Neusoft Corporation
Annual Report 2012
SSE Stock Code：600718

Table of Contents
Important Notes

P4

Ⅰ Definitions and Significant Risk Warning

P5

Ⅱ Company Profile

P6

Ⅲ Financial and Operating Highlights

P9

Ⅳ Report of the Board of Directors

P12

Ⅴ Important Issues

P47

Ⅵ Changes in Equity and Shareholders

P58

Ⅶ Directors, supervisors and Senior management

P65

Ⅷ Corporate Governance

P77

Ⅸ Internal Control

P84

Ⅹ Financial ReportP85

Ⅺ Documents Available For Inspection

P231

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Neusoft Corporation Annual Report 20122012 年是东软步入新征程的元年，我们以创新和业务模式的转型为推动力，努力推动解决方案业务向更深入的领域发展，继续执行全球化发展策略，持续加强卓越运营管理，将公司的业务定位与社会发
展的需要和趋势紧密结合，推动了国内和国际业务的持续稳步增长。

对于未来，我们需要的是更强的适应市场环境变化的能力和不断创造新竞争能力的行动。新技术的不断涌现和发展正在加速技术生态
系统的演变，社会变革对创新的商业模式产生了必然的需求，技术也
越来越通过各种创新的商业模式和关联产品才能实现价值，而技术、
商业模式、应用环境、跨越行业的知识与业务的交融将产生十分复杂
的、多彩的发展机会和空间。因此，创新和转型将成为东软未来持续很长时间的主题和行动。面对不断发展和变化的社会需求，不断改善
和提高的行业应用，以及人们执著于对改变生活方式的追求，东软将
更加致力于将技术与变化的商业模式相结合，与不断发展的社会需求
相结合，以转型拉动技术研发、商业模式、全球资源配置的创新，提升可持续发展能力，寻找变革时代背景下的成功发展之路，推动公司
向全球优秀的创新型企业转变。

董事长刘积仁 博士Neusoft Corporation Annual Report 20122012 年，公司以创造客户价值为中心，加强新业务的策划与开
拓，实施积极智慧的市场营销战略，围绕客户需求，加大销售力量部
署和客户覆盖，推动公司整体业务规模的快速增长。同时，公司加强领导力发展，进一步推进卓越运营改善计划，加强支撑业务发展的组
织服务体系建设，提升公司整体管理水平和运营效率，保证了公司业
务的可持续发展。
2013 年，公司将继续执行创新和全球化发展策略，加强核心业务能力构建，以商业模式创新和知识资产驱动业务增长，加快推进卓越运营改善计划，以实现公司业务可持续、规模化发展。加快推进卓越运营改善计划，完善公司内部控制流程和制度，持续构筑支撑公司全球化发展的安全、可靠、高效率的组织级服务支撑体系。在国内市
场，提升市场营销和组织能力，巩固和加强市场领先竞争地位，针对
新兴重点机会统一策划和行动，加强多业务资源整合，以获取面向“智慧城市”等新领域的市场机会。在国际市场，持续加强市场前瞻性分析、业务规划、上游工程及用户体验设计能力，深度发展战略客户
与合作伙伴，实现核心业务的全球化布局，保证业务持续成长。

总裁
王勇峰

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Neusoft Corporation Annual Report 2012

Important Notes
The Board of Directors, Board of Supervisors, directors and supervisors as well as the senior management hereby represent and warrant that the Report contains no false representations, misleading statements to material omissions, and shall be individually and jointly reliable for the authenticity, accuracy and integrity of the contents.
BDO CHINA SHU LUN PAN Certified Public Accountants LLP has issued a standard and unqualified auditor’sreport.
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 statementsin this annual report.
This report is primarily about Neusoft Corporation “Neusoft”or(the“Company”), including any and/or all
branches and subsidiaries of the Company.

Neusoft Corporation Annual Report 2012

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.

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Neusoft Corporation Annual Report 2012

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 preparation
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 Corporation Annual Report 2012

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. 11, Lane 3, Wenhua Road, Heping District, Shenyang, PR China.
2.6.3 Alteration of main business since listing
Focusing on software technologies, the Company provides industry solutions, software products, platforms
and services 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 of Northeastern 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 University of China. After completion of the transfer, Neusoft held 27.64% equity in the Company, becoming the larg-

78Neusoft Corporation Annual Report 2012

est 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 controlling shareholder.
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%.

2.7 CPA firm
Name
CPA firm Address of office

BDO CHINA SHU LUN PAN Certified Public Accountants LLP
F4, New Huangpu Financial Plaza, No.61, East Nanjing Road, Shanghai 201804, PR China

Certified Public Accountants Li Chen, Jiang LijunNeusoft Corporation Annual Report 2012

Ⅲ Financial and Operating Highlights
3.1 Key accounting data and financial indicators for the last three years as at
the end of the reporting period
3.1.1 Key accounting data
Unit: RMB Yuan
Key accounting data
Operating income

2012Year-on-yearchange (%)

2011

2010

6,960,195,011

5,751,249,330

21.02

4,937,696,440

Net profit attributable to shareholdersof listed company

456,313,926

417,068,980

9.41

484,675,178

Net profit attributable to shareholdersof listed company after deducting
non-recurring Gains/losses

319,537,015

286,807,569

11.41

357,195,751

Net cash flow from operating activities

317,235,522

300,196,604

5.68

381,889,530

Key accounting data

Year-end 2012

Year-on-yearchangeYear-end 2011

Year-end 2010

Net assets attributable to shareholdersof listed company

5,119,337,733

4,674,677,555

9.51

4,280,208,312

Total assets

8,501,433,333

7,925,285,114

7.27

6,858,879,805

3.1.2 Key financial data
Unit: RMB Yuan
Key financial indicators

2012

2011

Year-on-year change (%)

2010

Basic earnings per share (RMB Yuan/share)

0.37

0.34

9.41

0.39

Diluted earnings per share(RMB Yuan/share)

0.37

0.34

9.41

0.39

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

0.26

0.23

11.41

0.29

Average weighted rate of return on equity

9.32

9.34

Decline by 0.02 percent

11.67

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

6.53

6.42

Increased by 0.11 percent

8.60

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

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Neusoft Corporation Annual Report 2012

3.2 Non-recurring gains/losses
Unit: RMB Yuan
Amount in2012

RemarkAmount in2011

Amount in2010

54,744,245

Investment income from transfer
of equity in Neusoft Park Industrial Development Co., Ltd. by
Shenyang Neusoft Information
Technology Services Co., Ltd.

18,180,599

43,302,916

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 regulationsof China

94,363,121

Government grants for research
projects and various government
funds and subsidiaries recordedin the current profit and loss

105,173,354

109,335,552

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

9,946,738

9,897,547

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

2,354,443

Non-operating income comingfrom the difference between fairvalues of net assets of invested
company, Shenyang Neusoft System Integration Engineering Co.,
Ltd. and investment capital—

26,753

Gains/losses from exchange of non-monetary assets——

24,934,400—

Reversal of provision for depreciation ofreceivables measured separately

—

—

—

6,600,000

14,224,580

The loss and gain of held-for-trading financial assets and fair valueof held-for-trading financial liabilities

950,557-694,314

653,891—

1,313,927-1,945,474——

1,221,899—-30,432,456—-20,258,444-17,278,655

869,087—-11,201,619-21,764,898

136,776,911—

130,261,411

127,479,427

Non-recurring gains/losses

Gain/loss on disposal of non-current assets

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
Other non-operating income/expenses
Other non-recurring Gains/losses
Income tax consequences
Minority shareholders’interests
Total

Neusoft Corporation Annual Report 2012

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

ChangeTrading financial assets

863,170

14,917,183

14,054,013

12,648,612

Held-for-trading financial liabilities

170,567—-170,567

153,510———

12,802,122

Item

Total

Influence on current profit of thereporting period (after tax)

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Neusoft Corporation Annual Report 2012

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 compliance with the development strategy of innovation and globalization, the Company’s business has
seen a great-leap-forward development in 2012. Focusing on creating customer value, the Company strengthened
new business planning and development, promoted business growth through business model innovation. Besides,
the Company furthered the operational excellence plan, enhanced supporting organization service construction forimproving management and operational efficiency, ensuring sustainable development of the Company’s business.
During the reporting period, the Company achieved operating income of RMB 6,960,200,000 Yuan, a 21.02%
year-on-year increase, net profit (attributable to shareholders of listed companies) of RMB 456,310,000 Yuan, earnings per share of RMB 0.37 Yuan, 9.41% year-on-year increase, net profit deducting non-recurring gains/losses of
RMB 319,540,000 Yuan, an 11.41% year-on-year increase.
During the reporting period, the Company actively carried out marketing strategy based on customer demands, increased the sales force and customer coverage and enhanced branding and marketing planning. These efforts led to a fast growth of business scale. The Company also focused on the development of leadership and further implemented the salary improvement plan to increase competitive power in the field of employee compensation. In addition, the Company reinforced the integration and adjustment of internal resources to optimize organization structure, started up project plan/budget/accounting management, promoted simplification of management
process and authority decentralization to increase operational efficiency. Investment in cloud computing, the Internet of Things, medical system, automotive information technology and business basic platform was increased, andgreat stride was made in Xikang cloud platform and application R&D. To grasp the opportunity of Smart City construction implemented by China, the Company integrated its advantages in telecom, transportation, healthcare,government and enterprise informationization, creating comprehensive solutions catering to Smart City and laying
a good foundation for future business development. In terms of innovation and business transformation, the Company integrated a wealth of experience in automotive electronics with its edges in China’s market to expand partnerships with automobile manufacturers in China, such as Qoros Auto Co., Ltd., creating new market opportunities. In the space of healthcare service, the Company adopted an online-to-offline model and created strategic partnerships on“Healthy City”program with fourteen cities, including Shenyang, Luoyang, and Foshan etc.
In terms of solution business in China’s market, the Company strengthened existing business and the market

Neusoft Corporation Annual Report 2012

competitive edges, accelerating business development in solutions for government, medical IT, energy resource,
and finance. In addition, the Company advanced expansion into business with operators, municipal commercial
banks, media, and other emerging business sectors for new market opportunities.
With respect to international business, the Company further improved its competence in major services to ensure robust growth. In the field of smart terminal, confronting with the adjustment of industry structure and business decline from key customers, the Company strengthened its ability in planning, consulting and system design,
enhanced cooperation with chip manufacturers, application service suppliers to maintain sustainable developmentof the business. In the fields of automotive electronics, intelligent family, and IT products, the Company attempted
innovation on business model, by fully identifying customers’demands, enhanced cooperation with key customers,
achieving large-scale growth in these fields.
In the space of medical systems, the Company has been increasing input in research and development. In
April 2012, NeuViz64 multi-slice CT scanner was put into the market and received active feedback and satisfying
sales result, exerting an active influence on future development of medical systems. In the domestic market, theCompany promoted marketing layout and channel construction for product lineup, and increased repurchase rateof regular customers. High-profile customer service has been developing smoothly, further consolidating competitive power of the core products. The Company emphasized on important regions of international market. Especially, great breakthroughs in sales in European market have been made.
During the reporting period, Neusoft’s brand image has been widely recognized with a number of honors andawards. Remarkably, the Company was included in the“2012 Global Outsourcing 100”by IAOP for the sixth timeand listed on the“2012 BCG 50 Chinese Global Challengers”sponsored by Boston Consulting Group, and won“2012 Asian Most Admired Knowledge Enterprises (MAKE) Award”jointly sponsored by Teleos and The KNOW
Network, on account of its development in knowledge-based products, services and solutions. Besides, it also won
the“Award of China Software and Information Service Industry Leaders over the Past Decade”at the China International Software & Information Service Fair 2012,“China Excellent Software Enterprises 2012”at the 16th China
International Software Exhibition as well as“Top 100 Listed Companies by Environmental Responsibility”organizedby China Listed Company Environmental Responsibility Investigating Committee.
4.1.1.2 Business Operations(1) Software and system integration
During the reporting period, the software and system integration services developed at a good pace, generating an income (after deducting inter-industry off-set) of RMB 5,975,050,000 Yuan, increasing by 23.69% over thesame period of the previous year and accounting for 85.85% of the Company’s total income.

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Neusoft Corporation Annual Report 2012

In the field of e-government, the Company further strengthened its leadership in human resource and social
security industry. The model of fixed-place based customer service was spread across China; Cooperation with province and city-level social security institutions, including Guangzhou, Liaoning and Tianjin Municipal Human Resource and Social Security Bureau. For land and resource and housing construction, the Company signed cooperation agreements with the Ministry of Housing and Urban-Rural Development of the People’s Republic of China, Department of Housing and Urban-Rural Development of Shanxi, Real Estate Trading and Haimen Registration Center,making a great progress in developing high-end customers and core business. In the public security field, the Company gained new customers such as Liaoning and Hunan Provincial Public Security Department. Moreover, the e-police system was put into operation in Ningbo. In the field of agricultural product traceability, the Company undertook the construction of agricultural product tracking systems in Shijiazhuang and Urumchi.
In the field of telecom industry, the Company strengthened its cooperation with the Ministry of Industry andInformation Technology of the People’s Republic of China, increased business coverage with the top three operators in China, and fulfilled fast development in BSS (business-supported system), management information system,
and BI (business intelligence). The Company also signed contracts with China Unicom Jiangxi Branch, Sichuan
Branch, China Telecom Hebei Branch and Liaoning Branch. Besides, it maintained close cooperation with China Mobile in cloud computing, information security, Internet of Things Management Platform (M2M), location service andnetwork management complaint platform.
In the public health and medical IT industry, the Company well maintained its leadership in the market. It won
health projects in Yulin, Baoji, Wuhu, etc. In medical IT field, the Company further improved the electronic medical
record-centered hospital information system and developed high-value customers actively. Neusoft’s electronic medical record system adopted by Shengjing Hospital reached Level Six of application of electronic medical record prescribed by the Ministry of Health and the passed the Evaluation of America HIMSS Analytics Electronic Medical Record Adoption Mode-Level Six, receiving high recognition from the industry. In the field of healthcare services, theCompany continued to promote product optimization and upgrade, finished product upgrade of a series of healthcare products including healthcare watch and healthcare terminal and launched healthcare apps such as Xikang Diet. Close cooperation with enterprises and public institutions in the fields of real estate, agriculture, tourism andmedical industry was made to accelerate the deployment of core markets. The construction of Healthy City plan
was promoted, further expanding the influence of Xikang brand.
In the energy industry, the Company completed the SG186 related projects of the State Grid and undertook
the State Grid’s marketing supervision and monitoring projects in nine provinces and customer service center projects in five provinces. It gained a number of customers, including Beijing Electronic Power Company and China

Neusoft Corporation Annual Report 2012

Southern Power Grid. In the field of petroleum and petrochemicals, the Company established partnership with Petroleum Control Center of CNPC, Hohhot Petrochemical Company, Huabei Petrochemical Company etc. In thefields of coal and power generation, the Company won customers including Shenhua Group Corporation Limited,
China Huaneng Group etc.
In the aspects of enterprise informationization and e-commerce business, the Company expanded thecoverage of high-quality customers through the cooperation China Railway Group Limited, China National Gold
Group Corporation, Rocar etc. In the tobacco industry, the Company won bids for the projects in Shandong, Zhejiang,
Hebei, Jiangsu and Hunan, maintaining a leading position in the market. With respect to ERP implementation andconsulting service, the Company continuously improved project implementation and service level, deepened thecooperation with regular customers such as Haier, China Minmetals Corporation, JiuQun Ircon & Steel (Group) Co.,
Ltd. and gained new customers such as CNR Changchun Railway Vehicles Co., Ltd., CITIC Dicastal Co., Ltd.
In the financial industry, the Company enhanced service planning for key customers including ICBC, Industrial
Bank and CGB to increase business scale. The Company provided service for core operations of many high-end customers such as PICC Property and Casualty Company Limited, CPIC, China Financial Futures Exchange and gained
new customers including China Merchants Bank, China CITIC Bank, Chang An Property and Liability Insurance.
Ltd., and China Continent Property & Casualty Insurance Company Ltd.
In the field of education, the Company has achieved great breakthroughs in cloud computing application. It
launched innovative solutions and products, such as cloud class and cloud classroom and won the bids for Zhuji
Education Cloud Project and education cloud program sponsored by China Mobile Hubei Branch, which are being
executed smoothly.
In terms of transportation, the Company developed new customers including Air China, China Eastern and
Shenzhen Airlines, undertook transportation projects for China CNR Corporation Limited, Shenyang Metro Co.,
Ltd. and rail transit projects in Beijing, Zhengzhou and Wuxi, etc.
In the field of software products, the Company enhanced the R&D of new products to improve competitive
power and promoted the construction of sales channel. In the network security field, the Company signed contracts with the Ministry of Finance of the People’s Republic of China, Ministry of the Industry and Information
Technology of the People’s Republic of China and the State Grid Corporation, further consolidating its market
share. In the E-HR field, the Company developed new cooperation with the Gezhou Dam and Air China Cargo. In
the space of archive management, the Company established partnerships with China North Industries Group Corporation, China Energy Conservation and Environmental Protection Group.
In the BPO field, with smooth expansion of the IT infrastructure construction and service, the Company gained

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Neusoft Corporation Annual Report 2012

more high-quality customers. It increased the input in IT service for medium-and small-sized enterprises, and expanded markets especially in Tianjin, Shenyang, Dalian etc, laying a good foundation for business development in
the future.
With respect to international software, the Company strengthened business development and established cooperation with more partners to fulfill business growth. In Japan, the Company helped important customers suchas Alpine and DENSO maintain a fast growth and furthered the partnerships with Sony and Toshiba. In Europeanand American markets, the Company strengthened cooperation with Intel, Harman, and established partnershipwith high-end customers such as Amazon. During the reporting period, income from international software business was 346,690,000 US dollars, an 11.94% year-on-year increase, accounting for 31.42% of the total businessincome.
(2) Medical systems
In 2012, the Company deepened marketing driving force for key business, and expanded the coverage on
high-end customers. Its new product NeuViz64 multi-slice CT scanner saw good sales performance and has been
approved by FDA, CE and SFDA, laying a good foundation for the development of international market. Besides,
the Company continued to enhance construction of service system, customer satisfaction and service business proportion. During the reporting period, the income from medical systems amounted to RMB 893,620,000 Yuan, an
11.22% year-on-year increase, accounting for 12.84% of the total business income. Income from export service
reached 25,740,000 US dollars, a 1.00% year-on-year increase.
4.1.1.3 Problems and challenges in operation and management
In 2012, with continuous expansion of business scale, the Company encountered many problems and challenges.
As the slow economic recovery and repetitive financial crisis in Europe, developed economies sunk into downturn or economic recession. Emerging markets and economies also faced development dilemma at different level.
In addition, a bigger fluctuation of exchange rate of RMB posed challenges for the Company’s business development. Along with slowdown of China’s economic growth, the potential of inflation still exist. Moreover, the increase of cost of human resource resulted in reduction or delay of IT investment by enterprises, thus intensifying
market competition.
In such a context, the Company strengthened its leading position in the markets and businesses that havebeen well developed, promoted the depth and width of customer coverage, and enhanced the ability of businessdevelopment driven by technology and consulting service. Efforts were also made in reinforcing market expansion
into Japan, Europe and the United States, accelerating construction of overall market expansion plan and distributed delivery organizations to achieve large-scale business development. Besides, the Company furthered the analysis

Neusoft Corporation Annual Report 2012

and research on the fluctuation of exchange rate, selected appropriate currency for quotation, and took proper
methods to avoid exchange risk, and negotiated with customers on collective responsibility for the risk, aggressively
reducing the disadvantages to the Company. For the internal aspects, the Company enhanced the construction ofOrganizational capability and leadership development, further carried out operational excellence plan and employeecompensation reform program, improved internal control process and regulations. Management and operation
model, process and methods were also optimized to achieve efficient risk control and improve operational 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 and approaches to promote business innovation.
In 2012, to fully leverage the opportunities from new medical system reform, 3G development, smart grid, Internet of thing, and triple play network, the Company furthered related business planning and R&D planning andlaunched a series of business innovation campaigns focusing on customer value. Besides, the Company enriched its
technological experience in Xikang healthcare service, auto information technology and remote service, mobile Internet-based smart terminals and information security.
To copy with business transformation brought by fast development of the Internet, mobile Internet, and Internet of Things, the Company took active measures for business innovation, including provision of vertical Internet
service for users and transfer and deployment of traditional enterprise application oriented to Internet. The Company has realized that rapid development of mobile Internet is changing service model of business; social network ischanging the way of communication among people; Cloud computing is changing people’s consumption method
to information service; big data drives more accurate insight, decision making and process automation; and scenario-based perception is creating enriched customer experience, stronger customer loyalty, and better commercial process. These innovation-integrated technologies will change the way of working, learning and living while creating
more business opportunities. To this end, the Company developed the next-generation software technology integration platform, SaCa (Secure Social Active Connected Cloud with Awareness), including SaCa.SNAP (social network
application platform), SaCa.AppMart (multi-terminal app store platform), SaCa.WWF (Web Widget Framework),
SaCa.ACAP (agile cloud application platform), SaCa.RealRec (Real Recommendation Platform), SaCa.CloudPush(cloud push platform), SaCa.MAF (HTML5-based mobile application platform), SaCa.ADSG (application delivery secure gateway) and SaCa.Aclome (agile cloud application management environment). The launch of SaCa platform
greatly promoted the construction of innovative application such as B2B2 and G2B2C and innovation of Internet-based diversified business model.

17

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Neusoft Corporation Annual Report 2012

The Company kept carrying out its high-efficiency strategy NeuSA?, strengthened the R&D of business unit
and the construction of technology development leadership, and carried out internal technological structure auditing to promote effective implementation of the strategy. Moreover, the Company consolidated the practice of development model of the software product line, increased the input in R&D in core fields, thus improving its competitive power and profitability by reuse of the knowledge. Meanwhile, it reinforced the construction of customer experience center, enhanced customer-centered design ability, constructed products and platforms with high added
value of technology and high customer stickiness, in order to increase the Company’s core competitiveness in related ecosystem. The Company kept on participating in international, domestic open technology standard organization, conducted and took party in the formation of industrial criterion and regulation, and dominated and participated in the formulation of industry specifications. By advancing the building of 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 cooperation.
The Company also took an active part in protecting technological innovations with intellectual rights. As ofthe end of 2012, it has applied for 264 patents, has been granted 135 patents and registered 421 software rights.
This has not only helped the Company protect core technologies and maintain a leading position in China market
but also facilitated development 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

Year 2012

Year 2011

Rate of change (%)

Operating income

6,960,195,011

5,751,249,330

21.02

Operating costs

4,729,720,928

4,004,998,405

18.10

Sales expenses

635,074,786

497,920,161

27.55

Administrative expenses

985,944,947

819,957,825

20.24

Financial expenses

78,565,067

23,649,196

232.21

Net cash flow from operating activities

317,235,522

300,196,604

5.68

Net cash flow from investment activities

47,483,221-769,257,253

106.17

Net cash flow from financing activities

14,908,706

529,377,797-97.18

Costs on research and development

468,503,476

323,514,830

44.82

Neusoft Corporation Annual Report 2012

4.1.2.2 Income(1) Factors causing changes in business income
Unit: RMB Yuan
Industry

Rate ofchange (%)

Rate ofchange (%)

1,144,528,919

23.69

94.67

803,436,708

90,180,440

11.22

7.46

91,529,872

117,293,550-25,763,678-21.97-2.13

6,960,195,011

5,751,249,330

1,208,945,681

21.02

100.00Year 2012

Year 2011

Change5,975,047,991

4,830,519,072

Healthcare system

893,617,148

Logistics and other business

Software and system integration

Total

During the reporting period, the Company’s subsidiary Shenyang Neusoft Information Technology Services
Co., Ltd. “Neusoft(
IT Services”) transferred its equity in Dalian Neusoft Park Industrial Development Co., Ltd. “DN(
PID”for short), changing the consolidation of financial statements. Comparison with the equivalent data of previous year is as follows.
Unit: RMB Yuan
Industry

Year 2012

Year 2011(same as theabove)

ChangeSoftware and system integration

5,975,047,991

4,827,725,739

Healthcare system

893,617,148

Property and other business
Total

Rate ofchange (%)

Rate ofchange (%)

1,147,322,252

23.77

92.18

803,436,708

90,180,440

11.22

7.24

91,529,872

84,257,405

7,272,467

8.63

0.58

6,960,195,011

5,715,419,852

1,244,775,159

21.78

100.00Notes to the ChangesNotes to the Changes:
During the reporting period, the Company’s operating income increased by RMB 1,208,950,000 Yuan, ayear-on-year growth of 21.02%; among which, income from software and system integration and healthcare system increased by RMB 1,144,530,000 Yuan and RMB 90,180,000 Yuan, 23.69% and 11.22% year-on-year
growth respectively. Income from property and other business income decreased by 25,760,000 Yuan, a decline of
21.97%, which is mainly caused by the change in consolidation due to selling of equity in DNPID by Neusoft IT Services. Comparing the income after deducting the counterpart of DNPID, the income in 2012 increased by RMB
1,244,780,000 Yuan, a 21.78% year-on-year increase; among which, income from property and other business increased by RMB 7.27 million Yuan, an 8.63% year-on-year increase.
(2) Sales income from key customers
During the reporting period, the total sales income from the top five customers is RMB 1,248,508,624 Yuan,

19

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Neusoft Corporation Annual Report 2012accounting for 17.94% of the total.
4.1.2.3 Cost
(1) Cost analysis
Unit: RMB Yuan
Amount of
the same
period in theprevious year

Percentage
in the totalof theprevious
period (%)

Year-on-yearchange ratio(%)

Industry

Cost composition

Amount inthis period

Percentage inthe total ofthis period(%)

Softwareand system
integration

Employee pay, projectsubcontracting fee, travels expense communication expenses, administrative expenses and assets
depreciation and amortization expenses.

4,172,158,625

88.21

3,476,555,703

86.81

20.01

Medicalsystems

Raw materials, manpower cost and production
expenses

530,343,758

11.21

486,024,807

12.14

9.12

(2) Main suppliers
Within the reporting period, total purchase amount from the top five suppliers is RMB 789,175,214 Yuan, accounting for 33.79% of the total in this year.
4.1.2.4 Expenses
Unit: RMB Yuan
Item

2012

2011

ChangeRate of change (%)

Reason for change

Sales expenses

635,074,786

497,920,161

137,154,625

27.55

—

Administrative expenses

985,944,947

819,957,825

165,987,122

20.24

—

Financial expenses

78,565,067

23,649,196

54,915,871

232.21（1）

Tax expenses

106,899,561

69,341,108

37,558,453

54.16

（2）

Notes to the ChangesNotes to the Changes:(1) The financial expenses increased by RMB 54,920,000 Yuan, a year-on-year increase of 232.21%, which ismainly caused by the increase of interest payment and loss due to exchange rate.
(2) The income tax increased by RMB 37,560,000 Yuan, a year-on-year increase of 54.16%, which is mainly
caused by an equity transfer of DNPID from Neusoft IT Services with a tax payable of RMB 18,920,000 Yuan andyear-on-year increase of tax payable from the Company and its subsidiaries.

Neusoft Corporation Annual Report 2012

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

468,503,476

Capitalized R&D expenses in this reporting period

—

Total

468,503,476

Year-on-year change (%)

44.82

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

9.15

Percentage of total R&D expenses in operating income (%)6.73(2) Notes to the ChangesNotes to the Changes
Within the reporting period, with a 44.82% year-on-year growth, total expenses on research and development increased by RMB 468,500,000 Yuan, accounting for 9.15% of the owner's equity of its parent company,
and 6.73% of the total revenue. This is mainly resulted from the increased input in the research and developmentof medical systems, auto information technology, cloud computing, Internet of Things, network security products,
healthcare service and intelligent logistics.
4.1.2.6 Cash flow
Unit: RMB Yuan
Item

Rate ofchange (%)

Type of
ChangeYear 2012

Year 2011

ChangeNet cash flow from operating activities

317,235,522

300,196,604

17,038,918

5.68

(1)

Net cash flow from investment activities

47,483,221-769,257,253

816,740,474

106.17(2)

Net cash flow from financing activities

14,908,706

529,377,797-514,469,091-97.18(3)

Notes to the ChangesNotes to the Changes:(1) With a 5.68% year-on-year growth, net cash flow from operating activities increased slightly by RMB
17,040,000 Yuan.
(2) With a 106.17% year-on-year growth, net cash flow from investment activities increased by RMB
816,740,000 Yuan. This is because that the Company invested RMB 400,000,000 Yuan in financial products in thesame period last year, which was recovered within the reporting period. The amount balanced with the cost on
newly-purchased financial products. Moreover, Neusoft IT Services received transfer fee of RMB 426,000,000 Yuan
by transferring the equity in DNPID.
(3) With a 97.18% year-on-year decline, net cash flow from financing activities declined by RMB 514,470,000

21

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Neusoft Corporation Annual Report 2012

Yuan, which resulted from a received capital of RMB 400,000,000 Yuan from the medium-term note issued in thesame period of previous year and the decline of net loan from bank by its subsidiaries.
4.1.2.7 Profit structure and changes in profit sources
Unit: RMB Yuan
Item

Year 2012
AmountYear 2011

Percent in total profit (%)

AmountPercent in total profit (%)

Operating income

6,960,195,011

1,282.59

5,751,249,330

1,166.85

Operating cost

4,729,720,928

871.57

4,004,998,405

812.56

Period cost

1,699,584,800

313.191,341,527,182

272.18

Impairment loss on assets

136,632,109

25.18

41,405,012

8.40

Investment income

112,124,066

20.66

42,136,578

8.55

Total profit

542,668,513

100.00492,886,660

100.00Notes to the Changes:
The proportions of operating income, operating cost, and period cost to the total profit in 2012 increased
compared with those in 2011, mainly resulted from the business expansion as well as the increasing input in manpower, sales and R&D.
The proportion of impairment loss on assets increased, resulted from the loss of RMB 86,430,000 Yuan of appropriated goodwill within the reporting period.
The proportion of investment income increased, resulted from the investment income of RMB 55,370,000 Yuan generated from the equity transfer of DNPID from Neusoft IT Services as well as year-on-year increase of profit
from financing products.
4.1.2.8 Development strategy and operating plan
Neusoft's Annual Report 2011 revealed its development strategy and operation plan in 2012. Within the reporting period, by carrying out the existing development strategy, the Company achieved massive business development with total revenue of RMB 6,960,200,000 Yuan and operating cost of RMB 4,729,720,000 Yuan, period costof RMB 1,699,580,000 Yuan, basically equal to the estimated amounts in the annual report 2011.

Neusoft Corporation Annual Report 2012

4.1.3 Operations analysis by industry, product and region
4.1.3.1 By industry
Unit: RMB Yuan

Operating costgross
profitmargin(%）

Year-on-yearchange inoperatingincome (%)

Year-on-yearchange inoperatingcost (%)

Year-on-yearchange ingross profit
margin (%)

5,975,047,991

4,172,158,625

30.17

23.69

20.01

2.14

(1)

893,617,148

530,343,758

40.65

11.22

9.12

1.15

(2)

Industry

OperatingincomeSoftware andsystem integration
Medical systems

Notes tothe
Changes

Notes to the Changes:(1) Within the reporting period, the gross profit margin of software and system integration increased by
2.14% over the same period of the previous year, which resulted from the increase of income from software.
(2) Within the reporting period, the gross profit margin of medical systems increased by 1.15% over the same
period of the previous year, which resulted from the change of product structure.
4.1.3.2 By Region
Unit: RMB Yuan
Country/city

Operating income

Year-on-year change

China5,070,030,343

30.08

Foreign countries

1,890,164,668

1.98

Notes to the Changes:
Within the reporting period, the income from foreign countries increased by 1.98% over the same period of
the previous year, as a result of the increase in international business; and the income from China region increasedby 30.08% compared with the same period of the previous year, which resulted from business expansion achievedby the Company.

23

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Neusoft Corporation Annual Report 2012

4.1.4 Assets and liabilities
4.1.4.1 Balance Sheet
Unit: RMB Yuan
Year-end
amount in thisperiodProportion
to thetotal (%)

Year-end
amount inprevious
periodProportion
to thetotal (%)

Year-on-yearchange rate(%)

Trading financial assets

14,917,183

0.18

863,1700.01

1,628.19(1)

Notes receivable

14,342,063

0.17

36,215,245

0.46-60.40(2)Inventories

830,972,882

9.77

585,158,868

7.38

42.01

(3)

Prepayments

118,441,067

1.39

57,312,087

0.72

106.66(4)

Long-term receivables

25,954,175

0.31

150,710,187

1.90-82.78(5)Long-term equity investments

390,074,357

4.59

703,226,389

8.87-44.53(6)

Construction in progress

195,555,957

2.30

307,799,158

3.88-36.47(7)

Goodwill

140,387,437

1.65

227,376,502

2.87-38.26(8)

Long-term deferred expenses

72,063,173

0.85

53,694,146

0.68

34.21

(9)

Deferred tax assets

66,353,503

0.78

45,591,522

0.58

45.54

(10)

Held-for-trading financial liabilities——

170,5670.00-100.00(11)

Interest receivable——

205,7240.00-100.00(12)

212,020,218

2.49

149,882,015

1.89

41.46

(13)

120,743

0.00

71,666

0.00

68.48

(14)

Long-term payables

179,459,431

2.11

134,609,431

1.70

33.32

(15)

Deferred tax liabilities

3,738,493

0.04

2,409,781

0.03

55.14

(16)

125,641,275

1.48

340,445,713

4.30-63.10(17)

Item

Other payables
Other current liabilities

Minority interest

Details

Notes to the Changes:(1) With a 1,628.19% year-on-year growth, trading financial assets increased by RMB 14.05 million Yuan,
which resulted from forward foreign exchange contract signed by the Company. The forward foreign exchange
contract was accounted by different foreign currencies based on open market exchange rates during the reporting
period. The estimated floating profit (RMB 14.05 million Yuan) was listed into gains/losses from change in fair val-

Neusoft Corporation Annual Report 2012

ue for the purpose of increasing trading financial assets; the estimated floating loss (RMB 170,000 Yuan) was listed
into gains/losses from change in fair value for the purpose of lowering trading financial liabilities.
(2) With a 60.40% year-on-year decline, notes receivable declined by RMB 21,870,000 Yuan as a result of payment for note receivable in software and system integration contract within the reporting period.
(3) With a 42.01% year-on-year growth, inventories increased by RMB 245,810,000 Yuan as a result of increase of software and system integration contracts in process at the end of reporting period.
(4) With a 106.66% year-on-year growth, prepayments increased by RMB 61,130,000 Yuan. That resulted
from the increase of prepayments to main suppliers according to the contracts within the reporting period.
(5) With an 82.78% year-on-year reduction, long-term receivables reduced by RMB 124,760,000 Yuan. That
mainly resulted from the share transfer of DNPID from Neusoft Information Technology, which makes a decline of
RMB 103,630,000 Yuan of long-term receivables within the reporting period.
(6) With a 44.53% year-on-year reduction, long-term equity investments reduced by RMB 313,150,000 Yuan.
That mainly resulted from equity transfer of DNPID from Neusoft Information Technology, which makes a declineof RMB 355,520,000 Yuan of long-term equity investments within the reporting period. Meanwhile, the Company’s subsidiaries invested in some companies, including Shenyang Neusoft System Integration Engineering Co., Ltd.,
Beijing Venusource Information Technology Co., Ltd., which increased the long-term equity investments by RMB
3,850,000 Yuan.
(7) With a 36.47% decline, construction in progress reduced by RMB 112,240,000 Yuan, which resulted from
Guangzhou Neusoft Park and Shanghai Neusoft Park that have been available for intended use and transferred into fixed assets within the reporting period.
(8) With a 38.26% decline, the Goodwill reduced by RMB 86,990,000 Yuan, as a result of appropriation of impairment loss of goodwill with an amount of RMB 86,430,000 Yuan.
(9) With an increase of 34.21%, the long-term deferred expenses increased by RMB 18,370,000 Yuan, which
resulted from the increase of decoration expenses within the reporting period.
(10) With a 45.54% growth, the deferred tax assets increased by RMB 20,760,000 Yuan, which resulted fromthe increase of deductible temporary difference caused by appropriated employee bonus and increase of appropriated impairment provision for assets.
(11) Held-for-trading financial liabilities reduced by RMB 170,000 Yuan, please refer to item (1) hereunder forreason.
(12) With a decline of 100%, interest payable reduced by RMB 210,000 Yuan, which resulted from the payment for unpaid interest payable in previous year.

25

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Neusoft Corporation Annual Report 2012(13) With a 41.46% growth, other payables increased by RMB 62,140,000 Yuan as a result of estimated project payment for Guangdong Neusoft Park and Shanghai Neusoft Park that have been available for intended use
and transferred into fixed assets within the reporting period.
(14) With a growth of 68.48%, other current liabilities increased by RMB 50,000 Yuan as a result of rise in appropriated expenses.
(15) With a 33.32% growth, the long-term payables increased by RMB 44,850,000 Yuan, which resulted frompayment for Neusoft Group (Tianjin) Co., Ltd.’s purchase of use right of the land located in Tianjin Free Trade
Zone from Tianjin Port Free Trade Zone Investment Co., Ltd., for construction of office building and related facilities on the land, and final payment for property purchase.
(16) With a 55.14% increase, the deferred tax liabilities increased by RMB 1,330,000 Yuan, which resulted
from the taxable temporary difference caused by change in fair value by the end of the reporting period.
(17) With a 63.10% decline, the minority interest reduced by RMB 214,800,000 Yuan, which mainly resulted from equity transfer of DNPID from Neusoft IT Services, which made 40% net assets in DNPID (minority interest) reduce by RMB 248,450,000 Yuan due to change in consolidation. Meanwhile, Shenyang Neusoft Medical
Systems Co., Ltd., a wholly-funded subsidiary of the Company, established a controlled company Neusoft A&T
Medical Technology Co., Ltd., absorbing investment from minority shareholders with an amount of RMB
29,590,000 Yuan.
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 Inter-

nal Control, 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 conductedfinancial accounting and disclosure pursuant to applicable provisions of Accounting Standards for Business Enter-

prises 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:Neusoft Corporation Annual Report 2012

Unit: RMB Yuan

Year-begin
amountGains/losses
fromchanges incurrent fair
value

86

1,405

1,492

Sub-total

86

1,405

1,492

Financial liabilities

17

17

—

Item

Changes infair value
listed in equity

Current
provisionfordepreciation

Year-end
amountFinancial assets
Include: a) Financial assets measured by fair value with changes accounted into current profits
and losses
Including: a) Derivative financial assetsb) Available-for-sale financial assets

Investment property
Productive biological assets
Others

4.1.5 Analysis on core competitive power
As China’s first listed software enterprise (listing done in 1996), Neusoft has now become the largest IT solutions and services 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 core competence powered by edges in many aspects including business scale, brand andtechnological research and development.
1. Business scale
Neusoft is the largest IT solution and service provider in China with operations that cover 134 fields and 578
solutions and products, as well as Neusoft branded medical systems involving CT, MRI, X-ray, Nuclear Magnetic Resonance, ultrasound, radiation therapy and nuclear medicine imaging equipment. The Company has ten thousandof customers 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 innovationand 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

27

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Neusoft Corporation Annual Report 2012

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-know
brand in China by the State Administration for Industry and Commerce of the People’s Republic of China. The
Company continuously enhanced brand and 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 established two-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, theCompany established State Key Lab of Software Architecture, taking a leading position in basic research on application of cutting-edge software architecture technologies and general key technologies in China. In recent years, theCompany has enhanced business and R&D planning and increased input in core business fields to drive sustainablebusiness 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 40 cities across the country, and established marketing and 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 establishedmany subsidiaries in Japan, Europe and America as overseas oriented technology supporting platform and marketing facilities, laying a good foundation for developing 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 steady development 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 range of special training plans and two-channel career development program,Neusoft Corporation Annual Report 2012

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. In 1998, the Company was approved by ISO9001:
1994 quality management system certification, becoming the first ISO-certified software enterprise in China. In
2002, the Company was certified by CMM5 for its excellent performance in quality management and process improvement. In 2004, the Company was approved by CMMI5, which demonstrates its well matured business competence and industry-leading project management, enhancing its comprehensive competitive power in both domestic
and global markets.
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

237,286

Change in the amount of investment

90,157

Amount of investment in the previous year

147,129

Rate of change in the amount of investment (%)61.28(1) Security investment
During the reporting period, no security investment was generated.
(2) Equity in other listed companies
No equity in other listed companies was held by the Company by the end of the reporting period.
(3) Equity in other unlisted financial companies
No equity in other unlisted financial companies was held by the Company by the end of the reporting period.
(4) Acquisition/selling of equity in other listed companies
No acquisition/selling of equity in other listed companies happened during the reporting period.

29

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Neusoft Corporation Annual Report 2012

4.1.6.2 Overview of invested companies
Unit: RMB Yuan

No.

Invested
companies

Amountofinvestment

Main business

Percentageof equity
held by theCompany

Remarks(1)

Neusoft A&T
MedicalTechnology
Co., Ltd.

Medical system, manufacturing andsales of lab automation system, development and sales of computer software/hardware system.

3,060

51.00%

Newly-establishedholding Subsidiary(2)

Shenyang Neusoft
System Integration
Engineering
Co., Ltd.

Software development, retailwholesale of electronic product2,000

26.65%

Subscription of
newly-added
registered capital(3)

Neusoft Medical(U.S.A) Co., Ltd.

Product R&D/manufacturing and related technical consulting and service

2.2
million US dollars

100.00%Capital increase(4)

Hunan Xikang
HealthcareCo., Ltd.

Health management, health consulting, medical institution management
consulting, health archive management, equipment sales and lease.

200

100.00%

Newly-establishedwholly owned
subsidiary(5)

Anhui Xikang
HealthcareCo., Ltd.

Health management, health consulting, medical institution management
consulting, health archive management, equipment sales and lease.

100

100.00%

Newly-establishedwholly owned
subsidiary(6)

Jiangsu Xikang
HealthcareCo., Ltd.

Electronic product development, design, transfer, sales consultation andlease of computer software and hardware technology.

500

100.00%

Newly-establishedwholly owned
subsidiary(7)

Hubei Xikang
HealthcareCo., Ltd.

Except for what are not allowed by
law with approval of related departments. For those without regulation,
free choice can be made.

100

100.00%

Newly-establishedwholly owned
subsidiary(8)

Guangzhou Xikang
Healthcare
Technology
Co., Ltd.

Health consultation, sales of electronic
product, computer software and hardware and mechanical equipment.

100

100.00%

Newly-establishedwholly owned
subsidiary(9)

Jiangxi Xikang
HealthcareCo., Ltd.

Management consultation, health information consultation, enterprise management and sales and lease of theequipment.

200

100.00%

Newly-establishedwholly owned
subsidiary(10)

Liaoning Neusoft
Xikang HealthcareCo., Ltd.

Health information management/consulting, management services, management system development

2,000

100.00%Capital increaseandNeusoft Corporation Annual Report 2012

Continued table
Percentageof equity
held by theCompany

Remarks

100

100.00%

Newly-establishedwholly owned
subsidiary

IT and related consulting services

2,765,000
US dollar

70.00%

Capital increase

Neusoft Medical(MEFTA) Co., Ltd.

Medical systems and relevant technicalconsulting and services

900,000
US Dollars

100.00%Capital increase(14)

Luoyang Xikang
HealthcareCo., Ltd.

Management consultation, health information consultation, enterprise management and sales and lease of theequipment.

100

100.00%

Newly-establishedwholly owned
subsidiary(15)

Hainan Xikang
HealthcareCo., Ltd.

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

500

100.00%

Newly-establishedwholly owned
subsidiary(16)

Jinzhou Xikang
HealthcareCo., Ltd.

Health management, health information consulting, medical institution
management consulting, equipment
sales and lease100

100.00%

Newly-establishedwholly owned
subsidiaryBeijing Huiyuan
Xikang Healthcare
Technology
Co., Ltd.

Technology
development/consulting/transfer/service/promotion,enterprisemanagement, enterprise management
consulting management, economic
and trade consulting, sales of electronic
products/computer/software and ancillary equipment/communication equipment/mechanical equipment, lease ofcommodity and mechanical equipment. (Except for those without administrative licensing)500

50.00%

Newly-establishedjoint venture

Shenzhen Xikang
HealthcareCo., Ltd.

Health consulting management, medical project investment, technology development and sales of health products, technology development, sales
lease and technical consulting of electronic products, computer software/
hardware, corporate image plan, meeting affair planning and investment consulting.

50

100.00%

Newly-establishedwholly owned
subsidiaryNo.

Invested
companies

Main business(11)

Hangzhou Xikang
HealthcareCo., Ltd.

Health consultation, sales and lease ofelectronic product, computer softwareand hardware and mechanical equipment.

(12)

Neusoft Xikang
Holdings Co., Ltd.

(13)

(17)

(18)

Amountofinvestment

31

32

Neusoft Corporation Annual Report 2012

Continued table
Percentageof equity
held by theCompany

Remarks

30,000100.00%Capital increase

Amountofinvestment

No.

Invested
companies(19)

Shenyang Neusoft
Medical Systems
Co., Ltd.

Medical systems(20)

Neusoft Medical(Peru) Inc.

Medical system, related technical consulting

5.0385 USD

100.00%

Newly-establishedwholly owned
subsidiary(21)

Shenyang Xikang
Alps Technologies
Co., Ltd.

Design, R&D of sensor and related electronic products, electronic parts, software and hardware, related technicalconsulting and service.

550,000 USD

55.00%

Newly-establishedwholly owned
subsidiary(22)

NEC Neusoft
Information
Technology
Co., Ltd.

Development, sales and consulting ofcomputer software

300

30.00%

Continuous
investment foraffiliatedcompany(23)

Neusoft Group(Beijing) Co., Ltd.

Import/ export of computer softwareand hardware, related goods and technologies.

9,000

100.00%Capital increase(24)

Neusoft Group(Dalian) Co., Ltd.

Computer software/hardware

30,000100.00%Capital increase(25)

Beijing Neusoft
Xikang HospitalManagement
Co., Ltd.

Hospital management, sales of electronic products, computers, software/
hardware, communication equipment/
mechanical equipment, lease of computers, communication equipment andmedical equipment, technology development/transfer/consulting/service.

50

100.00%

Newly-establishedwholly owned
subsidiary(26)

Dalian Neusoft
Xikang HealthcareCo., Ltd.

Healthcare consulting, lease of electronic products/computer/communication equipment/mechanical equipment
for construction engineering, normal
domestic trade50

100.00%

Newly-establishedwholly owned
subsidiary(27)

Neusoft Group(Shanghai) Co., Ltd.

Computer software, technical consulting and services

10,000100.00%Capital increase(28)

Neusoft GmbH

Computer software/hardware, technical consulting and services

200,000 EUR

100.00%Acqusition(29)

Shanghai Xikang
HealthcareCo., Ltd.

Health management consulting, business information consulting, sales andlease of electronic products/computer
software/hardware/mechanical equipment/communication equipment.

50

100.00%

Newly-establishedwholly owned
subsidiary

Main businessNeusoft Corporation Annual Report 2012

Continued table
Amountofinvestment

Percentageof equity
held by theCompany

Remarks

No.

Invested
companies(30)

Shandong Neusoft
System Integration
Co., Ltd.

Computer software/hardware

3,500

100.00%Capital increase(31)

Wuhan Neusoft
Information
Technology
Co., Ltd.

Computer software/hardware

1,000

100.00%Capital increase(32)

Beijing Venusource
Information
Technology
Co., Ltd.

Computer software/hardware, technology service.

1,050

34.43%

Purchase of
newly-added
registered capital(33)

Neusoft Group(Guangzhou)Co., Ltd.

Computer software, technical consulting and services

3,000

100.00%Capital increase(34)

Xi’an Neusoft
System Integration
Co., Ltd.

Computer software/hardware

1,000

100.00%Capital increase

Main business1. In July 2012, Shenyang Neusoft Medical Systems Co., Ltd., a subsidiary wholly owned by the Company, established this company by making a contribution of RMB 30.6 million Yuan and held 51% of its shares, which wasrecorded in the consolidated financial statements from the said month.
2. In March 2012, Shenyang Neusoft System Integration Technology Co., Ltd. and Xi’an Neusoft System Integration Co., Ltd., two subsidiaries of the Company, invested RMB 10 million respectively for subscription of newly-added registered capital of Shenyang Neusoft System Integration Engineering Co., Ltd. and held 13.325% respectively, totaling 26.65%, which was accounted in equity method as an associate from the said month.
3. In March 2012, Shenyang Neusoft Medical Systems Co., Ltd., a subsidiary wholly owned by the Company,
made a decision to infuse an additional 2 million US Dollars into the registered capital of Neusoft Medical (U.S.A.)
Co., Ltd. With this infusion, the total registered capital of the US entity reached 6 million US dollars. Till date, anaccumulative contribution of 4.7 million US dollars has been made as an amount of 2.2 million US dollars was paid
during the reporting period.
4. In April 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 2 million Yuan, which was recorded in the consolidated financial statements from the said month.

33

34

Neusoft Corporation Annual Report 2012

5. In April 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recorded in the consolidated financial statements from the said month.
6. In April 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 5 million Yuan, which was recorded in the consolidated financial statements from the said month.
7. In May 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recordedin the consolidated financial statements from the said month.
8. In May 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recordedin the consolidated financial statements from the said month.
9. In May 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the Company, established this company and held 100% of its shares by investing RMB 2 million Yuan, which was recordedin the consolidated financial statements from the said month.
10. In May, 2012, the Company’s subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. made a capitalincrease of RMB 20 million Yuan to its wholly-owned subsidiary Liaoning Neusoft Xikang Healthcare Co., Ltd., withtotal investment amounting to RMB 50 million Yuan.
11. In May 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recorded in the consolidated financial statements from the said month.
12. In May, 2012, the Company’s wholly-owned subsidiary Neusoft (Hong Kong) Co., Ltd. made a capital increase of 2.765 million US dollars to its controlling company Neusoft Xikang Holdings Co., Ltd. Total investment
amounted to 2.8 million US dollars and equity ratio at 70% after the increase.
13. In May and December 2012, the Company’s wholly-owned subsidiary Shenyang Neusoft Medical Systems
Co., Ltd. increased a capital of RMB 0.9 million Yuan for its subsidiary Neusoft Medical (MEFTA) Co., Ltd., amounting to 2.3 million US dollars in registered capital. The registered capital of Neusoft Medical (MEFTA) Co., Ltd. is 3.5
million US dollars.
14. In June 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recorded in the consolidated financial statements from the said month.

Neusoft Corporation Annual Report 2012

15. In June 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 5 million Yuan, which was recorded in the consolidated financial statements from the said month.
16. In June 2012, Liaoning Neusoft Xikang Healthcare Co., Ltd., a subsidiary indirectly controlled by the Company, established this company and held 100% of its shares by investing RMB 1 million Yuan, which was recordedin the consolidated financial statements from the said month.
17. In July 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 50% of its shares by investing RMB 5 million Yuan, which was recorded in the equity method of joint venture from the said month.
18. In August 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 0.5 million Yuan, which was recorded in the consolidated financial statements from the said month.
19. In August 2012, the Company infused RMB 300 million Yuan into the registered capital of Shenyang Neusoft Medical Systems Co., Ltd. a subsidiary wholly owned by it, achieving a total investment of RMB 378 million Yuan.
20. In August 2012, Shenyang Neusoft Medical Systems Co., Ltd., a subsidiary wholly owned by the Company
and its subsidiary jointly established this company and held 100% of its shares by contributing 50,385 US dollars,
which was recorded in the consolidated financial statements from the said month.
21. In September 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by
the Company, established this company and held 55% of its shares by investing 0.55 million US dollars, which wasrecorded in the consolidated financial statements from the said month.
22. In August 2012, Shenyang Neusoft Information Technology Services Co., Ltd., a subsidiary wholly ownedby the Company, made a capital increase of RMB 3 million Yuan to its associate NEC Neusoft Information Technology Co., Ltd. Total investment amounted to 7.5 million with equity ratio at 30%.
23. In September 2012, the Company increased RMB 90 million Yuan into the registered capital of Neusoft
Group (Beijing) Co., Ltd., a subsidiary wholly owned by it, achieving a total investment of RMB 340 million Yuan.
24. In September 2012, the Company infused RMB 300 million Yuan into the registered capital of Neusoft
Group (Dalian) Co., Ltd. a subsidiary wholly owned by it, achieving a total investment of RMB 600 million Yuan.
25. In October 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by theCompany, established this company and held 100% of its shares by investing RMB 0.5 million Yuan, which was recorded in the consolidated financial statements from the said month.
26. In October 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by the

35

36

Neusoft Corporation Annual Report 2012

Company, established this company and held 100% of its shares by investing RMB 0.5 million Yuan, which was recorded in the consolidated financial statements from the said month.
27. In October 2012, the Company infused RMB 100 million Yuan into the registered capital of Neusoft
Group (Shanghai) Co., Ltd., a subsidiary wholly owned by it, achieving a total investment of RMB 200 million Yuan.
28. In November 2012, the Company’s indirect wholly-funded subsidiary Neusoft EDC SRL (altered its namefrom the original Neusoft Mobile Solutions SRL to Neusoft EDC SRL in September 2012) acquired Neusoft GmbHby investing 25,000 Euros, which was recorded in the consolidated financial statements from the said month. In
December 2012, Neusoft EDC SRL invested RMB 175,000 Euros, achieving a total investment of 200,000 Euros.
29. In December 2012, Neusoft Xikang Healthcare Technology Co., Ltd., a subsidiary indirectly controlled by
the Company, established this Company and held 100% of its shares by investing RMB 0.5 million Yuan, which
was recorded in the consolidated financial statements from the said month.
30. In November 2012, the Company infused RMB 35 million Yuan into the registered capital of Shandong
Neusoft System Integration Co., Ltd., a subsidiary wholly owned by it, achieving a total investment of RMB 50 million Yuan.
31. In November 2012, the Company infused RMB 10 million Yuan into the registered capital of Wuhan Neusoft Information Technology Co., Ltd., a subsidiary wholly owned by it, achieving a total investment of RMB 25 million Yuan.
32. In November 2012, Liaoning Neusoft Venture Capital Investment Co., Ltd., a subsidiary controlled by theCompany, invested RMB 10.5 million Yuan for subscription of newly-added registered capital of this company andheld 34.43% of its shares, which was accounted in equity method as an associate from the said month.
33. In November, 2012, the Company increased a capital of RMB 30 million Yuan for its wholly-owned subsidiary Neusoft Group (Guangzhou) Co., Ltd. Its registered capital amounted to RMB 130 million Yuan after the increase.
34. In December 2012, the Company increased a capital of RMB 10 million Yuan for its wholly-owned subsidiary Xi’an Neusoft System Integration Co., Ltd. Its registered capital amounted to RMB 35 million Yuan after the increase.

74

137

253

378

508

88

repay
capital10,000 2011-12-23 2012-2-6
withinterest

repay
capital2012-2-13 2012-5-14
withinterest

repay
capital2012-4-1 2012-5-28
withinterest

repay
capital2012-6-20 2012-9-20
withinterest

repay
capital2012-11-1 2013-2-18
withinterest

30,00010,00030,00030,00025,000repay
capital7,000 2012-12-20 2013-3-20
withinterest

Industrial Principal
Bankand income(China)guaranteed

Industrial Principal
Bankand income(China)guaranteed

Industrial Principal
Bankand income(China)guaranteed

Industrial Principal
Bankand income(China)guaranteed

Industrial Principal
Bankand income(China)guaranteed

Industrial Principal
Bankand income(China)guaranteed

512

repay
capital
2011-12-1 2012-2-28
withinterest

Type

Industrial Principal
bank
and income(China)guaranteed

AgencyUnit: RMB’0,000 Yuan——

30,00030,00010,00010,00030,000

—

—

378

253

137

74

512

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

N/A

N/A

N/A

N/A

N/A

N/A

N/A

AmountAssociAmount
Subject
Whether Source
Comof
Relatedation
Date ofDate ofof
Actually to legal
involvedfrompensa- Estimateddepreci- transacrelaAmount commence- terminaactually gained proceedin
financingtion income
ation
tion
tionmenttion
retracted income
ings
prosecu- capitalmode
provi- or not
ship
principal
or nottion
or notsion
or 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 Corporation Annual Report 2012

37

23

27

0.10

0.03

0.02

0.02

0.38

0.04

repay
capital5,000 2012-12-13 2013-1-17
withinterest

repay
capital3,000 2012-12-13 2013-2-18
withinterest

repay
capital2012-3-1 2012-3-5
withinterest

repay
capital2012-3-1 2012-3-5
withinterest

repay
capital2012-3-1 2012-3-5
withinterest

repay
capital2012-3-1 2012-3-5
withinterest

repay
capital2012-3-8 2012-3-15
withinterest

repay
capital2012-3-9 2012-3-16
withinterest

300

100

50

50

500

50

Industrial Principal
Bankand income(China)guaranteed

China
Principal
Merchants and incomeBankguaranteed

China
Principal
Merchants and incomeBankguaranteed

China
Principal
Merchants and incomeBankguaranteed

China
Principal
Merchants and incomeBankguaranteed

China
Principal
Merchants and incomeBankguaranteed

China
Principal
Merchants and incomeBankguaranteed

Type

Industrial Principal
Bankand income(China)guaranteed

Agency

50

500

50

50

100

300

—

—

0.04

0.38

0.02

0.02

0.03

0.10

—

—

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

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

AmountAssociAmount
Subject
Whether Source
Comof
Relatedation
Date ofDate ofof
Actually to legal
involvedfromrelapensa- Estimateddepreci- transacAmount commence- terminaactually gained proceedin
financingtion income
ation
tion
tionmenttion
retracted income
ings
prosecu- capitalmode
provi- or not
ship
principal
or nottion
or notsion
or notContinued table

38
Neusoft Corporation Annual Report 2012

repaycapital2012-3-20 2012-3-27
withinterest

repay
capital2012-3-19 2012-3-26
withinterest

2,001

0.03

0.34

50

500

111,600

1,355

0.03

0.34

Yes

Yes

—

—

—

No

No

No

No

No

No

N/A

N/A

0

The Company and its subsidiaries did not have any other wealth management and derivative investment within the reporting period.

(4) Other wealth management and derivative investment

The Company and its subsidiaries did not have any entrusted loan within the reporting period.

(2) Entrusted loans

lion Yuan was entered into the balance sheet based on an estimate.

wealth management products that had not been received as they were under recognized as an investment and an income of RMB 3.16 mil-sion of its meeting held on April 25th, 2011. At the end of the reporting period, the principal and income related to the two of the above

dance with the Proposal on the Purchase of Wealth Management Products which was approved by the Board of Directors at the 26th ses-

tors’resolution. This resolution was passed for the purpose of reducing the total interest cost on bonds to the greatest extent in accor-

on capital position at any time following the bond issuance and use such an amount within two years from the date of the Board of Direc-

the Company may, at its discretion, purchase wealth management products amounting to a total amount of RMB 400 million Yuan based

Note: With regard to the wealth management products mentioned above, the Board of Directors has agreed that the management of

Accumulative amount of overdue principal and income outstanding (RMB Yuan)

151,600

50

China
Principal
Merchants
and incomeBankguaranteed

Total

500

Type

China
Principal
Merchants and incomeBankguaranteed

AgencyAssociAmountAmountSubject
Whether Source
ation
Comof
RelatedDate ofDate ofof
Actually to legal
involvedfrompensa- Estimateddepreci- transacrelaAmount commence- terminaactually gained proceedin
financingtiontion income
ation
tion
ment
tion
retracted income
ings
prosecu- capital
ship
mode
provi- or notprincipal
or nottion
or notor notsion

Continued table

Neusoft Corporation Annual Report 2012

39

40

Neusoft Corporation Annual Report 2012

4.1.6.4 Utilization 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

Registeredcapital

Total assets
Equityat the end of
ratio
the period

Net assets at
the end of
the period

OperatingincomeCurrent
net profit

378,000,000

100% 1,515,593,446 1,173,624,693 915,814,461

69,294,843

Shenyang
Neusoft
MedicalSystemsCo., Ltd.

Medicalsystems

Neusoft
Group(Dalian)Co., Ltd.

Software
Computerand system software/hardintegration ware

600,000,000

100%

915,039,082

832,486,493 949,986,397

75,801,341

Shenyang
Neusoft
Information
Technology
Co., Ltd.

Software
Computerand system software/hardintegration ware

50,000,000

100%

127,958,171

125,673,901 143,576,057

37,811,536

Neusoft(Japan)Co., Ltd.

Software
Computerand system software/hardintegration ware

187,750,000
Yen

100%

295,794,896

86,198,869 909,274,402

12,989,065

Neusoft(Europe)Co., Ltd.

Computer
Softwaresoftware,and system technicalintegration consulting
and services

37,900,000
CHF

100%

239,360,453

206,054,005 255,547,555-3,870,244

Neusoft
Technology
Co., Ltd.

Computer
Softwaresoftware,and system technicalintegration consulting
and services

1,000
US Dollars

100%

11,405,225

2,304,591

Neusoft(Hong
Kong)
Co., Ltd.

Development,
Softwaresales andand system consulting
integration of computer
software850,000
US Dollars

100%

179,567,734

60,243,004 202,721,265 -22,810,438

Medicalsystems

12,451,921 -28,149,942

4.1.6.6 Utilization of non-raised capital
During the reporting period, the Company and its subsidiaries made a total investment of RMB 228.33 million
Yuan for the construction of projects including Beijing Software Park and Shanghai Software Park with their own
capital, including:Neusoft Corporation Annual Report 2012

Unit: RMB Yuan
Item

AmountProgressAmount invested
this year

Actually accumulative
invested amount

Beijing Software Park

550,000,000

32%

1,381,842

130,316,802

Renovation of canteen of Shenyang Neusoft Park

43,000,000

80%

23,266,994

32,521,121

Hainan Software Park (Phase I)

209,110,000

40%

28,909,528

30,333,467

Neusoft Dalian Hekou Park (Phase II)347,890,000

0.40%

1,270,181

1,270,181

Medical information construction system

10,830,000

47%

2,431,861

5,091,456

Xikang renovation project

3,000,000

91%

2,724,689

2,724,689

Cloud Base Healthcare Center (Phase I )140,030,000

0.50%

152,028

152,028

Shanghai Software Park

272,950,000

95%

99,433,632

206,362,290

Guangzhou Software Park (Phase I)

143,810,000

95%

68,761,888

115,276,222

228,332,643

524,048,256

Total

1,720,620,000

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 policies, domestic software market saw growingly enlarged scale. Emerging fields such as smart
city, cloud computing, mobile Internet, big data are also developing at a fast speed. Meanwhile, with the readjustment of structure of international software industry, China’s software industry further expands its development in
R&D, design and full-life-cycle solution with industry chain developing from the low end to the high end. All thesebrought new market opportunities and vitality for dynamic development of China’s enterprises.
So far, the Company has maintained a leading position in the business fields of government, enterprise informationization, telecom, energy resource, finance, medical system and automobile electronics as the largest IT solution and service provider in China. In the future, the Company will fully develop its advantages in resource and

41

42

Neusoft Corporation Annual Report 2012technology integration to promote innovation on business model and technology, and strengthen its core competitive power in emerging business and segment fields, thereby achieving sustainable development in global market.
(2) Medical system
Medical system industry is a multisubject-involved, knowledge-intensive and capital-intensive high-tech industry. With the promotion of China’s reform on medical treatment system, China’s medical equipment market haslarge development potential. China has included medical equipment industry into strategic emerging industry. Following the increase of input in basic-level hospitals by China, demands for local high-end medical equipment andinternational emerging market’s demands for middle- and low-end medical apparatus and instruments increased
dramatically. 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 such as NeuViz64 multi-slice CT scanner and nuclear medical imaging system, further enlarging its market share and influence. In the future, the Company will make more input in R&D, accelerate market expansion
and customer coverage and enhance comprehensive competitive power to promote large-scale, fast developmentof business in the field of medical system.
4.2.2 Development strategy of the Company
The Company has mapped out the following development strategy and plan in 2013:
1. The Company will further promote the innovation and globalization development strategy, enhance corebusiness competence, strengthen deployment of sales network focusing on creating customer value, and drive business growth through business model innovation and knowledge assets in order to fulfill sustainable and large-scale
development.
2. Accelerate operational excellence plan, improve internal control process and regulations, promote decentralizationof business management rights, optimize labor cost structure, strengthen control on cost, continuously construct
secure, reliable, high-efficient organization-level service supporting system that can support global development of
the Company.
3. In the field of domestic solutions, the Company plans to strengthen marketing and organizing abilities; reinforce
leading position in the market. Take unified planning and action for emerging opportunities, increase resource integration of multiple business and establish partnerships with key customers to make an effective breakthrough.
4. In international software field, the Company will promote prospective analysis on market, business plan-Neusoft Corporation Annual Report 2012

ning, upstream project and ability of customer experience design to ensure sustainable growth of business.
5. In the field of medical systems, the Company plans to increase input in product R&D, promote the marketingof new products and customer coverage, and expand business scale effectively, in an effort to enhance competitive
power in the market.
4.2.3 Operating plan
It is estimated that in 2013, the Company’s operating income will hit RMB 8.61 billion Yuan, operating cost
will amount to RMB 5.97 billion Yuan and period cost will reach RMB 2.07 billion Yuan.
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 2.5 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-economy risk
Global economy is still in the phase of adjustment after the crisis with continued slow growth. As China is in a
key period for growth transfer and seeking for new balance, the driving force of economy growth is weakened tosome extent. At the same time, increase of manpower cost is still a challenge. These will impact enterprises’demands for information technology as well as input cycle of informationization, thus aggravating market competition. In such a context, the Company actively carried out well-targeted marketing strategy and strengthened market development to ensure robust business growth. In addition, the Company accelerated the execution of operational excellence plan, optimized its management and operating model, process and methods to increase operating
efficiency, by doing so, to defense against the adverse effect caused by fluctuation of economic cycle.
(2) Market risk
So far, information technology is being upgraded and innovated at an astounding speed. Mobile Internet, as
an emerging market, stimulates a tremendous transformation of software and information technology. In consideration of technology and market factors, some customers may execute in-depth adjustment on their strategies andbusiness. This leads changes in their demands for information technology, exerting impact on the Company’s existing business. To this end, the Company will highly regard persistent innovation an essential factor for supporting
business growth and development and strengthen its competence in sustainable development by planning and de-

43

44

Neusoft Corporation Annual Report 2012veloping new business and engaging in business model transformation and technical innovation.
(3) Risk in change in core technicians
For a high-tech enterprises centering on software, high-quality team for software development, sales, service
and management is an important element for sustainable development. Therefore, the Company always pays highattention to the influence of human resource on corporate development. With growing business expansion andfierce competition, the Company may confront with great pressure in terms of talents recruitment and reservation.
Therefore, the Company enhanced the construction of corporate culture, carried out compensation improvement
plan, enhanced introduction, training and reservation of core talents, laying a good human resource 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 2nd Session of Interim Shareholders’Meeting 2012 held on September 18th, 2012, indicating profit distribution policies especially for cash dividends.
According to the Company’s Articles of Association, the Company shall put high value on investors’returnon investment and keep the dividends distribution policy running continuously and stably. The Company may distribute dividends in cash or shares. 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 theplan 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 tovote on profit distribution plan. If the Company makes profits, while no distribution is carried out, cash dividends
should be distributed at least once every three consecutive 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 particu-

Neusoft Corporation Annual Report 2012

lar cases when the dividend cash cannot be distributed in the above proportion, the Board of Directors should givea special explanation at the shareholders’meeting. For the alteration of dividends distribution policy impacted byfactors, 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 and then deliver it to the shareholders’meeting for approval. The proposal should be passed after special resolution at the shareholders’meeting.
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
Company’s finance situation in 2012, the parent company made a net profit of RMB 470,480,907 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 47,048,091 Yuan, accounting for 10% of the total, other surplus
reserve of RMB 23,524,045 Yuan and accounting for 5% . The amount of profit distributable for shareholders is
RMB 399,908,771 Yuan, plus undistributed profits of previous reporting period with the amount of RMB
1,602,603,981 Yuan, the undistributed profits by the end of this reporting period is RMB 2,002,512,752 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, 2012, cash dividends will be distributed to all shareholders on a 1.5-for-10 basis. Total cash dividends with an amount of RMB 184,139,137 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

Number ofbonus sharesYear
per 10ordinaryshares (Share)

Number ofdividends per
10 ordinary
shares (taxes
included)Number of
Net profit attributablesharesto shareholders of listed
Amount ofconverted bycompanies recorded in
cash dividends
capital reserve
the consolidated(Taxes included)
per 10 ordinary
financial statements
shares (Share)for distribution year

Percentage in net
profit attributable
to shareholders oflisted companies
recorded in the
consolidated
financialstatements

2012

0

1.5

0

184,139,137

456,313,926

40.35%

2011

0

0

0

0

417,068,980

0

2010

0

0

0

0

484,675,178

0

45

46

Neusoft Corporation Annual Report 2012

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 2012 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’s national environmental protection authority
Neither the Company nor its subsidiaries attribute to enterprises with heavy pollution recognized by China’s
national environmental protection authority.

Neusoft Corporation Annual Report 2012

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 questionedby 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 Assets acquisition
Unit: RMB Yuan

Counterparty/
ultimate
controller

Assets acquired

Net profit
Is it aNet
contributed related
profitto the listed transaccontributcompany
tion?
edfrom the(Pleaseto theDatebeginninggive anAcquilistedofto the end explanasition company
acquiof 2012tion
price from thesition(Applicable of pricing
date ofto business basis inacquisition
combination case of ato the end
under
relatedof 2012
commontransac(Note 1)
control)tion)?

Use right of a land locatedin Tianjin Airport Economic
Tianjin
Zone with an area ofPort Free 400,030,000 square meters,
Trade one as well as the ownership of May
Investa newly-built R&D office
2012
ment
building with a floor area of
Co. Ltd. 31,477.54 square meters
and its facilities on theland lot

No
more
than
RMB
150
million
Yuan

N/A

N/A

No

Pricingbasis
forassetsacquisition

Pricing of theland use right
was RMB 120
Yuan per square
meter and thebuilding on theland lot was
priced based on
project
estimates.

Percentageof net
Are theAre theprofitproperty
claims contributrights of
Is
and
ed
assetsthere
liabilities to the list
involvedany
involved company
fully
relefully
by thetransvance?
trans- purchased
ferred?
ferred?
assets(Note2)againsttotal netprofit (%)

Yes

N/A

N/A

No

47

48

Neusoft Corporation Annual Report 2012

Note: The purchase of the building and land is divided into two phases. Phase I includes the use right of theland with an area of 17,835.7 square meters and a building with a floor area of 31,477.54 square meters. Assettransfer has been finished. Phase II includes the use right of the land with an area of 22,167.3 square meters. The
asset transfer is still in progress. The company's wholly-owned subsidiary Neusoft Group (Tianjin) Co., Ltd. has paid
totally RMB 88,149,300 Yuan during the reporting period in accordance with the relevant purchase agreement.
5.4.2 Sale of assets
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 2012 during the reporting period
Unit: RMB Yuan
Related transaction

Actual amountincurred in 2012

Estimated total
amount in 2012

Percent in estimatedamount of 2012

Raw material/finished product purchase418,401,238

434,000,000

96.41

Product/commodity selling

730,847,180

720,000,000

101.51

Labor service receiving

40,360,033

18,000,000

224.22

Labor service rendering

16,173,902

30,300,000

53.38

Neusoft Corporation Annual Report 2012

5.6.1.2 Related transactions in connection with normal business
Unit: RMB Yuan

Counterparty

Relevance

Content

Pricingbasis
forrelatedtransaction

AmountCause formaterial
Percentage
Rate ofSettling
difference
to thechangemethodbetweenamount ofover theoftransaction
similarprevious
relatedprice andtransaction
year (%)
transaction market(%)
reference
price

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

Hold morethan 5% oftheCompany’s
equitySystemintegration/
Market pricesoftwareselling

184,816,274

68.57

3.09

Cash
settlement

N/A

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

The
Company’s
Chairmanserves as
director inHarmanSystemintegration/
Market pricesoftwareselling

224,939,395

8.81

3.76

Cash
settlement

N/A

Hold moreToshiba Corporation
than 5% of
and its subsidiaries
the(collectively referred
Company’s
to as“Toshiba”)
equitySystemintegration/
Market pricesoftwareselling

184,356,833

11.81

3.09

Cash
settlement

N/A

Nokia Siemens
Networks Neusoft
CommtechCompany “Nokia(
Siemens Neusoft”)

The
SystemCompany’s
integration/
ChairmanMarket pricesoftwareserves as its
selling
Vice Chairman

112,600,705-15.04

1.88

Cashsettlement

N/A

Philips andNeusoft Medical
Systems Co., Ltd.
“Neusoft(
Philips”)

The
Company’s
Chairmanserves as its
ChairmanRawmaterial,
finishedproduct/
servicepurchase

393,312,137

8.20

69.87

Cash
settlement

N/A

1,100,025,344

—

—

Total

Market price

The amount of transactions with Alpine, Harman, Toshiba and Nokia Siemens Neusoft was equivalent to theaccumulative amount of related transactions in its kind. By leveraging the advantages in software development, theCompany provides Alpine, Harman, Toshiba and Nokia Siemens Neusoft with software products in the fields of
in-car audio, navigation and industry solutions, thus generating stable and continuous income and promoting the

49

50

Neusoft Corporation Annual Report 2012

development of its international software business.
The amount of related transactions with Neusoft Philips, mainly focusing on acquiring medical imaging systems including CT, MRI, X-ray and B-mode ultrasound systems from Neusoft Philips which was the production basefor such medical imaging systems was equivalent to the accumulative amount of such transactions in 2012. By selling these products through its own channels, the Company helped the medical systems business develop on ascaled basis continuously.
5.6.2 Related transactions caused by assets acquisition and selling
Unit: RMB’0,000 Yuan

RelatedRelatedtransaction
Relevance
party
type

Equitytransfer

Relatedtransaction
content

A wholly-owned
subsidiary of theCompany, Shenyang
Neusoft IT Services
Co., Ltd. held 60%
equity in Dalian
Neusoft Software
Park Development
Company Limited

All contribution of
Investment the Company’s
Thetransfer of 17.47% equity in
DalianCompany’s shareholders Chengdu Neusoft
Neusoft Chairman
Institute of Information
Holdings serves as
All contribution of theCo., Ltd. its
Investment Company’s 12.82%
Chairmantransfer of equity in Nanhai
shareholders Neusoft Institute ofInformation

Cause
for
material
Settling
difference Asset
PricingBook value Estimatedmethodbetween transfer
basis forTransferofvalue ofoftransfer avenue
relatedpricetransferred transferred
relatedprice and (after
transaction
asset
asset
transaction
book
tax)
value orestimated
value

Based onmutualagreement

42,601.57

Cashsettlement

Based onmutualagreement314.00Cashsettlement
38,707.54

Based onmutualagreement314.00Cashsettlement

All contribution of theInvestment
Based onCompany’s 1.74%
transfer ofmutualequity in Dalian Neusoft
shareholders
agreement
Institute of Information

628.01Cashsettlement

All contribution of theInvestment
Based onCompany’s 60%
transfer ofmutualequity in Dalian Neusoft
shareholders
agreement
Institute of Information

376.80Cashsettlement

42,417.18

N/A

3,818.43

Neusoft Corporation Annual Report 2012

Note: For more information, please refer to the Notice of Neusoft Corporation on Resolutions of the 6th Session of the 6th Meeting of the Board of Directors and the Notice of Neusoft Corporation on the related transaction
concerning the sale of equity and other related educational assets of its indirectly controlled subsidiaries as well as
the Notice of Neusoft Corporation on Resolutions of the First Interim Shareholders' Meeting 2011 published in China Securities Journal and Shanghai Securities News on December 7th and 23rd, 2011 respectively.
Within this reporting period, Neusoft Group (Dalian) Co., Ltd. (Neusoft Dalian) has paid all transactions to theCompany, totally RMB 442,340,000 Yuan. The net income after tax of the above transfer is expected to achieve a
total of RMB 38.18 million Yuan, of which, during the reporting period Neusoft IT has an increases after-tax net income of RMB 36.45 million Yuan after selling equities of Dalian development. At the same time, related transfer
processes about the contribution made by sponsors from the four institutes are in progress. Therefore, during thereporting period, the company receives an after-tax net income of RMB 1.73 million Yuan contributed by four institutes to be confirmed.
5.6.3 Related transactions for co-investment on other companies
Unit: RMB Yuan

Relevance

Invested
companyMain
businessofinvested
company

SmywayHoldingCo., LtdThe Company’s
Chairman serves
as its Vice
Chairman

Neusoft
XikangHoldings
Co., Ltd.

IT and related
consulting
services

DalianNeusoft
Holdings
Co., Ltd.

Liaoning
Neusoft
The Company’s
VentureChairman serves
Capitalas its Chairman
Investment
Co., Ltd.

Co-investor

Registeredcapital ofinvested
company

Total assets
of invested
company

Major
Net assets Net profits projectsof invested of investedofcompany
company invested
company

USD 51,000 130,074,655 -27,119,528 -36,124,998

Investment andmanagement tosmall and
125,000,000 174,117,176 130,481,570
medium-size
companies

4,178,609

N/A

N/A

Description of co-invested significant related transactions(1) Neusoft Xikang Holdings Co., Ltd.
On May 14th 2012, the Company’s wholly-owned subsidiary Neusoft Xikang Holding Co., Ltd. (Neusoft Xikang) was authorized to newly issue 50 thousand shares. The total number of authorized shares increased from 50
thousand to 100 thousand. At the same time, Neusoft Xikang carried out a share split at a ratio of 1:1,000. The
authorized shares increased to 100 million shares, including 50 million issued shares and 50 million treasury shares.

51

52

Neusoft Corporation Annual Report 2012

On May 14th 2012, the Company’s wholly-owned subsidiary Neusoft (Hong Kong) Co., Ltd. (Neusoft HongKong) and the Company’s related legal person Smyway Holding Co., Ltd. (Smyway), as current shareholders of
Neusoft Xikang Holdings Co., Ltd., subscribed 1 million shares newly issued at the price of 3.95 US dollars per
share in accordance with the shareholding ratio. Among them, Neusoft Hong Kong invested 2.765 million US dollars and subscribed 700 thousand shares. Smyway invested 1.185 million US dollars and subscribed 300 thousand
shares. After completion of this subscription, Neusoft Hong Kong held 35.7 million shares of Neusoft Xikang, accounting for 70% of the issued shares. Smyway held 15.3 million shares of Neusoft Xikang, accounting for 30%of the issued shares.
To sum up, Neusoft Xikang's shareholding structure is: authorized shares total 100 million, including 51 million issued shares and 49 million unissued shares.
(2) Liaoning Neusoft Venture Capital Investment Co., Ltd.
On Dec. 21st, 2012, Liaoning Neusoft Venture Capital Investment Co., Ltd. (Neusoft Venture Capital) increased
its registered capital from RMB 105 million Yuan to RMB 125 million Yuan according to business development demand. The Company’s related legal person Dalian Neusoft Holdings Co., Ltd. (Neusoft Holdings) has newly increased registered capital by RMB 20 million Yuan at a subscription price of RMB 20.4 million Yuan. Through negotiation, based on the book value per share RMB 1.01 Yuan of Neusoft Venture Capital on September 30th, the increased price was RMB 1.02 Yuan for per RMB 1 Yuan of registered capital.
After the capital increase, the shareholders’status of Neusoft Venture Capital is as follows:
Unit: RMB’0,000 Yuan
Shareholder

Amount of contribution

Contribution ratio (%)

Neusoft Corporation

7,500

60.00

Shenyang Hongyitong Technology Co., Ltd.

3,000

24.00

Dalian Neusoft Holdings Co., Ltd.

2,000

16.00

12,500100.00Total

5.6.4 Related Debts and Liabilities
During the reporting period, the Company has no related debts or liabilities.

Neusoft Corporation Annual Report 2012

5.7 Major contracts and their performance
5.7.1 Custody, contracting and leasing services
5.7.1.1 Custody
The Company did not provide any custodian in 2012.
5.7.1.2 Contracting
The Company was not engaged in any contracting service in 2012.
5.7.1.3 Leasing
The Company was not engaged in any leasing service in 2012.
5.7.1.4 Other issues
The dispute incurred by Neusoft (Europe) Co., Ltd. “Neusoft(
Europe”) and the bankruptcy curator of Sesca
Group Oy “SESCA”() arising out of or in connection with the equity acquisition agreement and the purchase price
was filed at the Arbitration Court of Central Chamber of Commerce of Finland for settlement on May 20th, 2011.
On January 9th, 2012, the parties entered into a dispute resolution agreement. According to the agreement, Neusoft Europe will pay 990,000 Euros to the bankruptcy curator of SESCA and it will have no obligation to pay the remaining transaction price amounting to 1.8 million Euros provided that the parties shall, at their own cost, pay any
expense arising from the dispute respectively incurred by them as well as the arbitration fees shared by them. Thisagreement shall not affect Neusoft’s continuous role in the bankruptcy liquidation of SESCA as well as its relevantclaims. The arbitration came to an end when Neusoft Europe paid 990,000 Euros to the bankruptcy curator of SESCA on January 19th, 2012.

53

54

Neusoft Corporation Annual Report 2012

5.7.2 Security
Unit: RMB’0,000 Yuan
Security provided by the Company for third parties (Excluding the subsidiaries controlled by the Company)
Relationshipbetweentheguarantor
and listedcompany

Securitytype

Has theIs theIs the Default Is there
security
security
security penalt
any
Relebeen
for theoverforcountervance
fulrelateddue? security security
filled?
party?

Total amount of security occurred in the reporting period (excluding that for the Company’s
subsidiaries)-15,004

Total balance of security occurred during the reporting period (excluding that for the Company’s subsidiaries) (A)0

Guarantor

Guarantee

Amountof thesecurity

Date ofsecurity Commence(Date ofment dateagreement)

Expirydate

N/A

Security provided by the Company for its controlled subsidiaries

Guarantor

Relationshipbetweentheguarantor
and listedcompany

Guarantee

NeuHeadquarters soft
Neusoftof the(Hong
Corporation
Company
Kong)Co., td.

Amountof thesecurity

Date ofsecurity Commence(Date ofment dateagreement)

Expirydate

Security
type

Joint
1.8
and
million2012.11.01 2012.11.01 2013.10.31 several
USliability
Dollars
security

Has theIs
Is the Default
security
there
security penalty
been
any
overforfulcounterdue? security
filled?
security

No

No

0

No

Relevance
to theCompany

Wholly-owned
subsidiaries

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

1,131

Total balance of security for the Company’s subsidiaries during the reporting period (B)1,131

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

1,131

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

0.22

Include:Amount of security for shareholders, ultimate controllers and their associates (C)0Amount of security directly or indirectly provided for guarantees whose asset/liability ratio is
more than 70% (D)0Amount of security amount exceeding 50% of net assets (E)0Total amount of security mentioned above (C+D+E)

0

Unexpired guarantee might assume joint liability.

0

The security items mentioned above refer to Neusoft (Hong Kong) Co., Ltd. is the Proposal on Providing
Amount of Security for Bank Loans of Neusoft (Europe) Co., Ltd., Neusoft (Japan) Co., Ltd. and Neusoft (HongKong) Co., Ltd. approved at the 3rd session of the 6th meeting of the Board of Directors held on August 24th, 2011.

Neusoft Corporation Annual Report 2012

It was agreed that the company would provide a total amount of RMB 50 million USD or the equivalent of othercurrencies 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 August 24th, 2011 to August 23rd, 2013).
5.7.3 Other important contracts
At the 8th session of the 6th meeting of the Board of Directors held on March 12th, 2012, the Proposal on Sign-

ing Letter of Intent and Other Related Documents with Chery Quantum Auto Co., Ltd. (now renamed as "Qoros
Auto Co. Ltd.") and the Proposal on Signing Letter of Intent and Other Related Documents with Alpine Electronics(China) Co., Ltd. were approved. At the first interim Shareholders’Meeting 2012 held on March 30th, 2012, theProposal on Signing Letter of Intent and Other Related Documents with Alpine Electronics (China) Co., Ltd. was approved. For more information, please refer to the related notices published in the China Securities Journal andShanghai Securities News on March 15th and 31st, 2012.
During the reporting period, based on the Letter of Intent and other related documents as well as the need of
Qoros Auto Co. Ltd, the Company carried out requirement analysis, design, custom development and testing forin-vehicle infotainment system, of which the operation income with the amount of RMB 11.77 million Yuan wasrecognized. In addition, the Company entrusted Alpine Electronics (China) Co., Ltd. to carry out designated hardware development, of which the operation cost with the amount of RMB 11.66 million Yuan was recognized.

5.8 Fulfillment of undertakings
The shareholders of the Company holding floating shares with trading restrictions have made the following undertakings upon stock acquisition:
Undertaker

Undertaking

Undertaking with regard to the eight premises and one land lot
for which the Company has not received any property right certificate as of September 30th, 2007: In the event that the Company fails to receive the property right certificate for any of the
NEU Sciencesaid land lot or premises as of December 31st, 2008 following& Technology the merger, NEU Science & Technology Industry Group Co., Ltd.
Industry Group will pay the Company in cash equivalent to the net assessable
Co., Ltd.
value of premises or land lot without a property right certificate(from December 31st, 2006).The said payment in cash (excludinginterest) will be refunded to NEU Science & Technology Industry
Group Co., Ltd. provided that the property right certificates are
made available for all of the said premises and land lot.

Fulfillment

During the reporting period, the Company
has acquired the property right certificates of
all the above said premises and land lot.
Thus, NEU Science & Technology Industry
Group Co., Ltd. is under no obligation of thesaid undertaking.

55

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Neusoft Corporation Annual Report 2012

Continued table
Undertaker

Undertaking

In the event that any educational assets result in any loss
NEU Science &against the issuers within five years from April 28th, 2008, NEU
Technology
Science & Technology Industry Group Co., Ltd. will acquire such
Industry Groupassets in accordance with the Assessment Report (No. 053
Co., Ltd.
[2007] of CEA) issued by China Enterprise Appraisals Co., Ltd.

Fulfillment
According to the resolution of the 1st Interim
Shareholders' Meeting 2011 held on December 22nd, 2011, all educational assets would
be sold at the price that is higher than theoriginal contribution made by sponsors, causing no economic losses to the Company.
Therefore, NEU Science & Technology Industry
Group Co., Ltd. is under no obligation of thesaid undertaking. During the reporting period,
the Company has received all due amounts
with respect to the educational assets.

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

5 years

At the 2011 Annual Shareholders’Meeting held on June 19th, 2012, the Proposal on Employment of Financial

Auditing Agency for 2012 was approved and the resolution related to the appointment of BDO China Shu Lun Pan
Certified Public Accountants LLP to perform financial auditing for 2012 was made. The service term was fixed fromthe date of approval at the 2011 Annual Shareholders’Meeting till the date of holding the 2012 Annual Shareholders’Meeting.
In 2012, BDO China Shu Lun Pan Certified Public Accountants LLP audited the Annual Report 2012 of theCompany, 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 theCompany for five years. Li Chen and Jiang Lijun, public certified accountants of BDO China Shu Lun Pan Certified
Accountants were the authorized signatories on the relevant auditors’reports.
5.9.2 Internal-Controlled Financial Auditing Agency
At the 9th Session of the 6th Meeting of the Board of Directors held on March 29th, 2012, the Proposal on Em-

Neusoft Corporation Annual Report 2012

ployment of Internal-Controlled Financial Auditing Agency for 2012 was approved and the resolution related to theappointment of BDO China Shu Lun Pan Certified Public Accountants LLP as the internal financial auditing agencyof the company for 2012 was made to audit the effectiveness of the internal control and prepare the Annual Report 2012 of the Company.
In 2012, BDO China Shu Lun Pan Certified Public Accountants LLP audited the effectiveness of internal control
mechanism for Annual Report 2012 of the Company, for which the Company paid an amount of RMB 350 thousand Yuan.

5.10 Punishments and rectifications received by the listed company, its directors, supervisors, senior management, shareholders and ultimate controllers
In 2012, 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 2012.

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 balanceof buyer’s credit guaranteed by Dalian Kangruidao Investment Co., Ltd. was RMB 32.58 million Yuan.

57

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Neusoft Corporation Annual Report 2012

Ⅵ Changes in Equity and Shareholders
6.1 Changes in equity
6.1.1 Statement of changes in equity
Overview
During the reporting period, the total number of shares and shareholding structure of the Company has notchanged.
Unit: Share
BeforeItem

Quantity

Changes (+/-)
Percent(%)

New Bonus
issue issue

Conversion
fromreserves

OthersAfter
Subtotal

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 foreign companies
Shares held by foreign natural persons
2. Floating shares without trading
1,227,594,245
restrictions

100

1,227,594,245

100a) RMB-denominated ordinary shares 1,227,594,245

100

1,227,594,245

100

100

1,227,594,245

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

1,227,594,245

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.

Neusoft Corporation Annual Report 2012

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 allotted 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
2012

Total number of shareholders by March 25 ,2013
th69,65565,062

Shareholdings of the top ten shareholders

Shareholder

NEU Science &Group Co., Ltd.

Technology

NatureIndustry State-owned
company

ChangeShareTotal
during theholding
shareholdings reporting
ratio (%)
periodNumberNumberof sharesof shareswithpledgedtrading
or frozen
restrictions

17.6248

216,361,562

0

0

0

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

1.8144

22,273,192 10,424,067

00Chinese People's Life Insurance Company
Unknown
Limited - Dividend - Insurance dividend

59

60

Neusoft Corporation Annual Report 2012

Continued table
Shareholdings of the top ten shareholders

Shareholder

NatureChangeShareTotal
during theholding
shareholdings reporting
ratio (%)
periodNumberNumberof sharesof shareswithpledgedtrading
or frozen
restrictions

Bank of Communications - Bosera Emerging Growth Equity Securities Investment Unknown
Fund

1.798022,072,383

7,656,609

00China Construction Bank - Bosera ThematUnknown
ic Sector Equity Securities Investment Fund

1.7921

21,999,877

3,000,10800Alpine Electronics Inc.

1.633920,057,144

0

0

0

Foreign company

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-denominatedordinary shares

216,361,562

Alpine Electronics (China) Co., Ltd.

171,263,547

RMB-denominatedordinary shares

171,263,547

Baosteel Group Corporation

63,000,000

RMB-denominatedordinary shares

63,000,000

Toshiba Solutions Corporation

58,228,036

RMB-denominatedordinary shares

58,228,036

Intel Capital Corporation

31,973,228

RMB-denominatedordinary shares

31,973,228

Philips Electronics China B.V.

24,954,871

RMB-denominatedordinary shares

24,954,871

Chinese People's Life Insurance Company Limited — Dividend — Insurance dividend

22,273,192

RMB-denominatedordinary shares

22,273,192

Bank of Communications - Bosera Emerging Growth Equity
Securities Investment Fund

22,072,383

RMB-denominatedordinary shares

22,072,383

China Construction Bank - Bosera Thematic Sector Equity Securities Investment Fund

21,999,877

RMB-denominatedordinary shares

21,999,877

Alpine Electronics Inc.

20,057,144

RMB-denominatedordinary shares

20,057,144

Alpine Electronics (China) Co., Ltd. operates as an investmentcompany solely owned by Alpine Electronics Inc. in China.
Both Bank of Communications - Bosera Emerging Growth Equity
Notes on the relationship or concerted action of the said Securities Investment Fund and China Construction Bank shareholders
Bosera Thematic Sector Equity Securities Investment Fund are
products of BOSERA Fund Management Co., Ltd.
The Company has no knowledge of the relationship of othershareholders such as concerted actor.

Neusoft Corporation Annual Report 2012

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%.
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 Introduction to 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 Republic of 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 Tech-

nology Industry in China’s Colleges and Universities. It holds the equity and business assets of investees on behalfof 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

61

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Neusoft Corporation Annual Report 2012

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 managementb) Baosteel Group Corporation
Baosteel Group Corporation is a legally incorporated and wholly state-owned corporation for which theState-owned Assets Supervision & Administration Commission under the State Council of the People’s Republic ofChina performs the duty 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
Legal representative: Xu Lejiang
Organization code: 13220082-1
Business scope: State-owned assets business under authorization of the State Council of the People’s Republicof 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/consulting of technologies related to such business, importing/exporting services approved by the Ministryof Foreign Trade and Economic Cooperation, domestic and foreign trading (except for those under special regulations of China) and relevant services.
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.

Neusoft Corporation Annual Report 2012

Date of incorporation: December 28th, 1994
Registered capital: 90,000,000 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, Japan
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, operates 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
Registered capital: 15,750,000 Euros

63

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Neusoft Corporation Annual Report 2012

Registered office: High Tech Campus, Eindhoven, The 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 thirdamong the world’s independent software developers in terms of market. Serving more than 232,000 customers
from 180-plus countries, the company has 64,000 employees in 60-plus countries including EMEA, USA, Asia Pacific and Japan. SAP is listed on a number of 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 innovativetechnology 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Neusoft Corporation Annual Report 2012

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

Numberof sharesat thebeggingof 2012

Numberof sharesat theend of2012

Compensation
receivedfrom theChanges Reason
Company
withinforduring the
2012changesreportingperiod (Unit:
RMB10,000
Yuan/before
tax)

Name

Title

GenderAge

Commencement ofservice

Liu Jiren

Chairman & CEO

Male

58

2011-5-25 2014-5-24

7,160,832

7,160,832

330.00Wang
Vice Chairman &Yongfeng President

Male

43

2011-5-25 2014-5-24

3,178,391

3,178,391

216.30

Seizo
Ishiguro

Director

Male

70

2011-5-25 2014-5-24

0

0

0

Klaus
MichaelZimmerDirector & SeniorVice President

Male

57

2011-5-25 2014-5-24

00304.80

Akira
KasanoDirector

Male

57

2011-5-25 2014-5-24

0

0

0

Chen
Ximin

Director, SeniorVice President
& COO

Male

44

2011-5-25 2014-5-24

449,272

449,272

98.00

Fang
Independent
Hongxing Director

Male

41

2011-5-25 2014-5-24

0

0

8.00

Xue Lan

Independent
Director

Male

54

2011-5-25 2014-5-24

0

0

8.00

Gao WenIndependent
Director

Male

57

2011-5-25 2014-5-24

0

0

8.00

Tu
Ganfeng

Chairman, Boardof Supervisors

Male

49

2011-5-25 2014-5-24

0

0

0

Hu Aimin Supervisor

Male

40

2011-5-25 2014-5-24

0

0

0

ShingoKurataSupervisor

Male

42

2011-5-25 2014-5-24

0

0

0

Ge
Shengliu

Supervisor

Male

38

2011-5-25 2014-5-24

315,267

315,267

77.78

Ma Chao Supervisor

Male

36

2011-5-25 2014-5-24

0

0

84.74

Lu
Zhaoxia

Female56

2011-5-25 2014-5-24

2,201,949

Senior Vice
President

Expiry ofservice

1,993,005 -208,944

Note 1118.0065

66

Neusoft Corporation Annual Report 2012

Continued table

Numberof sharesat thebeggingof 2012

Numberof sharesat theend of2012

Compensation
receivedfrom theChanges Reason
Company
withinforduring the
2012changesreportingperiod (Unit:
RMB10,000
Yuan/before
tax)

Title

GenderAge

Commencement ofservice

Zhang
Xia

Senior Vice
President, CTO& CKO

Female48

2011-5-25 2014-5-24

1,103,048

1,103,048

101.00Wang
Jingxi

Senior Vice
President

Male

44

2011-5-25 2014-5-24

792,609792,609

95.00

Zhang
Xiao’ou

Senior Vice
President & CFO

Male

41

2011-5-25 2014-5-24

370,000

370,000

95.00

Li JunSenior Vice
President & CMO

Male

40

2011-5-25 2014-5-24

660,508

660,508

95.00

Wang
Nan

Senior Vice
President &Secretary of theBoard ofDirectors

Female37

2011-5-25 2014-5-24

344,278

344,278

74.00

Wang Li

Former Director,
Senior Vice
President & CFO

Female48

2011-5-25 2012-4-5

1,445,403

1,445,403

—

—

Name

Total

—

—

Expiry ofservice—

18,021,557 17,812,613 -208,944

Note 219.96—

1,733.58

Note 1: From June 25th to 26th 2012, shares held by Lu Zhaoxia decreased by 208,944.
Note 2: The data indicates the change in shareholdings from the beginning of the year to six months after her
expiration of service.
Present directors, supervisors and senior management’s working experience in the past five years:(1) Liu Jiren
Dr. Liu has been Chairman & CEO at Neusoft since August 1999. As one of the founders of Neusoft, which
was established in 1991, Dr. Liu has successfully transformed a small college business into a leading IT solutions &services provider in China with his exceptional academic record and his unparalleled industry insight. 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Neusoft Corporation Annual Report 2012

and General Manager of Neusoft from June 1993 to August 1999.
Dr. Liu started his doctoral study since 1984 at Northeastern University. After completing the research on his
doctoral thesis at Computer Research Institute of the U.S. National Bureau of Standards from 1986 to 1987, Dr.
Liu returned to China in 1987. He then earned his doctorate degree in computer applications at the Northeastern
University, thus becoming China's first doctor in the field of computer applications. Dr. Liu has received a numberof awards, such as“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”,“2011 China Software Industry Leaders in the Past Decade”and“Advanced Worker of National Engineering Research Center”.
(2) Wang Yongfeng
Mr. Wang currently serves as Vice Chairman and President of Neusoft. He joined Neusoft in May 1992 andserved as 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 been President of Alpine Electronics Inc. since June 2010. He joined Alpine in 1978 andserved successively as Operations Manager, Managing Director and Vice General Manager, He served as General
Manager of 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 to joining Neusoft in 2009, 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.
(5) Akira Kasano
Mr. Akira Kasano is Director of Neusoft. He also serves as Director, Executive Director, General Manager of Innovation Division, General Manager of System Quality Division, General Manager of Purchase Management and Director of Reform Promotion Division at Toshiba Solutions Corporation.
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 as well as General Manager
of Embedded Software Division of the Company. Since joining the Company in January 1999, he has served succes-

67

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Neusoft Corporation Annual Report 2012

sively as Manager of the Intelligent Device Development Department, Deputy General Manager of Neusoft Middleware Technologies and Vice President of Neusoft.
Dr. Chen received 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. Currently, healso serves as consulting expert for the Accounting Standards Committee of the Ministry of Finance & China Internal Control Standards Committee, Director of Accounting Society of China, Deputy Director of Chinese Institute of
Finance and Cost for Young and Mid-career Professionals, 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 theState Council of People's Republic of China whilst serving as Independent Director at Shenyang Machine Tool Co.,
Ltd. and Dalian Zhangzidao Fishery Group Co., Ltd.
Dr. Fang received his doctorate degree in accounting from Dongbei University of Finance & Economics, China.
(8) Xue Lan
Dr. Xue holds three titles with Tsinghua University, China, namely, Dean of School for Public Policy andManagement, Director of China Institute for Science and Technology Policy. He is also Vice President of the
China Administration Society, Vice General Director of Chinese Association for Science of Science and S&T Policy,
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, doctorial tutor and specially employed professor for Cheung
Kong Scholars Program.
Dr. Xue received his doctorate degree in engineering and public policy from Carnegie-Mellon University, theUnited 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 maintains an active presence in the industry,currently serving as Dean of the National Engineering Laboratory for Video Technology, President of Audio Video
Coding Standard Group of China, Executive Director of China Computer Association, and Director of Langchao
Electronic Information Industry Co. Ltd.
Dr. Gao received his doctorate degree in electronics from the University of Tokyo, Japan.

Neusoft Corporation Annual Report 2012(10) Tu Ganfeng
Dr. Tu is General Manager of Northeastern University Science & Technology Industry Group Co., Ltd. Dr. Tu isa professor and doctoral advisor. He is also Standing Director of Chinese University Industry Association and Director of the China Metallurgical University Industry Association.
Dr. Tu received his doctorate degree in nonferrous metal metallurgy from Northeastern University, China.
(11) Hu Aimin
Mr. Hu currently works as Vice General Manager and Chief Project Manager of Capital Operations Department, Baosteel Group Co. Ltd. After joining Baosteel in 1995, he successively served as Senior Manager of Financial Planning Department and Investment & Merger Manager of Capital Operations Department.
Mr. Hu earned his bachelor’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 his bachelor’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 hasserved 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 Presidentof American Business Development Division of Neusoft. Since his accession in May 2005, he has served successively
as Sales Manager, Senior Sales Manager and Vice General 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 System from the University of Liverpool, England.
(15) Lu Zhaoxia
Ms. Lu has been Senior Vice President of Neusoft. Since joining the Company in 1995, she has served succes-

69

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Neusoft Corporation Annual Report 2012

sively as Deputy General Manager of Marketing and COO. Prior to that, she was Director of Management Control
Center of Northeastern University, China.
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 Northeastern 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.
Mr. Wang received his bachelor's degree in computer applications from Northeastern University, China.
(18) Zhang Xiao’ou
Mr. Zhang currently serves as Senior Vice President and CFO of Neusoft. In 2012, he was assigned as CFO of
the Company in April 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
as Manager 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.
Dr. Wang received her doctorate degree in Computer Applications from Northeastern University, China.

Neusoft Corporation Annual Report 2012

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.

Chairman

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

Hu Aimin

Baosteel Group Corporation

Vice General Manager of Capital Operation Division & Chief
Project Manager

Seizo Ishiguro

Alpine Electronics Inc.

Legal Manager of Business Planning Department

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

Liu Jiren

Company

Title

Philips and Neusoft Medical Systems Co., Ltd.

ChairmanNokia Siemens Networks Neusoft Commtech Company

Vice Chairman

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

Vice Chairman

Liaoning Shengjing Xikang Healthcare 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.

Director

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

Neusoft Holdings International Inc.

Director

Smartwave Holdings Inc.

DirectorHarman International Industries, Incorporated

Director71

72

Neusoft Corporation Annual Report 2012

Continued table
Name

Wang Yongfeng

Company

Title

Nokia Siemens Networks Neusoft Commtech Company

Director

Liaoning Shengjing Xikang Healthcare Co., Ltd.

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

China Institute for Science and Technology Policy, Tsinghua University

Dean

Xue Lan
Gao WenSchool of Electronic Engineering and Computer Science, Peking University Professor
National Engineering Laboratory for Video Technology

Dean

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

Wang Jingxi

Dalian Kangruidao Investment Co., Ltd.

Director

Zhang Xiao’ou

Dalian Kangruidao Investment Co., Ltd.

Chairman of Board of Supervisors

Nokia Siemens Networks Neusoft Commtech Company

Director

Shenyang Toshiba Neusoft Information Systems Co., Ltd.

Director

NEC Neusoft Information Technology Co., Ltd.

Director

Tu Ganfeng
Lu Zhaoxia

Li Jun7.3 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 accordancewith the decision of the Shareholders’Meeting, the Company shall pay an allowance of RMB 80,000 Yuan (beforetax) to each independent director every year since 2010; other expenses arising from presence at the meeting shallbe 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 determinedby the Board of Directors after the review of its compensation & evaluation committee based on business perfor-

Neusoft Corporation Annual Report 2012

mance and industry reference 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 the compensation 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 17.3358 million Yuan.

7.4 Changes in directors, supervisors and senior management
On April 5, 2012, Wang Li resigned from the posts of Director, Senior Vice President, and CFO for personal reasons.
On April 6, 2012, the 10th Session of the 6th Meeting of Board of Directors reached a resolution to appoint Senior Vice President Zhang Xiao’ou as Chief Financial Officer, responsible for financial operations of the Company
with a term of service till the expiry of his post at this Board of Directors. Mr. Zhang did no more serve as the Financial Operating Officer of the Company.
At the 2011 Shareholders’Meeting held on June 19th 2012, Chen Ximin was elected as the Director of the Company.

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, supervisors and senior management) who have a significant impact on the company's core competitiveness remained stable without 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 coretechnical backbones, 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 2012, in order to maintain thestability of the core technology team, the Company implemented a succession plan and external recruitment programfor key positions. The former was a preventive measure to reserve and foster 3-5 successors for each key position andfill 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 important talent supply and guarantee for the operation of the Company.

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Neusoft Corporation Annual Report 2012

7.6 Employees of Parent Company and Main Subsidiaries
7.6.1 Employees
Number of employees in the parent company

8,378

Number of employees in main subsidiaries

Neusoft Group (Dalian) Co., Ltd.

5,675

Shenyang Neusoft Medical Systems Co., Ltd.

1,043

Shenyang Neusoft Information Technology Co., Ltd.

931

Neusoft Group (Beijing) Co., Ltd.

945

Neusoft Group (Shanghai) Co., Ltd.

936

Neusoft Group (Guangzhou) Co., Ltd.

785
22,403

Total
Number of retirees whose allowance should be paid by theparent company and its main subsidiaries

0

Employee functions
Category

NumberTechnology development

18,500Marketing

1,924

Administration

1,833

Logistics

146
22,403

Total
Geographical Distribution
Country/city

NumberShenyang

8,273

Dalian6,134

Other cities in China

7,305

Japan

244

Europe/America

447
22,403

Total
Education
Education

NumberMaster and above

2,455

Bachelor

17,197

College (3-year)

2,393

Others358

Total

22,403

Neusoft Corporation Annual Report 2012

7.6.2 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 level with 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 sametime, a differentiated compensation 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 human resource 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 careerdevelopment model and“Career Development Roadmap”for employees so that they can choose their career direction and opportunities according to their strengths and interests.
To promote the continuous improvement of the professional competence of employees, the Company has established and 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, a“Falcon Plan”for project managers, architect-oriented“Excellence Program”, and other training programs for leadership development were also set up. Besides, customized
courses based on capacity development have been offered to make a good knowledge preparation for the promotion of employees, providing a comprehensive support for their growth, fair job promotion and development space.

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Neusoft Corporation Annual Report 2012

7.6.4 Employee Constitution
Marketing
8.59%

Management
8.18%
Logistic
0.65%

Technology
development
82.58%

7.6.5 Education Level Chart
Three-yearcollege
10.68%

Others1.60%

Master's degree
and above
10.96%

Bachelor's
76.76%

7.6.6 Labor Outsourcing
Total work hours
Total pay

1,815,000 Hrs
RMB 48,229,525 Yuan

Neusoft Corporation Annual Report 2012

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 thePeople's Republic of China, and relevant regulations formulated by China Securities Regulatory Commission andstock exchanges in China. By revising the Articles of Association according to the Guidelines for Articles of Associa-

tion 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 Pro-

cedure 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 Establishment of Independent Director System of Listed Companies issued by China Securities Regulatory Commission, the Company has developed its independent director system andorganized various committees for the Board of Directors to promote standard development and corporate governance under the Code of Corporate Governance for Listed Companies in China. Also, it is a constituent stock of
SSE Corporate Governance Index. 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

Corporate 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 of a series of reforming measures and actions, which helped further enhance the Company’s
corporate governance. Consequently, the Company received the Best Board of Directors Award granted by the

Board of Directors in both 2007 and 2010. In 2010, it also 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.
In 2012, the Company continued its actions related to corporate governance for further optimized and improved governance. During the reporting period, the Company made amendments to the Articles of Association of

the Company to further clarify the profit distribution policy, especially the cash dividend policy. Also, the Inter-bank
Bond Market Debt Financing Instruments Information Disclosure Management System is established to further improve the company's management system. 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, supervisors and senior management, including:

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Neusoft Corporation Annual Report 2012

(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 an absolute majority. With the help of the Board of Directors, the Company made continuous improvements in corporate governance 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 and effective implementation of international merge & acquisition strategies.
All directors fulfilled their duties diligently and faithfully, attended the meetings of the Board of Directors actively, and provided 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 reasonabledecisions. Also, they protected the interests of the Company and its shareholders through strict oversight and evaluation on business affairs. As a special committee for decision making, nomination, auditing, compensation and evaluation, they played an essential role in decision making for important issues.
(2) Enhance investor relations management
With an always focus on minority investors, the Company used its best efforts to provide them with easy access to company information, making them more confident in their shareholdings. Relying on the Information Dis-

closure Management System and the Investor Relations Management System, 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 Shareholders’Meeting, offered detailed introduction of both 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 reallyowners of the Company. During the reporting period, the Company invites investors to participate in the“Neusoft
Solutions Forum" to enable investors to gain insight into the company's innovative strategies and key business development. The Company received a total number of 74 investors throughout 2012.
(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 corpo-

Neusoft Corporation Annual Report 2012rate governance and promoting normal operation and sustainable development.
(4) Optimize internal control systems
The Company attaches great importance to internal control management and encourage all employees to participate. Focusing on“improving internal control systems to ensure effective operation", the Company has, targeting“effective design and efficient implementation”, comprehensively strengthened the implementation of the internal control standards and established a risk-control oriented, system-based internal control system with complete
processes.
During the reporting period, the Company has continuously implemented and optimized the internal control
management. In accordance with the Basic Standards for Enterprise Internal Control and The Guidelines for Enter-

prise Internal Control released by the Ministry of Finance and other five ministries, the Company improved risk assessment, summarized the risk control & management process, perfected various operations and management systems, optimized internal information systems, and carried out internal control assessment, to actively make further
improvement on internal control systems.
(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 byleveraging the information they possess prior to the disclosure of material sensitive information.
(6) Reinforce the training of directors, supervisors and senior management
The Company helped the directors, supervisors and senior management enforce self-discipline by causing themto learn the laws, regulations and rules formulated by competent authorities in order to further strengthen the directors’knowledge and understanding of standard operation in good faith and promote the normal operation ideal.
During the reporting period, in order to further strengthen the Company's internal management, the Company classified and customized the responsibility and rules of the domestic subsidiaries according to the actual situation. Trainings for corresponding management staff is also or organized to enhance their knowledge and understanding of standard operation in good faith and promote normal operation as well as improve corporate governance.
In addition to continuous consolidation and perfection of corporate governance, the Company will further enhance the 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, supervisors and senior management’s knowledge and understanding of standard operation in good faith inaccordance with applicable laws and regulations as well as relevant regulatory documents such as the Company

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Neusoft Corporation Annual Report 2012

Law of the People’s Republic of China, 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 standard operation andcorporate governance.

8.2 Shareholders’Meeting
8.2.1 The 1st Session of Interim Shareholders’Meeting in 2012
At the first interim Shareholders’Meeting 2012 held on March 30th 2012, the Proposal on Signing Letter ofIntent and other related documents with Alpine Electronics (China) 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 March 31st, 2012.
8.2.2 The 2011 Shareholders’Meeting
At the 2011 Shareholders’Meeting hold on June 19th 2011, the following proposals were approved:
1) Annual Report of the Board of Directors 2011
2) Annual Report 2011
3) Annual Report of the Board of Supervisors 2011;
4) Annual Reports of Independent Directors
5) Annual Financial Report 2011;
6) Proposal on Profit Distribution 2011;7) Proposal on Employment of Financial Auditing Agency 2012;8) Proposal on Estimate of Route Related Transactions 2012;9) Proposal on Re-election of the Board of Supervisors
Please visit the official website of Shanghai Stock Exchange (http://www.sse.com.cn) for more information
about relevant notice which was disclosed on June 20th 2012.
8.2.3 The 2nd Session of Interim Shareholders’Meeting in 2012
At the 2nd Session of Interim Shareholders’Meeting holds on September 18th 2012, the following proposals
were approved:
1. Proposal on revising the Articles of Association

Neusoft Corporation Annual Report 2012

2. Proposal on the amount of security for bank loans of shareholder Aerotel Medical Systems（1998）Ltd.
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 19th 2012.

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 3 in-person
meetings and 6 tele/video conferences. 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

IndeFailure topendent Number ofattendthedirector attendance
Number ofmeeting of
to meetings Number of attendance Number of Number
the Boardof thepersonalbydelegateofof Directors
Board of attendance telephone/ attendance absence
for two
Directors
video means
consecutive
in 2012
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

7

6

1

0

No

0

Klaus Michael Zimmer

No

8

7

6

1

0

No

2

Akira Kasano

No

8

7

6

1

0

No

3

Chen Ximin

No

3

3

2

0

0

No

3

Fang Hongxing

Yes

8

8

6

0

0

No

2

Xue Lan

Yes

8

8

6

0

0

No

1

Gao Wen

Yes

8

7

6

1

0

No

0

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Neusoft Corporation Annual Report 2012

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 otheritems 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
participated in the operations of the special committees, playing an essential role in decision making for important
issues.
1. Nomination Committee
The Nomination Committee of the Company is consisted of 3 members, including 2 independent directors,
one of whom serves as Chairman. In 2012, the Nomination Committee fulfilled its duties and responsibilities actively including nominating directors, senior management staffs.
2. Auditing Committee
The Auditing Committee of the Company is made up of 3 independent directors. Among them, Fang Hongxing is an expert in accounting who also serves as Chairman of the Committee. During the reporting period, the Auditing Committee fulfilled its duties and responsibilities regarding annual report and related transaction auditing ina diligent and faithful manner.
3. The Compensation and Evaluation Committee
The Compensation and Evaluation Committee is made up of three members, of which, two are independent
directors with one serving as Chairman of the Committee. In 2012, the Committee fulfilled its duties and responsibilities actively including reviewing the Company’s compensation systems for employees and senior executives.

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.

Neusoft Corporation Annual Report 2012

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 of developments 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 andheightened senior management's responsibility and created pride in their posts, thus achieving better results in thestability and development of senior management. Based on the good 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.

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Neusoft Corporation Annual Report 2012

Ⅸ Internal Control
9.1 Internal Control Evaluation Report
Upon release of this Report, the Company shall disclose the Internal Control Evaluation Report 2012. For more
information, 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 prepared an auditing
report for the effectiveness of the internal control for Annual Financial Report 2012.
Upon release of this Report, the Company shall disclose the Internal Control Auditing Report 2012 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.

Neusoft Corporation Annual Report 2012

Ⅹ Financial Report
Auditors’Report to Shareholders of Neusoft Corporation
Report No.: BDO [2013] 111284
We have audited the accompanying financial statements of Neusoft Corporation “the(Company”), which comprise the balance sheet/consolidated balance sheet as at December 31, 2012, 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 includes: selecting and applying appropriate accounting policies; making accounting estimates that arereasonable 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 tofraud 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 requirethat 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 therisks 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 order to 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.

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Neusoft Corporation Annual Report 2012

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company asat December 31, 2012 and of its financial performance and its cash flows for the year then ended in accordancewith the Accounting Standards for Business Enterprises.

Li Chen/Jiang Lijun, Chinese Certified Accountants,
BDO CHINA SHU LUN PAN Certified Public Accountants LLP
Shanghai China
Date: March 27th, 2013

Neusoft Corporation Annual Report 2012

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

Note 13Year-end balanceYear-begin balance

Current assets:
Monetary capital

1,047,858,225

831,393,669

Trading financial assets

8,337,715

863,170

Notes receivable

5,767,102

3,042,407

574,584,723

512,545,772

79,912,795

42,660,634

Accounts receivable

13.1

Prepayments
Interests receivable

304,676

Dividends receivable
Other receivables

13.2

141,169,261

231,779,851

399,208,162

234,673,448

88,821,463

168,595,350

2,345,659,446

2,025,858,977

13.3

322,958,466

401,931,507

13.4

2,732,245,904

2,149,288,869

Investment properties

317,051,989

305,082,712

Fixed assets

646,782,233

675,191,398

Construction in progress

32,673,149

9,967,715

136,005,401

141,016,756

Long-term deferred expenses

12,963,672

11,667,429

Deferred tax assets

43,327,690

31,162,641

Subtotal

4,244,008,504

3,725,309,027

Total

6,589,667,950

5,751,168,004

Inventories
Non-current assets due within one year
Other current assets
Subtotal
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investment

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

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

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Neusoft Corporation Annual Report 2012

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

500,000,000

Trading financial liabilities

250,000,000
170,567

Notes payable

106,763,675

83,204,957

Accounts payable

332,931,203

367,795,074

Advance receipts

321,840,397

325,614,892

Employee pays payable

145,123,164

132,562,557

Taxes payable

28,556,889

28,775,208

218,140,587

114,428,677

1,653,355,915

1,302,551,932

403,658,667

403,658,667

134,501,075

134,501,075

Estimated liabilities

14,746,497

11,890,630

Deferred tax liabilities

833,772

86,317

Other non-current liabilities

140,417,544

126,805,810

Subtotal

694,157,555

676,942,499

2,347,513,470

1,979,494,431

1,227,594,245

1,227,594,245

353,061,885

353,061,885

658,985,598

588,413,462

Undistributed profits

2,002,512,752

1,602,603,981

Subtotal

4,242,154,480

3,771,673,573

Total

6,589,667,950

5,751,168,004

Interests payable
Dividends payable
Other payables
Non-current liabilities due within one year
Other current liabilities
Subtotal
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term accounts payable

13.5

Special accounts payable

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

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

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Consolidated Balance Sheet at December 31(Expressed in Renminbi unless otherwise indicated)
AssetsCurrent assets:
Monetary capital
Deposit reservation for balance
Lendings to banks and other financial institutions
Trading financial assets
Notes receivable
Accounts receivable
Prepayments
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
Subtotal
Non-current assets:
Disbursement of entrusted loans and advances
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investment
Investment properties
Fixed assets
Construction in progress
Construction supplies
Disposal of fixed assets
Capitalized biological assets
Oil & gas assets
Intangible asset
Development expenditures
Goodwill
Long-term deferred expenses
Deferred tax assets
Other non-current assets
Subtotal
Total

Note 5Year-end balanceYear-begin balance

5.1

2,095,472,280

1,738,515,965

5.2
5.3
5.4
5.6

14,917,183
14,342,063
1,407,087,344
118,441,067

863,170
36,215,245
1,161,288,549
57,312,087

5.5

204,764,870

179,486,463

5.7

830,972,882

585,158,868

5.8

14,290,515
4,700,288,204

14,262,836
3,773,103,183

5.9
5.10
5.12
5.13
5.14
5.15

403,159,918
25,954,175
390,074,357
317,051,989
1,801,268,482
195,555,957

401,931,507
150,710,187
703,226,389
438,134,937
1,395,400,942
307,799,158

5.16

389,276,138

428,316,641

5.17
5.18
5.19

140,387,437
72,063,173
66,353,503

227,376,502
53,694,146
45,591,522

3,801,145,129
8,501,433,333

4,152,181,931
7,925,285,114

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

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Neusoft Corporation Annual Report 2012

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

Note 5Year-end balance

5.21

511,312,055

Year-begin balance

Current liabilities:
Short-term borrowings

470,000,000

Borrowings from central bank
Customer and interbank deposits
Borrowings from bank and other financial institutions
Trading financial liabilities

5.22

170,567

Notes payable

5.23

107,630,675

83,204,957

Accounts payable

5.24

620,096,812

543,996,141

Advance receipts

5.25

497,627,237

452,920,955

Employee pays payable

5.26

329,621,795

292,042,551

Taxes payable

5.27

65,941,991

67,567,092

Securities sold under repurchase agreements
Fees and commissions payable

Interests payable

205,724

Dividend payable
Other payables

5.28

212,020,218

149,882,015

120,743

71,666

2,344,371,526

2,060,061,668

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

5.30

84,000,000

104,000,000

Bonds payable

5.31

403,658,667

403,658,667

Long-term accounts payable

5.32

179,459,431

134,609,431

Estimated liabilities

5.29

18,628,581

15,686,425

Deferred tax liabilities

5.19

3,738,493

2,409,781

Other non-current liabilities

5.33

222,597,627

189,735,874

912,082,799

850,100,178

3,256,454,325

2,910,161,846

Special accounts payable

Subtotal
Total

Neusoft Corporation Annual Report 2012

Continued table
Liabilities and owners' (shareholders') equity

Note 5Year-end balanceYear-begin balance

Paid-in capital (share capital)

5.34

1,227,594,245

1,227,594,245

Capital reserves

5.35

356,289,108

362,247,201

5.36

667,275,850

596,703,714

5.37

Owners' (shareholders') equity

Less: treasury stocks
Special reserves
Surplus reserves
General risk provisions
Undistributed profits

2,922,439,964

2,536,698,174

Converted difference in foreign currency statements-54,261,434-48,565,779

Total owners' equity attributable to parent company

5,119,337,733

4,674,677,555

125,641,275

340,445,713

Subtotal

Minority interest

5,244,979,008

5,015,123,268

Total

8,501,433,333

7,925,285,114

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

91

92

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Income Statement 2012
(Expressed in Renminbi unless otherwise indicated)
Item

Note 13

Amount in thisperiodAmount in previous
period

1. Revenue from operations

13.6

3,705,696,757

3,027,330,275

Less: Operating costs

13.6

2,694,231,947

2,193,319,213

Business taxes and surtaxes

73,695,704

55,114,928

Sales expenses

192,933,758

153,527,526

Administrative expenses

376,159,961

354,954,095

Financial expenses

40,914,330

5,338,347

Impairment loss on assets

33,446,174

12,104,692

7,645,112

950,557

116,274,913

14,018,085

1,448,885

6,038,618

2. Operating profit ("-" for loss)

418,234,908

267,940,116

Add: Non-operating incomes

93,473,496

115,768,235

Less: Non-operating expenses

1,633,648

3,391,560

Add: Income from change in fair value ("-" for loss)
Investment income ("-" for loss)
Including: Income from investment on associates
and joint ventures

Including: Loss on disposal of non-current assets
3. Total profit ("-" for loss)

13.7

1,027,214

1,594,749

510,074,756

380,316,791

Less: Income tax

39,593,849

32,384,441

4. Net profit ("-" for loss)

470,480,907

347,932,350

470,480,907

347,932,350

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

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Consolidated Income Statement 2012
(Expressed in Renminbi unless otherwise indicated)

Item

Note 5

1. Revenue from operations

Amount in thisperiodAmount inprevious period

6,960,195,011

5,751,249,330

6,960,195,011

5,751,249,330

6,677,046,223

5,484,036,286

5.38

4,729,720,928

4,004,998,405

Business taxes and surtaxes

5.39

111,108,386

96,105,687

Sales expenses

5.40

635,074,786

497,920,161

Administrative expenses

5.41

985,944,947

819,957,825

Financial expenses

5.42

78,565,067

23,649,196

Impairment loss on assets

5.45

136,632,109

41,405,012

5.43

14,224,580

950,557

5.44

112,124,066

42,136,578

39,038,402

39,714,198

409,497,434

310,300,179

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 andjoint ventures
Exchange income ("-" for loss)
3. Operating profit ("-" for loss)
Add: Non-operating incomes

5.46

139,552,127

188,085,954

Less: Non-operating expenses

5.47

6,381,048

5,499,473

5,173,148

2,748,601

542,668,513

492,886,660

106,899,561

69,341,108

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

5.48

93

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Neusoft Corporation Annual Report 2012

Continued table
Item

Note 5

5. Net profit ("-" for loss)

Amount in thisperiodAmount inprevious period

435,768,952

423,545,552

456,313,926

417,068,980-20,544,974

6,476,572

Including: Net profit of the merged party which has been realized prior to the combination
Net profit attributable to the shareholders of the parent
company
Minority interest
6. EPS:(1) Basic EPS

5.49

0.37

0.34

(2) Diluted EPS

5.49

0.37

0.34

5.50

-11,853,741-22,413,285

8. Total composite income

423,915,211

401,132,267

Total composite income attributable to the shareholders of
the parent company

444,420,178

394,468,919

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

6,663,348

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

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Cash Flow Statement 2012
(Expressed in Renminbi unless otherwise indicated)
Item

Amount in thisperiodAmount in previous
period

1. Cash flow from operating activities
Cash received from the sales of products or provision of labor services
Tax refund
Other cash receipts relating to operating activities
Subtotal
Cash paid for goods and labor services

3,888,212,496

3,015,281,197

32,015,708

58,520,232

1,498,246,370

1,325,930,211

5,418,474,574

4,399,731,640

3,227,360,254

3,048,007,907

Cash paid to and for employees

924,942,579

607,331,520

Payments for taxes

216,183,677

144,833,142

Other cash payment relating to operating activities
Subtotal
Net cash flow from operating activities

699,540,199

183,083,465

5,068,026,709

3,983,256,034

350,447,865

416,475,606

2. Cash flow from investment activities
Cash received from disinvestment
Cash received from investment income

1,360,000,000
109,127,566

6,047,960

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

26,855,346

25,126,894

Net cash received from disposal of subsidiaries and other operating units

54,523,596

Other cash received relating to investment activities

299,939,131

126,446,883

1,850,445,639

157,621,737

79,611,913

123,858,787

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

1,020,000,000

400,000,000

Net cash received from subsidiaries and other operating units

875,000,000

544,151,832

Other cash payments relating to investment activities

210,143,985

109,149,331

Subtotal

2,184,755,898

1,177,159,950

Net cash flow from investment activities-334,310,259-1,019,538,213

500,000,000

300,000,000

3. Cash flow from financing activities
Cash received from investors
Cash received from borrowings
Cash received from issuing bonds

400,000,000

Other cash received relating to financing activities
Subtotal

500,000,000

700,000,000

95

96

Neusoft Corporation Annual Report 2012

Continued table
Item

Amount in thisperiodAmount in previous
periodCash paid for borrowings

250,000,000

180,000,000

Cash paid for dividends, profit distribution or interest expenses

47,114,736

14,325,313

100,000

1,242,000

Subtotal

297,214,736

195,567,313

Net cash flow from financing activities

202,785,264

504,432,687-2,458,314-2,682,913

216,464,556-101,312,833

831,393,669

932,706,502

1,047,858,225

831,393,669

Other cash paid relating to financing activities

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

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Consolidated Cash Flow Statement 2012
(Expressed in Renminbi unless otherwise indicated)
Item

Note 5

Amount in thisperiodAmount inprevious period

7,275,198,214

5,904,584,629

56,067,242

91,508,307

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

366,904,197

341,055,750

7,698,169,653

6,337,148,686

3,462,929,495

2,888,590,902

2,892,181,223

2,327,332,220

521,646,458

337,820,086

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
Subtotal
Net cash flow from operating activities

5.51

504,176,955

483,208,874

7,380,934,131

6,036,952,082

317,235,522

300,196,604

2. Cash flow from investment activities
Cash received from disinvestment
Cash received from investment income

1,116,000,000
49,327,100

24,010,000

97

98

Neusoft Corporation Annual Report 2012

Continued table
Amount in thisperiodAmount inprevious period

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

27,099,505

158,526,740

Net cash received from disposal of subsidiaries and other operating
units

415,773,861

Item

Other cash received relating to investment activities

Note 5

5.51

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

270,000

15,905,244

1,608,470,466

198,441,984

406,343,260

412,253,867

1,116,000,000

400,000,000

38,500,000

153,044,444

143,985

2,400,926

Net increase of pledged loan
Net cash received from subsidiaries and other operating units
Other cash payments relating to investment activities

5.51

Subtotal
Net cash flow from investment activities

1,560,987,245

967,699,237

47,483,221-769,257,253

60,288,436

21,561,981

60,288,436

21,561,981

642,975,880

677,000,000

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

400,000,000

Other cash received relating to financing activities
Subtotal

703,264,316

1,098,561,981

Cash paid for borrowings

625,800,807

533,277,160

Cash paid for dividends, profit distribution or interest expenses

62,454,803

34,665,024

3,610,159

3,244,741

100,000

1,242,000

Subtotal

688,355,610

569,184,184

Net cash flow from financing activities

14,908,706

529,377,797

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

4. Effect of change in exchange rate on cash and cash equivalents
5. Net increase of cash and cash equivalents
Add: Year-begin cash and cash equivalent balance
6. Year-end cash and cash equivalent balance

5.51-28,135,034-11,589,325

351,492,415

48,727,823

1,736,706,930

1,687,979,107

2,088,199,345

1,736,706,930

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

353,061,885

Total

470,480,907

470,480,907

470,480,907

2,002,512,752 4,242,154,480-70,572,136-70,572,136

470,480,907

470,480,907

399,908,771

1,602,603,981 3,771,673,573

1,602,603,981 3,771,673,573

General risk Undistributed
provisions
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' equity

4) Other3) Dividends to owners (shareholders)

658,985,598

70,572,136

2) Appropriation of general risk provisions

70,572,136

70,572,136

588,413,462

588,413,462

Surplusreserves

1) Appropriation of surplus reserves

1,227,594,245

353,061,885

Specialreserves

Amount in this period(4) Dividends

3) Other2) Amounts of share-based payments recognized inowners' 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 2012 ("-" for decrease)

2. Year-begin balance

Other

Prior-period error correction
1,227,594,245

353,061,885

1,227,594,245

1. Balance at the end of 2011

Add: Change in accounting policies

Capitalreserves

Paid-in capital(share capital)

Item

Less:
Treasuryshares(Expressed in Renminbi unless otherwise indicated)

Statement of Changes in Equity 2012

Neusoft Corporation

Neusoft Corporation Annual Report 201299

353,061,885

588,413,462

General risk
provisions

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

52,189,853

52,189,853

536,223,609

536,223,609

Surplusreserves

52,189,853

Specialreserves

1) Appropriation of surplus reserves

1,227,594,245

353,061,885

353,061,885

Capitalreserves

Amount in previous period(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 2012 ("-" for decrease)

2. Year-begin balance

Other

Prior-period error correction
1,227,594,245

1,227,594,245

1. Balance at the end of 2011

Add: Changes in accounting policies

Paid-in capital(share capital)

Item

Less:
Treasuryshares(Expressed in Renminbi unless otherwise indicated)

Statement of Changes in Equity 2012 (Continued)

Neusoft Corporation

1,602,603,981-52,189,853-52,189,853

347,932,350

347,932,350

295,742,497

1,306,861,484

1,306,861,484

Undistributed
profits

3,771,673,573

347,932,350

347,932,350

347,932,350

3,423,741,223

3,423,741,223

Total

100
Neusoft Corporation Annual Report 2012

Capitalreserves

667,275,850

Other

Minority
interest
Total

40,007423,915,211-11,853,741

435,768,952

229,855,740

60,248,427-3,610,159-3,610,159-3,610,159-3,610,159-250,697,739 -250,697,739

60,008,427-190,689,312 -190,449,312-5,695,655 -20,504,967-5,695,655-20,544,974-5,695,655 -214,804,438

2,922,439,964 -54,261,434 125,641,275 5,244,979,008-70,572,136-70,572,136

456,313,926

456,313,926

385,741,790

2,536,698,174 -48,565,779 340,445,713 5,015,123,268

2,536,698,174 -48,565,779 340,445,713 5,015,123,268

General
Undistributed
risk
profits
provisions

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

1) Appropriation of surplus reserves

70,572,136

596,703,714

596,703,714

Surplusreserves

70,572,136

Less:
SpecialTreasury
reserves
shares(4) Dividends

3) Other

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

240,000

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

240,000

1) Capital paid in by owners-6,198,093

Subtotal of (1) & (2)(3) Capital paid in and reduced by owners-6,198,093-5,958,093

1,227,594,245 362,247,201

1,227,594,245 362,247,201

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

3. Changes through 2012 ("-" for decrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Changes in accounting policies

1. Balance at the end of 2011

Item

Equity attributable to parent company

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

Consolidated Statement of Changes in Equity 2012

Neusoft Corporation

Neusoft Corporation Annual Report 2012101

Capitalreserves
Other

Minority
interest
Total-21,844,159-3,244,741-3,244,741-3,244,741-3,244,741-902,544

32,925,815-902,544

32,023,271
32,925,491

401,132,267-22,413,285

423,545,552

429,910,797

32,022,947

6,663,348

186,776

6,476,572

2,536,698,174 -48,565,779 340,445,713 5,015,123,268-52,189,853-52,189,853

417,068,980 -21,844,159

417,068,980

364,879,127 -21,844,159 35,441,554

2,171,819,047 -26,721,620 305,004,159 4,585,212,471

2,171,819,047 -26,721,620 305,004,159 4,585,212,471

General
Undistributed
risk
profits
provisions

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)

596,703,714

52,189,853

2) Appropriation of general risk provisions

1) Appropriation of surplus reserves

52,189,853

544,513,861

544,513,861

Surplusreserves

52,189,853

Less:
SpecialTreasury
reserves
shares(4) Dividends

3) Other

1,227,594,245 362,247,201

3242) Amounts of share-based payments recognized in owners' equity

3241) Capital paid in by owners-755,902

Subtotal of (1) & (2)(3) Capital paid in and reduced by owners-755,902-755,578

1,227,594,245 363,002,779

1,227,594,245 363,002,779

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

3. Changes through 2012 ("-" for decrease)

2. Year-begin balance

Other

Prior-period error correction

Add: Changes in accounting policies

1. Balance at the end of 2011

Item

Equity attributable to parent company

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

Consolidated Statement of Changes in Equity 2012 (Continued)

Neusoft Corporation

102
Neusoft Corporation Annual Report 2012

Neusoft Corporation Annual Report 2012

Neusoft Corporation
Notes to Financial Statements 2012
Note 1 Company Profile
Neusoft Corporation “the(Company”) formerly“Shenyang Neusoft Co., Ltd.”, is a Sino-foreign joint venture
duly organized and registered 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 theCompany’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. ofNortheast Institute of Technology “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 restructuring in the Zone. Neu-Alpine
Software was a joint venture established in June 1991 with Alpine Electronics Inc. The company came from twocollege start-ups of the Northeastern University, OPENSOFT System Co., Ltd. of Northeast Institute of Technology“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 restructuring in 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”(), theCompany 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 originalcontrolling 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-fundedstock 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,

103

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Neusoft Corporation Annual Report 2012

the Company’s stock structure was changed after the reform. The Company merged Neusoft Group Ltd. on January 16th, 2008 and finished corresponding share registration and cancellation procedures in Shanghai Branch of China Securities Depository and Clearing Corporation Limited under the authorization of 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 finished registration of changes in name and domicile. On October 29th, 2008, the Company carried out 2008 Half-yearly Profit Distribution and Share 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 shareswere 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 of 524,612,925 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, 2012, the Company and its subsidiaries “the(Group”) have evolved into a high-tech complex specialized in industry solutions, product engineering solutions related software products/platform and services
through seamless integration of software and services, 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, 2012, the Company’s corporate structure is as follows:
The Company

38 directly-controlledsubsidiaries

10 directly-held（holding 50% equity above
or below but having actual
control rights）

other investments

associates and1 branchNeusoft Corporation Annual Report 2012

Note 2 Principal 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 Republicof 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 Enterprises”), as well as theRegulation 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 Enterprise
The Company’s Financial Statements have been prepared in accordance with the Accounting Standards for
Business Enterprises and give a true and fair view of the Company’s financial position, results of operations, cash
flows and other relevant information obtained and applied in 2012.
2.3 Accounting Period
The accounting period is from January 1 to December 31, 2012.
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 shallbe measured on the basis 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 and recognize the assets and liabilities based on thebook values after the adjustment.
The difference between the book value of the net assets obtained from the acquisition and that of the acquisition consideration (or the 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, assess-

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ment 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 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 andbook values shall be included in current P&L.
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.
If the combination cost exceeds the fair value of the identifiable net assets obtained from the acquiree, the difference shall be recognized as goodwill; otherwise, it will be included in current P&L after review.
As for all the other assets excluding intangible asset acquired from the acquiree in the combination (not limited to the assets which have been recognized by the acquiree), if the economic benefit brought by them is likely toflow in the Company and their fair values can be measured reliably, they shall be separately recognized and measured by their fair values; for any intangible asset, if its fair value can be measured 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 asliabilities and measured at fair value.
The deductible temporary differences obtained from the acquiree through the combination shall not be recognized if they are not qualified 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 included incurrent 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

Neusoft Corporation Annual Report 2012

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.
2.6 Preparation of the consolidated financial statements
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.
The accounting policies and period adopted by the subsidiaries shall be in accordance with that of the Company; otherwise, they shall be adjusted according to the Company’s policies and period when preparing the consolidated financial statements. For any subsidiary acquired from business combination under non-common control, its
financial statements shall be adjusted based on the fair value of identifiable 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, effect of internal transactions between the Company and subsidiaries
or among the subsidiaries 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 indicatedunder the item of owners’equity in the consolidated balance sheet and the item of net profit in the consolidated
income statement. The difference by which 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.
During the reporting period, if any subsidiary is obtained through business combination under common control, the year-begin balance 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.
During the reporting period, if any subsidiary is obtained through business combination under non-common
control, the year-begin balance of the consolidated balance sheet shall have no change; the subsidiary’s income,expenses, profit from the acquisition date to 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 the Company before theacquisition date shall be re-measured based on its fair value on the acquisition date. Difference between the fairvalue and book value shall be included into current investment income. If other composite income is involved withthe foregoing equity, such income shall be converted into current investment income on the acquisition date.

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During the reporting period, in case of disposal of a subsidiary, the subsidiary’s income, expenses, profit fromthe beginning of the period 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 by which 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 ininvestment income in the period when the control is lost. Other composite income relevant to the equity investment in the originally owned subsidiary shall be converted into investment income in the period when the control
is lost.
The difference between long-term equity investment newly obtained from purchasing minority interest andthe subsidiary’s identifiable net assets attributable to the Company which is calculated according to newly increased equity ratio, and the difference between disposal price obtained from disposal of equity investment to thesubsidiary, without losing control over the subsidiary, 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.
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 capitalizationof borrowings. The foreign currency-denominated non-monetary items measured at the historical cost shall still betranslated 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

Neusoft Corporation Annual Report 2012

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 be translated 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 percentage 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 fairvalue 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 value 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

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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 relevanttransaction 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 nochange 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 (comparedwith the total amount of such investment before re-classification or sale), the rest of such investment will be re-classified as available-for-sale financial asset; meanwhile, 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 3 months 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 iscomposed 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, otherreceivables, 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.

Neusoft Corporation Annual Report 2012

(4) Available-for-sale financial assets
The sum of fair value (deducting cash dividends that have been recognized but not issued or bond interests tobe 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 fair value 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, andamortized cost shall be 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 the ownership 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 theamounts 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 fairvalue originally recorded in 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 ofthe 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

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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 case the 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 thefinancial liabilities or a 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 same time 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 shall terminate the recognition of the existing financial liabilities or part of them, and at the sametime recognize the financial liability after the revisions 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 consideration (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 terminated and 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, estimated profit 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

Neusoft Corporation Annual Report 2012financial 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 is deemed non-temporary after considering all relevant factors, impairment of such asset shall berecognized; and the accumulated losses as a result of the decline in the fair value that is originally included in theowners’equity shall be removed and recognized as impairment losses.
(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:
Determination of significant single amountThe balance of accounts receivable is above RMB 10 million Yuan and thebalance 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 make provision 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.

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.
Appropriation method

Portfolio

Account receivable aging analysis 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

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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 inprocess 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 mainlyrefers to the cost of contracted projects in process, including cost of system hardware that have been delivered tocustomer’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 the estimated sales expenses and taxes;
and the net realizable value of materials to be processed is calculated by the estimated price of finished 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 morethan ordered quantities in the contract, the net realizable value of the surplus is calculated based on the market
price.

Neusoft Corporation Annual Report 2012

In case the factors causing the write-down of the inventories disappear, the write-down shall be recovered tothe 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.
2.12 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 assts 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 thecapital surplus is not sufficient for offsetting, the retained earnings shall be adjusted. The direct costs arising fromthe business combination, including the expenses for audit, assessment and legal services, shall be included in current P&L. The bonds issued for the business combination or the handling fees, commissions and expenses for assuming other liabilities shall be included in initially measured amount of the bonds or other debts. The handlingfees, commissions and expenses for the issuance of equity securities for the business combination shall be credited
against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset.
Business combination under non-common control: The combination cost confirmed on the acquisition date isrecognized 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 theacquisition date. The acquirer’s expenses of audit, legal services, assessment and consulting services, agent fee andother related administrative expenses shall be included in current P&L; the transaction expenses for the issuance ofequity 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 sum of 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.

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Neusoft Corporation Annual Report 2012For long-term equity investment through issuing equity securities, the fair value of issued equity securities shallbe 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 the contract 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 valueof 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 andpayable 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 overthe 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 costof the long-term equity investment; otherwise, the difference shall be 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 the shareholding 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 beenrecognized 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

Neusoft Corporation Annual Report 2012attributable 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 unfulfilledinternal 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 materially constitute net investment on the investee, to offset against the book value of long-term receivables. At last, estimated liabilities shall be recognized 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 recognized shall 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.
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 financial and operating decisions relating to the activity require the unanimous consent of theparties sharing control. If the investing enterprise and other party exercise common control over the investee, theinvestee is its joint venture.
Significant influence refers to the investing enterprise’s power to participate in decision making of theinvestee’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 thedifference 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 from business combination) with impairment signs is lower than its book value, the difference

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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 measurementof 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 operationand management with more 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 determinedaccording to the nature and 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.

Neusoft Corporation Annual Report 2012

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 thefair 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 so that 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 on such fixed asset. If recognition of its recoverable amount is not reachable, its recognition shall bebased 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 book value of the land use right constitutes the cost of houses and buildings. As for land use
right that has been recorded into the cost of houses and buildings, the Company has removed it from book valueof 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, the cost of land use rightwas 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 Construction in progress
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 becounted into fixed assets at the estimated value based on construction budget, cost or actual cost upon it isavailable for intended use; and depreciation of fixed assets shall be made as per the Company’s depreciation policyof fixed assets. After the final account, the originally estimated value shall be 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

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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 in progress. 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 value 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; the write-down amount shall be recognized as impairment loss on construction in progress and includedin 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 of assets 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 readyfor its intended use or for sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:(1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets orinterest-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 have already started.
2.16.2 Capitalization period
Capitalization period refers to the period from the commencement to the termination of the capitalization ofNeusoft Corporation Annual Report 2012

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 havereached 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 finished 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 finished 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 stepfor making the qualified asset under acquisition and construction or production ready for the intended 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 charges of 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 thecapitalized 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 ofcapitalization, 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 capitalized. 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
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

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expenditures directly attributable to intangible asset for the expected purpose. Where the payment of purchaseprice for intangible asset is delayed beyond the normal credit conditions, which is for financing purpose, the costof intangible asset shall be determined on the basis of the current value of the purchase price.
For intangible asset obtained from the debtor for payment of debts through debt restructuring, its account value
shall be recognized based on its fair value. The difference between the book value of the restructured debts andfair 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 theoutgoing 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.
For intangible asset obtained through business combination under common control, its account value shall berecognized based on acquiree’s book value of the asset;
For intangible asset obtained through business combination under non-common control, its account value shallbe based on its fair value. The cost of intangible asset formed during internal development activities consists of thematerials, labor cost, register fee, amortization of other patents and franchise right during development period, interests paid for capitalization, and other direct expenses before the intangible asset is available for intended use.
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 bringeconomic benefit to the Company, it shall be regarded as an intangible asset with uncertain service life and not beamortized.
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

Neusoft Corporation Annual Report 2012

Service life and amortization method of the intangible asset with limited service life shall be rechecked at theend of each report year.
The rechecked result in current period shows that there is no difference in the estimate of service life andamortization 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 thefair 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 so that 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 planor design, before its commercial production or use, to create new or essentially improved material, device andproducts, 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

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Neusoft Corporation Annual Report 2012asset:(1) Complete this intangible asset and make it usable or salable technically;(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 intocurrent 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 combinationis 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, the amortization shall bebased on the proportion of book 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 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 amountwill be calculated and impairment loss will be recognized after comparison with the book value. Impairment teston 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

Neusoft Corporation Annual Report 2012

than the book value, the difference shall be recognized as impairment loss of goodwill. The impairment loss will berecorded 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 lessaccumulated amortization. If the long-term deferred expense cannot be profitable in future accounting periods, theamortized 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 and cash-settled share-based payments.
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 theequity 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 a equity-settled share-based payment in return for employee services, if the right cannot be exercised untilthe vesting period comes to an end or until the prescribed performance conditions are met, then on each balance

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Neusoft Corporation Annual Report 2012sheet date within the vesting period, the services obtained in the current period shall, based on the best estimateof the number of vested equity instruments, be included in the relevant costs or expenses and the capital reservesat 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, recognizedaccumulated amount of equity-settled share-based payment on each balance sheet date reflects the best estimateof 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 matterthe 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 date shall 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, andthe liabilities shall be increased accordingly. As to cash-settled share-based payment, if the right may 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 andon each account date prior to the settlement of the relevant liabilities, the fair values of the liabilities shall be
re-measured and the changes shall be included in current P&L.

Neusoft Corporation Annual Report 20122.22 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 bepresented 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 shall adopt 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 thecompleted 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:(1) If the contract costs can be recovered, the contract revenue shall be recognized based on actually recoverable contract costs; and the 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 no contract revenue shall be recognized.
The current contract revenues in the current period shall, on the balance sheet date, be recognized in accordance with the balance of the total contract revenues multiplied by the schedule of completion then deducting theaccumulated 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 recognized in preceding accounting
periods. If the total expected contract costs exceed the total expected contract revenue, the expected loss shall berecognized 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 tothe 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; andrelevant 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.

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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 shallbe recognized upon completion of the provision.
If the start date and finish date are attributed to different accounting years, and the transaction results canbe measured reliably, the relevant 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 forsoftware 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 consist of asset-related subsidies and income-related subsidies.
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 for compensating the related expenses or losses incurred to the Company
shall be directly included in current non-operating income.
2.24 Deferred income tax assets/liabilities
The Company shall recognize the deferred income tax assets arising from a deductible temporary difference toNeusoft Corporation Annual Report 2012

the extent of the amount of the taxable income which it is most likely to obtain and can be used for offsetting thedeductible 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 wholelease term without deducting rent-free period and be included in current expenses. Initial direct expenses paid by
the Company for the transactions related to the lease 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 expense from 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 wholelease term without deducting rent-free period and be recognized as lease income. Initial direct expense paid by theCompany for the leasing transactions shall be included in current expenses; if the amount of the expense is large,
it shall be capitalized and included in current income as the same as the recognition of lease income.
If the Company assumes the related expense that should have been borne by the lessee, the Company shalldeduct the expense from the total lease income. Deducted lease income shall be equally allocated based on thelease term.
2.26 Related parties
When a party controls, jointly controls or exercises significant influence over another party, or when two or moreparties 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 the state 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;

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(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 their close 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.
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
Tax type and rateType

Tax basisTax rateVAT

The VAT payable is recognized as the difference between
output VAT which is calculated based on income from salesof 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

5% (Note 2)
12%
1.2%

Urban maintenance and construction tax, EdBased on actually paid business tax, VAT and consumption tax
ucational surtax and local education surtax

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

Corporate income tax

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

Based on taxable income amount

Note 1: According to the Policies to Further Support the Development of Software and Integrated Circuit Industry issued by
the State Council 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 andSome Modern Service Industries (CS [2011] No. 111) as well as the Announcement about Pilot Change in Collection of Business Tax
into VAT in Eight Provinces/Cities for Transportation and Some Modern Service Industries (CS [2012] No. 71) released by the Ministry

Neusoft Corporation Annual Report 2012of Finance of the People’s Republic of China and State Taxation Administration, the Company’s subsidiaries Neusoft Group (Shanghai) Co., Ltd., Shanghai Neufashion Digital Technology Co., Ltd., since January 1st, 2012, Neusoft Group (Beijing) Co., Ltd., Beijing
LBS Social Insurance Information Technology Co., Ltd., Neusoft Group (Tianjin) Co., Ltd., Wuhan Neusoft Information Technology
Co., Ltd., since September 1st, 2012, Neusoft Group (Wuxi) Co., Ltd., Neusoft Group (Wuhu) Co., Ltd., Nanjing Neusoft System Integration Co., Ltd., Neusoft Group (Nanjing) Co., Ltd., since October 1st, 2012, Neusoft Group (Guangzhou) Co., Ltd., Guangzhou Neufashion Digital Technology Co., Ltd. and Guangdong Neusoft Co., Ltd., since November 1st, 2012, Hangzhou Neusoft Co., Ltd., sinceNovember 1st, 2012, were subject to the collection change from business tax into VAT at a rate of 6%.
Note 2: Business tax was paid by 5% of income from software technology development, transfer and service, system integration, leasing, labor service, ad production as well as net income from advertising agency. According to the Notice about Taxation

related to the State Council’s Announcement to Advance Technology Innovation, Develop High-tech and Promote Industrialization issued by the Ministry of Finance and State Taxation Administration (CSZ [1999] No. 273) and executed by Shenyang Bureauof Finance and Shenyang Taxation Bureau (SCYZ [2000] No. 102), income from technology transfer, development, consulting andtechnology service shall be exempted from business tax. As per the requirements of the Administrative Notice (GSH [2004] NO.
825) given by the State Administration of Taxation, the Company was entitled to the foregoing preferential policy after registration of the approved technology contract and relevant certificates in local tax bureau.
Note 3: According to the Notice about Unification of Local Education Surtax Policies (CZ [2010] NO. 98), the Company shallpay 7%, 3% and 2% of the sum of taxable VAT, consumption tax and business tax respectively for the urban maintenance andconstruction 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 Corporate Income Tax Law of the People's Republic of China (ZXL [2012] NO. 63), rate of corporate income tax shall be cut off to 15% for high-tech companies that are supported by the State. The Company and its subsidiary
Neusoft Group (Dalian) Co., Ltd. “Dalian(
Neusoft”), as high-tech companies, were entitled to this preferential policy in 2012. In
addition, according to the Notice about Corporate Income Tax Preferential Policy (CS [2008] NO.1) given by the State Taxation Administration, rate of corporate income tax shall be cut off to10% for key software companies under certain national plan. In
2011 - 2012, the Company and Dalian Neusoft was recognized as key software companies jointly by China’s National Development and Reform Commission, the Ministry of Industry and Information, Ministry of Finance and Ministry of Commerce and State
Taxation Administration and thereby was granted the preferential policy at the rate of 10%.
According to the Corporate Income Tax Law of the People's Republic of China (ZXL [2007] NO. 63), corporate income taxes
on following high-tech subsidiaries were paid at the rate of 15%: Neusoft Group (Beijing) Co., Ltd., Shenyang Neusoft Medical
Systems Co., Ltd., Chengdu Neusoft System Integration Co., Ltd., Xi’an Neusoft System Integration Co., Ltd., Qinhuangdao Neusoft Co., Ltd., Shenyang Neusoft Information Technology Service Co., Ltd. and Shandong Neusoft System Integration Co., Ltd.
According to the Notice about Corporate Income Tax Preferential Policy (CS [2008] NO.1) given by the State Council, the Company’s subsidiaries including Neusoft Group (Shanghai) Co., Ltd., Neusoft Group (Guangzhou) Co., Ltd., Shenyang Neusoft System
Integration Technology Co., Ltd., and Neusoft Group (Guangzhou) Co., Ltd. were exempted from corporate income tax in the firsttwo years since the profit-making year and pay the tax by half from the third to fifth year. Confirmed by the applicable tax administration, Shenyang Neusoft System Integration Technology Co., Ltd., Neusoft Group (Guangzhou) Co., Ltd., Neusoft Group (Shanghai) Co., Ltd. were in the preferential period when only half corporate income tax shall be exempted at a rate of 12.5%.
Other domestic subsidiaries paid the tax at the rate of 25% according to the Corporate Income Tax Law of the People's Re-

public of China.

131

Wholly
Beijingowned

WhollyQingdaoowned

WhollyChangsha
owned

WhollyNanjingowned

WhollyChengduowned

WhollyXi’an
owned

WhollyWuhan
owned

Neusoft Group(Beijing) Co., Ltd.

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.

Domicile

WhollyShenzhen
owned

Type

Shenzhen Neusoft
Co., Ltd.

Subsidiary

25,000,000

35,000,000

Limitedliability
company

Limitedliability
company

20,000,000

Limitedliability
company

12,000,000

12,000,000

Limitedliability
company

Limitedliability
company

50,000,000

Limitedliability
company

Computersoftware/hardware

Computersoftware/hardware

Computersoftware/hardware

Computersoftware/hardware

Computersoftware/hardware

Computersoftware/hardware

25,000,000

32,502,469

20,000,000

12,000,000

12,000,000

50,000,000

100

100

100

100

100

100

100

Computer software/
Limitedhardware, import/export
liability
340,000,000
339,396,361
of related goods andcompanytechnologies

Computersoftware/hardware
100

5,000,000

Limitedliability
company

Scope of business

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders
5,000,000

RegisteredcapitalNature4.1.1 Wholly-owned or controlled subsidiaries

4.1 Subsidiaries

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

Note 4 Business Combination and Consolidation of Financial Statements

132
Neusoft Corporation Annual Report 2012

20,000,000 Computer hardware

WhollyTianjinowned

Neusoft Group(Tianjin) Co., Ltd.

Limitedliability
company

WhollyHangzhouowned

Hangzhou Neusoft
Co., Ltd.

20,000,000

500,000

200,000,000

LimitedComputer software,
liability
200,000,000 technical consulting
companyand services

WhollyShanghai
owned

Neusoft Group(Shanghai) Co., Ltd.
Computer software,
500,000 technical consulting
and services

130,000,000

LimitedComputer software,
liability
130,000,000 technical consulting
companyand services

Neusoft Group
WhollyGuangzhou(Guangzhou) Co., Ltd. owned

Limitedliability
company

20,000,000

20,000,000

8,500,000

850,000
USD

12,416,895

1,000,000

387,082,539

Computer software,
20,000,000 technical consulting
and services

Limitedliability
company

WhollyShenyangowned

Shenyang Neusoft
Information
Technology Co., Ltd.

Computersoftware/hardware

Limitedliability
company

WhollyShanghai
owned

Shanghai Neufashion
Digital Technology
Co., Ltd.
20,000,000

Computer software
10,000,000 development &network integration

Limitedliability
company

Ad production/
publicity

Qinhuangdao Neusoft ConQinhuangdao
Co., Ltd.
trolled1,000,000

Development, sales
850,000
and consulting ofUSD
computer software

Limitediability
company

Limitedliability
company

WhollyHong Kong
owned

Scope of business

2,500,000 Computer
USD software/hardware

Neusoft (Hong Kong)
Co., Ltd.

RegisteredcapitalLimitedliability
378,000,000 Medical systems
company

NatureLimitedliability
company

Controlled Shenyang

Shenyang Neusoft
Boan SoftwareCo., Ltd.

WhollyShenyangowned

Shenyang Zhuri
Digital Advertising
Communications
Co., Ltd.

Domicile

WhollyShenyang
owned

Type

Shenyang Neusoft
Medical Systems
Co., Ltd.

Subsidiary

Continued table

100

100

100

100

100

100

85

100

60

100

100

100

100

100

100

100

100

85

100

60

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

2,169,356

242,392

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

Neusoft Corporation Annual Report 2012133

Wholly
Hainanowned

WhollyWuxi
owned

WhollyWuhu
owned

ConGuangzhou
trolledWhollyNanjing
owned

ConShenyang
trolledWhollyZhengzhou
owned

Neusoft Group(Hainan) Co., Ltd.

Neusoft Group(Wuxi) Co., Ltd.

Neusoft Group(Wuhu) Co., Ltd.

Guangdong
Neufashion Digital
Technology Co., Ltd.

Neusoft Group(Nanjing) Co., Ltd.

Shenyang Neusoft
Transportation
Information
Technology Co., Ltd.

Neusoft Group(Zhengzhou) Co., Ltd.

Domicile

WhollyTangshan
owned

Type

Neusoft Group(Tangshan) Co., Ltd.

Subsidiary

22,500,000

Sales anddevelopment ofcomputersoftware/hardware

10,000,000

Sales anddevelopment ofcomputersoftware/hardware

Limitedliability
company
10,000,000

3,535,000

7,000,000 Computer services

Computersoftware/hardware
12,000,000 and its development,
sales and technicalconsulting

Limitedliability
company

Limitedliability
company

37,500,000

Limitedliability
company

12,000,000

10,000,000

Sales anddevelopment ofcomputersoftware/hardware

10,000,000

Limitedliability
company

20,000,000

Computersoftware/hardware,technical consulting
and services

20,000,000

100,000,000

Computer
Limitedsoftware/hardware,
liability
100,000,000
technical consulting
companyand services

Limitedliability
company

30,000,000

30,000,000

Limitedliability
company

Scope of business

Computersoftware/hardware,technicalconsulting
and services

RegisteredcapitalNatureContinued table

100

50.5

100

60

100

100

100

100

100

50.5

100

60

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

2,020,878

8,111,438

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

134
Neusoft Corporation Annual Report 2012

Wholly
Switzerland
owned

WhollyTianjin
owned

Wholly合肥
owned

WhollyDalianowned

ConBeijingtrolledConShenzhen
trolled

ConBeijingtrolledWhollyBeijingowned

Neusoft (Europe)Co., Ltd.

Tianjin Neusoft
Technology Co., Ltd.
(Note 1)

Hefei Neusoft
Technology Co., Ltd.
(Note 2)

Dalian Neusoft
Business Process
Consulting Services
Co., Ltd. (Note 3)

Beijing Neusoft Huiju
Information
Technology Co., Ltd.
(Note 4)

Shenzhen Neusoft
Mobile Terminal
Design Co., Ltd.
(Note 5)Beijing Neusoft
Yuetong Software
Technology Co., Ltd.
(Note 6)

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

Domicile

WhollyNanchang
owned

Type

Neusoft Group(Nanchang) Co., Ltd.

Subsidiary

451,952

Computersoftware/hardware,system integration,technology consulting

Limitedliability
company

Limitedliability
company

Limitedliability
company

company
limited bysharesLimitedliability
company

Limitedliability
company

Development andsales of electronic
product, technicalconsulting

Recruitment
100,000 outsourcing andjob hunting service

Computer
15,000,000 software/hardware/
services

5,000,000

Computer software,
30,000,000 technical consulting
and services

5,000,000

500,000

Computersoftware/hardware

5,000,000

5,000,000

Computersoftware/hardware,system integration,technology consulting

Limitedliability
company

259,661,002

Computer software/
37,900,000
hardware, technical
CHF
consulting and services

Limitedliability
company

100,000

10,500,000

3,500,000

27,265,000

5,000,000

20,000,000

Computer hardware
development/
20,000,000
production, technicalconsulting, services

Limitedliability
company

Scope of business

RegisteredcapitalNature

100

100

100

70

70

80.28

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

4,364,371-39,187

7,459,049

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

Continued table

Neusoft Corporation Annual Report 2012135

Limited
liability
company

Limitedliability
company

Limitedliability
company

WhollyShenyangowned

Shenyang Neusoft
Spectrum MRI
ConShenyang
Technologies Co., Ltd. trolled(Note 13)

ConShenyang
trolledWhollyUSA
owned

Shenyang Neusoft
Medical Systems
Import & Export
Co., Ltd. (Note 12)

Neusoft Positron
Medical Systems
Co., Ltd. (Note 14)

Neusoft Medical
System U.S.A. Inc.
(Note 15)

Limitedliability
company

Limitedliability
company

ConShenyang
trolledNeusoft A&T
Diagnostics Co., Ltd.
(Note 11)

Limitedliability
company

WhollyHong Kong
owned

Neusoft XikangInternational Co., Ltd.
(Note 10)

LimitedConCayman Islands liability
trolledcompany

Limitedliability
company

NatureNeusoft Xikang
Holdings Co., Ltd.
(Note 9)

Domicile

WhollyDalianowned

TypeNeusoft Yuetong
Software Technology(Dalian) Co., Ltd.
(Note 8)

SubsidiaryComputersoftware/hardware,technical consulting
and services

Scope of business

3,465,000
USD

4,700,000
USD

R&D/manufacturing
6,000,000 of medical systems,
USD technology consulting& service

8,000,000

R&D and manufacturingof Low-filed permanent
10,000,000 magnet products, MRI
technology development
and consulting
Development andmanufacturing of
3,500,000
PET systems,
USD
technology
consulting/service

5,000,000

30,600,000

1,000,000
HKD

2,800,000
USD

5,000,000

Import & export ofgoods and technologies

5,000,000

Production and salesof medical equipment
and lab automation
60,000,000 system, development
and sales of computer
hardware/softwareand app systems

1,000,000 IT and related
HKD consulting services

51,000 IT and related
USD consulting services

5,000,000

RegisteredcapitalContinued table

100

99

80

100

51

100

70

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

-26,186

3,697,956

24,867,646-8,136,573

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

136
Neusoft Corporation Annual Report 2012

WhollyPeru
owned

WhollyShenzhenowned

WhollyBeijingowned

ConTianjin
trolledWhollyShenyangowned

WhollyShenyangowned

Neusoft Medical
System Peru Inc.
(Note 17)

Shenzhen Neufashion
Digital Technology
Co., Ltd. (Note18)

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 Medical
Systems Co., Ltd.
(Note 22)

Domicile

Wholly United
owned Arab Emirates

Type

Neusoft Medical
Systems (Middle East)
Co., Ltd. (Note 16)

Subsidiary

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

NatureScope of business

10,000,000

Computer software/
hardware development
10,000,000 for medical systems,
healthcare consulting
services

4,500,000

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

50,000,000

8,000,000
USD

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

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

1,000,000

50,385USD

2,300,000
USD

Design/R&D/production/
sales of watch mobiles,
1,000,000 technology development/
sales of computer
software/hardware

Medical systems and1,800,000
relevant technicalUSD
consulting and services

Medical systems and3,500,000
relevant technicalUSD
consulting and services

Registeredcapital

100

100

75

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Yes

1,495,697

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

Continued table

Neusoft Corporation Annual Report 2012137

Limited
liability
company

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

Limitedliability
company

Limitedliability
company

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

Hangzhou Xikang
Healthcare Co., Ltd.
(Note 28)

WhollyHangzhouowned

Limitedliability
company

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

WhollyGuangzhou
owned

Limitedliability
company

NatureHainan Xikang
Healthcare
WhollyChengmaiManagement Co., Ltd. owned(Note 24)

Domicile

Limitedliability
companyType

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

Subsidiary

1,000,000

1,000,000

Subject to laws andregulations of China
and shall be
1,000,000
approved by related
authorization
department.
Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

1,000,000

Health management,
health consulting,medical institution
management consulting,
1,000,000
healthcare archive
management, sales andlease of healthcare
equipment

1,000,000

1,000,000

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

5,000,000

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

1,000,000

5,000,000

Scope of business

R&D of electronic
products, technicaldevelopment, transfer,
5,000,000
consulting and leaseof computer
software/hardware

RegisteredcapitalContinued table

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Yes

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

138
Neusoft Corporation Annual Report 2012

Limited
liability
company

Limitedliability
company

Limitedliability
company

Limitedliability
company

Jiangxi Xikang
WhollyHealthcare
Nanchang
Management Co., Ltd. owned(Note 31)

Jinzhou Xikang
WhollyHealthcare
JinzhouManagement Co., Ltd. owned(Note 32)

Shenzhen Xikang
Healthcare
WhollyShenzhenManagement Co., Ltd. owned(Note 33)NatureHunan Xikang
Healthcare
WhollyChangsha
Management Co., Ltd. owned(Note 30)

Domicile

Limitedliability
companyType

Luoyang Xikang
WhollyHealthcare
Luoyang
Management Co., Ltd. owned(Note 29)

Subsidiary

1,000,000

500,000

Healthcare consulting/management, medical
project investment,
development and salesof technologies forhealthcare productsTechnical development,
sales, lease and500,000
technical consulting ofelectronic products andcomputer hardware/
software; corporate
image planning,meeting businessplanning and investment
consulting

2,000,000

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

1,000,000

Healthcare consulting,corporate management,
sales and lease ofhealthcare equipment

2,000,000

Health management,
health consulting,medical institution
management consulting,
2,000,000
healthcare archive
management, sales andlease of healthcare
equipment

2,000,000

1,000,000

Scope of business

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

Registeredcapital

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

Continued table

Neusoft Corporation Annual Report 2012139

Domicile

Limitedliability
company

Dalian Neusoft
Xikang Healthcare
WhollyDalianManagement Co., Ltd. owned(Note 36)

Limitedliability
company

NatureLimitedliability
company

ConShenyang
trolledType

Beijing Neusoft
Xikang Hospital
WhollyBeijing
Management Co., Ltd. owned(Note 35)

Shenyang Xikang
Alps Technologies
Co., Ltd. (Note 34)

Subsidiary

550,000
USD

500,000

500,000

Hospital management;
sales of electronic
products, software,mechanical equipment;
sales and lease ofcomputer and
500,000
communicationequipment; lease of
medical equipment;
technology
development,
transfer and consulting
Healthcare consulting;lease of electronic
products, computer andcommunicationequipment,
Construction
500,000
engineering andmechanical equipment;
computer softwaredevelopment,
consulting and service;general trading

Scope of business

Design, research anddevelopment of sensors
and related electronic
1,000,000
products, components,
USD
software/hardware;
related technicalconsulting and service

RegisteredcapitalContinued table

100

100

55

Yes

Yes

Yes

2,513,700

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

140
Neusoft Corporation Annual Report 2012

Type

Domicile

Limitedliability
company

NatureScope of business

Healthcare consulting,business information
consulting, sales andlease of computer
500,000
software/hardware,mechanical equipment;
and communicationequipment

Registeredcapital

500,000

100

Yes

Note 15: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 100%;

Note 14: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 99%;

Note 13: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 80%;

Note 12: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 100%;

Note 11: This subsidiary was invested by another subsidiary Shenyang Neusoft Medical Systems Co., Ltd. with an equity ratio of 51%;

Note 10: This subsidiary was invested by Neusoft Xikang Holdings Co., Ltd. indirectly controlled by the Company, with an equity ratio of 100%;

Note 9: This subsidiary was invested by another subsidiary Neusoft (Hong Kong) Co., Ltd. with an equity ratio of 70%;

tio of 100%;

Note 8: This subsidiary was invested by Beijing Neusoft Yuetong Software Technology Co., Ltd. indirectly controlled by the Company, with an equity ra-of 100%;Note 7: This subsidiary was invested by Beijing Neusoft Huiju Information Technology Co., Ltd. indirectly controlled by the Company, with an equity ratio

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

Note 5: This subsidiary was invested by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 70%;

Note 4: This subsidiary was invested by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 80.28%;

Note 3: This subsidiary was invested by another subsidiary Shenyang Neusoft Information Technology Services Co., Ltd. with an equity ratio of 100%;

Note 2: This subsidiary was invested by another subsidiary Shanghai Neufashion Digital Technology Co., Ltd. with an equity ratio of 100%;

Note 1: This subsidiary was invested by another subsidiary Neusoft Group (Beijing) Co., Ltd. with an equity ratio of 100%;

Shanghai Xikang
Healthcare
WhollyShanghaiManagement Co., Ltd. owned(Note 37)

Subsidiary

Continued table
Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

Neusoft Corporation Annual Report 2012141

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

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

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

Note 34: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd. indirectly controlled by the Company, with an equity ratio of 55%;

Note 33: This subsidiary was invested by Neusoft Xikang Healthcare Technology Co., Ltd. indirectly controlled by the Company, with an equity ratio of 100%;of 100%;Note 32: This subsidiary was invested by Liaoning Neusoft Xikang Healthcare Management Co., Ltd. indirectly controlled by the Company, with an equity ratio

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

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

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

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

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

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

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

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

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

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

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

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

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

Note 18: This subsidiary was invested by another subsidiary Guangdong Neufashion Digital Technology Co., Ltd. with an equity ratio of 100%;

Note 17: This subsidiary was jointly invested by Shenyang Neusoft Medical Systems Co., Ltd. and its subsidiary 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%;

142
Neusoft Corporation Annual Report 2012

Type

Domicile

WhollyDujiangyan
owned

WhollyShenyangowned

WhollyDalianowned

WhollyUSA
owned

Neusoft Group(Chengdu) Co., Ltd.

Shenyang Neusoft
Information
Technology Services
Co., Ltd.

Neusoft Group(Dalian) Co., Ltd.

Neusoft Science &Technology Co., Ltd.

Shenyang Neusoft
WhollyProperty Management
ShenyangownedCo., Ltd.

Subsidiary

50,000,000

1,000,000

1,000,000

RegisteredcapitalComputersoftware/hardware

Computersoftware/hardware

Property management
and service

Scope of business

LimitedComputerliability
600,000,000
software/hardware
company
Computer
Limited1,000 software/hardware,
liability
USD technical consulting
companyand services

Limitedliability
company

Limitedliability
company
Limitedliability
company

Nature63,329,610

600,000,000

50,000,000

1,000,000

1,000,000

100

100

100

100

100

100

100

100

100

100

Yes

Yes

Yes

Yes

Yes

Balance of the owner’sequity of parent
company after offsetting
BalanceAmountWhetherthe portion by whichof otherofActualit isthe loss of current
items
minority
investment
Equity Voting included
period borne by theconstituting
Minority
interest
amount atratio sharein theminority shareholders
netinterest
used tothe end of(%)(%) consolidatedof the subsidiaryinvestment
offsetthe period
financialexceeds the beginningon theminority
statements
balance of owner’s
subsidiary
profit/loss
equity of the subsidiaryshared by the minority
shareholders

4.1.2 Subsidiaries obtained through business combination under common control

Neusoft Corporation Annual Report 2012143

Scope of business

Development, design,
10,000,000 production and sales ofcomputer software

73.14

Computer softwaredevelopment/production,
114,101,440
self-made product sales,
technical support

Beijing Neusoft
ConViewhigh Technology
BeijingtrolledCo., Ltd. (Note 5)
27,790,000

1,200,000
EUR

Computer
94,000 software/hardware,
ROL technical consulting
and services

Limitedliability
company

Neusoft EDC SRL(Note 4)

Limitedliability
company

100

7,972,800
EUR

Computer
8,578 software/hardware,
EUR technical consulting
and services

Limitedliability
company

Neusoft Mobile
WhollyGermany
Solutions Oy (Note 3) owned

WhollyRomania
owned

6,029,000
EUR

Computer
1,025,000 software/hardware,
EUR technical consulting
and services

Limitedliability
company

WhollyGermany
owned

100

100

51

Neusoft Technology
Solutions GmbH
(Note 2)

15,119,513

Design, development,
production, service and30,000,000 sales of computerequipment andsoftware products

Limitedliability
company

61.67

60

100

100

ConKunming
trolled

61.67

60

100

100

Kunming Neusoft
Jinsha Information
Technology Co., Ltd.
(Note 1)

10,390,275

80,552,833

9,454,820

Technology
15,000,000 development/consulting
services, product selling

LimitedSmall and medium-sized
liability
125,000,000 enterprise investmentcompany
and management

Limitedliability
company

11,826,901

Limitedliability
company

ConDaliantrolledLiaoning Neusoft
Venture Capital
nvestment Co., Ltd.

RegisteredcapitalLimited187,750,000 Computer
liability
JPY software/hardware
company

NatureBeijing LBS Social
ConInsurance Information
BeijingtrolledTechnology Co., Ltd.

WhollyBeijingowned

Beijing Lanruisoft
Co., Ltd.

Domicile

Wholly
Japan
owned

Type

Neusoft (Japan)
Co., Ltd.

Subsidiary

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Balance
Whetherof otherActualit is
items
investment
Equity Voting included
constituting
amount atratio sharein thenet
the end of(%)(%) consolidated
investment
the period
financialon thestatements
subsidiary

4.1.3 Subsidiaries obtained through business combination under non-common control

5,813,504

15,556,966

3,918,395

51,611,873

Minority
interest

Balance of the owner’sequity of parent
Amount company after offsettingofthe portion by which
minority
the loss of current
interest
period borne by theused tominority shareholders
offsetof the subsidiaryminority exceeds the beginningprofit/balance of owner’s
loss
equity of the subsidiaryshared by the minority
shareholders

144
Neusoft Corporation Annual Report 2012

Domicile

WhollyGermany
owned

Type

Limitedliability
company

NatureScope of business

Computer
25,000 software/hardware,
EUR technical consulting
and services

Registeredcapital200,000
EUR
100

Yes

Minority
interest

Note 6: This subsidiary was acquired by Neusoft EDC SRL with an equity ratio of 100%.

Note 5: This subsidiary was acquired by another subsidiary Neusoft Group (Beijing) Co., Ltd. with an equity ratio of 73.14%;

other subsidiary Neusoft (Europe) Co., Ltd. with an equity ratio of 100%;

Note 4: This subsidiary (former“Neusoft Mobile Solutions SRL”and changed into“Neusoft EDC SRL”during the reporting period) was acquired by an-

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 Neusoft (Europe) Co., Ltd. with an equity ratio of 100%;

Note 1: This subsidiary was acquired by another subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. with an equity ratio of 51%;

Neusoft GmbH
(Note6)

Subsidiary

Balance
Whetherof otherActualit is
items
investment
Equity Voting included
constituting
amount atratio sharein thenet
the end of(%)(%) consolidated
investment
the period
financialon thestatements
subsidiary

Balance of the owner’sequity of parent
Amount company after offsettingofthe portion by which
minority
the loss of current
interest
period borne by theused tominority shareholders
offsetof the subsidiaryminority exceeds the beginningprofit/balance of owner’s
loss
equity of the subsidiaryshared by the minority
shareholders

Continued table

Neusoft Corporation Annual Report 2012

145

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Neusoft Corporation Annual Report 2012

4.2 Notes to the changes in consolidation
4.2.1 There are 18 newly consolidated companies in this year including

Neusoft

A&T

MedicalTechnology

Co., Ltd., Jiangsu Xikang Healthcare Co., Ltd., Hunan Xikang Healthcare Co., Ltd., Anhui Xikang Healthcare Co.,
Ltd., Guangzhou Xikang Healthcare Technology Co., Ltd., Hubei Xikang Healthcare Co., Ltd., Hangzhou Xikang
Healthcare Co., Ltd., Jiangxi Xikang Healthcare Co., Ltd., Hainan Xikang Healthcare Co., Ltd., Luoyang Xikang
Healthcare Co., Ltd., Jinzhou Xikang Healthcare Co., Ltd., Neusoft Medical System Peru Inc., Shenzhen Xikang
Healthcare Co., Ltd., Shenyang Xikang Alps Technologies Co., Ltd., Beijing Neusoft Xikang Hospital Management
Co., Ltd., Dalian Xikang Healthcare Co., Ltd., Shanghai Xikang Healthcare Co., Ltd. and Neusoft GmbH.
4.2.2 Five companies were deconsolidated this year: all share ownership of Dalian Neusoft Park Industrial Development Co., Ltd. indirectly controlled by the Company was sold during the reporting period; This indirectly controlled company and its subsidiaries including Nanhai Neusoft Information Technology Development Co., Ltd. (Foshan) and Chengdu Neusoft Information Technology Development Co., Ltd. have been not included in the consolidation since February 2012; The Company’s subsidiaries Dalian Neusoft Finance Information Technology Co., Ltd.
and Guangdong Neusoft Co., Ltd. have cancelled their business registrations and not included in the consolidation
since August 2012 and November 2012.
4.3 Entities newly included in the consolidated financial statements
EntityNet assets at theend of this period

Net profit of thisperiodNeusoft A&T Medical Technology Co., Ltd. (Note 1)

50,553,534-9,635,516

Jiangsu Xikang Healthcare Co., Ltd. (Note 2)

4,992,217-7,783

Hunan Xikang Healthcare Co., Ltd. (Note 3)

1,760,128-239,872

Anhui Xikang Healthcare Co., Ltd. (Note 4)

996,007-3,993

Guangzhou Xikang Healthcare Co., Ltd. (Note 5)

920,030-79,970

Hubei Xikang Healthcare Co., Ltd. (Note 6)

996,796-3,204Hangzhou Xikang Healthcare Co., Ltd. (Note 7)

996,569-3,431

Jiangxi Xikang Healthcare Co., Ltd. (Note 8)

1,995,249-4,751

Hainan Xikang Healthcare Co., Ltd. (Note 9)

4,987,785-12,215

Luoyang Xikang Healthcare Co., Ltd. (Note 10)989,137-10,863

Jinzhou Xikang Healthcare Co., Ltd. (Note 11)988,001-11,999

Neusoft Medical System Peru Inc. (Note 12)145,308-171,597

Shenzhen Xikang Healthcare Co., Ltd. (Note 13)492,342-7,658

Shenyang Xikang Alps Technologies Co., Ltd. (Note 14)

5,587,980-749,500

Beijing Neusoft Xikang Hospital Management Co., Ltd. (Note 15)497,346-2,654

Dalian Neusoft Xikang Healthcare Co., Ltd. (Note 16)

490,975-9,025

1,295,974-359,658

499,341-659

Neusoft GmbH (Note 17)
Shanghai Xikang Healthcare Co., Ltd. (Note 18)

Neusoft Corporation Annual Report 2012

Note 1: This entity was invested by the Company’s subsidiary Shenyang Neusoft Medical Systems Co., Ltd. in February 2012
with RMB 30.6 million Yuan with an equity ratio of 51% and included in the consolidated financial statements since the monthof investment.
Note 2: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in April 2012 with RMB 5 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 3: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in April 2012 with RMB 2 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 4: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in April 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 5: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in May 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 6: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in May 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 7: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in May 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 8: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in May 2012 with RMB 2 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 9: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in June 2012 with RMB 5 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 10: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in June 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 11: This entity was invested by the Company’s indirectly controlled subsidiary Liaoning Neusoft Xikang Healthcare
Management Co., Ltd. in June 2012 with RMB 1 million Yuan with an equity ratio of 100% and included in the consolidated
financial statements since the month of investment.
Note 12: This subsidiary was jointly invested by Shenyang Neusoft Medical Systems Co., Ltd. and its subsidiary with an equity
ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 13: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in August 2012 with RMB 500,000 Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 14: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology

147

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Neusoft Corporation Annual Report 2012

Co., Ltd. in September 2012 with USD 550,000 with an equity ratio of 55% and included in the consolidated financial statements since the month of investment.
Note 15: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in October 2012 with RMB 500,000 Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 16: This entity was invested by the Company’s indirectly controlled subsidiary Liaoning Neusoft Xikang Healthcare Management Co., Ltd. in October 2012 with RMB 500,000 Yuan with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note17: This entity was acquired by the Company’s indirectly controlled subsidiary Neusoft EDC SRL in November 2012 with
EUR 25,000 with an equity ratio of 100% and included in the consolidated financial statements since the month of investment.
Note 18: This entity was invested by the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology
Co., Ltd. in November 2012 with RMB 500,000 Yuan with an equity ratio of 100% and included in the consolidated financial
statements since the month of investment.

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 November 29th, 2012, the Company’s indirectly controlled company Neusoft EDC SRL
purchased 100% equity in Neusoft GmbH with EUR 25,000 in cash. The recognition of fair value of the acquisition
consideration is based on both confirmed book value of net assets of Neusoft GmbH, for which goodwill was notformed.
Neusoft GmbH, established on October 2012 in Munich, is a company specialized in service and selling of computer software and technical products. Its controlling shareholder before the acquisition was natural person Ingolf
Jensch. The acquisition date is determined upon payment of over 50% equity is made whilst the process of register of change is finished.
Identifiable assets and liabilities of the Acquiree (Neusoft GmbH)

Item
Current assets

Date of acquisition
Book value

Fair value
204,045

204,045

204,045

204,045

Fixed assets
Intangible asset
Total assets
Total liabilities
Net assets

Neusoft Corporation Annual Report 2012

4.5.2 Financial situation after consolidation:

Acquiree

Income from theacquisition date to theend of this period

Net profit from theacquisition date to theend of this period

Neusoft GmbH

Cash flow from theacquisition date to theend of this period-359,658-106,477

4.6 Subsidiary over which the Company lost control for equity sale
The Company's subsidiary Shenyang Neusoft Information Technology Services Co., Ltd.(“Neusoft IT Services”)
transferred its education asset-related equity in its holding subsidiary (Dalian Neusoft Park Industrial Development
Co., Ltd.,“DNPID”for short) and the Company’s investments on Chengdu Neusoft Institute of Information Technology, Nanhai Neusoft Institute of Information Technology, Dalian Neusoft Institute of Information and Dalian Neusoft Institute of Information Technology to Dalian Neusoft Holdings Co., Ltd. In accordance with the assessment report issued by China Enterprise Appraisals Co., Ltd., the total appraisal value of the said equity and contribution
amounted to RMB 424,171,800 Yuan. Through negotiation, the Transferor and Transferee reached an agreementon the transfer price of RMB 442,343,800 Yuan, increasing the total appraisal value by 4.28%, among which, theconcluded price of each transaction was respectively, RMB 426,015,700 Yuan, 3,140,000 Yuan, 3,140,000 Yuan,
6,280,100 and 3,768,000 Yuan. On February 15th, 2012, DNPID finished the process of register of change in equity. Neusoft IT Services confirmed to transfer all pre-tax investment income of DNPID with the amount of RMB
53,340,300 Yuan on the selling date February 15th, 2012; Its capital reserve amounting to RMB 2,029,200 Yuan
confirmed based on other change in capital reserve was converted into current investment income, and the net income after deducting taxes was RMB 36,449,000 Yuan. As of the end of the reporting period, the register change
in investors of the four institutes was still in process. During the reporting period, the Company and Neusoft IT Services received all the payments for equity transfer with total amount of RMB 442,343,800 Yuan according to related agreements. The selling date is determined upon completion of register change and the transferee has the ability to pay the due payments.
Company

Dalian Neusoft Park Industrial
Development Co., Ltd. and its
subsidiaries

Date of saleP&L recognition method

The difference between which the disposal price deducts theamount of attributable net assets calculated from the purchasedate on the basis of the original equity ratio was recognized as curFebruary 15th, 2012 rent investment income in the consolidated financial statement;
Capital reserve confirmed according to other capital reserve changeof the original subsidiaries in previous years was converted into current investment income.

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Neusoft Corporation Annual Report 2012

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 be translated 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.
Note 5 Notes to Main Items in Consolidated Financial Statements(Expressed in Renminbi unless otherwise indicated)
5.1 Monetary capital

Item

Year-end balance
Foreign currency Translation rateYear-begin balance
RMB

Foreign currency Translation rate

RMB

Cash
RMB

92,766USD

200

6.2855

JPY

98,809

EUR

1,603

HKD

198,093

1,257

2,000

6.30090.073049

7,218

23,2990.081103

1,890

8.3176

13,333

5,462

8.162544,5844,877

0.8109

3,955

1,392

0.8107

1,128

AED

6,705

1.7206

11,5371,467

1.7159

2,517

ROL

4,861

1.8692

9,086

3,203

1.8972

6,077

Subtotal

12,602

139,152

266,891

1,786,277,199

1,500,755,787

Bank deposit
RMB
USD

13,543,487

6.2855

85,127,588

17,631,079

6.3009111,091,666

JPY

2,431,337,836

0.073049

177,606,798

1,112,200,915

0.081103

90,202,831

EUR

2,903,839

8.317624,152,971

3,461,400

8.162528,253,678

HKD

1,527,716

0.81091,238,825

1,294,766

0.8107

1,049,667

SGD

547,357

5.09292,787,634

499,0144.86792,429,150

CHF

51,8606.8219353,784

1,619

6.7287

10,894

ROL

414,903

1.8692775,537

229,574

1.8972435,548

VND

2,212,334

0.0003664

304,611,815

0.000391,384

Neusoft Corporation Annual Report 2012

Continued table
Item

Year-end balanceYear-begin balance

Foreign currency Translation rate

RMB

AED

1,598,996

1.7206

2,751,233

GBP

145,748

10.1611

1,480,960

Foreign currency Translation rate

CAD
Subtotal

986,564

1.715969,053

6.1777

RMB
1,692,845

426,589

2,082,553,193

1,736,440,039

RMB

12,779,935

1,809,035

Subtotal

12,779,935

1,809,035

Subtotal

2,095,472,280

1,738,515,965

Other currency

Restricted monetary capital details are as follows:
Item

Year-end balanceYear-begin balance

Performance bond

2,371,935

Forward foreign exchange bond

4,901,000

1,809,035

7,272,935

Total

1,809,035

1) The balance of overseas deposited monetary capital at the end of this period is RMB 203,112,061 Yuan after translation.
2) Among other monetary capital at the end of this period, RMB 7,272,935 Yuan is the Company’s subsidiary
Neusoft Group (Dalian) Co., Ltd. and indirectly controlled subsidiary Beijing Neusoft Huiju Information Technology
Co., Ltd. and Shenyang Neusoft Positron Medical Systems Co. Ltd.’s margin deposit, which was not recognized as
cash or cash equivalent when preparing the cash flow statement.
5.2 Trading financial assets
Item

Year-end balanceYear-begin balance

Trading financial assets
Foreign exchange forward contracts (Note)
Total

14,917,183

863,170

14,917,183

863,170

Note: Foreign exchange forward contracts shall be calculated based on exchange rate quoted in the open market; estimatedfloating income shall be included in income from change in fair value and presented as trading financial assets.

151

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Neusoft Corporation Annual Report 2012

5.3 Notes receivable
5.3.1 TypeType

Year-end balanceBanker’s acceptanceYear-begin balance

13,731,461

33,772,838

Commercial acceptance bill

610,6022,442,407

Total

14,342,063

36,215,245

5.3.2 There is no pledged note receivable as of the end of this period;
5.3.3 There is no note that is converted into account receivable due to the drawer has no ability to performthe obligation and no note endorsed by the Company but undue yet as of the end of this period;
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.
5.4 Accounts receivable
5.4.1 Disclosure by typeYear-end balanceTypeYear-begin balance

Provision for bad
debts

Book balance

Provision for bad
debts

Book balance

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

Accounts receivable withsignificant single amountand single appropriationof provision for bad debts

219,627,652

14.61

21,829,540

9.94

203,808,369

16.70

13,811,688

6.78

Accounts receivable withappropriation of provision
for bad debts by portfolio

1,156,208,747

76.91

44,193,577

3.82

971,097,433

79.57

31,862,593

3.28

Accounts receivable withinsignificant single amountbut single appropriationof provision for bad debts

127,399,390

8.48

30,125,328 23.65

45,459,795

3.73

13,402,767

29.48

Total

1,503,235,789

100.001,220,365,597 100.00

59,077,048

96,148,445

Neusoft Corporation Annual Report 2012

5.4.2 Accounts receivable with significant single amount and single appropriation of provision for bad debts
BookamountAccount receivable from

Provision forbad debts

Appropriation
ratio (%)

ReasonChina Unicom

113,793,005

14,350,004

12.61

Significant amount with receivableproportion of over 85%

China Telecom

39,375,665

1,313,956

3.34

Significant amount with receivableproportion of over 95%

Nokia Siemens Networks Neusoft
Commtech Company “NSNN”()

28,264,043

2,787,316

9.86

Significant amount with receivableproportion of over 90%

Shenyang Metro Co., Ltd.

26,069,201

2,313,563

8.87

Significant amount with receivableproportion of over 90%

China Mobile

12,125,738

1,064,701

8.78

Significant amount with receivableproportion of over 90%

219,627,652

21,829,540

Total

Accounts receivable with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balance
AgeBook amountAmountYear-begin balanceBook amount

Provision for bad
debts

Ratio (%)

AmountRatio (%)

Provision forbad debts

Within 1 year

961,107,880

83.12

9,611,079

753,616,537

77.61

7,536,165

1-2 years

90,404,269

7.82

1,808,085

131,858,322

13.58

2,637,167

2-3 years

57,314,918

4.96

2,865,746

41,610,955

4.28

2,080,548

3-5 years

19,414,459

1.68

1,941,446

27,114,340

2.79

2,711,434

Over 5 years

27,967,221

2.42

27,967,221

16,897,279

1.74

16,897,279

Total

1,156,208,747

100.0044,193,577

971,097,433

100.0031,862,593

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

Account receivable fromBook
amountProvision forbad debts

Appropriation
ratio (%)

Contract payment for softwareand system integration

10,100,987

10,100,987

100.00Account receivable with long age whichis estimatedly unrecoverable

Contract payment for softwareand system integration

12,445,308

5,799,591

46.60

Account receivable with long age withrecoverable proportion of about 50%

Contract payment for softwareand system integration

104,853,095

14,224,750

13.57

Account receivable with long age withrecoverable proportion of about 90%

Total

127,399,390

30,125,328

Reason153

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Neusoft Corporation Annual Report 2012

5.4.3 Account receivables received in full or part amount in this period with appropriation of provision for bad
debts in full amount or at large proportion in preceding year:

Basis of confirming
original provision forbad debts

Accumulated
appropriatedprovision for bad
debts before
recoveryRecoveryamountRecoveredprovision forbad debts

Great effort was made towork off the receivables Aging analysis method
during the reporting period

5,559,109

3,225,146

3,142,331

Account
receivable fromRecovery reason

Sale amount receivable

5.4.4 There is no account receivable received through reorganization or other methods in this period;
5.4.5 Actual write-off accounts receivable:
Write-offamountReceivable from

Category

Shanxi Tonghui Network Co., Ltd.

Sales payment

OthersSales payment

Whether caused byrelated transaction

Reason1,455,247 It is estimatedly unrecoverable

No439,342 It is estimatedly unrecoverable

No

1,894,589

Total

5.4.6 Accounts receivable from shareholder companies with over 5% (including 5%) voting share of the Company:
Year-end balance
Receivable fromYear-begin balanceAppropriated provision
for bad debts

Book amountBook amount

Appropriated provision
for bad debts

Toshiba Corporation

5,852,557

58,526

4,616,409

46,164

Alpine3,998,077

39,981

3,982,428

39,824563,008

30,130100,000

50,000

Baosteel Group Corporation

5.4.7 Top 5 debtors of accounts receivable
Relationship with
the Company

AmountAge

China Unicom

Non-related parties

113,793,005

Within 1 yearover 5 years

7.57

Shanxi Xingji Technology and Trade Co., Ltd.

Non-related party

60,637,675 Within 2 years

4.03

HarmanRelated party

48,629,991 Within 1 year

3.24

China Telecom

Non-related party

39,375,665 Within 3 years

2.62

Sony

Non-related party

37,439,767 Within 1 year

2.49

299,876,103

19.95

Debtor

Total

Proportion to thetotal (%)

Neusoft Corporation Annual Report 2012

5.4.8 Accounts receivable from related parties
The accounts receivable from related parties is RMB 91,811,058 Yuan, accounting for 6.11% of the total,
please refer to Note 7.4.11 for details.
5.4.9 Account receivable with terminated recognition due to transfer of financial assets:
Item

AmountShenyang Branch of China CITIC Bank Corporation Limited

11,300,198

Profit or loss related to the termination
N/A

Note: The account receivable with terminated recognition due to transfer of financial assets is caused by the non-recourse factoring business between Shenyang Neusoft Medical Systems Co., Ltd. and Shenyang Branch of China CITIC Bank Corporation Limited.

5.5 Other receivables
5.5.1 Disclosure by typeYear-end balanceBook balance

Type

AmountYear-begin balance

Provision for bad
debts

Ratio
(%)

AmountRatio(%)

AmountRatio(%)

8,854,730

4.55

8,854,730 100.00

2.42 165,647,630

85.13

4,227,351

2.55

10.32

2,020,606

10.06

Account receivable with significant single amount and single appropriation ofprovision for bad debts
Account receivable with appropriation
203,841,742
of provision for bad debts by portfolio

95.25 4,924,915

Account receivable with insignificant single amount and single appropriation ofprovision for bad debts

4.75 4,313,766 42.45

10,161,809

214,003,551 100.00 9,238,681

Total

Provision for bad
debts

Book balance

20,086,790

AmountRatio(%)

194,589,150 100.00 15,102,687

5.5.2 Other receivables with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balance
AgeBook balance
AmountRatio (%)

Year-begin balance
Provision forbad debts

Book balance
AmountRatio (%)

Provision forbad debts

Within 1 year

150,880,712

74.03

1,508,807

128,905,982

77.83

1,289,060

1-2 years

32,746,471

16.06

654,930

20,513,771

12.38

410,275

2-3 years

9,136,521

4.48

456,826

2,754,906

1.66

137,745

3-5 years

9,748,540

4.78

974,854

12,314,111

7.43

1,231,411

Over 5 years

1,329,498

0.65

1,329,498

1,158,860

0.70

1,158,860

Total

203,841,742

100

4,924,915

165,647,630

100.004,227,351

155

156

Neusoft Corporation Annual Report 2012

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

Provision forbad debts

Appropriation
ratio (%)

Revolving fund

8,696,794

3,379,805

38.86

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

Open credit

1,465,015

933,96163.75

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

10,161,809

4,313,766

Other receivables

Total

Reason5.5.3 Other receivables received in full or part amount in this period with appropriation of provision for bad
debts in full amount or at large proportion in preceding year:

Other
receivables

Revolving fundRecoveryreasonBasis ofconfirming
original
provision forbad debts

Great effort was made towork off the receivables Aging analysis method
during the reporting period

Accumulated
appropriatedprovision for bad
debts before
recoveryRecoveryamount770,579

472,802

Recoveredprovision forbad debts

445,844

5.5.4 Other actual write-off accounts receivable:

Receivable from

Category

Sesca

Open credit

Purchase center of Chaozhou
Municipal Government

Bid bond

SubtotalWrite-offamountReason8,854,730 The debtor went into bankruptcy
10,000 Estimatedly unrecoverable

Whether caused byrelated transactionNoNo

8,864,730

5.5.5 There is no other receivable from Shareholding Company with over 5% (including 5%) voting share of
the Company;

Neusoft Corporation Annual Report 2012

5.5.6 Top 5 debtors of other receivables
Relationshipwith theCompany

DebtorAmountProportion
to thetotal (%)

Age

Nature orcontent

Hebei Anda Investment Consulting Co., Ltd.

Non-related party

6,491,718 Within 1 year

3.03 Margin

Dalian Airport Customs House

Non-related party

5,959,200 Within 2 years

2.78 Margin

Henan Provincial Bureau of Health

Non-related party

5,799,750 1-2 year

2.71 Margin

Bureau of Housing and Urban-Rural DevelopNon-related party
ment of Chengmai County

3,000,000 Within 1 year

1.40 Margin

State Grid Materials Co., Ltd.

2,996,336 Within 1 year

1.40 MarginNon-related party

24,247,004

Total

11.32

5.5.7 Other receivable from related party:
There is no other receivable from related party.
5.5.8 There is no termination of recognition of other receivables.
5.6 Prepayments
5.6.1 Presentation by age
Year-end balance

AgeAmountWithin 1 year

Year-begin balance
Ratio (%)

AmountRatio (%)

114,146,161

96.38

55,337,045

96.55

1-2 years

2,658,537

2.24

1,434,498

2.50

2-3 years

1,161,961

0.98

250,5250.44

474,408

0.40

290,0190.51

118,441,067

100.0057,312,087

100.00Over 3 years
Total

5.6.2 Top 5 prepayments
Relationship with
the Company

AmountBeijing Zhongguancun Software Park Development
Co., Ltd.

Non-related party

32,233,740 Within 1 year

H3C Technologies Co., Limited

Non-related party

11,013,265 Within 2 years Contracted prepayment

Oracle (China) Software System Co., Ltd.

Non-related party

8,293,412 Within 1 year

Contracted prepayment

Shanxi Bolan Technology Co., Ltd.

Non-related party

7,593,000 Within 1 year

Contracted prepayment

Beijing Ruihaitiandi Technology Development Co., Ltd. Non-related party

5,061,780 Within 1 year

Contracted prepayment

Prepayment to

Total

64,195,197

Term

RemarkProject prepayment

157

158

Neusoft Corporation Annual Report 2012

5.6.3 Among the prepayments at the end of this period, no Shareholding Company with over 5% (including
5%) voting share of the Company owes any debt for prepayment.
5.6.4 Prepayment to related parties
There is no prepayment to related parties.
5.7 Inventories
5.7.1 Presentation by typeYear-end balanceBook balance

Provision for
inventory
write-down

Raw materials

175,401,478

Work in process

570,219,685

Finished products

117,159,085

Item

Total

862,780,248

Year-begin balance
Provision for
inventory
write-downBook value

Book value

11,612,195

163,789,283

174,664,750

10,058,024

164,606,726

20,195,171

550,024,514

354,575,117

13,071,448

341,503,669

117,159,085

79,252,821

204,348

79,048,473

830,972,882

608,492,688

23,333,820

585,158,868

31,807,366

Book value

5.7.2 Provision for inventory write-down

Type

Write-down amountYear-begin book balanceAppropriation amountRaw materials

10,058,024

1,554,171

11,612,195

Work in process

13,071,448

7,123,723

20,195,171

Finished products

204,348

Total

23,333,820

Reversed

Write-offYear-end book balance

204,348
8,677,894

204,348

31,807,366

5.7.3 Depreciation provision for inventory write-down

Item

Basis

Raw materials

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

Work in process

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

Finished products

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

Reason forreversion of theprovision

Proportion ofreversed amount toyear-end balance of
the inventory

External sales

0.17%

Neusoft Corporation Annual Report 2012

5.8 Other current assets
Item

Year-end balance

Deferred business tax

Year-begin balance

5,510,731

7,293,081

Leasing expenses

694,777

337,391

Deferred property tax

276,220

289,335

7,808,787

6,343,029

14,290,515

14,262,836

Other (Note)
Total
Note: Other mainly refers to amortized heating expense.

5.9 Held-to-maturity investment
Item

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

403,159,918

401,931,507

Total

403,159,918

401,931,507

Note: The Company and its subsidiary Shenyang Neusoft Medical Systems Co., Ltd. purchased the finance products (that buyers should repay the loan and the accrued interest outright) from bank based on their financial situations. The investment with anamount of RMB 400 million Yuan and accrued income have been recovered at the end of March 2013.

5.10 Long-term receivables
Year-end balance
Item

AmountRatio(%)

Rental deposit (Note 1)

4,435,822

16.86

Instalment (Note 2)

21,877,518

83.14

Provisionfor baddebts

359,165

Year-begin balance

26,313,340 100.00

359,165

Provisionfor baddebts

Amount4,435,822

5,075,500

3.30

21,518,353

42,830,601

27.88

826,061

42,004,540

105,745,047

68.82

2,114,900

103,630,147

153,651,148 100.00

2,940,961

150,710,187

Receivable from transfer
of assets (Note 3)
Total

Ratio
(%)

Net value

25,954,175

Net value
5,075,500

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;
Note 2: This refers to receivable of Shenyang Neusoft Medical Systems Co., Ltd. from sales of products by instalment; andprovision for bad debt based on the age of the receivable is appropriated.
Note 3: The receivable balance from transfer of assets is RMB 105,745,047 Yuan at the year begin. Provision for bad debts is
RMB 2,114,900 Yuan. This refers to the due payment for transfer of assets by DNPID’s subsidiary Chengdu Neusoft Information
Technology Development Co., Ltd. to Chengdu Neusoft Institute of Information Technology. During the reporting period, Neusoft
IT Services transferred DNPID’s equity, and the long-term receivable was reduced accordingly.

15940.00

40.00
49.00
49.00
20.00
30.00
31.38
26.65
34.43
50.00

Shenyang Toshiba Neusoft Information Systems Co., Ltd.

Philips and Neusoft Medical Systems Co., Ltd.

Liaoning Shengjing Xikang Healthcare Co., Ltd.

Chongqing Guo’ao 100 Years Xikang HealthManagement Co., Ltd.

NEC Neusoft Information Technology Co., Ltd.

Aerotel Medical Systems（1998）Ltd.

Shenyang Neusoft System Integration Engineering Co., Ltd.
(Note 1)

Beijing Venusource Information Technology Co., Ltd.
(Note 2)Beijing Huiyuan Xikang Technology Co., Ltd. (Note 3)

16,538,399

14,443,965

15,639,612

12,872,852

1,028,297

1,876

9,599,460

23,648,606
68,016

940,844

60,830,836

9,934,543

614,306

2,654,347

154,479,055

651,223

13,665234,322,689
112,298

9,531,444

22,707,762

86,312,123

5,705,069

12,258,546-1,626,050

1,876

394,638,223

10,889,517

288,682,806

6,323,563

909,015

995,834

25,529946,008,303

5,840,337

14,430,300
15,887,176

269,983,065

119,661,871-468,556

1,011,562

8,636,898-5,809,600-8,535,090-2,971,423-234,671

79,642,288-4,499,694-5,313,664

8,987,768

Total business
Net profit inYear-end total Year-end net
income in this
this period
liabilities
assetsperiodcompany with an equity ratio of 50%.

Note 3: In July 2012, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested RMB 5 million Yuan in thisCompany with an equity ratio of 34.43%.

Note 2: In November 2011, the Company’s subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. invested RMB 10.5 million Yuan in thistively invested RMB 10 million Yuan in this Company with the same equity ratio of 13.325%, totaling 26.65%.

Note1: In March 2012, the Company’s subsidiaries Shenyang Neusoft System Integration Co., Ltd. and Xi’an Neusoft System Integration Co., Ltd respec-

50.00

34.43

26.65 147,142,959

31.38

30.00

20.00

49.00

49.00 549,117,278

16.67

16.67

Shenyang CataData Technology Co., Ltd.

46.00 353,984,560

46.00

Equity Voting
Year-endratio sharetotal assets(%)(%)

Nokia Siemens Networks Neusoft Commtech Company

Investee

5.11 Investment in joint ventures and associates

160
Neusoft Corporation Annual Report 2012

Equity method

Equity method

Equity method 10,675,548 11,073,220

Equity method 20,000,000

Equity method 10,500,000

Equity method

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

NEC Neusoft Information
Technology Co., Ltd. (Note 1)

Aerotel Medical Systems（1998）
Ltd.

Shenyang Neusoft System
Integration Engineering Co., Ltd.
(Note 2)Beijing Venusource Information
Technology Co., Ltd. (Note 3)

Beijing Huiyuan Xikang Technology
Co., Ltd. (Note 4)

Dalian Yunchou Technology
Co., Ltd.

Cost method

Equity method

Liaoning Shengjing Xikang
Healthcare Co., Ltd.

Subtotal

Equity method 120,050,000 182,664,926

Philips and Neusoft Medical
Systems Co., Ltd.

3,238,091

212,290

115,908

45,35245,352

225,380,169 270,204,931

5,000,000

7,500,000

400,000

490,000

8,154,748

Equity method

Shenyang Toshiba Neusoft
Information Systems Co., Ltd.
9,051,000

Equity method 15,000,000 13,835,661

Shenyang CataData Technology
Co., Ltd.

InitialYear-begin
investment
balancecost

Equity method 26,713,621 50,910,087

Calculation
methodNokia Siemens Networks Neusoft
Commtech Company

Investee

5.12.1 Overview

5.12Long-term equity investments

Year-endbalance

6,354,871 40.00

9,427,333 31.38

3,677,564 30.00

20.00

919 49.00

45,352

5.00

4,765,722 50.00

44,164,594 314,369,525

4,765,722

11,135,341 11,135,341 34.43

22,840,656 22,840,656 26.65-1,645,887

439,473-212,290-114,989

5,507,683 188,172,609 49.00-1,799,877-885,611 12,950,050 16.67

5.00

50.00

34.43

26.65

31.38

30.00

20.00

49.00

49.00

40.00

16.67

46.00

35,775,354

2,161,354

33,614,000

Difference
AppropriatedCash
Equity Voting between Accumulated
provision for dividend
ratio share equity ratio provision for
impairment
in this(%)(%) and voting impairment
in this period periodshare

4,134,373 55,044,460 46.00

Change inowners’equityNeusoft Corporation Annual Report 2012

161

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Tianjin Dongtai Development
Co., Ltd.

Beijing Huada Infosec Technology
Co., Ltd.

Beijing Co-create Open Source
Software Co., Ltd.

Beijing Shoufa Infosec Data System
Technology Co., Ltd.

Dongzhong Commtech Co., Ltd.

Shenyang Torch Company Limited

Lotus Business Consulting Co., Ltd.

Tianjin Shenzhou General Data
Technology Co., Ltd.

Nanchang Biotech A&C
Biotechnical Industry Incorporated
Company

3,000,000

347,358

100,000

3,000,000

3,350,000

770,000

150,000

256,000

1,000,000

27,600,000 27,600,000

3,000,000

347,358

100,000

3,000,000

3,350,000

770,000

150,000

256,000

1,000,000

1,877,722-256,000-1,000,000

21,227,945 21,227,945 -18,227,945

Cost method

Cost method

Neusoft Institute of Information
Technology, Nanhai (Note 5)

3,600,000

15,118,334 15,118,334 -12,118,334

Dalian Neusoft Education Service
Co., Ltd. (Note 5)

Cost method

Chengdu Neusoft Institute ofInformation (Note 5)

3,600,000

1,877,722

Cost method

Dalian Neusoft Institute ofInformation Technology

Change inowners’equity336,022,775 336,022,775 -330,022,775

Dalian Neusoft Information Services
Cost method
Co., Ltd.

Cost method

Calculation
methodDalian Neusoft Institute ofInformation (Note 5)

Investee

InitialYear-begin
investment
balance
cost

1.74

8.86

6.29

0.90

27,600,000

3,000,000

347,358

100,000

9.01

5.00

6.30

3,000,000 10.00

3,350,000

770,000

150,000

1,877,722 10.00

3,000,000 12.82

3,000,000 17.47

3,600,000 60.00

6,000,000

Year-endbalance

9.01

5.00

6.30

10.00

8.86

6.29

0.90

10.00

12.82

17.47

60.00

1.74

100,000

3,000,000

770,000

1,200,000

11,835Difference
AppropriatedCash
Equity Voting between Accumulated
provision for dividend
ratio share equity ratio provision for
impairment
in this(%)(%) and voting impairment
in this period period
shareContinued table

162
Neusoft Corporation Annual Report 2012

2,989,600

5,070,000

670,769,655 715,594,417 -320,450,060 395,144,357

15.92

35,787,189

11,835Difference
AppropriatedCash
Equity Voting between Accumulated
provision for dividend
ratio share equity ratio provision for
impairment
in this(%)(%) and voting impairment
in this period periodshare

24,934,400 15.92

Year-endbalance

5,070,000-2,989,600

Change inowners’equity445,389,486 445,389,486 -364,614,654 80,774,832

24,934,400 24,934,400

2,989,600

InitialYear-begin
investment
balancecost

due to liquidation. This subsidiary has cancelled its registration within the reporting period.

Note 7: The Company’s indirectly controlled subsidiary Beijing YYT Software Technology Co., Ltd. was not included in the consolidation since July 2012

Tianjin Dongtai Development Co., Ltd.

Note 6: During the reporting period, the Company’s subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. sold its equity at a ratio of 8% induced accordingly. The book balance is the amount of investment in the institutes by the Company.

Information and Nanhai Neusoft Institute of Information Technology and long-term equity investment in Dalian Neusoft Education Service Co., Ltd. were re-ings Co., Ltd. DNPID's original sponsor investment (i.e. long-term equity investment) in Dalian Neusoft Institute of Information, Chengdu Neusoft Institute ofNote 5: During the reporting period, Shenyang Neusoft Information Technology Services Co., Ltd. sold all of its equity in DNPID to Dalian Neusoft Hold-lion Yuan in this company with an equity ratio of 50%.

Note 4: During the reporting period, the Company’s indirectly controlled subsidiary Neusoft Xikang Healthcare Technology Co., Ltd. invested RMB 5 mil-this company with an equity ratio of 34.43%.

Note 3: During the reporting period, the Company’s subsidiary Liaoning Neusoft Venture Capital Investment Co., Ltd. invested RMB 10.5 million Yuan in

26.65%.

Integration Co., Ltd. invested, respectively, RMB 10 million Yuan in this subsidiary; each holds 13.325% of the target company’s equity shares, totaling

Note 2: During the reporting period, the Company’s subsidiaries Shenyang Neusoft System Integration Technology Co., Ltd. and Xi’an Neusoft Systemchange in equity ratio.

an in its associate NEC Neusoft Information Technology Co., Ltd., increasing initial investment cost of the long-term equity investment to 7.5 million with noNote 1: During the reporting period, the Company’s subsidiary Shenyang Neusoft Information Technology Services Co., Ltd. invested RMB 3 million Yu-

Total

Cost method

Appconomy, Inc.

Subtotal

Cost method

Beijing YYT Software Technology
Co., Ltd. (Note 7)

InvesteeCalculation
methodContinued table

Neusoft Corporation Annual Report 2012

163

164

Neusoft Corporation Annual Report 2012

5.12.2 Limitation on capital transfer from investee to investor: N/A.
5.13 Investment property
Item

Year-beginbalance

Increase inthis period

Decrease inthis period

Year-endbalance

Original book value

539,898,425

23,974,704

171,164,143

392,708,986

Houses and buildings

467,169,591

23,974,704

161,987,075

329,157,220

Land use right

72,728,834

9,177,068

63,551,766

2. Accumulated depreciation and amortization

101,763,488

12,005,428

38,111,919

75,656,997

Houses and buildings

90,628,573

10,416,827

36,734,881

64,310,519

Land use right

11,134,915

1,588,601

1,377,038

11,346,478

Net value of investment property

438,134,937

121,082,948

317,051,989

Houses and buildings

376,541,018

111,694,317

264,846,701

Land use right

61,593,919

9,388,631

52,205,288

Book value of investment property

438,134,937

121,082,948

317,051,989

Houses and buildings

376,541,018

111,694,317

264,846,701

Land use right

61,593,919

9,388,631

52,205,288

Accumulated amount of provision for impairment
on investment property
Houses and buildings
Land use right

The increase of accumulated depreciation and amortization is RMB 12,005,428 Yuan, of which, 8,278,695 Yuan is appropriated and 3,726,733 Yuan is transferred into depreciation due to re-classification.
The original amount transferred into increased investment property due to re-classification is RMB 23,633,652
Yuan.
The original amount of decreased investment property due to change in consolidation in this period is RMB
171,164,142 Yuan, and accumulated depreciation reduces to RMB 38,111,919 Yuan.

Neusoft Corporation Annual Report 20125.14 Original price and accumulated depreciation of fixed assets
5.14.1 Fix assets

Item

Year-beginbalance

Increase in this period

Decrease inthis period

Year-endbalance

Original book value

1,921,922,722

557,934,242

109,796,459

2,370,060,505

Including: Houses and buildings

1,349,622,708

426,291,413

42,697,097

1,733,217,024

Electronic equipment

348,437,480

88,806,052

56,991,469

380,252,063

Transportation equipment

16,354,498

1,600,868

1,443,125

16,512,241

Other equipment

207,508,036

41,235,909

8,664,768

240,079,177

Increase inthis period

Including: appropriationin this period

Accumulated depreciation

524,770,866

109,762,734

109,762,734

66,629,665

567,903,935

Including: Houses and buildings

162,017,766

35,504,386

35,504,386

11,549,302

185,972,850

Electronic equipment

248,618,698

52,313,992

52,313,992

49,530,307

251,402,383

9,913,461

2,003,344

2,003,344

1,136,186

10,780,619

104,220,941

19,941,012

19,941,012

4,413,870

119,748,083

709,415

1,802,156,570

Transportation equipment
Other equipment
Net book value of fixed assets

1,397,151,856

405,714,129

Including: Houses and buildings

1,187,604,942

359,639,232

1,547,244,174

Electronic equipment

99,818,782

29,030,898

128,849,680

Transportation equipment

6,441,037

Other equipment
Impairment provision

103,287,095

709,415
17,043,999

5,731,622
120,331,094

1,750,914

862,826

888,088

1,748,456

862,826

885,630

Including: Houses and buildings
Electronic equipment
Transportation equipment
Other equipment

2,458

2,458

Book value of fixed assets

1,395,400,942

406,576,955

Including: Houses and buildings

1,187,604,942

359,639,232

1,547,244,174

Electronic equipment

98,070,326

29,893,724

127,964,050

Transportation equipment

6,441,037

Other equipment

103,284,637

709,415

709,415
17,043,999

1,801,268,482

5,731,622
120,328,636

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Neusoft Corporation Annual Report 2012

RMB 109,762,734 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 325,152,822 Yuan.
The original amount of decreased investment property due to change in consolidation in this period is RMB
43,888,605 Yuan, accumulated depreciation reduces to RMB 29,915,610 Yuan.
For underlying security of fixed assets as of December 31st, 2012, 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

Book value

Houses and buildings 549,375,755

ReasonRemarkThe application and approval pro- The certificates will be obtained after the procedures
cedures are in progress.
are finished.

5.15 Construction in progress
5.15.1 Overview
Year-end balance
Item

Book
amountImpairment
provision

Year-begin balance
Book
value

Book
amountImpairment
provision

Book
value

Beijing Software Park

130,316,802

130,316,802 128,934,960

128,934,960

Renovation of canteen of Shenyang Software Park

32,521,121

32,521,121

21,337,672

21,337,672

Hainan Software Park (Phase I)

30,333,467

30,333,467

1,423,939

1,423,939

Dalian Hekou Park (Phase II)

1,270,181

1,270,181

Medical information construction system

558,907558,9072,659,595

2,659,595

Xikang renovation project

403,451

403,451

Cloud base healthcare center (Phase I)

152,028

152,028

Shanghai Software Park

106,928,658

106,928,658

Guangzhou Software Park (Phase I)

46,514,334

46,514,334

195,555,957 307,799,158

307,799,158

Total

195,555,957

Year-beginbalance

Total

4,532,549

68,761,888 115,276,222

99,433,632 205,344,051

152,028

2,724,689

2,431,861

1,270,181

28,909,528

23,266,994

1,381,842

Increase inthis period

Conversion
into fixed
assets1,018,239

2,321,238

12,083,545

Otherdecrease

1,720,620,000 307,799,158 228,332,643 325,152,822 15,423,022

46,514,334

143,810,000

Guangzhou Software
Park (Phase I)

3,000,000

Xikang renovation
project

2,659,595

272,950,000 106,928,658

10,830,000

Medical information
construction system

Shanghai Software
Park

347,890,000

Dalian Hekou Park
(Phase II)

1,423,939

140,030,000

209,110,000

Hainan Software Park
(Phase I)

21,337,672

Cloud base healthcare
center (Phase I)

43,000,000

550,000,000 128,934,960

BudgetRenovation of canteenof Shenyang SoftwarePark

Beijing Software Park

Project

5.15.2 Changes in construction in progress

80

76

0.11

91

47

0.37

15

76

24

95

95

0.50

91

47

0.40

40

80

32

Own
capitalOwn
capitalOwn
capitalOwn
capitalOwn
capitalOwn
capitalOwn
capitalOwn
capitalOwn
capitalIncluding:
Proportion
Sched- Accumulated amount of Capitalof project
Capitalule
capitalized capitalized ization
input tosource(%)
interests
interests in rate
budget (%)
this period

195,555,957

152,028

403,451

558,907

1,270,181

30,333,467

32,521,121

130,316,802

Year-endbalance

Neusoft Corporation Annual Report 2012

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5.15.3 Schedule of significant construction in progress
Item

Schedule

Beijing Software Park

This project is being constructed with rate of progress of 32%

Hainan Software Park (Phase I)This project is being constructed with rate of progress of 40%

Dalian Hekou Park (Phase II)This project is being constructed with rate of progress of 0.4%

Cloud base healthcare center (Phase I)This project is being constructed with rate of progress of 0.5%

5.16. Intangible asset
Year-begin bookbalance

Increase inthis period

Decrease inthis period

Year-end bookbalance

1. Original book value

683,335,374

13,425,998

191,725,731

505,035,641(1) Land use right450,228,932

2,739,879

56,897,910

396,070,901

9,413,054

124,169,956

Item(2) Land use right(3) Purchased proprietary technology

5,000,000
201,285,561

5,000,000
86,528,659(4) Others

26,820,881

1,273,065

5,657,865

22,436,081

2. Accumulated depreciation and amortization

254,878,493

23,360,280

162,619,510

115,619,263(1) Land use right

84,183,315

8,429,699

31,617,205

60,995,809(2) Land use right

2,250,000

333,333

2,583,333

153,547,967

10,846,340

126,821,564(4) Others

14,897,211

3,750,908

1,597,408

17,050,711

3. Net book value of intangible assets

428,456,881

1,218,322

40,258,825

389,416,378(1) Land use right

366,045,617

30,970,525

335,075,092(2) Land use right

2,750,000

2,750,000(3) Purchased proprietary technology

47,737,594(4) Others

11,923,670(3) Purchased proprietary technology

4. Impairment provision

1,218,322

37,572,743

48,955,916
6,538,300

5,385,370

140,240

140,240

140,240

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

428,316,641(1) Land use right

366,045,617(2) Land use right

2,750,000(3) Purchased proprietary technology

47,737,594(4) Others

11,783,430

1,218,322

40,258,825

389,276,138

30,970,525

335,075,092

2,750,000
1,218,322

48,955,916
6,538,300

1) The decreases of intangible assets in this period are all caused by change in consolidation.
2) The amortization amount of intangible asset in this period is RMB 23,360,280 Yuan.

5,245,130

Neusoft Corporation Annual Report 20125.17 Goodwill

Investee or item forming goodwill

Year-beginbalance

Increase

Decrease

Changecaused byexchangerateYear-endbalance

Provision for
impairment
at the end of
the period

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

3,928,116

Dalian Neusoft Finance Information
Technology Co., Ltd. (Note 2)

1,420,366

Liaoning Neusoft Venture Capital
Investment Co., Ltd. (Note 3)

77,123

77,123Beijing Lanruisoft Co., Ltd. (Note 4)

315,360

315,360NMSG business and assets (Note 5)

78,921,639

1,499,632

80,421,271

70,440,146

Neusoft Technology Solutions GmbH
(Note 6)32,650620

33,27033,270

VND business and assets (Note 7)

47,237,449

897,584

48,135,033

4,365,191

Taproot business and assets (Note 8)

18,535,797-45,304

18,490,493

18,490,493

Beijing LBS Social Insurance Information
Technology Co., Ltd. (Note 9)

1,809,071

1,809,071

Beijing Neusoft Viewhigh Technology
Co., Ltd. (Note 10)99,953,597

99,953,597

19,446,797

253,163,334

112,775,897

Total

252,231,168

3,928,116
1,420,366

1,420,366

2,352,532

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 appropriated as provision for impairment of goodwill.RMB 86,432,773
Yuan is appropriated as impairment loss of goodwill with operations and assets of NMSG and Taproot. Other provision for impairment is subject to change in 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 recognizedas equity investment difference and amortized by 10 years starting January 2004; On January 1st, 2007, according to the Account-ing 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: This Company’s subsidiary Neusoft (Japan) Co., Ltd. acquired 31% equity in Dalian Neusoft Finance Information
Technology Co., Ltd. The difference by which the acquisition price exceeds the attributable net assets was recognized as equity investment difference and amortized by 10 years starting May 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

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Neusoft Corporation Annual Report 2012

the amortization of debit balance of the equity investment balance as of the end of 2006 as goodwill when preparing the consolidated financial statement; During the reporting period, business registration of Dalian Neusoft Finance Information Technology
Co., Ltd. was cancelled and goodwill was 0 accordingly.
Note 3: 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 4: The Company acquired 14% equity in Beijing Lanruisoft Co., Ltd. in April 2007; the difference by which the purchase price exceeds the fair value of identifiable net assets attributable to the Company was presented as goodwill when preparing the consolidated financial statements;
Note 5: In October 2009, Neusoft (Europe) Co., Ltd. (Neusoft Europe) acquired 100% equity in Sesca Mobile Software Oy(later changed 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 considerationof 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 basicallysame, they are recognized as an asset group for goodwill impairment test; Among the change amount of provision for goodwill
impairment comparing with the beginning of the year, RMB 54,903,198 Yuan was added for the provision after the impairment
test; other was subject to change in exchange rate.
Note 6: 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.
Note 7: 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”) with transaction consideration of EUR 6 million; The difference by which the acquisition price exceeds the fairvalue of its attributable net assets was recognized as goodwill when preparing the consolidated financial statements; Based on
the result of impairment test, no provision for goodwill impairment was appropriated in this reporting period. The changeamount was subject to exchange rate.
Note 8: 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; Among the change amount of provision
for goodwill impairment comparing with the beginning of the year, RMB 12,082,778 Yuan was added for the provision after the
impairment test, other was subject to change in exchange rate.
Note 9: In August 2011, the Company acquired 28.33% equity in Beijing LBS with RMB 5.39 million Yuan, totally holdingNeusoft Corporation Annual Report 2012

61.67% after that. The difference by which the combination cost exceeds the fair value of identifiable net assets, RMB 1,809,071
Yuan, was presented as goodwill when preparing the consolidated financial statements.
Note 10: 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 combination cost exceeds the fair value of identifiable net assets attributable, RMB 99,953,597 Yuan, was presented as goodwill when preparing the consolidated financial statements. Appropriated provision for goodwill impairment based on the result of impairment test in during this period is RMB 19,446,797 Yuan.

5.18 Long-term deferred expenses
Year-beginbalance

Increase inthis period

Amortization
amountOtherdecrease

Year-endbalance

Decoration expense

38,453,494

13,927,805

9,114,229

702,448

42,564,622

Landscaping expense

5,122,427

1,321,864

3,306,816

Reconstruction of leased fixed assets for operation

2,815,337

442,600

1,074,479

Others

7,302,888

22,061,622

5,086,892

100,000

24,177,618

53,694,146

37,753,891

18,582,416

802,448

72,063,173

Item

Total

3,137,475
2,183,458

Note: Other decrease is mainly caused by change in consolidation.

5.19 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
Appropriated bonus

21,479,730

13,432,311

Government subsidy

16,703,086

15,889,963

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

11,232,120

7,134,586

Provision for inventory write-down

3,128,960

2,312,947

Estimated liabilities

2,056,962

1,758,432

Impairment of long-lived assets

526,206

1,122,869

Undue loss not offsetted

365,328

1,588,528

Change in fair value of assets

17,057

Depreciation of fixed assets and other asset amortization
OthersSubtotal

8,206

10,144

10,852,905

2,324,685

66,353,503

45,591,522

Deferred tax liabilities:
Change in fair value of assets

1,491,718

86,317

Others2,246,775

2,323,464

3,738,493

2,409,781

Subtotal

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Neusoft Corporation Annual Report 2012

5.19.2 Taxable differences and deductible differences
Item

AmountDeductible differences
Appropriated bonus

169,725,385

Government subsidy

154,262,021

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

101,462,551

Provision for inventory write-down

31,289,601

Estimated liabilities

18,628,581

Impairment of long-lived assets

5,159,563

Undue loss not offsetted

1,461,311

Change in fair value of assets
Depreciation of fixed assets and other asset amortization

62,819Others78,405,218
560,457,050

Subtotal
Taxable differences
Change in fair value of assets

14,917,183

Others

14,978,495
29,895,678

Subtotal

5.20 Provision for asset impairment
Year-beginbalance

Increase inthis period

Provision for bad debts

77,120,696

41,725,790

Provision for inventory
write-down

23,333,820

8,677,894

Provision for impairmentof goodwill

24,854,666

86,432,773

Provision for impairment oflong-term equity investment

12,368,028

Provision for impairment of
fixed assets

1,750,914

Provision for impairment ofintangible asset

140,240

Item

Total

139,568,364

Decrease in this period
Reversed

Write-off

Other(Note)

Year-endbalance

10,759,319-2,340,876

105,746,291

204,348

31,807,366

1,488,458

112,775,897-7,298,028

5,070,000

862,826

888,088

140,240
136,836,457

204,348

Note: Other is mainly caused by change in consolidation and exchange rate.

11,622,145-8,150,446

256,427,882

Neusoft Corporation Annual Report 20125.21 Short-term borrowings
5.21.1 Type
Item

Year-end balanceYear-begin balance

Guaranteed borrowing

11,312,055

Debt of honor

500,000,000

470,000,000

511,312,055

470,000,000

Total

5.21.2 There is no unpaid due short-term borrowing in this period.
5.22 Trading financial liabilities
Item

Year-end balanceYear-begin balance

Trading financial liabilities
Foreign exchange forward contract (Note)

170,567
170,567

Total

Note: Foreign exchange forward contract was calculated based on exchange rate quoted in the open market; estimated floating income was included in income from change in fair value and presented as trading financial assets.

5.23 Note payable
5.23.1 Overview
TypeYear-end balanceBanker’s acceptanceYear-begin balance

107,630,675

83,204,957

5.23.2 The amount due in following accounting period is RMB 107,630,675 Yuan.
5.23.3 There is no note payable to related party.
5.24 Accounts payable
5.24.1 Overview
Item

Year-end balance

Purchase payment

Year-begin balance

620,096,812

543,996,141

5.24.2 Accounts payable to shareholder companies with over 5% (including 5%) voting share of the Company:
Company
AlpineYear-end balance
518,177

Year-begin balance

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Neusoft Corporation Annual Report 2012

5.24.3 Account payable to related parties at the end of this period is RMB 114,631,402 Yuan. Please refer toNote 7.4.11 for details.
5.24.4 Large-amount accounts payable with age of over 1 year
Relationship with
the Company

AmountRemarkRadio Frequency Systems (Shanghai) Co., Ltd.

Non-related party

4,105,717

Unsettled purchase payment

Sihua Tech (Shanghai) Co., Ltd.

Non-related party

3,973,478

Unsettled purchase payment

Beijing Sugon Dawning Information Technology Co., Ltd.

Non-related party

2,815,869

Unsettled purchase payment

Beijing Jingwei Information Technology Co., Ltd.

Non-related party

2,701,462

Unsettled purchase payment

Beijing Jiaxun Feihong Electrical Co., Ltd.

Non-related party

2,196,760

Unsettled purchase payment

Debtor

15,793,286

Total

5.25 Advance receipt
5.25.1 Overview
Item

Year-end balanceContract payment received in advance

497,627,237

Year-begin balance
452,920,955

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

Toshiba Corporation

Year-begin balance
919,588

16,382

5.25.3 Advance receipt from related parties
Advance receipt from related parties at the end of this period is RMB 932,129 Yuan; please refer to Note
7.4.11 for details.
5.25.4 Large-amount advance receipt with age of over 1 year:
DebtorRelationship with
the Company

AmountRemarkTianjin occupational skill training and qualificationbase for machining/manufacturing industry

Non-related party

6,783,000

Unsettled project payment forcontract being performed

PT. Sani Tiara Prima

Non-related party

3,174,046

Unsettled project payment forcontract being performed

Information communication center of Jiangxi ElectricPower Company

Non-related party

3,011,500

Unsettled project payment forcontract being performed

Neusoft Corporation Annual Report 2012

Continued table
DebtorRelationship with
the Company

AmountRemark

Qinxinanzhou People Hospital

Non-related party

2,160,000

Unsettled project payment forcontract being performed

Shanxi Yanchang Petroleum (Group) Co., Ltd.

Non-related party

1,950,000

Unsettled project payment forcontract being performed

17,078,546

Total

5.26 Employee pays payable
Year-beginbalance

Increase inthis period

Decrease inthis period

Year-endbalance(1) wage, bonus, allowance and subsidy

248,340,451

2,340,643,388

2,306,269,364

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

18,314,894

4,074,415

4,074,415

18,314,894

211,958

19,858,746

20,070,704(4) Social insurance premium

2,275,203

412,856,687

412,206,578

2,925,312

Covering: medical insurance

699,851

103,606,501

103,812,114

494,238

Basic pension insurance

282,918

262,935,989

262,243,094

975,813

Annuity

825,257

13,808,346

13,541,108

1,092,495

Unemployment insurance

293,438

21,027,406

21,119,771

201,073

5,452

9,977,521

9,845,825

137,148

168,287

1,500,924

1,644,666

24,545

154,224

126,103,856

125,946,192

311,888

18,544,622

14,941,108

13,009,081

20,476,649

925,907925,9074,201,199

978,440

301,062

4,878,577

292,042,551

2,920,382,547

2,882,803,303

329,621,795

Item(3) Welfare expense

Employment injury insurance
Maternity insurance(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 March 2013.

175

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Neusoft Corporation Annual Report 20125.27 Taxes payable
Item

Year-end balance

Corporate income tax

Year-begin balance

844,682

12,479,460

VAT

29,001,889

23,402,130

Business tax

16,590,081

15,111,631

Urban maintenance and construction tax

3,897,508

2,957,016

Others

15,607,831

13,616,855

65,941,991

67,567,092

Total

5.28 Other accounts payable
5.28.1 Overview
Item

Year-end balanceYear-begin balance

Temporary receipt payable to other company

75,477,457

Temporary estimated construction payment

61,082,022

Withholding account payable

15,276,951

19,263,076

Deposit for property

9,261,646

14,905,894

Margin for construction or project

7,731,761

9,550,877

Temporary receipt payable to individual

5,955,549

2,263,291

Others37,234,832

25,188,721

212,020,218

149,882,015

Total

78,710,156

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

Northeastern University of China

Year-begin balance

4,783,862

19,659,255

5.28.3 Other accounts payable to related parties
Other account payable to related parties at the end of this period is RMB 21,324,830 Yuan; please refer toNote 7.4.11 for details.
5.28.4 Other large-amount account payable with age of over 1 year:
Payable to
Northeastern University of China

Amount
4,783,862

ReasonBased on related agreement

Neusoft Corporation Annual Report 2012

5.28.5 Other accounts payable with large amount
Payable to

AmountNature or content

Remarks

Dalian Neusoft Holdings Co., Ltd.

16,328,100 Temporary accountNote 1

Northeastern University of China

4,783,862

Including: Deferred payment for transfer of property

4,494,276 Instalment payment for transfer of property

Note 2

Note 1: This refers to the temporary payment for transfer of sponsor investment in the four institutes to Dalian Neusoft Holdings Co., Ltd.; please refer to 4.6 for details.
Note 2: This refers to the instalment payment for buying property from Northeastern University of China in 2006 as contracted.

5.29 Estimated liabilities
Item

Year-begin balance

Product liabilities

Increase

15,686,425

Decrease

Year-end balance

2,942,156

18,628,581

5.30 Long-term borrowings
5.30.1 Overview
TypeYear-end balance

Mortgage loan (Note)

Year-begin balance

84,000,000

104,000,000

Note: The loan at the end of this period was gained from a mortgage on property with a book value of RMB 128,739,776
Yuan by the Company’s subsidiary Neusoft Group (Tianjin) Co., Ltd., which was a full discount loan. The loan at the beginningof this period referred to the mortgage of DNPID. Long-term borrowings were reduced due to change in consolidation.

5.30.2 Top five long-term borrowings

Borrowing from

Tianjin Puji Branch of
SPD Bank

Term

May 9th, 2012May 8th, 2017

Currency

RMB

Interest
rate (%)

8.28

Year-end balance
Foreigncurrency

Local
currency
84,000,000

Year-begin balance
Foreigncurrency

Local
currency

177

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Neusoft Corporation Annual Report 20125.31 Bonds payable

Bond

Par value

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

400,000,000

Date of
issue

Term

Interest
Interest
payableAccruedInterest
payable at
at theinterest in
paid inthe end of
beginning this period this period
the yearof the year

Amount2011.11.14 3 years 400,000,000

3,658,667

27,440,000

27,440,000

3,658,667

Year-endbalance403,658,667

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.

5.32 Long-term accounts payable
Item

Year-beginbalance

Term

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

Interest
rate (%)

Accruedinterest

Condition

14,609,431

14,609,431

120,000,000

120,000,000

Note 144,850,000

Note 2

Payment for property
134,609,431

Total

Year-endbalance

179,459,431

Note 1: This fund was borrowed from Administrative Committee of Hunnan New District, Shenyang in preceding year with
use term of 10 years since October 1st, 2008 without paying any interest or any other fee. The Company shall refund RMB 24
million Yuan as at every October 31st within 5 years since 2013.
Note 2: This is the final payment instalment made by Neusoft Group (Tianjin) Co., Ltd. to Tianjin Port Free Trade Zone Investment Co., Ltd. for purchase the use right of the land located within Tianjin Free Trade Zone as well as the ownership of a newly-built R&D office building 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. made part of the payment and the remaining will be paid in the coming five years.

5.33 Other current liabilities
Item
Deferred income (Note)

Year-end balance
222,597,627

OthersYear-begin balance
186,425,966
3,309,908

Total

222,597,627

189,735,874

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

Neusoft Corporation Annual Report 20125.34 Share capital
Changes (+/-)

Item

Year-beginbalance

Share
Newly
Share
transferredissuedOthers Subtotal
dividend from surplus
share
reserveYear-endbalance

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
Subtotal
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

179

180

Neusoft Corporation Annual Report 20125.35 Capital reserves
Item

Year-begin balance

Increase

Decrease

Year-end balance

1. Capital share premium (share premium)

340,128,038

2. Other capital reserves (Note)

22,119,163

240,000

6,198,093

16,161,070

362,247,201

240,000

6,198,093

356,289,108

Total

340,128,038

Note: Dalian Neusoft Holdings Co., Ltd. made a capital increase into the registered capital of Liaoning Neusoft Venture Capital Investment Co., Ltd. Actual paid amount is more than the subscripted register capital, which formed the capital reserve with
an amount of RMB 400,000 Yuan. Capital reserve with the amount of RMB 240,000 Yuan was increased based on the Company’s equity ratio in Liaoning Neusoft Venture Capital Investment Co., Ltd. when consolidating the financial statements.

Neusoft IT Services sold all of its equity in DNPID and business registration of Dalian Neusoft Finance Information Technology Co., Ltd. was cancelled during the reporting period. As a result, the capital reserve with anamount of RMB 6,198,093 Yuan recognized according to change in other capital reserves of invested companies inpreceding years was converted into current investment income.
5.36 Surplus reserves
Item

Year-begin balance

Increase

Decrease

Year-end balance

Statutory surplus reserve384,377,466

47,048,091

431,425,557

Arbitrary surplus reserve

212,326,248

23,524,045

235,850,293

596,703,714

70,572,136

667,275,850

Total

Note: The Company and domestic subsidiaries' policies for surplus reserves are as follows:

1) Statutory surplus reserve
According to the Company Law of the People's Republic of China and the Company's by-laws, the Company
and its subsidiaries shall appropriate their respective surplus reserves based on 10% of the after-tax profit of statutory accounts (after the losses in preceding year are offsetted) prepared according to the Accounting Standards for
Business Enterprises; and the appropriation of the reserve may be terminated if its balance aggregates 50% of theregistered capital.
Statuary surplus reserve can be used to offset loss or increase capital upon approval. However, the balance after offsetting or transfer shall not lower than 25% of the registered capital.
2) Arbitrary surplus reserve
After the statutory surplus reserves are appropriated, arbitrary surplus reserve shall be then appropriated basedNeusoft Corporation Annual Report 2012

on the by-laws after the appropriation proposal filed by the Board of Directors is approved by the Meeting of
Shareholders. An amount of RMB 23,524,045 Yuan was appropriated as arbitrary surplus reserves of the Company
and its subsidiaries at 5% the after-tax profit of statutory accounts (after the losses in preceding year are offsetted)
prepared according to the Accounting Standards of Business Enterprises.
5.37 Undistributed profits

Item

AmountUndistributed profits at the beginning of the year

Appropriation/distribution rate

2,536,698,174

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

456,313,926

Less: Appropriated statutory surplus reserves

47,048,091

Please refer to Note 5.36

Appropriated arbitrary surplus reserves

23,524,045

Please refer to Note 5.36

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

2,922,439,964

5.38 Operating income and cost
5.38.1 Operating income
Item

Amount in this period

Amount in previous period

Primary business income

6,883,891,905

5,681,821,459

Other business income

76,303,106

69,427,871

6,960,195,011

5,751,249,330

Subtotal

5.38.2 Operating cost
Item

Amount in this period

Amount in previous period

Primary business cost

4,686,216,468

3,968,485,614

Other business cost

43,504,460

36,512,791

4,729,720,928

4,004,998,405

Subtotal

181

182

Neusoft Corporation Annual Report 2012

5.38.3 Operating income & cost (by industry):
Amount in this period

Item

Amount in previous period

Operating income Operating cost Operating income Operating cost

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

5,975,047,991

4,172,158,625

4,830,519,072

3,476,555,703

Medical systems

893,617,148

530,343,758

803,436,708

486,024,807

Property management service and rental

82,863,596

21,687,130

108,831,844

36,999,793

Advertising

8,666,276

5,531,415

8,461,706

5,418,102

6,960,195,011

4,729,720,928

5,751,249,330

4,004,998,405

Total

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

Amount in previous period

IncomeCost

IncomeCost

5,973,700,882

4,170,932,577

4,830,111,571

3,476,259,142

Medical systems

824,097,540

489,722,271

739,011,299

450,972,804

Property management service and rental

77,427,207

20,030,205

104,236,883

35,835,566

Advertising

8,666,276

5,531,415

8,461,706

5,418,102

6,883,891,905

4,686,216,468

5,681,821,459

3,968,485,614

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

Total

5.38.5 Operating income from top 5 customers:
Customer

Operating income

Proportion to the total (%)

Sony

410,661,756

5.90

China Unicom

243,734,126

3.50

Harman224,939,395

3.23

Alpine184,816,514

2.66

Toshiba Corporation

184,356,833

2.65

Total

1,248,508,624

17.94

5.39 Business tax and surtaxes
Item

Amount in this period

Amount in previous period

Tax rate (%)

Business tax

82,810,083

73,204,360

Urban maintenance and construction tax

16,167,805

11,666,600

1-7Educational surtax

11,752,517

9,816,712

2、3

377,981

1,418,015

111,108,386

96,105,687

Others
Total

5

Neusoft Corporation Annual Report 20125.40 Sales expense
Item

Amount in this period

Amount in previous period

Employee compensation

358,289,610

276,489,098

Transportation and business travel expenses

70,479,301

62,678,714

Entertainment expense

62,261,694

19,365,360

Advertising

41,475,992

48,043,707

Office materials

41,326,558

36,499,489

Rental and property management fee

8,628,113

6,670,868

Depreciation and amortization

6,983,748

5,848,673

Premium

6,663,142

7,786,325

Others38,966,628

34,537,927

635,074,786

497,920,161

Total

5.41 Administrative expenses
Item

Amount in this period

Amount in previous period

Employee compensation

627,701,024

455,916,412

Depreciation and amortization

76,393,409

65,556,233

Office materials

65,319,567

49,469,821

Transportation and business travel expenses

48,555,310

40,242,682

Rental and property management fee

41,953,657

32,015,989

Local taxes

35,639,885

25,575,799

Entertainment expense

34,220,589

60,590,196

Training/auditing/consulting expenses

22,630,727

23,654,173

Premium

4,211,355

5,522,799

Advertising

4,065,719

4,170,350

Others25,253,705

57,243,371

985,944,947

819,957,825

Total

5.42 Financial expenses
Type

Amount in this period

Amount in previous period

Interest expenses

59,183,749

34,540,370

Less: Interest income

14,042,444

20,429,876

Profit or loss on exchange

26,304,296

6,278,727

Handling fee and other

6,162,740

3,259,975

Cash discount956,726
Total

78,565,067

23,649,196

183

184

Neusoft Corporation Annual Report 20125.43 Income from changes in fair value
Cause

Amount in this period

Amount in previous period

14,054,013-106,180

170,567

1,056,737

14,224,580

950,557

Trading financial assets - Foreign exchange forward contract
Including: Income from changes in fair value caused by derivative
financial instrument
Trading financial liabilities - Foreign exchange forward contract
Investment property measured by fair value
Total

5.44 Investment income
5.44.1 Overview
Item

Amount in this period Amount in previous period

Income from long-term equity investment calculated by cost method

11,835

Income from long-term equity investment calculated by equity method

39,038,402

39,714,198

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

52,095,578-731,026

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

14,780,158

1,931,507

6,198,093

1,221,899

112,124,066

42,136,578

Investment income from disposal of trading financial assets
Investment income obtained during the holding period ofavailable-for-sale financial assets
Other (Note)
Total

Note: This investment income is mainly brought by Neusoft IT Services’selling of equity in DNPID and cancellation of business registration of Dalian Neusoft Finance Information Technology Co., Ltd. Capital reserve with an amount of RMB 6,198,093
Yuan confirmed according to other capital reserve change of DNPID and Dalian Neusoft Finance Information Technology Co., Ltd.
in previous years was converted into current investment income.

5.44.2 Long-term equity investment income calculated by cost method:
Investee
Lotus Business Consulting Co., Ltd.

Amount inthis period
11,835

Amount inprevious period

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

Neusoft Corporation Annual Report 2012

5.44.3 Long-term equity investment income calculated by equity method:Amount inthis period

InvesteeAmount inprevious
periodCause of change

Nokia Siemens Networks Neusoft Commtech Company

4,134,373

8,231,268 Change in net profit of investee

Shenyang CataData Technology Co., Ltd.

-885,611-839,530 Change in net profit of investee

Shenyang Toshiba Neusoft Information Systems Co., Ltd.

-1,799,877-896,252 Change in net profit of investee

Neusoft-Philips Medical Systems Co., Ltd.

39,090,289

34,780,482 Change in net profit of investee

Liaoning Shengjing Xikang Healthcare Co., Ltd.

-114,989-162,886 Change in net profit of investee

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

-212,290-119,702 Change in net profit of investee

NEC Neusoft Information Technology Co., Ltd.

-2,560,527-1,261,909 Change in net profit of investee

Aerotel Medical Systems (1998) Ltd.

-1,823,120

439,595 被投资单位净利润变动影响

Shandong Neusoft System Integration Engineering Co., Ltd.

2,809,091

Change in net profit of investee

Beijing Huiyuan Xikang Healthcare Technology Co., Ltd.

-234,278

Change in net profit of investee

Beijing Venusource Information Technology Co., Ltd.

635,341

Change in net profit of investee

Beijing LBS Social Insurance Information Technology Co., Ltd.
Total

-456,868
39,038,402

Calculation based on cost method
after capital increase

39,714,198

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

41,725,790

25,898,767

Inventory write-down

8,473,546

5,077,146

Impairment of long-term equity investment

1,448,028

Impairment of investment property
Impairment of fixed assets
Impairment of construction supplies
Impairment of construction in progress
Impairment of intangible asset
Impairment of goodwill
Total

86,432,773

8,981,071

136,632,109

41,405,012

185

186

Neusoft Corporation Annual Report 20125.46 Non-operating income
5.46.1 Overview
Amount inthis period

Amount inprevious period

Profits from disposal of non-current assets

1,623,722

21,660,226

1,623,722

Including: Profit from disposal of fixed assets

443,7222,380,226

443,722

Profit from disposal of intangible asset

1,180,000

19,280,000

1,180,000

Government Subsidies

94,363,121

105,173,354

94,363,121

VAT refund

39,349,050

32,253,175

Others4,216,234

28,999,199

4,216,234

139,552,127

188,085,954

100,203,077

Amount inthis period

Amount inprevious period(1) Fund appropriation for scientific research(included in current profit and loss)

22,987,495

58,128,282

22,987,495(2) Development fund for service outsourcing
business

36,053,600

28,066,200

36,053,600(3) Industry supporting fund

5,971,024

3,598,709

5,971,024(4) Fiscally subsidized interest

2,543,800

2,416,600

2,543,800(5) Other government subsidies

26,807,202

12,963,563

26,807,202

94,363,121

105,173,354

94,363,121

Amount inthis period

Amount inprevious period

Loss on disposal of non-current assets

5,173,148

2,748,601

5,173,148

Including: Loss on disposal of fixed assets

1,825,227

2,717,587

1,825,227

3,347,921

31,014

3,347,921

Donation

689,000

1,136,014

689,000

Others518,900

1,614,858

518,900

6,381,048

5,499,473

6,381,048

Item

Total

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

5.46.2 Government subsidies
Item

Total

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

5.47 Non-operating expense

Item

Loss on disposal of intangible asset

Total

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

Neusoft Corporation Annual Report 2012

5.48 Income tax
Item

Amount in this period

Amount in previous period

Income tax calculated by the Tax Laws and related regulations

126,918,048

80,385,084

Adjustment of deferred income tax-20,018,487-11,043,976

Total

106,899,561

69,341,108

5.49 Calculation of Basic EPS and Diluted EPS
Formula:5.49.1 Basic EPS
Basic EPS = P0÷SS = S0 + S 1 + Si × Mi ÷ M0 - Sj × Mj ÷ M0 - Sk
P0 means net profit attributable to the Company's common shareholders or net profit attributable to themafter deducting non-recurring profit and loss; S means weighted average number of ordinary shares outstanding;
S0 means total shares at the beginning of this period; S1 means increased shares transferred from capital reserveor stock dividends in this reporting period; Si means increased shares from 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; Skmeans 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; Mjmeans accumulated number of months 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 andloss 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.

187

188

Neusoft Corporation Annual Report 2012

5.49.3 Basic EPS and Diluted EPS
EPS (Yuan)

Item

Basic EPS

Diluted EPS

Net profit attributable to the Company's common shareholders

0.37

0.37

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

0.26

0.26

5.49.4 Calculation process of basic EPS:
Item

FormulaAmountNet profit attributable to the Company's common shareholders

P0456,313,926

Non-recurring profit and loss

F

136,776,911

Net profits attributable to Company's common shareholders after deP1 = P0 - F
ducting non-recurring profit and loss
Total shares at the beginning of this period

S0

Increased shares transferred from capital reserve or stock dividends

S1

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

Si319,537,015
1,227,594,245

Accumulated number of months from the following month of theMishare increase to the end of the reporting period
Decreased shares caused by buy-back

Sj

Accumulated number of months from the following month of the
Mjshare decrease to the end of the reporting period
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 EPSEPS = P0 / S

0.37

Basic EPS after deducting non-recurring profit and loss

EPS1 = P1 / S

0.26

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.

Neusoft Corporation Annual Report 20125.50 Other composite income
Item

Amount in thisperiodAmount in previous
period

1. Profit (loss) occurred by available-for-sale financial assets
Less: Related income tax
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 byequity method
Less: Related income tax
Net value previously included in other composite income and transferred
into current profit and loss

6,198,093

755,902

Subtotal-6,198,093-755,902-5,695,655-21,844,159-5,695,655-21,844,159

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

40,007

186,776

Subtotal

40,007

186,776-11,853,741-22,413,285

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
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 andtransferred into current profit and loss
Subtotal
Total

189

190

Neusoft Corporation Annual Report 2012

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

AmountInterest income

14,042,444

Scientific research appropriation

108,010,114

Other transactions

244,851,639
366,904,197

Total

5.51.2 Other cash disbursement relating to operating activities
Item

AmountTransportation and business travel expenses

122,476,662

Office materials

109,376,967

Entertainment expense

96,482,283

Rental and property management expense

56,480,516

Business promotion expense

44,156,113

Training, consulting, seminar expenses

25,286,892

Transportation and property insurance expenses

10,054,597

Other transactions

39,862,925
504,176,955

Total

5.51.3 Other cash receipt relating to investment activities
Item

AmountProject deposit

270,000
270,000

Total

5.51.4 Other cash disbursement relating to investment activities
Item

AmountDividend income tax of subsidiaries withheld at the source

143,985
143,985

Total

5.51.5 Other cash disbursement relating to financing activities
Item
Membership expense paid to China’s National Association of Financial Market Institutional Investors
Total

Amount100,000
100,000

Neusoft Corporation Annual Report 2012

5.52 Supplementary Information to cash flow statements
5.52.1 Overview
Item

Amount in thisperiodAmount in previous
period

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

435,768,952

423,545,552

Add: Provision for asset impairment

136,632,109

41,405,012

Depreciation of fixed assets, oil & gas assets and productive biological assets

118,041,429

128,325,801

Amortization of intangible asset

23,360,280

25,163,072

Amortization of long-term deferred expenses

18,582,416

14,795,474

Loss on disposal of fixed assets, intangible asset and other long-lived assets“-”for
(profit)3,549,426-18,911,625

Loss on change of fair value “-”for(
profit)-14,224,580-950,557

Financial expenses “-”for(
profit)85,488,045

41,705,531

Investment loss “-”for(
profit)-112,124,066-42,136,578

Decrease of deferred income tax assets “-”for(increase)-20,761,981-10,824,364

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

1,328,712-219,612

Decrease of inventories “-”for(increase-245,814,014-98,335,163

Decrease of operating accounts receivable “-”for(increase)-310,333,000-241,512,356

Increase of operating accounts payable “-”for(decrease)

197,741,794

38,146,417

317,235,522

300,196,604

Year-end cash balance

2,088,199,345

1,736,706,930

Less: Year-begin cash balance

1,736,706,930

1,687,979,107

351,492,415

48,727,823

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

191

192

Neusoft Corporation Annual Report 2012

5.52.2 Information relating to obtaining or disposing subsidiaries and other operating units
Amount in this Amount in previous
periodperiodItem
1. Information relating to obtaining subsidiaries and other operating units:
1) Acquisition price

38,704,045

197,778,092

2) Cash and cash equivalent paid for the acquisition

38,704,045

172,843,692

204,045

21,038,926

38,500,000

151,804,766

204,045

35,434,382

204,045

50,631,696

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
Current assets
Non-current assets

3,084,138

Current liabilities

18,281,452

Non-current liabilities
2. Information relating to disposing subsidiaries and other operating units:
1) Disposal price444,276,705

2) Cash and cash equivalent received from the disposal

430,115,253

Less: Cash and cash equivalent held by subsidiaries and other operating units

14,341,392

3) Net cash received from disposal of subsidiaries and other operating units

415,773,861

4) Net assets from disposal of subsidiaries

623,373,173

Current assets

153,816,891

Non-current assets

625,245,672

Current liabilities

51,689,390

Non-current liabilities

104,000,000

5.52.3 Composition of cash and cash equivalent:
Item

Amount in this period

Amount in previous period

2,088,199,345

1,736,706,930

139,152

266,891

2,082,553,193

1,736,440,039

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

5,507,000

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.

2,088,199,345

1,736,706,930

Shenzhen

Beijing

Qingdao

Changsha

NanjingChengdu

Xi’an

Wuhan

Shenyang

Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Neusoft Group (Beijing) Co., Ltd.

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 Neusoft Medical
Systems Co., Ltd.

Domicile

Limitedliability
company

Form

WhollyownedTypeShenzhen Neusoft Co., Ltd.

Subsidiary

7.1 Subsidiaries

Note 7 Related Party and Related Transactions

Liu Jiren

Li JunLi JunLi JunXing Bo

Guo Haijun

Li JunLi JunZhao Gang

Legal
representative
Business scope

Medical systems

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computer software/hardware

Computersoftware/hardware/services

Computer software/hardware

Note 6 There is no accounting treatment for asset backed securitization.

100.00 100.00

Equity Voting
ratio
share
(%)
(%)

378,000,000 100.00 100.00

25,000,000 100.00 100.00

35,000,000 100.00 100.00

20,000,000 100.00 100.00

12,000,000 100.00 100.00

12,000,000 100.00 100.00

50,000,000 100.00 100.00

340,000,000 100.00 100.00

5,000,000

Registeredcapital70208754-2

74143252-1

72628571-1

72539482-8

72173264-x

18378979-5

70620482-2

77545727-6

19236465-x

Organization
code(Unit: RMB Yuan)

Neusoft Corporation Annual Report 2012193

Shanghai

Japan

Beijing

Shenyang

Guangzhou

ShanghaiChengduLimitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Beijing Lanruisoft Co., Ltd.

Shenyang Neusoft System
WhollyIntegration Technology Co., Ltd. owned

Whollyowned

Neusoft (Japan) Co., Ltd.

Neusoft Group (Guangzhou)Co., Ltd.

Neusoft Group (Shanghai)Co., Ltd.

Neusoft Group (Chengdu)
Co., Ltd.

Qinhuangdao

Whollyowned

LimitedControlled liability
company

Qinhuangdao Neusoft Co., Ltd.

Shanghai Neufashion Digital
Technology Co., Ltd.

Whollyowned

Neusoft (Hong Kong) Co., Ltd.

Hong Kong

Shenyang

LimitedControlled liability
company

Shenyang Neusoft Boan
Software Co., Ltd.
Limitedliability
company

Shenyang

Domicile

Limitedliability
company

Form

Whollyowned

TypeShenyang Zhuri Digital
Advertising Communications
Co., Ltd.

Subsidiary

Ad production/release

Business scope

Wang Jingxi

Li JunLi JunLi JunLu Zhaoxia

Zhang Xiubang

Li JunXu Hongli

Liu Jiren

Computer software/hardware

Computer software, technicalconsulting and services

Computer software, technicalconsulting and services

Computer software, technicalconsulting and services

Development, production, designand sales of computer software

Computer software/hardware

Computer software/hardware

Computer softwaredevelopment/network integration

Development, sales andconsulting of computer software

Wang Yongfeng Computer software/hardware

Wang Jingxi

Legal
representative

Equity Voting
ratio
share
(%)
(%)

60.00

60.00

85.00

85.00

70333930-x

60128505-6

71114763-1

24376645-7

Organizationcode

1,000,000 100.00 100.00

200,000,000 100.00 100.00

130,000,000 100.00 100.00

20,000,000 100.00 100.00

10,000,000 100.00 100.00

78812157-9

68095364-8

67972637-6

67533650-6

78398520-4

187,750,000
100.00 100.00 0106-01-027903
JPY

20,000,000 100.00 100.00

10,000,000

850,000
100.00 100.00
USD

2,500,000
USD

1,000,000 100.00 100.00

RegisteredcapitalContinued table

194
Neusoft Corporation Annual Report 2012

ShenyangUSA

Hangzhou

TianjinTangshanHainanWuxi

Wuhu

Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Shenyang Neusoft Property
Management Co., Ltd.

Neusoft Technology Co., Ltd.

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.

DalianLimitedControlled liability
company

Liaoning Neusoft Venture
Capital Investment Co., Ltd.

Shenyang

Limitedliability
company

Whollyowned

Shenyang Neusoft Information
Technology Services Co., Ltd.

Dalian

Domicile

Limitedliability
company

Form

Whollyowned

TypeNeusoft Group (Dalian) Co., Ltd.

SubsidiaryBusiness scope

Xing Bo

Xing Bo

Wang Yongfeng

Lu Zhaoxia

Wang Limin

Xing Bo

Liu Jiren

Wang Jingxi

Liu Jiren

Sales and development ofcomputer software/hardware

Computer software/hardware,technical consulting and services

Computer software/hardware,technical consulting and services

Computer software/hardware,technical consulting and services

Computer software/hardware

Computer software, technicalconsulting and services

Computer software/hardware,technical consulting and services

Property management andservice

Small and medium-sizedenterprise investment andmanagement

Wang Yongfeng Computer software/hardware

Wang Yongfeng Computer software/hardware

Legal
representative

Equity Voting
ratio
share
(%)
(%)

60.00

60.00

10,000,000 100.00 100.00

20,000,000 100.00 100.00

100,000,000 100.00 100.00

30,000,000 100.00 100.00

20,000,000 100.00 100.00

500,000 100.00 100.00

1,000
100.00 100.00
USD

1,000,000 100.00 100.00

125,000,000

50,000,000 100.00 100.00

600,000,000 100.00 100.00

Registeredcapital57175470-3

56176638-0

55737352-5

55330512-x

69740643-x

68908449-3

72091468-7

71578937-5

78872654-3

79202132-7

Organization
code

Continued table

Neusoft Corporation Annual Report 2012

195

Form

Nanchang

Switzerland

Beijing

Tianjin

Hefei

DalianLimitedliability
company
Limitedliability
company

Limitedliability
company
Limitedliability
company

Whollyowned

LimitedControlled liability
company
Limitedliability
company

Whollyowned

Neusoft (Europe) Co., Ltd.

Beijing Neusoft ViewhighTechnology Co., Ltd.

Whollyowned

Whollyowned

Whollyowned

Tianjin Neusoft Technology
Co., Ltd.

Hefei Neusoft Information
Technology Co., Ltd.

Dalian Neusoft Business Process
Consulting Co., Ltd.

Neusoft Group (Nanchang)Co., Ltd.

Zhengzhou

Whollyowned

Neusoft Group (Zhengzhou)Co., Ltd.

Limitedliability
company

BeijingNanjing

LimitedBeijing LBS Social Insurance
Controlled liability
Information Technology Co., Ltd.
company

Limitedliability
company

Guangzhou

Domicile

Shenyang

Whollyowned

LimitedControlled liability
company

Type

LimitedShenyang Neusoft Transportation
Controlled liability
Information Technology Co., Ltd.
company

Neusoft Group (Nanjing)Co., Ltd.

Guangdong Neufashion Digital
Technology Co., Ltd.

SubsidiaryComputer software/hardware
and its development, sales andtechnical consulting

Sales and development ofcomputer software/hardware

Business scope

60.00

61.67

50.50

61.67

50.50

Computer software/hardware,system integration, technology
consulting

73.14

5,000,000 100.00 100.00

500,000 100.00 100.00

5,000,000 100.00 100.00

73.14

27,790,000

Development andsales/wholesale of computer
hardware and software;technology support,
import/export agent

20,000,000 100.00 100.00

10,000,000 100.00 100.00

15,000,000

7,000,000

37,900,000
100.00 100.00
CHF

Wang Yongfeng Computer software/hardware

Xing Bo

60.00

Equity Voting
ratio
share
(%)
(%)

12,000,000 100.00 100.00

37,500,000

RegisteredcapitalComputer software, technicalconsulting and services

Computer hardware
development/production,technical consulting, services

Sales and development ofcomputer software/hardware

Technology
development/consulting services,
product selling

Computer software/hardware,
Wang Yongfeng system integration, technology
consulting

Lu Zhaoxia

Liu Jiren

Guo Haijun

Wang Limin

Hu Weiwei

Wang Yongfeng Computer service/consulting

Xing BoLu Zhaoxia

Legal
representative

69600028-6

77735490-8

78639469-6

75010398-1

58657721-X

58288499-2

80204827-6

573458836

57593939-3

6057403343-4

Organization
code

Continued table

196
Neusoft Corporation Annual Report 2012

Type

Form

Domicile

DalianLimitedliability
company

Shenyang

Shenyang Neusoft Medical
WhollySystems Import & Export Co., Ltd owned

Limitedliability
company

Hong Kong

Shenyang

Limitedliability
company

LimitedNeusoft A&T Medical Technology
Controlled liability
Co., Ltd.
company

Neusoft Xikang International
Co., Ltd.

Whollyowned

CaymanIslands

LimitedControlled liability
company

Neusoft Xikang Holdings
Co., Ltd.

Kunming

LimitedKunming Neusoft Jinsha
Controlled liability
Information Technology Co., Ltd.
company

Whollyowned

Neusoft Yuetong Software
Technology (Dalian) Co., Ltd.

Beijing

Limitedliability
company

Whollyowned

Beijing

LimitedControlled liability
company

Beijing Neusoft Yuetong
Software Technology Co., Ltd.

Beijing InBridge Consulting
Co., Ltd

Shenzhen

LimitedControlled liability
company

Shenzhen Neusoft Mobile
Terminal Design Co., Ltd.

Beijing Neusoft Huiju Information
Joint stock
Controlled
Beijing
Technology Co., Ltd.
company

Subsidiary

Jiang Genmiao

Jiang Genmiao

Zhao Hong

Liu Jiren

Shan Zhenglong

Ma Ximing

Song Li

Wang Limin

Chen Ximin

Rong Xinjie

Legalrepresentative

Import & export of goods andtechnologies

Medical equipment, device
manufacturing/sales for lab
automation system;
development/sales of computer
software/hardware and app
systemIT and related consulting services

IT and related consulting services

Design, development,
manufacturing, service and salesof computer equipment andsoftware products

Computer software/hardware

Recruitment process outsourcing& talent hunting service

Computersoftware/hardware/services

Technology development, sales,
consulting of electronic products

Computer software/hardware,technical service

Business scope

70.00

70.00

80.28

70.00

70.00

80.28

Equity Voting
ratio
share
(%)
(%)

70.00

51.00

70.00

51.00

51.00

51.00

5,000,000 100.00 100.00

60,000,000

1,000,000
100.00 100.00
USD

51,000USD

30,000,000

5,000,000 100.00 100.00

100,000 100.00 100.00

15,000,000

5,000,000

30,000,000

Registeredcapital76439265-7

58388488-X

21663341-3

55981522-7

69231782-5

69230700-2

68537951-8

66217772-9

Organization
code

Continued table

Neusoft Corporation Annual Report 2012197

Shenyang

USA

UnitedEmiratesPeru

ShenzhenGermany

FinlandRomania

Germany

Beijing

LimitedControlled liability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Neusoft Positron Medical
Systems Co., Ltd.

Neusoft Medical System
U.S.A. Inc.

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

Neusoft Medical (Peru) Inc.

Shenzhen Neufashion Digital
Technology Co., Ltd.

Neusoft Technology Solutions
GmbH

Neusoft Mobile Solutions Oy

Neusoft EDC SRL

Neusoft GmbH

Neusoft Xikang Healthcare
Technology Co., Ltd.

Arab

Domicile

Shenyang

Form

LimitedControlled liability
companyType

Shenyang Neusoft Spectrum
MRI Technologies Co., Ltd.

Subsidiary

Lu Zhaoxia

Rares Cosmin
Grecu

Klaus Michael
ZimmerKlaus Michael
ZimmerKlaus Michael
ZimmerLu Zhaoxia

Romulo Javier
Omonte Dextre

MohamedAbdelha-mid
Hassan Elgabry

Christoph-er
A. McHan

Jiang Genmiao

Jiang Genmiao

Legalrepresentative

99.00

80.00

99.00

80.00

Equity Voting
ratio
share
(%)
(%)

25,000100.00 100.00
EUR

8,000,000
100.00 100.00
USD

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

94,000100.00 100.00
ROL

8,578
100.00 100.00
EUR

1,025,000
100.00 100.00
EUR

1,000,000 100.00 100.00

1,800,000
100.00 100.00
USD

3,500,000
100.00 100.00
USD

6,000,000
100.00 100.00
USD

3,500,000
USD

10,000,000

RegisteredcapitalComputer software/hardware,technical consulting and services

Computer software/hardware,technical consulting and services

Computer software/hardware,technical consulting and services

Computer software/hardware,technical consulting and services

Sales and development ofcomputer software/hardware

Medical systems and relevant
technical consulting and services

Medical systems and relevant
technical consulting and services

Product R&D/ manufacturing
and related technicalconsulting/services

Development and manufacturingof PET systems, technology
consulting/service

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

Business scope

57515244-3

58790030-6

78005017-1

73464528-9

Organization
code

Continued table

198
Neusoft Corporation Annual Report 2012

Shenyang

Shenyang

NanjingChengmai

Guangzhou

Hefei

Wuhan

Limitedliability
company

Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company
Limitedliability
company

Limitedliability
company

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Whollyowned

Shenyang Neusoft Xikang
Medical Systems Co., Ltd.

Jiangsu Xikang HealthcareCo., Ltd.

Hainan Xikang HealthcareCo., Ltd.

Guangzhou Xikang Healthcare
Technology Co., Ltd.

Anhui Xikang HealthcareCo., Ltd.

Hubei Xikang HealthcareCo., Ltd.

Tianjin

Domicile

Liaoning Neusoft Xikang
Healthcare Co., Ltd.

Form

Tianjin Xikang Healthcare
Technology Co., Ltd.

Type

LimitedControlled liability
company

Subsidiary

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Legal
representative

5,000,000 100.00 100.00

5,000,000 100.00 100.00

1,000,000 100.00 100.00

1,000,000 100.00 100.00

1,000,000 100.00 100.00

Healthcare service and archive
management; medical institution
consulting, medical equipment
sales/lease
Healthcare consulting, healthinformation consulting,corporate management,
equipment sales/lease
Healthcare service/consulting,medical institution consulting,healthcare archive management,
equipment sales/lease
Except for what are not allowed
by law with approval of related
departments. For those without
regulation, free choice can be
made.

10,000,000 100.00 100.00

Computer software/hardware
development for medical
systems, healthcare consulting
services
Development of electronic
products; development, transfer,consulting, sales and lease ofcomputer software/hardware

50,000,000 100.00 100.00

75.00

Health information
management/consulting,management services,management systemdevelopment

75.00

Equity Voting
ratio
share
(%)
(%)

30,000,000

RegisteredcapitalComputer software/hardware,electronics productdevelopment, corporate
investment management &consulting

Business scope

59454731-X

59573254-1

05454758-959494122-959352322-8

58387954-6

58385530-958975520-2

Organization
code

Continued table

Neusoft Corporation Annual Report 2012199

Shenyang

LimitedControlled liability
company

Shenyang Xikang APS
Technology Co., Ltd.

Shenzhen

Limitedliability
company

Whollyowned

Shenzhen Xikang HealthcareCo., Ltd.

Jinzhou

Whollyowned

Limitedliability
companyJinzhou Xikang HealthcareCo., Ltd.

Nanchang

Limitedliability
company

Whollyowned

Jiangxi Xikang HealthcareCo., Ltd.

Changsha

Whollyowned

Hunan Xikang HealthcareCo., Ltd.

Limitedliability
company

Whollyowned

Luoyang Xikang HealthcareCo., Ltd.
Luoyang

Whollyowned

Limitedliability
company

Domicile

HangzhouForm

Limitedliability
companyType

Hangzhou Xikang HealthcareCo., Ltd.

Subsidiary

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Lu Zhaoxia

Legal
representative

500,000 100.00 100.00

Healthcare service/consulting,medical project investment,
technology development/salesof healthcare products;
development/sales/lease/technicalservice of communicationequipment; corporate image
planning, meeting planning,
investment consulting,import/export of goods andtechnologies

55.00

1,000,000 100.00 100.00

Healthcare consulting, healthinformation consulting,healthcare archive management,
corporate management,
equipment sales/lease

55.00

2,000,000 100.00 100.00

Healthcare consulting, healthinformation consulting,corporate management,
equipment sales/lease

1,000,000
USD

2,000,000 100.00 100.00

Healthcare service/consulting,medical institution consulting,healthcare archive management,
equipment sales/lease

Design/research and developmentof sensors and related electronic
products, components, softwareand hardware; related technicalconsulting and service

1,000,000 100.00 100.00

Healthcare consulting, healthinformation consulting,healthcare archive management,
corporate management,
equipment sales/lease

Equity Voting
ratio
share
(%)
(%)

1,000,000 100.00 100.00

RegisteredcapitalHealthcare consulting, healthinformation consulting,corporate management,
equipment sales/lease

Business scope

05075277-X

05275130-859807150-7

59654875-4

59545669-8

05089368-7

Organization
code

Continued table

200
Neusoft Corporation Annual Report 2012

Whollyowned

Whollyowned

Whollyowned

Dalian Neusoft Xikang
Healthcare Co., Ltd.

Shanghai Xikang HealthcareCo., Ltd.

Type

Beijing Neusoft Xikang HospitalManagement Co., Ltd.

SubsidiaryBeijing

DalianShanghai

Limitedliability
company

Limitedliability
company

Domicile

Limitedliability
companyForm

Lu Zhaoxia

Lu Zhaoxia

Pan Ningchuan

Legal
representative

500,000 100.00 100.00

500,000 100.00 100.00

Health consulting; lease ofelectronic products, computerand communication equipment,
engineering and mechanicalequipment; development,
consulting and related service ofcomputer software; general
trading
Health consulting, businessinformation consulting, sales
and lease of electronic products,
computer software, mechanicalequipment, communication
deviceEquity Voting
ratio
share
(%)
(%)

500,000 100.00 100.00

RegisteredcapitalHospital management, sales ofelectronic products, computer,software, mechanical equipment,
communication device; lease ofcomputer, communication device
and medical equipment;
Technological development,
transfer, consulting and service

Business scope

05114778-2

05739944-6

Organization
code

Continued table

Neusoft Corporation Annual Report 2012201

Tohru Miwa

MasahikoyauuchiDavid Rubin

Han Wei

Chen Jian

Zhu Xinli

Limitedliability
Daliancompany

Limitedliability
Shenyang
company

Limitedliability
Israelcompany

Limitedliability
Shenyang
company

Limitedliability
Beijingcompany

Limitedliability
Beijingcompany

NEC Neusoft Information
Technologies Company Limited

Shenyang Toshiba Neusoft
Information Systems Co., Ltd.

Aerotel Medical Systems（1998）Ltd.

Shenyang Neusoft System Integration
Engineering Co., Ltd.

Beijing Venusource Information
Technology Co., Ltd.

Beijing Huiyuan Xikang Healthcare
Technology Co., Ltd.

8,587
ILS

3,500,000
USD

34.43

50.00

Technological development, consulting, transfer, service; corporate management, consulting; sales of elec10,000,000
tronic products, computer and software; lease of commodities and mechanical equipment

26.65

31.38

40.00

30.00

Computer software/hardware, techni30,500,000
cal service

Development, sales and consulting
75,000,000
of computer software

Tele-diagnosis/healthcare/wellness solutions

Sales and development of computer
software/hardware

Sales and development of computer
50,000,000
software/hardware

2,000,000

Development of health science andLimitedliability
Chongqing Zhang Jingdong technology projects; health managecompany
ment service

Chongqing Guo’ao 100 Years
Xikang Health Management Co., Ltd.
20.00

49.00

1,000,000

Development of health science andtechnology projects; health management service

Xian Jiantao

Limitedliability
Shenyang
company

Liaoning Shengjing Xikang HealthcareCo., Ltd.

16.67

46.00

50.00

34.43

26.65

31.38

40.00

30.00

20.00

49.00

49.00

16.67

46.00

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Associate

Associate05144350-658443161-2

243776663

57349218-8

57088436-2

57342964-8

69651276-7

76007551-5

55079395-7

71699395-x

Equity Voting
Organization
ratio share Relevance
code
(%)
(%)

49.00

Liu Jiren

Limitedliability
Shenyang
company

Neusoft-Philips Medical Systems
Co., Ltd.

7,000,000
USD

RegisteredcapitalSales and development of computer
12,000,000
software/hardware

Mobile application products and solutions

Business scope

R&D, manufacturing and sales of CT 29,600,000
equipment
USD

Dong Yanchun

Limitedliability
Shenyang
company

Shenyang CataData Technology
Co., Ltd.

Legal
representative

Ma Boce

Domicile

Limitedliability
Daliancompany

Form

Nokia Siemens Networks Neusoft
Commtech Company (“NSNN”)

Investee

7.2 Joint ventures and associates

202
Neusoft Corporation Annual Report 2012

42244491-2
75155503-1

58203862-2
55643276-5

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
Education organization established by the Company
Holding subsidiary owned by the education organization establishedby the Company
The Company’s chairman and CEO serves as director at Harman
The Company’s Chairman and CEO serves as Chairman of the Board
Wholly owned subsidiary owned by Chengdu Neusoft Institute ofInformation
The Company’s Chairman and CEO serves as Chairman at DNPID
Controlled subsidiary of Dalian Neusoft Holdings Co., Ltd.

Toshiba Solutions Corporation “Toshiba(
Corporation”)

Baosteel Group Corporation

Nanhai Neusoft Institute of Information Technology

Chengdu Neusoft Institute of Information

Dalian Neusoft Institute of Information

Dalian Neusoft Institute of Information Technology

Dalian Neusoft Education Services Co., Ltd. “DL(
Neusoft Education”)

Harman International Industries, Incorporated and its subsidiaries(collectively referred to as“Harman”)

Dalian Neusoft Holding Co., Ltd.

Chengdu Neusoft Co., Ltd. (”CD Neusoft”)

Dalian Neusoft Park Industrial Development Co., Ltd. “DNPID”()

Tianjin Neusoft Ruidao Education Information Technology Co., Ltd.

59290802X

740920764-4

76544538-6

74963918-0

74919300-0

13220082-1

Shareholder with over 5% equity in the Company, where theCompany’s directors take important position

Alpine Electronics, Inc., Alpine Electronics (China) Co., Ltd. “Alpine”()

11772782-8

Organization
code

Shareholder with over 5% equity in the Company

Relation

NEU Science & Technology Industry Group Co., Ltd. “NEU”()

Other related party

7.3 Other related parties

Neusoft Corporation Annual Report 2012

203

204

Neusoft Corporation Annual Report 2012

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 thisperiodRelated
party

Type

Content

PricingAmountAmount in previous
periodProportion
to similartransaction(%)

Neusoft-Philips

Purchase of
products

Raw material or
finished products

Negotiation basedon market price393,312,137

69.87

Shenyang Neusoft System
Integration Engineering
Co., Ltd.

Purchase of
products

Raw material or
finished products

Negotiation basedon market price

32,483,496

1.83

AlpinePurchase of
products

Raw material or
finished products

Negotiation basedon market price

17,479,699

0.99

NSNN

Purchase of
products

Raw material or
finished products

Negotiation basedon market price

7,609,402

0.43

DNPID

Labor service
receiving

Payment for rental
and property
management

Negotiation basedon market price423,371

0.49

Tianjin Neusoft Ruidao

Labor service
receiving

Payment for labor
service

Negotiation basedon market price

32,500,000

7.04

Shenyang Neusoft System
Integration Engineering
Co., Ltd.

Labor service
receiving

Payment for labor
service

Negotiation basedon market price

11,520,000

2.49

CD Neusoft

Labor service
receiving

Payment for labor
service

Negotiation basedon market price

6,617,662

NEU

Labor service
receiving

Payment for labor
service

Negotiation basedon market price819,000

Dalian Neusoft Instituteof Information
Technology

Labor service
receiving

Payment for training
fee

NEU

Purchase of
products

Training andtechnical service fee

Subtotal

AmountProportion
to similartransaction(%)

363,490,009

67.39

7,906,916

0.69

1.43

5,090,855

0.69

0.18

108,000

0.01

Negotiation basedon market price

12,000

0.002

Negotiation basedon market price

54,0000.03

502,764,767

376,661,780

Neusoft Corporation Annual Report 2012

7.4.3 Related transactions from product sales and provision of labor service
Amount in thisperiodRelated
party

Type

Content

PricingAmountAmount in previous
periodProportion
to similartransaction(%)

AmountProportion
to similartransaction(%)

HarmanProduct sales

System integration
or software

Negotiation basedon market price

224,939,395

3.76

206,724,653

4.28

AlpineProduct sales

System integration
or software

Negotiation basedon market price

184,816,274

3.09

109,640,721

2.27

Toshiba Corporation

Product sales

System integration
or software

Negotiation basedon market price

184,356,833

3.09

164,878,360

3.41

Shenyang Neusoft System
Integration Engineering
Co., Ltd.

Product sales

System integration
or software

Negotiation basedon market price

126,199,507

2.11

NSNN

Product sales

System integration
or software

Negotiation basedon market price

112,600,705

1.88

132,531,471

2.74

Neusoft-Philips

Product sales

System integration
or software

Negotiation basedon market price

3,464,046

0.06

Dalian Neusoft Institute ofInformation Technology

Product sales

System integration
or software

Negotiation basedon market price

1,333,333

0.02

5,000,000

0.10

Baosteel

Product sales

System integration
or software

Negotiation basedon market price

1,324,282

0.02

291,000

0.04

Nanhai Neusoft Instituteof Information Technology

Product sales

System integration
or software

Negotiation basedon market price

1,000,000

0.02

1,500,000

0.03

Chengdu Neusoft Instituteof Information

Product sales

System integration
or software

Negotiation basedon market price

1,000,000

0.02

3,933,333

0.08

CD Neusoft

Product sales

System integration
or software

Negotiation basedon market price

990,000

0.02

Tianjin Neusoft Ruidao

Product sales

System integration
or software

Negotiation basedon market price828,4990.01

NEU

Product sales

System integration
or software

Negotiation basedon market price

339,000

0.01

Huiyuan Xikang

Product sales

System integration
or software

Negotiation basedon market price295,727

0.005

Neusoft Information
Institute

Product sales

System integration
or software

Negotiation basedon market price

112,950

0.002

10,967,200

0.23

Chongqing Guo’ao 100
Years Xikang HealthManagement Co., Ltd.

Product sales

System integration
or software

Negotiation basedon market price56,9060.001

3,522,8020.07

Toshiba Neusoft

Product sales

System integration
or software

Negotiation basedon market price

265,364

0.01

Neusoft-Philips

Product sales

Materials andaccessories

Negotiation basedon market price

13,389,230

1.50

27,736,915

3.38

Neusoft-Philips

Labor service
rendering

Rental and property
management income

Negotiation basedon market price

12,330,576

14.88

10,935,815

10.05

Tianjin Neusoft Ruidao

Labor service
rendering

Rental and property
management income

Negotiation basedon market price

1,697,417

2.05

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Continued table
Amount in thisperiodRelated
party

Type

Content

PricingAmountAmount in previous
periodProportion
to similartransaction(%)

NEC Neusoft

Labor service
rendering

Rental and property
management income

Negotiation basedon market price616,956

0.74

AlpineLabor service
rendering

Rental and property
management income

Negotiation basedon market price240

0.0003

NEC Neusoft

Labor service
rendering

Management service
incomeNegotiation basedon market price990,217

0.02

Neusoft-Philips

Labor service
rendering

Management service
incomeNegotiation basedon market price538,496

0.01

Neusoft Information
Institute

Labor service
renderingService income

Neusoft Information
Institute

Labor service
rendering

Dalian Neusoft Institute ofInformation Technology

Labor service
renderingAmountProportion
to similartransaction(%)

8,691,478

7.99

4,012,657

0.08

Negotiation basedon market price

600,000

0.01

Training service
incomeNegotiation basedon market price

13,697,000

0.28

Training service
incomeNegotiation basedon market price7,200,000

0.15

873,220,589

Subtotal

712,128,769

7.4.4 There is no related-party trusteeship in this period.
7.4.5 There is no related-party contract in this period.
7.4.6 Related leasing
Start date Finish date

IncomeRecognition
basis

Treatment

Property 32,881,446

2005-7-1

2013-8-31

7,562,184

Leaseagreement

100% of the rental isrecognized as lease income

Property

5,652,804

2011-9-1

2013-8-31

1,029,231

Leaseagreement

100% of the rental isrecognized as lease income

Neusoft Corporation

Tianjin Neusoft
Property
Ruidao5,981,154

2012-1-1

2012-12-31 1,155,456

Leaseagreement

100% of the rental isrecognized as lease income

Neusoft Corporation

NEC Neusoft

Property

3,456,149

2011-5-1

2014-4-30

260,078Leaseagreement

100% of the rental isrecognized as lease income

Shenyang Neusoft
Medical Systems
Co., Ltd.

Neusoft-Philips

Property 15,540,743

2012-1-1

2012-12-31 1,992,589

Lease
agreement

100% of the rental isrecognized as lease income

2012-1-1

2012-12-31

Leaseagreement

100% of the rental isrecognized as lease income

LeasorLeaseeNeusoft Corporation

Neusoft-Philips

Neusoft Corporation

Neusoft-Philips

Leasedasset

Neusoft Group (Dalian) Tianjin Neusoft
PropertyCo., Ltd.
RuidaoAssetamount2,458,312

362,080

7.4.7 There is no related-party guarantee in this period.
7.4.8 There is no borrowing to related party in this period.
7.4.9 There is no asset transfer and debt restructuring of related party in this period.

Neusoft Corporation Annual Report 2012

7.4.10 Other related-party transactions(1) According to related agreement, Neusoft IT Services transferred its equity in DNPID (amounting to 60% of thetotal) and the Company’s original sponsor investment in Dalian Neusoft Institute of Information, Chengdu Neusoft Institute of Information and Nanhai Neusoft Institute of Information Technology to Dalian Neusoft Holdings Co., Ltd.
The Company and Neusoft IT Services have received the payment for transfer with an amount of RMB 442,343,800
Yuan. On February 15th, 2012, DNPID finished registration procedure of equity change. Confirming February 15th,
2012 as the selling date, Neusoft IT Services recognized investment income from the equity transfer with an amountof RMB 53,340,300 Yuan. The capital reserve with an amount of RMB 2,029,200 Yuan confirmed according to othercapital reserve change in preceding years was converted into current investment income. As at the end of the reporting period, the registration of change in sponsor investment of the four institutes was still in progress.
(2) During the reporting period, the Company’s subsidiaries Shenyang Neusoft Medical Systems Co., Ltd. andNeusoft Group (Beijing) Co., Ltd. repaid the remaining entrusted loan from DNPID with an amount of RMB
1,380,000 Yuan with interest of RMB 3,348,900 Yuan.
(3) Compensation for Directors, Supervisors and Senior Management
Unit: RMB 10,000 Yuan
Item

Amount in this period

Amount in previous period

1,733.58

1,551.34

Compensation for Directors, Supervisors and Senior Management

7.4.11 Related-party accounts receivable and payable
Year-end balance
Item

Related party

AmountYear-begin balance

Including:appropriation for
impairment

AmountIncluding:appropriation for
impairment

Accounts
receivable
Harman48,629,991

486,300

34,075,916

340,759NSNN

28,264,043

2,787,316

33,113,689

2,040,901

Toshiba Corporation

5,852,557

58,526

4,616,409

46,164

Alpine3,998,077

39,981

3,982,428

39,824

Neusoft-Philips

2,987,562

29,8761,215

12

Shenyang Neusoft System Integration
Engineering Co., Ltd.

1,026,000

20,520

Baosteel

563,008

30,130100,000

50,000Chongqing Guo’ao 100 Years
Xikang Health Management Co., Ltd.

320,400

6,408

320,400

3,204

207

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Neusoft Corporation Annual Report 2012

Continued tableYear-end balance
Item

Related party

CD Neusoft
Neusoft Information InstituteAmountYear-begin balance

Including:appropriation for
impairment

159,995

1,600

9,425

94

91,811,058

3,460,751

Toshiba Neusoft
Total

AmountIncluding:appropriation for
impairment

261,233

2,612

76,471,290

2,523,476

Advance receipts
Toshiba Corporation

919,588

Neusoft-Philips

12,541

16,382Nanhai Neusoft Institute of Information
Technology

1,000,000

Chengdu Neusoft Institute ofInformation

1,000,000

Dalian Neusoft Institute of Information
Technology

1,333,333

Harman290,995
Total

932,129

3,640,710

Other receivable
Nanhai Neusoft Institute of Information
Technology

50,000500

105,745,047

2,114,900

Long-term
receivable
Chengdu Neusoft Institute ofInformation
Accounts payable
Neusoft-Philips

114,082,010

Alpine518,177

Shenyang Neusoft System Integration
Engineering Co., Ltd.

31,215

Total

114,631,402

88,260,754

88,260,754

Prepayment
NSNN

2,571,900

Other accounts
payableDalian Neusoft Holdings Co., Ltd.

16,328,100

NEU

4,783,862

NEC Neusoft

19,659,255

212,868

Alpine772,303
Total

21,324,830

20,431,558

Neusoft Corporation Annual Report 2012

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

Provision of labor service forrelated party

Content

Related party

Amount at the end ofreporting period

System integration or software

Alpine19,391,361

System integration or software

NSNN

16,286,160

System integration or software

Toshiba Corporation

9,244,604

System integration or software

Harman2,428,978

Subtotal

47,351,103

Rental and property management
incomeNeusoft-Philips

7,422,150

Rental and property management
incomeNEC Neusoft

343,058

Rental and property management
incomeShenyang Neusoft
System Integration
Engineering Co., Ltd.

42,152

Subtotal

7,807,360

Total

55,158,463

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 thisreporting period.
9.2 There is no contingent liability caused by debt guarantee for other company in this period.
Note 10 Commitments
Significant commitments
10.1 Investment contract signed but not performed or fully performed yet and relevant expenditure
1. At the 23rd section of the 5th Meeting of Board of Directors on January 7th 2011, the Board of Directors
agreed to acquire the equity of Beijing Neusoft Viewhigh Technology Co., Ltd. (Neusoft Viewhigh) and sign MoU,

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Equity Transfer Agreement and Letter of Agreement 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, and theCompany will accept the transfer of 73.14 equity in Neusoft Viewhigh after the equity adjustment and completionof Registration of Change; In addition, following provisions for equity reward for managements and further acquisition are covered: (1) Provided that Neusoft View high’s net profit reach contracted amount in 2011 and 2012 andrelevant conditions are met, the Company will provide 3,800,000 shares as rewards for its managements and otherqualified employees; (2) 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) Neusoft Viewhigh’s net profit didn’t reachthe contracted amount in 2011-2012, and the managements and other qualified employees didn't get the equity
rewards.
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. 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 the balance of RMB 90 million Yuan.
10.2 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 informationcollection systems owned by Zhejiang Hiker Electric Power Software Technology Co., Ltd. (Zhejiang Hiker) with total consideration of RMB 23,268,000 Yuan. As at the approved reporting date of this financial report, the Company has paid RMB 20,600,000 Yuan, the remaining due payment will be paid after Zhejiang Hiker finishes the performance of contracted transactions.
10.3 There is no signed and being performed or to be performed restructuring plan in this reporting period.
10.4 There is no performance of significant financial commitment in this reporting period.
10.5 Other significant financial commitments
10.5.1 As at December 31st, 2012, the balance of Bank Guarantee of the Company and its subsidiaries which
is within the period of validity is as follows: Balance of Bank Guarantee: RMB 235,129,500 Yuan; USD 20,000,000.
10.5.2 For underlying security of assets please refer to 5.30.

Neusoft Corporation Annual Report 2012

Note 11 Items after the Balance Sheet Date
11.1 Profit distribution
At the 16th section of the 6th Meeting of Board of Directors on March 27th, 2013, 10% statutory surplus reserve and 5% arbitrary surplus reserve was proposed to appropriated based on the parent company’s net profit in2012.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, 2012, a cash dividend of RMB 1.5
Yuan per 10 shares will be distributed to all shareholders. Total cash dividends amount to RMB 184,139,137 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
11.2.1 On March 18th, 2011, the Company and two natural persons Le Liuping and Yin Sheng signed anagreement on investment on new joint venture Guangdong Neufashion Digital Technology Co., Ltd. (GD Neufashion). GD Neufashion signed acquisition contract with Shenzhen Lezhiyi Technology Co., Ltd. (Lezhiyi) and Shenzhen
Lezhiyuan Communications Co., Ltd. (Lezhiyuan) respectively. Le Liuping and Yin Sheng are the shareholders andactual controllers (hereafter refer to as“Counterparties”).In addition, the contract parties make following provisions
about equity adjustment: (1) Within 36 months after the establishment of GD Neufashion, if its net profit of every
12 months exceeds the estimated net profit, the joint venture shall pay certain amount of reward in cash for theexcess to the Counterparties (Le Liuping and Yin Sheng); otherwise, equity depreciation ratio shall be calculated
based on the difference; and the Counterparties shall convert the depreciated equity without any condition or payment or transfer it to the Company. During the reporting period, the term of the first 12 months was adjusted asfrom January 1st, 2012 to December 31st, 2012. On November 21st, 2012, the Company signed Equity Transfer
Agreement with Le Liuping and Yin Sheng and above mentioned equity adjustment provision was terminated automatically. Before the transfer, the Company’s equity in Guangdong Neufashion was 60% , Le Liuping and Yin
Sheng’s equity in the company was 34.9% and 5.1% respectively. According to related agreement, the Company
should transfer its equity in Guangdong Neufashion to Le Liuping and Yin Sheng. The payments for the transferfrom Le Liuping and Yin Sheng were RMB 19,631,300 Yuan and RMB 2,868,700 Yuan respectively. On March 21st,2013, the registration of change in equity has been finished. The Company received an accumulated payment of
RMB 3,858,400 Yuan and the remaining payment will be made according to the transfer agreement.
11.2.2 On February 4th, 2013, Shenyang Neusoft Medical Systems Co., Ltd. (Neusoft Medical) signed a MoU
with Philips Electronics China B.V., Philips (China) Investment Co., Ltd. (collectively referred to as“Philips”) and Phil-

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ips and Neusoft Medical Systems Co., Ltd. “Neusoft(
Philips”). According to the MoU, Philips plans to transfer its
51% equity in Neusoft Philips to Neusoft Medical and an overseas company, among which 26% will be transferred
to Neusoft Medical. Neusoft Medical will hold 75% equity in Neusoft Philips after the transfer. In addition, Philips
will purchase CT product related assets and receive some R&D and production personnel. After completion of thetransaction, Neusoft Medical and the former Neusoft Philips will continue to engage in R&D, manufacturing andsales of medical imaging equipment covering CT, MRI, x-ray and ultrasound. Philips and Neusoft Medical will maintain a strategic partnership on medical equipment manufacturing and component supply. At present, all the parties
are negotiating on transaction arrangement and business cooperation according to the MoU. Based on current
schedule, all the parties plan to sign the final agreement before May 31st, 2013 (or other designated date). For details please refer to the Announcement on Signing of MoU between Neusoft and Philips published in the China Securities Journal and Shanghai Securities News on February 5th, 2013.
11.2.3 Settlement of large-amount account receivables, advance receipts and other receivable with age of over
1 year:Item

Company

Year-end balance Settled amountAccounts payable
Radio Frequency Systems (Shanghai) Co., Ltd.

4,105,717

Sihua Tech (Shanghai) Co., Ltd.

3,973,478

Beijing Sugon Dawning Information Technology Co., Ltd.

2,815,869

Beijing Jingwei Information Technology Co., Ltd.

2,701,462

Beijing Jiaxun Feihong Electrical Co., Ltd.

2,196,760

NEU

4,783,862

Tianjin occupational skill training and qualification base formachining/manufacturing industry

6,783,000

PT. Sani Tiara Prima

3,174,046

57,071

Information communication center of Jiangxi Electric Power
Company

3,011,500

1,070,400

Qinxinanzhou People Hospital

2,160,000

Shanxi Yanchang Petroleum (Group) Co., Ltd.

1,950,000

Other accounts payable

Advance receipt

11.2.4 There is no event the Company shall announce occurring after the balance sheet date.

Neusoft Corporation Annual Report 2012

Note 12 Other Significant Items
12.1 There is no outstanding, convertible-for-share financial instrument in this period.
12.2 Assets and liabilities measured by fair value
Unit: RMB Yuan

Item

Year-beginbalance

Profit/loss
from change
in fair value

Accumulated fairvalue change
included in profit/
loss

Appropriation
for impairment

Year-endbalanceFinancial assets(1) Financial assets measured atfair value through profit or loss
(excluding derivative financial asset)

863,170

14,054,013

14,917,183

863,170

14,054,013

14,917,183

863,170

14,054,013

14,917,183

170,567

170,567(2) Derivative financial asset(3) Available-for-sale financial assets
Subtotal
Investment property
Productive biological assets
OthersSubtotal
Financial liabilities

12.3 Foreign currency dominated financial assets and liabilities
Please refer to Note 12.2.
12.4 Pension plan and significant change
The Company initiated the Corporate Pension Plan in January 2008. The Company’s contractual employees
who have worked for more 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 thepayment of the pensions on a quarterly basis. The pensions assumed by the Company are appropriated on amonthly basis and included in related costs. The Company uses fund and entrust based measures and exclusive accounts to manage the pension plan; and the fund is strictly separated with fixed assets or other assets and not included in the financial statements.
12.5 There is no other significant item to be disclosed.

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Note 13 Notes to Main Items of the Parent Company’s Financial Statements
13.1 Accounts receivable
13.1.1 Overview
Year-end balance
Provision for bad
debts

Book balanceTypeYear-begin balance
Provision for bad
debts

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

Accounts receivable with significant
single amount and single appropria- 197,551,106
tion of provision for bad debts

31.31 21,506,203

10.89

185,834,934

34.10

13,626,325

7.33

Accounts receivable with portfolio
appropriation of provision for bad 307,212,154
debts

48.69

5,946,397

1.94

317,436,339

58.25

6,059,356

1.91

Accounts receivable with non-significant single amount and single ap126,211,553
propriation of provision for bad
debts

20.00 28,937,490

22.93

41,665,897

7.65

12,705,717 30.49

630,974,813

100.00 56,390,090

544,937,170

100.00

Amount

Total

Ratio
(%)

Book balance

32,391,398

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

Book amount

Provision forbad debts

Appropriation
ratio (%)

China Unicom

95,558,055

14,080,614

14.74

Significant amount with receivable proportion ofover 85%

China Telecom

37,959,322

1,293,581

3.41

Significant amount with receivable proportion ofover 95%

NSNN

27,590,543

2,780,581

10.08

Significant amount with receivable proportion ofover 85%

Shenyang Metro
Co., Ltd.

26,069,201

2,313,563

8.87

Significant amount with receivable proportion ofover 90%

China Mobile

10,373,985

1,037,864

10.00

Significant amount with receivable proportion ofover 90%

Total

197,551,106

21,506,203

Receivable from

ReasonNeusoft Corporation Annual Report 2012

In account receivable portfolio, accounts receivable with appropriation of provision for bad debts by aging
analysis method:Year-end balance
AgeBook amountAmountWithin 1 year

Ratio (%)

Year-begin balanceBook amount

Provision forbad debts

AmountProvision forbad debts

Ratio (%)

304,308,845

99.05

3,043,088

314,522,206

99.08

3,145,223

2,903,309

0.95

2,903,309

2,914,133

0.92

2,914,133

307,212,154

100.005,946,397

317,436,339

100.006,059,356

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 forBookamountProvision forbad debts

Appropriation
ratio (%)

ReasonContract payment for softwareand system integration

8,913,149

8,913,149

100.00Account receivable with long age whichis estimatedly unrecoverable

Contract payment for softwareand system integration

63,726,305

16,055,790

25.19

Account receivable with long age withrecoverable proportion of about 75%

Contract payment for softwareand system integration

53,572,099

3,968,551

7.41

Account receivable with long age withrecoverable proportion of about 90%

Total

126,211,553

28,937,490

13.1.3 Accounts receivable received in full or part amount in this period with appropriation of provision forbad debts in full amount or at large proportion in previous year:

Account
receivable for

Sales payment
receivable

Recovery reason

Payment settlement
was promoted during
the reporting period

Basis forconfirmation oforiginal provision
for bad debts

Appropriation
based on age

Accumulated
appropriatedprovision for bad
debts before therecovery

2,483,350

RecoveryamountRecoveredprovision forbad debts

2,394,567

2,319,852

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Neusoft Corporation Annual Report 2012

13.1.4 There is no write-off account receivable in this period.
13.1.5 Accounts receivable from shareholder Companies with over 5% (including 5% ) voting share of theCompany:
Year-end balance
Receivable fromBook balanceYear-begin balance

Provision forbad debts

Provision forbad debts

Book balance

Alpine3,895,227

38,952

2,676,358

26,764

Baosteel

563,008

30,130100,000

50,000Toshiba Corporation

377,255

3,773

13.1.6 Top 5 debtors of accounts receivable
Relationshipwith theCompany

DebtorAmountProportion to thetotal accounts
receivable (%)

AgeWithin 1
year-Over 5 years

China Unicom

Non-related party

95,558,055

China Telecom

Non-related party

37,959,322 Within 3 years

6.02

NSNN

Related party

27,590,543 Within 5 years

4.37

Shenyang Metro Co., Ltd.

Non-related party

26,069,201 Within 3 years

4.13

Beijing Zhongdianpuhua Information
Technology Co., Ltd.

Non-related party

18,848,079 Within 1 year

2.99

206,025,200

32.65

Total

15.14

13.1.7 Accounts receivable from related parties

Receivable fromRelationship with the Company

AmountProportion to thetotal accounts
receivable (%)

NSNN

Associate

27,590,543

4.37

AlpineShareholder

3,895,227

0.62

Baosteel

Shareholder

563,008

0.09

HarmanThe Company’s chairman & CEO serves as director in Harman

440,253

0.07

Toshiba Corporation

Shareholder

377,255

0.06

9,425

0.001

32,875,711

5.21

The Company's chairman and CEO serves as President at thisNeusoft Information Instituteinstitute
Total

Neusoft Corporation Annual Report 2012

13.1.8 There is no account receivable which is consistent with conditions for termination of recognition.
13.2 Other receivables
13.2.1 Overview
Year-end balance
Provision forbad debts

Book balanceTypeYear-begin balance

Ratio
(%)

Provision forbad debts

Book balance

AmountRatio(%)

AmountRatio(%)

AmountRatio(%)

Accounts receivable with portfolio ap138,858,944
propriation of provision for bad debts

93.55 3,006,672

2.17

229,216,237

96.41

3,195,621

1.39

Accounts receivable with non-significant single amount and single appropriation of provision for bad debts

9,571,749

6.45 4,254,760 44.45

8,537,693

3.59

2,778,458

32.54

Total

148,430,693

237,753,930 100.00

5,974,079

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

100.00 7,261,432

13.2.2 Other receivables with appropriation of provision for bad debts by aging analysis method in portfolio:
Year-end balance
AgeBook amountAmountRatio (%)

Year-begin balance
Provision forbad debts

Book amountAmountRatio (%)

Provision forbad debts

Within 1 years

105,162,528

75.73

1,051,625

209,047,100

91.20

2,090,471

1-2 years

22,148,358

15.95

442,968

15,157,705

6.61

303,154

2-3 years

6,545,055

4.71

327,253

2,449,847

1.07

122,491

3-5 years

4,242,419

3.06

424,242

2,091,200

0.91

209,120

Over 5 years

760,5840.55

760,584

470,3850.21

470,385

Total

138,858,944

100.003,006,672

229,216,237

100.003,195,621

Other receivables with insignificant single amount but single appropriation of provision for bad debts
Other receivables

Book amount

Provision forbad debts

Revolving fund lending

8,696,794

3,379,805

874,955874,955

9,571,749

4,254,760

Open credit
Total

Appropriation
ratio (%)

Reason38.86 Recoverable proportion is about 60%
100.00 It is estimated that this item is not recoverable.

217

218

Neusoft Corporation Annual Report 201213.2.3 Other receivables received in full or part amount in this period with appropriation of provision for bad
debts in full amount or at large proportion in previous year:

Other
receivables

Accumulated
Basis forappropriated
Recoveredconfirmation ofprovision for bad Recovery amount provision for
original provisiondebts before thebad debts
for bad debts
recoveryRecovery reason

Revolving
Payment settlement was promoted
fund lending during the reporting period

Appropriation
based on age

770,579

472,802445,844

13.2.4 There is no other actual write-off receivable in this period.
13.2.5 There is no other receivable from Shareholding Company with over 5% (including 5%) voting share of
the Company;
13.2.6 Top 5 debtors of other receivables

DebtorRelationship with
the Company

Nature orcontent

AmountHebei Anda Investment Consulting Co., Ltd.

Non-related party

Margin6,491,718 Within 1 year

4.37

Henan Provincial Bureau of Health

Non-related party

Margin5,799,750 1-2 years

3.91

State Grid Materials Company

Non-related party

Margin2,996,336 Within 1 year

2.02

Ningbo Bureau of Public Security

Non-related party

Margin2,222,767 Within 1 year

1.50

Gansu Branch of China Tobacco

Non-related party

Margin2,167,024 Within 5 years

1.46

19,677,595

13.26

Total

Age

Proportion to
the total (%)

13.2.7 Other receivable from related party
There is no other receivable from related party.
13.2.8 There is no transfer of other receivable inconsistent with recognition termination conditions.
13.3 Held-to-maturity investment
Item
Bank finance product (Note)

Year-end balanceYear-begin balance

322,958,466

401,931,507

Note: The Company purchased finance products (one-off repayment of capital with interest) from banks based on its financial status. The capital of RMB 320 million Yuan and appropriated income has been recovered before March 2013.

Cost method

Cost method

Cost method

Xi’an Neusoft System
Integration Co., Ltd.

Wuhan Neusoft Information
Technology Co., Ltd.

Shenyang Neusoft Medical
Systems Co., Ltd.

Shenyang Zhuri Digital Advertising
Cost method
Communications Co., Ltd.

Shenyang Neusoft Boan Software
Cost method
Co., Ltd.

Cost method

Cost method

Chengdu Neusoft System
Integration Co., Ltd.

Cost method

12,416,895

Cost method

Nanjing Neusoft System
Integration Co., Ltd.

Qinhuangdao Neusoft Co., Ltd.

1,000,000

Cost method

Hunan Neusoft Co., Ltd.

Neusoft (Hong Kong) Co., Ltd.

387,082,539

Cost method

Shandong Neusoft System
Integration Co., Ltd.

8,500,000

7,037,915

25,000,000

32,502,469

20,000,000

12,000,000

12,000,000

50,000,000

339,396,361

Cost method

Neusoft Group (Beijing) Co., Ltd.

5,000,000

50,764,621

Cost method

Shenzhen Neusoft Co., Ltd.

Subtotal

Equity method

Shenyang Toshiba Neusoft
Information Systems Co., Ltd.
9,051,000

15,000,000

Equity method

Shenyang CataData Technology
Co., Ltd.

Investment

26,713,621

Calculation
methodNokia Siemens Networks Neusoft
Equity method
Commtech Company

Investee13.4 Long-term equity investment

10,000,000

10,000,000

35,000,000

90,000,000

1,448,885-1,799,877-885,611

4,134,373

Increase/decrease

8,500,000

7,037,915

12,416,895

1,000,000

87,082,539 300,000,000

15,000,000

22,502,469

20,000,000

12,000,000

12,000,000

15,000,000

249,396,361

5,000,000

72,900,496

8,154,748

13,835,661

50,910,087

Year-beginbalance

40.00

16.67

46.00

60.00

8,500,000 85.00

85.00

7,037,915 100.00 100.00

12,416,895 60.00

1,000,000 100.00 100.00

387,082,539 100.00 100.00

25,000,000 100.00 100.00

32,502,469 100.00 100.00

20,000,000 100.00 100.00

12,000,000 100.00 100.00

12,000,000 100.00 100.00

50,000,000 100.00 100.00

339,396,361 100.00 100.00

5,000,000 100.00 100.00

74,349,381

6,354,871 40.00

12,950,050 16.67

55,044,460 46.00

Year-endbalance

1,874,427

7,053,235

Difference
betweenAppropriatedCash
Equity Voting
Impairequity
provision for dividend
ratio sharement
ratio and
impairment in in this(%)(%)
provision
votingthis period
periodshare

Unit: RMB Yuan

Neusoft Corporation Annual Report 2012219

50,000,000
80,552,833

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Cost method

Neusoft (Japan) Co., Ltd.

Beijing Lanruisoft Co., Ltd.
(Note 4)

Shenyang Neusoft System
Integration Co., Ltd.

Neusoft Group (Guangzhou)Co., Ltd.

Neusoft Group (Shanghai)Co., Ltd.

Neusoft Group (Chengdu)
Co., Ltd.

Neusoft Group (Dalian) Co., Ltd.

Shenyang Neusoft Information
Technology Services Co., Ltd.

Liaoning Neusoft Venture Capital
Cost method
Investment Co., Ltd.

Cost method

Neusoft Group (Hainan) Co., Ltd. Cost method

Neusoft Group (Wuhu) Co., Ltd.

100,000,000

Cost method

Neusoft Group (Tangshan)Co., Ltd.

Cost method

Cost method

Neusoft Group (Tianjin) Co., Ltd.

Neusoft Group (Wuxi) Co., Ltd.

30,000,000

Cost method

Hangzhou Neusoft Co., Ltd.

10,000,000

20,000,000

20,000,000

500,000

63,329,610

Cost method

Neusoft Technology Co., Ltd.

1,000,000

Cost method

Shenyang Neusoft Property
Management Co., Ltd.

600,000,000

1,000,000

200,000,000

130,000,000

20,000,000

9,454,820

11,826,901

20,000,000

Cost method

Guangdong Neusoft Co., Ltd.

20,000,000

Investment

Cost method

Calculation
methodShanghai Neufashion Digital
Technology Co., Ltd.

Investee

Increase/decrease

30,000,000

10,000,000

20,000,000

100,000,000

30,000,000

20,000,000

500,000

63,329,610

1,000,000

80,552,833

310,000,000 -260,000,000

300,000,000 300,000,000

1,000,000

100,000,000 100,000,000

100,000,000

20,000,000

9,454,820

11,826,901

20,000,000 -20,000,000

20,000,000

Year-beginbalance

60.00

10,000,000 100.00 100.00

20,000,000 100.00 100.00

100,000,000 100.00 100.00

30,000,000 100.00 100.00

20,000,000 100.00 100.00

500,000 100.00 100.00

63,329,610 100.00 100.00

1,000,000 100.00 100.00

80,552,833 60.00

50,000,000 100.00 100.00

600,000,000 100.00 100.00

1,000,000 100.00 100.00

200,000,000 100.00 100.00

130,000,000 100.00 100.00

20,000,000 100.00 100.00

9,454,820 100.00 100.00

11,826,901 100.00 100.00

20,000,000 100.00 100.00

Year-endbalance

5,785,714

79,400,000

1,439,855

Difference
AppropriatedCashbetweenEquity Voting
Impairequity
provision for dividend
ratio sharement
ratio and
impairment in in this(%)(%)
provision
votingthis period
periodshare

Continued table

220
Neusoft Corporation Annual Report 2012

10,390,275
10,000,000

259,661,002
13,491,850

Beijing LBS Social Insurance
Cost method
Information Technology Co., Ltd.

Cost method

Cost method

Cost method

Neusoft Group (Zhengzhou)Co., Ltd.

Neusoft Group (Nanchang)Co., Ltd.

Neusoft (Europe) Co., Ltd.

Dalian Neusoft Finance
Cost method
Information Technology Co., Ltd.

24,934,400

24,934,400 15.92

3,000,000 12.82

15.92

12.82

17.47

1,200,000

100,000

3,000,000

4,300,000

24,934,400

3,000,000

3,000,000 17.47

60.00

1.74

10.00

2,745,577,491 2,153,588,869 582,957,035 2,736,545,904

Cost method

Appconomy, Inc.

3,000,000

3,000,000

1.74

3,600,000 60.00

6,000,000

100,000

3,000,000 10.00

259,661,002 100.00 100.00

20,000,000 100.00 100.00

Total

Cost method

Neusoft Institute of Information
Technology, Nanhai

3,000,000

3,600,000

61.67

50.50

10,000,000 100.00 100.00

11,265,778 61.67

3,535,000 50.50

4,300,000

Cost method

Chengdu Neusoft Institute ofInformation

3,600,000

6,000,000

100,000

3,000,000

60.00

12,000,000 100.00 100.00

22,500,000 60.00

Year-endbalance

2,694,812,870 2,080,688,373 581,508,150 2,662,196,523

Cost method

Dalian Neusoft Institute ofInformation Technology

6,000,000

Increase/decrease

13,491,850 -13,491,850

259,661,002

20,000,000

10,000,000

11,265,778

3,535,000

12,000,000

22,500,000

Year-beginbalance

Subtotal

Cost method

100,000

Shenyang Torch Company Limited Cost method

Dalian Neusoft Institute ofInformation

3,000,000

Cost method

Dongzhong Commtech Co., Ltd.

3,535,000

Shenyang Neusoft Transportation
Cost method
Information Technology Co., Ltd.

20,000,000

12,000,000

Neusoft Group (Nanjing) Co., Ltd. Cost method

Investment

22,500,000

Calculation
methodCost method

Guangdong Neufashion Digital
Technology Co., Ltd.

Investee

95,553,231

95,553,231

Difference
betweenAppropriatedCash
Equity Voting
Impairequity
provision for dividend
ratio sharement
ratio and
impairment in in this(%)(%)
provision
votingthis period
periodshare

Continued table

Neusoft Corporation Annual Report 2012

221

222

Neusoft Corporation Annual Report 201213.5 Bonds payable

Bond

Par value

Date of
issue

Term

AmountNeusoft Corporation’s firsttranche of medium-term
400,000,000 2011.11.14 3 years 400,000,000
notes in 2011 (Note)

Interest
payable at
Accruedtheinterest in
beginning this periodof the year

3,658,667

Interest
paidInterest
payableat theend ofthe yearYear-endbalance27,440,000 27,440,000 3,658,667 403,658,667

Note: Total amount of the issued bonds is RMB 400 million Yuan with each note of value RMB 100 Yuan and coupon rateof 6.86%. Interest of the first year has been paid in November 2012. As at the end of the reporting period, accrued interest unpaid is RMB 3,658,667 Yuan.

13.6 Operating income and cost
13.6.1 Operating income
Item

Amount in this period

Primary business income

Amount in this period
3,705,696,757

3,027,330,275

3,705,696,757

3,027,330,275

Other business income
Total

13.6.2 Operating cost
Item

Amount in this period

Primary business cost

Amount in this period

2,694,231,947

2,193,319,213

2,694,231,947

2,193,319,213

Other business cost
Total

13.6.3 Operating income & cost (by industry)
Amount in this period
Item

System integration, sales of software products,
software customization and other labor services
Property management service and rental
Total

Amount in previous period

OperatingincomeOperatingcost

OperatingincomeOperatingcost

3,630,054,355

2,671,162,273

2,956,396,915

2,172,504,576

75,642,402

23,069,674

70,933,360

20,814,637

3,705,696,757

2,694,231,947

3,027,330,275

2,193,319,213

Neusoft Corporation Annual Report 2012

13.6.4 Primary business income and cost (by industry)
Amount in this period

Amount in this period

IncomeCost

IncomeCost

3,630,054,355

2,671,162,273

2,956,396,915

2,172,504,576

75,642,402

23,069,674

70,933,360

20,814,637

3,705,696,757

2,694,231,947

3,027,330,275

2,193,319,213

Item
System integration, sales of software products,
software customization and other labor services
Property management service and rental
Total

13.6.5 Operating income from top 5 customers:
Customer

Operating income

Proportion to the total (%)

Alpine182,287,847

4.92

China Unicom

177,029,752

4.78

Shenyang Neusoft System Integration Engineering Co., Ltd.

142,458,448

3.84

Toshiba Corporation

132,075,476

3.56

China Mobile
Total

63,380,655

1.71

697,232,178

18.81

13.7 Investment income
13.7.1 Overview
Amount in thisperiodAmount in thisperiodIncome from long-term equity investment calculated by cost method

95,553,231

6,047,960

Income from long-term equity investment calculated by equity method

1,448,885

6,038,618

Investment income from disposal of long-term equity investment

4,703,646

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

14,569,151

1,931,507

116,274,913

14,018,085

Item

Investment income obtained during the holding period of available-for-sale financial
assetsInvestment income from disposal of trading financial assets
Investment income from disposal of available-for-sale financial assets
Others
Total

223

224

Neusoft Corporation Annual Report 201213.7.2 Long-term equity investment income calculated by cost method
Amount inthis period

InvesteeAmount inprevious period

Cause of change

Shenyang Neusoft Information Technology Services Co., Ltd.

79,400,000

Attributable cash dividend
received by the Company

Shenyang Zhuri Digital Advertising Communications Co., Ltd.

7,053,235

Attributable cash dividend
received by the Company

Liaoning Neusoft Venture Capital Investment Co., Ltd.

5,785,714

3,571,429

Attributable cash dividend
received by the Company

Qinhuangdao Neusoft Co., Ltd.

1,874,427

983,224

Attributable cash dividend
received by the Company

Neusoft (Japan) Co., Ltd.

1,439,855

1,493,307

Attributable cash dividend
received by the Company

95,553,231

6,047,960

Total

13.7.3 Long-term equity investment income calculated by equity method
Amount in thisperiodInvesteeAmount inprevious period

Cause of change

NSNN

4,134,373

8,231,268 Change in net profit of investee

Shenyang CataData Technology Co., Ltd.

-885,611-839,530 Change in net profit of investee-1,799,877-896,252 Change in net profit of investee

Toshiba Neusoft
Beijing LBS Social Insurance Information
Technology Co., Ltd.

-456,868
1,448,885

Total

Calculation based on cost method
after capital increase

6,038,618

13.8 Supplementary to cash flow statement
Amount in thisperiodAmount inprevious period

Net profit

470,480,907

347,932,350

Add: Provision for asset impairment

33,446,174

12,104,692

Depreciation of fixed assets, oil & gas assets and productive biological assets

53,126,234

52,414,605

Amortization of intangible asset

7,544,879

6,689,718

Amortization of long-term deferred expenses

3,955,617

3,618,351

Loss on disposal of fixed assets, intangible asset and other long-lived assets“-”for
(profit)-183,945

253,794Item
1. The net profit is converted into cash flow from operating activities

Abandonment loss of fixed assets “-”for(
profit)Neusoft Corporation Annual Report 2012

Continued table
Item

Amount in thisperiodAmount inprevious period

Loss on change of fair value “-”for(
profit)-7,645,112-950,557

Financial expenses “-”for(
profit)53,938,420

21,735,445

Investment loss “-”for(
profit)-116,274,913-14,018,085

Decrease of deferred income tax assets “-”for(increase)-12,165,049-7,872,536

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

747,455-10,618-164,534,714-59,795,034

Decrease of operating accounts receivable “-”for(increase)

68,368,670

67,317,394

Increase of operating accounts payable “-”for(decrease)-40,356,758-12,943,913

350,447,865

416,475,606

1,047,858,225

831,393,669

831,393,669

932,706,502

216,464,556-101,312,833

Decrease of inventories “-”for(increase

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

Note 14 Supplementary Information
14.1 Non-recurring profit and loss
Item
Profit/loss on disposal of non-current assets

Amount inthis period

Remarks

54,744,245

Note 1

94,363,121

Note 2

2,354,443

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

225

226

Neusoft Corporation Annual Report 2012

Continued table
Item

Amount inthis period

Remarks

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 such as 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
controlProfit 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 and loss 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

14,224,580

Note 4

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

653,891

Other profit and loss items consistent with the definition of non-recurring profit and loss
Amount effected by minority interest

869,087

Amount effected by income tax-30,432,456
Total

136,776,911

Note 1: This is mainly brought by transfer of equity in DNPID by Neusoft IT Services.
Note 2: This mainly refers to government subsidy for science research projects and investment subsidy.
Note 3: This mainly involves with investment in Shenyang Neusoft System Integration Engineering Co., Ltd. by Shenyang Neusoft System Integration Technology Co., Ltd. and Xi’an Neusoft System Integration Co., Ltd. with a total equity ratio of 26.65%.
Note 4: This mainly refers to profit and loss on change in fair values of trading financial assets/liabilities.

Neusoft Corporation Annual Report 201214.2 Net asset's rate of return and EPS:
EPS (Yuan)

Weighted average ofreturn of net assets (%)

Basic EPS

Diluted EPS

Net profit attributable to the shareholders of the parent company

9.32

0.37

0.37

Net profit attributable to the shareholders of the parent company
after deducting non-recurring profit and loss

6.53

0.26

0.26

Changeratio (%)

ReasonProfits in this reporting period

14.3 Main financial items with abnormal change and reasons
Financial items with abnormal amount or abnormal change during comparison period

Item

Year-end balance(or amount in this period）

Year-begin balance(or amount ofprevious year)

Trading financial assets

14,917,183

863,170

1,628.19(1)

Notes receivable

14,342,063

36,215,245-60.40(2)Inventories

830,972,882

585,158,868

42.01

(3)

Prepayments

118,441,067

57,312,087

106.66(4)

Long-term receivables

25,954,175

150,710,187-82.78(5)Long-term equity investments

390,074,357

703,226,389-44.53(6)

Construction in progress

195,555,957

307,799,158-36.47(7)

Goodwill

140,387,437

227,376,502-38.26(8)

Long-term deferred expenses

72,063,173

53,694,146

34.21

(9)

Deferred tax assets

66,353,503

45,591,522

45.54

(10)

Trading financial liabilities

170,567-100.00(11)

Interest payable

205,724-100.00(12)

212,020,218

149,882,015

41.46

(13)

120,743

71,666

68.48

(14)

179,459,431

134,609,431

33.32

(15)

3,738,493

2,409,781

55.14

(16)

Minority interest

125,641,275

340,445,713-63.10(17)

Operating income

6,960,195,011

5,751,249,330

21.02

(18)

Operating cost

4,729,720,928

4,004,998,405

18.10

(19)

Sales expense

635,074,786

497,920,161

27.55

(20)

Administrative expenses

985,944,947

819,957,825

20.24

(21)

Other receivables
Other current liabilities
Long-term accounts payable
Deferred tax liabilities

227

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Neusoft Corporation Annual Report 2012

Continued tableYear-end balance(or amount in this period）

Year-begin balance(or amount ofprevious year)

Financial expenses

78,565,067

23,649,196

232.21(22)

Impairment loss on assets

136,632,109

41,405,012

229.99(23)

Profit/loss from changes in fair value

14,224,580

950,557

1,396.45(24)

Investment income

112,124,066

42,136,578

166.10(25)

Income tax

106,899,561

69,341,108

54.16

(26)

Minority interest income-20,544,974

6,476,572-417.22(27)

Other composite income-11,853,741-22,413,285

47.11

(28)

Item

Changeratio (%)

ReasonDetails of changes:(1) This item increases by RMB 14,050,000 Yuan, an increase of 1,628.19% over the year beginning, which ismainly caused by the Company’s foreign exchange forward contracts. During the reporting period, foreign exchange forward contracts were calculated based on exchange rate quoted in the open market; estimated floating
income increase with an amount of RMB 14,050,000 Yuan was included in P&L from change in fair value for increasing trading financial assets; estimated floating loss with an amount of RMB 170,000 Yuan was included in
P&L from change in fair value for lowering trading financial liabilities.
(2) This item reduces by RMB 21,870,000 Yuan, a decrease of 60.40% over the year beginning, which is mainly caused by payment for software and system integration contracts in the reporting period.
(3) This item increases by RMB 245,810,000 Yuan, an increase of 42.01% over the year beginning, which ismainly caused by increase of software and system integration contracts that are being executed as at the end of
the reporting period.
(4) This item increases by RMB 61,130,000 Yuan, an increase of 106.66% over the year beginning, which ismainly caused by increase of prepayment for contracted purchase projects.
(5) This item reduces by RMB 124,760,000 Yuan, a decrease of 82.78% over the year beginning, which ismainly caused by equity transfer by Neusoft IT Services, with a reduced amount of RMB 103,630,000 Yuan.
(6) This item reduces by RMB 313,150,000 Yuan, a decrease of 44.53% over the year beginning, which is mainly caused by equity transfer by Neusoft IT Services, with a reduced amount of RMB 355,520,000 Yuan. The Company’s subsidiary invested Shenyang Neusoft System Integration Engineering Co., Ltd. and Beijing Venusource Information
Technology Co., Ltd., resulting in the increase of long-term equity investment of RMB 38,500,000 Yuan.
(7) This item reduces by RMB 112,240,000 Yuan, a decrease of 36.47% over the year beginning, which isNeusoft Corporation Annual Report 2012

mainly caused by Guangzhou Software Park and Shanghai Software Park's conversion into fixed assets.
(8) This item reduces by RMB 86,990,000 Yuan, a decrease of 38.26% over the year beginning, which is mainly caused by appropriated impairment loss on goodwill with an amount of RMB 86,430,000 Yuan.
(9) This item increases by RMB 18,370,000 Yuan, an increase of 34.21%, which is mainly caused by increaseof decoration expense.
(10) This item increases by RMB 20,760,000 Yuan, an increase of 45.54%, which is mainly caused by increaseof deductible temporary difference arising from appropriated employee bonus and appropriated impairment provision for assets.
(11) This item reduces by RMB 170,000 Yuan, a decrease of 100%. Please refer to (1) hereunder for details.
(12) This item reduces by RMB 210,000 Yuan, a decrease of 100%, which is mainly caused by payment during the reporting period for appropriated interest payable at the end of previous year.
(13) This item increases by RMB 62,140,000 Yuan, an increase of 41.46%, which is mainly caused by estimated construction payment for Shanghai Software Park and Guangzhou Software Park which have been converted into fixed assets.
(14) This item increases by RMB 50,000 Yuan, an increase of 68.48%, which is mainly caused by increase of
accrued expenses.
(15) This item increases RMB 44,850,000 Yuan, an increase of 33.32% , which is mainly caused by the payment for purchase of use right of land located in Tianjin Free Trade Zone from Tianjin Port Free Trade Zone Investment Co., Ltd. as well as the ownership of a newly-built R&D office building on the land lot.
(16) This item increases by RMB 1,330,000 Yuan, an increase of 55.14%, which is mainly caused by increaseof taxable temporary difference arising from change in fair value.
(17) This item decreases by RMB 214,800,000 Yuan, a decrease of 63.10%, which is mainly caused by equity
transfer by Neusoft IT Services. 40% of net assets of DNPID (minority interest) decreases by RMB 248,450,000 Yuan due to change in consolidation. In addition, Shenyang Neusoft Medical Systems Co., Ltd. set up a new controlled company Neusoft A&T Medical Technology Co., Ltd. and absorbed investment from minority shareholders
with an amount of RMB 29,590,000 Yuan.
(18) This item increases by RMB 1,208,950,000 Yuan, a growth of 21.02% as a result of rise in income fromdomestic solutions service and international services during the reporting period.
(19) This item increases by RMB 724,720,000 Yuan, a growth of 18.10% as a result of rise in both operating
income and labor cost during the reporting period.
(20) This item increases by RMB 137,150,000 Yuan, a growth of 27.55% as a result of increase in sales and

229

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Neusoft Corporation Annual Report 2012rise in market input costs.
(21) This item increases by RMB 165,990,000 Yuan, a growth of 20.24% as a result of rise in labor cost andR&D expenses.
(22) This item increases by RMB 54,920,000 Yuan, a growth of 232.21% as a result of increase of interest fornotes and exchange loss.
(23) This item increases by RMB 95,230,000 Yuan, a growth of 229.99% as a result of appropriation of impairment of goodwill with an amount of RMB 86,430,000 Yuan.
(24) This item increases by RMB 13,270,000 Yuan, a growth of 1,396.45% as a result of changes in fair valueof forward foreign exchange contracts.
(25) This item increases by RMB 69,990,000 Yuan, a growth of 166.10% as a result of investment income
with an amount of RMB 55,370,000 Yuan (before tax) from equity transfer by Neusoft IT Services and increase ofincome from purchase of wealth management product.
(26) This item increases by RMB 37,560,000 Yuan, a growth of 54.16%, which is mainly caused by payment
for business income tax with an amount of RMB 18,920,000 Yuan arising from selling of equity in DNPID by Neusoft IT Services, as well as the increase of taxable amounts in the Company and its subsidiaries that made profits inthis reporting period.
(27) This item reduces by RMB 27,020,000 Yuan, a decrease of 417.22%, which is mainly caused by decreaseof net profits achieved by subsidiaries that are not wholly owned by the Company.
(28) This item increases by RMB 10,560,000 Yuan, an increase of 47.11%, which is mainly caused by increaseof translation difference in foreign currency-dominated statements.
Note 15 Authorization of Publication of Financial Statements
The Board of Directors has authorized to publicize the financial statements on March 27th, 2013.

Neusoft Corporation

Date: March 27th, 2013

Neusoft Corporation Annual Report 2012

Ⅺ Documents Available For Inspection(1) 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; and(2) The original Auditing Report with the seal of the CPA firm and the signature and seal of the certified accountants；(3) All the original documents and announcements disclosed in newspapers or magazines designated by CSRC.

Neusoft Corporation

President: Liu Jiren

March 27th, 2013231