Important Notes

4(Ⅰ) Definitions and Significant Risk Warning

5(Ⅱ) Company Profile

6(Ⅲ) Accounting Data and Financial Indicators

9(IV) Report of the Board of Directors

12(V) Important Issues

43(VI) Changes in Equity and Shareholders

53(VII) Directors, supervisors and Senior management

59(VIII) Corporate Governance69(IX) Internal Control

74(X) Financial Report75(XI) Documents Available for Inspection203

Neusoft Annual Report 2013

Dr. Liu Jiren
Chairman
Neusoft Corporation

The world is changing faster than ever before. An increasing number of new policies, transformative technologies andnew trend are constantly catalyzing innovative business models, emerging markets and new demands in recent years.
With that big picture in mind, Neusoft has always been focusing on innovation and globalization. We encourage innovation at all levels of our operations to drive transformation for better. Specifically, we have built a robust
growth model driven by knowledge assets. These efforts have helped us not only overcome many challenges andward off potential risks, but also build our new competitive advantages.
Today, new technologies such as mobile Internet, cloud computing, big data and social media are overthrowing traditional business models with new IT products/services and business patterns springing up. This stimulated new market demands and gradually broke industry barriers, and what followed by are increasingly growing cross-industry
competition and cooperation. Over the past twenty-plus years, Neusoft has achieved a great-leap-forward growththrough incremental innovation and transformation. In the future, we will integrate innovation into a daily routine,
reengineering and strengthening our business capabilities through collaboration. Pinpointing the construction of China’s economic infrastructures and the informatization in the realms important to the people’s livelihood, we willcontinue to promote social transformation through IT business, explore business model innovation and transformation, enhance the seamless integration of industrialization and informatization, and accelerate the upgrade of the
manufacturing industries. Besides, we will continue to expand our cloud and big data service offerings, by doing so,
to build Neusoft into a global excellent innovative company with sustainable development and everlasting vitality.

2

Neusoft Annual Report 2013

Wang Yongfeng
President
Neusoft Corporation

We faced a complex, challenging market environment in the year 2013. To cope with the challenges and achieve alarge-scale dynamic growth of our businesses, we strengthened our core business strengths, enhanced organizational
systems and capabilities, accelerated the planning and development of new businesses, and promoted businessgrowth through Internet-based diversified business models, application innovation and knowledge assets. In addition,
we continued to further the operational excellence plan, strengthened the management of operational expenseand enhanced operational efficiency. Thankfully, these efforts we made ensured our stable and sustainable growth.
2014 is an important year for our ongoing growth and transformation. We will stick to our innovation and globa ⁃lization strategy, enhance the competitiveness of our core businesses on a professional and systematic basis, andoptimize business structure and organizational capability. Focusing on key accounts, we will set up customer development team systematically, and develop business that may take leading position in the market with advantageous
sales resource. What’s more, we will develop businesses in the fields of cloud service, Internet of Things, IP andproduct lines, and speed up innovation on Internet-based business model, promote business resource integration
to keep pace with the era of mobile Internet, and increase input into knowledge assets that can drive increasing
business growth. Moreover, we will accelerate operational excellence plan and comprehensive quality management, improve expense and budget management to enhance overall operation efficiency, with an aim to drive sustainable, large-scale and highly efficient business development.

3

Neusoft Annual Report 2013

Important Notes(1) The Board of Directors, Board of Supervisors, directors and supervisors as well as the senior managements hereby
represent and warrant that the Report contains no false representations, misleading statements to material omissions, andwill be individually and jointly reliable for the authenticity, accuracy and integrity of the contents.
(2) BDO CHINA SHU LUN PAN Certified Public Accountants LLP has issued a standard and unqualified auditor’s report.
(3) Liu Jiren, Chairman & CEO, Zhang Xiao’ou, Senior Vice President & CFO, and Shi Peijun, Director of Accounting
and Settlement Department, hereby confirm the authenticity, accuracy and integrity of the financial statements in this annual report.
(4) This report is primarily about Neusoft Corporation (“Neusoft” or the “Company”), including any and/or all
branches and subsidiaries of the Company.

4

Neusoft Annual Report 2013

(Ⅰ) Definitions and Significant Risk Warning
1.1 Definitions
Unless otherwise indicated, the following items in this annual report have the following meanings.
China Securities Regulatory Commission

Refers toSecurities Regulatory Commission of the People’s Republic of China

The Ministry of Commerce

Refers to

The Ministry of Commerce of the People’s Republic of China

Stock exchange

Refers to

Shanghai Stock Exchange

Neusoft, the Company, parent company

Refers to

Neusoft Corporation

The group

Refers to

Neusoft Corporation and its subsidiaries

CPA firm

Refers to

BDO CHINA SHU LUN PAN Certified Public Accountants LLP

Reporting period

Refers to

Fiscal year of 2012, from January 1st, 2012 to December 31st, 2012

Yuan, Ten thousand Yuan, and one
hundred million Yuan

Refers to

The RMB Yuan, RMB ten thousand Yuan, RMB ten hundred million Yuan

1.2 Significant risk warning:
The Company has described the potential risks and related countermeasures in this annual report. For more details,
please refer to the Report of the Board of Directors.

5Neusoft Annual Report 2013

(Ⅱ) Company Profile
2.1 Overview
Registered Company Name in Chinese“东软集团股份有限公司”

Abbreviation of Registered Company Name in Chinese“东软集团”

Registered Company Name in English

Neusoft Corporation

Abbreviation of Registered Company Name in English

Neusoft

Legal Representative

Liu Jiren

2.2 Contact
Secretary of the Board of Directors

Representative for Securities Affairs

Name

Wang Nan

Zhang Long

Address

Neusoft Park, No.2 Xinxiu Street, Hunnan New District,
Shenyang 110179, PR China

Neusoft Park, No.2 Xinxiu Street, Hunnan New District,
Shenyang 110179, PR China

Tel024-83662115

024-83662115

Fax

024-23783375

024-23783375

Emailinvestor@neusoft.com

investor@neusoft.com

2.3 Basic information
Registered officeNo.2 Xinxiu Street, Hunnan New District, Shenyang 110179, PR
China

Post code

110179Address of office

Neusoft Park, No.2 Xinxiu Street, Hunnan New District, Shenyang
110179, PR China

Post code

110179

Official website

http://www.neusoft.com

Emailinvestor@neusoft.com

2.4 Information disclosure and venue of report preparation6

Newspaper designated by the Company for information disclosure

China Securities Journal, Shanghai Securities News

Website designated by China Securities Regulatory Commission
for publication of annual report

http://www.sse.com.cn

Venue of preparation of annual report

Office of the Board of Directors

Neusoft Annual Report 2013

2.5 Company Stock
Company StockClass of stock

Stock exchange

Stock name

Stock code

Name of stock before alteration

A

Shanghai Stock Exchange

Neusoft Corporation

600718

Neusoft Stock/Neu-Alpine

2.6 Alteration of registered information within the reporting period
2.6.1 Basic information
No information related to the place of registration, registered number of Corporate Business License, tax registration
number and organization code are altered.
Place of registration

No.2 Xinxiu Street, Hunnan New District, Shenyang 110179, PR
China

Registration number of corporate business license

210100402001491

Tax registration number

210132604608172

Organization code

60460817-2

2.6.2 Initial registration information
Date of initial registration: June 17th, 1991
Place of initial registration: No. 2, Xinxiu Street Hunnan New District, Shenyang 110179, PR China.
2.6.3 Alteration of main business since listing
Focusing on software technologies, the Company provides industry solutions, software products, platforms and servi ⁃ces and medical equipment. No significant change in main business is found since listing.
2.6.4 Alteration of stockholders since listing
In June 1996, the Company was listed at Shanghai Stock Exchange. The largest shareholder was Software Center ofNortheastern University of China, holding 27.64% of the total shares.
In May 1998, Neusoft accepted a transfer of all corporate shares held by Software Center of Northeastern Universityof China. After completion of the transfer, Neusoft held 27.64% equity in the Company, becoming the largest shareholder.
In December 2003, Neusoft acquired all the foreign corporate shares of the Company held by Alpine Electronics (China) Co., Ltd. After completion of the acquisition, Neusoft held 60.24% equity in the Company, becoming the controllingshareholder.
In March 2008, the Company finished the registration of stock acquisition from the original controlling shareholder
Neusoft Group Co., Ltd. and cancellation procedures. NEU Science & Technology Industry Co., Ltd. became the largest
shareholder with a shareholding ratio of 17.6248%.

7

Neusoft Annual Report 2013

2.7 CPA firm

CPA firm

8

Name

BDO CHINA SHU LUN PAN Certified Public Accountants LLP

Address of office

F4, New Huangpu Financial Plaza, No.61, East Nanjing Road, Shanghai
201804, PR China

Certified Public Accountants

Li Chen, Wu Jie

Neusoft Annual Report 2013

(Ⅲ) Accounting Data and Financial Indicators
3.1 Key accounting data and financial indicators for the last three years as at theend of the reporting period
3.1.1 Key accounting data
Unit: RMB/Yuan
Key accounting data
Operating income

2013Year-on-yearchange (%)

2012

2011

7,452,753,233

6,960,195,011

7.08

5,751,249,330

Net profit attributable to shareholders oflisted company

410,938,749

456,313,926-9.94

417,068,980

Net profit attributable to shareholders oflisted company after deducting non-recurring Gains/losses

215,672,470

319,537,015-32.50286,807,569

Net cash flow from operating activities

303,851,532

317,235,522-4.22

300,196,604

Year-on-year change

Year-end 2011

Key accounting data

Year-end 2013

Year-end 2012

Net assets attributable to shareholdersof listed company

5,329,762,555

5,119,337,733

4.11

4,674,677,555

Total assets

9,376,450,793

8,501,433,333

10.29

7,925,285,114

3.1.2 Key financial data
Unit: RMB/Yuan
Key financial indicators

2013

Year-on-year change
(%)

2012

2011

Basic earnings per share (RMB Yuan/share)

0.33

0.37

-9.94

0.34

Diluted earnings per share(RMB Yuan/share)

0.33

0.37

-9.94

0.34

Basic earnings per share after deducting non-recurring gains/losses (RMB Yuan/share)

0.18

0.26

-32.50

0.23

Average weighted rate of return on equity

7.88

9.32

Decline by 1.44 percent

9.34

Average weighted rate of return on equity after
deducting non-recurring gains/losses

4.14

6.53

Decline by 2.39 percent

6.42

Note: In accordance with related regulations, earnings per share shall be calculated by 1,227,594,245 shares.

9Neusoft Annual Report 2013

3.2 Non-recurring gains/losses
Unit: RMB/Yuan
Non-recurring gains/losses

Amount in 2012

Amount in 2011

21,676,892

Investment income fromtransfer of equity in Guangdong Neufashion Digital
Technology Co., Ltd.

54,744,245

18,180,599

Government grants recorded in current
profit and loss, with exception of those
closely related to the normal operationsof the Company and continuously received at certain quotation or quantity
according to the policies and regulations of China

140,953,065

Government grants for research projects and government subsidies recorded incurrent profit and loss

94,363,121

105,173,354

Payment from non-financial businesses
for use of funds recorded in current
profit and loss

—

—

—

9,946,738

Gains from fair value of the investee’s
net identifiable assets attributable to theCompany when the investment cost acquired from the subsidiary, associatedor joint-venture is lower than the investment——

2,354,443—

Gains/losses from exchange of non-monetary assets

—

—

—

24,934,400

Gains/losses on changes in fair value
from held-for-trading financial assets/liabilities, investment income from disposalof held-for-trading financial assets/liabilities and available-for-sale financial assets, except for hedging business related to normal operation of the Company

27,498,475

Change in fair value andgain/loss on disposal of trading financial assets mainly

14,224,580

950,557

Other non-operating income/expenses

4,684,571—

653,891

1,313,927

Other non-recurring Gains/losses

18,364,615

Investment income recognized by re-estimating theoriginally held 49% equity
in Neusoft-Philips Medical
Systems Limited Liability
Company (Neusoft-Philips)
based on its fair value on
the acquisition date whenpurchasing the additional
25% equity in Neusoft-Philips—

1,221,899

Income tax consequences-16,946,262—-30,432,456-20,258,444-965,077—

869,087-11,201,619

195,266,279—

136,776,911

130,261,411

Gain/loss on disposal of non-current assets

Minority shareholders’interests
Total

10

Amount in 2013

RemarkNeusoft Annual Report 2013

3.3 Fair value-measured items
Unit: RMB/Yuan
Year-beginbalanceYear-endbalance

Change14,917,183

32,249,913

17,332,730

15,599,457

Trading financial liabilities

—

—

—

—

Available-for-sale financial assets—

26,594,230

26,594,230

—

—

—

—

15,599,457

Item
Trading financial assets

Total

Influence on current profit of thereporting period (after tax)

11

Neusoft Annual Report 2013

(IV) Report of the Board of Directors
4.1 Discussion and analysis on overall operation during the reporting period
4.1.1 Overall operation during the reporting period
4.1.1.1 Overview
In the face of a complex and challenging market environment in 2013, the Company continued to implement the development strategy of innovation and globalization, strengthened its core business capabilities, enhanced organizational
system and capabilities supporting large-scale business development, and promoted business growth through Internet-based diversified business model, application innovation and knowledge assets. Besides, the Company continued tofurther the operational excellence plan, strengthened expense management and enhanced operational efficiency. These efforts ensured stable and sustainable growth of the Company’s businesses. During the reporting period, the Company
achieved operating income of RMB 7,452,750,000 Yuan, a 7.08% year-on-year increase, net profit (attributable to shareholders of listed companies) of RMB 410,940,000 Yuan, earnings per share of RMB 0.33 Yuan, a 9.94% year-on-year decrease, net profit deducting non-recurring gains/losses of RMB 215,670,000 Yuan, a 32.50% year-on-year decrease.
During the reporting period, the overall income of the Company maintained a growth but the profits declined, which
was mainly caused by the following reasons: a) The exchange rate of RMB fluctuated heavily and the yen continued to depreciate, bringing a certain impact on corporate profits and international business expansion; b) As a knowledge-intensive
enterprise, in order to attract and retain talents, the Company continued to promote compensation improvement plan, increasing the cost of human resources; c) For the purpose of ensuring sustainable development of the Company’s businessand speeding up the planning and development of new businesses, the Company enhanced future-oriented investment in
R&D, marketing and other related expenses. By the end of the reporting period, the Company asset-liability ratio is41.17%, maintaining a reasonable level.
In terms of solution business in China’s market, the Company engaged in building comprehensive, new customer relations focusing on key value customers, further promoted its business competitiveness and market position in government, telecommunications, energy, healthcare, IT, finance and other fields. It has achieved rapid development in Smart
City, Smart Health and cloud application service. In the field of Smart City, the Company has developed integrated Neusoft Smart City solutions through resource integration and innovation. The Company participated actively in the pilot application program sponsored by the Ministry of Housing and Urban-Rural Development of China and undertook the Smart
City programs of many provinces. Remarkably, the Company won the Excellent Smart City Solutions Award at the Annual
Meeting of Chinese Smart Cities 2013. In the field of health management service, the Company continued to increase investment on R&D and marketing, launched Xikang BUDDY bluetooth smart watch and other wearable terminals as well asa wide range of health apps such as“Xikang Walking/Running Recorder”,“Xikang Diet”,“Shoushou”, etc. Besides, it
has set up a number of new healthy management centers in Shenyang, Beijing and other places with smooth business development. In the field of telematics, the Company actively promoted its business to the top of the value chain. As an
in-vehicle system supplier, the Company has developed a number of domestic customers of automobile manufacturers
such as Qoros Auto Co. Ltd., GAC Group, Pan Asia Technical Automotive, Brilliance BMW, Shanghai General Motors,
FAW Group Corporation and Shanghai Automotive Industry Corporation with innovative model. It also established a joint
venture with Harman to specialize in the development, sales and service of in-vehicle audio and infotainment system.
With respect to international business, the Company made timely and positive response to the income decrease

12Neusoft Annual Report 2013

caused by some external factors such as the exchange rate, ensuring steady development of its international business. The
Company strengthened the development of overseas market, developed strategic customers and partners on an extensive
and large-scale basis, intensifying the interrelation between the integration of key customers’businesses and large-scale
growth. In the field of telematics, the Company carried out deeper cooperation with Harman, demonstrating its shift tohigh-end value chain and the transformation from the growth model based on personnel scale to the model driven byknowledge assets. In the field of smart terminal, the Company furthered its business expansion to diversified terminals
such as smart phone, tablet and smart TV to promote the business move to the upstream of the industry chain. In addition, it enhanced cooperation with chip manufacturers, achieving sustainable development of its business.
In the space of medical systems, the business income showed a slight year-on-year decline due to the delayed launchof new products and the impact of exchange rate. During the reporting period, great achievements have been made in
the R&D of new products, including NeuViz Twin dual-slice CT scanner, US-N700 and US-N900 Diagnostic Ultrasound System and NeuCareMammo DR digital breast X-ray photography system that have hit the market and received active feedback. Those products will play a positive influence on the future development of medical system business. At the sametime, the Company made great effort to strengthen its service and logistics capabilities, set up many centers both at home
and abroad for spare parts, which improved the efficiency of service operation. The Company completed the equity acquisition with Neusoft Philips, changing the joint venture model into cooperation. The Company will increase investment on
the market with a more positive product strategy to further expand the global market.
During the reporting period, Neusoft’s competitiveness and brand image has been widely recognized with a numberof honors and awards. Notably, the Company gained the“Computer Information System Integration Enterprise Qualification Certificate”issued by the Ministry of Industry and Information Technology of China, which will have a positive impact
on the Company’s future business development. The Company has once again become the only Chinese software enterprise listed on“PWC 100 Global Software Leaders”and it was included in the list of“Top 100 Emerging Market Companies”at the same time. According to the“China-Based Offshore Software Development 2013-2017 Forecast and Analysis”report by IDC and the“Chinese Software and Service Outsourcing Market Research Report 2012-2013”by CCID, themarket share of the Company ranked at the top of China’s software outsourcing service suppliers again. Besides, theCompany was included in the“2013 Global Outsourcing 100”by IAOP for the seventh time. It also won the“Outstanding Contribution Award”and the“Most Potential Company Award”at the“2012-2013 China software and information
service Annual Selection”sponsored by the Organizing Committee of China International Software and Information Service Trade Fair. The Company was included in the“China Top 100 Green Companies”at 2013 (the sixth) China Green
Companies Annual Meeting. In addition, its governance level gained further recognition by winning the Best Board of Directors Award once again at the ninth Golden Round Table Award for the Board of Directors of Chinese Listed Companies, which was granted by the Board of Directors magazine.
4.1.1.2 Business Operations(1) Software and system integration
During the reporting period, the software and system integration business developed at a good pace, generating an
income (after deducting inter-industry off-set) of RMB 6,480,630,000 Yuan, increasing by 8.46% over the same period of
the previous year and accounting for 86.96% of the Company’s total income.
In the field of e-government, the Company maintained its leadership in human resource and social security industry
and undertook a number of provincial projects such as Golden Social Security Projects of Anhui, Xuzhou and Shenyang. In

13Neusoft Annual Report 2013

the public security field, the company won the bid for“software system development project for national population basic information database”and undertook the smart court projects of Shanxi Procuratorate, Guangzhou, Shantou and other places. For land and resource and housing construction, the Company signed cooperation agreements with the Ministryof Land and Resources of China, Wuhan Municipal Bureau of Land and Resources and Dongguan Housing Fund Management Center. In the field of intellectual property right, the Company signed cooperation agreement with the State Intellectual Property Office. In environmental protection field, the Company won the bid for e-waste management and Liaoning
Dahuofang reservoir emergency projects. In the field of agricultural product traceability, the Company undertook the construction of agricultural product tracking systems in Yan’an and other places. In Smart City field, the Company undertook
projects in Ningbo, Yingkou, Shenyang, Chongqing, etc., further expanding its market share. Moreover, the company actively explored business model innovation and developed elastic cloud solutions for social security, which laid a good foundation for the cloud-based government solutions. During the reporting period, the Company’s innovative businesses suchas self-service terminals for human resource and social security, health insurance anti-fraud and paying party management
were developed rapidly.
In the field of telecom industry, the Company strengthened business coverage with the top three operators in China,
continued to consolidate its leading position in BSS (business-supported system), BI (business intelligence), mobile Internet
and other core business fields. The Company strengthened its cooperation with China Unicom and China Telecom by signing contracts with China Unicom and its branches in Liaoning and Tianjin and undertaking projects such as China Telecom’s National Purchase and MSS system construction projects. Besides, the Company maintained close cooperation with
China Mobile through new businesses with its headquarters, South Base and North Information Port while making great
breakthrough in cloud-enabled SMS gateway. It also developed customers in Yunnan, Henan and Liaoning in terms of paperless office business. At the same time, the Company won the bid for Leyu Communication project and actively expanded new business fields catering to Mobile Virtual Network Operators. In cloud computing, the“Yiceyun”, an automatic
cloud test service system launched by Neusoft, has been recognized by customers. Besides, the Company undertook theconstruction of private cloud and public cloud for China Mobile’s South Base with smooth progress.
In the public health and medical IT industry, the Company well maintained its market leadership. In the field of healthcare, the Company won all the telemedicine projects across Shanxi province as well as the projects for the Bureau ofHealth of many provinces including Guizhou, Hunan, and Liaoning and of cities including Zhengzhou, Xuzhou and Kunshan, etc. In medical IT field, the Company deepened the partnership with existing high-quality customers like Shengjing
Hospital and China-Japan Friendship Hospital and developed new customers like the First Hospital of Qiqihar City, theTenth People’s Hospital of Shanghai, Shanghai Oriental Hospital with increasingly growing market share and customer sa ⁃tisfaction. In the field of health services, the Company constantly promoted the development of smart wearable equipment
and terminals and speeded up the deployment of health management centers. Besides, it continued to establish cooperation with hospitals, finance and insurance and real estate enterprises, promoting sustainable development of Xikang business.
In the energy industry, the Company continued to deepen cooperation with customers in traditional fields, signed contracts with the State Grid Corporation of China (SGCC) and China Southern Power Grid and gained some customers including SGCC Jiangxi Branch and Sichuan Branch as well as Guangzhou Branch and Guangxi Branch of China Southern
Power Grid. In the field of petroleum and petrochemicals, the Company undertook the project of Emergency Management System for CNPC Sales Co., Ltd., expanded business with North China, Shandong, Dalian branches of CNPC. In the14

Neusoft Annual Report 2013

fields of coal and power generation, the Company signed contracts with Huaneng Group Corp. and made great breakthrough in the applications for the headquarters of Shenhua Group and China National Coal Group Corp.
In the aspects of enterprise informatization and e-commerce business, the Company strengthened the coverage ofhigh-quality customers by expanding a number of large state-owned enterprises like Aviation Industry Corporation of China, Xingxing Cathay International Group, etc. In the tobacco industry, the Company maintained its leadership with its business in tobacco logistics developed fast and won the bid for the project of core business overall management platform for
the State Tobacco Monopoly Bureau. It also signed contracts with customers including China Tobacco Yunnan IndustrialCo., Ltd. and Hebei Tobacco Monopoly Bureau. Besides, its integrated platform for tobacco was applied in Hunan andNanjing. In digital media field, the Company signed contracts with CNTV, Xinhua News Agency, China Daily and Beijing
Daily, etc. With respect to ERP implementation and consulting service, based on the existing customer operations, theCompany won new customers such as State Nuclear Power Automation System Engineering Company, China Potevio and
Kelong Group, increasing its the market share continuously.
In the financial industry, the Company enhanced its customer coverage in banking, insurance and security fields andconsolidated the long-term cooperation with ICBC, Industrial Bank Co. Ltd., SPD Bank, PICC, CPIC and Foreign Exchange
Trading Center. It also gained new customers such as Jinshang Bank and Bank of Ningbo. During the reporting period,
the Company made great progress in core development platform for insurance, supplementary medical insurance for serious diseases, bank credit management system and core trading system and extended business to Shandong and Shenzhen, etc.
In the field of education, the Company undertook some basic education projects including the preschool education
management system for the Golden Education program sponsored by the Ministry of Education, compulsory education
platform for Beijing Municipal Commission of Education and basic education project for Zhangjiakou Municipal Commission of Education. Aiming at the demand for informatization of colleges and universities, the Company focused on the
R&D and marketing for“E-campus Platform V6”and signed contracts with universities such as Beijing university of Chinese Medicine, China University Of Petroleum and Shanghai Maritime University, which are being implemented smoothly.
In terms of transportation, the Company signed contracts with customers including Air China, China Eastern, Shenzhen Airlines and China Southern, undertook transportation projects for Dalian Metro Co., Ltd., Suzhou Subway,
Shenyang Subway and Nanjing Intercity Railway, etc. The Company actively expanded its business in Smart Transportation
field and successfully implemented onboard entertainment project for Air China’s satellite communication and Internet enabled flights. Besides, the Company undertook transportation projects including transportation informatization of Qinghai
province, dynamic bus monitoring system of Kunming and smart transportation of Ninghai town.
In the field of software products, the Company focused on key industries and medium and high-end customers, further enhanced the investment on R&D of software products to improve its competitive power. In the field of information
security, the Company launched a series of new products such as application delivery security gateway (ADSG) based on
cloud computing and“Security Keeper”service strategy. It signed contracts with some key customers such as the General
Administration of Quality Supervision, Inspection and Quarantine of China, Huaneng Group, Haier Group, Construction
Bank of China, consolidating its domination in the marketplace. In the E-HR field, the Company deepened the identification of the demands of existing customers such as CSR Corporation Limited and Dalian Wanda Group, etc., and deve ⁃loped new customers including Bright Food (Group) Co., Ltd., Ningbo Port and Dongyirisheng. In the space of archive
management, the Company expanded its business to Inner Mongolia, Nanjing, Harbin and Yiwu, established partnership

15

Neusoft Annual Report 2013

with All-China Federation of Trade Union, CNEC and China Resources, laying a good foundation for its large-scale developmentin the future.
In the BPO field, the Company has been seeing steady growth. With respect of the IT infrastructure construction andservice, its IT infrastructure monitoring & management platform was put into market, achieving a rapid development. In
terms of cloud service for small- and medium-sized enterprises (SME), the Company successively set up public service platforms for SMEs in Hubei, Shandong, Tianjin, etc. At the same time, the Company constantly built up IT-based e-commerce
platforms by industry or professional markets. During the reporting period,“Wuaigo”, the biggest online trading centerof light industrial products in Northeast China, has been successfully launched.
As for international software business, the Company strengthened its partnerships with key customers such as Sony,Toshiba, Alpine and DENSO in Japan market. In European market, the Company actively innovated the cooperation modelwith key customers such as Harman and expanded high-end customers overseas, promoting market and brand influence.
In the US market, the Company developed partners and promoted cooperation with key customers such as Amazon andIntel. During the reporting period, the Company’s income from international software business was 323,210,000 US dollars, a 6.77% year-on-year decrease due to some external factors, accounting for 26.84% of the total business income.
(2) Medical systems
In 2013, the Company continued to reinforce its marketing force: for domestic market, the Company strengthened
the construction of channels and marketing deployment for multiple product lineups, built highly efficient marketing teamand optimized the resetting of old customers, laying a good foundation for future development; for international market,
the Company implemented the strategy of tapping into key countries to achieve large-scale business development. Besides, the Company enhanced the coverage of service and marketing with logistic capability for spare parts and operational efficiency promoted. As a result, income from medical system service has seen a steady growth. During the reporting period, the income from medical systems amounted to RMB 877,660,000 Yuan, a 1.79% year-on-year decrease, accountingfor 11.78% of the total business income. Income from export service reached 25,660,000 US dollars, a 0.33%
year-on-year decrease.
4.1.1.3 Problems and challenges
Although seeing steady business growth, the Company encountered many problems and challenges in 2013.
The world economy was still moving on from a post-crisis bounce-back phase of recovery to slower growth this yearwith downside risk looming. The United States was suffering fiscal deficit and European economy has not yet warded off
the impact of debt crisis; besides, the developed economies remained a downturn. Emerging markets and developing
economies also faced development dilemma at different levels. Some countries’asset bubbles burst, leading to a slowdown of economic growth. In addition, a greater fluctuation of exchange rate of RMB and depreciation of Yen and US
dollar posed challenges for the Company’s business expansion. China’s economy faced great pressures, leading to slow
economic growth with continued structural inflation, increasingly growing cost of human resources, which resulted in further downturn of enterprise and society-wide information consumption and more fierce market competition.
In such a context, the Company strengthened its core business capabilities focusing on creating customer value, promoted marketing development ability at an organizational level, enhanced sales organization deployment and accelerated
market expansion and customer coverage to scale up its service business and value contribution rapidly and effectively; in
addition, the Company further promoted its ability of core technologies by developing new products and enhancing technological innovation and intellectual property right management, with a hope to drive dynamic business growth by busi-

16Neusoft Annual Report 2013ness model innovation and knowledge asset. Besides, the Company furthered the analysis and research on the fluctuationof exchange rate, took proper methods to avoid exchange risk, selected appropriate currency for quotation, and took collective responsibility with customers for risk, reducing the disadvantages to the Company to some extent. For internal aspects, the Company accelerated to carry out operational excellence plan, integrated internal organization structure and optimized personnel structure. The Company also strengthened refined expense management, furthered administrative authority decentralization, and enhanced the management of project planning, budget and accounting, improving overall efficiency.
4.1.1.4 Technological innovation
As an enterprise focusing on software technology, the Company always adheres to the strategy of “open innovation”and attaches great importance to input into research and development of new services/products, technologies andapproaches to promote business innovation.
In 2013, in the fields of Internet, Internet of Things and mobile Internet, the Company leveraged the opportunity ofbusiness transformation driven by the new generation of information technology to strengthen the collaboration and innovation of its two R&D systems, with an aim to promote business growth with Internet-based diversified business model innovation and knowledge asset. Besides, the Company established business innovation strategy focusing on customer value
rather than project opportunity. To this end, it initiated the R&D of main and referential technical structure of next generation, continued to increase the R&D investment on cloud application platform SaCa (Secure Social Active Connected Cloudwith Awareness), set up public consumption and enterprise oriented Internet of Things and mobile Internet applications at
a fast pace, and promoted the transfer and deployment of enterprise applications onto dynamic infrastructure. During thereporting period, the Company added new products to its SaCa family, such as SaCa EMM (Enterprise Mobile Management Platform) and SaCa DataViz (Advance Data Visualization Platform).
Considering the development trend of China’s urbanization process, the Company developed integrated solutions ofsmart city to cope with the problems occurred in aspects of urban infrastructure, public service, healthcare and educationin the process of high-speed urbanization of China. The Company has set a target of sustainable development of smart
city to optimize every function for people’s life and work by widespread application of smart technology (smart information technology). These solutions included comprehensive healthcare system, lifelong education service system and convenient and safe traffic system, etc. Continuous research and development on Neusoft SaCa platform aggressively promoted
the launch of these new applications and diversified business model innovation.
The Company furthered the implementation of its high-efficiency strategy NeuSA™, formulated and conducted feasible improvement plan according to the results of the Company’s organization-level technological capability assessment
and structure auditing, improving its competitive power and profitability. The Company also promoted the transformationfrom personnel scale to knowledge asset-based growth model. Moreover, the Company practiced the development modelof software product line, increased the input in R&D of core fields based on UniEAP V4, promoting the ability of productdesign, business modeling and engineering comprehensively. Besides, it greatly enhanced customer-centered design ability
and input in R&D of forward-looking key technologies and features. The Company kept on participating in both international and domestic open technology standard organization, conducted and took part in the formation of industrial criterion and regulation, and dominated and participated in the formulation of industry specifications. By advancing the buildingof State Key Lab of Software Architecture and developing the systems for Competence Center with partners, the Company introduced a number of cutting-edge technologies to improve the ability of continuous innovation through open coop-17

Neusoft Annual Report 2013

eration. Focusing on the development model of organization-level technological ability, the Company strengthened a series of technical abilities to promote the maturity of its organizational knowledge management.
The Company also took an active part in protecting technological innovations with intellectual rights. At the end of
2013, it has applied for 428 patents, has been granted 171 patents and registered 552 software rights. This has not only
helped the Company protect core technologies and maintain a leading position in China market but also facilitated deve⁃
lopment of international markets and core competencies.
4.1.2 Analysis on major operations
4.1.2.1 Item changes in income statement and cash flow statement
Unit: RMB/Yuan
Item

2013

2012

Operating income

7,452,753,233

6,960,195,011

7.08

Operating costs

5,308,680,595

4,729,720,928

12.24

Sales expenses

657,573,048

635,074,786

3.54

1,173,997,714

985,944,947

19.07

Financial expenses

39,185,293

78,565,067-50.12

Net cash flow from operating activities

303,851,532

317,235,522-4.22

Net cash flow from investment activities-184,039,969

47,483,221-487.59

Net cash flow from financing activities-57,542,905

14,908,706-485.97

Costs on research and development

604,046,763

468,503,476

28.93

Administrative expenses

Rate of change (%)

4.1.2.2 Income(1) Factors causing changes in business income
Unit: RMB/Yuan
Industry
Software and system integration

2013

2012

ChangeRate ofchange (%)

Rate ofchange (%)

6,480,628,986

5,975,047,991

505,580,995

8.46

102.64

Medical systems

877,664,386

893,617,148-15,952,762

-1.79

-3.24

Property management service and other businesses

94,459,861

91,529,872

2,929,989

3.20

0.60

Total

7,452,753,233

6,960,195,011

492,558,222

7.08

100.00During the reporting period, the Company’s business income increased by RMB 492,560,000 Yuan, a growth of
7.08% on account of the increase of the income from software and system integration.
(2) Sales income from key customers

18

Neusoft Annual Report 2013

During the reporting period, the total sales income from the top 5 customers is RMB 1,234,623,488 Yuan, accounting for 16.57% of the total.
4.1.2.3 Cost
（1）Cost analysis
Unit: RMB/Yuan

Cost composition

Industry

Amount inthis period

Percentage
in the totalof thisperiod (%)

Amount of
the same
period inthe previous
year

Percentage
in the totalof theprevious
period (%)

Year-on-yearchange ratio(%)

Software and system integration

Employee pay, projectsubcontracting fee, tra ⁃vels expense communication expenses, administrative expenses and assets depreciation andamortization expenses

4,782,344,528

90.09

4,172,158,625

88.21

14.63

Medical systems

Raw materials, manpower cost and production expenses

496,725,778

9.36

530,343,758

11.21

-6.34

（2）Purchase amount from main suppliers
Within the reporting period, the total purchase amount from the top five suppliers is RMB 766,899,785 Yuan, accounting for 27.10% of the total in this year.
4.1.2.4 Expenses
Unit: RMB/Yuan
Item

Reason forchange2012657,573,048

635,074,786

22,498,262

3.54

—

1,173,997,714

985,944,947

188,052,767

19.07

（1）

Financial expenses

39,185,293

78,565,067-39,379,774-50.12（2）

Income tax expenses

60,598,760

106,899,561-46,300,801-43.31（3）

Sales expenses
Administrative expenses

ChangeRate of change
(%)

2013

Notes to the Changes:(1) The administrative expenses increased by RMB 188.05 million Yuan, a year-on-year increase of 19.07% , which
was mainly caused by the rise of labor service costs and R&D expenses.
(2) The financial expenses decreased by RMB 39.38 million Yuan, a year-on-year decline of 50.12%, which was mainly caused by the change in loan structure and exchange income.
(3) The income tax expenses decreased by RMB 46.3 million Yuan, a year-on-year decline of 43.31% , which was
mainly caused by the equity transfer of Dalian Neusoft Park Industrial Development Co., Ltd. (“DNPID”) from Shenyang
Neusoft Information Technology Services Co., Ltd. (“Neusoft IT Services”) last year with a tax payable of RMB 18.92 million Yuan and year-on-year decrease of tax payable from the Company and its subsidiaries.

19

Neusoft Annual Report 2013

4.1.2.5 Research and development expenses(1) Overview
Unit: RMB/Yuan
R&D expenses in this reporting period

604,046,763

Capitalized R&D expenses in this reporting period

—

Total

604,046,763

Year-on-year change (%)

28.93

Percentage of total R&D expenses in net asset (%)

11.33

Percentage of total R&D expenses in operating income (%)8.11(2) Notes to the changes
During the reporting period, the total expenses on research and development increased by RMB 604.05 million Yuan,
a 28.93% year-on-year growth, accounting for 9.15% of the owner’s equity of its parent company, and 8.11% of the total business income. This is mainly resulted from continued input in the research and development of cloud computing, Internet of Things, telematics, medical equipment, e-government, healthcare service, network security products and intelligent logistics.
4.1.2.6 Cash flow
Unit: RMB/Yuan
ChangeRate ofchange (%)

Type of
Change

Item

2013

2012

Net cash flow from operating activities

303,851,532

317,235,522-13,383,990

-4.22

(1)

Net cash flow from investment activities-184,039,969

47,483,221-231,523,190-487.59(2)

Net cash flow from financing activities-57,542,905

14,908,706-72,451,611-485.97(3)

Note to the changes:(1) This item reduces by RMB 13.38 million Yuan, a decrease of 4.22% over the same period of the previous year,
which is mainly caused by the increase of labor service expenses and purchase costs which cannot be covered by the received payments.
(2) This item reduces by RMB 231.52 million Yuan, a decrease of 487.59% over the same period of the previous
year, which is mainly caused by the transfer of equity in DNPID by Neusoft IT Services with a transaction price of RMB 442
million Yuan. In addition, RMB 176 million Yuan of inward cash flow is generated due to the net cash flow of the reco⁃vered and newly purchased wealth management products from the bank, and the net cash flow of the same period of
the previous year is 0.
(3) This item reduces by RMB 72.45 million Yuan, a decrease of 485.97% over the same period of the previous year,
which is mainly caused by the dividend distribution for the year of 2012 by cash with an amount of RMB 184 million Yuan as well as the newly added borrowing from the bank with an amount of RMB 200 million Yuan. Besides, the inward
cash from absorbed investment by minority shareholders of the subsidiaries decreases by RMB 56.29 million Yuan.

20

Neusoft Annual Report 2013

4.1.2.7 Profit structure and changes in profit sources
Unit: RMB/Yuan
2013
Item
Amount2012

Percent in total profit(%)

AmountPercent in total profit(%)

Operating income

7,452,753,233

1,674.29

6,960,195,011

1,282.59

Operating cost

5,308,680,595

1,192.61

4,729,720,928

871.57

Period cost

1,870,756,055

420.27

1,699,584,800

313.19Operating profit

241,367,528

54.22

409,497,434

75.46

Investment income

85,929,224

19.30

112,124,066

20.66

Net non-operating income

203,762,646

45.78

133,171,079

24.54

Total

445,130,174

100.00542,668,513

100.00Notes to the Changes:
Comparing with 2012, the proportion of operating income/cost and period cost to the total profit increased in 2013;
the proportion of operating profit to the total decreased slightly as a result of the increase of human resource cost, sales
expense and R&D investment to gear the Company’s increasingly developed business; the proportion of the investment income to the total profit declined as a result of equity transfer and that of net non-operating income increased on accountof the rise of government subsidies and VAT refund of software products included in current gains/losses.
4.1.2.8 Progress of Development Strategy and Business Plan
The Company disclosed its Development Strategy and Business Plan 2013 in its Annual Report 2012. During the reporting period, the Company achieved RMB 7,452,750,000 Yuan of operating income with the cost of RMB
5,308,680,000 Yuan and period cost of 1,870,760,000 Yuan, hitting the targets of 86.56%, 88.92% and 90.37% of theamount for related items in the plan while maintaining steady business growth.
4.1.3 Operations analysis by industry, product and region
4.1.3.1 By industry
Unit: RMB/Yuan
grossprofitmargin(%）

Year-on-ye
ar changein
operatingincome (%)

Year-on-ye
ar changein
operatingcost (%)

Year-on-ye
ar changein gross
profitmargin (%)

Notes tothe
ChangesIndustry

OperatingincomeOperating cost

Software and system integration

6,480,628,986

4,782,344,528

26.21

8.46

14.63

-3.96

(1)

Medical systems

877,664,386

496,725,778

43.40

-1.79

-6.34

2.75

(2)

Notes to the Changes:(1) Within the reporting period, the gross profit margin of software and system integration decreased by 3.96% overthe same period of the previous year, which resulted from the decline of income from international business due to the21Neusoft Annual Report 2013

decrease of yen exchange rate.
(2) Within the reporting period, the gross profit margin of medical systems increased by 2.75% over the same periodof the previous year, which resulted from the change of product structure.
4.1.3.2 By region
Unit: RMB/Yuan
RegionOperating income

Year-on-year change

China5,673,075,149

11.89

Overseas regions

1,779,678,084-5.85

Notes to the Changes:
Within the reporting period, the income from domestic regions increased by 11.89% over the same period of the previous year as a result of the business expansion across China; and the income from overseas regions decreased by 5.85%
compared with the same period of the previous year, which was mainly caused by the decline of yen exchange rate.
4.1.4 Assets and liabilities
4.1.4.1 Balance sheet

Item

Trading financial assets

Year-end
amount inthis period

Proportion
to the total(%)

Year-end
amount inprevious period

Proportion
to thetotal (%)

Year-on-yearchange rate(%)

Details

32,249,913

0.34

14,917,183

0.18

116.19(1)

1,890,363,626

20.16

1,407,087,344

16.55

34.35

(2)

Prepayments

227,915,556

2.43

118,441,067

1.39

92.43

(3)

Other current assets

236,069,531

2.52

14,290,515

0.17

1,551.93(4)

Available-for-sale financial assets

26,594,230

0.28

—

—

—

(5)

Held-to-maturity investment——

403,159,918

4.74-100.00(6)

Long-term equity investment

177,229,331

1.89

390,074,357

4.59-54.57(7)

Construction in progress

276,749,271

2.95

195,555,957

2.30

41.52

(8)

Intangible asset

631,665,525

6.74

389,276,138

4.58

62.27

(9)

Long-term deferred expenses

103,494,600

1.10

72,063,173

0.85

43.62

(10)

Short-term borrowings

209,139,575

2.23

511,312,055

6.01-59.10(11)

Notes receivable

191,495,518

2.04

107,630,675

1.27

77.92

(12)

Non-current liabilities due within one year

469,158,667

5.00

—

—

—

(13)

Other current liabilities

3,664,444

0.04

120,743—2,934.91(14)

Long-term borrowings

554,000,000

5.91

84,000,000

0.99

559.52(15)——

403,658,667

4.75-100.00(16)

Accounts receivable

Bonds payable

22

Unit: RMB/Yuan

Neusoft Annual Report 2013

Continued table
Item

Deferred tax liabilities

Year-end
amount inthis period

Proportion
to the total(%)

Year-end
amount inprevious period

Proportion
to thetotal (%)

Year-on-yearchange rate(%)

Details

7,214,022

0.08

3,738,493

0.04

92.97

(17)

Converted difference in foreign
currency statements-73,859,185-0.79-54,261,434-0.64-36.12(18)

Minority interest

186,301,325

1.99

125,641,275

1.48

48.28

(19)

Notes to the Changes:(1) This item increases by RMB 17.33 million Yuan, an increase of 116.19% over the year beginning, which is mainly
caused by the Company’s foreign exchange forward contracts. At the end of this reporting period, foreign exchange forward contracts were calculated based on exchange rate quoted in the open market by different currencies; estimated floating income increase was included in P&L from change in fair value for increasing trading financial assets.
(2) This item increases by RMB 483.28 million Yuan, an increase of 34.35% over the year beginning, which is mainly
caused by the increase of accounts receivable from software and system integration business.
(3) This item increases by RMB 109.47 million Yuan, an increase of 92.43% over the year beginning, which is mainly
caused by the increase of contracted prepayment for main suppliers.
(4) This item increases by RMB 221.78 million Yuan, an increase of 1,551.93% over the year beginning, which ismainly caused by the reclassification of bank finance products purchased by the Company and its subsidiaries to other current assets.
(5) This item increases by RMB 26.59 million Yuan over the year beginning, which is mainly caused by the accountingof stocks of other listed companies purchased by Liaoning Neusoft Venture Capital Investment Co., Ltd. as avai ⁃lable-for-sale financial assets.

(6) This item reduces by RMB 403.16 million Yuan, a decrease of 100.00% over the year beginning, which is mainly
caused by the recovery of the bank finance products purchased by the Company and its subsidiaries.
(7) This item reduces by RMB 212.85 million Yuan, a decrease of 54.57% over the year beginning, which is mainly
caused by the acquisition of 25% equity in Neusoft-Philips by Neusoft Medical, which holds 74% equity in total after theacquisition. Neusoft-Philips was included in the consolidated financial statements since the end of 2013. The change ofthe consolidation results in the decrease of long-term equity investment by equity method by RMB 188.17 million Yuan.
(8) This item increases by RMB 81.19 million Yuan, an increase of 41.52% over the year beginning, which is mainly
caused by the increase of investment in the factory and office buildings in the cloud base and additional input in Beijing
Software Park project.
(9) This item increases by RMB 242.39 million Yuan, an increase of 62.27% over the year beginning, which is mainly
caused by the new right to use the land for Beijing Software Park.
(10) This item increases by RMB 31.43 million Yuan, an increase of 43.62%, which is mainly caused by increase of
decoration expense.
(11) This item reduces by RMB 302.17 million Yuan, a decrease of 59.10% over the year beginning, which is mainly
caused by the payment for short-term borrowings due in this period.
(12) This item increases by RMB 83.86 million Yuan, an increase of 77.92%, which is mainly caused by contracted set-23

Neusoft Annual Report 2013

tlement with suppliers by notes payable.
(13) This item increases by RMB 469.16 million Yuan over the year beginning, which is mainly caused by the reclassification of the Company’s medium-term note with RMB 400 million Yuan due within one year, which was included in thebonds payable item formerly.
(14) This item increases by RMB 3.54 million Yuan, an increase of 2,934.91%, which is mainly caused by the consolidation of Neusoft-Philips since the end of 2013.
(15) This item increases by RMB 470 million Yuan, an increase of 559.52% , which is mainly caused by the newlong-term borrowing with 500 million Yuan in this period.
(16) This item reduces by RMB 403.66 million Yuan, a decrease of 100.00% over the year beginning, which is mainly
caused by the reclassification of the Company’s medium-term note due within one year.
(17) This item increases by RMB 3.48 million Yuan, an increase of 92.97%, which is mainly caused by the increase of
taxable temporary difference arising from change in fair value.
(18) This item reduces by RMB 19.6 million Yuan, a decrease of 36.12% over the year beginning, which is mainly
caused by the fluctuation of exchange rate.
(19) This item increases by RMB 60.66 million Yuan, an increase of 48.28% over the year beginning, which is mainly
caused by the consolidation of Neusoft-Philips since the end of 2013.
4.1.4.2 Change in fair value measurement assets and main asset measurement attributes
No change was found in the fair value measurement assets and measure attributes of the main assets during the reporting period.
4.1.4.3 Internal control system related to the measurement of fair value
In accordance with the Accounting Standards for Business Enterprises and Basic Standards for Enterprise Internal Con-trol, the Company worked out the internal control system related to fair value to specify the utilization, acquisition, measurement and disclosure of fair value. In the aspect of financial accounting, the Company conducted financial accounting
and disclosure pursuant to applicable provisions of Accounting Standards for Business Enterprises while for internal control, it designated professional staff to check the utilization and acquisition of fair value in addition to supervising the implementation of the system.
Items related to the measurement of fair value:
Unit: RMB/’0,000 Yuan

Item

Year-begin
amountIncrease in thisperiodGains/losses
from changes
in current fair
value

Changes infair value
listed inequityCurrent
provision
Year-endforamountdepreciation

Financial assets
Include: a) Financial assets measured
by fair value with changes accounted into current profits and losses

1,492

1,733

3,225

Including: a) Derivative financial assetsb) Available-for-sale financial assets

24

1,923

736

2,659

Neusoft Annual Report 2013

Continued table

Item

Sub-total

Year-begin
amountIncrease in thisperiodGains/losses
from changes
in current fair
value

Changes infair value
listed inequity

1,492

1,923

1,733

736

Current
provision
Year-endforamountdepreciation
—

5,884

Financial liabilities
Investment property
Productive biological assets
Others

4.1.5 Core competitive powers
As China’s first listed software enterprise (listing done in 1996), Neusoft has now become the largest IT solutions andservices provider in China. Focusing on software technologies, the Company provides a number of offerings including industry solutions, product engineering solutions and relevant software products, platforms and services by integrating software with service provision and production. With two decades of development, the Company now boasts forceful corecompetence powered by edges in many aspects including business scale, brand and technological research and development.
1) Business scale
Neusoft is the largest IT solution and service provider in China with operations that cover 186 fields and 755 solutions
and products, as well as Neusoft branded medical systems involving CT, MRI, X-ray, Nuclear Magnetic Resonance, ultrasound, radiation therapy, nuclear medicine imaging equipment and PET equipment. The Company has ten thousands ofcustomers across many countries and regions including Japan, America, Europe and Middle East. In recent years, the Company’s income from main business has been increasing year by year as the implementation of innovation and globalization development strategy, contributing to a large business scale.
2) Brand power
The Company strengthened brand communication and management oriented to global market and was highly recognized by customers with its high-quality products and reliable brand. In 2008, the Company ranked No. 1 on China Independent Software Brand Top Ten List elected by the Ministry of Industry and information Technology of the People’s Republic of China. In 2009, the Company was included in Top Sixty Brands over the Past Six Decades by CCTV as the only
enterprise in software and service industry. In 2011, Neusoft was regarded as a well-known brand in China by the State
Administration for Industry and Commerce of the People’s Republic of China. The Company continuously enhanced brandand market construction, integrated platforms and sources for brand communication, and created exclusive communication strategy for key business, in an effort to increasingly promote the Company’s brand advantages.
3) Technical research and development
Being a knowledge-intensive high-tech enterprise that focuses on cultivation of R&D forces, the Company establishedtwo-level R&D system composed of company-level technology development supporting platform and business unit-level
R&D platform. As the R&D center for China’s national computer software engineering field, the Company establishedState Key Lab of Software Architecture, taking a leading position in basic research on application of cutting-edge softwarearchitecture technologies and general key technologies in China. In recent years, the Company has enhanced business and25

Neusoft Annual Report 2013

R&D planning and increased input in core business fields to drive sustainable business growth by knowledge assets.
4) Marketing and service
The Company put forward the business strategy philosophy of“achieving excellent service process and creating customer value”to fulfill its positioning as service-oriented software enterprise. In China, it set up total eight regional headquarters with marketing and service network covering more than 60 cities across the country, and established marketingand service system for key accounts, shaping a complete national-wide marketing and service network providing support
for marketing, technology consulting and customer service. Meanwhile, it established many subsidiaries in Japan, Europe
and America as overseas oriented technology supporting platform and marketing facilities, laying a good foundation fordeveloping overseas markets.
5) Human resource
The Company has established international and professional Board of Directors and senior management team, providing insightful suggestion and support for the implementation of global expansion strategy and ensuring a dynamic steadydevelopment under the complex and ever-changing economic climate. As the first PCMM Level 5 certified Chinese enterprise, the Company maintained an industry-leading position in process improvement and human capital management. The
Company has 22,403 employees, whose professional competence have been increasingly improved through a wide rangeof special training plans and two-channel career development program, forming a well-deployed, high-performance,high-quality employee force that is supporting the Company’s business development dynamically.
6) Quality management
With great attention to quality management, the Company sustained upgrade and improvement of quality system
based on its international strategy and business development demands. It has approved by a number third-party certification institutions including DNV, BSI, QAI, CQC, etc. The Company has been approved by ISO9001:1994 quality management system certification, becoming the first ISO-certified software enterprise in China. Besides, the Company is China’s
first CMM5 and CMMI5 certified software enterprise for its excellent performance in quality management and process improvement, demonstrating its well matured business competence and industry-leading project management.
4.1.6 Investments
4.1.6.1 Analysis on equity investment in other companies
Unit: RMB/’0,000 Yuan
Amount of investment during the reporting period

418,236

Change in the amount of investment

180,950

Amount of investment in the previous year

237,286

Rate of change in the amount of investment (%)76.26(1) Shareholding in other listed company

26

Unit: Yuan

Stock code

Stock name

InitialEquity ratio
investmentin thiscost
company (%)

Year-end
book value

Gain/loss
in thisperiodChange inequity inthis period

Recordedaccounting item

SourceHK01297

Sinosoft
Technology

19,235,058

26,594,230—

7,359,172

Available-for-salefinancial assets

From public
offerings

1.60

Neusoft Annual Report 2013

During the reporting period, the Company’s controlled subsidiary Liaoning Neusoft Venture Capital Investment Co.,
Ltd. (LNVCI) subscribed for 16,500,000 public shares of Sinosoft Technology Group Limited through QDII wealth management product managed by CICC, which was accounted as available-for-sale financial assets; RMB 5,520,000 Yuan of capital reserve was formed due to the change in fair value of available-for-sale financial assets (net value after deducting theamount effected by deferred income tax. RMB 3310,000 Yuan of capital reserve was added based on the Company’s e⁃quity in LNVCI when preparing the consolidated financial statements.
(2) Purchase/selling of shares of other listed company

Stock name

Number ofshares at
year-begin

Purchased shares
during thereporting period

016,500,000

Sinosoft Technology

Capital forthis purchase(Yuan)

Number of soldshares during thereporting period

Number ofshares at
year-end

Investment
income (Yuan)

0

16,500,000—

19,235,058

According to the Proposal of Capital Operation Business by Liaoning Neusoft Venture Capital Investment Co., Ltd. approved at the 18th session of the 6th Meeting of the Board of Directors on June 21st, 2013, the Board of Directors approved of LNVCI engaging in capital operation business such as security investment with its idle fund with maximal
amount of RMB 50 million Yuan (the accumulated amount of capital operation business at any point of time shall be lessthan RMB 50 million Yuan). This amount of capital may be used on a three-year rolling basis. For more details please referto the related notices published in the China Securities Journal and Shanghai Securities News on June 25th, 2013.
4.1.6.2 Overview of invested companies
Unit: RMB/’0,000 Yuan

No.

Amount ofinvestment

Percentageof equity
held by theCompany500

100.00%Capital increase

2,000

100.00%Capital increase

Invested companies

Main business

Remarks(1)

Beijing Neusoft Xikang
Hospital Management
Co., Ltd.

Hospital management, sales of electronic
products, computer, software, mechanicalequipment, communication device; leaseof computer, communication device andmedical equipment; Technological development, transfer, consulting and service(2)

Dalian Neusoft Business
Process Consulting Co.,
Ltd.

Computer software/hardware(3)

Shanghai Shimao
Xikang Healthcare
Management Co., Ltd.

Health management consulting, corporate
management service, data processing; salesof electronic products, computer software,mechanical equipment, communication device; lease of owned equipment; investment
management consulting; business consulting; meeting service; property management500

50.00%

Newly establishedjoint venture(4)

Chongqing Neusoft
Xikang HealthManagement Co., Ltd.

Healthcare service/consulting, medical institution consulting, healthcare archive ma ⁃nagement, lease of medical equipment;
Computer software/hardware development,
sales and technical consulting; technical service

50

100.00%

Newly-establishedwholly owned
subsidiary27

Neusoft Annual Report 2013

Continued table

28

Main businessAmount ofinvestment

Percentageof equity
held by theCompany231

100.00%Purchasing
minority interest

No.

Invested companies

Remarks(5)

Shenyang Neusoft
Transportation
Information Technology
Co., Ltd.

Computer service(6)

Neusoft Group
Chongqing Co., Ltd.

Development and sales of computer software/hardware and integrated product; development of medical equipment; computer system integration

2,000

100.00%

Newly-establishedwholly owned
subsidiary(7)

Neusoft Group (Ningbo)
Co., Ltd.

Development, sales， installation and consulting of computer software; transportation engineering, electronic engineering,property management

2,000

100.00%

Newly-establishedwholly owned
subsidiary(8)

Neusoft Group (Xuzhou)Co., Ltd.

Development, sales， installation, lease andconsulting of computer software; data processing; technical training for software andservice outsourcing; management training;labor dispatch

1,000

100.00%

Newly-establishedwholly owned
subsidiary(9)

Hunan Xikang HealthManagement Co., Ltd.

Health management/consulting, management consulting for medical institutions;health record management; sales andlease of health equipment810

100.00%Capital increase(10)

NEC Neusoft
Information Technology
Co., Ltd.

Development and sales of computer software

750

30.00%

Continued
funding for joint
venture(11)

Neusoft Group(Karamay) Co., Ltd.

Design, production and sales of computer
software/hardware, and mechatronics products; information technology, data processing and technical consulting service; sales
and lease of computer software and accessory equipment; labor dispatch

2,000

100.00%

Newly-establishedwholly owned
subsidiary(12)

Neusoft Medical
Systems (Middle East)
Limited liability company

Medical systems and relevant technical consulting and services

300,000USD

100.00%Continued
funding(13)

Neusoft Medical (Peru)
Inc.

Medical systems and relevant technical consulting and services

50,000 USD

100.00%Continued
funding(14)

Neusoft Medical System
U.S.A. Inc.

Product R&D/ manufacturing and related
1.3 million Yuan
technical consulting/services

100.00%Capital increase(15)

Neusoft Group(Changchun) Co., Ltd.

Development, sales, installation, technicalconsulting of computer software/hardwareand electronic products

3,000

100.00%

Newly-establishedwholly owned
subsidiary(16)

Neusoft Technology
Co., Ltd.

Technical consulting and service for computer software/hardware and electronic
products

5 million USD

100.00%Capital increase

Neusoft Annual Report 2013

Continued table

No.

Amount ofinvestment

Percentageof equity
held by theCompany

Invested companies

Main business

Remarks(17)

Dalian Yida Xikang
Healthcare Management
Co., Ltd.

Health consulting; lease of electronic pro ⁃ducts, computer and communication equipment, engineering and mechanical equipment; development, consulting and related
service of computer software; general trading

600

60.00%

Newly establishedholding company(18)

Neusoft CapitalInternational Co., Ltd.

Project investment, asset management andinvestment consulting

100,000USD

100.00%

Newly-establishedwholly owned
subsidiary(19)

Tianjin Xikang HospitalManagement Co., Ltd.

Hospital management, sales of electronic
products, software, mechanical equipment,
communication equipment; lease of computer, communication equipment, medical
equipment; technical development, transfer, consulting and service

50

100.00%

Newly-establishedwholly owned
subsidiary(20)

Neusoft-Philips Medical
Systems Limited liability
company

Development/production/research/sales ofCT scanners, MRI, X-ray, US and relatedparts; technical consulting and support

9,289

74.00%

Acquired andcontrolled(21)

Appconomy, Inc.

Mobile Internet application

443.693USD

15.20%

Vesting of
warrants(1) In January 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, infused an additional RMB 5 million Yuan into the registered capital of this subsidiary, increasing the registered capital
to 5.5 million Yuan.
(2) In January 2013, Shenyang Neusoft Information Technology Services Co., Ltd., a subsidiary wholly owned by theCompany, infused an additional RMB 20 million Yuan into the registered capital of this subsidiary, increasing the registered capital to 25 million Yuan.
(3) In February 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, established this company and held 50% of its shares by investing RMB 5 million Yuan, which was recorded in the consolidated financial statements from the said month as a joint venture based on equity method.
(4) In March 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, set up this company and held 100% of its shares by investing RMB 500,000 Yuan, which was recorded in the consolidated financial statements from the said month.
(5) In March and May 2013, the Company invested RMB 210,000 and RMB 2.1 million Yuan respectively to acquire
49.5% equity in this company and held 100% equity after the acquisition.
(6) In April 2013, the Company set up this subsidiary and held 100% of its shares by investing RMB 20 million Yuan,
which was recorded in the consolidated financial statements from the said month.
(7) In May 2013, the Company set up this subsidiary and held 100% of its shares by investing RMB 20 million Yuan,
which was recorded in the consolidated financial statements from the said month.

29

Neusoft Annual Report 2013(8) In May 2013, the Company set up this subsidiary and held 100% of its shares by investing RMB 10 million Yuan,
which was recorded in the consolidated financial statements from the said month.
(9) In May 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company,
infused an additional RMB 8.1 million Yuan into the registered capital of this subsidiary, increasing the registered capitalto 10.1 million Yuan.
(10) In May 2013, Shenyang Neusoft Information Technology Services Co., Ltd., a subsidiary wholly owned by theCompany, infused an additional RMB 7.5 million Yuan into the registered capital of this joint venture. The accumulated
capital fully infused by the subsidiary is RMB 15 million Yuan and the registered capital of this joint venture is RMB 50 million Yuan.
(11) In June 2013, the Company set up this subsidiary and held 100% of its shares by investing RMB 20 million Yuan, which was recorded in the consolidated financial statements from the said month.
(12) In June 2013, Shenyang Neusoft Medical Systems Co., Ltd., a subsidiary wholly owned by the Company, infused
an additional 300,000 US dollars into the registered capital of this subsidiary. The accumulated capital infused by
Shenyang Neusoft Medical Systems Co., Ltd. is 2.6 million US dollars and the registered capital of Neusoft Medical Systems (Middle East) Limited Liability Company was 3.5 million US dollars.
(13) In June 2013, Shenyang Neusoft Medical Systems Co., Ltd. infused an additional 500,000 US dollars into this subsidiary. Accumulated amount of 100,000 US dollars was invested. The registered capital of this subsidiary is 1.8 million Yuan.
(14) In July 2013, Shenyang Neusoft Medical Systems Co., Ltd. decided to infuse an additional 6 million US dollars into this subsidiary, increasing the registered capital to 12 million US dollars. 1.3 million was infused during the reporting period and the accumulated investment was 6 million US dollars.
(15) In August 2013, the Company set up this subsidiary and held 100% of its shares by investing RMB 30 million Yuan, which was recorded in the consolidated financial statements from the said month.
(16) In September 2013, the Company infused an additional capital of 5 million US dollars into this wholly owned subsidiary, increasing the total investment to 14.2 million US dollars.
(17) In November 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 60% of its shares by investing RMB 6 million Yuan, which was recorded in
the consolidated financial statements from the said month.
(18) In November 2013, the Company’s controlled subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd.
set up this company with an equity ratio of 100% and registered capital of 1 million US dollars. As at December 31st,
2013, 100,000 US dollars has been invested and this company was recorded in the consolidated financial statements fromthe said month.
(19) In December 2013, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 500,000 Yuan, which was recorded in
the consolidated financial statements from the said month.
(20) In December 2013, Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity in this company and held
74% equity after the acquisition. This company was recorded in the consolidated financial statements from the said
month.
(21) In December 2013, the Company vested 443,693 shares of the warrants in Appconomy, Inc. with a price of
0.001 US dollars per share. The Company held 15.20% outstanding stock of Appconomy, Inc.

30

5,000

2,000

5,000

China
Construction
Bank

China
Construction
Bank

SPD Bank

25,0003,000

Industrial
Bank

Industrial
Bank

350

100

Bank ofCommunica⁃
tions

ICBC

10,000

AmountBank ofCommunica⁃
tions

Agency2012-12-13

2012-11-1

2013-12-31

2013-12-30

2013-12-24

2013-12-24

2013-12-13

2013-12-6

Date ofcommencement

53

1

32

13

36

2

508

27

Repay capitalwith interest
2014-1-20
upon
expiration
Repay capitalwith interest
2014-1-29
upon
expiration
Repay capitalwith interest
2014-1-29
upon
expiration
Repay capitalwith interest
2014-2-12
upon
expiration
Repay capitalwith interest
2014-2-10
upon
expiration
Repay capitalwith interest
2013-2-18
upon
expiration
Repay capitalwith interest
2013-2-18
upon
expiration

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2014-1-13
upon
expiration

Date oftermination

3,000

25,000

—

—

—

—

—

—

Amountofactually
retracted
principal

27

508

—

—

—

—

—

—

Actually
gainedincomeUnit: RMB/’0,000 Yuan

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

—

—

—

—

—

—

—

—

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

NA

NA

NA

NA

NA

NA

NA

NA

AmountWhether Source
Subject
AssociationofRelated involved
fromto legal
relation
depreciati⁃ transactioninfinancingproceedi⁃
ship oron
or not prosecuti⁃ capitalngs or not
notprovisiononor notDuring the reporting period, the Company purchased the following wealth management products:(1) Wealth management

4.1.6.3 Wealth management and derivative investment

Neusoft Annual Report 2013

31

32

17,000Industrial
Bank

5,000

15,00010,000

5,000

HSBC

HSBC

HSBC

20,000HSBC

Industrial
Bank

5,400

7,000

Industrial
Bank

HSBC

5,000

AmountIndustrial
Bank

Agency2013-6-19

2013-6-13

2013-6-6

2013-5-30

2013-5-16

2013-4-24

2013-4-3

2012-12-20

2012-12-13

Date ofcommencement

23

88

11

5

249

4

13

10

6

Repay capitalwith interest
2013-3-20
upon
expiration
Repay capitalwith interest
2013-4-10
upon
expiration
Repay capitalwith interest
2013-5-2
upon
expiration
Repay capitalwith interest
2013-8-14
upon
expiration
Repay capitalwith interest
2013-6-6
upon
expiration
Repay capitalwith interest
2013-6-13
upon
expiration
Repay capitalwith interest
2013-6-20
upon
expiration
Repay capitalwith interest
2013-6-26
upon
expiration

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2013-1-17
upon
expiration

Date oftermination

5,000

10,00015,0005,000

20,0005,400

17,000

7,000

5,000

Amountofactually
retracted
principal

6

10

13

4

249

5

11

88

23

Actually
gainedincome

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

—

—

—

—

—

—

—

—

—

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

NA

NA

NA

NA

NA

NA

NA

NA

NA

AmountWhether Source
Subject
AssociationofRelated involved
fromto legal
relation
depreciati⁃ transactioninfinancingship orproceedi⁃onor not prosecuti⁃ capitalnotngs or notonor notprovision

Continued table

Neusoft Annual Report 2013

15,000

15,00015,00015,00015,000

HSBC

HSBC

HSBC

HSBC

HSBC

5,000

Bank ofCommunica⁃
tions

15,000

5,000

HSBC

HSBC

10,000

AmountHSBC

Agency2013-8-7

2013-7-31

2013-7-24

2013-7-17

2013-7-10

2013-7-3

2013-6-28

2013-6-26

2013-6-20

Date ofcommencement

22

6

30

12

9

10

13

14

12

Repay capitalwith interest
2013-7-3
upon
expiration
Repay capitalwith interest
2013-8-2
upon
expiration
Repay capitalwith interest
2013-7-10
upon
expiration
Repay capitalwith interest
2013-7-17
upon
expiration
Repay capitalwith interest
2013-7-24
upon
expiration
Repay capitalwith interest
2013-7-31
upon
expiration
Repay capitalwith interest
2013-8-7
upon
expiration
Repay capitalwith interest
2013-8-14
upon
expiration

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2013-7-3
upon
expiration

Date oftermination

15,00015,00015,00015,00015,00015,000

5,000

5,000

10,000

Amountofactually
retracted
principal

Continued table

12

14

13

10

9

12

30

6

22

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

—

—

—

—

—

—

—

—

—

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

NA

NA

NA

NA

NA

NA

NA

NA

NA

AmountWhether Source
Subject
Association
ActuallyofRelated involved
fromto legal
relation
gaineddepreciati⁃ transactioninfinancingproceedi⁃
ship orincomeonor not prosecuti⁃ capitalngs or not
notprovisiononor notNeusoft Annual Report 2013

33

34

3,800

12,80012,800

6,000

HSBC

HSBC

HSBC

23,000SPD Bank

HSBC

23,000

HSBC

5,000

8,000

HSBC

Bank ofCommunica⁃
tions

15,000

AmountHSBC

Agency2013-11-15

2013-10-28

2013-10-21

2013-9-30

2013-9-30

2013-9-12

2013-8-30

2013-8-23

2013-8-14

Date ofcommencement

23

7

18

100

29

4

11

27

11

Repay capitalwith interest
2013-8-30
upon
expiration
Repay capitalwith interest
2013-9-6
upon
expiration
Repay capitalwith interest
2013-10-17
upon
expiration
Repay capitalwith interest
2013-11-13
upon
expiration
Repay capitalwith interest
2013-10-8
upon
expiration
Repay capitalwith interest
2013-10-28
upon
expiration
Repay capitalwith interest
2013-11-12
upon
expiration
Repay capitalwith interest
2013-11-29
upon
expiration

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2013-8-28
upon
expiration

Date oftermination

6,000

12,80012,800

3,800

5,000

23,00023,0008,000

15,000

Amountofactually
retracted
principal

11

27

11

4

29

100

18

7

23

Actually
gainedincome

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

—

—

—

—

—

—

—

—

—

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

NA

NA

NA

NA

NA

NA

NA

NA

NA

AmountWhether Source
Subject
AssociationofRelated involved
fromto legal
relation
depreciati⁃ transactioninfinancingproceedi⁃
ship oron
or not prosecuti⁃ capitalngs or not
notprovisiononor notContinued table

Neusoft Annual Report 2013

5,000

6,700

550

CEB

HSBC

CMB

1,500

650

CMB

Industrial
Bank

550

CMB

1,500

5,000

CEB

Industrial
Bank

5,000

AmountHSBC

Agency2013-8-8

2013-7-4

2013-7-2

2013-6-6

2013-5-24

2013-11-29

2013-11-28

2013-11-27

2013-11-21

Date ofcommencement

9

21

10

6

1

12

5

3

7

Repay capitalwith interest
2013-12-25
upon
expiration
Repay capitalwith interest
2013-12-12
upon
expiration
Repay capitalwith interest
2013-12-6
upon
expiration
Repay capitalwith interest
2013-6-24
upon
expiration
Repay capitalwith interest
2013-8-5
upon
expiration
Repay capitalwith interest
2013-8-30
upon
expiration
Repay capitalwith interest
2013-8-5
upon
expiration
Repay capitalwith interest
2013-9-12
upon
expiration

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2013-12-5
upon
expiration

Date oftermination

1,500

650

550

1,500

550

6,700

5,000

5,000

5,000

Amountofactually
retracted
principal

Continued table

7

3

5

12

1

6

10

21

9

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

—

—

—

—

—

—

—

—

—

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

No

NA

NA

NA

NA

NA

NA

NA

NA

NA

AmountWhether Source
Subject
Association
ActuallyofRelated involved
fromto legal
relation
gaineddepreciati⁃ transactioninfinancingproceedi⁃
ship orincomeonor not prosecuti⁃ capitalngs or not
notprovisiononor notNeusoft Annual Report 2013

35

36

2013-11-21

—

1,000

390,500

Industrial
Bank

Total

11

2

4

Repay capitalwith interest
2013-11-14
upon
expiration
Repay capitalwith interest
2013-12-6
upon
expiration
Repay capitalwith interest
2013-12-26
upon
expiration
1,533

1

Repay capitalwith interest
2013-10-8
upon
expiration——

2

Compensati⁃ Estimatedon modeincomeRepay capitalwith interest
2013-9-11
upon
expiration

Date oftermination

368,050

1,000

500

2,000

650

650

Continued table

1,396

4

2

11

1

2

—

Yes

Yes

Yes

Yes

Yes

—

No

No

No

No

No

—

No

No

No

No

No

—

No

No

No

No

No

0

—

NA

NA

NA

NA

NA

As at the end of this reporting period, the first to the sixth products were not expired so the principal and interest with a total amount of RMB 225 million

quirements.

2013 to April 24th, 2015, for the purpose of improving the utilization of the fund and increasing capital cost based on the Company’s business development re-fund or owned fund available for purchasing wealth management products was increased to RMB 600 million Yuan on a two-year rolling basis from April 25th,

Amount of Purchased Wealth Management Products at the 16th session of the 6th Meeting held on March 27th, 2013, under which, the total amount of idle

Board of Directors’resolution. Considering that the term is due on April 24th, 2013, the Board of Directors approved the Proposal on Increasing the Limited

RMB 400 million Yuan based on capital condition at any time following the bond issuance and use such an amount within two years from the date of the

Directors on April 25th, 2011, the management of the Company may, at its discretion, purchase wealth management products amounting to a total amount of

Note: According to the Proposal on the Purchase of Wealth Management Products which was approved at the 26th session of the 5th Meeting of Board of

—

—

—

—

—

—

AmountWhether Source
Subject
Association
ActuallyofRelated involved
fromrelationto legalinfinancing
gaineddepreciati⁃ transaction
ship orproceedi⁃
incomeonor not prosecuti⁃ capitalngs or not
notprovisiononor notAccumulative amount of overdue principal and income outstanding (RMB Yuan)

2013-11-1

500

Industrial
Bank

2013-10-10

2013-9-24

2,000

650

CMB

2013-8-8

Date ofcommencementIndustrial
Bank

650

AmountCMB

AgencyAmountofactually
retracted
principal

Neusoft Annual Report 2013

Neusoft Annual Report 2013

Yuan was not recovered yet. The Company recognized RMB 450,000 Yuan of investment income due at the end of the reporting period based on the estimated rate of return on the balance sheet date.
(2) Entrusted Loan: NA(3) Other wealth management and derivative investment: NA
4.1.6.4 Use of raised capital
No raised capital or funds raised from previous offering were in use during the reporting period.
4.1.6.5 Main subsidiaries and shareholding companies
Unit: RMB/Yuan
Invested
company

Industry

Scope ofbusiness

RegisteredcapitalEquityratio

Total assets
at the end of
the period

Net assets at
the end of
the period

OperatingincomeCurrent
net profit

Shenyang
Neusoft
MedicalSystems Co.,Ltd.

MedicalsystemMedicalsystem378,000,000

100%

1,834,904,111

1,286,196,092

902,150,988

112,178,256

Neusoft
Group(Dalian) Co.,Ltd.

Softwareand system
integration

Computersoftware/hardware600,000,000

100%

927,621,364

821,153,968

992,176,941

126,667,475

Shenyang
Neusoft
Information
Technology
Services Co.,Ltd.

Softwareand system
integration

Computersoftware/hardware50,000,000

100%

94,732,485

89,025,599

158,872,315

3,351,698

Neusoft(Japan) Co.,Ltd.

Softwareand system
integration

Computersoftware/hardware187,750,000
JPY

100%

213,528,976

88,632,326

767,406,991

23,472,867

Neusoft(Europe)Co., Ltd.

Softwareand system
integration

Computersoftware/hardware,technical
consulting

37,900,000
CHF

100%

240,721,673

212,725,318

246,309,212

3,943,551

Neusoft
Technology
Co., Ltd.

Softwareand system
integration

Computersoftware/hardware,technical
consulting

1,000
USD

100%

18,314,395

16,571,926

16,058,221-16,353,954

Softwareand system
integration

Developme
nt, salesandconsultingofcomputersoftware850,000
USD

100%

319,164,482-8,780,141

143,236,448-67,235,806

Neusoft(Hong Kong)
Co., Ltd.

37

Neusoft Annual Report 2013

4.1.6.6 Utilization of non-raised capital
During the reporting period, the Company and its subsidiaries made a total investment of RMB 368.74 million Yuan
for the construction of projects including Beijing Software Park, Hainan Software Park (phase I), cloud base factory and office building, as shown in the following table.
Unit: RMB/Yuan
Item

AmountProgressAmount invested
this year

Actually accumulative
invested amount

Beijing Software Park

576,000,000

41%

96,527,681

226,844,483

Renovation of canteen of Shenyang Neusoft Park

43,000,000

100%

9,873,715

42,394,836

Hainan Software Park (Phase I)

210,840,000

90%

91,848,447

122,181,914

Neusoft Dalian Hekou Park (Phase II)72,370,000

35%

11,263,041

12,533,222

Medical information platform

2,720,000

69%

2,001,807

2,560,714

cloud base factory and office building

475,520,000

17%76,633,268

76,633,268

Xikang renovation project (Phase II)57,230,000

83%

42,202,901

42,606,352

Cloud Base Healthcare Center (Phase I )136,070,000

40%

32,178,891

32,330,919

Shenzhen office2,330,000

100%

2,512,477

2,512,477

Supporting facility reconstruction at No. 3
Street, Shenyang

6,700,000

90%

3,697,774

3,697,774

1,582,780,000—

368,740,002

564,295,959

Total

4.1.6.7 Entity controlled by the Company for special purpose
As at the end of the reporting period, there was no entity controlled by the Company for special purpose.

4.2 The Board of Directors’discussion and analysis on future development
4.2.1 Industry competition and development trend(1) Software and system integration
With the implementation of China’s 12th-Five-Year Plan and other important projects favorable for the people’s livelihood, preferential policies for China’s software industry was further promoted. New-generation information technology
has been listed in China’s national strategic emerging industry. Benefiting from the implementation of the preferential po⁃
licies, domestic software market saw growingly enlarged scale. In the coming years, IT innovation will be further accelera⁃ted, which will spur the emergence of new products, services and types of business and trigger new market demands,
and driving the informationalization of all fields to a higher level. This will further promote the development of emerging
fields such as smart city, cloud computing, Internet of Things, mobile Internet, big data at a fast speed. All these brought
new market opportunities and vitality for dynamic development of China’s IT enterprises.
So far, the Company has maintained a leading position in the business fields of government, enterprise informatio ⁃nization, telecom, energy resource, finance, medical system and automobile electronics as the largest IT solution and service

38

Neusoft Annual Report 2013provider in China. In the future, the Company will fully develop its advantages in resource and technology integration topromote innovation on business model and technology, and strengthen its core competitive power in emerging businessand segment fields, thereby achieving strong presence around the globe with sustainable, large-scale and robust development.
(2) Medical system
Medical system industry is a multisubject-involved, knowledge-intensive and capital-intensive high-tech industry which
was included into China’s strategic emerging industry. With further promotion of China’s reform on medical treatment
system, the increase of input in basic-level hospitals by China, demands for local high-end medical equipment and the increasing deployment and upgrade of basic medical facilities, China’s medical equipment market has large development potential. These brought significant development opportunities and promising prospect for China’s medical equipment industry.
The Company currently is the only enterprise that is able to provide independently branded four high-tech imaging devices including CT, X-ray, MRI and ultrasound. The Company has launched a series of high-end medical equipment covering the fields of CT scanner, digital X-ray apparatus, ultrasound and clinical examination, receiving active market response
while enlarging its market share and influence. In the future, the Company will spare no efforts to enhance core technology strength and competitive power of its products and promote marketing forces, in a hope to promote large-scale, fastdevelopment of business in the field of medical system.
4.2.2 Development strategy
The Company has mapped out the following development strategy and plan in 2014, an important year for the business development and transformation of the Company:
1) The Company will further conduct the innovation and globalization development strategy, enhance the competitiveness of core business on a professional and systematic basis and optimize business structure and organizational capability,with an aim to drive fulfill sustainable, large-scale and high-quality business development;
2) Focus on key accounts, set up customer development team systematically, formulate multilateral BBC business mo⁃del based on cloud in collaboration with key accounts, establish new relationships with customers, develop business that
may take leading position in the market with advantageous sales resource and promote the development of cloud service
for vertical applications;3) Develop business model based on cloud service, Internet of Things, IP and product lines as well as innovation on
business model based on Internet, promote business resource integration in the era of mobile Internet, increase input into
knowledge assets that can drive increasing business growth, and promote the value of reusable assets; and
4) Accelerate operational excellence plan and comprehensive quality management, promote virtual company-based o⁃peration and management of business units, improve expense and budget management to enhance overall operation efficiency.
4.2.3 Operating plan
It is estimated that in 2014, the Company’s operating income will hit RMB 8.88 billion Yuan, operating cost willamount to RMB 6.32 billion Yuan and period cost will reach RMB 2.31 billion Yuan.

39

Neusoft Annual Report 2013

4.2.4 Capital needed for maintaining existing business and finishing in-progress investment projects
In order to achieve these planning targets mentioned above, it is estimated that an amount of RMB 2.8 billion Yuan,
mainly sourced from self-owned funds, bank loans, will be required for purpose of daily operation, infrastructure and equity investments.
4.2.5 Potential risks(1) Macro-economic climate
Alongside complex macro-economic climate, the global economy is still moving on a rough road with some unstablefactors and uncertainties, for example, the adjustment made by some countries on their macroeconomic control policies.
Emerging economies are facing a new round of challenges and difficulties. Besides, the in-depth adjustment of the economic structure of global economy will lead to more fierce international competition. China’s economy also faces greatpressures with increasingly growing cost of human resources. These will exert a negative impact on IT requirements andconsumption of the society and businesses, thereby aggravating market competition. To this end, the Company carriedout forward-looking business deployment and development planning based on cloud computing and mobile Internet, reinforced competitiveness of core business and market position. In addition, the Company further optimized its business structure and organizational capability and enhanced the overall operational efficiency to fight against the challenges broughtby complex external environment.
(2) Fluctuation of exchange rate
So far, international software is one of the most important businesses of the Company, which may be subject to thefluctuation of exchange rate, leading to the rise or fall of gain level. The Company further promoted the analysis and research on the fluctuation, adopted proper method to ward off foreign exchange risk and quotation based on proper currency, and other measures such as joint liability for the risk with customers to minimize the impact of exchange rate fluctuation.
(3) Market
New types of businesses represented by cloud computing, Internet of Things, mobile Internet and big data are changing the structure and business model of IT industry profoundly. Increasingly intensified market competition posed higher
level of requirements for business capability and development model of the Company. The Company integrated the resources of businesses, customers, IP and product lines to strengthen its competitive powers on a professional and systema⁃
tic basis to promote the development of core businesses, executed forward-looking business deployment and development
planning in the era of mobile Internet, built up knowledge asset-based operation and cloud service to promote large-scaleand highly effective business development.
(4) Human resources
For a high-tech enterprises centering on software, high-quality teams for core technology, sales, service and management play a significant role in sustainable development. Therefore, the Company always pays high attention to the influence of human resource on corporate development. With growing business expansion and fierce competition, the Company may confront with great pressure in terms of talents recruitment and reservation. Therefore, the Company enhanced
the construction of corporate culture and high-performance organization, strengthened the salary incentive plan and talent hunting capability, increased the input into employee training, reinforced team leaderships and organizational capabili-

40Neusoft Annual Report 2013

ties, and consolidated the preparation of human resources through pinpointing key groups and specialized training. These
efforts lay a good foundation for the Company’s sustainable development.

4.3 Profit distribution/capital reserve-based capitalization proposal
4.3.1 Cash dividends policy making, implementation and adjustment

Proposal on Modifying the Company’s Articles of Association was approved at the 25th Session of the 6th Meeting ofBoard of Directors held on March 26th, 2014, indicating the distribution priority of dividends in cash and shares.
According to the Company’s Articles of Association, the Company shall put high value on investors’return on investment and keep the dividends distribution policy running continuously and stably. The Company may distribute dividends incash or shares. The priority of dividends in cash is higher than that in shares. Dividends in cash shall be adopted if the relevant conditions are met and the adoption of dividends in shares shall be based on some true and reasonable factors, suchas the growth of the Company and dilution of net asset value per share. Plan of profit distribution shall be mapped out
by the Board of Directors and approved at the shareholders’meeting. The Board of Directors should take the following
factors into full consideration, including business status of the Company, capital demands, shareholder return plan, when
mapping out the plan for profit distribution. If no profit distribution proposal is proposed when the Company makes profits, detailed reasons and the use of such reserved capital should be indicated. Independent director shall give independent
opinion about the rationality of the profit distribution proposal. The Company should listen to the opinions about the profit distribution proposal from minority shareholders through multiple channels, such as telephone consulting, field investigation and E-mail. The Company should invite minority shareholders to the shareholders’meeting related with profit distribution proposal actively. The Board of Directors, independent directors and shareholders who conform to related regulations
could collect voting right of shareholders to ensure minority shareholders’right to vote on profit distribution plan. If theCompany makes profits, while no distribution is carried out, cash dividends should be distributed at least once every threeconsecutive years. The profits distributed in cash in recent three years should not be less than 30% of the annual average
distributable profit of the recent three years. For particular cases when the dividend cash cannot be distributed in theabove proportion, the Board of Directors should give a special explanation at the shareholders’meeting. For the alterationof dividends distribution policy impacted by factors, such operation status, capital planning and long-term development,
the Board of Directors should put forward adjustment proposal. The independent directors should give their opinions andthen deliver it to the shareholders’meeting for approval. The proposal should be passed after special resolution at theshareholders’meeting.
According to the Profit Distribution Proposal 2012 approved at the Shareholders’Meeting held on April 19th, 2013,
the Company, based on total share capital of 1,227,594,245 shares as at December 31st, 2012, distributed cash dividends
on 1.5 Yuan-for-10 basis (including tax) to all shareholders with an amount of RMB 184,139,137 Yuan (including tax), theremaining undistributed profit will be given in the coming fiscal years. Relevant announcement has been released on the
China Securities Journal and Shanghai Securities News on April 20th, 2013. The Company has finished the foregoing distribution on June 7th, 2013.
4.3.2 Profit distribution/Capitalized capital reserves proposal
According to the auditing results from BDO CHINA SHU LUN PAN Certified Public Accountants LLP on the Compa-

41

Neusoft Annual Report 2013

ny’s finance situation in 2013, the parent company made a net profit of RMB 348,501,524 Yuan. According to the Company Law of the People’s Republic of China and the Company’s Articles of Association, the Company appropriated statutory surplus reserve of RMB 34,850,153 Yuan, accounting for 10% of the total, other surplus reserve of RMB 17,425,076
Yuan and accounting for 5%. The amount of profit distributable for shareholders is RMB 296,226,295 Yuan, the distributed profit to common shareholders in this fiscal year is RMB 184,139,137 Yuan. Plus the undistributed profits of previous
reporting period with the amount of RMB 2,002,512,752 Yuan, the undistributed profits by the end of this reporting period
is RMB 2,114,599,910 Yuan.
According to the Company’s future development plan, the Board of Directors plans to give returns to shareholders.
Based on total share capital of 1,227,594,245 shares on December 31st, 2013, cash dividends will be distributed to allshareholders on a 1.1-for-10 basis. Total cash dividends with an amount of RMB 135,035,367 Yuan (tax included) will be
distributed. The remaining undistributed profits will be given in following year.
The sections mentioned above shall be approved at the Shareholders’Meeting.
4.3.3 Profit distribution/capital reserve-based capitalization proposal in recent three years (the reporting period
is included)
Unit: RMB/Yuan
Numberof bonus
shares per
10
ordinaryshares(Share)Number ofdividends
per 10ordinaryshares(taxesincluded)Number ofsharesconvertedby capitalreserve per
10 ordinary
shares(Share)

2013

0

1.1

2012

0

2011

0

Year

Amount of cash
dividends(Taxes included)

Net profit
attributable toshareholders oflisted companies
recorded in the
consolidated
financial statements
for distribution year

Percentage in net
profit attributable toshareholders of listedcompanies recordedin the consolidated
financial statements0

135,035,367

410,938,749

32.86

1.5

0

184,139,137

456,313,926

40.35

0

0

0

417,068,980

0

4.4 Corporate Social Responsibility
4.4.1 Performance of corporate social responsibility
When announcing this Report, the Company shall disclose the Annual Social Responsibility Report 2013 concurrently.
For more information, please visit the official website of Shanghai Stock Exchange (http://www.sse.com.cn.)
4.4.2 Environment protection at listed companies from industries with heavy pollution recognized by China’ snational environmental protection authority
Neither the Company nor its subsidiaries attribute to enterprises with heavy pollution recognized by China’s national
environmental protection authority.

42

Neusoft Annual Report 2013

(V) Important Issues
5.1 Material litigation, arbitration material, and issue widely questioned by media
During the reporting period, there are no material litigation, arbitration material, and issue widely questioned by media.

5.2 Fund appropriation and clearing progress during the reporting period
During the reporting period, no fund appropriation happened.

5.3 Bankruptcy reorganization related issues
During the reporting period, the Company has not experienced any bankruptcy reorganization.

5.4 Asset transaction and business combination
5.4.1 Asset acquisition
At the 19th session of the 6th Meeting of Board of Directors held on July 4th, 2013, the Proposal on Signing Acquisition
Agreement with Philips was approved. For more details, please refer to the relevant announcement published on the China Securities Journal and Shanghai Securities News on July 5th, 2013.
According to the agreement, Philips Electronics China B.V. transferred 15% equity in Neusoft-Philips Medical Systems
Limited Liability Company (“Neusoft-Philips”) to Shenyang Neusoft Medical Systems Co., Ltd. (“SNMS”) with a transaction price at RMB 55,736,300 Yuan; Philips (China) Investment Co., Ltd. transferred its 10% equity in Neusoft-Philips to
SNMS with a transaction price at RMB at 37,157,500 Yuan, total price of the transactions is RMB 92,893,800 Yuan. Besides, the associate of Philips (China) Investment Co., Ltd. took over 150 R&D and production staff with respect to the operationof CT scanner and CT high pressure generator assets. According the related agreement, Philips Medical Systems (Suzhou)Co., Ltd. purchased equipment, apparatus and prototype relating to R&D and pilot production of CT scanners and CT highpressure generators. As mutually agreed, the final transaction price (excluding tax) was RMB 11,026,700 Yuan.
On December 25th, 2013, the registration of business change for the above transfer has been finished and thereafter
Neusoft-Philips became an indirectly controlled subsidiary of the Company.
5.4.2 Sales of assets

Counterparty

Sold asset

Qinhuangdao
Xingpai
Investment
Co., Ltd.

The asset refers twohouses located at No.2
Lianfeng North Road,
Beidaihe District,Qinhuangdao City withland area of 7,684.46
sqms and total building
area of 3,974.03 sqms

Unit: RMB/’0,000 Yuan

Date of sales

Net profit
contributed
to thelistedGain/loss
RelatedSales
company
before transaction
pricefrom the the sales
or notbeginning (pre-tax)
to the endof 2013

May 16th, 2013 2,325

NA

688

No

Pricing
basis

Asset
evaluation

Are the
Percentage
Are thepropertyof netclaims andrights of
profitliabilities
assetscontributed
involved
involved
to the list
fully
fully
companytransferredtransferredof the?
?
sales (%)

Yes

Yes

1.39

43

Neusoft Annual Report 2013

Continued table

Counterparty

Sold asset

Naturalperson Le
Liuping and
Yin Sheng

Their 60% equity inGuangdong Neufashion
Digital Technology Co.,Ltd.

Date of sales

Net profit
contributed
to thelistedGain/loss
RelatedSales
company
before transaction
pricefrom the the sales
or notbeginning (pre-tax)
to the endof 2013

March 21st, 2013 2,250

-125

1,158

No

Pricingbasis

Are the
Percentage
Are thepropertyof netclaims andrights of
profitliabilities
assetscontributed
involved
involved
to the list
fully
fully
companytransferredtransferredof the?
?
sales (%)

Mutually
negotiated

Yes

Yes

2.60

Please refer to 5.6.2“Related transactions caused by assets acquisition and selling”for details.

5.5 Equity Incentive & Influence
During the reporting period, the company did not carry out equity incentive program.

5.6 Material Related Transactions
5.6.1 Related transactions in connection with normal business5.6.1.1 Execution of estimated route related transactions for 2013 during the reporting period
Unit: RMB/Yuan
Related transaction
Raw material/finished product purchase

Estimated total amountin 2013

Percent in estimatedamount of 2013

328,500,601

419,850,000

78.24%

1,007,673,596

1,002,140,000

100.55%

Labor service receiving

23,898,773

19,120,000

124.99%Labor service rendering

210,930,571

315,440,000

66.87%

Product/commodity selling

44

Actual amount incurredin 2013

Neusoft Annual Report 2013

5.6.1.2 Related transactions in connection with normal businessCounterparty

Relevance

Type

Content

Pricing basis

Amount

Unit: RMB/Yuan

Percentage
to theamount ofsimilartransaction(%)

Settling
method ofrelatedtransaction

Cause formaterial
difference
betweenMarket price transaction
price andmarketreference
price

Alpine Electronics
Inc. and its
subsidiaries(collectively
referred to as“Alpine”)

Hold more than
Product/
System
5% of thecommodity integration/
Market priceCompany’s
selling
software selling
equity200,243,700

3.09%

Cash

200,243,700

NA

HarmanInternational
Industries,
Incorporated andits subsidiaries(collectively
referred to as“Harman”)

The Company’s
Chairman
Product/
Systemserves ascommodity integration/
Market pricedirector inselling
software selling
Harman244,558,733

3.77%

Cash

244,558,733

NA

Toshiba
Corporation andits subsidiaries(collectively
referred to as“Toshiba”)

Hold more than
Product/
System
5% of thecommodity integration/
Market priceCompany’s
selling
software selling
equity228,126,084

3.52%

Cash

228,126,084

NANokia Neusoft
CommtechCompany (Note)

The Company’s
Product/
SystemChairmancommodity integration/
Market priceserves as its
selling
software selling
Vice Chairman

80,830,446

1.25%

Cash

80,830,446

NA

Tianjin Neusoft
Ruidao Education
Information
Technology Co.,
Ltd. and its
subsidiaries(collectively
referred to as“Tianjin Ruidao”)

The Company’s
ChairmanServiceserves as its
receiving
Chairman

Softwaredevelopment
and service

Market price

118,252,824

13.57%

Cash

118,252,824

NA

Dalian Neusoft
Thinking
Technology
The Company’s
Development Co.,
ChairmanServiceLtd. and its
serves as its
receivingsubsidiaries
Chairman(collectively
referred to as“Dalian Thinking”)

Softwaredevelopment
and staff
outsourcing

Market price

79,051,728

9.07%

Cash

79,051,728

NA

Its controlling
Shenyang Neusoft
shareholder
Product/
SystemSystem Integration
serves ascommodity integration/
Market priceEngineering Co.,
chairman of the selling
software selling
Ltd. (“SY NSIE”)
Company

222,594,085

3.43%

Cash

222,594,085

NA

45

Neusoft Annual Report 2013

Continued table

Counterparty

Settling
method ofrelatedtransaction

Type

Content

Pricing basis

AmountIts controlling
Shenyang Neusoft
shareholder
Raw
System Integration
serves as
material
Engineering Co.,
chairman of the purchaseLtd. (“SY NSIE”)
Company

Raw materialpurchase

Market price

10,659,427

0.47%

Cash

10,659,427

NA

Neusoft-Philips
Medical Systems
Limited Liability
Company(“Neusoft-Philips)

The Company’s
Raw
Chairmanmaterial
serves as itspurchase
Chairman

Raw material,
finishedproduct/service
purchase

Market price

304,010,440

54.91%

Cash

304,010,440

NA

—

—

—

1,488,327,467

—

—

—

—

Total

Relevance

Percentage
to theamount ofsimilartransaction(%)

Cause formaterial
difference
betweenMarket price transaction
price andmarketreference
price—

Note: It is formerly known as “Nokia Siemens Networks Neusoft Commtech Company”. The registration of namechange has been finished on December 18th, 2013.
The amount of transactions with Alpine, Harman, Toshiba and Nokia Neusoft was equivalent to the accumulative
amount of related transactions in its kind in 2013. By leveraging the advantages in software development, the Company
provides Alpine, Harman, Toshiba and Nokia Siemens Neusoft with software products in the fields of in-vehicle audio, navigation and industry solutions, thus generating stable and continuous income and promoting the development of its international software business.
The amount of transactions with Tianjin Ruidao was equivalent to the accumulative amount of related transactions in
its kind in 2013. Tianjin Ruidao leveraged its advantages in human resource supply, training and cost efficiency to assist
the Company for R&D projects and provide the Company with software development and service.
The amount of transactions with Dalian Thinking was equivalent to the accumulative amount of related transactionsin its kind from June 20th, 2013 to December 31st, 2013. Dalian Thinking provided the Company with cost effective software development and HR outsourcing service relying on its HR advantage and rich experience in related technology andproject.
The amount of transactions with SY NSIE was equivalent to the accumulative amount of related transactions in its
kind from May 16th, 2013 to December 31st, 2013. The Company sold computer products to SY NSIE with its price advantage and professional purchase management process. The Company also purchased computer products from SY NSIE toachieve complementary advantages and mutual benefits.
The amount of transactions with Neusoft-Philips was equivalent to the accumulative amount of related transactions in
its kind in 2013. The Company purchased CT scanners, MRI, X-ray apparatus and ultrasonic diagnosis equipment from
Neusoft-Philips.

46

Neusoft Annual Report 2013

5.6.2 Related transactions caused by assets acquisition and selling
Unit: RMB/’0,000 Yuan

Relatedparty

Relevance

Type

Content

Cause
Influenceforonmaterial
business differenceBook
Estimated
Gain
MarketresultbetweenPricing value ofvalue ofTransfer Settlement fromfairandtransfer
basis transferred transferredpricemethodthevaluefinancial price and
asset
asset
transfer
condition
bookof thevalue orCompany estimatedvalue

The assets, including
two employeeItsdormitory buildings and
Shenyang controlling
1 office building andRuidaoshareholder Sales their auxiliary facilities, AssetHouse
serves asofevalulocates at No.2 Xinxiu
Purchasing chairman of asset Street, Hunnan New
ationCo., Ltd. theDistrict, Shenyang with
Company
an area of 35,713 sqms
and total building areasof 16,749.4 sqms

3,388

3,990

3,990

3,990

Cash

202

NA

Note: For more details, please refer to the Announcement on Related Transaction of Asset Transfer Agreement with

Dalian Kangruidao Investment Co., Ltd. published on China Securities Journal and Shanghai Securities News on March
30th, 2013. As at December 31st, 2013, the procedures of transfer of property rights have been closed.
5.6.3 Related transactions for co-investment on other companies
On December 20th, 2013, the Company and its associated legal entity Harman International (China) Holdings Co.,
Ltd. (“Harman China”) set up Neusoft Harman Telematics (Dalian) Co., Ltd. (“Neusoft Harman”) in Dalian with registered capital of 7 million US dollars, among which, 4.2 million was invested by Harman China, accounting for 60% of thetotal; and 2.8 million was invested by the Company, accounting for 40% of the total. Neusoft Harman will specialize indevelopment and wholesales of speaker, power amplifier, infotainment system host with or without navigation and in-vehicle information service as well as related technical support and service.
Harman China is a wholly owned subsidiary of Harman. The Company’s Chairman serves as Director at Harman. Harman China is the Company’s associated legal entity according to applicable regulations.
5.6.4 Related Debts and Liabilities
Unit: RMB/Yuan
Fund provided
Related party

Aerotel Medical Systems (1998) Ltd.

Relevance

Company’s directors serve as directors in this company as wellYear-beginbalance0

Amount occurredYear-end balance

1,415,839

1,415,839

47

Neusoft Annual Report 2013

Note: At the 22th section of the 6th Meeting of Board of Directors on October 10th, 2013, the Board of Directors
agreed Neusoft (Europe) Co., Ltd. (“Neusoft Europe”) to provide financial assistance to Aerotel Medical Systems (1998)
Ltd. (“Aerotel Medical”) with USD 1 million with a term of 2 years (from October 10th, 2013 to October 9th, 2015) basedon local loan interest rate. The fund will be provided based on the financial situation of Neusoft Europe and actual needof Aerotel Medical. For more details, please refer to the relevant announcement published on China Securities Journal andShanghai Securities News on October 11th, 2013.

5.7 Major contracts and their performance
5.7.1 Custody, contracting and leasing services
1) Custody
The Company did not provide any custodian in this fiscal year.
2) Contracting
The Company was not engaged in any contracting service in this fiscal year.
3) Leasing
The Company was not engaged in significant leasing service in this fiscal year.
5.7.2 Security
Unit: RMB/’0,000 Yuan
Security provided by the Company for third parties (Excluding the subsidiaries controlled by the Company)

Relationshipbetweenthe
Guarantor
Guarantee
guarantor
and listedcompany

Neusoft(Europe)Co., Ltd.

Whollyowned
subsidiary

AerotelMedicalSystems(1998)Ltd.

Amountof thesecurityHas
Is theIs
Date oftheDefault
securityIs thethere
security Commencement
Security security
penaltyfor
Expiry datesecurity
any
Relevance(Date ofdate
type beenfortheoverdue?
coun⁃agreement)
fulfilledsecurity
relatedtersecurity?
party?

210,000
2013.04.24
USD

Joint
and
several2013.04.24 2014.04.22
liability

No

No

0

No

Yes

Its
directors
serve asdirectors
as well intheCompanyYes

Itsdirectors
serve asdirectors
as well intheCompany

security

Neusoft(Europe)Co., Ltd.

Whollyowned
subsidiary

AerotelMedicalSystems(1998)Ltd.

1270002013.06.06
USD

Joint
and
several2013.06.06 2014.06.05
liability
security

48

No

No

0

No

Total amount of security occurred in the reporting period (excluding that for the Company’s subsidiaries)

208

Total balance of security occurred during the reporting period (excluding that for the Company’s
subsidiaries) (A)208

Neusoft Annual Report 2013

Continued table
Security provided by the Company for its controlled subsidiaries
Relationship
Date ofbetweenAmountthesecurity Commence⁃ Expiry
Guarantor
Guarantee of theguarantor(Date of ment datedate
securityand listed
agreement)
company

Neusoft
Corporation

HQ

Neusoft(HongKong) Co.,
Ltd.

1.5
millionUSD

Has theDefault Is there
Is theSecurity security
penaltyany
security
type
been
for
counter
overdue?
fulfilled?
security security

Joint
and
2013.3.20 2013.3.20 2014.3.20 several
liability
security

No

No

0

No

Relevance to theCompany

Wholly owned
subsidiary

Total amount of security for the Company’s subsidiaries during the reporting period-203

Total balance of security for the Company’s subsidiaries during the reporting period (B)928

Total security provided by the Company (Excluding that for its controlled subsidiaries)
Total security (A+B)

1,136

Percentage of total security to the Company’s net assets (%)

0.21

Include:Amount of security for shareholders, ultimate controllers and their associates (C)Amount of security directly or indirectly provided for guarantees whose asset/liability ratio is morethan 70% (D)Amount of security amount exceeding 50% of net assets (E)Total amount of security mentioned above (C+D+E)
Unexpired guarantee might assume joint liability.

0
1,136
0
1,136
0

Remarks:
The security for Aerotel Medical Systems (1998) Ltd. was according to the Proposal on Providing Security for theAmount of Bank Loan for Aerotel Medical Systems (1998) Ltd. approved at the 2nd session of Interim Shareholders’Meeting held on September 18th, 2012, under which the security by the Company’s wholly owned subsidiary Neusoft (Europe)Co., Ltd. for Aerotel Medical Systems, with a total warranted amount of 1 million US dollars with a term of two years(from September 18th, 2012 to September 17th, 2014) was approved.
The security for Neusoft (Hong Kong) Co., Ltd. was according to the Proposal on Providing Limited Amount of Securi-ty for Bank Loans of Neusoft (Europe) Co., Ltd., Neusoft (Japan) Co., Ltd. and Neusoft (Hong Kong) Co., Ltd. approved atthe 2nd session of Interim Shareholders’Meeting held on September 12th, 2013, under which, the company would provide
a total amount of RMB 50 million USD or the equivalent of other currencies as security for bank loans of the company’s
three wholly-owned subsidiaries for two years from the approval date of the proposal (i.e. from September 12th, 2013 to
September 11th, 2015).
5.7.3 Other important contracts or transactions
1) At the 8th session of the 6th Meeting of Board of Directors held on March 12th, 2012, the proposal on signing Letterof Intent and other related document with QOROS (formerly known as“CQAC”) and the proposal on signing Letter of49

Neusoft Annual Report 2013

Intent and other related document with Alpine Electronics (China) Co., Ltd. (“Alpine China”) were approved. At the first
Interim Shareholders’Meeting on March 30th, 2012, the proposal on signing Letter of Intent with Alpine China was approved. For more details please refer to related announcements published on China Securities Journal and Shanghai Securities News respectively on March 15th, 2012 and March 31st, 2012.
During the reporting period, the Company run its automobile-related business according to the requirements of
QOROS and recognized RMB 21.91 million Yuan of income from this business. At the same time, the Company made purchase from Alphine China and recognized RMB 20.47 million Yuan of operating cost.
2) At the 16th session of the 6th Meeting of Board of Directors on March 27th, 2013 and the 2012 Shareholders’Meeting on April 19th, 2013, the proposal on signing Navigation Map Product Agreement with Harman Becker Automotive Systems GmbH was approved. For more details please refer to related announcements published on China Securities Journaland Shanghai Securities News respectively on March 30th, 2013 and April 20th, 2013.
During the reporting period, the Company’s indirectly controlled subsidiary Neusoft Technology Solutions GmbH purchased original map data for the production, development, test and integration of its navigation map product and soldthis product by set to Harman Becker Automotive Systems GmbH. RMB 91.15 million Yuan of income from this business
was recognized.

5.8 Fulfillment of undertakings
There is no committed undertaking during the reporting period.

5.9 Employment and dismissal of CPA firm
5.9.1 Financial Auditing Agency
Unit: RMB/’0,000 Yuan
Whether to appoint a CPA firm

No

Name of the appointed CPA firm

BDO CHINA SHU LUN PAN Certified Public Accountants LLP

Rewards of the appointed CPA firm

1.3 million (excluding taxes)

Term of audit of the appointed CPA firm

6 years

At the 2012 Annual Shareholders’Meeting held on April 19th, 2013, the Proposal on Employment of Financial Audit-

ing Agency for 2013 was approved and the resolution related to the appointment of BDO China Shu Lun Pan Certified
Public Accountants LLP to perform financial auditing for 2013 was made. The service term was fixed from the date of approval at the 2012 Annual Shareholders’Meeting till the date of holding the 2013 Annual Shareholders’Meeting.
In 2013, BDO China Shu Lun Pan Certified Public Accountants LLP audited the Annual Report 2013 of the Company,
for which the Company paid an amount of RMB 1.3 million Yuan (excluding tax). Till the end of the reporting period,
BDO China Shu Lun Pan Certified Public Accountants LLP has performed auditing service for the Company for six years. Li
Chen and Wu Jie, public certified accountants of BDO China Shu Lun Pan Certified Accountants were the authorized signatories on the relevant auditors’reports.

50

Neusoft Annual Report 2013

5.9.2 Internal-Controlled Financial Auditing Agency
At the 16th Session of the 6th Meeting of the Board of Directors held on March 27th, 2013, the Proposal on Employ-ment of Internal-Controlled Financial Auditing Agency for 2013 was approved and the resolution related to the appointment of BDO China Shu Lun Pan Certified Public Accountants LLP as the internal financial auditing agency of the company for 2013 was made to audit the effectiveness of the internal control and prepare the Annual Report 2013 of the Company.
In 2013, BDO China Shu Lun Pan Certified Public Accountants LLP audited the effectiveness of internal control mechanism for Annual Report 2013 of the Company, for which the Company paid an amount of RMB 400,000 Yuan (exclusiveof tax).

5.10 Punishments and rectifications received by the listed company, its directors, supervisors, senior management, shareholders holding over 5% voting share of theCompany, actual controllers and acquirers
In this fiscal year, the Company, its directors, supervisors, senior managements and shareholders have not received
any inspection orders, administrative punishment and public reprimand or censure from the China Securities Regulatory
Commission or any stock exchange and have not engaged in any illegal dealings in shares.

5.11 Listing Suspension or Termination
No listing suspension or termination occurred by the end of the reporting period.

5.12 Convertible Bonds
No convertible bonds were issued in this fiscal year.

5.13 Buyer’s Credit
To facilitate the Company’s medical system operations, Dalian Kangruidao Investment Co., Ltd. has provided loan
guarantees for medical system customers since August 2012. By the end of the reporting period, the balance of buyer’s
credit guaranteed by Dalian Kangruidao Investment Co., Ltd. was RMB 97.67 million Yuan.

5.14 Other issues
On June 25th, 2013, the Company’s indirectly controlled subsidiary Beijing Neusoft Huiju Information Technology Co.,
Ltd. (“Neusoft Huiju”) obtained the Approval of Public Transfer of Beijing Neusoft Huiju Information Technology Co.,

Ltd.’s shares in National Equities Exchange and Quotations from China Securities Regulatory Commission (License No.
[2013]812), under which Neusoft Huiju was supervised as a non-listed public company.
The shares of Neusoft Huiju were listed for public transfer in the system on July 3rd, 2013 with an abbreviated name of“Neusoft Huiju” and stock code of 430227. The designated information disclosure platform is (www.neeq.com.cn) or(www.neeq.cc.)

51

Neusoft Annual Report 20135.15 Description of other important issues
No material changes and error correction occurred in the accounting policies, estimates and methods during the reporting period.

52

Neusoft Annual Report 2013

(VI) Changes in Equity and Shareholders
6.1 Changes in equity
6.1.1 Statement of changes in equity
6.1.1.1 Overview
During the reporting period, the total number of shares and shareholding structure of the Company has not changed.
Unit: Share
BeforeItem
Quantity

Changes (+/-)

Percent
(%)

New
issue

Bonus
issue

Conver⁃sion
Others Sub-total
fromreserves

After

Quantity

Percent(%)

1. Shares with trading restrictionsa) State-owned sharesb) Shares held by state-owned
companiesc) Shares held by other domestic investors
Include: Shares held by companies other than state-owned
companies
Shares held by domestic natural personsd) Shares held by foreign investors
Include: Shares held by foreigncompanies
Shares held by foreign natural
persons
2. Floating shares without trading restrictions

1,227,594,245

100

1,227,594,245

100a) RMB-denominated ordinary
shares1,227,594,245

100

1,227,594,245

100

1,227,594,245

100

1,227,594,245

100b) Shares traded in non-RMB
currencies and listed domesticallyc) Shares listed overseasd) Others
Total shares

53

Neusoft Annual Report 2013

6.1.2 Changes in shares with trading restrictions
During the reporting period, there was no change in shares with trading restrictions. All the Company’s
1,227,594,245 shares were tradable shares without trading restrictions hereto.

6.2 Issue and listing of securities
6.2.1 Issue of securities in the past three years by the end of the reporting period
No securities were issued and listed in the past three years prior to the end of the reporting period.
6.2.2 Changes in the total number of shares, shareholding and liability structures
There is no change in the total number of shares and shareholding structure caused by bonus issue and alloted
shares during the reporting period.
6.2.3 Shares held by employees
During the reporting period, no shares for employees of the Company were issued.

6.3 Shareholders and ultimate controllers
6.3.1 shareholders and their shareholdings
Unit: ShareTotal number of shareholders at the end of 2013

62,680Total number of shareholders by March 24th, 2013

76,774

Shareholdings of the top ten shareholders
Number ofsharespledged orfrozenNatureState-owned
company

17.6248

216,361,562

0067,370,000

Alpine Electronics (China) Co., Ltd.

Domestic
non-state-owned
company

13.9512

171,263,547

0

0

0

Baosteel Group Corporation

The state

5.132063,000,000

0

0

0

Toshiba Solutions Corporation

Foreign company

4.743358,228,036

0

0

0

Intel Capital Corporation

Foreign company

2.604531,973,228

0

0

0

Philips Electronics China B.V.

Foreign company

2.032824,954,871

0

0

0

Bank of China - Harvest Research Selected Equity Securities Investment Fund

Unknown

1.9911

24,443,018

24,443,018

00ICBC - Invesco Great Wall Selected Blue
Chip Equity Securities Investment Fund

Unknown

1.893823,248,436

23,248,436

00Shareholder

NEU Science &Group Co., Ltd.

54

Numberof shares
withtrading
restrictions

Changeduring thereportingperiodShare⁃
holdingratio (%)

Technology

Industry

Total
shareholdings

Neusoft Annual Report 2013

Continued table
Shareholdings of the top ten shareholders

Shareholder

NatureShare⁃
holdingratio (%)

Total
shareholdings

Numberof shares
withtrading
restrictions

Changeduring thereportingperiodNumber ofsharespledged orfrozenChina Construction Bank - Hua An Hongli Equity Securities Investment Fund

Unknown

1.800322,099,990

22,099,99000Alpine Electronics Inc.

Foreign company

1.633920,057,144

0

0

0

Shareholdings of top ten shareholders with shares without trading conditions
Shareholder

Number of shares without
trading restrictions

Class and number of shares

NEU Science & Technology Industry Group Co., Ltd.

216,361,562

RMB-denominated ordinary shares

216,361,562

Alpine Electronics (China) Co., Ltd.

171,263,547

RMB-denominated ordinary shares

171,263,547

Baosteel Group Corporation

63,000,000

RMB-denominated ordinary shares

63,000,000

Toshiba Solutions Corporation

58,228,036

RMB-denominated ordinary shares

58,228,036

Intel Capital Corporation

31,973,228

RMB-denominated ordinary shares

31,973,228

Philips Electronics China B.V.

24,954,871

RMB-denominated ordinary shares

24,954,871

Bank of China - Harvest Research Selected Equity Securities Investment Fund

24,443,018

RMB-denominated ordinary shares

24,443,018

ICBC - Invesco Great Wall Selected Blue Chip Equity Securities
Investment Fund

23,248,436

RMB-denominated ordinary shares

23,248,436

China Construction Bank - Hua An Hongli Equity Securities Investment Fund

22,099,990

RMB-denominated ordinary shares

22,099,990

Alpine Electronics Inc.

20,057,144

RMB-denominated ordinary shares

20,057,144

Notes on the relationship or concerted action of the said
shareholders

Alpine Electronics (China) Co., Ltd. operates as an investment company solely owned
by Alpine Electronics Inc. in China.
The Company has no knowledge of the relationship of other shareholders such as concerted actor.

6.3.2 Holding shareholders and ultimate controllers
6.3.2.1 At present, the Company, with stock held in separate shareholdings, has no holding shareholders or ultimate
controllers. The largest shareholder is NEU Science & Technology Industry Group Co., Ltd. with a shareholding percentage
of 17.6248%.

55

Neusoft Annual Report 2013

6.3.2.2 Shareholder and Control Relation Chart
Ministry of
Education of
the People’s
Republic of
China

State-owned Assets
Supervision and
Administration
Commission of the StateCouncils Republic of China

100%

100%

Northeastern
University

Toshiba
Corporation

INTEL
CORPORATIONROYALPHILIPSELECTRONICS

100%

100%

100%

100%

AlpineElectronics（China）Co.,Ltd.

ToshibaSolutions
Corporation

INTEL
CAPITALCORPORATIONPHILIPSELECTRONICSCHINA B.V

AlpineElectronics
Inc.

100%

NEU Science& Technology
Industry
Group Co.,Ltd.

BaosteelGroup
Corporation

17.6248%5.1320%13.9512%4.7433%2.6045%2.0328%AlpineElectronics
Inc.

1.6339%SAP
AGToshiba
Corporation

1.3265%0.6776%

PublicShares50.2734%

100%

Neusoft Corporation

6.3.2.3 Major shareholdersa) NEU Science & Technology Industry Co., Ltd.
NEU Science & Technology Industry Group Co., Ltd., approved by the Ministry of Education of the People’s Republicof China through issuing the Document of No.11 [2005] of Department of Science and Technology, the Ministry of Education on July 1st, 2005, was incorporated as a limited liability company wholly-owned by Northeastern University in compliance with a judicial restructure of NEU Industry Development Co., Ltd. (a company owned by all members of Northeastern
University) in accordance with the Guidelines for Promoting the Development of Technology Industry in China’s Collegesand Universities. It holds the equity and business assets of investees on behalf of Northeastern University.
Date of incorporation: August 5th, 2005
Registered capital: RMB 500 million Yuan
Registered office: No.11, Lane 3, Wenhua Road, Heping District, Shenyang 110819, PR China
Legal representative: Zuo Liang
Organization code: 11772782-8
Business scope: Research/development/manufacturing/contracting of computer software/hardware, mechatronics,
high-tech products, emerging materials and metallurgical products, technology consulting/service/transfer/training, importing/exporting of self-owned and commissioned products and technologies, corporate investment management, corporate
assets management, property management.
b) Baosteel Group Corporation
Baosteel Group Corporation is a legally incorporated and wholly state-owned corporation for which the State-owned
Assets Supervision & Administration Commission under the State Council of the People’s Republic of China performs theduty of investor on behalf of the State Council.
Date of incorporation: January 1st, 1992
Registered capital: RMB 51,082,621,000 Yuan
Registered office: Baosteel Plaza, No.370, Pudian Road, Pudong New Area, Shanghai 200122, PR China

56

Neusoft Annual Report 2013

Legal representative: Xu Lejiang
Organization code: 13220082-1
Business scope: State-owned assets business under authorization of the State Council of the People’s Republic of China and relevant investment business, other business related to steel, mineral & metals, chemicals (except for hazardous
goods), power supply, terminal service, warehousing and transpiration and development/transfer/management/consultingof technologies related to such business, importing/exporting services approved by the Ministry of Foreign Trade and Economic Cooperation, domestic and foreign trading (except for those under special regulations of China) and relevant servi⁃ces.
c) Alpine Electronics Inc.
Alpine Electronics Inc., organized and existing under the laws of Japan, is an auto electronics manufacturer mainly engaged in the production of in-car audio, information and communication products. It is listed on Tokyo Stock Exchange.
Date of incorporation: May 10th, 1967
Registered capital: 25,920,599,127 Yen
Registered office: 1-1-8 Nishi-Gotanda, Shinagawa-ku, Tokyo 141-8501, Japan
Business scope: In-car audio products/in-car information & communication productsd) Alpine Electronics (China) Co., Ltd.
Alpine Electronics (China) Co., Ltd., established in Beijing, China in 1994, operates as an investment company wholly-owned by Alpine Electronics Inc.
Date of incorporation: December 28th, 1994
Registered capital: 103,700,000 US dollars
Registered office: F4, Block R2, China Merchants Tower, No.116, Jianguo Road, Chaoyang District, Beijing 100022,
PR China
Legal representative: Toshinori Kobayashi
Organization code: 60003725-3
Business scope: Investment in in-car audio products, in-car information/communication/navigation products and relevant parts, sales of and services for products designed for investees.
e) Toshiba Corporation
Toshiba Corporation, a company organized and existing under the laws of Japan, is listed on the Tokyo Stock Exchange.
Date of incorporation: 1875
Registered capital: 439,901,268,477 Yen
Registered office: 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan
Business scope: Digital products, electronic devices and components, infrastructure systems, home appliance & othersf) Toshiba Solutions Corporation
Toshiba Solutions Corporation is a company incorporated and existing under the laws of Japan. Its major shareholder
is Toshiba Corporation.
Date of incorporation: October 2003
Registered capital: 23,500,000,000 Yen
Registered office: 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan57

Neusoft Annual Report 2013

Business scope: Software development and solutions offering. Its software is now widely used in the infrastructure development industry covering government, roadways, transpiration and exhibition as well as other sectors such as manufacturing, industries, logistics, service offering, finance, telecommunication, and media.
g) Philips Electronics China B.V.
Philips Electronics China B.V., a limited liability company organized and existing under the laws of the Netherlands, o⁃perates as a subsidiary of Koninklijke Philips Electronics NV. Based in Eindhoven, the Netherlands, the company is dedicated to Philips’investment and development in China.
Date of incorporation: September 12th, 1946
Authorized capital stock: 13,613,850 Euros
Registered office: No.5 High Tech Campus, Eindhoven, Netherlands
Business scope: Healthcare, high-quality lifestyle, lighting systemsh) SAP AG
SAP AG, organized under the laws of Germany, is one of the global leading software providers, ranking third among
the world’s independent software developers in terms of market. Serving more than 253,500 customers from 180-plus
countries, the company has 66,500 employees in Europe, EMEA, USA, Asia Pacific and Japan. SAP is listed on a numberof stock exchanges such as Frankfurt Stock Exchange and New York Stock Exchange.
Date of incorporation: 1972
Registered capital: 1,228,504,232 Euros
Registered office: SAP AG, Dietmar-Hopp-Allee 16, 69190 Walldorf, Germany
Business scope: Development/sales/implementation of commercial software solutions and relevant support & consulting servicesi) Intel Capital Corporation
Listed on NASDAQ Stock Market, Intel Capital Corporation operates as a wholly-owned subsidiary of Intel Corporation. Being a capital venture company under the control of Intel, it is dedicated to providing innovative technology enterprises and fresh businesses with access to capital investments.
Date of incorporation: April 6th, 1998
Registered capital: 10 US dollars
Registered office: 2200 Mission College Boulevard, Santa Clara, California 95052, USA
Business scope: Capital venture

58

Neusoft Annual Report 2013

（VII）Directors, supervisors and Senior management
7.1 Changes in shareholdings of directors, supervisors and senior managements andtheir compensation

Name

Title

Commenc
Expiry of
Gender Age ement ofserviceservice

Number ofshares atthebegging of2013

Number ofshares at
the end of
2013

Compensation
receivedfrom theCompany
Reasonduring theforreportingchangesperiod (Unit:
RMB10,000
Yuan/beforetax)

Changeswithin2013

Liu Jiren

Chairman & CEO

Male

59

2011-5-25 2014-5-24

7,160,832

5,484,795 -1,676,037

Note

380.00Wang
Yongfeng

Vice Chairman& President

Male

44

2011-5-25 2014-5-24

3,178,391

2,888,391-290,000Note

249.00

Seizo
Ishiguro

Director

Male

71

2011-5-25 2014-5-24

0

0

0

0.00

Klaus
MichaelZimmerDirector &Senior Vice
President

Male

58

2011-5-25 2014-5-24

0

0

0

301.94

Akira
KasanoDirector

Male

58

2011-5-25 2014-5-24

0

0

0

0.00

Chen Ximin

Director, SeniorVice President &
COO

Male

45

2011-5-25 2014-5-24

449,272

339,272-110,000Fang
Hongxing

Independent
Director

Male

42

2011-5-25 2014-5-24

0

0

0

8.00

Xue Lan

Independent
Director

Male

55

2011-5-25 2014-5-24

0

0

0

8.00

Gao WenIndependent
Director

Male

58

2011-5-25 2014-5-24

0

0

0

8.00

Chairman of
Tu Ganfeng Board ofSupervisors

Male

50

2011-5-25 2014-5-24

0

0

0

0.00

Hu AiminSupervisor

Male

41

2011-5-25 2014-5-24

0

0

0

0.00

ShingoKurataSupervisor

Male

43

2011-5-25 2014-5-24

0

0

0

0.00

Ge Shengliu Supervisor

Male

39

2011-5-25 2014-5-24

315,267

315,267

074.78

Ma ChaoSupervisor

Male

37

2011-5-25 2014-5-24

0

0

0

108.32Lu Zhaoxia

Senior Vice
President

Female 57

2011-5-25 2014-5-24

1,993,005

1,543,005-450,000

Note

Note

109.00132.0059

Neusoft Annual Report 2013

Continued table

Commenc
Expiry of
Gender Age ement ofserviceservice

Number ofshares atthebegging of2013

Number ofshares at
the end of
2013

Compensation
receivedfrom theCompany
Reasonduring theforreportingchangesperiod (Unit:
RMB10,000
Yuan/beforetax)

Changeswithin
2013

Name

Title

Zhang Xia

Senior Vice
President, CTO& CKO

Female 49

2011-5-25 2014-5-24

1,103,048

1,103,048

0

Wang Jingxi

Senior Vice
President

Male

45

2011-5-25 2014-5-24

792,609

600,000-192,609

Note

106.00Zhang
Xiao’ou

Senior Vice
President & CFO

Male

42

2011-5-25 2014-5-24

370,000

280,000-90,000

Note

106.00Li JunSenior Vice
President &
CMO

Male

41

2011-5-25 2014-5-24

660,508

550,508-110,000Note106.00Wang Nan

Senior Vice
President &Secretary of theBoard ofDirectors

Female 38

2011-5-25 2014-5-24

344,278

344,278

0

Total

—

—

—

—

—

16,367,210

13,448,564 -2,918,646

113.0088.00—

1,898.04

Note: On September 27th 2013, shares held by Liu Jiren decreased by 1,676,037, shares held by Lu Zhaoxia decreasedby 450,000. On October 30th 2013, shares held by Chen Ximin decreased by 110,000, shares held by Zhang Xiao’ou decreased by 90,000. On November 21st 2013, shares held by Wang Yongfeng decreased by 290,000. On December 30th
2013, shares held by Li Jun decreased by 110,000. From December 30th to 31st 2013, shares held by Wang Jingxi totally
decreased by 192,609.
Present directors, supervisors and senior management’s working experience in the past five years:(1) Liu Jiren
Dr. Liu is one of the founding members of Neusoft, which was established in 1991, and has served as Chairman &CEO at the Company since August 1999. Dr. Liu also holds the positions of Vice President of Northeastern University of
China, Vice-chairman of the China Software Industry Association and Director of Harman International Industries, Incorporated. Prior to this, he served as Director and General Manager of Neusoft from June 1993 to August 1999. Dr. Liu has received a number of awards, such as the“6th Sixth Asian Business Leaders Awards - Innovator of the Year”,“2009 CCTV
China Economic Person of the Year”,“Ernst & Young Entrepreneur of the Year 2010 China Awards”and“Chairman of
the Board with the Most Strategic Vision Award”in 2013.
(2) Wang Yongfeng
Mr. Wang currently serves as Vice Chairman and President of Neusoft. He joined Neusoft in May 1992 and served as

60

Neusoft Annual Report 2013

Director since October 1999 and President since August 1999. Prior to this, he served as Vice General Manager from December 1997 to August 1999. Mr. Wang received his master’s degree in artificial intelligence of computer applications
from Jilin University, China.
(3) Seizo Ishiguro
Mr. Seizo Ishiguro has served as Consultant of Alpine Electronics Inc. since June 2013. He joined Alpine in 1978 andserved successively as Operations Manager, Managing Director and Vice General Manager. He served as General Managerof the company from 1997 to June 2010. Mr. Seizo Ishiguro graduated from the Law School of Waseda University, Japan.
(4) Klaus Michael Zimmer
Mr. Klaus Michael Zimmer is Director and Senior Vice President of Neusoft and President of Neusoft Europe. Prior tojoining Neusoft, Mr. Zimmer was with SAP, where he served as Chairman & CEO SAP, North Asia. Mr. Zimmer received
his master’s degree from the University of Trier, Germany. He also studied in Harvard Business School and European Institute of Business Administration.
(5) Akira Kasano
Mr. Akira Kasano serves as Director, Executive Director, General Manager of Innovation Division, General Manager ofSystem Quality Division, General Manager of Purchase Management and Director of Reform Promotion Division at Toshiba
Solutions Corporation. Prior to this, he held the position of Manager of Business Division of the company. He joined Toshiba in 1982. Mr. Akira Kasano received his master’s degree of physics from the Faculty of Science, University of Tokyo, Japan.
(6) Chen Ximin
Dr. Chen is Director, Senior Vice President and Chief Operating Officer of Neusoft. Since joining the Company in January
1999, he has served successively as Manager of the Intelligent Device Development Department, Deputy General Manager
of Neusoft Middleware Technologies, Manager of Embedded Software Division and Vice President of Neusoft. Dr. Chenreceived his doctorate degree in automatic control from Tsinghua University, China.
(7) Fang Hongxing
Dr. Fang is President of the Accountant Institute of Dongbei University of Finance & Economics, consulting expert for
the Accounting Standards Committee of the Ministry of Finance & China Internal Control Standards Committee, Directorof Accounting Society of China, member of the Technological Guidance Committee of the Chinese Institute of Certified
Public Accountants and consulting expert of Accounting and Auditing Standards Panel. Besides, Dr. Fang is a professor
and doctorial tutor and has a special government allowance granted by the State Council of People’s Republic of China.
Dr. Fang received his doctorate degree in accounting from Northeastern University of Finance & Economics, China.
(8) Xue Lan
Dr. Xue holds three titles with Tsinghua University, China, namely, Dean of School for Public Policy and Management,
Deputy President of Chinese Institute of Engineering Development Strategies and Director of China Institute for Scienceand Technology Policy. He is also a member of the Emergency Rescue Plan Group under the Office of the State Council,
Vice President of the China Administration Society, Vice President of Society of Organization Establishment and Management of China, Vice President of Society of Management Science of China, Vice Director of National MPA Education Steering Committee, Director of International Development and Research Center (IDRC), non-permanent senior researcher of
Brookings Institution, member of Advisory Committee of John F. Kennedy School of Government (KSG), visiting Professor
at Carnegie-Mellon University, member of Academic Advisory Committee of Blanvanik School of Government (BSG), doctorial tutor and specially employed professor for Cheung Kong Scholars Program. Dr. Xue received his doctorate degree in61

Neusoft Annual Report 2013engineering and public policy from Carnegie-Mellon University, the United States.
(9) Gao Wen
Dr. Gao is currently a professor at the School of Electronic Engineering and Computer Science, Peking University as
well as a member of Chinese Academy of Engineering. He also serves as Dean of the National Engineering Laboratory forVideo Technology, President of Audio Video Coding Standard Group of China and Executive Director of China Computer
Association. Dr. Gao received his doctorate degree in electronics from the University of Tokyo, Japan.
(10) Tu Ganfeng
Dr. Tu is General Manager of Northeastern University Science & Technology Industry Group Co., Ltd. Dr. Tu is a professor and doctoral advisor. He is also Standing Director of Chinese University Industry Association. Dr. Tu received his doctorate degree in nonferrous metal metallurgy from Northeastern University, China.
(11) Hu Aimin
Mr. Hu currently serves as Vice General Manager of Capital Operations Department in both Baosteel Group Co. Ltd.
and Huabao Investment Management Co. Ltd. After joining Baosteel in 1995, he successively served as Senior Manager ofFinancial Planning Department and Investment & Merger Manager of Capital Operations Department. Mr. Hu earned hisbachelor’s degree in business administration from Jiangxi University of Finance & Economics, China.
(12) Shingo Kurata
Mr. Shingo Kurata is the Legal Manager of Business Planning Department of Alpine Electronics Inc. After joining Alpine in 1999, he served as Legal Manager at the Intellectual Property Rights Department. Mr. Shingo Kurata received hisbachelor’s degree in law from Meiji University, Japan and holds a master’s degree in law from the Law Center of Georgetown University, the United States.
(13) Ge Shengliu
Mr. Ge is Vice General Manager of IA Business Division of Neusoft. Since his accession in July 1997, he has served as Manager of the 3rd Department of IA Business Division and Embedded Application Development Department of NEU-APN IA Business Division successively. Mr. Ge received his bachelor’s degree in Computer Applications from Northeastern University, China.
(14) Ma Chao
Mr. Ma currently works as General Manager of International Business Development Division and Vice President ofAmerican Business Development Division of Neusoft. Since his accession in May 2005, he has served successively as SalesManager and Senior Sales Manager of Neusoft’s International Business Development Division. Mr. Ma received his bachelor’s degree in Computer Applications from Northeastern University, China and master’s degree in Information Systemfrom the University of Liverpool, England.
(15) Lu Zhaoxia
Ms. Lu serves as Senior Vice President of Neusoft. Since joining the Company in 1995, she has served successively as
Deputy General Manager of Marketing and COO. Prior to that, she was Director of Management Control Center of Northeastern University, China. In 2013, she received the award“Person of the Year in China’s IT Industry”and was includedin the“Top 10 Influential People in China’s Healthcare Service Industry”. Ms. Lu received her master’s degree in computer applications from Northeastern University, China.
(16) Zhang Xia
Dr. Zhang is Senior Vice President, CTO & CKO at Neusoft. She joined Neusoft in Nov. 1994 and has been serving as
CTO & CKO since November 2004. Dr. Zhang received her doctorate degree in computer applications from Northeastern62

Neusoft Annual Report 2013

University, China.
(17) Wang Jingxi
Mr. Wang has served as Senior Vice President at Neusoft since Feb. 2002. He joined Neusoft in Mar. 1999 and served
as Director of Administrations from 2001. Dr. Wang received his doctorate degree in Philosophy of Science and Technology from Northeastern University, China.
(18) Zhang Xiao’ou
Mr. Zhang currently serves as Senior Vice President and CFO of Neusoft. He was assigned as CFO of the Company inApril 2012 and won the“Rising Star Award, 2012 CFO of the Year Awards”. As a senior certified public accountant, Mr.
Zhang joined Neusoft in April 2000 and has worked as Financial Director, senior Vice President and Financial Operating Officer. Mr. Zhang received his master’s degree in management from Northeastern University of China. He also has an EMBA degree from China European International Business School.
(19) Li Jun
Mr. Li has served as Senior Vice President & CMO at Neusoft since May 2008. Since joining the Company in July
1995, he has served successively as General Manager of East China Region and Sales Director of Neusoft. Mr. Li received
his bachelor’s degree in computer software from the Northeastern University of China.
(20) Wang Nan
Dr. Wang has been Senior Vice President since May 2011 in addition to holding the position of Secretary of theBoard of Directors at Neusoft from December 2011. She joined in the Company in 1995 and has served successively asManager of Java Application Department of Software Center, Vice General Manager of Middleware Technology Branch,
Manager of Mobile Internet Division and Deputy Director of Advanced Automotive Electronic Technology Research Center,
General Manager of the Company’s International Business Development Division of the Company. She received the“Most Innovative Board Secretary Award” in 2013. Dr. Wang received her doctorate degree in Computer Applications
from Northeastern University, China.

7.2 Current Directors, Supervisors and Senior Management and Changes
7.2.1 Posts held in shareholding companies
Name

Shareholding company

Title

Liu Jiren

Northeastern University

Vice President

Seizo Ishiguro

Alpine Electronics Inc.

Consultant

Akira Kasano

Toshiba Solutions Corporation

Director, Executive Director, General Manager of Operation Reform,
General Manager of System Quality, General Manager of Purchase
Management and Manager of Reform Promotion Division

Tu Ganfeng

NEU Science & Technology Industry Group
Co., Ltd.

General Manager

Baosteel Group Corporation

Vice General Manager of Capital Operation Division & Chief Pro ⁃ject Manager

Huabao Investment Co. Ltd.

Vice General Manager of Capital Operation Division

Alpine Electronics Inc.

Legal Manager of Business Planning Department

Hu AiminShingo Kurata

63Neusoft Annual Report 2013

7.2.2 Posts in other organizations excluding wholly-owned subsidiaries, holding subsidiaries and associated shareholders’firms
Name

Title

Nokia Neusoft Commtech Company

Vice Chairman

Chongqing Guo’ao 100 Years Xikang Health Management Co., Ltd.

Vice Chairman

Beijing Huiyuan Xikang Healthcare Technology Co., Ltd.

Director

Shanghai Shimao Xikang Healthcare Co., Ltd.

Chairman

Dalian Neusoft Information Services Co., Ltd.

Vice Chairman

Dalian Kangruidao Investment Co., Ltd.

Chairman

Dalian Neusoft Holdings Co., Ltd.

Chairman

Tianjin Neusoft Ruidao Education Information Technology Co., Ltd.

Chairman

Dalian Ruidaoyibo Education Information Technology Co., Ltd.

Chairman

Dalian Neusoft Park Industrial Development Co., Ltd.

Chairman

Dalian Neusoft Institute of Information

ChairmanChengdu Neusoft Institute of Information

Chairman

Neusoft Institute of Information Technology, Nanhai

Chairman

Dalian Neusoft Thinking Technology Development Co., Ltd.

Chairman

Neusoft Holdings International Inc.

Director

Smartwave Holdings Inc.

DirectorHarman International Industries, Incorporated

Director

Nokia Neusoft Commtech Company

Director

Shenyang CataData Technology Co., Ltd.

Director

Beijing Neu-Alpine Power System Technology Co., Ltd.

Director

Dalian Kangruidao Investment Co., Ltd.

Director

Dalian Neusoft Holdings Co., Ltd.

Director

Klaus Michael Zimmer

Aerotel Medical Systems（1998）Ltd.

Director

Fang Hongxing

School of Accounting, Dongbei University of Finance and Economics

President

School of Public Policy and Management, Tsinghua University

President

Chinese Institute of Engineering Development Strategies, Tsinghua University

Vice President

China Institute for Science and Technology Policy, Tsinghua University

Dean

School of Electronic Engineering and Computer Science, Peking University

Professor

National Engineering Laboratory for Video Technology

Dean

Liu Jiren

Wang Yongfeng

Xue Lan

Gao Wen64

CompanyNeusoft Annual Report 2013

Continued table
Name
Tu Ganfeng

Lu Zhaoxia

Wang Jingxi

Company
Dalian Neusoft Holdings Co., Ltd.

Director

Chongqing Guo’ao 100 Years Xikang Health Management Co., Ltd.

Director

Beijing Huiyuan Xikang Healthcare Technology Co., Ltd.

Director

Shanghai Shimao Xikang Healthcare Co., Ltd.

Director

Dalian Kangruidao Investment Co., Ltd.

Director

Dalian Kangruidao Investment Co., Ltd.

Chairman of Board ofSupervisors

Neusoft Harman Telematics (Dalian) Co., Ltd.

Board of Supervisors

Nokia Neusoft Commtech Company

Director

Shenyang Toshiba Neusoft Information Systems Co., Ltd.

Director

NEC Neusoft Information Technology Co., Ltd.

Vice Chairman

Neusoft Harman Telematics (Dalian) Co., Ltd.

Director

Zhang Xiao’ou

Li JunWang Nan

Title

7.3 Compensation for directors, supervisors and senior management
1) Decision-making process of compensation for directors, supervisors and senior management: The Company shall
pay compensation to the directors, supervisors and senior management who hold administrative positions at the Company
those taking no administrative posts will receive no payments from the Company. In accordance with the decision of the
Shareholders’Meeting, the Company shall pay an allowance of RMB 80,000 Yuan (before tax) to each independent director every year since 2010; other expenses arising from presence at the meeting shall be paid on an incurred basis.
2) Decision basis of compensation for directors, supervisors and senior management: Compensation for the directors,
supervisors and senior management holding administrative positions at the Company shall be determined by the Board of
Directors after the review of its compensation & evaluation committee based on business performance and industry refe⁃rence in accordance with the Company’s general compensation policies and standards.
3) Actual payment of compensation for directors, supervisors and senior management: The Company has paid off thecompensation for the directors, supervisors and senior management holding administrative positions as well as allowance
for independent directors.
4) By the end of the reporting period, actual total compensation for all directors, supervisors and senior management
amounted to RMB 18.9804 million Yuan.

7.4 Changes in directors, supervisors and senior management
There were no changes in directors, supervisors and senior management during the reporting period.

7.5 Core Technical Team or Key Technical Personnel
During the reporting period, the Company’s core technical team or key technical personnel (other than directors, su-

65Neusoft Annual Report 2013pervisors and senior management) who have a significant impact on the Company’s core competitiveness remained stablewithout significant changes.
Members of the Company’s core technical team are core technical backbones selected based on comprehensive evaluation results of the annual employee performance appraisal and competency assessment, etc. As for the core technicalbackbones, the Company and divisions adopted a two-stage development management system (from training, paying attention to reservation) according to development goals and strategies, business development challenges and personnel capacity conditions to achieve full-process, full-cycle management. In 2013, in order to maintain the stability of the coretechnology team, the Company implemented a succession plan and external recruitment program for key positions. The
former was a preventive measure to reserve and foster 3-5 successors for each key position and fill the vacancies as soon
as possible. The latter was a supplemental program. Comprehensive talent hunting channels were utilized to supplement
suitable candidates in place. This realized effective training and reservation of core technical team and provided importanttalent supply and guarantee for the operation of the Company.

7.6 Employees of Parent Company and Main Subsidiaries
7.6.1 Employees

Number of employees in the parent company

Number of employees in main subsidiaries

7,475
Neusoft Group (Dalian) Co., Ltd.

5,014

Shenyang Neusoft Medical Systems Co., Ltd.

1,529

Shenyang Neusoft Information Technology Co., Ltd.

1,076

Neusoft Xikang Healthcare Technology Co., Ltd.

658

Neusoft Group (Beijing) Co., Ltd.

472

Neusoft Group (Shanghai) Co., Ltd.

679

Neusoft Group (Guangzhou) Co., Ltd.

424
20,397

Total
Number of retirees whose allowance should be
paid by the parent company and its main subsi⁃
diaries0

Employee functions
Category
Technology development

16,153Marketing

1,689

Administration

2,103

Logistics
Total

66

Number452
20,397

Neusoft Annual Report 2013

Continued table
Geographical Distribution
Country/city

NumberShenyang

8,218

Dalian5,625

Other cities in China

5,864

Japan

258

Europe/America

432
20,397

Total
Education
Education

NumberMaster and above

2,674

Bachelor

15,108

Graduate from 3-year college

2,278

Others337

Total

20,3977.6.2 Compensation Policy
The Company’s compensation policy aims to effectively combine the interests of employees with the Company’s business development and the interests of shareholders, and to attract, retain and motivate key talents. Responsibility, ability
and contribution are the basis of the Company’s compensation policy, which effectively connects the general pay levelwith job value and performance.
Compensations and welfare programs are important parts of the Company’s value allocation and the comprehensive
pay of employees. The Company has established a growth-driven wage system, under which employee pay will be adjusted and improved according to the Company’s business status and market labor cost. At the same time, a differentiatedcompensation concept is advocated, so that the wage structure can be designed and adjusted based on the value of various positions and market research data. The welfare system is based on China’s national social security system, supplemented by other benefits such as Corporate Pension Plan, additional commercial insurance, gift bonus and solatium, visiting leave and travel expense reimbursement. By building a comprehensive compensation system and strengthening humanresource management, the Company aims to establish a sustained and stable personnel system to ensure robust development.
7.6.3 Training Program
Focusing on the development and growth of employees, the Company has developed a dual-channel career development model and“Career Development Roadmap”for employees so that they can choose their career direction and op-

67

Neusoft Annual Report 2013

portunities according to their strengths and interests.
To promote the continuous improvement of the professional competence of employees, the Company has establishedand continuously improved its training system at the Company and division levels. Systematic human resource management strategies have been formulated. Besides, a wide range of trainings and further education opportunities are provided, including in-class learning, e-learning, network classroom, in-service training, assignment training, project practice, tutorials etc. Relevant curricula cover a number of areas such as technology, marketing, self-improvement and corporate systems. Moreover, leader-oriented leadership training programs as well as specific training plans for all groups of employees
were also set up. Besides, customized courses based on capacity development have been offered to make a good know⁃
ledge preparation for the promotion of employees, providing a comprehensive support for their growth, fair job promotion
and development space.
7.6.4 Employee Constitution

Marketing
8.28%

Management
10.31%

Logistic
2.22%

Technology
development
79.19%

Education Level Chart
Three-yearcollege
11.17%

Others1.65%

Master's degree
and above
13.11%

Bachelor's
74.07%

7.6.5 Labor Outsourcing
Total work hours
Total pay

68

2,000,000 Hrs
RMB 59,644,284 Yuan

Neusoft Annual Report 2013

(VIII) Corporate Governance
8.1 Statement of Corporate Governance and Management of Insider Information
Sources
To ensure its smooth operation, the Company has been devoted to developing and improving its corporate governance system in accordance with the Company Law of the People’s Republic of China, Securities Law of the People’s Re-

public of China, and relevant regulations formulated by China Securities Regulatory Commission and stock exchanges in
China. By revising the Articles of Association according to the Guidelines for Articles of Association of Listed Companies

and the Code of Corporate Governance for Listed Companies, formulating and improving the Rules of Procedure for the
Shareholders’Meeting, Rules of Procedure for the Board of Directors, Rules of Procedure for the Board of Supervisors, Investors Relations Management System, and Information Disclosure Management System, the Company has defined the authorities and procedures for decision making to make scientific reasonable decisions. Prior to the Guidelines on Establish-

ment of Independent Director System of Listed Companies issued by China Securities Regulatory Commission, the Company has developed its independent director system and organized various committees for the Board of Directors to promote
standard development and corporate governance under the Code of Corporate Governance for Listed Companies in Chi-

na. Also, it is a constituent stock of SSE Corporate Governance Index.
In accordance with the Notice on the Matters concerning Carrying out a Special Campaign to Strengthen the Corpo-

rate Governance of Listed Companies (No.28 [2007] of China Securities Regulatory Commission) issued by China Securities
Regulatory Commission, the Company initiated a dedicated campaign involving the establishment and implementation ofa series of reforming measures and actions, which helped further enhance the Company’s corporate governance.
Consequently, in 2010, it received the 2010 Best Board of Directors Award at the 9th China Corporate Governance Forum hosted by Shanghai Stock Exchange, demonstrating its efforts and achievements in corporate governance. Besides,
the Company also received the Best Board of Directors Award, Chairman of the Board with the Most Strategic Vision
Award and the Most Innovative Board Secretary Award granted by the Board of Directors Magazine in 2013.
In 2013, the Company continued its actions related to corporate governance for further optimized and improved go⁃vernance. Furthermore, the Company also worked harder in building the Board of Directors, managing investor relations
and perfecting a series of systems covering incentives, monitoring, internal control and training of directors, supervisorsand senior managements, including:(1) Strengthen the construction of the Board of Directors
The Board of Directors was made of 9 members from China, Japan and Europe, including experienced professionals
in the fields of IT, management and finance, well-known scholars as independent directors and outside directors with anabsolute majority. With the help of the Board of Directors, the Company made continuous improvements in corporate go⁃vernance as well as innovations to both management and business models to move towards international development at
a faster pace. Also, it provided the Company with valuable experience and support for global deployment of business andeffective implementation of international merge & acquisition strategies.
All directors fulfilled their duties diligently and faithfully, attended the meetings of the Board of Directors actively, andprovided professional opinions on a wide range of topics, including strategic planning, business plans, internal management optimization and risk management, thus helping the Company make scientific and reasonable decisions. Also, theyprotected the interests of the Company and its shareholders through strict oversight and evaluation on business affairs. Asa special committee for decision making, nomination, auditing, compensation and evaluation, they played an essential role69

Neusoft Annual Report 2013

in decision making for important issues.
(2) Enhance investor relations management
With an always focus on minority investors, the Company made great efforts to provide them with easy access tocompany information, such as Investors’Column on Company homepage, consulting hotline for investors, email for investors and field reception in the Company, etc., making them more confident in their shareholdings. In compliance with theInformation Disclosure Management System and the Investor Relations Management System, the Company further
strengthened the detailed rules for implementation and process management on investor relations management. Detailed
reception processes for investors’field and teleconference investigation were built in order to quickly arrange reception affairs according to investors’visit purposes and demands. The Company was able to make integral accurate disclosure of
information on an instant, effective and equitable basis and give investors a good understanding of its status, thereby winning great trust and high recognitions from them.
The Company made good preparation for each session of the Shareholders’Meeting, offered detailed introduction ofboth business and development strategies, and responded to the questions and views of investors seriously. In addition, it
also provided them with opportunities to visit and understand relevant projects, making them really owners of the Company. During the reporting period, the Company invited investors to participate in Neusoft Solution Forum 2013 to enable investors to gain insight into the Company’s innovative and market strategies. In addition, the Company has arranged visit
and physical examination activities in Xikang Healthcare Management Center to have a deep communication with investors on specific business of the Company. The Company received a total number of 143 investors throughout 2013.
(3) Build up incentive/monitoring systems
Up to now, no equity incentive plans have been made available. As a high-tech company focusing on computer software, the Company has a number of high-quality talents who are important to its survival and development. Due to inadequate senior talents and fast talent turnover existing in China’s computer software industry, the Company will, in accordance with the regulations of competent authorities, develop equity incentive plans based on actual conditions to protect
the interests of the Company and its shareholders and employees, thus perfecting corporate governance and promoting
normal operation and sustainable development.
(4) Optimize internal control systems
The Company attached great importance to internal control management and continuously to perfect corporate go⁃vernance system and various internal management systems during the reporting period. It carried out internal control evalu⁃
ation in a deep-going way throughout the Company by speeding up process summarization, defect identification and eva⁃
luating system design and validity of implementation, improving internal control system comprehensively. Those efforts ensured each work have regulations to abide by and well managed, further standardizing operation and promoting corporate governance.
(5) Develop and implement the system of management of insider information sources
The Company has developed a System of Management of Insider Information Sources to define the scope of insider
information and its sources as well as registration, confidentiality, obligation and responsibility of the sources.
During the reporting period, no insider information sources have bought or sold any share of the Company by leve⁃
raging the information they possess prior to the disclosure of material sensitive information.
(6) Continue to promote standardized operations
The Company organized directors, supervisors and senior management to participate in learning the laws, regulations

70

Neusoft Annual Report 2013

and rules formulated by competent authorities to further strengthen their knowledge and understanding of standardized
operations and integrity awareness and improve corporate governance. In order to further enhance internal management,
the Company classified the responsibilities and rules of the domestic subsidiaries according to the actual situation. Trainings for corresponding management staff were also organized to enhance their knowledge and understanding of standardized operations and integrity awareness, enforce self-discipline as well as improve corporate governance.
During the reporting period, the Company’s indirectly controlled subsidiary- Beijing Neusoft Huiju Information Technology Co., Ltd. (hereafter referred as“Neusoft Huiju”) listed for public transfer on the National Equities Exchange andQuotations on July 3rd, 2013 approved by China Securities Regulatory Commission (CSRC), its abbreviated name for security is“Neusoft Huiju”and security code is“430227”. This action was conducive for“Neusoft Huiju”to improve corporate governance and raise developing funds through capital platform, which was helpful to establish incentive mechanism,stabilize and attract talents to realize sustainable development of its businesses.
In addition to continuous consolidation and perfection of corporate governance, the Company will further enhancethe development of corporate management and internal control systems accordingly, standardize the operation of the
Shareholders’Meeting, Board of Directors and Board of Supervisors, and continually improve the directors, supervisorsand senior management’s knowledge and understanding of standard operation in good faith in accordance with applicable laws and regulations as well as relevant regulatory documents such as the Company Law of the People’s Republic ofChina, Securities Law of the People’s Republic of China, Administrative Measures for the Disclosure of Information of Listed Companies and Stock Listing Rules to promote standardized operations and corporate governance.

8.2 Shareholders’Meeting
8.2.1 The 2012 Shareholders’ Meeting
At the 2012 Shareholders’Meeting hold on April 19th, 2013, the following proposals were approved:
1) Annual Report of the Board of Directors 2012;
2) Annual Report 2012;
3) Annual Report of the Board of Supervisors 2012;
4) Annual Report on Work of Independent Directors 2012;
5) Annual Financial Report 2012;6) Proposal on Profit Distribution 2012;7) Proposal on Employment of Financial Auditing Agency 2013;8) Proposal on Estimated Related Transactions 2013;9) Proposal on continuous provision of financial aid to Neusoft Xikang Holdings Inc. and its subsidiaries; and
10) Proposal on signing Navigation Map Product Agreement with Harman Becker Automotive Systems GmbH
Please visit the official website of Shanghai Stock Exchange (http://www.sse.com.cn) for more information about relevant notice which was disclosed on April 20th, 2013.
8.2.2 The 1st Session of Interim Shareholders’ Meeting in 2013
At the 1st Session of Interim Shareholders’Meeting holds on July 25th, 2013, the following proposals were approved:
1) Proposal on signing Related Transactions Agreement with Shenyang Neusoft System Integration Engineering Co.,71

Neusoft Annual Report 2013

Ltd. and Dalian Neusoft Thinking Technology Co., Ltd.;
2) Proposal on Increasing Estimated Amount of Route Related Transactions 2013
Please visit the official website of Shanghai Stock Exchange (http://www.sse.com.cn) for more information about relevant notice which was disclosed on July 26th, 2013.
8.2.3 The 2nd Session of Interim Shareholders’Meeting in 2013
At the 2nd interim Shareholders’Meeting 2013 held on September 12th, 2013, the Proposal on Providing Limited

Amount of Security for Bank Loans of Neusoft (Europe) Co., Ltd., Neusoft (Japan) Co., Ltd. and Neusoft (Hong Kong) Co.,
Ltd. was approved.
Please visit the official website of Shanghai Stock Exchange (http://www.sse.com.cn) for more information about relevant notice which was disclosed on September 13th, 2013.

8.3 Directors’performance of duties and responsibilities
8.3.1 Attendance to the meetings of the Board of Directors and the Shareholders’Meeting
During the reporting period, the Board of Directors held 8 sessions of meeting in total, including 2 in-person meetings and 6 tele/video conferences; 3 sessions of shareholders’meeting. The content below shows the attendance of directors in such meetings.
Attendanceat theShareholders’Meeting

Attendance at the meetings of the Board of Directors

Name of director

72

Failure to
Independent
Number ofattend the
Number of
director
attendance
meeting of
Number of attendance Number of Number
to meetings
the Board of
personalbydelegateofof the Board
Directors forattendance telephone/ attendance absenceof Directors
twovideo means
in 2013consecutive
years

Times

Liu Jiren

No

8

8

6

0

0

No

3

Wang Yongfeng

No

8

8

6

0

0

No

3

Seizo Ishiguro

No

8

8

6

0

0

No

1

Klaus Michael Zimmer

No

8

8

6

0

0

No

0

Akira Kasano

No

8

8

6

0

0

No

0

Chen Ximin

No

8

8

6

0

0

No

1

Fang Hongxing

Yes

8

8

6

0

0

No

3

Xue Lan

Yes

8

8

6

0

0

No

1

Gao Wen

Yes

8

8

6

0

0

No

0

Neusoft Annual Report 2013

8.3.2 Dissidence to items relevant to the Company from independent directors
During the reporting period, no independent directors raise any objection against the resolutions and other items of
the Board of Directors.

8.4 Important suggestions proposed by special committees under the Board during
the reporting period
The Board of Directors has four special committees including the Strategy/Decision Making Committee, Nomination
Committee, Auditing Committee and Compensation & Evaluation Committee. Independent directors actively participatedin the operations of the special committees, playing an essential role in decision making for important issues. The Strategy/
Decision Making Committee is consisted of 7 members, including 2 independent directors; the Nomination Committee isconsisted of 3 members, including 2 independent directors, one of whom serves as Chairman; the Auditing Committee ismade up of 3 independent directors, among them, Fang Hongxing is an expert in accounting who also serves as Chairman of the Committee; the Compensation and Evaluation Committee is made up of 3 members, of which, 2 are independent directors with 1 serving as Chairman of the Committee. During the reporting period, all special committees fulfilled
its duties and responsibilities in a diligent and faithful manner.

8.5 The Board of Supervisors’Statement on existing risks of the Company
The Board of Supervisors has no objection against the auditing items during the reporting period.

8.6 Statement on disclaimer of warranty for independent operations in business, personnel, assets, organization, finance and other aspects for its controlling shareholders
By the end of the reporting period, the Company has no controlling shareholders.

8.7 Establishment and implementation of evaluation & inventive mechanism for senior management during the reporting period
In order to protect the interests of the Company and its shareholders, the Company has to deal with the challenges
existing in world economy and exploit opportunities found in the industry. It has to maintain a steady development during
globalization with an effectively motivated senior management. At Neusoft, senior management strives to keep abreast ofdevelopments in industry and market trends and company conditions. Neusoft has perfected the competency model of senior management, kept evaluation by means of balanced score card and 360° feedback, continuously aroused the attention from senior management to business performance and long-term development targets, set great value on leadership
improvement and contribution to corporate development and heightened senior management’s responsibility and createdpride in their posts, thus achieving better results in the stability and development of senior management. Based on thegood momentum in globalized and enlarged development, the Company will continue to develop more complete and effective incentive and control systems for senior management in order to achieve continuous improvements in business performance and operation quality.

73

Neusoft Annual Report 2013

(IX) Internal Control
9.1 Responsibility Statement and System Formulation
The Board of Directors has the responsibility to establish and perfect internal control, ensure effective implementation,
evaluate its effectiveness and disclose internal control evaluation report in accordance with the Company’s standardized internal control system. According to the Company Law of the People’ Republic of China, Securities Law of the People’s

Republic of China, Guidelines for Internal Control of Listed Companies and Basic Standards of Enterprise Internal Control,
based on the present situation and combined with actual and management demands, the Company established strict andeffective internal control system as well as comprehensive risk management system in accordance with the supervision requirements for domestic and overseas capital market. Continuously focusing on“improving internal control system to ensure effective operations”while targeting“effective design and efficient implementation”, the Company has comprehensively strengthened the implementation of the internal control standards and further enhanced a risk-control oriented, system-based internal control system with streamlined processes.
Upon the release of this Report, the Company disclosed the Internal Control Evaluation Report 2013, which evaluatedthe effectiveness of internal control on December 31st, 2013 (base date of Internal Control Evaluation Report). On the basedate of Internal Control Evaluation Report, no material defects in financial report internal control were found according to
the identification standard of material defects in financial report internal control of the Company. The Board of Directors
believed that the Company has maintained effective internal control over the financial report in all major respects in accordance with the requirements of the internal control system and applicable regulations. On the base date of Internal Control Evaluation Report, no material defects in non-financial report internal control were found according to the identification standard of material defects in non-financial report internal control of the Company. No factors that influence theconclusion of effective evaluation occurred from the base date to the disclosure date of the Internal Control Evaluation Report. For more details please visit the official website of Shanghai Stock Exchange（http://www.sse.com.cn. ）9.2 Statement on Internal Control Auditing Report
BDO CHINA SHU LUN PAN Certified Public Accountants LLP has conducted auditing and has issued a standard auditor’s report for the effectiveness of the internal control for Annual Financial Report 2013 with unqualified opinion.
Upon release of this Report, the Company shall disclose the Internal Control Auditing Report 2013 issued by BDO CHINA SHU LUN PAN Certified Public Accountants LLP. For more information, please visit the official website of Shanghai
Stock Exchange (http://www.sse.com.cn).

9.3 Accountability system for material errors on information disclosure in Annual Report and its implementations
The Company formulated the Accountability System for Material Errors on Information Disclosure in Annual Reports,
defining who shall be reliable for material errors on information disclosure in annual reports and relevant punishments.
During the reporting period, no correction of material accounting errors, supplementation of material omissions or rectification of performance prediction was made by the Company.

74

Neusoft Annual Report 2013

(X) Financial Report
Auditors’Report
Report No.: BDO [2014]111213
To Shareholders of Neusoft Corporation:
We have audited the accompanying financial statements of Neusoft Corporation (“the Company”), which comprisethe balance sheet/consolidated balance sheet as at December 31, 2013, the income statement/consolidated income statement, the cash flow statement/consolidated cash flow statement, the statement of changes in equity/the consolidated
statement of changes in equity and the notes thereto for the year then ended.
Directors’Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements. This responsibility
include: selecting and applying appropriate accounting policies; making accounting estimates that are reasonable in the circumstances; and designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with Chinese Certified Public Accountants Auditing Standards. Those Standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company as at December 31, 2013 and of its financial performance and its cash flows for the year then ended in accordance with the Accounting Standards for Business Enterprises.
Li Chen/Wujie, Chinese Certified Accountants,
BDO CHINA SHU LUN PAN Certified Public Accountants LLP
Shanghai China
Date: March 26th, 201475

Neusoft Annual Report 2013

Neusoft Corporation
Balance Sheet at December 31(Expressed in Renminbi unless otherwise indicated)
Assets

Note 13Year-end balanceYear-begin balance

Current assets:
Monetary capital

1,199,125,558

1,047,858,225

Trading financial assets

13,348,345

8,337,715

Notes receivable

10,510,000

5,767,102

914,241,268

574,584,723

160,314,950

79,912,795

198,961,308

141,169,261

487,085,278

399,208,162

473,911,181

88,821,463

3,457,497,888

2,345,659,446

Accounts receivable

13.1

Prepayments
Interests receivable
Dividends receivable
Other receivables

13.2

Inventories
Non-current liabilities due within one year
Other current liabilities

13.3

Subtotal
Non-current liabilities:
Long-term borrowings
Bonds payable

322,958,466

Long-term accounts payable
Special accounts payable

13.4

2,910,660,936

2,732,245,904

Estimated liabilities

323,911,555

317,051,989

Deferred tax liabilities

616,826,298

646,782,233

Other non-current liabilities

36,028,693

32,673,149

119,950,441

136,005,401

Surplus reserves

15,099,731

12,963,672

General risk provisions

54,950,355

43,327,690

Subtotal

4,077,428,009

4,244,008,504

Total

7,534,925,897

6,589,667,950

Subtotal
Total
Owners’(shareholders’) equity:
Paid-in capital (share capital)
Capital reserves
Less: treasury stocks
Special reserves

Undistributed profits

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

76

Neusoft Annual Report 2013

Neusoft Corporation
Balance Sheet at December 31 (Continued)(Expressed in Renminbi unless otherwise indicated)
Liabilities and owners’(shareholders’) equity

Note 13Year-end balanceYear-begin balance

Current liabilities:
Short-term borrowings

200,000,000

500,000,000

Notes payable

190,032,934

106,763,675

Accounts payable

519,903,513

332,931,203

Advance receipts

418,257,711

321,840,397

Employee pays payable

147,055,051

145,123,164

Taxes payable

17,648,905

28,556,889

Other payables

390,491,973

218,140,587

Non-current liabilities due within one year

451,658,667

Trading financial liabilities

Interests payable
Dividends payable

Other current liabilities
Subtotal

2,335,048,754

1,653,355,915

Non-current liabilities:
Long-term borrowings

500,000,000

Bonds payable
Long-term accounts payable

403,658,667
86,501,075

134,501,075

Estimated liabilities

18,208,572

14,746,497

Deferred tax liabilities

1,334,835

833,772

Other non-current liabilities

187,315,794

140,417,544

Subtotal

793,360,276

694,157,555

3,128,409,030

2,347,513,470

1,227,594,245

1,227,594,245

353,061,885

353,061,885

711,260,827

658,985,598

Special accounts payable

Total
Owners’(shareholders’) equity:
Paid-in capital (share capital)
Capital reserves
Less: treasury stocks
Special reserves
Surplus reserves
General risk provisions
Undistributed profits

2,114,599,910

2,002,512,752

Subtotal

4,406,516,867

4,242,154,480

Total

7,534,925,897

6,589,667,950

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

77

Neusoft Annual Report 2013

Neusoft Corporation
Consolidated Balance Sheet at December 31(Expressed in Renminbi unless otherwise indicated)
Assets

Note 5Year-end balanceYear-begin balance

Current assets:
Monetary capital

5.1

2,213,448,225

2,095,472,280

Trading financial assets

5.2

32,249,913

14,917,183

Notes receivable

5.3

14,174,346

14,342,063

Accounts receivable

5.4

1,890,363,626

1,407,087,344

Prepayments

5.6

227,915,556

118,441,067

5.5

196,717,958

204,764,870

5.7

996,583,099

830,972,882

Deposit reservation for balance
Lendings to banks and other financial institutions

Premiums receivable
Cession premiums receivable
Provision of cession receivable
Interests receivable
Dividends receivable
Other receivables
Securities purchased under resale agreements
Inventories
Non-current assets due within one year
Other current assets

5.8

Subtotal

236,069,531

14,290,515

5,807,522,254

4,700,288,204

Non-current assets:
Disbursement of entrusted loans and advances
Available-for-sale financial assets

5.9

Held-to-maturity investment

5.10

26,594,230

Long-term accounts receivable

5.11

19,506,040

25,954,175

Long-term equity investment

5.12

177,229,331

390,074,357

Investment properties

5.13

323,911,555

317,051,989

Fixed assets

5.14

1,768,896,223

1,801,268,482

Construction in progress

5.15

276,749,271

195,555,957

5.16

631,665,525

389,276,138

Goodwill

5.17

156,110,131

140,387,437

Long-term deferred expenses

5.18

103,494,600

72,063,173

Deferred tax assets

5.19

84,771,633

66,353,503

Subtotal

3,568,928,539

3,801,145,129

Total

9,376,450,793

8,501,433,333

403,159,918

Construction supplies
Disposal of fixed assets
Capitalized biological assets
Oil & gas assets
Intangible asset
Development expenditures

Other non-current assets

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

78

Neusoft Annual Report 2013

Neusoft Corporation
Consolidated Balance Sheet at December 31 (Continued)(Expressed in Renminbi unless otherwise indicated)
Liabilities and owners’(shareholders’) equity
Current liabilities:
Short-term borrowings
Borrowings from central bank
Customer and interbank deposits
Borrowings from bank and other financial institutions
Trading financial liabilities
Notes payable
Accounts payable
Advance receipts
Securities sold under repurchase agreements
Fees and commissions payable
Employee pays payable
Taxes payable
Interests payable
Dividend payable
Other payables
Cession insurance premiums payable
Provision for insurance contracts
Acting trading securities
Acting underwriting securities
Non-current liabilities due within one year
Other current liabilities
Subtotal
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term accounts payable
Special accounts payable
Estimated liabilities
Deferred tax liabilities
Other non-current liabilities
Subtotal
Total
Owners' (shareholders') equity
Paid-in capital (share capital)
Capital reserves
Less: treasury stocks
Special reserves
Surplus reserves
General risk provisions
Undistributed profits
Converted difference in foreign currency statements
Total owners' equity attributable to parent company
Minority interest
Subtotal
Total

Note 5Year-end balanceYear-begin balance

5.21

209,139,575

511,312,055

5.22
5.23
5.24

191,495,518
805,545,291
593,558,197

107,630,675
620,096,812
497,627,237

5.25
5.26

354,922,512
67,598,043

329,621,795
65,941,991

5.27

183,768,414

212,020,218

5.28
5.29

469,158,667
3,664,444
2,878,850,661

120,7432,344,371,526

5.31

554,000,000

5.32

128,046,431

84,000,000
403,658,667
179,459,431

5.30
5.19
5.33

22,085,086
7,214,022
270,190,713
981,536,252
3,860,386,913

18,628,581
3,738,493
222,597,627
912,082,799
3,256,454,325

5.34
5.35

1,227,594,245
359,512,069

1,227,594,245
356,289,108

5.36

719,551,079

667,275,850

5.37

3,096,964,347-73,859,185
5,329,762,555
186,301,325
5,516,063,880
9,376,450,793

2,922,439,964-54,261,434
5,119,337,733
125,641,275
5,244,979,008
8,501,433,333

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

79

Neusoft Annual Report 2013

Neusoft Corporation
Income Statement 2013
(Expressed in Renminbi unless otherwise indicated)
Item

Note 13

Amount in this period

Amount inprevious period

1. Revenue from operations

13.5

4,327,149,932

3,705,696,757

Less: Operating costs

13.5

3,447,244,092

2,694,231,947

Business taxes and surtaxes

46,052,351

73,695,704

Sales expenses

203,371,088

192,933,758

Administrative expenses

477,747,859

376,159,961

Financial expenses

40,502,316

40,914,330

Impairment loss on assets

63,254,583

33,446,174

5,010,630

7,645,112

193,882,176

116,274,913

3,603,937

1,448,885

2. Operating profit (“-”for loss)

247,870,449

418,234,908

Add: Non-operating incomes

103,875,852

93,473,496

Less: Non-operating expenses

1,887,871

1,633,648

1,183,727

1,027,214

349,858,430

510,074,756

1,356,906

39,593,849

348,501,524

470,480,907

348,501,524

470,480,907

Add: Income from change in fair value (“-”for loss)
Investment income (“-”for loss)
Including: Income from investment on associates andjoint ventures

Including: Loss on disposal of non-current assets
3. Total profit (“-”for loss)
Less: Income tax
4. Net profit (“-”for loss)

13.6

5. Earning per share (EPS):(1) Basic EPS(2) Diluted EPS
6. Other composite income
7. Total composite income

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

80Neusoft Annual Report 2013

Neusoft Corporation
Consolidated Income Statement 2013
(Expressed in Renminbi unless otherwise indicated)
Item

Note 5

1. Revenue from operations

Amount in this period

Amount inprevious period

7,452,753,233

6,960,195,011

7,452,753,233

6,960,195,011

7,314,647,659

6,677,046,223

5.38

5,308,680,595

4,729,720,928

Business taxes and surtaxes

5.39

67,218,955

111,108,386

Sales expenses

5.40

657,573,048

635,074,786

Administrative expenses

5.41

1,173,997,714

985,944,947

Financial expenses

5.42

39,185,293

78,565,067

Impairment loss on assets

5.45

67,992,054

136,632,109

5.43

17,332,730

14,224,580

5.44

85,929,224

112,124,066

33,813,510

39,038,402

241,367,528

409,497,434

Including: Operating income

5.38Interest income
Earned premium
Fee and commission income
2. Total cost of operations
Including: Operating costs
Interest expenses
Fee and commission expenses
Retirement pension
Net compensation expenses
Net reserves for reinsurance contract
Policy dividend expenses
reinsurance expenses

Add: Income from change in fair value “-”for(loss)
Investment income “-”for(loss)
Including: Income from investment on associates and joint
venturesExchange income “-”for(loss)
3. Operating profit “-”for(loss)
Add: Non-operating incomes

5.46

207,129,411

139,552,127

Less: Non-operating expenses

5.47

3,366,765

6,381,048

1,823,907

5,173,148

445,130,174

542,668,513

60,598,760

106,899,561

384,531,414

435,768,952

Including: Loss on disposal of non-current assets
4. Total profit “-”for(loss)
Less: Income tax
5. Net profit “-”for
(
loss)

5.48

Including: Net profit of the merged party which has been realizedprior to the combination81

Neusoft Annual Report 2013

Continued table
Item

Note 5

Amount in this period

Amount inprevious period

Net profit attributable to the shareholders of the parent company

410,938,749

456,313,926

Minority interest-26,407,335-20,544,974

6. EPS:(1) Basic EPS

5.49

0.33

0.37

(2) Diluted EPS

5.49

0.33

0.37

5.50

-13,800,587-11,853,741

8. Total composite income

370,730,827

423,915,211

Total composite income attributable to the shareholders of theparent company

394,652,625

444,420,178

Total composite income attributable to minority shareholders-23,921,798-20,504,967

7. Other composite income

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

82

Neusoft Annual Report 2013

Neusoft Corporation
Cash Flow Statement 2013
(Expressed in Renminbi unless otherwise indicated)
Item

Amount in this period

Amount inprevious period

1. Cash flow from operating activities
Cash received from the sales of products or provision of labor services

4,374,163,177

3,888,212,496

73,670,937

32,015,708

1,412,752,745

1,498,246,370

Subtotal

5,860,586,859

5,418,474,574

Cash paid for goods and labor services

3,578,828,605

3,227,360,254

Cash paid to and for employees

972,441,832

924,942,579

Payments for taxes

210,852,538

216,183,677

Other cash payment relating to operating activities

781,961,819

699,540,199

5,544,084,794

5,068,026,709

316,502,065

350,447,865

3,505,000,000

1,360,000,000

Cash received from investment income

194,121,051

109,127,566

Net cash received from disposal of fixed assets, intangible asset and otherlong-lived assets

38,181,204

26,855,346

Net cash received from disposal of subsidiaries and other operating units

22,859,800

54,523,596

Other cash received relating to investment activities

88,608,075

299,939,131

3,848,770,130

1,850,445,639

88,482,722

79,611,913

3,385,000,000

1,020,000,000

Net cash received from subsidiaries and other operating units

247,265,096

875,000,000

Other cash payments relating to investment activities

270,124,827

210,143,985

Subtotal

3,990,872,645

2,184,755,898

Net cash flow from investment activities-142,102,515-334,310,259

700,000,000

500,000,000

Subtotal

700,000,000

500,000,000

Cash paid for borrowings

500,000,000

250,000,000

Cash paid for dividends, profit distribution or interest expenses

238,040,307

47,114,736

Tax refund
Other cash receipts relating to operating activities

Subtotal
Net cash flow from operating activities
2. Cash flow from investment activities
Cash received from disinvestment

Subtotal
Cash paid for purchase/construction of fixed assets, intangible asset andother long-lived assets
Cash paid for investment

3. Cash flow from financing activities
Cash received from investors
Cash received from borrowings
Cash received from issuing bonds
Other cash received relating to financing activities

83

Neusoft Annual Report 2013

Continued table
Item
Other cash paid relating to financing activities

Amount in this period

Amount inprevious period

1,351,372

100,000

Subtotal

739,391,679

297,214,736

Net cash flow from financing activities-39,391,679

202,785,264

4. Effect of change in exchange rate on cash and cash equivalents

16,259,462-2,458,314

5. Net increase of cash and cash equivalents

151,267,333

216,464,556

1,047,858,225

831,393,669

1,199,125,558

1,047,858,225

Add: Year-begin cash and cash equivalent balance
6. Year-end cash and cash equivalent balance

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

84

Neusoft Annual Report 2013

Neusoft Corporation
Consolidated Cash Flow Statement 2013
(Expressed in Renminbi unless otherwise indicated)
Item

Note 5

Amount in thisperiodAmount inprevious period

1. Cash flow from operating activities
Cash received from sales of products or provision of labor services

7,735,400,303

7,275,198,214

123,223,573

56,067,242

324,570,537

366,904,197

8,183,194,413

7,698,169,653

3,892,658,197

3,462,929,495

2,956,845,862

2,892,181,223

484,457,633

521,646,458

545,381,189

504,176,955

7,879,342,881

7,380,934,131

303,851,532

317,235,522

3,680,500,000

1,116,000,000

74,995,334

49,327,100

Net cash received from disposal of fixed assets, intangible asset and other long-lived assets

38,315,863

27,099,505

Net cash received from disposal of subsidiaries and other operating units

27,807,037

415,773,861

30,343,128

270,000

Net increase of customer and inter-bank deposits
Net increase of loans from central bank
Net increase of borrowings from other financial institutions
Cash received from primary insurance premium
Net cash received from reinsurance business
Net increase of policy holder reserve and investment fundNet increase of disposal of trading financial assets
Cash received from interests, fees and commissions
Net increase of borrowings from banks and other financial institutions
Net increase of repurchase business fundTax refund
Other cash receipts relating to operating activities

5.51

Subtotal
Cash paid for goods and labor services
Net increase of loans and advances to customers
Net increase of deposits in central bank and other banks
Cash paid for primary insurance indemnity
Cash paid for interests, fees and commissions
Cash paid for policy dividend
Cash paid to and for employees
Payments for taxes
Other cash payments relating to operating activities

5.51

Subtotal
Net cash flow from operating activities
2. Cash flow from investment activities
Cash received from disinvestment
Cash received from investment income

Other cash received relating to investment activities

5.51

85

Neusoft Annual Report 2013

Continued table
Item

Note 5

Subtotal

Amount in thisperiodAmount inprevious period

3,851,961,362

1,608,470,466

489,300,713

406,343,260

3,524,235,058

1,116,000,000

14,812,656

38,500,000

7,652,904

143,985

Subtotal

4,036,001,331

1,560,987,245

Net cash flow from investment activities-184,039,969

47,483,221

4,000,000

60,288,436

4,000,000

60,288,436

738,648,281

642,975,880

Subtotal

742,648,281

703,264,316

Cash paid for borrowings

553,003,399

625,800,807

Cash paid for dividends, profit distribution or interest expenses

245,836,415

62,454,803

1,003,047

3,610,159

1,351,372

100,000

Subtotal

800,191,186

688,355,610

Net cash flow from financing activities-57,542,905

14,908,706

4. Effect of change in exchange rate on cash and cash equivalents

4,659,448-28,135,034

5. Net increase of cash and cash equivalents

66,928,106

351,492,415

2,088,199,345

1,736,706,930

2,155,127,451

2,088,199,345

Cash paid for purchase/construction of fixed assets, intangible asset andother long-lived assets
Cash paid for investment
Net increase of pledged loan
Net cash received from subsidiaries and other operating units
Other cash payments relating to investment activities

5.51

3. Cash flow from financing activities
Cash received from investors
Including: Cash received from investment absorption of minority shareholders by subsidiaries
Cash received from borrowings
Cash received from issuing bonds
Other cash received relating to financing activities

Including: Dividends & profits paid to minority shareholders by subsidiaries
Other cash paid relating to financing activities

Add: Year-begin cash and cash equivalent balance
6. Year-end cash and cash equivalent balance

5.51

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

86Special
reserves

112,087,158

711,260,827

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

4. Year-end balance(7) Other

2) Use1) Appropriation(6) Special reserves4) Other3) Surplus reserves for making up losses

2) Capitalized surplus reserves

1) Capitalized capital reserves(5) Internal carry-over of shareholders‘ equity4) Other3) Dividends to owners (shareholders)

2) Appropriation of general risk provisions

2,114,599,910-184,139,137-52,275,229-236,414,366

348,501,524

348,501,524

2,002,512,752

2,002,512,752

Undistributed
profits

52,275,229

Generalrisk
provisions

658,985,598

658,985,598

Surplus reserves

52,275,229

Less:
Treasuryshares52,275,229

353,061,885

353,061,885

353,061,885

Capital reserves

1) Appropriation of surplus reserves

1,227,594,245

1,227,594,245

1,227,594,245

Paid-in capital(share capital)(4) Dividends

3) Other2) Amounts of share-based payments recognizedin owners‘ equity

1) Capital paid in by owners(3) Capital paid in and reduced by owners

Subtotal of (1) & (2)(2) Other composite income(1) Net profit

3. Changes through this period (“-”for decrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Change in accounting policies

1. Balance at the end of previous period

Item

Amount in this period(Expressed in Renminbi unless otherwise indicated)

Statement of Changes in Equity 2013

Neusoft Corporation

4,406,516,867-184,139,137-184,139,137

348,501,524

348,501,524

164,362,387

4,242,154,480

4,242,154,480

Total

Neusoft Annual Report 201387

88
Specialreserves

70,572,136

588,413,462

588,413,462

Surplus reserves

658,985,598

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

4. Year-end balance(7) Other

2) Use1) Appropriation(6) Special reserves4) Other3) Surplus reserves for making up losses

2) Capitalized surplus reserves

1) Capitalized capital reserves(5) Internal carry-over of shareholders’equity

4) Other3) Dividends to owners (shareholders)

2) Appropriation of general risk provisions

70,572,136

Less:
Treasuryshares

70,572,136

353,061,885

353,061,885

353,061,885

Capital reserves

1) Appropriation of surplus reserves

1,227,594,245

1,227,594,245

1,227,594,245

Paid-in capital(share capital)(4) Dividends

3) Other2) Amounts of share-based payments recognized in owners’equity

1) Capital paid in by owners(3) Capital paid in and reduced by owners

Subtotal of (1) & (2)(2) Other composite income(1) Net profit

3. Changes through this period (“ - ” for decrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Changes in accounting policies

1. Balance at the end of previous period

Item

Amount in previous period(Expressed in Renminbi unless otherwise indicated)

Statement of Changes in Equity 2013 (Continued)

Neusoft Corporation

General risk
provisions

2,002,512,752-70,572,136-70,572,136

4,242,154,480

470,480,907

470,480,907

470,480,907
470,480,907

470,480,907

3,771,673,573

3,771,673,573

Total

399,908,771

1,602,603,981

1,602,603,981

Undistributed
profits

Neusoft Annual Report 2013

719,551,079

3,096,964,347-184,139,137-52,275,229-236,414,366

410,938,749

410,938,749

174,524,383

2,922,439,964

2,922,439,964

Undistributed
profits

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou Accounting body’s principal: Shi Peijun

4. Year-end balance(7) Other

2) Use1) Appropriation(6) Special reserves4) Other3) Surplus reserves for making up losses

2) Capitalized surplus reserves

1) Capitalized capital reserves(5) Internal carry-over of shareholders'equity4) Other3) Dividends to owners (shareholders)

359,512,069

52,275,229

1) Appropriation of surplus reserves

2) Appropriation of general risk provisions

52,275,229

6,197

52,275,229

667,275,850(4) Dividends

3) Other2) Amounts of share-based payments
recognized in owners' equity

3,311,627-88,666-94,863

Subtotal of (1) & (2)(3) Capital paid in and reduced by owners
1) Capital paid in by owners

3,222,961

356,289,108

356,289,108

Capitalreserves

3,311,627

1,227,594,245

1,227,594,245

1,227,594,245

Paid-in capital(share capital)(2) Other composite income(1) Net profit

3. Changes through this period ("-" fordecrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Changes in accounting policies

1. Balance at the end of previous period

Item

Equity attributable to parent company
Less:
SpecialSurplusGeneral risk
Treasury
reserves
reserves
provisions
shares667,275,850

Amount in this period(Expressed in Renminbi unless otherwise indicated)

Consolidated Statement of Changes in Equity 2013

Neusoft Corporation-73,859,185-19,597,751-19,597,751-19,597,751-54,261,434-54,261,434

Other

186,301,325-1,003,047-1,003,047-9,730,441-23,921,798
85,584,895
95,315,336

2,485,537-26,407,335

60,660,050

125,641,275

125,641,275

Minority
interest

5,516,063,880-185,142,184-185,142,184-9,724,244

370,730,827
85,496,229
95,220,473-13,800,587

384,531,414

271,084,872

5,244,979,008

5,244,979,008

Total

Neusoft Annual Report 2013

89

90

The accompanying Notes are integral part of these financial statements.
Neusoft’s legal representative: Liu Jiren Neusoft’s accounting principal: Zhang Xiaoou
Accounting body’s principal: Shi Peijun

4. Year-end balance(7) Other

2) Use1) Appropriation(6) Special reserves4) Other3) Surplus reserves for making up losses

2) Capitalized surplus reserves

1) Capitalized capital reserves(5) Internal carry-over of shareholders'equity4) Other3) Dividends to owners (shareholders)

2) Appropriation of general risk provisions

667,275,850

70,572,136

70,572,136

596,703,714

596,703,714

Surplusreserves

1) Appropriation of surplus reserves

Specialreserves

70,572,136

3) OtherLess:
Treasuryshares(4) Dividends

356,289,108

240,000

1) Capital paid in by owners

2) Amounts of share-based payments
recognized in owners' equity

240,000(3) Capital paid in and reduced by owners-6,198,093

Subtotal of (1) & (2)-5,958,093

362,247,201

362,247,201

Capitalreserves-6,198,093

1,227,594,245

1,227,594,245

1,227,594,245

Paid-in capital(share capital)(2) Other composite income(1) Net profit

3. Changes through this period “( - ”fordecrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Changes in accounting policies

1. Balance at the end of previous period

Item
General risk
provisions

Equity attributable to parent company

Amount in previous period(Expressed in Renminbi unless otherwise indicated)

2,922,439,964-70,572,136-70,572,136

456,313,926

456,313,926

385,741,790-54,261,434-5,695,655-5,695,655-5,695,655-48,565,779-48,565,779

2,536,698,174

2,536,698,174

Other

Undistributed
profits

Consolidated Statement of Changes in Equity 2013 (Continued)

Neusoft Corporation

125,641,275-3,610,159-3,610,159-250,697,739

60,008,427-190,689,312

5,244,979,008-3,610,159-3,610,159-250,697,739

60,248,427-190,449,312

423,915,211-11,853,741-20,504,967

435,768,952
40,007

229,855,740

5,015,123,268

5,015,123,268

Total-20,544,974-214,804,438

340,445,713

340,445,713

Minority
interest

Neusoft Annual Report 2013

Neusoft Annual Report 2013

Neusoft Corporation
Notes to the Financial Statements 2013
Note 1 Company Profile
Neusoft Corporation “the(Company”) formerly“Shenyang Neusoft Co., Ltd.”, is a Sino-foreign joint venture duly organized and re⁃gistered in the People’s Republic of China, under the approval and authorization numbered (1993) 47 by Shenyang Economic System Reform Commission on June 7th, 1993. The registration number of the Company’s Business License is 210100402001491. In June 1996,
the Company was listed on Shanghai Stock Exchange in the category of IT.
The company came from two college start-ups of the Northeastern University, OPENSOFT System Co., Ltd. of Northeast Institute ofTechnology “OPENSOFT(
System”) and Shenyang Neu-Alpine Software Co., Ltd. “Neu-Alpine(
Software”). OPENSOFT System was incorporated as a high-tech company in Shenyang National New and High-tech Industrial Development Zone, formerly known as Shenyang Nanhu Sci-tech Development Zone, in April 1991; it was also one of the earliest high-tech companies going through ownership restructuringin the Zone. Neu-Alpine Software was a joint venture established in June 1991 with Alpine Electronics Inc. In June 1993, the Company initiated its shareholding reform program. On May 9th, 1996, under the authorization of China Securities Regulatory Commission “CSRC”(),
the Company issued 15 million shares of common stocks during its domestic initial public offering; on June 18th, 1996, the Company was
listed on the Shanghai Stock Exchange. On February 5th, 2004, Neusoft Group Ltd., the original controlling shareholder of the Company,
acquired the foreign legal person’s shares held by Alpine Electronic (China) Co., Ltd., formerly the Company's second largest shareholder.
The Company hereto became a domestic-funded stock corporation after finishing Registration of Change on March 5th, 2004. On March
27th, 2006, the Company’s Meeting of Shareholders approved its Split Share Structure Reform Proposal; further, on April 7th, 2006, Neusoft Group Ltd. completed the payment to shareholders of tradable shares with 28,314,574 shares and cash of RMB 41,339,277 Yuan
(2.5 shares and 3.65 Yuan for every 10 tradable shares). With the same total shares as before, the Company’s stock structure waschanged after the reform. The Company merged Neusoft Group Ltd. on January 16th, 2008 and finished corresponding share registrationand cancellation procedures in Shanghai Branch of China Securities Depository and Clearing Corporation Limited under the authorizationof CSRC on March 11th, 2008. After the registration of cancellation on April 28th, 2008, the Company became a Sino-foreign joint venture with 28.62% of shares owned by foreign shareholders. On May 30th, 2008, the Meeting of Shareholders for Year 2007 approved
the change of company name from“Shenyang Neusoft Co., Ltd.”to“Neusoft Corporation”. On June 5th, 2008, the Company finishedregistration of changes in name and domicile. On October 29th, 2008, the Company carried out 2008 Half-yearly Profit Distribution andShare Capital Raise Program, under which, based on total share capital of 524,612,925 shares as at June 30th, 2008, bonus shares were
distributed to all shareholders on a 2-for-10 basis, and capital reserves were converted into share capital on a 6-for-10 basis. Total
419,690,340 shares were distributed and converted, increasing the Company’s registered capital to RMB 944,303,265 Yuan. In July
2010, the Company executed 2009 Profit Distribution and Share Capital Raise Program, under which, based on total share capital of524,612,925 shares as at December 31st, 2009, capital reserves were converted into share capital on a 3-for-10 basis. Total 283,290,980
shares were converted, increasing the Company’s registered capital to RMB 1,227,594,245 Yuan. On March 14th, 2011, 900,294,040
tradable shares held by the Company’s shareholders such as Northeastern University Science & Technology Industry Group Co., Ltd., subject to trading restrictions, were listed. Till then, all the Company’s 1,227,594,245 shares were tradable shares without trading restrictions hereto.
As at December 31st, 2013, the Company and its subsidiaries “the(Group”) have evolved into a high-tech complex specialized in industry solutions relating to software development and service and system integration, and manufacturing/sales of digital medical systems
covering CT, X-ray, Color Doppler Ultrasound and Nuclear Magnetic Resonance, etc. The Company’s registered address is at No. 2 Xinxiu
Street, Hunnan New District, Shenyang, China; and the headquarter is located at Neusoft Software Park, No. 2 Xinxiu Street, Hunnan
New District, Shenyang, China.
As at December 31st, 2013, the Company’s corporate structure is as follows:91Neusoft Annual Report 2013

The Company

42 directly-controlledsubsidiaries(Holding 50% equity above
or below but having actual
control rights)

5 directly-heldassociates and1 branchother investments

Note 2 Accounting Policies, Accounting Estimates and Errors
2.1

Basis of Preparation of the Financial Statements

These Financial Statements have been prepared on the basis of the Company’s continuous operations and actually occurred transactions and events in accordance with the Accounting Standards for Business Enterprises, including the Basic Standards and 38 detailed
standards issued by the Ministry of Finance of the People’s Republic of China on February 15th, 2006 and the subsequently issued application guide, interpretations and other relevant provisions “hereafter(collectively referred to as“Accounting Standards for Business Enterpri⁃ses”), as well as the Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No.15: General Requirements for Financial Reports (revision 2010) issued by the CSRC.
2.2 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company’s Financial Statements have been prepared in accordance with the Accounting Standards for Business Enterprises andgive a true and fair view of the Company’s financial position, results of operations, cash flows and other relevant information during theaccounting period.
2.3 Accounting Period
The accounting period is from January 1 to December 31, 2013.
2.4 Functional Currency
The functional currency of the Company is Chinese Renminbi (RMB).
The functional currencies of the Company's overseas subsidiaries/units are based on local currencies and translated into RMB when
preparing the Financial Statements.
2.5 Accounting Methods for Business Combination
2.5.1 Business combination under common control
The assets and liabilities obtained by the Company through business combination under common control shall be measured on thebasis of their book values within the acquiree on the acquisition date. If the accounting policies adopted by the acquiree are different
from that of the Company, the Company shall, on the acquisition date, adjust the book values according to its accounting policies andrecognize the assets and liabilities based on the book values after the adjustment.
The difference between the book value of the net assets obtained from the acquisition and that of the acquisition consideration (orthe total amount of par value of the shares issued) shall be firstly offset against capital surplus and then debited to retained earnings if
the capital surplus is insufficient for offsetting.
The Company’s direct costs arising from the business combination, including the expenses for audit, assessment and legal services
shall be included in current profit and loss statement (P&L).
The handling fees, commissions and other expenses for the issuance of equity securities for the business combination shall be firstly
offset against the surplus revenue from equity securities and then debited to retained earnings if the surplus revenue is insufficient for offsetting.
2.5.2 Business combination under non-common control
The Company shall allocate the combination costs on the acquisition date and recognize the fair values of all identifiable assets, liabilities and contingent liabilities obtained from the acquiree.
The assets paid and liabilities assumed by the Company through business combination not under common control on the acquisition
date shall be measured by their fair values. The difference between their fair values and book values shall be included in current P&L.

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The Company shall allocate the combination costs on the acquisition date and recognize the fair values of all identifiable assets, liabilities and contingent liabilities obtained from the acquiree.
As for all the other assets excluding intangible asset acquired from the acquiree in the combination (not limited to the assets whichhave been recognized by the acquiree), if the economic benefit brought by them is likely to flow in the Company and their fair values canbe measured reliably, they shall be separately recognized and measured by their fair values; for any intangible asset, if its fair value can bemeasured reliably, it shall be separately recognized as intangible asset and measured at fair value; for all the other liabilities excluding contingent liabilities, if the performance of the relevant obligations is likely to result in any out-flow of economic benefits from the Company,
and their fair values can be measured reliably, they shall be separately recognized and measured at fair value; and for the contingent liabilities, if their fair value can be measured reliably, they shall be separately recognized as liabilities and measured at fair value.
The deductible temporary differences obtained from the acquiree through the combination shall not be recognized if they are notqualified for conditions of recognition of deferred income tax assets on the acquisition date. Within 12 months after the acquisition date,
if any new information or further information can prove the relevant situation has existed since the acquisition date and the economic
benefit from the deductible temporary differences may be achieved, such deductible temporary differences shall be recognized as deferred income tax assets; Goodwill shall be deducted hereto. If the goodwill is not sufficient for offsetting, the difference shall be inclu⁃
ded in current P&L. Otherwise the above-mentioned conditions, deferred income tax assets related to business combination shall be recognized and included in current P&L.
In any business combination under non-common control, the acquirer’s expenses of audit, legal services, assessment and consulting
services, agent fees and other related administrative expenses shall be included in current P&L; the transaction expenses for the issuanceof equity securities for the business combination shall be included in the initially recognized amount of equity securities or bonds.
2.6 Preparation of the consolidated financial statements
2.6.1 Scope
The scope of consolidated financial statements is confirmed based on the Company’s control over its subsidiaries; and all the Company’s subsidiaries are included in the consolidated financial statements.
2.6.2 Consolidation procedure
The accounting policies and period adopted by the subsidiaries shall be in accordance with that of the Company; otherwise, theyshall be adjusted according to the Company’s policies and period when preparing the consolidated financial statements. For any subsi⁃
diary acquired from business combination under non-common control, its financial statements shall be adjusted based on the fair value ofidentifiable net assets on the acquisition date. Based on the financial statements of the Company and subsidiaries and other relevant materials, the consolidated financial statements have been prepared by the Company after adjusting long-term equity investment on the subsidiaries by equity method.
When consolidating the financial statements, the effect of internal transactions between the Company and subsidiaries or among thesubsidiaries on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated statement of changes in equity shall be offset.
The equity, profit and loss attributable to the minority shareholders of the subsidiaries shall be separately indicated under the item ofowners’equity in the consolidated balance sheet and the item of net profit in the consolidated income statement. The difference bywhich the current loss assumed by the minority shareholders of the subsidiaries exceeds the share belonging to them at the beginning of
the period shall offset against the minority interest.
(1) Addition of subsidiaries
During the reporting period, if any subsidiary is obtained through business combination under common control, the year-begin ba⁃
lance of the consolidated balance sheet shall be adjusted; the subsidiary’s income, expenses, profit from the beginning of the combination period to the end of the reporting period shall be included in the consolidated income statement; and cash flow in the consolidated
cash flow statement. Relevant items in the comparative statements shall be adjusted and the reporting entity after the combination shallbe deemed existing in the previous period.
During the reporting period, if any subsidiary is obtained through business combination under non-common control, the year-beginbalance of the consolidated balance sheet shall have no change; the subsidiary’s income, expenses, profit from the acquisition date to93

Neusoft Annual Report 2013

the end of the reporting period shall be included in the consolidated income statement; and cash flow in the consolidated cash flow statement. For subsidiary obtained by stages through business combination under non-common control, equity in the acquiree held by theCompany before the acquisition date shall be re-measured based on its fair value on the acquisition date. Difference between the fair value and book value shall be included into current investment income. If other composite income is involved with the foregoing equity,
such income shall be converted into current investment income on the acquisition date.
(2) Disposal of subsidiaries① General Method
During the reporting period, in case of disposal of a subsidiary, the subsidiary’s income, expenses, profit from the beginning of theperiod to the disposal date shall be included in the consolidated income statement; and the cash flow included in the consolidated cash
flow statement. If the Company loses control over a subsidiary it originally owns due to disposal of part of equity investment or other reasons, the remaining equity investment shall be re-measured based on its fair value on the date when the control is lost. Difference bywhich the sum of the consideration received on the disposal of equity and the fair value of the remaining equity subtracts the amount of
attributable net assets calculated from the purchase date on the basis of the original equity ratio shall be included in investment incomein the period when the control is lost. Other composite income relevant to the equity investment in the originally owned subsidiary shallbe converted into investment income in the period when the control is lost.
② Disposal by steps
If the Company loses control over a subsidiary it originally owns due to disposal of its equity investment by steps, multiple transactions for the disposal shall be deemed package deal for accounting in any of the following situations:a) These transactions are made simultaneously or in consideration of mutual influence;b) Only these transactions in whole can achieve a complete business result;c) A single transaction will lead to one or more other transactions; andd) A single transaction may be non-economical when it is considered independently, but it is economical when it is considered together with other transactions.
If the multiple transactions attribute to a package deal, the Company will consider the transactions as one deal of disposing a subsi⁃
diary for accounting. However, before losing the control right over the subsidiary, the difference between the disposal price and theamount of attributable net assets shall be included in the“Other composite income”when consolidating the financial statements andshall be carried forward to current R&L when losing the control right.
If the multiple transactions does not belong to a package deal, their accounting shall be according to“Note 2.6.2 (4)”hereunder before losing the control right and“Note 2.6.2 (2) ①”upon losing the control right.
(3) Purchase of minority interest in subsidiary
The difference between long-term equity investment newly obtained from purchasing minority interest and the subsidiary’s identifiable net assets attributable to the Company which is calculated according to newly increased equity ratio since the purchase date (or acquisition date) shall be firstly offset against capital surplus in the consolidated balance sheet and then debited to retained earnings if thecapital surplus is insufficient for offsetting.
(4) Disposal of equity investment in part without losing control over the subsidiary
The difference between disposal price obtained from disposal of equity investment to the subsidiary, without losing control over thesubsidiary, and attributable net assets from disposal of long-term equity investment, shall be firstly offset against capital surplus in the consolidated balance sheet and then debited to retained earnings if the capital surplus is insufficient for offsetting.
2.7 Determination of cash and cash equivalents
In the Financial Statements, cash refers to all cash on hand and deposit held at call with banks. Cash equivalents refer to short-term(due in three months after the purchase date), highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.
2.8 Foreign currency transactions and translation
2.8.1 Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the transaction date.

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The foreign currency-denominated monetary items shall be translated into RMB at the spot exchange rate on the balance sheet date;
and the resulting currency translation difference shall be included in current P&L, except for the exchange difference arising from special
foreign currency borrowings related to purchase/construction of assets compliant with capitalization conditions, which shall be disposed
according to the principles of capitalization of borrowings. The foreign currency-denominated non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date, of which the amount of functional currency shall not
be changed. The foreign currency-denominated non-monetary items measured at the fair value shall be translated at the spot exchange
rate on the date when the fair value is determined; the resulting currency translation differences shall be included in current P&L or capital reserves.
Overseas subsidiaries use their local currencies as the functional currencies. Their foreign currency operations shall be recorded in local currencies at the exchange rate on the operation date. Overseas subsidiaries’monetary assets and liabilities dominated in foreign currencies in the balance sheets shall be translated into local currencies; and the resulting translation difference shall be included in current
P&L.
2.8.2 Translation of financial statements represented in foreign currency
Foreign currency-dominated assets and liabilities of overseas subsidiaries included in the Company’s financial statements shall betranslated into RMB at the spot exchange rate on the balance sheet date; all the other items except for the“Undistributed profits”under
the owners’equity shall be translated into RMB at the spot exchange rate on the date of the transactions. Foreign currency-dominated income and expenses in the income statement shall be translated into RMB at the average exchange rate during the reporting period. The
resulting translation difference shall be separately indicated under the item of owners’equity in the balance sheet.
When disposing the overseas operations, relevant translation difference indicated under the item of the owners' equity in the balance
sheet shall be included in current P&L. If the overseas operations are disposed partially, relevant translation difference based on percen⁃
tage of the disposal shall be included in current P&L.
2.9 Financial Instruments
Financial instruments include financial asset, financial liability and equity instrument.
2.9.1 Classification
For the purpose of holding financial assets and assuming financial liabilities on a contract basis, the Company’s managements classify financial instruments into financial assets measured at fair value through profit or loss, including trading financial assets or liabilities(and directly recognized as financial assets or liabilities measured at fair value through profit or loss); held-to-maturity investment; loans
and accounts receivable; available-for-sale financial assets; and other financial liabilities.
2.9.2 Recognition and measurement(1) Financial assets (liabilities) measured at fair value through profit or loss
Its fair value (deducting cash dividends that have been recognized but not issued or bond interests to be received) upon the acquisition shall be identified as initially recognized amount and the related transaction expenses thereof shall be included in current P&L.
The interests or cash dividends obtained during the holding period shall be recognized as investment income, and change in fair va⁃
lue shall be, at the end of the period, included in current P&L.
On the disposal of the assets, the difference between their fair value and initial book value shall be recognized as investment income,and the profit or loss of change in fair value shall be accordingly adjusted.
(2) Held-to-maturity investment
The sum of fair value (deducting bond interests to be received) of the assets on the acquisition and relevant transaction expenses
shall be identified as initially recognized amount.
During the holding period, the interest income shall be calculated on the basis of amortized cost and real interest rate (coupon rate
prevails in case of insignificant difference between real interest rate and coupon rate) and included in the investment income. The real interest rate shall be recognized upon the acquisition and shall have no change during the predicted duration or a shorter applicable term.
On the disposal of the assets, the difference between the sale price and book value shall be included in investment income.
If the Company reclassifies or sells large amount of held-to-maturity investment before maturity (compared with the total amount ofsuch investment before re-classification or sale), the rest of such investment will be re-classified as available-for-sale financial asset; mean-

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Neusoft Annual Report 2013

while, no financial asset shall be classified as a held-to-maturity investment within the current accounting year and the following two complete accounting years. However, the following circumstances shall be excluded:a) The date of sale or re-classification is quite near to the maturity date or the repurchase date of the said investment (e.g., within 3months prior to maturity) that any change of the market interest rate has little impact upon the fair value of the said investment;b) After almost all the initial principal of the investment has been drawn back by way of repayment at fixed intervals or repayment
ahead of schedule according to the provisions of the contract, the remaining part of the investment will be sold or re-classified; andc) The sale or re-classification is caused by any independent event that the Company cannot control, is predicted not to occur again
and is hard to be reasonably predicted.
(3) Accounts receivable
The contract price charged to the buyers shall be recognized as initial amount for those receivables which is composed of the Company’s accounts receivable by the sale of goods and provision of labor services, and receivables in other companies excluding debt instruments priced in active markets, including accounts receivable, other receivables, notes receivable, prepayments and long-term receivables.
Finance receivables shall be initially recognized based on their present value.
On recovery or disposal of accounts receivable, the difference between sale value and book value shall be included in current P&L.
(4) Available-for-sale financial assets
The sum of fair value (deducting cash dividends that have been recognized but not issued or bond interests to be received) and relevant transaction expenses of the assets on the acquisition shall be identified as initially recognized amount.
The interests and cash dividend received during the holding period shall be recognized as investment income and measured at fairvalue at the end of the period; and change in fair value shall be included in capital reserves (other capital reserves).
On the disposal of the assets, the difference between sale price and book value shall be recognized as investment P&L, and the accumulated amount of changes in fair value caused by the disposal shall be accordingly converted into investment P&L from owners’equity.
(5) Other financial liabilities
The sum of fair value and relevant transaction expenses shall be confirmed as initially recognized amount, and amortized cost shallbe used for subsequent measurement.
2.9.3 Recognition and measurement of transfer of financial assets
On the transfer of financial assets, recognition of these assets shall be terminated if nearly all the risks and rewards relating to theownership have been transferred to the transferee; otherwise, they shall be still recognized as financial assets of the Company.
The principle of“Substance over Form”is adopted in judging the termination or not of recognizing financial assets. The transfer of financial assets is also divided into two cases: entire transfer and partial transfer. If the transfer of an entire financial asset satisfies the conditions for termination of recognition, the difference between the amounts of the following two items shall be included in current P&L:
(1) The book value of the transferred financial asset; and(2) Sum of the consideration received from the transfer, and the accumulated amount of the changes in fair value originally recordedin the owners’equity (in the event that the financial asset involved in the transfer is available-for-sale financial asset).
If the transfer of partial financial asset satisfies the conditions for termination of recognition, the book value of the entire financial asset transferred shall, between the portion whose recognition has been terminated and the portion whose recognition has not been terminated, be allocated at their respective relative fair value, and the difference between the amounts of the following two items shall be included in current P&L:
(1) The book value of the portion whose recognition has been terminated; and(2) The sum of the consideration of the portion whose recognition has been terminated, and the portion of the accumulated
amounts of the changes in fair value originally recorded in the owners’equity which is corresponding to the portion whose recognition
has been terminated (in the event that the financial asset involved in the transfer is available-for-sale financial asset).
The Company shall continue to recognize the financial assets and recognize the received consideration as a financial liability in casethe transfer of these financial assets cannot meet the conditions of termination.
2.9.4 Termination of recognition of financial liabilities
If the existing obligations of the financial liabilities have been removed in whole or in part, recognition of the financial liabilities or a96

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part of them shall be terminated. If the Company 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 shall terminate the recognition of the existing financial liability, and shall at the sametime recognize the new financial liability.
Where the Company makes substantial revisions to some or all of the contractual stipulations of the existing financial liability, it shallterminate the recognition of the existing financial liabilities or part of them, and at the same time recognize the financial liability after therevisions as a new financial liability.
If the recognition of financial liabilities is terminated in whole or in part, the difference between the book value and paid conside⁃
ration (including transferred non-cash assets or newly assumed financial liabilities) shall be included in current P&L.
If the Company buys back part of its financial liabilities, it shall distribute, on the repurchase day, the entire book value of the financial liabilities in light of the comparative fair values of the part that continues to be recognized and the part whose recognition has already been terminated. The difference between the book value which is distributed to the part whose recognition has been terminatedand the paid consideration (including transferred non-cash assets or newly assumed financial liabilities) shall be included in current P&L.
2.9.5 Recognition of fair values of financial assets and liabilities
Financial assets and liabilities measured at fair value shall be directly based on quotation price in active market. During the reporting
period, if estimated P&L of the long-term foreign exchange contract is not calculated according to the quoted exchange rate, estimatedprofit shall be included in P&L of change in fair value and trading financial assets; and estimated loss shall be included in P&L of change
in fair value and trading financial liabilities.
2.9.6 Appropriation of impairment provision for financial assets (excluding receivables)
The Company carries out an inspection, on the balance sheet date, on the book value of the financial assets other than those measured at fair value through profit and loss. If there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made.
(1) Impairment provision for available-for-sale financial assets
At the end of the period, if there is a significant decline in the fair value of an available-for-sale financial asset, or the decline isdeemed non-temporary after considering all relevant factors, impairment of such asset shall be recognized; and the accumulated losses asa result of the decline in the fair value that is originally included in the owners’equity shall be removed and recognized as impairment
losses.
As for any available-for-sale debt instrument that has been recognized as impairment loss, if its fair value increases in the following
accounting period and it is objectively related to the item occurred after the recognition, the originally recognized impairment loss shallbe recovered and recorded as current P&L.
The impairment loss of available-for-sale equity instrument shall not be recovered through P&L.
(2) Held-to-maturity investment
The impairment loss of held-to-maturity investment is calculated in the light of the measurement method of impairment loss on accounts receivable.
2.10 Provision for bad debts in accounts receivable
2.10.1 Appropriation of provision for bad debts in receivables with significant single amount:

Definition of significant single amountThe balance of accounts receivable is above RMB 10 million Yuan and the balance of other receivables is above RMB 2 million Yuan.

Appropriation method

The Company shall take independent impairment test for the accounts receivable with significant single amount at the end of the year, recognize the impairment loss and makeprovision for bad debts based on difference by which the present value of future cash
flow is less than its book value. If the future cash flow is not less than the book value,
provision for bad debts shall be appropriated according to aging analysis method.

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2.10.2 Appropriation of provision for bad debts in accounts receivable by portfolio:
Basis for determination of the portfolio
Portfolio

The Company determines the following proportion of provision for bad debts based on the actual loss ratio of the previous
periods’receivable accounts with similar credit risk feature and taking the actual situation into consideration.

Portfolio

Account receivable aging analysis method

Appropriation method

Appropriation of provision for bad debts by aging analysis method in portfolio:
Accounting age

Appropriation ratio of receivables (%)

Appropriation ratio of other receivables (%)

Within 1 year

11

1-2 years222-3 years

553-5 years

1010Over 5 years

100

100

2.10.3 Single appropriation of provision for bad debts in receivables with insignificant single amountReasonThe single amount is insignificant but obvious impairment has been shown. Independent impairment loss test indicates that the present value of its future cash flow is less than the book value.

Appropriation method

Specific identification method will be adopted to recognize impairment loss and appropriate provision for bad
debts based on the difference by which the present value of its future cash flow is less than the book value.

2.11 Inventories
2.11.1 Classification
Inventories are classified into raw materials, work in process, and finished products.
2.11.2 Valuation of outgoing inventories
Outgoing freight costs on raw materials shall be counted with weighted average method. Costs of work in process and finished products
include materials, labor force and manufacturing expenses proportioned according appropriate percentage under normal production capacity.
The cost of work in process, including the contract cost, is calculated as follows:
As of the balance sheet date, the balance between the accumulated cost of contract in process and the confirmed accumulated contract expense shall be listed into inventories in the current assets. The contract cost mainly refers to the cost of contracted projects in process, including cost of system hardware that have been delivered to customer’s designated location, cost of installation work that is being conducted or system integration cost, direct labor force cost and indirect expenses arising from contract which has been performed
and cost occurred by being performing obligations under other contracts.
2.11.3 Recognition of net realizable value of inventories and appropriation method of provision for depreciation of inventories
The Company checks up inventory at the end of each accounting period, and makes or adjusts provision for depreciation of inventories based on the cost and net realizable value of inventories, whichever is lower. During normal production, the net realizable value of inventories directly for sale, such as finished products, inventory products and materials for sale, is calculated by the estimated price less theestimated sales expenses and taxes; and the net realizable value of materials to be processed is calculated by the estimated price of fi⁃
nished products less the estimated cost, sales expenses and taxes. For those inventories held for the purpose of implementing sales contract or labor contract, the net realizable value is based on the contract price; if the inventories held are more than ordered quantities in
the contract, the net realizable value of the surplus is calculated based on the market price.
In case the factors causing the write-down of the inventories disappear, the write-down shall be recovered to the original amount;and the depreciation amount shall be recorded as current P&L from the provision.
2.11.4 Inventory system
The Company adopts perpetual inventory system.

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Neusoft Annual Report 20132.12 Long-term equity investment
2.12.1 Determination of investment cost
(1) Long-term equity investment through business combination
Business combination under common control: if the consideration of the combination is satisfied by paying cash, transfer of non-cash
assets or assumption of liabilities, the book value of owners’equity obtained from the acquiree on the acquisition date is recognized as
initial investment cost of the long-term equity investment. The difference between the initial investment cost and acquisition consideration
shall be recorded as capital surplus. If the capital surplus is not sufficient for offsetting, the retained earnings shall be adjusted. The direct
costs arising from the business combination, including the expenses for audit, assessment and legal services, shall be included in current
P&L. Business combination under common control: if the consideration of the combination is satisfied by paying cash, transfer of
non-cash assets or assumption of liabilities, the book value of owners’equity obtained from the acquiree on the acquisition date is recognized as initial investment cost of the long-term equity investment. The difference between the initial investment cost and acquisition consideration shall be recorded as capital surplus. If the capital surplus is not sufficient for offsetting, the retained earnings shall be adjusted.
The direct costs arising from the business combination, including the expenses for audit, assessment and legal services, shall be includedin current P&L.
Business combination under non-common control: The combination cost confirmed on the acquisition date is recognized as initial investment cost of the long-term equity investment. Combination cost refers to paid assets, assumed liabilities and fair value of the issued
equity securities for obtaining right of control over the acquiree on the acquisition date. The acquirer’s expenses of audit, legal services,
assessment and consulting services, agent fee and other related administrative expenses shall be included in current P&L; the transaction
expenses for the issuance of equity securities for the business combination shall be included in the initially recognized amount of equity
securities or bonds. In business combination under non-common control which is achieved through more than one transaction, the sumof book value of the acquiree’s equity held by the Company before the acquisition date and newly increased investment cost on the acquisition date shall be recognized as initial investment cost of the investment. The contingent consideration under the combination agreement is recognized as a part of transferred consideration for the combination and included in combination cost based on its fair value on
the acquisition date.
(2) Long-term equity investment through other methods
For long-term equity investment through cash, the actual paid price shall be recognized as initial investment cost.
For long-term equity investment through issuing equity securities, the fair value of issued equity securities shall be recognized as initial investment cost.
For long-term equity investment by investor, the value contracted in the investment contract or agreement (deducting cash dividends
or interests that have been recognized but not issued) shall be recognized as initial investment cost, unless it is not stipulated fair in thecontract or agreement.
Provided that exchange of non-monetary assets has business substance and the fair value of the ingoing assets or outgoing assets
can be measured reliably, its initial investment cost shall be determined based on fair value of the outgoing assets, unless there is obvious
proof indicating the fair value of the ingoing asset is much more reliable. If the exchange of non-monetary assets cannot meet foregoing condition, book value of outgoing asset and payable taxes shall be recognized as initial investment cost of ingoing long-term equity investment.
For long-term equity investment through debt restructuring, its initial investment cost is recognized based on its fair value.
2.12.2 Subsequent measurement and recognition of P&L(1) Subsequent measurement
The Company’s long-term equity investment on subsidiary is measured by cost method and adjusted by equity method when preparing the consolidated financial statements.
For long-term equity investment where the Company does not have joint control or significant influence over the investee, the investment is not quoted in an active market, and its fair value cannot be measured reliably, it shall be measured by cost method.
For long-term equity investment where the Company has joint control or significant influence over the investee, it shall be measured
by equity method. If the initial investment cost is more than the fair value of the investee’s identifiable net assets attributable to the Company, the difference shall not be recorded as initial investment cost of the long-term equity investment; otherwise, the difference shall be

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included in current P&L.
As for other change in owners’equity of the investee except for net P&L, the Company’s attributable P&L calculated based on theshareholding ratio which has no change, shall be recorded as book value of the long-term equity investment; and the capital reserves (other capital reserves) shall be accordingly increased or reduced.
(2) Recognition of P&L
According to the cost method, except for actually paid price or cash dividends or interests that have been recognized but not issued
in the consideration, the Company recognizes the investment income according to the cash dividends or interests that have been announced by the investee.
Under the equity method, based on the carrying amount of the investee’s net profit, net P&L of the investee attributable to the Company shall be recognized after adjustments to following circumstances: if the accounting policies adopted by the investee are different
from that of the Company, the Company, according to its accounting policies, adjusts the relevant items in the financial statements of
the investee; depreciation amount or amortized amount that is appropriated based on fair value of the investee’s fixed assets, intangible
asset upon the investment, and amount of provisions for asset impairment have impact on the investee’s net profit; and unfulfilled internal transactions between the Company and associates and joint ventures are offset.
Upon determination of the investee’s losses attributable to the Company, book value of the long-term equity investment shall be offset first; If the book value is not sufficient, investment losses shall be further recognized, subject to the long-term equity that materiallyconstitute net investment on the investee, to offset against the book value of long-term receivables. At last, estimated liabilities shall berecognized according to additional attributable obligations under the investment contract or agreement and included in current investment loss. If the investee makes profits in following accounting periods, book balance of estimated liabilities that have been recognizedshall be written down, and book values of long-term equity which materially constitutes net investment on the investee and long-term equity investment shall be recovered; investment income shall be recognized.
During the investment period, if the investee can provide consolidated financial statements, the recognition of P&L shall be based on
net profit and other change in equity in its consolidated financial statements.
(3) Disposal of long-term equity investment
On the disposal of long-term equity investment, the difference between its book value and actual acquisition price shall be recognized as current P&L. When the long-term equity investment is calculated by equity method, if it is recorded in owner’s equity due to other change in owner’s equity other than the net P&L of the investee, the recorded amount shall be transferred into current P&L based on
certain ratio when disposing it.
If the Company loses control over a subsidiary it originally owns due to disposal of part of equity investment, the remaining equity
shall be recognized as long-term equity investment or other relevant financial assets according to its book value. If the disposed remaining
equity can make the Company have joint control or significant influence over the investee, the recognition of long-term equity investment
cost that should be terminated shall be carried forward according to the ratio of disposal or recovery of the investment. On this basis, if
the difference between the remaining long-term equity investment cost and the fair value of the investee’s identifiable net assets attributable to the Company belongs to the goodwill indicated in the investment evaluation, the book value of long-term equity investment shallnot be adjusted; If the investment cost is less than the fair value of the investee’s identifiable net assets attributable to the Company, thelong-term equity investment and the retained earnings shall be adjusted. Based on the net P&L attributable to the Company from thedate of acquiring the original investment to the date when equity method is adopted for the accounting due to disposal of the investment, the book value of the long-term equity investment shall be adjusted; based on the net P&L attributable to the Company from thedate of acquiring the original investment to the year-begin of the disposal period (deducting cash dividends or interests that have beenrecognized and distributed), the retained earnings shall be adjusted. Based on the net P&L attributable to the Company from the year-begin of the disposal period to the disposal date, current P&L shall be adjusted; the amount attributable to the Company for the equity
change in the investee caused by other reasons shall be included in capital reserves (other capital reserves) while the book value of thelong-term equity investment shall be adjusted.
2.12.3 Determination of common control or significant influence over investee
Common control refers to the contractually agreed sharing of control over an economic activity, and exists only when the strategic fi-

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nancial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. If the investing enterprise and other party exercise common control over the investee, the investee is its joint venture.
Significant influence refers to the investing enterprise’s power to participate in decision making of the investee’s financial and operating policies, but the investing enterprise cannot control or jointly control over decision making of those policies. If an investing enterprise can exert significant influence on the investee, the investee is its associate.
2.12.4 Impairment test method and appropriation method for impairment provision
As for long-term equity investment that has no significant influence on the investee and no quotation in an active market and whose
fair value cannot be measured reliably, its impairment loss is determined according to the difference between its book value and cash value of future cash flow recognized based on current rate of return.
If the measurement result reveals that the recoverable amount of other long-term equity investment (except for goodwill arising frombusiness combination) with impairment signs is lower than its book value, the difference shall be recognized as impairment loss.
Upon recognition, the impairment loss of the long-term equity investment will not be recovered.
2.13 Investment Property
Investment property is a property held to earn rentals, or for capital appreciation or both, including land use right that is leased out,
land use right held for transfer upon capital appreciation, and building that is leased out.
The Company adopts cost method for measurement of investment property. As for investment property measured by cost method,
the Company adopts the same depreciation policy as that of fixed assets for measurement of building for rental, and the same amortization policy of intangible asset for land use right for rental.
On appearance of evidence for depreciation, the Company estimates the recoverable amount and recognizes the impairment loss if
the recoverable amount is lower than its book value.
Upon recognition, the impairment loss of investment property will not be recovered.
2.14 Fixed assets
2.14.1 Recognition of fixed assets
Fixed assets refer to as the tangible assets possessed for producing goods, providing labor, lease or operation and management withmore than one fiscal year of service life. Fixed assets are recognized when satisfying the following conditions:(1) The economic benefits related to such fixed assets can flow into the Company; and(2) The cost of such fixed assets can be measured reliably.
2.14.2 Depreciation of fixed assets
The depreciation of fixed assets is made by use of life averaging method. The depreciation rate is determined according to the natureand use of different types of the fixed assets, estimated useful life and estimated net residual value rate.
The depreciation period and annual depreciation rate of fixed assets are as follows:
Category

Depreciation period (Years)

Residual value rate (%)

Annual depreciation rate (%)

Houses and buildings

30-50

5

1.90-3.20

Electronic equipment

3

5

31.70

Transportation equipment

5

5

19.00

Other equipment

3-5

519.00-31.70

2.14.3 Impairment test method and appropriation method of provision for fixed assets
The Company reviews whether there are signs indicating impairment of fixed assets at the end of every accounting period.
When such signs do exist, impairment tests will be conducted to recognize the recoverable amount of fixed assets. The recoverable
amount of the fixed assets is recognized based on the higher between the net amount of the fair value of the assets after deducting thedisposal expenses and the present value of future cash flow of the assets.

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If the recoverable amount is lower than the book value of the fixed assets, the book value shall be written down to its recoverable
amount; the write-down amount shall be recognized as impairment loss of fixed assets and included in current P&L; and impairment provision for the fixed asset shall be appropriated.
Upon recognition of impairment loss of the fixed assets, depreciation of the fixed assets shall be adjusted in the future periods sothat their adjusted book value (deducting estimated net residual value) can be properly apportioned in the remaining service periods.
Once the impairment loss is recognized, it shall not be recovered in subsequent accounting periods.
If there is any sign indicating a fixed asset may have impairment, the Company shall recognize the recoverable amount based onsuch fixed asset. If recognition of its recoverable amount is not reachable, its recognition shall be based on the asset group it is attributable to.
2.14.4 Other remarks
In term of the Company’s any land-based construction project for own use from January 1st, 2002 to December 31st, 2006, the bookvalue of the land use right constitutes the cost of houses and buildings. As for land use right that has been recorded into the cost ofhouses and buildings, the Company has removed it from book value of its original asset and recorded it into intangible asset on January
1st, 2007 provided that it has been separately recognized as intangible asset according to relevant standards. Since January 1st, 2007, thecost of land use right was not included in the cost of houses and buildings for any land-based construction project for own use.
2.15 Construction in progress
2.15.1 Classification
Construction in progress is calculated according to project classification.
2.15.2 Criteria and timing for conversion of construction in progress into fixed assets
If the construction in process has been available for intended use but final account is not made, it shall be counted into fixed assets
at the estimated value based on construction budget, cost or actual cost upon it is available for intended use; and depreciation of fixed assets shall be made as per the Company’s depreciation policy of fixed assets. After the final account, the originally estimated value shallbe accordingly adjusted based on actual cost, without changing the appropriated depreciation amount.
2.15.3 Impairment test method and provision appropriation for construction in progress
The Company reviews whether there are signs indicating impairment of construction in progress at the end of every accounting period.
When such signs do exist, impairment tests will be conducted to recognize the recoverable amount of fixed assets. If there is any
sign indicating a fixed asset may have impairment, the Company shall recognize the recoverable amount based on such construction inprogress. If recognition of its recoverable amount is not reachable, its recognition shall be based on the asset group it is attributable to.
The recoverable amount of the construction in progress shall be decided based on the higher between the net amount of its fair va⁃
lue after deducting the disposal expenses and its present value of future cash flow.
If the recoverable amount is lower than the book value, the book value shall be written down to its recoverable amount; thewrite-down amount shall be recognized as impairment loss on construction in progress and included in current P&L; and impairment provision for the construction in progress shall be appropriated.
Once the impairment loss is recognized, it shall not be recovered in subsequent accounting periods.
2.16 Borrowing costs
2.16.1 Recognition of capitalization of borrowing costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses and exchange balance on foreign currency borrowings.
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction or production ofassets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current P&L.
The term”assets eligible for capitalization”shall refer to the fixed assets, investment real estate, inventories and other assets, of which
the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:

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(1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest-bearing debts
paid for the acquisition and construction or production activities for preparing assets eligible for capitalization;(2) The borrowing costs has already incurred; and(3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale havealready started.
2.16.2 Capitalization period
Capitalization period refers to the period from the commencement to the termination of the capitalization of borrowing costs, which
excludes the suspension period of the borrowing cost capitalization.
When the assets with its purchase and construction or production meeting the capitalization conditions have reached expected purpose for use or sale, the capitalization of borrowing cost shall be stopped.
If part of projects of the assets with its purchase and construction or production meeting the capitalization conditions have been fi⁃
nished respectively and can be used separately, the capitalization of such projects shall be stopped.
If part of projects of the assets with its purchase and construction or production meeting the capitalization conditions have been fi⁃
nished respectively but they are not available for use or sale until the whole assets are finished, the capitalization of such projects shall be
stopped upon the whole assets are finished.
2.16.3 Suspension of capitalization
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts
for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period
shall be recognized as expenses, and shall be recorded into current P&L, till the acquisition and construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset under acquisition and construction or production ready for theintended use or sale, the capitalization of the borrowing costs shall continue.
2.16.4 Calculation of capitalized amount of borrowing costs
If the special loan is borrowed for purchase or production of the assets meeting the condition of capitalization, the interest chargesof special loan actually occurring in current period deducted by the interest income of the not-used-loan fund in the bank or the income
obtained from temporary investment shall be confirmed as the capitalized amount of the interest charge of special loan.
If the Company uses the general loan in order to purchase or produce the assets meeting the conditions of capitalization, it shall use
the weighted average (at the end of each month) of the portion by which the total expenditure for assets exceeds the special loan multiplied by the capitalization rate of the occupied general loan to calculate the interest amount of the general loan which should be capita⁃
lized. The capitalization rate shall be calculated based on weighted average interest rate of the general loan.
For a borrowing at a discount or premium, the actual interest rate method shall be used to determine amortization for each accounting period and adjust interest amount of each period.
2.17 Intangible asset
2.17.1 Measurement of intangible asset(1) The company measures its intangible asset initially by cost
The cost of the purchased intangible asset shall include the purchase price, relevant taxes and other necessary expenditures directly
attributable to intangible asset for the expected purpose. Where the payment of purchase price for intangible asset is delayed beyond thenormal credit conditions, which is for financing purpose, the cost of intangible asset shall be determined on the basis of the current valueof the purchase price.
For intangible asset obtained from the debtor for payment of debts through debt restructuring, its account value shall be recognizedbased on its fair value. The difference between the book value of the restructured debts and fair value of the intangible asset for payment of debts shall be included in current P&L.
Provided that exchange of non-monetary assets has business substance and the fair value of the ingoing assets or outgoing assets
can be measured reliably, its account value shall be determined based on fair value of the outgoing assets, unless there is obvious proof
indicating the fair value of the ingoing asset is much more reliable. If the exchange of non-monetary assets cannot meet foregoing condition, book value of outgoing asset and payable taxes shall be recognized as cost of ingoing intangible asset and not recorded into P&L.

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For intangible asset obtained through business combination under common control, its account value shall be recognized based on
acquiree’s book value of the asset; For intangible asset obtained through business combination under non-common control, its accountvalue shall be based on its fair value. The cost of intangible asset formed during internal development activities consists of the materials,
labor cost, register fee, amortization of other patents and franchise right during development period, interests paid for capitalization, andother direct expenses before the intangible asset is available for intended use.
(2) Subsequent measurement
The service life of intangible asset shall be analyzed and judged upon acquisition.
Intangible asset with limited service life shall be amortized by straight-line method within the period when it brings economic benefit
to the Company. If it is unable to forecast the period when the intangible asset can bring economic benefit to the Company, it shall be
regarded as an intangible asset with uncertain service life and not be amortized.
2.17.2 Estimate of service life of intangible asset:
Item

Estimated service life

BasisLand use right

40-50 years

Term prescribed in the land use certificate

Property use right

50 years

Term prescribed in the property use contract or agreement

Industrial property right and proprietary technology

10 years

Term prescribed in relevant contract or estimated life

Other intangible asset

5-10 years

Term prescribed in relevant contract or estimated life

Service life and amortization method of the intangible asset with limited service life shall be rechecked at the end of each report year.
The rechecked result in current period shows that there is no difference in the estimate of service life and amortization method.
2.17.3 Appropriation of impairment provision for intangible asset
If there are signs indicating impairment of intangible asset with certain service life, impairment test shall be conducted at the end of
the period.
Impairment test on intangible asset with uncertain service life shall be conducted at the end of every period.
Recoverable amount shall be estimated through impairment test on the intangible asset. If there is any sign indicating a fixed asset
may have impairment, the Company shall recognize the recoverable amount based on such fixed asset. If recognition of its recoverable
amount is not reachable, its recognition shall be based on the asset group it is attributable to.
The recoverable amount of the fixed assets is recognized based on the higher between the net amount of the fair value of the assets
after deducting the disposal expenses and the present value of future cash flow of the assets.
If the recoverable amount is lower than the book value of the fixed assets, the book value shall be written down to its recoverable
amount; the write-down amount shall be recognized as impairment loss of fixed assets and included in current P&L; and impairment provision for the fixed asset shall be appropriated.
Upon recognition of impairment loss of the fixed assets, depreciation of the fixed assets shall be adjusted in the future periods sothat their adjusted book value (deducting estimated net residual value) can be properly apportioned in the remaining service periods.
Once the impairment loss is recognized, it shall not be recovered in subsequent accounting periods.
2.17.4 Determination of research phase and development phase of internal R&D projects
Expenses of internal R&D projects are divided into expense during research phase and expense during development phase.
Research phase refers to the period when special planned survey and research activities are carried out to obtain and understand any
new technology or knowledge.
Development phase refers to the period when research results or other knowledge is applied to specific plan or design, before its
commercial production or use, to create new or essentially improved material, device and products, etc.
2.17.5 Capitalization of expense during development phase
The expenditure in development phase which meets the following conditions shall be confirmed as intangible asset:(1) Complete this intangible asset and make it usable or salable technically;104

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(2) Have the intention of completing this intangible asset and using or selling it;(3) The way for generating economic interest by the intangible asset, includes the proof that the products produced with this intangible asset have a market or this intangible asset self has a market, and if the intangible asset is used inside the Company, it can be proved
to be useful;(4) Have the support with sufficient source of technique and finance and other resources to complete the development of this intangible asset, and the ability to use or sell this intangible asset; and(5) The expenditure in the development phase of this intangible asset can be measured reliably.
Expenditure during development phase which cannot meet foregoing conditions shall be recorded into current P&L.
Expenditure during research phase shall be recorded into current P&L.
2.17.6 Other Remarks
Please refer to 2.14.4.
2.18 Goodwill
As for good will arising from business combination under non-common control, its initial cost is based on the difference by which
the combination cost exceeds the fair value of acquired identifiable net assets.
On disposal of relevant asset group or asset group portfolio, the goodwill shall be removed and included into current P&L.
The Company does not amortize the goodwill. Impairment test on goodwill is conducted at the end of every year.
The Company conducts impairment test on goodwill. Fair value of goodwill arising from business combination is amortized into relevant asset group since the acquisition date by proper method or into relevant asset group portfolio if it is unable to amortize into the asset group. Amortization of fair value of goodwill shall be based on the proportion of fair value of each asset group or asset group portfolio to the total amount of fair value of relevant asset group or asset group portfolio. If the fair value cannot be measured reliably, theamortization shall be based on the proportion of book value of each asset group or asset group portfolio to the total amount of fair va⁃
lue of relevant asset group or asset group portfolio.
If asset group or asset group portfolio with respect to goodwill shows signs of impairment, impairment test on asset group or asset
group portfolio that does not include goodwill shall be conducted firstly; recoverable amount will be calculated and impairment loss will
be recognized after comparison with the book value. Impairment test on asset group or asset group portfolio that included goodwill will
be followed. Comparison of its book value (including book value of amortized goodwill) and recoverable amount will be made. If the recoverable amount is less than the book value, the difference shall be recognized as impairment loss of goodwill. The impairment loss will
be recorded in current P&L and will not be recovered in following accounting periods.
2.19 Long-term deferred expenses
Long-term deferred expenses refer to all the expenses paid but attributable to the current and subsequent accounting periods.
Long-term deferred expenses include expenses covering decoration fee, expenses of refurbishment of leased fixed assets, etc, of
which, the deferred period is over one year (excluding one year). They shall be amortized on average according to estimated profitable period and presented by net amount by which the actual expenses less accumulated amortization. If the long-term deferred expense cannot
be profitable in future accounting periods, the amortized value of the expense shall be all counted into current P&L.
2.20 Estimated liabilities
The obligation related to contingencies, if meeting all following conditions, shall be confirmed as estimated liabilities:(1) The obligation is the current obligation borne by the Company;(2) The fulfillment of the obligation shall most likely cause the economic interest flowing out from the Company; and(3) The amount of the obligation can be measured reliably.
The Company’s estimated liabilities mainly refer to liabilities caused by product quality warranty. Based on previous experience, certain labor or business travel expense occurred during the warranty period is recorded as estimated liabilities. Hardware quality warranty is
generally assumed by OEMs.
2.21 Share-based payments and equity instruments
Share-based payment refers to a transaction in which the Company grants equity instruments or undertakes equity-instrument-based
liabilities in return for services from employee (or other parties). The share-based payments consist of equity-settled share-based payments

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2.21.1 Equity-settled share-based payment and equity instruments
Equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments
granted to the employees. As to an equity-settled share-based payment in return for services of employees, if the right may be exercised
immediately after the grant, the fair value of the equity instruments shall, on the granting date, be included in the relevant cost or expense and the capital reserves shall be increased accordingly. As to an equity-settled share-based payment in return for employee services,
if the right cannot be exercised until the vesting period comes to an end or until the prescribed performance conditions are met, then oneach balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of thenumber of vested equity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the granting date.
During the period when performance conditions or service term conditions are satisfied, cost or expense of equity-settled share-based
payment shall be recognized as capital reserves. Before the vesting date, recognized accumulated amount of equity-settled share-based
payment on each balance sheet date reflects the best estimate of expired part and the Company's quantity of actually vested equity instruments.
Share-based payment in which the vesting is not performed eventually, its cost or expense shall not be recognized, unless the vesting
conditions are involved with market conditions or non-vesting conditions. If so, no matter the market conditions or non-vesting conditions
are met or not, vesting shall be recognized as long as all the non-market conditions in the vesting conditions are met.
If provisions of equity-settled share-based payment are modified, obtained service shall be recognized according to the original provisions. Any increase of fair value of the granted equity instruments or change that is beneficial to employees on the modification dateshall be recognized as increase of obtained service.
If equity-settled share-based payment is canceled, undetermined amount shall be recognized on the cancellation date to accelerate
the vesting. If employees or other party select non-vesting conditions, which are not met during the vesting period, the equity-settled
share-based payment shall be deemed canceled. However, if new equity instrument is granted and recognized as substitution of the canceled equity instrument on the granting date, modification methods for the terms and conditions of original equity instrument shall be adopted for the new equity instrument.
2.21.2 Cash-settled share-based payment
Cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated and confirmed based on
the shares or other equity instruments undertaken by the Company. As to cash-settled share-based payment instruments, if the right may
be exercised immediately after the grant, the fair value of the liability undertaken by the enterprise shall, on the granting date, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly. As to cash-settled share-based payment, if the rightmay not be exercised until the vesting period comes to an end or until the specified performance conditions are met, on each balance
sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the information
about the exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the fair value of the liability
undertaken by the Company. On each balance sheet date and on each account date prior to the settlement of the relevant liabilities, thefair values of the liabilities shall be re-measured and the changes shall be included in current P&L.
2.22 Income
The Company’s operating income is mostly from system integration contracts, sales of software products and medical systems, software development and other services, property services, rental, advertising, etc. Business income shall be presented based on the net
amount deducting all discounts. Recognition basis of each income item is as follows:
2.22.1 Income from system integration contracts
According to the accounting standards for construction contracts, the Company recognizes income from system integration development projects in process based on percentage-of-completion method. If the project result can be estimated reliably, the Company shalladopt the percentage-of-completion method to confirm the income from the projects on the balance sheet date. The completion progress shall be determined at the proportion of the completed contract work to the expected total contract work.
If the final result of a construction contract cannot be estimated reliably, it shall be dealt with as follows:106Neusoft Annual Report 2013

(1) If the contract costs can be recovered, the contract revenue shall be recognized based on actually recoverable contract costs; andthe contract costs shall be recognized as contract expenses in the current period they are incurred; and(2) If the contract costs cannot be recovered, these costs shall be recognized as contract expenses immediately when incurred and nocontract revenue shall be recognized.
The current contract revenues in the current period shall, on the balance sheet date, be recognized in accordance with the balanceof the total contract revenues multiplied by the schedule of completion then deducting the accumulated revenue recognized in previous
accounting periods. At the same time, the current contract expenses in the current period shall be recognized in accordance with the balance of the expected total contract costs multiplied by the schedule of completion then deducting the accumulated expenses recognizedin preceding accounting periods. If the total expected contract costs exceed the total expected contract revenue, the expected loss shallbe recognized as current expenses.
2.22.2 Income from sales of software products
Income from sales of software products shall be recognized provided that main risks and rewards related to the ownership of the
products have been transferred to the buyers and the products will not be managed and controlled by the Company; economic benefit
with respect to the sales transaction may flow into the Company; and relevant income and costs can be measured reliably.
2.22.3 Income from sales of medical systems
Income from sales of medical systems shall be recognized after the installation and debugging have been finished, and main risks
and rewards related to them have been transferred to the customers.
2.22.4 Income from labor services
Income from labor services mainly refers to revenue from the provision of customized software, software maintenance/upgrade, training, web page creation, etc.
Income from provision of services of which the start date and finish date are in the same accounting year shall be recognized uponcompletion of the provision.
If the start date and finish date are attributed to different accounting years, and the transaction results can be measured reliably, therelevant service income shall be recognized on the balance sheet date based on percentage-of-completion method.
The start date and finish date of providing customized software are usually attributed to different accounting years, and the results
can be measured reliably. Therefore, the Company adopts percentage-of-completion method to recognize the service income. The percentage of completion is determined at the proportion of labor hour for software production to the total labor hour.
2.22.5 Income from property service and leasing
Income from property service and leasing is recognized by direct method within the leasing term.
2.22.6 Income from advertising
Advertising income is mainly from advertising agency service, which is recognized upon the ad is broadcasted; and advertising production, which is recognized based on production schedule.
2.23 Government Subsidies
2.23.1 Types
Government subsidies refer to monetary or non-monetary assets obtained free from the government. Government subsidies consistof asset-related subsidies and income-related subsidies.
Asset-related subsidies refer to subsidies for long-term assets acquired, constructed or formed by other means, including financial allocation for purchasing fixed assets or intangible asset, financial discount for special borrowing for fixed assets, etc. Income-related subsidies refer to subsidies with respect to income.
2.23.2 Accounting treatment
Government subsidies related to long-term assets such as purchased or constructed fixed assets and intangible asset shall be recognized as deferred income and included in current non-operating income after being averagely allocated over the useful life of the related
assets;Income-related subsidies used for compensating future expenses or losses of the Company shall be recognized as deferred income
and included in current non-operating income during the period when the relevant expenses are recognized; Those subsidies used for107

Neusoft Annual Report 2013

compensating the related expenses or losses incurred to the Company shall be directly included in current non-operating income.
2.23.3 Recognition
Government subsidies measured at accounts receivable shall be recognized if there is obvious proof indicating the consistency to relevant conditions in the government policies and it is estimated the fund can be provided. Other government subsidies shall be recognized
upon receiving the fund.
2.24 Deferred income tax assets/liabilities
The Company shall recognize the deferred income tax assets arising from a deductible temporary difference to the extent of theamount of the taxable income which it is most likely to obtain and can be used for offsetting the deductible temporary difference in following accounting period.
Taxable temporary difference shall be recognized as deferred income tax liabilities unless following special circumstances: initial recognition of goodwill;
And other transactions or items that have no impact on accounting profits or taxable amount (or deductible loss).
2.25 Operating lease
Accounting treatment(1) Lease fee paid by the Company shall be equally amortized by straight-line method based on the whole lease term without deducting rent-free period and be included in current expenses. Initial direct expenses paid by the Company for the transactions related to thelease shall be included in current expenses.
If the asset lessor assumes the related expense that should have been borne by the Company, the Company shall deduct the expensefrom the total rent. Deducted rent shall be equally amortized based on the lease term and included in current expenses.
(2) Rental fee received by the Company shall be equally amortized by straight-line method based on the whole lease term without deducting rent-free period and be recognized as lease income. Initial direct expense paid by the Company for the leasing transactions shallbe included in current expenses; if the amount of the expense is large, it shall be capitalized and included in current income as the sameas the recognition of lease income.
If the Company assumes the related expense that should have been borne by the lessee, the Company shall deduct the expensefrom the total lease income. Deducted lease income shall be equally allocated based on the lease term.
2.26 Related parties
When a party controls, jointly controls or exercises significant influence over another party, or when two or more parties are under
the control, joint control or significant influence of the same party, the related party relationships are constituted. Related parties may be
individuals or corporate entities. Enterprises shall not be regarded as the Company’s related parties if they are all under the control of thestate without any other affiliated relationships.
The Company’s related parties include, but not limited to:(1) The parent company thereof;(2) The subsidiaries thereof;(3) Other enterprises under the control of the same parent company thereof;(4) The investors having joint control over the Company;(5) The investors having significant influence thereon;(6) The joint ventures thereof, including their subsidiaries;(7) The associates thereof, including their subsidiaries;(8) The main individual investors and their close family members;(9) Key managements of the Company or its parent company and their close family members; and(10) Other enterprises that is controlled or jointly controlled by the Company’s main individual investors, key managements or theirclose family members.
2.27 Changes in principal accounting policies and estimates
2.27.1 Change in principal accounting policies
The company has no change in principal accounting policies in this reporting period.

108

Neusoft Annual Report 2013

2.27.2 Change in accounting estimates
The company has no change in principal accounting estimates in this reporting period.
2.28 Prior-period error correction
The company doesn’t make any correction for previous accounting errors in this reporting period.
Note 3 Taxes
3.1 Tax types and rates
Type

Basis

Rate

VAT

The VAT payable is recognized as the difference between output VAT whichis calculated based on income from sales of products and provision of services
according to the tax law and deductible input VAT in the current period

17%, 6% (Note 1)

Business tax

Based on taxable business income

Property tax

Leasing property: Based on rental income
Own property: Based on the original value of the fixed asset

12%
1.2%

Urban maintenance and construction tax,
Educational surtax and local education surtax

Based on actually paid business tax, VAT and consumption tax

7%, 3%, 2%,
1%-7% (Note 3)

Corporate income tax

Based on taxable income amount

10%, 12.5%, 15%,25% (Note 4)

5% (Note 2)

Note 1: According to the Policies to Further Support the Development of Software and Integrated Circuit Industry issued by the StateCouncil of China (GF[2011] NO.4), the portion of VAT on software products independently developed by the taxpayers which exceeds
3% of the taxpayers’sales income from such software products will be refunded after the collection at the legal tax rate of 17%;
According to the Announcement about Pilot Change in Collection of Business Tax into VAT in Shanghai for Transportation and Some

Modern Service Industries (CS [2011] No. 111) released by the Ministry of Finance of the People’s Republic of China and State Taxation
Administration on November 16th, 2011, the pilot collection was carried out since January 1st, 2012. On July 31st, 2012, the Ministry of Finance of the People’s Republic of China and State Taxation Administration released the Announcement about Pilot Change in Collectionof Business Tax into VAT in Eight Provinces/Cities for Transportation and Some Modern Service Industries (CS [2012] No. 71), where thepilot locations was expanded to Beijing, Tianjin, Jiangsu Province, Zhejiang Province (including Ningbo), Anhui Province, Fujian Province (including Xiamen), Hubei Province, Guangdong Province (including Shenzhen) and the pilot collection has been executed respectively since
September 1st, 2012, October 1st, 2012, November 1st, 2012 and December 1st, 2012. On August 1st, 2013, the pilot collection has been
expanded nationwide. The Company and its subsidiaries engaging in modern service are subject to the collection change from businesstax into VAT at a rate of 6%. According to relevant notice (CSZ [2013] No. 106), income from technology transfer, development, consulting and technology service shall be exempted from business tax.
According to the Notice about Tentative Exemption from VAT & Business Tax on Some Small Sized Enterprises (CSZ [2013] No. 52)
announced by the Ministry of Finance of the People’s Republic of China and State Taxation Administration, VAT/business tax payers thatare small sized enterprises and organizations with monthly sales less than RMB 20,000 Yuan are exempt from VAT/business tax on a provisional basis. The Company’s subsidiary Hangzhou Neusoft Co., Ltd. was entitled to this policy.
Note 2: Business tax for income from lease and property management revenues not subject to the foregoing pilot change shall be
paid at a rate of 5%.
Note 3: According to the Notice about Unification of Local Education Surtax Policies (CZ [2010] NO. 98), the Company shall pay 7%,
3% and 2% of the sum of taxable VAT, consumption tax and business tax respectively for the urban maintenance and construction tax,
educational surtax and local educational surtax since February 1st, 2011. Subsidiaries except for overseas ones shall pay 1%-7%, 3% and
2% of the actually paid goods turnover tax respectively for foregoing taxes.
Note 4: According to the Preferential Policy on Corporate income tax to Further Support the Development of Software and Integrat-

ed Circuit Industry (CSZ [2012] NO. 98), the rate of corporate income tax shall be cut off to 10% for key software companies under cer-109

Neusoft Annual Report 2013

tain national program if the exemption policies are not enjoyed. In 2013, the Company and Neusoft Group (Dalian) Co., Ltd. were recognized as the key companies by China’s National Development and Reform Commission, the Ministry of Industry and Information Technology,
the Ministry of Finance, the Ministry of Commerce of the People’s Republic of China and State Taxation Administration jointly and entitled to the foregoing Preferential Policy.
In 2013, the Company and Neusoft Group (Beijing) Co., Ltd., Shenyang Neusoft Medical Systems Co., Ltd., Chengdu Neusoft System
Integration Co., Ltd., Neusoft System Integration Co., Ltd., Hebei Neusoft Co., Ltd., Shenyang Neusoft Information Technology Services
Co., Ltd., Shandong Neusoft System Integration Co., Ltd., and Beijing Neusoft Viewhigh Technology Co., Ltd., as high-tech companies,
paid the corporate income tax at a rate of 15% according to the Corporate Income Tax Law of the People's Republic of China (ZXL
[2007] No.63).
According to the Notice about Corporate Income Tax Preferential Policy (CS [2008] NO.1) given by the State Council, corporate income tax shall be exempt in the first two years since the profit-making year and paid by half from the third to fifth year. Confirmed by
the applicable tax administration, the Company’s subsidiaries including Shenyang Neusoft System Integration Technology Co., Ltd., Neusoft Group (Guangzhou) Co., Ltd. and Neusoft Group (Shanghai) Co., Ltd. were in the preferential period (pay the tax by half) in 2013
and the corporate income tax was paid at a rate of 12.5%. Neusoft Nanjing Co., Ltd. and Neusoft Group (Wuxi) Co., Ltd. were in the exemption period without paying the corporate income tax.
According to the Notice about Corporate Income Tax Preferential Policy for Small-sized Companies with Meager Profits (CS [2011]
NO.117), taxable income shall be cut off to 50% and the corporate income tax shall be collected at a rate of 20%. The taxable incomeof the Company’s subsidiary Hangzhou Neusoft Co., Ltd. was cut off to 50% and the corporate income tax was paid at a rate of 20%.
Other domestic subsidiaries paid the tax at the rate of 25% according to the Corporate Income Tax Law of the People's Republic ofChina.
3.2 Tax types and rates for overseas subsidiaries
3.2.1 Hong Kong
Type
Corporate income tax

Basis
Based on taxable income amount

Rate
16.5%

3.2.2 Japan
Type

110

Basis

Rate

Corporate income tax

Based on annual taxable income amount25.50%

Special Reconstruction Income Tax

Based on annual taxable income amount10.00%

Business tax (ratio of income)

Based on annual taxable income amount

7.50%

Business tax (ratio of added value)

Based on annual expenditure of peopleware and rental

0.50%

Business tax (ratio of capital)

Based on registered capital

0.21%

Local tax

Based on actually paid income tax

21.30%

Consumption tax

Output tax amount shall be calculated based on income from selling goods and taxable service
according to applicable tax law, the difference from which the output tax amount deducts the
deductible input tax amount in current period shall be the due consumption tax.

5.00%

Neusoft Annual Report 2013

3.2.3 Tax types and rates for Neusoft Europe AG, Neusoft Mobile Solutions Oy, Neusoft EDC SRL, Neusoft Technology Solutions
GmbH and Neusoft GmbH
Type

Basis

Rate

VAT

Output tax amount shall be calculated based on income from selling goods andtaxable service according to applicable tax law, the difference from which theoutput tax amount deducts the deductible input tax amount in current period
shall be the due consumption tax

8%-24%

Corporate Income Tax

Based on taxable income amount

16.5%-32.975%

Capital/Dividend Tax

Based on dividend/capital income

0.05%-32%

3.2.4 The United States
Type

Basis

Rate

Corporate Income Tax

Based on taxable income amount

15%-35%

Sales and Use tax

Based on annual taxable income from technology service

6.75%-9%Note: The tax rates may differ by states or cities within a state in the United States.

111

112

Qingdao

Changsha

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Shandong Neusoft
System Integration Co.,Ltd.

Hunan Neusoft Co., Ltd.

Nanjing Neusoft System
Integration Co., Ltd.

Chengdu Neusoft System
Integration Co., Ltd.

Xi’an Neusoft System
Integration Co., Ltd.

Wuhan Neusoft
Information Technology
Co., Ltd.

Shenyang

Shenyang

Shenyang Neusoft
WhollyMedical Systems Co., Ltd. owned

Shenyang Zhuri Digital
WhollyAdvertising
owned
Communications Co., Ltd.

Wuhan

Xi’an

ChengduNanjing

Beijing

Whollyowned

Neusoft Group (Beijing)Co., Ltd.

Shenzhen

Domicile

WhollyownedTypeShenzhen Neusoft Co.,Ltd.

Subsidiary

12,000,000

20,000,000

35,000,000

Limitedliability
company
Limitedliability
company
Limitedliability
company

Limitedliability
company

Limitedliability
company

Computer software/
hardware

Computer software/
hardware

Computer software/
hardware

Computer software/
hardware

Computer software/
hardware

Computer software/
hardware

Computer software/
hardware, import/export ofrelated goods andtechnologies

Computer software/
hardwareScope of business

1,000,000 Ad production/publicity

378,000,000 Medical systems

25,000,000

12,000,000

Limitedliability
company

Limitedliability
company

50,000,000

340,000,000

Limitedliability
company
Limitedliability
company

5,000,000

RegisteredcapitalLimitedliability
company

Nature4.1.1 Wholly-owned or controlled subsidiaries

4.1 Subsidiaries

1,000,000

387,082,539

25,000,000

32,502,468

20,000,000

12,000,000

12,000,000

50,000,000

339,396,361

5,000,000

Actualinvestment
amount at
the end of
the period

Monetary unit in following tables is expressed in Renminbi unless otherwise indicated.

Note 4 Business Combination and Consolidation of Financial Statements

Balance ofother items
constitutingnet
investment
on thesubsidiary

100

100

100

100

100

100

100

100

100

100

Equity
ratio
(%)

100

100

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements
Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

Shenyang

Guangzhou

Shenyang Neusoft System
WhollyIntegration Technology
ownedCo., Ltd.

Neusoft Group(Guangzhou) Co., Ltd.

HangzhouWhollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Hangzhou Neusoft Co.,Ltd.

Neusoft Group (Tianjin)
Co., Ltd.

Neusoft Group(Tangshan) Co., Ltd.

Neusoft Group (Hainan)Co., Ltd.

Neusoft Group (Wuxi)
Co., Ltd.

Neusoft Group (Wuhu)
Co., Ltd.

Wuhu

Wuxi

HainanTangshan

Tianjin

Shanghai

Neusoft Group (Shanghai) WhollyCo., Ltd.
owned

Whollyowned

Shanghai

Whollyowned

Shanghai Neufashion
Digital Technology Co.,
Ltd.

Qinhuangdaoh

Controlled

Hebei Neusoft Co., Ltd.
(Note 1)

Hong Kong

Domicile

Whollyowned

TypeNeusoft Group (HongKong) Co., Ltd.

SubsidiaryComputer software/
30,000,000 hardware, technicalconsulting and services
Computer software/
100,000,000 hardware, technicalconsulting and services
Computer software/
20,000,000 hardware, technicalconsulting and services
Computer software/
10,000,000 hardware development andservices

Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Computer software/
hardware

Computer software/
500,000 hardware, technicalconsulting and services

Limitedliability
company
20,000,000

Computer software/
200,000,000 hardware, technicalconsulting and services

Limitedliability
company

Limitedliability
company

Computer software/
130,000,000 hardware, technicalconsulting and services

Limitedliability
company

Computer software/
hardware

Computer software/
20,000,000 hardware, technicalconsulting and services

20,000,000

Limitedliability
company

Limitedliability
company

Computer software
10,000,000 development & network
integration

Limitedliability
company

Scope of business

Development, sales and
850,000
consulting of computer
USD
software

RegisteredcapitalLimitedliability
company

Nature10,000,000

20,000,000

100,000,000

30,000,000

20,000,000

500,000

200,000,000

130,000,000

20,000,000

20,000,000

8,500,000

850,000
USD

Actualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary

100

100

100

100

100

100

100

100

100

100

85

100

Equity
ratio
(%)

100

100

100

100

100

100

100

100

100

100

85

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements

2,428,848

Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Continued table

Neusoft Annual Report 2013

113

114

Switzerland

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Neusoft Group(Nanchang) Co., Ltd.

Neusoft (Europe) Co., Ltd.

Neusoft Group(Chongqing) Co., Ltd.

Neusoft Group (Ningbo)
Co., Ltd.

Neusoft Group (Xuzhou)Co., Ltd.

Neusoft Group (Karamay)
Co., Ltd.

Neusoft Group(Changchun) Co., Ltd.

Hefei Neusoft Technology WhollyCo., Ltd. (Note 3)
owned

Nanchang

Whollyowned

Neusoft Group(Zhengzhou) Co., Ltd.

Hefei

Changchun

Karamay

XuzhouNingboChongqing

Zhengzhou

Shenyang

Whollyowned

Shenyang Neusoft
Transportation
Information Technology
Co., Ltd. (Note 2)

Nanjing

Domicile

Whollyowned

TypeNeusoft Group (Nanjing)Co., Ltd.

SubsidiaryComputer software/
hardware development,
sales and technicalconsulting

Scope of business

30,000,000

451,952

Design, production and20,000,000 sales of computer software/
hardwareDevelopment/sales/
installation/technical
30,000,000 consulting of computer
software/hardware andelectronic products
Computer software/
hardware, system
integration, technology
consulting

Limitedliability
company
Limitedliability
company

Limitedliability
company
500,000

20,000,000

10,000,000

Development and sales ofcomputer software/hardware
10,000,000

20,000,000

Limitedliability
company

Development and sales ofcomputer software/hardware

20,000,000

20,000,000

Limitedliability
company

Development and sales ofcomputer software/hardware

259,661,004

20,000,000

Computer software/
37,900,000
hardware, technical
瑞士法郎
consulting and services

Limitedliability
company

20,000,000

10,000,000

5,844,950

12,000,000

Limitedliability
company

Computer hardware
20,000,000 development/production,technical consulting, services

Limitedliability
company

Sales and development ofcomputer software/hardware

10,000,000

7,000,000 Computer services

12,000,000

RegisteredcapitalLimitedliability
company

Limitedliability
company

Limitedliability
company

NatureActualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary

100

100

100

100

100

100

100

100

100

100

Equity
ratio
(%)

100

100

100

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements
Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Continued table

Neusoft Annual Report 2013

Neusoft Yuetong
WhollySoftware Technology
owned(Dalian) Co., Ltd. (Note 8)

WhollyownedControlled

WhollyownedControlled

Neusoft CapitalInternational Co., Ltd.
(Note 9)Neusoft Xikang Holdings
Co., Ltd. (Note 10)

Neusoft XikangInternational Co., Ltd.
(Note 11)

Neusoft A&T Diagnostics
Co., Ltd. (Note 12)

Shenyang Neusoft
Spectrum MRI
Technologies Co., Ltd.
(Note 14)

Controlled

Shenyang Neusoft
WhollyMedical Systems Import &owned
Export Co., Ltd. (Note 13)

51,000 IT and related consulting
USD services

DalianLimitedBritish Virgin Isliability
lands
company
Limitedliability
company

Beijing

Whollyowned

Beijing Inbridge
Consulting Co., Ltd.
(Note 7)

Shenyang

Shenyang

ShenyangHong Kong

Cayman Islands

Project investment, asset
1,000,000
management andUSD
investment consulting

Beijing

Computer software/
hardware/services

Limitedliability
company

Import & export of goods
and technologies

R&D and manufacturing of
Low-filed permanent
10,000,000 magnet products, MRI
technology development
and consulting

5,000,000

8,000,000

5,000,000

30,600,000

Production and sales of
medical equipment and lab
automation system,
60,000,000
development and sales ofcomputer hardware/
software and app systems

Limitedliability
company

Limitedliability
company

1,000,000
HKD

2,800,000
USD

100,000
USD

5,000,000

100,000

10,500,000

1,000,000 IT and related consulting
HKD services

Computer software/
5,000,000 hardware, technicalconsulting and services

Economic information
100,000 consulting and corporate
management service

15,000,000

27,265,000

25,000,000

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Computer software,
30,000,000 technical consulting andservices

Beijing Neusoft Yuetong
ConSoftware Technology Co.,
trolledLtd. (Note 6)company
limited bysharesComputer software/
hardwareScope of business

Beijing

25,000,000

RegisteredcapitalControlled

Limitedliability
company

NatureBeijing Neusoft Huiju
Information Technology
Co., Ltd. (Note 5)

Domicile

DalianType

Dalian Neusoft Business
WhollyProcess Consulting
ownedServices Co., Ltd. (Note 4)

Subsidiary

Actualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary
Equity
ratio
(%)

80

100

51

100

70

100

100

100

70

80.28

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements

4,550,466

18,821,232-37,430,516

4,724,959

8,585,858

Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Continued table

Neusoft Annual Report 2013

115

116

Shenyang

Nanjing

Whollyowned

Whollyowned

WhollyownedControlled

Whollyowned

Neusoft Medical Systems(Middle East) Co., Ltd.
(Note 17)

Neusoft Medical System
Peru Inc. (Note 18)

Neusoft Xikang
Healthcare Technology
Co., Ltd. (Note 19)

Tianjin Xikang Healthcare
Technology Co., Ltd.
(Note 20)

Liaoning Neusoft Xikang
Healthcare Management
Co., Ltd. (Note 21)

Shenyang Neusoft Xikang
WhollyMedical Systems Co., Ltd.
owned
(Note 22)

Jiangsu Xikang
Healthcare Management
Co., Ltd. (Note 23)

Whollyowned

Shenyang

Whollyowned

Neusoft Medical System
U.S.A. Inc. (Note 16)

TianjinBeijing

Peru

UnitedEmiratesUK

Shenyang

Controlled

Neusoft Positron Medical
Systems Co., Ltd. (Note
15)

Arab

Domicile

Type

Subsidiary

Scope of business

Limitedliability
company

Limitedliability
company

5,000,000

10,000,000

R&D of electronic products,
technical development,
5,000,000 transfer, consulting andlease of computer software/
hardware50,000,000

Health information
management/consulting,
50,000,000 management services,management systemdevelopment

Limitedliability
company

10,000,000

4,500,000

Computer software/
hardware, electronics
30,000,000 product development,
corporate investment
management & consulting

Limitedliability
company

Computer software/
hardware development for
medical systems, healthcare
consulting services

8,000,000
USD

Computer software/
hardware, electronics
8,000,000
product development,
USD
corporate investment
management & consulting

Limitedliability
company

100,385
USD

Medical systems and1,800,000
relevant technical consulting
USD
and services

Limitedliability
company

2,600,000
USD

6,000,000
USD

3,465,000
USD

Medical systems and3,500,000
relevant technical consulting
USD
and services

R&D/manufacturing of
12,000,000
medical systems, technology
USD
consulting & service

Development and3,500,000 manufacturing of PET
USD systems, technology
consulting/service

RegisteredcapitalLimitedliability
company

Limitedliability
company

Limitedliability
company

NatureActualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary
Equity
ratio
(%)

100

100

100

75

100

100

100

100

99

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements

1,065,364-102,373

Minority
interest

Continued table
Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Anhui Xikang Healthcare
Management Co., Ltd.
(Note 26)

Hubei Xikang Healthcare
Management Co., Ltd.
(Note 27)

Luoyang Xikang
Healthcare Management
Co., Ltd. (Note 28)

Hunan Xikang Healthcare
Management Co., Ltd.
(Note 29)

Jiangxi Xikang Healthcare
Management Co., Ltd.
(Note 30)

Jinzhou Xikang
Healthcare Management
Co., Ltd. (Note 31)

Jinzhou

Nanchang

Changsha

Luoyang

Wuhan

Hefei

Guangzhou

Whollyowned

Guangzhou Xikang
Healthcare Technology
Co., Ltd. (Note 25)

Domicile

ChengmaiType

Hainan Xikang Healthcare
WhollyManagement Co., Ltd.
owned
(Note 24)

Subsidiary

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Nature1,000,000

Subject to laws andregulations of China and1,000,000
shall be approved by related
authorization department.

1,000,000

2,000,000

2,000,000

1,000,000

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

10,100,000

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

Health management, healthconsulting, medical
institution management
10,100,000 consulting, healthcarearchive management, sales
and lease of healthcare
equipment

1,000,000

1,000,000

Health management, healthconsulting, medical
institution management
1,000,000 consulting, healthcarearchive management, sales
and lease of healthcare
equipment

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

1,000,000

Healthcare consulting,corporate management,
1,000,000
sales and lease ofhealthcare equipment

1,000,000

5,000,000

Scope of business

Health information service
and archive management,
5,000,000 medical institution
consulting, equipment sales
and lease

RegisteredcapitalActualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary
Equity
ratio
(%)

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements
Minority
interest

Continued table
Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

117

118

Type

WhollyownedControlled

Whollyowned

Whollyowned

Subsidiary

Shenzhen Xikang
Healthcare Management
Co., Ltd. (Note 32)

Shenyang Xikang Alps
Technologies Co., Ltd.
(Note 33)

Beijing Neusoft Xikang
Hospital Management
Co., Ltd. (Note 34)

Dalian Neusoft Xikang
Healthcare Management
Co., Ltd. (Note 35)

DalianBeijing

Shenyang

Shenzhen

Domicile

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Nature500,000

550,000
USD

5,500,000

500,000

Design, research anddevelopment of sensors and
1,000,000 related electronic products,
USD components, software/
hardware; related technicalconsulting and service
Hospital management; salesof electronic products,
software, mechanicalequipment; sales and lease
5,500,000 of computer andcommunication equipment;
lease of medical equipment;
technology development,
transfer and consulting
Healthcare consulting; leaseof electronic products,
computer andcommunication equipment,
500,000 Construction engineeringand mechanical equipment;
computer softwaredevelopment, consulting
and service; general trading

Scope of business

Healthcare consulting/management, medical
project investment,
development and sales oftechnologies for healthcare
products; Technicaldevelopment, sales, lease
500,000
and technical consulting ofelectronic products andcomputer hardware/
software; corporate image
planning, meeting businessplanning and investment
consulting

RegisteredcapitalActualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary
Equity
ratio
(%)

100

100

55

100

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements

1,595,148

Minority
interest

Continued table
Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

Wholly
owned

olly
owned

WhollyownedControlled

Shanghai Xikang
Healthcare Management
Co., Ltd. (Note 36)

Chongqing Xikang
Healthcare Management
Co., Ltd. (Note 37)

Tianjin Xikang HospitalManagement Co., Ltd.
(Note 38)

Dalian Yida Xikang
Healthcare Management
Co.,Ltd. (Note 39)

DalianTianjin

Chongqing

Shanghai

Domicile

Limited liability company

Limitedliability
company

Limitedliability
company

Limitedliability
company

NatureBalance ofother items
constitutingnet
investment
on thesubsidiary
Equity
ratio
(%)

60

100

100

Yes

Yes

Yes

Yes

Whether
it is included
Votings
in thehare
consolidated(%)
financialstatements

3,995,729

Minority
interest

Note 5: This subsidiary was invested by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 80.28%;

Note 4: This subsidiary was invested by another subsidiary Shenyang Neusoft Information Technology Services Co., Ltd. with an equity ratio of 100%;

Note 3: This subsidiary was invested by another subsidiary Shanghai Neufashion Digital Technology Co., Ltd. with an equity ratio of 100%;

Note 2: The Company purchased 49.5% shares of this subsidiary during this reporting period and held 100% shares after the purchase.;

6,000,000

500,000

Hospital management, salesof electronic products,
software, mechanicalequipment, communicationequipment; lease of
500,000
computer, communicationequipment, medical
equipment; technicaldevelopment, transfer,consulting and service
Computer software/
hardware，technicalconsulting and service;general trading

500,000

Healthcare management,
information consulting,management consulting of
medical institutions,healthcare record
management; sales and
500,000
lease of electronic products,
computer hardware/
software; development,
transfer and consulting ofcomputer hardware/
software technology

10,000,000

500,000

Scope of business

Healthcare consulting,business information
consulting, sales and lease
500,000 of computer software/
hardware, mechanicalequipment; andcommunication equipment

RegisteredcapitalNote 1: This subsidiary is formerly known as Qinhuangdao Neusoft Co., Ltd.;Type

Subsidiary

Actualinvestment
amount at
the end of
the period

Continued table
Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

119

120

Note 39: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 60%.

Note 38: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 37: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 36: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 35: This subsidiary was invested by Liaoning Neusoft Xikang Healthcare Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 34: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 33: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 55%;

Note 32: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 31: This subsidiary was invested by Liaoning Neusoft Xikang Healthcare Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 30: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 29: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 28: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 27: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 26: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 25: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 24: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 23: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 22: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 21: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 20: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 75%;

Note 19: This subsidiary was invested by Neusoft Xikang International Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 18: This subsidiary was jointly invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. and its subsidiary with an equity ratio of 100%;

Note 17: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 100%;

Note 16: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 100%;

Note 15: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 99%;

Note 14: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 80%;

Note 13: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 100%;

Note 12: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 51%;

Note 11: This subsidiary was invested by Neusoft Xikang Holdings Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 10: This subsidiary was invested by another subsidiary Neusoft (Hong Kong) Co., Ltd. with an equity ratio of 70%;

Note 9: This subsidiary was invested by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 100%;

Note 8: This subsidiary was invested by Beijing Neusoft Yuetong Software Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 7: This subsidiary was invested by Beijing Neusoft Huiju Information Technology Co., Ltd., a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 6: This subsidiary was invested by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 70%;

Neusoft Annual Report 2013

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Neusoft Group(Chengdu) Co., Ltd.

Shenyang Neusoft
Information Technology
Services Co., Ltd.

Neusoft Group (Dalian)Co., Ltd.

Neusoft Technology Co.,
Ltd.

Type

Shenyang Neusoft
Property Management
Co., Ltd.

Subsidiary

USA

DalianShenyang

Dujiangyan

Shenyang

Domicile

Computer software/
hardware

Computer software/
hardware

Computer software/
hardwareProperty management andserviceScope of business

Computer software/
1,000
hardware，technicalUSD
consulting and service

600,000,000

Limitedliability
company
Limitedliability
company

50,000,000

1,000,000

Limitedliability
company
Limitedliability
company

1,000,000

RegisteredcapitalLimitedliability
company

Nature4.1.2 Subsidiaries acquired from business combination under common control

94,180,610

600,000,000

50,000,000

1,000,000

1,000,000

Actualinvestment
amount at
the end of
the period

Balance ofother items
constitutingnet
investment
on thesubsidiary

100

100

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Whether it isincluded in
Equity Votings
the
ratio
hare
consolidated(%)(%)
financialstatements
Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

121

122

Romania

Germany

WhollyownedControlled

Controlled

Controlled

Controlled

Whollyowned

Whollyowned

Whollyowned

WhollyownedControlled

Beijing Lanruisoft Co.,Ltd.

Liaoning Neusoft
Venture Capital
Investment Co., Ltd.

Beijing LBS Social
Insurance Information
Technology Co., Ltd.

Beijing Neusoft
Viewhigh Technology
Co., Ltd. (Note 1)

Kunming Neusoft Jinsha
Information Technology
Co., Ltd. (Note 2)

Neusoft Technology
Solutions GmbH (Note3)

Neusoft Mobile
Solutions Oy (Note 4)

Neusoft EDC SRL (Note5)

Neusoft GmbH(Note 6)

Neusoft-Philips Medical
Systems Limited liability
company (Note 7)

Shenyang

FinlandGermany

Kunming

Beijing

Beijing

DalianBeijing

Japan

Whollyowned

Neusoft (Japan) Co., Ltd.

Domicile

Type

Subsidiary

SME investment andmanagement

Computer software/
94,000
hardware, technicalROL
consulting and services
Computer software/
25,000
hardware, technicalEUR
consulting and services

Limitedliability
company
Limitedliability
company

Development/production/
research/sales of CT
29,600,000
scanners, MRI, X-ray, US
USD
and related parts; technicalconsulting and support

Computer software/
8,578
hardware, technicalEUR
consulting and services

Limitedliability
company

Limitedliability
company

Computer software/
1,025,000
hardware, technicalEUR
consulting and services

212,943,769

200,000
EUR

1,200,000
EUR

7,972,800
EUR

6,029,000
EUR

15,119,513

Computer equipment andsoftware design/development/production/
service/sales

30,000,000

114,101,440

10,390,275

80,552,833

9,454,820

11,826,900

Development andproduction of computer
software; sales of
27,790,000
independently-produced
products; technical support
serviceTechnical development/
15,000,000 consulting and productselling

125,000,000

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Computer software
10,000,000 development/design/
production/sales

Limitedliability
company

Scope of business

187,750,000 Computer software/
JPY hardware

RegisteredcapitalLimitedliability
company

NatureActualinvestment
amount at
the end of
the period

4.1.3 Subsidiaries acquired from business combination under non-common control

Balance ofother items
constitutingnet
investment
on thesubsidiary

73.14

61.67

60

100

100

Equity
ratio
(%)

74

100

100

100

100

51

73.14

61.67

60

100

100

Voting
share
(%)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Whether it isincluded intheconsolidated
financialstatements

91,315,336

15,742,712

12,162,465

2,996,242

55,849,855

Minority
interest

Balance of the owner’sequity of parent company
Amountafter offsetting the portionofby which the loss of current
minority
period borne by theinterest
minority shareholders ofused tothe subsidiary exceeds theoffsetbeginning balance ofminority
owner’s equity of the
profit/loss
subsidiary shared by theminority shareholders

Neusoft Annual Report 2013

Note 1: The Company’s subsidiary Neusoft Group (Beijing) Co., Ltd. acquired 73.14% equity in this subsidiary in 2011; In 2013, the Company acquired the 73.14% equity insubsidiary in total after the acquisition.

Note 7: During this reporting period, the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity in this company and held 74% equity in thisNote 6: This subsidiary was invested by Neusoft EDC SRL, a subsidiary indirectly controlled by the Company, with an equity ratio of 100%;

Note 5: This subsidiary was acquired by another subsidiary Neusoft (Europe) Co., Ltd. with an equity ratio of 100%;

Note 4: This subsidiary was acquired by another subsidiary Neusoft (Europe) Co., Ltd. with an equity ratio of 100%;

Note 3: This subsidiary was acquired by another subsidiary Neusoft (Europe) Co., Ltd. with an equity ratio of 100%;

Note 2: This subsidiary was acquired by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 51%;

this subsidiary held by Neusoft Group (Beijing) Co., Ltd.;

Neusoft Annual Report 2013123

Neusoft Annual Report 2013

4.2 Notes to the changes in consolidation
4.2.1 There are 10 newly consolidated companies in this year including Neusoft Group (Chongqing) Co., Ltd., Neusoft Group (Ningbo) Co., Ltd., Neusoft Group (Xuzhou) Co., Ltd., Neusoft Group (Karamay) Co., Ltd., Neusoft Group (Changchun) Co., Ltd., Chongqing
Neusoft Xikang Healthcare Management Co., Ltd., Tianjin Xikang Hospital Management Co., Ltd., Dalian Yida Xikang Healthcare Management Co., Ltd., Neusoft Capital International Co., Ltd. and Neusoft-Philips Medical Systems Limited liability company.
4.2.2 Six companies were deconsolidated this year: All the equities in Guangdong Neufashion Digital Technology Co., Ltd. “GD(
Neufashion”) and Shenzhen Neufashion Digital Technology Co., Ltd. were sold during this reporting period, and these two companies were
not included in the consolidation since March 2013; During this reporting period, the Company’s indirectly controlled subsidiary Tianjin
Neusoft Technology Co., Ltd., Shenzhen Neusoft Mobile Terminal Design Co., Ltd., the Company’s subsidiary Shenyang Neusoft Boan
Software Co., Ltd. have cancelled their business registrations and not included in the consolidation since March 2013 and December
2013; The Company’s indirectly controlled subsidiary Hangzhou Xikang Healthcare Management Co., Ltd. was not included in the consolidation since March 2013 as a result of disinvestment.
4.3 Entities newly included in/excluded from the consolidated financial statements
4.3.1 Newly included subsidiaries
EntityChongqing Neusoft Xikang Healthcare Management Co., Ltd. (Note 1)

Year-end net assets

Net profit of this period

489,480-10,520

Neusoft Group (Chongqing) Co., Ltd. (Note 2)

17,210,933-2,789,067

Neusoft Group (Ningbo) Co., Ltd. (Note 3)

19,993,218-6,782

Neusoft Group (Xuzhou) Co., Ltd. (Note 4)

9,997,228-2,772

Neusoft Group (karamay) Co., Ltd. (Note 5)

19,746,791-253,209

Neusoft Group (Changchun) Co., Ltd. (Note 6)

29,388,413-611,587

Dalian Yida Xikang Healthcare Management Co., Ltd. (Note 7)

9,989,321-10,679

Neusoft Capital International Co., Ltd. (Note 8)

592,696-17,107

Tianjin Xikang Healthcare Management Co., Ltd. (Note 9)496,633-3,367

Neusoft-Philips Medical Systems Limited Liability Company (Note 10)351,212,832

Note 1: In March 2013, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested RMB
500,000 Yuan to set up this company with an equity ratio of 100%. This company was recorded in the consolidated financial statements
since March 2013.
Note 2: In April 2013, the Company invested RMB 20 million Yuan to set up this company with an equity ratio of 100%, and it wasrecorded in the consolidated financial statements since April 2013.
Note 3: In May 2013, the Company invested RMB 20 million Yuan to set up this company with an equity ratio of 100%, and it wasrecorded in the consolidated financial statements since May 2013.
Note 4: In May 2013, the Company invested RMB 10 million Yuan to set up this company with an equity ratio of 100%, and it wasrecorded in the consolidated financial statements since May 2013.
Note 5: In June 2013, the Company invested RMB 20 million Yuan to set up this company with an equity ratio of 100%, and it wasrecorded in the consolidated financial statements since June 2013.
Note 6: In August 2013, the Company invested RMB 30 million Yuan to set up this company with an equity ratio of 100%, and it
was recorded in the consolidated financial statements since August 2013.
Note 7: In November 2013, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested
RMB 6 million Yuan to set up this company with an equity ratio of 60%. This company was recorded in the consolidated financial statements since November 2013.

124

Neusoft Annual Report 2013

Note 8: In November 2013, the Company’s subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. set up this company
with the registered capital of USD 1 million dollars and equity ratio of 100%. As at December 31st, 2013, USD 100,000 dollars has been
invested and this company was recorded in the consolidated financial statements since November 2013.
Note 9: In December 2013, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested
RMB 500,000 Yuan to set up this company with an equity ratio of 100%. This company was recorded in the consolidated financial statements since December 2013.
Note 10: In December 2013, the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity in thiscompany and held 74% equity in this subsidiary in total after the acquisition. This company was recorded in the consolidated financial
statements at the end of 2013.
4.3.2 Excluded subsidiaries
EntityNet profit from year-begin to thedisposal date

Net assets upon disposal

Guangdong Neufashion Digital Technology Co., Ltd. and its subsidiaries
Hangzhou Xikang Healthcare Management Co., Ltd.
Tianjin Neusoft Co., Ltd.
Shenzhen Neusoft Mobile Terminal Design Co., Ltd.
Shenyang Neusoft Boan Software Co., Ltd.

18,200,520-2,078,075

994,514-2,055

3,252,750

24,478-130,625

598,192-7,788

4.4 There is no business combination under common control in this period
4.5 Business combination under non-common control in this period
4.5.1 Overview
On the acquisition date December 25th, 2013, the Company’s indirectly controlled company Shenyang Neusoft Medical Systems Co.,
Ltd. “Neusoft(
Medical”) purchased 25% equity in Neusoft-Philips Medical Systems Limited Liability Company (Neusoft-Philips) According
to the asset assessment report (2013 No. 3556) issued by China Enterprise Appraisals Co., Ltd., the acquisition consideration was RMB
92,893,769 Yuan as mutually agreed (Please refer to Neusoft Corporation’s announcements numbered“L2013-021”and“L2014-002”).
The Company held 49% equity in Neusoft-Philips before the acquisition. According to equity method, the book value of the long-term equity investment was RMB 163,707,172 Yuan; the fair value of the 49% equity on the acquisition date was RMB 182,071,787 Yuan; andthe investment income in the consolidated statements which was re-measured and recognized based on fair value was RMB 18,364,615
Yuan. As at December 31st, 2013, RMB 40,015,586 Yuan has been paid; according to applicable regulations of the State Administrationof Foreign Exchange of China, the remaining due payment with an amount of RMB 52,878,183 Yuan has been transferred to the designated bank-supervised account of Neusoft-Philips and finally paid on January 2014.
Neusoft-Philips was established on May 24th, 2004. Headquartered in Shenyang, this company was specialized in research and deve⁃
lopment, production and sales of CT scanners, MRI, X-ray apparatus, ultrasonic diagnosis apparatus, image management systems and relatedparts and accessories (excluding that for electrocardiogram monitor and printer), SKD and CKD, as well as related technical consulting
and service. Other shareholders before the acquisition included Philips Electronics China B.V. (41% equity) and Philip (China) Investment
Co., Ltd. (10% equity), the ultimate controller was Royal Philips Electronics. The acquisition date was determined upon finishing the business registration change.
Acquiree

Neusoft-Philips
MedicalSystems Limited Liability
Company

Goodwillamount15,068,061

Calculation method of goodwill
Shenyang Neusoft Medical Systems Co., Ltd. purchased 25% equity in Neusoft-Philips and held 74%
equity in total after this acquisition. The acquisition cost is RMB 274,965,556 Yuan. On the acquisitiondate, the fair value of Neusoft-Philips’s identifiable assets was RMB 351,212,832 Yuan, the amountof its 74% was RMB 259,897,495 Yuan. The difference between the acquisition cost and the fair valueof identifiable assets attributable to Neusoft Medical was recognized as goodwill when consolidating
the financial statements.

125

Neusoft Annual Report 2013

4.5.2 Identifiable assets and liabilities of the Acquiree
Date of acquisition
Item
Book value

Fair value of identifiable assets

Current assets

377,954,817

377,954,817

Fixed assets

28,544,990

28,544,990

Intangible asset

56,499,840

73,616,401

Total assets

470,716,331

487,832,892

Total liabilities

136,620,060

136,620,060

Net assets

334,096,271

351,212,832

4.6 Subsidiary over which the Company lost control for equity sale
4.6.1 Subsidiary not disposed by steps
Overview:
On November 21st, 2012, the Company, as the transferor, signed an agreement on equity transfer of Guangdong Neufashion Digital
Technology Co., Ltd. “GD(
Neufashion”) with Le Liuping and Yin Sheng. The Company, Le Liuping and Yin Sheng respectively held 60%,
34.9% and5.1% equity in GD Neufashion before the transfer. According to the agreement with fair principles, the transfer considerationof Le Liuping and Yin Sheng was RMB 19.63 million Yuan and 2.87 million Yuan (22.5 million Yuan in total). On March 21st, 2013, theprocess of business registration change was finished and GD Neufashion was excluded from the consolidated financial statements since
March 2013. During the reporting period, the Company has received all the payment for this transfer with an amount of RMB 22.5 million Yuan. The selling date was determined upon finishing the business registration change while the payment for this transfer was made.
EntityGuangdong Neufashion
Technology Co., Ltd.

Selling date

DigitalMarch 21 2013st

P&L recognition method
The difference between which the disposal price deducts the amount of attributable
net assets calculated from the purchase date on the basis of the original equity ratio
was recognized as current income from investment when consolidating the financial
statements.

4.6.2 There is no disposal of subsidiary by steps in this reporting period
4.7 There is no reverse acquisition in this period
4.8 There is no merger in this period
4.9 Exchange rate for financial statements of overseas entities
Foreign currency-dominated assets and liabilities of overseas subsidiaries included in the Company’s financial statements shall betranslated into RMB at the spot exchange rate on the balance sheet date; All the other items except for the“Undistributed profits”under
the owners’equity shall be translated into RMB at the spot exchange rate on the date of the transactions. Foreign currency-dominated income and expenses in the income statement shall be translated into RMB at the average exchange rate during the reporting period. The
resulting translation difference shall be separately indicated under the item of owners’equity in the balance sheet.

126

Neusoft Annual Report 2013

Note 5 Notes to Main Items in Consolidated Financial Statements(Expressed in Renminbi unless otherwise indicated)
5.1 Monetary capital
Year-end balance
Item

Foreign currency

Translationrate

Year-begin balance
Amount in RMB

Foreign currency

Translation
rate

Amount in RMB

Cash
RMB

157,652

92,766USD

200

6.09691,219

200

6.2855

1,257

JPY

24,8170.057771

1,434

98,8090.073049

7,218

EUR

1,249

8.418910,5151,603

8.3176

13,333HKD

425

0.7862334

4,877

0.81093,955

ROL

12,2501.879923,0294,861

1.8692

9,086

AED

1,924

1.6690

3,211

6,705

1.7206

11,537

Subtotal

197,394

139,152

1,934,177,456

1,786,277,199

Bank deposit
RMB
USD

14,242,716

6.096986,836,415

13,543,487

6.2855

85,127,588

JPY

1,364,981,569

0.057771

78,856,350

2,431,337,836

0.073049

177,606,798

EUR

5,140,654

8.418943,278,652

2,903,839

8.317624,152,971

HKD

1,011,977

0.7862795,616

1,527,716

0.81091,238,825

SGD

1,195,965

4.78455,722,095

547,357

5.09292,787,634

CHF

7,950

6.833654,32751,8606.8219353,784

ROL

315,291

1.8799592,716

414,903

1.8692775,537

VND

20,957,174

0.00036,287

2,212,334

0.0003664

AED

1,401,220

1.66902,338,636

1,598,996

1.7206

2,751,233

GBP

139,73110.0556

1,405,079

145,748

10.1611

1,480,960

CAD

4,808

5.725927,530PEN33,7562.140572,255
2,154,163,414

2,082,553,193

RMB

59,087,417

12,779,935

Subtotal

59,087,417

12,779,935

2,213,448,225

2,095,472,280

Subtotal
OthersTotal

Restricted monetary capital details are as follows:
Item
Equity investment fundYear-end balanceYear-begin balance
52,878,183

Performance bond
Total

5,442,591

7,272,935

58,320,774

7,272,935

127

Neusoft Annual Report 2013

1) The balance of overseas deposited monetary capital at the end of this period is RMB 141,391,222 Yuan after translation;2) Among other monetary capital at the end of this period, RMB 52,878,183 Yuan is the equity investment fund deposited in thedesignated bank-supervised account of Neusoft-Philips for the acquisition by Shenyang Neusoft Medical Systems Co., Ltd., please refer toNote 4.5 for details; RMB 5,442,591 Yuan is the Company’s subsidiary Neusoft Group (Dalian) Co., Ltd., Neusoft Group (Beijing) Co.,
Ltd., Liaoning Neusoft Venture Capital Investment Co., Ltd. and the Company’s indirectly controlled subsidiary Shenyang Neusoft Medical
Systems Import & Export Co., Ltd.’s margin deposit, which was not recognized as cash or cash equivalent when preparing the cash flow
statement; RMB 766,643 Yuan is Liaoning Neusoft Venture Capital Investment Co., Ltd.’s refundable deposits which can be refunded orused for investment and recognized as cash or cash equivalent when preparing the cash flow statement.
5.2 Trading financial assets
Item

Fair value at year-end

Trading financial assets
Total

Fair value at year-begin

32,249,913

14,917,183

32,249,913

14,917,183

5.3 Notes receivable
5.3.1 TypeType

Year-end balanceYear-begin balanceBanker’s acceptance

8,084,346

13,731,461

Commercial acceptance bill

6,090,000

610,602

14,174,346

14,342,063

Total

5.3.2 There is no pledged note receivable as of the end of this period
5.3.3 Notes endorsed by the Company but undue yet as of the end of this period:
Top 5 notes:
DrawerDate of invoiceDue date

CSSC

July 30th, 2013

January 14th, 2014

1,000,000

Paid before the disclosing date

Fujian Hongxing Pottery Development Co.,Ltd.

July 12th, 2013

January 10th, 2014

600,000

Paid before the disclosing dateLuzhou Naxi District Kaili Trading Co., Ltd.

July 23rd, 2013

January 23rd, 2014

500,000

Paid before the disclosing date

Taizhou Jiangxing Shipping Machine Building
Co., Ltd.

August 8th, 2013

February 8th, 2014

500,000

Paid before the disclosing date

CSR Qingdao Sifang Co., Ltd.

August 27th, 2013

February 27th, 2014

420,000

Paid before the disclosing date

Total

AmountRemark

3,020,000

5.3.4 There is no undue but discounted banker’s acceptance or commercial acceptance bill as of the end of this period
5.3.5 Among notes receivable as of the end of this period, there is no note receivable from any shareholding company holding over
5% (including 5%) voting share of the Company.

128

Neusoft Annual Report 2013

5.4 Accounts receivable
5.4.1 Aging analysis
Year-end balanceBook balance

Age

Provision for bad debts

Ratio
(%)

AmountYear-begin balanceBook balance

Ratio
(%)

AmountProvision for bad debts
Ratio
(%)

AmountAmountRatio (%)

Within one year(including one year)

1,637,253,956

81.39

17,652,391

1.08

1,129,882,712

75.16

12,474,788

1.10

1-2 years(including 2 years)

200,018,829

9.94

28,760,140

14.38

211,795,050

14.09

27,786,702

13.12

2-3 years(including 3 years)

75,751,365

3.77

11,124,934

14.69

99,439,056

6.62

11,830,364

11.90

3-5 years

65,865,717

3.27

30,988,776

47.05

33,176,124

2.21

15,113,744

45.56

Over 5 years

32,614,673

1.63

32,614,673

100.0028,942,847

1.92

28,942,847

100.002,011,504,540

100.00121,140,914

1,503,235,789

100.0096,148,445

Total

5.4.2 Disclosure by typeYear-end balance
Provision for bad
debts

Book balanceTypeYear-begin balance
Provision for bad
debts

Book balance

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

Accounts receivable with significant single amount and single
appropriation of provision forbad debts

331,410,923

16.48

47,753,285

14.41

219,627,652

14.61

21,829,540

9.94

Accounts receivable with appropriation of provision for bad
debts by portfolio

1,555,362,634

77.32

50,251,121

3.23

1,156,208,747

76.91

44,193,577

3.82

Accounts receivable with insignificant single amount but single appropriation of provision
for bad debts

124,730,983

6.20

23,136,508

18.55

127,399,390

8.48

30,125,328

23.65

Total

2,011,504,540

100.00121,140,914

1,503,235,789

100.0096,148,445

5.4.3 Accounts receivable with significant single amount and single appropriation of provision for bad debts
Book amount

Provision forbad debts

Appropriation
ratio (%)

105,208,452

27,398,564

26.04

Significant amount with receivable proportionof over 70%

China Telecom

67,536,927

4,520,059

6.69

Significant amount with receivable proportionof over 90%

Beijing China Power Information Technology Co., Ltd.

46,347,756

3,737,039

8.06

Significant amount with receivable proportionof over 90%

Nokia Neusoft(Nokia Neusoft)

33,513,720

5,847,628

17.45

Significant amount with receivable proportionof over 80%

Account receivable from
China UnicomCommtechCompany

Reason129

Neusoft Annual Report 2013

Continued table
Book amount

Provision forbad debts

Appropriation
ratio (%)

State Grid Electric Power of Xinjiang State
Grid East Inner Mongolia Electric Power
Company Limited

20,849,208

417,1222.00

Significant amount with receivable proportionof over 95%

China Mobile

18,775,526

1,426,643

7.60

Significant amount with receivable proportionof over 90%

Yulin Health Bureau

15,000,000

2,096,360

13.98

Significant amount with receivable proportionof over 85%

Shenyang Metro Co., Ltd.

13,816,085

2,147,771

15.55

Significant amount with receivable proportionof over 80%

State Grid East Inner Mongolia ElectricPower Company Limited

10,363,249

162,099

1.56

Significant amount with receivable proportionof over 95%

Total

331,410,923

47,753,285

Account receivable from

ReasonAccounts receivable with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balance
AgeBook balance
AmountWithin 1 year

Year-begin balanceBook balance

Provision for bad
debts

Ratio (%)

AmountRatio (%)

Provision forbad debts

1,382,890,750

88.91

13,828,908

961,107,880

83.12

9,611,079

1-2 years

71,234,539

4.58

1,424,690

90,404,269

7.82

1,808,085

2-3 years

33,105,454

2.13

1,655,273

57,314,918

4.96

2,865,746

3-5 years

38,655,157

2.48

3,865,516

19,414,459

1.68

1,941,446

Over 5 years

29,476,734

1.90

29,476,734

27,967,221

2.42

27,967,221

1,555,362,634

100.0050,251,121

1,156,208,747

100.0044,193,577

Total

Accounts receivable with insignificant single amount but single appropriation of provision for bad debts:
Account receivable fromContract payment forand system integration

softwareContract payment forand system integration

softwareContract payment forand system integration

software

Total

130

Book balance

Provision forbad debts

Appropriation
ratio (%)

Reason6,243,505

6,243,505

100.00Account receivable with long age which is estimatedly unrecoverable

7,759,581

3,518,890

45.35

Account receivable with long age with recoverable
proportion of about 50%

110,727,897

13,374,113

12.08

Account receivable with long age with recoverable
proportion of about 90%

124,730,983

23,136,508

Neusoft Annual Report 2013

5.4.4 Account receivable recovered or received in this period:

Account receivable

Basis ofconfirming
original
provision forbad debts

Recovery reason

Great effort was made towork off the receivables
during the reporting period

Sale amountreceivable

Accumulated
appropriated provision
for bad debts before
recoveryAging analysis
methodRecovery amount

9,224,367

6,291,721

Recoveredprovision forbad debts

6,257,071

5.4.5 There is no account receivable received through reorganization or other methods in this period
5.4.6 Actual write-off accounts receivable:

Receivable from

Category

Write-off amountReasonWhethercaused byrelatedtransaction

Development Planning Department, the First Research Institute, China Aerospace Science andTechnology Corporation

Sales payment

1,646,000

It is estimatedly unrecoverable

No

Dezhou Power Plant of Shandong Huaneng Power Generation Corporation

Sales payment

1,030,059

It is estimatedly unrecoverable

No

Hefei Zhihe Technology Co., Ltd.

Sales payment

770,000

It is estimatedly unrecoverable

No

Personnel Training Bureau of the Ministry of Public Security of the PRC

Sales payment

678,000

It is estimatedly unrecoverable

No

Yangzhou Municipal Public Security Bureau

Sales payment

594,000

It is estimatedly unrecoverable

No

Hohehot Municipal Human Resources and Social
Security Bureau

Sales payment

480,000

It is estimatedly unrecoverable

No

Shanghai GFC Toshiba Elevator Co., Ltd.

Sales payment

325,980

It is estimatedly unrecoverable

No

State Grid Shanxi Electric Power Company

Sales payment

313,000

It is estimatedly unrecoverable

No

Chengdu Jinyuan Technology Development Co.,Ltd.

Sales payment

308,800

It is estimatedly unrecoverable

No

Guizhou Shuicheng Iron & Steel (Group) Co., Ltd.

Sales payment

300,000

It is estimatedly unrecoverable

No

OthersSales payment

1,263,166

It is estimatedly unrecoverable

No7,709,005

Total

5.4.7 Accounts receivable from shareholder companies with over 5% (including 5%) voting share of the Company:
Year-end balanceYear-begin balance

Receivable fromBook balanceAppropriated provision for bad debts

Book balanceAppropriated provision for bad debts

Toshiba Corporation

38,657,104

386,5715,852,557

58,526

Alpine18,874,252

188,7433,998,077

39,981

Baosteel Group Corporation

7,734,608

231,346

563,008

30,130131

Neusoft Annual Report 2013

5.4.8 Top 5 debtors of accounts receivable
Relationship with
the Company

DebtorBook balance

Proportion to
the total (%)

AgeChina Unicom

Non-related party

105,208,452

Within 1 year-over 5 years

5.23

China Telecom

Non-related party

67,536,927

Within 5 years

3.36

Shanxi Xingji Technology and Trade Co., Ltd.

Non-related party

57,874,323

Within 1 year

2.88

Shandong Neusoft System Integration Engineering Co., Ltd.

Non-related party

56,762,767

Within 1 year

2.82

Beijing Kedong Electric Power Control System
Co., Ltd.

Non-related party

53,945,704

Within 2 years

2.68

341,328,173

Total

16.97

5.4.9 Accounts receivable from related parties
The accounts receivable from related parties is RMB 206,126,457 Yuan, accounting for 10.25% of the year-end balance, please refer
to Note 7.4.11 for details.
5.4.10 Account receivable with terminated recognition due to transfer of financial assets:
Item

AmountShenyang Branch of China CITIC Bank Corporation Limited

Profit or loss related to the termination
9,704,193

N/A

Note: The account receivable with terminated recognition due to transfer of financial assets is caused by the non-recourse factoringbusiness between Shenyang Neusoft Medical Systems Co., Ltd. and Shenyang Branch of China CITIC Bank Corporation Limited.
5.4.11 There is no fully terminated recognition of transferred accounts receivable in this period.
5.4.12 There is no securitization of accounts receivable as the subject.
5.5 Other receivables
5.5.1 Aging analysis
Year-end balance
Age

132

Book balanceYear-begin balance

Provision for bad debts

AmountRatio(%)

Within one year(including one year)

123,636,274

59.65

1,236,363

1-2 years(including 2 years)

53,055,967

25.60

2-3 years(including 3 years)

18,240,502

3-5 years

Provision for bad debts

Amount

Ratio
(%)

1.00

155,365,832

72.60

1,553,658

1.00

4,024,766

7.59

35,501,556

16.59

3,410,015

9.61

8.80

1,332,452

7.30

11,259,545

5.26

1,820,796

16.17

9,533,062

4.60

1,154,266

12.11

10,547,120

4.93

1,124,714

10.66

Over 5 years

2,819,025

1.35

2,819,025

100.001,329,498

0.62

1,329,498

100.00Total

207,284,830

100.0010,566,872

214,003,551

100.009,238,681

AmountRatio(%)

Book balance

AmountRatio(%)

Neusoft Annual Report 2013

5.5.2 Disclosure by typeYear-end balance
Provision for bad
debts

Book balance

Type

AmountYear-begin balance

Ratio (%)

Amount

Ratio(%)

Provision for bad
debts

Book balance
AmountRatio(%)

AmountRatio(%)

Account receivable with significant
single amount and single appropriation of provision for bad debts
Account receivable with appropriation of provision for bad debts byportfolio

200,137,582

96.55

6,842,326

3.42

203,841,742

95.25

4,924,915

2.42

Account receivable with insignificant
single amount and single appropriation of provision for bad debts

7,147,248

3.45

3,724,546

52.11

10,161,809

4.75

4,313,766

42.45

Total

207,284,830

100.0010,566,872

214,003,551

100.009,238,681

5.5.3 Other receivables with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balance
AgeBook balance
AmountYear-begin balanceBook balance

Provision for bad
debts

Ratio (%)

AmountRatio (%)

Provision for bad
debts

Within 1 year

120,178,999

60.05

1,201,790

150,880,712

74.03

1,508,807

1-2 years

50,031,837

25.00

1,000,637

32,746,471

16.06

654,930

2-3 years

17,797,947

8.89

889,897

9,136,521

4.48

456,826

3-5 years

9,309,774

4.65

930,977

9,748,540

4.78

974,854

Over 5 years

2,819,025

1.41

2,819,025

1,329,498

0.65

1,329,498

Total

200,137,582

100.006,842,326

203,841,742

100.004,924,915

Appropriation of provision for bad debts in other receivables with insignificant single amount and separate impairment test:

Other receivables

Provision for bad
debts

Book balanceAppropriation
ratio (%)

ReasonSuspense credit

3,895,273

2,311,897

59.35

It is estimated that the recoverable proportion is about 40%.

Open credit

3,251,975

1,412,649

43.44

It is estimated that the recoverable proportion is about 60%.

7,147,248

3,724,546

Total

5.5.4 Other receivable recovered or received in this period:

Other receivable

Suspense credit

Recovery reason

Basis of confirming
original provision forbad debts

Great effort was made towork off the receivables
during the reporting period

Aging analysis method

Accumulated
appropriated provision
for bad debts before
recovery

2,616,808

Recovery amount

2,586,028

Recoveredprovision forbad debts

2,582,008

133

Neusoft Annual Report 2013

5.5.5 Other actual write-off receivable in this period:
The amount of other actual write-off receivable, which is mainly the estimatedly unrecoverable advance, is RMB 246,851 Yuan in thisperiod.
5.5.6 There is no other receivable from Shareholding Company with over 5% (including 5%) voting share of the Company
5.5.7 Top 5 debtors of other receivable:
Relationship with
the Company

DebtorBook balance

Proportion to thetotal (%)

Age

DebtorDalian Airport Customs

Non-related party

8,603,103

Within 3 years

4.15

DepositHebei Anda Investment Consulting Co.,Ltd.

Non-related party

5,767,018

1-2 years

2.78

DepositNingbo Traffic Management Bureau

Non-related party

5,104,753

Within 2 years

2.46

DepositShenzhen Funding Technology Co., Ltd.

Non-related party

4,255,702

Within 1 year

2.05

DepositDalian Metro Co., Ltd.

Non-related party

3,979,248

Within 1 year

1.92

Deposit

27,709,824

Total

13.36

5.5.8 Account receivable from related parties
The accounts receivable from related parties is RMB 1,415,839 Yuan, accounting for 0.68% of the year-end balance, please refer toNote 7.4.11 for details.
5.5.9 There is no termination of recognition of other receivables
5.5.10 There is no fully terminated recognition of transferred other receivables in this period
5.5.11 There is no securitization of other receivables as the subject
5.6 Prepayments
5.6.1 Presentation by age
Year-end balanceYear-begin balance

AgeBook balanceWithin 1 year

Ratio (%)

Book balance

Ratio (%)

226,242,321

99.27

114,146,161

96.38

1-2 years

304,4390.13

2,658,537

2.24

2-3 years

741,1710.33

1,161,961

0.98Over 3 years

627,625

0.27

474,408

0.40

227,915,556

100.00118,441,067

100.00Total

5.6.2 Top 5 prepayments
Prepayment toRelationship with
the Company

China Railway Signal & Communication Shanghai Engineering Bureau Group Co., Ltd.

Non-related party

28,375,531

Within 1 year

合同约定的预付款

Lenovo (Beijing) Co., Ltd.

Non-related party

19,547,685

Within 1 year

Contracted prepayment

Hebei Far East Communication System Engineering Co., Ltd.

Non-related party

19,477,327

Within 1 year

Contracted prepayment

Shenyang Zhongxing Electric Power Communication Co., Ltd.

Non-related party

17,100,000

Within 1 year

Contracted prepayment

SAP (Beijing) Software System Co., Ltd.

Non-related party

16,316,870

Within 2 years

Contracted prepayment

Total

134

Amount100,817,413

Term

RemarkNeusoft Annual Report 2013

5.6.3 Among the prepayments at the end of this period, no Shareholding Company with over 5% (including 5%) voting share of theCompany owes any debt for prepayment.
5.6.4 Prepayment to related parties
The amount is RMB 218,398 Yuan, accounting for 0.1% of the year-end balance, please refer to Note 7.4.11 for details.
5.7 Inventories
5.7.1 Presentation by type

Item

Book balanceYear-end balanceYear-begin balance

Provision for
inventory
write-downBook balance

Provisionforinventory
write-downBook value

Book value

Raw materials

305,151,375

28,067,279

277,084,096

175,401,478

11,612,195

163,789,283

Work in process

637,468,017

29,818,004

607,650,013

570,219,685

20,195,171

550,024,514

Finished products

111,848,990

111,848,990

117,159,085

996,583,099

862,780,248

1,054,468,382

Total

57,885,283

117,159,085
31,807,366

830,972,882

5.7.2 Provision for inventory write-down

TypeYear-begin balanceAppropriation amountRaw materials

11,612,195

Work in process

20,195,171

9,939,786

31,807,366

9,939,786

Write-down amount
Reversed

Write-off

Other (note)

1,087,896

Year-end balance

17,542,980

28,067,279

316,953

29,818,004

Finished products
Total

1,087,896

316,953

17,542,980

57,885,283

Note: This is mainly caused by change in the consolidation of the financial statements.
5.7.3 Depreciation provision for inventory write-down

Basis

Reason forreversion of theprovision

Proportion of reversed
amount to year-end
balance of the inventory

Raw materials

Provision for inventory write-down is made or adjusted at the lower
one between the cost and net realizable value

External sales

0.36%Work in process

Provision for inventory write-down is made or adjusted at the lower
one between the cost and net realizable value

Finished products

Provision for inventory write-down is made or adjusted at the lower
one between the cost and net realizable value

Item

5.8 Other current assets
Item
Bank finance product (Note 1)

Year-end balanceYear-begin balance
224,949,474

Deferred business tax

1,409,565

5,510,731

Leasing expenses

1,072,083

694,777454,712276,220

8,183,697

7,808,787

236,069,531

14,290,515

Deferred property tax
Other (Note 2)
Total

135

Neusoft Annual Report 2013

Note 1: The Company and its subsidiary Shenyang Neusoft Medical Systems Co., Ltd., Shenyang Zhuri Digital Advertising Communications Co., Ltd. and Shenyang Xikang APS Technology Co., Ltd. purchased the finance products (that buyers should repay the loan and theaccrued interest outright) from bank based on their financial situations. The investment fund and accrued income have been recoveredat the end of March 2014.
Note 2: This mainly refers to amortized heating expense.
5.9 Available-for-sale financial assets
5.9.1 Overview
Item

Fair value at year-end

Fair value at year-begin(1) Available-for-sale Security(2) Available-for-sale equity instrument (note)

26,594,230(3) Other
26,594,230

Total

Note: During the reporting period, the Company’s controlled subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. subscribed for 16,500,000 public shares of Sinosoft Technology Group Limited through QDII wealth management product managed by CICC.
5.9.2 There is no available-for-sale financial asset with restricted trade period as at the end of this reporting period.
5.9.3 Cost, fair value, amount of changes in fair value included in other composite income and appropriated impairment amount ofavailable-for-sale financial assets as at December 31st, 2013
Available-for-sale equity
instrument

Item

Available-for-sale Security

Total

Cost of equity instrument/amortized cost of security

19,235,058

19,235,058

amount of changes in fair value included in othercomposite income

7,359,172

7,359,172

Fair value

26,594,230

26,594,230

Appropriated impairment amount5.10 Held-to-maturity investment
5.10.1 Overview
Item

Year-end balanceYear-begin balanceBank finance products (Note)

403,159,918

Total

403,159,918

Note: The principal with an amount of RMB 400 million Yuan and the accrued income have been recovered in this period.
5.10.2 There is no sale of held-to-maturity investment in this period
5.11 Long-term receivables
Year-end balance
Item
Amount136

Ratio (%)

Provisionfor baddebts

Year-begin balance
Ratio
(%)

Net value

Amount3,038,023

4,435,822

16.86

Provisionfor baddebts

Net value

Rental deposit (Note 1)

3,038,023

15.38

4,435,822

Instalment (Note 2)

16,716,680

84.62

248,663

16,468,017

21,877,518

83.14

359,165

21,518,353

Total

19,754,703

100.00248,663

19,506,040

26,313,340

100.00359,165

25,954,175

Neusoft Annual Report 2013

Note 1: This refers to the deposit paid by Neusoft (Japan) Co., Ltd. for rental which will be recovered upon the lease contract is terminated; Based on the operations of the subsidiary, the period when the contract will be terminated cannot be estimated precisely; andNote 2: This refers to receivable of Shenyang Neusoft Medical Systems Co., Ltd. from sales of products by instalment; and provision
for bad debt based on the age of the receivable is appropriated.
5.12 Long-term equity investment
5.12.1 Overview
Item

Year-end balance

Joint ventures

Year-begin balance
7,459,244

4,765,722

Associates

131,599,655

309,603,803

Others65,077,538

80,774,832

Subtotal

204,136,437

395,144,357

Less: impairment provision

26,907,106

5,070,000

177,229,331

390,074,357

Total

5.12.2 Investment in joint ventures and associates

Investee

Equityratio(%)

Votingshare (%)

Year-end
total liabilities

Year-end net
assetsTotal businessincome inthis period

Beijing Huiyuan Xikang Healthcare Technology Co., Ltd. (Huiyan Xikang)

50.00

50.00

5,691,030

271,040

5,419,990

1,284,996

Shanghai Shimao Xikang Healthcare Management Co., Ltd. (Note 1)

50.00

50.00

9,019,090-479,408

9,498,498

Nokia Neusoft Commtech Company(Note 2)

46.00

46.00

457,140,552

322,806,524

134,334,028

265,956,220

14,672,157

Shenyang CataData Technology Co., Ltd.

16.67

16.67

7,501,005

1,821

7,499,184

113,551-6,931,116

Shenyang Toshiba Neusoft Information Systems Co., Ltd.

40.00

40.00

22,401,299

11,489,295

10,912,004

33,898,072-4,975,172

Chongqing Guo’ao 100 Years Xikang
Health Management Co., Ltd.

20.00

20.00

964,863

3,098,198-2,133,335

1,000-507,285

NEC Neusoft Information
Company Limited

30.00

30.00

35,727,058

699,198

35,027,860

4,928,113-2,230,686

Aerotel Medical Systems (1998) Ltd.

31.38

31.38

17,292,496

14,790,536

2,501,960

7,169,034-3,364,565

Shenyang Neusoft System Integration Engineering Co., Ltd.

26.65

26.65

320,151,862

229,098,862

91,053,000

487,853,195

13,420,834

Beijing Venusource Information Technology Co., Ltd.

34.43

34.43

32,925,937

1,258,440

31,667,497

20,543,195

109,735

Year-end
total assets

Net profit
in thisperiod

1. Joint ventures-4,111,454-501,502

2. Associates

Technologies

Note 1: In February 2013, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested
RMB 5 million Yuan in this Company with an equity ratio of 50%.
Note 2: This company was formerly known as Nokia Siemens Networks Neusoft Commtech Company.

137

138
3,000,000
3,000,000
1,877,722
150,000

3,000,000
3,000,000
1,877,722
150,000
770,000

Beijing Co-Create Open Source
Software Company

Cost method

3,600,000

3,600,000

6,354,871

9,051,000

6,000,000

12,950,050

15,000,000-1,990,069-1,155,186

6,749,192

Changeinowners’equity4,765,722

5,000,000

770,000-3,000,000-3,600,000-6,000,000

770,000

150,000

1,877,722

3,000,000

139,058,899
45,352

237,880,169 314,369,525 -175,310,626
45,35245,352

2,709,995

11,183,446

4,749,249-2,055,727

48,10523,439,254

4,749,249

5,000,000

11,135,341

10,500,000

598,598

6.29

0.90

10.00

17.47

5.00

50.00

50.00

34.43

26.65

31.38

22,840,656

8,515,279

20,000,000-912,054

9,427,333

10,675,548

10,508,358

30.00

6,830,794

3,677,564

40.00

16.67

46.00

15,000,000-919

4,364,802

11,794,864

61,793,652

Equityratio (%)

20.00

919

Year-endbalance

6.29

0.90

10.00

17.47

5.00

50.00

50.00

34.43

26.65

31.38

30.00

20.00

40.00

16.67

46.00

770,000

1,200,000

Difference
Accumulated Appropriatedbetween
Votingprovision
provision forequity ratio
share (%)
for
impairment
and voting
impairment in this period
share

400,000

490,000

120,050,000 188,172,609 -188,172,609

55,044,460

26,713,621

6,000,000

Year-beginbalanceNokia Neusoft Commtech
Equity method
Company
Shenyang CataData Technology
Equity method
Co., Ltd.
Shenyang Toshiba Neusoft
Equity method
Information Systems Co., Ltd.
Neusoft-Philips Medical Systems
Equity method
Limited liability company (Note 1)
Liaoning Shengjing Xikang
Equity method
Healthcare Co., Ltd. (Note 2)
Chongqing Guo’ao 100 Years
Xikang Health Management
Equity method
Co., Ltd.
NEC Neusoft Information
Technologies Company Limited Equity method(Note 3)
Aerotel Medical Systems (1998)
Equity method
Ltd.
Shenyang Neusoft System
Equity method
Integration Engineering Co., Ltd.
Beijing Venusource Information
Equity method
Technology Co., Ltd.
Beijing Huiyuan Xikang
Equity method
Healthcare Technology Co., Ltd.
Shanghai Shimao Xikang
Healthcare Management Co.,
Equity methodLtd. (Note 4)
Subtotal
Dalian Weavesoft Co., Ltd.
Cost method
Dalian Neusoft Institute of
Cost method
Information (Note 5)
Dalian Neusoft Institute of
Cost method
Information Technology (Note 5)
Chengdu Neusoft Institute of
Cost method
Information
Nanhai Neusoft Institute of
Cost method
Information Technology (Note 5)
Dalian Neusoft Information
Cost method
Services Co., Ltd.
Beijing Huada Infosec
Cost method
Technology Co., Ltd.

InvesteeCalculation
methodInitialinvestmentcost

5.12.3 Details of long-term equity investments
Cashdividendin thisperiod60,868,209

2,313,209

58,555,000

Investee

Neusoft Annual Report 2013

Cost method

Cost method

Cost method

Tianjin Shenzhou Universal Data
Technology Co., Ltd.

Nanchang Biotech A&C
Biotechnical Industry
Incorporated Company

Appconomy, Inc. (Note 7)
204,136,437

24,937,106

27,600,000

3,000,000

347,358

3,350,000

Equityratio (%)

318,657,707 395,144,357 -191,007,920

2,706

Year-endbalance

65,077,538

80,774,832-100,000-3,000,000

Changeinowners’equity-15,697,294

24,934,400

80,777,538

27,600,000

3,000,000

347,358

100,000

24,937,106

27,600,000

3,000,000

347,358

100,000

3,000,000

3,350,000

Year-beginbalance

15.20

9.01

5.00

6.30

8.86

15.20

9.01

5.00

6.30

8.86

215,624

199,300

16,324

Investee

26,907,106 24,937,106 61,083,833

26,907,106 24,937,106

24,937,106 24,937,106

Cashdividendin thisperiodContinued tablelong-term equity investment, the Company appropriated the impairment provision of long-term equity investment in full amount.

the initial investment cost to RMB 24,937,106 Yuan. The Company held 15.20% issued shares in Appconomy, Inc. after the exercise. Besides, according to recoverable situation ofNote 7: During this reporting period, the Company has exercised the warrants of 443,693 shares in Appconomy, Inc. with the price at USD 0.001 dollar per share, increasing

Co., Ltd. and Shenyang Torch Incorporated Company in previous years.

Note 6: During this reporting period, the Company wrote off the appropriated impairment provision of long-term equity investment in full amount for Dongzhong Commtech(1)”section for details.

tute of Information and Dalian Neusoft Institute of Information Technology and recognized the income from equity transfer of these three institutes, please refer to“Note 7.4.10.

Note 5: During this reporting period, the Company finished the procedures of investment change in Nanhai Neusoft Institute of Information Technology, Dalian Neusoft Insti-

pany with an equity ratio of 50%.

Note 4: During this reporting period, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested RMB 5 million Yuan in this Com-tal contributions to this company, increasing the initial investment cost to RMB 15 million Yuan without change in equity ratio.

Note 3: During this reporting period, the Company’s subsidiary Shenyang Neusoft Information Technology Services Co., Ltd. invested RMB 7.5 million Yuan of subscribed capi-

Note 2: In December 2013, the business registration of this company was cancelled.

as an associate.

subsidiary in total after the acquisition. This company was included in the consolidated statements since the end of 2013 and no accounting by equity method will be made for it

Note 1: During this reporting period, the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity in this company and held 74% equity in this

Total

Cost method

Lotus Business Consulting Co.,Ltd.

Subtotal

Cost method

3,000,000

Dongzhong Commtech Co., Ltd.
Cost method(Note 6)

Shenyang Torch Incorporated
Company (Note 6)

3,350,000

Initialinvestment
cost

Cost method

Beijing Shoufa Infosec Data
System Technology Co., Ltd.

InvesteeCalculation
methodDifference
Accumulated Appropriatedbetween
Votingprovision
provision forequity ratio
share (%)
for
impairment
and voting
impairment in this period
share

Neusoft Annual Report 2013139

Neusoft Annual Report 2013

5.12.4 Limitation on capital transfer from investee to investor: N/A
5.12.5 Sale of long-term equity investment with the price obviously higher than its book value: N/A
5.13 Investment property
Year-beginbalance

Item

Increase in thisperiodDecrease in thisperiodYear-endbalance

1. Original book value392,708,986

18,135,165

1,248,137

409,596,014(1) Houses and buildings

329,157,220

18,135,165

1,248,137

346,044,248(2) Land use right

63,551,766

2. Accumulated depreciation and amortization

75,656,997

10,321,432

293,970

85,684,459(1) Houses and buildings

64,310,519

8,732,833

293,970

72,749,382(2) Land use right

11,346,478

1,588,599

3. Net value of investment property

317,051,989

8,448,165(1) Houses and buildings

264,846,701

8,448,165(2) Land use right

52,205,288

63,551,766

12,935,077
1,588,599

323,911,555
273,294,866

1,588,599

50,616,689

1,588,599

323,911,555

4. Accumulated amount of provision for impairment on investment
property(1) Houses and buildings(2) Land use right
5．Book value of investment property

317,051,989

8,448,165(1) Houses and buildings

264,846,701

8,448,165(2) Land use right

52,205,288

273,294,866
1,588,599

50,616,689

The increase of accumulated depreciation and amortization is RMB 10,321,432 Yuan, of which, 8,622,688 Yuan is appropriated and1,698,744 Yuan is transferred into depreciation due to re-classification.
The original amount transferred into increased investment property due to re-classification is RMB 17,326,892 Yuan.
5.14 Original price and accumulated depreciation of fixed assets
5.14.1 Fix assets
Decrease in thisperiodYear-end balance

220,584,553

115,697,776

2,474,947,282

47,945,922

63,652,470

1,717,510,476

380,252,063

74,573,138

43,157,387

411,667,814

Transportation equipment

16,512,241

4,305,527

2,068,166

18,749,602

Other equipment

240,079,177

93,759,966

6,819,753

327,019,390

Item

Year-begin balance

1. Original book value

2,370,060,505

Including: Houses and buildings

1,733,217,024

Electronic equipment

Increase in this period

Increase in thisperiod
2. Accumulated depreciation

567,903,935

192,802,003

133,377,872

55,294,926

705,411,012

Including: Houses and buildings

185,972,850

47,633,599

47,633,599

13,242,823

220,363,626Electronic equipment

251,402,383

65,778,349

59,835,331

36,398,194

280,782,538

Transportation equipment

10,780,619

2,779,119

2,170,571

1,496,962

12,062,776

Other equipment

119,748,083

76,610,936

23,738,371

4,156,947

192,202,072

17,477,024

50,097,324

1,769,536,270

3. Net book value of fixed assets

140

Including: appropriation in this period

1,802,156,570

Neusoft Annual Report 2013

Continued table
Item
Including: Houses and buildings

Year-begin balance

Increase in this period

Decrease in thisperiodYear-end balance

50,097,324

1,497,146,850

1,547,244,174

Electronic equipment

128,849,680

2,035,596

130,885,276

5,731,622

955,204

6,686,826

120,331,094

14,486,224

134,817,318

Transportation equipment
Other equipment
4. Impairment provision

888,088

248,041

640,047885,630

248,041

637,589

Including: Houses and buildings
Electronic equipment
Transportation equipment
Other equipment

2,458

5. Book value of fixed assets

1,801,268,482

Including: Houses and buildings

1,547,244,174

Electronic equipment

17,725,065

50,097,324

1,768,896,223

50,097,324

1,497,146,850

127,964,050

2,283,637

130,247,687

5,731,622

955,204

6,686,826

120,328,636

14,486,224

134,814,860

Transportation equipment
Other equipment

2,458

RMB 133,377,872 Yuan is appropriated for depreciation of fixed assets in this period.
The original amount for conversion of construction in progress into fixed assets is RMB 43,218,719 Yuan.
The original amount of increased fix assets due to change in consolidation in this period is RMB 87,289,685 Yuan, accumulated depreciation increases to RMB 59,424,131 Yuan.
For underlying security of fixed assets as of December 31st, 2013, please refer to Note 5.31 for details.
5.14.2 There is no idle fixed asset as of the end of this period
5.14.3 There is no leased fixed asset based on financing lease
5.14.4 There is no leased fixed asset based on operating lease
5.14.5 There is no hold-to-sale fixed asset as of the end of this period
5.14.6 Fixed assets without property right certificates
Item
Houses and buildingsBook value
416,469,861

ReasonRemarkThe application and approval procedures are in progress.

The certificates will be obtained after the proceduresare finished.

5.14.7 Sale of fixed assets with the price obviously higher than its book value:
Item

Book value

Sales price

BasisHouses and buildings

11,068,362

23,255,539

Evaluation report

Houses, buildings and land

33,877,381

39,900,000

Evaluation report, please refer to note 7.4.9 (1) for
details.

141

Neusoft Annual Report 20135.15 Construction in progress
5.15.1 Overview
Year-end balance
ItemBook balance
Beijing Software Park

Impairment
provision

19,291,278

Year-begin balanceBook value

Book balance

19,291,278

Renovation of canteen of
Shenyang Software Park

Impairment
provision

Book value

130,316,802

130,316,802

32,521,121

32,521,121

Hainan Software Park
(Phase I)

122,181,914

122,181,914

30,333,467

30,333,467

Dalian Hekou Park (Phase II)

12,533,222

12,533,222

1,270,181

1,270,181

Medical Information platform

1,736,831

1,736,831

558,907558,907

Cloud base factory and officebuilding

76,633,268

76,633,268

Xikang renovation project(phase II)

8,344,065

8,344,065

403,451

403,451

Cloud base healthcare center(Phase I)

32,330,919

32,330,919

152,028

152,028

Renovation of supporting
project of Shenyang No. 3
Street3,697,774

3,697,774

276,749,271

276,749,271

195,555,957

195,555,957

Total

5.15.2 Changes in construction in progress

Project

142

BudgetYear-begin Increase inbalancethis period

Beijing Software
Park

576,000,000 130,316,802 96,527,681

Renovation of
canteen of
Shenyang
Software Park

43,000,000

32,521,121

Hainan Software
Park (Phase I)

210,840,000

Dalian Hekou
Park (Phase II)72,370,000

MedicalInformation
platform

2,720,000

Cloud basefactory andoffice building

475,520,000

Conversion
into fixed
assetsOtherdecrease

Propor⁃Including:
tion
Accu⁃
amountofmulat⁃
Sche⁃ofCapita⁃project
ed
Capitaldule
capitalized lization
input
capita⁃source(%)
interests
rate
to
lized
in thisbudgetinterests
period(%)

Year-endbalance

39

41

Own
capital

99

100

Own
capital30,333,467 91,848,447

58

90

Own
capital122,181,914

1,270,181 11,263,041

17

35

Own
capital12,533,222

94

69

Own
capital1,736,831

16

17

Own
capital76,633,268

558,907

207,553,205

9,873,715 42,394,836

2,001,807

76,633,268

823,883

19,291,278

Neusoft Annual Report 2013

Continued table

Project

BudgetYear-begin Increase inbalancethis period

Xikangrenovation
project (phase II)57,230,000

403,451 42,202,901

Cloud basehealthcare
center (Phase I)

136,070,000

152,028 32,178,891

Office inShenzhen

2,330,000

2,512,477

Renovation of
supporting
project ofShenyang No. 3
Street6,700,000

3,697,774

Total

Conversion
into fixed
assetsOtherdecrease

34,262,287

2,512,477

Propor⁃Including:
tion
Accu⁃
amountofmulat⁃
Sche⁃ofCapita⁃project
ed
Capitaldule
capitalized lization
input
capita⁃source(%)
interests
rate
to
lized
in thisbudgetinterests
period(%)

Year-endbalance

74

83

Own
capital8,344,065

24

40

Own
capital32,330,919

108

100

Own
capital

55

90

Own
capital1,582,780,000 195,555,957 368,740,002 43,218,719 244,327,969

3,697,774

276,749,271

5.15.3 Schedule of significant construction in progress
Item

Schedule

Beijing Software Park

This project is being constructed with rate of progress of 41%

Hainan Software Park (Phase I)This project is being constructed with rate of progress of 90%

Dalian Hekou Park (Phase II)This project is being constructed with rate of progress of 35%

Cloud base healthcare center (Phase I)This project is being constructed with rate of progress of 40%

Cloud base factory and office buildingThis project is being constructed with rate of progress of 17%

5.16 Intangible asset
5.16.1 Overview
Item

Year-begin bookbalance

Increase in thisperiodDecrease in thisperiodYear-end bookbalance

1．Original book value

505,035,641

295,469,116

15,098,928

785,405,829(1) Land use right

396,070,901

207,553,205

13,855,493

589,768,613(3) Purchased proprietary technology

86,528,659

60,953,630

1,243,435

146,238,854(4) Others

22,436,081

26,962,281

2．Accumulated amortization

115,619,263

47,037,454

9,056,653

153,600,064(1 )Land use right

60,995,809

9,264,906

3,309,701

66,951,014

37,572,743

20,785,516

5,746,952

52,611,307(2) Property use right

49,398,362(2) Property use right(3) Purchased proprietary technology

143

Neusoft Annual Report 2013

Continued table
Item

Year-begin bookbalance

Increase in thisperiodDecrease in thisperiodYear-end bookbalance(4) Others

17,050,711

16,987,032

34,037,743

3. Purchased proprietary technology

389,416,378

242,389,387

631,805,765(1) Land use right

335,075,092

187,742,507

522,817,599(3) Purchased proprietary technology

48,955,916

44,671,631

93,627,547(4) Others

5,385,370

9,975,249

15,360,619(2) Property use right

4．Impairment provision

140,240

140,240

140,240

140,240(1) Land use right(2) Property use right(3) Purchased proprietary technology(4) Others
5．Book value of intangible assets

389,276,138

242,389,387

631,665,525(1) Land use right

335,075,092

187,742,507

522,817,599(3) Purchased proprietary technology

48,955,916

44,671,631

93,627,547(4) Others

5,245,130

9,975,249

15,220,379(2) Property use right(1) The decrease of land use right is caused by the right transfer by the Company to Shenyang Ruidao House Purchasing Co., Ltd.,
please refer to Note 7.4.9 (1) for details; other decreases are mainly caused by change in the consolidation.
(2) The amortization amount of intangible asset in this period increases by RMB 47,037,454 Yuan, of which the current amortization
amount is RMB 21,803,077 Yuan and the remaining is caused by change in the consolidation.
(3) There is no intangible asset for mortgage or warranty as at the end of this period, please refer to note 5.14.7.
5.16.2 Please refer to Note 5.14.7 for sale of intangible assets with the price obviously higher than its book value
5.16.3 Other remarks:
In December 2013, the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. “Neusoft(
Medical”) purchased 25% equity in Neusoft-Philips and held 74% equity in total after this acquisition. Neusoft-Philips was recorded in the consolidated financial statements at the end of 2013. According to the evaluation results, the fair value of purchased intangible asset from Neusoft-Philips is RMB
17,116,561 Yuan higher than its book value. Therefore, Neusoft Medical consolidated the intangible asset of Neusoft-Philips based on
the fair value upon the acquisition date.

144

Neusoft Annual Report 20135.17 Goodwill

Investee or item forming goodwill

Neusoft (Japan) Co., Ltd. (Note 1)

Year-begin balance

Increase

Decrease

Changecaused byexchangerateYear-endbalance

Provisionfor
impairment
at the endof theperiod3,928,116

3,928,116

Liaoning Neusoft Venture Capital Investment Co., Ltd. (Note 2)

77,123

77,123Beijing Lanruisoft Co., Ltd. (Note 3)

315,360

315,360NMSG business and assets (Note 4)

80,421,271

979,450

81,400,721

71,298,041

33,270406

33,67633,676

VND business and assets (Note 6)

48,135,033

586,236

48,721,269

4,418,349

Taproot business and assets (Note 7)

18,490,493-554,818

17,935,675

17,935,675

Beijing LBS Social Insurance Information
Technology Co., Ltd. (Note 8)

1,809,071

1,809,071

Beijing Neusoft Viewhigh Technology
Co., Ltd. (Note 9)99,953,597

99,953,597

Neusoft Technology Solutions
GmbH (Note 5)

Neusoft-Philips Medical Systems Limited
liability company (Neusoft-Philips) (Note 10)
Total

15,068,061
253,163,334

15,068,061

19,446,797

15,068,061
1,011,274

269,242,669

113,132,538

The Company conducted impairment test on goodwill at the end of this period; the present value of estimated future cash flow is adopted as the recoverable amount of related asset group and asset group portfolio. According to the Five-year Budget-based Cash Flow
Forecast approved by the Company’s managements, if the book value of goodwill is higher than the recoverable amount of related asset
group, the difference shall be appropriated as provision for impairment of goodwill. There is no impairment on goodwill in this period after the test. The change in provision for goodwill impairment is subject to the fluctuation of exchange rate.
Note 1: This Company invested into the subsidiary in June 2001 with an equity ratio of 60%. In December 2003, the Company acquired the remaining 40%. The difference by which the acquisition price exceeds the attributable net assets was recognized as equity investment difference and amortized by 10 years starting January 2004; On January 1st, 2007, according to the Accounting Standards for

Business Enterprises No. 38 - First Time Adoption of Accounting Standards for Business Enterprises, the Company presented the amortization of debit balance of the equity investment balance as of the end of 2006 as goodwill when preparing the consolidated financial statement.
Note 2: On December 27th, 2004, the Company invested additional RMB 500 Yuan to acquire 4.76% equity in Liaoning Neusoft Venture Capital Investment Co., Ltd. The difference by which the purchase price exceeds the fair value of identifiable net assets attributable
to the Company was presented as goodwill; On January 1st, 2007, according to the Accounting Standards for Business Enterprises No.
38 - First Time Adoption of Accounting Standards for Business Enterprise, the amortization of debit balance of the equity investment balance as of the end of 2006 was presented as goodwill when preparing the consolidated financial statements.
Note 3: The Company acquired 14% equity in Beijing Lanruisoft Co., Ltd. in April 2007; the difference by which the purchase priceexceeds the fair value of identifiable net assets attributable to the Company was presented as goodwill when preparing the consolidated
financial statements.
Note 4: In October 2009, Neusoft (Europe) Co., Ltd. “Neusoft(
Europe”) acquired 100% equity in Sesca Mobile Software Oy (later

145

Neusoft Annual Report 2013changed for“Neusoft Mobile Solutions Oy”), Almitas Oy (nullified in 2010 with all operations and employees merged into Neusoft Mobile
Solutions Oy) and Sesca Technologies SRL (later changed for“Neusoft Mobile Solutions SRL”), the consideration of the transactions aggregated 9 million EUR, the difference by which the acquisition price exceeds the fair value of identifiable net assets was presented as goodwill when preparing the consolidated financial statements. Because the key accounts, operations, management team of Neusoft Mobile
Solutions Oy (including Almitas Oy) and Neusoft Mobile Solutions SRL are basically same, they are recognized as an asset group for goodwill impairment test; The change in provision for goodwill impairment is subject to the fluctuation of exchange rate.
Note 5: In April 2010, Neusoft Europe acquired 100% equity in Johanna GmbH (later changed for“Neusoft Technology Solutions
GmbH”); the consideration for this transaction aggregated 29,000 EUR; the difference by which the acquisition price exceeds the fair value of identifiable net assets attributable to Neusoft Europe was recognized as goodwill when preparing the consolidated financial statements. The change in provision for goodwill impairment is subject to the fluctuation of exchange rate.
Note 6: In June 2010, Neusoft Europe’s subsidiary in Germany, Neusoft Technology Solutions GmbH (NTS), acquired the business of
Car Navigation System-related computer hardware, mechanical hardware and applications as well as all supporting tangible fixed assets,inventories, rights, contracts, labor contracts from its subsidiary Harman (collectively referred to as“VND Operations and Assets”) withtransaction consideration of EUR 6 million; The difference by which the acquisition price exceeds the fair value of its attributable net assets was recognized as goodwill when preparing the consolidated financial statements; The change in provision for goodwill impairment
is subject to the fluctuation of exchange rate.
Note 7: In February 2010, the Company’s wholly owned subsidiary Neusoft Science & Technology Co., Ltd. acquired the development service business for high-end smart phone embedded software from the US-based Taproot System Inc. with transaction consideration of USD 3.1 million; the difference by which the acquisition price exceeds the fair value of its attributable net assets was recognized
as goodwill when preparing the consolidated financial statements; The change in provision for goodwill impairment is subject to the fluctuation of exchange rate.
Note 8: In August 2011, the Company acquired 28.33% equity in Beijing LBS with RMB 5.39 million Yuan, totally holding 61.67%
after that. The difference by which the acquisition price exceeds the fair value of its attributable net assets was recognized as goodwill
when preparing the consolidated financial statements.
Note 9: In August 2011, the Company’s wholly owned subsidiary Neusoft Group (Beijing) Co., Ltd. acquired 73.14% equity in Beijing
Viewhigh Technology Co., Ltd. (changed for“Beijing Neusoft Viewhigh Technology Co., Ltd.”after the acquisition) with RMB 114,101,440
Yuan; The difference by which the acquisition price exceeds the fair value of its attributable net assets was recognized as goodwill when preparing the consolidated financial statements. In December 2013, the Company purchased 73.14% equity in Beijing Neusoft Viewhigh Technology from Neusoft Group (Beijing) Co., Ltd. with the original price. According to the applicable regulations for business combination undercommon control in the Accounting Standards for Business Enterprises, there is no change in the originally recognized goodwill.
Note 10: In December 2013, the Company’s wholly owned subsidiary Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity in Neusoft-Philips with RMB 92.89 million Yuan and held 74% equity in this subsidiary in total after the acquisition. The difference bywhich the acquisition price exceeds the fair value of its attributable net assets was recognized as goodwill when preparing the consolidated financial statements.
5.18 Long-term deferred expenses
Item

Year-begin balance

Increase in this period

Amortization amount

Other decrease (note)Year-end balance

Decoration expense

42,564,622

49,078,679

13,471,417

246,327

77,925,557

Landscaping expense

3,137,475

120,000

2,225,389

1,032,086

Reconstruction ofleased fixed assets
for operation

2,183,458

912,897

1,321,263

1,775,092

Others24,177,618

6,194,297

6,747,663

862,387

22,761,865

72,063,173

56,305,873

23,765,732

1,108,714

103,494,600

Total

Note: This is mainly caused by change in the consolidation.

146

Neusoft Annual Report 20135.19 Deferred income tax assets/liabilities
Deferred income tax assets and liabilities are not presented as net value after offsetting.
5.19.1 Recognized deferred income tax assets/liabilities
Item

Year-end balanceYear-begin balance

Deferred tax assets:
Government subsidy

22,547,435

16,703,086

Appropriated bonus

19,869,527

21,479,730

Appropriated provision for bad debts above the standard in the Tax Law of P.R. China

14,104,736

11,232,120

Impairment of long-lived assets

7,732,754

526,206

Provision for inventory write-down

6,665,677

3,128,960

Estimated liabilities

2,402,334

2,056,962

Depreciation of fixed assets and other asset amortization

1,119,994

8,206

Undue loss not offsetted

365,328

Others10,329,176

10,852,905

84,771,633

66,353,503

Change in fair value of assets

5,064,783

1,491,718

Others2,149,239

2,246,775

7,214,022

3,738,493

Subtotal
Deferred tax liabilities:

Subtotal

5.19.2 Taxable differences and deductible differences
Item

AmountDeductible differences
Government subsidy

208,687,101

Appropriated bonus

177,219,272

Appropriated provision for bad debts above the standard in the Tax Law of P.R. China

131,724,519

Impairment of long-lived assets

61,480,257

Provision for inventory write-down

57,885,283

Estimated liabilities

22,085,086

Depreciation of fixed assets and other asset amortization

3,767,109

Undue loss not offsetted
Others77,645,233
Subtotal

740,493,860

Taxable differences
Change in fair value of assets

39,609,074

Others

14,328,252
Subtotal

53,937,326

147

Neusoft Annual Report 20135.20 Provision for asset impairment
Year-beginbalance

Item

Increase in thisperiodProvision for bad debts

105,746,291

34,203,058

Provision for inventory
write-down

31,807,366

9,939,786

Provision for impairment of
goodwill

112,775,897

Provision for impairment oflong-term equity investment

5,070,000

Provision for impairment of
fixed assets

888,088

Provision for impairment ofintangible asset

140,240
256,427,882

Total

Decrease in this period
Other (Note)
Reversed

Write-off

1,087,896

24,937,106

Year-endbalance

7,955,856-37,044

131,956,449

316,953

17,542,980

57,885,283

356,641

113,132,538

3,100,000

26,907,106

248,041

640,047

140,240
69,079,950

1,087,896

11,620,850

17,862,577

330,661,663

Note: This is mainly caused by change in consolidation and exchange rate.
5.21 Short-term borrowings
5.21.1 Type
Item

Year-end balance

Guaranteed borrowing
Debt of honor
Total

Year-begin balance
9,139,575

11,312,055

200,000,000

500,000,000

209,139,575

511,312,055

5.21.2 There is no unpaid due short-term borrowing in this period.
5.22 Note payable
5.22.1 Overview
TypeYear-end balanceBanker’s acceptanceYear-begin balance
191,495,518

107,630,675

5.22.2 The amount due in following accounting period is RMB 191,495,518 Yuan.
5.22.3 Note payable to related party: the amount is RMB 244,000 Yuan, please refer to Note 7.4.11 for details.
5.23 Accounts payable
5.23.1 Overview
Item

Year-end balance

Purchase payment

Year-begin balance
805,545,291

620,096,812

5.23.2 Accounts payable to shareholder companies with over 5% (including 5%) voting share of the Company:
Company
Alpine148

Year-end balanceYear-begin balance
6,285,699

518,177

Neusoft Annual Report 2013

5.23.3 Account payable to related parties at the end of this period is RMB 7,574,234 Yuan. Please refer to Note 7.4.11 for details.
5.23.4 Large-amount accounts payable with age of over 1 year
DebtorAmountRemarkShenzhen Eternal Asia Supply Chain Incorporated Company

12,928,534

Unsettled purchase payment

Beijing Ericsson Communication Systems Co., Ltd.

4,694,195

Unsettled purchase payment

SHTECH (Shanghai) Co., Ltd.

3,973,478

Unsettled purchase payment

Hytera Communications Co., Ltd.

2,652,886

Unsettled purchase payment

Guangzhou Victel Technology Co., Ltd.

2,069,918

Unsettled purchase payment

26,319,011

Total

5.24 Advance receipt
5.24.1 Overview
Item

Year-end balanceContract payment received in advanceYear-begin balance

593,558,197

497,627,237

5.24.2 Advance receipt from Shareholding Company with over 5% (including 5%) voting share of the Company:
Advance receipt fromYear-end balance

Northeastern University of China (NEU)

Year-begin balance602,720

Toshiba Corporation

919,588602,720

Total

919,588

5.24.3 Advance receipt from related parties
Advance receipt from related parties at the end of this period is RMB 1,202,720 Yuan; please refer to Note 7.4.11 for details.
5.24.4 Large-amount advance receipt with age of over 1 year:
DebtorAmountRemarkQinhuangdao Branch of Agricultural Bank of China

5,807,935

Unsettled payment for contract being performed

Dalian Commodity Exchange

4,628,324

Unsettled payment for contract being performed

Bureau of Human Resources and Social Security of Lanzhou

3,550,538

Unsettled payment for contract being performed

Subei People’s Hospital of Jiangsu Province

2,978,000

Unsettled payment for contract being performed

Gansu Branch of China National Tobacco Corporation

2,347,394

Unsettled payment for contract being performed

Total

19,312,191

149

Neusoft Annual Report 20135.25 Employee pays payable

Item

Year-begin balance(1) wage, bonus, allowance and subsidy

282,714,475(2) Reward and welfare fund

18,314,894(3) Welfare expense

Increase in thisperiodDecrease in thisperiod2,374,068,694

2,353,476,978Year-end balance
303,306,191
18,314,894

23,389,470

23,114,929

274,541(4) Social insurance premium

2,925,312

432,175,468

430,793,252

4,307,528

Covering: medical insurance

494,238

139,781,976

139,255,115

1,021,099

Basic pension insurance

975,813243,014,927

242,380,496

1,610,244

1,092,495

17,223,783

17,233,452

1,082,826

Unemployment insurance

201,073

20,774,098

20,902,570

72,601

Employment injury insurance

137,148

9,721,770

9,360,328

498,590

Maternity insurance

24,545

1,658,914

1,661,291

22,168311,888

132,726,895

133,004,769

34,014

20,476,649

18,432,116

15,269,342

23,639,423

978,344

978,3444,878,577

395,326

227,982

5,045,921

329,621,795

2,982,166,313

2,956,865,596

354,922,512

Annuity(5) Housing reserve(6) Labor union fund and employee education fund(7) Compensation for terminating labor relation(8) Retirement allowance
Total1) There is no delinquent pay in this period;2) The retirement allowance refers to the payment paid by Neusoft (Japan) Co., Ltd. for its employee retirement according to local applicable laws and regulations; and3) Wage, bonus, allowance and subsidy payable have been given before February 2014.
5.26 Taxes payable
Item

Year-begin balance

Corporate income tax-9,017,837

844,682

VAT

50,448,633

29,001,889

745,882

16,590,081

Urban maintenance and construction tax

6,079,198

3,897,508

Individual income tax

12,200,043

10,767,870

Others7,142,124

4,839,961

67,598,043

65,941,991

Business tax

Total

150

Year-end balanceNeusoft Annual Report 20135.27 Other accounts payable
5.27.1 Overview
Item

Year-end balanceYear-begin balance

Temporary receipt payable to other company

97,725,206

75,477,457

Withholding account payable

13,715,115

15,276,951

Margin for construction or project

13,494,428

7,731,761

Deposit for property

9,461,862

9,261,646

Temporary estimated construction payment

4,337,407

61,082,022

Temporary receipt payable to individuals

3,280,607

5,955,549

Others41,753,789

37,234,832

183,768,414

212,020,218

Total

5.27.2 Other account payable to Shareholding Company with over 5% (including 5%) voting share of the Company:
Payable toYear-end balance

NEU

Year-begin balance
8,531,789

4,783,862

5.27.3 Other accounts payable to related parties: Other account payable to related parties at the end of this period is RMB
13,798,025 Yuan; please refer to Note 7.4.11 for details.
5.27.4 Other large-amount account payable with age of over 1 year:
Payable to

AmountReasonDalian Neusoft Holding Co., Ltd.

3,140,000

Based on related agreement

NEU

2,304,672

Based on related agreement

5.27.5 Other accounts payable with large amount
Payable to

AmountNature or content

Remarks

Philips Electronic China Group

52,878,183

Payment for equity transfer(Note 1)

Dalian Neusoft Holding Co., Ltd.

3,140,000

Temporary receipt(Note 2)NEU

8,531,789

Instalment payment for transfer of property(Note 3)Note1: The Company’s subsidiary Neusoft Medical purchased 25% equity in Neusoft Philips. According to applicable regulations of
the State Administration of Foreign Exchange of China, the remaining due payment has been transferred to the designated bank-supervised account of Neusoft-Philips and finally paid on January 2014. Please refer to Note 4.5 for details.
Note 2: This refers to the payment for transfer of the equities in four institutes from the Company to Dalian Neusoft Holding Co.,
Ltd. in 2012. Please refer to Note 7.4.10 (1) for details.
Note 3: This refers to the due instalment payment for buying property from Northeastern University of China in 2006 as contracted
and other temporary receipts.

151

Neusoft Annual Report 20135.28 Non-current liabilities due within one year
5.28.1 Overview
Item

Year-end balanceYear-begin balance

Bonds payable due within one year

403,658,667

Long-term accounts payable due within one year

48,000,000

Long-term borrowings due within one year

17,500,000
469,158,667

Total

5.28.2 Bonds payable due within one year

Bond

Par value

Neusoft orporation’s
first tranche ofmedium-term notes in2011 (Note)

Date of issue

400,000,000

2011.11.14

Term

Amount3 years

400,000,000

Interest
payable at
AccruedInterest
theinterest in paid in thisbeginning this period
periodof the year

3,658,667

27,440,000

27,440,000

Interest
payableat theend ofthe yearYear-endbalance

3,658,667

403,658,667

Note: Total amount of this issuance is RMB 0.4 billion Yuan with a term of 3 years; the par value is RMB 100 Yuan per note. It is a
fixed interest bearing instrument with an interest rate of 6.86% . The accrued interest unpaid as at the end of this period is RMB
3,658,667 Yuan. The Company will pay the principal and the remaining interest in November 2014 so that it was reclassified into
“non-current liabilities due within one year”item.
5.28.3 Long-term accounts payable due within one year
Item

Year-beginbalance

Term

Construction fund for Shenyang Neusoft IT
Talent Training Base (Note)

Interest
rate (%)

Accruedinterest

2008.10.01-2014.10.31

Year-endbalance
48,000,000

Note: This fund was borrowed from Administrative Committee of Hunnan New District, Shenyang in preceding year with an amountof RMB 120,000,000 Yuan without paying any interest or any other fee. Please refer to Note 5.32 (Note 1) for details.
5.28.4 Long-term borrowings due within one year
Item

Year-end balance

Mortgage loan (Note)

Year-begin balance
17,500,000

Debt of honor
17,500,000

Total

Note: There is no overdue loan under this item as at the end of this period. Please refer to Note 5.31 for details.
5.29 Other current liabilities
Item
Accrued expenses

Year-end balanceYear-begin balance
3,664,444

Note: the increase of the year-end balance is mainly caused by change in the consolidation.

152

120,743

Neusoft Annual Report 20135.30 Estimated liabilities
Item

Year-begin balance

Product quality warranty

Increase

18,628,581

Decrease

Year-end balance

3,456,505

22,085,086

5.31 Long-term borrowings
5.31.1 Overview
TypeYear-end balanceYear-begin balance

Mortgage loan (Note)

54,000,000

Debt of honor

500,000,000

84,000,000

554,000,000

Total

84,000,000

Note: The loan at the end of this period was gained from a mortgage on property with a book value of RMB 126,134,586 Yuan by
the Company’s subsidiary Neusoft Group (Tianjin) Co., Ltd. “Neusoft(
Tianjin”), which was a full discount loan.
Neusoft Tianjin has repaid RMB 12,500,000 Yuan before December 31st, 2013 and will pay RMB 17,500,000 Yuan before December
31 , 2014. Therefore, it was reclassified into“non-current liabilities due within one year”item.
st5.31.2 Top five long-term borrowings

Borrowing fromStart date

Expiry dateCurrency

Interest
rate (%)

Year-end balance
Foreigncurrency

Year-begin balance

Localcurrency

Foreigncurrency

Tianjin Puji Branch of
SPD Bank

May 9th, 2012

May 8th, 2017

RMB

8.28

54,000,000

Dalian Branch of the Export-Import Bank of China

March 4th, 2013

March 3rd, 2015

RMB

4.20

200,000,000

Dalian Branch of the Export-Import Bank of China

March 18th, 2013

March 17th, 2015

RMB

4.20

300,000,000

554,000,000

Total

Local
currency
84,000,000

84,000,000

5.32 Long-term accounts payable
Item

Term

Operating fund for housing

Year-beginbalance

Interest rate(%)

Accruedinterest

Year-endbalance

Condition

14,609,431

14,609,431

120,000,000

72,000,000(Note 1)

Due payment for buying property

44,850,000

41,437,000(Note 2)

Total

179,459,431

128,046,431

Construction fund for Shenyang
Neusoft IT Talent Training Base2008.10.01-2018.10.01

Note 1: This fund was borrowed from Administrative Committee of Hunnan New District, Shenyang in preceding year with anamount of RMB 120,000,000 Yuan without paying any interest or any other fee. The Company will repay RMB 48,000,000 Yuan before
October 31st, 2014 so it was reclassified into“non-current liabilities due within one year”item.
Note 2: This is the due instalment payment of Neusoft Group (Tianjin) Co., Ltd. to Tianjin Port Free Trade Zone Investment Co., Ltd.
for purchasing the use right of the land located within Tianjin Free Trade Zone as well as the ownership of a newly-built R&D office build-

153

Neusoft Annual Report 2013

ing on the land lot. (See“Asset Transactions" in the Company’s announcement with number of“Temporary 2011-22”and Semi-Annual
Report 2012 for other related transaction). During the reporting period, Neusoft Group (Tianjin) Co., Ltd. paid RMB 3,413,000 Yuan andthe remaining will be paid in the coming four years.
5.33 Other current liabilities
Item

Year-end balance

Deferred income (Note)
Total

Year-begin balance

270,190,713

222,597,627

270,190,713

222,597,627

Note: Deferred income refers to income-related subsidy received from the government for compensating for relevant expenses in following years.
Deferred income

Year-end balanceYear-begin balance

Asset-related/income-related

Asset-related scientific research appropriation

16,220,667

16,780,000

Asset-related

Income-related scientific research appropriation

219,366,094

156,368,314

Income-related

Other asset-related government subsidy

21,168,752

18,842,413

Asset-related

Other income-related government subsidy

13,435,200

30,606,900

Income-related

Total

270,190,713

222,597,627

5.34 Share capital
Changes (+/-)
Item

1. Shares with restrictive selling conditions(1) Share held by the state(2) Share held by state-owned companies(3) Shares held by other domestic companies
Including:Shares held by domestically non-state owned
companies
Shares held by domestic natural persons(4) Shares held by foreign companies
Including:Share held by foreign companies
Share held by foreign natural persons
Subtotal154

Year-beginbalance

Newly issued
share

Share
dividend

Share transferredfrom surplus
reserve

Others Subtotal

Year-endbalanceNeusoft Annual Report 2013

Continued table
Changes (+/-)
Item

Year-beginbalance

Newly issued
share

Share
dividend

Share transferredfrom surplus
reserve

Others Subtotal

Year-endbalance

2. Shares outstanding without restrictive selling conditions(1) RMB-denominated ordinary shares

1,227,594,245

1,227,594,245

1,227,594,245

1,227,594,245

1,227,594,245

1,227,594,245(2) Foreign share listed in China(3) Foreign share listed overseas(4) Others
Subtotal
Total

5.35 Capital reserves
Item

Year-begin balance

1. Share premium (Note 1)

340,128,038

2. Other capital reserves (Note 2)

16,161,070

3,317,824

356,289,108

3,317,824

Total

Increase

Decrease
94,863Year-end balance
340,033,175
19,478,894

94,863359,512,069

Note 1: During this reporting period, the Company purchased the minority interest in Neusoft Transportation Information Technology
Co., Ltd. The capital reserve increased by RMB 94,863 Yuan for the difference between purchase price and identifiable net assets attributable to the Company which is calculated according to newly increased equity ratio.
Note 2: During this reporting period, RMB 30,000 Yuan of capital surplus was generated for the newly increased registered capital of
Beijing Venusource Information Technology Co., Ltd., an associate of the Company’s controlled subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. “Neusoft(
Venture Capital”), which recognized RMB 10,328 Yuan of capital reserve according to its equity ratio.
The Company increased RMB 6,197 Yuan of capital reserve based on its equity ratio in Neusoft Venture Capital when consolidating the financial statements.
RMB 5,519,379 Yuan of capital reserve was formed due to the net amount of fair value change in Neusoft Venture Capital’s available-for-sale financial asset (after deducting the deferred income tax). The Company increased RMB 3,311,627 Yuan of capital reservebased on its equity ratio in Neusoft Venture Capital when consolidating the financial statements.
5.36 Surplus reserves
Item

Year-begin balance

Increase

Decrease

Year-end balance

Statutory surplus reserve

431,425,557

34,850,153

466,275,710

Arbitrary surplus reserve

235,850,293

17,425,076

253,275,369

667,275,850

52,275,229

719,551,079

Total

155

Neusoft Annual Report 20135.37 Undistributed profits
Item

AmountUndistributed profits at the beginning of the year

Appropriation/distribution rate

2,922,439,964

Add: Net profit attributable to the shareholders of the parent
company

410,938,749

Less: Appropriated statutory surplus reserves

34,850,153

10% of after-tax profits

Appropriated arbitrary surplus reserves

17,425,076

5% after-tax profits

Common stock dividends payable

184,139,137(Note)

Common stock dividends transferred into capital share
Others
Undistributed profit at the end of this period

3,096,964,347

Note: The Profit Distribution Proposal 2012 was approved at the 2012 Annual Shareholders’Meeting held on April 19th, 2013.
Based on the total equity of 1,227,594,245 shares as at December 31st, 2012, the Company decided to distribute cash bonus to all shareholders with a total amount of RMB 184,139,137 Yuan (including tax) on a RMB 1.5 Yuan-for-10 shares basis. The remaining undistributed profit was carried forward to the following year. The related announcement has been published on China Securities Journal andShanghai Securities News on April 20th, 2013 and the Company has finished the foregoing distribution on June 7th, 2013.
5.38 Operating income and cost
5.38.1 Operating income
Item

Amount in this period

Amount in previous period

Primary business income

7,375,688,797

6,883,891,905

Other business income

77,064,436

76,303,106

7,452,753,233

6,960,195,011

Subtotal

5.38.2 Operating cost
Item

Amount in this period

Amount in previous period

Primary business cost

5,273,376,260

4,686,216,468

Other business cost

35,304,335

43,504,460

5,308,680,595

4,729,720,928

Total

5.38.3 Operating income & cost (by industry):

Industry
System integration, sales of software products, software customization and other labor services

Operating income

Amount in previous period

Operating cost

Operating income

Operating cost

6,480,628,986

4,782,344,528

5,975,047,991

4,172,158,625

Medical systems

877,664,386

496,725,778

893,617,148

530,343,758

Property management service and rental

86,040,458

23,966,306

82,863,596

21,687,130

Advertising

8,419,403

5,643,983

8,666,276

5,531,415

7,452,753,233

5,308,680,595

6,960,195,011

4,729,720,928

Total

156

Amount in this period

Neusoft Annual Report 2013

5.38.4 Primary operating income & cost (by industry):
Amount in this period

Amount in previous period

Industry
Operating income
System integration, sales of software products, software customization and other labor
services

Operating cost

Operating income

Operating cost

6,477,718,637

4,779,697,752

5,973,700,882

4,170,932,577

Medical systems

812,499,233

466,447,345

824,097,540

489,722,271

Property management service and rental

77,051,524

21,587,180

77,427,207

20,030,205

Advertising

8,419,403

5,643,983

8,666,276

5,531,415

7,375,688,797

5,273,376,260

6,883,891,905

4,686,216,468

Total

5.38.5 Operating income from top 5 customers:
Customer

Operating income

Proportion to the total (%)

Shenyang Neusoft System Integration Engineering Co., Ltd.

317,187,737

4.26

Harman244,558,733

3.28

Sony

244,036,898

3.27

Toshiba Corporation

228,596,420

3.07

Alpine200,243,700

2.69

1,234,623,488

16.57

Total

5.39 Business tax and surtaxes
Item

Amount in this period

Amount in previous period

Tax rate (%)

Business tax

39,030,653

82,810,083

5Urban maintenance and construction tax

15,782,259

16,167,805

1-7Educational surtax

11,468,658

11,752,517

2、3937,385

377,981

67,218,955

111,108,386

OthersTotal

5.40 Sales expense
Item

Amount in this period

Amount in previous period

Employee compensation

399,832,328

358,289,610

Transportation and business travel expenses

69,419,015

70,479,301

Entertainment expense

62,785,305

62,261,694

Office materials

37,283,786

41,326,558

Advertising

36,050,706

41,475,992

Rent al and property management fee

11,772,354

8,628,113

Depreciation and amortization

7,195,234

6,983,748

Premium

6,099,076

6,663,142

Others27,135,244

38,966,628

657,573,048

635,074,786

Total

157

Neusoft Annual Report 20135.41 Administrative expenses
Item

Amount in this period

Amount in previous period

Employee compensation

754,939,268

627,701,024

Depreciation and amortization

104,100,117

76,393,409

Office materials

71,532,848

65,319,567

Rental and property management fee

58,756,935

41,953,657

Transportation and business travel expenses

44,965,311

48,555,310

Entertainment expense

33,179,561

34,220,589

Local taxes

32,670,876

35,639,885

Training/auditing/consulting expenses

30,837,811

22,630,727

Advertising

5,187,098

4,065,719

Premium

4,565,001

4,211,355

Others33,262,888

25,253,705

1,173,997,714

985,944,947

Total

5.42 Financial expenses
Type

Amount in this period

Amount in previous period

Interest expenses

60,865,808

59,183,749

Less: Interest income

16,977,451

14,042,444

Cash discount

1,716,983

956,726

Profit or loss on exchange-11,681,477

26,304,296

Handling fee and other

5,261,430

6,162,740

39,185,293

78,565,067

Total

5.43 Income from changes in fair value
Cause
Trading financial assets

Amount in this period
17,332,730

Trading financial liabilities

Amount in previous period
14,054,013
170,567

Total

17,332,730

14,224,580

5.44 Investment income
5.44.1 Overview
Item

158

Amount in this period

Amount in previous period

Income from long-term equity investment calculated by cost method

215,624

11,835

Income from long-term equity investment calculated by equity method

33,813,510

39,038,402

Investment income from disposal of long-term equity investment (Note 1)

12,168,673

52,095,578

Neusoft Annual Report 2013

Continued table
Item

Amount in this period

Amount in previous period

Investment income obtained during the holding period of held-to-maturity
investment

11,201,057

Investment income from disposal of trading financial assets

10,165,745

14,780,158

Investment income obtained during the holding period of available-for-salefinancial assets
Other (Note 2)
Total

18,364,615

6,198,093

85,929,224

112,124,066

Note 1: This mainly refers to the investment income from selling all the equity in Guangdong Neufashion Digital Technology Co., Ltd.
Note 2: This refers to the investment income recognized by re-estimating the fair value of the 49% equity in Neusoft-Philips originallyheld by Neusoft Medical when buying the 25% equity.
5.44.2 Long-term equity investment income calculated by cost method:
Investment income accounts for above 5% of the total profits or below 5% but ranking at the top 2:
InvesteeAmount inthis period

Amount inprevious period

Cash dividend received by Neusoft Group (Tianjin)
Co., Ltd.

Tianjin Shenzhou Universal Data Technology Co., Ltd.

199,300

Lotus Business Consulting Co., Ltd.

16,324

11,835

215,624

11,835

Total

Cause of change

Cash dividend received by Neusoft (Japan) Co., Ltd.

5.44.3 Long-term equity investment income calculated by equity method:
Investment income accounts for above 5% of the total profits or below 5% but ranking at the top 5:
InvesteeAmount in thisperiodAmount inprevious period

Cause of change

Neusoft-Philips Medical Systems Limited Liability Company

30,466,025

39,090,289

Change in net profit of investee

Nokia Neusoft Commtech Company

6,749,192

4,134,373

Change in net profit of investee

Shenyang Neusoft System Integration Engineering Co., Ltd.

3,738,175

2,809,091

Change in net profit of investee

37,777635,341

Change in net profit of investee-212,290

Investment loss is no longer recognized because the book value of long-term equity investment is written down to zero.

Beijing Venusource Information Technology Co., Ltd.
Chongqing Guo’ao 100 Years Xikang Health Management Co., Ltd.

5.44.4 Note: There is no significant limitation to the remittance of investment income.
5.45 Impairment loss on assets
Item

Amount in this period

Amount in previous period

Bad debts

34,203,058

41,725,790

Inventory write-down

8,851,890

8,473,546

Impairment of long-term equity investment

24,937,106

Impairment of investment property
Impairment of fixed assets

159

Neusoft Annual Report 2013

Continued table
Item

Amount in this period

Amount in previous period

Impairment of construction supplies
Impairment of construction in progress
Impairment of intangible asset
Impairment of goodwill

86,432,773
67,992,054

Total

136,632,109

5.46 Non-operating income
5.46.1 Overview
Item

Amount in previous
periodAmount in this period

Amount included in non-recurring
profit & loss of this period

Profits from disposal of non-current assets

11,332,126

1,623,722

11,332,126

Including: Profit from disposal of fixed assets

7,924,384

443,7227,924,384

Profit from disposal of intangible asset

3,407,742

1,180,000

3,407,742

Government Subsidies

140,953,065

94,363,121

140,953,065

VAT refund

48,616,791

39,349,050

6,227,429

4,216,234

6,227,429

207,129,411

139,552,127

158,512,620

OthersTotal

5.46.2 Government subsidies
Item(1) Fund appropriation for scientific research (included in current profit andloss)(2) Development fund for service outsourcing business(3) Industry supporting fund(4) Fiscally subsidized interest(5) Other government subsidies
Total

160

Nature/content

Amount in thisperiodForm

Acquisition year

For scientific research

Fund

2013

7,900,000

For scientific research

Fund

Before 2013

18,768,003

Service outsourcing business

Fund

2013

45,832,600

Service outsourcing business

Fund

Before 2013

Industry support

Fund

2013

Industry support

Fund

Before 2013

Fiscally subsidized interest

Fund

2013

Fiscally subsidized interest

Fund

Before 2013

Other

Fund

Amount inprevious period

22,987,495

36,053,600
23,682,104
5,971,024
9,454,000
2,543,800
35,316,358

26,807,202

140,953,065

94,363,121

Neusoft Annual Report 2013

5.47 Non-operating expense

Item

Amount in this period

Amount in previous period

Amount included in
non-recurring profit & lossof this period

Loss on disposal of non-current assets

1,823,907

5,173,148

1,823,907

Including: Loss on disposal of fixed assets

1,809,413

1,825,227

1,809,413

14,494

3,347,921

14,494

Loss on disposal of intangible asset
Donation

689,000

OthersTotal

1,542,858

518,900

1,542,858

3,366,765

6,381,048

3,366,765

5.48 Income tax
Item

Amount in this period

Amount in previous period

Income tax calculated by the Tax Laws and related regulations

69,664,469

126,918,048

Adjustment of deferred income tax-9,065,709-20,018,487

60,598,760

106,899,561

Total

5.49 Calculation of Basic EPS and Diluted EPS
Formula:5.49.1 Basic EPS
Basic EPS=P0÷S
S= S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk
PO means net profit attributable to the Company’s common shareholders or net profit attributable to them after deducting non-recurring profit and loss; S means weighted average number of ordinary shares outstanding; S0 means total shares at the beginning of thisperiod; S1 means increased shares transferred from capital reserve or stock dividends in this reporting period; Si means increased sharesfrom issuance of new shares or debt-to-equity swap in this reporting period; Sj means decreased shares caused by buy-back in this reporting period; Sk means shares of reserve stock split; M0 means the number of months in the reporting period; Mi means accumulated number of months from the following month of the share increase to the end of the reporting period; Mj means accumulated number ofmonths from the following month of the share decrease to the end of the reporting period.
5.49.2 Diluted EPS
Diluted EPS=P1/(S0 ＋ S1 ＋ Si × Mi ÷ M0 - Sj × Mj ÷ M0 - Sk + weighted average number of increased ordinary shares from Warrants,
Stock Option and convertible bonds)
P1 means net profit attributable to the Company’s common shareholders or net profit attributable to them after deducting non-recurring profit and loss, which will be adjusted according to the Accounting Standards for Business Enterprises after considering the dilutive
potential ordinary shares’influence on it. When calculating the diluted EPS, the Company shall consider the dilutive potential ordinary
shares' influence on the net profit attributable to the Company's common shareholders or net profit attributable to them after deducting
non-recurring profit and loss and weighted average number of shares, and include it in diluted EPS in the order of high to low dilution degree, up to the minimum value of diluted EPS.

161

Neusoft Annual Report 2013

5.49.3 Basic EPS and Diluted EPS
EPS (Yuan/share)
Item
Basic EPS

Diluted EPS

Net profit attributable to the Company’s common shareholders

0.33

0.33

Net profit attributable to Company’s common shareholders after deducting
non-recurring profit and loss

0.18

0.18

5.49.4 Calculation process of basic EPS:
Item

FormulaAmount in this period

Net profit attributable to the Company’s common shareholders

P0410,938,749

Non-recurring profit and loss

F

195,266,279

Net profits attributable to Company’s common shareholders after deducting non-recurring profit and loss

P1= P0- F

215,672,470

Total shares at year begin

S0

Increased shares transferred from capital reserve or stock dividends

S1

Increased shares from issuance of new shares or debt-to-equity swap

Si

Accumulated number of months from the following month of theshare increase to the end of the reporting period

Mi

Decreased shares caused by buy-back

Sj

Accumulated number of months from the following month of theshare decrease to the end of the reporting period

Mj

Shares of reserve stock split

Sk

The number of months in the reporting period

M0

Weighted average number of common shares outstanding

S= S0＋S1＋Si×Mi÷M0－Sj×Mj÷M0－Sk

Basic EPS(Yuan/share)

EPS=P0/S

0.33

Basic EPS after deducting non-recurring profit and loss(Yuan/share)

EPS1=P1/S

0.18

1,227,594,245

12
1,227,594,245

5.49.5 The Company does not have dilutive potential common share outstanding, so the diluted EPS is equal to the basic EPS.
5.50 Other composite income

Item

Amount in thisperiod

1. Profit (loss) occurred by available-for-sale financial assets

4,415,503

Less: Related income tax

1,103,876

Net value previously included in other composite income and transferred into current profit and loss
Subtotal
2. Attributable amount in other composite income of the investee calculated by equity method
Less: Related income tax

162

3,311,627

Amount inprevious
periodNeusoft Annual Report 2013

Continued table
Item

Amount in thisperiodNet value previously included in other composite income and transferred into current profit and loss

Amount inprevious
period6,198,093

Subtotal-6,198,093

3. Profit (loss) occurred by cash flow hedging instrument
Less: Related income tax
Net value previously included in other composite income and transferred into current profit and loss
Adjustment of initially recognized amount of converted arbitraged items
Subtotal
4. Translation difference in foreign currency-denominated statements-19,597,751-5,695,655-19,597,751-5,695,655

5. Other composite income attributable to minority shareholders (translation difference in foreign currency-denominated statements)

2,485,537

40,007

Subtotal

2,485,537

40,007-13,800,587-11,853,741

Less: Net value transferred into current profit and loss when disposing overseas operations
Subtotal

6. Others
Less: Related income tax
Other Net value previously included in other composite income and transferred into current profit and loss
Subtotal
Total

5.51 Note to the cash flow statement
5.51.1 Other cash receipts relating to operating activities
Item

AmountInterest income

16,977,451

Scientific research appropriation

163,529,218

Other transactions

144,063,868
324,570,537

Total

5.51.2 Other cash disbursement relating to operating activities
Item

AmountTransportation and business travel expenses

127,656,284

Office materials

119,711,058

Entertainment expense

98,501,748

Rental and property management expense

63,438,960

163

Neusoft Annual Report 2013

Continued table
Item

AmountBusiness promotion expense

41,131,512

Training, consulting, seminar expenses

36,427,775

Transportation and property insurance expenses

8,431,765

Other transactions

50,082,087
545,381,189

Total

5.51.3 Other cash receipt relating to investment activities
Item

AmountNet amount by which the amount of paid cash for acquiring subsidiary deducts theamount of the cash and cash equivalent held by the subsidiary on the acquisition date
(Note)

23,307,128

Project deposit

7,036,000
30,343,128

Total

Note: Neusoft-Philips was included in the consolidated financial statement after the acquisition by Neusoft Medical. This net amount
was indicated under“Other cash receipt relating to investment activities”when preparing the cash flow statement.
5.51.4 Other cash disbursement relating to investment activities
Item

AmountProject deposit

5,804,000

Financial support provided by Neusoft (Europe) Co., Ltd. for Aerotel Medical Systems (1998) Ltd.

1,385,685

Other463,219
7,652,904

Total

5.51.5 Other cash disbursement relating to financing activities
Item

164

AmountUnderwriting fee for medium-term notes in 2011

1,351,372

Total

1,351,372

Neusoft Annual Report 20135.52 Supplementary Information to cash flow statements
5.52.1 Overview
Item

Amount in this period

Amount in previous period

1. The net profit is converted into cash flow from operating activities
Net profit

384,531,414

435,768,952

Add: Provision for asset impairment

67,992,054

136,632,109

Depreciation of fixed assets, oil & gas assets and productive biologicalassets142,000,560

118,041,429

Amortization of intangible asset

21,803,077

23,360,280

Amortization of long-term deferred expenses

23,765,732

18,582,416

Loss on disposal of fixed assets, intangible asset and other long-lived
assets “-”for(
profit)-9,508,219

3,549,426

Loss on change of fair value “-”(for profit)-17,332,730-14,224,580

Financial expenses “-”for(
profit)49,184,331

85,488,045

Investment loss “-”for(
profit)-85,929,224-112,124,066

Decrease of deferred income tax assets (“-”for increase)-18,418,130-20,761,981

Increase of deferred income tax liabilities (“-”for decrease)

3,475,529

1,328,712

Decrease of inventories (“-”for increase-68,555,989-245,814,014

Decrease of operating accounts receivable (“-”for increase)-806,315,158-310,333,000

Increase of operating accounts payable (“-”for decrease)617,158,285

197,741,794

303,851,532

317,235,522

Year-end cash balance

2,155,127,451

2,088,199,345

Less: Year-begin cash balance

2,088,199,345

1,736,706,930

66,928,106

351,492,415

Abandonment loss of fixed assets “-”(for profit)

OthersNet value of cash flow from operating activities
2. Significant investment and financing activities not relating to cash receipt and disbursement
Debt conversion to equity
Convertible bonds due within one year
Leased fixed assets from financing
3. Change in cash and cash equivalent

Add: Year-end cash equivalent balanceLess: Year-begin cash equivalent balance
Net increase in cash and cash equivalents

165

Neusoft Annual Report 2013

5.52.2 Information relating to obtaining or disposing subsidiaries and other operating units
Item

Amount in previous
periodAmount in this period

1. Information relating to obtaining subsidiaries and other operating units:1). Acquisition price

107,706,425

38,704,045

2). Cash and cash equivalent paid for the acquisition

107,706,425

38,704,045

116,200,897

204,045-8,494,472

38,500,000

351,212,832

204,045

Current assets

377,954,817

204,045

Non-current assets

109,878,075

Current liabilities

136,620,060

Less: Cash and cash equivalent held by subsidiaries and other operating units
3) Net cash received from subsidiaries and other operating units
4) Net assets obtained from the subsidiaries

Non-current liabilities
2. Information relating to disposing subsidiaries and other operating units:
1) Disposal price

22,500,000

444,276,705

2) Cash and cash equivalent received from the disposal

27,820,967

430,115,253

13,93014,341,392

3) Net cash received from disposal of subsidiaries and other operating units

27,807,037

415,773,861

4) Net assets from disposal of subsidiaries

18,200,520

623,373,173

Current assets

19,456,362

153,816,891

Non-current assets

13,551,280

625,245,672

Current liabilities

14,807,122

51,689,390

Less: Cash and cash equivalent held by subsidiaries and other operating units

Non-current liabilities

104,000,000

Note: Neusoft-Philips was included in the consolidated financial statement after the acquisition by Neusoft Medical. This net amount(-23,307,128 Yuan) was indicated under“Other cash receipt relating to investment activities”when preparing the cash flow statement.
5.52.3 Composition of cash and cash equivalent:
Item

Amount in this period

1. CashIncluding: Cash on handBank deposit which can be used for payment at anytime
Other money capital which can be used for payment at anytime

Amount in previous period

2,155,127,451

2,088,199,345

197,394

139,152

2,154,163,414

2,082,553,193

766,643

5,507,000

2,155,127,451

2,088,199,345

2. Cash equivalent
Including: Bond investment due within three months
3. Ending balance in cash and cash equivalents

Note: Cash and cash equivalent with use limitation are not covered.
Note 6 There is no accounting treatment for asset backed securitization.

166

Guo Haijun
Xing BoLi JunLi JunWholly Limited liability
Changshaowned company
Wholly Limited liability
Nanjingowned company
Wholly Limited liability
Chengduowned company
Wholly Limited liability
Xi’an
owned company

Hunan Neusoft Co., Ltd.

Nanjing Neusoft System Integration Co., Ltd.

Chengdu Neusoft System Integration Co., Ltd.

Xi'an Neusoft System Integration Co., Ltd.

Wholly Limited liability
Shenyang
owned company

Li JunLi JunWholly Limited liability Guangowned company
zhou
Wholly Limited liability
Shanghaiowned company

Neusoft Group (Guangzhou) Co., Ltd.

Neusoft Group (Shanghai) Co., Ltd.

Li JunLu Zhaoxia

Wholly Limited liability
Beijingowned company

Beijing Lanruisoft Co., Ltd.

Shenyang Neusoft System Integration Technol- Wholly Limited liability
Shenyangogy Co., Ltd.
owned company

Zhang Xiubang

Wholly Limited liabilityJapan
owned company

Li JunNeusoft (Japan) Co., Ltd.

Shanghai Neufashion Digital Technology Co., Wholly Limited liability
ShanghaiLtd.
owned company

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

Development, production, design andsales of computer software

Computer software/hardware

Computer software/hardware

Computer software development/network
integration

Controlled

Hebei Neusoft Co., Ltd.

Limited liability QinhuangXu Hongli
companydao

Development, sales and consulting ofcomputer software

Ad production/release

Medical systems

Wholly Limited liability
Hong Kong Liu Jiren
owned company

Wang Jingxi

Liu Jiren

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware andrelated goods

Computer software/hardware

Business scope

Neusoft (Hong Kong) Co., Ltd.

Shenyang Zhuri Digital Advertising Communi- Wholly Limited liability
Shenyang
cations Co., Ltd.
owned company

Shenyang Neusoft Medical Systems Co., Ltd.

Li JunLi JunWholly Limited liability
Qingdaoowned company

Shandong Neusoft System Integration Co., Ltd.

Wuhan Neusoft Information Technology Co., Wholly Limited liability
Wuhan
Ltd.
owned company

Li JunWholly Limited liability
Beijingowned company

Neusoft Group (Beijing) Co., Ltd.

Domicile
Zhao Gang

Form

Wholly Limited liability
Shenzhenowned company

Type

Legal
representative

Shenzhen Neusoft Co., Ltd.

Subsidiary

7.1 Subsidiaries:

Note 7 Related Party and Related Transactions

200,000,000

130,000,000

20,000,000

10,000,000

187,750,000
JPY

20,000,000

10,000,000

850,000
USD

1,000,000

378,000,000

25,000,000

35,000,000

20,000,000

12,000,000

12,000,000

50,000,000

340,000,000

5,000,000

Registeredcapital100.00100.00100.00100.00100.00100.0085.00

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0070333930-x

60128505-6

24376645-7

70208754-2

74143252-1

72628571-1

72539482-8

72173264-x

18378979-5

70620482-2

77545727-6

19236465-x

100.00100.00100.00100.0068095364-8

67972637-6

67533650-6

78398520-4

100.00 0106-01-027903

100.0085.00

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00Organization
code(Unit: RMB/Yuan)
EquityVotingratio (%) share (%)

Neusoft Annual Report 2013

167

168
Limited liability
Daliancompany

Xing Bo
Xing Bo
Xing Bo

Wholly Limited liability
Wuxi
owned company
Wholly Limited liability
Wuhu
owned company
Wholly Limited liability
Nanjingowned company

Neusoft Group (Wuxi) Co., Ltd.

Neusoft Group (Wuhu) Co., Ltd.

Neusoft Group (Nanjing) Co., Ltd.

develop-

Sales and development of computer software/hardware
Computer hardware development/production, technical consulting, services
Computer software, technical consulting
and services
Development and sales of computer software/hardware
Development and sales of computer software/hardware

Wholly Limited liability
Zhengzhou Wang Limin
owned company
Wholly Limited liability
Nanchang
owned company
Wholly Limited liability
Switzerland Liu Jiren
owned company
Wholly Limited liability
Chongqing Yang Jiwen
owned company
Wholly Limited liability
Ningboowned company

Neusoft Group (Zhengzhou) Co., Ltd.

Neusoft Group (Nanchang) Co., Ltd.

Neusoft (Europe) Co., Ltd.

Neusoft Group (Chongqing) Co., Ltd.

Neusoft Group (Ningbo) Co., Ltd.

Xing Bo

Guo Haijun

Technology development/consulting services, product selling

Wang Yongfeng Computer service/consulting

Computer software/hardware and its development, sales and technical consulting

Computer software/hardware
ment and services。

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

Hu Weiwei

Limited liability
Beijingcompany

Wang Yongfeng

Wholly Limited liability
Hainanowned company

Neusoft Group (Hainan) Co., Ltd.

Beijing LBS Social Insurance Information Tech- Connology Co., Ltd.
trolledLu Zhaoxia

Wholly Limited liability
Tangshanowned company

Neusoft Group (Tangshan) Co., Ltd.

Limited liability
Shenyang
company

Computer software/hardware

Wang Limin

Wholly Limited liability
Tianjinowned company

Neusoft Group (Tianjin) Co., Ltd.

Shenyang Neusoft Transportation Information ConTechnology Co., Ltd.
trolledComputer software, technical consulting
and services

Wholly Limited liability
Hangzhou Xing Bo
owned company

Hangzhou Neusoft Co., Ltd.

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

Liu Jiren

Property management and service

Small and medium-sized enterprise investment and management

Wholly Limited liabilityUSA
owned company

Wang Jingxi

Liu Jiren

Wang Yongfeng Computer software/hardware

Neusoft Technology Co., Ltd.

Shenyang Neusoft Property Management Co., Wholly Limited liability
ShenyangLtd.
owned company

Liaoning Neusoft Venture Capital Investment ConCo., Ltd.
trolledShenyang Neusoft Information Technology Ser- Wholly Limited liability
Shenyang
vices Co., Ltd.
owned company

Computer software/hardware

Business scope

Wang Yongfeng Computer software/hardware

Wholly Limited liability
Dalianowned company

Domicile

Neusoft Group (Dalian) Co., Ltd.

Form

Wholly Limited liability
Dujiangyan Wang Jingxi
owned company

Type

Neusoft Group (Chengdu) Co., Ltd.

Subsidiary

Legal
representative

20,000,000

20,000,000

37,900,000
CHF

20,000,000

10,000,000

15,000,000

7,000,000

12,000,000

10,000,000

20,000,000

100,000,000

30,000,000

20,000,000

500,000

1,000 USD

1,000,000

125,000,000

50,000,000

600,000,000

1,000,000

Registeredcapital100.00100.00100.00100.00100.0061.67

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0060.00

100.00100.00100.00100.00100.00100.00100.00100.0061.67

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0060.00

100.00100.00100.0006661847-906615648-9

58657721-X

58288499-2

80204827-6

573458836

57593939-3

57175470-3

56176638-0

55737352-5

55330512-x

69740643-x

68908449-3

72091468-7

71578937-5

78872654-3

79202132-7

78812157-9

Organization
code

Continued table
EquityVotingratio (%) share (%)

Neusoft Annual Report 2013

27,790,000

Development and sales/wholesale of computer hardware and software; technology support, import/export agent

Wholly Limited liability
Hefei
owned company

Hefei Neusoft Information Technology Co., Ltd.

Beijing

Rong Xinjie

Limited liability
Shenyang
company

Controlled

Jiang Genmiao

Jiang Genmiao

Limited liability
Shenyang
company

Shenyang Neusoft Spectrum MRI Technologies ConCo., Ltd.
trolledNeusoft Positron Medical Systems Co., Ltd.

Jiang Genmiao

Shenyang Neusoft Medical Systems Import & Wholly Limited liability
Shenyang
Export Co., Ltd
owned company

3,500,000
USD

10,000,000

R&D and manufacturing of Low-filed permanent magnet products, MRI technology development and consulting
Development and manufacturing of PET
systems, technology consulting/service

5,000,000

60,000,000

1,000,000
HKD

51,000USD

30,000,000

5,000,000

100,000

15,000,000

1,000,000
USD

30,000,000

25,000,000

500,000

Import & export of goods and technologies

Medical equipment, device manufacturing/sales for lab automation system; development/sales of computer software/
hardware and app system

Jiang Genmiao

Controlled

Neusoft A&T Medical Technology Co., Ltd.

Limited liability
Shenyang
company

IT and related consulting services

Wholly Limited liability
Hong Kong Zhao Hongowned company

Neusoft Xikang International Co., Ltd.

Limited liability Cayman IsLiu Jiren
company
lands

Controlled

Neusoft Xikang Holdings Co., Ltd.

IT and related consulting services

Design, development, manufacturing, serShan Zhenglong vice and sales of computer equipment
and software products

Limited liability
Kunmingcompany

Computer software/hardware

Economic information consulting, corporate management service

Computer software/hardware/services

Kunming Neusoft Jinsha Information Technolo- Congy Co., Ltd.
trolledSong Li

Wang Limin

Ma Ximing

Wholly Limited liability
Beijingowned company

Limited liability
Beijingcompany

Project investment, asset management
and investment consulting

Computer software/hardware, technicalservice

Neusoft Yuetong Software Technology (Da- Wholly Limited liability
Dalianlian) Co., Ltd.
owned company

Beijing InBridge Consulting Co., Ltd

Joint stockcompany

Computer software/hardware, system integration, technology consulting

Wang Yongfeng Computer software/hardware

Wholly Limited liability British VirLiu Jiren
owned company
gin Islands

Beijing Neusoft Yuetong Software Technology ConCo., Ltd.
trolledNeusoft Capital International Co., Ltd.

Beijing Neusoft Huiju Information Technology ConCo., Ltd.
trolledDalian Neusoft Business Process Consulting Wholly Limited liability
DalianCo., Ltd.
owned company

Xing BoLu Zhaoxia

Controlled

Beijing Neusoft Viewhigh Technology Co., Ltd.

Limited liability
Beijingcompany

30,000,000

Development and sales of computer software/hardware and electronic products

Wholly Limited liability
Changchun Wang Qi
owned company

20,000,000

Neusoft Group (Changchun) Co., Ltd.

Design, production and sales of computer software/hardware

Zhang Dengguo

10,000,000

Wholly Limited liability
Karamay
owned company

Development and sales of computer software/hardware

Business scope

Neusoft Group (Karamay) Co., Ltd.

Domicile
Xing Bo

Form

Wholly Limited liability
Xuzhouowned company

Type

Registeredcapital

Neusoft Group (Xuzhou) Co., Ltd.

Subsidiary

Legal
representative

73.14

100.00100.00100.00

99.00

80.00

100.0051.00

100.00

70.00

51.00

100.00100.0070.00

100.0080.28

100.00100.0073.14

100.00100.00100.0078005017-1

73464528-976439265-7

58388488-X

21663341-3

55981522-7

69231782-5

69230700-2

66217772-9

69600028-6

77735490-8

75010398-1

07362451-9

07220013-2

06952887-4

Organization
code

Continued table
EquityVotingratio (%) share (%)

Neusoft Annual Report 2013

169

170
Form

Domicile

Wholly Limited liabilityUSA
owned company

Type
Christoph-er
A. McHan

Legal
representative

Klaus Michael
ZimmerRares Cosmin
Grecu

Wholly Limited liability
Romania
owned company
Wholly Limited liability
Germany
owned company

Neusoft EDC SRL

Neusoft GmbH

Healthcare

Technology Wholly Limited liability Guangowned company
zhou

Lu Zhaoxia

1,000,000

XikangHealthcare consulting, health information consulting, corporate management,
equipment sales/lease

GuangzhouCo., Ltd.

5,000,000

Healthcare service and archive management; medical institution consulting, medical equipment sales/lease

Wholly Limited liability
Chengmai Lu Zhaoxia
owned company

Hainan Xikang Healthcare Co., Ltd.

10,000,000

Computer software/hardware development for medical systems, healthcare
consulting services

5,000,000

50,000,000

Health information management/consulting, management services, management
system development

Development of electronic products; development, transfer, consulting, sales andlease of computer software/hardware

30,000,000

Computer software/hardware, electronics product development, corporate investment management & consulting

Lu Zhaoxia

8,000,000
USD

Computer software/hardware, electronics product development, corporate investment management & consulting

Wholly Limited liability
Nanjingowned company

Lu Zhaoxia

Shenyang Neusoft Xikang Medical Systems Wholly Limited liability
ShenyangCo., Ltd.
owned company

25,000EUR

94,000
ROL

8,578
EUR

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

Computer software/hardware, technicalconsulting and services

1,025,000
EUR

29,600,000
USD

R&D, manufacturing and sales of CT
scanners, MRI, X-ray and US equipment
and related parts, technical consulting
and support
Computer software/hardware, technicalconsulting and services

1,800,000
USD

3,500,000
USD

12,000,000
USD

Registeredcapital

Medical systems and relevant technicalconsulting and services

Medical systems and relevant technicalconsulting and services

Product R&D/ manufacturing and related
technical consulting/services

Business scope

Jiangsu Xikang Healthcare Co., Ltd.

Lu Zhaoxia

Wholly Limited liability
Shenyang
owned company

Lu Zhaoxia

Liaoning Neusoft Xikang Healthcare Co., Ltd.

Limited liability
Tianjincompany

Controlled

Tianjin Xikang Healthcare Technology Co., Ltd.

Lu Zhaoxia

Klaus Michael
ZimmerWholly Limited liability
Finlandowned company

Neusoft Mobile Solutions Oy

Neusoft Xikang Healthcare Technology Co., Wholly Limited liability
BeijingLtd.
owned company

Klaus Michael
ZimmerWholly Limited liability
Germany
owned company

Liu Jiren

Romulo Javier
Omonte Dextre

Neusoft Technology Solutions GmbH

Limited liability
Shenyang
company

Wholly Limited liability
Peru
owned company

Neusoft-Philips Medical Systems Limited liabili- Conty company
trolledNeusoft Medical (Peru) Inc.

United Ar- Mohamed
Neusoft Medical Systems (Middle East) Limited Wholly Limited liabilityabEmir- Abdelha-mid
liability company
owned company
ates
Hassan Elgabry

Neusoft Medical System U.S.A. Inc.

Subsidiary

100.00100.00100.00100.00100.0075.00

100.00100.00100.00100.00100.0074.00

100.00100.00100.00EquityVotingratio (%) share (%)

05454758-959494122-959352322-8

58387954-6

58385530-958975520-2

57515244-3

760075515

Organization
code

Continued table

Neusoft Annual Report 2013

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Pan Ningchuan

Lu Zhaoxia

Wholly Limited liability
Changshaowned company
Wholly Limited liability
Nanchang
owned company

Wholly Limited liability
Jinzhou
owned company

Wholly Limited liability
Shenzhenowned company

Controlled

Luoyang Xikang Healthcare Co., Ltd.

Hunan Xikang Healthcare Co., Ltd.

Jiangxi Xikang Healthcare Co., Ltd.

Jinzhou Xikang Healthcare Co., Ltd.

Shenzhen Xikang Healthcare Co., Ltd.

Shenyang Xikang APS Technology Co., Ltd.

Beijing Neusoft Xikang Hospital Management Wholly Limited liability
BeijingCo., Ltd.
owned company

Pan Ningchuan

Lu Zhaoxia

Wholly Limited liability
Luoyangowned company

Limited liability
Shenyang
company

Lu Zhaoxia

Hubei Xikang Healthcare Co., Ltd.

Legal
representative

Wholly Limited liability
Wuhan
owned company

Domicile

Lu Zhaoxia

Form

Wholly Limited liability
Hefei
owned company

Type

Anhui Xikang Healthcare Co., Ltd.

Subsidiary

1,000,000

1,000,000

1,000,000

10,100,000

2,000,000

1,000,000

500,000

1,000,000
USD

5,500,000

Except for what are not allowed by law
with approval of related departments. For
those without regulation, free choice
can be madeHealthcare consulting, health information
consulting, healthcare archive management, corporate management, equipment sales/lease
Healthcare service/consulting, medical institution consulting, healthcare archive
management, equipment sales/lease
Healthcare consulting, health information consulting, corporate management,
equipment sales/lease
Healthcare consulting, health information consulting, healthcare archive management, corporate management, equipment sales/lease
Healthcare service/consulting, medical
project investment, technology development/sales of healthcare products; development/sales/lease/technical service ofcommunication equipment; corporate image planning, meeting planning, investment consulting, import/export of goods
and technologies
Design/research and development of sensors and related electronic products,
components, software and hardware; related technical consulting and service
Hospital management, sales of electronic
products, computer, software, mechanical equipment, communication device;lease of computer, communication device and medical equipment; Technological development, transfer, consulting andservice

RegisteredcapitalHealthcare service/consulting, medical institution consulting, healthcare archive
management, equipment sales/lease

Business scope

100.0055.00

100.00100.00100.00100.00100.00100.00100.00EquityVotingratio (%) share (%)

05739944-6

05075277-X

05275130-859807150-7

59654875-4

59545669-8

05089368-7

59454731-X

59573254-1

Organization
code

Continued table

Neusoft Annual Report 2013

171

172
Limited liability
Daliancompany

Wholly Limited liability
Tianjinowned company

Dalian Yida Xikang Healthcare Management ConCo., Ltd.
trolledTianjin Xikang Hospital Management CO., Ltd.

Liu Jiren

Lu Zhaoxia

Chongqing Neusoft Xikang Healthcare Co., Wholly Limited liability
Chongqing Lu Zhaoxia
Ltd.
owned company

Lu Zhaoxia

Wholly Limited liability
Shanghaiowned company

Legal
representative

Shanghai Xikang Healthcare Co., Ltd.

Domicile

Lu Zhaoxia

Form

Wholly Limited liability
Dalianowned company

Type

Dalian Neusoft Xikang Healthcare Co., Ltd.

Subsidiary

500,000

10,000,000

Hospital management, sales of electronic
products, computer, software, mechanical equipment, communication device;lease of computer, communication device and medical equipment; Technological development, transfer, consulting andservice
Health consulting; lease of electronic
products, computer and communicationequipment, engineering and mechanicalequipment; development, consulting andrelated service of computer software;
general trading

ment; sales and lease of electronic pro ⁃ducts, computer and communicationequipment, engineering and mechanicalequipment; technical development, consulting and related service
500,000

500,000

Health consulting, business information
consulting, sales and lease of electronic
products, computer software, mechanical equipment, communication device
Healthcare management, information consulting, medical institution management
consulting, healthcare record manage-

500,000

RegisteredcapitalHealth consulting; lease of electronic
products, computer and communicationequipment, engineering and mechanicalequipment; development, consulting andrelated service of computer software;
general trading

Business scope

60.00

100.00100.00100.00100.00EquityVotingratio (%) share (%)

07948041-3

06989656-2

06288300-5

06088014-2

05114778-2

Organization
code

Continued table

Neusoft Annual Report 2013

Chongqing

DalianShenyangIsraelShenyang

Beijing

Chongqing Guo’ao 100 Years XiLimited liability company
kang Health Management Co., Ltd.

NEC Neusoft Information TechnoloLimited liability company
gies Company Limited

Shenyang Toshiba Neusoft InformaLimited liability company
tion Systems Co., Ltd.

Aerotel Medical Systems（1998）Ltd. Limited liability company

Shenyang Neusoft System IntegraLimited liability company
tion Engineering Co., Ltd.

Beijing Venusource Information TechLimited liability company
nology Co., Ltd.

DalianShenyang

Limited liability company

Shenyang CataData Technology Co.,
Limited liability company
Ltd.

Nokia Neusoft Commtech Company

2.Associates

Shanghai

Shanghai Shimao Xikang Healthcare
Limited liability company
Management Co., Ltd.

Domicile

BeijingForm

Beijing Huiyuan Xikang Healthcare
Limited liability company
Technology Co., Ltd.

1.Joint ventures

Investee

7.2 Joint ventures and associates

Chen Jian

Han WeiDavid Rubin

Masahiko yauuchi

Tohru Miwa

Zhang Jingdong

Dong Yanchun

Ma Boce

Liu Saifei

Jiang Xu

Legal
representative

Computer software/hardware, technical service

Development, sales and consultingof computer software

Tele-diagnosis/healthcare/wellness
solutions

Sales and development of computer software/hardware

30,500,000

75,000,000

8,587
ILS

3,500,000
USD

50,000,000

2,000,000

Development of health science andtechnology projects; health management service
Sales and development of computer software/hardware

12,000,000

Sales and development of computer software/hardware

7,000,000
USD

10,000,000

Healthcare management consulting; corporate management service; data processing; sales of electronic products, computer software/
hardwareMobile application products and solutions

10,000,000

RegisteredcapitalTechnical development, consulting,transfer and service; corporate management and consulting; sales ofelectronic products, computer software; lease of commodities andmechanical equipment

Business scope

34.43

26.65

31.38

40.00

30.00

20.00

16.67

46.00

50.00

50.00

34.43

26.65

31.38

40.00

30.00

20.00

16.67

46.00

50.00

50.00

EquityVotingratio (%) share (%)

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Joint venture

Joint venture

Relevance

58443161-2

243776663

57349218-8

57088436-2

57342964-8

55079395-7

71699395-x

06257733-1

05144350-6

Organization
code

Neusoft Annual Report 2013

173

174
Shareholder with over 5% equity in the Company, where the Company’s directors
take important position
Shareholder with over 5% equity in the Company
Shareholder with over 5% equity in the Company
The Company’s Chairman and CEO serves as President of this institute
The Company’s Chairman and CEO serves as President of this institute
The Company’s Chairman and CEO serves as President of this institute
The Company’s Chairman and CEO serves as Director at Harman
The Company’s Chairman and CEO serves as Director and Chairman at this company
Dalian Kangruidao’s controlled subsidiary
Education institution owned by Dalian Neusoft Holding
Dalian Kangruidao’s wholly owned subsidiary
Dalian Neusoft Holding’s controlled subsidiary
Dalian Neusoft Holding’s controlled subsidiary
Chengdu Neusoft Institute of Information’s wholly owned subsidiary
Dalian Kangruidao’s wholly owned subsidiary
Dalian Neusoft Holding’s wholly owned subsidiary

Alpine Electronics, Inc., Alpine Electronics (China) Co., Ltd. (“Alpine”)

Toshiba Solutions Corporation (“Toshiba Corporation”)

Baosteel Group Corporation

Nanhai Neusoft Institute of Information Technology

Chengdu Neusoft Institute of Information

Dalian Neusoft Institute of Information

Harman International Industries, Incorporated and its subsidiaries (collectively referred
to as“Harman”）

Dalian Kangruidao Investment Co., Ltd. (“Dalian Kangruidao”)

Dalian Neusoft Holding Co., Ltd. (“Dalian Neusoft Holding”)

Dalian Neusoft Institute of Information Technology

Dalian Neusoft Thinking Technology Development Co., Ltd. (“DL Thinking”)

Dalian Neusoft Park Industrial Development Co., Ltd. (“DNPID”)

Tianjin Neusoft Ruidao Education Information Technology Co., Ltd. (“TJ Ruidao”)

Chengdu Neusoft Co., Ltd. (“CD Neusoft”)

Shenyang Ruidao House Purchasing Co., Ltd. (“Ruidao House Purchasing”)

Dalian Yunguan Technology Co., Ltd.

Relation
Shareholder with over 5% equity in the Company

Other related party

NEU Science & Technology Industry Group Co., Ltd. (“NEU”)

7.3 Other related parties

05808908-7

06470928-955643276-5

59290802X

740920764-4

76077566-942244491-2

58203862-2

58200763-1

76544538-6

74963918-0

74919300-0

13220082-1

11772782-8

Organization
code

Neusoft Annual Report 2013

Neusoft Annual Report 2013

7.4 Related-party transactions
7.4.1 Transactions among the subsidiaries that are controlled by the Company and included in the consolidated financial statements
and between such subsidiaries and the Company have been offsetted
7.4.2 Related transactions from purchase of products and labor service
Amount in this period
Related party

Type

Content

PricingAmountProportion
to similartransaction(%)

Amount in previous period

AmountProportion
to similartransaction(%)

Neusoft-Philips

Purchase of
products

Raw material or fin- Negotiation based onished products
market price

304,010,440

54.91

393,312,137

69.87

AlpinePurchase of
products

Raw material or fin- Negotiation based onished products
market price

13,555,934

0.60

17,479,699

0.99

Shenyang Neusoft SysPurchase oftem Integration Engiproducts
neering Co., Ltd.

Raw material or fin- Negotiation based onished products
market price

13,028,245

0.57

32,483,496

1.83

TJ Ruidao

Purchase of
products

Raw material or fin- Negotiation based onished products
market price274,800

0.01

Nokia Neusoft

Purchase of
products

Raw material or fin- Negotiation based onished products
market price

7,609,402

0.43

TJ Ruidao

Labor service

Payment for rental and Negotiation based on
property management
market price

118,252,824

13.57

32,500,000

7.04

DL Thinking

Labor service
receiving

Payment for rental and Negotiation based on
property management
market price

79,051,728

9.07

AlpineLabor service
receiving

Payment for rental and Negotiation based on
property management
market price7,500,000

0.86

Shenyang Neusoft SysLabor service
tem Integration Engireceiving
neering Co., Ltd.

Payment for rental and Negotiation based on
property management
market price7,300,000

0.84

11,520,000

2.49

Beijing Venusource InLabor service
formation Technology
receivingCo., Ltd. (Venusource)

Payment for rental and Negotiation based on
property management
market price

1,980,738

0.23

Labor service
receiving

Payment for rental and Negotiation based on
property management
market price

1,759,543

0.20

6,617,662

1.43

NEC Neusoft InformaLabor service
tion Technology Co.,
receiving
Ltd.

Payment for rental and Negotiation based on
property management
market price

689,623

0.08

NEU

Labor service
receiving

Payment for rental and Negotiation based on
property management
market price344,000

0.04

819,000

0.18

TJ Ruidao

Labor service
receiving

Payment
fee

training Negotiation based onmarket price

2,958,798

8.16

DNPID

Labor service
receiving

Payment for lease and
Negotiation based on
property management
market pricefee

374,055

0.36

423,371

0.49

CD Neusoft

Total

for

551,080,728

502,764,767

175

Neusoft Annual Report 2013

7.4.3 Related transactions from product sales and provision of labor service
Amount in this period
Related party

176

Relatedtransaction

Content

PricingAmountAmount in this period

Proportion
to similartransaction (%)

AmountProportion
to similartransaction (%)

Shenyang Neusoft
System Integration
Sales of products
Engineering
Co.,
Ltd. (“SY ESIE”)

System integration Negotiation based
or software
on market price

316,884,279

4.89

126,199,507

2.11

HarmanSales of products

System integration Negotiation based
or software
on market price244,558,733

3.77

224,939,395

3.76

Toshiba Neusoft

Sales of products

System integration Negotiation based
or software
on market price

228,126,084

3.52

184,356,833

3.09

AlphineSales of products

System integration Negotiation based
or software
on market price200,243,700

3.09

184,816,274

3.09

Nokia Neusoft

Sales of products

System integration Negotiation based
or software
on market price

80,830,446

1.25

112,600,705

1.88

Baosteel

Sales of products

System integration Negotiation based
or software
on market price

8,662,143

0.13

1,324,282

0.02

Shimao Xikang

Sales of products

System integration Negotiation based
or software
on market price

1,198,297

0.02

Venusource

Sales of products

System integration Negotiation based
or software
on market price

1,147,500

0.02

TJ Ruidao

Sales of products

System integration Negotiation based
or software
on market price749,0260.01

828,499

0.01

NEU

Sales of products

System integration Negotiation based
or software
on market price680,1800.01

339,000

0.01

DL Yunguan

Sales of products

System integration Negotiation based
or software
on market price

673,9810.01

NEC Neusoft

Sales of products

System integration Negotiation based
or software
on market price211,379

0.003

Neusoft Philips

Sales of products

System integration Negotiation based
or software
on market price

196,976

0.003

3,464,046

0.06

Huiyuan Xikang

Sales of products

System integration Negotiation based
or software
on market price

67,5840.001

295,727

0.005

Dalian Neusoft Institute of Informa- Sales of products
tion Technology

System integration Negotiation based
or software
on market price

1,333,333

0.02

Nanhai Neusoft Institute of Informa- Sales of products
tion Technology

System integration Negotiation based
or software
on market price

1,000,000

0.02

Chengdu Neusoft
Institute of Infor- Sales of products
mationSystem integration Negotiation based
or software
on market price

1,000,000

0.02

CD Neusoft

System integration Negotiation based
or software
on market price

990,000

0.02

Sales of products

Neusoft Annual Report 2013

Continued table
Amount in this period
Related party

Relatedtransaction

Content

PricingAmountAmount in this period

Proportion
to similartransaction (%)

AmountProportion
to similartransaction (%)

Neusoft
Institute
Sales of productsof Information

System integration Negotiation based
or software
on market price

112,950

0.002

Chongqing
Guo’ao 100 Years

Sales of products

System integration Negotiation based
or software
on market price56,9060.001

Neusoft Philips

Sales of products

Materials and parts

Negotiation basedon market price

18,880,982

2.15

13,389,230

1.50

Neusoft Philips

Rental and properProvision of labor
Negotiation basedty management inservice
on market pricecome

12,667,759

14.72

12,330,576

14.88

TJ Ruidao

Provision of labor Rental and proper- Negotiation based
servicety management
on market price

4,640,114

5.39

1,697,417

2.05

Toshiba
Corporation

Provision of labor Rental and proper- Negotiation based
servicety management
on market price

470,336

0.55

SY ESIE

Provision of labor Rental and proper- Negotiation based
servicety management
on market price

303,458

0.35

NEC Neusoft

Provision of labor Rental and proper- Negotiation based
servicety management
on market price257,8310.30

616,956

0.74

AlpineProvision of labor Rental and proper- Negotiation based
servicety management
on market price240

0.0003

Neusoft Philips

Provision of labor Management
servicevice income

ser- Negotiation basedon market price

3,298,643

0.05

538,496

0.01

DL Thinking

Provision of labor Management
servicevice income

ser- Negotiation basedon market price

1,873,585

0.03

NEC Neusoft

Provision of labor Management
servicevice income

ser- Negotiation basedon market price

300,026

0.005

990,217

0.02

NEU

Provision of labor Management
servicevice income

ser- Negotiation basedon market price211,321

0.003

Total

1,127,134,363

873,220,589

7.4.4 There is no related-party trusteeship in this period
7.4.5 There is no related-party contract in this period

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7.4.6 Related leasing (as the leasor)

LeaseeLeasedasset

Asset amount

Neusoft Corporation

Neusoft Philips

Property

37,535,647

2012-9-1

2013-12-31

Lease agreement

8,591,415

Neusoft Corporation

TJ Ruidao

Property

16,390,950

2013-5-16

2015-5-15

Lease agreement

2,042,679

Neusoft Corporation

TJ Ruidao

Property

5,907,731

2013-1-1

2013-12-31

Lease agreement

1,324,067

Neusoft Corporation

Toshiba Corporation

Property

1,611,290

2013-1-1

2013-12-31

Lease agreement

470,336

Neusoft Corporation

NEC Neusoft

Property

1,081,751

2012-12-1

2014-4-30

Lease agreement

257,831

Neusoft Corporation

SY ESIE

Property

1,662,599

2012-3-25

2013-3-24

Lease agreement

42,152

Neusoft Corporation

SY ESIE

Property

2,002,298

2013-2-1

2014-1-31

Lease agreement261,306

Shenyang Neusoft MediNeusoft Philips
cal Systems Co., Ltd.

Property

15,386,017

2012-9-1

2014-8-31

Lease agreement

1,915,849

Neusoft Group (Tianjin)
TJ Ruidao
Co., Ltd.

Property

26,414,879

2013-8-1

2014-7-31

Lease agreement

823,996

Neusoft Group (Dalian)
TJ Ruidao
Co., Ltd.

Property

2,711,425

2013-1-1

2013-12-31

Lease agreement

362,080

Neusoft Group (Dalian)
TJ Ruidao
Co., Ltd.

Property

245,996

2012-7-1

2013-7-1

Lease agreement

16,425

Neusoft Group (Dalian)
TJ Ruidao
Co., Ltd.

Property

518,443

2013-7-1

2013-12-31

Lease agreement

33,841

Neusoft Group (Dalian)
TJ Ruidao
Co., Ltd.

Property

588,5222013-1-1

2013-6-30

Lease agreement

37,026

LeasorStart dateFinish date

IncomeRecognizedlease income

16,179,003

Total

Related leasing (as the leasee)

LeaseeLeasedasset

Asset amountStart date

DNPID

Liaoning Neusoft Venture Capital Investment Co., Ltd.

Property

2013-1-1

2013-12-31

DNPID

Neusoft Yuetong Software Technology (Dalian) Co., Ltd.

Property

2013-1-1

2013-12-31

DNPID

Dalian Neusoft Business Process Consulting
Co., Ltd.

Property

2013-1-1

2014-12-31

Leasor

Total

178

Pricing basis of
the rent charge
Lease agreement

Lease agreement

Lease agreement

Rent charge
recognized inthis period
110,449

86,747

176,859
374,055

Neusoft Annual Report 2013

7.4.7 Related-party guarantee

Guarantor

Secured party

Neusoft (Europe) Co., Ltd.

Aerotel Medical(1998) Ltd.

Systems

Neusoft (Europe) Co., Ltd.

Aerotel Medical(1998) Ltd.

Systems

Secured amountStart date

Expiry date

The guarantee
obligations areclosed or not

210,000 USD

2013-04-24

2014-04-22

No

127,000 USD

2013-06-06

2014-06-05

No

Remark: These are joint and several liability securities for borrowings from the bank.
7.4.8 Borrowing to related party
Related party

Borrowed amountStart date

Expiry date

Aerotel Medical Systems (1998) Ltd. (Note)

180,000 USD

2013-10-11

2014-10-10

Aerotel Medical Systems (1998) Ltd. (Note)

50,000 USD

2013-11-8

2014-11-7

Note: During this reporting period, the Company’s subsidiary Neusoft (Europe) Co., Ltd. borrowed 230,000 USD to Aerotel Medical
Systems (1998) Ltd. with a term of 12 months and annual interest rate at 4.70% ; and received the interest with an amount of 1,735
USD in this period.
7.4.9 Asset transfer and debt restructuring of related party(1) In July 2013, the Company transferred its right to use the land with an area of 35,713 square meters, the ownerships of 1 officebuilding and 2 dormitory buildings as well as the supporting facilities to Shenyang Ruidao House Purchasing Co., Ltd. According to Beijing Zhongtianhe Asset Evaluation Co., Ltd., the evaluated value is RMB 39.9 million Yuan, which is recognized as the transaction price as
mutually agreed. The registration of asset transfer has been finished and all due payment for this transfer has been paid by the end of
this reporting period. Income from asset transfer with an amount of RMB 2.02 million Yuan was obtained in this reporting period, accordingly, the book value of fixed assets increased by RMB 23.58 million Yuan and intangible asset by RMB 10.3 million Yuan.
(2) In December 2013, the Company transferred its software copyright to Shenyang Neusoft System Integration Engineering Co., Ltd.
with a value of RMB 2 million Yuan evaluated by Beijing Zhongtianhe Asset Evaluation Co., Ltd. According to the transfer agreement, thetransaction price is the evaluated value. The registration of copyright transfer has been finished and all due payment for this transfer has
been paid by the end of this reporting period. Income from asset transfer with an amount of RMB 1.38 million Yuan was obtained.
7.4.10 Other related-party transactions(1) According to related agreement, Neusoft IT Services transferred its 60% equity in DNPID and the Company’s original sponsor investment in Dalian Neusoft Institute of Information, Chengdu Neusoft Institute of Information, Dalian Neusoft Institute of Information
Technology and Nanhai Neusoft Institute of Information Technology to Dalian Neusoft Holdings Co., Ltd. In 2012, the Company and Neusoft IT Services have received all the payment for this transfer with an amount of RMB 442,340,000 Yuan and finished the registration ofequity change. During this reporting period, the Company has finished the registration of change in sponsor investment in Dalian Neusoft
Institute of Information, Dalian Neusoft Institute of Information Technology and Nanhai Neusoft Institute of Information Technology andrecognized RMB 590,000 Yuan of income from the transfer. As at the end of the reporting period, the registration of change in sponsor
investment in Chengdu Neusoft Institute of Information was still in progress.
(2) In 2013, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. purchased weak current
engineering materials valued at RMB 4.07 million Yuan from Shandong Neusoft System Integration Engineering Co., Ltd. for the refurbishment project of Xikang. All the payment for the materials has been paid.
(3) Compensation for Directors, Supervisors and Senior Management

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Neusoft Annual Report 2013

Unit: RMB 10,000 Yuan
Item

Amount in this period

Compensation for Directors, Supervisors and Senior Management

Amount in previous period
1,898.04

1,733.58

7.4.11 Related-party accounts receivable and payable
Accounts receivable
Year-end balance
Item

Related party
Book balanceYear-begin balance

Provision forbad debts

Book balance

Provision forbad debts

Accounts receivable
SY ESIE

56,762,767

567,628

1,026,000

20,520Harman48,174,811

562,886

48,629,991

486,300

Toshiba Corporation

38,657,104

386,5715,852,557

58,526

Nokia Neusoft

33,513,720

5,847,628

28,264,043

2,787,316

Alpine18,874,252

188,7433,998,077

39,981

Baosteel

7,734,608

231,346

563,008

30,130DL Thinking

1,986,000

19,860Chongqing Guo’ao 100
Years320,400

16,020320,400

6,408

TJ Ruidao

93,370934

Neusoft Institute of Information

9,425

4,712

9,425

94

2,987,562

29,876

159,995

1,600

91,811,058

3,460,751

Neusoft-Philips (Note)
CD Neusoft
Total

206,126,457

7,826,328

Advance receipts
DNPID

218,398
Total

218,398

Other receivable
Aerotel Medical Systems(1998) Ltd.

1,415,839

14,158

Total

1,415,839

14,158

Note: During this reporting period, the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. acquired 25% equity inthis company and held 74% equity in this subsidiary in total after the acquisition. This company was recorded in the consolidated financial statements at the end of 2013.

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Neusoft Annual Report 2013

Accounts payable
Item

Related party

Year-end balanceYear-begin balance

Accounts payable
Neusoft-Philips

114,082,010

Alpine6,285,699

518,177

SY ESIE

1,288,535

31,215

7,574,234

114,631,402

Total
Note payable
TJ Ruidao

244,000
244,000

Total
Prepayment
NEU602,720

Toshiba Corporation

919,588

Neusoft-Philips

12,541Venusource

600,000
1,202,720

932,129

NEU

8,531,789

4,783,862

Dalian Neusoft Holding

3,140,000

16,328,100

DL Thinking

1,913,368

NEC Neusoft

212,868

212,868

13,798,025

21,324,830

Total
Other accounts payable

Total

7.4.12 Related-party commitment
Contracted but not necessarily presented commitments with respect to related parties as at the balance sheet date:Type

Selling of products to related party

Content

Related party

System integration or software

Toshiba Corporation

48,762,462

System integration or software

Alpine35,981,246

System integration or software

Harman27,186,955

System integration or software

Nokia Neusoft

13,918,101

System integration or software

TJ Ruidao

1,000,000
Total

Service provided by the related party

Amount at the end ofreporting period

Technical development service

TJ Ruidao

126,848,764
597,600

181

Neusoft Annual Report 2013

Note 8 Share-based Payment
There is no share-based payment in this reporting period.
Note 9 Contingent Items
9.1 There is no contingent liability and related financial impact caused by pending action or arbitration in this reporting period.
9.2 Contingent liability caused by debt guarantee for other company in this period:

Secured party

Secured amount(0,000 USD

Expiry date

Influence on the Company’s
financial situation

Related party:
Aerotel Medical Systems（1998）Ltd.

210,000 USD

2014-4-22

It is estimated that no security
loss will occur.

Aerotel Medical Systems（1998）Ltd.

127,000 USD

2014-5-5

It is estimated that no security
loss will occur.

Total

337,000 USD

9.3 Other contingent items
There is no other contingent item required to be disclosed.
Note 10 Commitments
10.1 Investment contract signed but not performed or fully performed yet and relevant expenditure
10.1.1 At the 23rd section of the 5th Meeting of Board of Directors on January 7th 2011, the Board of Directors agreed to acquire theequity of Beijing Neusoft Viewhigh Technology Co., Ltd. (Neusoft Viewhigh) and sign MoU, Equity Transfer Agreement and Letter ofAgreement respectively with Viewhigh Technology Co., Ltd. (authorized representative Guo Xuewen), Intel China (authorized representative Duan Chenghui) and Beijing Taihedingcheng Investment Consulting Co., Ltd.(authorized representative Zhang Wei) (hereafter collectively referred to as“Counterparties”). According to the agreements, the acquisition consideration is within RMB 114,101,440 Yuan, andthe Company will accept the transfer of 73.14% equity in Neusoft Viewhigh. Besides, the Company will acquire the remaining equity of
Neusoft Viewhigh by cash or share of Neusoft Corporation in 2014 and 2015 and hold 100% equity. (For other related transactions
please refer to Neusoft Corporation’s announcement numbered“Temporary 2011—01)
10.1.2 At the 2nd section of the 6th Meeting of Board of Directors on January 7th, 2011, the Board of Directors agreed to set up Neusoft Xikang Holding Co., Ltd. (Neusoft Xikang) and its subsidiary in Cayman Islands and provide RMB 200 million Yuan for financial support which expires on July 14th, 2013.
In order to promote further development of Neusoft Xikang, the Company and Neusoft (Hong Kong) Co., Ltd.’s funding support
with a total amount of up to RMB 400 million Yuan for Neusoft Xikang and its subsidiary in Cayman Islands was approved at the 16th section of the 6th Meeting of Board of Directors on March 27th, 2013.
As at the approved reporting date of this financial report, Neusoft Hong Kong provided financial assistance to Neusoft Xikang and
Neusoft Xikang International Co., Ltd. (Subsidiary of Neusoft Xikang) respectively with HKD 1.5 million and USD 8 million; the Company
provided Neusoft Xikang Healthcare Technology Co., Ltd. with entrusted loan with an amount of RMB 300 million Yuan.
10.1.3 At the 22th section of the 6th Meeting of Board of Directors on October 10th, 2013, the Board of Directors agreed Neusoft (Europe) Co., Ltd. “Neusoft(
Europe”) to provide financial assistance to Aerotel Medical Systems (1998) Ltd. “Aerotel(
Medical”) with USD 1
million with a term of 2 years (from October 10th, 2013 to October 9th, 2015) based on local loan interest rate. The fund will be provided
based on the financial situation of Neusoft Europe and actual need of Aerotel Medical. As at the approved reporting date of this financial
report, USD 230,000 has been provided.
10.2 There is no signed and being performed or to be performed large-amount contract awarded in this period.

182

Neusoft Annual Report 201310.3 There is no signed and being performed or to be performed large-amount lease contract in this period.
10.4 Merger Agreement signed and being performed or to be performed
In December 2009, the Company acquired all the assets of software business for electric power information collection systems
owned by Ningbo Hiker Electric Power Software Technology Co., Ltd. (formerly known as Zhejiang Hiker Electric Power Software Technology Co., Ltd. with total consideration of RMB 23,268,000 Yuan. As at the approved reporting date of this financial report, the Company
has paid RMB 23,000,000 Yuan, the remaining due payment of RMB 268,000 Yuan will not be paid as mutually agreed by both sides
based on the implementation of this project.
10.5 There is no signed and being performed or to be performed restructuring plan in this reporting period.
10.6 There is no performance of significant financial commitment in this reporting period.
10.7 Other significant financial commitments
10.7.1 As at December 31st, 2013, the balance of Bank Guarantee of the Company and its subsidiaries which is within the period ofvalidity is as follows: Balance of Bank Guarantee: RMB 387,248,219 Yuan; USD 32,206,170.
10.7.2 For underlying security of assets please refer to 5.31.1.
Note 11 Items after the Balance Sheet Date
11.1 Profit distribution
At the 25th section of the 6th Meeting of Board of Directors on March 26th, 2014, 10% statutory surplus reserve and 5% arbitrary surplus reserve was proposed to appropriated based on the parent company’s net profit in 2013. According to the Company’s future development plan, the Board of Directors plans to give returns to shareholders. Based on total share capital of 1,227,594,245 shares on December 31st, 2013, a cash dividend of RMB 1.1 Yuan per 10 shares will be distributed to all shareholders. Total cash dividends amount to
RMB 135,035,367 Yuan (tax included). The remaining undistributed profits will be carried over to the following year. The sections mentioned above shall be approved at the Shareholders’Meeting.
11.2 Other items
Settlement of large-amount accounts payable, advance receipts and other payables with age of over 1 year:
Item

Company

Year-end balance

Settled amountAccounts payable
Shenzhen Eternal Asia Supply Chain Incorporated Company

12,928,534

Beijing Ericsson Communication Systems Co., Ltd.

4,694,195

SHTECH (Shanghai) Co., Ltd.

3,973,478

Hytera Communications Co., Ltd.

2,652,886

Guangzhou Victel Technology Co., Ltd.

2,069,918

Dalian Neusoft Holding Co., Ltd.

3,140,000

NEU

2,304,672

Qinhuangdao Branch of Agricultural Bank of China

5,807,935

866,766

Dalian Commodity Exchange

4,628,324

2,473,000

Bureau of Human Resources and Social Security of Lanzhou

3,550,538

3,550,538

Subei People’s Hospital of Jiangsu Province

2,978,000

Gansu Branch of China National Tobacco Corporation

2,347,394

Other payables

Advance receipts

11.2.1 There is no event the Company shall announce occurring after the balance sheet date.

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Neusoft Annual Report 2013

Note 12 Other Significant Items
12.1 Merger
On the acquisition date December 25th, 2013, the Company’s indirectly controlled company Shenyang Neusoft Medical Systems Co.,
Ltd. “Neusoft(
Medical”) purchased 25% equity in Neusoft-Philips Medical Systems Limited Liability Company (Neusoft-Philips) According
to the asset assessment report (2013 No. 3556) issued by China Enterprise Appraisals Co., Ltd., the acquisition consideration was RMB
92.89 million Yuan as mutually agreed (Please refer to Neusoft Corporation’s announcements numbered“L2013-021”and“L2014-002”).
The Company held 74% equity in Neusoft-Philips after the acquisition. The business registration of change was finished on December
25th, 2013 and Neusoft-Philips was recorded in the consolidated financial statements at the end of 2013. As at December 31st, 2013,
RMB 40.02 million Yuan has been paid; according to applicable regulations of the State Administration of Foreign Exchange of China, theremaining due payment with an amount of RMB 52.88 million Yuan has been transferred to the designated bank-supervised account of
Neusoft-Philips and finally paid on January 2014.
12.2 There is no outstanding, convertible-for-share financial instrument in this period
12.3 Assets and liabilities measured by fair value
Unit: RMB Yuan

Item

Year-beginbalance(1) Financial assets measured at fair value
through profit or loss (excluding derivative financial asset)

14,917,183

Profit/loss
fromchange infair value

Accumulated
fair valuechangeincluded in
profit/loss

Appropriationfor
impairment

Year-endbalance

Item

Financial assets

17,332,730

32,249,913(2) Derivative financial asset(3) Available-for-sale financial assets
Subtotal

19,235,058

7,359,172

26,594,230

14,917,183

19,235,058

17,332,730

7,359,172

58,844,143

14,917,183

19,235,058

17,332,730

7,359,172

58,844,143

Investment property
Productive biological assets
OthersSubtotal
Financial liabilities

12.4 Foreign currency dominated financial assets and liabilities
Please refer to Note 12.3.
12.5 Pension plan and significant change
The Company initiated the Corporate Pension Plan in January 2008. The Company’s contractual employees who have worked formore than a year and are legally involved in the basic pension insurance scheme are qualified to participate in the plan voluntarily. The
Company and participating employees are jointly responsible for the payment of the pensions on a quarterly basis. The pensions assumed
by the Company are appropriated on a monthly basis and included in related costs. The Company uses fund and entrust based measuresand exclusive accounts to manage the pension plan; and the fund is strictly separated with fixed assets or other assets and not includedin the financial statements.
12.6 Other items
On June 25th, 2013, the Company’s indirectly controlled subsidiary Beijing Neusoft Huiju Information Technology Co., Ltd. “Neusoft(

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Neusoft Annual Report 2013

Huiju”) obtained the Approval of Public Transfer of Beijing Neusoft Huiju Information Technology Co., Ltd.’s shares in National SME Equi-ty Transfer System from China Securities Regulatory Commission (License No. [2013]812), under which Neusoft Huiju was supervised as a
non-listed public company. The shares of Neusoft Huiju were listed for public transfer in the system on July 3rd, 2013 with an abbreviatedname of“Neusoft Huiju”and stock code of 430227. The designated information disclosure platform is www.neeq.com.cn or www.neeq.cc.
12.7 There is no other significant item to be disclosed.
Note 13 Notes to Main Items of the Parent Company’s Financial Statements
13.1 Accounts receivable
13.1.1 Overview
Year-end balanceBook balance

AgeAmountYear-begin balance

Provision for bad debts

Ratio (%)

AmountBook balance

Ratio (%)

AmountProvision for bad debts

Ratio (%)

AmountRatio (%)

Within 1 year(including one year)

791,353,187

79.79

7,913,531

1.00

453,372,870

71.85

4,533,729

1.00

1-2 years(including two years)

127,098,290

12.81

27,301,730

21.48

118,980,309

18.86

25,930,408

21.79

2-3 years(including 3 years)

40,360,439

4.07

9,355,387

23.18

41,635,884

6.60

8,940,203

21.47

3-5 years

27,113,560

2.73

27,113,560

100.0013,106,813

2.08

13,106,813

100.00Over 5 years

5,906,352

0.60

5,906,352

100.003,878,937

0.61

3,878,937

100.00Total

991,831,828

100.0077,590,560

630,974,813

100.0056,390,090

13.1.2 Disclosure by typeYear-end balance

TypeBook balance

AmountYear-begin balance

Provision for bad debts

Ratio
(%)

AmountRatio(%)

Book balance

AmountProvision for bad debts

Ratio
(%)

AmountRatio(%)

Accounts receivable with significant single amount and single
appropriation of provision forbad debts

305,244,525

30.78

47,379,089

15.52

197,551,106

31.31

21,506,203

10.89

Accounts receivable with appropriation of provision for bad
debts by portfolio

554,541,032

55.91

8,286,139

1.49

307,212,154

48.69

5,946,397

1.94

Accounts receivable with insignificant single amount but single appropriation of provision
for bad debts

132,046,271

13.31

21,925,332

16.60

126,211,553

20.00

28,937,490

22.93

Total

991,831,828

100.0077,590,560

630,974,813

100.0056,390,090

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Neusoft Annual Report 2013

13.1.3 Accounts receivable with significant single amount and single appropriation of provision for bad debts
Book amount

Provision for bad
debts

Appropriation
ratio (%)

China Unicom

95,330,727

27,225,699

28.56

Significant amount with receivable proportionof over 70%

Nokia Neusoft

32,486,985

5,837,360

17.97

Significant amount with receivable proportionof over 80%

Beijing China Power Information
Technology Co., Ltd.

33,067,175

3,604,233

10.90

Significant amount with receivable proportionof over 85%

China Telecom

66,270,730

4,487,553

6.77

Significant amount with receivable proportionof over 90%

Shenyang Metro Co., Ltd.

13,741,085

2,147,021

15.62

Significant amount with receivable proportionof over 80%

Yulin Health Bureau

15,000,000

2,096,360

13.98

Significant amount with receivable proportionof over 85%

China Mobile

18,135,366

1,401,642

7.73

Significant amount with receivable proportionof over 90%

State Grid Electric Power of Xinjiang

20,849,208

417,1222.00

Significant amount with receivable proportionof over 95%

State Grid East Inner Mongolia Electric Power Company Limited

10,363,249

162,099

1.56

Significant amount with receivable proportionof over 95%

Total

305,244,525

47,379,089

Account receivable from

ReasonIn account receivable portfolio, accounts receivable with appropriation of provision for bad debts by aging analysis method:Year-end balance
AgeBook balance
AmountWithin 1 year

Year-begin balance
Provision forbad debts

Ratio (%)

Book balance
AmountRatio (%)

Provision forbad debts

551,772,619

99.50

5,517,726

304,308,845

99.05

3,043,088

2,768,413

0.50

2,768,413

2,903,309

0.95

2,903,309

554,541,032

100.008,286,139

307,212,154

100.005,946,397

1-2 years
2-3 years
3-5 years
Over 5 years
Total

Account receivable with insignificant single amount but single appropriation of provision for bad debts:
Account receivable for

186

Book balance

Provision forbad debts

Appropriatio
n ratio (%)

ReasonContract payment for software andsystem integration

5,068,145

5,068,145

100.00Account receivable with long age which is estimatedly unrecoverable

Contract payment for software andsystem integration

7,759,581

3,518,890

45.35

Account receivable with long age with recoverable proportion of about 50%

Contract payment for software andsystem integration

119,218,545

13,338,297

11.19

Account receivable with long age with recoverable proportion of about 90%

Total

132,046,271

21,925,332

Neusoft Annual Report 2013

13.1.4 Account receivable recovered or received in this period:

Account receivable

Recovery reason

Basis ofconfirming
original
provision forbad debts

Sale amount receivable

Great effort was made towork off the receivables
during the reporting period

Aging analysis method

Accumulated
appropriated provision
for bad debts before
recoveryRecoveredprovision for bad
debts

Recovery amount

6,160,600

5,074,766

5,074,766

13.1.5 Actual write-off accounts receivable:

ReasonWhether caused byrelated transaction

1,646,000

It is estimatedly unrecoverable

No

Sales payment

1,030,059

It is estimatedly unrecoverable

No

Personnel Training Bureau of the Ministry of
Public Security of the PRC

Sales payment

678,000

It is estimatedly unrecoverable

No

Yangzhou Municipal Public Security Bureau

Sales payment

594,000

It is estimatedly unrecoverable

No

Hohehot Municipal Human Resources and Social Security Bureau

Sales payment

480,000

It is estimatedly unrecoverable

No

Shanghai GFC Toshiba Elevator Co.,Ltd.

Sales payment

325,980

It is estimatedly unrecoverable

No

State Grid Shanxi Electric Power Company

Sales payment

313,000

It is estimatedly unrecoverable

No

Guizhou Shuicheng Iron & Steel (Group) Co.,Ltd.

Sales payment

300,000

It is estimatedly unrecoverable

No

OthersSales payment

388,512

It is estimatedly unrecoverable

No

Receivable from

Category

Development Planning Department, the First
Research Institute, China Aerospace Scienceand Technology Corporation

Sales payment

Dezhou Power Plant of Shandong HuanengPower Generation Corporation

Write-off amount

5,755,551

Total

13.1.6 Accounts receivable from shareholder companies with over 5% (including 5%) voting share of the Company:
Year-end balanceYear-begin balanceBook balanceAppropriated provision for bad debts

Book balanceAppropriated provision for bad debts

Baosteel

7,734,608

231,346

563,008

30,130

Alpine401,567

4,016

3,895,227

38,952

24,762,987

247,630

377,255

3,773

Toshiba Corporation

187

Neusoft Annual Report 2013

13.1.7 Top 5 debtors of accounts receivable
Relationship with
the Company

DebtorBook balance

Proportion to thetotal (%)

Age

China Unicom

Non-related party

95,330,727

Within 1 year - over
5 years

9.61

China Telecom

Non-related party

66,270,730

Within 5 years

6.68

Shenyang Neusoft System Integration Engineering
Co., Ltd.

Related party

56,762,767

Within 1 year

5.72

Beiche Construction Engineering Limited liability company

Non-related party

38,001,314

Within 1 year

3.83

Beijing Kedong Electric Power Control System Limited liability company

Non-related party

36,296,704

Within 1 year

3.66

292,662,242

Total

29.50

13.1.8 Accounts receivable from related parties

CompanyBook balance

Proportion to
the total (%)

SY NSIE

Dalian Neusoft Holding’s controlled subsidiary

56,762,767

5.72

Nokia Neusoft

The Company’s associate

32,486,985

3.28

Neusoft (Japan) Co., Ltd.

The Company’s wholly owned subsidiary

30,747,467

3.10

Toshiba Corporation

Shareholder of the Company

24,762,987

2.50

Shenyang Neusoft System Integration Technology Co., Ltd.

The Company’s wholly owned subsidiary

8,583,353

0.87

Baosteel

Shareholder of the Company

7,734,608

0.78

Hunan Neusoft Co., Ltd.

The Company’s wholly owned subsidiary

6,587,403

0.66

Neusoft Technology Solutions GmbHThe Company’s indirectly controlled subsidiary

5,473,969

0.55

HarmanThe Company's chairman and CEO serves as director at Harman

1,943,263

0.20

Shenyang Neusoft Xikang Medical Systems
Co., Ltd.

The Company’s indirectly controlled subsidiary852,538

0.09

Wuhan Neusoft Information Technology Co.,Ltd.

The Company’s wholly owned subsidiary

758,310

0.08

AlpineShareholder of the Company

401,567

0.04

Tianjin Neusoft Ruidao Education Information
Technology Co., Ltd.

The Company's chairman and CEO serves as
Chairman and The Company's Vice Chairman
and President serves as director at this Company

92,1600.01

Neusoft Institute of Information

The Company's chairman and CEO serves as
President at this institute

9,425

0.001

177,196,802

17.881

Total

188

Relationship with the Company

Neusoft Annual Report 2013

13.1.9 There is no account receivable with terminated recognition due to transfer of financial assets in this period.
13.1.10 There is no fully terminated recognition of transferred account receivable in this period.
13.1.11 There is no securitization of accounts receivable as the subject.
13.2 Other receivables
13.2.1 Aging analysis
Year-end balanceBook balance

AgeAmountYear-begin balance

Provision for bad debts

Ratio (%)

AmountBook balance

Ratio (%)

AmountProvision for bad debts

Ratio (%)

AmountRatio (%)

Within one year(including one year)

152,948,747

73.35

1,529,488

1.00

109,647,648

73.87

1,096,476

1.00

1-2 years(including 2 years)

33,339,791

15.99

3,630,443

10.89

24,903,443

16.78

3,198,053

12.84

2-3 years(including 3 years)

12,126,529

5.82

1,026,754

8.47

8,078,019

5.44

1,632,217

20.21

3-5 years

7,704,316

3.69

971,390

12.61

5,040,999

3.40

574,102

11.39

Over 5 years

2,412,111

1.15

2,412,111

100.00760,5840.51

760,584

100.00

Total

208,531,494

100.009,570,186

148,430,693

100.007,261,432

13.2.2 Disclosure by typeYear-end balanceTypeYear-begin balance

Provision for bad
debts

Book balance

AmountRatio(%)

AmountRatio(%)

Account receivable with appropriation ofprovision for bad debts by portfolio

201,384,246

96.57

5,845,640

Account receivable with insignificant single amount and single appropriation ofprovision for bad debts

7,147,248

3.43

3,724,546

Total

208,531,494

100.009,570,186

Provision for bad
debts

Book balance

AmountRatio(%)

Amount

Ratio
(%)

2.90

138,858,944

93.55

3,006,672

2.17

52.11

9,571,749

6.45

4,254,760

44.45

148,430,693

100.007,261,432

Account receivable with significant single
amount and single appropriation of provision for bad debts

189

Neusoft Annual Report 2013

13.2.3 Other receivables with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balanceAge

Year-begin balanceBook balance
AmountBook balance

Provision forbad debts

Ratio (%)

AmountProvision forbad debts

Ratio (%)

Within 1 year

149,491,472

74.23

1,494,915

105,162,528

75.73

1,051,625

1-2 years

30,315,661

15.05

606,313

22,148,358

15.95

442,968

2-3 years

11,683,974

5.81

584,1996,545,055

4.71

327,253

3-5 years

7,481,028

3.71

748,1024,242,419

3.06

424,242Over 5 years

2,412,111

1.20

2,412,111

760,5840.55

760,584

201,384,246

100.005,845,640

138,858,944

100.003,006,672

Total

Other receivables with insignificant single amount but single appropriation of provision for bad debts

Other receivables

Book balance

Provision for bad
debts

Appropriation
ratio (%)

ReasonSuspense credit

3,895,273

2,311,897

59.35

Recoverable proportion is about
40%

Open credit

3,251,975

1,412,649

43.44

Recoverable proportion is about
60%

7,147,248

3,724,546

Total

13.2.4 Other receivables received in full or part amount in this period with appropriation of provision for bad debts in full amount orat large proportion in preceding year:

Other receivable

Suspense credit

Recovery reason

Basis ofconfirming
original
provision forbad debts

Accumulated
appropriated provision
for bad debts before
recoveryGreat effort was made towork off the receivables
during the reporting period

Aging analysis method

2,616,808

Recovery amount

2,586,028

Recoveredprovision for bad
debts

2,582,008

13.2.5 There is no other actual write-off receivable in this period
13.2.6 There is no other receivable from Shareholding Company with over 5% (including 5%) voting share of the Company

190

Neusoft Annual Report 2013

13.2.7 Top 5 debtors of other receivable:
Relationship with theCompany

DebtorBook balance

Age

Proportion to
the total (%)

Nature orcontent

Neusoft Group (Hainan) Co., Ltd.

The Company’s wholly owned
subsidiary

63,000,000

Within 1 year

30.21

Open credit

Neusoft Group (Tianjin) Co., Ltd.

The Company’s wholly owned
subsidiary

10,000,000

Within 1 year

4.80

Open credit

Hebei Anda Investment Consulting
Co., Ltd.

Non-related party

5,767,018

1-2 years

2.77

DepositXi’an Neusoft System Integration Co.,Ltd.

The Company’s wholly owned
subsidiary

5,481,926

Within 1 year

2.63

Open credit

Ningbo Traffic Management Bureau

Non-related party

5,104,753

Within 2 years

2.45

Deposit

89,353,697

Total

42.86

13.2.8 Other accounts receivable from related parties:
Company

Relationship with the Company

AmountProportion to the total (%)

Neusoft Group (Hainan) Co., Ltd.

The Company’s wholly owned subsidiary

63,000,000

30.21

Neusoft Group (Tianjin) Co., Ltd.

The Company’s wholly owned subsidiary

10,000,000

4.80

Xi'an Neusoft System Integration Co., Ltd.

The Company’s wholly owned subsidiary

5,481,926

2.63

Neusoft Group (Chengdu) Co., Ltd.

The Company’s wholly owned subsidiary

4,474,559

2.15

Hunan Neusoft Co., Ltd.

The Company’s wholly owned subsidiary

1,870,000

0.90

84,826,485

40.69

Total

13.2.9 There is no other receivable with terminated recognition due to transfer of financial assets in this period
13.2.10 There is no fully terminated recognition of transferred other receivables in this period
13.2.11 There is no securitization of other receivable as the subject in this period
13.2.12 There is no other government subsidies in this period
13.3 Other current assets
Item

Year-end balanceYear-begin balanceBank finance product (Note 1)

200,418,904

Entrusted loan for Neusoft Xikang Healthcare Technology Co., Ltd.

270,000,000

Deferred business tax

1,403,109

5,345,619

Deferred property tax

454,712276,220

1,634,456

83,199,624

473,911,181

88,821,463

Other (Note 2)
Total

Note 1: The Company purchased the finance products (that buyers should repay the loan and the accrued interest outright) frombank based on its financial situation. The principal and accrued interest has been recovered at the end of March 2014.
Note 2: This mainly refers to amortized heating expense.

191

192
74,349,381

50,764,621

339,396,361
50,000,000
12,000,000
12,000,000

20,000,000

32,502,468

25,000,000

387,082,539

1,000,000

Cost method

Cost method

Neusoft Group (Beijing) Co., Ltd.

Shandong Neusoft System IntegraCost methodtion Co., Ltd.

Cost method

Shenzhen Neusoft Co., Ltd.

Hunan Neusoft Co., Ltd.

Nanjing Neusoft System IntegraCost methodtion Co., Ltd.

Chengdu Neusoft System IntegraCost methodtion Co., Ltd.

Xi’ an Neusoft System IntegraCost methodtion Co., Ltd.

Wuhan Neusoft Information TechCost method
nology Co., Ltd.

Shenyang Neusoft Medical SysCost methodtems Co., Ltd.

Shenyang Zhuri Digital AdvertisCost method
ing Communications Co., Ltd.

Subtotal
5,000,000

6,354,871

9,051,000

Shenyang Toshiba Neusoft InforEquity method
mation Systems Co., Ltd.

1,000,000

387,082,539

25,000,000

32,502,468

20,000,000

12,000,000

12,000,000

50,000,000

339,396,361

5,000,000

12,950,050

15,000,000

Technology

Equity method

CataData

55,044,460

ShenyangCo., Ltd.

Investment

Year-beginbalance

26,713,621

Calculation
methodNokia Neusoft Commtech CompaEquity methodny

Investee

13.4.1 Details

13.4 Long-term equity investment

3,603,937-1,990,069-1,155,186

6,749,192

Increase/decrease

Year-endbalance

1,000,000

387,082,539

25,000,000

32,502,468

20,000,000

12,000,000

12,000,000

50,000,000

339,396,361

5,000,000

77,953,318

4,364,802

11,794,864

61,793,652

Equity ratio(%)

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00

40.00

16.67

46.00

Votingshare(%)

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00

40.00

16.67

46.00

Appro⁃
Difference
priatedbetweenprovision
Impair⁃equityment
for impair⁃ratio andprovision ment invotingthisshareperiodCashdividendin thisperiodInvestee

Unit: RMB

Neusoft Annual Report 2013

Cost method

Cost method

Neusoft Technology Co., Ltd.

Hangzhou Neusoft Co., Ltd.

500,000

94,180,610

1,000,000

Shenyang Neusoft Property ManCost method
agement Co., Ltd.

1,000,000

Neusoft Group (Chengdu) Co.,
Cost method
Ltd.

80,552,833

200,000,000

Neusoft Group (Shanghai) Co.,
Cost method
Ltd.

Liaoning Neusoft Venture Capital
Cost method
Investment Co., Ltd.

130,000,000

Neusoft Group (Guangzhou) Co.,
Cost method
Ltd.

50,000,000

20,000,000

Shenyang Neusoft System IntegraCost methodtion Co., Ltd.

Shenyang Neusoft Information
Cost method
Technology Services Co., Ltd.

9,454,820

Cost method

Beijing Lanruisoft Co., Ltd.

600,000,000

11,826,900

Cost method

Neusoft (Japan) Co., Ltd.

Cost method

20,000,000

Shanghai Neufashion Digital TechCost method
nology Co., Ltd.

Neusoft Group (Dalian) Co., Ltd.

8,500,000

Cost method

Hebei Neusoft Co., Ltd.

7,037,915

Cost method

12,416,895

Investment

Neusoft (Hong Kong) Co., Ltd.

Shenyang Neusoft Boan Software
Cost method
Co., Ltd.

InvesteeCalculation
method500,000

63,329,610

1,000,000

80,552,833

50,000,000

600,000,000

1,000,000

200,000,000

130,000,000

20,000,000

9,454,820

11,826,900

20,000,000

8,500,000

7,037,915

12,416,895

Year-beginbalance30,851,000-12,416,895

Increase/decrease

Year-endbalance

500,000

94,180,610

1,000,000

80,552,833

50,000,000

600,000,000

1,000,000

200,000,000

130,000,000

20,000,000

9,454,820

11,826,900

20,000,000

8,500,000

7,037,915

Equity ratio(%)

100.00100.00100.0060.00

100.00100.00100.00100.00100.00100.00100.00100.00100.0085.00

100.00

Votingshare(%)

100.00100.00100.0060.00

100.00100.00100.00100.00100.00100.00100.00100.00100.0085.00

100.00Appro⁃
Difference
priatedbetweenImpair⁃provision
equityment
for impair⁃ratio andprovision ment invotingthisshareperiodCashdividendin thisperiod40,000,000

138,000,000

1,248,275

1,943,991

InvesteeContinued table

Neusoft Annual Report 2013

193

194

Cost method

Cost method

Cost method

Neusoft Group (Wuxi) Co., Ltd.

Neusoft Group (Wuhu) Co., Ltd.

Guangdong Neufashion
Technology Co., Ltd.

20,000,000
10,000,000
20,000,000
20,000,000
30,000,000

Cost method

Cost method

Neusoft Group (Xuzhou) Co., Ltd.

Neusoft Group (Ningbo) Co., Ltd.

Neusoft Group (Karamay) Co., Ltd. Cost method

Neusoft Group (Changchun) Co.,
Cost method
Ltd.

20,000,000

Neusoft Group (Nanchang) Co.,
Cost method
Ltd.

Neusoft Group (Chongqing) Co.,
Cost method
Ltd.

10,000,000

Neusoft Group (Zhengzhou) Co.,
Cost method
Ltd.

259,661,004

10,390,275

Beijing LBS Social Insurance InforCost method
mation Technology Co., Ltd.

Cost method

5,844,950

Shenyang Neusoft Transportation
Cost method
Information Technology Co., Ltd.

Neusoft (Europe) Co., Ltd.

12,000,000

22,500,000

10,000,000

20,000,000

100,000,000

Cost method

Neusoft Group (Nanjing) Co., Ltd.

DigitalCost method

30,000,000

Neusoft Group (Tangshan) Co.,
Cost method
Ltd.

Neusoft Group (Hainan) Co., Ltd.

20,000,000

Investment

Cost method

Neusoft Group (Tianjin) Co., Ltd.

InvesteeCalculation
method259,661,004

20,000,000

10,000,000

11,265,778

3,535,000

12,000,000

22,500,000

10,000,000

20,000,000

100,000,000

30,000,000

20,000,000

Year-beginbalance

30,000,000

20,000,000

20,000,000

10,000,000

20,000,000

2,309,950-22,500,000

Increase/decrease

Year-endbalance

30,000,000

20,000,000

20,000,000

10,000,000

20,000,000

259,661,004

20,000,000

10,000,000

11,265,778

5,844,950

12,000,000

10,000,000

20,000,000

100,000,000

30,000,000

20,000,000

Equity ratio(%)

100.00100.00100.00100.00100.00100.00100.00100.0061.67

100.00100.00100.00100.00100.00100.00100.00

Votingshare(%)

100.00100.00100.00100.00100.00100.00100.00100.0061.67

100.00100.00100.00100.00100.00100.00100.00Appro⁃
Difference
priatedbetweenImpair⁃provision
equityfor impair⁃mentratio andprovision ment invotingthisshareperiodCashdividendin thisperiodInvesteeContinued table

Neusoft Annual Report 2013

Calculation
method3,600,000

3,000,000

3,000,000

Dalian Neusoft Institute of InforCost method
mation Technology

Chengdu Neusoft Institute of InCost method
formation

Nanhai Neusoft Institute of InforCost method
mation Technology

200,252,138

2,959,350,737 2,736,545,904

Total

Year-endbalance

2,936,798,042

2,858,844,724

24,937,106

3,000,000

114,101,440

Equity ratio(%)

13.4.2 There is no sales of long-term equity investment with the price obviously higher than its book value.

196,648,201

2,908,586,116 2,662,196,523

Subtotal-3,000,000-3,600,000-6,000,000-100,000-3,000,000

114,101,440

Increase/decrease

2,706

3,000,000

3,000,000

3,600,000

6,000,000

100,000

3,000,000

Year-beginbalance

24,934,400

Appconomy, Inc.

24,937,106

6,000,000

Dalian Neusoft Institute of InforCost method
mationCost method

100,000

Incorporated

Cost method

Torch

ShenyangCompany

3,000,000

Cost method

114,101,440

Investment

Dongzhong Commtech Co., Ltd.

Beijing Neusoft Viewhigh TechnolCost method
ogy Co., Ltd.

Investee

15.20

17.47

73.14

Voting
share
(%)

15.20

17.47

73.14

Cash
dividendin thisperiodInvestee

26,137,106 24,937,106 181,192,266

26,137,106 24,937,106 181,192,266

24,937,106 24,937,106

1,200,000

Appro⁃
Difference
priatedbetweenImpair⁃provision
equityment
for impair⁃ratio andprovision ment invotingthisshareperiodContinued table

Neusoft Annual Report 2013

195

Neusoft Annual Report 201313.5 Operating income and cost
13.5.1 Operating income
Item

Amount in this period

Primary business income

Amount in this period

4,327,149,932

3,705,696,757

4,327,149,932

3,705,696,757

Other business income
Total

13.5.2 Operating cost
Item

Amount in this period

Primary business cost

Amount in this period

3,447,244,092

2,694,231,947

3,447,244,092

2,694,231,947

Other business cost
Total

13.5.3 Operating income & cost (by industry)
Amount in this period

Amount in previous period

Item
Operating income

Operating cost

Operating income

Operating cost

System integration, sales of software
products, software customization andother labor services

4,251,904,543

3,422,995,127

3,630,054,355

2,671,162,273

Property management service and rental

75,245,389

24,248,965

75,642,402

23,069,674

Total

4,327,149,932

3,447,244,092

3,705,696,757

2,694,231,947

13.5.4 Primary business income and cost (by industry)
Amount in this period

Amount in this period

Item
IncomeCost

IncomeSystem integration, sales of software
products, software customization and other labor services

4,251,904,543

3,422,995,127

3,630,054,355

2,671,162,273

Property management service and rental

75,245,389

24,248,965

75,642,402

23,069,674

Total

4,327,149,932

3,447,244,092

3,705,696,757

2,694,231,947

13.5.5 Operating income from top 5 customers:
Customer

Proportion to the total (%)

SY NSIE

315,919,318

7.30

Toshiba Corporation

170,059,933

3.93

Neusoft (Japan) Co., Ltd.

159,884,226

3.69

China Unicom

142,962,542

3.30

China Telecom

115,880,706

2.68

904,706,725

20.90

Total

196

Operating income

Neusoft Annual Report 201313.6 Investment income
13.6.1 Overview
Item

Amount in this period

Amount in this period

Income from long-term equity investment calculated by cost method

181,192,266

95,553,231

Income from long-term equity investment calculated by equity method

3,603,937

1,448,885

Investment income from disposal of long-term equity investment-11,468,995

4,703,646

Investment income obtained during the holding period of held-to-maturity investment

10,389,223

14,569,151

Investment income obtained during the holding period of available-for-sale financial
assetsInvestment income from disposal of trading financial assets

10,165,745

Investment income from disposal of available-for-sale financial assets
Others
193,882,176

Total

116,274,913

13.6.2 Long-term equity investment income calculated by cost method:
Investment income accounts for above 5% of the total profits or below 5% but ranking at the top 5:
Amount inprevious period

InvesteeAmount in this period

Neusoft Group (Dalian) Co., Ltd.

138,000,000

Shenyang Neusoft Information Technology Services
Co., Ltd.

40,000,000

79,400,000

Cash dividend received by the Company

Hebei Neusoft Co., Ltd.

1,943,991

1,874,427

Cash dividend received by the Company

Neusoft (Japan) Co., Ltd.

1,248,275

1,439,855

Cash dividend received by the Company

Cash dividend received by the Company

Shenyang Zhuri Digital Advertising Communications
Co., Ltd.

7,053,235

Liaoning Neusoft Venture Capital Investment Co., Ltd.

5,785,714

Total

181,192,266

Cause of change

95,553,231

13.6.3 Long-term equity investment income calculated by equity method：
Investment income accounts for above 5% of the total profits or below 5% but ranking at the top 3:
InvesteeAmount in this period

Amount inprevious period

Cause of change

Nokia Neusoft

6,749,192

4,134,373

Change in net profit of investee

Shenyang CataData Technology Co., Ltd.

-1,155,186-885,611

Change in net profit of investee

Toshiba Neusoft-1,990,069-1,799,877

Change in net profit of investee

3,603,937

1,448,885

Total

197

Neusoft Annual Report 201313.7 Supplementary to cash flow statement

Item

Amount in this period

Amount in previous
period

1. The net profit is converted into cash flow from operating activities
Net profit

348,501,524

470,480,907

Add: Provision for asset impairment

63,254,583

33,446,174

Depreciation of fixed assets, oil & gas assets and productive biological assets

54,446,076

53,126,234

Amortization of intangible asset

6,993,367

7,544,879

Amortization of long-term deferred expenses

5,259,050

3,955,617-11,021,027-183,945

Loss on change of fair value “-”for(
profit)-5,010,630-7,645,112

Financial expenses “-”for(
profit)52,075,280

53,938,420

Investment loss “-”for(
profit)-193,882,176-116,274,913

Decrease of deferred income tax assets (“-”for increase)-11,622,665-12,165,049

501,063

747,455

Decrease of inventories (“-”for increase-96,929,818-164,534,714

Decrease of operating accounts receivable (“-”for increase)-477,264,459

68,368,670

Increase of operating accounts payable (“-”for decrease)581,201,897-40,356,758

316,502,065

350,447,865

Year-end cash balance

1,199,125,558

1,047,858,225

Less: Year-begin cash balance

1,047,858,225

831,393,669

151,267,333

216,464,556

Loss on disposal of fixed assets, intangible asset and other long-lived assets “-”for(
profit)Abandonment loss of fixed assets “-”(for profit)

Increase of deferred income tax liabilities (“-”for decrease)

OthersNet value of cash flow from operating activities
2. Significant investment and financing activities not relating to cash receipt and disbursement
Debt conversion to equity
Convertible bonds due within one year
Leased fixed assets from financing
3. Change in cash and cash equivalent

Add: Year-end cash equivalent balanceLess: Year-begin cash equivalent balance
Net increase in cash and cash equivalents

13.8 There is no asset and liability accounted through fair value under reverse acquisition in this period

198

Neusoft Annual Report 2013

Note 14 Supplementary Information(Expressed in Renminbi unless otherwise indicated)14.1 Current non-recurring profits and losses
Item
Profit/loss on disposal of non-current assets

Amount in this period

Remarks

21,676,892

Note 1140,953,065

Note 2

27,498,475

Note 3

Tax refund & exemption through examination and approval in excess of authority or without official approval document
Government subsidy included in current profits and losses (excluding the government subsidy highly associated with corporate business and issued by certain
amount based on national standards)
Payment from non-financial businesses for use of funds recorded in current profit and loss
Revenue from the difference by which the investment cost for acquiring subsidiaries, associates and joint ventures is less than fair value of attributable net assets
Gains/losses from exchange of non-monetary assets
Profit or loss from entrusted investment or assets management
Appropriation of provision for asset impairment caused by force majeure suchas natural disaster
Profit and loss on debt restructuring
Expenses for business restructuring, such as staffing and integration expenses
Profit and loss on transactions with obvious unfair transaction price
Subsidiaries’year-to-date net profit/loss arising from business combination under common control
Profit and loss arising from contingent items which are not related to the Company's normal operations
Except for effective hedging business related to normal operations, profit andloss on change in fair value arising from holding trading financial assets/liabilities, and investment income from disposal of trading financial assets/liabilities
and available-for-sale financial assets
Impairment provision for account receivable with separate impairment test
which is reversed backProfit and loss on entrusted loans
Profit and loss on change in fair value of investment properties with subsequent
measurement by fair value
Effect by one-off adjustment on current profits and losses according to relevant
tax and accounting laws and regulations
Trusteeship revenue from trust operation
Other non-operating income and expenditure

4,684,571

Other profit and loss items consistent with the definition of non-recurring profit
and loss

18,364,615

Note 4199

Neusoft Annual Report 2013

Continued table
Item

Amount in this period

Amount effected by minority interest

Remarks-965,077

Amount effected by income tax-16,946,262
195,266,279

Total

Note1: This is mainly brought by transfer of equity in Guangdong Neufashion Digital Technology Co., Ltd.
Note 2: This mainly refers to government subsidy for science research projects and investment subsidy.
Note 3: This mainly involves with change in fair value and disposal of trading financial assets and liabilities.
Note 4: This mainly refers to the investment income from the re-estimation on the fair value of the 49% equity in Neusoft-Philips on
the acquisition date.
14.2 Net assets’rate of return and EPS:
Weighted
average of returnof net assets (%)

Profits in this reporting period

EPS (Yuan)
Basic EPS

Diluted EPS

Net profit attributable to the shareholders of the parent company

7.88

0.33

0.33

Net profit attributable to the shareholders of the parent company after deducting non-recurring profit and loss

4.14

0.18

0.18

14.3 Main financial items with abnormal change and reasonsYear-begin balance(or amount of previous
year)

Change ratio (%)

32,249,913

14,917,183

116.19(1)

1,890,363,626

1,407,087,344

34.35

(2)

Prepayments

227,915,556

118,441,067

92.43

(3)

Other current assets

236,069,531

14,290,515

1,551.93(4)

Available-for-sale financial assets

26,594,230

Item

Trading financial assets
Accounts receivable

Year-end balance(or amount in thisperiod）

Held-to-maturity investment(5)403,159,918-100.00(6)

Long-term equity investment

177,229,331

390,074,357-54.57(7)

Construction in progress

276,749,271

195,555,957

41.52

(8)

Intangible asset

631,665,525

389,276,138

62.27

(9)

Long-term deferred expenses

103,494,600

72,063,173

43.62

(10)

Short-term borrowings

209,139,575

511,312,055-59.10(11)

Notes payable

191,495,518

107,630,675

77.92

(12)

Non-current liabilities due within one year

469,158,667(13)

Other current liabilities

3,664,444

120,7432,934.91(14)

Long-term borrowings

554,000,000

84,000,000

559.52(15)

403,658,667-100.00(16)

Bonds payable

200

ReasonNeusoft Annual Report 2013

Continued tableYear-begin balance(or amount of previous
year)

Change ratio (%)

Reason7,214,022

3,738,493

92.97

(17)

Converted difference in foreign currency statements-73,859,185-54,261,434-36.12(18)

Minority interest

186,301,325

125,641,275

48.28

(19)

Operating income

7,452,753,233

6,960,195,011

7.08

(20)

Operating cost

5,308,680,595

4,729,720,928

12.24

(21)

Business tax and surtaxes

67,218,955

111,108,386-39.50(22)

Administrative expenses

1,173,997,714

985,944,947

19.07

(23)

Financial expenses

39,185,293

78,565,067-50.12(24)

Impairment loss on assets

67,992,054

136,632,109-50.24(25)

Non-operating income

207,129,411

139,552,127

48.42

(26)

Non-operating expense

3,366,765

6,381,048-47.24(27)

Income tax expense

60,598,760

106,899,561-43.31(28)

Item

Year-end balance(or amount in thisperiod）

Deferred tax liabilities

Details of changes:(1) This item increased by RMB 17.33 million Yuan, an increase of 116.19% over the year beginning, which is mainly caused by theCompany’s foreign exchange forward contracts. At the end of this reporting period, foreign exchange forward contracts were calculated
based on exchange rate quoted in the open market by different currencies; estimated floating income increase was included in P&L fromchange in fair value for increasing trading financial assets.
(2) This item increases by RMB 483.28 million Yuan, an increase of 34.35% over the year beginning, which is mainly caused by theincrease of accounts receivable from software and system integration business.
(3) This item increases by RMB 109.47 million Yuan, an increase of 92.43% over the year beginning, which is mainly caused by theincrease of contracted prepayment for main suppliers.
(4) This item increases by RMB 221.78 million Yuan, an increase of 1,551.93% over the year beginning, which is mainly caused by
the reclassification of bank finance products purchased by the Company and its subsidiaries to other current assets.
(5) This item increases by RMB 26.59 million Yuan over the year beginning, which is mainly caused by the accounting of stocks ofother listed companies purchased by Liaoning Neusoft Venture Capital Investment Co., Ltd. as available-for-sale financial assets.
(6) This item reduces by RMB 403.16 million Yuan, a decrease of 100.00% over the year beginning, which is mainly caused by the recovery of the bank finance products purchased by the Company and its subsidiaries.
(7) This item reduces by RMB 212.85 million Yuan, a decrease of 54.57% over the year beginning, which is mainly caused by the acquisition of 25% equity in Neusoft-Philips by Neusoft Medical, which holds 74% equity in total after the acquisition. Neusoft-Philips was
included in the consolidated financial statements since the end of 2013. The change of the consolidation results in the decrease oflong-term equity investment by equity method by RMB 188.17 million Yuan.
(8) This item increases by RMB 81.19 million Yuan, an increase of 41.52% over the year beginning, which is mainly caused by the increase of investment in the factory and office buildings in the cloud base and additional input in Beijing Software Park project.
(9) This item increases by RMB 242.39 million Yuan, an increase of 62.27% over the year beginning, which is mainly caused by the
new right to use the land for Beijing Software Park.
(10) This item increases by RMB 31.43 million Yuan, an increase of 43.62%, which is mainly caused by increase of decoration expense.

201

Neusoft Annual Report 2013(11) This item reduces by RMB 302.17 million Yuan, a decrease of 59.10% over the year beginning, which is mainly caused by thepayment for short-term borrowings due in this period.
(12) This item increases by RMB 83.86 million Yuan, an increase of 77.92%, which is mainly caused by contracted settlement with
suppliers by notes payable.
(13) This item increases by RMB 469.16 million Yuan over the year beginning, which is mainly caused by the reclassification of theCompany’s medium-term note with RMB 400 million Yuan due within one year, which was included in the bonds payable item formerly.
(14) This item increases by RMB 3.54 million Yuan, an increase of 2,934.91%, which is mainly caused by the consolidation of Neusoft-Philips since the end of 2013.
(15) This item increases by RMB 470 million Yuan, an increase of 559.52%, which is mainly caused by the new long-term borrowing
with 500 million Yuan in this period.
(16) This item reduces by RMB 403.66 million Yuan, a decrease of 100.00% over the year beginning, which is mainly caused by thereclassification of the Company’s medium-term note due within one year.
(17) This item increases by RMB 3.48 million Yuan, an increase of 92.97%, which is mainly caused by the increase of taxable temporary difference arising from change in fair value.
(18) This item reduces by RMB 19.6 million Yuan, a decrease of 36.12% over the year beginning, which is mainly caused by the fluctuation of exchange rate.
(19) This item increases by RMB 60.66 million Yuan, an increase of 48.28% over the year beginning, which is mainly caused by the
consolidation of Neusoft-Philips since the end of 2013.
(20) This item increases by RMB 492.56 million Yuan, an increase of 7.08% over the same period of the previous year, which is mainly caused by the increase of income from software and system integration business.
(21) This item increases by RMB 578.96 million Yuan, an increase of 12.24% over the same period of the previous year, which ismainly caused by the rise in both operating income and labor cost during the reporting period.
(22) This item reduces by RMB 43.89 million Yuan, a decrease of 39.50% over the same period of the previous year, which is mainly
caused by the nationwide pilot change in collection of business tax into VAT since August 1st , 2013, which the Company and its subsi⁃
diaries were subject to.
(23) This item increases by RMB 188.05 million Yuan, an increase of 19.07% over the same period of the previous year, which ismainly caused by the rise in labor cost and R&D expenses.
(24) This item reduces by RMB 39.38 million Yuan, a decrease of 50.12% over the same period of the previous year, which is mainly
caused by the change in loan structure and P&L on exchange.
(25) This item reduces by RMB 68.64 million Yuan, a decrease of 50.24% over the same period of the previous year, which is mainly
caused by appropriated impairment loss on goodwill with an amount of RMB 86.43 million Yuan.
(26) This item increases by RMB 67.58 million Yuan, an increase of 48.42% over the same period of the previous year, which is mainly caused by the increase of government subsidy included in current P&L and the VAT refund.
(27) This item reduces by RMB 3.01 million Yuan, a decrease of 47.24% over the same period of the previous year, which is mainly
caused by the decrease of loss on disposal of non-current assets.
(28) This item reduces by RMB 46.3 million Yuan, a decrease of 43.31% over the same period of the previous year, which is mainly
caused by the transfer of equity in Dalian Neusoft Park Industrial Development Co., Ltd. by Shenyang Neusoft Information Technology Services Co., Ltd. The taxable income tax for this transfer is RMB 18.92 million Yuan; and the decrease of taxable income amount in the
Company and its subsidiaries that make profits in this reporting period.
Note 15 Authorization of Publication of Financial Statements
The Board of Directors has authorized to publicize the financial statements on March 26th, 2014.
Neusoft Corporation
Date: March 26th, 2014202

Neusoft Annual Report 2013

(XI) Documents Available for Inspection(1) Annual Report 2013 with signature of Chairman Liu Jiren and seal of the Company;(2) Financial Report with signatures of Chairman Liu Jiren, Senior VP & CFO Zhang Xiao’ou and Director of Accounting Department Shi Peijun and seal of the Company;(3) The original Auditing Report with the seal of the CPA firm and the signature and seal of the certified accountants;(4) All the original documents and announcements disclosed in newspapers or magazines designated by CSRC.

Neusoft Corporation
Chairman: Liu Jiren
March 26th, 2014203

Neusoft Annual Report 2013

Board of Directors’Confirmation on Annual Report 2013of Neusoft Corporation
In accordance with the Securities Law of the People’s Republic of China and relevant provisions of CSRC, we hereby
represent and warrant that the Annual report 2013 contains no false representations, misleading statements or material
omissions, and will be individually and jointly reliable for the authenticity, accuracy and integrity of the contents.
Signatures of Board of Directors:
Liu Jiren, Wang Yongfeng, Seizo Ishiguro, Klaus Michael Zimmer, Akira Kasano,Chen Ximin, Fang Hongxing, Xue Lan, Gao Wen
March 26th, 2014204

Neusoft Annual Report 2013

Senior Managements’Confirmation on Annual Report 2013of Neusoft Corporation
In accordance with the Securities Law of the People’s Republic of China and relevant provisions of CSRC, we hereby
represent and warrant that the Annual report 2013 contains no false representations, misleading statements or material
omissions, and will be individually and jointly reliable for the authenticity, accuracy and integrity of the contents.
Signatures of senior managements:
Liu Jiren, Wang Yongfeng, Chen Ximin, Lu Zhaoxia, Zhang Xia, Wang Jingxi,
Zhang Xiao’ou, Li Jun, Klaus Michael Zimmer, Wang Nan
March 26th, 2014205