konkagroupco., ltd. the 2015 annual report

The 2015 Annual Report of Konka Group Co., Ltd.

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KONKAGROUPCO., LTD.

THE 2015 ANNUALREPORT2016-16

April 2016


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Section I Important Statements, Contents & Terms

The Board of Directors, the Supervisory Committee, directors, supervisors and senior managementof Konka Group Co., Ltd. (hereinafter referred to as the “Company”) warrant that this Report isfactual, accurate and complete, and shall be jointly and severally liable for any false information,misleading statements or material omissions in this Report.Liu Fengxi, company principal, Xiao Qing, chief of the accounting work, and Xu Youshan, chief ofthe accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed inthis report is factual, accurate and complete.All directors have attended the board meeting of the board of directors.Except for the following directors, all the other directors attended in person the board meeting forthe review of this Report.

The future plans and some other forward-looking statements involved in this Report shall not beconsidered as virtual promises of the Company to investors. And investors are kindly reminded topay attention to investment risks.

Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by theCompany for its information disclosure. And all information about the Company shall be subject towhat’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention toinvestment risks.

The Company has described in detail in this Report the possible risks. Please refer to the contentsabout the possible risks and countermeasures in “Outlook of the Company’s future development” in“Section IV Discussion & Analysis by the Management” of this Report.

The Company plans not to distribute cash dividends or bonus shares or turn capital reserves intoshare capital.

This Report is prepared in both Chinese and English. Should there be any understandingdiscrepancy between the two versions, the Chinese version shall prevail.

http://www.cninfo.com.cn


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Contents

Section I Important Statements, Contents & Terms....................................................................... 2

Section II Company Profile & Financial Highlights....................................................................... 6

Section III Business Profile..............................................................................................................11

Section IV Discussion &Analysis by the Management.................................................................13

Section V Significant Events............................................................................................................34

Section VI Changes in Shares & Shareholders..............................................................................57

Section VII Preference Shares.........................................................................................................65

Section VIII Directors, Supervisors, Senior Management Staffs& Employees..........................66

Section IX Corporate Governance..................................................................................................81

Section X Financial Report..............................................................................................................94

Section XI Documents Available for Reference........................................................................... 262


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Terms

Term Specific meaning

Company, the Company, the Group Konka Group Co., Ltd.

Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.

Precision Mold Shenzhen Konka Precision Mold Manufacturing Co., Ltd.

Konka Household Appliances Shenzhen Konka Household Appliances Co., Ltd.

Information Network Shenzhen Konka Information Network Co., Ltd.

Plastic Products Shenzhen Konka Plastic Products Co., Ltd.

Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.

Fittings Technology Shenzhen Konka Electronic Fittings Technology Co., Ltd.

Mudanjiang Appliances Mudanjiang Arctic Ocean Appliances Co., Ltd.

Chongqing Electronic Chongqing Konka Automotive Electronic Co., Ltd.

Chongqing Qingjia Chongqing Qingjia Electronics Co., Ltd.

Anhui Konka Anhui Konka Electronic Co., Ltd.

Anhui Household Appliances Anhui Konka Household Appliances Co., Ltd.

Changshu Konka Changshu Konka Electronic Co., Ltd.

Kunshan Konka Kunshan Konka Electronic Co., Ltd.

Dongguan Konka Dongguan Konka Electronic Co., Ltd.

Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.

Dongguan Mould Plastic Dongguan Konka Mould Plastic Co., Ltd.

Boluo Konka Boluo Konka PCB Co., Ltd.

Boluo Precision Boluo Konka Precision Technology Co., Ltd.

Nanhai Institute Konka (Nanhai) Development Center

Hong Kong Konka Hong Kong Konka Co., Ltd.

Konka Household Appliances Investment Konka Household Appliances Investment & Development Co., Ltd.

Konka Household Appliances InternationalTrading

Konka Household Appliances International Trading Co., Ltd.

Konka America Konka America, Inc.

Konka Europe Konka (Europe) Co., Ltd.

Xutongda Dongguan Xutongda Mould Plastic Co., Ltd.

Konka Optoelectronic Shenzhen Konka Optoelectronic Technology Co., Ltd.

Wankaida Shenzhen Wankaida Science and Technology Co., Ltd.

Kunshan Kangsheng Kunshan Kangsheng Investment Development Co., Ltd.

Anhui Tongchuang Anhui Konka Tongchuang Household Appliances Co., Ltd.

Indonesia Konka Indonesia Konka Electronics Co., Ltd.

Shushida Logistics Shenzhen Shushida Logistics Service Co., Ltd.

Beijing Konka Electronic Beijing Konka Electronic Co., Ltd.

Kunshan Jielunte Kunshan Jielunte Mould Plastic Co. , Ltd.


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Wuhan Jielunte Wuhan Jielunte Mould Plastic Co. , Ltd.

Chuzhou Jielunte Chuzhou Jielunte Mould Plastic Co. , Ltd.

Konka E-display Shenzhen Konka E-display Co., Ltd.

E-display Service Shenzhen E-display Service Co., Ltd.

Xiamen Dalong Xiamen Dalong Trading Co., Ltd.

Youshi Kangrong Youshi Kangrong Culture Communication Co., Ltd.

Anhui Jiasen Anhui Jiasen Precision Technology Co., Ltd.

Kangqiao Jiacheng Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd.

Konka SmartTech Konka SmartTech Limited

Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.

E2info Shenzhen E2info Network Technology Co., Ltd.

Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.

Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.

CSRC China Securities Regulation Commission

SZSE Shenzhen Stock Exchange

CSRC Shenzhen Bureau Shenzhen Bureau of China Securities Regulation Commission

Yuan, Ten thousand Yuan, One HundredMillion Yuan

RMBYuan, RMB Ten thousand, RMB One Hundred Million Yuan


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Section II Company Profile & Financial Highlights

I. Basic information of the CompanyStock abbr. Konka A, Konka B Stock code 000016, 200016

Stock abbr. after change (if

any)No changes

Stock exchange Shenzhen Stock Exchange

Company name in Chinese 康佳集团股份有限公司

Abbr. of Company name in

Chinese康佳集团

Company name in English (if

any)KONKA GROUP CO., LTD.

Abbr. of Company name in

English (if any)KONKAGROUP

Legal representative Liu Fengxi

Registered address15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,

Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China

Zip code 518057

Office address15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,

Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China

Zip code 518057

Company website www.konka.com

Email address [email protected]

II. Contact informationCompany Secretary Representative for Securities Affairs

Name WuYongjun Miao Leiqiang

Address

Board Secretariat, 24/F, Konka R&D Center, 28 Keji

South Twelfth Road, Science and Technology Park,

Yuehai Street, Nanshan District, Shenzhen, Guangdong

Province, China

Board Secretariat, 24/F, Konka R&D Center, 28 Keji

South Twelfth Road, Science and Technology Park,

Yuehai Street, Nanshan District, Shenzhen, Guangdong

Province, China

Tel. 0755-26608866 0755-26608866

Fax 0755-26601139 0755-26601139

E-mail [email protected] [email protected]

III. About information disclosure and where this Report is placedNewspapers designated by the Company for Securities Times, etc.


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information disclosure

Internet website designated by CSRC for

disclosing this Reportwww.cninfo.com.cn

Where this Report is placed

Board Secretariat, 24/F, Konka R&D Center, 28 Keji South Twelfth Road,

Science and Technology Park, Yuehai Street, Nanshan District, Shenzhen,

Guangdong Province, China

IV. Changes in the registered informationOrganizational code 618815578

Changes in main business since listing (if any) No changes

Changes of controlling shareholder (if any) No changes

V. Other information

The CPAs firm hired by the CompanyName Ruihua Certified Public Accountants

Office address5-11F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No. 8,

Xibinhe Road, Yongding Men, Dongcheng District, Beijing, P.R.C.

Accountants writing signatures Shen Lingzhi, He Xiaojuan

Sponsor engaged by the Company to conduct consistent supervision during the reporting period□ Applicable √ InapplicableFinancial consultant engaged by the Company to conduct consistent supervision during thereporting period□ Applicable √ Inapplicable

VI. Accounting and financial highlights

Does the Company adjust retrospectively or restate the accounting data of previous years due tochanges in the accounting policy or correction of accounting errors?

□ Yes √ No

2015 2014

Increase/decrease

of current year

over last year

2013

Operating revenues

(RMB Yuan)18,395,177,035.98 19,423,488,994.07 -5.29% 20,006,736,878.82

Net profits attributable

to shareholders of the

Company (RMB Yuan)

-1,256,819,314.51 52,623,527.86 -2,488.32% 45,820,496.73

Net profits attributableto shareholders of theCompany afterextraordinary gains and

-1,129,999,645.94 -475,481,381.45 -137.65% -68,357,341.76


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losses (RMB Yuan)

Net cash flows from

operating activities

(RMB Yuan)

1,289,600,482.66 -640,385,182.05 301.38% 2,283,254,200.89

Basic EPS (RMB

Yuan/share)-0.52 0.02 -2,700.00% 0.0190

Diluted EPS (RMB

Yuan/share)-0.52 0.02 -2,700.00% 0.0190

Weighted average ROE

(%)-36.30% 1.28% -37.58% 1.13%

As at 31 Dec. 2015 As at 31 Dec. 2014

Increase/decrease

of current year-end

than last year-end

As at 31 Dec. 2013

Total assets (RMBYuan) 14,250,367,548.28 16,779,359,276.65 -15.07% 15,744,099,307.58

Net assets attributable to

shareholders of the

Company (RMB Yuan)

2,814,382,870.81 4,103,478,971.07 -31.41% 4,087,909,132.35

VII. Differences of the accounting data under the domestic and the overseas accountingstandards

1. Differences of the net profits and the net assets disclosed in the financial reports preparedunder the international and the Chinese accounting standards

□Applicable √ Inapplicable

No such differences for the reporting period.

2. Differences of the net profits and the net assets disclosed in the financial reports preparedunder the overseas and the Chinese accounting standards


No such differences for the reporting period.

VIII. Financial highlights by quarter

Unit: RMB Yuan

Q1 Q2 Q3 Q4

Operating revenues 4,569,152,230.30 4,375,406,690.66 4,900,151,931.72 4,550,466,183.30

Net profits attributable to

shareholders of the Company7,752,441.61 -304,705,949.00 -555,256,040.41 -404,609,766.71

Net profits attributable to -214,058.24 -333,724,173.74 -365,476,454.60 -430,584,959.36


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shareholders of the Companyafter extraordinary gains andlosses

Net cash flows from operating

activities277,361,649.37 -207,318,739.74 1,070,979,280.76 148,578,292.27

Any material differences between the financial indicators above or their summations and thosewhich have been disclosed in quarterly or semi-annual reports?□ Yes √ No

IX. Extraordinary gains and losses

√ Applicable □ InapplicableUnit: RMB Yuan

Item 2015 2014 2013 Note

Gains/losses on disposal of non-current

assets (including offset amount of asset

impairment provisions)

-16,096,434.80 587,454,101.18 61,547,807.91

Governmental grants recorded into current

gains and losses (excluding those closely

related to business of the Company and

granted at certain quotas or amounts

according to government’s standards)

71,499,330.11 75,401,093.20 84,343,548.07

Gain/loss on entrusting others with

investments or asset management20,419,318.35 12,260,439.18

Asset impairment provisions due to acts of

God such as natural disasters-144,808,654.70 -1,041,162.02

Gains and losses on fair value changes of

transactional financial assets and liabilities

& investment gains on disposal of

transactional financial assets and liabilities

as well as financial assets available for

sale, except for effective hedging related

to normal business of the Company

32,627,480.23 21,115.80

Gains and losses on entrusted loans 3,550,666.66

Non-operating income and expense other

than above-104,311,044.28 16,207,940.59 8,508,013.84

Other gain and loss items that meet

definition of extraordinary gain/loss-419,240.74 -151,895.48 -1,369,748.77

Less: Income tax effects -14,549,153.86 158,734,972.90 31,336,650.82

Minority interests effects (after tax) 3,830,243.26 4,331,796.46 6,495,085.52

Total -126,819,668.57 528,104,909.31 114,177,838.49 --


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Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for CompaniesOffering Their Securities to the Public—Extraordinary Gains and Losses, or classifies anyextraordinary gain/loss item mentioned in the said explanatory announcement as a recurrentgain/loss item

√ Applicable □ Inapplicable

ItemAmount involved (RMB

Yuan)Reason

Tax rebates on software 67,476,494.60

Government grants closely related to the Company’s normal

operation and constantly given at certain quotas or amounts

according to the government’s policies and standards


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Section III Business Profile

I. Main business during the reporting period

The Company is currently engaged in color TVs, mobile phones and white goods, with its mainbusiness models and the situations of its business divisions as follows:1. Color TVsThe Company provides color TVs for both domestic and overseas markets.The domestic sales of its color TVs are realized mainly through B2B (Business-to-Business) andB2C (Business-to-Consumer), with its branch companies, business departments and after-salesmaintenance points all over the country. And it profits from the margin between the costs and theselling prices of its color TVs.As for the overseas sales, it mainly relies on B2B and is supported by B2C. The color TVs of theCompany are sold to Asia Pacific, Middle East, Central & South America, East Europe, etc. And theprofit also comes from the difference between the costs and the selling prices of its color TVs.2. Mobile phonesThe mobile phones of the Company are sold domestically and overseas. The overseas sales mainlyrely on B2B and the profit comes from the margin between the costs and the selling prices of themobile phones. As for the domestic sales of its mobile phones, the Company mainly relies on thetelecom operator channel in the recent years. But it has also restarted the retail sales (through B2Band B2C) of its mobile phones in the domestic market since August 2015. It has been active inbreaking into the rural markets. And its successful launch of new products in the domestic retailmarket marks a good start in the domestic retail sales of its mobile phones. In the domestic sales ofits mobile phones, the Company profits mainly from the costs and the selling prices of its products,with a small amount from the value added service.3. White goodsThe white goods produced by the Company mainly include refrigerators, washing machines, airconditioners, freezers, etc., which are sold through B2B and B2C to the domestic market. And theCompany profits from the margin between the costs and the selling prices of its white goods.

II. Significant changes in the main assets

1. Significant changes in the main assets

Main asset Reason for any significant change


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Equity assets

The final report of the long-term equity investment compared with 2014, reducing the

end of 47.47%, the main reason is the hope of recovering couplet Ying company

Shanghai Konka green science and Technology Co., Ltd. of investment.

Fixed assets No significant changes

Intangible assets No significant changes

Construction in progress

At the end of this report in the construction project was increased by 30.23% compared

to the end of 2014, the main reason is the increase in investment in Kangsheng Hotel

project.

2. Main assets overseas


III. Core competitiveness analysis

The Company’s capability in R&D, the marketing network and manufacture constitutes itscompetitive edges. Through resource integration, the Company will vigorously try to makesubstantial breakthroughs in intelligent products, cloud computing, application of the internettechnology, application software, etc. It will also try to enhance the strength and thickness oftechnical innovations to increase its overall competitiveness.

2015 Annual Report of Konka Group Co., Ltd.

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Section IV Discussion &Analysis by the Management

I. Summary

In the reporting period, the Company carried on with its Internet strategy and its product miximproved with a larger proportion of smart TVs in its total sales. However, the Company recorded alarge deficit due to the following reasons:1. In the reporting period, the Company received The Notice of the Finance Commission ofShenzhen Municipality Concerning the Withdrawal of the Central Government Subsidy for thePromotion of Highly Energy-Saving Household Appliances. According to the Notice, the Companyhad to return a subsidy of RMB89.96 million, incurring an irrecoverable book receivable of netgovernment energy-saving subsidy of RMB131.99 million as well as a decrease of RMB221.95million in the consolidated total profits.2. The Company has a great amount of financings in the US dollar due to its operation needs.Although it has increased its exchange rate lock-in business from September 2015 to control theexchange rate risk of its dollar financings, a great, adverse impact was caused by the depreciation ofthe RMB against the US dollar in the first nine months of 2015 on the Company’s overall businessresults, incurring an exchange loss of approximately RMB229 million in the year.3. In the reporting period, the management of the Company, those in the domestic sales of colorTVs in particular, experienced frequent changes, which greatly affected the cohesion and morale ofthe employees as well as the product planning and operating efficiency of the Company. Thechanging management made two adjustments to the product planning in the third and fourthquarters respectively, creating an unfavorable impact on the sales. In addition, the price battlesinvolving the Company’s main products also led to the decrease in the Company’s profitability in itsmain business.For the reporting period, the Company achieved operating revenues of RMB18.395 billion, down5.29% from the prior year. And the net profits attributable to the shareholders of the Company stoodat RMB-1.257 billion, representing a year-on-year decrease of 2488.32%.

II. Main business analysis

1. Summary

In 2015, the Company not only faced with huge impacts from industry renewal and drasticfluctuations in exchange rate market, but also went through internal trials and shocks. In suchinstance, the Company stood up to the pressure, cleared up operation strategies and development


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directions, and created advantages for further acceleration of development. Business highlights ofthe Company in 2015 are as below:

1. The Company cleared up operation strategies and development directions in constantadjustments.

In 2015, competitions in household appliance industry were more white-hot, together with negativefactors such as exchange rate fluctuations and management changes, the Company suffered a largedecline in business performance. In the course of that period, the Company stabilized operationsituation through deep clear-up and positive strategic adjustments, re-clarified business layout,determined business strategies of focusing superior resources to develop main businesses, andcreated good atmosphere for development acceleration in next period.

2. Urban renewal project for the headquarter block officially started.

In Apr 2015, the Company moved into the new office block. The urban renewal project for theheadquarter block officially stepped into substantive construction period. At present, the siteformation work is progressing on schedule and in order.

3. Main businesses made progress during changes.

(1) Domestic business of color TV

In 2015, in terms of manufacturing of color TV for domestic business, the Company improvedmanufacturing efficiency by continuously perfecting techniques. And at the same time, theCompany kept improving product quality by strictly controlling on quality.

In terms of concrete sales strategies of color TV for domestic business, the Company strengthenedon products, supplied deficiencies, formed portfolio effects for main sales series, and enhanced theiterative upgrade of products. The client service department improved product service by real-timemonitoring on product quality.

In 2015, despite some repetitions made for previous thoughts and strategies due to managementchanges causing dissatisfactory businesses for overall operation, the Company generallyaccomplished business adjustments by re-adjustments and re-plans in the 4th quarter. The productsoperation tempo began to show up, the turnover speed became higher, and the sales businessesobtained obvious improvement. It should be mentioned that the domestic business of color TV iscurrently stepping into a trend for the good in overall view, which reflects the initial effects broughtby adjustments.

(2) Overseas businesses

In 2015, as for the overseas businesses, the Company conquered multiple negative factors, tightlycaught up blank markets in traditional districts, positively developed potential clients, fullycombined after-end resources, and realized large sales increase in traditional clients. Meanwhile, theblossomed result of key and new clients newly developed made the client structure more rational,


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and ensured a record-high sales volume of overseas businesses. Moreover, the profitability ofoverseas businesses further improved due to gross margin increase.

(3) Handset business

In 2015, as for handset business, the Company took products and clients as the key line, establishedoperation strategies of parallel businesses of OEM and self-own brand, and activated domestic salesbrand business in the second half year. The Company launched new product of mobile phone R1,and founded a mobile internet technology limited company with sales as the focused subject, whichformed a business model of shoulder-to-shoulder development of domestic and overseas businesses,and as a result, laid a foundation for future development.

(4) White household appliance business

In 2015, as for white household appliance business, the Company positively applied internetthinking, and put forth efforts to e-commerce, which developed rapidly. At the same time, throughconstant perfecting and optimization for internal management, the Company mainly promotedthree-door and multi-door boutique refrigerators, focused on digging out new growth points ofprofits and businesses, obtained growth against negative trend in difficult situation, and improved alot for business performance.

(II) Revenues and costs

1. Breakdown of the operating revenues

Unit: RMB Yuan

2015 2014

+/-Amount

In operating

revenuesAmount

In operating

revenues

Operating

revenues18,395,177,035.98 100% 19,423,488,994.07 100% -5.29%

By business segment

Electronics 16,882,508,201.20 91.78% 18,895,371,029.68 97.28% -10.65%

Others 1,512,668,834.78 8.22% 528,117,964.39 2.72% 186.43%

By product

Color TVs 12,590,931,785.71 68.45% 14,697,422,135.45 75.67% -14.33%

Mobile phones 790,942,197.54 4.30% 1,587,898,794.07 8.18% -50.20%

White goods 1,569,786,771.56 8.53% 1,277,294,037.34 6.58% 22.90%

Others 3,443,516,281.17 18.72% 1,860,874,027.21 9.57% 85.06%

By area

Domestic 12,466,005,969.45 67.77% 14,710,949,822.97 75.74% -15.26%


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Overseas 5,929,171,066.53 32.23% 4,712,539,171.10 24.26% 25.82%

(2) Industries, products or areas contributing over 10% of operating revenues or profit√ Applicable □ Inapplicable

Unit: RMB Yuan

Operating

revenueOperating cost

Gross profit

margin

Operating

revenue: +/-%

from last year

Operating cost:

+/-% from last

year

Gross profit

margin: +/-%

from last year

Classified by industries

Electronics

industry16,882,508,201.20 14,760,120,413.85 12.57% -10.65% -9.48% -1.13%

Classified by products

Color TVs

industry12,590,931,785.71 11,006,357,581.37 12.59% -14.33% -12.07% -2.25%

Classified by regions

Domestic sales 12,466,005,969.45 10,466,548,247.47 16.04% -15.26% -14.56% -0.68%

Overseas sales 5,929,171,066.53 5,588,948,938.15 5.74% 25.82% 24.67% 0.87%

Main business data of the previous year restated according to the changed statistical caliber for thereporting period□ Applicable √ Inapplicable

(3) Are the Company’s goods selling revenue higher than the service revenue?□ Yes √ No

Category Item Unit 2015 2014 YoY +/-

Electronics

industry

Sales volume Ten thousand sets 1,136.17 1,529.35 -25.71%

Output Ten thousand sets 914.05 1,150.33 -20.54%

Inventory Ten thousand sets 129.49 145.88 -11.24%

Explanation of the reasons of the changes of the relevant date exceeded 30% over the last period□ Applicable √ Inapplicable(4) List of the execution of the signed significant sales contracts of the Company up to thereporting period□Applicable √ Inapplicable(5) Operating cost formCategory of the industries and products

Unit: RMB YuanCategory

of the

industries

Item

2015 2014

YoY +/-Amount

Ratio to the

operating costAmount

Ratio to the

operating cost


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Electronics Raw

materials15,132,306,097.45 94.25% 15,737,054,443.96 94.04% -3.84%

Electronics Labor cost 642,219,887.42 4.00% 668,090,268.67 3.99% -3.87%

Electronics Depreciati

on65,843,593.96 0.41% 64,478,575.17 0.39% 2.12%

Unit: RMB YuanClassi

fied

by

produ

cts

Item

2015 2014

YoY +/-Amount

Ratio to the

operating costAmount

Ratio to the operating

cost

Color

TVsColor TVs 11,006,357,581.37 68.56% 12,516,818,815.26 74.81% -12.07%

Cell

phone

s

Cell phones 748,974,690.95 4.66% 1,443,167,712.05 8.62% -48.10%

Cons

umer

applia

nces

Consumer

appliances1,276,893,910.52 7.95% 1,106,574,443.35 6.61% 15.39%

Other Other 3,023,271,002.78 18.83% 1,667,185,610.79 9.96% 81.34%

Note: in 2015, the company's mobile phone business revenue decline, its operating costscompared with 2014 decreased, the white power and other business revenue increased so thatthe corresponding operating costs increased with the proportion of.6. Whether there were changes of the consolidation scope during the reporting period√ Yes □ No(1) Disposal of the subsidiariesOn 9 Feb. 2015, the Company formally written off Konka (Nanhai) Development Center. Sincethen, the Company no more included which in the consolidated scope.

(2) Changes of the consolidated scope of other reasons① Shenzhen Konka Precision Mold Manufacturing Co., Ltd and Mansfield Technology (Taiwan)Co., Ltd, our subsidiaries contributed capital jointly and founded Anhui Jiasen. Its registered capitalwas RMB20 million, and it was paid in full amount by all the stockholders by September 30, 2015.In it, Shenzhen Konka Precision Mold Manufacturing Co., Ltd. subscribed to RMB1.02 million,which occupied 51% of the registered capital and Mansfield Technology (Taiwan) Co., Ltd.subscribed to RMB9.80 million, which occupied 49% of the registered capital.② The Company contributed capital with Shenzhen Kaikai Shijie Investment PartnershipEnterprise (limited partnership) jointly and founded Anhui Kakai Shijie on December 29, 2014,


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with a registered capital of RMB20 million. In it, the Company contributed RMB16 million, whichoccupied 80% of the registered capital. Shenzhen Kaikai Shijie Investment Partnership Enterprise(limited partnership) contributed RMB4.0 million, which occupied 20% of the registered capital.The Company has right of control over it, and included it into its merger scope from January 1,2015.③ The Company contributed capital with Shenzhen Yizhonghui Technology Co., Ltd. andShenzhen Yizhonghe Technology Co., Ltd. jointly and founded Shenzhen E2info with a registeredcapital of RMB20 million on January 12, 2015. In it, the Company contributed RMB19.20million,which occupied 96% of the registered capital, the other stockholders contributed RMB800,000,which occupied 4% of the registered capital, but the capital had not been actually contributed by thedate of the balance sheet. And according to the regulations of the articles, the Company has right ofcontrol over it, and included it into its merger scope from January 12, 2015.④ The Company contributed capital with OCT Enterprises Co. jointly and founded ShenzhenKangqiaojiacheng Property Investment Co., Ltd, with a registered capital of RMB10 billion onJanuary 9, 2015, which will be paid in full amount by all the stockholders by December 31, 2019. Init, the Company subscribed to RMB700 million, which occupied 70% of the registered capital, OCTEnterprises Co. contributed to RMB300 million, which occupied 30% of the registered capital. Bythe date of the balance sheet, the Company actually contributed RMB112 million, which occupied11.20% of the registered capital; OCT Enterprises Co. actually contributed RMB48 million, whichoccupied 4.8% of the registered capital. The Company has right of control over it, and included itinto its merger scope from January 19, 2015.

⑤ Kangdian Investment Development Co., Ltd, a subsidiary of the Company, contributed capitaljointly with KK Orient Limited and founded Konka Smarttech Limited on January 21, 2015, with aregistered capital of HK$10million. In it, Kangdian Investment Development Co., Ltd. contributedHK$6.10 million, which occupied 61% of the registered capital and Konka Smarttech Limitedcontributed HK$3.90 million, which occupied 39% of the registered capital. The Company has rightof control over it, and included it into its merger scope from January 21, 2015.

⑥ Shenzhen Konka E-display Co., Ltd., a subsidiary of the Company contributed capital and

founded Shenzhen E-display Service Co., Ltd., a wholly-funded subsidiary under it on May 7, 2015,

with a registered capital of RMB2.00 million. The Company has right of control over it, and

included it into its merger scope from May 7, 2015.

⑦ The Company and Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) jointlyincorporated Shenzhen Konka Commercial System Technology Co., Ltd. on June 25, 2015 with theregistered capital of RMB12 million, of which, the company contributed RMB9.72 million,representing 81% of the registered capital, Shenzhen Kangzhuang Jiasheng Investment Partnership(LP) contributed RMB2.28 million, representing 19% of the registered capital. As at the date ofbalance sheet, the company’s actual contribution was RMB2.916 million, representing 24.3% of the


19

registered capital, and Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) wasRMB621,000, representing 5.18% of the registered capital. The company has control overShenzhen Konka Commercial System Technology Co., Ltd. which has been thus consolidated sinceJune 25, 2015.⑧ The Company and Shenzhen Kangwei Investment Partnership (LP) has jointly incorporatedShenzhen Konka Mobile Interconnection Technology Co., Ltd. with the registered capital ofRMBXXX on October 26, 2015, which shall be paid in full amount before June 30, 2016 by all theshareholders, of which, the Company shall contribute RMB10.20 million, representing 51% of theregistered capital; Shenzhen Kangwei Investment Partnership (LP) shall contribute RMB9.80million, representing 49% of the registered capital. As at the data of balance sheet, the Company’sactual contribution was RMB5.10 million, representing 25.5% of the registered capital, andShenzhen Kangwei Investment Partnership (LP)’s actual contribution was RMB4.90 million,representing 24.5% of the registered capital. The company has control over Shenzhen KonkaMobile Interconnection Technology Co., Ltd. which has thus been consolidated since October 26,2015.⑨ On 27 Mar. 2015, the Company completed the liquidation of Chongqing Konka AutomotiveElectronic Co., Ltd.. Since then, the Company no more included which in the consolidated scope.

7. List of the significant changes or adjustment of the industries, products or services of theCompany during the reporting period□Applicable √ Inapplicable8. List of the major trade debtors and major supplierList of the major trade debtors of the CompanyTotal sales to the top 5 customers (RMBYuan) 3,298,880,853.29

Ratio of the total sales to the top 5 customers to the

annual total sales17.93%

Information of the top 5 customers of the CompanySerial

No.Name of customer Sales amount (RMB Yuan) Proportion in annual total sales

1 Customer 1 1,030,050,237.42 5.60%

2 Customer 2 904,844,908.39 4.92%

3 Customer 3 675,374,436.63 3.67%

4 Customer 4 356,501,259.15 1.94%

5 Customer 5 332,110,011.70 1.80%

Total -- 3,298,880,853.29 17.93%

Notes of the other situation of the major customers


20

√ Applicable □ InapplicableThere was no related relationship of the Company and the top 5 customers, the Directors,Supervisors, Senior Executives, Senior Executives, shareholders with more than 5% shareholding,actual controllers and other related parties had no directly or indirectly equities of the majorcustomers.List of the major suppliers of the CompanyTotal purchase to the top 5 suppliers (RMB Yuan) 4,545,114,837.87

Ratio of the total purchase to the top 5 suppliers to the

annual total purchase37.88%

Information of the top 5 suppliers of the Company

No. Name of supplierPurchase amount (RMB

Yuan)Ratio to the annual purchase amount

1 Supplier 1 2,543,534,610.97 21.20%

2 Supplier 2 1,010,674,396.02 8.43%

3 Supplier 3 481,434,025.60 4.01%

4 Supplier 4 406,195,276.40 3.38%

5 Supplier 5 103,276,528.88 0.86%

Total -- 4,545,114,837.87 37.88%

Notes of the other situation of the major suppliers√ Applicable □ InapplicableThere was no related relationship of the Company and the top 5 customers, the Directors,Supervisors, Senior Executives, Senior Executives, shareholders with more than 5% shareholding,actual controllers and other related parties had no directly or indirectly equities of the majorsuppliers.(III) Expenses

Unit: RMB Yuan2015 2014 YoY +/- Notes of the significant changes

Selling

expenses2,448,337,549.43 2,414,468,187.73 1.40%

Managem

ent

expenses

695,731,013.59 686,930,373.50 1.28%

Financial

expenses350,616,323.55 132,763,824.46 164.09%

Exchange losses caused by exchange

rate fluctuations in the current

period.

(IV) R&D investment√ Applicable □ Inapplicable


21

During the reporting period, the R&D expenses of the Company was of RMB229 millions. TheCompany continued to enhance the R&D input and tried to lay a solid foundation for it to carry outproduct differentiation through constantly developing new products, studying new techniques,altering the existing equipment and continuously enriching the product varieties and series.Meanwhile, it constantly carried out technical innovation and rational suggestion to increase theproduction efficiency, improve the core competitiveness and continue to keep a leading position inthe industry.List of the R&D investment of the Company

2015 2014 Varied ratio

Number of the R&D personnel (person) 1,213 1227 -1.14%

Ratio to the R&D personnel 6.54% 6.53% 0.01%

Investment amount of the R&D

(RMB10,000’)229,397,281.19 219,325,677.28 4.59%

Ratio of the R&D investment to the

operating income1.25% 1.13% 0.12%

Amount of the capitalized R&D

investment (RMB Yuan)0 0 0

Ratio of the capitalized R&D

investment to the R&D investment0 0 0

Reason of remarkable changes over the last year of the ratio of the total R&D investment amount tothe operating income□ Applicable √ InapplicableReason of the greatly change of the ratio of the R&D investment capitalization and its reasonableexplanation□ Applicable √ Inapplicable(V) Cash flow

Unit: RMB YuanItem 2015 2014 YoY +/-

Subtotal of cash inflows from

operating activities19,318,005,896.78 18,464,400,652.40 4.62%

Subtotal of cash outflows from

operating activities18,028,405,414.12 19,104,785,834.45 -5.63%

Net cash flows from operating

activities1,289,600,482.66 -640,385,182.05 301.38%


investing activities3,818,980,972.35 3,104,636,438.39 23.01%

Subtotal of cash outflows from 3,970,903,850.94 3,473,214,203.50 14.33%


22

investing activities

Net cash flows from investing

activities-151,922,878.59 -368,577,765.11 58.78%


financing activities3,134,261,903.06 4,827,571,410.52 -35.08%

Subtotal of cash outflows from

financing activities4,388,415,298.00 3,947,765,478.96 11.16%

Net cash flows from financing

activities-1,254,153,394.94 879,805,931.56 -242.55%

Net increase in cash and cash

equivalents-152,081,985.73 -131,252,584.13 -15.87%

Notes of the major effects on the YoY significant changes occurred of the data above

√ Applicable □ InapplicableThe decrease in bills receivable and purchase cash payments resulting in the decrease in net cashflow from operating activities increased.Cash and cash investments paid in cash and investments during this period resulted in an increase innet cash flows generated during the current period.Net cash flow from financing activities resulting from the current repayment period.Notes to the reason of the significant differences between the net cash flow from the operatingactivities and the net profits of 2015 of the Company during the reporting period

√ Applicable □ InapplicableThe company to optimize product structure, increase sales efforts in the previous inventory,procurement to reduce the amount of lead to the purchase payment of cash to reduce; at the sametime due to the traditional peak season for sales of main products of TV is concentrated at the endof the year, and clearing the way mostly notes receivable, 2014 three or four quarters of sales in thisperiod produced cash flow and notes receivable reduction leads to an increase in sales of cashreceived. The comprehensive effect of the above two factors, the period of business activities netcash inflow is larger.III. Analysis of the non-core business√ Applicable □ Inapplicable

Unit: RMB Yuan

AmountRatio to the total

profits amountNotes of the causes Whether was sustainability

Investment profits 13,574,652.77 -0.88%

Variable profit and

loss of fair value32,591,836.13 -2.11%

Assets impairment

losses365,863,111.63 -23.67%

The main provision for

bad debts of accounts

This period to confirm the

temporarily unable to

recover the energy subsidies


23

receivable and inventory. to prepare for bad debts does

not have continuity.

Non-operating

revenues158,538,297.00 -10.26%

Software tax rebates and

government subsidies.Has a certain continuity.

Non-operating costs 134,780,910.57 -8.72%

This period should be

returned to the early

period of energy subsidies

received.

Does not have continuity.

IV. List of the assets and liabilities1. List of the significant changes of the assets form

Unit: RMB YuanAs at 31 Dec. 2015 As at 31 Dec. 2014

Proportio

n change

Explain any

major changeAmount

Proportio

n in total

assets

Amount

Proporti

on in

total

assets

Monetary funds 1,706,446,928.92 11.97% 1,703,135,732.18 10.15% 1.82%

Accounts

receivable2,048,813,439.34 14.38% 2,259,293,207.16 13.46% 0.92%

Inventories 2,882,515,913.28 20.23% 3,904,436,250.33 23.27% -3.04%

Increase the early

stage of inventory

sales, ending

inventory

reduction.

Investing real

estate227,718,178.53 1.60% 233,349,452.80 1.39% 0.21%

Long-term

equity

investment

190,573,524.29 1.34% 362,765,183.66 2.16% -0.82%

The company to

recover the

antithetical

couplet Shanghai

Konka green

Polytron

Technologies Inc

investment.

Fixed assets 1,763,503,189.50 12.38% 1,783,695,548.92 10.63% 1.75%

Construction in

progress207,854,180.88 1.46% 159,604,884.09 0.95% 0.51%

The increase in

investment in the

project of

Kangsheng hotel.

Short-term 4,150,773,195.76 29.13% 5,145,712,436.91 30.67% -1.54% The return of the


24

loans previous period

of borrowing led

to a reduction in

borrowing.

Long-term

loans23,700,000.00 0.17% 957,541,210.52 5.71% -5.54%

Long term loans

due to the

maturity of the

classification to a

year to maturity.

2. Assets and liabilities measured at fair value√ Applicable □ Inapplicable

Unit: RMB Yuan

Item

Openi

ng

amou

nt

Gain/loss on

fair value

change in the

reporting

period

Cumulative

fair value

change

recorded into

equity

Impairment

provisions in

the reporting

period

Purchased

amount in the

reporting

period

Sold amount

in the

reporting

period

Closing

amount

Financial assets

1. Financial assets

measured at fair

value and whose

changes are recorded

into current gains

and losses

(excluding derivative

financial assets)

0.0032,591,836.1

3

33,196,377.2

8

3.Available-for-sale

financial assets

1,630,

609.0

0

1,227,774.30 54,815.00 97,989.12 2,874,068.30

Total of the above

1,630,

609.0

0

32,591,836.1

31,227,774.30 54,815.00 97,989.12

36,070,445.5

8

Financial liabilities 0.00 0.00

Did any significant change occur to the attribute of the Company’s main asset measurement duringthe reporting period?□ Yes √ NoThe explanation of the reasons of the significant changes of the main asset measurement and theinfluences of which on the operating results and financial conditions


25

V. List of the investment1. Overall condition√ Applicable □ Inapplicable

Investment amount of the reporting

period (RMB Yuan)

Investment amount of the same period of

last year (RMB Yuan)Variation amount

78,306,112.00 249,170,764.00 -68.57%

2. List of the significant equity investment acquired from the reporting period□ Yes √ No3. List of the significant non-equity investment has been executing during the reporting period□Applicable √ Inapplicable4. Investment on the financial assets(1) List of the securities investment√ Applicable □ Inapplicable

Unit: RMB Yuan

Variet

y of

securi

ties

Code

of

securit

ies

Nam

e of

secu

rities

Initial

investm

ent cost

Accou

nting

measu

remen

t

mode

Op

eni

ng

bo

ok

val

ue

Gain

/loss

on

fair

valu

e

chan

ge in

the

repo

rting

peri

od

Cu

mul

ativ

e

fair

valu

e

cha

nge

reco

rded

into

equi

ty

Purchas

ed

amount

in the

reportin

g period

Sold

amount

in the

reportin

g period

Gain/los

s for

reportin

g period

Clo

sin

g

boo

k

val

ue

Account

ing title

Sou

rce

of

stoc

k

Dome

stic

and

overse

as

stock

002772ZXJ

Y6,500

Meas

ured

by

fair

value

0.0

00 0 0 6,500 14,205.77

7,70

5.770

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

300485SSY

Y19,230

Meas

ured

by

fair

value

0.0

00 0 0 19,230 38,060.46

18,8

30.4

6

0

Self

-ow

ned

fun

ds


26

Dome

stic

and

overse

as

stock

300481PYH

C4,565

Meas

ured

by

fair

value

0.0

00 0 0 4,565 9,535.45

4,97

0.450

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

002770KDR

Y3,4250

Meas

ured

by

fair

value

0.0

00 0 0 3,425 7,562.42

4,13

7.420

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

002776

Bob

aolo

n

11,645

Meas

ured

by

fair

value

0.0

00 0 0 11,645 18,769.61

7,12

4.610

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

002766SLG

F3,765

Meas

ured

by

fair

value

0.0

00 0 0 3,765 9,855.41

6,09

0.410

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

002787HY

BZ5,685

Meas

ured

by

fair

value

0 0 0 2,500 5,685 0 0 8,185

Self

-ow

ned

fun

ds

Dome

stic

and

overse

as

stock

000002Vank

e A

2,311,748.

07

Meas

ured

by

fair

value

1,6

30,

60

9.0

0

1,630

,6090

554,135.2

30 0

2,865,883.

3

Self

-ow

ned

fun

ds

Other securities

investment held at the

period-end

0 -- 0 0 0 0 0 0 0 -- --

Total2,366,563.

07--

1,63

0,60

9

0556,6

35.2354,815 97,989.12 48,859.12

2,87

4,06

8.3

-- --


27

Disclosure date of the

board announcement on

approval of the

securities investment

Inapplicable

Disclosure date of the

general meeting

announcement on

approval of the

securities investment (if

any)

Inapplicable

(2) List of the derivative investment□Applicable √ InapplicableNo such situation of the Company during the reporting period.

5. Use of raised funds□Applicable √ InapplicableNo such situation of the Company during the reporting period.

VI. Selling of the significant assets and the equities1. List of the selling of the significant assets□Applicable √ InapplicableNo such situation of the Company during the reporting period.

2. List of the selling of the significant equities√ Applicable □ Inapplicable

Count

erpart

y

Sold

equiti

es

Sold

date

Trans

action

price

(RMB

Ten

Thous

and

Yuan)

Net

profit

s

contri

buted

by the

equiti

es to

the

listed

comp

anies

from

the

period

-begin

to the

sold

date

Influe

nce of

the

sellin

g of

the

Comp

any

Propo

rtion

of the

net

profit

s of

the

contri

buted

amou

nt of

the

equiti

es

sellin

g to

the

listed

comp

Pricin

g

princi

ples

of the

equiti

es

sellin

g

Whet

her

was

the

relate

d

transa

ction

Relati

onshi

p with

the

count

erpart

y

Whet

her

the

involv

ed

equiti

es all

compl

eted

the

owner

ship

transf

er

Whet

her

execu

ted as

sched

uled

and if

failed,

shoul

d state

the

reaso

ns and

the

adopt

ed

measu

remen

ts of

Discl

osure

date

Discl

osure

index


28

(RMB

Ten

Thous

and

Yuan)

anies

to the

total

amou

nt of

the

net

profit

s

the

Comp

any

Listin

g

Shenz

hen

Konk

a

Yishij

ie

Com

merci

al

Displ

ay

Co.,

Ltd.

No 7,200 25

Suppl

ement

the

mobil

ity

0

Asses

sment

value

No

Witho

ut

relate

d

transa

ctions

No

Temp

oraril

y

cease

the

listing

4

Nov.

2015

http://

www.

cninfo

.com.

cn/fin

alpag

e/201

5-11-

04/12

01752

356.P

DF

Notes: March 2016, the Company had decided to temporarily cease the listing and transfer 60% equities of Shenzhen Konka Yishijie

Commercial Display Co., Ltd. held by the Company, of which the details please refer to the Indicative Announcement of Temporarily

Cease the Listing and Transfer 60% Equities of Yishijie Company (Announcement No.: 2016-11).

VII. Analysis of the major controlling and stock-participating companies√ Applicable □ InapplicableList of the stock-participating companies which the influence over 10% of the net profits of theCompany by the major subsidiaries

Unit: RMB Yuan

Name Type

Main

products

or

services

Registered

capitalTotal assets Net assets

Operating

revenues

Operating

profitNet profit

Shenzhe

n

Wankaid

a

Science

and

Technol

ogy Co.,

Subs

idiar

y

Software

technolo

gy

develop

ment

and

mainten

ance

RMB10000000 344,074,716.76 339,240,366.98 57,484,390.00 33,660,500.24 38,914,171.12


29

Ltd.

Donggu

an

Xutongd

a Mould

Plastic

Co., Ltd.

Subs

idiar

y

Producti

on and

sale of

mould

and

plastic

products

RMB5000000 97,038,261.68 35,915,691.33 165,783,377.81 15,770,567.84 13,721,503.54

Shenzhe

n Konka

Informat

ion

Network

Co., Ltd.

Subs

idiar

y

Producti

on and

sale of

digital

network

products

RMB30000000 169,047,739.55 10,528,385.85 227,564,096.73 12,698,675.02 14,068,154.53

Anhui

Konka

Tongchu

ang

Househo

ld

Applian

ces Co.,

Ltd.

Subs

idiar

y

Producti

on and

sale of

refrigera

tors,

washing

machine

s and

other

househol

d

applianc

es

RMB180000000 855,155,156.04 -45,426,362.30 1,813,977,718.86 -47,758,638.98 -31,124,158.57

Anhui

Konka

Electron

ic Co.,

Ltd.

Subs

idiar

y

Producti

on and

sale of

multime

dia

products

RMB140000000 1,108,033,608.80 287,310,914.76 5,226,927,921.25 -2,564,857.76 5,741,493.20

Donggu

an

Konka

Mould

Plastic

Co., Ltd.

Subs

idiar

y

Producti

on and

sale of

mould

and

plastic

products

RMB10000000 291,454,028.14 99,951,650.55 187,474,600.08 -23,563,931.64 -22,550,751.43

EnRay

Tek

Joint

stoc

Producti

on andUSD64196600 1,337,568,934.81 229,470,887.12 165,482,576.55 -129,645,828.55 -58,648,256.05


30

Optoelec

tronics

(Shangh

ai) Co.,

Ltd.

k

com

pany

sale of

LED

Shenzhen KonkaTelecommunicationsTechnology Co.,Ltd.

Subs

idiar

y

Producti

on and

sale of

mobile

commun

ication

products

& sale

of

multime

dia

products

RMB120000000 304,037,383.60 -244,556,546.46 821,019,386.24 -47,183,184.85 -45,307,508.54

Kunshan

Konka

Electron

ic Co.,

Ltd.

Subs

idiar

y

Producti

on and

sale of

TFT-LC

M and

multime

dia

products

RMB350000000 576,730,397.89 312,009,194.14 2,009,011,978.36 -53,073,365.90 -48,093,088.72

Donggu

an

Konka

Electron

ic Co.,

Ltd.

Subs

idiar

y

Producti

on and

sale of

multime

dia

products

RMB266670000 740,114,161.64 481,809,197.96 1,016,938,820.52 -117,656,404.92 -101,694,301.22

Hong

Kong

Konka

Co., Ltd.

Subs

idiar

y

Export

&

import

of

electrom

echanica

l and

electroni

cs

HKD500000 1,914,142,291.75 67,974,528.68 3,496,450,561.65 -43,639,699.09 -49,402,634.06

Subsidiaries acquired or disposed during the reporting period:√ Applicable □ Inapplicable


31

Name of subsidiaryPurpose for acquiring or disposing the

subsidiary in the reporting period

Effect on the overall production and

business performance

Konka (Nanhai) Development Center Write-offNo effect on the overall production and


Chongqing Konka Automotive

Electronic Co., Ltd.Liquidation

No effect on the overall production and


Anhui Jiasen Precision Technology Co.,

LtdEstablishment of capital contribution



Anhui Kaikai Shijie E-commerce Co.,

LtdEstablishment of capital contribution



Shenzhen Yipingfang Network

Technology Co., LtdEstablishment of capital contribution



Shenzhen Kangqiaojiacheng Property

Investment Co., LtdEstablishment of capital contribution



Konka Zhisheng Co., Ltd. Establishment of capital contributionNo effect on the overall production and


Shenzhen Konka Yishijie Commercial

Display Co., Ltd.Establishment of capital contribution



Shenzhen Konka Commercial Systems




Shenzhen Konka Mobile Internet




List of the major controlling stock-participating companies

There was no information of the major controlling stock-participating companies of the Companyneeded to be disclosed during the reporting period.VIII. List of the structured main bodies controlled by the Company□Applicable √ InapplicableIX. Outlook of the Company’s future development

Viewing from industrial perspective, Shenzhen Konka will face both advantages and disadvantagesin 2016:(I) Advantages:The Internet boom has brought great opportunities and unlimited space. The active users of thecompany’s smart TVs will continue to increase in 2016, and the operation of various value-addedservices at the TV terminals is starting to mature, and it will see returns from the video, advertising,education, health care and games.(II) Disadvantages:1. In 2016, the growth in the market capacity of color TV, white goods and mobile phone will belimited. According to the data by CMM, in 2016, the market capacity of color TVs is about 48.77


32

million sets, up by 520,000 sets year on year; the market capacity of mobile phones in 2016 will be440 millions sets, up by 15 million sets year on year; and the market capacity of refrigerators willbe 29.58 million sets, up by 120,000 sets year on year; and the market capacity of air conditionersin 2016 will be 41.09 million sets, down by 340,000 sets year on year, and the market capacity ofwashers will be basically flat in 2016.2. The home appliance industry will see increasingly fierce competitions: the color TV industry willexperience a slow growth. The excess production capacity of color TV in the Internet era will leadto continuous reorganization and distribution of the ecological chain and value chain of the industry.Though new technologies will bring an upgrade in consumption demand and thus, the chance toimprove the business, but in general, the challenges are higher than opportunities, and the marketcompetitions will further grow fierce.Business development ideas in 20161. Actively push for changes in the management mechanismThe company will actively push for changes in the corporate management mechanism, and promotethe market-oriented changes in the motivation mechanism and restraining mechanism.2. Balanced development in the whole chainThe company will stress the building of basic capabilities, and do well in each link of the wholechain, such as planning, manufacturing, R&D, supply, promotion, sales and after-sales services.3. Do a good job of user operationA large number of user groups can form an enormous interaction platform. On the basis of theplatform, the company must do a good job of user operation and gradually bring out the advantagesand potential values in possessing such an enormous user group, and turn them into actual valuegrowth and true contribution to the company’s business.4. Promote the intelligent manufacturingThe company will center on the “intelligent manufacturing” and through the product qualityenhancement and production efficiency increase, with the lean production management as thecarrier, rely on the efficient promotion of automated, digital, networking, and intelligent work toaccelerate the simultaneous promotion in production efficiency and product quality through thecontinuous deepening in shaping of intelligent production pacesetter and MES system application( the production information management system that is geared to the needs of the workshopexecution officers in manufacturing enterprises).X. List of the received researches, visits and interviews1. Particulars about researches, visits and interviews received in this reporting period

□Applicable √ InapplicableNo such situation of the Company during the reporting period.2. Particulars about researches, visits and interviews received from the period-end to thedisclosure date


33

□Applicable √ InapplicableNo such situation of the Company during the reporting period.


34

Section V. Significant Events

I. List of the profits distribution of the common shares and turning capital reserve into sharecapital of the CompanyList of the formulation, execution or adjustment of the profits distribution policies of the commonshares, especially the cash dividend policies√ Applicable □ InapplicableThe cash dividend policy of the Company is clearly stated in its Articles of Association, withexplicit dividend standards and ratios, as well as sound decision-making procedures andmechanisms. Independent directors have faithfully performed their duties and performed theirfunction well by giving minority shareholders opportunities to express their opinion and demandsand effectively safeguarding their lawful interests. The Company has strictly executed the cashdividend policy in the Articles of Association, and cash dividend distribution of the Company is inline with the Articles of Association and relevant resolutions of the Shareholders’ General Meeting.According to the requirements of the Listed Company Supervision Guidelines No. 3--ListedCompany Cash Dividends issued by CSRC, the Company had revised the profit distribution policystipulated by the Articles of Association, further clarifying the priority and proportion of cashdividends in profit distribution.

Special statement about the cash dividend policyIn compliance with the Company’s Articles of Association and the resolution of the generalmeeting Yes

Specific and clear dividend standard and ratio YesComplete decision-making procedure and mechanism Yes

Independent directors fulfilled their responsibilities and played their due role. Yes

Minority shareholders had the chance to fully express their opinion and desire and their legalrights and interests were fully protected. Yes

In adjustment or alteration of the cash dividend policy, the conditions and procedure were incompliance with regulations and transparent. Yes

Pre-plan or plan for profit distribution and turning capital reserve into share capital in recent 3 years(including the reporting period)1. The 2015 profits distribution preplan of the Company was as follows:The 2015 net profits after audit of the Company that attributed to the owner of the parent was ofRMB-1,256,819,314.51 with the retained earnings of RMB-522,836,282.66 and according to theactual conditions and the long-term development demands, the Company adviced not to distributecash bonus with no bonus share and without executing the turn from reserved funds to share capitalin 2015.2. The 2015 semi-annual profits distribution preplan of the Company was as follows:


35

Based on the total share capital of 1,203,972,704 shares at the month-end of Jun. 2015, theCompany executed the turning capital reserve into share capital and to increase 10 shares bytransferring for every 10 shares to the whole shareholders with the total amount of 1,203,972,704shares and after which the total share capital of the Company increased to 2,407,945,408.3. The 2014 profits distribution plan of the Company was as follows:Based on the Company’s total share capital of 1,203,972,704 shares as at the end of 2014, theCompany was proposed to distribute a cash dividend of RMB0.1 (tax included) to every 10 shares.The distributed profits would aggregate RMB12,039,727.04 and the retained profit would be carriedforward into the next year for distribution.4. The 2013 profits distribution plan of the Company was as follows:Based on the Company’s total share capital of 1,203,972,704 shares as at the end of 2013, theCompany distributed a cash dividend of RMB0.1 (tax included) to every 10 shares. The distributedprofits aggregated RMB12,039,727.04 and the retained profit was carried forward into the next yearfor distribution.Cash dividend distribution of the common shares of the Company of the recent 3 years (includingthe reporting period)

Unit: RMB Yuan

Dividend yearAmount of cash

dividend(including tax)

Net profit belonging toshareholders of thelisted company in

consolidated statementof dividend year

The ratioaccounting innet profit whichbelongs to

shareholders ofthe listedcompany inconsolidatedstatement

Amount of thecash dividend byother methods

Ratio of the cashdividend by other

methods

2015 0.00 -1,256,819,314.51 0.00% 0.00 0.00%

2014 12,039,727.04 52,623,527.86 22.88% 0.00 0.00%

2013 12,039,727.04 45,820,496.73 26.28% 0.00 0.00%

The Company (including its subsidiaries) made profit in the reporting period and the profitsdistribution of the common shares held by the shareholders of the Company (without subsidiaries)was positive, but it did not put forward a preplan for cash dividend distribution of the commonshares:□ Applicable √ InapplicableII. Pre-plan for profit allocation and turning capital reserve into share capital for thereporting period□Applicable √ InapplicableThe Company planed not to distribute the cash dividend with no bonus share and without executingthe turn from reserved funds to share capital.III. Performance of commitments1. Commitments completed by the Company, the shareholders, the actual controllers, thepurchasers, the Directors, the Supervisors and the Senior Executives or the other relatedparties during the reporting period and those hadn’t been completed execution up to theperiod-end□Applicable √ InapplicableThere was no such situation of the Company during the reporting period.


36

2. Assets or projects existing profit forecast, which were still in the profit forecast period, theCompany made note and explain to the assets or project arrived at original profit forecast□Applicable √ InapplicableIV. Occupation of the Company’s capital by the controlling shareholder or its related partiesfor non-operating purposes□Applicable √ InapplicableNo such cases in the reporting period.V. Explanation by the Board of Directors, the Supervisory Committee and the IndependentDirectors (if any) about the “non-standard audit report” issued by the CPAs firm for thereporting period□Applicable √ InapplicableVI. Explanation of the changes of the accounting policy, the accounting estimates and theaccounting methods compared to the last financial report□Applicable √ InapplicableNo such cases in the reporting period.VII. Explain retrospective restatement due to correction of significant accounting errors in thereporting period□Applicable √ InapplicableNo such cases in the reporting period.VIII. Explain change of the consolidation scope as compared with the financial reporting oflast year√ Applicable □ Inapplicable

For details, please refer to the fourth section of the management discussion and analysis of the mainbusiness analysis section within the scope of the report within the scope of the report period ofchange in the contents of the change.IX. Particulars about engagement and disengagement of CPAs firmCPAs firm engaged at presentName of domestic CPAs firm Ruihua Certified Public Accountants

Remuneration for domestic CPAs firm for thereporting period (RMB Ten Thousand Yuan) 120

Consecutive years of the audit services providedby domestic CPAs firm 3 years

Name of domestic CPAs firm Shen Lingzhi, He Xiaojuan

Name of overseas CPAs firm (if any) Inapplicable

Remuneration for overseas domestic CPAs firmfor the reporting period (RMB Ten ThousandYuan) (if any)

0

Consecutive years of the audit services providedby overseas CPAs firm (if any) Inapplicable

Name of overseas CPAs firm (if any) Inapplicable

Reengage the CPAs firm at current period or not?□ Yes √ NoReengage the CPAs firm during auditing period or not?√ Applicable □ InapplicableDuring the reporting period, as approved by the Shareholders’ General Meeting, the Company


37

continued to engage Ruihua Certified Public Accountants as the audit firm on internal control of theCompany for 2015, with the auditing fee for the internal control in 2015 as RMB400,000.X. Particulars about trading suspension and termination faced after the disclosure of annualreport□Applicable √ InapplicableXI. Bankruptcy and reorganization□Applicable √ InapplicableThere was no such situation of the Company during the reporting period.XII. Significant lawsuit or arbitration√ Applicable □ Inapplicable

Basic situation of lawsuit(arbitration)

Lawsuitamount

(RMB TenThousand)

Whetherform intoestimatedliabilities

Process oflawsuit(arbitratio

n)

Trial resultsand influencesof lawsuit(arbitration)

Situation ofexecution ofjudgment oflawsuit

(arbitration)

Disclosuredate

Disclosureindex

As for the details,please refer to theNotes 2. Descriptionof the Contingenciesof the Commitmentsand the Contingenciesof Chapter XII of theNotes to the FinancialReport

XIII. Punishment and rectification□Applicable √ InapplicableNo such cases in the reporting period.XIV. Honesty situations of the Company, its controlling shareholders and actual controller√ Applicable □ InapplicableThere was neither execution of the effective judgment from the court of the Company and thecontrolling shareholders nor the situation of the larger liabilities failed to pay off when expired.XV. List of the execution of the stock incentive plan, ESOP, or other Staff incentives□Applicable √ InapplicableNo such cases in the reporting period.


38

XVI. Significant related-party transactions1. Related-party transactions relevant to routine operation√ Applicable □ Inapplicable

Related

party

Relati

onshi

p

Type

of the

relate

d-part

y

transa

ction

Conte

nt of

the

relate

d-part

y

transa

ction

Pricin

g

princi

ple of

the

relate

d-part

y

transa

ction

Trans

action

price

Trans

action

amou

nt

(RM

B Ten

Thous

and

Yuan)

Propo

rtion

in

same

kind

of

transa

ctions

Appr

oved

transa

ction

quota

(RM

B Ten

Thous

and

Yuan)

Whet

her

excee

d the

appro

ved

quota

Settle

ment

metho

d of

the

relate

d-part

y

transa

ction

Simil

ar

marke

t price

Discl

osure

date

Discl

osure

index

Anhui

Huali

Packing

Co.,

Ltd.

Underthesameactualcontroller

Purchase ofcommodities

Purch

ase of

materi

als

Negot

iated

price

Mark

et

price

4,206 4,000 Yes Cash

Inapp

licabl

e

3 Apr.

2015

http://

www.c

ninfo.c

om.cn/

finalpa

ge/201

5-04-0

3/1200

78252

0.PDF

Shangh

ai Huali

Packing

Co.,

Ltd.



Purch

ase of

materi

als

Negot

iated

price

Mark

et

price

1,228 2,000 No Cash

Inapp

licabl

e

3 Apr.

2015

Huali

Packing

(Huizh

ou)

Co.,

Ltd.



Purch

ase of

materi

als

Negot

iated

price

Mark

et

price

1,093 2,000 No Cash

Inapp

licabl

e

3 Apr.

2015

Chengd

u

Tianfu

OCT

Industri

al

Develo

pment

Co.,

Ltd.


Salesofgoods

Sales

of

liquid

crystal

displa

y

Negot

iated

price

Mark

et

price

38 1,000 No Cash

Inapp

licabl

e

3 Apr.

2015

Total -- -- 6,565 -- 9,000 -- -- -- -- --

Details of large amount of sales

returnsInapplicable


39

As for the prediction on the total

amount of routine related-party

transactions to be occurred in the

reporting period by relevant types,

the actual performance in the

reporting period (if any)

The Company has published the Forecasting Public Notice on Routine Related

Transaction for Y2015 (public notice No. 2015-03) on Securities Times, Shanghai

Securities News, China Securities Journal and Hong Kong Ta Kung Pao as well as the

Internet website designated by CSRC http://www.cninfo.com.cn on 3 Apr. 2015. In the

reporting period, the basis for pricing, transaction price, transaction amount and

settlement methods of raw materials purchased by the Company were basically in

accordance with the forecast. The total amount was RMB65.65 million.

Reason for significant difference

between the transaction price and

the market price

Inapplicable

2. Related-party transactions regarding purchase and sales of assets□Applicable √ InapplicableNo such cases in the reporting period.3. Related-party transactions common external investment□Applicable √ InapplicableNo such cases in the reporting period.4. Credits and liabilities with related parties□Applicable √ InapplicableNo such cases in the reporting period.5. Other significant related-party transactions□Applicable √ InapplicableNo such cases in the reporting period.XVII. Significant contracts and their execution1. Trusteeship, contracting and leasing(1) Trusteeship□Applicable √ InapplicableNo such cases in the reporting period.(2) Contract□Applicable √ InapplicableNo such cases in the reporting period.(3) Lease□Applicable √ InapplicableNo such cases in the reporting period.2. Significant guarantees√ Applicable □ Inapplicable(1) List of guarantees

Unit: RMB Ten Thousand YuanGuarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)

Guaranteed Disclosure Amount Actual Actual Type of Period Execute Guarantee


40

party date of

relevant

announcement

for

guarantee

occurrence date

(date of

agreement)

guarante

e

amount

guarantee of

guaran

tee

d or not for a

related

party or not

N/A N/A 0 N/A 0 0 N/A N/A

Total external guarantee line approved during

the reporting period (A1)0

Total actual occurred amount of external

guarantee during the reporting period (A2)0

Total external guarantee line that has been

approved at the end of the reporting period

(A3)

0Total actual external guarantee balance at

the end of the reporting period (A4)0

Guarantees provided by the Company for its subsidiaries

Guarantee

d party

Disclosure date of

relevant

announcement

Amount

for

guarant

ee

Actual occurrence date

(date of agreement)

Actual

guarantee

amount

Type of

guarantee

Perio

d of

guar

antee

Exec

uted

or

not

Guaran

tee for

a

related

party

or not

Anhui

Konka

21 Nov. 2014 20,000

12 Mar. 2015 610.79General

guaranty

1

yearNo No

Anhui

Konka10 Apr. 2015 1,997.67

General

guaranty

1

yearNo No

Anhui

Konka14 May 2015 3,537.2

General

guaranty

1

yearNo No

Anhui

Konka19 May 2015 4,259.39

General

guaranty

1

yearNo No

Anhui

Tongchua

ng21 Nov. 2014 30,000

30 Jan. 2015 8,000General

guaranty

1

yearNo No

Anhui

Tongchua

ng

2 Jun. 2015 2,000General

guaranty

1

yearNo No

Communi

cation

technolog

y 21 Nov. 2014 60,000

22 Apr. 2015 50,000General

guaranty

1

yearNo No

Communi

cation

technolog

28 Jan. 2015 10,000General

guaranty

1

yearNo No


41

y

Yishijie 21 Nov. 2014 6,000 27 Jan. 2015 2,000General

guaranty

1

yearNo No

Konka

Househol

d

Appliance

s

21 Nov. 2014 6,000 28 Sep. 2014 274.28General

guaranty

0.5

yearNo No

Hong

Kong

Konka

30 Sep. 2013 307,500

15 Jan. 2014 30,550General

guaranty

2

yearsNo No

Hong

Kong

Konka

17 Sep. 2014 18,880General

guaranty

2

yearsNo No

Hong

Kong

Konka

23 Mar. 2015 15,092General

guaranty

1

yearNo No

Hong

Kong

Konka

29 May 2015 15,458General

guaranty

1

yearNo No

Hong

Kong

Konka

26 Jun. 2015 24,440General

guaranty

1

yearNo No

Hong

Kong

Konka

23 Nov. 2015 43,300General

guaranty

9

mont

hs

No No

Total guarantee line approved for the subsidiaries

during the reporting period (B1)0

Total actual occurred amount of guarantee for

the subsidiaries during the reporting period

(B2)

180,969.33

Total guarantee line that has been approved for the

subsidiaries at the end of the reporting period (B3)477,050

Total actual guarantee balance for the

subsidiaries at the end of the reporting period

(B4)

230,399.33

Guarantees provided by the subsidiaries for their subsidiaries

Guaranteed

party

Disclosure date of

relevant

announcement

Amoun

t for

guarant

ee

Actual occurrence

date (date of

agreement)

Actual

guarante

e

amount

Type of

guarantee

Perio

d of

guar

antee

Ex

ecu

ted

or

not

Guarante

e for a

related

party or

not

Dongguan 27Apr. 2013 4,631 23 Jul. 2015 463.1 Joint liability 1 No No


42

Mould

Plastic

guaranty year

Dongguan

Mould

Plastic

25 Aug. 2015 195.43Joint liability

guaranty

1

yearNo No

Dongguan

Mould

Plastic

28 Sep. 2015 231.55Joint liability

guaranty

1

yearNo No

Dongguan

Mould

Plastic

2 Nov. 2015 370.48Joint liability

guaranty

1

yearNo No

Dongguan

Mould

Plastic

30 Nov. 2015 230.62Joint liability

guaranty

1

yearNo No

Kunshan

Geraint

29 Sep. 2013 23,155

21 Jan. 2014 361.22Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint28 Nov. 2014 78.73

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint8 Dec. 2014 60.2

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint3 Dec. 2014 213.03

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint5 Feb. 2015 32.42

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint12 Feb. 2015 245.44

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint1 Sep. 2015 50.94

Joint liability

guaranty

3

yearsNo No

Kunshan

Geraint16 Nov. 2015 55.57

Joint liability

guaranty

3

yearsNo No

Total guarantee line approved for the subsidiaries

during the reporting period (C1)0

Total actual occurred amount of guarantee for

the subsidiaries during the reporting period

(C2)

1,875.55

Total guarantee line that has been approved for the

subsidiaries at the end of the reporting period (C3)27,786

Total actual guarantee balance for the

subsidiaries at the end of the reporting period

(C4)

2,588.73

Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)


43

Total guarantee line approved during the reporting

period (A1+B1+C1)0

Total actual occurred amount of guarantee

during the reporting period (A2+B2+C2)182,844.88

Total guarantee line that has been approved at the

end of the reporting period (A3+B3+C3)504,836

Total actual guarantee balance at the end of

the reporting period (A4+B4+C4)232,988.06

Proportion of total guarantee amount (A4+B4+C4) to the net

assets of the Company82.78%

Of which:

Amount of debt guarantee provided for shareholders, actual controller and the related-party(D) 0.00

Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is notless than 70% directly or indirectly (E) 232,988.06

Total guarantee amount exceeded 50% of the net assets (F) 92,268.92

Total amount of the above three guarantees (D+E+F) 325,256.98

Explanation on the occurred warranty liability or possible bearing joint responsibility of

liquidation due to immature guarantee (if any)Inapplicable

Explanation on provision of guarantees for external parties in violation of the prescribed

procedure (if any)Inapplicable

Explanation on guarantee that adopts complex methodThere was no such situation of the Company during the reporting period.(2) Illegal provision of guarantees for external parties□Applicable √ InapplicableThe Company did not illegally provide any guarantee for any external party in the reporting period.3. Cash assets management entrustment(1) Wealth management entrustment√ Applicable □ Inapplicable

Unit: RMB Ten Thousand Yuan

Name

of the

trustee

Whethe

r was

the

related

transacti

on

Producti

on type

Trust

manage

ment

amount

Start

date

Expirati

on date

Remunerati

on

recognition

method

Actual

recover

ed

amount

of the

reportin

g

period

Amount of

provision

for

impairment

loss (if any)

Estimat

ed

earning

s

Actual

gains

and

losses

amount

of the

reportin

g

period

Actu

al

reco

vere

d

situa

tion

of

the

gains

and

losse

s of


44

the

repor

ting

perio

d

Shenzh

en Ping

An

Bank

No

financia

l

products

20,0002015-0

9-01

2016-0

1-12

Break

even

and

keep

interest

0 0 342.53 307.69

Not

reco

vere

d

Shahe

Shenzh

en

Constru

ction

Bank

No

financia

l

products

5,0002015-1

2-02

2016-0

1-07

Break

even

and

keep

interest

0 0 14.79 11.92

Not

reco

vere

d

Shahe

Shenzh

en

Constru

ction

Bank

No

financia

l

products

10,0002015-1

2-02

2016-0

1-12

Break

even

and

keep

interest

0 0 33.7 23.84

Not

reco

vere

d

Shenzh

en

shahe

icbc

No

financia

l

products

15,0002015-7-

1

2016-1-

13

Break

even

and

keep

interest

0 0 350.01 345.95

Not

reco

vere

d

total 50,000 -- -- -- 0 0 741.03 689.4 --

Entrust financial funding

sourcesOwn funds

Fails to take back the

accumulative amount of the

principal and earnings

Cases involving lawsuit (if

applicable)No

Entrust financial examination

and approval the board

announcement date (if any)

2015-8-29

Entrusting the shareholders'

committee for examination

and approval of announcement

Inapplicable


45

date (if any)

Whether there is a future trust

management planYes

(2) Entrustment loans√ Applicable □ Inapplicable


Credit

object

Whether

was

related

transacti

on

Loan rateLoan

amount

Starting

dateEnd date

Actual

recovere

d

amount

of the

reportin

g period

Amount

of the

withdra

wn

impairm

ent

provisio

n (if

any)

Estimate

d

revenues

Actual

gains

and

losses of

the

reportin

g period

Actual

recover

ed

situatio

n of the

gains

and

losses

of the

reportin

g

period

Chuzhou

Tongchu

ang

Construc

tion

Investm

ent Co.,

Ltd.

No 7.28% 5,000

2014年

12月 30

日

2016年

03月 31

日

0 0 370.07 370.07 359.96

Entrust financial funding sources Own funds

Fails to take back the

accumulative amount of the

principal and earnings

Cases involving lawsuit (if

applicable)No

Entrust financial examination and

approval the board

announcement date (if any)

Inapplicable

Entrusting the shareholders'

committee for examination and

approval of announcement date

(if any)

Inapplicable

Whether there is a future trust

management planInapplicable


46

4 Other significant contracts□Applicable √ InapplicableNo such cases in the reporting period.XVIII. Other significant events√ Applicable □ Inapplicable1. Progress of the urban renewal project in the plant area of the Company’s headquartersAccording to the Proposal on the Cooperation Development Plan of the Urban Renewal Projects ofthe Headquarters Factory of Konka Group which be reviewed and approved by the 2nd

Extraordinary General Meeting held on 8 Dec. 2014 by the Company, the Company and the OCTEnterprises Co. set up the Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. by jointcapital, and developed the urban renewal project in the plan area of the Company’s originalheadquarters by regarding Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. as themain body and recently the bidding work of the project planning consulting unit had completedwith the work such as the old factory land leveling was in promotion.2. Progress of the Company’s Kunshan Zhouzhuang ProjectAfter the approval by the 42nd meeting of the 6th Board of Directors, the Company obtained the landuse rights of the land in the south of Quanwang Road, Zhouzhuang County, Kunshan. The projectcovers an area of 366,575.8 m2 for tourism facilities and commercial housing.The Company is planned to develop the land by stages and determine the annual development plansaccording to market condition. Recently the residential projects of Phase I and Phase II had bothcompleted and the majority of the residential sales had finished with the Phase III was still inprogress.

3. Index for significant information disclosed

Announc

ement

No.

Date Title Page on newspaper Link on http://www.cninfo.com.cn

2015-01 2015-3-28Announcement on Receipt of Tax

Rebates

Securities Times B60,

Ta Kung Pao B2

http://www.cninfo.com.cn/finalpage/201

5-03-28/1200753459.PDF

2015-02 2015-4-3

Announcement of Resolutions of

the 15th Session of the 7th Board

of Supervisors


B74, Ta Kung Pao

B16-B18


5-04-03/1200782527.PDF

2015-03 2015-4-3

Forecasting Public Notice on

Routine Related Transaction for

Y2015


B74, Ta Kung Pao

B16-B18


5-04-03/1200782520.PDF

2015-04 2015-4-3Notice on Holding the 2014

Annual General Meeting


B74, Ta Kung Pao

B16-B18


5-04-03/1200782525.PDF

2015-05 2015-4-3 Announcement on Changes of Securities Times B73, http://www.cninfo.com.cn/finalpage/201


47

Partly of the Accounting Policies B74, Ta Kung Pao

B16-B18

5-04-03/1200782538.PDF

2015-06 2015-4-3Abstract of the Annual Report for

Y2014 of Konka Group Co., Ltd.


B74, Ta Kung Pao

B16-B18


5-04-03/1200782521.PDF

2015-07 2015-4-3 2014 Annual Report


B74, Ta Kung Pao

B16-B18


5-04-03/1200782530.PDF

2015-08 2015-4-3


the 71st Session of the 7th Board

of Directors


B74, Ta Kung Pao

B16-B18


5-04-03/1200782524.PDF

2015-09 2015-4-3

Declaration of the Nominator of

the Independent Directors of the

Listed Companies (Di Xiaofeng)

Securities Times

B73,B74,Ta Kung

Pao B16-B18


5-04-03/1200782537.PDF

2015-10 2015-4-3



Listed Companies (Li Luoli)


B74, Ta Kung Pao

B16-B18


5-04-03/1200782536.PDF

2015-11 2015-4-3



Listed Companies (Zhang

Shuhua)


B74, Ta Kung Pao

B16-B18


5-04-03/1200782535.PDF

2015-12 2015-4-3

Declaration of the Candidate of


Listed Companies (Di Xiaofeng)


B74, Ta Kung Pao

B16-B18


5-04-03/1200782534.PDF

2015-13 2015-4-3



Listed Companies (Li Luoli)


B74, Ta Kung Pao

B16-B18


5-04-03/1200782533.PDF

2015-14 2015-4-3



Listed Companies (Zhang

Shuhua)


B74, Ta Kung Pao

B16-B18


5-04-03/1200782532.PDF

2015-15 2015-4-14

Announcement on the

Alternation of the Office Address

of the Company


Ta Kung Pao B7


5-04-14/1200825769.PDF

2015-16 2015-4-16Announcement on the Stock

Trading Abnormal Fluctuations


Ta Kung Pao Ta

Kung Pao B2


5-04-16/1200839341.PDF

2015-17 2015-4-29Abstract of the Report for the 1st

Quarter of 2015 (Chinese)


Ta Kung Pao A20


5-04-29/1200930942.PDF


48

2015-18 2015-4-29Report for the 1st Quarter of 2015

(Chinese)


Ta Kung Pao A20


5-04-29/1200930945.PDF




Ta Kung Pao B1


5-05-08/1200979093.PDF




Ta Kung Pao B3


5-05-13/1201006433.PDF

2015-21 2015-5-15

Announcement on Increasing the

Nominated Candidate of the

Directors and the Supervisors of

the Shareholders


Ta Kung Pao B8


5-05-15/1201015562.PDF

2015-22 2015-5-15

Notice on Holding the 2014


(renewed)


Ta Kung Pao B8


5-05-15/1201015561.PDF

2015-23 2015-5-15Declaration of the Candidate of

the Independent Directors


Ta Kung Pao B8


5-05-15/1201015563.PDF

2015-24 2015-5-15Declaration of the Nominator of

the Independent Directors


Ta Kung Pao B8


5-05-15/1201015564.PDF

2015-25 2015-5-16

Announcement on Increasing the

Nominated Candidate of the

Directors and the Supervisors of

the Shareholders


Ta Kung Pao B11


5-05-16/1201020163.PDF

2015-26 2015-5-16

Notice on Holding the 2014

Annual General Meeting (after

second renewed)


Ta Kung Pao B11


5-05-16/1201020162.PDF

2015-27 2015-5-16


the Independent Directors (Xiao

Zuhe)


Ta Kung Pao B11


5-05-16/1201020165.PDF

2015-28 2015-5-16


the Independent Directors (Xiao

Zuhe)

Securities Times

B37,Ta Kung Pao

B11


5-05-16/1201020164.PDF

2015-29 2015-5-19

Indicative Announcement of the

Shareholding Increase of the

Company’s Shares by the

Controlling Shareholders


Ta Kung Pao 11


5-05-19/1201031184.PDF

2015-5-19Detailed Report on Equity

Changes


Ta Kung Pao 11


5-05-19/1201031185.PDF

2015-30 2015-5-20


the 73rd Session of the 7th Board

of Directors


Ta Kung Pao B2


5-05-20/1201035530.PDF


49

2015-31 2015-5-23

Indicative Announcement of

Holding the 2014 Annual

General Meeting


Ta Kung Pao A23


5-05-23/1201049180.PDF

2015-32 2015-5-27

Announcement on the General

Election of the Employee

Supervisors


Ta Kung Pao B19


5-05-27/1201065868.PDF

2015-33 2015-5-29Indicative Announcement of the

2014 Annual General Meeting


Ta Kung Pao B2


5-05-29/1201078987.PDF

2015-34 2015-5-30Announcement on the Delisting

Owning to Significant Events


Ta Kung Pao B2


5-05-30/1201082236.PDF

2015-35 2015-6-5

Announcement on the

Resumption Owning to

Significant Events


Ta Kung Pao B3


5-06-05/1201106173.PDF

2015-36 2015-6-5


the 1st Session of the 8th Board of

Directors


Ta Kung Pao B3


5-06-05/1201106172.PDF

2015-37 2015-6-5


the 1st Session of the 8th Board of

Supervisors


Ta Kung Pao B3


5-06-05/1201106171.PDF

2015-38 2015-6-12Announcement on the Delisting

Owning to Significant Events


Ta Kung Pao B2


5-06-12/1201139697.PDF




Ta Kung Pao B2


5-06-12/1201139696.PDF

2015-40 2015-6-19


the 2nd Session of the 8th Board of

Directors


Ta Kung Pao B2


5-06-19/1201168695.PDF

2015-41 2015-6-19Announcement on the Progress

of the Significant Events


Ta Kung Pao B2


5-06-19/1201168694.PDF




Ta Kung Pao B9


5-06-27/1201200899.PDF




Ta Kung Pao B3


5-07-04/1201235889.PDF

2015-44 2015-7-11

Announcement on the Execution

of the 2014 Dividend Payout

Proposal


Ta Kung Pao A23


5-07-11/1201274263.PDF




Ta Kung Pao A23


5-07-11/1201274266.PDF

2015-46 2015-7-11 Announcement on the Securities Times B64, http://www.cninfo.com.cn/finalpage/201


50

Maintenance of the stability of

the Company’s Share Price

Ta Kung Pao A23 5-07-11/1201274265.PDF

2015-47 2015-7-11

Announcement on the 2015

Semi-annual Performance

Prediction


Ta Kung Pao A23


5-07-11/1201274264.PDF




Ta Kung Pao B3


5-07-18/1201309646.PDF




Ta Kung Pao B11


5-07-25/1201342320.PDF

2015-50 2015-7-29

Announcement on the Prediction

of the Routine Related

Transactions


Ta Kung Pao A4


5-07-29/1201358396.PDF

2015-51 2015-7-29


the 3rd Session of the 8th Board of

Directors


Ta Kung Pao A4


5-07-29/1201358397.PDF




Ta Kung Pao B11


5-08-01/1201374364.PDF




Ta Kung Pao B11


5-08-08/1201406469.PDF



Securities Times

B176, Ta Kung Pao

B5


5-08-15/1201438099.PDF



Securities Times

B176, Ta Kung Pao

B5


5-08-22/1201471918.PDF

2015-56 2015-8-29Announcement on the 2015

Semi-annual Report

Securities Times

B176, Ta Kung Pao

B5


5-08-29/1201518361.PDF

2015-57 2015-8-29


the 4th Session of the 8th Board of

Directors

Securities Times

B176, Ta Kung Pao

B5


5-08-29/1201518357.PDF

2015-58 2015-8-29Notice of Holding the 2015 1st

Extraordinary General Meeting

Securities Times

B176, Ta Kung Pao

B5


5-08-29/1201518363.PDF

2015-59 2015-8-29Announcement on Purchasing the

Bank Financial Products

Securities Times

B176, Ta Kung Pao

B5


5-08-29/1201518364.PDF


of the Significant EventsSecurities Times

B176, Ta Kung Pao


5-08-29/1201518365.PDF


51

B5

2015-61 2015-8-29Abstract of the 2015 Semi-annual

Report

Securities Times

B176, Ta Kung Pao

B5


5-08-29/1201518354.PDF

2015-62 2015-9-1

Announcement on the Specific

Proposal on the Purchasing of

Liability Insurance


5-09-02/1201537360.PDF




Ta Kung Pao B12


5-09-09/1201567403.PDF

2015-64 2015-9-9

Indicative Announcement on

Holding the 2015 1st



Ta Kung Pao B12


5-09-09/1201567402.PDF

2015-65 2015-9-11



Directors


Ta Kung Pao B9


5-09-11/1201578927.PDF

2015-66 2015-9-11


the 3rd Session of the 8th Board of

Supervisors


Ta Kung Pao B9


5-09-11/1201578926.PDF

2015-67 2015-9-11Notice of Holding the 2nd



Ta Kung Pao B9


5-09-11/1201578924.PDF

2015-68 2015-9-11

Announcement on the

Termination of the Planning of

the Significant Events and the

Resumption of Trading


Ta Kung Pao B9


5-09-11/1201578925.PDF

2015-69 2015-9-11

Announcement on the

Engagement of the Acting

President


Ta Kung Pao B9


5-09-11/1201578973.PDF

2015-70 2015-9-16


the 2015 1st Extraordinary

General Meeting


Ta Kung Pao B18


5-09-16/1201599161.PDF




Ta Kung Pao B18


5-09-16/1201599163.PDF

2015-72 2015-9-17

Announcement on the Execution

of the 2015 Semi-annual

Accumulation Fund Turning to

increase subscribed


Ta Kung Pao B18


5-09-17/1201603859.PDF

2015-73 2015-9-17Announcement on the Signing of

the Cooperation Agreement


Ta Kung Pao B18


5-09-17/1201603639.PDF

2015-74 2015-9-17 Announcement on the Stock Securities Times B29, http://www.cninfo.com.cn/finalpage/201


52

Trading Abnormal Fluctuations Ta Kung Pao B18 5-09-17/1201603640.PDF




Ta Kung Pao B2


5-09-18/1201608234.PDF




Ta Kung Pao B18


5-09-22/1201619942.PDF




Ta Kung Pao B11


5-09-23/1201624564.PDF

2015-78 2015-9-26

Announcement on the

Resignation of the Director and

Vice President of the Company


Ta Kung Pao B4


5-09-26/1201640536.PDF

2015-79 2015-9-29

Announcement on the

Resignation of the Independent

Directors of the Company


Ta Kung Pao B2


5-09-29/1201649682.PDF

2015-80 2015-9-29

Announcement on the

Resignation of the Supervisors of

the Company


Ta Kung Pao B2


5-09-29/1201649683.PDF

2015-81 2015-9-29

Announcement on the

Resignation of the President of

the Company


Ta Kung Pao B2


5-09-29/1201649681.PDF

2015-82 2015-9-30

Announcement on the Receiving

of the Notice of the Deduction of

the Promotion Subsidies Funds of

the Central High-efficient

Energy-saving Home Appliances

by Finance Commission of

Shenzhen Municipality


Ta Kung Pao B9


5-09-30/1201655523.PDF

2015-83 2015-10-9Announcement on Receipt of Tax

Rebates


Ta Kung Pao B7


5-10-09/1201668680.PDF

2015-84 2015-10-9Notice of Holding the 2015 2nd



Ta Kung Pao B7


5-10-09/1201668679.PDF

2015-85 2015-10-15

Announcement on the 2015 First

Three Quarter Performance

Prediction


Ta Kung Pao B1


5-10-15/1201694037.PDF

2015-86 2015-10-16


the 2015 2nd Extraordinary

General Meeting


Ta Kung Pao B4


5-10-16/1201699921.PDF

2015-87 2015-10-21



Directors


Ta Kung Pao B14


5-10-21/1201709720.PDF


53

2015-88 2015-10-21



Supervisors


Ta Kung Pao B14


5-10-21/1201709718.PDF

2015-89 2015-10-21Notice of Holding the 2015 3rd



Ta Kung Pao B14


5-10-21/1201709719.PDF

2015-90 2015-10-21


Independent Directors (Sun

Shengdian)


Ta Kung Pao B14


5-10-21/1201709721.PDF

2015-91 2015-10-21


Independent Directors (Sun

Shengdian)


Ta Kung Pao B14


5-10-21/1201709722.PDF

2015-92 2015-10-29Report of the Report for the 3rd

Quarter of 2015

Securities Times

B109, Ta Kung Pao

B11


5-10-29/1201734046.PDF

2015-93 2015-10-29Abstract for the 3rd Quarter of

2015

Securities Times

B109, Ta Kung Pao

B11


5-10-29/1201734044.PDF

2015-94 2015-10-29

Announcement on the Relevant

Events of the Energy-saving

Subsidies Funds

Securities Times

B109, Ta Kung Pao

B11


5-10-29/1201734049.PDF

2015-95 2015-10-30

Indicative Announcement on

Holding the 2015 3rd



Ta Kung Pao B13


5-10-30/1201740102.PDF

2015-96 2015-11-4

Announcement on the Planning

of Listing and Transfer the

Equities of Yishijie Company


Ta Kung Pao A16


5-11-04/1201752356.PDF

2015-97 2015-11-6


the 2015 3rd Extraordinary

General Meeting


Ta Kung Pao B1


5-11-06/1201755365.PDF

2015-98 2015-11-14

Announcement on the Abandon

of the Execution of the

Preemption of the Transfer of the

Equities of Shenzhen Konka

Yishijie Commercial Display

Co., Ltd.


Ta Kung Pao B1


5-11-14/1201771447.PDF

2015-99 2015-11-14



Directors


Ta Kung Pao B1


5-11-14/1201771446.PDF

2015-100 2015-11-24 Announcement on the Stock Securities Times B32, http://www.cninfo.com.cn/finalpage/201


54

Trading Abnormal Fluctuations Ta Kung Pao B7 5-11-24/1201784917.PDF

2015-101 2015-12-15

Announcement on the

Resignation of the Vice President

of the Company


Ta Kung Pao B5


5-12-15/1201832626.PDF

XIX. Significant events of subsidiaries□ √ Applicable □ InapplicableIn 2015, the company intends to transfer listed holdings subsidiary commercial city konka YishijieCommercial Display co., LTD., and on November 4, 2015, revealed on the proposed listingannouncement of company equity transfer one horizon, the index forhttp://www.cninfo.com.cn/finalpage/2015-11-04/1201752356.PDF.XX. Social responsibilities√ Applicable □ InapplicableThe Company insists the principle of health, stability and sustainable development to benefitshareholders and employees and satisfy customers. In pursuit of economic profits and protection ofshareholders’ profits, the Company is active in protecting legal rights of debtors and employees,treating suppliers, customers and consumers in good faith, and participating in environmentalprotection and community establishment for harmonious development of the Company and society.(I) To protect rights of shareholders and creditors1. The Company protects rights of shareholders(1) The Company insists protection of rights for all shareholders, especially equal status and legalrights for medium and small shareholders, and make insurance of rights to be informed,participation and vote.(2) The Company would perform all obligations of information disclosure to ensure timely, accurateand complete information and strictly execute confidential system of registrar and insiderinformation to guarantee justice.(3) The Company pays attention to repay to shareholders, and insists mutual development withinvestors. In the previous three years, the Company shares dividends with all shareholders. TheCompany strict executes dividend policies regulated in Articles of Association. All cash dividendscomply with regulations in Articles of Association and requirements in shareholders’ conference.2. The Company protects rights of creditorsIn full consideration of legal rights of creditors, the Company complies with strict business rules ofcredit cooperation to guarantee legal rights of creditors. No damages upon rights of creditorshappened.(II) The Company performs responsibilities to suppliers and customers1. It is devoted to improve customer service quality.The Company is insisting philosophy of customer orientation to strengthen customer service


55

management, service consciousness for employees, service levels and to protect rights forcustomers. Through customer service hot-line, field visit and follow-up service, the Company hasset a good corporate image for customers.2. Be honest to suppliersFollowing the principle of integrity and mutually beneficial cooperation, the Company keeps goodcooperative relations with suppliers at each level. The corporate principle is open, fair and impartialto standardize procurement, protect suppliers’ legal rights and lay solid foundation for furthercooperation.(III) Be enthusiastic to social and public welfare undertakingsBased on the principle of appreciating and repaying the society, the Company has participated in allkinds of activities for public welfare, cooperated with society, undertaken social responsibilitiesactively and promoted harmonious development between enterprise and society.(IV) Be responsible for employeesThe Company insists the principle of people orientation to improve working environment, promoteoccupational skills, provide opportunity and platform for development and growth and encourageself upgradation and realization for employees. Mutual improvement for employees and enterprisecould be achieved.1. Be honest and law-abiding to protect legal rights for employeesThe Company would strictly comply with laws and regulations in Labor Law and Labor ContractLaw to sign labor contract with employees with fair treatment in employment, payment, promotion,training, demission and retirement. Also, the Company would pay all kinds of insurances andhousing fund for employees. Regular physical examination would be organized for each year. Anyproblems found would require re-examination and consultation from a doctor.The Company would improve living quality; enhance cohesive force and sense of belongingsthrough a series of safeguard measures.2. To protect occupational health for employeesThe Company would establish and perfect training, safety assessment by security system toguarantee the safety and occupational health for employees. On the other hand, by promotion of theimportance of safety, safety awareness would be rooted in the heart to make all employees abide bysafety standards and fully play subjective initiative in protecting self occupational safety andproduction safety.3. To promote occupational skills by diversified professional trainingThe Company has always paid great attention on diversified training for employees. On the onehand, the Company would be meticulous in training of regular business and occupational skills andcarry out all requirements positively to improve professional levels by normal training management.On the other hand, the Company would establish methods of self training platform, training


56

instructor, theme training and lectures to provide colorful training activities. Besides the work,professional and comprehensive quality would be fully promoted.(V) Be responsible for environmentThe Company concerns about environmental changes and close relationships with environment bycreating low carbon economy in technical innovation, from green manufacturing, green products togreen industry circular economy. The Company would provide efforts in protecting globalecological environment.In the new year, the Company would undertake all social responsibilities by improving strategicmanagement, sustainable development and enterprise economic efficiency. It would retribute allshareholders and would protect legal rights for creditors and employees. To be honest to suppliersand customers, the Company would serve local economic development and participate in socialpublic welfare activities and environment protection. It would undertake all responsibilities in manyfields and make attributions to social, economic, and environmental sustainable development for asocialism harmonious society.Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated bythe environmental protection authorities of the country?□ Yes √ No □ InapplicableXXI. Corporation bondsWhether existing corporation bonds public issued and listed in Stock Exchange and maturity ormaturity but not fully paid on the approval report date of annual report□ Yes √ No □ Inapplicable


57

Section VI. Change in Shares & Shareholders

I. Changes in sharesUnit: share

Before the change Increase/decrease (+/-) After the change

AmountPropor

tion

Newly

issue

share

Bonus

shares

Capitalizati

on of

public

reserves

Other Subtotal AmountPropor

tion

I. Shares

subject to

trading

moratorium

198,381,940 16.48% 198,381,940 169,080 198,551,020 396,932,960 16.48%

2. Shares held

by

state-owned

corporation

198,381,940 16.48% 198,381,940 198,381,940 396,763,880 16.48%

3. Other

domestic

shareholding

169,080 169,080 169,080 0.00%

Shares held

by the

domestic

individuals

169,080 169,080 169,080 0.00%

II. Shares not

subject to

trading

moratorium

1,005,590,764 83.52% 1,005,590,764 -169,080 1,005,421,6842,011,012,44

883.52%

1. RMB

ordinary

shares

599,914,960 49.83% 599,914,960 599,914,9601,199,829,92

049.83%

2.

Domestically

listed foreign

shares

405,675,804 33.69% 405,675,804 -169,080 405,506,724 811,182,528 33.69%

III. Total

shares1,203,972,704

100.00

%1,203,972,704 0 1,203,972,704

2,407,945,40

8100.00%

Reason for the change in shares


58

√ Applicable □ Inapplicable1. Mr. Zhang Guanghui had officially resigned the position as Supervisor on 5 Nov. 2015 with theshareholding of the Company of 169,080 shares. Up to 31 Dec. 2015, the 169,080 shares held byhim were the shares subject to trading moratorium.2. According to the resolutions of the 2015 1st Extraordinary General Meeting, the Companyexecuted the proposal on the increase of the transferring of every 10 shares to 10 shares to thewhole shareholders by the capital reserves in Sep. 2015 and after which, the total share capital ofthe Company doubled with the amount increased to 2,407,945,408 shares.Approval of the change in shares√ Applicable □ InapplicableOn 15 Sep. 2015, the 2015 1st Extraordinary General Meeting of the Company reviewed andapproved the Proposal on 2015 Semi-annual Profits Distribution, which agreed to base on the totalshare capital of 1,203,972,704 shares to execute the turning capital reserve into share capital thatincrease the transferring by every 10 shares to 10 shares for the whole shareholders with the totaltransferred amount of 1,203,972,704 shares as well as the total share capital of the Companyincreased to 2,407,945,408 after which.Reason for the change in shares√ Applicable □ InapplicableThe changes in shares had completed transfer ownershipEffects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable tocommon shareholders of the Company and other financial indexes over the last year and last period√ Applicable □ InapplicableThe influences of the changes in shares were as follows:1. The 2014 basic EPS changed from RMB0.0437 to RMB0.02185;2. The 2014 diluted EPS changes from RMB0.0437 to RMB0.02185;3. The 2014 net assets of each share attributed to the common shareholders of the Companychanged from RMB3.40828 to RMB1.70414.Other contents that the Company considered necessary or were required by the securities regulatoryauthorities to disclose□ Applicable √ Inapplicable2. Changes in restricted shares√ Applicable □ Inapplicable

Unit: shareName

of the

shareho

lders

Number

of the

restricted

shares at

Number of

the

relieved

restricted

Number of

the

increased

restricted

Number

of the

restricted

shares at

Restricted reason

Relieved

restricted

date


59

the

period-b

egin

shares of

the

reporting

period

shares of

the

reporting

period

the

period-en

d

Zhang

Guangh

ui

0 0 169,080 169,080

On 5 Nov. 2015, Mr. Zhang Guanghui resigned

the position as the Supervisor owning to

personal reasons and according to the

regulations of the relevant laws and regulations,

within the 6 months after the resignation, the

holding share of the Company were the shares

subject to trading moratorium.

On 6 May

2016, the

relieved

restricted

shares was

of 169,080

shares

Total 0 0 169,080 169,080 -- --

Notes: on 2 Mar. 2016, the 396,763,880 shares which subjected to trading moratorium held by themajor shareholder-OCT Enterprises Co. of the Company was formally relieved the restriction withthe details please refer to http://www.cninfo.com.cn/finalpage/2016-02-27/1202003527.PDF.II. Issuance and listing of securities1. Issuance of securities (excluding preferred stock) in reporting period□Applicable √ Inapplicable2. Explanation on changes in share capital & the structure of shareholders, the structure ofassets and liabilities√ Applicable □ Inapplicable1. Explanation of the changes of the total share capital of the Company: according to the resolutionsof the 2015 1st Extraordinary General Meeting, the Company executed the turning capital reserveinto share capital that increase the transferring by every 10 shares to 10 shares for the wholeshareholders in Sep. 2015 with the total transferred amount of 1,203,972,704 shares as well as thetotal share capital of the Company increased to 2,407,945,408 after which.2. Explanation of the changes of the shareholders structure of the Company: the total shareholdingproportion of the Company’s controlling shareholder-OCT Enterprises Co. and its wholly ownedsubsidiaries arise from 21.75% to 29.99%.3. Existent shares held by internal staffs of the Company□Applicable √ InapplicableIII. Particulars about the shareholders and actual controller1. Total number of shareholders and their shareholding

Unit: shareTotal number

of

shareholders

at the

167,819

Total number

of shareholders

on the 30th

trading day

162,563

Total number of

preferred

stockholder with

vote right

0

Total number

of preferred

stockholder

with vote right

0


60

reporting

period

before the

disclosure date

of the annual

report

restored (if any)

(see Notes 8)

restored on the

30th trading

day before the

disclosure date

of the annual

report (if

any) (see

Notes 8)

Shareholding of shareholders holding more than 5% shares

Name of shareholder

Nature

of

sharehol

ders

Holding

percenta

ge

Number of

shareholding

at the end of

the reporting

period

Increase and

decrease of

shares

during

reporting

period

Number of

shares held

subject to

trading

moratorium

Number of

shares held

not subject

to trading

moratorium

Pledged or

frozen

shares

Statu

s of

share

s

A

m

ou

nt

OCT Enterprises Co.

State-ownedcorporation

21.75% 523,746,932 261,873,466 396,763,880 126,983,052

Pled

ged0

Froz

en0

CITIC Securities

Brokerage (Hong Kong)

Co., Ltd.

Foreign

corporat

ion

7.48% 180,001,110 180,001,110 0 180,001,110

Pled

ged0

Froz

en0

Guoyuan Securities

Broker (HK) Co., Ltd.

Foreign

corporat

ion

2.48% 59,827,170 45,782,270 0 59,827,170

Pled

ged0

Froz

en0

Gaoling Fund, L.P.

Foreign

corporat

ion

2.19% 52,801,250 26,400,625 0 52,801,250

Pled

ged0

Froz

en0

Holy Time Group Limited

Foreign

corporat

ion

2.18% 52,580,354 6,046,739 0 52,580,354

Pled

ged0

Froz

en0

Nam Ngai

Foreign

individu

al

0.97% 23,381,040 11,690,520 0 23,381,040

Pled

ged0

Froz

en0


61

CMS (HK) Co., Ltd.

State-ownedcorporation

0.94% 22,726,804 12,846,658 0 22,726,804

Pled

ged0

Froz

en0

CSI Capital Management

Limited

Foreign

corporat

ion

0.85% 20,550,928 20,550,928 0 20,550,928

Pled

ged0

Froz

en0

BOCI Securities Limited

Foreign

corporat

ion

0.78% 18,883,092 17,609,602 0 18,883,092

Pled

ged0

Froz

en0

Credit Suisse AG Hong

Kong Branch

Foreign

corporat

ion

0.33% 7,939,174 7,939,174 0 7,939,174

Pled

ged0

Froz

en0

Strategic investor or general

corporation becoming a top ten

shareholder due to placing of new

shares (if any) (see Notes 3)

N/A

Explanation on associated relationship

or/and persons acting in concert

among the above-mentioned

shareholders:

Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first

majority shareholder OCT Enterprises Co., Ltd., respectively held the common shares

of the Company of 180,001,110 shares and 18,360,000 shares through CITIC Securities

Brokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, Jialong

Investment Limited and OCT Enterprises Co. are parties acting in concert. The

Company does not know whether the other shareholders are related parties and whether

they are acting-in-concert parties.

Shareholdings of the top ten common shareholders not subject to trading moratorium

Name of shareholdersAmount of listed and circulated shares at the end

of the year

Type of shares

Type Amount

CITIC Securities Brokerage (Hong

Kong) Co., Ltd.180,001,110

Domestically

listed foreign

shares

180,001,110

OCT Enterprises Co. 126,983,052RMB ordinary

share126,983,052

Guoyuan Securities Broker (HK)

Co., Ltd.59,827,170

Domestically

listed foreign

shares

59,827,170

Gaoling Fund, L.P. 52,801,250 Domestically 52,801,250


62

listed foreign

shares

Holy Time Group Limited 52,580,354

Domestically

listed foreign

shares

52,580,354

Nam Ngai 23,381,040

Domestically

listed foreign

shares

23,381,040

CMS (HK) Co., Ltd. 22,726,804

Domestically

listed foreign

shares

22,726,804

CSI Capital Management Limited 20,550,928

Domestically

listed foreign

shares

20,550,928

BOCI Securities Limited 18,883,092

Domestically

listed foreign

shares

18,883,092

Credit Suisse Ag Hong Kong Branch 7,939,174

Domestically

listed foreign

shares

7,939,174

Explanation on associated

relationship or/and persons acting in

concert among the top ten tradable

shareholders and between the top ten

tradable shareholders and the top ten

shareholders

Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority

shareholder OCT Enterprises Co., Ltd., respectively held the common shares of the

Company of 180,001,110 shares and 18,360,000 shares through CITIC Securities

Brokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, Jialong

Investment Limited and OCT Enterprises Co. are parties acting in concert. The Company

does not know whether the other shareholders are related parties and whether they are

acting-in-concert parties.

Explanation on the Top 10

shareholders participating in the

margin trading business (if any) (see

notes 4)

N/A

Did any top ten shareholder of common share and the top ten shareholders not subject to tradingmoratorium of the Company carry out an agreed buy-back in the reporting period?□ Yes √ NoTop ten shareholder of common share and the top ten shareholders not subject to tradingmoratorium of the Company did carry out an agreed buy-back in the reporting period2. Particulars about the controlling shareholderNature of controlling shareholder: central state-owned holdingType of controlling shareholder: legal person

Name of Legal Date of Organization Business scope


63

controlling

shareholder

representative

/ company

principal

establishment code

OCT

ENTERPRISE

S CO.

Duan

Xiannian11 Nov. 1985 19034617-5

Export of textile, light industrial products, etc; import of

self-used goods in Shenzhen, mechanical equipment, light

industrial products, etc. as approved by the relevant

authorities of Shenzhen (under Government Document

JMB [92] WJMGTSZZ No. A19024); compensation trade;

investment in industry, tourism, real estate, commerce &

trade and financial insurance.

Shares held by the

controlling shareholder in

other listed companies by

holding or shareholding

during the reporting period

OCT ENTERPRISES CO. held 57.66% equity of Shenzhen Overseas Chinese Town Co., Ltd. (a

company listed on the main board of Shenzhen Stock Exchange, SZ. 000069), meanwhile, Shenzhen

Overseas Chinese Town Co., Ltd. indirectly held 66.66% equity of OCT (Asia) Holdings Ltd. (a

company listed on the main board of Hong Kong Stock Exchange, 3366.HK) and OCT

ENTERPRISES CO. held 4.08% equity of CITS (a company listed on the main board of Shanghai

Stock Exchange, 601888.SH).

Changes in controlling shareholders during the reporting period□ Applicable √ InapplicableThe controlling shareholder did not change during the reporting period.3. Particulars about the actual controllerNature of actual controller: central state-owned assets management institutionsType of actual controller: legal person

Name of actual controller

Legal

representative /

head of unit

Date of

foundationOrganization code Business scope

State-owned Assets

Supervision and

Administration Commission

of the State Council

Xiao Yaqing Inapplicable Inapplicable Inapplicable

Shares held by the actual controlling shareholder in other listed companies by holding or

shareholding during the reporting periodInapplicable

Change in actual controller in the reporting period□ Applicable √ InapplicableNo change in actual controller of the Company in the reporting period.Diagram of ownership and control relationship between the Company and its actual controller:


64

The actual controller controls the Company by the means of trust or other means of assetsmanagement□ Applicable √ Inapplicable4. Other Corporate Shareholder with a shareholding percentage over 10%□Applicable √ Inapplicable5. Particulars about restriction of reducing holding-shares of controlling shareholders, actualcontroller, restructuring parties and other commitment entities□Applicable √ Inapplicable

SASAC of the State Council

OCT Enterprises Co. and its wholly owned subsidiaries

Konka Group Co., Ltd.


65

Section VII. Preference Shares

□Applicable √ InapplicableThere was no preferred stock during reporting period.


66

Section VIII. Directors, Supervisors, Senior Management Staff &

Employees

I. Changes in shareholding of directors, supervisors and senior management staff

Name Title

Incu

mbe

nt or

not

G

en

de

r

A

ge

Starting date of

office term

Closing date of

office term

Share

s

held

at the

begin

ning

the

repor

ting

perio

d

Incre

ase

of

share

s in

this

repor

ting

perio

d

(shar

e)

Decrea

se of

shares

in this

reporti

ng

period

(share)

Other

increa

sed/d

ecreas

ed

chang

e

(share

)

Shar

es

held

at the

end

of

the

repor

ting

perio

d

(shar

e)

Liu

Fengxi

Directo

rCurr

ent

M

al

e

44 28 May 2015 28 May 2018 0 0 0 0 0

Liu

Fengxi

Board

Chairm

an

Curr

ent

M

al

e

44 18 Jun. 2015 28 May 2018 0 0 0 0 0

Liu

Fengxi

Acting

Preside

nt

Curr

ent

M

al

e

44 10 Sep. 2015 4 Apr. 2017 0 0 0 0 0

Jin

Qingju

n

Directo

rCurr

ent

M

al

e

59 28 May 2015 28 May 2018 0 0 0 0 0

Chen

Yuehua

Directo

rCurr

ent

M

al

e

53 28 May 2015 28 May 2018 0 0 0 0 0

He

Haibin

Directo

rCurr

ent

M

al

e

41 5 Nov. 2015 28 May 2018 0 0 0 0 0

Sun

Shengd

ian

Indepe

ndent

Directo

Curr

ent

M

al

e

61 5 Nov. 2015 28 May 2018 0 0 0 0 0


67

r

Xiao

Zuhe

Indepe

ndent

Directo

r

Curr

ent

M

al

e

50 28 May 2015 28 May 2018 0 0 0 0 0

Zhang

Shuhua

Indepe

ndent

Directo

r

Curr

ent

M

al

e

51 28 May 2015 28 May 2018 0 0 0 0 0

Hao

Gang

Supervi

sorCurr

ent

M

al

e

42 28 May 2015 28 May 2018 0 0 0 0 0

Hao

Gang

Supervi

soryCurr

ent

M

al

e

42 4 Jun. 2015 28 May 2018 0 0 0 0 0

Wang

Youlai

Supervi

sorCurr

ent

M

al

e

55 5 Nov. 2015 28 May 2018 0 0 0 0 0

Li Jun

Employ

ee

Supervi

sor

Curr

ent

M

al

e

45 25 May 2015 25 May 2018 0 0 0 0 0

Xiao

Qing

Executi

ve Vice

Preside

nt

Curr

ent

M

al

e

46 27Aug. 2015 4 Apr. 2017 0 0 0 0 0

Huang

Zhongti

an

Vice

Preside

nt

Curr

ent

M

al

e

55 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0

He

Jianjun

Vice

Preside

nt

Curr

ent

M

al

e

46 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0

Lin

Gaike

Vice

Preside

nt

Curr

ent

M

al

e

44 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0

Li

Hongta

o

Vice

Preside

nt

Curr

ent

M

al

e

48 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0

Lin

Hongfa

n

Vice

Preside

nt

Curr

ent

M

al

e

45 18 Jun. 2015 4 Apr. 2017 0 0 0 0 0


68

Wu

Yongju

n

Board

Secreta

ry

Curr

ent

M

al

e

41 27Aug. 2015 4 Apr. 2017 0 0 0 0 0

Chen

Yuehua

Board

Chairm

anLeft

M

al

e

53 8 Dec. 2014 28 May 2015 0 0 0 0 0

Su

Zheng

Directo

rLeft

M

al

e

59 17 Dec. 2010 28 May 2015 0 0 0 0 0

Wang

Xiaowe

n

Directo

rLeft

Fe

m

al

e

46 17 Dec. 2010 28 May 2015 0 0 0 0 0

He

Haibin

Directo

rLeft

M

al

e

41 17 Dec. 2010 28 May 2015 0 0 0 0 0

Feng

Yutao

Indepe

ndent

Directo

r

Left

M

al

e

48 17 Dec. 2010 28 May 2015 0 0 0 0 0

Yang

Haiying

Indepe

ndent

Directo

r

Left

Fe

m

al

e

48 17 Dec. 2010 28 May 2015 0 0 0 0 0

Zhang

Zhong

Indepe

ndent

Directo

r

Left

M

al

e

47 17 Dec. 2010 28 May 2015 0 0 0 0 0

Dong

Yaping

Supervi

soryLeft

M

al

e

62 17 Dec. 2010 28 May 2015 0 0 0 0 0

Liu

Yong

Employ

ee

Supervi

sor

Left

M

al

e

44 17 Dec. 2010 28 May 2015 0 0 0 0 0

Liu

Fengxi

Preside

ntLeft

M

al

e

44 4 Apr. 2014 18 Jun. 2015 0 0 0 0 0

Xiao

Qing

Board

Secreta

ryLeft

M

al

e

46 4 Apr. 2014 27 Aug. 2015 0 0 0 0 0


69

Huang

Zhiqian

g

CFO Left

M

al

e

50 26 May 2014 18 Jun. 2015 0 0 0 0 0

Song

Zhenhu

a

Directo

rLeft

M

al

e

34 28 May 2015 25 Sep. 2015 0 0 0 0 0

Song

Zhenhu

a

Vice

Preside

ntLeft

M

al

e

34 18 Jun. 2015 25 Sep. 2015 0 0 0 0 0

Zhang

Min

Indepe

ndent

Directo

r

Left

M

al

e

49 28 May 2015 5 Nov. 2015 0 0 0 0 0

Zhang

Guangh

ui

Supervi

sorLeft

M

al

e

52 28 May 2015 5 Nov. 2015 0169,

0800 0

169,

080

Liu

Dan

Preside

ntLeft

M

al

e

44 18 Jun. 2015 28 Sep. 2015 0 0 0 0 0

Wan

Libo

Vice

Preside

ntLeft

M

al

e

53 19 May 2015 14 Dec. 2015 0 0 0 0 0

II. Particulars about changes of Directors, Supervisors and Senior ExecutivesName Position Type Date Reason

Liu Fengxi Director Elected 28 May 2015Elected as the Director through the Annual

General Meeting

Liu FengxiBoard

ChairmanElected 16 Jun. 2015

Elected as the Board Chairman through the


Jin Qingjun Director Elected 28 May 2015Elected as the Director through the Annual

General Meeting

Chen Yuehua Director Elected 28 May 2015Elected as the Director through the Annual

General Meeting

He Haibin Director Elected 5 Nov. 2015Elected as the Director through the Annual

General Meeting

Sun ShengdianIndependent

DirectorElected 5 Nov. 2015

Elected as the Independent Director through the


Xiao ZuheIndependent

DirectorElected 28 May 2015



Zhang ShuhuaIndependent





70

Hao Gang Supervisor Elected 28 May 2015Elected as the Supervisor through the Annual

General Meeting

Hao Gang Supervisory Elected 4 Jun. 2015Elected as the Supervisory through the Annual

General Meeting

Wang Youlai Supervisor Elected 5 Nov. 2015Elected as the Supervisor through the Annual

General Meeting

Li JunEmployee

SupervisorElected 25 May 2015

Elected as the Employee Supervisor through the

Employee’s Assembly

Liu FengxiActing

PresidentEngaged 10 Sep. 2015

Engaged by the decision from the Board of

Directors

Xiao QingExecutive Vice

PresidentEngaged 27 Aug. 2015


Directors

Lin Hongfan Vice President Engaged 18 Jun. 2015Engaged by the decision from the Board of

Directors

Wu YongjunBoard

SecretaryEngaged 27 Aug. 2015


Directors

Chen YuehuaBoard

Chairman

Left as term

expired28 May 2015

The service term of the Board of Directors was

expired

Su Zheng DirectorLeft as term

expired28 May 2015


expired

Wang Xiaowen DirectorLeft as term

expired28 May 2015


expired

He Haibin DirectorLeft as term

expired28 May 2015


expired

Feng YutaoIndependent

Director

Left as term

expired28 May 2015


expired

Yang HaiyingIndependent

Director

Left as term

expired28 May 2015


expired

Zhang ZhongIndependent

Director

Left as term

expired28 May 2015


expired

Dong Yaping SupervisoryLeft as term

expired28 May 2015

The service term of the Board of Supervisors

was expired

Hao Gang SupervisorLeft as term

expired28 May 2015


was expired

Liu YongEmployee

Supervisor

Left as term

expired28 May 2015


was expired

Huang

ZhiqiangCFO Left 18 Jun. 2015 Resigned owning to working reasons


71

Liu Fengxi President Left 18 Jun. 2015 Resigned owning to working reasons

Xiao QingBoard

SecretaryLeft 27 Aug. 2015 Resigned owning to working reasons

Song Zhenhua Director Elected 28 May 2015Elected as the Director through the Annual

General Meeting

Song Zhenhua Vice President Engaged 18 Jun. 2015Engaged by the decision from the Board of

Directors

Song ZhenhuaDirector and

Vice PresidentLeft 25 Sep. 2015 Resigned owning to the personal reasons

Zhang MinIndependent




Zhang MinBoard

ChairmanElected 4 Jun. 2015

Elected as the Chairman of the Board of

Directors through the board meeting

Zhang MinBoard

ChairmanLeft 18 Jun. 2015 Resigned owning to the personal reasons

Zhang MinIndependent

DirectorLeft 5 Nov. 2015 Resigned owning to the personal reasons

Zhang

GuanghuiSupervisor Elected 28 May 2015

Elected as the Supervisor through the Annual

General Meeting

Zhang

GuanghuiSupervisor Left 5 Nov. 2015 Resigned owning to the personal reasons

Liu Dan President Engaged 18 Jun. 2015Engaged by the decision from the Board of

Directors

Liu Dan President Left 28 Sep. 2015 Resigned owning to the personal reasons

Wan Libo Vice President Engaged 19 May 2015Engaged by the decision from the Board of

Directors

Wan Libo Vice President Left 14 Dec. 2015 Resigned owning to the personal reasons

III. Post-holding situationProfessional background, main working experience and the main responsibilities of currentdirectors, supervisors and senior management staff of the CompanyMain working experience of current directors, supervisors and senior management staffs over thepast five years1. DirectorsLiu Fengxi, Board Chairman and Acting President, he is male, Han nationality, born in 1972,postgraduate. He was once marketing GM for the multi-media division of Konka Group, AssistantGM and then Vice GM of Shenzhen Konka Telecommunications Technology Co., Ltd., Chief of theOperation Management Center of Konka Group, Assistant to President and Vice President of Konka


72

Group, etc. And now he is acting as the Board Chairman and Acting President of Konka Group.Jin Qingjun, is a Director and male, who born in 1957 with the master of laws. Former lawyers inHong Kong-based law firm and Britain-based law firm, lawyer of JANG SHINN Law Office andexecutive partner of Shu Jin Law Firm, and at the same time, worked as the adjunct professor ofChina University of Political Science and Law, and the adjunct professor of the Lawyer College ofthe Renmin University of China, and graduate student co-tutor in the Law School of TsinghuaUniversity. Former arbitrator of the Shenzhen Court of International Arbitration, ShanghaiInternational Arbitration Center, Arbitration Foundation of Southern Africa, Former mediator ofShenzhen Securities and Futures Dispute Resolution Center, legal counsel of US Court ofAppeals-Washington DC. Presently the senior partner of Beijing King & Wood Mallesons LawFirm, independent director of Guotai Jun’an Securities, Gemdale Group Co., Ltd. (a company listedin Shanghai Stock Exchange), Tianjin Masterwork Machinery Co., Ltd. (a company listed inShenzhen Stock Exchange), Invesco Great Wall Fund Management Co., Ltd. and New China AssetManagement Co., Ltd., director of Konka Group.Chen Yuehua, Director, male, Han nationality, born in 1963. He is Master of BusinessAdministration, Senior Engineer, Former senior engineer of Konka Group TechnologicalDevelopment Center; former general manager of Konka Electric Appliance DepartmentTechnological Development Center; former general manager of President Office of Konka Group;former general manager of Dongguan Konka Electronics Co., Ltd; former vice general manager ofKonka Group Multimedia Business Department; former vice president of Konka Group; formerpresident, deputy party secretary of Konka Group; assistant to the president and secretary of theboard of Shenzhen OCT Co., Ltd. Current board chairman of Konka Group; vice president ofShenzhen OCT Co. Ltd; president of Shenzhen OCT Vision Inc.; and president of Shenzhen RoughDiamond Trading Center Co., Ltd. as well as Director of Konka Group.He Haibin, Director of the Company, born in 1974, Han nationality, holds undergraduate degree, isa senior accountant. He has successively taken the posts as Chief of Audit Department and FinancialDepartment in Overseas Chinese Town Group Corporation, as Principal of Finance in PlanningDepartment of the Crowne Plaza Shenzhen, as CFO in Shenzhen OCT Seaview Hotel Co., Ltd., asCFO in InterContinental Shenzhen, as Vice CFO in Overseas Chinese Town Group Corporation andas CFO in Overseas Chinese Town Hong Kong Limited, etc.. Now he is the Chief of EnterpriseManagement Department in Overseas Chinese Town Group Corporation, as well as a director ofKonka Group.2. Independent DirectorSun Shengdian, independent director, male, Han nationality, born in 1955, doctor of engineeringscience, sensor economist. Formerly vice general manager, deputy secretary of the Party committee,general manager and president of Shenzhen SEG, Hitachi Color Display Devices Co., Ltd., director,


73

Party Committee member, vice general manager, vice secretary of Party Committee, generalmanager of Shenzhen Electronics Group Co., Ltd. director of Shenzhen China Star OptoelectronicsTechnology Co., Ltd. and independent director of Skyworth Holding Ltd. Presently working as thepresident and secretary of party committee of Shenzhen Electronics Group Co., Ltd., President ofShenzhen Electronics Industries Association, Director of Shenzhen SI Semiconductor Co., Ltd.,vice president of Shenzhen Huakong SEG Co., Ltd., and independent director of Konka Group.Xiao Zuhe, Independent Director, male, Han nationality, born in 1966. EMBA, certified publicaccountant. Formerly worked as auditor and department manager in Jiangxi Accounting Firm,assistant financial controller of Shenzhen Fountain Corporation, auditor in Ho and Ho & Co. inHong Kong, financial controller of Qiaoxing Universal Telephone, Inc. (a company listed inNASDAQ), President of Benefit Capital Limited in Hong Kong. Presently he is working as thepresident and general manager of Tianjin Benefit Equity Investment Fund Management Co., Ltd.and independent director of Konka Group.Zhang Shuhua, Independent Director, male, Han nationality, born in 1965, a master degree owner,certified public account. Formerly worked as the principal staff member of Urban Social andEconomic Survey Organization of Sichuan Provincial Bureau of Statistics, accountant in charge ofSichuan Newspaper Press, chief financial officer of TOP Pacific Group Pty. Ltd., chief financialcontroller of Sichuan Bolan Properties Limited, chief financial officer of Sihuan Hanjia Group,chief financial officer of Chengdu Lishen Industry Co., Ltd. and vice president of Jiutai IndustryCo., Ltd. Presently working as the certified public accountant and partner of Sichuan AccountingFirm, independent director of Konka Group.3. SupervisorHao Gang, Supervisory, male, was born in 1973, Han nationality, bachelor degree. He successivelytook the post such as Vice Chief of the Inspection Office, etc. in Overseas Chinese Town GroupCorporation. Now he is the Chief of the Inspection Office in Overseas Chinese Town GroupCorporation and a supervisory of Konka Group.Wang Youlai, Supervisor, who is male, Han nationality, born in 1961, doctoral student and engineer.Formerly worked as the business manager of the Quality Department in Konka Group, assistantgeneral manager, vice general manager, and vice president of Konka Group, Deputy Director of theAdministration Department of Overseas Chinese Town Enterprise Co. Presently working as theco-secretary of the party committee in the HQs, and chief director of the Administration Departmentof Overseas Chinese Town Enterprise Co., and supervisor of Konka Group.Li Jun, Employee Supervisor, male, Han nationality, born in 1971, bachelor’s degree owner andassistant accountant. Formerly worked as the financial manager of Nanchang Branch ofTelecommunications Technology Co., Ltd., Senior Manager of the Financial Department and theSenior Manager of Auditing and Legal Affairs Department of Telecommunications Technology Co.,


74

Ltd. Presently working as the head of the Discipline Committee Office, assistant supervisor of theAuditing and Legal Affairs Department, general manager of the Internal Control and RiskManagement Department, and employee supervisor of Konka Group4. Senior ExecutivesLiu Fengxi, Acting President. As for the resume, please refer to “III. 1. Directors” of this sectionand he now is acting as the Board Chairman of the Company.Xiao Qing: Executive Vice President; male, was born in 1969 with the Han nationality; he gotbachelor degree, being Economist. He used to be Business Assistant to the President and DeputyChief of Strategic Development Dept. as well as Chief of the Investment Development Center inKonka Group Co., Ltd., Board Secretary, etc. He now is acting as the Executive Vice President ofKonka Group.Vice President. He is male, Han nationality, born in 1961, bachelor degree and SeniorAdministration Engineer. He successively took the post such as Assistant to President, Vice GeneralManager, Vice President, and Deputy Secretary of party Committee and Secretary of Commissionetc. of Konka Group. He now is acting as Vice President of Konka Group.He Jianjun, Vice President of the Company, was born in 1969 with the Han nationality; he obtainedbachelor degree; being Economist. He has served successfully as Deputy Chief of Secretariat of theBoard, Deputy Chief and Chief of Strategic Development Dept. and Secretary to the Board inKonka Group, etc. He now is acting as Vice President of Konka Group.Lin Gaike: Vice President, male and was born in 1972 with the Han nationality; he got bachelordegree, being Engineer. He used to be Director of New Type Display Design of Konka Group, ViceGM of Digital Tablet Business Division of Konka Group and Vice GM of Color TV BusinessDivision of Konka Group.Li Hongtao, Vice President. He is male, Han nationality, born in 1968; bachelor degree and SeniorEngineer. He successively took the post such as Assistant to General Manager, General Manager,Director and General Manager of Shenzhen Konka Telecommunication Technology Co., Ltd andAssistant President of Konka Group etc. He now is acting as Vice President of Konka Group.Lin Hongfan, vice president, .male, Han nationality, born in 1971, MBA, and political commissar.Formerly worked as the vice general manager, general manager of the Sales ManagementDepartment of the Multimedia Sales Company under Konka Group, vice general manager of KonkaGroup Multimedia Marketing Business Unit, General manager of Color TV Strategy and SupplyChain Management Center, standing vice general manager and of the Konka Group MultimediaBusiness Unit HQs, general manager of the Konka Group Multimedia Business Unit HQs, assistantof Konka Group president and the general manger of Konka Group Multimedia Business Unit HQs,assistant Konka Group president. Presently working as the vice president of Konka Group.Wu Yongjun, secretary of the board of directors, male, Han nationality, born in 1975, master’s


75

degree owner, certified public accountant. Formerly he worked as the senior manager, assistant ofchief supervisor, vice supervisor, supervisor of the secretariat of the Board of Directors of KonkaGroup, Konka Group Securities Affairs representative. Presently he is working as the secretary ofthe board of directors of Konka Group.Employment in shareholders’ companies√ Applicable □ Inapplicable

Name of

employer

s

Name of

shareholders’

companies

Posts held in shareholders’ companiesStart date of

tenure

Expirat

ion

Date of

tenure

Whether

receiving

subsidies

and

remuneratio

n in

shareholders

’ companies

He

Haibin

OCT Enterprises

Co.

Chief of Enterprise Management

Department1 Feb. 2010

Unkno

wnYes

Hao

Gang

OCT Enterprises

Co.Chief of Inspection Office 1 Mar. 2010

Unkno

wnYes

Wang

YoulaiOCT Enterprises

Co.

Secretary of the joint committee of the

general headquarters, administrative

management director

1 Dec. 2014Unkno

wnYes

Notes to post-holding

in shareholder’s unit

1. Except the above situation, other directors, supervisors and senior management didn’t hold any

position in the shareholders’ units.

2. It is unknown the ending date of the posts of Mr. He Haibin, Mr. Hao Gang and Mr. Wang Youlai

held in the shareholders’ units.

Employment in other entities√ Applicable □ Inapplicable

Name of

employer

s

Name of other companies

Posts held in

shareholders’

companies

Start date of

tenure

Expiration

Date of

tenure

Whether

receiving

subsidies and

remuneration

in other

companies

Jin

QingjunBeijing Kind & Wood Mallesons Senior Partner Unknown Unknown Yes

Chen

YuehuaShenzhen OCT Co., Ltd. Vice President 15 Dec 2014 Unknown Unknown

Chen

Yuehua

Shenzhen overseas Chinese town cultural

tourism science and Technology Co., Ltd.Chairman Unknown Unknown

Chen Shenzhen diamond blank Trading Center Chairman Unknown Unknown


76

Yuehua Co., Ltd.

Xiao

Zuhe

Tianjin Baifuyuan Equity Investment Fund

Management Co., Ltd., Shenzhen Qianhai

Baifuyuan Equity Investment Management

Co., Ltd.

Director, GM Unknown Yes

Xiao

Zuhe

Shenzhen Qianhai Baifuyuan Equity

Investment Management Co., Ltd.Partner Unknown Yes

Zhang

Shuhua

Sichuan Tan Cheng Certified Public

Accountants Co., Ltd.Partner Unknown Yes

Sun

Shengdia

n

Shenzhen Electronics Group Co., Ltd.

Chairman, Secretary

of the Party

Committee

Unknown Unknown

Sun

Shengdia

n

Shenzhen Electronics Industry Association president Unknown Unknown

Sun

Shengdia

n

Deep love semiconductor Limited by Share

LtdChairman Unknown Unknown

Sun

Shengdia

n

Shenzhen Huakong Limited by Share Ltd Vice ChairmanUnknown Unknown

Notes to post-holding in

shareholder’s unit

Mr. Sun Shengdian, Mr. Xiao Zuhe and Mr. Zhang Shuhua were the Independent Directors of

the Company. Mr. Jin Qingjun and Mr. Chen Yuehua were the Non-independent Directors of

the Company.

Particulars about the Company’s current directors, supervisors and senior executives’ punishmentsfrom Securities Regulatory Institution of recent three years in reporting period□ Applicable √ InapplicableIV. Remuneration for directors, supervisors and senior managementDecision-making procedure, determining basis and actual payment for the remuneration of directors,supervisors and senior managementAfter the approval and the consent by the Board of Directors on the salary of the Directors andSupervisors, should submit which to the Annual General Meeting for review and decision.1. During 1 Jan. 2015-31 May 2015, the salary of the Directors and Supervisors of the Companywere:The Company paid the salary or the subsidies for the Independent Directors, not for the otherDirectors and Supervisors other than the Independent Directors. During 1 Jan. 2015-31 May 2015,the total amount of the top 3 Directors with highest salary was of RMB0.2856 million, which werethe total amount of the salary of the above Independent Directors. The subsidies of the Independent


77

Directors of the Company were of RMB80,000/year (tax excluded).2. During 1 Jun. 2015-31 Dec. 2015, the salary of the Directors and Supervisors of the Companywere:Refered to the salary level of the Directors and Supervisor of the domestic listed companies of sameindustry, the salary proposal of the Director and Supervisors of the Company which approved andreviewed by the 2015 2nd Extraordinary General Meeting were as follows: (1) the basic annualsalary standard of the Board Chairman was of RMB1.2 million, the subsidy standard of otherDirectors (excluding the Directors serving in the Company) was of RMB0.3 million per person peryear and the subsidy standard of the Supervisors (excluding the Employee Supervisors) was ofRMB0.2 million per person per year; which was executed since Jun. 2015. (2) the above standardswere all pre-tax standard with the individual income tax burdened in person as well as the Companywithheld and remitted tax.During the 1 Jun. 2015-31 Dec. 2015, the salary of the Directors and Independent Directors wereexecuted according to the salary proposal approved by the 2015 2nd Extraordinary General Meeting.Other treatment for independent directors: travel expense when they went to attend the Boardsessions or Shareholders’ General Meetings and the expenses when they were performing theirduties as stipulated in the relevant regulations and the Articles of Association and other relevantsystems, all these could be reported for deletion.3. The Board of Directors determined the remuneration of senior management staffs, and referred tothe following factors: a. scope of jobs and responsibility shouldered; b. actual profit of theCompany; c. market remuneration level in the same industry and same area.Remuneration of the directors, supervisors and senior management of the Company during thereporting period


Name Title Gender AgeIncumbent or

not

Total amount of

remuneration

received from

the Company

Total amount of

remuneration

received from

shareholders’

companies

Liu

Fengxi

Board Chairman, Acting

PresidentMale 44 Current 181.16 No

Jin

QingjunDirector Male 59

Current17.50 No

Chen

YuehuaDirector

Male53

Current24.82 Yes

He

HaibinDirector

Male41

Current0 Yes

Sun

ShengdiaIndependent Director

Male61

Current0

No


78

n

Xiao

ZuheIndependent Director

Male50

Current17.50

No

Zhang

ShuhuaIndependent Director

Male51

Current17.50

No

Hao

GangSupervisory

Male42

Current0 Yes

Wang

YoulaiSupervisor

Male55

Current0 Yes

Li Jun Employee Supervisor Male 45 Current 25.71 No

Xiao

QingExecutive Vice President

Male46

Current136.93 No

Huang

Zhongtia

n

Vice President

Male

55

Current

131.10 No

He

JianjunVice President

Male46

Current131.10 No

Lin

GaikeVice President

Male44

Current131.10 No

Li

HongtaoVice President

Male48

Current125.59 No

Lin

HongfanVice President

Male45

Current195.19 No

Wu

YongjunBoard Secretary

Male41

Current71.75 No

Su

ZhengDirector

Male59 Left 0 Yes

Wang

XiaowenDirector Female 46 Left 0 Yes

Feng

YutaoIndependent Director Male 48 Left 9.52 No

Yang

HaiyingIndependent Director Female 48 Left 9.52 No

Zhang

ZhongIndependent Director

Male47 Left 9.52 No

Dong

YapingSupervisory

Male62 Left 0 Yes

Liu Yong Employee Supervisor Male 44 Left 91.00 No


79

Huang

ZhiqiangCFO

Male50 Left 53.14 No

Song

ZhenhuaDirector, Vice President


Zhang

MinIndependent Director


Zhang

Guanghu

i

Supervisor

Male

52 Left 0 No

Liu Dan President Male 44 Left 35.38 No

Wan

LiboVice President


Total -- -- -- -- 1594.54 --

Situations of equity incentives awarded to the directors, supervisors and senior management of theCompany during the reporting period□ Applicable √ Inapplicable

V. Employees of the Company1. Number of the employees, component difference and educational backgroundNumber of the serving employees of the parent company

(person)2,208

Number of the serving employees of the major subsidiaries

(person)16,333

Total number of the serving employees (person) 18,541

Total number of the employees receiving the salary of the

reporting period (person)18,541

Number of the left and retired employees that the parent

company and the major subsidiaries should undertake the

expenses (person)

0

Component difference

Category Number (person)

Production personnel 11,765

Sales personnel 3,489

Technical personnel 1,213

Financial personnel 598

Administrative personnel 1,476


80

Total 18,541

Educational background

Category Number (person)

master and above 171

bachelor degree 2,746

technical secondary 6,617

junior high school and below 9,007

Total 18,541

2. Remuneration policyThe Company promulgated its remuneration system with the operating strategy of serving for theenterprise development and enhancement, and the principle of deciding the remuneration accordingto the post, business performance and capabilities, as well as the market competitiveness andinternal fairness. And it decided the employee’s remuneration level according to its businessearnings, the posts and fulfillment of the business performance of the employee.3. Employee’s training planThe Company adhered to the people-oriented and paid special attention to cultivate the talents.Surrounded by the business development and the construction of talent team, the Company activelyorganized and carried out various training activities, and continuously perfected its talentscultivation system, as well as further enhanced the employee’s professional skills and overall quality,so as to strengthen the construction of management talents, professional talents and technical talentsteams.In 2015, guided by closing to the business needs, the Company centralized the superior resources topromote the cultivation of key talents. And it organized and carried out the open class project for allthe employees, and organized and carried out the new employee’s training & cultivation projectsrespectively for the graduates from campus recruiting and personnel from social recruitment.Meanwhile, it centralized to organize the pointed the training projects of general management skillsand post professional knowledge, etc for the personnel from marketing, R&D, manufacturing,financial and human resources systems, so as to better complete its annual training plan.


81

4. Labor outsourcing□ Applicable √ Inapplicable

Section IX. Corporate Governance

I. Basic information of corporate governanceIn the reporting period, strictly in accordance with the Company Law, Securities Law of the PRC,Code of Corporate Governance for Listed Companies, Share Listing Rules of Shenzhen StockExchange and the relevant rules and regulations of the CSRC, the Company timely amended theinternal control systems such as the Articles of Association and Administrative Method onProvision of External Financial Aids as well as Management System on Investors Relationship,continuously perfected the corporate governance structure and standardized the Company’soperation. By the end of the reporting period, the actual conditions of corporate governancebasically met the requirements of the regulatory documents in respect of corporate governancestructure of listed companies issued by CSRC.(I) Shareholders and the Shareholders’ General MeetingThe Company drew up Articles of Association and Rules for Procedure of Shareholders’ GeneralMeeting, ensured that all shareholders, in particular medium and minor shareholders, enjoy legalrights and equal standard. In the reporting period, the Company was able to publish announcementon Shareholders’ General Meetings in advance, convened Shareholders’ General Meeting withstrictly accordance to relevant requirements, so as to enable the shareholders have their rights ofinformation to the Company’s material issues and the participation rights. In 2015, the Companyconvened four Shareholders’ General Meeting in total. The Company seriously did well theregistration, arrangement and organization work for the Shareholders’ General Meeting before thecircular on convening the Shareholders’ General Meeting being published at the designated media.The Company convened the Shareholders’ General Meeting at the office address of the Companystrictly in line with relevant stipulations, which was convenient in traffic, and the shareholderscould attend the session in accordance with their actual situation. The Company’s directors,supervisors and senior management staffs made explanations and description for the shareholders’questions and advices at the session.(II) Controlling shareholder and the Company


82

In the reporting period, the controlling shareholders and actual controllers strictly regulated itsbehavior and complied with laws in exercising their rights and obligations, not bypassed theShareholders’ General Meeting to intervene in the Company’s decisions and operations directly orindirectly. The Company was separated from the controlling shareholders and actual controllers inaspects of its business, personnel, assets, organ and finance, the Board of Directors, SupervisoryCommittee and the internal departments of the Company functioned independently.(III) Directors and the Board of DirectorsThe number and structure of the Board Bureau of the Company were in compliance with laws andregulations. The Company drew up Rules for Procedures of the Board Bureau, so as to ensure ahigh efficient operation and scientific decision-making of the Board Bureau; the Company has setup Independent Director System and engaged three independent directors. In the reporting period,the number of directors and composition of the Board of Directors of the Company as well as theprocedure of selection was in accordance with the requirements of the rules and laws as well asArticles of Association. The Company set up four special committees, which were Financial AuditCommittee, Nomination Committee, Remuneration & Appraisal Committee, Strategy Committee toprovide profession opinion for the decision of the Board of Directors. All the directors carried outtheir work, fulfilled their duties and scrupulously attended the Board sessions in accordance withRules of Procedure for the Board of Directors, Rules for Independent Directors, etc. 14 Boardsessions were convened by the Company during the reporting period, which brought thedecision-making mechanism of the Board of Directors into full play.(IV) Supervisors and supervisory committeeThe Company has established Rules for Procedures of the Supervisory Committee, persons andstructure of the Supervisory Committee was in line with relevant laws and statutes, supervisors canearnestly perform their responsibilities, independently and efficiently executed supervision andcheck responsibilities with a spirit of being responsible to shareholders. In the reporting period, t henumber of supervisors and composition of the Supervisory Committee of the Company as well astheir selecting procedure complied with the laws, regulations. In accordance with the requirement ofthe Rules of Procedure for Supervisory Committee, the supervisors performed their duties in anearnest and responsible manner, and exercised their functions of supervision on thedecision-making procedure of the Board of Directors, resolutions and the Company’s operation bylaw, and took effective supervision over the Company’s significant events, related transactions,financial position, as well as the legality and compliance on duty performance by the directors,president and other senior management members.(V) Performance Appraisal and Incentive & Restrictive Mechanism


83

The senior management staffs of the Company were recruited on an open basis and in compliancewith the laws and regulations. The Company has established and gradually improved theperformance appraisal standards and incentive & restrictive mechanism for senior managementstaffs, so as to attract qualified personnel, and ensure the stability of senior management staffs.(VI) Interested partiesDuring the reporting period, the Company fully respected and maintained the legal rights of theinterested parties, and realized the balance of interest among the parties such as society,shareholders and employees, etc. Meanwhile, the Company protected the rights of the employees,promoted the environmental protection, and actively joined in the social benefit and charitablecause so as to jointly promote sustainable and healthy development.(VII) Information disclosure and transparencyThe Company strengthened its investor relations management by formulating the ManagementRules for Investor Relations and the Management Rules for Information Disclosure. The Companystrictly complied with the requirements of the laws, regulations and the Articles of Association todisclose its information as required by the relevant regulations on an timely, honest, complete andaccurate basis, to ensure the accurate and timely information disclosure, while ensure equal accessto information for all shareholders.(VIII) Non-standard governance1. Type of non-standard governance matter existedThere was a situation that the Company disclosed undisclosed information.2. Types and cycle of undisclosed information provided to the principal shareholderThe Company provided monthly financial data to the principal shareholder.3. Reasons for the related non-standard governance existedThe Company submitted the undisclosed information such as monthly financial data to thesubstantial shareholder directly administrated by the State-owned Assets Supervision andAdministration Commission of State Council in accordance with the managerial demand ofSASAC.4. Impact on Company independence

After the self-inspection, the Company kept strictly to the requirements of “Notice on Strengtheningthe Supervision of Listed Company’s Provision of Non-public Information to SubstantialShareholders and Actual Controllers”, and “Supplementary Notice Concerning Strengthening theSupervision of the Non-standard Governance Behavior of Listed Company's Provision ofNon-public Information to Substantial Shareholders and Actual Controllers”, while stringentlyperformed the necessary procedures. There existed no circumstances of substantial shareholder’sabuse of control and disclosure of undisclosed information for insider trading, and hence, it has noimpact on the independence of the Company.Whether it exist any significant difference between the actual corporate governance and thenormative documents related to the government of the listed companies issued by CSRC or not?


84

□ Yes √ No

There is no significant difference between the actual corporate governance and the normativedocuments related to the government of the listed companies issued by CSRC.II. Particulars about the Company’s separation from the controlling shareholder in respect ofbusiness, personnel, assets, organization and financial affairsWithin the reporting period, the company was fully separated from the controlling shareholders interms of business, staff, assets, organs, and finance, which owned independent legal representativeand main status in market competition and had independent accounting, as well as possessedcomplete business and the ability of independent operation to face the market.(I) Business: the Company owned complete supply, R&D, production and sales system, possessedability of independent operation to face the market by independent operation, independentaccounting & decision-making, independent bearing responsibility & risks, didn’t subject to theinterference and control of the controlling shareholders, actual controller and its controlledenterprises.(II) Staff: the Company was independent of the controlling shareholder with respect to labor,personnel and salaries management. The Company owned independent team of staffs, the seniormanagement staff, financial personnel and business personnel received their remunerations in theCompany, and they were full-time staffs of the Company without holding any post, except directorsand supervisors, in shareholders’ units or other related enterprises.(III) Assets integrity: the Company had production and operation premises completely separatedfrom the controlling shareholder, and the unaffiliated and integral assets structure, as well as theindependent production system, ancillary production system, the ancillary facilities, house propertyright and other assets, which also possessed independent procurement and sales system.(IV) Organ: the Company had its own functional organs adapting to the needs of self-developmentand market competitiveness, all the functional organs were separated from each other in aspects ofpersonnel, office premises and management rules, etc., there existed no particulars about anyshareholders, other units or individuals interfering the organ setting of the Company.

(V) Finance: the Company established an independent finance department with full-time financialpersonnel and an independent finance and accounting system, and independently carried out thefinancial work in line with requirements of relevant accounting rules; the Company promulgatedsound financial management system to operate independently without sharing common accountswith the controlling shareholder, related enterprise, other units or individual; the Companyindependently declared and paid the tax by laws without particulars on paying taxes together withshareholders’ units.


85

III. Horizontal competition□ Applicable √ InapplicableIV. Particulars about annual shareholders’ general meetings and temporary shareholders’general meetings held during the reporting period1. Particulars about annual shareholders’ general meetings during the reporting period

Session Type

Proportion

of

investors'

participati

on

Convening date Disclosure date Index to the disclosed

2014 Annual

General

Meeting

Annual

General

Meeting

57.63％ 28 May 2015 29 May 2015http://www.cninfo.com.cn/finalpa

ge/2015-05-29/1201078987.PDF

2015 1st

Extraordinary

General

Meeting

Extraordi

nary

General

Meeting

28.86％ 15 Sep. 2015 16 Sep. 2015http://www.cninfo.com.cn/finalpa

ge/2015-09-16/1201599161.PDF

2015 2nd

Extraordinary

General

Meeting

Extraordi

nary

General

Meeting

30.29% 15 Oct. 2015 16 Oct. 2015http://www.cninfo.com.cn/finalpa

ge/2015-10-16/1201699921.PDF

2015 3rd

Extraordinary

General

Meeting

Extraordi

nary

General

Meeting

30.00% 5 Nov. 2015 6 Nov. 2015http://www.cninfo.com.cn/finalpa

ge/2015-11-06/1201755365.PDF

2. Special Shareholders’ General Meeting applied by the preferred stockholder withrestitution of voting right□ Applicable √ InapplicableV. Performance of the Independent Directors1. Particulars about the independent directors attending the board sessions and theshareholders’ general meetings

Particulars about the independent directors attending the board sessions

Independent

director

Sessions

required to

attend during

the reporting

period

Attendance in

person

Attendance by

way of

telecommunica

tion

Entrusted

presence

(times)

Absence rate

Non-attendanc

e in person for

two

consecutive

times

Feng Yutao 4 1 3 0 0 No

Yang Haiying 4 1 3 0 0 No


86

Zhang Zhong 4 1 3 0 0 No

Sun Shengdian 3 0 3 0 0 No

Xiao Zuhe 10 4 6 0 0 No

Zhang Shuhua 10 2 8 0 0 No

Zhang Min 7 4 1 0 2 Yes

General meetings sat in on by

independent directors1

Explanation on failing to present in person for two consecutive sessionsIn Sep. 2015, Mr. Zhang Min submitted a written Resignation Report to the Board of Directorsowning to personal reasons, of which stated to apply for the resignation of his position asIndependent Director of the 8th Board of Director of the Company. Owning to the resignation of theMr. Zhang Min would lead to the number of the Independent Directors less than one third of that ofBoard of Directors, so according to the relevant regulations of the Guidance of the Construction ofthe Independent Directors System among the Listed Companies and the Articles of Association, theresignation application of Mr. Zhang Min would come into effect after the selection of a newIndependent Director from the 2015 3rd Extraordinary General Meeting held on 5 Nov. 2015 of theCompany. And during which, the Company held twice the meetings of Board of Directors that Mr.Zhang Min were absent without entrusting any Independent Director for attending.2. Particulars about Independent Directors proposing objection on relevant eventsWhether Independent Directors propose objection on relevant events or not?√ Yes □ No

Name of the

Independent

Directors

Events of the Independent Directors proposed objection Content of the objection

Zhang Shuhua Proposal on Electing the Board Chairman Abstention vote

Zhang MinProposal on Ceasing the Position as the President of Konka Group Acted

by Liu DanNegative vote

Zhang Min Proposal on the Salary Plan of the Directors and Supervisors Negative vote

Explanation of

the

Independent

Directors

proposing

objection on

relevant events

On 4 Jun. 2015, as for the Proposal on the Electing of the Board Chairman, Mr. Zhang Shuhua considered the

Board Chairman should be familiar to the color TV industry, thus he voted a abstention vote against the

proposal.

On 10 Sep. 2015, as for the Proposal on Ceasing the Position as the President of Konka Group Acted by Liu

Dan, Mr. Zhang Min considered the proposal was not proposed by the Nominations Committee of the Board of

Directors, thus he voted a negative vote against the proposal.

On 10 Sep. 2015, as for the Proposal on the Salary Plan of the Directors and Supervisors, Mr. Zhang Min

considered the salary level of the Board Chairman was not appropriate, thus he voted a negative vote against

the proposal.


87

3. Other explanations about the duty performance of independent directorsWhether advices to the Company from independent directors were adopted or not√ Yes □ NoExplanation on the advices of independent directors for the Company being adopted or not adoptedDuring the reporting period, the Independent Directors of the Company vigorously attended therelevant meetings, carefully reviewed each proposal, objectively stated their own views andopinions, knew of the R&D progress and the operating situation of the Company, the executionsituation of the internal control construction and the resolutions of the meetings of the Board ofDirectors and as well as the Annual General Meeting.As the expert of the involoved each field, the Independent Directors put forward the constructiveadvices by use of their own professional knowledge towards the internal management, including: tostrengthen the business process management, to strengthen the researches on the cutting-edgetechnology of the color TV and to strengthen the cash flow and the accounts receivablemanagement and so on. The Company carefully adopted the advices from the Independent Directorsand constantly improved and enhanced the management level of the Company.VI. Performance of the Special Committees under the Board during the reporting period(I) Summary report on the performance of the Audit Committee subject to the Board ofDirectorsThe company had constituted the Work Rules for the Financial Audit Committee under the Boardwhich illustrated the exact personnel, obligations and rights of the Financial Audit Committee underthe Board. In Y2015, based on the principle of faithfulness, the major execution situations of theFinancial Audit Committee under the Board were as follows:1. Reviewed financial statements of Annual Report 2014, First Quarterly Report 2015, Semi-AnnualReport 2015, and the Third Quarterly Report 2015, and had no objection to the aforesaid financialstatements.2. During the preparation of Annual Report 2015, the Company fulfilled the following duties:(1) Issued the Notes of the Events such as the Audit Work Arrangement of the Finanical AuditCommittee and approved the arrangement for 2015 annual auditing of the Company;(2) Issued Audit Opinion of the Financial Audit Committee on Financial Accounting StatementsPrepared by the Company before CPAs’ entry of Audit;(3) Communicated and exchanged ideas with the CPAs responsible for annual auditing on theproblems occurring during the auditing;(4) Issued Audit Opinion on Financial Accounting Statements of the Company after CPAs Issuedthe Preliminary Audit Opinion;(5) Issued Summary Report on 2015 Annual Auditing by Ruihua Certified Public Accountants;(6) Submitted the Resolution of the 2015 Annual Financial Statement of the Company to the Board;(7) Submitted the Resolution of engagement of the CPAs in 2016 to the Board;


88

3. In 2015, according to the authorization of the Board of Directors, the Financial Audit Committeeaccepted the report on the work of the Company’s Internal Auditing Department and carried outmanagement over the Internal Auditing Department of the Company and its work.(II) Summary report on the performance of the Remuneration and Appraisal Committeesubject to the Board of DirectorsThe company had constituted the Work Rules for the Remuneration and Appraisal Committee underthe Board which illustrated the exact personnel, obligations and rights of the Remuneration andAppraisal Committee under the Board. In Y2015, based on the principle of faithfulness, the majorexecution situations of the Remuneration and Appraisal Committee under the Board were asfollows:1. On 27 Aug. 2015, submitted the Proposal on the Basic Annual Salary Plan of the SeniorExecutives of the Remuneration and Appraisal Committee to the Board.2. On 10 Sep. submitted the Proposal on the Salary Plan of the Directors and Supervisors of theRemuneration and Appraisal Committee to the Board.3. During the preparation of Annual Report 2015, the Remuneration and Appraisal Committeesubject to the Board of Directors issued the Audit Opinion on the Disclosed Remuneration Situationof the Directors, Supervisors and Senior Executives of the Company, which considered thecondition of the remuneration of the Directors, Supervisors and Senior Executives of the Companydisclosed in the 2015 Annual Report was verified. The disclosed remuneration situation of theDirectors, Supervisors and Senior Executives of the Company met with the remunerationmanagement system without any situation that violated the remuneration management system of theCompany.(III) Summary report on the performance of the Nominations Committee subject to the Boardof DirectorsThe company had constituted the Work Rules for the Nominations Committee under the Boardwhich illustrated the exact personnel, obligations and rights of the Nominations Committee underthe Board. In Y2015, based on the principle of faithfulness, the major execution situations of theNominations Committee under the Board were as follows:1. On 1 Apr. 2015, issued the Audit Advice on the General Election of the Candidates of the Boardof Directors, which agreed the planed nominated candidates of the Non-independent Directors andthe Independent Directors of the 8th Board of Directors and agreed to submit the proposal to theBoard for review and approval.2. On 8 May 2015, submitted the Proposal on the Engagement of the Senior Executives, whichproposed the Company to engage Mr. Wan Libo as the Vice President of the Company.3. On 18 Jun. 2015, issued the Audit Advice of the Engagement of the Senior Executives, whichagreed the Company to engage Mr. Liu Dan as the President of the Company and agreed to engage


89

Mr. Song Zhenhua and Mr. Lin Hongfan as the Vice President of the Company as well as proposedthe Company to submit the proposal to the meeting of the Board of Directors for discussion.4. On 27 Aug. 2015, issued the Audit Advice of the Engagement of the Senior Executives, whichagreed to the Company to engage Mr. Xiao Qing as the Executive Vice President of the Company,and agreed to engage Mr. Wu Yongjun as the Board Secretary of the Company as well as proposedthe Company to submit the proposal to the meeting of the Board of Directors for discussion.5. On 20 Oct. 2015, issued the Audit Advice on the Increase of the Selection of the Directors of the8th Board of Directors of the Company, which agreed the planed nominated candidates of theNon-independent Directors and the Independent Directors of the 8th Board of Directors and agreedto submit which to the Board of Directors of the Company for review and approval.(IV) Summary report on the performance of the Strategy Committee subject to the Board ofDirectorsThe company had constituted the Work Rules for the Strategy Committee under the Board whichillustrated the exact personnel, obligations and rights of the Strategy Committee under the Board. InY2015, based on the principle of faithfulness, submitted the Proposal on the Developing Strategiesof Konka by the Strategy Committee on 10 Sep. 2015.VII. Performance of the Supervisory CommitteeDuring the reporting period, the Supervisory Committee found whether there was risk in theCompany in the supervisory activity√ Yes □ No

Meeting Convened DateSupervisors

Present

Name of the

Resolutions of the

Meeting

Resolutions

Disclosure

Index on the

Specified

Website for the

Resolutions

Disclosure

Date

15th

Session

of the 7th

Board of

Meeting

1 Apr. 2015

Dong Yaping,

Hao Gang, Liu

Yong

2014 Work Report

of the Board of

Supervisors, 2014

Self Assessment

Report of Internal

Control, 2014

Annual Report,

Proposal on the

General Election of

the Non-employee

Supervisor of the

Board of

Supervisors

Unanimously

voted agreed by

the participants

http://www.cni

nfo.com.cn/fina

lpage/2015-04-

03/1200782527

.PDF

3 Apr. 2015

16th 27 Apr. 2015 Dong Yaping, 2015 1st Quarter Unanimously N/A N/A


90

Session

of the 7th

Board of

Meeting

Hao Gang, Liu

Yong

Report voted agreed by

the participants

1st

Session

of the 8th

Board of

Meeting

4 Jun. 2015

Hao Gang, Li

Jun, Zhang

Guanghui

Proposal on

Electing the

Supervisory

Zhang

Guanghui

voted against

with the other

Supervisors

voted agree.

http://www.cni

nfo.com.cn/fina

lpage/2015-06-

05/1201106171

.PDF

5 Jun. 2015

2nd

Session

of the 8th

Board of

Meeting

27 Aug. 2015

Hao Gang, Li

Jun, Zhang

Guanghui

2015 Semi-annual

Report

Unanimously

voted agreed by

the participants

N/A N/A

3rd

Session

of the 8th

Board of

Meeting

10 Sep. 2015

Hao Gang, Li

Jun, Zhang

Guanghui

Proposal on the

Salary Plan of the

Directors and

Supervisors

Zhang

Guanghui

voted against

with the other

Supervisors

voted agree.

http://www.cni

nfo.com.cn/fina

lpage/2015-09-

11/1201578926

.PDF

11 Sep. 2015

4th

Session

of the 8th

Board of

Meeting

17 Sep. 2015Hao Gang, Li

Jun

Solutions on the

Inquiry of the

Relevant Issues

Occurred during

the Serving Period

of Liu Dan as the

President of Konka

Group

Unanimously

voted agreed by

the participants

N/A N/A

5th

Session

of the 8th

Board of

Meeting

20 Oct. 2015Hao Gang, Li

Jun

Proposal on

Increasing the

Election of Wang

Youlai as the

Non-employee

Supervisor of the

8th Board of

Supervisors

Unanimously

voted agreed by

the participants

http://www.cni

nfo.com.cn/fina

lpage/2015-10-

21/1201709718

.PDF

21 Oct. 2015

6th

Session

of the 8th

Board of

Meeting

27 Oct. 2015Hao Gang, Li

Jun

2015 3rd Quarter

Report

Unanimously

voted agreed by

the participants

N/A N/A


91

Brief comments on the relevant risks of the Company from the Board of SupervisorsThe supervisory committee made no objection to events under supervision during the reporting period.

VIII. Appraisal and incentive mechanism for senior management staffs

In order to enable the senior management staffs of the Company give better performance of theirduties, and clarify their rights and obligations, the Company established and improved a fair,transparent and efficient Performance Appraisal Standard and Incentive & Restraint Mechanism forthe senior management staffs. The Company assessed the duty performance and completion ofbusiness of senior management staffs in terms of professional skills, management level and jobperformance; took the salary plus bonus as a main incentive way, to improve the incentive of seniormanagement. The senior management staff was appraised by the Board of Directors, which wassupervised by the Supervisory Committee.IX. Internal Control1. Particulars about significant defects found in the internal control during reporting period□ Yes √ No

2. Self-appraisal report on internal controlDisclosure date of the Self-appraisal

Report on Internal Control8 Apr. 2016

Disclosure index of the Self-appraisal

Report on Internal Controlwww.cninfo.com.cn

The proportion of total assets included

in evaluation scope entities in the

Company's total assets of the

consolidated financial statements

90%

The proportion of operation revenue

included in evaluation scope entities in

the Company's operation revenue of the

consolidated financial statements

90%

Defect judging standards

Category Financial Report Non-Financial Report

Qualitative

criteria

I. Those with the following characteristics should be recognized as great

defect: 1. found out there were malpractices of the Directors, Supervisors

and Senior Executives of the Company that formed significant influences

on the financial report; 2. the Company revised the published financial

report and revised the great misstatements caused by the malpractices or

the mistakes; 3. CPA found out there was great misstatement of the current

financial report while didn’t found during the operating process of the

internal control; 4. the supervision of the internal control by the Finance

Audit Committee and the internal audit institution of the Company was

invalid; 5. not yet revised the great defect after the reasonable period as

I. The following signs indicated there may exist

great defect among the internal control of the

non-financial report; 1. the operating activities of

the enterprises seriously violated the national laws

and regulations; 2. negative news frequently

disclosed by the media which caused significant

harm to the Company’s reputation; 3. the core

management team left their positions one after

another or the outflow of the key position

personnel was serious; 4. significant business


92

which was discovered among the internal control assessment; 6. the

significant business lacked of systematic control or the systematic control

was invalid. II. Those with the following characteristics should be

recognized as significant defect: 1. not yet chosen or applied the

accounting polices according to the generally accepted accounting

standards; 2. not yet constructed the anti-spam process or control measures;

3. as for the accounts disposal of the unconventional or special

transactions, there was no corresponding control mechanism or execution

or the existence of the corresponding supplement control; 4. there was one

or multiple defects during the control of the compile of the financial report

at the period-end and could not reasonable guarantee the statement of the

compiled financial report reach the real and accurate target; 5. not yet

revised the significant defect after the reasonable period as which was

discovered among the internal control assessment. III. Other defects from

the internal control hadn’t reached the recognition standards of the great

defect or significant defect should be recognized as general defect.

lacked of systematic control of the system was

invalid; great defect discovered among the internal

control assessment not yet be revised in time. II.

The following signs indicated there may exist

significant defect among the internal control of the

non-financial report: 1. negative news occurred

rather frequently which caused rather big harm to

the Company’s reputation; 2. the outflow of the key

position personnel was rather serious; 3. there was

obvious defect among the control system of the

significant business; 4. the significant defect found

among the internal control assessment not yet be

revised in time. III. Other defects from the internal

control hadn’t reached the recognition standards of

the great defect or significant defect, should be

recognized as general defect.

Quantitative

criteria

Great defect: potential misstatement amount≥1% of the gross profit margin

of the 2015 consolidated financial report of the Company; significant

defect: 0.5% of the gross profit margin of the 2015 consolidated financial

report of the Company≤potential misstatement amount＜1% of the gross

profit margin of the 2015 consolidated financial report of the Company;

general defect: potential misstatement amount＜ 0.5% of the gross profit

margin of the 2015 consolidated financial report of the Company.

N/A

Number of

significant

defects of

financial report

(Piece)

0

Number of

significant

defects of non-

financial report

(Piece)

0

Number of

important defects

of financial

report (Piece)

0

Number of

important defects

of non-financial

report (Piece)

0

X. Audit report on internal control


93

√ Applicable □ InapplicableAudit opinion paragraphs in the Audit Report on Internal Control

We considered that, in all the significant aspects, Konka Group maintained efficient internal control of the financial report

according to the C-SOX and the relevant regulations on 31 Dec. 2015.

Particulars about Audit Report on

Internal ControlDisclosure

Disclosure date of the Audit Report on

Internal Control8 Apr. 2016

Disclosure index of the Audit Report on

Internal Controlwww.cninfo.com.cn

Type of Audit Report on Internal Control Unqualified auditor’s report

Whether there is significant defect in

non-financial reportNo

Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?

□ Yes √ No

Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Reportfrom the Board or not?

√ Yes □ No

The 2015Annual Report of Konka Group Co., Ltd.

94

Section X. Financial Report

I. Auditor’s ReportType of audit opinions Standard unqualified opinions

Signing date of audit report 6 Apr. 2016

Name of audit institution Ruihua CPAs (LLP)

No. of audit report R-H-S-Z [2016] No.44040012

Name of CPA Shen Lingzhi, He Xiaojuan

Text of the Auditor’s Report

To the shareholders of Konka Group Co., Ltd.,

We have audited the accompanying financial statements of Konka Group Co., Ltd. (hereafterreferred to as “the Company”) and its subsidiaries (hereafter referred to as “the Group” ingeneral) which comprise the consolidated and company’s balance sheets as at 31 Dec. 2015,and the consolidated and company’s income statements, the consolidated and company’scash flow statements and the consolidated and company’s statements of changes in owners’equity for the year then ended and notes to these financial statements.

I. Management’s Responsibility for the Financial Statements

The management is responsible for the preparation of these financial statements inaccordance with the Accounting Standards for Business Enterprises. This responsibilityincludes: (1) preparing financial statements according to the Accounting Standards forBusiness Enterprises and make them a fair presentation; and (2) designing, implementing andmaintaining internal control relevant to the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

II. Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with the China Standards on Auditing. Thosestandards require that we comply with ethical requirements of China CPAs and plan andperform the audit to obtain reasonable assurance whether the financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation of the financial statements andfair statement in order to design audit procedures that are appropriate in the circumstances.


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An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

III. Audit opinion

In our opinion, the financial statements have been prepared in accordance with theAccounting Standards for Business Enterprises in all material respects and give a fair view ofthe Company and its subsidiaries’ consolidated financial positions as at 31 Dec. 2015 and theconsolidated business results and cash flows for the year then ended, as well as theCompany’s financial positions as at 31 Dec. 2015 and business results and cash flows for theyear then ended.

CPA: Ruihua Certified Public Accountants (LLP)

CPA:

China·Beijing

6 Apr. 2016

II. Financial statementsUnit of statements in financial notes is: RMB Yuan1. Consolidated balance sheetName of enterprise: Konka Group Co., Ltd.

Unit: RMB YuanItem 31 Dec. 2015 31 Dec. 2014

Current Assets:

Monetary funds 1,706,446,928.92 1,703,135,732.18

Settlement reserves

Intra-group lendings

Financial assets measured at fairvalue of which changes are recordedin current profits and losses

33,196,377.28

Derivative financial assets

Notes receivable 2,880,860,750.44 3,819,417,076.37

Accounts receivable 2,048,813,439.34 2,259,293,207.16

Accounts paid in advance 193,664,620.66 315,150,044.57


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Premiums receivable

Reinsurance premiums receivable

Receivable reinsurance contractreserves

Interest receivable 7,426,409.52 1,885,727.36

Dividend receivable

Other accounts receivable 160,165,779.82 298,975,391.68

Financial assets purchased underagreements to resell

Inventories 2,882,515,913.28 3,904,436,250.33

Assets held for sale

Non-current assets due within 1year

Other current assets 647,311,938.45 568,020,200.48

Total current assets 10,560,402,157.71 12,870,313,630.13

Non-current assets:

Loans by mandate and advancesgranted

Available-for-sale financial assets 311,974,282.66 245,033,609.00

Held-to-maturity investments

Long-term accounts receivable

Long-term equity investment 190,573,524.29 362,765,183.66

Investing real estate 227,718,178.53 233,349,452.80

Fixed assets 1,763,503,189.50 1,783,695,548.92

Construction in progress 207,854,180.88 159,604,884.09

Engineering materials

Disposal of fixed assets

Production biological assets

Oil-gas assets

Intangible assets 352,591,887.48 347,626,130.58

R&D expense

Goodwill 3,597,657.15 3,597,657.15

Long-term deferred expenses 82,846,982.07 25,792,805.06

Deferred income tax assets 549,305,508.01 259,516,396.26

Other non-current assets - 488,063,979.00

Total of non-current assets 3,689,965,390.57 3,909,045,646.52

Total assets 14,250,367,548.28 16,779,359,276.65


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Current liabilities:

Short-term borrowings 4,150,773,195.76 5,145,712,436.91

Borrowings from Central Bank

Customer bank deposits and due tobanks and other financial institutions

Intra-group borrowings

Financial liabilities measured atfair value of which changes arerecorded in current profits and losses

Derivative financial liabilities

Notes payable 929,176,857.06 911,355,028.47

Accounts payable 2,980,416,983.25 3,144,408,433.93

Accounts received in advance 349,784,807.32 302,904,453.86

Financial assets sold for repurchase

Handling charges and commissionspayable

Payroll payable 279,631,258.71 299,272,715.05

Tax payable 92,097,951.90 112,557,005.85

Interest payable 20,552,763.14 22,872,418.43

Dividend payable

Other accounts payable 1,550,931,573.35 1,376,803,381.03

Reinsurance premiums payable

Insurance contract reserves

Payables for acting trading ofsecurities

Payables for acting underwriting ofsecurities

Liabilities held for sale

Non-current liabilities due within 1year

573,398,959.65 1,525,465.53

Other current liabilities

Total current liabilities 10,926,764,350.14 11,317,411,339.06

Non-current liabilities:

Long-term borrowings 23,700,000.00 957,541,210.52

Bonds payable

Of which: preferred shares

Perpetual bonds

Long-term payables 30,133,333.37 30,029,990.10


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Long-term payroll payables 23,435,856.86 28,554,734.16

Specific payables

Estimated liabilities 4,629,554.61

Deferred income 162,786,004.20 147,315,999.02

Deferred income tax liabilities 3,468,031.97 1,049,498.77

Other non-current liabilities

Total non-current liabilities 248,152,781.01 1,164,491,432.57

Total liabilities 11,174,917,131.15 12,481,902,771.63

Owners’ equity:

Share capital 2,407,945,408.00 1,203,972,704.00

Other equity instruments


Perpetual bonds

Capital reserves 78,209,535.19 1,289,403,563.99

Less: Treasury stock

Other comprehensive income 3,155,744.00 16,171,477.91

Specific reserves

Surplus reserves 847,908,466.28 847,908,466.28

Provisions for general risks

Retained profits -522,836,282.66 746,022,758.89

Total equity attributable to owners ofthe Company

2,814,382,870.81 4,103,478,971.07

Minority interests 261,067,546.32 193,977,533.95

Total owners’ equity 3,075,450,417.13 4,297,456,505.02

Total liabilities and owners’ equity 14,250,367,548.28 16,779,359,276.65

Legal representative: Liu Fengxi Person-in-charge of the accounting work: Xu YoushanPerson-in-charge of accounting firm: Xu Youshan2. Balance sheet of the parent company

Unit: RMB YuanItem 31 Dec. 2015 31 Dec. 2014

Current Assets:

Monetary funds 502,899,530.83 993,131,773.08

Financial assets measured at fairvalue of which changes are recordedin current profits and losses

7,184,035.29 -

Derivative financial assets

Notes receivable 2,635,643,772.62 3,664,117,423.56


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Accounts receivable 1,417,915,276.56 1,539,295,976.29

Accounts paid in advance 372,509,871.77 349,343,179.42

Interest receivable 14,901,123.48 14,450,153.53

Dividend receivable - -

Other accounts receivable 938,447,798.08 988,199,630.05

Inventories 1,771,302,947.50 2,500,537,916.63

Assets held for sale

Non-current assets due within 1year

Other current assets 530,272,796.83 201,280,204.53

Total current assets 8,191,077,152.96 10,250,356,257.09

Non-current assets:

Available-for-sale financial assets 271,924,282.66 218,983,609.00

Held-to-maturity investments 352,000,000.00 600,000,000.00

Long-term accounts receivable - -

Long-term equity investment 1,621,195,118.22 1,608,674,456.09

Investing real estate 227,718,178.53 233,349,452.80

Fixed assets 512,933,612.51 534,363,754.80

Construction in progress 12,619,010.21 37,567,861.10

Engineering materials

Disposal of fixed assets

Production biological assets

Oil-gas assets

Intangible assets 88,336,594.02 76,397,532.51

R&D expense

Goodwill

Long-term deferred expenses 57,865,790.98 14,567,206.83

Deferred income tax assets 504,252,794.29 244,080,035.45

Other non-current assets - -

Total of non-current assets 3,648,845,381.42 3,567,983,908.58

Total assets 11,839,922,534.38 13,818,340,165.67

Current liabilities:

Short-term borrowings 1,022,612,362.58 244,808,594.52

Financial liabilities measured atfair value of which changes arerecorded in current profits and losses

Derivative financial liabilities


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Notes payable 377,002,860.08 367,803,372.65

Accounts payable 5,173,897,087.35 7,871,208,959.66

Accounts received in advance 251,204,710.89 190,627,895.21

Payroll payable 118,684,992.99 146,758,331.08

Tax payable 31,360,675.68 5,081,943.95

Interest payable 7,761,519.53 5,406,211.20

Dividend payable - -

Other accounts payable 1,667,884,936.14 1,103,672,772.19

Liabilities held for sale

Non-current liabilities due within 1year

Other current liabilities

Total current liabilities 8,650,409,145.24 9,935,368,080.46

Non-current liabilities:

Long-term borrowings

Bonds payable


Perpetual bonds

Long-term payables

Long-term payroll payables

Specific payables

Estimated liabilities 4,629,554.61 -

Deferred income 88,668,785.51 80,679,738.96

Deferred income tax liabilities 1,935,167.63 -

Other non-current liabilities

Total non-current liabilities 95,233,507.75 80,679,738.96

Total liabilities 8,745,642,652.99 10,016,047,819.42

Owners’ equity:

Share capital 2,407,945,408.00 1,203,972,704.00

Other equity instruments


Perpetual bonds

Capital reserves 46,505,607.34 1,250,283,488.79

Less: Treasury stock

Other comprehensive income 1,803,252.77 471,827.51

Specific reserves


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Surplus reserves 847,908,466.28 847,908,466.28

Retained profits -209,882,853.00 499,655,859.67

Total owners’ equity 3,094,279,881.39 3,802,292,346.25

Total liabilities and owners’ equity 11,839,922,534.38 13,818,340,165.67

3. Consolidated income statementUnit: RMB Yuan

Item 2015 2014

I. Total operating revenues 18,395,177,035.98 19,423,488,994.07

Including: Sales income 18,395,177,035.98 19,423,488,994.07

Interest income

Premium income

Handling charge andcommission income

II. Total operating costs 20,010,568,582.72 20,169,975,385.57

Including: Cost of sales 16,055,497,185.62 16,733,746,581.45

Interest expenses

Handling charge andcommission expenses

Surrenders

Net claims paid

Net amount withdrawn for theinsurance contract reserve

Expenditure on policydividends

Reinsurance premium

Taxes and associate charges 94,523,398.90 60,527,648.50

Selling and distributionexpenses

2,448,337,549.43 2,414,468,187.73

Administrative expenses 695,731,013.59 686,930,373.50

Financial expenses 350,616,323.55 132,763,824.46

Asset impairment loss 365,863,111.63 141,538,769.93

Add: Gain/(loss) from change in fairvalue (“-” means loss)

32,591,836.13 -

Gain/(loss) from investment (“-”means loss)

13,574,652.77 596,873,633.39

Including: share of profits inassociates and joint ventures

-18,793,708.66 316,248,002.07

Foreign exchange gains (“-”


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means loss)

III. Business profit (“-” means loss) -1,569,225,057.84 -149,612,758.11

Add: non-operating income 158,538,297.00 258,877,423.01

Including: Gains on disposal ofnon-current assets

1,431,893.68 4,740,033.90

Less: non-operating expense 134,780,910.57 16,884,982.71

Including: Losses on disposalof non-current assets

12,339,287.69 9,752,806.72

IV. Total profit (“-” means loss) -1,545,467,671.41 92,379,682.19

Less: Income tax expense -269,622,908.76 31,854,983.02

V. Net profit (“-” means loss) -1,275,844,762.65 60,524,699.17

Net profit attributable to ownersof the Company

-1,256,819,314.51 52,623,527.86

Minority shareholders’ income -19,025,448.14 7,901,171.31

VI. After-tax net amount of othercomprehensive incomes

-12,414,464.72 56,503.90

After-tax net amount of othercomprehensive incomes attributable toowners of the Company

-13,015,733.91 -7,838.26

(I) Other comprehensiveincomes that will not be reclassifiedinto gains and losses

1. Changes in net liabilitiesor assets with a defined benefit planupon re-measurement

2. Enjoyable shares in othercomprehensive incomes in investeesthat cannot be reclassified into gainsand losses under the equity method

(II) Other comprehensiveincomes that will be reclassified intogains and losses

-13,015,733.91 -7,838.26

1. Enjoyable shares in othercomprehensive incomes in investeesthat will be reclassified into gains andlosses under the equity method

2. Gains and losses on fairvalue changes of available-for-salefinancial assets

928,330.73 516,457.28

3. Gains and losses onreclassifying held-to-maturityinvestments into available-for-sale


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financial assets

4. Effective hedging gainsand losses on cash flows

5. Foreign-currency financialstatement translation difference

-13,944,064.64 -524,295.54

6. Other

After-tax net amount of othercomprehensive incomes attributable tominority shareholders

601,269.19 64,342.16

VII. Total comprehensive incomes -1,288,259,227.37 60,581,203.07

Attributable to owners of theCompany

-1,269,835,048.42 52,615,689.60

Attributable to minorityshareholders

-18,424,178.95 7,965,513.47

VIII. Earnings per share

(I) Basic earnings per share -0.52 0.02

(II) Diluted earnings per share -0.52 0.02

Where business mergers under the same control occurred in this reporting period, the netprofit achieved by the merged parties before the business mergers was RMBXXX, with thecorresponding amount for the last period being RMBXXX.

Legal representative: Liu Fengxi Person-in-charge of the accounting work: Xu YoushanPerson-in-charge of accounting firm: Xu Youshan4. Income statement of the Company

Unit: RMB YuanItem 2015 2014

I. Total sales 15,799,396,382.50 18,252,320,333.18

Less: cost of sales 14,456,947,091.06 16,442,313,600.22

Business taxes and surcharges 35,952,751.61 28,791,258.57

Distribution expenses 1,754,767,878.82 1,891,815,304.69

Administrative expenses 365,394,474.96 445,985,722.14

Financial costs 32,911,021.52 57,149,270.99

Impairment loss 203,549,312.14 85,152,922.15

Add: gain/(loss) from change infair value (“-” means loss)

7,184,035.29 -

Gain/(loss) from investment (“-”means loss)

60,463,823.25 290,855,952.74

Including: income forminvestment on associates and jointventures

-4,991,699.40 -3,679,122.32


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II. Business profit (“-” means loss) -982,478,289.07 -408,031,792.84

Add: non-operating income 128,884,576.48 157,529,049.56

Including: Gains on disposal ofnon-current assets

141,921.85 3,914,114.70

Less: non-operating expense 102,453,940.21 9,394,570.77

Including: Losses on disposal ofnon-current assets

3,698,388.83 3,786,518.44

III. Total profit (“-” means loss) -956,047,652.80 -259,897,314.05

Less: Income tax expense -258,548,667.17 -59,623,917.51

IV. Net profit (“-” means loss) -697,498,985.63 -200,273,396.54

V. After-tax net amount of othercomprehensive incomes

1,331,425.26 471,827.51

(I) Other comprehensive incomesthat will not be reclassified into gainsand losses

1. Changes in net liabilities orassets with a defined benefit planupon re-measurement

2. Enjoyable shares in othercomprehensive incomes in investeesthat cannot be reclassified into gainsand losses under the equity method

(II) Other comprehensive incomesthat will be reclassified into gains andlosses

1,331,425.26 471,827.51

1. Enjoyable shares in othercomprehensive incomes in investeesthat will be reclassified into gains andlosses under the equity method

2. Gains and losses on fair valuechanges of available-for-sale financialassets

928,330.73 516,457.28

3. Gains and losses onreclassifying held-to-maturityinvestments into available-for-salefinancial assets

4. Effective hedging gains andlosses on cash flows

5. Foreign-currency financialstatement translation difference

403,094.53 -44,629.77

6. Other


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VI. Total comprehensive incomes -696,167,560.37 -199,801,569.03

VII. Earnings per share

(I) Basic earnings per share

(II) Diluted earnings per share

5. Consolidated cash flow statementUnit: RMB Yuan

Item 2015 2014

I. Cash flows from operatingactivities:

Cash received from sale ofcommodities and rendering of service

18,443,639,036.67 17,605,044,169.07

Net increase of deposits fromcustomers and dues from banks

Net increase of loans from thecentral bank

Net increase of funds borrowedfrom other financial institutions

Cash received from premium oforiginal insurance contracts

Net cash received from reinsurancebusiness

Net increase of deposits of policyholders and investment fund

Net increase of disposal offinancial assets measured at fair valueof which changes are recorded intocurrent gains and losses

Cash received from interest,handling charges and commissions

Net increase of intra-groupborrowings

Net increase of funds in repurchasebusiness

Tax refunds received 430,680,435.37 467,637,201.00

Other cash received relating tooperating activities

443,686,424.74 391,719,282.33

Subtotal of cash inflows fromoperating activities

19,318,005,896.78 18,464,400,652.40

Cash paid for goods and services 14,488,034,947.99 15,492,774,772.37

Net increase of customer lendings


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and advances

Net increase of funds deposited inthe central bank and amount due frombanks

Cash for paying claims of theoriginal insurance contracts

Cash for paying interest, handlingcharges and commissions

Cash for paying policy dividends

Cash paid to and for employees 1,738,319,265.97 1,747,390,336.65

Various taxes paid 616,762,165.13 685,636,270.36

Other cash payment relating tooperating activities

1,185,289,035.03 1,178,984,455.07

Subtotal of cash outflows fromoperating activities

18,028,405,414.12 19,104,785,834.45

Net cash flows from operatingactivities

1,289,600,482.66 -640,385,182.05

II. Cash flows from investingactivities:

Cash received from withdrawal ofinvestments

145,165,277.44 50,968,907.04

Cash received from return oninvestments

23,260,902.17 334,535,622.04

Net cash received from disposal offixed assets, intangible assets andother long-term assets

3,631,054.50 8,858,019.23

Net cash received from disposal ofsubsidiaries or other business units

8,889.24 285,401,846.77

Other cash received relating toinvesting activities

3,646,914,849.00 2,424,872,043.31

Subtotal of cash inflows frominvesting activities

3,818,980,972.35 3,104,636,438.39

Cash paid to acquire fixed assets,intangible assets and other long-termassets

234,096,470.72 750,959,942.15

Cash paid for investment 78,306,112.00 249,170,764.00

Net increase of pledged loans

Net cash paid to acquiresubsidiaries and other business units

Other cash payments relating toinvesting activities

3,658,501,268.22 2,473,083,497.35


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Subtotal of cash outflows frominvesting activities

3,970,903,850.94 3,473,214,203.50

Net cash flows from investingactivities

-151,922,878.59 -368,577,765.11

III. Cash Flows from FinancingActivities:

Cash received from capitalcontributions

78,701,328.03 15,700,000.00

Including: Cash received fromminority shareholder investments bysubsidiaries

71,151,328.03 15,700,000.00

Cash received from borrowings 2,937,450,105.14 4,234,914,268.82

Cash received from issuance ofbonds

- -

Other cash received relating tofinancing activities

118,110,469.89 576,957,141.70

Subtotal of cash inflows fromfinancing activities

3,134,261,903.06 4,827,571,410.52

Repayment of borrowings 4,071,657,524.17 3,208,016,241.44

Cash paid for interest expensesand distribution of dividends or profit

140,363,063.80 116,250,848.36

Including: dividends or profitpaid by subsidiaries to minorityshareholders

1,343,265.96 -

Other cash payments relating tofinancing activities

176,394,710.03 623,498,389.16

Sub-total of cash outflows fromfinancing activities

4,388,415,298.00 3,947,765,478.96

Net cash flows from financingactivities

-1,254,153,394.94 879,805,931.56

IV. Effect of foreign exchange ratechanges on cash and cash equivalents

-35,606,194.86 -2,095,568.53

V. Net increase in cash and cashequivalents

-152,081,985.73 -131,252,584.13

Add: Opening balance of cashand cash equivalents

1,640,236,837.08 1,771,489,421.21

VI. Closing balance of cash and cashequivalents

1,488,154,851.35 1,640,236,837.08

6. Cash flow statement of the CompanyUnit: RMB Yuan

Item 2015 2014


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I. Cash flows from operatingactivities:

Cash received from sale ofcommodities and rendering of service

12,246,114,167.03 12,298,684,620.60

Tax refunds received 179,546,436.62 223,273,103.54

Other cash received relating tooperating activities

1,745,067,849.17 739,787,761.18

Subtotal of cash inflows fromoperating activities

14,170,728,452.82 13,261,745,485.32

Cash paid for goods and services 10,398,532,975.42 10,722,090,404.58

Cash paid to and for employees 923,142,975.45 942,834,651.48

Various taxes paid 270,882,083.75 296,880,208.93

Other cash payment relating tooperating activities

1,780,957,816.25 1,840,153,779.28

Subtotal of cash outflows fromoperating activities

13,373,515,850.87 13,801,959,044.27

Net cash flows from operatingactivities

797,212,601.95 -540,213,558.95

II. Cash flows from investingactivities:

Cash received from retraction ofinvestments

130,102,809.09

Cash received from return oninvestments

59,458,173.75 41,767,052.88

Net cash received from disposal offixed assets, intangible assets andother long-term assets

57,765,301.70 7,769,133.70

Net cash received from disposal ofsubsidiaries or other business units

301,267,191.25

Other cash received relating toinvesting activities

3,522,884,590.00 2,403,472,043.31

Subtotal of cash inflows frominvesting activities

3,770,210,874.54 2,754,275,421.14

Cash paid to acquire fixed assets,intangible assets and other long-termassets

48,440,040.10 89,183,657.42

Cash paid for investment 196,857,096.00 215,523,300.00

Net cash paid to acquiresubsidiaries and other business units

Other cash payments relating toinvesting activities

3,774,884,590.00 2,496,000,000.00


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Subtotal of cash outflows frominvesting activities

4,020,181,726.10 2,800,706,957.42

Net cash flows from investingactivities

-249,970,851.56 -46,431,536.28

III. Cash Flows from FinancingActivities:

Cash received from capitalcontributions

Cash received from borrowings 61,422,000.00

Cash received from issuance ofbonds

Other cash received relating tofinancing activities

994,745,951.79 1,094,702,763.15

Subtotal of cash inflows fromfinancing activities

1,056,167,951.79 1,094,702,763.15

Repayment of borrowings 91,422,000.00

Cash paid for interest expensesand distribution of dividends or profit

16,842,865.65 12,852,947.28

Other cash payments relating tofinancing activities

2,007,026,133.52 617,810,454.06

Sub-total of cash outflows fromfinancing activities

2,115,290,999.17 630,663,401.34

Net cash flows from financingactivities

-1,059,123,047.38 464,039,361.81

IV. Effect of foreign exchange ratechanges on cash and cash equivalents

-1,310,869.10 -3,624,119.12

V. Net increase in cash and cashequivalents

-513,192,166.09 -126,229,852.54

Add: Opening balance of cashand cash equivalents

991,459,790.62 1,117,689,643.16

VI. Closing balance of cash and cashequivalents

478,267,624.53 991,459,790.62


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7. Consolidated statement of changes in owners’ equity2015

Unit: RMB Yuan

Item

2015

Equity attributable to owners of the Company

Minorityinterests

Total owners’equityShare capital

Other equityinstruments

Capital reserve

Less:treasury

stock

Othercomprehensive incomes

Specificreserve

Surplusreserve

Generalriskreserve

Retainedprofit

Preferredshares

Perpetualbonds

Other

I. Balance at theend of the previousyear

1,203,972,704.00 - - - 1,289,403,563.99 - 16,171,477.91 - 847,908,466.28 - 746,022,758.89 193,977,533.95 4,297,456,505.02

Add: change ofaccounting policy

- - - - - - - - - - - - -

Correction oferrors in previousperiods

- - - - - - - - - - - - -

Businessmergers under thesame control

- - - - - - - - - - - - -

Other - - - - - - - - - - - - -

II. Balance at thebeginning of theyear

1,203,972,704.00 - - - 1,289,403,563.99 - 16,171,477.91 - 847,908,466.28 - 746,022,758.89 193,977,533.95 4,297,456,505.02


111

III. Increase/decrease in theperiod (“-” meansdecrease)

1,203,972,704.00 - - - -1,211,194,028.80 - -13,015,733.91 - - - -1,268,859,041.55 67,090,012.37 -1,222,006,087.89

(I) Totalcomprehensiveincomes

- - - - - - -13,015,733.91 - - - -1,256,819,314.51 -18,424,178.95 -1,288,259,227.37

(II) Capitalincreased andreduced by owners

- - - - - - - - - - - 65,749,452.92 65,749,452.92

1. Commonshares increased byshareholders

- - - - - - - - - - - 65,749,452.92 65,749,452.92

2. Capitalincreased byholders of otherequity instruments

- - - - - - - - - - - - -

3. Amounts ofshare-basedpaymentsrecognized inowners’ equity

- - - - - - - - - - - - -

4. Other - - - - - - - - - - - - -

(III) Profitdistribution

- - - - - - - - - - -12,039,727.04 19,565,831.91 7,526,104.87

1.Appropriations tosurplus reserves

- - - - - - - - - - - - -


112

2.Appropriations togeneral riskprovisions

- - - - - - - - - - - - -

3.Appropriations toowners (orshareholders)

- - - - - - - - - - -12,039,727.04 -1,343,265.96 -13,382,993.00

4. Other - - - - - - - - - - - 20,909,097.87 20,909,097.87

(IV) Internalcarry-forward ofowners’ equity

1,203,972,704.00 - - - -1,203,972,704.00 - - - - - - - -

1. Newincrease of capital(or share capital)from capital publicreserves

1,203,972,704.00 - - - -1,203,972,704.00 - - - - - - - -

2. Newincrease of capital(or share capital)from surplusreserves

- - - - - - - - - - - - -

3. Surplusreserves for makingup losses

- - - - - - - - - - - - -

4. Other - - - - - - - - - - - - -

(V) Specific reserve - - - - - - - - - - - - -


113

1. Withdrawnfor the period

- - - - - - - - - - - - -

2. Used in theperiod

- - - - - - - - - - - - -

(VI) Other - - - - -7,221,324.80 - - - - - - 198,906.49 -7,022,418.31

IV. Closing balance 2,407,945,408.00 - - - 78,209,535.19 - 3,155,744.00 - 847,908,466.28 - -522,836,282.66 261,067,546.32 3,075,450,417.13

2014

Unit: RMB Yuan

Item

2014

Equity attributable to owners of the Company

Minorityinterests

Total owners’equityShare capital


Capital reserve

Less:treasury

stock


Specific

reserve

Surplusreserve

Generalriskreserve

Retainedprofit

Preferredshares

Perpetualbonds

Other

I. Balance at theend of the previousyear

1,203,972,704.00 - - - 1,314,409,687.82 - 16,179,316.17 - 847,908,466.28 - 705,438,958.07 193,008,519.16 4,280,917,651.50

Add: change ofaccounting policy

- - - - - - - - - -

Correction oferrors in previousperiods

- - - - - - - - - -

Business - - - - - - - - - -


114

mergers under thesame control

Other - - - - - - - - - -

II. Balance at thebeginning of theyear

1,203,972,704.00 - - - 1,314,409,687.82 - 16,179,316.17 - 847,908,466.28 - 705,438,958.07 193,008,519.16 4,280,917,651.50

III. Increase/decrease in theperiod (“-” meansdecrease)

- - - - -25,006,123.83 - -7,838.26 - - - 40,583,800.82 969,014.79 16,538,853.52

(I) Totalcomprehensiveincomes

- - - -7,838.26 - - - 52,623,527.86 7,965,513.47 60,581,203.07

(II) Capitalincreased andreduced by owners

- - - - - - - - - - - -6,996,498.68 -6,996,498.68

1. Commonshares increased byshareholders

- - - - - - - - - -

2. Capitalincreased byholders of otherequity instruments

- - - - - - - - - -

3. Amounts ofshare-basedpaymentsrecognized inowners’ equity

- - - - - - - - - -


115

4. Other - - - - - - - - -6,996,498.68 -6,996,498.68

(III) Profitdistribution

- - - - - - - - - - -12,039,727.04 - -12,039,727.04

1.Appropriations tosurplus reserves

- - - - - - - - - -

2.Appropriations togeneral riskprovisions

- - - - - - - - - -

3.Appropriations toowners (orshareholders)

- - - - - - - -12,039,727.04 - -12,039,727.04

4. Other - - - - - - - - - -

(IV) Internalcarry-forward ofowners’ equity

- - - - - - - - - - - - -

1. Newincrease of capital(or share capital)from capital publicreserves

- - - - - - - - - -

2. Newincrease of capital(or share capital)from surplusreserves

- - - - - - - - - -


116

3. Surplusreserves formaking up losses

- - - - - - - - - -

4. Other - - - - - - - - - -

(V) Specificreserve

- - - - - - - - - - - - -

1. Withdrawnfor the period

- - - - - - - - - -

2. Used in theperiod

- - - - - - - - - -

(VI) Other - -25,006,123.83 - - - - - - - -25,006,123.83

IV. Closingbalance

1,203,972,704.00 - - - 1,289,403,563.99 - 16,171,477.91 - 847,908,466.28 - 746,022,758.89 193,977,533.95 4,297,456,505.02

8. Statement of changes in owners’ equity of the Company2015

Unit: RMB Yuan

Item

2015

Share capital


Capital reserveLess:

treasurystock


Specific

reserve

Surplusreserve

Retained profitTotal owners’

equityPreferredshares

Perpetualbonds

Other

I. Balance at the end of the previousyear

1,203,972,704.00 1,250,283,488.79 - 471,827.51 - 847,908,466.28 499,655,859.67 3,802,292,346.25

Add: change of accounting - - - - - - - - - - -


117

policy

Correction of errors inprevious periods

- - - - - - - - - - -

Other - - - - - - - - - - -

II. Balance at the beginning of theyear

1,203,972,704.00 - - - 1,250,283,488.79 - 471,827.51 - 847,908,466.28 499,655,859.67 3,802,292,346.25

III. Increase/ decrease in the period(“-” means decrease)

1,203,972,704.00 - - - -1,203,777,881.45 - 1,331,425.26 - - -709,538,712.67 -708,012,464.86

(I) Total comprehensive incomes - - - - - - 1,331,425.26 - - -697,498,985.63 -696,167,560.37

(II) Capital increased andreduced by owners

1,203,972,704.00 - - - -1,203,972,704.00 - - - - - -

1. Common shares increasedby shareholders

1,203,972,704.00 - - - -1,203,972,704.00 - - - - - -

2. Capital increased by holdersof other equity instruments

- - - - - - - - - - -

3. Amounts of share-basedpayments recognized in owners’equity

- - - - - - - - - - -

4. Other - - - - - - - - - - -

(III) Profit distribution - - - - - - - - - -12,039,727.04 -12,039,727.04

1. Appropriations to surplusreserves

- - - - - - - - - - -

2. Appropriations to owners(or shareholders)

- - - - - - - - - -12,039,727.04 -12,039,727.04

3. Other - - - - - - - - - - -

(IV) Internal carry-forward of - - - - - - - - - - -


118

owners’ equity

1. New increase of capital (orshare capital) from capital publicreserves

- - - - - - - - - - -

2. New increase of capital (orshare capital) from surplus reserves

- - - - - - - - - - -

3. Surplus reserves for makingup losses

- - - - - - - - - - -

4. Other - - - - - - - - - - -

(V) Specific reserve - - - - - - - - - - -

1. Withdrawn for the period - - - - - - - - - - -

2. Used in the period - - - - - - - - - - -

(VI) Other - - - - 194,822.55 - - - - - 194,822.55

IV. Closing balance 2,407,945,408.00 - - - 46,505,607.34 - 1,803,252.77 - 847,908,466.28 -209,882,853.00 3,094,279,881.39

2014

Unit: RMBYuan

Item

2014

Share capital


Capital reserveLess:treasurystock


Specific

reserve

Surplusreserve

Retainedprofit

Total owners’equity

Preferredshares

Perpetualbonds

Other

I. Balance at the end of the previousyear

1,203,972,704.00 - - - 1,250,133,590.04 - - - 847,908,466.28 711,968,983.25 4,013,983,743.57


119

Add: change of accounting policy - - - - - - - - - - -

Correction of errors in previousperiods

- - - - - - - - - - -

Other - - - - - - - - - - -

II. Balance at the beginning of theyear

1,203,972,704.00 - - - 1,250,133,590.04 - - - 847,908,466.28 711,968,983.25 4,013,983,743.57

III. Increase/ decrease in the period(“-” means decrease)

- - - - 149,898.75 - 471,827.51 - - -212,313,123.58 -211,691,397.32

(I) Total comprehensive incomes - - - - - - 471,827.51 - - -200,273,396.54 -199,801,569.03

(II) Capital increased and reducedby owners

- - - - - - - - - - -

1. Common shares increasedby shareholders

- - - - - - - - - - -

2. Capital increased by holdersof other equity instruments

- - - - - - - - - - -

3. Amounts of share-basedpayments recognized in owners’equity

- - - - - - - - - - -

4. Other - - - - - - - - - - -

(III) Profit distribution - - - - - - - - - -12,039,727.04 -12,039,727.04

1. Appropriations to surplusreserves

- - - - - - - - - - -

2. Appropriations to owners (orshareholders)

- - - - - - - - - -12,039,727.04 -12,039,727.04

3. Other - - - - - - - - - - -

(IV) Internal carry-forward of - - - - - - - - - - -


120

owners’ equity

1. New increase of capital (orshare capital) from capital publicreserves

- - - - - - - - - - -

2. New increase of capital (orshare capital) from surplus reserves

- - - - - - - - - - -

3. Surplus reserves for makingup losses

- - - - - - - - - - -

4. Other - - - - - - - - - - -

(V) Specific reserve - - - - - - - - - - -

1. Withdrawn for the period - - - - - - - - - - -

2. Used in the period - - - - - - - - - - -

(VI) Other - - - - 149,898.75 - - - - - 149,898.75

IV. Closing balance 1,203,972,704.00 - - - 1,250,283,488.79 - 471,827.51 - 847,908,466.28 499,655,859.67 3,802,292,346.25


121

Konka Group Co., Ltd.Notes of 2015 Financial Statement

(Monetary unit is RMB Yuan unless otherwise stated)

I. Company Profile

1. Establishment

Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the Company”), is a

joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,

Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,

and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with

prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On

August 29, 1995, the Company, renamed to “Konka Group Co., Ltd.”, obtained corporate

business license (registration No.: 440301501121863) with its main business falling into

electronic industry. And now the headquarters locates in No. 28 of No. 12 of Keji South Rd.,

Science & Technology Park, Yuehai Street, Nanshan District, Shenzhen, Guangdong

Province.

2. Share Capital Changes upon Establishment

On November 27, 1991, with approval from the SRYFZ No. 102 [1991] document as issuedby the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen KonkaElectronic Co., Ltd., during December 8—December 31, 1991, has issued 128,869,000 RMBordinary shares (A-share) at a par value of RMB1.00 per share, of which the original netassets were converted into 98,719,000 state-owned institutional shares, 30,150,000 newshares were issued, including 26,500,000 circulating shares issued to the public and3,650,000 staff shares issued to the staff of the Company.

On January 29, 1992, with approval from the SRYFZ No. 106 [1991] document as issued bythe People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen KonkaElectronic Co., Ltd., during December 20, 1991— January 31, 1992, has issued to investorsabroad 58,372,300 RMB special shares (B-share) at a par value of RMB1.00 per share, ofwhich 48,372,300 shares held by the former foreign investor and founder—Hong KongGanghua Electronic Group Co., Ltd. are converted into foreign legal person’s shares, and10,000,000 B-shares are issued additionally.

On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout 1992 wasadopted at the second general meeting of shareholders of the Company. With approval fromthe SZBF No. 2 [1993] document as issued by Shenzhen Securities Regulatory Office, theCompany began to perform dividend policy for FY 1992 as of April 30, 1993: distributingRMB 0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The totalcapital stock reached 187,473,150 shares after this distribution.


122

On April 18, 1994, the Proposal on Profit Distribution and Dividend Payout 1993 wasadopted at the third general meeting of shareholders of the Company. With approval from theSZBF No. 115 [1994] document as issued by Shenzhen Securities Regulatory Office, theCompany began to perform dividend policy for FY1993 as of June 10, 1994: distributingRMB 1.10 in cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus sharecapitalized from capital public reserve) for every 10 shares to all shareholders. The totalcapital stock reached 281,209,724 shares after this distribution and capitalization from capitalpublic reserve.

On June 2, 1994, in accordance with the provisions that “staff shares could go public and betransferred six months after listing”, as jointly promulgated by the State Commission forRestructuring the Economic System and the State Council’s Securities Commission, the staffshares of the Company was planned to be listed on the flow on June 6, 1994, with the priorconsent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.

On October 8, 1994, the Proposal on Negotiable Bonus Shares of B-Share CorporateShareholders 1992 was adopted at the 1994 interim general meeting of shareholders of theCompany. With approval from the SZBF No. 224 [1994] document as issued by ShenzhenSecurities Regulatory Office, the 16,930,305 bonus shares for FY 1992 granted to foreignlegal persons were listed and negotiated at B-share market on October 26, 1994.

On February 6, 1996, the Proposal on Share Allotment Modes 1996 was adopted at the 1996interim general metering of shareholders of the Company. With approval from the SZBF No.5 [1996] document as issued by Shenzhen Securities Regulatory Office, and reexaminationfrom the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued byChina Securities Regulatory Commission, on July 16, 1996 and October 29, 1996, allshareholders were respectively allotted three shares for every ten existing shares held atRMB 6.28/A-share and HKD 5.85/B-share. Corporate shareholders took their respectiveexisting shares as bases for full subscription of the allocable shares. The total capital stockreached 365,572,641 shares after this allotment.

On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the 1998 interimgeneral meeting of shareholders of the Company. With approval from the ZZBZ No. 29[1998] document as issued by Shenzhen Securities Regulatory Office, and ZJSZ No.64 [1998]document as issued by China Securities Regulatory Commission, on July 15, 1998,negotiable A-shares were allotted in proportion of 3:10 at RMB 10.50/A-share. For suchreasons as continued weakness in B-share secondary market (lower than share allotmentprice), B-share negotiation and allotment plan was canceled, and the corporate shareholdersof the Company waived the preemptive right. The total capital stock reached 389,383,603shares after this allotment.

On June 30, 1999, the Proposal on Profit Distribution and Capitalization from Capital PublicReserve 1998 was adopted at the eighth general meeting of shareholders of the Company. On


123

August 20, 1999, the profit distribution for FY 1998 was carried out: all shareholders werepresented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital publicreserve. The total capital stock reached 467,260,323 shares after this capitalization.

On June 30, 1999, the Plan on A-Share Issue for Capital Increase was adopted at the eighthgeneral meeting of shareholders of the Company. With approval from the ZJFXZ No.140[1999] document as issued by China Securities Regulatory Commission, on November 1,1999, 80,000,000 A-shares were additionally issued to the public at RMB15.50/share. Thetotal capital stock reached 547,260,323 shares after this additional issue.

On May 30, 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted atthe ninth general meeting of shareholders of the Company. On July 25, 2000, the profitdistribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cashplus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352 sharesafter this distribution.

On April 3, 2008, the 7th meeting of the sixth Board of Directors was convened, during

which the following resolutions were discussed and adopted: based on the total capital stock

of 601,986,352 shares for the year ended December 31, 2007, capitalization from capital

public reserve was made to all shareholders at a proportion of 1:1, namely 10 new shares for

every 10 existing shares. And the said resolution was subject to approval by the 2007 annual

general meeting of shareholders convened on May 26, 2008. The Company, in June 2008,

implemented the capitalization from capital public reserve and went through the formalities

for transfer registration with China Securities Depository and Clearing Corporation Limited.

On December 16, 2008, with approval from the SMGZF No. 2662 [2008] document as

issued by Shenzhen Bureau of Trade and Industry, the Company was agreed to increase its

share capital, and went through the formalities for registration of changes with the

administration for industry and commerce on April 10, 2009. The total capital stock reached

1,203,972,704 shares after change.

According to the regulations of the 2015 1st Extraordinary General Meeting and the revised

articles of the Company, the Company applied to increase the registered capital of

RMB1,203,972,704.00, which totally turned into capital reserve with the altered registered

capital of RMB2,407,945,408.00 and managed the industrial and commercial alternation

registration on 28 Jan. 2016 with the altered share capital of 2,407,945,408 shares.

3. Approved business scope: research and development, production and operation of such

household appliances as televisions, refrigerators, washing machines, and personal electronic

appliances; manufacturing and application of home AV, IPTV set-top boxes, digital TV

receivers (including ground receiving equipment of satellite television broadcasting), digital


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products, mobile communication equipments and terminal products, daily-use electronic

products, automotive electronic products, satellite navigation systems, intelligent

transportation systems, fire-fighting and security systems, office equipments, computers,

displays, large screen display systems; LED (OLED) back light, illumination, light-emitting

devices, and packaging thereof; Touch TV AIO, wireless broadcasting television transiting

equipment; electronic parts and components, moulds, plastic and rubber products, and

packing materials, design and in-door installation security products, monitoring products,

wireless and cable digital television system and system integration, and technical consultancy

and after-sale paid services of related products (except mobile phone, the other products in

the above business scope are manufactured in other places outside Shenzhen); Wholesale,

retail, import & export and relevant support services of the aforesaid products (including

spare parts) (Commodities subject to state trading management are not involved. Products

involved in quota, license management and other specified management shall be subject to

the relevant state provisions.); sale of self-developed technological achievements; provision

of maintenance services, technical consultant service for electronic products; ordinary cargo

transportation, domestic freight forwarding, warehousing services; consultancy on enterprise

management; and self-owned property leasing and management services, recovery of waste

electrical appliances and electronic products (excluding dissembling) (operated by branch

offices); and outsourcing services of information technology and business procedures by

means of undertaking services in the way of outsourcing, including management and

maintenance of system application, management of information technology, bank

background service, financial settlement, human resource service, software development, call

center, and data processing.4. The Company and each subsidiary mainly engaged in the production and sales ofcolor TV, white household appliances, mobile phones and moulds and so on.5.The financial statements are subject to the approval of the board of directors of thecompany in April 6, 2016.

6. There were 45 subsidiaries included in the consolidation scope of 2015 of the Company,

and please refer to the Notes VIII. “Equities among other entities” for details. There were 8

subsidiaries increased and 2 decreased in the consolidation scope of the reporting period over

the last period of the Company, and the gains and losses as well as the cash flows of the

subsidiaries which be decreased before the date losing the control right should be recorded in

the consolidation of the reporting period and please refer to the Notes VII. “Changes of the

consolidation scope” for details.

7. A check list of corporate names and their abbreviations mentioned in this Report


125

Corporate name Abbreviation

Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology

Shenzhen Konka Precision Mold Manufacturing Co., Ltd. Precision Mold

Shenzhen Konka Electronic Co., Ltd. Konka Electronic

Shenzhen Konka Information Network Co., Ltd. Information Network

Shenzhen Konka Plastic Products Co., Ltd. Plastic Products

Shenzhen Konka Housing Appliances Co., Ltd. Housing Appliances

Shenzhen Electronic Fittings Technology Co., Ltd. Fittings Technology

Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances

Chongqing Konka Automotive Electronic Co., Ltd. Chongqing Electronic

Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia

Anhui Konka Electronic Co., Ltd. Anhui Konka

Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances

Changshu Konka Electronic Co., Ltd. Changshu Konka

Kunshan Konka Electronic Co., Ltd. Kunshan Konka

Dongguan Konka Electronic Co., Ltd. Dongguan Konka

Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing

Dongguan Konka Mould Plastic Co., Ltd. Dongguan Mould Plastic

Boluo Konka PCB Co., Ltd. Boluo Konka

Boluo Konka Precision Technology Co., Ltd. Boluo Precision

Konka (Nanhai) Development Center Nanhai Institute

Hong Kong Konka Co., Ltd. Hong Kong Konka

Konka Household Appliances Investment & Development Co., Ltd. Konka Household Appliances Investment

Konka Household Appliances International Trading Co., Ltd.Konka Household Appliances

International Trading

KONKAAMERICA,INC. KONKAAMERICA

Konka (Europe) Co., Ltd. Konka Europe

Dongguan Xutongda Mould Plastic Co., Ltd. Xutongda

Shenzhen Konka Optoelectronic Technology Co., Ltd. Konka Optoelectronic

Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida

Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng

Anhui Konka Tongchuang Household Appliances Co., Ltd. Anhui Tongchuang

Indonesia Konka Electronics Co., Ltd. Indonesia Konka

Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics


126

Corporate name Abbreviation

Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic

Kunshan Jielunte Mould Plastic Co. , Ltd. Kunshan Jielunte

Wuhan Jielunte Mould Plastic Co. , Ltd. Wuhan Jielunte

Chuzhou Jielunte Mould Plastic Co. , Ltd. Chuzhou Jielunte

Shenzhen Konka Yishijie Commercial Display Co., Ltd. Konka Yishijie

Shenzhen Yishijie Commercial Display Service Co., Ltd. Yishijie Commercial

Xiamen Dalong Trading Co., Ltd. Xiamen Dalong

Usee Kangrong Culture Communication Co., Ltd. Usee Kangrong

Anhui Jiasen Precision Science and Technology Co., Ltd. Anhui Jiasen

Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. Kangqiao Jiacheng

Konka Zhisheng Co., Ltd. Konka Zhisheng

Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie

Shenzhen E2info Internet Science and Technology Co., Ltd. E2info

Shenzhen Konka Mobile Internet Science & Technology Co., Ltd. Mobile Internet

Shenzhen Konka Business System Science & Technology Co., Ltd. Business Science & Technology

II. Basis for the preparation of financial statements

With the going-concern assumption as the basis and based on transactions and other events

that actually occurred, the Group prepared financial statements in accordance with <The

Accounting Standards for Business Enterprises—Basic Standard> issued by the Ministry of

Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting

standards, the Application Guidance of Accounting Standards for Business Enterprises, the

Interpretation of Accounting Standards for Business Enterprises and other regulations issued

and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting

Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as

the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 –

General Regulations for Financial Reporting (revised in 2014) by China Securities

Regulatory Commission.

In accordance with relevant provisions of the Accounting Standards for Business Enterprises,

the Group adopted the accrual basis in accounting. Except for some financial instruments,


127

where impairment occurred on an asset, an impairment reserve was withdrawn accordingly

pursuant to relevant requirements.

III. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Group are in compliance with in compliance with

the Accounting Standards for Business Enterprises, which factually and completely present

the Company’s financial positions as at 31 Dec. 2015, business results and cash flows for the

year of 2015, and other relevant information. In addition, the Company’s and the Group’s

financial statements meet the requirements of disclosing financial statements and notes

thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering

Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China

Securities Regulatory Commission.

IV. Important accounting policies and estimations

The Company and each subsidiary formulated certain specific accounting policies andaccounting estimates according to the actual production and operation characteristics and theregulations of the relevant ASBE on the transactions and events of the revenues recognition.For the details, please refer to each description of Notes IV. 22 “Revenues”. For the notes ofthe significant accounting judgment and estimations made by the management layer, pleaserefer to Notes IV. 27 “Significant accounting judgment and estimations”.

1. Fiscal period

The Group’s fiscal periods include fiscal years and fiscal periods shorter than a completefiscal year. The Group’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every yearaccording to the Gregorian calendar.

2. Operating cycle

A normal operating cycle refers to a period from the Group purchasing assets for processingto realizing cash or cash equivalents. An operating cycle for the Group is 12 months, whichis also the classification criterion for the liquidity of its assets and liabilities.

3. Recording currency

Renminbi is the dominant currency used in the economic circumstances where the Group andits domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries useRenminbi as their bookkeeping base currency. As for the overseas subsidiaries of the


128

Company-America Konka, European Konka and Indonesia Konka, should be respectivelyconfirmed the US Dollar, Euro and Indonesia Rupiah as their recording currency accordingits major economic environment of their operating address; subsidiaries such as Hong Kong

Konka, Konka Household Appliances International Trading，Konka Household Appliances

Investment and Konka Zhisheng use HK Dollar as their recording currency. And the Groupadopted Renminbi as the bookkeeping base currency when preparing the financial statementsfor the reporting year.

4. Accounting treatment methods for business combinations under the same control or

not under the same control

Business combinations, it is refer to two or more separate enterprises merge to form a

reporting entity transactions or events. Business combination is divided into under the same

control and those non under the same control.

(1) Business combinations under the same control

A business combination under the same control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or the same parties bothbefore and after the business combination and on which the control is not temporary. In abusiness combination under the same control, the party which obtains control of othercombining enterprise(s) on the combining date is the combining party, the other combiningenterprise(s) is (are) the combined party. The “combining date” refers to the date on whichthe combining party actually obtains control on the combined party.

The assets and liabilities that the combining party obtains in a business combination shall bemeasured on the basis of their carrying amount in the combined party on the combining date.As for the balance between the carrying amount of the net assets obtained by the combiningparty and the carrying amount of the consideration paid by it (or the total par value of theshares issued), the additional paid-in capital (share premium) shall be adjusted. If theadditional paid-in capital (share premium) is not sufficient to be offset, the retained earningsshall be adjusted.

The direct cost for the business combination of the combining party shall be recorded into theprofits and losses at the current period.

(2) Business combinations not under the same control

A business combination not under the same control is a business combination in which thecombining enterprises are not ultimately controlled by the same party or the same partiesboth before and after the business combination. In a business combination not under the samecontrol, the party which obtains the control on other combining enterprise(s) on the purchasedate is the acquirer, and other combining enterprise(s) is (are) the acquiree.

For a business combination not under the same control, the combination costs shall includethe fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumedand the equity securities issued by the acquirer in exchange for the control on the acquiree,the expenses for audit, legal services and assessment, and other administrative expenses,which are recorded into the profits and losses in the current period. The trading expenses forthe equity securities or debt securities issued by the acquirer as the combination


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consideration shall be recorded into the amount of initial measurement of the equitysecurities or debt securities. The involved contingent consideration shall be recorded into thecombination costs at its fair value on the acquiring date. Where new or further evidencesemerge, within 12 months since the acquiring date, against the existing circumstances on theacquiring date and the contingent consideration thus needs to be adjusted, the combinedgoodwill shall be adjusted accordingly. The combination costs of the acquirer and theidentifiable net assets obtained by it in the combination shall be measured according to theirfair values at the acquiring date. The acquirer shall recognize the positive balance betweenthe combination costs and the fair value of the identifiable net assets it obtains from theacquiree as business reputation. Where the combination costs are less then the fair value ofthe identifiable net assets it obtains from the acquiree, the acquirer shall re-examine themeasurement of the fair values of the identifiable assets, liabilities and contingent liabilities itobtains from the acquiree as well as the combination costs. If, after the reexamination, thecombination costs are still less than the fair value of the identifiable net assets it obtains fromthe acquiree, the acquirer shall record the balance into the profits and losses of the currentperiod.

As for the deductible temporary differences the acquirer obtains from the acquiree which arenot recognized into deferred income tax liabilities due to their not meeting the recognitionstandards, if new or further information shows that the relevant situation has existed on theacquiring date and the economic benefits brought by the deductible temporary differences theacquirer obtains from the acquiree on the acquiring date can be realized, they shall berecognized into deferred income tax assets and the relevant goodwill shall be reduced. Wherethe goodwill is not sufficient to be offset, the difference shall be recognized into the profitsand losses in the current period. In other circumstances than the above, where the deductibletemporary differences are recognized into deferred income tax assets on the acquiring date,they shall be recorded into the profits and losses in the current period.In a business combination not under same control realized by two or more transactions ofexchange, according to about the 5th Notice about the Treasury Issuing the AccountingStandards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the “packagedeal” (see note 4, 4 (2)), Whether the deals are “package deal” or not, belong to the “packagedeal”, see the previous paragraphs described in this section and note 4, 10 “long term equityinvestment transaction” and conduct accounting treatment, those not belong to the “packagedeal” distinguish between the individual financial statements and the consolidated financialstatements and conduct relevant accounting treatment.

In the individual financial statements, the sum of the book value and new investment cost ofthe Group holds in the acquiree before the acquiring date shall be considered as initial cost ofthe investment. Other related comprehensive gains in relation to the equity interests that theGroup holds in the acquiree before the acquiring date shall be treated on the same basis as theacquiree directly disposes the related assets or liabilities when disposing the investment (thatis, except for the corresponding share in the changes in the net liabilities or assets with adefined benefit plan measured at the equity method arising from the acquiree’sre-measurement, the others shall be transferred into current investment gains).

In the Group’s consolidated financial statements, as for the equity interests that the Groupholds in the acquiree before the acquiring date, they shall be re-measured according to theirfair values at the acquiring date; the positive difference between their fair values and carryingamounts shall be recorded into the investment gains for the period including the acquiring


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date. Other related comprehensive gains in relation to the equity interests that the Groupholds in the acquiree before the acquiring date shall be treated on the same basis as theacquiree directly disposes the related assets or liabilities when disposing the investment (thatis, except for the corresponding share in the changes in the net liabilities or assets with adefined benefit plan measured at the equity method arising from the acquiree’sre-measurement, the others shall be transferred into current investment gains on the acquiringdate).

5. Methods for preparing consolidated financial statements

(1) Principle for determining the consolidation scopeThe consolidation scope for financial statements is determined on the basis of control. Theterm “control” is the power of the Group upon an investee, with which it can take part inrelevant activities of the investee to obtain variable returns and is able to influence theamount of returns. The consolidated financial statements comprise the financial statements ofthe Group and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Group.

(2) Methods for preparing the consolidated financial statements

Subsidiaries are fully consolidated from the date on which the Group obtains control on theirnet assets and operation decision-making and are de-consolidated from the date when suchcontrol ceases. As for a disposed subsidiary, its operating results and cash flows before thedisposal date has been appropriately included in the consolidated income statement and cashflow statement; and as for subsidiaries disposed in the current period, the opening items inthe consolidated balance sheet are not adjusted. For a subsidiary acquired in a businesscombination not under the same control, its operating results and cash flows after theacquiring date have been appropriately included in the consolidated income statement andcash flow statement, and the opening items and comparative items in the consolidatedfinancial statements are not adjusted. For a subsidiary acquired in a business combinationunder the same control or a combined party obtained in a takeover, its operating results andcash flows from the beginning of the reporting period of the combination to the combinationdate have been appropriately included in the consolidated income statement and cash flowstatement, and the comparative items in the consolidated financial statements are adjusted atthe same time.

The financial statements of subsidiaries are adjusted in accordance with the accountingpolicies and accounting period of the Group during the preparation of the consolidatedfinancial statements, where the accounting policies and the accounting periods areinconsistent between the Group and subsidiaries. For a subsidiary acquired from a businesscombination not under the same control, the individual financial statements of the subsidiaryare adjusted based on the fair value of the identifiable net assets at the acquisition date.

All significant inter-group balances, transactions and unrealized profits are offset in theconsolidated financial statements.

The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profitsand losses for the period not held by the Group are recognized as minority interests andminority shareholder profits and losses respectively and presented separately undershareholders’ equity and net profits in the consolidation financial statements. The portion ofa subsidiary’s net profits and losses for the period that belong to minority interests is


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presented as the item of “minority shareholder profits and losses” under the bigger item ofnet profits in the consolidated financial statements. Where the loss of a subsidiary shared byminority shareholders exceeds the portion enjoyed by minority shareholders in thesubsidiary’s opening owners’ equity, minority interests are offset.

Where the Group losses control on its original subsidiaries due to disposal of some equityinvestments or other reasons, the residual equity interests are re-measured according to thefair value on the date when such control ceases. The summation of the consideration obtainedfrom the disposal of equity interests and the fair value of the residual equity interests, minusthe portion in the original subsidiary’s net assets measured on a continuous basis from theacquisition date that is enjoyable by the Group according to the original shareholdingpercentage in the subsidiary, is recorded in investment gains for the period when the Group’scontrol on the subsidiary ceases. Other comprehensive incomes in relation to the equityinvestment in the original subsidiary are treated on the same accounting basis as the acquireedirectly disposes the relevant assets or liabilities (that is, except for the changes in the netliabilities or assets with a defined benefit plan resulted from re-measurement of the originalsubsidiary, the rest shall all be transferred into current investment gains) when such controlceases. And subsequent measurement is conducted on the residual equity interests accordingto the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investmentsor the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurementof Financial Instruments. For details, see note IV, 12 “long term equity investment” or 9“financial instruments”.

Where the Group losses control on its original subsidiaries due to step by step disposal ofequity investments through multiple transactions, it need to distinguish the Group lossescontrol on its subsidiaries due to disposal of equity investments whether belongs to a packagedeal. All the transaction terms, conditions and economic impact of the disposal ofsubsidiaries’ equity investment are in accordance with one or more of the followingconditions, which usually indicate the multiple transactions, should be considered as a

package deal for accounting treatment. ① These deals are at the same time or under the

condition of considering the influence of each other to concluded;② These transactions only

be as a whole can achieve a complete business result; ③ The occurrence of a deal depends

on at least one other transactions；④ A deal alone is not economical, it is economical with

other trading together. Those not belong to a package deal, each of them a deal depends oncircumstances respectively conduct accounting treatment in accordance with the applicableprinciples of “part disposal of subsidiaries of a long-term equity investment under the

condition of not losing control on its subsidiaries” (see note IV 12, (2) ④) and “Where the

Group losses control on its original subsidiaries due to disposal of some equity investmentsor other reasons” (See the front paragraph) relevant transactions of the Group losses controlon its subsidiaries due to disposal of equity investments belonging to a package deal,considered as a transaction and conduct accounting treatment. However, Before losingcontrol, every disposal cost and corresponding net assets balance of subsidiary of disposalinvestment are confirmed as other comprehensive income in consolidated financial


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statements, which together transferred into the current profits and losses in the lose ofcontrol , when the Group losing control on its subsidiary.

6. Classification of joint arrangements and accounting treatment of joint operations

A joint arrangement refers to an arrangement jointly controlled by two participants or above.The Group classifies joint arrangements into joint operations and joint ventures according toits rights and duties in the joint arrangements. A joint operation refers to a joint arrangementwhere the Group enjoys assets and has to bear liabilities related to the arrangement. A jointventure refers to a joint arrangement where the Group is only entitled to the net assets of thearrangement.

The Group’s investments in joint ventures are measured at the equity method according to

the accounting policies mentioned in Note IV. 12 (2)② “Long-term equity investments

measured at the equity method”.

For a joint operation, the Group, as a joint operator, recognizes the assets and liabilities that itholds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borneliabilities according to the Group’s stake in the joint operation; recognizes the income fromsale of the Group’s share in the output of the joint operation; recognizes the income from saleof the joint operation’s outputs according to the Group’s stake in it; and recognizes theexpense solely incurred to the Group and the expense incurred to the joint operationaccording to the Group’s stake in it.

When the Group, as a joint operator, transfers or sells assets (the assets not constitutingbusiness, the same below) to the joint operation, or purchases assets from the joint operation,before the assets are sold to a third party, the Group only recognizes the share of the otherjoint operators in the gains and losses arising from the sale. Where impairment occurs to theassets as prescribed in <The Accounting Standard No. 8 for Business Enterprises—AssetImpairment>, the Group shall fully recognizes the loss for a transfer or sale of assets to ajoint operation; and shall recognize the loss according to its stake in the joint operation for apurchase of assets from the joint operation.

7. Recognition standard for cash and cash equivalents

In the Group’s understanding, cash and cash equivalents include cash on hand, any depositthat can be used for cover, and short-term (usually due within 3 months since the day ofpurchase) and high circulating investments, which are easily convertible into known amountof cash and whose risks in change of value are minimal.

8. Foreign currency businesses and translation of foreign currency financial statements

(1) Accounting treatments for translation of foreign currency transactions

As for a foreign currency transaction, the Company shall convert the amount in a foreigncurrency into amount in its bookkeeping base at the spot exchange rate (usually referring tothe central parity rate announced by the People’s Bank of China, the same below) of thetransaction date, while as for such transactions as foreign exchange or involving in foreign


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exchange, the Company shall converted into amount in the bookkeeping base currency atactual exchange rate the transaction is occurred.

(2) Accounting treatments for translation of foreign currency monetary items andnon-monetary items

On the balance sheet date, the foreign currency monetary items shall be translated at the spot

exchange rate on the balance sheet date. The exchange difference arising from the difference

between the spot exchange rate on the balance sheet date and the spot exchange rate at the

time of initial recognition or prior to the balance sheet date shall be recorded in the profits

and losses in the current period, excluding the following situations: ① the exchange

difference arising from foreign currency loans related to acquisition of fixed assets shall be

treated at the principle of capitalization of borrowing costs; ② the exchange difference

arising from the hedging instruments used for effective hedging of net overseas operation

investments shall be recorded into other comprehensive incomes, and shall be recognized

into current gains and losses when the net investments are disposed; and ③ the exchange

difference arising from change in the book balance of foreign currency monetary items

available for sale except the amortized costs shall be recorded into other comprehensive

gains and losses.

When it involves overseas business in preparing the consolidated financial statement, for the

translation difference of foreign currency monetary items of net investment in overseas

business arising from the change in exchange rate, it shall be recorded into the other

comprehensive income; and be recorded into disposal gains and losses at current period when

disposing overseas business.

A foreign currency non-monetary item measured at the historical costs shall still be translated

at the spot exchange rate on the transaction date. Where the foreign non-monetary items

measured at the fair value shall be converted into amount in its bookkeeping base currency at

spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in

fair value, and recorded into the current period gains and losses or as other comprehensive

incomes.

(3) Translation of foreign currency financial statements

When it involves overseas business in preparing the consolidated financial statement, for thetranslation difference of foreign currency monetary items of net investment in overseasbusiness arising from the change in exchange rate, it shall be recorded into the item of“difference of foreign currency financial statement translation” under the owners’ equity; andbe recorded into disposal gains and losses at current period when disposing overseasbusiness.


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The foreign currency financial statement of overseas business should be translated in to RMBfinancial statement by the following methods: The asset and liability items in the balancesheets shall be translated at a spot exchange rate on the balance sheet date. Among theowner’s equity items, except for the items as “undistributed profits”, other items shall betranslated at the spot exchange rate at the time when they are incurred. The income andexpense items in the profit statements shall be translated at the spot exchange rate of thetransaction date. The undistributed profits at year-begin is the undistributed profits at the endof last year after the translation; undistributed profits at year-end shall be listed as variousdistribution items after the translation; after the translation, the balance between assets andthe sum of liabilities and owners’ equities shall be recorded into other comprehensive gainsand losses as difference of foreign currency translation. Where an enterprise disposes of anoverseas business without the control right, it shall shift the differences, which is presentedunder the items of the owner’s equities in the balance sheet and which arises from thetranslation of foreign currency financial statements relating to this overseas business, into thedisposal profits and losses of the current period by all or proportion of the disposed overseasbusiness.

Foreign cash flow shall be translated at the spot exchange rate/the weighted average of theexchange rate of the current period of the date of cash flow incurred. The influence ofexchange rate on the cash flow shall be adjustment item and individually listed in the cashflow statement.

And the opening balance and the actual balance of last year shall be listed at the amountsafter translation of foreign currency financial statement in last year.

Where the control of the Group over an overseas operation ceases due to disposal of all orsome of the Group’s owner’s equity in the overseas operation or other reasons, theforeign-currency statement translation difference belonging to the parent company’s owner’sequity in relation to the overseas operation which is stated under the shareholders’ equity inthe balance sheet shall be all restated as gains and losses of the disposal period.

Where the Group’s equity in an overseas operation decreases due to disposal of some equityinvestment or other reasons but the Group still has control over the overseas operation, theforeign-currency statement translation difference in relation to the disposed part of theoverseas operation shall be recorded into minority interests instead of current gains andlosses. If what’s disposed is some equity in an overseas associated enterprise or joint venture,the foreign-currency statement translation difference related to the overseas operation shallbe recorded into the gains and losses of the current period of the disposal according to thedisposal ratio.

9. Financial instruments

The Group recognizes a financial asset or liability when it becomes a party of the relevantfinancial instrument contract. Financial assets and liabilities are measured at fair value ininitial recognition. As for the financial assets and liabilities measured at fair value of whichchanges are recorded into current gains and losses, the relevant dealing expenses are directlyrecorded into gains and losses; and the dealing expenses on other kinds of financial assetsand liabilities are included in the amounts initially recognized.

(1) Determination of the fair value of main financial assets and financial liabilities


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Fair value refers to the price that a market participant shall receive for selling an asset orshall pay for transferring a liability in an orderly transaction on the measurement date. As forthe financial assets or financial liabilities for which there is an active market, the quotedprices in the active market shall be used to determine the fair values thereof. The quotedprices in the active market refers to the prices available from stock exchange, broker’sagencies, guilds, pricing organization and etc., which represent the actual trading price underequal transaction. Where there is no active market for a financial instrument, the enterpriseconcerned shall adopt value appraisal techniques, including the prices adopted by the parties,who are familiar with the condition, in the latest market transaction upon their own free will,the current fair value obtained by referring to other financial instruments of the sameessential nature, the cash flow capitalization method and the option pricing model, etc., todetermine its fair value.

(2) Classification, recognition and measurement of financial assets

The purchase and sale of financial assets under the normal ways shall be recognized andstopped to be recognized respectively at the price of transaction date. Financial assets shallbe classified into the following four categories when they are initially recognized: (a) thefinancial assets which are measured at their fair values and the variation of which is recordedinto the profits and losses of the current period, (b) the investments which will be held totheir maturity; (c) loans and the account receivables; and (d) financial assets available forsale.

① The financial assets which are measured at their fair values and the variation of which is

recorded into the profits and losses of the current period

Including transactional financial assets and the financial assets which are designated to bemeasured at their fair value when they are initially recognized and of which the variation isrecorded into the profits and losses of the current period;

The financial assets meeting any of the following requirements shall be classified as

transactional financial assets：A. The purpose to acquire the said financial assets is mainly for

selling them in the near future; B. Forming a part of the identifiable combination of financialinstruments which are managed in a centralized way and for which there are objectiveevidences proving that the enterprise may manage the combination by way of short-termprofit making in the near future; C. Being a derivative instrument, excluding the designatedderivative instruments which are effective hedging instruments, or derivative instruments tofinancial guarantee contracts, and the derivative instruments which are connected with theequity instrument investments for which there is no quoted price in the active market, whosefair value cannot be reliably measured, and which shall be settled by delivering the saidequity instruments.

The financial assets meeting any of the following requirements shall be designated asfinancial assets which are measured at their fair values and the variation of which is recordedinto the profits and losses of the current period for initial recognition: A. the designation caneliminate or significantly reduce the difference of relevant gains and losses betweenrecognition and measurement causing from different bases for measurement of financialassets; B. The official written documents for risk management and investment strategies of


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the enterprise have clearly stated that it shall ,manage, evaluate and report to importantmanagement personnel based on the fair value, about the financial assets group or the groupof financial assets & liabilities which the financial assets are belong to.

For the financial assets which are measured at their fair values and the variation of which isrecorded into the profits and losses of the current period shall continue to be measured by fairvalue, gains and losses of change in fair value, dividends and interest related with thesefinancial assets should be recorded into gains and losses of current period.

② Held-to-maturity investment

The term “held-to-maturity investment” refers to a non-derivative financial asset with a fixeddate of maturity, a fixed or determinable amount of repo price and which the enterprise holdsfor a definite purpose or the enterprise is able to hold until its maturity.

For the held-to-maturity investment adopting actual interest rate method, which is measuredat the post-amortization costs, the profits and losses that arise when such financial assets orfinancial liabilities are terminated from recognition, or are impaired or amortized, shall berecorded into the profits and losses of the current period.

The actual interest rate method refers to the method by which the post-amortization costs andthe interest incomes of different installments or interest expenses are calculated in light of theactual interest rates of the financial assets or financial liabilities (including a set of financialassets or financial liabilities). The actual interest rate refers to the interest rate adopted tocash the future cash flow of a financial asset or financial liability within the predicted term ofexistence or within a shorter applicable term into the current carrying amount of the financialasset or financial liability.

When the actual interest rate is determined, the future cash flow shall be predicted on thebasis of taking into account all the contractual provisions concerning the financial asset orfinancial liability (the future credit losses shall not be taken into account).and also the variousfee charges, trading expenses, premiums or reduced values, etc., which are paid or collectedby the parties to a financial asset or financial liability contract and which form a part of theactual interest rate.

③ Loans and the accounts receivables

Loans and the accounts receivables refer to non-derivative financial assets, which there is noquotation in the active market, with fixed recovery cost or recognizable.

Financial assets that are defined as loans and the accounts receivables by the Group includingnotes receivables, accounts receivables, interest receivable, dividends receivable and otherreceivables etc..

Loans and the accounts receivables are made follow-up measurement on the basis ofpost-amortization costs employing the effective interest method. Gains or loss arising fromthe termination recognition, impairment occurs or amortization shall be recorded into theprofits and losses of the current period.

④ Assets available for sales


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Assets available for sales including non-derivative financial asset that has been assigned asassets available for sales on the initial recognition and financial assets excluded thosemeasured at fair value and of which the variation into profits and losses of the current period,they are some financial assets, loans and accounts receivables, held-to-maturity investment.

The cost at the period-end of the available-for-sale liabilities instruments should beconfirmed according to its amortized cost method, that is the initially recognized amountwhich deduct the principal that had been repaid, to plus or minus the accumulativeamortization amount formed by the amortization between the difference of the initiallyrecognized amount and the amount on the due date that adopted the actual interest ratemethod, and at the same time deduct the amount after the impairment loss happened. Thecost at the period-end of the available-for-sale liabilities instruments is its initial cost.

Financial assets available-for-trade are subsequently measured at fair value, and gains or

losses arising from changes in the fair value are recognized as other comprehensive income，

and be carried forward when the said financial assets stopped recognition, then it shall berecorded into the profits and losses of the current period. But, the equity instrumentinvestment which neither have quotation in the active market nor its fair value could not bereliable measured, as well as the derivative financial assets that concern with the equityinstruments and should be settled through handing over to its equity instruments, should takethe follow-up measurement according to the cost.

Interest receive during the holding of assets available for sales and cash dividends withdistribution announcement by invested companies, it shall be recorded into the profits andlosses of the current period.

(3) Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every financial assetexcept for the financial assets that measured by the fair value. If there is objective evidenceindicating a financial asset may be impaired, a provision is provided for the impairment.

The Group carries out a separate impairment test for every financial asset which isindividually significant. As for a financial asset which is individually insignificant, animpairment test is carried out separately or in the financial asset group with similar credit risk.Where the financial asset (individually significant or insignificant) is found not impairedafter the separate impairment test, it is included in the financial asset group with similarcredit risk and tested again on the group basis. Where the impairment loss is recognized foran individual financial asset, it is not included in the financial asset group with similar creditrisk for an impairment test.

① Impairment on held-to maturity investment, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying value bythe estimated present value of future cash flow. The difference is recorded as impairment loss.If there is objective evidence to indicate the recovery of value of financial assets afterimpairment, and it is related with subsequent event after recognition of loss, the impairmentloss recorded originally can be reversed. The carrying value of financial assets after


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impairment loss reversed shall not exceed the amortized cost of the financial assets withoutprovisions of impairment loss on the reserving date.

② Impairment of available-for-sale financial assets

When it judged that the decrease of fair value of the available-for-sale equity instrumentinvestment is serious and not temporarily after comprehensive considering relevant factors, itreflected that the available-for-sale equity instrument investment occurred impairment. Ofwhich, the “serious decline” refers to the accumulative decline range of the fair value over20%; while the “non-temporary decline” refers to the consecutive decline time of the fairvalue over 12 months.

Where an available-for-sale financial asset is impaired, the accumulative losses arising fromthe decrease of the fair value of the capital reserve which is directly included are transferredout and recorded in the profits and losses for the current period. The accumulative lossestransferred out are the balance obtained from the initially obtained cost of the said financialasset after deducting the principals as taken back, the amortized amount, the current fairvalue and the impairment loss originally recorded in the profits and losses.

Where the impairment loss has been recognized for an available-for-sale financial asset, if,within the accounting periods thereafter, there is any objective evidence proving that thevalue of the said financial asset has been restored and the restoration is objectively related tothe events that occur after the impairment loss was recognized, the originally recognizedimpairment loss is reversed. The impairment losses on the available-for-sale equityinstrument investments are reversed and recognized as other comprehensive incomes, and theimpairment losses on the available-for-sale liability instruments are reversed and recorded inthe profits and losses for the current period.

The impairment loss incurred to an equity instrument investment for which there is no quotedprice in the active market and whose fair value cannot be reliably measured, or incurred to aderivative financial asset which is connected with the said equity instrument investment andwhich must be settled by delivering the said equity investment, is not reversed.

(4) Recognition and measurement of financial asset transfers

Where a financial asset satisfies any of the following requirements, the recognition of it is

terminated: ① The contractual rights for collecting the cash flow of the said financial asset

are terminated;② The said financial asset has been transferred and nearly all of the risks and

rewards related to the ownership of the financial asset to the transferee; or ③ The said

financial asset has been transferred. And the Group has ceased its control on the saidfinancial asset though it neither transfers nor retains nearly all of the risks and rewardsrelated to the ownership of the financial asset.

Where the Group neither transfers nor retains nearly all of the risks and rewards related to theownership of a financial asset, and it does not cease its control on the said financial asset, itrecognizes the relevant financial asset and liability accordingly according to the extent of itscontinuous involvement in the transferred financial asset. The term "continuous involvement


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in the transferred financial asset" refers to the risk level that the enterprise faces resultingfrom the change of the value of the financial asset.

If the transfer of an entire financial asset satisfies the conditions for stopping recognition, thedifference between the amounts of the following 2 items is recorded in the profits and lossesof the current period: (1) The book value of the transferred financial asset; and (2) The sumof consideration received from the transfer, and the accumulative amount of the changes ofthe fair value originally recorded in other comprehensive incomes.

If the transfer of partial financial asset satisfies the conditions to stop the recognition, thebook value of the transferred financial asset is apportioned between the portion whoserecognition has been stopped and the portion whose recognition has not been stoppedaccording to their respective relative fair value, and the difference between the amounts ofthe following 2 items is included into the profits and losses of the current period: (1) Thesummation of the consideration received from the transfer and the portion of theaccumulative amount of changes in the fair value originally recorded in other comprehensiveincomes which corresponds to the portion whose recognition has been stopped; and (2) Theamortized carrying amounts of the aforesaid amounts.

In respect of the assets using recourse to sell or using endorsement to transfer, the Groupneeds to determine whether almost all of the risks and rewards of the financial assetownership are transferred. If almost all of the risks and rewards of the financial assetownership had been transferred to the transferee, derecognize the financial assets. For almostall of the risks and rewards of the financial asset ownership retained, do not end to recognizethe financial assets. For which neither transfer or retain almost all of the risks and rewards ofthe financial asset ownership, continuously judge whether the Company retain the control ofthe assets, and conduct accounting treatment according to the principle of mentioned in theprevious paragraphs.

(5) Classification and measurement of financial liabilities

In the initial recognition, financial liabilities are divided into the financial liabilities measuredat fair values and whose changes are recorded in current gains and losses and other financialliabilities. Financial liabilities are initially recognized at their fair values. As for a financialliability measured at fair value and whose changes are recorded in current gains and losses,the relevant trading expense is directly recorded in the profits and losses for the currentperiod. As for other financial liabilities, the relevant trading expenses are recorded in theinitially recognized amounts.

① Financial liabilities measured at fair values and whose changes are recorded in current

gains and losses

Such financial liabilities are divided into transactional financial liabilities and financialliabilities designated to be measured at fair values and whose changes are recorded in currentgains and losses in the initial recognition under the same conditions where such financialassets are divided into transactional financial assets and financial assets designated to bemeasured at fair values and whose changes are recorded in current gains and losses in theinitial recognition.


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Financial liabilities measured at fair values and whose changes are recorded in current gainsand losses are subsequently measured at their fair values. Gains or losses arising from the fairvalue changes, as well as the dividend and interest expenses in relation to the said financialliabilities, are recorded in the profits and losses for the current period.

② Other financial liabilities

As for a derivative financial liability connected to an equity instrument for which there is notquoted price in an active market and whose fair value cannot be reliably measured and whichmust be settled by delivering the equity instrument, it is subsequently measured on the basisof costs. Other financial liabilities are subsequently measured according to the amortized costusing the actual interest rate method. Gains or losses arising from de-recognition oramortization of the said financial liabilities is recorded in the profits and losses for thecurrent period.

③ Financial guarantee contract and loan commitment

For the financial guarantee contracts which are not designated as a financial liabilitymeasured at its fair value and the variation thereof is recorded into the profits and losses ofthe current period, or the loan commitment which is not designated as a financial liabilitymeasured at its fair value and the variation thereof is recorded into the gains and losses thatwill be loaned lower than the market interest rate, which shall be initially recognized by fairvalue, and the subsequent measurement shall be made after they are initially recognizedaccording to the higher one of the following: a. the amount as determined according to theAccounting Standards for Enterprises No. 13 – Contingencies; b. the surplus afteraccumulative amortization as determined according to the principles of the AccountingStandards for Enterprises No. 14 - Revenues is subtracted from the initially recognizedamount.

(6) De-recognition of financial liabilities

Only when the prevailing obligations of a financial liability are relieved in all or in part maythe recognition of the financial liability be terminated in all or partly. Where the Group(debtor) enters into an agreement with a creditor so as to substitute the existing financialliabilities by way of any new financial liability, and if the contractual stipulations regardingthe new financial liability is substantially different from that regarding the existing financialliability, it terminates the recognition of the existing financial liability, and at the same timerecognizes the new financial liability.

Where the recognition of a financial liability is totally or partially terminated, the enterpriseconcerned shall include into the profits and losses of the current period for the gap betweenthe book value which has been terminated from recognition and the considerations it has paid(including the non-cash assets it has transferred out and the new financial liabilities it hasassumed)

(7) Derivatives and embedded derivatives

Derivative financial instruments include derivatives are initially measured at fair value at thedate when the derivative contracts are entered into and are substantially re-measured at fairvalue. The resulting gain and loss is recognized in profit or loss.


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An embedded derivative is separated from the hybrid instrument, where the hybridinstrument is not designated as a financial asset or financial liability at fair value thoughprofit or loss, and the treated as a standalone derivative if (a) the economic characteristicsand risks of the embedded derivative are not closely related to the economic characteristicsand risks of the host contract; and (b) a separate instrument with the same terms as theembedded derivative would meet the definition of a derivative. If the Company is unable tomeasure the embedded derivative separately either at acquisition or at a subsequent balancesheet date, it designates the entire hybrid instrument as a financial asset or financial liabilityat fair value through profit or loss.

(8) Offsetting financial assets and financial liabilities

When the Group has a legal right that is currently enforceable to set off the recognizedfinancial assets and financial liabilities, and intends either to settle on a net basis, or to realizethe financial asset and settle the financial liability simultaneously, a financial asset and afinancial liability shall be offset and the net amount is presented in the balance sheet. Exceptfor the above circumstances, financial assets and financial liabilities shall be presentedseparately in the balance sheet and shall not be offset.

(9) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of theCompany after deducting all of its liabilities. The Group issues (including refinancing),re-purchases, sells or written-offs the equity instrument as the disposing of the changes of theequity. The Group not recognized the changes of the fair value of the equity instrument. Thetransaction expenses related to the equity transaction would be deducted from the equity.

All types of distribution (excluding stock dividends) made by the Group to holders of equityinstruments are deducted from shareholders’ equity. The Group does not recognize anychanges in the fair value of equity instruments.

10. Receivables

Receivables include account receivables and other accounts receivables.

(1) Recognition of provision for bad debts:

The Group shall test the carrying amount of receivables on the balance sheet date. Wherethere is any objective evidence proving that such receivables have been impaired, animpairment provision shall be made.

① Debtor has serious financial difficult;

② Debtor goes against the contract clause (for instance, breach of faith or overdue paying

interests or principal);

③ Debtors have a great probability of bankruptcy or other financial reorganization;

④ Other objective evidence proving such accounts receivable has been impaired;


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(2) Withdraw method of provision for bad debts

① The recognition criteria and method of individual provision for bad debts of receivables

that are individually significant

The Group recognized the receivables with amount above RMB20 million and otherreceivables above 10 million as receivables with significant single amounts and withdrawnthe provision for bad debts.

The Group made an independent impairment test on receivables with significant singleamounts; the financial assets without impairment by independent impairment test should beincluded in financial assets portfolio with similar credit risk to take the impairment test.Receivables was recognized with impairment should no longer be included in receivablesportfolio with similar credit risk to take the impairment test.

② The recognition and method of provision for bad debts of receivables by credit risk

portfolio

A. Recognition of credit risk group

Receivables that not individually significant and individually significant but withoutimpairment by independent impairment test, are grouped on the basis of similarity andrelevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all thedue accounts in accordance with contract for such assets, which also are related with themeasurement on future cash flow of the examined assets.

Recognition basic of different groups:

Item Basic

Group 1: Aging groupDivide the groups according to the credit risks characteristics of the accounts

receivable

Group 2: Internal related party

groups of the Company

Divide the groups according to the credit risks characteristics of whether the

creditor is the internal related party of the Company

B. Withdrawal method of provision for bad debts recognized by credit risk group

For the impairment test implemented by groups, the amount of provision for bad debts was

appraised and recognized in accordance with the structure of accounts receivable group and

similar characteristics of credit risk (the debtor’s ability to pay off the loans in accordance

with the provisions of contract), experience of losses, current economic status and the

predicted losses in the accounts receivable group.

Withdrawal method of the bad debts provision of the different groups:

Item Withdrawal method

Group 1: Aging group Aging analysis method


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Item Withdrawal method

Group 2: Internal related party groups

of the Company

To make an independent impairment test and if there was no impairment,

should not withdraw the bad debts provision.

In the groups, adopting aging analysis method to withdraw bad debt provision:

AgeWithdrawal proportion for accounts

receivable (%)Withdrawal proportion for other

accounts receivable (%)

Within 1 year (including 1 year, similarlyhereinafter) 2 2

1-2 years 5 5

2-3 years 20 20

3-4 years 50 50

4-5 years 50 50

Over 5 years 100 100

③ Receivables with insignificant amount but being individually withdrawn the provision forbad debtsThe Group made independent impairment test on receivables with insignificant amount butwith the following characteristics, if any objective evidence shows that the accountsreceivable has been impaired, impairment loss shall be recognized on the basis of the gapbetween the current values of the future cash flow lower than its book value so as towithdraw provision for bad debts:A. Receivables have dispute with the other parties or involving lawsuit and arbitration;B. Receivables have obvious indication showing that the debtors are likely to fail to performthe duty of repayment, etc.(3) Reversal of provision for bad debts

If there is any objective evidence proving that the value of the said receivables has been

restored, and it is objectively related to the events occurred after such loss is recognized, the

impairment-related losses as originally recognized shall be reversed and be recorded into the

profits and losses of the current period. However, the reversed carrying amount shall not be

any more than the post-amortization costs of the said accounts receivable on the day of

reverse under the assumption that no provision is made for the impairment.

11. Inventory

(1) Classification

The Group’s inventories are classified as non-property inventories and property inventories.


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And the non-property inventories include raw materials, goods in process; merchandise onhand, goods delivered and circulating materials, etc; while the property inventories includeproperty in process and finished property, etc.

① The finished property refers to the finished and held-for-sale property.

② The property in process (development costs) refers to the unfinished property with the

development purpose for sale.

(2) Pricing method for outgoing inventories

Pricing method: weighted average methodThe inventories shall be measured in light of their cost when obtained. The cost of inventoryconsists of purchase costs, processing costs and other costs. Inventory is accounted by weightaverage method upon receiving and giving. For merchandise on hand shall be accounted byplanned cost, if the difference between planned cost of and actual cost of raw materials isaccounted through the cost variance item, and the planned cost is adjusted to the actual costaccording to the cost difference which the carryover and given-out inventory should shoulderin the period.

The property inventories are initially measured at the costs, and the costs of the developed

property include the land premium, expenditures for supporting infrastructures, expenditures

for construction and installation projects, the borrowing costs before the completion of the

developed project and other expenses occurred during the development process.

① The public supporting facilities recorded the development costs at the actual costs, the

amortization upon completion was transferred to the costs of houses and other

available-for-sale property, while as for the supporting facilities with operating value and

beneficiary rights owned by the Group as well as available for individual sale and

measurement, which shall be recorded into the “investment property”

② For the accounting policies on borrowing costs occurred for developing property, please

refer to Note IV. 17 Pricing of “Borrowing Costs”.

(3) Recognition basis of net realizable value and withdrawal method of depreciationreserves for inventories

The net realizable value refers, in the ordinary course of business, to the account afterdeducting the estimated cost of completion, estimated sale expense and relevant taxes fromthe estimated sale price of inventories. The net realizable value of inventories shall be fixedon the basis of valid evidence as well as under consideration of purpose of inventories andthe effect of events after balance-sheet-date.


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On the balance sheet date, the inventories shall be measured according to the cost or the netrealizable value, whichever is lower. If the net realizable value is lower than the cost, it shallwithdraw the depreciation reserves for inventories, which was withdrawn in accordance withthe balance that the cost of individual inventory item exceeding the net realizable value.

After withdrawing the depreciation reserves for inventories, if the factors, which cause any

write-down of the inventories, have disappeared, causing the net realizable value of

inventories is higher than its carrying amount; the amount of write-down shall be reversed

from the original amount of depreciation reserve for inventories. The reversed amount shall

be included in the profits and losses of the current period.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method of the low-value consumption goods and packing articles

The low-value consumption goods should be amortized by one time amortization when

acquiring and the packing articles are amortized by one time/gradation amortization when

acquiring.

12. Long-term equity investments

The long-term equity investments of this part refer to the long-term equity investments thatthe Group has control, joint control or significant influence over the investees. The long-termequity investment that the Group does not have control, joint control or significant influenceover the investees, should be recognized as available-for-sale financial assets or be measuredby fair value with the changes should be included in the financial assets accounting of thecurrent gains and losses, and please refer the details of the accounting polices to Notes IV 9“financial instrument”.Joint control, refers to the control jointly owned according to the relevant agreement on anarrangement by the Group and the relevant activities of the arrangement should be decidedonly after the participants which share the control right make consensus. Significantinfluence refers to the power of the Group which could anticipate in the finance and theoperation polices of the investees, but could not control or jointly control the formulation ofthe policies with the other parties.

(1) Recognition of investment costsAs for long-term equity investments acquired by enterprise merger, if the merger is under thesame control, the share of the book value of the owner’s equity of the merged enterprise, onthe date of merger, is regarded as the initial cost of the long-term equity investment. Thedifference between the initial cost of the long-term equity investment and the payment incash, non-cash assets transferred as well as the book value of the debts borne by the mergingparty shall offset against the capital reserve. If the capital reserve is insufficient to dilute, theretained earnings shall be adjusted. If the consideration of the merging enterprise is that itissues equity securities, it shall, on the date of merger, regard the share of the book value ofthe shareholder's equity of the merged enterprise on the consolidated financial statement ofthe ultimate control party as the initial cost of the long-term equity investment. The total facevalue of the stocks issued shall be regarded as the capital stock, while the difference between


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the initial cost of the long-term equity investment and total face value of the shares issuedshall offset against the capital reserve. If the capital reserve is insufficient to dilute, theretained earnings shall be adjusted. The equities of the combined party which respectivelyacquired through multiple transaction under the same control that ultimately form into thecombination of the enterprises under the same control, should be disposed according whetherbelongs to package deal; if belongs to package deal, each transaction would be executedaccounting treatment by the Company as a transaction of acquiring the control right. If notbelongs to package deal, it shall, on the date of merger, regard the enjoyed share of the bookvalue of the shareholder's equity of the merged enterprise on the consolidated financialstatement of the ultimate control party as the initial cost of the long-term equity investment,and as for the difference between the initial investment cost of the long-term equityinvestment and sum of the book value of the long-term equity investment before thecombination and the book value of the consideration of the new payment that furtherrequired on the combination date, should adjust the capital reserve; if the capital reserve isinsufficient to dilute, the retained earnings shall be adjusted. The equity investment heldbefore the combination date which adopted the equity method for accounting, or the othercomprehensive income confirmed for the available-for-sale financial assets, should not haveany accounting disposal for the moment.For the long-term investment required from the business combination under different control,the initial investment cost regarded as long-term equity investment on the purchasing dateaccording to the combination cost, the combination costs shall be the sum of the fair valuesof the assets paid, the liabilities incurred or assumed and the equity securities issued by theCompany. The equities of the acquirees which respectively acquired through multipletransaction that ultimately form into the combination of the enterprises under the differentcontrol, should be disposed according whether belongs to package deal; if belongs topackage deal, each transaction would be executed accounting treatment by the Company as atransaction of acquiring the control right. If not belongs to package deal, the sum of the bookvalue of the original held equity investment of the acquirees and the newly added investmentcost should be regarded as the initial investment cost of the long-term equity investment thatchanged to be accounted by cost method. If the original held equity is calculated by costmethod, the other relevant comprehensive income would not have any accounting disposalfor the moment. If the original held equity investment is the financial assets available for sale,its difference between the fair value and the book value as well as the accumulative changesof the fair value that include in the other comprehensive income, should transfer into thecurrent gains and losses.The commission fees for audit, law services, assessment and consultancy services and otherrelevant expenses occurred in the business combination by the combining party or thepurchase party, shall be recorded into current profits and losses upon their occurrence; thetransaction expense from the issuance of equity securities or bonds securities which are asconsideration for combination by the combining party, should be recorded as the initialamount of equity securities and bonds securities.Besides the long-term equity investments formed by business combination, the otherlong-term equity investments shall be initially measured by cost, the cost is fixed inaccordance with the ways of gaining, such as actual cash payment paid by the Group, the fairvalue of equity securities issued by the Group, the agreed value of the investment contract oragreement, the fair value or original carrying amount of exchanged assets from non-monetaryassets exchange transaction, the fair value of the long-term equity investments, etc. The


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expenses, taxes and other necessary expenditures directly related with gaining the long-termequity investments shall also be recorded into investment cost. The long-term equityinvestment cost for those could execute significant influences on the investees because ofappending the investment or could execute joint control but not form as control, should be asthe sum of the fair value of the original held equity investment and the newly addedinvestment cost recognized according to the No.22 of Accounting Standards for BusinessEnterprises—Recognition and Measurement of Financial Instrument.(2) Subsequent measurement and recognition of gains or lossesA long-term equity investment where the investing enterprise has joint control (except forwhich forms into common operators) or significant influence over the investors should bemeasured by equity method. Moreover, long-term equity investment adopting the costmethod in the financial statements, and which the Company has control on invested entity.

① Long-term equity investment measured by adopting cost method

The price of a long-term equity investment measured by adopting the cost method shall beincluded at its initial investment cost and append as well as withdraw the cost of investingand adjusting the long-term equity investment. The return on investment at current periodshall be recognized in accordance with the cash dividend or profit announced to distribute bythe invested entity, except the announced but not distributed cash dividend or profit includedin the actual payment or consideration upon gaining the investment.

② Long-term equity investment measured by adopting equity method

If the initial cost of a long-term equity investment is more than the Company's attributableshare of the fair value of the invested entity's identifiable net assets for investment, the initialcost of the long-term equity investment may not be adjusted. If the initial cost of a long-termequity investment is less than the Company's attributable share of the fair value of theinvested entity's identifiable net assets for investment, the difference shall be included in thecurrent profits and losses and the cost of the long-term equity investment shall be adjustedsimultaneously.When measured by adopting equity method, respectively recognize investment income andother comprehensive income according to the net gains and losses as well as the portion ofother comprehensive income which should be enjoyed or be shared, and at the same timeadjust the book value of the long-term equity investment; corresponding reduce the bookvalue of the long-term equity investment according to profits which be declared to distributeby the investees or the portion of the calculation of cash dividends which should be enjoyed;for the other changes except for the net gains and losses, other comprehensive income andthe owners’ equity except for the profits distribution of the investees, should adjust the bookvalue of the long-term equity investment as well as include in the capital reserve. Theinvesting enterprise shall, on the ground of the fair value of all identifiable assets of theinvested entity when it obtains the investment, recognize the attributable share of the netprofits and losses of the invested entity after it adjusts the net profits of the invested entity. Ifthe accounting polices adopted by the investees is not accord with that of the Group, shouldbe adjusted according to the accounting policies of the Group and the financial statement ofthe investees during the accounting period and according which to recognize the investmentincome as well as other comprehensive income. For the transaction happened between theGroup and associated enterprises as well as joint ventures, if the assets launched or sold notform into business, the portion of the unrealized gains and losses of the internal transaction,


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which belongs to the Group according to the calculation of the enjoyed proportion, shouldrecognize the investment gains and losses on the basis. But the losses of the unrealizedinternal transaction happened between the Group and the investees which belongs to theimpairment losses of the transferred assets, should not be neutralized. The assets launched bythe Group to the associated enterprises or the joint ventures if could form into business, thelong-term equity investment without control right which acquired by the investors, shouldregard the fair value of the launched business as the initial investment cost the newly addedlong-term equity investment, and for the difference between the initial investment cost andthe book value of the launched business, should be included into the current gains and losseswith full amount. The assets sold by the Group to the associated enterprises or the jointventures if could form into business, the difference between the acquired consideration andthe book value of the business should be included in the current gains and losses with fullamount. The assets purchased by the Group to the associated enterprises or the joint venturesif could form into business, should be accounting disposed according to the regulations of No.20 of ASBE—Business Combination, and should be recognized gains or losses related to thetransaction with full amount.The Group shall recognize the net losses of the invested enterprise until the book value of thelong-term equity investment and other long-term rights and interests which substantiallyform the net investment made to the invested entity are reduced to zero. However, if theGroup has the obligation to undertake extra losses, it shall be recognized as the estimatedliabilities in accordance with the estimated duties and then recorded into investment losses atcurrent period. If the invested entity realizes any net profits later, the Group shall, after theamount of its attributable share of profits offsets against its attributable share of theun-recognized losses, resume recognizing its attributable share of profits.For the long-term equity investment held by the Group before the first execution of the newaccounting criterion on 1 Jan. 2008 of the associated enterprises and joint ventures, if there isdebit difference of the equity investment related to the investment, should be included in thecurrent gains and losses according to the amount of the straight-line amortization during theoriginal remained period.

③Acquiring shares of minority interest

In the preparation for the financial statements, the balance existed between the long-termequity investment increased by acquiring shares of minority interest and the attributable netassets on the subsidiary calculated by the increased shares held since the purchase date (orcombination date), the capital reserves shall be adjusted, if the capital reserves are notsufficient to offset, the retained profits shall be adjusted.

④ Disposal of long-term equity investment

In the preparation of financial statements, the Company disposed part of the long-term equityinvestment on subsidiaries without losing its controlling right on them, the balance betweenthe disposed price and attributable net assets of subsidiaries by disposing the long-termequity investment shall be recorded into owners’ equity; where the Company losses thecontrolling right by disposing part of long-term equity investment on such subsidiaries, itshall treated in accordance with the relevant accounting policies in Note IV. 5 (2) — Methodon preparation of combined financial statements.For other ways on disposal of long-term equity investment, the balance between the bookvalue of the disposed equity and its actual payment gained shall be recorded into current


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profits and losses.For the long-term equity investment measured by adopting equity method, if the remainedequity after disposal still adopts the equity method for measurement, the othercomprehensive income originally recorded into owners’ equity should adopt the same basisof the accounting disposal of the relevant assets or liabilities directly disposed by theinvestees according to the corresponding proportion. The owners’ equity recognized owningto the changes of the other owners’ equity except for the net gains and losses, othercomprehensive income and the profits distribution of the investees, should be transferred intothe current gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement, if theremained equity still adopt the cost method, the other comprehensive income recognizedowning to adopting the equity method for measurement or the recognition and measurementstandards of financial instrument before acquiring the control of the investees, should adoptthe same basis of the accounting disposal of the relevant assets or liabilities directly disposedby the investees and should be carried forward into the current gains and losses according tothe proportion; the changes of the other owners’ equity except for the net gains and losses,other comprehensive income and the profits distribution among the net assets of the investeeswhich recognized by adopting the equity method for measurement, should be carried forwardinto the current gains and losses according to the proportion.For those the Group lost the control of the investees by disposing part of the equityinvestment as well as the remained equity after disposal could execute joint control orsignificant influences on the investees, should change to measure by equity method whencompiling the individual financial statement and should adjust the measurement of theremained equity to equity method as adopted since the time acquired; if the remained equityafter disposal could not execute joint control or significant influences on the investees,should change the accounting disposal according to the relevant regulations of therecognition and measurement standards of financial instrument, and its difference betweenthe fair value and book value on the date lose the control right should be included in thecurrent gains and losses. For the other comprehensive income recognized by adopting equitymethod for measurement or the recognition and measurement standards of financialinstrument before the Group acquired the control of the investees, should execute theaccounting disposal by adopting the same basis of the accounting disposal of the relevantassets or liabilities directly disposed by the investees when lose the control of them, while thechanges of the other owners’ equity except for the net gains and losses, other comprehensiveincome and the profits distribution among the net assets of the investees which recognized byadopting the equity method for measurement, should be carried forward into the currentgains and losses according to the proportion. Of which, for the disposed remained equitywhich adopted the equity method for measurement, the other comprehensive income and theother owners’ equity should be carried forward according to the proportion; for the disposedremained equity which changed to execute the accounting disposal according to therecognition and measurement standards of financial instrument, the other comprehensiveincome and the other owners’ equity should be carried forward in full amount.For those the Group lost the control of the investees by disposing part of the equityinvestment, the disposed remained equity should change to calculate according to therecognition and measurement standards of financial instrument, and difference between thefair value and book value on the date lose the control right should be included in the currentgains and losses. For the other comprehensive income recognized from the original equity


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investment by adopting the equity method, should execute the accounting disposal byadopting the same basis of the accounting disposal of the relevant assets or liabilities directlydisposed by the investees when terminate the equity method for measurement, while for theowners’ equity recognized owning to the changes of the other owner’s equity except for thenet gains and losses, other comprehensive income and the profits distribution of the investees,should be transferred into the current investment income with full amount when terminateadopting the equity method.The Group respectively disposes the equity investment of the subsidiaries through multipletransactions until lose the control right, if the above transactions belongs to the package deal,should execute the accounting disposal by regarding each transaction as a deal of disposingthe equity investment of the subsidiaries until lose the control right, while the differencebetween each expenses of the disposal and the book value of the long-term equity investmentin accord with the disposed equity before losing the control right, should firstly berecognized as other comprehensive income then be transferred into the current gains andlosses of losing the control right along until the time when lose it.

13. Investment real estatesThe term “investment real estates” refers to the real estate held for generating rent and/orcapital appreciation. Investment real estates of the Group include the right to use any landwhich has already been rented; the right to use any land which is held and prepared fortransfer after appreciation; and the right to use any building which has already been rented.The initial measurement of the investment real estate shall be made at its cost. Subsequentexpenditures incurred for an investment real estate is included in the cost of the investmentreal estate when it is probable that economic benefits associated with the investment realestate will flow to the Group and the cost can be reliably measured, otherwise theexpenditure is recognized in profit or loss in the period in which they are incurred.The Group shall make a follow-up measurement to the investment real estates by employingthe cost pattern on the date of the balance sheet. An accrual depreciation or amortization shallbe made for the investment real estates in the light of the accounting policies of the use rightof buildings or lands.For details of impairment test method and withdrawal method of impairment provision ofinvestment real estates, please refer to Note IV. 16. Impairment of Non-current Non-financialAssets.When owner-occupied real estate or inventories are changed into investment real estate orinvestment real estate is changed into owner-occupied real estate, of which book value priorto the change shall be the entry value after the change.When an investment real estate is changed to an owner-occupied real estate, it would betransferred to fixed assets or intangible assets at the date of such change. When anowner-occupied real estate is changed to be held to earn rental or for capital appreciation, thefixed asset or intangible asset is transferred to investment real estate at the date of suchchange. If the fixed asset or intangible asset is changed into investment real estate measuredby adopting the cost pattern, whose book value prior to the change shall be the entry valueafter the change; if the fixed asset or intangible asset is changed into investment real estatemeasured by adopting the fair value pattern, whose fair value on the date of such changeshall be the entry value after the changeAn investment real estate is derecognized on disposal or when the investment real estate ispermanently withdrawn from use and no future economic benefits are expected from its


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disposal. The amount of proceeds on sale, transfer, retirement or damage of an investmentreal estate less its carrying amount and related taxes and expenses is recognized in profit orloss in the period in which it is incurred.

14. Fixed assets(1) Conditions for recognition of fixed assetsThe term "fixed assets" refers to the tangible assets that simultaneously possess the featuresas follows: (a) they are held for the sake of producing commodities, rendering labor service,renting or business management; and (b) their useful life is in excess of one fiscal year. Thefixed assets are only recognized when the relevant economic benefits probably flow in theGroup and its cost could be reliable measured. The fixed assets should take the initialmeasurement according to the cost and at the same time consider the influences of the factorsof the estimated discard expenses.(2) Depreciation methods of each fixed assetThe fixed assets should be withdrawn and depreciation by straight-line depreciation withinthe useful life since the next month when the fixed assets reach the estimated available state.The useful life, estimated net salvage and the yearly discounted rate of each fixed asset are asfollows:

Category of fixed assets Method Useful life (Year)Expected netsalvage value

(%)

Annualdeprecation (%)

Housing and building Straight-line

depreciation20-40 10.00 2.25-4.50

Machinery equipment Straight-line

depreciation10

10.009.00

Electronic equipment Straight-line

depreciation5

10.0018.00

Transportation vehicle Straight-line

depreciation5

10.0018.00

Other equipment Straight-line

depreciation

5 10.0018.00

The “expected net salvage value” refers to the expected amount that the Group may obtainfrom the current disposal of a fixed asset after deducting the expected disposal expenses atthe expiration of its expected useful life.(3) Testing method of impairment and withdrawal method of provision for impairment onfixed assetsFor details of the testing method of impairment and withdraw method of impairmentprovision for impairment on fixed assets, please refer to Note IV. 19 “Long-term assetsimpairment”.(4) Recognition basis, pricing and depreciation method of fixed assets by finance leaseThe “finance lease” shall refer to a lease that has transferred in substance all the risks and


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rewards related to the ownership of an asset. Its ownership may or may not eventually betransferred. The fixed assets by finance lease shall adopt the same depreciation policy forself-owned fixed assets. If it is reasonable to be certain that the lessee will obtain theownership of the leased asset when the lease term expires, the leased asset shall be fullydepreciated over its useful life. If it is not reasonable to be certain that the lessee will obtainthe ownership of the leased asset at the expiry of the lease term, the leased asset shall be fullydepreciated over the shorter one of the lease term or its useful life.(5) Other explanationsThe follow-up expenses related to a fixed asset, if the economic benefits pertinent to thisfixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall berecorded into cost of fixed assets and ultimately recognized as the book value of the replacedpart; otherwise, they shall be included in the current profits and losses.Terminate to recognize the fixed assets when the fixed assets under the disposing state or beestimated that could not occur any economy benefits through using or disposing. When theGroup sells, transfers or discards any fixed assets, or when any fixed assets of the Group isdamaged or destroyed, the Group shall deduct the book value of the fixed assets as well asthe relevant taxes from the disposal income, and include the amount in the current profits andlosses.The Group shall check the useful life, expected net salvage value and depreciation method ofthe fixed assets at the end of the year at least, if there is any change, it shall be regarded as achange of the accounting estimates.

15. Construction in progressConstruction in process is measured at actual cost. Actual cost comprises construction costs,borrowing costs that are eligible for capitalization before the fixed assets being ready fortheir intended us and other relevant costs. Construction in process is transferred to fixedassets when the assets are ready for their intended use.For details of the testing method of impairment and withdraw method of impairmentprovision on construction in progress, please refer to Note IV. 19 “Long-term assetsimpairment”.

16. Borrowing costsThe borrowing costs shall include interest on borrowings, amortization of discounts orpremiums on borrowings, ancillary expenses, and exchange balance on foreign currencyborrowings. When the borrowing costs can be directly attributable to the construction orproduction of assets eligible for capitalization, and the asset disbursements or the borrowingcosts have already incurred, and the construction or production activities which are necessaryto prepare the asset for its intended use or sale have already started, the capitalization ofborrowing costs begins. When the asset eligible for capitalization under acquisition andconstruction or production is ready for the intended use or sale, the capitalization of theborrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses whenincurred.The to-be-capitalized amount of interests shall be determined in light of the actual interestsincurred of the specially borrowed loan at the present period minus the income of interestsearned on the unused borrowing loans as a deposit in the bank or as a temporary investment;the enterprise shall calculate and determine the to-be-capitalized amount on the generalborrowing by multiplying the weighted average asset disbursement of the part of theaccumulative asset disbursements minus the general borrowing by the capitalization rate of


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the general borrowing used. The capitalization rate shall be calculated and determined inlight of the weighted average interest rate of the general borrowing.During the period of capitalization, the exchange balance on foreign currency specialborrowings shall be capitalized; the exchange balance on foreign currency generalborrowings shall be recorded into current profits and losses.The term “assets eligible for capitalization” refers to the fixed assets, investment real estate,inventories and other assets, of which the acquisition and construction or production maytake quite a long time to get ready for its intended use or for sale.Where the acquisition and construction or production of a qualified asset is interruptedabnormally and the interruption period lasts for more than 3 months, the capitalization of theborrowing costs shall be suspended.

17. Intangible assets(1) Pricing method, useful life and impairment testThe term “intangible asset” refers to the identifiable non-monetary assets possessed orcontrolled by enterprises which have no physical shape.The intangible assets shall be initially measured according to its cost. The costs related withthe intangible assets, if the economic benefits related to intangible assets are likely to flowinto the enterprise and the cost of intangible assets can be measured reliably, shall berecorded into the costs of intangible assets; otherwise, it shall be recorded into current profitsand losses upon the occurrence.The use right of land gained is usually measured as intangible assets. For the self-developedand constructed factories and other constructions, the related expenditures on use right ofland and construction costs shall be respectively measured as intangible assets and fixedassets. For the purchased houses and buildings, the related payment shall be distributed intothe payment for use right of land and the payment for buildings, if it is difficult to bedistributed, the whole payment shall be treated as fixed assets.For intangible assets with a finite service life, from the time when it is available for use, thecost after deducting the sum of the expected salvage value and the accumulated impairmentprovision shall be amortized by straight line method during the service life. While theintangible assets without certain service life shall not be amortized.At the end of period, the Group shall check the service life and amortization method ofintangible assets with finite service life, if there is any change, it shall be regarded as achange of the accounting estimates. Besides, the Group shall check the service life ofintangible assets without certain service life, if there is any evidence showing that the periodof intangible assets to bring the economic benefits to the enterprise can be prospected, it shallbe estimated the service life and amortized in accordance with the amortization policies forintangible assets with finite service life.(2) R & D expensesThe expenditures for internal research and development projects of an enterprise shall beclassified into research expenditures and development expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures shall be confirmed as intangible assets when they satisfy thefollowing conditions simultaneously, and shall be recorded into profit or loss for the currentperiod when they don’t satisfy the following conditions.

① It is feasible technically to finish intangible assets for use or sale;


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② It is intended to finish and use or sell the intangible assets;

③ The usefulness of methods for intangible assets to generate economic benefits shall be

proved, including being able to prove that there is a potential market for the productsmanufactured by applying the intangible assets or there is a potential market for theintangible assets itself or the intangible assets will be used internally;

④ It is able to finish the development of the intangible assets, and able to use or sell the

intangible assets, with the support of sufficient technologies, financial resources and otherresources;

⑤ The development expenditures of the intangible assets can be reliably measured.

As for expenses that can’t be identified as research expenditures or developmentexpenditures, the occurred R & D expenses shall be all included in current profits and losses.(3) Testing method of impairment and withdraw method of impairment provision ofintangible assetsFor details of the testing method of impairment and withdraw method of impairmentprovision on intangible assets, see Notes IV. 19 “Long-term assets impairment”.

18. Amortization method of long-term deferred expensesLong-term deferred expenses refer to general expenses with the apportioned period over oneyear (one year excluded) that have occurred but attributable to the current and future periods.Long-term deferred expense shall be amortized averagely within benefit period.

19. Impairment of long-term assetsFor non-current financial Assets of fixed Assets, projects under construction, intangibleAssets with limited service life, investing real estate with cost model, long-term equityinvestment of subsidiaries, cooperative enterprises and joint ventures, the Group shouldjudge whether decrease in value exists on the date of balance sheet. Recoverable amountsshould be tested for decrease in value if it exists. Other intangible Assets of reputation anduncertain service life and other non-accessible intangible assets should be tested for decreasein value no matter whether it exists.If the recoverable amount is less than book value in impairment test results, the provision forimpairment of differences should include in impairment loss. Recoverable amounts would bethe higher of net value of asset fair value deducting disposal charges or present value ofpredicted cash flow. Asset fair value should be determined according to negotiated sales priceof fair trade. If no sales agreement exists but with asset active market, fair value should bedetermined according to the Buyer’s price of the asset. If no sales agreement or asset activemarket exists, asset fair value could be acquired on the basis of best information available.Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantableAssets related to asset disposal. Present value of predicted asset cash flow should bedetermined by the proper discount rate according to Assets in service and predicted cash flowof final disposal. Asset depreciation reserves should be calculated on the basis of singleAssets. If it is difficult to predict the recoverable amounts for single Assets, recoverableamounts should be determined according to the belonging asset group. Asset group is theminimum asset combination producing cash flow independently.


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In impairment test, book value of the business reputation in financial report should be sharedto beneficial asset group and asset group combination in collaboration of business merger. Itis shown in the test that if recoverable amounts of shared business reputation asset group orasset group combination are lower than book value, it should determine the impairment loss.Impairment loss amount should firstly be deducted and shared to the book value of businessreputation of asset group or asset group combination, then deduct book value of all assetsaccording to proportions of other book value of above assets in asset group or asset groupcombination except business reputation.After the asset impairment loss is determined, recoverable value amounts would not bereturned in future.

20. Employee compensationEmployee compensation of the Company mainly includes short-term employeecompensation, departure benefits, demission benefits and other long-term employeecompensation. Of which:Short-term compensation mainly including salary, bonus, allowances and subsidies,employee services and benefits, medical insurance premiums, birth insurance premium,industrial injury insurance premium, housing fund, labor union expenditure and personneleducation fund, non-monetary benefits etc. The short-term compensation actually happenedduring the accounting period when the active staff offering the service for the Group shouldbe recognized as liabilities and is included in the current gains and losses or relevant assetscost. Of which the non-monetary benefits should be measured according to the fair value.Welfare after demission mainly includes setting drawing plan. Defined contribution plansinclude basic endowment insurance, unemployment insurance and annuity. Depositedamounts are charged to relevant asset costs or current profits and losses during theperiod in which they are incurred. Defined benefit plan of the Company is internal earlyretirement plan. According to anticipated accumulative welfare unit, the Company makesestimates by unbiased and consistent actuarial assumption for the demographic variables andfinancial variables, measures the obligations produced in defined benefit plans, anddetermines the vesting period. On balance sheet date, the Company will list all obligations indefined benefit plans as present value and include current service costs into current profitsand losses.When terminating labor relations before expiration of contract, or layoffs with compensations,and the Company can not terminate the labor relations unilaterally or reduce the dimissionwelfare, remuneration and liabilities produced from the dimission welfare should bedetermined and included in current profits and losses when determining the costs ofdismission welfare and recombination. However, dimission welfare not fully paid within 12months after annual report period should be handled the same as other long-term employees’payrolls.The inside employee retirement plan is treated by adopting the same principle with the abovedismiss ion welfare. The group would recorded the salary and the social security insurancefees paid and so on from the employee’s service terminative date to normal retirement dateinto current profits and losses (dismiss ion welfare) under the condition that they meet therecognition conditions of estimated liabilities.The other long-term welfare that the Group offers to the staffs, if met with the settingdrawing plan, should be accounting disposed according to the setting drawing plan, while therest should be disposed according to the setting revenue plan.


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21. Estimated liabilitiesThe company should recognize the related obligation as a provision for liability when theobligation meets the following conditions: (1) That obligation is a present obligation of theenterprise; (2) It is probable that an outflow of economic benefits from the enterprise will berequired to settle the obligation; (3) A reliable estimate can be made of the amount of theobligation.On the balance sheet date, an enterprise shall take into full consideration of the risks,uncertainty, time value of money, and other factors pertinent to the Contingencies to measurethe estimated liabilities in accordance with the best estimate of the necessary expenses for theperformance of the current obligation.When all or some of the expenses necessary for the liquidation of an estimated liabilities ofan enterprise is expected to be compensated by a third party, the compensation should beseparately recognized as an asset only when it is virtually certain that the reimbursement willbe obtained. Besides, the amount recognized for the reimbursement should not exceed thebook value of the estimated liabilities.

22. Revenue(1) Revenue from selling goodsNo revenue from selling goods may be recognized unless the following conditions are metsimultaneously: the significant risks and rewards of ownership of the goods have beentransferred to the buyer by the enterprise; the enterprise retains neither continuousmanagement right that usually keeps relation with the ownership nor effective control overthe sold goods; the relevant amount of revenue can be measured in a reliable way; therelevant economic benefits may flow into the enterprise; and the relevant costs incurred or tobe incurred can be measured in a reliable way.The recognition of revenue from commodities for the home market when shipping the goods:for good exported by way of FOB, the revenue shall be recognized once the goods weredelivered to the carrier designated by the purchaser; for goods exported by way of CIF, therevenue shall be recognized once the goods reach the port of the purchase.(2) Providing labor servicesIf the Group can reliably estimate the outcome of a transaction concerning the labor servicesit provides, it shall recognize the revenue from providing services employing thepercentage-of-completion method on the date of the balance sheet. The completed proportionof a transaction concerning the providing of labor services shall be decided by the proportionof the labor service already provided to the total labor service to provide.The outcome of a transaction concerning the providing of labor services can be measured in a

reliable way, means that the following conditions shall be met simultaneously: ① The

amount of revenue can be measured in a reliable way;② The relevant economic benefits are

likely to flow into the enterprise;③ The schedule of completion under the transaction can be

confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction

can be measured in a reliable way.If the outcome of a transaction concerning the providing of labor services cannot be


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measured in a reliable way, the revenue from the providing of labor services shall berecognized in accordance with the amount of the cost of labor services incurred and expectedto be compensated, and make the cost of labor services incurred as the current expenses. If itis predicted that the cost of labor services incurred couldn’t be compensated, thus no revenueshall be recognized.Where a contract or agreement signed between Group and other enterprises concerns sellinggoods and providing of labor services, if the part of sale of goods and the part of providinglabor services can be distinguished from each other and can be measured respectively, thepart of sale of goods and the part of providing labor services shall be treated respectively. Ifthe part of selling goods and the part of providing labor services can not be distinguishedfrom each other, or if the part of sale of goods and the part of providing labor services can bedistinguished from each other but can not be measured respectively, both parts shall beconducted as selling goods.(3) Recognition method of the sales revenues of real estateThe Group had signed the sales contract with the real estate had completed and be examinedqualified, and reached the referable using conditions agreed by the sales contract as well as atthe same time the housing accounts had been recognized the realize of the sales revenueswhen received with full amount according to the sales contract.(4) Royalty revenueIn accordance with relevant contract or agreement, the amount of royalty revenue should berecognized as revenue on accrual basis.(5) Interest revenueThe amount of interest revenue should be measured and confirmed in accordance with thelength of time for which the Group’s monetary fund is used by others and the agreed interestrate.(6)Property leasing revenueFor the recognition method of the property leasing revenue, please refer to Notes IV. 25.

23. Government subsidiesA government subsidy means the monetary or non-monetary assets obtained free by theGroup from the government, but excluding the capital invested by the government as theowner of the enterprise. Government subsidies consist of the government subsidies pertinentto assets and government subsidies pertinent to income.If a government subsidy is a monetary asset, it shall be measured in the light of the receivedor receivable amount. If a government subsidy is a non-monetary asset, it shall be measuredat its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured atits nominal amount. The government subsidies measured at their nominal amounts shall bedirectly included in the current profits and losses.The government subsidies pertinent to assets shall be recognized as deferred income, equallydistributed within the useful lives of the relevant assets, and included in the current profitsand losses. The government subsidies pertinent to incomes shall be treated respectively inaccordance with the circumstances as follows: those subsidies used for compensating therelated future expenses or losses of the enterprise shall be recognized as deferred income andshall included in the current profits and losses during the period when the relevant expensesare recognized; or those subsidies used for compensating the related expenses or lossesincurred to the enterprise shall be directly included in the current profits and losses.


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Where it is necessary to refund any government subsidy which has been recognized, it shallbe treated respectively in accordance with the circumstances as follows: if there is thedeferred income concerned, the book balance of the deferred income shall be offset against,but the excessive part shall be included in the current profits and losses; or if there is nodeferred income concerned to the government subsidy, it shall be directly included in thecurrent profits and losses.

24. Deferred income tax assets/deferred income tax liabilities(1) Income tax of the current periodOn the balance sheet date, for the current income tax liabilities (or assets) of the currentperiod as well as the part formed during the previous period, should be measured by theincome tax of the estimated payable (returnable) amount which be calculated according tothe regulations of the tax law. The amount of the income tax payable which is based by thecalculation of the current income tax expenses, are according to the result measured from thecorresponding adjustment of the pre-tax accounting profit of 2014 which in accord to therelevant regulations of the tax law.(2) Deferred income tax assets and deferred income tax liabilitiesThe difference between the book value of certain assets and liabilities and their taxassessment basis, as well as the temporary difference occurs from the difference between thebook value of the items which not be recognized as assets and liabilities but could confirmtheir tax assessment basis according to the regulations of the tax law, the deferred income taxassets and the deferred income tax liabilities should be recognized by adopting liabilities lawof the balance sheet.No deferred tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill, the initial recognition of assets or liabilities due to a transactionother than a business combination, which affects neither accounting profit nor taxable profit(or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporarydifferences related to the investments of subsidiary companies, associated enterprises andjoint enterprises, and the investing enterprise can control the time of the reverse of temporarydifferences as well as the temporary differences are unlikely to be reversed in the exceptedfuture. Otherwise, the Group should recognize the deferred income tax liabilities arising formother taxable temporary difference.No deferred taxable assets should be recognized for the deductible temporary difference ofinitial recognition of assets and liabilities arising from the transaction which is not businesscombination, the accounting profits will not be affected, nor will the taxable amount ordeductible loss be affected at the time of transaction. Besides, no deferred taxable assetsshould be recognized for the deductible temporary difference related to the investments ofthe subsidiary companies, associated enterprises and joint enterprises, which are not likely tobe reversed in the expected future or is not likely to acquire any amount of taxable incometax that may be used for making up such deductible temporary differences. Otherwise, theCompany shall recognize the deferred income tax assets arising from a deductible temporarydifference basing on the extent of the amount of the taxable income that is likely to beacquired to make up such deductible temporary differencesFor any deductible loss or tax deduction that can be carried forward to the next year, thecorresponding deferred income tax asset shall be determined to the extent that the amount offuture taxable income to be offset by the deductible loss or tax deduction to be likelyobtained.


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On the balance sheet date, the deferred income tax assets and the deferred income taxliabilities shall be measured at the tax rate applicable to the period during which the assetsare expected to be recovered or the liabilities are expected to be settled.The book value of deferred income tax assets shall be reviewed at each balance sheet date. Ifit is unlikely to obtain sufficient taxable income to offset against the benefit of the deferredincome tax asset, the book value of the deferred income tax assets shall be written down. Anysuch write-down should be subsequently reversed where it becomes probable that sufficienttaxable income will be available.(3) Income tax expensesIncome tax expenses include current income tax and deferred income tax.The rest current income tax and the deferred income tax expenses or revenue should beincluded into current gains and losses except for the current income tax and the deferredincome tax related to the transaction and events that be confirmed as other comprehensiveincome or be directly included in the shareholders’ equity which should be included in othercomprehensive income or shareholders’ equity as well as the book value for adjusting thegoodwill of the deferred income tax occurs from the business combination.(4) Offset of income taxThe current income tax assets and liabilities of the Group should be listed by the written-offnet amount which intend to executes the net amount settlement as well as the assets acquiringand liabilities liquidation at the same time while owns the legal rights of settling the netamount.The deferred income tax assets and liabilities of the Group should be listed as written-off netamount when having the legal rights of settling the current income tax assets and liabilitiesby net amount and the deferred income tax and liabilities is relevant to the income tax whichbe collected from the same taxpaying bodies by the same tax collection and administrationdepartment or is relevant to the different taxpaying bodies but during each period which thereis significant reverse of the deferred income assets and liabilities in the future and amongwhich the involved taxpaying bodies intend to settle the current income tax and liabilities bynet amount or are at the same time acquire the asset as well as liquidate the liabilities.

25. LeasingFinancing leasing virtually transferred the whole risks and leasing of the compensationrelated to the assets ownership and their ownership may eventually be transferred or maybenot. Other leasing except for the financing leasing is operating leasing.(1) Business of operating leases recorded by the Group as the lesseeThe rent expenses from operating leases shall be recorded by the lessee in the relevant assetcosts or the profits and losses of the current period by using the straight-line method overeach period of the lease term. The initial direct costs shall be recognized as the profits andlosses of the current period. The contingent rents shall be recorded into the profits and lossesof the current period in which they actually arise.(2) Business of operating leases recorded by the Group as the lessorThe rent incomes from operating leases shall be recognized as the profits and losses of thecurrent period by using the straight-line method over each period of the lease term. Theinitial direct costs of great amount shall be capitalized when incurred, and be recorded intocurrent profits and losses in accordance with the same basis for recognition of rent incomesover the whole lease term. The initial direct costs of small amount shall be recorded into


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current profits and losses when incurred. The contingent rents shall be recorded into theprofits and losses of the current period in which they actually arise.(3) Business of finance leases recorded by the Group as the lesseeOn the lease beginning date, the Group shall record the lower one of the fair value of theleased asset and the present value of the minimum lease payments on the lease beginningdate as the entering value in an account, recognize the amount of the minimum leasepayments as the entering value in an account of long-term account payable, and treat thebalance between the recorded amount of the leased asset and the long-term account payableas unrecognized financing charges. Besides, the initial direct costs directly attributable to theleased item incurred during the process of lease negotiating and signing the leasingagreement shall be recorded in the asset value of the current period. The balance throughdeducting unrecognized financing charges from the minimum lease payments shall berespectively stated in long-term liabilities and long-term liabilities due within 1 year.Unrecognized financing charges shall be adopted by the effective interest rate method in thelease term, so as to calculate and recognize current financing charges. The contingent rentsshall be recorded into the profits and losses of the current period in which they actually arise.(4) Business of finance leases recorded by the Group as the lessorOn the beginning date of the lease term, the Group shall recognize the sum of the minimumlease receipts on the lease beginning date and the initial direct costs as the entering value inan account of the financing lease values receivable, and record the unguaranteed residualvalue at the same time. The balance between the sum of the minimum lease receipts, theinitial direct costs and the unguaranteed residual value and the sum of their present valuesshall be recognized as unrealized financing income. The balance through deductingunrealized financing incomes from the finance lease accounts receivable shall be respectivelystated in long-term claims and long-term claims due within 1 year.Unrecognized financing incomes shall be adopted by the effective interest rate method in thelease term, so as to calculate and recognize current financing revenues. The contingent rentsshall be recorded into the profits and losses of the current period in which they actually arise.

26. Changes in main accounting policies and estimates(1) Change of accounting policiesThere was no any change of accounting policies of the Company in the reporting period.(2) Change of accounting estimatesThere was no any change of accounting estimate of the Company in the reporting period.

27. Critical accounting judgments and estimatesDue to the inside uncertainty of operating activity, the Group needed to make judgments,estimates and assumption on the book value of the accounts without accurate measurementduring the employment of accounting policies. And these judgments, estimates andassumption were made basing on the prior experience of the senior executives of the Group,as well as in consideration of other factors. These judgments, estimates and assumptionwould also affect the report amount of income, costs, assets and liabilities, as well as thedisclosure of contingent liabilities on balance sheet date. However, the uncertainty of theseestimates was likely to cause significant adjustment on the book value of the affected assetsand liabilities.The Group would check periodically the above judgments, estimates and assumption on thebasis of continuing operation. For the changes in accounting estimates only affected on the


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current period, the influence should be recognized at the period of change occurred; for thechanges in accounting estimates affected the current period and also the future period, theinfluence should be recognized at the period of change occurred and future period.On the balance sheet date, the Group needed to make judgments, estimates and assumptionon the accounts in the following important items:(1) Categorization of leasingIn accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Groupcategorized the leasing into operating lease and finance lease. During the categorization, themanagement level needed to make analysis and judgment on whether all the risk andcompensation related with the leased assets had been transferred to the leasee, or whether theGroup had already undertaken all the risk and compensation related with the leased assets.(2) Provision for bad debtsIn accordance with the accounting policies of accounts receivable, the Group measured thelosses for bad debts by adopting allowance method. The impairment of accounts receivablewas based on the appraisal of the recoverability of accounts receivable. The impairment ofaccounts receivable was dependent on the judgment and estimates. The actual amount andthe difference of previous estimates would affect the book value of accounts receivable andthe withdrawal and reversal on provision for bad debts of accounts receivable during theperiod of estimates being changed.(3) Provision for falling price of inventoriesIn accordance with the accounting policies of inventories, for the inventories that the costswere more than the net realizable value as well as out-of-date and dull-sale inventories, theGroup withdrawn the provision for falling price of inventories on the lower one betweencosts and net realizable value. Evaluating the falling price of inventories needed themanagement level gain the valid evidence and take full consideration of the purpose ofinventories, influence of events after balance sheet date and other factors, and then maderelevant judgments and estimates. The actual amount and the difference of previous estimateswould affect the book value of inventories and the withdrawal and reversal on provision forbad debts of inventories during the period of estimates being changed.(4) The fair value of financial instrumentFor the financial instruments without active market, the Group recognized the fair value byvarious methods. These evaluation methods included discounted cash flow mode analysis,etc. The Group needed to estimate the future cash flow, credit risk, fluctuation rate of marketand relativity and other factors, as well as choose the property discount rate. Due to theuncertainty of relevant assumptions, so their changes would affect the fair value of financialinstrument.

(5) Investment impairment held-to-maturityThe decision whether executes the impairment of the investment held-to-maturity by theCompany depends on the judgment of the management layer to a great extent. The objectiveevidences of the occurrence of the impairment include there is serious financial difficulties ofthe issuer which lead the financial assets could not be continued to deal in the active marketand could not execute the clauses of the contracts (for example, to pay for the interests or theprincipal occurs default) and so on. When executing the judgment, the Company shouldassess the influences of the objective evidences of the occurrence of the impairment on theestimated future cash flow of the investment.(6) The impairment of financial assets available for sale


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The Group judged whether the financial assets available for sale were impaired relyingheavily on the judgment and assumption of the management team, so as to decide whetherrecognized the impairment losses in the income statement. During the process of making thejudgment and assumption, the Group needed to appraise the balance of the cost of theinvestment exceeding its fair value and the continuous period, the financial status andbusiness forecast in a short period, including the industrial situation, technical reform, creditlevel, default rate and risk of counterparty.(7) Provision for impairment of non-financial non-current assetsThe Group made a judgment on the non-current assets other than financial assets whetherthey had any indication of impairment on the balance sheet date. For the intangible assetswithout finite service life, other than the annual impairment test, they should be subject to theimpairment test when there was any indication of impairment. For other non-currentnon-financial assets, which should be subjected to impairment test when there was indicationof impairment indicated that the book value can’t be recoverable.When the book value of the assets or assets portfolio was more than the recoverable amount,which was the higher one between the net amount of fair value after deducting the disposalexpenses and the discounted amount of the estimated future cash flow, it means impairmentincurred.The net amount of fair value after deducting the disposal expenses should be fixed the pricein the sale agreement for similar assets in the fair transaction minus the increased costsdirectly attributable to the assets disposal.When estimated the discounted value of future cash flow, the Group needed to makeimportant judgment on the output, selling price, relevant costs and the discount rate forcalculating the discounted amount, etc. When estimated the recoverable amount, the Groupwould adopt all the available documents, including the prediction for relevant output, sellingprice and relevant operating costs arising from reasonable and supportive assumptions.The Group made the impairment test on goodwill at least one time per year, which requiredto predict the discounted amount of the future cash flow of the assets or assets portfolio withthe distributed good will, for which, the Group needed to predict the future cash flow of theassets or assets portfolio, and adopt the property discounted rate to decide the discountedamount of future cash flow.(8) Depreciation and amortizationFor the investment real estate, fixed assets and intangible assets, the Group withdrew thedepreciation and amortization by adopting the straight-line method during the service lifeafter full consideration of the salvage value. The Group checked the service life periodicallyso as to decide the amount of depreciation and amortization at each reporting period. Theservice life was fixed by the Group in accordance with the previous experience of the similarassets and the expected technical update. If there was any significant change on the previousestimates, the depreciation and amortization expenses should be adjusted.(9) Expenditures for developmentWhen fixing the amount of capitalization, the management level of the Group needed tomake assumption on the predicted future cash flow, property discounted rate and estimatedbeneficiary period for relevant assets.(10) Deferred income tax assetsWithin the limit that it was likely to have sufficient taxable profits to offset the losses, theGroup recognized the deferred income tax assets by all the unused tax losses, which needed


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the management level of the Group to estimate time and amount of the future taxable profitsincurred with many judgments, as well as integrate strategy of tax payment, to decide theamount of deferred income tax assets which should be recognized.(11) Income taxDuring the routine operating activities, there were some uncertainty in the ultimate taxtreatment and calculation for parts of transactions. Some accounts of such transaction couldbe listed as pre-tax expenditures only after the approval of taxation authorities. If there wereany differences between the ultimate result of recognition for these taxation maters and theirinitial estimates, the differences would affect the current income tax and deferred income taxat the period of ultimate recognition.(12) Internal early retirement welfare and supplementary retirement welfareAmounts of expenditures and liabilities of internal early retirement welfare andsupplementary retirement welfare should be determined according to assumption terms.Assumption terms include discount rate, average growth rate of medical costs, growth rate ofsubsidies for early retirement employees and retirees and other factors. The differences ofactual results and assumption should be confirmed immediately and included into costs ofcurrent year. Although the management have adopted reasonable assumption terms, changesof actual experience value and assumption terms may affect the internal early retirementwelfare, supplementary retirement benefits and balance of liabilities.(13) Estimated liabilitiesThe Group made the estimation on product quality guarantee, predicted loss of contract andthe fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilitiesin accordance the provisions of contract, current knowledge and experience. Under thecondition that the contingent event has formed a current duty and fulfilling the duty is likelyto cause the economical interest outflow the Group, the Group measures the estimatedliabilities in accordance with the best estimate of the necessary expenses for the performanceof the current duty. The recognition and measurement of estimated liabilities were heavilyrelied on the judgment of the management team. During the process of making judgment, theGroup needed to appraise the relevant risks, uncertainty and the time value of money and etc.

Of which, the Group estimated the liabilities basing on the after-sale services commitments

to the customers upon the sale, repair and reform of goods. When estimating the liabilities,

the Group has fully taken the consideration of the latest repair experience, but which may not

reflect the repair situation in the future. Any increase / decrease of the provision for estimated

liabilities may affect the profits and losses in the future periods.

V. Taxation

1. Main taxes and tax rate

Category of taxes Specific situation of the taxes rate


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VAT

Calculated the output tax at 17% of taxable income and paid the VAT by the

amount after deducting the deductible withholding VAT at current period, of

which the subsidiary Europe Konka of 21%, Telecommunication Technology

and the value-added service part of Mobile Internet brand of 6%, which see

details to (3); Shushida Logistics of 11%, 6% which see details to (4);

Calculated the added-value tax at 3% of the taxable income of E2info.

Business tax Paid by 5% of taxable business income.

Urban maintenance and constructiontax

Paid at 7% of the circulating tax actually paid, of which Dongguan Packing,

Dongguan Konka, Dongguan Mould, Boluo Konka, Boluo Konka Precision,

Xutongda and Kunshan Kangsheng of 5%.

Enterprise income tax

Paid at 25% of the taxable income, of which Hong Kong Konka, Konka

Household Appliances Investment, Konka Household Appliances International

Trading, and Konka Zhisheng of 16.5%, Wankaida, Telecommunication

Technology, Precision Mould, Information Network, Chongqing Qingjia, Anhui

Konka, Kunshan Konka, Dongguan Konka, Dongguan Mould, Xutongda and

Business System of 15%, USA Konka of 28% and Europe Konka of 31%;

E2info of 10%.

Education surtax Paid at 3% of the circulating tax actually paid.

Local education surtax Paid at 2% of the circulating tax actually paid.

(1) In accordance with the Notice on Printing the Administration Method on Charging andUse of the Treatment Funds of Discarded Electronic Appliance and Electric Products issuedby the Ministry of Finance, Ministry of Environmental Protection, National Developmentand Reform Commission, Ministry of Industry and Information, General Administration ofCustoms and National Taxation Bureau (CZ [2012] No. 34), and the Administration Methodon Charging and Use of the Treatment Funds of Discarded Electronic Appliance and ElectricProducts issued by National Taxation Bureau (GJSWZJGG [2012] No. 41), the domesticmanufacturer of the electrical appliances and electronic products of PRC started to pay thetreatment funds for discarded electrical appliance and electronic products according the salesvolume (trusted processing amount) and relevant charging standards from 1 Jul. 2012.According to the regulations, the Group’s charging standards were RMB13 per set of TV,RMB12 per set of refrigerator and RMB7 per set of washing machine.(2) According to regulations of Temporary Provisions of Income Tax of Trans-boundary TaxPayment Enterprises by State Administration of Taxation, resident enterprises withoutbusiness establishment or places of legal persons should be tax payment enterprises with theadministrative measures of income tax of “unified computing, level-to-level administration,local prepayment, liquidation summary, and finance transfer”. It came into force fromJanuary 1, 2008. According to the above methods, the Company’s sales branch companies ineach area will hand in the corporate income taxes in advance from 1 Jan. 2008 and will befinal settled uniformly by the Company at the year-end.


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(3) The Company’s subsidiary, Shenzhen Konka Communication Technology Co., Ltd, isengaged in value-added services of brand costs. According to Notice of the Ministry ofFinance and the State Administration of Taxation on the Pilot Work of Levying Value-AddedTax in Lieu of Business Tax in the Transportation Industry and Some Modern ServiceIndustries in Beijing and Other Seven Provinces and Cities (CS[2012] No.71), added-valuetax is levied from 1 Nov. 2012, with tax rate of 6%.(4) As for the transportation revenue of the logistic business of the Company’s subsidiaryShushida Logistics, in accordance with the Notice on Carrying out the Pilot of Change onCharging the Business Taxes of Transportation Industry and Partial Modern Service Industryto Value Added Taxes in Eight Provinces and Cities including Beijing issued by the Ministryof Finance and the National Taxation Bureau (CS [2012] No. 71) and other regulations, itwas changed to charge the VAT since 1 Sept. 2012, with the tax rate of 3%. From 1 Jun. 2013,Shushida Logistics received the general taxpayer qualification with the VAT rate of thetransportation revenue of 11% and the other service of 6%.

2. Tax preference and approved document(1) On 30 Sep. 2014, the subsidiary of the Company Shenzhen Konka TelecommunicationTechnology Co., Ltd. acquired the certificate of high-technology enterprises jointly issued byShenzhen Science and technology Innovation Committee, Shenzhen Finance Committee,Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau, with thecertification number of GR201444201101 and the validity of three years. According to therelevant taxation regulations, the Telecommunication Technology could enjoy the relevantpreferential tax policy on the high-tech enterprise for continuous 3 years from 2014 to 2016,and pay for the corporate income tax according to 15% of the preferential tax rate.(2) On 30 Sep. 2014, the subsidiary of the Company Konka Precision Mould ManufactureCo., Ltd. acquired the certificate of high-technology enterprises jointly issued by ShenzhenScience and technology Innovation Committee, Shenzhen Finance Committee, ShenzhenProvincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification numberof GR201444201781 and the validity of three years. According to the relevant taxationregulations, the Precision Mould could enjoy the relevant preferential tax policy on thehigh-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporateincome tax according to 15% of the preferential tax rate.(3) On 22 Jul. 2013, the subsidiary of the Company Shenzhen Konka Information NetworkCo., Ltd. acquired the certificate of high-technology enterprises jointly issued by ShenzhenScience and technology Innovation Committee, Shenzhen Finance Committee, ShenzhenProvincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification numberof GR201344200179 and the validity of three years. According to the relevant taxationregulations, the Information Network could enjoy the relevant preferential tax policy on thehigh-tech enterprise for continuous 3 years from 2013 to 2015, and pay for the corporateincome tax according to 15% of the preferential tax rate.(4) The Company’s subsidiary—Chongqing Qingjia Electronics Co., Ltd. is levied thebusiness income tax at the preferential tariff of 15% from 1 Jan. 2011 to 31 Dec. 2020 inaccordance with CS (2011) No. 58 Notice on Relevant Tax Policies on Deeply Implementingthe western development strategy.(5) On 14 Oct., 2013, the subsidiary of the Company, Anhui Konka, received the certificateof high-technology enterprises (No.: GF2013342000298) awarded by Anhui Science andTechnology Department, Anhui Department of Finance, Anhui State Taxation Bureau and


166

Anhui Local Taxation Bureau. The period of validity is three years. According to taxationrules, Anhui Konka would enjoy the preferential tax privileges of high-technologyenterprises from 2013 to 2015 and pay the enterprise income tax at the preferential rate of15%.(6) On 5 Aug. 2014, the subsidiary of the Company, Kunshan Konka Electronics Co., Ltd.acquired the certificate of high-technology enterprises joint issued by Jiangsu ProvinceScience and Technology Department, Department of Finance of Jiangsu Province, JiangsuProvince Municipal Office, SAT, and Jiangsu Local Taxation Bureau with the certificationnumber of GF201432000413 and the validity of three years. According to the relevanttaxation regulations, the Kunshan Konka could enjoy the relevant preferential tax policy onthe high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporateincome tax according to 15% of the preferential tax rate.(7) On 10 Oct. 2014, the subsidiary of the Company, Dongguan Konka acquired thecertificate of high-technology enterprises joint issued by Guangdong Province Science andTechnology Department, Department of Finance of Guangdong Province, GuangdongProvince Municipal Office, SAT, and Guangdong Local Taxation Bureau with thecertification number of GF201444001341 and the validity of three years. According to therelevant taxation regulations, the Dongguan Konka could enjoy the relevant preferential taxpolicy on the high-tech enterprise for continuous 3 years since 2014, and pay for thecorporate income tax according to 15% of the preferential tax rate.(8) On 18 Feb. 2016, according to the associated issued Notice of Announcing theGuangdong Hi-tech Enterprises of Guangdong Provincial Department of Science andTechnology, Department of Finance of Guangdong Province, Guangdong Provincial Office,SAT and Guangdong Local Taxation Bureau by the above institutions, YKGZ [2016] No. 17,the subsidiary of the Company, Dongguan Mould Plastic and Shushida were recognized asthe high-technology enterprises with the certificate number respectively wereGR201544000549 and GF201544000193; and would enjoy the relevant preferential taxprivileges of high-technology enterprises for continuous 3 years from 2015 to 2017 and paythe enterprise income tax at the preferential rate of 15%.(9) On 30 Sep. 2014, the Company’s subsidiary- Wankaida acquired the certificate ofhigh-technology enterprises joint issued by Shenzhen Science and technology InnovationCommittee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and ShenzhenLocal Taxation Bureau with the certification number of GR201444201523 and the validity ofthree years. According to the relevant taxation regulations, the Anhui Tongchuang couldenjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 yearsfrom 2012 to 2014, and pay for the corporate income tax according to 15% of the preferentialtax rate.(10) The annual taxable income amount would be≤RMB0.2 million of the subsidiary of theCompany- Shenzhen E2info Internet Science and Technology Co., Ltd. according to theincome tax preferential policies of the small and micro businesses among the scope of thecorporate income tax, and from 1 Jan. 2015 to 31 Dec. 2017, the income of which should bereduced to 50% before be included in the taxable income and pay the enterprise income tax atthe preferential rate of 20%.(11) According to the Notice of the Corporate Income Tax Preferential Policy and theOptimal Directory of Guangdong Hengqin New Zone, Fujian Pingtan ComprehensiveExperimental Area and Qianhai Shenzhen-Hong Kong Modern Service Industry CooperationZone of Shenzhen by Ministry of Finance and SAT, CS [2014] No. 26, the subsidiary of the


167

Company-Shenzhen Konka Business System Science & Technology Co., Ltd. would pay forthe corporate income tax according to 15% of the preferential tax rate from 1 Jan. 2015 to 31Dec. 2015.

(12) According to the CS No. [2011] 100 Article issued by Ministry of Finance and State

Administration of Taxation, if the ordinary VAT payer sells software products developed by

itself, the VAT is levied at the rate of 17% and after that, the part of actual tax burden of VAT

which exceeds 3% can enjoy the policy of refunding taxes immediately after levying taxes.

The subsidiaries of the Company, Shenzhen Konka Telecommunication Technology Co.,

Ltd., Shenzhen Konka Information Network Co., Ltd., Shenzhen Wankaida Science and

Technology Co., Ltd. and Shenzhen Konka Yishijie Commercial Display Co., Ltd. enjoy

such favorable policy.

VI. Notes on major items in consolidated financial statements of the Company

Unless otherwise noted, the following annotation project (including the main projects

annotation of the financial statement of the Company), the year-begin refers to 1 Jan. 2015,

the year-end refers to 31 Dec. 2015

1. Monetary funds

Item Closing balance Opening balance

Cash on hand 4,217.37 5,118.98

Bank deposits 1,488,150,633.98 1,640,231,718.10

Other monetary funds 218,292,077.57 62,898,895.10

Total 1,706,446,928.92 1,703,135,732.18

Of which: total amount deposited in overseas 205,900,491.11 149,716,988.11

Notes: The closing balance of other monetary fund was the deposits of each margin deposit

not withdrawn at any time.

2. Financial assets measured by fair value and the changes be included in the current

gains and losses


Income from agreement of forward foreign

exchange purchase33,196,377.28 —

Total 33,196,377.28 —

3. Notes receivable

(1)Notes receivable listed by category


168


Bank acceptance bill 2,879,244,863.46 3,785,443,076.37

Trade acceptance 1,615,886.98 33,974,000.00

Total 2,880,860,750.44 3,819,417,076.37

(2) Notes receivable pledged at the period-end

Item Amount

Bank acceptance bill 1,446,191,357.58

Total 1,446,191,357.58

Notes: Up to 31 Dec. 2015, the Company pledged the banker’s acceptance bill of the book

value of RMB1, 446,191,357.58 for the comprehensive financing business such as handling

the billing, letter of credit and the trading financing.

(3) Notes receivable which had endorsed by the Company or had discounted and had not due

on the balance sheet date at the year-end

ItemAmount of recognition termination at

the period-end

Amount of recognition

termination at the period-end

Bank acceptance bill 952,963,830.15 —

Total 952,963,830.15 —

4. Accounts receivable

(1) Accounts receivable classified by category

Category

Closing balance

Book balance Bad debt provision

Book valueAmount

Proportion

(%)Amount

Withdra

wal

proporti

on (%)

Accounts receivable with

insignificant single amount for

which bad debt provision

separately accrued

21,847,005.37 0.92 21,847,005.37 100.00 —


169

Accounts receivable withdrawal

of bad debt provision of by

credit risks characteristics:

Group 1: aging group 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27

Subtotal of groups 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27




separately accrued

76,251,927.24 3.20 67,420,869.17 88.42 8,831,058.07

Total 2,382,189,182.25 100.00 333,375,742.91 13.99 2,048,813,439.34

(Continued)

Category

Opening balance


Book valueAmount

Proportion

(%)Amount

Withdrawa

l

proportion

(%)




separately accrued

— — — — —

Accounts receivable withdrawal

of bad debt provision of by

credit risks characteristics:






separately accrued

26,756,380.18 1.05 24,861,604.49 92.92 1,894,775.69

Total 2,543,458,396.36 100.00 284,165,189.20 11.17 2,259,293,207.16


170

①Accounts receivable with significant single amount for which bad debt provision

separately accrued at the year-end

Accounts receivable (classified by units)

Closing balance

Account receivable Bad debt provisionWithdrawal

proportion (%)Withdrawal reason

Customera 21,847,005.37 21,847,005.37 100.00

Difficult to recover, dueto the bankruptcy of that

company

②In the groups, accounts receivable adopting aging analysis method to withdraw bad debt

provision:

AgingClosing balance

Account receivable Bad debt provision Withdrawal proportion

Within 1 year 2,013,172,455.64 40,203,521.76 2.00

1 to 2 years 40,173,735.00 2,008,686.75 5.00

2 to 3 years 25,126,437.95 5,025,287.59 20.00

3 to 4 years 8,035,966.18 4,017,983.09 50.00

4 to 5 years 9,458,531.38 4,729,265.69 50.00

Over 5 years 188,123,123.49 188,123,123.49 100.00

Total 2,284,090,249.64 244,107,868.37

③Top five of account receivable with insignificant single amount for which bad debt

provision separately accrued

Accounts receivable (classified by units)

Closing balance


proportionWithdrawal reason

Customer 1 17,867,121.02 17,867,121.02 100.00Had difficulty in

operation

Customer 2 12,166,047.60 12,166,047.60 100.00Involved with lawsuit

dispute


dispute


dispute


171


dispute

Total 47,925,759.73 41,744,659.40

(2) Bad debt provision withdrawal, reversed or recovered in the report period

The withdrawal amount of the bad debt provision during the reporting period was of RMB

54,610,084.52; the amount of the reversed or collected part during the reporting period was

of RMB5, 205,580.98, other decrease was RMB193, 949.83.

(3) Top five of account receivable of closing balance collected by arrears party

The total amount of top five of account receivable of closing balance collected by arrears

party was RMB643, 509,696.39, 27.01% of total closing balance of account receivable, the

relevant closing balance of bad debt provision withdrawn was RMB12, 870,193.93.

5. Prepayment

(1) List by aging analysis:

Aging

Closing amount Opening amount

Book balanceBad debt

provision

Book balanceBad debt

provisionAmountProportion (

%)Amount

Proportio

n (%)

Within 1 year 192,024,479.90 92.75 527,017.04 312,558,414.85 96.34 863,929.20

1 to 2 years 1,037,032.15 3.04 406,683.12 5,069,017.23 1.56 1,952,958.31

2 to 3 years 3,154,864.60 0.85 1,716,100.63 735,503.34 0.23 396,003.34

Over 3 years 6,774,559.86 3.36 6,676,515.06 6,086,092.93 1.87 6,086,092.93

Total 202,990,936.51 100.00 9,326,315.85 324,449,028.35 100.00 9,298,983.78

Notes: prepayments of significant amount and aged more than 1 year, of which the amount of

RMB6,635,213.35 was the relevant materials which had quality problems and had not handle

the accounts settlement as well as the material warehousing formalities, and the materials

purchase account prepaid should be presented as the prepayments.

(2) Top 5 of the closing balance of the prepayment collected according to the prepayment

target


party was RMB37, 240,245.94, 18.354% of total closing balance of account receivable.

6. Interest receivable


172

(1) Category of interest receivable


Fixed term deposit interest 7,325,298.41 1,885,727.36

Entrusted loan interest 101,111.11 —

Total 7,426,409.52 1,885,727.36

7. Other accounts receivable

(1) Other account receivable classified by category

Category

Closing balance


Book valueAmount

Proportion

(%)Amount

Withdrawa

l

proportion

Other accounts receivable

with insignificant single

amount for which bad debt


183,881,677.62 51.78 171,132,382.98 93.07 12,749,294.64


withdrawn bad debt provision

according to credit risks

characteristics

Group 1: aging group 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18

Subtotal of groups 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18





402,820.00 0.11 402,820.00 100.00 —

Total 355,139,902.09 100.00 194,974,122.27 54.90 160,165,779.82

(Continued)

CategoryOpening balance

Book balance Bad debt provision Book value


173

Amount

Proportion

(%) Amount

Withdrawal

proportion (%)





18,115,952.51 5.45 5,405,926.42 29.84 12,710,026.09




characteristics







— — — — —

Total 332,575,515.40 100.00 33,600,123.72 10.10 298,975,391.68

① Other account receivable with insignificant single amount for which bad debt provision

separately accrued

Other accounts receivable (unit）

Closing balance

Other accounts receivable Bad debt provisionWithdrawal

proportion（%）Withdrawal reason

Energy saving subsidy 152,402,680.00 152,402,680.00 100.00 Irrecoverable

Shenzhen Konka Video &Communication SystemsEngineering Co., Ltd.

18,115,952.51 5,366,657.87 29.62

Assessmentirrecoverable for full

amount

Chongqng Konka Auto ElectronicCompany 13,363,045.11 13,363,045.11 100.00

Irrecoverable, underbankruptcy liquidation

Total 183,881,677.62 171,132,382.98 93.07 —

②In the groups, other accounts receivable adopting aging analysis method to withdraw bad

debt provision:

Aging Closing balance


174

Other accounts receivable Bad debt provision Withdrawal proportion（%）

Within 1 year 125,476,792.14 2,504,840.07 2.00

1 to 2 years 9,688,182.60 484,409.13 5.00

2 to 3 years 15,052,680.35 3,010,536.07 20.00

3 to 4 years 4,571,994.74 2,285,997.37 50.00

4 to 5 years 1,825,235.98 912,617.99 50.00

Over 5 years 14,240,518.66 14,240,518.66 100.00

Total 170,855,404.47 23,438,919.29


The withdrawal amount of the bad debt provision during the reporting period was of

RMB162,803,057.40; the amount of the reversed or collected part during the reporting period

was of RMB682, 759.03, other decrease was RMB746, 299.82.

(3) Top 5 of the closing balance of the other accounts receivable collected according to the

arrears party

Name of

the entityNature Closing balance Aging

Proportion of the total

year-end balance of the


Bad debt provision

Closing balance

CustomerA

Energy savingsubsidy 152,402,680.00 1-2years, 2-3 years 42.91 152,402,680.00

CustomerB

Export taxrefunds 18,334,262.62 Within 1 year 5.16 916,713.13

CustomerC

Propertyadministrativeexpenses

6,413,845.45 Within 1 year 1.81 320,692.27

CustomerD

Payment onbehalf 6,202,366.00

Within 1year ,1-2years, 2-3years

1.75 1,252,283.30

CustomerE

Payment forland 2,570,568.00 1-2years, 2-3 years 0.72 937,254.00

Total 185,923,722.07 52.35 155,829,622.70

8. Inventory

(1) Category of inventory

Item Closing amount


175

Book balance

Of which: the

capitalized amount of

the borrowings

Impairment of

inventoriesBook value

Development projects of

the property:

Development cost 270,136,005.18 — — 270,136,005.18

Development products 194,778,406.05 3,693,784.24 — 194,778,406.05

Subtotal 464,914,411.23 3,693,784.24 — 464,914,411.23

Non-developmentprojects of the property:

Raw materials 611,138,306.26 — 53,034,708.44 558,103,597.82

Raw materials 152,737,782.18 — 54,853,159.84 97,884,622.34

Inventory goods 1,960,267,024.10 — 199,769,581.12 1,760,497,442.98

Turnover materials 1,115,838.91 — — 1,115,838.91

Subtotal 2,725,258,951.45 — 307,657,449.40 2,417,601,502.05

Total 3,190,173,362.68 3,693,784.24 307,657,449.40 2,882,515,913.28

(Continued)

Item

Opening amount

Book balance

Of which: the

capitalized amount of

the borrowings

Impairment of

inventoriesBook value

Development projects of

the property:

Development cost 433,431,258.26 708,392.08 — 433,431,258.26

Development products 184,288,149.21 4,786,589.71 — 184,288,149.21

Subtotal 617,719,407.47 5,494,981.79 — 617,719,407.47

Non-developmentprojects of the property:

Raw materials 1,299,997,072.71 — 331,916,902.96 968,080,169.75

Raw materials 384,479,782.98 — 174,801,078.20 209,678,704.78


176

Inventory goods 2,347,967,769.03 — 239,864,738.09 2,108,103,030.94

Turnover materials 854,937.39 — — 854,937.39

Subtotal 4,033,299,562.11 — 746,582,719.25 3,286,716,842.86

Total 4,651,018,969.58 5,494,981.79 746,582,719.25 3,904,436,250.33

(2) List of the development cost

Name o f item Starting timeExpected completion time

of the next batchOpening amount Closing amount

Shuiyue Zhouzhuang Project Y 2011 Completion by stages 433,431,258.26 268,056,798.18

Kangqiao Jiacheng Not yet started Not yet started — 2,079,207.00

Total 433,431,258.26 270,136,005.18

(3) List of the developed products

Name o f itemCompletion

timeOpening amount Increased Decreased Closing amount

Shuiyue ZhouzhuangProject(Phase IResidence)

Y 2014 184,288,149.21 2,710,216.34 107,315,291.21 79,683,074.34

Shuiyue ZhouzhuangProject(Phase IIResidence)

Y 2015 — 281,251,269.33 166,155,937.62 115,095,331.71

Total 184,288,149.21 283,961,485.67 273,471,228.83 194,778,406.05

(4) Impairment of inventories

Item Opening balanceIncreased amount Decreased amount

Closing balanceWithdrawal Other Reverse Write-off

Raw

materials331,916,902.96 18,922,271.43 —

8,015,456.8

9289,789,009.06 53,034,708.44

Raw

materials174,801,078.20 219,137.28 —

5,693,260.1

3114,473,795.51 54,853,159.84

Inventory

goods239,864,738.09 81,517,733.07 — — 121,612,890.04 199,769,581.12

Total 746,582,719.25 100,659,141.78 —13,708,717.

02525,875,694.61 307,657,449.40


177

(5) Withdrawal provision basis of the falling price of the inventory and the reasons of the

reserve or write-off

ItemSpecific basis of withdrawal of falling

price reserves of inventoryReasons for write-off

Raw materialsThe realizable net value was lower thanthe inventory cost

Disposed in the current period

Raw materialsThe realizable net value was lower thanthe inventory cost


Inventory goodsThe realizable net value was lower thanthe inventory cost


(4) Closing balance of the inventory which includes capitalized borrowing expenses was

RMB3, 693,784.24.

9. Other current assets


Prepayments and deductible taxes 89,108,687.45 311,200,708.77

Entrust loans 50,000,000.00 50,000,000.00

Financial products 500,000,000.00 500,000.00

Unreached bank deposits 8,203,251.00 206,319,491.71

Total 647,311,938.45 568,020,200.48

Notes: the entrust loan was Anhui Electronic borrowed RMB50,000,000.00 to Chuzhou

Tongchuang Construction Investment Co., Ltd. through Bank of China Limited, Chuzhou

Branch, due to Anhui Electronic had sufficient capital, in order to improve capital service

efficiency, both party signed Entrust Loan Extension Loan agreement based on the original

contract with contract No.007 CZYWDZ of 2014, the extension period was three months,

from 31 Dec. 2015 to 31 Mar. 2016.


178

10. Available-for-sale financial assets

(1) List of available-for-sale financial assets

ItemClosing balance Opening balance

Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value

Available-for-sale equity instruments 316,972,068.30 4,997,785.64 311,974,282.66 247,799,748.07 2,766,139.07 245,033,609.00

Of which: measured at fair value 2,874,068.30 — 2,874,068.30 2,311,748.07 681,139.07 1,630,609.00

Measured by cost 314,098,000.00 4,997,785.64 309,100,214.36 245,488,000.00 2,085,000.00 243,403,000.00

Total 316,972,068.30 4,997,785.64 311,974,282.66 247,799,748.07 2,766,139.07 245,033,609.00

(2) Available-for-sale financial assets measured by fair value at the period-end

Category Available-for-sale equity instruments

Cost of the equity instruments 2,317,433.07

Fair value 556,635.23

Changed amount of the fair value accumulatively included in other comprehensive

income1,237,774.30

Withdrawn impairment amount —

(3) Available-for-sale financial assets measured by cost at the period-end

InvesteeBook balance

Year-begin Increased Decreased Year-end


179

Shenzhen Qianhai Qingsong Venture CapitalFund Enterprise 6,000,000.00 14,000,000.00 — 20,000,000.00

Shenzhen Tianyilian Science & Technology Co.,Ltd. 4,800,000.00 — — 4,800,000.00

Shenzhen Yifan Interactive Science &Technology Co., Ltd. 9,500,000.00 — — 9,500,000.00

Shenzhen ADot TV Co., Ltd. 5,750,000.00 — — 5,750,000.00

Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00

ZAEFI 100,000.00 — — 100,000.00

Shenzhen Chuangce Investment DevelopmentCo., Ltd. 485,000.00 — — 485,000.00

Shanlian Information Technology EngineeringCenter 5,000,000.00 — — 5,000,000.00

Shenzhen CIU Science & Technology Co., Ltd. 1,153,000.00 — — 1,153,000.00

Shenzhen Digital TV National EngineeringLaboratory Co., Ltd. 6,000,000.00 — — 6,000,000.00

Shanghai National Engineering Research Centerof Digital TV Co., Ltd. 2,400,000.00 — — 2,400,000.00

ChinaAMC - Jiayi Overseas OrientationPrograms 203,000,000.00 — — 203,000,000.00

Hunan Vary Science & Technology Co., Ltd. — 47,230,000.00 — 47,230,000.00

Nobel Education Investment Development Co.,Ltd. — 7,380,000.00 — 7,380,000.00

Chongqing Konka Eurotomotive Electronic Co., — — — —


180

Ltd. (See note VII.2.（9）)

Total 245,488,000.00 68,610,000.00 — 314,098,000.00

(Continued)

Investee

Depreciation reserves Shareholding

proportion among

the investees

Cash bonus of the reporting

periodYear-begin Increased Decreased Year-end

Shenzhen Qianhai Qingsong Venture CapitalFund Enterprise — — — — 6.00 —

Shenzhen Tianyilian Science & Technology Co.,Ltd. — — — — 7.05 —

Shenzhen Yifan Interactive Science &Technology Co., Ltd. — — — — 13.57 —

ShenzhenADot TV Co., Ltd. — — — — 9.50 —

Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00 8.33 —

ZAEFI 100,000.00 — — 100,000.00 — —

Shenzhen Chuangce Investment DevelopmentCo., Ltd. 485,000.00 — — 485,000.00 1.00 —

Shanlian Information Technology EngineeringCenter — 1,639,190.80 — 1,639,190.80 9.62 —

Shenzhen CIU Science & Technology Co., Ltd. 200,000.00 — — 200,000.00 11.50 —

Shenzhen Digital TV National EngineeringLaboratory Co., Ltd. — 1,273,594.84 — 1,273,594.84 6.00 —


181

Shanghai National Engineering Research Centerof Digital TV Co., Ltd. — — — — 4.26 —

ChinaAMC - Jiayi Overseas OrientationPrograms — — — — — 2,153,880.21

Hunan Vary Science & Technology Co., Ltd. — — — — 10.04 —

Nobel Education Investment Development Co.,Ltd. — — — — 14.76 —

Chongqing Konka Eurotomotive Electronic Co.,Ltd. (See note VII.2.（9）) — — — — — —

Total 2,085,000.00 2,912,785.64 — 4,997,785.64 — 2,153,880.21

(4) Changes of the impairment of the available-for-sale financial assets during the reporting period

Category Available-for-sale equity instruments

Balance of the withdrawn impairment at the period-begin 2,766,139.07

Withdrawn impairment balance at the period-begin 2,912,785.64

Of which: transferred from other comprehensive income —

Decreased 681,139.07

Ofwhich: recovered and reversed after the period of the fair value 681,139.07

Balance of the withdrawn impairment at the period-end 4,997,785.64

11. Long-term equity investment


182

Investee Opening balance

Increase/decrease in reporting period

Additional

investmentNegative investment

Investment profit

and loss recognized

under the equity

method

Adjustment of

other

comprehensive

income

Other equity changes

Subsidiary of joint venture

Shenzhen Refund Optoelectronics Co., Ltd. 43,425,481.67 — — 2,378,983.32 — —

Enraytek Optoelectronics Co., Ltd. 110,793,944.21 — — -16,120,186.21 — —

Shenzhen Konka Energy Technology Co., Ltd. 3,649,728.08 — — — — —

Shanghai Konka Green Science & Technology Co.,Ltd. 197,758,604.87 — 124,800,000.00 -5,111,426.37 403,094.53 —

Shenzhen Dekang Electronics Co., Ltd. 7,137,424.83 — — — —

Zhuhai Jinsu Plastic Co., Ltd. — 6,210,000.00 — 58,920.60 — 183,267.00

Total 362,765,183.66 6,210,000.00 124,800,000.00 -18,793,708.66 403,094.53 183,267.00

(Continued)

Investee


Closing balanceClosing balance of

impairment provisionDeclaration of cash dividends or

profits

Withdrawn impairment

provisionOther

Associated enterprise:


183

Shenzhen Refund Optoelectronics Co., Ltd. 1,487,448.32 — — 44,317,016.67 —

Enraytek Optoelectronics Co., Ltd. — 30,257,135.84 — 94,673,758.00 30,257,135.84

Shenzhen Konka Energy Technology Co.,Ltd. — 3,649,728.08 — 3,649,728.08 3,649,728.08

Shanghai Konka Green Science &Technology Co., Ltd. — — — 68,250,273.03 —

Shenzhen Dekang Electronics Co., Ltd. — — — 7,137,424.83 —

Zhuhai Jinsu Plastic Co., Ltd. — — — 6,452,187.60 —

Total 1,487,448.32 33,906,863.92 — 224,480,388.21 33,906,863.92

Note: since the shenzhen konka energy technology co., LTD., continuing losses, as of December 31, 2015, its net worth is negative, according tothe book value of full provision for impairment loss; Reflected the Enraytek Optoelectronics Co., Ltd., by way of assessment signs, there ispossible assets impairment provision for impairment loss according to the difference between evaluating price and book value.


184

12. Investment property

Investment property adopted the cost measurement mode

Item Houses and buildings Land use rightConstruction in

progressTotal

I. Original book value

1.Opening balance 249,923,047.75 — — 249,923,047.75

2. Increased amount of the period — — — —

3.Decreased amount of the period — — — —

Closing balance 249,923,047.75 — — 249,923,047.75

II. Accumulative depreciation and

accumulative amortization— — — —

1.Opening balance 16,573,594.95 — — 16,573,594.95

2. Increased amount of the period 5,631,274.27 — — 5,631,274.27

(1) Withdrawal or amortization 5,631,274.27 — — 5,631,274.27


Closing balance 22,204,869.22 — — 22,204,869.22

III. Depreciation reserves — — — —

1.Opening balance — — — —

2. Increased amount of the period — — — —


4.Closing balance — — — —

IV. Book value — — — —

1. Closing book value 227,718,178.53 — — 227,718,178.53

2. Opening book value 233,349,452.80 — — 233,349,452.80


185

13. Fixed assets

(1) List of fixed assets

Item Houses and buildings Machinery equipment Electronic equipment Transportation equipment Other Total


1.Opening balance 1,666,832,339.28 1,025,362,549.65 252,641,100.35 74,244,036.50 214,920,840.16 3,234,000,865.94

2. Increased amount of the

period72,994,535.09 51,204,901.71 19,270,450.60 5,655,781.95 20,677,102.58 169,802,771.93

(1) Purchase 6,072,522.58 46,355,267.49 18,669,505.56 5,474,108.36 17,035,522.26 93,606,926.25

(2) Transfer of project under

construction66,922,012.51 4,849,634.22 600,945.04 181,673.59 3,641,580.32 76,195,845.68

3.Decreased amount of the

period129,421,263.34 80,576,728.94 45,976,766.12 15,186,067.52 26,110,920.83 297,271,746.75

(1) Disposal or Scrap 129,421,263.34 80,576,728.94 45,976,766.12 15,186,067.52 26,110,920.83 297,271,746.75

(2) Other — — — — — —

4.Closing balance 1,610,405,611.03 995,990,722.42 225,934,784.83 64,713,750.93 209,487,021.91 3,106,531,891.12

II. Accumulative depreciation

1.Opening balance 401,426,983.75 590,925,364.93 201,361,698.85 52,503,060.71 140,779,033.03 1,386,996,141.27


period56,893,032.66 60,882,542.16 13,661,165.53 6,045,622.63 19,000,737.36 156,483,100.34


186

(1) Withdrawal 56,893,032.66 60,882,542.16 13,661,165.53 6,045,622.63 19,000,737.36 156,483,100.34


period92,491,301.56 68,883,330.10 41,068,075.82 12,586,323.43 23,329,729.40 238,358,760.31

(1) Disposal or Scrap 92,491,301.56 68,883,330.10 41,068,075.82 12,586,323.43 23,329,729.40 238,358,760.31

(2) Other — — — — — —

4.Closing balance 365,828,714.85 582,924,576.99 173,954,788.56 45,962,359.91 136,450,040.99 1,305,120,481.30

III. Depreciation reserves -

1.Opening balance 53,124,316.45 6,198,654.13 1,628,053.45 899,230.59 1,458,921.13 63,309,175.75


period— 20,992,333.00 6,021,747.13 109,187.63 2,737,376.43 29,860,644.19

(1) Withdrawal — 20,992,333.00 6,021,747.13 109,187.63 2,737,376.43 29,860,644.19


period51,117,567.15 1,122,857.24 2,335,953.13 45,072.30 640,149.80 55,261,599.62

(1) Disposal or Scrap 51,117,567.15 1,122,857.24 2,335,953.13 45,072.30 640,149.80 55,261,599.62

(2) Other — — — — — —

4.Closing balance 2,006,749.30 26,068,129.89 5,313,847.45 963,345.92 3,556,147.76 37,908,220.32

IV. Book value -

1. Closing book value 1,242,570,146.88 386,998,015.54 46,666,148.82 17,788,045.10 69,480,833.16 1,763,503,189.50


187

2. Opening book value 1,212,281,039.08 428,238,530.59 49,651,348.05 20,841,745.20 72,682,886.00 1,783,695,548.92

(2) List of temporarily idle fixed assets

Item Original book value Accumulative depreciation Depreciation reserves Book value Notes

Houses and buildings 4,284,173.90 2,458,069.58 942,269.83 883,834.49

Machinery equipment 6,705,827.19 5,338,283.86 718,159.24 649,384.09

Electronic equipment 18,515,199.56 17,070,291.53 1,021,928.09 422,979.94

Transportation equipment 1,623,535.00 1,460,501.40 87,259.60 75,774.00

Other equipment 2,979,447.09 2,690,379.92 43,920.91 245,146.26

Total 34,108,182.74 29,017,526.29 2,813,537.67 2,277,118.78


188

(3) Fixed assets leased in from financing lease

Item Original book valueAccumulative

depreciation

Impairment provisionBook value

Machinery equipment 5,321,552.85 1,173,743.61 — 4,147,809.24

(4) Fixed assets leased out from operation lease

Item Closing book value

Houses and buildings 23,232,191.19

Total 23,232,191.19

(5) Details of fixed assets failed to accomplish certification of property

Item Book value Reason

Yikang building 48,324,645.35 Under processing

KangshengAquatic Club 20,343,430.96 Under processing

Mudangjiang electric appliancesetc. 12,187,010.26

Has not obtained the state-owned land uses card, can notto deal with house property card

Jingyuan office building 12,725,226.98 Under processing

Office building of Pang riverstreet, Big East District, Shenyang 9,426,356.36 Under processing

Office building of Kunming 5,432,239.86 Under processing

Office building of Foshan 4,842,032.86 Under processing

Office building of ChangshuKonka Color TV etc. 1,826,104.32

Has not obtained the state-owned land uses card, can notto deal with house property card

14. Construction in progress

(1) List of construction in progress

Item

Closing balance Opening balance

Book balanceDepreciation

reservesBook value Book balance

Depreciation

reservesBook value

Kunshan hotel 138,816,397.92 — 138,816,397.92 57,267,807.74 — 57,267,807.74

Kunshangallery 1,643,881.07 — 1,643,881.07 1,643,881.07 — 1,643,881.07

KunshanJielunte newfactory

4,801,714.50 — 4,801,714.50 29,459,670.93 — 29,459,670.93


189

WuhanJieluntefactoryconstruction

31,032,889.26 — 31,032,889.26 18,304,006.73 — 18,304,006.73

Canteenproject of theTongchuangIndustrialPark

4,035,058.76 — 4,035,058.76 — — —

Chuzhou Jielute factoryphase Iconstruction

9,613,833.54 — 9,613,833.54 6,466,505.22 — 6,466,505.22

Other smallprojects 17,910,405.83 — 17,910,405.83 46,463,012.40 — 46,463,012.40

Total 207,854,180.88 — 207,854,180.88 159,604,884.09 — 159,604,884.09


190

(2) Changes of significant construction in progress

Name o f item Estimated number Opening balance Increased amountAmount that transferred tofixed assets of the period

Amount thattransferred to intangibleassets of the period

Other decreased amountof the period Closing balance

Kunshan hotel 441,600,000.00 57,267,807.74 81,548,590.18 — — — 138,816,397.92

Kunshan

gallery26,320,000.00 1,643,881.07 — — — — 1,643,881.07

Kunshan

Jielunte new

factory

37,992,500.00 29,459,670.93 8,594,370.74 33,252,327.17 — — 4,801,714.50

Wuhan

Jielunte

factory

construction

40,000,000.00 18,304,006.73 12,728,882.53 — — — 31,032,889.26

Canteen

project of the

Tongchuang

Industrial Park

4,186,655.78 — 4,035,058.76 — — — 4,035,058.76

Chuzhou Jielut

e factory phase

I construction

— 6,466,505.22 3,147,328.32 — — — 9,613,833.54


191

Anhui Konka

Electronic

employee

apartment

building

projects

21,049,600.00 — 20,508,465.44 20,508,465.44 — — —

Other small

projects— 46,463,012.40 20,490,246.57 22,435,053.07 10,621,478.28 15,986,321.79 17,910,405.83

Total 571,148,755.78 159,604,884.09 151,052,942.54 76,195,845.68 10,621,478.28 15,986,321.79 207,854,180.88

(Continued)

Project nameProportion estimated

of the projectaccumulative input

Project progressAccumulative amountof capitalized interests

Of which: the amount ofthe capitalized interests of

the period

Capitalization rate of theinterests of the period

Capital resources

Kunshan gallery 6.25 6.25 — — — Self-owned fund

Wuhan Jielunte factory

construction77.58 95.00 — — — Self-owned fund

Canteen project of the

Tongchuang Industrial Park96.38 76.60 — — — Self-owned fund

Chuzhou Jielute factory phase I

construction— 90.00 — — — Self-owned fund


192

Anhui Konka Electronic

employee apartment building

projects

97.43 100.00 — — — Self-owned fund

Kunshan hotel 31.58 31.58 810,165.16 — —Loans to financial institutions

and self-owned fund


193

15. Intangible assets

(1) List of intangible assets

Item Land use right Patent right

Trademark

registration

expense

Other Total


1.Opening balance 366,197,934.11 40,139,739.88 3,519,159.61 30,062,433.23 439,919,266.83

2. Increased amount of

the period— 31,264.96 — 17,833,356.38 17,864,621.34

(1) Purchase — 31,264.96 — 7,211,878.10 7,243,143.06

(2) Transfer of project

under construction— — — 10,621,478.28 10,621,478.28

3.Decreased amount of

the period— — — 9,800.00 9,800.00

(1) Disposal — — — 9,800.00 9,800.00

4.Closing balance 366,197,934.11 40,171,004.84 3,519,159.61 47,885,989.61 457,774,088.17

II. Accumulated

amortization

1.Opening balance 40,380,243.37 32,123,987.40 3,364,176.89 13,523,645.98 89,392,053.64

2. Increased amount of

the period8,338,831.53 831,399.43 35,845.25 3,692,788.23 12,898,864.44

(1) Withdrawal 8,338,831.53 831,399.43 35,845.25 3,692,788.23 12,898,864.44


the period— — — 9,800.00 9,800.00

(1) Disposal — — — 9,800.00 9,800.00

4.Closing balance 48,719,074.90 32,955,386.83 3,400,022.14 17,206,634.21 102,281,118.08

III. Depreciation

reserves

1.Opening balance — 2,901,082.61 — — 2,901,082.61

2. Increased amount of — — — — —


194

the period

(1) Withdrawal — — — — —


the period— — — — —

(1) Disposal — — — — —

4.Closing balance — 2,901,082.61 — — 2,901,082.61

IV. Book value

1. Closing book value 317,478,859.21 4,314,535.40 119,137.47 30,679,355.40 352,591,887.48

2. Opening book value 325,817,690.74 5,114,669.87 154,982.72 16,538,787.25 347,626,130.58

(2) Details of fixed assets failed to accomplish certification of land use right

Item Book value Reason

Mudangjiang electric appliances

etc. 3,153,608.13Left over by history

(3) Other notes

The land use right of book value of intangible assets of the Company’s subsidiary Kunshan

Konka Electronic Co., Ltd. was RMB78, 094,958.58 which was pledged for long term loan

of RMB63,876,957.13.

16. Goodwill

(1) Original book value of goodwill

Name of the investees or theevents formed goodwill

Opening balance

Increased Decreased

Closing balanceFormed from

the

businesscombination

Other Dispose Other

Anhui Konka 3,597,657.15 — — — — 3,597,657.15

Total 3,597,657.15 — — — — 3,597,657.15

(2) The method of impairment test and impairment provision, see note 19, IV.

(3) As of 31 Dec. 2015, there was no book value of goodwill higher than recoverable amount.

17. Long-term unamortized expenses

Item Opening balance Increased amountAmortization

amountDecrease Closing amount


195

Renovation costs 9,557,434.43 23,314,451.15 7,090,610.84 — 25,781,274.74

Shoppe expense 10,280,675.07 38,695,322.84 15,843,815.43 — 33,132,182.48

Other 5,954,695.56 24,334,874.47 6,356,045.18 — 23,933,524.85

Total 25,792,805.06 86,344,648.46 29,290,471.45 — 82,846,982.07

18. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets

Item


Deductible temporary Deferred income taxassets

Deductible temporary Deferred incometax assetsdifference difference

Assets impairmentprovision 682,074,474.66 160,938,084.03 680,584,889.73 168,852,965.21

Unrealized internalsales gain and loss 75,656,622.48 18,914,155.62 45,585,627.57 11,396,406.89

Accrued expenses 114,093,986.59 28,165,776.55 92,847,148.47 23,119,888.96

Deferred income 98,649,185.43 23,704,256.37 91,852,218.96 21,845,806.74

Deductible losses 1,223,305,795.11 295,093,235.44 137,205,313.83 34,301,328.46

Other 89,960,000.00 22,490,000.00 — —

Total 2,283,740,064.27 549,305,508.01 1,048,075,198.56 259,516,396.26

(2) Lists of deferred income tax liabilities

Item


Deductibletemporarydifference

Deferred income taxliabilities

Deductible temporarydifference

Deferred income taxliabilities

Accelerateddepreciation of fixedassets

10,219,095.65 1,532,864.34 6,996,658.49 1,049,498.77

Change of fair value oftrading financial assets 7,184,035.28 1,796,008.82 — —

Change in fair value ofavailable-for-salefinancial assets

556,635.24 139,158.81 — —

Total 17,959,766.17 3,468,031.97 6,996,658.49 1,049,498.77

(3) List of unrecognized deferred income tax assets



196

Deductible temporary difference 385,065,293.90 416,383,521.99

Deductible losses 1,162,480,889.15 525,234,499.08

Total 1,547,546,183.05 941,618,021.07

19. Other non-current assets


Prepayment for land — 488,063,979.00

Total — 488,063,979.00

20. Assets impairment provision

Item Opening balance

Withdrawn

impairment balance

at the period-begin

Decreased

Closing balanceReverseWrite-off

I. Bad debtprovision 327,064,296.70 218,323,037.39 6,090,644.27 1,620,508.79 537,676,181.03

II.Impairmentof inventories 746,582,719.25 100,659,141.78 13,708,717.02 525,875,694.61 307,657,449.40

III.Impairmentprovision oftheavailable-for-sale financialassets

2,766,139.07 2,912,785.64 681,139.07 — 4,997,785.64

IV.Impairmentprovision ofthe fixedassets

63,309,175.75 29,860,644.19 — 55,261,599.62 37,908,220.32

V. Impairmentprovision ofthe intangibleassets

2,901,082.61 — — — 2,901,082.61

VI. Long-termequityinvestment

— 33,906,863.92 — — 33,906,863.92

Total 1,142,623,413.38 385,662,472.92 20,480,500.36 582,757,803.02 925,047,582.92

21. Short-term loans

Category of short-term loans


197


Pledge loan — 10,000,000.00

Mortgage loan — —

Guaranteed loan 1,196,103,036.53 1,563,972,365.24

Credit loan 2,954,670,159.23 3,571,740,071.67

Total 4,150,773,195.76 5,145,712,436.91

22. Notes payable

Category Closing balance Opening balance

Trade acceptance — 6,855,587.12

Bank acceptance bill 929,176,857.06 904,499,441.35

Total 929,176,857.06 911,355,028.47

Notes: RMB929, 176,857.06 will be due in next fiscal period.

23. Accounts payable

(1) List of accounts payable


Within 1 year 2,806,965,708.04 3,065,357,903.95

1 to 2 years 126,958,011.57 58,683,458.20

2 to 3 years 28,320,658.56 1,259,084.44

Over 3 years 18,172,605.08 19,107,987.34

Total 2,980,416,983.25 3,144,408,433.93

(2) Notes of the accounts payable aging over one year

Item Closing balance Unpaid/ Un-carry-over reason

Interior decoration 13,804,404.30 Unsettled

Exterior components 5,038,769.40 Unsettled

Building projects 2,902,005.96 Unsettled

Total 21,745,179.66

24. Advance from customers

(1) List of advance from customers


198


Within 1 year 308,012,574.61 275,288,665.86

1 to 2 years 21,697,745.80 11,520,332.44

2 to 3 years 5,825,837.33 1,574,348.73

Over 3 years 14,248,649.58 14,521,106.83

Total 349,784,807.32 302,904,453.86

(2) Significant advance from customers aging over one year was prepayment of goods

undelivered.

(3) Advance receipts of houses


Shuiyue Zhouzhuang Project(Phase I) 15,387,876.00 81,228,984.00

Shuiyue Zhouzhuang Project(Phase II) 8,542,534.36 13,509,507.91

合计 23,930,410.36 94,738,491.91

25. Payroll payable

(1) List of Payroll payable

Item Opening balance Increased Decreased Closing balance

I. Short-term salary 296,701,946.79 1,624,244,622.09 1,649,465,363.42 271,481,205.46

II. Post-employment

benefit-defined contribution plans2,562,794.26 137,657,181.47 137,761,396.48 2,458,579.25

III. Termination benefits 7,974.00 10,701,417.05 5,017,917.05 5,691,474.00

IV. Other benefits due within one

year— — — —

Total 299,272,715.05 1,772,603,220.61 1,792,244,676.95 279,631,258.71

(2) List of Short-term salary


1. Salary, bonus, allowance,subsidy 288,171,641.38 1,435,260,071.96 1,461,273,188.12 262,158,525.22

2. Employee welfare 1,111,472.13 62,543,230.95 62,397,521.82 1,257,181.26

3. Social insurance 1,526,026.37 63,685,606.33 63,274,297.61 1,937,335.09


199

Including: 1. Medical

insurance premiums1,285,679.34 53,414,120.10 53,306,965.10 1,392,834.34

Work-related injury

insurance91,233.21 5,406,091.01 5,394,781.15 102,543.07

Maternity insurance 149,113.82 4,865,395.22 4,572,551.36 441,957.68

4. Housing fund 1,504,548.35 33,021,559.27 33,029,409.53 1,496,698.09

5. Labor union budget andemployee education budget 4,388,258.56 13,023,907.35 13,192,266.36 4,219,899.55

6.Short-term absence with

payment— — — —

7. Short-term profit sharing

plan— — — —

8. Other — 16,710,246.23 16,298,679.98 411,566.25

Total 296,701,946.79 1,624,244,622.09 1,649,465,363.42 271,481,205.46

(3) List of drawing scheme


Basic pension benefits 2,437,546.24 130,593,613.81 130,901,578.79 2,129,581.26

Unemployment insurance 125,248.02 7,063,567.66 6,859,817.69 328,997.99

Annuity — — — —

Total 2,562,794.26 137,657,181.47 137,761,396.48 2,458,579.25

The Company, in line with the requirement, participate the endowment insurance,

unemployment insurance scheme and so on, according to the scheme, the Company monthly

pay to the scheme in line with requirements of local government, except the monthly

payment, the Company no longer shoulder the further payment obligation, the relevant

expense occurred was recorded into current profits and losses or related assets costs.

26. Taxes payable


VAT 13,316,492.43 24,559,393.58

Corporate income tax 15,106,336.81 42,937,116.01

Business tax 2,049,531.99 1,680,131.18


200

Urban maintenance and construction tax 1,392,874.16 801,349.04

Personal income tax 5,468,489.97 4,086,658.32

Education Surcharge 939,576.85 548,155.02

Flood control fund, fund for embankment, fund for water

conservancy and fund for river management1,286,346.53

2,220,266.89

Fund for disposing abandoned appliances and electronic

products19,694,608.00

21,403,104.00

Other 32,843,695.16 14,320,831.81

Total 92,097,951.90 112,557,005.85

27. Interest payable


Loan interests 20,552,763.14 22,872,418.43

Total 20,552,763.14 22,872,418.43

28. Other accounts payable

(1) Other accounts payable listed by nature of the account


Accrued expenses 958,366,586.73 862,532,739.03

Margin 228,909,206.83 253,375,271.47

Intercourse funds 172,797,449.90 100,800,186.16

Payment on behalf 10,769,352.74 50,527,321.48

Other 180,088,977.15 109,567,862.89

Total 1,550,931,573.35 1,376,803,381.03

(2) Other significant accounts payable with aging over one year

Item Closing balance Unpaid/ Un-carry-over reason

Shanghai Shensy Logistics Co., Ltd. 3,800,000.00 Margin

Ningbo Huacai Electric Appliance Co., Ltd. 3,031,041.94 Guarantee money of operation

Shanghai Yongxin Color CRT Ltd. Co., Ltd. 2,075,485.15 Margin

Total 8,906,527.09


201

29. Non-current liabilities due within 1 year


Long-term loans due within 1 year(Note: 30) 573,341,856.11 —

Long-term loans due within 1 year(Note: 31) 57,103.54 1,525,465.53

Total 573,398,959.65 1,525,465.53

30. Long-term loan


Mortgage loan 63,776,957.13 51,976,957.13

Guaranteed loan 23,700,000.00 —

Credit loan 509,564,898.98 905,564,253.39

Less: long-term loans due within 1 year(Note: 29) 573,341,856.11 —

Total 23,700,000.00 957,541,210.52

Notes: the mortgage asset category and amount of mortgage loan see Notes 54.

31. Long-term payable


Chuzhou Tongchuang Jianshe Investment Co., Ltd. 30,000,000.00 30,000,000.00

Accrued financial lease outlay 190,436.91 1,555,455.63

Less: Expired part due within 1 year (Note: 29) 57,103.54 1,525,465.53

Total 30,133,333.37 30,029,990.10

32. Long term payroll payable

(1) List of long term payroll payable


I. Termination benefits-net liabilities of defined contribution

plans23,435,856.86

28,554,734.16

II. Termination benefits — —

III. Other long term welfare — —

Total 23,435,856.86 28,554,734.16

(2) Changes of defined benefit plans


202

① Present worth of defined benefit plans obligation:

Item Reporting period Last period

I. Opening balance 28,554,734.16 —

II. Defined benefit cost recorded into current profits and

losses —28,554,734.16

1. Current service cost — 5,140,521.34

2. Previous service cost — 23,200,807.83

3. Settlement gains (loss “－”) — —

4. Net interest — 213,404.99

III. Other changes 5,118,877.30 —

1. Consideration of settlement of payment — —

2.Welfare had paid 5,118,877.30 —

Balance at year- end 23,435,856.86 28,554,734.16

②Notes to the influence of the content and related risk of defined benefit plans to the future

cash flows, time and uncertainty of the Company:

Due to upgrading and reconstruction of current work sites of the subsidiary, communication

technology, it is to adjust the labor relations according to Implementation Measures for

Accompanying Employees in manufacturing system of Shenzhen Konka Communication

Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and

voluntary selection, Communication Technology provides early retirement plans for senior

employees (employed before December 31, 1990 and signed non-fixed term labor contract

with the Company or Communication Technology).

The accumulative compensation paid to the internal early retirement pensions in future year

is RMB34,931,714.55, the Company in line with Agreement of Internal Early Retirement

Pension, in line with the standard of salary remaining the same, turnover rate of 0, the

mortality rate of, fix standard of social security base payment remaining the same to test the

present worth of defined benefit plans. The actual payment for the employee is influence by

the actual turnover rate, death rate and the changes of minimum cardinality of social security.

③ Notes to analysis results of actuarial assumptions and sensibility of defined benefit plans

Major assumptions estimated Period-end of reporting period Period-end of last period

Discount rate Treasury bond rate in same period —


203

Death rate 0% —

Expected life expectancy Over legal emeritus age —

Expected compensation growth rate 0% —

33. Accrued liabilities

Item Opening balance Closing balance Formation reasons

Pending litigation — 4,629,554.61 litigation

Total — 4,629,554.61

34. Deferred income

Item Opening balance Increased Decreased Closing balanceFormation

reasons

Government subsidies 147,315,999.02 40,689,403.00 25,219,397.82 162,786,004.20 Amortization

Total 147,315,999.02 40,689,403.00 25,219,397.82 162,786,004.20


204

Of which, items involved in government subsidies:

Item Opening balanceAmount of newly

subsidy

Amount accrued in

non-business incomeOther changes Closing balance

Related to the assets/

income

Subsidies for equipment engineering and

technology17,550,000.00 — 3,510,000.00 — 14,040,000.00 Related to the assets

Smart TV industry chain of Konka Group

Co., Ltd.12,800,000.00 — — — 12,800,000.00 Related to the assets

Compensation for infrastructure

construction of Jielunte11,550,000.00 — — — 11,550,000.00 Related to the assets

Supporting the next generation Internet

intelligent terminal system research projects8,508,737.85 — — 600,000.00 7,908,737.85 Related to the assets

Fund for flat panel display industry in year

20086,499,999.94 — 2,000,000.04 — 4,499,999.90 Related to the assets

R&D of mating core chip based on the

terminal of AVS/DRA5,620,000.00 — — — 5,620,000.00 Related to the assets

R&D and industrialization of new-type

smart television with man-machine

interaction

5,256,893.21 — — — 5,256,893.21 Related to the assets

Key technology and industrialization of

LED Backlight of flat TV set4,750,000.01 — 999,999.96 — 3,750,000.05 Related to the assets


205

Industrialization project of large size liquid

crystal display module (LCM)4,400,000.00 — 2,400,000.00 — 2,000,000.00 Related to the assets

Special Fund of Strategic Emerging Industry

of Dongguan Financial Bureau4,200,000.00 — 600,000.00 — 3,600,000.00 Related to the assets

R&D and industrialization of large size

liquid crystal display module3,600,000.00 — 2,400,000.00 — 1,200,000.00 Related to the assets

Funds for provincial scientific and

technological innovation and special

guidance of achievements transfer of 2010

3,000,000.00 — 521,739.12 — 2,478,260.88 Related to the assets

Special fund for 2010-2012 provincial

finance industrial technology2,940,000.00 — 383,333.34 — 2,556,666.66 Related to the assets

R&D and industrialization of integrated

DTMB2,869,999.89 — 1,640,000.04 — 1,229,999.85 Related to the assets

Government grant for Qianhai Project 2,800,000.00 — - — 2,800,000.00 Related to the assets

Machine module integration subsidy 2,775,000.00 — 300,000.00 — 2,475,000.00 Related to the assets

Supporting the research and development

and industrialization of synergy

internet-connected digital products


TV application oriented and embedded

operating system development2,470,000.00 — — — 2,470,000.00 Related to the assets


206

Industrialization technological

transformation of large precise multi-color

injection mold based on green

Manufacturing


Research instruments subsidies 2,068,933.33 — 420,800.04 — 1,648,133.29 Related to the assets

R&D and industrialization of new-type

terminal application service system of

internet


Research and development and

industrialization of Dual channel new 3 D

smart TV


Supporting triple play smart TV and system

support platform2,000,000.00 — 133,333.32 - 1,866,666.68 Related to the assets

Shenzhen Finance Committee Konka Group

Smart TV Industry Project— 8,170,000.00 — — 8,170,000.00 Related to the assets

Konka next generation multimedia

terminal technology engineering laboratory

project

— 5,000,000.00 — — 5,000,000.00 Related to the assets

Special fund for Scientifically Create

Committee technology PR project— 4,500,000.00 — — 4,500,000.00 Related to the assets


207

Mobile intelligent terminal new application

service system— 4,000,000.00 — — 4,000,000.00 Related to the assets

Economic, trade and information

commission, 2015 Shenzhen Industrial

Design Center subsidy


Deferred income-mobile intelligent terminal

information security system key— 2,400,000.00 — — 2,400,000.00 Related to the assets

Lean manufacturing execution system

comprehensive integrated innovation

projects


Other 21,146,588.06 11,619,403.00 5,254,856.87 — 27,511,134.19 Related to the assets

Subtotal 135,745,693.66 40,689,403.00 21,513,683.17 600,000.00 154,321,413.49

Other 11,570,305.36 — 3,105,330.17 384.48 8,464,590.71 Related to the income

Subtotal 11,570,305.36 — 3,105,330.17 384.48 8,464,590.71

Total 147,315,999.02 40,689,403.00 24,619,013.34 600,384.48 162,786,004.20

35. Share capital


Increase/decrease in reporting period (+, -)

Closing balanceNewly issueshare

Bonusshares

Capitalization ofpublic reserves

OtherSubtotal


208

The sum of shares 1,203,972,704.00 — — 1,203,972,704.00 — — 2,407,945,408.00

In line with the stipulations of the revision of the article of association and Resolution of the First Special Meeting of Shareholders , the

Company applied to increase registration capital RMB1,203,972,704.00, which all increased by capital reserve, the registration capital after

change was RMB2,407,945,408.00 On 28 Jan. 2016, the Company finished the change of industrial and commercial registration, the share

number after change was 2,407,945,408 shares.

36. Capital reserves


Capital premium 1,211,366,082.55 — 1,203,972,704.00 7,393,378.55

Other capital reserves 78,037,481.44 194,822.54 7,416,147.34 70,816,156.64

Total 1,289,403,563.99 194,822.54 1,211,388,851.34 78,209,535.19

Note: the Capital reserve transfer into share capital which lead to the decrease of Capital premium of RMB1,203,972,704.00; due to the purchase

of 49% of minority shareholder's equity of subsidiary Boluo Konka which lead to other capital reserve decreased RMB7,416,147.34.

37. Other comprehensive income


Reporting period

Closing balanceAmount

incurred beforeincome tax

Less: Amount transferredinto profit and loss in the

current period thatrecognized into other

comprehensive income inprior period

Less: income taxexpense

After-tax attributeto the parentcompany

After-taxattribute tominority

shareholder


209

I. Other comprehensiveincome cannot be reclassifiedinto profits and losses infuture

— — — — — — —

II. Other comprehensivereclassified into profits orlosses

— — — — — — —

Of which: othercomprehensive income as perequity method recognizedinto profit and loss in future

— — — — — — —

Profits or losses ofchange in fair value ofavailable-for-sale financialassets

516,457.28 1,237,774.30 — 309,443.57 928,330.73 — 1,444,788.01

Converted differenceof the foreign currencyfinancial statement

15,655,020.63 -13,342,795.45 — — -13,944,064.64 601,269.19 1,710,955.99

total 16,171,477.91 -12,105,021.15 — 309,443.57 -13,015,733.91 601,269.19 3,155,744.00

38. Surplus reserves


Statutory surplus reserves 593,846,200.71 — — 593,846,200.71

Discretionary surplus reserves 254,062,265.57 — — 254,062,265.57

Total 847,908,466.28 — — 847,908,466.28


210

Notes: Based on the regulations of the Corporation Law and Constitution, the Company should withdraw 10% of the statutory surplus reserves

according to the net profits. If the accumulated amount of the statutory surplus reserves exceeded the 50% of the registered capital, the Company

could no more withdraw.

The Company, after withdraw statutory surplus reserves, can withdraw discretional surplus reserves, in line with the approval, the discretional

surplus reserves can be used for making up losses in previous year or increase share capital.


211

39. Retained profits

Item Reporting period Same period of last year

Opening balance of retained profits before adjustments 746,022,758.89 737,991,722.40

Total opening balance of retained profits before adjustments

(increase+, decrease -)— -32,552,764.33

Opening balance of retained profits after adjustments 746,022,758.89 705,438,958.07

Add: Net profit attributable to owners of the Company -1,256,819,314.51 52,623,527.86

Less: Withdrawal of statutory surplus reserves — —

Withdrawal of discretional surplus reserves — —

Dividend of common stock payable 12,039,727.04 12,039,727.04

Dividend of common stock transfer into share capital — —

Closing retained profits -522,836,282.66 746,022,758.89

40. Revenues and operating costs

1. Revenue and Cost of Sales

ItemReporting period Last period

Revenue Operating costs Revenue Operating costs

Main operations 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80

Other operations 1,133,878,632.78 1,035,913,710.44 348,098,528.39 264,123,293.65

Total 18,395,177,035.98 16,055,497,185.62 19,423,488,994.07 16,733,746,581.45

(2) Main operations (Classified by product)

ProductReporting period Same period of last year

Operation revenue Operation cost Operation revenue Operation cost

Color TV business 12,590,931,785.71 11,006,357,581.37 14,697,422,135.45 12,516,818,815.26

Mobile phone

business790,942,197.54 748,974,690.95

1,587,898,794.07 1,443,167,712.05

Consumer

appliances business1,569,786,771.56 1,276,893,910.52

1,277,294,037.34 1,106,574,443.35

Other 2,309,637,648.39 1,987,357,292.34 1,512,775,498.82 1,403,062,317.14


212

Total 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80

(3) Main operations (Classified by area)

AreaReporting period Same period of last year


Domestic sales 11,332,127,336.67 9,430,634,537.03 14,362,851,294.58 11,986,596,367.77

Overseas sales 5,929,171,066.53 5,588,948,938.15 4,712,539,171.10 4,483,026,920.03

Total 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80

(4) The revenue of sales from the top five customers

Period Main operation revenueProportion of total business revenue

(%)

Y 2015 3,298,880,853.29 17.93

Y 2014 3,303,518,733.47 17.01

41. Business tax and surcharges


Business tax 25,434,795.00 15,402,472.92

Urban maintenance and construction tax 31,858,403.10 25,484,992.48

Education Surcharge 13,911,746.90 11,910,616.10

Land VAT 12,908,502.64 —

Local education surtax 9,615,001.74 7,161,448.26

Other 794,949.52 568,118.74

Total 94,523,398.90 60,527,648.50

Notes: the measurement standards of business tax and surcharges see Notes V. Tax

42. Sales expenses


Salary 637,502,858.56 670,761,003.35

Promotional activities 422,601,760.68 342,953,340.20

Warranty fee 358,821,827.56 290,826,277.64

Logistic Fee 326,633,784.28 330,079,606.13

Advertising expense 266,849,899.18 323,941,757.16

Social security charges 99,423,394.48 80,653,020.90


213

Taxes and fund 73,865,498.94 86,628,594.20

Business travel charges 39,697,519.90 48,775,736.17

Rental charges 29,615,957.91 35,041,860.70

Employee welfare 19,492,036.66 21,422,207.70

Other 173,833,011.28 183,384,783.58

Total 2,448,337,549.43 2,414,468,187.73

43. Administrative expenses


R&D expenses 229,397,281.19 219,325,677.28

Salary 174,464,266.91 165,516,874.48

Taxes and fund 36,087,894.16 29,473,516.24

Depreciation charge 33,156,228.75 31,483,976.08

Patent fee 22,836,537.65 20,976,257.96

Business entertainment expense 19,758,529.99 20,417,348.49

Social security charges 21,808,406.79 20,801,921.11

Business travel charges 13,515,296.14 16,121,368.20

Consulting fees 12,627,143.05 14,309,273.25

Employee welfare 11,611,229.54 14,359,210.35

Water & electricity fees 10,417,929.04 6,860,965.30

Labor-union expenditure 7,429,275.36 4,239,879.20

Other 102,620,995.02 123,044,105.56

Total 695,731,013.59 686,930,373.50

44. Financial expenses


Interest expenses 165,242,581.67 143,547,683.34

Less: Interest income 58,996,071.96 52,265,939.36

Exchange gains and losses 228,619,830.03 35,174,225.81

Other 15,749,983.81 6,307,854.67

Total 350,616,323.55 132,763,824.46


214

45. Asset impairment loss


Bad debt loss 212,232,393.12 13,263,816.09

Inventory falling price loss 86,950,424.76 76,797,683.87

Impairment losses of available-for-sale

financial assets2,912,785.64

200,000.00

Impairment losses of long-term equity

investment33,906,863.92

Fixed assets impairment losses 29,860,644.19 51,277,269.97

Total 365,863,111.63 141,538,769.93

46. Gains on the changes in the fair value

Source Reporting period Last period

Financial assets measured by fair value and the changes be included in

the current profits and losses32,591,836.13 —

Of which, gains on the changes in the fair value of derivative financial

instruments32,591,836.13 —

Total 32,591,836.13 —

47. Investment income


Long-term equity investment income accounted by equity method -18,793,708.66 -7,901,784.31

Investment income arising from disposal of long-term equity

investments— 592,466,874.00

Investment income received from holding of available-for-sale

financial assets2,212,535.21 48,104.52

Investment income received from disposal of available-for-sale

financial assets48,859.12 —

Equity investment income after losing control 8,290,862.30 —

Income from trust management 21,816,104.80 12,260,439.18

Total 13,574,652.77 596,873,633.39


215

48. Non-operating gains


The amount included in

the current

non-recurring gains and

losses

Total gains from disposal of non-current assets 1,431,893.68 4,740,033.90 1,431,893.68

Including: Gains from disposal of fixed assets 1,431,893.68 4,740,033.90 1,431,893.68

Gains from disposal of intangible assets — — —

Government grants ( Details, see the statement

below, lists of government subsidies )138,975,824.71 230,797,272.53 71,499,330.11

Income from compensation 4,620,972.98 3,459,744.68 4,620,972.98

Penalty income 5,753,390.97 5,782,597.32 5,753,390.97

Other 7,756,214.66 14,097,774.58 7,756,214.66

Total 158,538,297.00 258,877,423.01 91,061,802.40

Of which, government subsidies recorded into current profits and losses

Item Reporting period Same period of last yearRelated to the assets/

income

Deferred income 24,619,013.34 22,809,163.30 See note VI. 34

Software tax returns 67,476,494.60 155,396,179.33 Related to the income

Financial Discounts 16,697,890.80 17,587,747.00 Related to the income

Government financing 3,713,042.00 2,699,350.00 Related to the income

The L/C export subsidies 2,711,014.00 1,248,573.00 Related to the income

Post allowance 4,108,800.00 3,079,200.00 Related to the income

Awards and subsidies 15,018,153.38 17,625,000.00 Related to the income

Other 4,631,416.59 10,352,059.90 Related to the income

Total 138,975,824.71 230,797,272.53

49. Non-operating expenses

Item Reporting period Last periodThe amount included in

the current non-recurring


216

gains and losses

Loss on disposal of non-current assets 12,339,287.69 9,752,806.72 12,339,287.68

Including: Loss on disposal of fixed

assets12,339,287.69 9,752,806.72 12,339,287.68

Losses from disposal of intangible assets — — —

Compensation expenses 17,094,119.09 — 17,094,119.09

Penalty expenses 1,224,158.89 511,646.80 1,224,158.89

External donation expenses 1,449,348.77 3,697,606.64 1,449,348.77

Refundable energy saving government

subsidy89,960,000.00 — 89,960,000.00

Other 12,713,996.13 2,922,922.55 12,713,996.14

Total 134,780,910.57 16,884,982.71 134,780,910.57

50. Income tax expense

(1) Lists of income tax expense


Current income tax expense 18,057,113.35 71,765,293.53

Deferred income tax expense -287,680,022.11 -39,910,310.51

Total -269,622,908.76 31,854,983.02

(2) Adjustment process of accounting profit and income tax expense

Item Reporting period

Total profits -1,545,467,671.41

Current income tax expense accounted by tax and relevant regulations -386,366,917.85

Influence of different tax rate suitable to subsidiary 44,915,029.68

Influence of income tax before adjustment -4,164,118.82

Influence of non taxable income -498,815.77

Influence of not deductable costs, expenses and losses 10,540,085.18

Influence of deductable losses of deferred income tax assets derecognized used in

previous period-57,071,289.45


217

Influence of deductible temporary difference or deductible losses of deferred income tax

assets derecognized in reporting period.137,397,674.39

Changes of the balance of deferred income tax assets/ liabilities in previous period due to

adjustment of tax rate—

Influence of plus deducting costs -14,374,556.12

Income tax expense -269,622,908.76

51. Other comprehensive income

See notes VI. 37

52. Supplementary information to cash flow statement

(1) Other cash received relevant to operating activities


Intercourse funds 144,699,799.50 111,968,538.65

Income from government subsidy 87,460,993.66 94,150,553.85

Bargain money and deposit 72,231,723.07 71,752,956.44

Interest income from bank deposits 51,113,129.24 53,255,954.05

Income from waste 17,420,360.55 19,084,574.26

Insurance indemnity income 34,877,755.30 12,433,636.17

Repayment of individual borrowing 9,781,562.99 9,278,645.25

Income from fine and penalty 3,098,865.44 1,678,292.56

Temporary received repair fund 1,284,765.81 1,672,413.78

Other 21,717,469.18 16,443,717.32

Total 443,686,424.74 391,719,282.33

(2) Other cash paid relevant to operating activities


Expense for cash payment 963,497,935.43 945,208,628.95

Payment for pledges, guarantee and repair 113,287,169.86 128,466,550.07

Expense for bank handling charges 13,440,138.47 17,130,320.70

Employee reserve fund 30,468,528.61 20,729,008.95


218

Payment made on behalf 16,001,436.93 25,310,052.38

Donation expense 1,481,651.00 3,965,934.40

Compensation expense 13,036,082.41 189,014.66

Other expense 34,076,092.32 37,984,944.96

Total 1,185,289,035.03 1,178,984,455.07

(3) Other cash received relevant to investment activity


Received financial product 3,152,200,000.00 2,422,400,000.00

Interest of land fund 488,063,979.00 —

Purchase of new share 6,650,870.00 —

Interest of equity transfer — 2,472,043.31

Total 3,646,914,849.00 2,424,872,043.31

(4) Other cash paid relevant to investment activity


Purchase of financial product 3,651,700,000.00 2,422,900,000.00

Entrust loans — 50,000,000.00

Purchase of new share and capital transfer out 6,650,870.00 —

Other 150,398.22 183,497.35

Total 3,658,501,268.22 2,473,083,497.35

(5) Other cash received relevant to financing activities


Receipt and return of pledged RMB fixed deposits upon maturity 118,098,914.34 576,549,112.55

Other 11,555.55 408,029.15

Total 118,110,469.89 576,957,141.70

(6) Other cash paid relevant to financing activities


Pledged margin deposit 161,850,987.97 579,030,740.04

Financing lease — 1,755,444.00


219

Financing cost 14,543,722.06 42,712,205.12

Total 176,394,710.03 623,498,389.16

53. Supplementary information to cash flow statement

(1) Information of net profit to net cash flows generated from operating activities

Supplementary materials Reporting period Same period of last year

1. Reconciliation of net profit to net cash flows generatedfrom operating activities

Net profit -1,275,844,762.65 60,524,699.17

Add: Provision for impairment of assets 365,863,111.63 141,538,769.93

Depreciation of fixed assets, of oil-gas assets, of productivebiological assets 162,114,374.61 145,659,620.62

Amortization of intangible assets 12,898,864.44 11,917,420.27

Long-term unamortized expenses 29,290,471.45 7,001,981.43

Losses on disposal of fixed assets, intangible assets andother long-term assets (gains: negative) 10,907,394.01 5,012,772.82

Losses on retirement of fixed assets — —

Losses from variation of fair value -32,591,836.13 —

Financial cost (gains: negative) 393,862,411.70 177,835,011.99

Investment loss (gains: negative) -13,574,652.77 -596,873,633.39

Decrease in deferred income tax assets (gains: negative) -289,789,111.75 -40,787,656.85

Increase in deferred income tax liabilities(“-” means decrease) 2,418,533.20 1,049,498.77

Decrease in inventory (gains: negative) 934,969,912.29 -290,565,252.54

Decrease in accounts receivable from operating activities(gains: negative) 1,198,719,245.19 -196,522,570.90

Increase in payables from operating activities (decrease:negative) -209,643,472.57 -66,175,843.37

Other — —

Net cash flows generated from operating activities 1,289,600,482.65 -640,385,182.05

2. Investing and financing activities that do not involvingcash receipts and payment:

Liabilities transfer into capital — —

Company bonus convertible due within one year — —


220

Fix assets under financing lease — —

3. Net increase in cash and cash equivalents

Closing balance of cash 1,488,154,851.35 1,640,236,837.08

Less: Opening balance of cash 1,640,236,837.08 1,771,489,421.21

Add: Closing balance of cash equivalents — —

Less: Opening balance of cash equivalents — —

Net increase in cash and cash equivalents -152,081,985.73 -131,252,584.13

(2) Cash and cash equivalents


I. Cash 1,488,154,851.35 1,640,236,837.08

Including: Cash on hand 4,217.37 5,118.98

Bank deposit on demand 1,488,150,633.98 1,640,231,718.10

II. Cash and cash equivalents — —

Of which: Bond investment due within three months — —

III. Closing balance of cash and cash equivalents 1,488,154,851.35 1,640,236,837.08

Notes: the cash and cash equivalents exclude the restricted cash and cash equivalents the

Company and the subsidiaries of the Group used.

54. The assets with the ownership or use right restricted

Item 1. Closing book value Restricted reason

Subtotal of assets for guarantee 78,094,958.58

Intangible assets 78,094,958.58

On 12 Aug. 2013 the Company’s subsidiary KunshanKangsheng Investment Development Co., Ltd. signed FixedAssets Loan Contract with CCB, Kunshan Branch, whichagreed that the maximum loan of secure claims of thecontract was RMB 150 million, mortgaged the land used rightof CKGY(2013 No. 1201211700. As of 31 Dec. 2015, theaforesaid book value of land use right of RMB78, 094,958.58(original book value RMB 88,201,364.97) was pledged forobtaining long term loan of RMB63, 776,957.13.

Subtotal of assets with the ownershipor use right restricted form by otherreason:

1,664,483,435.15


221

Other monetary funds 218,292,077.57Each margin deposit for security cannot be withdrawn at anytime and Regular financial account.

Notes receivable 1,446,191,357.58 Pledged in the bank for note financing

Total 1,742,578,393.73

55. Foreign currency monetary items

Foreign currency monetary items

ItemClosing foreign currency

balanceExchange rate

Closing convert to RMB

balance

Monetary capital 601,848,577.11

Including: USD 91,424,349.59 6.49360 593,673,156.50

EUR 46,703.40 7.09520 331,369.96

IDR 2,826,943,665.57 0.00047 1,328,663.52

GBP 1.32 9.61590 12.69

HKD 7,776,951.51 0.83778 6,515,374.44

Account receivable 815,878,908.86

Including: USD 125,008,637.60 6.49360 811,756,089.12

IDR 7,287,324.02 0.00047 3,425.04

HKD 4,636,217.64 0.83778 3,884,130.41

AUD 49,764.00 4.72760 235,264.29

Other accounts receivable 8,146,444.07

Including: USD 1,215,678.35 6.49360 7,894,128.93

EUR 26,524.37 7.09520 188,195.71

IDR 60,296.30 0.00047 28.34

HKD 76,501.10 0.83778 64,091.09

Accounts payable 210,433,968.02

Including: USD 14,776,344.13 6.4936 95,951,668.24

IDR 2,783.20 7.09520 19,747.36

HKD 136,626,026.43 0.83778 114,462,552.42


222

Short-term loans 1,757,449,703.28

Including: USD 223,060,815.74 6.49360 1,448,467,713.09

EUR 43,548,031.09 7.09520 308,981,990.19

VII. Changes of merge scope

1. The disposal of subsidiary

Single disposal of investment to subsidiary that losing control

Name of the subsidiary

The equitydisposalprice

Equitydisposalproportion

(%)

Method ofequitydisposal

Time of losingcontrol

Recognition basis ofthe time of losing

control

The differences enjoyedof net assets share of the

subsidiary incorresponding

consolidated statementsbetween the disposal ofprice and the disposal of

investment

Konka (Nanhai)

Development Center— 100.00 Cancel 2015-2-9

Cancellation

procedure was

completed

-491,110.76

(Continued)


Residualequity

proportionon the dateof losingcontrol (%)

Book valueof residualequity onthe date oflosingcontrol

Fair value ofresidualequity onthe date oflosingcontrol

Profits orlosses of

residual equityrecalculatedin line withfair value

Recognition methodand main assumption

of fair value ofresidual equity on thedate of losing control

Amount related toother comprehensiveincome transfer intoinvestment profitsor loss of originalsubsidiary equity

investment

Konka (Nanhai)

Development Center— — — — — —

2. Other reasons for the changes in combination scope

(1) Shenzhen Konka Precision Mold Manufacturing Co., Ltd and Mansfield Technology

(Taiwan) Co., Ltd, our subsidiaries contributed capital jointly and founded Anhui Jiasen

Precision Technology Co., Ltd on December 22, 2014. Its registered capital was RMB20

million, and it was paid in full amount by all the stockholders by September 30, 2015. In it,

Shenzhen Konka Precision Mold Manufacturing Co., Ltd subscribed to RMB1.02 million,

which occupied 51% of the registered capital by means of contribution in currency,

Mansfield Technology (Taiwan) Co., Ltd subscribed to RMB9.80 million, which occupied

49% of the registered capital by means of contribution in RMB.


223

(2)The Company contributed capital with Shenzhen Kaikai Shijie Investment Partnership

Enterprise (limited partnership) jointly and founded Anhui Kakai Shijie E-Commerce Co.,

Ltd on December 29, 2014, with a registered capital of RMB20 million. In it, the Company

contributed RMB16 million, which occupied 80% of the registered capital. Shenzhen Kaikai

Shijie Investment Partnership Enterprise (limited partnership) contributed RMB4.0 million,

which occupied 20% of the registered capital. The Company has right of control over it,

and included it into its merger scope from 1 Jan. 2015.

(3) The Company contributed capital with Shenzhen Yizhonghui Technology Co., Ltd and

Shenzhen Yizhonghe Technology Co., Ltd jointly and founded Shenzhen Yipingfang

Network Technology Co., Ltd, with a registered capital of RMB20 million on January 9,

2015. In it, the Company contributed RMB19.20million, which occupied 96% of the

registered capital, the other stockholders contributed RMB800, 000, which occupied 4% of

the registered capital, but the capital had not been contributed by the date of the balance sheet.

The Company has right of control over it, and included it into its merger scope from 12 Jan.

2015.

(4)The Company contributed capital with OCT Group jointly and founded Shenzhen

Kangqiaojiacheng Property Investment Co., Ltd, with a registered capital of RMB10 billion

on January 9, 2015, which will be paid in full amount by all the stockholders by December

31, 2019. In it, the Company subscribed to RMB700 million by means of contribution in

RMB, which occupied 70% of the registered capital, OCT Group contributed to RMB300

million by means of contribution in RMB, which occupied 30% of the registered capital.

By the date of the balance sheet, the Company contributed RMB112 million, which occupied

11.20% of the registered capital; OCT Group contributed RMB48 million, which occupied

4.8% of the registered capital. The Company has right of control over it, and included it into

its merger scope from 19 Jan. 2015.

(5) Kangdian Investment Development Co., Ltd, a subsidiary of the Company, contributed

capital jointly with KK Orient Limited and founded Konka Smarttech Limited on January 21,

2015, with a registered capital of HK$10million. In it, Kangdian Investment Development

Co., Ltd contributed HK$6.10 million, which occupied 61% of the registered capital and

Konka Smarttech Limited contributed HK$3.90 million, which occupied 39% of the

registered capital. The Company has right of control over it, and included it into its merger

scope from 21 Jan. 2015.

(6) Shenzhen Konka Yishijie Commercial Display Co., Ltd, a subsidiary of the Company

contributed capital and founded Shenzhen Konka Yishijie Commercial Display Service Co.,


224

Ltd, a wholly-funded subsidiary under it on May 7, 2015, with a registered capital of

RMB2.00 million. The Company has right of control over it, and included it into its merger

scope from 7 May 2015.

(7) As of the balance sheet date, the Company actual contributed RMB2.916 million, 24.3%

of registration capital, Shenzhen KangzhuangJiasheng Investment Partnership (LP)

contributed RMB0.621 million, 5.18% of registration capital. The Company has right of

control over it, and included it into its merger scope from 25 Jun. 2015.

(8) The company and Shenzhen Kangwei Investment Partnership (LP) has jointly

incorporated Shenzhen Konka Telecommunications Technology Co., Ltd. with the registered

capital of RMB 20 million on October 26, 2015, which shall be paid in full amount before

June 30, 2016 by all the shareholders, of which, the company shall contribute RMB 10.20

million representing 51% of the registered capital; Shenzhen Kangwei Investment

Partnership (LP) shall contribute RMB 9.80 million, representing 49% of the registered

capital. As of the balance sheet date, the company actual investment 510 million yuan,

accounted for 25.5% of the registered capital, Shenzhen City Kangwei investment

partnership enterprise (limited partnership) actual investment of RMB 490 million yuan,

24.5% of the registered capital.The Company has right of control over it, and included it into

its merger scope from 26 Oct. 2015.

(9) On 27 Mar. 2015, Chongqing Jiangbei District People's Court had accepted application of

cancellation of the subsidiary of the Company, the Company no longer had power to lead the

relevant activities of Chongqing Electronic, since entering the cancellation procedure, it was

excluded in the consolidated scope, and considering its net assets as zero reclassified into

available for sale financial assets.

VIII. Equity in other entities

1. Equity in subsidiary

(1) The structure of the enterprise group


Main

operating

place

Registration

place

Nature of

business

Holding percentage

(%)Way of

gainingDirectly Indirectly

Shenzhen Konka Telecommunications

Technology Co., Ltd.

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry75.00 25.00

Set up or

investment

Shenzhen Konka Precision Mould

Manufacturing Co., Ltd.①

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry— 46.31

Set up or

investment


225

Shenzhen Konka Electronic Co., Ltd.Shenzhen,

Guangdong

Shenzhen,

Guangdong

Electrical

Appliances

Retail

100.00 —Set up or

investment

Shenzhen Konka Information Network

Co., Ltd.

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry75.00 25.00

Set up or

investment

Shenzhen Konka Plastic Products Co.,

Ltd.

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry49.00 51.00

Set up or

investment

Shenzhen Konka Life Electronic Co.,

Ltd.

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry75.00 25.00

Set up or

investment

Shenzhen Konka Electronic Fittings


Shenzhen,

Guangdong

Shenzhen,

Guangdong

Investment

holding75.00 25.00

Set up or

investment

Mudanjiang Arctic Ocean Appliances

Co., Ltd.

Mudanjiang,

Heilongjiang

Mudanjiang,

Heilongjiang

Manufacturing

industry60.00 —

Set up or

investment

Chongqing Konka Eurotomotive

Electronic Co., Ltd.Chongqing Chongqing

Manufacturing

industry57.00 —

Set up or

investment

Chongqing Konka Electronic Co.,

Ltd.②Chongqing Chongqing

Manufacturing

industry— 40.00

Set up or

investment

Anhui Konka Electronic Co., Ltd.Chuzhou,

Anhui

Chuzhou,

Anhui

Manufacturing

industry78.00 —

Set up or

investment

Anhui Konka Appliance Co., Ltd.Chuzhou,

Anhui

Chuzhou,

Anhui

Manufacturing

industry— 100.00

Set up or

investment

Changshu Konka Electronic Co., Ltd.Changshu,

Jiangsu

Changshu,

Jiangsu

Manufacturing

industry— 60.00

Set up or

investment

Kunshan Konka Electronic Co., Ltd.Kunshan,

Jiangsu

Kunshan,

Jiangsu

Manufacturing

industry100.00 —

Set up or

investment

Dongguan Konka Electronic Co., Ltd.Dongguan,

Guangdong

Dongguan,

Guangdong

Manufacturing

industry75.00 25.00

Set up or

investment

Dongguan Konka Packing Materials

Co., Ltd.

Dongguan,

Guangdong

Dongguan,

Guangdong

Manufacturing

industry— 100.00

Set up or

investment

Dongguan Konka Mould Plastic Co.,

Ltd.

Dongguan,

Guangdong

Dongguan,

Guangdong

Manufacturing

industry— 59.73

Set up or

investment


226

Boluo Konka PCB Co., Ltd.Boluo，

Guangdong

Boluo，

Guangdong

Manufacturing

industry— 51.00

Set up or

investment

Boluo Konka Precision Technology

Co., Ltd.

Boluo，

Guangdong

Boluo，

Guangdong

Manufacturing

industry— 100.00

Set up or

investment

Hong Kong Konka Co., Ltd.Hong Kong,

China

Hong Kong,

China

International

Trading100.00 —

Set up or

investment

Konka Household Appliances

Investment & Development Co., Ltd.

Hong Kong,

China

Hong Kong,

China

Investment

holding— 100.00

Set up or

investment

Konka Household Appliances

International Trading Co., Ltd.

Hong Kong,

China

Hong Kong,

China

International

Trading— 100.00

Set up or

investment

KONKA AMERICA,INC. America AmericaInternational

Trading100.00 —

Set up or

investment

Konka (Europe) Co., Ltd.

Frankfurt,

Germany,

Europe

Frankfurt,

Germany,

Europe

International

Trading100.00 —

Set up or

investment

Dongguan Xutongda Mould Plastic

Co., Ltd.③

Dongguan,

Guangdong

Dongguan,

Guangdong

Manufacturing

industry— 46.31

Set up or

investment

Shenzhen Konka Optoelectronic


Shenzhen,

Guangdong

Shenzhen,

Guangdong

R&D

expenses100.00 —

Set up or

investment

Shenzhen Wankaida Science and


Shenzhen,

Guangdong

Shenzhen,

Guangdong

Software

development100.00 —

Set up or

investment

Kunshan Kangsheng Investment

Development Co., Ltd.

Kunshan,

Jiangsu

Kunshan,

JiangsuReal estate 100.00 —

Set up or

investment

Anhui Konka Tongchuang Household

Appliances Co., Ltd.④

Chuzhou,

Anhui

Chuzhou,

Anhui

Manufacturing

industry100.00 —

Set up or

investment

Indonesia Konka Electronics Co., Ltd. Indonesia IndonesiaInternational

Trading— 51.00

Set up or

investment

Shenzhen Shushida Logistics Service

Co., Ltd.

Shenzhen,

Guangdong

Shenzhen,

GuangdongLogistics 100.00 —

Set up or

investment

Beijing Konka Electronic Co., Ltd. Beijing BeijingSale of home

appliance100.00 —

Set up or

investment


227

Kunshan Jielunte Mould Plastic Co.,

Ltd.⑤

Kunshan,

Jiangsu

Kunshan,

Jiangsu

Manufacturing

industry— 46.31

Set up or

investment

Wuhan Jielunte Mould Plastic Co.,

Ltd.⑤

Wuhan, Hubei Wuhan, Hubei Manufacturing

industry— 46.31

Set up or

investment

Chuzhou Jielunte Mould Plastic Co.,

Ltd.⑤

Chuzhou,

Anhui

Chuzhou,

Anhui

Manufacturing

industry— 46.31

Set up or

investment

Shenzhen Konka E-display Co., Ltd.Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry60.00 —

Set up or

investment

Shenzhen E-display Service Co., Ltd.Shenzhen,

Guangdong

Shenzhen,

Guangdong

Manufacturing

industry60.00

Set up or

investment

Xiamen Dalong Trade Co., Ltd.Xiamen,

Fujian

Xiamen,

FujianCommerce — 69.23

Set up or

investment

Youshi Kangrong Cultural

Communication Co., Ltd.Tianjin Tianjin Other — 70.00

Set up or

investment

Anhui Jiasen Precision Technology

Co., Ltd.⑥Anhui Anhui

Manufacturing

industry— 23.62

Set up or

investment

Shenzhen Kangqiaojiacheng Property

Investment Co., Ltd

Shenzhen,

Guangdong

Shenzhen,

GuangdongReal estate 70.00 —

Set up or

investment

Konka Smarttech LimitedHong Kong,

China

Hong Kong,

ChinaOther — 61.00

Set up or

investment

Anhui Kakai Shijie E-Commerce Co.,

LtdAnhui Anhui E-commerce 80.00 —

Set up or

investment

Shenzhen Yipingfang Network

Technology Co., Ltd

Shenzhen,

Guangdong

Shenzhen,

Guangdong

Information

service96.00 —

Set up or

investment

Shenzhen Konka Commercial Systems

Technology Co., Ltd

Shenzhen,

Guangdong

Shenzhen,

GuangdongCommerce 81.00 —

Set up or

investment

Shenzhen Konka Mobile Internet


Shenzhen,

Guangdong

Shenzhen,

GuangdongCommerce 51.00 —

Set up or

investment

Notes: ① The Company holds 46.31% of shares of Shenzhen Konka Precision Mold

Manufacturing Co., Ltd., Konka Household Appliances Investment & Development Co., Ltd,

a subsidiary company of the Company, is entrusted to manage 6.18% shares held by


228

Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd. After the entrustment, the

percentage of voting rights of the Company increases to 52.49%. Therefore, the financial

statements of Shenzhen Konka Precision Mold Manufacturing Co., Ltd. are combined into

the consolidated financial statements. Xutongda is a wholly funded subsidiary of Dongguan

Konka Mould Plastic Co., Ltd and is also combined into the consolidated financial

statements.

② The Company holds 40.00% shares of Chongqing Qingjia Electronic Co., Ltd. that all

senior managers of Chongqing Qingjia Electronic Co., Ltd. are appointed and dismissed by

the Company. Among the directors, half of them or over half are dispatched directly or

indirectly by the Company. Moreover, in Chongqing Qingjia, 70% to 80% of its products

are sold to the Company and thus the Company has absolute influence and control over the

production and operation of Chongqing Qingjia Electronic Co., Ltd., which is combined into

the consolidated financial statement.

③ Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 100% equity of Dongguan

Xutongda Mould Plastic Co., Ltd., and the Company is the actual controller of Dongguan

Xutongda Mould Plastic Co., Ltd., for the Company indirectly held 46.31% shares and

52.49% voting right of Dongguan Xutongda Mould Plastic Co., Ltd., which is combined into

the consolidated financial statement.

④ Anhui Tongchuang is a limited company jointly invested and established by the Company

and Chuzhou Tongchuang Construction Investment Co., Ltd. (hereinafter refer to as

“Tongchuang Construction”) with registration capital of RMB 180 million, of which each

party invested in RMB 90 million respectively on contract. As to 31 Dec. 2013, Anhui

Tongchuang with a paid-up capital of RMB 120 million (including paid-up capital of RMB

90 million of the Company, 75.00% of total paid-up capital; and paid-up capital of RMB 30

million of Tongchuang Construction, 25.00% of total paid-up capital ). According to

contract sign by two parties, Tongchuang Construction has the rights of transferring stock

ownership three years after the establishment of Anhui Tongchuang Company. Meanwhile,

the Company can repurchase the said stock ownership and contracted with Tongchuang

Investment Company that the Company shall receive fixed investment gains at 2% of actual

capital invested by the Group annually. So the Company can conduct actual control to Anhui

Tongchuang Company, and combines it into the consolidated financial statement.

⑤Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 100% equity of Kunshan

Jielunte, Wuhan Jielunte and ChuzhouJielunte, Shenzhen Konka Precision Mold

Manufacturing Co., Ltd. was the actual controller of the Company which the Company


229

indirectly held 46.31% share equity of Jielunte with voting right of 52.49%, and combines it

into consolidated financial statement.

⑥Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 51.00% equity of Anhui

Jiasen, Shenzhen Konka Precision Mold Manufacturing Co., Ltd. was the actual controller of

the Company which the Company indirectly controlled Anhui Jiasen, and combines it into

consolidated financial statement.

(2) Significant not wholly owned subsidiary


Shareholding

proportion of

minority

shareholder

The profits and

losses arbitrate to

the minority

shareholders

Dividends distribute

to minority

shareholder

Balance of minority

shareholder at

closing period

Precision Mold 53.69 -5,199,362.20 — 38,315,045.54

Anhui Konka 22.00 1,263,128.50 — 61,438,567.39

Dongguan Konka Mould Plastic Co.,Ltd.

40.27 -9,080,623.83 — 36,221,280.89

Dongguan Xutongda Mould Plastic Co.,Ltd.

53.69 7,367,204.84 — 16,598,926.66

(3) The main financial information of significant not wholly owned subsidiary

Name

Closing balance

current assets Non-current assets Total assets Current liabilitiesNon-current

liabilityTotal liabilities

Precision Mold

62,359,351.14 180,143,888.63 242,503,239.77 171,141,027.89 — 171,141,027.89

AnhuiKonka

861,543,505.16 246,490,103.64 1,108,033,608.80 811,514,052.71 9,208,641.33 820,722,694.04

DongguanKonkaMouldPlasticCo.,Ltd.

241,913,766.69 49,540,261.45 291,454,028.14 188,757,532.47 2,744,845.12 191,502,377.59

DongguanXutongdaMouldPlastic

89,259,620.16 7,778,641.52 97,038,261.68 60,855,982.82 266,587.53 61,122,570.35


230

Co.,Ltd.

(Continued)

Name

Opening balance

current assets Non-current assets Total assets Current liabilitiesNon-current

liabilityTotal liabilities

Precision Mold

73,933,646.66 170,997,722.16 244,931,368.82 163,885,285.19 — 163,885,285.19

AnhuiKonka

530,345,042.25 228,358,246.18 758,703,288.43 469,762,019.50 7,371,847.37 477,133,866.87

DongguanKonkaMouldPlasticCo.,Ltd.

246,221,614.74 55,571,226.68 301,792,841.42 176,470,898.07 2,819,541.37 179,290,439.44

DongguanXutongdaMouldPlasticCo.,Ltd.

82,414,688.51 10,115,814.00 92,530,502.51 70,336,314.72 — 70,336,314.72

Name

Reporting period

Operation revenue Net profitTotal comprehensive

incomeOperating cash flow

Precision Mold 92,681,195.35 -9,683,871.75 -9,683,871.75 6,568,036.25

Anhui Konka 5,226,927,921.25 5,741,493.20 5,741,493.20 -14,276,249.32

DongguanKonka MouldPlastic Co.,Ltd.

187,474,600.08 -22,550,751.43 -22,550,751.43 -38,473,275.48

DongguanXutongdaMould PlasticCo., Ltd.

165,783,377.81 13,721,503.54 13,721,503.54 -7,819,375.13


231

(Continued)

Name

Last period

Operation revenue Net profitTotal comprehensive

incomeOperating cash flow

Precision Mold 177,708,791.65 1,695,078.23 1,695,078.23 1,018,798.67

Anhui Konka 4,505,390,088.43 1,528,671.19 1,528,671.19 65,694,893.41

DongguanKonka MouldPlastic Co.,Ltd.

280,476,981.47 11,391,059.19 11,391,059.19 42,523,300.53

DongguanXutongdaMould PlasticCo., Ltd.

154,952,772.16 10,192,895.26 10,192,895.26 14,313,157.43

2. The transaction of the Company with its owner’s equity share changed but still

controlling the subsidiary

(1) Note to owner’s equity share changed in subsidiary

During reporting period Shenzhen Shangyongtong Investment Development Co., Ltd.

transfer its holdings of 49% minority equity of Boluo Konka to Fittings Technology, the

transfer price was RMB9.5431 million, after the equity transfer, the Company held 100%

equity of Boluo Konka.

(2) The transaction’s influence to equity of minority shareholders and attributable to the

owner's equity of the parent company

Item Boluo Konka

Purchase cost consideration

-Cash 9,543,100.00

-Fair value of non-cash assets —

Total of purchase cost consideration 9,543,100.00

Less: subsidiary net assets proportion calculated by share proportion

obtained2,126,952.66

Difference 7,416,147.34

Of which: Adjustment of capital reserves (- decrease) -7,416,147.34

Surplus reserves adjustments —


232

Retained profits adjustments —

3. Equity in associated enterprise

(1) Significant associated enterprise

Subsidiary of associated

enterprise

Main

operating

place

Registration

placeNature of business

Holding percentage (%) Accounting

treatment of the

investment of joint

venture or

associated enterprise

Directly Indirectly

Shenzhen RefundOptoelectronics Co., Ltd.

Shenzhen ShenzhenProduction and sale oflight emitting diode

— 6.79 Equity method

Enraytek OptoelectronicsCo., Ltd.

Shanghai ShanghaiProduction and sale oflight emitting diode

— 28.04 Equity method

Shanghai Konka GreenScience & TechnologyCo., Ltd.

Shanghai ShanghaiProduction and sale oflight emitting diode

39.00 — Equity method

(2) Main financial information of significant associated enterprise

Item

Closing balance/reporting period Opening balance/ same period of last year

Enraytek Optoelectronics

Co., Ltd.

Shanghai Konka Green

Science & Technology

Co., Ltd.

Enraytek

Optoelectronics Co.,

Ltd.

Shanghai Konka

Green Science &


current assets 643,665,278.09 124,548,698.88 268,409,318.77 476,703,490.64

Non-current assets 693,903,656.72 237,205,034.02 606,856,639.67 228,455,686.18

Total assets 1,337,568,934.81 361,753,732.90 875,265,958.44 705,159,176.82

Current liabilities 551,431,214.97 97,706,289.06 355,102,547.52 66,932,415.14

Non-current liability 556,666,832.72 86,797,751.49 232,930,605.06 119,562,409.62

Total liabilities 1,108,098,047.69 184,504,040.55 588,033,152.58 186,494,824.76

Minority interests -260,290.34 2,248,992.25 68.50 11,591,006.22

Equity attribute to the

parent company229,731,177.46 175,000,700.10 287,232,737.36 507,073,345.84


233

Portion of net assets

calculated according

to proportion of

shareholdings

64,416,622.16 68,250,273.03 80,536,808.37 197,758,604.87

Adjusting events

-Goodwill — — 30,257,135.84 —

-Unrealized internal

sales gain and loss— — — —

-Other — — — —

Book value of equity

investment to

associated venture

64,416,622.16 68,250,273.03 110,793,944.21 197,758,604.87

Fair value of equity

investment of

associate enterprises

with public offer

— — — —

Operation revenue 165,482,576.55 120,572,337.08 150,182,731.09 112,916,555.92

Net profit -58,648,256.05 -21,424,479.94 -30,454,225.45 -8,403,704.69

Net profits of

termination operation— — — —

Other comprehensive

income— 1,033,575.71 — 152,885.18

Total comprehensive

income-58,648,256.05 -20,390,904.23 -30,454,225.45 -8,250,819.51


234

Equity received from

associated enterprises

in reporting period

— — — —

IX. The risk related financial instruments

Main financial instruments include monetary capital, accounts receivable and accounts

payable. Refer to Note XI for the details of all financial instruments. Risks related to

financial instruments and risk management policies to reduce risks are as follows. The

management should control and monitor the risk exposure to ensure all risks within defined

scope.

The Company use sensitivity analysis technology to analyze the reasonable of risk variables,

influence of probable changes to the current profits and Stockholders’ equity. Because rarely

any risk variables change in isolation, and the correlation between variables for the eventual

impact of the change of a risk variables will have a significant effect, thus, the aforesaid

content was processing under the assumption of the change of each variable was conducted

independently.

(I) Risk management objectives and policies

The goals of Company engaged in the risk management is to achieve the proper balance

between the risks and benefits, reduced the negative impact to the Company operating

performance risk to a minimum, maximized the profits of shareholders and other equity

investors. Based on the risk management goal, the basic strategy of the Company's risk

management is determine and analyze the various risks faced by the Company, set up the

bottom line of risk and conducted appropriate risk management, and timely supervised

various risks in a reliable way and controlled the risk within the range of limit.

1. Market risk

(1) Foreign exchange risk

Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate.

Foreign exchange risk refers to the risks that may lead to losses due to fluctuation in

exchange rate. The foreign exchange risk borne by the Company is related to USD, EURO

and HKD, except the procurement and sales by US dollars for several subsidiaries such as

the Company, Hong Kong Konka, American Konka, Konka Trading Europe Konka and

Indonesia Konka which settled by USD, HKD and EURO for purchase and sale. Until

December 31, 2015 (refer to Note VI 55, foreign monetary items), foreign exchange risks


235

may affect the business performance produced by the assets and liabilities of the balance.

The Company timely paid attention to the influence of change of the exchange rate to the

Company's foreign exchange risk, which required the Group and others which conducted

purchase and sale with settlement by foreign currency to purchase foreign currency long-term

forward contract to lock the cost of purchase on forward date to reduce the risk exposure of

foreign exchange.

(2) Interest rate risk- cash flow change risk

Cash flow change risk caused by financial instruments due to interest rate change is related to

floating interest rate of bank loan. By establishing good relations with banks and

reasonable planning of credit line, credit varieties and credit period, it is to guarantee

sufficient band line of credit and satisfy all financial demands. Moreover, it is to reduce

risks of interest rate uncertainty by shortening single loan term and establishing repayment

terms.

(3) Other price risk

For the equity investment of other listed companies holding by the Company, the

management considers that the market price risks are acceptable. Refer to Note VI, 10

Available-for-sale financial assets for equity investment of other listed companies holding by

the Company.

2. Credit risk

On 31 Dec. 2015, the biggest credit risk exposure may lead to the financial assets losses of

the Company was mainly from the one party fail to perform its obligation, which included:

book amount recognized in consolidated balance sheet: for financial instruments measured at

fair value, the book value reflect its risk exposure, but not the biggest one, the biggest risk

exposure will change along with the change of future fair value.

In order the reduce the credit risk, the Company establish a group response for recognizing

line of credit, conducting credit approval and other monitor procedures to ensure that the

necessary measures were used to recycle expired claims. In addition, the Company at each

balance sheet date, review every single receivables recycling situation, to ensure that the

money unable to recycle withdrawn provision for bad debt fully. Thus, the Company

management believed that have assume the credit risk the Company shouldered had been

greatly reduced.

The company's working capital was in bank with higher credit rating, so credit risk of

working capital was low.


236

3. Liquidity Risk

When managing liquidity risk, the Company maintained the management’s believe that

supervising the sufficient cash and cash equivalents to meet the operating demand of the

Company and reduce the influence of the fluctuation of cash flow.

X. The disclosure of the fair value

1. Closing fair value of assets and liabilities calculated by fair value

Item

Closing fair value

Fair value

measurement

items at level 1

Fair value

measurement

items at level 2

Fair value

measurement

items at level 3

Total

I. Consistent fair value

measurement

(I) Financial assets calculatedby fair value and changesrecord into current profits orlosses

— — — —

Trading financial assets 33,196,377.28 — — 33,196,377.28

(II) Available-for-sale financial

assets

1. Debt instruments investment — — — —

2. Equity instrument

investment2,874,068.30 — — 2,874,068.30

3. Other — — — —

Total assets of consistent fairvalue measurement

36,070,445.58 — — 36,070,445.58

Total assets of consistent fairvalue measurement — — — —

2. Market price recognition basis for consistent and inconsistent fair value

measurement items at level 1

① As of the end of reporting period, the Company in line with the difference of DF forward

foreign exchange purchase cost( DF base price on balance sheet date) on assets balance sheet

and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed)

recognized as losses or profits


237

② As of the end of reporting period, the Company held 117,310.00 shares of stock A of

Vanke, and their fair value at the end of the year was determined to be RMB2, 865,883.30

according to closing price of RMB24.43 for each share and held 500 shares of Suzhou

Huayuan and their fair value at the end of the year was determined to be RMB8, 185.00

according to closing price of RMB16.37 for each share on 31 Dec., 2015.

XI. Related party and related Transaction

1. Information of parent company

Name of parent companyRegistration

placeNature of business

Registered

capital

Proportion of

share held by

parent company

against the

Company (%)

Proportion of

voting rights

owned by parent

company against

the Company (%)

Shenzhen OCT East Co.,

Ltd.Shenzhen

Tourism, real estate,

electronics industry6.3 billion 29.99 29.99

Note: the final control party of the Company is State-owned Assets Supervision and

Administration Commission

2. Information of subsidiary of the Company

Details of information of subsidiary of the Company see note 1. Equity in subsidiary VIII

3. Information on the joint ventures of the Company

The details of significant joint venture of the Company please refer to Notes VIII, 3.Equity in

the joint venture.

4. Information on other related parties of the Company

Name Relationship

Shanghai OCT Investment Development Co., Ltd. Under the same actual controller

Shanghai OCT Investment Development Co., Ltd. Under the same actual controller

Shanghai Tianxiang OCT Investment Co., Ltd. Under the same actual controller

Anhui Huali Packaging Co., Ltd. Under the same actual controller

Shenzhen OCT Water and Power Co., Ltd Under the same actual controller

Shanghai Huali Packaging Co., Ltd Under the same actual controller

Shenzhen Huayou Packaging Co., Ltd Under the same actual controller

Shenzhen Huali Packing & Trading Co., Ltd Under the same actual controller


238

Huali Packaging (Huizhou) Co., Ltd. Under the same actual controller

Huizhou Huali Packaging Co., Ltd. Under the same actual controller

Shenzhen Konka Video & Communication Systems

Engineering Co., Ltd.Under the same actual controller

Taizhou OCT Co., Ltd. Under the same actual controller

Shenzhen OCT Real Estate Co., Ltd. Under the same actual controller

Yunnan OCT Industry Co., Ltd. Under the same actual controller

Shenzhen OCT Hotel Co., Ltd. Under the same actual controller

Shenzhen OCT Property Management Co., Ltd. Under the same actual controller

Shenzhen OCT Hotel Group Co., Ltd. Under the same actual controller

Shenzhen Splendid China Development Co., Ltd. Associated enterprise of the Company

Shenzhen the Windows of the world Co., Ltd. Associated enterprise of the Company

Shenzhen Refund Optoelectronics Co., Ltd. Subsidiary of joint venture

Enraytek Optoelectronics Co., Ltd. Subsidiary of joint venture

Zhuhai Jinsu Plastic Co., Ltd. Subsidiary of joint venture

Charm Media Co. , Ltd. Shareholder of the subsidiary

5. List of related-party transactions

(1) Information on acquisition of goods and reception of labor service (unit: Yuan)

①Information on acquisition of goods and reception of labor service

Related-party Content Reporting period Last period

Shenzhen Refund Optoelectronics Co., Ltd. Purchase of raw material 95,272,151.31 115,447,444.91

Charm Media Co. , Ltd. Advertising expense 77,340,190.65 —

Anhui Huali Packaging Co., Ltd. Purchase of raw material 42,056,410.31 30,414,202.53

Shanghai Huali Packaging Co., Ltd Purchase of raw material 12,283,155.39 13,645,510.03

Huali Packaging (Huizhou) Co., Ltd. Purchase of raw material 10,931,552.82 11,499,212.38

Shenzhen OCTWater and Power Co., Ltd Water and power 5,826,581.42 8,151,649.23

②Information of sales of goods and provision of labor service

Related-party Content Reporting period Last period


239

Shanghai Konka Green Science &


Processing fee, auxiliary

materials fee— 12,131,664.24

Shenzhen Refund Optoelectronics Co., Ltd. Selling materials 23,298,317.21 16,539,304.45

Charm Media Co. , Ltd. Advertising expense 62,111,300.23 —

Taizhou OCT Co., Ltd. Selling LCDs — 35,000.00

Anhui Konka Green Science & Technology

Co., Ltd.Selling materials 4,137,079.29 —

Chengdu Tianfu OCT Industrial

Development Co., Ltd.Maintenance costs 376,068.38 19,658.12

(2) Related-party guarantee

①The Company was guarantor:

Secured party CurrencyGuarantee

amount

Actual using

amountStart date End date

Execution

accomplished or

not

Anhui Tongchuang

(Note①)RMB 8,000.00 799.60 30/1/2015 29/1/2016 No

Anhui Tongchuang

(Note①)RMB 2,000.00 1,000.00 2 /6/2015 1/6/2016 No

Anhui Konka

(Note②)RMB 610.79 610.79 12/3/2015 12/3/2016 No

Anhui Konka

(Note②)RMB 1,997.67 1,997.67 10/4/2015 10/4/2016 No

Anhui Konka

(Note②)RMB 3,537.20 3,537.20 14/5/2015 14/5/2016 No

Anhui Konka

(Note②)RMB 4,259.39 4,259.39 19/5/ 2015 19/5/ 2016 No

Shenzhen KonkaE-displayCommercialDisplay Co., Ltd.

(Note③)

RMB 2,000.00 413.42 27/1/2015 27/1/2016 No

Shenzhen KonkaTelecommunications TechnologyCo., Ltd.

RMB 50,000.00 20,784.96 22/4/2015 21/4/2016 No


240

Shenzhen KonkaTelecommunications TechnologyCo., Ltd.

RMB 10,000.00 — 28/1/2015 28/1/2016 No

Hong Kong KonkaCo., Ltd.

USD 4,000.00 4,000.00 26/6/2015 26/6/2016 No


USD 2,470.00 2,470.00 23/3/2015 23/3/2016 No


USD 2,530.00 2,530.00 29 /5/ 2015 29/5/2016 No


USD 5,000.00 5,000.00 15/1/2014 14/2/2016 No


USD 3,090.00 3,090.00 17/9/2014 117/10/2016 No


RMB 43,300.00 43,300.00 23/11/2015 26/8/2016 No

Kunshan Jielunte

(Note④)RMB 3,000.00 2,370.00 29/9/2013 29/9/2016 No

Shenzhen KonkaElectronic Co.,Ltd.

RMB 6,000.00 274.28 28/9/2015 28/2/2016 No

①Note: the minority shareholders of Anhui Tongchuang, ChuzhouTongchuang Investment

Construction Co., Ltd. provided 50% counter-guarantee to the limit amount of guarantee of

the Company.

② The minority shareholders of Anhui Tongchuang, ChuzhouState-owned Assets Operation

Co., Ltd. provided 22% counter-guarantee to the limit amount of guarantee of the Company.

③Shenzhen E-display Capital Investment Partnership Business (LLP) provided 40%

counter-guarantee to the limit amount of guarantee of the Company.

④ The subsidiary of the Company Shenzhen Precision provided RMB30 million fixed assets

loan guarantee for Kunshan Jielunte.

(3) Rewards for the key management personnel


Rewards for the key management personnel RMB15.9454 million RMB8.0290 million

6. Receivables and payables of related parties

(1) Receivables

Name o f item Closing balance Opening balance


241

Book balance Bad debt provision Book balance Bad debt

provision

Account receivable:

Shenzhen Refond Optoelectronics Co., Ltd. 12,116,064.48 242,321.29 7,478,269.37 149,565.39

Shanghai Konka Green Science and

Technology Co., Ltd.10,963,614.12 548,180.71 10,963,653.88 219,273.08

Shanghai OCT Investment Development Co.,

Ltd.150,000.00 3,000.00 — —

Shenzhen Konka Video & Communication

Systems Engineering Co., Ltd.— — 1,260,956.45 25,219.13

Charm Media Co. , Ltd. 775,587.00 15,511.74 — —

Chongqing Konka Eurotomotive Electronic

Co., Ltd.981,218.48 981,218.48

— —

Total 24,986,484.08 1,790,232.22 19,702,879.70 394,057.60

Other account receivable:：

Shenzhen Konka Video & Communication

Systems Engineering Co., Ltd.18,115,952.51 5,366,657.87 18,115,952.51 5,405,926.42

Chongqing Konka Eurotomotive Electronic

Co., Ltd.13,396,856.82 13,396,856.82

— —

Shenzhen OCT Property Management Co.,

Ltd.6,491,248.10 203,206.00 77,402.65 3,870.13

Shenzhen OCTWater and Power Co., Ltd. 1,198,932.32 23,978.65 776,572.25 15,531.45

Shenzhen OCT Real Estate Co., Ltd. 1,053,706.86 1,033,282.36 1,209,064.86 1,209,064.86

Chengdu Tianfu OCT Industrial Development

Co., Ltd.440,000.00 8,800.00

— —

Shenzhen Overseas Chinese Town Gas Station

Co., Ltd.80,000.00 80,000.00 80,000.00 80,000.00

40,726,642.87 20,062,727.96

18,115,952.51 5,366,657.87

13,346,803.08 13,346,803.08


242

40,776,696.61 20,112,781.70 20,258,992.27 6,714,392.86

(2) Payables

Name o f item Closing balance Opening balance

Accounts payable:

Shenzhen Konka Video & Communication Systems

Engineering Co., Ltd.20,412,650.58 21,670,642.23

Anhui Huali Packaging Co., Ltd. 4,160,761.50 9,801,227.07

Shenzhen Refund Optoelectronics Co., Ltd. 3,309,766.50 17,648,415.04

Shanghai Huali Packaging Co., Ltd 2,634,241.04 1,782,812.82

Huali Packaging (Huizhou)Co., Ltd. 1,747,011.10 1,050,557.07

Shenzhen Huali Packing & Trading Co., Ltd 1,078,005.09 1,078,005.09

Shenzhen Dekang Electronics Co., Ltd. 358,929.03 358,929.03

Total 33,701,364.84 53,390,588.35

Notes payable:

Shenzhen Refund Optoelectronics Co., Ltd. 12,997,249.74 12,339,062.14

Anhui Huali Packaging Co., Ltd. 5,150,030.89 1,605,902.13

Huali Packaging (Huizhou)Co., Ltd. 988,662.81 5,143,401.86

Zhuhai Jinsu Plastic Co., Ltd. 186,000.04 —

Shanghai Huali Packaging Co., Ltd 3,126,818.21 —

Total 22,448,761.69 19,088,366.13

Accounts received in advance:

Shenzhen the Windows of the world Co., Ltd. — 81,000.00

Charm Media Co. , Ltd. 126,000.00 —

Total 126,000.00 81,000.00

Other account payable:

Anhui Huali Packaging Co., Ltd. 258,000.00 1,130,000.00

Shanghai Huali Packaging Co., Ltd 652,000.00 1,530,000.00

Huali Packaging (Huizhou)Co., Ltd. — 428,000.00


243

Shenzhen Refund Optoelectronics Co., Ltd. 51,135.00 51,135.00

Total 961,135.00 3,139,135.00

XII. Commitments and contingency

1. Significant commitments

(1) Capital commitment


Commitments signed but hasn’t been recognized in

financial statements

-- Commitment for constructing and purchasing long-term

assets

— —

- Contract with large amount 184,797,300.59 150,424,982.66

- Foreign investment commitments — —

Total 184,797,300.59 150,424,982.66

(2) Operating lease commitments

As of the end of balance sheet date, the irrevocable operating lease commitments that the

Company signed were as followed:


Minimum lease payments of irrevocable operating lease

1 year after balance date 20,414,436.47 23,767,119.89



Future years 4,007,824.20 6,735,380.75

Total 40,767,121.19 50,007,139.13

2. Contingency

1. Contingent liabilities and its financial effect arising from unsettled litigation or arbitration

①Contingent liabilities and financial effects caused by pending litigation or arbitration

On 4 Feb. 2013, the Company’s subsidiary Kunshan Konka signed Purchase Order

(Hereinafter referred to as "PO") with Italy customer MOTOM ELECTRONICS GROUP

SPA (Hereinafter referred to as the "MEG").

The PO payment was 90 days L/C, L/C amount was $1.29744 million. MEG opened L/C


244

which Kunshan Konka was beneficiary on 26 Feb, due to the problems of delivery time and

related items, after the agreement of both parties, MEG respectively opened two revisions of

L/C on 11 Mar. and 13 May. Then the Kunshan Konka entrusted Ningbo United

International Freight Forwarding Co., Ltd. (Hereinafter referred to as the “Ningbo United”)

to book space, and Ningbo United signed and issued the carrier's bill of lading of Econolines

Ltd. (Hereinafter referred to as the “Econolines” (No.

NGB1305005\GNB1305016\NGB1305034), the whole case handover with Container

delivery conditions of CY TO CY) on 5, 14 and 19 May 2013. According to the verification,

after the goods arrived to the port of destination in Italy, the empty cargo container had

returned to the shipping company, but the full set of original bill of lading was still in

Kunshan Konka; Ningbo United and Econolines’s behaviors of delivery of goods without

original bill of lading had violated the "maritime law" and other relevant laws and regulations,

Kunshan Konka had right to require Econolines return the goods. The total amount of the

goods was $ 1,214,780.04, equivalents RMB 7,507,340.65, MEG received the goods but not

pay the full amount of the goods to Kunshan Konka, the amount in arrear reached

$1,100,000.00.

Kunshan Konka entrusted Shanghai Jiajia Law firm to file a suit from Shanghai Maritime

Court, requested Ningbo United and Econolines compensate for the loss of payment for

goods USD1,099,423.52 and its interest; meanwhile bear the fees for acceptance and

property preservation application fee on 15 Aug. 2013. On 26 May 2014, Shanghai Maritime

Court made the first-instance judgment, which ordered Ningbo United and Econolines

compensate for the loss of payment for goods USD1,099,423.52 and its interest, and bear the

fees for acceptance and property preservation application fee In Jun. 2014 Ningbo United

appealed to the Shanghai Higher People's Court against its sentence. On 24 Nov. 2014, the

second trial had been made. During the second trial, the Kunshan Konka indicated that as of

31 May 2015, the company had received EUR100000 payment from the oversea receivers

which would be deducted from the payment of goods of United and Econolines. Kunshan

Konka were willing to give up the interest part of EUR100000 discounted by bank rate on

the date of the second trial basing on USD1,099,423.52 in the first trial. On 16 Jul. 2015,

Shanghai Higher People's Court made the second-instance judgment, which ordered

Econolines compensate for the loss of payment for goods USD990, 253.50 (discounted by

the middle of the euro against the dollar exchange rate of People's Bank of China on 16 Jul.

2015) and bear the fees for acceptance, United bear the joint liability.

②The Company's subsidiary Nanchang Branch applied for property preservation for Tengda


245

Electric Appliance Co., Ltd. due to the contract dispute. After the judgment from Nanchang

Intermediate People's Court, RMB9, 918,725.43 of Tengda Electric Appliance Co., Ltd. was

frozen and five houses were closed down. As of 31 Dec. 2015, Nanchang Branch's credit

receivable from Tengda Electric Appliance Co., Ltd. was RMB8, 223,935.99?

(2) Possible liabilities formed for providing debt guarantee for other institutions and their

financial impactsThe Company applied to China Construction Bank, Shenzhen Branch for a credit line ofUSD 50 million (about RMB305.68 million) on January 15, 2014 and China ConstructionBank (Asia) Co., Ltd. provided a short-term loan of USD48.50 million to Hong Kong Konkaon January 15, 2014, and the guarantee period was from January 15, 2014 to February 14,2016.The Company applied to China Construction Bank, Shenzhen Branch for a credit line ofUSD30.90 million (about RMB188.9102 million) on Wednesday, September 17, 2014 andChina Construction Bank (Asia) Co., Ltd. provided a short-term loan of USD29.97million toHong Kong Konka on September 17, 2014, and the guarantee period was from Wednesday,September 17, 2014 to October 17, 2016.The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-1with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided acredit guarantee with a line of RMB200million for Anhui Konka Electronics Co., Ltd, and itsguarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used byAnhui Konka Electronics Co., Ltd. for the purposes of daily operating businesses such asopening and acceptance of letters of credit and acquiring financial loans from banks. ByDecember 31, 2015, RMB104,050,587.54 had been used in this line. Chuzhou State-ownedAssets Operation Co., Ltd, a minority stockholder of Anhui Konka provided 22% of counterguarantee of the line guaranteed by the Company.The Company provided a credit guarantee with a line of RMB300million for AnhuiKonkaTongchuang Household Appliances Co., Ltd., and its guarantee term was fromDecember 8, 2014 to December 7, 2017. The line is mainly used by AnhuiKonkaTongchuang Household Appliances Co., Ltd. for the purposes of daily operatingbusinesses such as opening and acceptance of letters of credit and acquiring financial loansfrom banks. By December 31, 2015, RMB29,996,000.00 had been used in this line.ChuzhouTongchuang Investment and Construction Co., Ltd., a minority stockholder ofToptry Electric Appliance Co., Ltd provided 50% of counter guarantee of the line guaranteedby the Company.The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-2with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided acredit guarantee with a line of RMB 300 million for KunshanKonka Electronic Co., Ltd., andits guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly usedby KunshanKonka Electronic Co., Ltd. for the purposes of daily operating such as acquiringfinancial loans from banks. By December 31, 2015, the amount in this line had been used.On January 27, 2015, the Company signed a Comprehensive Credit Line Contract with theserial number of 2015 SJTZEZ No 002 with China Minsheng Banking Corp., Ltd, andprovided a credit guarantee with a max credit line of RMB48.00 million for Shenzhen KonkaE-display Co., Ltd. and its guarantee term was from January 27, 2015 to January27, 2016. By


246

December 31, 2015, RMB4, 134,210.82 in this line had been used.On 23 Mar. 2015, the Company applied to China Development Bank, Shenzhen Branch for acredit line by letter of guarantee of USD24.7 million and provide guarantee for it on 23 Mar.2015. DBS Bank (Hong Kong) Co., Ltd. provided short term loan of USD24.7 million toHong Kong Konka, the guarantee period was from 23 Mar. 2015 to 22 Mar. 2016.The Company applied to Bank of China, Shenzhen Branch for a comprehensive credit line ofRMB5.3 billion on April 21, 2015, and provided a credit guarantee of RMB500 million forShenzhen Konka Telecommunications Technology Co., Ltd. with its comprehensive creditline of RMB500 million on April 22, 2015, and its guarantee term was from April 22, 2015 toApril 21, 2016. The credit line is mainly used for the purposes of daily operating businessessuch as acquiring financial loans from banks. By December 31, 2015, RMB 207,849,613.41in this line had been used.The Company applied to China Development Bank, Shenzhen Branch for a credit line byletter of guarantee of USD25.30 million on May 29, 2015, and provided a credit guaranteefor Hong Kong Konka Co., Ltd on May 29, 2015, and its guarantee term was from May 29,2015 to May 29, 2016.The Company applied to China Minsheng Banking Corp., Ltd, Shenzhen Branch for a creditline by letter of guarantee of USD40 million (about RMB259.74 million) on June 26, 2015,and provided a credit guarantee of a line of RMB148 million for Hong Kong Konka Co., Ltdon June 26, 2015, and its guarantee term was from June 26, 2015 to June 25, 2016.The Company applied to Bank of China Limited, Shenzhen Nanshan Branch, for a credit lineby letter of guarantee of RMB433 million on November 10, 2015, and China ConstructionBank (Asia) Co., Ltd. provided a short-term loan of RMB420 million to Hongkong Konkaand its guarantee term was from November 23, 2015 to August 26, 2016.By December 31, 2015, the Company opened commercial acceptance bills with a totalamount of RMB 2,742,801.69 for Konka Electric Appliance Co., Ltd, which was used aspledge to open bank acceptance bills. In accordance with the Agreement on Opening BankAcceptance Bills (2015 SJTZCS No. 126) signed by Konka Electric Appliance Co., Ltd andChina Minsheng Banking Corp., Ltd, Shenzhen Branch, a bank acceptance bill with anamount of RMB2,742,801.69 was opened, and its contractual term was from October 9, 2015to April 9, 2016.

XIV. Events after balance sheet date

1. Profit distribution

On 6 Apr. 2016, the Company held 13th Meeting of the 8th Board of Directors; the meeting

reviewed and approved the proposal of not implementing the allocation of profits.

(2) Significant related-party transactions

In order to meet the need of current business development of the Company and reduce the

financing cost, the Company held12th meeting of 8th Board of Directors on 2 Mar. 2016, the

meeting reviewed and approved the Proposal on Application for the Entrusted Loan Amount

from OCT Group Co., Ltd. The meeting agreed that the Company could apply entrust loans

with amount no more than RMB5 billion from OCT Group Co., Ltd. in 2016,which

withdrawn by stages, and the Company can sign entrust loan contract with bank and OCT


247

Group Co., Ltd. within the amount of RMB5 billion. The meeting also agreed that the

interest rate of entrust loan was lower than the benchmark interest rate for loan of People's

Bank of China at same period. The transaction involving the interest no more than RMB0.2

billion the Company should pay to OCT Group Co., Ltd. within one year.

As for the aforesaid loan amount, the Company will in line with the actual demand of capital,

and after reasonably measuring the capital cost, recognized the actual loan amount prudently.

3. Suspend the listing transfer of 60% equity of E-display

On 13 Nov. 2015, the Company held the 8th Meeting of the 8th Board of Directors; the

meeting reviewed and approved the Proposal on the Listing Transfer of 60% Equity of

E-display. In line with the resolution of the Board, the Company, on 29 Jan. 2016, listing

transferred its holding of 60% equity of Shenzhen Konka E-display Co., Ltd. with a price of

RMB72.00 million at Shanghai United Assets and Equity Exchange. During the period of

publicly listed, the interested transferee negotiated with the Company about the aforesaid

transfer, but both party did not make an agreement on the significant items of the transfer

contract. The Company decided to suspend listing transfer its holding of 60% equity of

Shenzhen Konka E-display Co., Ltd.

4. The Company's subsidiary, Konka Household Appliances Investment signed agreement

with Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd. Since 1 Jan. 2016,

Dingshengxin Mould Technology Consultation Co., Ltd. no longer entrusted Konka

Household Appliances Investment managed its holding of 6.18% shares of Precision Mold,

and since 1 Jan. 2016, the Company no longer control the Precision Mold which excluded

into consolidated statements scope.

5. Plan of non-public issue of stock

The Company plan to prepare the non-public issue of shares. Now the Company was

negotiating with the potential objects upon the amount of non-public issue of stock, actively

preparing the materials and sparing no effort to promote the relevant work. The relevant

events were under processing and existing uncertainty.

XV. Other significant events

1. Lease

(1) The closing original price accumulated depreciation and accumulated impairment

provision of all kinds of the rented fixed assets.

Particulars of the financing lease of the rented fixed assets, please refer to note VI, 13, (3)

(2) Minimum lease payment will be paid in future


248

The remaining lease termThe minimum lease

payment

Within 1 year (including 1 year) 133,333.37

Over 1 year and within 2 years (including 2 year) 84,894.93

Total 218,228.30

(3) The balance of unrecognized financing charges, and the method used to allocate the

unrecognized financing charges.

As of the balance sheet date, the balance of unrecognized financing charges was RMB27,

791.39; amortization method is the actual interest rate method.

(4) Category of fixed assets leased by operating lease, please refer to note VI, 13 (4)

2. The Company's subsidiary Mudajiang Konka. Changshu Konka was under liquidation.

Chongqng Konka Auto Electronic Company was under liquidation by the court on 27 Mar.

2015, which was excluded into consolidated scope.

3. On 14 Dec. 2015, the Company held 9th meeting of the 8th Board of Directors, the meeting

decided that the Company contributed RMB6 million to set up Shenzhen Konka Electronic

Appliance Technology Co., Ltd. together with Charm Media Co., Ltd. The registration capital

was RMB15 million, of which, Konka Group contributed cash of RMB6 million, held 40%

equity of Shenzhen Konka Electronic Appliance Technology Co., Ltd., Management of

Household Appliance contributed 4.5 million, held 30% equity and Charm Media Co., Ltd.

contributed RMB4.5 million, held 30% equity. As of the issue date financial statements, the

joint venture company hadn't been set up.

4. On 14 Dec. 2015, after the research of the 9th meeting of the 8th Board of Directors, the

meeting decided that the Company contributed RMB20 million to set up NORINCO Konka

Technology Co., Ltd. together with NORINCO North Electronics Research Institute Co., Ltd.

and Beidou Project Team, of which, Konka Group contributed cash of RMB20 million, held

40% equity of NORINCO Konka Technology Co., Ltd., NORINCO North Electronics

Research Institute Co., Ltd. contributed RMB20 million, held 40% equity and Beidou Project

Team contributed RMB10 million, held 20% equity. As of the issue date financial statements,

the joint venture company hadn't been set up.

XVI. Notes of main items in the financial statements of the Company

1. Accounts receivable

(1) Accounts receivable classified by category


249

Category

Closing balance


Book value

Amount

Proportion

(%) Amount

Proportion

(%)


insignificant single amount

for which bad debt provision

separately accrued

— — — — —

Accounts receivable

withdrawal of bad debt

provision of by credit risks

characteristics:

Group 1: aging group 1,126,362,276.00 68.50 202,746,563.72 18.00 923,615,712.28

Group 2: related party group 486,174,280.87 29.57 — — 486,174,280.87





separately accrued

31,826,201.74 1.94 23,700,918.33 74.47 8,125,283.41

Total 1,644,362,758.61 100.00 226,447,482.05 13.77 1,417,915,276.56

(Continued)

Category

Opening balance


Book value

Amount

Proportion (

%) Amount

Proportion (

%)




separately accrued

— — — — —

Accounts receivable

withdrawal of bad debt


250

provision of by credit risks

characteristics:







separately accrued

— — — — —

Total 1,754,027,708.37 100.00 214,731,732.08 12.24 1,539,295,976.29

①In the groups, accounts receivable adopting aging analysis method to withdraw bad debt

provision:


Account receivable Bad debt provision Withdrawal proportion (%)

Within 1 year 918,718,739.98 18,374,374.80 2.00

1 to 2 years 14,672,885.00 733,644.25 5.00

2 to 3 years 5,627,558.78 1,125,511.76 20.00

3 to 4 years 5,427,292.76 2,713,646.38 50.00

4 to 5 years 4,232,825.89 2,116,412.95 50.00

Over 5 years 177,682,973.59 177,682,973.58 100.00

Total 1,126,362,276.00 202,746,563.72

②In the groups, accounts receivable adopting other methods to withdraw bad debt provision:

Name of the groupBalance at year- end

Account receivable Bad debt provision Withdrawal proportion (%)

Related party group 486,174,280.87 — —

Total 486,174,280.87 — —

③Individual amount is not significant, but the first five accounts receivable to prepare for

bad debts separately

Name of customer Closing balance


251


proportionWithdrawal reason

Customer 1 8,223,935.99 4,111,968.00 50Involved with lawsuit

dispute


dispute


dispute


dispute


dispute

Total 17,623,817.89 11,548,492.22


The withdrawn bad debt provision of 2015 was of RMB11, 715,749.97.

(3) Top five of account receivable of closing balance collected by arrears party


party was RMB856, 883,933.28, 52.11% of total closing balance of account receivable,

the relevant closing balance of bad debt provision withdrawn was RMB8, 451,063.98.

2. Other accounts receivable

(1) Other account receivable classified by category

Category

Closing balance


Book value

Amount

Proportion

(%) Amount

Proportion

(%)





173,028,147.62 15.48 160,278,852.98 92.63 12,749,294.64




characteristics

— — — — —


252








— — — — —

Total 1,117,732,063.80 100.00 179,284,265.72 16.04 938,447,798.08

(Continued)

Category

Opening balance


Book value

Amount

Proportion (

%) Amount

Proportion (%

)




provision separately

accrued

31,507,969.28 3.07 18,797,943.19 59.66 12,710,026.09


withdrawn bad debt

provision according to

credit risks characteristics

— — — — —


Group 2: related party

group366,148,374.77 35.63 — — 366,148,374.77





provision separately

accrued

— — — — —


253

Total 1,027,470,924.05 100.00 39,271,294.00 3.82 988,199,630.05

① Other accounts receivable with insignificant single amount for which bad debt provision

separately accrued

Other accounts receivable (unit）

Closing balance

Other accounts

receivableBad debt provision

Withdrawal

proportion (%)Withdrawal reason

Energy saving subsidy 141,549,150.00 141,549,150.00 100.00 政策变化致无法收回

Chongqng Konka Auto ElectronicCompany 13,363,045.11 13,363,045.11 100.00 停产拟出售

Shenzhen Konka Video &Communication Systems EngineeringCo., Ltd.

18,115,952.51 5,366,657.87 29.62 评估减值

Total 173,028,147.62 160,278,852.98 92.63

②In the groups, other accounts receivable adopting aging analysis method to withdraw bad

debt provision:


Other accounts receivable Bad debt provision Withdrawal proportion (%)

Within 1 year 31,019,128.44 620,484.13 2.00

1 to 2 years 19,056,050.64 952,802.53 5.00

2 to 3 years 7,674,294.40 1,534,858.88 20.00

3 to 4 years 4,185,012.22 2,092,506.11 50.00

4 to 5 years 334,958.96 167,479.48 50.00

Over 5 years 13,637,281.61 13,637,281.61 100.00

Total 75,906,726.27 19,005,412.74

③In the groups, accounts receivable adopting other methods to withdraw bad debt provision:

Name of the groupBalance at year- end

Other accounts receivable Bad debt provision Withdrawal proportion (%)

Related party group 868,797,189.91 — —

Total 868,797,189.91 — —



254

The withdrawal amount of the bad debt provision during the reporting period was of

RMB140,012,971.72; there was no amount of the reversed or collected part during the

reporting period.

(3) Top 5 of the closing balance of the other accounts receivable collected according to the

arrears party

Name of the

entityNature Closing balance Aging

Proportion of the total

year-end balance of the


Bad debt provision

Closing balance

Customer 1 Intercourse funds 204,028,944.44 Within 1 year 18.25

Customer 2Energy saving

subsidy141,549,150.00

1-2years, 2-3years

12.66 141,549,150.00




Total 631,022,167.67


255



Item


Book balanceDepreciationreserves

Book value Book balance Depreciation reserves Book value

Investment to the subsidiary 1,623,726,835.91 77,294,984.69 1,546,431,851.22 1,505,310,835.91 94,394,984.69 1,410,915,851.22

Investment to joint ventures 74,763,267.00 — 74,763,267.00 197,758,604.87 — 197,758,604.87

Total 1,698,490,102.91 77,294,984.69 1,621,195,118.22 1,703,069,440.78 94,394,984.69 1,608,674,456.09

(2) Investment to the subsidiary

Investee Opening balance Increased Decreased Closing balanceWithdrawn impairment

provision

Closing balance of

impairment provision

Mudangjiang electricappliances

36,000,000.00 — — 36,000,000.00 — 36,000,000.00

Anhui Konka 122,780,937.98 — — 122,780,937.98 — —

Dongguan Konka 274,783,988.91 — — 274,783,988.91 — —

Hong Kong Konka 781,828.61 — — 781,828.61 — —

Konka Europe 261,482.50 — — 261,482.50 — —

Nanhai Konka 500,000.00 — 500,000.00 — — —

Kunshan Konka 350,000,000.00 — — 350,000,000.00 — —

Plasthetics 4,655,000.00 — — 4,655,000.00 — —

Konka Household 10,732,485.69 — — 10,732,485.69 — 10,732,484.69


256

Appliances

TelecommunicationTechnology

90,000,000.00 — — 90,000,000.00 — —

Konka America 8,062,500.00 — — 8,062,500.00 — 8,062,500.00

Information Network 22,500,000.00 — — 22,500,000.00 — 22,500,000.00

Shushida 31,500,000.00 — — 31,500,000.00 — —

Chongqing Electronic 17,100,000.00 — 17,100,000.00 — — —

Fittings Technology 48,750,000.00 — — 48,750,000.00 — —

Kunshan Kangsheng 350,000,000.00 — — 350,000,000.00 — —

Anhui Tongchuang 69,702,612.22 — — 69,702,612.22 — —

Konka Optoelectronic 10,000,000.00 — — 10,000,000.00 — —

Wankaida 10,000,000.00 — — 10,000,000.00 — —

Beijing Konka 30,000,000.00 — — 30,000,000.00 — —

Shushida Logistics 10,000,000.00 — — 10,000,000.00 — —

Konka E-display 7,200,000.00 — — 7,200,000.00 — —

Kaikai Shijie — 16,000,000.00 — 16,000,000.00 — —

Kangqiao Jiacheng — 112,000,000.00 — 112,000,000.00 — —

CommercialTechnology

— 2,916,000.00 — 2,916,000.00 — —

Mobile Internet — 5,100,000.00 — 5,100,000.00 — —

Total 1,505,310,835.91 136,016,000.00 17,600,000.00 1,623,726,835.91 — 77,294,984.69

(3) Investment to joint ventures

Investee Opening balance Increase/decrease in reporting period


257

Additional

investmentNegative investment

Investment profit and loss

recognized under the equity method

Adjustment of other

comprehensive incomeOther equity changes

Shanghai Konka Green Science &Technology Co., Ltd.

197,758,604.87 — 124,800,000.00 -5,111,426.37 403,094.53 —

Zhuhai Jinsu Plastic Co., Ltd. — 6,210,000.00 — 119,726.97 183,267.00

Total 197,758,604.87 6,210,000.00 124,800,000.00 -4,991,699.40 403,094.53 183,267.00

(Continued)

Investee


Closing balance

Closing balance of

impairment

provision

Declaration of cash dividends or

profits

Withdrawn impairment

provisionOther

Shanghai Konka Green Science &Technology Co., Ltd.

— — — 68,250,273.03 —

Zhuhai Jinsu Plastic Co., Ltd. — — — 6,512,993.97 —

Total — — — 74,763,267.00 —


258



ItemReporting period Last period

Revenue Operating costs Revenue Operating costs

Main

operations10,542,892,396.23 9,238,043,128.65

12,994,682,247.47 11,233,692,241.60

Other

operations5,256,503,986.27 5,218,903,962.41

5,257,638,085.71 5,208,621,358.62

Total 15,799,396,382.50 14,456,947,091.06 18,252,320,333.18 16,442,313,600.22

(2) Main operations (Classified by industry)

IndustryReporting period Last period


Electronic industry 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60

Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60

(3) Main operations (Classified by product)

ProductReporting period Last period


Color TV business 10,063,529,629.38 8,800,695,399.60 12,389,008,246.36 10,671,963,381.66

Mobile phone business — — 25,260,750.08 21,695,401.37

Consumer appliances business 405,363,485.13 361,990,500.54 501,891,601.26 458,915,261.80

Other 73,999,281.72 75,357,228.51 78,521,649.77 81,118,196.77

Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60

(4) Main operations (Classified by area)

AreaReporting period Last period


Domestic sales 9,247,233,574.48 7,955,639,997.50 11,011,476,670.78 9,284,752,004.46

Overseas sales 1,295,658,821.75 1,282,403,131.15 1,983,205,576.69 1,948,940,237.14

Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60


259

(5) The revenue of sales from the top five customers

Period Main operation revenueProportion of total business revenue

(%)

Y 2015 3,735,430,268.71 23.64

Y 2014 3,035,222,295.61 16.63

5. Investment income


Long-term equity investment income accounted by cost method 2,014,898.95 —

Long-term equity investment income accounted by equity method -4,991,699.40 -3,679,122.32

Investment income arising from disposal of long-term equity

investments-491,110.76 248,192,713.43

Investment income received from disposal of available-for-sale

financial assets13,215.02 —

Investment income received from holding of available-for-sale

financial assets2,212,535.21 48,104.52

Income from trust management 61,705,984.23 46,294,257.11

Total 60,463,823.25 290,855,952.74


260

XVII. Supplementary materials

1. Items and amounts of extraordinary gains and losses

Item Amount Explanation

Gains/losses on the disposal of non-current assets -16,096,434.80

Tax rebates, reductions or exemptions due to approval beyond authority or the lack of

official approval documents—

Government grants recognized in the current period, except for those acquired in the

ordinary course of business or granted at certain quotas or amounts according to the

government’s unified standards

71,499,330.11

Capital occupation charges on non-financial enterprises that are recorded into current

gains and losses—

Gains due to that the investment costs for the Company to obtain subsidiaries, associates

and joint ventures are lower than the enjoyable fair value of the identifiable net assets of

the investees when making the investments

—

Gain/loss on non-monetary asset swap —

Gain/loss on entrusting others with investments or asset management 20,419,318.35

Asset impairment provisions due to acts of God such as natural disasters -144,808,654.70

Gains and losses from debt restructuring —

Expenses on business reorganization, such as expenses on staff arrangements,

integration, etc.—

Gain/loss on the part over the fair value due to transactions with distinctly unfair prices —

Current net gains and losses of subsidiaries acquired in business combination under the same

control from period-begin to combination date—

Profits or losses incurred from contingency of non-operating business. —

Gain/loss from change of fair value of transactional assets and liabilities, and investment

gains from disposal of transactional financial assets and liabilities and available-for-sale

financial assets, other than valid hedging related to the Company’s common businesses

32,627,480.23

Reverse of bad debt provision of account receivable individually conducting impairment

test—

Gain/loss on entrustment loans 3,550,666.66


261

Gain/loss on change of the fair value of investing real estate of which the subsequent

measurement is carried out adopting the fair value method—

Effect on current gains/losses when a one-off adjustment is made to current gains/losses

according to requirements of taxation, accounting and other relevant laws and

regulations

—

Custody fee income when entrusted with operation —

Other non-operating income and expenses other than the above -104,311,044.28

Project confirmed with the definition of non-recurring gains and losses and losses -419,240.74

Subtotal -137,538,579.17

Income tax effects -14,549,153.86

Minority interests effects (after tax) 3,830,243.26

Total -126,819,668.57

Notes: the number “+” among the non-current gains and losses items refers to profits and revenues,

while “-”referred to losses or expenditure.

The recognition of the non-current gains and losses items was executed according to the regulations

of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering

Securities-Non-current Gains and losses (Z-J-H-Announcement [2008] No. 43) .

ItemThe amount of leased

assets involvedReason

Software tax returns 67,476,494.60

Closely related to the normal operating business of the Company

which met with the regulations of the state policies as well as

constantly enjoyed the governmental subsidies according to certain

standard quotas or quantities

2. Return on equity (ROE) and earnings per share (EPS)

Profit as of reporting periodWeighted average

ROE (%)

EPS（Yuan/share）

Basic EPS Diluted EPS

Net profit attributable to common shareholders of the

Company-36.30 -0.5219 -0.5219

Net profits attributed to the common shareholders after

deducting the non-current gains and losses-32.63 -0.4693 -0.4693


262

Section XI Documents Available for Reference

I. Financial statements with the signatures and seals of the company principal, the principal of theaccounting work and the principal of the accounting organ (financial manager);II. Original of the Auditor’s Report with the seal of the CPAs firm and the signatures & seals of thecertified public accountants;

III. Texts of all the Company’s documents ever publicly disclosed in newspapers designated by theCSRC in the reporting period and the originals of the public announcements.

IV. Other relevant materials.

The Board of Directors

Konka Group Co., Ltd.7 April 2016

konkagroupco., ltd. the 2015 annual report

Documents

Transcript of konkagroupco., ltd. the 2015 annual report