The 2015 Annual Report of Konka Group Co., Ltd.
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KONKAGROUPCO., LTD.
THE 2015 ANNUALREPORT2016-16
April 2016
The 2015 Annual Report of Konka Group Co., Ltd.
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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.
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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
□Applicable √ Inapplicable
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
□Applicable √ Inapplicable
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.
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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
2015 Annual Report of Konka Group Co., Ltd.
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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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18
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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%
Subtotal of cash inflows from
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%
2015 Annual Report of Konka Group Co., Ltd.
22
investing activities
Net cash flows from investing
activities-151,922,878.59 -368,577,765.11 58.78%
Subtotal of cash inflows from
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
-- --
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
business performance
Chongqing Konka Automotive
Electronic Co., Ltd.Liquidation
No effect on the overall production and
business performance
Anhui Jiasen Precision Technology Co.,
LtdEstablishment of capital contribution
No effect on the overall production and
business performance
Anhui Kaikai Shijie E-commerce Co.,
LtdEstablishment of capital contribution
No effect on the overall production and
business performance
Shenzhen Yipingfang Network
Technology Co., LtdEstablishment of capital contribution
No effect on the overall production and
business performance
Shenzhen Kangqiaojiacheng Property
Investment Co., LtdEstablishment of capital contribution
No effect on the overall production and
business performance
Konka Zhisheng Co., Ltd. Establishment of capital contributionNo effect on the overall production and
business performance
Shenzhen Konka Yishijie Commercial
Display Co., Ltd.Establishment of capital contribution
No effect on the overall production and
business performance
Shenzhen Konka Commercial Systems
Technology Co., LtdEstablishment of capital contribution
No effect on the overall production and
business performance
Shenzhen Konka Mobile Internet
Technology Co., LtdEstablishment of capital contribution
No effect on the overall production and
business performance
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
33
□Applicable √ InapplicableNo such situation of the Company during the reporting period.
2015 Annual Report of Konka Group Co., Ltd.
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:
2015 Annual Report of Konka Group Co., Ltd.
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.
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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.
2015 Annual Report of Konka Group Co., Ltd.
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.
Underthesameactualcontroller
Purchase ofcommodities
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.
Underthesameactualcontroller
Purchase ofcommodities
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.
Underthesameactualcontroller
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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)
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
45
date (if any)
Whether there is a future trust
management planYes
(2) Entrustment loans√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
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
2015 Annual Report of Konka Group Co., Ltd.
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
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782527.PDF
2015-03 2015-4-3
Forecasting Public Notice on
Routine Related Transaction for
Y2015
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782520.PDF
2015-04 2015-4-3Notice on Holding the 2014
Annual General Meeting
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782525.PDF
2015-05 2015-4-3 Announcement on Changes of Securities Times B73, http://www.cninfo.com.cn/finalpage/201
2015 Annual Report of Konka Group Co., Ltd.
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.
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782521.PDF
2015-07 2015-4-3 2014 Annual Report
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782530.PDF
2015-08 2015-4-3
Announcement of Resolutions of
the 71st Session of the 7th Board
of Directors
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
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
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782537.PDF
2015-10 2015-4-3
Declaration of the Nominator of
the Independent Directors of the
Listed Companies (Li Luoli)
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782536.PDF
2015-11 2015-4-3
Declaration of the Nominator of
the Independent Directors of the
Listed Companies (Zhang
Shuhua)
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782535.PDF
2015-12 2015-4-3
Declaration of the Candidate of
the Independent Directors of the
Listed Companies (Di Xiaofeng)
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782534.PDF
2015-13 2015-4-3
Declaration of the Candidate of
the Independent Directors of the
Listed Companies (Li Luoli)
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782533.PDF
2015-14 2015-4-3
Declaration of the Candidate of
the Independent Directors of the
Listed Companies (Zhang
Shuhua)
Securities Times B73,
B74, Ta Kung Pao
B16-B18
http://www.cninfo.com.cn/finalpage/201
5-04-03/1200782532.PDF
2015-15 2015-4-14
Announcement on the
Alternation of the Office Address
of the Company
Securities Times B40,
Ta Kung Pao B7
http://www.cninfo.com.cn/finalpage/201
5-04-14/1200825769.PDF
2015-16 2015-4-16Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B80,
Ta Kung Pao Ta
Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-04-16/1200839341.PDF
2015-17 2015-4-29Abstract of the Report for the 1st
Quarter of 2015 (Chinese)
Securities Times B76,
Ta Kung Pao A20
http://www.cninfo.com.cn/finalpage/201
5-04-29/1200930942.PDF
2015 Annual Report of Konka Group Co., Ltd.
48
2015-18 2015-4-29Report for the 1st Quarter of 2015
(Chinese)
Securities Times B76,
Ta Kung Pao A20
http://www.cninfo.com.cn/finalpage/201
5-04-29/1200930945.PDF
2015-19 2015-5-8Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B80,
Ta Kung Pao B1
http://www.cninfo.com.cn/finalpage/201
5-05-08/1200979093.PDF
2015-20 2015-5-13Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B68,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B85,
Ta Kung Pao B8
http://www.cninfo.com.cn/finalpage/201
5-05-15/1201015562.PDF
2015-22 2015-5-15
Notice on Holding the 2014
Annual General Meeting
(renewed)
Securities Times B85,
Ta Kung Pao B8
http://www.cninfo.com.cn/finalpage/201
5-05-15/1201015561.PDF
2015-23 2015-5-15Declaration of the Candidate of
the Independent Directors
Securities Times B85,
Ta Kung Pao B8
http://www.cninfo.com.cn/finalpage/201
5-05-15/1201015563.PDF
2015-24 2015-5-15Declaration of the Nominator of
the Independent Directors
Securities Times B85,
Ta Kung Pao B8
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B37,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-05-16/1201020163.PDF
2015-26 2015-5-16
Notice on Holding the 2014
Annual General Meeting (after
second renewed)
Securities Times B37,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-05-16/1201020162.PDF
2015-27 2015-5-16
Declaration of the Nominator of
the Independent Directors (Xiao
Zuhe)
Securities Times B37,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-05-16/1201020165.PDF
2015-28 2015-5-16
Declaration of the Candidate of
the Independent Directors (Xiao
Zuhe)
Securities Times
B37,Ta Kung Pao
B11
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B49,
Ta Kung Pao 11
http://www.cninfo.com.cn/finalpage/201
5-05-19/1201031184.PDF
2015-5-19Detailed Report on Equity
Changes
Securities Times B49,
Ta Kung Pao 11
http://www.cninfo.com.cn/finalpage/201
5-05-19/1201031185.PDF
2015-30 2015-5-20
Announcement of Resolutions of
the 73rd Session of the 7th Board
of Directors
Securities Times B37,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-05-20/1201035530.PDF
2015 Annual Report of Konka Group Co., Ltd.
49
2015-31 2015-5-23
Indicative Announcement of
Holding the 2014 Annual
General Meeting
Securities Times B53,
Ta Kung Pao A23
http://www.cninfo.com.cn/finalpage/201
5-05-23/1201049180.PDF
2015-32 2015-5-27
Announcement on the General
Election of the Employee
Supervisors
Securities Times B45,
Ta Kung Pao B19
http://www.cninfo.com.cn/finalpage/201
5-05-27/1201065868.PDF
2015-33 2015-5-29Indicative Announcement of the
2014 Annual General Meeting
Securities Times B4,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-05-29/1201078987.PDF
2015-34 2015-5-30Announcement on the Delisting
Owning to Significant Events
Securities Times B60,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-05-30/1201082236.PDF
2015-35 2015-6-5
Announcement on the
Resumption Owning to
Significant Events
Securities Times B60,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
5-06-05/1201106173.PDF
2015-36 2015-6-5
Announcement of Resolutions of
the 1st Session of the 8th Board of
Directors
Securities Times B60,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
5-06-05/1201106172.PDF
2015-37 2015-6-5
Announcement of Resolutions of
the 1st Session of the 8th Board of
Supervisors
Securities Times B60,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
5-06-05/1201106171.PDF
2015-38 2015-6-12Announcement on the Delisting
Owning to Significant Events
Securities Times B36,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-06-12/1201139697.PDF
2015-39 2015-6-12Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B36,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-06-12/1201139696.PDF
2015-40 2015-6-19
Announcement of Resolutions of
the 2nd Session of the 8th Board of
Directors
Securities Times B60,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-06-19/1201168695.PDF
2015-41 2015-6-19Announcement on the Progress
of the Significant Events
Securities Times B60,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-06-19/1201168694.PDF
2015-42 2015-6-27Announcement on the Progress
of the Significant Events
Securities Times B37,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-06-27/1201200899.PDF
2015-43 2015-7-4Announcement on the Progress
of the Significant Events
Securities Times B40,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
5-07-04/1201235889.PDF
2015-44 2015-7-11
Announcement on the Execution
of the 2014 Dividend Payout
Proposal
Securities Times B64,
Ta Kung Pao A23
http://www.cninfo.com.cn/finalpage/201
5-07-11/1201274263.PDF
2015-45 2015-7-11Announcement on the Progress
of the Significant Events
Securities Times B64,
Ta Kung Pao A23
http://www.cninfo.com.cn/finalpage/201
5-07-11/1201274266.PDF
2015-46 2015-7-11 Announcement on the Securities Times B64, http://www.cninfo.com.cn/finalpage/201
2015 Annual Report of Konka Group Co., Ltd.
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
Securities Times B64,
Ta Kung Pao A23
http://www.cninfo.com.cn/finalpage/201
5-07-11/1201274264.PDF
2015-48 2015-7-18Announcement on the Progress
of the Significant Events
Securities Times B77,
Ta Kung Pao B3
http://www.cninfo.com.cn/finalpage/201
5-07-18/1201309646.PDF
2015-49 2015-7-25Announcement on the Progress
of the Significant Events
Securities Times B21,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-07-25/1201342320.PDF
2015-50 2015-7-29
Announcement on the Prediction
of the Routine Related
Transactions
Securities Times B37,
Ta Kung Pao A4
http://www.cninfo.com.cn/finalpage/201
5-07-29/1201358396.PDF
2015-51 2015-7-29
Announcement of Resolutions of
the 3rd Session of the 8th Board of
Directors
Securities Times B37,
Ta Kung Pao A4
http://www.cninfo.com.cn/finalpage/201
5-07-29/1201358397.PDF
2015-52 2015-8-1Announcement on the Progress
of the Significant Events
Securities Times B52,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-08-01/1201374364.PDF
2015-53 2015-8-8Announcement on the Progress
of the Significant Events
Securities Times B56,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-08-08/1201406469.PDF
2015-54 2015-8-15Announcement on the Progress
of the Significant Events
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
5-08-15/1201438099.PDF
2015-55 2015-8-22Announcement on the Progress
of the Significant Events
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
5-08-22/1201471918.PDF
2015-56 2015-8-29Announcement on the 2015
Semi-annual Report
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
5-08-29/1201518361.PDF
2015-57 2015-8-29
Announcement of Resolutions of
the 4th Session of the 8th Board of
Directors
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
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
http://www.cninfo.com.cn/finalpage/201
5-08-29/1201518363.PDF
2015-59 2015-8-29Announcement on Purchasing the
Bank Financial Products
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
5-08-29/1201518364.PDF
2015-60 2015-8-29Announcement on the Progress
of the Significant EventsSecurities Times
B176, Ta Kung Pao
http://www.cninfo.com.cn/finalpage/201
5-08-29/1201518365.PDF
2015 Annual Report of Konka Group Co., Ltd.
51
B5
2015-61 2015-8-29Abstract of the 2015 Semi-annual
Report
Securities Times
B176, Ta Kung Pao
B5
http://www.cninfo.com.cn/finalpage/201
5-08-29/1201518354.PDF
2015-62 2015-9-1
Announcement on the Specific
Proposal on the Purchasing of
Liability Insurance
http://www.cninfo.com.cn/finalpage/201
5-09-02/1201537360.PDF
2015-63 2015-9-9Announcement on the Progress
of the Significant Events
Securities Times B21,
Ta Kung Pao B12
http://www.cninfo.com.cn/finalpage/201
5-09-09/1201567403.PDF
2015-64 2015-9-9
Indicative Announcement on
Holding the 2015 1st
Extraordinary General Meeting
Securities Times B21,
Ta Kung Pao B12
http://www.cninfo.com.cn/finalpage/201
5-09-09/1201567402.PDF
2015-65 2015-9-11
Announcement of Resolutions of
the 5th Session of the 8th Board of
Directors
Securities Times B4,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-09-11/1201578927.PDF
2015-66 2015-9-11
Announcement of Resolutions of
the 3rd Session of the 8th Board of
Supervisors
Securities Times B4,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-09-11/1201578926.PDF
2015-67 2015-9-11Notice of Holding the 2nd
Extraordinary General Meeting
Securities Times B4,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B4,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-09-11/1201578925.PDF
2015-69 2015-9-11
Announcement on the
Engagement of the Acting
President
Securities Times B4,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-09-11/1201578973.PDF
2015-70 2015-9-16
Announcement of Resolutions of
the 2015 1st Extraordinary
General Meeting
Securities Times B61,
Ta Kung Pao B18
http://www.cninfo.com.cn/finalpage/201
5-09-16/1201599161.PDF
2015-71 2015-9-16Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B61,
Ta Kung Pao B18
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B29,
Ta Kung Pao B18
http://www.cninfo.com.cn/finalpage/201
5-09-17/1201603859.PDF
2015-73 2015-9-17Announcement on the Signing of
the Cooperation Agreement
Securities Times B29,
Ta Kung Pao B18
http://www.cninfo.com.cn/finalpage/201
5-09-17/1201603639.PDF
2015-74 2015-9-17 Announcement on the Stock Securities Times B29, http://www.cninfo.com.cn/finalpage/201
2015 Annual Report of Konka Group Co., Ltd.
52
Trading Abnormal Fluctuations Ta Kung Pao B18 5-09-17/1201603640.PDF
2015-75 2015-9-18Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B41,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-09-18/1201608234.PDF
2015-76 2015-9-22Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B41,
Ta Kung Pao B18
http://www.cninfo.com.cn/finalpage/201
5-09-22/1201619942.PDF
2015-77 2015-9-23Announcement on the Stock
Trading Abnormal Fluctuations
Securities Times B36,
Ta Kung Pao B11
http://www.cninfo.com.cn/finalpage/201
5-09-23/1201624564.PDF
2015-78 2015-9-26
Announcement on the
Resignation of the Director and
Vice President of the Company
Securities Times B20,
Ta Kung Pao B4
http://www.cninfo.com.cn/finalpage/201
5-09-26/1201640536.PDF
2015-79 2015-9-29
Announcement on the
Resignation of the Independent
Directors of the Company
Securities Times B20,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-09-29/1201649682.PDF
2015-80 2015-9-29
Announcement on the
Resignation of the Supervisors of
the Company
Securities Times B20,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
5-09-29/1201649683.PDF
2015-81 2015-9-29
Announcement on the
Resignation of the President of
the Company
Securities Times B20,
Ta Kung Pao B2
http://www.cninfo.com.cn/finalpage/201
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
Securities Times B44,
Ta Kung Pao B9
http://www.cninfo.com.cn/finalpage/201
5-09-30/1201655523.PDF
2015-83 2015-10-9Announcement on Receipt of Tax
Rebates
Securities Times B25,
Ta Kung Pao B7
http://www.cninfo.com.cn/finalpage/201
5-10-09/1201668680.PDF
2015-84 2015-10-9Notice of Holding the 2015 2nd
Extraordinary General Meeting
Securities Times B25,
Ta Kung Pao B7
http://www.cninfo.com.cn/finalpage/201
5-10-09/1201668679.PDF
2015-85 2015-10-15
Announcement on the 2015 First
Three Quarter Performance
Prediction
Securities Times B29,
Ta Kung Pao B1
http://www.cninfo.com.cn/finalpage/201
5-10-15/1201694037.PDF
2015-86 2015-10-16
Announcement of Resolutions of
the 2015 2nd Extraordinary
General Meeting
Securities Times B29,
Ta Kung Pao B4
http://www.cninfo.com.cn/finalpage/201
5-10-16/1201699921.PDF
2015-87 2015-10-21
Announcement of Resolutions of
the 6th Session of the 8th Board of
Directors
Securities Times B33,
Ta Kung Pao B14
http://www.cninfo.com.cn/finalpage/201
5-10-21/1201709720.PDF
2015 Annual Report of Konka Group Co., Ltd.
53
2015-88 2015-10-21
Announcement of Resolutions of
the 5th Session of the 8th Board of
Supervisors
Securities Times B33,
Ta Kung Pao B14
http://www.cninfo.com.cn/finalpage/201
5-10-21/1201709718.PDF
2015-89 2015-10-21Notice of Holding the 2015 3rd
Extraordinary General Meeting
Securities Times B33,
Ta Kung Pao B14
http://www.cninfo.com.cn/finalpage/201
5-10-21/1201709719.PDF
2015-90 2015-10-21
Declaration of the Candidate of
Independent Directors (Sun
Shengdian)
Securities Times B33,
Ta Kung Pao B14
http://www.cninfo.com.cn/finalpage/201
5-10-21/1201709721.PDF
2015-91 2015-10-21
Declaration of the Nominator of
Independent Directors (Sun
Shengdian)
Securities Times B33,
Ta Kung Pao B14
http://www.cninfo.com.cn/finalpage/201
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
http://www.cninfo.com.cn/finalpage/201
5-10-29/1201734046.PDF
2015-93 2015-10-29Abstract for the 3rd Quarter of
2015
Securities Times
B109, Ta Kung Pao
B11
http://www.cninfo.com.cn/finalpage/201
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
http://www.cninfo.com.cn/finalpage/201
5-10-29/1201734049.PDF
2015-95 2015-10-30
Indicative Announcement on
Holding the 2015 3rd
Extraordinary General Meeting
Securities Times B92,
Ta Kung Pao B13
http://www.cninfo.com.cn/finalpage/201
5-10-30/1201740102.PDF
2015-96 2015-11-4
Announcement on the Planning
of Listing and Transfer the
Equities of Yishijie Company
Securities Times B4,
Ta Kung Pao A16
http://www.cninfo.com.cn/finalpage/201
5-11-04/1201752356.PDF
2015-97 2015-11-6
Announcement of Resolutions of
the 2015 3rd Extraordinary
General Meeting
Securities Times B44,
Ta Kung Pao B1
http://www.cninfo.com.cn/finalpage/201
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.
Securities Times B48,
Ta Kung Pao B1
http://www.cninfo.com.cn/finalpage/201
5-11-14/1201771447.PDF
2015-99 2015-11-14
Announcement of Resolutions of
the 8th Session of the 8th Board of
Directors
Securities Times B48,
Ta Kung Pao B1
http://www.cninfo.com.cn/finalpage/201
5-11-14/1201771446.PDF
2015-100 2015-11-24 Announcement on the Stock Securities Times B32, http://www.cninfo.com.cn/finalpage/201
2015 Annual Report of Konka Group Co., Ltd.
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
Securities Times B28,
Ta Kung Pao B5
http://www.cninfo.com.cn/finalpage/201
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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:
2015 Annual Report of Konka Group Co., Ltd.
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.
2015 Annual Report of Konka Group Co., Ltd.
65
Section VII. Preference Shares
□Applicable √ InapplicableThere was no preferred stock during reporting period.
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
Annual General Meeting
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
Annual General Meeting
Xiao ZuheIndependent
DirectorElected 28 May 2015
Elected as the Independent Director through the
Annual General Meeting
Zhang ShuhuaIndependent
DirectorElected 28 May 2015
Elected as the Independent Director through the
Annual General Meeting
2015 Annual Report of Konka Group Co., Ltd.
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
Engaged by the decision from the Board of
Directors
Lin Hongfan Vice President Engaged 18 Jun. 2015Engaged by the decision from the Board of
Directors
Wu YongjunBoard
SecretaryEngaged 27 Aug. 2015
Engaged by the decision from the Board of
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
The service term of the Board of Directors was
expired
Wang Xiaowen DirectorLeft as term
expired28 May 2015
The service term of the Board of Directors was
expired
He Haibin DirectorLeft as term
expired28 May 2015
The service term of the Board of Directors was
expired
Feng YutaoIndependent
Director
Left as term
expired28 May 2015
The service term of the Board of Directors was
expired
Yang HaiyingIndependent
Director
Left as term
expired28 May 2015
The service term of the Board of Directors was
expired
Zhang ZhongIndependent
Director
Left as term
expired28 May 2015
The service term of the Board of Directors was
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
The service term of the Board of Supervisors
was expired
Liu YongEmployee
Supervisor
Left as term
expired28 May 2015
The service term of the Board of Supervisors
was expired
Huang
ZhiqiangCFO Left 18 Jun. 2015 Resigned owning to working reasons
2015 Annual Report of Konka Group Co., Ltd.
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
DirectorElected 28 May 2015
Elected as the Independent Director through the
Annual General Meeting
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
2015 Annual Report of Konka Group Co., Ltd.
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,
2015 Annual Report of Konka Group Co., Ltd.
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.,
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
Unit: RMB Ten Thousand Yuan
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
79
Huang
ZhiqiangCFO
Male50 Left 53.14 No
Song
ZhenhuaDirector, Vice President
Male34 Left 60.32 No
Zhang
MinIndependent Director
Male49 Left 10.00 No
Zhang
Guanghu
i
Supervisor
Male
52 Left 0 No
Liu Dan President Male 44 Left 35.38 No
Wan
LiboVice President
Male53 Left 109.19 No
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
2015 Annual Report of Konka Group Co., Ltd.
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.
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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
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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
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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?
2015 Annual Report of Konka Group Co., Ltd.
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.
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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
2015 Annual Report of Konka Group Co., Ltd.
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.
2015 Annual Report of Konka Group Co., Ltd.
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;
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
3 Apr. 2015
16th 27 Apr. 2015 Dong Yaping, 2015 1st Quarter Unanimously N/A N/A
2015 Annual Report of Konka Group Co., Ltd.
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
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
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
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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
2015 Annual Report of Konka Group Co., Ltd.
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.
The 2015Annual Report of Konka Group Co., Ltd.
95
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
The 2015Annual Report of Konka Group Co., Ltd.
96
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
The 2015Annual Report of Konka Group Co., Ltd.
97
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
The 2015Annual Report of Konka Group Co., Ltd.
98
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
Of which: preferred shares
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
The 2015Annual Report of Konka Group Co., Ltd.
99
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
The 2015Annual Report of Konka Group Co., Ltd.
100
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
Of which: preferred shares
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
Of which: preferred shares
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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108
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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110
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
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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
- - - - - - - - - - - - -
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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 - - - - - - - - - - - - -
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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
Other equityinstruments
Capital reserve
Less:treasury
stock
Othercomprehensive incomes
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 - - - - - - - - - -
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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
- - - - - - - - - -
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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
- - - - - - - - - -
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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
Other equityinstruments
Capital reserveLess:
treasurystock
Othercomprehensive incomes
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 - - - - - - - - - - -
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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 - - - - - - - - - - -
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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
Other equityinstruments
Capital reserveLess:treasurystock
Othercomprehensive incomes
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
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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 - - - - - - - - - - -
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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
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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.
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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
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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
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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
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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,
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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
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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
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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
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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
Item Closing balance Opening balance
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
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Item Closing balance Opening balance
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 —
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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
Accounts receivable with
insignificant single amount for
which bad debt provision
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 balance Bad debt provision
Book valueAmount
Proportion
(%)Amount
Withdrawa
l
proportion
(%)
Accounts receivable with
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 2,516,702,016.18 98.95 259,303,584.71 10.30 2,257,398,431.47
Subtotal of groups 2,516,702,016.18 98.95 259,303,584.71 10.30 2,257,398,431.47
Accounts receivable with
insignificant single amount for
which bad debt provision
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
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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
Account receivable Bad debt provisionWithdrawal
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
Customer 3 8,223,935.99 4,111,968.00 50.00Involved with lawsuit
dispute
Customer 4 6,260,260.93 5,554,486.27 88.73Involved with lawsuit
dispute
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Customer 5 3,408,394.19 2,045,036.51 60.00Involved with lawsuit
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
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB37, 240,245.94, 18.354% of total closing balance of account receivable.
6. Interest receivable
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(1) Category of interest receivable
Item Closing balance Opening balance
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 balance Bad debt provision
Book valueAmount
Proportion
(%)Amount
Withdrawa
l
proportion
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
183,881,677.62 51.78 171,132,382.98 93.07 12,749,294.64
Other accounts receivable
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
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
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
The 2015Annual Report of Konka Group Co., Ltd.
173
Amount
Proportion
(%) Amount
Withdrawal
proportion (%)
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
18,115,952.51 5.45 5,405,926.42 29.84 12,710,026.09
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: aging group 314,459,562.89 94.55 28,194,197.30 8.97 286,265,365.59
Subtotal of groups 314,459,562.89 94.55 28,194,197.30 8.97 286,265,365.59
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
— — — — —
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
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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
(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
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
accounts receivable (%)
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
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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
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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
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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
Disposed in the current period
Inventory goodsThe realizable net value was lower thanthe inventory cost
Disposed in the current period
(4) Closing balance of the inventory which includes capitalized borrowing expenses was
RMB3, 693,784.24.
9. Other current assets
Item Closing balance Opening balance
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.
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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
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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., — — — —
The 2015 Annual Report of Konka Group Co., Ltd.
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 —
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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
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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
Increase/decrease in reporting period
Closing balanceClosing balance of
impairment provisionDeclaration of cash dividends or
profits
Withdrawn impairment
provisionOther
Associated enterprise:
The 2015 Annual Report of Konka Group Co., Ltd.
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.
The 2015Annual Report of Konka Group Co., Ltd.
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
3.Decreased amount of the period — — — —
Closing balance 22,204,869.22 — — 22,204,869.22
III. Depreciation reserves — — — —
1.Opening balance — — — —
2. Increased amount of the period — — — —
3.Decreased 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
The 2015 Annual Report of Konka Group Co., Ltd.
185
13. Fixed assets
(1) List of fixed assets
Item Houses and buildings Machinery equipment Electronic equipment Transportation equipment Other Total
I. Original book value
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
2. Increased amount of the
period56,893,032.66 60,882,542.16 13,661,165.53 6,045,622.63 19,000,737.36 156,483,100.34
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(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
3.Decreased amount of the
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
2. Increased amount of the
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
3.Decreased amount of the
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
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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
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(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
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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
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(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
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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
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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
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15. Intangible assets
(1) List of intangible assets
Item Land use right Patent right
Trademark
registration
expense
Other Total
I. Original book value
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
3.Decreased amount of
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 — — — — —
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the period
(1) Withdrawal — — — — —
3.Decreased amount of
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
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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
Closing balance Opening balance
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
Closing balance Opening balance
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
Item Closing balance Opening balance
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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
Item Closing balance Opening balance
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
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Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
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Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
Item Opening balance Increased Decreased Closing balance
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
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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
Item Opening balance Increased Decreased Closing balance
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
Item Closing balance Opening balance
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
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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
Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
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29. Non-current liabilities due within 1 year
Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
Item Closing balance Opening balance
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
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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 —
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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
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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
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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
2,600,000.00 — — — 2,600,000.00 Related to the assets
TV application oriented and embedded
operating system development2,470,000.00 — — — 2,470,000.00 Related to the assets
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Industrialization technological
transformation of large precise multi-color
injection mold based on green
Manufacturing
2,259,541.37 — 349,620.44 — 1,909,920.93 Related to the assets
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
2,050,000.00 — 600,000.00 — 1,450,000.00 Related to the assets
Research and development and
industrialization of Dual channel new 3 D
smart TV
2,030,000.00 — — — 2,030,000.00 Related to the assets
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
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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
— 3,000,000.00 — — 3,000,000.00 Related to the assets
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
— 2,000,000.00 — — 2,000,000.00 Related to the assets
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
Item Opening balance
Increase/decrease in reporting period (+, -)
Closing balanceNewly issueshare
Bonusshares
Capitalization ofpublic reserves
OtherSubtotal
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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
Item Opening balance Increased Decreased Closing balance
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
Item Opening balance
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
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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
Item Opening balance Increased Decreased Closing balance
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
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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.
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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
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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
Operation revenue Operation cost Operation revenue Operation cost
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
Item Reporting period Last period
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
Item Reporting period Last period
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
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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
Item Reporting period Last period
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
Item Reporting period Last period
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
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45. Asset impairment loss
Item Reporting period Last period
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
Item Reporting period Last period
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
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48. Non-operating gains
Item Reporting period Last period
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
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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
Item Reporting period Last period
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
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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
Item Reporting period Last period
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
Item Reporting period Last period
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
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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
Item Reporting period Last period
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
Item Reporting period Last period
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
Item Reporting period Last period
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
Item Reporting period Last period
Pledged margin deposit 161,850,987.97 579,030,740.04
Financing lease — 1,755,444.00
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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 — —
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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
Item Closing balance Opening balance
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
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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
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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)
Name of the subsidiary
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.
The 2015Annual Report of Konka Group Co., Ltd.
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.,
The 2015Annual Report of Konka Group Co., Ltd.
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
Name of the subsidiary
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Technology Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Technology Co., Ltd.
Shenzhen,
Guangdong
Shenzhen,
Guangdong
R&D
expenses100.00 —
Set up or
investment
Shenzhen Wankaida Science and
Technology Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Technology Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Name of the 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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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 —
The 2015Annual Report of Konka Group Co., Ltd.
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 &
Technology Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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.
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
239
Shanghai Konka Green Science &
Technology Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Hong Kong KonkaCo., Ltd.
USD 2,470.00 2,470.00 23/3/2015 23/3/2016 No
Hong Kong KonkaCo., Ltd.
USD 2,530.00 2,530.00 29 /5/ 2015 29/5/2016 No
Hong Kong KonkaCo., Ltd.
USD 5,000.00 5,000.00 15/1/2014 14/2/2016 No
Hong Kong KonkaCo., Ltd.
USD 3,090.00 3,090.00 17/9/2014 117/10/2016 No
Hong Kong KonkaCo., Ltd.
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
Item Reporting period Last period
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Item Closing balance Opening balance
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:
Item Closing balance Opening balance
Minimum lease payments of irrevocable operating lease
1 year after balance date 20,414,436.47 23,767,119.89
2 year after balance date 10,962,573.65 11,062,103.32
3 year after balance date 5,382,286.87 8,442,535.17
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
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
The 2015Annual Report of Konka Group Co., Ltd.
249
Category
Closing balance
Book balance Bad debt provision
Book value
Amount
Proportion
(%) Amount
Proportion
(%)
Accounts receivable with
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
Subtotal of groups 1,612,536,556.87 98.06 202,746,563.72 12.57 1,409,789,993.15
Accounts receivable with
insignificant single amount
for which bad debt provision
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 balance Bad debt provision
Book value
Amount
Proportion (
%) Amount
Proportion (
%)
Accounts receivable with
insignificant single amount
for which bad debt provision
separately accrued
— — — — —
Accounts receivable
withdrawal of bad debt
The 2015Annual Report of Konka Group Co., Ltd.
250
provision of by credit risks
characteristics:
Group 1: aging group 1,436,462,593.91 81.90 214,731,732.08 14.95 1,221,730,861.83
Group 2: related party group 317,565,114.46 18.10 — — 317,565,114.46
Subtotal of groups 1,754,027,708.37 100.00 214,731,732.08 12.24 1,539,295,976.29
Accounts receivable with
insignificant single amount
for which bad debt provision
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:
AgingClosing balance
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
The 2015Annual Report of Konka Group Co., Ltd.
251
Account receivable Bad debt provisionWithdrawal
proportionWithdrawal reason
Customer 1 8,223,935.99 4,111,968.00 50Involved with lawsuit
dispute
Customer 2 3,408,394.19 2,045,036.51 60.00Involved with lawsuit
dispute
Customer 3 2,207,440.84 1,607,440.84 72.82Involved with lawsuit
dispute
Customer 4 2,050,248.88 2,050,248.88 100.00Involved with lawsuit
dispute
Customer 5 1,733,797.99 1,733,797.99 100.00Involved with lawsuit
dispute
Total 17,623,817.89 11,548,492.22
(2) Bad debt provision withdrawal, reversed or recovered in the report period
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
The total amount of top five of account receivable of closing balance collected by arrears
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 balance Bad debt provision
Book value
Amount
Proportion
(%) Amount
Proportion
(%)
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
173,028,147.62 15.48 160,278,852.98 92.63 12,749,294.64
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
— — — — —
The 2015Annual Report of Konka Group Co., Ltd.
252
Group 1: aging group 75,906,726.27 6.79 19,005,412.74 31.11 56,901,313.53
Group 2: related party group 868,797,189.91 77.73 — — 868,797,189.91
Subtotal of groups 944,703,916.18 84.52 19,005,412.74 2.01 925,698,503.44
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately accrued
— — — — —
Total 1,117,732,063.80 100.00 179,284,265.72 16.04 938,447,798.08
(Continued)
Category
Opening balance
Book balance Bad debt provision
Book value
Amount
Proportion (
%) Amount
Proportion (%
)
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately
accrued
31,507,969.28 3.07 18,797,943.19 59.66 12,710,026.09
Other accounts receivable
withdrawn bad debt
provision according to
credit risks characteristics
— — — — —
Group 1: aging group 629,814,580.00 61.3 20,473,350.81 3.25 609,341,229.19
Group 2: related party
group366,148,374.77 35.63 — — 366,148,374.77
Subtotal of groups 995,962,954.77 96.93 20,473,350.81 2.06 975,489,603.96
Other accounts receivable
with insignificant single
amount for which bad debt
provision separately
accrued
— — — — —
The 2015Annual Report of Konka Group Co., Ltd.
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:
AgingClosing balance
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 — —
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The 2015Annual Report of Konka Group Co., Ltd.
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
accounts receivable (%)
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
Customer 3 Intercourse funds 102,869,873.14 Within 1 year 9.20
Customer 4 Intercourse funds 92,437,026.68 Within 1 year 8.27
Customer 5 Intercourse funds 90,137,173.41 Within 1 year 8.06
Total 631,022,167.67
The 2015 Annual Report of Konka Group Co., Ltd.
255
3. Long-term equity investment
1. Long-term equity investment
Item
Closing balance Opening balance
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
The 2015 Annual Report of Konka Group Co., Ltd.
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
The 2015 Annual Report of Konka Group Co., Ltd.
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
Increase/decrease in reporting period
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 —
The 2015Annual Report of Konka Group Co., Ltd.
258
4. Revenue and Cost of Sales
1. Revenue and Cost of Sales
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
Operation revenue Operation cost Operation revenue Operation cost
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
Operation revenue Operation cost Operation revenue Operation cost
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
Operation revenue Operation cost Operation revenue Operation cost
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
The 2015Annual Report of Konka Group Co., Ltd.
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
Item Reporting period Last period
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
The 2015 Annual Report of Konka Group Co., Ltd.
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
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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
The 2015 Annual Report of Konka Group Co., Ltd.
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
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