Nanjing Putian Telecommunications Co., Ltd.
2009 Semi-Annual ReportNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
1
Nanjing Putian Telecommunications Co., Ltd.
2009 Semi-Annual Report
Important Notice
The Board of Directors, the Supervisory Committee, the directors, supervisors and
senior management of the Company hereby confirm that there are no factitious record,
misleading statements or material omission in this report, and collectively and individually
accepts full responsibility for the truthfulness, accuracy and completeness of the whole
contents.
Except the following directors, the rest directors were present in person at the board
meeting at which this semi-annual report was considered: Mr. Zhu Hongchen and Mr. Han
Shu, due to official business, and Mr. Li Tong, due to private business, did not attend the
meeting in person. They respectively authorized Mr. Zhao Xinping, Mr. Huang Haodong
and Mr. Sun Liang to attend the meeting and vote on his behalf.
Chairman of the BOD Mr. Zhao Xinping, chief financial supervisor Mr. Sun Liang, and
accountant officer Mr. Shi Lian hereby confirm that the financial report in this report is
truthful and complete.
The financial report for the first half of 2009 was unaudited.
This report is prepared both in Chinese and in English. In case of any inconsistency
between the two versions, the Chinese version should prevail.
Contents
I. Basic Information............................................................................................................. 2
II. Changes in Share Capital & Major Shareholders.............................................................. 3
III. Directors, Supervisors & Senior Management ................................................................. 5
IV. Report of the Board of Directors ...................................................................................... 6
V. Significant Events ............................................................................................................. 9
VI. Financial Report ............................................................................................................ 12
VII. Documents for Inspection............................................................................................. 12Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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I. Basic Information
I. Company profile
1. Company’s Legal Chinese Name: 南京普天通信股份有限公司
Company’s Legal English Name: Nanjing Putian Telecommunications Co., Ltd.
2. Legal Representative: Mr. Zhao Xinping
3. Secretary of the Board of Directors: Mr. Zhang Shenwei
Telephone: 86-25-58962289
Fax: 86-25-52409954
Mailing Address: No. 1 Putian Road, Qinhuai District Nanjing
Email Address: zsw@postel.com.cn
Representative of Securities Affairs: Ms. Xiao Hong
Telephone: 86-25-58962072
Fax: 86-25-52409954
Mailing Address: No. 1 Putian Road, Qinhuai District Nanjing
Email Address: xiaohong@postel.com.cn
4. Registration Address: No.58, Qinhuai Road, Jiangning Economics and
Technology Development Zone, Nanjing,
Jiangsu Province PRC
Postal Code: 211100
Office Address: No. 1 Putian Road, Qinhuai District Nanjing
Postal Code: 210012
Web Site: www.postel.com.cn
Email Address: securities@postel.com.cn
5. Appointed Newspaper for
Information Disclosure:
Securities Times & Hong Kong Wen Wei Po
Appointed Web Site for Information
Disclosure:
www.cninfo.com.cn
Semi-Annual Report Prepared at: Financial & Securities Department
6. Listing and Trading Place of the
Company Stock:
Shenzhen Stock Exchange
Abbreviation of Company Stock: NJ TEL
Stock Code: 200468
7. Other Information
Registration At: Jiangsu Administration for Industry and
Commerce
Legal Person Operating License
Registration Code:
320000400000500
Taxation Registration Code: 320121134878054
II. Main financial data (Yuan):
1. Main financial data
30 June 2009 31 December 2008 Increase/decrease
（％）
Total assets 1,294,644,134.17 1,229,410,783.11 5.31%
Equity attributable to owners of 336,216,428.40 325,891,395.72 3.17%Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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the listed company
Share capital 215,000,000.00 215,000,000.00 0.00%
Net assets per share attributable
to shareholders of the listed
company(Yuan/share)
1.56 1.52 2.63%
January to June
2009
January to June
2008
Increase/decrease
(%)
Total operating income 655,468,338.04 533,182,988.51 22.93%
Operational profit 15,088,076.45 7,785,517.57 93.80%
Gross profit 15,124,490.13 7,971,629.02 89.73%
Net profit attributable to the
shareholders of the listed
company
5,298,699.21 742,405.14 613.72%
Net profit attributable to the
shareholders of the listed
company after deducting
non-recurring profits/losses
5,214,544.48 496,204.42 950.89%
Basic earnings per share 0.0246 0.0035 602.86%
Diluted earnings per share 0.0246 0.0035 602.86%
Return on equity（%） 1.58% 0.23% 1.35%
Net cash per share generated
from operating activities -38,659,739.54 -54,630,876.70 29.23%
Net cash per share generated
from operating activities per
share(Yuan/share)
-0.18 -0.25 28.00%
Note: Details of the deducted non-recurring profits/losses for the first half of 2009(Yuan):
Item Amount
Profit and loss of non-current assets disposal 53,757.26
Government subsidy recorded into profit and loss of current
period 93,410.32
Profit and loss of debt restructure -175,912.50
Net amount of other non-operating profit and expenses
excluding items above 65,158.60
Influenced amount of minority interest 59,945.44
Influenced amount of income tax -12,204.39
Total 84,154.73
2. Supplement of income statement
Return on equity Earnings per share (Yuan)
Profit of the reporting period
Fully diluted
return on
equity
Weighted
average
Basic
earnings per
share
Diluted
earnings per
share
Net profit attributable to ordinary
shareholders of the Company
1.58% 1.61% 0.0246 0.0246
Net profit attributable to ordinary
shareholders of the Company after
deducting non-recurring gain or loss
1.55% 1.59% 0.0243 0.0243
II. Changes in Share Capital & Major Shareholders
I. Change of the Company’s sharesNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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Year-beginning
Increase/decre
ase During the
Year
Year-end
Number Proportion Number Proportion
I. Non-tradable shares 115,000,000 53.49% 115,000,000 53.49%
1.Promoter shares 115,000,000 53.49% 115,000,000 53.49%
Including:
State-owned shares 115,000,000 53.49% 115,000,000 53.49%
Domestic legal person shares
Foreign legal person shares
Other
2.Placement legal person shares
3.Employee’s shares
4.Preference shares and other
II. Listed shares 100,000,000 46.51% 100,000,000 46.51%
1.RMB ordinary shares
2.Domestically-listed shares in
foreign currency 100,000,000 46.51% 100,000,000 46.51%
3.Overseas listed foreign shares
4.Other
III. Total number of shares 215,000,000 100% 215,000,000 100%
II. Top ten shareholders and top ten shareholders of tradable shares at
the end of the reporting period
Total number of
shareholders 14,988
Top ten shareholders
Shareholder’s name Type of
shareholder
Proportion in
share capital Shareholding
Non-tradable
shares held by
the shareholder
Number of
mortgaged or
frozen shares
China Potevio Company
Limited
State-owned
legal person 53.49% 115,000,000 115,000,000 0
Ou Yanping Domestic
natural person 0.60% 1,283,711 0 Unknown
Chan Keung Overseas
natural person 0.60% 1,281,700 0 Unknown
PRO PERFORMANCE Overseas legal
person 0.34% 725,000 0 Unknown
Wang Feifei Domestic
natural person 0.26% 568,008 0 Unknown
Shui Guowei Domestic
natural person 0.25% 528,951 0 Unknown
Shen Guo Overseas
natural person 0.23% 500,265 0 Unknown
Li Meifang Domestic
natural person 0.22% 475,300 0 Unknown
Chen Chaofan Domestic
natural person 0.19% 416,979 0 Unknown
Zhong Guowei Domestic
natural person 0.17% 362,900 0 Unknown
Top ten shareholders of tradable shares
Shareholder’s name Shareholder’s name Shareholder’s name
Ou Yanping 1,283,711 Domestically-listed shares in
foreign currency
Chan Keung 1,281,700 Domestically-listed shares inNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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foreign currency
PRO PERFORMANCE 725,000 Domestically-listed shares in
foreign currency
Wang Feifei 568,008 Domestically-listed shares in
foreign currency
Shui Guowei 528,951 Domestically-listed shares in
foreign currency
Shen Guo 500,265 Domestically-listed shares in
foreign currency
Li Meifang 475,300 Domestically-listed shares in
foreign currency
Chen Chaofan 416,979 Domestically-listed shares in
foreign currency
Zhong Guowei 362,900 Domestically-listed shares in
foreign currency
Long Jianqiu 340,000 Domestically-listed shares in
foreign currency
Specification of related
parties or persons acting in
concert among the
above-mentioned
shareholders
Among the top ten shareholders, China Potevio Company Limited is neither a
related party nor a person acting in concert with the others. It’s unknown by the
Company whether there are related parties or persons acting in concert among the
other shareholders.
The Company does not know whether there are related parities or persons acting in
concert among the top ten holders of tradable shares.
III. Change of the Company’s controlling shareholder or effective
controller
The Company’s controlling shareholder and effective controller kept unchanged during
the reporting period.
III. Directors, Supervisors & Senior Management
I. Shareholding of the directors, supervisors and senior management
None of the directors, supervisors and members of the senior management held or
traded shares of the Company during the reporting period.
II. Personnel changes in directors, supervisors and senior management
1. The term of office of the Fourth BOD and Supervisory Committee expired by May 2009
and a re-election was held at the 2008 Shareholders’ General Meeting on 22 May 2009.
Mr. Zhao Xinping, Mr. Sun Liang, Mr. Huang Haodong, Mr. Li Tong, Mr. Zhu Hongchen,
Ms. Han Shu, Mr. Zhang Shuiyi and Ms. Zheng Aimei were elected into the Fifth BOD,
among whom the last two are independent directors. Ms. Liu Shuping and Mr. Xiong
Weihua, together with the staff supervisor Ms. Liu Xiaodong, were elected into the Fifth
Supervisory Committee. And as approved by the First Extempore Shareholders’
General Meeting of 2009 held on 7 August 2009, Mr. Ding Haiyan was opted into the
Fifth BOD as independent director.
2. Mr. Zhao Xinping and Mr. Sun Liang were respectively elected as chairman and vice
chairman of the Fifth BOD at the First Meeting of the Fifth BOD on 22 May 2009.
3. Ms. Liu Shuping was elected as chairman of the Fifth Supervisory Committee at theNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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First Meeting of the Fifth Supervisory Committee on 22 May 2009.
4. As approved by the First Meeting of the Fifth BOD on 22 May 2009, Mr. Sun Liang was
engaged as general manager of the Company, Mr. Zhang Shenwei was engaged as
secretary of the BOD, Mr. Zou Dezhong, Mr. Jiang Hanbin and Mr. Sun Qiang were
engaged as vice general managers of the Company, Mr. Shi LIan was engaged as
chief accountant of the Company.
IV. Report of the Board of Directors
I. General operating conditions in the reporting period
In the reporting period, the Company grasped the opportunity of the revival of market
demand of telecommunications equipment. Centered on the operating target and tasks,
the Company worked hard on market exploitation and brand fostering, adhered to
technology innovation, actively promoted internal restructuring and reforms and
strengthened fundamental management. Under the effort of the whole staff, the Company
fulfilled the operating budget of the first half year. It realized revenue of 655 million Yuan, a
year-on-year increase of 22.93 percent, operational profit of 15.09 million Yuan, a
year-on-year increase of 93.80 percent, and net profit of 5.30 million Yuan, a year-on-year
increase of 4.56 million Yuan.
II. Brief analysis on the operating results and financial position in the
reporting period (Yuan)
Item 30 June 2009 31 December 2008 Increase
/decrease(Yuan)
Increase
/decrease
Total assets 1,294,644,134.17 1,229,410,783.11 65,233,351.06 5.31%
Shareholders’
equity 336,216,428.40 325,891,395.72 10,325,032.68 3.17%
January to June
2009
January to June
2008
Operating income 655,468,338.04 533,182,988.51 122,285,349.53 22.93%
Operational profit 15,088,076.45 7,785,517.57 7,302,558.88 93.80%
Net profit 12,221,913.73 5,093,379.88 7,128,533.85 139.96%
Net profit
attributable to the
owners of parent
company
5,298,699.21 742,405.14 4,556,294.07 613.72%
Net Cash flow from
operating activities
-38,659,739.54 -54,630,876.70 15,971,137.16 29.23%
Explanation:
1. Increase of profit was mainly due to growth of sales revenue and investment income
from invested entities.
2. Increase of cash flow from operating activities compared with the same period of last
year was mainly due to growth of sales revenue. And main reasons that resulted in an
outflow of net cash from operating activities include: (1) accounts receivable, inventory and
payment to suppliers increased as sales grew, (2) fund withdraw from customer paymentNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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slowed and cash inflow was relatively small, (3) taxes and fees increased as a
consequence of growth of sales.
III. Main operating activities in the reporting period
1. Introduction of main businesses of the Company
The Company is mainly engaged in R&D, manufacturing and sales of
telecommunications equipment.
2. A breakdown of main business by industry and product is as follows (RMB 0’000):
A breakdown of main business by industry
A breakdown by
industry or product Revenue Cost Gross margin
(%)
Year-on-year
increase/decrease
of revenue(%)
Year-on-year
increase/decreas
e of cost(%)
Year-on-year
increase/decrea
se of gross
margin(%)
Telecommunications 65,418.80 55,698.67 14.86% 41.33% 45.97% -2.70%
A breakdown of main business by product
Comprehensive
access products 29,910.29 23,679.30 20.83% 28.31% 31.52% -1.93%
Video conference
system 12,771.56 11,076.81 13.27% -14.77% -15.46% 0.70%
Other 22,736.95 20,942.56 7.89% 107.27% 120.07% -5.36%
3. A breakdown of main business by region is as follows( RMB0’000):
Region Revenue Year-on-year increase/decrease（％）
North China 10,178.47 -15.51%
East China 38,649.41 99.65%
Other regions 16,590.92 -7.11%
4. Change in the Company’s main business, the structure and profitability of main
business，and the composition of profit
(1) There were no material changes in the Company’s main business，the structure of main
business and the profitability of main business.
(2) Changes in the composition of profit(Yuan)
Item
January to June
2009
January to June
2008
Increase
/decrease(Yuan)
Increase
/decrease
Sales expense 37,948,082.52 36,006,180.73 1,941,901.79 5.39%
Administrative
expense
36,877,942.06 32,189,625.90 4,688,316.16 14.56%
Financial expenses 10,023,133.88 13,690,367.66 -3,667,233.78 -26.79%
Investment income 5,109,439.94 1,463,689.53 3,645,750.41 249.08%
Non-operating
income
338,597.00 358,612.81 -20,015.81 -5.58%
Non-operating
expenses
302,183.32 172,501.36 129,681.96 75.18%
Net profit attributable
to the owners of
parent company
5,298,699.21 742,405.14 4,556,294.07 613.72%
Explanation
①Financial expense was 3.67 million Yuan lower than that of the same period of last
year, because interest rate dropped substantially followed by bank loan interest rate cut.
②Investment income increased 3.65 million Yuan from the same period last year,
because the investment income from joint ventures and affiliated ventures recognized by
equity method increased 2.31 million Yuan, and investment income recognized by costNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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method increased 2.2 million Yuan.
4. Associated companies that contributed more than 10 percent of the Company’s
net profit
Name of associated
company Equity owned
by the
Company
Main business
Net profit in
the reporting
period(Yuan)
Investment
Income
contributed to the
Company(Yuan)
Nanjing Mennekes
Electric Appliance Ltd. 50%
Manufacturing and
sales of plugs,
receptacles and
related products
5,169,625.16 2,584,812.58
5. Main problems and risks in operation
(1) Influenced by economic crisis in the reporting period, fund reflowing was more
difficult than previous years. There was an increase of receivables, and the quantity of
delivered goods was a little larger than normal standard, which occupied a large amount of
cash capital.
Measures: we should strengthen work on demanding overdue payment, check overdue
payment of long ages in time, enhance management of delivered goods, trying to
complete necessary procedures as early as we can so that sales can be recognized and
liquidation period could be shortened.
(2) Influenced by adoption of group procurement and reverse tendering by
telecommunication operators, prices of some product are estimated to fall.
Measures: we should lower cost and raise efficiency by reducing cost of production and
purchase, enhanc internal management, promote product quality, adopt group ERP
systems, enhance integration of industry chain and reduce unnecessary internal
coordinate links..
IV. Work plan for the next half year
In the next half year, we will mainly undertake the following tasks:
1. Deepening reforms and internal restructuring.
2. Accelerating industrial development and technology innovation. We should link our
development strategy with market demand and improve resource allocation for industry
upgrading, and promote innovation in industry, product and technology.
3. Strengthening cash reflowing to prevent operating risks. We will pay attention to the
problem of increasing of accounts receivable and inventory, and attach importance on
cash reflowing.
4. Enhancing informatization work to improve fundamental management. The
informatization work should be done based on the Company’s managerial structure and
need, and serve for the improvement of managerial and operational level.
5. Improving salary and assessment system and strengthening fostering of talents.
6. Facilitating corporate culture building to promote a harmonious and steady
development of the Company.
V. Investment in reporting period
1. Investment with proceeds raised from share issuingNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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The Company did not raise proceeds by issuing shares in the reporting period or use
proceeds raised in previous periods.
2. Investment with the Company’s own funds
The Company did not make any large investment by using its own funds.
V. Significant Events
I. Company governance
The Company has made continuous efforts to improve its legal person governance
structure and standardize its operations pursuant to the Company Law, Securities Law and
the requirement of CSRC. In the reporting period, the Company revised the provisions in
the Articles of Association that relates to profit distribution policy pursuant to the
requirement of the Decisions on Revising Some Provisions on Cash Dividends by Listed
Companies issued by CSRC.
II. Proposal and implementation of profit distribution plan in the reporting
period
1. The Company conducted neither profit distribution nor transfer of capital reserves into
share capital for the Year 2008.
2. The Company will not conduct profit distribution or transfer of capital reserves into share
capital for the first half of 2009.
III. Material lawsuit or arbitration.
The Company was not involved in any significant lawsuit or arbitration in the reporting
period.
IV. Assets purchasing, selling or disposal and company merging
There was no significant assets purchasing, selling or disposal and company merging
in the reporting period.
V. Related-party transactions
1. Day-to-day related-party transactions
a) sale of goods
The company produces and sells telecommunication products to the related parties at
the market price. The amount of sales to the related parties in the reporting period is listed
as follows (Unit: RMB 0’000)
Jan. – Jun. 2009
Name of the related party
Amount Proportion (%)
Nanjing Putian Datang Information Electronics Co., Ltd 1.57
Beijing Great Dragon Information Technology Co., Ltd. 1.27Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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China Potevio Company Limited 1,055.96 1.61
Nanjing Putian Zhongyou Telecommunication Co., Ltd. 16.73 0.03
ChengDu PuTian Telecommunications Cable CO., LTD 133.53 0.20
Potevio Institute of Technology Co.，Ltd. 4.87 0.01
Total 1,213.93 1.85
Note: sales to the controlling shareholder and its subsidiaries amounted to 11.96 million
Yuan in the reporting period.
b) Purchase of goods
The company purchases the goods at the market price from the related parties. The
amount of purchase from the related parties in the reporting period is listed as follows (Unit:
RMB 0’000)
2009.1-6
Name of the related party
Amount Proportion(%)
Nanjing Putian Datang Information Electronics Co., Ltd 147.20 0.25
Nanjing Putian Hongyan Electric Appliance Company 4.21 0.01
Total 151.41 0.26
c) The company leased the land and houses of Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd. as offices and plant. The lese fee recorded into the
reporting period was 3.8 million Yuan.
2. Related-party transactions in light of assets purchasing and selling
There were no related-party transactions in light of assets purchasing and selling in the
reporting period.
3. Receivables and payables with related parties due to non-operating activities
(RMB0’000)
Fund provided by the listed
company to related parties
Fund provided to the listed
company by related parties
Name of the related party Accumulative
Amount in the
year
Balance at pe
riod-end
Accumulative
Amount in the
year
Balance at pe
riod-end
Nanjing Putian Datang Information
Electronics Co., Ltd 10.68 45.44 0.00 0.00
Nanjing Potevio
Telecommunication Technology
Industry Park Co., Ltd.
0.00 0.00 6.20 2,020.15
Total 10.68 45.44 6.20 2,020.15
VI. Important contracts
1. During the reporting period the Company did not trust, contract or lease assets to
other companies or vice versa.
In the reporting period the Company signed an agreement with Nanjing Potevio
Telecommunication Technology Industry Park Co., Ltd. to lease its realestate for
production and office. Except that, there were no significant issues in terms of trusting,
contracting or leasing assets to other units or vice versa.
2. Guaranty provided for other parties (Yuan ):Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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Guarantee offered by the Company(excluding the guarantee offered to the subsidiaries)
Name of
the
debtor
Happening Date (the
date when the
guaranty agreement
was signed)
Amount of
guaranty
Type of
guaranty
Term of
guaranty
Completed or
not
Guaranty
whether offered
to a related party
or not
-
Accumulative amount of guaranty during
reporting period 0
Balance of guarantee at the end of the
reporting period(A) 0
Guaranty offered to the subsidiaries
Accumulative amount of guarantee offered to
the subsidiaries during this reporting period 30,000,000
Balance of guarantee offered to the
subsidiaries at the end of the reporting
period(B)
35,000,000
Total amount of guarantee offered by the Company(including guaranty offered to the subsidiaries)
Total amount of guarantee(A+B) 35,000,000
Proportion of the total amount of guarantee in
net assets 10.41%
Including:
Amount of guarantee offered to the
Company’s shareholders, effective controller
and their related parties(C)
0
Amount of guarantee directly or indirectly
offered for a debtor whose assets liabilities
ratio was above 70%(D)
0
Amount of guarantee exceeding 50% of net
assets(E) 0
Total amount of the three types of guarantee
above(C+D+E) 0
Explanation on possibility of bearing joint
responsibility for undue guarantee -
3. Entrusted investment
During the reporting period the Company did not entrust other parties to manage the
cash capital.
VII. Commitment by the Company or shareholders
During the reporting period, the Company or the shareholders holding more than 5
percent of share capital did not make any significant commitment.
VIII. Appointment and discharging of a public accounting firm
The Company did not change a the public accounting firm in the reporting period. The
current public accounting firm engaged by the Company is Daxin Certified Public
Accountants.
IX. Punishment by the securities regulatory departments
In the reporting period the Company, the Board of Directors and the directors were not
punished by the securities departments.
X. Securities investment
During the reporting period the Company did not make securities investment.
XI. Shareholding in other listed companiesNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
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During the reporting period the Company did not hold shares of other listed companies.
XII. Shareholding in un-listed financial enterprises or companies to be listed
During the reporting period the Company did not hold shares of any non-listed financial
enterprises or companies that plan to be listed.
XIII. Reception of visitors and interviews during the reporting period
In the reporting period, the Company did not receive investigation, communication or
interview of any specific investors.
XIV. Special statement and independent opinion presented by the independent
directors of the Company in terms of fund appropriation by the controlling
shareholder and other related parties and guaranty provided by the Company
According to our investigation, there was no appropriation of fund of the Company by the
controlling shareholder or its subsidiaries through non-business transactions in the first half
of 2009,
During January-June 2009, the Company provided guaranty for some subsidiaries to
help them to apply for bank loans. The ending balance of guarantee as of 30 June is 35
million Yuan, accounting for 10.41 percent of the value of net assets. The procedures of
guaranty were in conformity with the regulations of relevant laws. There was no violation of
laws in providing the above guarantee, nor was there overdue guarantee. The interests of
the Company or of the Company’s shareholders was not harmed due to the guarantee.
VI. Financial Report
I. Auditor’s report
The Company’s Financial Statements for the first half of 2009 were not audited.
II. Financial statements and Notes to the financial statements: attached.
III. Supplementary information(attached)
VII. Documents for Inspection
I. Original text of the semi-annual report signed by Chairman of the Board of
Directors.
II. Original text of accounting statements signed and sealed by legal person
representative, chief financial supervisor and accountant officer.
III. Original texts of all the files and announcements published on the newspapers
appointed by China Securities Regulatory Commission during the reporting period.Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
13
Board of Directors
Nanjing Putian Telecommunications Co., Ltd.
25 August 2009Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
14
Nanjing Putian Telecommunications Co., Ltd.
Balance Sheet as of June 30, 2009
(All amounts in CNY unless otherwise stated)
Item At the end of the current period At the beginning of the current period
Consolidated Parent Company Consolidated Parent Company
Current assets:
Monetary funds 258,531,706.79 191,416,790.10 320,147,650.59 259,364,708.17
Settlement provision
Outgoing call loan
Trading financial assets
Notes receivable 3,223,543.00 678,388.00 6,349,430.00 736,000.00
Account receivable 419,156,803.55 318,107,458.57 337,226,330.95 244,877,404.04
Prepaid fund 49,560,712.52 47,190,254.05 48,146,368.56 39,570,789.34
Insurance receivable
Reinsurance receivable
Provisions of Reinsurance contracts
receivable
Interest receivable
Dividends receivable
Other account receivable 37,433,804.28 51,568,838.84 33,411,453.54 30,760,661.50
Repurchasing of financial assets
Inventories 220,311,283.56 82,637,957.10 177,019,556.57 68,012,117.85
Non-current asset due in year
Other current asset
Total of current asset 988,217,853.70 691,599,686.66 922,300,790.21 643,321,680.90
Non-current assets
Loans and payment on other’s behalf
disbursed
Disposable financial asset
Expired investment in possess
Long-term receivable
Long-term share equity investment 217,555,305.30 329,298,380.03 216,398,929.36 326,642,004.09
Property investment 5,310,929.41 5,433,475.69
Fixed assets 74,147,475.16 38,428,269.94 75,339,969.01 39,746,992.57
Construction in progress
Engineering material
Fixed asset disposal
Production physical assets
Gas & petrol
Intangible assets 9,412,570.60 3,032,369.80 9,937,618.84 3,221,250.46
R&D expense
Goodwill
Long-term deferred expenses
Differed income tax asset
Other non-current asset
Total of non-current assets 306,426,280.47 370,759,019.77 307,109,992.90 369,610,247.12
Total of assets 1,294,644,134.17 1,062,358,706.43 1,229,410,783.11 1,012,931,928.02
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
15
Nanjing Putian Telecommunications Co., Ltd.
Balance Sheet as of June 30, 2009(Continued)
(All amounts in CNY unless otherwise stated)
Item At the end of the current period At the beginning of the current period
Consolidated Parent Company Consolidated Parent Company
Current liabilities
Short-term borrowings 481,000,000.00 286,000,000.00 490,000,000.00 290,000,000.00
Loan from Central Bank
Deposit received and hold for
others
Call loan received
Trade off financial liabilities
Notes payable 3,757,986.40 163,757,986.40 160,000,000.00
Accounts payable 374,139,404.90 136,725,768.34 303,518,882.73 108,621,465.61
Advances from customers 11,488,307.65 4,890,166.34 15,375,739.80 3,679,516.42
Selling of repurchased financial
assets
Fees and commissions payable
Employees benefits payable 13,272,707.48 3,278,578.25 13,489,219.64 3,477,875.49
Tax payable -16,884,577.60 168,920.36 -5,996,782.80 5,843,015.57
Interest payable
Dividend payable 2,167,920.00
Other payables 39,165,002.42 162,053,045.48 36,696,588.02 137,639,798.33
Reinsurance fee payable
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Non-current liability due in year
Other current liability
Total of current liability 908,106,751.25 756,874,465.17 853,083,647.39 709,261,671.42
Non-current liabilities
Long-term borrowings
Bond payable
Long-term payables 80,118.00 80,118.00 80,118.00 80,118.00
Special payable
Expected liabilities
Differed income tax liability
Other non-recurring liabilities
Total of non-current liabilities 80,118.00 80,118.00 80,118.00 80,118.00
Total of liability 908,186,869.25 756,954,583.17 853,163,765.39 709,341,789.42
Owners’ equity (or shareholders’
equity)
Paid-in capital (or share capital) 215,000,000.00 215,000,000.00 215,000,000.00 215,000,000.00
Capital reserves 183,465,955.00 172,417,299.81 183,465,955.00 172,417,299.81
Less: Treasury stocks
Special reserve
Surplus reserves 589,559.77 589,559.76 589,559.77 589,559.76
Common risk provision
Undistributed profit -64,827,911.89 -82,602,736.31 -70,126,611.10 -84,416,720.97
Difference of foreign currency
translation 1,988,825.52 -3,037,507.95
Total of equity attributable to owners
of the parent company 336,216,428.40 305,404,123.26 325,891,395.72 303,590,138.60
Minor shareholders’ equity 50,240,836.52 50,355,622.00
Total of owners’ equity 386,457,264.92 305,404,123.26 376,247,017.72 303,590,138.60
Total of liabilities and owners’ equity 1,294,644,134.17 1,062,358,706.43 1,229,410,783.11 1,012,931,928.02
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
16
Nanjing Putian Telecommunications Co., Ltd.
Income Statement as of Jan.-Jun 2009
(All amounts in CNY unless otherwise stated)
Current Period Same Period of Last Year
Item
Consolidated Parent Company Consolidated Parent Company
I. Total operating income 655,468,338.04 476,190,932.07 533,182,988.51 273,497,124.34
Incl. operating income 655,468,338.04 476,190,932.07 533,182,988.51 273,497,124.34
Interest income
Insurance fee earned
Fee and commission received
II. Total operating cost 645,489,701.53 484,568,968.85 526,861,160.47 281,772,274.80
Incl. operating cost 557,468,259.62 429,832,076.47 444,716,093.94 234,407,234.25
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Net insurance policy reserves
provided
Insurance policy dividend paid
Reinsurance expenses
Taxes and surcharges on
operations
1,667,456.97 325,479.60 2,051,770.87 195,661.93
Sales expense 37,948,082.52 22,905,148.25 36,006,180.73 17,531,957.19
Administrative expense 36,877,942.06 21,065,005.82 32,189,625.90 17,429,678.60
Financial expenses 10,023,133.88 8,936,432.23 13,690,367.66 12,519,354.78
Impairment loss on assets 1,504,826.48 1,504,826.48 -1,792,878.63 -311,611.95
Plus: Gains from change of fair value
(“-“ for loss)
Investment income (“-“ for loss) 5,109,439.94 10,053,439.94 1,463,689.53 2,245,140.83
Incl. Investment gains from
affiliates
2,656,375.94 2,656,375.94 1,463,689.53 2,245,140.83
Gains from currency exchange
(“-“ for loss)
III. Operational profit (“-“ for loss) 15,088,076.45 1,675,403.16 7,785,517.57 -6,030,009.63
Plus: Non-operating income 338,597.00 196,480.16 358,612.81 32,200.000
Less: Non-operating expenses 302,183.32 57,898.66 172,501.36 3,643.320
Incl. Loss from disposal of
non-current assets
IV. Gross profit (“-“ for loss) 15,124,490.13 1,813,984.66 7,971,629.02 -6,001,452.95
Less: Income tax expenses 2,902,576.40 2,878,249.14
V. Net profit (“-“ for net loss) 12,221,913.73 1,813,984.66 5,093,379.88 -6,001,452.95
Net profit attributable to the owners
of parent company
5,298,699.21 1,813,984.66 742,405.14 -6,001,452.95
Minor shareholders’ equity 6,923,214.52 4,350,974.74
VI. Earnings per share:
(I) Basic earnings per share 0.0246 0.0084 0.0035 -0.0279
(II) Diluted earnings per share 0.0246 0.0084 0.0035 -0.0279
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
17
Nanjing Putian Telecommunications Co., Ltd.
Cash Flow Statement as of Jan.-Jun. 2009
(All amounts in CNY unless otherwise stated)
Current Period Same Period of Last Year
Item
Consolidated Parent Company Consolidated Parent Company
I. Net cash flow from operating activities
Cash received from sales of products and
providing of services
663,602,122.78 422,118,934.56 544,369,047.62 254,581,706.84
Net increase of customer deposits and
capital kept for brother company
Net increase of loans from central bank
Net increase of inter-bank loans from other
financial bodies
Cash received against original insurance
contract
Net cash received from reinsurance
business
Net increase of client deposit and
investment
Net increase of trade financial asset
disposal
Cash received as interest, processing fee
and commission
Net increase of inter-bank fund received
Net increase of repurchasing business
Tax returned 93,410.32 262,500.00
Other cash received from operating
activities
3,781,155.14 55,962,573.87 8,456,266.99 60,837,463.03
Sub-total of cash inflow from operating
activities
667,476,688.24 478,081,508.43 553,087,814.61 315,419,169.87
Cash paid for purchasing of merchandise
and services
580,895,580.85 404,502,204.96 520,954,649.81 326,620,882.34
Net increase of client trade and advance
Net increase of savings in central bank
and brother company
Cash paid for original contract claim
Cash paid for interest, processing fee
and commission
Cash paid for policy dividend
Cash paid to staffs or paid for staffs 50,863,339.44 28,114,762.27 37,355,058.25 21,512,990.13
Taxes paid 31,292,635.78 16,091,372.86 26,041,586.33 8,555,430.79
Cash paid for other operating activities 43,084,871.71 81,298,788.23 23,367,396.92 8,503,036.26
Sub-total of cash outflow from operating
activities
706,136,427.78 530,007,128.32 607,718,691.31 365,192,339.52
Net Cash flow from operating activities -38,659,739.54 -51,925,619.89 -54,630,876.70 -49,773,169.65
II. Cash flow from investing activities
Cash received from investment retrieving 1,500,000.00 536,297.00
Cash received as investment gains 18,000.00 250,000.00 250,000.00
Net cash retrieved from disposal of fixed
assets, intangible assets, and other long-term
assets
50,500.00 27,000.00 3,888.50
Net cash received from disposal of
subsidiaries or other operational units
10,980,200.00 10,980,200.00
Cash received from other investing
activitiesNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
18
Sub-total of cash inflow from investing
activities
1,568,500.00 27,000.00 11,770,385.50 11,230,200.00
Cash paid for construction of fixed
assets, intangible assets and other long-term
assets
3,633,903.96 1,211,236.15 11,897,891.83 2,558,079.50
Cash paid as investment 378,780.00 378,780.00
Net increase of loan against pledge
Net cash received from subsidiaries and
other operational units
Cash paid for other investing activities
Sub-total of cash outflow from investing
activities
3,633,903.96 1,211,236.15 12,276,671.83 2,936,859.50
Net cash flow from investing activities -2,065,403.96 -1,184,236.15 -506,286.33 8,293,340.50
III. Cash flow from financing activities
Cash received as investment
Incl. Cash received as investment from
minor shareholders
Cash received as loans 346,000,000.00 316,000,000.00 386,000,000.00 350,000,000.00
Cash received from bond placing
Other financing-related cash received
Subtotal of cash inflow from financing
activities
346,000,000.00 316,000,000.00 386,000,000.00 350,000,000.00
Cash to repay debts 355,000,000.00 320,000,000.00 321,000,000.00 290,000,000.00
Cash paid as dividend, profit or interests 11,855,436.45 10,802,698.18 15,514,346.25 14,115,419.03
Incl. Dividend and profit paid by
subsidiaries to minor shareholders
Cash paid for other financing activities 20,000,000.00 20,000,000.00
Subtotal of cash outflow due to financing
activities
366,855,436.45 330,802,698.18 356,514,346.25 324,115,419.03
Net cash flow from financing activities -20,855,436.45 -14,802,698.18 29,485,653.75 25,884,580.97
IV. Influence of exchange rate alternation on
cash and cash equivalents
-35,363.85 -35,363.85 -53,333.01 -53,333.01
V. Net increase of cash and cash equivalents -61,615,943.80 -67,947,918.07 -25,704,842.29 -15,648,581.19
Plus: Balance of cash and cash
equivalents at the beginning of term
240,048,010.59 179,265,068.17 217,726,540.06 129,852,279.50
VI. Balance of cash and cash equivalents at
the end of term
178,432,066.79 111,317,150.10 192,021,697.77 114,203,698.31
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
19
Nanjing Putian Telecommunications Co., Ltd.
Consolidated Statement of Changes in Owners' Equity as of Jan. to Jun. 2009
(All amounts in CNY unless otherwise stated)
Current period Last year
Equity attributable to shareholders of the parent company Equity attributable to shareholders of the parent company
Item
Paid-in
capital
(or
share
capital)
Capital
reserve
s
Less:
Treasur
y stocks
Special
reserve
Surplus
reserve
s
General
risk
provisio
n
Undistri
buted
profit
Other
Minor
shareho
lders'
equity
Total
owners'
equity
Paid-in
capital
(or
share
capital)
Capital
reserve
s
Less:
Treasur
y stocks
Special
reserve
Surplus
reserve
s
General
risk
provisio
n
Undistri
buted
profit
Other
Minor
shareho
lders'
equity
Total
owners'
equity
I. Opening balance brought
forward
215,000
,000.00
183,465
,955.00
589,559
.77
-70,126
,611.10
-3,037,
507.95
50,355,
622.00
376,247
,017.72
215,000
,000.00
183,465
,955.00
589,559
.77
-77,343
,697.79
-1,325,
917.73
61,080,
333.68
381,466
,232.93
Plus: Adjustments for
changes in accounting policy
Adjustments for
correction of accounting errors
in previous period
other
II. Beginning balance of
current year
215,000
,000.00
183,465
,955.00
589,559
.77
-70,126
,611.10
-3,037,
507.95
50,355,
622.00
376,247
,017.72
215,000
,000.00
183,465
,955.00
589,559
.77
-77,343
,697.79
-1,325,
917.73
61,080,
333.68
381,466
,232.93
III. Increase/decrease of
changing in this
year(decrease is listed with
“-“)
5,298,6
99.21
5,026,3
33.47
-114,78
5.48
10,210,
247.20
7,217,0
86.69
-1,711,
590.22
-10,724
,711.68
-5,219,
215.21
1. Net Profit
5,298,6
99.21
6,923,2
14.52
12,221,
913.73
6,447,7
13.08
9,945,5
27.15
16,393,
240.23
2. Gain and loss directly
recognized in owners' equity
5,026,3
33.47
5,026,3
33.47
769,373
.61
-1,711,
590.22
-942,21
6.61
1) Adjustments for changes
in fair value of available-for-sale
financial assets
2) Adjustments for changes
in owners' equity of invested
unit under equity method
3) Adjustments on income
tax recognized in owners' equity
items
4) Others 5,026,3 5,026,3 769,373 -1,711, -942,21Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
20
33.47 33.47 .61 590.22 6.61
Sub-total of 1 and 2
5,298,6
99.21
5,026,3
33.47
6,923,2
14.52
17,248,
247.20
7,217,0
86.69
-1,711,
590.22
9,945,5
27.15
15,451,
023.62
3. Capital contributed or
reduced by owners
-20,670
,238.83
-20,670
,238.83
1) Capital contributed by
owners
2) Amount of share
payment recognized in owners'
equity
3) Others
-20,670
,238.83
-20,670
,238.83
4. Distributed profit
-7,038,
000.00
-7,038,
000.00
1) Extract for surplus
reserves
2) General risk provision
3) Distributable profit to
investors (or shareholders)
-7,038,
000.00
-7,038,
000.00
4) Others
5. Internal transfer of owners'
equity
1) Capital reserves
transferring to paid-in capital (or
share capital)
2) Surplus reserve
transferring to paid-in capital (or
share capital)
3) Surplus reserves
offsetting loss
4) Others
IV. Balance at the end of this
year
215,000
,000.00
183,465
,955.00
589,559
.77
-64,827
,911.89
1,988,8
25.52
50,240,
836.52
386,457
,264.92
215,000
,000.00
183,465
,955.00
589,559
.77
-70,126
,611.10
-3,037,
507.95
50,355,
622.00
376,247
,017.72
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
21
Nanjing Putian Telecommunications Co., Ltd.
Statement of Changes in Owners' Equity as of Jan. to Jun. 2009
(All amounts in CNY unless otherwise stated)
Current period Last year
Item
Paid-in
capital (or
share
capital)
Capital
reserves
Less:
Treasury
stocks
Special
reserve
Surplus
reserves
Undistribute
d profit
Total owners'
equity
Paid-in
capital (or
share
capital)
Capital
reserves
Less:
Treasury
stocks
Special
reserve
Surplus
reserves
Undistribute
d profit
Total owners'
equity
I. Opening balance brought
forward
215,000,000
.00
172,417,299
.81
589,559.76
-84,416,720
.97
303,590,138
.60
215,000,000
.00
172,417,299
.81
589,559.76
-68,655,190
.82
319,351,668
.75
Plus: Adjustments for
changes in accounting policy
Adjustments for
correction of accounting errors
in previous period
other
II. Beginning balance of
current year
215,000,000
.00
172,417,299
.81
589,559.76
-84,416,720
.97
303,590,138
.60
215,000,000
.00
172,417,299
.81
589,559.76
-68,655,190
.82
319,351,668
.75
III. Increase/decrease of
changing in this
year(decrease is listed with
“-“)
1,813,984.6
6
1,813,984.6
6
-15,761,530
.15
-15,761,530
.15
1. Net Profit
1,813,984.6
6
1,813,984.6
6
-15,761,530
.15
-15,761,530
.15
2. Gain and loss directly
recognized in owners' equity
1) Adjustments for changes
in fair value of available-for-sale
financial assets
2) Adjustments for changes
in owners' equity of invested
unit under equity method
3) Adjustments on income
tax recognized in owners' equity
items
4) Others
Sub-total of 1 and 2
1,813,984.6
6
1,813,984.6
6
-15,761,530
.15
-15,761,530
.15Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
22
3. Capital contributed or
reduced by owners
1) Capital contributed by
owners
2) Amount of share
payment recognized in owners'
equity
3) Others
4. Distributed profit
1) Extract for surplus
reserves
2) General risk provision
3) Others
5. Internal transfer of owners'
equity
1) Capital reserves
transferring to paid-in capital (or
share capital)
2) Surplus reserve
transferring to paid-in capital (or
share capital)
3) Surplus reserves
offsetting loss
4) Others
IV. Balance at the end of this
year
215,000,000
.00
172,417,299
.81
589,559.76
-82,602,736
.31
305,404,123
.26
215,000,000
.00
172,417,299
.81
589,559.76
-84,416,720
.97
303,590,138
.60
Legal person representative：Zhao Xinping Financial controller: Sun Liang Accountant officer: Shi LianNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
23
NANJING PUTIAN TELECOMMUNICATIONS CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
(All amounts are stated by RMB Yuan unless otherwise stated）
1. Corporate information
Nanjing Putian Telecommunications Co., Ltd. (hereafter refers to ‘the Company’) is the
original Nanjing Telecommunication Facility Factory, and was established as joint stock
limited company by raising money approved with TGS (1997) No. 28 issued by National
Economic Institutional Reform Commission on March 21, 1997. The Company is mainly
engaged in telecom equipment manufacture industry and was listed in Shenzhen Stock
Exchange on May 22, 1997. As of June 30, 2009, the capital of the Company is CNY
215,000,000.00. The business scope of the Company is data telecom product, wires
telecom product, wireless telecom product, distribution and allocation of layout of telecom
product, research, manufacture of media computer and digital television, vehicle electronics
and other related product and software, sales of self-produced products and provide the
related after-sales service, and telecom information net project, buildings intelligentized
project, design of computer information systematic project, construction and system
combination and related consultancy service.
2. Basis of preparation of the financial statements
The financial statements of company based on the assumption of continuing operations
and are prepared according to “Enterprise Accounting Standard – Basic Standard”,
“Enterprise Accounting Standard No. 1 – Inventories” and other 37 specific accounting
standards issued by the Ministry of Finance on February 15, 2006.
3.Statement of compliance
The consolidated financial statements have been prepared in accordance with the Basis of
preparation of the financial statements set out in note 2,and it meet the requirements of
Accounting Standard for Business Enterprises, reflect the financial situation of enterprises、
results of operations and cash flow, and other relevant information truly、fairly and
completely.
4. Main accounting policies and estimations
4.1 Fiscal year
The fiscal year of the Company is the solar calendar year, which is from January 1 to
December 31. This report cover the period, which is from January 1,2009 to June 30,2009.
4.2 Recording currency
Recording currency is CNY
4.3 Measurement characters
The Company measures financial statements’ items according to stated measurement
characters and measurement characters don’t be changed during the report period. The
company uses history cost commonly for the measurement of accounting factors. When the
Company uses replacement cost, net realizable value, net value and fair value based on
assured amounts that could be obtained and measured reliably.
4.4Confirmation of cash equivalence
Cash equivalence is that the Company holds short-term (expiration of 3 months from
purchasing day),liquidity, easy to convert to known amount of cash and low-risk changes inNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
24
value of investment.
4.5Foreign currency transaction and translation of foreign currency financial
statements
(1) Foreign currencies caused by foreign businesses are translated into RMB accounts
according to the spot exchange rate of transaction occurring day. For the balances of
foreign currency accounts at the end of period, foreign currency monetary items are
translated according to the spot exchange rate at the balance sheet date, the difference
recorded into current profit and loss; the foreign currency
non-monetary items using historical cost are translated according to the spot exchange rate
of transaction occurring day; the foreign currency non-monetary items using fair value are
translated according to the spot exchange rate of fair value confirming day, the difference is
taken as the changes in the profit and loss of fair value.
(2) How to deal with exchange profit and loss: exchange profit and loss due to foreign
currency loan relating with purchasing, building or producing assets that comply with
capitalization conditions should be dealt same as loan expenses; in addition to above
condition, exchange profit and loss should be charged into current financial expenses.
4.6 Financial assets and financial liabilities
(1) Classification of financial assets and financial liabilities
Financial assets include financial assets held for trading; financial assets designated as at
fair value through profit and loss; held-to-maturity investments; loans and receivables;
available-for-sale financial assets. Financial liabilities include financial liabilities held for
trading, financial liabilities designated as at fair value through profit and loss.
(2) Recognition and measurement of financial instruments
a. The Company shall recognize one financial asset or financial liability when the
Company becomes one party to the contractual provisions of financial instrument.
The Company shall derecognize a financial asset if one of the following conditions is met:
the contractual rights to the cash flows from the financial asset expire; the financial asset
has been transferred, and the transfer meets the terms of recognition. The Company shall
derecognize a financial liability (or part of it) only when the underlying present obligation (or
part of it) is discharged/cancelled.
b. The financial assets and financial liabilities are measured with fair value when
confirming initially. As to financial assets or financial liabilities at fair value through profit
and loss, relevant trade expenses are recorded into the profit and loss of current period; as
to other financial assets or financial liabilities, relevant trade expenses are recorded into the
initial confirming amount.
c. For financial assets, the Company adopts fair value for follow-up measure, and
doesn’t deduct trade expenses that would generate when disposing the financial assets.
d. For financial liabilities, the Company uses actual interest rate and adopts
amortized cost for follow-up measure.
e. Profit or loss due to fair value change of financial assets and financial liabilities,
excluding relating with hedging, should be dealt with followings: financial assets or financial
liabilities at fair value through profit and loss, profit or loss due to fair value change should
be recorded into profit or loss due to fair value change; profit or loss due to fair value
change of available-for-sale financial assets should be recorded into capital reserves after
deducting impairment and exchange difference due to foreign currency financial assets, the
capital reserves shall be transferred into current profit and loss when recognition.
f. For financial assets or financial liabilities, the Company adopts amortized cost,
excluding relating with hedging, profit or loss due to derecognition, impairment or
amortization should be recorded into profit and loss of current period.
g. The Company charges counteractive results of fair value change due to hedge
instrument and hedged item in same accounting period.
(3) Fair value of financial instruments
If there is an active market for a financial asset or financial liability, the quoted price in the
active market shall be used to establish the fair value of the financial asset or financial
liability. If no active market exists for a financial instrument, the Company establishes fairNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
25
value by using a valuation technique. Valuation techniques include using recent market
transactions between knowledgeable, willing parties, reference to the current fair value of
another instrument that is substantially the same,
discounted cash flow analysis and option pricing models.
(4) Impairment of financial assets
The Company assesses at the balance sheet date the carrying amount of the financial
assets excluding financial assets at fair value through profit and loss. If there is objective
evidence that the financial asset is impaired, the Company shall determine the amount of
any impairment loss. For a financial asset that is individually significant, the Company
should assess the asset impairment
individually. For a financial asset that is not individually significant, the Company should
collect similar financial assets group and assess asset impairment.
4.7 Recognition standard and provision method of provision for bad and doubtful
debts of accounts receivable
If there is objective evidence at the year end to indicate that impairment exists in accounts
receivable, their carrying amount should be decreasingly recorded as recoverable amount.
The decreased amount should be recognized as impairment loss of assets and be
recorded into profit and loss of the current period. Recoverable amount is recognized
through discounting its future cash flow (excluding credit loss that has not occurred) at
original actual rate with consideration of the value of related guarantee (deducting
estimated disposal expenses and etc.). Original actual rate is actual rate calculated when
recognizing the accounts receivable at first. Since there is tiny difference between
estimated future cash flow and present value of short-term accounts receivable, the
estimated future cash flow will not be discounted when recognizing related impairment loss.
Conduct impairment testing separately on accounts receivable with relatively higher
individual price at the end of the period. If there is objective evidence to indicate that
impairment exists, recognize impairment loss and provide for bad and doubtful debts in
accordance with the difference between its future cash flow and carrying amount.
Individual material receivables are the first five largest receivables.
For individual receivables not material, the Company categorizes them together with the
receivables tested unimpaired into groups using aging of the accounts as a similar risk
factor, and assigns a certain percentage of the end of the period balance of the receivable
groups (individual impairment test may be carried out) to determine the impairment loss
and provide for bad debts. Except the receivables provided impairment loss separately, the
Company set the provision rate in accordance with the actual loss percentage of the same
or similar credit risk group by aging divided in the previous years and the real circs as
follows:
Proportion（%） Proportion（%）
Aging
Telecommunication products
None
telecommunication
products
Within 2 years 0.00 0.00
2-3 years 10.00 20.00
3-4 years 30.00 50.00
4-5 years 40.00 80.00
5-6 years 80.00 100.00
Over 6 years 100.00 100.00
4.8 Inventory:
(1) Inventory classification: Raw materials, finished goods, turn-over materials, goods
in process, and materials for manufacturing consignment etc.
(2) Calculation of issued inventory
a. The inventory is calculated using weighted average method when issued.Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
26
b. Amortization of turn-over materials: For low cost and short lived articles, use
step-amortization method； For package materials, use lump-sum amortization method.
(3) System of stock inventories :Perpetual inventory system.
(4) Recording method of provision for inventory devaluation
At the end of the year, after overall check of the inventory, draw or adjust provision for
inventory devaluation according to the lower of the cost of inventory and net realizable
values of inventory. In normal operation process, net realizable values of commodities
inventories for direct sales including finished goods, commodities and materials for sales
are determined by the estimated selling prices minus the estimated selling expenses and
relevant taxes and fees; In normal operation process, net realizable values of materials that
need further processing are determined by the estimated selling prices of the finished
goods minus estimated cost to completion, estimated selling expenses and relevant taxes.
For the inventory held to implement sales contract or work contract, its net realizable value
is calculated on the basis of contract price. For the balance of inventory beyond the amount
of the sales contract, its net realizable value is calculated on the basis of general selling
price. When the factors that influence the decreased bookkeeping of inventory value have
disappeared, switch back from the provision for inventory devaluation amount that
previously appropriated and the amount that switched back is charged to profit and loss of
current period.
4.9 Long-term equity investment
(1) Initial Calculation
a. Long-term equity investment formed from enterprises merger In case the long-term
equity investment are made to obtain the equities of the enterprises under the same control
and the Company pays the cash, transfers the non-cash assets or bears the liabilities as
the consideration for the merger, the book value share on the merging date to obtain the
owners’ equities of the merging party will be deemed as the initial investment cost of
long-term equity investment. The difference between the initial investment cost of long-term
equity investment and paid cash, transferred non-cash assets and book values of liabilities
will be supplemented by the capital reserve; in case the capital reserve is not enough, the
remaining gains will be adjusted. All direct expenses related to the enterprise merger,
including the auditing expenses, evaluation expenses, legal service expense, etc, will be
accrued to the current profit and loss. In case the long-term equity investment are made to
obtain the equities of the merging enterprises which are not under the same control, the
consolidation cost determined according to ‘Accounting Standard for Business Enterprises
No. 20 – Business Combinations’ on the purchase date will be deemed as the initial
investment cost.
b. Other types of long-term equity investment
In case the long-term equity investment is made by cash payment, the actual payment
amount will be deemed as the initial investment cost. In case the long-term equity
investment is made by issuing the equity securities, the fair values of issued equity
securities will be deemed as the initial investment cost. For the long-term equity investment
made by the investors, the values agreed in the investment contracts or agreements
(deducting the cash dividends or profits that have been declared but have not been
dismissed) will be deemed as the initial investment cost, except that the contracts or
agreements provide that the values are not fair. In case the long-term equity investment is
made by exchanging the non-currency assets, and this exchange has the commercial
substance and the fair values of exchanged assets can be reliably calculated, the fair
values of assets surrendered will be deemed as the initial investment cost, unless there is
conclusive evidence that the fair values of assets received are more reliable; for exchange
of non-currency assets that do not satisfy the above conditions, the sum of book value of
assets surrendered and relevant taxes payable will be deemed as the initial investment
cost. In case the long-term equity investment is made by the mode of liability restructure,
the fair values of the obtained equities will be deemed as the initial investment cost.
(2) Judgment criteria of joint control and significant influence in the invested companies
If, in accordance with provisions in the contracts, the Company enjoys joint control over
certain economic activities only when taking part in significant financial and operationalNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
27
decisions with investors in need of share of control who unanimously agree, the Company
is deemed to enjoy joint control with other parties over the invested companies. If the
Company is authorized to take part in decision making with regard to the financial and
operational policies, but is unable to control or control jointly with other parties over the
invested company, the Company is deemed to be able to exercise significant influence over
the invested companies.
(3) Subsequent measurement and income recognition
When the Company is able to exercise significant influence or joint control, the
difference of cost of initial investment in excess of the proportion of the fair value of the net
identifiable assets in the invested companies is not adjusted against the initial cost of
long-term equity investment. The difference of cost of initial investment in short of the
proportion of the fair value of the net identifiable assets in the invested companies is
charged into the current profit and loss statement. . The Company’s long-term equity
investments in subsidiaries are accounted for by the cost method and adjusted according to
the equity method when preparing consolidated financial statements. For joint ventures,
proportional consolidation method is not applicable. When the Company has neither joint
control nor significant influence in the invested companies, there is no quotation available
on the active market, and the fair value of the investment cannot be reliably measured, the
long-term equity investment is accounted for under the cost method. When the Company
has joint control or significant influence over the invested companies, the long-term equity
investment is accounted for under the equity method. Investment income recognized under
the cost method is limited to the proportion of the accumulated profit of the invested
companies after the investment. Any excess of profit or cash dividend received over the
above amount is recognized as withdrawals of initial investments. Recognition of share of
losses of the invested companies under the equity method is treated in the following steps:
First, reduce the book value of the long-term equity investment. Second, when the book
value is insufficient to cover the share of losses, investment losses are recognized up to a
limit of book values of other long-term equity which form net investment in substance by
reducing the book value of long term receivables, etc. Finally, after all the above treatments,
if the Company is still responsible for any additional liabilities in accordance with the
provisions stipulated in the investment contracts or agreements, estimated liabilities are
recognized and charged into current investment loss according to the liabilities estimated. If
the invested company achieve profit in subsequent periods, the treatment is in the reversed
steps described above after deduction of any unrecognized investment losses, i.e., reduce
book value of estimated liabilities recognized, restore book values of other long-term equity
which form net investment in substance, and in long-term equity investment, and recognize
investment income at the same time. Treatment of other equity changes except for net
profit or loss in the invested companies: For other equity changes except for net profit or
loss in the invested companies, if the proportion of investments remain unchanged, the
Company calculates the proportion it shall enjoy or bear and adjust book value of long-term
equity investment, and increase or decrease capital reserves – other capital reserves at the
same time.
..
4.10 Classification and measurement of investment real estate
Investment real estate is defined as the real estate with the purpose to earn rentals or
capital appreciation or both, including rented land use rights, land use rights which are held
and prepared for transfer after appreciation and rented buildings. The Company adopts the
cost model to value investment real estate. For investment real estate for lease accounted
for under the cost model, the same depreciation policies as those of the Company’s fixed
assets are adopted. For land use right for lease, the same amortization policies as those of
the intangibles are adopted.
4.11Fixed assets
(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of
goods or services, for rental to others, or for administrative purpose, and have useful lives
more than one accounting year.Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
28
(2) Classification of fixed assets
The Company’s fixed assets are classified as buildings and constructions, machinery
equipment, transportation equipment and electronic and other equipment.
(3) Initial measurement of fixed assets
Fixed assets are recorded at the actual cost on acquisition.
The cos of fixed assets purchased includes purchase price, related tax, transportation
expenses, loading and uploading expenses, installment expenses and specialist service
expenses attributable to the assets that arise before the assets are completed and put into
use. Where payment for the purchase price of a fixed asset is deferred beyond normal
credit terms, such that the arrangement is in substance of a financing nature, the cost of
the fixed asset shall be determined based on the present value of the purchase price. The
cost of a self-constructed fixed asset comprises those expenditures necessarily incurred for
bringing the asset to working condition for its intended use.
For fixed assets formed through the debtor’s paying for debt in debt restructure,
recognize their recording value as fair value of the fixed assets, and record the difference
between the carrying amounts of debt restructure and the fixed assets used for paying debt
into profit and loss of the current period. In the circumstance that the non monetary assets
exchange has commercial nature and fair value of surrendered or received assets can be
measured reliably, recording value of received assets should be recognized as fair value of
surrendered assets unless there is clear evidence to indicate that fair value of received
assets is more reliable; for non monetary assets exchange which doesn’t meet the
requirement of premise mentioned above, cost of received assets should be recognized as
carrying amount and related tax expenses payable of surrendered assets and should not
be recognized as profit and loss. Recording value of fixed assets obtained by absorbing
and consolidated by enterprise under the same control should be recognized as carrying
amount of the consolidated party; recording value of fixed assets obtained by absorbing
and consolidated by enterprise under different control should be recognized as fair value.
Recording value of financing leasehold should be recognized as the lower of the fair value
of leasing assets and present value of lowest leasing payment when leasing occurs
whichever is lower.
(4) Depreciation method
Depreciation of fixed assets is provided for on a straight-line basis. The depreciation
rate is recognized in accordance with category, estimated useful life and estimated residual
rate of fixed assets. Fixed assets renovations expenses that meet the criteria of
capitalization are depreciated on an individual basis over the interval of two renovations or
remaining useful life of the fixed assets, whichever is shorter. Depreciation of financial
lease assets is provided for during the remaining useful life if the Company is certain to
obtain the ownership of the assets after the leasehold period is over; Depreciation of
financial lease assets is provided for during the leasehold period or remaining useful life
whichever is shorter if the Company is not certain to obtain the ownership of the assets
after the leasehold period is over. Depreciation of improvement on financial lease assets
that can be capitalized is provided for on a straight-line basis during the interval between
the two improvements, remaining leasehold period or remaining useful life whichever is
shortest. Estimated useful life and annual depreciation rate of fixed assets by categories
are as follows:
Category Estimated useful life (year) Estimated net residual rate
Buildings and
constructions 15－35 years 3%
Machinery
equipment 10－15 years 3%
Transportation
equipment 6－8 years 3%
Electronic and
other equipment 4－11 years 3%
(5)Provision for impairment of fixed assets
At the end of an accounting period, fixed asset have impaired, estimated reclaimable
value, recognized impairment if reclaimable value is lower than book value and recorded asNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
29
current profit and loss, and estimated provision for impairment of fixed asset.
The fixed assets should provision for impairment with fully book value as the following
circumstance: to predict, the fixed assets will not be used for a long time and don’t use in
the future to predict, and don’t have the recoverable value; for the reason of improving
technology, the fixed assets cannot be used; the fixed assets produce too many
disqualification products; for the reason of the damaged, the fixed assets don’t have any
usage value and recoverable value; the assets cannot bring any further economic benefits
to the Company for other reasons.
The provision for impairment of fixed asset as above can not write-off in future.
4.12 Construction in progress
The Company measures construction in progress according to detailed items, including:
construction project, installation project, pending installation of equipment and prepaid
expenses. Construction in progress is measured at actual cost. Construction in progress is
transferred to fixed assets when the project is substantially ready for its intended use.
Borrowing costs relating to construction in progress are measured according to borrowing
costs measurement method.
4.13 Intangible assets
(1) Calculation method of intangible assets
The intangible assets are recorded at actual cost upon acquisition. Cost of purchased
intangible assets comprises the purchase price, relevant taxes and surcharges and other
expenses directly attributable to bringing the assets to intended usage. For those whose
deferred paid price exceeds normal credit condition and that substantively have financing
character, the cost is confirmed on the basis of present value of purchasing price. The book
values of intangible assets to be obtained by the absorption merger from the enterprises
which are under the same control will be determined based on the book values of merging
party; the book values of intangible assets to be obtained by the absorption merger from
the enterprises which are not under the same control will be determined based on their fair
values.
(2) Usage life and amortization of intangible assets
(a) Estimation of useful life for intangible assets with finite useful life：
Item Estimated useful life Proof
Land use right 50 years Land use right certificate period
Software 5-10 years Update cycle
Exclusive technology 10 years Exclusive certificate period
At the end of each year, the Company will recheck the usage life of intangible assets with
the limited usage life and amortization method will be rechecked. According to the re-check,
the useful life and amortization method of the intangible assets at the end of the year are
not different from those estimated before.
(b) Amortization of intangible assets In case their usage life is limited, the intangible
assets are amortized evenly over the period in which they produce economic profit for the
Company; in case it is impossible to evaluate the usage life when the intangible assets
bring the benefits to enterprises, it will be deemed that the usage life of such intangible
assets is uncertain and amortization is not applicable.
(3) The confirmation and calculation of internal R&D expenses
The expenses in the developing stage of internal research and development programs can
be recognized as intangible assets when satisfying the following conditions:
(a) Completing the intangible assets to make them useful or to sell them is technically
feasible;
(b) Have intention of completing the intangible assets to use or sell;
(c) The manners in that the intangible assets produce economic interest can prove
that the products produced with the intangible assets have market or the intangible assets
themselves have market. For the intangible assets for internal use, verify their feasibility;
(d) Have essential technique, financial resources and other resources to support
completing the development of intangible assets, and have ability to use or sell the
intangible assets;Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
30
(e) The expenses that belong to development phase of the intangible assets can be
calculated reliably.
4.14Amortization method and period of long-term deferred expenses
Long-term deferred expenses are amortized evenly over the beneficial period. Among
which: Leasehold improvement for operation on leased property is amortized evenly over
the remaining leasing period or the remaining useful life whichever is shorter.
4.15 Impairment on other main assets except for inventories, investment properties
and financial assets
(1) Long-term equity investment
In case the cost method is used to calculate the long-term equity investments which are not
quoted in the active market or whose fair values cannot be reliably calculated, the
depreciation loss will be determined based on the difference between the book values and
present values determined by the discounting of future cash flow in line with the current
market return rate of similar financial assets. For other long-term equity investments, in
case the calculation results of receivable amounts indicate that the receivable amount of
this long-term equity investment is lower than their book values, the difference will be
confirmed as the asset depreciation losses. Once the depreciation loss of long-term equity
investment is confirmed, it will not be reversed.
(2)Long-term non-financial assets such as fixed assets, construction in progress,
intangible assets and goodwill etc
For long-term non-financial assets such as fixed assets, construction in progress,
intangible assets, etc, the Company assesses whether signs of possible impairment exist at
end of each year. Impairment tests are performed on goodwill arises from business
combinations and intangibles with uncertain useful life regardless of whether signs of
possible impairment exist. For assets with signs of impairment, recoverable amounts are
estimated. Recoverable amounts are determined by the higher of the fair value of the
assets after netting off costs of disposal and the current value of projected future cash flows
generated by the assets. When the recoverable amount of an asset is lower than the book
value of the asset, the book value of the asset is reduced to its recoverable amount. The
amount reduced is recognized as impairment loss on assets in the current profit and loss
statement, and provision for impairment loss on assets is recorded at the same time.
Future depreciation or amortization of assets is adjusted after recognition of impairment
loss so that the adjusted book value of the assets (less estimated residual value) is
amortized systematically over their remaining useful life. Impairment loss on long-term
non-financial assets such as fixed assets, construction in progress, intangibles, etc shall
not be reversed once recognized. When there are signs of possible impairment on assets,
the Company estimates the recoverable amount of the assets on an individual basis.
4.16 Capitalization of borrowing expenses
(1) Confirmation principle of capitalization of borrowing expenses
In case the borrowing expenses occurring in the Company may directly be attributable
to the construction and productions of assets complying with the capitalization conditions,
they will be capitalized and accrued to the relevant capital costs; other borrowing expenses
will be confirmed as the expenses based on the actual amount at the time of occurrence
and accrued to the current profit and loss. The assets complying with the capitalization
conditions mean the assets such as fixed assets, investment real estates and inventory, etc
that need a long time of construction and production activities before they are ready for use
or for sales. The borrowing expenses begin to be capitalized under the following
circumstances:
(a) The asset payment have been made which include the payment such as the paid
cashes, transferred non-currency assets or borne liabilities with the interests to construct or
produce the assets complying with the capitalization conditions;
(b) The borrowing expenses have occurred;
(c) The necessary construction or production activities to make the assets ready for
use or sales have been launched. In case during the construction or production period the
assets complying with the capitalization conditions are abnormally suspended and theNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
31
suspension period exceeds 3 months continuously, the capitalization of borrowing
expenses will also be suspended. The capitalization of borrowing expenses for the assets
that have been constructed or produced and are ready for use or sales will be stopped.
When parts of the purchased assets or assets whose production satisfies the capitalization
conditions are completed respectively and can be used individually, the capitalization of the
borrowing expenses of these parts will be stopped.
(2) Capitalization period of borrowing expenses
The capitalization period means the period from the moment that the borrowing expenses
start to be capitalized to the moment that the capitalization is stopped, which does not
include the period that the capitalization of borrowing expenses is suspended.
(3) Calculation method about capitalization amount of borrowing expenses
The interest expenses for special loans (after the deduction of interest income generated
by the unused loan capitals or the investment return obtained from the temporary
investments) and auxiliary expenses will be capitalized before the assets complying with
the capitalization conditions are ready for the expected use or sales. The interest amount of
general loans to be capitalized will be determined by multiplying the weighted average
amount of the asset payment by which the accumulated assets exceed the special loans
with the capitalization rate of general loans. The capitalization rate will be determined
based on the weighted average interest rate of general loans. In case the loans have the
discounts or premiums, the Company will adjust the interest amount in each period based
on the amortized discount and premium amount in each accounting period in accordance
with the actual interest rate method.
4.17.Recognition of Income
(1) Sale of goods:
Revenue from the sale of goods is recognized when the enterprise has transferred to the
buyer the significant risks and rewards of ownership of the goods; the enterprise retains
neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold; it is probable that the economic benefits
associated with the transaction will flow to the enterprise; and the relevant amount of
revenue and costs can be measured reliably.
(2)Rendering of service
In case on the preparation date of balance sheet the results about service transaction can
be reliably evaluated, the labor income will be confirmed by the completion percentage
method. The completed percentage of service transactions is determined by the
measurement of finished work. In case the service transaction results on the preparation
date of balance sheet cannot be reliably evaluated, they will be determined in the following
methods:
(a) In case the service costs that have occurred can be compensated, the service
income will be confirmed based on such service costs and the same amounts will be
settled as the service costs.
(b) In case the service costs that have occurred cannot be compensated, such
service costs will be accrued to the current profit and loss and will not be confirmed
as the service costs.
(3) Use right of transferred assets
In case the economic benefits related to the transaction will probably flow into the
enterprise and the income amounts can be reliably calculated, the Company will determine
the income amount about use right of transferred assets by the following means:
(a) The interest income amount will be calculated and determined based on the use
time of currency capital from the Company by others and actual interest rate.
(b) The income amount of use expenses will be calculated and determined subject
to the charging time and method agreed in the relevant contracts and agreements.
(c) Rental income from lease of properties
a. Lease contracts, agreements or other notice of settlement ratified by
leaseholder
b. Have executed liabilities as stipulated in the contract, issued rental invoices
and the proceeds have been or will be received with certaintyNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
32
c. Cost can be reliably measured
4.18 Government grants
Government grants shall be recognized at fair value on the conditions that the Company
can receive the grant and comply with the conditions attaching to the grant. For a
government grant related to income, if the grant is a compensation for related expenses or
losses to be incurred by the Company in subsequent period, the grant shall be recognized
as deferred income, and recognized in profit or loss over the periods in which the related
costs are recognized. A government grant related to an asset shall be recognized as
deferred income, and evenly amortized to profit or loss over the useful life of the related
asset.
4.19 Income Tax
Income Tax comprises current income tax and deferred income tax. In addition to the
corporate income tax adjustment of the merger goodwill, or directly charged to owners of
the rights and interests of the transactions or matters included in the owner's equity, income
tax is recorded as income tax expense are included in the current profit or loss.
The company form during the current income tax liabilities or assets in current and previous,
estimated in accordance with the provisions of the tax law calculating the expected to pay
and return amount. According to temporary differences between book value of assets and
liabilities in the balance sheet date and tax base, using deferred taxation accounting for
income tax. All taxable temporary differences are recognized as deferred income tax
liabilities, unless taxable temporary differences form in the following transactions:
Initial recognition of goodwill; Although the transaction is not a consolidation, but when the
transaction occurred impact neither accounting profit nor taxable income (or loss
deductions);
Taxable temporary differences of investment for subsidiaries, associated company and joint
ventures, the reversal of the temporary differences can control the time and the temporary
differences in the foreseeable future it is not likely to switch back.
The company recognizes deferred income tax assets arising from temporary differences
under the limite of taxable income that is likely to get and can be used to deduct temporary
differences, unless the deductible temporary differences produced in the following
transactions
Although the transaction is not a consolidation, but when the transaction occurred impact
neither accounting profit nor taxable income (or loss deductions);
The deducible taxable temporary differences of investment for subsidiaries, associated
company and joint ventures, deferred income tax assets recognized as temporary
differences in the foreseeable future is likely to switch back, and the future is likely to be
used to touch deduction deductible temporary differences of taxable income.
The balance sheet date, conclusive evidence that the coming period is likely to be sufficient
taxable income to deduct temporary differences, it should recognized deferred income tax
assets of identified previously.
The Company was the balance sheet date, the deferred income tax assets and deferred
income tax liabilities, according to provisions of the tax law, in accordance with the
expected recovery of the assets or liquidation of liabilities during the applicable tax rates
measurement, and reflect the balance sheet date is expected to recover assets or
liquidation of liabilities impact of the income tax form.
The book value of deferred tax assets must be reviewed at the banlance sheet date. If the
taxable income that arouses in the future is unlikely sufficient to deduct the benefit of the
deferred tax assets, the book value of the deferred tax assets should be write-down.If likely,
the amount that has been write-down should be write-off.
5. Changes in accounting policies and accounting estimates
None
6. Major TaxationNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
33
6.1 Turnover tax and others
(1) Tax rate
Item Type of tax Tax rate
Products sales income VAT 17%
Material transferred income VAT 17%
Leasing income Business Tax 5%
Installation and processiong
service income Business Tax 3%-5%
(2) City Maintenance & Construction Tax
The City Maintenance & Construction Tax is recognized and paid as 7% of the
turnover tax, and the foreign invested enterprise affiliated to the Company is exempt
for the City Maintenance & Construction Tax according to rules.
(3) Education Tax
The Education tax is recognized and paid as 3% of the turnover tax, and the foreign
invested enterprise affiliated to the Company is exempt for the Education
6.2 Income Tax
(1)The company and Nanjing Putian Intelligent Building Ltd. are the high-technique
enterprise, which is located in Jiangning national new and high technique development
area established with the approval by National Scientific Technique Commission. In
accordance with relevant rules, Nanjing Putian Intelligent Building Ltd is subject to taxation
at a rate of 15% of the standard Enterprise Income Tax rate.
(2) Putian Telecommunications (Hong Kong) Co., Ltd. was established in Hong Kong on
December 1,2000, and is subject to the Enterprise Income Tax at a rate of 17.5%
according to relevant rules in Hong Kong.
(3) Others are subject to the Enterprise Income Tax at a rate of 25%.
7. Business combination and consolidated financial statements
7.1 Business combination policy
(1) Business combination involving enterprises under common control
For this kind of business combination, the Company adopts equity method. Assets and
liabilities that are obtained by the absorbing party in a business combination shall be
measured at their carrying amounts, excluding the adjustment of using different accounting
policies, and not be recognized as goodwill. The difference between the carrying amount of
the net assets obtained and the carrying amount of the consideration paid for the
combination shall be adjusted to capital reserve. If the capital reserve is not sufficient to
absorb the difference, any excess shall be adjusted against retained earnings. The net
profit made by the party being absorbed before the combination shall be presented in the
consolidated income statement.
(2) Business combination not involving enterprises under common control
Where the cost of a business combination exceeds the acquirer’s interest in the fair value
of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill,
goodwill shall be measured at cost less accumulated impairment losses. Where the cost of
combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, after reassessment, the difference shall be recognized in profit or loss for the
current period. The operation results of the acquiree shall be consolidated since the
Company obtains the controlling rights, until the controlling rights are transferred from the
Company.
(3) Step-by-step realization of business combination
The Company realizes business combination through multiple step-by-step exchange
transactions; the combined cost is summation of each individual transaction’s cost
according to “Enterprise Accounting Standards No. 20 – Business combinations”.Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
34
7.2 Preparation of consolidated financial statements
(1) Consolidation scope
Consolidation scope includes: the Company holds invested enterprise’s more than half of
the right to vote directly, through subsidiary holds invested enterprise’s more than half of
the right to vote indirectly, or the Company holds less than half of the right to vote but can
control the invested enterprise.
(2) Preparation of consolidated financial statements
Parent company prepares consolidated financial statements on the basis of parent
company and subsidiaries’ financial statements and other datum, adjusts long-term equity
investment to subsidiaries according to equity method. The Company would offset all major
internal transactions and intercompany current accounts within the consolidation scope.
7.3Subsidiary company
Unit:
Name of subsidiary Business scope Registered
capital
Company’s
Investment
amount
Holdingp
roportion
(%)
Wheth
er
consol
idated
or not
Note
Nanjing Nanfang
Telecommunications
Company Limited
Manufacture and service of data
communication products 3,420.50 3,317.89 98.24 Yes ---
Nanjing Bada
Telecommunications Co.,
Ltd.
Manufacture of cassette communication
equipment 1,130.14 678.07 60.00 Yes ---
Nanjing Putian Inforamtion
Technology Company Ltd.
Communication equipment, net
equipment, electronic products, data
communication products, electronic
machinery and equipment products,
research, producing, sales, installation
and repair of fitted software,
telecommunication information net
project, buildings intelligentize project,
design of computer information system
project, construction and system
combination, consultancy; Maintenance
of communication equipment; property
management
1,400.00 1,386.00 99.98 Yes ---
Nanjing Putian Intelligent
Building Ltd.
Manufacture and sales of buildings
intelligentize product, construction and
system combination
1,200.00 496.21 41.35 Yes Note
Putian
Telecommunications (Hong
Kong) Co., Ltd.
Import & export transaction of
telecommunication product, research of
high-tech technique and technique
transit, technique trade
HK 200.00 HK 180.00 90.00 Yes ---
Nanjing Putian Network
Company Ltd.
Telecommunication; Research,
manufacture and repair of software and
net electronic equipment, sales of
electronic computer system combination
1,000.00 921.60 92.16 Yes ---
Nanjing Postel Wongshi
Telecommunications Co.,
Ltd.
R&D, manufacture of electronic product,
sales of self-produced product and offer
related service
9,019.00 8,966.69 99.42 Yes ---
Nanjing Putian Changle
Telecommunications
Equipment Co., Ltd.
Outside allocation equipment, computer
room network engine trunk equipment,
manufacture and sales of communication
electronic product
1,000.00 507.00 50.70 Yes ---
Nanjing Putian
Telecommunication
Technology Co., Ltd.
Allocation of station record and other
electronic appliance; electronic product,
R&D of communication product, sales
and technical service; Design,
construction, maintenance and system
combination of network
475.00 3,32.5 70 Yes
Notes 1: The registered capital of Nanjing Putian Intelligent Building Ltd. (hereafterNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
35
refer to as ‘Building company’) is CNY 12,000,000, and the equity proportion of the
company is 41.3505%., Building company is within the consolidated scope because the
Company’s voting authority among the Board of Directors is over a half and the company
has actual control over the building company
Notes 1: Nanjing Postel Wongzhi Telecommunications Co. Ltd. changed its name into
Nanjing Postel Wongshi Telecommunications Co. Ltd in February 2009.
7.4Changes in the scope of consolidation during the year
None.
7.5 Minority shareholders’ equity and interest
Name of the company
Proportion of
minority
shareholders’
equity（%）
Relationship
Minority
shareholders’
equity amount
Profit
distribution of
the minority
shareholders
Nanjing Bada Telecommunications Co., Ltd 40.00% Subsidiary 4,516,293.27 96,468.75
Nanjing Putian Telecommunication Technology Co., Ltd 30.00% Subsidiary
Nanjing Putian Intelligent Building Ltd. 58.65% Subsidiary 33,638,933.88 5,244,914.41
Putian Telecommunications (Hong Kong) Co., Ltd. 10.00% Subsidiary
Nanjing Putian Network Company Ltd. 7.84% Subsidiary 481,237.95 164,309.20
Nanjing Postel Wongshi Telecommunications Co., Ltd. 0.58% Subsidiary 223,483.59 -5,006.30
Nanjing Putian Changle Telecommunications Equipment
Co., Ltd. 49.30% Subsidiary 10,231,231.68 1,374,437.91
Nanjing Nanfang Telecommunications Company Limited 1.76% Subsidiary 1,148,853.48 48,140.02
Nanjing Putian Inforamtion Technology Company Ltd. 0.02% Subsidiary 802.67 -49.47
Total 50,240,836.52 6,923,214.52
8. Notes to the main items of financial statements
8.1 Monetary funds
As of 30 June, 2009 As of 31 December, 2008
Item Non-CNY
amount
Exchange
rate CNY amount Non-CNY
amount
Exchange
rate CNY amount
Cash on hand 285,579.70 14,579.60
CNY 285,579.70 1.0000 285,579.70 14,579.60 1.0000 14,579.60
Cash in bank 217,397,883.14 279,097,765.57
CNY 204,105,520.68 1.0000 204,105,520.68 266,860,891.73 1.0000 266,860,891.73
USD 494,962.89 6.8319 3,381,536.97 1,056,626.45 6.8346 7,221,619.14
EUR 305,279.42 9.6408 2,943,137.83 337,414.11 9.6590 3,259,082.89
GBP 5.08 11.3379 57.6 208.78 9.8798 2,062.70
HKD 7,904,288.21 0.8815 6,967,630.06 1,989,033.91 0.8819 1,754,109.11
Other
monetary
funds
40,848,243.95 41,035,305.42
CNY 40,364,041.30 1.0000 40,364,041.30 40,463,166.01 1.0000 40,463,166.01
USD 69,282.09 6.8319 473,328.31 82,082.09 6.8346 560,998.26
GBP 1,127.95 9.6408 10,874.34 1,127.67 9.8798 11,141.15
Total 258,531,706.79 320,147,650.59
a) Classification of other monetary funds：
Item Amount Notes
Security deposit for bank
acceptance bills 40,000,000.00 Deducted in the cash flow statement.Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
36
Other security deposit 848,243.95 Including the deposit of CNY 99,640.00 for contracts,
which has been deducted in the cash flow statements
Total 40,848,243.95
8.2 Notes receivables
Item As of 30 June, 2009 As of 31 December, 2008
Bank acceptance bills 3,223,543.00 6,349,430.00
Commercial acceptance bills
Total 3,223,543.00 6,349,430.00
No acceptance bills are impawned
8.3 Accounts receivable
a).Classification of accounts receivable in accordance with risk ：
As of 30 June, 2009 As of 31 December, 2008
Item
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairment
Amount of individual
with significant
amount and high
possibility of bad
debts
45,793,744.36 10.53 39,644,499.35 11.27
Amount of individual
with no significant
amount but high
possibility of bad
debts when
combined
14,674,287.88 3.38 6,872,539.74 3,503,042.59 1.00 3,503,042.59
Others 374,280,414.28 86.09 8,719,103.23 308,751,475.48 87.73 11,169,643.88
Total 434,748,446.52 100.00 15,591,642.97 351,899,017.42 100.00 14,672,686.47
b).Analysis of aging
As of 30 June, 2009 As of 31 December, 2008
Aging
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%) Provision for impairment
Within 1 year 384,262,917.17 88.39 5,778,968.23 298,530,076.51 84.83 1,854,415.35
1-2 years 23,692,179.47 5.45 1,093,571.51 26,542,044.16 7.54 2,431,077.15
2-3 years 12,087,485.49 2.78 1,208,748.55 13,536,703.05 3.85 2,539,469.03
3-4 years 6,911,505.38 1.59 2,073,451.61 5,855,565.70 1.67 1,756,669.71
4-5 years 3,929,093.24 0.90 1,571,637.30 2,684,427.39 0.76 2,290,894.74
over 5 years 3,865,265.77 0.89 3,865,265.77 4,750,200.61 1.35 3,800,160.49
Total 434,748,446.52 100.00 15,591,642.97 351,899,017.42 100.00 14,672,686.47
Accounts
receivable, net 419,156,803.55 337,226,330.95
c). Top 5 debtors of accounts receivable
No Name of the debtors Amount Aging
Proportion
of bad
debts
Reasons Proportion of
total amount
1 Shanghai Potevio Co., Ltd 13,341,700.00 Within 1 year 0.00%
Low possibility
of the bad
debts
3.07%
2 China Telecom Jiangsu
branch 12,471,665.90 Within 1 year 0.00%
Low possibility
of the bad
debts
2.87%Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
37
3 Beijing xinliwenhao science
technology Ltd Co. 7,368,111.00 Within 1 year 0.00%
Low possibility
of the bad
debts
1.69%
4 China Telecom Xian branch 6,874,480.00 Within 1 year 0.00%
Low possibility
of the bad
debts
1.58%
5 China Telecom, Jiangsu
network assets Branch 5,737,787.46 Within 1 year 0.00%
Low possibility
of the bad
debts
1.32%
Total 45,793,744.36 10.53%
d) No accounts receivable has offset this year.
e) There is no accounts receivable due from shareholder who has more than 5% (including
5 %) voting shares of the Company as of 31 December.
f) Accounts receivable of related parties accounts for 3.75% of the total amount.
8.4 Prepayment
a). Analysis of aging
Aging As of 30 June, 2009 Proportion
(%)
As of 31 December,
2008
Proportion
(%)
Within 1 year 46,481,513.90 93.79 45,067,169.94 93.60
1-2 years 3,079,198.62 6.21 3,076,948.62 6.39
2-3 years
4-5 years 2,250.00 0.01
Total 49,560,712.52 100.00 48,146,368.56 100.00
b) There is no prepayment due from shareholder who has more than 5% (including 5 %)
voting shares of the Company as of 30 June, 2009
c) Prepayment of related parties is zero as of 30 June, 2009.
d) The amount of prepayment over 1 year is 3,079,198.62 As of 30 June, 2009 which
includes the land use right fee of 3,000,000.00 for the project of industry park.
8.5Other receivables
1).Classification of other receivables in accordance with the risk
As of 30 June, 2009 As of 31 December, 2008
Item
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairment
Amount with significant
individual amount and
has been provided for
bad and doubtful debts
43,536,707.58 60.71 32,421,689.26 48,112,982.66 71.07 33,229,583.2
2
Amount of individual
with no significant
amount but high
possibility of bad debts
when combined
Others 28,179,074.13 39.29 1,860,288.17 19,580,448.32 28.93 1,052,394.22
Total 71,715,781.71 100.00 34,281,977.43 67,693,430.98 100.00 34,281,977.4
4
2).Analysis of aging for other receivables
As of 30 June, 2009 As of 31 December, 2008
Aging
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairment
Within 1 year 19,864,287.84 27.70 19,327,372.48 28.55
1-2 years 13,797,752.00 19.24 916,591.98 7,176,160.63 10.60
2-3 years 1,006.18 0.00 128,006.18 0.19 12,901.24Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
38
3-4 years 36,144,524.98 50.40 31,529,506.66 39,153,680.98 57.84 32,507,800.62
4-5 years 362,665.64 0.50 290,333.72 362,665.64 0.54 290,132.51
over 5 years 1,545,545.07 2.16 1,545,545.07 1,545,545.07 2.28 1,471,143.07
Total 71,715,781.71 100.00 34,281,977.43 67,693,430.98 100.00 34,281,977.44
Other
receivables, net 37,433,804.28 33,411,453.54
3). Top 5 debtors of other receivables
No. Company name
Amount Aging Proportion
of bad
debts
Reasons Proportion of total
amount
1 Beijing Picom
Telecommunications
Equipment Ltd
29,264,652.71 3-4 years 100.00% No possibility for
recover
40.81%
2 Shanghai linyan
Investment Consulting
Company
6,879,872.27 3-4 years 32.92% High possibility of
bad debts
9.59%
3 Shanghai Youtong
Networking Co.,Ltd
4,000,000.00 1－2years 0.00% Low possibility of
bad debts
5.58%
4 Shenzhen Fateli
Industry Co.,Ltd
2,500,000.00 1－2years 0.00% Low possibility of
bad debts
3.49%
5 Nanjing Jintong
CO.,Ltd
892,182.60 Over 5 years 100.00% No possibility for
recover
1.24%
Total 43,536,707.58 60.71%
b.The amount of other receivables for the top 5 debtors is 43,536,707.58 and equals to
60.71% of the total amount As of 30 June, 2009
2.There is no offset other receivables and no offset other receivables recover. this year.
c. There is no other receivables due from shareholder who has more than 5% (including
5 %) voting shares of the Company As of 30 June, 2009
d. Other receivables of related parties accounts for 36.64％of the total amount As of 30
June, 2009
e. Other receivables aging 3-4 years includes the amount of 29,264,652.71 from Beijing
Picom Telecommunications Equipment Ltd which is excluded from the consolidated scope
8.6 Inventories
a). Inventories and provision for inventory devaluation
As of 30 June, 2009 As of 31 December, 2008
Item
Amount Provision for
devaluation Amount Provision for devaluation
Raw materials 31,593,120.42 2,661,315.91 23,316,966.24 6,322,693.53
Goods process 44,411,706.06 - 38,633,788.53 10,404,064.58
Finished goods 146,967,772.99 - 135,278,464.30 3,482,904.39
Total 222,972,599.47 2,661,315.91 197,229,219.07 20,209,662.50
b).Provision for inventory devaluation
Item As of 31
December, 2008 Provided Returned Written off As of 30 June, 2009
Raw materials 6,322,693.53 3,661,377.62 2,661,315.91
Goods process 10,404,064.58 10,404,064.58
Finished goods 3,482,904.39 3,482,904.39
Total 20,209,662.50 17,548,346.59 2,661,315.91Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
39
8.7 Long-term equity investment
a).Classification of the long-term equity investment
Item Amount as of 30
June, 2009
Provision for
diminution in
value
Net amount, as of
30 June, 2009
Amount as of 31
December 2008
Provision for
diminution in
value
Net amount, as
of 31
December
2008
Investmen
t of joint
venture
26,899,470.97 26,899,470.97 26,317,441.14 26,317,441.14
Investmen
t of
affiliated
venture
189,732,179.49 189,732,179.49 189,157,833.38 189,157,833.38
Others 2,778,564.84 1,854,910.00 923,654.84 2,778,564.84 1,854,910.00 923,654.84
Total 219,410,215.30 1,854,910.00 217,555,305.30 218,253,839.36 1,854,910.00 216,398,929.36
b) .Information of the joint ventures and affiliated ventures
Name of
invested unit Registry Business
nature
Share
holding
percentag
e of the
Company
Voting right
proportion of the
Company
among invested
units
Total net
assets as of 30
June, 2009
Total sales
as of
1January
2009 to 30
June 2009
Net profit as
of 1January
2009 to 30
June 2009
Joint venture
Nanjing
Mennekes
Electric
Appliances Ltd.
Nanjing
Manufacture
and sales of
industrial plugs
and sockets
50 50 53,798,941.94 7,203,335.06 5,169,625.1
6
Affiliated
venture
Nanjing Putian
Datang
Information and
Electric
Company Ltd.
Nanjing
Manufacture
and sales of
telecommunica
tion products
40 40 5,756,902.50 4,882,303.84 34,867.93
Nanjing
Zhongyou
Telecommunica
tion Co., Ltd.
Nanjing
Manufacture
and sales of
telecommunica
tion products
30 30 1,229,715.70 16,200.00 -37,169.24
Nanjing Potevio
Telecommunica
tion Technology
Industry Park
Co., Ltd.
Nanjing
Land leasing
and
management
of the industry
park
49.64 49.64 338,183,528.6
5 4,752,856.67 37,381.36
Shanghai
Yulong Biotech
Ltd.
Shanghai
Development,
manufacture
and sales of
bio-tech
products
21 21 66,554,014.95 -- --
Qufu
YulongBio-Tech
Co., Ltd.
Qufu
Development,
manufacture
and sales of
bio-tech
products
21 21 24,808,842.95 -- --
C).Classification of the long-term equity investment
Name of
invested unit Initial amount
As of
31December
2008
Increase
and
decrease of
the
investment
cost
Increase and
decrease of the
equity
as of 30 June,
2009
Distribution
of
dividend in
cash the
current
period
Share
holding
percent
age of
the
CompaNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
40
ny (%)
Nanjing
Mennekes
Electric
Appliances Ltd.
15,037,508.00 24,817,441.14 2,082,029.83 26,899,470.97 50.00
Danyang
Putian Building
Digital Cable
Co., Ltd.
1,500,000.00 1,500,000.00 -1,500,000.0
0 0.00 50.00
Sub-total of
joint ventures 16,537,508.00 26,317,441.14 -1,500,000.0
0 2,082,029.83 26,899,470.97
Nanjing Putian
Datang
Information
and Electric
Company Ltd.
600,000.00 2,288,813.83 13,947.17 2,302,761.00 40.00
Nanjing
Zhongyou
Telecommunic
ation Co., Ltd.
300,000.00 209,349.37 159,565.34 368,914.71 30.00
Nanjing
Potevio
Telecommunic
ation
Technology
Industry Park
Co., Ltd.
167,548,141.29 167,473,470.02 400,833.60 167,874,303.6
2 49.64
Shanghai
Yulong Biotech
Ltd.
23,310,000.00 13,976,343.14 13,976,343.14 21.00
Qufu
YulongBio-Tec
h Co., Ltd.
--- 5,209,857.02 5,209,857.02 21.00
Sub-total of the
affiliated
ventures
191,758,141.29 189,157,833.38 574,346.11 189,732,179.4
9
Nanjing Yuhua
Galvanization
Factory
420,915.00 420,915.00 10.00
Hangzhou
HongyanElectri
c Appliance
Group
321,038.00 321,038.00 2.26
Nanjing Putian
Industry
Co.,Ltd
181,701.84 181,701.84 10.00
Beijing Picom
Telecommunic
ations
Equipment Ltd
1,854,910.00 1,854,910.00 51.00
Sub-total of
others 2,778,564.84 2,778,564.84
Total 208,295,649.29 218,253,839.36 -1,500,000.0
0 2,656,375.94 219,410,215.3
0
d). Provision for diminution in value of long-term equity investment.
Name of the
company
As of December
31, 2008 Increases Decreases As of June 30, 2009
Beijing Picom
Telecommunications
Equipment Ltd
1,854,910.00 1,854,910.00
8.8. Investment real estate
Item As of December Increases Decreases As of June 30,Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
41
31, 2008
Depreciation
and amortization
Real estate
for self-use or
transferred
from inventory
Disposal
Investment
real estate
transferred
into real
estate for
self-use
2009
Total original
value 10,032,416.92 10,032,416.92
Land use right
rented out 3,642,147.50 3,642,147.50
Constructions
rented out 6,390,269.42 6,390,269.42
Total depreciation
provided or
accumulated
amortization
2,756,523.23 122,546.28 2,879,069.51
Land use right
rented out 603,143.65 39,986.88 643,130.53
Constructions
rented out 2,153,379.58 82,559.40 2,235,938.98
Accumulated
provision for
impairment loss
on investment
real estate
1,842,418.00 1,842,418.00
Land use right
rented out
Constructions
rented out 1,842,418.00 1,842,418.00
Total book value
of investment real
estate
5,433,475.69 -122,546.28 5,310,929.41
Land use right
rented out 3,039,003.85 - 39,986.88 2,999,016.97
Constructions rented
out 2,394,471.84 -82,559.40 2,311,912.44
8.9 Fixed assets
Item As of December 31,
2008 Increases Decrease As of June 30,
2009
Total original cost of
fixed assets 195,448,942.64 3,796,483.10 650,048.80 198,595,376.94
Buildings and
constructions 63,165,347.42 1,186,223.36 0.00 64,351,570.78
Machinery equipment 64,727,126.56 441,998.40 0.00 65,169,124.96
Transportation
equipment 12,395,922.12 1,162,178.00 592,448.80 12,965,651.32
Electronic equipment 55,160,546.54 1,006,083.34 57,600.00 56,109,029.88
Total accumulated
depreciation 116,317,018.30 4,961,083.69 622,155.54 120,655,946.45
Buildings and
constructions 21,677,116.73 763,912.75 0.00 22,441,029.48
Machinery equipment 40,647,208.15 3,295,241.40 0.00 43,942,449.55
Transportation
equipment 8,515,303.86 496,059.19 579,485.12 8,431,877.93
Electronic equipment 45,477,389.56 405,870.34 42,670.42 45,840,589.48
Total provision for
impairment loss on 3,791,955.33 3,791,955.33Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
42
fixed assets
Buildings and
constructions 539,124.00 539,124.00
Machinery equipment 2,061,340.99 2,061,340.99
Transportation
equipment 774,121.79 774,121.79
Electronic equipment 417,368.55 417,368.55
Total book value of
fixed assets 75,339,969.01 2,452,555.16 3,645,049.01 74,147,475.16
Buildings and
constructions 40,949,106.69 1,186,223.36 763,912.75 41,371,417.30
Machinery equipment 22,018,577.42 2,853,243.00 19,165,334.42
Transportation
equipment 3,106,496.47 666,118.81 12,963.68 3,759,651.60
Electronic equipment 9,265,788.43 600,212.99 14,929.58 9,851,071.84
a).Fixed assets not in use
Item Original cost Accumulated
depreciation Provision of the Net book value
Plan when
to be
reused
Machinery
equipment 3,613,901.63 2,367,335.64 1,246,565.99
Electronic
equipment 1,431,119.40 833,617.18 597,502.22
Total 5,045,021.03 3,200,952.82 1,844,068.21
b). Fixed assets with no property right certificate
Item Original cost Accumulated
depreciation Net book value Reasons for no property right
certification
Buildings and
constructions 12,191,531.61 5,994,624.31 6,196,907.30 No certification of land use
right
Total 12,191,531.61 5,994,624.31 6,196,907.30
8.10 Intangible assets
Item As of December
31, 2008 Increases Decreases As of June 30,
2009
Amortization
period left
Total original cost
of intangible
assets 21,267,753.47 39,000.00 21,306,753.47
Land use right 8,250,892.87 8,250,892.87
Exclusive
-technology 5,775,000.00 5,775,000.00
Software 7,241,860.60 39,000.00 7,280,860.60
Total accumulated
amortization 11,330,134.63 564,048.24 11,894,182.87
Land use right 955,949.75 82,504.86 1,038,454.61
Exclusive
-technology 4,008,041.58 288,750.00 4,296,791.58
Software 6,366,143.30 192,793.38 6,558,936.68Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
43
Item As of December
31, 2008 Increases Decreases As of June 30,
2009
Amortization
period left
Total book value of
intangible assets 9,937,618.84 525,048.24 9,412,570.60
Land use right 7,294,943.12 82,504.86 7,212,438.26 8-48 years
Exclusive
-technology 1,766,958.42 288,750.00 1478208.42 3 years
Software 875,717.30 153,793.38 721,923.92 0-8 years
8.11 Short-term borrowings
Classification As of June 30, 2009 As of December 31, 2008
Mortgage borrowings 56,000,000.00 60,000,000.00
Guaranteed borrowings 265,000,000.00 270,000,000.00
Bank and commercial
acceptance bills 160,000,000.00 160,000,000.00
Total 481,000,000.00 490,000,000.00
1.The company pledged fixed deposit of 40 millions yuan to the Shanghai Pudong
Development Bank ,Nanjing Branch for the bank acceptance bills of 80 million yuan.
Security deposit for bank acceptance bills of 40 millions yuan to the Minsheng
Bank ,Nanjing Branch for the bank acceptance bills of 80 million yuan
2. The company borrows short-term loan of 16 million yuan from the Shanghai Pudong
Development Bank ,Nanjing Branch and the borrowing period is from 10 February 2009 to
10 February 2010.Two real estates with the fair value 28.01 million yuan and the book
value of real estate 17,579,975.80 yuan are mortgaged.
3. To borrow short-term loan of 40 million yuan from Guangdong Development Bank,
three real estates of the company’s affiliated venture Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd., with the fair value 78,715,000.00 yuan are mortgaged.
The borrowing period is from 8 April 2009 to 7 April 2010 and from 17 April 2009 to 16 April
2010.
4. The company guaranteed the borrowing of 18 million for Nanjing Putian Intelligent
Building Ltd. and the borrowing of 17 million for Nanjing Nanfang Telecommunications
Company Limited
5. The parent company China Potevio Company Limited guaranteed the borrowing of 30
million
6.The final controller China Putian Corporation Group guaranteed the borrowing of 200
million and guaranteed fixed deposit of 40 million yuan for the bank acceptance bills of 40
million yuan
8.12Notes payables
Item As of 30 June, 2009 As of 31 December, 2008
Bank acceptance bills
Commercial acceptance bills 3,757,986.40
Total 3,757,986.40
8.13 Accounts payable
Item As of June 30, 2009 As of December 31, 2008
Accounts payable 374,139,404.90 303,518,882.73
1. There is no accounts payable due from shareholder who has more than 5% (including
5 %) voting shares of the Company As of June 30, 2009
2. The amount of accounts payable of related parties amounts for 0.1% of the total As of
June 30, 2009
a). Top 5 of account payables
No Name of the company As of June 30, 2009 AgingNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
44
No Name of the company As of June 30, 2009 Aging
1 Jiangsu mechanical Import-export company of SainTY Group 37,240,423.23 Within 1 year
2 Hong’an Group 14,022,646.60 Within 1 year
3 Suzhou Hailong Data Cable CO.,LTD 7,586,169.24 Within 1 year
4 Jiangsu Dongqiang CO.,LTD 7,577,731.93 Within 1 year
5 Beidian network telecommunications CO.,LTD 3,936,420.00 Within 1 year
Total 70,363,391.00
8.14 Advances from customers
Item As of June 30, 2009 As of December 31, 2008
Advances from customers 11,488,307.65 15,375,739.80
1. There is no advances from customers due from shareholder who has more than 5%
(including 5 %) voting shares of the Company as of June 30, 2009
2. The amount of advances fromcustomers of related parties is zero
a).Top 5 creditors of advances to customers
No Name of the company As of June 30,
2009
Aging
1 Tianjin Hongyuan telecommunications CO.,LTD 644,574.98 Within 1 year
2 China people army 8690 548,548.06 Within 1 year
3 Gansu Jinxin science technology Company 391,434.00 Within 1 year
4 Guoyuan security Co.,Ltd 378,400.00 Within 1 year
5 Nanjing Futeng restate Co.,Ltd 349,299.00 Within 1 year
Total 2,312,256.04
8.15 Other payables
Item As of June 30, 2009 As of December 31, 2008
Other payables 39,165,002.42 36,696,588.02
1. There is no other payable due from shareholder who has more than 5% (including 5 %)
voting shares of the Company as of June 30, 2009
2. The amount of other payable of related parties is 20,201,527.28, which amounts for
51.58% of the total as of June 30, 2009. The creditor is Nanjing Putian Telecommunication
Technology Industry Park Co.,Ltd
8.16 Employee benefits payable
Item As of June 30, 2009 As of December 31,
2008
Salary, bonus allowance and subsidy 639,488.27 1,761,051.45
Welfare expenses for staff -
Social insurance fees 425,238.48
Housing fund 9,569,513.17 2,870,351.37
Staff union expenses and staff education
expenses 2,638,467.56 3,103,389.29
Non-monetary welfare
Compensation for cancellation of work
relationship
Housing subsidy 5,754,427.53Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
45
Among which: Shares paid in cash
Total 13,272,707.48 13,489,219.64
8.17 Tax payable
Item Legal tax rate As of June 30, 2009 As of December 31,
2008
VAT 17% -18,554,614.58 -7,326,416.57
Consumption tax - -
Business tax 3%-5% 161,031.00 184,742.24
City maintenance & construction tax 7% 84,125.28 356,829.83
Enterprise income tax 673,683.62 126,135.03
Individual income tax 465,696.80 346,749.35
Land VAT - -
Real estate tax - -
Stamp duty - 1,796.70
Education surcharge 3% 285,194.88 318,560.92
Embankment expenses 305.40 -5,180.30
Total -16,884,577.60 -5,996,782.80
8.18 Share capital
As of December 31, 2008 Increases(+) or decreases(-) in current year As of June 30, 2009
Item
Amount Proportion
％
Issuance
of new
shares
Gift
share
Shares
transferred
from public
reserve
fund
Other
s
Sub
total Amount Proportion
％
1．Unlisted
shares
115,000,000.00 53.49 115,000,000.00 53.49
（ 1 ）
Promotion
shares
115,000,000.00 53.49 115,000,000.00 53.49
Among
which:
State-holding
shares
Among
which:
State-owned
shares
State-owned
legal entity
shares
115,000,000.00 53.49 115,000,000.00 53.49
Domestic
legal entity
shares
Foreign legal
entity shares
Natural
person’s
shares
（ 2 ）
Recruitment
legal entity
shares
（3）Internal
staff shares
（ 4 ）
Preferred
shares or
ohersNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
46
Among
which:
Transferred
shares
Total of
unlisted
shares
115,000,000.00 53.49 115,000,000.00 53.49
2. Listed
shares
(1) CNY
ordinary
shares
(2)
Domestically
listed foreign
shares
100,000,000.00 46.51 100,000,000.00 46.51
(3) Overseas
listed foreign
shares
(4) Others
Total of listed
shares
100,000,000.00 46.51 100,000,000.00 46.51
Total 215000000.00 100.00 215000000.00 100.00
8.19 Capital reserves
Item As of December
31, 2008 Increases Decreases As of June 30,
2009
Share capital premium 140,491,909.80 140,491,909.80
Other capital reserves 42,974,045.20 42,974,045.20
Total 183,465,955.00 183,465,955.00
8.20 Surplus reserves
Item As of December 31,
2008 Increases Decreases As of June 30,
2009
Statutory surplus
reserves 589,559.77 589,559.77
Total 589,559.77 589,559.77
8.21 Undistributed profit
Item Amount
Adjusted undistributed profit at the beginning of period -70,126,611.10
Plus：Net profit of current period 5,298,699.21
Other transferred in
Minus：Extract for statutory surplus reserves
Extract for staff welfare fund
Extract for reserve fund
Extract for enterprise development fund
Profit return for investment
Dividends payable to preferred shares
Extract for discretionary surplus reserves
Dividends payable to ordinary shares
Dividends for ordinary shares transferred into capitals
Undistributed profit at the ending of period -64,827,911.89
8.22 Operating revenues and costsNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
47
a).Operating revenues
Item 2009.1-6 2008.1-6
Main operating revenues 654,187,992.21 492,658,884.27
Other operating revenues 1,280,345.83 40,524,104.24
Total 655,468,338.04 533,182,988.51
b)、Operating costs
Item 2009.1-6 2008.1-6
Main operating cost 556,986,653.17 406,225,688.45
Other operating cost 481,606.45 38,490,405.49
Total 557,468,259.62 444,716,093.94
c).Classification of the operating revenues and costs
(1) Classification by products
Item Main operating revenues Main operating cost Main operating profit 2009.1-6 2008.1-6 2009.1-6 2008.1-6 2009.1-6 2008.1-6
Communic
ation
products
654,187,992.21 462,868,776.18 556,986,653.17 381,577,444.65 97,201,339.04 81,291,331.53
Electronic
products 29,790,108.09 24,648,243.80 5,141,864.29
Others
Total 654,187,992.21 492,658,884.27 556,986,653.17 406,225,688.45 97,201,339.04 86,433,195.82
(2) Classification by markets
Areas M2a0in0 9op.1e-r6ating reven2ue0s0 8.1-6 20M0a9in.1 o-p6erating cos2t 008.1-6 2M0a0i9n. o1p-6erating pro2f0it 08.1-6
Domestic
market 651,364,223.89 488,430,866.73 554,493,868.85 402,379,372.93 96,870,355.04 86,051,493.80
Oversea
market 2,823,768.32 4,228,017.54 2,492,784.32 3,846,315.52 330,984.00 381,702.02
Total 654,187,992.21 492,658,884.27 556,986,653.17 406,225,688.45 97,201,339.04 86,433,195.82
d).The amount of sales to the top 5 customers is 170,357,420.00,which amounts
to 25.99% of the total operating revenues in the current period.
8.23 Taxes and surcharges on operations
Item 2009.1-6 2008.1-6
Business tax 581,816.16 872,630.85
City maintenance &
construction tax 347,708.51 660,378.57
Education surcharge 737,932.30 518,761.45
Others 0.00 0.00
Total 1,667,456.97 2,051,770.87
8.24 Financial expenses
Item 2009.1-6 2008.1-6
Interest expenses 11,855,436.45 15,383,690.57Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
48
Less: Interest income 2,254,349.37 1,900,409.28
Exchange loss -35,363.85 53,333.01
Others 457,410.65 153,753.36
Total 10,023,133.88 13,690,367.66
8.25 Impairment loss on assets
Item 2009.1-6 2008.1-6
Bad debt loss 1,504,826.48 -75,957.89
Impairment loss on inventory -1,716,920.74
Impairment loss on fixed assets
Provision for diminution in value
of long-term equity investment.
Total 1,504,826.48 -1,792,878.63
8.26 Investment income
Item 2009.1-6 2008.1-6
1、Financial instrument investment
income
2、Equity investment income 5,109,439.94 1,463,689.53
（1）Cost method valuation
recognition 2,453,064.00 252,013.02
（2）Equity method valuation
recognition 2,656,375.94 346,057.52
（3）Disposal investment income 865,618.99
Total 5,109,439.94 1,463,689.53
No significant restrictions on investment income.
8.27 Non-operating profit
Item 2009.1-6 2008.1-6
1、Total income from disposal of
non-current assets 58,295.30 15,600.00
Including: Income from disposal
of fixed assets 58,295.30 15,600.00
2、Income from debt restructure 4,500.00 -
3、Subsidy from government 93,410.32 262,500.00
4、Indemnity income - 27,985.00
5、Compensation from moving - -
6、Compensation income - -
7、Gain or loss from the
short-term investment cost
compared to the appropriate
realizable fair value of net
assets of the invested unit -
-
8、Others 182,391.38 52,527.81
Total 338,597.00 358,612.81
8.28 None-operating expensesNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
49
Item 2009.1-6 2008.1-6
1．Total loss for disposal of
non-current assets 4,538.04 78,778.33
Including: Loss for disposal
of fixed assets 4,538.04 78,778.33
2．Loss from debt restructure 180,412.50 3,623.32
3．Beneficent donation - -
4. Loss for inventory
shortage - -
5. Fine expenses 677.64 21,481.33
6. Default penalty expenses - -
7.Various fund expenses 90,019.63 60,089.27
8. Others 26,535.51 8,529.11
Total 302,183.32 172,501.36
8.29 Income tax expenses
Item 2009.1-6 2008.1-6
Income tax expenses of current year 2,902,576.40 2,878,249.14
Deferred income tax expenses
Total 2,902,576.40 2,878,249.14
8.30 Government subsidies
Item 2009.1-6 2008.1-6
Drawback of VAT 93,410.32 262,500.00
Total 93,410.32 262,500.00
The subsidiary Nanjing Telecommunication Factory ,seven branch has the VAT preferential
policies
8.31 Notes to cash flow statement
a).Other cash receipts related to operating activities
Item 2009.1-6 2008.1-6
Other cash receipts related to operating
activities 3,781,155.14 8,456,266.99
Including: Repayment of temporary payment 881,127.68 6,555,857.71
Interest income 2,254,349.37 1,900,409.28
Insurance indemnity income 182,391.38
Others 463,286.71
b). Other cash payment related to operating activities
Item 2009.1-6 2008.1-6
Other cash payment related to operating
activities 43,084,871.71 23,367,396.92
Including: Temporary payment 25,554,626.64 7,800,000.00
Various expenses 17,413,012.29 14,542,028.50
Others 117,232.78 1,025,368.42
c)、Other cash payment related to financing activities
Item 2009.1-6 2008.1-6Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
50
Repayment of borrowing from China Putian Corporation
Repayment of borrowing from Putian Technology Park 20,000,000.00
Total 20,000,000.00
d)、Supplementary information
Item 2009.1-6 2008.1-6
Net profit 12,221,913.73 5,093,379.88
Plus: Provision for asset impairment 1,504,826.48 -1,792,878.63
Depreciation of fixed assets, depletion of oil and natural
gas assets
and depreciation of bearer biological assets 4,961,083.69
5,247,397.18
Amortization of intangible assets 564,048.24 511,106.27
Amortization of long-term deferred expenses 3,254.39
Loss from disposals of fixed assets, intangible assets
and other
long-term assets (deduct: increase) -53,757.26
63,178.33
Loss on disposal of fixed assets (deduct: increase)
Loss from changes in fair values (deduct: increase)
Financial expenses (deduct: increase) 11,855,436.45 15,087,404.67
Investment loss (deduct: increase) -5,109,439.94 -1,463,689.53
Decreases in deferred income tax assets (deduct:
increase)
Increases in deferred income tax liabilities (deduct:
decrease)
Decreases in inventories (deduct: increase) -25,743,380.40 -1,306,506.81
Decreases in operating receivables (deduct: increase) -107,883,574.39 -58,400,424.47
Increases in operating payables (deduct: decrease) 69,023,103.86 -17,673,097.98
Others
Net cash flows from operating activities -38,659,739.54 -54,630,876.70
9.Notes to the main items of accounting statement of parent company
9.1 Accounts receivable
a).Classification of accounts receivable in accordance with risk ：
As of 30Juner, 2009 As of 31 December, 2008
Item
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairment
Amount of individual
with significant
amount and high
possibility of bad
debts
44,124,905.60 13.50 35,546,286.43 14.07
Amount of individual
with no significant
amount but high
possibility of bad
debts when
combined
12,466,881.68 3.81 4,280,525.95 3,503,042.59 1.38 3,503,042.59
Others 270,264,805.68 82.69 4,468,608.44 213,639,142.91 84.55 4,308,025.30Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
51
Total 326,856,592.96 100.00 8,749,134.39 252,688,471.93 100.00 7,811,067.89
b).Analysis of aging
As of 30Juner, 2009 As of 31 December, 2008
Aging
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairment
Within 1 year 298,258,020.28 91.25 4,280,525.95 221,441,927.32 87.63 249,893.79
1-2 years 13,250,393.91 4.05 14,417,584.73 5.71 2,984,808.50
2-3 years 9,273,913.35 2.84
927,391.34 9,273,913.35 3.67 927,391.34
3-4 years 3,421,549.29 1.05
1,026,464.79 3,421,549.29 1.35 1,026,464.79
4-5 years 229,939.69 0.07
91,975.88 1,710,720.80 0.68 684,288.32
over 5 years 2,422,776.44 0.74
2,422,776.44 2,422,776.44 0.96 1,938,221.15
Total 326,856,592.96 100.00 8,749,134.39 252,688,471.93 100.00 7,811,067.89
Accounts
receivable,
net
318,107,458.57 244,877,404.04
c). Top 5 debtors of accounts receivable
No Name of the debtors Amount Aging
Proportion
of bad
debts
Reasons Proportion of
total amount
1 Shanghai Potevio
Co., Ltd 13,341,700.00 Within1year 0.00%
Low
possibility of
the bad debts
4.08%
2 Jiangsu Telecom
Nanjing branch 12,471,665.90 Within1year 0.00%
Low
possibility of
the bad debts
3.82%
3 China Telecom Xian
branch 6,874,480.00 Within1year 0.00%
Low
possibility of
the bad debts
2.10%
4
China
Telecom ,Jiangsu
network sset Branch
5,737,787.46 Within1year 0.00%
Low
possibility of
the bad debts
1.76%
5 J China Telecom
Nanjing branch 5,699,272.24 Within1year 0.00%
Low
possibility of
the bad debts
1.74%
Total 44,124,905.60 13.50%
1.The amount of Accounts receivable for the top 5 debtors is 44,124,905.60 and equals
to 13.50% of the total amount as of 30Juner, 2009
2. There is no Accounts receivable due from shareholders who has more than 5%
(including 5 %) voting shares of the Company as of 30Juner, 2009
3.. Accounts receivables of related parties accounts for 4.52％of the total amount as of
30Juner, 2009
4.The amount of offset accounts receivable is zero
9.2 Other receivables
a).Classification of other receivables in accordance with the risk:
As of 30Juner, 2009 As of 31 December, 2008
Item
Amount Proportion
(%)
Provision for
impairment Amount Proportion
(%)
Provision for
impairmentNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
52
Amount of
individual with
significant amount
and high
possibility of bad
debts
57,073,281.53 57.08 45,958,263.21 59,514,437.53 75.16 46,766,157.17
Amount of
individual with no
significant amount
but high
possibility of bad
debts when
combined
Others 42,915,957.57 42.92 2,462,137.05 19,666,624.23 24.84 1,654,243.09
Total 99,989,239.10 100.00 48,420,400.26 79,181,061.76 100.00 48,420,400.26
b).Analysis of aging
As of 30Juner, 2009 As of 31 December, 2008
Item
Amount Proportion
(%)
Provision for
impairment Amount
Proportio
n
(%)
Provision for
impairment
Within 1 year 40,572,660.50 40.58 18,941,274.16 23.92
1-2 years 7,297,752.00 7.30 916,591.98 5,552,805.00 7.01 -
2-3 years 127,000.00 0.16 12,700.00
3-4 years 50,573,281.53 50.58 45,958,263.21 53,014,437.53 66.96 46,936,557.19
4-5 years -
over 5 years 1,545,545.07 1.54 1,545,545.07 1,545,545.07 1.95 1,471,143.07
Total 99,989,239.10 100.00 48,420,400.26 79,181,061.76 100.00 48,420,400.26
Other
receivables,
net
51,568,838.84 30,760,661.50
c). Top 5 debtors of other receivables
No. Company name Amount Aging
Proportion
of bad
debts
Reasons
Proportion
of total
amount
1
Beijing Picom
Telecommunications
Equipment Ltd
29,264,652.71 3-4 years 100.00% No possibility for
recover 39.40%
2 Shanghai linyan Investment
Consulting Company 14,428,756.55 3-4 years 100.00% No possibility for
recover 19.42%
3 Putian Telecommunications
(Hong Kong) Co., Ltd. 6,879,872.27 3-4 years 32.92% High possibility
of bad debts 9.26%
4 Shanghai Youtong
Networking Co.,Ltd 4,000,000.00 1－2 years 0.00% Low possibility of
bad debts 5.38%
5 Shenzhen Fateli Industry
Co.,Ltd 2,500,000.00 1－2 years 0.00% Low possibility of
bad debts 3.37%
Total 57,073,281.53 76.83%
1. There is no offset other receivables and no regain of the offset other receivables
2. There is no other receivables due from shareholders who has more than 5% (including
5 %) voting shares of the Company as of 30Juner, 2009
3.Other receivables of related parties accounts for 41.20％of the total amount as of
30Juner, 2009Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
53
9.3 Long-term equity investment
Item Amount as of 30
June, 2009
Provision for
diminution in
value
Net amount, as
of 30 June, 2009
Amount as of 31
December 2008
Provision for
diminution in
value
Net amount, as
of 31 December
2008
Investment
of
subsidiary
113,779,686.57 1,854,910.00 111,924,776.57 113,779,686.57 1,854,910.00 111,924,776.57
Investment
of joint
venture
26,899,470.97 26,899,470.97 24,817,441.14 24,817,441.14
Investment
of affiliated
venture
189,732,179.49 189,732,179.49 189,157,833.38 189,157,833.38
Others 741,953.00 741,953.00 741,953.00 741,953.00
Total 331,153,290.03 1,854,910.00 329,298,380.03 328,496,914.09 1,854,910.00 326,642,004.09
a) .Information of the joint ventures and affiliated ventures
Name of invested unit Registry Business
nature
Share
holding
percent
age of
the
Compa
ny
Voting right
proportion of
the
Company
among
invested
units
Total net
assets as of
30 June, 2009
Total sales as
of 1January
2009 to 30
June 2009
Net profit as of
1January 2009
to 30 June
2009
Joint venture
Nanjing Mennekes
Electric Appliances Ltd.
Nanjing Manufacture
and sales of
industrial plugs
and sockets
50.00 50.00 53,798,941.94 57,203,335.06 5,169,625.16
Affiliated venture
Nanjing Putian Datang
Information and
Electric Company Ltd.
Nanjing Manufacture
and sales of
telecommunica
tion products
40.00 40.00 5,756,902.50 4,882,303
.84
34,867.93
Nanjing Zhongyou
Telecommunication
Co., Ltd.
Nanjing Manufacture
and sales of
telecommunica
tion products
30.00 30.00 1,229,715.70 16,200.00 -37,169.24
Nanjing Potevio
Telecommunication
Technology Industry
Park Co., Ltd.
Nanjing Land leasing
and
management of
the industry
park
49.64 49.64 4,752,856
.67
37,381.36 4,752,856.67
Shanghai Yulong
Biotech Ltd.
Shangha
i
Development,
manufacture
and sales of
bio-tech
products
21.00 21.00 66,554,014.95 -- --
Qufu YulongBio-Tech
Co., Ltd.
Qufu Development,
manufacture
and sales of
bio-tech
products
21.00 21.00 24,808,842.95 -- --
b).Classification of the long-term equity investment
Name of invested unit Original cost As of 31
December,2008
Increase and
decrease of
investment
cost
Increase
and
decrease of
the equity
As of 30
June,2009
Distribution of
dividend in
cash of
current year
Share
holding
percenta
ge of the
Compan
y (%)
Nanjing Nanfang
Telecommunications 33,175,148.00 33,175,148.00 33,175,148.00 98.24Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
54
Company Limited
Nanjing Bada
TelecommunicationsC
o.,
Ltd.
5,610,000.00 5,610,000.00 5,610,000.00 60
Nanjing Putian
Inforamtion
Technology
Company Ltd.
13,860,000.00 13,860,000.00 13,860,000.00 99.98
Nanjing Putian
Intelligent Building Ltd 3,320,003.46 3,320,003.45 3,320,003.45 7,397,064.00 41.35
Putian
Telecommunications
(Hong Kong)
Co., Ltd.
1,910,520.00 1,910,520.00 1,910,520.00 90
Beijing Picom
Telecommunications
Equipment Ltd.
9,146,455.12 9,146,455.12 9,146,455.12 92.16
Nanjing Postel
Wongzhi
Telecommunications
Co., Ltd.
40,997,683.00 40,997,683.00 40,997,683.00 99.42
Nanjing Putian
Changle
Telecommunications
Equipment Co., Ltd
2,610,457.00 2,610,457.00 2,610,457.00 50.7
Beijing Picom
Telecommunications
Equipment Ltd
1,854,910.00 1,854,910.00 1,854,910.00 51
Nanjing Hongyan
Electronic Appliance
Company
10,114,581.00 0.00
Nanjing Putian
Telecommunication
Technology Co., Ltd
1,294,510.00 1,294,510.00 70
Sub-total of cost
accounting 122,599,757.58 113,779,686.57 113,779,686.57 7,397,064.00
Joint venture
Nanjing Mennekes
Electric Appliances
Ltd.
15,037,508.00 24,817,441.14 2,082,029.8
3 26,899,470.97 50
Sub-total of joint
venture 15,037,508.00 24,817,441.14 2,082,029.8
3 26,899,470.97
Nanjing Putian Datang
Information and
Electric Company Ltd.
600,000.00
2,288,813.83 13,947.17 2,302,761.00
40
Nanjing Zhongyou
Telecommunication
Co., Ltd
300,000.00 209,349.37 159,565.34 368,914.71 30
Nanjing Potevio
Telecommunication
Technology Industry
Park Co., Ltd.
167,548,141.29 167,473,470.02 400,833.60 167,874,303.62 49.64
Shanghai Yulong
Biotech Ltd. 23,310,000.00 13,976,343.13 13,976,343.13
21
Qufu YulongBio-Tech
Co., Ltd. 5,209,857.03 5,209,857.03 21
Sub-total of affiliated
company 191,758,141.29 189,157,833.38 574,346.11 189,732,179.49
Nanjing Yuhua
Galvanization Factory 420,915.00 420,915.00 10
Hangzhou
HongyanElectric
Appliance Group
321,038.00 321,038.00 2.26
Subtotal of others 741,953.00 741,953.00
Total 328,496,914.09 2,656,375.9
4 331,153,290.03 7,397,064.00
c). Provision for diminution in value of long-term equity investment.
Name of the company As of December 31,
2008 Increases Decreases As of June 30, 2009
Beijing Picom
Telecommunications
Equipment Ltd
1,854,910.00
1,854,910.00Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
55
9.4 Operating revenues and operating costs
a).Operating revenues
Item 2009.1-6 2008.1-6
Main operating revenues 448,027,347.71 234,537,095.79
Other operating revenues 28,163,584.36 38,960,028.55
Total 476,190,932.07 273,497,124.34
b).Operating costs
Item 2009.1-6 2008.1-6
Main operating cost 401,827,150.88 197,219,708.89
Other operating cost 28,004,925.59 37,187,525.36
Total 429,832,076.47 234,407,234.25
c).：Classification of operating revenues and operating costs
（1）Classification by products
Item Main operating revenues Main operating cost Main operating profit
2009.1-6 2008.1-6 2009.1-6 2008.1-6 2009.1-6 2008.1-6
Communicat
ion products 448,027,347.71 234,537,095.79 401,827,150.88 197,219,708.89 46,200,196.83 37,317,386.90
Total 448,027,347.71 234,537,095.79 401,827,150.88 197,219,708.89 46,200,196.83 37,317,386.90
（2）Classification by areas
Areas Main operating revenues Main operating cost Main operating profit
2009.1-6 2008.1-6 2009.1-6 2008.1-6 2009.1-6 2008.1-6
Domestic
market 445,203,579.39
230,309,078.25 399,334,366.56
193,373,393.37 45,869,212.83
36,935,684.88
Oversea
market 2,823,768.32
4,228,017.54 2,492,784.32
3,846,315.52 330,984.00
381,702.02
Total 448,027,347.71 234,537,095.79 401,827,150.88 197,219,708.89 46,200,196.83
37,317,386.90
d): The amount of sales of the top 5 customers is 187,319,740.14 and equals to
39.34% of the total amount of the current period.
9.5 Investment income
Item 2009.1-6 2008.1-6
1、Financial instrument
investment income --- ---
2、Equity investment income 10,053,439.94 2,245,140.83
（1）Cost method valuation
recognition 7,397,064.00 1,033,464.32
（2）Equity method valuation
recognition 2,656,375.94 346,057.52
3）Disposal investment income 865,618.99
Total 10,053,439.94 2,245,140.83
No significant restrictions on investment income.
10.Related parties and related parties transaction
10.1 Parent company and final controllerNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
56
Name of
enterprise
Registry Main business Relationship Business
nature
Representative
China Potevio
Company
Limited
No. 2 Tudi
2 Road,
Zhongguan
village
economy
zone,
Haidian
district,
Beijing
Communication system and terminal,
Telecommunication equipment and terminal,
broadcast TV system and terminal, computer
and software, system combination,
photoelectric cable; development, produce,
sales and service of post specific equipment
and related component; domestic and
overseas project and bidding agency; project
construction contract, project program, design
and supervise; manufacture, sales and repair
of electronic machinery, machinery
equipment, appliance and accessory; industry
investment; technique transmit, consultancy
service; import & export business
Parent
company
State-owned Xing Wei
China Putian
Corporation
No. 2
Jiangtai
Road,
Chaoyang
district,
Beijing
Manufacture and sales of
communication equipment
Controlling
shareholders
of parent
company State-owned
Xing Wei
a)The holding percentage and voting proportion of the parent company is 53.49% and
53.49% respectively. The final controller of the Company is China Putian Corporation.
b) Registered capital and its changes of related parties with controlling relationship(Unit:
0’000)
Name of the companies As of 31 December,
2008 Increase Decrease As of 30 June, 2009
China Potevio Company
Limited 190,000.00 190,000.00
China Putian Corporation 308,694.00 308,694.00
Nanjing Nanfang
Telecommunications
Company Limited
3,420.50 3,420.50
Nanjing Bada
TelecommunicationsCo.,
Ltd.
1,130.14 1,130.14
Nanjing Putian
Inforamtion Technology
Company Ltd.
1,400.00 1,400.00
Nanjing Putian Intelligent
Building Ltd 1,200.00 1,200.00
Putian
Telecommunications
(Hong Kong)
Co., Ltd.
HK 200.00 HK 200.00
Beijing Picom
Telecommunications
Equipment Ltd.
USD 50.00 USD 50.00
Nanjing Postel WongShi
Telecommunications Co.,
Ltd.
9,019.00 9,019.00
Nanjing Putian Changle
Telecommunications
Equipment Co., Ltd
1,000.00 1,000.00
Nanjing Putian Network
Company Ltd 1,000.00 1,000.00
Nanjing Putian
Telecommunication
Technology Co., Ltd
475.00 475.00
c) Equity and its changes of related parties with controlling relationship (Unit: 0’000)Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
57
As of 31 December, 2008 Increase Decrease As of 30 June, 2009
Name of companies
Amount Proportion
（％） Amount Proporti
on（％） Amount Proportio
n（％） Amount Proportion
（％）
China Potevio Company
Limited 11,500.00 53.49 11,500.00 53.49
Nanjing Nanfang
Telecommunications
Company Limited
3,359.60 98.24 3,359.60 98.24
Nanjing Bada
TelecommunicationsCo.,
Ltd.
678.00 60.00 678.00 60.00
Nanjing Putian
Inforamtion Technology
Company Ltd.
1,400.00
99.98
1,400.00 99.98
Nanjing Putian Intelligent
Building Ltd 496.20 41.35 496.20 41.35
Putian
Telecommunications
(Hong Kong)
Co., Ltd.
HK 180.00 90.00 HK 180.00 90.00
Nanjing Postel WangShi
Telecommunications Co.,
Ltd.
8,966.69 99.42 8,966.69 99.42
Nanjing Putian Changle
Telecommunications
Equipment Co., Ltd
507.00 50.70 507.00 50.70
Nanjing Putian Network
Company Ltd 921.60 92.16 921.60 92.16
Nanjing Putian
Telecommunication
Technology Co., Ltd
332.50 70.00 332.50 70.00
d).Related parties with no controlling relationship
Name of the company Relationship
Nanjing Mennekes Electric Appliances Ltd. Joint venture
Nanjing Putian Datang Information Electronics Co., Ltd Affiliated venture
Nanjing Putian Zhongyou Telecommunication Co., Ltd. Affiliated venture
Nanjing Potevio Telecommunication Technology Industry Park
Co., Ltd.
Affiliated venture
Shanghai Yulong Biotech Ltd. Affiliated venture
Qufu YulongBio-Tech Co., Ltd. Affiliated venture
Nanjing Putian Hongyan Electric Appliance Company Controlled by the same company
Shenzhen Potevio Lingyun Electronics Co. Ltd Controlled by the same final controller
Shanghai Potevio Co., Ltd. Controlled by the same company
Beijing Great Dragon Information Technology Co., Ltd. Controlled by the same company
ChengDu PuTian Telecommunications Cable CO., LTD Controlled by the same company
Potevio Institute of Technology Co.，Ltd Controlled by the same company
10.2 Related parties transaction
a) sales of goods
The company produces and sells the telecommunication products to the related
parties at the market price. The amount of sales to the related parties is listed as
follows (Unit: 0’000)
2009.1-6 2008.1-6
Name of the related party
Amount Proportion(%) Amount Proportion(%)
Nanjing Putian Datang Information
Electronics Co., Ltd 1.57
Shenzhen Potevio Lingyun
Electronics Co. Ltd
Beijing Great Dragon Information
Technology Co., Ltd. 1.27Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
58
China Potevio Company Limited 1,055.96 1.61
Nanjing Putian Zhongyou
Telecommunication Co., Ltd. 16.73 0.03 63.08 0.12
ChengDu PuTian
Telecommunications Cable CO.,
LTD
133.53 0.20 119.37 0.22
Potevio Institute of Technology
Co.，Ltd. 4.87 0.01
Shanghai Potevio Co., Ltd.
Nanjing Putian Hongyan Electric
Appliance Company 0.66 0.00
Total 1,213.93 1.85 183.11 0.34
b) Purchase of goods
The company purchases the goods at the market price from the related parties. The
amount of purchase from the related parties is listed as follows
2009.1-6 2008.1-6
Name of the related party
Amount Proportion(%) Amount Proportion(%)
Nanjing Putian Datang Information
Electronics Co., Ltd 147.20 0.25
Nanjing Putian Hongyan Electric
Appliance Company 4.21 0.01 14.35 0.06
Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd.
Nanjing Putian Zhongyou
Telecommunication Co., Ltd.
Chengdu PuTian Telecommunications
Cable CO., Ltd 74.88 0.34
Total 151.41 0.26 89.23 0.40
c) The company leased the land and houses of Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd. as offices and plant. The lese fee recorded into the
reporting period was 3.8 million Yuan.
10.3 Payables and receivables of related parties
Item Name of the related parties As of 30 June, 2009 As of 31 December, 2008
Amount Proportion(%) Amount Proportion(%)
Accounts
Receivable
Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd.
5.53 0.02
Accounts
Receivable
Shenzhen Potevio Lingyun Electronics Co.
Ltd
1.42 0.09 1.42 0
Accounts
Receivable
Shanghai Potevio Co., Ltd. 1,334.17 81.85 1,334.17 3.79
Accounts
Receivable
Nanjing Putian Zhongyou Telecommunication
Co., Ltd.
90.56 5.56 115.81 0.33
Accounts
Receivable
China Putian Corporation 0.36 0.02
Prepayment Nanjing Putian Datang Information Electronics
Co., Ltd
172.22 3.58
Other
receivables
Nanjing Putian Datang Information Electronics
Co., Ltd
45.44 1.67 34.76 0.53
Other
receivables
Beijing Picom Telecommunications Equipment
Co., Ltd
2,676.46 98.33 2,927.08 44.65
Payables Nanjing Putian Hongyan Electric Appliance
Company
4.72 12.62 44.36 0.15
Payables Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd.
32.68 87.38 19.61 0.06Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
59
Advances
from
customers
China Putian Corporation 3.46 0.22
Other
payables
Nanjing Putian Hongyan Electric Appliance
Company
0.05 0
Other
payables
Nanjing Potevio Telecommunication
Technology Industry Park Co., Ltd.
2,020.15 99.99 2,013.95 54.88
Accounts
Receivable
Potevio Institute of Technology Co.，Ltd 0.56 0.03
Accounts
Receivable
Chengdu PuTian Telecommunications Cable
CO., LTD
54.69 3.36
Accounts
Receivable
China Potevio Company Limited 146.4 8.98
Other
payables
Shanghai Vision Technology Co., Ltd 0.18 0.01
Accounts
Receivable
Nanjing Putian Datang Information Electronics
Co., Ltd
1.84 0.11
10.4 Other related parties transactions.
1.The parent company China Potevio Company Limited guaranteed the short-term
borrowing of 30 million for the company. The final controller China Putian Corporation
Group guaranteed the borrowing of 200 million and the bank acceptance bills of 40 million
2.The company borrows short-term loan of 40 million yuan and the bank acceptance bills of
40 million yuan, Three real estates of its affiliated venture Nanjing Potevio
Telecommunication Technology Industry Park Co., Ltd. are mortgage.
3.The condition that the company guarantee the borrowings of the related parties is stated
in Note 8.12
11.Contingencies
a).The condition of guarantee as of 30 June 2009：
Guaranteed party Amount
0’000 Terms of borrowing Guaranteed by Influence on the
compamy
Nanjing Putian Intelligent
Building Ltd 800.00 2009.05.08-2009.09.08
Nanjing Putian
Telecommunication
Co.,Ltd
No negative influence
Nanjing Putian Intelligent
Building Ltd 200.00 2009.05.31-2009.09.30
Nanjing Putian
Telecommunication
Co.Ltd
No negative influence
Nanjing Putian Intelligent
Building Ltd 800.00 2009.06.24-2010.06.24
Nanjing Putian
Telecommunication
Co.Ltd
No negative influence
Nanjing south
telecommunication Co., LTD 1,200.00 2009.5.31-2010.5.30
Nanjing Putian
Telecommunication
Co.Ltd
No negative influence
Nanjing south
telecommunication Co., LTD 500.00 2008.12.16-2009.12.15
Nanjing Putian
Telecommunication
Co.Ltd
No negative influence
Total 3,500.00
b) There are none of pending actions of the company at 30 June 2009
12.The events after the balance sheet date
a) Nanjing Putian Network Company Ltd declare that it will transfer 15.76% share
holdings on 16 july,2009 at the price of net assets on 31 January ,2009 based on valued
net assets.
b) No other events after the balance sheet date
13、Other significant issues
None
14.CommitmentNanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
60
a) Investment contracts already signed with third parties, not yet executed or
fully executed and related capital expenditures
The Company, purchased land use right of land which covers an area of 43 mu
(Chinese unit of area)（in accordance with actual measurement）from Nanjing Economic &
Technological Development Area Management Committee for manufacture base
constructions with total payment for land amounting to CNY 6,020,000 (actual payment for
land should be calculated in accordance with actually measured dimension)for the
construction of Nanjing Putian Telecommunication production places The Company
committed total project investment should be no less than CNY 110,000,000.
b). Other significant financial commitments
The Company drew bank acceptance amounting to CNY 160,000,000 with deposit
amounting to CNY 80,000,000, the bank acceptance has been discounted by its
subsidiaries, Nanjing Bada Telecommunications Co., Ltd.. and transferred into short-term
borrowings when consolidating the Financial Statements
15.Other events
a). Foreign currency translation
Exchange difference recorded into profit and loss of current period isCNY－35,363.85
16. None-recurring profit and loss of current year (Profit: +, loss: -)
Item 2009.1-6 2008.1-6
Profit and loss of non-current assets disposal 53,757.26 -63,178.33
Tax refund and exemption without authorized approval or
formal approval document
Government subsidy recorded into profit and loss of current
period 93,410.32 262,500.00
Profit and loss of debt restructure -175,912.50 -3,623.32
Reverse of beginning balance of welfare payable
Income from the condition that the consolidation cost is less
than the fair-value of tangible net assets of the corporation
being consolidated that
belonging to the consolidating corporation
Net amount of other non-operating profit and expenses
excluding items above 65,158.60 50,502.37
Influenced amount of minority interest 59,945.44
Influenced amount of income tax -12,204.39
Total 84,154.73 246,200.72
Return on net asset and earnings per share
a). Return on net asset
2009.1-6 2008.1-6
Profit of the reporting period Fully diluted
return on
equity
Weighted
average
Fully diluted
return on
equity
Weighted
average
Net profit attributable to common
shareholders 1.58% 1.61% 0.23% 0.23%
Net profit excluding extraordinary
items attributable to common
shareholders
1.55% 1.59% 0.15% 0.15%
b), earnings per share
2009.1-6 2008.1-6
Profit of the reporting period Basic
earnings
per share
Diluted
earnings
per share
Basic earnings
per share
Diluted
earnings
per share
Net profit attributable to common
shareholders 0.02 0.02 0.0035 0.0035
Net profit excluding extraordinary
items attributable to common shareholders 0.02 0.02 0.0023 0.0023Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
61
Calculation Process
The above data is calculated using the following formulae:
Fully diluted return on equity
Fully diluted return on equity = P/E Where: P is net profit attributable to ordinary
shareholders of the Company or net profit attributable to ordinary shareholders of the
Company after deducting non-recurring gain or loss; E is the year end equity attributable to
ordinary shareholders of the Company. Net profit attributable to ordinary shareholders of
the Company does not include the amount of gain or loss of minority shareholders. For net
profit attributable to ordinary shareholders of the Company after deducting non-recurring
gain or loss, non-recurring gain or loss of parent company (after taking into consideration
the income tax effects) and the proportion of non-recurring gain or loss (after taking into
consideration the income tax effects) of all subsidiaries owned by ordinary shareholders of
parent company are deducted on the basis of consolidated net profit after deducting gain or
loss of minority shareholders. The year end equity attributable to ordinary shareholders of
the Company does not include equity of minority shareholders.
Weighted average return on equity
Weighted average return on equity =
P/(E0+NP/2+Ei*Mi/M0–Ej*Mj/M0+-Ek*Mk/M0) Where: P is net profit attributable to ordinary
shareholders of the Company or net profit attributable to ordinary shareholders of the
Company after deducting non-recurring gain or loss; E0 is the year beginning equity
attributable to ordinary shareholders of the Company; Ei is increased equity attributable to
ordinary shareholders of the Company which arises from new issuance of shares or
conversion of debt instruments to stocks in the reporting period; Ej is
-87-
reduced equity attributable to ordinary shareholders of the Company due to stock
repurchase or cash dividend in the reporting period; M0 is the number of months of the
reporting period; Mi is the number of months from the next month that equity is increased to
the year end of the reporting period; Mj is the number of months from the next month that
equity is decreased to the year end of the reporting period; Ek is the change of equity
resulting from other transactions or events; Mk is the number of months from the next
month that other change of equity occurs to the year end of the reporting period.
Basic earnings per share
Basic earnings per share = P/S S = S0+S1+Si*Mi/M0-Sj*Mj/M0-Sk Where: P is net profit
attributable to ordinary shareholders of the Company or net profit attributable to ordinary
shareholders of the Company after deducting non-recurring gain or loss; S is weighted
average number of ordinary shares outstanding; S0 is the total number of shares at the
beginning of the year; S1 is the number of increased shares as a result of capitalization of
reserves or scrip dividend during the reporting period; Si is the number of increased shares
as a result of new issuance of shares or conversion of debt instruments to stocks during the
reporting period; Sj is the number of reduced shares as a result of stock repurchase; Sk is
the number of consolidated shares in the reporting period; M0 is the number of months of
the reporting period; Mi is the number of months from the next month that the number of
shares is increased to the year end of the reporting period; Mj is the number of months
from the next month that the number of shares is decreased to the year end of the reporting
period.
Diluted earnings per share
Diluted earnings per share = [P+(any recognized interest related to dilutive potential
ordinary shares-conversion expenses)*(1-income tax rate)]/(S0+S1+Si*Mi/M0-Sj*Mj/M0-Sk
+weighted average number of increased ordinary shares arising from warrants, stock
options and convertible debts) Where: P is net profit attributable to ordinary shareholders of
the Company or net profit attributable to ordinary shareholders of the Company after
deducting non-recurring gain or loss. In calculating the diluted earnings per share, the
Company has taken into consideration the effects of all dilutive potential ordinary shares,
until the diluted earnings per share reach the lowest amount.
Item 2009.1-6 2008.1-6
Net profit attributable to common shareholders 5,298,699.21 742,405.14Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
62
Net profit excluding extraordinary items attributable to
common shareholders 5,214,544.48 496,204.42
Net asset as of year-beginning 325,891,395.72 320,385,899.25
Months of the current year 6 6
Average weighted amount of common stock 215,000,000.00 215,000,000.00
Net asset as of the end of the period 336,216,428.40 324,114,515.07Nanjing Putian Telecommunications Co., Ltd. 2009 Semi-Annual Report
63
Supplementary information
Impairment of assets (CNY)
Decrease in the current period
Item Book value at
year-beginning
Withdrawal in
the current
period Write-back Write-off
Book value at
year-end
1. Provision for bad debts 48,954,663.91 1,504,826.48 585,869.99 49,873,620.40
2. Provision for inventory
devaluation
20,209,662.50 17,548,346.59 2,661,315.91
3. Provision for impairment loss
on disposable financial assets
-
4. Provision for Impairment loss
on held-to-maturity financial
assets
-
5. Provision for impairment loss
on long-term investment on
equity
1,854,910.00 1,854,910.00
6. Provision for impairment loss
on property investment
1,842,418.00 1,842,418.00
7. Provision for impairment loss
on fixed assets
3,791,955.33 3,791,955.33
8. Provision for impairment loss
on engineering material
-
9. Provision for impairment loss
on construction in progress
-
10. Provision for impairment
loss on production physical
assets
-
Including: Provision for
depreciation of mature
production physical assets
-
11. Provision for impairment
loss on gas and petrol
-
12. Provision for impairment
loss on intangible assets
-
13. Provision for impairment
loss on goodwill
-
14. Other -
Total 76,653,609.74 1,504,826.48 18,134,216.58 60,024,219.64
