KonkaGroupCo.,Ltd. Semi-AnnualReport2017 KONKA GROUP CO., LTD.
SEMI-ANNUAL REPORT 2017
2017-44
August 2017
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section I Important Statements, Contents and Definitions
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”) as well as the directors, supervisors and senior management of Konka Group Co., Ltd. (the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall be jointly and severally liable for any false representation, misleading statements ormaterial omissionsin this Report.
Liu Fengxi, head of the Company, Li Chunlei, accounting head for this Report, and Feng Junxiu, head of the accounting department (head of accounting), hereby guarantee that the FinancialReport carried in thisReport is factual,accurate andcomplete.
All thedirectors attended theboard meeting forthe reviewofthis Report.
Any plans for the future and other forward-looking statements mentioned in this Report shall NOT be considered as virtual promises of the Company to investors. Therefore, investors are kindly reminded to payattention to investmentrisk.
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into sharecapital.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Table of Contents
Semi-AnnualReport 2017..................................................................................................................1 Section I Important Statements, Contents andDefinitions............................................................2 Section II Corporate Profileand Key Operating Results...............................................................6 Section III Business Profile................................................................................................................9 Section IVPerformance DiscussionandAnalysis......................................................................... 11 SectionVSignificantEvents............................................................................................................30 SectionVIShareChangesandShareholders’Profile...................................................................42 SectionVII Preference Shares.........................................................................................................47 SectionVIIIDirectors, Supervisors andSeniorManagement.....................................................48 Section IX Corporate Bonds............................................................................................................50 Section XFinancial Report..............................................................................................................51 Section XI DocumentsAvailableforReference...........................................................................237
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Definitions
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|-|-|
|Term|Definition|
|Company,theCompany,theGroup|KonkaGroupCo.,Ltd.|
|TelecommunicationTechnology|ShenzhenKonkaTelecommunicationsTechnologyCo.,Ltd.|
|KonkaHouseholdAppliances|ShenzhenKonkaHouseholdAppliancesCo.,Ltd.|
|PlasticProducts|ShenzhenKonkaPlasticProductsCo.,Ltd.|
|ElectricalAppliances|ShenzhenKonkaElectricalAppliancesCo.,Ltd.|
|FittingsTechnology|ShenzhenKonkaElectronicFittingsTechnologyCo.,Ltd.|
|MudanjiangAppliances|MudanjiangArcticOceanAppliancesCo.,Ltd.|
|ChongqingQingjia|ChongqingQingjiaElectronicsCo.,Ltd.|
|AnhuiKonka|AnhuiKonkaElectronicCo.,Ltd.|
|AnhuiHouseholdAppliances|AnhuiKonkaHouseholdAppliancesCo.,Ltd.|
|KunshanKonka|KunshanKonkaElectronicCo.,Ltd.|
|DongguanKonka|DongguanKonkaElectronicCo.,Ltd.|
|DongguanPacking|DongguanKonkaPackingMaterialsCo.,Ltd.|
|BoluoKonka|BoluoKonkaPCBCo.,Ltd.|
|BoluoKonkaPrecision|BoluoKonkaPrecisionTechnologyCo.,Ltd.|
|HongKongKonka|HongKongKonkaCo.,Ltd.|
|KonkaHouseholdAppliancesInvestment|KonkaHouseholdAppliancesInvestment&DevelopmentCo.,Ltd.|
|Konka Household Appliances InternationalTrading|KonkaHouseholdAppliancesInternationalTradingCo.,Ltd.|
|KonkaEurope|Konka(Europe)Co.,Ltd.|
|KonkaFactoring|KonkaFactoring(Shenzhen)Co.,Ltd.|
|Wankaida|ShenzhenWankaidaScienceandTechnologyCo.,Ltd.|
|KunshanKangsheng|KunshanKangshengInvestmentDevelopmentCo.,Ltd.|
|AnhuiTongchuang|AnhuiKonkaTongchuangHouseholdAppliancesCo.,Ltd.|
|IndonesiaKonka|IndonesiaKonkaElectronicsCo.,Ltd.|
|ShushidaLogistics|ShenzhenShushidaLogisticsServiceCo.,Ltd.|
|BeijingKonkaElectronic|BeijingKonkaElectronicCo.,Ltd.|
|KonkaE-display|ShenzhenKonkaE-displayCo.,Ltd.|
|E-displayService|ShenzhenE-displayServiceCo.,Ltd.|
|XiamenDalong|XiamenDalongTradingCo.,Ltd.|
|YoushiKangrong|YoushiKangrongCultureCommunicationCo.,Ltd.|
|KangqiaoJiacheng|ShenzhenKangqiaoJiachengPropertyInvestmentCo.,Ltd.|
|KonkaSmartTech|KonkaSmartTechLimited|
|KaikaiShijie|AnhuiKaikaiShijieE-commerceCo.,Ltd.|
|E2info|ShenzhenE2infoNetworkTechnologyCo.,Ltd.|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
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|-|-|
|MobileInterconnection|ShenzhenKonkaMobileInterconnectionTechnologyCo.,Ltd.|
|CommercialSystemTechnology|ShenzhenKonkaCommercialSystemTechnologyCo.,Ltd.|
|ZhongkangSupplyChain|ZhongkangSupplyChainManagementCo.,Ltd.|
|KangqiaoEasyChain|ShenzhenKangqiaoEasyChainTechnologyCo.,Ltd.|
|E3info|E3info(Hainan)TechnologyCo.,Ltd.|
|KonkaTechnology&IndustryDevelopment|ChuzhouKonkaTechnology&IndustryDevelopmentCo.,Ltd.|
|KangzhiTrade|AnhuiKangzhiTradeCo.,Ltd.|
|CSRC|TheChinaSecuritiesRegulatoryCommission|
|SZSE|TheShenzhenStockExchange|
|CSRCShenzhen|TheShenzhenbranchoftheChinaSecuritiesRegulatoryCommission|
|RMB,RMB’0,000|RMByuan,RMBtenthousandyuan|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section II Corporate Profile and Key Operating Results
I Corporate Information
|||||
|-|-|-|-|
|Stockname|KonkaA,KonkaB|Stockcode|000016,200016|
|Changedstockname(ifany)|N/A|||
|Stockexchange|ShenzhenStockExchange|||
|CompanynameinChinese|康佳集团股份有限公司|||
|Abbr.(ifany)|康佳集团|||
|CompanynameinEnglish(ifany)|KONKAGROUPCO.,LTD|||
|Abbr.(ifany)|KONKAGROUP|||
|Legalrepresentative|LiuFengxi|||

II Contact Information
||||
|-|-|-|
||BoardSecretary|SecuritiesRepresentative|
|Name|WuYongjun|MiaoLeiqiang|
|Address|Board Secretariat, 24/F, Konka R&D Center, 28 KejiSouth Twelfth Road, Science and Technology Park,YuehaiStreet,NanshanDistrict,Shenzhen,GuangdongProvince,China|Board Secretariat, 24/F, Konka R&D Center, 28 KejiSouth Twelfth Road, Science and Technology Park,YuehaiStreet,NanshanDistrict,Shenzhen,GuangdongProvince,China|
|Tel.|0755-26608866|0755-26608866|
|Fax|0755-26601139|0755-26601139|
|E-mail|szkonka@konka.com|szkonka@konka.com|

III Other Information
1.Ways to Contactthe Company
Indicate by tick mark whether any changes occur to the registered address, office address and their postal codes, websiteaddress and email address of theCompany during theReporting Period.□Applicable√ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2016Annual Report.
2.Information DisclosureMedia andPlace where this Reportis Kept
Indicate by tick mark whether any changes occurred to the information disclosure media and the
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 place where this Report was kept during theReporting Period.
□Applicable√ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing this Report and the location where this Report was placed did not change during theReporting Period.Thesaid information can be found inthe 2016Annual Report.
IVKey Consolidated Operating Results
Indicate by tick mark whether theCompany needs to retroactively restate anyofits accounting data.□Yes√No
|||||
|-|-|-|-|
||ReportingPeriod|Sameperiodoflastyear|+/-(%)|
|Operatingrevenues(RMB)|11,405,965,979.43|8,609,080,822.24|32.49%|
|Net profit attributable to shareholders oftheCompany(RMB)|30,871,267.86|12,834,736.76|140.53%|
|Net profit attributable to shareholders ofthe Company before exceptional gainsandlosses(RMB)|-44,456,212.17|-28,736,147.20|-54.70%|
|Net cash from operating activities(RMB)|-2,264,014,704.88|-125,542,056.42|-1,703.39%|
|Basicearningspershare(RMB/share)|0.0128|0.0053|141.51%|
|Dilutedearningspershare(RMB/share)|0.0128|0.0053|141.51%|
|Weightedaveragereturnonequity(%)|1.06%|0.46%|0.60%|
||EndofReportingPeriod|Endoflastyear|+/-(%)|
|Totalassets(RMB)|20,666,059,935.37|17,243,119,597.97|19.85%|
|Net assets attributableto shareholdersoftheCompany(RMB)|2,928,936,565.96|2,901,481,607.04|0.95%|

V Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under ChineseandInternational Accounting Standards
□Applicable√ Not applicable
No such differences for theReporting Period.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under ChineseandForeign Accounting Standards
□Applicable√ Not applicable
No such differences for theReporting Period.
VI Exceptional Gains/Losses
√Applicable□ Not applicable
Unit:RMB
||||
|-|-|-|
|Item|ReportingPeriod|Note|
|Gains/losses on disposal of non-current assets (including offset asset impairmentprovisions)|32,560,637.29||
|Governmental subsidies charged to gains/losses for Reporting Period (except forgovernmentgrantscloselyrelatedtobusinessoftheCompanyandgivenatafixedquotaoramountinaccordancewithgovernment’suniformstandards)|79,034,666.86||
|Gains/lossesoninvestmentorassetmanagemententrustmentstothirdparties|30,058,960.78||
|Gains/losses on fair value changes of financial assets and liabilities held for trading &investment incomefrom disposal offinancial assets and liabilitiesheldfor trading as wellasfinancialassetsavailableforsale, exceptforeffectivehedgesrelatedtonormal businessoperationsoftheCompany|-61,493,877.60||
|Gains/lossesonentrustedloans|280,538.52||
|Non-operatingincomeandexpenseotherthanabove|8,144,500.65||
|Less:Incometaxeffects|12,549,958.46||
|Minorityinterestseffects(aftertax)|707,988.01||
|Total|75,327,480.03|--|

 Explanation of why the Company classified an item as an exceptional gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gains and Losses, or reclassified any exceptional gain/loss item given as an example in the said explanatory announcement as a recurrent gain/loss:
√Applicable□ Not applicable
||||
|-|-|-|
|Item|Amountinvolved(RMB)|Reason|
|Taxrebatesonsoftware|35,115,965.51|Government grants closely related to the Company’s normal business operations andconstantlygivenatfixedquotasoramountsaspergovernment’suniformstandards|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section III Business Profile
I Main Business ScopeforReporting Period
Is theCompanysubject to anydisclosurerequirements for special industries?
No.
Currently, the Company offers, among other things, color TVs, supply chain services, white goods and mobilephones. Its mainbusiness modelsare specified as follows:
(I) ColorTVs
The Company provides color TVs for both domestic and overseas markets. It also offers Internet TVservices.
The domestic sales of theCompany’s 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 operating across the country. And the Company profits from themargins between thecosts and theselling prices of itscolorTVs.
In the overseas sales, the Company mainly relies on B2B. Its color TVs are sold to Asia Pacific, Middle East, Central& South America, East Europe, etc. And the main profit source is also the differences between thecosts andthe sellingprices ofits colorTVs.
The Company offers Internet TV services based on the smart TVs it has sold to end users. Firstly, it works with other Internet companies to provide end users with, among other content, video, educational, music, medical and game content to generate earnings. Secondly, it analyses user behaviors and offer certain free, interactive services to increase attractiveness to users, promote its brand and stimulate desire for its hardware products. Finally, it is trying to build an Internet TV platform with tens of millions of users, on which it will profit through commercial and application distribution.This Internet TVbusiness is key to theCompany’s Internet-oriented transformation and upgrade to a development modelof“hardware+ software” and“smartTV+ endusers”.
(II) Supply Chain Services
The Company trades IC components, LCD panels, metal materials and other products in the supply chains for theCompany’s existing products. This can help the Company establish good relationships with its upstream suppliers and downstream customers, learn about the prices of the materials used in its production in a timely manner, and control costs of its existing products. In addition, the Company also intends to provide supply chain services integrating commercial, logistics and information handling services to createa new growth pointfor thefuture.
(III)WhiteGoods
The white goods produced by the Company mainly include refrigerators, washing machines, air
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 conditioners, freezers, etc., which are sold through B2B and B2C mainly to the domestic market. And the Company profits from the margins between the costs and the selling prices of its white goods.
(IV) MobilePhones
The mobile phones of the Company are sold to both the domestic and overseas markets. The overseas sales mainly rely on B2B and the profit comes from the margins between the costs and the selling prices of the mobile phones. As for the domestic sales of its mobile phones, the Company relies on B2B and B2C, and profits mainly from the costs and the selling prices of its products and slightly from therelated valueadded services.
II SignificantChanges inMain Assets
1.SignificantChanges in MainAssets
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|-|-|
|Mainassets|ReasonforsignificantchangeinReportingPeriod|
|Equityassets|NewjointstockcompaniessuchasGuangdongChutianDragonSmartCardCo.,Ltd.andShenzhenYaodeTechnologyCo.,Ltd.|
|Fixedassets|Nosignificantchanges|
|Intangibleassets|Nosignificantchanges|
|Constructioninprogress|IncreasedinvestmentsinKunshanZhouzhuanghotelinconstruction,etc.|

2.Main Assets Overseas
□Applicable√ Not applicable
III Core Competitiveness Analysis
Is theCompanysubject to anydisclosurerequirements for special industries?
No.
TheCompany’s competitive edges include, among other things, itsR&D ability, marketing network and manufacturing capability. 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 strengthen technical innovation to increase its overall competitiveness.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section IV Performance Discussion and Analysis
I Summary
For the Reporting Period, the Company achieved, on a consolidated basis, operating revenues of RMB11.406 billion, up32.49% compared to the same period of last year; net profit attributable to theCompany’s shareholders of RMB30.8713 million, representing a year-on-year rise of140.53%; and earnings per share (EPS)ofRMB0.0128.
In the Reporting Period, the Company proactively promoted reform in its system and kept integrating resources to accelerate transformation. As a result, its efforts have been rewarded by improved earnings. The work that the Company has accomplished in the Reporting Period is detailed as follows:
1. In the Reporting Period, the Company continued to promote reform in its system. New senior management has been hired through an open recruitment in the first quarter of this year.Meanwhile, certain business units are carrying out amarket-oriented reform ina steady manner.
2. In the Reporting Period, the Company made good use of itspartners’ resource advantages. The Company and China Mobile have jointly launched the Migu-Konka TV. In addition, the Company has become a top sponsor of the Jiangsu Suning Football Club. These moves will help set up win-win cooperations. In addition, the Company has signed on July 28, 2017 to be an official partner of La Liga in China, which will bring new vitality totheCompany’sbrand.
3. The Reporting Period saw a significant year-on-year increase in both the operating revenues and net profit generated by theCompany’s smart TV operation business. Moreover, the Company has developed on its own a series of new products including E-learning, E-shopping, K Video and World of Games, increasing attractiveness to users and the soft power in brand, as well as promoting the upgrade in its main business from a traditional model of profiting through adding value onhardware to anew model of“hardware+software”and“smartTV+end users”.
4. In the Reporting Period, the Company integrated the development, production and supply chain systems and optimized the product structure, trying to provide more competitive products. The increasingly fierce market competition and the rising prices of raw materials, however, led to decreased gross profit margins and losses in certain of theCompany’s main business segments (including colorTVs and whitegoods).
5. Exceptional gains and losses have an effect of RMB75.3275 million on net profit in the Reporting Period.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 II Analysisof MainBusiness
Summary:
See “ISummary”above.
Year-on-year changes of key financial data:
Unit:RMB
||||||
|-|-|-|-|-|
||ReportingPeriod|Sameperiodoflastyear|+/-%|Mainreasonforchange|
|Operatingrevenues|11,405,965,979.43|8,609,080,822.24|32.49%|Increasedrevenuefromprovisionofsupplychainservices|
|Operatingcosts|10,110,191,258.07|7,177,725,092.42|40.86%|Increasedcostsinprovisionofsupplychainservices|
|Sellingexpense|974,003,306.54|1,109,146,923.61|-12.18%||
|Administrativeexpense|264,108,100.97|290,919,290.02|-9.22%||
|Financecosts|110,882,895.46|68,373,432.00|62.17%|Increasesinborrowingssecuredandininterestexpenseonborrowings|
|Incometaxes|-3,838,772.97|705,997.10|-643.74%||
|R&Dexpense|96,753,027.87|88,336,972.44|9.53%||
|Netcashfromoperatingactivities|-2,264,014,704.88|-125,542,056.42|-1,703.39%|Increaseincashpaidforgoods|
|Netcashfrominvestingactivities|-1,580,867,932.13|-63,713,124.67|-2,381.23%|Newinvestmentsinjointstockcompaniesandincreasedinvestmentsinwealthmanagementinstruments|
|Netcashfromfinancingactivities|4,161,145,047.39|1,154,153,257.89|260.54%|Increaseinborrowingssecured|
|Netincreaseincashandcashequivalents|305,883,134.09|981,795,915.13|-68.84%||

Major changes to theprofit structure orsources ofthe Companyin theReporting Period:
□Applicable√ Not applicable
No such cases in theReporting Period.
Breakdown of main business:
Unit:RMB
|||||||
|-|-|-|-|-|-|
|Operatingrevenue|Operatingcost|Grossprofitmargin|Operatingrevenue:YoY|Operatingcost:YoY+/-%|Grossprofitmargin:YoY+/-%|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||
|-|-|-|-|-|-|-|
|||||+/-%|||
|Bybusinesssegment|||||||
|Electronics|6,808,860,299.10|5,693,408,104.76|16.38%|-11.85%|-11.01%|-0.79%|
|Supplychain|4,307,330,068.12|4,247,646,007.45|1.39%|715.73%|720.30%|-0.55%|
|Byproduct|||||||
|ColorTVs|5,289,992,150.21|4,431,743,317.09|16.22%|-1.45%|-0.83%|-0.53%|
|Supplychain|4,307,330,068.12|4,247,646,007.45|1.39%|715.73%|720.30%|-0.55%|
|Whitegoods|891,933,843.48|726,049,054.97|18.60%|7.49%|12.04%|-3.30%|
|Mobilephones|420,602,444.99|365,383,403.95|13.13%|-10.84%|-12.05%|1.19%|
|Others|206,331,860.42|170,232,328.75|17.50%|-60.84%|-51.06%|-16.49%|
|Bygeographicsegment|||||||
|Domestic|7,343,613,290.29|6,314,287,989.74|14.02%|41.87%|56.89%|-8.23%|
|Overseas|3,772,577,076.93|3,626,766,122.47|3.87%|48.06%|52.83%|-3.00%|

 III Non-Core Business Analysis
√Applicable□ Not applicable
Unit:RMB
||||||
|-|-|-|-|-|
||Amount|Asapercentageoftotalprofit(%)|Source/reason|Recurring|
|Investmentincome|67,005,572.06|219.28%|Income from wealth managementinstruments and sale ofavailable-for-salefinancialassets|Not|
|Gains andlosses on fairvaluechanges|-103,077,757.73|-337.32%|Changes in fair value of financialassets held for trading and forwardforexcontracts|Not|
|Assetimpairment|2,271,042.76|7.43%||Not|
|Non-operatingincome|123,347,108.29|403.65%|Governmental subsidies and gainsondisposalofintangibleassets|Tax rebates on software arerecurringwhiletheothersareuncertain|
|Non-operatingexpense|3,635,538.11|11.90%||Not|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017 IVAnalysis ofAssets andLiabilities
1.SignificantChanges in AssetComposition
Unit:RMB
||||||||
|-|-|-|-|-|-|-|
||EndofReportingPeriod||Endofsameperiodoflastyear||Changeinpercentage(%)|Mainreasonforsignificantchange|
||Amount|Asapercentageoftotalassets(%)|Amount|Asapercentageoftotalassets(%)|||
|Monetaryfunds|2,490,079,604.07|12.05%|2,598,216,832.20|17.46%|-5.41%||
|Accountsreceivable|1,966,918,540.02|9.52%|2,041,011,200.19|13.71%|-4.19%||
|Inventories|6,374,483,463.58|30.85%|2,925,556,540.93|19.66%|11.19%||
|Investmentproperty|219,271,267.11|1.06%|224,902,541.38|1.51%|-0.45%||
|Long-termequityinvestments|629,257,019.68|3.04%|276,561,119.65|1.86%|1.18%||
|Fixedassets|1,544,239,052.29|7.47%|1,604,828,298.83|10.78%|-3.31%||
|Constructioninprogress|404,450,172.08|1.96%|173,840,293.07|1.17%|0.79%||
|Short-termborrowings|10,744,965,110.13|51.99%|4,588,542,749.93|30.83%|21.16%||
|Long-termborrowings|70,000,000.00|0.34%|0.00|0.00%|0.34%||

2.Assets andLiabilities Measured atFairValue
√Applicable□ Not applicable
Unit:RMB
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Openingbalance|Gains/lossesonfairvaluechangesinReportingPeriod|Cumulativefairvaluechangeschargedtoequity|ImpairmentprovidedinReportingPeriod|PurchasedinReportingPeriod|SoldinReportingPeriod|Closingbalance|
|Financialassets||||||||
|1. Financial assets at|252,084,994.12||||||168,120,900.00|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|fair value throughgains/losses(exclusiveof derivative financialassets)|||
|3. Available-for-salefinancialassets|55,777,425.00|40,665,244.82|
|Subtotal of financialassets|307,862,419.12|208,786,144.82|
|Totalofabove|307,862,419.12|208,786,144.82|
|Financialliabilities|337,263.13|20,181,325.74|

 Significant changes in themeasurement attributes of themain assets in theReporting Period:□Yes√No
3.Restricted Asset Rights asof EndoftheReporting Period
As of the end of the Reporting Period, there were no such circumstances where any main assets of the Company were sealed, distrained, frozen, impawned, pledged, conditionally cashable, non-cashable orincapable of being used as substitution for debt.
V Investments Made
1.Total Investments Made
√Applicable□ Not applicable
||||
|-|-|-|
|InvestmentsmadeinReportingPeriod(RMB)|Investmentsmadeinsameperiodoflastyear(RMB)|+/-%|
|326,090,459.58|6,010,455.00|5325.39%|

 2.SignificantEquity Investments Madein Reporting Period
√Applicable□ Not applicable
Unit:RMB
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Investee|Mainbusiness|Wayofinvestment|Amountofinvestment|TheCompany’sshareholding|Sourceofinvestmentfunds|Partners|Termofinvestment|Typeofinvestee’sproducts|Progressasofbalancesheetdate|Projectedearnings|Gain/lossforReportingPeriod|Lawsuitsinvolved|Disclosuredate(ifany)|Indextodisclosedinformation(ifany)|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||percentage|||||||||||
|GuangdongChutianDragonSmartCardCo.,Ltd.|Manufacturingandmarketingofsmartcard|Acquisition|588,000,000.00|24%|TheCompany’sownfunds|ZhengzhouXiangHongWanEnterpriseManagementCo.,Ltd.andZhengzhouEasternSpiritEnterpriseManagementCenter|Undetermined|Undetermined|Investmentagreementsignedandownershiptransferwithindustrialandcommercialadministrationcompleted|0|0|Not|06/30/2017|www.cninfo.com.cn|
|Total|--|--|588,000,000.00|--|--|--|--|--|--|0|0|--|--|--|

3.SignificantNon-Equity Investments Ongoing inReporting Period
√Applicable□ Not applicable
Unit:RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Project|Wayofinvestment|Investmentinfixedassetsornot|Industry|InvestmentinReportingPeriod|TotalactualinvestmentasofendofReportingPeriod|Sourceofinvestmentfunds|Projectprogress|Projectedearnings|TotalearningsasofendofReportingPeriod|Reasonforfallingbehindscheduleornotachievingprojectedearnings|Disclosuredate(ifany)|Indextodisclosedinformation(ifany)|
|RenewalofplantsatKonkaHeadquarters|Directinvestment||Commercialestate|17,620,000|1,016,690,000|TheCompany’sownfunds|14.73%|Undetermined|0|N/A|11/21/2014|www.cninfo.com.cn|
|KunshanShuiyueZhouzhua|Directinvestme|25%isinvestedinfixed|Realestate,hotelmanage|537,580,000|1,685,930,000|TheCompany’s|57.095%|Undetermined|13,133,552|N/A|07/06/2010||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|ng|nt|assets|ment|||ownfunds|||||||
|KonkaTechnologicalInnovationCenter|Directinvestment||Electronics|76,657,814.5|76,657,814.5|TheCompany’sownfunds|17%|Undetermined|0|N/A|12/30/2016||
|NewplantsinDongguan|Directinvestment||Electronics|0|0|TheCompany’sownfunds|0%|Undetermined|0|N/A|03/11/2017||
|Total|--|--|--|631,857,814.50|2,779,277,814.50|--|--||13,133,552|--|--|--|

Notes:
(1) Concerning the renewal project of plants at the Konka Headquarters, overall planning and geological survey is underway.
(2) Regarding the Kunshan Shuiyue Zhouzhuang project, Phases III and IV are in construction and the pre-sale ofPhaseIII has been substantiallycompleted.
(3) In regard to the Konka Technological Innovation Center project, the related land use right transferagreement has been signed and planning isunderway.
(4) As for the project of new plants in Dongguan, preparations are underway and the Company is waiting for thelocal government to put outtheproject target land for bids.
4.FinancialInvestments
(1) Securities Investments
√Applicable□ Not applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Varietyofsecurities|Codeofsecurities|Nameofsecurities|Initialinvestmentcost|Accountingmeasurementmodel|Openingbookvalue|Gain/lossonfairvaluechangesinReportingPeriod|Cumulativefairvaluechangeschargedtoequity|PurchasedinReportingPeriod|SoldinReportingPeriod|Gain/lossinReportingPeriod|Closingbookvalue|Accountingtitle|Sourceofinvestmentfunds|
|Domestic/Foreignstock|300605|HFXX|4,671.80|Fairvaluemethod|0|0|0|4,671.80|24,601.50|19,929.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Domestic/Foreignstock|300610|CHGF|3,371.83|Fairvaluemethod|0|0|0|3,371.83|14,788.84|11,417.01|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300609|HNKJ|3,369.80|Fairvaluemethod|0|0|0|3,369.80|25,605.50|22,235.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2848|GSBE|4,417.00|Fairvaluemethod|0|0|0|4,417.00|26,110.00|21,693.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2849|WXZN|3,575.68|Fairvaluemethod|0|0|0|3,575.68|19,092.00|15,516.32|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300611|MLKJ|3,579.03|Fairvaluemethod|0|0|0|3,579.03|17,312.10|13,733.07|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2850|KLD|22,997.00|Fairvaluemethod|0|0|0|22,997.00|85,201.70|62,204.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2851|MGMT|4,016.10|Fairvaluemethod|0|0|0|4,016.10|26,400.00|22,383.90|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300616|SPZP|20,109.50|Fairvaluemethod|0|0|0|20,109.50|68,080.00|47,970.50|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/For|300618|HRGY|5,689.65|Fairvalue|0|0|0|5,689.65|48,583.67|42,894.02|0|Available-for-sal|TheComp|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|eignstock||||method||||||||efinancialassets|any’sownfunds|
|Domestic/Foreignstock|2852|DDQ|17,832.10|Fairvaluemethod|0|0|0|17,832.10|60,255.60|42,423.50|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300620|GKKJ|2,766.06|Fairvaluemethod|0|0|0|2,766.06|14,648.26|11,882.20|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300622|BSYJ|1,916.85|Fairvaluemethod|0|0|0|1,916.85|9,145.50|7,228.65|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300623|JJWD|5,526.00|Fairvaluemethod|0|0|0|5,526.00|19,200.00|13,674.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300621|WYGF|4,016.20|Fairvaluemethod|0|0|0|4,016.20|15,878.00|11,861.80|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300625|SXJG|10,885.20|Fairvaluemethod|0|0|0|10,885.20|32,881.20|21,996.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2856|MZGF|3,831.30|Fairvaluemethod|0|0|0|3,831.30|13,530.00|9,698.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2855|JRJS|3,256.92|Fairvaluemethod|0|0|0|3,256.92|14,178.06|10,921.14|0|Available-for-salefinancia|TheCompany’sown|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||lassets|funds|
|Domestic/Foreignstock|300626|HRGF|2,362.50|Fairvaluemethod|0|0|0|2,362.50|11,428.20|9,065.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300627|HCDH|2,949.87|Fairvaluemethod|0|0|0|2,949.87|14,666.19|11,716.32|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300630|PLZY|4,389.18|Fairvaluemethod|0|0|0|4,389.18|16,808.00|12,418.82|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2774|KYDT|5,124.00|Fairvaluemethod|0|0|0|5,124.00|18,480.00|13,356.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2859|JMKJ|6,798.96|Fairvaluemethod|0|0|0|6,798.96|16,005.60|9,206.64|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300635|DAGF|3,605.49|Fairvaluemethod|0|0|0|3,605.49|10,999.80|7,394.31|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300632|GPGF|2,549.55|Fairvaluemethod|0|0|0|2,549.55|9,487.50|6,937.95|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2860|XSE|3,506.37|Fairvaluemethod|0|0|0|3,506.37|9,522.60|6,016.23|0|Available-for-salefinancialassets|TheCompany’sownfunds|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Domestic/Foreignstock|300639|KPSW|2,850.45|Fairvaluemethod|0|0|0|2,850.45|8,339.00|5,488.55|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300637|YFXC|3,316.62|Fairvaluemethod|0|0|0|3,316.62|9,648.65|6,332.03|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2861|YTTX|4,485.00|Fairvaluemethod|0|0|0|4,485.00|11,960.00|7,475.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2863|JFKD|3,101.68|Fairvaluemethod|0|0|0|3,101.68|13,402.88|10,301.20|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300641|ZDGF|6,438.00|Fairvaluemethod|0|0|0|6,438.00|15,600.00|9,162.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2865|JDGF|2,787.40|Fairvaluemethod|0|0|0|2,787.40|8,602.44|5,815.04|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2866|CYKJ|4,850.80|Fairvaluemethod|0|0|0|4,850.80|13,140.60|8,289.80|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2867|ZDS|9,940.08|Fairvaluemethod|0|0|0|9,940.08|22,355.20|12,415.12|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/For|2868|LKSH|4,286.40|Fairvalue|0|0|0|4,286.40|12,097.80|7,811.40|0|Available-for-sal|TheComp|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|eignstock||||method||||||||efinancialassets|any’sownfunds|
|Domestic/Foreignstock|300647|CP3|1,711.36|Fairvaluemethod|0|0|0|1,711.36|6,952.40|5,241.04|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300643|WTZK|2,119.90|Fairvaluemethod|0|0|0|2,119.90|9,860.00|7,740.10|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2869|JYKJ|4,054.80|Fairvaluemethod|0|0|0|4,054.80|9,207.00|5,152.20|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2870|XSGF|5,518.80|Fairvaluemethod|0|0|0|5,518.80|11,188.80|5,670.00|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300652|LDK|3,985.88|Fairvaluemethod|0|0|0|3,985.88|9,364.81|5,378.93|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2872|TSZY|11,945.58|Fairvaluemethod|0|0|0|11,945.58|24,350.40|12,404.82|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300655|JRGF|1,557.00|Fairvaluemethod|0|0|0|1,557.00|8,214.75|6,657.75|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300657|HXDZ|2,027.97|Fairvaluemethod|0|0|0|2,027.97|9,839.70|7,811.73|0|Available-for-salefinancia|TheCompany’sown|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||lassets|funds|
|Domestic/Foreignstock|300659|ZFXX|2,659.95|Fairvaluemethod|0|0|0|2,659.95|8,617.41|5,957.46|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300658|YJGF|3,726.72|Fairvaluemethod|0|0|0|3,726.72|8,361.60|4,634.88|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300660|JSLL|13,701.87|Fairvaluemethod|0|0|0|13,701.87|27,395.55|13,693.68|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2877|ZNZK|2,049.60|Fairvaluemethod|0|0|0|2,049.60|7,654.28|5,604.68|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300663|KLRJ|2,617.20|Fairvaluemethod|0|0|0|2,617.20|10,260.00|7,642.80|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300662|KRGJ|3,353.60|Fairvaluemethod|0|0|0|3,353.60|13,194.24|9,840.64|0|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2879|CLKJ|6,270.96|Fairvaluemethod|0|0|0|6,270.96|0.00|0.00|6,270.96|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2880|WGSW|6,779.70|Fairvaluemethod|0|0|0|6,779.70|20,903.40|14,123.70|0|Available-for-salefinancialassets|TheCompany’sownfunds|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Domestic/Foreignstock|300666|JFDZ|1,624.00|Fairvaluemethod|0|0|5,057.50|1,624.00|0|0|6,681.50|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2881|MGZN|2,804.48|Fairvaluemethod|0|0|4,350.70|2,804.48|0|0|7,155.18|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|2882|JLY|5,232.80|Fairvaluemethod|0|0|0|5,232.80|0|0|5,232.80|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300669|HNGF|1,551.00|Fairvaluemethod|0|0|905.22|1,551.00|0|0|2,456.22|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300670|DYZN|2,306.23|Fairvaluemethod|0|0|0|2,306.23|0|0|2,306.23|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300671|FMDZ|2,132.93|Fairvaluemethod|0|0|0|2,132.93|0|0|2,132.93|Available-for-salefinancialassets|TheCompany’sownfunds|
|Domestic/Foreignstock|300241|RFGD|232,711,950|Fairvaluemethod|212,190,150|-44,069,250|0|0|0|-44,069,250|168,120,900|Financialassetsheldfortrading|TheCompany’sownfunds|
|Othersecuritiesinvestmentsheldatperiod-end|||0|--|0|0|0|0|0|0|0|--|--|
|Total|||233,000,852|--|212,190,150|-44,069,250|10,313.42|288,902.70|943,400.73|-43,392,829.57|168,153,135.82|--|--|
|Disclosure date of announcement about Board’s consent for||||||N/A||||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||
|-|-|
|securitiesinvestment||
|Disclosuredateofannouncementaboutshareholders’meeting’sconsentforsecuritiesinvestment(ifany)|N/a|

(2)InvestmentsinDerivativeFinancialInstruments
√Applicable□Notapplicable
Unit:RMB’0,000
|||
|-|-|
|Capital source for derivativeinvestment|U.S.dollarfinancings|
|Lawsuitsinvolved(ifapplicable)|N/A|
|Disclosure date of boardannouncement approvingderivativeinvestment(ifany)|05/24/2014|
|Disclosure date of shareholders’meeting announcement approvingderivativeinvestment(ifany)|06/10/2014|
|Analysis of risks and controlmeasures associated withderivative investments held in theReporting Period (including butnotlimitedtomarketrisk,liquidityrisk, credit risk, operational risk,legalrisk,etc.)|We engage in forward forex transactions to reduce the currency risk when securingforeign-currency financing. This is very needed in our routine operation and is incompliancewiththeapplicablelawsandregulations.WehaveformulatedtheManagementRules of Konka Group Co., Ltd. for Investment In Derivative Financial Instruments,making clear the relevant consideration and approval procedure, risk control, etc.. Wealways sign forward forex contracts with large banks such as the Bank of China, whichoperatesteadilyandhavegoodcreditstanding,whichcouldhelppreventlossonforwardforexcontractsduetobankfailure.|
|Changes in market prices or fairvalue of derivative investmentsduring the Reporting Period (fairvalue analysis should includemeasurement method and relatedassumptionsandparameters)|How we usually measure the fair value of derivative financial instruments: Based on theforward forex sales and purchase contracts that are signed between the Company andbanks and have not expired in a Reporting Period, we recognize the differences betweenthequotationsforthesecontractsonthebalancesheetdatesprovidedbythebanksandthecontractual prices as transactional financial assets or liabilities, and theprofit/loss on fairvaluechangesisrecognizedaccordingly.Becausethesecontractshavelockedinexchangerates, no changeswill occur when comparingthefair valueonsigningdateswith thatondeliverydates.|
|Significant changes in accountingpolicies and specific accountingprinciples adopted for derivativeinvestments in the ReportingPeriod compared to previousreportingperiod|None|
|Opinion of independent directorson derivative investments and risk|It is considered necessary for the Company to lock in foreign-currency financing coststhrough financial instruments, because it could effectively reduce the currency risk whensecuring foreign-currency financing. The Company has formulated the internal control|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||
|-|-|
|control|mechanismforinvestmentinderivativefinancialinstruments,andtherelevantriskcontrolmeasuresthattheCompanyhastakenareconsideredeffective.|

Unit:RMB’0,000
||||||
|-|-|-|-|-|
|Typeofderivativefinancialinstrument|Openingcontractualamount|Closingcontractualamount|Gain/lossinReportingPeriod|ClosinginvestmentamountasapercentageoftheCompany’sclosingnetassets|
|Forwardforexcontract|137,247.18|154,742.17|-7,440.04|52.83%|

VI Saleof Major Assets and EquityInterests
1.SaleofMajor Assets
□Applicable√ Not applicable
No such cases in theReporting Period.
2.SaleofMajor Equity Interests
√Applicable□ Not applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Transactionparty|Equitiessold|Dateofsale|Transactionprice(RMB’0,000)|NetprofitcontributedtotheCompanyfromperiod-beginningtodateofsale(RMB’0,000)|EffectontheCompany|RatioofnetprofitcontributedbysaleofequitiestotheCompany’stotalnetprofit(%)|Pricingprinciple|Relatedtransactionornot|RelationshipbetweentransactionpartyandtheCompany|Ownershipofallinvolvedequitiestransferredornot|Executedasscheduledornot|Disclosuredate|Indextodisclosedinformation|
|Undetermined|A22.935%stakeinEnraytekOptoelectronicsCo.,Ltd.|Undetermined|Not lower than assessedvalue|N/A|OptimizingtheCompany’sallocationofassets,generatingcash|Undetermined|Not lower than assessed value|Not|Undetermined|Notyet|N/A|05/23/2017|www.cninfo.com.cn|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Undetermined|A51%stakeinKunshanKonkaElectronicsCo.,Ltd.|Undetermined|Not lower than assessedvalue|N/A|inflows,increasingassets’liquidityandimprovingtheCompany’searnings|Undetermined|Not lower than assessed value|Not|Undetermined|Notyet|N/A|06/30/2017|www.cninfo.com.cn|

VII Main Controlled andJointStock Companies
√Applicable□ Not applicable
Main subsidiaries and jointstock companies with anover10%influenceontheCompany’s net profit:
Unit:RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Companyname|RelationshipwiththeCompany|Mainbusinessscope|Industry|Registeredcapital|Totalassets|Netassets|Operatingrevenues|Operatingprofit|Netprofit|
|ShenzhenWankaidaScienceandTechnologyCo.,Ltd.|Subsidiary|Softwaretechnologydevelopmentandmaintenance|Electronics|RMB10000000|472,891,636.33|465,508,703.97|54,228,020.00|81,671,523.46|69,478,601.92|
|AnhuiKonkaTongchuangHouseholdAppliancesCo.,Ltd.|Subsidiary|Productionandsaleofrefrigerators,washingmachinesandotherhouseholdappliances|Electronics|RMB180000000|1,040,624,838.22|-29,126,245.04|871,446,615.97|-14,227,209.36|7,782,918.28|
|AnhuiKonkaElectronicCo.,Ltd.|Subsidiary|Productionandsaleofmultimediaproducts|Electronics|RMB140000000|1,187,112,855.77|360,481,619.46|2,399,150,981.00|7,650,066.73|8,748,900.14|
|ShenzhenKonkaTelecommu|Subsidiary|Productionandsaleofmobile|Electronics|RMB120000000|407,954,026.32|-260,159,027.64|373,531,836.22|-33,733,955.64|-25,459,578.65|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|nicationsTechnologyCo.,Ltd.||communicationproducts||||||||
|KunshanKonkaElectronicCo.,Ltd.|Subsidiary|ProductionandsaleofTFT-LCMandmultimediaproducts|Electronics|RMB350000000|636,259,459.25|344,833,020.52|950,905,556.31|-6,077,554.37|31,562,218.31|
|DongguanKonkaElectronicCo.,Ltd.|Subsidiary|Productionandsaleofmultimediaproducts|Electronics|RMB266670000|750,211,773.74|636,941,333.48|225,543,577.24|-2,682,374.63|-254,382.34|
|HongKongKonkaCo.,Ltd.|Subsidiary|Export&importofelectromechanicalandelectronics|Electronics|HKD500000|1,604,475,725.51|144,055,810.63|1,236,250,447.74|37,968,843.05|33,706,379.72|
|KunshanKangshengInvestmentDevelopmentCo.,Ltd.|Subsidiary|Realestateandhotels|Realestateandhotels|RMB350000000|1,574,104,261.87|363,133,551.80|3,045,238.10|-11,055,364.63|-7,539,785.20|
|ChainKingdomCo.,Limited|Subsidiary|Internationaltrading|Trading|USD1500000|682,117,876.78|20,578,468.84|1,677,581,838.88|11,993,097.54|10,006,349.46|

Subsidiaries obtained or disposed in theReporting Period:
√Applicable□ Not applicable
||||
|-|-|-|
|Subsidiary|HowsubsidiarywasobtainedordisposedinReportingPeriod|Effectsonoverallproductionandoperatingresults|
|AnhuiKangzhiTradeCo.,Ltd.|Incorporatedbyinvestment|Nosignificanteffects|
|AnhuiKonkaHouseholdAppliancesCo.,Ltd.|Consolidatedbymerger,cancellationformalitiescompletedwithindustrialandcommercialadministration|Nosignificanteffects|

There is no other important information about the controlled and joint stock companies in the Reporting Period of which disclosure isrequired.
VIII Structured BodiesControlled bytheCompany
□Applicable√ Not applicable
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 IXPerformance Forecast forJanuary-September2017
Warning of possible loss or considerableYoYchange in the accumulative net profit made during the period-beginning to theend of thenextreporting period, as well as thereasons:
□Applicable√ Not applicable
X RisksFacing theCompany andCountermeasures
The Company ismainly in face of thefollowing risks:
The color TV market has entered a mature stage with slow growth in size. According to a research institution, the first half of 2017 saw a year-on-year drop of7.3% in the retail sales volume of color TVs on the domestic market, which would do no good to the sales volume of theCompany’s color TVs. In addition, the increasingly fierce competition on the color TV market, the continuous price competition among Internet TV brands, the flooding-in of foreign brands, and the significant price rises of raw materials (panel, etc.) in the Reporting Period, are bringing down the gross profit margins oftheCompany’s main businesssegments (colorTVs, whitegoods, etc.).
To cope with these risks, the Company will adopt measures such as adjusting its hardware product mix, increasing itsproducts’competitiveness, being more professional in user operation, improving its capability ofInternetTVoperationand strengthening internal management.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section V Significant Events
I AnnualandSpecial Meetings ofShareholders Convenedduringthe Reporting Period 1.Meetings ofShareholders Convened during theReporting Period
|||||||
|-|-|-|-|-|-|
|Meeting|Type|Investorparticipationratio|Conveneddate|Disclosuredate|Indextodisclosedinformation|
|TheFirstSpecialMeetingofShareholdersin2017|SpecialMeetingofShareholders|2.65%|03/06/2017|03/07/2017|www.cninfo.com.cn|
|The2016AnnualMeetingofShareholders|AnnualMeetingofShareholders|37.09%|04/24/2017|04/25/2017||
|TheSecondSpecialMeetingofShareholdersin2017|SpecialMeetingofShareholders|37.19%|06/09/2017|06/10/2017||

2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with ResumedVoting Rights
□Applicable√ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for the Reporting Period
□Applicable√ Not applicable
For the Reporting Period, the Company plans not to distribute cash dividends or bonus shares or convert capital reserveinto share capital.
III Commitments of theCompany’s Actual Controller, Shareholders, Related Parties and Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting Period or stillOngoing atPeriod-End
□Applicable√ Not applicable
No such cases in theReporting Period
IVEngagement andDisengagement ofCPAs Firm
Has thesemi-annual financial report been audited?
□Yes√ No
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 This Semi-Annual Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Board Regarding “ModifiedAuditor’sReport”Issued byCPAs FirmfortheReporting Period
□Applicable√ Not applicable
VI Explanations Given by Board of Directors Regarding “ModifiedAuditor’s Report” Issued forLastYear
□Applicable√ Not applicable
VII Bankruptcy andRestructuring
□Applicable√ Not applicable
No such cases in theReporting Period.
VIII Legal Matters
Significant lawsuits orarbitrations:
□Applicable√ Not applicable
No such cases in theReporting Period.
Other legal matters:
√Applicable□ Not applicable
|||||||||
|-|-|-|-|-|-|-|-|
|Basicsituationoflawsuit(arbitration)|Lawsuitamount(RMB’0,000)|Whetherformintoestimatedliabilities|Processoflawsuit(arbitration)|Trialresultsandinfluencesoflawsuit(arbitration)|Situationofexecutionofjudgmentoflawsuit(arbitration)|Disclosuredate|Disclosureindex|
|Asforthedetails,pleaserefertotheNotes2.DescriptionoftheContingenciesoftheCommitmentsandtheContingenciesofChapterXIIoftheNotestotheFinancialReport.Becausetheinvolvedamountwassmall,therewasnoneedtofulfilltheobligationofinformationdisclosure.||||||||

IXPunishments andRectifications
□Applicable√ Not applicable
No such cases in theReporting Period.
X Credit Conditions of the Company as well as its Controlling Shareholder and Actual Controller
□Applicable√ Not applicable
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for Employees
□Applicable√ Not applicable
No such cases in theReporting Period.
XII SignificantRelated Transactions
1.Related TransactionsRelevant to RoutineOperations
√Applicable□ Not applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Relatedparty|Relationship|Typeoftherelated-partytransaction|Contentoftherelated-partytransaction|Pricingprincipleoftherelated-partytransaction|Transactionprice|Transactionamount(RMB’0,000)|Proportioninsamekindoftransactions|Approvedtransactionquota(RMB’0,000)|Whetherexceedtheapprovedquota|Settlementmethodoftherelated-partytransaction|Similarmarketprice|Disclosuredate|Disclosureindex|
|AnhuiHualiPackingCo.,Ltd.|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|2,453||4,500|No|Cash|Notapplicable|03/31/2017|www.cninfo.com.cn|
|SuzhouHualiEnvironmentProtectionPackagingTechnologyCo.,Ltd|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|728||1,500|No|Cash|Notapplicable|||
|HualiPacking(Huizhou)Co.,Ltd.|Underthesameactualcontroller|Purchaseofcommodities|Purchaseofmaterials|Negotiatedprice|Marketprice|420||1,500|No|Cash|Notapplicable|||
|OCTCo.,Ltd.and|Underthe|Salesof|Sale|Neg|Mar|967||2,000|No|Cash|Not|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|itsaffiliatedcompanies|sameactualcontroller|goods|sofgoodsSalesofLCD|otiatedprice|ketprice||||||applicable||
|ShenzhenOCTPropertyServiceCo.,Ltd|Underthesameactualcontroller|Providepropertymanagementservices|Providepropertymanagementservices|Negotiatedprice|Marketprice|614||1,000|No|Cash|Notapplicable||
|ShenzhenOCTRealEstateCo.,Ltd|Underthesameactualcontroller|Provideservices|Assistindeveloprenovationprojectofheadquarter|Negotiatedprice|Marketprice|1,000||2,000|No|Cash|Notapplicable||
|Total||||--|--|6,182|--|12,500|--|--|--|--|
|Detailsoflargeamountofsalesreturns||||Notapplicable|||||||||
|As for the prediction on the total amount ofroutine related-party transactions to beoccurred in the Reporting Period by relevanttypes,theactualperformanceintheReportingPeriod(ifany)||||TheCompany haspublished theForecastingPublicNoticeonRoutineRelatedTransaction for Y2017 (public notice No. 2016-20) on Securities Times,Shanghai Securities News, China Securities Journal and Hong Kong Ta KungPao as well as the Internet website designated by CSRChttp://www.cninfo.com.cn on March 31, 2017. In the Reporting Period, thebasis for pricing, transaction price, transaction amount and settlement methodsofrawmaterials purchased bytheCompany werebasically inaccordancewith|||||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||
|-|-|
||theforecast.ThetotalamountwasRMB61.82million.|
|Reason for major difference betweentransaction price and reference market price(ifapplicable)|N/A|

2.Related TransactionsRegarding Purchase orSales ofAssets orEquity Interests
□Applicable√ Not applicable
No such cases in theReporting Period.
3.Related TransactionsRegarding JointInvestments inThirdParties
□Applicable√ Not applicable
No such cases in theReporting Period.
4.Credits andLiabilities with Related Parties
√Applicable□ Not applicable
Whether thereis non-operating creditsand liabilities with related parties
√ Applicable□Not applicable
Credits of parties related to account receivable
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Relatedparty|RelationwiththeCompany|Formationreason|Whetherthereisnon-operatingcapitaloccupation|Openingbalance(RMB’0,000)|Amountnewlyaddedincurrentperiod(RMB’0,000)|Amountrecoveredincurrentperiod(RMB’0,000)|Interestrate|Currentinterest(RMB’0,000)|Closingbalance(RMB’0,000)|
|Naught|Naught|Naught|No|0|0|0|0.00%|0|0|
|Impactofrelatedcreditsonthecompany'soperationresultandfinancialcondition||||||Naught||||

Liabilities ofparties related toaccount payable
||||||||||
|-|-|-|-|-|-|-|-|-|
|Relatedparty|RelationwiththeCompany|Formationreason|Openingbalance(RMB’0,000)|Amountnewlyaddedincurrentperiod(RMB’0,000)|Amountreturnedincurrentperiod(RMB’0,000)|Interestrate|Currentinterest(RMB’0,000)|Closingbalance(RMB’0,000)|
|OCTEnterprisesCo.|Controllingshareholder|Thecompanyappliesentrustedloantoit|160,000|0|0|3.10%-3.90%|3,084.54|160,000|
|OCTEnterprisesCo.|||90,000|0|0|3.18%-4.35%|1,746.11|90,000|
|OCTEnterprisesCo.|||90,000|0|0|3.06%|1,384.69|90,000|
|OCTEnterprises|||3,000|0|0|4.75%|167.17|3,000|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||
|-|-|
|Co.||
|Impactofrelatedliabilitiesonthecompany'soperationresultandfinancialcondition|ThecompanyappliesentrustedloanfromOCTEnterprisesCo.,whichmeetstheneedsofthecompany'sexistingbusinessdevelopmentandreducesthefinancingcost.|

5.Other SignificantRelated Transactions
□Applicable√ Not applicable
No such cases in theReporting Period.
XIII. Particulars about the Non-operating Occupation of Funds by the Controlling ShareholderandOther Related Parties ofthe Company
□Applicable√ Not applicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other related parties during theReporting Period.
XIV. SignificantContracts andExecution
1.Entrustment, Contracting and Leasing
(1) Entrustment
□Applicable√ Not applicable
No such cases in theReporting Period.
(2) Contracting
□Applicable√ Not applicable
No such cases in theReporting Period.
(3) Leasing
□Applicable√ Not applicable
No such cases in theReporting Period.
2.SignificantGuarantees
√ Applicable□Not applicable
(1) Guarantees
Unit:RMB'0,000
||||||||||
|-|-|-|-|-|-|-|-|-|
|GuaranteesprovidedbytheCompanyanditssubsidiariesforexternalparties(excludingthoseforsubsidiaries)|||||||||
|Guarantee|Disclosuredateof|Amou|Actualoccurrencedate|Actual|Type|Perio|Executed|Guarante|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|dparty|relevantannouncement||ntforguarantee|(dateofagreement)||||guaranteeamount||ofguarantee|dofguarantee||ornot||eforarelatedpartyornot||
|Naught|Naught||0|Naught||||0||Naught|0||Naught||Naught||
|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||TotalactualexternalguaranteebalanceattheendoftheReportingPeriod(A4)|||||||||0||
|GuaranteesprovidedbytheCompanyforitssubsidiaries|||||||||||||||||
|Guaranteedparty|Disclosuredateofrelevantannouncement|Amountforguarantee||Actualoccurrencedate(dateofagreement)|||Actualguaranteeamount||Typeofguarantee|||Periodofguarantee||Executedornot||Guaranteeforarelatedpartyornot|
|AnhuiTongchuang|03/31/2017|35,000||07/01/2016|||6,000||Jointliability|||1year||No||No|
|Communicationtechnology||50,000||09/01/2016|||50,000||Jointliability|||1year||No||No|
|AnhuiKonka||110,000||10/26/2016|||10,000||Jointliability|||1year||No||No|
|Yishijie||4,800||07/01/2016|||2,000||Jointliability|||1year||No||No|
|HongKongKonka||355,000||10/20/2016|||3,387||Jointliability|||1year||No||No|
|||||11/07/2016|||23,710||Jointliability|||1year||No||No|
|||||04/25/2017|||6774||Jointliability|||1year||No||No|
|||||05/22/2017|||13,549||Jointliability|||1year||No||No|
|||||06/12/2017|||6774||Jointliability|||1year||No||No|
|Total guarantee line approved for the subsidiariesduringtheReportingPeriod(B1)|||||909,800||Total actual occurred amount of guaranteefor the subsidiaries during the ReportingPeriod(B2)||||||||27,097||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Total guarantee line that has been approved for thesubsidiariesattheendoftheReportingPeriod(B3)||||||909,800||Total actual guarantee balance for thesubsidiaries at the end of the ReportingPeriod(B4)||||||122,194||
|Guaranteesprovidedbythesubsidiariesfortheirsubsidiaries||||||||||||||||
|Guaranteedparty|Disclosuredateofrelevantannouncement|Amountforguarantee|Actualoccurrencedate(dateofagreement)||||Actualguaranteeamount||Typeofguarantee|Periodofguarantee||Executedornot|Guaranteeforarelatedpartyornot|||
|Naught|Naught|0|Naught||||0||Naught|0||Naught|Naught|||
|TotalguaranteelineapprovedforthesubsidiariesduringtheReportingPeriod(C1)|||||0||TotalactualoccurredamountofguaranteeforthesubsidiariesduringtheReportingPeriod(C2)||||||||0|
|TotalguaranteelinethathasbeenapprovedforthesubsidiariesattheendoftheReportingPeriod(C3)|||||0||TotalactualguaranteebalanceforthesubsidiariesattheendoftheReportingPeriod(C4)||||||||0|
|TotalguaranteeamountprovidedbytheCompany(totaloftheabove-mentionedthreekindsofguarantees)||||||||||||||||
|Total guarantee line approved during theReportingPeriod(A1+B1+C1)||||922,800|||Total actual occurred amount of guaranteeduringtheReportingPeriod(A2+B2+C2)||||||27,097|||
|Total guaranteelinethat hasbeen approvedat theendoftheReportingPeriod(A3+B3+C3)||||922,800|||TotalactualguaranteebalanceattheendoftheReportingPeriod(A4+B4+C4)||||||122,194|||
|Proportionoftotalguaranteeamount(A4+B4+C4)tothenetassetsoftheCompany|||||||41.72%|||||||||
|Ofwhich:||||||||||||||||
|Amountofdebtguaranteeprovidedforshareholders,actualcontrollerandtherelated-party(D)|||||||||||0|||||
|Amountofdebtguaranteeprovidedfortheguaranteedpartywhoseasset-liabilityratioisnotlessthan70%directlyorindirectly(E)|||||||||||122,194|||||
|Totalguaranteeamountexceeded50%ofthenetassets(F)|||||||||||0|||||
|Totalamountoftheabovethreeguarantees(D+E+F)|||||||||||122,194|||||
|Explanationontheoccurredwarrantyliabilityorpossiblebearingjointresponsibilityofliquidationduetoimmatureguarantee(ifany)|||||||||||N/A|||||
|Explanationonprovisionofguaranteesforexternalpartiesinviolationoftheprescribedprocedure(ifany)|||||||||||N/A|||||

Note:theguaranteeperiodforthe"AnhuiTongchuang"and"Yishijie"isfrom07/01/2016 to07/01/2017.
Explanation onguarantee that adopts complex method
Naught
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 (2) IllegalProvision of Guarantees forExternal Parties
□Applicable√ Not applicable
No such cases in theReporting Period.
3.Other SignificantContracts
□Applicable√ Not applicable
No such cases in theReporting Period.
XV. SocialResponsibilities
1.Targeted Measures Takento Help People LiftThemselves OutofPoverty
(1) Outlineof Targeted Measures inthe Reporting Period
We and China Youth Development Foundation (CYDF) have held the large public benefit activity “Heart Journey” since 2013. Five sessions of activities have been held until now. In 2013, we have helped thousands of migrant workers to go home; in 2014, we have planted tens of thousands of trees nationwide and improved the living conditions of 5,000 needy families by planting the economic and ecological trees; in 2015, we have donated nearly 100 music classrooms to the remote regions of China by carrying out “Happy Music Classroom” Project with CYDF; in 2016, we have helped the professional training on 100 music teachers in the remote regions of China and promotethe teacherteam construction in poverty-stricken areas.
In the first half of 2017, “Heart Journey” activity with the theme of caring for the affection in the left-behind children family in the poor area carried out by our company built “Heart Journey Affection House” in the western poor primary school to let the children have the face-to-face communication with the relatives in other countries via the video, and help 100 left-behind children to gather with theparents inthe city during thesummervacation.
(2) Listof Targeted Measures ofListed Companies intheReporting Period
||||
|-|-|-|
|Indicator|Measurementunit|Number/Progress|
|I. Generalcondition|——|——|
|Ofwhich:1.funds|RMB’0,000|40|
|II. Itemizedinvestment|——|——|
|4.Outofpovertybyeducation|——|——|
|Ofwhich:4.1investedamountofsupportingstudentsinpoverty|RMB’0,000|40|
|4.2numbersofstudentsinpovertywhoweresupported|Person|100|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017 (3) SubsequentTargeted Measure Plans
In the second half of 2017, our company will continue to carry out the “Heart Journey” public welfare activity with the theme of caring for the affection in the left-behind children family in the poor area, build “Heart Journey Affection House” in the western poor primary school and help 100 left-behind children togather with theparents in thecity during thesummervacation.
2.SignificantEnvironmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified bytheenvironmental protection authorities ofChina
No
XVI. OtherSignificantEvents
√ Applicable□Not applicable
||||||
|-|-|-|-|-|
|AnnouncementNo.|Date|Title|Pageonnewspaper|Link|
|||||Linkonhttp://www.cninfo.com.cn|
|2017-01|2017-1-17|AnnouncementabouttheProgressofInvestingandConstructingKonkaScientificCreationCenter|SecuritiesTimesB80,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2017-01-17/1203018565.PDF|
|2017-02|2017-1-21|Announcement on the 2016 EarningsForecasts|SecuritiesTimesB68,TaKungPaoB4|http://www.cninfo.com.cn/finalpage/2017-01-21/1203035594.PDF|
|2017-03|2017-2-18|AnnouncementontheResolutionofthe25thSessionofthe8thBoardofDirectors|SecuritiesTimesB49,TaKungPaoA22|http://www.cninfo.com.cn/finalpage/2017-02-18/1203090685.PDF|
|2017-04|2017-2-18|NoticeonConveningthe20171stExtraordinaryGeneralMeeting|SecuritiesTimesB49,TaKungPaoA22|http://www.cninfo.com.cn/finalpage/2017-02-18/1203090686.PDF|
|2017-05|2017-2-18|AnnouncementaboutOfferingEntrustedLoanstojointStockCompany|SecuritiesTimesB49,TaKungPaoA22|http://www.cninfo.com.cn/finalpage/2017-02-18/1203090689.PDF|
|2017-06|2017-3-7|AnnouncementontheResolutionofthe20171stExtraordinaryGeneralMeeting|SecuritiesTimesB57,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2017-03-07/1203134012.PDF|
|2017-07|2017-3-11|AnnouncementontheResolutionofthe26thSessionofthe8thBoardofDirectors|SecuritiesTimesB45,TaKungPaoA26|http://www.cninfo.com.cn/finalpage/2017-03-11/1203148741.PDF|
|2017-08|2017-3-11|AnnouncementaboutPutForward“threeold”RenovationProjectofWankangFactoryandinvestingandbuildingNewFactoryinDongguan|SecuritiesTimesB45,TaKungPaoA26|http://www.cninfo.com.cn/finalpage/2017-03-11/1203148742.PDF|
|2017-09|2017-3-31|Announcementonthe2016AnnualReport||http://www.cninfo.com.cn/finalpage/2017-03-31/1203237063.PDF|
|2017-10|2017-3-31|Announcement on the Abstract of the 2016|SecuritiesTimesB97,|http://www.cninfo.com.cn/finalpage/2017-0|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||
|-|-|-|-|-|
|||AnnualReport|TaKungPaoB14|3-31/1203237062.PDF|
|2017-11|2017-3-31|AnnouncementontheResolutionofthe28thSessionofthe8thBoardofDirectors|SecuritiesTimesB97,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237057.PDF|
|2017-12|2017-3-31|AnnouncementontheResolutionofthe13thSessionofthe8thBoardofDirectors|SecuritiesTimesB97,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237042.PDF|
|2017-13|2017-3-31|AnnouncementontheExpectationofthe2017RoutineRelatedTransaction|SecuritiesTimesB97,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237058.PDF|
|2017-14|2017-3-31|AnnouncementabouttheExternalGuaranteeofKonkaGroupCo.,Ltd.|SecuritiesTimesB97,TaKungPaoB14|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237056.PDF|
|2017-15|2017-3-31|AnnouncementaboutRelatedTransactionofKonkaGroupCo.,Ltd.|SecuritiesTimesB97,TaKungPaoB15|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237059.PDF|
|2017-16|2017-3-31|AnnouncementaboutApplyingfortheLimitofFinancialProductsofKonkaGroupCo.,Ltd.|SecuritiesTimesB97,TaKungPaoB15|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237043.PDF|
|2017-17|2017-3-31|NoticeonConveningthe2016AnnualGeneralMeeting|SecuritiesTimesB97,TaKungPaoB15|http://www.cninfo.com.cn/finalpage/2017-03-31/1203237041.PDF|
|2017-18|2017-4-8|AnnouncementonReceivingtheTaxReimbursementEvents|SecuritiesTimesB40,TaKungPaoA6|http://www.cninfo.com.cn/finalpage/2017-04-08/1203260578.PDF|
|2017-19|2017-4-15|Announcementonthe2017FirstQuarterEarningsForecasts|SecuritiesTimesB61,TaKungPaoA11|http://www.cninfo.com.cn/finalpage/2017-04-15/1203298268.PDF|
|2017-20|2017-4-20|AnnouncementaboutSomeVicePresidentoftheCompanyofficiallyPerformingDuties|SecuritiesTimesB24,TaKungPaoB7|http://www.cninfo.com.cn/finalpage/2017-04-20/1203331863.PDF|
|2017-21|2017-4-25|AnnouncementontheResolutionofthe2015AnnualGeneralMeeting|SecuritiesTimesB41,TaKungPaoB13|http://www.cninfo.com.cn/finalpage/2017-04-25/1203376714.PDF|
||2017-4-25|LegalOpinionofKonkaGroup2016AnnualGeneralMeeting|SecuritiesTimesB12|http://www.cninfo.com.cn/finalpage/2017-04-25/1203376713.PDF|
|2017-22|2017-4-29|2016FirstQuarterReport||http://www.cninfo.com.cn/finalpage/2017-04-29/1203422671.PDF|
|2017-23|2017-4-29|Textofthe2016FirstQuarterReport|SecuritiesTimesB189,TaKungPaoB6|http://www.cninfo.com.cn/finalpage/2017-04-29/1203422669.PDF|
|2017-24|2017-5-23|AnnouncementontheResolutionofthe30thSessionofthe8thBoardofDirectors|SecuritiesTimesB60,TaKungPaoB10|http://www.cninfo.com.cn/finalpage/2017-05-23/1203553957.PDF|
|2017-25|2017-5-23|AnnouncementontheRelatedTransactions|SecuritiesTimesB60,TaKungPaoB10|http://www.cninfo.com.cn/finalpage/2017-05-23/1203553958.PDF|
|2017-26|2017-5-23|AnnouncementabouttheListingtoTransferEquityofYingruiPhotoelectric||http://www.cninfo.com.cn/finalpage/2017-05-23/1203553959.PDF|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||
|-|-|-|-|-|
|2017-27|2017-5-23|NoticeonConveningthe20172ndExtraordinaryGeneralMeeting|SecuritiesTimesB60,TaKungPaoB10|http://www.cninfo.com.cn/finalpage/2017-05-23/1203553955.PDF|
|2017-28|2017-6-10|AnnouncementontheResolutionofthe20172ndExtraordinaryGeneralMeeting|SecuritiesTimesB48,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2017-06-10/1203606560.PDF|
|2017-29|2017-6-22|AnnouncementabouttheProgressThatListingtoTransferEquityofYingruiPhotoelectric|SecuritiesTimesB40,TaKungPaoB2|http://www.cninfo.com.cn/finalpage/2017-06-22/1203637987.PDF|
|2017-30|2017-6-24|AnnouncementabouttheResignofNon-independentDirectoroftheCompany|SecuritiesTimesB36,TaKungPaoB3|http://www.cninfo.com.cn/finalpage/2017-06-24/1203642993.PDF|
|2017-31|2017-6-27|AnnouncementonReceivingtheTaxReimbursementEvents|SecuritiesTimesB13,TaKungPaoB6|http://www.cninfo.com.cn/finalpage/2017-06-27/1203648572.PDF|
|2017-32|2017-6-30|AnnouncementontheResolutionofthe31thSessionofthe8thBoardofDirectors|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665192.PDF|
|2017-33|2017-6-30|AnnouncementaboutPlanningtoSetUpIndustryFunds|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665190.PDF|
|2017-34|2017-6-30|AnnouncementabouttheListingtoTransferPartofEquityofKangqiaoJiachengCompany|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665200.PDF|
|2017-35|2017-6-30|AnnouncementabouttheListingtoTransferPartofEquityofKunkangCompany|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665201.PDF|
|2017-36|2017-6-30|AnnouncementaboutInvestingChutianDragon|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665191.PDF|
|2017-37|2017-6-30|NoticeonConveningthe20173rdExtraordinaryGeneralMeeting|SecuritiesTimesB20,TaKungPaoB18|http://www.cninfo.com.cn/finalpage/2017-06-30/1203665193.PDF|

XVII. SignificantEvents ofSubsidiaries
□Applicable√Notapplicable
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section VI Share Changes andShareholders’Profile
I.ShareChanges
1.ShareChanges
Unit:share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before||Increase/decrease(+/-)|||||After||
||Number|Percentage(%)|Newissues|Bonusshares|Increasefromcapitalreserve|Other|Subtotal|Number|Percentage(%)|
|1.Restrictedshares||||||19,500|19,500|19,500|0.00%|
|1.1Sharesheldbyotherdomesticinvestors||||||19,500|19,500|19,500|0.00%|
|Amongwhich:Sharesheld by domesticcorporations||||||||||
|Sharesheld by domesticindividuals||||||19,500|19,500|19,500|0.00%|
|2. Non-restrictedshares|2,407,945,408|100.00%||||-19,500|-19,500|2,407,925,908|100%|
|2.1 RMB commonshares|1,596,593,800|66.31%||||-19,500|-19,500|1,596,574,300|66.31%|
|2.2 Domesticallylistedforeignshares|811,351,608|33.69%||||||811,351,608|33.69%|
|3.Totalshares|2,407,945,408|100.00%||||||2,407,945,408|100%|

Reasons for theshare changes
√ Applicable□Not applicable
On March 10, 2017, the company held the 26th meeting of 8th board of directors, audited and passed the Bill on the Term-change of Senior Managers, and agreed to hire Mr. Sun Qingyan as the vice president. Mr. Sun Qingyan holds 26,000 shares of A stock (000016), and75% of the shares is the limited-sales condition according to therelated provisions.
Approval ofshare changes
KonkaGroupCo.,Ltd. Semi-AnnualReport2017□Applicable√ Not applicable
Transfer of share ownership
□Applicable√ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of theCompany andother financial indexes over theprioryear and thepriorperiod□Applicable√ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities todisclose
□Applicable√ Not applicable
2.Changes inRestricted Shares
√ Applicable□Not applicable
Unit:share
||||||||
|-|-|-|-|-|-|-|
|Nameofshareholder|Openingrestrictedshares|UnlockedintheReportingPeriod|IncreasedintheReportingPeriod|Closingrestrictedshares|Reasonforunlocking|Dateofunlocking|
|SunQingyan|0|0|19,500|19,500|Lockedsharebyseniorexecutives|Undetermined|
|Total|0|0|19,500|19,500|--|--|

 II. Issuance andListingof Securities
□Applicable√ Not applicable
III. Total Number of Shareholders and TheirShareholdings
Unit:share
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Totalnumberofcommonshareholdersattheperiod-end||115,362||Totalnumberofpreferenceshareholderswithresumedvotingrightsattheperiod-end(ifany)(seeNote8)||||||0||
|5%orgreatercommonshareholdersorthetop10commonshareholders||||||||||||
|Nameofshareholder|Natureofshareholder||Shareholdingpercentage(%)||Totalsharesheldattheperiod-end|Increase/decreaseduringtheReportingPeriod|Numberofrestrictedsharesheld|Numberofnon-restrictedsharesheld|Pledgedorfrozenshares|||
||||||||||Status||Numb|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||||||er|
|OCTEnterprisesCo.|State-ownedcorporation|21.75%||523,746,932|0|0|523,746,932||
|CITIC Securities Brokerage(HongKong)Co.,Ltd.|Foreigncorporation|7.56%||182,100,202|0|0|182,100,202||
|HOLYTIMEGROUPLIMITED|Foreigncorporation|2.33%||56,049,824|0|0|56,049,824||
|GuoyuanSecuritiesBroker(HK)Co.,Ltd.|Foreigncorporation|2.27%||54,755,145|-1,412,800|0|54,755,145||
|GAOLINGFUND,L.P.|Foreigncorporation|2.19%||52,801,250|0|0|52,801,250||
|CMS(HK)|State-ownedcorporation|0.94%||22,662,120|-528,500|0|22,662,120||
|NAMNGAI|Foreignnaturalperson|0.94%||22,535,240|-684,800|0|22,535,240||
|NanhuaFuturesCo.,Ltd.－ NanhuaFuturesSilverLeafNo.25AssetsManagementPlan|Other|0.86%||20,713,937|-2,792,042|0|20,713,937||
|YunnanInternationalEntrustCo.,Ltd-JuliNo.48SingleCapitalEntrust|Other|0.84%||20,216,860|20,216,860|0|20,216,860||
|CSICapitalManagementLimited|Foreigncorporation|0.83%||20,050,928|0|0|20,050,928||
|Strategic investors or general corporationsbecoming top-ten shareholders due to placingofnewshares(ifany)(seeNote3)|||Naught||||||
|Related or acting-in-concert parties among theshareholdersabove|||JialongInvestmentLimited,awholly-fundedsubsidiaryoftheCompany’sfirstmajorityshareholderOCTEnterprisesCo.,holds180,001,110and18,360,000ordinarysharesintheCompanyrespectivelythroughCITICSecuritiesBrokerage(HongKong)Co.,Ltd.andCMS(HK).Jialong||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||
|-|-|-|-|-|-|
|||InvestmentLimitedandOCTEnterprisesCo.arepartiesactinginconcert.Otherthanthat,itisunknownwhethertheothershareholdersarerelatedpartiesoract-in-concertpartiesornot.||||
|Shareholdingsofthetoptennon-restrictedcommonshareholders||||||
|Nameofshareholder|||Numberofnon-restrictedsharesheldattheperiod-end|Typeofshares||
|||||Type|Number|
|OCTEnterprisesCo.|||523,746,932|RMBordinaryshare|523,746,932|
|CITICSecuritiesBrokerage(HongKong)Co.,Ltd.|||182,100,202|Domesticallylistedforeignshare|182,100,202|
|HOLYTIMEGROUPLIMITED|||56,049,824|Domesticallylistedforeignshare|56,049,824|
|GuoyuanSecuritiesBroker(HK)Co.,Ltd.|||54,755,145|Domesticallylistedforeignshare|54,755,145|
|GAOLINGFUND,L.P.|||52,801,250|Domesticallylistedforeignshare|52,801,250|
|CMS(HK)|||22,662,120|Domesticallylistedforeignshare|22,662,120|
|NAMNGAI|||22,535,240|Domesticallylistedforeignshare|22,535,240|
|NanhuaFuturesCo.,Ltd. － NanhuaFuturesSilverLeafNo.25AssetsManagementPlan|||20,713,937|RMBordinaryshare|20,713,937|
|YunnanInternationalEntrustCo.,Ltd-JuliNo.48SingleCapitalEntrust|||20,216,860|RMBordinaryshare|20,216,860|
|CSICapitalManagementLimited|||20,050,928|Domesticallylistedforeignshare|20,050,928|
|Related or acting-in-concert partiesamong the top ten non-restrictedlytradable share holders and between thetop ten non-restrictedly tradable shareholdersandthetoptenshareholders|JialongInvestmentLimited,awholly-fundedsubsidiaryoftheCompany’sfirstmajorityshareholderOCTEnterprisesCo.,holds180,001,110and18,360,000ordinarysharesintheCompanyrespectivelythroughCITICSecuritiesBrokerage(HongKong)Co.,Ltd.andCMS(HK).JialongInvestmentLimitedandOCTEnterprisesCo.arepartiesactinginconcert.Otherthanthat,itisunknownwhethertheothershareholdersarerelatedpartiesoract-in-concertpartiesornot.|||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||
|-|-|
|Top 10 ordinary shareholdersconductingsecuritiesmargintrading(ifany)(seeNote4)|Naught|

Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of theCompany conducted any promissory repo during theReporting Period.□Yea√ No
No such cases in theReporting Period.
IV.Changeof theControllingShareholderor theActual Controller
Change ofthecontrolling shareholderin theReporting Period
□Applicable√ Not applicable
There was noany change of thecontrolling shareholderofthe Company intheReporting Period. Change oftheactual controller intheReporting Period
□Applicable√ Not applicable
There was noany change of theactual controller of theCompany inthe Reporting Period.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section VII Preference Shares
□Applicable√ Not applicable
No preferenceshares in theReporting Period.
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section VIII Directors, Supervisors and Executive Officers
I Changes inShareholdingsof Directors, Supervisors andExecutive Officers
√ Applicable□Not applicable
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Name|Officetitle|Incumbent/former|Openingshareholding(share)|IncreaseintheReportingPeriod(share)|DecreaseintheReportingPeriod(share)|Closingshareholding(share)）|Thegrantedrestrictedsharesattheperiod-begin(share)|ThegrantedrestrictedsharesattheReportingperiod(share)|Thegrantedrestrictedsharesattheperiod-end(share)|
|LiuFengxi|BoardChairman|Current|0|0|0|0|0|0|0|
|JinQingjun|Director|Current|0|0|0|0|0|0|0|
|HeHaibin|Director|Current|0|0|0|0|0|0|0|
|Zhangjing|Director|Current|0|0|0|0|0|0|0|
|SunShengdian|IndependentDirector|Current|0|0|0|0|0|0|0|
|XiaoZuhe|IndependentDirector|Current|0|0|0|0|0|0|0|
|ZhangShuhua|IndependentDirector|Current|0|0|0|0|0|0|0|
|HaoGang|Supervisory|Current|0|0|0|0|0|0|0|
|WangYoulai|Supervisor|Current|0|0|0|0|0|0|0|
|LiJun|EmployeeSupervisor|Current|0|0|0|0|0|0|0|
|Zhoubin|President|Current|0|0|0|0|0|0|0|
|HeJianjun|VicePresident|Current|0|0|0|0|0|0|0|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|LiHongtao|VicePresident|Current|0|0|0|0|0|0|0|
|WuYongjun|BoardSecretary|Current|0|0|0|0|0|0|0|
|LiChunlei|CFO|Current|0|0|0|0|0|0|0|
|YangBo|VicePresident|Current|0|0|0|0|0|0|0|
|CaoShiping|VicePresident|Current|0|0|0|0|0|0|0|
|SunQingyan|VicePresident|Current|0|26,000|0|26,000|0|0|0|
|ChenYuehua|Director|Left|0|0|0|0|0|0|0|
|HuangZhongtian|VicePresident|Left|0|0|0|0|0|0|0|
|LinHhongfan|VicePresident|Left|0|0|0|0|0|0|0|
|Total|--|--|0|26,000|0|26,000|0|0|0|

 II Changes inDirectors, Supervisors andExecutiveOfficers
√ Applicable□Not applicable
||||||
|-|-|-|-|-|
|Name|Officetitle|Typeofchange|Date|Reason|
|Zhangjing|Director|Elected|07/17/2017|Electionofmeetingofshareholders|
|ChenYuehua|Director|Left|06/22/2017|Resignduetopersonalreasons|
|Zhoubin|President|Engaged|03/10/2017|Engaged by the decision fromtheBoardofDirectors|
|LiChunlei|CFO|Engaged|03/10/2017|Engaged by the decision fromtheBoardofDirectors|
|YangBo|VicePresident|Engaged|03/10/2017|Engaged by the decision fromtheBoardofDirectors|
|CaoShiping|VicePresident|Engaged|03/10/2017|Engaged by the decision fromtheBoardofDirectors|
|SunQingyan|VicePresident|Engaged|04/18/2017|Engaged by the decision fromtheBoardofDirectors|
|HuangZhongtian|VicePresident|Leftforexpiration|03/10/2017|TheservicetermoftheBoard|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||
|-|-|-|-|-|
|||||ofSupervisorswasexpired|
|LinHongfan|VicePresident|Leftforexpiration|03/10/2017|TheservicetermoftheBoardofSupervisorswasexpired|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval dateof thisReport or were duebut could not beredeemed in full?
No
KonkaGroupCo.,Ltd. Semi-AnnualReport2017 Section X Financial Report
I.Auditor’s Report
Whether thesemi-annual report has been audited?
□Yes√ No
The semi-annual report of theCompany has not been audited.
II. FinancialStatements
The unitof thefinancial statements attached: RMB
1.Consolidated BalanceSheet
Prepared byKonka Group Co., Ltd.
June30, 2017
Unit:RMB
||||
|-|-|-|
|Item|Closingbalance|Openingbalance|
|Currentassets:|||
|Monetaryfunds|2,490,079,604.07|2,617,606,256.42|
|Settlementreserve|||
|Interbanklendings|||
|Financialassetsatfairvaluethroughprofit/loss|174,029,426.65|252,084,994.12|
|Derivativefinancialassets|||
|Notesreceivable|2,429,438,978.77|2,871,633,498.82|
|Accountsreceivable|1,966,918,540.02|2,307,965,548.49|
|Accountspaidinadvance|739,601,586.38|274,810,658.72|
|Premiumsreceivable|||
|Reinsurancepremiumsreceivable|||
|Receivablereinsurancecontractreserve|||
|Interestreceivable|1,185,860.75|1,342,063.84|
|Dividendsreceivable|10,171,609.48|10,171,609.48|
|Otheraccountsreceivable|277,435,269.56|222,389,921.80|
|Financialassetspurchasedunderagreementstoresell|||
|Inventories|6,374,483,463.58|4,287,413,944.35|
|Assetsheldforsale|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Non-currentassetsduewithinoneyear|||
|Othercurrentassets|2,011,262,179.93|562,204,116.20|
|Totalcurrentassets|16,474,606,519.19|13,407,622,612.24|
|Non-currentassets:|||
|Loansandadvancestocustomers|||
|Available-for-salefinancialassets|290,355,459.18|314,967,639.36|
|Held-to-maturityinvestments|||
|Long-termaccountsreceivable|||
|Long-termequityinvestments|629,257,019.68|309,648,120.37|
|Investmentproperty|219,271,267.11|222,086,904.26|
|Fixedassets|1,544,239,052.29|1,573,978,914.03|
|Constructioninprogress|404,450,172.08|315,536,437.05|
|Engineeringmaterials|||
|Disposaloffixedassets|||
|Productivelivingassets|||
|Oil-gasassets|||
|Intangibleassets|252,432,746.73|302,045,627.44|
|R&Dexpenses|||
|Goodwill|3,597,657.15|3,597,657.15|
|Long-termdeferredexpense|94,751,697.66|91,901,533.39|
|Deferredincometaxassets|733,098,344.30|701,734,152.68|
|Othernon-currentassets|20,000,000.00||
|Totalnon-currentassets|4,191,453,416.18|3,835,496,985.73|
|Totalassets|20,666,059,935.37|17,243,119,597.97|
|Currentliabilities:|||
|Short-termborrowings|10,744,965,110.13|6,562,834,226.51|
|BorrowingsfromtheCentralBank|||
|Moneydepositsacceptedandinter-bankdeposits|||
|Interbankborrowings|||
|Financialliabilitiesatfairvaluethroughprofit/loss|20,181,325.74|337,263.13|
|Derivativefinancialliabilities|||
|Notespayable|899,911,286.22|863,709,138.39|
|Accountspayable|2,297,215,140.77|3,160,073,575.56|
|Accountsreceivedinadvance|1,678,390,010.50|1,201,426,223.70|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Financialassetssoldforrepurchase|||
|Feesandcommissionspayable|||
|Payrollpayable|172,950,937.61|273,059,516.65|
|Taxespayable|68,872,054.95|121,905,421.18|
|Interestpayable|30,119,490.82|21,344,172.45|
|Dividendspayable|||
|Otheraccountspayable|1,132,518,296.11|1,444,349,986.74|
|Reinsurancepremiumspayable|||
|Insurancecontractreserve|||
|Payablesforactingtradingofsecurities|||
|Payablesforactingunderwritingofsecurities|||
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithinoneyear|301,282.02|41,025.60|
|Othercurrentliabilities|||
|Totalcurrentliabilities|17,045,424,934.87|13,649,080,549.91|
|Non-currentliabilities:|||
|Long-termborrowings|70,000,000.00|70,000,000.00|
|Bondspayable|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Long-termaccountspayable|30,144,871.84|30,102,564.14|
|Long-termpayrollpayable|15,614,846.48|18,151,659.90|
|Specialpayables|||
|Provisions|7,551,985.10|7,551,985.10|
|Deferredincome|126,952,107.30|130,571,125.42|
|Deferredincometaxliabilities|21,615,840.46|19,162,818.83|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|271,879,651.18|275,540,153.39|
|Totalliabilities|17,317,304,586.05|13,924,620,703.30|
|Owners’equity:|||
|Sharecapital|2,407,945,408.00|2,407,945,408.00|
|Otherequityinstruments|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Capitalreserve|78,556,489.58|79,723,092.04|
|Less:Treasuryshares|||
|Othercomprehensiveincome|-9,181,811.13|-6,932,104.65|
|Specialreserve|||
|Surplusreserve|847,908,466.28|847,908,466.28|
|Provisionsforgeneralrisks|||
|Retainedearnings|-396,291,986.77|-427,163,254.63|
|EquityattributabletoownersoftheCompany|2,928,936,565.96|2,901,481,607.04|
|Minorityinterests|419,818,783.36|417,017,287.63|
|Totalowners’equity|3,348,755,349.32|3,318,498,894.67|
|Totalliabilitiesandowners’equity|20,666,059,935.37|17,243,119,597.97|

 Legalrepresentative:LiuFengxi AccountingheadforthisReport:LiChunlei Headoftheaccountingdepartment:FengJunxiu
2.BalanceSheet oftheCompany
Unit:RMB
||||
|-|-|-|
|Item|Closingbalance|Openingbalance|
|Currentassets:|||
|Monetaryfunds|1,271,047,943.41|982,562,273.45|
|Financialassetsatfairvaluethroughprofit/loss|1,608,526.37|39,894,844.12|
|Derivativefinancialassets|||
|Notesreceivable|2,217,478,346.39|2,513,459,083.61|
|Accountsreceivable|2,579,464,881.21|3,145,529,199.35|
|Accountspaidinadvance|767,711,288.96|523,905,219.52|
|Interestreceivable|2,215,166.39|4,502,350.43|
|Dividendsreceivable|||
|Otheraccountsreceivable|2,658,019,649.37|1,725,494,161.08|
|Inventories|2,946,917,248.75|1,926,824,243.11|
|Assetsheldforsale|||
|Non-currentassetsduewithinoneyear|||
|Othercurrentassets|1,992,042,082.60|505,418,961.79|
|Totalcurrentassets|14,436,505,133.45|11,367,590,336.46|
|Non-currentassets:|||
|Available-for-salefinancialassets|255,073,223.36|270,217,639.36|
|Held-to-maturityinvestments|170,000,000.00|170,000,000.00|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Long-termaccountsreceivable|||
|Long-termequityinvestments|2,737,657,509.19|2,383,970,009.87|
|Investmentproperty|219,271,267.11|222,086,904.26|
|Fixedassets|493,652,144.76|499,826,176.39|
|Constructioninprogress|22,139,475.71|11,754,885.34|
|Engineeringmaterials|||
|Disposaloffixedassets|||
|Productivelivingassets|||
|Oil-gasassets|||
|Intangibleassets|88,383,149.81|90,880,022.23|
|R&Dexpenses|||
|Goodwill|||
|Long-termdeferredexpense|71,702,290.31|66,995,753.17|
|Deferredincometaxassets|686,578,897.26|656,704,805.39|
|Othernon-currentassets|20,000,000.00||
|Totalnon-currentassets|4,764,457,957.51|4,372,436,196.01|
|Totalassets|19,200,963,090.96|15,740,026,532.47|
|Currentliabilities:|||
|Short-termborrowings|7,878,215,003.35|5,436,958,840.80|
|Financialliabilitiesatfairvaluethroughprofit/loss|20,181,325.74|337,263.13|
|Derivativefinancialliabilities|||
|Notespayable|2,291,729,831.35|1,454,982,347.31|
|Accountspayable|4,390,355,218.59|3,710,175,718.31|
|Accountsreceivedinadvance|427,249,879.85|322,402,357.59|
|Payrollpayable|88,784,318.13|131,415,800.19|
|Taxespayable|10,440,304.17|19,823,949.08|
|Interestpayable|39,816,809.21|23,767,528.97|
|Dividendspayable|||
|Otheraccountspayable|1,287,996,900.39|1,760,751,455.81|
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithinoneyear|||
|Othercurrentliabilities|||
|Totalcurrentliabilities|16,434,769,590.78|12,860,615,261.19|
|Non-currentliabilities:|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Long-termborrowings|40,000,000.00|40,000,000.00|
|Bondspayable|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Long-termpayables|||
|Long-termpayrollpayable|||
|Specialpayables|||
|Provisions|7,551,985.10|7,551,985.10|
|Deferredincome|82,531,411.20|82,166,818.30|
|Deferredincometaxliabilities||12,026,251.50|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|130,083,396.30|141,745,054.90|
|Totalliabilities|16,564,852,987.08|13,002,360,316.09|
|Owners’equity:|||
|Sharecapital|2,407,945,408.00|2,407,945,408.00|
|Otherequityinstruments|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Capitalreserve|63,627,505.93|64,794,108.39|
|Less:Treasuryshares|||
|Othercomprehensiveincome|-5,093,676.42|6,714,437.62|
|Specialreserve|||
|Surplusreserve|847,908,466.28|847,908,466.28|
|Retainedearnings|-678,277,599.91|-589,696,203.91|
|Totalowners’equity|2,636,110,103.88|2,737,666,216.38|
|Totalliabilitiesandowners’equity|19,200,963,090.96|15,740,026,532.47|

 3.Consolidated Income Statement
Unit:RMB
||||
|-|-|-|
|Item|January-June2017|January-June2016|
|1.Operatingrevenues|11,405,965,979.43|8,609,080,822.24|
|Including:Salesincome|11,405,965,979.43|8,609,080,822.24|
|Interestincome|||
|Premiumincome|||
|Feeandcommissionincome|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|2.Operatingcosts|11,495,886,195.84|8,741,569,244.93|
|Including:Costofsales|10,110,191,258.07|7,177,725,092.42|
|Interestexpenses|||
|Feeandcommissionexpenses|||
|Surrenders|||
|Netclaimspaid|||
|Netamountprovidedasinsurancecontractreserve|||
|Expenditureonpolicydividends|||
|Reinsurancepremium|||
|Taxesandsurtaxes|34,429,592.04|56,149,941.54|
|Sellingexpenses|974,003,306.54|1,109,146,923.61|
|Administrativeexpenses|264,108,100.97|290,919,290.02|
|Financecosts|110,882,895.46|68,373,432.00|
|Assetimpairmentloss|2,271,042.76|39,254,565.34|
|Add:Profitonfairvaluechanges(“-”meansloss)|-103,077,757.73|-18,141,655.39|
|Investmentincome(“-”meansloss)|67,005,572.06|10,586,381.62|
|Including:Shareofprofit/lossofassociatesandjointventures|-4,574,294.19|-7,531,575.68|
|Exchangegains(“-”meansloss)|||
|Othergains|36,838,391.51||
|3.Operatingprofit(“-”meansloss)|-89,154,010.57|-140,043,696.46|
|Add:Non-operatingincome|123,347,108.29|154,187,662.64|
|Including:Profitondisposalofnon-currentassets|33,597,795.57|3,147,161.67|
|Less:Non-operatingexpense|3,635,538.11|3,531,018.36|
|Including:Lossondisposalofnon-currentassets|1,065,392.90|617,565.57|
|4.Totalprofit(“-”meansloss)|30,557,559.61|10,612,947.82|
|Less:Corporateincometax|-3,838,772.97|705,997.10|
|5.Netprofit(“-”meansloss)|34,396,332.58|9,906,950.72|
|NetprofitattributabletoownersoftheCompany|30,871,267.86|12,834,736.76|
|Minorityinterests’income|3,525,064.72|-2,927,786.04|
|6.Othercomprehensiveincomenetoftax|-2,226,560.59|-15,440,224.77|
|OthercomprehensiveincomenetoftaxattributabletoownersoftheCompany|-2,249,706.48|-15,158,638.24|
|6.1 Other comprehensive income that will not be reclassifiedintoprofit/loss|||
|6.1.1 Changes in net liabilities or assets with a defined|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|benefitplanuponre-measurement|||
|6.1.2Shareofothercomprehensiveincomeofinvesteesthatcannotbereclassifiedintoprofit/lossundertheequitymethod|||
|6.2 Other comprehensive income to be subsequentlyreclassifiedintoprofit/loss|-2,249,706.48|-15,158,638.24|
|6.2.1Shareofothercomprehensiveincomeofinvesteesthatwillbereclassifiedintoprofit/lossundertheequitymethod|||
|6.2.2 Profit/loss on fair value changes of available-for-salefinancialassets|-11,347,998.58|-1,875.00|
|6.2.3 Profit/loss on reclassifying held-to-maturityinvestmentsintoavailable-for-salefinancialassets|||
|6.2.4Effectiveprofit/lossoncashflowhedges|||
|6.2.5Currencytranslationdifferences|9,098,292.10|-15,156,763.24|
|6.2.6Other|||
|Other comprehensive income net of tax attributable to minorityinterests|23,145.89|-281,586.53|
|7.Totalcomprehensiveincome|32,169,771.99|-5,533,274.05|
|AttributabletoownersoftheCompany|28,621,561.38|-2,323,901.48|
|Attributabletominorityinterests|3,548,210.61|-3,209,372.57|
|8.Earningspershare|||
|8.1Basicearningspershare|0.0128|0.0053|
|8.2Dilutedearningspershare|0.0128|0.0053|

 WherebusinessmergersunderthesamecontroloccurredinthisReportingPeriod,thenetprofitachievedbythemergedparties beforethebusinessmergerswasRMB0.00,withthecorrespondingamountforthelastperiodbeingRMB0.00.
Legalrepresentative:LiuFengxi AccountingheadforthisReport:LiChunlei
Headoftheaccountingdepartment:FengJunxiu
4.Income Statementofthe Company
Unit:RMB
||||
|-|-|-|
|Item|January-June2017|January-June2016|
|1.Operatingrevenues|6,272,712,644.73|6,445,980,538.16|
|Less:Operatingcosts|5,443,839,907.56|5,638,759,127.68|
|Taxesandsurtaxes|10,868,803.46|21,209,160.52|
|Sellingexpenses|711,874,597.16|808,506,711.94|
|Administrativeexpenses|188,310,629.91|152,850,562.16|
|Financecosts|127,560,085.67|72,822,853.13|
|Assetimpairmentloss|2,244,928.43|24,699,388.50|
|Add:profitonfairvaluechanges(“-”meansloss)|-63,255,380.36|7,670,643.10|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Investmentincome(“-”meansloss)|77,763,929.57|20,628,022.12|
|Including:Shareofprofit/lossofassociatesandjointventures|-6,495,694.18|4,112,715.97|
|Othergains|26,416,590.40||
|2.Operatingprofit(“-”meansloss)|-171,061,167.85|-244,568,600.55|
|Add:Non-operatingincome|46,954,770.89|98,624,509.69|
|Including:Profitondisposalofnon-currentassets|71,766.85|264,303.85|
|Less:Non-operatingexpense|2,589,238.41|1,189,594.88|
|Including:Lossondisposalofnon-currentassets|141,009.66|145,122.77|
|3.Totalprofit(“-”meansloss)|-126,695,635.37|-147,133,685.74|
|Less:Corporateincometax|-38,114,239.37|-35,628,495.40|
|4.Netprofit(“-”meansloss)|-88,581,396.00|-111,505,190.34|
|5.Othercomprehensiveincomenetoftax|-11,808,114.04|641,019.96|
|5.1 Other comprehensive income that will not be reclassified intoprofitandloss|||
|5.1.1 Changes in net liabilities or assets with a defined benefitplanuponre-measurement|||
|5.1.2 Share of other comprehensive income of investees thatcannotbereclassifiedintoprofit/lossundertheequitymethod|||
|5.2 Other comprehensive income to be subsequently reclassifiedintoprofit/loss|-11,808,114.04|641,019.96|
|5.2.1Shareofothercomprehensiveincomeofinvesteesthatwillbereclassifiedintoprofit/lossundertheequitymethod|||
|5.2.2 Profit/loss on fair value changes of available-for-salefinancialassets|-11,358,312.00|-1,875.00|
|5.2.3 Profit/loss on reclassifying held-to-maturity investmentsintoavailable-for-salefinancialassets|||
|5.2.4Effectiveprofit/lossoncashflowhedges|||
|5.2.5Currencytranslationdifferences|-449,802.04|642,894.96|
|5.2.6Other|||
|6.Totalcomprehensiveincome|-100,389,510.04|-110,864,170.38|
|7.Earningspershare|||
|7.1Basicearningspershare|||
|7.2Dilutedearningspershare|||

5.Consolidated Cash flowstatement
Unit:RMB
||||
|-|-|-|
|Item|January-June2017|January-June2016|
|1.Cashflowsassociatedwithoperatingactivities:|||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Cashreceivedfromsaleofcommoditiesandrenderingofservice|10,702,542,891.56|9,435,398,454.00|
|Net increase in money deposits from customers and interbankplacements|||
|NetincreaseinloansfromtheCentralBank|||
|Netincreaseinfundsborrowedfromotherfinancialinstitutions|||
|Cashreceivedfrompremiumoforiginalinsurancecontracts|||
|Netcashreceivedfromreinsurancebusiness|||
|Netincreaseindepositsofpolicyholdersandinvestmentfund|||
|Net increase in disposal of financial assets at fair value throughprofit/loss|||
|Interest,feesandcommissionsreceived|||
|Netincreaseininterbankborrowings|||
|Netincreaseinfundsinrepurchasebusiness|||
|Taxrefundsreceived|153,594,635.95|178,405,043.66|
|Cashgeneratedbyotheroperatingactivities|242,504,590.42|265,852,475.51|
|Subtotalofcashgeneratedbyoperatingactivities|11,098,642,117.93|9,879,655,973.17|
|Cashpaidforgoodsandservices|11,531,432,202.90|8,174,460,211.13|
|Netincreaseinloansandadvancestocustomers|||
|Net increase in funds deposited in the Central Bank and interbankplacements|||
|Cashpaidforclaimsoforiginalinsurancecontracts|||
|Interest,feesandcommissionspaid|||
|Cashpaidaspolicydividends|||
|Cashpaidtoandforemployees|810,851,488.87|844,148,334.80|
|Taxespaid|264,698,689.66|393,891,670.20|
|Cashusedinotheroperatingactivities|755,674,441.38|592,697,813.46|
|Subtotalofcashusedinoperatingactivities|13,362,656,822.81|10,005,198,029.59|
|Netcashgeneratedbyoperatingactivities|-2,264,014,704.88|-125,542,056.42|
|2.Cashflowsassociatedwithinvestingactivities:|||
|Cashreceivedfromretractionofinvestments|9,766,980.30|10,039,975.96|
|Cashreceivedasinvestmentincome|78,957,443.99|18,138,724.61|
|Net cash received from disposal of fixed assets, intangible assetsandotherlong-termassets|78,716,573.22|177,070.99|
|Net cash received from disposal of subsidiaries or other businessunits|||
|Cashgeneratedbyotherinvestingactivities|857,901,449.68|4,293,428,300.00|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Subtotalofcashgeneratedbyinvestingactivities|1,025,342,447.19|4,321,784,071.56|
|Cash paid to acquire fixed assets, intangible assets and otherlong-termassets|124,051,006.64|57,679,455.60|
|Cashpaidforinvestment|326,090,459.58|6,010,455.00|
|Netincreaseinpledgedloans|||
|Netcashpaidtoacquiresubsidiariesandotherbusinessunits|||
|Cashusedinotherinvestingactivities|2,156,068,913.10|4,321,807,285.63|
|Subtotalofcashusedininvestingactivities|2,606,210,379.32|4,385,497,196.23|
|Netcashgeneratedbyinvestingactivities|-1,580,867,932.13|-63,713,124.67|
|3.Cashflowsassociatedwithfinancingactivities:|||
|Cashreceivedfromcapitalcontributions|265,000.00|4,900,000.00|
|Including: Cash received from minority shareholder investmentsbysubsidiaries|265,000.00|4,900,000.00|
|Cashreceivedasborrowings|5,023,816,944.90|2,902,000,000.00|
|Cashreceivedfromissuanceofbonds|||
|Cashgeneratedbyotherfinancingactivities|444,475,802.89|1,091,505,232.65|
|Subtotalofcashgeneratedbyfinancingactivities|5,468,557,747.79|3,998,405,232.65|
|Repaymentofborrowings|1,143,869,292.69|2,762,733,295.48|
|Cash paid for interest expenses and distribution of dividends orprofit|162,968,902.94|50,260,605.68|
|Including: dividends or profit paid by subsidiaries to minorityinterests|746714.88||
|Cashusedinotherfinancingactivities|574,504.77|31,258,073.60|
|Sub-totalofcashusedinfinancingactivities|1,307,412,700.40|2,844,251,974.76|
|Netcashgeneratedbyfinancingactivities|4,161,145,047.39|1,154,153,257.89|
|4. Effect of foreign exchange rate changes on cash and cashequivalents|-10,379,276.29|16,897,838.33|
|5.Netincreaseincashandcashequivalents|305,883,134.09|981,795,915.13|
|Add:Openingbalanceofcashandcashequivalents|2,020,902,945.13|1,488,154,851.35|
|6.Closingbalanceofcashandcashequivalents|2,326,786,079.22|2,469,950,766.48|

 6.Cash FlowStatementof theCompany
Unit:RMB
||||
|-|-|-|
|Item|January-June2017|January-June2016|
|1.Cashflowsassociatedwithoperatingactivities:|||
|Cashreceivedfromsaleofcommoditiesandrenderingofservice|7,169,804,450.63|6,066,072,499.56|
|Taxrefundsreceived|45,615,145.13|106,864,410.47|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|Cashgeneratedbyotheroperatingactivities|1,557,443,931.45|595,949,901.28|
|Subtotalofcashgeneratedbyoperatingactivities|8,772,863,527.21|6,768,886,811.31|
|Cashpaidforgoodsandservices|6,398,479,799.13|7,097,799,617.56|
|Cashpaidtoandforemployees|490,539,972.72|469,174,013.13|
|Taxespaid|74,454,460.84|199,964,096.41|
|Cashusedinotheroperatingactivities|2,206,102,049.40|950,560,098.46|
|Subtotalofcashusedinoperatingactivities|9,169,576,282.09|8,717,497,825.56|
|Netcashgeneratedbyoperatingactivities|-396,712,754.88|-1,948,611,014.25|
|2.Cashflowsassociatedwithinvestingactivities:|||
|Cashreceivedfromretractionofinvestments||5,685.00|
|Cashreceivedasinvestmentincome|90,904,415.99|22,133,330.57|
|Net cash received from disposal of fixed assets, intangible assetsandotherlong-termassets|157,331.75|174,720.56|
|Net cash received from disposal of subsidiaries or other businessunits|||
|Cashgeneratedbyotherinvestingactivities|857,000,000.00|4,395,417,300.00|
|Subtotalofcashgeneratedbyinvestingactivities|948,061,747.74|4,417,731,036.13|
|Cash paid to acquire fixed assets, intangible assets and otherlong-termassets|25,893,599.53|8,706,651.29|
|Cashpaidforinvestment|361,799,598.00|14,016,000.00|
|Netcashpaidtoacquiresubsidiariesandotherbusinessunits|||
|Cashusedinotherinvestingactivities|2,229,985,587.07|4,542,483,083.21|
|Subtotalofcashusedininvestingactivities|2,617,678,784.60|4,565,205,734.50|
|Netcashgeneratedbyinvestingactivities|-1,669,617,036.86|-147,474,698.37|
|3.Cashflowsassociatedwithfinancingactivities:|||
|Cashreceivedfromcapitalcontributions|||
|Cashreceivedasborrowings|2,676,935,367.72|3,501,874,941.51|
|Cashreceivedfromissuanceofbonds|||
|Cashgeneratedbyotherfinancingactivities|141,159,174.39||
|Subtotalofcashgeneratedbyfinancingactivities|2,818,094,542.11|3,501,874,941.51|
|Repaymentofborrowings|303,221,456.06|210,241,682.55|
|Cash paid for interest expenses and distribution of dividends orprofit|155,399,679.20|15,544,969.44|
|Cashusedinotherfinancingactivities|574,504.77|322,169,966.60|
|Sub-totalofcashusedinfinancingactivities|459,195,640.03|547,956,618.59|
|Netcashgeneratedbyfinancingactivities|2,358,898,902.08|2,953,918,322.92|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||
|-|-|-|
|4. Effect of foreign exchange rate changes on cash and cashequivalents|2,847,903.92|7,375,907.16|
|5.Netincreaseincashandcashequivalents|295,417,014.26|865,208,517.46|
|Add:Openingbalanceofcashandcashequivalents|973,613,753.40|478,267,624.53|
|6.Closingbalanceofcashandcashequivalents|1,269,030,767.66|1,343,476,141.99|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
7.Consolidated StatementofChangesinOwners’Equity
January-June2017 Unit:RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January-June2017|||||||||||||
||EquityattributabletoownersoftheCompany|||||||||||Minorityinterests|Totalowners’equity|
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:Treasuryshares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Generalriskreserve|Retainedearnings|||
|||Preferenceshares|Perpetualbonds|Other||||||||||
|1.Balanceattheendoftheprioryear|2,407,945,408.00||||79,723,092.04||-6,932,104.65||847,908,466.28||-427,163,254.63|417,017,287.63|3,318,498,894.67|
|Add: Changes in accountingpolicies||||||||||||||
|Correction of errors in priorperiods||||||||||||||
|Business mergers under thesamecontrol||||||||||||||
|Other||||||||||||||
|2. Balance at the beginning of theyear|2,407,945,408.00||||79,723,092.04||-6,932,104.65||847,908,466.28||-427,163,254.63|417,017,287.63|3,318,498,894.67|
|3. Increase/ decrease in the period(“-”meansdecrease)|||||-1,166,602.46||-2,249,706.48||||30,871,267.86|2,801,495.73|30,256,454.65|
|3.1Totalcomprehensiveincome|||||||-2,249,706.48||||30,871,267.86|3,548,210.61|32,169,771.99|
|3.2 Capital increased and reducedbyowners||||||||||||||
|3.2.1Ordinarysharesincreasedbyshareholders||||||||||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||
|-|-|-|-|-|-|-|-|
|3.2.2Capitalincreasedbyholdersofotherequityinstruments||||||||
|3.2.3Amountsofshare-basedpaymentschargedtoowners’equity||||||||
|3.2.4Other||||||||
|3.3Profitdistribution||||||-746,714.88|-746,714.88|
|3.3.1 Appropriation to surplusreserve||||||||
|3.3.2 Appropriation to generalriskprovisions||||||||
|3.3.3 Appropriation to owners(orshareholders)||||||-746,714.88|-746,714.88|
|3.3.4Other||||||||
|3.4 Internal carry-forward ofowners’equity||||||||
|3.4.1Newincreaseofcapital(orsharecapital)fromcapitalreserve||||||||
|3.4.2Newincreaseofcapital(orsharecapital)fromsurplusreserve||||||||
|3.4.3Surplusreserveformakinguploss||||||||
|3.4.4Other||||||||
|3.5Specialreserve||||||||
|3.5.1Withdrawnfortheperiod||||||||
|3.5.2Usedintheperiod||||||||
|3.6Other||-1,166,602.46|||||-1,166,602.46|
|4.Closingbalance|2,407,945,408.00|78,556,489.58|-9,181,811.13|847,908,466.28|-396,291,986.77|419,818,783.36|3,348,755,349.32|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
January-June2016 Unit:RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January-June2016|||||||||||||
||EquityattributabletoownersoftheCompany|||||||||||Minorityinterests|Totalowners’equity|
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:Treasuryshares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Generalriskreserve|Retainedearnings|||
|||Preferenceshares|Perpetualbonds|Other||||||||||
|1.Balanceattheendoftheprioryear|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|
|Add:Changesinaccountingpolicies||||||||||||||
|Correction of errors in priorperiods||||||||||||||
|Business mergers under the samecontrol||||||||||||||
|Other||||||||||||||
|2.Balanceatthebeginningoftheyear|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|
|3. Increase/ decrease in the period (“-”meansdecrease)|||||1,513,556.85||-10,087,848.65||||95,673,028.03|155,949,741.31|243,048,477.54|
|3.1Totalcomprehensiveincome|||||||-10,087,848.65||||95,673,028.03|-3,703,180.21|81,881,999.17|
|3.2 Capital increased and reduced byowners||||||||||||159,564,888.59|159,564,888.59|
|3.2.1Ordinarysharesincreasedbyshareholders||||||||||||261,842,331.23|261,842,331.23|
|3.2.2Capitalincreasedbyholdersofotherequityinstruments||||||||||||||
|3.2.3Amountsofshare-based||||||||||||||
|paymentschargedtoowners’equity3.2.4Other||||||||||||-102,277,442.64|-102,277,442.64|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||
|-|-|-|-|-|-|-|-|
|3.3Profitdistribution||||||||
|3.3.1 Appropriation to surplusreserve||||||||
|3.3.2Appropriation to general riskprovisions||||||||
|3.3.3 Appropriation to owners (orshareholders)||||||||
|3.3.4Other||||||||
|3.4Internal carry-forward of owners’equity||-35,543,805.21|||||-35,543,805.21|
|3.4.1 New increase of capital (orsharecapital)fromcapitalreserve||||||||
|3.4.2 New increase of capital (orsharecapital)fromsurplusreserve||||||||
|3.4.3 Surplus reserve for makinguploss||||||||
|3.4.4Other||-35,543,805.21||||-|-35,543,805.21|
|3.5Specialreserve||||||||
|3.5.1Withdrawnfortheperiod||||||||
|3.5.2Usedintheperiod||||||||
|3.6Other||37,057,362.06||||88,032.93|37,145,394.99|
|4.Closingbalance|2,407,945,408.00|79,723,092.04|-6,932,104.65|847,908,466.28|-427,163,254.63|417,017,287.63|3,318,498,894.67|

 8.StatementofChangesinOwners’Equity ofthe Company
January-June2017 Unit:RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item|January-June2017|||||||||
||Sharecapital|Otherequityinstruments|Capitalreserve|Less:Treasury|Othercomprehe|Specialreserve|Surplusreserve|Retainedearnings|Totalowners’equity|

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||Preferenceshares|Perpetualbonds|Other||||||
|1.Balanceattheendoftheprioryear|2,407,945,408.00||||64,794,108.39|6,714,437.62|847,908,466.28|-589,696,203.91|2,737,666,216.38|
|Add:Changesinaccountingpolicies||||||||||
|Correctionoferrorsinpriorperiods||||||||||
|Other||||||||||
|2.Balanceatthebeginningoftheyear|2,407,945,408.00||||64,794,108.39|6,714,437.62|847,908,466.28|-589,696,203.91|2,737,666,216.38|
|3. Increase/ decrease in the period (“-” meansdecrease)|||||-1,166,602.46|-11,808,114.04||-88,581,396.00|-101,556,112.50|
|3.1Totalcomprehensiveincome||||||-11,808,114.||-88,581,396.00|-100,389,510.04|
|3.2Capitalincreasedandreducedbyowners||||||||||
|3.2.1Ordinarysharesincreasedbyshareholders||||||||||
|3.2.2Capitalincreasedbyholdersofotherequityinstruments||||||||||
|3.2.3Amountsofshare-basedpaymentschargedtoowners’equity||||||||||
|3.2.4Other||||||||||
|3.3Profitdistribution||||||||||
|3.3.1Appropriationtosurplusreserve||||||||||
|3.3.2 Appropriation to owners (orshareholders)||||||||||
|3.3.3Other||||||||||
|3.4Internalcarry-forwardofowners’equity||||||||||
|3.4.1Newincreaseofcapital(orsharecapital)fromcapital reserve||||||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||
|-|-|-|-|-|-|-|
|3.4.2Newincreaseofcapital(orsharecapital)fromsurplusreserve|||||||
|3.4.3Surplusreserveformakinguploss|||||||
|3.4.4Other|||||||
|3.5Specialreserve|||||||
|3.5.1Withdrawnfortheperiod|||||||
|3.5.2Usedintheperiod|||||||
|3.6Other||-1,166,602.46||||-1,166,602.46|
|4.Closingbalance|2,407,945,408.00|63,627,505.93|-5,093,676.4|847,908,466.28|-678,277,599.91|2,636,110,103.88|

 January-June2016 Unit:RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|January-June2016|||||||||||
||Sharecapital|Otherequityinstruments|||Capitalreserve|Less:Treasuryshares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Retainedearnings|Totalowners’equity|
|||Preferenceshares|Perpetualbonds|Other||||||||
|1.Balanceattheendoftheprioryear|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|
|Add:Changesinaccountingpolicies||||||||||||
|Correctionoferrorsinpriorperiods||||||||||||
|Other||||||||||||
|2.Balanceatthebeginningoftheyear|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|
|3. Increase/ decrease in the period (“-” meansdecrease)|||||18,288,501.05||4,911,184.85|||-379,813,350.91|-356,613,665.01|
|3.1Totalcomprehensiveincome|||||||4,911,184.85|||-379,813,350.91|-374,902,166.06|
|3.2Capitalincreasedandreducedbyowners||||||||||||
|3.2.1Ordinarysharesincreasedbyshareholders||||||||||||

KonkaGroupCo.,Ltd. Semi-AnnualReport2017
||||||||
|-|-|-|-|-|-|-|
|3.2.2Capitalincreasedbyholdersofotherequityinstruments|||||||
|3.2.3Amountsofshare-basedpaymentschargedtoowners’equity|||||||
|3.2.4Other|||||||
|3.3Profitdistribution|||||||
|3.3.1Appropriationtosurplusreserve|||||||
|3.3.2 Appropriation to owners (orshareholders)|||||||
|3.3.3Other|||||||
|3.4Internalcarry-forwardofowners’equity|||||||
|3.4.1 New increase of capital (or sharecapital)fromcapital reserve|||||||
|3.4.2 New increase of capital (or sharecapital)fromsurplusreserve|||||||
|3.4.3Surplusreserveformakinguploss|||||||
|3.4.4Other|||||||
|3.5Specialreserve|||||||
|3.5.1Withdrawnfortheperiod|||||||
|3.5.2Usedintheperiod|||||||
|3.6Other||18,288,501.05||||18,288,501.05|
|4.Closingbalance|2,407,945,408.00|64,794,108.39|6,714,437.62|847,908,466.28|-589,696,203.91|2,737,666,216.38|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017` Konka Group Co., Ltd.
Notes to Financial Statements for January-June 2017
(All amounts areexpressed, unlessotherwisestated, inRenminbi (RMB).)
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 was renamed to “Konka Group Co., Ltd.” (Credibility code: 914403006188155783) with its main business falling into electronic industry. And now the headquarters locates in No. 28 of No. 12 of Keji South Rd., Science& Technology Park, Yuehai Street, Nanshan District,Shenzhen, Guangdong Province.
2.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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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 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 16,930,305.00 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 Share Allotment Modes 1996 was adopted at the 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 365,572,641.00 shares after thisallotment.
On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the interim general
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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 467,260,323.00 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, 80,000,000.00A-shares were additionally issued to the public at RMB15.50/share. The totalcapital stock reached 547,260,323.00shares 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 601,986,352.00 shares after thisdistribution.
On May 26, 2008, the 2017 general meeting of shareholders s was convened, during which the following resolutions were discussed and adopted: based on the total capital stock of 601,986,352.00 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. On December 16, 2008, with approval from the SMGZF No. 2662[2008] document as issued by Shenzhen Bureau of Trade and Industry, the Company was agreed to increase its share capital, and went through the formalities for registration of changes with the administration for industry and commerce on April 10, 2009. The total capital stock reached 1,203,972,704.00shares after change.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 onJanuary 28,2016with thealtered share capital of2,407,945,408.00shares. 3. Approved business scope: research and development, production and operation of such household appliances as televisions, refrigerators, washing machines, and personal electronic appliances; manufacturing and application of home AV, IPTV set-top boxes, digital TV receivers (including ground receiving equipment of satellite television broadcasting), digital products, mobile communication equipments and terminal products, daily-use electronic products, automotive electronic products, satellite navigation systems, intelligent transportation systems, fire-fighting and security systems, office equipments, computers, displays, large screen display systems; LED (OLED) back light, illumination, light-emitting devices, and packaging thereof; Touch TV AIO, wireless broadcasting television transiting equipment; electronic parts and components, moulds, plastic and rubber products, and packing materials, design and in-door installation security products, monitoring products, wireless and cable digital television system and system integration, and technical consultancy and after-sale paid services of related products (except mobile phone, the other products in the above business scope are manufactured in other places outside Shenzhen); Wholesale, retail, import& export and relevant support services of the aforesaid products (including spare parts) (Commodities subject to state trading management are not involved. Products involved in quota, license management and other specified management shall be subject to the relevant state provisions.); sale of self-developed technological achievements; provision of maintenance services, technical consultant service for electronic products; ordinary cargo transportation, domestic freight forwarding, warehousing services; consultancy on enterprise management; and self-owned property leasing and management services, recovery of waste electrical appliances and electronic products (excluding dissembling) (operated by branch offices); and outsourcing services of information technology and business procedures by means of undertaking services in the way of outsourcing, including management and maintenance of system application, management of information technology, bank background service, financial settlement, human resource service, software development, call center,and data processing.
4. The Company and its subsidiaries are mainly engaged in the production and sales of color TVs, white goods, mobile phones, etc.; trading; real estate development and marketing;
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 advertising agency; factoring, andetc.
5. The financial statements contained herein have been approved for issue by the Board of theCompany onAugust 23,2017.
6. There were 39 subsidiaries included in the consolidation scope of June 30, 2017 of the Company, and please refer to the Notes VIII. “Equities among other entities” for details. There were 1 subsidiaries increased and 1 decreased in the consolidation scope of the Reporting Period over the last period of the Company, and the reason for 1 decreased is that Anhui HouseholdAppliance is absorbed and consolidated byAnhui Tongchuang. For details, pleaserefer to theNotesVII. “Changes of theconsolidationscope” fordetails.
7.Acheck listofcorporate names and theirabbreviations mentioned in thisReport
Corporatename Abbreviation
ShenzhenKonkaTelecommunicationsTechnologyCo.,Ltd. TelecommunicationTechnology
ShenzhenKonkaHouseholdAppliancesCo.,Ltd. KonkaHouseholdAppliances
ShenzhenKonkaPlasticProductsCo.,Ltd. PlasticProducts
ShenzhenKonkaElectricalAppliancesCo.,Ltd. ElectricalAppliances
ShenzhenKonkaElectronicFittingsTechnologyCo.,Ltd. FittingsTechnology
MudanjiangArcticOceanAppliancesCo.,Ltd. MudanjiangAppliances
ChongqingQingjiaElectronicsCo.,Ltd. ChongqingQingjia
AnhuiKonkaElectronicCo.,Ltd. AnhuiKonka
AnhuiKonkaHouseholdAppliancesCo.,Ltd. AnhuiHouseholdAppliances
KunshanKonkaElectronicCo.,Ltd. KunshanKonka
DongguanKonkaElectronicCo.,Ltd. DongguanKonka
DongguanKonkaPackingMaterialsCo.,Ltd. DongguanPacking
BoluoKonkaPCBCo.,Ltd. BoluoKonka
BoluoKonkaPrecisionTechnologyCo.,Ltd. BoluoKonkaPrecision
HongKongKonkaCo.,Ltd. HongKongKonka
Konka Household AppliancesKonkaHouseholdAppliancesInvestment&DevelopmentCo.,Ltd.
Investment
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Corporatename Abbreviation
Konka Household Appliances KonkaHouseholdAppliancesInternationalTradingCo.,Ltd.
InternationalTrading
Konka(Europe)Co.,Ltd. KonkaEurope
KonkaFactoring(Shenzhen)Co.,Ltd. KonkaFactoring
ShenzhenWankaidaScienceandTechnologyCo.,Ltd. Wankaida
KunshanKangshengInvestmentDevelopmentCo.,Ltd. KunshanKangsheng
AnhuiKonkaTongchuangHouseholdAppliancesCo.,Ltd. AnhuiTongchuang
IndonesiaKonkaElectronicsCo.,Ltd. IndonesiaKonka
ShenzhenShushidaLogisticsServiceCo.,Ltd. ShushidaLogistics
BeijingKonkaElectronicCo.,Ltd. BeijingKonkaElectronic
ShenzhenKonkaE-displayCo.,Ltd. KonkaE-display
ShenzhenE-displayServiceCo.,Ltd. E-displayService
XiamenDalongTradingCo.,Ltd. XiamenDalong
YoushiKangrongCultureCommunicationCo.,Ltd. YoushiKangrong
ShenzhenKangqiaoJiachengPropertyInvestmentCo.,Ltd. KangqiaoJiacheng
KonkaSmartTechLimited KonkaSmartTech
AnhuiKaikaiShijieE-commerceCo.,Ltd. KaikaiShijie
ShenzhenE2infoNetworkTechnologyCo.,Ltd. E2info
ShenzhenKonkaMobileInterconnectionTechnologyCo.,Ltd. MobileInterconnection
ShenzhenKonkaCommercialSystemTechnologyCo.,Ltd. CommercialSystemTechnology
ZhongkangSupplyChainManagementCo.,Ltd. ZhongkangSupplyChain
ShenzhenKangqiaoEasyChainTechnologyCo.,Ltd. KangqiaoEasyChain
E3info(Hainan)TechnologyCo.,Ltd. E3info
Konka Technology & IndustryChuzhouKonkaTechnology&IndustryDevelopmentCo.,Ltd.
Development
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Corporatename Abbreviation
AnhuiKangzhiTradeCo.,Ltd. KangzhiTrade
II.Basis forthepreparationoffinancial statements
1. Basis for thepreparation
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, 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 June 30, 2017, business results and cash flows for the first half year of 2017, 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 Company-America Konka, European Konka and Indonesia Konka, should be respectively confirmed the US Dollar, Euro and Indonesia Rupiah as their recording currency according its major economic environment of their operating address; subsidiaries such as Hong Kong Konka, Konka Household Appliances International Trading, Konka Zhisheng and Zhongkang Supply Chain use HK Dollar as their recording currency. And the Group adopted Renminbi as the bookkeeping base currency when preparing the financial statements for the reporting year.
4. Accounting treatment methods for business combinations under the same control or
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 and the equity securities issued by the acquirer in exchange for the control on the acquiree, the expenses for audit, legal services and assessment, and other administrative expenses, which are recorded into the profits and losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as the combination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. The involved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new or further evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and the contingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. Where the combination costs are less than 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 Notes IV. 5 (2)), Whether the deals are “package deal” or not, belong to the “package deal”, see the previous paragraphs described in this section and Notes IV. 12 “long term equity investment transaction” and conduct accounting treatment, those not belong to the “package deal” distinguish between the individual financial statements and the consolidated financial statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of the Group holds in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the equity interests that the Group holds in the acquiree before the acquiring date shall be treated 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 relevant activities of the investee to obtain variable returns and is able to influence the amountof returns. Asubsidiary is anenterprise orentity controlled bytheGroup.
Once any changes in the relevant facts or situations result in any changes in the elements involvedin theaforesaid definition of“control”,theCompany shall carry out a reassessment. (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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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 Note IV. 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 statements, which together transferred into the current profits and losses in the loss of control, when the Group losing controlonits subsidiary.
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 in joint ventures are measured at the equity method according to the accounting policies mentioned in Note IV. 12 (2)② “Long-term equity investments measured at 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 quotation in the active market, with fixed recovery cost or recognizable. Financial assets that
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 are defined as loans and the accounts receivables by the Group including notes receivables, accounts receivables, interest receivable, dividends receivable andother 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
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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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,
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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;
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017② Debtor goes against the contract clause (for instance, breach of faith or overdue paying interests orprincipal);
③Debtors have agreat probability ofbankruptcy orother financial reorganization;
④Otherevidence proving such accounts receivable has been impaired;
(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
Group1:Aginggroup Divide the groups according to the credit risks characteristics of the accounts
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 receivable
Group 2: Internal related party groups in
Divide the groups according to the credit risks characteristics of whether the the scope of consolidation of the
creditoristheinternalrelatedpartyinthescopeofconsolidationoftheCompany Company
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.
Item Withdrawalmethod
Group1:Aginggroup Aginganalysismethod
Group 2: Internal related party groups in the To make an independent impairment test and if there was no scopeofconsolidationoftheCompany impairment,shouldnotwithdrawthebaddebtsprovision.
In thegroups, adopting aging analysis method to withdraw bad debt provision:
||
|-|
|Withdrawal proportion for accountsreceivable(%)|
|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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
C.There isother evidence of impairmentand theimpairment amount can estimated reliably. (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. 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
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.16Pricing 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.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 policies 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 the ultimate control party as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities of the combined party which respectively acquired through multiple transaction under the same control that ultimately form into the combination of the enterprises under the same control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment, and as for the difference between the initial investment cost of the long-term equity investment and sum of the book value of the long-term equity investment before the combination and the book value of the consideration of the new payment that further required on the combination date, should adjust the capital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combination date which adopted the equity method for accounting, or the other comprehensive income confirmed for the available-for-sale financial assets, should not have any accounting disposal 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 policies 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,
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 lossesof thetransferred assets, should not beneutralized.
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 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 losses oflosingthe control right along untilthetimewhen loseit.
13.Investmentreal estates
The term “investment real estate” 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 estate 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 toNote IV.19.“Long-term assets impairment”.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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)|Expected netsalvage value(%)|
|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|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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,
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (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;
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 cannot terminate the labor relations unilaterally or reduce the demission welfare, remuneration and liabilities produced from the demission welfare should be determined and included in current profits and losses when determining the costs of demission welfare and recombination. However, demission welfare not fully paid within 12 months after annual Reporting 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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 goods exported, the revenue shall be recognized once the goods are cleared through customsand delivered tothe carrierdesignated bythepurchaser.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (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 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 cannot 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 cannot 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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,
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 from 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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)Held-to-maturity investments
The Company classifies the non-derivative financial asset with a fixed or determinable amount of repo price, and a fixed date of maturity, which the enterprise holds for a definite purpose or the enterprise is able to hold until its maturity, to held-to-maturity investment. Such classification concerns lots of judgments. During the judgment process, the Company will assess the purpose and capability for holding such kind of investment to maturity. Except for special cases (for example, selling investment with no-large amount when the maturity date is closely to come), if the Companycan’t hold the investment to maturity date, the Company should re-classify all that investment to available-for-sale financial assets, andshouldn’t classify those financial assets into hold-to-maturity investment in the current fiscal year and the next two complete fiscal years. Such cases may have significant impact on related financial assets value stated in financial statements, and may influence the risk management strategy for financial toolsofthe Company.
(6)Impairment ofheld-to-maturity investment
The decision about confirming the impairment of the investment held-to-maturity by the Company depends on the judgment of the management layer to a great extent. The objective evidences of the occurrence of the impairment include there is serious financial difficulties of
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
(7)The impairment offinancial assets available for sale
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.
(8)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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
(9)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.
(10)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.
(11)Deferred incometax 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 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.
(12)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.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (13)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.
(14)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
Calculatedtheoutputtaxat3%,5%,6%,11%,13%,17%andpaidtheVATby the amount after deducting the deductible withholding VATat current period, VAT
ofwhichtheVATapplicabletoeasycollectionwon’t belongtothedeductible withholdingVAT.
Businesstax
Paid by5% of taxable business income.; and VAT replaced the business tax
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Categoryoftaxes Specificsituationofthetaxesrate
fromMay1,2016.
Paid at7% of the circulating tax actually paid, of which Dongguan Packing, Urban maintenance and construction
Dongguan Konka, Boluo Konka, Boluo Konka Precision, and Kunshan tax
Kangshengof5%.
Paid at25% of the taxable income, of which Hong Kong Konka, Konka HouseholdAppliancesInvestment, KonkaHouseholdAppliancesInternational Trading, Konka Zhisheng, and Zhongkang Supply Chain of16.5%; Enterpriseincometax
Telecommunication Technology, Kunshan Konka, Dongguan Konka, Anhui Konka, Konka E-display, and Wankaida and Chongqing Qingjia of15%; andEuropeKonkaof31%.
Educationsurtax Paidat3%ofthecirculatingtaxactuallypaid.
Localeducationsurtax Paidat2%ofthecirculatingtaxactuallypaid.
Note: (1) On March 23, 2016, the Ministry of Finance and the State Administration of Taxation issued the Notice on Overall Promotion of Pilot Change from Business Tax to VAT (CS[2016)] NO.36). Since May 1, 2016, the pilot change from business tax to VAT has been overall promoted in nationwide. The industries of construction, real estate, financing, life service, and so on were all included into the pilot range and related business taxpayers will pay VAT instead of business tax. The Company has followed the aforesaid policy for its businesses belonging to the industries of real estate, information service, immovable property leasing, and so on.
(2) 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 July 1, 2012. According to the regulations, theGroup’s charging standards were RMB13 per set of TV,
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 RMB12 per set ofrefrigeratorand RMB7 per set ofwashing machine.
(3) 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 January 1, 2008 and will befinal settled uniformly bytheCompany at the year-end.
2.Taxpreference andapproved document
(1) OnAugust 5, 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 Provincial 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.
(2) On September 30, 2014, the subsidiary of the Company Shenzhen Konka Telecommunication Technology Co., Ltd. acquired the certificate of high-technology enterprises jointly issued by Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau, with the certification number of GR201444201101 and the validity of three years. According to the relevant taxation regulations, the Telecommunication Technology could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate income tax according to15% of the preferential tax rate.
(3) On September 30, 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.
(4) On October 10, 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(2014~2016), and pay forthe corporate incometax according to15% ofthepreferential tax rate.
(5) On October 21, 2016, the subsidiary of the Company, Anhui Konka acquired the certificate of high-technology enterprises joint issued by Anhui Province Science and Technology Department, Department of Finance ofAnhui Province,Anhui Provincial Office, SAT, and Anhui Local Taxation Bureau with the certification number of GR201634000520 and the validity of three years. According to the relevant taxation regulations, the Anhui Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2016 to 2018, and pay for the corporate income tax according to15%ofthe preferential tax rate.
(6) On November 21, 2016, the subsidiary of the Company, Konka E-display acquired the certificate of high-technology enterprises joint issued by Shenzhen Science and Technology Innovation Committee, Finance Commission of Shenzhen Municipality, Shenzhen Municipal Office, SAT, and Shenzhen Local Taxation Bureau with the certification number of GR201644201332 and the validity of three years. According to the relevant taxation regulations, the Konka E-display could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years from 2016 to 2018, and pay for the corporate incometax according to15%of thepreferential tax rate.
(7) According toCS[2011]No.58 Notice to Implement the Tax Policy Problem Related with Western Development Strategy, Chongqing Qingjia Electronics Co., Ltd., a subsidiary of our company shall pay the enterprise income tax according to the preferential rate of15% from January 1, 2011to December 31,2020.
(8) 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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 period-begin refers to January 1, 2017, the period-end refers to June 30, 2017 and this period refers to January– June 2017 withthelast period ofJanuary–June2016.
1.Monetary funds
||
|-|
|Closingbalance|
|2,243.88|
|2,326,783,835.34|
|163,293,524.85|
|2,490,079,604.07|
|443,043,503.51|

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|
|855,984.37|
|168,120,900.00|
|5,052,542.28|
|174,029,426.65|

3.Notes receivable
(1)Notes receivable listed byItem
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|2,381,704,149.01|
|47,734,829.76|
|2,429,438,978.77|

 (2)Notes receivable pledged at theperiod-end
Item Amount
Bankacceptancebill 1,367,853,053.41 Total 1,367,853,053.41 Notes: Up to June 30, 2017, the Company pledged thebanker’s acceptance bill of the book value of RMB 1,367,853,053.41 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|
|596,282,708.80|
|596,282,708.80|

4.Accounts receivable
(1)Accounts receivabledisclosed by category
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|24,105,446.05|1.05|24,105,446.05|100.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|2,172,166,790.55|94.18|234,656,920.97|10.80|
|2,172,166,790.55|94.18|234,656,920.97|10.80|
|109,892,524.23|4.77|80,483,853.79|73.24|
|2,306,164,760.83|100.00|339,246,220.81|14.71|

 (Continued)
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion(%)|
|24,684,155.33|0.93|24,684,155.33|100.00|
|2,516,341,840.82|94.77|242,313,342.19|9.63|
|2,516,341,840.82|94.77|242,313,342.19|9.63|
|114,253,229.55|4.30|80,316,179.69|70.30|
|2,655,279,225.70|100.00|347,313,677.21|13.08|

① Accounts receivable with significant individual amount and make independent provision
forbad debt at theyear-end
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
Accountsreceivable(classifiedby
||||
|-|-|-|
|Accountsreceivable|Baddebtprovision|Withdrawalproportion(%)|
|24,105,446.05|24,105,446.05|100.00|

② In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision
Closingbalance
|||
|-|-|
|Accountsreceivable|Baddebtprovision|
|1,934,601,471.67|38,692,029.42|
|33,435,887.73|1,671,794.39|
|8,034,493.35|1,606,898.67|
|5,547,644.29|2,773,822.15|
|1,269,834.34|634,917.17|
|189,277,459.17|189,277,459.17|
|2,172,166,790.55|234,656,920.97|

③ Top 5 of the accounts receivable with insignificant single amount but individually withdrawn thebad debt provision
Closingbalance
||||
|-|-|-|
|Accountsreceivable|Baddebtprovision|Withdrawalproportion(%)|
|18,509,467.26|18,509,467.26|100.00|
|18,320,000.00|5,496,000.00|30.00|
|12,692,138.85|12,692,138.85|100.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
||||
|-|-|-|
|Accountsreceivable|Baddebtprovision|Withdrawalproportion(%)|
|8,223,935.99|4,111,968.00|50.00|
|5,794,676.58|5,794,676.58|100.00|
|63,540,218.68|46,604,250.69|73.35|

(2)Baddebt provision withdrawal, reversed orrecovered in theReporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 6,382,342.47; the amount of the reversed or collected part during the Reporting Period was ofRMB13,333,986.11,nowrite-offamounts.
(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 RMB 949,856,183.56,41.62% of total closing balance of account receivable, the relevantclosing balance ofbad debt provision withdrawn was RMB 18,997,123.67.
5.Prepayment
(1)List byaging analysis:
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance||Baddebtprovision|Bookbalance||
|Amount|Proportion(%)||Amount|Proportion(%)|
|730,562,127.56|98.25|1,119,839.73|269,405,925.30|96.52|
|5,925,151.86|0.80|232.67|3,335,844.57|1.20|
|9,405.00|0.00|470.25|2,265,192.49|0.81|
|7,097,388.89|0.95|2,871,944.28|4,099,193.21|1.47|
|743,594,073.31|100.00|3,992,486.93|279,106,155.57|100.00|

 Notes: (1) prepayments of significant amount and aged more than 1 year, of which the
amount of RMB 8,146,945.00 was the relevant materials which had quality problems and
had not handle the accounts settlement as well as the material warehousing formalities, and
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 thematerials purchase account prepaid should be presented as theprepayments.
(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 RMB245,502,929.55,33.02%oftotal closing balance of account receivable.
(3) The accrual bad debt reserve is RMB 35,186.42 this year; the withdrawing or reversing bad debt reserve isRMB 322,952.31.
6.Interests receivable
||
|-|
|Closingbalance|
|1,158,069.08|
|27,791.67|
|1,185,860.75|

 7.Dividends receivable
||
|-|
|Closingbalance|
|10,171,609.48|
|10,171,609.48|

 8.Otheraccounts receivable
(1)Other account receivable classified byItem
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion|
|183,915,489.33|38.53|174,186,734.34|94.71|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion|
|288,041,256.20|60.34|24,293,649.44|8.43|
|288,041,256.20|60.34|24,293,649.44|8.43|
|5,400,601.91|1.13|1,441,694.10|26.70|
|477,357,347.44|100.00|199,922,077.88|41.88|

 (Continued)
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion|
|183,915,489.33|43.21|174,186,734.34|94.71|
|234,570,113.10|55.12|26,878,827.62|11.46|
|234,570,113.10|55.12|26,878,827.62|11.46|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Withdrawalproportion|
|7,101,401.90|1.67|2,131,520.57|30.02|
|425,587,004.33|100.00|203,197,082.53|47.75|

 Other account receivable with insignificant single amount for which bad debt provision separately accrued
Closingbalance
Otheraccountsreceivable
||||
|-|-|-|
|Otheraccountsreceivable|Baddebtprovision|Withdrawalproportion|
|152,402,680.00|152,402,680.00|100.00%|
|18,115,952.51|8,387,197.52|46.30%|
|13,396,856.82|13,396,856.82|100.00%|
|183,915,489.33|174,186,734.34|94.71%|

② In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
Closingbalance
Aging
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|232,049,383.58|4,640,987.66|
|25,458,687.47|1,272,934.37|
|12,969,329.40|2,593,865.88|
|3,054,459.23|1,527,229.62|
|501,529.22|250,764.61|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
Aging
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|14,007,867.30|14,007,867.30|
|288,041,256.20|24,293,649.44|

(2)Baddebt provision withdrawal, reversed orrecovered in theReporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 1,160,417.80; the amount of the reversed or collected part during the Reporting Period was ofRMB 4,159,432.06,nowrite-offamounts.
(3)Top 5 of the closing balance of theother accounts receivable collected according to the arrears party
|||||
|-|-|-|-|
|Nature|Closingbalance|Aging|Proportionofthetotalamountoftheclosingbalanceofotheraccountsreceivable(%)|
|Energy-savingsubsidies|152,402,680.00|2-3years,4-5years|31.93|
|Landfund|73,500,000.00|Within1year|15.40|
|Exportrefund|20,511,658.91|Within1year|4.30|
|Transferfund|18,115,952.51|3-4years|3.80|
|Currentaccount|13,396,856.82|2-3years,3-4years,4-5years,over5years|2.81|
|—|277,927,148.24||48.15|

 9.Inventory
(1)Category
Closingbalance
||||
|-|-|-|
|Bookbalance|Ofwhich:thecapitalizedamountoftheborrowings|Impairmentofinventories|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
||||
|-|-|-|
|Bookbalance|Ofwhich:thecapitalizedamountoftheborrowings|Impairmentofinventories|
|1,516,368,571.23|||
|6,036,068.26|128,525.78||
|1,522,404,639.49|128,525.78|0.00|
|1,874,563,922.70||33,289,359.79|
|64,192,721.23||8,364,754.34|
|3,199,778,821.51||244,943,725.65|
|141,198.43|||
|5,138,676,663.87|0.00|286,597,839.78|
|6,661,081,303.36|128,525.78|286,597,839.78|

 (Continued)
Openingbalance
||||
|-|-|-|
|Bookbalance|Ofwhich:thecapitalizedamountoftheborrowings|Impairmentofinventories|
|1,394,176,034.85|—|—|
|7,596,482.12|141,378.83|—|
|1,401,772,516.97|141,378.83|—|
|781,934,686.08|—|31,054,247.46|
|83,957,767.23|—|8,872,936.27|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Openingbalance
||||
|-|-|-|
|Bookbalance|Ofwhich:thecapitalizedamountoftheborrowings|Impairmentofinventories|
|2,306,460,682.29|—|247,224,025.03|
|439,500.54|—|—|
|3,172,792,636.14|—|287,151,208.76|
|4,574,565,153.11|141,378.83|287,151,208.76|

 (2)List ofthedevelopment cost
||||
|-|-|-|
|Startingtime|Expectedcompletiontimeofthenextbatch|Openingbalance|
|December2015|Year2018|449,653,196.40|
|October2015|Year2020|944,522,838.45|
|December2017|Year2019||
|||1,394,176,034.85|

 (3)List ofthedeveloped products
|||||
|-|-|-|-|
|Completiontime|Openingamount|Increased|Decreased|
|Year2014|3,953,247.18|||
|Year2015|3,643,234.94||1,560,413.86|
||7,596,482.12||1,560,413.86|

 (4)Impairment ofinventories
|||||||
|-|-|-|-|-|-|
|Openingbalance|Increasedamount||Decreasedamount|||
||Withdrawal|Other|Reverse|Write-off|Otherdecrease|
|31,054,247.46|2,933,598.43||224,952.37|622,541.84||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||||
|-|-|-|-|-|-|
|Openingbalance|Increasedamount||Decreasedamount|||
||Withdrawal|Other|Reverse|Write-off|Otherdecrease|
|8,872,936.27|131,142.03||0.00|268,529.82||
|247,224,025.03|12,628,069.47||3,070,068.22|12,060,086.66||
|287,151,208.76|15,692,809.93|0.00|3,295,020.59|12,951,158.32|0.00|

 Notes: otherdecrease was dueto theloss ofcontrol right to subsidiaries.
(5) Withdrawal provision basis of the falling price of the inventory and the reasons of the reserveorwrite-off
||
|-|
|Specificbasisofwithdrawaloffallingpricereservesofinventory|
|Differencethattherealizablenetvaluewaslowerthanthebookvalue|
|Differencethattherealizablenetvaluewaslowerthanthebookvalue|
|Differencethattherealizablenetvaluewaslowerthanthebookvalue|

(6) Closing balance of the inventory which includes capitalized borrowing expenses was RMB128,525.78
10.Othercurrent assets
||
|-|
|Closingbalance|
|1,570,016,568.58|
|441,245,611.35|
|2,011,262,179.93|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 11.Available-for-salefinancialassets
(1)List ofavailable-for-sale financial assets
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Depreciationreserves|Bookvalue|Bookbalance|Depreciationreserves|
|295,353,244.82|4,997,785.64|290,355,459.18|319,965,425.00|4,997,785.64|
|40,665,244.82||40,665,244.82|55,777,425.00|—|
|254,688,000.00|4,997,785.64|249,690,214.36|264,188,000.00|4,997,785.64|
|295,353,244.82|4,997,785.64|290,355,459.18|319,965,425.00|4,997,785.64|

 (2)Available-for-salefinancial assets measured byfair valueat the period-end
Item Available-for-saleequityinstruments
Costoftheequityinstruments 47,251,922.40 Fairvalue 40,665,244.82 Changedamountofthefairvalueaccumulativelyincludedinothercomprehensiveincome -6,586,677.58 Withdrawnimpairmentamount — (3)Available-for-salefinancial assets measured bycost at theperiod-end
Bookbalance
Investee
||||
|-|-|-|
|Period-begin|Increase|Decrease|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Bookbalance
Investee
||||
|-|-|-|
|Period-begin|Increase|Decrease|
|20,000,000.00|||
|4,800,000.00|||
|9,500,000.00||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|||
|4,700,000.00|||
|—|||
|264,188,000.00|0.00|9,500,000.00|

 (Continued)
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Depreciationreserves||||Shareholdingproportionamongtheinvestees(%)|
|Period-begin|Increase|Decrease|Period-end||
|—|—|—|—|6.00|
|—|—|—|—|6.10|
|—|—|—|—|13.57|
|—|—|—|—|12.67|
|1,300,000.00|—|—|1,300,000.00|9.60|
|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|2.40|
|—|—|—||4.26|
|—|—|—||—|
|—|—|—||9.56|
|—|—|—||—|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Depreciationreserves||||Shareholdingproportionamongtheinvestees(%)|
|Period-begin|Increase|Decrease|Period-end||
|—|—|—||3.62|
|—|—|—||—|
|4,997,785.64|—|—|4,997,785.64|—|

 Note:① OnMarch 27,2015,Chongqing Jiangbei DistrictPeople’s Court accepted theapplication ofbankruptcy liquidationfrom Chongqing KonkaAutomotiveElectronic Co.,Ltd., a subsidiary of ourcompany and appointed to establish theliquidationgroup, thecompany would not have theleading right ontherelated activity ofChongqing KonkaAutomotiveElectronicCo.,Ltd.After entering into thebankruptcy procedure, itwould not beincluded in theconsolidation scope, and it would beclassified again with thenet valueof zero to theavailable-for-salefinancial asset.
(4)Changes oftheimpairment oftheavailable-for-sale financial assets of theReporting Period
Categoryofavailable-for-salefinancialassets Available-for-saleequityinstruments
Withdrawnimpairmentbalanceattheperiod-begin 4,997,785.64 WithdrawaloftheReportingPeriod — Ofwhich:transferredfromothercomprehensiveincome — DecreaseoftheReportingPeriod — Ofwhich:recoveredorreversedfromthefairvalueafterthePeriod —
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Categoryofavailable-for-salefinancialassets Available-for-saleequityinstruments
Withdrawnimpairmentbalanceattheperiod-end 4,997,785.64 12.Long-term equityinvestment
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Openingbalanceofimpairmentreserves||||||
|||Additionalinvestment|Costmethodconvertedintoequitymethod|Negativeinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|88,298,590.32|30,257,135.84||||||
|3,649,728.08|3,649,728.08|||3,649,728.08|||
|85,791,460.71|||||-3,733,992.50|-449,802.04|
|7,438,647.50|||||1,923,787.63||
|85,405,031.28|||||-2,387.64||
|27,166,487.52|||||||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Openingbalanceofimpairmentreserves||||||
|||Additionalinvestment|Costmethodconvertedintoequitymethod|Negativeinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|19,164,691.78|||||-3,060,432.97||
|6,213,908.63|||||-495,301.18||
|20,426,438.47|||||794,032.47||
|||4,000,000.00|||||
|||150,000,000.00|||||
|||171,799,598.00|||||
|343,554,984.29|33,906,863.92|325,799,598.00|0.00|3,649,728.08|-4,574,294.19|-449,802.04|

 (Continued)
|||
|-|-|
|Increase/decreaseinReportingPeriod|Closingbalance|

 impairmentprovision
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Equityconvertedintotradablefinancialassets||
||||88,298,590.32|
||||0.00|
||||80,441,063.71|
||||9,362,435.13|
||||85,402,643.64|
||||27,166,487.52|
||||16,104,258.81|
||||5,718,607.45|
||||21,220,470.94|
||||4,000,000.00|
||||150,000,000.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Increase/decreaseinReportingPeriod|||Closingbalance|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Equityconvertedintotradablefinancialassets||
||||171,799,598.00|
||||659,514,155.52|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 13.Investmentproperty
Investment property adopted thecost measurement mode
||
|-|
|Housesandbuildings|
|249,923,047.75|
|—|
|—|
|249,923,047.75|
|—|
|27,836,143.49|
|2,815,637.15|
|2,815,637.15|
|—|
|30,651,780.64|
|—|
|—|
|—|
|—|
|—|
|—|
|219,271,267.11|
|222,086,904.26|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 14.Fixed assets
(1)List offixed assets
||||||
|-|-|-|-|-|
|Housesandbuildings|Machineryequipment|Electronicequipment|Transportationequipment|Other|
|1,585,782,685.49|758,663,226.60|212,512,639.28|53,668,633.02|169,982,040.39|
|426,220.22|17,504,505.72|8,032,993.43|1,690,710.33|2,702,592.78|
|426,220.22|2,777,220.18|8,032,993.43|1,690,710.33|2,702,592.78|
||14,727,285.54||||
|721,422.82|4,934,460.03|19,964,185.75|2,094,235.69|3,234,950.46|
|721,422.82|4,934,460.03|19,964,185.75|2,094,235.69|3,234,950.46|
|1,585,487,482.89|771,233,272.29|200,581,446.96|53,265,107.66|169,449,682.71|
|392,850,477.50|462,360,402.61|163,374,809.37|39,315,097.11|123,516,834.06|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Housesandbuildings|Machineryequipment|Electronicequipment|Transportationequipment|Other|
|18,613,936.20|24,358,346.66|5,717,058.03|1,714,940.31|6,969,489.05|
|18,613,936.20|24,358,346.66|5,717,058.03|1,714,940.31|6,969,489.05|
|182,014.07|3,720,311.79|17,907,864.12|1,559,641.60|2,854,875.57|
|182,014.07|3,720,311.79|17,907,864.12|1,559,641.60|2,854,875.57|
|411,282,399.63|482,998,437.48|151,184,003.28|39,470,395.82|127,631,447.54|
|2,006,749.30|16,777,278.59|3,760,562.66|950,517.86|1,717,581.69|
|0.00|2,579.50|48,191.00|0.00|60,906.71|
|0.00|2,579.50|48,191.00|0.00|60,906.71|
|0.00|135,594.31|1,777,624.43|0.00|199,892.10|
|0.00|135,594.31|1,777,624.43|0.00|199,892.10|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Housesandbuildings|Machineryequipment|Electronicequipment|Transportationequipment|Other|
|2,006,749.30|16,644,263.78|2,031,129.23|950,517.86|1,578,596.30|
|1,172,198,333.96|271,590,571.03|47,366,314.45|12,844,193.98|40,239,638.87|
|1,190,925,458.69|279,525,545.40|45,377,267.25|13,403,018.05|44,747,624.64|

 Notes: otherdecrease was dueto theloss ofcontrol right to subsidiaries.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (2)List ofTemporarily IdleFixedAssets
|||||
|-|-|-|-|
|Originalbookvalue|Accumulativedepreciation|Impairmentprovision|Bookvalue|
|39,474,322.57|20,230,130.99|542,558.97|18,701,632.61|
|25,533,099.58|11,996,854.48|8,321,804.55|5,214,440.55|
|1,732,582.00|1,595,054.30|100,422.20|37,105.50|
|21,893,797.12|20,551,591.46|1,021,928.09|320,277.57|
|1,752,076.39|1,345,351.28|263,805.28|142,919.83|
|90,385,877.66|55,718,982.51|10,250,519.09|24,416,376.06|

(3)FixedAssets Leased in from Financing Lease
||||
|-|-|-|
|Originalbookvalue|Accumulativedepreciation|Impairmentprovision|
|5,988,219.52|1,953,324.23||
|205,128.20|95,726.49||
|6,193,347.72|2,049,050.72||

 (4)FixedAssets Leased out from Operation Lease
Item Closingbookvalue
Housesandbuildings 23,232,191.19 Total 23,232,191.19 (5)Details of FixedAssets Failed toAccomplishCertification ofProperty
||
|-|
|Bookvalue|
|45,739,032.33|
|19,359,810.34|
|12,187,010.26|
|12,197,713.76|
|5,248,901.73|
|3,540,181.14|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 15.Construction inProgress
(1)List ofConstruction inProgress
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Impairmentprovision|Bookvalue|Bookbalance|Impairmentprovision|
|361,913,329.77||361,913,329.77|286,093,111.12|—|
|1,643,881.07||1,643,881.07|1,643,881.07|—|
|21,743,404.48||21,743,404.48|—|—|
|19,149,556.76||19,149,556.76|27,799,444.86|—|
|404,450,172.08|0.00|404,450,172.08|315,536,437.05|—|

 (2)Changes ofSignificant Construction inProgress
||||||
|-|-|-|-|-|
|Estimatednumber|Openingbalance|IncreaseAmount|Amountthattransferredtofixedassetsoftheperiod|Otherdecreasedamountoftheperiod|
|444,600,000.00|286,093,111.12|75,820,218.65|||
|26,320,000.00|1,643,881.07||||
|35,000,000.00|8,061,797.71|13,681,606.77|||
||19,737,647.15|14,139,195.15|14,727,285.54||
|505,920,000.00|315,536,437.05|103,641,020.57|14,727,285.54|0.00|

 Notes: Other decreasewas mainly generated from theloss ofcontrol over subsidiaries.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017（Continued）
||||||
|-|-|-|-|-|
|Proportionestimatedoftheprojectaccumulativeinput|Projectprogress|Accumulativeamountofcapitalizedinterests|Ofwhich:theamountofthecapitalizedinterestsoftheperiod|Capitalizationrateoftheinterestsoftheperiod|
|6.25|6.25|—|—|—|
|90|99|832,313.28|—|—|

 16. IntangibleAssets
(1) List of IntangibleAssets
|||||
|-|-|-|-|
|Landuseright|Patentright|Trademarkregistrationexpense|Others|
|316,997,134.11|40,234,111.64|3,519,159.61|56,205,873.76|
||||1,519,158.67|
||||1,519,158.67|
|45,617,181.03||||
|45,617,181.03||||
|271,379,953.08|40,234,111.64|3,519,159.61|57,725,032.43|
|53,371,371.76|33,745,464.74|3,412,215.10|21,480,517.47|
|2,577,266.19|346,235.48||2,591,356.68|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Landuseright|Patentright|Trademarkregistrationexpense|Others|
|2,577,266.19|346,235.48||2,591,356.68|
|55,948,637.95|34,091,700.22|3,412,215.10|24,071,874.15|
||2,901,082.61|||
||2,901,082.61|||
|215,431,315.13|3,241,328.81|106,944.51|33,653,158.28|
|263,625,762.35|3,587,564.29|106,944.51|34,725,356.29|

 Notes: Other decreasewas mainly generated from thelossof control over subsidiaries.
(2)Details of FixedAssets Failed toAccomplishCertification ofLand UseRight
||
|-|
|Bookvalue|
|3,153,608.13|

17. Goodwill
(1)Original BookValueofGoodwill
||||
|-|-|-|
|Openingbalance|Increase|Decrease|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
||Formedfromthebusinesscombination|Others|Dispose|Others|
|3,597,657.15|—|—|—|—|
|3,597,657.15|—|—|—|—|

 For more information on the method of impairment test and impairment provision, please referto NoteIV.19.
As ofJune30,2017, there was nobookvalueof goodwill higher than recoverable amount. 18.Long-term UnamortizedExpenses
|||||
|-|-|-|-|
|Openingbalance|Increasedamount|Amortizationamount|Decreaseofothers|
|16,313,225.16|5,011,364.82|3,734,066.14|0.00|
|51,212,313.70|25,845,674.19|22,994,414.21|0.00|
|24,375,994.53|4,103,436.15|5,381,830.54|0.00|
|91,901,533.39|34,960,475.16|32,110,310.89|0.00|

 Notes: Other decreasewas mainly generated from thelossof control over subsidiaries.
19. DeferredIncomeTaxAssets/DeferredIncomeTax Liabilities
(1)List ofDeferred IncomeTaxAssets
||||
|-|-|-|
|Closingbalance|||
|Deductibletemporarydifference|Deferredincometaxassets|Deductibletemporarydifference|
|740,047,560.61|183,885,720.72|746,292,412.93|
|101,199,694.08|25,299,923.52|100,026,922.96|
|102,944,305.25|25,080,837.16|113,547,244.37|
|91,842,840.87|22,029,567.24|90,555,138.14|
|1,737,704,820.92|434,109,795.78|1,622,776,529.02|
|170,769,999.52|42,692,499.88|144,068,370.06|
|2,944,509,221.25|733,098,344.30|2,817,266,617.48|

Notes: Others were refundable subsidy for energy-saving without actual refund, accrued
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 liabilities, advancehouse payment, advanceearnest money and payroll payable.
(2)List ofDeferred Income Liabilities
||||
|-|-|-|
|Closingbalance|||
|Deductibletemporarydifference|Deferredincometaxliabilities|Deductibletemporarydifference|
|7,075,362.87|1,061,304.43|6,867,714.25|
|0.00|0.00|39,557,580.99|
|0.00|0.00|8,547,425.00|
|71,782,644.68|17,945,661.17|14,848,590.56|
|10,435,499.44|2,608,874.86|9,577,050.20|
|89,293,506.99|21,615,840.46|79,398,361.00|

 (3)List ofUnrecognized Deferred IncomeTaxAssets
||
|-|
|Closingbalance|
|212,724,693.73|
|1,219,362,942.89|
|1,432,087,636.62|

 20.OtherNon-currentAssets
||
|-|
|Closingbalance|
|20,000,000.00|
|20,000,000.00|

 21.Assets ImpairmentProvision
|||||
|-|-|-|-|
|Openingbalance|Withdrawnimpairmentbalanceattheperiod-begin|Decreased||
|||Reverse|Write-off|
|554,806,256.59|7,577,946.69|17,816,370.48|1,407,047.18|
|287,151,208.76|15,692,809.93|3,295,020.59|12,951,158.32|
|4,997,785.64|0.00||0.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Openingbalance|Withdrawn|Decreased||
||impairment|||
|25,212,690.10|balanceatthe111,677.21||2,113,110.84|
|2,901,082.61|period-begin0.00||0.00|
|33,906,863.92|0.00||3,649,728.08|
|908,975,887.62|23,382,433.83|21,111,391.07|20,121,044.42|

 22.Short-termLoans
Category ofShort-term Loans
||||
|-|-|-|
|Item|Closingbalance|Openingbalance|
||591,952,161.09||
||10,153,012,949.04||
||10,744,965,110.13||

 Note: The closing balance of guaranteed loan of related party in guaranteed loan was RMB591,952,161.09. For moredetails, please refer to NoteXI. 5(4).
23. Financial Liabilities Measured by Fair Value and the Changes Included in the CurrentGains andLosses
||
|-|
|Closingbalance|
|20,181,325.74|
|20,181,325.74|

 24.Notes Payable
||
|-|
|Closingbalance|
|56,604,230.04|
|843,307,056.18|
|899,911,286.22|

 Notes: The amount of notes payable due during the next accounting period was
RMB899,911,286.22.
25.Accounts Payable
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (1)List ofAccounts Payable
||
|-|
|Closingbalance|
|2,204,229,902.21|
|24,227,354.00|
|20,777,516.86|
|47,980,367.70|
|2,297,215,140.77|

 (2)Notes of theAccounts PayableAging over OneYear
||
|-|
|Closingbalance|
|28,486,306.70|
|9,543,100.00|
|38,029,406.70|

26.Advancefrom Customers
(1)List ofAdvance from Customers
||
|-|
|Closingbalance|
|1,645,102,587.82|
|23,635,582.74|
|365,269.67|
|9,286,570.27|
|1,678,390,010.50|

 (2) The Significant Advance from CustomersAging over 1 year was Mainly Generated from theAdvance from Customers from Companies without Continuous Cooperation.
(3)Advance Receipts of Houses
||
|-|
|Closingbalance|
|1,635,098.00|
|1,608,868.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|928,845,428.00|
|932,089,394.00|

 27.PayrollPayable
(1)List ofPayroll Payable
|||||
|-|-|-|-|
|Openingbalance|Increase|Decrease|Otherdecreaseoftheyear|
|269,328,946.11|651,894,639.51|750,826,484.09|0|
|2,067,376.48|55,267,430.99|54,878,592.67||
|1,663,194.06|623,418.40|2,188,991.18||
|273,059,516.65|707,785,488.90|807,894,067.94|0|

 Notes: The other decrease of the year was generated from the loss of control over subsidiaries.
(2)List ofShort-term Salary
|||||
|-|-|-|-|
|Openingbalance|Increase|Decrease|Otherdecreaseoftheyear|
|259,948,249.68|567,441,027.96|672,099,201.27||
|1,210,626.63|32,381,092.08|27,957,944.98||
|1,799,379.97|28,512,836.10|27,603,281.93||
|894,422.89|24,454,580.19|24,002,166.26||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Openingbalance|Increase|Decrease|Otherdecreaseoftheyear|
|180,237.94|2,228,378.09|2,237,061.20||
|724,719.14|1,829,877.82|1,364,054.47||
|1,313,004.12|10,816,260.71|11,665,431.72||
|4,314,422.20|5,524,803.61|3,829,764.64||
|—||||
|—||||
|743,263.51|7,218,619.05|7,670,859.55||
|269,328,946.11|651,894,639.51|750,826,484.09|0|

 Notes: The other decrease of the year was generated from the loss of control over subsidiaries.
(3)List ofDrawing Scheme
|||||
|-|-|-|-|
|Openingbalance|Increase|Decrease|Otherdecreaseoftheyear|
|1,929,475.33|53,419,061.57|53,021,070.86||
|137,901.15|1,848,369.42|1,857,521.81||
|—||||
|2,067,376.48|55,267,430.99|54,878,592.67||

 Notes: The other decrease of the year was generated from the loss of control over subsidiaries.
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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 expenseoccurred was recorded intocurrent profits and losses orrelated assets costs.
28.Taxes Payable
||
|-|
|Closingbalance|
|6,235,397.21|
|29,341,831.95|
|11,854,045.00|
|7,887,162.23|
|4,023,557.21|
|1,005,946.96|
|4,413,293.36|
|2,819,699.91|
|451,931.85|
|351,288.38|
|255,167.09|
|29,807.37|
|202,926.43|
|68,872,054.95|

 29.InterestPayable
||
|-|
|Closingbalance|
|30,119,490.82|
|30,119,490.82|

 30.OtherAccounts Payable
(1)OtherAccounts Payable Listed byNature oftheAccount
||
|-|
|Closingbalance|
|678,797,416.33|
|223,657,959.46|
|143,376,312.99|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|3,438,817.44|
|83,247,789.89|
|1,132,518,296.11|

 (2)Other SignificantAccounts PayablewithAging overOneYear
||
|-|
|Closingbalance|
|70,959,377.96|
|70,959,377.96|

31.Non-currentLiabilities Duewithin 1Year
||
|-|
|Closingbalance|
|—|
|301,282.02|
|301,282.02|

 32.Long-term Loan
||
|-|
|Closingbalance|
|—|
|—|
|70,000,000.00|
|—|
|70,000,000.00|

 33.Long-term Payable
||
|-|
|Closingbalance|
|30,000,000.00|
|446,153.86|
|301,282.02|
|30,144,871.84|

34.Long-term PayrollPayable
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (1)List ofLong-term PayrollPayable
||
|-|
|Closingbalance|
|15,614,846.48|
|—|
|—|
|15,614,846.48|

 (2) Changes of Defined Benefit Plans
①PresentWorth ofDefined Benefit Plans Obligation
||
|-|
|ReportingPeriod|
|18,151,659.90|
|2,536,813.42|
|2,536,813.42|
|15,614,846.48|

② Notes 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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|
|0%|
|Overlegalemeritusage|
|0%|

35.Estimated Liabilities
|||
|-|-|
|Openingbalance|Closingbalance|
|4,711,597.59|4,711,597.59|
|2,840,387.51|2,840,387.51|
|7,551,985.10|7,551,985.10|

36.DeferredRevenue
||||||
|-|-|-|-|-|
|Openingbalance|Increase|Decrease|Otherdecreaseoftheyear|Closingbalance|
|130,571,125.42|7,942,660.60|11,561,486.48|192.24|126,952,107.30|
|130,571,125.42|7,942,660.60|11,561,486.48|192.24|126,952,107.30|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
Ofwhich, itemsinvolved in government subsidies:
||||||
|-|-|-|-|-|
|Openingbalance|Amountofnewlysubsidy|Amountaccruedinnon-businessincome|Otherchanges|Closingbalance|
|10,530,000.00||1,755,000.00||8,775,000.00|
|12,800,000.00||213,333.33||12,586,666.67|
|8,170,000.00||136,166.67||8,033,833.33|
|7,776,925.55|2,000,000.00|1,024,207.11||8,752,718.44|
|5,620,000.00||0.00||5,620,000.00|
|5,256,893.21||0.00||5,256,893.21|
|5,000,000.00||0.00||5,000,000.00|
|2,499,999.90||1,000,000.02||1,499,999.88|
|4,000,000.00||0.00||4,000,000.00|
|2,750,000.05||499,999.98||2,250,000.07|
|3,000,000.00||300,000.00||2,700,000.00|
|6,620,000.00||0.00||6,620,000.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Openingbalance|Amountofnewlysubsidy|Amountaccruedinnon-businessincome|Otherchanges|Closingbalance|
|2,600,000.00||0.00||2,600,000.00|
|2,136,666.58||210,000.00||1,926,666.58|
|1,956,521.76||260,869.56||1,695,652.20|
|2,175,000.00||150,000.00||2,025,000.00|
|2,470,000.00||174,200.00||2,295,800.00|
|2,400,000.00||0.00||2,400,000.00|
|1,996,166.67||202,999.98||1,793,166.69|
|2,000,000.00||0.00||2,000,000.00|
|||||0.00|
|1,466,666.68||199,999.98||1,266,666.70|
|1,227,333.25||210,400.02||1,016,933.23|
|850,000.00||300,000.00||550,000.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Openingbalance|Amountofnewlysubsidy|Amountaccruedinnon-businessincome|Otherchanges|Closingbalance|
|4,000,000.00||0.00||4,000,000.00|
|27,637,230.66|5,942,200.00|3,803,915.79||29,775,514.87|
|126,939,404.31|7,942,200.00|10,441,092.44|0.00|124,440,511.87|
|3,631,721.11|460.60|1,120,394.04|192.24|2,511,595.43|
|3,631,721.11|460.60|1,120,394.04|192.24|2,511,595.43|
|130,571,125.42|7,942,660.60|11,561,486.48|192.24|126,952,107.30|

37.ShareCapital
|||||||
|-|-|-|-|-|-|
|Openingbalance|Increase/decreaseinReportingPeriod(+,-)|||||
||Issuingnewshares|Bonusshares|Capitalizationofpublicreserves|Others|Subtotal|
|2,407,945,408.00|—|—|—|—|—|

 38.Capital Surplus
||||
|-|-|-|
|Openingbalance|Increase|Decrease|
|7,393,378.55|||
|72,329,713.49||1,166,602.46|
|79,723,092.04|0.00|1,166,602.46|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
Notes: The decrease of other capital surplus was generated from the changes inowner’s equity excluding the net gain/loss of Shanghai Konka GreenTechnology Co., Ltd. with theamount of RMB1,166,602.46.
39.OtherComprehensiveIncome
|||||||
|-|-|-|-|-|-|
|Openingbalance|ReportingPeriod|||||
||Amountbeforeincometaxincurrentperiod|Less:recordedinothercomprehensiveincomeinpriorperiodandtransferredtoprofitorlossincurrent period|Less:Incometaxexpense|AttributabletoownersoftheCompanyaftertax|Attributabletominorityshareholdersaftertax|
|—||||||
|-6,932,104.65|-6,012,664.59|0.00|-3,786,104.00|-2,249,706.48|23,145.89|
|||||0.00||
|6,410,568.76|-15,134,102.58||-3,786,104.00|-11,347,998.58||
|-13,342,673.41|9,121,437.99|||9,098,292.10|23,145.89|
|-6,932,104.65|-6,012,664.59|0.00|-3,786,104.00|-2,249,706.48|23,145.89|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 40.SurplusReserves
||||
|-|-|-|
|Openingbalance|Increase|Decrease|
|593,846,200.71|—|—|
|254,062,265.57|—|—|
|847,908,466.28|—|—|

 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, theCompany could nomore withdraw.
41.Retained Profits
||
|-|
|ReportingPeriod|
|-427,163,254.63|
|—|
|-427,163,254.63|
|30,871,267.86|
|—|
|—|
|—|
|—|
|-396,291,986.77|

 42.RevenueandCost ofSales
(1)Revenue and CostofSales
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|11,116,190,367.22|9,941,054,112.21|7,724,414,205.37|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|289,775,612.21|169,137,145.86|884,666,616.87|
|11,405,965,979.43|10,110,191,258.07|8,609,080,822.24|

 (2)Main Operations (Classified byproduct)
||||
|-|-|-|
|ReportingPeriod|||
|Operationrevenue|Operationcost|Operationrevenue|
|5,289,992,150.21|4,431,743,317.09|5,367,972,378.49|
|891,933,843.48|726,049,054.97|829,752,654.59|
|420,602,444.99|365,383,403.95|471,731,609.94|
|4,307,330,068.12|4,247,646,007.45||
|206,331,860.42|170,232,328.75|1,054,957,562.35|
|11,116,190,367.22|9,941,054,112.21|7,724,414,205.37|

 (3)Main Operations (Classified byArea)
||||
|-|-|-|
|ReportingPeriod|||
|Operationrevenue|Operationcost|Operationrevenue|
|7,343,613,290.29|6,314,287,989.74|5,176,447,693.40|
|3,772,577,076.93|3,626,766,122.47|2,547,966,511.97|
|11,116,190,367.22|9,941,054,112.21|7,724,414,205.37|

 (4)Other Business
||||
|-|-|-|
|ReportingPeriod|||
|Operationrevenue|Operationcost|Operationrevenue|
|||598,960,641.11|
|289,775,612.21|169,137,145.86|534,917,991.67|
|289,775,612.21|169,137,145.86|1,133,878,632.78|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (5)The Revenue ofSales from theTopFive Customers
||
|-|
|Mainoperationrevenue|
|2,662,113,944.10|
|1,776,976,457.55|

43.BusinessTaxand Surcharges
||
|-|
|ReportingPeriod|
|9,045,781.48|
|102,929.05|
|47,500.00|
|4,011,787.05|
|2,617,655.26|
|4,633,250.57|
|6,808,790.65|
|5,698,979.66|
|13,620.00|
|457,748.63|
|991,549.69|
|34,429,592.04|

 Note: (1) After replacing business tax with value added tax is fully tried according to CK[2016] No. 22 Provision on VAT Accounting Treatment issued by the Ministry of Finance, the course title of “business tax and surcharge” is adjusted to be the course of “tax and surcharge”, the course checks the consumption tax, urban maintenance and construction tax, resource tax, educational expense and surcharge and property tax, land use tax, vehicle and vessel use tax, stamp tax and other related taxes occurred in theenterprise’s operating activity; the project of “business tax and surcharge” in the profit statement is adjusted as the project of “tax and surcharge”.
(2) For more details about the measurement standards of business tax and surcharges, please
referto NoteV.Tax.
44.SalesExpenses
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|ReportingPeriod|
|146,655,505.33|
|320,216,302.42|
|148,814,891.66|
|114,430,603.12|
|93,547,508.94|
|21,205,649.26|
|16,044,394.98|
|14,424,674.47|
|10,651,455.99|
|6,530,558.33|
|81,481,762.04|
|974,003,306.54|

 45.Administrative Expenses
||
|-|
|ReportingPeriod|
|96,753,027.87|
|68,075,439.56|
|16,955,414.43|
|9,395,168.52|
|8,204,092.21|
|6,907,424.07|
|0.00|
|4,518,651.08|
|6,552,271.96|
|3,456,348.07|
|43,290,263.20|
|264,108,100.97|

 46.Financial Expenses
||
|-|
|ReportingPeriod|
|165,919,248.32|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|ReportingPeriod|
|61,587,922.88|
|-94,091.34|
|6,645,661.36|
|110,882,895.46|

 47.Asset Impairment Loss
||
|-|
|ReportingPeriod|
|-10,238,423.79|
|12,397,789.34|
|111,677.21|
|2,271,042.76|

 48.Gains andLosses fromChanges inFairValue
||
|-|
|ReportingPeriod|
|-103,077,757.73|
|-103,077,757.73|
|-103,077,757.73|

 49.InvestmentIncome
||
|-|
|ReportingPeriod|
|-4,574,294.19|
|28,234.62|
|0.00|
|25,048,785.15|
|263,100.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|ReportingPeriod|
|30,338,020.11|
|15,901,726.37|
|67,005,572.06|

 50.OtherIncome
||
|-|
|ReportingPeriod|
|35,115,965.51|
|1,722,426.00|
|36,838,391.51|

 51.Non-operating Gains
|||
|-|-|
|ReportingPeriod|Sameperiodoflastyear|
|33,597,795.57|3,147,161.67|
|228,629.18|3,147,161.67|
|79,034,666.86|136,544,386.15|
||7,639,245.00|
|3,366,979.21|2,148,787.76|
|7,347,666.65|4,708,082.06|
|123,347,108.29|154,187,662.64|

 Ofwhich, government subsidies recorded intocurrent profits andlosses
|||
|-|-|
|ReportingPeriod|Sameperiodoflastyear|
|0.00|84,594,956.03|
|40,225,800.00|29,076,900.00|
|11,561,486.48|12,057,366.44|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||
|-|-|
|ReportingPeriod|Sameperiodoflastyear|
|21,005,000.00||
|1,948,800.00||
|4,293,580.38|10,815,163.68|
|79,034,666.86|136,544,386.15|

52.Non-operating Expenses
|||
|-|-|
|ReportingPeriod|Sameperiodoflastyear|
|1,065,392.90|617,565.57|
|1,065,392.90|617,565.57|
|1,531.07||
|52,501.63|1,344,333.27|
|13,600.00|28,000.00|
|2,502,512.51|1,541,119.52|
|3,635,538.11|3,531,018.36|

 53.IncomeTax Expense
(1)Lists ofIncomeTax Expense
||
|-|
|ReportingPeriod|
|21,286,293.02|
|-25,125,065.99|
|-3,838,772.97|

 (2)AdjustmentProcess ofAccounting Profit and IncomeTax Expense
Item ReportingPeriod
Totalprofits 30,557,559.61
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Current income tax expense accounted by tax and relevant
7,639,389.90 regulations
Influenceofdifferenttaxratesuitabletosubsidiary -3,376,311.10 Influenceofincometaxbeforeadjustment -726,692.04 Influenceofnontaxableincome -2,265,211.18 Influenceofnotdeductablecosts,expensesandlosses 561,232.11 Influence of deductable losses of deferred income tax assets
-4,832,078.47 derecognizedusedinpreviousperiod
Influence of deductible temporary difference or deductible losses of
-839,102.19 deferredincometaxassetsderecognizedinReportingPeriod.
Changes of the balance of deferred income tax assets/ liabilities in
previousperiodduetoadjustmentoftaxrate
Influenceofplusdeductingcosts
Incometaxexpense -3,838,772.97 54.OtherComprehensiveIncome
For moredetails, please refer toNoteVI. 39.
55.Information ofCash FlowStatement
(1)Other Cash Received Relevant to OperatingActivities
||
|-|
|ReportingPeriod|
|73,794,757.98|
|35,452,861.96|
|7,386,176.08|
|5,528,381.42|
|2,369,554.91|
|2,820,613.27|
|170,823.92|
|114,981,420.88|
|242,504,590.42|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (2)Other Cash PaidRelevant to OperatingActivities
||
|-|
|ReportingPeriod|
|619,722,220.51|
|16,655,746.00|
|55,078,829.30|
|10,359,585.52|
|9,929,886.88|
|0.00|
|43,928,173.17|
|755,674,441.38|

 (3)Other Cash Received Relevant to InvestmentActivities
||
|-|
|ReportingPeriod|
|857,900,000.00|
|1,449.68|
|857,901,449.68|

 (4)Other Cash PaidRelevant to InvestmentActivity
||
|-|
|ReportingPeriod|
|2,130,900,000.00|
|20,000,000.00|
|5,125,000.00|
|43,913.10|
|2,156,068,913.10|

 (5)Other Cash Received Relevant to FinancingActivities
||
|-|
|ReportingPeriod|
|444,475,802.89|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|ReportingPeriod|
|444,475,802.89|

 (6)Other Cash PaidRelevant to FinancingActivities
||
|-|
|ReportingPeriod|
|574,504.77|
|0.00|
|574,504.77|

 56.Supplemental Information forCash FlowStatement
(1)Supplemental Information forCash Flow Statement
||
|-|
|ReportingPeriod|
|34,396,332.58|
|2,271,042.76|
|57,373,770.25|
|5,514,858.35|
|32,110,310.89|
|-32,532,402.67|
|—|
|103,077,757.73|
|205,629,196.69|
|-67,005,572.06|
|-35,150,295.62|
|2,453,021.63|
|-2,097,599,214.55|
|274,747,714.15|
|-737,739,738.53|
|-11,561,486.48|
|-2,264,014,704.88|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|ReportingPeriod|
|—|
|—|
|—|
|2,326,786,079.22|
|2,020,902,945.13|
|—|
|—|
|305,883,134.09|

 (2)Cash and Cash Equivalents
||
|-|
|Closingbalance|
|2,326,786,079.22|
|2,243.88|
|2,326,783,835.34|
|—|
|—|
|2,326,786,079.22|

 Notes: The cash and cash equivalents excluded the restricted cash and cash equivalents of the Company anditssubsidiaries.
57.TheAssets withthe OwnershiporUseRightRestricted
||
|-|
|Closingbookvalue|
|163,293,524.85|
|1,367,853,053.41|
|5,807,674.32|
|1,536,954,252.58|

58.ForeignCurrency Monetary Items
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 (1)Foreign Currency Monetary Items
|||
|-|-|
|Closingforeigncurrencybalance|Exchangerate|
|105,182,149.96|6.7744|
|103,868.04|7.7496|
|4,225,752,514.66|0.000509|
|1.32|8.8144|
|9,268,333.66|0.86792|
|6.96|5.2144|
|117,296.00|1.8271|
|57,647,203.61|6.7744|
|1,131,442,304.69|0.000509|
|1,026,939.74|0.86792|
|361,691.10|6.7744|
|1,400.00|7.7496|
|305,018.72|0.86792|
|8,000,000.00|0.000509|
|21,400,000.00|0.060485|
|14,843,770.66|6.7744|
|742,696.83|0.86792|

 VII. Changesof Merge Scope
1. TheDisposal ofSubsidiary
There was nosubsidiary to dispose.
2.OtherReasons fortheChanges in CombinationScope
(1) Anhui Konka Electronic Co., Ltd., a subsidiary of our company registered to set up the
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 wholly-owned subsidiary of Anhui Kangzhi Commerce and Trade Co., Ltd., in Anhui on March 8, 2017 with the registered capital of RMB5.00 million. Until the date of asset balance sheet, Anhui Konka Electronic Co., Ltd. has not invested actually. The company has the control power,andit has been included in themergerscope sinceMarch 8,2017.
(2)Anhui Konka Tongchuang Household Appliances Co., Ltd., a subsidiary of our company absorbed and merged the wholly-owned subsidiary of Anhui Konka Household Appliances Co., Ltd. on May 17, 2017, Anhui Konka Household Appliances Co., Ltd. completed the industrialand commercial registration cancellation onMay 17,2017.
VIII. Equity inOtherEntities
1.Equity inSubsidiary
(1)The Structureof theEnterprise Group
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|75.00|25.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustryandtrade|100.00|—|
|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|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Mudanjiang,Heilongjiang|Mudanjiang,Heilongjiang|Manufacturingindustry|60.00|—|
|Chongqing|Chongqing|Manufacturingindustry|—|40.00|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|78.00|—|
|Chuzhou,Anhui|Chuzhou,Anhui|Manufacturingindustry|100.00|—|
|Kunshan,Jiangsu|Kunshan,Jiangsu|Manufacturingindustry|75.00|25.00|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|—|100.00|
|Dongguan,Guangdong|Dongguan,Guangdong|Manufacturingindustry|—|100.00|
|Boluo，Guangdong|Boluo，Guangdong|Manufacturingindustry|—|100.00|
|Boluo，Guangdong|Boluo，Guangdong|Manufacturingindustry|100.00|—|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|HongKong,China|HongKong,China|InternationalTrading|—|100.00|
|HongKong,China|HongKong,China|Investmentholding|—|100.00|
|Frankfurt,Germany,Europe|Frankfurt,Germany,Europe|InternationalTrading|100.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Factoring(Non-bankfinance)|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|—|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry|60.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Manufacturingindustry||60.00|
|Xiamen,Fujian|Xiamen,Fujian|Trade|—|69.23|
|Tianjin|Tianjin|Advertisement|—|70.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Realestate|70.00|—|
|HongKong,China|HongKong,China|Internationaltrading|—|61.00|
|Anhui|Anhui|E-commerce|80.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Informationservice|100.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Commerce|81.00|—|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Commerce|51.00|—|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|HongKong,China|HongKong,China|Internationaltrading|—|51.00|
|Shenzhen,Guangdong|Shenzhen,Guangdong|Commerce|60.00|—|
|Haikou,Hainan|Haikou,Hainan|Developmentofinternetplatform|100.00|—|
|Chuzhou,Anhui|Chuzhou,Anhui|Technologyindustry|100.00|—|
|Chuzhou,Anhui|Chuzhou,Anhui|Trade|—|78.00|

 Notes:①The 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.
②Anhui 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 Dec. 31, 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
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 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.As of Dec. 31, 2016, “Tongchuang Construction” had not transferred its equity and the Company had not repurchased it. So the Company can conduct actual control toAnhui Tongchuang Company, and combines it into the consolidated financial statement.
(2)Significant NotWholly Owned Subsidiary
||||
|-|-|-|
|Shareholdingproportionofminorityshareholder|Theprofitsandlossesarbitratetotheminorityshareholders|Dividendsdistributetominorityshareholder|
|22.00|1,924,758.03|—|
|30.00|-1,379,203.28|—|
|20.00|589,684.00|—|
|19.00|125,654.91|—|
|49.00|-1,862,724.74|—|

(3)The Main Financial Information ofSignificant NotWholly Owned Subsidiary
Closingbalance
||||||
|-|-|-|-|-|
|Currentassets|Non-currentassets|Totalassets|Currentliabilities|Non-currentliability|
|956,041,713.09|231,071,142.68|1,187,112,855.77|818,317,044.11|8,314,192.20|
|1,091,379,684.22|669,800.89|1,092,049,485.11|6,865,636.14|100,000,000.00|
|450,332,965.18|1,603,761.86|451,936,727.04|422,760,814.65|0.00|
|57,327,701.61|124,443.28|57,452,144.89|44,825,074.59|0.00|
|43,693,816.15|23,095.72|43,716,911.87|36,773,046.61|0.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
||||||
|-|-|-|-|-|
|Currentassets|Non-currentassets|Totalassets|Currentliabilities|Non-currentliability|

（Continued）
Openingbalance
||||||
|-|-|-|-|-|
|Currentassets|Non-currentassets|Totalassets|Currentliabilities|Non-currentliability|
|882,686,223.79|237,235,477.46|1,119,921,701.25|758,810,489.87|9,378,492.06|
|1,095,944,360.32|823,353.13|1,096,767,713.45|6,986,520.22|100,000,000.00|
|415,460,985.44|1,976,121.55|417,437,106.99|391,209,614.58|—|
|60,748,150.41|210,589.31|60,958,739.72|49,258,011.04|—|
|51,339,640.20|25,744.89|51,365,385.09|40,620,040.76|—|

ReportingPeriod
||||
|-|-|-|
|Operationrevenue|Netprofit|Totalcomprehensiveincome|
|2,399,150,981.00|8,748,900.14|8,748,900.14|
|0.00|-4,597,344.26|-4,597,344.26|
|470,025,219.90|2,948,419.98|2,948,419.98|
|68,795,665.26|661,341.62|661,341.62|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 ReportingPeriod
||||
|-|-|-|
|Operationrevenue|Netprofit|Totalcomprehensiveincome|
|112,984,978.64|-3,801,479.07|-3,801,479.07|

（Continued）
Sameperiodoflastyear
||||
|-|-|-|
|Operationrevenue|Netprofit|Totalcomprehensiveincome|
|1,782,076,379.17|41,054,374.04|41,054,374.04|
|0.00|-1,974,407.17|-1,974,407.17|
|249,006,644.45|5,918,017.84|5,918,017.84|
|49,859,194.22|1,159,219.36|1,159,219.36|
|145,032,685.28|2,756,416.09|2,756,416.09|

2.Equity inAssociated Enterprise
(1)SignificantAssociated Enterprises
||||||
|-|-|-|-|-|
|Mainoperatingplace|Registrationplace|Natureofbusiness|Holdingpercentage(%)||
||||Directly|Indirectly|
|Shanghai|Shanghai|Productionandsaleoflightemittingdiode|39.00|—|

(2)Main Financial Information ofSignificantAssociated Enterprise
||
|-|
|Closingbalance/ReportingPeriod|
|ShanghaiKonkaGreenScience&TechnologyCo.,Ltd.|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Currentassets
312,266,543.64 361,468,348.74
||
|-|
|348,472,666.95|
|660,739,210.59|
|202,158,890.03|
|60,315,740.08|
|262,474,630.11|
|192,005,442.76|
|206,259,137.72|
|80,441,063.71|
|—|
|—|
|—|
|80,441,063.71|
|—|
|260,884,229.06|
|9,284,617.15|
|—|
|—|
|9,284,617.15|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Dividends received from associated
— — enterprisesinReportingPeriod
IX.TheRiskRelated Financial Instruments
(I)Risk Management Objectives andPolicies
Risk management objective of the Company is to balance the risks and profits, minimize the negative effects to business performance and maximize the profits for stockholders and other equity investors. On the basis of risk management objectives, basic strategies of risk management are to determine and analyze all possible risks, establish appropriate risk baseline, control and manage risks and monitor all risks timely and reliably within defined scope.
1.MarketRisk
(1)Foreign Exchange Risk
Foreign exchange risk refers to the risks that may lead to losses due to fluctuation 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, IDR and HKD, except the procurement and sales by US dollars for several subsidiaries such as the Company, Kongkong Konka, Zhongkang Supply Chain, Konka Trading, Europe Konka and Indonesia Konka which settled by USD, HKD, IDR and EURO for purchase and sale. Until June 30, 2017 (refer to Notes VI 58, foreign monetary items), foreign exchange risks may affect the business performance produced by the assets and liabilities ofthebalance.
The Company timely pay attention to the influence of change of the exchange rate to the Company's foreign exchange risk, which require 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 RateRisk-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 uncertaintybyshortening single loan term andestablishing repayment terms.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 3.OtherPrice Risk
The investment classified as available-for-sale financial assets and trading financial assets, and the financial assets/liabilities measured at fair value and its changes be recorded into the current gains/losses held by the Company were accounted at fair value on the balance sheet date., For the equity investment of other listed companies holding by the Company, the management considers that the market price risks are acceptable. Refer to Notes VI, 11 Available-for-sale financial assets for equity investment of other listed companies holding by theCompany.
2CreditRisk
On June 30, 2017, 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.
Thecompany’s working capital was in bank with higher credit rating, so credit risk of working capital was low.
3.Liquidity Risk
When managing liquidity risk, the Company maintained the management, so credit rat supervising the sufficient cash and cash equivalents to meet the operating demand of the Company andreduce theinfluence ofthefluctuation of cash flow.
X.TheDisclosureof theFairValue
1.ClosingFairValueofAssets andLiabilities Calculated by FairValue
Item Closingfairvalue
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|Fairvaluemeasurementitemsatlevel1|Fairvaluemeasurementitemsatlevel2|Fairvaluemeasurementitemsatlevel3|
|168,120,900.00|—|—|
|855,984.37|—|—|
|5,052,542.28|||
|—|—|—|
|40,665,244.82|—|—|
|—|—|—|
|214,694,671.47|—|—|
|20,181,325.74|—|—|
|20,181,325.74|—|—|
|—|—|—|
|—|—|—|

2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value MeasurementItems at Level 1
As of the end of Reporting Period, the Company in line with the difference of DF forward foreign exchange purchase cost (DF base price on balance sheet date) on assets balance sheet and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed)
recognized as losses orprofits
By the end of Reporting Period, for the 13,155,000 shares of Refond stock held by the
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 company, their final fair value was calculated and determined to be RMB168,120,900.00, according to closing price of RMB12.78 for each share on June 30, 2017; for the 6,760,900 shares of Hunan VARY stock held by the company, their final fair value was calculated and determined to be RMB40,633,009.00, according to closing price of RMB6.01 for each share on June 30, 2017; for the 348 shares of Changlan Cable Accessories stock held by the company, their final fair value was calculated and determined to be RMB6,270.96, according to buying price of RMB18.02 for each share on June 7, 2017, and unlisted transaction had no fair value on June 30; for the 350 shares of Konfoong Materials stock held by the company, their final fair value was calculated and determined to be RMB6,681.5, according to closing price of RMB19.09 for each share on June 30, 2017; for the 313 shares of MeiG Smart stock held by the company, their final fair value was calculated and determined to be RMB7,155.18, according to closing price of RMB 22.86 for each share on June 30, 2017; for the 844 shares of Jinlongyu stock held by the company, their final fair value was calculated and determined to be RMB5,232.80, according to closing price of RMB6.2 for each share on June 19, 2017, and unlisted transaction had no fair value on June 30; for the 141 shares of Huning Elevator Parts stock held by the company, their final fair value was calculated and determined to be RMB2,456.22, according to closing price of RMB17.42 for each share on June 30, 2017; for the 211 shares of Daye Intelligent stock held by the company, their final fair value was calculated and determined to be RMB2,306.23, according to closing price of RMB10.93 for each share on June 28, 2017, and unlisted transaction had no fair value on June 30; for the 263 shares of Fuman Electronics stock held by the company, their final fair value was calculated and determined to be RMB2,132.93, according to closing price of RMB 8.11foreach shareonJune 29,2017,and unlisted transaction had nofair valueonJune 30. XI. Related Party and RelatedTransaction
1.Information ofParentCompany
|||||
|-|-|-|-|
|Registrationplace|Natureofbusiness|Registeredcapital|ProportionofshareheldbyparentcompanyagainsttheCompany(%)|
|Shenzhen|Tourism, real estate,electronicsindustry|RMB11.30billion|29.99|

Notes: the final control party of the Company is State-owned Assets Supervision and
AdministrationCommission
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 2.Information ofSubsidiary of theCompany
For moredetails, please refer toNoteVIII. 1.Equity in Subsidiary.
3.Information ontheAssociated Enterprises of theCompany
For more details, please refer to Note VIII. 2. Equity in Associated Enterprises. The information on other joint ventures or associated enterprises with balance in related transactions made with the Company in this year or before the reporting period was as follows:
Nameofjointventuresorassociatedenterprises Relationship
ShenzhenKonkaInformationNetworkCo.,Ltd. Associatedenterprise
ShenzhenDekangElectronicCo.,Ltd. Associatedenterprise
ZhuhaiJinsuPlasticsCo.,Ltd. Associatedenterprise
ShanghaiKonkaGreenTechnologyCo.,Ltd. Associatedenterprise
ShenzhenKonkaIntelligentApplianceTechnologyCo.,
Associatedenterprise
Ltd.
AnhuiKonkaGreenLightingTechnologyCo.,Ltd. Associatedenterprise
ShenzhenZhongbingKonkaTechnologyCo.,Ltd. Associatedenterprise
ShenzhenKonkaPrecisionMouldManufacturingCo.,
Associatedenterprise
Ltd.
KunshanBranchofShenzhenKonkaPrecisionMould
Subsidiaryofassociatedenterprise
ManufacturingCo.,Ltd.
ChuzhouBranchofShenzhenKonkaPrecisionMould
Subsidiaryofassociatedenterprise
ManufacturingCo.,Ltd.
DongguanKonkaMould&plasticsCo.,Ltd. Associatedenterprise
DongguanXutongdaMould&PlasticsCo.,Ltd. Associatedenterprise
KunshanJielunteMould&PlasticsCo.,Ltd. Associatedenterprise
ChuzhouJielunteMould&PlasticsCo.,Ltd. Associatedenterprise
DongguanJielunteMould&PlasticsCo.,Ltd. Associatedenterprise
AnhuiJiasenPrecisionTechnologyCo.,Ltd. Associatedenterprise
4.Information onOtherRelated Parties oftheCompany
Name Relationship
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 ShenzhenOCTEastCo.,Ltd. Underthesameactualcontroller
ShanghaiTianxiangOCTInvestmentCo.,Ltd. Underthesameactualcontroller
AnhuiHualiPackagingCo.,Ltd.
Underthesameactualcontroller
ShenzhenOCTWaterandPowerCo.,Ltd
Underthesameactualcontroller
ShanghaiHualiPackagingCo.,Ltd
Underthesameactualcontroller
ShenzhenHualiPacking&TradingCo.,Ltd
Underthesameactualcontroller
HualiPackaging(Huizhou)Co.,Ltd.
Underthesameactualcontroller
Suzhou Huali Environmental Packing Technology Co.,
Underthesameactualcontroller
Ltd.
Shenzhen Konka Video& Communication Systems
Underthesameactualcontroller
EngineeringCo.,Ltd.
TaizhouOCTCo.,Ltd.
Underthesameactualcontroller
ShenzhenOCT RealEstateCo.,Ltd.
Underthesameactualcontroller
ShenzhenOCTHotelCo.,Ltd.
Underthesameactualcontroller
ShenzhenOCTPropertyManagementCo.,Ltd.
Underthesameactualcontroller
AssetsManagementBranchofShenzhenOCT Underthesameactualcontroller
ShenzhenOCTHuckCultureCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTFireEngineeringCo.,Ltd. Underthesameactualcontroller
ShenzhenOCTGasServiceStationCo.,Ltd. Underthesameactualcontroller
ChongqingOCTIndustrialDevelopmentCo.,Ltd. Underthesameactualcontroller
Guangdong Shunde OCT Industrial Development Co.,
Underthesameactualcontroller
Ltd.
ShenzhenOCTPropertiesCompany Underthesameactualcontroller
ShenzhenOCTGasServiceStationCompany Underthesameactualcontroller
ShenzhenOCTEastThemeHotels Underthesameactualcontroller
ShenzhenOCTEastPropertyManagementCo.,Ltd. Underthesameactualcontroller
ChengduOCTIndustrialDevelopmentCo.,Ltd. Underthesameactualcontroller
Shenzhen OCT Culture-oriented Travel& Technology
Underthesameactualcontroller
Co.,Ltd.
ShenzhenOCTSeaViewHotelCo.,Ltd. Underthesameactualcontroller
KunshanBranchofShenzhenOCTPropertyManagement
Underthesameactualcontroller
Co.,Ltd.
ShenzhenOCTEconomicDevelopmentCorporation Underthesameactualcontroller
ShenzhenOCTEastPropertyManagementCompany Underthesameactualcontroller
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Jiangxi Youshi Xinrong Culture& Communication Co.,ThecompanycontrolledbythefinalcontrollerofSubsidiary’s Ltd. minorityshareholders
CharmMediaCo.,Ltd. Thefinalcontrollerofminorityshareholdersofsubsidiary GuoguangOrientalNetwork(Beijing)Co.,Ltd. Shareholderofassociatedenterprise
ShenzhenRefundOptoelectronicsCo.,Ltd. Ex-associatedenterprise
5.Listof Related-partyTransactions
(1) Information onAcquisition of Goods and Reception of Labor Service (unit: ten thousand Yuan)
①Information onacquisition ofgoods and reception oflabor service
|||
|-|-|
|Content|ReportingPeriod|
|Purchaseofmaterials|77,564,260.96|
|Purchaseofmaterials|53,840,442.74|
|Purchaseofproducts|81,484,429.91|
|Purchaseofmaterials|5,254,342.08|
|Packing|24,527,123.44|
|Purchaseofmaterials|0.00|
|Purchaseofmaterials/others|2,585,675.21|
|Purchaseofmaterials|4,195,331.54|
|Purchaseofmaterials|11,286,323.82|
|Purchaseofmaterials|7,278,815.34|
|Purchaseofmaterials|41,734.51|
|Purchaseofproducts|799,033.15|
|Utilities|2,244,889.77|
|Purchaseofmaterials|34,843.00|
|Servicecharge|0.00|
|Servicechargeforpropertymanagement|1,262,436.01|
|Advertisingexpense|6,415,094.34|
|Purchaseofmaterials|2,014,700.50|
|Servicecharge|28,043.88|
|Servicechargeof|10,000,000.00|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||
|-|-|
|Content|ReportingPeriod|
|engineering||

②Information of sales ofgoods and provision of laborservice
|||
|-|-|
|Content|ReportingPeriod|
|Salesofproducts|80,608,719.74|
|Salesofproducts|11,997,198.94|
|Leaseservicechargeandsalesofmaterials|3,906,945.24|
|Advertisingexpense|0.00|
|Servicechargeandsalesofproducts|1,233,572.79|
|Salesofproducts|2,648,776.15|
|Leaseservicecharge|3,359,016.16|
|Servicechargeandsalesofproducts|147,369.23|
|Technicalservicefeesandsalesofmaterials|216,246.39|
|Salesofdisplayscreens|5,681,875.20|
|Maintenanceservice|1,417,777.78|
|Salesofdisplayscreens|2,564.10|
|Maintenanceservice|1,051,681.35|
|Maintenanceservice|1,203,179.49|
|Maintenanceservice|108,262.11|
|Maintenanceservice|51,282.05|
|Maintenanceservice|87,170.94|
|Salesofdisplayscreens|21,367.52|
|Salesofdisplayscreens|2,564.10|
|Maintenanceservice|35,724.79|
|Maintenanceservice|4,302,721.71|
|Salesofdisplayscreens|7,948.72|

(2)Borrowing and Lending of Related Parties
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|Amount|Startdate|Maturitydate|
|1,600,000,000.00|01/11/2017|09/28/2017|
|900,000,000.00|03/19/2017|11/26/2017|
|900,000,000.00|10/17/2016|07/14/2017|
|30,000,000.00|12/14/2016|12/13/2019|

Notes:Thecurrent interest expenses confirmed withOCTwere RMB63,825,197.54.
(4)Related-party Guarantee
TheCompany severed as theguarantee
||||||
|-|-|-|-|-|
|Currency|Guaranteeamount(RMB’0,000)|Actualusingamount(RMB’0,000)|Startdate|Enddate|
|RMB|6,000.00|4,440.00|07/01/2016|07/01/2017|
|RMB|10,000.00|7,200.00|10/26/2016|07/13/2017|
|RMB|2,000.00|646.92|07/01/2016|07/01/2017|
|RMB|50,000.00|13,119.49|09/21/2016|09/21/2017|
|USD|500|500|10/20/2016|10/20/2017|
|USD|3,500.00|3,500.00|11/07/2016|11/07/2017|
|USD|1,000.00|1,000.00|04/24/2017|04/23/2018|
|USD|2,000.00|2,000.00|05/22/2017|05/18/2018|
|USD|1,000.00|1,000.00|06/12/2017|06/11/2018|

Notes:①The minority shareholders of Anhui Konka, Chuzhou State-owned Assets
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Operation Co., Ltd. provided22% counter-guarantee to the limit amount of guarantee of the Company.
②Shenzhen Konka Yi Capital Investment Partnership (Limited partnership) provided40% counter-guaranteeto thelimitamount ofguarantee of theCompany.
TheCompany served as thesecured party
|||||
|-|-|-|-|
|Currency|Guaranteeamount(RMB’0,000)|Startdate|Enddate|
|USD|4,000.00|10/17/2016|10/16/2017|

Note: the subsidiary, Zhongkang Supply Chain Management Co., Ltd. obtained the borrowing of USD 40 million from Hong Kong Konka Co., Ltd. The corresponding natural persons of Zhongkang Supply Chain, minority shareholders, Wu Guoren(25%) and Xiao Yongsong(24%) provided equity pledge guarantee for this loan. The third-party natural person provided the houseproperty mortgage guarantee as thethirdparty guarantor.
(5)Rewards for theKey Management Personnel
||
|-|
|ReportingPeriod|
|RMB4,109,400|

6.Receivablesand Payables ofRelated parties
(1)Receivables
||||
|-|-|-|
|Closingbalance|||
|Bookbalance|Baddebtprovision|Bookbalance|
|66,382,152.00|1,327,643.04|61,566,084.52|
|20,755,610.90|415,112.22|22,708,250.40|
|12,205,388.44|244,107.77|16,770,384.94|
|2,560,469.44|51,209.39|16,006,373.88|
|6,263,614.12|1,252,722.82|7,463,614.12|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|Closingbalance|||
|Bookbalance|Baddebtprovision|Bookbalance|
|189,668.62|3,793.37|6,236,403.32|
|2,165,092.05|43,301.84|4,376,574.40|
|3,522,682.24|70,453.64|546,416.80|
|1,132,419.90|22,648.40|287,956.74|
|270,000.00|5,400.00|270,000.00|
|95,000.00|1,900.00|89,733.33|
|0.00||74,880.00|
|3,297.39|65.95|55,281.17|
|0.00||35,980.00|
|530,947.11|10,618.94|6,000.00|
|116,076,342.21|3,448,977.39|136,493,933.62|
|0.00||2,473,998.29|
|0.00||800,000.00|
|0.00|0.00|3,273,998.29|
|25,353,644.56|507,072.89|16,230,337.81|
|25,353,644.56|507,072.89|16,230,337.81|
|0.00|0.00|22,260,000.00|
|18,115,952.51|8,387,197.52|18,115,952.51|
|1,053,706.86|1,033,907.60|1,053,706.86|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|Closingbalance|||
|Bookbalance|Baddebtprovision|Bookbalance|
|753,553.73|15,071.07|801,006.26|
|0.00|0.00|145,638.00|
|220,000.00|4,400.00|130,540.69|
|80,000.00|80,000.00|80,000.00|
|778,305.14|88,947.15|77,402.65|
|0.00|0.00|50,000.00|
|0.00|0.00|49,640.00|
|0.00|0.00|49,626.92|
|0.00|0.00|17,940.73|
|5,000.00|100.00|5,000.00|
|4,448.00|889.60|4,448.00|
|3,000.00|60.00|3,000.00|
|0.00|0.00|922.33|
|21,013,966.24|9,610,572.94|42,844,824.95|

 (2)Payables
||
|-|
|Closingbalance|
|30,043,130.69|
|29,499,985.38|
|18,174,005.86|
|67,312,882.13|
|9,543,100.00|
|310,000.00|
|4,672,418.54|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|8,368,055.84|
|2,614,248.15|
|1,078,005.09|
|1,540.19|
|721,103.02|
|1,132,419.90|
|358,929.03|
|1,259.03|
|899,659.44|
|10,915.86|
|6,900.00|
|174,748,558.15|
|12,623,941.41|
|8,458,014.55|
|2,448,292.14|
|1,815,156.91|
|1,462,156.55|
|702,203.57|
|27,509,765.13|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|22,537,909.18|
|15,357,854.41|
|955,155.90|
|0.00|
|0.00|
|0.00|
|38,850,919.49|
|750,000.00|
|1,187,000.00|
|0.00|
|0.00|
|0.00|
|301,135.00|
|0.00|
|222,000.00|
|0.00|
|105,000.00|
|0.00|
|0.00|
|10,139.00|
|2,575,274.00|
|5,270,833.33|
|5,270,833.33|

XII. Commitments andContingency
1.SignificantCommitments
(1)Capital Commitment
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Closingbalance|
|—|
|457,003,294.00|
|—|
|457,003,294.00|

(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|
|15,669,396.70|
|11,680,611.91|
|8,148,431.95|
|1,391,040.43|
|36,889,480.99|

 2.Contingencies
(1)Contingent liabilities and financial effects caused bypending litigation orarbitration①In May, 2013, thecompany’s subsidiary, Kunshan Konka entrusted Ningbo United to ship goods from Shanghai to Genoa, Italy, and Econolines Limited was the carrier. After the goods arrived at the destination port in Italy,due to releasing goods without B/L, and because that the customer of Kunshan Konka, MOTOM ELECTRONICS GROUP SPA (hereinafter referred to as the "MEG") didn't pay the full payment to Kunshan Konka after receiving the goods, the amount in arrear reached USD 1,100,000.00. Kunshan Konka filed a suit to Shanghai Maritime Court on August 15, 2013, requesting Econolines Limited and Ningbo United to jointly compensate USD 1,099,423.52 and its interest to Kunshan Konka and bear
thecase's acceptance fee and property preservation application fee.
On May 26, 2014, Shanghai Maritime Court made the first-instance judgment, which ordered
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Econolines Limited to compensate USD 1,099,423.52 and its interest to Kunshan Konka. Ningbo United undertook the joint compensation liability. The case's acceptance fee and property preservation application fee were jointly bore by Econolines Limited and Ningbo United. In June, 2014, Ningbo United and Econolines Limited refused to accept and appealed to Shanghai Higher People's Court, requiring to rescind the first-instance judgment. In the second trial, because Kunshan Konka had received EUR 100 thousand from the overseas consignee, it deducted the corresponding amount from the goods payment claimed by Ningbo United and Econolines Limited. On July 16, 2015, Shanghai Higher People's Court made the judgment that Econolines Limited compensated the goods loss of USD 990, 253.50 (discounted by the middle of the euro against the dollar exchange rate of People's Bank of China on July 16, 2015) to Kunshan Konka and bore the litigation expense, and Ningbo United bore the joint liability. In the execution stage, Kunshan Konka received the execution funds ofRMB 592,200(USD 17,475) of "Ningbo United" enforced by Ningbo Marine Court. By December 31, 2016, the credit receivable of Kunshan Konka should be USD 855,378.57. Thiscase is in thecompulsory execution stageat present.
②Konka (Nanchang) Co., Ltd. litigated and applied for property preservation to Tengda Electric Appliance Co., Ltd. due to the contract disputes in 2015. Nanchang Intermediate People's Court ruled to freeze the bank deposit of RMB 9,918,725.43 of Tengda Electric Appliance Co., Ltd. and closed down its 5 house properties. In the follow-up stage, we changed the add-on interest of the original sue amount to RMB 595,123.50 based on the actual conditions, which is accepted by the court. During the period, Tengda Electric Appliance Co., Ltd. filed an objection to the jurisdiction of the case. Nanchang Intermediate People's Court overruled the jurisdiction objection application of Tengda Electric Appliance Co., Ltd. Tengda Electric Appliance Co., Ltd. was unsatisfied with the judgment result and appealed to Jiangxi Superior People's Court. In January, 2016, Jiangxi Superior People's Courtoverruled itsjurisdiction objection appeal andupheld theoriginal ruling.
In March, 2016, in the trial process of the case in Nanchang Intermediate People's Court, Konka (Nanchang) Co., Ltd. received the notice of Xinyu Intermediate People's Court on ruling to accept the bankruptcy and liquidation case of Tengda Electric Appliance Co., Ltd. and designate an administrant to conduct the bankruptcy and liquidation for Tengda Electric Appliance Co., Ltd. On March 16, Konka (Nanchang) Co., Ltd. received the notice of Nanchang Intermediate People's Court on suspending the case trial. In May, 2017, Konka (Nanchang) Co., Ltd. received the civil ruling paper of Nanchang Intermediate People's Court, ruling to relieve the seal of the property of Tengda Electric Appliance Co., Ltd. and
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 the freeze of Gome acquisition payment and relieve the seal of the property provided by our company for guarantee. At present, the creditor's right declaring data of Konka (Nanchang) Co., Ltd. have been submitted to the bankruptcy administrator, and the declared claim amount is RMB 12,051,251.40. The Tengda Electric Appliance Co., Ltd. is in bankruptcy liquidation.
(2) Possible liabilities formed for providing debt guarantee for other institutions and their financial impacts
①The company signed the guarantee contract (No. 16czA0030-a-XCYZBZD2016) with China CITIC Bank Chuzhou Branch on July 1, 2016, providing credit guarantee of RMB 60,000,000.00 toAnhuiTongchuang InternationalTrade Co., Ltd. from July 1,2016 to July 1, 2017. The credit line was mainly used to open and accept the L/C of Anhui Tongchuang International Trade Co., Ltd. and obtain the financing credit and other daily businesses from the bank. The guarantee credit had been used RMB 44,400,000.00 by June 30, 2017. The minority shareholder of Anhui Tongchuang International Trade Co., Ltd. -- Chuzhou Tongchuang Investment Construction Co., Ltd. provided50% of counter guarantee for our company's guarantee amount.
② On October 26, 2016, the Company signed the guarantee contract with Bank of China Chuzhou Branch and provided RMB 100,000,000.00 of credit line to Anhui Konka, a sub-branch of the Company. The credit period was Oct. 26, 2016~ July 13, 2017. The credit line can be used forAnhui Konka to issue the letter of credit, make acceptance bill and obtain financing credit from the bank etc. By June 30, 2017, the credit line had been used RMB 72,000,000.00. A few shareholders in Anhui Konka, state-owned assets operation limited companies inChuzhou,provide22% ofcounter guaranteefortheCompany’s credit line.③The Company applied for RMB 6,000,000,000.00 of comprehensive credit line in Bank of China Fukuda Branch on September 21, 2016. The Company made RMB 1,300,000,000.00 of bank acceptance for pledge guarantee. On September 21, 2016, the Company provided RMB 500,000,000.00 from total RMB 6,000,000,000.00 comprehensive credit line to the sub-branch for communication technology. Communication technology shall be jointly and severally liable for the comprehensive credit. The credit period was Sept. 21, 2016~ Sept. 21, 2017. The credit line is mainly used for communication technology to obtain the financing credit from the bank etc. By June 30, 2017, the credit line had been used RMB 131,194,900.00.
④ On October 20, 2016, the Company applied for opening 5,000,000.00 dollars of letter of guarantee in China Minsheng Banking Shenzhen Branch. The letter of guarantee could be
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 used for Hong Kong Konka Sub-branch to obtain the financing credit. The credit period was Oct. 20, 2016~ Oct. 20, 2017. By June 30, 2017, Hong Kong Konka Sub-branch had obtained 5,000,000.00dollars ofloan from BankofChina(Hong Kong)Co., Ltd.
⑤On July 1, 2016, the Company signed the guarantee contract numbered “07308BY20168072” with Bank of Ningbo Shenzhen Branch and provided RMB 20,000,000.00 of credit line to Konka Yishijie. The credit period was July 1, 2016~ July 1, 2017. The credit line could be used for Konka Yishijie to open a letter of credit, accept and obtain the financing credit from the bank etc. By June 30, 2017, the credit line had been used RMB 6,469,200.00. A few shareholders of Konka Yishijie, Shenzhen Konka Yi Capital Investment Partnerships Enterprises (limited partnership), provided40% of counter guaranteefortheCompany’s credit line.
⑥On November 7, 20016, the Company applied for opening 35,000,000.00 dollars of letter of guarantee in China Minsheng Banking Shenzhen Branch. The letter of guarantee could be used for Hong Kong Konka Sub-branch to obtain the financing credit. The credit period was November 7, 2016~ November 7, 2017. By June 30, 2017, Hong Kong Konka had obtained 35,000,000.00dollars from Bankof China(Hong Kong) Co.,Ltd.
⑦ On April 24, 2017, the Company applied for opening 10,000,000.00 dollars of letter of guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee could be used for Hong Kong Konka to obtain the financing loan from the bank. The credit period was April 24, 2017~ April 23, 2018. By June 30, 2017, Hong Kong Konka had obtained 10,000,000.00dollars from Bank of China(Hong Kong) Co.,Ltd.
⑧On May 22, 2017, the Company applied for opening 20,000,000.00 dollars of letter of guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee could be used Hong Kong Konka to obtain the financing credit from the bank. The credit period was May 22, 2017~ May 18, 2018. By June 30, 2017, Hong Kong Konka had obtained 20,000,000.00dollars from Bank of ChinaHong Kong)Co.,Ltd.
⑨On June 12, 2017, the Company applied for opening 10,000,000.00 dollars of letter of guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee could be used Hong Kong Konka to obtain the financing credit from the bank. The credit period was June 12, 2017~ June 11, 2018. By June 30, 2017, Hong Kong Konka had obtained 10,000,000.00dollars from Bank of ChinaHong Kong)Co.,Ltd.
⑩Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise cooperation agreement on new house loan business with Agricultural Bank of China Corp. Ltd in 2016. The Company provided the liability guarantee for the personal housing loan
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 issued bythe bank for the house purchaser.The credit period was from the house loan issuing day to the house ownership certificate day. It shall continue to the completion of mortgage registration formalities, and the house purchaser shall be the mortgagee at the same time. The Company shall pay3% of house loan issued by the bank for the house purchaser as the cash deposit. By June 30, 2017, Kunshan Konka provided RMB 233,632,522.00 of credit line forthehousepurchaser’s loan.The deposit fund balance was RMB9,142,975.66.
⑪Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise cooperation agreement on new house loan business with China Construction Bank Kunshan Branch in 2016. The Company provided the liability guarantee for the personal housing loan issued bythe bank for the house purchaser.The credit period was from the house loan issuing day to the house ownership certificate day. It shall continue to the completion of mortgage registration formalities, and the house purchaser shall be the mortgagee at the same time. The Company shall pay3% of house loan issued by the bank for the house purchaser as the cash deposit. By June 30, 2017, Kunshan Konka provided RMB 147,688,505.00 of credit line forthehousepurchaser’s loan.The deposit fund balance was RMB4,430,655.15.
⑫Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise cooperation agreement on new house loan business with Kunshan Rural Commercial Bank Zhouzhuang Branch in 2016. The Company provided the liability guarantee for the personal housing loan issued by the bank for the house purchaser. The credit period was from the house loan issuing day to the house ownership certificate day. It shall continue to the completion of mortgage registration formalities, and the house purchaser shall be the mortgagee at the same time. The Company shall pay3% of house loan issued by the bank for the house purchaser as the cash deposit. By June 30, 2017, Kunshan Konka provided RMB 93,879,000.00 of credit line for the housepurchaser’s loan. The deposit fund balance was RMB2,816,370.00.
XIII. EventsafterBalanceSheetDate
None
XIV.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 NotesVI, 14, (3) (2)Minimumlease payment willbepaid infuture
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Theremainingleaseterm
Theminimumlease payment 301,282.02 Within1year(including1year)
144,871.84 Over1yearandwithin2years(including2year)
446,153.86 Total
(3) Category of fixed assets leased byoperating lease, pleaserefer to NoteVI, 14(4)
2.TheCompany's subsidiary Mudanjiang Konka.Changshu Konkahad finished liquidation. 3. TheCompany’s subsidiary Chongqing Qingjia conducted liquidation after the complement oflandpurchasingandstorage.
4. On February 16, 2017, the Company held the 25th meeting of the 8th Chairman of the Board and passed Bill on Providing Entrusted Loan to Wanrong Science Technology. The Company planned to provide Hunan Wanrong Science Technology Co., Ltd (“Wanrong Science Technology”) with the entrusted loan not more than RMB 50,000,000.00. Entrusted loan interest rate was the150% of current financinginstitutions’ one-year loan interest rate issued by People's Bank of China. The entrusted loan was mainly used for daily operation of WanrongScience Technology.
5. On March 10, 2017, the Company held the 26th meeting of the 8th Chairman of the Board and passed Bill on Building New Factories in Dongguan. The Company planned to push the “three-old” renovation project of Dongguan Konka factory area. The Company also planned to raise RMB 800 million to build new factories (including color TVR&D building, main production plant, logistics distribution warehouse, supporting staff dorms etc.) in Wulian Village, Fenggang Town, Dongguan. At the same time, the Company carried out the development, production and marketing ofcolor TVand otherelectrical products.
6. On June 29, 2017, the Company held the 31st meeting of the 8thChairman of the Board and passed Resolution on listing transfer part of KunshanKonka’s holdings. The Company decided to transfer51% of holdings of Kunshan Konka Electronic Household Co., Ltd in assets and equity exchange. The listing price shall not be lower than the assessed value of asset appraisal firm.
7. On May 28, 2015, the company signed the Comprehensive Credit Contract (No. 0005-SYQHZZD2015) with China CITIC Bank Shenzhen Citizen Center Sub-branch, applying for credit line of RMB 400,000,000.00, which was used for loans, acceptance of bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill credit, opening letter of guarantee and other businesses. The credit period was May, 2017~ May,2018.Thecredit linehad been used RMB250,000,000.00byJune 30,2017.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 8.On June 14, 2016, the company signed the Credit Line Contract (No. J2016Z15608HQC) with China Construction Bank Shenzhen Branch, applying for credit line not more than RMB 3,570,000,000.00 at maximum. The credit period was June 14, 2016~ June 13, 2019. By June 30, 2017, the credit line had been used RMB 661,127,500.00, and RMB 4,908,872,500.00 had not been used. Hereinto, the company and had agreed with China Construction Bank Shenzhen Branch that it could apply for low risk credit not more than RMB2,000,000,000.00at maximum.Thecredit linehadnot been used yet byJune 30,2017. 9. On August 11, 2016, the company signed the Comprehensive Credit Contract (No. 018-SJTZEZD2016) with China Minsheng Banking Corp. Ltd, applying for credit line not more than RMB 500,000,000.00 at maximum, which was used for RMB business, trade financing, import bill advance and outward bill credit, import refinance, delivery against bank guarantee, packing loans, bill discounting and other businesses. The credit period was August 11, 2016~ August 11, 2017. By June 30, 2017, the credit line had been used RMB 275,860,000.00,and RMB224,140,000.00had not been used.
10. On September 12, 2016, the company signed the Comprehensive Credit Agreement (No. CN11002068781-160823) with HSBC Bank (China) Shenzhen Branch, applying for uncommitted portfolio revolving credit not more than USD 15,000,000.00 at maximum. The credit period was September 12, 2016~ September 12, 2017. By June 30, 2017, the credit linehad not been used yet.
11. On September 21, 2016, the company signed the Credit Line Agreement (No. 0000719-ZZYFEXZD2016) with Bank of China Shenzhen Futian Sub-branch, agreeing that the company and Konka Communication which was its subsidiary provided bank acceptance not less than RMB 1,300,000,000.00 as pledge guarantee to get the comprehensive credit line not more than RMB 6,000,000,000.00. Hereinto, the company was the credited party, and the Communication Technology Company was the authorized party that could draw the money. The credit period was September 21, 2016~ September 21, 2017. By June 30, 2017, the credit line had been used RMB 3,939,983,280.33, and RMB 2,060,016,719.67 had not been used.
12. On September 30, 2016, the company agreed with Industrial and Commercial Bank of China Shenzhen OTC Sub-branch to apply for credit line not more than RMB 2,200,000,000.00 at maximum. The credit period was September 30, 2016~ September 30, 2017. By June 30, 2017, the credit line had been used RMB 1,598,700,300.00, and RMB 601,299,700.00had not been used.
13. On October 12, 2016, the company signed the Credit Line Agreement (No.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 A596201609260001-PY(SZ)ZZD) with Ping An Banking Corp. Ltd Head Office Sales Department, applying for credit line not more than RMB 400,000,000.00 at maximum, which was used for liquidity loans, opening bank acceptances, opening import L/C, opening domestic L/C, import bill advance and outward bill credit, import and export refinance, opening financing guarantee and other businesses. The credit period was October 12, 2016~ October 12, 2017. By June 30, 2017, the comprehensive credit line had been used RMB 400,000,000.00.
14. On February 28, 2017, the company applied for credit line of RMB 1,200,000,000.00 from Agricultural Bank of China Shenzhen OCTOBER Sub-branch, for loans, acceptance of bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill credit, opening letter of guarantee and other businesses. The credit period was February 28, 2017~ February 28, 2018. By June 30, 2017, the comprehensive credit line had been used RMB604,610,000.00,and RMB 595,390,000.00hadnot been used.
15. On April 11, 2017, the company applied for credit line of RMB 500,000,000.00 from Bank of Communications Shenzhen OCTOBER Sub-branch, for loans, acceptance of bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill credit, opening letter of guarantee and other businesses. The credit period was April 11, 2017~ April 11,2019. By June30,2017,thecredit linehad not been used yet.
16. On April 11, 2017, the company applied for credit line of RMB 500,000,000.00 from Bank of Ningbo Shenzhen Branch, for loans, acceptance of bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill credit, opening letter of guarantee and other businesses. The credit period was April 11, 2017~ April 11, 2018. By June 30, 2017, the credit line had been used RMB 9,070,000.00, and RMB 490,930,000.00 had not been used.
XV.Notes ofMain Items intheFinancialStatements oftheCompany
1. Accounts Receivable
(1)Accounts Receivable Disclosed byCategory
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|—|—|—|—|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|1,137,172,860.75|40.41|201,098,271.61|17.68|
|1,613,987,991.63|57.35|—|—|
|2,751,160,852.38|97.76|201,098,271.61|7.31|
|63,021,334.66|2.24|33,619,034.22|53.35|
|2,814,182,187.04|100.00|234,717,305.83|8.34|

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

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|1,457,500,829.10|43.04|204,973,829.53|14.06|
|1,859,065,149.92|54.89|—|—|
|3,316,565,979.02|97.93|204,973,829.53|6.18|
|70,065,431.01|2.07|36,128,381.15|51.56|
|3,386,631,410.03|100.00|241,102,210.68|7.12|

①In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision
Closingbalance
Aging
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|929,687,065.77|18,593,741.32|
|22,891,350.59|1,144,567.53|
|291,468.26|58,293.65|
|5,346,073.44|2,673,036.72|
|656,540.60|328,270.30|
|178,300,362.09|178,300,362.09|
|1,137,172,860.75|201,098,271.61|

②In thegroups, accounts receivable adopting other methodsto withdraw bad debt provision
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Closingbalance
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|1,613,987,991.63|—|
|1,613,987,991.63|—|

③The top 5 of accounts receivable with significant single amount for which bad debt provisionseparately accrued
Closingbalance
||||
|-|-|-|
|Accountreceivable|Baddebtprovision|Withdrawalproportion(%)|
|18,320,000.00|5,496,000.00|30|
|8,223,935.99|4,111,968.00|50|
|3,674,078.28|1,285,927.40|35|
|3,408,394.19|2,045,036.51|60|
|2,316,229.68|718,031.20|31|
|35,942,638.14|13,656,963.11|—|

(2)BadDebt ProvisionWithdrawal, Reversed orRecovered in theReport Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 000; the amount of the reversed or collected part during the Reporting Period was of RMB6,384,904.85.
(3)Top 5 of the Closing Balance of the OtherAccounts Receivable Collected according to theArrears Party
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB1,986,202,264.91,70.58% of total closing balance of account receivable,
therelevant closing balance ofbad debt provision withdrawn was RMB10,827,635.27.
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 2. OtherAccounts Receivable
(1)OtherAccounts ReceivableDisclosed byCategory
Closingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|173,061,959.33|6.09|163,333,204.34|0.94|
|121,519,248.71|4.27|20,120,580.97|0.17|
|2,543,589,780.50|89.47||0|
|2,665,109,029.21|93.74|20,120,580.97|0.01|
|4,727,923.05|0.17|1,425,476.91|0.3|
|2,842,898,911.59|100.00|184,879,262.22|0.07|

（Continued）
Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|173,061,959.33|9.04|163,333,204.34|94.38|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Openingbalance
|||||
|-|-|-|-|
|Bookbalance||Baddebtprovision||
|Amount|Proportion(%)|Amount|Proportion(%)|
|126,005,125.10|6.58|22,703,322.23|18.02|
|1,607,493,721.89|84.00|—|—|
|1,733,498,846.99|90.59|22,703,322.23|1.31|
|7,101,401.90|0.37|2,131,520.57|30.02|
|1,913,662,208.22|100.00|188,168,047.14|9.83|

①Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
Closingbalance
||||
|-|-|-|
|Otheraccountsreceivable|Baddebtprovision|Withdrawalproportion(%)|
|141,549,150.00|141,549,150.00|100.00|
|13,396,856.82|13,396,856.82|100.00|
|18,115,952.51|8,387,197.52|46.30|
|173,061,959.33|163,333,204.34|—|

② In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision
Aging Closingbalance
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||
|-|-|
|Otheraccountsreceivable|Baddebtprovision|
|70,548,176.76|1,410,963.54|
|23,131,613.27|1,156,580.66|
|11,037,720.70|2,207,544.14|
|2,634,461.48|1,317,230.74|
|278,029.22|139,014.61|
|13,889,247.28|13,889,247.28|
|121,519,248.71|20,120,580.97|

③In thegroups, accounts receivable adopting other methodsto withdraw bad debt provision Closingbalance
|||
|-|-|
|Accountreceivable|Baddebtprovision|
|2,543,589,780.50|—|
|2,543,589,780.50|—|

 (2)BadDebt ProvisionWithdrawal, Reversed orRecovered in theReport Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 000; the amount of the reversed or collected part during the Reporting Period was of RMB3,288,784.92.
(3)Top 5 of the Closing Balance of the OtherAccounts Receivable Collected according to theArrears Party
|||||
|-|-|-|-|
|Nature|Closingbalance|Aging|Proportion(%)|
|Intercoursefunds|445,251,804.52|Within1year,1to2years|15.66|
|Intercoursefunds|438,095,069.40|Within1year,1to2years|15.41|
|Intercoursefunds|359,413,591.91|Within1year|12.64|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Nature|Closingbalance|Aging|Proportion(%)|
|Intercoursefunds|347,253,097.02|Within1year|12.21|
|Intercoursefunds|344,417,113.46|Within1year|12.11|
||1,934,430,676.31||68.04|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
3.Long-term Equity Investment
(1)List ofLong-term Equity Investment
||||||
|-|-|-|-|-|
|Closingbalance|||||
|Bookbalance|Depreciationreserves|Bookvalue|Bookbalance|Depreciationreserves|
|2,257,782,345.01|46,732,484.69|2,211,049,860.32|2,217,782,345.01|46,732,484.69|
|531,766,557.93|5,158,909.06|526,607,648.87|218,079,058.61|5,158,909.06|
|2,789,548,902.94|51,891,393.75|2,737,657,509.19|2,435,861,403.62|51,891,393.75|

 (2)Investment tothe Subsidiary
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Increase|Decrease|Closingbalance|Openingbalanceofimpairmentprovision|WithdrawnimpairmentprovisionintheReportingPeriod|Decreaseofimpairmentprovisioninthereportingperiod|
|36,000,000.00||||36,000,000.00|||
|122,780,937.98||||—|||
|274,783,988.91||||—|||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Increase|Decrease|Closingbalance|Openingbalanceofimpairmentprovision|WithdrawnimpairmentprovisionintheReportingPeriod|Decreaseofimpairmentprovisioninthereportingperiod|
|781,828.61||||—|||
|261,482.50||||—|||
|350,000,000.00||||—|||
|4,655,000.00||||—|||
|10,732,485.69||||10,732,484.69|||
|90,000,000.00||||—|||
|31,500,000.00||||—|||
|48,750,000.00||||—|||
|350,000,000.00||||—|||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Increase|Decrease|Closingbalance|Openingbalanceofimpairmentprovision|WithdrawnimpairmentprovisionintheReportingPeriod|Decreaseofimpairmentprovisioninthereportingperiod|
|69,702,612.22||||—|||
|10,000,000.00||||—|||
|10,000,000.00||||—|||
|30,000,000.00||||—|||
|10,000,000.00||||—|||
|7,200,000.00||||—|||
|16,000,000.00||||—|||
|700,000,000.00||||—|||
|5,832,000.00||||—|||
|10,200,000.00||||—|||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||||||
|-|-|-|-|-|-|-|
|Openingbalance|Increase|Decrease|Closingbalance|Openingbalanceofimpairmentprovision|WithdrawnimpairmentprovisionintheReportingPeriod|Decreaseofimpairmentprovisioninthereportingperiod|
|20,000,000.00||||—|||
|8,602,009.10||||—|||
||40,000,000.00||40,000,000.00||||
|2,217,782,345.01|40,000,000.00|0.00|2,257,782,345.01|46,732,484.69|||

 1 Investment to associated enterprises
|||||||
|-|-|-|-|-|-|
|Openingbookvalue||||||
||Increaseafterthetransfertoequitymethodfromcost|Increasedinvestment|Decreasedinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|85,791,460.70||||-3,733,992.50|-449,802.04|
|7,438,647.50||||||
|6,213,908.63||||-495,301.18||

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||||
|-|-|-|-|-|-|
|Openingbookvalue||||||
||Increaseafterthetransfertoequitymethodfromcost|Increasedinvestment|Decreasedinvestment|Investmentprofitandlossrecognizedundertheequitymethod|Adjustmentofothercomprehensiveincome|
|86,545,225.20||||||
|19,164,691.78||||-3,060,432.97||
|12,925,124.80||||794,032.47||
|||150,000,000.00||||
|||171,799,598.00||||
|218,079,058.61|0.00|321,799,598.00|0.00|-6,495,694.18|-449,802.04|

（Continued）
|||||
|-|-|-|-|
|Increase/decreaseinReportingPeriod|||Closingbookvalue|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Others||
||||80,441,063.70|
||||7,438,647.50|
||||5,718,607.45|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
|||||
|-|-|-|-|
|Increase/decreaseinReportingPeriod|||Closingbookvalue|
|Declarationofcashdividendsorprofits|Withdrawnimpairmentprovision|Others||
||||86,545,225.20|
||||16,104,258.81|
||||13,719,157.27|
||||150,000,000.00|
||||171,799,598.00|
||||531,766,557.93|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 4.Revenue andCost ofSales
(1) Revenue and Cost ofSales
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|4,206,989,260.45|3,482,365,918.4|8 4,302,017,760.17|
|2,065,723,384.28|1,961,473,989.0|8 2,143,962,777.99|
|6,272,712,644.73|5,443,839,907.5|6 6,445,980,538.16|

 (2) Main Operations (Classified byIndustry)
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|4,206,989,260.45|3,482,365,918.48|4,302,017,760.17|
|4,206,989,260.45|3,482,365,918.48|4,302,017,760.17|

 (3) Main Operations (Classified byProduct)
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|4,058,572,854.30|3,352,318,191.14|4,081,763,878.87|
|148,212,399.29|129,780,963.65|175,160,620.74|
|204,006.86|266,763.69|45,093,260.56|
|4,206,989,260.45|3,482,365,918.48|4,302,017,760.17|

 (4) Main Operations (Classified byArea)
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|3,822,475,481.58|3,102,447,555.27|3,760,982,130.37|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||||
|-|-|-|
|ReportingPeriod|||
|Salesrevenue|Costofsales|Salesrevenue|
|384,513,778.87|379,918,363.21|541,035,629.80|
|4,206,989,260.45|3,482,365,918.48|4,302,017,760.17|

 (5)TheRevenue of Sales from theTopFiveCustomers
||
|-|
|Mainoperationrevenue|
|1,153,169,124.71|
|1,401,966,640.64|

 5.Investment Income
||
|-|
|ReportingPeriod|
|33,233,152.36|
|-6,495,694.18|
|16,271,994.98|
|34,754,476.41|
|77,763,929.57|

XVI. Supplementary Materials
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 1.Items andAmounts ofExtraordinary Gains andLosses
||
|-|
|Amount|
|32,560,637.29|
|79,034,666.86|
|30,058,960.78|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Amount|
|-61,493,877.60|
|280,538.52|
|8,144,500.65|
|88,585,426.50|
|12,549,958.46|
|707,988.01|
|75,327,480.03|

Notes: the number“+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses or expenditure.
The recognition of the non-current gains and losses items was executed according to the regulations of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering
Securities-Non-current Gains andlosses (Z-J-H-Announcement[2008]No. 43) .
KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017
||
|-|
|Theamountofleasedassetsinvolved|
|35,115,965.51|

2.Return onEquity and EarningsPerShare
|||
|-|-|
|WeightedaverageROE(%)||
||BasicEPS|
|1.06|0.0128|
|-1.52|-0.0185|

KonkaGroupCo.,Ltd. NotestoFinancialStatementsforJanuary-June2017 Section XI Documents Available for Reference
I Financial statements signed and sealed by the head of the Company, the accounting head for the Report, andthehead oftheaccounting organ (thehead ofaccounting);
II Originals of all the announcements and documents that the Company disclosed on the newspaper designated bytheCSRCinthe Reporting Period; and
III Other relevant materials.
The Board ofDirectors
Konka Group Co.,Ltd.
August 24,2017