Beijing Digital Telecom Co., Ltd. - Interim / Quarterly Report 2020

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北京迪信通商貿股份有限公司 Beijing Digital Telecom Co., Ltd.

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 6188)

ANNOUNCEMENT OF UNAUDITED FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

UNAUDITED FINANCIAL HIGHLIGHTS

For the year ended 31 December 2019:

Revenue of the Group was RMB15,350,953,000 (unaudited), representing an increase of 1.97% from last year (including discontinued operations).

Net profit attributable to the owners of the parent of the Company was RMB259,202,000 (unaudited), representing a decrease of 21.34% from last year.

Basic earnings per share was RMB0.39 per share (unaudited), representing a decrease of RMB0.10 per share from last year.

The Board did not recommend any final dividend for the year ended 31 December 2019.

Since some of the provinces and cities in China have imposed restrictions to fight against COVID-19 epidemic, the audit process for the annual results of Beijing Digital Telecom Co., Ltd. (the “ Company ”) and its subsidiaries (the “ Group ” or “ we ” ) for the year ended 31 December 2019 has not yet been completed. The unaudited annual results set out in this announcement have not been agreed with the Company’s auditors. Meanwhile, the board (the “ Board ”) of directors (the “ Directors ”) is pleased to announce the unaudited consolidated results of the Group for the year ended 31 December 2019, together with comparable audited figures for the same period in 2018.

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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME

Year ended 31 December 2019

Notes CONTINUING OPERATIONS REVENUE 3 Cost of sales Gross profit Other income and gains 3 Selling and distribution expenses Administrative expenses Impairment losses on financial assets Other expenses Finance costs Share of profits/(losses) of: Joint ventures Associates PROFIT BEFORE TAX FROM CONTINUING OPERATIONS Income tax expense 4 PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS DISCONTINUED OPERATION Profit for the year from a discontinued operation PROFIT FOR THE YEAR Attributable to: Owners of the parent Non-controlling interests EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT – Basic and diluted (RMB) For profit for the year 6 For profit from continuing operations 6	2019 *RMB’000* (Unaudited) 15,350,953 (13,582,076) 1,768,877 70,295 (858,016) (324,563) (51,855) (34,896) (232,712) (1,586) (679) 334,865 (72,650) 262,215 – 262,215 259,202 3,013 262,215 0.39 0.39	2018 RMB’000 (Audited) 14,957,133 (13,042,383) 1,914,750 97,996 (992,508) (359,889) (27,510) (52,532) (192,106) (4,253) 894 384,842 (78,633) 306,209 15,892 322,101 329,536 (7,435) 322,101 0.49 0.48

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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME (CONTINUED)

Year ended 31 December 2019

Notes PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations Share of other comprehensive income of a joint venture Net other comprehensive income that may be reclassified to profit or loss in subsequent periods Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Equity investments designated at fair value through other comprehensive (loss)/income: Changes in fair value Net other comprehensive (loss)/income that will not be reclassified to profit or loss in subsequent periods OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF TAX TOTAL COMPREHENSIVE INCOME FOR THE YEAR Attributable to: Owners of the parent Non-controlling interests	2019 *RMB’000* (Unaudited) 262,215 (361) 715 354 (4,568) (4,568) (4,214) 258,001 254,990 3,011 258,001	2018 RMB’000 (Audited) 322,101 836 151 987 1,601 1,601 2,588 324,689 331,792 (7,103) 324,689

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2019

Notes NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Goodwill Other intangible assets Investments in joint ventures Investments in associates Debt instrument at amortised cost Equity investments designated at fair value through other comprehensive income Deferred tax assets Loan receivables Total non-current assets CURRENT ASSETS Inventories Trade and bills receivables 7 Prepayments, other receivables and other assets Financial assets at fair value through profit or loss Loan receivables Due from the controlling shareholder Due from related parties Pledged deposits Cash and cash equivalents Total current assets	2019 *RMB’000* (Unaudited) 114,059 550,002 68,119 8,459 74,349 252,406 500 35,623 64,381 – 1,167,898 2,937,176 2,689,638 1,717,182 100 – – 76,163 1,687,875 667,945 9,776,079	2018 RMB’000 (Audited) 130,744 – 72,646 7,492 74,313 37,114 – 41,713 40,892 16,472
		421,386
		2,541,787 2,172,337 1,331,443 – 40,640 35,000 168,711 660,251 708,548
		7,658,717

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

31 December 2019

Notes CURRENT LIABILITIES Trade and bills payables 8 Other payables and accruals Interest-bearing bank and other borrowings Lease liabilities Due to related parties Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities NET ASSETS EQUITY Equity attributable to owners of the parent Share capital Reserves Non-controlling interests Total equity	2019 *RMB’000* (Unaudited) 1,097,525 310,254 3,968,773 205,276 432,309 427,144 6,441,281 3,334,798 4,502,696 324,428 4,178,268 666,667 3,349,354 4,016,021 162,247 4,178,268	2018 RMB’000 (Audited) 484,876 341,922 3,066,638 – 4,253 348,709
		4,246,398
		3,412,319
		3,833,705
		–
		3,833,705
		666,667 3,093,663
		3,760,330 73,375
		3,833,705

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2019

		Attributable to owners of theparent	Attributable to owners of theparent	Attributable to owners of theparent	Attributable to owners of theparent	Total equity RMB’000 (Audited) 3,511,342 (950) (1,571)
Share capital RMB’000 (Audited) 666,667 – – 666,667 – – – – – – – – – 666,667	Capital reserve RMB’000 (Audited) 524,953 – – 524,953 – – – – – – – – – 524,953	Statutory reserve funds RMB’000 (Audited) 243,661 – – 243,661 – – – – – – – – 32,954 276,615	Retained profits RMB’000 (Audited) 1,996,853 – (1,571) 1,995,282 329,536 – – – 329,536 – – – (32,954) 2,291,864	Fair value reserve RMB’000 (Audited) – (950) – (950) – – 1,601 – 1,601 – – – – 651	Exchange fluctuation reserve RMB’000 (Audited) (1,075) – – (1,075) – 504 – 151 655 – – – – (420)
						3,508,821 322,101 836 1,601 151
						324,689 49,651 (3,749) (45,707) –
						3,833,705

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) Year ended 31 December 2019

				Attributable to owners of theparent	Attributable to owners of theparent	Attributable to owners of theparent
			Share-	Statutory			Exchange		Non-
	Share	Capital	based	reserve	Retained	Fair value	fluctuation		controlling	Total
	capital	reserve	payment	funds	profits	reserve	reserve	Total	interests	equity
	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*	*RMB’000*
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
At 1 January 2019	666,667	524,953	–	276,615	2,291,864	651	(420)	3,760,330	73,375	3,833,705
Profit for the year	–	–	–	–	259,202	–	–	259,202	3,013	262,215
Other comprehensive income
for the year:
Exchange differences on translation
of foreign operations	–	–	–	–	–	–	(359)	(359)	(2)	(361)
Change in fair value of equity investments at
fair value through other comprehensive
income, net of tax	–	–	–	–	–	(4,568)	–	(4,568)	–	(4,568)
Share of other comprehensive gain of
a joint venture	–	–	–	–	–	–	715	715	–	715
Total comprehensive income
for the year	–	–	–	–	259,202	(4,568)	356	254,990	3,011	258,001
Acquisition of non-controlling interests	–	(621)	–	–	–	–	–	(621)	(10,046)	(10,667)
Disposal of partial interests in subsidiaries
without losing control	–	(23,973)	–	–	–	–	–	(23,973)	93,973	70,000
Share-based payments	–	–	25,295	–	–	–	–	25,295	–	25,295
Acquisition of subsidiaries	–	–	–	–	–	–	–	–	2,114	2,114
Dividends paid to non-controlling shareholders	–	–	–	–	–	–	–	–	(180)	(180)
Transfer from retained profits	–	–	–	25,920	(25,920)	–	–	–	–	–
At 31 December 2019	666,667	500,359	25,295	302,535	2,525,146	(3,917)	(64)	4,016,021	162,247	4,178,268

* These reserve accounts comprise the consolidated reserves of RMB3,349,354,000 (2018: RMB3,093,663,000) in the consolidated statement of financial position.

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NOTES

1. BASIS OF PREPARATION

These financial statements have been prepared in accordance with International Financial Reporting Standards (“ IFRSs ”) (which include all International Financial Reporting Standards, International Accounting Standards (“ IASs ”) and Interpretations) issued by the International Accounting Standards Board (“ IASB ”), and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for equity investments which have been measured at fair value. These financial statements are presented in Renminbi (“ RMB ”) and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Group for the year ended 31 December 2019. A subsidiary is an entity, directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e. existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;
(b) rights arising from other contractual arrangements; and
(c) the Group’s voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

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2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the following new and revised IFRSs for the first time for the current year’s financial statements.

Amendments to IFRS 9	Prepayment Features with Negative Compensation
IFRS 16	Leases
Amendments to IAS 19	Plan Amendment, Curtailment or Settlement
Amendments to IAS 28	Long-term Interests in Associates and Joint Ventures
IFRIC 23	Uncertainty over Income Tax Treatments
Annual Improvements 2015-2017 Cycle	Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23

Except for the amendments to IFRS 9 and IAS 19, and Annual Improvements to IFRSs 2015-2017 Cycle, which are not relevant to the preparation of the Group’s financial statements, the nature and the impact of the new and revised IFRSs are described below:

(a) Adoption of IFRS 16

IFRS 16 replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model to recognise and measure right-of-use assets and lease liabilities, except for certain recognition exemptions. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17.

The Group has adopted IFRS 16 using the modified retrospective method with the date of initial application of 1 January 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption recognised as an adjustment to the opening balance of retained profits at 1 January 2019, and the comparative information for 2018 was not restated and continued to be reported under IAS 17 and related interpretations.

New definition of a lease

Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.

– 9 –

As a lessee – Leases previously classified as operating leases

Nature of the effect of adoption of IFRS 16

The Group has lease contracts for various items of property, machinery, motor vehicles and other equipment. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under IFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low-value assets (elected on a lease-by-lease basis) and leases with a lease term of 12 months or less (“ short-term leases ”) (elected by class of underlying asset). Instead of recognising rental expenses under operating leases on a straight-line basis over the lease term commencing from 1 January 2019, the Group recognises depreciation (and impairment, if any) of the right-of-use assets and interest accrued on the outstanding lease liabilities (as finance costs).

Impact on transition

Lease liabilities at 1 January 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 January 2019 and included in interest-bearing bank and other borrowings. The right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial position immediately before 1 January 2019.

All these assets were assessed for any impairment based on IAS 36 on that date. The Group elected to present the right-of-use assets separately in the statement of financial position.

The Group has used the following elective practical expedients when applying IFRS 16 at 1 January 2019:

Applying the short-term lease exemptions to leases with a lease term that ends within 12 months from the date of initial application
Using hindsight in determining the lease term where the contract contains options to extend/ terminate the lease

Financial impact at 1 January 2019

The impact arising from the adoption of IFRS 16 at 1 January 2019 was as follows:

Assets Increase in right-of-use assets Decrease in prepayments, other receivables and other assets Increase in total assets Liabilities Increase in lease liabilities Increase in total liabilities Decrease in retained profits	Increase/ (decrease) *RMB’000* 649,515 (47,883) 601,632 601,632 601,632 –

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The lease liabilities as at 1 January 2019 reconciled to the operating lease commitments as at 31 December 2018 are as follows:

Operating lease commitments as at 31 December 2018 Less: Commitments relating to short-term leases and those leases with a remaining lease term ended on or before 31 December 2019 Commitments relating to leases of low-value assets Add: Payments for optional extension periods not recognised as at 31 December 2018 Weighted average incremental borrowing rate as at 1 January 2019 Discounted operating lease commitments as at 1 January 2019 Lease liabilities as at 1 January 2019	RMB’000 703,201 14,700 – 72,973
	761,474 4.93%
	601,632
	601,632

(b) Amendments to IAS 28 clarify that the scope exclusion of IFRS 9 only includes interests in an associate or joint venture to which the equity method is applied and does not include long-term interests that in substance form part of the net investment in the associate or joint venture, to which the equity method has not been applied. Therefore, an entity applies IFRS 9, rather than IAS 28, including the impairment requirements under IFRS 9, in accounting for such long-term interests. IAS 28 is then applied to the net investment, which includes the long-term interests, only in the context of recognising losses of an associate or joint venture and impairment of the net investment in the associate or joint venture. The Group assessed its business model for its long-term interests in associates and joint ventures upon adoption of the amendments on 1 January 2019 and concluded that the long-term interests in associates and joint ventures continued to be measured at amortised cost in accordance with IFRS 9. Accordingly, the amendments did not have any impact on the financial position or performance of the Group.
(c) IFRIC 23 addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of IAS 12 (often referred to as “ uncertain tax positions ”). The interpretation does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. Upon adoption of the interpretation, the Group considered whether it has any uncertain tax positions arising from the transfer pricing on its intergroup sales. Based on the Group’s tax compliance and transfer pricing study, the Group determined that it is probable that its transfer pricing policy will be accepted by the tax authorities. Accordingly, the interpretation did not have any impact on the financial position or performance of the Group.

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3. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Revenue from contracts with customers Sales of mobile telecommunications devices and accessories Including: Retail of mobile telecommunications devices and accessories Sales of telecommunications devices and accessories to franchisees Wholesale of mobile telecommunications devices and accessories Service income from mobile carriers Other service fee income	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 14,905,915 14,451,208 6,773,491 7,875,083 2,726,784 3,039,672 5,405,640 3,536,453 312,421 378,337 132,617 127,588 15,350,953 14,957,133	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 14,905,915 14,451,208 6,773,491 7,875,083 2,726,784 3,039,672 5,405,640 3,536,453 312,421 378,337 132,617 127,588 15,350,953 14,957,133
		14,957,133

Disaggregated revenue information

Segments

Mobile telecommunications devices

Geographical markets Mainland China Spain Bangladesh India Total revenue from contracts with customers Timing of revenue recognition Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 15,023,563 14,905,625 322,137 50,724 3,183 452 2,070 332 15,350,953 14,957,133 14,905,915 14,451,208 445,038 505,925 15,350,953 14,957,133	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 15,023,563 14,905,625 322,137 50,724 3,183 452 2,070 332 15,350,953 14,957,133 14,905,915 14,451,208 445,038 505,925 15,350,953 14,957,133
		14,957,133
		14,451,208 505,925
		14,957,133

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Other income Interest income Government grants_(note (a))_ Others Gains Gain on acquisition of subsidiaries Gain on disposal of a subsidiary Gain on disposal of items of property, plant and equipment	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 12,967 42,254 46,091 49,772 6,447 5,720 65,505 97,746 1,929 189 2,580 – 281 61 4,790 250 70,295 97,996	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 12,967 42,254 46,091 49,772 6,447 5,720 65,505 97,746 1,929 189 2,580 – 281 61 4,790 250 70,295 97,996
		97,746
		189 – 61
		250
		97,996

Note (a): The amount represents grants received from local PRC government authorities by the Group’s subsidiaries in connection with certain financial subsidies and tax refunds to support local businesses. There are no unfulfilled conditions and other contingencies attached to these government grants.

4. INCOME TAX EXPENSE

The provision for PRC current income tax is based on the statutory rate of 25% of the assessable profits of the Group as determined in accordance with the PRC Corporate Income Tax Law which became effective on 1 January 2008, except for Sichuan Yijialong Communication Technology Chain Co., Ltd. and Dixin Simaier Technology (Guangdong) Co., Ltd, two subsidiaries of the Company, which were taxed at preferential rates of 15% and 0%, respectively, for the year ended 31 December 2019. The major components of income tax expense are as follows:

Current: Tax charge for the year Deferred Total tax charge for the year from continuing operations Total tax charge for the year from a discontinued operation	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 95,367 85,929 (22,717) (7,296) 72,650 78,633 – – 72,650 78,633	Year ended 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 95,367 85,929 (22,717) (7,296) 72,650 78,633 – – 72,650 78,633
		78,633 –
		78,633

– 13 –

A reconciliation of the tax expense applicable to profit before tax at the statutory rate for the jurisdiction in which the Company and the majority of the subsidiaries are domiciled to the tax expense at the effective tax rate is as follows:

Profit before tax from continuing operations
Profit before tax from a discontinued operation
Tax at the statutory tax rate
Lower tax rates for certain entities
Tax rate change effect
Adjustments in respect of current tax of previous periods
Losses attributable to associates and joint ventures
Expenses not deductible for tax
Tax losses utilised from previous periods
Tax losses not recognised
Tax charge at the Group’s effective rate
Tax charge from continuing operations at the effective rate
Tax charge from a discontinued operation at the effective rate

Year ended 31 December
2019
2018
RMB’000
RMB’000
(Unaudited)
(Audited)
334,865
384,842
–
15,892
334,865
400,734
83,716
100,184
(20,828)
(28,363)
(10,929)
(1,049)
798
1,611
566
840
18,597
6,978
(1,643)
(3,211)
2,373
1,643
72,650
78,633
Year ended 31 December
2019
2018
RMB’000
RMB’000
(Unaudited)
(Audited)
72,650
78,633
–
–

The share of tax attributable to associates and joint ventures amounting to RMB1,245,000 (2018: RMB365,000) and RMB824,000 (2018: RMB10,000), respectively, is included in “Share of profits/(losses) of associates and joint ventures” in the consolidated statement of profit or loss and other comprehensive income.

5. DIVIDENDS

The Directors did not propose a dividend for the year ended 31 December 2019.

– 14 –

6. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of basic earnings per share is based on the profit attributable to ordinary equity holders of the parent and the weighted average number of ordinary shares of 666,667,000 (2018:666,667,000) in issue during the year.

The Group had no potentially dilutive ordinary shares in issue during the years ended 31 December 2019 and 2018.

The calculation of basic earnings per share is based on:

Earnings
Profit attributable to ordinary equity holders of the parent,
used in the basic earnings per share calculation
From continuing operations
From a discontinued operation
Shares
Weighted average number of ordinary shares
in issue during the year used in the basic and
diluted earnings per share calculation
TRADE AND BILLS RECEIVABLES
Trade receivables
Bills receivable
Less: impairment

Year ended 31 December
2019
2018
RMB’000
RMB’000
(Unaudited)
(Audited)
259,202
316,982
–
12,554
259,202
329,536
666,667,000
666,667,000
As at 31 December
2019
2018
RMB’000
RMB’000
(Unaudited)
(Audited)
2,667,684
2,278,015
148,057
2,389
(126,103)
(108,067)
2,689,638
2,172,337

7. TRADE AND BILLS RECEIVABLES

The Group grants different credit periods to customers. The Group’s retail sales to consumers are cash sales. Credit periods are offered to customers of volume sales of telecommunications devices and accessories. The credit periods offered to unincorporated customers are considered on a case-by-case basis. The Group maintains strict control over and closely monitors its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

– 15 –

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

Within 90 days 91 to 180 days 181 to 365 days Over 1 year	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 2,347,021 2,016,782 184,140 66,324 109,487 50,185 48,990 39,046 2,689,638 2,172,337	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 2,347,021 2,016,782 184,140 66,324 109,487 50,185 48,990 39,046 2,689,638 2,172,337
		2,172,337

8. TRADE AND BILLS PAYABLES

Trade payables Bills payable	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 323,625 327,359 773,900 157,517 1,097,525 484,876	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 323,625 327,359 773,900 157,517 1,097,525 484,876
		484,876

An ageing analysis of the outstanding trade and bills payables as at the end of the reporting period, based on the invoice date, is as follows:

Within 90 days 91 to 180 days 181 to 365 days Over 1 year	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 644,121 308,797 84,413 160,858 365,361 11,467 3,630 3,754 1,097,525 484,876	As at 31 December 2019 2018 *RMB’000* RMB’000 (Unaudited) (Audited) 644,121 308,797 84,413 160,858 365,361 11,467 3,630 3,754 1,097,525 484,876
		484,876

The trade payables are non-interest-bearing and are normally settled on terms of 30 to 45 days.

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9. SHARE-BASED PAYMENTS

The Group operates a share ownership plan (the “ plan ”) for the purpose of providing the eligible participants the opportunity to acquire equity interests from controlling shareholder and other co-founders at a preferential price to award the past performance and contribution of the eligible participants. The eligible participants include senior management personnel of the Company’s subsidiaries considered to be able to enhance the operations or the value of the Group.

The percentage of the equity interests and purchase price are solely at the discretion of the controlling shareholder.

In 2019, 25% of the equity interest in Shanghai Dixin Electronic Communication Technology Co., Ltd., 25% of the equity interest in Shanghai Chuanda Communication Technology Co., Ltd. and 25% of the equity interest in Shanghai Dixin South Communication Technology Co., Ltd. were allotted to seven eligible participants at a total consideration of RMB70,000,000 with no vesting conditions. The fair value of the granted equity interest was determined by the management using a discounted cash flow method. The difference amounted to RMB25,295,000 between the consideration and the fair value was charged to profit or loss for the year ended 31 December 2019.

10. BUSINESS COMBINATIONS

Acquisition of Beijing Penglu Network Technology Co., Ltd.

On 24 April 2019, the Group acquired a 51%-interest in Beijing Penglu Network Technology Co., Ltd. (“ Penglu Network ”) from a third party. Penglu Network is engaged in online retail and IT technology development. The acquisition was made as part of the Group’s strategy to expand its online sales of mobile telecommunications devices and accessories. The purchase consideration of RMB1,020,000 for the acquisition was in the form of cash.

The fair values of the identifiable assets and liabilities of Penglu Network as at the date of acquisition were as follows:

Cash and cash equivalents Prepayments, other receivables and other assets Inventory Trade and bills payables Other payables and accruals Total identifiable net liabilities at fair values Non-controlling interests Total net liabilities acquired Goodwill on acquisition Satisfied by: Cash	Fair value recognised on acquisition RMB’000 1,806 16,826 143 (6,810) (8,833) 3,132 (1,535) 1,597 (577) 1,020 1,020

The fair values of the acquired other receivables as at the date of acquisition approximate to their gross contractual amounts. None of these receivables are expected to be uncollectible.

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Acquisition of Shenzhen Mizuan Network Technology Co., Ltd.

On 30 May 2019, the Group acquired a 70%-interest in Shenzhen Mizuan Network Technology Co., Ltd. (“ Shenzhen Mizuan ”) from a third party. Shenzhen Mizuan is engaged in the after-sales service market of mobile telecommunications devices and other electronic devices. The acquisition was made as part of the Group’s strategy to expand its business chain in the market of mobile telecommunications devices and accessories. The purchase consideration of RMB7 for the acquisition was in the form of cash.

The fair values of the identifiable assets and liabilities of Shenzhen Mizuan as at the date of acquisition were as follows:

Property, plant and equipment Other intangible assets Other payables and accruals Deferred tax liabilities Total identifiable net assets at fair values Non-controlling interests Total net assets acquired Goodwill on acquisition Satisfied by: Cash*	Fair value recognised on acquisition RMB’000 4 3,000 (323) (750) 1,931 (579) 1,352 (1,352) – –

* The purchase consideration in the form of cash was RMB7, which was rounded to nil thousand for presentation.

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11. DISPOSAL OF A SUBSIDIARY

Net assets disposed of: Property, plant and equipment Inventories Trade and bills receivables Prepayments, other receivables and other assets Trade and bills payables Accruals and other payables Gain on disposal of a subsidiary Satisfied by: Cash Cash consideration unreceived	2019 *RMB’000* 237 1,643 1,040 4,249 (2,015) (2,734) 2,420 2,580 5,000 – 5,000 5,000

12. EVENTS AFTER THE REPORTING PERIOD

(a) On 8 January 2020, the Company had issued 65,793,400 subscription shares in aggregate at the subscription price of HK$3.25 per subscription share to Nelson Innovation Limited (the “ Subscriber ”). The total number of 65,793,400 subscription shares issued represented 16.67% and 8.98% of the total number of issued H shares and the total number of issued shares of the Company as enlarged by the issue of the subscription shares, respectively. The gross proceeds from the subscription were HK$213,828,550.
(b) Since the outbreak of the Coronavirus Disease 2019 (“ COVID-19 ”) in January 2020, it continues to spread throughout China and to countries across the world. The prevention and control of the COVID-19 has been going on.

The COVID-19 has certain impacts on the business operations of the Group in particular the operation of retail stores and sales in Hubei Province as well as customer flows in China to certain degree, and the degree of the impact depends on the situation of the epidemic preventive measures and the duration of the epidemic.

The Group will monitor the developments of COVID-19 situation closely, assess and react actively to its impacts on the financial position and operating results of the Group in year 2020.

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UNAUDITED RESULTS OF THE GROUP

For the year ended 31 December 2019, the Group sold 9,733,740 mobile handsets, representing a decrease of 172,440 sets or 1.74% from 9,906,180 sets for the same period last year. Operating revenue for the year of 2019 amounted to RMB15,350,952,900 (unaudited), representing an increase of RMB296,288,960 or 1.97% from RMB15,054,663,940 for the same period last year (including discontinued operations). Net profit for the year of 2019 amounted to RMB262,215,000 (unaudited), representing a decrease of RMB59,886,470 or 18.59% from RMB322,101,470 for the same period last year.

FINAL DIVIDEND

The Board does not recommend any final dividend for the year ended 31 December 2019.

CLOSURE OF REGISTER OF MEMBERS

The register of shareholders of the Company will be closed from 22 April 2020 to 22 May 2020 (both days inclusive), for the purpose of determining shareholders’ entitlement to attend the forthcoming annual general meeting to be held on 22 May 2020. Shareholders are required to lodge all transfer documents, accompanied by relevant share certificates and transfer forms, with the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, No. 183 Queen’s Road East, Wan Chai, Hong Kong no later than 4:30 p.m. on 21 April 2020.

CORPORATE GOVERNANCE PRACTICES

The Company has adopted the Corporate Governance Code and Corporate Governance Report (the “ CG Code ”) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) (the “ Listing Rules ”) as its own code of corporate governance. During the year ended 31 December 2019, save as disclosed in this announcement, the Company has complied with all the code provisions of the CG Code and adopted most of the best practices.

Under code provision A.2.1 of the CG Code, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Given Mr. Liu Donghai’s background, qualifications and experience in the Company, he is considered the most suitable person to take both roles under the current circumstances. The Board is of the view that it is appropriate and in the best interests of the Company that Mr. Liu Donghai holds both positions at the current stage, as it helps to maintain the continuity of the policies and the stability and efficiency of the operation of the Company. The Board also meets regularly on a quarterly basis to review the operation of the Company led by Mr. Liu Donghai. Accordingly, the Board believes that this arrangement will not affect the balance of power and authorizations between the Board and the management of the Company. The Company will continue to review and enhance its corporate governance practices to ensure compliance with the CG Code.

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MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as its code of conduct regarding Directors’ and supervisors’ securities transactions. Having made specific enquiry with the Directors and supervisors of the Company, all of the Directors and supervisors of the Company confirmed that they have complied with the standards for securities transactions as set out in the Model Code during the year ended 31 December 2019.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the year ended 31 December 2019, neither the Company nor its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.

AUDIT COMMITTEE

Since some of the provinces and cities in China have imposed restrictions to fight against COVID-19 epidemic, the audit process for the annual results of the Group for the year ended 31 December 2019 has not yet been completed. The unaudited annual results set out in this announcement have not been agreed with the Company’s auditors.

The Audit Committee, together with the management, has reviewed the accounting principles and practices adopted by the Group and reviewed the unaudited annual results for the year ended 31 December 2019.

The Board has considered and approved the unaudited consolidated results of the Group for the year ended 31 December 2019 as set out in this announcement.

PUBLICATION OF UNAUDITED ANNUAL RESULTS, AUDITED ANNUAL RESULTS AND 2019 ANNUAL REPORT

This unaudited annual results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.dixintong.com).

After the completion of audit process, the Company will publish the audited annual results announcement on the respective websites of the Stock Exchange and the Company on or before 20 April 2020. Such announcement contains, among other things, the audited consolidated results for the year ended 31 December 2019 agreed with the Company’s auditors and significant inconsistencies with the unaudited annual results set out in this announcement (if any).

The Company’s 2019 annual report containing all the information required under the Listing Rules will be dispatched to the shareholders of the Company and will be published on the respective websites of the Stock Exchange and the Company in due course and no later than 30 April 2020.

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The financial information of annual results of the Group set out in this announcement is unaudited and not yet agreed with the auditors. The Board cannot guarantee the unaudited annual results have truly reflected the financial performance and condition of the Group. Shareholders and prospective investors should not place undue reliance on the unaudited annual results contained in this announcement and are advised to exercise caution when dealing with the shares of the Company.

By order of the Board Beijing Digital Telecom Co., Ltd. LIU Donghai Chairman and executive Director

Beijing, 30 March 2020

As at the date of this announcement, the executive Directors of the Company are Mr. LIU Donghai, Mr. LIU Yajun, Mr. LIU Songshan and Ms. LIU Wencui; the non-executive Directors are Mr. QI Xiangdong and Ms. XIN Xin; and the independent non-executive Directors are Mr. LV Tingjie, Mr. LV Pingbo and Mr. ZHANG Senquan.

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