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Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
(Expressed in Renminbi)
Annual Report 2011 /
1
The notes on pages 108 to 174 form part of these financial statements.
Notes:
(a)
Share premium
The share premium represents the difference between the total amount of the par value of shares issued and the
amount of the net proceeds received from the initial public offering in 2006 and subsequent share issuance in 2008.
(b)
Capital reserve
The capital reserve represents the difference between the total amount of the par value of shares issued and the
amount of the net assets transferred from China Telecommunications Corporation (“CTC”), Guangdong Telecom
Industry Group Corporation and Zhejiang Telecom Industry Corporation upon the formation of the Company. Then,
the capital reserve was net off by the difference between the consideration for the acquisition of Target Business
and the net assets value of the Target Business in 2007 and subsequent common control acquisitions net balances.
As a result of the adoption of amendment to IFRS 1, the capital reserve has been restated (see note 3(ii)).
(c)
Revaluation reserve
As required by the relevant PRC rules and regulations with respect to the Restructuring and the acquisition of the
Target Business, revaluations were carried out by independent valuers registered in the PRC, on a depreciated
replacement cost basis. The revaluation reserve represents the surpluses arising from these valuations of the
Group’s assets amounting to RMB294 million and RMB121 million in respect of the Restructuring and the
acquisition of the Target Business, respectively, which have been credited to owner’s equity. As a result of the
adoption of amendment to IFRS 1, the revaluation reserve has been reversed (see note 3(ii)).
(d)
Statutory surplus reserve
According to the Company’s Article of Association, the Company is required to transfer 10% of its net profit as
determined in accordance with the PRC Accounting Rules and Regulations to its statutory surplus reserve until the
reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution
of a dividend to shareholders.
Statutory surplus reserve can be used to make good previous years’ losses, if any, or to expand the Company’s
business, and may be converted into share capital by the issuance of new shares to shareholders in proportion to
their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the
balance after such issue is not less than 25% of the registered capital.
For the year ended 31 December 2011, the Company transferred RMB102 million being 10% of the current year’s
net profit as determined in accordance with the PRC Accounting Rules and Regulations, to this reserve.
(e)
Fair value reserve
The fair value reserve represents the net change in the fair value of available-for-sale securities in other investments
held at the balance sheet date.
(f)
Exchange reserve
The exchange reserve represents all foreign exchange differences arising from the translation of the financial
statements of subsidiaries located outside of Mainland China.