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China Communications Services Corporation Limited Annual Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
INCOME TAX
The income tax of the Group in 2015 was RMB487 million and our effective tax rate was 17.3%, representing a decrease of 0.3
percentage point from 17.6% of 2014. The difference between the Group’s effective tax rate and the statutory tax rate was
mainly due to the preferential income tax rate treatment enjoyed by certain subsidiaries, which are classified as new and high-
technology enterprises, and the preferential policy of tax deduction before income tax for research and development expenses. In
2015, certain subsidiaries of the Group that fall under the scope of new and high-technology enterprises were entitled to a
preferential income tax rate of 15%. Certain enterprises in the western parts of China were entitled to the preferential policies
for Western Development Program. Apart from these subsidiaries, the Company and other domestic subsidiaries of the Group
were mainly subject to an income tax rate of 25%. The overseas subsidiaries of the Group were subject to different tax rates in
various countries.
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY AND
BASIC EARNINGS PER SHARE
In 2015, profit attributable to equity shareholders of the Company was RMB2,334 million, representing an increase of 8.6% over
RMB2,150 million in 2014. Profit attributable to equity shareholders of the Company accounted for 2.9% of our total revenues,
which remained stable compared to 2014. Basic earnings per share of the Company were RMB0.337 (2014: RMB0.310).
CAPITAL EXPENDITURE
The Group implemented stringent budget management over capital expenditure, and made adjustments according to changes in
market condition. In 2015, capital expenditure amounted to RMB712 million, representing an increase of 10.2% over RMB646
million in 2014. The capital expenditure in 2015 accounted for 0.9% of the total revenues and remained relatively stable as
compared to 2014. The capital expenditure of the Group included the purchases of production facilities and equipment,
machinery and meters, plant and office buildings, intangible assets and other operating assets.
CASH FLOW
The Group’s net cash inflow in 2015 amounted to RMB2,209 million, an increase of 283.5% over RMB576 million in 2014. As at
the end of 2015, the cash and cash equivalents of the Group amounted to RMB9,536 million, of which 92.2% was denominated
in Renminbi.
The following table sets out our cash flow positions in 2014 and 2015, respectively:
2015
2014
RMB’000
RMB’000
Net cash generated from operating activities
4,687,811
1,608,854
Net cash used in investing activities
(1,686,164)
(876,674)
Net cash used in financing activities
(792,831)
(156,051)
Net increase in cash and cash equivalents
2,208,816
576,129
In 2015, net cash generated from operating activities was RMB4,688 million, representing an increase of RMB3,079 million from
RMB1,609 million in 2014. The increase in net cash generated from operating activities was mainly attributable to the Group’s
“value-driven” principle and appraisal system, the strengthening of management of cash flow and accounts receivable, and
effective accounts receivable settlement and collection work during the course of business expansion.
In 2015, net cash used in investing activities was RMB1,686 million, representing an increase of RMB809 million from RMB877
million in 2014 which were mainly term deposits for over three months.
