The2015AnnualReportofKonkaGroupCo.,Ltd.
KONKA GROUP CO., LTD.
THE 2015 ANNUAL REPORT
2016-16
April 2016
The2015AnnualReportofKonkaGroupCo.,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 omissionsin 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 ofthe board of directors.
Except for the following directors, all the other directors attended in person the board meeting for the review ofthisReport.
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 toinvestment 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 towhat’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 theCompany’s future development” in “Section IVDiscussion&Analysis bytheManagement”ofthis 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 thetwo versions, theChinese version shall prevail.
The2015AnnualReportofKonkaGroupCo.,Ltd.
Contents
Section I Important Statements, Contents&Terms.......................................................................2 Section II CompanyProfile&FinancialHighlights.......................................................................6 Section III Business Profile..............................................................................................................11 Section IVDiscussion&Analysisbythe Management.................................................................13 SectionVSignificantEvents............................................................................................................34 SectionVIChangesinShares&Shareholders..............................................................................57 SectionVII Preference Shares.........................................................................................................65 SectionVIIIDirectors, Supervisors,SeniorManagementStaffs&Employees..........................66 Section IX Corporate Governance..................................................................................................81 Section XFinancial Report..............................................................................................................94 Section XI DocumentsAvailableforReference...........................................................................262
The2015AnnualReportofKonkaGroupCo.,Ltd.
Terms
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|-|-|
|Term|Specificmeaning|
|Company,theCompany,theGroup|KonkaGroupCo.,Ltd.|
|TelecommunicationTechnology|ShenzhenKonkaTelecommunicationsTechnologyCo.,Ltd.|
|PrecisionMold|ShenzhenKonkaPrecisionMoldManufacturingCo.,Ltd.|
|KonkaHouseholdAppliances|ShenzhenKonkaHouseholdAppliancesCo.,Ltd.|
|InformationNetwork|ShenzhenKonkaInformationNetworkCo.,Ltd.|
|PlasticProducts|ShenzhenKonkaPlasticProductsCo.,Ltd.|
|ElectricalAppliances|ShenzhenKonkaElectricalAppliancesCo.,Ltd.|
|FittingsTechnology|ShenzhenKonkaElectronicFittingsTechnologyCo.,Ltd.|
|MudanjiangAppliances|MudanjiangArcticOceanAppliancesCo.,Ltd.|
|ChongqingElectronic|ChongqingKonkaAutomotiveElectronicCo.,Ltd.|
|ChongqingQingjia|ChongqingQingjiaElectronicsCo.,Ltd.|
|AnhuiKonka|AnhuiKonkaElectronicCo.,Ltd.|
|AnhuiHouseholdAppliances|AnhuiKonkaHouseholdAppliancesCo.,Ltd.|
|ChangshuKonka|ChangshuKonkaElectronicCo.,Ltd.|
|KunshanKonka|KunshanKonkaElectronicCo.,Ltd.|
|DongguanKonka|DongguanKonkaElectronicCo.,Ltd.|
|DongguanPacking|DongguanKonkaPackingMaterialsCo.,Ltd.|
|DongguanMouldPlastic|DongguanKonkaMouldPlasticCo.,Ltd.|
|BoluoKonka|BoluoKonkaPCBCo.,Ltd.|
|BoluoPrecision|BoluoKonkaPrecisionTechnologyCo.,Ltd.|
|NanhaiInstitute|Konka(Nanhai)DevelopmentCenter|
|HongKongKonka|HongKongKonkaCo.,Ltd.|
|KonkaHouseholdAppliancesInvestment|KonkaHouseholdAppliancesInvestment&DevelopmentCo.,Ltd.|
|Konka Household Appliances InternationalTrading|KonkaHouseholdAppliancesInternationalTradingCo.,Ltd.|
|KonkaAmerica|KonkaAmerica,Inc.|
|KonkaEurope|Konka(Europe)Co.,Ltd.|
|Xutongda|DongguanXutongdaMouldPlasticCo.,Ltd.|
|KonkaOptoelectronic|ShenzhenKonkaOptoelectronicTechnologyCo.,Ltd.|
|Wankaida|ShenzhenWankaidaScienceandTechnologyCo.,Ltd.|
|KunshanKangsheng|KunshanKangshengInvestmentDevelopmentCo.,Ltd.|
|AnhuiTongchuang|AnhuiKonkaTongchuangHouseholdAppliancesCo.,Ltd.|
|IndonesiaKonka|IndonesiaKonkaElectronicsCo.,Ltd.|
|ShushidaLogistics|ShenzhenShushidaLogisticsServiceCo.,Ltd.|
|BeijingKonkaElectronic|BeijingKonkaElectronicCo.,Ltd.|
|KunshanJielunte|KunshanJielunteMouldPlasticCo.,Ltd.|

The2015AnnualReportofKonkaGroupCo.,Ltd.
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|-|-|
|WuhanJielunte|WuhanJielunteMouldPlasticCo.,Ltd.|
|ChuzhouJielunte|ChuzhouJielunteMouldPlasticCo.,Ltd.|
|KonkaE-display|ShenzhenKonkaE-displayCo.,Ltd.|
|E-displayService|ShenzhenE-displayServiceCo.,Ltd.|
|XiamenDalong|XiamenDalongTradingCo.,Ltd.|
|YoushiKangrong|YoushiKangrongCultureCommunicationCo.,Ltd.|
|AnhuiJiasen|AnhuiJiasenPrecisionTechnologyCo.,Ltd.|
|KangqiaoJiacheng|ShenzhenKangqiaoJiachengPropertyInvestmentCo.,Ltd.|
|KonkaSmartTech|KonkaSmartTechLimited|
|KaikaiShijie|AnhuiKaikaiShijieE-commerceCo.,Ltd.|
|E2info|ShenzhenE2infoNetworkTechnologyCo.,Ltd.|
|MobileInterconnection|ShenzhenKonkaMobileInterconnectionTechnologyCo.,Ltd.|
|CommercialSystemTechnology|ShenzhenKonkaCommercialSystemTechnologyCo.,Ltd.|
|CSRC|ChinaSecuritiesRegulationCommission|
|SZSE|ShenzhenStockExchange|
|CSRCShenzhenBureau|ShenzhenBureauofChinaSecuritiesRegulationCommission|
|Yuan, Ten thousand Yuan, One HundredMillionYuan|RMBYuan,RMBTenthousand,RMBOneHundredMillionYuan|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Section II Company Profile& Financial Highlights
I.Basicinformation ofthe Company
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|Stockabbr.|KonkaA,KonkaB|Stockcode|000016,200016|
|Stock abbr. after change (ifany)|Nochanges|||
|Stockexchange|ShenzhenStockExchange|||
|CompanynameinChinese|康佳集团股份有限公司|||
|Abbr. of Company name inChinese|康佳集团|||
|Company name in English (ifany)|KONKA GROUP CO., LTD.|||
|Abbr. of Company name inEnglish(ifany)|KONKAGROUP|||
|Legalrepresentative|LiuFengxi|||
|Registeredaddress|15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,YuehaiStreet,NanshanDistrict,Shenzhen,GuangdongProvince,China|||
|Zipcode|518057|||
|Officeaddress|15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,YuehaiStreet,NanshanDistrict,Shenzhen,GuangdongProvince,China|||
|Zipcode|518057|||
|Companywebsite|www.konka.com|||
|Emailaddress|szkonka@konka.com|||

II. Contact information
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|-|-|-|
||CompanySecretary|RepresentativeforSecuritiesAffairs|
|Name|WuYongjun|MiaoLeiqiang|
|Address|Board Secretariat, 24/F, Konka R&D Center, 28 KejiSouth Twelfth Road, Science and Technology Park,Yuehai Street, Nanshan District, Shenzhen, GuangdongProvince,China|Board Secretariat, 24/F, Konka R&D Center, 28 KejiSouth Twelfth Road, Science and Technology Park,Yuehai Street, Nanshan District, Shenzhen, GuangdongProvince,China|
|Tel.|0755-26608866|0755-26608866|
|Fax|0755-26601139|0755-26601139|
|E-mail|szkonka@konka.com|szkonka@konka.com|

III. Aboutinformation disclosure andwhere thisReport is placed
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|Newspapers designated by the Company for|SecuritiesTimes,etc.|

The2015AnnualReportofKonkaGroupCo.,Ltd.
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|informationdisclosure||
|Internet website designated by CSRC fordisclosingthisReport|www.cninfo.com.cn|
|WherethisReportisplaced|Board Secretariat, 24/F, Konka R&D Center, 28 Keji South Twelfth Road,Science and Technology Park, Yuehai Street, Nanshan District, Shenzhen,GuangdongProvince,China|

IV.Changes in theregistered information
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|Organizationalcode|618815578|
|Changesinmainbusinesssincelisting(ifany)|Nochanges|
|Changesofcontrollingshareholder(ifany)|Nochanges|

V. Otherinformation
The CPAsfirm hired bytheCompany
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|Name|RuihuaCertifiedPublicAccountants|
|Officeaddress|5-11F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No. 8,XibinheRoad,YongdingMen,DongchengDistrict,Beijing,P.R.C.|
|Accountantswritingsignatures|ShenLingzhi,HeXiaojuan|

Sponsorengaged bytheCompany to conduct consistent supervision during thereporting period□Applicable√ Inapplicable
Financial consultant engaged by the Company to conduct consistent supervision during the reporting period
□Applicable√ Inapplicable
VI.Accounting and financialhighlights
Does the Company adjust retrospectively or restate the accounting data of previous years due to changes in theaccounting policy orcorrection ofaccounting errors?
□Yes√No
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|-|-|-|-|-|
||2015|2014|Increase/decreaseofcurrentyearoverlastyear|2013|
|Operatingrevenues(RMBYuan)|18,395,177,035.98|19,423,488,994.07|-5.29%|20,006,736,878.82|
|Net profits attributableto shareholders of theCompany(RMBYuan)|-1,256,819,314.51|52,623,527.86|-2,488.32%|45,820,496.73|
|Net profits attributableto shareholders of theCompany afterextraordinary gains and|-1,129,999,645.94|-475,481,381.45|-137.65%|-68,357,341.76|

The2015AnnualReportofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|
|losses(RMBYuan)|||||
|Net cash flows fromoperating activities(RMBYuan)|1,289,600,482.66|-640,385,182.05|301.38%|2,283,254,200.89|
|Basic EPS (RMBYuan/share)|-0.52|0.02|-2,700.00%|0.0190|
|Diluted EPS (RMBYuan/share)|-0.52|0.02|-2,700.00%|0.0190|
|Weighted average ROE(%)|-36.30%|1.28%|-37.58%|1.13%|
||Asat31Dec.2015|Asat31Dec.2014|Increase/decreaseofcurrentyear-endthanlastyear-end|Asat31Dec.2013|
|Totalassets(RMBYuan)|14,250,367,548.28|16,779,359,276.65|-15.07%|15,744,099,307.58|
|Net assetsattributabletoshareholders of theCompany(RMBYuan)|2,814,382,870.81|4,103,478,971.07|-31.41%|4,087,909,132.35|

VII. Differences of the accounting data under the domestic and the overseas accounting standards
1. Differences of the net profits and the net assets disclosed in the financial reports prepared under theinternational andtheChineseaccounting standards
□Applicable√ Inapplicable
No such differences for thereporting period.
2. Differences of the net profits and the net assets disclosed in the financial reports prepared under theoverseas andthe Chinese accountingstandards
□Applicable√ Inapplicable
No such differences for thereporting period.
VIII. Financialhighlights byquarter
Unit:RMBYuan
||||||
|-|-|-|-|-|
||Q1|Q2|Q3|Q4|
|Operatingrevenues|4,569,152,230.30|4,375,406,690.66|4,900,151,931.72|4,550,466,183.30|
|Net profits attributable toshareholdersoftheCompany|7,752,441.61|-304,705,949.00|-555,256,040.41|-404,609,766.71|
|Net profits attributable to|-214,058.24|-333,724,173.74|-365,476,454.60|-430,584,959.36|

The2015AnnualReportofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|
|shareholders of the Companyafter extraordinary gains andlosses|||||
|Net cash flows from operatingactivities|277,361,649.37|-207,318,739.74|1,070,979,280.76|148,578,292.27|

Any material differences between the financial indicators above or their summations and those which havebeen disclosed in quarterly orsemi-annual reports?
□Yes√No
IX.Extraordinary gains andlosses
√Applicable□ Inapplicable
Unit:RMBYuan
||||||
|-|-|-|-|-|
|Item|2015|2014|2013|Note|
|Gains/losses on disposal of non-currentassets (including offset amount of assetimpairmentprovisions)|-16,096,434.80|587,454,101.18|61,547,807.91||
|Governmentalgrantsrecordedintocurrentgains and losses (excluding those closelyrelated to business of the Company andgranted at certain quotas or amountsaccordingtogovernment’sstandards)|71,499,330.11|75,401,093.20|84,343,548.07||
|Gain/loss on entrusting others withinvestmentsorassetmanagement|20,419,318.35|12,260,439.18|||
|AssetimpairmentprovisionsduetoactsofGodsuchasnaturaldisasters|-144,808,654.70||-1,041,162.02||
|Gains and losses on fair value changes oftransactionalfinancialassetsandliabilities& investment gains on disposal oftransactionalfinancialassetsandliabilitiesas well as financial assets available forsale, except for effective hedging relatedtonormalbusinessoftheCompany|32,627,480.23||21,115.80||
|Gainsandlossesonentrustedloans|3,550,666.66||||
|Non-operating income and expense otherthanabove|-104,311,044.28|16,207,940.59|8,508,013.84||
|Other gain and loss items that meetdefinitionofextraordinarygain/loss|-419,240.74|-151,895.48|-1,369,748.77||
|Less:Incometaxeffects|-14,549,153.86|158,734,972.90|31,336,650.82||
|Minorityinterestseffects(aftertax)|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|--|

The2015AnnualReportofKonkaGroupCo.,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 thePublic—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
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|-|-|-|
|Item|Amountinvolved(RMBYuan)|Reason|
|Taxrebatesonsoftware|67,476,494.60|Government grants closely related to the Company’s normaloperation and constantly given at certain quotas or amountsaccordingtothegovernment’spoliciesandstandards|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Section III Business Profile
I.Main business during thereportingperiod
The Company is currently engaged in color TVs, mobile phones and white goods, with its main business models and thesituationsofits business divisions as follows:
1.ColorTVs
The Company provides colorTVs forboth domesticand 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 ofitscolorTVs.
As for the overseas sales, it mainly relies on B2B and is supported by B2C. The color TVs of the Company are sold toAsia Pacific, Middle East, Central& SouthAmerica, East Europe, etc.And the profit alsocomes from thedifference between thecosts and theselling prices of itscolorTVs. 2.Mobilephones
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 smallamount from thevalue 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 themargin between thecosts and theselling prices of itswhitegoods. II. Significantchanges in themain assets
1.Significantchanges in themain assets
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|Mainasset|Reasonforanysignificantchange|

The2015AnnualReportofKonkaGroupCo.,Ltd.
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|Equityassets|Thefinalreportofthelong-termequityinvestmentcomparedwith2014,reducingtheendof47.47%,themainreasonisthehopeofrecoveringcoupletYingcompanyShanghaiKonkagreenscienceandTechnologyCo.,Ltd.ofinvestment.|
|Fixedassets|Nosignificantchanges|
|Intangibleassets|Nosignificantchanges|
|Constructioninprogress|Attheendofthisreportintheconstructionprojectwasincreasedby30.23%comparedtotheendof2014,themainreasonistheincreaseininvestmentinKangshengHotelproject.|

2.Main assets overseas
□Applicable√ Inapplicable
III. Core competitiveness analysis
TheCompany’s capability inR&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 toincrease its overall competitiveness.
2015AnnualReportofKonkaGroupCo.,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 thefollowing 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 theconsolidated totalprofits.
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 theCompany’s overall business results, incurring anexchange lossof approximatelyRMB229million inthe 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 theCompany’s main products also led to the decrease intheCompany’s profitability in its main business.
For the reporting period, the Company achieved operating revenues of RMB18.395 billion, down5.29% from the prior year.And the net profits attributable to the shareholders of the Company stood at RMB-1.257 billion,representing a year-on-year decreaseof2488.32%.
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
2015AnnualReportofKonkaGroupCo.,Ltd.
directions, and created advantages for further acceleration of development. Business highlights of the Companyin 2015are 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 fordevelopment acceleration in nextperiod.
2.Urban renewalproject fortheheadquarterblock 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 onschedule and inorder.
3.Main businesses madeprogressduring changes.
(1) Domestic business ofcolorTV
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 bystrictly controlling onquality.
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 onproduct 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 byadjustments.
(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,
2015AnnualReportofKonkaGroupCo.,Ltd.
and ensured a record-high sales volume of overseas businesses. Moreover, the profitability of overseas businesses further improved dueto 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 aresult, laid afoundation for future development.
(4)Whitehousehold appliancebusiness
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 businessperformance.
(II) Revenues andcosts
1.Breakdown oftheoperating revenues
Unit:RMBYuan
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|-|-|-|-|-|-|
||2015||2014||+/-|
||Amount|Inoperatingrevenues|Amount|Inoperatingrevenues||
|Operatingrevenues|18,395,177,035.98|100%|19,423,488,994.07|100%|-5.29%|
|Bybusinesssegment||||||
|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%|
|Byproduct||||||
|ColorTVs|12,590,931,785.71|68.45%|14,697,422,135.45|75.67%|-14.33%|
|Mobilephones|790,942,197.54|4.30%|1,587,898,794.07|8.18%|-50.20%|
|Whitegoods|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%|
|Byarea||||||
|Domestic|12,466,005,969.45|67.77%|14,710,949,822.97|75.74%|-15.26%|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|Overseas|5,929,171,066.53|32.23%|4,712,539,171.10|24.26%|25.82%|

 (2) Industries, products orareascontributingover10%ofoperating revenuesorprofit√Applicable□ Inapplicable
Unit: RMBYuan
||||||||
|-|-|-|-|-|-|-|
||Operatingrevenue|Operatingcost|Grossprofitmargin|Operatingrevenue:+/-%fromlastyear|Operatingcost:+/-%fromlastyear|Grossprofitmargin:+/-%fromlastyear|
|Classifiedbyindustries|||||||
|Electronicsindustry|16,882,508,201.20|14,760,120,413.85|12.57%|-10.65%|-9.48%|-1.13%|
|Classifiedbyproducts|||||||
|ColorTVsindustry|12,590,931,785.71|11,006,357,581.37|12.59%|-14.33%|-12.07%|-2.25%|
|Classifiedbyregions|||||||
|Domesticsales|12,466,005,969.45|10,466,548,247.47|16.04%|-15.26%|-14.56%|-0.68%|
|Overseassales|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)AretheCompany’s goods sellingrevenuehigherthanthe service revenue?
□Yes√No
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|-|-|-|-|-|-|
|Category|Item|Unit|2015|2014|YoY+/-|
|Electronicsindustry|Salesvolume|Tenthousandsets|1,136.17|1,529.35|-25.71%|
||Output|Tenthousandsets|914.05|1,150.33|-20.54%|
||Inventory|Tenthousandsets|129.49|145.88|-11.24%|

 Explanation of thereasons ofthechanges of therelevant dateexceeded30%over thelast 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 costform
Category oftheindustries and products
Unit: RMBYuan
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|-|-|-|-|-|-|-|
|Categoryoftheindustries|Item|2015||2014||YoY+/-|
|||Amount|Ratiototheoperatingcost|Amount|Ratiototheoperatingcost||

2015AnnualReportofKonkaGroupCo.,Ltd.
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|Electronics|Rawmaterials|15,132,306,097.45|94.25%|15,737,054,443.96|94.04%|-3.84%|
|Electronics|Laborcost|642,219,887.42|4.00%|668,090,268.67|3.99%|-3.87%|
|Electronics|Depreciation|65,843,593.96|0.41%|64,478,575.17|0.39%|2.12%|

Unit: RMBYuan
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|-|-|-|-|-|-|-|
|Classifiedbyproducts|Item|2015||2014||YoY+/-|
|||Amount|Ratiototheoperatingcost|Amount|Ratiototheoperatingcost||
|ColorTVs|ColorTVs|11,006,357,581.37|68.56%|12,516,818,815.26|74.81%|-12.07%|
|Cellphones|Cellphones|748,974,690.95|4.66%|1,443,167,712.05|8.62%|-48.10%|
|Consumerappliances|Consumerappliances|1,276,893,910.52|7.95%|1,106,574,443.35|6.61%|15.39%|
|Other|Other|3,023,271,002.78|18.83%|1,667,185,610.79|9.96%|81.34%|

 Note: in 2015, the company's mobile phone business revenue decline, its operating costs compared with 2014 decreased, the white power and other business revenue increased so that thecorresponding operating costs increased with theproportion of.
6.Whetherthere werechanges ofthe consolidationscope during thereporting period
√Yes□No
(1) Disposal ofthesubsidiaries
On 9 Feb. 2015, the Company formally written off Konka (Nanhai) Development Center. Since then, theCompanyno more included which inthe consolidated scope.
(2) Changes of theconsolidated scope ofotherreasons
① Shenzhen Konka Precision Mold Manufacturing Co., Ltd and Mansfield Technology (Taiwan) Co., Ltd, our subsidiaries contributed capital jointly and foundedAnhui 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 occupied51% of the registered capital and Mansfield Technology (Taiwan) Co., Ltd.
subscribed to RMB9.80 million, which occupied49%of theregistered 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,
2015AnnualReportofKonkaGroupCo.,Ltd.
with a registered capital of RMB20 million. In it, the Company contributed RMB16 million, which occupied80% of the registered capital. Shenzhen Kaikai Shijie Investment Partnership Enterprise (limited partnership) contributed RMB4.0 million, which occupied20% 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 occupied96% of the registered capital, the other stockholders contributed RMB800,000, which occupied4% 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 itsmerger scopefrom 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 byDecember 31, 2019. In it, the Company subscribed to RMB700 million, which occupied70% of the registered capital, OCT Enterprises Co. contributed to RMB300 million, which occupied30% of the registered capital. By the date of the balance sheet, the Company actually contributed RMB112 million, which occupied11.20% of the registered capital; OCT Enterprises Co. actually contributed RMB48 million, which occupied4.8% of the registered capital. The Company has right of control over it, and included it into itsmerger scopefrom 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 ofHK$10million. In it, Kangdian Investment Development Co., Ltd. contributedHK$6.10 million, which occupied61% of the registered capital and Konka Smarttech Limited contributedHK$3.90 million, which occupied39% of the registered capital. The Company has right ofcontrol over it,and included itinto itsmerger scopefrom 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 itinto itsmerger scopefrom 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, representing81% of the registered capital, Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) contributed RMB2.28 million, representing19% of the registered capital. As at the date of balance sheet, thecompany’s actual contribution was RMB2.916 million, representing24.3% of the
2015AnnualReportofKonkaGroupCo.,Ltd.
registered capital, and Shenzhen Kangzhuang Jiasheng Investment Partnership (LP) was RMB621,000, representing5.18% of the registered capital. The company has control over Shenzhen Konka Commercial System Technology Co., Ltd. which has been thus consolidated since June25,2015.
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, representing51% of the registered capital; Shenzhen Kangwei Investment Partnership (LP) shall contribute RMB9.80 million, representing49% of the registered capital. As at the data of balance sheet, theCompany’s actual contribution was RMB5.10 million, representing25.5% of the registered capital, and Shenzhen Kangwei Investment Partnership(LP)’s actual contribution was RMB4.90 million, representing24.5% 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.. Sincethen, theCompany nomore included which in theconsolidated scope. 7. List of the significant changes or adjustment of the industries, products or services of the Company duringthereporting period
□Applicable√ Inapplicable
8.Listofthemajor tradedebtors andmajor supplier
List ofthemajor tradedebtors oftheCompany
|||
|-|-|
|Totalsalestothetop5customers(RMBYuan)|3,298,880,853.29|
|Ratio of the total sales to the top 5 customers to theannualtotalsales|17.93%|

Information ofthetop 5customers oftheCompany
|||||
|-|-|-|-|
|SerialNo.|Nameofcustomer|Salesamount(RMBYuan)|Proportioninannualtotalsales|
|1|Customer1|1,030,050,237.42|5.60%|
|2|Customer2|904,844,908.39|4.92%|
|3|Customer3|675,374,436.63|3.67%|
|4|Customer4|356,501,259.15|1.94%|
|5|Customer5|332,110,011.70|1.80%|
|Total|--|3,298,880,853.29|17.93%|

Notes of theother situationofthemajor customers
2015AnnualReportofKonkaGroupCo.,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 than5% shareholding, actual controllers and other related parties had no directly or indirectly equities of the major customers.
List ofthemajor suppliersof theCompany
|||
|-|-|
|Totalpurchasetothetop5suppliers(RMBYuan)|4,545,114,837.87|
|Ratioofthetotalpurchasetothetop5supplierstotheannualtotalpurchase|37.88%|

Information ofthetop 5suppliers ofthe Company
|||||
|-|-|-|-|
|No.|Nameofsupplier|Purchaseamount(RMBYuan)|Ratiototheannualpurchaseamount|
|1|Supplier1|2,543,534,610.97|21.20%|
|2|Supplier2|1,010,674,396.02|8.43%|
|3|Supplier3|481,434,025.60|4.01%|
|4|Supplier4|406,195,276.40|3.38%|
|5|Supplier5|103,276,528.88|0.86%|
|Total|--|4,545,114,837.87|37.88%|

 Notes of theother situationofthemajor 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 than5% 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+/-|Notesofthesignificantchanges|
|Sellingexpenses|2,448,337,549.43|2,414,468,187.73|1.40%||
|Managementexpenses|695,731,013.59|686,930,373.50|1.28%||
|Financialexpenses|350,616,323.55|132,763,824.46|164.09%|Exchangelossescausedbyexchangeratefluctuationsinthecurrentperiod.|

(IV)R&D investment
√Applicable□ Inapplicable
2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|229|millions|

 Company continued to enhance theR&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.
ListoftheR&D investment oftheCompany
|||||
|-|-|-|-|
||2015|2014|Variedratio|
|NumberoftheR&Dpersonnel(person)|1,213|1227|-1.14%|
|RatiototheR&Dpersonnel|6.54%|6.53%|0.01%|
|Investment amount of the R&D(RMB10,000’)|229,397,281.19|219,325,677.28|4.59%|
|Ratio of the R&D investment to theoperatingincome|1.25%|1.13%|0.12%|
|Amount of the capitalized R&Dinvestment(RMBYuan)|0|0|0|
|Ratio of the capitalized R&DinvestmenttotheR&Dinvestment|0|0|0|

Reason of remarkable changes over the last year of the ratio of the totalR&D investment amount to the operating income
□Applicable√ Inapplicable
Reason of the greatly change of the ratio of theR&D investment capitalization and its reasonable explanation
□Applicable√ Inapplicable
(V) Cash flow
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2015|2014|YoY+/-|
|Subtotal of cash inflows fromoperatingactivities|19,318,005,896.78|18,464,400,652.40|4.62%|
|Subtotal of cash outflows fromoperatingactivities|18,028,405,414.12|19,104,785,834.45|-5.63%|
|Net cash flows from operatingactivities|1,289,600,482.66|-640,385,182.05|301.38%|
|Subtotal of cash inflows frominvestingactivities|3,818,980,972.35|3,104,636,438.39|23.01%|
|Subtotal of cash outflows from|3,970,903,850.94|3,473,214,203.50|14.33%|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|investingactivities||||
|Net cash flows from investingactivities|-151,922,878.59|-368,577,765.11|58.78%|
|Subtotal of cash inflows fromfinancingactivities|3,134,261,903.06|4,827,571,410.52|-35.08%|
|Subtotal of cash outflows fromfinancingactivities|4,388,415,298.00|3,947,765,478.96|11.16%|
|Net cash flows from financingactivities|-1,254,153,394.94|879,805,931.56|-242.55%|
|Net increase in cash and cashequivalents|-152,081,985.73|-131,252,584.13|-15.87%|

Notes of themajoreffects ontheYoYsignificant changes occurred ofthedata above
√Applicable□ Inapplicable
The decrease in bills receivable and purchase cash payments resulting in the decrease in net cash flowfrom operatingactivities increased.
Cash and cash investments paid in cash and investments during this period resulted in an increase in net cash flows generated during thecurrent period.
Net cash flowfrom financing activities resultingfrom thecurrent repayment period.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of2015of theCompany during thereporting 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 inflowis larger.
III. Analysisof thenon-core business
√Applicable□ Inapplicable
Unit: RMB Yuan
||||||
|-|-|-|-|-|
||Amount|Ratiotothetotalprofitsamount|Notesofthecauses|Whetherwassustainability|
|Investmentprofits|13,574,652.77|-0.88%|||
|Variable profit andlossoffairvalue|32,591,836.13|-2.11%|||
|Assets impairmentlosses|365,863,111.63|-23.67%|Themainprovisionforbaddebtsofaccounts|Thisperiodtoconfirmthetemporarilyunabletorecovertheenergysubsidies|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
||||receivableandinventory.|toprepareforbaddebtsdoesnothavecontinuity.|
|Non-operatingrevenues|158,538,297.00|-10.26%|Softwaretaxrebatesandgovernmentsubsidies.|Hasacertaincontinuity.|
|Non-operatingcosts|134,780,910.57|-8.72%|Thisperiodshouldbereturnedtotheearlyperiodofenergysubsidiesreceived.|Doesnothavecontinuity.|

IV.Listofthe assets andliabilities
1.Listofthesignificantchanges oftheassets form
Unit: RMBYuan
||||||||
|-|-|-|-|-|-|-|
||Asat31Dec.2015||Asat31Dec.2014||Proportionchange|Explainanymajorchange|
||Amount|Proportionintotalassets|Amount|Proportionintotalassets|||
|Monetaryfunds|1,706,446,928.92|11.97%|1,703,135,732.18|10.15%|1.82%||
|Accountsreceivable|2,048,813,439.34|14.38%|2,259,293,207.16|13.46%|0.92%||
|Inventories|2,882,515,913.28|20.23%|3,904,436,250.33|23.27%|-3.04%|Increasetheearlystageofinventorysales,endinginventoryreduction.|
|Investingrealestate|227,718,178.53|1.60%|233,349,452.80|1.39%|0.21%||
|Long-termequityinvestment|190,573,524.29|1.34%|362,765,183.66|2.16%|-0.82%|ThecompanytorecovertheantitheticalcoupletShanghaiKonkagreenPolytronTechnologiesIncinvestment.|
|Fixedassets|1,763,503,189.50|12.38%|1,783,695,548.92|10.63%|1.75%||
|Constructioninprogress|207,854,180.88|1.46%|159,604,884.09|0.95%|0.51%|TheincreaseininvestmentintheprojectofKangshenghotel.|
|Short-term|4,150,773,195.76|29.13%|5,145,712,436.91|30.67%|-1.54%|Thereturnofthe|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||
|-|-|-|-|-|-|-|
|loans||||||previousperiodofborrowingledtoareductioninborrowing.|
|Long-termloans|23,700,000.00|0.17%|957,541,210.52|5.71%|-5.54%|Longtermloansduetothematurityoftheclassificationtoayeartomaturity.|

 2.Assets andliabilities measured atfairvalue
√Applicable□ Inapplicable
Unit: RMBYuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item|Openingamount|Gain/lossonfairvaluechangeinthereportingperiod|Cumulativefairvaluechangerecordedintoequity|Impairmentprovisionsinthereportingperiod|Purchasedamountinthereportingperiod|Soldamountinthereportingperiod||Closingamount|
|Financialassets|||||||||
|1. Financial assetsmeasured at fairvalue and whosechanges are recordedinto current gainsand losses(excluding derivativefinancialassets)|0.00|32,591,836.13|||||33,196,377.28||
|3.Available-for-salefinancialassets|1,630,609.00||1,227,774.30||54,815.00|97,989.12|2,874,068.30||
|Totaloftheabove|1,630,609.00|32,591,836.13|1,227,774.30||54,815.00|97,989.12|36,070,445.58||
|Financialliabilities|0.00||||||0.00||

 Did any significant change occur to the attribute of theCompany’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 ontheoperating results andfinancial conditions
2015AnnualReportofKonkaGroupCo.,Ltd.
V. Listof theinvestment
1.Overall condition
√Applicable□ Inapplicable
||||
|-|-|-|
|Investmentamountofthereportingperiod(RMBYuan)|Investmentamountofthesameperiodoflastyear(RMBYuan)|Variationamount|
|78,306,112.00|249,170,764.00|-68.57%|

 2.Listofthesignificantequity investmentacquired fromthereporting period
□Yes√No
3.Listofthesignificantnon-equity investment hasbeen executing during thereporting period□Applicable√ Inapplicable
4.Investment on thefinancialassets
(1) Listof thesecurities investment
√Applicable□ Inapplicable
Unit: RMBYuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Varietyofsecurities|Codeofsecurities|Nameofsecurities|Initialinvestmentcost|Accountingmeasurementmode|Openingbookvalue|Gain/lossonfairvaluechangeinthereportingperiod|Cumulativefairvaluechangerecordedintoequity|Purchasedamountinthereportingperiod|Soldamountinthereportingperiod|Gain/lossforreportingperiod|Closingbookvalue|Accountingtitle|Sourceofstock|
|Domesticandoverseasstock|002772|ZXJY|6,500|Measuredbyfairvalue|0.00|0|0|0|6,500|14,205.77|7,705.77|0|Self-ownedfunds|
|Domesticandoverseasstock|300485|SSYY|19,230|Measuredbyfairvalue|0.00|0|0|0|19,230|38,060.46|18,830.46|0|Self-ownedfunds|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Domesticandoverseasstock|300481|PYHC|4,565|Measuredbyfairvalue|0.00|0|0|0|4,565|9,535.45|4,970.45|0|Self-ownedfunds|
|Domesticandoverseasstock|002770|KDRY|3,4250|Measuredbyfairvalue|0.00|0|0|0|3,425|7,562.42|4,137.42|0|Self-ownedfunds|
|Domesticandoverseasstock|002776|Bobaolon|11,645|Measuredbyfairvalue|0.00|0|0|0|11,645|18,769.61|7,124.61|0|Self-ownedfunds|
|Domesticandoverseasstock|002766|SLGF|3,765|Measuredbyfairvalue|0.00|0|0|0|3,765|9,855.41|6,090.41|0|Self-ownedfunds|
|Domesticandoverseasstock|002787|HYBZ|5,685|Measuredbyfairvalue|0|0|0|2,500|5,685|0|0|8,185|Self-ownedfunds|
|Domesticandoverseasstock|000002|VankeA|2,311,748.07|Measuredbyfairvalue|1,630,609.00|1,630,609|0|554,135.23||0|0|2,865,883.3|Self-ownedfunds|
|Other securitiesinvestment held at theperiod-end|||0|--|0|0|0|0|0|0|0|--|--|
|Total|||2,366,563.07|--|1,630,609|0|556,635.23|54,815|97,989.12|48,859.12|2,874,068.3|--|--|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|Disclosure date of theboard announcement onapproval of thesecuritiesinvestment|Inapplicable|
|Disclosure date of thegeneral meetingannouncement onapproval of thesecurities investment (ifany)|Inapplicable|

(2) Listof thederivative investment
□Applicable√ Inapplicable
No such situationofthe Company duringthe reporting period.
5.Use ofraised funds
□Applicable√ Inapplicable
No such situationofthe Company duringthe reporting period.
VI.Selling of thesignificantassets andtheequities
1.Listoftheselling ofthe significantassets
□Applicable√ Inapplicable
No such situationofthe Company duringthe reporting period.
2.Listoftheselling ofthe significantequities
√Applicable□ Inapplicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Counterparty|Soldequities|Solddate|Transactionprice(RMBTenThousandYuan)|Netprofitscontributedbytheequitiestothelistedcompaniesfromtheperiod-begintothesolddate|InfluenceofthesellingoftheCompany|Proportionofthenetprofitsofthecontributedamountoftheequitiessellingtothelistedcomp|Pricingprinciplesoftheequitiesselling|Whetherwastherelatedtransaction|Relationshipwiththecounterparty|Whethertheinvolvedequitiesallcompletedtheownershiptransfer|Whetherexecutedasscheduledandiffailed,shouldstatethereasonsandtheadoptedmeasurementsof|Disclosuredate|Disclosureindex|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||(RMBTenThousandYuan)||aniestothetotalamountofthenetprofits|||||theCompany|||
|Listing|ShenzhenKonkaYishijieCommercialDisplayCo.,Ltd.|No|7,200|25|Supplementthemobility|0|Assessmentvalue|No|Withoutrelatedtransactions|No|Temporarilyceasethelisting|4Nov.2015|http://www.cninfo.com.cn/finalpage/2015-11-04/1201752356.PDF|

Notes:March2016,theCompanyhaddecidedtotemporarilyceasethelistingandtransfer60%equitiesofShenzhenKonkaYishijie CommercialDisplayCo.,Ltd.heldbytheCompany,ofwhichthedetailspleaserefertotheIndicativeAnnouncementofTemporarilyCeasetheListingandTransfer60%EquitiesofYishijieCompany(AnnouncementNo.:2016-11).
VII. Analysis ofthemajor controlling andstock-participating companies
√Applicable□ Inapplicable
List of the stock-participating companies which the influence over10% of the net profits of the Company bythemajor subsidiaries
Unit: RMBYuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name|Type|Mainproductsorservices|Registeredcapital|Totalassets|Netassets|Operatingrevenues|Operatingprofit|Netprofit|
|ShenzhenWankaidaScienceandTechnology Co.,|Subsidiary|Softwaretechnologydevelopmentandmaintenance|RMB10000000|344,074,716.76|339,240,366.98|57,484,390.00|33,660,500.24|38,914,171.12|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Ltd.|||||||||
|DongguanXutongda MouldPlasticCo.,Ltd.|Subsidiary|Productionandsaleofmouldandplasticproducts|RMB5000000|97,038,261.68|35,915,691.33|165,783,377.81|15,770,567.84|13,721,503.54|
|ShenzhenKonkaInformationNetworkCo.,Ltd.|Subsidiary|Productionandsaleofdigitalnetworkproducts|RMB30000000|169,047,739.55|10,528,385.85|227,564,096.73|12,698,675.02|14,068,154.53|
|AnhuiKonkaTongchuangHouseholdAppliances Co.,Ltd.|Subsidiary|Productionandsaleofrefrigerators,washingmachinesandotherhouseholdappliances|RMB180000000|855,155,156.04|-45,426,362.30|1,813,977,718.86|-47,758,638.98|-31,124,158.57|
|AnhuiKonkaElectronic Co.,Ltd.|Subsidiary|Productionandsaleofmultimediaproducts|RMB140000000|1,108,033,608.80|287,310,914.76|5,226,927,921.25|-2,564,857.76|5,741,493.20|
|DongguanKonkaMouldPlasticCo.,Ltd.|Subsidiary|Productionandsaleofmouldandplasticproducts|RMB10000000|291,454,028.14|99,951,650.55|187,474,600.08|-23,563,931.64|-22,550,751.43|
|EnRayTek|Jointstoc|Productionand|USD64196600|1,337,568,934.81|229,470,887.12|165,482,576.55|-129,645,828.55|-58,648,256.05|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Optoelectronics(Shanghai)Co.,Ltd.|kcompany|saleofLED|||||||
|Shenzhen KonkaTelecommunicationsTechnology Co.,Ltd.|Subsidiary|Productionandsaleofmobilecommunicationproducts&saleofmultimediaproducts|RMB120000000|304,037,383.60|-244,556,546.46|821,019,386.24|-47,183,184.85|-45,307,508.54|
|KunshanKonkaElectronicCo.,Ltd.|Subsidiary|ProductionandsaleofTFT-LCMandmultimediaproducts|RMB350000000|576,730,397.89|312,009,194.14|2,009,011,978.36|-53,073,365.90|-48,093,088.72|
|DongguanKonkaElectronicCo.,Ltd.|Subsidiary|Productionandsaleofmultimediaproducts|RMB266670000|740,114,161.64|481,809,197.96|1,016,938,820.52|-117,656,404.92|-101,694,301.22|
|HongKongKonkaCo.,Ltd.|Subsidiary|Export&importofelectromechanicalandelectronics|HKD500000|1,914,142,291.75|67,974,528.68|3,496,450,561.65|-43,639,699.09|-49,402,634.06|

Subsidiaries acquired or disposed during thereporting period:
√Applicable□ Inapplicable
2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Nameofsubsidiary|Purposeforacquiringordisposingthesubsidiaryinthereportingperiod|Effectontheoverallproductionandbusinessperformance|
|Konka(Nanhai)DevelopmentCenter|Write-off|Noeffectontheoverallproductionandbusinessperformance|
|ChongqingKonkaAutomotiveElectronicCo.,Ltd.|Liquidation|Noeffectontheoverallproductionandbusinessperformance|
|AnhuiJiasenPrecisionTechnologyCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|AnhuiKaikaiShijieE-commerceCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|ShenzhenYipingfangNetworkTechnologyCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|ShenzhenKangqiaojiachengPropertyInvestmentCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|KonkaZhishengCo.,Ltd.|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|ShenzhenKonkaYishijieCommercialDisplayCo.,Ltd.|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|ShenzhenKonkaCommercialSystemsTechnologyCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|
|ShenzhenKonkaMobileInternetTechnologyCo.,Ltd|Establishmentofcapitalcontribution|Noeffectontheoverallproductionandbusinessperformance|

List ofthemajor controllingstock-participating companies
There was no information of the major controlling stock-participating companies of the Company needed to bedisclosed during thereporting period.
VIII. Listofthe structuredmain bodies controlledby theCompany
□Applicable√ Inapplicable
IX.OutlookoftheCompany’sfuturedevelopment
Viewing from industrial perspective, Shenzhen Konkawill faceboth advantages and disadvantages in 2016:
(I)Advantages:
The Internet boom has brought great opportunities and unlimited space. The active users of thecompany’s smart TVs will continue to increase in 2016, and the operation of various value-added services at the TV terminals is starting to mature, and it will see returns from the video, advertising, education, health care andgames.
(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
2015AnnualReportofKonkaGroupCo.,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 willbebasically 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 in2016
1.Actively pushforchanges inthe management mechanism
The company will actively push for changes in the corporate management mechanism, and promote the market-oriented changes in themotivationmechanism and restraining mechanism.
2.Balanced developmentin thewholechain
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 agoodjob ofuseroperation
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 truecontribution tothecompany’sbusiness.
4.Promote theintelligentmanufacturing
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 inmanufacturing enterprises).
X. Listof thereceived researches, visits andinterviews
1.Particulars aboutresearches,visits andinterviews received inthis reportingperiod
□Applicable√ Inapplicable
No such situationofthe Company duringthe reporting period.
2. Particulars about researches, visits and interviews received from the period-end to the disclosuredate
2015AnnualReportofKonkaGroupCo.,Ltd.
□Applicable√ Inapplicable
No such situationofthe Company duringthe reporting period.
2015AnnualReportofKonkaGroupCo.,Ltd.
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share capital of theCompany
List of the formulation, execution or adjustment of the profits distribution policies of the common shares, especially thecash 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 linewith theArticles ofAssociation and relevant resolutionsoftheShareholders’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.
|||
|-|-|
|Specialstatementaboutthecashdividendpolicy||
|In compliance with the Company’s Articles of Association and the resolution of the generalmeeting|Yes|
|Specificandcleardividendstandardandratio|Yes|
|Completedecision-makingprocedureandmechanism|Yes|
|Independentdirectorsfulfilledtheirresponsibilitiesandplayedtheirduerole.|Yes|
|Minority shareholders had the chance to fully express their opinion and desire and their legalrightsandinterestswerefullyprotected.|Yes|
|In adjustment or alteration of the cash dividend policy, the conditions and procedure were incompliancewithregulationsandtransparent.|Yes|

Pre-plan or plan for profit distribution and turning capital reserve into share capital in recent 3 years (including thereporting period)
1.The 2015profits distributionpreplan oftheCompany 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 2015semi-annual profits distribution preplan oftheCompany was as follows:
2015AnnualReportofKonkaGroupCo.,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 thetotal share capital oftheCompany increased to 2,407,945,408.
3.The 2014profits distributionplan of theCompany was as follows:
Based on theCompany’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 intothe nextyear fordistribution.
4.The 2013profits distributionplan of theCompany was as follows:
Based on theCompany’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: RMBYuan
|||||||
|-|-|-|-|-|-|
|Dividendyear|Amountofcashdividend(includingtax)|Netprofitbelongingtoshareholdersofthelistedcompanyinconsolidatedstatementofdividendyear|Theratioaccountinginnetprofitwhichbelongstoshareholdersofthelistedcompanyinconsolidatedstatement|Amountofthecashdividendbyothermethods|Ratioofthecashdividendbyothermethods|
|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 turnfrom reserved funds to share capital.
III. Performance ofcommitments
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 thosehadn’t been completed execution up to the period-end
□Applicable√ Inapplicable
There was nosuch situation oftheCompany during thereporting period.
2015AnnualReportofKonkaGroupCo.,Ltd.
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the Company madenote andexplainto the assets orproject arrived atoriginalprofitforecast□Applicable√ Inapplicable
IV. Occupation of theCompany’s capital by the controlling shareholder or its related parties fornon-operating purposes
□Applicable√ Inapplicable
No such cases in thereporting 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 thelastfinancial report
□Applicable√ Inapplicable
No such cases in thereporting period.
VII. Explain retrospective restatement due to correction of significant accounting errors in the reporting period
□Applicable√ Inapplicable
No such cases in thereporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of lastyear
√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 thecontents ofthechange.
IX.Particulars aboutengagement anddisengagementof CPAsfirm
CPAs firm engaged at present
|||
|-|-|
|NameofdomesticCPAsfirm|RuihuaCertifiedPublicAccountants|
|Remuneration for domestic CPAs firm for thereportingperiod(RMBTenThousandYuan)|120|
|Consecutive years of the audit services providedbydomesticCPAsfirm|3years|
|NameofdomesticCPAsfirm|ShenLingzhi,HeXiaojuan|
|NameofoverseasCPAsfirm(ifany)|Inapplicable|
|Remuneration for overseas domestic CPAs firmfor the reporting period (RMB Ten ThousandYuan)(ifany)|0|
|Consecutive years of the audit services providedbyoverseasCPAsfirm(ifany)|Inapplicable|
|NameofoverseasCPAsfirm(ifany)|Inapplicable|

Reengage theCPAsfirm at current period ornot?
□Yes√No
Reengage theCPAsfirm during auditing period ornot?
√Applicable□ Inapplicable
During the reporting period, as approved by theShareholders’ General Meeting, the Company
2015AnnualReportofKonkaGroupCo.,Ltd.
continued to engage Ruihua Certified PublicAccountants as the audit firm on internal control of the Company for 2015,withthe auditingfee for theinternal control in 2015as RMB400,000.
X. Particulars about trading suspension and termination faced after the disclosure of annual report
□Applicable√ Inapplicable
XI.Bankruptcy andreorganization
□Applicable√ Inapplicable
There was nosuch situation oftheCompany during thereporting period.
XII. Significantlawsuitorarbitration
√Applicable□ Inapplicable
|||||||||
|-|-|-|-|-|-|-|-|
|Basicsituationoflawsuit(arbitration)|Lawsuitamount(RMBTenThousand)|Whetherformintoestimatedliabilities|Processoflawsuit(arbitration)|Trialresultsandinfluencesoflawsuit(arbitration)|Situationofexecutionofjudgmentoflawsuit(arbitration)|Disclosuredate|Disclosureindex|
|As for the details,please refer to theNotes 2. Descriptionof the Contingenciesof the Commitmentsand the Contingenciesof Chapter XII of theNotes to the FinancialReport||||||||

XIII. Punishmentand rectification
□Applicable√ Inapplicable
No such cases in thereporting period.
XIV.Honesty situationsoftheCompany,its controlling shareholders andactual controller√Applicable□ Inapplicable
There was neither execution of the effective judgment from the court of the Company and the controlling shareholders northesituationof thelarger liabilities failed to pay offwhen expired. XV.Listof theexecutionof thestock incentive plan, ESOP,orotherStaffincentives
□Applicable√ Inapplicable
No such cases in thereporting period.
2015AnnualReportofKonkaGroupCo.,Ltd.
XVI. Significantrelated-party transactions
1.Related-party transactions relevantto routine operation
√Applicable□ Inapplicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Relatedparty|Relationship|Typeoftherelated-partytransaction|Contentoftherelated-partytransaction|Pricingprincipleoftherelated-partytransaction|Transactionprice|Transactionamount(RMBTenThousandYuan)|Proportioninsamekindoftransactions|Approvedtransactionquota(RMBTenThousandYuan)|Whetherexceedtheapprovedquota|Settlementmethodoftherelated-partytransaction|Similarmarketprice|Disclosuredate|Disclosureindex|
|AnhuiHualiPackingCo.,Ltd.|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|4,206||4,000|Yes|Cash|Inapplicable|3Apr.2015|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782520.PDF|
|ShanghaiHualiPackingCo.,Ltd.|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|1,228||2,000|No|Cash|Inapplicable|3Apr.2015||
|HualiPacking(Huizhou)Co.,Ltd.|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|1,093||2,000|No|Cash|Inapplicable|3Apr.2015||
|ChengduTianfuOCTIndustrialDevelopmentCo.,Ltd.|Underthesameactualcontroller|Salesofgoods|Salesofliquidcrystaldisplay|Negotiatedprice|Marketprice|38||1,000|No|Cash|Inapplicable|3Apr.2015||
|Total||||--|--|6,565|--|9,000|--|--|--|--|--|
|Details of large amount of salesreturns||||Inapplicable||||||||||

2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|As for the prediction on the totalamount of routine related-partytransactions to be occurred in thereporting period by relevant types,the actual performance in thereportingperiod(ifany)|The Company has published the Forecasting Public Notice on Routine RelatedTransaction for Y2015 (public notice No. 2015-03) on Securities Times, ShanghaiSecurities News, China Securities Journal and Hong Kong Ta Kung Pao as well as theInternet website designated by CSRC http://www.cninfo.com.cn on 3 Apr. 2015. In thereporting period, the basis for pricing, transaction price, transaction amount andsettlement methods of raw materials purchased by the Company were basically inaccordancewiththeforecast.ThetotalamountwasRMB65.65million.|
|Reason for significant differencebetween the transaction price andthemarketprice|Inapplicable|

2.Related-party transactions regardingpurchaseandsales of assets
□Applicable√ Inapplicable
No such cases in thereporting period.
3.Related-party transactions common external investment
□Applicable√ Inapplicable
No such cases in thereporting period.
4.Credits andliabilities with related parties
□Applicable√ Inapplicable
No such cases in thereporting period.
5.Othersignificantrelated-party transactions
□Applicable√ Inapplicable
No such cases in thereporting period.
XVII. Significantcontracts andtheirexecution
1.Trusteeship, contractingand leasing
(1)Trusteeship
□Applicable√ Inapplicable
No such cases in thereporting period.
(2) Contract
□Applicable√ Inapplicable
No such cases in thereporting period.
(3) Lease
□Applicable√ Inapplicable
No such cases in thereporting period.
2.Significantguarantees
√Applicable□ Inapplicable
(1) List ofguarantees
Unit:RMBTenThousandYuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|GuaranteesprovidedbytheCompanyanditssubsidiariesforexternalparties(excludingthoseforsubsidiaries)|||||||||
|Guaranteed|Disclosure|Amount|Actual|Actual|Typeof|Period|Execute|Guarantee|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|party||dateofrelevantannouncement|forguarantee||occurrencedate(dateofagreement)|guaranteeamount||guarantee||ofguarantee||dornot||forarelatedpartyornot||
|N/A||N/A|0||N/A|0||||0||N/A||N/A||
|Total external guarantee lineapproved duringthereportingperiod(A1)|||||0|Total actual occurred amount of externalguaranteeduringthereportingperiod(A2)||||||||0||
|Total external guarantee line that has beenapproved at the end of the reporting period(A3)|||||0|Total actual external guarantee balance attheendofthereportingperiod(A4)||||||||0||
|GuaranteesprovidedbytheCompanyforitssubsidiaries||||||||||||||||
|Guaranteedparty|Disclosuredateofrelevantannouncement||Amountforguarantee|Actualoccurrencedate(dateofagreement)|||Actualguaranteeamount||Typeofguarantee||Periodofguarantee||Executedornot||Guaranteeforarelatedpartyornot|
|AnhuiKonka|21Nov.2014||20,000|12Mar.2015|||610.79||Generalguaranty||1year||No||No|
|AnhuiKonka||||10Apr.2015|||1,997.67||Generalguaranty||1year||No||No|
|AnhuiKonka||||14May2015|||3,537.2||Generalguaranty||1year||No||No|
|AnhuiKonka||||19May2015|||4,259.39||Generalguaranty||1year||No||No|
|AnhuiTongchuang|21Nov.2014||30,000|30Jan.2015|||8,000||Generalguaranty||1year||No||No|
|AnhuiTongchuang||||2Jun.2015|||2,000||Generalguaranty||1year||No||No|
|Communicationtechnology|21Nov.2014||60,000|22Apr.2015|||50,000||Generalguaranty||1year||No||No|
|Communicationtechnolog||||28Jan.2015|||10,000||Generalguaranty||1year||No||No|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|y||||||||||||||||||
|Yishijie|21Nov.2014||6,000||27Jan.2015|||||2,000||Generalguaranty|1year|No|||No|
|KonkaHouseholdAppliances|21Nov.2014||6,000||28Sep.2014|||||274.28||Generalguaranty|0.5year|No|||No|
|HongKongKonka|30Sep.2013||307,500||15Jan.2014|||||30,550||Generalguaranty|2years|No|||No|
|HongKongKonka|||||17Sep.2014|||||18,880||Generalguaranty|2years|No|||No|
|HongKongKonka|||||23Mar.2015|||||15,092||Generalguaranty|1year|No|||No|
|HongKongKonka|||||29May2015|||||15,458||Generalguaranty|1year|No|||No|
|HongKongKonka|||||26Jun.2015|||||24,440||Generalguaranty|1year|No|||No|
|HongKongKonka|||||23Nov.2015|||||43,300||Generalguaranty|9months|No|||No|
|Total guarantee line approved for the subsidiariesduringthereportingperiod(B1)|||||||0|Total actual occurred amount ofguaranteeforthe subsidiaries during the reporting period(B2)|||||||180,969.33|||
|Totalguaranteelinethathasbeenapprovedforthesubsidiariesattheendofthereportingperiod(B3)|||||||477,050|Total actual guarantee balance for thesubsidiaries at theend of the reportingperiod(B4)|||||||230,399.33|||
|Guaranteesprovidedbythesubsidiariesfortheirsubsidiaries||||||||||||||||||
|Guaranteedparty||Disclosuredateofrelevantannouncement||Amountforguarantee||Actualoccurrencedate(dateofagreement)|||Actualguaranteeamount||Typeofguarantee||Periodofguarantee|Executedornot||Guaranteeforarelatedpartyornot||
|Dongguan||27Apr.2013||4,631||23Jul.2015|||463.1||Joint liability||1|No||No||

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|MouldPlastic|||||||guaranty|year||||
|DongguanMouldPlastic|||25Aug.2015|||195.43|Joint liabilityguaranty|1year|No||No|
|DongguanMouldPlastic|||28Sep.2015|||231.55|Joint liabilityguaranty|1year|No||No|
|DongguanMouldPlastic|||2Nov.2015|||370.48|Joint liabilityguaranty|1year|No||No|
|DongguanMouldPlastic|||30Nov.2015|||230.62|Joint liabilityguaranty|1year|No||No|
|KunshanGeraint|29Sep.2013|23,155|21Jan.2014|||361.22|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||28Nov.2014|||78.73|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||8Dec.2014|||60.2|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||3Dec.2014|||213.03|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||5Feb.2015|||32.42|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||12Feb.2015|||245.44|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||1Sep.2015|||50.94|Joint liabilityguaranty|3years|No||No|
|KunshanGeraint|||16Nov.2015|||55.57|Jointliabilityguaranty|3years|No||No|
|Total guarantee line approved for the subsidiariesduringthereportingperiod(C1)||||0|Total actual occurredamountof guaranteeforthe subsidiaries during the reporting period(C2)|||||1,875.55||
|Total guarantee line that has been approved for thesubsidiariesattheendofthereportingperiod(C3)||||27,786|Total actual guarantee balance for thesubsidiariesat the end of thereporting period(C4)|||||2,588.73||
|TotalguaranteeamountprovidedbytheCompany(totaloftheabove-mentionedthreekindsofguarantees)||||||||||||

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|Total guaranteelineapproved duringthereportingperiod(A1+B1+C1)|0|Total actual occurred amount of guaranteeduringthereportingperiod(A2+B2+C2)||182,844.88|
|Total guarantee line that has been approved at theendofthereportingperiod(A3+B3+C3)|504,836|Total actual guarantee balance at the end ofthereportingperiod(A4+B4+C4)||232,988.06|
|Proportion of total guarantee amount (A4+B4+C4) to the netassetsoftheCompany||82.78%|||
|Ofwhich:|||||
|Amount of debt guarantee provided for shareholders, actual controller and the related-party(D)|||0.00||
|Amountofdebtguaranteeprovidedfortheguaranteed partywhoseasset-liabilityratioisnotlessthan70%directlyorindirectly(E)|||232,988.06||
|Totalguaranteeamountexceeded50%ofthenetassets(F)|||92,268.92||
|Totalamountoftheabovethreeguarantees(D+E+F)|||325,256.98||
|Explanation on the occurred warranty liability or possible bearing joint responsibility ofliquidationduetoimmatureguarantee(ifany)|||Inapplicable||
|Explanation on provision of guarantees for external parties in violation of the prescribedprocedure(ifany)|||Inapplicable||

Explanation onguarantee that adopts complex method
There was nosuch situation oftheCompany during thereporting period.
(2) Illegalprovision ofguarantees forexternal parties
□Applicable√ Inapplicable
The Company did notillegally provideany guarantee for anyexternal party in thereporting period. 3.Cash assets management entrustment
(1)Wealthmanagement entrustment
√Applicable□ Inapplicable
Unit: RMB Ten Thousand Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Nameofthetrustee|Whetherwastherelatedtransaction|Productiontype|Trustmanagementamount|Startdate|Expirationdate|Remunerationrecognitionmethod|Actualrecoveredamountofthereportingperiod|Amountofprovisionforimpairmentloss(ifany)|Estimatedearnings|Actualgainsandlossesamountofthereportingperiod|Actualrecoveredsituationofthegainsandlossesof|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||thereportingperiod|
|ShenzhenPingAnBank|No|financialproducts|20,000|2015-09-01|2016-01-12|Breakevenandkeepinterest|0|0|342.53|307.69|Notrecovered|
|ShaheShenzhenConstructionBank|No|financialproducts|5,000|2015-12-02|2016-01-07|Breakevenandkeepinterest|0|0|14.79|11.92|Notrecovered|
|ShaheShenzhenConstructionBank|No|financialproducts|10,000|2015-12-02|2016-01-12|Breakevenandkeepinterest|0|0|33.7|23.84|Notrecovered|
|Shenzhenshaheicbc|No|financialproducts|15,000|2015-7-1|2016-1-13|Breakevenandkeepinterest|0|0|350.01|345.95|Notrecovered|
|total|||50,000|--|--|--|0|0|741.03|689.4|--|
|Entrust financial fundingsources|||Ownfunds|||||||||
|Fails to take back theaccumulative amount of theprincipalandearnings||||||||||||
|Cases involving lawsuit (ifapplicable)|||No|||||||||
|Entrust financial examinationand approval the boardannouncementdate(ifany)|||2015-8-29|||||||||
|Entrusting the shareholders'committee for examinationandapprovalofannouncement|||Inapplicable|||||||||

2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|date(ifany)||
|Whether there is a future trustmanagementplan|Yes|

(2) Entrustmentloans
√Applicable□ Inapplicable
Unit:RMBTenThousandYuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Creditobject|Whetherwasrelatedtransaction|Loanrate|Loanamount|Startingdate|Enddate|Actualrecoveredamountofthereportingperiod|Amountofthewithdrawnimpairmentprovision(ifany)|Estimatedrevenues|Actualgainsandlossesofthereportingperiod|Actualrecoveredsituationofthegainsandlossesofthereportingperiod|
|ChuzhouTongchuangConstructionInvestmentCo.,Ltd.|No|7.28%|5,000|2014年12月30日|2016年03月31日|0|0|370.07|370.07|359.96|
|Entrustfinancialfundingsources|||Ownfunds||||||||
|Fails to take back theaccumulative amount of theprincipalandearnings|||||||||||
|Cases involving lawsuit (ifapplicable)|||No||||||||
|Entrustfinancialexaminationandapproval the boardannouncementdate(ifany)|||Inapplicable||||||||
|Entrusting the shareholders'committee for examination andapproval of announcement date(ifany)|||Inapplicable||||||||
|Whether there is a future trustmanagementplan|||Inapplicable||||||||

2015AnnualReportofKonkaGroupCo.,Ltd.
4Othersignificantcontracts
□Applicable√ Inapplicable
No such cases in thereporting period.
XVIII. Othersignificantevents
√Applicable□ Inapplicable
1.Progress oftheurban renewal project in theplant area oftheCompany’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 theCompany’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 thework such as the oldfactory land leveling was in promotion.
2.ProgressoftheCompany’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 of366,575.8m2fortourism 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
||||||
|-|-|-|-|-|
|AnnouncementNo.|Date|Title|Pageonnewspaper|Linkonhttp://www.cninfo.com.cn|
|2015-01|2015-3-28|AnnouncementonReceiptofTaxRebates|SecuritiesTimesB60,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-03-28/1200753459.PDF|
|2015-02|2015-4-3|Announcement of Resolutions ofthe 15th Session of the 7th BoardofSupervisors|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782527.PDF|
|2015-03|2015-4-3|Forecasting Public Notice onRoutine Related Transaction forY2015|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782520.PDF|
|2015-04|2015-4-3|Notice on Holding the 2014AnnualGeneralMeeting|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782525.PDF|
|2015-05|2015-4-3|Announcement on Changes of|SecuritiesTimesB73,|http://www.cninfo.com.cn/finalpage/201|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|||PartlyoftheAccountingPolicies|B74,TaKungPaoB16-B18|5-04-03/1200782538.PDF|
|2015-06|2015-4-3|AbstractoftheAnnualReportforY2014ofKonkaGroupCo.,Ltd.|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782521.PDF|
|2015-07|2015-4-3|2014AnnualReport|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782530.PDF|
|2015-08|2015-4-3|Announcement of Resolutions ofthe 71stSession of the 7th BoardofDirectors|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782524.PDF|
|2015-09|2015-4-3|Declaration of the Nominator ofthe Independent Directors of theListedCompanies(DiXiaofeng)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782537.PDF|
|2015-10|2015-4-3|Declaration of the Nominator ofthe Independent Directors of theListedCompanies(LiLuoli)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782536.PDF|
|2015-11|2015-4-3|Declaration of the Nominator ofthe Independent Directors of theListed Companies (ZhangShuhua)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782535.PDF|
|2015-12|2015-4-3|Declaration of the Candidate ofthe Independent Directors of theListedCompanies(DiXiaofeng)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782534.PDF|
|2015-13|2015-4-3|Declaration of the Candidate ofthe Independent Directors of theListedCompanies(LiLuoli)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782533.PDF|
|2015-14|2015-4-3|Declaration of the Candidate ofthe Independent Directors of theListed Companies (ZhangShuhua)|SecuritiesTimesB73,B74,TaKungPaoB16-B18|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782532.PDF|
|2015-15|2015-4-14|Announcement on theAlternationoftheOfficeAddressoftheCompany|SecuritiesTimesB40,TaKungPaoB7|http://www.cninfo.com.cn/finalpage/2015-04-14/1200825769.PDF|
|2015-16|2015-4-16|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB80,TaKungPaoTaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-04-16/1200839341.PDF|
|2015-17|2015-4-29|Abstract of the Report for the 1stQuarterof2015(Chinese)|SecuritiesTimesB76,TaKungPaoA20|http://www.cninfo.com.cn/finalpage/2015-04-29/1200930942.PDF|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|2015-18|2015-4-29|Reportforthe1stQuarterof2015(Chinese)|SecuritiesTimesB76,TaKungPaoA20|http://www.cninfo.com.cn/finalpage/2015-04-29/1200930945.PDF|
|2015-19|2015-5-8|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB80,TaKungPaoB1|http://www.cninfo.com.cn/finalpage/2015-05-08/1200979093.PDF|
|2015-20|2015-5-13|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB68,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-05-13/1201006433.PDF|
|2015-21|2015-5-15|Announcement on Increasing theNominated Candidate of theDirectors and the Supervisors oftheShareholders|SecuritiesTimesB85,TaKungPaoB8|http://www.cninfo.com.cn/finalpage/2015-05-15/1201015562.PDF|
|2015-22|2015-5-15|Notice on Holding the 2014Annual General Meeting(renewed)|SecuritiesTimesB85,TaKungPaoB8|http://www.cninfo.com.cn/finalpage/2015-05-15/1201015561.PDF|
|2015-23|2015-5-15|Declaration of the Candidate oftheIndependentDirectors|SecuritiesTimesB85,TaKungPaoB8|http://www.cninfo.com.cn/finalpage/2015-05-15/1201015563.PDF|
|2015-24|2015-5-15|Declaration of the Nominator oftheIndependentDirectors|SecuritiesTimesB85,TaKungPaoB8|http://www.cninfo.com.cn/finalpage/2015-05-15/1201015564.PDF|
|2015-25|2015-5-16|Announcement on Increasing theNominated Candidate of theDirectors and the Supervisors oftheShareholders|SecuritiesTimesB37,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-05-16/1201020163.PDF|
|2015-26|2015-5-16|Notice on Holding the 2014Annual General Meeting (aftersecondrenewed)|SecuritiesTimesB37,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-05-16/1201020162.PDF|
|2015-27|2015-5-16|Declaration of the Nominator ofthe Independent Directors (XiaoZuhe)|SecuritiesTimesB37,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-05-16/1201020165.PDF|
|2015-28|2015-5-16|Declaration of the Candidate ofthe Independent Directors (XiaoZuhe)|SecuritiesTimesB37,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-05-16/1201020164.PDF|
|2015-29|2015-5-19|Indicative Announcement of theShareholding Increase of theCompany’s Shares by theControllingShareholders|SecuritiesTimesB49,TaKungPao11|http://www.cninfo.com.cn/finalpage/2015-05-19/1201031184.PDF|
||2015-5-19|Detailed Report on EquityChanges|SecuritiesTimesB49,TaKungPao11|http://www.cninfo.com.cn/finalpage/2015-05-19/1201031185.PDF|
|2015-30|2015-5-20|Announcement of Resolutions ofthe 73rd Session of the 7th BoardofDirectors|SecuritiesTimesB37,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-05-20/1201035530.PDF|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|2015-31|2015-5-23|Indicative Announcement ofHolding the 2014 AnnualGeneralMeeting|SecuritiesTimesB53,TaKungPaoA23|http://www.cninfo.com.cn/finalpage/2015-05-23/1201049180.PDF|
|2015-32|2015-5-27|Announcement on the GeneralElection of the EmployeeSupervisors|SecuritiesTimesB45,TaKungPaoB19|http://www.cninfo.com.cn/finalpage/2015-05-27/1201065868.PDF|
|2015-33|2015-5-29|Indicative Announcement of the2014AnnualGeneralMeeting|SecuritiesTimesB4,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-05-29/1201078987.PDF|
|2015-34|2015-5-30|Announcement on the DelistingOwningtoSignificantEvents|SecuritiesTimesB60,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-05-30/1201082236.PDF|
|2015-35|2015-6-5|Announcement on theResumption Owning toSignificantEvents|SecuritiesTimesB60,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-06-05/1201106173.PDF|
|2015-36|2015-6-5|AnnouncementofResolutionsofthe1stSessionofthe8thBoardofDirectors|SecuritiesTimesB60,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-06-05/1201106172.PDF|
|2015-37|2015-6-5|Announcement of Resolutions ofthe1stSessionofthe8thBoardofSupervisors|SecuritiesTimesB60,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-06-05/1201106171.PDF|
|2015-38|2015-6-12|Announcement on the DelistingOwningtoSignificantEvents|SecuritiesTimesB36,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-06-12/1201139697.PDF|
|2015-39|2015-6-12|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB36,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-06-12/1201139696.PDF|
|2015-40|2015-6-19|AnnouncementofResolutionsofthe2ndSessionofthe8thBoardofDirectors|SecuritiesTimesB60,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-06-19/1201168695.PDF|
|2015-41|2015-6-19|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB60,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-06-19/1201168694.PDF|
|2015-42|2015-6-27|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB37,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-06-27/1201200899.PDF|
|2015-43|2015-7-4|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB40,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-07-04/1201235889.PDF|
|2015-44|2015-7-11|Announcement on the Executionof the 2014 Dividend PayoutProposal|SecuritiesTimesB64,TaKungPaoA23|http://www.cninfo.com.cn/finalpage/2015-07-11/1201274263.PDF|
|2015-45|2015-7-11|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB64,TaKungPaoA23|http://www.cninfo.com.cn/finalpage/2015-07-11/1201274266.PDF|
|2015-46|2015-7-11|Announcement on the|SecuritiesTimesB64,|http://www.cninfo.com.cn/finalpage/201|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|
|||Maintenance of the stability oftheCompany’sSharePrice|TaKungPaoA23|5-07-11/1201274265.PDF|
|2015-47|2015-7-11|Announcement on the 2015Semi-annual PerformancePrediction|SecuritiesTimesB64,TaKungPaoA23|http://www.cninfo.com.cn/finalpage/2015-07-11/1201274264.PDF|
|2015-48|2015-7-18|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB77,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2015-07-18/1201309646.PDF|
|2015-49|2015-7-25|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB21,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-07-25/1201342320.PDF|
|2015-50|2015-7-29|Announcement on the Predictionof the Routine RelatedTransactions|SecuritiesTimesB37,TaKungPaoA4|http://www.cninfo.com.cn/finalpage/2015-07-29/1201358396.PDF|
|2015-51|2015-7-29|Announcement of Resolutions ofthe3rdSessionofthe8thBoardofDirectors|SecuritiesTimesB37,TaKungPaoA4|http://www.cninfo.com.cn/finalpage/2015-07-29/1201358397.PDF|
|2015-52|2015-8-1|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB52,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-08-01/1201374364.PDF|
|2015-53|2015-8-8|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB56,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-08-08/1201406469.PDF|
|2015-54|2015-8-15|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-15/1201438099.PDF|
|2015-55|2015-8-22|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-22/1201471918.PDF|
|2015-56|2015-8-29|Announcement on the 2015Semi-annualReport|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518361.PDF|
|2015-57|2015-8-29|Announcement of Resolutions ofthe4thSessionofthe8thBoardofDirectors|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518357.PDF|
|2015-58|2015-8-29|Notice of Holding the 2015 1stExtraordinaryGeneralMeeting|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518363.PDF|
|2015-59|2015-8-29|AnnouncementonPurchasingtheBankFinancialProducts|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518364.PDF|
|2015-60|2015-8-29|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB176,TaKungPao|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518365.PDF|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|2015-61|2015-8-29|Abstractofthe2015Semi-annualReport|SecuritiesTimesB176,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-08-29/1201518354.PDF|
|2015-62|2015-9-1|Announcement on the SpecificProposal on the Purchasing ofLiabilityInsurance||http://www.cninfo.com.cn/finalpage/2015-09-02/1201537360.PDF|
|2015-63|2015-9-9|Announcement on the ProgressoftheSignificantEvents|SecuritiesTimesB21,TaKungPaoB12|http://www.cninfo.com.cn/finalpage/2015-09-09/1201567403.PDF|
|2015-64|2015-9-9|Indicative Announcement onHolding the 2015 1stExtraordinaryGeneralMeeting|SecuritiesTimesB21,TaKungPaoB12|http://www.cninfo.com.cn/finalpage/2015-09-09/1201567402.PDF|
|2015-65|2015-9-11|Announcement of Resolutions ofthe5thSessionofthe8thBoardofDirectors|SecuritiesTimesB4,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578927.PDF|
|2015-66|2015-9-11|Announcement of Resolutions ofthe3rdSessionofthe8thBoardofSupervisors|SecuritiesTimesB4,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578926.PDF|
|2015-67|2015-9-11|Notice of Holding the 2ndExtraordinaryGeneralMeeting|SecuritiesTimesB4,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578924.PDF|
|2015-68|2015-9-11|Announcement on theTermination of the Planning ofthe Significant Events and theResumptionofTrading|SecuritiesTimesB4,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578925.PDF|
|2015-69|2015-9-11|Announcement on theEngagement of the ActingPresident|SecuritiesTimesB4,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578973.PDF|
|2015-70|2015-9-16|Announcement of Resolutions ofthe 2015 1st ExtraordinaryGeneralMeeting|SecuritiesTimesB61,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2015-09-16/1201599161.PDF|
|2015-71|2015-9-16|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB61,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2015-09-16/1201599163.PDF|
|2015-72|2015-9-17|Announcement on the Executionof the 2015 Semi-annualAccumulation Fund Turning toincreasesubscribed|SecuritiesTimesB29,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2015-09-17/1201603859.PDF|
|2015-73|2015-9-17|Announcement on theSigning oftheCooperationAgreement|SecuritiesTimesB29,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2015-09-17/1201603639.PDF|
|2015-74|2015-9-17|Announcement on the Stock|SecuritiesTimesB29,|http://www.cninfo.com.cn/finalpage/201|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|||TradingAbnormalFluctuations|TaKungPaoB18|5-09-17/1201603640.PDF|
|2015-75|2015-9-18|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB41,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-09-18/1201608234.PDF|
|2015-76|2015-9-22|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB41,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2015-09-22/1201619942.PDF|
|2015-77|2015-9-23|Announcement on the StockTradingAbnormalFluctuations|SecuritiesTimesB36,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-09-23/1201624564.PDF|
|2015-78|2015-9-26|Announcement on theResignation of the Director andVicePresidentoftheCompany|SecuritiesTimesB20,TaKungPaoB4|http://www.cninfo.com.cn/finalpage/2015-09-26/1201640536.PDF|
|2015-79|2015-9-29|Announcement on theResignation of the IndependentDirectorsoftheCompany|SecuritiesTimesB20,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-09-29/1201649682.PDF|
|2015-80|2015-9-29|Announcement on theResignationoftheSupervisorsoftheCompany|SecuritiesTimesB20,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-09-29/1201649683.PDF|
|2015-81|2015-9-29|Announcement on theResignation of the President oftheCompany|SecuritiesTimesB20,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2015-09-29/1201649681.PDF|
|2015-82|2015-9-30|Announcement on the ReceivingoftheNoticeoftheDeductionofthePromotionSubsidiesFundsofthe Central High-efficientEnergy-saving Home Appliancesby Finance Commission ofShenzhenMunicipality|SecuritiesTimesB44,TaKungPaoB9|http://www.cninfo.com.cn/finalpage/2015-09-30/1201655523.PDF|
|2015-83|2015-10-9|AnnouncementonReceiptofTaxRebates|SecuritiesTimesB25,TaKungPaoB7|http://www.cninfo.com.cn/finalpage/2015-10-09/1201668680.PDF|
|2015-84|2015-10-9|Notice of Holding the 2015 2ndExtraordinaryGeneralMeeting|SecuritiesTimesB25,TaKungPaoB7|http://www.cninfo.com.cn/finalpage/2015-10-09/1201668679.PDF|
|2015-85|2015-10-15|Announcement on the 2015 FirstThree Quarter PerformancePrediction|SecuritiesTimesB29,TaKungPaoB1|http://www.cninfo.com.cn/finalpage/2015-10-15/1201694037.PDF|
|2015-86|2015-10-16|Announcement of Resolutions ofthe 2015 2nd ExtraordinaryGeneralMeeting|SecuritiesTimesB29,TaKungPaoB4|http://www.cninfo.com.cn/finalpage/2015-10-16/1201699921.PDF|
|2015-87|2015-10-21|Announcement of Resolutions ofthe6thSessionofthe8thBoardofDirectors|SecuritiesTimesB33,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709720.PDF|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|2015-88|2015-10-21|Announcement of Resolutions ofthe5thSessionofthe8thBoardofSupervisors|SecuritiesTimesB33,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709718.PDF|
|2015-89|2015-10-21|Notice of Holding the 2015 3rdExtraordinaryGeneralMeeting|SecuritiesTimesB33,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709719.PDF|
|2015-90|2015-10-21|Declaration of the Candidate ofIndependent Directors (SunShengdian)|SecuritiesTimesB33,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709721.PDF|
|2015-91|2015-10-21|Declaration of the Nominator ofIndependent Directors (SunShengdian)|SecuritiesTimesB33,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709722.PDF|
|2015-92|2015-10-29|Report of the Report for the 3rdQuarterof2015|SecuritiesTimesB109,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-10-29/1201734046.PDF|
|2015-93|2015-10-29|Abstract for the 3rd Quarter of2015|SecuritiesTimesB109,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-10-29/1201734044.PDF|
|2015-94|2015-10-29|Announcement on the RelevantEvents of the Energy-savingSubsidiesFunds|SecuritiesTimesB109,TaKungPaoB11|http://www.cninfo.com.cn/finalpage/2015-10-29/1201734049.PDF|
|2015-95|2015-10-30|Indicative Announcement onHolding the 2015 3rdExtraordinaryGeneralMeeting|SecuritiesTimesB92,TaKungPaoB13|http://www.cninfo.com.cn/finalpage/2015-10-30/1201740102.PDF|
|2015-96|2015-11-4|Announcement on the Planningof Listing and Transfer theEquitiesofYishijieCompany|SecuritiesTimesB4,TaKungPaoA16|http://www.cninfo.com.cn/finalpage/2015-11-04/1201752356.PDF|
|2015-97|2015-11-6|Announcement of Resolutions ofthe 2015 3rd ExtraordinaryGeneralMeeting|SecuritiesTimesB44,TaKungPaoB1|http://www.cninfo.com.cn/finalpage/2015-11-06/1201755365.PDF|
|2015-98|2015-11-14|Announcement on the Abandonof the Execution of thePreemptionoftheTransferoftheEquities of Shenzhen KonkaYishijie Commercial DisplayCo.,Ltd.|SecuritiesTimesB48,TaKungPaoB1|http://www.cninfo.com.cn/finalpage/2015-11-14/1201771447.PDF|
|2015-99|2015-11-14|Announcement of Resolutions ofthe8thSessionofthe8thBoardofDirectors|SecuritiesTimesB48,TaKungPaoB1|http://www.cninfo.com.cn/finalpage/2015-11-14/1201771446.PDF|
|2015-100|2015-11-24|Announcement on the Stock|SecuritiesTimesB32,|http://www.cninfo.com.cn/finalpage/201|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|||TradingAbnormalFluctuations|TaKungPaoB7|5-11-24/1201784917.PDF|
|2015-101|2015-12-15|Announcement on theResignationoftheVicePresidentoftheCompany|SecuritiesTimesB28,TaKungPaoB5|http://www.cninfo.com.cn/finalpage/2015-12-15/1201832626.PDF|

XIX. Significantevents 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. Socialresponsibilities
√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 ofshareholders’ profits, the Company is active in protecting legal rights of debtors and employees, treating suppliers, customers and consumers in good faith, and participating in environmental protection and communityestablishment for harmonious development oftheCompany and society. (I)Toprotect rights ofshareholders and creditors
1.The Company protects rights ofshareholders
(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 toguarantee 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 inArticles ofAssociation and requirementsinshareholders’conference. 2.The Company protects rights ofcreditors
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) TheCompany performs responsibilities tosuppliers and customers
1.It is devoted to improvecustomer service quality.
The Company is insisting philosophy of customer orientation to strengthen customer service
2015AnnualReportofKonkaGroupCo.,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 corporateimage forcustomers.
2.Be honest tosuppliers
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, protectsuppliers’ legal rights and lay solid foundation for further cooperation.
(III) Be enthusiasticto social and publicwelfare 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 enterpriseand society.
(IV) Beresponsible foremployees
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 beachieved.
1.Be honest andlaw-abiding toprotect legal rights foremployees
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-examinationand consultation from adoctor.
The Company would improve living quality; enhance cohesive force and sense of belongings through a series of safeguard measures.
2.Toprotect 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.Topromoteoccupational skillsbydiversified 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
2015AnnualReportofKonkaGroupCo.,Ltd.
instructor, theme training and lectures to provide colorful training activities. Besides the work, professional and comprehensive qualitywould be fully promoted.
(V) Be responsiblefor 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 ofthecountry?
□Yes√No□Inapplicable
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not fullypaid ontheapproval report date ofannual report
□Yes√No□Inapplicable
2015AnnualReportofKonkaGroupCo.,Ltd.
Section VI. Change in Shares& Shareholders
I.Changes inshares
Unit:share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Beforethechange||Increase/decrease(+/-)|||||Afterthechange||
||Amount|Proportion|Newlyissueshare|Bonusshares|Capitalizationofpublicreserves|Other|Subtotal|Amount|Proportion|
|I. Sharessubject totradingmoratorium|198,381,940|16.48%|||198,381,940|169,080|198,551,020|396,932,960|16.48%|
|2. Shares heldbystate-ownedcorporation|198,381,940|16.48%|||198,381,940||198,381,940|396,763,880|16.48%|
|3. Otherdomesticshareholding||||||169,080|169,080|169,080|0.00%|
|Shares heldby thedomesticindividuals||||||169,080|169,080|169,080|0.00%|
|II. Shares notsubject totradingmoratorium|1,005,590,764|83.52%|||1,005,590,764|-169,080|1,005,421,684|2,011,012,448|83.52%|
|1. RMBordinaryshares|599,914,960|49.83%|||599,914,960||599,914,960|1,199,829,920|49.83%|
|2.Domesticallylisted foreignshares|405,675,804|33.69%|||405,675,804|-169,080|405,506,724|811,182,528|33.69%|
|III. Totalshares|1,203,972,704|100.00%|||1,203,972,704|0|1,203,972,704|2,407,945,408|100.00%|

Reason forthechange inshares
2015AnnualReportofKonkaGroupCo.,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 theshares 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 Companydoubled with theamount increased to 2,407,945,408shares.
Approval ofthechange inshares
√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 to2,407,945,408after which.
Reason forthechange inshares
√Applicable□ Inapplicable
The changes inshares 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 theCompany andother financial indexes over thelast year and last period√Applicable□ Inapplicable
The influences ofthechanges in shares were as follows:
1.The 2014basicEPS changed from RMB0.0437 toRMB0.02185;
2.The 2014diluted EPSchanges from RMB0.0437 toRMB0.02185;
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 todisclose
□Applicable√ Inapplicable
2.Changes inrestricted shares
√Applicable□ Inapplicable
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Nameoftheshareholders|Numberoftherestrictedsharesat|Numberoftherelievedrestricted|Numberoftheincreasedrestricted|Numberoftherestrictedsharesat|Restrictedreason|Relievedrestricteddate|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||
|-|-|-|-|-|-|-|
||theperiod-begin|sharesofthereportingperiod|sharesofthereportingperiod|theperiod-end|||
|ZhangGuanghui|0|0|169,080|169,080|On5Nov.2015,Mr.ZhangGuanghuiresignedthe position as the Supervisor owning topersonal reasons and according to theregulationsoftherelevantlawsandregulations,within the 6 months after the resignation, theholding share of the Company were the sharessubjecttotradingmoratorium.|On 6 May2016, therelievedrestrictedshares wasof 169,080shares|
|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 detailsplease refer to http://www.cninfo.com.cn/finalpage/2016-02-27/1202003527.PDF. II. Issuance andlistingofsecurities
1.Issuance ofsecurities (excluding preferred stock) inreporting period
□Applicable√ Inapplicable
2. Explanation on changes in share capital& the structure of shareholders, the structure of assets andliabilities
√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 theCompany increased to2,407,945,408after which.
2. Explanation of the changes of the shareholders structure of the Company: the total shareholding proportion of theCompany’s controlling shareholder-OCT Enterprises Co. and its wholly owned subsidiaries arisefrom21.75% to29.99%.
3.Existentsharesheld by internalstaffs of theCompany
□Applicable√ Inapplicable
III. Particulars aboutthe shareholdersand actual controller
1.Total numberof shareholdersand theirshareholding
Unit:share
|||||||||
|-|-|-|-|-|-|-|-|
|Total numberofshareholdersat the|167,819|Total numberofshareholderson the 30thtrading day|162,563|Total number ofpreferredstockholder withvote right|0|Total numberof preferredstockholderwith vote right|0|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|reportingperiod||before thedisclosure dateof the annualreport|||restored (if any)(seeNotes8)|||restored on the30th tradingday before thedisclosure dateof the annualreport (ifany) (seeNotes8)||||
|Shareholdingofshareholdersholdingmorethan5%shares||||||||||||
|Nameofshareholder|Natureofshareholders||Holdingpercentage|Numberofshareholdingattheendofthereportingperiod||Increaseanddecreaseofsharesduringreportingperiod|Numberofsharesheldsubjecttotradingmoratorium||Numberofsharesheldnotsubjecttotradingmoratorium|Pledgedorfrozenshares||
|||||||||||Statusofshares|Amount|
|OCTEnterprisesCo.|State-ownedcorporation||21.75%|523,746,932||261,873,466|396,763,880||126,983,052|Pledged|0|
|||||||||||Frozen|0|
|CITIC SecuritiesBrokerage (Hong Kong)Co.,Ltd.|Foreigncorporation||7.48%|180,001,110||180,001,110|0||180,001,110|Pledged|0|
|||||||||||Frozen|0|
|Guoyuan SecuritiesBroker(HK)Co.,Ltd.|Foreigncorporation||2.48%|59,827,170||45,782,270|0||59,827,170|Pledged|0|
|||||||||||Frozen|0|
|GaolingFund,L.P.|Foreigncorporation||2.19%|52,801,250||26,400,625|0||52,801,250|Pledged|0|
|||||||||||Frozen|0|
|HolyTimeGroupLimited|Foreigncorporation||2.18%|52,580,354||6,046,739|0||52,580,354|Pledged|0|
|||||||||||Frozen|0|
|NamNgai|Foreignindividual||0.97%|23,381,040||11,690,520|0||23,381,040|Pledged|0|
|||||||||||Frozen|0|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|CMS(HK)Co.,Ltd.|State-ownedcorporation||0.94%|22,726,804|12,846,658|0||22,726,804||Pledged|0|
|||||||||||Frozen|0|
|CSI Capital ManagementLimited|Foreigncorporation||0.85%|20,550,928|20,550,928|0||20,550,928||Pledged|0|
|||||||||||Frozen|0|
|BOCISecuritiesLimited|Foreigncorporation||0.78%|18,883,092|17,609,602|0||18,883,092||Pledged|0|
|||||||||||Frozen|0|
|Credit Suisse AG HongKongBranch|Foreigncorporation||0.33%|7,939,174|7,939,174|0||7,939,174||Pledged|0|
|||||||||||Frozen|0|
|Strategic investor or generalcorporation becoming a top tenshareholder due to placing of newshares(ifany)(seeNotes3)|||N/A|||||||||
|Explanationonassociatedrelationshipor/and persons acting in concertamong the above-mentionedshareholders:|||Jialong Investment Limited, a wholly-funded subsidiary of the Company’s firstmajority shareholder OCT Enterprises Co., Ltd., respectively held the common sharesoftheCompanyof180,001,110sharesand18,360,000sharesthroughCITICSecuritiesBrokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, JialongInvestment Limited and OCT Enterprises Co. are parties acting in concert. TheCompanydoesnotknowwhethertheothershareholdersarerelatedpartiesandwhethertheyareacting-in-concertparties.|||||||||
|Shareholdingsofthetoptencommonshareholdersnotsubjecttotradingmoratorium||||||||||||
|Nameofshareholders||Amountoflistedandcirculatedsharesattheendoftheyear|||||Typeofshares|||||
||||||||Type||Amount|||
|CITIC Securities Brokerage (HongKong)Co.,Ltd.||180,001,110|||||Domesticallylisted foreignshares||180,001,110|||
|OCTEnterprisesCo.||126,983,052|||||RMB ordinaryshare||126,983,052|||
|Guoyuan Securities Broker (HK)Co.,Ltd.||59,827,170|||||Domesticallylisted foreignshares||59,827,170|||
|GaolingFund,L.P.||52,801,250|||||Domestically||52,801,250|||

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|||listed foreignshares||
|HolyTimeGroupLimited|52,580,354|Domesticallylisted foreignshares|52,580,354|
|NamNgai|23,381,040|Domesticallylisted foreignshares|23,381,040|
|CMS(HK)Co.,Ltd.|22,726,804|Domesticallylisted foreignshares|22,726,804|
|CSICapitalManagementLimited|20,550,928|Domesticallylisted foreignshares|20,550,928|
|BOCISecuritiesLimited|18,883,092|Domesticallylisted foreignshares|18,883,092|
|CreditSuisseAgHongKongBranch|7,939,174|Domesticallylisted foreignshares|7,939,174|
|Explanation on associatedrelationshipor/andpersonsactinginconcert among the top ten tradableshareholdersandbetweenthetoptentradableshareholdersandthetoptenshareholders|JialongInvestmentLimited, awholly-fundedsubsidiaryoftheCompany’sfirst majorityshareholder OCT Enterprises Co., Ltd., respectively held the common shares of theCompany of 180,001,110 shares and 18,360,000 shares through CITIC SecuritiesBrokerage (Hong Kong) Co., Ltd. and CMS (HK) Co., Ltd. Therefore, JialongInvestmentLimitedandOCTEnterprisesCo.arepartiesactinginconcert.TheCompanydoes not know whether the other shareholders are related parties and whether they areacting-in-concertparties.|||
|Explanation on the Top 10shareholders participating in themargintradingbusiness(ifany)(seenotes4)|N/A|||

Did any top ten shareholder of common share and the top ten shareholders not subject to trading moratorium oftheCompany carry out anagreed buy-back inthe reporting period?
□Yes√No
Top ten shareholder of common share and the top ten shareholders not subject to trading moratorium oftheCompany did carry out anagreed buy-back in thereporting period
2.Particulars aboutthecontrollingshareholder
Nature ofcontrolling shareholder: central state-owned holding
Type ofcontrolling shareholder: legal person
||||||
|-|-|-|-|-|
|Nameof|Legal|Dateof|Organization|Businessscope|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||
|-|-|-|-|-|-|
|controllingshareholder|representative/companyprincipal||establishment|code||
|OCTENTERPRISESCO.|DuanXiannian||11Nov.1985|19034617-5|Export of textile, light industrial products, etc; import ofself-used goods in Shenzhen, mechanical equipment, lightindustrial products, etc. as approved by the relevantauthorities of Shenzhen (under Government DocumentJMB[92]WJMGTSZZNo.A19024);compensationtrade;investment in industry, tourism, real estate, commerce &tradeandfinancialinsurance.|
|Shares held by thecontrolling shareholder inother listed companies byholding or shareholdingduringthereportingperiod||OCT ENTERPRISES CO. held 57.66% equity of Shenzhen Overseas Chinese Town Co., Ltd. (acompanylistedonthemainboardofShenzhenStockExchange,SZ.000069),meanwhile,ShenzhenOverseas Chinese Town Co., Ltd. indirectly held 66.66% equity of OCT (Asia) Holdings Ltd. (acompany listed on the main board of Hong Kong Stock Exchange, 3366.HK) and OCTENTERPRISESCO. held4.08%equityofCITS (acompanylistedonthemain boardofShanghaiStockExchange,601888.SH).||||

Changes in controllingshareholders during thereporting period
□Applicable√ Inapplicable
The controlling shareholder did not change during thereporting period.
3.Particulars abouttheactual controller
Nature ofactual controller: central state-owned assets management institutions
Type ofactual controller: legal person
||||||
|-|-|-|-|-|
|Nameofactualcontroller|Legalrepresentative/headofunit|Dateoffoundation|Organizationcode|Businessscope|
|State-owned AssetsSupervision andAdministration CommissionoftheStateCouncil|XiaoYaqing|Inapplicable|Inapplicable|Inapplicable|
|Shares held by the actual controlling shareholder in other listed companies by holding orshareholdingduringthereportingperiod||||Inapplicable|

Change inactual controller in thereporting period
□Applicable√ Inapplicable
No changein actual controller oftheCompany in thereporting period.
Diagram ofownership andcontrol relationship between theCompany and its actual controller:
2015AnnualReportofKonkaGroupCo.,Ltd.
SASACoftheStateCouncil
OCTEnterprisesCo.anditswhollyownedsubsidiaries
KonkaGroupCo.,Ltd.
The actual controller controls the Company by the means of trust or other means of assets management
□Applicable√ Inapplicable
4.OtherCorporate Shareholderwithashareholding percentageover10%
□Applicable√ Inapplicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,restructuring parties andothercommitment entities
□Applicable√ Inapplicable
2015AnnualReportofKonkaGroupCo.,Ltd.
Section VII. Preference Shares
□Applicable√ Inapplicable
There was nopreferred stock during reporting period.
2015AnnualReportofKonkaGroupCo.,Ltd.
Section VIII. Directors, Supervisors, Senior Management Staff& Employees
I.Changes inshareholding ofdirectors, supervisors and seniormanagement staff
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Title|Incumbentornot|Gender|Age|Starting date ofofficeterm|Closing date ofofficeterm|Sharesheldat thebeginningthereportingperiod|Increaseofshares inthisreportingperiod(share)|Decrease ofsharesin thisreportingperiod(share)|Otherincreased/decreasedchange(share)|Sharesheldattheendofthereportingperiod(share)|
|LiuFengxi|Director|Current|Male|44|28May2015|28May2018|0|0|0|0|0|
|LiuFengxi|BoardChairman|Current|Male|44|18Jun.2015|28May2018|0|0|0|0|0|
|LiuFengxi|ActingPresident|Current|Male|44|10Sep.2015|4Apr.2017|0|0|0|0|0|
|JinQingjun|Director|Current|Male|59|28May2015|28May2018|0|0|0|0|0|
|ChenYuehua|Director|Current|Male|53|28May2015|28May2018|0|0|0|0|0|
|HeHaibin|Director|Current|Male|41|5Nov.2015|28May2018|0|0|0|0|0|
|SunShengdian|IndependentDirecto|Current|Male|61|5Nov.2015|28May2018|0|0|0|0|0|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||r|||||||||||
|XiaoZuhe|IndependentDirector|Current|Male|50|28May2015|28May2018|0|0|0|0|0|
|ZhangShuhua|IndependentDirector|Current|Male|51|28May2015|28May2018|0|0|0|0|0|
|HaoGang|Supervisor|Current|Male|42|28May2015|28May2018|0|0|0|0|0|
|HaoGang|Supervisory|Current|Male|42|4Jun.2015|28May2018|0|0|0|0|0|
|WangYoulai|Supervisor|Current|Male|55|5Nov.2015|28May2018|0|0|0|0|0|
|LiJun|EmployeeSupervisor|Current|Male|45|25May2015|25May2018|0|0|0|0|0|
|XiaoQing|ExecutiveVicePresident|Current|Male|46|27Aug.2015|4Apr.2017|0|0|0|0|0|
|HuangZhongtian|VicePresident|Current|Male|55|4Apr.2014|4Apr.2017|0|0|0|0|0|
|HeJianjun|VicePresident|Current|Male|46|4Apr.2014|4Apr.2017|0|0|0|0|0|
|LinGaike|VicePresident|Current|Male|44|4Apr.2014|4Apr.2017|0|0|0|0|0|
|LiHongtao|VicePresident|Current|Male|48|4Apr.2014|4Apr.2017|0|0|0|0|0|
|LinHongfan|VicePresident|Current|Male|45|18Jun.2015|4Apr.2017|0|0|0|0|0|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|WuYongjun|BoardSecretary|Current|Male|41|27Aug.2015|4Apr.2017|0|0|0|0|0|
|ChenYuehua|BoardChairman|Left|Male|53|8Dec.2014|28May2015|0|0|0|0|0|
|SuZheng|Director|Left|Male|59|17Dec.2010|28May2015|0|0|0|0|0|
|WangXiaowen|Director|Left|Female|46|17Dec.2010|28May2015|0|0|0|0|0|
|HeHaibin|Director|Left|Male|41|17Dec.2010|28May2015|0|0|0|0|0|
|FengYutao|IndependentDirector|Left|Male|48|17Dec.2010|28May2015|0|0|0|0|0|
|YangHaiying|IndependentDirector|Left|Female|48|17Dec.2010|28May2015|0|0|0|0|0|
|ZhangZhong|IndependentDirector|Left|Male|47|17Dec.2010|28May2015|0|0|0|0|0|
|DongYaping|Supervisory|Left|Male|62|17Dec.2010|28May2015|0|0|0|0|0|
|LiuYong|EmployeeSupervisor|Left|Male|44|17Dec.2010|28May2015|0|0|0|0|0|
|LiuFengxi|President|Left|Male|44|4Apr.2014|18Jun.2015|0|0|0|0|0|
|XiaoQing|BoardSecretary|Left|Male|46|4Apr.2014|27Aug.2015|0|0|0|0|0|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|HuangZhiqiang|CFO|Left|Male|50|26May2014|18Jun.2015|0|0|0|0|0|
|SongZhenhua|Director|Left|Male|34|28May2015|25Sep.2015|0|0|0|0|0|
|SongZhenhua|VicePresident|Left|Male|34|18Jun.2015|25Sep.2015|0|0|0|0|0|
|ZhangMin|IndependentDirector|Left|Male|49|28May2015|5Nov.2015|0|0|0|0|0|
|ZhangGuanghui|Supervisor|Left|Male|52|28May2015|5Nov.2015|0|169,080|0|0|169,080|
|LiuDan|President|Left|Male|44|18Jun.2015|28Sep.2015|0|0|0|0|0|
|WanLibo|VicePresident|Left|Male|53|19May2015|14Dec.2015|0|0|0|0|0|

II. Particulars aboutchanges of Directors, Supervisors andSeniorExecutives
||||||
|-|-|-|-|-|
|Name|Position|Type|Date|Reason|
|LiuFengxi|Director|Elected|28May2015|Elected as the Director through the AnnualGeneralMeeting|
|LiuFengxi|BoardChairman|Elected|16Jun.2015|Elected as the Board Chairman through theAnnualGeneralMeeting|
|JinQingjun|Director|Elected|28May2015|Elected as the Director through the AnnualGeneralMeeting|
|ChenYuehua|Director|Elected|28May2015|Elected as the Director through the AnnualGeneralMeeting|
|HeHaibin|Director|Elected|5Nov.2015|Elected as the Director through the AnnualGeneralMeeting|
|SunShengdian|IndependentDirector|Elected|5Nov.2015|ElectedastheIndependentDirectorthroughtheAnnualGeneralMeeting|
|XiaoZuhe|IndependentDirector|Elected|28May2015|ElectedastheIndependentDirectorthroughtheAnnualGeneralMeeting|
|ZhangShuhua|IndependentDirector|Elected|28May2015|ElectedastheIndependentDirectorthroughtheAnnualGeneralMeeting|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|HaoGang|Supervisor|Elected|28May2015|Elected as the Supervisor through the AnnualGeneralMeeting|
|HaoGang|Supervisory|Elected|4Jun.2015|Elected as the Supervisory through the AnnualGeneralMeeting|
|WangYoulai|Supervisor|Elected|5Nov.2015|Elected as the Supervisor through the AnnualGeneralMeeting|
|LiJun|EmployeeSupervisor|Elected|25May2015|ElectedastheEmployeeSupervisorthroughtheEmployee’sAssembly|
|LiuFengxi|ActingPresident|Engaged|10Sep.2015|Engaged by the decision from the Board ofDirectors|
|XiaoQing|ExecutiveVicePresident|Engaged|27Aug.2015|Engaged by the decision from the Board ofDirectors|
|LinHongfan|VicePresident|Engaged|18Jun.2015|Engaged by the decision from the Board ofDirectors|
|WuYongjun|BoardSecretary|Engaged|27Aug.2015|Engaged by the decision from the Board ofDirectors|
|ChenYuehua|BoardChairman|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|SuZheng|Director|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|WangXiaowen|Director|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|HeHaibin|Director|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|FengYutao|IndependentDirector|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|YangHaiying|IndependentDirector|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|ZhangZhong|IndependentDirector|Left as termexpired|28May2015|The service term of the Board of Directors wasexpired|
|DongYaping|Supervisory|Left as termexpired|28May2015|The service term of the Board of Supervisorswasexpired|
|HaoGang|Supervisor|Left as termexpired|28May2015|The service term of the Board of Supervisorswasexpired|
|LiuYong|EmployeeSupervisor|Left as termexpired|28May2015|The service term of the Board of Supervisorswasexpired|
|HuangZhiqiang|CFO|Left|18Jun.2015|Resignedowningtoworkingreasons|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|LiuFengxi|President|Left|18Jun.2015|Resignedowningtoworkingreasons|
|XiaoQing|BoardSecretary|Left|27Aug.2015|Resignedowningtoworkingreasons|
|SongZhenhua|Director|Elected|28May2015|Elected as the Director through the AnnualGeneralMeeting|
|SongZhenhua|VicePresident|Engaged|18Jun.2015|Engaged by the decision from the Board ofDirectors|
|SongZhenhua|DirectorandVicePresident|Left|25Sep.2015|Resignedowningtothepersonalreasons|
|ZhangMin|IndependentDirector|Elected|28May2015|ElectedastheIndependentDirectorthroughtheAnnualGeneralMeeting|
|ZhangMin|BoardChairman|Elected|4Jun.2015|Elected as the Chairman of the Board ofDirectorsthroughtheboardmeeting|
|ZhangMin|BoardChairman|Left|18Jun.2015|Resignedowningtothepersonalreasons|
|ZhangMin|IndependentDirector|Left|5Nov.2015|Resignedowningtothepersonalreasons|
|ZhangGuanghui|Supervisor|Elected|28May2015|Elected as the Supervisor through the AnnualGeneralMeeting|
|ZhangGuanghui|Supervisor|Left|5Nov.2015|Resignedowningtothepersonalreasons|
|LiuDan|President|Engaged|18Jun.2015|Engaged by the decision from the Board ofDirectors|
|LiuDan|President|Left|28Sep.2015|Resignedowningtothepersonalreasons|
|WanLibo|VicePresident|Engaged|19May2015|Engaged by the decision from the Board ofDirectors|
|WanLibo|VicePresident|Left|14Dec.2015|Resignedowningtothepersonalreasons|

 III. Post-holdingsituation
Professional background, main working experience and the main responsibilities of current directors, supervisors and seniormanagement staffof theCompany
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
2015AnnualReportofKonkaGroupCo.,Ltd.
Group, etc.And nowheis acting as theBoard Chairman andActing President of KonkaGroup. 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 GuotaiJun’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 ChinaAsset Management Co., Ltd., director ofKonka 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 DiamondTrading CenterCo.,Ltd. as well as Director ofKonka 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 ofAudit 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 ChineseTown 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.IndependentDirector
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,
2015AnnualReportofKonkaGroupCo.,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 ShenzhenHuakong SEGCo., Ltd., and independent directorof KonkaGroup. 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 KonkaGroup.
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 KonkaGroup.
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 asupervisory ofKonka Group.
WangYoulai, 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 theAdministration Department ofOverseas ChineseTown Enterprise Co.,and supervisorof KonkaGroup.
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 ofAuditing and LegalAffairs Department of Telecommunications Technology Co.,
2015AnnualReportofKonkaGroupCo.,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 supervisorofKonka Group
4.SeniorExecutives
Liu Fengxi, Acting President. As for the resume, please refer to “III. 1. Directors” of this section and henowis acting as the Board Chairman of theCompany.
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 asAssistant to President, Vice General Manager, Vice President, and Deputy Secretary of party Committee and Secretary of Commission etc. ofKonka Group. He nowis acting asVicePresident of KonkaGroup.
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. Henow is acting asVicePresident ofKonka 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 ofKonka 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 KonkaGroup etc. He nowis acting asVicePresident ofKonkaGroup. 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 thevicepresident ofKonka Group.
Wu Yongjun, secretary of the board of directors, male, Han nationality, born in 1975,master’s
2015AnnualReportofKonkaGroupCo.,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 ofdirectors of KonkaGroup.
Employment inshareholders’companies
√Applicable□ Inapplicable
||||||||
|-|-|-|-|-|-|-|
|Nameofemployers|Nameofshareholders’companies||Postsheldinshareholders’companies|Startdateoftenure|ExpirationDateoftenure|Whetherreceivingsubsidiesandremunerationinshareholders’companies|
|HeHaibin|OCT EnterprisesCo.||Chief of Enterprise ManagementDepartment|1Feb.2010|Unknown|Yes|
|HaoGang|OCT EnterprisesCo.||ChiefofInspectionOffice|1Mar.2010|Unknown|Yes|
|WangYoulai|OCT EnterprisesCo.||Secretary of the joint committee of thegeneral headquarters, administrativemanagementdirector|1Dec.2014|Unknown|Yes|
|Notestopost-holdinginshareholder’sunit||1. Except the above situation, other directors, supervisors and senior management didn’t hold anypositionintheshareholders’units.2. It isunknown theending date of theposts of Mr.He Haibin, Mr.Hao Gang and Mr.WangYoulaiheldintheshareholders’units.|||||

Employment in otherentities
√Applicable□ Inapplicable
|||||||
|-|-|-|-|-|-|
|Nameofemployers|Nameofothercompanies|Postsheldinshareholders’companies|Startdateoftenure|ExpirationDateoftenure|Whetherreceivingsubsidiesandremunerationinothercompanies|
|JinQingjun|BeijingKind&WoodMallesons|SeniorPartner|Unknown|Unknown|Yes|
|ChenYuehua|ShenzhenOCTCo.,Ltd.|VicePresident|15Dec2014|Unknown|Unknown|
|ChenYuehua|Shenzhen overseas Chinese town culturaltourismscienceandTechnologyCo.,Ltd.|Chairman||Unknown|Unknown|
|Chen|Shenzhen diamond blank Trading Center|Chairman||Unknown|Unknown|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||
|-|-|-|-|-|-|
|Yuehua|Co.,Ltd.|||||
|XiaoZuhe|Tianjin Baifuyuan Equity Investment FundManagement Co., Ltd., Shenzhen QianhaiBaifuyuan Equity Investment ManagementCo.,Ltd.||Director,GM|Unknown|Yes|
|XiaoZuhe|Shenzhen Qianhai Baifuyuan EquityInvestmentManagementCo.,Ltd.||Partner|Unknown|Yes|
|ZhangShuhua|Sichuan Tan Cheng Certified PublicAccountantsCo.,Ltd.||Partner|Unknown|Yes|
|SunShengdian|ShenzhenElectronicsGroupCo.,Ltd.||Chairman, Secretaryof the PartyCommittee|Unknown|Unknown|
|SunShengdian|ShenzhenElectronicsIndustryAssociation||president|Unknown|Unknown|
|SunShengdian|Deep love semiconductor Limited by ShareLtd||Chairman|Unknown|Unknown|
|SunShengdian|ShenzhenHuakongLimitedbyShareLtd||ViceChairman|Unknown|Unknown|
|Notes to post-holding inshareholder’sunit||Mr.SunShengdian,Mr.XiaoZuheandMr.ZhangShuhuaweretheIndependentDirectorsoftheCompany.Mr.JinQingjunandMr.ChenYuehuaweretheNon-independentDirectorsoftheCompany.||||

Particulars about theCompany’s current directors, supervisors and seniorexecutives’ punishments from Securities Regulatory Institution ofrecent three years inreporting period
□Applicable√ Inapplicable
IV.Remuneration fordirectors, supervisors and seniormanagement
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, shouldsubmitwhich to theAnnual 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
2015AnnualReportofKonkaGroupCo.,Ltd.
Directors ofthe Company were ofRMB80,000/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 thesalary proposal approved bythe20152ndExtraordinary General Meeting. Other treatment for independent directors: travel expense when they went to attend the Board sessions orShareholders’ 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 bereported 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 thesame industry andsame area.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period
Unit:RMBTenThousandYuan
||||||||
|-|-|-|-|-|-|-|
|Name|Title|Gender|Age|Incumbentornot|TotalamountofremunerationreceivedfromtheCompany|Totalamountofremunerationreceivedfromshareholders’companies|
|LiuFengxi|Board Chairman, ActingPresident|Male|44|Current|181.16|No|
|JinQingjun|Director|Male|59|Current|17.50|No|
|ChenYuehua|Director|Male|53|Current|24.82|Yes|
|HeHaibin|Director|Male|41|Current|0|Yes|
|SunShengdia|IndependentDirector|Male|61|Current|0|No|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||
|-|-|-|-|-|-|-|
|n|||||||
|XiaoZuhe|IndependentDirector|Male|50|Current|17.50|No|
|ZhangShuhua|IndependentDirector|Male|51|Current|17.50|No|
|HaoGang|Supervisory|Male|42|Current|0|Yes|
|WangYoulai|Supervisor|Male|55|Current|0|Yes|
|LiJun|EmployeeSupervisor|Male|45|Current|25.71|No|
|XiaoQing|ExecutiveVicePresident|Male|46|Current|136.93|No|
|HuangZhongtian|VicePresident|Male|55|Current|131.10|No|
|HeJianjun|VicePresident|Male|46|Current|131.10|No|
|LinGaike|VicePresident|Male|44|Current|131.10|No|
|LiHongtao|VicePresident|Male|48|Current|125.59|No|
|LinHongfan|VicePresident|Male|45|Current|195.19|No|
|WuYongjun|BoardSecretary|Male|41|Current|71.75|No|
|SuZheng|Director|Male|59|Left|0|Yes|
|WangXiaowen|Director|Female|46|Left|0|Yes|
|FengYutao|IndependentDirector|Male|48|Left|9.52|No|
|YangHaiying|IndependentDirector|Female|48|Left|9.52|No|
|ZhangZhong|IndependentDirector|Male|47|Left|9.52|No|
|DongYaping|Supervisory|Male|62|Left|0|Yes|
|LiuYong|EmployeeSupervisor|Male|44|Left|91.00|No|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||
|-|-|-|-|-|-|-|
|HuangZhiqiang|CFO|Male|50|Left|53.14|No|
|SongZhenhua|Director,VicePresident|Male|34|Left|60.32|No|
|ZhangMin|IndependentDirector|Male|49|Left|10.00|No|
|ZhangGuanghui|Supervisor|Male|52|Left|0|No|
|LiuDan|President|Male|44|Left|35.38|No|
|WanLibo|VicePresident|Male|53|Left|109.19|No|
|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 theCompany
1.Number ofthe employees, componentdifference andeducational background
|||
|-|-|
|Number of the serving employees of the parent company(person)|2,208|
|Number of the serving employees of the major subsidiaries(person)|16,333|
|Totalnumberoftheservingemployees(person)|18,541|
|Total number of the employees receiving the salary of thereportingperiod(person)|18,541|
|Number of the left and retired employees that the parentcompany and the major subsidiaries should undertake theexpenses(person)|0|
|Componentdifference||
|Category|Number(person)|
|Productionpersonnel|11,765|
|Salespersonnel|3,489|
|Technicalpersonnel|1,213|
|Financialpersonnel|598|
|Administrativepersonnel|1,476|

2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|Total|18,541|
|Educationalbackground||
|Category|Number(person)|
|masterandabove|171|
|bachelordegree|2,746|
|technicalsecondary|6,617|
|juniorhighschoolandbelow|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 theemployee’s remuneration level according to its business earnings, theposts and fulfillment ofthebusiness performance of theemployee.
3.Employee’s trainingplan
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 theemployee’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 newemployee’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 bettercomplete its annual training plan.
2015AnnualReportofKonkaGroupCo.,Ltd.
4.Laboroutsourcing
□Applicable√ Inapplicable
Section IX. Corporate Governance
I.Basicinformation ofcorporate 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 theCompany’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 oflisted companies issued byCSRC.
(I) Shareholders andtheShareholders’General Meeting
The Company drew up Articles of Association and Rules for Procedure ofShareholders’ 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 onShareholders’ General Meetings in advance, convenedShareholders’ General Meeting with strictly accordance to relevant requirements, so as to enable the shareholders have their rights of information to theCompany’s material issues and the participation rights. In 2015, the Company convened fourShareholders’ General Meeting in total. The Company seriously did well the registration, arrangement and organization work for theShareholders’ General Meeting before the circular on convening theShareholders’ General Meeting being published at the designated media. The Company convened theShareholders’ 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. TheCompany’s directors, supervisors and senior management staffs made explanations and description for theshareholders’ questions and advices at thesession.
(II) Controlling shareholder and the Company
2015AnnualReportofKonkaGroupCo.,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 theShareholders’ General Meeting to intervene in theCompany’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 andtheinternal departments of theCompany functioned independently.
(III) Directors and theBoard ofDirectors
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 ofthe Board ofDirectors intofull play.
(IV) Supervisors andsupervisory 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 theCompany’s operation by law, and took effective supervision over theCompany’s significant events, related transactions, financial position, as well as the legality and compliance on duty performance by the directors, president and other seniormanagement members.
(V) Performance Appraisal andIncentive& RestrictiveMechanism
2015AnnualReportofKonkaGroupCo.,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 thestabilityof seniormanagement 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 tojointlypromote sustainableand 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 ofnon-standard governance matter existed
There was asituation that theCompany disclosed undisclosed information.
2.Types andcycle ofundisclosed information provided to theprincipal shareholder
The Company provided monthlyfinancial data to theprincipal shareholder.
3.Reasons for therelated 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 onCompany independence
After the self-inspection, the Company kept strictly to the requirements of “Notice on Strengthening the Supervision of ListedCompany’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 substantialshareholder’s abuse of control and disclosure of undisclosed information for insider trading, and hence, it has no impact ontheindependence of theCompany.
Whether it exist any significant difference between the actual corporate governance and the normative documents related to thegovernment of thelistedcompanies issued byCSRCornot?
2015AnnualReportofKonkaGroupCo.,Ltd.
□Yes√ No
There is no significant difference between the actual corporate governance and the normative documents related to thegovernment ofthelisted companies issued byCSRC.
II. Particulars about theCompany’s separation from the controlling shareholder in respect of business, personnel, assets, organization andfinancial 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 theability ofindependent operation toface themarket.
(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, inshareholders’units orother 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 unitsor individualsinterfering the organ setting oftheCompany.
(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 withshareholders’units.
2015AnnualReportofKonkaGroupCo.,Ltd.
III. Horizontal competition
□Applicable√ Inapplicable
IV. Particulars about annualshareholders’ general meetings and temporaryshareholders’ general meetings heldduringthereporting period
1.Particularsaboutannualshareholders’general meetings during thereporting period
|||||||
|-|-|-|-|-|-|
|Session|Type|Proportionofinvestors'participation|Conveningdate|Disclosuredate|Indextothedisclosed|
|2014 AnnualGeneralMeeting|AnnualGeneralMeeting|57.63％|28May2015|29May2015|http://www.cninfo.com.cn/finalpage/2015-05-29/1201078987.PDF|
|2015 1stExtraordinaryGeneralMeeting|ExtraordinaryGeneralMeeting|28.86％|15Sep.2015|16Sep.2015|http://www.cninfo.com.cn/finalpage/2015-09-16/1201599161.PDF|
|2015 2ndExtraordinaryGeneralMeeting|ExtraordinaryGeneralMeeting|30.29%|15Oct.2015|16Oct.2015|http://www.cninfo.com.cn/finalpage/2015-10-16/1201699921.PDF|
|2015 3rdExtraordinaryGeneralMeeting|ExtraordinaryGeneralMeeting|30.00%|5Nov.2015|6Nov.2015|http://www.cninfo.com.cn/finalpage/2015-11-06/1201755365.PDF|

2. SpecialShareholders’ General Meeting applied by the preferred stockholder with restitution ofvoting right
□Applicable√ Inapplicable
V. Performance oftheIndependentDirectors
1. Particulars about the independent directors attending the board sessions and theshareholders’general meetings
||||||||
|-|-|-|-|-|-|-|
|Particularsabouttheindependentdirectorsattendingtheboardsessions|||||||
|Independentdirector|Sessionsrequiredtoattendduringthereportingperiod|Attendanceinperson|Attendancebywayoftelecommunication|Entrustedpresence(times)|Absencerate|Non-attendanceinpersonfortwoconsecutivetimes|
|FengYutao|4|1|3|0|0|No|
|YangHaiying|4|1|3|0|0|No|

2015AnnualReportofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|-|-|
|ZhangZhong|4|1|3|0|0|No|
|SunShengdian|3|0|3|0|0|No|
|XiaoZuhe|10|4|6|0|0|No|
|ZhangShuhua|10|2|8|0|0|No|
|ZhangMin|7|4|1|0|2|Yes|
|General meetings sat in on byindependentdirectors||1|||||

Explanation onfailing topresent in person for two consecutivesessions
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 theArticles ofAssociation, 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 anyIndependent Director forattending.
2.Particulars aboutIndependentDirectors proposingobjection onrelevant events
Whether Independent Directors propose objection onrelevant events ornot?
√Yes□No
||||
|-|-|-|
|NameoftheIndependentDirectors|EventsoftheIndependentDirectorsproposedobjection|Contentoftheobjection|
|ZhangShuhua|ProposalonElectingtheBoardChairman|Abstentionvote|
|ZhangMin|ProposalonCeasingthePositionasthePresidentofKonkaGroupActedbyLiuDan|Negativevote|
|ZhangMin|ProposalontheSalaryPlanoftheDirectorsandSupervisors|Negativevote|
|Explanation oftheIndependentDirectorsproposingobjection onrelevantevents|On4Jun.2015,asfortheProposalontheElectingoftheBoardChairman,Mr.ZhangShuhuaconsideredtheBoard Chairman should be familiar to the color TV industry, thus he voted a abstention vote against theproposal.On10Sep.2015,as for theProposal onCeasingthePositionas thePresidentofKonkaGroupActedbyLiuDan,Mr.ZhangMinconsideredtheproposalwasnotproposedbytheNominationsCommitteeoftheBoardofDirectors,thushevotedanegativevoteagainsttheproposal.On 10 Sep. 2015, as for the Proposal on the Salary Plan of the Directors and Supervisors, Mr. Zhang Minconsideredthesalary level of theBoard Chairman was not appropriate, thushevoted anegative vote againsttheproposal.||

2015AnnualReportofKonkaGroupCo.,Ltd.
3.Otherexplanations aboutthedutyperformance ofindependentdirectors
Whether advices to theCompany from independent directors were adopted ornot
√Yes□No
Explanation ontheadvices of independent directors fortheCompany being adopted ornot 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 theR&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 theAnnual 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 themanagement level of theCompany.
VI.Performance oftheSpecial Committees underthe Boardduring thereporting period (I) Summary reporton theperformance oftheAuditCommittee subject to the Boardof 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 FinancialAudit Committee under the Board. In Y2015, based on the principle of faithfulness, the major execution situations of the FinancialAudit Committeeunder theBoard were as follows:
1. Reviewed financial statements ofAnnual 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 ofAnnual Report 2015,the Companyfulfilled the following duties: (1) Issued the Notes of the Events such as the Audit Work Arrangement of the Finanical Audit Committee andapproved thearrangement for 2015annual auditing oftheCompany;
(2) Issued Audit Opinion of the Financial Audit Committee on Financial Accounting Statements Prepared bythe Company beforeCPAs’entry ofAudit;
(3) Communicated and exchanged ideas with the CPAs responsible for annual auditing on the problems occurring during theauditing;
(4) Issued Audit Opinion on Financial Accounting Statements of the Company after CPAs Issued the PreliminaryAudit Opinion;
(5) Issued Summary Report on2015AnnualAuditingbyRuihuaCertified PublicAccountants; (6) Submitted theResolutionof the2015Annual Financial Statement oftheCompany to theBoard; (7) Submitted theResolutionof engagement oftheCPAs in 2016tothe Board;
2015AnnualReportofKonkaGroupCo.,Ltd.
3. In 2015, according to the authorization of the Board of Directors, the FinancialAudit Committee accepted the report on the work of theCompany’s Internal Auditing Department and carried out management over theInternalAuditing Department ofthe Companyand itswork.
(II) Summary report on the performance of the Remuneration and Appraisal Committee subject to the Boardof Directors
The company had constituted the Work Rules for the Remuneration andAppraisal 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 ofthe Remuneration andAppraisal Committee to theBoard.
2. On 10 Sep. submitted the Proposal on the Salary Plan of the Directors and Supervisors of the Remuneration andAppraisal Committee to theBoard.
3. During the preparation of Annual Report 2015, the Remuneration and Appraisal Committee subject to the Board of Directors issued theAudit 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 ofDirectors
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 Committeeunder theBoard were as follows:
1. On 1Apr. 2015, issued theAuditAdvice 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 forreview and approval.
2. On 8 May 2015, submitted the Proposal on the Engagement of the Senior Executives, which proposed theCompany to engage Mr.Wan Libo as theVicePresident ofthe 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
2015AnnualReportofKonkaGroupCo.,Ltd.
Mr. Song Zhenhua and Mr. Lin Hongfan as the Vice President of the Company as well as proposed the Companyto submittheproposal to themeeting oftheBoard ofDirectors 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. WuYongjun as the Board Secretary of the Company as well as proposed the Companyto submittheproposal to themeeting oftheBoard ofDirectors for discussion.
5. On 20 Oct. 2015, issued theAuditAdvice 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 submitwhich to theBoard ofDirectors of theCompany forreview andapproval.
(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 ofKonka bytheStrategy Committee on10 Sep. 2015.
VII. Performance of theSupervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in thesupervisory activity
√Yes□No
||||||||
|-|-|-|-|-|-|-|
|Meeting|ConvenedDate|SupervisorsPresent|NameoftheResolutionsoftheMeeting|Resolutions|DisclosureIndexontheSpecifiedWebsitefortheResolutions|DisclosureDate|
|15thSessionofthe7thBoardofMeeting|1Apr.2015|DongYaping,HaoGang,LiuYong|2014 Work Reportof the Board ofSupervisors, 2014Self AssessmentReport of InternalControl, 2014Annual Report,Proposal on theGeneralElectionofthe Non-employeeSupervisor of theBoard ofSupervisors|Unanimouslyvotedagreedbytheparticipants|http://www.cninfo.com.cn/finalpage/2015-04-03/1200782527.PDF|3Apr.2015|
|16th|27Apr.2015|DongYaping,|2015 1st Quarter|Unanimously|N/A|N/A|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||||||
|-|-|-|-|-|-|-|
|Sessionofthe7thBoardofMeeting||HaoGang,LiuYong|Report|votedagreedbytheparticipants|||
|1stSessionofthe8thBoardofMeeting|4Jun.2015|HaoGang,LiJun,ZhangGuanghui|Proposal onElecting theSupervisory|ZhangGuanghuivoted againstwith the otherSupervisorsvotedagree.|http://www.cninfo.com.cn/finalpage/2015-06-05/1201106171.PDF|5Jun.2015|
|2ndSessionofthe8thBoardofMeeting|27Aug.2015|HaoGang,LiJun,ZhangGuanghui|2015 Semi-annualReport|Unanimouslyvotedagreedbytheparticipants|N/A|N/A|
|3rdSessionofthe8thBoardofMeeting|10Sep.2015|HaoGang,LiJun,ZhangGuanghui|Proposal on theSalary Plan of theDirectors andSupervisors|ZhangGuanghuivoted againstwith the otherSupervisorsvotedagree.|http://www.cninfo.com.cn/finalpage/2015-09-11/1201578926.PDF|11Sep.2015|
|4thSessionofthe8thBoardofMeeting|17Sep.2015|HaoGang,LiJun|Solutions on theInquiry of theRelevant IssuesOccurred duringthe Serving Periodof Liu Dan as thePresidentofKonkaGroup|Unanimouslyvotedagreedbytheparticipants|N/A|N/A|
|5thSessionofthe8thBoardofMeeting|20Oct.2015|HaoGang,LiJun|Proposal onIncreasing theElection of WangYoulai as theNon-employeeSupervisor of the8th Board ofSupervisors|Unanimouslyvotedagreedbytheparticipants|http://www.cninfo.com.cn/finalpage/2015-10-21/1201709718.PDF|21Oct.2015|
|6thSessionofthe8thBoardofMeeting|27Oct.2015|HaoGang,LiJun|2015 3rd QuarterReport|Unanimouslyvotedagreedbytheparticipants|N/A|N/A|

2015AnnualReportofKonkaGroupCo.,Ltd.
Brief comments ontherelevant risks oftheCompany from the Board ofSupervisors
Thesupervisorycommitteemadenoobjectiontoeventsundersupervisionduringthereportingperiod.
VIII.Appraisalandincentivemechanism forseniormanagement 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 PerformanceAppraisal 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 bytheSupervisory Committee.
IX.Internal Control
1.Particulars aboutsignificantdefects foundin theinternal controlduring reportingperiod□Yes√No
2.Self-appraisal reportoninternal control
|||||
|-|-|-|-|
|Disclosure date of the Self-appraisalReportonInternalControl||8Apr.2016||
|Disclosure index of the Self-appraisalReportonInternalControl||www.cninfo.com.cn||
|Theproportion oftotalassetsincludedin evaluation scope entities in theCompany's total assets of theconsolidatedfinancialstatements||90%||
|The proportion of operationrevenueincludedinevaluationscope entitiesinthe Company's operation revenue of theconsolidatedfinancialstatements||90%||
|Defectjudgingstandards||||
|Category|FinancialReport||Non-FinancialReport|
|Qualitativecriteria|I. Those with the following characteristics should be recognized asgreatdefect:1.foundoutthereweremalpracticesoftheDirectors,SupervisorsandSeniorExecutivesoftheCompanythatformedsignificantinfluenceson the financial report; 2. the Company revised the published financialreportand revised the great misstatements caused by the malpractices orthemistakes;3.CPAfoundouttherewasgreatmisstatementofthecurrentfinancial report while didn’t found during the operating process of theinternal control; 4. the supervision of the internal control bythe FinanceAudit Committee and the internal audit institution of the Company wasinvalid; 5. not yet revised the great defect after the reasonable period as||I. The following signs indicated there may existgreat defect among the internal control of thenon-financial report; 1. the operating activities oftheenterprisesseriouslyviolatedthenationallawsand regulations; 2. negative news frequentlydisclosed by the media which caused significantharm to the Company’s reputation; 3. the coremanagement team left their positions one afteranother or the outflow of the key positionpersonnel was serious; 4. significant business|

2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
||which was discovered among the internal control assessment; 6. thesignificantbusinesslackedofsystematiccontrolorthesystematiccontrolwas invalid. II. Those with the following characteristics should berecognized as significant defect: 1. not yet chosen or applied theaccounting polices according to the generally accepted accountingstandards;2.notyetconstructedtheanti-spamprocessorcontrolmeasures;3. as for the accounts disposal of the unconventional or specialtransactions,therewasnocorrespondingcontrolmechanismorexecutionortheexistenceofthecorrespondingsupplementcontrol;4.therewasoneormultipledefectsduringthecontrolofthecompileofthefinancialreportattheperiod-endandcouldnotreasonableguaranteethestatementofthecompiled financial report reach the real and accurate target; 5. not yetrevised the significant defect after the reasonable period as which wasdiscoveredamongtheinternalcontrolassessment.III. Otherdefectsfromthe internal control hadn’t reached the recognition standards of the greatdefectorsignificantdefectshouldberecognizedasgeneraldefect.|lacked of systematic control of the system wasinvalid;greatdefectdiscoveredamongtheinternalcontrol assessment not yet be revised in time. II.The following signs indicated there may existsignificantdefectamongtheinternalcontrolofthenon-financial report: 1. negative news occurredrather frequently which caused rather big harm totheCompany’sreputation;2.theoutflowofthekeypositionpersonnelwasratherserious;3.therewasobvious defect among the control system of thesignificantbusiness;4.thesignificantdefectfoundamong the internal control assessment not yet berevisedintime.III.Otherdefectsfromtheinternalcontrolhadn’treachedtherecognitionstandardsofthe great defect or significant defect, should berecognizedasgeneraldefect.|
|Quantitativecriteria|Greatdefect:potentialmisstatementamount≥1%ofthegrossprofitmarginof the 2015 consolidated financial report of the Company; significantdefect:0.5%ofthegrossprofitmarginofthe2015consolidatedfinancialreportoftheCompany≤potentialmisstatementamount＜1%ofthegrossprofit margin of the 2015 consolidated financial report of the Company;general defect: potential misstatement amount＜0.5% of the gross profitmarginofthe2015consolidatedfinancialreportoftheCompany.|N/A|
|Number ofsignificantdefects offinancial report(Piece)|0||
|Number ofsignificantdefects of non-financial report(Piece)|0||
|Number ofimportant defectsof financialreport(Piece)|0||
|Number ofimportant defectsof non-financialreport(Piece)|0||

X.Auditreport on internalcontrol
2015AnnualReportofKonkaGroupCo.,Ltd.
√Applicable□ Inapplicable
|||
|-|-|
|AuditopinionparagraphsintheAuditReportonInternalControl||
|We considered that, in all the significant aspects, Konka Group maintained efficient internal control of the financial reportaccordingtotheC-SOXandtherelevantregulationson31Dec.2015.||
|Particulars about Audit Report onInternalControl|Disclosure|
|Disclosure date of the Audit Report onInternalControl|8Apr.2016|
|Disclosure index of theAudit Report onInternalControl|www.cninfo.com.cn|
|TypeofAuditReportonInternalControl|Unqualifiedauditor’sreport|
|Whether there is significant defect innon-financialreport|No|

WhethertheCPAsfirmissuesanAuditReportonInternalControlwithnon-standardopinionornot?
□Yes√No
Whether theAudit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report fromtheBoardornot?
√Yes□No
The2015AnnualReportofKonkaGroupCo.,Ltd.
Section X. Financial Report
I.Auditor’s Report
|||
|-|-|
|Typeofauditopinions|Standardunqualifiedopinions|
|Signingdateofauditreport|6Apr.2016|
|Nameofauditinstitution|RuihuaCPAs(LLP)|
|No.ofauditreport|R-H-S-Z[2016]No.44040012|
|NameofCPA|ShenLingzhi,HeXiaojuan|

TextoftheAuditor’sReport
Totheshareholders ofKonka 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 andcompany’s balance sheets as at 31 Dec. 2015, and the consolidated andcompany’s income statements, the consolidated andcompany’s cash flow statements and the consolidated andcompany’s statements of changes inowners’ equityfor theyear then ended and notes tothese financial statements.
I.Management’sResponsibility for theFinancial 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 theauditor’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 theentity’s preparation of the financial statements and
fair statement in order to design audit procedures that are appropriate in the circumstances.
The2015AnnualReportofKonkaGroupCo.,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 ofthefinancial statements.
Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis forouraudit opinion.
III.Auditopinion
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 itssubsidiaries’consolidated financial positions as at 31 Dec. 2015 and the consolidated business results and cash flows for the year then ended, as well as theCompany’s financial positions as at 31 Dec. 2015 and business results and cash flows for the yearthen ended.
CPA: RuihuaCertified PublicAccountants (LLP) CPA:
China·Beijing
6Apr.2016
II.Financialstatements
Unitof statements in financial notes is: RMBYuan
1.Consolidated balance sheet
Name ofenterprise: KonkaGroup Co.,Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|31Dec.2015|31Dec.2014|
|CurrentAssets:|||
|Monetaryfunds|1,706,446,928.92|1,703,135,732.18|
|Settlementreserves|||
|Intra-grouplendings|||
|Financial assets measured at fairvalue of which changes are recordedincurrentprofitsandlosses|33,196,377.28||
|Derivativefinancialassets|||
|Notesreceivable|2,880,860,750.44|3,819,417,076.37|
|Accountsreceivable|2,048,813,439.34|2,259,293,207.16|
|Accountspaidinadvance|193,664,620.66|315,150,044.57|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Premiumsreceivable|||
|Reinsurancepremiumsreceivable|||
|Receivable reinsurance contractreserves|||
|Interestreceivable|7,426,409.52|1,885,727.36|
|Dividendreceivable|||
|Otheraccountsreceivable|160,165,779.82|298,975,391.68|
|Financial assets purchased underagreementstoresell|||
|Inventories|2,882,515,913.28|3,904,436,250.33|
|Assetsheldforsale|||
|Non-current assets due within 1year|||
|Othercurrentassets|647,311,938.45|568,020,200.48|
|Totalcurrentassets|10,560,402,157.71|12,870,313,630.13|
|Non-currentassets:|||
|Loans by mandate and advancesgranted|||
|Available-for-salefinancialassets|311,974,282.66|245,033,609.00|
|Held-to-maturityinvestments|||
|Long-termaccountsreceivable|||
|Long-termequityinvestment|190,573,524.29|362,765,183.66|
|Investingrealestate|227,718,178.53|233,349,452.80|
|Fixedassets|1,763,503,189.50|1,783,695,548.92|
|Constructioninprogress|207,854,180.88|159,604,884.09|
|Engineeringmaterials|||
|Disposaloffixedassets|||
|Productionbiologicalassets|||
|Oil-gasassets|||
|Intangibleassets|352,591,887.48|347,626,130.58|
|R&Dexpense|||
|Goodwill|3,597,657.15|3,597,657.15|
|Long-termdeferredexpenses|82,846,982.07|25,792,805.06|
|Deferredincometaxassets|549,305,508.01|259,516,396.26|
|Othernon-currentassets|-|488,063,979.00|
|Totalofnon-currentassets|3,689,965,390.57|3,909,045,646.52|
|Totalassets|14,250,367,548.28|16,779,359,276.65|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Currentliabilities:|||
|Short-termborrowings|4,150,773,195.76|5,145,712,436.91|
|BorrowingsfromCentralBank|||
|Customerbankdepositsandduetobanksandotherfinancialinstitutions|||
|Intra-groupborrowings|||
|Financial liabilities measured atfair value of which changes arerecordedincurrentprofitsandlosses|||
|Derivativefinancialliabilities|||
|Notespayable|929,176,857.06|911,355,028.47|
|Accountspayable|2,980,416,983.25|3,144,408,433.93|
|Accountsreceivedinadvance|349,784,807.32|302,904,453.86|
|Financialassetssoldforrepurchase|||
|Handlingchargesandcommissionspayable|||
|Payrollpayable|279,631,258.71|299,272,715.05|
|Taxpayable|92,097,951.90|112,557,005.85|
|Interestpayable|20,552,763.14|22,872,418.43|
|Dividendpayable|||
|Otheraccountspayable|1,550,931,573.35|1,376,803,381.03|
|Reinsurancepremiumspayable|||
|Insurancecontractreserves|||
|Payables for acting trading ofsecurities|||
|Payablesforactingunderwritingofsecurities|||
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithin1year|573,398,959.65|1,525,465.53|
|Othercurrentliabilities|||
|Totalcurrentliabilities|10,926,764,350.14|11,317,411,339.06|
|Non-currentliabilities:|||
|Long-termborrowings|23,700,000.00|957,541,210.52|
|Bondspayable|||
|Ofwhich:preferredshares|||
|Perpetualbonds|||
|Long-termpayables|30,133,333.37|30,029,990.10|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Long-termpayrollpayables|23,435,856.86|28,554,734.16|
|Specificpayables|||
|Estimatedliabilities|4,629,554.61||
|Deferredincome|162,786,004.20|147,315,999.02|
|Deferredincometaxliabilities|3,468,031.97|1,049,498.77|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|248,152,781.01|1,164,491,432.57|
|Totalliabilities|11,174,917,131.15|12,481,902,771.63|
|Owners’equity:|||
|Sharecapital|2,407,945,408.00|1,203,972,704.00|
|Otherequityinstruments|||
|Ofwhich:preferredshares|||
|Perpetualbonds|||
|Capitalreserves|78,209,535.19|1,289,403,563.99|
|Less:Treasurystock|||
|Othercomprehensiveincome|3,155,744.00|16,171,477.91|
|Specificreserves|||
|Surplusreserves|847,908,466.28|847,908,466.28|
|Provisionsforgeneralrisks|||
|Retainedprofits|-522,836,282.66|746,022,758.89|
|Total equity attributableto owners oftheCompany|2,814,382,870.81|4,103,478,971.07|
|Minorityinterests|261,067,546.32|193,977,533.95|
|Totalowners’equity|3,075,450,417.13|4,297,456,505.02|
|Totalliabilitiesandowners’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 ofaccounting firm: Xu Youshan
2.Balance sheetof theparent company
Unit:RMBYuan
||||
|-|-|-|
|Item|31Dec.2015|31Dec.2014|
|CurrentAssets:|||
|Monetaryfunds|502,899,530.83|993,131,773.08|
|Financial assets measured at fairvalue of which changes are recordedincurrentprofitsandlosses|7,184,035.29|-|
|Derivativefinancialassets|||
|Notesreceivable|2,635,643,772.62|3,664,117,423.56|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Accountsreceivable|1,417,915,276.56|1,539,295,976.29|
|Accountspaidinadvance|372,509,871.77|349,343,179.42|
|Interestreceivable|14,901,123.48|14,450,153.53|
|Dividendreceivable|-|-|
|Otheraccountsreceivable|938,447,798.08|988,199,630.05|
|Inventories|1,771,302,947.50|2,500,537,916.63|
|Assetsheldforsale|||
|Non-current assets due within 1year|||
|Othercurrentassets|530,272,796.83|201,280,204.53|
|Totalcurrentassets|8,191,077,152.96|10,250,356,257.09|
|Non-currentassets:|||
|Available-for-salefinancialassets|271,924,282.66|218,983,609.00|
|Held-to-maturityinvestments|352,000,000.00|600,000,000.00|
|Long-termaccountsreceivable|-|-|
|Long-termequityinvestment|1,621,195,118.22|1,608,674,456.09|
|Investingrealestate|227,718,178.53|233,349,452.80|
|Fixedassets|512,933,612.51|534,363,754.80|
|Constructioninprogress|12,619,010.21|37,567,861.10|
|Engineeringmaterials|||
|Disposaloffixedassets|||
|Productionbiologicalassets|||
|Oil-gasassets|||
|Intangibleassets|88,336,594.02|76,397,532.51|
|R&Dexpense|||
|Goodwill|||
|Long-termdeferredexpenses|57,865,790.98|14,567,206.83|
|Deferredincometaxassets|504,252,794.29|244,080,035.45|
|Othernon-currentassets|-|-|
|Totalofnon-currentassets|3,648,845,381.42|3,567,983,908.58|
|Totalassets|11,839,922,534.38|13,818,340,165.67|
|Currentliabilities:|||
|Short-termborrowings|1,022,612,362.58|244,808,594.52|
|Financial liabilities measured atfair value of which changes arerecordedincurrentprofitsandlosses|||
|Derivativefinancialliabilities|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Notespayable|377,002,860.08|367,803,372.65|
|Accountspayable|5,173,897,087.35|7,871,208,959.66|
|Accountsreceivedinadvance|251,204,710.89|190,627,895.21|
|Payrollpayable|118,684,992.99|146,758,331.08|
|Taxpayable|31,360,675.68|5,081,943.95|
|Interestpayable|7,761,519.53|5,406,211.20|
|Dividendpayable|-|-|
|Otheraccountspayable|1,667,884,936.14|1,103,672,772.19|
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithin1year|||
|Othercurrentliabilities|||
|Totalcurrentliabilities|8,650,409,145.24|9,935,368,080.46|
|Non-currentliabilities:|||
|Long-termborrowings|||
|Bondspayable|||
|Ofwhich:preferredshares|||
|Perpetualbonds|||
|Long-termpayables|||
|Long-termpayrollpayables|||
|Specificpayables|||
|Estimatedliabilities|4,629,554.61|-|
|Deferredincome|88,668,785.51|80,679,738.96|
|Deferredincometaxliabilities|1,935,167.63|-|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|95,233,507.75|80,679,738.96|
|Totalliabilities|8,745,642,652.99|10,016,047,819.42|
|Owners’equity:|||
|Sharecapital|2,407,945,408.00|1,203,972,704.00|
|Otherequityinstruments|||
|Ofwhich:preferredshares|||
|Perpetualbonds|||
|Capitalreserves|46,505,607.34|1,250,283,488.79|
|Less:Treasurystock|||
|Othercomprehensiveincome|1,803,252.77|471,827.51|
|Specificreserves|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Surplusreserves|847,908,466.28|847,908,466.28|
|Retainedprofits|-209,882,853.00|499,655,859.67|
|Totalowners’equity|3,094,279,881.39|3,802,292,346.25|
|Totalliabilitiesandowners’equity|11,839,922,534.38|13,818,340,165.67|

 3.Consolidated income statement
Unit:RMBYuan
||||
|-|-|-|
|Item|2015|2014|
|I.Totaloperatingrevenues|18,395,177,035.98|19,423,488,994.07|
|Including:Salesincome|18,395,177,035.98|19,423,488,994.07|
|Interestincome|||
|Premiumincome|||
|Handling charge andcommissionincome|||
|II.Totaloperatingcosts|20,010,568,582.72|20,169,975,385.57|
|Including:Costofsales|16,055,497,185.62|16,733,746,581.45|
|Interestexpenses|||
|Handling charge andcommissionexpenses|||
|Surrenders|||
|Netclaimspaid|||
|Net amount withdrawn for theinsurancecontractreserve|||
|Expenditure on policydividends|||
|Reinsurancepremium|||
|Taxesandassociatecharges|94,523,398.90|60,527,648.50|
|Selling and distributionexpenses|2,448,337,549.43|2,414,468,187.73|
|Administrativeexpenses|695,731,013.59|686,930,373.50|
|Financialexpenses|350,616,323.55|132,763,824.46|
|Assetimpairmentloss|365,863,111.63|141,538,769.93|
|Add: Gain/(loss) from change in fairvalue(“-”meansloss)|32,591,836.13|-|
|Gain/(loss) from investment (“-”meansloss)|13,574,652.77|596,873,633.39|
|Including: share of profits inassociatesandjointventures|-18,793,708.66|316,248,002.07|
|Foreign exchange gains (“-”|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|meansloss)|||
|III.Businessprofit(“-”meansloss)|-1,569,225,057.84|-149,612,758.11|
|Add:non-operatingincome|158,538,297.00|258,877,423.01|
|Including: Gains on disposal ofnon-currentassets|1,431,893.68|4,740,033.90|
|Less:non-operatingexpense|134,780,910.57|16,884,982.71|
|Including: Losses on disposalofnon-currentassets|12,339,287.69|9,752,806.72|
|IV.Totalprofit(“-”meansloss)|-1,545,467,671.41|92,379,682.19|
|Less:Incometaxexpense|-269,622,908.76|31,854,983.02|
|V.Netprofit(“-”meansloss)|-1,275,844,762.65|60,524,699.17|
|Net profit attributable to ownersoftheCompany|-1,256,819,314.51|52,623,527.86|
|Minorityshareholders’income|-19,025,448.14|7,901,171.31|
|VI. After-tax net amount of othercomprehensiveincomes|-12,414,464.72|56,503.90|
|After-tax net amount of othercomprehensive incomes attributable toownersoftheCompany|-13,015,733.91|-7,838.26|
|(I) Other comprehensiveincomes that will not be reclassifiedintogainsandlosses|||
|1. Changes in net liabilitiesor assets with a defined benefit planuponre-measurement|||
|2. Enjoyable shares in othercomprehensive incomes in investeesthat cannot be reclassified into gainsandlossesundertheequitymethod|||
|(II) Other comprehensiveincomes that will be reclassified intogainsandlosses|-13,015,733.91|-7,838.26|
|1. Enjoyable shares in othercomprehensive incomes in investeesthat will be reclassified into gains andlossesundertheequitymethod|||
|2. Gains and losses on fairvalue changes of available-for-salefinancialassets|928,330.73|516,457.28|
|3. Gains and losses onreclassifying held-to-maturityinvestments into available-for-sale|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|financialassets|||
|4. Effective hedging gainsandlossesoncashflows|||
|5. Foreign-currency financialstatementtranslationdifference|-13,944,064.64|-524,295.54|
|6.Other|||
|After-tax net amount of othercomprehensive incomes attributable tominorityshareholders|601,269.19|64,342.16|
|VII.Totalcomprehensiveincomes|-1,288,259,227.37|60,581,203.07|
|Attributable to owners of theCompany|-1,269,835,048.42|52,615,689.60|
|Attributable to minorityshareholders|-18,424,178.95|7,965,513.47|
|VIII.Earningspershare|||
|(I)Basicearningspershare|-0.52|0.02|
|(II)Dilutedearningspershare|-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 correspondingamount for thelast period being RMBXXX.
Legal representative: Liu Fengxi Person-in-charge of the accounting work: Xu Youshan Person-in-charge ofaccounting firm: XuYoushan
4.Incomestatement oftheCompany
Unit:RMBYuan
||||
|-|-|-|
|Item|2015|2014|
|I.Totalsales|15,799,396,382.50|18,252,320,333.18|
|Less:costofsales|14,456,947,091.06|16,442,313,600.22|
|Businesstaxesandsurcharges|35,952,751.61|28,791,258.57|
|Distributionexpenses|1,754,767,878.82|1,891,815,304.69|
|Administrativeexpenses|365,394,474.96|445,985,722.14|
|Financialcosts|32,911,021.52|57,149,270.99|
|Impairmentloss|203,549,312.14|85,152,922.15|
|Add: gain/(loss) from change infairvalue(“-”meansloss)|7,184,035.29|-|
|Gain/(loss) from investment (“-”meansloss)|60,463,823.25|290,855,952.74|
|Including: income forminvestment on associates and jointventures|-4,991,699.40|-3,679,122.32|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|II.Businessprofit(“-”meansloss)|-982,478,289.07|-408,031,792.84|
|Add:non-operatingincome|128,884,576.48|157,529,049.56|
|Including: Gains on disposal ofnon-currentassets|141,921.85|3,914,114.70|
|Less:non-operatingexpense|102,453,940.21|9,394,570.77|
|Including: Losses ondisposal ofnon-currentassets|3,698,388.83|3,786,518.44|
|III.Totalprofit(“-”meansloss)|-956,047,652.80|-259,897,314.05|
|Less:Incometaxexpense|-258,548,667.17|-59,623,917.51|
|IV.Netprofit(“-”meansloss)|-697,498,985.63|-200,273,396.54|
|V. After-tax net amount of othercomprehensiveincomes|1,331,425.26|471,827.51|
|(I) Other comprehensive incomesthatwillnotbereclassifiedintogainsandlosses|||
|1. Changes in net liabilities orassets with a defined benefit planuponre-measurement|||
|2. Enjoyable shares in othercomprehensive incomes in investeesthat cannot be reclassified into gainsandlossesundertheequitymethod|||
|(II) Other comprehensive incomesthatwillbereclassifiedintogainsandlosses|1,331,425.26|471,827.51|
|1. Enjoyable shares in othercomprehensive incomes in investeesthatwillbereclassifiedintogainsandlossesundertheequitymethod|||
|2.Gainsandlossesonfairvaluechangesofavailable-for-salefinancialassets|928,330.73|516,457.28|
|3. Gains and losses onreclassifying held-to-maturityinvestments into available-for-salefinancialassets|||
|4. Effective hedging gains andlossesoncashflows|||
|5. Foreign-currency financialstatementtranslationdifference|403,094.53|-44,629.77|
|6.Other|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|VI.Totalcomprehensiveincomes|-696,167,560.37|-199,801,569.03|
|VII.Earningspershare|||
|(I)Basicearningspershare|||
|(II)Dilutedearningspershare|||

5.Consolidated cash flowstatement
Unit:RMBYuan
||||
|-|-|-|
|Item|2015|2014|
|I. Cash flows from operatingactivities:|||
|Cash received from sale ofcommoditiesandrenderingofservice|18,443,639,036.67|17,605,044,169.07|
|Net increase of deposits fromcustomersandduesfrombanks|||
|Net increase of loans from thecentralbank|||
|Net increase of funds borrowedfromotherfinancialinstitutions|||
|Cash received from premium oforiginalinsurancecontracts|||
|Netcashreceivedfromreinsurancebusiness|||
|Net increase of deposits of policyholdersandinvestmentfund|||
|Net increase of disposal offinancialassetsmeasuredatfairvalueof which changes are recorded intocurrentgainsandlosses|||
|Cash received from interest,handlingchargesandcommissions|||
|Net increase of intra-groupborrowings|||
|Netincreaseoffundsinrepurchasebusiness|||
|Taxrefundsreceived|430,680,435.37|467,637,201.00|
|Other cash received relating tooperatingactivities|443,686,424.74|391,719,282.33|
|Subtotal of cash inflows fromoperatingactivities|19,318,005,896.78|18,464,400,652.40|
|Cashpaidforgoodsandservices|14,488,034,947.99|15,492,774,772.37|
|Net increase of customer lendings|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|andadvances|||
|Net increase of funds deposited inthecentralbankandamountduefrombanks|||
|Cash for paying claims of theoriginalinsurancecontracts|||
|Cash for paying interest, handlingchargesandcommissions|||
|Cashforpayingpolicydividends|||
|Cashpaidtoandforemployees|1,738,319,265.97|1,747,390,336.65|
|Varioustaxespaid|616,762,165.13|685,636,270.36|
|Other cash payment relating tooperatingactivities|1,185,289,035.03|1,178,984,455.07|
|Subtotal of cash outflows fromoperatingactivities|18,028,405,414.12|19,104,785,834.45|
|Net cash flows from operatingactivities|1,289,600,482.66|-640,385,182.05|
|II. Cash flows from investingactivities:|||
|Cash received from withdrawal ofinvestments|145,165,277.44|50,968,907.04|
|Cash received from return oninvestments|23,260,902.17|334,535,622.04|
|Net cash received from disposal offixed assets, intangible assets andotherlong-termassets|3,631,054.50|8,858,019.23|
|Net cash received from disposal ofsubsidiariesorotherbusinessunits|8,889.24|285,401,846.77|
|Other cash received relating toinvestingactivities|3,646,914,849.00|2,424,872,043.31|
|Subtotal of cash inflows frominvestingactivities|3,818,980,972.35|3,104,636,438.39|
|Cash paid to acquire fixed assets,intangible assets and other long-termassets|234,096,470.72|750,959,942.15|
|Cashpaidforinvestment|78,306,112.00|249,170,764.00|
|Netincreaseofpledgedloans|||
|Net cash paid to acquiresubsidiariesandotherbusinessunits|||
|Other cash payments relating toinvestingactivities|3,658,501,268.22|2,473,083,497.35|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Subtotal of cash outflows frominvestingactivities|3,970,903,850.94|3,473,214,203.50|
|Net cash flows from investingactivities|-151,922,878.59|-368,577,765.11|
|III. Cash Flows from FinancingActivities:|||
|Cash received from capitalcontributions|78,701,328.03|15,700,000.00|
|Including: Cash received fromminority shareholder investments bysubsidiaries|71,151,328.03|15,700,000.00|
|Cashreceivedfromborrowings|2,937,450,105.14|4,234,914,268.82|
|Cash received from issuance ofbonds|-|-|
|Other cash received relating tofinancingactivities|118,110,469.89|576,957,141.70|
|Subtotal of cash inflows fromfinancingactivities|3,134,261,903.06|4,827,571,410.52|
|Repaymentofborrowings|4,071,657,524.17|3,208,016,241.44|
|Cash paid for interest expensesanddistributionofdividendsorprofit|140,363,063.80|116,250,848.36|
|Including: dividends or profitpaid by subsidiaries to minorityshareholders|1,343,265.96|-|
|Other cash payments relating tofinancingactivities|176,394,710.03|623,498,389.16|
|Sub-total of cash outflows fromfinancingactivities|4,388,415,298.00|3,947,765,478.96|
|Net cash flows from financingactivities|-1,254,153,394.94|879,805,931.56|
|IV. Effect of foreign exchange ratechangesoncashandcashequivalents|-35,606,194.86|-2,095,568.53|
|V. Net increase in cash and cashequivalents|-152,081,985.73|-131,252,584.13|
|Add: Opening balance of cashandcashequivalents|1,640,236,837.08|1,771,489,421.21|
|VI. Closing balanceof cash and cashequivalents|1,488,154,851.35|1,640,236,837.08|

6.Cashflowstatementofthe Company
Unit:RMBYuan
||||
|-|-|-|
|Item|2015|2014|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|I. Cash flows from operatingactivities:|||
|Cash received from sale ofcommoditiesandrenderingofservice|12,246,114,167.03|12,298,684,620.60|
|Taxrefundsreceived|179,546,436.62|223,273,103.54|
|Other cash received relating tooperatingactivities|1,745,067,849.17|739,787,761.18|
|Subtotal of cash inflows fromoperatingactivities|14,170,728,452.82|13,261,745,485.32|
|Cashpaidforgoodsandservices|10,398,532,975.42|10,722,090,404.58|
|Cashpaidtoandforemployees|923,142,975.45|942,834,651.48|
|Varioustaxespaid|270,882,083.75|296,880,208.93|
|Other cash payment relating tooperatingactivities|1,780,957,816.25|1,840,153,779.28|
|Subtotal of cash outflows fromoperatingactivities|13,373,515,850.87|13,801,959,044.27|
|Net cash flows from operatingactivities|797,212,601.95|-540,213,558.95|
|II. Cash flows from investingactivities:|||
|Cash received from retraction ofinvestments|130,102,809.09||
|Cash received from return oninvestments|59,458,173.75|41,767,052.88|
|Net cash received from disposal offixed assets, intangible assets andotherlong-termassets|57,765,301.70|7,769,133.70|
|Net cash received from disposal ofsubsidiariesorotherbusinessunits||301,267,191.25|
|Other cash received relating toinvestingactivities|3,522,884,590.00|2,403,472,043.31|
|Subtotal of cash inflows frominvestingactivities|3,770,210,874.54|2,754,275,421.14|
|Cash paid to acquire fixed assets,intangible assets and other long-termassets|48,440,040.10|89,183,657.42|
|Cashpaidforinvestment|196,857,096.00|215,523,300.00|
|Net cash paid to acquiresubsidiariesandotherbusinessunits|||
|Other cash payments relating toinvestingactivities|3,774,884,590.00|2,496,000,000.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Subtotal of cash outflows frominvestingactivities|4,020,181,726.10|2,800,706,957.42|
|Net cash flows from investingactivities|-249,970,851.56|-46,431,536.28|
|III. Cash Flows from FinancingActivities:|||
|Cash received from capitalcontributions|||
|Cashreceivedfromborrowings|61,422,000.00||
|Cash received from issuance ofbonds|||
|Other cash received relating tofinancingactivities|994,745,951.79|1,094,702,763.15|
|Subtotal of cash inflows fromfinancingactivities|1,056,167,951.79|1,094,702,763.15|
|Repaymentofborrowings|91,422,000.00||
|Cash paid for interest expensesanddistributionofdividendsorprofit|16,842,865.65|12,852,947.28|
|Other cash payments relating tofinancingactivities|2,007,026,133.52|617,810,454.06|
|Sub-total of cash outflows fromfinancingactivities|2,115,290,999.17|630,663,401.34|
|Net cash flows from financingactivities|-1,059,123,047.38|464,039,361.81|
|IV. Effect of foreign exchange ratechangesoncashandcashequivalents|-1,310,869.10|-3,624,119.12|
|V. Net increase in cash and cashequivalents|-513,192,166.09|-126,229,852.54|
|Add: Opening balance of cashandcashequivalents|991,459,790.62|1,117,689,643.16|
|VI. Closing balanceof cash and cashequivalents|478,267,624.53|991,459,790.62|

The2015AnnualReportofKonkaGroupCo.,Ltd.
7.Consolidated statementof changesinowners’equity
2015
Unit: RMBYuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|2015|||||||||||||
||EquityattributabletoownersoftheCompany|||||||||||Minorityinterests|Totalowners’equity|
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:treasurystock|Othercomprehensiveincomes|Specificreserve|Surplusreserve|Generalriskreserve|Retainedprofit|||
|||Preferredshares|Perpetualbonds|Other||||||||||
|I. Balance at theend of the previousyear|1,203,972,704.00|-|-|-|1,289,403,563.99|-|16,171,477.91|-|847,908,466.28|-|746,022,758.89|193,977,533.95|4,297,456,505.02|
|Add: change ofaccountingpolicy|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Correction oferrors in previousperiods|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Businessmergers under thesamecontrol|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Other|-|-|-|-|-|-|-|-|-|-|-|-|-|
|II. Balance at thebeginning of theyear|1,203,972,704.00|-|-|-|1,289,403,563.99|-|16,171,477.91|-|847,908,466.28|-|746,022,758.89|193,977,533.95|4,297,456,505.02|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|III. Increase/decrease in theperiod (“-” meansdecrease)|1,203,972,704.00|-|-|-|-1,211,194,028.80|-|-13,015,733.91|-|-|-|-1,268,859,041.55|67,090,012.37|-1,222,006,087.89|
|(I) Totalcomprehensiveincomes|-|-|-|-|-|-|-13,015,733.91|-|-|-|-1,256,819,314.51|-18,424,178.95|-1,288,259,227.37|
|(II) Capitalincreased andreducedbyowners|-|-|-|-|-|-|-|-|-|-|-|65,749,452.92|65,749,452.92|
|1.Commonsharesincreasedbyshareholders|-|-|-|-|-|-|-|-|-|-|-|65,749,452.92|65,749,452.92|
|2.Capitalincreasedbyholdersofotherequityinstruments|-|-|-|-|-|-|-|-|-|-|-|-|-|
|3.Amountsofshare-basedpaymentsrecognizedinowners’equity|-|-|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|-|-|
|(III) Profitdistribution|-|-|-|-|-|-|-|-|-|-|-12,039,727.04|19,565,831.91|7,526,104.87|
|1.Appropriations tosurplusreserves|-|-|-|-|-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|2.Appropriations togeneral riskprovisions|-|-|-|-|-|-|-|-|-|-|-|-|-|
|3.Appropriations toowners (orshareholders)|-|-|-|-|-|-|-|-|-|-|-12,039,727.04|-1,343,265.96|-13,382,993.00|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|20,909,097.87|20,909,097.87|
|(IV) Internalcarry-forward ofowners’equity|1,203,972,704.00|-|-|-|-1,203,972,704.00|-|-|-|-|-|-|-|-|
|1. Newincrease of capital(or share capital)from capital publicreserves|1,203,972,704.00|-|-|-|-1,203,972,704.00|-|-|-|-|-|-|-|-|
|2. Newincrease of capital(or share capital)from surplusreserves|-|-|-|-|-|-|-|-|-|-|-|-|-|
|3. Surplusreserves for makinguplosses|-|-|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|-|-|
|(V)Specificreserve|-|-|-|-|-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|1. Withdrawnfortheperiod|-|-|-|-|-|-|-|-|-|-|-|-|-|
|2. Used in theperiod|-|-|-|-|-|-|-|-|-|-|-|-|-|
|(VI)Other|-|-|-|-|-7,221,324.80|-|-|-|-|-|-|198,906.49|-7,022,418.31|
|IV.Closingbalance|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: RMBYuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|2014|||||||||||||
||EquityattributabletoownersoftheCompany|||||||||||Minorityinterests|Totalowners’equity|
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:treasurystock|Othercomprehensiveincomes|Specificreserve|Surplusreserve|Generalriskreserve|Retainedprofit|||
|||Preferredshares|Perpetualbonds|Other||||||||||
|I. Balance at theendofthepreviousyear|1,203,972,704.00|-|-|-|1,314,409,687.82|-|16,179,316.17|-|847,908,466.28|-|705,438,958.07|193,008,519.16|4,280,917,651.50|
|Add: change ofaccountingpolicy|-||||-|-|-|-|-|-|-|-|-|
|Correction oferrors in previousperiods|-||||-|-|-|-|-|-|-|-|-|
|Business|-||||-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|mergers under thesamecontrol||||||||||||||
|Other|-||||-|-|-|-|-|-|-|-|-|
|II. Balance at thebeginning of theyear|1,203,972,704.00|-|-|-|1,314,409,687.82|-|16,179,316.17|-|847,908,466.28|-|705,438,958.07|193,008,519.16|4,280,917,651.50|
|III. Increase/decrease in theperiod (“-” meansdecrease)|-|-|-|-|-25,006,123.83|-|-7,838.26|-|-|-|40,583,800.82|969,014.79|16,538,853.52|
|(I) Totalcomprehensiveincomes|-||||-|-|-7,838.26|-|-|-|52,623,527.86|7,965,513.47|60,581,203.07|
|(II) Capitalincreased andreducedbyowners|-|-|-|-|-|-|-|-|-|-|-|-6,996,498.68|-6,996,498.68|
|1.Commonsharesincreasedbyshareholders|-||||-|-|-|-|-|-|-|-|-|
|2.Capitalincreasedbyholdersofotherequityinstruments|-||||-|-|-|-|-|-|-|-|-|
|3.Amountsofshare-basedpaymentsrecognizedinowners’equity|-||||-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-||||-|-|-|-|-|-|-|-6,996,498.68|-6,996,498.68|
|(III) Profitdistribution|-|-|-|-|-|-|-|-|-|-|-12,039,727.04|-|-12,039,727.04|
|1.Appropriations tosurplusreserves|-||||-|-|-|-|-|-|-|-|-|
|2.Appropriations togeneral riskprovisions|-||||-|-|-|-|-|-|-|-|-|
|3.Appropriations toowners (orshareholders)|-||||-|-|-|-|-|-|-12,039,727.04|-|-12,039,727.04|
|4.Other|-||||-|-|-|-|-|-|-|-|-|
|(IV) Internalcarry-forward ofowners’equity|-|-|-|-|-|-|-|-|-|-|-|-|-|
|1. Newincrease of capital(or share capital)from capital publicreserves|-||||-|-|-|-|-|-|-|-|-|
|2. Newincrease of capital(or share capital)from surplusreserves|-||||-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|3. Surplusreserves formakinguplosses|-||||-|-|-|-|-|-|-|-|-|
|4.Other|-||||-|-|-|-|-|-|-|-|-|
|(V) Specificreserve|-|-|-|-|-|-|-|-|-|-|-|-|-|
|1. Withdrawnfortheperiod|-||||-|-|-|-|-|-|-|-|-|
|2. Used in theperiod|-||||-|-|-|-|-|-|-|-|-|
|(VI)Other|-||||-25,006,123.83|-|-|-|-|-|-|-|-25,006,123.83|
|IV. Closingbalance|1,203,972,704.00|-|-|-|1,289,403,563.99|-|16,171,477.91|-|847,908,466.28|-|746,022,758.89|193,977,533.95|4,297,456,505.02|

8.Statementofchanges inowners’equity oftheCompany
2015
Unit: RMBYuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|2015|||||||||||
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:treasurystock|Othercomprehensiveincomes|Specificreserve|Surplusreserve|Retainedprofit|Totalowners’equity|
|||Preferredshares|Perpetualbonds|Other||||||||
|I.Balanceattheendofthepreviousyear|1,203,972,704.00||||1,250,283,488.79|-|471,827.51|-|847,908,466.28|499,655,859.67|3,802,292,346.25|
|Add: change of accounting|-|-|-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|policy||||||||||||
|Correction of errors inpreviousperiods|-|-|-|-|-|-|-|-|-|-|-|
|Other|-|-|-|-|-|-|-|-|-|-|-|
|II. Balance at the beginning of theyear|1,203,972,704.00|-|-|-|1,250,283,488.79|-|471,827.51|-|847,908,466.28|499,655,859.67|3,802,292,346.25|
|III. Increase/ decrease inthe period(“-”meansdecrease)|1,203,972,704.00|-|-|-|-1,203,777,881.45|-|1,331,425.26|-|-|-709,538,712.67|-708,012,464.86|
|(I)Totalcomprehensiveincomes|-|-|-|-|-|-|1,331,425.26|-|-|-697,498,985.63|-696,167,560.37|
|(II) Capital increased andreducedbyowners|1,203,972,704.00|-|-|-|-1,203,972,704.00|-|-|-|-|-|-|
|1.Commonsharesincreasedbyshareholders|1,203,972,704.00|-|-|-|-1,203,972,704.00|-|-|-|-|-|-|
|2.Capitalincreasedbyholdersofotherequityinstruments|-|-|-|-|-|-|-|-|-|-|-|
|3.Amountsofshare-basedpaymentsrecognizedinowners’equity|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|
|(III)Profitdistribution|-|-|-|-|-|-|-|-|-|-12,039,727.04|-12,039,727.04|
|1. Appropriations to surplusreserves|-|-|-|-|-|-|-|-|-|-|-|
|2. Appropriations to owners(orshareholders)|-|-|-|-|-|-|-|-|-|-12,039,727.04|-12,039,727.04|
|3.Other|-|-|-|-|-|-|-|-|-|-|-|
|(IV) Internal carry-forward of|-|-|-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|owners’equity||||||||||||
|1. New increase of capital (orshare capital) from capital publicreserves|-|-|-|-|-|-|-|-|-|-|-|
|2. New increase of capital (orsharecapital)fromsurplusreserves|-|-|-|-|-|-|-|-|-|-|-|
|3.Surplusreservesformakinguplosses|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|
|(V)Specificreserve|-|-|-|-|-|-|-|-|-|-|-|
|1.Withdrawnfortheperiod|-|-|-|-|-|-|-|-|-|-|-|
|2.Usedintheperiod|-|-|-|-|-|-|-|-|-|-|-|
|(VI)Other|-|-|-|-|194,822.55|-|-|-|-|-|194,822.55|
|IV.Closingbalance|2,407,945,408.00|-|-|-|46,505,607.34|-|1,803,252.77|-|847,908,466.28|-209,882,853.00|3,094,279,881.39|

 2014
Unit:RMBYuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|2014|||||||||||
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:treasurystock|Othercomprehensiveincomes|Specificreserve|Surplusreserve|Retainedprofit|Totalowners’equity|
|||Preferredshares|Perpetualbonds|Other||||||||
|I.Balanceattheendofthepreviousyear|1,203,972,704.00|-|-|-|1,250,133,590.04|-|-|-|847,908,466.28|711,968,983.25|4,013,983,743.57|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Add:changeofaccountingpolicy|-|-|-|-|-|-|-|-|-|-|-|
|Correctionoferrorsinpreviousperiods|-|-|-|-|-|-|-|-|-|-|-|
|Other|-|-|-|-|-|-|-|-|-|-|-|
|II. Balance at the beginning of theyear|1,203,972,704.00|-|-|-|1,250,133,590.04|-|-|-|847,908,466.28|711,968,983.25|4,013,983,743.57|
|III. Increase/ decrease in the period(“-”meansdecrease)|-|-|-|-|149,898.75|-|471,827.51|-|-|-212,313,123.58|-211,691,397.32|
|(I)Totalcomprehensiveincomes|-|-|-|-|-|-|471,827.51|-|-|-200,273,396.54|-199,801,569.03|
|(II)Capitalincreasedandreducedbyowners|-|-|-|-|-|-|-|-|-|-|-|
|1.Commonsharesincreasedbyshareholders|-|-|-|-|-|-|-|-|-|-|-|
|2.Capitalincreasedbyholdersofotherequityinstruments|-|-|-|-|-|-|-|-|-|-|-|
|3.Amountsofshare-basedpaymentsrecognizedinowners’equity|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|
|(III)Profitdistribution|-|-|-|-|-|-|-|-|-|-12,039,727.04|-12,039,727.04|
|1. Appropriations to surplusreserves|-|-|-|-|-|-|-|-|-|-|-|
|2.Appropriationstoowners(orshareholders)|-|-|-|-|-|-|-|-|-|-12,039,727.04|-12,039,727.04|
|3.Other|-|-|-|-|-|-|-|-|-|-|-|
|(IV) Internal carry-forward of|-|-|-|-|-|-|-|-|-|-|-|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|owners’equity||||||||||||
|1. New increase of capital (orshare capital) from capital publicreserves|-|-|-|-|-|-|-|-|-|-|-|
|2. New increase of capital (orsharecapital)fromsurplusreserves|-|-|-|-|-|-|-|-|-|-|-|
|3. Surplus reserves for makinguplosses|-|-|-|-|-|-|-|-|-|-|-|
|4.Other|-|-|-|-|-|-|-|-|-|-|-|
|(V)Specificreserve|-|-|-|-|-|-|-|-|-|-|-|
|1.Withdrawnfortheperiod|-|-|-|-|-|-|-|-|-|-|-|
|2.Usedintheperiod|-|-|-|-|-|-|-|-|-|-|-|
|(VI)Other|-|-|-|-|149,898.75|-|-|-|-|-|149,898.75|
|IV.Closingbalance|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|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Konka Group Co., Ltd.
Notes of 2015 Financial Statement
(Monetary unitis RMBYuanunless otherwisestated)
I. CompanyProfile
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 thePeople’s Government of Shenzhen Municipality, and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with prior consent from thePeople’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.ShareCapital Changes uponEstablishment
On November 27, 1991, with approval from the SRYFZ No. 102[1991] document as issued by thePeople’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka Electronic Co., Ltd., during December8—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 3,650,000staffshares issued to thestaffoftheCompany.
On January 29, 1992, with approval from the SRYFZ No. 106[1991] document as issued by thePeople’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 andfounder—Hong Kong Ganghua Electronic Group Co., Ltd. are converted into foreign legalperson’s shares, and 10,000,000B-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 187,473,150shares after this distribution.
The2015AnnualReportofKonkaGroupCo.,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 publicreserve.
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 StateCouncil’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 Officeand Shenzhen StockExchange.
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-sharemarket onOctober 26,1994.
On February 6, 1996, the Proposal on ShareAllotment 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 thisallotment.
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 thisallotment.
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
The2015AnnualReportofKonkaGroupCo.,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 totalcapital stock reached 547,260,323shares after thisadditional 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 thisdistribution.
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 onApril 10, 2009. The total capital stock reached 1,203,972,704shares 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 on28Jan. 2016with thealtered share capital of2,407,945,408shares.
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
The2015AnnualReportofKonkaGroupCo.,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” fordetails.
7.Acheck listofcorporate names and theirabbreviations mentioned in thisReport
The2015AnnualReportofKonkaGroupCo.,Ltd.
Corporatename Abbreviation
ShenzhenKonkaTelecommunicationsTechnologyCo.,Ltd. TelecommunicationTechnology ShenzhenKonkaPrecisionMoldManufacturingCo.,Ltd. PrecisionMold
ShenzhenKonkaElectronicCo.,Ltd. KonkaElectronic
ShenzhenKonkaInformationNetworkCo.,Ltd. InformationNetwork
ShenzhenKonkaPlasticProductsCo.,Ltd. PlasticProducts
ShenzhenKonkaHousingAppliancesCo.,Ltd. HousingAppliances
ShenzhenElectronicFittingsTechnologyCo.,Ltd. FittingsTechnology
MudanjiangArcticOceanAppliancesCo.,Ltd. MudanjiangAppliances ChongqingKonkaAutomotiveElectronicCo.,Ltd. ChongqingElectronic
ChongqingQingjiaElectronicsCo.,Ltd. ChongqingQingjia
AnhuiKonkaElectronicCo.,Ltd. AnhuiKonka
AnhuiKonkaHouseholdAppliancesCo.,Ltd. AnhuiHouseholdAppliances ChangshuKonkaElectronicCo.,Ltd. ChangshuKonka
KunshanKonkaElectronicCo.,Ltd. KunshanKonka
DongguanKonkaElectronicCo.,Ltd. DongguanKonka
DongguanKonkaPackingMaterialsCo.,Ltd. DongguanPacking
DongguanKonkaMouldPlasticCo.,Ltd. DongguanMouldPlastic BoluoKonkaPCBCo.,Ltd. BoluoKonka
BoluoKonkaPrecisionTechnologyCo.,Ltd. BoluoPrecision
Konka(Nanhai)DevelopmentCenter NanhaiInstitute
HongKongKonkaCo.,Ltd. HongKongKonka
KonkaHouseholdAppliancesInvestment&DevelopmentCo.,Ltd. KonkaHouseholdAppliancesInvestment KonkaHouseholdAppliances KonkaHouseholdAppliancesInternationalTradingCo.,Ltd.
InternationalTrading
KONKAAMERICA,INC. KONKAAMERICA
Konka(Europe)Co.,Ltd. KonkaEurope
DongguanXutongdaMouldPlasticCo.,Ltd. Xutongda
ShenzhenKonkaOptoelectronicTechnologyCo.,Ltd. KonkaOptoelectronic
ShenzhenWankaidaScienceandTechnologyCo.,Ltd. Wankaida
KunshanKangshengInvestmentDevelopmentCo.,Ltd. KunshanKangsheng
AnhuiKonkaTongchuangHouseholdAppliancesCo.,Ltd. AnhuiTongchuang
IndonesiaKonkaElectronicsCo.,Ltd. IndonesiaKonka
ShenzhenShushidaLogisticsServiceCo.,Ltd. ShushidaLogistics
The2015AnnualReportofKonkaGroupCo.,Ltd.
Corporatename Abbreviation
BeijingKonkaElectronicCo.,Ltd. BeijingKonkaElectronic KunshanJielunteMouldPlasticCo.,Ltd.
KunshanJielunte
WuhanJielunteMouldPlasticCo.,Ltd. WuhanJielunte
ChuzhouJielunteMouldPlasticCo.,Ltd. ChuzhouJielunte
ShenzhenKonkaYishijieCommercialDisplayCo.,Ltd. KonkaYishijie
ShenzhenYishijieCommercialDisplayServiceCo.,Ltd. YishijieCommercial
XiamenDalongTradingCo.,Ltd. XiamenDalong
UseeKangrongCultureCommunicationCo.,Ltd. UseeKangrong
AnhuiJiasenPrecisionScienceandTechnologyCo.,Ltd. AnhuiJiasen
ShenzhenKangqiaoJiachengRealEstateInvestmentCo.,Ltd. KangqiaoJiacheng
KonkaZhishengCo.,Ltd. KonkaZhisheng
AnhuiKaikaiShijieE-commerceCo.,Ltd. KaikaiShijie
ShenzhenE2infoInternetScienceandTechnologyCo.,Ltd. E2info
ShenzhenKonkaMobileInternetScience&TechnologyCo.,Ltd. MobileInternet
ShenzhenKonkaBusinessSystemScience&TechnologyCo.,Ltd. BusinessScience&Technology II.Basis forthepreparationoffinancial statements
With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Group prepared financial statements in accordance with<The Accounting Standards for BusinessEnterprises—BasicStandard> 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 theAccounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments,
The2015AnnualReportofKonkaGroupCo.,Ltd.
where impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.
III.Statementof Compliancewith theAccounting StandardsforBusiness 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 theCompany’s financial positions as at 31 Dec. 2015, business results and cash flows for the year of 2015, and other relevant information. In addition, theCompany’s and theGroup’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. Importantaccounting policies andestimations
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 referto Notes IV.27“Significant accounting judgment and estimations”.
1.Fiscalperiod
TheGroup’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal year. TheGroup’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year according tothe 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 isalso theclassification criterion forthe liquidity ofitsassets and liabilities.
3.Recordingcurrency
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
The2015AnnualReportofKonkaGroupCo.,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 InternationalTrading，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 forthe reporting year.
4. Accounting treatment methods for business combinations under the same control or notunderthe 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 thosenonunder thesame control.
(1)Business combinations underthe samecontrol
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 thecombiningparty actually obtains control onthecombined 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 beadjusted.
The direct cost for the business combination of the combining party shall be recorded into the profits andlosses at thecurrent period.
(2)Business combinations not underthesame 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 dateis theacquirer, and othercombining enterprise(s) is(are) theacquiree.
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
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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 berecorded intotheprofits andlosses in thecurrent 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 onthe 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 theacquiree’s re-measurement, theothers shall be transferred into current investment gains).
In theGroup’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
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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 theacquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).
5.Methods forpreparing consolidated financial statements
(1)Principlefor determining theconsolidation 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 theGroup and its subsidiaries. A subsidiaryis an enterprise orentity controlled bytheGroup. (2)Methods for preparing theconsolidated 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 thesametime.
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 areadjusted based onthefair valueof theidentifiablenet assets at theacquisitiondate.
All significant inter-group balances, transactions and unrealized profits are offset in the consolidated financial statements.
The portion of asubsidiary’sshareholders’ equity and the portion of asubsidiary’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 undershareholders’ equity and net profits in the consolidation financial statements. The portion of asubsidiary’s net profits and losses for the period that belong to minority interests is
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presented as the item of “minority shareholder profits and losses” under the bigger item 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 thesubsidiary’s openingowners’equity, minorityinterests 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 originalsubsidiary’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 theGroup’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 BusinessEnterprises—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 ofsubsidiaries’ 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 othertransactions；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
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statements, which together transferred into the current profits and losses in the lose of control ,when theGroup losingcontrol onitssubsidiary.
6.Classificationof jointarrangements andaccounting treatment ofjointoperations 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.
TheGroup’s investments injointventures aremeasured at theequity method according to theaccounting policiesmentioned inNote IV. 12(2)②“Long-term equity investments measured at theequity 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 theGroup’s stake in the joint operation; recognizes the income from sale of theGroup’s share in the output of the joint operation; recognizes the income from sale of the jointoperation’s outputs according to theGroup’s stake in it; and recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according totheGroup’sstake in it.
When the Group, as a joint operator, transfers or sells assets (the assets not constituting business, the same below) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party, the Group only recognizes the share of the other joint operators in the gains and losses arising from the sale. Where impairment occurs to the assets as prescribed in<The Accounting Standard No. 8 for BusinessEnterprises—AssetImpairment>, 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 ofassets from thejointoperation.
7.Recognition standardforcash andcash equivalents
In theGroup’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 ofcash andwhose risksin change of valueare minimal.
8.Foreign currency businesses andtranslation offoreign currency financialstatements (1)Accounting treatments for translation offoreign 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 thePeople’s Bank of China, the same below) of the transaction date, while as for such transactions as foreign exchange or involving in foreign
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exchange, the Company shall converted into amount in the bookkeeping base currency at actual exchange rate thetransaction 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; and③ 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 andlosses.
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 disposingoverseas 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 theowners’ equity; and be recorded into disposal gains and losses at current period when disposing overseas business.
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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 theowner’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 andowners’ 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 theowner’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 flowstatement.
And the opening balance and the actual balance of last year shall be listed at the amounts after translation offoreign currency financial statement inlast year.
Where the control of the Group over an overseas operation ceases due to disposal of all or some of theGroup’sowner’s equity in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parentcompany’sowner’s equity in relation to the overseas operation which is stated under theshareholders’ equity in thebalance sheet shallbe all restated as gains and lossesof thedisposal period.
Where theGroup’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. Ifwhat’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 disposalratio.
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 intheamounts initiallyrecognized.
(1)Determination ofthefair valueof main financial assets andfinancial liabilities
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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 determineits fair value.
(2)Classification, recognitionand measurement offinancial 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 theprofits and lossesof thecurrent 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 theprofits and lossesof thecurrent period;
The financial assets meeting any of the following requirements shall be classified as transactional financialassets：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 equityinstruments.
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
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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 offinancial assets& liabilities which thefinancial 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 shouldbe recorded intogains and losses ofcurrent period.
②Held-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 fora definitepurpose ortheenterpriseis able to holduntilits 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 theprofits and lossesof thecurrent 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 orfinancial 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.
③Loans and theaccounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotationin theactive market, withfixed recovery cost orrecognizable.
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 andlosses ofthecurrent period.
④Assets availablefor sales
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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 somefinancial 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 theperiod-end ofthe available-for-sale liabilities instruments is itsinitialcost.
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 comprehensiveincome， 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 thefollow-up measurement according tothe 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 ofthecurrent period.
(3)Impairment offinancial 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 indicatinga financial asset may be impaired, aprovision is provided for theimpairment. 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 foran impairmenttest.
①Impairment onheld-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
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impairment loss reversed shall not exceed the amortized cost of the financial assets without provisionsof impairment lossonthe reserving date.
②Impairment ofavailable-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 over20%; while the “non-temporary decline” refers to the consecutive decline time of the fair valueover 12months.
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 valueand theimpairment lossoriginally recorded in theprofits andlosses.
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 theprofits and losses for thecurrent 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 besettled bydelivering thesaid equityinvestment, 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; or③ 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 theownership ofthe 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
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in the transferred financial asset" refers to the risk level that the enterprise faces resulting from thechange of thevalueof thefinancial 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 thefair valueoriginally recorded in othercomprehensiveincomes.
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 amortizedcarrying amountsof theaforesaid 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 offinancial 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 andlosses
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.
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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 inthe profits and losses forthe current period.
②Otherfinancial 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.
③Financial guaranteecontract 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 thenew 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. Theresulting gain andloss is recognized in profit orloss.
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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 valuethrough profit or loss.
(8)Offsettingfinancial 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 thebalance sheet andshall not beoffset.
(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 theequity transaction would bededucted from theequity. All types of distribution (excluding stock dividends) made by the Group to holders of equity instruments are deducted fromshareholders’ equity. The Group does not recognize any changes in thefair value ofequity instruments.
10.Receivables
Receivables includeaccount receivables and other accounts receivables.
(1)Recognition ofprovision 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 shallbemade.
①Debtorhas serious financial difficult;
② Debtor goes against the contract clause (for instance, breach of faith or overdue paying interests orprincipal);
③Debtors have agreat probability ofbankruptcy orother financial reorganization;
④Otherobjective evidence proving such accounts receivablehas been impaired;
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(2)Withdraw method ofprovision for baddebts
① The recognition criteria and method of individual provision for bad debts of receivables thatare 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 theprovisionfor 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 portfoliowith similarcredit risk to taketheimpairment test.
② The recognition and method of provision for bad debts of receivables by credit risk portfolio
A. Recognition ofcreditrisk 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 thedebtor’s ability to repay all the due accounts in accordance with contract for such assets, which also are related with the measurement onfuturecash flowof theexaminedassets.
Recognition basicofdifferent groups:
Item Basic
Divide the groups according to the credit risks characteristics of the accounts Group1:Aginggroup
receivable
Group 2: Internal related party Divide the groups according to the credit risks characteristics of whether the groupsoftheCompany creditoristheinternalrelatedpartyoftheCompany
B.Withdrawal method of provision forbad debts recognized bycredit 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 (thedebtor’s ability to pay off the loans in accordance with the provisions of contract), experience of losses, current economic status and the predicted losses inthe accounts receivable group.
Withdrawal method ofthebad debts provisionofthe different groups:
Item Withdrawalmethod
Group1:Aginggroup Aginganalysismethod
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Item Withdrawalmethod
Group 2: Internal related party groups To make an independent impairment test and if there was no impairment, oftheCompany shouldnotwithdrawthebaddebtsprovision.
In thegroups, adopting aging analysis method to withdraw bad debt provision:
||
|-|
|Withdrawalproportionforaccountsreceivable(%)|
|2|
|5|
|20|
|50|
|50|
|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 withdrawprovision forbad debts:
A. Receivables have disputewiththeother parties or involvinglawsuit and arbitration;
B. Receivables have obvious indication showing that the debtors are likely to fail to perform thedutyof repayment, etc.
(3)Reversal ofprovision for baddebts
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 reverseunder theassumption that no provisionis made forthe impairment.
11.Inventory
(1)Classification
TheGroup’s inventories are classified as non-property inventories and property inventories.
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And the non-property inventories include raw materials, goods in process; merchandise on hand, goods delivered and circulating materials, etc; while the property inventories include property inprocess and finished property,etc.
①Thefinished property refers tothe finished andheld-for-saleproperty.
② The property in process (development costs) refers to the unfinished property with the development purpose forsale.
(2)Pricing method foroutgoinginventories
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 intheperiod.
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 otherexpenses occurred during thedevelopment 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 berecorded into the“investment property”
② For the accounting policies on borrowing costs occurred for developing property, please referto Note IV.17Pricing of“Borrowing Costs”.
(3) Recognition basis of net realizable value and withdrawal method of depreciation reserves forinventories
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 theeffect of events after balance-sheet-date.
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On the balance sheet date, the inventories shall be measured according to the cost or the 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 thebalance that thecost of individual inventory item exceeding the net realizablevalue. 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 beincluded in theprofits and losses ofthecurrent period.
(4)The perpetual inventory system is maintained for stocksystem.
(5)Amortization method ofthelow-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 equityinvestments
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 thepolicies with theotherparties.
(1)Recognition ofinvestment 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 theowner’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
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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 forthemoment.
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 andlosses.
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 amountof equity securities andbonds 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
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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 BusinessEnterprises—Recognition and Measurement ofFinancial 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 methodin thefinancial statements, and which theCompany has control oninvested entity.①Long-term equity investment measured byadopting 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 intheactual payment orconsideration upongainingthe investment.
②Long-term equity investment measured byadopting 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 theowners’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,
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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 ifcould form into business, should be accounting disposed according to the regulations of No. 20ofASBE—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-recognizedlosses, resumerecognizingits attributableshare ofprofits.
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.
③Acquiring shares of minorityinterest
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 sufficientto offset, theretained profits shall be adjusted.
④Disposal oflong-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 intoowners’ 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 onpreparation ofcombined 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
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profits andlosses.
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 intoowners’ 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. Theowners’equity recognized owning to the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into thecurrent gains andlosses according tothe 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 otherowners’ 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 intothecurrent gainsand losses according to theproportion.
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 otherowners’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 otherowners’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 incomeandtheotherowners’equity shouldbe carried forward in fullamount.
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
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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 theowners’equity recognized owning to the changes of the otherowner’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 adoptingthe equitymethod.
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 oflosingthe control right along untilthetimewhen loseit.
13.Investmentreal 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 theright touseany buildingwhich 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 expenditureis recognized in profit orloss in theperiod 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 ofbuildings 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 tothechange shallbe theentry valueafter 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 betheentry valueafter thechange
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
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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 lossin theperiod in which it isincurred.
14.Fixed assets
(1)Conditionsfor 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 oftheestimated discard expenses.
(2)Depreciation methodsof 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:
||||
|-|-|-|
|Method|Usefullife(Year)|Expectednetsalvagevalue(%)|
|Straight-linedepreciation|20-40|10.00|
|Straight-linedepreciation|10|10.00|
|Straight-linedepreciation|5|10.00|
|Straight-linedepreciation|5|10.00|
|Straight-linedepreciation|5|10.00|

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 theexpirationof itsexpected 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 offixed assets byfinance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
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rewards related to the ownership of an asset. Its ownership may or may not eventually 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 theshorter oneof thelease term orits 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 beincluded in thecurrent profits andlosses.
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 oftheaccounting estimates.
15.Construction inprogress
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 theassets are ready for theirintended 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.Borrowingcosts
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
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the general borrowing used. The capitalization rate shall be calculated and determined in light ofthe weighted average interest rate ofthe 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 takequitea longtimeto get ready for itsintended useorforsale.
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 besuspended.
17.Intangibleassets
(1)Pricing method, useful life and impairment test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or controlled byenterprises which havenophysical 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 upontheoccurrence.
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,thewhole payment shall betreated as fixedassets.
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 intangibleassets without certain service lifeshall not beamortized.
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 intangibleassets with finiteservice life.
(2)R& Dexpenses
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures.
Theresearch expenditures shall berecorded into theprofit orloss forthe 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 theydon’t satisfy thefollowing conditions.
①It isfeasibletechnically to finish intangibleassets foruse orsale;
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②It isintended tofinish and use orsell theintangible 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 intangibleassets itselfortheintangible assets will beused 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;
⑤Thedevelopment expenditures oftheintangible assets can be reliably measured.
As for expenses thatcan’t be identified as research expenditures or development expenditures, theoccurred R& Dexpenses shall be all included in current profits and losses. (3) Testing method of impairment and withdraw method of impairment provision of intangibleassets
For details of the testing method of impairment and withdraw method of impairment provisiononintangible assets, seeNotes IV.19“Long-term assets impairment”.
18.Amortization method oflong-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 expenseshall be amortizedaveragely within benefit period.
19.Impairmentoflong-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 invalue nomatterwhether 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 theBuyer’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 toAssets 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 flowindependently.
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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 combinationexcept businessreputation.
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. Ofwhich thenon-monetary benefits should bemeasured according tothe fairvalue. 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-termemployees’ 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 theemployee’s service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the condition that they meet the recognition conditionsof 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 bedisposed according to thesetting revenueplan.
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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 ofthecurrent 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 bookvalueoftheestimated liabilities.
22.Revenue
(1)Revenue from sellinggoods
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 beincurred can bemeasured ina reliableway.
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 berecognized once thegoods reach theport of thepurchase.
(2)Providing laborservices
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 ofthelabor service already provided tothe totallaborservice toprovide.
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; and④ The costs incurred or to be incurred in the transaction can bemeasured in areliable way.
If the outcome of a transaction concerning the providing of labor services cannot be
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measured in a reliable way, the revenue from the providing of labor services shall 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 incurredcouldn’t be compensated, thus no revenue shall berecognized.
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 ofthe 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 fullamount according to thesales contract.
(4)Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue onaccrual basis.
(5)Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the length of time for which theGroup’s monetary fund is used by others and the agreed interest rate.
(6)Property leasing revenue
For therecognition method oftheproperty leasing revenue, please refer toNotes 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 toassets andgovernment subsidiespertinent 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 thecurrent profits andlosses.
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 theenterprise shall bedirectly included in thecurrent profits and losses.
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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 andlosses.
24.Deferredincometax assets/deferredincome tax liabilities
(1)Income tax ofthe 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 relevantregulations ofthetax law.
(2)Deferred income tax assets and deferred incometax 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 ofthebalance 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 othertaxabletemporary 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 tomake upsuch 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.
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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 areexpected to berecovered orthe 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 taxableincome willbe available.
(3)Income tax expenses
Incometax expenses includecurrent incometax 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 theshareholders’equity which should be included in other comprehensive income orshareholders’ equity as well as the book value for adjusting the goodwillof thedeferred incometax occurs from thebusinesscombination.
(4)Offset of incometax
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 orare at thesame timeacquire theasset as well as liquidatetheliabilities.
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 thefinancing leasing is operating leasing.
(1)Business ofoperating leases recorded bythe Group as thelessee
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 ofthecurrent period inwhich they actually arise.
(2)Business ofoperating leases recorded bythe Group as thelessor
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
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current profits and losses when incurred. The contingent rents shall be recorded into the profits andlosses ofthecurrent period in which they actually arise.
(3)Business offinance leases recorded bytheGroup as thelessee
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 within1year.
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 berecorded intotheprofits and losses ofthecurrent period inwhich they actually arise. (4)Business offinance leases recorded bytheGroup as thelessor
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 andlong-term claims duewithin 1year.
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 berecorded intotheprofits and losses ofthecurrent period inwhich they actually arise. 26.Changesin mainaccounting policies andestimates
(1)Changeof accounting policies
There was noany change ofaccounting policies oftheCompany in thereporting period. (2)Changeof accounting estimates
There was noany change ofaccounting estimateoftheCompany in thereporting period. 27.Critical accounting judgments andestimates
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
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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 influenceshould be recognized at theperiod ofchange occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption ontheaccountsin thefollowing importantitems:
(1)Categorization ofleasing
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 therisk and compensation related with theleased assets. (2)Provision forbad 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 forfalling price ofinventories
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 theperiod of estimates being changed.
(4)The fair valueof 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 impairmentheld-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 futurecash flow oftheinvestment.
(6)The impairment offinancial assets available for sale
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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, defaultrate and risk ofcounterparty.
(7)Provision forimpairment 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 ofimpairment indicated that thebookvaluecan’t berecoverable.
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 attributableto theassets 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 priceand relevant operating costs arising from reasonable and supportiveassumptions.
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 amountof futurecash 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, thedepreciation and amortization expenses should beadjusted.
(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 forrelevant 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
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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 amountof deferred incometax assets which should berecognized.
(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 theperiod of ultimaterecognition.
(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 andbalance 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 appraisetherelevant risks,uncertainty and the timevalue ofmoney 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 theprofits and losses in thefuture periods.
V.Taxation
1.Maintaxes andtax rate
Categoryoftaxes Specificsituationofthetaxesrate
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Calculated the output tax at17% 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 of21%, Telecommunication Technology VAT
and the value-added service part of Mobile Internet brand of6%, which see details to (3); Shushida Logistics of11%,6% which see details to (4);Calculatedtheadded-valuetaxat3%ofthetaxableincomeofE2info.
Businesstax Paidby5%oftaxablebusinessincome.
Paid at7% of the circulating tax actually paid, of which Dongguan Packing, Urban maintenance and construction
Dongguan Konka, Dongguan Mould, Boluo Konka, Boluo Konka Precision, tax
XutongdaandKunshanKangshengof5%.
Paid at25% of the taxable income, of which Hong Kong Konka, Konka Household Appliances Investment, Konka Household Appliances International Trading, and Konka Zhisheng of16.5%, Wankaida, Telecommunication Enterpriseincometax Technology,PrecisionMould,InformationNetwork,ChongqingQingjia,Anhui Konka, Kunshan Konka, Dongguan Konka, Dongguan Mould, Xutongda and Business System of15%, USA Konka of28% and Europe Konka of31%;E2infoof10%.
Educationsurtax
Paidat3%ofthecirculatingtaxactuallypaid.
Localeducationsurtax
Paidat2%ofthecirculatingtaxactuallypaid.
(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 ElectronicAppliance 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, theGroup’s charging standards were RMB13 per set of TV, RMB12 per set ofrefrigeratorand RMB7 per set ofwashing 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, theCompany’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 bytheCompany at theyear-end.
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(3) TheCompany’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 StateAdministration 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 1Nov.2012,with tax rateof6%.
(4) As for the transportation revenue of the logistic business of theCompany’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 ValueAdded 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 theVATsince 1 Sept. 2012, with the tax rate of3%. From 1 Jun. 2013, Shushida Logistics received the general taxpayer qualification with the VAT rate of the transportation revenueof11%and theotherservice of6%.
2.Taxpreference andapproved 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 forthecorporate incometax according to15%of thepreferential 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 incometax according to15%of thepreferential 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 incometax according to15%of thepreferential tax rate.
(4) TheCompany’ssubsidiary—Chongqing Qingjia Electronics Co., Ltd. is levied the business income tax at the preferential tariff of15% from 1 Jan. 2011 to 31 Dec. 2020 in accordance with CS (2011) No. 58 Notice on Relevant Tax Policies on Deeply Implementing thewestern 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
The2015AnnualReportofKonkaGroupCo.,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 of15%.
(6) On 5 Aug. 2014, the subsidiary of the Company, Kunshan Konka Electronics Co., Ltd. acquired the certificate of high-technology enterprises joint issued by Jiangsu 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 incometax according to15%of thepreferential 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 corporateincometax according to15%ofthepreferential 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 theenterpriseincometax at thepreferential rateof15%.
(9) On 30 Sep. 2014, theCompany’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 to15% of the preferential tax rate.
(10) The annual taxable income amount wouldbe≤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 to50% before be included in the taxable income and pay the enterprise income tax at thepreferential rateof20%.
(11) According to the Notice of the Corporate Income Tax Preferential Policy and the Optimal Directory of Guangdong Hengqin New Zone, Fujian Pingtan Comprehensive ExperimentalArea 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
The2015AnnualReportofKonkaGroupCo.,Ltd.
Company-Shenzhen Konka Business System Science& Technology Co., Ltd. would pay for the corporate income tax according to15% 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 of17% and after that, the part of actual tax burden of VAT which exceeds3% 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 majoritems inconsolidated financialstatements of theCompany
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, theyear-end refers to 31Dec. 2015
1.Monetary funds
||
|-|
|Closingbalance|
|4,217.37|
|1,488,150,633.98|
|218,292,077.57|
|1,706,446,928.92|
|205,900,491.11|

 Notes: The closing balance of other monetary fund was the deposits of each margin deposit notwithdrawn at any time.
2. Financial assets measured by fair value and the changes be included in the current gainsandlosses
||
|-|
|Closingbalance|
|33,196,377.28|
|33,196,377.28|

3.Notes receivable
(1)Notes receivable listed bycategory
The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|Closingbalance|
|2,879,244,863.46|
|1,615,886.98|
|2,880,860,750.44|

 (2)Notes receivable pledged at theperiod-end
Item Amount
Bankacceptancebill
1,446,191,357.58 Total
1,446,191,357.58 Notes: Up to 31 Dec. 2015, the Company pledged thebanker’s acceptance bill of the book value of RMB1, 446,191,357.58 for the comprehensive financing business such as handling thebilling, letterofcredit and thetrading financing.
(3) Notes receivable which had endorsed by the Company or had discounted and had not due onthebalance sheet dateat the year-end
||
|-|
|Amountofrecognitionterminationattheperiod-end|
|952,963,830.15|
|952,963,830.15|

 4.Accounts receivable
(1)Accounts receivableclassified bycategory
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|21,847,005.37|0.92|21,847,005.37|100.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|2,284,090,249.64|95.88|244,107,868.37|10.69|
|2,284,090,249.64|95.88|244,107,868.37|10.69|
|76,251,927.24|3.20|67,420,869.17|88.42|
|2,382,189,182.25|100.00|333,375,742.91|13.99|

 (Continued)
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|—|—|—|—|
|2,516,702,016.18|98.95|259,303,584.71|10.30|
|2,516,702,016.18|98.95|259,303,584.71|10.30|
|26,756,380.18|1.05|24,861,604.49|92.92|
|2,543,458,396.36|100.00|284,165,189.20|11.17|

The2015AnnualReportofKonkaGroupCo.,Ltd.
①Accounts receivable with significant single amount for which bad debt provision separately accrued at theyear-end
Closingbalance
||||
|-|-|-|
|Accountreceivable|Baddebtprovision|Withdrawalproportion(%)|
|21,847,005.37|21,847,005.37|100.00|

②In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Closingbalance
Aging
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|2,013,172,455.64|40,203,521.76|
|40,173,735.00|2,008,686.75|
|25,126,437.95|5,025,287.59|
|8,035,966.18|4,017,983.09|
|9,458,531.38|4,729,265.69|
|188,123,123.49|188,123,123.49|
|2,284,090,249.64|244,107,868.37|

③Top five of account receivable with insignificant single amount for which bad debt provisionseparately accrued
Closingbalance
||||
|-|-|-|
|Accountreceivable|Baddebtprovision|Withdrawalproportion|
|17,867,121.02|17,867,121.02|100.00|
|12,166,047.60|12,166,047.60|100.00|
|8,223,935.99|4,111,968.00|50.00|
|6,260,260.93|5,554,486.27|88.73|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|3,408,394.19|2,045,036.51|60.00|
|47,925,759.73|41,744,659.40||

(2)Baddebt provision withdrawal, reversed orrecovered in thereport 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 ofRMB5, 205,580.98,other decrease was RMB193, 949.83.
(3)Top fiveofaccount receivable ofclosing balance collected byarrears 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 relevantclosing balance ofbad debt provision withdrawn was RMB12, 870,193.93.
5.Prepayment
(1)List byaging analysis:
||||||
|-|-|-|-|-|
|Closingamount|||||
|Bookbalance||Baddebtprovision|Bookbalance||
|Amount|Proportion(%)||Amount|Proportion(%)|
|192,024,479.90|92.75|527,017.04|312,558,414.85|96.34|
|1,037,032.15|3.04|406,683.12|5,069,017.23|1.56|
|3,154,864.60|0.85|1,716,100.63|735,503.34|0.23|
|6,774,559.86|3.36|6,676,515.06|6,086,092.93|1.87|
|202,990,936.51|100.00|9,326,315.85|324,449,028.35|100.00|

 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 shouldbe 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%oftotal closing balance of account receivable.
6.Interestreceivable
The2015AnnualReportofKonkaGroupCo.,Ltd.
(1)Category ofinterest receivable
||
|-|
|Closingbalance|
|7,325,298.41|
|101,111.11|
|7,426,409.52|

 7.Otheraccounts receivable
(1)Other account receivable classified bycategory
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion|
|183,881,677.62|51.78|171,132,382.98|93.07|
|170,855,404.47|48.11|23,438,919.29|13.72|
|170,855,404.47|48.11|23,438,919.29|13.72|
|402,820.00|0.11|402,820.00|100.00|
|355,139,902.09|100.00|194,974,122.27|54.90|

 (Continued)
Openingbalance
Category
|||
|-|-|
|Bookbalance|Baddebtprovision|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|18,115,952.51|5.45|5,405,926.42|29.84|
|314,459,562.89|94.55|28,194,197.30|8.97|
|314,459,562.89|94.55|28,194,197.30|8.97|
|—|—|—|—|
|332,575,515.40|100.00|33,600,123.72|10.10|

① Other account receivable with insignificant single amount for which bad debt provision separately accrued
Closingbalance
||||
|-|-|-|
|Otheraccountsreceivable|Baddebtprovision|Withdrawalproportion（%）|
|152,402,680.00|152,402,680.00|100.00|
|18,115,952.51|5,366,657.87|29.62|
|13,363,045.11|13,363,045.11|100.00|
|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 Closingbalance
The2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|125,476,792.14|2,504,840.07|
|9,688,182.60|484,409.13|
|15,052,680.35|3,010,536.07|
|4,571,994.74|2,285,997.37|
|1,825,235.98|912,617.99|
|14,240,518.66|14,240,518.66|
|170,855,404.47|23,438,919.29|

(2)Baddebt provision withdrawal, reversed orrecovered in thereport 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,otherdecrease was RMB746, 299.82.
(3)Top 5 of the closing balance of theother accounts receivable collected according to the arrears party
|||||
|-|-|-|-|
|Nature|Closingbalance|Aging|Proportionofthetotalyear-endbalanceoftheaccountsreceivable(%)|
|Energy savingsubsidy|152,402,680.00|1-2years,2-3years|42.91|
|Export taxrefunds|18,334,262.62|Within1year|5.16|
|Propertyadministrativeexpenses|6,413,845.45|Within1year|1.81|
|Paymentonbehalf|6,202,366.00|Within1year,1-2years,2-3years|1.75|
|Paymentforland|2,570,568.00|1-2years,2-3years|0.72|
||185,923,722.07||52.35|

 8.Inventory
(1)Category ofinventory
Item Closingamount
The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Bookbalance|Ofwhich: thecapitalizedamountoftheborrowings|Impairmentofinventories|
|270,136,005.18|—|—|
|194,778,406.05|3,693,784.24|—|
|464,914,411.23|3,693,784.24|—|
|611,138,306.26|—|53,034,708.44|
|152,737,782.18|—|54,853,159.84|
|1,960,267,024.10|—|199,769,581.12|
|1,115,838.91|—|—|
|2,725,258,951.45|—|307,657,449.40|
|3,190,173,362.68|3,693,784.24|307,657,449.40|

 (Continued)
Openingamount
||||
|-|-|-|
|Bookbalance|Ofwhich: thecapitalizedamountoftheborrowings|Impairmentofinventories|
|433,431,258.26|708,392.08|—|
|184,288,149.21|4,786,589.71|—|
|617,719,407.47|5,494,981.79|—|
|1,299,997,072.71|—|331,916,902.96|
|384,479,782.98|—|174,801,078.20|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|2,347,967,769.03|—|239,864,738.09|
|854,937.39|—|—|
|4,033,299,562.11|—|746,582,719.25|
|4,651,018,969.58|5,494,981.79|746,582,719.25|

 (2)List ofthedevelopment cost
||||
|-|-|-|
|Startingtime|Expectedcompletiontimeofthenextbatch|Openingamount|
|Y2011|Completionbystages|433,431,258.26|
|Notyetstarted|Notyetstarted|—|
|||433,431,258.26|

 (3)List ofthedeveloped products
|||||
|-|-|-|-|
|Completiontime|Openingamount|Increased|Decreased|
|Y2014|184,288,149.21|2,710,216.34|107,315,291.21|
|Y2015|—|281,251,269.33|166,155,937.62|
||184,288,149.21|283,961,485.67|273,471,228.83|

 (4)Impairment ofinventories
||||||
|-|-|-|-|-|
|Openingbalance|Increasedamount||Decreasedamount||
||Withdrawal|Other|Reverse|Write-off|
|331,916,902.96|18,922,271.43|—|8,015,456.89|289,789,009.06|
|174,801,078.20|219,137.28|—|5,693,260.13|114,473,795.51|
|239,864,738.09|81,517,733.07|—|—|121,612,890.04|
|746,582,719.25|100,659,141.78|—|13,708,717.02|525,875,694.61|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(5) Withdrawal provision basis of the falling price of the inventory and the reasons of the reserveorwrite-off
||
|-|
|Specificbasisofwithdrawaloffallingpricereservesofinventory|
|Therealizablenetvaluewaslowerthantheinventorycost|
|Therealizablenetvaluewaslowerthantheinventorycost|
|Therealizablenetvaluewaslowerthantheinventorycost|

(4) Closing balance of the inventory which includes capitalized borrowing expenses was RMB3, 693,784.24.
9.Othercurrent assets
||
|-|
|Closingbalance|
|89,108,687.45|
|50,000,000.00|
|500,000,000.00|
|8,203,251.00|
|647,311,938.45|

 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 31Dec. 2015to 31Mar.2016.
The2015AnnualReportofKonkaGroupCo.,Ltd.
10.Available-for-salefinancialassets
(1)List ofavailable-for-sale financial assets
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Depreciationreserves|Bookvalue|Bookbalance|Depreciationreserves|
|316,972,068.30|4,997,785.64|311,974,282.66|247,799,748.07|2,766,139.07|
|2,874,068.30|—|2,874,068.30|2,311,748.07|681,139.07|
|314,098,000.00|4,997,785.64|309,100,214.36|245,488,000.00|2,085,000.00|
|316,972,068.30|4,997,785.64|311,974,282.66|247,799,748.07|2,766,139.07|

 (2)Available-for-salefinancial assets measured byfair valueat the period-end
Category Available-for-saleequityinstruments
Costoftheequityinstruments 2,317,433.07 Fairvalue 556,635.23 Changedamountofthefairvalueaccumulativelyincludedinothercomprehensive
1,237,774.30 income
Withdrawnimpairmentamount — (3)Available-for-salefinancial assets measured bycost at theperiod-end
Bookbalance
Investee
||||
|-|-|-|
|Year-begin|Increased|Decreased|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|6,000,000.00|14,000,000.00|—|
|4,800,000.00|—|—|
|9,500,000.00|—|—|
|5,750,000.00|—|—|
|1,300,000.00|—|—|
|100,000.00|—|—|
|485,000.00|—|—|
|5,000,000.00|—|—|
|1,153,000.00|—|—|
|6,000,000.00|—|—|
|2,400,000.00|—|—|
|203,000,000.00|—|—|
|—|47,230,000.00|—|
|—|7,380,000.00|—|
|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|245,488,000.00|68,610,000.00|—|

 (Continued)
||||||
|-|-|-|-|-|
|Depreciationreserves||||Shareholdingproportionamongtheinvestees|
|Year-begin|Increased|Decreased|Year-end||
|—|—|—|—|6.00|
|—|—|—|—|7.05|
|—|—|—|—|13.57|
|—|—|—|—|9.50|
|1,300,000.00|—|—|1,300,000.00|8.33|
|100,000.00|—|—|100,000.00|—|
|485,000.00|—|—|485,000.00|1.00|
|—|1,639,190.80|—|1,639,190.80|9.62|
|200,000.00|—|—|200,000.00|11.50|
|—|1,273,594.84|—|1,273,594.84|6.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|—|—|—|—|4.26|
|—|—|—|—|—|
|—|—|—|—|10.04|
|—|—|—|—|14.76|
|—|—|—|—|—|
|2,085,000.00|2,912,785.64|—|4,997,785.64|—|

 (4)Changes oftheimpairment oftheavailable-for-sale financial assets during thereporting period
Category Available-for-saleequityinstruments Balanceofthewithdrawnimpairmentattheperiod-begin 2,766,139.07 Withdrawnimpairmentbalanceattheperiod-begin 2,912,785.64 Ofwhich: transferredfromothercomprehensiveincome — Decreased 681,139.07 Ofwhich: recoveredandreversedaftertheperiodofthefairvalue 681,139.07 Balanceofthewithdrawnimpairmentattheperiod-end 4,997,785.64
11.Long-term equity investment
The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|Openingbalance|||||
||Additionalinvestment|Negativeinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|43,425,481.67|—|—|2,378,983.32|—|
|110,793,944.21|—|—|-16,120,186.21|—|
|3,649,728.08|—|—|—|—|
|197,758,604.87|—|124,800,000.00|-5,111,426.37|403,094.53|
|7,137,424.83|—|—||—|
|—|6,210,000.00|—|58,920.60|—|
|362,765,183.66|6,210,000.00|124,800,000.00|-18,793,708.66|403,094.53|

 (Continued)
|||||
|-|-|-|-|
|Increase/decreaseinreportingperiod|||Closingbalance|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Other||

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|1,487,448.32|—|—|44,317,016.67|
|—|30,257,135.84|—|94,673,758.00|
|—|3,649,728.08|—|3,649,728.08|
|—|—|—|68,250,273.03|
|—|—|—|7,137,424.83|
|—|—|—|6,452,187.60|
|1,487,448.32|33,906,863.92|—|224,480,388.21|

 Note: sincethe shenzhen konkaenergy technology co., LTD., continuing losses, as ofDecember 31,2015,its net worth is negative, according to thebook valueof full provisionfor impairment loss; Reflected the Enraytek Optoelectronics Co.,Ltd., byway ofassessment signs, there is possibleassets impairment provision forimpairment loss according to thedifferencebetween evaluating price and bookvalue.
The2015AnnualReportofKonkaGroupCo.,Ltd.
12.Investmentproperty
Investment property adopted thecost measurement mode
||||
|-|-|-|
|Housesandbuildings|Landuseright|Constructioninprogress|
|249,923,047.75|—|—|
|—|—|—|
|—|—|—|
|249,923,047.75|—|—|
|—|—|—|
|16,573,594.95|—|—|
|5,631,274.27|—|—|
|5,631,274.27|—|—|
|—|—|—|
|22,204,869.22|—|—|
|—|—|—|
|—|—|—|
|—|—|—|
|—|—|—|
|—|—|—|
|—|—|—|
|227,718,178.53|—|—|
|233,349,452.80|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
13.Fixed assets
(1)List offixed assets
||||||
|-|-|-|-|-|
|Housesandbuildings|Machineryequipment|Electronicequipment|Transportationequipment|Other|
|1,666,832,339.28|1,025,362,549.65|252,641,100.35|74,244,036.50|214,920,840.16|
|72,994,535.09|51,204,901.71|19,270,450.60|5,655,781.95|20,677,102.58|
|6,072,522.58|46,355,267.49|18,669,505.56|5,474,108.36|17,035,522.26|
|66,922,012.51|4,849,634.22|600,945.04|181,673.59|3,641,580.32|
|129,421,263.34|80,576,728.94|45,976,766.12|15,186,067.52|26,110,920.83|
|129,421,263.34|80,576,728.94|45,976,766.12|15,186,067.52|26,110,920.83|
|—|—|—|—|—|
|1,610,405,611.03|995,990,722.42|225,934,784.83|64,713,750.93|209,487,021.91|
|401,426,983.75|590,925,364.93|201,361,698.85|52,503,060.71|140,779,033.03|
|56,893,032.66|60,882,542.16|13,661,165.53|6,045,622.63|19,000,737.36|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|56,893,032.66|60,882,542.16|13,661,165.53|6,045,622.63|19,000,737.36|
|92,491,301.56|68,883,330.10|41,068,075.82|12,586,323.43|23,329,729.40|
|92,491,301.56|68,883,330.10|41,068,075.82|12,586,323.43|23,329,729.40|
|—|—|—|—|—|
|365,828,714.85|582,924,576.99|173,954,788.56|45,962,359.91|136,450,040.99|
|53,124,316.45|6,198,654.13|1,628,053.45|899,230.59|1,458,921.13|
|—|20,992,333.00|6,021,747.13|109,187.63|2,737,376.43|
|—|20,992,333.00|6,021,747.13|109,187.63|2,737,376.43|
|51,117,567.15|1,122,857.24|2,335,953.13|45,072.30|640,149.80|
|51,117,567.15|1,122,857.24|2,335,953.13|45,072.30|640,149.80|
|—|—|—|—|—|
|2,006,749.30|26,068,129.89|5,313,847.45|963,345.92|3,556,147.76|
|1,242,570,146.88|386,998,015.54|46,666,148.82|17,788,045.10|69,480,833.16|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|1,212,281,039.08|428,238,530.59|49,651,348.05|20,841,745.20|72,682,886.00|

 (2)List oftemporarily idlefixed assets
|||||
|-|-|-|-|
|Originalbookvalue|Accumulativedepreciation|Depreciationreserves|Bookvalue|
|4,284,173.90|2,458,069.58|942,269.83|883,834.49|
|6,705,827.19|5,338,283.86|718,159.24|649,384.09|
|18,515,199.56|17,070,291.53|1,021,928.09|422,979.94|
|1,623,535.00|1,460,501.40|87,259.60|75,774.00|
|2,979,447.09|2,690,379.92|43,920.91|245,146.26|
|34,108,182.74|29,017,526.29|2,813,537.67|2,277,118.78|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(3)Fixed assets leased in from financing lease
||||
|-|-|-|
|Originalbookvalue|Accumulativedepreciation|Impairmentprovision|
|5,321,552.85|1,173,743.61|—|

 (4)Fixed assets leased out from operation lease
Item Closingbookvalue
Housesandbuildings
23,232,191.19 Total 23,232,191.19 (5)Details of fixed assets failed to accomplishcertification of property
||
|-|
|Bookvalue|
|48,324,645.35|
|20,343,430.96|
|12,187,010.26|
|12,725,226.98|
|9,426,356.36|
|5,432,239.86|
|4,842,032.86|
|1,826,104.32|

14.Construction inprogress
(1)List ofconstruction in progress
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Depreciationreserves|Bookvalue|Bookbalance|Depreciationreserves|
|138,816,397.92|—|138,816,397.92|57,267,807.74|—|
|1,643,881.07|—|1,643,881.07|1,643,881.07|—|
|4,801,714.50|—|4,801,714.50|29,459,670.93|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|31,032,889.26|—|31,032,889.26|18,304,006.73|—|
|4,035,058.76|—|4,035,058.76|—|—|
|9,613,833.54|—|9,613,833.54|6,466,505.22|—|
|17,910,405.83|—|17,910,405.83|46,463,012.40|—|
|207,854,180.88|—|207,854,180.88|159,604,884.09|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(2)Changes ofsignificant construction in progress
|||||||
|-|-|-|-|-|-|
|Estimatednumber|Openingbalance|Increasedamount|Amountthattransferredtofixedassetsoftheperiod|Amountthattransferredtointangibleassetsoftheperiod|Otherdecreasedamountoftheperiod|
|441,600,000.00|57,267,807.74|81,548,590.18|—|—|—|
|26,320,000.00|1,643,881.07|—|—|—|—|
|37,992,500.00|29,459,670.93|8,594,370.74|33,252,327.17|—|—|
|40,000,000.00|18,304,006.73|12,728,882.53|—|—|—|
|4,186,655.78|—|4,035,058.76|—|—|—|
|—|6,466,505.22|3,147,328.32|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||
|-|-|-|-|-|-|
|21,049,600.00|—|20,508,465.44|20,508,465.44|—|—|
|—|46,463,012.40|20,490,246.57|22,435,053.07|10,621,478.28|15,986,321.79|
|571,148,755.78|159,604,884.09|151,052,942.54|76,195,845.68|10,621,478.28|15,986,321.79|

 (Continued)
||||||
|-|-|-|-|-|
|Proportionestimatedoftheprojectaccumulativeinput|Projectprogress|Accumulativeamountofcapitalizedinterests|Ofwhich: theamountofthecapitalizedinterestsoftheperiod|Capitalizationrateoftheinterestsoftheperiod|
|6.25|6.25|—|—|—|
|77.58|95.00|—|—|—|
|96.38|76.60|—|—|—|
|—|90.00|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|97.43|100.00|—|—|—|
|31.58|31.58|810,165.16|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
15.Intangibleassets
(1)List ofintangible assets
|||||
|-|-|-|-|
|Landuseright|Patentright|Trademarkregistrationexpense|Other|
|366,197,934.11|40,139,739.88|3,519,159.61|30,062,433.23|
|—|31,264.96|—|17,833,356.38|
|—|31,264.96|—|7,211,878.10|
|—|—|—|10,621,478.28|
|—|—|—|9,800.00|
|—|—|—|9,800.00|
|366,197,934.11|40,171,004.84|3,519,159.61|47,885,989.61|
|40,380,243.37|32,123,987.40|3,364,176.89|13,523,645.98|
|8,338,831.53|831,399.43|35,845.25|3,692,788.23|
|8,338,831.53|831,399.43|35,845.25|3,692,788.23|
|—|—|—|9,800.00|
|—|—|—|9,800.00|
|48,719,074.90|32,955,386.83|3,400,022.14|17,206,634.21|
|—|2,901,082.61|—|—|
|—|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|—|—|—|—|
|—|—|—|—|
|—|—|—|—|
|—|2,901,082.61|—|—|
|317,478,859.21|4,314,535.40|119,137.47|30,679,355.40|
|325,817,690.74|5,114,669.87|154,982.72|16,538,787.25|

 (2)Details of fixed assets failed to accomplishcertification of land useright
||
|-|
|Bookvalue|
|3,153,608.13|

(3)Other notes
The land use right of book value of intangible assets of theCompany’s subsidiary Kunshan Konka Electronic Co., Ltd. was RMB78, 094,958.58 which was pledged for long term loan ofRMB63,876,957.13.
16.Goodwill
(1)Original bookvalue ofgoodwill
||||||
|-|-|-|-|-|
|Openingbalance|Increased||Decreased||
||Formedfromthebusinesscombination|Other|Dispose|Other|
|3,597,657.15|—|—|—|—|
|3,597,657.15|—|—|—|—|

 (2)The method ofimpairment test and impairment provision, see note19,IV.
(3)As of31 Dec. 2015,there was no bookvalue ofgoodwill higherthan recoverable amount. 17.Long-term unamortized expenses
|||||
|-|-|-|-|
|Openingbalance|Increasedamount|Amortizationamount|Decrease|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|9,557,434.43|23,314,451.15|7,090,610.84|—|
|10,280,675.07|38,695,322.84|15,843,815.43|—|
|5,954,695.56|24,334,874.47|6,356,045.18|—|
|25,792,805.06|86,344,648.46|29,290,471.45|—|

 18.Deferredincometax assets/deferredincome tax liabilities
(1)Deferred income tax assets
||||
|-|-|-|
|Closingbalance|||
|Deductibletemporarydifference|Deferredincometaxassets|Deductibletemporarydifference|
|682,074,474.66|160,938,084.03|680,584,889.73|
|75,656,622.48|18,914,155.62|45,585,627.57|
|114,093,986.59|28,165,776.55|92,847,148.47|
|98,649,185.43|23,704,256.37|91,852,218.96|
|1,223,305,795.11|295,093,235.44|137,205,313.83|
|89,960,000.00|22,490,000.00|—|
|2,283,740,064.27|549,305,508.01|1,048,075,198.56|

 (2)Lists ofdeferred incometax liabilities
||||
|-|-|-|
|Closingbalance|||
|Deductibletemporarydifference|Deferredincometaxliabilities|Deductibletemporarydifference|
|10,219,095.65|1,532,864.34|6,996,658.49|
|7,184,035.28|1,796,008.82|—|
|556,635.24|139,158.81|—|
|17,959,766.17|3,468,031.97|6,996,658.49|

(3)List ofunrecognized deferred incometax assets
Item Closingbalance Openingbalance
The2015AnnualReportofKonkaGroupCo.,Ltd.
Deductibletemporarydifference
385,065,293.90 416,383,521.99
||
|-|
|1,162,480,889.15|
|1,547,546,183.05|

 19.Othernon-currentassets
||
|-|
|Closingbalance|
|—|
|—|

 20.Assets impairmentprovision
|||||
|-|-|-|-|
|Openingbalance|Withdrawnimpairmentbalanceattheperiod-begin|Decreased||
|||Reverse|Write-off|
|327,064,296.70|218,323,037.39|6,090,644.27|1,620,508.79|
|746,582,719.25|100,659,141.78|13,708,717.02|525,875,694.61|
|2,766,139.07|2,912,785.64|681,139.07|—|
|63,309,175.75|29,860,644.19|—|55,261,599.62|
|2,901,082.61|—|—|—|
|—|33,906,863.92|—|—|
|1,142,623,413.38|385,662,472.92|20,480,500.36|582,757,803.02|

21.Short-termloans
Category ofshort-term loans
The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|Closingbalance|
|—|
|—|
|1,196,103,036.53|
|2,954,670,159.23|
|4,150,773,195.76|

 22.Notes payable
||
|-|
|Closingbalance|
|—|
|929,176,857.06|
|929,176,857.06|

 Notes: RMB929, 176,857.06will beduein nextfiscal period.
23.Accounts payable
(1)List ofaccounts payable
||
|-|
|Closingbalance|
|2,806,965,708.04|
|126,958,011.57|
|28,320,658.56|
|18,172,605.08|
|2,980,416,983.25|

 (2)Notes of theaccounts payable aging over oneyear
||
|-|
|Closingbalance|
|13,804,404.30|
|5,038,769.40|
|2,902,005.96|
|21,745,179.66|

24.Advancefrom customers
(1)List ofadvance from customers
The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|Closingbalance|
|308,012,574.61|
|21,697,745.80|
|5,825,837.33|
|14,248,649.58|
|349,784,807.32|

 (2) Significant advance from customers aging over one year was prepayment of goods undelivered.
(3)Advancereceipts ofhouses
||
|-|
|Closingbalance|
|15,387,876.00|
|8,542,534.36|
|23,930,410.36|

 25.Payrollpayable
(1)List ofPayroll payable
||||
|-|-|-|
|Openingbalance|Increased|Decreased|
|296,701,946.79|1,624,244,622.09|1,649,465,363.42|
|2,562,794.26|137,657,181.47|137,761,396.48|
|7,974.00|10,701,417.05|5,017,917.05|
|—|—|—|
|299,272,715.05|1,772,603,220.61|1,792,244,676.95|

 (2)List ofShort-term salary
||||
|-|-|-|
|Openingbalance|Increased|Decreased|
|288,171,641.38|1,435,260,071.96|1,461,273,188.12|
|1,111,472.13|62,543,230.95|62,397,521.82|
|1,526,026.37|63,685,606.33|63,274,297.61|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|1,285,679.34|53,414,120.10|53,306,965.10|
|91,233.21|5,406,091.01|5,394,781.15|
|149,113.82|4,865,395.22|4,572,551.36|
|1,504,548.35|33,021,559.27|33,029,409.53|
|4,388,258.56|13,023,907.35|13,192,266.36|
|—|—|—|
|—|—|—|
|—|16,710,246.23|16,298,679.98|
|296,701,946.79|1,624,244,622.09|1,649,465,363.42|

 (3)List ofdrawing scheme
||||
|-|-|-|
|Openingbalance|Increased|Decreased|
|2,437,546.24|130,593,613.81|130,901,578.79|
|125,248.02|7,063,567.66|6,859,817.69|
|—|—|—|
|2,562,794.26|137,657,181.47|137,761,396.48|

 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 expenseoccurred was recorded intocurrent profits and losses orrelated assets costs.
26.Taxes payable
||
|-|
|Closingbalance|
|13,316,492.43|
|15,106,336.81|
|2,049,531.99|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|1,392,874.16|
|5,468,489.97|
|939,576.85|
|1,286,346.53|
|19,694,608.00|
|32,843,695.16|
|92,097,951.90|

 27.Interestpayable
||
|-|
|Closingbalance|
|20,552,763.14|
|20,552,763.14|

 28.Otheraccounts payable
(1)Other accounts payable listedby nature oftheaccount
||
|-|
|Closingbalance|
|958,366,586.73|
|228,909,206.83|
|172,797,449.90|
|10,769,352.74|
|180,088,977.15|
|1,550,931,573.35|

 (2)Other significant accounts payable withaging overone year
||
|-|
|Closingbalance|
|3,800,000.00|
|3,031,041.94|
|2,075,485.15|
|8,906,527.09|

The2015AnnualReportofKonkaGroupCo.,Ltd.
29.Non-currentliabilities duewithin1year
||
|-|
|Closingbalance|
|573,341,856.11|
|57,103.54|
|573,398,959.65|

 30.Long-term loan
||
|-|
|Closingbalance|
|63,776,957.13|
|23,700,000.00|
|509,564,898.98|
|573,341,856.11|
|23,700,000.00|

 Notes: themortgage asset category and amount ofmortgageloan see Notes 54.
31.Long-term payable
||
|-|
|Closingbalance|
|30,000,000.00|
|190,436.91|
|57,103.54|
|30,133,333.37|

 32.Longterm payroll payable
(1)List oflong term payroll payable
||
|-|
|Closingbalance|
|23,435,856.86|
|—|
|—|
|23,435,856.86|

(2)Changes ofdefined benefit plans
The2015AnnualReportofKonkaGroupCo.,Ltd.
①Present worth of defined benefit plans obligation:
||
|-|
|Reportingperiod|
|28,554,734.16|
|—|
|—|
|—|
|—|
|—|
|5,118,877.30|
|—|
|5,118,877.30|
|23,435,856.86|

②Notes to the influence of the content and related risk of defined benefit plans to the future cash flows, timeand uncertainty of theCompany:
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 theCompany’s andemployees’ 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 withtheCompany orCommunicationTechnology).
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 theactual turnoverrate, death rate andthechanges ofminimumcardinality ofsocial security.③Notes to analysis results ofactuarial assumptions andsensibilityof defined benefit plans
||
|-|
|Period-endofreportingperiod|
|Treasurybondrateinsameperiod|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|0%|
|Overlegalemeritusage|
|0%|

33.Accrued liabilities
|||
|-|-|
|Openingbalance|Closingbalance|
|—|4,629,554.61|
|—|4,629,554.61|

34.Deferredincome
|||||
|-|-|-|-|
|Openingbalance|Increased|Decreased|Closingbalance|
|147,315,999.02|40,689,403.00|25,219,397.82|162,786,004.20|
|147,315,999.02|40,689,403.00|25,219,397.82|162,786,004.20|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Ofwhich, itemsinvolved in government subsidies:
||||||
|-|-|-|-|-|
|Openingbalance|Amountofnewlysubsidy|Amountaccruedinnon-businessincome|Otherchanges|Closingbalance|
|17,550,000.00|—|3,510,000.00|—|14,040,000.00|
|12,800,000.00|—|—|—|12,800,000.00|
|11,550,000.00|—|—|—|11,550,000.00|
|8,508,737.85|—|—|600,000.00|7,908,737.85|
|6,499,999.94|—|2,000,000.04|—|4,499,999.90|
|5,620,000.00|—|—|—|5,620,000.00|
|5,256,893.21|—|—|—|5,256,893.21|
|4,750,000.01|—|999,999.96|—|3,750,000.05|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|4,400,000.00|—|2,400,000.00|—|2,000,000.00|
|4,200,000.00|—|600,000.00|—|3,600,000.00|
|3,600,000.00|—|2,400,000.00|—|1,200,000.00|
|3,000,000.00|—|521,739.12|—|2,478,260.88|
|2,940,000.00|—|383,333.34|—|2,556,666.66|
|2,869,999.89|—|1,640,000.04|—|1,229,999.85|
|2,800,000.00|—|-|—|2,800,000.00|
|2,775,000.00|—|300,000.00|—|2,475,000.00|
|2,600,000.00|—|—|—|2,600,000.00|
|2,470,000.00|—|—|—|2,470,000.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|2,259,541.37|—|349,620.44|—|1,909,920.93|
|2,068,933.33|—|420,800.04|—|1,648,133.29|
|2,050,000.00|—|600,000.00|—|1,450,000.00|
|2,030,000.00|—|—|—|2,030,000.00|
|2,000,000.00|—|133,333.32|-|1,866,666.68|
|—|8,170,000.00|—|—|8,170,000.00|
|—|5,000,000.00|—|—|5,000,000.00|
|—|4,500,000.00|—|—|4,500,000.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|—|4,000,000.00|—|—|4,000,000.00|
|—|3,000,000.00|—|—|3,000,000.00|
|—|2,400,000.00|—|—|2,400,000.00|
|—|2,000,000.00|—|—|2,000,000.00|
|21,146,588.06|11,619,403.00|5,254,856.87|—|27,511,134.19|
|135,745,693.66|40,689,403.00|21,513,683.17|600,000.00|154,321,413.49|
|11,570,305.36|—|3,105,330.17|384.48|8,464,590.71|
|11,570,305.36|—|3,105,330.17|384.48|8,464,590.71|
|147,315,999.02|40,689,403.00|24,619,013.34|600,384.48|162,786,004.20|

35.Sharecapital
|||||||
|-|-|-|-|-|-|
|Openingbalance|Increase/decreaseinreportingperiod(+,-)|||||
||Newlyissueshare|Bonusshares|Capitalizationofpublicreserves|Other|Subtotal|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||
|-|-|-|-|-|-|
|1,203,972,704.00|—|—|1,203,972,704.00|—|—|

 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 numberafter change was 2,407,945,408shares.
36.Capital reserves
||||
|-|-|-|
|Openingbalance|Increased|Decreased|
|1,211,366,082.55|—|1,203,972,704.00|
|78,037,481.44|194,822.54|7,416,147.34|
|1,289,403,563.99|194,822.54|1,211,388,851.34|

 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 purchaseof49%of minorityshareholder's equity of subsidiary Boluo Konka which lead to othercapital reservedecreased RMB7,416,147.34. 37.Othercomprehensiveincome
|||||||
|-|-|-|-|-|-|
|Openingbalance|Reportingperiod|||||
||Amountincurredbeforeincometax|Less:Amounttransferredintoprofitandlossinthecurrentperiodthatrecognizedintoothercomprehensiveincomeinpriorperiod|Less:incometaxexpense|After-taxattributetotheparentcompany|After-taxattributetominorityshareholder|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||||
|-|-|-|-|-|-|
|—|—|—|—|—|—|
|—|—|—|—|—|—|
|—|—|—|—|—|—|
|516,457.28|1,237,774.30|—|309,443.57|928,330.73|—|
|15,655,020.63|-13,342,795.45|—|—|-13,944,064.64|601,269.19|
|16,171,477.91|-12,105,021.15|—|309,443.57|-13,015,733.91|601,269.19|

 38.Surplusreserves
||||
|-|-|-|
|Openingbalance|Increased|Decreased|
|593,846,200.71|—|—|
|254,062,265.57|—|—|
|847,908,466.28|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Notes: Based on the regulations of the Corporation Law and Constitution, the Company should withdraw10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the statutory surplus reserves exceeded the50% of the registered capital, the Company could no morewithdraw.
The Company, after withdraw statutory surplus reserves, can withdraw discretional surplus reserves, in line with the approval, the discretional surplus reserves can be used formaking uplosses in previous year or increaseshare capital.
The2015AnnualReportofKonkaGroupCo.,Ltd.
39.Retained profits
||
|-|
|Reportingperiod|
|746,022,758.89|
|—|
|746,022,758.89|
|-1,256,819,314.51|
|—|
|—|
|12,039,727.04|
|—|
|-522,836,282.66|

 40.Revenues andoperating costs
1.Revenueand Costof Sales
||||
|-|-|-|
|Reportingperiod|||
|Revenue|Operatingcosts|Revenue|
|17,261,298,403.20|15,019,583,475.18|19,075,390,465.68|
|1,133,878,632.78|1,035,913,710.44|348,098,528.39|
|18,395,177,035.98|16,055,497,185.62|19,423,488,994.07|

 (2) Main operations (Classified byproduct)
||||
|-|-|-|
|Reportingperiod|||
|Operationrevenue|Operationcost|Operationrevenue|
|12,590,931,785.71|11,006,357,581.37|14,697,422,135.45|
|790,942,197.54|748,974,690.95|1,587,898,794.07|
|1,569,786,771.56|1,276,893,910.52|1,277,294,037.34|
|2,309,637,648.39|1,987,357,292.34|1,512,775,498.82|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|17,261,298,403.20|15,019,583,475.18|19,075,390,465.68|

 (3)Main operations (Classified byarea)
||||
|-|-|-|
|Reportingperiod|||
|Operationrevenue|Operationcost|Operationrevenue|
|11,332,127,336.67|9,430,634,537.03|14,362,851,294.58|
|5,929,171,066.53|5,588,948,938.15|4,712,539,171.10|
|17,261,298,403.20|15,019,583,475.18|19,075,390,465.68|

 (4)The revenue of sales from thetopfive customers
||
|-|
|Mainoperationrevenue|
|3,298,880,853.29|
|3,303,518,733.47|

 41.Businesstax andsurcharges
||
|-|
|Reportingperiod|
|25,434,795.00|
|31,858,403.10|
|13,911,746.90|
|12,908,502.64|
|9,615,001.74|
|794,949.52|
|94,523,398.90|

 Notes: themeasurement standards ofbusiness tax and surcharges see NotesV.Tax
42.Salesexpenses
||
|-|
|Reportingperiod|
|637,502,858.56|
|422,601,760.68|
|358,821,827.56|
|326,633,784.28|
|266,849,899.18|
|99,423,394.48|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|73,865,498.94|
|39,697,519.90|
|29,615,957.91|
|19,492,036.66|
|173,833,011.28|
|2,448,337,549.43|

 43.Administrative expenses
||
|-|
|Reportingperiod|
|229,397,281.19|
|174,464,266.91|
|36,087,894.16|
|33,156,228.75|
|22,836,537.65|
|19,758,529.99|
|21,808,406.79|
|13,515,296.14|
|12,627,143.05|
|11,611,229.54|
|10,417,929.04|
|7,429,275.36|
|102,620,995.02|
|695,731,013.59|

 44.Financial expenses
||
|-|
|Reportingperiod|
|165,242,581.67|
|58,996,071.96|
|228,619,830.03|
|15,749,983.81|
|350,616,323.55|

The2015AnnualReportofKonkaGroupCo.,Ltd.
45.Asset impairmentloss
||
|-|
|Reportingperiod|
|212,232,393.12|
|86,950,424.76|
|2,912,785.64|
|33,906,863.92|
|29,860,644.19|
|365,863,111.63|

 46.Gains onthe changes inthefairvalue
||
|-|
|Reportingperiod|
|32,591,836.13|
|32,591,836.13|
|32,591,836.13|

 47.Investmentincome
||
|-|
|Reportingperiod|
|-18,793,708.66|
|—|
|2,212,535.21|
|48,859.12|
|8,290,862.30|
|21,816,104.80|
|13,574,652.77|

The2015AnnualReportofKonkaGroupCo.,Ltd.
48.Non-operating gains
|||
|-|-|
|Reportingperiod|Lastperiod|
|1,431,893.68|4,740,033.90|
|1,431,893.68|4,740,033.90|
|—|—|
|138,975,824.71|230,797,272.53|
|4,620,972.98|3,459,744.68|
|5,753,390.97|5,782,597.32|
|7,756,214.66|14,097,774.58|
|158,538,297.00|258,877,423.01|

 Ofwhich, government subsidies recorded intocurrent profits andlosses
|||
|-|-|
|Reportingperiod|Sameperiodoflastyear|
|24,619,013.34|22,809,163.30|
|67,476,494.60|155,396,179.33|
|16,697,890.80|17,587,747.00|
|3,713,042.00|2,699,350.00|
|2,711,014.00|1,248,573.00|
|4,108,800.00|3,079,200.00|
|15,018,153.38|17,625,000.00|
|4,631,416.59|10,352,059.90|
|138,975,824.71|230,797,272.53|

49.Non-operating expenses
|||
|-|-|
|Reportingperiod|Lastperiod|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|12,339,287.69|9,752,806.72|
|12,339,287.69|9,752,806.72|
|—|—|
|17,094,119.09|—|
|1,224,158.89|511,646.80|
|1,449,348.77|3,697,606.64|
|89,960,000.00|—|
|12,713,996.13|2,922,922.55|
|134,780,910.57|16,884,982.71|

 50.Incometax expense
(1)Lists ofincometax expense
||
|-|
|Reportingperiod|
|18,057,113.35|
|-287,680,022.11|
|-269,622,908.76|

 (2)Adjustmentprocess of accounting profit and incometax expense
Item Reportingperiod Totalprofits -1,545,467,671.41 Currentincometaxexpenseaccountedbytaxandrelevantregulations -386,366,917.85 Influenceofdifferenttaxratesuitabletosubsidiary 44,915,029.68 Influenceofincometaxbeforeadjustment -4,164,118.82 Influenceofnontaxableincome -498,815.77 Influenceofnotdeductablecosts,expensesandlosses 10,540,085.18 Influence of deductable losses of deferred income tax assets derecognized used in
-57,071,289.45
previousperiod
The2015AnnualReportofKonkaGroupCo.,Ltd.
Influenceofdeductibletemporarydifferenceordeductiblelossesofdeferredincometax
137,397,674.39 assetsderecognizedinreportingperiod.
Changesofthebalanceofdeferredincometaxassets/liabilitiesinpreviousperioddueto
— adjustmentoftaxrate
Influenceofplusdeductingcosts -14,374,556.12 Incometaxexpense -269,622,908.76 51.Othercomprehensiveincome
SeenotesVI. 37
52.Supplementary information to cash flowstatement
(1)Other cash received relevant to operating activities
||
|-|
|Reportingperiod|
|144,699,799.50|
|87,460,993.66|
|72,231,723.07|
|51,113,129.24|
|17,420,360.55|
|34,877,755.30|
|9,781,562.99|
|3,098,865.44|
|1,284,765.81|
|21,717,469.18|
|443,686,424.74|

 (2)Other cash paid relevant to operating activities
||
|-|
|Reportingperiod|
|963,497,935.43|
|113,287,169.86|
|13,440,138.47|
|30,468,528.61|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|16,001,436.93|
|1,481,651.00|
|13,036,082.41|
|34,076,092.32|
|1,185,289,035.03|

 (3)Other cash received relevant to investment activity
||
|-|
|Reportingperiod|
|3,152,200,000.00|
|488,063,979.00|
|6,650,870.00|
|—|
|3,646,914,849.00|

 (4)Other cash paid relevant to investmentactivity
||
|-|
|Reportingperiod|
|3,651,700,000.00|
|—|
|6,650,870.00|
|150,398.22|
|3,658,501,268.22|

 (5)Other cash received relevant to financing activities
||
|-|
|Reportingperiod|
|118,098,914.34|
|11,555.55|
|118,110,469.89|

 (6)Other cash paid relevant to financing activities
||
|-|
|Reportingperiod|
|161,850,987.97|
|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|14,543,722.06|
|176,394,710.03|

 53.Supplementary information to cash flowstatement
(1)Information ofnet profit to net cash flows generated from operating activities
||
|-|
|Reportingperiod|
|-1,275,844,762.65|
|365,863,111.63|
|162,114,374.61|
|12,898,864.44|
|29,290,471.45|
|10,907,394.01|
|—|
|-32,591,836.13|
|393,862,411.70|
|-13,574,652.77|
|-289,789,111.75|
|2,418,533.20|
|934,969,912.29|
|1,198,719,245.19|
|-209,643,472.57|
|—|
|1,289,600,482.65|
|—|
|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
Fixassetsunderfinancinglease
— —
||
|-|
|1,488,154,851.35|
|1,640,236,837.08|
|—|
|—|
|-152,081,985.73|

 (2)Cash and cash equivalents
||
|-|
|Closingbalance|
|1,488,154,851.35|
|4,217.37|
|1,488,150,633.98|
|—|
|—|
|1,488,154,851.35|

 Notes: the cash and cash equivalents exclude the restricted cash and cash equivalents the Company andthesubsidiaries of theGroup used.
54.Theassets with theownership oruserightrestricted
||
|-|
|1.Closingbookvalue|
|78,094,958.58|
|78,094,958.58|
|1,664,483,435.15|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|218,292,077.57|
|1,446,191,357.58|
|1,742,578,393.73|

55.Foreigncurrency monetary items
Foreign currency monetary items
|||
|-|-|
|Closingforeigncurrencybalance|Exchangerate|
|91,424,349.59|6.49360|
|46,703.40|7.09520|
|2,826,943,665.57|0.00047|
|1.32|9.61590|
|7,776,951.51|0.83778|
|125,008,637.60|6.49360|
|7,287,324.02|0.00047|
|4,636,217.64|0.83778|
|49,764.00|4.72760|
|1,215,678.35|6.49360|
|26,524.37|7.09520|
|60,296.30|0.00047|
|76,501.10|0.83778|
|14,776,344.13|6.4936|
|2,783.20|7.09520|
|136,626,026.43|0.83778|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|223,060,815.74|6.49360|
|43,548,031.09|7.09520|

 VII. Changesof merge scope
1.Thedisposal ofsubsidiary
Singledisposal ofinvestment to subsidiary that losing control
||||||
|-|-|-|-|-|
|Theequitydisposalprice|Equitydisposalproportion(%)|Methodofequitydisposal|Timeoflosingcontrol|Recognitionbasisofthetimeoflosingcontrol|
|—|100.00|Cancel|2015-2-9|Cancellationprocedurewascompleted|

(Continued)
||||||
|-|-|-|-|-|
|Residualequityproportiononthedateoflosingcontrol(%)|Bookvalueofresidualequityonthedateoflosingcontrol|Fairvalueofresidualequityonthedateoflosingcontrol|Profitsorlossesofresidualequityrecalculatedinlinewithfairvalue|Recognitionmethodandmainassumptionoffairvalueofresidualequityonthedateoflosingcontrol|
|—|—|—|—|—|

2.Otherreasons forthe changes incombination 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 occupied51% of the registered capital by means of contribution in currency,
Mansfield Technology (Taiwan) Co., Ltd subscribed to RMB9.80 million, which occupied
49%ofthe registered capital bymeans of contribution inRMB.
The2015AnnualReportofKonkaGroupCo.,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 occupied80% of the registered capital. Shenzhen Kaikai Shijie Investment Partnership Enterprise (limited partnership) contributed RMB4.0 million, which occupied20% of the registered capital. The Company has right of control over it, and included it intoits mergerscope from 1Jan. 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 occupied96% of the registered capital, the other stockholders contributed RMB800, 000, which occupied4% of theregistered capital, but the capital had not been contributed by thedate 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 occupied70% of the registered capital, OCT Group contributed to RMB300 million by means of contribution in RMB, which occupied30% of the registered capital. By the date of the balance sheet, the Company contributed RMB112 million, which occupied11.20% of the registered capital; OCT Group contributed RMB48 million, which occupied4.8% of the registered capital. The Company has right of control over it, and included it into itsmergerscope from 19Jan. 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 ofHK$10million. In it, Kangdian Investment Development Co., Ltd contributedHK$6.10 million, which occupied61% of the registered capital and Konka Smarttech Limited contributedHK$3.90 million, which occupied39% of the registered capital. The Company has right of control over it, and included it into its merger scopefrom 21Jan. 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.,
The2015AnnualReportofKonkaGroupCo.,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 scopefrom 7May 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 itinto its merger scopefrom 25Jun.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 representing51% of the registered capital; Shenzhen Kangwei Investment Partnership (LP) shall contribute RMB 9.80 million, representing49% of the registered capital. As of the balance sheet date, the company actual investment 510 million yuan, accounted for25.5% 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 itsmergerscope from 26Oct. 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 forsale financial assets.
VIII. Equity inotherentities
1.Equity insubsidiary
(1)The structure oftheenterprisegroup
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|75.00|25.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|—|46.31|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|Shenzhen,Guangdong|Shenzhen,Guangdong|ElectricalAppliancesRetail|100.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|75.00|25.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|49.00|51.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|75.00|25.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Investmentholding|75.00|25.00|
|Mudanjiang,Heilongjiang|Mudanjiang,Heilongjiang|Manufacturingindustry|60.00|—|
|Chongqing|Chongqing|Manufacturingindustry|57.00|—|
|Chongqing|Chongqing|Manufacturingindustry|—|40.00|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|78.00|—|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|—|100.00|
|Changshu,Jiangsu|Changshu,Jiangsu|Manufacturingindustry|—|60.00|
|Kunshan,Jiangsu|Kunshan,Jiangsu|Manufacturingindustry|100.00|—|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|75.00|25.00|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|—|100.00|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|—|59.73|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|Boluo，Guangdong|Boluo，Guangdong|Manufacturingindustry|—|51.00|
|Boluo，Guangdong|Boluo，Guangdong|Manufacturingindustry|—|100.00|
|HongKong,China|HongKong,China|InternationalTrading|100.00|—|
|HongKong,China|HongKong,China|Investmentholding|—|100.00|
|HongKong,China|HongKong,China|InternationalTrading|—|100.00|
|America|America|InternationalTrading|100.00|—|
|Frankfurt,Germany,Europe|Frankfurt,Germany,Europe|InternationalTrading|100.00|—|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|—|46.31|
|Shenzhen,Guangdong|Shenzhen,Guangdong|R&Dexpenses|100.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Softwaredevelopment|100.00|—|
|Kunshan,Jiangsu|Kunshan,Jiangsu|Realestate|100.00|—|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|100.00|—|
|Indonesia|Indonesia|InternationalTrading|—|51.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Logistics|100.00|—|
|Beijing|Beijing|Saleofhomeappliance|100.00|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|Kunshan,Jiangsu|Kunshan,Jiangsu|Manufacturingindustry|—|46.31|
|Wuhan,Hubei|Wuhan,Hubei|Manufacturingindustry|—|46.31|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|—|46.31|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|60.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry||60.00|
|Xiamen,Fujian|Xiamen,Fujian|Commerce|—|69.23|
|Tianjin|Tianjin|Other|—|70.00|
|Anhui|Anhui|Manufacturingindustry|—|23.62|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Realestate|70.00|—|
|HongKong,China|HongKong,China|Other|—|61.00|
|Anhui|Anhui|E-commerce|80.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Informationservice|96.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Commerce|81.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Commerce|51.00|—|

 Notes:① The Company holds46.31% of shares of Shenzhen Konka Precision Mold
Manufacturing Co., Ltd., Konka HouseholdAppliances Investment& Development Co., Ltd,
a subsidiary company of the Company, is entrusted to manage6.18% shares held by
The2015AnnualReportofKonkaGroupCo.,Ltd.
Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd.After the entrustment, the percentage of voting rights of the Company increases to52.49%. 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 holds40.00% 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% to80% 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 theconsolidated financial statement.
③ Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held100% 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 held46.31% shares and52.49% voting right of Dongguan Xutongda Mould Plastic Co., Ltd., which is combined into theconsolidated financial statement.
④Anhui 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 at2% of actual capital invested by the Group annually. So the Company can conduct actual control toAnhui Tongchuang Company,and combines it into theconsolidated financial statement.
⑤Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held100% 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
The2015AnnualReportofKonkaGroupCo.,Ltd.
indirectly held46.31% share equity of Jielunte with voting right of52.49%, and combines it intoconsolidated financial statement.
⑥Shenzhen Konka Precision Mold Manufacturing Co., Ltd. held51.00% 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 ownedsubsidiary
||||
|-|-|-|
|Shareholdingproportionofminorityshareholder|Theprofitsandlossesarbitratetotheminorityshareholders|Dividendsdistributetominorityshareholder|
|53.69|-5,199,362.20|—|
|22.00|1,263,128.50|—|
|40.27|-9,080,623.83|—|
|53.69|7,367,204.84|—|

(3)The main financial information ofsignificant not wholly owned subsidiary
Closingbalance
||||||
|-|-|-|-|-|
|currentassets|Non-currentassets|Totalassets|Currentliabilities|Non-currentliability|
|62,359,351.14|180,143,888.63|242,503,239.77|171,141,027.89|—|
|861,543,505.16|246,490,103.64|1,108,033,608.80|811,514,052.71|9,208,641.33|
|241,913,766.69|49,540,261.45|291,454,028.14|188,757,532.47|2,744,845.12|
|89,259,620.16|7,778,641.52|97,038,261.68|60,855,982.82|266,587.53|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(Continued)
Openingbalance
||||||
|-|-|-|-|-|
|currentassets|Non-currentassets|Totalassets|Currentliabilities|Non-currentliability|
|73,933,646.66|170,997,722.16|244,931,368.82|163,885,285.19|—|
|530,345,042.25|228,358,246.18|758,703,288.43|469,762,019.50|7,371,847.37|
|246,221,614.74|55,571,226.68|301,792,841.42|176,470,898.07|2,819,541.37|
|82,414,688.51|10,115,814.00|92,530,502.51|70,336,314.72|—|

Reportingperiod
||||
|-|-|-|
|Operationrevenue|Netprofit|Totalcomprehensiveincome|
|92,681,195.35|-9,683,871.75|-9,683,871.75|
|5,226,927,921.25|5,741,493.20|5,741,493.20|
|187,474,600.08|-22,550,751.43|-22,550,751.43|
|165,783,377.81|13,721,503.54|13,721,503.54|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(Continued)
Lastperiod
||||
|-|-|-|
|Operationrevenue|Netprofit|Totalcomprehensiveincome|
|177,708,791.65|1,695,078.23|1,695,078.23|
|4,505,390,088.43|1,528,671.19|1,528,671.19|
|280,476,981.47|11,391,059.19|11,391,059.19|
|154,952,772.16|10,192,895.26|10,192,895.26|

2. The transaction of the Company with itsowner’s equity share changed but still controllingthe subsidiary
(1)Note toowner’s equity share changed in subsidiary
During reporting period Shenzhen Shangyongtong Investment Development Co., Ltd. transfer its holdings of49% minority equity of Boluo Konka to Fittings Technology, the transfer price was RMB9.5431 million, after the equity transfer, the Company held100% equityof Boluo Konka.
(2) Thetransaction’s influence to equity of minority shareholders and attributable to the owner's equity of theparent company
Item BoluoKonka
Purchasecostconsideration
-Cash
9,543,100.00 -Fairvalueofnon-cashassets
— Totalofpurchasecostconsideration
9,543,100.00 Less: subsidiary net assets proportion calculated by share proportion
2,126,952.66 obtained
Difference
7,416,147.34
Ofwhich:Adjustmentofcapitalreserves(-decrease) -7,416,147.34
Surplusreservesadjustments —
The2015AnnualReportofKonkaGroupCo.,Ltd.
Retainedprofitsadjustments — 3.Equity inassociated enterprise
(1)Significant associated enterprise
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Shenzhen|Shenzhen|Productionandsaleoflightemittingdiode|—|6.79|
|Shanghai|Shanghai|Productionandsaleoflightemittingdiode|—|28.04|
|Shanghai|Shanghai|Productionandsaleoflightemittingdiode|39.00|—|

(2)Main financial information ofsignificant associated enterprise
||||
|-|-|-|
|Closingbalance/reportingperiod|||
|EnraytekOptoelectronicsCo.,Ltd.|ShanghaiKonkaGreenScience&TechnologyCo.,Ltd.|EnraytekOptoelectronicsCo.,Ltd.|
|643,665,278.09|124,548,698.88|268,409,318.77|
|693,903,656.72|237,205,034.02|606,856,639.67|
|1,337,568,934.81|361,753,732.90|875,265,958.44|
|551,431,214.97|97,706,289.06|355,102,547.52|
|556,666,832.72|86,797,751.49|232,930,605.06|
|1,108,098,047.69|184,504,040.55|588,033,152.58|
|-260,290.34|2,248,992.25|68.50|
|229,731,177.46|175,000,700.10|287,232,737.36|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|64,416,622.16|68,250,273.03|80,536,808.37|
|—|—|30,257,135.84|
|—|—|—|
|—|—|—|
|64,416,622.16|68,250,273.03|110,793,944.21|
|—|—|—|
|165,482,576.55|120,572,337.08|150,182,731.09|
|-58,648,256.05|-21,424,479.94|-30,454,225.45|
|—|—|—|
|—|1,033,575.71|—|
|-58,648,256.05|-20,390,904.23|-30,454,225.45|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|—|—|—|

IX.Theriskrelated 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 andStockholders’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 areliable way and controlled the risk withintherange oflimit.
1.Marketrisk
(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
The2015AnnualReportofKonkaGroupCo.,Ltd.
may affect the business performance produced bytheassets and liabilities ofthe 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 flowchange 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 theCompany.
2.Creditrisk
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 exposurewillchange along with thechange of futurefair 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.
The2015AnnualReportofKonkaGroupCo.,Ltd.
3.Liquidity Risk
When managing liquidity risk, the Company maintained themanagement’s believe that supervising the sufficient cash and cash equivalents to meet the operating demand of the Company andreduce theinfluence ofthefluctuation of cash flow.
X.Thedisclosureofthefairvalue
1.Closingfairvalueofassets andliabilities calculated byfairvalue
Closingfairvalue
||||
|-|-|-|
|Fairvaluemeasurementitemsatlevel1|Fairvaluemeasurementitemsatlevel2|Fairvaluemeasurementitemsatlevel3|
|—|—|—|
|33,196,377.28|—|—|
|—|—|—|
|2,874,068.30|—|—|
|—|—|—|
|36,070,445.58|—|—|
|—|—|—|

2. Market price recognition basis for consistent and inconsistent fair value measurementitems atlevel 1
①As 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 orprofits
The2015AnnualReportofKonkaGroupCo.,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 toclosing priceof RMB16.37 for each share on31Dec., 2015.
XI. Related party andrelatedTransaction
1.Information ofparentcompany
|||||
|-|-|-|-|
|Registrationplace|Natureofbusiness|Registeredcapital|ProportionofshareheldbyparentcompanyagainsttheCompany(%)|
|Shenzhen|Tourism, real estate,electronicsindustry|6.3billion|29.99|

Note: the final control party of the Company is State-owned Assets Supervision and AdministrationCommission
2.Information ofsubsidiary oftheCompany
Details ofinformation ofsubsidiary oftheCompany see note1.Equity insubsidiaryVIII 3.Information onthe jointventures oftheCompany
The details of significant joint venture of the Company please refer to Notes VIII, 3.Equity in thejointventure.
4.Information onotherrelated parties oftheCompany
Name Relationship
ShanghaiOCTInvestmentDevelopmentCo.,Ltd. Underthesameactualcontroller
ShanghaiOCTInvestmentDevelopmentCo.,Ltd. Underthesameactualcontroller
ShanghaiTianxiangOCTInvestmentCo.,Ltd. Underthesameactualcontroller
AnhuiHualiPackagingCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTWaterandPowerCo.,Ltd Underthesameactualcontroller
ShanghaiHualiPackagingCo.,Ltd Underthesameactualcontroller
ShenzhenHuayouPackagingCo.,Ltd Underthesameactualcontroller
ShenzhenHualiPacking&TradingCo.,Ltd Underthesameactualcontroller
The2015AnnualReportofKonkaGroupCo.,Ltd.
HualiPackaging(Huizhou)Co.,Ltd. Underthesameactualcontroller
HuizhouHualiPackagingCo.,Ltd. Underthesameactualcontroller
ShenzhenKonkaVideo&CommunicationSystems
Underthesameactualcontroller
EngineeringCo.,Ltd.
TaizhouOCTCo.,Ltd. Underthesameactualcontroller
ShenzhenOCT RealEstateCo.,Ltd. Underthesameactualcontroller
YunnanOCTIndustryCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTHotelCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTPropertyManagementCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTHotelGroupCo.,Ltd. Underthesameactualcontroller
ShenzhenSplendidChinaDevelopmentCo.,Ltd. AssociatedenterpriseoftheCompany
ShenzhentheWindowsoftheworldCo.,Ltd. AssociatedenterpriseoftheCompany
ShenzhenRefundOptoelectronicsCo.,Ltd. Subsidiaryofjointventure
EnraytekOptoelectronicsCo.,Ltd. Subsidiaryofjointventure
ZhuhaiJinsuPlasticCo.,Ltd. Subsidiaryofjointventure
CharmMediaCo.,Ltd. Shareholderofthesubsidiary
5.Listof related-party transactions
(1)Information onacquisition ofgoods and reception oflabor service (unit: Yuan)
①Information on acquisition ofgoods and reception oflabor service
|||
|-|-|
|Content|Reportingperiod|
|Purchaseofrawmaterial|95,272,151.31|
|Advertisingexpense|77,340,190.65|
|Purchaseofrawmaterial|42,056,410.31|
|Purchaseofrawmaterial|12,283,155.39|
|Purchaseofrawmaterial|10,931,552.82|
|Waterandpower|5,826,581.42|

②Information of sales ofgoods and provision of laborservice
|||
|-|-|
|Content|Reportingperiod|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||
|-|-|
|Processingfee,auxiliarymaterialsfee|—|
|Sellingmaterials|23,298,317.21|
|Advertisingexpense|62,111,300.23|
|SellingLCDs|—|
|Sellingmaterials|4,137,079.29|
|Maintenancecosts|376,068.38|

(2)Related-party guarantee
①TheCompany was guarantor:
||||||
|-|-|-|-|-|
|Currency|Guaranteeamount|Actualusingamount|Startdate|Enddate|
|RMB|8,000.00|799.60|30/1/2015|29/1/2016|
|RMB|2,000.00|1,000.00|2/6/2015|1/6/2016|
|RMB|610.79|610.79|12/3/2015|12/3/2016|
|RMB|1,997.67|1,997.67|10/4/2015|10/4/2016|
|RMB|3,537.20|3,537.20|14/5/2015|14/5/2016|
|RMB|4,259.39|4,259.39|19/5/2015|19/5/2016|
|RMB|2,000.00|413.42|27/1/2015|27/1/2016|
|RMB|50,000.00|20,784.96|22/4/2015|21/4/2016|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|RMB|10,000.00|—|28/1/2015|28/1/2016|
|USD|4,000.00|4,000.00|26/6/2015|26/6/2016|
|USD|2,470.00|2,470.00|23/3/2015|23/3/2016|
|USD|2,530.00|2,530.00|29/5/2015|29/5/2016|
|USD|5,000.00|5,000.00|15/1/2014|14/2/2016|
|USD|3,090.00|3,090.00|17/9/2014|117/10/2016|
|RMB|43,300.00|43,300.00|23/11/2015|26/8/2016|
|RMB|3,000.00|2,370.00|29/9/2013|29/9/2016|
|RMB|6,000.00|274.28|28/9/2015|28/2/2016|

①Note: the minority shareholders of Anhui Tongchuang, ChuzhouTongchuang Investment Construction Co., Ltd. provided50% counter-guarantee to the limit amount of guarantee of theCompany.
② The minority shareholders of Anhui Tongchuang, ChuzhouState-owned Assets Operation Co.,Ltd. provided22%counter-guarantee tothe limit amount ofguarantee of theCompany.③Shenzhen E-display Capital Investment Partnership Business (LLP) provided40% counter-guaranteeto thelimitamount ofguarantee of theCompany.
④ The subsidiary of the Company Shenzhen Precision provided RMB30 million fixed assets loan guaranteefor Kunshan Jielunte.
(3)Rewards for thekey management personnel
||
|-|
|Reportingperiod|
|RMB15.9454million|

 6.Receivablesand payables ofrelated parties
(1)Receivables
Nameofitem Closingbalance Openingbalance
The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Bookbalance|Baddebtprovision|Bookbalance|
|12,116,064.48|242,321.29|7,478,269.37|
|10,963,614.12|548,180.71|10,963,653.88|
|150,000.00|3,000.00|—|
|—|—|1,260,956.45|
|775,587.00|15,511.74|—|
|981,218.48|981,218.48|—|
|24,986,484.08|1,790,232.22|19,702,879.70|
|18,115,952.51|5,366,657.87|18,115,952.51|
|13,396,856.82|13,396,856.82|—|
|6,491,248.10|203,206.00|77,402.65|
|1,198,932.32|23,978.65|776,572.25|
|1,053,706.86|1,033,282.36|1,209,064.86|
|440,000.00|8,800.00|—|
|80,000.00|80,000.00|80,000.00|

40,726,642.87 20,062,727.96
18,115,952.51 5,366,657.87
13,346,803.08 13,346,803.08
The2015AnnualReportofKonkaGroupCo.,Ltd.
40,776,696.61 20,112,781.70 20,258,992.27 6,714,392.86 (2)Payables
||
|-|
|Closingbalance|
|20,412,650.58|
|4,160,761.50|
|3,309,766.50|
|2,634,241.04|
|1,747,011.10|
|1,078,005.09|
|358,929.03|
|33,701,364.84|
|12,997,249.74|
|5,150,030.89|
|988,662.81|
|186,000.04|
|3,126,818.21|
|22,448,761.69|
|—|
|126,000.00|
|126,000.00|
|258,000.00|
|652,000.00|
|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|51,135.00|
|961,135.00|

 XII. Commitments andcontingency
1.Significantcommitments
(1)Capital commitment
||
|-|
|Closingbalance|
|—|
|184,797,300.59|
|—|
|184,797,300.59|

 (2)Operating lease commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the Company signed were as followed:
||
|-|
|Closingbalance|
|20,414,436.47|
|10,962,573.65|
|5,382,286.87|
|4,007,824.20|
|40,767,121.19|

 2.Contingency
1.Contingent liabilities and itsfinancial effect arising from unsettled litigation or arbitration①Contingent liabilities and financial effects caused bypending litigation or arbitration
On 4 Feb. 2013, theCompany’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$1.29744 million. MEG opened L/C
The2015AnnualReportofKonkaGroupCo.,Ltd.
which Kunshan Konka was beneficiary on 26 Feb, due to the problems of delivery time and related items, after the agreement of both parties, MEG respectively opened two revisions of L/C on 11 Mar. and 13 May. Then the Kunshan Konka entrusted Ningbo United International Freight Forwarding Co., Ltd. (Hereinafter referred to as the “Ningbo United”) to book space, and Ningbo United signed and issued the carrier's bill of lading of Econolines Ltd. (Hereinafter referred to as the “Econolines” (No.NGB1305005\GNB1305016\NGB1305034), the whole case handover with Container delivery conditions of CYTO CY) on 5, 14 and 19 May 2013.According to the verification, after the goods arrived to the port of destination in Italy, the empty cargo container had returned to the shipping company, but the full set of original bill of lading was still in Kunshan Konka; Ningbo United andEconolines’s behaviors of delivery of goods without original bill of lading had violated the "maritime law" and other relevant laws and regulations, Kunshan Konka had right to require Econolines return the goods. The total amount of the goods was$ 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 15Aug. 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 thefees for acceptance, United bear thejointliability.
②The Company's subsidiary Nanchang Branch applied for property preservation for Tengda
The2015AnnualReportofKonkaGroupCo.,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 receivablefromTengda ElectricAppliance 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, September17,2014 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 forAnhui 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 ofAnhui Konka provided22% of counter guaranteeofthe lineguaranteed bytheCompany.
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 ElectricAppliance Co., Ltd provided50% of counter guarantee of the line guaranteed bytheCompany.
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,theamount in thislinehad 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
The2015AnnualReportofKonkaGroupCo.,Ltd.
December 31,2015,RMB4, 134,210.82in thislinehad 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, theguarantee period was from 23Mar.2015to 22Mar.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 onApril 22, 2015, and its guarantee term was fromApril 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 inthis linehad 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, 2015toMay 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 onJune26, 2015,and its guaranteeterm was from June26,2015to June25,2016.
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 23,2015toAugust 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 toApril 9, 2016.
XIV.Events afterbalancesheet date
1.Profitdistribution
On 6 Apr. 2016, the Company held 13th Meeting of the 8th Board of Directors; the meeting reviewed and approved the proposal ofnot implementing theallocation ofprofits.
(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
The2015AnnualReportofKonkaGroupCo.,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 theCompany should payto OCTGroup Co., Ltd. within oneyear.
As for the aforesaid loan amount, the Company will in line with the actual demand of capital, and after reasonably measuring thecapital cost,recognized theactual loan amount prudently. 3.Suspend thelisting transferof60% equity ofE-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 of60% Equity of E-display. In line with the resolution of the Board, the Company, on 29 Jan. 2016, listing transferred its holding of60% 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 of60% equity of Shenzhen KonkaE-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 of6.18% shares of Precision Mold, and since 1 Jan. 2016, the Company no longer control the Precision Mold which excluded intoconsolidated statements scope.
5.Planof non-publicissueofstock
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.Othersignificantevents
1.Lease
(1) The closing original price accumulated depreciation and accumulated impairment provisionof all kindsof therented fixed assets.
Particulars of thefinancing lease of therented fixed assets, please refer to noteVI, 13,(3) (2)Minimumlease payment willbepaid infuture
The2015AnnualReportofKonkaGroupCo.,Ltd.
The minimumlease Theremainingleaseterm
payment
Within1year(including1year) 133,333.37 Over1yearandwithin2years(including2year) 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 istheactual interest ratemethod.
(4)Category offixedassets leased byoperating lease, please refer to noteVI, 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 intoconsolidated 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, held40% equity of Shenzhen Konka Electronic Appliance Technology Co., Ltd., Management of Household Appliance contributed 4.5 million, held30% equity and Charm Media Co., Ltd. contributed RMB4.5 million, held30% equity. As of the issue date financial statements, the jointventurecompanyhadn'tbeensetup.
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, held40% equity of NORINCO Konka Technology Co., Ltd., NORINCO North Electronics Research Institute Co., Ltd. contributed RMB20 million, held40% equity and Beidou Project Team contributed RMB10 million, held20% equity.As of the issue date financial statements, thejointventurecompanyhadn'tbeensetup.
XVI. Notes ofmain items in thefinancial statements ofthe Company
1.Accounts receivable
(1)Accounts receivableclassified bycategory
The2015AnnualReportofKonkaGroupCo.,Ltd.
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|—|—|—|—|
|1,126,362,276.00|68.50|202,746,563.72|18.00|
|486,174,280.87|29.57|—|—|
|1,612,536,556.87|98.06|202,746,563.72|12.57|
|31,826,201.74|1.94|23,700,918.33|74.47|
|1,644,362,758.61|100.00|226,447,482.05|13.77|

 (Continued)
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|—|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|1,436,462,593.91|81.90|214,731,732.08|14.95|
|317,565,114.46|18.10|—|—|
|1,754,027,708.37|100.00|214,731,732.08|12.24|
|—|—|—|—|
|1,754,027,708.37|100.00|214,731,732.08|12.24|

①In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Closingbalance
Aging
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|918,718,739.98|18,374,374.80|
|14,672,885.00|733,644.25|
|5,627,558.78|1,125,511.76|
|5,427,292.76|2,713,646.38|
|4,232,825.89|2,116,412.95|
|177,682,973.59|177,682,973.58|
|1,126,362,276.00|202,746,563.72|

②In thegroups, accounts receivable adopting other methodsto withdraw bad debt provision: Balanceatyear-end
Nameofthegroup
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|486,174,280.87|—|
|486,174,280.87|—|

③Individual amount is not significant, but the first five accounts receivable to prepare for
bad debts separately
Nameofcustomer Closingbalance
The2015AnnualReportofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Accountreceivable|Baddebtprovision|Withdrawalproportion|
|8,223,935.99|4,111,968.00|50|
|3,408,394.19|2,045,036.51|60.00|
|2,207,440.84|1,607,440.84|72.82|
|2,050,248.88|2,050,248.88|100.00|
|1,733,797.99|1,733,797.99|100.00|
|17,623,817.89|11,548,492.22||

(2)Baddebt provision withdrawal, reversed orrecovered in thereport period
Thewithdrawn bad debt provision of2015was ofRMB11, 715,749.97.
(3)Top fiveofaccount receivable ofclosing balance collected byarrears 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, therelevant closing balance ofbad debt provision withdrawn was RMB8, 451,063.98.
2.Otheraccounts receivable
(1)Other account receivable classified bycategory
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|173,028,147.62|15.48|160,278,852.98|92.63|
|—|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|75,906,726.27|6.79|19,005,412.74|31.11|
|868,797,189.91|77.73|—|—|
|944,703,916.18|84.52|19,005,412.74|2.01|
|—|—|—|—|
|1,117,732,063.80|100.00|179,284,265.72|16.04|

 (Continued)
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|31,507,969.28|3.07|18,797,943.19|59.66|
|—|—|—|—|
|629,814,580.00|61.3|20,473,350.81|3.25|
|366,148,374.77|35.63|—|—|
|995,962,954.77|96.93|20,473,350.81|2.06|
|—|—|—|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
|||||
|-|-|-|-|
|1,027,470,924.05|100.00|39,271,294.00|3.82|

① Other accounts receivable with insignificant single amount for which bad debt provision separately accrued
Closingbalance
||||
|-|-|-|
|Otheraccountsreceivable|Baddebtprovision|Withdrawalproportion(%)|
|141,549,150.00|141,549,150.00|100.00|
|13,363,045.11|13,363,045.11|100.00|
|18,115,952.51|5,366,657.87|29.62|
|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:
Closingbalance
Aging
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|31,019,128.44|620,484.13|
|19,056,050.64|952,802.53|
|7,674,294.40|1,534,858.88|
|4,185,012.22|2,092,506.11|
|334,958.96|167,479.48|
|13,637,281.61|13,637,281.61|
|75,906,726.27|19,005,412.74|

③In thegroups, accounts receivable adopting other methodsto withdraw bad debt provision: Balanceatyear-end
Nameofthegroup
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|868,797,189.91|—|
|868,797,189.91|—|

(2)Baddebt provision withdrawal, reversed orrecovered in thereport period
The2015AnnualReportofKonkaGroupCo.,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 5oftheclosing balance ofthe otheraccounts receivable collected according to the arrears party
|||||
|-|-|-|-|
|Nature|Closingbalance|Aging|Proportionofthetotalyear-endbalanceoftheaccountsreceivable(%)|
|Intercoursefunds|204,028,944.44|Within1year|18.25|
|Energysavingsubsidy|141,549,150.00|1-2years,2-3years|12.66|
|Intercoursefunds|102,869,873.14|Within1year|9.20|
|Intercoursefunds|92,437,026.68|Within1year|8.27|
|Intercoursefunds|90,137,173.41|Within1year|8.06|
||631,022,167.67|||

The2015AnnualReportofKonkaGroupCo.,Ltd.
3.Long-term equityinvestment
1.Long-term equity investment
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Depreciationreserves|Bookvalue|Bookbalance|Depreciationreserves|
|1,623,726,835.91|77,294,984.69|1,546,431,851.22|1,505,310,835.91|94,394,984.69|
|74,763,267.00|—|74,763,267.00|197,758,604.87|—|
|1,698,490,102.91|77,294,984.69|1,621,195,118.22|1,703,069,440.78|94,394,984.69|

 (2)Investment tothe subsidiary
||||||
|-|-|-|-|-|
|Openingbalance|Increased|Decreased|Closingbalance|Withdrawnimpairmentprovision|
|36,000,000.00|—|—|36,000,000.00|—|
|122,780,937.98|—|—|122,780,937.98|—|
|274,783,988.91|—|—|274,783,988.91|—|
|781,828.61|—|—|781,828.61|—|
|261,482.50|—|—|261,482.50|—|
|500,000.00|—|500,000.00|—|—|
|350,000,000.00|—|—|350,000,000.00|—|
|4,655,000.00|—|—|4,655,000.00|—|
|10,732,485.69|—|—|10,732,485.69|—|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
|90,000,000.00|—|—|90,000,000.00|—|
|8,062,500.00|—|—|8,062,500.00|—|
|22,500,000.00|—|—|22,500,000.00|—|
|31,500,000.00|—|—|31,500,000.00|—|
|17,100,000.00|—|17,100,000.00|—|—|
|48,750,000.00|—|—|48,750,000.00|—|
|350,000,000.00|—|—|350,000,000.00|—|
|69,702,612.22|—|—|69,702,612.22|—|
|10,000,000.00|—|—|10,000,000.00|—|
|10,000,000.00|—|—|10,000,000.00|—|
|30,000,000.00|—|—|30,000,000.00|—|
|10,000,000.00|—|—|10,000,000.00|—|
|7,200,000.00|—|—|7,200,000.00|—|
|—|16,000,000.00|—|16,000,000.00|—|
|—|112,000,000.00|—|112,000,000.00|—|
|—|2,916,000.00|—|2,916,000.00|—|
|—|5,100,000.00|—|5,100,000.00|—|
|1,505,310,835.91|136,016,000.00|17,600,000.00|1,623,726,835.91|—|

 (3)Investment tojoint ventures
Investee Openingbalance Increase/decreaseinreportingperiod
The2015AnnualReportofKonkaGroupCo.,Ltd.
||||||
|-|-|-|-|-|
||Additionalinvestment|Negativeinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|197,758,604.87|—|124,800,000.00|-5,111,426.37|403,094.53|
|—|6,210,000.00|—|119,726.97||
|197,758,604.87|6,210,000.00|124,800,000.00|-4,991,699.40|403,094.53|

 (Continued)
|||||
|-|-|-|-|
|Increase/decreaseinreportingperiod|||Closingbalance|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Other||
|—|—|—|68,250,273.03|
|—|—|—|6,512,993.97|
|—|—|—|74,763,267.00|

The2015AnnualReportofKonkaGroupCo.,Ltd.
4.RevenueandCost ofSales
1.Revenueand Costof Sales
||||
|-|-|-|
|Reportingperiod|||
|Revenue|Operatingcosts|Revenue|
|10,542,892,396.23|9,238,043,128.65|12,994,682,247.47|
|5,256,503,986.27|5,218,903,962.41|5,257,638,085.71|
|15,799,396,382.50|14,456,947,091.06|18,252,320,333.18|

 (2)Main operations (Classified byindustry)
||||
|-|-|-|
|Reportingperiod|||
|Operationrevenue|Operationcost|Operationrevenue|
|10,542,892,396.23|9,238,043,128.65|12,994,682,247.47|
|10,542,892,396.23|9,238,043,128.65|12,994,682,247.47|

 (3)Main operations (Classified byproduct)
||||
|-|-|-|
|Reportingperiod|||
|Operationrevenue|Operationcost|Operationrevenue|
|10,063,529,629.38|8,800,695,399.60|12,389,008,246.36|
|—|—|25,260,750.08|
|405,363,485.13|361,990,500.54|501,891,601.26|
|73,999,281.72|75,357,228.51|78,521,649.77|
|10,542,892,396.23|9,238,043,128.65|12,994,682,247.47|

 (4)Main operations (Classified byarea)
||||
|-|-|-|
|Reportingperiod|||
|Operationrevenue|Operationcost|Operationrevenue|
|9,247,233,574.48|7,955,639,997.50|11,011,476,670.78|
|1,295,658,821.75|1,282,403,131.15|1,983,205,576.69|
|10,542,892,396.23|9,238,043,128.65|12,994,682,247.47|

The2015AnnualReportofKonkaGroupCo.,Ltd.
(5)The revenue of sales from thetopfive customers
||
|-|
|Mainoperationrevenue|
|3,735,430,268.71|
|3,035,222,295.61|

 5.Investmentincome
||
|-|
|Reportingperiod|
|2,014,898.95|
|-4,991,699.40|
|-491,110.76|
|13,215.02|
|2,212,535.21|
|61,705,984.23|
|60,463,823.25|

The2015AnnualReportofKonkaGroupCo.,Ltd.
XVII. Supplementary materials
1.Items andamounts ofextraordinary gainsand losses
||
|-|
|Amount|
|-16,096,434.80|
|—|
|71,499,330.11|
|—|
|—|
|—|
|20,419,318.35|
|-144,808,654.70|
|—|
|—|
|—|
|—|
|—|
|32,627,480.23|
|—|
|3,550,666.66|

The2015AnnualReportofKonkaGroupCo.,Ltd.
||
|-|
|—|
|—|
|—|
|-104,311,044.28|
|-419,240.74|
|-137,538,579.17|
|-14,549,153.86|
|3,830,243.26|
|-126,819,668.57|

Notes: the number“+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses orexpenditure.
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 andlosses (Z-J-H-Announcement[2008]No. 43) .
||
|-|
|Theamountofleasedassetsinvolved|
|67,476,494.60|

2.Return onequity (ROE)and earnings per share (EPS)
|||
|-|-|
|WeightedaverageROE(%)||
||BasicEPS|
|-36.30|-0.5219|
|-32.63|-0.4693|

The2015AnnualReportofKonkaGroupCo.,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 andtheprincipal of theaccountingorgan (financial manager);
II. Original oftheAuditor’s Report with the seal of the CPAs firm and the signatures& seals of the certified publicaccountants;
III. Texts of all theCompany’s documents ever publicly disclosed in newspapers designated by the CSRCin thereporting period andthe originals ofthepublicannouncements.
IV.Otherrelevant materials.
The Board of Directors
Konka Group Co.,Ltd.
7April 2016