Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2021
(Expressed in Renminbi Yuan)
Note
Assets Closing balance Opening balance
No.
Current assets:
Cash and bank balances 1 90,221,585.93 209,849,710.96
Settlement funds
Loans to other banks
Held-for-trading financial assets
Derivative financial assets
Notes receivable 2 20,215,362.47 17,029,051.04
Accounts receivable 3 529,083,330.61 493,992,403.49
Receivables financing 4 13,747,563.72 32,594,702.60
Advances paid 5 26,113,911.42 19,616,348.65
Premiums receivable
Reinsurance accounts receivable
Reinsurance reserve receivable
Other receivables 6 18,122,691.90 16,911,790.31
Financial assets under reverse repo
Inventories 7 226,870,395.21 199,641,972.32
Contract assets
Assets classified as held for sale
Non-current assets due within one year
Other current assets 8 13,311,935.75 13,126,022.08
Total current assets 937,686,777.01 1,002,762,001.45
Non-current assets:
Loans and advances paid
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 9 10,422,055.77 10,422,056.96
Other equity instrument investments 10 741,953.00 741,953.00
Other non-current financial assets
Investment property 11 4,076,777.32 4,267,013.35
Fixed assets 12 98,429,381.98 100,158,063.58
Construction in progress 13 23,811,418.56 22,454,792.27
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 14 20,778,350.12 21,261,119.40
Development expenditures
Goodwill
Long-term prepayments 15 5,382,379.54 5,541,410.81
Deferred tax assets 16
Other non-current assets
Total non-current assets 163,642,316.29 164,846,409.37
Total assets 1,101,329,093.30 1,167,608,410.82
1
Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2021 (continued)
(Expressed in Renminbi Yuan)
Note
Liabilities & Equity Closing balance Opening balance
No.
Current liabilities:
Short-term borrowings 17 140,500,000.00 65,000,000.00
Central bank loans
Loans from other banks
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 18 14,698,110.10 76,135,010.10
Accounts payable 19 561,701,149.98 604,765,586.00
Advances received 20
Contract liabilities 21 31,494,936.69 28,518,252.40
Financial liabilities under repo
Absorbing deposit and interbank deposit
Deposit for agency security transaction
Deposit for agency security underwriting
Employee benefits payable 22 16,999,268.19 17,362,878.28
Taxes and rates payable 23 6,327,204.25 8,707,248.67
Other payables 24 56,473,719.89 53,759,120.63
Handling fee and commission payable
Reinsurance accounts payable
Liabilities classified as held for sale
Non-current liabilities due within one year 25 7,954,722.25 9,181,720.08
Other current liabilities 26 3,778,589.00 3,707,372.81
Total current liabilities 839,927,700.35 867,137,188.97
Non-current liabilities:
Insurance policy reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables 27 4,036,160.05
Long-term employee benefits payable
Provisions
Deferred income 28
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 4,036,160.05
Total liabilities 839,927,700.35 871,173,349.02
Equity:
Share capital/Paid-in capital 29 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 30 196,286,481.92 183,568,842.44
Less: Treasury shares
Other comprehensive income 31 -5,891,985.07 -6,853,931.65
Special reserve
Surplus reserve 32 589,559.77 589,559.77
General risk reserve
Undistributed profit 33 -232,274,176.83 -202,680,309.64
Total equity attributable to the parent company 173,709,879.79 189,624,160.92
Non-controlling interest 87,691,513.16 106,810,900.88
Total equity 261,401,392.95 296,435,061.80
Total liabilities & equity 1,101,329,093.30 1,167,608,410.82
2
Nanjing Putian Telecommunications Co., Ltd.
Parent company balance sheet as at June 30, 2021
(Expressed in Renminbi Yuan)
Note
Assets Closing balance Opening balance
No.
Current assets:
Cash and bank balances 20,592,675.73 57,345,349.24
Held-for-trading financial assets
Derivative financial assets
Notes receivable 237,500.00 1,190,734.45
Accounts receivable 1 203,731,115.33 218,887,318.18
Receivables financing 1,683,955.00
Advances paid 8,950,718.25 10,138,293.79
Other receivables 2 41,635,450.06 50,275,151.96
Inventories 83,081,841.77 80,454,321.56
Contract assets
Assets classified as held for sale
Non-current assets due within one year
Other current assets 5,787,633.65 7,516,579.06
Total current assets 365,700,889.79 425,807,748.24
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 3 123,831,124.41 123,831,124.60
Other equity instrument investments 741,953.00 741,953.00
Other non-current financial assets
Investment property
Fixed assets 43,682,729.77 45,117,637.57
Construction in progress
Productive biological assets
Oil & gas assets
Right-of-use assets
Intangible assets 4,825,084.05 5,006,099.13
Development expenditures
Goodwill
Long-term prepayments 3,859,520.94 4,461,404.63
Deferred tax assets
Other non-current assets
Total non-current assets 176,940,412.17 179,158,218.93
Total assets 542,641,301.96 604,965,967.17
3
Nanjing Putian Telecommunications Co., Ltd.
Parent company balance sheet as at June 30, 2021 (continued)
(Expressed in Renminbi Yuan)
Note
Liabilities & Equity Closing balance Opening balance
No.
Current liabilities:
Short-term borrowings 95,000,000.00 30,000,000.00
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 14,698,110.10 76,135,010.10
Accounts payable 192,828,967.91 214,453,536.53
Advances received
Contract liabilities 15,011,700.79 14,109,283.43
Employee benefits payable 8,292,687.68 7,931,673.97
Taxes and rates payable 403,923.89 115,233.85
Other payables 145,888,014.12 164,586,605.64
Liabilities classified as held for sale
Non-current liabilities due within one year 7,954,722.25 9,181,720.08
Other current liabilities 1,635,768.34 1,834,206.85
Total current liabilities 481,713,895.08 518,347,270.45
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables 4,036,160.05
Long-term employee benefits payable
Provisions
Deferred income
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 4,036,160.05
Total liabilities 481,713,895.08 522,383,430.50
Equity:
Share capital/Paid-in capital 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 158,864,042.34 158,864,042.34
Less: Treasury shares
Other comprehensive income -1,854,910.00 -1,854,910.00
Special reserve
Surplus reserve 589,559.76 589,559.76
Undistributed profit -311,671,285.22 -290,016,155.43
Total equity 60,927,406.88 82,582,536.67
Total liabilities & equity 542,641,301.96 604,965,967.17
4
Nanjing Putian Telecommunications Co., Ltd.
Consolidated income statement for the year ended June 30, 2021
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Total operating revenue 451,878,610.43 405,172,803.62
Including: Operating revenue 1 451,878,610.43 405,172,803.62
Interest income
Premium earned
Revenue from handling charges and commission
II. Total operating cost 471,300,838.43 455,371,095.39
Including: Operating cost 1 357,433,868.99 327,775,992.40
Interest expenses
Handling charges and commission expenditures
Surrender value
Net payment of insurance claims
Net provision of insurance policy reserve
Premium bonus expenditures
Reinsurance expenses
Taxes and surcharges 2 2,771,656.02 2,290,036.93
Selling expenses 3 49,061,292.58 58,811,392.65
Administrative expenses 4 29,720,592.42 27,533,357.61
R&D expenses 5 29,747,490.78 24,000,179.13
Financial expenses 6 2,565,937.64 14,960,136.67
Including: Interest expenses 2,798,625.53 15,276,918.26
Interest income 410,149.62 2,387,417.73
Add: Other income 7 1,192,018.97 6,452,807.84
Investment income (or less: losses) 8 -1.19 -137,939.58
Including: Investment income from associates and joint ventures -1.19 -137,939.58
Gains from derecognition of financial assets at amortized cost
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)
Credit impairment loss 9 -2,408,210.40 -5,364,320.35
Assets impairment loss 10 -3,298,844.16
Gains on asset disposal (or less: losses) 11 15,829.32 1,244.51
III. Operating profit (or less: losses) -20,622,591.30 -52,545,343.51
Add: Non-operating revenue 12 56,934.58 3,768,822.98
Less: Non-operating expenditures 13 61,544.99 649,407.57
IV. Profit before tax (or less: total loss) -20,627,201.71 -49,425,928.10
Less: Income tax 14 4,521,812.72 2,242,233.92
V. Net profit (or less: net loss) -25,149,014.43 -51,668,162.02
(I) Categorized by the continuity of operations
1. Net profit from continuing operations (or less: net loss) -25,149,014.43 -51,668,162.02
2. Net profit from discontinued operations (or less: net loss)
(II) Categorized by the portion of equity ownership
1. Net profit attributable to owners of parent company (or less: net loss) -29,593,867.19 -58,856,854.03
2. Net profit attributable to non-controlling shareholders (or less: net loss) 4,444,852.76 7,188,692.01
VI. Other comprehensive income after tax 961,946.58 -724,622.78
Items attributable to the owners of the parent company 961,946.58 -652,160.50
(I) Not to be reclassified 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 reclassified subsequently to profit or loss 961,946.58 -652,160.50
1. Items under equity method that may be reclassified to profit or loss
2. Changes in fair value of other debt investments
3. Profit or loss from reclassification of financial assets into other comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserve
6. Translation reserve 961,946.58 -652,160.50
7. Others
Items attributable to non-controlling shareholders -72,462.28
VII. Total comprehensive income -24,187,067.85 -52,392,784.80
Items attributable to the owners of the parent company -28,631,920.61 -59,509,014.53
Items attributable to non-controlling shareholders 4,444,852.76 7,116,229.73
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) -0.14 -0.27
(II) Diluted EPS (yuan per share) -0.14 -0.27
5
Nanjing Putian Telecommunications Co., Ltd.
Parent company income statement for the year ended June 30, 2021
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Operating revenue 1 63,611,201.65 62,600,413.61
Less: Operating cost 1 59,096,001.19 62,495,073.80
Taxes and surcharges 891,562.48 553,456.43
Selling expenses 14,093,441.48 22,491,578.45
Administrative expenses 14,173,902.23 12,223,379.98
R&D expenses 4,771,057.66 4,226,104.01
Financial expenses 1,549,446.67 14,496,890.37
Including: Interest expenses 1,997,776.76 13,154,606.78
Interest income 498,022.08 448,096.86
Add: Other income 232,500.00 1,262,915.62
Investment income (or less: losses) 2 9,153,398.81 55,129,560.42
Including: Investment income from associates and joint ventures -1.19 -137,939.58
Gains from derecognition of financial assets at amortized cost
Gains on net exposure to hedging risk (or less: losses)
Gains on changes in fair value (or less: losses)
Credit impairment loss -55,949.44 -5,633,415.93
Assets impairment loss -3,298,844.16
Gains on asset disposal (or less: losses) 15,829.32 67,992.36
II. Operating profit (or less: losses) -21,618,431.37 -6,357,861.12
Add: Non-operating revenue 22,004.66 40,400.31
Less: Non-operating expenditures 58,703.08 607,399.62
III. Profit before tax (or less: total loss) -21,655,129.79 -6,924,860.43
Less: Income tax
IV. Net profit (or less: net loss) -21,655,129.79 -6,924,860.43
(I) Net profit from continuing operations (or less: net loss) -21,655,129.79 -6,924,860.43
(II) Net profit from discontinued operations (or less: net loss)
V. Other comprehensive income after tax
(I) Not to be reclassified 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 reclassified subsequently to profit or loss
1. Items under equity method that may be reclassified to profit or loss
2. Changes in fair value of other debt investments
3. Profit or loss from reclassification of financial assets into other
comprehensive income
4. Provision for credit impairment of other debt investments
5. Cash flow hedging reserve
6. Translation reserve
7. Others
VI. Total comprehensive income -21,655,129.79 -6,924,860.43
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share)
(II) Diluted EPS (yuan per share)
6
Nanjing Putian Telecommunications Co., Ltd.
Consolidated cash flow statement for the year ended June 30, 2021
(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 or rendering of services 420,252,617.33 524,664,515.38
Net increase of client deposit and interbank deposit
Net increase of central bank loans
Net increase of loans from other financial institutions
Cash receipts from original insurance contract premium
Net cash receipts from reinsurance
Net increase of policy-holder deposit and investment
Cash receipts from interest, handling charges and commission
Net increase of loans from others
Net increase of repurchase
Net cash receipts from agency security transaction
Receipts of tax refund 1,054,350.93 2,251,512.17
Other cash receipts related to operating activities 1 14,468,443.28 26,408,848.52
Subtotal of cash inflows from operating activities 435,775,411.54 553,324,876.07
Cash payments for goods purchased and services received 373,073,984.06 386,133,169.35
Net increase of loans and advances to clients
Net increase of central bank deposit and interbank deposit
Cash payments for insurance indemnities of original insurance contracts
Net increase of loans to others
Cash payments for interest, handling charges and commission
Cash payments for policy bonus
Cash paid to and on behalf of employees 95,944,470.91 93,415,784.55
Cash payments for taxes and rates 22,940,276.09 16,591,036.09
Other cash payments related to operating activities 2 60,538,953.63 39,532,168.05
Subtotal of cash outflows from operating activities 552,497,684.69 535,672,158.04
Net cash flows from operating activities -116,722,273.15 17,652,718.03
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income
Net cash receipts from the disposal of fixed assets, intangible assets and other 31,890.00 9,966,200.00
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 31,890.00 9,966,200.00
Cash payments for the acquisition of fixed assets, intangible assets and other 3,324,429.34 5,923,105.90
long-term assets
Cash payments for investments
Net increase of pledged borrowings
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 3,324,429.34 5,923,105.90
Net cash flows from investing activities -3,292,539.34 4,043,094.10
III. Cash flows from financing activities:
Cash receipts from absorbing investments
Including: Cash received by subsidiaries from non-controlling shareholders as
investments
Cash receipts from borrowings 140,500,000.00 172,737,283.33
Other cash receipts related to financing activities 3
Subtotal of cash inflows from financing activities 140,500,000.00 172,737,283.33
Cash payments for the repayment of borrowings 70,057,921.04 207,227,384.90
Cash payments for distribution of dividends or profits and for interest expenses 7,991,968.37 30,654,979.03
Including: Cash paid by subsidiaries to non-controlling shareholders as dividend 8,722,500.00
or profit
Other cash payments related to financing activities 4 39,813,078.92 40,240,245.04
Subtotal of cash outflows from financing activities 117,862,968.33 278,122,608.97
Net cash flows from financing activities 22,637,031.67 -105,385,325.64
IV. Effect of foreign exchange rate changes on cash & cash equivalents 424,532.65 129,185.36
V. Net increase in cash and cash equivalents -96,953,248.17 -83,560,328.15
Add: Opening balance of cash and cash equivalents 170,062,746.87 208,783,866.60
VI. Closing balance of cash and cash equivalents 73,109,498.70 125,223,538.45
7
Nanjing Putian Telecommunications Co., Ltd.
Parent company cash flow statement for the year ended June 30, 2021
(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 75,606,543.56 175,951,704.04
Receipts of tax refund 18,754.29 37,518.67
Other cash receipts related to operating activities 38,473,620.39 39,171,541.72
Subtotal of cash inflows from operating activities 114,098,918.24 215,160,764.43
Cash payments for goods purchased and services received 69,851,073.79 78,668,243.32
Cash paid to and on behalf of employees 31,619,733.53 35,297,802.39
Cash payments for taxes and rates 1,076,610.70 782,330.42
Other cash payments related to operating activities 50,209,315.10 73,919,046.61
Subtotal of cash outflows from operating activities 152,756,733.12 188,667,422.74
Net cash flows from operating activities -38,657,814.88 26,493,341.69
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income 4,500,000.00 55,267,500.00
Net cash receipts from the disposal of fixed assets, intangible 31,890.00 9,965,400.00
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 4,531,890.00 65,232,900.00
Cash payments for the acquisition of fixed assets, intangible assets 441,129.96
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 441,129.96
Net cash flows from investing activities 4,531,890.00 64,791,770.04
III. Cash flows from financing activities:
Cash receipts from absorbing investments
Cash receipts from borrowings 95,000,000.00 97,737,283.33
Other cash receipts related to financing activities
Subtotal of cash inflows from financing activities 95,000,000.00 97,737,283.33
Cash payments for the repayment of borrowings 35,057,921.04 137,227,384.90
Cash payments for distribution of dividends or profits and for 729,270.76 10,263,867.10
interest expenses
Other cash payments related to financing activities 41,391,500.00 45,108,000.00
Subtotal of cash outflows from financing activities 77,178,691.80 192,599,252.00
Net cash flows from financing activities 17,821,308.20 -94,861,968.67
IV. Effect of foreign exchange rate changes on cash and cash
equivalents
V. Net increase in cash and cash equivalents -16,304,616.68 -3,576,856.94
Add: Opening balance of cash and cash equivalents 24,349,341.34 25,794,743.17
VI. Closing balance of cash and cash equivalents 8,044,724.66 22,217,886.23
8
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2021
(Expressed in Renminbi Yuan)
Current period cumulative
Equity attributable to parent company
Items Other equity instruments Less: Other Non-controlling
Share capital/ Special Surplus General risk Undistributed Total equity
Preferred Perpetual Capital reserve Treasury comprehensive interest
Paid-in capital Others reserve reserve reserve profit
shares bonds shares income
I. Balance at the end of prior year 215,000,000.00 183,568,842.44 -6,853,931.65 589,559.77 -202,680,309.64 106,810,900.88 296,435,061.80
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 215,000,000.00 183,568,842.44 -6,853,931.65 589,559.77 -202,680,309.64 106,810,900.88 296,435,061.80
III. Current period increase (or less: decrease) 12,717,639.48 961,946.58 - -29,593,867.19 -19,119,387.72 -35,033,668.85
(I) Total comprehensive income 961,946.58 -29,593,867.19 4,444,852.76 -24,187,067.85
(II) Capital contributed or withdrawn by
12,717,639.48 - - - -12,717,640.48 -1.00
owners
1. Ordinary shares contributed by owners - -
2. Capital contributed by holders of other
- -
equity instruments
3. Amount of share-based payment included
- -
in equity
4. Others 12,717,639.48 - - -12,717,640.48 -1.00
(III) Profit distribution - - - - -10,846,600.00 -10,846,600.00
1. Appropriation of surplus reserve -
2. Appropriation of general risk reserve -
3. Appropriation of profit to owners -10,846,600.00 -10,846,600.00
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 -
9
Current period cumulative
Equity attributable to parent company
Items Other equity instruments Less: Other Non-controlling
Share capital/ Special Surplus General risk Undistributed Total equity
Preferred Perpetual Others Capital reserve Treasury comprehensive interest
Paid-in capital reserve reserve reserve profit
shares bonds shares income
4. Changes in defined benefit plan carried
over to retained earnings -
5. Other comprehensive income carried over
-
to retained earnings
6. Others -
(V) Special reserve - - - - - -
1. Appropriation of current period -
2. Application of current period -
(VI) Others -
IV. Balance at the end of current period 215,000,000.00 196,286,481.92 -5,891,985.07 589,559.77 -232,274,176.83 87,691,513.16 261,401,392.95
10
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2021 (continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Equity attributable to parent company
Items Other equity instruments Less: Other General Non-controlling
Share capital/ Special Surplus Undistributed Total equity
Preferred Perpetual Capital reserve Treasury comprehensive risk interest
Paid-in capital Others reserve reserve profit
shares bonds shares income reserve
I. Balance at the end of prior year 215,000,000.00 185,374,533.85 -6,776,124.85 589,559.77 -224,644,862.48 130,557,035.50 300,100,141.79
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 -6,776,124.85 589,559.77 -224,644,862.48 130,557,035.50 300,100,141.79
III. Current period increase (or less: decrease) -652,160.50 -58,856,854.03 -1,606,270.27 -61,115,284.80
(I) Total comprehensive income -652,160.50 -58,856,854.03 7,116,229.73 -52,392,784.80
(II) Capital contributed or withdrawn by owners
1. Ordinary shares contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in equity
4. Others
(III) Profit distribution -8,722,500.00 -8,722,500.00
1. Appropriation of surplus reserve
2. Appropriation of general risk reserve
3. Appropriation of profit to owners -8,722,500.00 -8,722,500.00
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. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to
retained earnings
6. 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 -7,428,285.35 589,559.77 -283,501,716.51 128,950,765.23 238,984,856.99
11
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2021
(Expressed in Renminbi Yuan)
Current period cumulative
Other equity instruments Less: Other
Items Share capital/ Special Undistributed
Preferred Perpetual Others Capital reserve Treasury comprehensive Surplus reserve Total equity
Paid-in capital reserve profit
shares bonds shares income
I. Balance at the end of prior year 215,000,000.00 158,864,042.34 -1,854,910.00 589,559.76 -290,016,155.43 82,582,536.67
Add: Cumulative changes of accounting policies
Error correction of prior period
Others
II. Balance at the beginning of current year 215,000,000.00 158,864,042.34 -1,854,910.00 589,559.76 -290,016,155.43 82,582,536.67
III. Current period increase (or less: decrease) -21,655,129.79 -21,655,129.79
(I) Total comprehensive income -21,655,129.79 -21,655,129.79
(II) Capital contributed or withdrawn by owners
1. Ordinary shares contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment 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. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to retained
earnings
6. Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 158,864,042.34 -1,854,910.00 589,559.76 -311,671,285.22 60,927,406.88
12
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2021 (continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Other equity instruments Less: Other
Items Share capital/ Undistributed
Preferred Perpetual Capital reserve Treasury comprehensive Special reserve Surplus reserve Total equity
Paid-in capital Others profit
shares bonds shares income
I. Balance at the end of prior year 215,000,000.00 172,417,299.81 -1,854,910.00 589,559.76 -354,057,972.32 32,093,977.25
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 -1,854,910.00 589,559.76 -354,057,972.32 32,093,977.25
III. Current period increase (or less: decrease) -6,924,860.43 -6,924,860.43
(I) Total comprehensive income -6,924,860.43 -6,924,860.43
(II) Capital contributed or withdrawn by owners
1. Ordinary shares contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment 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. Changes in defined benefit plan carried over to
retained earnings
5. Other comprehensive income carried over to retained
earnings
6. 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 -1,854,910.00 589,559.76 -360,982,832.75 25,169,116.82
[Wang Wenkui] [Wang Huailin] [Tang Yiqiao]
[Legal representative] [Officer in charge of accounting] [Head of accounting department]
(Signature and stamp) (Signature and stamp) (Signature and stamp)
13
Nanjing Putian Telecommunications Co., Ltd.
Notes to Financial Statements
For the year ended June 30, 2021
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 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.
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, vehicle 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 the Board of Directors
dated August 25, 2021.
The Company has brought 9 subsidiaries including Nanjing Southern Telecom Co., Ltd, and
Nanjing Putian Telege Intelligent Building Co., Ltd. etc. into the consolidated scope. Please refer
to notes of VII for details.
II. Preparation basis of the financial statements
(I) Preparation basis
The financial statements have been prepared on the basis of going concern.
(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.
14
III. Significant accounting policies and estimates
Important note:
The Company has set up accounting policies and estimates on transactions or events such as
impairment of financial instruments, depreciation of fixed assets, depreciation of right-of-use
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 arising 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.
(VI) Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into the 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.
15
(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 the following items 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 assets 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, with the RMB amounts 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 the aforementioned foreign currency
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)
16
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
“CASBE 14 – 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 included into profit or loss when the financial assets are derecognized,
reclassified, amortized using effective interest method or recognized with impairment loss.
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 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
17
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 “CASBE 23 – 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 measures its financial liabilities at the higher of: a. the amount of loss allowances in
accordance with impairment requirements of financial instruments; b. the amount initially recognized
less the amount of accumulated amortization recognized in accordance with “CASBE 14 – Revenues”.
4) Financial liabilities at amortized cost
The Company measures its financial liabilities at amortized cost using effective interest method. 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
amortized using effective interest method.
(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 “CASBE 23 – 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
18
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 carrying 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 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 uses 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 unadjusted quoted prices 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
19
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 leases 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.
Expected credit losses refer to the weighted average of credit losses with the respective risks of a
default occurring as the weights. Credit loss refers to the difference between all contractual cash
flows that are due to the Company in accordance with the contract and all the cash flows that the
Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest
rate. Among which, purchased or originated credit-impaired financial assets are discounted at the
credit-adjusted effective interest rate.
At 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 and contract assets that do not contain a significant financing component
or financing components in contracts with associated period less than one year that are not
considered by the Company, which result from transactions as regulated in “CASBE 14 –
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
regulated in “CASBE 14 – 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 measure the
loss allowance for that financial instrument at an amount equal to 12-month expected credit loss.
20
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.
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 relatively
low credit risk at the balance sheet date.
The Company shall estimate expected credit risk and measure expected credit losses on an
individual or a collective basis. When the Company adopts the collective basis, financial
instruments are grouped with similar credit risk features.
The Company shall remeasure expected credit loss on each balance sheet date, and increased or
reversed amounts of loss allowance arising therefrom shall be included into profit or loss as
impairment losses or gains. For a financial asset measured at amortized cost, the loss allowance
reduces the carrying amount of such financial asset presented in the balance sheet; for a debt
investment measured at fair value through other comprehensive income, the loss allowance shall
be recognized in other comprehensive income and shall not reduce the carrying amount of such
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
of portfolio expected credit loss
Other receivables – Portfolio grouped Based on historical credit
with consolidated related parties loss experience, the current
Other receivables – Portfolio grouped situation and the forecast of
with deposit receivables Nature of receivables future economic conditions,
Other receivables – Portfolio grouped calculate expected credit loss
with export tax rebate through exposure at default
Other receivables – Other portfolio and 12-month or lifetime
expected credit loss rate.
(3) Accounts receivable and contract assets with expected credit losses measured on a collective
basis
1) Specific portfolios and method for measuring expected credit loss
Items Basis for determination Method for measuring expected
of portfolio credit loss
Bank acceptance receivable Based on historical credit loss
experience, the current situation and
Type of notes the forecast of future economic
Trade acceptance receivable conditions, calculate expected credit
loss through exposure at default and
lifetime expected credit loss rate.
Accounts receivable Consolidated related Based on historical credit loss
21
Items Basis for determination Method for measuring expected
of portfolio credit loss
–Portfolio grouped with parties experience, the current situation and
the forecast of future economic
consolidated related parties
conditions, prepare the comparison
table of overdue ages and lifetime
expected credit loss rate of accounts
receivable, so as to calculate expected
credit loss.
Based on historical credit loss
experience, the current situation and
Accounts receivable –
Aging the forecast of future economic
Portfolio Aging conditions, calculate expected credit
loss through aging of receivables and
lifetime expected credit loss rate.
2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of
portfolio grouped with ages
Ages Expected credit loss rate (%)
Within 1 year (inclusive, the same 1.00
hereinafter)
1-2 years 5.00
2-3 years 10.00
3-4 years 30.00
4-5 years 50.00
Over 5 years 100.00
6. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not
offset. However, the Company offsets a financial asset and a financial liability and presents the net
amount in the balance sheet when, and only when, the Company: (a) currently has a legally
enforceable right to set off the recognized amounts; and (b) intends either to settle on a net basis,
or to realize the asset and settle the liability simultaneously.
For a transfer of a financial asset that does not qualify for derecognition, the Company does not
offset the transferred asset and the associated liability.
(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 supplies 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 and net realizable value;
22
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) Contract costs
Assets related to contract costs including costs of obtaining a contract and costs to fulfil a contract.
The Company recognizes as an asset the incremental costs of obtaining a contract if those costs
are expected to be recovered.
If the costs incurred in fulfilling a contract are not within the scope of standards related to
inventories, fixed assets or intangible assets, etc., the Company shall recognize the costs to fulfil a
contract as an asset if all the following criteria are satisfied:
1. The costs relate directly to a contract or to an anticipated contract, including direct labor, direct
materials, manufacturing overhead cost (or similar cost), cost that are explicitly chargeable to the
customer under the contract, and other costs that are only related to the contract;
2. The costs enhance resources of the Company that will be used in satisfying performance
obligations in the future; and
3. The costs are expected to be recovered.
An asset related to contract costs shall be amortized on a systematic basis that is consistent with
related goods or services, with amortization included into profit or loss.
The Company shall make provision for impairment and recognize an impairment loss to the extent
that the carrying amount of an asset related to contract costs exceeds the remaining amount of
consideration that the Company expects to receive in exchange for the goods or services to which
23
the asset relates less the costs expected to be incurred. The Company shall recognize a reversal of
an impairment loss previously recognized in profit or loss when the impairment conditions no
longer exist or have improved. The carrying amount of the asset after the reversal shall not exceed
the amount that would have been determined on the reversal date if no provision for impairment
had been made previously.
(XIII) Non-current assets or disposal groups classified as held for sale
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 subsequent measurement
For initial measurement and subsequent measurement 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
24
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.
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 liabilities 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 reversed.
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 reversed.
For 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 asset (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.
(XIV) Long-term equity investments
1. Judgment of joint control and significant influence
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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
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 in 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 investments and the carrying amount 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”, on the date of combination, 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
initial investment cost of long-term equity investments at the acquisition date 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 amount of the
acquirer’s previously held equity interest in the acquiree is remeasured at the acquisition-date fair
value, and the difference between the fair value and the carrying amount is recognized in
26
investment income; when the acquirer’s previously held equity interest in the acquiree 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.
(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
“CASBE 12 – Debt Restructuring”; and that obtained through non-cash assets exchange is
determined according to “CASBE 7 – Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of profit 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 remeasured 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
27
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. However, before the Company loses control, the
difference between 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.
(XV) Investment property
1. Investment property includes land use right of leased-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.
(XVI) Fixed assets
1. Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production of goods or rendering of 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
Categories Useful life
Depreciation method residual value depreciation
(years)
proportion (%) rate (%)
Buildings and Straight-line method 15-35 3.00 2.77-6.47
structures
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 8.82-24.25
Other equipment Straight-line method 4-11 3.00 8.82-24.25
(XVII) 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.
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2. Construction in progress is transferred into fixed assets at its actual cost when it reaches the
designed usable conditions. When the auditing of the construction in progress was not finished
while 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.
(XVIII) Intangible assets
1. Intangible assets include land use right, patent right and non-patented technology etc. The initial
measurement of intangible assets is based on its cost.
2. For intangible assets with finite useful lives, their amortization amounts are amortized within
their 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
5-10
technology
land use right 40-50
3. Expenditures on the research phase of an internal project are recognized as profit or loss when
they are incurred. An intangible asset arising from the development phase of an internal project is
recognized if the Company can demonstrate all of the followings: (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 long-term assets
For long-term assets such as long-term equity investments, investment property at cost model, fixed
assets, construction in progress, productive biological assets at cost model, oil and gas assets,
right-of-use assets, intangible assets with finite useful lives, etc., if at the balance sheet date there is
indication of impairment, the recoverable amount is to be estimated. For goodwill recognized in
business combination and intangible assets with indefinite useful lives, no matter whether there is
indication of impairment, impairment test is performed annually. Impairment test on goodwill is
performed on related asset group or asset group portfolio.
When the recoverable amount of such long-term assets is lower than their carrying amount, the
29
difference is recognized as provision for assets impairment 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
the 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, measure
the obligations under the defined benefit plan, and determine the periods to which the obligations
are attributed. Meanwhile, the Company discounts obligations under the defined benefit plan 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 fair value of defined benefit plan assets from the present value of the defined benefit
plan obligation 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;
3) At the end of the 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 remeasurement 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.
30
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 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, while other benefits are accounted for in
accordance with the requirements relating to defined benefit plan. The Company recognizes the
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 remeasurement of the net liability or net assets of other long-term
employee benefits. As a practical expedient, the net total of the aforesaid amounts is 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.
(XXIII) Revenue
1. Revenue recognition principles
At contract inception, the Company shall assess the contracts and shall identify each performance
obligation in the contracts, and determine whether the performance obligation should be satisfied over
time or at a point in time.
The Company satisfies a performance obligation over time if one of the following criteria is met,
otherwise, the performance obligation is satisfied at a point in time: (1) the customer simultaneously
receives and consumes the economic benefits provided by the Company’s performance as the
Company performs; (2) the customer can control goods as they are created by the Company’s
performance; (3) goods created during the Company’s performance have irreplaceable uses and the
Company has an enforceable right to receive the payments for performance completed to date during
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the whole contract period.
For each performance obligation satisfied over time, the Company shall recognize revenue over time
by measuring the progress towards complete satisfaction of that performance obligation. In the
circumstance that the progress cannot be measured reasonably, but the costs incurred in satisfying the
performance obligation are expected to be recovered, the Company shall recognize revenue only to the
extent of the costs incurred until it can reasonably measure the progress. For each performance
obligation satisfied at a point in time, the Company shall recognize revenue at the time point that the
client obtains control of relevant goods or services. To determine whether the customer has obtained
control of goods, the Company shall consider the following indications: (1) the Company has a present
right to payment for the goods, i.e., the customer is presently obliged to pay for the goods; (2) the
Company has transferred the legal title of the goods to the customer, i.e., the customer has legal title to
the goods; (3) the Company has transferred physical possession of the goods to the client, i.e., the
customer has physically possessed the goods; (4) the Company has transferred significant risks and
rewards of ownership of the goods to the client, i.e., the customer has obtained significant risks and
rewards of ownership of the goods; (5) the customer has accepted the goods; (6) other evidence
indicating the customer has obtained control over the goods.
2. Revenue measurement principle
(1) Revenue is measured at the amount of the transaction price that is allocated to each performance
obligation. The transaction price is the amount of consideration to which the Company expects to be
entitled in exchange for transferring goods or services to a customer, excluding amounts collected on
behalf of third parties and those expected to be refunded to the customer.
(2) If the consideration promised in a contract includes a variable amount, the Company shall confirm
the best estimate of variable consideration at expected value or the most likely amount. However, the
transaction price that includes the amount of variable consideration only to the extent that it is high
probable that a significant reversal in the amount of cumulative revenue recognized will not occur
when the uncertainty associated with the variable consideration is subsequently resolved.
(3) In the circumstance that the contract contains a significant financing component, the Company shall
determine the transaction price based on the price that a customer would have paid for if the customer
had paid cash for obtaining control over those goods or services. The difference between the
transaction price and the amount of promised consideration is amortized under effective interest
method over contractual period. The effects of a significant financing component shall not be
considered if the Company expects, at the contract inception, that the period between when the
customer obtains control over goods or services and when the customer pays consideration will be one
year or less.
(4) For contracts containing two or more performance obligations, the Company shall determine the
stand-alone selling price at contract inception of the distinct good underlying each performance
obligation and allocate the transaction price to each performance obligation on a relative stand-alone
selling price basis.
32
3. Revenue recognition method
The Company’s main product is the Video conference products, integrated wiring products, low
voltage distribution products, private network communication products, wiring products and other
products. The above-mentioned product sales business of the company belongs to the performance
obligation performed at a certain time point, and the revenue is recognized when the customer collects,
has collected the price or obtained the right to collect and the relevant economic benefits are likely to
flow in.
(XXIV) 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 cannot be assessed.
2. Government grants related to assets
Government grants related to assets are government grants with which the Company constructs or
otherwise acquires 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 they are 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 are 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 period 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, they are thus collectively classified as government grants related to
income. For government grants related to income used for compensating the related future cost,
expenses or losses, they are recognized as deferred income and included in profit or loss or used to
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 used to offset relevant cost.
4. Government grants related to the ordinary course of business shall be included into other income or
used to 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.
(XXV) Contract assets, contract liabilities
33
The Company presents contract assets or contract liabilities in the balance sheet based on the
relationship between its performance obligations and customers’ payments. Contract assets and
contract liabilities under the same contract shall offset each other and be presented on a net basis.
The Company presents an unconditional right to consideration (i.e., only the passage of time is
required before the consideration is due) as a receivable, and presents a right to consideration in
exchange for goods that it has transferred to a customer (which is conditional on something other
than the passage of time) as a contract asset.
The Company presents an obligation to transfer goods to a customer for which the Company has
received consideration (or the amount is due) from the customer as a contract liability.
(XXVI) Deferred income tax assets and 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.
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 income 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 income 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.
(XXVII) Leases
1. Identification of a lease
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset for a period of time, the Company assesses whether, throughout
the period of use, the customer has both of the following: (a) the right to obtain substantially all of the
economic benefits from use of the identified asset; and (b) the right to direct the use of the identified
asset.
34
2. Identification of separate leases
1) Operating leases
When the Company is the lessee, lease payments are recognized as cost or profit or loss with
straight-line method/unit-of-production 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/unit-of-production 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 values is recognized as unrealized finance
income. The effective interest method is used to recognize finance income of the period during the
lease term.
(XXVIII) Segment reporting
Operating segments 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:
(1) that engages in business activities from which it may earn revenues and incur expenses;
(2) whose financial performance is regularly reviewed by the Management to make decisions
about resource to be allocated to the segment and to assess its performance; and
(3) for which accounting information regarding financial position, financial performance and cash
flows is available through analysis.
(XXIX) Significant changes in accounting policies and estimates
1. Significant changes in accounting policies
35
(1) The company has adopted the accounting standards for Business Enterprises No. 21 - Lease
(hereinafter referred to as the new lease standards) revised by the Ministry of finance from
January 1, 2021.
1) For contracts that existed before January 1, 2021, The company has not assessed whether it is a
lease or contains a lease;
2) The company did not follow the retrospective adjustment method to the company as the lessor’s
lease.
2. Significant changes in accounting estimates
None.
IV. Taxes
(I) Main taxes and tax rates
Taxes Tax bases Tax rates
Value-added tax (VAT) The taxable revenue from sales of goods or
13%、6%、3%
rendering of services
For housing property levied on the basis of
price, housing property tax is levied at the
Housing property tax rate of 1.2% of the balance after deducting 1.2%、12%
30% of the cost; for housing property 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 Putian Changle
Telecommunications Equipment Co., 15%
Ltd.
Nanjing Putian Datang Information 15%
Electronic Co., Ltd.
Putian Telecommunications (H.K.) Co., 16.5%
Ltd.
Taxpayers other than the 25%
above-mentioned
(II) Tax preferential policies
The Company obtained high-tech enterprise certificate in December, 2018, valid for 3 years. It is
subject to the enterprise income tax at a rate of 15%
36
The subsidiary, Nanjing Putian Changle Telecommunications Equipment Co., Ltd., obtained high-tech
enterprise certificate in October, 2018, 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 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 Southern Telecom Co., Ltd and Nanjing Putian Network Co.,
Ltd. are entitled to enjoy the preferential tax policy of 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 Closing balance Opening balance
Cash on hand 398.89 2,229.39
Cash in bank 73,109,099.81 170,060,517.48
Other cash and bank balances 17,112,087.23 39,786,964.09
Total 90,221,585.93 209,849,710.96
(2) Details of other cash and bank balances
Items Closing balance Opening balance
Bank acceptance deposit 9,747,672.38 29,219,480.00
deposit for L/G 7,364,414.85 10,428,199.34
Others 139,284.75
Total 17,112,087.23 39,786,964.09
Other cash and bank balances are restricted funds.
2. Notes receivable
(1) Details
1) Details on categories
Closing balance
Book balance Provision for bad
debts
Categories
Provisio Carrying
% to amount
Amount Amount n
total proporti
on (%)
Receivables with provision
37
Closing balance
Book balance Provision for bad
debts
Categories
Provisio Carrying
% to
Amount Amount n amount
total proporti
on (%)
for bad debts made on an
individual basis
Including: Bank acceptance
Trade acceptance
Receivables with provision
for bad debts made on a 21,256,734.18 100.00 1,041,371.71 4.90 20,215,362.47
collective basis
Including: Bank acceptance 429,300.00 2.02 429,300.00
Trade acceptance 20,827,434.18 97.98 1,041,371.71 5.00 19,786,062.47
Total 21,256,734.18 100.00 1,041,371.71 4.90 20,215,362.47
(Continued)
Opening balance
Book balance Provision for bad
Categories debts
Carrying
Provision amount
Amount % to total Amount proportion
(%)
Receivables with provision
for bad debts made on an
individual basis
Including: Bank acceptance
Trade acceptance
Receivables with provision
for bad debts made on a 17,714,790.57 100.00 685,739.53 3.87 17,029,051.04
collective basis
Including: Bank acceptance 4,000,000.00 22.58 4,000,000.00
Trade acceptance 13,714,790.57 77.42 685,739.53 5.00 13,029,051.04
Total 17,714,790.57 100.00 685,739.53 3.87 17,029,051.04
(2) Changes in provision for bad debts
1) Details
Increase Decrease
Items Opening Closing
balance Accrual Recovery Others Reversal Write-off Others balance
individual
basis
collective 685,739.53 355,632.18 1,041,371.71
basis
Subtotal 685,739.53 355,632.18 1,041,371.71
(3) Endorsed or discounted but undue notes at the balance sheet date
Items Closing balance derecognized Closing balance not yet
derecognized
38
Items Closing balance derecognized Closing balance not yet
derecognized
Bank acceptance 3,001,879.22 31,824,655.94
Trade acceptance 8,555,865.91 19,452,731.28
Subtotal 11,557,745.13 51,277,387.22
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.
3. Accounts receivable
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying
Amount % to total Amount Provision amount
proportion (%)
Receivables with provision 59,944,074.91 8.65 59,944,074.91 100.00
made on an individual basis
Receivables with provision 633,167,867.15 91.35 104,084,536.54 16.44 529,083,330.61
made on a collective basis
Total 693,111,942.06 100.00 164,028,611.45 23.67 529,083,330.61
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Amount % to total Amount Provision Carrying amount
proportion (%)
Receivables with provision 59,944,074.91 9.14 59,944,074.91 100.00
made on an individual basis
Receivables with provision 595,708,348.24 90.86 101,715,944.75 17.07 493,992,403.49
made on a collective basis
Total 655,652,423.15 100.00 161,660,019.66 24.66 493,992,403.49
2) Accounts receivable with provision made on an individual basis
Provision
Debtors Book balance Provision for Reasons
proportion
bad debts
(%)
Dongpo Xi Laos Co., Ltd. 19,708,086.54 19,708,086.54 100.00 Unable to recover
Mr. Xu 17,591,683.74 17,591,683.74 100.00 Unable to recover
China Tower Corporation Ltd. 13,819,926.92 13,819,926.92 100.00 Unable to recover
Nanjing Zhengqian Communication 5,356,181.55 5,356,181.55 100.00 Unable to recover
Technology Co., Ltd
Nanjing Aerte photoelectric Co., Ltd 3,468,196.16 3,468,196.16 100.00 Unable to recover
Subtotal 59,944,074.91 59,944,074.91 100.00
3) Accounts receivable with provision for bad debts made on age analysis
39
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 316,210,450.04 3,162,104.49 49.94
1-2 years 105,709,344.20 5,285,467.22 16.7
2-3 years 88,463,431.54 8,846,343.16 13.97
3-4 years 38,568,632.29 11,570,589.69 6.09
4-5 years 17,991,954.20 8,995,977.10 2.84
Over 5 years 66,224,054.88 66,224,054.88 10.46
Subtotal 633,167,867.15 104,084,536.54 16.44
(2) Changes in provision for bad debts
Increase
Items Opening
balance Accrual Recovery Others
Receivables with provision made 59,944,074.91
on an individual basis
Receivables with provision 101,715,944.75 2,426,050.63
made on a collective basis
Subtotal 161,660,019.66 2,426,050.63
(Continued)
Decrease
Items Closing balance
Reversal Write-off Others
Receivables with provision 59,944,074.91
made on an individual basis
Receivables with provision 57,458.84 104,084,536.54
made on a collective basis
Subtotal 57,458.84 164,028,611.45
(3) Details of the top 5 debtors with largest balances
Proportion to the total
Debtors Book balance Provision for
balance of accounts
bad debts
receivable (%)
Dongpo Xi Laos Co., Ltd. 19,708,086.54 2.84 19,708,086.54
Mr. Xu 17,591,683.74 2.54 17,591,683.74
China Tower Corporation Ltd. 13,819,926.92 1.99 13,819,926.92
Shenzhen Yunshi Haitong 16,602,269.00 2.40 713,406.01
Technology Co., Ltd
Beijing RONGTONG Zhiyuan 11,489,579.97
Technology Co., Ltd 1.66 371,115.48
Subtotal 79,211,546.17 11.43 52,204,218.69
4. Receivables financing
40
(1) Details
1) Details on categories
Closing balance
Items
Interest Interest Changes in Carrying Provision for
Initial cost
adjustment accrued fair value amount impairment
Bank acceptance 13,747,563.72 13,747,563.72
Total 13,747,563.72 13,747,563.72
(Continued)
Opening balance
Items
Interest Interest Changes in Carrying Provision for
Initial cost
adjustment accrued fair value amount impairment
Bank acceptance 32,594,702.60 32,594,702.60
Total 32,594,702.60 32,594,702.60
2) Receivables financing with provision for impairment made on a collective basis
Closing balance
Items
Book balance Provision for Provision proportion
impairment (%)
Bank acceptance 13,747,563.72
portfolio
Subtotal 13,747,563.72
(2) Endorsed or discounted but undue notes at the balance sheet date
Items Closing balance derecognized
Bank acceptance 53,633,327.45
Subtotal 53,633,327.45
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.
5. Advances paid
(1) Age analysis
1) Details
Closing balance Opening balance
Ages
% to Provision for % to Provision for
Book balance Carrying amount Book balance Carrying amount
total impairment total impairment
Within 1 year 20,881,818.10 79.97 20,881,818.10 12,509,089.32 63.77 12,509,089.32
1-2 years 1,925,702.53 7.37 1,925,702.53 3,743,667.83 19.08 3,743,667.83
2-3 years 1,060,012.10 4.06 1,060,012.10 2,247,435.21 11.46 2,247,435.21
Over 3 years 2,246,378.69 8.60 2,246,378.69 1,116,156.29 5.69 1,116,156.29
Total 26,113,911.42 100.00 26,113,911.42 19,616,348.65 100.00 19,616,348.65
(2) Details of the top 5 debtors with largest balances
41
Proportion to the
Debtors Book balance total balance of
advances paid (%)
Jiangsu Shuntian International Group Machinery
7,415,646.87 28.40
Import and Export Co., Ltd
HUAWEI TECHNOLOGIES CO.LTD 6,616,009.13 25.34
Fuzhou Yunfeng Communication Technology Co., Ltd 1,547,169.75 5.92
Liyang Shengli rubber and plastic products Co., Ltd 950,205.36 3.64
Far East Cable Co., Ltd 684,068.05 2.62
Subtotal 17,213,099.16 65.92
6. 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
28,912,122.71 51.11 28,912,122.71 100.00
on an individual basis
Receivables with provision made
27,654,614.27 48.89 9,531,922.37 34.47 18,122,691.90
on a collective basis
Total 56,566,736.98 100.00 38,444,045.08 67.96 18,122,691.90
(Continued)
Opening balance
Book balance Provision for bad debts
Categories
Provision Carrying
Amount % to Amount amount
proportion
total
(%)
Receivables with provision made
28,912,122.71 51.88 28,912,122.71 100.00
on an individual basis
Receivables with provision made
26,817,237.74 48.12 9,905,447.43 36.94 16,911,790.31
on a collective basis
Total 55,729,360.45 100.00 38,817,570.14 69.65 16,911,790.31
2) Other receivables with provision made on an individual basis
Debtors Book balance Provision for Provision Reasons for
bad debts proportion (%) provision made
Beijing Likangpu
Unable to
Communication 28,912,122.71 28,912,122.71 100.00
recover
Equipment Co., Ltd.
Subtotal 28,912,122.71 28,912,122.71 100.00
3) Other receivables with provision made on a collective basis
Closing balance
Portfolios
Book balance Provision for bad debts Provision proportion (%)
42
Closing balance
Portfolios
Book balance Provision for bad debts Provision proportion (%)
Portfolio-Financing margin 1,578,947.37
Portfolio-Others 26,075,666.90 9,531,922.37 36.55
Subtotal 27,654,614.27 9,531,922.37 34.47
(2) Age analysis
Ages Closing book balance Opening book balance
Within 1 year 11,015,336.50 6,470,106.41
1-2 years 2,854,624.48 6,515,139.65
2-3 years 5,122,220.31 4,733,535.99
3-4 years 2,446,269.65 3,610,856.13
4-5 years 3,051,927.07 1,448,923.00
Over 5 years 32,076,358.97 32,950,799.27
Subtotal 56,566,736.98 55,729,360.45
(3) Changes in provision for bad debts
1) Details
Phase I Phase II Phase III
Items 12 month Lifetime expected Lifetime expected Subtotal
expected credit losses (credit credit losses (credit
credit losses not impaired) impaired)
Opening balance 806,991.74 38,010,578.40 38,817,570.14
Opening balance in the
current period
--Transferred to phase II
--Transferred to phase III -8,784.66 8,784.66
--Reversed to phase II
--Reversed to phase I
Provision made in the
current period 71,282.31 -444,754.72 -373,472.41
Provision recovered in
current period
Provision reversed in
current period
Provision written off in
current period
Retranslation 52.65 52.65
Decrease due to business
combination
Closing balance 869,489.39 37,574,555.69 38,444,045.08
(4) Other receivables categorized by nature
Nature of receivables Closing balance Opening balance
43
Nature of receivables Closing balance Opening balance
Temporary payment receivable 33,648,852.40 35,152,407.81
Security deposit 15,595,850.55 16,515,511.45
Imprest 1,487,151.73 1,471,813.99
Others 5,834,882.30 2,589,627.20
Total 56,566,736.98 55,729,360.45
(5) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Ages Provision for
Book balance total balance of other
receivables bad debts
receivables (%)
Beijing Likangpu Temporary Over
Communication payment 28,912,122.71 5 51.11 28,912,122.71
Equipment Co., Ltd. receivable years
China Potevio Company 2-5
Security deposit 1,958,000.00 3.46 1,046,900.00
Limited years
Security deposit
Far East International 1-2
for financial 1,578,947.37 2.79
Leasing Co.,Ltd. years
leasing
China Communications
1-2
import and Export Co., Security deposit 943,855.74 1.67 74,538.41
years
Ltd. Shenzhen Branch
Potevio Information Security deposit 2-3
824,870.77 1.46 41,243.54
Technology Co., Ltd. years
Subtotal 34,217,796.59 60.49 30,074,804.66
7. Inventories
(1) Details
Closing balance Opening balance
Items
Provision for Carrying Provision for Carrying
Book balance Book balance
write-down amount write-down amount
Raw materials 38,576,581.23 5,678,761.14 32,897,820.09 32,804,463.00 5,678,761.14 27,125,701.86
Work in process 15,757,432.72 15,757,432.72 13,266,680.85 13,266,680.85
Goods on hand 96,741,785.61 18,772,268.10 77,969,517.51 86,350,107.31 18,772,268.10 67,577,839.21
Goods dispatched 127,140,389.35 29,157,593.24 97,982,796.11 118,443,146.03 29,157,593.24 89,285,552.79
Products on
consignment for 3,067,520.77 804,691.99 2,262,828.78 3,190,889.60 804,691.99 2,386,197.61
sales
Total 281,283,709.68 54,413,314.47 226,870,395.21 254,055,286.79 54,413,314.47 199,641,972.32
(2) Provision for inventory write-down
Increase Decrease
Items Opening
Reversal or Closing balance
balance Accrual Others Others
write-off
Raw materials 5,678,761.14 5,678,761.14
Goods on hand 18,772,268.10 18,772,268.10
Goods dispatched 29,157,593.24 29,157,593.24
Products on
804,691.99 804,691.99
consignment for sales
Subtotal 54,413,314.47 54,413,314.47
44
8. Other current assets
Items Closing balance Opening balance
Input VAT to be credited 10,919,159.61 11,568,247.65
Prepaid income tax 2,392,776.14 1,557,774.43
Total 13,311,935.75 13,126,022.08
9. Long-term equity investments
(1) Categories
Closing balance Opening balance
Items
Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Investments
10,422,055.77 10,422,055.77 10,422,056.96 10,422,056.96
in associates
Investments
in joint
ventures
Total 10,422,055.77 10,422,055.77 10,422,056.96 10,422,056.96
(2) Details
Increase/Decrease
Investees Opening Investment income
balance Investments Investments Adjustment in other
recognized under
increased decreased comprehensive income
equity method
Joint ventures
SEI-Nanjing
Potevio Optical
10,422,056.96 -1.19
Network Co.,
Ltd.
Total 10,422,056.96 -1.19
(Continued)
Increase/Decrease Closing
Investees balance of
Changes in Cash dividend/Profit Provision for Others Closing balance provision for
other equity declared for distribution impairment impairment
Joint ventures
SEI-Nanjing
Potevio Optical
10,422,055.77
Network Co.,
Ltd.
Total 10,422,055.77
10. Other equity instrument investments
Accumulated amount of gains
or losses transferred from other
Items Closing Opening Dividend comprehensive income to
balance balance income retained earnings
Amount Reasons
Nanjing Yuhua Electroplating Factory 420,915.00 420,915.00
45
Accumulated amount of gains
or losses transferred from other
Items Closing Opening Dividend comprehensive income to
balance balance income retained earnings
Amount Reasons
Hangzhou Honyar Electrical Co.,Ltd. 321,038.00 321,038.00
Beijing Likangpu Communication
Equipment Co., Ltd.
Subtotal 741,953.00 741,953.00
Note: The investment in Nanjing Yuhua Electroplating Factory, Hangzhou Honyar Electrical
Co.,Ltd. and Beijing Likong Communication Equipment Co., Ltd. are classified as other equity
instrument investments, the Company measured it at fair value through other comprehensive
income.
11. Investment property
(1) Details
Items Buildings and Land use right Total
structures
Cost
Opening balance 12,256,127.93 12,256,127.93
Increase
1) Acquisition
Decrease
1) Disposal
Closing balance 12,256,127.93 12,256,127.93
Accumulated depreciation and
amortization
Opening balance 7,989,114.58 7,989,114.58
Increase 190,236.03 190,236.03
1) Accrual or amortization 190,236.03 190,236.03
Decrease
1) Disposal
Closing balance 8,179,350.61 8,179,350.61
Provision for impairment
Opening balance
Increase
1) Accrual
Decrease
1) Disposal
Closing balance
Carrying amount
46
Items Buildings and Land use right Total
structures
Closing balance 4,076,777.32 4,076,777.32
Opening balance 4,267,013.35 4,267,013.35
12. Fixed assets
(1) Details
Items Buildings and General Transport Electronic
Other equipment Total
structures equipment facilities equipment
Cost
Opening balance 134,663,363.37 34,132,418.65 7,887,148.60 2,306,674.54 44,828,796.91 223,818,402.07
Increase 309,137.32 1,121,831.25 835,735.70 2,266,704.27
1) Acquisition 309,137.32 386,825.69 835,735.70 1,531,698.71
2) Transferred in from
735,005.56 735,005.56
construction in progress
3) Retranslation
Decrease 1,653,806.74 509,686.37 2,163,493.11
1) Disposal/Scrapping 1,653,806.74 509,564.00 2,163,370.74
2) Business combination
3) Retranslation 122.37
Closing balance 134,663,363.37 32,787,749.23 7,887,148.60 2,912,023.42 45,671,328.61 223,921,613.23
Accumulated depreciation
Opening balance 47,849,478.31 25,017,696.49 7,089,647.48 2,117,483.41 40,860,070.24 122,934,375.93
Increase 2,368,328.69 808,318.03 124,719.72 614,634.58 3,943.40 3,919,944.42
1) Accrual 2,368,328.69 808,318.03 124,719.72 614,634.58 3,943.40 3,919,944.42
2) Retranslation
Decrease 1,593,652.21 122.37 494,277.08 2,088,051.66
1) Disposal/Scrapping 1,593,652.21 494,277.08 2,087,929.29
2) Business combination
3) Retranslation 122.37 122.37
Closing balance 50,217,807.00 24,157,803.11 7,278,926.40 2,729,428.04 40,382,304.14 124,766,268.69
Provision for impairment
Opening balance 539,124.00 11,048.35 175,790.21 725,962.56
Increase
Decrease
Closing balance 539,124.00 11,048.35 175,790.21 725,962.56
Carrying amount
Closing balance 83,906,432.37 8,618,516.27 608,222.20 182,595.38 5,113,615.76 98,429,381.98
Opening balance 86,274,761.06 9,114,722.16 797,501.12 178,142.78 3,792,936.46 100,158,063.58
2) Fixed assets temporarily idle
Items Cost Accumulated Provision for Carrying Remarks
depreciation impairment amount
General equipment 2,466,884.50 2,265,898.17 11,048.35 189,937.98
47
Items Cost Accumulated Provision for Carrying Remarks
depreciation impairment amount
Transport facilities 987,277.01 944,682.45 42,594.56
Electronic equipment 433,603.93 413,182.23 20,421.70
Other equipment 1,574,539.55 1,287,852.76 175,408.71 111,278.08
Subtotal 5,462,304.99 4,911,615.61 186,457.06 364,232.32
3) Fixed assets with certificate of titles being unsettled
Items Carrying amount Reasons for unsettlement
Buildings and structures 29,713,873.09 Unable to handle
Subtotal 29,713,873.09
13. Construction in progress
(1) Details
Closing balance Opening balance
Projects Provision Provision
Carrying for Carrying
Book balance for Book balance
amount amount
impairment impairme
Nanjing Putian nt
Datang Information
Electronics Co.,
Ltd. Product 22,905,813.91 22,905,813.91 21,300,309.31 21,300,309.31
Development
Center
Others 905,604.65 905,604.65 1,154,482.96 1,154,482.96
Total 23,811,418.56 23,811,418.56 22,454,792.27 22,454,792.27
2) Changes in significant projects
Projects Budgets Increase Transferred to Closing balance
Opening balance
fixed assets
Nanjing Putian Datang
Information Electronics
Co., Ltd. Product 30,000,000.00 21,300,309.31 1,605,504.60 22,905,813.91
Development Center
Subtotal 30,000,000.00 21,300,309.31 1,605,504.60 22,905,813.91
(Continued)
Accumulated Amount of
Accumulated Completion Annual
Projects amount of borrowing cost Fund
input to percentage capitalization
borrowing cost capitalization in source
budget (%) (%) rate (%)
capitalization current period
Nanjing Putian
Datang Information
Self-owned
Electronics Co., 76.35 76.35
Ltd. Product fund
Development
48
Accumulated Amount of
Accumulated Completion Annual
Projects amount of borrowing cost Fund
input to percentage capitalization
borrowing cost capitalization in source
budget (%) (%) rate (%)
capitalization current period
Center
Subtotal 76.35 76.35
14. Intangible assets
(1) Details
Items Land use right Software Total
Cost
Opening balance 26,656,046.83 10,920,157.40 37,576,204.23
Increase
1) Acquisition
2) Internal research and
development
Decrease
1) Disposal
Closing balance 26,656,046.83 10,920,157.40 37,576,204.23
Accumulated amortization
Opening balance 6,512,813.57 9,802,271.26 16,315,084.83
Increase 317,144.81 165,624.47 482,769.28
1) Accrual 317,144.81 165,624.47 482,769.28
Decrease
1) Disposal
Closing balance 6,829,958.38 9,967,895.73 16,797,854.11
Carrying amount
Closing balance 19,826,088.45 952,261.67 20,778,350.12
Opening balance 20,143,233.26 1,117,886.14 21,261,119.40
(1) Land use right with certificate of titles being unsettled
Items Carrying amount Reasons for unsettlement
Land use right 4,462,742.89 Unable to handle
Subtotal 4,462,742.89
15. Long-term prepayments
(1) Details
Items Opening balance Increase Amortization Closing balance
Renovation expenditure 5,541,410.81 721,912.42 880,943.69 5,382,379.54
Total 5,541,410.81 721,912.42 880,943.69 5,382,379.54
49
16. Deferred tax assets and deferred tax liabilities
(1) Details of unrecognized deferred tax assets
Items Closing balance Opening balance
Deductible temporary difference 259,762,732.16 259,762,732.16
Deductible losses 145,604,016.49 145,604,016.49
Subtotal 405,366,748.65 405,366,748.65
(2) Maturity years of deductible losses of unrecognized deferred tax assets
Maturity years Closing balance Opening balance Remarks
Year 2021 5,554,380.47 5,554,380.47
Year 2022 4,443,610.43 4,443,610.43
Year 2023 18,084,226.36 18,084,226.36
Year 2024 113,996,079.49 113,996,079.49
Year 2025 3,525,719.74 3,525,719.74
Subtotal 145,604,016.49 145,604,016.49
17. Short-term borrowings
(1) Details
Items Closing balance Opening balance
Pledged borrowings 95,000,000.00
Mortgaged borrowings 45,500,000.00 15,000,000.00
Secured borrowings 50,000,000.00
Total 140,500,000.00 65,000,000.00
18. Notes payable
(1) Details
Items Closing balance Opening balance
Bank acceptance 57,636,900.00
Trade acceptance 14,698,110.10 18,498,110.10
Total 14,698,110.10 76,135,010.10
19. Accounts payable
(1) Details
Items Closing balance Opening balance
Procurement of materials 560,915,409.98 603,045,038.32
Project payment 785,740.00 1,720,547.68
Total 561,701,149.98 604,765,586.00
50
(2) Significant accounts payable with age over one year
Items Closing balance Reasons for unsettlement
SEI-Nanjing Potevio Optical Network Co., Ltd. 18,627,974.96 Not yet settled
POLYCOM communications technology Not yet settled
16,532,270.72
(Beijing) Co.,Ltd.
China Potevio Company Limited 16,314,294.20 Not yet settled
Nanjing Xingping Industrial Co., Ltd 12,368,248.11 Not yet settled
Jiangsu Lecxe TECHNOLOGIES INC. 9,909,302.30 Not yet settled
Subtotal 73,752,090.29
20. Advances received
(1) Details
Items Closing balance Opening balance[Note]
Payment for goods
Total
Note: Please refer to note III (XXVIII) 1 (1) 1) of the financial statements for the difference
between the opening balance and the end of the previous year.
21. Contract liabilities
(1) Details
Items Closing balance Opening balance[Note]
Payment for goods 31,494,936.69 28,518,252.40
Total 31,494,936.69 28,518,252.40
Note: Please refer to note III (XXVIII) 1 (1) 1) of the financial statements for the difference
between the opening balance and the end of the previous year.
22. Employee benefits payable
(1) Details
Items Opening Increase Decrease Closing
balance balance
Short-term employee
benefits 17,362,878.28 66,234,062.10 66,597,672.19 16,999,268.19
Post-employment benefits
10,425,345.26 10,425,345.26
- defined contribution plan
Total 17,362,878.28 76,659,407.36 77,023,017.45 16,999,268.19
(2) Details of short-term employee benefits
Items Opening Increase Decrease Closing
balance balance
Wage, bonus, allowance and
subsidy 4,673,800.25 51,451,348.16 52,499,799.16 3,625,349.25
Employee welfare fund 3,216,504.92 3,027,798.02 188,706.90
51
Items Opening Increase Decrease Closing
balance balance
Social insurance premium 3,953,763.28 3,953,763.28
Including: Medicare
3,423,765.38 3,423,765.38
premium
Occupational injuries
246,858.22 246,858.22
premium
Maternity premium 283,139.68 283,139.68
Housing provident fund 3,294,555.74 4,240,384.66 4,240,384.66 3,294,555.74
Trade union fund and
9,379,525.76 995,047.82 498,913.81 9,875,659.77
employee education fund
Compensation for
360,985.00 360,985.00
termination of labor relations
Others 14,996.53 2,016,028.26 2,016,028.26 14,996.53
Subtotal 17,362,878.28 66,234,062.10 66,597,672.19 16,999,268.19
(3) Details of defined contribution plan
Items Opening Increase Decrease Closing
balance balance
Basic endowment insurance
7,796,170.62 7,796,170.62
premium
Unemployment insurance
premium 2,179,474.13 2,179,474.13
Company annuity payment 449,700.51 449,700.51
Subtotal 10,425,345.26 10,425,345.26
23. Taxes and rates payable
Items Closing balance Opening balance
VAT 578,183.08 2,356,409.61
Enterprise income tax 3,869,737.95 5,300,903.29
Individual income tax 1,067,344.52 167,893.85
Urban maintenance and construction tax 309,543.90 336,089.22
Housing property tax 198,649.66 207,909.01
Land use tax 81,754.17 83,316.67
Education surcharge 218,960.27 237,921.18
Other tax 3,030.70 16,805.84
Total 6,327,204.25 8,707,248.67
24. Other payables
(1) Details
Items Closing balance Opening balance
Dividend payable 7,692,213.38 4,044,213.38
Other payables 48,781,506.51 49,714,907.25
52
Items Closing balance Opening balance
Total 56,473,719.89 53,759,120.63
(2) Dividend payable
Items Closing balance Opening balance
Dividend of ordinary shares 7,692,213.38 4,044,213.38
Subtotal 7,692,213.38 4,044,213.38
(3) Other payables
Items Closing balance Opening balance
Temporary receipts payable 34,267,658.25 25,326,626.30
Unsettled installation cost 231,627.19 6,106,864.43
Deposits 3,945,708.16 6,497,152.88
Operating expenses 9,195,923.30 9,314,827.00
Others 1,140,589.61 2,469,436.64
Subtotal/Total 48,781,506.51 49,714,907.25
25. Non-current liabilities due within one year
Items Closing balance Opening balance
Long-term payables due within one year 7,954,722.25 9,181,720.08
Total 7,954,722.25 9,181,720.08
26. Other current liabilities
Items Closing balance Opening balance[Note]
VAT collected in advance 3,778,589.00 3,707,372.81
Total 3,778,589.00 3,707,372.81
Note: Please refer to note III (XXVIII) 1 (1) 1) of the financial statements for the difference
between the opening balance and the end of the previous year.
27. Long-term payables
Items Closing balance Opening balance
Finance lease 4,036,160.05
Total 4,036,160.05
28. Share capital
Movements
Items Opening Issue of Reserve
Bonus Closing balance
balance new transferred to Others Subtotal
shares
shares shares
Total shares 215,000,000.00 215,000,000.00
53
29. Capital reserve
Items Opening balance Increase Decrease Closing balance
Share premium 137,786,640.63 12,717,639.48 150,504,280.11
Other capital reserve 45,782,201.81 45,782,201.81
Total 183,568,842.44 12,717,639.48 196,286,481.92
30. Other comprehensive income (OCI)
Current period cumulative Closing
balance
Items Opening Current period
Less: Attributable Attributable to
balance cumulative
Income to parent non-controlling
before income
tax company shareholders
tax
Items not to be reclassified
-6,853,931.65 961,946.58 961,946.58 -5,891,985.07
subsequently to profit or loss
Including: Translation reserves -4,999,021.65 961,946.58 961,946.58 -4,037,075.07
Reclassified financial assets to
-1,854,910.00 -1,854,910.00
OCI
Total -6,853,931.65 961,946.58 961,946.58 -5,891,985.07
31. Surplus reserve
Items Opening balance Increase Decrease Closing balance
Statutory surplus
reserve 589,559.77 589,559.77
Total 589,559.77 589,559.77
32. Undistributed profit
(1) Details
Items Current period Preceding period
cumulative comparative
Balance before adjustment at the end of
-202,680,309.64 -224,644,862.48
preceding period
Add: Increase due to adjustment (or less:
decrease)
Opening balance after adjustment -202,680,309.64 -224,644,862.48
Add: Net profit attributable to owners of the
parent company -29,593,867.19 -58,856,854.03
Less: Appropriation of statutory surplus reserve
Dividend payable on ordinary shares
Closing balance -232,274,176.83 -283,501,716.51
(II) Notes to items of the consolidated income statement
1. Operating revenue/Operating cost
(1) Details
Items Current period cumulative Preceding period comparative
54
Revenue Cost Revenue Cost
Main operations 441,387,294.27 348,603,700.69 395,904,248.73 319,716,375.61
Other operations 10,491,316.16 8,830,168.30 9,268,554.89 8,059,616.79
Total 451,878,610.43 357,433,868.99 405,172,803.62 327,775,992.40
(2) Breakdown of revenue by main categories
Video Low voltage
Generic
Reportable segments conference distribution Others Subtotal
products
products products
Revenue recognition time
Goods (transferred at a point in
time) 129,623,277.17 197,510,645.45 41,853,695.33 82,890,992.48 451,878,610.43
Services (rendered over time)
Total 129,623,277.17 197,510,645.45 41,853,695.33 82,890,992.48 451,878,610.43
2. Taxes and surcharges
Items Current period cumulative Preceding period comparative
Urban maintenance and
construction tax 950,147.23 691,226.63
Education surcharge 678,676.61 518,417.63
Housing property tax 632,407.41 665,188.86
Land use tax 253,268.80 281,129.00
Other tax 257,155.97 134,074.81
Total 2,771,656.02 2,290,036.93
3. Selling expenses
Items Current period cumulative Preceding period comparative
Employee benefits 30,657,820.79 29,101,579.10
Business entertainment 7,320,086.73 10,510,611.36
Travelling expenses 3,593,668.46 3,952,465.19
Sales service charges 1,983,529.10 796,994.00
Office expenses 757,905.79 688,695.61
Promotion expenses 645,814.35 190,608.73
Conference expenses 561,693.48 136,838.17
Equipment maintain fees 7,719.09 2,959,544.28
Transport fees 2,617.00 5,078,514.76
Others 3,530,437.79 5,395,541.45
Total 49,061,292.58 58,811,392.65
4. Administrative expenses
55
Items Current period cumulative Preceding period comparative
Employee benefits 20,500,482.96 17,630,420.81
Depreciation and amortization 3,134,154.50 2,946,226.66
Consulting, intermediary and
legal fees 1,179,882.32 1,751,707.50
Office expenses 1,128,158.97 1,423,803.35
Lease expenses 382,999.62 307,636.94
Business entertainment 712,793.82 597,252.28
Travelling expense 500,872.73 303,727.91
Funding for Party Building 214,223.66 338,709.63
Taxes 18,744.56
Others 1,967,023.84 2,215,127.97
Total 29,720,592.42 27,533,357.61
5. R&D expenses
Items Current period cumulative Preceding period comparative
Employee benefits 24,333,843.32 19,862,124.42
Intermediate test fee 1,431,006.18
Travelling expenses 865,144.33 726,452.26
Depreciation and amortization 605,021.78 709,954.89
Material use 684,146.16 375,658.08
Commissioned development 233,946.41
Others 1,828,329.01 2,092,043.07
Total 29,747,490.78 24,000,179.13
6. Financial expenses
Items Current period cumulative Preceding period comparative
Interest expenditures 2,798,625.53 15,276,918.26
Less: Interest income 410,149.62 2,387,417.73
Losses on foreign exchange -104,172.86 187,604.49
Financial institution fees 281,634.59 502,882.54
Financing fee 1,312,805.26
Others 67,343.85
Total 2,565,937.64 14,960,136.67
7. Other income
Items Current period Preceding period Amount included in
cumulative comparative non-recurring profit or loss
Government grants
related to income 1,192,018.97 6,452,807.84 360,145.78
56
Items Current period Preceding period Amount included in
cumulative comparative non-recurring profit or loss
[Note]
Total 1,192,018.97 6,452,807.84 360,145.78
Note: Please refer to section V (IV) 3 of the notes to financial statements for details on
government grants included into other income.
8. Investment income
Current period Preceding period
Items
cumulative comparative
Investment income from long-term equity investments
-1.19 -137,939.58
under equity method
Total -1.19 -137,939.58
9. Credit impairment loss
Items Current period cumulative Preceding period comparative
Bad debt loss of notes receivable -355,632.18 41,793.34
Bad debt loss of accounts receivable -2,426,050.63 -5,126,974.89
Bad debt loss of other receivables 373,472.41 -279,138.80
Total -2,408,210.40 -5,364,320.35
10. Assets impairment loss
Items Current period cumulative Preceding period comparative
Inventory write-down loss -3,298,844.16
Total -3,298,844.16
11. Gains on asset disposal
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Gains on disposal of fixed
15,829.32 1,244.51 15,829.32
assets
Total 15,829.32 1,244.51 15,829.32
12. Non-operating revenue
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Penalty income 5,000.00 200,000.11 5,000.00
Government grants 191,000.00
Non-current assets damage
and retirement gains 35,398.23
Others 51,934.58 3,342,424.64 51,934.58
57
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Total 56,934.58 3,768,822.98 56,934.58
13. Non-operating expenditures
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Donation expenditures 2,000.00 2,000.00 2,000.00
Inventory loss 605,399.62
Others 59,544.99 42,007.95 59,544.99
Total 61,544.99 649,407.57 61,544.99
14. Income tax expenses
(1) Details
Items Current period cumulative Preceding period comparative
Current period income tax
4,521,812.72 2,242,233.92
expenses
Total 4,521,812.72 2,242,233.92
(2) Reconciliation of accounting profit to income tax expenses
Items Current period Preceding period
cumulative comparative
Profit before tax -20,627,201.71 -49,425,928.10
Income tax expenses based on tax rate applicable
-3,094,080.26 -7,413,889.22
to the parent company
Effect of different tax rate applicable to
1,662,899.51 766,325.77
subsidiaries
Effect of prior income tax reconciliation 415,195.75 -20,690.94
Effect of non-deductible costs, expenses and
1,597,637.39 8,932,260.09
losses
Utilization of deductible losses not previously
-4,299.40 -308,388.14
recognized as deferred tax assets
Effect of deducible temporary differences or
deductible losses not recognized as deferred tax 110,437.79
assets
Effect of deducible temporary differences or
5,874,821.15 726,243.45
deductible losses not recognized
Deduction of R&D expenditures -2,040,799.21 -439,627.09
Income tax expenses 4,521,812.72 2,242,233.92
(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
58
Items Current period cumulative Preceding period comparative
Government grants 1,192,018.97 5,337,831.84
Interest income 410,149.62 2,387,417.73
Intercourse 11,932,139.16 17,451,277.42
Others 934,135.53 1,232,321.53
Total 14,468,443.28 26,408,848.52
2. Other cash payments related to operating activities
Items Current period cumulative Preceding period comparative
Selling and Administrative
expenses paid in cash 33,193,862.80 22,717,102.16
Intercourse 26,882,349.43 15,824,530.64
Others 462,741.40 990,535.25
Total 60,538,953.63 39,532,168.05
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 -25,149,014.43 -51,668,162.02
Add: Provision for assets impairment loss 3,298,844.16
Provision for credit impairment loss 2,408,210.40 5,364,320.35
Depreciation of fixed assets, oil and gas assets,
productive biological assets 3,919,944.42 4,403,776.33
Amortization of intangible assets 482,769.28 666,658.48
Amortization of long-term prepayments 880,943.69 835,343.74
Loss on disposal of fixed assets, intangible
-15,829.32 -1,244.51
assets and other long-term assets (Less: gains)
Fixed assets retirement loss (Less: gains) -35,398.23
Losses on changes in fair value (Less: gains)
Financial expenses (Less: gains) 2,798,625.53 16,589,723.52
Investment losses (Less: gains) 1.19 137,939.58
Decrease of deferred tax assets (Less: increase)
Increase of deferred tax liabilities (Less:
decrease)
Decrease of inventories (Less: increase) 27,228,422.89 -28,013,240.51
Decrease of operating receivables (Less:
-106,583,908.66 120,731,493.58
increase)
Increase of operating payables (Less: decrease) -22,692,438.14 -54,657,336.44
Others
59
Supplement information Current period Preceding period
cumulative comparative
Net cash flows from operating activities -116,722,273.15 17,652,718.03
(2) Significant investing and financing activities not
related to cash receipts and payments:
Conversion of debt into capital
Convertible bonds due within one year
Fixed assets leased in under finance leases
(3) Net changes in cash and cash equivalents:
Cash at the end of the period 73,109,498.70 125,223,538.45
Less: Cash at the beginning of the period 170,062,746.87 208,783,866.60
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 -96,953,248.17 -83,560,328.15
(2) Composition of cash and cash equivalents
Items Closing balance Opening balance
1) Cash 73,109,498.70 170,062,746.87
Including: Cash on hand 398.89 2,229.39
Cash in bank on demand for payment 73,109,099.81 170,060,517.48
2) Cash equivalents
3) Cash and cash equivalents at the end of the period 73,109,498.70 170,062,746.87
(IV) Others
1. Assets with title or use right restrictions
Items Closing carrying amount Reasons for restrictions
Deposit for acceptance and
Cash and bank balances 3,136,966.33 deposit for L/G
Fixed assets 10,133,882.66 Mortgaged borrowings
Intangible assets 3,615,634.97 Mortgaged borrowings
Total 16,886,483.96
(2) Other remarks
We remind users of financial statements that, apart from the above assets with title or use right
restrictions, in order to entrust the parent company to apply for loans from Bank of Beijing,
Jiangning Sub-branch, the Company pledged its holding equities to the parent company, which
include equity of Nanjing Southern Telecom Co., Ltd 33.17 million yuan, equity of Nanjing Putian
Telege Intelligent Building Co., Ltd. 4.80 million yuan, equity of Nanjing Putian Changle
Telecommunications Equipment Co., Ltd. 5.07 million yuan, equity of Nanjing Putian Network
Co., Ltd. 7.80 million yuan. The Company has registered the equity pledge at Nanjing Jiangning
60
Market Supervision Administration. Those equities are with use restrictions before released.
2. Monetary items in foreign currencies
Items Closing balance in Exchange rate RMB equivalent at
foreign currencies the end of the period
Cash and bank balances -- -- --
Including: USD 9,653.15 6.4601 62,360.31
EUR 4979.83 7.6862 38,275.97
GBP 2205.47 8.941 19,719.11
HKD 461,146.61 0.83208 383,710.87
3. Government grants
1) Government grants related to income and used to compensate incurred relevant costs, expenses
or losses
Items Amounts Presented under Remarks
VAT refund 831,873.19 Other income Cai Shui [2011] No.100
Other income Nanjing social insurance
Staff training subsidies 244,700.00 management center
Subsidies for up-to-standard Nanjing Jiangning Economic
enterprises in the construction of 3,100.00 Other income Development Zone Management
dual prevention mechanisms Committee
Others 112,345.78 Other income
Subtotal 1,192,018.97
The amount of government subsidies included in the current profits and losses is 1,192,018.97yuan.
VI. Changes in the consolidation scope
The scope of the consolidated financial statements for the current period has not changed.
VII. Interest in other entities
(I) Interest in subsidiaries
1. Composition of subsidiaries
(1) Basis information
Main Holding
Subsidiaries Place of Business proportion (%) Acquisition
operating
registration nature Direct Indirect method
place
Nanjing Putian Changle
Nanjing Nanjing Manufacture 50.70
Telecommunications Set up
City City
Equipment Co., Ltd.
Nanjing Putian Telege Nanjing Nanjing Manufacture 45.77 Set up
Intelligent Building Ltd. City City
Nanjing Southern Nanjing Nanjing Manufacture 96.99 3.01 Set up
Telecom Co., Ltd City City
Nanjing Nanman Nanjing Nanjing Manufacture 100.00 not under
61
Main Holding
Subsidiaries Place of Business proportion (%) Acquisition
operating
registration nature Direct Indirect method
place
Electrics Co., Ltd. City City the same
control
Nanjing Putian Nanjing Nanjing Manufacture 78.00 Set up
Network Co., Ltd. City City
Nanjing Putian Datang not under
Nanjing Nanjing Manufacture 40.00
Information Electronic the same
City City
Co., Ltd. control
Nanjing Putian
Nanjing Nanjing Manufacture 70.00
Communication Set up
City City
Technology Co., Ltd.
Putian Communications Hong Hong Trading 100.00 Set up
(Hong Kong) Co., Ltd. Kong Kong
Chongqing Puhua
Chongqi Chongqin Manufacture 100.00
Information Set up
ng City g City
Technology Co., Ltd
(2) Other remarks
Remarks on inconsistency between holding proportion owned and voting rights proportion owned in
subsidiaries
a. The Company holds 45.767% of voting rights in Nanjing Putian Telege Intelligent Building 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 Ltd’s related activity. The Company has the ability to impact the
amount of return and control over Nanjing Putian Telege Intelligent Building Ltd.
b. 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 proportion Non-controlling Dividend declared Closing balance of
Subsidiaries of non-controlling shareholders’ profit to non-controlling non-controlling
shareholders or loss shareholders interest
Nanjing Putian
Telege 54.23% 7,377,766.84 10,846,600.00 44,632,434.14
Intelligent
Building Ltd.
3. Main financial information of significant not wholly-owned subsidiaries
(1) Assets and liabilities
Subsidiaries Closing balance
62
Current Non-current Total assets Non-current
Current liabilities Total liabilities
assets assets liabilities
Nanjing Putian
Telege Intelligent 221,613,748.50 36,396,797.07 258,010,545.57 175,708,435.77 175,708,435.77
Building Ltd.
(Continued)
Opening balance
Subsidiaries
Current Non-current Total assets Non-current
Current liabilities Total liabilities
assets assets liabilities
Nanjing Putian
Telege Intelligent 222,552,329.22 35,936,096.57 258,488,425.79 169,790,901.71 169,790,901.71
Building Ltd.
(2) Profit or loss and cash flows
Current period cumulative Preceding period comparative
Subsidiaries Total Cash flows from Total Cash flows
Operating
Operating revenue Net profit comprehensive operating Net profit comprehensive from operating
revenue
income activities income activities
Nanjing Putian
Telege 199,671,487.21 13,604,585.72 13,604,585.72 -52,546,951.98 154,721,985.29 10,380,625.48 10,380,625.48 -40,625,738.51
Intelligent
Building Ltd.
(II) Interest in joint venture or associates
1. Aggregated financial information of insignificant joint ventures and associates
Items Closing balance/Current Opening balance/Preceding
period cumulative period comparative
Joint ventures
Total carrying amount of investments 10,422,056.96 10,422,056.96
Proportionate shares in the following
items
Net profit 2.38 140.38
Total comprehensive income 2.38 140.38
Associates
Total carrying amount of investments
Proportionate shares in the following
items
Net profit
Total comprehensive income
VIII. 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
approved policies concerning such risks, and details are:
63
(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.
1. Credit risk management practice
(1) Evaluation method of credit risk
At each reporting date, the Company assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When assessing whether the credit risk has
increased significantly since initial recognition, the Company takes into account reasonable and
supportable information, which is available without undue cost or effort, including qualitative and
quantitative analysis based on historical data, external credit risk rating, and forward-looking
information. The Company determines the changes in default risk of financial instruments during
the estimated lifetime through comparison of the default risk at the balance sheet date and the
initial recognition date, on an individual basis or a collective basis.
The Company considers the credit risk on a financial instrument has increased significantly when
one or more of the following qualitative and quantitative standards are met:
1) Quantitative standard mainly relates to the scenario in which, on the balance sheet date, the
probability of default in the remaining lifetime has risen by more than a certain percentage
compared with the initial recognition;
2) Qualitative standard mainly relates to significant adverse changes in the debtor ’s operation or
financial position, present or expected changes in technology, market, economy or legal
environment that will have significant adverse impact on the debtor’s repayment ability;
(2) Definition of default and credit-impaired asset
A financial asset is credit-impaired when one or more following events have occurred:
1) significant financial difficulty of the debtor;
2) a breach of binding clause of contract;
3) it is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial
difficulty, having granted to the debtor a concession(s) that the creditor would not otherwise
consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss
rate of default, and exposure to default risk.
3. Please refer to note V(I)2(2)；V(I)3(2); V(I)6(3) on the reconciliation table of opening balance
64
and closing balance of provision for losses of financial instrument.
4. Exposure to credit risk and concentration of credit risk
The Company’s credit risk is primarily attributable to cash and bank balances and receivables. In
order to control such risks, the Company has taken the following measures:
(1) Cash and bank balances
The Company deposits its bank balances and other cash and 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/continuous 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 only conducts business with credible and well-reputed third parties, normally,
does not obtain collateral from customers. Normally, the Group does not obtain collateral from
customers. The Company manages credit risk aggregated by customers. As the company’s
accounts receivable risk points are distributed across multiple partners and customers, as of June
30, 2021, 11.43% of the company’s accounts receivable (June 30, 2020: 12.32%) Among the top
five customers in the balance, the company does not have a significant concentration of credit risk.
The maximum amount of exposure to credit risk of the Company is the carrying amount of each
financial asset on the balance sheet.
(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, bank
borrowings, etc. and adopts long and short financing methods 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.
Financial instruments classified based on remaining time period till maturity
Closing balance
Items
Contract amount 1-3 years Over 3
Carrying amount Within 1 year
not yet discounted years
65
Closing balance
Items
Contract amount 1-3 years Over 3
Carrying amount Within 1 year
not yet discounted years
Bank borrowings 140,500,000.00 140,500,000.00 140,500,000.00
Notes payable 14,698,110.10 14,698,110.10 14,698,110.10
Accounts payable 561,701,149.98 561,701,149.98 561,701,149.98
Other payable 56,473,719.89 56,473,719.89 56,473,719.89
Long-term payable
Subtotal 773,372,979.97 773,372,979.97 773,372,979.97
(Continued)
Opening balance
Items
Contract amount 1-3 years Over 3
Carrying amount Within 1 year
not yet discounted years
Bank borrowings 65,000,000.00 66,950,000.00 66,950,000.00
Notes payable 76,135,010.10 76,135,010.10 76,135,010.10
Accounts payable 604,765,586.00 604,765,586.00 604,765,586.00
Other payable 53,759,120.63 53,759,120.63 53,759,120.63
Long-term payable 13,217,880.13 13,614,416.53 9,457,171.68 4,157,244.85
Subtotal 812,877,596.86 815,224,133.26 811,066,888.41 4,157,244.85
(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 fair value
interest risks arise from fixed-rate financial instruments, while the cash flow interest risks arise
from floating interest financial instruments. The Company determines the proportion of fixed-rate
financial instruments and floating interest rate financial instruments based on the market
environment, and maintains a proper financial instruments portfolio through regular review and
monitoring. The Company’s interest risk relates mainly to bank borrowings with floating interest
rate.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial
instrument resulted from changes in exchange rate. The Company’s foreign currency risk relates
mainly to foreign currency monetary assets and liabilities.
Please refer to notes to financial statements for details in foreign currency financial assets and
liabilities at the end of the period.
IX. Fair value disclosure
(I) Details of fair value of assets and liabilities at fair value at the balance sheet date
66
Fair value as of the balance sheet date
Items Level 1 fair Level 2 fair Level 3 fair
value value value Total
measurement measurement measurement
Recurring fair value measurement
1. Receivables financing 13,747,563.72 13,747,563.72
2. Other equity instrument 741,953.00 741,953.00
investments
Total assets at recurring fair value 14,489,516.72 14,489,516.72
measurement
(II) Valuation technique(s) and key input(s) for level 3 fair value at recurring and non-recurring fair
measurement
1. For notes receivable, measured at par value.
2. For other equity instrument investments including Nanjing Yuhua Electroplating Factory and
Hangzhou Honyar Electrical Co.,Ltd., due to no changes of operating environment and conditions and
financial conditions of the invested enterprises, the Company measured at investment cost.
3. For other equity instrument investments including Beijing Likangpu Communication Equipment Co.,
Ltd., due to deterioration of operating environment and conditions and financial conditions of the
invested enterprises, the Company measured at zero value.
X. Related party relationships and transactions
(I) Related party relationships
1. Parent company
(1) Details
Holding
Parent Voting right
Business proportion over
Place of registration Registered capital proportion over the
company nature the Company
Company (%)
(%)
No.2 Tudi 2 Road,
China Potevio
Zhongguan Village Information
Company 1,903,050,000.00 53.49 53.49
Economy Zone, Haidian industry
Limited
District, Beijing
The Company’s ultimate controlling party is China Putian Corporation.
2. Please refer to section VII of notes to financial statements for details on the Company’s subsidiaries.
3. Joint ventures and associates of the Company
(1) Joint ventures and associates of the Company
Please refer to section VII of notes to financial statements 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
SEI-Nanjing Potevio Optical Joint ventures
Network Co., Ltd.
67
4. Other related parties of the Company
(1) Details
Related parties Relationships with the Company
Nanjing Putian Information Technology An affiliated company of the ultimate
Co., Ltd. controlling party
An affiliated company of the ultimate
Potevio Hi-tech Industry Co., Ltd.
controlling party
Potevio innovation and Entrepreneurship An affiliated company of the ultimate
Management Co., Ltd controlling party
Nanjing Honyar Electrical Technology Co., An affiliated company of the ultimate
Ltd. controlling party
An affiliated company of the ultimate
Nanjing Honyar Electrical Co., Ltd.
controlling party
Shanghai Potevio Post and An affiliated company of the ultimate
Telecommunications Technology Co., Ltd. controlling party
Beijing Potevio Taili Communications An affiliated company of the ultimate
Technology Co., Ltd. controlling party
Hangzhou Honyar Dongbei Photoelectric An affiliated company of the ultimate
Technology Co., Ltd. controlling party
An affiliated company of the ultimate
POTEVIO Telecommunications Co., Ltd.
controlling party
An affiliated company of the ultimate
Potevio Information Technology Co., Ltd.
controlling party
Beijing Likangpu Communication An affiliated company of the ultimate
Equipment Co., Ltd. controlling party
Mennekes Electric Industrial(China) Co., Minority shareholders of subsidiaries of the
Ltd. company
An affiliated company of the ultimate
Potevio Heping Technology Co., Ltd.
controlling party
An affiliated company of the ultimate
Hangzhou Honyar Electrical Co.,Ltd.
controlling party
An affiliated company of the ultimate
Potevio International Trading Co., Ltd.
controlling party
Chengdu Putian Telecommunications An affiliated company of the ultimate
Cable Co.,Ltd. controlling party
An affiliated company of the ultimate
Eastern Communications Inc.
controlling party
An affiliated company of the ultimate
Potevio Eastern Communications Co.,Ltd.
controlling party
Potevio Science & Technology Industrial An affiliated company of the ultimate
Co., Ltd. controlling party
Tianjin Potevio Innovation and An affiliated company of the ultimate
Entrepreneur Technology Co., Ltd. controlling party
Beijing Potevio Desheng Technology An affiliated company of the ultimate
Incubator Co., Ltd controlling party
An affiliated company of the ultimate
Putian New Energy (Shenzhen) Co., Ltd.
controlling party
An affiliated company of the ultimate
Wuhan Putian New Energy Co., Ltd
controlling party
68
(II) Related party transactions
1. Purchase and sale of goods, rendering and receiving of services
(1) Details
1) Purchase of goods and receiving of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
China Potevio Telecommunication
371,681.42
Company Limited products
Nanjing Putian
Procurement of
Hongyan Electrical 175,207.98
goods/labor
Technology Co., Ltd.
Putian High-tech
Procurement of labor 129,056.58
Industry Co., Ltd.
Potevio Information Telecommunication
Technology Co., Ltd. products 68,584.07
2) Sale of goods and rendering of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
Eastern Communications Co., Telecommunication
1,034,151.45 15,929.21
Ltd. products
Telecommunication
China Potevio Company Limited 384,300.86 573,405.15
products
Putian Eastern Communications Telecommunication
22,641.51
Group Co., Ltd. products
Wuhan Putian New Energy Co., Telecommunication
Ltd. products 16,088.49
Beijing Putian Desheng Telecommunication
Technology Incubator Co., Ltd. products 1,361,157.59
Telecommunication
Putian Communication Co., Ltd. 1,040,734.52
products
Putian Information Technology Telecommunication
303,656.86
Co., Ltd. products
Putian Science and Technology Telecommunication
Industrial Co., Ltd. products 31,034.48
2. Related party leases
(1) Details
1) The Company as the lessee
Lessors Types of asset Lease expenses for Lease expenses for the
leased current period preceding period
Potevio Hi-tech
Land and buildings 268,423.40 86,037.72
Industry Co., Ltd.
3. Related party guarantees
(1) The Company and its subsidiaries as guaranteed parties
Guarantors Amount Commencement Maturity date Whether the
guaranteed date guarantee is mature
China Potevio 50,000,000.00 2020/10/19 2021/10/19 No
Company Limited
69
4. Call loans between related parties
Entrusted loans and interest
Current period cumulative Preceding period comparative
expenses with parent company
Entrusted loans 95,000,000.00 297,000,000.00
Entrusted interest expenses 1,286,777.78 8,328,382.78
5. Key management’s emoluments
Items Current period cumulative Preceding period comparative
Key management’s emoluments 1,306,373.00 1,161,814.00
(III) Balance due to or from related parties
1. Balance due from related parties
Closing balance Opening balance
Items Related parties
Book balance Provision for bad Book balance Provision for bad
debts debts
Accounts
receivable
Putian Information
6,256,048.36 426,255.40 6,900,298.36 536,650.66
Technology Co., Ltd.
Putian Communication
4,317,924.00 168,855.00 4,317,924.00 168,855.00
Co., Ltd.
Eastern Communications
448,207.57 22,410.38 20,659.60 206.60
Co., Ltd.
Nanjing Loop Co., Ltd. 207,500.00 2,075.00
Putian Eastern
Communications Group 24,000.00 240.00
Co., Ltd.
Beijing Putian Desheng
Technology Incubator 107,164.50 1,071.65 107,164.50 1,071.65
Co., Ltd.
Tianjin Putian Innovation
and Entrepreneurship 4,546.26 454.63 4,546.26 454.63
Technology Co., Ltd.
China Potevio Company
5,987,268.83 2,948,823.87 5,890,775.42 2,761,564.47
Limited
Shanghai Putian Network
536,319.70 132,831.97 536,319.70 132,831.97
Technology Co., Ltd.
Shanghai Putian Post
8,755,534.00 8,755,534.00 8,755,534.00 8,755,534.00
Technology Co., Ltd.
Subtotal 26,437,013.22 12,456,476.90 26,533,221.84 12,357,168.98
Advances
paid
China Potevio Company
420,000.00
Limited
Subtotal 420,000.00
Other
receivables
China Potevio
2,245,100.00 1,062,255.00 2,245,100.00 1,062,255.00
Information Industry Inc.
Potevio Information
367,800.00 18,390.00 1,203,052.00 60,152.60
Technology Co., Ltd.
Subtotal 2,612,900.00 1,080,645.00 3,448,152.00 1,122,407.60
2. Balance due to related parties
70
Items Related parties Closing balance Opening balance
Accounts
payable
SEI-Nanjing Potevio Optical Network
20,258,725.66 20,220,725.66
Co., Ltd.
China Potevio Company Limited 18,016,137.43 18,332,258.02
Shanghai Potevio Network Technology
11,685.00 11,685.00
Co., Ltd.
Potevio Hi-tech Industry Co., Ltd. 25,000.00 25,000.00
Nanjing Potevio Honyar Electrical
166,421.00 126,806.40
Technology Co., Ltd.
Subtotal 38,477,969.09 38,716,475.08
Advances
received
China Potevio Company Limited 4,690,537.30 4,690,537.30
Potevio Company Limited. 13,239.48 13,239.48
Wuhan Putian New Energy Co., Ltd 12,120.00
Subtotal 4,703,776.78 4,715,896.78
Other
payables
Potevio Hi-tech Industry Co., Ltd. 3,806,518.82 3,588,281.58
Potevio Information Technology Co.,
555,000.00 555,000.00
Ltd.
Potevio Telecommunications Co., Ltd. 200,000.00 200,000.00
Potevio Company Limited. 9,580,000.00 9,580,000.00
Subtotal 14,141,518.82 13,923,281.58
XI. Commitments and contingencies
(I) Significant commitments
None.
(II) Contingencies
None.
XII. Events after the balance sheet date
None.
XIII. Other significant events
(I) Segment information
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, electrical products, wiring products, and
other products. Assets and liabilities shared by different segments are allocated pro rata among
segments.
71
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
Video
Items Generic cable Electrical Wiring products Inter-segment Total
conferencing
products products offsetting
products
Revenue from
129,623,277.17 197,510,645.45 41,853,695.33 82,624,306.00 -10,224,629.68 441,387,294.27
main operations
Cost of main
103,283,120.76 148,296,269.63 30,554,000.92 76,594,824.74 -10,124,515.36 348,603,700.69
operations
Total assets 233,822,636.26 258,010,545.57 192,388,655.44 667,988,818.83 -250,881,562.80 1,101,329,093.30
Total liabilities 144,379,073.75 175,708,435.77 141,195,664.59 543,718,100.05 -165,073,574.81 839,927,699.35
XIV. 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
Amount % to total Amount Provision Carrying amount
proportion (%)
Receivables with provision
59,944,074.91 18.13 59,944,074.91 100.00
made on an individual basis
Receivables with provision
270,714,500.06 81.87 66,983,384.73 24.74 203,731,115.33
made on a collective basis
Total 330,658,574.97 100.00 126,927,459.64 38.39 203,731,115.33
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Provision Carrying amount
Amount % to total Amount
proportion (%)
Receivables with provision 59,944,074.91 17.44 59,944,074.91 100.00
made on an individual basis
Receivables with provision 283,799,350.56 82.56 64,912,032.38 22.87 218,887,318.18
made on a collective basis
Total 343,743,425.47 100.00 124,856,107.29 36.32 218,887,318.18
2) Accounts receivable with provision made on an individual basis
Debtors Book balance Provision for bad Provision Reasons for
debts proportion (%) provision made
Dongpo Xi Laos Co., Ltd. 19,708,086.54 19,708,086.54 100.00 Unable to collect
Mr. Xu 17,591,683.74 17,591,683.74 100.00 Unable to collect
China Tower Corporation Unable to collect
13,819,926.92 13,819,926.92 100.00
Ltd.
Nanjing Zhengqian
Communication Technology 5,356,181.55 5,356,181.55 100.00 Unable to collect
Co., Ltd
Nanjing Aerte photoelectric 3,468,196.16 3,468,196.16 100.00 Unable to collect
72
Debtors Book balance Provision for bad Provision Reasons for
debts proportion (%) provision made
Co., Ltd
Subtotal 59,944,074.91 59,944,074.91 100.00
3) Accounts receivable with provision for bad debts made on an age analysis
Closing balance
Ages
Provision for bad Provision
Book balance
debts proportion (%)
Within 1 year 88,426,367.31 884,263.67 1.00
1-2 years 55,112,850.02 2,755,642.50 5.00
2-3 years 47,035,306.00 4,703,530.60 10.00
3-4 years 20,401,838.97 6,120,551.69 30.00
4-5 years 13,235,473.84 6,617,736.92 50.00
Over 5 years 45,901,659.35 45,901,659.35 100.00
Subtotal 270,113,495.49 66,983,384.73 24.80
(2) Changes in provision for bad debts
Increase Decrease
Items Opening Closing
balance Accrual Recovery Others Reversal Write-off Others balance
Receivables
with provision
59,944,074.91 59,944,074.91
made on an
individual basis
Receivables
with provision
64,912,032.38 2,071,352.35 66,983,384.73
made on a
collective basis
Subtotal 124,856,107.29 2,071,352.35 126,927,459.64
(3) Details of the top 5 debtors with largest balances
Proportion to the total
Debtors Book balance Provision for bad
balance of accounts
debts
receivable (%)
Dongpo Xi Laos Co., Ltd. 19,708,086.54 5.96 19,708,086.54
Mr. Xu 17,591,683.74 5.32 17,591,683.74
Hegang branch of China Tower
Co., Ltd 13,819,926.92 4.18 13,819,926.92
Shenzhen Zhongchuang Electric
Measurement Technology Co., 11,171,751.30 3.38 1,117,175.13
Ltd
Nanjing yuanzun
Electromechanical Equipment 9,862,665.79 2.98 2,353,301.27
Co., Ltd
Subtotal 72,154,114.29 21.82 54,590,173.60
2. Other receivables
(1) Details
1) Details on categories
Categories Closing balance
73
Book balance Provision for bad debts
Carrying
Amount % to total Amount Provision amount
proportion (%)
Receivables with provision made
31,098,272.43 41.61 31,098,272.43 100.00
on an individual basis
Receivables with provision
43,636,626.22 58.39 6,654,576.16 15.25 36,982,050.06
made on a collective basis
Total 74,734,898.65 100.00 37,752,848.59 50.52 36,982,050.06
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying
Amount % to total Amount Provision amount
proportion (%)
Receivables with provision made
33,010,009.04 36.68 33,010,009.04 100.00
on an individual basis
Receivables with provision
56,983,224.19 63.32 6,708,072.23 11.77 50,275,151.96
made on a collective basis
Total 89,993,233.23 100.00 39,718,081.27 44.13 50,275,151.96
2) Other receivables with provision made on an individual basis
Provision
Debtors Book balance Provision for bad Reasons for
proportion
debts provision made
(%)
Beijing Likangpu
Communication 28,912,122.71 28,912,122.71 100.00 Unable to collect
Equipment Co., Ltd.
Putian Communications
2,186,149.72 2,186,149.72 100.00 Unable to collect
(Hong Kong) Co., Ltd.
Subtotal 31,098,272.43 31,098,272.43 100.00
3) Other receivables with provision made on a collective basis
Closing balance
Portfolios
Book balance Provision for bad debts Provision proportion (%)
Portfolio-Financi
1,578,947.37
ng margin
Portfolio-Other 42,057,678.85 6,654,576.16 15.82
Subtotal 43,636,626.22 6,654,576.16 15.25
(2) Ages
Items Closing book balance Opening book balance
Within 1 year 33,252,863.61 38,298,614.15
1-2 years 1,287,937.67 5,217,214.31
2-3 years 2,946,444.41 7,373,694.63
3-4 years 2,296,002.65 1,648,262.87
4-5 years 1,304,932.00 1,321,643.00
Over 5 years 33,646,718.31 36,133,804.27
Subtotal/Total 74,734,898.65 89,993,233.23
(3) Changes in provision for bad debts
74
Phase I Phase II Phase III
Items 12 month Lifetime expected Lifetime expected Subtotal
expected credit losses (credit credit losses (credit
credit losses not impaired) impaired)
Opening balance 480,904.58 39,237,176.69 39,718,081.27
Opening balance in
current period
--Transferred to phase II
--Transferred to phase III -77,787.12 77,787.12
--Reversed to phase II
--Reversed to phase I
Provision made in current
period 102,078.17 -155,574.24 -53,496.07
Provision recovered in
current period 1,911,736.61 1,911,736.61
Provision reversed in
current period
Provision written off in
current period
Other changes
Closing balance 505,195.63 37,247,652.96 37,752,848.59
(4) Other receivables categorized by nature
Nature of receivables Closing balance Opening balance
Temporary advance payment receivable 60,309,503.15 76,617,770.01
Deposit as security 9,749,249.43 10,992,593.44
Travel reserve fund 866,938.99 796,798.91
Others 3,809,207.08 1,586,070.87
Total 74,734,898.65 89,993,233.23
(5) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Book balance Ages Provision for bad
total balance of other
receivables debts
receivables (%)
Temporary
Beijing Likangpu
advance Over 5 years
Communication 28,912,122.71 38.69 28,912,122.71
payment
Equipment Co., Ltd.
receivable
China Potevio Deposit as 2-5 years
1,958,000.00 2.62 1,046,900.00
Company Limited security
Far East
Financing 1-2 years
International 1,578,947.37 2.11 -
deposit
Leasing Co.,Ltd.
Nanjing Putian
Deposit as 1-5 years
Communication 824,870.77 1.10 41,243.54
security
Industry Co., Ltd
Nanjing Municipal
Construction
Industry
Construction Deposit as Over 5 years
400,000.00 0.54 400,000.00
Enterprise Migrant security
Workers' Wage
Guarantee Fund
Management Office
75
Proportion to the
Debtors Nature of Book balance Ages Provision for bad
total balance of other
receivables debts
receivables (%)
Subtotal 33,673,940.85 45.06 30,400,266.25
3. Long-term equity investments
(1) Details
Closing balance Opening balance
Items
Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Investments in
115,319,588.64 1,910,520.00 113,409,068.64 115,319,587.64 1,910,520.00 113,409,067.64
subsidiaries
Investments in
associates and 10,422,055.77 10,422,055.77 10,422,056.96 10,422,056.96
joint ventures
Total 125,741,644.41 1,910,520.00 123,831,124.41 125,741,644.60 1,910,520.00 123,831,124.60
(2) Investments in subsidiaries
Provision for Closing balance
Investees Opening balance Increase Decrease Closing balance impairment made of provision for
in current period impairment
Nanjing Putian Changle
Telecommunications 2,610,457.00 2,610,457.00
Equipment Co., Ltd.
Nanjing Putian Telege
3,320,003.45 3,320,003.45
Intelligent Building Ltd.
Nanjing Southern Telecom Co.,
33,175,148.00 33,175,148.00
Ltd
Nanjing Nanman Electrics Co.,
57,831,011.71 1.00 57,831,012.71
Ltd.
Nanjing Putian Network Co.,
7,741,140.41 7,741,140.41
Ltd.
Nanjing Putian Datang
Information Electronic Co., 5,436,797.07 5,436,797.07
Ltd.
Nanjing Putian
Telecommunication 1,294,510.00 1,294,510.00
Technology Co., Ltd.
Putian Telecommunications
1,910,520.00 1,910,520.00 1,910,520.00
(H.K.) Co., Ltd.
Chongqing Puhua Information
2,000,000.00 2,000,000.00
Technology Co., Ltd
Subtotal 115,319,587.64 1.00 115,319,588.64 1,910,520.00
(3) Investments in associates and joint ventures
Increase/Decrease
Investees Opening balance Investment income Adjustment in other
Investments Investments
recognized under comprehensive
increased decreased
equity method income
Joint ventures
SEI-Nanjing Potevio
Optical Network Co., 10,422,056.96 -1.19
Ltd.
Total 10,422,056.96 -1.19
(Continued)
Investees Increase/Decrease Closing balance
Closing balance
of provision for
76
Cash impairment
Changes in dividend/Profit Provision for Others
other equity declared for impairment
distribution
Joint ventures
SEI-Nanjing
Potevio Optical 10,422,055.77
Network Co., Ltd.
Total 10,422,055.77
(II) Notes to items of the parent company income statement
1. Operating revenue/Operating cost
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Main operations 57,592,825.38 53,102,335.86 56,667,765.21 56,773,522.18
Other operations 6,018,376.27 5,993,665.33 5,932,648.40 5,721,551.62
Total 63,611,201.65 59,096,001.19 62,600,413.61 62,495,073.80
2. Investment income
Items Current period cumulative Preceding period comparative
Investment income from long-term
equity investments under cost 9,153,400.00
method
Investment income from long-term
equity investments under equity -1.19 -137,939.58
method
Investment income from long-term
equity investments under cost 55,267,500.00
method
Total 9,153,398.81 55,129,560.42
XV. Other supplementary information
(I) Non-recurring profit or loss
1. Schedule of non-recurring profit or loss
(1) Details
Items Amount Remarks
Gains on disposal of non-current assets, including write-off
15,829.32
of provision for impairment
Government grants included in profit or loss (excluding
those closely related to operating activities of the
Company, satisfying government policies and 360,145.78
regulations, and continuously enjoyed with certain
quantity/quota based on certain standards)
Other non-operating revenue or expenditures -4,610.41
Subtotal 371,364.69
Less: Enterprise income tax affected 25,041.95
77
Items Amount Remarks
Non-controlling interest affected (after tax) 73,731.44
Net non-recurring profit or loss attributable to shareholders
272,591.30
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
-16.14 -0.14 -0.14
of ordinary shares
Net profit attributable to shareholders
of ordinary shares after deducting -16.29 -0.14 -0.14
non-recurring profit or loss
2. Calculation process of weighted average RONA
Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -29,593,867.19
shares
Non-recurring profit or loss B 272,591.30
Net profit attributable to shareholders of ordinary C=A-B
shares after deducting non-recurring profit or loss -29,866,458.49
Opening balance of net assets attributable to D 189,624,160.92
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 the F
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 the H
reporting period
Others I 12,717,639.48
Number of months counting from the
Others
next month when other net assets J
were increased or decreased to the 4
end of the reporting period
Number of months in the reporting period K 6
L= D+A/2+
Weighted average net assets E×F/K-G×H/K±I× 183,305,653.65
J/K
Weighted average RONA (%) M=A/L -16.14
Weighted average RONA after deducting N=C/L -16.29
non-recurring profit or loss (%)
3. Calculation process of basic EPS and diluted EPS
(1) Calculation process of basic EPS
78
Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -29,593,867.19
shares
Non-recurring profit or loss B 272,591.30
Net profit attributable to shareholders of ordinary C=A-B -29,866,458.49
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
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
reporting period
Number of shares decreased due to share repurchase H
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/K-J 215,000,000.00
Basic EPS M=A/L -0.14
Basic EPS after deducting non-recurring profit or N=C/L
loss -0.14
Calculation process of diluted EPS is the same as calculation process of basic EPS.
79
