Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2019
(Expressed in Renminbi Yuan)
Assets Note No. Jun. 30, 2019 Dec. 31, 2018
Current assets:
Cash and bank balances 136,567,071.22 261,938,068.72
Settlement funds
Loans to other banks
Held-for-trading financial assets
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable 36,976,983.83 46,475,656.01
Accounts receivable 959,336,259.46 941,068,459.35
Advances paid 29,915,309.02 188,848,712.69
Premiums receivable
Reinsurance accounts receivable
Reinsurance reserve receivable
Other receivables 34,203,510.56 33,734,948.67
Financial assets under reverse repo
Inventories 255,486,163.16 286,972,632.59
Contract assets
Assets classified as held for sale
Non-current assets due within one year
Other current assets 17,580,665.17 13,497,540.69
Total current assets 1,470,065,962.42 1,772,536,018.72
Non-current assets:
Loans and advances paid
Debt investments
Available-for-sale financial assets 741,953.00
Other debt investments
Held-to-maturity investments
Long-term receivable
Long-term equity investments 181,617,987.10 183,244,080.23
Other equity instrument investments 741,953.00
Other non-current financial assets
Investment property 8,103,661.99 8,397,113.98
Fixed assets 110,559,771.46 112,504,807.11
Construction in progress 17,268,676.17 9,472,383.76
Productive biological assets
Oil & gas assets
Intangible assets 29,300,021.15 30,285,598.77
Development expenditures
Goodwill
Long-term prepayments 3,037,751.17 3,562,336.84
Deferred tax assets
Other non-current assets
Total non-current assets 350,629,822.04 348,208,273.69
Total assets 1,820,695,784.46 2,120,744,292.41
1
Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2019 (continued)
Liabilities & Equity Note No. Jun. 30, 2019 Dec. 31, 2018
Current liabilities:
Short-term borrowings 464,183,401.05 445,010,000.00
Central bank loans
Loans from other banks
Held-for-trading financial liabilities
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 91,238,774.75 84,374,916.99
Accounts payable 695,496,740.26 743,028,953.62
Advances received 33,841,758.85 259,545,648.66
Financial liabilities under repo
Employee benefits payable 21,259,466.94 21,132,336.19
Taxes and rates payable 3,836,621.32 17,230,159.02
Other payables 41,857,252.04 55,128,492.65
Handling fee and commission payable
Reinsurance accounts payable
Contract liabilities
Liabilities classified as held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,351,714,015.21 1,625,450,507.13
Non-current liabilities:
Insurance policy reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 28,947,368.42
Long-term employee benefits payable
Provisions
Deferred income 6,004,873.00 7,296,315.00
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 34,952,241.42 7,296,315.00
Total liabilities 1,386,666,256.63 1,632,746,822.13
Equity:
Share capital/Paid-in capital 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 185,374,533.85 185,374,533.85
Less: Treasury shares
Other comprehensive income -5,012,479.78 -4,947,588.58
Special reserve
Surplus reserve 589,559.77 589,559.77
General risk reserve
Undistributed profit -98,255,301.68 -40,726,776.80
Total equity attributable to the parent company 297,696,312.16 355,289,728.24
Non-controlling interest 136,333,215.67 132,707,742.04
Total equity 434,029,527.83 487,997,470.28
Total liabilities & equity 1,820,695,784.46 2,120,744,292.41
Nanjing Putian Telecommunications Co., Ltd.
2
Parent company balance sheet as at June 30, 2019
(Expressed in Renminbi Yuan)
Assets Note No. Jun. 30, 2019 Dec. 31, 2018
Current assets:
Cash and bank balances 78,496,286.22 80,553,208.65
Held-for-trading financial assets
Financial assets at fair value through profit or
loss
Derivative financ ial assets
Notes receivable 3,142,881.55 6,620,178.00
Accounts receivable 569,391,656.54 586,635,878.62
Advances paid 8,639,524.01 155,717,638.43
Other receivables 37,779,362.09 31,077,389.58
Inventories 110,644,059.39 143,432,315.11
Contract assets
Assets classified as held for sale
Non-current assets due within one year
Other current assets 4,268,385.84 6,222,172.75
Total current assets 812,362,155.64 1,010,258,781.14
Non-current assets:
Debt investments
Available-for-sale financial assets 741,953.00
Other debt investments
Held-to-maturity investments
Long-term receivable
Long-term equity investments 332,925,737.74 333,367,967.90
Other equity instrument investments 741,953.00
Other non-current financial assets
Investment property
Fixed assets 48,729,251.36 50,769,872.87
Construction in progress 5,984,113.43 5,839,892.88
Productive biological assets
Oil & gas assets
Intangible assets 11,922,705.47 12,305,246.69
Development expenditures
Goodwill
Long-term prepayments 2,960,931.17 3,403,376.01
Deferred tax assets
Other non-current assets
Total non-current assets 403,264,692.17 406,428,309.35
Total assets 1,215,626,847.81 1,416,687,090.49
3
Nanjing Putian Telecommunications Co., Ltd.
Parent company balance sheet as at June 30, 2019 (continued)
(Expressed in Renminbi Yuan)
Liabilities & Equity Note No. Jun. 30, 2019 Dec. 31, 2018
Current liabilities:
Short-term borrowings 374,183,401.05 355,000,000.00
Held-for-trading financial liabilities
Financial liabilities at fair value through profit
or loss
Derivative financial liabilities
Notes payable 87,955,415.63 80,759,989.55
Accounts payable 354,176,500.26 340,405,588.53
Advances received 13,033,438.34 227,951,168.81
Contract liabilities
Employee benefits payable 8,664,119.99 7,854,213.23
Taxes and rates payable 31,150.92 8,674,579.20
Other payables 193,246,486.58 187,172,612.82
Liabilities classified as held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,031,290,512.77 1,207,818,152.14
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 28,947,368.42
Long-term employee benefits payable
Provisions
Deferred income
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 29,947,368.42 1,000,000.00
Total liabilities 1,061,237,881.19 1,208,818,152.14
Equity:
Share capital/Paid-in capital 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 172,417,299.81 172,417,299.81
Less: treasury shares
Other comprehensive income
Special reserve
Surplus reserve 589,559.76 589,559.76
Undistributed profit -233,617,892.95 -180,137,921.22
Total equity 154,388,966.62 207,868,938.35
Total liabilities & equity 1,215,626,847.81 1,416,687,090.49
4
Nanjing Putian Telecommunications Co., Ltd.
Consolidated income statement for the year ended June 30, 2019
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Total operating revenue 757,197,371.80 757,197,371.80
Including: Operating revenue 757,197,371.80 757,197,371.80
Interest income
Premium earned
Revenue from handling charges and commission
II. Total operating cost 815,094,836.61 1,003,706,276.96
Including: Operating cost 633,095,768.07 824,358,695.32
Interest expens es
Handling charges and commission expenditures
Surrender value
Net payment of insurance claims
Net provision of insurance policy res erve
Premium bonus expenditures
Reinsurance expenses
Taxes and surcharges 4,493,183.68 5,664,250.54
Selling expenses 78,513,462.05 79,696,183.64
Administrative expenses 47,259,575.67 47,390,575.27
R&D expenses 35,909,040.49 36,398,106.80
Financial expense 15,823,806.65 10,198,465.39
Including: Interest expenses 12,296,091.86 11,625,553.62
Interest income 2,400,422.53 1,692,017.07
Assets impairment loss -3,030,783.16
Credit impairment loss -668,512.60
Add: Other income 6,006,842.30 5,799,343.86
Investment income (or less: losses) -442,230.16 407,793.10
Including: Investment income from associat es and joint ventures -442,230.16 407,793.10
Gains on foreign exchange (or less: losses)
Gains on net exposure to hedging risk (or less: losses)
Gains on changes in fair value (or less: losses)
Gains on asset disposal (or less: losses) 98,840.67 30,156,818.80
III. Operating profit (or less: losses) -52,902,524.60 -3,522,499.41
Add: Non-operating revenue 1,312,115.17 2,825,854.15
Less: Non-operating expenditures 238,652.04 308,586.00
IV. Profit before tax (or less: total loss) -51,829,061.47 -1,005,231.26
Less: Income tax 2,066,779.65 1,646,117.70
V. Net profit (or less: net loss) -53,895,841.12 -2,651,348.96
(I) Categorized by the continuity of operations
1. Net profit from continuing operations (or less: net loss) -53,895,841.12 -53,895,841.12
2. Net profit from discontinued operations (or less: net loss)
(II) Categori zed by the portion of equity ownership
1. Net profit attributable to owners of parent company (or less: net loss) -57,528,524.88 -10,421,705.60
2. Net profit attributable to non-controlling shareholders (or less: net loss) 3,632,683.76 7,770,356.64
VI. Other comprehensive income aft er tax -72,101.33 -135,607.00
Items attributable to the owners of the parent company -64,891.20 -122,046.30
(I) Not to be reclassi fied subsequently to profit or loss
1.Changes in remeasurement on the net defined benefit plan
2. Items under equity method that will not be reclassified to profit or loss
(II) To be reclassi fied subsequently to profit or loss -64,891.20 -122,046.30
1. Items under equity method that may be reclassi fied to profit or loss
2. Changes in fair value of other debt investments
3. Profit or loss from changes in fair value of availabl e-for-sal e financial assets
4. Profit or loss from recl assifi cation of financial assets into other
comprehensive income
5. Profit or loss from recl assifi cation of held-to-maturity investments as
available-for-s ale financi al assets
6. Provision for credit impairment of other debt investments
7.Cash flow hedging reserve (profit or loss on cash flow hedging) -64,891.20 -122,046.30
8. Translation reserve
9. Others
Items attributable to non-controlling shareholders -7,210.13 -13,560.70
VII. Total comprehensive income -53,967,942.45 -2,786,955.96
Items attributable to the owners of the parent company -57,593,416.08 -10,543,751.90
Items attributable to non-controlling shareholders 3,625,473.63 7,756,795.94
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) -0.27 -0.05
(II) Diluted EPS (yuan per share) -0.27 -0.05
5
Nanjing Putian Telecommunications Co., Ltd.
Parent company income statement for the year ended June 30, 2019
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Operating revenue 341,411,818.58 497,806,967.24
Less: Operating cost 321,158,291.44 461,016,015.39
Taxes and surcharges 973,408.31 2,188,404.36
Selling expenses 28,375,553.20 33,623,765.06
Administrative expenses 24,427,461.58 22,687,329.39
R&D expenses 8,648,006.73 10,160,185.58
Financial expense 14,954,773.35 10,288,228.05
Including: Interest expenses 9,868,608.51 11,625,553.62
Interest income 481,846.95 1,692,017.07
Assets impairment loss -1,674,589.82
Credit impairment loss 2,562,201.43
Add: Other income 800,000.00 876,429.06
Investment income (or less: losses) -442,230.16 407,793.10
Including: Investment income from associat es and joint ventures -442,230.16 407,793.10
Gains on net exposure to hedging risk (or less: losses)
Gains on changes in fair value (or less: losses)
Gains on asset disposal (or less: losses) 8,421.83 18,909,015.41
Gains on foreign exchange (or less: losses)
II. Operating profit (or less: losses) -54,197,282.93 -23,638,312.84
Add: Non-operating revenue 954,802.59 1,994,545.83
Including: Gains on disposal of non-current assets
Less: Non-operating expenditures 237,491.39 210,933.46
Including: Losses on disposal of non-current assets
III. Profit before tax (or less: total loss) -53,479,971.73 -21,854,700.47
Less: Income tax
IV. Net profit (or less: net loss) -53,479,971.73 -21,854,700.47
(I) Net profit from continuing operations (or less: net loss) -53,479,971.73 -21,854,700.47
(II) Net profit from discontinued operations (or less: net loss)
V. Other comprehensive income aft er tax
(I) Not to be reclassi fied subsequently to profit or loss
1.Changes in remeasurement on the net defined benefit plan
2. Items under equity method that will not be reclassified to profit or loss
3. Changes in fair value of other equity instrument investments
4. Changes in fair value of own credit risk
5. Others
(II) To be reclassi fied subsequently to profit or loss
1. Items under equity method that may be reclassi fied to profit or loss
2. Changes in fair value of other debt investments
3. Profit or loss from changes in fair value of availabl e-for-sal e financial assets
4. Profit or loss from recl assifi cation of financial assets into other
comprehensive income
5. Profit or loss from recl assifi cation of held-to-maturity investments as
available-for-s ale financi al assets
6. Provision for credit impairment of other debt investments
7. Cash flow hedging reserve (profit or loss on cash flow hedging)
8. Translation reserve
9. Others
VI. Total comprehensive income -53,479,971.73 -21,854,700.47
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) -0.25 -0.10
(II) Diluted EPS (yuan per share) -0.25 -0.10
6
Nanjing Putian Telecommunications Co., Ltd.
Consolidated cash flow statement for the year ended June 30, 2019
Note Current period Preceding period
Items
No. cumulative comparative
I. Cash flows from operating activities:
Cash receipts from sale of goods or rendering of services 634,459,933.46 823,226,257.29
Net increas e of client deposit and interbank deposit
Net increas e of central bank loans
Net increas e of loans from other financial institutions
Cash receipts from original insurance contract premium
Net cash receipts from reinsurance
Net increas e of policy-holder deposit and investment
Net increas e from disposal of financi al assets at fair value through profit or loss
Cash receipts from interest, handling charges and commission
Net increas e of loans from others
Net increas e of repurchase
Receipts of tax refund 4,281,155.44 3,751,204.59
Other cash receipts related to operating activities 1 34,101,264.61 37,651,747.79
Subtotal of cash inflows from operating activities 672,842,353.51 864,629,209.67
Cash payments for goods purchased and services received 584,963,313.52 795,841,324.87
Net increas e of loans and advances to clients
Net increas e of central bank deposit and interbank deposit
Cash payments for insurance indemnities of original insurance contracts
Cash payments for interest, handling charges and commission
Cash payments for policy bonus
Cash paid to and on behalf of employees 123,749,018.11 134,614,701.29
Cash payments for taxes and rat es 49,887,398.91 43,357,641.42
Other cash payments relat ed to operating activities 2 78,339,353.71 116,090,771.02
Subtotal of cash outflows from operating activities 836,939,084.25 1,089,904,438.60
Net cash flows from operating activities -164,096,730.74 -225,275,228.93
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments 1,183,862.97
Cash receipts from investment income 197,567.20
Net cash receipts from the disposal of fixed assets, intangible assets and other 397,940.00 30,244,870.00
long-term assets
Net cash receipts from the disposal of subsidiaries & other business units
Other cash receipts related to investing activities
Subtotal of cash inflows from investing activities 1,581,802.97 30,442,437.20
Cash payments for the acquisition of fixed assets, intangible assets and other 7,306,368.27 7,937,241.37
long-term assets
Cash payments for investments
Net increas e of pledged borrowings
Net cash payments for the acquisition of subsidiaries & other business units
Other cash payments relat ed to investing activities
Subtotal of cash outflows from investing activities 7,306,368.27 7,937,241.37
Net cash flows from investing activities -5,724,565.30 22,505,195.83
III. Cash flows from financing activities:
Cash receipts from absorbing investments 2,169,200.00
Including: Cash received by subsidiaries from non-cont rolling shareholders as 2,169,200.00
investments
Cash receipts from borrowings 295,400,273.89 266,510,000.00
Cash receipts from issuing of bonds
Other cash receipts related to financing activities
Subtotal of cash inflows from financing activities 295,400,273.89 268,679,200.00
Cash payments for the repaym ent of borrowings 213,539,162.28 206,550,000.00
Cash payments for distribution of dividends or profits and for interest expenses 15,154,944.10 13,087,901.03
Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit 2,169,200.00
Other cash payments relat ed to financing activities 20,051,791.37
Subtotal of cash outflows from financing activities 248,745,897.75 219,637,901.03
Net cash flows from financing activities 46,654,376.14 49,041,298.97
IV. Effect of foreign exchange rate changes on cash & cash equivalents -92,357.05
V. Net increase in cash and cash equivalents -123,166,919.90 -153,821,091.18
Add: Opening balance of cash and cash equivalents 201,369,317.42 311,056,919.17
VI. Closing balance of cash and cash equivalents 78,202,397.52 157,235,827.99
7
Nanjing Putian Telecommunications Co., Ltd.
Parent company cash flow statement for the year ended June 30, 2019
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Cash flows from operating activities:
Cash receipts from sale of goods and rendering of services 196,554,502.38 348,436,329.15
Receipts of tax refund 226,972.07
Other cash receipts related to operating activities 32,644,987.12 68,779,821.99
Subtotal of cash inflows from operating activities 229,199,489.50 417,443,123.21
Cash payments for goods purchased and services received 143,162,629.87 372,154,435.27
Cash paid to and on behalf of employees 52,522,811.25 53,879,491.46
Cash payments for taxes and rates 17,627,190.91 11,331,804.57
Other cash payments related to operating activities 66,818,288.91 60,181,711.77
Subtotal of cash outflows from operating activities 280,130,920.94 497,547,443.07
Net cash flows from operating activities -50,931,431.44 -80,104,319.86
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income 400,000.00 197,567.20
Net cash receipts from the disposal of fixed assets, intangible 40,890.00
18,187,870.00
assets and other long-term assets
Net cash receipts from the disposal of subsidiaries & other
business units
Other cash receipts related to investing activities
Subtotal of cash inflows from investing activities 440,890.00 18,385,437.20
Cash payments for the acquisition of fixed assets, intangible assets 358,326.21 6,483,699.11
and other long-term assets
Cash payments for investments
Net cash payments for the acquisition of subsidiaries & other
business units
Other cash payments related to investing activities
Subtotal of cash outflows from investing activities 358,326.21 6,483,699.11
Net cash flows from investing activities 82,563.79 11,901,738.09
III. Cash flows from financing activities:
Cash receipts from absorbing investments
Cash receipts from borrowings 176,839,010.00 192,000,000.00
Other cash receipts related to financing activities 38,561,263.89
Subtotal of cash inflows from financing activities 215,400,273.89 192,000,000.00
Cash payments for the repayment of borrowings 133,529,162.28 165,000,000.00
Cash payments for distribution of dividends or profits and for 11,315,171.30 9,668,959.87
interest expenses
Other cash payments related to financing activities 20,000,000.00
Subtotal of cash outflows from financing activities 164,844,333.58 174,668,959.87
Net cash flows from financing activities 50,555,940.31 17,331,040.13
IV. Effect of foreign exchange rate changes on cash and cash
equivalents
V. Net increase in cash and cash equivalents -292,927.34 -50,871,541.64
Add: Opening balance of cash and cash equivalents 23,812,669.19 109,752,099.29
VI. Closing balance of cash and cash equivalents 23,519,741.85 58,880,557.65
8
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2019
(Expressed in Renminbi Yuan)
Current period cumulative
Equity attributable to parent company
Items Other equity instruments Less: Other General Non-controlling
Total equity
Capital reserve treasury comprehensive Special Surplus interest
Share capital Preferred Perpetual Others risk Undistributed profit
reserve reserve
shares bonds shares income reserve
I. Balance at the end of prior year 215,000,000.00 185,374,533.85 -4,947,588.58 589,559.77 -40,726,776.80 132,707,742.04 487,997,470.28
Add: Cumulative changes of accounting policies
Error correction of prior period
Business combination under common control
Others
II. Balance at the beginning of current year 215,000,000.00 185,374,533.85 -4,947,588.58 589,559.77 -40,726,776.80 132,707,742.04 487,997,470.28
III. Current period increase (or less: decrease) -64,891.20 -57,528,524.88 3,625,473.63 -53,967,942.45
(I) Total comprehensive income -64,891.20 -57,528,524.88 3,625,473.63 -53,967,942.45
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based paym ent included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of general risk reserve
3. Appropriation of profit to owners
4. Others
(IV) Internal carry-over within equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve to cover losses
4. Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 185,374,533.85 -5,012,479.78 589,559.77 -98,255,301.68 136,333,215.67 434,029,527.83
9
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2019 (continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Equity attributable to parent company
Items Other equity instruments Less: Other General Non-controlling
Total equity
treasury comprehensive Special Surplus Undistributed interest
Share capital Preferred Perpetual Others Capital reserve risk
reserve reserve profit
shares bonds shares income reserve
I. Balance at the end of prior year 215,000,000.00 185,374,533.85 -4,129,619.45 589,559.76 -44,605,902.63 120,893,826.56 473,122,398.10
Add: Cumulative changes of accounting policies
Error correction of prior period -1,980,089.01 -1,980,089.01
Business combination under common control
Others
II. Balance at the beginning of current year 215,000,000.00 185,374,533.85 -4,129,619.45 589,559.76 -46,585,991.64 120,893,826.56 471,142,309.09
III. Current period increase (or less: decrease) -122,046.30 -10,421,705.60 7,756,795.94 -2,786,955.96
(I) Total comprehensive income -122,046.30 -10,421,705.60 7,756,795.94 -2,786,955.96
(II) Capital contributed or withdrawn by owners 2,169,200.00 2,169,200.00
1. Capital contributed by owners 2,169,200.00 2,169,200.00
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based paym ent included in
equity
4. Others
(III) Profit distribution -2,169,200.00 -2,169,200.00
1. Appropriation of surplus reserve
2. Appropriation of general risk reserve
3. Appropriation of profit to owners -2,169,200.00 -2,169,200.00
4. Others
(IV) Internal carry-over within equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve to cover losses
4. Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 185,374,533.85 -4,251,665.75 589,559.76 -57,007,697.24 128,650,622.50 468,355,353.13
10
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2019
(Expressed in Renminbi Yuan)
Current period cumulative
Other equity instruments
Other
Items Less: treasury Special Undistributed
Share capital Preferred Perpetual Others Capital reserve comprehensive Surplus reserve Total equity
shares reserve profit
shares bonds income
I. Balance at the end of prior year 215,000,000.00 172,417,299.81 589,559.76 -180,137,921.22 207,868,938.35
Add: Cumulative changes of accounting policies
Error correction of prior period
Others
II. Balance at the beginning of current year 215,000,000.00 172,417,299.81 589,559.76 -180,137,921.22 207,868,938.35
III. Current period increase (or less: decrease) -53,479,971.73 -53,479,971.73
(I) Total comprehensive income -53,479,971.73 -53,479,971.73
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based paym ent included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of profit to owners
3. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 172,417,299.81 589,559.76 -233,617,892.95 154,388,966.62
11
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2019 (continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Other equity instruments
Less: Other
Items Special
Share capital Preferred Perpetual Others Capital reserve treasury comprehensive reserve Surplus reserve Undistributed profit Total equity
shares bonds shares income
I. Balance at the end of prior year 215,000,000.00 172,417,299.81 589,559.76 -179,778,157.50 208,228,702.07
Add: Cumulative changes of accounting policies
Error correction of prior period -1,980,089.01 -1,980,089.01
Others
II. Balance at the beginning of current year 215,000,000.00 172,417,299.81 589,559.76 -181,758,246.51 206,248,613.06
III. Current period increase (or less: decrease) -21,854,700.47 -21,854,700.47
(I) Total comprehensive income -21,854,700.47 -21,854,700.47
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based paym ent included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of profit to owners
3. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 172,417,299.81 589,559.76 -203,612,946.98 184,393,912.59
[Wang Wen Kui] [Cao Xu Rong] [Cao Xu Rong]
[Legal representative] [Officer in charge of accounting] [Head of accounting department]
(Signature and stamp) (Signature and stamp) (Signature and stamp)
12
Nanjing Putian Telecommunications Co., Ltd.
Notes to Financial State ments
Semi-annual Report 2019
Monetary unit: RMB Yuan
I. Company profile
Nanjing Putian Telecommunications Co., Ltd. (the “Company”), whose predecessor is Nanjing
Telecommunication Facility Factory, was established as a limited liability company (by shares)
through financing under the approval of National Economic Institutional Reform Commission
with document of approval numbered TGS [1997] 28 dated March 21, 1997. The Company is
headquartered in Nanjing City, Jiangsu Province. Currently it holds a business license with unified
social credit code of 91320000134878054G, with registered capital of 215,000,000.00 yuan, total
share of 215,000,000.00 shares, with par value of 1 yuan per share. Among them, 115,000,000
shares are state-owned legal person shares, and 100,000,000 shares are B shares. The Company
was listed on the Shenzhen Stock Exchange on May 22, 1997 and its stocks has been suspended
on May 11, 2017 when receiving the decision of the Shenzhen stock exchange to suspend the
listing of the shares of Nanjing Putian Telecommunications Co., LTD. (Shenzhen Certificate No.
294, 2017)
The Company belongs to telecommunication equipment manufacture industry and is mainly
engaged in R&D, production, and sale of data, wire and wireless telecommunication equipment,
distribution and allocation of layout of telecommunication product, multimedia computer, digital
television, vehic le electronics and conference video system. The main services rendered by the
Company include installation and maintenance equipment, communication information network
and computer information system projects design, and systems integration and related consultancy
service.
The financial statements have been deliberated and approved for issue by session of the Board of
Directors dated August 28, 2019.
The Company has brought 11 subsidiaries including Nanjing South Telecommunications Co., Ltd.,
Nanjing Putian Telege Intelligent Building Co., Ltd. etc. into the consolidated scope. Please refer
to notes to changes in the consolidated scope and interest in other entities for details.
II. Preparation basis of the financial statements
(I) Preparation basis
The financial statements have been prepared on the basis of going concern.
13
(II) Assessment of the ability to continue as a going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s
ability to continue as a going concern within the 12 months after the balance sheet date.
III. Significant accounting policies and estimates
Important note:
The Company has set up accounting policies and estimates on transactions or events such as
provision for bad debts of receivables, depreciation of fixed assets, amortization of intangible
assets, and revenue recognition, etc. based on the Company’s actual production and operation
features.
(I) Statement of compliance
The financial statements have been prepared in accordance with the requirements of China
Accounting Standards for Business Enterprises (CASBEs), and present truly and completely the
financial position, results of operations and cash flows of the Company.
(II) Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian
calendar.
(III) Operating cycle
The Company has a relatively short operating cycle for its business, an asset or a liability is
classified as current if it is expected to be realized or due within 12 months.
(IV) Functional currency
The Company’s functional currency is Renminbi (RMB) Yuan.
(V) Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities aris ing from business combination are measured at carrying amount of the
combined party included in the consolidated financial statements of the ultimate controlling party
at the combination date. Difference between carrying amount of the equity of the combined party
included in the consolidated financial statements of the ultimate controlling party and that of the
combination consideration or total par value of shares issued is adjusted to capital reserve, if the
balance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the
acquiree at the acquisition date, the excess is recognized as goodwill; otherwise, the fair value of
identifiable assets, liabilities and contingent liabilities, and the measurement of the combination
cost are reviewed, then the difference is recognized in profit or loss.
14
(VI) Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into its consolidation scope. The
consolidated financial statements are compiled by the parent company according to “CASBE 33 -
Consolidated Financial Statements”, based on relevant information and the financial statements of
the parent company and its subsidiaries.
(VII) Classification of joint arrangements and accounting treatment of joint operations
1. Joint arrangements include joint operations and joint ventures.
2. When the Company is a joint operator of a joint operation, it recognizes in relation to its interest
in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output arising from the joint operation;
(4) its share of the revenue from the sales of the output by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
(VIII) Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for
payment. Cash equivalents refer to short-term, highly liquid investments that can be readily
converted to cash and that are subject to an insignificant risk of changes in value.
(IX) Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange
rate at the transaction date at initial recognition. At the balance sheet date, monetary items
denominated in foreign currency are translated at the spot exchange rate at the balance sheet date
with difference, except for those arising from the principal and interest of exclusive borrowings
eligible for capitalization, included in profit or loss; non-cash items carried at historical costs are
translated at the spot exchange rate at the transaction date, w ith its RMB amount unchanged;
non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at
the date when the fair value was determined, with difference included in profit or loss or other
comprehensive income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the
balance sheet date; the equity items, other than undistributed profit, are translated at the spot rate
at the transaction date; the revenues and expenses in the income statement are translated into RMB
at the spot exchange rate at the transaction date. The difference arising from foreign currency
15
translation is included in other comprehensive income.
(X) Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following three categories when initially recognized: (1)
financial assets at amortized cost; (2) financial assets at fair value through other comprehensive
income; (3) financial assets at fair value through profit or loss.
Financial liabilities are classified into the following four categories when initially recognized: (1)
financial liabilities at fair value through profit or loss; (2) financial liabilities that arise when a
transfer of a financial asset does not qualify for derecognition or when the continuing involvement
approach applies; (3) financial guarantee contracts not fall within the above categories (1) and (2),
and commitments to provide a loan at a below -market interest rate, which do not fall within the
above category (1) ; (4) financial liabilities at amortized cost.
2. Recognition criteria, measurement method and derecognition condition of financial assets and
financial liabilities
(1) Recognition criteria and measurement method of financial assets and financial liabilities
When the Company becomes a party to a financial instrument, it is recognized as a financial asset
or financial liability. The financial assets and financial liabilities initially recognized by the
Company are measured at fair value; for the financial assets and liabilities at fair value through
profit or loss, the transaction expenses thereof are directly included in profit or loss; for other
categories of financial assets and financial liabilities, the transaction expenses thereof are included
into the initially recognized amount. However, at initial recognition, for accounts receivable that
do not contain a significant financing component or contracts in which the financing components
with associated period less than one year are not considered, the Company measures at their
transaction price in accordance with “CASBE14 – Revenues”.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
The Company measures its financial assets at the amortized costs using effective interest method.
Gains or losses on financial assets that are measured at amortized cost and are not part of hedging
relationships shall be inc luded into profit or loss when the financial assets are derecognized,
reclassified, through the amortization process or in order to recognize impairment gains or losses.
2) Debt instrument investments at fair value through other comprehensive income
The Company measures its debt instrument investments at fair value. Interests, impairment gains
or losses, and gains and losses on foreign exchange that calculated using effective interest method
shall be included into profit or loss, while other gains or losses are included into other
comprehensive income. Accumulated gains or losses that initially recognized as other
comprehensive income should be transferred out into profit or loss when the financial assets are
16
derecognized.
3) Equity instrument investments at fair value through other comprehensive income
The Company measures its equity instrument investments at fair value. Dividends obtained (other
than those as part of investment cost recovery) shall be included into profit or loss, while other
gains or losses are included into other comprehensive income. Accumulated gains or losses that
initially recognized as other comprehensive income should be transferred out into retained
earnings when the financial assets are derecognized.
4) Financial assets at fair value through profit or loss
The Company measures its financial assets at fair value. Gains or losses arising from changes in
fair value (including interests and dividends) shall be included into profit or loss, except for
financial assets that are part of hedging relationships.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities
(including derivatives that are liabilities) and financial liabilities designated as at fair value
through profit or loss. The Company measures such kind of liabilities at fair value. The amount of
changes in the fair value of the financial liabilities that are attributable to changes in the
Company’s own credit risk shall be included into other comprehensive income, unless such
treatment would create or enlarge accounting mismatches in profit or loss. Other gains or losses on
those financial liabilities (including interests, changes in fair value that are attributable to reasons
other than changes in the Company’s own credit risk) shall be included into profit or loss, except
for financial liabilities that are part of hedging relationships. Accumulated gains or losses that
originally recognized as other comprehensive income should be transferred out into retained
earnings when the financial liabilities are derecognized.
2) Financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or when the continuing involvement approach applies
The Company measures its financial liabilities in accordance with “CASBE23 – Transfer of
Financial Assets”.
3) Financial guarantee contracts not fall within the above categories 1) and 2), and commitments
to provide a loan at a below-market interest rate, which do not fall within the above category 1)
The Company measure its financial liabilities at the higher of: a. the amount of loss allowances in
according to impairment requirements of financial instruments; b. the amount initially recognized
less the amount of accumulated amortization recognized in accordance with “CASBE14 –
Revenues”.
4) Financial liabilities at amortized cost
The Company measure its financial liabilities at amortized cost using effective interest method.
17
Gains or losses on financial liabilities that are measured at amortized cost and are not part of
hedging relationships shall be included into profit or loss when the financial liabilities are
derecognized and through the amortization process.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
a. the contractual rights to the cash flows from the financial assets expire; or
b. the financial assets have been transferred and the transfer qualifies for derecognition in
accordance with “CASBE23 – Transfer of Financial Assets”.
2) Only when the underlying present obligations of a financial liability are relieved totally or
partly may the financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the
ownership of the financial asset, it derecognizes the financial asset, and any right or liability
arising from such transfer is recognized independently as an asset or a liability. If it retained
substantially all of the risks and rewards related to the ownership of the financial asset, it
continues recognizing the financial asset. Where the Company does not transfer or retain
substantially all of the risks and rewards related to the ownership of a financial asset, it is dealt
with according to the circumstances as follows respectively: (1) if the Company does not retain its
control over the financial asset, it derecognizes the financial asset, and any right or liability arising
from such transfer is recognized independently as an asset or a liability; (2) if the Company retains
its control over the financial asset, according to the extent of its continuing involvement in the
transferred financial asset, it recognizes the related financial asset and recognizes the relevant
liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference
between the amounts of the following two items are included in profit or loss: (1) the carrying
amount of the transferred financial asset as of the date of derecognition; (2) the sum of
consideration received from the transfer of the financial asset, and the accumulative amount of the
changes of the fair value originally included in other comprehensive income proportionate to the
transferred financial asset (financial assets transferred refer to debt instrument investments at fair
value through other comprehensive income). If the transfer of financial asset partially satisfies the
conditions to derecognition, the entire carry amount of the transferred financial asset is, between
the portion which is derecognized and the portion which is not, apportioned according to their
respective relative fair value, and the difference between the amounts of the following two items
are included into profit or loss: (1) the carrying amount of the portion which is derecognized; (2)
the sum of consideration of the portion which is derecognized, and the portion of the accumulative
amount of the changes in the fair value originally included in other comprehensive income which
18
is corresponding to the portion which is derecognized (financial assets transferred refer to debt
instrument investments at fair value through other comprehensive income).
4. Fair value determination method of financial assets and liabilities
The Company use valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value. The inputs to valuation techniques used to
measure fair value are arranged in the following hierarchy and used accordingly:
(1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for
similar assets or liabilities in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability, for example, interest rates and yield curves observable at commonly quoted
intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest
rate that is not observable and cannot be corroborated by observable market data at commonly
quoted intervals, historical volatility, future cash flows to be paid to fulfill the disposal obligation
assumed in business combination, and financial forecast developed using the Company’s own data,
etc.
5. Impairment of financial instruments
(1) Measurement and accounting treatment
The Company, on the basis of expected credit loss, recognizes loss allowances of financial assets
at amortized cost, debt instrument investments, contract assets or lease receivable at fair value
through other comprehensive income, loan commitments other than financial liabilities at fair
value through profit or loss, financial guarantee contracts not belong to financial liabilities at fair
value through profit or loss or financial liabilities that arise when a transfer of a financial asset
does not qualify for derecognition or when the continuing involvement approach applies.
On the balance sheet date, the Company shall only recognize the cumulative changes in the
lifetime expected credit losses since initial recognition as a loss allowance for purchased or
originated credit-impaired financial assets.
For accounts receivable do not contain a significant financing component or contracts in which the
financing components with associated period less than one year are not considered, which result
from transactions as regulated in “CASBE14 - Revenues”, the Company chooses simplified
approach to measure the loss allowance at an amount equal to lifetime expected credit losses.
For lease receivables, accounts receivable and contract assets that result from transactions as
19
regulated in “CASBE14 - Revenues” and contain a significant financing component, the Company
chooses simplified approach to measure the loss allowance at an amount equal to lifetime
expected credit losses.
For financial assets other than the above, on each balance sheet date, the Company shall assess
whether the credit risk on the financial instrument has increased significantly since initial
recognition. The Company shall measure the loss allowance for the financial instrument at an
amount equal to the lifetime expected credit losses if the credit risk on that financial instrument
has increased significantly since initial recognition; otherwise, the Company shall meas ure the
loss allowance for that financial instrument at an amount equal to 12-month expected credit loss.
Considering reasonable and supportable forward-looking information, the Company compares the
risk of a default occurring on the financial instrument as at the balance sheet date with the risk of a
default occurring on the financial instrument as at the date of initial recognition, so as to assess
whether the credit risk on the financial instrument has increased significantly since initial
recognition. For loan commitments and financial guarantee contracts, the date that the Company
becomes a part to the irrecoverable commitment shall be considered to be the date of initial
recognition for the purposes of applying the impairment requirements.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit
risk on the balance sheet date.
The following factors should be considered when the Company makes the above assessment:
1) Whether the contract payment is overdue for more than 30 days. If the delay exceeds 30 days,
the company determines that the credit risk of the financial instrument has increased significantly.
Unless the company does not have to pay much cost or effort to obtain reasonable and
substantiated information proving that the credit risk has not increased significantly since the
initial confirmation, although the payment term stipulated in the contract has exceeded 30 days.
2) Whether the company's credit management methods for financial instruments have changed.
3) Whether there are significant changes in the expected performance and repayment behavior of
the debtor.
4) Whether there is any significant change in the actual or expected operating results of the debtor.
5) Whether there has been a significant adverse change in the regulatory, economic or technical
environment of the debtor.
6) Whether there are adverse changes in business financial or economic conditions that are
expected to cause a significant change in the debtor's ability to meet its obligations.
7) Whether the internal price index caused by the change of credit risk changes significantly.
8) If an existing financial instrument is originated or issued as a new financial instrument on the
reporting date, will the interest rate or other terms of the financial instrument change significantly.
9) Whether the external market indicators of credit risk of the same financial instrument or similar
20
financial instrument with the same expected duration change significantly. These include credit
spreads, the price of credit default swaps for borrowers, the length and extent to which the fair
value of a financial asset is less than its amortized cost, and other market information relevant to
the borrower (such as changes in the price of the borrower's debt instruments or equity
instruments).
10) Whether there has been a significant change in the actual or expected external credit rating of
financial instruments.
11) Whether the actual or expected internal credit rating of the debtor is downgraded.
12) Does the credit risk of other financial instruments issued by the same debtor increase
significantly.
13) Whether there has been a significant change in the value of collateral or the quality of
collateral or credit enhancement provided by third parties.
14) Whether there is a significant change in the economic incentives that are expected to reduce
borrowers' ability to meet contractual deadlines.
15) Anticipated changes to a loan contract, including whether the expected breach of contract may
result in the release or revision of contractual obligations, the granting of an interest free period, a
jump in interest rates, the demand for additional collateral or guarantees, or other changes to the
contractual framework of a financial instrument.
The company evaluates the expected credit risk and measures the expected credit loss on the basis
of a single financial instrument or a combination of financial instruments. When the financial
instrument portfolio is the basis, the company divides the financial instruments into different
portfolios based on the common risk characteristics.
The company re-measures the expected credit loss on each balance sheet date, and the increase or
reversal of the loss provision resulting therefrom is recorded as impairment loss or profit in the
current profit and loss. For a financial asset measured at amortized cost, the loss provision shall be
set off against the carrying value of the financial asset shown in the balance sheet; For creditor's
rights investment measured at fair value and whose changes are included in other comprehensive
income, the company shall recognize its loss provision in other comprehensive income and shall
not deduct the book value of the financial asset.
(2) Financial instruments with expected credit risk assessed and expected credit losses measured
on a collective basis
Items Basis for determination Method for measuring expected
of portfolio credit loss
Have similar risk Loss reserves are measured against
Other receivables – Portfolio characteristics, combined the amount of expected credit
grouped with temporary
with historical experience losses for the next 12 months or for
payments receivable
grouping the entire duration
Other receivables – Portfolio Have similar risk Loss reserves are measured against
grouped with deposit
characteristics, combined the amount of expected credit
receivables
21
Items Basis for determination Method for measuring expected
of portfolio credit loss
with historical experience losses for the next 12 months or for
grouping the entire duration
Have similar risk Loss reserves are measured against
Other receivables – Portfolio characteristics, combined the amount of expected credit
grouped with petty cash
with historical experience losses for the next 12 months or for
receivables
grouping the entire duration
Have similar risk Loss reserves are measured against
Other receivables – Portfolio
characteristics, combined the amount of expected credit
grouped with other
with historical experience losses for the next 12 months or for
combinations
grouping the entire duration
(3) Accounts receivable and contract assets with expected credit losses measured on a collective
basis
Specific portfolios and method for measuring expected credit loss
Items Basis for determination of Method for measuring expected credit loss
portfolio
By referring to the historical experience of
credit losses and combining with the current
Notes With similar risk characteristics, situation and the forecast of the future
receivable – the risk of bank acceptance bill economic situation, the comparison table of
Bank is low, which is generally the aging of bank acceptance bills receivable
acceptance accepted by the bank and the expected credit loss rate of the whole
duration was prepared to calculate the
expected credit loss
With reference to the historical experience of
credit losses and combined with the current
Notes situation and the forecast of the future
receivable – economic situation, the comparison table of
Have similar risk characteristics
Trade the aging of commercial acceptance
acceptance receivables and the expected credit loss rate
of the entire duration was prepared to
calculate the expected credit loss
Based on historical credit loss experience, the
Accounts Merchandise sales receivables,
current situation and the forecast of future
receivable – with similar risks, recognize
economic conditions, prepare the comparison
Portfolio of expected credit losses
table of overdue days/ages and lifetime
affiliated throughout the life after initial
expected credit loss rate of accounts
parties recognition
receivable, so as to calculate expected credit
22
Items Basis for determination of Method for measuring expected credit loss
portfolio
loss.
Based on historical credit loss experience, the
Accounts Merchandise sales receivables, current situation and the forecast of future
receivable – with similar risks, recognize economic conditions, prepare the comparison
Portfolio of expected credit losses table of overdue days/ages and lifetime
non-affiliate throughout the life after initial expected credit loss rate of accounts
parties recognition receivable, so as to calculate expected credit
loss.
(XI) Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work
in process in the process of production, and materials or suppliers etc. to be consumed in the
production process or in the rendering of services.
2. Accounting method for dispatching inventories :
Inventories dispatched from storage are accounted for with weighted average method.
3. Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost or net realizable value;
provisions for inventory write-down are made on the excess of its cost over the net realizable
value. The net realizable value of inventories held for sale is determined based on the amount of
the estimated selling price less the estimated selling expenses and relevant taxes and surcharges in
the ordinary course of business; the net realizable value of materials to be processed is determined
based on the amount of the estimated selling price less the estimated costs of completion, selling
expenses and relevant taxes and surcharges in the ordinary course of business; at the balance sheet
date, when only part of the same item of inventories have agreed price, their net realizable value is
determined separately and is compared with their costs to set the provision for inventory
write-down to be made or reversed.
4. Inventory system
Perpetual inventory method is adopted.
5. Amortization method of low-value consumables and packages
(1) Low-value consumables
Low-value consumables are amortized with one-off method.
(2) Packages
Packages are amortized with one-off method.
(XII) Non-current assets or disposal groups classified as held for sale
23
1. Classification of non-current assets or disposal groups as held for sale
Non-current assets or disposal groups are accounted for as held for sale when the following
conditions are all met: a. the asset must be available for immediate sale in its present condition
subject to terms that are usual and customary for sales of such assets or disposal groups; b. its
sales must be highly probable, i.e., the Company has made a decision on the sale plan and has
obtained a firm purchase commitment, and the sale is expected to be completed within one year.
When the Company acquires a non-current asset or disposal group with a view to resale, it shall
classify the non-current asset or disposal group as held for sale at the acquisition date only if the
requirement of “expected to be completed within one year” is met at that date and it is highly
probable that other criteria for held for sale will be met within a short period (usually within three
months).
An asset or a disposal group is still accounted for as held for sale when the Company remains
committed to its plan to sell the asset or disposal group in the circumstance that non-related party
transactions fail to be completed within one year due to one of the following reasons: a. a buyer or
others unexpectedly set conditions that will extend the sale period, while the Company has taken
timely actions to respond to the conditions and expects a favorable resolution of the delaying
factors within one year since the setting; (2) a non-current asset or disposal group classified as
held for sale fails to be sold within one year due to rare cases, and the Company has taken action
necessary to respond to the circumstances during the initial one-year period and the criteria for
held for sale are met.
2. Measurement of non-current assets or disposal groups as held for sale
(1) Initial measurement and remeasurement
For initial measurement and remeasurement as at the balance sheet date of a non-current asset or
disposal group as held for sale, where the carrying amount is higher than the fair value less costs
to sell, the carrying amount is written down to the fair value less costs to sell, and the write-down
is recognized in profit or loss as assets impairment loss, meanwhile, provision for impairment of
assets as held for sale shall be made.
For a non-current asset or disposal group classified as held for sale at the acquisition date, the
asset or disposal group is measured on initial recognition at the lower of its initial measurement
amount had it not been so classified and fair value less costs to sell. Apart from the non-current
asset or disposal group acquired through business combination, the difference arising from the
initial recognition of a non-current asset or disposal group at the fair value less costs to sell shall
be included into profit or loss.
The assets impairment loss recognized for a disposal group as held for sale shall reduce the
carrying amount of goodwill in the disposal group first, and then reduce its carrying amount based
on the proportion of each non-current asset’s carrying amount in the disposal group.
24
No provision for depreciation or amortization shall be made on non-current assets as held for sale
or non-current assets in disposal groups as held for sale, while interest and other expenses
attributable to the liabilit ies of a disposal group as held for sale shall continue to be recognized.
(2) Reversal of assets impairment loss
When there is a subsequent increase in fair value less costs to sell of a non-current asset as held
for sale at the balance sheet date, the write-down shall be recovered, and shall be reversed not in
excess of the impairment loss that has been recognized after the non-current asset was classified as
held for sale. The reversal shall be included into profit or loss. Assets impairment loss that has
been recognized before the classification is not reserved.
When there is a subsequent increase in fair value less costs to sell of a disposal group as held for
sale at the balance sheet date, the write-down shall be recovered, and shall be reversed not in
excess of the non-current assets impairment loss that has been recognized after the disposal group
was classified as held for sale. The reversal shall be included into profit or loss. The reduced
carrying amount of goodwill and non-current assets impairment loss that has been recognized
before the classification is not reserved.
The subsequent reversal of the impairment loss that has been recognized in a disposal group as
held for sale, the carrying amount is increased based on the proportion of carrying amount of each
non-current assets (excluding goodwill) in the disposal group.
(3) Non-current asset or disposal group that is no longer classified as held for sale and
derecognized
A non-current asset or disposal group that does not met criteria for held for sale and no longer
classified as held for sale, or a non-current asset that removed from a disposal group as held for
sale shall be measured at the lower of: a. its carrying amount before it was classified as held for
sale, adjusted for any depreciation. Amortization or impairment that would have been recognized
had it not been classified as held for sale; and b. its recoverable amount.
When a non-current asset or disposal group classified as held for sale is derecognized,
unrecognized gains or losses shall be included into profit or loss.
(XIII)) Long-term equity investments
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the parties sharing
control. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party
25
is that it makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equity
securities, on the date of combination, it regards the share of the carrying amount of the equity of
the combined party included the consolidated financial statements of the ultimate controlling party
as the initial cost of the investment. The difference between the initial cost of the long-term equity
investment and the carrying value of the combination consideration paid or the par value of shares
issued offsets capital reserve; if the balance of capital reserve is insufficient to offset, any excess is
adjusted to retained earnings.
When long-term equity investments are obtained through business combination under common
control achieved in stages, the Company determines whether it is a “bundled transaction”.
If it is a “bundled transaction”, stages as a whole are considered as one transaction in accounting
treatment. If it is not a “bundled transaction”, investment cost is initially recognized at the share of
the carrying amount of net assets of the combined party included the consolidated financial
statements of the ultimate controlling party. The difference between the acquisition-date
investment cost of long-term equity investments and the carrying amount of the previously held
long-term equity investments plus the carrying amount of the consideration paid for the newly
acquired equity is adjusted to capital reserve; if the balance of capital reserve is insufficient to
offset, any excess is adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at
the acquisition-date fair value of considerations paid.
When long-term equity investments are obtained through business combination not under
common control achieved in stages, the Company determined whether they are stand-alone
financial statements or consolidated financial statements in accounting treatment:
1) In the case of stand-alone financial statements, investment cost is initially recognized at the
carrying amount of the previously held long-term equity investments plus the carrying amount of
the consideration paid for the newly acquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a
“bundled transaction”.
If it is a “bundled transaction”, stages as a whole are considered as one transaction in accounting
treatment. If it is not a “bundled transaction”, the carrying value of the acquirer’s previously held
equity interest in the acquire is re-measured at the acquisition-date fair value, and the difference
between the fair value and the carrying amount is recognized in investment income; when the
acquirer’s previously held equity interest in the acquire involves other comprehensive income
under equity method, the related other comprehensive income is reclassified as income for the
acquisition period, excluding other comprehensive income arising from changes in net liabilities
or assets from remeasurement of defined benefit plan of the acquiree.
26
(3) Long-term equity investments obtained through ways other than business combination: the
initial cost of a long-term equity investment obtained by making payment in cash is the purchase
cost which is actually paid; that obtained on the basis of issuing equity securities is the fair value
of the equity securities issued; that obtained through debt restructuring is determined according to
“CASBE12 - Debt Restructuring”; and that obtained through non-cash assets exchange is
determined according to “CASBE7 - Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of gain or loss
For long-term equity investments with control relationship, it is accounted for with cost method;
for long-term equity investments with joint control or significant influence relationship, it is
accounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained
thereof is recognized in profit or loss. If the disposal does not result in the Company’s loss of
significant influence or joint control, the remained equity is accounted for with equity method;
however, if the disposal results in the Company’s loss of control, joint control, or significant
influence, the remained equity is accounted for according to “CASBE 22 - Financial Instruments:
Recognition and Measurement”.
(2) Consolidated financial statements
1) Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the
Company’s loss of control
Before the Company’s loss of control, the difference between the disposal consideration and the
proportionate share of net assets in the disposed subsidiary from acquisition date or combination
date to the disposal date is adjusted to capital reserve (capital premium), if the balance of capital
reserve is insufficient to offset, any excess is adjusted to retained earnings.
When the Company loses control, the remained equity is re-measured at the loss-of-control-date
fair value. The aggregated value of disposal consideration and the fair value of the remained
equity, less the share of net assets in the disposed subsidiary held before the disposal from the
acquisition date or combination date to the disposal date is recognized in investment income in the
period when the Company loses control over such subsidiary, and meanwhile goodwill is offset
correspondingly. Other comprehensive income related to equity investments in former subsidiary
is reclassified as investment income upon the Company’s loss of control.
2) Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s
loss of control
In case of “bundled transaction”, stages as a whole are considered as one transaction resulting in
loss of control in accounting treatment. Before the Company loses control, the difference between
27
the disposal consideration at each stage and the proportionate share of net assets in the disposed
subsidiary is recognized as other comprehensive income at the consolidated financial statements
and reclassified as profit or loss in the period when the Company loses control over such
subsidiary.
(XIV) Investment property
1. Investment property includes land use right of rent-out property and of property held for capital
appreciation and buildings that have been leased out.
2. The initial measurement of investment property is based on its cost, and subsequent
measurement is made using the cost model, the depreciation or amortization method is the same as
that of fixed assets and intangible assets.
(XV) Fixed assets
1. Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production or supply of goods or services, for
rental to others, or for administrative purposes, and expected to be used during more than one
accounting year. Fixed assets are recognized if, and only if, it is probable that future economic
benefits associated with the assets will flow to the Company and the cost of the assets can be
measured reliably.
2. Depreciation method of different categories of fixed assets
Estimated Annual
Useful life
Categories Depreciation method residual value depreciation
(years)
proportion (%) rate (%)
Buildings and structures Straight-line method 15-35 3.00 2.77-6.47
Machinery Straight-line method 10-15 3.00 6.47-9.70
Transport facilities Straight-line method 6-8 3.00 12.13-16.17
Electronic equipment Straight-line method 4-11 3.00 2.2-24.25
Office equipment and others Straight-line method 4-11 3.00 2.2-24.25
3. Recognition and pricing principles of fixed assets rented-in under finance lease
Finance lease is determined when one or a combination of the following conditions are satisfied:
(1) the ownership has been transferred to the lessee when the leasing term is due; (2) the lessee has
the option to purchase the leasing asset at a price that is much lower than its fair value, so it can be
reasonably determined that the lessee will take the option at the very beginning of the lease; (3)
the leasing term accounts for most time of the useful life (ordinarily accounting for 75% or higher)
even if the ownership does not transfer to the lessee; (4) the present value of the minimum amount
of rent that the lessee has to pay at the first day of the lease amounts to 90% or higher of its fair
value at the same date; or the present value of the minimum amount of rent that the lessor collects
at the first day of the lease amounts to 90% or higher of its fair value at the same date; and/or (5)
28
the leased assets are of such a specialized nature that only the lessee can use them without major
modifications.
Fixed assets rented-in under finance lease are recorded at the lower of fair value and the present
value of the minimum lease payment at the inception of the lease, and are depreciated following
the depreciation policy for self-owned fixed assets.
(XVI) Construction in progress
1. Construction in progress is recognized if, and only if, it is probable that future economic
benefits associated with the item will flow to the Company, and the cost of the item can be
measured reliably. Construction in progress is measured at the actual cost incurred to reach its
designed usable conditions.
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches its
designed usable conditions. When the construction completion cost reaches final estimating and
auditing of the construction in progress was not finished while it reaching the designed usable
conditions, it is transferred to fixed assets using estimated value first, and then adjusted
accordingly when the actual cost is settled, but the accumulated depreciation is not to be adjusted
retrospectively.
(XVII) Borrowing costs
1. Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition
and construction or production of assets eligible for capitalization, it is capitalized and included in
the costs of relevant assets; other borrowing costs are recognized as expenses on the basis of the
actual amount incurred, and are included in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless they following requirements are all met: 1) the
asset disbursements have already incurred; 2) the borrowing costs have already incurred; and 3)
the acquisition and construction or production activities which are necessary to prepare the asset
for its intended use or sale have already started.
(2) Suspension of capitalization: where the acquisition and construction or production of a
qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months,
the capitalization of the borrowing costs is suspended; the borrowing costs incurred during such
period are recognized as expenses, and are included in profit or loss, till the acquisition and
construction or production of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or
production is ready for the intended use or sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
29
For borrowings exclusively for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests is determined in light of the actual interest
expenses incurred (including amortization of premium or discount based on effective interest
method) of the special borrowings at the present period minus the income of interests earned on
the unused borrowings as a deposit in the bank or as a temporary investment; where a general
borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the Company calculates and determines the to-be-capitalized amount of interests on
the general borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of the
general borrowing used.
(XVIII) Intangible assets
1. Intangible asset includes land use right, patent right and non-patented technology etc. The initial
measurement of intangible asset is based its cost.
2. For intangible assets with finite useful lives, its amortization amount is amortized within its
useful lives systematically and reasonably, if it is unable to determine the expected realization
pattern reliably, intangible assets are amortized by the straight-line method with details as follows:
Items Amortization period (years)
Software 3-10
Patent right and non-patented technology 5-10
Land use right 40-50
3. Expenditures on the research phase of an internal project are recognized as profit or loss when it
is incurred. An intangible asset arising from the development phase of an internal project is
recognized if the Company can demonstrate all of the following: (1) the technical feasibility of
completing the intangible asset so that it will be available for use or sale; (2) its intention to
complete the intangible asset and use or sell it; (3) how the intangible asset will generate probable
future economic benefits. Among other things, the Company can demonstrate the existence of a
market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset; (4) the availability of adequate technical,
financial and other resources to complete the development and to use or sell the intangible asset;
and (5) its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
(XIX)) Impairment of part of non-current assets
For non-current assets such as long-term equity investments, investment property at cost model,
fixed assets, construction in progress, intangible assets with finite useful life, etc., if at the balance
sheet date there is indication of impairment, the recoverable amount is estimated. For goodwill
recognized in business combination and intangible assets with indefinite useful life, no matter
whether there is indication of impairment, impairment test is performed annually. Impairment test
30
on goodwill is performed on related group of assets or a portfolio of groups of assets.
When the recoverable amount of such non-current assets is lower than their carrying amount, the
difference is recognized as assets impairment loss through profit or loss.
(XX) Long-term prepayments
Long-term prepayments are expenses that have been recognized but with amortization period over
one year (excluding one year). They are recorded with actual cost, and evenly amortized within its
beneficiary period or stipulated period. If items of long-term prepayments fail to be beneficial to
the following accounting periods, residual values of such items are included in profit or loss.
(XXI) Employee benefits
1. Employee benefits include short-term employee benefits, post-employment benefits,
termination benefits and other long-term employee benefits.
2. Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service,
short-term employee benefits actually incurred as liabilities, with a corresponding charge to profit
or loss or the cost of a relevant asset.
3. Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans.
(1) The Company recognizes in the accounting period in which an employee provides service the
contribution payable to a defined contribution plan as a liability, with a corresponding charge to
profit or loss or the cost of a relevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the following
steps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatible
actuarial assumptions to estimate related demographic variables and financial variables, meas ure
the obligations under the defined benefit plan, and determine the periods to which the obligations
are attributed. The Company discounts obligations under the defined benefit plan using the
discount rate to determine the present value of the defined benefit plan obligations and the current
service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus by
deducting the present value of the defined benefit plan obligation from the fair value of defined
benefit plan assets as a net defined benefit plan liability or net defined benefit plan asset. When a
defined benefit plan has a surplus, the Company measures the net defined benefit plan asset at the
lower of the surplus in the defined benefit plan and the asset ceiling;
31
3) At the end of reporting period, the Company recognizes the following components of employee
benefits cost arising from defined benefit plan: a. service cost; b. net interest on the net defined
benefit plan liability (asset); and c. Changes as a result of re-measurement of the net defined
benefit liability (asset). Item a and item b are recognized in profit or loss or the cost of a relevant
asset. Item c is recognized in other comprehensive income and is not to be reclassified
subsequently to profit or loss. However, the Company may transfer those amounts recognized in
other comprehensive income within equity.
4. Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability for
termination benefits, with a corresponding charge to profit or loss at the earlier of the following
dates: a. when the Company cannot unilaterally withdraw the offer of termination benefits because
of an employment termination plan or a curtailment proposal; or b. when the Company recognizes
cost or expenses related to a restructuring that involves the payment of termination benefits.
5. Other long-term employee benefits
When other long-term employee benefits provided by the Company to the employees satisfied the
conditions for classifying as a defined contribution plan, those benefits are accounted for in
accordance with the requirements relating to defined contribution plan. The Company recognizes
and measures the net liability or net asset of other long-term employee benefits in accordance with
the requirements relation to defined benefit plan. At the end of the reporting period, the Company
recognizes the components of cost of employee benefits arising from other long-term employee
benefits as the followings: a. service cost; b. net interest on the net liability or net assets of other
long-term employee benefits; and c. changes as a result of re-measurement of the net liability or
net assets of other long-term employee benefits. As a practical expedient, the net total of the
aforesaid amounts are recognized in profit or loss or included in the cost of a relevant asset.
(XXII) Provisions
1. Provisions are recognized when fulfilling the present obligations arising from contingencies
such as providing guarantee for other parties, litigation, products quality guarantee, onerous
contract, etc., may cause the outflow of the economic benefit and such obligations can be reliably
measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in
fulfilling the present obligations, and its carrying amount is reviewed at the balance sheet date.
(XVIII) Revenue
1. Revenue recognition principles
(1) Sale of goods
Revenue from sale of goods is recognized if, and only if, the following conditions are all satisfied:
a) significant risks and rewards of ownership of the goods is transferred to the buyer; b) the
32
Company retains neither continuing managerial involvement of ownership nor effective control
over the goods sold; c) the amount of revenue can be measured reliably; d) it is probable that the
economic benefits of the transaction will flow to the Company; and e) the costs of the transaction
incurred and to be incurred can be measured reliably.
(2) Rendering of services
When the outcome of the transaction can be estimated reliably (the amount of revenue can be
measured reliably, it is probable that the economic benefits will flow to the Company, the
percentage of completion of the transaction can be determined reliably, and the costs of the
transaction incurred and to be incurred can be measured reliably), revenue from rendering of
services is recognized using the percentage of completion method, and the stage of completion is
determined at the proportion of costs incurred to the estimated total costs. When the outcome of
the transaction cannot be estimated reliably at the balance sheet date, revenue is recognized based
on the amount of the costs incurred and the costs incurred are charged off at the same amount
when the costs incurred are expected to be recoverable; and no revenue is recognized and the costs
incurred are charged off as an expense of the period when the costs incurred are not expected to be
recovered.
(3) Revenue arising from use by others of assets
Revenue arising from use by others of assets is recognized if, and only if, it is probable that
economic benefits associated with the transaction will flow to the Company and the amount of the
revenue can be measured reliably. Interest income is recognized based on the length of time for
which the Company’s cash is used by others and the effective interest rate; and royalties are
recognized according to the period and method of charging as specified in relevant contract or
agreement.
2. Revenue recognition method adopted by the Company
The Company’s main product is the telecommunication product. Revenue is recognized if, and
only if, the following conditions are all met: the Company has delivered goods to the purchaser
based on contractual agreements; customers have accepted goods and settled the payment; goods
payment has been collected or the Company has obtained receipts invoices and it is probable that
economic benefits associated with the transaction will flow to the Company; and the costs of the
transaction incurred and to be incurred can be measured reliably.
(XIX) Government grants
Government grants
1. Government grants shall be recognized if, and only if, the following conditions are all met: (1)
the Company will comply with the conditions attaching to the grants; (2) the grants will be
received. Monetary government grants are measured at the amount received or receivable.
Non-monetary government grants are measured at fair value, and can be measured at nominal
amount in the circumstance that fair value can’t be assessed.
33
2. Government grants related to assets
Government grants related to assets are government grants with which the Company construct or
otherwise acquire long-term assets under requirements of government. In the circumstances that
there is no specific government requirement, the Company shall determine based on the primary
condition to acquire the grants and government grants related to assets are government grants
whose primary condition is to construct or otherwise acquire long-term assets. They offset
carrying amount of relevant assets or recognized as deferred income. If recognized as deferred
income, they are included in profit or loss on a systematic basis over the useful lives of the
relevant assets. Those measured at notional amount is directly included into profit or loss. For
assets sold, transferred, disposed or damaged within the useful lives, balance of unamortized
deferred income is transferred into profit or loss of the year in which the disposal occurred.
3. Government grants related to income
Government grants related to income are government grants other than those related to assets. For
government grants that contain both parts related to assets and parts related to income, in which
those two parts are blurred and thus collectively classified as government grants related to income.
For government grants related to income used for compensating the related future cost, expens es
or losses of the Company are recognized as deferred income and are included in profit or loss or
offset relevant cost during the period in which the relevant cost, expenses or losses are recognized;
for government grants related to income used for compensating the related cost, expenses or losses
incurred to the Company, they are directly included in profit or loss or directly offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other
income or offset relevant cost based on business nature, while those not related to the ordinary
course of business shall be included into non-operating revenue or expenditures.
5. Policy interest subvention
(1) In the circumstance that government appropriates interest subvention to lending bank, who
provides loans for the Company with a policy subsidised interest rate, borrowings are carried at
the amount received, with relevant borrowings cost computed based on the principal and the
policy subsidised interest rate.
(2) In the circumstance that government directly appropriates interest subvention to the Company,
the subsidised interest shall offset relevant borrowing cost.
(XXV) Deferred tax assets/Deferred tax liabilities
1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the
difference between the carrying amount and tax base of assets and liabilities (and the difference of
the carrying amount and tax base of items not recognized as assets and liabilities but with their tax
base being able to be determined according to tax laws) and in accordance with the tax rate
applicable to the period during which the assets are expected to be recovered or the liabilities are
expected to be settled.
34
2. A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is
most likely to obtain and which can be deducted from the deductible temporary difference. At the
balance sheet date, if there is any exact evidence that it is probable that future taxable profits will
be available against which deductible temporary differences can be utilized, the deferred tax assets
unrecognized in prior periods are recognized.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying
amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow the benefit of the deferred tax asset to be utilized. Such
reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable
income will be available.
4. The income tax and deferred tax for the period are treated as income tax expenses or income
through profit or loss, excluding those arising from the following circumstances: (a) business
combination; and (b) the transactions or items directly recognized in equity.
(XXVI) Leases
1. Operating leases
When the Company is the lessee, lease payments are recognized as cost or profit or loss with
straight-line method over the lease term. Initial expenses are recognized directly into profit or loss.
Contingent rents are charged as profit or loss in the periods in which they are incurred.
When the Company is the lessor, lease income is recognized as profit or loss with straight-line
method over the lease term. Initial expenses, other than those with material amount and eligible
for capitalization which are recognized as profit or loss by installments, are recognized directly as
profit or loss. Contingent rents are charged as profit or loss in the periods in which they are
incurred.
2. Finance leases
When the Company is the lessee, at the commencement of the lease term, lessees recognize
finance leases as assets and liabilities in their balance sheets at amounts equal to the lower of fair
value of the leased property and the present value of the minimum lease payments, each
determined at the inception of the lease, and recognize the minimum lease payments as the
entering value of long-term payable, and treat the difference of the two as unrecognized finance
expense. Any initial direct costs of the lessee are added to the amount recognized as an asset. The
effective interest method is used to recognize finance expense of the period during the lease term.
When the Company is the lessor, at the commencement of the lease, lessor recognizes the
aggregate of minimum lease receipts and initial direct costs, each determined at the inception of
the lease, as the entering value of finance lease receivables, and recognize the unguaranteed
residual value at the same time. The difference between the aggregate of the minimum lease
receipts, the initial direct costs and the unguaranteed residual value, and the sum of their present
35
values is recognized as unrealized finance income. The effective interest method is used to
recognize finance income of the period during the lease term.
(XXVII) Segment reporting
Reportable segments are identified based on operating segments which are determined based on
the structure of the Company’s internal organization, management requirements and internal
reporting system. An operating segment is a component of the Company that:
(1) engages in business activities from which it may earn revenues and incur expenses;
(2) whose financial performance are regularly reviewed by Management to make decisions about
resource to be allocated to the segment and assess its performance; and
(3) for which financial information regarding financial position, financial performance and cash
flows is available.
(XXVIII) Other significant accounting policies and estimates
1. Recognition criteria and accounting treatment of discontinued operations
A component of the Company that has been disposed of, or is classified as held for sale and can be
clearly distinguished is recognized as a discontinued operation when it fulfills any of the following
conditions:
(1) it represents a separate major line of business or a separate geographical area of operations;
(2) it is part of a related plan to dispose of a separate major line of business or a separate
geographical area of operations; or
(3) it is a subsidiary acquired exclusively with a review to resale.
(XXXIV) Significant changes in accounting policies and estimates
1. Changes in accounting policies
(1) Changes in accounting policies arising from changes in CASBEs
The Company prepared the financial statements for the year ended December 31, 2019 in
accordance with “Notice of the Ministry of Finance on Revising and Issuing Financial Statement
Templates for General Enterprises” (numbered Cai Kuai [2019] 6), its interpretations and
CASBEs, and changes in accounting policies are applicable to retrospective application method.
Financial statement items and amounts significantly affected of 2018 are as follows:
Original financial statement items and amounts Revised financ ial statement items and amounts
Notes receivable and Notes receivable 46,475,656.01
987,544,115.36
accounts receivable Accounts receivable 941,068,459.35
Notes payable and Notes payable 84,374,916.99
827,403,870.61
accounts payable Accounts payable 743,028,953.62
Available-for-sale 741,953.00 Other equity 741,953.00
36
financial assets instrument
investments
Less:Assets impairment Add:Assets
3,030,783.16 -3,030,783.16
loss impairment loss
2) The Company has adopted “CASBE 22 – Recognition and measurement of Financial Assets”,
“CASBE 23 – Transfer of Financial Assets”, “CASBE 24 - Hedging” and “CASBE 37 -
Presentation of Financial Instruments” (collectively, the “revised financial instrument standard”)
revised by Ministry of Finance of PRC. Pursuant to regulations on convergence between old and
new standards, no adjustment shall be made on comparable information, and the difference arising
from adoption on the adopting date shall be retrospectively adjusted into retained earnings or other
comprehensive income at the beginning of the reporting period.
The revised financial instrument standard changes classification and measurement method of
financial assets, and determines three major categories of measurement: amortized cost; fair value
through other comprehensive income; fair value through profit or loss. The Company makes the
above classification based on its own business model and the contractual cash flow characteristics
of the financial assets. The Company measures equity investments at fair value through profit or
loss, but may make an irrevocable election at initial recognition to measure them at fair value
through other comprehensive income.
The revised financial instrument standard requires for a “expected credit loss model” instead of
“incurred loss model”, which is applicable to financ ial assets at amortized cost, financial assets,
contract assets, lease receivable at fair value through other comprehensive income.
2. Significant changes in accounting estimates
None.
3. Implementation of the new financial instruments guidelines, revenue standards and lease
standards adjustments for the first time implementation of the relevant financial statements at the
beginning of the year
Consolidated Financial Statement
Items Dec,31 2018 Jau,1 2019 adjustments
Current assets:
Cash and bank balances 261,938,068.72 261,938,068.72
Notes receivable 46,475,656.01 46,475,656.01
Accounts receivable 941,068,459.35 941,068,459.35
Advances paid 188,848,712.69 188,848,712.69
Other receivables 33,734,948.67 33,734,948.67
Inventories 286,972,632.59 286,972,632.59
Other current assets 13,497,540.69 13,497,540.69
37
Total current assets 1,772,536,018.72 1,772,536,018.72
Available-for-sale financial
741,953.00 -741,953.00
assets
Long-term equity investments 183,244,080.23 183,244,080.23
Other equity instrument
741,953.00 741,953.00
investments
Investment property 8,397,113.98 8,397,113.98
Fixed assets 112,504,807.11 112,504,807.11
Construction in progress 9,472,383.76 9,472,383.76
Intangible assets 30,285,598.77 30,285,598.77
Long-term prepayments 3,562,336.84 3,562,336.84
Total non-current assets 348,208,273.69 348,208,273.69
Total assets 2,120,744,292.41 2,120,744,292.41
Current liabilities: 445,010,000.00 445,010,000.00
Short-term borrowings 84,374,916.99 84,374,916.99
Notes payable 743,028,953.62 743,028,953.62
Accounts payable 259,545,648.66 259,545,648.66
Advances received 21,132,336.19 21,132,336.19
Employee benefits payable 17,230,159.02 17,230,159.02
Taxes and rates payable 55,128,492.65 55,128,492.65
Other payables 1,625,450,507.13 1,625,450,507.13
Total current liabilities 7,296,315.00 7,296,315.00
Non-current liabilities: 7,296,315.00 7,296,315.00
Deferred income 1,632,746,822.13 1,632,746,822.13
Total non-current liabilities 215,000,000.00 215,000,000.00
Total liabilities 185,374,533.85 185,374,533.85
Equity: -4,947,588.58 -4,947,588.58
Share capital/Paid-in capital 589,559.77 589,559.77
Capital reserve -40,726,776.80 -40,726,776.80
Other comprehensive income 355,289,728.24 355,289,728.24
Surplus reserve 132,707,742.04 132,707,742.04
Undistributed profit 487,997,470.28 487,997,470.28
Total equity attributable to the
2,120,744,292.41 2,120,744,292.41
parent company
4. Implementation of the new financial instrument guidelines, new lease criteria retrospective
adjustment pre-comparison data description
None.
IV Taxes
(I) Main taxes and tax rates
38
Taxes Tax bases Tax rates
Value-added tax (VAT) The taxable revenue from sales of goods or 16%、13%、6%
rendering of services
For housing property levied on the basis of
price, housing property tax is levied at the
rate of 1.2% of the balance after deducting
Housing property tax 30% of the cost; for housing property 1.2%, 12%
levied on the basis of rent, housing
property tax is levied at the rate of 12% of
rent revenue.
Urban maintenance and Turnover tax payable 7%
construction tax
Education surcharge Turnover tax payable 3%
Local education surcharge Turnover tax payable 2%
Enterprise income tax Taxable income 15%,16.5%,25%
Different enterprise income tax rates applicable to different taxpayers:
Taxpayers Income tax rate
The “Company” 15%
Nanjing Mennekes Electrics Co., Ltd. 15%
Nanjing Putian Telege Intelligent Building Co., Ltd. 15%
Nanjing Putian Changle Telecommunications Equipment Co., Ltd. 15%
Nanjing Putian Datang Information Electronic Co., Ltd. 15%
Nanjing Putian Network Co., Ltd. 15%
Putian Telecommunications (H.K.) Co., Ltd. 16.5%
Taxpayers other than the above-mentioned 25%
The subsidiary, Putian Telecommunications (H.K.) Co., Ltd., was established in Hong Kong on
December 1, 2000, and is subject to the enterprise income tax at a rate of 16.5%, according to
relevant rules in Hong Kong.
(II) Tax preferential policies
The company obtained the high-tech enterprise certificate in December 2018, which is valid for 3
years and shall pay the enterprise income tax at the rate of 15%.
The subsidiary, Nanjing Putian Telege Intelligent Building Co., Ltd. obtained high-tech enterprise
certificate in December , 2017, valid for 3 years. It is subject to the enterprise income tax at a rate
of 15% .
The subsidiary, Nanjing Mennekes Electrics Co., Ltd. obtained high-tech enterprise certificate in
October , 2016, valid for 3 years. It is subject to the enterprise income tax at a rate of 15% .
The subsidiary, Nanjing Putian Changle Telecommunications Equipment Co., Ltd. obtained
high-tech enterprise certificate in October 10, 2015, valid for 3 years. It is subject to the enterprise
39
income tax at a rate of 15% .
The subsidiary, Nanjing Putian Network Co., Ltd., obtained high-tech enterprise certificate in
December 7, 2017, valid for 3 years. It is subject to the enterprise income tax at a rate of 15% .
The subsidiary, Nanjing Putian Datang Information Electronic Co., Ltd. obtained high-tech
enterprise certificate in November, 2018, valid for 3 years. It is subject to the enterprise income
tax at a rate of 15% .
The subsidiary, Nanjing Telecommunication Equipment Factory - the Seventh Branch, is a social
welfare enterprise. Accordance to the provisions of Guo Shui Fa [2007] No.067, it enjoys the
preferential tax policy of VAT refund upon collection and plus deduction of wages paid to the
disabled employees.
The subsidiaries, Nanjing Putian Datang Information Electronic Co., Ltd. and Nanjing Putian
Telecommunication Technology Co., Ltd. were certified as software enterprises, and some of the
software products produced by Nanjing South Telecommunications Company Limited and
Nanjing Putian Network Co., Ltd. are entitled to enjoy the preferential tax policy of 3% VAT
refund upon collection in accordance with the provisions of Cai Shui [2011] No.100.
V. Notes to items of consolidated financial statements
(I) Notes to items of the consolidated balance sheet
1. Cash and bank balances
(1) Details
Items Clos ing balance Opening balance
Cash on hand 3,553.38 1,886.33
Cash in bank 78,198,844.14 201,367,431.09
Other cash and bank balances 58,364,673.70 60,568,751.30
Total 136,567,071.22 261,938,068.72
(2) Details of other cash and bank balances
Items Clos ing balance Opening balance
Bank acceptance deposit 20,847,307.09 38,442,848.22
Guarantee money 37,517,366.61 22,125,903.08
Total 58,364,673.70 60,568,751.30
2. Notes receivable
(1) Details
1) Details of different categories
Closing balance
Categories
Book balance Provision for bad debts Carrying
40
% to Provision amount
Amount Amount proportion
total
(%)
Bad debts made on an individual
basis
Including: Bank acceptance
Trade acceptance
Bad debts made on a collective basis
Including: Bank acceptance 32,885,730.42 88.94 32,885,730.42
Trade acceptance 4,091,253.41 11.06 4,091,253.41
Total 36,976,983.83 100.00 36,976,983.83
Opening balance
Items
Book balance Provision for bad debts Carrying amount
Bank acceptance portfolio 37,837,668.81 37,837,668.81
Trade acceptance portfolio 8,637,987.20 8,637,987.20
Subtotal 46,475,656.01 46,475,656.01
(2) Endorsed or discounted but undue notes at the balance sheet date
Items Clos ing balance derecognized Clos ing balance not yet
derecognized
Bank acceptance 9,378,042.36 6,252,028.24
Trade acceptance 3,126,014.12
Subtotal 12,504,056.48 6,252,028.24
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit
level, there is very little possibility of failure in recoverability when it is due. Based on this fact,
the Company derecognized the endorsed or discounted bank acceptance. However, if any bank
acceptance is not recoverable when it is due, the Company still holds joint liability on such
acceptance, according to the China Commercial Instrument Law.
In the current period, trade acceptance is endorsed for goods payment. As it relates to many
endorsements and the drawer is always in good commercial credit level, it is with low default risk
and thus derecognized.
3. Accounts receivable
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables with provision
made on an individual basis
41
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables with provision
1,015,892,712.42 100.00 56,556,452.96 5.90 959,336,259.46
made on a collective basis
Portfolio 1
Portfolio 2 1,015,892,712.42 100.00 56,556,452.96 5.90 959,336,259.46
Total 1,015,892,712.42 100.00 56,556,452.96 5.90 959,336,259.46
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables with provision
made on an individual basis
Receivables with provision
997,288,551.79 100.00 56,220,092.44 5.64 941,068,459.35
made on a collective basis
Portfolio 1
Portfolio 2 997,288,551.79 100.00 56,220,092.44 5.64 941,068,459.35
Total 997,288,551.79 100.00 56,220,092.44 5.64 941,068,459.35
2) In portfolios, accounts receivable with provision made on a collective basis with age analysis
method
Clos ing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 769,215,633.23
1-2 years 115,804,345.06
2-3 years 55,713,805.24 5,571,380.52 10.00
3-4 years 18,835,120.82 5,650,536.25 30.00
4-5 years 15,713,782.15 6,285,512.86 40.00
5-6 years 7,805,012.96 6,244,010.37 80.00
Over 6 years 32,805,012.96 32,805,012.96 100.00
Subtotal 1,015,892,712.42 56,556,452.96
3) Bad debts disclosed by ages
Ages Clos ing balance
Within 1 year
1-2 years
2-3 years 5,571,380.52
Over 3 years 50,985,072.44
3-4 years 5,650,536.25
4-5 years 6,285,512.86
42
Ages Clos ing balance
Over 5 years 39,049,023.33
Subtotal 56,556,452.96
(2) Provisions made, collected or reversed in current period
Increase
Items Opening
Provision Closing balance
balance Provision made Others
collected
Accounts
receivable 56,220,092.44 319,224.33 3,900.00 -21,036.19 56,556,452.96
Subtotal 56,220,092.44 319,224.33 3,900.00 -21,036.19 56,556,452.96
Provision for bad debts made in current period totaled 319,224.33 yuan, collected totaled
3,900.00yuan and provision increased due to fluctuations in exchange totaled -21,036.19yuan.
(3) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Book balance total balance of Provision for
accounts bad debts
receivable (%)
Beijing UniStrong Science & Technology
52,167,500.00 5.14
Co., Ltd.
China United Network Communications
29,514,969.14 2.91
Group Co.,Ltd. -Henan Branch
Beijing Zhongrui Haotian Information
25,499,700.00 2.51
Technology Co., Ltd.
Nanjing Hehao Communication Technology
22,940,243.35 2.26
Co., Ltd.
Shenzhen Zhongchuang Electric
22,904,248.79 2.25
Measurement Technology Co., Ltd.
Subtotal 153,026,661.28 15.07
4. Advances paid
(1) Age analys is
Clos ing balance
Ages
Book balance % to total Provision for Carrying amount
bad debts
Within 1 year 21,515,674.72 71.92 21,515,674.72
1-2 years 3,553,031.52 11.88 3,553,031.52
2-3 years 1,139,873.30 3.81 1,139,873.30
Over 3 years 3,706,729.48 12.39 3,706,729.48
Total 29,915,309.02 100.00 29,915,309.02
(Continued)
Opening balance
Ages
Book balance % to total Provision for Carrying amount
bad debts
43
Opening balance
Ages
Book balance % to total Provision for Carrying amount
bad debts
Within 1 year 179,718,854.19 95.17 179,718,854.19
1-2 years 3,256,231.30 1.72 3,256,231.30
2-3 years 1,176,772.69 0.62 1,176,772.69
Over 3 years 4,696,854.51 2.49 4,696,854.51
Total 188,848,712.69 100.00 188,848,712.69
(2) Details of the top 5 debtors with largest balances
Debtors Book balance Proportion to the total
balance of advances paid (%)
Jiangsu Sainty M achinery IM P.&Co.,Ltd. 7,342,908.43 24.55
Shenzhen KTC Commercial Display Technology
Co., Ltd. 894,150.00 2.99
Xuzhou hengxun network technology Co., Ltd. 881,472.90 2.95
Jiangsu huihong intelligent engineering Co. Ltd. 746,549.33 2.50
Erdos Tianjin Electric Co., Ltd. 618,750.00 2.07
Subtotal
10,483,830.66 35.05
5. Other receivables
(1) Details
1) Details on categories
Closing balance
Book balance Provision for bad debts
Categories
Provision Carrying
Amount % to Amount amount
proportion
total
(%)
Receivables with provision
made on an individual basis 28,912,122.71 42.33 28,912,122.71 100.00
Including: Interest receivable
Dividend receivable
Other receivables 28,912,122.71 42.33 28,912,122.71 100.00
Receivables with provision
made on a collective basis 39,384,063.40 57.67 5,180,552.84 13.15 34,203,510.56
Including: Interest receivable
Dividend receivable
Other receivables 39,384,063.40 57.67 5,180,552.84 13.15 34,203,510.56
Portfolio 1
Portfolio 2 39,384,063.40 57.67 5,180,552.84 13.15 34,203,510.56
Total 68,296,186.11 100.00 34,092,675.55 49.92 34,203,510.56
(Continued)
Opening balance
Categories
Book balance Provision for bad debts Carrying
44
Provision amount
Amount % to Amount proportion
total
(%)
Receivables with provision
28,912,122.71 42.85 28,912,122.71 100.00
made on an individual basis
Including: Interest receivable
Dividend receivable
Other receivables 28,912,122.71 42.85 28,912,122.71 100.00
Receivables with provision
made on a collective basis 38,562,293.97 57.15 4,827,345.30 12.52 33,734,948.67
Including: Interest receivable
Dividend receivable
Other receivables 38,562,293.97 57.15 4,827,345.30 12.52 33,734,948.67
Portfolio 1
Portfolio 2 38,562,293.97 57.15 4,827,345.30 12.52 33,734,948.67
Total 67,474,416.68 100.00 33,739,468.01 50.00 33,734,948.67
2) Other receivables of individually significant amount and with provision made on an individual
basis
Debtors Book balance Provision for Provision Reasons for
bad debts proportion (%) provision made
With long age
Beijing Likangpu Communication 28,912,122.71 28,912,122.71 100.00 and hard to
Equipment Co., Ltd.
recover
Subtotal 28,912,122.71 28,912,122.71 100.00
3) Other receivables with provision made on a collective basis
Clos ing balance
Ages Provision
Book balance Provision for bad debts
proportion (%)
Temporary advance
7,674,156.55 2,120,925.66 27.64
payment receivable
Deposits 24,776,510.58 2,037,288.82 8.22
Funds for business 1,148,198.17 92,636.03 8.07
Others 5,785,198.10 929,702.33 16.07
Subtotal 39,384,063.40 5,180,552.84
4)Provision for bad debts
Level 1 Level 2 Level 3
Expected credit Expected credit loss
Expected credit
Ages loss for the for the entire Total
losses in the next
entire duration duration (credit loss
12 months
(no credit loss) has occurred)
Balance at
215,395.92 4,611,949.38 4,827,345.30
Jau1,2019
45
Level 1 Level 2 Level 3
Expected credit Expected credit loss
Expected credit
Ages loss for the for the entire Total
losses in the next
entire duration duration (credit loss
12 months
(no credit loss) has occurred)
Transfer level 2
Transfer level 3 215,395.92 215,395.92
Reversed level 2
Reversed level 1
Provision made 232,406.89 346,177.30 578,584.19
Provision
10,000.00 10,000.00
Reserved
Other changes -19.27 -19.27
Balance at
222,426.16 4,958,126.68 5,180,552.84
Jun30,2019
5) Bad debts disclosed by ages
Ages Clos ing balance
Within 1 year
1-2 years
2-3 years 222,426.16
Over 3 years 4,958,126.68
3-4 years 268,083.90
4-5 years 103,949.20
Over 5 years 4,586,093.58
Subtotal 5,180,552.84
(2) Provisions made, collected or reversed in current period
Increase
Items Opening
Provision Closing balance
balance Provision made Others
collected
Other receivables 33,739,468.01 363,188.27 10,000.00 -19.27 34,092,675.55
Subtotal 33,739,468.01 363,188.27 10,000.00 -19.27 34,092,675.55
Provision for bad debts made in current period totaled363,188.27 yuan, collected totaled
10,000.00 yuan, and provision increased due to fluctuations in exchange totaled -19.27 yuan.
(3) Other receivables categorized by nature
Nature of receivables Clos ing balance Opening balance
Temporary advance payment receivable 36,354,429.26 33,879,523.33
46
Nature of receivables Clos ing balance Opening balance
Deposits 25,008,360.58 24,126,517.87
Funds for business 1,793,318.17 2,652,720.79
Others 5,140,078.10 6,815,654.69
Total 68,296,186.11 67,474,416.68
(4) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Book balance Ages total balance of Provision for
receivables other receivables bad debts
(%)
Beijing Likangpu Temporary
Communications advance payment 28,912,122.71 Over 5 years 42.33 28,912,122.71
Equipment Co., Ltd. receivable
Ping An International
Financial Leasing Co., Deposits 4,000,000.00 Within 1 year 5.86 200,000.00
Ltd.
Haitong Unitrust
International Leasing Deposits 2,775,420.00 Within 1 year 4.06 138,771.00
Co.,Ltd.
China Potevio 1-3 years
Information Industry Inc. Deposits 1,938,000.00 2.84 96,900.00
Far East International
Leasing Co.,Ltd. Deposits 1,578,947.37 Within 1 year 2.31 78,947.37
Subtotal 39,204,490.08 57.40 29,426,741.08
6. Inventories
(1) Details
Closing balance Opening balance
Items
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
write-down write-down
Raw materials 78,124,583.39 3,401,987.55 74,695,978.70 84,431,224.04 3,401,987.55 81,029,236.49
Work in process 9,029,205.27 9,029,205.27 33,004,830.02 33,004,830.02
Goods on hand 112,971,236.01 7,337,485.59 105,633,750.42 80,895,523.20 7,337,485.59 73,558,037.61
M erchandise shipped 74,653,070.77 13,804,319.56 60,875,368.35 108,005,683.58 13,804,319.56 94,201,364.02
M aterials in
consignors 6,056,552.41 804,691.99 5,251,860.42 5,983,856.44 804,691.99 5,179,164.45
Total 280,834,647.85 25,348,484.69 255,486,163.16 312,321,117.28 25,348,484.69 286,972,632.59
(2) Provision for inventory write-down
Increase Decrease
Items Opening balance Closing balance
ProvisionOthers Reversal or Others
written-off
Raw materials 3,401,987.55 3,401,987.55
Goods on hand 7,337,485.59 7,337,485.59
Goods dispatched 13,804,319.56 13,804,319.56
M aterials on consignment for
further processing 804,691.99 804,691.99
Subtotal 25,348,484.69 25,348,484.69
47
7. Other current assets
Items Clos ing balance Opening balance
Input VAT to be credited 17,477,582.88 13,497,540.69
Advance payment of income tax 103,082.29
Total 17,580,665.17 13,497,540.69
8. Long-term equity investments
(1) Categories
Closing balance Opening balance
Items
Book balance Provision for Book balance Provision for
impairment Carrying amount impairment Carrying amount
Investments in
10,430,784.30 10,430,784.30 11,128,318.34 11,128,318.34
associates
Investments in
171,187,202.80 171,187,202.80 172,115,761.89 172,115,761.89
joint ventures
Total 181,617,987.10 181,617,987.10 183,244,080.23 183,244,080.23
(2) Details
Increase/decrease
Adjustment in
Investees Opening balance Investment income
Investments Investments other
recognized under
increased decreased comprehensive
equity method
income
Joint ventures
SEI-Nanjing Potevio Optical
Network Co., Ltd. 11,128,318.34 -697,534.04
Subtotal 11,128,318.34 -697,534.04
Associates
Nanjing Putian Telege Cable
1,183,862.97 1,183,862.97
Co., Ltd.
Potevio Hi-tech Industry Co.,
Ltd. 170,931,898.92 255,303.88
Subtotal 172,115,761.89 1,183,862.97 255,303.88
Total 183,244,080.23 1,183,862.97 -442,230.16
(Continued)
Increase/decrease
Closing
Cash balance of
Investees Closing balance
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Joint ventures 10,430,784.30
SEI-Nanjing Potevio
10,430,784.30
Optical Network Co., Ltd.
Subtotal
Associates
Nanjing Putian Telege
Cable Co., Ltd.
Potevio Hi-tech Industry
171,187,202.80
Co., Ltd.
Subtotal 171,187,202.80
48
Increase/decrease
Closing
Cash balance of
Investees Closing balance
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Total 181,617,987.10
9. Other equity instrument investments
(1) Details
Accumulated amount of gains
or losses transferred fro m
Items Closing January 1, Div idend other comprehensive income
balance 2018 income to retained earnings
Amount Reasons
Nanjing Yuhua
Electroplating Factory 420,915.00 420,915.00
Hangzhou Honyar
321,038.00 321,038.00
Electrical Co.,Ltd.
Beijing Likangpu
Co mmunicat ion
Equip ment Co., Ltd.
Subtotal 741,953.00 741,953.00
(2) Reasons for equity instrument investments designated as at fair value through other
comprehensive income
The company's equity instrument investment is an investment that the company plans to hold for a
long time for strategic purposes, so the company designates it as a financial asset measured at fair
value and whose changes are included in other comprehensive income.
[Note]: Beijing Likangpu Communication Equipment Co., Ltd. by the end of 2007 has become a
serious insolvent situation, remain c losed, since 2008, no business continues today, October 2007,
the Beijing municipal administration of industry and commerc e issued the license of the decision
and asked the company liquidation in accordance with the law, according to “CASBE 33 -
Consolidated Financial Statements”, relevant provisions of the company in 2008 began to no
longer be inc luded in the annual report consolidated range, which has been submitted to the China
Potevio Information Industry Inc. and the state-owned assets supervision and administration for
the record.
10. Investment property
Items Buildings and Land use right Total
structures
Cost
Opening balance 18,646,397.35 3,642,147.87 22,288,545.22
Increase
49
Items Buildings and Land use right Total
structures
Decrease
1) Transferred into fixed assets
Closing balance 18,646,397.35 3,642,147.87 22,288,545.22
Accumulated depreciation and
amortization
Opening balance 10,164,478.73 1,884,534.51 12,049,013.24
Increase 233,471.67 59,980.32 293,451.99
1) Accrual or amortization 233,471.67 59,980.32 293,451.99
Decrease
1) Transferred into fixed assets
Closing balance 10,397,950.40 1,944,514.83 12,342,465.23
Provision for impairment
Opening balance 1,842,418.00 1,842,418.00
Increase
Decrease
Closing balance 1,842,418.00 1,842,418.00
Carrying amount
Closing balance 6,406,028.95 1,697,633.04 8,103,661.99
Opening balance 6,639,500.62 1,757,613.36 8,397,113.98
11. Fixed assets
(1) Details
Office
Items Buildings and Machinery Electronic Total
Transport facilities equipment and
structures equipment equipment
others
Cost
Opening balance 146,734,468.68 47,510,328.82 12,956,558.48 7,377,179.98 46,466,540.34 261,045,076.30
Increase 1,414,689.30 1,651,396.01 96,322.28 90,938.96 3,253,346.55
1) Acquisition 1,651,396.01 96,322.28 90,938.96 1,838,657.25
2) Transferred in
from construction in 1,414,689.30 1,414,689.30
progress
Decreas e 2,728,393.48 1,591,072.72 325,115.25 253,492.00 4,898,073.45
1) Disposal/scrap 2,728,393.48 1,591,072.72 325,115.25 253,492.00 4,898,073.45
Closing balance 148,149,157.98 46,433,331.35 11,365,485.76 7,148,387.01 46,303,987.30 259,400,349.40
Accumulated depreci ation
Opening balance 50,615,949.47 37,030,086.33 11,631,222.35 5,825,140.46 42,701,045.00 147,803,443.61
Increase 2,457,450.35 952,404.53 234,157.15 623,511.43 500,825.74 4,768,349.20
1) Accrual 2,457,450.35 952,404.53 234,157.15 623,511.43 500,825.74 4,768,349.20
2) Transferred in
from construction in
progress
Decreas e 2,361,925.33 1,549,003.25 311,224.63 245,887.24 4,468,040.45
1) Disposal/scrap 2,361,925.33 1,549,003.25 311,224.63 245,887.24 4,468,040.45
50
Office
Items Buildings and Machinery Electronic Total
Transport facilities equipment and
structures equipment equipment
others
Closing balance 53,073,399.82 35,620,565.53 10,316,376.25 6,137,427.26 42,955,983.50 148,103,752.36
Provision for impairment
Opening balance 539,124.00 10,863.02 11,048.35 175,790.21 736,825.58
Increase
Decreas e
Closing balance 539,124.00 10,863.02 11,048.35 175,790.21 736,825.58
Carrying amount
Closing balance 94,536,634.16 10,801,902.80 1,049,109.51 999,911.40 3,172,213.59 110,559,771.46
Opening balance 95,579,395.21 10,469,379.47 1,325,336.13 1,540,991.17 3,589,705.13 112,504,807.11
(2) Fixed assets temporarily idle
Items Cost Accumulated Provision for
Carrying amount
depreciation impairment
M achinery equipment 208,085.00 192,141.10 11,048.35 4,895.55
Transport facilities 225,000.00 218,250.00 6,750.00
Electronic equipment 36,000.00 34,920.00 1,080.00
Office equipment and others 370,885.18 184,349.93 175,408.71 11,126.54
Subtotal 839,970.18 629,661.03 186,457.06 23,852.09
(3) Fixed assets with certificate of titles being unsettled
Items Carrying amount Reasons for unsettlement
Buildings and structures 2,455,263.86 Not applicable for allocated land
Buildings and structures Under procedure
31,920,799.34
Subtotal 34,376,063.20
12. Construction in progress
(1) Details
Items Closing balance Opening balance
Construction in progress 17,268,676.17 9,472,383.76
Total 17,268,676.17 9,472,383.76
(2) Construction in progress
1) Details
Closing balance Opening balance
Projects
Provision for Book balance Provision for
Book balance Carrying amount Carrying amount
impairment impairment
Nanjing putian
science and
technology pioneer
park intelligent 5,781,757.54 5,781,757.54 5,781,757.54 5,781,757.54
construction related
building intelligent
equipment.
Reconstruction of
1,160,141.27 1,160,141.27
distribution building
Nanjing hao Ming 58,135.34 58,135.34 58,135.34 58,135.34
51
Closing balance Opening balance
Projects
Provision for Book balance Provision for
Book balance Carrying amount Carrying amount
impairment impairment
litong information
technology Co.,
Ltd.
Nanjing Putian
Datang Inform ation
Electronic Co., Ltd. 11,284,562.74 11,284,562.74 2,472,349.61 2,472,349.61
-Product
development center
Block c-2, putian
No.1, geological
engineering and 44,339.62 44,339.62
exploration institute
of jiangsu province
Comprehensive
pipeline
70,754.72 70,754.72
construction of
putian pioneering
Putian science and
technology
29,126.21 29,126.21
pioneering park
planning
Total 17,268,676.17 17,268,676.17 9,472,383.76 9,472,383.76
(2) Changes in significant projects
Projects Budgets Increase Transferred to Other
Opening balance Closing balance
fixed assets decrease
Nanjing putian
science and
technology pioneer
park intelligent park 9,920,000.00 5,781,757.54 5,781,757.54
construction related
building intelligent
equipment
Nanjing Putian
Datang Information
Electronic Co., Ltd. 20,000,000.00 2,472,349.61 8,812,213.13 11,284,562.74
-Product
development center
Subtotal 25,920,000.00 8,254,107.15 8,812,213.13 17,066,320.28
(Continued)
Accumulated Amount of
Accumulated Completion Annual
Projects amount of borrowing cost Fund
investment to percentage capitalizatio
borrowing cost capitalization in source
budget (%) n rate (%)
capitalization current period
Nanjing putian science and
technology pioneer park Self-ow
intelligent park construction 58.28 60.00 ned
related building intelligent fund
equipment
Nanjing Putian Datang
Self-ow
Information Electronic Co.,
56.42 60.00 ned
Ltd. -Product development
fund
center
Subtotal
52
13. Intangible assets
Items Software Land use right Patent right Non-patent Total
technology
Cost
Opening balance 34,638,346.69 11,978,112.74 607,500.00 4,560,000.00 51,783,959.43
Increase
1) Acquisition
2) Internal research
and development
Decrease
1) Disposal
Closing balance 34,638,346.69 11,978,112.74 607,500.00 4,560,000.00 51,783,959.43
Accumulated
amortization
Opening balance 6,865,500.72 9,465,359.94 607,500.00 4,560,000.00 21,498,360.66
Increase 431,228.92 554,348.70 985,577.62
1) Accrual 431,228.92 554,348.70 985,577.62
Decrease
1) Disposal
Closing balance 7,296,729.64 10,019,708.64 607,500.00 4,560,000.00 22,483,938.28
Carrying amount
Closing balance 27,341,617.05 1,958,404.10 29,300,021.15
Opening balance 27,772,845.97 2,512,752.80 30,285,598.77
14. Long-term prepayments
Items Opening balance Increase Amortization Other decreases Closing balance
Reconstruction of
canteen 789,761.03 106,524.99 683,236.04
Reconstruction of
office building 1,262,446.69 131,003.64 455,399.48 938,050.85
Others
1,510,129.12 59,433.96 153,098.80 1,416,464.28
Total 3,562,336.84 190,437.60 715,023.27 3,037,751.17
15. Short-term borrowings
Items Clos ing balance Opening balance
Pledged borrowings 290,670,651.05 250,000,000.00
Mortgaged borrowings 48,820,000.00 65,010,000.00
Secured borrowings 124,692,750.00 130,000,000.00
Total 464,183,401.05 445,010,000.00
16. Notes payable
Items Clos ing balance Opening balance
53
Items Clos ing balance Opening balance
Trade acceptance 10,409,478.80 15,932,068.77
Bank acceptance 80,829,295.95 68,442,848.22
Total 91,238,774.75 84,374,916.99
17. Accounts payable
(1) Details
Items Clos ing balance Opening balance
Purchase of materials 673,053,507.64 742,212,386.80
Project payment 22,443,232.62 816,566.82
Total 695,496,740.26 743,028,953.62
(2) Significant accounts payable over 1 year
Items Clos ing balance Reasons for unsettlement
Jiangsu Sainty M achinery IM P.&Co.,Ltd. Settlement is not completed
30,253,013.65
China Potevio Information Industry Inc. Settlement is not completed
19,641,228.50
SEI-Nanjing Potevio Optical Network Co., Settlement is not completed
Ltd. 18,589,974.96
POLYCOM communications technology Settlement is not completed
(Beijing) Co.,Ltd. 17,737,438.13
Beijing LDL Technology Co.,Ltd. Settlement is not completed
4,917,823.33
Subtotal
91,139,478.57
18. Advances received
(1) Details
Items Clos ing balance Opening balance
Payment for goods 33,841,758.85 259,545,648.66
Total 33,841,758.85 259,545,648.66
19. Employee benefits payable
(1) Details
Items Opening balance Increase Decrease Clos ing balance
Short-term employee benefits 21,132,336.19 114,390,630.00 114,263,499.25 21,259,466.94
Post-employment benefits -
13,903,520.86 13,903,520.86
defined benefit plan
Total 21,132,336.19 128,294,150.86 128,167,020.11 21,259,466.94
(2) Details of short-term employee benefits
Items Opening balance Increase Decrease Clos ing balance
Wage, bonus, allowance 11,254,526.62 86,829,481.55 87,760,265.29 10,323,742.88
and subsidy
Employee welfare fund 5,135,787.68 5,049,623.58 86,164.10
Social insurance
7,251,507.99 7,251,507.99
premium
54
Items Opening balance Increase Decrease Clos ing balance
Including: Medicare
6,668,985.01 6,668,985.01
premium
Occupational injuries
145,471.57 145,471.57
premium
Maternity premium 437,051.41 437,051.41
Housing provident fund 156,533.23 5,569,529.31 5,569,529.31 156,533.23
Trade union fund and
9,721,276.34 2,300,465.23 1,349,391.60 10,672,349.97
employee education fund
Compensation for
termination of labor 1,702,830.64 1,702,830.64
relations
Others 5,601,027.60 5,580,350.84 20,676.76
Subtotal 21,132,336.19 114,390,630.00 114,263,499.25 21,259,466.94
(3) Details of defined benefit plan
Items Opening balance Increase Decrease Clos ing balance
Basic endowment
11,836,850.07 11,836,850.07
insurance premium
Unemployment
531,469.10 531,469.10
insurance premium
Company annuity 1,535,201.69 1,535,201.69
payment
Subtotal 13,903,520.86 13,903,520.86
20. Taxes and rates payable
Items Clos ing balance Opening balance
VAT 1,042,577.52 11,419,693.22
Enterprise income tax 2,314,752.33 3,685,037.85
Individual income tax -143,774.49 233,032.97
Urban maintenance and
155,806.29 900,385.94
construction tax
Housing property tax 210,621.97 248,142.34
Land use tax 81,754.17 83,316.67
Education surcharge 15,824.82 655,635.04
Other taxes 159,058.71 4,914.99
Total 3,836,621.32 17,230,159.02
21. Other payables
(1) Details
Items Clos ing balance Opening balance
Interest payable 396,333.33 454,333.33
Dividend payable 2,018,213.38 2,018,213.38
Other payables 39,442,705.33 52,655,945.94
Total 41,857,252.04 55,128,492.65
55
(2) Interest payable
Items Clos ing balance Opening balance
Short-term borrowings interest 396,333.33 454,333.33
Subtotal 396,333.33 454,333.33
(3) Dividend payable
Items Clos ing balance Opening balance
Dividend of ordinary shares 2,018,213.38 2,018,213.38
Subtotal 2,018,213.38 2,018,213.38
(4) Other payables
Items Clos ing balance Opening balance
Deposits 23,393,548.33 23,338,514.42
Temporary receipts payable 1,708,699.79 18,165,474.04
Unsettled installation cost 4,980,031.75 5,611,697.12
Operating expenses 6,403,540.74 2,899,584.68
Others 2,956,884.72 2,640,675.68
Total 39,442,705.33 52,655,945.94
22. Long-term payable
(1) Details
Items Clos ing balance Opening balance
Long-term payable 28,947,368.42
Total 28,947,368.42
(2) Long-term payable
1) Details
Items Clos ing balance Opening balance
Finance lease payable 28,947,368.42
Total 28,947,368.42
23. Deferred income
(1) Details
Items Opening balance Increase Decrease Clos ing balance
Government grants 7,296,315.00 1,291,442.00 6,004,873.00
Total 7,296,315.00 1,291,442.00 6,004,873.00
(2) Other remarks
The condition of government subsidies carried in profit and loss of current period are showed in
the explanations of notes to items of consolidated financial statements as detailed.
56
24. Share capital
M ovements
Items Opening balance Reserve Closing balance
Issue of Bonus Others Subtotal
transferred to
new shares shares shares
Total shares 215,000,000.00 215,000,000.00
25. Capital reserve
Items Opening balance Increase Decrease Clos ing balance
Share/capital premium 139,592,332.04 139,592,332.04
Other capital reserve 45,782,201.81 45,782,201.81
Total 185,374,533.85 185,374,533.85
26. Other comprehensive income (OCI)
Current period cumulative
Items Opening balance Current period Less: Attributable to Attributable to Closing balance
cumulative before income parent non-controlling
income tax tax company interest
Items to be
reclassified
subsequently to -4,947,588.58 -72,101.33 -64,891.20 -7,210.13 -5,012,479.78
profit or loss
Including:
Translation reserve -4,947,588.58 -72,101.33 -64,891.20 -7,210.13 -5,012,479.78
Total -4,947,588.58 -72,101.33 -64,891.20 -7,210.13 -5,012,479.78
27. Surplus reserve
Items Opening balance Increase Decrease Clos ing balance
Statutory surplus reserve 589,559.77 589,559.77
Total 589,559.77 589,559.77
28. Undistributed profit
(1) Details
Current period Preceding period
Items
cumulative comparative
Balance before adjustment at the end of
-40,726,776.80 -44,605,902.63
preceding period
Add: Increase due to adjustment (or less:
-1,980,089.01
decrease)
Opening balance after adjustment -40,726,776.80 -46,585,991.64
Add: Net profit attributable to owners of the -57,528,524.88 5,859,214.84
parent company
Clos ing balance -98,255,301.68 -40,726,776.80
(2) Other remarks
The undistributed profit at the beginning of the period was affected by RMB -44,284,870.45 due
57
to changes in accounting policies.
(II) Notes to items of the consolidated income statement
1. Operating revenue/Operating cost
Current period cumulative Preceding period comparative
Items
Income Cost Income Cost
Revenue from main
operations 748,403,711.97 627,020,995.66 934,501,599.83 796,224,938.08
Revenue from other
8,793,659.83 6,074,772.41 32,349,005.12 28,133,757.24
operations
Total 757,197,371.80 633,095,768.07 966,850,604.95 824,358,695.32
2. Taxes and surcharge for operations
Items Current period cumulative Preceding period comparative
Urban maintenance and 2,182,407.41
1,777,930.30
construction tax
Education surcharge 1,269,818.71 2,054,225.98
Housing property tax 557,385.97 749,055.08
Land use tax 422,897.78 320,919.70
Other taxes 465,150.92 357,642.37
Total 4,493,183.68 5,664,250.54
3. Selling expenses
Items Current period cumulative Preceding period comparative
Employee benefits 39,112,434.18 40,217,290.65
Transport fees and transport
10,243,144.78 7,900,716.87
damages
Bus iness hospitality 10,874,241.76 12,549,783.07
Travelling expenses 6,968,112.26 7,876,538.22
Office expenses 1,360,197.08 2,593,640.68
Sales service charges 1,741,668.30 1,658,518.68
Promotion expenses 324,310.03 1,002,873.79
Conference expenses 766,545.15 720,798.25
Equipment maintain fees 61,318.09 345,262.15
Others 7,061,490.42 4,830,761.28
Total 78,513,462.05 79,696,183.64
4. Administrative expenses
Items Current period cumulative Preceding period comparative
Employee benefits 31,499,550.76 29,511,436.71
Consulting, agency fee 2,715,146.65 3,131,873.17
58
Items Current period cumulative Preceding period comparative
Depreciation and amortization 3,344,059.93 2,348,170.20
Office expenses 2,705,032.24 1,987,484.94
Lease expenses 900,914.93 1,477,494.62
Travelling expense 705,272.98 1,732,042.57
Bus iness hospitality 1,167,004.52 1,351,907.52
Funds for Party Construction 610,733.18
Others 3,611,860.48 5,850,165.54
Total 47,259,575.67 47,390,575.27
5. R&D expenses
Items Current period cumulative Preceding period comparative
Employee benefits 29,168,313.31 23,171,707.81
Intermediate test expenses 8,469.63 2,135,693.09
Travelling expense 1,071,110.21 1,948,834.81
Material used 557,435.00 4,615,230.61
Depreciation and amortization 776,073.03 910,835.79
Commissioned development 842,161.13 698,345.52
Others 3,485,478.18 2,917,459.17
Total 35,909,040.49 36,398,106.80
6. Financial expenses
Items Current period cumulative Preceding period comparative
Interest expenditures 12,296,091.86 11,625,553.62
Less: Interest income 2,400,422.53 1,692,017.07
Losses on foreign exchange 7,644.23 18,361.79
Handling charges 454,996.92 246,567.05
Financing charges 5,465,496.17
Total 15,823,806.65 10,198,465.39
7. Other income
Items Current period Preceding period Amount included in
cumulative comparative non-recurring profit or loss
Government grants
related to income 6,006,842.30 5,799,343.86 3,456,342.00
Total 6,006,842.30 5,799,343.86 3,456,342.00
8. Investment income
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments -442,230.16 407,793.10
under equity method
59
Total -442,230.16 407,793.10
9. Credit impairment loss
Items Current period cumulative
Bad debts -668,512.60
Total -668,512.60
10. Assets impairment loss
Items Current period cumulative Preceding period comparative
Bad debts -3,030,783.16
Inventory write-down loss
Total -3,030,783.16
11. Gains on disposal of assets
The amount included in
Current period Preceding period the current
Items
cumulative comparative non-recurring profit and
loss.
Gains on disposal of 98,840.67 30,156,818.80 98,840.67
non-current assets
Total 98,840.67 30,156,818.80 98,840.67
12. Non-operating revenue
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Government grants 300,000.00 2,375,370.56 300,000.00
Unpayable payables 891,670.89 225,371.60 891,670.89
Fine income 12,300.00 1,000.00 12,300.00
Others 108,144.28 224,111.99 108,144.28
Total 1,312,115.17 2,825,854.15 1,312,115.17
13. Non-operating expenditures
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Fines expenditures 444.60 135,029.97 444.60
Donation expenditures 18,845.00 97,000.00 18,845.00
Disposal of fixed assets 386.54 386.54
Others 218,975.90 76,556.03 218,975.90
60
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Total 238,652.04 308,586.00 238,652.04
14. Income tax expenses
(1) Details
Items Current period cumulative Preceding period comparative
Current period income tax 2,066,779.65 1,646,117.70
expenses
Total 2,066,779.65 1,646,117.70
(2) Reconciliation of accounting profit to income tax expenses
Items Current period cumulative Preceding period comparative
Profit before tax -51,829,061.47 -1,005,231.26
Income tax expenses based on
statutory tax rate applicable to the -7,774,359.22 -251,307.82
parent company
Effect of different tax rate applicable -874,737.23
to subsidiaries -38,556.99
Effect of prior income tax 67,935.55
-280,669.75
reconciliation
Effect of non-taxable income 114,572.30 -101,948.28
Effect of non-deductible costs, 1,826,473.01
expenses and losses
Effect of deducible temporary
differences or deductible losses not -2,407,065.64
recognized as deferred income tax
assets
Effect of deductible temporary
difference or the deductible loss of 7,620,079.35
deferred income tax assets in the
current period
Deduction of R&D expenditures 16,531,798.36 -4,233,311.26
Income tax expenses -6,486,005.05 1,646,117.70
(III) Notes to items of the consolidated cash flow statement
1. Other cash receipts related to operating activities
Items Current period cumulative Preceding period comparative
Government grants 1,904,900.00 4,377,764.52
Interest income 2,391,843.99 1,692,017.07
Temporary receipts and recovery
28,106,277.94 28,106,277.94
of temporary payment
Others 1,698,242.68 1,698,242.68
Total 34,101,264.61 37,651,747.79
2. Other cash payments related to operating activities
61
Items Current period cumulative Preceding period comparative
Expenses by cash payment 40,048,152.96 52,338,653.48
Temporary payment and 62,678,023.35
37,196,104.12
repayment of temporary receipts
Others 1,095,096.63 1,074,094.19
Total 78,339,353.71 116,090,771.02
3. Supplement information to the cash flow statement
(1) Supplement information to the cash flow statement
Supplement information Current period Preceding period
cumulative comparative
(1) Reconciliation of net profit to cash flow from
operating activities:
Net profit -53,895,841.12 -2,651,348.96
Add: Provision for assets impairment loss 3,030,783.16
Credit impairment loss 668,512.60
Depreciation of fixed assets, oil and gas assets, 5,073,524.74
4,768,349.20
productive biological assets
Amortization of intangible assets 985,577.62 692,753.77
Amortization of long-term prepayments 715,023.27 1,387,749.95
Loss on disposal of fixed assets, intangible -30,156,818.80
-98,840.67
assets and other non-current assets (Less: gains)
Fixed assets retirement loss (Less: gains)
Losses on changes in fair value (Less: gains)
Financial expenses (Less: gains) 17,761,588.03 11,625,553.62
Investments losses (Less: gains) 442,230.16 -407,793.10
Decrease of deferred tax assets ( Less: increase)
Increase of deferred tax liabilities ( Less:
decrease)
Decrease in inventories ( Less: increase) 31,486,469.43 141,110,892.98
Decrease in operating receivables ( Less: -263,703,522.06
146,744,343.43
increase)
Increase of operating payables ( Less: decrease) -313,674,142.69 -91,277,004.23
Others
Net cash flow from operating activities -164,096,730.74 -225,275,228.93
(2) Significant investing and financing activities not
related to cash receipts and payments:
Conversion of debt into share capital
Convertible bonds due within one year
Fixed assets rented in under finance leases
(3) Net changes in cash and cash equivalents:
Cash at the end of the period 78,202,397.52 157,235,827.99
62
Supplement information Current period Preceding period
cumulative comparative
Less: Cash at the beginning of the period 201,369,317.42 311,056,919.17
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the
period
Net increase of cash and cash equivalents -123,166,919.90 -153,821,091.18
(2) Cash and cash equivalents
Items Clos ing balance Opening balance
1) Cash 78,202,397.52 201,369,317.42
Including: Cash on hand 3,553.38 1,886.33
Cash in bank on demand for payment 78,198,844.14 201,367,431.09
2) Cash equivalents
Including: Bond investments maturing within three
78,202,397.52 201,369,317.42
months
3) Cash and cash equivalents at the end of the period 78,202,397.52 201,369,317.42
Including: Cash and cash equivalents of parent
company or subsidiaries with use restrictions
(IV) Others
1. Assets with title or use right restrictions
Items Clos ing carrying amount Reasons for restrictions
Deposit for acceptance and
Cash and bank balances 58,364,673.70
deposit for L/G
Accounts receivable 98,424,500.00 Pledge borrowings
Providing mortgaged
Fixed assets 63,341,997.31
guarantee for borrowings
Providing mortgaged
Intangible assets 7,178,053.74
guarantee for borrowings
Providing mortgaged
Investment property 2,184,290.01 guarantee for borrowings
Total 229,493,514.76
Note: We remind users of financial statements that, apart from the above assets with title or use
right restrictions, The Company pledged its holding equities to the parent company, which include
equity of Nanjing Putian Telege Intelligent Building Co., Ltd. amounting to 4.80 million yuan,
Nanjing South Telecommunications Co., Ltd. amounting to 33.17 million yuan, equity of Nanjing
Putian Changle Telecommunications Equipment Co., Ltd. amounting to 5.07 million yuan, equity
of Nanjing Putian Wangzhi Electronic Co., Ltd. amounting to 60.43 million yuan, equity of
Nanjing Putian Network Co., Ltd. amounting to 7.80 million yuan. The Company has registered
the equity pledge at Nanjing Jiangning Market Supervision Administration. Those equities are
with use restrictions before released.
2. Monetary items in foreign currencies
63
Items Clos ing balance in Exchange rate RMB equivalent
foreign currencies
Cash and bank balances
Including: USD 635,133.18 6.8747 4,366,350.07
EUR 522.27 7.8170 4,082.58
HKD 603,229.93 0.8797 530,661.37
GBP 208.79 8.7113 1,818.83
3. Government grants
1. Details
(1) Government grants related to income and used to compensate future relevant costs, expenses
or losses
Opening Presented Closing
Presented Related to
Items balance of under balance of
Increase under other
deferred non-operating deferred assets/income
income
income income income
Zombie enterprise Related to
6,296,315.00 1,291,442.00 5,004,873.00
financial aid. income
Government
subsidies on
technical Related to
development plans 1,000,000.00 1,000,000.00
income
and technical
funding
Subtotal 7,296,315.00 1,291,442.00 6,004,873.00
(2) Government grants related to income and used to compensate incurred relevant costs, expenses
or losses
Items Amounts Presented under Remarks
value-added tax refund 2,550,500.30 Other income
High-tech enterprise reward 1,250,000.00 Other income
Enterprise special funds 600,000.00 Other income
Provincial award for enterprise Non-operating revenue
300,000.00
research and development in 2018
R&D expenditure award by Nanjing Other income
10,000.00
Yuhuatai district
Science and technology award by Other income
300,000.00
Nanjing Qinhuai district
Patent subsidiaries 4,900.00 Other income
Subtotal 5,015,400.30
VI. Interest in other entities
(I) Interest in significant subsidiaries
1. Significant subsidiaries
(1) Basis information
64
Main Holding
Subsidiaries Place of Bus iness proportion (%) Acquis ition
operating
registration nature Direct Indirect method
place
Nanjing Putian Changle
Nanjing Nanjing Manufacture Set up
Telecommunications 50.70
City City
Equipment Co., Ltd.
Nanjing Putian Telege
Nanjing Nanjing Manufacture Set up
Intelligent Building 45.77
City City
Co., Ltd.
Nanjing South
Nanjing Nanjing Manufacture Set up
Telecommunications 96.99 1.38
City City
Co., Ltd.
Bus iness
combination
Nanjing Mennekes Nanjing Nanjing Manufacture not under
75.00
Electrics Co., Ltd. City City
common
control
Nanjing Putian Nanjing Nanjing Manufacture Set up
78.00
Network Co., Ltd. City City
Bus iness
combination
Nanjing Putian Datang
Nanjing Nanjing Manufacture not under
Information Electronic 40.00
City City
Co., Ltd. common
control
Nanjing Putian
Nanjing Nanjing Manufacture Set up
Communication 70.00
City City
Technology Co., Ltd.
Nanjing Putian
Nanjing Nanjing Manufacture Set up
Wangzhi Electronic 100.00
City City
Co., Ltd.
Nanjing Bada
Nanjing Nanjing Manufacture Set up
Communication 60.00
City City
Equipment Co., Ltd.
Nanjing Putian
Nanjing Nanjing Manufacture Set up
Information Technology 100.00
City City
Co., Ltd.
Putian Communications Hong Hong Commercial Set up
90.00
(Hong Kong) Co., Ltd. Kong Kong
(2) Other remarks
1) Basis for the control of an investee while holding its half or less than half voting rights, and the
non-control of an investee while holding its more than half voting rights
The Company holds 45.767% of voting rights in Nanjing Putian Telege Intelligent Building Co.,
Ltd. the other voting rights are decentralized. The Company has over half member of the Board of
Directors, and it not only controls this company but also has a privileged variable return by taking
part in Nanjing Putian Telege Intelligent Building Co., Ltd.’s related activity. The Company has
the ability to impact the amount of return and control over Nanjing Putian Telege Intelligent
Building Co., Ltd.
65
2)The Company holds 40% equity of Nanjing Putian Datang Information Electronic Co., Ltd. The
Company signed the agreement with Yan Yaoming, a shareholder of Nanjing Putian Datang
Information Electronic Co., Ltd. to exercise his 21% right to vote. The agreement is valid during
the period of the existence of Nanjing Putian Datang Information Electronic Co., Ltd. The
Company has 61% of the voting right during the existence period of Nanjing Putian Datang
Information Electronic Co., Ltd.
2. Significant not wholly-owned subsidiaries
(1) Details
Holding Profit or loss Dividend Clos ing
Subsidiaries proportion of attributable to declared to balance of
non-controlling non-controlling non-controlling non-controlling
shareholders shareholders shareholders shareholders
Nanjing South
Telecommunications 1.63% 23,873.64 1,702,532.74
Co., Ltd.
Nanjing Putian Telege
Intelligent Building Co., 54.233% 5,165,421.76 72,244,873.26
Ltd.
3. Main financial information of significant not wholly-owned subsidiaries
(1) Assets and liabilities
Closing balance
Subsidiaries
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
Nanjing South
Telecommunications 295,585,309.01 4,015,365.80 299,600,674.81 195,150,813.60 195,150,813.60
Co., Ltd.
Nanjing Putian
Telege Intelligent 215,284,703.52 35,379,077.28 250,663,780.80 117,450,779.38 117,450,779.38
Building Co., Ltd.
(Continued)
Opening balance
Subsidiaries
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
Nanjing South
Telecommunications 342,548,804.01 4,049,249.40 346,598,053.41 243,612,832.61 243,612,832.61
Co., Ltd.
Nanjing Putian
Telege Intelligent 263,041,060.54 37,450,502.90 300,491,563.44 176,803,061.42 176,803,061.42
Building Co., Ltd.
(2) Profit or loss and cash flows
Current period cumulative
Subsidiaries Total Cash flows from
Operating Net profit comprehensive operating
revenue
income activities
Nanjing South
161,078,673.03 1,464,640.41 1,464,640.41 -40,474,734.54
Telecommunications
66
Current period cumulative
Subsidiaries Total Cash flows from
Operating Net profit comprehensive operating
revenue
income activities
Co., Ltd.
Nanjing Putian Telege
Intelligent Building 172,230,459.10 9,524,499.40 9,524,499.40 -67,113,843.29
Co., Ltd.
(Continued)
Preceding period comparative
Subsidiaries Total Cash flows from
Operating Net profit comprehensive operating
revenue
income activities
Nanjing South
Telecommunications 189,137,568.77 5,242,512.96 5,242,512.96 -42,705,054.89
Co., Ltd.
Nanjing Putian Telege
Intelligent Building 175,165,797.66 7,863,323.16 7,863,323.16 -63,303,867.53
Co., Ltd.
(II) Interest in joint venture or associates
1. Significant joint ventures or associates
Main Holding
Joint ventures or Place of Bus iness nature proportion (%) Accounting
operating
associates registration Direct Indirect treatment
place
Industrial park
Potevio Hi-tech Nanjing Nanjing 49.64 Equity
venue rental
Industry Co., Ltd. City City method
management etc.
2. Main financial information of significant associates
Clos ing balance/ Opening balance/
Items current period cumulative preceding period comparative
Potevio Hi-tech Industry Co., Ltd.
Current assets 160,770,173.48 161,743,478.51
Non-current assets 190,849,670.82 190,882,106.08
Total assets 351,619,844.30 352,625,584.59
Current liabilities 6,788,321.97 8,282,339.46
Non-current liabilities
Total liabilities 6,788,321.97 8,282,339.46
Non-controlling interest
Equity attributable to owners of
344,343,245.13 344,343,245.13
parent company
Proportionate share in net assets 171,187,202.80 170,931,898.92
Adjustments
Goodwill
67
Clos ing balance/ Opening balance/
Items current period cumulative preceding period comparative
Potevio Hi-tech Industry Co., Ltd.
Unrealized profit in internal
trading
Others
Carrying amount of investments
171,187,202.80 170,931,898.92
in associates
Fair value of equity investments
in associates in association with
quoted price
Operating revenue 15,876,141.41 12,964,410.68
Net profit 710,277.20 650,880.98
Net profit of discontinued
operations
Other comprehensive income
Total comprehensive income 710,277.20 650,880.98
Dividend from associates
255,303.88 197,567.20
received in current period
3. Aggregated financial information of insignificant joint ventures and associates
Items Clos ing balance/current Opening balance/preceding
period cumulative period comparative
Joint ventures
Total carrying amount of investments 10,430,784.30 11,128,318.34
Proportionate shares in the following
items
Net profit -697,534.04 82,233.20
Total comprehensive income -697,534.04 82,233.20
Associates
Total carrying amount of investments 1,183,862.97
Proportionate shares in the following
items
Net profit 75,194.64
Total comprehensive income 75,194.64
VII. Risks related to financial instruments
The Company aims to seek the appropriate balance between the risks and benefits from its use of
financial instruments and to mitigate the adverse effects that the risks of financial instruments
have on the Company’s financial performance. Based on such objectives, the Company’s risk
management policies are established to identify and analyze the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits.
The Company has exposure to the following risks from its use of financial instruments, which
mainly include: credit risk, liquidity risk, and market risk. Management have deliberated and
68
approved polic ies concerning such risks, and details are:
(I) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation.
The Company’s credit risk is primarily attributable to bank balances and receivables. In order to
control such risks, the Company has taken the following measures:
1. Bank balances
The Company deposits its bank balances in financial institutions with relatively high credit levels,
hence, its credit risk is relatively low.
2. Receivables
The Company performs credit assessment on customers who uses credit settlement on a regular
basis. The Company selects credible and well-reputed customers based on credit assessment
result, and conducts ongoing monitoring on receivables, to avoid significant risks in bad debts.
As the Company’s credit risks fall into several business partners and customers, as of June 30, 2019,
15.07% (December 31, 2018: 16.85%) of the total accounts receivable was due from the five
largest customers of the Company. The Company has no significant central credit risk.
(II) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting
obligations associated with cash or other financial assets settlement, which is possibly attributable
to failure in selling financial assets at fair value on a timely basis, or failure in collecting liabilities
from counterparts of contracts, or early redemption of debts, or failure in achieving estimated cash
flows.
In order to control such risk, the Company utilized financing tools such as notes settlement and
bank borrowings, etc. to optimizing financing structures, and finally maintains a balance between
financing sustainability and flexibility. The Company has obtained credit limit from several
commercial banks to meet working capital requirements and expenditures.
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value of financial
instruments or future cash flows due to changes in market price.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value of financial
instruments or future cash flows due to changes in market interest. The Company’s interest risk
relates mainly to borrowings with floating interest rate.
2. Foreign currency risk
69
Foreign currency risk is the risk arising from changes in exchange rate. The Company is mainly
operated in mainland China, with a small amount of imports and exports, and its main activities
are denominated in RMB, hence, the Company bears insignificant market risk arising from foreign
exchange changes.
Please refer to notes to foreign currency monetary items for details in foreign currency financial
assets and liabilities at the end of the period.
VIII. Related party relationships and transactions
(I) Related party relationships
1. Details of parent company
(1) Parent company
Registered Holding Voting right
Parent company Business
Place of registration capital proportion over proportion over
nature
(in million) the Company the Company
No.2 Shangdi 2 Road,
China Potevio
Zhongguan Village Information 1,903,05 53.49% 53.49%
Information
Economy Zone, Haidian industry
Industry Inc.
District, Beijing
The Company’s ultimate controlling party is Potevio Company Limited.
2. The details of the company's important subsidiaries are illustrated in the notes to the financial
statements in other subjects.
3. Joint ventures and associates of the Company
Please refer to notes to interest in other entities for details on the Company’s significant joint
ventures and associates. Details of other joint ventures or associates carrying out related party
transactions with the Company in current period or in preceding period but with balance in current
period are as follows:
Joint ventures or associates Relationships with the Company
Potevio Hi-tech Industry Co., Ltd. Associates
SEI-Nanjing Potevio Optical Network Co., Ltd. Joint ventures
4. Other related parties of the Company
Relationships with the
Related parties
Company
An affiliated company of the
Nanjing Potevio Honyar Electrical Technology Co., Ltd.
ultimate controlling party
An affiliated company of the
Nanjing Potevio Honyar Electrical Co., Ltd.
ultimate controlling party
An affiliated company of the
Shanghai Potevio Post and Technology Co., Ltd.
ultimate controlling party
An affiliated company of the
Beijing Potevio Taili Communications Technology Co., Ltd.
ultimate controlling party
Hangzhou Honyar Dongbei Photoelectric Technology Co., An affiliated company of the
Ltd. ultimate controlling party
70
Relationships with the
Related parties
Company
An affiliated company of the
Shanghai Potevio Network Technology Co., Ltd.
ultimate controlling party
An affiliated company of the
Potevio Telecommunications Co., Ltd.
ultimate controlling party
An affiliated company of the
Potevio Information Technology Co., Ltd.
ultimate controlling party
An affiliated company of the
Beijing Likangpu Communication Equipment Co., Ltd.
Company
Non-controlling shareholder
Mennekes Electric Industrial(China) Co., Ltd.
of the Company’s subsidiary
An affiliated company of the
Potevio Heping Technology Co., Ltd.
ultimate controlling party
An affiliated company of the
Hangzhou Honyar Electrical Co.,Ltd.
ultimate controlling party
An affiliated company of the
Potevio International Trading Co., Ltd.
ultimate controlling party
An affiliated company of the
Chengdu Putian Telecommunications Cable Co.,Ltd.
ultimate controlling party
An affiliated company of the
Eastern Communications Inc.
ultimate controlling party
An affiliated company of the
Potevio Eastern Communications Co.,Ltd.
ultimate controlling party
An affiliated company of the
Potevio Science & Technology Industrial Co., Ltd.
ultimate controlling party
Tianjin Potevio Innovation and Entrepreneur Technology Co., An affiliated company of the
Ltd. ultimate controlling party
(II) Related party transactions
1. Purchase and sale of goods, rendering and receiving services
(1) Purchase of goods and receiving of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
Nanjing Potevio Honyar Telecommunication
132,195.74 85,492.00
Electrical Technology Co., Ltd. products
Potevio Information Technology Telecommunication
597,863.25
Co., Ltd. products
(2) Sale of goods and rendering of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
Potevio Information Technology Telecommunication
3,615,050.89 12,975,234.34
Co., Ltd. products
China Potevio Information Telecommunication
190,657,333.97 238,683,644.38
Industry Inc. products
Beijing Potevio Taili
Telecommunication
Communications Technology 31,310.35 6,423.67
products
Co., Ltd.
Potevio Science & Technology Telecommunication
520,689.63
Industrial Co., Ltd. products
71
Related parties Content of transaction Current period Preceding period
cumulative comparative
Potevio Telecommunications Telecommunication
6,262,055.95
Co., Ltd. products
2. Related party leases
(1) The Company as the lessor
Lessees Types of asset Lease income for Lease income for the
leased current period preceding period
SEI-Nanjing Potevio Optical Buildings and 318,215.64
Network Co., Ltd. structures
(2) The Company as the lessee
Lease expenses Property
Lease expenses Property
Lessors Types of asset for the services for the
for current services for
leased preceding preceding
period current period
period period
Potevio Hi-tech Buildings and 386,216.95 372,669.04 903,601.03 797,626.96
Industry Co., Ltd. structures
3. Related party guarantees
The Company and its subsidiaries as guaranteed parties
Whether
Guarantors Amount Commence- Maturity the
guaranteed ment date date guarantee
is mature
China Potevio Information Industry Inc. 30,000,000.00 2018/3/9 2019/3/8 Yes
China Potevio Information Industry Inc. 40,000,000.00 2018/9/28 2019/6/28 Yes
China Potevio Information Industry Inc. 30,000,000.00 2018/10/23 2019/10/23 No
China Potevio Information Industry Inc. 30,000,000.00 2019/6/11 2020/6/11 No
China Potevio Information Industry Inc. 50,000,000.00 2019/6/05 2020/5/14 Yes
4. Interest expenditures
In the current period, the Company paid to China Potevio Information Industry Inc. a total of
6,186,106.38 yuan as interest expenditures.
5. Key management’s emoluments
Items Current period cumulative Preceding period comparative
Key management’s emoluments 1,354,188.02 1,155,082.00
(III) Balance due to or from related parties
1. Balance due from related parties
Items Related parties Closing balance Opening balance
72
Book balance Provision for Book balance Provision for
bad debts bad debts
Accounts China Potevio
12,204,488.63 660,400.00 20,981,660.73 709,020.78
receivable Information Industry Inc.
Potevio Information
Technology Co., Ltd. 16,377,198.52 12,941,118.68
Shanghai Potevio
Network Technology Co., 536,319.70 429,055.76 536,319.70 429,055.76
Ltd.
Shanghai Potevio Post
and Technology Co., Ltd. 8,755,534.00 8,755,534.00 8,755,534.00 8,755,534.00
Potevio Heping
333,706.00 33,370.60 333,706.00
Technology Co., Ltd.
Eastern Communications
144,617.20 206,596.00
Inc.
Potevio
Telecommunications Co., 199,000.00
Ltd.
Tianjin Potevio
Innovation and
Entrepreneur Technology 1,003,948.40 941,969.60
Co., Ltd.
Potevio Company
Limited. 8,164,069.30 1,768,070.00
M ennekes Electric
Industrial(China) Co., 4,546.26 4,546.26
Ltd.
Guangxi Potevio Post
Communication 629,899.32 186,044.64 629,899.32 186,044.64
Equipment Co., Ltd.
Potevio Science &
Technology Industrial 12,709.44 200.81
Co., Ltd.
Subtotal 73,040.00
Advances Potevio Heping
paid Technology Co., Ltd. 436,294.00 436,294.00 436,294.00
Potevio Information
Technology Co., Ltd. 25,000.00 25,000.00
Subtotal 461,294.00 436,294.00 461,294.00
Other China Potevio
receivables Information Industry Inc. 1,963,000.00 60,000.00 3,839,000.00 400,000.00
Potevio Eastern
Communications Co.,Ltd. 1,209,297.25
Potevio Information
Engineering Design 30,000.00 30,000.00
Service Co., Ltd.
Potevio Science &
Technology Industrial 1,300.00 1,300.00
Co., Ltd.
Subtotal 1,203,052.00 1,203,052.00
2. Balance due to related parties
Items Related parties Clos ing balance Opening balance
Accounts payable SEI-Nanjing Potevio Optical
1,630,750.70 20,819,725.66
Network Co., Ltd.
China Potevio Information
19,641,228.50 19,641,228.50
Industry Inc.
Nanjing Potevio Honyar
242,595.99 242,595.99
Electrical Co., Ltd.
Shanghai Potevio Network
11,685.00 11,685.00
Technology Co., Ltd.
73
Items Related parties Clos ing balance Opening balance
Mennekes Electric
5,433,476.69
Industrial(China) Co., Ltd.
Potevio Information Technology
69,950.00 69,950.00
Co., Ltd.
Nanjing Potevio Honyar
232,843.05 86,243.30
Electrical Technology Co., Ltd.
Subtotal 21,829,053.24 46,304,905.14
Advances received China Potevio Information
Industry Inc. 2,720,702.86 223,246,886.73
Subtotal 2,720,702.86 223,246,886.73
Other payables Potevio Hi-tech Industry Co., Ltd. 138,657.24
Potevio Telecommunications Co.,
200,000.00 200,000.00
Ltd.
Potevio Company Limited. 10,638,000.00 14,580,000.00
Subtotal 10,976,657.24 14,780,000.00
IX. Commitments and contingencies
None
X. Events after balance sheet day
None
XI. Other important matters
1. Identification basis for reportable segments
Reportable segments are identified based on operating segments which are determined based on
the structure of the Company’s internal organization, management requirements and internal
reporting system. The Company identified reportable segments based on products , which include
video conferencing products, generic cable products, various low-voltage distribution products,
private network communication products, wiring products, and other products. Assets and
liabilities shared by different segments are allocated pro rata among segments.
The Company identified reportable segments based on geographic information, revenue from
main operations and costs of main operations are allocated between segments based on locations
where sales realized, and assets and liabilities are allocated based on locations of operating
entities.
The Company identified reportable segments based on products, assets and liabilities of each
segment are the actual amount of its proportion in assets and liabilities, and revenue from main
operations and cost of main operations are those generated or incurred by each product segment.
2. Financial information of reportable segments
Products segment
74
Video Special network
Items Generic cable Electrical Wiring products Inter-segment Total
conferencing communication
products products offsetting
products products
Revenue from
160,888,196.84 171,197,491.27 59,996,386.53 186,594,827.60 189,089,692.12 -19,362,882.39 748,403,711.97
main operations
Cost of main
123,774,773.25 126,510,910.63 47,656,142.16 183,479,607.25 164,962,444.76 -19,362,882.39 627,020,995.66
operations
Total assets 299,600,674.81 271,481,638.09 210,732,524.25 38,418,675.80 1,362,789,970.59 -423,343,638.37 1,759,679,845.17
Total liabilities 195,150,813.60 138,268,636.67 119,620,363.75 1,213,613,713.10 -259,379,964.05 1,407,273,563.07
XII. Notes to items of parent company financial statements
(I) Notes to items of parent company balance sheet
1. Accounts receivable
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis
using portfolios with similar 603,322,197.30 100.00 33,930,540.76 5.62 569,391,656.54
credit risk features
Portfolio 1 14,044,807.00 2.33 14,044,807.00
Portfolio 2 589,277,390.30 97.67 33,930,540.76 5.76 555,346,849.54
Total 603,322,197.30 100.00 33,930,540.76 5.62 569,391,656.54
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis
using portfolios with similar 618,514,189.40 99.70 31,878,310.78 5.15 586,635,878.62
credit risk features
Portfolio 1 14,042,487.00 2.27 14,042,487.00
Portfolio 2 604,471,702.40 97.73 31,878,310.78 5.27 572,593,391.62
Total 618,514,189.40 100.00 31,878,310.78 5.15 586,635,878.62
2) In portfolios, accounts receivable with provision made on a collective basis with age analysis
method
Clos ing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
75
Clos ing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 444,373,134.11
1-2 years 75,053,008.28
2-3 years 24,387,009.62 2,438,700.96 10.00
3-4 years 12,695,673.43 3,808,702.03 30.00
4-5 years 7,606,783.87 3,042,713.55 40.00
5-6 years 2,606,783.87 2,085,427.10 80.00
Over 6 years 22,554,997.12 22,554,997.12 100.00
Subtotal 589,277,390.30 33,930,540.76
3) Bad debts disclosed by ages
Ages Clos ing balance
Within 1 year
1-2 years
2-3 years 2,438,700.96
Over 3 years 31,491,839.8
3-4 years 3,808,702.03
4-5 years 3,042,713.55
Over 5 years 24,640,424.22
Subtotal 33,930,540.76
(2) Provisions made, collected or reversed in current period
Provision for bad debts made in current period totaled 2,056,129.98 yuan and recovered 3,900.00
yuan.
(3) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Book balance total balance of Provision for
accounts bad debts
receivable (%)
Beijing UniStrong Science & Technology
52,167,500.00 8.85
Co., Ltd.
China United Network Communications
29,514,969.14 5.01
Group Co.,Ltd. -Henan Branch
Beijing Zhongrui Haotian Information
25,499,700.00 4.33
Technology Co., Ltd.
Shenzhen Zhongchuang Electric
22,904,248.79 3.89
Measurement Technology Co., Ltd.
Dongpo Laos Co., Ltd. 19,708,086.54 3.34
Subtotal 149,794,504.47 25.42
2. Other receivables
(1) Details
76
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of provision
28,912,122.71 47.30 28,912,122.71 100.00
made on an individual basis
Including: other receivable 28,912,122.71 47.30 28,912,122.71 100.00
Receivables with provision
made on a collective basis 40,869,343.18 52.70 3,089,981.09 7.56 37,779,362.09
using portfolios
Including: other receivable 40,869,343.18 52.70 3,089,981.09 7.56 37,779,362.09
Portfolio 1 11,873,459.99 11.14 11,873,459.99
Portfolio 2 28,995,883.19 41.55 3,089,981.09 10.66 25,905,902.10
Total 69,781,465.89 100.00 32,002,103.80 45.86 37,779,362.09
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of provision
28,912,122.71 42.71 28,912,122.71 100.00
made on an individual basis
Including: other receivable 28,912,122.71 42.71 28,912,122.71 100.00
Receivables with provision
made on a collective basis 38,781,802.08 57.29 7,704,412.50 19.87 31,077,389.58
using portfolios
Including: dividend
400,000.00 0.59 400,000.00
receivable
other receivable 38,381,802.08 56.70 7,704,412.50 20.07 30,677,389.58
Portfolio 1 6,913,310.33 10.21 6,913,310.33
Portfolio 2 31,468,491.75 46.49 7,704,412.50 24.48 23,764,079.25
Total 67,693,924.79 100.00 36,616,535.21 54.09 31,077,389.58
2) Other receivables of individually significant amount and with provision made on an individual
basis
Debtors Book balance Provision for Provision Reasons for
bad debts proportion (%) provision made
Beijing Likangpu With long age
Communication Equipment 28,912,122.71 28,912,122.71 100.00 and hard to
Co., Ltd. recover
Subtotal 28,912,122.71 28,912,122.71
3) Other receivables with provision made on portfolios
Clos ing balance
Portfolio
Book balance Provision for bad debts Provision proportion (%)
Temporary advance
4,754,936.71 1,277,357.90 26.86
payment receivable
Deposit 19,892,455.22 1,277,357.90 6.42
Funds for business 1,023,880.04 74,944.00 7.32
77
Clos ing balance
Portfolio
Book balance Provision for bad debts Provision proportion (%)
Others 3,324,611.22 401,195.71 12.07
Subtotal 28,995,883.19 3,089,981.09
4)Provision for bad debts
Level 1 Level 2 Level 3
Expected credit
Expected credit Expected credit loss
Ages loss for the entire Total
losses in the for the entire duration
duration (credit
next 12 months (no credit loss)
loss has occurred)
Balance at
190,895.92 7,513,516.58 7,704,412.50
Jau1,2019
Transfer level 2
Transfer level 3 190,895.92 190,895.92
Reversed level 2
Reversed level 1
Provision made 198,926.16 -4,622,461.65 -4,423,535.49
Provision
Reserved
Other changes
Balance at
198,926.16 2,891,054.93 3,089,981.09
Jun30,2019
5) Bad debts disclosed by ages
Ages Clos ing balance
Within 1 year
1-2 years
2-3 years 198,926.16
Over 3 years 2,891,054.93
3-4 years 223,083.90
4-5 years 69,309.20
Over 5 years 2,598,661.83
Subtotal 3,089,981.09
(2) Provisions made, collected or reversed in current period
Increase
Items Opening Closing
balance Provision Others balance
Provision made
collected
Other receivables 36,616,535.21 -4,614,431.41 32,002,103.80
78
Increase
Items Opening Closing
balance Provision Others balance
Provision made
collected
Subtotal 36,616,535.21 -4,614,431.41 32,002,103.80
Provisions for bad debts made in current period totaled-4,614,431.41 yuan.
(3) Other receivables categorized by nature
Nature of receivables Clos ing balance Opening balance
Temporary advance payment receivable 45,540,519.41 46,230,393.22
Deposits 19,892,455.22 18,558,706.28
Funds for business 1,023,880.04 1,348,181.93
Others 3,324,611.22 1,156,643.36
Total 69,781,465.89 67,293,924.79
(4) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Book balance Ages total balance of Provision for
receivables other receivables bad debts
(%)
Beijing Likangpu Temporary
Communications advance payment 28,912,122.71 Over 5 years 41.43 28,912,122.71
Equipment Co., Ltd. receivable
Putian Temporary
Telecommunications advance payment 4,097,886.33 Over 5 years 5.87 4,097,886.33
(H.K.) Co., Ltd. receivable
Ping An International
Financial Leasing Co., Deposits 4,000,000.00 Within 1 year 5.73
Ltd.
Haitong Unitrust
International Leasing Deposits 2,775,420.00 1-3 years 3.98 138,771.00
Co.,Ltd.
China Potevio
Information Industry Deposits 1,938,000.00 1-3 years 2.78 96,900.00
Inc.
Subtotal 41,723,429.04 59.79 33,245,680.04
3. Long-term equity investments
(1) Categories
Closing balance Opening balance
Items
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
impairment impairment
Investments in
subsidiaries 153,218,270.64 1,910,520.00 151,307,750.64 153,218,270.64 1,910,520.00 151,307,750.64
Investments in associates
181,617,987.10 181,617,987.10 182,060,217.26 182,060,217.26
and joint ventures
Total 334,836,257.74 1,910,520.00 332,925,737.74 335,278,487.90 1,910,520.00 333,367,967.90
(2) Investments in subsidiaries
Provision for Closing balance of
Investees Opening balance Increase Decrease Closing balance impairment made in provision for
current period impairment
Nanjing M ennekes Electrics Co., Ltd. 57,831,011.71 57,831,011.71
Nanjing Bada Communication 5,610,000.00 5,610,000.00
79
Provision for Closing balance of
Investees Opening balance Increase Decrease Closing balance impairment made in provision for
current period impairment
Equipment Co., Ltd.
Nanjing Putian Changle
Telecommunications Equipment Co., 2,610,457.00 2,610,457.00
Ltd.
Nanjing Putian Communication 1,294,510.00 1,294,510.00
Technology Co., Ltd.
Nanjing Putian Information Technology 13,860,000.00 13,860,000.00
Co., Ltd.
Nanjing Putian Telege Intelligent 3,320,003.45 3,320,003.45
Building Co., Ltd.
Putian Telecommunications (H.K.) Co., 1,910,520.00
Ltd.
Nanjing Putian Network Co., Ltd. 7,741,140.41 7,741,140.41
Nanjing Putian Wangzhi Electronic Co., 20,428,683.00 20,428,683.00
Ltd.
Nanjing South Telecommunications Co., 33,175,148.00 33,175,148.00
Ltd.
Nanjing Putian Datang Information 5,436,797.07 5,436,797.07
Electronic Co., Ltd.
Subtotal 151,307,750.64 151,307,750.64 1,910,520.00
(3) Investments in associates and joint ventures
Increase/decrease
Adjustment in
Investees Opening balance Investment income
Investments Investments other
recognized under
increased decreased comprehensive
equity method
income
Joint ventures
SEI-Nanjing Potevio Optical
Network Co., Ltd. 11,128,318.34 -697,534.04
Subtotal 11,128,318.34 -697,534.04
Associates
Potevio Hi-tech Industry
170,931,898.92 255,303.88
Co., Ltd.
Subtotal 170,931,898.92 255,303.88
Total 182,060,217.26 -442,230.16
(Continued)
Increase/decrease
Closing
Cash balance of
Investees Closing balance
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Joint ventures
SEI-Nanjing Potevio
Optical Network Co., Ltd. 10,430,784.30
Subtotal 10,430,784.30
Associates
Potevio Hi-tech Industry
Co., Ltd. 171,187,202.80
Subtotal 171,187,202.80
Total 181,617,987.10
(II) Notes to items of the parent company income statement
80
1. Operating revenue/ Operating cost
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Revenue from
336,659,233.97 318,589,542.51 473,077,482.03 437,252,856.53
main operations
Revenue from
other operations 4,752,584.61 2,568,748.93 24,729,485.21 23,763,158.86
Total 341,411,818.58 321,158,291.44 497,806,967.24 461,016,015.39
2. Investment income
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments -442,230.16 407,793.10
under equity method
Total -442,230.16 407,793.10
XIII. Other supplementary information
(I) Non-recurring profit or loss
1. Schedule of non-recurring profit or loss of current period
Items Amount Remarks
Gains on disposal of non-current assets, including
98,454.13
written-off of provision for impairment
Government grant included in profit or loss (excluding
those closely related to operating activities, or regular 3,756,342.00
government grants)
Gains on debt restructuring -1,291,442.00
Other non-operating revenue or expenditures 56,538.47
Subtotal 2,619,892.60
Less: enterprise income tax affected -305,760.82
Non-controlling interest affected (after tax) -982,101.05
Net non-recurring profit or loss attributable to
1,332,030.73
shareholders of the parent company
(II) RONA and EPS
1. Details
EPS (yuan/share)
Profit of the reporting period Weighted average
RONA (%) Basic EPS Diluted EPS
Net profit attributable to shareholders
-17.62 -0.2676 -0.2676
of ordinary shares
Net profit attributable to shareholders
of ordinary shares after deducting -18.03 -0.2738 -0.2738
non-recurring profit or loss
2. Calculation process of weighted average RONA
81
Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -57,528,524.88
shares
Non-recurring profit or loss B 1,332,030.73
Net profit attributable to shareholders of ordinary C=A-B -58,860,555.61
shares after deducting non-recurring profit or loss
Opening balance of net assets attributable to D 355,289,728.24
shareholders of ordinary shares
Net assets attributable to shareholders of ordinary
shares increased due to offering of new shares or E
conversion of debts into shares
Number of months counting from the next month
when the net assets were increased to the end of F
the reporting period
Net assets attributable to shareholders of ordinary
shares decreased due to share repurchase or cash G
dividends appropriation
Number of months counting from the next month
when the net assets were decreased to the end of H
the reporting period
Translation reserve -64,891.20
increased in current
period
Number of months
Others counting from the next
month when the net
assets were increased or
decreased to the end of
the reporting period
Number of months in the reporting period K 6.00
L= D+A×1/2
Weighted average net assets +
326,525,465.80
E×F/K-G×H/K±I×J/
K
Weighted average RONA M=A/L -17.62
Weighted average RONA after deducting N=C/L -18.03
non-recurring profit or loss
3. Calculation process of basic EPS and diluted EPS
(1) Calculation process of basic EPS
Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -57,528,524.88
shares
Non-recurring profit or loss B 1,332,030.73
Net profit attributable to shareholders of ordinary C=A-B -58,860,555.61
shares after deducting non-recurring profit or loss
Opening balance of total shares D 215,000,000.00
Number of shares increased due to conversion of
reserve to share capital or share dividend E
appropriation
Number of shares increased due to offering of new F
82
Items Symbols Current period
cumulative
shares or conversion of debts into shares
Number of months counting from the next month
when the share was increased to the end of the G 3.00
reporting period
Number of shares decreased due to share H
repurchase
Number of months counting from the next month
when the share was decreased to the end of the I
reporting period
Number of shares decreased in the reporting period J
Number of months in the reporting period K 6.00
Weighted average of outstanding ordinary shares L=D+E+F×G/K-H×I/ 215,000,000.00
K-J
Basic EPS M=A/L -0.2676
Basic EPS after deducting non-recurring profit or N=C/L -0.2738
loss
(2) The calculation process of diluted EPS is the same with that of basic EPS.
83
