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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
Annual Report 2011 /
1
47 Distributable reserves
(continued)
2011
2010
RMB’000
RMB’000
At 31 December
305,805
231,091
The above amount was determined in accordance with the PRC Accounting Rules and Regulations.
Note:
(i)
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.
(ii)
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 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 net assets
value of the Target Business in 2007.
(iii)
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 or by increasing the par value of the share currently held
by them, provided that the balance after such issue is not less than 25% of the registered capital.