The 2015 Annual Report of Konka Group Co., Ltd.
KONKA GROUP CO., LTD.
THE 2015 ANNUAL REPORT
2016-16
April 2016
1
The 2015 Annual Report of Konka Group Co., Ltd.
Section I Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management
of Konka Group Co., Ltd. (hereinafter referred to as the “Company”) warrant that this Report is
factual, accurate and complete, and shall be jointly and severally liable for any false information,
misleading statements or material omissions in this Report.
Liu Fengxi, company principal, Xiao Qing, chief of the accounting work, and Xu Youshan, chief of
the accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed in
this report is factual, accurate and complete.
All directors have attended the board meeting of the board of directors.
Except for the following directors, all the other directors attended in person the board meeting for
the review of this Report.
The future plans and some other forward-looking statements involved in this Report shall not be
considered as virtual promises of the Company to investors. And investors are kindly reminded to
pay attention to investment risks.
Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the
Company for its information disclosure. And all information about the Company shall be subject to
what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to
investment risks.
The Company has described in detail in this Report the possible risks. Please refer to the contents
about the possible risks and countermeasures in “Outlook of the Company’s future development” in
“Section IV Discussion & Analysis by the Management” of this Report.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserves into
share capital.
This Report is prepared in both Chinese and English. Should there be any understanding
discrepancy between the two versions, the Chinese version shall prevail.
2
The 2015 Annual Report of Konka Group Co., Ltd.
Contents
Section I Important Statements, Contents & Terms....................................................................... 2
Section II Company Profile & Financial Highlights....................................................................... 6
Section III Business Profile.............................................................................................................. 11
Section IV Discussion & Analysis by the Management.................................................................13
Section V Significant Events............................................................................................................34
Section VI Changes in Shares & Shareholders..............................................................................57
Section VII Preference Shares.........................................................................................................65
Section VIII Directors, Supervisors, Senior Management Staffs& Employees..........................66
Section IX Corporate Governance..................................................................................................81
Section X Financial Report..............................................................................................................94
Section XI Documents Available for Reference........................................................................... 262
3
The 2015 Annual Report of Konka Group Co., Ltd.
Terms
Term Specific meaning
Company, the Company, the Group Konka Group Co., Ltd.
Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.
Precision Mold Shenzhen Konka Precision Mold Manufacturing Co., Ltd.
Konka Household Appliances Shenzhen Konka Household Appliances Co., Ltd.
Information Network Shenzhen Konka Information Network Co., Ltd.
Plastic Products Shenzhen Konka Plastic Products Co., Ltd.
Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
Fittings Technology Shenzhen Konka Electronic Fittings Technology Co., Ltd.
Mudanjiang Appliances Mudanjiang Arctic Ocean Appliances Co., Ltd.
Chongqing Electronic Chongqing Konka Automotive Electronic Co., Ltd.
Chongqing Qingjia Chongqing Qingjia Electronics Co., Ltd.
Anhui Konka Anhui Konka Electronic Co., Ltd.
Anhui Household Appliances Anhui Konka Household Appliances Co., Ltd.
Changshu Konka Changshu Konka Electronic Co., Ltd.
Kunshan Konka Kunshan Konka Electronic Co., Ltd.
Dongguan Konka Dongguan Konka Electronic Co., Ltd.
Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.
Dongguan Mould Plastic Dongguan Konka Mould Plastic Co., Ltd.
Boluo Konka Boluo Konka PCB Co., Ltd.
Boluo Precision Boluo Konka Precision Technology Co., Ltd.
Nanhai Institute Konka (Nanhai) Development Center
Hong Kong Konka Hong Kong Konka Co., Ltd.
Konka Household Appliances Investment Konka Household Appliances Investment & Development Co., Ltd.
Konka Household Appliances International
Konka Household Appliances International Trading Co., Ltd.
Trading
Konka America Konka America, Inc.
Konka Europe Konka (Europe) Co., Ltd.
Xutongda Dongguan Xutongda Mould Plastic Co., Ltd.
Konka Optoelectronic Shenzhen Konka Optoelectronic Technology Co., Ltd.
Wankaida Shenzhen Wankaida Science and Technology Co., Ltd.
Kunshan Kangsheng Kunshan Kangsheng Investment Development Co., Ltd.
Anhui Tongchuang Anhui Konka Tongchuang Household Appliances Co., Ltd.
Indonesia Konka Indonesia Konka Electronics Co., Ltd.
Shushida Logistics Shenzhen Shushida Logistics Service Co., Ltd.
Beijing Konka Electronic Beijing Konka Electronic Co., Ltd.
Kunshan Jielunte Kunshan Jielunte Mould Plastic Co. , Ltd.
4
The 2015 Annual Report of Konka Group Co., Ltd.
Wuhan Jielunte Wuhan Jielunte Mould Plastic Co. , Ltd.
Chuzhou Jielunte Chuzhou Jielunte Mould Plastic Co. , Ltd.
Konka E-display Shenzhen Konka E-display Co., Ltd.
E-display Service Shenzhen E-display Service Co., Ltd.
Xiamen Dalong Xiamen Dalong Trading Co., Ltd.
Youshi Kangrong Youshi Kangrong Culture Communication Co., Ltd.
Anhui Jiasen Anhui Jiasen Precision Technology Co., Ltd.
Kangqiao Jiacheng Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd.
Konka SmartTech Konka SmartTech Limited
Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.
E2info Shenzhen E2info Network Technology Co., Ltd.
Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.
Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.
CSRC China Securities Regulation Commission
SZSE Shenzhen Stock Exchange
CSRC Shenzhen Bureau Shenzhen Bureau of China Securities Regulation Commission
Yuan, Ten thousand Yuan, One Hundred
RMB Yuan, RMB Ten thousand, RMB One Hundred Million Yuan
Million Yuan
5
The 2015 Annual Report of Konka Group Co., Ltd.
Section II Company Profile & Financial Highlights
I. Basic information of the Company
Stock abbr. Konka A, Konka B Stock code 000016, 200016
Stock abbr. after change (if
No changes
any)
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 康佳集团股份有限公司
Abbr. of Company name in
康佳集团
Chinese
Company name in English (if
KONKA GROUP CO., LTD.
any)
Abbr. of Company name in
KONKA GROUP
English (if any)
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 518057
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 518057
Company website www.konka.com
Email address szkonka@konka.com
II. Contact information
Company Secretary Representative for Securities Affairs
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, Guangdong Yuehai Street, Nanshan District, Shenzhen, Guangdong
Province, China Province, China
Tel. 0755-26608866 0755-26608866
Fax 0755-26601139 0755-26601139
E-mail szkonka@konka.com szkonka@konka.com
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for Securities Times, etc.
6
The 2015 Annual Report of Konka Group Co., Ltd.
information disclosure
Internet website designated by CSRC for
www.cninfo.com.cn
disclosing this Report
Board Secretariat, 24/F, Konka R&D Center, 28 Keji South Twelfth Road,
Where this Report is placed Science and Technology Park, Yuehai Street, Nanshan District, Shenzhen,
Guangdong Province, China
IV. Changes in the registered information
Organizational code 618815578
Changes in main business since listing (if any) No changes
Changes of controlling shareholder (if any) No changes
V. Other information
The CPAs firm hired by the Company
Name Ruihua Certified Public Accountants
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 Shen Lingzhi, He Xiaojuan
Sponsor engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct consistent supervision during the
reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate the accounting data of previous years due to
changes in the accounting policy or correction of accounting errors?
□ Yes √ No
Increase/decrease
2015 2014 of current year 2013
over last year
Operating revenues
18,395,177,035.98 19,423,488,994.07 -5.29% 20,006,736,878.82
(RMB Yuan)
Net profits attributable
to shareholders of the -1,256,819,314.51 52,623,527.86 -2,488.32% 45,820,496.73
Company (RMB Yuan)
Net profits attributable
to shareholders of the -1,129,999,645.94 -475,481,381.45 -137.65% -68,357,341.76
Company after
extraordinary gains and
7
The 2015 Annual Report of Konka Group Co., Ltd.
losses (RMB Yuan)
Net cash flows from
operating activities 1,289,600,482.66 -640,385,182.05 301.38% 2,283,254,200.89
(RMB Yuan)
Basic EPS (RMB
-0.52 0.02 -2,700.00% 0.0190
Yuan/share)
Diluted EPS (RMB
-0.52 0.02 -2,700.00% 0.0190
Yuan/share)
Weighted average ROE
-36.30% 1.28% -37.58% 1.13%
(%)
Increase/decrease
As at 31 Dec. 2015 As at 31 Dec. 2014 of current year-end As at 31 Dec. 2013
than last year-end
Total assets (RMB Yuan) 14,250,367,548.28 16,779,359,276.65 -15.07% 15,744,099,307.58
Net assets attributable to
shareholders of the 2,814,382,870.81 4,103,478,971.07 -31.41% 4,087,909,132.35
Company (RMB Yuan)
VII. Differences of the accounting data under the domestic and the overseas accounting
standards
1. Differences of the net profits and the net assets disclosed in the financial reports prepared
under the international and the Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period.
2. Differences of the net profits and the net assets disclosed in the financial reports prepared
under the overseas and the Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period.
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenues 4,569,152,230.30 4,375,406,690.66 4,900,151,931.72 4,550,466,183.30
Net profits attributable to
7,752,441.61 -304,705,949.00 -555,256,040.41 -404,609,766.71
shareholders of the Company
Net profits attributable to -214,058.24 -333,724,173.74 -365,476,454.60 -430,584,959.36
8
The 2015 Annual Report of Konka Group Co., Ltd.
shareholders of the Company
after extraordinary gains and
losses
Net cash flows from operating
277,361,649.37 -207,318,739.74 1,070,979,280.76 148,578,292.27
activities
Any material differences between the financial indicators above or their summations and those
which have been disclosed in quarterly or semi-annual reports?
□ Yes √ No
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2015 2014 2013 Note
Gains/losses on disposal of non-current
assets (including offset amount of asset -16,096,434.80 587,454,101.18 61,547,807.91
impairment provisions)
Governmental grants recorded into current
gains and losses (excluding those closely
related to business of the Company and 71,499,330.11 75,401,093.20 84,343,548.07
granted at certain quotas or amounts
according to government’s standards)
Gain/loss on entrusting others with
20,419,318.35 12,260,439.18
investments or asset management
Asset impairment provisions due to acts of
-144,808,654.70 -1,041,162.02
God such as natural disasters
Gains and losses on fair value changes of
transactional financial assets and liabilities
& investment gains on disposal of
transactional financial assets and liabilities 32,627,480.23 21,115.80
as well as financial assets available for
sale, except for effective hedging related
to normal business of the Company
Gains and losses on entrusted loans 3,550,666.66
Non-operating income and expense other
-104,311,044.28 16,207,940.59 8,508,013.84
than above
Other gain and loss items that meet
-419,240.74 -151,895.48 -1,369,748.77
definition of extraordinary gain/loss
Less: Income tax effects -14,549,153.86 158,734,972.90 31,336,650.82
Minority interests effects (after tax) 3,830,243.26 4,331,796.46 6,495,085.52
Total -126,819,668.57 528,104,909.31 114,177,838.49 --
9
The 2015 Annual Report of Konka Group Co., Ltd.
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the
definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies
Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any
extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent
gain/loss item
√ Applicable □ Inapplicable
Amount involved (RMB
Item Reason
Yuan)
Government grants closely related to the Company’s normal
Tax rebates on software 67,476,494.60 operation and constantly given at certain quotas or amounts
according to the government’s policies and standards
10
The 2015 Annual Report of Konka Group Co., Ltd.
Section III Business Profile
I. Main business during the reporting period
The Company is currently engaged in color TVs, mobile phones and white goods, with its main
business models and the situations of its business divisions as follows:
1. Color TVs
The Company provides color TVs for both domestic and overseas markets.
The domestic sales of its color TVs are realized mainly through B2B (Business-to-Business) 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.
2. 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.
3. 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 the main assets
1. Significant changes in the main assets
Main asset Reason for any significant change
11
The 2015 Annual Report of Konka Group Co., Ltd.
The final report of the long-term equity investment compared with 2014, reducing the
Equity assets end of 47.47%, the main reason is the hope of recovering couplet Ying company
Shanghai Konka green science and Technology Co., Ltd. of investment.
Fixed assets No significant changes
Intangible assets No significant changes
At the end of this report in the construction project was increased by 30.23% compared
Construction in progress to the end of 2014, the main reason is the increase in investment in Kangsheng Hotel
project.
2. Main assets overseas
□ Applicable √ Inapplicable
III. Core competitiveness analysis
The Company’s capability in R&D, the marketing network and manufacture constitutes 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
technical innovations to increase its overall competitiveness.
12
2015 Annual Report of Konka Group Co., Ltd.
Section IV Discussion & Analysis by the Management
I. Summary
In the reporting period, the Company carried on with its Internet strategy and its product mix
improved with a larger proportion of smart TVs in its total sales. However, the Company recorded a
large deficit due to the following reasons:
1. In the reporting period, the Company received The Notice of the Finance Commission of
Shenzhen Municipality Concerning the Withdrawal of the Central Government Subsidy for the
Promotion of Highly Energy-Saving Household Appliances. According to the Notice, the Company
had to return a subsidy of RMB89.96 million, incurring an irrecoverable book receivable of net
government energy-saving subsidy of RMB131.99 million as well as a decrease of RMB221.95
million in the consolidated total profits.
2. The Company has a great amount of financings in the US dollar due to its operation needs.
Although it has increased its exchange rate lock-in business from September 2015 to control the
exchange rate risk of its dollar financings, a great, adverse impact was caused by the depreciation of
the RMB against the US dollar in the first nine months of 2015 on the Company’s overall business
results, incurring an exchange loss of approximately RMB229 million in the year.
3. In the reporting period, the management of the Company, those in the domestic sales of color
TVs in particular, experienced frequent changes, which greatly affected the cohesion and morale of
the employees as well as the product planning and operating efficiency of the Company. The
changing management made two adjustments to the product planning in the third and fourth
quarters respectively, creating an unfavorable impact on the sales. In addition, the price battles
involving the Company’s main products also led to the decrease in the Company’s profitability in its
main business.
For the reporting period, the Company achieved operating revenues of RMB18.395 billion, down
5.29% from the prior year. And the net profits attributable to the shareholders of the Company stood
at RMB-1.257 billion, representing a year-on-year decrease of 2488.32%.
II. Main business analysis
1. Summary
In 2015, the Company not only faced with huge impacts from industry renewal and drastic
fluctuations in exchange rate market, but also went through internal trials and shocks. In such
instance, the Company stood up to the pressure, cleared up operation strategies and development
13
2015 Annual Report of Konka Group Co., Ltd.
directions, and created advantages for further acceleration of development. Business highlights of
the Company in 2015 are as below:
1. The Company cleared up operation strategies and development directions in constant
adjustments.
In 2015, competitions in household appliance industry were more white-hot, together with negative
factors such as exchange rate fluctuations and management changes, the Company suffered a large
decline in business performance. In the course of that period, the Company stabilized operation
situation through deep clear-up and positive strategic adjustments, re-clarified business layout,
determined business strategies of focusing superior resources to develop main businesses, and
created good atmosphere for development acceleration in next period.
2. Urban renewal project for the headquarter block officially started.
In Apr 2015, the Company moved into the new office block. The urban renewal project for the
headquarter block officially stepped into substantive construction period. At present, the site
formation work is progressing on schedule and in order.
3. Main businesses made progress during changes.
(1) Domestic business of color TV
In 2015, in terms of manufacturing of color TV for domestic business, the Company improved
manufacturing efficiency by continuously perfecting techniques. And at the same time, the
Company kept improving product quality by strictly controlling on quality.
In terms of concrete sales strategies of color TV for domestic business, the Company strengthened
on products, supplied deficiencies, formed portfolio effects for main sales series, and enhanced the
iterative upgrade of products. The client service department improved product service by real-time
monitoring on product quality.
In 2015, despite some repetitions made for previous thoughts and strategies due to management
changes causing dissatisfactory businesses for overall operation, the Company generally
accomplished business adjustments by re-adjustments and re-plans in the 4th quarter. The products
operation tempo began to show up, the turnover speed became higher, and the sales businesses
obtained obvious improvement. It should be mentioned that the domestic business of color TV is
currently stepping into a trend for the good in overall view, which reflects the initial effects brought
by adjustments.
(2) Overseas businesses
In 2015, as for the overseas businesses, the Company conquered multiple negative factors, tightly
caught up blank markets in traditional districts, positively developed potential clients, fully
combined after-end resources, and realized large sales increase in traditional clients. Meanwhile, the
blossomed result of key and new clients newly developed made the client structure more rational,
14
2015 Annual Report of Konka Group Co., Ltd.
and ensured a record-high sales volume of overseas businesses. Moreover, the profitability of
overseas businesses further improved due to gross margin increase.
(3) Handset business
In 2015, as for handset business, the Company took products and clients as the key line, established
operation strategies of parallel businesses of OEM and self-own brand, and activated domestic sales
brand business in the second half year. The Company launched new product of mobile phone R1,
and founded a mobile internet technology limited company with sales as the focused subject, which
formed a business model of shoulder-to-shoulder development of domestic and overseas businesses,
and as a result, laid a foundation for future development.
(4) White household appliance business
In 2015, as for white household appliance business, the Company positively applied internet
thinking, and put forth efforts to e-commerce, which developed rapidly. At the same time, through
constant perfecting and optimization for internal management, the Company mainly promoted
three-door and multi-door boutique refrigerators, focused on digging out new growth points of
profits and businesses, obtained growth against negative trend in difficult situation, and improved a
lot for business performance.
(II) Revenues and costs
1. Breakdown of the operating revenues
Unit: RMB Yuan
2015 2014
In operating In operating +/-
Amount Amount
revenues revenues
Operating
18,395,177,035.98 100% 19,423,488,994.07 100% -5.29%
revenues
By business segment
Electronics 16,882,508,201.20 91.78% 18,895,371,029.68 97.28% -10.65%
Others 1,512,668,834.78 8.22% 528,117,964.39 2.72% 186.43%
By product
Color TVs 12,590,931,785.71 68.45% 14,697,422,135.45 75.67% -14.33%
Mobile phones 790,942,197.54 4.30% 1,587,898,794.07 8.18% -50.20%
White goods 1,569,786,771.56 8.53% 1,277,294,037.34 6.58% 22.90%
Others 3,443,516,281.17 18.72% 1,860,874,027.21 9.57% 85.06%
By area
Domestic 12,466,005,969.45 67.77% 14,710,949,822.97 75.74% -15.26%
15
2015 Annual Report of Konka Group Co., Ltd.
Overseas 5,929,171,066.53 32.23% 4,712,539,171.10 24.26% 25.82%
(2) Industries, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating Operating cost: Gross profit
Operating Gross profit
Operating cost revenue: +/-% +/-% from last margin: +/-%
revenue margin
from last year year from last year
Classified by industries
Electronics
16,882,508,201.20 14,760,120,413.85 12.57% -10.65% -9.48% -1.13%
industry
Classified by products
Color TVs
12,590,931,785.71 11,006,357,581.37 12.59% -14.33% -12.07% -2.25%
industry
Classified by regions
Domestic sales 12,466,005,969.45 10,466,548,247.47 16.04% -15.26% -14.56% -0.68%
Overseas sales 5,929,171,066.53 5,588,948,938.15 5.74% 25.82% 24.67% 0.87%
Main business data of the previous year restated according to the changed statistical caliber for the
reporting period
□ Applicable √ Inapplicable
(3) Are the Company’s goods selling revenue higher than the service revenue?
□ Yes √ No
Category Item Unit 2015 2014 YoY +/-
Sales volume Ten thousand sets 1,136.17 1,529.35 -25.71%
Electronics Output Ten thousand sets 914.05 1,150.33 -20.54%
industry Inventory Ten thousand sets 129.49 145.88 -11.24%
Explanation of the reasons of the changes of the relevant date exceeded 30% over the last period
□ Applicable √ Inapplicable
(4) List of the execution of the signed significant sales contracts of the Company up to the
reporting period
□ Applicable √ Inapplicable
(5) Operating cost form
Category of the industries and products
Unit: RMB Yuan
Category 2015 2014
of the Item Ratio to the Ratio to the YoY +/-
Amount Amount
industries operating cost operating cost
16
2015 Annual Report of Konka Group Co., Ltd.
Electronics Raw
15,132,306,097.45 94.25% 15,737,054,443.96 94.04% -3.84%
materials
Electronics Labor cost 642,219,887.42 4.00% 668,090,268.67 3.99% -3.87%
Electronics Depreciati
65,843,593.96 0.41% 64,478,575.17 0.39% 2.12%
on
Unit: RMB Yuan
Classi 2015 2014
fied
by Item Ratio to the Ratio to the operating YoY +/-
Amount Amount
produ operating cost cost
cts
Color
11,006,357,581.37 68.56% 12,516,818,815.26 74.81% -12.07%
Color TVs
TVs
Cell
phone Cell phones 748,974,690.95 4.66% 1,443,167,712.05 8.62% -48.10%
s
Cons
umer Consumer
1,276,893,910.52 7.95% 1,106,574,443.35 6.61% 15.39%
applia appliances
nces
Other Other 3,023,271,002.78 18.83% 1,667,185,610.79 9.96% 81.34%
Note: in 2015, the company's mobile phone business revenue decline, its operating costs
compared with 2014 decreased, the white power and other business revenue increased so that
the corresponding operating costs increased with the proportion of.
6. Whether there were changes of the consolidation scope during the reporting period
√ Yes □ No
(1) Disposal of the subsidiaries
On 9 Feb. 2015, the Company formally written off Konka (Nanhai) Development Center. Since
then, the Company no more included which in the consolidated scope.
(2) Changes of the consolidated scope of other reasons
① Shenzhen Konka Precision Mold Manufacturing Co., Ltd and Mansfield Technology (Taiwan)
Co., Ltd, our subsidiaries contributed capital jointly and founded Anhui Jiasen. Its registered capital
was RMB20 million, and it was paid in full amount by all the stockholders by September 30, 2015.
In it, Shenzhen Konka Precision Mold Manufacturing Co., Ltd. subscribed to RMB1.02 million,
which occupied 51% of the registered capital and Mansfield Technology (Taiwan) Co., Ltd.
subscribed to RMB9.80 million, which occupied 49% of the registered capital.
② The Company contributed capital with Shenzhen Kaikai Shijie Investment Partnership
Enterprise (limited partnership) jointly and founded Anhui Kakai Shijie on December 29, 2014,
17
2015 Annual Report of Konka Group Co., Ltd.
with a registered capital of RMB20 million. In it, the Company contributed RMB16 million, which
occupied 80% of the registered capital. Shenzhen Kaikai Shijie Investment Partnership Enterprise
(limited partnership) contributed RMB4.0 million, which occupied 20% of the registered capital.
The Company has right of control over it, and included it into its merger scope from January 1,
2015.
③ The Company contributed capital with Shenzhen Yizhonghui Technology Co., Ltd. and
Shenzhen Yizhonghe Technology Co., Ltd. jointly and founded Shenzhen E2info with a registered
capital of RMB20 million on January 12, 2015. In it, the Company contributed RMB19.20million,
which occupied 96% of the registered capital, the other stockholders contributed RMB800,000,
which occupied 4% of the registered capital, but the capital had not been actually contributed by the
date of the balance sheet. And according to the regulations of the articles, the Company has right of
control over it, and included it into its merger scope from January 12, 2015.
④ The Company contributed capital with OCT Enterprises Co. jointly and founded Shenzhen
Kangqiaojiacheng Property Investment Co., Ltd, with a registered capital of RMB10 billion on
January 9, 2015, which will be paid in full amount by all the stockholders by December 31, 2019. In
it, the Company subscribed to RMB700 million, which occupied 70% of the registered capital, OCT
Enterprises Co. contributed to RMB300 million, which occupied 30% of the registered capital. By
the date of the balance sheet, the Company actually contributed RMB112 million, which occupied
11.20% of the registered capital; OCT Enterprises Co. actually contributed RMB48 million, which
occupied 4.8% of the registered capital. The Company has right of control over it, and included it
into its merger scope from January 19, 2015.
⑤ Kangdian Investment Development Co., Ltd, a subsidiary of the Company, contributed capital
jointly with KK Orient Limited and founded Konka Smarttech Limited on January 21, 2015, with a
registered capital of HK$10million. In it, Kangdian Investment Development Co., Ltd. contributed
HK$6.10 million, which occupied 61% of the registered capital and Konka Smarttech Limited
contributed HK$3.90 million, which occupied 39% of the registered capital. The Company has right
of control over it, and included it into its merger scope from January 21, 2015.
⑥ Shenzhen Konka E-display Co., Ltd., a subsidiary of the Company contributed capital and
founded Shenzhen E-display Service Co., Ltd., a wholly-funded subsidiary under it on May 7, 2015,
with a registered capital of RMB2.00 million. The Company has right of control over it, and
included it into its merger scope from May 7, 2015.
⑦ The Company and Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) jointly
incorporated Shenzhen Konka Commercial System Technology Co., Ltd. on June 25, 2015 with the
registered capital of RMB12 million, of which, the company contributed RMB9.72 million,
representing 81% of the registered capital, Shenzhen Kangzhuang Jiasheng Investment Partnership
(LP) contributed RMB2.28 million, representing 19% of the registered capital. As at the date of
balance sheet, the company’s actual contribution was RMB2.916 million, representing 24.3% of the
18
2015 Annual Report of Konka Group Co., Ltd.
registered capital, and Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) was
RMB621,000, representing 5.18% of the registered capital. The company has control over
Shenzhen Konka Commercial System Technology Co., Ltd. which has been thus consolidated since
June 25, 2015.
⑧ The Company and Shenzhen Kangwei Investment Partnership (LP) has jointly incorporated
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. with the registered capital of
RMBXXX on October 26, 2015, which shall be paid in full amount before June 30, 2016 by all the
shareholders, of which, the Company shall contribute RMB10.20 million, representing 51% of the
registered capital; Shenzhen Kangwei Investment Partnership (LP) shall contribute RMB9.80
million, representing 49% of the registered capital. As at the data of balance sheet, the Company’s
actual contribution was RMB5.10 million, representing 25.5% of the registered capital, and
Shenzhen Kangwei Investment Partnership (LP)’s actual contribution was RMB4.90 million,
representing 24.5% of the registered capital. The company has control over Shenzhen Konka
Mobile Interconnection Technology Co., Ltd. which has thus been consolidated since October 26,
2015.
⑨ On 27 Mar. 2015, the Company completed the liquidation of Chongqing Konka Automotive
Electronic Co., Ltd.. Since then, the Company no more included which in the consolidated scope.
7. List of the significant changes or adjustment of the industries, products or services of the
Company during the reporting period
□ Applicable √ Inapplicable
8. List of the major trade debtors and major supplier
List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB Yuan) 3,298,880,853.29
Ratio of the total sales to the top 5 customers to the
17.93%
annual total sales
Information of the top 5 customers of the Company
Serial
Name of customer Sales amount (RMB Yuan) Proportion in annual total sales
No.
1 Customer 1 1,030,050,237.42 5.60%
2 Customer 2 904,844,908.39 4.92%
3 Customer 3 675,374,436.63 3.67%
4 Customer 4 356,501,259.15 1.94%
5 Customer 5 332,110,011.70 1.80%
Total -- 3,298,880,853.29 17.93%
Notes of the other situation of the major customers
19
2015 Annual Report of Konka Group Co., Ltd.
√ Applicable □ Inapplicable
There was no related relationship of the Company and the top 5 customers, the Directors,
Supervisors, Senior Executives, Senior Executives, shareholders with more than 5% shareholding,
actual controllers and other related parties had no directly or indirectly equities of the major
customers.
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan) 4,545,114,837.87
Ratio of the total purchase to the top 5 suppliers to the
37.88%
annual total purchase
Information of the top 5 suppliers of the Company
Purchase amount (RMB
No. Name of supplier Ratio to the annual purchase amount
Yuan)
1 Supplier 1 2,543,534,610.97 21.20%
2 Supplier 2 1,010,674,396.02 8.43%
3 Supplier 3 481,434,025.60 4.01%
4 Supplier 4 406,195,276.40 3.38%
5 Supplier 5 103,276,528.88 0.86%
Total -- 4,545,114,837.87 37.88%
Notes of the other situation of the major suppliers
√ Applicable □ Inapplicable
There was no related relationship of the Company and the top 5 customers, the Directors,
Supervisors, Senior Executives, Senior Executives, shareholders with more than 5% shareholding,
actual controllers and other related parties had no directly or indirectly equities of the major
suppliers.
(III) Expenses
Unit: RMB Yuan
2015 2014 YoY +/- Notes of the significant changes
Selling
2,448,337,549.43 2,414,468,187.73 1.40%
expenses
Managem
ent 695,731,013.59 686,930,373.50 1.28%
expenses
Exchange losses caused by exchange
Financial
350,616,323.55 132,763,824.46 164.09% rate fluctuations in the current
expenses
period.
(IV) R&D investment
√ Applicable □ Inapplicable
20
2015 Annual Report of Konka Group Co., Ltd.
During the reporting period, the R&D expenses of the Company was of RMB229 millions. 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 rational suggestion to increase the
production efficiency, improve the core competitiveness and continue to keep a leading position in
the industry.
List of the R&D investment of the Company
2015 2014 Varied ratio
Number of the R&D personnel (person) 1,213 1227 -1.14%
Ratio to the R&D personnel 6.54% 6.53% 0.01%
Investment amount of the R&D
229,397,281.19 219,325,677.28 4.59%
(RMB10,000’)
Ratio of the R&D investment to the
1.25% 1.13% 0.12%
operating income
Amount of the capitalized R&D
0 0 0
investment (RMB Yuan)
Ratio of the capitalized R&D
0 0 0
investment to the R&D investment
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to
the operating income
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable
explanation
□ Applicable √ Inapplicable
(V) Cash flow
Unit: RMB Yuan
Item 2015 2014 YoY +/-
Subtotal of cash inflows from
19,318,005,896.78 18,464,400,652.40 4.62%
operating activities
Subtotal of cash outflows from
18,028,405,414.12 19,104,785,834.45 -5.63%
operating activities
Net cash flows from operating
1,289,600,482.66 -640,385,182.05 301.38%
activities
Subtotal of cash inflows from
3,818,980,972.35 3,104,636,438.39 23.01%
investing activities
Subtotal of cash outflows from 3,970,903,850.94 3,473,214,203.50 14.33%
21
2015 Annual Report of Konka Group Co., Ltd.
investing activities
Net cash flows from investing
-151,922,878.59 -368,577,765.11 58.78%
activities
Subtotal of cash inflows from
3,134,261,903.06 4,827,571,410.52 -35.08%
financing activities
Subtotal of cash outflows from
4,388,415,298.00 3,947,765,478.96 11.16%
financing activities
Net cash flows from financing
-1,254,153,394.94 879,805,931.56 -242.55%
activities
Net increase in cash and cash
-152,081,985.73 -131,252,584.13 -15.87%
equivalents
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
The decrease in bills receivable and purchase cash payments resulting in the decrease in net cash
flow from operating activities increased.
Cash and cash investments paid in cash and investments during this period resulted in an increase in
net cash flows generated during the current period.
Net cash flow from financing activities resulting from the current repayment period.
Notes to the reason of the significant differences between the net cash flow from the operating
activities and the net profits of 2015 of the Company during the reporting period
√ Applicable □ Inapplicable
The company to optimize product structure, increase sales efforts in the previous inventory,
procurement to reduce the amount of lead to the purchase payment of cash to reduce; at the same
time due to the traditional peak season for sales of main products of TV is concentrated at the end
of the year, and clearing the way mostly notes receivable, 2014 three or four quarters of sales in this
period produced cash flow and notes receivable reduction leads to an increase in sales of cash
received. The comprehensive effect of the above two factors, the period of business activities net
cash inflow is larger.
III. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the total
Amount Notes of the causes Whether was sustainability
profits amount
Investment profits 13,574,652.77 -0.88%
Variable profit and
32,591,836.13 -2.11%
loss of fair value
This period to confirm the
Assets impairment The main provision for
365,863,111.63 -23.67% temporarily unable to
losses bad debts of accounts
recover the energy subsidies
22
2015 Annual Report of Konka Group Co., Ltd.
receivable and inventory. to prepare for bad debts does
not have continuity.
Non-operating Software tax rebates and
158,538,297.00 -10.26% Has a certain continuity.
revenues government subsidies.
This period should be
returned to the early
Non-operating costs 134,780,910.57 -8.72% Does not have continuity.
period of energy subsidies
received.
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB Yuan
As at 31 Dec. 2015 As at 31 Dec. 2014
Proporti
Proportio Proportio Explain any
on in
Amount n in total Amount n change major change
total
assets
assets
Monetary funds 1,706,446,928.92 11.97% 1,703,135,732.18 10.15% 1.82%
Accounts
2,048,813,439.34 14.38% 2,259,293,207.16 13.46% 0.92%
receivable
Increase the early
stage of inventory
Inventories 2,882,515,913.28 20.23% 3,904,436,250.33 23.27% -3.04% sales, ending
inventory
reduction.
Investing real
227,718,178.53 1.60% 233,349,452.80 1.39% 0.21%
estate
The company to
recover the
antithetical
Long-term
couplet Shanghai
equity 190,573,524.29 1.34% 362,765,183.66 2.16% -0.82%
Konka green
investment
Polytron
Technologies Inc
investment.
Fixed assets 1,763,503,189.50 12.38% 1,783,695,548.92 10.63% 1.75%
The increase in
Construction in investment in the
207,854,180.88 1.46% 159,604,884.09 0.95% 0.51%
progress project of
Kangsheng hotel.
Short-term 4,150,773,195.76 29.13% 5,145,712,436.91 30.67% -1.54% The return of the
23
2015 Annual Report of Konka Group Co., Ltd.
loans previous period
of borrowing led
to a reduction in
borrowing.
Long term loans
due to the
Long-term
23,700,000.00 0.17% 957,541,210.52 5.71% -5.54% maturity of the
loans
classification to a
year to maturity.
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gain/loss on Cumulative
Openi Impairment Purchased Sold amount
fair value fair value
ng provisions in amount in the in the Closing
Item change in the change
amou the reporting reporting reporting amount
reporting recorded into
nt period period period
period equity
Financial assets
1. Financial assets
measured at fair
value and whose
changes are recorded 32,591,836.1 33,196,377.2
0.00
into current gains 3 8
and losses
(excluding derivative
financial assets)
1,630,
3.Available-for-sale
609.0 1,227,774.30 54,815.00 97,989.12 2,874,068.30
financial assets
0
1,630,
32,591,836.1 36,070,445.5
Total of the above 609.0 1,227,774.30 54,815.00 97,989.12
3 8
0
Financial liabilities 0.00 0.00
Did any significant change occur to the attribute of the Company’s main asset measurement during
the reporting period?
□ Yes √ No
The explanation of the reasons of the significant changes of the main asset measurement and the
influences of which on the operating results and financial conditions
24
2015 Annual Report of Konka Group Co., Ltd.
V. List of the investment
1. Overall condition
√ Applicable □ Inapplicable
Investment amount of the reporting Investment amount of the same period of
Variation amount
period (RMB Yuan) last year (RMB Yuan)
78,306,112.00 249,170,764.00 -68.57%
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 √ Inapplicable
4. Investment on the financial assets
(1) List of the securities investment
√ Applicable □ Inapplicable
Unit: RMB Yuan
Cu
Gain
mul
/loss
ativ
on
e
Op fair Clo
Accou fair Purchas
eni valu Sold sin Sou
Variet Code Nam nting valu ed Gain/los
Initial ng e amount g rce
y of of e of measu e amount s for Account
investm bo chan in the boo of
securi securit secu remen cha in the reportin ing title
ent cost ok ge in reportin k stoc
ties ies rities t nge reportin g period
val the g period val k
mode reco g period
ue repo ue
rded
rting
into
peri
equi
od
ty
Dome
Meas Self
stic
ured -ow
and ZXJ 0.0 7,70
002772 6,500 by 0 0 0 6,500 14,205.77 0 ned
overse Y 0 5.77
fair fun
as
value ds
stock
Dome
Meas Self
stic
ured 18,8 -ow
and SSY 0.0
300485 19,230 by 0 0 0 19,230 38,060.46 30.4 0 ned
overse Y 0
fair 6 fun
as
value ds
stock
25
2015 Annual Report of Konka Group Co., Ltd.
Dome
Meas Self
stic
ured -ow
and PYH 0.0 4,97
300481 4,565 by 0 0 0 4,565 9,535.45 0 ned
overse C 0 0.45
fair fun
as
value ds
stock
Dome
Meas Self
stic
ured -ow
and KDR 0.0 4,13
002770 3,4250 by 0 0 0 3,425 7,562.42 0 ned
overse Y 0 7.42
fair fun
as
value ds
stock
Dome
Meas Self
stic
Bob ured -ow
and 0.0 7,12
002776 aolo 11,645 by 0 0 0 11,645 18,769.61 0 ned
overse 0 4.61
n fair fun
as
value ds
stock
Dome
Meas Self
stic
ured -ow
and SLG 0.0 6,09
002766 3,765 by 0 0 0 3,765 9,855.41 0 ned
overse F 0 0.41
fair fun
as
value ds
stock
Dome
Meas Self
stic
ured -ow
and HY
002787 5,685 by 0 0 0 2,500 5,685 0 0 8,185 ned
overse BZ
fair fun
as
value ds
stock
Dome
Meas 1,6 Self
stic
ured 30, -ow
and Vank 2,311,748. 1,630 554,135.2 2,865,883.
000002 by 60 0 0 0 ned
overse eA 07 ,609 3 3
fair 9.0 fun
as
value 0 ds
stock
Other securities
investment held at the 0 -- 0 0 0 0 0 0 0 -- --
period-end
1,63 2,87
2,366,563. 556,6
Total -- 0,60 0 54,815 97,989.12 48,859.12 4,06 -- --
07 35.23
9 8.3
26
2015 Annual Report of Konka Group Co., Ltd.
Disclosure date of the
board announcement on
Inapplicable
approval of the
securities investment
Disclosure date of the
general meeting
announcement on
Inapplicable
approval of the
securities investment (if
any)
(2) List of the derivative investment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
2. List of the selling of the significant equities
√ Applicable □ Inapplicable
Net Propo Whet
profit rtion her
s of the execu
Whet
contri net ted as
her
buted profit sched
the
by the s of Pricin uled
Trans Influe Whet involv
equiti the g Relati and if
action nce of her ed
es to contri princi onshi failed,
price the was equiti
Count Sold the buted ples p with shoul Discl Discl
Sold (RMB sellin the es all
erpart equiti listed amou of the the d state osure osure
date Ten g of relate compl
y es comp nt of equiti count the date index
Thous the d eted
anies the es erpart reaso
and Comp transa the
from equiti sellin y ns and
Yuan) any ction owner
the es g the
ship
period sellin adopt
transf
-begin g to ed
er
to the the measu
sold listed remen
date comp ts of
27
2015 Annual Report of Konka Group Co., Ltd.
(RMB anies the
Ten to the Comp
Thous total any
and amou
Yuan) nt of
the
net
profit
s
Shenz
http://
hen
www.
Konk
cninfo
a
Witho Temp .com.
Yishij Suppl
ut oraril cn/fin
ie ement Asses 4
Listin relate y alpag
Com No 7,200 25 the 0 sment No No Nov.
g d cease e/201
merci mobil value 2015
transa the 5-11-
al ity
ctions listing 04/12
Displ
01752
ay
356.P
Co.,
DF
Ltd.
Notes: March 2016, the Company had decided to temporarily cease the listing and transfer 60% equities of Shenzhen Konka Yishijie
Commercial Display Co., Ltd. held by the Company, of which the details please refer to the Indicative Announcement of Temporarily
Cease the Listing and Transfer 60% Equities of Yishijie Company (Announcement No.: 2016-11).
VII. Analysis of the major controlling and stock-participating companies
√ Applicable □ Inapplicable
List of the stock-participating companies which the influence over 10% of the net profits of the
Company by the major subsidiaries
Unit: RMB Yuan
Main
Name Type products Registered
Total assets Net assets
Operating Operating
Net profit
or capital revenues profit
services
Shenzhe Software
n technolo
Wankaid gy
Subs
a develop
idiar RMB10000000 344,074,716.76 339,240,366.98 57,484,390.00 33,660,500.24 38,914,171.12
Science ment
y
and and
Technol mainten
ogy Co., ance
28
2015 Annual Report of Konka Group Co., Ltd.
Ltd.
Producti
Donggu
on and
an
Subs sale of
Xutongd
idiar mould RMB5000000 97,038,261.68 35,915,691.33 165,783,377.81 15,770,567.84 13,721,503.54
a Mould
y and
Plastic
plastic
Co., Ltd.
products
Shenzhe Producti
n Konka on and
Subs
Informat sale of
idiar RMB30000000 169,047,739.55 10,528,385.85 227,564,096.73 12,698,675.02 14,068,154.53
ion digital
y
Network network
Co., Ltd. products
Producti
on and
Anhui sale of
Konka refrigera
Tongchu tors,
ang Subs washing
Househo idiar machine RMB180000000 855,155,156.04 -45,426,362.30 1,813,977,718.86 -47,758,638.98 -31,124,158.57
ld y s and
Applian other
ces Co., househol
Ltd. d
applianc
es
Producti
Anhui
on and
Konka Subs
sale of
Electron idiar RMB140000000 1,108,033,608.80 287,310,914.76 5,226,927,921.25 -2,564,857.76 5,741,493.20
multime
ic Co., y
dia
Ltd.
products
Producti
Donggu
on and
an
Subs sale of
Konka
idiar mould RMB10000000 291,454,028.14 99,951,650.55 187,474,600.08 -23,563,931.64 -22,550,751.43
Mould
y and
Plastic
plastic
Co., Ltd.
products
EnRay Joint Producti
USD64196600 1,337,568,934.81 229,470,887.12 165,482,576.55 -129,645,828.55 -58,648,256.05
Tek stoc on and
29
2015 Annual Report of Konka Group Co., Ltd.
Optoelec k sale of
tronics com LED
(Shangh pany
ai) Co.,
Ltd.
Producti
on and
sale of
Shenzhe
mobile
n Konka
commun
Telecom Subs
municati ication
idiar RMB120000000 304,037,383.60 -244,556,546.46 821,019,386.24 -47,183,184.85 -45,307,508.54
ons products
y
Technol & sale
ogy Co.,
of
Ltd.
multime
dia
products
Producti
on and
Kunshan
sale of
Konka Subs
TFT-LC
Electron idiar RMB350000000 576,730,397.89 312,009,194.14 2,009,011,978.36 -53,073,365.90 -48,093,088.72
M and
ic Co., y
multime
Ltd.
dia
products
Donggu Producti
an on and
Subs
Konka sale of
idiar RMB266670000 740,114,161.64 481,809,197.96 1,016,938,820.52 -117,656,404.92 -101,694,301.22
Electron multime
y
ic Co., dia
Ltd. products
Export
&
import
Hong
Subs of
Kong
idiar electrom HKD500000 1,914,142,291.75 67,974,528.68 3,496,450,561.65 -43,639,699.09 -49,402,634.06
Konka
y echanica
Co., Ltd.
l and
electroni
cs
Subsidiaries acquired or disposed during the reporting period:
√ Applicable □ Inapplicable
30
2015 Annual Report of Konka Group Co., Ltd.
Purpose for acquiring or disposing the Effect on the overall production and
Name of subsidiary
subsidiary in the reporting period business performance
No effect on the overall production and
Konka (Nanhai) Development Center Write-off
business performance
Chongqing Konka Automotive No effect on the overall production and
Liquidation
Electronic Co., Ltd. business performance
Anhui Jiasen Precision Technology Co., No effect on the overall production and
Establishment of capital contribution
Ltd business performance
Anhui Kaikai Shijie E-commerce Co., No effect on the overall production and
Establishment of capital contribution
Ltd business performance
Shenzhen Yipingfang Network No effect on the overall production and
Establishment of capital contribution
Technology Co., Ltd business performance
Shenzhen Kangqiaojiacheng Property No effect on the overall production and
Establishment of capital contribution
Investment Co., Ltd business performance
No effect on the overall production and
Konka Zhisheng Co., Ltd. Establishment of capital contribution
business performance
Shenzhen Konka Yishijie Commercial No effect on the overall production and
Establishment of capital contribution
Display Co., Ltd. business performance
Shenzhen Konka Commercial Systems No effect on the overall production and
Establishment of capital contribution
Technology Co., Ltd business performance
Shenzhen Konka Mobile Internet No effect on the overall production and
Establishment of capital contribution
Technology Co., Ltd business performance
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 √ Inapplicable
IX. Outlook of the Company’s future development
Viewing from industrial perspective, Shenzhen Konka will face both advantages and disadvantages
in 2016:
(I) Advantages:
The Internet boom has brought great opportunities and unlimited space. The active users of the
company’s smart TVs will continue to increase in 2016, and the operation of various value-added
services at the TV terminals is starting to mature, and it will see returns from the video, advertising,
education, health care and games.
(II) Disadvantages:
1. In 2016, the growth in the market capacity of color TV, white goods and mobile phone will be
limited. According to the data by CMM, in 2016, the market capacity of color TVs is about 48.77
31
2015 Annual Report of Konka Group Co., Ltd.
million sets, up by 520,000 sets year on year; the market capacity of mobile phones in 2016 will be
440 millions sets, up by 15 million sets year on year; and the market capacity of refrigerators will
be 29.58 million sets, up by 120,000 sets year on year; and the market capacity of air conditioners
in 2016 will be 41.09 million sets, down by 340,000 sets year on year, and the market capacity of
washers will be basically flat in 2016.
2. The home appliance industry will see increasingly fierce competitions: the color TV industry will
experience a slow growth. The excess production capacity of color TV in the Internet era will lead
to continuous reorganization and distribution of the ecological chain and value chain of the industry.
Though new technologies will bring an upgrade in consumption demand and thus, the chance to
improve the business, but in general, the challenges are higher than opportunities, and the market
competitions will further grow fierce.
Business development ideas in 2016
1. Actively push for changes in the management mechanism
The company will actively push for changes in the corporate management mechanism, and promote
the market-oriented changes in the motivation mechanism and restraining mechanism.
2. Balanced development in the whole chain
The company will stress the building of basic capabilities, and do well in each link of the whole
chain, such as planning, manufacturing, R&D, supply, promotion, sales and after-sales services.
3. Do a good job of user operation
A large number of user groups can form an enormous interaction platform. On the basis of the
platform, the company must do a good job of user operation and gradually bring out the advantages
and potential values in possessing such an enormous user group, and turn them into actual value
growth and true contribution to the company’s business.
4. Promote the intelligent manufacturing
The company will center on the “intelligent manufacturing” and through the product quality
enhancement and production efficiency increase, with the lean production management as the
carrier, rely on the efficient promotion of automated, digital, networking, and intelligent work to
accelerate the simultaneous promotion in production efficiency and product quality through the
continuous deepening in shaping of intelligent production pacesetter and MES system application
( the production information management system that is geared to the needs of the workshop
execution officers in manufacturing enterprises).
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this reporting period
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
2. Particulars about researches, visits and interviews received from the period-end to the
disclosure date
32
2015 Annual Report of Konka Group Co., Ltd.
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
33
2015 Annual Report of Konka Group Co., Ltd.
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 □ Inapplicable
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.
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 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.
2. The 2015 semi-annual profits distribution preplan of the Company was as follows:
34
2015 Annual Report of Konka Group Co., Ltd.
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.
3. The 2014 profits distribution plan of the Company was as follows:
Based on the Company’s total share capital of 1,203,972,704 shares as at the end of 2014, the
Company was proposed to distribute a cash dividend of RMB0.1 (tax included) to every 10 shares.
The distributed profits would aggregate RMB12,039,727.04 and the retained profit would be carried
forward into the next year for distribution.
4. The 2013 profits distribution plan of the Company was as follows:
Based on the Company’s total share capital of 1,203,972,704 shares as at the end of 2013, the
Company distributed a cash dividend of RMB0.1 (tax included) to every 10 shares. The distributed
profits aggregated RMB12,039,727.04 and the retained profit was 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 Yuan
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
2015 0.00 -1,256,819,314.51 0.00% 0.00 0.00%
2014 12,039,727.04 52,623,527.86 22.88% 0.00 0.00%
2013 12,039,727.04 45,820,496.73 26.28% 0.00 0.00%
The Company (including its subsidiaries) made profit in the reporting period and the 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 √ Inapplicable
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
□ Applicable √ Inapplicable
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 √ Inapplicable
There was no such situation of the Company during the reporting period.
35
2015 Annual Report of Konka Group Co., Ltd.
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 √ Inapplicable
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
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 √ Inapplicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Inapplicable
No such cases in the reporting period.
VII. Explain retrospective restatement due to correction of significant accounting errors in the
reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
√ Applicable □ Inapplicable
For details, please refer to the fourth section of the management discussion and analysis of the main
business analysis section within the scope of the report within the scope of the report period of
change in the contents of the change.
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
120
reporting period (RMB Ten Thousand Yuan)
Consecutive years of the audit services provided
3 years
by domestic CPAs firm
Name of domestic CPAs firm Shen Lingzhi, He Xiaojuan
Name of overseas CPAs firm (if any) Inapplicable
Remuneration for overseas domestic CPAs firm
for the reporting period (RMB Ten Thousand 0
Yuan) (if any)
Consecutive years of the audit services provided
Inapplicable
by overseas CPAs firm (if any)
Name of overseas CPAs firm (if any) Inapplicable
Reengage the CPAs firm at current period or not?
□ Yes √ No
Reengage the CPAs firm during auditing period or not?
√ Applicable □ Inapplicable
During the reporting period, as approved by the Shareholders’ General Meeting, the Company
36
2015 Annual Report of Konka Group Co., Ltd.
continued to engage Ruihua Certified Public Accountants as the audit firm on internal control of the
Company for 2015, with the auditing fee for the internal control in 2015 as RMB400,000.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Inapplicable
XI. Bankruptcy and reorganization
□Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
XII. Significant lawsuit or arbitration
√ Applicable □ Inapplicable
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 √ Inapplicable
No such cases in the reporting period.
XIV. Honesty situations of the Company, its controlling shareholders and actual controller
√ Applicable □ Inapplicable
There was neither execution of the effective judgment from the court of the Company and the
controlling shareholders nor the situation of the larger liabilities failed to pay off when expired.
XV. List of the execution of the stock incentive plan, ESOP, or other Staff incentives
□ Applicable √ Inapplicable
No such cases in the reporting period.
37
2015 Annual Report of Konka Group Co., Ltd.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Pricin Appr Settle
Trans
Conte g Propo oved ment
Type action Whet
nt of princi rtion transa metho
of the amou her
the ple of in ction d of Simil
Relati relate Trans nt excee Discl Discl
Related relate the same quota the ar
onshi d-part action (RM d the osure osure
party d-part relate kind (RM relate marke
p y price B Ten appro date index
y d-part of B Ten d-part t price
transa Thous ved
transa y transa Thous y
ction and quota
ction transa ctions and transa
Yuan)
ction Yuan) ction
Anhui Under
Purch Purch
Huali the Negot Mark Inapp
ase of
same ase of 3 Apr.
Packing comm iated et 4,206 4,000 Yes Cash licabl
actual materi 2015
Co., oditie price price e
contro als
Ltd. s
ller
Shangh Under
Purch Purch
ai Huali the Negot Mark Inapp
ase of
same ase of 3 Apr.
Packing comm iated et 1,228 2,000 No Cash licabl
actual materi 2015
Co., oditie price price e http://
contro als
Ltd. s www.c
ller
ninfo.c
Huali
Under
Packing Purch Purch
om.cn/
the Negot Mark Inapp
ase of finalpa
(Huizh same ase of 3 Apr.
comm iated et 1,093 2,000 No Cash licabl ge/201
ou) actual materi 2015
oditie price price e 5-04-0
Co., contro als
s
ller 3/1200
Ltd.
78252
Chengd
0.PDF
u
Tianfu Sales
Under
OCT the of
Sales Negot Mark Inapp
Industri same liquid 3 Apr.
of iated et 38 1,000 No Cash licabl
al actual crystal 2015
goods price price e
Develo contro displa
pment ller y
Co.,
Ltd.
Total -- -- 6,565 -- 9,000 -- -- -- -- --
Details of large amount of sales
Inapplicable
returns
38
2015 Annual Report of Konka Group Co., Ltd.
The Company has published the Forecasting Public Notice on Routine Related
As for the prediction on the total
Transaction for Y2015 (public notice No. 2015-03) on Securities Times, Shanghai
amount of routine related-party
Securities News, China Securities Journal and Hong Kong Ta Kung Pao as well as the
transactions to be occurred in the
Internet website designated by CSRC http://www.cninfo.com.cn on 3 Apr. 2015. In the
reporting period by relevant types,
reporting period, the basis for pricing, transaction price, transaction amount and
the actual performance in the
settlement methods of raw materials purchased by the Company were basically in
reporting period (if any)
accordance with the forecast. The total amount was RMB65.65 million.
Reason for significant difference
between the transaction price and Inapplicable
the market price
2. Related-party transactions regarding purchase and sales of assets
□ Applicable √ Inapplicable
No such cases in the reporting period.
3. Related-party transactions common external investment
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
No such cases in the reporting period.
(3) Lease
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Significant guarantees
√ Applicable □ Inapplicable
(1) List of guarantees
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Guaranteed Disclosure Amount Actual Actual Type of Period Execute Guarantee
39
2015 Annual Report of Konka Group Co., Ltd.
party date of for occurrence date guarante guarantee of d or not for a
relevant guarantee (date of e guaran related
announcement agreement) amount tee party or not
N/A N/A 0 N/A 0 0 N/A N/A
Total external guarantee line approved during Total actual occurred amount of external
0 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 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
12 Mar. 2015 610.79 No No
Konka guaranty year
Anhui General 1
10 Apr. 2015 1,997.67 No No
Konka guaranty year
21 Nov. 2014 20,000
Anhui General 1
14 May 2015 3,537.2 No No
Konka guaranty year
Anhui General 1
19 May 2015 4,259.39 No No
Konka guaranty year
Anhui
General 1
Tongchua 30 Jan. 2015 8,000 No No
guaranty year
ng
21 Nov. 2014 30,000
Anhui
General 1
Tongchua 2 Jun. 2015 2,000 No No
guaranty year
ng
Communi
cation General 1
22 Apr. 2015 50,000 No No
technolog guaranty year
y 21 Nov. 2014 60,000
Communi
General 1
cation 28 Jan. 2015 10,000 No No
guaranty year
technolog
40
2015 Annual Report of Konka Group Co., Ltd.
y
General 1
Yishijie 21 Nov. 2014 6,000 27 Jan. 2015 2,000 No No
guaranty year
Konka
Househol
General 0.5
d 21 Nov. 2014 6,000 28 Sep. 2014 274.28 No No
guaranty year
Appliance
s
Hong
General 2
Kong 15 Jan. 2014 30,550 No No
guaranty years
Konka
Hong
General 2
Kong 17 Sep. 2014 18,880 No No
guaranty years
Konka
Hong
General 1
Kong 23 Mar. 2015 15,092 No No
guaranty year
Konka
30 Sep. 2013 307,500
Hong
General 1
Kong 29 May 2015 15,458 No No
guaranty year
Konka
Hong
General 1
Kong 26 Jun. 2015 24,440 No No
guaranty year
Konka
Hong 9
General
Kong 23 Nov. 2015 43,300 mont No No
guaranty
Konka hs
Total actual occurred amount of guarantee for
Total guarantee line approved for the subsidiaries
0 the subsidiaries during the reporting period 180,969.33
during the reporting period (B1)
(B2)
Total actual guarantee balance for the
Total guarantee line that has been approved for the
477,050 subsidiaries at the end of the reporting period 230,399.33
subsidiaries at the end of the reporting period (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
Dongguan 27 Apr. 2013 4,631 23 Jul. 2015 463.1 Joint liability 1 No No
41
2015 Annual Report of Konka Group Co., Ltd.
Mould guaranty year
Plastic
Dongguan
Joint liability 1
Mould 25 Aug. 2015 195.43 No No
guaranty year
Plastic
Dongguan
Joint liability 1
Mould 28 Sep. 2015 231.55 No No
guaranty year
Plastic
Dongguan
Joint liability 1
Mould 2 Nov. 2015 370.48 No No
guaranty year
Plastic
Dongguan
Joint liability 1
Mould 30 Nov. 2015 230.62 No No
guaranty year
Plastic
Kunshan Joint liability 3
21 Jan. 2014 361.22 No No
Geraint guaranty years
Kunshan Joint liability 3
28 Nov. 2014 78.73 No No
Geraint guaranty years
Kunshan Joint liability 3
8 Dec. 2014 60.2 No No
Geraint guaranty years
Kunshan Joint liability 3
3 Dec. 2014 213.03 No No
Geraint guaranty years
29 Sep. 2013 23,155
Kunshan Joint liability 3
5 Feb. 2015 32.42 No No
Geraint guaranty years
Kunshan Joint liability 3
12 Feb. 2015 245.44 No No
Geraint guaranty years
Kunshan Joint liability 3
1 Sep. 2015 50.94 No No
Geraint guaranty years
Kunshan Joint liability 3
16 Nov. 2015 55.57 No No
Geraint guaranty years
Total actual occurred amount of guarantee for
Total guarantee line approved for the subsidiaries
0 the subsidiaries during the reporting period 1,875.55
during the reporting period (C1)
(C2)
Total actual guarantee balance for the
Total guarantee line that has been approved for the
27,786 subsidiaries at the end of the reporting period 2,588.73
subsidiaries at the end of the reporting period (C3)
(C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
42
2015 Annual Report of Konka Group Co., Ltd.
Total guarantee line approved during the reporting Total actual occurred amount of guarantee
0 182,844.88
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
504,836 232,988.06
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
82.78%
assets of the Company
Of which:
Amount of debt guarantee provided for shareholders, actual controller and the related-party
0.00
(D)
Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not
232,988.06
less than 70% directly or indirectly (E)
Total guarantee amount exceeded 50% of the net assets (F) 92,268.92
Total amount of the above three guarantees (D+E+F) 325,256.98
Explanation on the occurred warranty liability or possible bearing joint responsibility of
Inapplicable
liquidation due to immature guarantee (if any)
Explanation on provision of guarantees for external parties in violation of the prescribed
Inapplicable
procedure (if any)
Explanation on guarantee that adopts complex method
There was no such situation of the Company during the reporting period.
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
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 □ Inapplicable
Unit: RMB Ten Thousand Yuan
Actu
al
Actual reco
Actual
gains vere
Whethe recover
Amount of and d
r was Trust Remunerati ed Estimat
Name provision losses situa
the Producti manage Start Expirati on amount ed
of the for amount tion
related on type ment date on date recognition of the earning
trustee impairment of the of
transacti amount method reportin s
loss (if any) reportin the
on g
g gains
period
period and
losse
s of
43
2015 Annual Report of Konka Group Co., Ltd.
the
repor
ting
perio
d
Break
Not
Shenzh financia even
2015-0 2016-0 reco
en Ping No l 20,000 and 0 0 342.53 307.69
9-01 1-12 vere
An products keep
d
Bank interest
Shahe
Break
Shenzh Not
financia even
en 2015-1 2016-0 reco
No l 5,000 and 0 0 14.79 11.92
Constru 2-02 1-07 vere
products keep
ction d
interest
Bank
Shahe
Break
Shenzh Not
financia even
en 2015-1 2016-0 reco
No l 10,000 and 0 0 33.7 23.84
Constru 2-02 1-12 vere
products keep
ction d
interest
Bank
Break
Shenzh Not
financia even
en 2015-7- 2016-1- reco
No l 15,000 and 0 0 350.01 345.95
shahe 1 13 vere
products keep
icbc d
interest
total 50,000 -- -- -- 0 0 741.03 689.4 --
Entrust financial funding
Own funds
sources
Fails to take back the
accumulative amount of the
principal and earnings
Cases involving lawsuit (if
No
applicable)
Entrust financial examination
and approval the board 2015-8-29
announcement date (if any)
Entrusting the shareholders'
committee for examination Inapplicable
and approval of announcement
44
2015 Annual Report of Konka Group Co., Ltd.
date (if any)
Whether there is a future trust
Yes
management plan
(2) Entrustment loans
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Actual
recover
Amount
ed
Actual of the Actual
situatio
Whether recovere withdra gains
n of the
was d wn Estimate and
Credit Loan Starting gains
related Loan rate End date amount impairm d losses of
object amount date and
transacti of the ent revenues the
losses
on reportin provisio reportin
of the
g period n (if g period
reportin
any)
g
period
Chuzhou
Tongchu
ang
2014 年 2016 年
Construc
No 7.28% 5,000 12 月 30 03 月 31 0 0 370.07 370.07 359.96
tion
日 日
Investm
ent Co.,
Ltd.
Entrust financial funding sources Own funds
Fails to take back the
accumulative amount of the
principal and earnings
Cases involving lawsuit (if
No
applicable)
Entrust financial examination and
approval the board Inapplicable
announcement date (if any)
Entrusting the shareholders'
committee for examination and
Inapplicable
approval of announcement date
(if any)
Whether there is a future trust
Inapplicable
management plan
45
2015 Annual Report of Konka Group Co., Ltd.
4 Other significant contracts
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVIII. Other significant events
√ Applicable □ Inapplicable
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.
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 Receipt of Tax Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-01 2015-3-28
Rebates Ta Kung Pao B2 5-03-28/1200753459.PDF
Announcement of Resolutions of Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-02 2015-4-3 the 15th Session of the 7th Board B74, Ta Kung Pao
5-04-03/1200782527.PDF
of Supervisors B16-B18
Forecasting Public Notice on Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-03 2015-4-3 Routine Related Transaction for B74, Ta Kung Pao
5-04-03/1200782520.PDF
Y2015 B16-B18
Securities Times B73,
Notice on Holding the 2014 http://www.cninfo.com.cn/finalpage/201
2015-04 2015-4-3 B74, Ta Kung Pao
Annual General Meeting 5-04-03/1200782525.PDF
B16-B18
2015-05 2015-4-3 Announcement on Changes of Securities Times B73, http://www.cninfo.com.cn/finalpage/201
46
2015 Annual Report of Konka Group Co., Ltd.
Partly of the Accounting Policies B74, Ta Kung Pao 5-04-03/1200782538.PDF
B16-B18
Securities Times B73,
Abstract of the Annual Report for http://www.cninfo.com.cn/finalpage/201
2015-06 2015-4-3 B74, Ta Kung Pao
Y2014 of Konka Group Co., Ltd. 5-04-03/1200782521.PDF
B16-B18
Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-07 2015-4-3 2014 Annual Report B74, Ta Kung Pao
5-04-03/1200782530.PDF
B16-B18
Announcement of Resolutions of Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-08 2015-4-3 the 71st Session of the 7th Board B74, Ta Kung Pao
5-04-03/1200782524.PDF
of Directors B16-B18
Declaration of the Nominator of Securities Times
http://www.cninfo.com.cn/finalpage/201
2015-09 2015-4-3 the Independent Directors of the B73,B74,Ta Kung
5-04-03/1200782537.PDF
Listed Companies (Di Xiaofeng) Pao B16-B18
Declaration of the Nominator of Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-10 2015-4-3 the Independent Directors of the B74, Ta Kung Pao
5-04-03/1200782536.PDF
Listed Companies (Li Luoli) B16-B18
Declaration of the Nominator of
Securities Times B73,
the Independent Directors of the http://www.cninfo.com.cn/finalpage/201
2015-11 2015-4-3 B74, Ta Kung Pao
Listed Companies (Zhang 5-04-03/1200782535.PDF
B16-B18
Shuhua)
Declaration of the Candidate of Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-12 2015-4-3 the Independent Directors of the B74, Ta Kung Pao
5-04-03/1200782534.PDF
Listed Companies (Di Xiaofeng) B16-B18
Declaration of the Candidate of Securities Times B73,
http://www.cninfo.com.cn/finalpage/201
2015-13 2015-4-3 the Independent Directors of the B74, Ta Kung Pao
5-04-03/1200782533.PDF
Listed Companies (Li Luoli) B16-B18
Declaration of the Candidate of
Securities Times B73,
the Independent Directors of the http://www.cninfo.com.cn/finalpage/201
2015-14 2015-4-3 B74, Ta Kung Pao
Listed Companies (Zhang 5-04-03/1200782532.PDF
B16-B18
Shuhua)
Announcement on the
Securities Times B40, http://www.cninfo.com.cn/finalpage/201
2015-15 2015-4-14 Alternation of the Office Address
Ta Kung Pao B7 5-04-14/1200825769.PDF
of the Company
Securities Times B80,
Announcement on the Stock http://www.cninfo.com.cn/finalpage/201
2015-16 2015-4-16 Ta Kung Pao Ta
Trading Abnormal Fluctuations 5-04-16/1200839341.PDF
Kung Pao B2
Abstract of the Report for the 1st Securities Times B76, http://www.cninfo.com.cn/finalpage/201
2015-17 2015-4-29
Quarter of 2015 (Chinese) Ta Kung Pao A20 5-04-29/1200930942.PDF
47
2015 Annual Report of Konka Group Co., Ltd.
Report for the 1st Quarter of 2015 Securities Times B76, http://www.cninfo.com.cn/finalpage/201
2015-18 2015-4-29
(Chinese) Ta Kung Pao A20 5-04-29/1200930945.PDF
Announcement on the Stock Securities Times B80, http://www.cninfo.com.cn/finalpage/201
2015-19 2015-5-8
Trading Abnormal Fluctuations Ta Kung Pao B1 5-05-08/1200979093.PDF
Announcement on the Stock Securities Times B68, http://www.cninfo.com.cn/finalpage/201
2015-20 2015-5-13
Trading Abnormal Fluctuations Ta Kung Pao B3 5-05-13/1201006433.PDF
Announcement on Increasing the
Nominated Candidate of the Securities Times B85, http://www.cninfo.com.cn/finalpage/201
2015-21 2015-5-15
Directors and the Supervisors of Ta Kung Pao B8 5-05-15/1201015562.PDF
the Shareholders
Notice on Holding the 2014
Securities Times B85, http://www.cninfo.com.cn/finalpage/201
2015-22 2015-5-15 Annual General Meeting
Ta Kung Pao B8 5-05-15/1201015561.PDF
(renewed)
Declaration of the Candidate of Securities Times B85, http://www.cninfo.com.cn/finalpage/201
2015-23 2015-5-15
the Independent Directors Ta Kung Pao B8 5-05-15/1201015563.PDF
Declaration of the Nominator of Securities Times B85, http://www.cninfo.com.cn/finalpage/201
2015-24 2015-5-15
the Independent Directors Ta Kung Pao B8 5-05-15/1201015564.PDF
Announcement on Increasing the
Nominated Candidate of the Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-25 2015-5-16
Directors and the Supervisors of Ta Kung Pao B11 5-05-16/1201020163.PDF
the Shareholders
Notice on Holding the 2014
Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-26 2015-5-16 Annual General Meeting (after
Ta Kung Pao B11 5-05-16/1201020162.PDF
second renewed)
Declaration of the Nominator of
Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-27 2015-5-16 the Independent Directors (Xiao
Ta Kung Pao B11 5-05-16/1201020165.PDF
Zuhe)
Declaration of the Candidate of Securities Times
http://www.cninfo.com.cn/finalpage/201
2015-28 2015-5-16 the Independent Directors (Xiao B37,Ta Kung Pao
5-05-16/1201020164.PDF
Zuhe) B11
Indicative Announcement of the
Shareholding Increase of the Securities Times B49, http://www.cninfo.com.cn/finalpage/201
2015-29 2015-5-19
Company’s Shares by the Ta Kung Pao 11 5-05-19/1201031184.PDF
Controlling Shareholders
Detailed Report on Equity Securities Times B49, http://www.cninfo.com.cn/finalpage/201
2015-5-19
Changes Ta Kung Pao 11 5-05-19/1201031185.PDF
Announcement of Resolutions of
Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-30 2015-5-20 the 73rd Session of the 7th Board
Ta Kung Pao B2 5-05-20/1201035530.PDF
of Directors
48
2015 Annual Report of Konka Group Co., Ltd.
Indicative Announcement of
Securities Times B53, http://www.cninfo.com.cn/finalpage/201
2015-31 2015-5-23 Holding the 2014 Annual
Ta Kung Pao A23 5-05-23/1201049180.PDF
General Meeting
Announcement on the General
Securities Times B45, http://www.cninfo.com.cn/finalpage/201
2015-32 2015-5-27 Election of the Employee
Ta Kung Pao B19 5-05-27/1201065868.PDF
Supervisors
Indicative Announcement of the Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-33 2015-5-29
2014 Annual General Meeting Ta Kung Pao B2 5-05-29/1201078987.PDF
Announcement on the Delisting Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-34 2015-5-30
Owning to Significant Events Ta Kung Pao B2 5-05-30/1201082236.PDF
Announcement on the
Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-35 2015-6-5 Resumption Owning to
Ta Kung Pao B3 5-06-05/1201106173.PDF
Significant Events
Announcement of Resolutions of
Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-36 2015-6-5 the 1st Session of the 8th Board of
Ta Kung Pao B3 5-06-05/1201106172.PDF
Directors
Announcement of Resolutions of
Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-37 2015-6-5 the 1st Session of the 8th Board of
Ta Kung Pao B3 5-06-05/1201106171.PDF
Supervisors
Announcement on the Delisting Securities Times B36, http://www.cninfo.com.cn/finalpage/201
2015-38 2015-6-12
Owning to Significant Events Ta Kung Pao B2 5-06-12/1201139697.PDF
Announcement on the Stock Securities Times B36, http://www.cninfo.com.cn/finalpage/201
2015-39 2015-6-12
Trading Abnormal Fluctuations Ta Kung Pao B2 5-06-12/1201139696.PDF
Announcement of Resolutions of
Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-40 2015-6-19 the 2nd Session of the 8th Board of
Ta Kung Pao B2 5-06-19/1201168695.PDF
Directors
Announcement on the Progress Securities Times B60, http://www.cninfo.com.cn/finalpage/201
2015-41 2015-6-19
of the Significant Events Ta Kung Pao B2 5-06-19/1201168694.PDF
Announcement on the Progress Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-42 2015-6-27
of the Significant Events Ta Kung Pao B9 5-06-27/1201200899.PDF
Announcement on the Progress Securities Times B40, http://www.cninfo.com.cn/finalpage/201
2015-43 2015-7-4
of the Significant Events Ta Kung Pao B3 5-07-04/1201235889.PDF
Announcement on the Execution
Securities Times B64, http://www.cninfo.com.cn/finalpage/201
2015-44 2015-7-11 of the 2014 Dividend Payout
Ta Kung Pao A23 5-07-11/1201274263.PDF
Proposal
Announcement on the Progress Securities Times B64, http://www.cninfo.com.cn/finalpage/201
2015-45 2015-7-11
of the Significant Events Ta Kung Pao A23 5-07-11/1201274266.PDF
2015-46 2015-7-11 Announcement on the Securities Times B64, http://www.cninfo.com.cn/finalpage/201
49
2015 Annual Report of Konka Group Co., Ltd.
Maintenance of the stability of Ta Kung Pao A23 5-07-11/1201274265.PDF
the Company’s Share Price
Announcement on the 2015
Securities Times B64, http://www.cninfo.com.cn/finalpage/201
2015-47 2015-7-11 Semi-annual Performance
Ta Kung Pao A23 5-07-11/1201274264.PDF
Prediction
Announcement on the Progress Securities Times B77, http://www.cninfo.com.cn/finalpage/201
2015-48 2015-7-18
of the Significant Events Ta Kung Pao B3 5-07-18/1201309646.PDF
Announcement on the Progress Securities Times B21, http://www.cninfo.com.cn/finalpage/201
2015-49 2015-7-25
of the Significant Events Ta Kung Pao B11 5-07-25/1201342320.PDF
Announcement on the Prediction
Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-50 2015-7-29 of the Routine Related
Ta Kung Pao A4 5-07-29/1201358396.PDF
Transactions
Announcement of Resolutions of
Securities Times B37, http://www.cninfo.com.cn/finalpage/201
2015-51 2015-7-29 the 3rd Session of the 8th Board of
Ta Kung Pao A4 5-07-29/1201358397.PDF
Directors
Announcement on the Progress Securities Times B52, http://www.cninfo.com.cn/finalpage/201
2015-52 2015-8-1
of the Significant Events Ta Kung Pao B11 5-08-01/1201374364.PDF
Announcement on the Progress Securities Times B56, http://www.cninfo.com.cn/finalpage/201
2015-53 2015-8-8
of the Significant Events Ta Kung Pao B11 5-08-08/1201406469.PDF
Securities Times
Announcement on the Progress http://www.cninfo.com.cn/finalpage/201
2015-54 2015-8-15 B176, Ta Kung Pao
of the Significant Events 5-08-15/1201438099.PDF
B5
Securities Times
Announcement on the Progress http://www.cninfo.com.cn/finalpage/201
2015-55 2015-8-22 B176, Ta Kung Pao
of the Significant Events 5-08-22/1201471918.PDF
B5
Securities Times
Announcement on the 2015 http://www.cninfo.com.cn/finalpage/201
2015-56 2015-8-29 B176, Ta Kung Pao
Semi-annual Report 5-08-29/1201518361.PDF
B5
Announcement of Resolutions of Securities Times
http://www.cninfo.com.cn/finalpage/201
th th
2015-57 2015-8-29 the 4 Session of the 8 Board of B176, Ta Kung Pao
5-08-29/1201518357.PDF
Directors B5
Securities Times
Notice of Holding the 2015 1st http://www.cninfo.com.cn/finalpage/201
2015-58 2015-8-29 B176, Ta Kung Pao
Extraordinary General Meeting 5-08-29/1201518363.PDF
B5
Securities Times
Announcement on Purchasing the http://www.cninfo.com.cn/finalpage/201
2015-59 2015-8-29 B176, Ta Kung Pao
Bank Financial Products 5-08-29/1201518364.PDF
B5
Announcement on the Progress Securities Times http://www.cninfo.com.cn/finalpage/201
2015-60 2015-8-29
of the Significant Events B176, Ta Kung Pao 5-08-29/1201518365.PDF
50
2015 Annual Report of Konka Group Co., Ltd.
B5
Securities Times
Abstract of the 2015 Semi-annual http://www.cninfo.com.cn/finalpage/201
2015-61 2015-8-29 B176, Ta Kung Pao
Report 5-08-29/1201518354.PDF
B5
Announcement on the Specific
http://www.cninfo.com.cn/finalpage/201
2015-62 2015-9-1 Proposal on the Purchasing of
5-09-02/1201537360.PDF
Liability Insurance
Announcement on the Progress Securities Times B21, http://www.cninfo.com.cn/finalpage/201
2015-63 2015-9-9
of the Significant Events Ta Kung Pao B12 5-09-09/1201567403.PDF
Indicative Announcement on
Securities Times B21, http://www.cninfo.com.cn/finalpage/201
2015-64 2015-9-9 Holding the 2015 1st
Ta Kung Pao B12 5-09-09/1201567402.PDF
Extraordinary General Meeting
Announcement of Resolutions of
Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-65 2015-9-11 the 5th Session of the 8th Board of
Ta Kung Pao B9 5-09-11/1201578927.PDF
Directors
Announcement of Resolutions of
Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-66 2015-9-11 the 3rd Session of the 8th Board of
Ta Kung Pao B9 5-09-11/1201578926.PDF
Supervisors
Notice of Holding the 2nd Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-67 2015-9-11
Extraordinary General Meeting Ta Kung Pao B9 5-09-11/1201578924.PDF
Announcement on the
Termination of the Planning of Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-68 2015-9-11
the Significant Events and the Ta Kung Pao B9 5-09-11/1201578925.PDF
Resumption of Trading
Announcement on the
Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-69 2015-9-11 Engagement of the Acting
Ta Kung Pao B9 5-09-11/1201578973.PDF
President
Announcement of Resolutions of
Securities Times B61, http://www.cninfo.com.cn/finalpage/201
2015-70 2015-9-16 the 2015 1st Extraordinary
Ta Kung Pao B18 5-09-16/1201599161.PDF
General Meeting
Announcement on the Stock Securities Times B61, http://www.cninfo.com.cn/finalpage/201
2015-71 2015-9-16
Trading Abnormal Fluctuations Ta Kung Pao B18 5-09-16/1201599163.PDF
Announcement on the Execution
of the 2015 Semi-annual Securities Times B29, http://www.cninfo.com.cn/finalpage/201
2015-72 2015-9-17
Accumulation Fund Turning to Ta Kung Pao B18 5-09-17/1201603859.PDF
increase subscribed
Announcement on the Signing of Securities Times B29, http://www.cninfo.com.cn/finalpage/201
2015-73 2015-9-17
the Cooperation Agreement Ta Kung Pao B18 5-09-17/1201603639.PDF
2015-74 2015-9-17 Announcement on the Stock Securities Times B29, http://www.cninfo.com.cn/finalpage/201
51
2015 Annual Report of Konka Group Co., Ltd.
Trading Abnormal Fluctuations Ta Kung Pao B18 5-09-17/1201603640.PDF
Announcement on the Stock Securities Times B41, http://www.cninfo.com.cn/finalpage/201
2015-75 2015-9-18
Trading Abnormal Fluctuations Ta Kung Pao B2 5-09-18/1201608234.PDF
Announcement on the Stock Securities Times B41, http://www.cninfo.com.cn/finalpage/201
2015-76 2015-9-22
Trading Abnormal Fluctuations Ta Kung Pao B18 5-09-22/1201619942.PDF
Announcement on the Stock Securities Times B36, http://www.cninfo.com.cn/finalpage/201
2015-77 2015-9-23
Trading Abnormal Fluctuations Ta Kung Pao B11 5-09-23/1201624564.PDF
Announcement on the
Securities Times B20, http://www.cninfo.com.cn/finalpage/201
2015-78 2015-9-26 Resignation of the Director and
Ta Kung Pao B4 5-09-26/1201640536.PDF
Vice President of the Company
Announcement on the
Securities Times B20, http://www.cninfo.com.cn/finalpage/201
2015-79 2015-9-29 Resignation of the Independent
Ta Kung Pao B2 5-09-29/1201649682.PDF
Directors of the Company
Announcement on the
Securities Times B20, http://www.cninfo.com.cn/finalpage/201
2015-80 2015-9-29 Resignation of the Supervisors of
Ta Kung Pao B2 5-09-29/1201649683.PDF
the Company
Announcement on the
Securities Times B20, http://www.cninfo.com.cn/finalpage/201
2015-81 2015-9-29 Resignation of the President of
Ta Kung Pao B2 5-09-29/1201649681.PDF
the Company
Announcement on the Receiving
of the Notice of the Deduction of
the Promotion Subsidies Funds of
Securities Times B44, http://www.cninfo.com.cn/finalpage/201
2015-82 2015-9-30 the Central High-efficient
Ta Kung Pao B9 5-09-30/1201655523.PDF
Energy-saving Home Appliances
by Finance Commission of
Shenzhen Municipality
Announcement on Receipt of Tax Securities Times B25, http://www.cninfo.com.cn/finalpage/201
2015-83 2015-10-9
Rebates Ta Kung Pao B7 5-10-09/1201668680.PDF
Notice of Holding the 2015 2nd Securities Times B25, http://www.cninfo.com.cn/finalpage/201
2015-84 2015-10-9
Extraordinary General Meeting Ta Kung Pao B7 5-10-09/1201668679.PDF
Announcement on the 2015 First
Securities Times B29, http://www.cninfo.com.cn/finalpage/201
2015-85 2015-10-15 Three Quarter Performance
Ta Kung Pao B1 5-10-15/1201694037.PDF
Prediction
Announcement of Resolutions of
Securities Times B29, http://www.cninfo.com.cn/finalpage/201
2015-86 2015-10-16 the 2015 2nd Extraordinary
Ta Kung Pao B4 5-10-16/1201699921.PDF
General Meeting
Announcement of Resolutions of
Securities Times B33, http://www.cninfo.com.cn/finalpage/201
2015-87 2015-10-21 the 6th Session of the 8th Board of
Ta Kung Pao B14 5-10-21/1201709720.PDF
Directors
52
2015 Annual Report of Konka Group Co., Ltd.
Announcement of Resolutions of
Securities Times B33, http://www.cninfo.com.cn/finalpage/201
2015-88 2015-10-21 the 5th Session of the 8th Board of
Ta Kung Pao B14 5-10-21/1201709718.PDF
Supervisors
Notice of Holding the 2015 3rd Securities Times B33, http://www.cninfo.com.cn/finalpage/201
2015-89 2015-10-21
Extraordinary General Meeting Ta Kung Pao B14 5-10-21/1201709719.PDF
Declaration of the Candidate of
Securities Times B33, http://www.cninfo.com.cn/finalpage/201
2015-90 2015-10-21 Independent Directors (Sun
Ta Kung Pao B14 5-10-21/1201709721.PDF
Shengdian)
Declaration of the Nominator of
Securities Times B33, http://www.cninfo.com.cn/finalpage/201
2015-91 2015-10-21 Independent Directors (Sun
Ta Kung Pao B14 5-10-21/1201709722.PDF
Shengdian)
Securities Times
Report of the Report for the 3rd http://www.cninfo.com.cn/finalpage/201
2015-92 2015-10-29 B109, Ta Kung Pao
Quarter of 2015 5-10-29/1201734046.PDF
B11
Securities Times
Abstract for the 3rd Quarter of http://www.cninfo.com.cn/finalpage/201
2015-93 2015-10-29 B109, Ta Kung Pao
2015 5-10-29/1201734044.PDF
B11
Announcement on the Relevant Securities Times
http://www.cninfo.com.cn/finalpage/201
2015-94 2015-10-29 Events of the Energy-saving B109, Ta Kung Pao
5-10-29/1201734049.PDF
Subsidies Funds B11
Indicative Announcement on
Securities Times B92, http://www.cninfo.com.cn/finalpage/201
2015-95 2015-10-30 Holding the 2015 3rd
Ta Kung Pao B13 5-10-30/1201740102.PDF
Extraordinary General Meeting
Announcement on the Planning
Securities Times B4, http://www.cninfo.com.cn/finalpage/201
2015-96 2015-11-4 of Listing and Transfer the
Ta Kung Pao A16 5-11-04/1201752356.PDF
Equities of Yishijie Company
Announcement of Resolutions of
Securities Times B44, http://www.cninfo.com.cn/finalpage/201
2015-97 2015-11-6 the 2015 3rd Extraordinary
Ta Kung Pao B1 5-11-06/1201755365.PDF
General Meeting
Announcement on the Abandon
of the Execution of the
Preemption of the Transfer of the Securities Times B48, http://www.cninfo.com.cn/finalpage/201
2015-98 2015-11-14
Equities of Shenzhen Konka Ta Kung Pao B1 5-11-14/1201771447.PDF
Yishijie Commercial Display
Co., Ltd.
Announcement of Resolutions of
Securities Times B48, http://www.cninfo.com.cn/finalpage/201
2015-99 2015-11-14 the 8th Session of the 8th Board of
Ta Kung Pao B1 5-11-14/1201771446.PDF
Directors
2015-100 2015-11-24 Announcement on the Stock Securities Times B32, http://www.cninfo.com.cn/finalpage/201
53
2015 Annual Report of Konka Group Co., Ltd.
Trading Abnormal Fluctuations Ta Kung Pao B7 5-11-24/1201784917.PDF
Announcement on the
Securities Times B28, http://www.cninfo.com.cn/finalpage/201
2015-101 2015-12-15 Resignation of the Vice President
Ta Kung Pao B5 5-12-15/1201832626.PDF
of the Company
XIX. Significant events of subsidiaries
□ √ Applicable □ Inapplicable
In 2015, the company intends to transfer listed holdings subsidiary commercial city konka Yishijie
Commercial Display co., LTD., and on November 4, 2015, revealed on the proposed listing
announcement of company equity transfer one horizon, the index for
http://www.cninfo.com.cn/finalpage/2015-11-04/1201752356.PDF.
XX. Social responsibilities
√ Applicable □ Inapplicable
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.
(I) To protect rights of shareholders and creditors
1. The Company protects rights of shareholders
(1) 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.
(2) 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.
(3) 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.
(II) The Company performs responsibilities to suppliers and customers
1. It is devoted to improve customer service quality.
The Company is insisting philosophy of customer orientation to strengthen customer service
54
2015 Annual Report of Konka Group Co., Ltd.
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.
(III) 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.
(IV) 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
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
55
2015 Annual Report of Konka Group Co., Ltd.
instructor, theme training and lectures to provide colorful training activities. Besides the work,
professional and comprehensive quality would be fully promoted.
(V) Be responsible for 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 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 □ Inapplicable
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or
maturity but not fully paid on the approval report date of annual report
□ Yes √ No □ Inapplicable
56
2015 Annual Report of Konka Group Co., Ltd.
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
198,381,940 16.48% 198,381,940 169,080 198,551,020 396,932,960 16.48%
trading
moratorium
2. Shares held
by
198,381,940 16.48% 198,381,940 198,381,940 396,763,880 16.48%
state-owned
corporation
3. Other
domestic 169,080 169,080 169,080 0.00%
shareholding
Shares held
by the
169,080 169,080 169,080 0.00%
domestic
individuals
II. Shares not
subject to 2,011,012,44
1,005,590,764 83.52% 1,005,590,764 -169,080 1,005,421,684 83.52%
trading 8
moratorium
1. RMB
1,199,829,92
ordinary 599,914,960 49.83% 599,914,960 599,914,960 49.83%
0
shares
2.
Domestically
405,675,804 33.69% 405,675,804 -169,080 405,506,724 811,182,528 33.69%
listed foreign
shares
III. Total 100.00 2,407,945,40
1,203,972,704 1,203,972,704 0 1,203,972,704 100.00%
shares % 8
Reason for the change in shares
57
2015 Annual Report of Konka Group Co., Ltd.
√ Applicable □ Inapplicable
1. Mr. Zhang Guanghui had officially resigned the position as Supervisor on 5 Nov. 2015 with the
shareholding of the Company of 169,080 shares. Up to 31 Dec. 2015, the 169,080 shares held by
him were the shares subject to trading moratorium.
2. According to the resolutions of the 2015 1st Extraordinary General Meeting, the Company
executed the proposal on the increase of the transferring of every 10 shares to 10 shares to the
whole shareholders by the capital reserves in Sep. 2015 and after which, the total share capital of
the Company doubled with the amount increased to 2,407,945,408 shares.
Approval of the change in shares
√ Applicable □ Inapplicable
On 15 Sep. 2015, the 2015 1st Extraordinary General Meeting of the Company reviewed and
approved the Proposal on 2015 Semi-annual Profits Distribution, which agreed to base on the total
share capital of 1,203,972,704 shares to execute the turning capital reserve into share capital that
increase the transferring by every 10 shares to 10 shares for the whole shareholders with the total
transferred amount of 1,203,972,704 shares as well as the total share capital of the Company
increased to 2,407,945,408 after which.
Reason for the change in shares
√ Applicable □ Inapplicable
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 □ Inapplicable
The influences of the changes in shares were as follows:
1. The 2014 basic EPS changed from RMB0.0437 to RMB0.02185;
2. The 2014 diluted EPS changes from RMB0.0437 to RMB0.02185;
3. The 2014 net assets of each share attributed to the common shareholders of the Company
changed from RMB3.40828 to RMB1.70414.
Other contents that the Company considered necessary or were required by the securities regulatory
authorities to disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: share
Name Number Number of Number of Number
Relieved
of the of the the the of the
Restricted reason restricted
shareho restricted relieved increased restricted
date
lders shares at restricted restricted shares at
58
2015 Annual Report of Konka Group Co., Ltd.
the shares of shares of the
period-b the the period-en
egin reporting reporting d
period period
On 5 Nov. 2015, Mr. Zhang Guanghui resigned On 6 May
the position as the Supervisor owning to 2016, the
Zhang personal reasons and according to the relieved
Guangh 0 0 169,080 169,080 regulations of the relevant laws and regulations, restricted
ui within the 6 months after the resignation, the shares was
holding share of the Company were the shares of 169,080
subject to trading moratorium. shares
Total 0 0 169,080 169,080 -- --
Notes: on 2 Mar. 2016, the 396,763,880 shares which subjected to trading moratorium held by the
major shareholder-OCT Enterprises Co. of the Company was formally relieved the restriction with
the details please refer to http://www.cninfo.com.cn/finalpage/2016-02-27/1202003527.PDF.
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in reporting period
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of
assets and liabilities
√ Applicable □ Inapplicable
1. Explanation of the changes of the total share capital of the Company: according to the resolutions
of the 2015 1st Extraordinary General Meeting, the Company executed the turning capital reserve
into share capital that increase the transferring by every 10 shares to 10 shares for the whole
shareholders in Sep. 2015 with the total transferred amount of 1,203,972,704 shares as well as the
total share capital of the Company increased to 2,407,945,408 after which.
2. Explanation of the changes of the shareholders structure of the Company: the total shareholding
proportion of the Company’s controlling shareholder-OCT Enterprises Co. and its wholly owned
subsidiaries arise from 21.75% to 29.99%.
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number Total number Total number of Total number
of of shareholders preferred of preferred
167,819 162,563 0 0
th
shareholders on the 30 stockholder with stockholder
at the trading day vote right with vote right
59
2015 Annual Report of Konka Group Co., Ltd.
reporting before the restored (if any) restored on the
period disclosure date (see Notes 8) 30th trading
of the annual day before the
report disclosure date
of the annual
report (if
any) (see
Notes 8)
Shareholding of shareholders holding more than 5% shares
Pledged or
Increase and
Number of Number of Number of frozen
Nature decrease of
Holding shareholding shares held shares held shares
of shares
Name of shareholder percenta at the end of subject to not subject Statu A
sharehol during
ge the reporting trading to trading s of m
ders reporting
period moratorium moratorium share ou
period
s nt
Pled
State-ow 0
ned ged
OCT Enterprises Co. 21.75% 523,746,932 261,873,466 396,763,880 126,983,052
corporat Froz
ion 0
en
Pled
CITIC Securities Foreign 0
ged
Brokerage (Hong Kong) corporat 7.48% 180,001,110 180,001,110 0 180,001,110
Froz
Co., Ltd. ion 0
en
Pled
Foreign 0
Guoyuan Securities ged
corporat 2.48% 59,827,170 45,782,270 0 59,827,170
Broker (HK) Co., Ltd. Froz
ion 0
en
Pled
Foreign 0
ged
Gaoling Fund, L.P. corporat 2.19% 52,801,250 26,400,625 0 52,801,250
Froz
ion 0
en
Pled
Foreign 0
ged
Holy Time Group Limited corporat 2.18% 52,580,354 6,046,739 0 52,580,354
Froz
ion 0
en
Pled
Foreign 0
ged
Nam Ngai individu 0.97% 23,381,040 11,690,520 0 23,381,040
Froz
al 0
en
60
2015 Annual Report of Konka Group Co., Ltd.
Pled
State-ow 0
ned ged
CMS (HK) Co., Ltd. 0.94% 22,726,804 12,846,658 0 22,726,804
corporat Froz
ion 0
en
Pled
Foreign 0
CSI Capital Management ged
corporat 0.85% 20,550,928 20,550,928 0 20,550,928
Limited Froz
ion 0
en
Pled
Foreign 0
ged
BOCI Securities Limited corporat 0.78% 18,883,092 17,609,602 0 18,883,092
Froz
ion 0
en
Pled
Foreign 0
Credit Suisse AG Hong ged
corporat 0.33% 7,939,174 7,939,174 0 7,939,174
Kong Branch Froz
ion 0
en
Strategic investor or general
corporation becoming a top ten
N/A
shareholder due to placing of new
shares (if any) (see Notes 3)
Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first
majority shareholder OCT Enterprises Co., Ltd., respectively held the common shares
Explanation on associated relationship
of the Company of 180,001,110 shares and 18,360,000 shares through CITIC Securities
or/and persons acting in concert
Brokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, Jialong
among the above-mentioned
Investment Limited and OCT Enterprises Co. are parties acting in concert. The
shareholders:
Company does not know whether the other shareholders are related parties and whether
they are acting-in-concert parties.
Shareholdings of the top ten common shareholders not subject to trading moratorium
Amount of listed and circulated shares at the end Type of shares
Name of shareholders
of the year Type Amount
Domestically
CITIC Securities Brokerage (Hong
180,001,110 listed foreign 180,001,110
Kong) Co., Ltd.
shares
RMB ordinary
OCT Enterprises Co. 126,983,052 126,983,052
share
Domestically
Guoyuan Securities Broker (HK)
59,827,170 listed foreign 59,827,170
Co., Ltd.
shares
Gaoling Fund, L.P. 52,801,250 Domestically 52,801,250
61
2015 Annual Report of Konka Group Co., Ltd.
listed foreign
shares
Domestically
Holy Time Group Limited 52,580,354 listed foreign 52,580,354
shares
Domestically
Nam Ngai 23,381,040 listed foreign 23,381,040
shares
Domestically
CMS (HK) Co., Ltd. 22,726,804 listed foreign 22,726,804
shares
Domestically
CSI Capital Management Limited 20,550,928 listed foreign 20,550,928
shares
Domestically
BOCI Securities Limited 18,883,092 listed foreign 18,883,092
shares
Domestically
Credit Suisse Ag Hong Kong Branch 7,939,174 listed foreign 7,939,174
shares
Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority
Explanation on associated
shareholder OCT Enterprises Co., Ltd., respectively held the common shares of the
relationship or/and persons acting in
Company of 180,001,110 shares and 18,360,000 shares through CITIC Securities
concert among the top ten tradable
Brokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, Jialong
shareholders and between the top ten
Investment Limited and OCT Enterprises Co. are parties acting in concert. The Company
tradable shareholders and the top ten
does not know whether the other shareholders are related parties and whether they are
shareholders
acting-in-concert parties.
Explanation on the Top 10
shareholders participating in the
N/A
margin trading business (if any) (see
notes 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
Name of Legal Date of Organization Business scope
62
2015 Annual Report of Konka Group Co., Ltd.
controlling representative establishment code
shareholder / company
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
ENTERPRISE 11 Nov. 1985 19034617-5 authorities of Shenzhen (under Government Document
Xiannian
S CO. JMB [92] WJMGTSZZ No. A19024); compensation trade;
investment in industry, tourism, real estate, commerce &
trade and financial insurance.
OCT ENTERPRISES CO. held 57.66% equity of Shenzhen Overseas Chinese Town Co., Ltd. (a
Shares held by the
company listed on the main board of Shenzhen Stock Exchange, SZ. 000069), meanwhile, Shenzhen
controlling shareholder in
Overseas Chinese Town Co., Ltd. indirectly held 66.66% equity of OCT (Asia) Holdings Ltd. (a
other listed companies by
company listed on the main board of Hong Kong Stock Exchange, 3366.HK) and OCT
holding or shareholding
ENTERPRISES CO. held 4.08% equity of CITS (a company listed on the main board of Shanghai
during the reporting period
Stock Exchange, 601888.SH).
Changes in controlling shareholders during the reporting period
□ Applicable √ Inapplicable
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
Xiao Yaqing Inapplicable Inapplicable Inapplicable
Administration Commission
of the State Council
Shares held by the actual controlling shareholder in other listed companies by holding or
Inapplicable
shareholding during the reporting period
Change in actual controller in the reporting period
□ Applicable √ Inapplicable
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:
63
2015 Annual Report of Konka Group Co., Ltd.
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 √ Inapplicable
4. Other Corporate Shareholder with a shareholding percentage over 10%
□ Applicable √ Inapplicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual
controller, restructuring parties and other commitment entities
□ Applicable √ Inapplicable
64
2015 Annual Report of Konka Group Co., Ltd.
Section VII. Preference Shares
□ Applicable √ Inapplicable
There was no preferred stock during reporting period.
65
2015 Annual Report of Konka Group Co., Ltd.
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 repor reporti
the chang repor
not r ting ng
repor e ting
perio period
ting (share perio
d (share)
perio ) d
(shar
d (shar
e)
e)
M
Liu Directo Curr
al 44 28 May 2015 28 May 2018 0 0 0 0 0
Fengxi r ent
e
Board M
Liu Curr
Chairm al 44 18 Jun. 2015 28 May 2018 0 0 0 0 0
Fengxi ent
an e
Acting M
Liu Curr
Preside al 44 10 Sep. 2015 4 Apr. 2017 0 0 0 0 0
Fengxi ent
nt e
Jin M
Directo Curr
Qingju al 59 28 May 2015 28 May 2018 0 0 0 0 0
r ent
n e
M
Chen Directo Curr
al 53 28 May 2015 28 May 2018 0 0 0 0 0
Yuehua r ent
e
M
He Directo Curr
al 41 5 Nov. 2015 28 May 2018 0 0 0 0 0
Haibin r ent
e
Sun Indepe M
Curr
Shengd ndent al 61 5 Nov. 2015 28 May 2018 0 0 0 0 0
ent
ian Directo e
66
2015 Annual Report of Konka Group Co., Ltd.
r
Indepe
M
Xiao ndent Curr
al 50 28 May 2015 28 May 2018 0 0 0 0 0
Zuhe Directo ent
e
r
Indepe
M
Zhang ndent Curr
al 51 28 May 2015 28 May 2018 0 0 0 0 0
Shuhua Directo ent
e
r
M
Hao Supervi Curr
al 42 28 May 2015 28 May 2018 0 0 0 0 0
Gang sor ent
e
M
Hao Supervi Curr
al 42 4 Jun. 2015 28 May 2018 0 0 0 0 0
Gang sory ent
e
M
Wang Supervi Curr
al 55 5 Nov. 2015 28 May 2018 0 0 0 0 0
Youlai sor ent
e
Employ
M
ee Curr
Li Jun al 45 25 May 2015 25 May 2018 0 0 0 0 0
Supervi ent
e
sor
Executi
M
Xiao ve Vice Curr
al 46 27 Aug. 2015 4 Apr. 2017 0 0 0 0 0
Qing Preside ent
e
nt
Huang Vice M
Curr
Zhongti Preside al 55 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0
ent
an nt e
Vice M
He Curr
Preside al 46 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0
Jianjun ent
nt e
Vice M
Lin Curr
Preside al 44 4 Apr. 2014 4 Apr. 2017 0 0 0 0 0
Gaike 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
Lin Vice M
Curr
Hongfa Preside al 45 18 Jun. 2015 4 Apr. 2017 0 0 0 0 0
ent
n nt e
67
2015 Annual Report of Konka Group Co., Ltd.
Wu Board M
Curr
Yongju Secreta al 41 27 Aug. 2015 4 Apr. 2017 0 0 0 0 0
ent
n ry e
Board M
Chen
Chairm Left al 53 8 Dec. 2014 28 May 2015 0 0 0 0 0
Yuehua
an e
M
Su Directo
Left al 59 17 Dec. 2010 28 May 2015 0 0 0 0 0
Zheng r
e
Fe
Wang
Directo m
Xiaowe Left 46 17 Dec. 2010 28 May 2015 0 0 0 0 0
r al
n
e
M
He Directo
Left al 41 17 Dec. 2010 28 May 2015 0 0 0 0 0
Haibin r
e
Indepe
M
Feng ndent
Left al 48 17 Dec. 2010 28 May 2015 0 0 0 0 0
Yutao Directo
e
r
Indepe Fe
Yang ndent m
Left 48 17 Dec. 2010 28 May 2015 0 0 0 0 0
Haiying Directo al
r e
Indepe
M
Zhang ndent
Left al 47 17 Dec. 2010 28 May 2015 0 0 0 0 0
Zhong Directo
e
r
M
Dong Supervi
Left al 62 17 Dec. 2010 28 May 2015 0 0 0 0 0
Yaping sory
e
Employ
M
Liu ee
Left al 44 17 Dec. 2010 28 May 2015 0 0 0 0 0
Yong Supervi
e
sor
M
Liu Preside
Left al 44 4 Apr. 2014 18 Jun. 2015 0 0 0 0 0
Fengxi nt
e
Board M
Xiao
Secreta Left al 46 4 Apr. 2014 27 Aug. 2015 0 0 0 0 0
Qing
ry e
68
2015 Annual Report of Konka Group Co., Ltd.
Huang M
Zhiqian CFO Left al 50 26 May 2014 18 Jun. 2015 0 0 0 0 0
g e
Song M
Directo
Zhenhu Left al 34 28 May 2015 25 Sep. 2015 0 0 0 0 0
r
a e
Song Vice M
Zhenhu Preside Left al 34 18 Jun. 2015 25 Sep. 2015 0 0 0 0 0
a nt e
Indepe
M
Zhang ndent
Left al 49 28 May 2015 5 Nov. 2015 0 0 0 0 0
Min Directo
e
r
Zhang M
Supervi 169, 169,
Guangh Left al 52 28 May 2015 5 Nov. 2015 0 0 0
sor 080 080
ui e
M
Liu Preside
Left al 44 18 Jun. 2015 28 Sep. 2015 0 0 0 0 0
Dan nt
e
Vice M
Wan
Preside Left al 53 19 May 2015 14 Dec. 2015 0 0 0 0 0
Libo
nt e
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Elected as the Director through the Annual
Liu Fengxi Director Elected 28 May 2015
General Meeting
Board Elected as the Board Chairman through the
Liu Fengxi Elected 16 Jun. 2015
Chairman Annual General Meeting
Elected as the Director through the Annual
Jin Qingjun Director Elected 28 May 2015
General Meeting
Elected as the Director through the Annual
Chen Yuehua Director Elected 28 May 2015
General Meeting
Elected as the Director through the Annual
He Haibin Director Elected 5 Nov. 2015
General Meeting
Independent Elected as the Independent Director through the
Sun Shengdian Elected 5 Nov. 2015
Director Annual General Meeting
Independent Elected as the Independent Director through the
Xiao Zuhe Elected 28 May 2015
Director Annual General Meeting
Independent Elected as the Independent Director through the
Zhang Shuhua Elected 28 May 2015
Director Annual General Meeting
69
2015 Annual Report of Konka Group Co., Ltd.
Elected as the Supervisor through the Annual
Hao Gang Supervisor Elected 28 May 2015
General Meeting
Elected as the Supervisory through the Annual
Hao Gang Supervisory Elected 4 Jun. 2015
General Meeting
Elected as the Supervisor through the Annual
Wang Youlai Supervisor Elected 5 Nov. 2015
General Meeting
Employee Elected as the Employee Supervisor through the
Li Jun Elected 25 May 2015
Supervisor Employee’s Assembly
Acting Engaged by the decision from the Board of
Liu Fengxi Engaged 10 Sep. 2015
President Directors
Executive Vice Engaged by the decision from the Board of
Xiao Qing Engaged 27 Aug. 2015
President Directors
Engaged by the decision from the Board of
Lin Hongfan Vice President Engaged 18 Jun. 2015
Directors
Board Engaged by the decision from the Board of
Wu Yongjun Engaged 27 Aug. 2015
Secretary Directors
Board Left as term The service term of the Board of Directors was
Chen Yuehua 28 May 2015
Chairman expired expired
Left as term The service term of the Board of Directors was
Su Zheng Director 28 May 2015
expired expired
Left as term The service term of the Board of Directors was
Wang Xiaowen Director 28 May 2015
expired expired
Left as term The service term of the Board of Directors was
He Haibin Director 28 May 2015
expired expired
Independent Left as term The service term of the Board of Directors was
Feng Yutao 28 May 2015
Director expired expired
Independent Left as term The service term of the Board of Directors was
Yang Haiying 28 May 2015
Director expired expired
Independent Left as term The service term of the Board of Directors was
Zhang Zhong 28 May 2015
Director expired expired
Left as term The service term of the Board of Supervisors
Dong Yaping Supervisory 28 May 2015
expired was expired
Left as term The service term of the Board of Supervisors
Hao Gang Supervisor 28 May 2015
expired was expired
Employee Left as term The service term of the Board of Supervisors
Liu Yong 28 May 2015
Supervisor expired was expired
Huang
CFO Left 18 Jun. 2015 Resigned owning to working reasons
Zhiqiang
70
2015 Annual Report of Konka Group Co., Ltd.
Liu Fengxi President Left 18 Jun. 2015 Resigned owning to working reasons
Board
Xiao Qing Left 27 Aug. 2015 Resigned owning to working reasons
Secretary
Elected as the Director through the Annual
Song Zhenhua Director Elected 28 May 2015
General Meeting
Engaged by the decision from the Board of
Song Zhenhua Vice President Engaged 18 Jun. 2015
Directors
Director and
Song Zhenhua Left 25 Sep. 2015 Resigned owning to the personal reasons
Vice President
Independent Elected as the Independent Director through the
Zhang Min Elected 28 May 2015
Director Annual General Meeting
Board Elected as the Chairman of the Board of
Zhang Min Elected 4 Jun. 2015
Chairman Directors through the board meeting
Board
Zhang Min Left 18 Jun. 2015 Resigned owning to the personal reasons
Chairman
Independent
Zhang Min Left 5 Nov. 2015 Resigned owning to the personal reasons
Director
Zhang Elected as the Supervisor through the Annual
Supervisor Elected 28 May 2015
Guanghui General Meeting
Zhang
Supervisor Left 5 Nov. 2015 Resigned owning to the personal reasons
Guanghui
Engaged by the decision from the Board of
Liu Dan President Engaged 18 Jun. 2015
Directors
Liu Dan President Left 28 Sep. 2015 Resigned owning to the personal reasons
Engaged by the decision from the Board of
Wan Libo Vice President Engaged 19 May 2015
Directors
Wan Libo Vice President Left 14 Dec. 2015 Resigned owning to the personal reasons
III. Post-holding situation
Professional background, main working experience and the main responsibilities of current
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
71
2015 Annual Report of Konka Group Co., Ltd.
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.
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 general manager of Konka Electric Appliance Department
Technological Development Center; former general manager of President Office of Konka Group;
former general manager of Dongguan Konka Electronics Co., Ltd; former vice general manager of
Konka Group Multimedia Business Department; former vice president of Konka Group; former
president, deputy party secretary of Konka Group; 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.
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.
2. Independent Director
Sun Shengdian, independent director, male, Han nationality, born in 1955, doctor of engineering
science, sensor economist. Formerly vice general manager, deputy secretary of the Party committee,
general manager and president of Shenzhen SEG, Hitachi Color Display Devices Co., Ltd., director,
72
2015 Annual Report of Konka Group Co., Ltd.
Party Committee member, vice general manager, vice secretary of Party Committee, general
manager 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 general manager of Tianjin Benefit Equity Investment Fund Management Co., Ltd.
and independent director of Konka Group.
Zhang Shuhua, Independent Director, male, Han nationality, born in 1965, a master degree owner,
certified public account. Formerly worked as the principal staff member of Urban Social 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
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
general manager, vice general manager, 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.,
73
2015 Annual Report of Konka Group Co., Ltd.
Ltd. Presently working as the head of the Discipline Committee Office, assistant supervisor of the
Auditing and Legal Affairs Department, general manager of the Internal Control and Risk
Management Department, and employee supervisor of Konka Group
4. Senior Executives
Liu Fengxi, Acting President. As for the resume, please refer to “III. 1. Directors” of this section
and he now is acting as the Board Chairman of the Company.
Xiao Qing: Executive Vice President; male, was born in 1969 with the Han nationality; he got
bachelor degree, being Economist. He used to be Business Assistant to the President and Deputy
Chief of Strategic Development Dept. as well as Chief of the Investment Development Center in
Konka Group Co., Ltd., Board Secretary, etc. He now is acting as the Executive Vice President of
Konka Group.
Vice President. He is male, Han nationality, born in 1961, bachelor degree and Senior
Administration Engineer. He successively took the post such as Assistant to President, Vice General
Manager, Vice President, and Deputy Secretary of party Committee and Secretary of Commission
etc. of Konka Group. He now is acting as Vice President of Konka Group.
He Jianjun, Vice President of the Company, was born in 1969 with the Han nationality; he 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.
Lin Gaike: Vice President, male and was born in 1972 with the Han nationality; he got bachelor
degree, being Engineer. He used to be Director of New Type Display Design of Konka Group, Vice
GM of Digital Tablet Business Division of Konka Group and Vice GM of Color TV Business
Division 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 General Manager, General Manager,
Director and General Manager of Shenzhen Konka Telecommunication Technology Co., Ltd and
Assistant President of Konka Group etc. He now is acting as Vice President of Konka Group.
Lin Hongfan, vice president, .male, Han nationality, born in 1971, MBA, and political commissar.
Formerly worked as the vice general manager, general manager of the Sales Management
Department of the Multimedia Sales Company under Konka Group, vice general manager of Konka
Group Multimedia Marketing Business Unit, General manager of Color TV Strategy and Supply
Chain Management Center, standing vice general manager and of the Konka Group Multimedia
Business Unit HQs, general manager of the Konka Group Multimedia Business Unit HQs, assistant
of Konka Group president and the general manger of Konka Group Multimedia Business Unit HQs,
assistant Konka Group president. Presently working as the vice president of Konka Group.
Wu Yongjun, secretary of the board of directors, male, Han nationality, born in 1975, master’s
74
2015 Annual Report of Konka Group Co., Ltd.
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.
Employment in shareholders’ companies
√ Applicable □ Inapplicable
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
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
Secretary of the joint committee of the
Wang OCT Enterprises Unkno
general headquarters, administrative 1 Dec. 2014 Yes
Youlai Co. 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. He Haibin, Mr. Hao Gang and Mr. Wang Youlai
held in the shareholders’ units.
Employment in other entities
√ Applicable □ Inapplicable
Whether
receiving
Name of Posts held in Expiration
Start date of subsidies and
employer Name of other companies shareholders’ Date of
tenure remuneration
s companies tenure
in other
companies
Jin
Beijing Kind & Wood Mallesons Senior Partner Unknown Unknown Yes
Qingjun
Chen
Shenzhen OCT Co., Ltd. Vice President 15 Dec 2014 Unknown Unknown
Yuehua
Chen Shenzhen overseas Chinese town cultural
Chairman Unknown Unknown
Yuehua tourism science and Technology Co., Ltd.
Chen Shenzhen diamond blank Trading Center Chairman Unknown Unknown
75
2015 Annual Report of Konka Group Co., Ltd.
Yuehua Co., Ltd.
Tianjin Baifuyuan Equity Investment Fund
Xiao Management Co., Ltd., Shenzhen Qianhai
Director, GM Unknown Yes
Zuhe Baifuyuan Equity Investment Management
Co., Ltd.
Xiao Shenzhen Qianhai Baifuyuan Equity
Partner Unknown Yes
Zuhe Investment Management Co., Ltd.
Zhang Sichuan Tan Cheng Certified Public
Partner Unknown Yes
Shuhua Accountants Co., Ltd.
Sun Chairman, Secretary
Shengdia Shenzhen Electronics Group Co., Ltd. of the Party Unknown Unknown
n Committee
Sun
Shengdia Shenzhen Electronics Industry Association president Unknown Unknown
n
Sun
Deep love semiconductor Limited by Share
Shengdia Chairman Unknown Unknown
Ltd
n
Sun
Shenzhen Huakong Limited by Share Ltd Vice Chairman
Shengdia Unknown 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 √ Inapplicable
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors,
supervisors and senior management
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.
1. During 1 Jan. 2015-31 May 2015, the salary of the Directors and Supervisors of the Company
were:
The Company paid the salary or the subsidies for the Independent Directors, not for the other
Directors and Supervisors other than the Independent Directors. During 1 Jan. 2015-31 May 2015,
the total amount of the top 3 Directors with highest salary was of RMB0.2856 million, which were
the total amount of the salary of the above Independent Directors. The subsidies of the Independent
76
2015 Annual Report of Konka Group Co., Ltd.
Directors of the Company were of RMB80,000/year (tax excluded).
2. During 1 Jun. 2015-31 Dec. 2015, the salary of the Directors and Supervisors of the Company
were:
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.
During the 1 Jun. 2015-31 Dec. 2015, the salary of the Directors and Independent Directors were
executed according to the salary proposal approved by the 2015 2nd Extraordinary General Meeting.
Other treatment for independent directors: travel expense when they went to attend the Board
sessions or Shareholders’ General Meetings and the expenses when they were performing their
duties as stipulated in the relevant regulations and the Articles of Association and other relevant
systems, all these could be reported for deletion.
3. 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
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 44 Current 181.16 No
Fengxi President
Jin Current
Director Male 59 17.50 No
Qingjun
Chen Male Current
Director 53 24.82 Yes
Yuehua
He Male Current
Director 41 0 Yes
Haibin
Sun Male Current No
Independent Director 61 0
Shengdia
77
2015 Annual Report of Konka Group Co., Ltd.
n
Xiao Male Current No
Independent Director 50 17.50
Zuhe
Zhang Male Current No
Independent Director 51 17.50
Shuhua
Hao Male Current
Supervisory 42 0 Yes
Gang
Wang Male Current
Supervisor 55 0 Yes
Youlai
Li Jun Employee Supervisor Male 45 Current 25.71 No
Xiao Male Current
Executive Vice President 46 136.93 No
Qing
Huang Male Current
Zhongtia Vice President 55 131.10 No
n
He Male Current
Vice President 46 131.10 No
Jianjun
Lin Male Current
Vice President 44 131.10 No
Gaike
Li Male Current
Vice President 48 125.59 No
Hongtao
Lin Male Current
Vice President 45 195.19 No
Hongfan
Wu Male Current
Board Secretary 41 71.75 No
Yongjun
Su Male
Director 59 Left 0 Yes
Zheng
Wang
Director Female 46 Left 0 Yes
Xiaowen
Feng
Independent Director Male 48 Left 9.52 No
Yutao
Yang
Independent Director Female 48 Left 9.52 No
Haiying
Zhang Male
Independent Director 47 Left 9.52 No
Zhong
Dong Male
Supervisory 62 Left 0 Yes
Yaping
Liu Yong Employee Supervisor Male 44 Left 91.00 No
78
2015 Annual Report of Konka Group Co., Ltd.
Huang Male
CFO 50 Left 53.14 No
Zhiqiang
Song Male
Director, Vice President 34 Left 60.32 No
Zhenhua
Zhang Male
Independent Director 49 Left 10.00 No
Min
Zhang Male
Guanghu Supervisor 52 Left 0 No
i
Liu Dan President Male 44 Left 35.38 No
Wan Male
Vice President 53 Left 109.19 No
Libo
Total -- -- -- -- 1594.54 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the
Company during the reporting period
□ Applicable √ Inapplicable
V. Employees of the Company
1. Number of the employees, component difference and educational background
Number of the serving employees of the parent company
2,208
(person)
Number of the serving employees of the major subsidiaries
16,333
(person)
Total number of the serving employees (person) 18,541
Total number of the employees receiving the salary of the
18,541
reporting period (person)
Number of the left and retired employees that the parent
company and the major subsidiaries should undertake the 0
expenses (person)
Component difference
Category Number (person)
Production personnel 11,765
Sales personnel 3,489
Technical personnel 1,213
Financial personnel 598
Administrative personnel 1,476
79
2015 Annual Report of Konka Group Co., Ltd.
Total 18,541
Educational background
Category Number (person)
master and above 171
bachelor degree 2,746
technical secondary 6,617
junior high school and below 9,007
Total 18,541
2. Remuneration 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
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 2015, 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.
80
2015 Annual Report of Konka Group Co., Ltd.
4. Labor outsourcing
□ Applicable √ Inapplicable
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 2015, the Company
convened four 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
81
2015 Annual Report of Konka Group Co., Ltd.
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
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. 14 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, t he
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
82
2015 Annual Report of Konka Group Co., Ltd.
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
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.
(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.
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?
83
2015 Annual Report of Konka Group Co., Ltd.
□ 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.
84
2015 Annual Report of Konka Group Co., Ltd.
III. Horizontal competition
□ Applicable √ Inapplicable
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
2014 Annual Annual
http://www.cninfo.com.cn/finalpa
General General 57.63％ 28 May 2015 29 May 2015
ge/2015-05-29/1201078987.PDF
Meeting Meeting
2015 1st Extraordi
Extraordinary nary http://www.cninfo.com.cn/finalpa
28.86％ 15 Sep. 2015 16 Sep. 2015
General General ge/2015-09-16/1201599161.PDF
Meeting Meeting
2015 2nd Extraordi
Extraordinary nary http://www.cninfo.com.cn/finalpa
30.29% 15 Oct. 2015 16 Oct. 2015
General General ge/2015-10-16/1201699921.PDF
Meeting Meeting
2015 3rd Extraordi
Extraordinary nary http://www.cninfo.com.cn/finalpa
30.00% 5 Nov. 2015 6 Nov. 2015
General General ge/2015-11-06/1201755365.PDF
Meeting Meeting
2. Special Shareholders’ General Meeting applied by the preferred stockholder with
restitution of voting right
□ Applicable √ Inapplicable
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
Feng Yutao 4 1 3 0 0 No
Yang Haiying 4 1 3 0 0 No
85
2015 Annual Report of Konka Group Co., Ltd.
Zhang Zhong 4 1 3 0 0 No
Sun Shengdian 3 0 3 0 0 No
Xiao Zuhe 10 4 6 0 0 No
Zhang Shuhua 10 2 8 0 0 No
Zhang Min 7 4 1 0 2 Yes
General meetings sat in on by
1
independent directors
Explanation on failing to present in person for two consecutive sessions
In Sep. 2015, Mr. Zhang Min submitted a written Resignation Report to the Board of Directors
owning to personal reasons, of which stated to apply for the resignation of his position as
Independent Director of the 8th Board of Director of the Company. Owning to the resignation of the
Mr. Zhang Min would lead to the number of the Independent Directors less than one third of that of
Board of Directors, so according to the relevant regulations of the Guidance of the Construction of
the Independent Directors System among the Listed Companies and the Articles of Association, the
resignation application of Mr. Zhang Min would come into effect after the selection of a new
Independent Director from the 2015 3rd Extraordinary General Meeting held on 5 Nov. 2015 of the
Company. And during which, the Company held twice the meetings of Board of Directors that Mr.
Zhang Min were absent without entrusting any Independent Director for attending.
2. Particulars about Independent Directors proposing objection on relevant 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
Zhang Shuhua Proposal on Electing the Board Chairman Abstention vote
Proposal on Ceasing the Position as the President of Konka Group Acted
Zhang Min Negative vote
by Liu Dan
Zhang Min Proposal on the Salary Plan of the Directors and Supervisors Negative vote
On 4 Jun. 2015, as for the Proposal on the Electing of the Board Chairman, Mr. Zhang Shuhua considered the
Explanation of Board Chairman should be familiar to the color TV industry, thus he voted a abstention vote against the
the proposal.
Independent On 10 Sep. 2015, as for the Proposal on Ceasing the Position as the President of Konka Group Acted by Liu
Directors Dan, Mr. Zhang Min considered the proposal was not proposed by the Nominations Committee of the Board of
proposing Directors, thus he voted a negative vote against the proposal.
objection on On 10 Sep. 2015, as for the Proposal on the Salary Plan of the Directors and Supervisors, Mr. Zhang Min
relevant events considered the salary level of the Board Chairman was not appropriate, thus he voted a negative vote against
the proposal.
86
2015 Annual Report of Konka Group Co., Ltd.
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 involoved 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
the Board. In Y2015, 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 2014, First Quarterly Report 2015, Semi-Annual
Report 2015, and the Third Quarterly Report 2015, and had no objection to the aforesaid financial
statements.
2. During the preparation of Annual Report 2015, the Company fulfilled the following duties:
(1) Issued the Notes of the Events such as the Audit Work Arrangement of the Finanical Audit
Committee and approved the arrangement for 2015 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
problems 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 2015 Annual Auditing by Ruihua Certified Public Accountants;
(6) Submitted the Resolution of the 2015 Annual Financial Statement of the Company to the Board;
(7) Submitted the Resolution of engagement of the CPAs in 2016 to the Board;
87
2015 Annual Report of Konka Group Co., Ltd.
3. In 2015, 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 Y2015, based on the principle of faithfulness, the major
execution situations of the Remuneration and Appraisal Committee under the Board were as
follows:
1. On 27 Aug. 2015, submitted the Proposal on the Basic Annual Salary Plan of the Senior
Executives of the Remuneration and Appraisal Committee to the Board.
2. On 10 Sep. submitted the Proposal on the Salary Plan of the Directors and Supervisors of the
Remuneration and Appraisal Committee to the Board.
3. During the preparation of Annual Report 2015, 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 2015 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
which illustrated the exact personnel, obligations and rights of the Nominations Committee under
the Board. In Y2015, based on the principle of faithfulness, the major execution situations of the
Nominations Committee under the Board were as follows:
1. On 1 Apr. 2015, issued the Audit Advice on the General Election of the Candidates of the Board
of Directors, which agreed the planed nominated candidates of the Non-independent Directors and
the Independent Directors of the 8th Board of Directors and agreed to submit the proposal to the
Board for review and approval.
2. On 8 May 2015, submitted the Proposal on the Engagement of the Senior Executives, which
proposed the Company to engage Mr. Wan Libo as the Vice President of the Company.
3. On 18 Jun. 2015, issued the Audit Advice of the Engagement of the Senior Executives, which
agreed the Company to engage Mr. Liu Dan as the President of the Company and agreed to engage
88
2015 Annual Report of Konka Group Co., Ltd.
Mr. Song Zhenhua and Mr. Lin Hongfan as the Vice President of the Company as well as proposed
the Company to submit the proposal to the meeting of the Board of Directors for discussion.
4. On 27 Aug. 2015, issued the Audit Advice of the Engagement of the Senior Executives, which
agreed to the Company to engage Mr. Xiao Qing as the Executive Vice President of the Company,
and agreed to engage Mr. Wu Yongjun as the Board Secretary of the Company as well as proposed
the Company to submit the proposal to the meeting of the Board of Directors for discussion.
5. On 20 Oct. 2015, issued the Audit Advice on the Increase of the Selection of the Directors of the
8th Board of Directors of the Company, which agreed the planed nominated candidates of the
Non-independent Directors and the Independent Directors of the 8th Board of Directors and agreed
to submit which to the Board of Directors of the Company for review and approval.
(IV) Summary report on the performance of the Strategy Committee subject to the Board 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
Y2015, based on the principle of faithfulness, submitted the Proposal on the Developing Strategies
of Konka by the Strategy Committee on 10 Sep. 2015.
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
Disclosure
Name of the Index on the
Supervisors Disclosure
Meeting Convened Date Resolutions of the Resolutions Specified
Present Date
Meeting Website for the
Resolutions
2014 Work Report
of the Board of
Supervisors, 2014
Self Assessment
th
15 Report of Internal http://www.cni
Session Dong Yaping, Control, 2014 Unanimously nfo.com.cn/fina
th
of the 7 1 Apr. 2015 Hao Gang, Liu Annual Report, voted agreed by lpage/2015-04- 3 Apr. 2015
Board of Yong Proposal on the the participants 03/1200782527
Meeting General Election of .PDF
the Non-employee
Supervisor of the
Board of
Supervisors
16th 27 Apr. 2015 Dong Yaping, 2015 1st Quarter Unanimously N/A N/A
89
2015 Annual Report of Konka Group Co., Ltd.
Session Hao Gang, Liu Report voted agreed by
of the 7th Yong the participants
Board of
Meeting
Zhang
1st http://www.cni
Guanghui
Session Hao Gang, Li Proposal on nfo.com.cn/fina
voted against
th
of the 8 4 Jun. 2015 Jun, Zhang Electing the lpage/2015-06- 5 Jun. 2015
with the other
Board of Guanghui Supervisory 05/1201106171
Supervisors
Meeting .PDF
voted agree.
2nd
Session Hao Gang, Li Unanimously
2015 Semi-annual
of the 8th 27 Aug. 2015 Jun, Zhang voted agreed by N/A N/A
Report
Board of Guanghui the participants
Meeting
Zhang
3rd http://www.cni
Proposal on the Guanghui
Session Hao Gang, Li nfo.com.cn/fina
Salary Plan of the voted against
th
of the 8 10 Sep. 2015 Jun, Zhang lpage/2015-09- 11 Sep. 2015
Directors and with the other
Board of Guanghui 11/1201578926
Supervisors Supervisors
Meeting .PDF
voted agree.
Solutions on the
Inquiry of the
4th
Relevant Issues
Session Unanimously
Hao Gang, Li Occurred during
of the 8th 17 Sep. 2015 voted agreed by N/A N/A
Jun the Serving Period
Board of the participants
of Liu Dan as the
Meeting
President of Konka
Group
Proposal on
Increasing the
5th http://www.cni
Election of Wang
Session Unanimously nfo.com.cn/fina
Hao Gang, Li Youlai as the
th
of the 8 20 Oct. 2015 voted agreed by lpage/2015-10- 21 Oct. 2015
Jun Non-employee
Board of the participants 21/1201709718
Supervisor of the
Meeting .PDF
8th Board of
Supervisors
6th
Session Unanimously
Hao Gang, Li 2015 3rd Quarter
of the 8 th
27 Oct. 2015 voted agreed by N/A N/A
Jun Report
Board of the participants
Meeting
90
2015 Annual Report of Konka Group Co., Ltd.
Brief comments on the relevant risks of the Company from the Board of Supervisors
The supervisory committee made no objection to events under supervision during the reporting period.
VIII. Appraisal and incentive mechanism for senior management staffs
In order to enable the senior management staffs of the Company give better performance of 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 job
performance; took the salary plus bonus as a main incentive way, to improve the incentive of senior
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
8 Apr. 2016
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
90%
Company's total assets of the
consolidated financial statements
The proportion of operation revenue
included in evaluation scope entities in
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 recognized as great I. The following signs indicated there may exist
defect: 1. found out there were malpractices of the Directors, Supervisors great defect among the internal control of the
and Senior Executives of the Company that formed significant influences non-financial report; 1. the operating activities of
on the financial report; 2. the Company revised the published financial the enterprises seriously violated the national laws
Qualitative report and revised the great misstatements caused by the malpractices or and regulations; 2. negative news frequently
criteria the mistakes; 3. CPA found out there was great misstatement of the current disclosed by the media which caused significant
financial report while didn’t found during the operating process of the harm to the Company’s reputation; 3. the core
internal control; 4. the supervision of the internal control by the Finance management team left their positions one after
Audit Committee and the internal audit institution of the Company was another or the outflow of the key position
invalid; 5. not yet revised the great defect after the reasonable period as personnel was serious; 4. significant business
91
2015 Annual Report of Konka Group Co., Ltd.
which was discovered among the internal control assessment; 6. the lacked of systematic control of the system was
significant business lacked of systematic control or the systematic control invalid; great defect discovered among the internal
was invalid. II. Those with the following characteristics should be control assessment not yet be revised in time. II.
recognized as significant defect: 1. not yet chosen or applied the The following signs indicated there may exist
accounting polices according to the generally accepted accounting significant defect among the internal control of the
standards; 2. not yet constructed the anti-spam process or control measures; non-financial report: 1. negative news occurred
3. as for the accounts disposal of the unconventional or special rather frequently which caused rather big harm to
transactions, there was no corresponding control mechanism or execution the Company’s reputation; 2. the outflow of the key
or the existence of the corresponding supplement control; 4. there was one position personnel was rather serious; 3. there was
or multiple defects during the control of the compile of the financial report obvious defect among the control system of the
at the period-end and could not reasonable guarantee the statement of the significant business; 4. the significant defect found
compiled financial report reach the real and accurate target; 5. not yet among the internal control assessment not yet be
revised the significant defect after the reasonable period as which was revised in time. III. Other defects from the internal
discovered among the internal control assessment. III. Other defects from control hadn’t reached the recognition standards of
the internal control hadn’t reached the recognition standards of the great the great defect or significant defect, should be
defect or significant defect should be recognized as general defect. recognized as 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
Quantitative
report of the Company≤potential misstatement amount ＜ 1% of the gross N/A
criteria
profit margin of the 2015 consolidated financial report of the Company;
general defect: potential misstatement amount ＜ 0.5% of the gross profit
margin of the 2015 consolidated financial report of the Company.
Number of
significant
defects of 0
financial report
(Piece)
Number of
significant
defects of non- 0
financial report
(Piece)
Number of
important defects
0
of financial
report (Piece)
Number of
important defects
0
of non-financial
report (Piece)
X. Audit report on internal control
92
2015 Annual Report of Konka Group Co., Ltd.
√ Applicable □ Inapplicable
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
according to the C-SOX and the relevant regulations on 31 Dec. 2015.
Particulars about Audit Report on
Disclosure
Internal Control
Disclosure date of the Audit Report on
8 Apr. 2016
Internal Control
Disclosure index of the Audit Report on
www.cninfo.com.cn
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
93
The 2015 Annual Report of Konka Group Co., Ltd.
Section X. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 6 Apr. 2016
Name of audit institution Ruihua CPAs (LLP)
No. of audit report R-H-S-Z [2016] No.44040012
Name of CPA Shen Lingzhi, He Xiaojuan
Text of the Auditor’s Report
To the shareholders of Konka Group Co., Ltd.,
We have audited the accompanying financial statements of Konka Group Co., Ltd. (hereafter
referred to as “the Company”) and its subsidiaries (hereafter referred to as “the Group” in
general) which comprise the consolidated and company’s balance sheets as at 31 Dec. 2015,
and the consolidated and company’s income statements, the consolidated and company’s
cash flow statements and the consolidated and company’s statements of changes in owners’
equity for the year then ended and notes to these financial statements.
I. Management’s Responsibility for the Financial Statements
The management is responsible for the preparation of these financial statements in
accordance with the Accounting Standards for Business Enterprises. This 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.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the China Standards on Auditing. Those
standards require that we comply with ethical requirements of China CPAs and plan and
perform the audit to obtain reasonable assurance 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 risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial statements and
fair statement in order to design audit procedures that are appropriate in the circumstances.
94
The 2015 Annual Report of Konka Group Co., Ltd.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by 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 to provide a
basis for our audit opinion.
III. Audit opinion
In our opinion, the financial statements have been prepared in accordance with the
Accounting Standards for Business Enterprises in all material respects and give a fair view of
the Company and its subsidiaries’ consolidated financial positions as at 31 Dec. 2015 and the
consolidated business results and cash flows for the year then ended, as well as the
Company’s financial positions as at 31 Dec. 2015 and business results and cash flows for the
year then ended.
CPA: Ruihua Certified Public Accountants (LLP)
CPA:
ChinaBeijing
6 Apr. 2016
II. Financial statements
Unit of statements in financial notes is: RMB Yuan
1. Consolidated balance sheet
Name of enterprise: Konka Group Co., Ltd.
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 1,706,446,928.92 1,703,135,732.18
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded 33,196,377.28
in current profits and losses
Derivative financial assets
Notes receivable 2,880,860,750.44 3,819,417,076.37
Accounts receivable 2,048,813,439.34 2,259,293,207.16
Accounts paid in advance 193,664,620.66 315,150,044.57
95
The 2015 Annual Report of Konka Group Co., Ltd.
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable 7,426,409.52 1,885,727.36
Dividend receivable
Other accounts receivable 160,165,779.82 298,975,391.68
Financial assets purchased under
agreements to resell
Inventories 2,882,515,913.28 3,904,436,250.33
Assets held for sale
Non-current assets due within 1
year
Other current assets 647,311,938.45 568,020,200.48
Total current assets 10,560,402,157.71 12,870,313,630.13
Non-current assets:
Loans by mandate and advances
granted
Available-for-sale financial assets 311,974,282.66 245,033,609.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 190,573,524.29 362,765,183.66
Investing real estate 227,718,178.53 233,349,452.80
Fixed assets 1,763,503,189.50 1,783,695,548.92
Construction in progress 207,854,180.88 159,604,884.09
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 352,591,887.48 347,626,130.58
R&D expense
Goodwill 3,597,657.15 3,597,657.15
Long-term deferred expenses 82,846,982.07 25,792,805.06
Deferred income tax assets 549,305,508.01 259,516,396.26
Other non-current assets - 488,063,979.00
Total of non-current assets 3,689,965,390.57 3,909,045,646.52
Total assets 14,250,367,548.28 16,779,359,276.65
96
The 2015 Annual Report of Konka Group Co., Ltd.
Current liabilities:
Short-term borrowings 4,150,773,195.76 5,145,712,436.91
Borrowings from Central Bank
Customer bank deposits and due to
banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at
fair value of which changes are
recorded in current profits and losses
Derivative financial liabilities
Notes payable 929,176,857.06 911,355,028.47
Accounts payable 2,980,416,983.25 3,144,408,433.93
Accounts received in advance 349,784,807.32 302,904,453.86
Financial assets sold for repurchase
Handling charges and commissions
payable
Payroll payable 279,631,258.71 299,272,715.05
Tax payable 92,097,951.90 112,557,005.85
Interest payable 20,552,763.14 22,872,418.43
Dividend payable
Other accounts payable 1,550,931,573.35 1,376,803,381.03
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within 1
573,398,959.65 1,525,465.53
year
Other current liabilities
Total current liabilities 10,926,764,350.14 11,317,411,339.06
Non-current liabilities:
Long-term borrowings 23,700,000.00 957,541,210.52
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables 30,133,333.37 30,029,990.10
97
The 2015 Annual Report of Konka Group Co., Ltd.
Long-term payroll payables 23,435,856.86 28,554,734.16
Specific payables
Estimated liabilities 4,629,554.61
Deferred income 162,786,004.20 147,315,999.02
Deferred income tax liabilities 3,468,031.97 1,049,498.77
Other non-current liabilities
Total non-current liabilities 248,152,781.01 1,164,491,432.57
Total liabilities 11,174,917,131.15 12,481,902,771.63
Owners’ equity:
Share capital 2,407,945,408.00 1,203,972,704.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 78,209,535.19 1,289,403,563.99
Less: Treasury stock
Other comprehensive income 3,155,744.00 16,171,477.91
Specific reserves
Surplus reserves 847,908,466.28 847,908,466.28
Provisions for general risks
Retained profits -522,836,282.66 746,022,758.89
Total equity attributable to owners of
2,814,382,870.81 4,103,478,971.07
the Company
Minority interests 261,067,546.32 193,977,533.95
Total owners’ equity 3,075,450,417.13 4,297,456,505.02
Total liabilities and owners’ equity 14,250,367,548.28 16,779,359,276.65
Legal representative: Liu Fengxi Person-in-charge of the accounting work: Xu Youshan
Person-in-charge of accounting firm: Xu Youshan
2. Balance sheet of the parent company
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 502,899,530.83 993,131,773.08
Financial assets measured at fair
value of which changes are recorded 7,184,035.29 -
in current profits and losses
Derivative financial assets
Notes receivable 2,635,643,772.62 3,664,117,423.56
98
The 2015 Annual Report of Konka Group Co., Ltd.
Accounts receivable 1,417,915,276.56 1,539,295,976.29
Accounts paid in advance 372,509,871.77 349,343,179.42
Interest receivable 14,901,123.48 14,450,153.53
Dividend receivable - -
Other accounts receivable 938,447,798.08 988,199,630.05
Inventories 1,771,302,947.50 2,500,537,916.63
Assets held for sale
Non-current assets due within 1
year
Other current assets 530,272,796.83 201,280,204.53
Total current assets 8,191,077,152.96 10,250,356,257.09
Non-current assets:
Available-for-sale financial assets 271,924,282.66 218,983,609.00
Held-to-maturity investments 352,000,000.00 600,000,000.00
Long-term accounts receivable - -
Long-term equity investment 1,621,195,118.22 1,608,674,456.09
Investing real estate 227,718,178.53 233,349,452.80
Fixed assets 512,933,612.51 534,363,754.80
Construction in progress 12,619,010.21 37,567,861.10
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 88,336,594.02 76,397,532.51
R&D expense
Goodwill
Long-term deferred expenses 57,865,790.98 14,567,206.83
Deferred income tax assets 504,252,794.29 244,080,035.45
Other non-current assets - -
Total of non-current assets 3,648,845,381.42 3,567,983,908.58
Total assets 11,839,922,534.38 13,818,340,165.67
Current liabilities:
Short-term borrowings 1,022,612,362.58 244,808,594.52
Financial liabilities measured at
fair value of which changes are
recorded in current profits and losses
Derivative financial liabilities
99
The 2015 Annual Report of Konka Group Co., Ltd.
Notes payable 377,002,860.08 367,803,372.65
Accounts payable 5,173,897,087.35 7,871,208,959.66
Accounts received in advance 251,204,710.89 190,627,895.21
Payroll payable 118,684,992.99 146,758,331.08
Tax payable 31,360,675.68 5,081,943.95
Interest payable 7,761,519.53 5,406,211.20
Dividend payable - -
Other accounts payable 1,667,884,936.14 1,103,672,772.19
Liabilities held for sale
Non-current liabilities due within 1
year
Other current liabilities
Total current liabilities 8,650,409,145.24 9,935,368,080.46
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities 4,629,554.61 -
Deferred income 88,668,785.51 80,679,738.96
Deferred income tax liabilities 1,935,167.63 -
Other non-current liabilities
Total non-current liabilities 95,233,507.75 80,679,738.96
Total liabilities 8,745,642,652.99 10,016,047,819.42
Owners’ equity:
Share capital 2,407,945,408.00 1,203,972,704.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 46,505,607.34 1,250,283,488.79
Less: Treasury stock
Other comprehensive income 1,803,252.77 471,827.51
Specific reserves
100
The 2015 Annual Report of Konka Group Co., Ltd.
Surplus reserves 847,908,466.28 847,908,466.28
Retained profits -209,882,853.00 499,655,859.67
Total owners’ equity 3,094,279,881.39 3,802,292,346.25
Total liabilities and owners’ equity 11,839,922,534.38 13,818,340,165.67
3. Consolidated income statement
Unit: RMB Yuan
Item 2015 2014
I. Total operating revenues 18,395,177,035.98 19,423,488,994.07
Including: Sales income 18,395,177,035.98 19,423,488,994.07
Interest income
Premium income
Handling charge and
commission income
II. Total operating costs 20,010,568,582.72 20,169,975,385.57
Including: Cost of sales 16,055,497,185.62 16,733,746,581.45
Interest expenses
Handling charge and
commission expenses
Surrenders
Net claims paid
Net amount withdrawn for the
insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
Taxes and associate charges 94,523,398.90 60,527,648.50
Selling and distribution
2,448,337,549.43 2,414,468,187.73
expenses
Administrative expenses 695,731,013.59 686,930,373.50
Financial expenses 350,616,323.55 132,763,824.46
Asset impairment loss 365,863,111.63 141,538,769.93
Add: Gain/(loss) from change in fair
32,591,836.13 -
value (“-” means loss)
Gain/(loss) from investment (“-”
13,574,652.77 596,873,633.39
means loss)
Including: share of profits in
-18,793,708.66 316,248,002.07
associates and joint ventures
Foreign exchange gains (“-”
101
The 2015 Annual Report of Konka Group Co., Ltd.
means loss)
III. Business profit (“-” means loss) -1,569,225,057.84 -149,612,758.11
Add: non-operating income 158,538,297.00 258,877,423.01
Including: Gains on disposal of
1,431,893.68 4,740,033.90
non-current assets
Less: non-operating expense 134,780,910.57 16,884,982.71
Including: Losses on disposal
12,339,287.69 9,752,806.72
of non-current assets
IV. Total profit (“-” means loss) -1,545,467,671.41 92,379,682.19
Less: Income tax expense -269,622,908.76 31,854,983.02
V. Net profit (“-” means loss) -1,275,844,762.65 60,524,699.17
Net profit attributable to owners
-1,256,819,314.51 52,623,527.86
of the Company
Minority shareholders’ income -19,025,448.14 7,901,171.31
VI. After-tax net amount of other
-12,414,464.72 56,503.90
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to -13,015,733.91 -7,838.26
owners of the Company
(I) Other comprehensive
incomes that will not be reclassified
into gains and losses
1. Changes in net liabilities
or assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive
incomes that will be reclassified into -13,015,733.91 -7,838.26
gains and losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair
value changes of available-for-sale 928,330.73 516,457.28
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
102
The 2015 Annual Report of Konka Group Co., Ltd.
financial assets
4. Effective hedging gains
and losses on cash flows
5. Foreign-currency financial
-13,944,064.64 -524,295.54
statement translation difference
6. Other
After-tax net amount of other
comprehensive incomes attributable to 601,269.19 64,342.16
minority shareholders
VII. Total comprehensive incomes -1,288,259,227.37 60,581,203.07
Attributable to owners of the
-1,269,835,048.42 52,615,689.60
Company
Attributable to minority
-18,424,178.95 7,965,513.47
shareholders
VIII. Earnings per share
(I) Basic earnings per share -0.52 0.02
(II) Diluted earnings per share -0.52 0.02
Where business mergers under the same control occurred in this reporting period, the net
profit achieved by the merged parties before the business mergers was RMBXXX, with the
corresponding amount for the last period being RMBXXX.
Legal representative: Liu Fengxi Person-in-charge of the accounting work: Xu Youshan
Person-in-charge of accounting firm: Xu Youshan
4. Income statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Total sales 15,799,396,382.50 18,252,320,333.18
Less: cost of sales 14,456,947,091.06 16,442,313,600.22
Business taxes and surcharges 35,952,751.61 28,791,258.57
Distribution expenses 1,754,767,878.82 1,891,815,304.69
Administrative expenses 365,394,474.96 445,985,722.14
Financial costs 32,911,021.52 57,149,270.99
Impairment loss 203,549,312.14 85,152,922.15
Add: gain/(loss) from change in
7,184,035.29 -
fair value (“-” means loss)
Gain/(loss) from investment (“-”
60,463,823.25 290,855,952.74
means loss)
Including: income form
investment on associates and joint -4,991,699.40 -3,679,122.32
ventures
103
The 2015 Annual Report of Konka Group Co., Ltd.
II. Business profit (“-” means loss) -982,478,289.07 -408,031,792.84
Add: non-operating income 128,884,576.48 157,529,049.56
Including: Gains on disposal of
141,921.85 3,914,114.70
non-current assets
Less: non-operating expense 102,453,940.21 9,394,570.77
Including: Losses on disposal of
3,698,388.83 3,786,518.44
non-current assets
III. Total profit (“-” means loss) -956,047,652.80 -259,897,314.05
Less: Income tax expense -258,548,667.17 -59,623,917.51
IV. Net profit (“-” means loss) -697,498,985.63 -200,273,396.54
V. After-tax net amount of other
1,331,425.26 471,827.51
comprehensive incomes
(I) Other comprehensive incomes
that will not be reclassified into gains
and losses
1. Changes in net liabilities or
assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and 1,331,425.26 471,827.51
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial 928,330.73 516,457.28
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
403,094.53 -44,629.77
statement translation difference
6. Other
104
The 2015 Annual Report of Konka Group Co., Ltd.
VI. Total comprehensive incomes -696,167,560.37 -199,801,569.03
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating
activities:
Cash received from sale of
18,443,639,036.67 17,605,044,169.07
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the
central bank
Net increase of funds borrowed
from other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of
financial assets measured at fair value
of which changes are recorded into
current gains and losses
Cash received from interest,
handling charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 430,680,435.37 467,637,201.00
Other cash received relating to
443,686,424.74 391,719,282.33
operating activities
Subtotal of cash inflows from
19,318,005,896.78 18,464,400,652.40
operating activities
Cash paid for goods and services 14,488,034,947.99 15,492,774,772.37
Net increase of customer lendings
105
The 2015 Annual Report of Konka Group Co., Ltd.
and advances
Net increase of funds deposited in
the central bank and amount due from
banks
Cash for paying claims of the
original insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 1,738,319,265.97 1,747,390,336.65
Various taxes paid 616,762,165.13 685,636,270.36
Other cash payment relating to
1,185,289,035.03 1,178,984,455.07
operating activities
Subtotal of cash outflows from
18,028,405,414.12 19,104,785,834.45
operating activities
Net cash flows from operating
1,289,600,482.66 -640,385,182.05
activities
II. Cash flows from investing
activities:
Cash received from withdrawal of
145,165,277.44 50,968,907.04
investments
Cash received from return on
23,260,902.17 334,535,622.04
investments
Net cash received from disposal of
fixed assets, intangible assets and 3,631,054.50 8,858,019.23
other long-term assets
Net cash received from disposal of
8,889.24 285,401,846.77
subsidiaries or other business units
Other cash received relating to
3,646,914,849.00 2,424,872,043.31
investing activities
Subtotal of cash inflows from
3,818,980,972.35 3,104,636,438.39
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 234,096,470.72 750,959,942.15
assets
Cash paid for investment 78,306,112.00 249,170,764.00
Net increase of pledged loans
Net cash paid to acquire
subsidiaries and other business units
Other cash payments relating to
3,658,501,268.22 2,473,083,497.35
investing activities
106
The 2015 Annual Report of Konka Group Co., Ltd.
Subtotal of cash outflows from
3,970,903,850.94 3,473,214,203.50
investing activities
Net cash flows from investing
-151,922,878.59 -368,577,765.11
activities
III. Cash Flows from Financing
Activities:
Cash received from capital
78,701,328.03 15,700,000.00
contributions
Including: Cash received from
minority shareholder investments by 71,151,328.03 15,700,000.00
subsidiaries
Cash received from borrowings 2,937,450,105.14 4,234,914,268.82
Cash received from issuance of
- -
bonds
Other cash received relating to
118,110,469.89 576,957,141.70
financing activities
Subtotal of cash inflows from
3,134,261,903.06 4,827,571,410.52
financing activities
Repayment of borrowings 4,071,657,524.17 3,208,016,241.44
Cash paid for interest expenses
140,363,063.80 116,250,848.36
and distribution of dividends or profit
Including: dividends or profit
paid by subsidiaries to minority 1,343,265.96 -
shareholders
Other cash payments relating to
176,394,710.03 623,498,389.16
financing activities
Sub-total of cash outflows from
4,388,415,298.00 3,947,765,478.96
financing activities
Net cash flows from financing
-1,254,153,394.94 879,805,931.56
activities
IV. Effect of foreign exchange rate
-35,606,194.86 -2,095,568.53
changes on cash and cash equivalents
V. Net increase in cash and cash
-152,081,985.73 -131,252,584.13
equivalents
Add: Opening balance of cash
1,640,236,837.08 1,771,489,421.21
and cash equivalents
VI. Closing balance of cash and cash
1,488,154,851.35 1,640,236,837.08
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item 2015 2014
107
The 2015 Annual Report of Konka Group Co., Ltd.
I. Cash flows from operating
activities:
Cash received from sale of
12,246,114,167.03 12,298,684,620.60
commodities and rendering of service
Tax refunds received 179,546,436.62 223,273,103.54
Other cash received relating to
1,745,067,849.17 739,787,761.18
operating activities
Subtotal of cash inflows from
14,170,728,452.82 13,261,745,485.32
operating activities
Cash paid for goods and services 10,398,532,975.42 10,722,090,404.58
Cash paid to and for employees 923,142,975.45 942,834,651.48
Various taxes paid 270,882,083.75 296,880,208.93
Other cash payment relating to
1,780,957,816.25 1,840,153,779.28
operating activities
Subtotal of cash outflows from
13,373,515,850.87 13,801,959,044.27
operating activities
Net cash flows from operating
797,212,601.95 -540,213,558.95
activities
II. Cash flows from investing
activities:
Cash received from retraction of
130,102,809.09
investments
Cash received from return on
59,458,173.75 41,767,052.88
investments
Net cash received from disposal of
fixed assets, intangible assets and 57,765,301.70 7,769,133.70
other long-term assets
Net cash received from disposal of
301,267,191.25
subsidiaries or other business units
Other cash received relating to
3,522,884,590.00 2,403,472,043.31
investing activities
Subtotal of cash inflows from
3,770,210,874.54 2,754,275,421.14
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 48,440,040.10 89,183,657.42
assets
Cash paid for investment 196,857,096.00 215,523,300.00
Net cash paid to acquire
subsidiaries and other business units
Other cash payments relating to
3,774,884,590.00 2,496,000,000.00
investing activities
108
The 2015 Annual Report of Konka Group Co., Ltd.
Subtotal of cash outflows from
4,020,181,726.10 2,800,706,957.42
investing activities
Net cash flows from investing
-249,970,851.56 -46,431,536.28
activities
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings 61,422,000.00
Cash received from issuance of
bonds
Other cash received relating to
994,745,951.79 1,094,702,763.15
financing activities
Subtotal of cash inflows from
1,056,167,951.79 1,094,702,763.15
financing activities
Repayment of borrowings 91,422,000.00
Cash paid for interest expenses
16,842,865.65 12,852,947.28
and distribution of dividends or profit
Other cash payments relating to
2,007,026,133.52 617,810,454.06
financing activities
Sub-total of cash outflows from
2,115,290,999.17 630,663,401.34
financing activities
Net cash flows from financing
-1,059,123,047.38 464,039,361.81
activities
IV. Effect of foreign exchange rate
-1,310,869.10 -3,624,119.12
changes on cash and cash equivalents
V. Net increase in cash and cash
-513,192,166.09 -126,229,852.54
equivalents
Add: Opening balance of cash
991,459,790.62 1,117,689,643.16
and cash equivalents
VI. Closing balance of cash and cash
478,267,624.53 991,459,790.62
equivalents
109
The 2015 Annual Report of Konka Group Co., Ltd.
7. Consolidated statement of changes in owners’ equity
2015
Unit: RMB Yuan
2015
Equity attributable to owners of the Company
Other equity
instruments Gene
Item Less: Spe
Pre Per Other ral Minority Total owners’
treasu cific Surplus Retained
Share capital ferr pet Ot Capital reserve comprehensi risk interests equity
ry rese reserve profit
ed ual he ve incomes reser
stock rve
sha bo r ve
res nds
I. Balance at the
end of the previous 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: change of
- - - - - - - - - - - - -
accounting policy
Correction of
errors in previous - - - - - - - - - - - - -
periods
Business
mergers under the - - - - - - - - - - - - -
same control
Other - - - - - - - - - - - - -
II. Balance at the
beginning of 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
year
110
The 2015 Annual Report of Konka Group Co., Ltd.
III. Increase/
decrease in the
1,203,972,704.00 - - - -1,211,194,028.80 - -13,015,733.91 - - - -1,268,859,041.55 67,090,012.37 -1,222,006,087.89
period (“-” means
decrease)
(I) Total
comprehensive - - - - - - -13,015,733.91 - - - -1,256,819,314.51 -18,424,178.95 -1,288,259,227.37
incomes
(II) Capital
increased and - - - - - - - - - - - 65,749,452.92 65,749,452.92
reduced by owners
1. Common
shares increased by - - - - - - - - - - - 65,749,452.92 65,749,452.92
shareholders
2. Capital
increased by
- - - - - - - - - - - - -
holders of other
equity instruments
3. Amounts of
share-based
payments - - - - - - - - - - - - -
recognized in
owners’ equity
4. Other - - - - - - - - - - - - -
(III) Profit
- - - - - - - - - - -12,039,727.04 19,565,831.91 7,526,104.87
distribution
1.
Appropriations to - - - - - - - - - - - - -
surplus reserves
111
The 2015 Annual Report of Konka Group Co., Ltd.
2.
Appropriations to
- - - - - - - - - - - - -
general risk
provisions
3.
Appropriations to
- - - - - - - - - - -12,039,727.04 -1,343,265.96 -13,382,993.00
owners (or
shareholders)
4. Other - - - - - - - - - - - 20,909,097.87 20,909,097.87
(IV) Internal
carry-forward of 1,203,972,704.00 - - - -1,203,972,704.00 - - - - - - - -
owners’ equity
1. New
increase of capital
(or share capital) 1,203,972,704.00 - - - -1,203,972,704.00 - - - - - - - -
from capital public
reserves
2. New
increase of capital
(or share capital) - - - - - - - - - - - - -
from surplus
reserves
3. Surplus
reserves for making - - - - - - - - - - - - -
up losses
4. Other - - - - - - - - - - - - -
(V) Specific reserve - - - - - - - - - - - - -
112
The 2015 Annual Report of Konka Group Co., Ltd.
1. Withdrawn
- - - - - - - - - - - - -
for the period
2. Used in the
- - - - - - - - - - - - -
period
(VI) Other - - - - -7,221,324.80 - - - - - - 198,906.49 -7,022,418.31
IV. Closing balance 2,407,945,408.00 - - - 78,209,535.19 - 3,155,744.00 - 847,908,466.28 - -522,836,282.66 261,067,546.32 3,075,450,417.13
2014
Unit: RMB Yuan
2014
Equity attributable to owners of the Company
Other equity
instruments Spe Gene
Item Less:
Other cifi ral Minority Total owners’
Pre Per
treasu Surplus Retained
Share capital Capital reserve comprehensi c risk interests equity
fer pet Ot
ry reserve profit
red ual he ve incomes rese reser
stock
sha bo r rve ve
res nds
I. Balance at the
end of the previous 1,203,972,704.00 - - - 1,314,409,687.82 - 16,179,316.17 - 847,908,466.28 - 705,438,958.07 193,008,519.16 4,280,917,651.50
year
Add: change of
- - - - - - - - - -
accounting policy
Correction of
errors in previous - - - - - - - - - -
periods
Business - - - - - - - - - -
113
The 2015 Annual Report of Konka Group Co., Ltd.
mergers under the
same control
Other - - - - - - - - - -
II. Balance at the
beginning of the 1,203,972,704.00 - - - 1,314,409,687.82 - 16,179,316.17 - 847,908,466.28 - 705,438,958.07 193,008,519.16 4,280,917,651.50
year
III. Increase/
decrease in the
- - - - -25,006,123.83 - -7,838.26 - - - 40,583,800.82 969,014.79 16,538,853.52
period (“-” means
decrease)
(I) Total
comprehensive - - - -7,838.26 - - - 52,623,527.86 7,965,513.47 60,581,203.07
incomes
(II) Capital
increased and - - - - - - - - - - - -6,996,498.68 -6,996,498.68
reduced by owners
1. Common
shares increased by - - - - - - - - - -
shareholders
2. Capital
increased by
- - - - - - - - - -
holders of other
equity instruments
3. Amounts of
share-based
payments - - - - - - - - - -
recognized in
owners’ equity
114
The 2015 Annual Report of Konka Group Co., Ltd.
4. Other - - - - - - - - -6,996,498.68 -6,996,498.68
(III) Profit
- - - - - - - - - - -12,039,727.04 - -12,039,727.04
distribution
1.
Appropriations to - - - - - - - - - -
surplus reserves
2.
Appropriations to
- - - - - - - - - -
general risk
provisions
3.
Appropriations to
- - - - - - - -12,039,727.04 - -12,039,727.04
owners (or
shareholders)
4. Other - - - - - - - - - -
(IV) Internal
carry-forward of - - - - - - - - - - - - -
owners’ equity
1. New
increase of capital
(or share capital) - - - - - - - - - -
from capital public
reserves
2. New
increase of capital
(or share capital) - - - - - - - - - -
from surplus
reserves
115
The 2015 Annual Report of Konka Group Co., Ltd.
3. Surplus
reserves for - - - - - - - - - -
making up losses
4. Other - - - - - - - - - -
(V) Specific
- - - - - - - - - - - - -
reserve
1. Withdrawn
- - - - - - - - - -
for the period
2. Used in the
- - - - - - - - - -
period
(VI) Other - -25,006,123.83 - - - - - - - -25,006,123.83
IV. Closing
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
balance
8. Statement of changes in owners’ equity of the Company
2015
Unit: RMB Yuan
2015
Other equity
instruments Specif
Less: Other
Item Prefe Perp ic Surplus Total owners’
Share capital Capital reserve treasury comprehens Retained profit
rred etual Oth reserv reserve equity
stock ive incomes
share bond er e
s s
I. Balance at the end of the previous
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: change of accounting - - - - - - - - - - -
116
The 2015 Annual Report of Konka Group Co., Ltd.
policy
Correction of errors in
- - - - - - - - - - -
previous periods
Other - - - - - - - - - - -
II. 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
III. 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)
(I) Total comprehensive incomes - - - - - - 1,331,425.26 - - -697,498,985.63 -696,167,560.37
(II) Capital increased and
1,203,972,704.00 - - - -1,203,972,704.00 - - - - - -
reduced by owners
1. Common shares increased
1,203,972,704.00 - - - -1,203,972,704.00 - - - - - -
by shareholders
2. Capital increased by holders
- - - - - - - - - - -
of other equity instruments
3. Amounts of share-based
payments recognized in owners’ - - - - - - - - - - -
equity
4. Other - - - - - - - - - - -
(III) Profit distribution - - - - - - - - - -12,039,727.04 -12,039,727.04
1. Appropriations to surplus
- - - - - - - - - - -
reserves
2. Appropriations to owners
- - - - - - - - - -12,039,727.04 -12,039,727.04
(or shareholders)
3. Other - - - - - - - - - - -
(IV) Internal carry-forward of - - - - - - - - - - -
117
The 2015 Annual Report of Konka Group Co., Ltd.
owners’ equity
1. New increase of capital (or
share capital) from capital public - - - - - - - - - - -
reserves
2. New increase of capital (or
- - - - - - - - - - -
share capital) from surplus reserves
3. Surplus reserves for making
- - - - - - - - - - -
up losses
4. Other - - - - - - - - - - -
(V) Specific reserve - - - - - - - - - - -
1. Withdrawn for the period - - - - - - - - - - -
2. Used in the period - - - - - - - - - - -
(VI) Other - - - - 194,822.55 - - - - - 194,822.55
IV. Closing balance 2,407,945,408.00 - - - 46,505,607.34 - 1,803,252.77 - 847,908,466.28 -209,882,853.00 3,094,279,881.39
2014
Unit: RMB Yuan
2014
Other equity
instruments Specifi
Less: Other
Item Prefe Perp c Surplus Retained Total owners’
Share capital Capital reserve treasury comprehens
rred etual Oth reserv reserve profit equity
stock ive incomes
share bond er e
s s
I. Balance at the end of the previous
1,203,972,704.00 - - - 1,250,133,590.04 - - - 847,908,466.28 711,968,983.25 4,013,983,743.57
year
118
The 2015 Annual Report of Konka Group Co., Ltd.
Add: change of accounting policy - - - - - - - - - - -
Correction of errors in previous
- - - - - - - - - - -
periods
Other - - - - - - - - - - -
II. Balance at the beginning of the
1,203,972,704.00 - - - 1,250,133,590.04 - - - 847,908,466.28 711,968,983.25 4,013,983,743.57
year
III. Increase/ decrease in the period
- - - - 149,898.75 - 471,827.51 - - -212,313,123.58 -211,691,397.32
(“-” means decrease)
(I) Total comprehensive incomes - - - - - - 471,827.51 - - -200,273,396.54 -199,801,569.03
(II) Capital increased and reduced
- - - - - - - - - - -
by owners
1. Common shares increased
- - - - - - - - - - -
by shareholders
2. Capital increased by holders
- - - - - - - - - - -
of other equity instruments
3. Amounts of share-based
payments recognized in owners’ - - - - - - - - - - -
equity
4. Other - - - - - - - - - - -
(III) Profit distribution - - - - - - - - - -12,039,727.04 -12,039,727.04
1. Appropriations to surplus
- - - - - - - - - - -
reserves
2. Appropriations to owners (or
- - - - - - - - - -12,039,727.04 -12,039,727.04
shareholders)
3. Other - - - - - - - - - - -
(IV) Internal carry-forward of - - - - - - - - - - -
119
The 2015 Annual Report of Konka Group Co., Ltd.
owners’ equity
1. New increase of capital (or
share capital) from capital public - - - - - - - - - - -
reserves
2. New increase of capital (or
- - - - - - - - - - -
share capital) from surplus reserves
3. Surplus reserves for making
- - - - - - - - - - -
up losses
4. Other - - - - - - - - - - -
(V) Specific reserve - - - - - - - - - - -
1. Withdrawn for the period - - - - - - - - - - -
2. Used in the period - - - - - - - - - - -
(VI) Other - - - - 149,898.75 - - - - - 149,898.75
IV. Closing balance 1,203,972,704.00 - - - 1,250,283,488.79 - 471,827.51 - 847,908,466.28 499,655,859.67 3,802,292,346.25
120
The 2015 Annual Report of Konka Group Co., Ltd.
Konka Group Co., Ltd.
Notes of 2015 Financial Statement
(Monetary unit is RMB Yuan unless otherwise stated)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the Company”), is a
joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,
Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,
and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with
prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On
August 29, 1995, the Company, renamed to “Konka Group Co., Ltd.”, obtained corporate
business license (registration No.: 440301501121863) with its main business falling into
electronic industry. And now the headquarters locates in No. 28 of No. 12 of Keji South Rd.,
Science & Technology Park, Yuehai Street, Nanshan District, Shenzhen, Guangdong
Province.
2. Share Capital Changes upon Establishment
On November 27, 1991, with approval from the SRYFZ No. 102 [1991] document as 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
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.
121
The 2015 Annual Report of Konka Group Co., Ltd.
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
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
122
The 2015 Annual Report of Konka Group Co., Ltd.
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,
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
123
The 2015 Annual Report of Konka Group Co., Ltd.
products, mobile communication equipments and terminal products, daily-use electronic
products, automotive electronic products, satellite navigation systems, intelligent
transportation systems, fire-fighting and security systems, office equipments, computers,
displays, large screen display systems; LED (OLED) back light, illumination, light-emitting
devices, and packaging thereof; Touch TV AIO, wireless broadcasting television transiting
equipment; electronic parts and components, moulds, plastic and rubber products, and
packing materials, design and in-door installation security products, monitoring products,
wireless and cable digital television system and system integration, and technical consultancy
and after-sale paid services of related products (except mobile phone, the other products in
the above business scope are manufactured in other places outside Shenzhen); Wholesale,
retail, import & export and relevant support services of the aforesaid products (including
spare parts) (Commodities subject to state trading management are not involved. Products
involved in quota, license management and other specified management shall be subject to
the relevant state provisions.); sale of self-developed technological achievements; provision
of maintenance services, technical consultant service for electronic products; ordinary cargo
transportation, domestic freight forwarding, warehousing services; consultancy on enterprise
management; and self-owned property leasing and management services, recovery of waste
electrical appliances and electronic products (excluding dissembling) (operated by branch
offices); and outsourcing services of information technology and business procedures by
means of undertaking services in the way of outsourcing, including management and
maintenance of system application, management of information technology, bank
background service, financial settlement, human resource service, software development, call
center, and data processing.
4. The Company and each subsidiary mainly engaged in the production and sales of
color TV, white household appliances, mobile phones and moulds and so on.
5.The financial statements are subject to the approval of the board of directors of the
company in April 6, 2016.
6. There were 45 subsidiaries included in the consolidation scope of 2015 of the Company,
and please refer to the Notes VIII. “Equities among other entities” for details. There were 8
subsidiaries increased and 2 decreased in the consolidation scope of the reporting period over
the last period of the Company, and the gains and losses as well as the cash flows of the
subsidiaries which be decreased before the date losing the control right should be recorded in
the consolidation of the reporting period and please refer to the Notes VII. “Changes of the
consolidation scope” for details.
7. A check list of corporate names and their abbreviations mentioned in this Report
124
The 2015 Annual Report of Konka Group Co., Ltd.
Corporate name Abbreviation
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Precision Mold Manufacturing Co., Ltd. Precision Mold
Shenzhen Konka Electronic Co., Ltd. Konka Electronic
Shenzhen Konka Information Network Co., Ltd. Information Network
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Konka Housing Appliances Co., Ltd. Housing Appliances
Shenzhen Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Chongqing Konka Automotive Electronic Co., Ltd. Chongqing Electronic
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances
Changshu Konka Electronic Co., Ltd. Changshu Konka
Kunshan Konka Electronic Co., Ltd. Kunshan Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Dongguan Konka Mould Plastic Co., Ltd. Dongguan Mould Plastic
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo Precision
Konka (Nanhai) Development Center Nanhai Institute
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Household Appliances Investment & Development Co., Ltd. Konka Household Appliances Investment
Konka Household Appliances
Konka Household Appliances International Trading Co., Ltd.
International Trading
KONKA AMERICA,INC. KONKA AMERICA
Konka (Europe) Co., Ltd. Konka Europe
Dongguan Xutongda Mould Plastic Co., Ltd. Xutongda
Shenzhen Konka Optoelectronic Technology Co., Ltd. Konka Optoelectronic
Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida
Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng
Anhui Konka Tongchuang Household Appliances Co., Ltd. Anhui Tongchuang
Indonesia Konka Electronics Co., Ltd. Indonesia Konka
Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics
125
The 2015 Annual Report of Konka Group Co., Ltd.
Corporate name Abbreviation
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Kunshan Jielunte Mould Plastic Co. , Ltd. Kunshan Jielunte
Wuhan Jielunte Mould Plastic Co. , Ltd. Wuhan Jielunte
Chuzhou Jielunte Mould Plastic Co. , Ltd. Chuzhou Jielunte
Shenzhen Konka Yishijie Commercial Display Co., Ltd. Konka Yishijie
Shenzhen Yishijie Commercial Display Service Co., Ltd. Yishijie Commercial
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Usee Kangrong Culture Communication Co., Ltd. Usee Kangrong
Anhui Jiasen Precision Science and Technology Co., Ltd. Anhui Jiasen
Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. Kangqiao Jiacheng
Konka Zhisheng Co., Ltd. Konka Zhisheng
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Shenzhen E2info Internet Science and Technology Co., Ltd. E2info
Shenzhen Konka Mobile Internet Science & Technology Co., Ltd. Mobile Internet
Shenzhen Konka Business System Science & Technology Co., Ltd. Business Science & Technology
II. Basis for the preparation of financial statements
With the going-concern assumption as the basis and based on transactions and other events
that actually occurred, the Group prepared financial statements in accordance with Accounting Standards for Business Enterprises—Basic Standard> issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission. In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments, 126 The 2015 Annual Report of Konka Group Co., Ltd. where impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements. III. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Group are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present the Company’s financial positions as at 31 Dec. 2015, business results and cash flows for the year of 2015, and other relevant information. In addition, the Company’s and the Group’s financial statements meet the requirements of disclosing financial statements and notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission. IV. Important accounting policies and estimations The Company and each subsidiary formulated certain specific accounting policies 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 127 The 2015 Annual Report of Konka Group Co., Ltd. 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 Household Appliances Investment and Konka Zhisheng 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 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 128 The 2015 Annual Report of Konka Group Co., Ltd. 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 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, 4 (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, 10 “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 129 The 2015 Annual Report of Konka Group Co., Ltd. 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 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. The consolidated financial statements comprise the financial statements of the Group and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Group. (2) Methods for preparing the consolidated financial statements Subsidiaries are fully consolidated from the date on which the Group obtains control on 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 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 130 The 2015 Annual Report of Konka Group Co., Ltd. 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”. 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 131 The 2015 Annual Report of Konka Group Co., Ltd. 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. 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 Impairment>, 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 transaction date, while as for such transactions as foreign exchange or involving in foreign 132 The 2015 Annual Report of Konka Group Co., Ltd. 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 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. 133 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 134 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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 135 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 136 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 137 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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 138 The 2015 Annual Report of Konka Group Co., Ltd. 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 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. 139 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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. 140 The 2015 Annual Report of Konka Group Co., Ltd. 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. 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; 141 The 2015 Annual Report of Konka Group Co., Ltd. (2) Withdraw method of provision for bad debts ① The recognition criteria and method of individual provision for bad debts of receivables that are individually significant The Group recognized the receivables with amount above RMB20 million and 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 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. Withdrawal method of the bad debts provision of the different groups: Item Withdrawal method Group 1: Aging group Aging analysis method 142 The 2015 Annual Report of Konka Group Co., Ltd. Item Withdrawal 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 hereinafter) 2 2 1-2 years 5 5 2-3 years 20 20 3-4 years 50 50 4-5 years 50 50 Over 5 years 100 100 ③ Receivables with insignificant amount but being individually withdrawn the provision 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. (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. 143 The 2015 Annual Report of Konka Group Co., Ltd. And the non-property inventories include raw materials, goods in process; merchandise on 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 Pricing method: weighted average method 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 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. 144 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 145 The 2015 Annual Report of Konka Group Co., Ltd. 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. 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 146 The 2015 Annual Report of Konka Group Co., Ltd. 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 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; 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, 147 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 148 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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 149 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 150 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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 151 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 152 The 2015 Annual Report of Konka Group Co., Ltd. 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 (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 period when they don’t satisfy the following conditions. ① It is feasible technically to finish intangible assets for use or sale; 153 The 2015 Annual Report of Konka Group Co., Ltd. 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. 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. 154 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 report period should be handled the same as other long-term employees’ payrolls. The inside employee retirement plan is treated by adopting the same principle with the 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. 155 The 2015 Annual Report of Konka Group Co., Ltd. 21. Estimated liabilities The company should recognize the related obligation as a provision for liability when the 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 good exported by way of FOB, the revenue shall be recognized once the goods were delivered to the carrier designated by the purchaser; for goods exported by way of CIF, the revenue shall be recognized once the goods reach the port of the purchase. (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. The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction can be measured in a reliable way. If the outcome of a transaction concerning the providing of labor services cannot be 156 The 2015 Annual Report of Konka Group Co., Ltd. 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 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. 157 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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. 158 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 159 The 2015 Annual Report of Konka Group Co., Ltd. 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 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 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 160 The 2015 Annual Report of Konka Group Co., Ltd. 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 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) Investment impairment held-to-maturity The decision whether executes 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 the contracts (for example, to pay for the interests or the principal occurs default) and so on. When executing the judgment, the Company should assess the influences of the objective evidences of the occurrence of the impairment on the estimated future cash flow of the investment. (6) The impairment of financial assets available for sale 161 The 2015 Annual Report of Konka Group Co., Ltd. The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment and assumption of the management team, so as to decide whether recognized the impairment losses in the income statement. During the process of making the judgment and assumption, the Group needed to appraise the balance of the cost of the investment exceeding its fair value and the continuous period, the financial status and business forecast in a short period, including the industrial situation, technical reform, credit level, default rate and risk of counterparty. (7) Provision for impairment of non-financial non-current assets The Group made a judgment on the non-current assets other than financial assets whether they had any indication of impairment on the balance sheet date. For the intangible assets without finite service life, other than the annual impairment test, they should be subject to the impairment test when there was any indication of impairment. For other non-current non-financial assets, which should be subjected to impairment test when there was indication of impairment indicated that the book value can’t be recoverable. When the book value of the assets or assets portfolio was more than the recoverable amount, which was the higher one between the net amount of fair value after deducting the disposal expenses and the discounted amount of the estimated future cash flow, it means impairment incurred. The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale agreement for similar assets in the fair transaction minus the increased costs directly attributable to the assets disposal. When estimated the discounted value of future cash flow, the Group needed to make important judgment on the output, selling price, relevant costs and the discount rate for calculating the discounted amount, etc. When estimated the recoverable amount, the Group would adopt all the available documents, including the prediction for relevant output, selling price and relevant operating costs arising from reasonable and supportive assumptions. The Group made the impairment test on goodwill at least one time per year, which required to predict the discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which, the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property discounted rate to decide the discounted amount of future cash flow. (8) Depreciation and amortization For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and amortization by adopting the straight-line method during the service life after full consideration of the salvage value. The Group checked the service life periodically so as to decide the amount of depreciation and amortization at each reporting period. The service life was fixed by the Group in accordance with the previous experience of the similar assets and the expected technical update. If there was any significant change on the previous estimates, the depreciation and amortization expenses should be adjusted. (9) Expenditures for development When fixing the amount of capitalization, the management level of the Group needed to make assumption on the predicted future cash flow, property discounted rate and estimated beneficiary period for relevant assets. (10) Deferred income tax assets Within the limit that it was likely to have sufficient taxable profits to offset the losses, the Group recognized the deferred income tax assets by all the unused tax losses, which needed 162 The 2015 Annual Report of Konka Group Co., Ltd. the management level of the Group to estimate time and amount of the future taxable profits incurred with many judgments, as well as integrate strategy of tax payment, to decide the amount of deferred income tax assets which should be recognized. (11) Income tax During the routine operating activities, there were some uncertainty in the ultimate tax treatment and calculation for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures only after the approval of taxation authorities. If there were any differences between the ultimate result of recognition for these taxation maters and their initial estimates, the differences would affect the current income tax and deferred income tax at the period of ultimate recognition. (12) Internal early retirement welfare and supplementary retirement welfare Amounts of expenditures and liabilities of internal early retirement welfare and supplementary retirement welfare should be determined according to assumption terms. Assumption terms include discount rate, average growth rate of medical costs, growth rate of subsidies for early retirement employees and retirees and other factors. The differences of actual results and assumption should be confirmed immediately and included into costs of current year. Although the management have adopted reasonable assumption terms, changes of actual experience value and assumption terms may affect the internal early retirement welfare, supplementary retirement benefits and balance of liabilities. (13) Estimated liabilities The Group made the estimation on product quality guarantee, predicted loss of contract and the fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilities in accordance the provisions of contract, current knowledge and experience. Under the condition that the contingent event has formed a current duty and fulfilling the duty is likely to cause the economical interest outflow the Group, the Group measures the estimated liabilities in accordance with the best estimate of the necessary expenses for the performance of the current duty. The recognition and measurement of estimated liabilities were heavily relied on the judgment of the management team. During the process of making judgment, the Group needed to appraise the relevant risks, uncertainty and the time value of money and etc. Of which, the Group estimated the liabilities basing on the after-sale services commitments to the customers upon the sale, repair and reform of goods. When estimating the liabilities, the Group has fully taken the consideration of the latest repair experience, but which may not reflect the repair situation in the future. Any increase / decrease of the provision for estimated liabilities may affect the profits and losses in the future periods. V. Taxation 1. Main taxes and tax rate Category of taxes Specific situation of the taxes rate 163 The 2015 Annual Report of Konka Group Co., Ltd. Calculated the output tax at 17% of taxable income and paid the VAT by the amount after deducting the deductible withholding VAT at current period, of which the subsidiary Europe Konka of 21%, Telecommunication Technology VAT and the value-added service part of Mobile Internet brand of 6%, which see details to (3); Shushida Logistics of 11%, 6% which see details to (4); Calculated the added-value tax at 3% of the taxable income of E2info. Business tax Paid by 5% of taxable business income. Paid at 7% of the circulating tax actually paid, of which Dongguan Packing, Urban maintenance and construction Dongguan Konka, Dongguan Mould, Boluo Konka, Boluo Konka Precision, tax Xutongda and Kunshan Kangsheng of 5%. Paid at 25% of the taxable income, of which Hong Kong Konka, Konka Household Appliances Investment, Konka Household Appliances International Trading, and Konka Zhisheng of 16.5%, Wankaida, Telecommunication Enterprise income tax Technology, Precision Mould, Information Network, Chongqing Qingjia, Anhui Konka, Kunshan Konka, Dongguan Konka, Dongguan Mould, Xutongda and Business System of 15%, USA Konka of 28% and Europe Konka of 31%; E2info of 10%. Education surtax Paid at 3% of the circulating tax actually paid. Local education surtax Paid at 2% of the circulating tax actually paid. (1) In accordance with the Notice on Printing the Administration Method on Charging and Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products issued by the Ministry of Finance, Ministry of Environmental Protection, National Development and Reform Commission, Ministry of Industry and Information, General Administration of Customs and National Taxation Bureau (CZ [2012] No. 34), and the Administration Method on Charging and Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products issued by National Taxation Bureau (GJSWZJGG [2012] No. 41), the domestic manufacturer of the electrical appliances and electronic products of PRC started to pay the treatment funds for discarded electrical appliance and electronic products according the sales volume (trusted processing amount) and relevant charging standards from 1 Jul. 2012. According to the regulations, the Group’s charging standards were RMB13 per set of TV, RMB12 per set of refrigerator and RMB7 per set of washing machine. (2) According to regulations of Temporary Provisions of Income Tax of Trans-boundary Tax Payment Enterprises by State Administration of Taxation, resident enterprises without business establishment or places of legal persons should be tax payment enterprises with the administrative measures of income tax of “unified computing, level-to-level administration, local prepayment, liquidation summary, and finance transfer”. It came into force from January 1, 2008. According to the above methods, the Company’s sales branch companies in each area will hand in the corporate income taxes in advance from 1 Jan. 2008 and will be final settled uniformly by the Company at the year-end. 164 The 2015 Annual Report of Konka Group Co., Ltd. (3) The Company’s subsidiary, Shenzhen Konka Communication Technology Co., Ltd, is engaged in value-added services of brand costs. According to Notice of the Ministry of Finance and the State Administration of Taxation on the Pilot Work of Levying Value-Added Tax in Lieu of Business Tax in the Transportation Industry and Some Modern Service Industries in Beijing and Other Seven Provinces and Cities (CS[2012] No.71), added-value tax is levied from 1 Nov. 2012, with tax rate of 6%. (4) As for the transportation revenue of the logistic business of the Company’s subsidiary Shushida Logistics, in accordance with the Notice on Carrying out the Pilot of Change on Charging the Business Taxes of Transportation Industry and Partial Modern Service Industry to Value Added Taxes in Eight Provinces and Cities including Beijing issued by the Ministry of Finance and the National Taxation Bureau (CS [2012] No. 71) and other regulations, it was changed to charge the VAT since 1 Sept. 2012, with the tax rate of 3%. From 1 Jun. 2013, Shushida Logistics received the general taxpayer qualification with the VAT rate of the transportation revenue of 11% and the other service of 6%. 2. Tax preference and approved document (1) On 30 Sep. 2014, the subsidiary of the Company Shenzhen Konka Telecommunication Technology Co., Ltd. acquired the certificate of high-technology enterprises jointly issued by Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification number of GR201444201101 and the validity of three years. According to the relevant taxation regulations, the Telecommunication Technology could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate income tax according to 15% of the preferential tax rate. (2) On 30 Sep. 2014, the subsidiary of the Company Konka Precision Mould Manufacture Co., Ltd. acquired the certificate of high-technology enterprises jointly issued by Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification number of GR201444201781 and the validity of three years. According to the relevant taxation regulations, the Precision Mould could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate income tax according to 15% of the preferential tax rate. (3) On 22 Jul. 2013, the subsidiary of the Company Shenzhen Konka Information Network Co., Ltd. acquired the certificate of high-technology enterprises jointly issued by Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification number of GR201344200179 and the validity of three years. According to the relevant taxation regulations, the Information Network could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2013 to 2015, and pay for the corporate income tax according to 15% of the preferential tax rate. (4) The Company’s subsidiary—Chongqing Qingjia Electronics Co., Ltd. is levied the business income tax at the preferential tariff of 15% from 1 Jan. 2011 to 31 Dec. 2020 in accordance with CS (2011) No. 58 Notice on Relevant Tax Policies on Deeply Implementing the western development strategy. (5) On 14 Oct., 2013, the subsidiary of the Company, Anhui Konka, received the certificate of high-technology enterprises (No.: GF2013342000298) awarded by Anhui Science and Technology Department, Anhui Department of Finance, Anhui State Taxation Bureau and 165 The 2015 Annual Report of Konka Group Co., Ltd. Anhui Local Taxation Bureau. The period of validity is three years. According to taxation rules, Anhui Konka would enjoy the preferential tax privileges of high-technology enterprises from 2013 to 2015 and pay the enterprise income tax at the preferential rate of 15%. (6) On 5 Aug. 2014, the subsidiary of the Company, Kunshan Konka Electronics Co., Ltd. acquired the certificate of high-technology enterprises joint issued by Jiangsu Province Science and Technology Department, Department of Finance of Jiangsu Province, Jiangsu Province Municipal Office, SAT, and Jiangsu Local Taxation Bureau with the certification number of GF201432000413 and the validity of three years. According to the relevant taxation regulations, the Kunshan Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate income tax according to 15% of the preferential tax rate. (7) On 10 Oct. 2014, the subsidiary of the Company, Dongguan Konka acquired the certificate of high-technology enterprises joint issued by Guangdong Province Science and Technology Department, Department of Finance of Guangdong Province, Guangdong Province Municipal Office, SAT, and Guangdong Local Taxation Bureau with the certification number of GF201444001341 and the validity of three years. According to the relevant taxation regulations, the Dongguan Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years since 2014, and pay for the corporate income tax according to 15% of the preferential tax rate. (8) On 18 Feb. 2016, according to the associated issued Notice of Announcing the Guangdong Hi-tech Enterprises of Guangdong Provincial Department of Science and Technology, Department of Finance of Guangdong Province, Guangdong Provincial Office, SAT and Guangdong Local Taxation Bureau by the above institutions, YKGZ [2016] No. 17, the subsidiary of the Company, Dongguan Mould Plastic and Shushida were recognized as the high-technology enterprises with the certificate number respectively were GR201544000549 and GF201544000193; and would enjoy the relevant preferential tax privileges of high-technology enterprises for continuous 3 years from 2015 to 2017 and pay the enterprise income tax at the preferential rate of 15%. (9) On 30 Sep. 2014, the Company’s subsidiary- Wankaida acquired the certificate of high-technology enterprises joint issued by Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau with the certification number of GR201444201523 and the validity of three years. According to the relevant taxation regulations, the Anhui Tongchuang could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2012 to 2014, and pay for the corporate income tax according to 15% of the preferential tax rate. (10) The annual taxable income amount would be≤RMB0.2 million of the subsidiary of the Company- Shenzhen E2info Internet Science and Technology Co., Ltd. according to the income tax preferential policies of the small and micro businesses among the scope of the corporate income tax, and from 1 Jan. 2015 to 31 Dec. 2017, the income of which should be reduced to 50% before be included in the taxable income and pay the enterprise income tax at the preferential rate of 20%. (11) According to the Notice of the Corporate Income Tax Preferential Policy and the Optimal Directory of Guangdong Hengqin New Zone, Fujian Pingtan Comprehensive Experimental Area and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen by Ministry of Finance and SAT, CS [2014] No. 26, the subsidiary of the 166 The 2015 Annual Report of Konka Group Co., Ltd. Company-Shenzhen Konka Business System Science & Technology Co., Ltd. would pay for the corporate income tax according to 15% of the preferential tax rate from 1 Jan. 2015 to 31 Dec. 2015. (12) According to the CS No. [2011] 100 Article issued by Ministry of Finance and State Administration of Taxation, if the ordinary VAT payer sells software products developed by itself, the VAT is levied at the rate of 17% and after that, the part of actual tax burden of VAT which exceeds 3% can enjoy the policy of refunding taxes immediately after levying taxes. The subsidiaries of the Company, Shenzhen Konka Telecommunication Technology Co., Ltd., Shenzhen Konka Information Network Co., Ltd., Shenzhen Wankaida Science and Technology Co., Ltd. and Shenzhen Konka Yishijie Commercial Display Co., Ltd. enjoy such favorable policy. VI. Notes on major items in consolidated financial statements of the Company Unless otherwise noted, the following annotation project (including the main projects annotation of the financial statement of the Company), the year-begin refers to 1 Jan. 2015, the year-end refers to 31 Dec. 2015 1. Monetary funds Item Closing balance Opening balance Cash on hand 4,217.37 5,118.98 Bank deposits 1,488,150,633.98 1,640,231,718.10 Other monetary funds 218,292,077.57 62,898,895.10 Total 1,706,446,928.92 1,703,135,732.18 Of which: total amount deposited in overseas 205,900,491.11 149,716,988.11 Notes: The closing balance of other monetary fund was the deposits of each margin deposit not withdrawn at any time. 2. Financial assets measured by fair value and the changes be included in the current gains and losses Item Closing balance Opening balance Income from agreement of forward foreign 33,196,377.28 — exchange purchase Total 33,196,377.28 — 3. Notes receivable (1)Notes receivable listed by category 167 The 2015 Annual Report of Konka Group Co., Ltd. Item Closing balance Opening balance Bank acceptance bill 2,879,244,863.46 3,785,443,076.37 Trade acceptance 1,615,886.98 33,974,000.00 Total 2,880,860,750.44 3,819,417,076.37 (2) Notes receivable pledged at the period-end Item Amount Bank acceptance bill 1,446,191,357.58 Total 1,446,191,357.58 Notes: Up to 31 Dec. 2015, the Company pledged the banker’s acceptance bill of the book value of RMB1, 446,191,357.58 for the comprehensive financing business such as handling the billing, letter of credit and the trading financing. (3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the year-end Amount of recognition termination at Amount of recognition Item the period-end termination at the period-end Bank acceptance bill 952,963,830.15 — Total 952,963,830.15 — 4. Accounts receivable (1) Accounts receivable classified by category Closing balance Book balance Bad debt provision Category Withdra Proportion wal Book value Amount Amount (%) proporti on (%) Accounts receivable with insignificant single amount for 21,847,005.37 0.92 21,847,005.37 100.00 — which bad debt provision separately accrued 168 The 2015 Annual Report of Konka Group Co., Ltd. Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: Group 1: aging group 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27 Subtotal of groups 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27 Accounts receivable with insignificant single amount for 76,251,927.24 3.20 67,420,869.17 88.42 8,831,058.07 which bad debt provision separately accrued Total 2,382,189,182.25 100.00 333,375,742.91 13.99 2,048,813,439.34 (Continued) Opening balance Book balance Bad debt provision Category Withdrawa Proportion l Book value Amount Amount (%) proportion (%) Accounts receivable with insignificant single amount for — — — — — which bad debt provision separately accrued Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: Group 1: aging group 2,516,702,016.18 98.95 259,303,584.71 10.30 2,257,398,431.47 Subtotal of groups 2,516,702,016.18 98.95 259,303,584.71 10.30 2,257,398,431.47 Accounts receivable with insignificant single amount for 26,756,380.18 1.05 24,861,604.49 92.92 1,894,775.69 which bad debt provision separately accrued Total 2,543,458,396.36 100.00 284,165,189.20 11.17 2,259,293,207.16 169 The 2015 Annual Report of Konka Group Co., Ltd. ①Accounts receivable with significant single amount for which bad debt provision separately accrued at the year-end Closing balance Accounts receivable (classified by units) Withdrawal Account receivable Bad debt provision Withdrawal reason proportion (%) Difficult to recover, due Customera 21,847,005.37 21,847,005.37 100.00 to the bankruptcy of that company ②In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Within 1 year 2,013,172,455.64 40,203,521.76 2.00 1 to 2 years 40,173,735.00 2,008,686.75 5.00 2 to 3 years 25,126,437.95 5,025,287.59 20.00 3 to 4 years 8,035,966.18 4,017,983.09 50.00 4 to 5 years 9,458,531.38 4,729,265.69 50.00 Over 5 years 188,123,123.49 188,123,123.49 100.00 Total 2,284,090,249.64 244,107,868.37 ③Top five of account receivable with insignificant single amount for which bad debt provision separately accrued Closing balance Accounts receivable (classified by units) Withdrawal Account receivable Bad debt provision Withdrawal reason proportion Had difficulty in Customer 1 17,867,121.02 17,867,121.02 100.00 operation Involved with lawsuit Customer 2 12,166,047.60 12,166,047.60 100.00 dispute Involved with lawsuit Customer 3 8,223,935.99 4,111,968.00 50.00 dispute Involved with lawsuit Customer 4 6,260,260.93 5,554,486.27 88.73 dispute 170 The 2015 Annual Report of Konka Group Co., Ltd. Involved with lawsuit Customer 5 3,408,394.19 2,045,036.51 60.00 dispute Total 47,925,759.73 41,744,659.40 (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB 54,610,084.52; the amount of the reversed or collected part during the reporting period was of RMB5, 205,580.98, other decrease was RMB193, 949.83. (3) Top five of account receivable of closing balance collected by arrears party The total amount of top five of account receivable of closing balance collected by arrears party was RMB643, 509,696.39, 27.01% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was RMB12, 870,193.93. 5. Prepayment (1) List by aging analysis: Closing amount Opening amount Book balance Book balance Aging Bad debt Bad debt Proportion ( Proportio Amount provision Amount provision %) n (%) Within 1 year 192,024,479.90 92.75 527,017.04 312,558,414.85 96.34 863,929.20 1 to 2 years 1,037,032.15 3.04 406,683.12 5,069,017.23 1.56 1,952,958.31 2 to 3 years 3,154,864.60 0.85 1,716,100.63 735,503.34 0.23 396,003.34 Over 3 years 6,774,559.86 3.36 6,676,515.06 6,086,092.93 1.87 6,086,092.93 Total 202,990,936.51 100.00 9,326,315.85 324,449,028.35 100.00 9,298,983.78 Notes: prepayments of significant amount and aged more than 1 year, of which the amount of RMB6,635,213.35 was the relevant materials which had quality problems and had not handle the accounts settlement as well as the material warehousing formalities, and the materials purchase account prepaid should be presented as the prepayments. (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target The total amount of top five of account receivable of closing balance collected by arrears party was RMB37, 240,245.94, 18.354% of total closing balance of account receivable. 6. Interest receivable 171 The 2015 Annual Report of Konka Group Co., Ltd. (1) Category of interest receivable Item Closing balance Opening balance Fixed term deposit interest 7,325,298.41 1,885,727.36 Entrusted loan interest 101,111.11 — Total 7,426,409.52 1,885,727.36 7. Other accounts receivable (1) Other account receivable classified by category Closing balance Book balance Bad debt provision Category Withdrawa Proportion Book value Amount Amount l (%) proportion Other accounts receivable with insignificant single 183,881,677.62 51.78 171,132,382.98 93.07 12,749,294.64 amount for which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision according to credit risks characteristics Group 1: aging group 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18 Subtotal of groups 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18 Other accounts receivable with insignificant single 402,820.00 0.11 402,820.00 100.00 — amount for which bad debt provision separately accrued Total 355,139,902.09 100.00 194,974,122.27 54.90 160,165,779.82 (Continued) Opening balance Category Book balance Bad debt provision Book value 172 The 2015 Annual Report of Konka Group Co., Ltd. Proportion Withdrawal Amount (%) Amount proportion (%) Other accounts receivable with insignificant single 18,115,952.51 5.45 5,405,926.42 29.84 12,710,026.09 amount for which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision according to credit risks characteristics Group 1: aging group 314,459,562.89 94.55 28,194,197.30 8.97 286,265,365.59 Subtotal of groups 314,459,562.89 94.55 28,194,197.30 8.97 286,265,365.59 Other accounts receivable with insignificant single — — — — — amount for which bad debt provision separately accrued Total 332,575,515.40 100.00 33,600,123.72 10.10 298,975,391.68 ① Other account receivable with insignificant single amount for which bad debt provision separately accrued Closing balance Other accounts receivable (unit） Withdrawal Other accounts receivable Bad debt provision Withdrawal reason proportion（%） Energy saving subsidy 152,402,680.00 152,402,680.00 100.00 Irrecoverable Shenzhen Konka Video & Assessment Communication Systems 18,115,952.51 5,366,657.87 29.62 irrecoverable for full Engineering Co., Ltd. amount Chongqng Konka Auto Electronic Irrecoverable, under Company 13,363,045.11 13,363,045.11 100.00 bankruptcy liquidation Total 183,881,677.62 171,132,382.98 93.07 — ②In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: Aging Closing balance 173 The 2015 Annual Report of Konka Group Co., Ltd. Other accounts receivable Bad debt provision Withdrawal proportion（%） Within 1 year 125,476,792.14 2,504,840.07 2.00 1 to 2 years 9,688,182.60 484,409.13 5.00 2 to 3 years 15,052,680.35 3,010,536.07 20.00 3 to 4 years 4,571,994.74 2,285,997.37 50.00 4 to 5 years 1,825,235.98 912,617.99 50.00 Over 5 years 14,240,518.66 14,240,518.66 100.00 Total 170,855,404.47 23,438,919.29 (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB162,803,057.40; the amount of the reversed or collected part during the reporting period was of RMB682, 759.03, other decrease was RMB746, 299.82. (3) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Proportion of the total Name of Bad debt provision Nature Closing balance Aging year-end balance of the the entity Closing balance accounts receivable (%) Customer Energy saving A subsidy 152,402,680.00 1-2years, 2-3 years 42.91 152,402,680.00 Customer Export tax B refunds 18,334,262.62 Within 1 year 5.16 916,713.13 Property Customer administrative 6,413,845.45 Within 1 year 1.81 320,692.27 C expenses Within 1 Customer Payment on D behalf 6,202,366.00 year ,1-2years, 2-3 1.75 1,252,283.30 years Customer Payment for E land 2,570,568.00 1-2years, 2-3 years 0.72 937,254.00 Total 185,923,722.07 52.35 155,829,622.70 8. Inventory (1) Category of inventory Item Closing amount 174 The 2015 Annual Report of Konka Group Co., Ltd. Of which: the Impairment of Book balance capitalized amount of Book value inventories the borrowings Development projects of the property: Development cost 270,136,005.18 — — 270,136,005.18 Development products 194,778,406.05 3,693,784.24 — 194,778,406.05 Subtotal 464,914,411.23 3,693,784.24 — 464,914,411.23 Non-development projects of the property: Raw materials 611,138,306.26 — 53,034,708.44 558,103,597.82 Raw materials 152,737,782.18 — 54,853,159.84 97,884,622.34 Inventory goods 1,960,267,024.10 — 199,769,581.12 1,760,497,442.98 Turnover materials 1,115,838.91 — — 1,115,838.91 Subtotal 2,725,258,951.45 — 307,657,449.40 2,417,601,502.05 Total 3,190,173,362.68 3,693,784.24 307,657,449.40 2,882,515,913.28 (Continued) Opening amount Of which: the Item Impairment of Book balance capitalized amount of Book value inventories the borrowings Development projects of the property: Development cost 433,431,258.26 708,392.08 — 433,431,258.26 Development products 184,288,149.21 4,786,589.71 — 184,288,149.21 Subtotal 617,719,407.47 5,494,981.79 — 617,719,407.47 Non-development projects of the property: Raw materials 1,299,997,072.71 — 331,916,902.96 968,080,169.75 Raw materials 384,479,782.98 — 174,801,078.20 209,678,704.78 175 The 2015 Annual Report of Konka Group Co., Ltd. Inventory goods 2,347,967,769.03 — 239,864,738.09 2,108,103,030.94 Turnover materials 854,937.39 — — 854,937.39 Subtotal 4,033,299,562.11 — 746,582,719.25 3,286,716,842.86 Total 4,651,018,969.58 5,494,981.79 746,582,719.25 3,904,436,250.33 (2) List of the development cost Expected completion time Name o f item Starting time Opening amount Closing amount of the next batch Shuiyue Zhouzhuang Project Y 2011 Completion by stages 433,431,258.26 268,056,798.18 Kangqiao Jiacheng Not yet started Not yet started — 2,079,207.00 Total 433,431,258.26 270,136,005.18 (3) List of the developed products Completion Name o f item Opening amount Increased Decreased Closing amount time Shuiyue Zhouzhuang Project(Phase I Y 2014 184,288,149.21 2,710,216.34 107,315,291.21 79,683,074.34 Residence) Shuiyue Zhouzhuang Project(Phase II Y 2015 — 281,251,269.33 166,155,937.62 115,095,331.71 Residence) Total 184,288,149.21 283,961,485.67 273,471,228.83 194,778,406.05 (4) Impairment of inventories Increased amount Decreased amount Item Opening balance Closing balance Withdrawal Other Reverse Write-off Raw 8,015,456.8 331,916,902.96 18,922,271.43 — 289,789,009.06 53,034,708.44 materials 9 Raw 5,693,260.1 174,801,078.20 219,137.28 — 114,473,795.51 54,853,159.84 materials 3 Inventory 239,864,738.09 81,517,733.07 — — 121,612,890.04 199,769,581.12 goods 13,708,717. Total 746,582,719.25 100,659,141.78 — 525,875,694.61 307,657,449.40 02 176 The 2015 Annual Report of Konka Group Co., Ltd. (5) Withdrawal provision basis of the falling price of the inventory and the reasons of the reserve or write-off Specific basis of withdrawal of falling Item Reasons for write-off price reserves of inventory The realizable net value was lower than Raw materials Disposed in the current period the inventory cost The realizable net value was lower than Raw materials Disposed in the current period the inventory cost The realizable net value was lower than Inventory goods Disposed in the current period the inventory cost (4) Closing balance of the inventory which includes capitalized borrowing expenses was RMB3, 693,784.24. 9. Other current assets Item Closing balance Opening balance Prepayments and deductible taxes 89,108,687.45 311,200,708.77 Entrust loans 50,000,000.00 50,000,000.00 Financial products 500,000,000.00 500,000.00 Unreached bank deposits 8,203,251.00 206,319,491.71 Total 647,311,938.45 568,020,200.48 Notes: the entrust loan was Anhui Electronic borrowed RMB50,000,000.00 to Chuzhou Tongchuang Construction Investment Co., Ltd. through Bank of China Limited, Chuzhou Branch, due to Anhui Electronic had sufficient capital, in order to improve capital service efficiency, both party signed Entrust Loan Extension Loan agreement based on the original contract with contract No.007 CZYWDZ of 2014, the extension period was three months, from 31 Dec. 2015 to 31 Mar. 2016. 177 The 2015 Annual Report of Konka Group Co., Ltd. 10. Available-for-sale financial assets (1) List of available-for-sale financial assets Closing balance Opening balance Item Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value Available-for-sale equity instruments 316,972,068.30 4,997,785.64 311,974,282.66 247,799,748.07 2,766,139.07 245,033,609.00 Of which: measured at fair value 2,874,068.30 — 2,874,068.30 2,311,748.07 681,139.07 1,630,609.00 Measured by cost 314,098,000.00 4,997,785.64 309,100,214.36 245,488,000.00 2,085,000.00 243,403,000.00 Total 316,972,068.30 4,997,785.64 311,974,282.66 247,799,748.07 2,766,139.07 245,033,609.00 (2) Available-for-sale financial assets measured by fair value at the period-end Category Available-for-sale equity instruments Cost of the equity instruments 2,317,433.07 Fair value 556,635.23 Changed amount of the fair value accumulatively included in other comprehensive 1,237,774.30 income Withdrawn impairment amount — (3) Available-for-sale financial assets measured by cost at the period-end Book balance Investee Year-begin Increased Decreased Year-end 178 The 2015 Annual Report of Konka Group Co., Ltd. Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise 6,000,000.00 14,000,000.00 — 20,000,000.00 Shenzhen Tianyilian Science & Technology Co., Ltd. 4,800,000.00 — — 4,800,000.00 Shenzhen Yifan Interactive Science & Technology Co., Ltd. 9,500,000.00 — — 9,500,000.00 Shenzhen A Dot TV Co., Ltd. 5,750,000.00 — — 5,750,000.00 Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00 ZAEFI 100,000.00 — — 100,000.00 Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 — — 485,000.00 Shanlian Information Technology Engineering Center 5,000,000.00 — — 5,000,000.00 Shenzhen CIU Science & Technology Co., Ltd. 1,153,000.00 — — 1,153,000.00 Shenzhen Digital TV National Engineering Laboratory Co., Ltd. 6,000,000.00 — — 6,000,000.00 Shanghai National Engineering Research Center of Digital TV Co., Ltd. 2,400,000.00 — — 2,400,000.00 ChinaAMC - Jiayi Overseas Orientation Programs 203,000,000.00 — — 203,000,000.00 Hunan Vary Science & Technology Co., Ltd. — 47,230,000.00 — 47,230,000.00 Nobel Education Investment Development Co., Ltd. — 7,380,000.00 — 7,380,000.00 Chongqing Konka Eurotomotive Electronic Co., — — — — 179 The 2015 Annual Report of Konka Group Co., Ltd. Ltd. (See note VII.2.（9）) Total 245,488,000.00 68,610,000.00 — 314,098,000.00 (Continued) Depreciation reserves Shareholding Cash bonus of the reporting Investee proportion among Year-begin Increased Decreased Year-end period the investees Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise — — — — 6.00 — Shenzhen Tianyilian Science & Technology Co., Ltd. — — — — 7.05 — Shenzhen Yifan Interactive Science & Technology Co., Ltd. — — — — 13.57 — Shenzhen A Dot TV Co., Ltd. — — — — 9.50 — Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00 8.33 — ZAEFI 100,000.00 — — 100,000.00 — — Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 — — 485,000.00 1.00 — Shanlian Information Technology Engineering Center — 1,639,190.80 — 1,639,190.80 9.62 — Shenzhen CIU Science & Technology Co., Ltd. 200,000.00 — — 200,000.00 11.50 — Shenzhen Digital TV National Engineering Laboratory Co., Ltd. — 1,273,594.84 — 1,273,594.84 6.00 — 180 The 2015 Annual Report of Konka Group Co., Ltd. Shanghai National Engineering Research Center of Digital TV Co., Ltd. — — — — 4.26 — ChinaAMC - Jiayi Overseas Orientation Programs — — — — — 2,153,880.21 Hunan Vary Science & Technology Co., Ltd. — — — — 10.04 — Nobel Education Investment Development Co., Ltd. — — — — 14.76 — Chongqing Konka Eurotomotive Electronic Co., Ltd. (See note VII.2.（9）) — — — — — — Total 2,085,000.00 2,912,785.64 — 4,997,785.64 — 2,153,880.21 (4) Changes of the impairment of the available-for-sale financial assets during the reporting period Category Available-for-sale equity instruments Balance of the withdrawn impairment at the period-begin 2,766,139.07 Withdrawn impairment balance at the period-begin 2,912,785.64 Of which: transferred from other comprehensive income — Decreased 681,139.07 Of which: recovered and reversed after the period of the fair value 681,139.07 Balance of the withdrawn impairment at the period-end 4,997,785.64 11. Long-term equity investment 181 The 2015 Annual Report of Konka Group Co., Ltd. Increase/decrease in reporting period Investment profit Adjustment of Investee Opening balance Additional and loss recognized other Negative investment Other equity changes investment under the equity comprehensive method income Subsidiary of joint venture Shenzhen Refund Optoelectronics Co., Ltd. 43,425,481.67 — — 2,378,983.32 — — Enraytek Optoelectronics Co., Ltd. 110,793,944.21 — — -16,120,186.21 — — Shenzhen Konka Energy Technology Co., Ltd. 3,649,728.08 — — — — — Shanghai Konka Green Science & Technology Co., Ltd. 197,758,604.87 — 124,800,000.00 -5,111,426.37 403,094.53 — Shenzhen Dekang Electronics Co., Ltd. 7,137,424.83 — — — — Zhuhai Jinsu Plastic Co., Ltd. — 6,210,000.00 — 58,920.60 — 183,267.00 Total 362,765,183.66 6,210,000.00 124,800,000.00 -18,793,708.66 403,094.53 183,267.00 (Continued) Increase/decrease in reporting period Closing balance of Investee Declaration of cash dividends or Withdrawn impairment Closing balance Other impairment provision profits provision Associated enterprise: 182 The 2015 Annual Report of Konka Group Co., Ltd. Shenzhen Refund Optoelectronics Co., Ltd. 1,487,448.32 — — 44,317,016.67 — Enraytek Optoelectronics Co., Ltd. — 30,257,135.84 — 94,673,758.00 30,257,135.84 Shenzhen Konka Energy Technology Co., Ltd. — 3,649,728.08 — 3,649,728.08 3,649,728.08 Shanghai Konka Green Science & Technology Co., Ltd. — — — 68,250,273.03 — Shenzhen Dekang Electronics Co., Ltd. — — — 7,137,424.83 — Zhuhai Jinsu Plastic Co., Ltd. — — — 6,452,187.60 — Total 1,487,448.32 33,906,863.92 — 224,480,388.21 33,906,863.92 Note: since the shenzhen konka energy technology co., LTD., continuing losses, as of December 31, 2015, its net worth is negative, according to the book value of full provision for impairment loss; Reflected the Enraytek Optoelectronics Co., Ltd., by way of assessment signs, there is possible assets impairment provision for impairment loss according to the difference between evaluating price and book value. 183 The 2015 Annual Report of Konka Group Co., Ltd. 12. Investment property Investment property adopted the cost measurement mode Construction in Item Houses and buildings Land use right Total progress I. Original book value 1.Opening balance 249,923,047.75 — — 249,923,047.75 2. Increased amount of the period — — — — 3.Decreased amount of the period — — — — Closing balance 249,923,047.75 — — 249,923,047.75 II. Accumulative depreciation and — — — — accumulative amortization 1.Opening balance 16,573,594.95 — — 16,573,594.95 2. Increased amount of the period 5,631,274.27 — — 5,631,274.27 (1) Withdrawal or amortization 5,631,274.27 — — 5,631,274.27 3.Decreased amount of the period — — — — Closing balance 22,204,869.22 — — 22,204,869.22 III. Depreciation reserves — — — — 1.Opening balance — — — — 2. Increased amount of the period — — — — 3.Decreased amount of the period — — — — 4.Closing balance — — — — IV. Book value — — — — 1. Closing book value 227,718,178.53 — — 227,718,178.53 2. Opening book value 233,349,452.80 — — 233,349,452.80 184 The 2015 Annual Report of Konka Group Co., Ltd. 13. Fixed assets (1) List of fixed assets Item Houses and buildings Machinery equipment Electronic equipment Transportation equipment Other Total I. Original book value 1.Opening balance 1,666,832,339.28 1,025,362,549.65 252,641,100.35 74,244,036.50 214,920,840.16 3,234,000,865.94 2. Increased amount of the 72,994,535.09 51,204,901.71 19,270,450.60 5,655,781.95 20,677,102.58 169,802,771.93 period (1) Purchase 6,072,522.58 46,355,267.49 18,669,505.56 5,474,108.36 17,035,522.26 93,606,926.25 (2) Transfer of project under 66,922,012.51 4,849,634.22 600,945.04 181,673.59 3,641,580.32 76,195,845.68 construction 3.Decreased amount of the 129,421,263.34 80,576,728.94 45,976,766.12 15,186,067.52 26,110,920.83 297,271,746.75 period (1) Disposal or Scrap 129,421,263.34 80,576,728.94 45,976,766.12 15,186,067.52 26,110,920.83 297,271,746.75 (2) Other — — — — — — 4.Closing balance 1,610,405,611.03 995,990,722.42 225,934,784.83 64,713,750.93 209,487,021.91 3,106,531,891.12 II. Accumulative depreciation 1.Opening balance 401,426,983.75 590,925,364.93 201,361,698.85 52,503,060.71 140,779,033.03 1,386,996,141.27 2. Increased amount of the 56,893,032.66 60,882,542.16 13,661,165.53 6,045,622.63 19,000,737.36 156,483,100.34 period 185 The 2015 Annual Report of Konka Group Co., Ltd. (1) Withdrawal 56,893,032.66 60,882,542.16 13,661,165.53 6,045,622.63 19,000,737.36 156,483,100.34 3.Decreased amount of the 92,491,301.56 68,883,330.10 41,068,075.82 12,586,323.43 23,329,729.40 238,358,760.31 period (1) Disposal or Scrap 92,491,301.56 68,883,330.10 41,068,075.82 12,586,323.43 23,329,729.40 238,358,760.31 (2) Other — — — — — — 4.Closing balance 365,828,714.85 582,924,576.99 173,954,788.56 45,962,359.91 136,450,040.99 1,305,120,481.30 III. Depreciation reserves - 1.Opening balance 53,124,316.45 6,198,654.13 1,628,053.45 899,230.59 1,458,921.13 63,309,175.75 2. Increased amount of the — 20,992,333.00 6,021,747.13 109,187.63 2,737,376.43 29,860,644.19 period (1) Withdrawal — 20,992,333.00 6,021,747.13 109,187.63 2,737,376.43 29,860,644.19 3.Decreased amount of the 51,117,567.15 1,122,857.24 2,335,953.13 45,072.30 640,149.80 55,261,599.62 period (1) Disposal or Scrap 51,117,567.15 1,122,857.24 2,335,953.13 45,072.30 640,149.80 55,261,599.62 (2) Other — — — — — — 4.Closing balance 2,006,749.30 26,068,129.89 5,313,847.45 963,345.92 3,556,147.76 37,908,220.32 IV. Book value - 1. Closing book value 1,242,570,146.88 386,998,015.54 46,666,148.82 17,788,045.10 69,480,833.16 1,763,503,189.50 186 The 2015 Annual Report of Konka Group Co., Ltd. 2. Opening book value 1,212,281,039.08 428,238,530.59 49,651,348.05 20,841,745.20 72,682,886.00 1,783,695,548.92 (2) List of temporarily idle fixed assets Item Original book value Accumulative depreciation Depreciation reserves Book value Notes Houses and buildings 4,284,173.90 2,458,069.58 942,269.83 883,834.49 Machinery equipment 6,705,827.19 5,338,283.86 718,159.24 649,384.09 Electronic equipment 18,515,199.56 17,070,291.53 1,021,928.09 422,979.94 Transportation equipment 1,623,535.00 1,460,501.40 87,259.60 75,774.00 Other equipment 2,979,447.09 2,690,379.92 43,920.91 245,146.26 Total 34,108,182.74 29,017,526.29 2,813,537.67 2,277,118.78 187 The 2015 Annual Report of Konka Group Co., Ltd. (3) Fixed assets leased in from financing lease Accumulative Impairment provision Item Original book value Book value depreciation Machinery equipment 5,321,552.85 1,173,743.61 — 4,147,809.24 (4) Fixed assets leased out from operation lease Item Closing book value Houses and buildings 23,232,191.19 Total 23,232,191.19 (5) Details of fixed assets failed to accomplish certification of property Item Book value Reason Yikang building 48,324,645.35 Under processing Kangsheng Aquatic Club 20,343,430.96 Under processing Mudangjiang electric appliances Has not obtained the state-owned land uses card, can not etc. 12,187,010.26 to deal with house property card Jingyuan office building 12,725,226.98 Under processing Office building of Pang river 9,426,356.36 Under processing street, Big East District, Shenyang Office building of Kunming 5,432,239.86 Under processing Office building of Foshan 4,842,032.86 Under processing Office building of Changshu Has not obtained the state-owned land uses card, can not Konka Color TV etc. 1,826,104.32 to deal with house property card 14. Construction in progress (1) List of construction in progress Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Kunshan hotel 138,816,397.92 — 138,816,397.92 57,267,807.74 — 57,267,807.74 Kunshan 1,643,881.07 — 1,643,881.07 1,643,881.07 — 1,643,881.07 gallery Kunshan Jielunte new 4,801,714.50 — 4,801,714.50 29,459,670.93 — 29,459,670.93 factory 188 The 2015 Annual Report of Konka Group Co., Ltd. Wuhan Jielunte 31,032,889.26 — 31,032,889.26 18,304,006.73 — 18,304,006.73 factory construction Canteen project of the Tongchuang 4,035,058.76 — 4,035,058.76 — — — Industrial Park Chuzhou Jielu te factory 9,613,833.54 — 9,613,833.54 6,466,505.22 — 6,466,505.22 phase I construction Other small 17,910,405.83 — 17,910,405.83 46,463,012.40 — 46,463,012.40 projects Total 207,854,180.88 — 207,854,180.88 159,604,884.09 — 159,604,884.09 189 The 2015 Annual Report of Konka Group Co., Ltd. (2) Changes of significant construction in progress Amount that Amount that transferred to Other decreased amount Name o f item Estimated number Opening balance Increased amount transferred to intangible Closing balance fixed assets of the period of the period assets of the period Kunshan hotel 441,600,000.00 57,267,807.74 81,548,590.18 — — — 138,816,397.92 Kunshan 26,320,000.00 1,643,881.07 — — — — 1,643,881.07 gallery Kunshan Jielunte new 37,992,500.00 29,459,670.93 8,594,370.74 33,252,327.17 — — 4,801,714.50 factory Wuhan Jielunte 40,000,000.00 18,304,006.73 12,728,882.53 — — — 31,032,889.26 factory construction Canteen project of the 4,186,655.78 — 4,035,058.76 — — — 4,035,058.76 Tongchuang Industrial Park Chuzhou Jielut e factory phase — 6,466,505.22 3,147,328.32 — — — 9,613,833.54 I construction 190 The 2015 Annual Report of Konka Group Co., Ltd. Anhui Konka Electronic employee 21,049,600.00 — 20,508,465.44 20,508,465.44 — — — apartment building projects Other small — 46,463,012.40 20,490,246.57 22,435,053.07 10,621,478.28 15,986,321.79 17,910,405.83 projects Total 571,148,755.78 159,604,884.09 151,052,942.54 76,195,845.68 10,621,478.28 15,986,321.79 207,854,180.88 (Continued) Proportion estimated Of which: the amount of Accumulative amount Capitalization rate of the Project name of the project Project progress the capitalized interests of Capital resources of capitalized interests interests of the period accumulative input the period Kunshan gallery 6.25 6.25 — — — Self-owned fund Wuhan Jielunte factory 77.58 95.00 — — — Self-owned fund construction Canteen project of the 96.38 76.60 — — — Self-owned fund Tongchuang Industrial Park Chuzhou Jielute factory phase I — 90.00 — — — Self-owned fund construction 191 The 2015 Annual Report of Konka Group Co., Ltd. Anhui Konka Electronic employee apartment building 97.43 100.00 — — — Self-owned fund projects Loans to financial institutions Kunshan hotel 31.58 31.58 810,165.16 — — and self-owned fund 192 The 2015 Annual Report of Konka Group Co., Ltd. 15. Intangible assets (1) List of intangible assets Trademark Item Land use right Patent right registration Other Total expense I. Original book value 1.Opening balance 366,197,934.11 40,139,739.88 3,519,159.61 30,062,433.23 439,919,266.83 2. Increased amount of — 31,264.96 — 17,833,356.38 17,864,621.34 the period (1) Purchase — 31,264.96 — 7,211,878.10 7,243,143.06 (2) Transfer of project — — — 10,621,478.28 10,621,478.28 under construction 3.Decreased amount of — — — 9,800.00 9,800.00 the period (1) Disposal — — — 9,800.00 9,800.00 4.Closing balance 366,197,934.11 40,171,004.84 3,519,159.61 47,885,989.61 457,774,088.17 II. Accumulated amortization 1.Opening balance 40,380,243.37 32,123,987.40 3,364,176.89 13,523,645.98 89,392,053.64 2. Increased amount of 8,338,831.53 831,399.43 35,845.25 3,692,788.23 12,898,864.44 the period (1) Withdrawal 8,338,831.53 831,399.43 35,845.25 3,692,788.23 12,898,864.44 3.Decreased amount of — — — 9,800.00 9,800.00 the period (1) Disposal — — — 9,800.00 9,800.00 4.Closing balance 48,719,074.90 32,955,386.83 3,400,022.14 17,206,634.21 102,281,118.08 III. Depreciation reserves 1.Opening balance — 2,901,082.61 — — 2,901,082.61 2. Increased amount of — — — — — 193 The 2015 Annual Report of Konka Group Co., Ltd. the period (1) Withdrawal — — — — — 3.Decreased amount of — — — — — the period (1) Disposal — — — — — 4.Closing balance — 2,901,082.61 — — 2,901,082.61 IV. Book value 1. Closing book value 317,478,859.21 4,314,535.40 119,137.47 30,679,355.40 352,591,887.48 2. Opening book value 325,817,690.74 5,114,669.87 154,982.72 16,538,787.25 347,626,130.58 (2) Details of fixed assets failed to accomplish certification of land use right Item Book value Reason Mudangjiang electric appliances Left over by history etc. 3,153,608.13 (3) Other notes The land use right of book value of intangible assets of the Company’s subsidiary Kunshan Konka Electronic Co., Ltd. was RMB78, 094,958.58 which was pledged for long term loan of RMB63,876,957.13. 16. Goodwill (1) Original book value of goodwill Increased Decreased Formed from Name of the investees or the Opening balance the Closing balance events formed goodwill Other Dispose Other business combination Anhui Konka 3,597,657.15 — — — — 3,597,657.15 Total 3,597,657.15 — — — — 3,597,657.15 (2) The method of impairment test and impairment provision, see note 19, IV. (3) As of 31 Dec. 2015, there was no book value of goodwill higher than recoverable amount. 17. Long-term unamortized expenses Amortization Item Opening balance Increased amount Decrease Closing amount amount 194 The 2015 Annual Report of Konka Group Co., Ltd. Renovation costs 9,557,434.43 23,314,451.15 7,090,610.84 — 25,781,274.74 Shoppe expense 10,280,675.07 38,695,322.84 15,843,815.43 — 33,132,182.48 Other 5,954,695.56 24,334,874.47 6,356,045.18 — 23,933,524.85 Total 25,792,805.06 86,344,648.46 29,290,471.45 — 82,846,982.07 18. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income difference assets difference tax assets Assets impairment provision 682,074,474.66 160,938,084.03 680,584,889.73 168,852,965.21 Unrealized internal sales gain and loss 75,656,622.48 18,914,155.62 45,585,627.57 11,396,406.89 Accrued expenses 114,093,986.59 28,165,776.55 92,847,148.47 23,119,888.96 Deferred income 98,649,185.43 23,704,256.37 91,852,218.96 21,845,806.74 Deductible losses 1,223,305,795.11 295,093,235.44 137,205,313.83 34,301,328.46 Other 89,960,000.00 22,490,000.00 — — Total 2,283,740,064.27 549,305,508.01 1,048,075,198.56 259,516,396.26 (2) Lists of deferred income tax liabilities Closing balance Opening balance Item Deductible Deferred income tax Deductible temporary Deferred income tax temporary liabilities difference liabilities difference Accelerated depreciation of fixed 10,219,095.65 1,532,864.34 6,996,658.49 1,049,498.77 assets Change of fair value of trading financial assets 7,184,035.28 1,796,008.82 — — Change in fair value of available-for-sale 556,635.24 139,158.81 — — financial assets Total 17,959,766.17 3,468,031.97 6,996,658.49 1,049,498.77 (3) List of unrecognized deferred income tax assets Item Closing balance Opening balance 195 The 2015 Annual Report of Konka Group Co., Ltd. Deductible temporary difference 385,065,293.90 416,383,521.99 Deductible losses 1,162,480,889.15 525,234,499.08 Total 1,547,546,183.05 941,618,021.07 19. Other non-current assets Item Closing balance Opening balance Prepayment for land — 488,063,979.00 Total — 488,063,979.00 20. Assets impairment provision Withdrawn Decreased Item Opening balance impairment balance Closing balance Reverse Write-off at the period-begin I. Bad debt provision 327,064,296.70 218,323,037.39 6,090,644.27 1,620,508.79 537,676,181.03 II.Impairment of inventories 746,582,719.25 100,659,141.78 13,708,717.02 525,875,694.61 307,657,449.40 III. Impairment provision of the 2,766,139.07 2,912,785.64 681,139.07 — 4,997,785.64 available-for-s ale financial assets IV. Impairment provision of 63,309,175.75 29,860,644.19 — 55,261,599.62 37,908,220.32 the fixed assets V. Impairment provision of the intangible 2,901,082.61 — — — 2,901,082.61 assets VI. Long-term equity — 33,906,863.92 — — 33,906,863.92 investment Total 1,142,623,413.38 385,662,472.92 20,480,500.36 582,757,803.02 925,047,582.92 21. Short-term loans Category of short-term loans 196 The 2015 Annual Report of Konka Group Co., Ltd. Item Closing balance Opening balance Pledge loan — 10,000,000.00 Mortgage loan — — Guaranteed loan 1,196,103,036.53 1,563,972,365.24 Credit loan 2,954,670,159.23 3,571,740,071.67 Total 4,150,773,195.76 5,145,712,436.91 22. Notes payable Category Closing balance Opening balance Trade acceptance — 6,855,587.12 Bank acceptance bill 929,176,857.06 904,499,441.35 Total 929,176,857.06 911,355,028.47 Notes: RMB929, 176,857.06 will be due in next fiscal period. 23. Accounts payable (1) List of accounts payable Item Closing balance Opening balance Within 1 year 2,806,965,708.04 3,065,357,903.95 1 to 2 years 126,958,011.57 58,683,458.20 2 to 3 years 28,320,658.56 1,259,084.44 Over 3 years 18,172,605.08 19,107,987.34 Total 2,980,416,983.25 3,144,408,433.93 (2) Notes of the accounts payable aging over one year Item Closing balance Unpaid/ Un-carry-over reason Interior decoration 13,804,404.30 Unsettled Exterior components 5,038,769.40 Unsettled Building projects 2,902,005.96 Unsettled Total 21,745,179.66 24. Advance from customers (1) List of advance from customers 197 The 2015 Annual Report of Konka Group Co., Ltd. Item Closing balance Opening balance Within 1 year 308,012,574.61 275,288,665.86 1 to 2 years 21,697,745.80 11,520,332.44 2 to 3 years 5,825,837.33 1,574,348.73 Over 3 years 14,248,649.58 14,521,106.83 Total 349,784,807.32 302,904,453.86 (2) Significant advance from customers aging over one year was prepayment of goods undelivered. (3) Advance receipts of houses Item Closing balance Opening balance Shuiyue Zhouzhuang Project(Phase I) 15,387,876.00 81,228,984.00 Shuiyue Zhouzhuang Project(Phase II) 8,542,534.36 13,509,507.91 合计 23,930,410.36 94,738,491.91 25. Payroll payable (1) List of Payroll payable Item Opening balance Increased Decreased Closing balance I. Short-term salary 296,701,946.79 1,624,244,622.09 1,649,465,363.42 271,481,205.46 II. Post-employment 2,562,794.26 137,657,181.47 137,761,396.48 2,458,579.25 benefit-defined contribution plans III. Termination benefits 7,974.00 10,701,417.05 5,017,917.05 5,691,474.00 IV. Other benefits due within one — — — — year Total 299,272,715.05 1,772,603,220.61 1,792,244,676.95 279,631,258.71 (2) List of Short-term salary Item Opening balance Increased Decreased Closing balance 1. Salary, bonus, allowance, subsidy 288,171,641.38 1,435,260,071.96 1,461,273,188.12 262,158,525.22 2. Employee welfare 1,111,472.13 62,543,230.95 62,397,521.82 1,257,181.26 3. Social insurance 1,526,026.37 63,685,606.33 63,274,297.61 1,937,335.09 198 The 2015 Annual Report of Konka Group Co., Ltd. Including: 1. Medical 1,285,679.34 53,414,120.10 53,306,965.10 1,392,834.34 insurance premiums Work-related injury 91,233.21 5,406,091.01 5,394,781.15 102,543.07 insurance Maternity insurance 149,113.82 4,865,395.22 4,572,551.36 441,957.68 4. Housing fund 1,504,548.35 33,021,559.27 33,029,409.53 1,496,698.09 5. Labor union budget and employee education budget 4,388,258.56 13,023,907.35 13,192,266.36 4,219,899.55 6.Short-term absence with — — — — payment 7. Short-term profit sharing — — — — plan 8. Other — 16,710,246.23 16,298,679.98 411,566.25 Total 296,701,946.79 1,624,244,622.09 1,649,465,363.42 271,481,205.46 (3) List of drawing scheme Item Opening balance Increased Decreased Closing balance Basic pension benefits 2,437,546.24 130,593,613.81 130,901,578.79 2,129,581.26 Unemployment insurance 125,248.02 7,063,567.66 6,859,817.69 328,997.99 Annuity — — — — Total 2,562,794.26 137,657,181.47 137,761,396.48 2,458,579.25 The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on, according to the scheme, the Company monthly pay to the scheme in line with requirements of local government, except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred was recorded into current profits and losses or related assets costs. 26. Taxes payable Item Closing balance Opening balance VAT 13,316,492.43 24,559,393.58 Corporate income tax 15,106,336.81 42,937,116.01 Business tax 2,049,531.99 1,680,131.18 199 The 2015 Annual Report of Konka Group Co., Ltd. Urban maintenance and construction tax 1,392,874.16 801,349.04 Personal income tax 5,468,489.97 4,086,658.32 Education Surcharge 939,576.85 548,155.02 Flood control fund, fund for embankment, fund for water 2,220,266.89 1,286,346.53 conservancy and fund for river management Fund for disposing abandoned appliances and electronic 21,403,104.00 19,694,608.00 products Other 32,843,695.16 14,320,831.81 Total 92,097,951.90 112,557,005.85 27. Interest payable Item Closing balance Opening balance Loan interests 20,552,763.14 22,872,418.43 Total 20,552,763.14 22,872,418.43 28. Other accounts payable (1) Other accounts payable listed by nature of the account Item Closing balance Opening balance Accrued expenses 958,366,586.73 862,532,739.03 Margin 228,909,206.83 253,375,271.47 Intercourse funds 172,797,449.90 100,800,186.16 Payment on behalf 10,769,352.74 50,527,321.48 Other 180,088,977.15 109,567,862.89 Total 1,550,931,573.35 1,376,803,381.03 (2) Other significant accounts payable with aging over one year Item Closing balance Unpaid/ Un-carry-over reason Shanghai Shensy Logistics Co., Ltd. 3,800,000.00 Margin Ningbo Huacai Electric Appliance Co., Ltd. 3,031,041.94 Guarantee money of operation Shanghai Yongxin Color CRT Ltd. Co., Ltd. 2,075,485.15 Margin Total 8,906,527.09 200 The 2015 Annual Report of Konka Group Co., Ltd. 29. Non-current liabilities due within 1 year Item Closing balance Opening balance Long-term loans due within 1 year(Note: 30) 573,341,856.11 — Long-term loans due within 1 year(Note: 31) 57,103.54 1,525,465.53 Total 573,398,959.65 1,525,465.53 30. Long-term loan Item Closing balance Opening balance Mortgage loan 63,776,957.13 51,976,957.13 Guaranteed loan 23,700,000.00 — Credit loan 509,564,898.98 905,564,253.39 Less: long-term loans due within 1 year(Note: 29) 573,341,856.11 — Total 23,700,000.00 957,541,210.52 Notes: the mortgage asset category and amount of mortgage loan see Notes 54. 31. Long-term payable Item Closing balance Opening balance Chuzhou Tongchuang Jianshe Investment Co., Ltd. 30,000,000.00 30,000,000.00 Accrued financial lease outlay 190,436.91 1,555,455.63 Less: Expired part due within 1 year (Note: 29) 57,103.54 1,525,465.53 Total 30,133,333.37 30,029,990.10 32. Long term payroll payable (1) List of long term payroll payable Item Closing balance Opening balance I. Termination benefits-net liabilities of defined contribution 23,435,856.86 plans 28,554,734.16 II. Termination benefits — — III. Other long term welfare — — Total 23,435,856.86 28,554,734.16 (2) Changes of defined benefit plans 201 The 2015 Annual Report of Konka Group Co., Ltd. ① Present worth of defined benefit plans obligation: Item Reporting period Last period I. Opening balance 28,554,734.16 — II. Defined benefit cost recorded into current profits and 28,554,734.16 losses — 1. Current service cost — 5,140,521.34 2. Previous service cost — 23,200,807.83 3. Settlement gains (loss “－”) — — 4. Net interest — 213,404.99 III. Other changes 5,118,877.30 — 1. Consideration of settlement of payment — — 2.Welfare had paid 5,118,877.30 — Balance at year- end 23,435,856.86 28,554,734.16 ②Notes to the influence of the content and related risk of defined benefit plans to the future cash flows, time and uncertainty of the Company: Due to upgrading and reconstruction of current work sites of the subsidiary, communication technology, it is to adjust the labor relations according to Implementation Measures for Accompanying Employees in manufacturing system of Shenzhen Konka Communication Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and voluntary selection, Communication Technology provides early retirement plans for senior employees (employed before December 31, 1990 and signed non-fixed term labor contract with the Company or Communication Technology). The accumulative compensation paid to the internal early retirement pensions in future year is RMB34,931,714.55, the Company in line with Agreement of Internal Early Retirement Pension, in line with the standard of salary remaining the same, turnover rate of 0, the mortality rate of, fix standard of social security base payment remaining the same to test the present worth of defined benefit plans. The actual payment for the employee is influence by the actual turnover rate, death rate and the changes of minimum cardinality of social security. ③ Notes to analysis results of actuarial assumptions and sensibility of defined benefit plans Major assumptions estimated Period-end of reporting period Period-end of last period Discount rate Treasury bond rate in same period — 202 The 2015 Annual Report of Konka Group Co., Ltd. Death rate 0% — Expected life expectancy Over legal emeritus age — Expected compensation growth rate 0% — 33. Accrued liabilities Item Opening balance Closing balance Formation reasons Pending litigation — 4,629,554.61 litigation Total — 4,629,554.61 34. Deferred income Formation Item Opening balance Increased Decreased Closing balance reasons Government subsidies 147,315,999.02 40,689,403.00 25,219,397.82 162,786,004.20 Amortization Total 147,315,999.02 40,689,403.00 25,219,397.82 162,786,004.20 203 The 2015 Annual Report of Konka Group Co., Ltd. Of which, items involved in government subsidies: Amount of newly Amount accrued in Related to the assets/ Item Opening balance Other changes Closing balance subsidy non-business income income Subsidies for equipment engineering and 17,550,000.00 — 3,510,000.00 — 14,040,000.00 Related to the assets technology Smart TV industry chain of Konka Group 12,800,000.00 — — — 12,800,000.00 Related to the assets Co., Ltd. Compensation for infrastructure 11,550,000.00 — — — 11,550,000.00 Related to the assets construction of Jielunte Supporting the next generation Internet 8,508,737.85 — — 600,000.00 7,908,737.85 Related to the assets intelligent terminal system research projects Fund for flat panel display industry in year 6,499,999.94 — 2,000,000.04 — 4,499,999.90 Related to the assets 2008 R&D of mating core chip based on the 5,620,000.00 — — — 5,620,000.00 Related to the assets terminal of AVS/DRA R&D and industrialization of new-type smart television with man-machine 5,256,893.21 — — — 5,256,893.21 Related to the assets interaction Key technology and industrialization of 4,750,000.01 — 999,999.96 — 3,750,000.05 Related to the assets LED Backlight of flat TV set 204 The 2015 Annual Report of Konka Group Co., Ltd. Industrialization project of large size liquid 4,400,000.00 — 2,400,000.00 — 2,000,000.00 Related to the assets crystal display module (LCM) Special Fund of Strategic Emerging Industry 4,200,000.00 — 600,000.00 — 3,600,000.00 Related to the assets of Dongguan Financial Bureau R&D and industrialization of large size 3,600,000.00 — 2,400,000.00 — 1,200,000.00 Related to the assets liquid crystal display module Funds for provincial scientific and technological innovation and special 3,000,000.00 — 521,739.12 — 2,478,260.88 Related to the assets guidance of achievements transfer of 2010 Special fund for 2010-2012 provincial 2,940,000.00 — 383,333.34 — 2,556,666.66 Related to the assets finance industrial technology R&D and industrialization of integrated 2,869,999.89 — 1,640,000.04 — 1,229,999.85 Related to the assets DTMB Government grant for Qianhai Project 2,800,000.00 — - — 2,800,000.00 Related to the assets Machine module integration subsidy 2,775,000.00 — 300,000.00 — 2,475,000.00 Related to the assets Supporting the research and development and industrialization of synergy 2,600,000.00 — — — 2,600,000.00 Related to the assets internet-connected digital products TV application oriented and embedded 2,470,000.00 — — — 2,470,000.00 Related to the assets operating system development 205 The 2015 Annual Report of Konka Group Co., Ltd. Industrialization technological transformation of large precise multi-color 2,259,541.37 — 349,620.44 — 1,909,920.93 Related to the assets injection mold based on green Manufacturing Research instruments subsidies 2,068,933.33 — 420,800.04 — 1,648,133.29 Related to the assets R&D and industrialization of new-type terminal application service system of 2,050,000.00 — 600,000.00 — 1,450,000.00 Related to the assets internet Research and development and industrialization of Dual channel new 3 D 2,030,000.00 — — — 2,030,000.00 Related to the assets smart TV Supporting triple play smart TV and system 2,000,000.00 — 133,333.32 - 1,866,666.68 Related to the assets support platform Shenzhen Finance Committee Konka Group — 8,170,000.00 — — 8,170,000.00 Related to the assets Smart TV Industry Project Konka next generation multimedia terminal technology engineering laboratory — 5,000,000.00 — — 5,000,000.00 Related to the assets project Special fund for Scientifically Create — 4,500,000.00 — — 4,500,000.00 Related to the assets Committee technology PR project 206 The 2015 Annual Report of Konka Group Co., Ltd. Mobile intelligent terminal new application — 4,000,000.00 — — 4,000,000.00 Related to the assets service system Economic, trade and information commission, 2015 Shenzhen Industrial — 3,000,000.00 — — 3,000,000.00 Related to the assets Design Center subsidy Deferred income-mobile intelligent terminal — 2,400,000.00 — — 2,400,000.00 Related to the assets information security system key Lean manufacturing execution system comprehensive integrated innovation — 2,000,000.00 — — 2,000,000.00 Related to the assets projects Other 21,146,588.06 11,619,403.00 5,254,856.87 — 27,511,134.19 Related to the assets Subtotal 135,745,693.66 40,689,403.00 21,513,683.17 600,000.00 154,321,413.49 Other 11,570,305.36 — 3,105,330.17 384.48 8,464,590.71 Related to the income Subtotal 11,570,305.36 — 3,105,330.17 384.48 8,464,590.71 Total 147,315,999.02 40,689,403.00 24,619,013.34 600,384.48 162,786,004.20 35. Share capital Increase/decrease in reporting period (+, -) Item Opening balance Newly issue Bonus Capitalization of Subtot Closing balance Other share shares public reserves al 207 The 2015 Annual Report of Konka Group Co., Ltd. The sum of shares 1,203,972,704.00 — — 1,203,972,704.00 — — 2,407,945,408.00 In line with the stipulations of the revision of the article of association and Resolution of the First Special Meeting of Shareholders , the Company applied to increase registration capital RMB1,203,972,704.00, which all increased by capital reserve, the registration capital after change was RMB2,407,945,408.00 On 28 Jan. 2016, the Company finished the change of industrial and commercial registration, the share number after change was 2,407,945,408 shares. 36. Capital reserves Item Opening balance Increased Decreased Closing balance Capital premium 1,211,366,082.55 — 1,203,972,704.00 7,393,378.55 Other capital reserves 78,037,481.44 194,822.54 7,416,147.34 70,816,156.64 Total 1,289,403,563.99 194,822.54 1,211,388,851.34 78,209,535.19 Note: the Capital reserve transfer into share capital which lead to the decrease of Capital premium of RMB1,203,972,704.00; due to the purchase of 49% of minority shareholder's equity of subsidiary Boluo Konka which lead to other capital reserve decreased RMB7,416,147.34. 37. Other comprehensive income Reporting period Less: Amount transferred into profit and loss in the After-tax Amount After-tax attribute Item Opening balance current period that Less: income tax attribute to Closing balance incurred before to the parent recognized into other expense minority income tax company comprehensive income in shareholder prior period 208 The 2015 Annual Report of Konka Group Co., Ltd. I. Other comprehensive income cannot be reclassified into profits and losses in — — — — — — — future II. Other comprehensive reclassified into profits or — — — — — — — losses Of which: other comprehensive income as per equity method recognized — — — — — — — into profit and loss in future Profits or losses of change in fair value of available-for-sale financial 516,457.28 1,237,774.30 — 309,443.57 928,330.73 — 1,444,788.01 assets Converted difference of the foreign currency 15,655,020.63 -13,342,795.45 — — -13,944,064.64 601,269.19 1,710,955.99 financial statement total 16,171,477.91 -12,105,021.15 — 309,443.57 -13,015,733.91 601,269.19 3,155,744.00 38. Surplus reserves Item Opening balance Increased Decreased Closing balance Statutory surplus reserves 593,846,200.71 — — 593,846,200.71 Discretionary surplus reserves 254,062,265.57 — — 254,062,265.57 Total 847,908,466.28 — — 847,908,466.28 209 The 2015 Annual Report of Konka Group Co., Ltd. Notes: Based on the regulations of the Corporation Law and Constitution, the Company should withdraw 10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the statutory surplus reserves exceeded the 50% of the registered capital, the Company could no more withdraw. The Company, after withdraw statutory surplus reserves, can withdraw discretional surplus reserves, in line with the approval, the discretional surplus reserves can be used for making up losses in previous year or increase share capital. 210 The 2015 Annual Report of Konka Group Co., Ltd. 39. Retained profits Item Reporting period Same period of last year Opening balance of retained profits before adjustments 746,022,758.89 737,991,722.40 Total opening balance of retained profits before adjustments — -32,552,764.33 (increase+, decrease -) Opening balance of retained profits after adjustments 746,022,758.89 705,438,958.07 Add: Net profit attributable to owners of the Company -1,256,819,314.51 52,623,527.86 Less: Withdrawal of statutory surplus reserves — — Withdrawal of discretional surplus reserves — — Dividend of common stock payable 12,039,727.04 12,039,727.04 Dividend of common stock transfer into share capital — — Closing retained profits -522,836,282.66 746,022,758.89 40. Revenues and operating costs 1. Revenue and Cost of Sales Reporting period Last period Item Revenue Operating costs Revenue Operating costs Main operations 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80 Other operations 1,133,878,632.78 1,035,913,710.44 348,098,528.39 264,123,293.65 Total 18,395,177,035.98 16,055,497,185.62 19,423,488,994.07 16,733,746,581.45 (2) Main operations (Classified by product) Reporting period Same period of last year Product Operation revenue Operation cost Operation revenue Operation cost Color TV business 12,590,931,785.71 11,006,357,581.37 14,697,422,135.45 12,516,818,815.26 Mobile phone 1,587,898,794.07 1,443,167,712.05 790,942,197.54 748,974,690.95 business Consumer 1,277,294,037.34 1,106,574,443.35 1,569,786,771.56 1,276,893,910.52 appliances business Other 2,309,637,648.39 1,987,357,292.34 1,512,775,498.82 1,403,062,317.14 211 The 2015 Annual Report of Konka Group Co., Ltd. Total 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80 (3) Main operations (Classified by area) Reporting period Same period of last year Area Operation revenue Operation cost Operation revenue Operation cost Domestic sales 11,332,127,336.67 9,430,634,537.03 14,362,851,294.58 11,986,596,367.77 Overseas sales 5,929,171,066.53 5,588,948,938.15 4,712,539,171.10 4,483,026,920.03 Total 17,261,298,403.20 15,019,583,475.18 19,075,390,465.68 16,469,623,287.80 (4) The revenue of sales from the top five customers Proportion of total business revenue Period Main operation revenue (%) Y 2015 3,298,880,853.29 17.93 Y 2014 3,303,518,733.47 17.01 41. Business tax and surcharges Item Reporting period Last period Business tax 25,434,795.00 15,402,472.92 Urban maintenance and construction tax 31,858,403.10 25,484,992.48 Education Surcharge 13,911,746.90 11,910,616.10 Land VAT 12,908,502.64 — Local education surtax 9,615,001.74 7,161,448.26 Other 794,949.52 568,118.74 Total 94,523,398.90 60,527,648.50 Notes: the measurement standards of business tax and surcharges see Notes V. Tax 42. Sales expenses Item Reporting period Last period Salary 637,502,858.56 670,761,003.35 Promotional activities 422,601,760.68 342,953,340.20 Warranty fee 358,821,827.56 290,826,277.64 Logistic Fee 326,633,784.28 330,079,606.13 Advertising expense 266,849,899.18 323,941,757.16 Social security charges 99,423,394.48 80,653,020.90 212 The 2015 Annual Report of Konka Group Co., Ltd. Taxes and fund 73,865,498.94 86,628,594.20 Business travel charges 39,697,519.90 48,775,736.17 Rental charges 29,615,957.91 35,041,860.70 Employee welfare 19,492,036.66 21,422,207.70 Other 173,833,011.28 183,384,783.58 Total 2,448,337,549.43 2,414,468,187.73 43. Administrative expenses Item Reporting period Last period R&D expenses 229,397,281.19 219,325,677.28 Salary 174,464,266.91 165,516,874.48 Taxes and fund 36,087,894.16 29,473,516.24 Depreciation charge 33,156,228.75 31,483,976.08 Patent fee 22,836,537.65 20,976,257.96 Business entertainment expense 19,758,529.99 20,417,348.49 Social security charges 21,808,406.79 20,801,921.11 Business travel charges 13,515,296.14 16,121,368.20 Consulting fees 12,627,143.05 14,309,273.25 Employee welfare 11,611,229.54 14,359,210.35 Water & electricity fees 10,417,929.04 6,860,965.30 Labor-union expenditure 7,429,275.36 4,239,879.20 Other 102,620,995.02 123,044,105.56 Total 695,731,013.59 686,930,373.50 44. Financial expenses Item Reporting period Last period Interest expenses 165,242,581.67 143,547,683.34 Less: Interest income 58,996,071.96 52,265,939.36 Exchange gains and losses 228,619,830.03 35,174,225.81 Other 15,749,983.81 6,307,854.67 Total 350,616,323.55 132,763,824.46 213 The 2015 Annual Report of Konka Group Co., Ltd. 45. Asset impairment loss Item Reporting period Last period Bad debt loss 212,232,393.12 13,263,816.09 Inventory falling price loss 86,950,424.76 76,797,683.87 Impairment losses of available-for-sale 200,000.00 2,912,785.64 financial assets Impairment losses of long-term equity 33,906,863.92 investment Fixed assets impairment losses 29,860,644.19 51,277,269.97 Total 365,863,111.63 141,538,769.93 46. Gains on the changes in the fair value Source Reporting period Last period Financial assets measured by fair value and the changes be included in 32,591,836.13 — the current profits and losses Of which, gains on the changes in the fair value of derivative financial 32,591,836.13 — instruments Total 32,591,836.13 — 47. Investment income Item Reporting period Last period Long-term equity investment income accounted by equity method -18,793,708.66 -7,901,784.31 Investment income arising from disposal of long-term equity — 592,466,874.00 investments Investment income received from holding of available-for-sale 2,212,535.21 48,104.52 financial assets Investment income received from disposal of available-for-sale 48,859.12 — financial assets Equity investment income after losing control 8,290,862.30 — Income from trust management 21,816,104.80 12,260,439.18 Total 13,574,652.77 596,873,633.39 214 The 2015 Annual Report of Konka Group Co., Ltd. 48. Non-operating gains The amount included in the current Item Reporting period Last period non-recurring gains and losses Total gains from disposal of non-current assets 1,431,893.68 4,740,033.90 1,431,893.68 Including: Gains from disposal of fixed assets 1,431,893.68 4,740,033.90 1,431,893.68 Gains from disposal of intangible assets — — — Government grants ( Details, see the statement 138,975,824.71 230,797,272.53 71,499,330.11 below, lists of government subsidies ) Income from compensation 4,620,972.98 3,459,744.68 4,620,972.98 Penalty income 5,753,390.97 5,782,597.32 5,753,390.97 Other 7,756,214.66 14,097,774.58 7,756,214.66 Total 158,538,297.00 258,877,423.01 91,061,802.40 Of which, government subsidies recorded into current profits and losses Related to the assets/ Item Reporting period Same period of last year income Deferred income 24,619,013.34 22,809,163.30 See note VI. 34 Software tax returns 67,476,494.60 155,396,179.33 Related to the income Financial Discounts 16,697,890.80 17,587,747.00 Related to the income Government financing 3,713,042.00 2,699,350.00 Related to the income The L/C export subsidies 2,711,014.00 1,248,573.00 Related to the income Post allowance 4,108,800.00 3,079,200.00 Related to the income Awards and subsidies 15,018,153.38 17,625,000.00 Related to the income Other 4,631,416.59 10,352,059.90 Related to the income Total 138,975,824.71 230,797,272.53 49. Non-operating expenses The amount included in Item Reporting period Last period the current non-recurring 215 The 2015 Annual Report of Konka Group Co., Ltd. gains and losses Loss on disposal of non-current assets 12,339,287.69 9,752,806.72 12,339,287.68 Including: Loss on disposal of fixed 12,339,287.69 9,752,806.72 12,339,287.68 assets Losses from disposal of intangible assets — — — Compensation expenses 17,094,119.09 — 17,094,119.09 Penalty expenses 1,224,158.89 511,646.80 1,224,158.89 External donation expenses 1,449,348.77 3,697,606.64 1,449,348.77 Refundable energy saving government 89,960,000.00 — 89,960,000.00 subsidy Other 12,713,996.13 2,922,922.55 12,713,996.14 Total 134,780,910.57 16,884,982.71 134,780,910.57 50. Income tax expense (1) Lists of income tax expense Item Reporting period Last period Current income tax expense 18,057,113.35 71,765,293.53 Deferred income tax expense -287,680,022.11 -39,910,310.51 Total -269,622,908.76 31,854,983.02 (2) Adjustment process of accounting profit and income tax expense Item Reporting period Total profits -1,545,467,671.41 Current income tax expense accounted by tax and relevant regulations -386,366,917.85 Influence of different tax rate suitable to subsidiary 44,915,029.68 Influence of income tax before adjustment -4,164,118.82 Influence of non taxable income -498,815.77 Influence of not deductable costs, expenses and losses 10,540,085.18 Influence of deductable losses of deferred income tax assets derecognized used in -57,071,289.45 previous period 216 The 2015 Annual Report of Konka Group Co., Ltd. Influence of deductible temporary difference or deductible losses of deferred income tax 137,397,674.39 assets derecognized in reporting period. Changes of the balance of deferred income tax assets/ liabilities in previous period due to — adjustment of tax rate Influence of plus deducting costs -14,374,556.12 Income tax expense -269,622,908.76 51. Other comprehensive income See notes VI. 37 52. Supplementary information to cash flow statement (1) Other cash received relevant to operating activities Item Reporting period Last period Intercourse funds 144,699,799.50 111,968,538.65 Income from government subsidy 87,460,993.66 94,150,553.85 Bargain money and deposit 72,231,723.07 71,752,956.44 Interest income from bank deposits 51,113,129.24 53,255,954.05 Income from waste 17,420,360.55 19,084,574.26 Insurance indemnity income 34,877,755.30 12,433,636.17 Repayment of individual borrowing 9,781,562.99 9,278,645.25 Income from fine and penalty 3,098,865.44 1,678,292.56 Temporary received repair fund 1,284,765.81 1,672,413.78 Other 21,717,469.18 16,443,717.32 Total 443,686,424.74 391,719,282.33 (2) Other cash paid relevant to operating activities Item Reporting period Last period Expense for cash payment 963,497,935.43 945,208,628.95 Payment for pledges, guarantee and repair 113,287,169.86 128,466,550.07 Expense for bank handling charges 13,440,138.47 17,130,320.70 Employee reserve fund 30,468,528.61 20,729,008.95 217 The 2015 Annual Report of Konka Group Co., Ltd. Payment made on behalf 16,001,436.93 25,310,052.38 Donation expense 1,481,651.00 3,965,934.40 Compensation expense 13,036,082.41 189,014.66 Other expense 34,076,092.32 37,984,944.96 Total 1,185,289,035.03 1,178,984,455.07 (3) Other cash received relevant to investment activity Item Reporting period Last period Received financial product 3,152,200,000.00 2,422,400,000.00 Interest of land fund 488,063,979.00 — Purchase of new share 6,650,870.00 — Interest of equity transfer — 2,472,043.31 Total 3,646,914,849.00 2,424,872,043.31 (4) Other cash paid relevant to investment activity Item Reporting period Last period Purchase of financial product 3,651,700,000.00 2,422,900,000.00 Entrust loans — 50,000,000.00 Purchase of new share and capital transfer out 6,650,870.00 — Other 150,398.22 183,497.35 Total 3,658,501,268.22 2,473,083,497.35 (5) Other cash received relevant to financing activities Item Reporting period Last period Receipt and return of pledged RMB fixed deposits upon maturity 118,098,914.34 576,549,112.55 Other 11,555.55 408,029.15 Total 118,110,469.89 576,957,141.70 (6) Other cash paid relevant to financing activities Item Reporting period Last period Pledged margin deposit 161,850,987.97 579,030,740.04 Financing lease — 1,755,444.00 218 The 2015 Annual Report of Konka Group Co., Ltd. Financing cost 14,543,722.06 42,712,205.12 Total 176,394,710.03 623,498,389.16 53. Supplementary information to cash flow statement (1) Information of net profit to net cash flows generated from operating activities Supplementary materials Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated from operating activities Net profit -1,275,844,762.65 60,524,699.17 Add: Provision for impairment of assets 365,863,111.63 141,538,769.93 Depreciation of fixed assets, of oil-gas assets, of productive biological assets 162,114,374.61 145,659,620.62 Amortization of intangible assets 12,898,864.44 11,917,420.27 Long-term unamortized expenses 29,290,471.45 7,001,981.43 Losses on disposal of fixed assets, intangible assets and other long-term assets (gains: negative) 10,907,394.01 5,012,772.82 Losses on retirement of fixed assets — — Losses from variation of fair value -32,591,836.13 — Financial cost (gains: negative) 393,862,411.70 177,835,011.99 Investment loss (gains: negative) -13,574,652.77 -596,873,633.39 Decrease in deferred income tax assets (gains: negative) -289,789,111.75 -40,787,656.85 Increase in deferred income tax liabilities (“-” means decrease) 2,418,533.20 1,049,498.77 Decrease in inventory (gains: negative) 934,969,912.29 -290,565,252.54 Decrease in accounts receivable from operating activities (gains: negative) 1,198,719,245.19 -196,522,570.90 Increase in payables from operating activities (decrease: negative) -209,643,472.57 -66,175,843.37 Other — — Net cash flows generated from operating activities 1,289,600,482.65 -640,385,182.05 2. Investing and financing activities that do not involving cash receipts and payment: Liabilities transfer into capital — — Company bonus convertible due within one year — — 219 The 2015 Annual Report of Konka Group Co., Ltd. Fix assets under financing lease — — 3. Net increase in cash and cash equivalents Closing balance of cash 1,488,154,851.35 1,640,236,837.08 Less: Opening balance of cash 1,640,236,837.08 1,771,489,421.21 Add: Closing balance of cash equivalents — — Less: Opening balance of cash equivalents — — Net increase in cash and cash equivalents -152,081,985.73 -131,252,584.13 (2) Cash and cash equivalents Item Closing balance Opening balance I. Cash 1,488,154,851.35 1,640,236,837.08 Including: Cash on hand 4,217.37 5,118.98 Bank deposit on demand 1,488,150,633.98 1,640,231,718.10 II. Cash and cash equivalents — — Of which: Bond investment due within three months — — III. Closing balance of cash and cash equivalents 1,488,154,851.35 1,640,236,837.08 Notes: the cash and cash equivalents exclude the restricted cash and cash equivalents the Company and the subsidiaries of the Group used. 54. The assets with the ownership or use right restricted Item 1. Closing book value Restricted reason Subtotal of assets for guarantee 78,094,958.58 On 12 Aug. 2013 the Company’s subsidiary Kunshan Kangsheng Investment Development Co., Ltd. signed Fixed Assets Loan Contract with CCB, Kunshan Branch, which agreed that the maximum loan of secure claims of the Intangible assets 78,094,958.58 contract was RMB 150 million, mortgaged the land used right of CKGY(2013 No. 1201211700. As of 31 Dec. 2015, the aforesaid book value of land use right of RMB78, 094,958.58 (original book value RMB 88,201,364.97) was pledged for obtaining long term loan of RMB63, 776,957.13. Subtotal of assets with the ownership or use right restricted form by other 1,664,483,435.15 reason: 220 The 2015 Annual Report of Konka Group Co., Ltd. Each margin deposit for security cannot be withdrawn at any Other monetary funds 218,292,077.57 time and Regular financial account. Notes receivable 1,446,191,357.58 Pledged in the bank for note financing Total 1,742,578,393.73 55. Foreign currency monetary items Foreign currency monetary items Closing foreign currency Closing convert to RMB Item Exchange rate balance balance Monetary capital 601,848,577.11 Including: USD 91,424,349.59 6.49360 593,673,156.50 EUR 46,703.40 7.09520 331,369.96 IDR 2,826,943,665.57 0.00047 1,328,663.52 GBP 1.32 9.61590 12.69 HKD 7,776,951.51 0.83778 6,515,374.44 Account receivable 815,878,908.86 Including: USD 125,008,637.60 6.49360 811,756,089.12 IDR 7,287,324.02 0.00047 3,425.04 HKD 4,636,217.64 0.83778 3,884,130.41 AUD 49,764.00 4.72760 235,264.29 Other accounts receivable 8,146,444.07 Including: USD 1,215,678.35 6.49360 7,894,128.93 EUR 26,524.37 7.09520 188,195.71 IDR 60,296.30 0.00047 28.34 HKD 76,501.10 0.83778 64,091.09 Accounts payable 210,433,968.02 Including: USD 14,776,344.13 6.4936 95,951,668.24 IDR 2,783.20 7.09520 19,747.36 HKD 136,626,026.43 0.83778 114,462,552.42 221 The 2015 Annual Report of Konka Group Co., Ltd. Short-term loans 1,757,449,703.28 Including: USD 223,060,815.74 6.49360 1,448,467,713.09 EUR 43,548,031.09 7.09520 308,981,990.19 VII. Changes of merge scope 1. The disposal of subsidiary Single disposal of investment to subsidiary that losing control The differences enjoyed of net assets share of the Equity subsidiary in The equity Method of Recognition basis of disposal Time of losing corresponding Name of the subsidiary disposal equity the time of losing proportion control consolidated statements price disposal control (%) between the disposal of price and the disposal of investment Cancellation Konka (Nanhai) — 100.00 Cancel 2015-2-9 procedure was -491,110.76 Development Center completed (Continued) Amount related to Residual Book value Fair value of Profits or Recognition method other comprehensive equity of residual residual losses of and main assumption income transfer into proportion equity on equity on residual equity Name of the subsidiary on the date of fair value of investment profits the date of the date of recalculated residual equity on the or loss of original of losing losing losing in line with date of losing control subsidiary equity control (%) control control fair value investment Konka (Nanhai) — — — — — — Development Center 2. Other reasons for the changes in combination scope (1) Shenzhen Konka Precision Mold Manufacturing Co., Ltd and Mansfield Technology (Taiwan) Co., Ltd, our subsidiaries contributed capital jointly and founded Anhui Jiasen Precision Technology Co., Ltd on December 22, 2014. Its registered capital was RMB20 million, and it was paid in full amount by all the stockholders by September 30, 2015. In it, Shenzhen Konka Precision Mold Manufacturing Co., Ltd subscribed to RMB1.02 million, which occupied 51% of the registered capital by means of contribution in currency, Mansfield Technology (Taiwan) Co., Ltd subscribed to RMB9.80 million, which occupied 49% of the registered capital by means of contribution in RMB. 222 The 2015 Annual Report of Konka Group Co., Ltd. (2)The Company contributed capital with Shenzhen Kaikai Shijie Investment Partnership Enterprise (limited partnership) jointly and founded Anhui Kakai Shijie E-Commerce Co., Ltd on December 29, 2014, with a registered capital of RMB20 million. In it, the Company contributed RMB16 million, which occupied 80% of the registered capital. Shenzhen Kaikai Shijie Investment Partnership Enterprise (limited partnership) contributed RMB4.0 million, which occupied 20% of the registered capital. The Company has right of control over it, and included it into its merger scope from 1 Jan. 2015. (3) The Company contributed capital with Shenzhen Yizhonghui Technology Co., Ltd and Shenzhen Yizhonghe Technology Co., Ltd jointly and founded Shenzhen Yipingfang Network Technology Co., Ltd, with a registered capital of RMB20 million on January 9, 2015. In it, the Company contributed RMB19.20million, which occupied 96% of the registered capital, the other stockholders contributed RMB800, 000, which occupied 4% of the registered capital, but the capital had not been contributed by the date of the balance sheet. The Company has right of control over it, and included it into its merger scope from 12 Jan. 2015. (4)The Company contributed capital with OCT Group jointly and founded Shenzhen Kangqiaojiacheng Property Investment Co., Ltd, with a registered capital of RMB10 billion on January 9, 2015, which will be paid in full amount by all the stockholders by December 31, 2019. In it, the Company subscribed to RMB700 million by means of contribution in RMB, which occupied 70% of the registered capital, OCT Group contributed to RMB300 million by means of contribution in RMB, which occupied 30% of the registered capital. By the date of the balance sheet, the Company contributed RMB112 million, which occupied 11.20% of the registered capital; OCT Group contributed RMB48 million, which occupied 4.8% of the registered capital. The Company has right of control over it, and included it into its merger scope from 19 Jan. 2015. (5) Kangdian Investment Development Co., Ltd, a subsidiary of the Company, contributed capital jointly with KK Orient Limited and founded Konka Smarttech Limited on January 21, 2015, with a registered capital of HK$10million. In it, Kangdian Investment Development Co., Ltd contributed HK$6.10 million, which occupied 61% of the registered capital and Konka Smarttech Limited contributed HK$3.90 million, which occupied 39% of the registered capital. The Company has right of control over it, and included it into its merger scope from 21 Jan. 2015. (6) Shenzhen Konka Yishijie Commercial Display Co., Ltd, a subsidiary of the Company contributed capital and founded Shenzhen Konka Yishijie Commercial Display Service Co., 223 The 2015 Annual Report of Konka Group Co., Ltd. Ltd, a wholly-funded subsidiary under it on May 7, 2015, with a registered capital of RMB2.00 million. The Company has right of control over it, and included it into its merger scope from 7 May 2015. (7) As of the balance sheet date, the Company actual contributed RMB2.916 million, 24.3% of registration capital, Shenzhen KangzhuangJiasheng Investment Partnership (LP) contributed RMB0.621 million, 5.18% of registration capital. The Company has right of control over it, and included it into its merger scope from 25 Jun. 2015. (8) The company and Shenzhen Kangwei Investment Partnership (LP) has jointly incorporated Shenzhen Konka Telecommunications Technology Co., Ltd. with the registered capital of RMB 20 million on October 26, 2015, which shall be paid in full amount before June 30, 2016 by all the shareholders, of which, the company shall contribute RMB 10.20 million representing 51% of the registered capital; Shenzhen Kangwei Investment Partnership (LP) shall contribute RMB 9.80 million, representing 49% of the registered capital. As of the balance sheet date, the company actual investment 510 million yuan, accounted for 25.5% of the registered capital, Shenzhen City Kangwei investment partnership enterprise (limited partnership) actual investment of RMB 490 million yuan, 24.5% of the registered capital.The Company has right of control over it, and included it into its merger scope from 26 Oct. 2015. (9) On 27 Mar. 2015, Chongqing Jiangbei District People's Court had accepted application of cancellation of the subsidiary of the Company, the Company no longer had power to lead the relevant activities of Chongqing Electronic, since entering the cancellation procedure, it was excluded in the consolidated scope, and considering its net assets as zero reclassified into available for sale financial assets. VIII. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Main Holding percentage Registration Nature of Way of Name of the subsidiary operating (%) place business gaining place Directly Indirectly Shenzhen Konka Telecommunications Shenzhen, Shenzhen, Manufacturing Set up or 75.00 25.00 Technology Co., Ltd. Guangdong Guangdong industry investment Shenzhen Konka Precision Mould Shenzhen, Shenzhen, Manufacturing Set up or — 46.31 Manufacturing Co., Ltd.① Guangdong Guangdong industry investment 224 The 2015 Annual Report of Konka Group Co., Ltd. Electrical Shenzhen, Shenzhen, Set up or Shenzhen Konka Electronic Co., Ltd. Appliances 100.00 — Guangdong Guangdong investment Retail Shenzhen Konka Information Network Shenzhen, Shenzhen, Manufacturing Set up or 75.00 25.00 Co., Ltd. Guangdong Guangdong industry investment Shenzhen Konka Plastic Products Co., Shenzhen, Shenzhen, Manufacturing Set up or 49.00 51.00 Ltd. Guangdong Guangdong industry investment Shenzhen Konka Life Electronic Co., Shenzhen, Shenzhen, Manufacturing Set up or 75.00 25.00 Ltd. Guangdong Guangdong industry investment Shenzhen Konka Electronic Fittings Shenzhen, Shenzhen, Investment Set up or 75.00 25.00 Technology Co., Ltd. Guangdong Guangdong holding investment Mudanjiang Arctic Ocean Appliances Mudanjiang, Mudanjiang, Manufacturing Set up or 60.00 — Co., Ltd. Heilongjiang Heilongjiang industry investment Chongqing Konka Eurotomotive Manufacturing Set up or Chongqing Chongqing 57.00 — Electronic Co., Ltd. industry investment Chongqing Konka Electronic Co., Manufacturing Set up or Chongqing Chongqing — 40.00 Ltd.② industry investment Chuzhou, Chuzhou, Manufacturing Set up or Anhui Konka Electronic Co., Ltd. 78.00 — Anhui Anhui industry investment Chuzhou, Chuzhou, Manufacturing Set up or Anhui Konka Appliance Co., Ltd. — 100.00 Anhui Anhui industry investment Changshu, Changshu, Manufacturing Set up or Changshu Konka Electronic Co., Ltd. — 60.00 Jiangsu Jiangsu industry investment Kunshan, Kunshan, Manufacturing Set up or Kunshan Konka Electronic Co., Ltd. 100.00 — Jiangsu Jiangsu industry investment Dongguan, Dongguan, Manufacturing Set up or Dongguan Konka Electronic Co., Ltd. 75.00 25.00 Guangdong Guangdong industry investment Dongguan Konka Packing Materials Dongguan, Dongguan, Manufacturing Set up or — 100.00 Co., Ltd. Guangdong Guangdong industry investment Dongguan Konka Mould Plastic Co., Dongguan, Dongguan, Manufacturing Set up or — 59.73 Ltd. Guangdong Guangdong industry investment 225 The 2015 Annual Report of Konka Group Co., Ltd. Boluo， Boluo， Manufacturing Set up or Boluo Konka PCB Co., Ltd. — 51.00 Guangdong Guangdong industry investment Boluo Konka Precision Technology Boluo， Boluo， Manufacturing Set up or — 100.00 Co., Ltd. Guangdong Guangdong industry investment Hong Kong, Hong Kong, International Set up or Hong Kong Konka Co., Ltd. 100.00 — China China Trading investment Konka Household Appliances Hong Kong, Hong Kong, Investment Set up or — 100.00 Investment & Development Co., Ltd. China China holding investment Konka Household Appliances Hong Kong, Hong Kong, International Set up or — 100.00 International Trading Co., Ltd. China China Trading investment International Set up or KONKA AMERICA,INC. America America 100.00 — Trading investment Frankfurt, Frankfurt, International Set up or Konka (Europe) Co., Ltd. Germany, Germany, 100.00 — Trading investment Europe Europe Dongguan Xutongda Mould Plastic Dongguan, Dongguan, Manufacturing Set up or — 46.31 Co., Ltd.③ Guangdong Guangdong industry investment Shenzhen Konka Optoelectronic Shenzhen, Shenzhen, R&D Set up or 100.00 — Technology Co., Ltd. Guangdong Guangdong expenses investment Shenzhen Wankaida Science and Shenzhen, Shenzhen, Software Set up or 100.00 — Technology Co., Ltd. Guangdong Guangdong development investment Kunshan Kangsheng Investment Kunshan, Kunshan, Set up or Real estate 100.00 — Development Co., Ltd. Jiangsu Jiangsu investment Anhui Konka Tongchuang Household Chuzhou, Chuzhou, Manufacturing Set up or 100.00 — Appliances Co., Ltd.④ Anhui Anhui industry investment International Set up or Indonesia Konka Electronics Co., Ltd. Indonesia Indonesia — 51.00 Trading investment Shenzhen Shushida Logistics Service Shenzhen, Shenzhen, Set up or Logistics 100.00 — Co., Ltd. Guangdong Guangdong investment Sale of home Set up or Beijing Konka Electronic Co., Ltd. Beijing Beijing 100.00 — appliance investment 226 The 2015 Annual Report of Konka Group Co., Ltd. Kunshan Jielunte Mould Plastic Co., Kunshan, Kunshan, Manufacturing Set up or — 46.31 Ltd.⑤ Jiangsu Jiangsu industry investment Wuhan Jielunte Mould Plastic Co., Wuhan, Hubei Wuhan, Hubei Manufacturing Set up or — 46.31 Ltd.⑤ industry investment Chuzhou Jielunte Mould Plastic Co., Chuzhou, Chuzhou, Manufacturing Set up or — 46.31 Ltd.⑤ Anhui Anhui industry investment Shenzhen, Shenzhen, Manufacturing Set up or Shenzhen Konka E-display Co., Ltd. 60.00 — Guangdong Guangdong industry investment Shenzhen, Shenzhen, Manufacturing Set up or Shenzhen E-display Service Co., Ltd. 60.00 Guangdong Guangdong industry investment Xiamen, Xiamen, Set up or Xiamen Dalong Trade Co., Ltd. Commerce — 69.23 Fujian Fujian investment Youshi Kangrong Cultural Set up or Tianjin Tianjin Other — 70.00 Communication Co., Ltd. investment Anhui Jiasen Precision Technology Manufacturing Set up or Anhui Anhui — 23.62 Co., Ltd.⑥ industry investment Shenzhen Kangqiaojiacheng Property Shenzhen, Shenzhen, Set up or Real estate 70.00 — Investment Co., Ltd Guangdong Guangdong investment Hong Kong, Hong Kong, Set up or Konka Smarttech Limited Other — 61.00 China China investment Anhui Kakai Shijie E-Commerce Co., Set up or Anhui Anhui E-commerce 80.00 — Ltd investment Shenzhen Yipingfang Network Shenzhen, Shenzhen, Information Set up or 96.00 — Technology Co., Ltd Guangdong Guangdong service investment Shenzhen Konka Commercial Systems Shenzhen, Shenzhen, Set up or Commerce 81.00 — Technology Co., Ltd Guangdong Guangdong investment Shenzhen Konka Mobile Internet Shenzhen, Shenzhen, Set up or Commerce 51.00 — Technology Co., Ltd. Guangdong Guangdong investment Notes: ① The Company holds 46.31% of shares of Shenzhen Konka Precision Mold Manufacturing Co., Ltd., Konka Household Appliances Investment & Development Co., Ltd, a subsidiary company of the Company, is entrusted to manage 6.18% shares held by 227 The 2015 Annual Report of Konka Group Co., Ltd. Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd. After the entrustment, the percentage of voting rights of the Company increases to 52.49%. Therefore, the financial statements of Shenzhen Konka Precision Mold Manufacturing Co., Ltd. are combined into the consolidated financial statements. Xutongda is a wholly funded subsidiary of Dongguan Konka Mould Plastic Co., Ltd and is also combined into the consolidated financial statements. ② The Company holds 40.00% shares of Chongqing Qingjia Electronic Co., Ltd. that all senior managers of Chongqing Qingjia Electronic Co., Ltd. are appointed and dismissed by the Company. Among the directors, half of them or over half are dispatched directly or indirectly by the Company. Moreover, in Chongqing Qingjia, 70% to 80% of its products are sold to the Company and thus the Company has absolute influence and control over the production and operation of Chongqing Qingjia Electronic Co., Ltd., which is combined into the consolidated financial statement. ③ Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 100% equity of Dongguan Xutongda Mould Plastic Co., Ltd., and the Company is the actual controller of Dongguan Xutongda Mould Plastic Co., Ltd., for the Company indirectly held 46.31% shares and 52.49% voting right of Dongguan Xutongda Mould Plastic Co., Ltd., which is combined into the consolidated financial statement. ④ Anhui Tongchuang is a limited company jointly invested and established by the Company and Chuzhou Tongchuang Construction Investment Co., Ltd. (hereinafter refer to as “Tongchuang Construction”) with registration capital of RMB 180 million, of which each party invested in RMB 90 million respectively on contract. As to 31 Dec. 2013, Anhui Tongchuang with a paid-up capital of RMB 120 million (including paid-up capital of RMB 90 million of the Company, 75.00% of total paid-up capital; and paid-up capital of RMB 30 million of Tongchuang Construction, 25.00% of total paid-up capital ). According to contract sign by two parties, Tongchuang Construction has the rights of transferring stock ownership three years after the establishment of Anhui Tongchuang Company. Meanwhile, the Company can repurchase the said stock ownership and contracted with Tongchuang Investment Company that the Company shall receive fixed investment gains at 2% of actual capital invested by the Group annually. So the Company can conduct actual control to Anhui Tongchuang Company, and combines it into the consolidated financial statement. ⑤Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 100% equity of Kunshan Jielunte, Wuhan Jielunte and ChuzhouJielunte, Shenzhen Konka Precision Mold Manufacturing Co., Ltd. was the actual controller of the Company which the Company 228 The 2015 Annual Report of Konka Group Co., Ltd. indirectly held 46.31% share equity of Jielunte with voting right of 52.49%, and combines it into consolidated financial statement. ⑥Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held 51.00% equity of Anhui Jiasen, Shenzhen Konka Precision Mold Manufacturing Co., Ltd. was the actual controller of the Company which the Company indirectly controlled Anhui Jiasen, and combines it into consolidated financial statement. (2) Significant not wholly owned subsidiary Shareholding The profits and Dividends distribute Balance of minority proportion of losses arbitrate to Name of the subsidiary to minority shareholder at minority the minority shareholder closing period shareholder shareholders Precision Mold 53.69 -5,199,362.20 — 38,315,045.54 Anhui Konka 22.00 1,263,128.50 — 61,438,567.39 Dongguan Konka Mould Plastic Co., 40.27 -9,080,623.83 — 36,221,280.89 Ltd. Dongguan Xutongda Mould Plastic Co., 53.69 7,367,204.84 — 16,598,926.66 Ltd. (3) The main financial information of significant not wholly owned subsidiary Closing balance Name Non-current current assets Non-current assets Total assets Current liabilities Total liabilities liability Precisio 62,359,351.14 180,143,888.63 242,503,239.77 171,141,027.89 — 171,141,027.89 n Mold Anhui 861,543,505.16 246,490,103.64 1,108,033,608.80 811,514,052.71 9,208,641.33 820,722,694.04 Konka Donggu an Konka Mould 241,913,766.69 49,540,261.45 291,454,028.14 188,757,532.47 2,744,845.12 191,502,377.59 Plastic Co., Ltd. Donggu an Xutong 89,259,620.16 7,778,641.52 97,038,261.68 60,855,982.82 266,587.53 61,122,570.35 da Mould Plastic 229 The 2015 Annual Report of Konka Group Co., Ltd. Co., Ltd. (Continued) Opening balance Name Non-current current assets Non-current assets Total assets Current liabilities Total liabilities liability Precisio 73,933,646.66 170,997,722.16 244,931,368.82 163,885,285.19 — 163,885,285.19 n Mold Anhui 530,345,042.25 228,358,246.18 758,703,288.43 469,762,019.50 7,371,847.37 477,133,866.87 Konka Donggu an Konka Mould 246,221,614.74 55,571,226.68 301,792,841.42 176,470,898.07 2,819,541.37 179,290,439.44 Plastic Co., Ltd. Donggu an Xutong da 82,414,688.51 10,115,814.00 92,530,502.51 70,336,314.72 — 70,336,314.72 Mould Plastic Co., Ltd. Reporting period Name Total comprehensive Operation revenue Net profit Operating cash flow income Precision Mold 92,681,195.35 -9,683,871.75 -9,683,871.75 6,568,036.25 Anhui Konka 5,226,927,921.25 5,741,493.20 5,741,493.20 -14,276,249.32 Dongguan Konka Mould 187,474,600.08 -22,550,751.43 -22,550,751.43 -38,473,275.48 Plastic Co., Ltd. Dongguan Xutongda 165,783,377.81 13,721,503.54 13,721,503.54 -7,819,375.13 Mould Plastic Co., Ltd. 230 The 2015 Annual Report of Konka Group Co., Ltd. (Continued) Last period Name Total comprehensive Operation revenue Net profit Operating cash flow income Precision Mold 177,708,791.65 1,695,078.23 1,695,078.23 1,018,798.67 Anhui Konka 4,505,390,088.43 1,528,671.19 1,528,671.19 65,694,893.41 Dongguan Konka Mould 280,476,981.47 11,391,059.19 11,391,059.19 42,523,300.53 Plastic Co., Ltd. Dongguan Xutongda 154,952,772.16 10,192,895.26 10,192,895.26 14,313,157.43 Mould Plastic Co., Ltd. 2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary (1) Note to owner’s equity share changed in subsidiary During reporting period Shenzhen Shangyongtong Investment Development Co., Ltd. transfer its holdings of 49% minority equity of Boluo Konka to Fittings Technology, the transfer price was RMB9.5431 million, after the equity transfer, the Company held 100% equity of Boluo Konka. (2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company Item Boluo Konka Purchase cost consideration -Cash 9,543,100.00 -Fair value of non-cash assets — Total of purchase cost consideration 9,543,100.00 Less: subsidiary net assets proportion calculated by share proportion 2,126,952.66 obtained Difference 7,416,147.34 Of which: Adjustment of capital reserves (- decrease) -7,416,147.34 Surplus reserves adjustments — 231 The 2015 Annual Report of Konka Group Co., Ltd. Retained profits adjustments — 3. Equity in associated enterprise (1) Significant associated enterprise Holding percentage (%) Accounting Main treatment of the Subsidiary of associated Registration operating Nature of business investment of joint enterprise place Directly Indirectly place venture or associated enterprise Shenzhen Refund Production and sale of Shenzhen Shenzhen — 6.79 Equity method Optoelectronics Co., Ltd. light emitting diode Enraytek Optoelectronics Production and sale of Shanghai Shanghai — 28.04 Equity method Co., Ltd. light emitting diode Shanghai Konka Green Production and sale of Science & Technology Shanghai Shanghai 39.00 — Equity method light emitting diode Co., Ltd. (2) Main financial information of significant associated enterprise Closing balance/reporting period Opening balance/ same period of last year Shanghai Konka Green Enraytek Shanghai Konka Item Enraytek Optoelectronics Science & Technology Optoelectronics Co., Green Science & Co., Ltd. Co., Ltd. Ltd. Technology Co., Ltd. current assets 643,665,278.09 124,548,698.88 268,409,318.77 476,703,490.64 Non-current assets 693,903,656.72 237,205,034.02 606,856,639.67 228,455,686.18 Total assets 1,337,568,934.81 361,753,732.90 875,265,958.44 705,159,176.82 Current liabilities 551,431,214.97 97,706,289.06 355,102,547.52 66,932,415.14 Non-current liability 556,666,832.72 86,797,751.49 232,930,605.06 119,562,409.62 Total liabilities 1,108,098,047.69 184,504,040.55 588,033,152.58 186,494,824.76 Minority interests -260,290.34 2,248,992.25 68.50 11,591,006.22 Equity attribute to the 229,731,177.46 175,000,700.10 287,232,737.36 507,073,345.84 parent company 232 The 2015 Annual Report of Konka Group Co., Ltd. Portion of net assets calculated according 64,416,622.16 68,250,273.03 80,536,808.37 197,758,604.87 to proportion of shareholdings Adjusting events -Goodwill — — 30,257,135.84 — -Unrealized internal — — — — sales gain and loss -Other — — — — Book value of equity investment to 64,416,622.16 68,250,273.03 110,793,944.21 197,758,604.87 associated venture Fair value of equity investment of — — — — associate enterprises with public offer Operation revenue 165,482,576.55 120,572,337.08 150,182,731.09 112,916,555.92 Net profit -58,648,256.05 -21,424,479.94 -30,454,225.45 -8,403,704.69 Net profits of — — — — termination operation Other comprehensive — 1,033,575.71 — 152,885.18 income Total comprehensive -58,648,256.05 -20,390,904.23 -30,454,225.45 -8,250,819.51 income 233 The 2015 Annual Report of Konka Group Co., Ltd. Equity received from associated enterprises — — — — in reporting period IX. The risk related financial instruments Main financial instruments include monetary capital, accounts receivable and accounts payable. Refer to Note XI for the details of all financial instruments. Risks related to financial instruments and risk management policies to reduce risks are as follows. The management should control and monitor the risk exposure to ensure all risks within defined scope. The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the current profits and Stockholders’ equity. Because rarely any risk variables change in isolation, and the correlation between variables for the eventual impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing under the assumption of the change of each variable was conducted independently. (I) Risk management objectives and policies The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the negative impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity investors. Based on the risk management goal, the basic strategy of the Company's risk management is determine and analyze the various risks faced by the Company, set up the bottom line of risk and conducted appropriate risk management, and timely supervised various risks in a reliable way and controlled the risk within the range of limit. 1. Market risk (1) Foreign exchange risk Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk refers to the risks that may lead to losses due to fluctuation in exchange rate. The foreign exchange risk borne by the Company is related to USD, EURO and HKD, except the procurement and sales by US dollars for several subsidiaries such as the Company, Hong Kong Konka, American Konka, Konka Trading Europe Konka and Indonesia Konka which settled by USD, HKD and EURO for purchase and sale. Until December 31, 2015 (refer to Note VI 55, foreign monetary items), foreign exchange risks 234 The 2015 Annual Report of Konka Group Co., Ltd. may affect the business performance produced by the assets and liabilities of the balance. The Company timely paid attention to the influence of change of the exchange rate to the Company's foreign exchange risk, which required the Group and others which conducted purchase and sale with settlement by foreign currency to purchase foreign currency long-term forward contract to lock the cost of purchase on forward date to reduce the risk exposure of foreign exchange. (2) Interest rate risk- cash flow change risk Cash flow change risk caused by financial instruments due to interest rate change is related to floating interest rate of bank loan. By establishing good relations with banks and reasonable planning of credit line, credit varieties and credit period, it is to guarantee sufficient band line of credit and satisfy all financial demands. Moreover, it is to reduce risks of interest rate uncertainty by shortening single loan term and establishing repayment terms. (3) Other price risk For the equity investment of other listed companies holding by the Company, the management considers that the market price risks are acceptable. Refer to Note VI, 10 Available-for-sale financial assets for equity investment of other listed companies holding by the Company. 2. Credit risk On 31 Dec. 2015, the biggest credit risk exposure may lead to the financial assets losses of the Company was mainly from the one party fail to perform its obligation, which included: book amount recognized in consolidated balance sheet: for financial instruments measured at fair value, the book value reflect its risk exposure, but not the biggest one, the biggest risk exposure will change along with the change of future fair value. In order the reduce the credit risk, the Company establish a group response for recognizing line of credit, conducting credit approval and other monitor procedures to ensure that the necessary measures were used to recycle expired claims. In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the money unable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit risk the Company shouldered had been greatly reduced. The company's working capital was in bank with higher credit rating, so credit risk of working capital was low. 235 The 2015 Annual Report of Konka Group Co., Ltd. 3. Liquidity Risk When managing liquidity risk, the Company maintained the management’s believe that supervising the sufficient cash and cash equivalents to meet the operating demand of the Company and reduce the influence of the fluctuation of cash flow. X. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value Closing fair value Fair value Fair value Fair value Item measurement measurement measurement Total items at level 1 items at level 2 items at level 3 I. Consistent fair value measurement (I) Financial assets calculated by fair value and changes record into current profits or — — — — losses Trading financial assets 33,196,377.28 — — 33,196,377.28 (II) Available-for-sale financial assets 1. Debt instruments investment — — — — 2. Equity instrument 2,874,068.30 — — 2,874,068.30 investment 3. Other — — — — Total assets of consistent fair 36,070,445.58 — — 36,070,445.58 value measurement Total assets of consistent fair value measurement — — — — 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 ① As of the end of reporting period, the Company in line with the difference of DF forward foreign exchange purchase cost( DF base price on balance sheet date) on assets balance sheet and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed) recognized as losses or profits 236 The 2015 Annual Report of Konka Group Co., Ltd. ② As of the end of reporting period, the Company held 117,310.00 shares of stock A of Vanke, and their fair value at the end of the year was determined to be RMB2, 865,883.30 according to closing price of RMB24.43 for each share and held 500 shares of Suzhou Huayuan and their fair value at the end of the year was determined to be RMB8, 185.00 according to closing price of RMB16.37 for each share on 31 Dec., 2015. XI. Related party and related Transaction 1. Information of parent company Proportion of Proportion of share held by voting rights Registration Registered Name of parent company Nature of business parent company owned by parent place capital against the company against Company (%) the Company (%) Shenzhen OCT East Co., Tourism, real estate, Shenzhen 6.3 billion 29.99 29.99 Ltd. electronics industry Note: the final control party of the Company is State-owned Assets Supervision and Administration Commission 2. Information of subsidiary of the Company Details of information of subsidiary of the Company see note 1. Equity in subsidiary VIII 3. Information on the joint ventures of the Company The details of significant joint venture of the Company please refer to Notes VIII, 3.Equity in the joint venture. 4. Information on other related parties of the Company Name Relationship Shanghai OCT Investment Development Co., Ltd. Under the same actual controller Shanghai OCT Investment Development Co., Ltd. Under the same actual controller Shanghai Tianxiang OCT Investment Co., Ltd. Under the same actual controller Anhui Huali Packaging Co., Ltd. Under the same actual controller Shenzhen OCT Water and Power Co., Ltd Under the same actual controller Shanghai Huali Packaging Co., Ltd Under the same actual controller Shenzhen Huayou Packaging Co., Ltd Under the same actual controller Shenzhen Huali Packing & Trading Co., Ltd Under the same actual controller 237 The 2015 Annual Report of Konka Group Co., Ltd. Huali Packaging (Huizhou) Co., Ltd. Under the same actual controller Huizhou Huali Packaging Co., Ltd. Under the same actual controller Shenzhen Konka Video & Communication Systems Under the same actual controller Engineering Co., Ltd. Taizhou OCT Co., Ltd. Under the same actual controller Shenzhen OCT Real Estate Co., Ltd. Under the same actual controller Yunnan OCT Industry Co., Ltd. Under the same actual controller Shenzhen OCT Hotel Co., Ltd. Under the same actual controller Shenzhen OCT Property Management Co., Ltd. Under the same actual controller Shenzhen OCT Hotel Group Co., Ltd. Under the same actual controller Shenzhen Splendid China Development Co., Ltd. Associated enterprise of the Company Shenzhen the Windows of the world Co., Ltd. Associated enterprise of the Company Shenzhen Refund Optoelectronics Co., Ltd. Subsidiary of joint venture Enraytek Optoelectronics Co., Ltd. Subsidiary of joint venture Zhuhai Jinsu Plastic Co., Ltd. Subsidiary of joint venture Charm Media Co. , Ltd. Shareholder of the subsidiary 5. List of related-party transactions (1) Information on acquisition of goods and reception of labor service (unit: Yuan) ①Information on acquisition of goods and reception of labor service Related-party Content Reporting period Last period Shenzhen Refund Optoelectronics Co., Ltd. Purchase of raw material 95,272,151.31 115,447,444.91 Charm Media Co. , Ltd. Advertising expense 77,340,190.65 — Anhui Huali Packaging Co., Ltd. Purchase of raw material 42,056,410.31 30,414,202.53 Shanghai Huali Packaging Co., Ltd Purchase of raw material 12,283,155.39 13,645,510.03 Huali Packaging (Huizhou) Co., Ltd. Purchase of raw material 10,931,552.82 11,499,212.38 Shenzhen OCT Water and Power Co., Ltd Water and power 5,826,581.42 8,151,649.23 ②Information of sales of goods and provision of labor service Related-party Content Reporting period Last period 238 The 2015 Annual Report of Konka Group Co., Ltd. Shanghai Konka Green Science & Processing fee, auxiliary — 12,131,664.24 Technology Co., Ltd. materials fee Shenzhen Refund Optoelectronics Co., Ltd. Selling materials 23,298,317.21 16,539,304.45 Charm Media Co. , Ltd. Advertising expense 62,111,300.23 — Taizhou OCT Co., Ltd. Selling LCDs — 35,000.00 Anhui Konka Green Science & Technology Selling materials 4,137,079.29 — Co., Ltd. Chengdu Tianfu OCT Industrial Maintenance costs 376,068.38 19,658.12 Development Co., Ltd. (2) Related-party guarantee ①The Company was guarantor: Execution Guarantee Actual using Secured party Currency Start date End date accomplished or amount amount not Anhui Tongchuang RMB 8,000.00 799.60 30/1/2015 29/1/2016 No (Note ①) Anhui Tongchuang RMB 2,000.00 1,000.00 2 /6/2015 1/6/2016 No (Note ①) Anhui Konka RMB 610.79 610.79 12/3/2015 12/3/2016 No (Note ②) Anhui Konka RMB 1,997.67 1,997.67 10/4/2015 10/4/2016 No (Note ②) Anhui Konka RMB 3,537.20 3,537.20 14/5/2015 14/5/2016 No (Note ②) Anhui Konka RMB 4,259.39 4,259.39 19/5/ 2015 19/5/ 2016 No (Note ②) Shenzhen Konka E-display Commercial RMB 2,000.00 413.42 27/1/2015 27/1/2016 No Display Co., Ltd. (Note ③) Shenzhen Konka Telecommunicatio RMB 50,000.00 20,784.96 22/4/2015 21/4/2016 No ns Technology Co., Ltd. 239 The 2015 Annual Report of Konka Group Co., Ltd. Shenzhen Konka Telecommunicatio RMB 10,000.00 — 28/1/2015 28/1/2016 No ns Technology Co., Ltd. Hong Kong Konka USD 4,000.00 4,000.00 26/6/2015 26/6/2016 No Co., Ltd. Hong Kong Konka USD 2,470.00 2,470.00 23/3/2015 23/3/2016 No Co., Ltd. Hong Kong Konka USD 2,530.00 2,530.00 29 /5/ 2015 29/5/2016 No Co., Ltd. Hong Kong Konka USD 5,000.00 5,000.00 15/1/2014 14/2/2016 No Co., Ltd. Hong Kong Konka USD 3,090.00 3,090.00 17/9/2014 117/10/2016 No Co., Ltd. Hong Kong Konka RMB 43,300.00 43,300.00 23/11/2015 26/8/2016 No Co., Ltd. Kunshan Jielunte RMB 3,000.00 2,370.00 29/9/2013 29/9/2016 No (Note ④) Shenzhen Konka Electronic Co., RMB 6,000.00 274.28 28/9/2015 28/2/2016 No Ltd. ①Note: the minority shareholders of Anhui Tongchuang, ChuzhouTongchuang Investment Construction Co., Ltd. provided 50% counter-guarantee to the limit amount of guarantee of the Company. ② The minority shareholders of Anhui Tongchuang, ChuzhouState-owned Assets Operation Co., Ltd. provided 22% counter-guarantee to the limit amount of guarantee of the Company. ③Shenzhen E-display Capital Investment Partnership Business (LLP) provided 40% counter-guarantee to the limit amount of guarantee of the Company. ④ The subsidiary of the Company Shenzhen Precision provided RMB30 million fixed assets loan guarantee for Kunshan Jielunte. (3) Rewards for the key management personnel Item Reporting period Last period Rewards for the key management personnel RMB15.9454 million RMB8.0290 million 6. Receivables and payables of related parties (1) Receivables Name o f item Closing balance Opening balance 240 The 2015 Annual Report of Konka Group Co., Ltd. Book balance Bad debt provision Book balance Bad debt provision Account receivable: Shenzhen Refond Optoelectronics Co., Ltd. 12,116,064.48 242,321.29 7,478,269.37 149,565.39 Shanghai Konka Green Science and 10,963,614.12 548,180.71 10,963,653.88 219,273.08 Technology Co., Ltd. Shanghai OCT Investment Development Co., 150,000.00 3,000.00 — — Ltd. Shenzhen Konka Video & Communication — — 1,260,956.45 25,219.13 Systems Engineering Co., Ltd. Charm Media Co. , Ltd. 775,587.00 15,511.74 — — Chongqing Konka Eurotomotive Electronic — — 981,218.48 981,218.48 Co., Ltd. Total 24,986,484.08 1,790,232.22 19,702,879.70 394,057.60 Other account receivable:： Shenzhen Konka Video & Communication 18,115,952.51 5,366,657.87 18,115,952.51 5,405,926.42 Systems Engineering Co., Ltd. Chongqing Konka Eurotomotive Electronic — — 13,396,856.82 13,396,856.82 Co., Ltd. Shenzhen OCT Property Management Co., 6,491,248.10 203,206.00 77,402.65 3,870.13 Ltd. Shenzhen OCT Water and Power Co., Ltd. 1,198,932.32 23,978.65 776,572.25 15,531.45 Shenzhen OCT Real Estate Co., Ltd. 1,053,706.86 1,033,282.36 1,209,064.86 1,209,064.86 Chengdu Tianfu OCT Industrial Development — — 440,000.00 8,800.00 Co., Ltd. Shenzhen Overseas Chinese Town Gas Station 80,000.00 80,000.00 80,000.00 80,000.00 Co., Ltd. 40,726,642.87 20,062,727.96 18,115,952.51 5,366,657.87 13,346,803.08 13,346,803.08 241 The 2015 Annual Report of Konka Group Co., Ltd. 40,776,696.61 20,112,781.70 20,258,992.27 6,714,392.86 (2) Payables Name o f item Closing balance Opening balance Accounts payable: Shenzhen Konka Video & Communication Systems 20,412,650.58 21,670,642.23 Engineering Co., Ltd. Anhui Huali Packaging Co., Ltd. 4,160,761.50 9,801,227.07 Shenzhen Refund Optoelectronics Co., Ltd. 3,309,766.50 17,648,415.04 Shanghai Huali Packaging Co., Ltd 2,634,241.04 1,782,812.82 Huali Packaging (Huizhou)Co., Ltd. 1,747,011.10 1,050,557.07 Shenzhen Huali Packing & Trading Co., Ltd 1,078,005.09 1,078,005.09 Shenzhen Dekang Electronics Co., Ltd. 358,929.03 358,929.03 Total 33,701,364.84 53,390,588.35 Notes payable: Shenzhen Refund Optoelectronics Co., Ltd. 12,997,249.74 12,339,062.14 Anhui Huali Packaging Co., Ltd. 5,150,030.89 1,605,902.13 Huali Packaging (Huizhou)Co., Ltd. 988,662.81 5,143,401.86 Zhuhai Jinsu Plastic Co., Ltd. 186,000.04 — Shanghai Huali Packaging Co., Ltd 3,126,818.21 — Total 22,448,761.69 19,088,366.13 Accounts received in advance: Shenzhen the Windows of the world Co., Ltd. — 81,000.00 Charm Media Co. , Ltd. 126,000.00 — Total 126,000.00 81,000.00 Other account payable: Anhui Huali Packaging Co., Ltd. 258,000.00 1,130,000.00 Shanghai Huali Packaging Co., Ltd 652,000.00 1,530,000.00 Huali Packaging (Huizhou)Co., Ltd. — 428,000.00 242 The 2015 Annual Report of Konka Group Co., Ltd. Shenzhen Refund Optoelectronics Co., Ltd. 51,135.00 51,135.00 Total 961,135.00 3,139,135.00 XII. Commitments and contingency 1. Significant commitments (1) Capital commitment Item Closing balance Opening balance Commitments signed but hasn’t been recognized in financial statements -- Commitment for constructing and purchasing long-term — — assets - Contract with large amount 184,797,300.59 150,424,982.66 - Foreign investment commitments — — Total 184,797,300.59 150,424,982.66 (2) Operating lease commitments As of the end of balance sheet date, the irrevocable operating lease commitments that the Company signed were as followed: Item Closing balance Opening balance Minimum lease payments of irrevocable operating lease 1 year after balance date 20,414,436.47 23,767,119.89 2 year after balance date 10,962,573.65 11,062,103.32 3 year after balance date 5,382,286.87 8,442,535.17 Future years 4,007,824.20 6,735,380.75 Total 40,767,121.19 50,007,139.13 2. Contingency 1. Contingent liabilities and its financial effect arising from unsettled litigation or arbitration ①Contingent liabilities and financial effects caused by pending litigation or arbitration On 4 Feb. 2013, the Company’s subsidiary Kunshan Konka signed Purchase Order (Hereinafter referred to as "PO") with Italy customer MOTOM ELECTRONICS GROUP SPA (Hereinafter referred to as the "MEG"). The PO payment was 90 days L/C, L/C amount was $1.29744 million. MEG opened L/C 243 The 2015 Annual Report of Konka Group Co., Ltd. which Kunshan Konka was beneficiary on 26 Feb, due to the problems of delivery time and related items, after the agreement of both parties, MEG respectively opened two revisions of L/C on 11 Mar. and 13 May. Then the Kunshan Konka entrusted Ningbo United International Freight Forwarding Co., Ltd. (Hereinafter referred to as the “Ningbo United”) to book space, and Ningbo United signed and issued the carrier's bill of lading of Econolines Ltd. (Hereinafter referred to as the “Econolines” (No. NGB1305005\GNB1305016\NGB1305034), the whole case handover with Container delivery conditions of CY TO CY) on 5, 14 and 19 May 2013. According to the verification, after the goods arrived to the port of destination in Italy, the empty cargo container had returned to the shipping company, but the full set of original bill of lading was still in Kunshan Konka; Ningbo United and Econolines’s behaviors of delivery of goods without original bill of lading had violated the "maritime law" and other relevant laws and regulations, Kunshan Konka had right to require Econolines return the goods. The total amount of the goods was $ 1,214,780.04, equivalents RMB 7,507,340.65, MEG received the goods but not pay the full amount of the goods to Kunshan Konka, the amount in arrear reached $1,100,000.00. Kunshan Konka entrusted Shanghai Jiajia Law firm to file a suit from Shanghai Maritime Court, requested Ningbo United and Econolines compensate for the loss of payment for goods USD1,099,423.52 and its interest; meanwhile bear the fees for acceptance and property preservation application fee on 15 Aug. 2013. On 26 May 2014, Shanghai Maritime Court made the first-instance judgment, which ordered Ningbo United and Econolines compensate for the loss of payment for goods USD1,099,423.52 and its interest, and bear the fees for acceptance and property preservation application fee In Jun. 2014 Ningbo United appealed to the Shanghai Higher People's Court against its sentence. On 24 Nov. 2014, the second trial had been made. During the second trial, the Kunshan Konka indicated that as of 31 May 2015, the company had received EUR100000 payment from the oversea receivers which would be deducted from the payment of goods of United and Econolines. Kunshan Konka were willing to give up the interest part of EUR100000 discounted by bank rate on the date of the second trial basing on USD1,099,423.52 in the first trial. On 16 Jul. 2015, Shanghai Higher People's Court made the second-instance judgment, which ordered Econolines compensate for the loss of payment for goods USD990, 253.50 (discounted by the middle of the euro against the dollar exchange rate of People's Bank of China on 16 Jul. 2015) and bear the fees for acceptance, United bear the joint liability. ②The Company's subsidiary Nanchang Branch applied for property preservation for Tengda 244 The 2015 Annual Report of Konka Group Co., Ltd. Electric Appliance Co., Ltd. due to the contract dispute. After the judgment from Nanchang Intermediate People's Court, RMB9, 918,725.43 of Tengda Electric Appliance Co., Ltd. was frozen and five houses were closed down. As of 31 Dec. 2015, Nanchang Branch's credit receivable from Tengda Electric Appliance Co., Ltd. was RMB8, 223,935.99? (2) Possible liabilities formed for providing debt guarantee for other institutions and their financial impacts The Company applied to China Construction Bank, Shenzhen Branch for a credit line of USD 50 million (about RMB305.68 million) on January 15, 2014 and China Construction Bank (Asia) Co., Ltd. provided a short-term loan of USD48.50 million to Hong Kong Konka on January 15, 2014, and the guarantee period was from January 15, 2014 to February 14, 2016. The Company applied to China Construction Bank, Shenzhen Branch for a credit line of USD30.90 million (about RMB188.9102 million) on Wednesday, September 17, 2014 and China Construction Bank (Asia) Co., Ltd. provided a short-term loan of USD29.97million to Hong Kong Konka on September 17, 2014, and the guarantee period was from Wednesday, September 17, 2014 to October 17, 2016. The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-1 with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided a credit guarantee with a line of RMB200million for Anhui Konka Electronics Co., Ltd, and its guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used by Anhui Konka Electronics Co., Ltd. for the purposes of daily operating businesses such as opening and acceptance of letters of credit and acquiring financial loans from banks. By December 31, 2015, RMB104,050,587.54 had been used in this line. Chuzhou State-owned Assets Operation Co., Ltd, a minority stockholder of Anhui Konka provided 22% of counter guarantee of the line guaranteed by the Company. The Company provided a credit guarantee with a line of RMB300million for Anhui KonkaTongchuang Household Appliances Co., Ltd., and its guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used by Anhui KonkaTongchuang Household Appliances Co., Ltd. for the purposes of daily operating businesses such as opening and acceptance of letters of credit and acquiring financial loans from banks. By December 31, 2015, RMB29,996,000.00 had been used in this line. ChuzhouTongchuang Investment and Construction Co., Ltd., a minority stockholder of Toptry Electric Appliance Co., Ltd provided 50% of counter guarantee of the line guaranteed by the Company. The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-2 with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided a credit guarantee with a line of RMB 300 million for KunshanKonka Electronic Co., Ltd., and its guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used by KunshanKonka Electronic Co., Ltd. for the purposes of daily operating such as acquiring financial loans from banks. By December 31, 2015, the amount in this line had been used. On January 27, 2015, the Company signed a Comprehensive Credit Line Contract with the serial number of 2015 SJTZEZ No 002 with China Minsheng Banking Corp., Ltd, and provided a credit guarantee with a max credit line of RMB48.00 million for Shenzhen Konka E-display Co., Ltd. and its guarantee term was from January 27, 2015 to January27, 2016. By 245 The 2015 Annual Report of Konka Group Co., Ltd. December 31, 2015, RMB4, 134,210.82 in this line had been used. On 23 Mar. 2015, the Company applied to China Development Bank, Shenzhen Branch for a credit line by letter of guarantee of USD24.7 million and provide guarantee for it on 23 Mar. 2015. DBS Bank (Hong Kong) Co., Ltd. provided short term loan of USD24.7 million to Hong Kong Konka, the guarantee period was from 23 Mar. 2015 to 22 Mar. 2016. The Company applied to Bank of China, Shenzhen Branch for a comprehensive credit line of RMB5.3 billion on April 21, 2015, and provided a credit guarantee of RMB500 million for Shenzhen Konka Telecommunications Technology Co., Ltd. with its comprehensive credit line of RMB500 million on April 22, 2015, and its guarantee term was from April 22, 2015 to April 21, 2016. The credit line is mainly used for the purposes of daily operating businesses such as acquiring financial loans from banks. By December 31, 2015, RMB 207,849,613.41 in this line had been used. The Company applied to China Development Bank, Shenzhen Branch for a credit line by letter of guarantee of USD25.30 million on May 29, 2015, and provided a credit guarantee for Hong Kong Konka Co., Ltd on May 29, 2015, and its guarantee term was from May 29, 2015 to May 29, 2016. The Company applied to China Minsheng Banking Corp., Ltd, Shenzhen Branch for a credit line by letter of guarantee of USD40 million (about RMB259.74 million) on June 26, 2015, and provided a credit guarantee of a line of RMB148 million for Hong Kong Konka Co., Ltd on June 26, 2015, and its guarantee term was from June 26, 2015 to June 25, 2016. The Company applied to Bank of China Limited, Shenzhen Nanshan Branch, for a credit line by letter of guarantee of RMB433 million on November 10, 2015, and China Construction Bank (Asia) Co., Ltd. provided a short-term loan of RMB420 million to Hongkong Konka and its guarantee term was from November 23, 2015 to August 26, 2016. By December 31, 2015, the Company opened commercial acceptance bills with a total amount of RMB 2,742,801.69 for Konka Electric Appliance Co., Ltd, which was used as pledge to open bank acceptance bills. In accordance with the Agreement on Opening Bank Acceptance Bills (2015 SJTZCS No. 126) signed by Konka Electric Appliance Co., Ltd and China Minsheng Banking Corp., Ltd, Shenzhen Branch, a bank acceptance bill with an amount of RMB2,742,801.69 was opened, and its contractual term was from October 9, 2015 to April 9, 2016. XIV. Events after balance sheet date 1. Profit distribution On 6 Apr. 2016, the Company held 13th Meeting of the 8th Board of Directors; the meeting reviewed and approved the proposal of not implementing the allocation of profits. (2) Significant related-party transactions In order to meet the need of current business development of the Company and reduce the financing cost, the Company held12th meeting of 8th Board of Directors on 2 Mar. 2016, the meeting reviewed and approved the Proposal on Application for the Entrusted Loan Amount from OCT Group Co., Ltd. The meeting agreed that the Company could apply entrust loans with amount no more than RMB5 billion from OCT Group Co., Ltd. in 2016,which withdrawn by stages, and the Company can sign entrust loan contract with bank and OCT 246 The 2015 Annual Report of Konka Group Co., Ltd. Group Co., Ltd. within the amount of RMB5 billion. The meeting also agreed that the interest rate of entrust loan was lower than the benchmark interest rate for loan of People's Bank of China at same period. The transaction involving the interest no more than RMB0.2 billion the Company should pay to OCT Group Co., Ltd. within one year. As for the aforesaid loan amount, the Company will in line with the actual demand of capital, and after reasonably measuring the capital cost, recognized the actual loan amount prudently. 3. Suspend the listing transfer of 60% equity of E-display On 13 Nov. 2015, the Company held the 8th Meeting of the 8th Board of Directors; the meeting reviewed and approved the Proposal on the Listing Transfer of 60% Equity of E-display. In line with the resolution of the Board, the Company, on 29 Jan. 2016, listing transferred its holding of 60% equity of Shenzhen Konka E-display Co., Ltd. with a price of RMB72.00 million at Shanghai United Assets and Equity Exchange. During the period of publicly listed, the interested transferee negotiated with the Company about the aforesaid transfer, but both party did not make an agreement on the significant items of the transfer contract. The Company decided to suspend listing transfer its holding of 60% equity of Shenzhen Konka E-display Co., Ltd. 4. The Company's subsidiary, Konka Household Appliances Investment signed agreement with Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd. Since 1 Jan. 2016, Dingshengxin Mould Technology Consultation Co., Ltd. no longer entrusted Konka Household Appliances Investment managed its holding of 6.18% shares of Precision Mold, and since 1 Jan. 2016, the Company no longer control the Precision Mold which excluded into consolidated statements scope. 5. Plan of non-public issue of stock The Company plan to prepare the non-public issue of shares. Now the Company was negotiating with the potential objects upon the amount of non-public issue of stock, actively preparing the materials and sparing no effort to promote the relevant work. The relevant events were under processing and existing uncertainty. XV. Other significant events 1. Lease (1) The closing original price accumulated depreciation and accumulated impairment provision of all kinds of the rented fixed assets. Particulars of the financing lease of the rented fixed assets, please refer to note VI, 13, (3) (2) Minimum lease payment will be paid in future 247 The 2015 Annual Report of Konka Group Co., Ltd. The minimum lease The remaining lease term payment Within 1 year (including 1 year) 133,333.37 Over 1 year and within 2 years (including 2 year) 84,894.93 Total 218,228.30 (3) The balance of unrecognized financing charges, and the method used to allocate the unrecognized financing charges. As of the balance sheet date, the balance of unrecognized financing charges was RMB27, 791.39; amortization method is the actual interest rate method. (4) Category of fixed assets leased by operating lease, please refer to note VI, 13 (4) 2. The Company's subsidiary Mudajiang Konka. Changshu Konka was under liquidation. Chongqng Konka Auto Electronic Company was under liquidation by the court on 27 Mar. 2015, which was excluded into consolidated scope. 3. On 14 Dec. 2015, the Company held 9th meeting of the 8th Board of Directors, the meeting decided that the Company contributed RMB6 million to set up Shenzhen Konka Electronic Appliance Technology Co., Ltd. together with Charm Media Co., Ltd. The registration capital was RMB15 million, of which, Konka Group contributed cash of RMB6 million, held 40% equity of Shenzhen Konka Electronic Appliance Technology Co., Ltd., Management of Household Appliance contributed 4.5 million, held 30% equity and Charm Media Co., Ltd. contributed RMB4.5 million, held 30% equity. As of the issue date financial statements, the joint venture company hadn't been set up. 4. On 14 Dec. 2015, after the research of the 9th meeting of the 8th Board of Directors, the meeting decided that the Company contributed RMB20 million to set up NORINCO Konka Technology Co., Ltd. together with NORINCO North Electronics Research Institute Co., Ltd. and Beidou Project Team, of which, Konka Group contributed cash of RMB20 million, held 40% equity of NORINCO Konka Technology Co., Ltd., NORINCO North Electronics Research Institute Co., Ltd. contributed RMB20 million, held 40% equity and Beidou Project Team contributed RMB10 million, held 20% equity. As of the issue date financial statements, the joint venture company hadn't been set up. XVI. Notes of main items in the financial statements of the Company 1. Accounts receivable (1) Accounts receivable classified by category 248 The 2015 Annual Report of Konka Group Co., Ltd. Closing balance Book balance Bad debt provision Category Proportion Proportion Book value Amount (%) Amount (%) Accounts receivable with insignificant single amount — — — — — for which bad debt provision separately accrued Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: Group 1: aging group 1,126,362,276.00 68.50 202,746,563.72 18.00 923,615,712.28 Group 2: related party group 486,174,280.87 29.57 — — 486,174,280.87 Subtotal of groups 1,612,536,556.87 98.06 202,746,563.72 12.57 1,409,789,993.15 Accounts receivable with insignificant single amount 31,826,201.74 1.94 23,700,918.33 74.47 8,125,283.41 for which bad debt provision separately accrued Total 1,644,362,758.61 100.00 226,447,482.05 13.77 1,417,915,276.56 (Continued) Opening balance Book balance Bad debt provision Category Proportion ( Proportion ( Book value Amount %) Amount %) Accounts receivable with insignificant single amount — — — — — for which bad debt provision separately accrued Accounts receivable withdrawal of bad debt 249 The 2015 Annual Report of Konka Group Co., Ltd. provision of by credit risks characteristics: Group 1: aging group 1,436,462,593.91 81.90 214,731,732.08 14.95 1,221,730,861.83 Group 2: related party group 317,565,114.46 18.10 — — 317,565,114.46 Subtotal of groups 1,754,027,708.37 100.00 214,731,732.08 12.24 1,539,295,976.29 Accounts receivable with insignificant single amount — — — — — for which bad debt provision separately accrued Total 1,754,027,708.37 100.00 214,731,732.08 12.24 1,539,295,976.29 ①In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: Closing balance Aging Account receivable Bad debt provision Withdrawal proportion (%) Within 1 year 918,718,739.98 18,374,374.80 2.00 1 to 2 years 14,672,885.00 733,644.25 5.00 2 to 3 years 5,627,558.78 1,125,511.76 20.00 3 to 4 years 5,427,292.76 2,713,646.38 50.00 4 to 5 years 4,232,825.89 2,116,412.95 50.00 Over 5 years 177,682,973.59 177,682,973.58 100.00 Total 1,126,362,276.00 202,746,563.72 ②In the groups, accounts receivable adopting other methods to withdraw bad debt provision: Balance at year- end Name of the group Account receivable Bad debt provision Withdrawal proportion (%) Related party group 486,174,280.87 — — Total 486,174,280.87 — — ③Individual amount is not significant, but the first five accounts receivable to prepare for bad debts separately Name of customer Closing balance 250 The 2015 Annual Report of Konka Group Co., Ltd. Withdrawal Account receivable Bad debt provision Withdrawal reason proportion Involved with lawsuit Customer 1 8,223,935.99 4,111,968.00 50 dispute Involved with lawsuit Customer 2 3,408,394.19 2,045,036.51 60.00 dispute Involved with lawsuit Customer 3 2,207,440.84 1,607,440.84 72.82 dispute Involved with lawsuit Customer 4 2,050,248.88 2,050,248.88 100.00 dispute Involved with lawsuit Customer 5 1,733,797.99 1,733,797.99 100.00 dispute Total 17,623,817.89 11,548,492.22 (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawn bad debt provision of 2015 was of RMB11, 715,749.97. (3) Top five of account receivable of closing balance collected by arrears party The total amount of top five of account receivable of closing balance collected by arrears party was RMB856, 883,933.28, 52.11% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was RMB8, 451,063.98. 2. Other accounts receivable (1) Other account receivable classified by category Closing balance Book balance Bad debt provision Category Proportion Proportion Book value Amount (%) Amount (%) Other accounts receivable with insignificant single 173,028,147.62 15.48 160,278,852.98 92.63 12,749,294.64 amount for which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision — — — — — according to credit risks characteristics 251 The 2015 Annual Report of Konka Group Co., Ltd. Group 1: aging group 75,906,726.27 6.79 19,005,412.74 31.11 56,901,313.53 Group 2: related party group 868,797,189.91 77.73 — — 868,797,189.91 Subtotal of groups 944,703,916.18 84.52 19,005,412.74 2.01 925,698,503.44 Other accounts receivable with insignificant single — — — — — amount for which bad debt provision separately accrued Total 1,117,732,063.80 100.00 179,284,265.72 16.04 938,447,798.08 (Continued) Opening balance Book balance Bad debt provision Category Proportion ( Proportion (% Book value Amount %) Amount ) Other accounts receivable with insignificant single amount for which bad debt 31,507,969.28 3.07 18,797,943.19 59.66 12,710,026.09 provision separately accrued Other accounts receivable withdrawn bad debt — — — — — provision according to credit risks characteristics Group 1: aging group 629,814,580.00 61.3 20,473,350.81 3.25 609,341,229.19 Group 2: related party 366,148,374.77 35.63 — — 366,148,374.77 group Subtotal of groups 995,962,954.77 96.93 20,473,350.81 2.06 975,489,603.96 Other accounts receivable with insignificant single amount for which bad debt — — — — — provision separately accrued 252 The 2015 Annual Report of Konka Group Co., Ltd. Total 1,027,470,924.05 100.00 39,271,294.00 3.82 988,199,630.05 ① Other accounts receivable with insignificant single amount for which bad debt provision separately accrued Closing balance Other accounts receivable (unit） Other accounts Withdrawal Bad debt provision Withdrawal reason receivable proportion (%) Energy saving subsidy 141,549,150.00 141,549,150.00 100.00 政策变化致无法收回 Chongqng Konka Auto Electronic 13,363,045.11 13,363,045.11 100.00 停产拟出售 Company Shenzhen Konka Video & Communication Systems Engineering 18,115,952.51 5,366,657.87 29.62 评估减值 Co., Ltd. Total 173,028,147.62 160,278,852.98 92.63 ②In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion (%) Within 1 year 31,019,128.44 620,484.13 2.00 1 to 2 years 19,056,050.64 952,802.53 5.00 2 to 3 years 7,674,294.40 1,534,858.88 20.00 3 to 4 years 4,185,012.22 2,092,506.11 50.00 4 to 5 years 334,958.96 167,479.48 50.00 Over 5 years 13,637,281.61 13,637,281.61 100.00 Total 75,906,726.27 19,005,412.74 ③In the groups, accounts receivable adopting other methods to withdraw bad debt provision: Balance at year- end Name of the group Other accounts receivable Bad debt provision Withdrawal proportion (%) Related party group 868,797,189.91 — — Total 868,797,189.91 — — (2) Bad debt provision withdrawal, reversed or recovered in the report period 253 The 2015 Annual Report of Konka Group Co., Ltd. The withdrawal amount of the bad debt provision during the reporting period was of RMB140,012,971.72; there was no amount of the reversed or collected part during the reporting period. (3) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Proportion of the total Name of the Bad debt provision Nature Closing balance Aging year-end balance of the entity Closing balance accounts receivable (%) Customer 1 Intercourse funds 204,028,944.44 Within 1 year 18.25 Energy saving 1-2years, 2-3 Customer 2 141,549,150.00 12.66 141,549,150.00 subsidy years Customer 3 Intercourse funds 102,869,873.14 Within 1 year 9.20 Customer 4 Intercourse funds 92,437,026.68 Within 1 year 8.27 Customer 5 Intercourse funds 90,137,173.41 Within 1 year 8.06 Total 631,022,167.67 254 The 2015 Annual Report of Konka Group Co., Ltd. 3. Long-term equity investment 1. Long-term equity investment Closing balance Opening balance Item Depreciation Book balance Book value Book balance Depreciation reserves Book value reserves Investment to the subsidiary 1,623,726,835.91 77,294,984.69 1,546,431,851.22 1,505,310,835.91 94,394,984.69 1,410,915,851.22 Investment to joint ventures 74,763,267.00 — 74,763,267.00 197,758,604.87 — 197,758,604.87 Total 1,698,490,102.91 77,294,984.69 1,621,195,118.22 1,703,069,440.78 94,394,984.69 1,608,674,456.09 (2) Investment to the subsidiary Withdrawn impairment Closing balance of Investee Opening balance Increased Decreased Closing balance provision impairment provision Mudangjiang electric 36,000,000.00 — — 36,000,000.00 — 36,000,000.00 appliances Anhui Konka 122,780,937.98 — — 122,780,937.98 — — Dongguan Konka 274,783,988.91 — — 274,783,988.91 — — Hong Kong Konka 781,828.61 — — 781,828.61 — — Konka Europe 261,482.50 — — 261,482.50 — — Nanhai Konka 500,000.00 — 500,000.00 — — — Kunshan Konka 350,000,000.00 — — 350,000,000.00 — — Plasthetics 4,655,000.00 — — 4,655,000.00 — — Konka Household 10,732,485.69 — — 10,732,485.69 — 10,732,484.69 255 The 2015 Annual Report of Konka Group Co., Ltd. Appliances Telecommunication 90,000,000.00 — — 90,000,000.00 — — Technology Konka America 8,062,500.00 — — 8,062,500.00 — 8,062,500.00 Information Network 22,500,000.00 — — 22,500,000.00 — 22,500,000.00 Shushida 31,500,000.00 — — 31,500,000.00 — — Chongqing Electronic 17,100,000.00 — 17,100,000.00 — — — Fittings Technology 48,750,000.00 — — 48,750,000.00 — — Kunshan Kangsheng 350,000,000.00 — — 350,000,000.00 — — Anhui Tongchuang 69,702,612.22 — — 69,702,612.22 — — Konka Optoelectronic 10,000,000.00 — — 10,000,000.00 — — Wankaida 10,000,000.00 — — 10,000,000.00 — — Beijing Konka 30,000,000.00 — — 30,000,000.00 — — Shushida Logistics 10,000,000.00 — — 10,000,000.00 — — Konka E-display 7,200,000.00 — — 7,200,000.00 — — Kaikai Shijie — 16,000,000.00 — 16,000,000.00 — — Kangqiao Jiacheng — 112,000,000.00 — 112,000,000.00 — — Commercial — 2,916,000.00 — 2,916,000.00 — — Technology Mobile Internet — 5,100,000.00 — 5,100,000.00 — — Total 1,505,310,835.91 136,016,000.00 17,600,000.00 1,623,726,835.91 — 77,294,984.69 (3) Investment to joint ventures Investee Opening balance Increase/decrease in reporting period 256 The 2015 Annual Report of Konka Group Co., Ltd. Additional Investment profit and loss Adjustment of other Negative investment Other equity changes investment recognized under the equity method comprehensive income Shanghai Konka Green Science & 197,758,604.87 — 124,800,000.00 -5,111,426.37 403,094.53 — Technology Co., Ltd. Zhuhai Jinsu Plastic Co., Ltd. — 6,210,000.00 — 119,726.97 183,267.00 Total 197,758,604.87 6,210,000.00 124,800,000.00 -4,991,699.40 403,094.53 183,267.00 (Continued) Increase/decrease in reporting period Closing balance of Investee Declaration of cash dividends or Withdrawn impairment Closing balance impairment Other profits provision provision Shanghai Konka Green Science & — — — 68,250,273.03 — Technology Co., Ltd. Zhuhai Jinsu Plastic Co., Ltd. — — — 6,512,993.97 — Total — — — 74,763,267.00 — 257 The 2015 Annual Report of Konka Group Co., Ltd. 4. Revenue and Cost of Sales 1. Revenue and Cost of Sales Reporting period Last period Item Revenue Operating costs Revenue Operating costs Main 12,994,682,247.47 11,233,692,241.60 10,542,892,396.23 9,238,043,128.65 operations Other 5,257,638,085.71 5,208,621,358.62 5,256,503,986.27 5,218,903,962.41 operations Total 15,799,396,382.50 14,456,947,091.06 18,252,320,333.18 16,442,313,600.22 (2) Main operations (Classified by industry) Reporting period Last period Industry Operation revenue Operation cost Operation revenue Operation cost Electronic industry 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60 Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60 (3) Main operations (Classified by product) Reporting period Last period Product Operation revenue Operation cost Operation revenue Operation cost Color TV business 10,063,529,629.38 8,800,695,399.60 12,389,008,246.36 10,671,963,381.66 Mobile phone business — — 25,260,750.08 21,695,401.37 Consumer appliances business 405,363,485.13 361,990,500.54 501,891,601.26 458,915,261.80 Other 73,999,281.72 75,357,228.51 78,521,649.77 81,118,196.77 Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60 (4) Main operations (Classified by area) Reporting period Last period Area Operation revenue Operation cost Operation revenue Operation cost Domestic sales 9,247,233,574.48 7,955,639,997.50 11,011,476,670.78 9,284,752,004.46 Overseas sales 1,295,658,821.75 1,282,403,131.15 1,983,205,576.69 1,948,940,237.14 Total 10,542,892,396.23 9,238,043,128.65 12,994,682,247.47 11,233,692,241.60 258 The 2015 Annual Report of Konka Group Co., Ltd. (5) The revenue of sales from the top five customers Proportion of total business revenue Period Main operation revenue (%) Y 2015 3,735,430,268.71 23.64 Y 2014 3,035,222,295.61 16.63 5. Investment income Item Reporting period Last period Long-term equity investment income accounted by cost method 2,014,898.95 — Long-term equity investment income accounted by equity method -4,991,699.40 -3,679,122.32 Investment income arising from disposal of long-term equity -491,110.76 248,192,713.43 investments Investment income received from disposal of available-for-sale 13,215.02 — financial assets Investment income received from holding of available-for-sale 2,212,535.21 48,104.52 financial assets Income from trust management 61,705,984.23 46,294,257.11 Total 60,463,823.25 290,855,952.74 259 The 2015 Annual Report of Konka Group Co., Ltd. XVII. Supplementary materials 1. Items and amounts of extraordinary gains and losses Item Amount Explanation Gains/losses on the disposal of non-current assets -16,096,434.80 Tax rebates, reductions or exemptions due to approval beyond authority or the lack of — official approval documents Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the 71,499,330.11 government’s unified standards Capital occupation charges on non-financial enterprises that are recorded into current — gains and losses Gains due to that the investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the enjoyable fair value of the identifiable net assets of — the investees when making the investments Gain/loss on non-monetary asset swap — Gain/loss on entrusting others with investments or asset management 20,419,318.35 Asset impairment provisions due to acts of God such as natural disasters -144,808,654.70 Gains and losses from debt restructuring — Expenses on business reorganization, such as expenses on staff arrangements, — integration, etc. Gain/loss on the part over the fair value due to transactions with distinctly unfair prices — Current net gains and losses of subsidiaries acquired in business combination under the same — control from period-begin to combination date Profits or losses incurred from contingency of non-operating business. — Gain/loss from change of fair value of transactional assets and liabilities, and investment gains from disposal of transactional financial assets and liabilities and available-for-sale 32,627,480.23 financial assets, other than valid hedging related to the Company’s common businesses Reverse of bad debt provision of account receivable individually conducting impairment — test Gain/loss on entrustment loans 3,550,666.66 260 The 2015 Annual Report of Konka Group Co., Ltd. Gain/loss on change of the fair value of investing real estate of which the subsequent — measurement is carried out adopting the fair value method Effect on current gains/losses when a one-off adjustment is made to current gains/losses according to requirements of taxation, accounting and other relevant laws and — regulations Custody fee income when entrusted with operation — Other non-operating income and expenses other than the above -104,311,044.28 Project confirmed with the definition of non-recurring gains and losses and losses -419,240.74 Subtotal -137,538,579.17 Income tax effects -14,549,153.86 Minority interests effects (after tax) 3,830,243.26 Total -126,819,668.57 Notes: the number “+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses or expenditure. The recognition of the non-current gains and losses items was executed according to the regulations of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering Securities-Non-current Gains and losses (Z-J-H-Announcement [2008] No. 43) . The amount of leased Item Reason assets involved Closely related to the normal operating business of the Company which met with the regulations of the state policies as well as Software tax returns 67,476,494.60 constantly enjoyed the governmental subsidies according to certain standard quotas or quantities 2. Return on equity (ROE) and earnings per share (EPS) Weighted average EPS（Yuan/share） Profit as of reporting period ROE (%) Basic EPS Diluted EPS Net profit attributable to common shareholders of the -36.30 -0.5219 -0.5219 Company Net profits attributed to the common shareholders after -32.63 -0.4693 -0.4693 deducting the non-current gains and losses 261 The 2015 Annual Report of Konka Group Co., Ltd. Section XI Documents Available for Reference I. Financial statements with the signatures and seals of the company principal, the principal of the accounting work and the principal of the accounting organ (financial manager); II. Original of the Auditor’s Report with the seal of the CPAs firm and the signatures & seals of the certified public accountants; III. Texts of all the Company’s documents ever publicly disclosed in newspapers designated by the CSRC in the reporting period and the originals of the public announcements. IV. Other relevant materials. The Board of Directors Konka Group Co., Ltd. 7 April 2016 262
首页
微信公众号
证券之星APP
