Konka Group Co., Ltd. Annual Report 2016
KONKA GROUP CO., LTD.
ANNUAL REPORT 2016
2017-09
March 2017
Konka Group Co., Ltd. Annual Report 2016
Section I Important Statements, Contents and Definitions
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as
well as the directors, supervisors and executive officers of Konka Group Co., Ltd. (the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report, and shall be jointly and severally liable for any false representation, misleading
statements or material omissions in this Report.
Liu Fengxi, head of the Company, and Li Chunlei, accounting head for this Report and head
of the accounting department (head of accounting), hereby guarantee that the Financial
Report carried in this Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
Any plans for the future and other forward-looking statements mentioned in this Report shall
NOT be considered as virtual promises of the Company to investors. Therefore, investors are
kindly reminded to pay attention to possible investment risks.
The Company plans not to distribute cash dividends or bonus shares or convert capital
reserve into share capital.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese
version shall prevail.
Konka Group Co., Ltd. Annual Report 2016
Table of Contents
Section I Important Statements, Contents and Definitions............................................................2
Section II Corporate Profile and Financial Results........................................................................ 6
Section III Business Profile.............................................................................................................. 11
Section IV Performance Discussion and Analysis......................................................................... 13
Section V Significant Events............................................................................................................32
Section VI Share Changes and Shareholders’ Profile................................................................... 53
Section VII Preference Shares.........................................................................................................61
Section VIII Directors, Supervisors, Executive Officers and Staff..............................................62
Section IX Corporate Governance..................................................................................................74
Section X Corporate Bonds............................................................................................................. 89
Section XI Financial Report............................................................................................................ 90
Section XII Documents Available for Reference..........................................................................283
Konka Group Co., Ltd. Annual Report 2016
Definitions
Term Definition
Company, the Company, the Group Konka Group Co., Ltd.
Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.
Konka Household Appliances Shenzhen Konka Household Appliances 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 Qingjia Chongqing Qingjia Electronics Co., Ltd.
Anhui Konka Anhui Konka Electronic Co., Ltd.
Anhui Household Appliances Anhui Konka Household Appliances Co., Ltd.
Kunshan Konka Kunshan Konka Electronic Co., Ltd.
Dongguan Konka Dongguan Konka Electronic Co., Ltd.
Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.
Boluo Konka Boluo Konka PCB Co., Ltd.
Boluo Konka Precision Boluo Konka Precision Technology Co., Ltd.
Hong Kong Konka Hong Kong Konka Co., Ltd.
Konka Household Appliances Investment Konka Household Appliances Investment & Development Co., Ltd.
Konka Household Appliances International
Konka Household Appliances International Trading Co., Ltd.
Trading
Konka Europe Konka (Europe) Co., Ltd.
Konka Factoring Konka Factoring (Shenzhen) 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.
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.
Kangqiao Jiacheng Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd.
Konka SmartTech Konka SmartTech Limited
Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.
Yipingfang Shenzhen Yipingfang Network Technology Co., Ltd.
Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.
Konka Group Co., Ltd. Annual Report 2016
Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.
Zhongkang Supply Chain Zhongkang Supply Chain Management Co., Ltd.
Kangqiao Easy Chain Shenzhen Kangqiao Easy Chain Technology Co., Ltd.
Yilifang Yilifang (Hainan) Technology Co., Ltd.
Konka Technology & Industry Development Chuzhou Konka Technology & Industry Development 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 Hundred
RMB, RMB Ten thousand, RMB One Hundred Million Yuan
Million Yuan
Konka Group Co., Ltd. Annual Report 2016
Section II Corporate Profile and Financial Results
I Corporate information
Stock name Konka A, Konka B Stock code 000016, 200016
Changed stock name (if any) N/A
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 康佳集团股份有限公司
Abbr. 康佳集团
Company name in English (if
KONKA GROUP CO., LTD.
any)
Abbr. (if any) KONKA GROUP
Legal representative Liu Fengxi
15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,
Registered address
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China
Zip code
15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,
Office address
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China
Zip code
Company website www.konka.com
Email szkonka@konka.com
II Contact information
Board Secretary Securities Representative
Name Wu Yongjun Miao Leiqiang
Board Secretariat, 24/F, Konka R&D Center, 28 Keji Board Secretariat, 24/F, Konka R&D Center, 28 Keji
South Twelfth Road, Science and Technology Park, South Twelfth Road, Science and Technology Park,
Address
Yuehai Street, Nanshan District, Shenzhen, Yuehai Street, Nanshan District, Shenzhen,
Guangdong Province, China Guangdong Province, China
Tel. 0755-26608866 0755-26608866
Fax 0755-26601139 0755-26601139
E-mail szkonka@konka.com szkonka@konka.com
III Information disclosure and place where this Report is kept
Newspapers designated by the Company for
Securities Times, etc.
information disclosure
Website designated by the China Securities
www.cninfo.com.cn
Regulatory Commission (CSRC) for the
Konka Group Co., Ltd. Annual Report 2016
publication of this Report
Board Secretariat, 24/F, Konka R&D Center, 28 Keji South Twelfth Road,
Place where this Report is kept Science and Technology Park, Yuehai Street, Nanshan District, Shenzhen,
Guangdong Province, China
IV Company registration and alteration
Credibility code
Changes in main business activities of the
No changes
Company after going public (if any)
Changes of controlling shareholder (if any) No changes
V Other information
The CPAs firm hired by the Company
Name Ruihua Certified Public Accountants (LLP)
5-11F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No. 8,
Office address
Xibinhe Road, Yongding Men, Dongcheng District, Beijing, P.R.C.
Accountants writing signatures Tang Qimei, Shen Lingzhi
Sponsor engaged by the Company to continuously perform its supervisory function during this
Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during
this Reporting Period
□ Applicable √ Not applicable
VI Accounting and financial results
Indicate by tick mark whether the Company performed any retroactive adjustments to or
restatement of its accounting data due to changes of accounting policies or correction of accounting
errors
□ Yes √ No
2016 2015 +/-%
Operating revenues (RMB) 20,299,348,136.21 18,395,177,035.98 10.35% 19,423,488,994.07
Net profit attributable to shareholders
95,673,028.03 -1,256,819,314.51 107.61% 52,623,527.86
of the Company (RMB)
Net profit attributable to shareholders
of the Company before exceptional -283,460,349.24 -1,129,999,645.94 74.92% -475,481,381.45
profit and loss (RMB)
Net cash flows from operating -983,256,602.23 1,289,600,482.66 -176.25% -640,385,182.05
Konka Group Co., Ltd. Annual Report 2016
activities (RMB)
Basic earnings per share
0.0397 -0.52 107.63% 0.02
(RMB/share)
Diluted earnings per share
0.0397 -0.52 107.63% 0.02
(RMB/share)
Weighted average return on equity
3.35% -36.30% 39.65% 1.28%
(%)
December 31, 2016 December 31, 2015 +/-% December 31, 2014
Total assets (RMB) 17,243,119,597.97 14,250,367,548.28 21.00% 16,779,359,276.65
Net assets attributable to
2,901,481,607.04 2,814,382,870.81 3.09% 4,103,478,971.07
shareholders of the Company (RMB)
VII Differences in accounting data under domestic and foreign accounting standards
(I) Differences in the net profit and the net assets disclosed in the financial reports prepared
under Chinese and international accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
(II) Differences in the net profit and the net assets disclosed in the financial reports prepared
under Chinese and foreign accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
VIII Financial results by quarter
Unit: RMB
1Q 2Q 3Q 4Q
Operating revenues 4,072,311,262.92 4,536,769,559.32 6,008,160,392.02 5,682,106,921.95
Net profit attributable to
8,429,549.66 4,405,187.10 -57,165,694.07 140,003,985.34
shareholders of the Company
Net profit attributable to
shareholders of the Company
27,524,586.04 -56,260,733.24 -93,347,364.40 -161,376,837.63
before exceptional profit and
loss
Net cash flows from operating
295,245,741.81 -420,787,798.23 -285,036,494.71 -572,678,051.10
activities
Indicate by tick mark whether there are any material differences between the financial indicators
above or their summations and those which have been disclosed in quarterly or semi-annual reports
Konka Group Co., Ltd. Annual Report 2016
□ Yes √ No
IX Exceptional profit/loss
√ Applicable □ Not applicable
Unit: RMB
Item 2016 2015 2014 Note
Profit/loss on disposal of non-current assets
242,932,907.65 -16,096,434.80 587,454,101.18
(including offset asset impairment provisions)
Government grants charged to the profit/loss for this
Reporting Period (except for the government grants
closely related to the business of the Company and 113,350,808.96 71,499,330.11 75,401,093.20
given at a fixed quota or amount in accordance with
the State’s uniform standards)
Profit/loss on entrusting others with investments or
70,849,063.30 20,419,318.35 12,260,439.18
asset management
Asset impairment provisions due to acts of God
0 -144,808,654.70
such as natural disasters
Profit/loss on fair value changes of transactional
financial assets and liabilities & investment income
from disposal of transactional financial assets and
17,953,552.28 32,627,480.23
liabilities as well as financial assets available for
sale, except for effective hedges related to routine
operations of the Company
Impairment provision reversal for accounts
receivable on which the impairment test is carried 707,777.79 3,550,666.66
out separately
Profit/loss on entrusted loans 22,934,301.50 -104,311,044.28 16,207,940.59
Non-operating income and expense other than the
168,175.52 -419,240.74 -151,895.48
above
Other profit/loss that meet the definition of
78,609,375.35 -14,549,153.86 158,734,972.90
exceptional profit/loss
Less: Corporate income tax 11,153,834.38 3,830,243.26 4,331,796.46
Minority interests (after tax) 379,133,377.27 -126,819,668.57 528,104,909.31
Total 400,491,687.22 -126,819,668.57 528,104,909.31 --
Explanation of why the Company classified an item as exceptional profit/loss according to the
definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies
Offering Their Securities to the Public—Exceptional Profit and Loss, or reclassified any exceptional
profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss
√ Applicable □ Not applicable
Konka Group Co., Ltd. Annual Report 2016
Item Amount involved (RMB) Reason
Government grants closely related to the Company’s normal
Tax rebates on software 121,451,535.04 operation and constantly given at certain quotas or amounts
according to the government’s policies and standards
Konka Group Co., Ltd. Annual Report 2016
Section III Business Profile
I Main business scope for this Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company is currently engaged in color TVs, mobile phones and white goods, with its main
business models and the situations of its business divisions as follows:
(I) Color TVs
The Company provides color TVs for both domestic,overseas markets and the internet business
The domestic sales of its color TVs are realized mainly through B2B (Business-to-Business) and
B2C (Business-to-Consumer), with its branch companies, business departments and after-sales
maintenance points all over the country. And it profits from the margin between the costs and the
selling prices of its color TVs.
As for the overseas sales, it mainly relies on B2B and is supported by B2C. The color TVs of the
Company are sold to Asia Pacific, Middle East, Central & South America, East Europe, etc. And the
profit also comes from the difference between the costs and the selling prices of its color TVs.
The basis of internet business is the smart TV terminal sold by us. We will cooperate with other
internet companies and obtain the benefits by providing the users with video, education, music,
medical treatment, games and other services; then increase the adhesiveness of users, publicize the
brand and increase the sales opportunities of hardware by providing part of public welfare and
interactive services based on the analysis of user behavior data to; finally establish ten million-level
user platform and obtain the benefits via advertisement and application distribution. The internet
business is essential for our internet transformation and the upgrade of development modes --
“hardware + software” and “terminal + user”.
(II) Mobile phones
The mobile phones of the Company are sold domestically and overseas. The overseas sales mainly
rely on B2B and the profit comes from the margin between the costs and the selling prices of the
mobile phones. As for the domestic sales of its mobile phones, the Company mainly relies on the
telecom operator channel in the recent years. But it has also restarted the retail sales (through B2B
and B2C) of its mobile phones in the domestic market since August 2015. It has been active in
breaking into the rural markets. And its successful launch of new products in the domestic retail
market marks a good start in the domestic retail sales of its mobile phones. In the domestic sales of
its 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.
Konka Group Co., Ltd. Annual Report 2016
(III) White goods
The white goods produced by the Company mainly include refrigerators, washing machines, air
conditioners, freezers, etc., which are sold through B2B and B2C to the domestic market. And the
Company profits from the margin between the costs and the selling prices of its white goods.
II Significant changes in main assets
(I) Significant changes in main assets
Main asset Reason for any significant change
Investment on long-term equity assets in the Reporting Period showed a 62.48%
year-on-year increase, and main reasons were as below –
On 31 Dec. 2015, 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
Equity assets longer entrusted Konka Household Appliances Investment to manage its holding of
6.18% shares of Precision Mold, and since 1 Jan. 2016, the Precision Mold and its
subsidiaries (Kunshan Jielunte Mould Plastic Co., Ltd, Dongguan Xuda Mould Plastic
Co., Ltd.,Chuzhou Jielunte Mould Plastic Co., Ltd., Anhui Jiasen Precision Technology
Co., Ltd., Wuhan Jielunte Mould Plastic Co., Ltd. and Dongguan Konka Mould Plastic
Co., Ltd.), would be excluded from consolidated statements scope.
Fixed assets as at the end of the Reporting Period decreased by 10.75% as compared
Fixed assets
with last year, of which the main reason was the same as above.
Intangible assets as at the end of the Reporting Period decreased by 14.34% as
Intangible assets
compared with last year, of which the main reason was the same as above.
Construction in progress as at the end of the Reporting Period increased by 51.81% as
Construction in progress compared with last year, which was mainly caused by the commencement of
construction of the Kunshan Zhouzhuang Project Phase III of the Company.
(II) Main assets overseas
□ Applicable √ Not applicable
III Core competitiveness analysis
Is the Company subject to any disclosure requirements for special industries?
No.
The Company’s capability in R&D, the marketing network and manufacture constitutes its
competitive edges. Through resource integration, the Company will vigorously try to make
substantial breakthroughs in intelligent products, cloud computing, application of the internet
technology, application software, etc. It will also try to enhance the strength and thickness of
Konka Group Co., Ltd. Annual Report 2016
technical innovations to increase its overall competitiveness.
Konka Group Co., Ltd. Annual Report 2016
Section IV Performance Discussion and Analysis
I Overview
(I) Operating results of this Reporting Period
For this Reporting Period, the Company achieved consolidated operating revenues of RMB20.299
billion, up 10.35% from the prior year. And the net profits attributable to the shareholders of the
Company stood at RMB0.096 billion, The main reasons are as follows:
(I) in 2016, the Company positively integrated resources, thoroughly planned to improve the
capability of R&D, manufacturing, and supply chain of main businesses, ad simultaneously and
positively adjusted the product layout and marketing strategies based on market status, which
improved the sales structure of the Company’s main businesses and accelerated the inventory
turnover speed in the Reporting Period, leading to the better profitability of main businesses.
(II) In 2016, the Company put forth effort into 5 systems including payment and settlement, user
operation, big data, advertisements, and UI (user interface), and made breakthroughs in the
profitability of smart TV’s operation by providing users with professional and high-quality internet
content service.
(III) In 2016, via positive clearing-up and adjustment, the Company made the business layout more
rational, the thoughts more clear, and the resources and energy more concentrated, and as a result,
stabilized the Company’s backbone team, and rose up employees’ morale.
(IV) The amount of non-recurring profit and loss in 2015 was RMB-127 million, but it turned to be
RMB379 million in 2016, of which the profit of RMB220 million was mainly due to the equity of
Shenzhen Refund Optoelectronics Co., Ltd. partially lessened by the Company.
(II) Business highlights in 2016
In 2016, the Company conquered adverse factors such as fierce industry competitions and sharply
increased raw material prices, and made up the deficits and got surpluses through all staffs’
common efforts, and made the profit back to the rising channel. Business highlights of the
Company in 2016 were as below:
1. Business performance turned around
In 2016, the Company overcame difficulties and ceased to lose and began to turn out a profit. For
this Reporting Period, the Company achieved consolidated operating revenues of RMB20.299
billion, up 10.35% from the prior year. And the net profits attributable to the shareholders of the
Company stood at RMB0.096 billion.
Konka Group Co., Ltd. Annual Report 2016
2. Breakthroughs in mechanism reform
In 2016, the Company confirmed the reform thoughts of setting the target as establishing an
operating system and mechanism that should be highly competitive, fully marketized, and matched
with the industry, and the Company correspondingly made breakthroughs:
Firstly, reformation was successfully conducted in the Company’s business of small household
appliances. Strategic investors were introduced while employees’ shares were still held.
Secondly, strategic investors were introduced to the Company’s data network business (for example,
the set top box).
Thirdly, the scheme of reforming the mixed ownership mechanism for the internet e-commerce
business has been basically confirmed, and related work is being positively carried forward.
Fourthly, the Company creatively started to publicize and marketize the recruitment of the
Company’s senior management team, and formally engaged the new senior management team on 10
Mar. 2017.
3. Business transformation achieved preliminary results
In 2016, the Company started to formally upgrade and transfer its development pattern form single
hardware terminal to hardware plus software and terminal plus user. Except for selling out products,
the Company developed software service, as well as operation in respect of users.
4. The quality of business operation was improved
In 2016, core businesses of the Company were adjusted and cleared up, and the overall operation
status was approaching to a better condition.
In respect of color TV, the guidance of “consolidating scale and improving structure” confirmed in
the beginning of 2016 played its role. The Company adjusted product planning, intensified the
capability construction for channel and terminal, and the major highlights were as below:
1. Gross margin rose up. Through rational product planning, the Company improved the sales
structure of products while accelerating the product promotion speed, and made the gross margin
increased.
2. Quality was steadily improved. The Company ensured the steady improvement of product quality
by establishing the mechanism of prevention against abnormal process and quality to advance
quality management, ensuring the effective operation of the quality management system, and deeply
developing quality improvement activities.
3. Manufacturing efficiency was sharply improved. On one hand, the Company effectively
mobilized the operation sense and enthusiasm of the grass-roots employees by promoting the
system for contracted responsibility in production line. On the other hand, the Company
accomplished the construction of 2 smart manufacturing and production lines, directly pushing
forward the improvement of production efficiency.
Konka Group Co., Ltd. Annual Report 2016
4. The business scale of color TV for export sales was improved. Despite the rapidly rising cost, the
shipment of complete machines increased by 30% as compared with last year, which was mainly
caused by the Company’s measures of consolidating existing clients, vigorously enlarging blank
markets, as well as adjusting marketing strategies.
In terms of white household appliances – On one hand, the Company sharply improved gross
margin and achieved benefits with a year-on-year income increase of 8.41% by product upgrade.
On the other hand, a large scope of improvement was realized in white household appliances, and
the sales revenue achieved a sharp year-on-year increase.
In terms of handset business – In the face of fierce competitions in handset industry, the Company
obtained sales growth in handset business by continuous innovation on channel management,
enhancing product R&D, as well as the promotion of key models of E1, S1, R3, and so on. In 2016,
revenue of handset business realized a year-on-year increase of 22.67%.
In terms of internet business – Not only material breakthroughs were made in smart TV operation.
On one hand, the Company set up 5 systems including payment and settlement, user operation, big
data, advertisements, and UI (user interface), and constructed the business system, organization,
structure, and commercial mode supportable to rapid business development, laying a solid
foundation for the Company’s development of internet business. On the other hand, the Company
basically accomplished the commercial mode construction for smart TV user operation. For
example, as for business cooperation, the Company adopted two ways of open cooperation and
independent operation, strategically cooperated with IQiyi, Tencent Video, and so on, and
continuously set layout in areas covering application distribution, games, education, VR, music,
health, etc.
II Analysis of main business
(I) Overview
See “I Overview” in “Performance Discussion and Analysis”.
(II) Revenues and costs
1. Breakdown of operating revenues
Unit: RMB
2016
As a percentage of As a percentage of
+/-%
Amount operating revenues Amount operating revenues
(%) (%)
Konka Group Co., Ltd. Annual Report 2016
Operating
20,299,348,136.21 100% 18,395,177,035.98 100% 10.35%
revenues
By business segment
Electronics 17,167,313,167.21 84.57% 17,261,298,403.20 93.84% -0.54%
Others 3,132,034,969.00 15.43% 1,133,878,632.78 6.16% 176.22%
By product
Color TVs 12,478,427,986.35 61.47% 12,590,931,785.71 68.45% -0.89%
White goods 1,701,770,760.58 8.38% 1,569,786,771.56 8.53% 8.41%
Mobile phones 970,287,086.42 4.78% 790,942,197.54 4.30% 22.67%
Others 5,148,862,302.86 25.36% 3,443,516,281.17 18.72% 49.52%
By geographical segment
Domestic 14,282,697,744.63 70.36% 12,466,005,969.45 67.77% 14.57%
Overseas 6,016,650,391.58 29.64% 5,929,171,066.53 32.23% 1.48%
2. Business segments, products or geographical segments contributing over 10% of the
operating revenues or profit
√ Applicable □ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
Unit: RMB
Gross Operating Gross profit
Operating cost:
Operating revenue Operating cost profit revenue: YoY margin: YoY
YoY +/-%
margin +/-% +/-%
By business segment
Electronics 17,167,313,167.21 14,622,628,859.55 14.82% -0.54% -2.64% 1.84%
By product
Color TVs 12,478,427,986.35 10,729,196,625.12 14.02% -0.89% -2.52% 1.43%
By geographical segment
Domestic 14,282,697,744.63 11,893,157,869.41 16.73% 14.57% 26.11% -7.62%
Overseas 6,016,650,391.58 5,625,172,473.58 6.51% 1.48% 0.65% 0.77%
Main business data of the prior year restated according to the changed statistical caliber for this
Reporting Period
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
3. Whether revenue from physical sales is higher than service revenue
√ Yes □ No
Business segment Item Unit 2016 2015 +/-%
Sales volume 0,000 units 1219 1,136 7.31%
Electronics Output volume 0,000 units 983 914 7.55%
Inventory 0,000 units 127 129 -1.55%
Reason for any over 30% YoY movements in the data above
√ Applicable □ Not applicable
4. Execution progress of major signed sales contracts in this Reporting Period
□ Applicable √ Not applicable
5. Breakdown of operating costs
By product
Unit: RMB
2016
Produ
Item As a percentage of As a percentage of +/-%
ct Amount Amount
operating costs (%) operating costs (%)
Color Color
10,729,196,625.12 61.25% 11,006,357,581.37 68.55% -2.52%
TVs TVs
Whit
White e
1,354,850,701.01 7.73% 1,276,893,910.52 7.95% 6.11%
goods good
s
Mobil Mobi
e le
888,167,026.43 5.07% 748,974,690.95 4.66% 18.58%
phone phon
s es
Other Other 3,023,271,002.78
4,546,115,990.43 25.95% 18.84% 50.37%
s s
Notes:
6. Changes in the scope of the consolidated financial statements for this Reporting Period
√ Yes □ No
(1) Disposal of the subsidiaries
① On 31 May. 2016, the Company written off Changshu Konka Electronic Co., Ltd.. Since then,
Konka Group Co., Ltd. Annual Report 2016
the Company no more included it in the consolidated scope.
② On 3 Jan. 2016, the Company written off KONKA AMERICA,INC.，Since then, the Company
no more included it in the consolidated scope.
③ On 1 Nov. 2016, the Company listed the transfer of 51% equity of Shenzhen Konka Information
Network Co., Ltd.. Since then, the Company no more included it in the consolidated scope.
(2) Changes of the consolidated scope of other reasons
① On 31 Dec. 2015, 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 to manage its holding of 6.18% shares of Precision Mold, and
since 1 Jan. 2016, the Precision Mold and its subsidiaries (Kunshan Jielunte Mould Plastic Co., Ltd,
Dongguan Xuda Mould Plastic Co., Ltd.,Chuzhou Jielunte Mould Plastic Co., Ltd., Anhui Jiasen
Precision Technology Co., Ltd., Wuhan Jielunte Mould Plastic Co., Ltd. and Dongguan Konka
Mould Plastic Co., Ltd.), would be excluded from consolidated statements scope.
② On 17 Jul. 2016, the Company set up Zhongkang Supply Chain Management Co., Ltd. with
nature person Wu Guoren and Xiao Yongsong, with registered capital of USD1.5 million, of which
Konka Group invested cash USD765,000, and held 51% equity, Wu Guoren invested cash
USD375,000, and held 25% equity, and Xiao Yongsong invested cash USD360,000, and held 24%
equity. The Company owned the controlling right, and included it into consolidated scope since 15
Jul. 2016.
③ On 30 Sep. 2016, the Company set up Yilifang (Hainan) Science & Technology Co., Ltd., with
registered capital of RMB20 million, 100% invested by the Company. Since 30 Sep. 2016, it was
included into the consolidated scope.
④ On 1 Apr. 2016, Shenzhen Konka E-display Co., Ltd., a subsidiary of the Company, funded the
setup of its fully owned subsidiary, Shenzhen Kangqiao Yilian Science & Technology Co., Ltd.,
with registered capital of RMB5 million. As at the balance sheet date, the actual investment was
RMB5, 000.00. The Company owned the controlling right, and included it into consolidated scope
since 1 Apr. 2016.
⑤ On 31 Oct. 2016, the Company set up the Chuzhou Konka Science & Technology Industry
Development Co., Ltd. in Anhui, with registered capital of RMB40 million, 100% invested by the
Company. The shareholder should pay the capital before 26 Feb. 2017, and has not actually paid out
as at the report issuance date. The Company owned the controlling right, and included it into
consolidated scope since 31 Oct. 2016.
7. Major changes in the business, products or services in this Reporting Period
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
8. Main customers and suppliers
Main customers
Total sales to top five customers (RMB) 4,731,230,318.90
Total sales to top five customers as a percentage of the total
23.31%
sales for this Reporting Period (%)
Total sales to related parties among top five customers as a
percentage of the total sales for this Reporting Period (%)
Information about top five customers
As a percentage of the total sales for
No. Customer Sales amount (RMB)
this Reporting Period (%)
1 Customer 1 1,508,455,484.54 7.43%
2 Customer 2 1,390,625,530.80 6.85%
3 Customer 3 680,316,433.51 3.35%
4 Customer 4 550,883,797.36 2.71%
5 Customer 5 600,949,072.69 2.96%
Total -- 4,731,230,318.90 23.31%
Other information about the main customers
√ Applicable □ Not applicable
None of the top five customers were related parties of the Company. And none of the Company’s
directors, supervisors, executive officers, core technicians, over5% shareholders, actual controller
or any other related parties held equity interests in the major customers, directly or indirectly.
Main suppliers
Total purchases from top five suppliers (RMB) 4,253,121,609.25
Total purchases from top five suppliers as a percentage of the
35.44%
total purchases for this Reporting Period (%)
Total purchases from related parties among top five suppliers as
a percentage of the total purchases for this Reporting Period (%)
Information about top five suppliers
As a percentage of the total purchases
No. Supplier Purchase amount (RMB)
for this Reporting Period (%)
1 Supplier 1 1,162,437,795.00 9.69%
2 Supplier 2 984,083,817.23 8.20%
3 Supplier 3 765,741,373.64 6.38%
4 Supplier 4 683,232,461.33 5.69%
5 Supplier 5 657,626,162.05 5.48%
Konka Group Co., Ltd. Annual Report 2016
Total -- 4,253,121,609.25 35.44%
Other information about the main suppliers
√ Applicable □ Not applicable
None of the top five suppliers were related parties of the Company. And none of the Company’s
directors, supervisors, executive officers, core technicians, over 5% shareholders, actual controller
or any other related parties held equity interests in the major supp 5%liers, directly or indirectly.
(III) Expense
Unit: RMB
2016 2015 +/-% Reason for any significant change
Selling
2,285,998,285.97 2,448,337,549.43 -6.63%
expenses
Administrati
607,579,115.65 695,731,013.59 -12.67%
ve expenses
Finance Considerable decrease in exchange
154,764,546.12 350,616,323.55 -55.86%
costs loss
(IV) R&D input
√ Applicable □ Not applicable
The R&D expenditure in this Reporting Period was RMB192 million. The Company continued to
enhance the R&D input and tried to lay a solid foundation for it to carry out product 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 encouraged suggestions to increase its production efficiency
and core competitiveness.
Details about R&D input:
2016 2015 +/-%
Number of R&D personnel 1,203 1,213 -0.82%
R&D personnel as a
percentage in the total 6.92% 6.54% 0.38%
employees
R&D input (RMB) 191,650,648.39 229,397,281.19 -16.45%
R&D input as a percentage in
0.94% 1.25% -0.31%
operating revenues
Capitalized R&D input
0.00 0.00 0.00%
(RMB)
Capitalized R&D input as a
percentage in the total R&D 0.00% 0.00% 0.00%
input
Reasons for any significant YoY change in the percentage of the R&D input in the operating
Konka Group Co., Ltd. Annual Report 2016
revenues
□ Applicable √ Not applicable
Since 1 Jan. 2016, the Precision Mold and its subsidiaries (Kunshan Jielunte Mould Plastic Co., Ltd,
Dongguan Xuda Mould Plastic Co., Ltd.,Chuzhou Jielunte Mould Plastic Co., Ltd., Anhui Jiasen
Precision Technology Co., Ltd., Wuhan Jielunte Mould Plastic Co., Ltd. and Dongguan Konka
Mould Plastic Co., Ltd.), would be excluded from consolidated statements scope. Therefore, the
R&D expenditure of the aforesaid companies was excluded from the consolidated financial
statements.
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable
(V) Cash flows
Unit: RMB
Item 2016 2015 +/-%
Subtotal of cash inflows from
19,092,835,700.32 19,318,005,896.78 -1.17%
operating activities
Subtotal of cash outflows due to
20,076,092,302.55 18,028,405,414.12 11.36%
operating activities
Net cash flows from operating
-983,256,602.23 1,289,600,482.66 -176.25%
activities
Subtotal of cash inflows from
9,979,263,572.51 3,818,980,972.35 161.31%
investing activities
Subtotal of cash outflows due to
9,876,845,908.02 3,970,903,850.94 148.73%
investing activities
Net cash flows from investing
102,417,664.49 -151,922,878.59 167.41%
activities
Subtotal of cash inflows from
7,172,728,955.54 3,134,261,903.06 128.85%
financing activities
Subtotal of cash outflows due to
5,839,979,604.35 4,388,415,298.00 33.08%
financing activities
Net cash flows from financing
1,332,749,351.19 -1,254,153,394.94 206.27%
activities
Net increase in cash and cash
532,748,093.79 -152,081,985.73 450.30%
equivalents
Explanation of why the data above varied significantly
Konka Group Co., Ltd. Annual Report 2016
√ Applicable □ Not applicable
The increased cash paid for goods and the payment for the land of the Headquarters resulted in the
decreased net cash flows from operating activities.
The increased investment income and due wealth management amount resulted in the increased net
cash flows from investing activities.
The increased new borrowings and contributions from minority interests resulted in the increased
net cash flows from financing activities.
Reason for any big difference between the net operating cash flow and the net profit for this
Reporting Period
□ Applicable √ Not applicable
III Analysis of non-core business
√ Applicable □ Not applicable
Unit: RMB
As a percentage
Amount Source/reason Recurring or not
of total profit (%)
Considerable investment
income from the sale of
Investment income 348,445,927.65 1256.35% Refond stock, as well as No
increased wealth
management income
Decreased market price of
Profit/Loss on fair
-14,617,369.08 -52.70% transactional financial No
value changes
assets held by subsidiary
Price falling provision on
inventories upon net
Asset impairment 186,776,847.38 673.44% No
realizable value
measurement
Governmental subsidies Tax rebates on software are
Non-operating
270,828,423.34 976.49% and tax rebates on recurring while the others are
revenue
software uncertain
Non-operating
10,853,641.54 39.13% No
expense
IV Analysis of assets and liabilities
(I) Significant changes in the asset composition
Unit: RMB
Konka Group Co., Ltd. Annual Report 2016
December 31, 2016 December 31, 2015
Change
As a As a Reason for any
in
percentag percentage significant
Amount Amount percenta
e of total of total change
ge (%)
assets (%) assets (%)
Monetary funds 2,617,606,256.42 15.18% 1,706,446,928.92 11.97% 3.21%
Accounts
2,307,965,548.49 13.38% 2,048,813,439.34 14.38% -1.00%
receivable
Inventories 4,287,413,944.35 24.86% 2,882,515,913.28 20.23% 4.63%
Investment
222,086,904.26 1.29% 227,718,178.53 1.60% -0.31%
property
Long-term
equity 309,648,120.37 1.80% 190,573,524.29 1.34% 0.46%
investments
Fixed assets 1,573,978,914.03 9.13% 1,763,503,189.50 12.38% -3.25%
Construction in
315,536,437.05 1.83% 207,854,180.88 1.46% 0.37%
progress
Short-term
6,562,834,226.51 38.06% 4,150,773,195.76 29.13% 8.93%
borrowings
Long-term
70,000,000.00 0.41% 23,700,000.00 0.17% 0.24%
borrowings
(II) Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profit/loss on Cumulative Impairment
Purchased
fair value fair value provided in Sold in this
Opening in this Closing
Item changes in this changes this Reporting
balance Reporting balance
Reporting charged to Reporting Period
Period
Period equity Period
Financial
assets
1. Financial
assets at fair
value through
profit/loss
33,196,377.28 252,084,994.12
(excluding
derivative
financial
assets)
3. 2,874,068.30 8,547,425.00 55,777,425.00
Konka Group Co., Ltd. Annual Report 2016
Available-for
-sale
financial
assets
Total of the
36,070,445.58 8,547,425 307,862,419.1
above
Financial
0 337,263.13
liabilities
Significant changes in the measurement attributes of the main assets in this Reporting Period
□ Yes √ No
(III) Restricted asset rights as of the end of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of
the Company were sealed, distrained, frozen, impawned, pledged, conditionally cashable, not
cashable or could not be used for repaying debt.
V. List of the investment
1. Overall condition
√ Applicable □ Not applicable
Investment amount of the Reporting Investment amount of the same period of
Variation amount
Period (RMB) last year (RMB)
231,850,384.41 78,306,112.00 196.08%
2. List of the significant equity investment acquired from the Reporting Period
□ Yes √ No
3. List of the significant non-equity investment has been executing during the Reporting
Period
√ Applicable □ Not applicable
Unit: RMB
Actuall Accumu The
Amou
y lative reaso
Wheth Involv nt of Disclo
accumu earnings n of
er it is ed invest Proj sure
Projec lative Estimate by the failin
Investme fixed industr ment Fund ect date
t investm d end of g to Disclosure index (if existing)
nt mode asset ies of in this source prog (if
name ent earnings the reach
invest invest Repor ress existi
amount Reporti the
ment ment ting ng)
by the ng progr
Period
end of Period ess of
Konka Group Co., Ltd. Annual Report 2016
the plan
Reporti and
ng estim
Period ated
earni
ngs
Projec
t of
Konka Electr
Self-col
Scienc Self-esta onics 0.00 Undeter http://www.cninfo.com.cn/finalpage/201
Yes 0.00 0.00 lected 0.00 No Dec.
e and blished industr % mined 6-12-30/1202973415.PDF
funds
Innov y
ation
Center
Total -- -- -- 0.00 0.00 -- -- 0.00 0.00 -- -- --
4. Investment on the financial assets
(1) List of the securities investment
√ Applicable □ Not applicable
Unit: RMB
Gain/los Cumul
s on fair ative Purchas Sold
Accou
Varie Code value fair ed amount Gain/los
Name of Initial nting Openin Closing Accounti
ty of of change value amount in the s for Source
securitie investm measur g book book ng title
secur secur in the change in the Reporti Reportin of stock
s ent cost ement value value
ities ities Reporti record Reportin ng g Period
mode
ng ed into g Period Period
Period equity
Dom Jouder
estic Precisio Measur Available
Self-ow
and 3005 n ed by 47,448 39,933. -for-sale
7,515 0 0 0 7,515 0 ned
overs 48 fair .25 25 financial
funds
eas value assets
stock
Dom Huayua
estic n Measur Available
Self-ow
and 0027 Packagi ed by 21,065 15,380. -for-sale
5,685 8,185 0 0 0 0 ned
overs 87 ng fair .40 40 financial
funds
eas value assets
stock
Dom 3005 Tus-D 10,455 Measur 0 0 0 10,455 39,778 29,323. 0 Available Self-ow
Konka Group Co., Ltd. Annual Report 2016
estic 00 esign ed by .22 22 -for-sale ned
and fair financial funds
overs value assets
eas
stock
Dom Vanke A
estic Measur Available
2,865 Self-ow
and 0000 2,311,74 ed by 2,346, 34,451. -for-sale
,883. 0 0 0 0 ned
overs 02 8.07 fair 200 93 financial
30 funds
eas value assets
stock
Dom Refond
estic Optoele Measur Available
11,291 Self-ow
and 3002 ctronics 243,683, ed by -20,52 243,683 319,508 212,190 -for-sale
0 0 ,324.3 ned
overs 41 765.60 fair 1,800 ,765.60 .73 ,150 financial
6 funds
eas value assets
stock
Other securities
investment held at the 0 -- 0 0 0 0 0 0 0 -- --
period-end
2,874 13,745
246,019, -20,52 243,701 438,597 212,190
Total -- ,068. 0 ,816.2 -- --
168.67 1,800 ,735.60 .53 ,150
30
Disclosure date of the
Board announcement on
Not applicable
approval of the securities
investment
Disclosure date of the
general meeting
announcement on Not applicable
approval of the securities
investment (if any)
(2) List of the derivative financial instruments
√ Applicable □ Not applicable
Source of investment funds USD financing
Lawsuit (if applicable) N/A
Disclosure date of the announcement about the
24 May 2014
board’s consent for the investment
Disclosure date of the announcement about the 10 Jun. 2014
Konka Group Co., Ltd. Annual Report 2016
general meeting’s consent for the investment
We engage in forward forex transactions to reduce the currency risk when
securing foreign-currency financing. This is very needed in our routine
operation and is in compliance with the applicable laws and regulations. We
Risk analysis and risk control measures for have formulated the Management Rules of Konka Group Co., Ltd. for
positions held in derivatives in the Reporting Investment In Derivative Financial Instruments, making clear the relevant
Period consideration and approval procedure, risk control, etc.. We always sign
forward forex contracts with large banks such as the Bank of China, which
operate steadily and have good credit standing, which could help prevent
loss on forward forex contracts due to bank failure.
How we usually measure the fair value of derivative financial instruments:
Based on the forward forex sales and purchase contracts that are signed
Changes in market price or fair value of between the Company and banks and have not expired in a Reporting Period,
derivatives invested in the Reporting Period we recognize the differences between the quotations for these contracts on
(specific methods used and relevant assumption the balance sheet dates provided by the banks and the contractual prices as
and parameter settings shall be disclosed for transactional financial assets or liabilities, and the profit/loss on fair value
analysis of fair value of derivatives) changes is recognized accordingly. Because these contracts have locked in
exchange rates, no changes will occur when comparing the fair value on
signing dates with that on delivery dates.
Significant changes in the Company’s accounting
policies and specific accounting principles for
N/A
derivatives in the Reporting Period as compared
to the prior period
It is considered necessary for the Company to lock in foreign-currency
financing costs through financial instruments, because it could effectively
Special opinions expressed by independent
reduce the currency risk when securing foreign-currency financing. The
directors concerning the Company’s derivatives
Company has formulated the internal control mechanism for investment in
investment and risk control
derivative financial instruments, and the relevant risk control measures that
the Company has taken are considered effective.
Unit: RMB Ten Thousand Yuan
Type of derivative Opening Closing
Profit/loss in the Closing investment amount as a percentage of
financial contractual contractual
Reporting Period the Company’s closing net assets
instrument amount amount
Forward forex
224,712.77 137,247.18 2,424.21 47.30%
contract
*Note: Fair value changes of forward forex contracts signed in 2016 generated profit of RMB 000.
5. Use of raised funds
□ Applicable √ Not applicable
No such situation of the Company during the Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
□ Applicable √ Not applicable
No such situation of the Company during the Reporting Period.
2. List of the selling of the significant equities
□ Applicable √ Not applicable
VII. Analysis of the major controlling and stock-participating companies
√ Applicable □ Not applicable
List of the stock-participating companies which the influence over 10% of the net profits of the
Company by the major subsidiaries
Unit: RMB
Main products or Registered Operating
Name Type Total assets Net assets Operating profit Net profit
services capital revenues
Shenzhen Wankaida Software
Science and technology
Subsidiary RMB10000000 442,644,302.61 428,143,182.10 101,362,000.00
Technology Co., development and 91,390,355.03 88,902,815.12
Ltd. maintenance
Production and
sale of
Anhui Konka
refrigerators,
Tongchuang
Subsidiary washing RMB180000000 992,836,218.84 -6,503,969.08 1,853,307,611.
Household 10,612,650.38 38,922,393.22
machines and
Appliances Co., Ltd.
other household
appliances
Production and
Anhui Konka sale of
Subsidiary RMB140000000 1,119,921,701. 351,732,719.32 6,179,232,216.
Electronic Co., Ltd. multimedia 28,443,976.70 64,421,804.56
25
products
EnRay Tek Joint
Production and -80,323,704.6
Optoelectronics stock USD64196600 1,639,066,288. 250,847,074.84 207,977,609.60 -144,634,650.
sale of LED
(Shanghai) Co., Ltd. company 40
Production and
Shenzhen Konka sale of mobile
Telecommunications communication -234,709,762.4 1,035,301,736.
Subsidiary RMB120000000 474,385,953.88 -329,237.60 9,846,784.05
Technology Co., products & sale 1
Ltd. of multimedia
products
Production and
Kunshan Konka
Subsidiary sale of TFT-LCM RMB350000000 646,857,383.41 313,270,802.21 2,273,507,169. 1,261,608.07
Electronic Co., Ltd. -6,728,717.96
and multimedia
Konka Group Co., Ltd. Annual Report 2016
products
Production and
Dongguan Konka sale of
Subsidiary RMB266670000 785,778,165.02 637,195,715.82 34,980,993.18
Electronic Co., Ltd. multimedia 98,800,518.54 82,194,724.90
products
Export & import
Hong Kong Konka of
Subsidiary HKD500000 1,539,004,276. 112,080,521.02 3,822,857,341.
Co., Ltd. electromechanical 60,674,120.47 44,458,558.00
07
and electronics
Subsidiaries acquired or disposed during the Reporting Period:
√ Applicable □ Not applicable
Effect on the overall
Purpose for acquiring or disposing the subsidiary
Name of subsidiary production and business
in the Reporting Period
performance
Changshu Konka Electronic Co., Ltd. Liquidation No significant influence
on achievement during
the Reporting Period
KONKA AMERICA,INC. Liquidation
Shenzhen Konka Information Network Co., Ltd. Transfer 51% stock right
Subsidiary company Konka Household Appliances
Shenzhen Konka Precision Mold Manufacturing Co., Investment & Development Co., Ltd. signed
Ltd. and its subsidiary companies (Kunshan Jielunte agreement with Shenzhen Dingshengxin Mould
Mould Plastic Co., Ltd., Dongguan Xuda Mould Plastic Technology Consulting Co., Ltd. on 31 Dec. 2015.
Co., Ltd., Chuzhou Jielunte Mould Plastic Co., Ltd., From 1 Jan. 2016, Shenzhen Dingshengxin Mould
Anhui Jiasen Precision Technology Co., Ltd., Wuhan Technology Consulting Co., Ltd. would not entrust
Jielunte Mould Plastic Co., Ltd., Dongguan Konka Konka Household Appliances Investment &
Mould Plastic Co. , Ltd.) Development Co., Ltd. to manage 6.18% stock
right of precise moulds.
Zhongkang Supply Chain Management Co., Ltd. Establishment with contribution of capital
Yilifang (Hainan) Science and Technology Co., Ltd. Establishment with contribution of capital
Shenzhen KangQiaoYiLian Science and Technology Co.,
Establishment with contribution of capital
Ltd.
Chuzhou Konka Scientific and Technological Industry
Establishment with contribution of capital
Development Co., Ltd.
List of the major controlling stock-participating companies
There was no information of the major controlling stock-participating companies of the Company
needed to be disclosed during the Reporting Period.
VIII. List of the structured main bodies controlled by the Company
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
IX. Outlook on future development of the company
In 2017, macro-economic situation and industrial environment will be still not promising.
Macro-economic growth is still slow. The structural reform of supply will deepen continuously. The
permeation of internet into industry intensifies. The integration of different industries further
intensifies. Market competition further deteriorates. Meanwhile, new opportunities will constantly
emerge.
The thought of business development in 2017
1. Push forward business transformation
The company will unswervingly upgrade original simplex mode of hardware development to the
mode of hardware + software, terminal + user and investment control + finance. Original simplex
product thought will transfer to the thought of software, platform and users. In addition, this thought
will be pushed into every link of the whole business chain to rapidly transform the company to be a
platform-type enterprise.
2. Achieve scale expansion
In 2017, the company will use the strategy of scale economy and proactive marketing means to
push forward the stable, continuous and large-scale development of existing businesses of the
company.
3. Structural reform
In 2017, the company will continuously deepen the reform of each business. Businesses of the
company will be operated in total marketization as soon as possible. The vitality of businesses will
be anew irradiated; operation mechanism will be more reasonable; stimulation will be more
effective.
4. Pay attention to key nodes of businesses
Color TV sale in domestic market: input-output ratio will be emphasized in 2017; structure of
products will be continuously improved on the basis of guaranteeing scale of market; popularization
of intelligent TV products will be accelerated to guarantee the further enhancement of
comprehensive ability of making profit. In addition, the company will invest more in brand and
development in 2017 and lay firm foundation for long-term development of the company.
Color TV manufacture: Efficiency and quality management will be emphasized in 2017. Functions
of manufacture base will be reasonably positioned; manufacture upgrade project will be pushed
forward; the relationship between efficiency and quality will be strictly balanced.
Color TV sale in foreign market: In 2017, the company will actively expand sale channels, intensify
the ability of supply chain management and control and enhance the ability of creating value for
customers.
Internet business: In 2017, the company plans to rapidly increase operation revenue through
Konka Group Co., Ltd. Annual Report 2016
expanding online shopping mall, education, medical treatment, game and so on. At the same time,
the work of users operation will be well done.
Business of white goods: In 2017, scale will be actively expanded. While maintaining the rapid
development of online channels, the stable growth of offline channels will be guaranteed. The
company will build a long-term profit-making model with sustainable development, tamp the
foundation of the brand of healthy white goods and pursue the virtuous cycle of scale benefits on
the premise of sustainable development.
Business of mobile phone: In 2017, the high-efficiency integration of whole chain will be pushed
forward. The company will improve quality and expand operation scale on the premise of
comprehensively controlling operation cost, actively explore the opportunities in market segment
and seek the development opportunities in the market with differentiation, small scale, low
competition intensity and high gross profit.
5. Create real competitive products
“Competitive products, wonderful life” is the core brand concept of the company. Product is the
foundation of the company. The company will start from planning and create competitive products
with whole-chain spirit of craftsman in the links of product R & D, trial-production, technology,
quality control, logistics, sale, propaganda, installation service and after-sale service.
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this Reporting Period
□ Applicable √ Not applicable
No such situation of the Company during the Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common
shares, especially the cash dividend policies
√ Applicable □ Not applicable
The cash dividend policy of the Company is clearly stated in its Articles of Association, with
explicit dividend standards and ratios, as well as sound decision-making procedures and
mechanisms. Independent directors have faithfully performed their duties and performed their
function well by giving minority shareholders opportunities to express their opinion and demands
and effectively safeguarding their lawful interests. The Company has strictly executed the cash
dividend policy in the Articles of Association, and cash dividend distribution of the Company is in
line 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--Listed
Company Cash Dividends issued by CSRC, the Company had revised the profit distribution policy
stipulated by the Articles of Association, further clarifying the priority and proportion of cash
dividends in profit distribution. In 2016, the company will further normalize shareholders return
mechanism, push forward the establishment of scientific, sustainable and stable shareholders return
mechanism, enhance the transparency and operability of profit distribution policy and decision and
practically protect the legal rights and interests of investors. The company has formulated
Shareholders Return Planning for the Subsequent Three Years (2016-2018).
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and the resolution of the general
Yes
meeting
Specific and clear dividend standard and ratio Yes
Complete 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 legal
Yes
rights and interests were fully protected.
In adjustment or alteration of the cash dividend policy, the conditions and procedure were in
Yes
compliance with regulations and transparent.
Pre-plan or plan for profit distribution and turning capital reserve into share capital in recent 3 years
(including the Reporting Period)
1. The 2016 profits distribution preplan of the Company was as follows:
The 2016 retained earnings after audit of the Company that attributed to the owner of the parent was
of RMB-427,163,254.63 and according to the actual conditions and the long-term development
Konka Group Co., Ltd. Annual Report 2016
demands, the Company adviced not to distribute cash bonus with no bonus share and without
executing the turn from reserved funds to share capital in 2016.
2. 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 of
RMB-1,256,819,314.51 with the retained earnings of RMB-522,836,282.66 and according to the
actual conditions and the long-term development demands, the Company adviced not to distribute
cash bonus with no bonus share and without executing the turn from reserved funds to share capital
in 2015.
3. The 2015 semi-annual profits distribution preplan of the Company was as follows:
Based on the total share capital of 1,203,972,704 shares at the month-end of Jun. 2015, the
Company executed the turning capital reserve into share capital and to increase 10 shares by
transferring for every 10 shares to the whole shareholders with the total amount of 1,203,972,704
shares and after which the total share capital of the Company increased to 2,407,945,408.
4. 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, the
Company was proposed to distribute a cash dividend of RMB0.1 (tax included) to every 10 shares.
The distributed profits would aggregate RMB 12,039,727.04 and the retained profit would be
carried forward into the next year for distribution.
Cash dividend distribution of the common shares of the Company of the recent 3 years (including
the Reporting Period)
Unit: RMB
The ratio
accounting in
Net profit belonging to net profit which
Amount of cash shareholders of the belongs to Amount of the Ratio of the cash
Dividend year dividend listed company in shareholders of cash dividend by dividend by other
(including tax) consolidated statement the listed other methods methods
of dividend year company in
consolidated
statement
2016 0.00 95,673,028.03 0.00% 0.00 0.00%
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%
The Company (including its subsidiaries) made profit in the Reporting Period and the profits
distribution 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 common
shares:
□ Applicable √ Not applicable
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
Reporting Period
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
The Company planed not to distribute the cash dividend with no bonus share and without executing
the turn from reserved funds to share capital.
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the
purchasers, the Directors, the Supervisors and the Senior Executives or the other related
parties during the Reporting Period and those hadn’t been completed execution up to the
period-end
√Applicable □ Not applicable
Perio
Com
Date of d of
Commitme Commitment mitme Execu
Contents of commitment commitmen com
nt maker nt tion
t mitm
type
ent
The irregularity actions such as hadn’t disclose the idle
land, bid up the land price with property hoarding as
Other well as bid up the housing prices by the subsidiaries
Konka Group com which engaged in the real estate business that 12 Apr. Fulfill
Dec.
Commitme Co., Ltd. mitm subordinated to Konka Group Co., Ltd. caused the 2016 ed
nts at the ent losses for the listed companies and the investors, those
time of subsidiaries should burden the compensation
initial responsibility.
public The irregularity actions such as hadn’t disclose the idle
issuance or land, bid up the land price with property hoarding as
re-financin well as bid up the housing prices by the subsidiaries
g OCT Other
which engaged in the real estate business that 12 Apr. Fulfill
Holdings comm Dec.
subordinated to Konka Group Co., Ltd. caused the 2016 ed
Company itment
losses for the listed companies and the investors, those
subsidiaries should burden the compensation
responsibility.
Executed timely or not? Yes
Detailed reason for failing to execute and the next plan (if any) Not applicable
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the
Company made note and explain to the assets or project arrived at original profit forecast
□ Applicable √ Not applicable
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V. Explanation by the Board of Directors, the Supervisory Committee and the Independent
Directors (if any) about the “non-standard audit report” issued by the CPAs firm for the
Reporting Period
□ Applicable √ Not applicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VII. Explain retrospective restatement due to correction of significant accounting errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
√Applicable □ Not applicable
(I) Subsidiary companies treatment
1. Changshu Konka Electronic Co., Ltd. was canceled on 31 May 2016. Therefore, it will not be in
merger from 31 May 2016.
2. KONKA AMERICA, INC. was canceled on 3 Jan. 2016. Therefore, it will not be in merger from
January 3, 2016.
3. On 1 Nov. 2016, 51% stock right of Shenzhen Konka Information Network Co., Ltd. was
transferred. Therefore, it will not be in merger from November 1, 2016.
(II) Change of merger in other reasons
1. Subsidiary company Konka Household Appliances Investment & Development Co., Ltd. signed
agreement with Shenzhen Dingshengxin Mould Technology Consulting Co., Ltd. on 31 Dec. 2015.
From 1 Jan. 2016, Shenzhen Dingshengxin Mould Technology Consulting Co., Ltd. would not
entrust Konka Household Appliances Investment & Development Co., Ltd. to manage 6.18% stock
right of precise moulds. From 1 Jan. 2016, Shenzhen Konka Precision Mold Manufacturing Co.,
Ltd. and its subsidiary companies (Kunshan Jielunte Mould Plastic Co., Ltd., Dongguan Xuda
Mould Plastic Co., Ltd., Chuzhou Jielunte Mould Plastic Co., Ltd., Anhui Jiasen Precision
Technology Co., Ltd., Wuhan Jielunte Mould Plastic Co., Ltd., Dongguan Konka Mould Plastic Co.,
Ltd.) will not be in merger.
2. The company and natural persons Wu Guoren and Xiao Yongsong founded Zhongkang Supply
Chain Management Co., Ltd. on 15 Jul. 2016 with registered capital USD 1500 thousand. Konka
Group contributed cash USD765 thousand dollars holding 51% stock right; Wu Guoren contributed
cash USD375 thousand dollars holding 25% stock right; Xiao Yongsong contributed cash USD 360
thousand dollars holding 24% stock right. The company owns control right and brings it into merger
from 15 Jul. 2016.
3. The company registered to set up Yilifang (Hainan) Science and Technology Co., Ltd. in Hainan
on 30 Sept. 2016 with registered capital RMB 20 million. The company holds all shares. It is
brought into merger from September 30, 2016.
4. Subsidiary company Shenzhen Konka E-display Co., Ltd. invested to set up wholly-owned
subsidiary Shenzhen KangQiaoYiLian Science and Technology Co., Ltd. on 1 Apr. 2016 with
registered capital RMB 5 million. By the date of balance sheet, RMB 5,000.00 had been invested.
The company had control right and brought it into merger from April 1, 2016.
5. The company registered to set up Chuzhou Konka Scientific and Technological Industry
Development Co., Ltd. in Anhui on 31 Oct. 2016 with registered capital RMB 40 million. Before
the date of report submission, the company had not paid. The company has control right and
Konka Group Co., Ltd. Annual Report 2016
brought it into merger from 31 Oct. 2016.
IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
Name of domestic CPAs firm Ruihua Certified Public Accountants
Remuneration for domestic CPAs firm for the
Reporting Period (RMB Ten Thousand Yuan)
Consecutive years of the audit services provided
4 years
by domestic CPAs firm
Name of domestic CPAs firm Tang Meiqi, Shen Lingzhi,
Name of overseas CPAs firm (if any) Not applicable
Remuneration for overseas domestic CPAs firm
for the Reporting Period (RMB Ten Thousand
Yuan) (if any)
Consecutive years of the audit services provided
Not applicable
by overseas CPAs firm (if any)
Name of overseas CPAs firm (if any) Not applicable
Reengage the CPAs firm at current period or not?
□ Yes √ No
Reengage the CPAs firm during auditing period or not?
√ Applicable □ Not applicable
During the Reporting Period, as approved by the Shareholders’ General Meeting, the Company
continued to engage Ruihua Certified Public Accountants as the audit firm on internal control of the
Company for 2016, with the auditing fee for the internal control in 2016 as RMB0.4 million(Not
contain tax).
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Not applicable
XI. Bankruptcy and reorganization
□Applicable √ Not applicable
There was no such situation of the Company during the Reporting Period.
XII. Significant lawsuit or arbitration
√ Applicable □ Not applicable
Situation of
Lawsuit Whether Process of Trial results
execution of Disclo Disclo
Basic situation of lawsuit amount form into lawsuit and influences
judgment of sure sure
(arbitration) (RMB Ten estimated (arbitratio of lawsuit
lawsuit date index
Thousand) liabilities n) (arbitration)
(arbitration)
As for the details, please refer to the Notes 2. Description of the Contingencies of the Commitments and the Contingencies of
Chapter XII of the Notes to the Financial Report
XIII. Punishment and rectification
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV. Honesty situations of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
XV. List of the execution of the stock incentive plan, ESOP, or other Staff incentives
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Not applicable
Appro
Pricing Transa ved Settle
Wheth
Type of Content princip ction Proport transac ment
er
the of the le of amount ion in tion method
Transa exceed Similar Disclos Disclo
Related Relatio related- related- the (RMB same quota of the
ction the market ure sure
party nship party party related- Ten kind of (RMB related-
price approv price date index
transac transact party Thousa transac Ten party
ed
tion ion transac nd tions Thousa transac
quota
tion Yuan) nd tion
Yuan)
Under
Anhui Purchas
the Purcha
Negoti Not
Huali same se of e of Market 8 Apr.
ated 3,406 0.32% 5,000 No Cash applica
Packing actual commo materia price
price ble
Co., Ltd. control dities ls
ler
Under
Shanghai Purchas
the Purcha
Negoti Not
Huali same se of e of Market 8 Apr.
ated 1,431 0.13% 2,000 No Cash applica
Packing actual commo materia price
price ble
Co., Ltd. control dities ls
ler http://
Under www.c
Huali
Purchas ninfo.c
the Purcha
Packing Negoti Not
same se of e of Market 8 Apr. om.cn/
(Huizhou ated 1,031 0.10% 2,000 No Cash applica
actual commo materia price 2016 finalpa
) Co., price ble
control dities ls ge/201
Ltd.
ler
6-04-0
OCT 8/1202
Under
Co., Ltd. Sales of
the Sales
Negoti Not
and its same of goods Market 8 Apr. 9.PDF
ated 677 0.05% 1,000 No Cash applica
affiliated actual goods Sales of price
price ble
companie control LCD
s ler
Provid
Provide
Shenzhen Under e
propert
the propert
OCT Negoti Not
same y y Market 8 Apr.
Property ated 994 0.09% 1,000 No Cash applica
actual manag manage price
Service price ble
control ement ment
Co., Ltd
ler service services
s
Konka Group Co., Ltd. Annual Report 2016
Shenzhen Under
Provid
Assist
the
OCT e Negoti Not
same in Market
Real service ated 500 0.05% 1,000 No Cash applica
actual develop price
Estate s price ble
control ment
Co., Ltd
ler
Total -- -- 8,039 -- 12,000 -- -- -- -- --
Details of large amount of sales returns Not applicable
The Company has published the Forecasting Public Notice on Routine Related Transaction for Y2016
As for the prediction on the total amount of
(public notice No. 2016-20) on Securities Times, Shanghai Securities News, China Securities Journal and
routine related-party transactions to be
Hong Kong Ta Kung Pao as well as the Internet website designated by CSRC http://www.cninfo.com.cn on
occurred in the Reporting Period by
8 Apr. 2016. In the Reporting Period, the basis for pricing, transaction price, transaction amount and
relevant types, the actual performance in
settlement methods of raw materials purchased by the Company were basically in accordance with the
the Reporting Period (if any)
forecast. The total amount was RMB 0.08039 million.
Reason for significant difference between
Not applicable
the transaction price and the market price
Note: Shanghai Huali packing Limited company for strategic transformation, the second half of
2016 will be stripped of its packaging materials business to Suzhou Huali Environmental Protection
Technology Co Ltd. In 2017, the company will no longer purchase color TV packaging materials
to Shanghai Hua Sheng packaging Co., ltd.。
2. Related-party transactions regarding purchase and sales of assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related-party transactions common external investment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
√ Applicable □ Not applicable
Whether there is non-operating credits and liabilities with related parties
√ Applicable □ Not applicable
Credits of parties related to account receivable
Amount
Whether Amount
newly Closing
there is Opening recovered Current
added in balance
Relation non-opera balance in current interest
Related Formatio current Interest
with the ting (Ten period (Ten
party n reason period rate (Ten
Company capital thousand (Ten thousand
(Ten thousand
occupatio Yuan) thousand Yuan)
thousand Yuan)
n Yuan)
Yuan)
N/A N/A N/A No 0 0 0 0% 0
Impact of related Not applicable
credits on the
Konka Group Co., Ltd. Annual Report 2016
company's operation
result and financial
condition
Liabilities of parties related to account payable
Amount
Amount
newly
Opening returned in Current
added in
Relation balance current interest
Related Formation current Interest Closing
with the (Ten period (Ten
party reason period rate balance(Ten
Company thousand (Ten thousand
(Ten thousand
Yuan) thousand Yuan)
thousand Yuan)
Yuan)
Yuan)
The
Controllin
OCT company
g
Enterprises applies
shareholde 0 160,000 0 3.10% 3596 160,000
Co. entrusted
r
loan to it
The
Controllin
OCT company
g
Enterprises applies
shareholde 0 90,000 0 3.18% 1542 90,000
Co. entrusted
r
loan to it
The
Controllin company
OCT
g applies
Enterprises
shareholde entrusted 0 90,000 0 3.06% 581 90,000
Co.
r loan from
it
The
Controllin company
OCT
g applies
Enterprises
shareholde entrusted 0 3,000 0 4.75% 7 3,000
Co.
r loan from
it
Impact of related liabilities
on the company's operation The company applies entrusted loan from OCT Enterprises Co., which meets the needs of the
result and financial company's existing business development and reduces the financing cost.
condition
5. Other significant related-party transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contract
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
(3) Lease
√ Applicable □ Not applicable
Lease description
No such cases in the Reporting Period.
During the Reporting Period, the rent paid by Konka R & D Building was approximately RMB
69,734,212.45.
The profits and losses brought to the company to achieve the company's total profit in the Reporting
Period more than 10% of the project
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) List of guarantees
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosure Actual Actual Period Guarantee
Amount
Guaranteed date of occurrence date guarante Type of of Execute for a
for
party relevant (date of e guarantee guaran d or not related
guarantee
announcement agreement) amount tee party or not
N/A N/A 0 N/A 0 N/A 0 NO N/A
Total external guarantee line approved during Total actual occurred amount of external
0
the Reporting Period (A1) guarantee during the Reporting Period (A2)
Total external guarantee line that has been
Total actual external guarantee balance at
approved at the end of the Reporting Period 0
the end of the Reporting Period (A4)
(A3)
Guarantees provided by the Company for its subsidiaries
Guaran
Amount Perio Exec tee for
Disclosure date of Actual
Guarantee for Actual occurrence date Type of d of uted a
relevant guarantee
d party guarant (date of agreement) guarantee guar or related
announcement amount
ee antee not party
or not
Anhui
General 1
Tongchua 21 Nov. 2014 30,000 1 Jul. 2016 6,000 No No
guaranty year
ng
Konka Group Co., Ltd. Annual Report 2016
Anhui
General 1
Tongchua 5 Jun. 2016 2,000 No No
guaranty year
ng
Communi 60,000
cation General 1
21 Nov. 2014 21 Sept. 2016 50,000 No No
technolog guaranty year
y
Anhui General 1
29 Apr. 2016 80,000 26 Oct. 2016 10,000
Konka guaranty year
General 1
Yishijie 21 Nov. 2014 4,800 1 Jul. 2016 2,000 No No
guaranty year
Hong
General 1
Kong Oct. 24, 2016 3,389 No No
guaranty year
Konka
8 Apr. 2016 307,500
Hong
General
Kong 8 Nov. 2016 23,674 mont No No
guaranty
Konka hs
Total actual occurred amount of guarantee for
Total guarantee line approved for the subsidiaries
427,500 the subsidiaries during the Reporting Period 97,063
during the Reporting Period (B1)
(B2)
Total guarantee line that has been approved for the Total actual guarantee balance for the
subsidiaries at the end of the Reporting Period 597,050 subsidiaries at the end of the Reporting Period 97,063
(B3) (B4)
Guarantees provided by the subsidiaries for their subsidiaries
Ex Guarante
Amoun Actual Perio
Disclosure date of Actual occurrence ecu e for a
Guaranteed t for guarante Type of d of
relevant date (date of ted related
party guarant e guarantee guar
announcement agreement) or party or
ee amount antee
not not
N/
N/A N/A 0 N/A 0 N/A 0 N/A
A
Total actual occurred amount of guarantee for
Total guarantee line approved for the subsidiaries
0 the subsidiaries during the Reporting Period
during the Reporting Period (C1)
(C2)
Total guarantee line that has been approved for the Total actual guarantee balance for the
0
subsidiaries at the end of the Reporting Period (C3) subsidiaries at the end of the Reporting Period
Konka Group Co., Ltd. Annual Report 2016
(C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during the Reporting Total actual occurred amount of guarantee
427,500 97,063
Period (A1+B1+C1) during the Reporting Period (A2+B2+C2)
Total guarantee line that has been approved at the Total actual guarantee balance at the end of
597,050 97,063
end of the Reporting Period (A3+B3+C3) the Reporting Period (A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
33.45%
assets of the Company
Of which:
Amount of debt guarantee provided for shareholders, actual controller and the related-party
(D)
Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not
97,063
less than 70% directly or indirectly (E)
Total guarantee amount exceeded 50% of the net assets (F)
Total amount of the above three guarantees (D+E+F) 97,063
Explanation on the occurred warranty liability or possible bearing joint responsibility of N/A
liquidation due to immature guarantee (if any)
Explanation on provision of guarantees for external parties in violation of the prescribed N/A
procedure (if any)
Explanation on guarantee that adopts complex method
N/A
(2) Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
The 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 □ Not applicable
Unit: RMB Ten Thousand Yuan
Whet Act Amo Actual Actu
her ual unt gains al
was Trust Remune reco of and reco
Estimat
the manag ration vere prov losses vere
Name of the Producti Expiration ed
relat ement Start date recognit d ision amoun d
trustee on type date earning
ed amoun ion amo for t of the situa
s
trans t method unt impa Report tion
actio of irme ing of
n the nt Period the
Konka Group Co., Ltd. Annual Report 2016
Rep loss gains
orti (if and
ng any) losse
Peri s of
od the
Repo
rting
Perio
d
Shenzhen Principa
branch of Principa l and
China No l-guaran 3,700 2016-6-21 2017-2-13 interest 0 N/A 72.07 58.98
Construction teed guarante
Bank ed
Shenzhen Principa
branch of Principa l and
China No l-guaran 2,000 2016-6-21 2017-2-15 interest 0 N/A 39.29 31.88
Construction teed guarante
Bank ed
Shenzhen Principa
branch of Principa l and
China No l-guaran 1,300 2016-9-1 2017-2-13 interest 0 N/A 17.63 13.04
Construction teed guarante
Bank ed
Shenzhen Principa Unre
branch of Principa l and cove
China No l-guaran 700 2016-9-1 2017-1-18 interest 0 N/A 8.00 7.02 red
Construction teed guarante
Bank ed
Principa
Principa l and
Ping An
No l-guaran 2,000 2016-8-3 2017-2-15 interest 0 N/A 25.76 19.03
Bank
teed guarante
ed
Principa
Shenzhen Principa l and
branch of No l-guaran 5,000 2016-4-20 2017-2-16 interest 0 N/A 150.84 140.82
ICBC teed guarante
ed
Shenzhen Principa Principa
2016-12-3
branch of No l-guaran 15,000 2017-1-6 l and 0 N/A 13.23 3.78
ICBC teed interest
Konka Group Co., Ltd. Annual Report 2016
guarante
ed
Total 29,700 -- -- -- 0 326.82 274.55
Entrusted financial resources source Private capital
Overdue amount of principal and income recoverable
Involving the situation (if applicable) N/A
Disclosure date of the approved announcement of the Board of Directors of the trust
29 Aug. 2016
management (if any)
Disclosure date of the approved announcement of the Board of Shareholders of the trust
N/A
management (if any)
Whether there is a contingency plan in the future Yes
(2) Entrustment loans
□ Applicable √ Not applicable
4 Other significant contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII. Social responsibilities
√ Applicable □ Not applicable
(I)Fulfill the precise social responsibility of poverty alleviation
（1）Summary of annual targeted poverty alleviation
We and China Youth Development Foundation (CYDF) have held the large public benefit activity
“Heart Journey” since 2013. Four sessions of activities have been held until now. In 2013, we
have helped thousands of migrant workers to go home; in 2014, we have planted tens of thousands
of trees nationwide and improved the living conditions of 5,000 needy families by planting the
economic and ecological trees; in 2015, we have donated nearly 100 music classrooms to the
remote regions of China by carrying out “Happy Music Classroom” Project with CYDF; in 2016,
we have invested RMB 0.5 million to sponsor the professional training on 5,000 music teachers in
the remote regions of China and promote the teacher team construction in poverty-stricken areas.
（2）Annual targeted poverty alleviation of listed company
Indicator Unit Qty./ Progress
I. Overall conditions —— ——
RMB Ten
Wherein: 1. Capital
Thousand Yuan
2. Equivalent payment of goods RMB Ten
and materials Thousand Yuan
3. Number of shake-off-poverty Person
Konka Group Co., Ltd. Annual Report 2016
people in archiving
II. Project-based investment —— ——
4. Shaking off poverty on education —— ——
Wherein: 4.1. Financial aid to poverty RMB Ten
students Thousand Yuan
4.2. Number of poverty students Person
4.3. Investment for improving the RMB Ten
education sources of poverty-stricken area Thousand Yuan
（3）Follow-up targeted poverty alleviation plan
We will continue to hold the large public benefit activity “Heart Journey” with CYDF, and will
improve the education and life of the left-behind children in rural areas with RMB 0.5 million in
2017.
（II）Other social responsibilities
The Company insists the principle of health, stability and sustainable development to benefit
shareholders and employees and satisfy customers. In pursuit of economic profits and protection of
shareholders’ profits, the Company is active in protecting legal rights of debtors and employees,
treating suppliers, customers and consumers in good faith, and participating in environmental
protection and community establishment for harmonious development of the Company and society.
1. guarantee the rights and interests of shareholders and creditors
(1)The Company protects rights of shareholders
The Company insists protection of rights for all shareholders, especially equal
status and legal rights for medium and small shareholders, and make insurance of
rights to be informed, participation and vote.
The Company would perform all obligations of information disclosure to ensure timely,
accurate and complete information and strictly execute confidential system of
registrar and insider information to guarantee justice.
The Company pays attention to repay to shareholders, and insists mutual development
with investors. In the previous three years, the Company shares dividends with all
shareholders. The Company strict executes dividend policies regulated in Articles
of Association. All cash dividends comply with regulations in Articles of Association
and requirements in shareholders’ conference.
(2)The Company protects rights of creditors
In full consideration of legal rights of creditors, the Company complies with strict
business rules of credit cooperation to guarantee legal rights of creditors. No
damages upon rights of creditors happened.
2.The Company performs responsibilities to suppliers and customers
(1)It is devoted to improve customer service quality.
Konka Group Co., Ltd. Annual Report 2016
The Company is insisting philosophy of customer orientation to strengthen customer service
management, service consciousness for employees, service levels and to protect rights for
customers. Through customer service hot-line, field visit and follow-up service, the Company has
set a good corporate image for customers.
(2) Be honest to suppliers
Following the principle of integrity and mutually beneficial cooperation, the Company keeps good
cooperative relations with suppliers at each level. The corporate principle is open, fair and impartial
to standardize procurement, protect suppliers’ legal rights and lay solid foundation for further
cooperation.
3.Be enthusiastic to social and public welfare undertakings
Based on the principle of appreciating and repaying the society, the Company has participated in all
kinds of activities for public welfare, cooperated with society, undertaken social responsibilities
actively and promoted harmonious development between enterprise and society.
4.Be responsible for employees
The Company insists the principle of people orientation to improve working environment, promote
occupational skills, provide opportunity and platform for development and growth and encourage
self upgradation and realization for employees. Mutual improvement for employees and enterprise
could be achieved.
(1)Be honest and law-abiding to protect legal rights for employees
The Company would strictly comply with laws and regulations in Labor Law and Labor Contract
Law 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 and
housing fund for employees. Regular physical examination would be organized for each year. Any
problems found would require re-examination and consultation from a doctor.
The Company would improve living quality; enhance cohesive force and sense of belongings
through a series of safeguard measures.
(2)To protect occupational health for employees
The Company would establish and perfect training, safety assessment by security system to
guarantee the safety and occupational health for employees. On the other hand, by promotion of the
importance of safety, safety awareness would be rooted in the heart to make all employees abide by
safety standards and fully play subjective initiative in protecting self-occupational safety and
production safety.
(3)To promote occupational skills by diversified professional training
The Company has always paid great attention on diversified training for employees. On the one
hand, the Company would be meticulous in training of regular business and occupational skills and
Konka Group Co., Ltd. Annual Report 2016
carry 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
instructor, theme training and lectures to provide colorful training activities. Besides the work,
professional and comprehensive quality would be fully promoted.
5.Be responsible for environment
The Company concerns about environmental changes and close relationships with environment by
creating low carbon economy in technical innovation, from green manufacturing, green products to
green industry circular economy. The Company would provide efforts in protecting global
ecological environment. In June, 2012, subsidized products catalogue had been released jointly by
National Development and Reform Commission, Ministry of Industry and Information and Ministry
of Finance.
In the new year, the Company would undertake all social responsibilities by improving strategic
management, sustainable development and enterprise economic efficiency. It would retribute all
shareholders and would protect legal rights for creditors and employees. To be honest to suppliers
and customers, the Company would serve local economic development and participate in social
public welfare activities and environment protection. It would undertake all responsibilities in many
fields and make attributions to social, economic, and environmental sustainable development for a
socialism harmonious society.
Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by
the environmental protection authorities of the country?
□ Yes √ No □ Not applicable
XIX. Other significant events
√ Applicable □ Not applicable
1. Progress of the urban renewal project in the plant area of the Company’s headquarters
According to the Proposal on the Cooperation Development Plan of the Urban Renewal Projects of
the 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 OCT
Enterprises Co. set up the Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. by joint
capital, and developed the urban renewal project in the plan area of the Company’s original
headquarters by regarding Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. as the
main body and recently the bidding work of the project planning consulting unit had completed
with the work such as the old factory land leveling was in promotion.
2. Progress of the Company’s Kunshan Zhouzhuang Project
After the approval by the 42nd meeting of the 6th Board of Directors, the Company obtained the land
use rights of the land in the south of Quanwang Road, Zhouzhuang County, Kunshan. The project
covers an area of 366,575.8 m2 for tourism facilities and commercial housing.
Konka Group Co., Ltd. Annual Report 2016
The Company is planned to develop the land by stages and determine the annual development plans
according to market condition. Recently the residential projects of Phase I and Phase II had both
completed and the majority of the residential sales had finished with the Phase III was still in
progress.
3. Index for significant information disclosed
Announc
ement Date Title Page on newspaper Link on http://www.cninfo.com.cn
No.
Announcement on the 2015 Earnings Securities Times B32, http://www.cninfo.com.cn/finalpage/2016-
2016-01 2016-1-23
Forecasts Ta Kung Pao B4 01-23/1201934829.PDF
Announcement on the Resolution of the
Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-02 2016-1-27 11th Session of the 8th Board of
Ta Kung Pao B7 01-27/1201943171.PDF
Directors
Announcement on the Resolution of the
Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-03 2016-1-27 7th Session of the 8th Board of
Ta Kung Pao B7 01-27/1201943172.PDF
Supervisors
Indicative Announcement on the Listing Securities Times B48, http://www.cninfo.com.cn/finalpage/2016-
2016-04 2016-2-27
and Circulating of the Restricted Shares Ta Kung Pao A21 02-27/1202003527.PDF
Announcement on the Resolution of the
Securities Times B29, http://www.cninfo.com.cn/finalpage/2016-
2016-06 2016-3-3 12th Session of the 8th Board of
Ta Kung Pao B13 03-03/1202017481.PDF
Directors
Announcement on the Related Securities Times http://www.cninfo.com.cn/finalpage/2016-
2016-07 2016-3-3
Transactions B29,Ta Kung Pao B13 03-03/1202017480.PDF
Notice on Convening the 2016 1st Securities Times B29, http://www.cninfo.com.cn/finalpage/2016-
2016-08 2016-3-3
Extraordinary General Meeting Ta Kung Pao B13 03-03/1202017482.PDF
Indicative Announcement on Convening
Securities Times B44, http://www.cninfo.com.cn/finalpage/2016-
2016-09 2016-3-16 the 2016 1st Extraordinary General
Ta Kung Pao B10 03-16/1202045996.PDF
Meeting
Announcement on the Delisting owning Securities Times B45, http://www.cninfo.com.cn/finalpage/2016-
2016-10 2016-3-17
to Significant Events Ta Kung Pao B4 03-17/1202051293.PDF
Indicative Announcement on the
Securities Times B24, http://www.cninfo.com.cn/finalpage/2016-
2016-11 2016-3-17 Temporarily Ceasing of the Listing and
Ta Kung PaoB4 03-17/1202051277.PDF
Transferring of the Yishijie Company
Announcement on the Resolution of the Securities Times http://www.cninfo.com.cn/finalpage/2016-
2016-12 2016-3-22
2016 1 Extraordinary General Meeting B64,Ta Kung Pao B15 03-22/1202063800.PDF
st
Announcement on the Progress of the Securities Times B25, http://www.cninfo.com.cn/finalpage/2016-
2016-13 2016-3-24
Significant Events Ta Kung Pao B5 03-24/1202068976.PDF
2016-14 2016-3-26 Announcement on Receiving the Tax Securities Times B73, http://www.cninfo.com.cn/finalpage/2016-
Konka Group Co., Ltd. Annual Report 2016
Reimbursement Events Ta Kung Pao A21 03-26/1202081746.PDF
Announcement on the Progress of the Securities Times B73, http://www.cninfo.com.cn/finalpage/2016-
2016-15 2016-3-31
Significant Events Ta Kung Pao A21 03-31/1202110076.PDF
Announcement on the 2015 Annual Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-16 2016-4-8
Report Ta Kung Pao A28 04-08/1202150039.PDF
Announcement on the Abstract of the Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-17 2016-4-8
2015 Annual Report Ta Kung Pao A28 04-08/1202150021.PDF
Announcement on the Resolution of the
Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-18 2016-4-8 13th Session of the 8th Board of
Ta Kung Pao A28 04-08/1202150019.PDF
Directors
Announcement on the Resolution of the
Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-19 2016-4-8 8th Session of the 8th Board of
Ta Kung Pao A28 04-08/1202150026.PDF
Supervisors
Announcement on the Expectation of Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-20 2016-4-8
the 2016 Routine Related Transaction Ta Kung Pao A28 04-08/1202150009.PDF
Announcement on the External Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-21 2016-4-8
Guarantee Ta Kung Pao A28 04-08/1202150010.PDF
Notice on Convening the 2015 Annual Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-22 2016-4-8
General Meeting Ta Kung Pao A28 04-08/1202150020.PDF
Announcement on the Progress of the Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
2016-23 2016-4-8
Significant Events Ta Kung Pao A29 04-08/1202150011.PDF
Announcement on the Notes to the
Number of the Subscription Entities
Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-24 2016-4-13 Involved after the Penetration of the
Ta Kung Pao B8 04-13/1202169859.PDF
Subscription Target of the Private
Offering A Shares
Announcement on the Risks Reminders
of the Diluted Prompt Return of the Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-25 2016-4-13
Private Offering Shares and the Filling Ta Kung Pao B8 04-13/1202169860.PDF
Up Measures
Announcement on the Related
Securities Times http://www.cninfo.com.cn/finalpage/2016-
2016-26 2016-4-13 Transactions Involved with the Private
B11,Ta Kung Pao B8 04-13/1202169862.PDF
Offering A Shares of the Company
Announcement on the Company signed
the Share Subscription Contract with Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-27 2016-4-13
Sub Conditione with the Subscription Ta Kung Pao B8 04-13/1202169863.PDF
Target of Konka Group Co., Ltd.
Notes to the Specific Report on the Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-28 2016-4-13
Company Needn’t to Compile the Ta Kung Pao B9 04-13/1202169864.PDF
Konka Group Co., Ltd. Annual Report 2016
Previous Raise Funds Usage Situation
Announcement on the Resolution of the
Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-29 2016-4-13 14th Session of the 8th Board of
Ta Kung Pao B9 04-13/1202169865.PDF
Directors
Announcement on the Resolution of the
Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-30 2016-4-13 9th Session of the 8th Board of
Ta Kung Pao B9 04-13/1202169866.PDF
Supervisors
Indicative Announcement on the Securities Times B11, http://www.cninfo.com.cn/finalpage/2016-
2016-31 2016-4-13
Resumption of the Significant Events Ta Kung Pao B9 04-13/1202169867.PDF
Indicative Announcement on Convening Securities Times B44, http://www.cninfo.com.cn/finalpage/2016-
2016-32 2016-4-23
the 2015 Annual General Meeting Ta Kung Pao B17 04-23/1202225330.PDF
Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-33 2016-4-29 2016 First Quarter Report
Ta Kung Pao B9 04-29/1202263671.PDF
http://www.cninfo.com.cn/finalpage/2016-
2016-34 2016-4-29 Text of the 2016 First Quarter Report
04-29/1202263674.PDF
Announcement on the Resolution of the Securities Times B212, http://www.cninfo.com.cn/finalpage/2016-
2016-35 2016-4-30
2015 Annual General Meeting Ta Kung Pao A10 04-30/1202282189.PDF
Announcement on the Resolution of the
Securities Times B36, http://www.cninfo.com.cn/finalpage/2016-
2016-36 2016-5-4 16th Session of the 8th Board of
Ta Kung Pao B1 05-04/1202287814.PDF
Directors
Announcement on the Resign of the Securities Times B64, http://www.cninfo.com.cn/finalpage/2016-
2016-37 2016-5-11
Vice President of the Company Ta Kung Pao B2 05-11/1202314647.PDF
Announcement on Receiving the Reply Securities Times B56, http://www.cninfo.com.cn/finalpage/2016-
2016-38 2016-5-12
from SASAC of the Private Offering Ta Kung Pao A16 05-12/1202316512.PDF
Indicative Announcement on Convening
Securities Times B56, http://www.cninfo.com.cn/finalpage/2016-
2016-39 2016-5-12 the 2016 2nd Extraordinary General
Ta Kung Pao A16 05-12/1202316511.PDF
Meeting
Announcement on the Resolution of the Securities Times B76, http://www.cninfo.com.cn/finalpage/2016-
2016-40 2016-5-20
2016 2nd Extraordinary General Meeting Ta Kung Pao B9 05-20/1202330961.PDF
Announcement on the Receiving of the
Securities Times B45, http://www.cninfo.com.cn/finalpage/2016-
2016-41 2016-6-22 Acceptance of the Private Offering
Ta Kung Pao B3 06-22/1202380173.PDF
Application from CSRC
Announcement on Receiving the Tax Securities Times B24, http://www.cninfo.com.cn/finalpage/2016-
2016-42 2016-6-25
Reimbursement Ta Kung Pao B1 06-25/1202402692.PDF
Announcement on the 2015 Earnings Securities Times B32, http://www.cninfo.com.cn/finalpage/2016-
2016-01 2016-1-23
Forecasts Ta Kung Pao B4 01-23/1201934829.PDF
2016-43 2016-7-8 Announcement on the Resolution of the Securities Times B40, http://www.cninfo.com.cn/finalpage/2016-
Konka Group Co., Ltd. Annual Report 2016
19th Session of the 8th Board of Ta Kung Pao B7 07-08/1202457827.PDF
Directors
Announcement on the semi-annual 2016 Securities Times B33, http://www.cninfo.com.cn/finalpage/2016-
2016-44 2016-7-14
earnings forecasts Ta Kung Pao A18 07-14/1202469363.PDF
Announcement on Receiving the Notice
of China Securities Regulatory
Securities Times B61, http://www.cninfo.com.cn/finalpage/2016-
2016-45 2016-7-22 Commission on the Review and
Ta Kung Pao B11 07-22/1202496345.PDF
Feedback Comment of Administrative
Licensing Project
Announcement on Delayed Reply for
Securities Times B41, http://www.cninfo.com.cn/finalpage/2016-
2016-46 2016-8-12 Feedback on Application Documents of
Ta Kung Pao B1 08-12/1202557744.PDF
Privately Issuing A-shares in 2016
Announcement on the 2016 Semi http://www.cninfo.com.cn/finalpage/2016-
2016-47 2016-8-30
Annual Report 08-30/1202642330.PDF
Announcement on the Abstract of the Securities Times B10, http://www.cninfo.com.cn/finalpage/2016-
2016-48 2016-8-30
2016 Semi Annual Report Ta Kung Pao B92 08-30/1202642323.PDF
Announcement on Applying to Suspend
the Review for the Company's Securities Times B28, http://www.cninfo.com.cn/finalpage/2016-
2016-49 2016-9-10
Application Documents of Privately Ta Kung Pao B1 09-10/1202689532.PDF
Issuing A-shares in 2016
Announcement on Completing the
Securities Times B36, http://www.cninfo.com.cn/finalpage/2016-
2016-50 2016-10-13 Renewal Registration of \"Integrating
Ta Kung Pao B3 10-13/1202753155.PDF
Three Licenses into One\"
Announcement on Performance
Securities Times B41, http://www.cninfo.com.cn/finalpage/2016-
2016-51 2016-10-15 Forecasts of the First Three Quarters in
Ta Kung Pao B2 10-15/1202759150.PDF
Announcement on the Resign of the Securities Times B256, http://www.cninfo.com.cn/finalpage/2016-
2016-10-25
Vice President of the Company Ta Kung Pao B4 10-25/1202780130.PDF
Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-52 2016-10-29 2016 Third Quarter Report
Ta Kung Pao B1 10-29/1202800793.PDF
Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-53 2016-10-29 Text of the 2016 Third Quarter Report
Ta Kung Pao B1 10-29/1202800791.PDF
Announcement on the Resolution of the
Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-54 2016-10-29 21st Session of the 8th Board of
Ta Kung Pao B1 10-29/1202800786.PDF
Directors
Announcement on the External Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-55 2016-10-29
Guarantee Ta Kung Pao B1 10-29/1202800787.PDF
Announcement on Holding Subsidiaries' Securities Times B84, http://www.cninfo.com.cn/finalpage/2016-
2016-56 2016-10-29
Receipt of the Notice of Income and Ta Kung Pao B1 10-29/1202800788.PDF
Konka Group Co., Ltd. Annual Report 2016
Payment for the Transfer of Use Right
of State-owned Land in Shenzhen
Announcement on the Resolution of the
Securities Times B41, http://www.cninfo.com.cn/finalpage/2016-
2016-57 2016-11-29 22nd Session of the 8th Board of
Ta Kung Pao B5 11-29/1202846547.PDF
Directors
Announcement on the Termination of Securities Times B41, http://www.cninfo.com.cn/finalpage/2016-
2016-58 2016-11-29
Privately Issuing A-shares Matters Ta Kung Pao B5 11-29/1202846548.PDF
Announcement on Holding Subsidiaries'
Securities Times B52, http://www.cninfo.com.cn/finalpage/2016-
2016-59 2016-11-29 Signing for the Contract of Transferring
Ta Kung Pao B5 11-29/1202846710.PDF
the Land Use Right
Announcement on Receiving the Notice
of China Securities Regulatory Securities Times B33, http://www.cninfo.com.cn/finalpage/2016-
2016-60 2016-12-17
Commission on Terminating Reviewing Ta Kung Pao B2 12-17/1202878743.PDF
the Administrative License Application
Announcement on Receiving the Tax Securities Times B32, http://www.cninfo.com.cn/finalpage/2016-
2016-61 2016-12-27
Reimbursement Ta Kung Pao B1 12-27/1202957919.PDF
Announcement on the Resolution of the
Securities Times B48, http://www.cninfo.com.cn/finalpage/2016-
2016-62 2016-12-30 24th Session of the 8th Board of
Ta Kung Pao B15 12-30/1202973414.PDF
Directors
Announcement on Investing and
Securities Times B48, http://www.cninfo.com.cn/finalpage/2016-
2016-63 2016-12-30 Constructing Konka Science and
Ta Kung Pao B15 12-30/1202973415.PDF
Innovation Center
XX. Significant events of subsidiaries
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
Konka Group Co., Ltd. Annual Report 2016
Section VI. Change in Shares & Shareholders
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalizati
Newly
Propor Bonus on of Propor
Amount issue Other Subtotal Amount
tion shares public tion
share
reserves
I. Shares
subject to 396,932,96 16.48 -396,932 -396,932,9
0 0.00%
trading 0 % ,960
moratorium
2. Shares held
by 396,763,88 16.48 -396,763 -396,763,8
0 0.00%
state-owned 0 % ,880
corporation
3. Other
domestic 169,080 0.00% -169,080 -169,080 0 0.00%
shareholding
Shares held
by the
169,080 0.00% -169,080 -169,080 0 0.00%
domestic
individuals
II. Shares not
subject to 2,011,012,4 83.52 396,932, 396,932,96 2,407,945,4 100.00
trading 48 % 960 0 08 %
moratorium
1. RMB
1,199,829,9 49.83 396,763, 396,763,88 1,596,593,8 66.31
ordinary
20 % 880 0 00 %
shares
2.
Domestically 811,182,52 33.69 811,351,60 33.69
169,080 169,080
listed foreign 8 % 8 %
shares
III. Total 2,407,945,4 100.00 2,407,945,4 100.00
0
shares 08 % 08 %
Reason for the change in shares
Konka Group Co., Ltd. Annual Report 2016
√ Applicable □ Not applicable
2 Mar. 2016, 396,763,880 shares of the Company; stocks held by OCT Holdings Company were
relieved the restriction. See the details on the Indicative Announcement on the Listing and
Circulating of the Restricted Shares disclosed on 27 Feb. 2016 by the Company (Announcement No.
2016-04).
Mr. Zhang Guanghui had resigned the position as a Supervisor officially on 5 Nov. 2015 with the
169,080 shares subject to trading moratorium held by whom of the Company's had all automatically
terminated the restriction on 5 May 2016.
Approval of the change in shares
□ Applicable √ Not applicable
Reason for the change in shares
□ Applicable √ Not applicable
The changes in shares had completed transfer ownership
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to
common shareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory
authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
Number
Number of
of the Number
Number of the relieved
increased of the
the restricted Relieved
Name of the restricted restricted
restricted shares of Restricted reason restricted
shareholders shares of shares at
shares at the the date
the the
period-begin Reporting
Reporting period-end
Period
Period
OCT
396,763,88 396,763,88 2 Mar.
Enterprises 0 0 Non-tradable shares reform
0 0
Co.
On 5 Nov. 2015, Mr. Zhang Guanghui
resigned the position as the Supervisor
Zhang 5 May.
169,080 169,080 0 0 owning to personal reasons and according to
Guanghui
the regulations of the relevant laws and
regulations, within the 6 months after the
Konka Group Co., Ltd. Annual Report 2016
resignation, the holding share of the Company
were the shares subject to trading
moratorium.
396,932,96 396,932,96
Total 0 0 -- --
0
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in Reporting Period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of
assets and liabilities
√ Applicable □ Not applicable
(1) The total capital stock of the company has no change.
(2) 2 Mar. 2016, 396,763,880 shares of the Company; stocks held by OCT Holdings Company
were relieved the restriction. Mr. Zhang Guanghui had resigned the position as a Supervisor
officially on 5 Nov. 2015 with the 169,080 shares subject to trading moratorium held by whom of
the Company's had all automatically terminated the restriction on 5 May 2016.
(3) The company's assets and liabilities have no change.
3. Existent shares held by internal staffs of the Company
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number
of preferred
Total number stockholder
Total number of shareholders Total number of with vote right
of on the 30 th
preferred restored on the
shareholders trading day stockholder with 30th trading
134,479 130,924 0
at the before the vote right day before the
Reporting disclosure date restored (if any) disclosure date
Period of the annual (see Notes 8) of the annual
report report (if
any) (see
Notes 8)
Shareholding of shareholders holding more than 5% shares
Nature Holding Number of Increase and Number of Number of Pledged or
Name of shareholder of percenta shareholding decrease of shares held shares held frozen
sharehol ge at the end of shares subject to not subject shares
Konka Group Co., Ltd. Annual Report 2016
ders the during trading to trading Statu A
Reporting Reporting moratorium moratorium s of m
Period Period share ou
s nt
Pled
State-ow
ned ged
OCT Enterprises Co. 21.75% 523,746,932 0 0 523,746,932
corporat Froz
ion
en
Pled
CITIC Securities Foreign
ged
Brokerage (Hong Kong) corporat 7.56% 182,100,202 2,099,092 0 182,100,202
Froz
Co., Ltd. ion
en
Pled
Foreign
Guoyuan Securities ged
corporat 2.33% 56,167,945 -3,659,225 0 56,167,945
Broker (HK) Co., Ltd. Froz
ion
en
Pled
Foreign
ged
Holy Time Group Limited corporat 2.33% 56,049,824 3,469,470 0 56,049,824
Froz
ion
en
Pled
Foreign
ged
Gaoling Fund, L.P. corporat 2.19% 52,801,250 0 0 52,801,250
Froz
ion
en
Nanhua Futures Co., Ltd. - Pled
Nanhua Futures Silver ged
Other 0.98% 23,505,979 23,505,979 0 23,505,979
Leaf No. 2 Assets Froz
Management Plan en
Pled
Foreign
ged
NAM NGAI Individu 0.96% 23,220,040 -161,000 0 23,220,040
Froz
al
en
State-ow Pled
ned ged
CMS (HK) 0.96% 23,190,620 463,816 0 23,190,620
corporat Froz
ion en
Pled
CSI Capital Management
Other 0.83% 20,050,928 -500,000 0 20,050,928 ged
Limited
Froz 0
Konka Group Co., Ltd. Annual Report 2016
en
Domesti Pled
c ged
Meng Diliang 0.62% 15,000,083 15,000,083 0 15,000,083
Individu Froz
al en
Strategic investor or general
corporation becoming a top ten
N/A
ordinary shareholder due to placing of
new shares (if any) (see Note 3)
Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority
shareholder OCT Enterprises Co., holds 180,001,110 and 18,360,000 ordinary shares in
Related or act-in-concert parties the Company respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd.
among the shareholders above and CMS (HK). Jialong Investment Limited and OCT Enterprises Co. are parties acting
in concert. Other than that, it is unknown whether the other shareholders are related
parties or act-in-concert parties or not.
Particulars about shares held by the top ten common shareholders holding shares not subject to trading moratorium
Number of tradable Type of shares
Name of shareholder shares held at the
Type Number
period-end
RMB ordinary
OCT Enterprises Co. 523,746,932 523,746,932
share
Domestically
CITIC Securities Brokerage (Hong Kong) Co., Ltd. 182,100,202 listed foreign 180,001,110
shares
Domestically
CITIC Securities Brokerage (Hong Kong) Co., Ltd. 56,167,945 listed foreign 56,167,945
shares
Domestically
Holy Time Group Limited 56,049,824 listed foreign 56,049,824
shares
Domestically
Gaoling Fund, L.P. 52,801,250 listed foreign 52,801,250
shares
Nanhua Futures Co., Ltd. - Nanhua Futures Silver Leaf
RMB ordinary
No. 2 Assets Management Plan 23,505,979 23,505,979
share
Domestically
NAM NGAI 23,220,040 listed foreign 23,220,040
shares
CMS (HK) 23,190,620 Domestically 23,190,620
Konka Group Co., Ltd. Annual Report 2016
listed foreign
shares
Domestically
CSI Capital Management Limited 20,050,928 listed foreign 20,050,928
shares
RMB ordinary
Meng Diliang 15,000,083 15,000,083
share
Related or act-in-concert parties Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority
among the top 10 non-restricted shareholder OCT Enterprises Co., holds 180,001,110 and 18,360,000 ordinary shares in the
ordinary shareholders as well as Company respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and
between the top 10 non-restricted CMS (HK). Jialong Investment Limited and OCT Enterprises Co. are parties acting in
ordinary shareholders and the top concert. Other than that, it is unknown whether the other shareholders are related parties or
10 ordinary shareholders act-in-concert parties or not.
Top 10 ordinary shareholders
Meng Diliang holds 15,000,083 A-shares in the Company through a client account of
conducting securities margin
collateral securities for margin trading in Essence Securities Co., Ltd.
trading (if any) (see Note 4)
Did any top ten shareholder of common share and the top ten shareholders not subject to trading
moratorium of the Company carry out an agreed buy-back in the Reporting Period?
□ Yes √ No
Top ten shareholder of common share and the top ten shareholders not subject to trading
moratorium of the Company did carry out an agreed buy-back in the Reporting Period
2. Particulars about the controlling shareholder
Nature of controlling shareholder: central state-owned holding
Type of controlling shareholder: legal person
Legal
Name of
representative Date of Organization
controlling Business scope
/ company establishment code
shareholder
principal
Export of textile, light industrial products, etc; import of
self-used goods in Shenzhen, mechanical equipment, light
OCT industrial products, etc. as approved by the relevant
Duan
Enterprises 11 Nov. 1985 authorities of Shenzhen (under Government Document
Xiannian 0346175T
Co. JMB [92] WJMGTSZZ No. A19024); compensation trade;
investment in industry, tourism, real estate, commerce &
trade and financial insurance.
Shares held by the OCT ENTERPRISES CO. held 53.47% equity of Shenzhen Overseas Chinese Town Co., Ltd. (a
controlling shareholder in company listed on the main Board of Shenzhen Stock Exchange, SZ. 000069), meanwhile,
other listed companies by Shenzhen Overseas Chinese Town Co., Ltd. indirectly held 66.66% equity of OCT (Asia) Holdings
holding or shareholding Ltd. (a company listed on the main Board of Hong Kong Stock Exchange, 3366.HK) and OCT
Konka Group Co., Ltd. Annual Report 2016
during the Reporting Period ENTERPRISES CO. held 4.08% equity of CITS (a company listed on the main Board of Shanghai
Stock Exchange, 601888.SH). OCT ENTERPRISES CO. intends to increase its investment in
Yunnan Expo Tourism Group Holdings Ltd. to indirectly control Yunnan Tourism Co., Ltd. (listed
on the SMEs board of the Shenzhen Stock Exchange, stock code: SZ.002059). The abstract of the
relevant tender offer report has been released, with the relevant work underway.
Changes in controlling shareholders during the Reporting Period
□ Applicable √ Not applicable
The controlling shareholder did not change during the Reporting Period.
3. Particulars about the actual controller
Nature of actual controller: central state-owned assets management institutions
Type of actual controller: legal person
Legal
Date of
Name of actual controller representative / Organization code Business scope
foundation
head of unit
State-owned Assets
Supervision and
Hao Peng Not applicable Not applicable
Administration Commission
of the State Council
Shares held by the actual controlling shareholder in other listed companies by holding or
Not applicable
shareholding during the Reporting Period
Change in actual controller in the Reporting Period
□ Applicable √ Not applicable
No change in actual controller of the Company in the Reporting Period.
Diagram of ownership and control relationship between the Company and its actual controller:
SASAC of the State Council
OCT Enterprises Co. and its wholly owned subsidiaries
Konka Group Co., Ltd.
The actual controller controls the Company by the means of trust or other means of assets
management
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
4. Other Corporate Shareholder with a shareholding percentage over 10%
□ Applicable √ Not applicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual
controller, restructuring parties and other commitment entities
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
Section VII. Preference Shares
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
Konka Group Co., Ltd. Annual Report 2016
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Shar
Incre
Share es
ase
s Other held
of Decrea
held increa at the
share se of
at the sed/d end
Incu G s in shares
begin ecreas of
mbe en A Starting date of Closing date of this in this
Name Title ning ed the
nt or de ge office term office term Repo Report
the chang Repo
not r rting ing
Repo e rting
Perio Period
rting (share Perio
d (share)
Perio ) d
(shar
d (shar
e)
e)
M
Liu Directo Curr
al 45 28 May 2015 28 May 2018 0 0 0 0 0
Fengxi r ent
e
Board M
Liu Curr
Chairm al 45 18 Jun. 2015 28 May 2018 0 0 0 0 0
Fengxi ent
an e
Jin M
Directo Curr
Qingju al 60 28 May 2015 28 May 2018 0 0 0 0 0
r ent
n e
M
Chen Directo Curr
al 42 28 May 2015 28 May 2018 0 0 0 0 0
Yuehua r ent
e
M
He Directo Curr
al 54 5 Nov. 2015 28 May 2018 0 0 0 0 0
Haibin r ent
e
Indepe
Sun M
ndent Curr
Shengd al 62 5 Nov. 2015 28 May 2018 0 0 0 0 0
Directo ent
ian e
r
Xiao Indepe Curr M 51 28 May 2015 28 May 2018 0 0 0 0 0
Konka Group Co., Ltd. Annual Report 2016
Zuhe ndent ent al
Directo e
r
Indepe
M
Zhang ndent Curr
al 52 28 May 2015 28 May 2018 0 0 0 0 0
Shuhua Directo ent
e
r
M
Hao Supervi Curr
al 44 28 May 2015 28 May 2018 0 0 0 0 0
Gang sor ent
e
M
Hao Supervi Curr
al 44 8 Jun. 2015 28 May 2018 0 0 0 0 0
Gang sory ent
e
M
Wang Supervi Curr
al 56 5 Nov. 2015 28 May 2018 0 0 0 0 0
Youlai sor ent
e
Employ
M
ee Curr
Li Jun al 46 25 May 2015 25 May 2018 0 0 0 0 0
Supervi ent
e
sor
Vice M
He Curr
Preside al 38 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0
Jianjun ent
nt e
Li Vice M
Curr
Hongta Preside al 48 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0
ent
o nt e
Vice M
Yang Curr
Preside al 49 10 Mar.2017 10 Mar.2020 0 0 0 0 0
Bo ent
nt e
Vice M
Cao Curr
Preside al 47 10 Mar.2017 10 Mar.2020 0 0 0 0 0
Shiping ent
nt e
Sun Vice M
Curr
Qingya Preside al 39 determined 10 Mar.2020 0 0 0 0 0
ent
n nt e
M
Li Curr
CFO al 45 10 Mar.2017 10 Mar.2020 0 0 0 0 0
Chunlei ent
e
Wu Board Curr M
44 27 Aug. 2015 4 Apr. 2017 0 0 0 0 0
Yongju Secreta ent al
Konka Group Co., Ltd. Annual Report 2016
n ry e
Executi M
ve Vice al
Xiao
Preside Left e 42 27 Aug.2015 24 Oct.2016 0 0 0 0 0
Qing
nt
Huang Vice M
Zhongti Preside Left al 47 4 Apr.2014 10 Mar.2020 0 0 0 0 0
an nt e
Vice M
Lin
Preside Left al 56 4 Apr.2014 9 Mar. 2016 0 0 0 0 0
Gaike
nt e
Lin Vice M
Hongfa Preside Left al 45 4 Apr.2014 10 Mar.2020 0 0 0 0 0
n nt e
Note: For Mr. Sun Qingyan is handling the check-out procedure in Shenzhen Shenwo Asset Management Co., Ltd., he cannot take
his post immediately, it is expected that Mr. Sun Qingyan will sign the labor contract with our company before 30 Apr. 2017 served
as the vice president officially.
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Zhou Bin Engaged by the decision from the Board of
President Engaged 10 Mar.2017
Directors
Yang Bo Engaged by the decision from the Board of
Vice President Engaged 10 Mar.2017
Directors
Cao Shiping Engaged by the decision from the Board of
Vice President Engaged 10 Mar.2017
Directors
Sun Qingyan Engaged by the decision from the Board of
Vice President Engaged To be determined
Directors
Li Chunlei Engaged by the decision from the Board of
CFO Engaged 10 Mar.2017
Directors
Xiao Qing Executive Vice Resigned owning to the personal reasons
Left 24 Oct.2016
President
Huang The service term of the Board of Supervisors was
Vice President Expired 10 Mar.2017
Zhongtian expired
Lin gaike Vice President Left 09 May 2016 Resigned owning to the personal reasons
III. Post-holding situation
Professional background, main working experience and the main responsibilities of current
Konka Group Co., Ltd. Annual Report 2016
directors, supervisors and senior management staff of the Company
Main working experience of current directors, supervisors and senior management staffs over the
past five years
1. Directors
Liu 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, Assistant
GM and then Vice GM of Shenzhen Konka Telecommunications Technology Co., Ltd., Chief of the
Operation Management Center of Konka Group, Assistant to President and Vice President of Konka
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 in
Hong Kong-based law firm and Britain-based law firm, lawyer of JANG SHINN Law Office and
executive partner of Shu Jin Law Firm, and at the same time, worked as the adjunct professor of
China University of Political Science and Law, and the adjunct professor of the Lawyer College of
the Renmin University of China, and graduate student co-tutor in the Law School of Tsinghua
University. Former arbitrator of the Shenzhen Court of International Arbitration, Shanghai
International Arbitration Center, Arbitration Foundation of Southern Africa, Former mediator of
Shenzhen Securities and Futures Dispute Resolution Center, legal counsel of US Court of
Appeals-Washington DC. Presently the senior partner of Beijing King & Wood Mallesons Law
Firm, independent director of Guotai Jun’an Securities, Gemdale Group Co., Ltd. (a company listed
in Shanghai Stock Exchange), Tianjin Masterwork Machinery Co., Ltd. (a company listed in
Shenzhen Stock Exchange), Invesco Great Wall Fund Management Co., Ltd. and New China Asset
Management Co., Ltd., director of Konka Group.
He Haibin, Director of the Company, born in 1974, Han nationality, holds undergraduate degree, is
a senior accountant. He has successively taken the posts as Chief of Audit Department and Financial
Department in Overseas Chinese Town Group Corporation, as Principal of Finance in Planning
Department of the Crowne Plaza Shenzhen, as CFO in Shenzhen OCT Seaview Hotel Co., Ltd., as
CFO in InterContinental Shenzhen, as Vice CFO in Overseas Chinese Town Group Corporation and
as CFO in Overseas Chinese Town Hong Kong Limited, etc.. Now he is the Chief of Enterprise
Management Department in Overseas Chinese Town Group Corporation, as well as a director of
Konka Group.
Chen Yuehua, Director, male, Han nationality, born in 1963. He is Master of Business
Administration, Senior Engineer, Former senior engineer of Konka Group Technological
Development Center; former GM of Konka Electric Appliance Department Technological
Development Center; former GM of President Office of Konka Group; former GM of Dongguan
Konka Electronics Co., Ltd; former vice GM of Konka Group Multimedia Business Department;
former vice president of Konka Group; former president, deputy party secretary of Konka Group;
Konka Group Co., Ltd. Annual Report 2016
assistant to the president and secretary of the Board of Shenzhen OCT Co., Ltd. Current Board
chairman of Konka Group; vice president of Shenzhen OCT Co. Ltd; president of Shenzhen OCT
Vision Inc.; and president of Shenzhen Rough Diamond Trading Center Co., Ltd. as well as
Director of Konka Group.
2. Independent Director
Sun Shengdian, independent director, male, Han nationality, born in 1955, doctor of engineering
science, sensor economist. Formerly vice GM, deputy secretary of the Party committee, GM and
president of Shenzhen SEG, Hitachi Color Display Devices Co., Ltd., director, Party Committee
member, vice GM, vice secretary of Party Committee, GM of Shenzhen Electronics Group Co., Ltd.
director of Shenzhen China Star Optoelectronics Technology Co., Ltd. and independent director of
Skyworth Holding Ltd. Presently working as the president and secretary of party committee of
Shenzhen Electronics Group Co., Ltd., President of Shenzhen 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 public
accountant. Formerly worked as auditor and department manager in Jiangxi Accounting Firm,
assistant financial controller of Shenzhen Fountain Corporation, auditor in Ho and Ho & Co. in
Hong Kong, financial controller of Qiaoxing Universal Telephone, Inc. (a company listed in
NASDAQ), President of Benefit Capital Limited in Hong Kong. Presently he is working as the
president and GM 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 and
Economic Survey Organization of Sichuan Provincial Bureau of Statistics, accountant in charge of
Sichuan Newspaper Press, chief financial officer of TOP Pacific Group Pty. Ltd., chief financial
controller 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 Industry
Co., Ltd. Presently working as the certified public accountant and partner of Sichuan Accounting
Firm, independent director of Konka Group.
3. Supervisor
Hao Gang, Supervisory, male, was born in 1973, Han nationality, bachelor degree. He successively
took the post such as Vice Chief of the Inspection Office, etc. in Overseas Chinese Town Group
Corporation. Now he is the Chief of the Inspection Office in Overseas Chinese Town Group
Konka Group Co., Ltd. Annual Report 2016
Corporation 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, assistant GM,
vice GM, and vice president of Konka Group, Deputy Director of the Administration Department of
Overseas Chinese Town Enterprise Co. Presently working as the co-secretary of the party
committee in the HQs, and chief director of the Administration Department of Overseas Chinese
Town Enterprise Co., and supervisor of Konka Group.
Li Jun, Employee Supervisor, male, Han nationality, born in 1971, bachelor’s degree owner and
assistant accountant. Formerly worked as the financial manager of Nanchang Branch of
Telecommunications Technology Co., Ltd., Senior Manager of the Financial Department and the
Senior Manager of Auditing and Legal Affairs Department of Telecommunications Technology Co.,
Ltd. Presently working as the head of the Discipline Committee Office, assistant supervisor of the
Auditing and Legal Affairs Department, GM of the Internal Control and Risk Management
Department, and employee supervisor of Konka Group
4. Senior Executives
Zhou Bin, president. Male, Han, born in 1979, undergraduate. Served as the director assistant,
deputy director and director in Operating Management Center in Konka Group, assistant of the
president in the Board of Directors and Director in Operating Management Center and others. Serve
as the president in Konka Group now.
He Jianjun, Vice President of the Company, was born in 1969 with the Han nationality; he obtained
bachelor degree; being Economist. He has served successfully as Deputy Chief of Secretariat of the
Board, Deputy Chief and Chief of Strategic Development Dept. and Secretary to the Board in
Konka Group, etc. He now is acting as Vice President of Konka Group.
Li Hongtao, Vice President. He is male, Han nationality, born in 1968; bachelor degree and Senior
Engineer. He successively took the post such as Assistant to GM, GM, Director and GM of
Shenzhen Konka Telecommunication Technology Co., Ltd and Assistant President of Konka Group
etc. He now is acting as Vice President of Konka Group.
Wu Yongjun, secretary of the board of directors, male, Han nationality, born in 1975, master’s
degree owner, certified public accountant. Formerly he worked as the senior manager, assistant of
chief supervisor, vice supervisor, supervisor of the secretariat of the Board of Directors of Konka
Group, Konka Group Securities Affairs representative. Presently he is working as the secretary of
the board of directors of Konka Group.
Li Chunlei, CFO. Male, Han nationality, born in 1973, master. Served as the director in Real Estate
Business Division, Konka Group, vice GM and GM in Kunshan Kangsheng Investment
Konka Group Co., Ltd. Annual Report 2016
Development Co., Ltd., deputy director (preside the work) and director in Strategic Development
Center, GM in Financial Center and GM in Asset Settlement Center and others. Serve as the CFO in
Konka Group now.
Yang Bo, vice president. Male, Han nationality, born in 1970, master. Served as the director in
Shenzhen Cable Television Education Financial Channel, director in the market sales and support
region of US Tailiyang Communications Company, GM in Program Operating Department in
Shenzhen Topway Video Communication Co., Ltd., director and GM in Shenzhen Tianhua Century
Media Co., Ltd., GM in Market Sales Center in Shenzhen Topway Video Communication Co., Ltd.
and others. Serve as the vice president in Konka Group.
Cao Shiping, vice president. Male, Han nationality, born in 1978, master. Served as the GM in
Jinzhou Branch and Tianjin Branch of Konka Group Multi-media, GM in Multi-media Business
Division Customer Cooperation Department, vice GM in Multi-media Marketing Business Division,
vice GM in Multi-media Business Division and GM in Marketing Center, GM in Multi-media
Business Division, GM in Internet Business Division and others. Serve as the vice president in
Konka Group.
Sun Qingyan, vice president. Male, Han nationality, born in 1972, doctor, senior economist. Served
as the tutor in Northeast University of Finance and Economies, vice GM in Shenzhen Huaixin
Enterprise Investment Consulting Co., Ltd., CEO in Shenzhen Xinheng Lida Capital Management
Co., Ltd., vice GM in Shanying Investment Management Co., Ltd., GM in Shenzhen Shenwo Asset
Management Co., Ltd. and others.
Employment in shareholders’ companies
√ Applicable □ Not applicable
Whether
receiving
Expirat subsidies
Name of Name of
Start date of ion and
employer shareholders’ Posts held in shareholders’ companies
tenure Date of remuneratio
s companies
tenure n in
shareholders
’ companies
Liu OCT Enterprises Unkno
Party Committee Standing Committee 22 Feb. 2016
Fengxi Co. wn
He OCT Enterprises Chief of Enterprise Management Unkno
1 Feb. 2010 Yes
Haibin Co. Department wn
Hao OCT Enterprises Unkno
Chief of Inspection Office 1 Mar. 2010 Yes
Gang Co. wn
Wang OCT Enterprises Secretary of the joint committee of the 1 Dec. 2014 Unkno Yes
Konka Group Co., Ltd. Annual Report 2016
Youlai Co. general headquarters, administrative wn
management director
1. Except the above situation, other directors, supervisors and senior management didn’t hold any
Notes to post-holding position in the shareholders’ units.
in shareholder’s unit 2. It is unknown the ending date of the posts of Mr. Liu Fengxi, Mr. He Haibin, Mr. Hao Gang and Mr.
Wang Youlai held in the shareholders’ units.
Note: Mr. Liu Fengxi in 2016 1-3 months in the company to receive remuneration, after the controlling shareholder
to receive compensation.
Employment in other entities
√ Applicable □ Not applicable
Whether
Expirati receiving
Name of Posts held in
Start date of on subsidies and
employer Name of other companies shareholders’
tenure Date of remuneration
s companies
tenure in other
companies
Unknow
Beijing Kind & Wood Mallesons Senior Partner Unknown Yes
n
Independent director Unknow
Guotai Junan Securities Co., Ltd Unknown Unknown
n
Independent director Unknow
Gemdalea (Group) Holding Co., Ltd. Unknown Unknown
Jin n
Qingjun Independent director Unknow
Tianjin Masterwork Machinery Co., Ltd. Unknown Unknown
n
Invesco Great Wall Fund Management Co., Independent director Unknow
Unknown Unknown
Ltd. n
Independent director Unknow
New China Asset Management Co., Ltd., Unknown Unknown
n
Unknow
Shenzhen OCT Co., Ltd. Vice President Unknown Yes
n
Chen Unknow
Shenzhen OCT Vision Inc Director Unknown
Yuehua n
Shenzhen Rough Diamond Trading Center Unknow
Director Unknown No
Co., Ltd. n
He Unknow
Shenzhen OCT Co., Ltd CAO Unknown No
Haibin n
Xiao Tianjin Baifuyuan Equity Investment Fund Unknow
Director Unknown Yes
Zuhe Management Co., Ltd. n
Konka Group Co., Ltd. Annual Report 2016
Shenzhen Qianhai Baifuyuan Equity Unknow
Director, GM Unknown
Investment Management Co., Ltd. n
Zhang Sichuan Tan Cheng Certified Public Partner Project Unknow
Unknown Yes
Shuhua Accountants Co., Ltd. Manager n
Chairman, Secretary
Unknow
Shenzhen Electronics Group Co., Ltd. of the Party Unknown Yes
n
Committee
Sun Unknow
Shenzhen Electronics Industries Association President Unknown
Shengdia n
n Unknow
Shenzhen SI Semiconductors Co., Ltd. Director Unknown
n
Unknow
Shenzhen Huakong SEG Co., Ltd. Vice Director Unknown
n
Mr. Sun Shengdian, Mr. Xiao Zuhe and Mr. Zhang Shuhua were the Independent Directors of
Notes to post-holding in
the Company. Mr. Jin Qingjun and Mr. Chen Yuehua were the Non-independent Directors of
shareholder’s unit
the Company.
Particulars about the Company’s current directors, supervisors and senior executives’ punishments
from Securities Regulatory Institution of recent three years in Reporting Period
□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior management
1. After the approval and the consent by the Board of Directors on the salary of the Directors and
Supervisors, should submit which to the Annual General Meeting for review and decision.
Refered to the salary level of the Directors and Supervisor of the domestic listed companies of same
industry, the salary proposal of the Director and Supervisors of the Company which approved and
reviewed by the 2015 2nd Extraordinary General Meeting were as follows: (1) the basic annual
salary standard of the Board Chairman was of RMB1.2 million, the subsidy standard of other
Directors (excluding the Directors serving in the Company) was of RMB0.3 million per person per
year and the subsidy standard of the Supervisors (excluding the Employee Supervisors) was of
RMB0.2 million per person per year; which was executed since Jun. 2015. (2) the above standards
were all pre-tax standard with the individual income tax burdened in person as well as the Company
withheld and remitted tax.
2. The Board of Directors determined the remuneration of senior management staffs, and referred to
the following factors: a. scope of jobs and responsibility shouldered; b. actual profit of the
Company; c. market remuneration level in the same industry and same area.
Remuneration of the directors, supervisors and senior management of the Company during the
Reporting Period
Konka Group Co., Ltd. Annual Report 2016
Unit: RMB Ten Thousand Yuan
Total amount of
Total amount of
remuneration
Incumbent or remuneration
Name Title Gender Age received from
not received from
shareholders’
the Company
companies
Liu Board Chairman, Acting
Male 45 Current 57.64 No
Fengxi President
Jin Current
Director Male 60 30 No
Qingjun
He Male Current
Director 42 0 Yes
Haibin
Chen Male Current
Director 54 0 Yes
Yuehua
Sun Male Current No
Shengdia Independent Director 62
n
Xiao Male Current No
Independent Director 51
Zuhe
Zhang Male Current No
Independent Director 52
Shuhua
Hao Male Current
Supervisory 44 0 Yes
Gang
Wang Male Current
Supervisor 56 0 Yes
Youlai
Li Jun Employee Supervisor Male 46 Current 58.45 No
He Male Current
Vice President 48 106.34 No
Jianjun
Li Male Current
Vice President 49 106.34 No
Hongtao
Wu Male Current
Board Secretary 42 110.01 No
Yongjun
Xiao Male Current
Executive Vice President 47 113.47 No
Qing
Huang Male Current
Zhongtia Vice President 56 106.34 No
n
Lin Male Current
Vice President 45 54.38 No
Gaike
Konka Group Co., Ltd. Annual Report 2016
Lin Male Current
Vice President 46 160.25 No
Hongfan
Total -- -- -- -- 963.22 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the
Company during the Reporting Period
□ Applicable √ Not applicable
V. Employees of the Company
1. Number of the employees, component difference and educational background
Number of the serving employees of the parent company
2,186
(person)
Number of the serving employees of the major subsidiaries
15,204
(person)
Total number of the serving employees (person) 17,390
Total number of the employees receiving the salary of the
17,390
Reporting Period (person)
Number of the left and retired employees that the parent
company and the major subsidiaries should undertake the
expenses (person)
Component difference
Category Number (person)
Production personnel 10,405
Sales personnel 3,819
Technical personnel 1,203
Financial personnel
Administrative personnel 1,341
Total 17,390
Educational background
Category Number (person)
Master and above
Undergraduate 2,482
College 6,247
High school and below 8,503
Total 17,390
2. Remuneration policy
The Company promulgated its remuneration system with the operating strategy of serving for the
enterprise development and enhancement, and the principle of deciding the remuneration according
Konka Group Co., Ltd. Annual Report 2016
to the post, business performance and capabilities, as well as the market competitiveness and
internal fairness. And it decided the employee’s remuneration level according to its business
earnings, the posts and fulfillment of the business performance of the employee.
3. Employee’s training plan
The 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 actively
organized and carried out various training activities, and continuously perfected its talents
cultivation 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 talents
teams.
In 2016, guided by closing to the business needs, the Company centralized the superior resources to
promote the cultivation of key talents. And it organized and carried out the open class project for all
the employees, and organized and carried out the new employee’s training & cultivation projects
respectively for the graduates from campus recruiting and personnel from social recruitment.
Meanwhile, it centralized to organize the pointed the training projects of general management skills
and 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.
4. Labor outsourcing
□ Applicable √ Not applicable
Konka Group Co., Ltd. Annual Report 2016
Section IX. Corporate Governance
I. Basic information of corporate governance
In 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 Stock
Exchange and the relevant rules and regulations of the CSRC, the Company timely amended the
internal control systems such as the Articles of Association and Administrative Method on
Provision of External Financial Aids as well as Management System on Investors Relationship,
continuously perfected the corporate governance structure and standardized the Company’s
operation. By the end of the Reporting Period, the actual conditions of corporate governance
basically met the requirements of the regulatory documents in respect of corporate governance
structure of listed companies issued by CSRC.
(I) Shareholders and the Shareholders’ General Meeting
The Company drew up Articles of Association and Rules for Procedure of Shareholders’ General
Meeting, ensured that all shareholders, in particular medium and minor shareholders, enjoy legal
rights and equal standard. In the Reporting Period, the Company was able to publish announcement
on Shareholders’ General Meetings in advance, convened Shareholders’ General Meeting with
strictly accordance to relevant requirements, so as to enable the shareholders have their rights of
information to the Company’s material issues and the participation rights. In 2016, the Company
convened three Shareholders’ General Meeting in total. The Company seriously did well the
registration, arrangement and organization work for the Shareholders’ General Meeting before the
circular 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 Company
strictly in line with relevant stipulations, which was convenient in traffic, and the shareholders
could 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
In the Reporting Period, the controlling shareholders and actual controllers strictly regulated its
behavior and complied with laws in exercising their rights and obligations, not bypassed the
Shareholders’ General Meeting to intervene in the Company’s decisions and operations directly or
indirectly. The Company was separated from the controlling shareholders and actual controllers in
aspects of its business, personnel, assets, organ and finance, the Board of Directors, Supervisory
Committee and the internal departments of the Company functioned independently.
(III) Directors and the Board of Directors
Konka Group Co., Ltd. Annual Report 2016
The number and structure of the Board Bureau of the Company were in compliance with laws and
regulations. The Company drew up Rules for Procedures of the Board Bureau, so as to ensure a
high efficient operation and scientific decision-making of the Board Bureau; the Company has set
up 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 the
procedure of selection was in accordance with the requirements of the rules and laws as well as
Articles of Association. The Company set up four special committees, which were Financial Audit
Committee, Nomination Committee, Remuneration & Appraisal Committee, Strategy Committee to
provide profession opinion for the decision of the Board of Directors. All the directors carried out
their work, fulfilled their duties and scrupulously attended the Board sessions in accordance with
Rules of Procedure for the Board of Directors, Rules for Independent Directors, etc. 19 Board
sessions were convened by the Company during the Reporting Period, which brought the
decision-making mechanism of the Board of Directors into full play.
(IV) Supervisors and supervisory committee
The Company has established Rules for Procedures of the Supervisory Committee, persons and
structure of the Supervisory Committee was in line with relevant laws and statutes, supervisors can
earnestly perform their responsibilities, independently and efficiently executed supervision and
check responsibilities with a spirit of being responsible to shareholders. In the Reporting Period, the
number of supervisors and composition of the Supervisory Committee of the Company as well as
their selecting procedure complied with the laws, regulations. In accordance with the requirement of
the Rules of Procedure for Supervisory Committee, the supervisors performed their duties in an
earnest and responsible manner, and exercised their functions of supervision on the
decision-making procedure of the Board of Directors, resolutions and the Company’s operation by
law, 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
The senior management staffs of the Company were recruited on an open basis and in compliance
with the laws and regulations. The Company has established and gradually improved the
performance appraisal standards and incentive & restrictive mechanism for senior management
staffs, so as to attract qualified personnel, and ensure the stability of senior management staffs.
(VI) Interested parties
Konka Group Co., Ltd. Annual Report 2016
During the Reporting Period, the Company fully respected and maintained the legal rights of the
interested 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 charitable
cause so as to jointly promote sustainable and healthy development.
(VII) Information disclosure and transparency
The Company strengthened its investor relations management by formulating the Management
Rules for Investor Relations and the Management Rules for Information Disclosure. The Company
strictly complied with the requirements of the laws, regulations and the Articles of Association to
disclose its information as required by the relevant regulations on an timely, honest, complete and
accurate basis, to ensure the accurate and timely information disclosure, while ensure equal access
to information for all shareholders. Owing to his efforts in promoting the standardized operations of
the listed companies, implementing the requirements of regulatory authorities, investor relations
management, as well as the information disclosure, Mr. Xiao Qing, the Board Secretary, has won
the title “Golden Board Secretary of New Fortune” from the 10th session, and successively gained
the title of Board Secretary in Actively Promoting the Standards and Self-discipline for the Listed
Companies from Y2008 to Y2014 in Shenzhen Securities Regulatory Bureau.
(VIII) Non-standard governance
1. Type of non-standard governance matter existed
There was a situation that the Company disclosed undisclosed information.
2. Types and cycle of undisclosed information provided to the principal shareholder
The Company provided monthly financial data to the principal shareholder.
3. Reasons for the related non-standard governance existed
The Company submitted the undisclosed information such as monthly financial data to the
substantial shareholder directly administrated by the State-owned Assets Supervision and
Administration Commission of State Council in accordance with the managerial demand of
SASAC.
4. Impact on Company independence
After the self-inspection, the Company kept strictly to the requirements of “Notice on Strengthening
the Supervision of Listed Company’s Provision of Non-public Information to Substantial
Shareholders and Actual Controllers”, and “Supplementary Notice Concerning Strengthening the
Supervision of the Non-standard Governance Behavior of Listed Company's Provision of
Non-public Information to Substantial Shareholders and Actual Controllers”, while stringently
performed the necessary procedures. There existed no circumstances of substantial shareholder’s
abuse of control and disclosure of undisclosed information for insider trading, and hence, it has no
impact on the independence of the Company.
(IX) Development of company’s special governance activity, formulation and implementation of
Konka Group Co., Ltd. Annual Report 2016
registration and management system for the insider of inside information
1. Establishment and perfection of management system for the insider of inside information
To further standardize the company’s inside information management behavior, strengthen the
company’s inside information confidential work, and maintain the fair principle of information
disclosure, the company established Inside Information and Insider Management System in Konka
Group Co., Ltd. According to Corporate Law, Security Law, Information Disclosure Management
Method for Listed Company, Stock Listing Rule in Shenzhen Stock Exchange and other related
provisions in the laws, regulations and regulatory documents; Within the report term, the company
amends Inside Information and Insider Management System according to CSRC Provisions on
Establishing the Inside Information and Insider Registration Management System in Listed
Company, Shenzhen Security Regulatory Bureau Notice to Further Conduct the Inside Information
Management Work in Shenzhen Listed Company and other related documents. The company
strictly implements the system in the information disclosure work, meanwhile, carefully implements
the company’s inside information and insider registration and management method, registers the
insider of inside information, and report to Shenzhen Stock Exchange and Shenzhen Security
Regulatory Bureau according to the provision.
The company conducted the special inspection on the inside information management during the
occurrence of major event in 2016 and the annual report in 2016. After the inspection, the company
actually realized that the insider of inside information strictly kept the confidential provision, did
not disclose, divulge and spread the company’s inside information to the outside, the insider of
inside information did not buy and sell the company’s share with the inside information before
disclosing the major sensitive information influencing the company’s share price, there was no
investigation and rectification from the regulatory department during the editing, review and
disclosure of regular report and major event. Management Rules for Inside Information and Insider
Management System was implemented in place and controlled effectively.
2. Establishment and implementation of external information user’s management system
To strengthen the management on the reporting of company’s inside information, the company
establishes Inside Information Reporting Management System, and prescribes the inside
information reporting range, reporting procedure, responsibility division and other matters
according to Security Law in People’s Republic of China, Information Disclosure Management
Method in Listed Company, Inside Information and Insider Management System in Konka Group
Co., Ltd. and other related provisions in the laws, regulations and regulatory documents.
The company conducted the special inspection on the inside information reporting status during the
occurrence of major event in 2016 and the annual report in 2016. After the inspection, the
company’s inside information reporting status complies with the requirements in Inside Information
Reporting Management System. Inside Information Reporting Management System was
Konka Group Co., Ltd. Annual Report 2016
implemented in place and controlled effectively.
Whether it exist any significant difference between the actual corporate governance and the
normative documents related to the government of the listed companies issued by CSRC or not?
□ Yes √ No
There is no significant difference between the actual corporate governance and the normative
documents related to the government of the listed companies issued by CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs
Within the Reporting Period, the company was fully separated from the controlling shareholders in
terms of business, staff, assets, organs, and finance, which owned independent legal representative
and main status in market competition and had independent accounting, as well as possessed
complete business and the ability of independent operation to face the market.
(I) Business: the Company owned complete supply, R&D, production and sales system, possessed
ability of independent operation to face the market by independent operation, independent
accounting & decision-making, independent bearing responsibility & risks, didn’t subject to the
interference and control of the controlling shareholders, actual controller and its controlled
enterprises.
(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 senior
management staff, financial personnel and business personnel received their remunerations in the
Company, and they were full-time staffs of the Company without holding any post, except directors
and supervisors, in shareholders’ units or other related enterprises.
(III) Assets integrity: the Company had production and operation premises completely separated
from the controlling shareholder, and the unaffiliated and integral assets structure, as well as the
independent production system, ancillary production system, the ancillary facilities, house property
right 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-development
and market competitiveness, all the functional organs were separated from each other in aspects of
personnel, office premises and management rules, etc., there existed no particulars about any
shareholders, other units or individuals interfering the organ setting of the Company.
(V) Finance: the Company established an independent finance department with full-time financial
personnel and an independent finance and accounting system, and independently carried out the
financial work in line with requirements of relevant accounting rules; the Company promulgated
sound financial management system to operate independently without sharing common accounts
with the controlling shareholder, related enterprise, other units or individual; the Company
independently declared and paid the tax by laws without particulars on paying taxes together with
shareholders’ units.
Konka Group Co., Ltd. Annual Report 2016
III. Horizontal competition
□ Applicable √ Not applicable
IV. Particulars about annual shareholders’ general meetings and temporary shareholders’
general meetings held during the Reporting Period
1. Particulars about annual shareholders’ general meetings during the Reporting Period
Proportion
of
Session Type investors' Convening date Disclosure date Index to the disclosed
participati
on
2016 1st Extraordi
Extraordinary nary http://www.cninfo.com.cn/finalpa
4.83% 21 Mar. 2016 22 Mar. 2016
General General ge/2016-03-22/1202063800.PDF
Meeting Meeting
2014 Annual Annual
http://www.cninfo.com.cn/finalpa
General General 30.04% 29 Apr. 2016 30 Apr. 2016
ge/2016-04-30/1202282189.PDF
Meeting Meeting
2016 2nd Extraordi
Extraordinary nary http://www.cninfo.com.cn/finalpa
38.23% 19 May 2016 20 May 2016
General General ge/2016-05-20/1202330961.PDF
Meeting Meeting
2. Special Shareholders’ General Meeting applied by the preferred stockholder with
restitution of voting right
□ Applicable √ Not applicable
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the Board sessions and the
shareholders’ general meetings
Particulars about the independent directors attending the Board sessions
Sessions Non-attendanc
Attendance by
required to Entrusted e in person for
Independent Attendance in way of
attend during presence Absence rate two
director person telecommunica
the Reporting (times) consecutive
tion
Period times
Sun Shengdian 14 1 12 0 1 No
Xiao Zuhe 14 2 12 0 0 No
Zhang Shuhua 14 2 12 0 0 No
Explanation on failing to present in person for two consecutive sessions
Konka Group Co., Ltd. Annual Report 2016
N/A
2. Particulars about Independent Directors proposing objection on relevant events
Whether Independent Directors propose objection on relevant events or not?
√ Yes □ No
Name of the
Independent Events of the Independent Directors proposed objection Content of the objection
Directors
Xiao Zuhe Proposal to Amend the Terms Related with Company’s Articles of
Abstention vote
Association
Explanation of
the
Amendments to the provisions of the amendment to the articles relating to the articles of association of the
Independent
company, Mr Shaw thinks that the scheme has its pros and cons, and therefore abstain from voting.
Directors
Amendments to the provisions of the amendment to the articles relating to the articles of association of the
proposing
company, Mr Shaw thinks that the scheme has its pros and cons, and therefore abstain from voting.
objection on
relevant events
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
During the Reporting Period, the Independent Directors of the Company vigorously attended the
relevant meetings, carefully reviewed each proposal, objectively stated their own views and
opinions, knew of the R&D progress and the operating situation of the Company, the execution
situation of the internal control construction and the resolutions of the meetings of the Board of
Directors and as well as the Annual General Meeting.
As the expert of the involved each field, the Independent Directors put forward the constructive
advices by use of their own professional knowledge towards the internal management, including: to
strengthen the business process management, to strengthen the researches on the cutting-edge
technology of the color TV and to strengthen the cash flow and the accounts receivable
management and so on. The Company carefully adopted the advices from the Independent Directors
and 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 of
Directors
The company had constituted the Work Rules for the Financial Audit Committee under the Board
which illustrated the exact personnel, obligations and rights of the Financial Audit Committee under
Konka Group Co., Ltd. Annual Report 2016
the Board. In Y2016, based on the principle of faithfulness, the major execution situations of the
Financial Audit Committee under the Board were as follows:
1. Reviewed financial statements of Annual Report 2015, First Quarterly Report 2016, Semi-Annual
Report 2016, and the Third Quarterly Report 2016, and had no objection to the aforesaid financial
statements.
2. During the preparation of Annual Report 2016, the Company fulfilled the following duties:
(1) Issued the Notes of the Events such as the Audit Work Arrangement of the Finanical Audit
Committee and approved the arrangement for 2016 annual auditing of the Company;
(2) Issued Audit Opinion of the Financial Audit Committee on Financial Accounting Statements
Prepared by the Company before CPAs’ entry of Audit;
(3) Communicated and exchanged ideas with the CPAs responsible for annual auditing on the pro
Blems occurring during the auditing;
(4) Issued Audit Opinion on Financial Accounting Statements of the Company after CPAs Issued
the Preliminary Audit Opinion;
(5) Issued Summary Report on 2016 Annual Auditing by Ruihua Certified Public Accountants;
(6) Submitted the Resolution of the 2016 Annual Financial Statement of the Company to the Board;
(7) Submitted the Resolution of engagement of the CPAs in 2017 to the Board;
3. In 2016, according to the authorization of the Board of Directors, the Financial Audit Committee
accepted the report on the work of the Company’s Internal Auditing Department and carried out
management over the Internal Auditing Department of the Company and its work.
(II) Summary report on the performance of the Remuneration and Appraisal Committee
subject to the Board of Directors
The company had constituted the Work Rules for the Remuneration and Appraisal Committee under
the Board which illustrated the exact personnel, obligations and rights of the Remuneration and
Appraisal Committee under the Board. In Y2016, based on the principle of faithfulness, the major
execution situations of the Remuneration and Appraisal Committee under the Board were as follows:
During the preparation of Annual Report 2016, the Remuneration and Appraisal Committee subject
to the Board of Directors issued the Audit Opinion on the Disclosed Remuneration Situation of the
Directors, Supervisors and Senior Executives of the Company, which considered the condition of
the remuneration of the Directors, Supervisors and Senior Executives of the Company disclosed in
the 2016 Annual Report was verified. The disclosed remuneration situation of the Directors,
Supervisors and Senior Executives of the Company met with the remuneration management system
without any situation that violated the remuneration management system of the Company.
(III) Summary report on the performance of the Nominations Committee subject to the Board
of Directors
The company had constituted the Work Rules for the Nominations Committee under the Board
Konka Group Co., Ltd. Annual Report 2016
which illustrated the exact personnel, obligations and rights of the Nominations Committee under
the Board. In Y2016, based on the principle of faithfulness, the Nominations Committee under the
Board did not submit the proposal.
(IV) Summary report on the performance of the Strategy Committee subject to the Board of
Directors
The company had constituted the Work Rules for the Strategy Committee under the Board which
illustrated the exact personnel, obligations and rights of the Strategy Committee under the Board. In
Y2016, based on the principle of faithfulness, submitted the Proposal on the Developing Strategies
of Konka by the Strategy Committee.
VII. Performance of the Supervisory Committee
During the Reporting Period, the Supervisory Committee found whether there was risk in the
Company in the supervisory activity
□Yes √ No
The
superv
isory
commi
ttee
made
no
objecti Disclosure
on to Name of the Index on the
Supervisors Disclosure
events Convened Date Resolutions of the Resolutions Specified
Present Date
under Meeting Website for the
superv Resolutions
ision
during
the
Report
ing
Period
.Meeting
7th Proposal to http://www.cni
Hao Gang, Unanimously
Session Formulate the nfo.com.cn/fina
26 Jan. 2016 Wang Youlai, voted agreed by 27 Jan. 2016
of the 8 th
Specification on lpage/2016-01-
Li Jun the participants
Board of the Behavior of 27/1201943172
Konka Group Co., Ltd. Annual Report 2016
Meeting Director, .PDF
Supervisor and
Senior Manager
2015 Annual
Report, 2015 Work
Report of the
Board of
Supervisors, 2015
8th http://www.cni
Self-Assessment
Session Hao Gang, Unanimously nfo.com.cn/fina
Report of Internal
of the 8 th
6 Apr. 2016 Wang Youlai, voted agreed by lpage/2016-04- 8 Apr. 2016
Control, Proposal
Board of Li Jun the participants 08/1202150026
on the General
Meeting .PDF
Election of the
Non-employee
Supervisor of the
Board of
Supervisors
Proposal on
Company’s
Complying with
the condition for
Privately Issuing
A-shares; Proposal
on Company’s
Privately Issuing
A-shares to
Specific Object;
Proposal on the
9 th
Company’s Note http://www.cni
Session Hao Gang, for not Compiling Unanimously nfo.com.cn/fina
of the 8th 12 Apr. 2016 Wang Youlai, the Special Report voted agreed by lpage/2016-04- 13 Apr. 2016
Board of Li Jun for Previous the participants 13/1202169866
Meeting Raised Fund Using .PDF
Status; Proposal on
Company’s
Feasibility
Analysis Report
for Privately
Issuing A-shares
Fund Usage;
Proposal on the
Company’s Plan
on Privately
Issuing A-shares;
Konka Group Co., Ltd. Annual Report 2016
Proposal to Invite
the General
Meeting of
Shareholders to
Authorize the
Board of Directors
to handle the
related Matters on
the Matters related
with Privately
Issuing A-shares;
Proposal on
Formulating the
Shareholder Return
Planning in Future
Three Years
(2016-2018) in
Konka Group
Co.,Ltd.; Proposal
to Amend Raising
Fund Management
System in Konka
Group Co.,Ltd.;
Proposal on the
Company’s
Involved
Associated Trade
Matter on Privately
Issuing A-shares;
Proposal on
Agreeing Overseas
Chinese Town
Enterprise Co. To
Free from
Increasing the
Stock with offer;
Proposal on
Signing Effective
Share Subscribing
Contract Attached
with Condition
between the
Company and
Subscribing
Konka Group Co., Ltd. Annual Report 2016
Object; Proposal
on Adopting
Filling Measures
for Diluted Returns
at Sight for
Privately Issuing
A-shares; Proposal
on the
Commitment for
Adopting Filling
Measures for
Diluted Returns at
Sight for Privately
Issuing A-shares
released by All
Directors, Senior
Managers and
Controlling
Shareholders.
10th
Session Hao Gang, Unanimously
2016 1st Quarter
of the 8th 27 Apr. 2016 Wang Youlai, voted agreed by N/A
Report
Board of Li Jun the participants
Meeting
11th
Session Hao Gang, Unanimously
2016 Semi-annual
of the 8 th
26 Aug. 2016 Wang Youlai, voted agreed by N/A
Report
Board of Li Jun the participants
Meeting
12th
Session Hao Gang, Unanimously
2016 3rd Quarter
of the 8 th
28 Oct. 2016 Wang Youlai, voted agreed by N/A
Report
Board of Li Jun the participants
Meeting
VIII. Appraisal and incentive mechanism for senior management staffs
In order to enable the senior management staffs of the Company give better performance of their
duties, and clarify their rights and obligations, the Company established and improved a fair,
transparent and efficient Performance Appraisal Standard and Incentive & Restraint Mechanism for
the senior management staffs. The Company assessed the duty performance and completion of
business of senior management staffs in terms of professional skills, management level and jo B
performance; took the salary plus bonus as a main incentive way, to improve the incentive of senior
Konka Group Co., Ltd. Annual Report 2016
management. The senior management staff was appraised by the Board of Directors, which was
supervised by the Supervisory Committee.
IX. Internal Control
1. Particulars about significant defects found in the internal control during Reporting Period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal
31 Mar. 2017
Report on Internal Control
Disclosure index of the Self-appraisal
www.cninfo.com.cn
Report on Internal Control
The proportion of total assets included
in evaluation scope entities in the
More than 90%
Company's total assets of the
consolidated financial statements
The proportion of operation revenue
included in evaluation scope entities in
More than 90%
the Company's operation revenue of the
consolidated financial statements
Defect judging standards
Category Financial Report Non-Financial Report
I. Those with the following characteristics should be I. The following signs indicated there may
recognized as great defect: 1. found out there were exist great defect among the internal
malpractices of the Directors, Supervisors and Senior control of the non-financial report; 1. the
Executives of the Company that formed significant influences operating activities of the enterprises
on the financial report; 2. the Company revised the published seriously violated the national laws and
financial report and revised the great misstatements caused by regulations; 2. negative news frequently
the malpractices or the mistakes; 3. CPA found out there was disclosed by the media which caused
great misstatement of the current financial report while didn’t significant harm to the Company’s
found during the operating process of the internal control; 4. reputation; 3. the core management team
the supervision of the internal control by the Finance Audit left their positions one after another or the
Qualitative
Committee and the internal audit institution of the Company outflow of the key position personnel was
criteria
was invalid; 5. not yet revised the great defect after the serious; 4. significant business lacked of
reasonable period as which was discovered among the internal systematic control of the system was
control assessment; 6. the significant business lacked of invalid; great defect discovered among the
systematic control or the systematic control was invalid. II. internal control assessment not yet be
Those with the following characteristics should be recognized revised in time. II. The following signs
as significant defect: 1. not yet chosen or applied the indicated there may exist significant defect
accounting polices according to the generally accepted among the internal control of the
accounting standards; 2. not yet constructed the anti-spam non-financial report: 1. negative news
process or control measures; 3. as for the accounts disposal of occurred rather frequently which caused
the unconventional or special transactions, there was no rather big harm to the Company’s
Konka Group Co., Ltd. Annual Report 2016
corresponding control mechanism or execution or the reputation; 2. the outflow of the key
existence of the corresponding supplement control; 4. there position personnel was rather serious; 3.
was one or multiple defects during the control of the compile there was obvious defect among the
of the financial report at the period-end and could not control system of the significant business;
reasonable guarantee the statement of the compiled financial 4. the significant defect found among the
report reach the real and accurate target; 5. not yet revised the internal control assessment not yet be
significant defect after the reasonable period as which was revised in time. III. Other defects from the
discovered among the internal control assessment. III. Other internal control hadn’t reached the
defects from the internal control hadn’t reached the recognition standards of the great defect or
recognition standards of the great defect or significant defect significant defect, should be recognized as
should be recognized as general defect. general defect.
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 Reference to the implementation of
Quantitative
Company≤potential misstatement amount ＜ 1% of the gross quantitative standards for internal control
criteria
profit margin of the 2015 consolidated financial report of the defect assessment of financial reporting.
Company; general defect: potential misstatement amount ＜
0.5% of the gross profit margin of the 2015 consolidated
financial report of the Company.
Number of
significant
defects of
financial report
(Piece)
Number of
significant
defects of non-
financial report
(Piece)
Number of
important defects
of financial
report (Piece)
Number of
important defects
of non-financial
report (Piece)
X. Audit report on internal control
√ Applicable □ Not applicable
Audit 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
Konka Group Co., Ltd. Annual Report 2016
according to the C-SOX and the relevant regulations on 31 Dec. 2016.
Particulars about Audit Report on
Disclosure
Internal Control
Type of Audit Report on Internal Control Unqualified auditor’s report
Whether there is significant defect in
No
non-financial report
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 Report from the Board or not?
√ Yes □ No
Konka Group Co., Ltd. Annual Report 2016
Section X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue
before the approval date of this Report or were due but could not be redeemed in full?
No.
Konka Group Co., Ltd. Annual Report 2016
Section XI Financial Report
I Auditor’s report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 03/29/2017
Name of the auditor Ruihua Certified Public Accountants (LLP)
No. of the auditor’s report Ruihua Audit Report [2017] No. 44050001
Name of CPA Tang Qimei, Shen Lingzhi
Text of the Auditor’s Report
Auditor’s Report
Ruihua Audit Report [2017] No. 44050001
All shareholders of Konka Group Co., Ltd.,
We have audited the accompanying financial statements of Konka Group Co., Ltd. (the
“Company”), which comprise the Company’s and consolidated balance sheets as at December 31,
2016, the Company’s and consolidated income statements, the Company’s and consolidated cash
flow statements, the Company’s and consolidated statements of changes in shareholders’ equity for
the year then ended, as well as the notes to the financial statements.
1. The management’s responsibility for the financial statements
The management of the Company is responsible for the preparation and fair presentation of these
financial statements. Such a responsibility includes: (1) preparing financial statements according to
the Accounting Standards for Business Enterprises and make them a fair presentation; and (2)
designing, implementing and maintaining internal control relevant to the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
2. Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
Konka Group Co., Ltd. Annual Report 2016
have conducted our audit in accordance with the Audit Standards for Chinese Registered
Accountants, which require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance as to whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risks assessments, the auditor considers the internal control
related to the preparation of the financial statements so as to design proper audit procedures. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a
basis for us to express auditing opinion.
3. Auditor’s opinion
In our opinion, the financial statements of the Company have been prepared according to the
Accounting Standards for Business Enterprises in all material aspects, which give a fair view of the
Company’s and consolidated financial positions as at December 31, 2016 and the Company’s and
consolidated operating results and cash flows for the year then ended.
Ruihua Certified Public Accountants (LLP) Chinese CPA:
Beijing China Chinese CPA:
March 29, 2017
II Financial statements
Currency unit for the financial statements: RMB
1. Consolidated balance sheet
Konka Group Co., Ltd. Annual Report 2016
Prepared by Konka Group Co., Ltd.
Unit: RMB
Item December 31, 2016 December 31, 2015
Current assets:
Monetary funds 2,617,606,256.42 1,706,446,928.92
Settlement reserve
Interbank lendings
Financial assets at fair value through profit/loss 252,084,994.12 33,196,377.28
Derivative financial assets
Notes receivable 2,871,633,498.82 2,880,860,750.44
Accounts receivable 2,307,965,548.49 2,048,813,439.34
Accounts paid in advance 274,810,658.72 193,664,620.66
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserve
Interest receivable 1,342,063.84 7,426,409.52
Dividends receivable 10,171,609.48
Other accounts receivable 222,389,921.80 160,165,779.82
Financial assets purchased under agreements to resell
Inventories 4,287,413,944.35 2,882,515,913.28
Assets held for sale
Non-current assets due within one year
Other current assets 562,204,116.20 647,311,938.45
Total current assets 13,407,622,612.24 10,560,402,157.71
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 314,967,639.36 311,974,282.66
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 309,648,120.37 190,573,524.29
Investment property 222,086,904.26 227,718,178.53
Fixed assets 1,573,978,914.03 1,763,503,189.50
Construction in progress 315,536,437.05 207,854,180.88
Engineering materials
Konka Group Co., Ltd. Annual Report 2016
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 302,045,627.44 352,591,887.48
R&D expenses
Goodwill 3,597,657.15 3,597,657.15
Long-term deferred expenses 91,901,533.39 82,846,982.07
Deferred tax assets 701,734,152.68 549,305,508.01
Other non-current assets
Total non-current assets 3,835,496,985.73 3,689,965,390.57
Total assets 17,243,119,597.97 14,250,367,548.28
Current liabilities:
Short-term borrowings 6,562,834,226.51 4,150,773,195.76
Borrowings from the Central Bank
Money deposits accepted and inter-bank deposits
Interbank borrowings
Financial liabilities at fair value through profit/loss 337,263.13
Derivative financial liabilities
Notes payable 863,709,138.39 929,176,857.06
Accounts payable 3,160,073,575.56 2,980,416,983.25
Accounts received in advance 1,201,426,223.70 349,784,807.32
Financial assets sold for repurchase
Fees and commissions payable
Payroll payable 273,059,516.65 279,631,258.71
Taxes payable 121,905,421.18 92,097,951.90
Interest payable 21,344,172.45 20,552,763.14
Dividends payable
Other accounts payable 1,444,349,986.74 1,550,931,573.35
Reinsurance premiums payable
Insurance contract reserve
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities held for sale
Non-current liabilities due within one year 41,025.60 573,398,959.65
Konka Group Co., Ltd. Annual Report 2016
Other current liabilities
Total current liabilities 13,649,080,549.91 10,926,764,350.14
Non-current liabilities:
Long-term borrowings 70,000,000.00 23,700,000.00
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term accounts payable 30,102,564.14 30,133,333.37
Long-term payroll payable 18,151,659.90 23,435,856.86
Special payables
Provisions 7,551,985.10 4,629,554.61
Deferred income 130,571,125.42 162,786,004.20
Deferred tax liabilities 19,162,818.83 3,468,031.97
Other non-current liabilities
Total non-current liabilities 275,540,153.39 248,152,781.01
Total liabilities 13,924,620,703.30 11,174,917,131.15
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 79,723,092.04 78,209,535.19
Less: Treasury shares
Other comprehensive income -6,932,104.65 3,155,744.00
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Provisions for general risks
Retained earnings -427,163,254.63 -522,836,282.66
Equity attributable to owners of the Company 2,901,481,607.04 2,814,382,870.81
Minority interests 417,017,287.63 261,067,546.32
Total owners’ equity 3,318,498,894.67 3,075,450,417.13
Total liabilities and owners’ equity 17,243,119,597.97 14,250,367,548.28
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei
Head of the accounting department: Li Chunlei
Konka Group Co., Ltd. Annual Report 2016
2. Balance sheet of the Company
Unit: RMB
Item December 31, 2016 December 31, 2015
Current assets:
Monetary funds 982,562,273.45 502,899,530.83
Financial assets at fair value through profit/loss 39,894,844.12 7,184,035.29
Derivative financial assets
Notes receivable 2,513,459,083.61 2,635,643,772.62
Accounts receivable 3,145,529,199.35 1,417,915,276.56
Accounts paid in advance 523,905,219.52 372,509,871.77
Interest receivable 4,502,350.43 14,901,123.48
Dividends receivable
Other accounts receivable 1,725,494,161.08 938,447,798.08
Inventories 1,926,824,243.11 1,771,302,947.50
Assets held for sale
Non-current assets due within one year
Other current assets 505,418,961.79 530,272,796.83
Total current assets 11,367,590,336.46 8,191,077,152.96
Non-current assets:
Available-for-sale financial assets 270,217,639.36 271,924,282.66
Held-to-maturity investments 170,000,000.00 352,000,000.00
Long-term accounts receivable
Long-term equity investments 2,383,970,009.87 1,621,195,118.22
Investment property 222,086,904.26 227,718,178.53
Fixed assets 499,826,176.39 512,933,612.51
Construction in progress 11,754,885.34 12,619,010.21
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 90,880,022.23 88,336,594.02
R&D expenses
Goodwill
Long-term deferred expenses 66,995,753.17 57,865,790.98
Konka Group Co., Ltd. Annual Report 2016
Deferred tax assets 656,704,805.39 504,252,794.29
Other non-current assets
Total non-current assets 4,372,436,196.01 3,648,845,381.42
Total assets 15,740,026,532.47 11,839,922,534.38
Current liabilities:
Short-term borrowings 5,436,958,840.80 1,022,612,362.58
Financial liabilities at fair value through profit/loss 337,263.13
Derivative financial liabilities
Notes payable 1,454,982,347.31 377,002,860.08
Accounts payable 3,710,175,718.31 5,173,897,087.35
Accounts received in advance 322,402,357.59 251,204,710.89
Payroll payable 131,415,800.19 118,684,992.99
Taxes payable 19,823,949.08 31,360,675.68
Interest payable 23,767,528.97 7,761,519.53
Dividends payable
Other accounts payable 1,760,751,455.81 1,667,884,936.14
Liabilities held for sale
Non-current liabilities due within one year 0.00
Other current liabilities
Total current liabilities 12,860,615,261.19 8,650,409,145.24
Non-current liabilities:
Long-term borrowings 40,000,000.00
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Special payables
Provisions 7,551,985.10 4,629,554.61
Deferred income 82,166,818.30 88,668,785.51
Deferred tax liabilities 12,026,251.50 1,935,167.63
Other non-current liabilities
Total non-current liabilities 141,745,054.90 95,233,507.75
Total liabilities 13,002,360,316.09 8,745,642,652.99
Konka Group Co., Ltd. Annual Report 2016
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 64,794,108.39 46,505,607.34
Less: Treasury shares
Other comprehensive income 6,714,437.62 1,803,252.77
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Retained earnings -589,696,203.91 -209,882,853.00
Total owners’ equity 2,737,666,216.38 3,094,279,881.39
Total liabilities and owners’ equity 15,740,026,532.47 11,839,922,534.38
3. Consolidated income statement
Unit: RMB
Item December 31, 2016 December 31, 2015
1. Operating revenues 20,299,348,136.21 18,395,177,035.98
Including: Sales income 20,299,348,136.21 18,395,177,035.98
Interest income
Premium income
Fee and commission income
2. Operating costs 20,865,416,619.07 20,010,568,582.72
Including: Cost of sales 17,518,330,342.99 16,055,497,185.62
Interest expenses
Fee and commission expenses
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and surtaxes 111,967,480.96 94,523,398.90
Selling expenses 2,285,998,285.97 2,448,337,549.43
Administrative expenses 607,579,115.65 695,731,013.59
Finance costs 154,764,546.12 350,616,323.55
Konka Group Co., Ltd. Annual Report 2016
Asset impairment loss 186,776,847.38 365,863,111.63
Add: Profit on fair value changes (“-” means loss) -14,617,369.08 32,591,836.13
Investment income (“-” means loss) 348,445,927.65 13,574,652.77
Including: Share of profit/loss of associates and joint ventures 12,738,812.54 -18,793,708.66
Exchange gains (“-” means loss)
3. Operating profit (“-” means loss) -232,239,924.29 -1,569,225,057.84
Add: Non-operating income 270,828,423.34 158,538,297.00
Including: Profit on disposal of non-current assets 5,205,974.43 1,431,893.68
Less: Non-operating expense 10,853,641.54 134,780,910.57
Including: Loss on disposal of non-current assets 2,967,838.13 12,339,287.69
4. Total profit (“-” means loss) 27,734,857.51 -1,545,467,671.41
Less: Corporate income tax -64,440,500.57 -269,622,908.76
5. Net profit (“-” means loss) 92,175,358.08 -1,275,844,762.65
Net profit attributable to owners of the Company 95,673,028.03 -1,256,819,314.51
Minority interests’ income -3,497,669.95 -19,025,448.14
6. Other comprehensive income net of tax -10,293,358.91 -12,414,464.72
Other comprehensive income net of tax attributable to owners
-10,087,848.65 -13,015,733.91
of the Company
6.1 Other comprehensive income that will not be
reclassified into profit/loss
6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees
that cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently
-10,087,848.65 -13,015,733.91
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees
that will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of
4,965,780.75 928,330.73
available-for-sale financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences -15,053,629.40 -13,944,064.64
6.2.6 Other
Other comprehensive income net of tax attributable to
-205,510.26 601,269.19
minority interests
7. Total comprehensive income 81,881,999.17 -1,288,259,227.37
Konka Group Co., Ltd. Annual Report 2016
Attributable to owners of the Company 85,585,179.38 -1,269,835,048.42
Attributable to minority interests -3,703,180.21 -18,424,178.95
8. Earnings per share
8.1 Basic earnings per share 0.0397 -0.5219
8.2 Diluted earnings per share 0.0397 -0.5219
Where business mergers under the same control occurred in this Reporting Period, the net profit
achieved by the merged parties before the business mergers was RMB , with the corresponding
amount for the last period being RMB.
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei
Head of the accounting department: Li Chunlei
4. Income statement of the Company
Unit: RMB
Item December 31, 2016 December 31, 2015
1. Operating revenues 13,972,090,704.33 15,799,396,382.50
Less: Operating costs 12,336,816,440.54 14,456,947,091.06
Taxes and surtaxes 37,856,483.10 35,952,751.61
Selling expenses 1,655,163,345.34 1,754,767,878.82
Administrative expenses 418,505,210.84 365,394,474.96
Finance costs 222,678,508.21 32,911,021.52
Asset impairment loss 134,659,777.14 203,549,312.14
Add: profit on fair value changes (“-” means loss) 32,373,545.70 7,184,035.29
Investment income (“-” means loss) 146,984,583.30 60,463,823.25
Including: Share of profit/loss of associates and joint ventures 29,506,367.44 -4,991,699.40
2. Operating profit (“-” means loss) -654,230,931.84 -982,478,289.07
Add: Non-operating income 136,056,632.09 128,884,576.48
Including: Profit on disposal of non-current assets 737,683.92 141,921.85
Less: Non-operating expense 5,807,098.97 102,453,940.21
Including: Loss on disposal of non-current assets 487,539.02 3,698,388.83
3. Total profit (“-” means loss) -523,981,398.72 -956,047,652.80
Less: Corporate income tax -144,168,047.81 -258,548,667.17
4. Net profit (“-” means loss) -379,813,350.91 -697,498,985.63
5. Other comprehensive income net of tax 4,911,184.85 1,331,425.26
5.1 Other comprehensive income that will not be reclassified into
profit and loss
Konka Group Co., Ltd. Annual Report 2016
5.1.1 Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
5.2 Other comprehensive income to be subsequently reclassified
4,911,184.85 1,331,425.26
into profit/loss
5.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method
5.2.2 Profit/loss on fair value changes of available-for-sale
4,965,780.75 928,330.73
financial assets
5.2.3 Profit/loss on reclassifying held-to-maturity investments
into available-for-sale financial assets
5.2.4 Effective profit/loss on cash flow hedges
5.2.5 Currency translation differences -54,595.90 403,094.53
5.2.6 Other
6. Total comprehensive income -374,902,166.06 -696,167,560.37
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB
Item December 31, 2016 December 31, 2015
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 18,285,259,305.39 18,443,639,036.67
Net increase in money deposits from customers and interbank
placements
Net increase in loans from the Central Bank
Net increase in funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase in deposits of policy holders and investment fund
Net increase in disposal of financial assets at fair value through
profit/loss
Interest, fees and commissions received
Net increase in interbank borrowings
Net increase in funds in repurchase business
Tax refunds received 358,031,487.94 430,680,435.37
Konka Group Co., Ltd. Annual Report 2016
Cash received from other operating activities 436,160,333.16 443,686,424.74
Subtotal of cash inflows from operating activities 19,079,451,126.49 19,318,005,896.78
Cash paid for goods and services 16,509,132,778.70 14,488,034,947.99
Net increase in loans and advances to customers
Net increase in funds deposited in the Central Bank and
interbank placements
Cash paid for claims of original insurance contracts
Interest, fees and commissions paid
Cash paid as policy dividends
Cash paid to and for employees 1,649,736,066.93 1,738,319,265.97
Taxes paid 656,221,900.55 616,762,165.13
Cash paid for other operating activities 1,247,616,982.54 1,185,289,035.03
Subtotal of cash outflows due to operating activities 20,062,707,728.72 18,028,405,414.12
Net cash flows from operating activities -983,256,602.23 1,289,600,482.66
2. Cash flows from investing activities:
Cash received from retraction of investments 31,642,659.96 145,165,277.44
Cash received as investment income 59,446,152.79 23,260,902.17
Net cash received from disposal of fixed assets, intangible assets
4,491,419.45 3,631,054.50
and other long-term assets
Net cash received from disposal of subsidiaries or other business
8,889.24
units
Cash received from other investing activities 9,883,683,340.31 3,646,914,849.00
Subtotal of cash inflows from investing activities 9,979,263,572.51 3,818,980,972.35
Cash paid to acquire fixed assets, intangible assets and other
172,054,580.04 234,096,470.72
long-term assets
Cash paid for investment 231,850,384.41 78,306,112.00
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 9,472,940,943.57 3,658,501,268.22
Subtotal of cash outflows due to investing activities 9,876,845,908.02 3,970,903,850.94
Net cash flows from investing activities 102,417,664.49 -151,922,878.59
3. Cash flows from financing activities:
Cash received from capital contributions 262,112,331.23 78,701,328.03
Including: Cash received from minority shareholder
262,112,331.23 71,151,328.03
investments by subsidiaries
Cash received as borrowings 6,897,808,624.31 2,937,450,105.14
Konka Group Co., Ltd. Annual Report 2016
Cash received from issuance of bonds
Cash received from other financing activities 12,808,000.00 118,110,469.89
Subtotal of cash inflows from financing activities 7,172,728,955.54 3,134,261,903.06
Repayment of borrowings 5,256,766,118.99 4,071,657,524.17
Cash paid for interest expenses and distribution of dividends or
139,915,601.19 140,363,063.80
profit
Including: dividends or profit paid by subsidiaries to minority
461,972.51 1,343,265.96
interests
Cash paid for other financing activities 443,297,884.17 176,394,710.03
Sub-total of cash outflows due to financing activities 5,839,979,604.35 4,388,415,298.00
Net cash flows from financing activities 1,332,749,351.19 -1,254,153,394.94
4. Effect of foreign exchange rate changes on cash and cash
80,837,680.34 -35,606,194.86
equivalents
5. Net increase in cash and cash equivalents 532,748,093.79 -152,081,985.73
Add: Opening balance of cash and cash equivalents 1,488,154,851.35 1,640,236,837.08
6. Closing balance of cash and cash equivalents 2,020,902,945.14 1,488,154,851.35
6. Cash flow statement of the Company
Unit: RMB
Item 2016
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 11,834,479,194.94 12,246,114,167.03
Tax refunds received 160,071,895.68 179,546,436.62
Cash received from other operating activities 2,128,714,960.22 1,745,067,849.17
Subtotal of cash inflows from operating activities 14,123,266,050.84 14,170,728,452.82
Cash paid for goods and services 12,638,560,047.48 10,398,532,975.42
Cash paid to and for employees 915,901,145.04 923,142,975.45
Taxes paid 281,931,582.32 270,882,083.75
Cash paid for other operating activities 3,263,567,880.24 1,780,957,816.25
Subtotal of cash outflows due to operating activities 17,099,960,655.08 13,373,515,850.87
Net cash flows from operating activities -2,976,694,604.24 797,212,601.95
2. Cash flows from investing activities:
Cash received from retraction of investments 12,427,433.07 130,102,809.09
Cash received as investment income 51,737,043.81 59,458,173.75
Net cash received from disposal of fixed assets, intangible assets
1,280,614.55 57,765,301.70
and other long-term assets
Net cash received from disposal of subsidiaries or other business
Konka Group Co., Ltd. Annual Report 2016
units
Cash received from other investing activities 10,006,846,873.48 3,522,884,590.00
Subtotal of cash inflows from investing activities 10,072,291,964.91 3,770,210,874.54
Cash paid to acquire fixed assets, intangible assets and other
41,220,039.50 48,440,040.10
long-term assets
Cash paid for investment 642,016,000.00 196,857,096.00
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 10,501,287,664.77 3,774,884,590.00
Subtotal of cash outflows due to investing activities 11,184,523,704.27 4,020,181,726.10
Net cash flows from investing activities -1,112,231,739.36 -249,970,851.56
3. Cash flows from financing activities:
Cash received from capital contributions
Cash received as borrowings 5,251,690,361.51 61,422,000.00
Cash received from issuance of bonds
Cash received from other financing activities 369,933,493.64 994,745,951.79
Subtotal of cash inflows from financing activities 5,621,623,855.15 1,056,167,951.79
Repayment of borrowings 626,502,931.51 91,422,000.00
Cash paid for interest expenses and distribution of dividends or
93,670,105.28 16,842,865.65
profit
Cash paid for other financing activities 352,371,563.61 2,007,026,133.52
Sub-total of cash outflows due to financing activities 1,072,544,600.40 2,115,290,999.17
Net cash flows from financing activities 4,549,079,254.75 -1,059,123,047.38
4. Effect of foreign exchange rate changes on cash and cash
35,193,217.72 -1,310,869.10
equivalents
5. Net increase in cash and cash equivalents 495,346,128.87 -513,192,166.09
Add: Opening balance of cash and cash equivalents 478,267,624.53 991,459,790.62
6. Closing balance of cash and cash equivalents 973,613,753.40 478,267,624.53
Konka Group Co., Ltd. Annual Report 2016
7. Consolidated statement of changes in owners’ equity
2016
Unit: RMB
Equity attributable to owners of the Company
Other equity
instruments
Gene
Pre Less: Spe
Item Per Other ral Minority Total owners’
fer Treas cial Surplus Retained
Share capital pet Ot Capital reserve comprehensi risk interests equity
enc ury rese reserve earnings
ual he ve income reser
e shares rve
bo r ve
sha
nds
res
1. Balance at the
end of the prior 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
year
Add: Changes in
accounting policies
Correction of
errors in prior
periods
Business
mergers under the
same control
Other
2. Balance at the
beginning of the 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
year
Konka Group Co., Ltd. Annual Report 2016
3. Increase/
decrease in the
1,513,556.85 -10,087,848.65 95,673,028.03 155,949,741.31 243,048,477.54
period (“-” means
decrease)
3.1 Total
comprehensive -10,087,848.65 95,673,028.03 -3,703,180.21 81,881,999.17
income
3.2 Capital
increased and 159,564,888.59 159,564,888.59
reduced by owners
3.2.1 Ordinary
shares increased by 261,842,331.23 261,842,331.23
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3 Amounts
of share-based
payments charged
to owners’ equity
3.2.4 Other -102,277,442.64 -102,277,442.64
3.3 Profit
distribution
3.3.1
Appropriation to
surplus reserve
3.3.2
Appropriation to
Konka Group Co., Ltd. Annual Report 2016
general risk
provisions
3.3.3
Appropriation to
owners (or
shareholders)
3.3.4 Other
3.4 Internal
carry-forward of -35,543,805.21 -35,543,805.21
owners’ equity
3.4.1 New
increase of capital
(or share capital)
from capital reserve
3.4.2 New
increase of capital
(or share capital)
from surplus
reserve
3.4.3 Surplus
reserve for making
up loss
3.4.4 Other -35,543,805.21 -35,543,805.21
3.5 Special reserve
3.5.1
Withdrawn for the
period
3.5.2 Used in
the period
Konka Group Co., Ltd. Annual Report 2016
3.6 Other 37,057,362.06 88,032.93 37,145,394.99
4. Closing balance 2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
2015
Unit: RMB
Equity attributable to owners of the Company
Other equity
instruments
Spe Gene
Pre Less:
Item Per Other cifi ral Minority Total owners’
fer Treas Surplus Retained
Share capital pet Ot Capital reserve comprehensi c risk interests equity
enc ury reserve earnings
ual he ve income rese reser
e shares
bo r rve ve
sha
nds
res
1. Balance at the
end of the prior 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
year
Add: Changes in
accounting policies
Correction of
errors in prior
periods
Business
mergers under the
same control
Other
2. Balance at the
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
beginning of the
Konka Group Co., Ltd. Annual Report 2016
year
3. Increase/
decrease in the -1,268,859,041.5
1,203,972,704.00 -1,211,194,028.80 -13,015,733.91 67,090,012.37 -1,222,006,087.89
period (“-” means
decrease)
3.1 Total
-1,256,819,314.5
comprehensive -13,015,733.91 -18,424,178.95 -1,288,259,227.37
income
3.2 Capital
increased and 65,749,452.92 65,749,452.92
reduced by owners
3.2.1
Ordinary shares
65,749,452.92 65,749,452.92
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Amounts of
share-based
payments charged
to owners’ equity
3.2.4 Other
3.3 Profit
-12,039,727.04 19,565,831.91 7,526,104.87
distribution
3.3.1
Appropriation to
Konka Group Co., Ltd. Annual Report 2016
surplus reserve
3.3.2
Appropriation to
general risk
provisions
3.3.3
Appropriation to
-12,039,727.04 -1,343,265.96 -13,382,993.00
owners (or
shareholders)
3.3.4 Other 20,909,097.87 20,909,097.87
3.4 Internal
carry-forward of 1,203,972,704.00 -1,203,972,704.00
owners’ equity
3.4.1 New
increase of capital
(or share capital) 1,203,972,704.00 -1,203,972,704.00
from capital
reserve
3.4.2 New
increase of capital
(or share capital)
from surplus
reserve
3.4.3 Surplus
reserve for making
up loss
3.4.4 Other
3.5 Special reserve
3.5.1
Konka Group Co., Ltd. Annual Report 2016
Withdrawn for the
period
3.5.2 Used in
the period
3.6 Other -7,221,324.80 198,906.49 -7,022,418.31
4. 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
8. Statement of changes in owners’ equity of the Company
2016
Unit: RMB
Other equity
instruments
Specia
Prefe Less: Other
Item Perp l Surplus Retained Total owners’
Share capital renc Capital reserve Treasury comprehens
etual Oth reserv reserve earnings equity
e shares ive income
bond er e
share
s
s
1. Balance at the end of the prior
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
year
Add: Changes in accounting
0.00 0.00 0.00 0.00 0.00
policies
Correction of errors in prior
0.00 0.00 0.00 0.00 0.00
periods
Other 0.00 0.00 0.00 0.00 0.00
2. Balance at the beginning of the
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
year
3. Increase/ decrease in the period
18,288,501.05 4,911,184.85 -379,813,350.91 -356,613,665.01
(“-” means decrease)
Konka Group Co., Ltd. Annual Report 2016
3.1 Total comprehensive income 4,911,184.85 -379,813,350.91 -374,902,166.06
3.2 Capital increased and
reduced by owners
3.2.1 Ordinary shares
increased by shareholders
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’
equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to surplus
reserve
3.3.2 Appropriation to owners
(or shareholders)
3.3.3 Other
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of capital
(or share capital) from capital
reserve
3.4.2 New increase of capital
(or share capital) from surplus
reserve
3.4.3 Surplus reserve for
making up loss
3.4.4 Other
Konka Group Co., Ltd. Annual Report 2016
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 18,288,501.05 18,288,501.05
4. Closing balance 2,407,945,408.00 64,794,108.39 6,714,437.62 847,908,466.28 -589,696,203.91 2,737,666,216.38
2015
Unit: RMB
Other equity
instruments Specia
Less: Other
Item Prefe Perp l Surplus Retained Total owners’
Share capital Capital reserve Treasury comprehens
rence etual Oth reserv reserve earnings equity
shares ive income
share bond er e
s s
1. Balance at the end of the prior
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
year
Add: Changes in accounting
policies
Correction of errors in prior
periods
Other
2. Balance at the beginning of the
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
year
3. Increase/ decrease in the period
1,203,972,704.00 -1,203,777,881.45 1,331,425.26 -709,538,712.67 -708,012,464.86
(“-” means decrease)
3.1 Total comprehensive income 1,331,425.26 -697,498,985.63 -696,167,560.37
3.2 Capital increased and reduced 1,203,972,704.00 -1,203,972,704.00
Konka Group Co., Ltd. Annual Report 2016
by owners
3.2.1 Ordinary shares increased
1,203,972,704.00 -1,203,972,704.00
by shareholders
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’ equity
3.2.4 Other
3.3 Profit distribution -12,039,727.04 -12,039,727.04
3.3.1 Appropriation to surplus
reserve
3.3.2 Appropriation to owners
-12,039,727.04 -12,039,727.04
(or shareholders)
3.3.3 Other 0.00
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of capital
(or share capital) from capital
reserve
3.4.2 New increase of capital
(or share capital) from surplus
reserve
3.4.3 Surplus reserve for
making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
Konka Group Co., Ltd. Annual Report 2016
3.6 Other 194,822.55 194,822.55
4. 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
Konka Group Co., Ltd. Annual Report 2016
Konka Group Co., Ltd.
Notes of 2016 Financial Statement
(Monetary unit is RMB 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 was renamed to “Konka Group Co., Ltd.” (credibility code:
914403006188155783) 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 issued
by the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 8—December 31, 1991, has issued 128,869,000 RMB
ordinary shares (A-share) at a par value of RMB1.00 per share, of which the original net
assets were converted into 98,719,000 state-owned institutional shares, 30,150,000 new
shares were issued, including 26,500,000 circulating shares issued to the public and
3,650,000 staff shares issued to the staff of the Company.
On January 29, 1992, with approval from the SRYFZ No. 106 [1991] document as issued by
the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 20, 1991— January 31, 1992, has issued to investors
abroad 58,372,300 RMB special shares (B-share) at a par value of RMB1.00 per share, of
which 48,372,300 shares held by the former foreign investor and founder—Hong Kong
Ganghua Electronic Group Co., Ltd. are converted into foreign legal person’s shares, and
10,000,000 B-shares are issued additionally.
On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout 1992 was
Konka Group Co., Ltd. Annual Report 2016
adopted at the second general meeting of shareholders of the Company. With approval from
the SZBF No. 2 [1993] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY 1992 as of April 30, 1993: distributing
RMB 0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The total
capital stock reached 187,473,150 shares after this distribution.
On April 18, 1994, the Proposal on Profit Distribution and Dividend Payout 1993 was
adopted at the third general meeting of shareholders of the Company. With approval from the
SZBF No. 115 [1994] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY1993 as of June 10, 1994: distributing
RMB 1.10 in cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus share
capitalized from capital public reserve) for every 10 shares to all shareholders. The total
capital stock reached 281,209,724 shares after this distribution and capitalization from capital
public reserve.
On June 2, 1994, in accordance with the provisions that “staff shares could go public and be
transferred six months after listing”, as jointly promulgated by the State Commission for
Restructuring the Economic System and the State Council’s Securities Commission, the staff
shares of the Company was planned to be listed on the flow on June 6, 1994, with the prior
consent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.
On October 8, 1994, the Proposal on Negotiable Bonus Shares of B-Share Corporate
Shareholders 1992 was adopted at the 1994 interim general meeting of shareholders of the
Company. With approval from the SZBF No. 224 [1994] document as issued by Shenzhen
Securities Regulatory Office, the 16,930,305 bonus shares for FY 1992 granted to foreign
legal 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 1996
interim general metering of shareholders of the Company. With approval from the SZBF No.
5 [1996] document as issued by Shenzhen Securities Regulatory Office, and reexamination
from the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued by
China Securities Regulatory Commission, on July 16, 1996 and October 29, 1996, all
shareholders were respectively allotted three shares for every ten existing shares held at
RMB 6.28/A-share and HKD 5.85/B-share. Corporate shareholders took their respective
existing shares as bases for full subscription of the allocable shares. The total capital stock
Konka Group Co., Ltd. Annual Report 2016
reached 365,572,641 shares after this allotment.
On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the 1998 interim
general 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 such
reasons as continued weakness in B-share secondary market (lower than share allotment
price), B-share negotiation and allotment plan was canceled, and the corporate shareholders
of the Company waived the preemptive right. The total capital stock reached 389,383,603
shares after this allotment.
On June 30, 1999, the Proposal on Profit Distribution and Capitalization from Capital Public
Reserve 1998 was adopted at the eighth general meeting of shareholders of the Company. On
August 20, 1999, the profit distribution for FY 1998 was carried out: all shareholders were
presented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital public
reserve. 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 eighth
general 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. The
total 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 at
the ninth general meeting of shareholders of the Company. On July 25, 2000, the profit
distribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cash
plus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352 shares
after 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,
Konka Group Co., Ltd. Annual Report 2016
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
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
Konka Group Co., Ltd. Annual Report 2016
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 its subsidiaries are mainly engaged in the production and sales of color
TVs, white goods, mobile phones, etc.; trading; real estate development and marketing.
5. The financial statements contained herein have been approved for issue by the Board of
the Company on March 29, 2017.
6. There were 39 subsidiaries included in the consolidation scope of 2016 of the Company,
and please refer to the Notes VIII. “Equities among other entities” for details. There were 4
subsidiaries increased and 10 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 10
decreased subsidiaries 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
Corporate name Abbreviation
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Household Appliances Co., Ltd. Konka Household Appliances
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Konka Electrical Appliances Co., Ltd. Electrical Appliances
Shenzhen Konka Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances
Konka Group Co., Ltd. Annual Report 2016
Corporate name Abbreviation
Kunshan Konka Electronic Co., Ltd. Kunshan Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo Konka Precision
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Household Appliances Investment & Development Co., Ltd. Konka Household Appliances Investment
Konka Household Appliances
Konka Household Appliances International Trading Co., Ltd.
International Trading
Konka (Europe) Co., Ltd. Konka Europe
Konka Factoring (Shenzhen) Co., Ltd. Konka Factoring
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
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Shenzhen Konka E-display Co., Ltd. Konka E-display
Shenzhen E-display Service Co., Ltd. E-display Service
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Youshi Kangrong Culture Communication Co., Ltd. Youshi Kangrong
Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd. Kangqiao Jiacheng
Konka SmartTech Limited Konka SmartTech
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Shenzhen Yipingfang Network Technology Co., Ltd. Yipingfang
Konka Group Co., Ltd. Annual Report 2016
Corporate name Abbreviation
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. Mobile Interconnection
Shenzhen Konka Commercial System Technology Co., Ltd. Commercial System Technology
Zhongkang Supply Chain Management Co., Ltd. Zhongkang Supply Chain
Shenzhen Kangqiao Easy Chain Technology Co., Ltd. Kangqiao Easy Chain
Yilifang (Hainan) Technology Co., Ltd. Yilifang
Konka Technology & Industry
Chuzhou Konka Technology & Industry Development Co., Ltd.
Development
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 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,
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
Konka Group Co., Ltd. Annual Report 2016
the Accounting Standards for Business Enterprises, which factually and completely present
the Company’s financial positions as at 31 Dec. 2016, business results and cash flows for the
year of 2016, 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 and
accounting estimates according to the actual production and operation characteristics and the
regulations 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 of
the significant accounting judgment and estimations made by the management layer, please
refer 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 complete
fiscal year. The Group’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year
according to the Gregorian calendar.
2. Operating cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing
to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which
is 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 and
its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use
Renminbi as their bookkeeping base currency. As for the overseas subsidiaries of the
Konka Group Co., Ltd. Annual Report 2016
Company-America Konka, European Konka and Indonesia Konka, should be respectively
confirmed the US Dollar, Euro and Indonesia Rupiah as their recording currency according
its major economic environment of their operating address; subsidiaries such as Hong Kong
Konka, Konka Household Appliances International Trading, Konka Zhisheng and
Zhongkang Supply Chain use HK Dollar as their recording currency. And the Group adopted
Renminbi as the bookkeeping base currency when preparing the financial statements for 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 the
combining enterprises are ultimately controlled by the same party or the same parties both
before and after the business combination and on which the control is not temporary. In a
business combination under the same control, the party which obtains control of other
combining enterprise(s) on the combining date is the combining party, the other combining
enterprise(s) is (are) the combined party. The “combining date” refers to the date on which
the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be
measured 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 combining
party and the carrying amount of the consideration paid by it (or the total par value of the
shares issued), the additional paid-in capital (share premium) shall be adjusted. If the
additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings
shall be adjusted.
The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
Konka Group Co., Ltd. Annual Report 2016
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties
both before and after the business combination. In a business combination not under the same
control, the party which obtains the control on other combining enterprise(s) on the purchase
date 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 include
the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and 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 for
the equity securities or debt securities issued by the acquirer as the combination
consideration shall be recorded into the amount of initial measurement of the equity
securities or debt securities. The involved contingent consideration shall be recorded into the
combination costs at its fair value on the acquiring date. Where new or further evidences
emerge, within 12 months since the acquiring date, against the existing circumstances on the
acquiring date and the contingent consideration thus needs to be adjusted, the combined
goodwill shall be adjusted accordingly. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their
fair values at the acquiring date. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less then the fair value of
the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it
obtains from the acquiree as well as the combination costs. If, after the reexamination, the
combination costs are still less than the fair value of the identifiable net assets it obtains from
the acquiree, the acquirer shall record the balance into the profits and losses of the current
period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are
not recognized into deferred income tax liabilities due to their not meeting the recognition
standards, if new or further information shows that the relevant situation has existed on the
acquiring date and the economic benefits brought by the deductible temporary differences the
Konka Group Co., Ltd. Annual Report 2016
acquirer obtains from the acquiree on the acquiring date can be realized, they shall be
recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where
the goodwill is not sufficient to be offset, the difference shall be recognized into the profits
and losses in the current period. In other circumstances than the above, where the deductible
temporary 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 of
exchange, according to about the 5th Notice about the Treasury Issuing the Accounting
Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the “package
deal” (see note 4, 5 (2)), Whether the deals are “package deal” or not, belong to the “package
deal”, see the previous paragraphs described in this section and note 4, 12 “long term equity
investment transaction” and conduct accounting treatment, those not belong to the “package
deal” distinguish between the individual financial statements and the consolidated financial
statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of
the Group holds in the acquiree before the acquiring date shall be considered as initial cost of
the investment. Other related comprehensive gains in relation to the equity interests that the
Group holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains).
In the Group’s consolidated financial statements, as for the equity interests that the Group
holds in the acquiree before the acquiring date, they shall be re-measured according to their
fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring
date. Other related comprehensive gains in relation to the equity interests that the Group
holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
Konka Group Co., Ltd. Annual Report 2016
re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
5. Methods for preparing consolidated financial statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The
term “control” is the power of the Group upon an investee, with which it can take part in
relevant activities of the investee to obtain variable returns and is able to influence the
amount of returns. A subsidiary is an enterprise or entity controlled by the Group.
Once any changes in the relevant facts or situations result in any changes in the elements
involved in the aforesaid definition of “control”, the Company shall carry out a reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Group obtains control on their
net assets and operation decision-making and are de-consolidated from the date when such
control ceases. As for a disposed subsidiary, its operating results and cash flows before the
disposal date has been appropriately included in the consolidated income statement and cash
flow statement; and as for subsidiaries disposed in the current period, the opening items in
the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business
combination not under the same control, its operating results and cash flows after the
acquiring date have been appropriately included in the consolidated income statement and
cash flow statement, and the opening items and comparative items in the consolidated
financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control or a combined party obtained in a takeover, its operating results and
cash flows from the beginning of the Reporting Period of the combination to the combination
date have been appropriately included in the consolidated income statement and cash flow
statement, and the comparative items in the consolidated financial statements are adjusted at
the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Group during the preparation of the consolidated
financial statements, where the accounting policies and the accounting periods are
Konka Group Co., Ltd. Annual Report 2016
inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business
combination not under the same control, the individual financial statements of the subsidiary
are 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 the
consolidated financial statements.
The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits
and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of
a subsidiary’s net profits and losses for the period that belong to minority interests is
presented as the item of “minority shareholder profits and losses” under the bigger item of
net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the
subsidiary’s opening owners’ equity, minority interests are offset.
Where the Group losses control on its original subsidiaries due to disposal of some equity
investments or other reasons, the residual equity interests are re-measured according to the
fair value on the date when such control ceases. The summation of the consideration obtained
from the disposal of equity interests and the fair value of the residual equity interests, minus
the portion in the original subsidiary’s net assets measured on a continuous basis from the
acquisition date that is enjoyable by the Group according to the original shareholding
percentage in the subsidiary, is recorded in investment gains for the period when the Group’s
control on the subsidiary ceases. Other comprehensive incomes in relation to the equity
investment in the original subsidiary are treated on the same accounting basis as the acquiree
directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control
ceases. And subsequent measurement is conducted on the residual equity interests according
to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments
or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement
of Financial Instruments. For details, see note IV, 12 “long term equity investment” or 9
“financial instruments”.
Konka Group Co., Ltd. Annual Report 2016
Where the Group losses control on its original subsidiaries due to step by step disposal of
equity investments through multiple transactions, it need to distinguish the Group losses
control on its subsidiaries due to disposal of equity investments whether belongs to a package
deal. All the transaction terms, conditions and economic impact of the disposal of
subsidiaries’ equity investment are in accordance with one or more of the following
conditions, 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 on circumstances respectively conduct accounting treatment in accordance with
the applicable principles 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
investments or other reasons” (See the front paragraph) relevant transactions of the Group
losses control on its subsidiaries due to disposal of equity investments belonging to a
package deal, considered as a transaction and conduct accounting treatment. However,
Before losing control, every disposal cost and corresponding net assets balance of subsidiary
of disposal investment are confirmed as other comprehensive income in consolidated
financial statements, which together transferred into the current profits and losses in the lose
of control , 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 to
its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement
where the Group enjoys assets and has to bear liabilities related to the arrangement. A joint
venture refers to a joint arrangement where the Group is only entitled to the net assets of the
arrangement.
Konka Group Co., Ltd. Annual Report 2016
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 it
holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne
liabilities according to the Group’s stake in the joint operation; recognizes the income from
sale of the Group’s share in the output of the joint operation; recognizes the income from sale
of the joint operation’s outputs according to the Group’s stake in it; and recognizes the
expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
When the Group, as a joint operator, transfers or sells assets (the assets not constituting
business, 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 other
joint operators in the gains and losses arising from the sale. Where impairment occurs to the
assets as prescribed in , the Group shall fully recognizes the loss for a transfer or sale of assets to a
joint operation; and shall recognize the loss according to its stake in the joint operation for a
purchase 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 deposit
that can be used for cover, and short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount
of 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 foreign
currency into amount in its bookkeeping base at the spot exchange rate (usually referring to
the central parity rate announced by the People’s Bank of China, the same below) of the
Konka Group Co., Ltd. Annual Report 2016
transaction date, while as for such transactions as foreign exchange or involving in foreign
exchange, the Company shall converted into amount in the bookkeeping base currency at
actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and
non-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
Konka Group Co., Ltd. Annual Report 2016
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 item of
“difference of foreign currency financial statement translation” under the owners’ equity; and
be recorded into disposal gains and losses at current period when disposing overseas
business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance
sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and
expense items in the profit statements shall be translated at the spot exchange rate of the
transaction date. The undistributed profits at year-begin is the undistributed profits at the end
of last year after the translation; undistributed profits at year-end shall be listed as various
distribution items after the translation; after the translation, the balance between assets and
the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains
and losses as difference of foreign currency translation. Where an enterprise disposes of an
overseas business without the control right, it shall shift the differences, which is presented
under the items of the owner’s equities in the balance sheet and which arises from the
translation of foreign currency financial statements relating to this overseas business, into the
disposal profits and losses of the current period by all or proportion of the disposed overseas
business.
Foreign cash flow shall be translated at the spot exchange rate/the weighted average of the
exchange rate of the current period of the date of cash flow incurred. The influence of
exchange rate on the cash flow shall be adjustment item and individually listed in the cash
flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts
after 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 or
some of the Group’s owner’s equity in the overseas operation or other reasons, the
Konka Group Co., Ltd. Annual Report 2016
foreign-currency statement translation difference belonging to the parent company’s owner’s
equity in relation to the overseas operation which is stated under the shareholders’ equity in
the 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 equity
investment or other reasons but the Group still has control over the overseas operation, the
foreign-currency statement translation difference in relation to the disposed part of the
overseas operation shall be recorded into minority interests instead of current gains and
losses. 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 shall
be recorded into the gains and losses of the current period of the disposal according to the
disposal ratio.
9. Financial instruments
The Group recognizes a financial asset or liability when it becomes a party of the relevant
financial instrument contract. Financial assets and liabilities are measured at fair value in
initial recognition. As for the financial assets and liabilities measured at fair value of which
changes are recorded into current gains and losses, the relevant dealing expenses are directly
recorded into gains and losses; and the dealing expenses on other kinds of financial assets
and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or
shall pay for transferring a liability in an orderly transaction on the measurement date. As for
the financial assets or financial liabilities for which there is an active market, the quoted
prices in the active market shall be used to determine the fair values thereof. The quoted
prices in the active market refers to the prices available from stock exchange, broker’s
agencies, guilds, pricing organization and etc., which represent the actual trading price under
equal transaction. Where there is no active market for a financial instrument, the enterprise
concerned 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 same
Konka Group Co., Ltd. Annual Report 2016
essential nature, the cash flow capitalization method and the option pricing model, etc., to
determine 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 and
stopped to be recognized respectively at the price of transaction date. Financial assets shall
be classified into the following four categories when they are initially recognized: (a) 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, (b) the investments which will be held to
their maturity; (c) loans and the account receivables; and (d) financial assets available for
sale.
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 be
measured at their fair value when they are initially recognized and of which the variation is
recorded 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 financial
instruments which are managed in a centralized way and for which there are objective
evidences proving that the enterprise may manage the combination by way of short-term
profit making in the near future; C. Being a derivative instrument, excluding the designated
derivative instruments which are effective hedging instruments, or derivative instruments to
financial guarantee contracts, and the derivative instruments which are connected with the
equity instrument investments for which there is no quoted price in the active market, whose
fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments.
The financial assets meeting any of the following requirements shall be designated as
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 for initial recognition: A. the designation can
Konka Group Co., Ltd. Annual Report 2016
eliminate or significantly reduce the difference of relevant gains and losses between
recognition and measurement causing from different bases for measurement of financial
assets; B. The official written documents for risk management and investment strategies of
the enterprise have clearly stated that it shall ,manage, evaluate and report to important
management personnel based on the fair value, about the financial assets group or the group
of 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 is
recorded into the profits and losses of the current period shall continue to be measured by fair
value, gains and losses of change in fair value, dividends and interest related with these
financial 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 fixed
date of maturity, a fixed or determinable amount of repo price and which the enterprise holds
for 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 measured
at the post-amortization costs, the profits and losses that arise when such financial assets or
financial liabilities are terminated from recognition, or are impaired or amortized, shall be
recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and
the interest incomes of different installments or interest expenses are calculated in light of the
actual interest rates of the financial assets or financial liabilities (including a set of financial
assets or financial liabilities). The actual interest rate refers to the interest rate adopted to
cash the future cash flow of a financial asset or financial liability within the predicted term of
existence or within a shorter applicable term into the current carrying amount of the financial
asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the
basis of taking into account all the contractual provisions concerning the financial asset or
financial liability (the future credit losses shall not be taken into account).and also the various
fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected
Konka Group Co., Ltd. Annual Report 2016
by the parties to a financial asset or financial liability contract and which form a part of the
actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no
quotation in the active market, with fixed recovery cost or recognizable.
Financial assets that are defined as loans and the accounts receivables by the Group including
notes receivables, accounts receivables, interest receivable, dividends receivable and other
receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of
post-amortization costs employing the effective interest method. Gains or loss arising from
the termination recognition, impairment occurs or amortization shall be recorded into the
profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as
assets available for sales on the initial recognition and financial assets excluded those
measured 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 be
confirmed according to its amortized cost method, that is the initially recognized amount
which deduct the principal that had been repaid, to plus or minus the accumulative
amortization amount formed by the amortization between the difference of the initially
recognized amount and the amount on the due date that adopted the actual interest rate
method, and at the same time deduct the amount after the impairment loss happened. The
cost 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 be
recorded into the profits and losses of the current period. But, the equity instrument
Konka Group Co., Ltd. Annual Report 2016
investment which neither have quotation in the active market nor its fair value could not be
reliable measured, as well as the derivative financial assets that concern with the equity
instruments and should be settled through handing over to its equity instruments, should take
the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with
distribution announcement by invested companies, it shall be recorded into the profits and
losses of the current period.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating 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 is
individually significant. As for a financial asset which is individually insignificant, an
impairment 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 impaired
after the separate impairment test, it is included in the financial asset group with similar
credit risk and tested again on the group basis. Where the impairment loss is recognized for
an individual financial asset, it is not included in the financial asset group with similar credit
risk 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 by
the 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 after
impairment, and it is related with subsequent event after recognition of loss, the impairment
loss recorded originally can be reversed. The carrying value of financial assets after
impairment loss reversed shall not exceed the amortized cost of the financial assets without
provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
Konka Group Co., Ltd. Annual Report 2016
When it judged that the decrease of fair value of the available-for-sale equity instrument
investment is serious and not temporarily after comprehensive considering relevant factors, it
reflected that the available-for-sale equity instrument investment occurred impairment. Of
which, the “serious decline” refers to the accumulative decline range of the fair value over
20%; while the “non-temporary decline” refers to the consecutive decline time of the fair
value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from
the decrease of the fair value of the capital reserve which is directly included are transferred
out and recorded in the profits and losses for the current period. The accumulative losses
transferred out are the balance obtained from the initially obtained cost of the said financial
asset after deducting the principals as taken back, the amortized amount, the current fair
value 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 the
value of the said financial asset has been restored and the restoration is objectively related to
the events that occur after the impairment loss was recognized, the originally recognized
impairment loss is reversed. The impairment losses on the available-for-sale equity
instrument investments are reversed and recognized as other comprehensive incomes, and the
impairment losses on the available-for-sale liability instruments are reversed and recorded in
the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
derivative financial asset which is connected with the said equity instrument investment and
which 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
Konka Group Co., Ltd. Annual Report 2016
financial asset has been transferred. And the Group has ceased its control on the said
financial asset though it neither transfers nor retains nearly all of the risks and rewards
related to the ownership of the financial asset.
Where the Group neither transfers nor retains nearly all of the risks and rewards related to the
ownership of a financial asset, and it does not cease its control on the said financial asset, it
recognizes the relevant financial asset and liability accordingly according to the extent of its
continuous involvement in the transferred financial asset. The term \"continuous involvement
in the transferred financial asset\" refers to the risk level that the enterprise faces resulting
from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
difference between the amounts of the following 2 items is recorded in the profits and losses
of the current period: (1) The book value of the transferred financial asset; and (2) The sum
of consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the
book value of the transferred financial asset is apportioned between the portion whose
recognition has been stopped and the portion whose recognition has not been stopped
according to their respective relative fair value, and the difference between the amounts of
the following 2 items is included into the profits and losses of the current period: (1) The
summation of the consideration received from the transfer and the portion of the
accumulative amount of changes in the fair value originally recorded in other comprehensive
incomes which corresponds to the portion whose recognition has been stopped; and (2) The
amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Group
needs to determine whether almost all of the risks and rewards of the financial asset
ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost
all of the risks and rewards of the financial asset ownership retained, do not end to recognize
the financial assets. For which neither transfer or retain almost all of the risks and rewards of
the financial asset ownership, continuously judge whether the Company retain the control of
Konka Group Co., Ltd. Annual Report 2016
the assets, and conduct accounting treatment according to the principle of mentioned in the
previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured
at fair values and whose changes are recorded in current gains and losses and other financial
liabilities. Financial liabilities are initially recognized at their fair values. As for a financial
liability 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 current
period. As for other financial liabilities, the relevant trading expenses are recorded in the
initially 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 financial
liabilities designated to be measured at fair values and whose changes are recorded in current
gains and losses in the initial recognition under the same conditions where such financial
assets are divided into transactional financial assets and financial assets designated to be
measured at fair values and whose changes are recorded in current gains and losses in the
initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains
and losses are subsequently measured at their fair values. Gains or losses arising from the fair
value changes, as well as the dividend and interest expenses in relation to the said financial
liabilities, 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 not
quoted price in an active market and whose fair value cannot be reliably measured and which
must be settled by delivering the equity instrument, it is subsequently measured on the basis
of costs. Other financial liabilities are subsequently measured according to the amortized cost
using the actual interest rate method. Gains or losses arising from de-recognition or
Konka Group Co., Ltd. Annual Report 2016
amortization of the said financial liabilities is recorded in the profits and losses for the
current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of
the current period, or the loan commitment which is not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the gains and losses that
will be loaned lower than the market interest rate, which shall be initially recognized by fair
value, and the subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: a. the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after
accumulative amortization as determined according to the principles of the Accounting
Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized
amount.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may
the 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 financial
liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between
the 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 has
assumed)
(7) Derivatives and embedded derivatives
Konka Group Co., Ltd. Annual Report 2016
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at fair
value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid
instrument is not designated as a financial asset or financial liability at fair value though
profit or loss, and the treated as a standalone derivative if (a) the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; and (b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance
sheet date, it designates the entire hybrid instrument as a financial asset or financial liability
at 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 recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a
financial liability shall be offset and the net amount is presented in the balance sheet. Except
for the above circumstances, financial assets and financial liabilities shall be presented
separately 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 the
Company 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 the
equity. The Group not recognized the changes of the fair value of the equity instrument. The
transaction 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 equity
instruments are deducted from shareholders’ equity. The Group does not recognize any
changes in the fair value of equity instruments.
Konka Group Co., Ltd. Annual Report 2016
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. Where
there is any objective evidence proving that such receivables have been impaired, an
impairment 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;
(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 RMB 20 million and other
receivables above 10 million as receivables with significant single amounts and withdrawn
the provision for bad debts.
The Group made an independent impairment test on receivables with significant single
amounts; the financial assets without impairment by independent impairment test should be
included in financial assets portfolio with similar credit risk to take the impairment test.
Receivables was recognized with impairment should no longer be included in receivables
portfolio 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
Konka Group Co., Ltd. Annual Report 2016
Receivables that not individually significant and individually significant but without
impairment by independent impairment test, are grouped on the basis of similarity and
relevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all the
due accounts in accordance with contract for such assets, which also are related with the
measurement on future cash flow of the examined assets.
Recognition basic of different groups:
Item Basic
Divide the groups according to the credit risks characteristics of the accounts
Group 1: Aging group
receivable
Group 2: Internal related party Divide the groups according to the credit risks characteristics of whether the
groups of the Company 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.
Item Withdrawal method
Group 1: Aging group Aging analysis method
Group 2: Internal related party groups To make an independent impairment test and if there was no impairment,
of the Company should not withdraw the bad debts provision.
In the groups, adopting aging analysis method to withdraw bad debt provision:
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
Within 1 year (including 1 year, similarly
2
hereinafter)
1-2 years 5
2-3 years 20
Konka Group Co., Ltd. Annual Report 2016
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
3-4 years 50
4-5 years 50
Over 5 years 100
③ Receivables with insignificant amount but being individually withdrawn the provision for
bad debts
The Group made independent impairment test on receivables with insignificant amount but
with the following characteristics, if any objective evidence shows that the accounts
receivable has been impaired, impairment loss shall be recognized on the basis of the gap
between the current values of the future cash flow lower than its book value so as to
withdraw 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 perform
the duty of repayment, etc.
C. There is other objective evidence of impairment and the impairment amount can estimated
reliably.
(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.
And the non-property inventories include raw materials, goods in process; merchandise on
Konka Group Co., Ltd. Annual Report 2016
hand, goods delivered and circulating materials, etc; while the property inventories include
property 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
The inventories shall be measured in light of their cost when obtained. The cost of inventory
consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
average method upon receiving and giving. For merchandise on hand shall be accounted by
planned cost, if the difference between planned cost of and actual cost of raw materials is
accounted through the cost variance item, and the planned cost is adjusted to the actual cost
according to the cost difference which the carryover and given-out inventory should shoulder
in 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 depreciation reserves
for inventories
The net realizable value refers, in the ordinary course of business, to the account after
Konka Group Co., Ltd. Annual Report 2016
deducting the estimated cost of completion, estimated sale expense and relevant taxes from
the estimated sale price of inventories. The net realizable value of inventories shall be fixed
on the basis of valid evidence as well as under consideration of purpose of inventories and
the effect of events after balance-sheet-date.
On the balance sheet date, the inventories shall be measured according to the cost or the net
realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall
withdraw the depreciation reserves for inventories, which was withdrawn in accordance with
the 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 that
the Group has control, joint control or significant influence over the investees. The long-term
equity investment that the Group does not have control, joint control or significant influence
over the investees, should be recognized as available-for-sale financial assets or be measured
by fair value with the changes should be included in the financial assets accounting of the
current 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 an
arrangement by the Group and the relevant activities of the arrangement should be decided
only after the participants which share the control right make consensus. Significant
influence refers to the power of the Group which could anticipate in the finance and the
Konka Group Co., Ltd. Annual Report 2016
operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the
same control, the share of the book value of the owner’s equity of the merged enterprise, on
the date of merger, is regarded as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the payment in
cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. If the consideration of the merging enterprise is that it
issues equity securities, it shall, on the date of merger, regard the share of the book value of
the shareholder's equity of the merged enterprise on the consolidated financial statement of
the ultimate control party as the initial cost of the long-term equity investment. The total face
value of the stocks issued shall be regarded as the capital stock, while the difference between
the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. The equities of the combined party which respectively
acquired through multiple transaction under the same control that ultimately form into the
combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed
accounting treatment by the Company as a transaction of acquiring the control right. If not
belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book
value of the shareholder's equity of the merged enterprise on the consolidated financial
statement 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 equity
investment and sum of the book value of the long-term equity investment before the
combination and the book value of the consideration of the new payment that further
required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other
comprehensive income confirmed for the available-for-sale financial assets, should not have
any accounting disposal for the moment.
Konka Group Co., Ltd. Annual Report 2016
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 date
according to the combination cost, the combination costs shall be the sum of the fair values
of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
Company. The equities of the acquirees which respectively acquired through multiple
transaction that ultimately form into the combination of the enterprises under the different
control, should be disposed according whether belongs to package deal; if belongs to
package deal, each transaction would be executed accounting treatment by the Company as a
transaction of acquiring the control right. If not belongs to package deal, the sum of the book
value of the original held equity investment of the acquirees and the newly added investment
cost should be regarded as the initial investment cost of the long-term equity investment that
changed to be accounted by cost method. If the original held equity is calculated by cost
method, the other relevant comprehensive income would not have any accounting disposal
for 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 changes
of the fair value that include in the other comprehensive income, should transfer into the
current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other
relevant expenses occurred in the business combination by the combining party or the
purchase party, shall be recorded into current profits and losses upon their occurrence; the
transaction expense from the issuance of equity securities or bonds securities which are as
consideration for combination by the combining party, should be recorded as the initial
amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other
long-term equity investments shall be initially measured by cost, the cost is fixed in
accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair
value of equity securities issued by the Group, the agreed value of the investment contract or
agreement, the fair value or original carrying amount of exchanged assets from non-monetary
assets exchange transaction, the fair value of the long-term equity investments, etc. The
expenses, taxes and other necessary expenditures directly related with gaining the long-term
equity investments shall also be recorded into investment cost. The long-term equity
investment cost for those could execute significant influences on the investees because of
Konka Group Co., Ltd. Annual Report 2016
appending the investment or could execute joint control but not form as control, should be as
the sum of the fair value of the original held equity investment and the newly added
investment cost recognized according to the No.22 of Accounting Standards for Business
Enterprises—Recognition and Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for
which forms into common operators) or significant influence over the investors should be
measured by equity method. Moreover, long-term equity investment adopting the cost
method 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 be
included at its initial investment cost and append as well as withdraw the cost of investing
and adjusting the long-term equity investment. The return on investment at current period
shall be recognized in accordance with the cash dividend or profit announced to distribute by
the invested entity, except the announced but not distributed cash dividend or profit included
in 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 attributable
share of the fair value of the invested entity's identifiable net assets for investment, the initial
cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term
equity investment is less than the Company's attributable share of the fair value of the
invested entity's identifiable net assets for investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
When measured by adopting equity method, respectively recognize investment income and
other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time
adjust the book value of the long-term equity investment; corresponding reduce the book
value of the long-term equity investment according to profits which be declared to distribute
by the investees or the portion of the calculation of cash dividends which should be enjoyed;
Konka Group Co., Ltd. Annual Report 2016
for the other changes except for the net gains and losses, other comprehensive income and
the owners’ equity except for the profits distribution of the investees, should adjust the book
value of the long-term equity investment as well as include in the capital reserve. The
investing enterprise shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If
the accounting polices adopted by the investees is not accord with that of the Group, should
be adjusted according to the accounting policies of the Group and the financial statement of
the investees during the accounting period and according which to recognize the investment
income as well as other comprehensive income. For the transaction happened between the
Group and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction,
which belongs to the Group according to the calculation of the enjoyed proportion, should
recognize the investment gains and losses on the basis. But the losses of the unrealized
internal transaction happened between the Group and the investees which belongs to the
impairment losses of the transferred assets, should not be neutralized. The assets launched by
the Group to the associated enterprises or the joint ventures if could form into business, the
long-term equity investment without control right which acquired by the investors, should
regard the fair value of the launched business as the initial investment cost the newly added
long-term equity investment, and for the difference between the initial investment cost and
the book value of the launched business, should be included into the current gains and losses
with full amount. The assets sold by the Group to the associated enterprises or the joint
ventures if could form into business, the difference between the acquired consideration and
the book value of the business should be included in the current gains and losses with full
amount. The assets purchased by the Group to the associated enterprises or the joint ventures
if 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 the
transaction with full amount.
The Group shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially
form the net investment made to the invested entity are reduced to zero. However, if the
Group has the obligation to undertake extra losses, it shall be recognized as the estimated
Konka Group Co., Ltd. Annual Report 2016
liabilities in accordance with the estimated duties and then recorded into investment losses at
current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the
un-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 new
accounting criterion on 1 Jan. 2008 of the associated enterprises and joint ventures, if there is
debit difference of the equity investment related to the investment, should be included in the
current gains and losses according to the amount of the straight-line amortization during the
original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term
equity investment increased by acquiring shares of minority interest and the attributable net
assets on the subsidiary calculated by the increased shares held since the purchase date (or
combination date), the capital reserves shall be adjusted, if the capital reserves are not
sufficient 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 equity
investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term
equity investment shall be recorded into owners’ equity; where the Company losses the
controlling right by disposing part of long-term equity investment on such subsidiaries, it
shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) — Method
on preparation of combined financial statements.
For other ways on disposal of long-term equity investment, the balance between the book
value of the disposed equity and its actual payment gained shall be recorded into current
profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained
equity after disposal still adopts the equity method for measurement, the other
comprehensive income originally recorded into owners’ equity should adopt the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the
Konka Group Co., Ltd. Annual Report 2016
investees according to the corresponding proportion. The owners’ equity recognized owning
to the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into
the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the
remained equity still adopt the cost method, the other comprehensive income recognized
owning to adopting the equity method for measurement or the recognition and measurement
standards of financial instrument before acquiring the control of the investees, should adopt
the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees and should be carried forward into the current gains and losses according to
the 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 investees
which recognized by adopting the equity method for measurement, should be carried forward
into the current gains and losses according to the proportion.
For those the Group lost the control of the investees by disposing part of the equity
investment as well as the remained equity after disposal could execute joint control or
significant influences on the investees, should change to measure by equity method when
compiling the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees,
should change the accounting disposal according to the relevant regulations of the
recognition and measurement standards of financial instrument, and its difference between
the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity
method for measurement or the recognition and measurement standards of financial
instrument before the Group acquired the control of the investees, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant
assets or liabilities directly disposed by the investees when lose the control of them, while 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 investees which recognized by
adopting the equity method for measurement, should be carried forward into the current
gains and losses according to the proportion. Of which, for the disposed remained equity
Konka Group Co., Ltd. Annual Report 2016
which adopted the equity method for measurement, the other comprehensive income and the
other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the
recognition and measurement standards of financial instrument, the other comprehensive
income 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 equity
investment, the disposed remained equity should change to calculate according to the
recognition and measurement standards of financial instrument, and difference between the
fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by
adopting the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees when terminate the equity method for measurement, while for the
owners’ equity recognized owning to the changes of the other owner’s equity except for the
net 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 terminate
adopting the equity method.
The Group respectively disposes the equity investment of the subsidiaries through multiple
transactions 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 disposing
the equity investment of the subsidiaries until lose the control right, while the difference
between each expenses of the disposal and the book value of the long-term equity investment
in accord with the disposed equity before losing the control right, should firstly be
recognized as other comprehensive income then be transferred into the current gains and
losses of losing the control right along until the time when lose it.
13. Investment real estates
The term “investment real estates” refers to the real estate held for generating rent and/or
capital appreciation. Investment real estates of the Group include the right to use any land
which has already been rented; the right to use any land which is held and prepared for
transfer 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. Subsequent
Konka Group Co., Ltd. Annual Report 2016
expenditures incurred for an investment real estate is included in the cost of the investment
real estate when it is probable that economic benefits associated with the investment real
estate will flow to the Group and the cost can be reliably measured, otherwise the
expenditure 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 employing
the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall
be made for the investment real estates in the light of the accounting policies of the use right
of buildings or lands.
For details of impairment test method and withdrawal method of impairment provision of
investment real estates, please refer to Note IV. 16. Impairment of Non-current Non-financial
Assets.
When owner-occupied real estate or inventories are changed into investment real estate or
investment real estate is changed into owner-occupied real estate, of which book value prior
to 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 be
transferred to fixed assets or intangible assets at the date of such change. When an
owner-occupied real estate is changed to be held to earn rental or for capital appreciation, the
fixed asset or intangible asset is transferred to investment real estate at the date of such
change. If the fixed asset or intangible asset is changed into investment real estate measured
by adopting the cost pattern, whose book value prior to the change shall be the entry value
after the change; if the fixed asset or intangible asset is changed into investment real estate
measured by adopting the fair value pattern, whose fair value on the date of such change
shall be the entry value after the change
An investment real estate is derecognized on disposal or when the investment real estate is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment
real estate less its carrying amount and related taxes and expenses is recognized in profit or
loss in the period in which it is incurred.
14. Fixed assets
(1) Conditions for recognition of fixed assets
The term \"fixed assets\" refers to the tangible assets that simultaneously possess the features
Konka Group Co., Ltd. Annual Report 2016
as 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. The
fixed assets are only recognized when the relevant economic benefits probably flow in the
Group and its cost could be reliable measured. The fixed assets should take the initial
measurement according to the cost and at the same time consider the influences of the factors
of the estimated discard expenses.
(2) Depreciation methods of each fixed asset
The fixed assets should be withdrawn and depreciation by straight-line depreciation within
the 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 as
follows:
Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
Housing and building Straight-line
20-40 10.00 2.25-4.50
depreciation
Machinery equipment Straight-line 10.00
10 9.00
depreciation
Electronic equipment Straight-line 10.00
5 18.00
depreciation
Transportation vehicle Straight-line 10.00
5 18.00
depreciation
Other equipment Straight-line 5 10.00
18.00
depreciation
The “expected net salvage value” refers to the expected amount that the Group may obtain
from the current disposal of a fixed asset after deducting the expected disposal expenses at
the expiration of its expected useful life.
(3) Testing method of impairment and withdrawal method of provision for impairment on
fixed assets
For details of the testing method of impairment and withdraw method of impairment
Konka Group Co., Ltd. Annual Report 2016
provision for impairment on fixed assets, please refer to Note IV. 19 “Long-term assets
impairment”.
(4) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
rewards related to the ownership of an asset. Its ownership may or may not eventually be
transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the
ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain
the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully
depreciated over the shorter one of the lease term or its useful life.
(5) Other explanations
The follow-up expenses related to a fixed asset, if the economic benefits pertinent to this
fixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall be
recorded into cost of fixed assets and ultimately recognized as the book value of the replaced
part; 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 be
estimated that could not occur any economy benefits through using or disposing. When the
Group sells, transfers or discards any fixed assets, or when any fixed assets of the Group is
damaged or destroyed, the Group shall deduct the book value of the fixed assets as well as
the relevant taxes from the disposal income, and include the amount in the current profits and
losses.
The Group shall check the useful life, expected net salvage value and depreciation method of
the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a
change of the accounting estimates.
15. Construction in progress
Construction 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 for
their intended us and other relevant costs. Construction in process is transferred to fixed
assets when the assets are ready for their intended use.
For details of the testing method of impairment and withdraw method of impairment
Konka Group Co., Ltd. Annual Report 2016
provision on construction in progress, please refer to Note IV. 19 “Long-term assets
impairment”.
16. Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings. When the borrowing costs can be directly attributable to the construction or
production of assets eligible for capitalization, and the asset disbursements or the borrowing
costs have already incurred, and the construction or production activities which are necessary
to prepare the asset for its intended use or sale have already started, the capitalization of
borrowing costs begins. When the asset eligible for capitalization under acquisition and
construction or production is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when
incurred.
The to-be-capitalized amount of interests shall be determined in light of the actual interests
incurred of the specially borrowed loan at the present period minus the income of interests
earned 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 general
borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in
light of the weighted average interest rate of the general borrowing.
During the period of capitalization, the exchange balance on foreign currency special
borrowings shall be capitalized; the exchange balance on foreign currency general
borrowings 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 may
take 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 interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended.
17. Intangible assets
Konka Group Co., Ltd. Annual Report 2016
(1) Pricing method, useful life and impairment test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with
the intangible assets, if the economic benefits related to intangible assets are likely to flow
into the enterprise and the cost of intangible assets can be measured reliably, shall be
recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits
and losses upon the occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed
and constructed factories and other constructions, the related expenditures on use right of
land and construction costs shall be respectively measured as intangible assets and fixed
assets. For the purchased houses and buildings, the related payment shall be distributed into
the payment for use right of land and the payment for buildings, if it is difficult to be
distributed, 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, the
cost after deducting the sum of the expected salvage value and the accumulated impairment
provision shall be amortized by straight line method during the service life. While the
intangible assets without certain service life shall not be amortized.
At the end of period, the Group shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a
change of the accounting estimates. Besides, the Group shall check the service life of
intangible assets without certain service life, if there is any evidence showing that the period
of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall
be estimated the service life and amortized in accordance with the amortization policies for
intangible assets with finite service life.
(2) R & D expenses
The expenditures for internal research and development projects of an enterprise shall be
classified 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 the
following conditions simultaneously, and shall be recorded into profit or loss for the current
Konka Group Co., Ltd. Annual Report 2016
period when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
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 products
manufactured by applying the intangible assets or there is a potential market for the
intangible 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 other
resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development
expenditures, 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 of
intangible assets
For details of the testing method of impairment and withdraw method of impairment
provision on intangible assets, see Notes IV. 19 “Long-term assets impairment”.
18. Amortization method of long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one
year (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 assets
For non-current financial Assets of fixed Assets, projects under construction, intangible
Assets with limited service life, investing real estate with cost model, long-term equity
investment of subsidiaries, cooperative enterprises and joint ventures, the Group should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts
should be tested for decrease in value if it exists. Other intangible Assets of reputation and
uncertain service life and other non-accessible intangible assets should be tested for decrease
in value no matter whether it exists.
Konka Group Co., Ltd. Annual Report 2016
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be
the higher of net value of asset fair value deducting disposal charges or present value of
predicted cash flow. Asset fair value should be determined according to negotiated sales price
of fair trade. If no sales agreement exists but with asset active market, fair value should be
determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market 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 merchantable
Assets related to asset disposal. Present value of predicted asset cash flow should be
determined by the proper discount rate according to Assets in service and predicted cash flow
of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable
amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared
to beneficial asset group and asset group combination in collaboration of business merger. It
is shown in the test that if recoverable amounts of shared business reputation asset group or
asset 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 business
reputation of asset group or asset group combination, then deduct book value of all assets
according to proportions of other book value of above assets in asset group or asset group
combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be
returned in future.
20. Employee compensation
Employee compensation of the Company mainly includes short-term employee
compensation, departure benefits, demission benefits and other long-term employee
compensation. 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 personnel
Konka Group Co., Ltd. Annual Report 2016
education fund, non-monetary benefits etc. The short-term compensation actually happened
during the accounting period when the active staff offering the service for the Group should
be recognized as liabilities and is included in the current gains and losses or relevant assets
cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Defined contribution plans
include basic endowment insurance, unemployment insurance and annuity. Deposited
amounts are charged to relevant asset costs or current profits and losses during the
period in which they are incurred. Defined benefit plan of the Company is internal early
retirement plan. According to anticipated accumulative welfare unit, the Company makes
estimates by unbiased and consistent actuarial assumption for the demographic variables and
financial variables, measures the obligations produced in defined benefit plans, and
determines the vesting period. On balance sheet date, the Company will list all obligations in
defined benefit plans as present value and include current service costs into current profits
and 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 dimission
welfare, remuneration and liabilities produced from the dimission welfare should be
determined and included in current profits and losses when determining the costs of
dismission welfare and recombination. However, dimission welfare not fully paid within 12
months after annual Reporting 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 above
dismiss ion welfare. The group would recorded the salary and the social security insurance
fees paid and so on from the employee’s service terminative date to normal retirement date
into current profits and losses (dismiss ion welfare) under the condition that they meet the
recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting
drawing plan, should be accounting disposed according to the setting drawing plan, while the
rest should be disposed according to the setting revenue plan.
21. Estimated liabilities
The company should recognize the related obligation as a provision for liability when the
Konka Group Co., Ltd. Annual Report 2016
obligation meets the following conditions: (1) That obligation is a present obligation of the
enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be
required to settle the obligation; (3) A reliable estimate can be made of the amount of the
obligation.
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 measure
the estimated liabilities in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
When all or some of the expenses necessary for the liquidation of an estimated liabilities of
an enterprise is expected to be compensated by a third party, the compensation should be
separately recognized as an asset only when it is virtually certain that the reimbursement will
be obtained. Besides, the amount recognized for the reimbursement should not exceed the
book value of the estimated liabilities.
22. Revenue
(1) Revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous
management right that usually keeps relation with the ownership nor effective control over
the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to
be incurred can be measured in a reliable way.
The recognition of revenue from commodities for the home market when shipping the goods:
for goods exported, the revenue shall be recognized once the goods are cleared through
customs and delivered to the carrier designated by the purchaser.
(2) Providing labor services
If the Group can reliably estimate the outcome of a transaction concerning the labor services
it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion
of a transaction concerning the providing of labor services shall be decided by the proportion
of the labor service already provided to the total labor service to provide.
Konka Group Co., Ltd. Annual Report 2016
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; ②The relevant economic benefits are
likely to flow into the enterprise; ③The 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
measured in a reliable way, the revenue from the providing of labor services shall be
recognized in accordance with the amount of the cost of labor services incurred and expected
to be compensated, and make the cost of labor services incurred as the current expenses. If it
is predicted that the cost of labor services incurred couldn’t be compensated, thus no revenue
shall be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling
goods and providing of labor services, if the part of sale of goods and the part of providing
labor services can be distinguished from each other and can be measured respectively, the
part of sale of goods and the part of providing labor services shall be treated respectively. If
the part of selling goods and the part of providing labor services can not be distinguished
from each other, or if the part of sale of goods and the part of providing labor services can be
distinguished from each other but can not be measured respectively, both parts shall be
conducted as selling goods.
(3) Recognition method of the sales revenues of real estate
The Group had signed the sales contract with the real estate had completed and be examined
qualified, and reached the referable using conditions agreed by the sales contract as well as at
the same time the housing accounts had been recognized the realize of the sales revenues
when received with full amount according to the sales contract.
(4) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(5) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the
Konka Group Co., Ltd. Annual Report 2016
length of time for which the Group’s monetary fund is used by others and the agreed interest
rate.
(6)Property leasing revenue
For the recognition method of the property leasing revenue, please refer to Notes IV. 25.
23. Government subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the
Group from the government, but excluding the capital invested by the government as the
owner of the enterprise. Government subsidies consist of the government subsidies pertinent
to assets and government subsidies pertinent to income.
If a government subsidy is a monetary asset, it shall be measured in the light of the received
or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured
at its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured at
its nominal amount. The government subsidies measured at their nominal amounts shall be
directly included in the current profits and losses.
The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits
and losses. The government subsidies pertinent to incomes shall be treated respectively in
accordance with the circumstances as follows: those subsidies used for compensating the
related future expenses or losses of the enterprise shall be recognized as deferred income and
shall included in the current profits and losses during the period when the relevant expenses
are recognized; or those subsidies used for compensating the related expenses or losses
incurred to the enterprise shall be directly included in the current profits and losses.
Where it is necessary to refund any government subsidy which has been recognized, it shall
be treated respectively in accordance with the circumstances as follows: if there is the
deferred 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 no
deferred income concerned to the government subsidy, it shall be directly included in the
current profits and losses.
24. Deferred income tax assets/deferred income tax liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current
Konka Group Co., Ltd. Annual Report 2016
period as well as the part formed during the previous period, should be measured by the
income tax of the estimated payable (returnable) amount which be calculated according to
the regulations of the tax law. The amount of the income tax payable which is based by the
calculation of the current income tax expenses, are according to the result measured from the
corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the
relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax
assessment basis, as well as the temporary difference occurs from the difference between the
book value of the items which not be recognized as assets and liabilities but could confirm
their tax assessment basis according to the regulations of the tax law, the deferred income tax
assets and the deferred income tax liabilities should be recognized by adopting liabilities law
of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill, the initial recognition of assets or liabilities due to a transaction
other 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 temporary
differences related to the investments of subsidiary companies, associated enterprises and
joint enterprises, and the investing enterprise can control the time of the reverse of temporary
differences as well as the temporary differences are unlikely to be reversed in the excepted
future. Otherwise, the Group should recognize the deferred income tax liabilities arising form
other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of
initial recognition of assets and liabilities arising from the transaction which is not business
combination, the accounting profits will not be affected, nor will the taxable amount or
deductible loss be affected at the time of transaction. Besides, no deferred taxable assets
should be recognized for the deductible temporary difference related to the investments of
the subsidiary companies, associated enterprises and joint enterprises, which are not likely to
be reversed in the expected future or is not likely to acquire any amount of taxable income
tax that may be used for making up such deductible temporary differences. Otherwise, the
Company shall recognize the deferred income tax assets arising from a deductible temporary
Konka Group Co., Ltd. Annual Report 2016
difference basing on the extent of the amount of the taxable income that is likely to be
acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely
obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax
liabilities shall be measured at the tax rate applicable to the period during which the assets
are 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. If
it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred
income tax asset, the book value of the deferred income tax assets shall be written down. Any
such write-down should be subsequently reversed where it becomes probable that sufficient
taxable income will be available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be
included into current gains and losses except for the current income tax and the deferred
income tax related to the transaction and events that be confirmed as other comprehensive
income or be directly included in the shareholders’ equity which should be included in other
comprehensive income or shareholders’ equity as well as the book value for adjusting the
goodwill of the deferred income tax occurs from the business combination.
(4) Offset of income tax
The current income tax assets and liabilities of the Group should be listed by the written-off
net amount which intend to executes the net amount settlement as well as the assets acquiring
and liabilities liquidation at the same time while owns the legal rights of settling the net
amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities
by net amount and the deferred income tax and liabilities is relevant to the income tax which
be collected from the same taxpaying bodies by the same tax collection and administration
Konka Group Co., Ltd. Annual Report 2016
department or is relevant to the different taxpaying bodies but during each period which there
is significant reverse of the deferred income assets and liabilities in the future and among
which the involved taxpaying bodies intend to settle the current income tax and liabilities by
net amount or are at the same time acquire the asset as well as liquidate the liabilities.
25. Leasing
Financing leasing virtually transferred the whole risks and leasing of the compensation
related to the assets ownership and their ownership may eventually be transferred or maybe
not. Other leasing except for the financing leasing is operating leasing.
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset
costs or the profits and losses of the current period by using the straight-line method over
each period of the lease term. The initial direct costs shall be recognized as the profits and
losses of the current period. The contingent rents shall be recorded into the profits and losses
of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the
current period by using the straight-line method over each period of the lease term. The
initial direct costs of great amount shall be capitalized when incurred, and be recorded into
current profits and losses in accordance with the same basis for recognition of rent incomes
over the whole lease term. The initial direct costs of small amount shall be recorded into
current profits and losses when incurred. The contingent rents shall be recorded into the
profits and losses of the current period in which they actually arise.
(3) Business of finance leases recorded by the Group as the lessee
On the lease beginning date, the Group shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning
date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the
balance between the recorded amount of the leased asset and the long-term account payable
as unrecognized financing charges. Besides, the initial direct costs directly attributable to the
leased item incurred during the process of lease negotiating and signing the leasing
agreement shall be recorded in the asset value of the current period. The balance through
Konka Group Co., Ltd. Annual Report 2016
deducting unrecognized financing charges from the minimum lease payments shall be
respectively 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 the
lease term, so as to calculate and recognize current financing charges. The contingent rents
shall 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 lessor
On the beginning date of the lease term, the Group shall recognize the sum of the minimum
lease receipts on the lease beginning date and the initial direct costs as the entering value in
an account of the financing lease values receivable, and record the unguaranteed residual
value at the same time. The balance between the sum of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value and the sum of their present values
shall be recognized as unrealized financing income. The balance through deducting
unrealized financing incomes from the finance lease accounts receivable shall be respectively
stated 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 the
lease term, so as to calculate and recognize current financing revenues. The contingent rents
shall 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 policies
There was no any change of accounting policies of the Company in the Reporting Period.
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the Reporting Period.
27. Critical accounting judgments and estimates
Due 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 measurement
during the employment of accounting policies. And these judgments, estimates and
assumption 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 assumption
would also affect the report amount of income, costs, assets and liabilities, as well as the
disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these
estimates was likely to cause significant adjustment on the book value of the affected assets
Konka Group Co., Ltd. Annual Report 2016
and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the
basis of continuing operation. For the changes in accounting estimates only affected on the
current period, the influence should be recognized at the period of change occurred; for the
changes in accounting estimates affected the current period and also the future period, the
influence 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 assumption
on the accounts in the following important items:
(1) Categorization of leasing
In accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Group
categorized the leasing into operating lease and finance lease. During the categorization, the
management level needed to make analysis and judgment on whether all the risk and
compensation related with the leased assets had been transferred to the leasee, or whether the
Group had already undertaken all the risk and compensation related with the leased assets.
(2) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the
losses for bad debts by adopting allowance method. The impairment of accounts receivable
was based on the appraisal of the recoverability of accounts receivable. The impairment of
accounts receivable was dependent on the judgment and estimates. The actual amount and
the difference of previous estimates would affect the book value of accounts receivable and
the withdrawal and reversal on provision for bad debts of accounts receivable during the
period of estimates being changed.
(3) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs
were more than the net realizable value as well as out-of-date and dull-sale inventories, the
Group withdrawn the provision for falling price of inventories on the lower one between
costs and net realizable value. Evaluating the falling price of inventories needed the
management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made
relevant judgments and estimates. The actual amount and the difference of previous estimates
would affect the book value of inventories and the withdrawal and reversal on provision for
Konka Group Co., Ltd. Annual Report 2016
bad debts of inventories during the period of estimates being changed.
(4) The fair value of financial instrument
For the financial instruments without active market, the Group recognized the fair value by
various 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 market
and relativity and other factors, as well as choose the property discount rate. Due to the
uncertainty of relevant assumptions, so their changes would affect the fair value of financial
instrument.
(5) Held-to-maturity investments
The Company classifies the non-derivative financial asset with a fixed or determinable
amount of repo price, and a fixed date of maturity, which the enterprise holds for a definite
purpose or the enterprise is able to hold until its maturity, to held-to-maturity investment.
Such classification concerns lots of judgments. During the judgment process, the Company
will assess the purpose and capability for holding such kind of investment to maturity. Except
for special cases (for example, selling investment with no-large amount when the maturity
date is closely to come), if the Company can’t hold the investment to maturity date, the
Company should re-classify all that investment to available-for-sale financial assets, and
shouldn’t classify those financial assets into hold-to-maturity investment in the current fiscal
year and the next two complete fiscal years. Such cases may have significant impact on
related financial assets value stated in financial statements, and may influence the risk
management strategy for financial tools of the Company.
(6) Impairment of held-to-maturity investment
The decision about confirming the impairment of the investment held-to-maturity by the
Company depends on the judgment of the management layer to a great extent. The objective
evidences of the occurrence of the impairment include there is serious financial difficulties of
the issuer which lead the financial assets could not be continued to deal in the active market
and could not execute the clauses of th
