China Communications Services Corporation Limited Annual Report 2015
144
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
34. ACCRUED EXPENSES AND OTHER PAYABLES
(continued)
Notes:
(i)
The amounts due to CTC group and other related parties are unsecured, interest-free and are expected to be settled within one year.
(ii)
Special dividend and profit distribution payable to CTC Group
As disclosed in the Prospectus of the Company dated 27 November 2006, in accordance with the “Provisional Regulation relating to Corporate
Restructuring of Enterprises and Related Management of State-owned Capital and Financial Treatment” which was issued by the PRC Ministry of
Finance and a resolution passed on 1 November 2006, the directors proposed and the shareholders approved the distribution of profit of the Group
for the period from 1 April 2006 to 29 August 2006, being the calendar day immediately preceding to the date of incorporation of the Company. In
the same resolution, the directors proposed and the shareholders approved the distribution of profit of the Group for the period from 30 August 2006
to the calendar day immediately preceding the date of its listing on the Stock Exchange (i.e. 7 December 2006) (together, the “2006 special dividend”).
Pursuant to a resolution passed at directors’ meeting on 17 April 2007, the directors resolved to pay the 2006 special dividend to CTC and its
subsidiaries amounting to RMB535 million in total, out of which RMB117 million was directly distributed at the subsidiary level. The Group has paid
RMB533 million special dividend to CTC and its subsidiaries by 31 December 2015.
As disclosed in the Circular of the Company dated 20 June 2007, in line with the principles set out in the “Notice of the Forwarding the
Implementation Opinions of the state-owned Assets Supervision and Administration Commission about Further Standardisation of the Work Relating
to the Reconstruction of State-owned Enterprise” issued by the General Office of the State Council of the PRC, the changes in net assets between the
period from 1 February 2007 to 31 August 2007 of the Target Business should be distributed in form of cash to CTC and its subsidiaries amounting to
RMB197 million in total, of which RMB145 million has been paid to CTC and its subsidiaries by 31 December 2015.
Pursuant to the Equity Transfer Agreements entered into by the Group and CTC and its subsidiaries on 20 June 2012 in relation to the acquisitions of
the Target Interests and SBSS, the net profit or loss made by the Target Interests and SBSS between the period from the respective valuation dates (31
October 2011 for Ningxia Construction and Ningxia Supervision and 30 June 2011 for Xinjiang Planning & Designing and SBSS) to 30 June 2012 (for
the Target Interests) and 26 July 2012 (for SBSS) should be distributed in form of cash to CTC and its subsidiaries amounting to RMB26 million in total,
which has been paid to CTC and its subsidiaries by 31 December 2015.
(iii)
The amounts mainly include payables to suppliers for purchases on behalf of CTC, deposits received from subcontractors and others.
35. OTHER NON-CURRENT LIABILITIES
2015
2014
RMB’000
RMB’000
Convertible preference shares and preference shares (note (i))
649,360
611,900
Others (note (ii))
216,420
175,742
865,780
787,642
Notes:
(i)
On 25 July 2014, a subsidiary of the Company has placed 66,670,000 convertible preference shares and 33,330,000 preference shares to an
independent third party at par value of US$1 for each of the convertible preference share and preference share. According to the agreement, the
subsidiary of the Company has the right, at its discretion, to defer the annual interest payment and also to redeem the convertible preference share
and preference share eight years after the delivery date. However, the Group has obligation to pay the interest amount if the subsidiary of the
Company defer the payment. Therefore, the directors of the Company consider that the Group does not have an unconditional right to avoid
delivering cash or another financial asset to settle a contractual obligation arising from this agreement. Moreover, according to the agreement, the
preference shareholder has the option to convert the convertible preference shares into ordinary shares from 1 January 2017 onwards. In the opinion
of the directors of the Company, the number of ordinary shares can be converted, from the Group’s perspective, is subject to negotiation between the
Group and the preference shareholder in certain circumstances pursuant to the terms of the agreement, and with reference to fair value. In the
consolidated statement of financial position of the Group, the host contract was classified as a financial liability.
The annual interest rate is 3.7% plus the average six-month dollar interest rate of Libor for six months before each interest payment date, and should
be adjusted from the first interest payment in the year of eighth anniversary of the issuance date. The adjusted interest rate should not be less than 8%,
and will automatically increase 1% every year after then. The effective interest rate as at 31 December 2015 was 4.21% per annum.
(ii)
Others represent the deferred income arising from government grants and warranty provisions.
