Notes to financial statements
1、 Basic information of the company 1. Overview of the company
Zhong Fu Tong Group Co.Ltd(300560) (hereinafter referred to as "the company" or "the company") is a joint stock limited company established by Fujian Tianjin Futong Information Science&Technology Co.Ltd(000836) Industry Co., Ltd. In October 2016, the company issued 17.53 million ordinary shares (A shares) with a par value of 1.00 yuan per share and an issue price of 10.26 yuan per share to the public, as approved by China Securities Regulatory Commission's zjxk [2016] No. 2095 "reply on Approving the initial public offering of shares by Zhong Fu Tong Group Co.Ltd(300560) Co., Ltd.". After this issuance, the total share capital of the company was changed to 70.12 million shares, with a par value of 1 yuan per share, and the registered capital was changed to 70.12 million yuan.
In April 2017, the company held the 2016 annual general meeting of shareholders and decided to increase 5 shares for every 10 shares to all shareholders by converting capital reserve into share capital based on the total share capital of 70.12 million shares on December 31, 2016, with a total of 35.06 million shares. The total share capital after this increase was 105.18 million shares, with a par value of 1 yuan per share and a registered capital of 105.18 million yuan.
In May 2018, the company held the 2017 annual general meeting of shareholders and decided to transfer 5 shares for every 10 shares to all shareholders in the form of capital reserve into share capital based on the total share capital of 105.18 million shares as of December 31, 2017, with a total transfer of 52.59 million shares. The total share capital after this transfer is 157.77 million shares, the par value of each share is 1 yuan, and the registered capital is changed to 157.77 million yuan.
The unified social credit code of the company's business license: 913500007356527552; Registered address: floors 20, 21 and 22, building 4, zone F, software park, No. 89 software Avenue, Fuzhou. Legal representative: Chen Rongjie.
The company has established the corporate governance structure of the general meeting of shareholders, the board of directors and the board of supervisors. At present, the company has set up the first maintenance department, the second maintenance department, the technical service department, the bidding department, the R & D department, the audit department, the legal Department, the finance department, the logistics support department, the administration department, the IT support department, the management and supervision department, the human resources department, the procurement department, the securities department and other departments.
The company and its subsidiaries (grandchildren) (hereinafter referred to as "the group") are engaged in communication network technology services and software and information technology services. Their main businesses include communication network construction, maintenance services (including daily maintenance and rectification maintenance) and communication network optimization services (including daily optimization and special optimization), And system integration and software development business. The company mainly provides communication network construction, maintenance services and communication network optimization services for the three major telecom operators and communication equipment suppliers. The subsidiary Fujian Tianchuang Information Technology Co., Ltd. (hereinafter referred to as "Tianchuang information") mainly provides software development, system integration and technical services in the field of social and public security for public security organs and other enterprises. The actual controller of the company is Chen Rongjie.
The financial statements and notes to the financial statements were approved by the 12th meeting of the third board of directors of the company on April 16, 2019. 2. Scope of consolidated financial statements
The scope of consolidated financial statements in the reporting period includes the parent company and 13 subsidiaries (grandchildren). See "note VI, changes in consolidation scope" and "note VII, equity in other entities" for details. 2、 Preparation basis of financial statements
The financial statements are prepared in accordance with the accounting standards for business enterprises issued by the Ministry of Finance and its application guidelines, interpretations and other relevant provisions (collectively referred to as
"Accounting standards for business enterprises"). In addition, the group also disclosed relevant financial information in accordance with the rules for the preparation of information disclosure of companies offering securities to the public No. 15 - General Provisions on financial reports (revised in 2014) of the CSRC.
The financial statements are presented on a going concern basis.
The accounting of the group is based on the accrual basis. Except for some financial instruments, the financial statements are measured on the basis of historical cost. If an asset is impaired, the corresponding impairment provision shall be withdrawn in accordance with relevant regulations. 3、 Important accounting policies and accounting estimates
The Group determines the capitalization conditions of R & D expenses and revenue recognition policies according to its own production and operation characteristics. See notes III and 18 and notes III and 23 for specific accounting policies. 1. Statement of compliance with accounting standards for business enterprises
The financial statements comply with the requirements of the accounting standards for business enterprises and truly and completely reflect the company's consolidated and financial position as of December 31, 2018, as well as the consolidated and company's operating results, consolidated and company's cash flow and other relevant information in 2018. 2. Accounting period
The accounting period of the group adopts the Gregorian calendar year, i.e. from January 1 to December 31 each year.
3. Business cycle
The business cycle of the group is 12 months. 4. Recording currency
The company and its domestic subsidiaries use RMB as the recording currency. The company's overseas subsidiaries determine their recording currency according to the main economic environment in which they operate, and convert it into RMB when preparing the financial statements. The currency used by the group in preparing the financial statements is RMB. 5. Accounting treatment methods for business combinations under the same control and not under the same control (1) business combinations under the same control
For business combinations under the same control, the assets and liabilities of the combined party obtained by the combining party in the combination, except for adjustments due to different accounting policies, shall be measured according to the book value of the combined party in the consolidated financial statements of the final controller on the combination date. For the difference between the book value of the merger consideration and the book value of the net assets obtained in the merger, the capital reserve (share capital premium) shall be adjusted. If the capital reserve (share capital premium) is insufficient to offset, the retained earnings shall be adjusted.
Business combination under the same control is realized step by step through multiple transactions
In individual financial statements, the share of the book value of the combined party's net assets in the final controller's consolidated financial statements on the consolidation date calculated by the shareholding ratio on the consolidation date shall be regarded as the initial investment cost of the investment; For the difference between the initial investment cost and the sum of the book value of the investment held before the merger plus the book value of the newly paid consideration on the merger date, the capital reserve (equity premium) shall be adjusted. If the capital reserve is insufficient to be offset, the retained earnings shall be adjusted.
In the consolidated financial statements, the assets and liabilities of the combined party obtained by the combining party in the combination, except for different accounting policies
In addition to the adjustment, it shall be measured according to the book value in the consolidated financial statements of the final controller on the consolidation date; For the difference between the sum of the book value of the investment held before the merger and the book value of the newly paid consideration on the merger date and the book value of the net assets obtained in the merger, the capital reserve (equity premium) shall be adjusted. If the capital reserve is insufficient to be offset, the retained earnings shall be adjusted. For the long-term equity investment held by the combining party before obtaining the control of the combined party, the changes in relevant profits and losses, other comprehensive income and other owner's rights and interests have been recognized from the later of the date of obtaining the original equity and the date when the combining party and the combined party are under the final control of the same party to the combination date, which shall offset the opening retained earnings or current profits and losses during the comparative statement period respectively.
(2) Business combination not under the same control
For business combination not under the same control, the combination cost is the fair value of assets paid, liabilities incurred or assumed and equity securities issued to obtain the control over the acquiree on the acquisition date. On the acquisition date, the assets, liabilities and contingent liabilities obtained from the acquiree are recognized at fair value.
The difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination shall be recognized as goodwill, and the subsequent measurement shall be carried out according to the cost minus the accumulated impairment provision; The difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination shall be included in the current profits and losses after review.
Business combination not under the same control is realized step by step through multiple transactions
In individual financial statements, the sum of the book value of the equity investment held by the acquiree before the acquisition date and the new investment cost on the acquisition date is regarded as the initial investment cost of the investment. Other comprehensive income recognized for equity investment held before the acquisition date due to accounting with the equity method, this part of other comprehensive income will not be treated on the acquisition date, and the investment will be treated on the same basis as the investee's direct disposal of relevant assets or liabilities; The owner's equity recognized due to changes in the owner's equity of the investee other than net profit and loss, other comprehensive income and profit distribution shall be transferred to the current profit and loss during the disposal period when the investment is disposed. If the equity investment held before the purchase date is measured at fair value, the cumulative changes in fair value originally included in other comprehensive income shall be transferred to the current profit and loss when accounting by cost method.
In the consolidated financial statements, the combination cost is the sum of the consideration paid on the acquisition date and the fair value of the equity of the acquiree held before the acquisition date on the acquisition date. The equity of the acquiree held before the acquisition date shall be remeasured according to the fair value of the equity on the acquisition date, and the difference between the fair value and its book value shall be included in the current income; The equity of the acquiree held before the acquisition date involves other comprehensive income and other changes in owner's equity, which are transferred to the current income on the acquisition date, except for other comprehensive income arising from the change in net liabilities or net assets of the investee's re measurement and setting income plan. (3) Treatment of transaction expenses in business combination
The intermediary expenses such as audit, legal services, appraisal and consultation and other relevant management expenses incurred for business combination shall be included in the current profit and loss when incurred. The transaction expenses of equity securities or debt securities issued as merger consideration shall be included in the initially recognized amount of equity securities or debt securities. 6. Preparation method of consolidated financial statements (1) consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the company has the power over the investee, enjoys variable returns by participating in relevant activities of the investee, and has the ability to use the power over the investee to affect its return amount. Subsidiaries refer to the entities controlled by the company (including enterprises and investees)
Separable parts, structured subjects, etc.). (2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the company based on the financial statements of the company and its subsidiaries and based on other relevant information. When preparing the consolidated financial statements, the accounting policies and accounting period requirements of the company and its subsidiaries shall be consistent, and the major transactions and transaction balances between companies shall be offset.
During the reporting period, subsidiaries and businesses increased due to business combination under the same control shall be deemed to be included in the consolidation scope of the company from the date when they are controlled by the final controller, and their operating results and cash flows from the date when they are controlled by the final controller shall be included in the consolidated income statement and consolidated cash flow statement respectively.
For subsidiaries and businesses increased due to business combination not under the same control during the reporting period, the income, expenses and profits of the subsidiaries and businesses from the purchase date to the end of the reporting period shall be included in the consolidated income statement, and their cash flows shall be included in the consolidated cash flow statement.
The part of the subsidiary's shareholders' equity that is not owned by the company is separately listed as minority shareholders' equity under shareholders' equity in the consolidated balance sheet; The shares belonging to minority shareholders' equity in the current net profit and loss of subsidiaries are listed as "minority shareholders' profit and loss" under the net profit item in the consolidated income statement. The loss of a subsidiary shared by minority shareholders exceeds the share of minority shareholders in the owner's equity of the subsidiary at the beginning of the period, and the balance is still offset against the reduced shareholder's equity. (3) Purchase of minority shareholders' equity of subsidiaries
The difference between the cost of long-term equity investment newly obtained due to the purchase of minority equity and the share of net assets of subsidiaries continuously calculated from the purchase date or merger date according to the newly increased shareholding ratio, As well as the difference between the disposal price obtained from partial disposal of equity investment in subsidiaries and the share of net assets of subsidiaries continuously calculated from the purchase date or merger date corresponding to the disposal of long-term equity investment without losing control, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted. If the capital reserve is insufficient to be offset, Adjust retained earnings. (4) Disposal of loss of control of subsidiaries
If the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity shall be re measured according to its fair value on the date of loss of control; The difference between the sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity minus the sum of the share of the book value of the net assets of the original subsidiary continuously calculated from the purchase date calculated according to the original shareholding ratio and the goodwill is included in the investment income of the current period when the control right is lost.
Other comprehensive income related to the equity investment of the original subsidiary shall be transferred to the current profit and loss when the control right is lost, except other comprehensive income arising from the change of net liabilities or net assets due to the re measurement and setting of income plan by the investee. 7. Criteria for determining cash and cash equivalents
Cash refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to the short-term, highly liquid investments held by the group, which are easy to be converted into known amounts of cash and have little risk of value change. 8. Foreign currency business and translation of foreign currency statements (1) foreign currency business
The group's foreign currency transactions are translated into the amount of functional currency at the spot exchange rate on the transaction date.
On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or the previous balance sheet date shall be included in the current profits and losses; Foreign currency non monetary items measured at historical cost shall still be translated at the spot exchange rate on the transaction date; Foreign currency non monetary items measured at fair value are translated at the spot exchange rate on the date when the fair value is determined. The difference between the amount of the converted bookkeeping functional currency and the amount of the original bookkeeping functional currency is included in the current profit and loss. (2) Translation of foreign currency financial statements
On the balance sheet date, when the foreign currency financial statements of overseas subsidiaries are translated, the asset and liability items in the balance sheet are translated at the spot exchange rate on the balance sheet date. Except for "undistributed profit", other items of shareholders' equity are translated at the spot exchange rate on the date of occurrence.
The income and expense items in the income statement are translated at the spot exchange rate on the transaction date.
All items in the cash flow statement are translated at the spot exchange rate on the date of cash flow. As a reconciliation item, the impact of exchange rate changes on cash is listed separately in the cash flow statement
