China Mobile Limited
Stock Code: 941
ANNUAL REPORT 2015
CONNECTING ALL
2
4
6
8
Company Profile
Financial Highlights
2015 Milestones
58 Report of Directors
70 Notice of the Annual General Meeting
73
Independent Auditor’s Report
Awards & Recognition
74 Consolidated Statement of Comprehensive
10 Corporate Information
11 Biographies of Directors and Senior
Management
Income
76 Consolidated Balance Sheet
78 Consolidated Statement of Changes in Equity
18 Chairman’s Statement
79 Consolidated Statement of Cash Flows
26 Business Review
34
Financial Review
42 Corporate Governance Report
56 Human Resources Development
81 Notes to the Consolidated Financial Statements
143 Financial Summary
CONTENTS COMPANY PROFILE
China Mobile Limited (the “Company”, and together with its subsidiaries, the “Group”) was incorporated in Hong Kong on
3 September 1997. The Company was listed on the New York Stock Exchange (“NYSE”) and The Stock Exchange of Hong
Kong Limited (“HKEx” or the “Stock Exchange”) on 22 October 1997 and 23 October 1997, respectively. The Company
was admitted as a constituent stock of the Hang Seng Index in Hong Kong on 27 January 1998.
As the leading telecommunications services provider in Mainland China, the Group boasts the world’s largest mobile
network and the world’s largest mobile customer base. In 2015, the Company was once again selected as one of the “FT
Global 500” by Financial Times and “The World’s 2,000 Biggest Public Companies” by Forbes magazine, and recognized
again on the Dow Jones Sustainability Emerging Markets Index. Currently, the Company’s corporate credit ratings are
equivalent to China’s sovereign credit ratings, namely, AA-/Outlook Stable from Standard & Poor’s and Aa3/Outlook
Negative from Moody’s.
The Company operates in all 31 provinces, autonomous regions and directly-administered municipalities throughout
Mainland China and in Hong Kong Special Administrative Region. The Company owns 100% interest in the following major
subsidiaries:
• China Mobile Communication Company Limited (“CMC”)
• China Mobile Group Guangdong Company Limited (“Guangdong Mobile”)
• China Mobile Group Zhejiang Company Limited (“Zhejiang Mobile”)
• China Mobile Group Jiangsu Company Limited (“Jiangsu Mobile”)
• China Mobile Group Fujian Company Limited (“Fujian Mobile”)
• China Mobile Group Henan Company Limited (“Henan Mobile”)
• China Mobile Group Hainan Company Limited (“Hainan Mobile”)
• China Mobile Group Beijing Company Limited (“Beijing Mobile”)
• China Mobile Group Shanghai Company Limited (“Shanghai Mobile”)
• China Mobile Group Tianjin Company Limited (“Tianjin Mobile”)
• China Mobile Group Hebei Company Limited (“Hebei Mobile”)
• China Mobile Group Liaoning Company Limited (“Liaoning Mobile”)
• China Mobile Group Shandong Company Limited (“Shandong Mobile”)
• China Mobile Group Guangxi Company Limited (“Guangxi Mobile”)
• China Mobile Group Anhui Company Limited (“Anhui Mobile”)
• China Mobile Group Jiangxi Company Limited (“Jiangxi Mobile”)
• China Mobile Group Chongqing Company Limited (“Chongqing Mobile”)
• China Mobile Group Sichuan Company Limited (“Sichuan Mobile”)
• China Mobile Group Hubei Company Limited (“Hubei Mobile”)
• China Mobile Group Hunan Company Limited (“Hunan Mobile”)
• China Mobile Group Shaanxi Company Limited (“Shaanxi Mobile”)
• China Mobile Group Shanxi Company Limited (“Shanxi Mobile”)
• China Mobile Group Neimenggu Company Limited (“Neimenggu Mobile”)
• China Mobile Group Jilin Company Limited (“Jilin Mobile”)
• China Mobile Group Heilongjiang Company Limited (“Heilongjiang Mobile”)
• China Mobile Group Guizhou Company Limited (“Guizhou Mobile”)
• China Mobile Group Yunnan Company Limited (“Yunnan Mobile”)
• China Mobile Group Xizang Company Limited (“Xizang Mobile”)
• China Mobile Group Gansu Company Limited (“Gansu Mobile”)
• China Mobile Group Qinghai Company Limited (“Qinghai Mobile”)
• China Mobile Group Ningxia Company Limited (“Ningxia Mobile”)
• China Mobile Group Xinjiang Company Limited (“Xinjiang Mobile”)
• China Mobile Group Design Institute Company Limited (“Design Institute”)
• China Mobile Hong Kong Company Limited (“Hong Kong Mobile”)
• China Mobile International Limited (“International Company”)
• China Mobile M2M Company Limited (“CM M2M”)
• China Mobile (Shenzhen) Limited
• China Mobile Online Services Company Limited
• China Mobile (Suzhou) Software Technology Company Limited
2
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
COMPANY PROFILE
• China Mobile (Hangzhou) Information Technology Company Limited
• MIGU Company Limited (“MIGU”)
• China Mobile Internet Company Limited (“CM Internet”)
• China Mobile Tietong Company Limited (“CM TieTong”)
In addition, the Company owns a 99.97% equity interest in China Mobile Group Device Company Limited (“China Mobile
Device”), a 92% equity interest in China Mobile Group Finance Company Limited (“China Mobile Finance”), and a 66.41%
equity interest in Aspire Holdings Limited (“Aspire”).
As of 31 December 2015, the Group had a total staff of 438,645, and maintained a leading position in Mainland China in
terms of customer base which reached 826 million.
The Company’s majority shareholder is China Mobile (Hong Kong) Group Limited (“CMHK (Group)”), which, as of 31
December 2015, indirectly held approximately 72.72% of the total number of issued shares of the Company through a
wholly-owned subsidiary, China Mobile Hong Kong (BVI) Limited (“CMHK (BVI)”). The remaining approximately 27.28%
was held by public investors.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
3
FINANCIAL HIGHLIGHTS
Operating revenue (RMB million)
Of which: Revenue from telecommunications services (RMB million)
EBITDA2 (RMB million)
EBITDA margin3
Profit attributable to equity shareholders (RMB million)
Margin of profit attributable to equity shareholders4
Basic earnings per share (RMB)
Dividend per share – Interim (HK$)
– Final (HK$)
– Full year (HK$)
2015
2014
As restated1
668,335
584,089
240,028
35.9%
108,539
16.2%
5.30
1.525
1.196
2.721
651,509
591,602
241,831
37.1%
109,218
16.8%
5.38
1.540
1.380
2.920
1
2
3
4
4
In 2015, CM TieTong acquired certain assets and businesses (“Target Assets and Businesses”) of China TieTong Telecommunications Corporation.
The acquisition of the Target Assets and Businesses was considered as a business combination under common control as CM Tietong and the Target
Assets and Businesses are both ultimately controlled by China Mobile Communications Corporation. As a result, the Group has restated the 2014
comparative amounts of the consolidated statement of comprehensive income by including the operating results of Target Assets and Businesses
and eliminating its transactions with the Target Assets and Businesses, as if the acquisition had been completed on the earliest date of the periods
being presented, i.e., 1 January 2014. The consolidated balance sheet of the Group as at 31 December 2014 was restated to include the assets and
liabilities of Target Assets and Businesses. Please refer to note 2(b) to the consolidated financial statements included in this annual report for details.
The Company defines EBITDA as profit for the year before taxation, share of profit of investments accounted for using the equity method, finance
costs, interest income, other gains, depreciation, amortization of other intangible assets, impairment loss of goodwill and gain on the transfer of Tower
Assets.
EBITDA margin = EBITDA/Operating revenue
Margin of profit attributable to equity shareholders = Profit attributable to equity shareholders/Operating revenue
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL HIGHLIGHTS
OPERATING REVENUE
(RMB million)
651,509
668,335
EBITDA
(RMB million)
EBITDA margin
37.1%
35.9%
241,831
240,028
2014
2015
2014
2015
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS
(RMB million)
BASIC EARNINGS PER SHARE
(RMB)
Margin of profit attributable to equity shareholders
16.8%
16.2%
109,218
108,539
5.38
5.30
2014
2015
2014
2015
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
5
2015 MILESTONES
15 JANUARY 2015
MIGU, China Mobile’s first subsidiary
specializing in mobile internet operations, held
its opening ceremony in Beijing, marking the
commencement of China Mobile’s specialized
operation in digital content services.
15 MAY 2015
As a response to society’s rising expectations
and the government’s advocacy of “speed
upgrade & tariff reduction”, the Group
announced 12 new measures including 8 for
tariff reduction and 4 for speed upgrade. With
the implementation of these measures, in
2015, handset data tariff decreased by 43%
compared to the previous year, while network
capabilities and network speed increased
significantly.
10 SEPTEMBER 2015
Following the resignation of Mr. Xi Guohua
from the positions of Executive Director and
Chairman of the Company with effect from 24
August 2015, as proposed by the Nomination
Committee of the Company, and after review
and approval by the Board, Mr. Shang Bing
was appointed as an Executive Director and
the Chairman of the Company.
6
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
2015 MILESTONES
14 OCTOBER 2015
The Company entered into a transaction
agreement with China Tower on 14 October
2 0 1 5 . C o m p l e t i o n o f t h e t r a n s a c t i o n
took place on 31 October whereby the
Company completed its transfer of existing
telecommunications towers and related assets
to China Tower. After China Tower’s issue of
new shares to the Company pursuant to the
transaction agreement, the Company, through
its subsidiary, holds a 38.0% shareholding
interest in China Tower.
14 DECEMBER 2015
CM Internet, a subsidiary of the Group
specializing in internet business operations,
held its opening ceremony in Guangzhou,
marking the commencement of China
Mobile’s specialized operation in internet
businesses.
27 NOVEMBER 2015
The Company, through its wholly-owned
subsidiary, CM TieTong, entered into an
acquisition agreement with TieTong (a
wholly-owned subsidiary of China Mobile
Communications Corporation) to acquire
TieTong’s assets and businesses at a final
consideration of RMB31.967 billion. This
acquisition enables the Company to obtain a
wireline broadband license and resources.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
7
AWARDS & RECOGNITION
IN 2015, THE COMPANY’S OUTSTANDING PERFORMANCE HAS WON
POPULAR RECOGNITION AND ACCLAIM:
The Company was ranked 20th by Forbes Magazine in the 2015 “Forbes Global
2000”, and came first among all telecommunications companies.
The Company was again selected as one of the “FT Global 500” companies by
the Financial Times in 2015 and ranked 11th on the list.
The Company was listed in the Dow Jones Sustainability Indices for the eighth
consecutive year.
8
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
AWARDS & RECOGNITION
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
9
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors
Mr. SHANG Bing
(Executive Director & Chairman)
Mr. LI Yue
(Executive Director & Chief Executive Officer)
Mr. XUE Taohai
(Executive Director, Vice President & Chief Financial Officer)
Mr. SHA Yuejia
(Executive Director & Vice President)
Mr. LIU Aili
(Executive Director & Vice President)
Independent Non-Executive Directors
Dr. LO Ka Shui
Mr. Frank WONG Kwong Shing
Dr. Moses CHENG Mo Chi
Mr. Paul CHOW Man Yiu
PRINCIPAL BOARD COMMITTEES
Audit Committee
Mr. Frank WONG Kwong Shing (Chairman)
Dr. Moses CHENG Mo Chi
Mr. Paul CHOW Man Yiu
Remuneration Committee
Dr. LO Ka Shui (Chairman)
Mr. Frank WONG Kwong Shing
Dr. Moses CHENG Mo Chi
Nomination Committee
Dr. LO Ka Shui (Chairman)
Mr. Frank WONG Kwong Shing
Dr. Moses CHENG Mo Chi
COMPANY SECRETARY
Ms. WONG Wai Lan, Grace (FCS, FCIS)
AUDITORS
PricewaterhouseCoopers
PricewaterhouseCoopers Zhong Tian LLP
LEGAL ADVISER
Sullivan & Cromwell
REGISTERED OFFICE
60/F, The Center
99 Queen’s Road Central
Hong Kong
10
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
PUBLIC AND INVESTOR RELATIONS
Tel: 852 3121 8888
Fax: 852 2511 9092
Website: www.chinamobileltd.com
Stock code:
(HKEx) 941
(NYSE) CHL
CUSIP Reference Number: 16941M109
SHARE REGISTRAR
Hong Kong Registrars Limited
Shops 1712–1716, 17/F
Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
AMERICAN DEPOSITARY RECEIPTS DEPOSITARY
BNY Mellon Shareowner Services
P.O. Box 30170
College Station, TX 77842-3170
USA
Overnight Correspondence:
BNY Mellon Shareowner Services
211 Quality Circle, Suite 210
College Station, TX 77845
USA
Tel: 1-888-BNY-ADRS (toll free in USA)
1 201 680 6825 (international call)
Email: shrrelations@cpushareownerservices.com
Website: www.mybnymdr.com
PUBLICATIONS
As required by the United States securities laws and
regulations, the Company will file an annual report on
Form 20-F with the United States Securities and Exchange
Commission (“US SEC”) before 30 April 2016. Copies of
the annual report of the Company as well as the annual
report on Form 20-F, once filed, will be available at:
Hong Kong:
China Mobile Limited
60/F, The Center
99 Queen’s Road Central
Hong Kong
The United States:
BNY Mellon
Depositary Receipts
101 Barclay Street, 22/F
New York, NY 10286
USA
BIOGRAPHIES OF DIRECTORS AND
SENIOR MANAGEMENT
EXECUTIVE DIRECTORS
MR. SHANG BING
MR. LI YUE
Age 60, Executive Director and Chairman of the Company,
in charge of the overall management of the Company,
joined the Board of Directors of the Company in September
2015. He is currently the Chairman of China Mobile
Communications Corporation (“CMCC”) and China Mobile
Communication Company Limited (“CMC”). Mr. Shang
formerly served as a Director of Industrial Technology
Development Centre in Liaoning Province, a General
Manager of Economic and Technological Development
Company in Liaoning Province, a General Manager of China
United Telecommunications Corporation Liaoning Branch,
a Director, Vice President and President of China United
Telecommunications Corporation, an Executive Director
and President of China United Telecommunications
Corporation Limited and China Unicom Limited, a Vice
President of China Telecommunications Corporation, an
Executive Director, President and Chief Operating Officer of
China Telecom Corporation Limited and the Vice Minister
of the Ministry of Industry and Information Technology
of China. Mr. Shang graduated from Shenyang Chemical
Industry Institution with a Bachelor’s degree in 1982. He
received a Master’s degree in business administration from
the State University of New York in 2002 and a Doctor’s
degree in business administration from the Hong Kong
Polytechnic University in 2005. Mr. Shang is a senior
economist, has long-term experience in the operations and
management in basic telecommunications enterprises,
with extensive experience in enterprise management and
telecommunications industry. Save as above stated, Mr.
Shang has not held any other directorships in any listed
public companies in the last three years.
Age 56, Executive Director and Chief Executive Officer of
the Company, in charge of the operation and management
of the Company, joined the Board of Directors of the
Company in March 2003. He is also the President and
Director of CMCC and CMC. Mr. Li started his career
in 1976 and previously served as Deputy Director
General and Chief Engineer of Tianjin Long-Distance
Telecommunications Bureau, Deputy Director General of
Tianjin Posts and Telecommunications Administration,
President of Tianjin Mobile Communications Company,
Deputy Head of the preparatory team and Vice President
of CMCC, Chairman of Aspire, non-executive director
of Phoenix Satellite Television Holdings Limited and
Chairman of Union Mobile Pay Limited. Mr. Li holds
a Bachelor’s degree in telephone exchange from the
Correspondence College of Beijing University of Posts
and Telecommunications, a Master’s degree in business
administration from Tianjin University and a doctoral
degree in business administration from Hong Kong
Polytechnic University. He is a professor-level senior
engineer and had won many national, provincial and
ministerial level scientific and technological progress
awards. Mr. Li has been engaging in telecommunications
network operations and maintenance, planning and
construction, operational management, development
strategies and has many years of experience in the
telecommunications industry.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
11
BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT
MR. XUE TAOHAI
MR. SHA YUEJIA
Age 59, Executive Director, Vice President and Chief
Financial Officer of the Company, principally in charge
of the corporate affairs, finance and internal audit of the
Company, joined the Board of Directors of the Company in
July 2002. He is also a Vice President of CMCC, a director
of CMC, and director and Chairman of China Mobile
Finance. Mr. Xue previously served as the Deputy Director
General of the Finance Department of the former Ministry
of Posts and Telecommunications, Deputy Director General
of the Department of Financial Adjustment and Clearance
of the MII and Deputy Director General of the former
Directorate General of Telecommunications. He graduated
from Henan University and received an EMBA degree
from Peking University. Mr. Xue is a senior accountant
with many years of experience in the telecommunications
industry and financial management.
Age 57, Executive Director and Vice President of the
Company, principally in charge of marketing, data
business, corporate customer and international businesses
of the Company, joined the Board of Directors of the
Company in March 2006. He is also a Vice President
of CMCC, a director of CMC, non-executive director of
Phoenix Satellite Television Holdings Limited and Shanghai
Pudong Development Bank Co., Ltd.. He previously served
as Director of the Engineering Construction Department
IV Division of Beijing Telecommunications Administration,
President of Beijing Telecommunications Planning
Design Institute, Deputy Director General of Beijing
Telecommunications Administration, Vice President of
Beijing Mobile Communications Company, and Chairman
and President of Beijing Mobile. Mr. Sha graduated from
Beijing University of Posts and Telecommunications, and
received a Master’s Degree from the Academy of Posts
and Telecommunications of the Ministry of Posts and
Telecommunications and a Doctoral degree in business
administration from Hong Kong Polytechnic University.
He is a professor-level senior engineer with many years of
experience in the telecommunications industry.
12
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT
INDEPENDENT NON-EXECUTIVE
DIRECTORS
MR. LIU AILI
DR. LO KA SHUI
Age 52, Executive Director and Vice President of
the Company, principally in charge of planning and
construction, network operation and business support of
the Company, joined the Board of Directors of the Company
in March 2006. He is also a Vice President of CMCC, a
director of CMC and a Vice President of China Internet
Infrastructure Resources Association. Mr. Liu has been
appointed as the Chairman of China Tower Corporation
Limited (formerly known as China Communications
Facilities Services Corporation Limited) with effect from
July 2014. Since November 2012, He ceased to be a
non-executive director of China Communications Services
Corporation Limited, a company listed in Hong Kong.
He previously served as Deputy Director General of
Shandong Mobile Telecommunications Administration,
Director General of Shandong Mobile Telecommunications
Administration and General Manager of Shandong Mobile
Communications Enterprises, Vice President of Shandong
Mobile Communications Company, Director-General of
Network Department of CMCC, Chairman and President
of Shandong Mobile and Zhejiang Mobile, and Chairman
of CMPak Limited. Mr. Liu graduated from Heilongjiang
Posts and Telecommunications School with an associate
degree. Mr. Liu also received a Master of Management
degree from Norwegian School of Management BI and
a Doctoral degree in business administration from Hong
Kong Polytechnic University. He is a professor-level
senior engineer with many years of experience in the
telecommunications industry.
Age 69, Independent Non-Executive Director of the
Company, joined the Board of Directors of the Company
in April 2001. He was appointed as the Chairman of
Remuneration Committee and Nomination Committee
of the Company. Dr. Lo is the Chairman and Managing
Director of Great Eagle Holdings Limited and the Chairman
and a Non-Executive Director of the Manager of the
publicly listed trusts, Champion Real Estate Investment
Trust and Langham Hospitality Investments. He is
an Independent Non-Executive Director of Shanghai
Industrial Holdings Limited, Phoenix Satellite Television
Holdings Limited and City e-Solutions Limited. Dr. Lo is a
vice president of the Real Estate Developers Association
of Hong Kong, a trustee of the Hong Kong Centre for
Economic Research, a vice chairman of The Chamber
of Hong Kong Listed Companies and a member of
the Exchange Fund Advisory Committee of the Hong
Kong Monetary Authority. Dr. Lo graduated from McGill
University with a Bachelor of Science degree and from
Cornell University with a Doctor of Medicine (M.D.) degree.
He was certified in internal medicine and cardiology. He
has over three decades of experience in property and
hotel development and investment both in Hong Kong and
overseas.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
13
BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT
MR. FRANK WONG KWONG SHING
DR. MOSES CHENG MO CHI, GBS, OBE, JP
Age 68, Independent Non-Executive Director of the
Company, joined the Board of Directors of the Company
in August 2002. He was appointed as the Chairman of the
Audit Committee in May 2013. He currently also serves as
the Chairman and Independent Non-Executive Director of
Mapletree Greater China Commercial Trust Management
Ltd, Non-Executive Director of PSA International Pte Ltd
and PSA Corporation Limited in Singapore. He previously
served as Vice Chairman of DBS Bank, Chairman of
DBS Bank (Hong Kong) and DBS Bank (China) and was
a member of the Boards of DBS Bank and DBS Group
Holdings. Early on in his professional career, Mr. Wong
held a series of progressively senior positions at Citibank,
JP Morgan and NatWest. More recently, Mr. Wong was
an Independent Non-Executive Director of Industrial and
Commercial Bank of China Limited (China), Mapletree
Investments Pte Ltd and National Healthcare Group Pte
Ltd in Singapore. Committed to public service, he had
held various positions with Hong Kong government bodies
including Chairman of the Hong Kong Futures Exchange
between 1993 and 1998 and member of HKSAR’s
Financial Services Development Council between 2013
and 2015.
Age 66, Independent Non-Executive Director of the
Company, joined the Board of Directors of the Company
in March 2003. Dr. Cheng is a practising solicitor and a
consultant of Messrs. P.C. Woo & Co. after serving as its
Senior Partner from 1994-2015. Dr. Cheng was a member
of the Legislative Council of Hong Kong. He is the founder
chairman of the Hong Kong Institute of Directors of which
he is now the Honorary President and Chairman Emeritus.
Dr. Cheng currently holds directorships in Liu Chong Hing
Investment Limited, China Resources Beer (Holdings)
Company Limited, Towngas China Company Limited,
Kader Holdings Company Limited, K. Wah International
Holdings Limited, Guangdong Investment Limited and
Tian An China Investments Company Limited, all of
which are public listed companies in Hong Kong. He is
also an independent non-executive director of ARA Asset
Management Limited, a company whose shares are listed
on Singapore Exchange Limited. His other directorships in
public listed companies in the last 3 years includes Hong
Kong Television Network Limited (formerly known as City
Telecom (H.K.) Limited).
14
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT
MR. PAUL CHOW MAN YIU, GBS, SBS, JP
Age 69, Independent Non-Executive Director of the
Company, joined the Board of Directors of the Company
in May 2013. He was an executive director and Chief
Executive of Hong Kong Exchanges and Clearing Limited
from April 2003 to January 2010. Hong Kong Exchanges
and Clearing Limited is listed on the Main Board of
HKEx. Mr. Chow also served as the Chief Executive
of the Asia Pacific Region (ex-Japan) of HSBC Asset
Management (Hong Kong) Limited from 1997 to 2003.
Mr. Chow currently serves as the Chairman of Hong Kong
Cyberport Management Company Limited, a member of
the Advisory Committee on Innovation and Technology of
the Government of the Hong Kong Special Administrative
Region, a member of the Asian Advisory Council of
AustralianSuper, an independent non-executive director
of Bank of China Limited (a company listed on the Main
Board of HKEx), Julius Baer Group Ltd. and Bank Julius
Baer & Co. Ltd, and CITIC Limited.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
15
2.6Million
Base Stations
Revenue Exceeded
668Billion
Customers
Exceeded
826Million
WORLD’S LARGEST
4G OPERATOR
CHAIRMAN’S STATEMENT
CHAIRMAN’S STATEMENT
“
It is a great honor for me to have been entrusted with the Chairman position
by the shareholders and directors in September last year. Since I took up
the post, I have received warm support from our customers and investors
for which I am deeply grateful. I also remain fully aware of the significant
responsibilities to these stakeholders, and their justified high expectations for
the Chairman of this Company.
The success that the Company has had to date is a great source of motivation.
China Mobile boasts the world’s largest network and customer base, market-
leading profitability, strong brand recognition, outstanding execution
capabilities and leading market capitalization. All these combine to make
China Mobile one of the world-class telecommunications service providers.
We, however, should not rest on the laurels of past success as the industry
faces an increasingly complicated operating landscape. There are challenges
ahead, identified and unforeseen, as well as opportunities to be seized. The
management team and I are ready to navigate China Mobile through these
challenges and steer towards the opportunities that will take the Company
forward now, and in the future.
Working closely with the management team, I am confident that we will be
able to create a robust company suited to the current environment and bring
an innovative direction to our long-term planning, amidst the constant state of
global change that the telecommunications industry finds itself in, with an aim
to deliver strong performance to our shareholders.
”
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
19
CHAIRMAN’S STATEMENT
Dear Shareholders,
2015 was a crucial year for China Mobile’s transformation.
Despite increasing competition in the telecommunications
industry, a continued disturbance to the traditional
communications landscape by the Internet and changing
regulatory policies, China Mobile seized opportunities in
the 4G sector. As the first mover in providing 4G services,
we continued to lead innovative business layouts and
developments and to focus our efforts on transformation
and management efficiency. As a result, China Mobile
has solidified its position as a leading 4G service provider.
We are an industry leader in revenue growth, and we
have continuously strengthened our competitive position
in the marketplace and have laid a solid foundation for
sustainable future development.
2015 PERFORMANCE
Benefiting from the rapid development of data traffic
business driven by the extension of 4G adoption, China
Mobile’s dependency on traditional services as a source
of revenue growth has decreased. Our operating revenue
in 2015 was RMB668.3 billion, up by an industry-leading
2.6% compared to the previous year. For the first time,
our revenue from data services surpassed our revenue
from voice services, accounting for 52.0% of revenue from
telecommunications services.
Operating Revenue Growth in
LEADING
POSITION
China Mobile again demonstrated industry leading
profitability. The margin of profit attributable to equity
shareholders was 16.2%, profit attributable to equity
shareholders was RMB108.5 billion and basic EPS was
RMB5.30.
For the financial year ended 31 December 2015, the Board
recommends payment of a final dividend of HK$1.196 per
share. Together with the interim dividend of HK$1.525 per
share paid earlier, this amounts to an aggregate dividend
payment of HK$2.721 per share for the full financial year
of 2015.
In considering China Mobile’s financial situation, capability
to generate cash flow and future development needs,
the Company’s planned dividend payout ratio for the full
financial year of 2016 will be 43%.
20
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
The Board remains confident that our Company’s
leading position in profitability and proven track record in
generating healthy cash flow will propel China Mobile’s
future development and bring favorable returns for our
shareholders.
For a more detailed analysis of business affairs and
financial performance in 2015, please refer to the
“Business Review” and “Financial Review” sections.
4G DEVELOPMENT
In 2015, our Company exerted great effort in all aspects of
4G development and achieved remarkable results.
Our Company has established the world’s largest 4G
network with superior quality. Our 4G network has
approximately 1.1 million base stations. It realizes
continuous coverage in all areas above rural towns level,
as well as effective coverage of data hotspots in villages.
In addition, we have almost realized full coverage of high
speed railways, underground subways, and key scenic
spots. Our 4G network provides coverage for over 1.2 billion
people, and our average download speeds on urban roads
exceed 37Mbps. The end-to-end customer experience has
been further enhanced. China Mobile’s 4G customer Net
Promoter Score leads the market.
Our Company also achieved record highs in customer
development. We have already become the world’s largest
4G operator in terms of customer base. Within this year,
we had a net addition of over 200 million 4G customers,
bringing our total 4G customer base to over 300 million.
DOU of 4G customers was 2.2 times the DOU of our total
mobile customer base, which demonstrated strong driving
force from 4G.
We have launched 4G international roaming services in
114 countries and regions, an increase of 61% compared
with the previous year. We have also increased our
collaboration with organizations including GTI1 to build
a global TD-LTE eco-system. So far, 43 countries and
regions have launched 76 TD-LTE commercial networks.
STRATEGIC TRANSFORMATION
In recent years, due to the downward trend in traditional
voice services and SMS, our Company has attached
high importance to, and actively explored strategic
transformation, which have now achieved some initial
success.
We have already achieved tangible results in our
transformation from a voice-centric operation to a data-
centric operation, as we have seen that data traffic has
become the primary driver for revenue growth. In 2015,
our mobile data traffic increased 143.7% compared to the
previous year; DOU of handset data customers increased
118.5%; and our revenue from wireless data traffic
increased 30.5%, reaching a total of RMB200.9 billion.
1
Global TD-LTE Initiative
CHAIRMAN’S STATEMENT
Data Services Revenue
FIRST TIME
SURPASSED
Voice Services Revenue
broadband for household use, we can benefit from the
growth in digitally enabled families. Secondly, by providing
the integration of wireline and mobile services, we can
improve our customer retention and reduce our churn rate.
Finally, this acquisition can create synergy in increasing
our network capabilities, coverage and efficiency. Through
joint development with TieTong in recent years, our total
number of wireline broadband customers exceeded
55 million.
For the agreement with China Tower3, our Company has
already completed the transfer of existing towers at a fairly
negotiated price. Currently, we hold 38% of the outstanding
shares of China Tower and the one-off gain from the transfer
improved our net profit by RMB10.1 billion for 2015.
Through the centralized construction and maintenance of
towers and related assets by China Tower, our Company
will benefit from not only from a faster development of
enhanced network coverage capabilities but also save
on capital expenditure. As we continue in our close
collaboration, a greater number of shared towers will
further reduce our operating cost.
REGULATORY POLICIES
The Chinese government has promoted the cyberpower
strategy, instituted the “Internet+” action plan and
propelled the supply-side structural reform, and as such,
has created new opportunities for business growth.
In response to the needs of our community and the
government’s emphasis on “speed upgrade & tariff
reduction”, China Mobile has introduced more than ten
policies, including one that permits customers to carry over
unused data to the next month. We listened to community
opinions and implemented transparent and effective
measures, and as a result, our handset data tariff was
decreased by 43%, which in turn, stimulated increased
data usage. The consequences of this were a positive
uptick in revenues while maintaining customer satisfaction.
Our corporate customer base and market share steadily
increased this year as well. In 2015, we targeted industry
sectors such as government, medical, transportation,
logistics and education. We worked hard to promote
key business and information solutions into these target
areas, a strategy which achieved favorable results. Our
revenue growth rate from corporate telecommunications
and informatization services was higher than the industry
average and its revenue market share has reached nearly
one third.
Moreover, across the telecommunications industry,
we have spearheaded the exploration and deployment
in digital services. According to the Internet industry’s
practice of specialization, we have established various
professional companies, including MIGU, CM Internet,
CM M2M, Virtue Intelligent Network, all of which focus on
digital content, mobile Internet, Internet of Things, Internet
of Vehicles and other digital services. Furthermore,
through the establishment of a fund to invest in a range of
industries along the value chain, China Mobile has not only
invested in a diversified collection of ideas but has also
collaborated with these innovative companies to establish
integrated operating platforms. But this is an area that we
believe to be in its infancy and there is much more that we
can achieve by going deeper into digital services. As such,
we need to explore new operating models for China Mobile
in order to achieve further market-orientated mechanism
and to cultivate ongoing innovation to solidify our position
in this competitive digital landscape.
In order to increase the efficiency of our management
processes, we promoted centralized management in
areas such as sales and marketing, network maintenance,
IT support, logistics, finance and human resources.
This move promotes resources sharing and allows us to
benefit more from the economies of scale. We have also
implemented effective cost-control measures to cut costs
and boost efficiency, which have allowed us to maintain
our favorable profitability.
We have achieved initial success in our strategic
transformation and established a foundation for
sustainable development, but at the same time, we are
fully aware that our Company has areas for improvement in
applications and information services. In order to achieve
progress and success, we need to maximize opportunities
in new technologies and services such as big data, cloud
computing and the Internet of Things, and in doing so our
capabilities and services can be enhanced. This is not an
easy task and calls for persistence and endeavour.
INVESTMENT AND ACQUISITION
Our Company’s acquisition of assets and businesses
from TieTong2 enabled us to obtain a wireline broadband
license and accelerated the implementation of our full-
service strategy. Firstly, by rapidly expanding wireline
2
China TieTong Telecommunications Corporation
3
China Tower Corporation Limited
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
21
CHAIRMAN’S STATEMENT
We anticipate that future regulatory policies will encourage
the construction of information network infrastructure and
increase consumption of information services. Any future
policies aimed at increasing network speeds, decreasing
network tariff, and providing better information services
to meet societal needs will create some pressure on our
current operations capabilities and will need developments
for which we will need to be prepared.
We are fully aware of the increasing investor concern with
regulatory developments. Nonetheless, we will actively
communicate with the relevant regulators to ensure that
we represent different perspectives and interests as well as
meeting their expectations.
CORPORATE GOVERNANCE
W e h a v e i m p o s e d h i g h s t a n d a r d s o f c o r p o r a t e
governance on ourselves, particularly around the areas
of integrity, transparency, openness and efficiency, and
we meticulously follow the requirements of the Listing
Rules. We will continue our focus on optimizing our risk
management and internal control systems, which permit
us to quickly respond to potential risks and manage
against them. In 2015, the Company strengthened
monitoring on procurement, project investment and
business collaboration. We have also conducted a special
audit of our key procedures and IT systems. We believe
that by regularly reviewing and developing our internal
management procedures and mechanism, we can
maintain quality operations.
For a more detailed analysis of our corporate governance,
please refer to the “Corporate Governance Report”.
CORPORATE SOCIAL RESPONSIBILITY AND
CORPORATE RECOGNITION
We place great emphasis on the corporate social
responsibility of China Mobile, and carefully consider the
needs of the wider community that we serve.
For many years, although we have focused on economic
development, we have never neglected our civic duty
to raise environmental awareness and promote greener
practices, from recycling to low carbon emissions. In fact,
we are entering the ninth year of our “Green Action Plan”
in a bid to reduce energy consumption and emissions.
Finally, in 2015, the overall energy consumption per unit of
information flow decreased 17.5% from the previous year.
Through our China Mobile Charity Foundation, we continue
to provide medical assistance to disadvantaged groups. By
the end of 2015, we had sponsored surgeries for 2,744
children with congenital heart disease. In another of our
chosen causes, we have focused on narrowing the digital
divide by improving telecommunications and internet
services in villages and remote areas.
22
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
312 million
4G CUSTOMERS
1.1 million
4G BASE STATIONS
In response to a growing phenomenon, we have
implemented policies and procedures that target and
reduce phishing and spam SMS to strictly protect customer
privacy, combat spam and improper messages. In 2015
alone, we reduced spam SMS complaints by 29.4%.
We have established a widely-recognized and industry
leading brand. In 2015, we were ranked number one
by Forbes Magazine in “The World’s Largest Telecom
Companies 2015”, and for the eighth year in a row, we
were selected for inclusion in the Dow Jones Sustainability
Indices for our noteworthy developments. In addition, we
were ranked 11th by the Financial Times in its “FT Global
500”.
In 2015, Moody’s and Standard & Poor’s continued to
maintain our corporate credit ratings at the same level as
that awarded to China’s sovereign ratings.
FUTURE OUTLOOK
A holistic understanding of the economy coupled with
a long-term vision are the keys to success in today’s
telecommunications industry. As the Chinese economy
enters its next stage and the telecommunications
landscape undergoes new changes, we are faced with a
new range of opportunities and challenges.
On one hand, China Mobile is well-positioned to take
advantage of the Chinese government’s promotion of the
cyberpower strategy, implementation of the “Internet+”
action plan, and expansion in information services
consumption as the key focus of supply-side structural
reforms. On the other hand, the increasing penetration of
internet companies into ICT landscape, the intensifying
substitution by OTT and other new technologies along with
the unpredictability of the regulatory policies have posed
new tests for China Mobile.
We need to rapidly adapt to these economic changes in
order to effectively compete. China Mobile will seize the
opportunities with the emergence of Internet of Everything,
and develop a new generation of information network
infrastructure. We will move forward to expand connection
scale, provide premium services and applications.
4G expansion is the focal point for 2016. On this front,
we will adhere to the principle of exploring new markets
and striving for excellence. Leveraging our 4G advantages,
we will continue to improve network quality, accelerate
the migration of 2G/3G customers to 4G and enhance
customer value.
Our data business has become our main revenue driver
reflecting the changes in user habits and will serve as
the foundation for future growth and expansion. But we
need to be smart about how we capture the opportunity
of 4G, as reducing tariffs and boosting usage are not just
about revenue increases but need to be tied to efficiency
improvements.
We will continue to expand our corporate customer base
and increase revenue scope. We will continue to seize
opportunities in “Internet+”, and target government,
medical, transportation, logistics and education sectors,
with tailored information technology products and services.
Providing high quality broadband services, developing
smart cities and increasing smart home capabilities are
the aims of the Chinese government’s “Broadband China”
strategy. To support this policy goal, we will emphasize
integrated development of wireline and mobile with a range
of connected actions, and adhere to the principle of high-
standard, high-quality and high-value to develop wireline
broadband services. We will optimize our investment in
wireline broadband by providing products featuring high
connection speed, premium quality and brand. We will
maintain steady growth in our revenue from our wireline
broadband services.
Looking ahead, our strategy will focus on expanding digital
services and leading technological innovations. We plan to
increase investment in technological innovation, establish
new businesses and develop new business models,
including strengthening the content media business and
expanding smart technology and applications for some key
industries.
We see huge growth potential in the Internet of Everything.
In the next five years, connectivity in China is expected to
exceed ten billion, creating a business of over one trillion
yuan. China Mobile provides connectivity to a one-billion-
customer base and will continue to build through this solid
CHAIRMAN’S STATEMENT
foundation to establish an open platform for Internet of
Everything that enables us to reach the ten-billion scale
in terms of connection support in the future to link people
and things and between things everywhere.
The management and I at this point want to extend the call
for action to act on the future vision for China Mobile. Our
commitment to this is that we will create a platform in the
Company that will support our five areas of development:
momentum in innovation, new company values, increased
operational synergies, fresh impetus around company
reforms and a new collective future. All of us sharing in
this initiative and direction will ensure that we smoothly
implement any needed reforms and find success.
ACKNOWLEDGMENT
On behalf of the Board, I would like to express our
gratitude to my predecessor, Mr. Xi Guohua, for his
invaluable contribution to the Company. Mr. Xi has steered
China Mobile through the difficult 3G era and spearheaded
the Company to be the leading 4G service provider in the
Mainland, which brought China Mobile to where it is today.
The success China Mobile achieved now and future is
attributable to the continued support of its customers
and shareholders, the dedication of its employees, the
trust bestowed upon China Mobile by regulatory agencies
and the faith in China Mobile by the wider community.
I represent the Board in thanking everyone for their
contributions in making China Mobile a success. As I
touched on above, these might not be easy times, but
with continuing efforts from all our employees, I know that
China Mobile will continue to reach new heights to benefit
not only its shareholders but also the community at large.
Shang Bing
Chairman
17 March 2016, Hong Kong
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
23
Customer
Satisfactory
Rate
No.1
Mobile
Data Traffic
(cid:113)143.7%
Wireless
Data
Traffic
Revenue
(cid:113)30.5 %
DATA TRAFFIC AS
MAIN REVENUE DRIVER
BUSINESS REVIEW
2015 was a crucial year for China Mobile’s transformation. We consolidated our 4G advantages and accelerated business
development, rolled out the world’s largest 4G network, with a 4G customer base of over 300 million. Facing the decline in
traditional voice services and SMS/MMS, we accelerated our business redeployment and innovation, strived for management
enhancement and breakthrough in strategic transformation, strengthened our data traffic and corporate customer operations,
developed digital services. As a result, we have become the industry leader in operating revenue growth and further solidified
our market leading position, and overall, maintained a favorable growth momentum.
OPERATING RESULTS
Key Operating Data
Mobile Business
Customer Base (million)
4G Customer Base (million)
Net Additional Customers (million)
Net Additional 4G Customers (million)
Total Voice Usage (billion minutes)
Mobile Data Usage (PB)
SMS (billion)
Average Minutes of Usage per User per Month (MOU)
(minutes/user/month)
Average Handset Data Traffic per Month (DOU)
(MB/user/month)
Average Revenue per User per Month (ARPU)
(RMB/user/month)
Wireline Broadband Business
Customer base (million)
Average Revenue per User per Month (ARPU)
(RMB/user/month)
2015
2014
Change %
826.24
312.28
19.61
222.22
4,220.8
2,760.6
559.9
430
339
56
55.03
32
806.63
90.06
39.43
90.06
4,293.9
1,132.9
611.4
453
155
59
–
–
2.4
246.7
-50.3
146.7
-1.7
143.7
-8.4
-5.1
118.5
-5.4
–
–
At the end of 2015, our mobile customer base reached a total of 826 million users. Mid to high-end customers remained
stable and we saw continuous decline in churn and bad debt rates. With a net addition of 222 million from the previous
year, our 4G customer base rapidly increased to exceed 312 million. As such, we have continued to maintain our leading
market share. Data traffic business gained rapid growth, mobile data traffic reached 2,760.6PB, an increase of 143.7%
from the previous year, with data traffic business as a major revenue driver, highlighting the Group’s transition from
traditional business to data business. Voice business continued to decline; MOU was 430 minutes, representing a 5.1%
decrease. At the same time, the Group completed strategic deployment for wirleline broadband business. Through joint
development with TieTong in recent years, our wireline broadband customer base reached 55 million at the end of 2015,
with an ARPU of RMB32.
26
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
BUSINESS REVIEW
4G Development
The Group endeavored in its 4G expansion. With a
remarkably rapid development, it further solidified its
position as a leading 4G services provider.
4GCUSTOMERS NET ADDITION
222
Consolidated 4G Network Advantage. At the end of
2015, the Group had 1.1 million 4G base stations. Our
4G network provides continuous coverage in all areas
above rural towns level, as well as effective coverage
of data hotspots in villages, and almost realized full
coverage of high speed railways, underground subways,
and key scenic spots. Our 4G network provides
coverage for over 1.2 billion people, making it the largest 4G network in the world. We continuously improved 4G network
quality management system, enhanced the customer perception based end-to-end quality control mechanism, and carried
out 4G wireless network and core network optimization. By the end of 2015, the average download speeds on urban roads
exceeded 37Mbps, CSFB completion rate1 increased to 98.4%, thus remarkably improved customer perception.
million
Leading 4G Market Share. While implementing cost controls, the Group has prioritized its resource allocation towards 4G. We
have encouraged terminal manufacturers to produce more 4G mobile phones with higher cost-performance ratio, and by
the end of 2015, there had been more than 1,000 models of 4G mobile phones in the market. By promoting the integrated
sales of terminals, USIM cards and 4G plans through our distribution channels, approximately 320 million 4G terminals had
been sold in all channels in 2015. We had over 222 million net addition of 4G customer within last year, bringing our total 4G
customer base to over 312 million, making us the largest 4G service provider in the world. Our proactive business measures
not only increased 4G customer growth, sped up customer migration from 2G and 3G to 4G, but also enhanced customer
value. Our 4G customer DOU reached 748MB, which was 2.2 times of our mobile customer DOU.
Leading 4G Business and Service. While actively developing signature 4G products, we also focused on product and service
quality. On one hand we employed carrier aggregation (CA)2 technology to increase 4G speed, on the other pushed forward
VoLTE network transformation and maintenance, to bring our customers high quality 4G experience. The Group constantly
refined its service quality control system that features “Convenient access, User friendly, Tariff matching customer needs,
Timely reminder and Quick response” to enhance customer care, thus attained market leading 4G customer Net Promoter
Score. We pushed forward 4G international development, launched 4G international roaming services in 114 countries and
regions. We continue to strengthen collaboration with GTI as well as other organizations in TD-LTE global expansion, and
up to now, 76 TD-LTE commercial networks have been established globally.
1
2
CSFB completion rate = CSFB connection rate * (1 - Call drop rate).
Carrier Aggregation, a technology that is used to increase bandwidth, thereby to effectively improve transmission speed.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
27
BUSINESS REVIEW
Business Growth
During the past year, the Group emphasized on data traffic operation and corporate customer businesses, as well as the
development of digital services, as to attain steady revenue growth and optimize revenue structure. Last year, for the first
time, revenue from data services surpassed revenue from voice services.
DOU118.5%
Remarkable Results in Data Traffic Operation.
In response to the society and customers’
expectations and the government’s emphasis on
“speed upgrade & tariff reduction”, in addition
to other cost-saving measures for customers,
we introduced the new Unused Data Carry-over
service that let monthly plan customers carry their
unused data to the next month. Also, we launched
innovative charging models of data sharing, data
trading and the trial of progressive unit data pricing. In 2015, handset data tariff decreased by 43%. We maximized price
elasticity in data traffic operations and rapidly increased its business penetration. As a result, total data usage increased
rapidly to 2,760.6PB, a 143.7% increase from the previous year. DOU reached 339MB, representing a 118.5% increase.
Revenue from wireless data traffic increased significantly, as a major revenue driver, it represented 34.5% of our overall
revenue from telecommunications services.
GREW BY
Further Development in Corporate Customer Business. By focusing on key services such as dedicated line services and IDC,
we targeted industry sectors such as government, financial, medical, transportation, logistics and education. We worked
hard to promote information solutions into these target areas. We made continuous improvements of our products and
expanded the scale of industry-specified applications. At the same time, our “covering all market segments, maximizing
synergy of all channels” corporate customer distribution system had started to take effect. In 2015, revenue from corporate
customers data dedicated line and IDC services increased 95.3% and 31.1%, respectively. Revenue from the Group’s
corporate telecommunications and informatization services had increased, it had taken up nearly one third of total market
share.
Exploration and Development of Digital Services. In response to the changing demands of customers in the mobile internet
era, the Group has spearheaded the exploration and strategic planning in digital services. In 2015, MIGU saw increase
of its monthly active customer; total transaction value of “and-Wallet”, our mobile payment service, gained rapid growth;
our self-branded set-top box, a high-definition internet video-on-demand service, recorded steady growth, with paying
customers exceeding 5.67 million. Distribution volume on our Mobile Market platform continued to grow, and connections
on our Internet of Things (IoT) platform exceeded 60 million. Concurrently, we have pushed forward the construction and
operation of CDN and other internet content distribution networks, thus improved our internet content delivery capability
and our handset on-net hit rate continued to increase.
28
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
BUSINESS REVIEW
Decline in Traditional Business
With the increasing substitution effect of mobile Internet and the rising popularity of instant messaging applications,
customers’ preferred mode of communication have also changed. The Group saw a decline in voice and SMS/MMS
services. In 2015, the total voice minutes of usage had been 4.22 trillion minutes, representing a decrease of 1.7% from
the previous year. MOU was 430 minutes, representing a 5.1% decrease, and revenue from voice services decreased
16.5%, and revenue from SMS and MMS decreased 10.2%. Nevertheless, during the transition period from voice services
to data services, we will continue our efforts and take various measures to slowdown the decline rate of these services.
BUSINESS STRATEGY
Network Organization
Network organization capability is one of the core competences of a telecommunications operator, as a sound network
organization not only supports its business operations but also sustains its long term growth. The Group strives to construct
a lower cost, higher efficiency and performance information infrastructure. Through scientific planning of network
development and optimization of resource allocation, we promoted synergetic development of various networks. While
focusing on developing a premium 4G network, we also explored and developed other network potentials. We have directed
efforts to establishing high speed, high efficiency and intelligent backbone transmission network, in order to improve
overall business access and internet traffic delivering capability. We saw improvement of backbone network capabilities,
interprovincial transmission network bandwidth reached 285T. With the improvement of international network deployment,
our international transmission bandwidth reached 2,983G, and the number of POP points reached 25, providing coverage
in Southeast Asia, North America, Middle East, West Africa and Europe. The Group continued to enhance the capability
of new type of infrastructure and maximize the utilization of the centralized infrastructure resources. We further enhanced
centralized management of operations and maintenance of our network. Simultaneously, we pushed forward IT support
transformation and established an integrated IT support system. Finally, we improved emergency communications and
network security measures, continued the optimization of responding process, to enhance our network contingency and
internet security capability.
Business Innovation
Innovation brings about new development dynamic and is critical for a company’s future development. The Group
aligns itself with the development pattern of new businesses, in cultivating innovations and strengthening research and
development, as to create competitive products. Through establishment of a new business research & development
and promotion system that caters to customers’ needs, we are able to provide high quality products and good customer
experience, which will in turn attribute to the Group’s sustainable growth.
The Group endeavors to contribute to the implementation of the “Internet+” action plan. By way of specialized operation
and cultivation of innovation, we are making active expansion in the areas of mobile internet, cloud computing, big data
and IoT. We have established multiple specialized business units, including MIGU, CM Internet and CM M2M, which
focus on exploration in digital content and applications, and
conduct customer-oriented, independent product research and
development. We further consolidated the product lines including
“and-Entertainment”, “and-Communication” and “and-Life”,
and promoted centralized operation of products such as unified
communication for corporate customers, IDC and internet television.
We also introduced industry specified informatization products
including “and-Education”, “and-Health” and Internet of Vehicles,
and commercially launched Mobile Cloud. At the same time, we have
built the world’s largest public IoT which has a terminal capacity of
several billions.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
29
BUSINESS REVIEW
We have also expanded our own brand product offering, including the launch of 3 models of mobile phones, a number
of Internet of Things intelligent modules, 2 self-branded set-top box products, 11 models of automobile device and 2 On-
Board Diagnostics terminals (OBD).
Customer Service
While the enhancing its innovation capability, adhering to the mantra of “Customers are our priority, quality service is our
principle”, the Group has been reforming its customer service methods and models, to push forward the transformation
of operation and service systems towards a new model that is customer experience oriented and emphasis on customer
value.
We continued the optimization of our customer care system that separates front and back lines, established sales and
service channels that are adjusted to contemporary customer needs with the provision of numerous electronic and
mobile internet channels. We respect and protect customer rights and proactively respond to customer requests, we
promoted simplified, transparent tariff system and emphasized on quick responses and closed loop customer complaints
management. During the past year, the Group made solid progress in customer service transformation and improved 4G
whole process service control system, thus consolidated our advantage in customer care and customer retention. As a
result, our customer perception kept improving. We have maintained industry leading customer satisfaction rate and the
lowest complaint rate of point-to-point spam SMS in the industry.
30
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
BUSINESS REVIEW
Wireline Broadband
After the acquisition of TieTong’s assets and businesses and obtaining
wireline broadband license, the Group will carry out its wireline
broadband business development adhering to the principle of High
standard, High quality and High value, while emphasis on cost-
effectiveness. We will accelerate the improvement of wireline broadband
quality and competitiveness. We will take the differentiation approach in
the provision of broadband connection, alternate wireline and wireless
according different local situation and conditions. We will focus on
medium to high speed bandwidth products, establish premium brand
name, and to develop medium to high end customers. For household
customers, we will focus on the provision of high definition video, home
safety devices and other smart home products to meet household
customers’ communications needs. We plan to make steady progress in
wireline broadband in both operation scale and value creation through
continued improvement in the six fronts of products, tariff setting, brand
recognition, marketing and sales, distribution channels and service.
WIRELINE BROADBAND CUSTOMERS
55 million
Looking forward, we will adapt to and take the lead in the industry new norm, facilitate and support the building a cyberpower
and the “Internet+” action plan, enhance customer value, increase core competence, push forward reform and transformation
breakthrough. We will maintain our 4G leading position, provide high quality wireline broadband service, accelerate our
business redeployment and innovation, actively explore and cultivate new development drives, thus to maintain sound and
sustainable development.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
31
SOUND FINANCIAL
PERFORMANCE
Selling Expenses
(cid:114)20.9%
Solid Revenue
Market Share
52%
Industry Leading
Profit Margin
16.2%
FINANCIAL REVIEW
SUMMARY OF THE FINANCIAL RESULTS
In 2015, the Group seized the opportunities and directed
its resources focusing on 4G development, established our
leading edge in 4G market. Operating revenue continued to
grow which leads the industry, whereas strongly compressed
selling and administrative expenses, comprehensively
promoted operations with low cost and high efficiency.
The Group remains industry-leader in profitability and
continuously creates value for the shareholders.
CREATE
LONG-TERM VALUE
FOR SHAREHOLDERS
Operating revenue (RMB million)
Of which: Revenue from telecommunications services (RMB million)
EBITDA (RMB million)
EBITDA margin
EBITDA as a percentage of revenue from
telecommunications services
2015
2014
As restated
668,335
584,089
240,028
35.9%
651,509
591,602
241,831
37.1%
41.1%
40.9%
Profit attributable to equity shareholders (RMB million)
108,539
109,218
Margin of profit attributable to equity shareholders
Basic earnings per share (RMB)
16.2%
5.30
16.8%
5.38
Change
2.6%
–1.3%
–0.7%
–1.2pp
0.2pp
–0.6%
–0.6pp
–1.5%
OPERATING REVENUE
In 2015, the Group accelerated 4G development. Despite of various impacts such as the “transformation from business
tax to value-added tax” policy and the “speed upgrade & tariff reduction” policy, the Group maintained a steady growth in
revenue. Operating revenue reached RMB668.3 billion, up by 2.6% compared to the previous year, of which revenue from
telecommunications services was RMB584.1 billion, down by 1.3% compared to the previous year. While revenue from
traditional businesses continued to decline, revenue from data services grew rapidly and became the primary contributor,
exceeding the revenue from voice services for the first time.
34
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL REVIEW
REVENUE FROM TELECOMMUNICATIONS SERVICES
(RMB million)
591,602
(51,580)
(3,536)
46,931
2,135
(567)
(896)
584,089
2014
Voice
SMS & MMS
Wireless
data traffic
Wireline
broadband
Applications and
information services
Others
2015
Revenue from Voice Services
Due to the impact of factors such as substitution effect of mobile Internet, revenue from voice services continued to
decline. The amount for 2015 was RMB261.9 billion, down by 16.5% compared to the previous year, representing 44.8%
of revenue from telecommunications services, down by 8.2 percentage points compared to the previous year.
Revenue from Data Services
In 2015, revenue from data services was RMB303.4 billion,
up by 17.4% compared to the previous year, representing
52.0% of revenue from telecommunications services, up by 8.3
percentage points compared to the previous year.
The Group accelerated its business development with a focus
on its 4G business, speeded up the migration of customers from
2G/3G networks to 4G networks, enriched various applications
and enhanced its precise marketing of data traffic, leading to
a rapid growth in data traffic which became the main engine
of revenue growth. Revenue from wireless data traffic reached
RMB200.9 billion, up by 30.5% compared to the previous year
and representing 34.5% of revenue from telecommunications
services, thereby effectively mitigated the decrease in revenue
from voice and SMS/MMS services. Due to the impacts of
substitution by OTT, revenue from SMS/MMS services was
RMB31.2 billion, down by 10.2% compared to the previous
year. The Group steadily developed its wireline broadband
business and obtained a wireline broadband license through
the acquisition of TieTong’s assets and businesses, which is
conducive to further synergy. Revenue from wireline broadband
services was RMB18.3 billion, up by 13.2% compared to the
previous year. Revenue from applications and information
services was RMB53.0 billion, representing a slight decrease
compare to previous year. The Group continues to innovate and
explore in mechanism system and operation mode and expects
greater room for expansion in the future.
STRUCTURE
OF REVENUE
FURTHER IMPROVE
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
35
FINANCIAL REVIEW
A POSITIVE RESULT
IN COST REDUCTION
AND EFFICIENCY
ENHANCEMENT
OPERATING EXPENSES
In 2015, the Group adhered to the principle of effectiveness, proactively optimized its allocation of resources, continued to
strengthen its refined cost management and reduced its selling and administrative expenses, thereby achieving a positive
result in cost reduction and efficiency enhancement. Operating expenses were RMB565.4 billion, up by 5.8% compared to
the previous year and representing 84.6% of operating revenue. Profitability continued to be leading in the industry.
Operating expenses
Leased lines and network assets
Interconnection
Depreciation
Employee benefit and related expenses
Selling expenses
Cost of products sold
Other operating expenses
2015
RMB million
2014
As restated
RMB million
Change
%
565,413
534,189
20,668
21,668
15,843
23,502
136,832
122,805
74,805
59,850
89,297
70,385
75,655
74,495
162,293
151,504
5.8
30.5
–7.8
11.4
6.3
–20.9
19.9
7.1
Leased Lines and Network Assets
The expenses for leased lines and network assets were RMB20.7 billion, up by 30.5% compared to the previous year
and representing 3.1% of operating revenue, mainly comprised of usage fees for telecommunications towers, TD-SCDMA
network capacity and “Village Connect” assets. Pursuant to actual circumstances, the Group accrued usage fees in respect
of existing telecommunications towers for November and December 2015 and new telecommunications towers from the
date of delivery amounted to RMB5.6 billion, which was the main reason for the increase in leasing fees.
Interconnection
Interconnection expenses were RMB21.7 billion, down by 7.8% compared to the previous year and representing 3.2% of
operating revenue, which mainly due to the decline in the volume of voice and SMS/MMS services and hence a drop in the
corresponding settlement amount.
Depreciation
Depreciation expenses were RMB136.8 billion, up by 11.4% compared to the previous year and representing 20.5% of
operating revenue. Currently, the Group is at a critical stage of 4G development and strategic transformation. In order
to maintain its leading edge in the 4G market and strengthen its market position, the Group increased its efforts in the
construction of 4G and transmission networks. Depreciation expenses therefore increased with the expansion of the assets
scale. The transfer of existing telecommunications towers and related assets would enable the Group to save depreciation
costs in the future.
36
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL REVIEW
Employee Benefit and Related Expenses1
Employee benefit and related expenses were RMB74.8 billion, up by 6.3% compared to the previous year and representing
11.2% of operating revenue. Due to the implementation of the enterprise annuity system, the deepening of personnel
structure adjustments, the distribution system reform, the enhancement of incentives for junior staff as well as the rigid rise
in social insurance expenses, employee benefit and related expenses increased accordingly.
Selling Expenses
Selling expenses were RMB59.9 billion, down by 20.9% compared to the previous year and representing 9.0% of
operating revenue. The Group deepened the transformation of its marketing mode, optimized the structure of its selling
expenses, promoted the marketization of terminal sales, accelerated the transformation of social channels, enhanced
the concentration of advertising and utilized big data for precise marketing, thereby boosting its marketing efficiency
significantly. As a result, selling expenses reduced by over RMB30.0 billion in total for the last two years.
Cost of Products Sold
Cost of products sold were RMB89.3 billion, up by 19.9% compared to the previous year. The Group devoted itself to
promoting the long-term development of TD-LTE terminal industry chain and focused on the sales of 4G terminals. As a
result of the boost in sales volume, the cost of products sold increased accordingly.
Other Operating Expenses
Other operating expenses were RMB162.3 billion, up by 7.1% compared to the previous year and representing 24.2%
of operating revenue. Other operating expenses primarily consist of maintenance expenses, operating lease expenses,
provision for bad debts as well as asset written-off and impairment. Among these, maintenance and related expenses
increased with the expansion of assets scale. Maintenance expenses were RMB54.0 billion, up by 2.1% compared to
the previous year. Write-off and impairment of property, plant and equipment were RMB7.6 billion, mainly represents the
provision for impairment of certain inefficient terminal transmission equipment and WLAN assets. The Group continued
to strictly control its management expenses, with its administrative expenses such as conference and travelling expenses
significantly reduced.
1
In accordance with requirements of reducing the proportion of labor sourced by third parties that provide services to the Group (“outsourcing labor”)
among total labor under “Amendment to Labor Contract Law of the PRC” and its associated rules and regulations, the Group has made adjustment on the
structure of employees and outsourcing labor. Such adjustment leads to the significantly increase in number of employees and the significantly decrease in
number of outsourcing labor in 2015. In order to reasonably reflect the composition and fluctuation of employee benefit and related expenses, the Group
presents employee benefit and related expenses by combining personnel expenses and labor service expenses, the latter of which was presented under
other operating expenses prior to 2015. The comparative figures have been presented on the same basis.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
37
FINANCIAL REVIEW
INDUSTRY-LEADING
LEVEL OF PROFITABILITY
PROFITABILITY
In 2015, due to the impact of factors such as the “transformation from business tax to value-added tax” policy and the
“speed upgrade & tariff reduction” policy, profit from operations was RMB102.9 billion, down by 12.3% compared to
the previous year. EBITDA reached RMB240.0 billion and EBITDA margin reached 35.9%. Profit attributable to equity
shareholders was RMB108.5 billion and its margin was 16.2%, thereby maintaining an industry-leading level of profitability.
Profit from operations
Gain on the transfer of Tower Assets
Other gains
Interest income
Finance costs
Share of profit for investments accounted for
using the equity method
Taxation
2015
RMB million
2014
As restated
RMB million
Change
%
102,922
117,320
–12.3
15,525
1,800
15,852
455
8,090
35,079
–
1,171
16,270
487
8,248
33,179
–
53.7
–2.6
–6.6
–1.9
5.7
–0.6
Profit attributable to equity shareholders
108,539
109,218
38
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL REVIEW
CAPITAL STRUCTURE
REMAINS
STEADY
CAPITAL STRUCTURE
The Group’s financial position continued to remain steady.
At the end of 2015, total assets grew from RMB1,348.0
billion at the end of the previous year to RMB1,427.9
billion. Total liabilities changed from RMB459.1 billion
at the end of the previous year to RMB507.5 billion.
Debt-to-assets ratio changed from 34.1% at the end of the
previous year to 35.5%.
As at the end of 2015, total borrowings was RMB5.0
billion, total debt to total book capitalization ratio (with
total book capitalization representing the sum of total debt
and total equity attributable to equity shareholders) was
0.5%. All of the Group’s borrowings were denominated in
Renminbi and all made at fixed interest rates. The Group
firmly adhered to its prudent financial risk management
policies and maintained sound repayment capabilities. The
Group’s effective average interest rate of borrowings was
4.27% and its effective interest coverage multiple was 282
times.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Non-controlling interests
As at
31 December
2015
RMB million
As at
31 December
2014
As restated
RMB million
488,697
939,198
486,925
861,110
1,427,895
1,348,035
501,038
452,492
6,489
6,560
507,527
459,052
3,032
2,067
Total equity attributable to equity shareholders
917,336
886,916
Change
%
0.4
9.1
5.9
10.7
–1.1
10.6
46.7
3.4
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
39
CAPITAL EXPENDITURE, FUND MANAGEMENT, CASH
FLOW AND CREDIT RATINGS
Capital Expenditure
The Group is at a critical stage of transformation
development. On one hand, by prioritizing its investments
to make the most out of its first-mover advantage in the
4G market, the Group reinforced the optimization of its
4G network infrastructure and enhanced the quality of its
4G networks. On the other hand, the Group continuously
increased its effort in the construction of transmission
networks and achieved leaping improvements in its
capabilities of transmission network, thereby supporting
the Group’s business development effectively.
In 2015, the Group appropriately controlled its investment
schedule and optimized investment directions to ensure
investment effectiveness. Capital expenditure for the year
was RMB195.6 billion, down by 9.1% compared to the
previous year, of which RMB79.1 billion was invested
in 4G networks. Planned capital expenditure for 2016 is
RMB186.2 billion, of which RMB75.7 billion, RMB11.2 billion
and RMB39.0 billion will be invested in 4G networks,
wireline broadband and transmission networks excluding
access part, respectively.
Fund Management and Cash Flow
The Group consistently upheld prudent financial principles
and strict fund management policies to maintain its cash
flow at a healthy level. The Group ensured the safety
and integrity of its funds through its highly centralized
management of investing and financing activities.
Meanwhile, the Group continued to reinforce its centralized
fund management effort and make appropriate allocations
of its funds through China Mobile Finance, thereby
enhancing the efficiency of funds utilization.
FINANCIAL REVIEW
SUFFICIENT FUNDS
SOLID
FOUNDATION
CAPITAL EXPENDITURE DOWN YEAR BY YEAR
(RMB billion)
215.1
1%
4%
4%
8%
34%
49%
195.6
1%
4%
4%
9%
35%
186.2
3%
5%
7%
12%
30%
47%
43%
2014
2015
2016E
Mobile communications networks
Transmission
Buildings & infrastructure & power systems
Business networks
Support systems
Others
40
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL REVIEW
In 2015, the Group’s cash flow remained healthy. Net cash inflow generated from operating activities, net cash outflow
from investing activities, net cash outflow from financing activities and free cash flow were RMB235.1 billion, RMB142.7
billion, RMB86.5 billion and RMB39.5 billion respectively. As at the end of 2015, the Group’s cash and bank balances
were RMB407.8 billion, of which 98.6%, 0.5% and 0.9% were denominated in Renminbi, U.S. dollars and Hong Kong
dollars respectively. The steady fund management and healthy cash flow provided a solid foundation to withstand risk and
achieve sustainable healthy development for the Group.
Credit Ratings
Currently, the Company’s corporate credit ratings are equivalent to China’s sovereign credit ratings, namely, AA-/Outlook
Stable from Standard & Poor’s and Aa3/Outlook Negative from Moody’s. These ratings reflect that the Group’s sound
financial strength, favourable business potential and solid financial management are highly recognized by the market.
ACQUISITION OF TARGET ASSETS AND BUSINESSES FROM TIETONG
In 2015, CM TieTong and TieTong entered into an acquisition agreement, under which CM TieTong acquired certain assets,
businesses and related liabilities of TieTong located in thirty-one provinces, autonomous regions and directly administered
municipalities in China, and took over related employees, at a final consideration of RMB31.967 billion. The acquisition
would enable the Group to obtain a wireline broadband license and network resources throughout the country, to enhance
its competitiveness of full-services, to achieve cost synergy and to significantly reduce its scale of connected transactions.
TRANSFER OF EXISTING TELECOMMUNICATIONS TOWERS AND RELATED ASSETS TO CHINA TOWER
In 2015, CMC transferred its existing telecommunications towers and related assets to China Tower on an arm’s length
basis at a final consideration of RMB102.736 billion. Pursuant to the transaction agreement, China Tower has issued
45.151 billion consideration shares to CMC at an issue price of RMB1 per share, and a cash consideration of RMB57.585
billion shall also be payable to CMC. Of the cash consideration, the first RMB5 billion was paid on 25 February 2016,
while the remaining RMB52.585 billion will be paid before 31 December 2017 with an interest rate of 3.92% per annum
to be charged. The transaction generated a one-off gain of RMB10.096 billion. China Tower’s centralized construction and
operation of telecommunications towers resources would enable the Group to obtain more network infrastructure resources
through the co-construction and sharing, and to save its capital expenditure. In addition, as one of the major shareholders
of China Tower, the Group expects to benefit from China Tower’s future earnings and value enhancement.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
41
CORPORATE GOVERNANCE REPORT
Our goal has always been to enhance our corporate value, maintain our sustainable long-term development and generate
greater returns for our shareholders. In order to better achieve the above objectives, we have established good corporate
governance practices following the principles of integrity, transparency, openness and efficiency, and have implemented
sound governance structure and measures. We have established and improved various policies, internal control system
and other management mechanisms and procedure for the key participants involved in good corporate governance,
including shareholders, board of directors and its committees, management and staff, internal auditors, external auditors
and other stakeholders (including our customers, local communities, industry peers, regulatory authorities, etc.).
In addition, as a company listed in both Hong Kong and New York, we also set forth in this report a summary of the
significant differences between the corporate governance practices of the Company and the corporate governance
practices required to be followed by U.S. companies under the NYSE’s listing standards.
Evolution of China Mobile Corporate Governance in 2015:
•
•
•
•
•
•
•
conducted a performance evaluation of the Board by retaining an independent third party to further improve the
Board operation;
reviewed and expanded the terms of reference of the Audit Committee;
carried out a special inspection to clean up false contracts and conducted a compliance management survey to
enhance legal risk control;
re-arranged and optimized the duties and responsibilities of our headquarters departments and their internal organs
to improve its management efficiency;
provided training on the latest amendments to the Hong Kong Listing Rules to our directors and management;
carried out optimization of procurement management procedures and processing procedures for home broadband;
and
we were again recognized on the Dow Jones Sustainability Emerging Markets Index, and had been on the DJSI family
for eight consecutive years.
42
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
COMPLIANCE WITH THE CODE PROVISIONS OF THE CORPORATE GOVERNANCE CODE
The Board is responsible for performing the corporate governance duties and setting out the terms of reference on
corporate governance functions. At present, more than one-third of the Board are independent non-executive directors.
Throughout the financial year ended 31 December 2015, the Company has complied with all code provisions of the
Corporate Governance Code (the “CP”) as set forth in Appendix 14 to the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”), except that the Company and its directors (including
independent non-executive directors) have not entered into any service contract with a specified term. All directors are
subject to retirement by rotation and re-election at our annual general meetings (the “AGM”) every three years.
We will, in accordance with the Corporate Governance Code, require our Board of Directors (the “Board”), the Board
committees and other internal organs to strictly comply with their internal procedures.
SHAREHOLDERS
The Company is established in Hong Kong and owned by all shareholders. Our controlling shareholder is CMHK (Group),
which, as of 31 December 2015, indirectly held approximately 72.72% of the total number of issued shares of the
Company through a wholly-owned subsidiary, CMHK (BVI). The remaining approximately 27.28% of the total number of
issued shares were held by public investors. The Articles of Association (the “Articles”) of the Company is available on our
website and the HKEx website.
Shareholder Rights
According to the Articles and the Companies Ordinance (Cap 622 of the Laws of Hong Kong) (the “Hong Kong Companies
Ordinance”), shareholders holding the requisite voting rights may: (i) move a requisition to move a resolution at the AGM;
(ii) requisition to convene an extraordinary general meeting (the “EGM”); and (iii) propose a person other than a retiring
director for election as a director at a general meeting. Such details and procedures are available in our website.
Shareholders may make inquiries in writing to the Board. The requisition must be deposited at our registered office at 60/F,
The Center, 99 Queen’s Road Central, Hong Kong (the “Registered Office”), for the attention of the Company Secretary,
providing sufficient contact information so that such inquiries can be properly handled. In addition, shareholders may also
raise their concerns and suggestions in the Q&A session at our AGMs.
I.
Requisition to move a resolution at an AGM
The Company holds a general meeting as its AGM every year, which is usually held in May. In accordance with
section 615 of the Hong Kong Companies Ordinance, a requisition to move a resolution at the AGM may be
submitted by:
(i)
any number of shareholders representing not less than one-fortieth (1/40th) of the total voting rights of all
shareholders having the right to vote on that resolution at the AGM; or
(ii)
not less than 50 shareholders having the right to vote on that resolution at the AGM.
The requisition must identify the resolution and must be signed by all the requisitionists. The requisition must be
deposited at the Registered Office, for the attention of the Company Secretary, not later than:
(i)
6 weeks before the AGM to which the request relates; or
(ii)
if later, when the Notice of AGM is dispatched.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
43
CORPORATE GOVERNANCE REPORT
II.
III.
Requisition to convene an EGM
Shareholders holding not less than one-twentieth (1/20th) of the total voting rights of all the members having a right
to vote at general meetings of the Company can deposit a requisition to convene an EGM pursuant to sections 566
to 568 of the Hong Kong Companies Ordinance. The requisition must state the general nature of the business to
be dealt with at the meeting, and must be signed by the requisitionists. The requisition must be deposited at our
Registered Office for the attention of the Company Secretary.
Proposing a person other than a retiring director for election as a director at a general meeting
If a shareholder wishes to propose a person other than a retiring director for election as a director at a general
meeting, he/she must lodge a written notice to that effect at our Registered Office for the attention of the Company
Secretary. The written notice must state the full name and biographical details of the person proposed for election
as a director as required by Rule 13.51(2) of the Hong Kong Listing Rules and signed by such shareholder. A
written notice signed by the person proposed for election as a director indicating his/her willingness to be elected
must also be lodged with the Company. The above shall be dispatched during a period of not less than seven days
commencing no earlier than the dispatch of the notice of the AGM and at least seven days before the date of the
AGM.
For requesting the Company to circulate to shareholders a statement with respect to a matter mentioned in a
proposed resolution or any other business to be dealt with at a general meeting, shareholders are requested to follow
the requirements and procedures as set out in section 580 of the Hong Kong Companies Ordinance.
Shareholder Value and Communication
The Company’s established principle is to strive to create value and bring favorable returns for shareholders. Since our
first dividend payment for the fiscal year 2002, we have made efforts to achieve a sustained and stable growth in dividend
to create better returns for shareholders. In fact, although the company’s profitability in the recent two years has been
fluctuating, we still maintain the planned 43% annual dividend payout ratio.
To ensure the effective communications between the Company and its shareholders, we have formulated the
communication policies with shareholders. We will regularly review the policies to ensure its effectiveness. We have
established an investor relations department, dedicated to provide necessary information and services to, and communicate
with, shareholders and investors and other participants in the capital market, to maintain an active dialogue with them and
make sure they are fully informed of the Company’s operation and development.
We use a number of formal channels to report to shareholders on the performance and operations of the Company,
particularly through our annual and interim reports. Generally, when announcing interim results, annual results or any
major transactions in accordance with the relevant regulatory requirements, the Company arranges investment analyst
conferences, press conferences and investor telephone conferences to explain the relevant results or major transactions
to the shareholders, investors and the general public, listen to their opinions and address any questions that they may
have. In addition, the Company adheres to the practice of voluntarily disclosing on a quarterly basis certain key, unaudited
operational and financial data, and on a monthly basis the net increase in the number of customers on its website to
further increase the Group’s transparency and to provide shareholders, investors and the general public with additional
timely information so as to facilitate their understanding of the Group’s operations.
The Company maintains close communication with investors through investment conferences, one-on-one meetings, video-
conferencing and other forms of exchange interaction to timely deliver our operating conditions to the capital markets.
In 2015, our management attended 9 investor conferences and 238 routine investor meetings, met with 635 investment
institutions and 844 investors in total. We will continue our efforts to enhance our investor relations work.
44
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
The Company also attaches high importance to the AGMs, and makes substantial efforts to enhance communications
between the Board and the shareholders. At the AGMs, the Board always makes efforts to fully address the questions
raised by shareholders. In 2015, we held our AGM on one occasion on 28 May 2015 (Thursday) in the Conference Room,
Conrad Hotel, Pacific Place, 88 Queensway, Hong Kong. The major items discussed and the percentage of votes cast in
favor of the resolutions are set out as follows:
•
•
•
•
•
The approval of the audited financial statements and the reports of the directors and auditors for the year ended 31
December 2014 (99.9988%);
The declaration of a final dividend for the year ended 31 December 2014 (99.5073%);
The re-election of Mr. XUE Taohai as executive director (99.4316%);
The re-election of Mr. Frank WONG Kwong Shing and Dr. Moses CHENG Mo Chi as independent non-executive
directors (“INEDs”) (89.6725% to 99.5114%);
The appointment of PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP (hereinafter collectively as
“PwC”) as auditors of the Group for Hong Kong financial reporting and US financial reporting purposes, respectively,
and authorizing the Board to fix their remuneration (99.9741%).
All resolutions were duly passed at the 2015 AGM. As at the date of the AGM, the number of issued shares of the Company
was 20,474,995,907 shares, which was the total number of shares entitling the holders to attend and vote for or against
all the resolutions proposed at the AGM. No shareholders were required to abstain from voting on the resolutions proposed
at the AGM. Hong Kong Registrars Limited, the share registrar of the Company, acted as scrutineer for vote-taking at the
AGM. Poll results were announced at the meeting and on the websites of the Company and the HKEx on the day of the
AGM.
Shareholders’ Calendar
The following table sets out the tentative key dates for our shareholders for the financial year ending 31 December 2016.
Such dates are subject to change pursuant to actual situations. Shareholders should note our announcements issued from
time to time.
FY 2016 Shareholders’ Calendar
17 March
11 April
12 April
26 May
End of June
Mid-August
Announcement of final results and final dividend for the financial year ended 31 December 2015
Upload of 2015 annual report on the websites of the Company and the HKEx
Dispatch of 2015 annual reports to shareholders
2016 AGM
Payment of final dividend for the financial year ended 31 December 2015
Announcement of interim results and interim dividend for the six months ending 30 June 2016,
if any
End of September
Payment of interim dividend for the six months ending 30 June 2016, if any
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
45
CORPORATE GOVERNANCE REPORT
THE BOARD OF DIRECTORS AND THE BOARD COMMITTEES
The Board of Directors
The key responsibilities of the Board include, among others, formulating the Group’s overall strategies, setting management
targets, monitoring internal controls and financial management, supervising the performance of our management,
developing and reviewing the policies and practices of corporate governance (the Terms of Reference of its corporate
governance function are available on the websites of our Company and the HKEx), while day-to-day operations and
management are delegated by the Board to the executives of the Company. The Board operates in accordance with
established practices (including those relating to reporting and supervision).
The Board currently comprises nine directors, namely Mr. SHANG Bing (Chairman), Mr. LI Yue (Chief Executive Officer),
Mr. XUE Taohai, Mr. SHA Yuejia and Mr. LIU Aili as executive directors, and Dr. LO Ka Shui, Mr. Frank WONG Kwong
Shing, Dr. Moses CHENG Mo Chi and Mr. Paul CHOW Man Yiu as INEDs. The list of directors and their role and function is
available on the websites of our Company and HKEx. The biographies of our directors are presented on pages 11 to 15 of
this annual report and on our website.
As proposed by the Nomination Committee of the Company and after review and approval by the Board, Mr. SHANG Bing
has been appointed as an Executive Director and the Chairman of the Company with effect from 10 September 2015. Mr.
XI Guohua has resigned from his positions as an Executive Director and the Chairman of the Company by reason of age
with effect from 24 August 2015. With effect from 19 March 2015, Madam HUANG Wenlin resigned from her positions
as an Executive Director and Vice President of the Company by reason of retirement. Both Mr. XI and Mdm. HUANG have
confirmed that there is no disagreement with the Board and that there is no matter relating to his resignation that needs to
be brought to the attention of the shareholders of the Company.
Board meetings are held at least once a quarter and as and when necessary. Directors are requested to declare their direct
or indirect interests, if any, in any proposals or transactions to be considered by the Board at Board meetings and withdraw
from the meetings as appropriate. During the financial year ended 31 December 2015, the Board met on six occasions
and the directors’ attendances at the meetings are as follows:
Board of
directors
Audit
committee
Remuneration
committee
Nomination
committee
AGM
INEDs
Dr. LO Ka Shui
Mr. Frank WONG Kwong Shing
Dr. Moses CHENG Mo Chi
Mr. Paul CHOW Man Yiu
Executive Directors
Mr. SHANG Bing1 (Chairman)
Mr. XI Guohua2
Mr. LI Yue (CEO)
Mr. XUE Taohai (CFO)
Mr. SHA Yuejia
Mr. LIU Aili
6
5
6
6
2
3
6
6
4
6
–
5
4
5
–
–
–
–
–
–
2
2
2
–
–
–
–
–
–
–
2
2
2
–
–
–
–
–
–
–
1
1
1
1
–
1
1
1
1
1
1
2
Mr. Shang was appointed as an Executive Director and the Chairman of the Company with effect from 10 September 2015.
Mr. Xi resigned from his positions as an Executive Director and Chairman of the Company with effect from 24 August 2015.
46
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
All board meetings and committee meetings were attended by the directors in person or by telephone/video conferencing.
In 2015, the Board has met and discussed the matters relating to the annual results, interim results, connected
transactions, acquisitions and transfer of assets, adjustment of the Board, sustainability report, application to increase the
issue of ADS and others.
In 2015, the Company has engaged an independent third party to conduct a performance evaluation of the Board. The
evaluation was principally on assessing the effectiveness of the Board and the Board Committees. The overall evaluation
conclusion is that the Board and the Board Committees have effectively performed their duties.
The Board has adopted a Board Diversity Policy. In considering the composition of the Board, diversity can be considered
from a number of perspectives, including professional experience and qualifications, regional and industry experience,
educational and cultural background, skills, industry knowledge and reputation, knowledge of the laws and regulations
applicable to the Group, gender, ethnicity, language skills and length of service etc. Such perspectives shall be taken into
account in determining the optimal composition of the Board and be considered on a case-by-case basis in light of the
actual circumstances of the Company.
To ensure the timely disclosure of any change of directors’ personal information, the Company has set up a specific
communication channel with each of our directors. There is no financial, business, family or other material relationships
among members of the Board. The Company purchases directors and officers’ liabilities insurance on behalf of its directors
and officers and reviews the terms of such insurance annually.
The Company has received a confirmation of independence from each of our INEDs, namely Dr. LO Ka Shui, Mr. Frank
WONG Kwong Shing, Dr. Moses CHENG Mo Chi and Mr. Paul CHOW Man Yiu, and considers them to be independent. The
Board is of the view that they not only are able to completely fulfill their responsibilities as an INED, but will also continue to
play a role and contribute to our Board Committees. They being our INEDs will benefit the Company and all shareholders as
a whole.
The directors have disclosed to the Company the positions held by them in other listed public companies or organizations
or associated companies, and the information regarding their directorships in other listed public companies in the last
three years is set out in the biographies of directors and senior management on pages 11 to 15 of this annual report and
on the Company’s website. The Company has also received acknowledgments from the directors of their responsibility
for preparing the financial statements and the representation by the auditors of the Company about their reporting
responsibilities.
All our directors confirmed that they have complied with Paragraph A.6.5 of the Corporate Governance Code with respect
to directors’ training. Throughout the financial year ended 31 December 2015, we have provided a training session with
respect to the latest amendments to the Hong Kong Listing Rules to our directors and management.
The Company has adopted the “Model Code for Securities Transactions by Directors of Listed Issuers” set out in Appendix
10 to the Hong Kong Listing Rules (the “Model Code”) to regulate the directors’ securities transactions. Save and except for
the interests disclosed in the report of the directors on pages 60 to 62 of this annual report, none of the directors had any
other interest in the shares of the Company as of 31 December 2015. All directors have confirmed, following enquiry by
the Company, that they have complied with the Model Code during the period between 1 January 2015 and 31 December
2015.
THE BOARD COMMITTEES
The Board currently has three principal board committees, which are the Audit Committee, the Remuneration Committee
and the Nomination Committee, and all of which are comprised solely of INEDs. With the appointment and authorization
of the Board, each of the board committees operates under its written terms of reference. In 2015, the terms of reference
of the Audit Committee was reviewed and expanded. The terms of reference of the board committees are available on the
HKEx’s and the Company’s websites, and can be obtained from the Company Secretary upon written request.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
47
CORPORATE GOVERNANCE REPORT
AUDIT COMMITTEE
Membership
The current members of the Company’s Audit Committee are Mr. Frank WONG Kwong Shing (chairman), Dr. Moses
CHENG Mo Chi and Mr. Paul CHOW Man Yiu, who are all INEDs. All members of our Audit Committee have many years
of finance and business management experience and expertise and appropriate professional qualifications.
Responsibilities
The duties of our Audit Committee are to be primarily responsible for, among other things, making recommendations to
the Board on the appointment, re-appointment and removal of external auditors, approving the remuneration and terms
of engagement of external auditors, dealing with any questions of resignation or dismissal of such auditors; reviewing and
monitoring external auditors’ independence and objectivity and the effectiveness of the audit process in accordance with
applicable standards; developing and implementing policies on the engagement of external auditors to provide non-audit
services; monitoring the integrity of financial statements of the Company and the annual reports and accounts, interim
report and, if prepared for publication, quarterly reports, and reviewing significant financial reporting judgments contained
in them; and overseeing the Company’s financial reporting system, risk management and internal control procedures.
Work Done in 2015
In 2015, the Audit Committee met on five occasions and the attendance of each member is disclosed on page 46 of this
annual report. In addition, the Audit Committee met with the external auditors for three times in 2015 and one of such
meeting was held without any executive directors being present.
In 2015, the principal work performed by the Audit Committee includes:
•
•
•
•
•
•
•
•
•
•
•
reviewed and approved the financial statements and results announcement, the report of the directors, financial
review and final dividend for the financial year ended 31 December 2014;
reviewed and approved our 2014 Annual Report on Form 20-F, which was filed with the US SEC;
reviewed and approved the interim report, interim results announcement and interim dividend for the six months
ended 30 June 2015;
reviewed and approved the budgets and remuneration of the external auditors;
reviewed and approved the assessment report on the disclosure controls and procedures;
reviewed and approved the 2014 assessment report in relation to effectiveness of compliance with section 404 of
the U.S. Sarbanes-Oxley Act of 2002 (the “SOX Act”);
reviewed and approved the 2015 project plan of internal audit department and budget for external engagement;
approved the revised terms of reference of the Audit Committee;
approved the 2014 evaluation report on accounting and financial report system;
reviewed and approved the report on compliance with relevant laws and regulations in 2014; and
reviewed and approved various internal audit reports.
In 2015, our Audit Committee has completed its review on internal controls and enforcement, reviewed its performance
with reference to the authorities and duties set out in its terms of reference.
48
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
REMUNERATION COMMITTEE
Membership
The current members of the Company’s Remuneration Committee are Dr. LO Ka Shui (chairman), Mr. Frank WONG
Kwong Shing and Dr. Moses CHENG Mo Chi, who are all INEDs.
Responsibilities
The duties of the Remuneration Committee are, among others, to make recommendations to the Board on the
remuneration packages of individual executive directors and senior management, including benefits in kind, pension
rights and compensation payments including any compensation payable for loss or termination of their office or
appointment, and make recommendations to the Board on the remuneration of non-executive directors; to review and
approve the management’s remuneration proposals with reference to corporate goals and objectives resolved by the
Board from time to time; to review and approve compensation payable to executive directors and senior management
for any loss or termination of office or appointment, and compensation arrangements relating to dismissal or removal of
directors for misconduct to ensure that they are consistent with contractual terms; to ensure that no director or any of
his associates is involved in deciding his own remuneration; to make recommendations to the Board on the policy and
structure for remuneration of all directors, senior management and employees including salaries, incentive schemes and
other share option schemes, and on the establishment of formal and transparent procedures for developing remuneration
policy; to make recommendations to the Board on disclosure of directors’ remuneration in the annual report (if applicable)
sent by the Board to the shareholders; to make recommendations to the Board annually on whether the shareholders
shall be requested to approve the policies set out in the report on directors’ remuneration (if applicable) at the AGM.
Work Done in 2015
In 2015, the Remuneration Committee met twice, during which the committee:
•
reviewed and approved the 2014 performance-linked annual bonus of the senior management, and revised the
appraisal program; and
•
reviewed and approved the remuneration arrangements adjusted by the Board.
The Remuneration Committee reviewed its performance with reference to the authorities and duties set out in its terms of
reference in 2015.
NOMINATION COMMITTEE
Membership
The current members of the Company’s Nomination Committee are Dr. LO Ka Shui (chairman), Mr. Frank WONG Kwong
Shing and Dr. Moses CHENG Mo Chi, who are all INEDs.
Responsibilities
The duties of the Nomination Committee, among other things, are to review the structure, size and composition (including
the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed
changes to the Board to complement the corporate strategy; to identify individuals suitably qualified to become board
members and select or make recommendations to the Board on the selection of, individuals nominated for directorships;
to assess the independence of independent non-executive directors; to make recommendations to the Board on the
appointment or reappointment of directors and succession planning for directors, in particular the Chairman and the
Chief Executive Officer.
Work Done in 2015
In 2015, the Nomination Committee met twice, during which the committee approved to conduct a performance
evaluation of the Board by retaining an independent third party.
The Nomination Committee reviewed its performance with reference to the authorities and duties set out in its terms of
reference in 2015.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
49
CORPORATE GOVERNANCE REPORT
REMUNERATION, APPOINTMENT AND ROTATION OF DIRECTORS
The Remuneration Committee is responsible for determining the remuneration packages of all executive directors and
senior management. The remuneration package of our executive directors consists of a basic salary, a performance-linked
annual bonus and a term incentive. The remuneration of independent non-executive directors is determined in part by
reference to the prevailing market conditions and their workload as independent non-executive directors and members of
the board committees of the Company. Please refer to note 10 to the consolidated financial statements on page 101 of this
annual report for directors’ and senior management’s remuneration in 2015.
Currently, executive directors are mainly selected internally within the Group from executives who have considerable
years of management experience and expertise in the telecommunications industry, whereas for the identification of
non-executive directors, importance is attached to the individual’s independence as well as his or her experience and
expertise in finance and business management, and taking into consideration the requirements of the jurisdictions where
the Company is listed and the structure and composition of the Board. The Nomination Committee identifies, reviews
and nominates, with diligence and care, individuals suitably qualified as board members of the Company before making
recommendations to the Board for their final appointment.
All newly-appointed directors receive a comprehensive induction of directors’ duties to make sure that they have a proper
understanding of the operations and business of the Company, and that they are fully aware of their responsibilities as a
director, the listing rules of the stock exchanges on which the Company is listed, applicable laws and regulations, and the
operation and governance policies of the Company. All newly-appointed directors are subject to re-election by shareholders
at the first annual general meeting after their appointment. Every director is subject to retirement by rotation and needs to
stand for re-election at least once every three years.
In 2015, the nomination and appointment of Mr. SHANG Bing was conducted in accordance with the above standards
and procedures. His remuneration and director’s fee as an Executive Director and the Chairman of the Company was
determined by the Board with reference to his duties, responsibilities and experience, prevailing market conditions and any
applicable regulatory requirements and is subject to all applicable approval(s).
MANAGEMENT AND EMPLOYEES
The task of the Company’s management is to implement the strategy and direction as determined by the Board, and to
take care of day-to-day operations and functions of the Company. The division of responsibilities among our Chief Executive
Officer and other members of the senior management is set out in the biographies of directors and senior management on
pages 11 to 15 of this annual report and on the Company’s website.
Our management is required to adhere to certain business principles and ethics while performing management duties. For
the purpose of promoting honest and ethical conducts and deterring wrongdoings, the Company, in 2004, adopted a code
of ethics, which is applicable to our chief executive officer, chief financial officer, deputy chief financial officer, assistant
chief financial officer and other designated senior officers of the Group, in accordance with the requirements of the SOX
Act. In the event of a breach of the code of ethics, the Company may take appropriate preventive or disciplinary actions
after consultation with the Board. The code of ethics has been filed with the U.S. SEC as an exhibit to our annual report on
Form 20-F for the financial year ended 31 December 2003, which may also be viewed and downloaded from our website.
The Company established an on-going disclosure control procedure to formulate potential insider dealings. Our CEO and
CFO have a personal obligation to maintain the effectiveness of the disclosure controls and internal controls over financial
reporting, and to report to the Audit Committee and the external auditor any significant changes, deficiencies and material
weaknesses in, and fraud related to, such controls. Besides, our management provides monthly updates to board members
giving the latest development of the Company to enable them to discharge their duties.
50
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
To prevent and discipline corruption, we further refined our management system and business processes to improve
internal control and prevent risks, enhancing anti-corruption education. We further revised and improved our decision-
making policies and implementation method, refined our major issue catalogue and criteria to prevent risks in decision-
making. We strengthened the inspection mechanism, especially on key areas such as procurement biddings to look
for loopholes in our management system and resolve them and urge for honest operation, healthy development, good
performance and shareholders’ interests protection.
For whistle blowing, the Company has set a post office box, an e-mail account (jubao@chinamobile.com), a telephone
hotline (010-52616186), fax and other channels to encourage employees and the public to raise concerns about
misconducts, malpractices or irregularities in any matters related to the Company. The Company will keep the
whistleblowers’ personal information strictly confidential to protect his/her rights, and carefully verify and investigate issues
reported. During 2015, there were 1605 cases of whistle-blowing.
INTERNAL AUDIT
The internal audit department of the Company (the “IA Dept.”) conducts independent and objective supervision and
assessment and provides consulting services in respect of the appropriateness, compliance and effectiveness of the
Company’s operational activities and internal controls by applying systematic and standardized auditing procedures and
methods. The IA Dept. also assists the Company in improving the effectiveness of corporate governance, risk management
and control process, with an aim to increasing its corporate value, improving its operations, promoting its sustainable and
healthy development as well as contributing to the achievement of its strategic objectives.
The Company and its operating subsidiaries have set up internal audit departments, which independently audit the
business units of the Company and its operating subsidiaries. The head of the IA Dept. directly reports to the Audit
Committee which, in turn, reports to the Board regularly. The IA Dept. has unrestricted access to all areas of the Group’s
business units, assets, records and personnel in the course of performing their duties.
The IA Dept. establishes an internal audit scope and framework and carries out risk investigations on an annual basis.
According to the results of the risk investigations, the IA Dept. formulates an internal audit project rolling plan and an
annual audit plan and, together with the Audit Committee, reviews and approves the annual audit plan and resources
allocation. The annual audit plan of the internal audit department covers various areas, namely financial audit, internal
control audit, risk assessment, audit investigation and consultancy services. For financial audit, the IA Dept. audits
and assesses the truthfulness, accuracy, compliance and efficiency of the Company’s financial activities and financial
information as well as the management and utilization of the Company’s capital and assets. For internal control audit, the
IA Dept. audits and assesses the effectiveness in the design and implementation of the Company’s internal control system.
According to the requirements under section 404 of the SOX Act, the IA Dept. organizes and performs internal audit
assessment on the internal control over financial reporting of the Company on an annual basis, providing assurance for the
Company’s management in its issuance of the internal control assessment report. At the same time, the IA Dept. carries
on special projects and investigations in response to requests from the Company’s management or the Audit Committee or
if otherwise required. In addition, without prejudice to its independence, if requested by the Company’s management and
as required by business needs, the IA Dept. provides management advice or consultancy services by making use of audit
resources and audit information to facilitate the Company’s decision-making and operational management.
The IA Dept. makes improvement recommendations in respect of its findings in the course of the audits and requests the
management to undertake and to confirm the implementation plan, the methods and the timing. It regularly monitors the
status of the implementation of the recommendations to ensure their completion.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
51
CORPORATE GOVERNANCE REPORT
In 2015, the IA Dept., focusing on the Company’s strategy transformation, made more efforts on supervising high-risk areas
including procurement, investment, cooperation businesses and expanded audit coverage. Special audits were carried
out on key processes and IT systems in order to plug the loopholes and push management improvement. The IA Dept.
promoted IT audit and formally launched the on-going computer-assisted audits, further promoted the audit rectification
and accountability and improved the value of internal audit.
In 2016, the IA Dept. will continue focusing on new tasks of strategy transformation to find in-depth risk and plug
management loopholes, and promoting process control and mechanism optimization to further enhance the effectiveness
of internal audit.
EXTERNAL AUDITORS
In 2015, the Group engaged PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as statutory auditors
of the Group for Hong Kong financial reporting and U.S. financial reporting purposes, respectively. The principal services
provided by PwC included:
•
•
review of interim consolidated financial information of the Group;
audit of annual consolidated financial statements of the Group and annual financial statements of its subsidiaries;
and
•
audit of the effectiveness of the Group’s internal control over financial reporting as of 31 December 2015.
Apart from providing the above-mentioned audit services to the Group, the external auditors also provided other non-audit
services to the Group, which were permitted under section 404 of the SOX Act and pre-approved by the Audit Committee.
The following table sets forth the types of, and fees for, the principal audit services and non-audit services provided by the
external auditors (please refer to note 6 to the consolidated financial statements for details):
Audit fees3
Non-audit services fees4
2015
RMB million
2014
RMB million
97
5
91
6
3
4
Including the fees rendered for the audit of internal control over financial reporting as required by section 404 of the SOX Act.
Including the fees for tax compliance and advisory services, risk assessment and performance improvement advisory services.
OTHER STAKEHOLDERS
Good corporate governance practices require due attention to the impact of our business decisions on our shareholders
as well as other relevant stakeholders such as customers, local communities, industry peers and regulatory authorities.
Our sustainability report for the year of 2015 (the “Sustainability Report”), which is issued together with this annual report,
highlights our philosophy of corporate social responsibility and our performance in the areas of social and environmental
management in 2015. This annual report and the Sustainability Report illustrate our efforts and development in the areas
of industry development, community advancement and environmental protection and also explain how we have fulfilled our
obligations to our employees, customers, environment, local communities and other stakeholders.
In 2015, we were recognized on the Dow Jones Sustainability Emerging Markets Index, and had been on the DJSI family
for eight consecutive years.
52
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
INTERNAL CONTROLS
The Board is responsible for conducting and conducts regular reviews of the effectiveness of the Group’s internal controls
to reasonably ensure that the Company is operating legally and the assets are safeguarded and to ensure the accuracy and
reliability of the financial information that the Company employs in its business or releases to the public.
According to the provisions under section 404 of the SOX Act, our management is responsible for establishing and
maintaining internal control over financial reporting. We adopted the control criteria framework set out in the Internal
Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
(2013) and in compliance with requirements under the CP issued by HKEx, in establishing a stringent internal control
system over financial reporting, and refined the routine management mechanism of internal controls.
We established a sound corporate governance structure and a top-down organizational structure from the Board to the
specific positions with respective internal control duties. Our Audit Committee under the Board is responsible for, among
other things, monitoring the Company’s financial reporting procedures, internal controls and risk management. The
Company reports the design and implementation of internal controls to Audit Committee annually and receives guidance
and supervision from Audit Committee.
We established a hierarchical top-down risk assessment mechanism, relying on the strategic level risk assessment (material
risk assessment), the management level risk assessment (major projects risk assessment) and the operational level risk
assessment (procedure risk assessment), to assist the management to acknowledge risk information in a timely manner
in order to make a reasonable decision. Based on risk assessment, we established a three-tier internal controls of “the
top level internal control system, the internal control professional system and the internal control practices guidelines”,
which brought the control requirements to the whole process of marketing, production and management. Base on our
business operation, we focus on high risk and key management areas and perform risk assessment, so as to enforce our
internal control requirement into our daily operation. Meanwhile, we assigned specific responsibilities to individuals and
input the control requirements in our IT systems to strengthen the internal controls. And through multiple internal and
external supervision and inspections, including self-assessment, management evaluation, external audit, etc., we effectively
improved the execution efficiency and effectiveness of our internal controls.
Based on the evaluation conducted by the management of the Company, the management believes that, as of 31
December 2015, the Company’s internal control over financial reporting was effective and provided reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for reporting purposes in
accordance with generally accepted accounting principles.
All disclosure of material information relating to the Company is made through the unified leadership and management of
the Board, with the Company’s management performing its relevant duties. The Company has performed an annual review
of the effectiveness of the Company’s disclosure controls and procedures, and concluded that, as of 31 December 2015,
the Company’s disclosure controls and procedures were effectively executed at a reasonable assurance level.
INFORMATION DISCLOSURE
According to the Hong Kong Listing Rules and United States Securities Act, since 2003, the Company has implemented
the information disclosure internal control and procedures. We have established the Disclosure Committee, including our
Chairman, chief executive officer, chief financial officer and heads of main functional departments. Empowered by the
Board, the Disclosure Committee is responsible for organizing and coordinating the routine reporting and disclosure job to
prompt timely, fair, truthful and complete disclosure of information, ensure good corporate governance and transparency,
properly get back to the investors, analysts and media inquiries, to prevent our share price volatility caused by error
messages.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
53
CORPORATE GOVERNANCE REPORT
Under the circumstances where any department or officer are in breach of disclosure procedures and internal control
resulting in reporting or disclosure errors, or in breach of disclosure related laws and regulations, the Company shall hold
the relevant personnel accountable. Members of the Disclosure Committee, heads of our IA Dept. and other relevant
departments and each of our subsidiaries shall make certifications annually and take personal responsibilities with respect
to their disclosure duties.
Our IA Dept. conducts annual evaluation with respect to the effectiveness of disclosure internal control and procedures,
and issues audit reports. Depend on which, our CEO and CFO shall make written statements with respect to our annual
report on Form 20-F and take personal responsibilities in accordance with the requirements of the US Securities Act. The
Disclosure Committee can revise the disclosure internal control and procedure in accordance with its performance and the
development of relevant laws with approval of the senior management. The revised internal control procedure and articles
shall be circulated to all departments and subsidiaries within the Group.
In compliance with the provisions of Hong Kong Securities and Futures Ordinance (the “SFO”), the Company also set up
rules and lock-up periods on directors, management and employees in dealing in the shares of the Company or exercising
our share options while they are in possession of inside information. In about every six months, they are required to sign
a duty of confidentiality and prohibition against insider dealing. Unauthorized use of confidential or inside information for
profits is strictly prohibited to prevent violation of laws and regulations.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATE GOVERNANCE PRACTICES OF THE
COMPANY AND THE CORPORATE GOVERNANCE PRACTICES REQUIRED TO BE FOLLOWED BY U.S. COMPANIES
UNDER THE NYSE’S LISTING STANDARDS
As a foreign private issuer (as defined in Rule 3b-4 under the U.S. Securities Exchange Act of 1934, as amended), we are
permitted to follow home country practices in lieu of some of the corporate governance practices required to be followed
by U.S. companies listed on the NYSE. As a result, our corporate governance practices differ in some respects from those
required to be followed by U.S. companies listed on the NYSE.
In accordance with the requirements of section 303A.11 of the NYSE Listed Company Manual, the following is a summary
of the significant differences between the Company’s corporate governance practices and those required to be followed by
U.S. companies under the NYSE’s listing standards.
Section 303A.01 of the NYSE Listed Company Manual provides that listed companies must have a majority of independent
directors. As a listed company in Hong Kong, the Company is subject to the requirement under the Hong Kong Listing
Rules that at least one-third of its board be independent non-executive directors as determined under the Hong Kong
Listing Rules. The Company has 4 independent non-executive directors out of a total of 9 directors. The Hong Kong Listing
Rules set forth standards for establishing independence, which differ from those set forth in the NYSE Listed Company
Manual.
Section 303A.03 of the NYSE Listed Company Manual provides that listed companies must schedule regular executive
sessions in which non-management directors meet without management participation. As a listed company in Hong Kong,
we are subject to the requirement under the Hong Kong Listing Rules that our Chairman should hold meetings at least
annually with the non-executive directors (including INEDs) without the presence of executive directors.
Section 303A.04 of the NYSE Listed Company Manual provides that the nominating/corporate governance committee of a
listed company must have a written charter that addresses the committee’s purpose and responsibilities, which include,
among others, the development and recommendation of corporate governance guidelines to the listed company’s board of
directors. Our Board is responsible for performing the corporate governance duties, including developing and reviewing our
policies and practices of corporate governance.
54
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CORPORATE GOVERNANCE REPORT
Section 303A.07 of the NYSE Listed Company Manual provides that if an audit committee member simultaneously serves
on the audit committee of more than three public companies, and the listed company does not limit the number of audit
committees on which its audit committee members serve to three or less, then in each case, the board of directors must
determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed
company’s audit committee and disclose such determination. The Company is not required, under the applicable Hong
Kong law, to make such determination.
Section 303A.10 of the NYSE Listed Company Manual provides that listed companies must adopt and disclose a code of
business conduct and ethics for directors, officers and employees. While the Company is not required, under the Hong
Kong Listing Rules, to adopt such similar code, as required under the SOX Act, the Company has adopted a code of ethics
that is applicable to the Company’s principal executive officers, principal financial officers, principal accounting officers or
persons performing similar functions.
Section 303A.12(a) of the NYSE Listed Company Manual provides that each listed company’s chief executive officer must
certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance
listing standards. The Company’s chief executive officer is not required, under the applicable Hong Kong law, to make
similar certifications.
CONTINUOUS EVOLVEMENT OF CORPORATE GOVERNANCE
We will closely study the development of corporate governance practices among the world’s leading corporations, future
evolution of the relevant regulatory environment and the requirements of the investors on an ongoing basis. We will also
review and enhance our corporate governance procedures and practices from time to time so as to ensure the long-term
sustainable development of the Company.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
55
HUMAN RESOURCES DEVELOPMENT
In 2015, our human resources work strictly adhered to the Group strategies and business development with “innovating
mechanisms, stimulating vitality and improving efficiency” as the focus, “personnel selection and appointment mechanism
improvement, labor management reform, diversified incentive mechanism enhancement and talent system management
enhancement” as the emphasis, continuously improving organizational ability and work efficiency and actively promoting
our transformation development.
ENHANCING KEY TALENT RETENTION
First, we implemented the successor scheme. We commenced studies on successor recommendation and preliminarily
built up a team of successors that was prepared for the mid-and-long term leadership with proper structure and sufficient
quantity. Second, we conducted forward-looking research. Based on our corporate strategic transformation, we carried out
research on key talent retention and development to fully understand the current work situation of key talents and explored
measures in respect of their retention and development.
OPTIMIZING REMUNERATION INCENTIVE MECHANISM
First, we firmly promoted the reform of the remuneration incentive mechanism with “flexible job structure and up-and-down
job movements” as the focus, enhancing different management framework and optimizing the remuneration mechanisms
of management and employees. Second, we continuously improved the remuneration incentive system at different levels
and categories and promoted the reform on quantitative performance-based remuneration system for front-line employees,
such as salespersons of Marketing department.
Employees participated actively in various
healthy events.
56
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
HUMAN RESOURCES DEVELOPMENT
IMPROVING FUNDAMENTAL MANAGEMENT
First, we launched the pilot unified written test for campus recruitment. We promoted employer brand building by
organizing 14 presentation sessions and 16 on-site recruitment sessions, covering more than 30,000 person-times, to draw
on a wide range of talents. We adopted an innovative recruitment management model and launched the first pilot unified
written test attracting 33 organizations in more than 1,000 test centres with students participating for more than 40,000
person-times. Second, we actively improved the human resources information level. Further initiatives were taken to
support the business management and promote the best human resources practices, including full implementation of the
HRMS system, establishment of the training management system for its overall workflow and assistance to newly established
specialized companies in their business and system construction planning.
In 2015, the online study platform of China Mobile University which was based on the development of mobile internet,
introduced innovative study models by integrating multiple study means, such as PC, mobile phone, WeChat, live-
broadcasting and MOOC. The platform provided our employees with training courses and learning materials in
respect of corporate strategies, corporate culture communication, business strategies, work skills certification and
employee development, etc. The number of people who studied at platform during the year exceeded 330,000 with
a total of 10.24 million study hours. The platform encouraged them to study and make progress and endeavored
to implement the corporate strategies. New initiatives were introduced and implemented to raise the refinement
and professional levels of the trainings which, in turn, provided a sound training and development platform
for our employees. Whilst employee vocational skills were comprehensively enhanced, this provided strong support to our
business development. In 2014, China Mobile University was awarded “ATD – Excellence in Practice Award”, “China Best
Enterprise University” and further than that, we received important awards this year, including “2015 Engine Award –
China Benchmarked Enterprise University” and “2015 Innovation Award in China E-learning Industry”, etc.
In 2016, with China economic growth entering into a stage of new normal, there will be new changes in competition
within the industry and new development of the Group. Our human resources work will also face new challenges and
requirements. Thus, our human resources work shall further focus on “optimization of resources allocation, improvement
of mechanisms, enhancement of talents retention and strengthening of service support” and endeavor to address new
strategies, new requirements, new normal and new problems. We shall strive to be more proactive, forward-looking,
systematic and efficient, continue to enhance organizational capabilities and work efficiency in order to support the
sustainable and sound development of the Group.
2015 Engine Award –
China Benchmarked
Enterprise University
2015 Innovation Award
in China E-learning
Industry
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
57
REPORT OF DIRECTORS
The directors take pleasure in submitting their annual report together with the audited financial statements for the year
ended 31 December 2015.
PRINCIPAL ACTIVITIES
The Group’s principal activity is providing mobile telecommunications and related services in 31 provinces, autonomous
regions and directly-administered municipalities in Mainland China and Hong Kong. The principal activity of the Company is
investment holding.
The revenue of the Group during the financial year consisted primarily of revenue generated from the provision of mobile
telecommunications services.
MAJOR CUSTOMERS AND SUPPLIERS
The Group’s aggregate revenue with its five largest customers did not exceed 30% of the Group’s total revenue in 2015.
Purchases from the largest supplier for the year represented 13% of the Group’s total purchases. The five largest
suppliers accounted for an aggregate of 30% of the Group’s purchases in 2015. Purchases for the Group include network
equipment purchases, leasing of transmission lines and payments in relation to interconnection arrangements. Purchases
from suppliers, other than suppliers of leased lines and network equipment and interconnection arrangements, were not
material to the Group’s total purchases.
At no time during the year ended 31 December 2015 have the directors, their associates or any shareholder of the
Company (which to the knowledge of the directors owns more than 5% of the number of issued shares of the Company)
had any interest in these five largest suppliers.
SUBSIDIARIES AND INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Particulars of the Company’s subsidiaries and the Group’s investments accounted for using the equity method as at 31
December 2015 are set out in notes 18 and 19, respectively, to the consolidated financial statements, and the list of
directors of each of the Company’s subsidiaries is available on the Company’s website.
FINANCIAL STATEMENTS
The profit of the Group for the year ended 31 December 2015 and the financial conditions of the Company and the Group as
at that date are set out in the consolidated financial statements on pages 74 to 142.
DIVIDENDS
The Board remains confident that our Company’s leading position in profitability and proven track record in generating
healthy cash flow will propel China Mobile’s future development and bring favorable returns for our shareholders. For the
financial year ended 31 December 2015, the Board recommends payment of a final dividend of HK$1.196 per share.
Together with the interim dividend of HK$1.525 per share paid earlier, this amounts to an aggregate dividend payment
of HK$2.721 per share for the full financial year of 2015. In considering China Mobile’s financial situation, capability to
generate cash flow and future development needs, the Company’s planned dividend payout ratio for the full financial year
of 2016 will be 43%.
58
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
DONATIONS
Donations made by the Group during the year amounted to RMB55,655,059 (2014: RMB55,987,029).
PROPERTY, PLANT AND EQUIPMENT
Changes to the property, plant and equipment of the Group during the year ended 31 December 2015 are set out in note
14 to the consolidated financial statements.
SHARE CAPITAL AND SHARE OPTION SCHEME
Details of the Company’s share capital and share option scheme are set out in note 35 to the consolidated financial
statements and the paragraph “Share Option Scheme” below, respectively.
BONDS
Details of the bonds of the Group are set out in note 33 to the consolidated financial statements.
RESERVES
Changes to the reserves of the Group during the year are set out in the consolidated statement of changes in equity.
Changes to the reserves of the Company during the year are set out in note 35 to the consolidated financial statements.
DIRECTORS
The directors of the Company during the financial year were:
Executive Directors:
SHANG Bing (Chairman; appointed on 10 September 2015)
XI Guohua (former Chairman; resigned on 24 August 2015)
LI Yue
XUE Taohai
HUANG Wenlin (resigned on 19 March 2015)
SHA Yuejia
LIU Aili
Independent Non-Executive Directors:
LO Ka Shui
Frank WONG Kwong Shing
Moses CHENG Mo Chi
Paul CHOW Man Yiu
In accordance with Article 99 of the Articles, Mr. SHANG Bing will hold office until the forthcoming annual general meeting
of the Company and will then be eligible for re-election. Besides, in accordance with Article 95 of the Articles, Mr. LI Yue,
Mr. SHA Yuejia and Mr. LIU Aili will retire by rotation at the forthcoming annual general meeting of the Company and,
being eligible, offer themselves for re-election.
The biographies of the directors proposed for re-election at the forthcoming annual general meeting (“Directors for Re-
election”) are set out on pages 11 to 13 of this annual report. Except as disclosed in such biographies, the Directors for
Re-election have not held any other directorships in any listed public companies in the last three years. Further, except
as noted in the biographies, none of the Directors for Re-election is connected with any directors, senior management or
substantial or controlling shareholders of the Company and, except as disclosed in the paragraphs headed “Directors’ and
Chief Executive’s Interest and Short Positions in Shares, Underlying Shares and Debentures” and “Share Option Scheme”
below, none of them has any interests in the shares of the Company within the meaning of Part XV of the SFO.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
59
REPORT OF DIRECTORS
The service contracts of all the Directors for Re-election do not provide for a specified length of service and each of such
directors will be subject to retirement by rotation and re-election at annual general meetings of the Company every three
years. Each of the Directors for Re-election is entitled to an annual director’s fee of HK$180,000 as proposed by the
Board and approved by the shareholders of the Company. Director’s fees are payable on a time pro-rata basis for any
non full year’s service. The executive directors of the Company voluntarily waived their directors’ fees for the year ended
31 December 2015. The remuneration of the directors have been determined with reference to the individual’s duties,
responsibilities and experience, and to prevailing market conditions. Details of the remuneration of the directors of the
Company are set out in note 10 to the consolidated financial statements.
None of the Directors for Re-election has an unexpired service contract which is not determinable by the Company or any
of its subsidiaries within one year without payment of compensation, other than under normal statutory obligations.
Save as disclosed herein, there are no other matters relating to the re-election of the Directors for Re-election that need to
be brought to the attention of the shareholders of the Company nor is there any information to be disclosed pursuant to any
of the requirements of Rule 13.51(2) of the Hong Kong Listing Rules.
DIRECTORS’ INTERESTS IN CONTRACTS
No contract of significance to which the Company or any of its subsidiaries was a party and in which a director of the
Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the
year.
PERMITTED INDEMNITY PROVISION
Pursuant to Article 159 of the Articles, every director or other officer of the Company shall be indemnified out of the
assets of the Company against all liabilities (to the extent permitted by the Hong Kong Companies Ordinance) sustained or
incurred by such director or officer in or about the execution of his office or otherwise in relation thereto. In addition, the
Company purchases directors and officers’ liabilities insurance on behalf of its directors and officers.
DIRECTORS’ AND CHIEF EXECUTIVE’S INTEREST AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND
DEBENTURES
As at 31 December 2015, the interests and short positions of the directors in the shares and underlying shares of the
Company (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352
of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers are set out below.
Certain directors of the Company personally held ordinary shares of the Company. Details of the directors’ holding of
ordinary shares of the Company as at 31 December 2015 are as follows.
Director
LO Ka Shui
Capacity
Beneficial owner
Ordinary
shares held
Percentage of
the number of
issued shares*
400,000
0.00%
Interest of controlled corporation
300,000
0.00%
Frank WONG Kwong Shing
Beneficial owner
150,000
0.00%
Moses CHENG Mo Chi
Beneficial owner
400,000
0.00%
Note: The calculation is based on the total number of issued ordinary shares of the Company (i.e. 20,475,482,897 ordinary shares) as at 31 December
2015, and rounded off to two decimal places.
60
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
In 2015, certain directors of the Company personally hold options to subscribe for ordinary shares of the Company. Please
refer to the paragraph headed “Share Option Scheme” below for details of the interests of the directors in such share
options. The share options were granted to the directors pursuant to the terms of the share option scheme adopted by the
Company.
Apart from those disclosed herein, as at 31 December 2015, none of the directors nor the chief executive of the Company
had any interests or short positions in any of the shares, underlying shares or debentures of the Company or any of
its associated corporations (within the meaning of the SFO) that is required to be recorded and kept in the register in
accordance with section 352 of the SFO or any interests required to be notified to the Company and the Stock Exchange
pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.
SHARE OPTION SCHEME
Share Option Scheme of the Company
Pursuant to a resolution passed at the annual general meeting held on 24 June 2002, a share option scheme (the “Scheme”)
was adopted. The Scheme shall be valid and effective for a period of 10 years commencing on its adoption date after
which period no further options to subscribe for shares of the Company will be granted. The Scheme ceased to be valid
and effective on 24 June 2012 and accordingly, no further share options will be granted under the Scheme. However,
the provisions of the Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of
any share options granted under the Scheme prior to the expiry of the 10-year period and which may become thereafter
capable of being exercised under the rules of the Scheme.
As set out in the Company’s circular to shareholders dated 8 April 2002, the purpose of the Scheme is to provide the
Company with a flexible and effective means of remunerating and providing benefits to the executive directors, non-
executive directors and employees of the Company, any of its holding companies and their respective subsidiaries and any
entity in which the Company or any of its subsidiaries holds any equity interest (the “Participants”), thereby incentivizing
the Participants. Under the Scheme, the Board may, at their discretion, invite the Participants to take up options to
subscribe for shares in the Company.
The maximum aggregate number of shares which can be subscribed pursuant to options that are or may be granted under
the Schemes equals to 10% of the total issued share capital of the Company as at the date of adoption of the Scheme.
Options lapsed or cancelled in accordance with the terms of the Old Scheme or the Scheme will not be counted for the
purpose of calculating this 10% limit.
The total number of shares in the Company issued and to be issued upon exercise of the options granted to a Participant
(including both exercised and outstanding options) in any 12-month period must not exceed 1% of the issued share capital
of the Company. The consideration payable for the grant of each option under the Scheme is HK$1.00.
Under the Scheme, the term of the option is determined by the Board at their discretion, provided that all options must be
exercised within 10 years after the date on which the option is granted. The exercise price of the options granted under the
Scheme is determined by the Board at its discretion provided that such price may not be set below a minimum price which
is the highest of:
(i)
the nominal value of a share in the Company;
(ii)
the closing price of the shares in the Company on the Stock Exchange on the date on which the option was granted;
and
(iii)
the average closing price of the shares in the Company on the Stock Exchange for the five trading days immediately
preceding the date on which the option was granted.
No share options were granted or cancelled under the Scheme during the year ended 31 December 2015.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
61
REPORT OF DIRECTORS
All outstanding options to subscribe for shares in the Company granted under the Scheme either lapsed or were exercised
and none is outstanding during the year ended 31 December 2015, as detailed in the following table:
No. of shares
involved in
the options
outstanding at
the beginning
of the year
No. of shares
involved in
the options
outstanding
at year end
No. of shares
involved
in the options
lapsed
during
the year
Date on which
options were
granted
No. of shares
acquired on
exercise of
options during
the year Exercise price
HK$
Directors
LI Yue
XUE Taohai
SHA Yuejia
LIU Aili
Moses CHENG Mo Chi
780,000
780,000
780,000
141,500
400,000
– 8 November 2005
– 8 November 2005
– 8 November 2005
– 8 November 2005
780,000
780,000
780,000
141,500
–
–
–
–
– 8 November 2005
–
400,000
34.87
34.87
34.87
34.87
34.87
Employees
43,351,922
– 8 November 2005
6,695,539
36,656,383
34.87
Notes:
(a)
No options to subscribe for shares in the Company were granted to the directors of the Company in 2015.
(b)
Particulars of share options:
Date of grant
Exercise period
8 November 2005
8 November 2006 to 7 November 2015 (in respect of 40% of the options granted)
8 November 2007 to 7 November 2015 (in respect of 30% of the options granted)
8 November 2008 to 7 November 2015 (in respect of the remaining 30% of the options granted)
Details of share options exercised during the year:
Period during which
share options were exercised
Weighted
average closing
price per share
immediately
before dates
of exercise
of options
HK$
Exercise
price
HK$
Number of
shares
involved in
the options
Proceeds
received
HK$
2 January 2015 to 6 November 2015
34.87
97.28
1,292,156,075
37,056,383
62
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN SHARES AND
UNDERLYING SHARES
The Company has been notified of the following interests in the Company’s issued shares as at 31 December 2015
amounting to 5% or more of the ordinary shares in issue:
Ordinary shares held
directly
indirectly
Percentage of
total number
of issued shares
(i)
(ii)
China Mobile Communications Corporation (“CMCC”)
China Mobile (Hong Kong) Group Limited (“CMHK (Group)”)
–
–
14,890,116,842
14,890,116,842
(iii) China Mobile Hong Kong (BVI) Limited (“CMHK (BVI)”)
14,890,116,842
–
72.72%
72.72%
72.72%
Note:
In light of the fact that CMCC and CMHK (Group) directly or indirectly control one-third or more of the voting rights in the shareholders’ meetings of
CMHK (BVI), in accordance with the SFO, the interests of CMHK (BVI) are deemed to be, and have therefore been included in, the interests of CMCC
and CMHK (Group).
Apart from the foregoing, as at 31 December 2015, no persons, other than a director or chief executive of the Company,
had any interests or short positions in the shares and underlying shares of the Company as recorded in the register
required to be kept under section 336 of the SFO.
CONNECTED TRANSACTIONS
Connected Transactions
1.
On 18 May 2015, China Mobile Communication Company Limited (“CMC”), a wholly-owned subsidiary of the
Company, entered into a partnership agreement with State Development & Investment Corporation (“SDIC”) and
China Mobile State Development & Investment Management Company Limited (the “Fund Management Company”)
(the “Partnership Agreement”) pursuant to which the parties agreed to establish, participate in and continue a limited
partnership to be established and registered under the laws of the PRC, namely China Mobile Innovative Business
Fund (Shenzhen) Partnership (Limited Partnership) (the “Partnership”).
The capital commitment of CMC, SDIC and the Fund Management Company to the Partnership were RMB1,500
million, RMB1,000 million and RMB50 million, respectively. During the 12-month period following the establishment
date of the Partnership, the Partnership is entitled to increase the total capital commitment to RMB5,000 million
and if such increase takes place, the percentage of equity interest in the Partnership of CMC, SDIC, the Fund
Management Company and other investors will be 30%, 20%, 1% and 49%, respectively. The relevant capital
commitment was determined after arm’s length negotiations among the parties to the Partnership Agreement with
reference to the capital requirements of the Partnership.
The purpose of establishing the Partnership is to utilize and take advantage of the strengths and the resources of the
parties to the Partnership; to invest in shares, equity interests, businesses and assets of companies, enterprises or
other economic organizations with growth potential which are engaged in the mobile Internet and related upstream
and downstream businesses, with the main investment targets being enterprises at the growth and maturity stages;
and to seek favorable opportunities to exit by appropriate means, thereby achieving favorable investment returns for
the partners.
CMCC is the ultimate controlling shareholder of the Company and therefore, a connected person of the Company.
The Fund Management Company is owned by CMCC as to 45% of its registered capital and therefore, is an associate
of CMCC and also a connected person of the Company. Accordingly, the entering into of the Partnership Agreement
by CMC and the Fund Management Company constituted a connected transaction for the Company under the Hong
Kong Listing Rules. As at least one relevant percentage ratio applicable to this transaction is or exceeds 0.1% but
is less than 5%, the transaction was subject to announcement and reporting requirements but exempt from the
independent shareholders’ approval requirements under the Hong Kong Listing Rules.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
63
REPORT OF DIRECTORS
2.
On 27 November 2015, CM TieTong (a wholly-owned subsidiary of the Company) entered into an acquisition
agreement (the “Acquisition Agreement”) with China TieTong Telecommunications Corporation (“TieTong”),
under which CM TieTong has agreed to acquire (the “Acquisition”), and TieTong has agreed to sell certain assets,
businesses and related liabilities and employees of TieTong. The final consideration for the Acquisition is RMB31.967
billion.
The Board believes that the Acquisition would be beneficial to the Group’s development due to the following reasons:
(a)
(b)
the Acquisition will be important in facilitating and accelerating the transformation of the Company into a
fully integrated fixed-mobile operator in order to enhance the competitive strength to better compete against
integrated peers in the data heavy and bundled services age;
it will enable the Company to obtain a fixed broadband license and provide an opportunity for the Company to
grasp the opportunities in the fixed broadband market, accelerate the growth potential of the smart home and
benefit from the expected growth of the PRC fixed broadband market;
(c)
it is expected to expand the Company’s customer base rapidly, enabling the provision of bundled services to
reduce churn rates as well as improve user loyalty and revenue;
(d)
it will provide the Company immediate scale through complementary network assets (extensive metro fibre
network, backbone network and IPv4 addresses etc.) to increase the Company’s fixed network capacity,
coverage and efficiency through an integrated network;
(e)
through the Acquisition, the Company will obtain employees with extensive experience and expertise in the
management and maintenance of fixed networks; and
(f)
overall, the Acquisition will greatly reduce the continuing connected transactions between the Company and
CMCC (via TieTong) and simplify its management and operating structure.
TieTong is a wholly-owned subsidiary of CMCC, the ultimate controlling shareholder of the Company. Thereby,
TieTong is a connected person of the Company pursuant to Rule 14A.07 of the Hong Kong Listing Rules. Therefore,
the entering into the Acquisition Agreement by CM TieTong and the Acquisition itself constitute a connected
transaction for the Company under Chapter 14A of the Hong Kong Listing Rules. As at least one relevant percentage
ratio applicable to the Acquisition is or exceeds 0.1% but is less than 5%, the Acquisition is subject to the reporting
and announcement requirements but exempt from the independent shareholders’ approval requirements under
Chapter 14A of the Hong Kong Listing Rules.
64
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
Continuing Connected Transactions
Details of the continuing connected transactions are set out in note 37 to the consolidated financial statements.
For the financial year ended 31 December 2015, the following continuing connected transactions (the “Continuing
Connected Transactions”) have not exceeded their respective annual caps:
(1)
(2)
(3)
rental and property management service charges paid by the Group to CMCC did not exceed RMB2,200 million.
The charges payable by the Group in respect of properties owned by CMCC and its subsidiaries are determined
with reference to market rates whilst the charges payable in respect of properties which CMCC or its subsidiaries
lease from third parties and sub-let to the Group are determined according to the actual rent payable by CMCC or its
subsidiaries to such third parties together with the amount of any tax payable;
telecommunications service charges, prices of transmission towers and spare parts and the charges payable for
installation and maintenance services in respect of transmission towers paid by the Group to CMCC did not exceed
RMB8,000 million. The telecommunications service charges, prices of transmission towers and spare parts and the
charges payable for installation and maintenance services in respect of transmission towers are determined with
reference to and cannot exceed relevant standards laid down and revised from time to time by the government of the
PRC. Where there are no government standards, the prices and charges are determined according to market rates;
the charges in respect of telecommunications services provided by the Group payable by CMCC and its subsidiaries
to the Group did not exceed RMB2,200 million;
settlement charges paid by the Company to TieTong, in respect of calls made or received by their respective
customers did not exceed RMB800 million and the settlement charges received by the Company from TieTong
in respect of calls made or received by their respective customers were below 0.1% of each of the applicable
percentage ratios set out in Rule 14.07 of the Hong Kong Listing Rules. The rates for the settlement charges
payable and receivable by the Company to and from TieTong are based on the previous interconnection settlement
agreements entered into between TieTong and CMCC;
(4)
leasing fees paid by the Company to CMCC for the leasing of the TD-SCDMA network capacity by the Company from
CMCC did not exceed RMB10,000 million. The leasing fees are determined on a basis that reflects the Group’s actual
usage of CMCC’s TD-SCDMA network capacity and to compensate CMCC for the costs of such network capacity;
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
65
REPORT OF DIRECTORS
(5)
service charges paid by the Company to CMCC for the agency services regarding sales channel utilization and for the
cooperation in the provision of basic telecommunications services (such as fixedline phone services, fixed-line IDD
phone services, IP phone-to-phone calls services, 2G GSM and 3G TD-SCDMA mobile telecommunications services)
(“Basic Telecommunications Services”) and value-added telecommunications services (such as paging services, data
transmission services, voice mailbox services and network connection services) (“Value-Added Telecommunications
Services”) to customers of the Company under the Telecommunications Services Cooperation Agreement did not
exceed RMB7,000 million. The aggregate amount of the charges received by the Company for the services provided
to CMCC under the Telecommunications Services Cooperation Agreement did not exceed RMB1,700 million. The
service charges for agency services are determined with reference to market prices after taking into consideration
the actual volume of agency services provided by CMCC and performance indicators such as total sales being
recognized and additional number of subscribers acquired as a result of the provision of agency services by CMCC.
In determining the market prices for the agency services, the Company has taken into account the service fees
payable by the Company and CMCC to other industry players as well as the services fees receivable by the Company
and CMCC from other industry players. The service fees payable by the Company and CMCC were, from the
Company’s perspective, no less favorable than the service fees charged to other industry players, being independent
third parties, for the same agency services provided to such independent third parties. The service charges in
respect of business cooperation are determined with reference to, after taking into account the actual volume of
Basic Telecommunications Services and Value-Added Telecommunications Services provided and the resources and
investment contributed, the government fixed price or the government guidance price if there is no government fixed
price and where there is neither a government fixed price nor a government guidance price, the market price. Where
none of the foregoing prices is applicable, the price is to be agreed between the parties and determined on a cost-
plus basis. As there are no government fixed price or government guidance price for the Basic Telecommunications
Services or the Value-Added Telecommunications Services, the charges payable by the Company and CMCC under
the Telecommunications Services Cooperation Agreement for these services are determined with reference to the
market price. In determining the market prices for the Basic Telecommunications Services and the Value-Added
Telecommunications Services, the Company has taken into account the charges payable by the Company and CMCC
to other industry players and the charges receivable by the Company and CMCC from other industry players. Such
charges payable by the Company and CMCC were, from the Company’s perspective, no less favorable than the
charges charged to other industry players, being independent third parties, for the same Basic Telecommunications
Services or Value-Added Telecommunications Services; and
(6)
leasing fees paid by the Company to CMCC for the leasing of telecommunications network operation assets by the
Company from CMCC did not exceed RMB15,000 million. The leasing fees are determined with reference to the
prevailing market rates. In determining the market rates for the leasing fees, the Company has taken into account
the charges payable by the Company and CMCC to other industry players as well as the charges receivable by the
Company and CMCC from other industry players. The leasing fees payable by the Company to CMCC were not more
than the leasing fees charged to other industry players, being independent third parties, for same kinds of network
operation assets. The aggregate amount of leasing fees received by the Company from CMCC under the Network
Assets Leasing Agreement was below 0.1% of each of the applicable percentage ratios set out in Rule 14.07 of the
Hong Kong Listing Rules.
66
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
The transactions referred to in paragraph (1) above were entered into pursuant to the 2014–2016 property leasing
and management services agreement dated 15 August 2013 between the Company and CMCC (the “2014–2016
Property Leasing Agreement”). The Company announced the entering into and the terms of the 2014–2016 Property
Leasing Agreement on 15 August 2013. The 2014–2016 Property Leasing Agreement has a term of three years
commencing on 1 January 2014 and will expire on 31 December 2016.
The transactions referred to in paragraph (2) above were entered into pursuant to the 2014–2016
telecommunications services agreement dated 15 August 2013 between the Company and CMCC (the “2014–2016
Telecommunications Services Agreement”). The Company announced the entering into and the terms of the 2014–
2016 Telecommunications Services Agreement on 15 August 2013. The 2014–2016 Telecommunications Services
Agreement has a term of three years commencing on 1 January 2014 and will expire on 31 December 2016.
The transactions referred to in paragraph (3) above were entered into pursuant to the tripartite agreement among
the Company, CMCC and TieTong dated 13 November 2008 (the “Tripartite Agreement”). The entering into of the
Tripartite Agreement was announced by the Company on 13 November 2008. The Tripartite Agreement has been
renewed and announced by the Company (i) on 6 November 2009 for a period of one year from 1 January 2010;
(ii) on 21 December 2010 for a period of one year from 1 January 2011; (iii) on 6 December 2011 for a period of
one year from 1 January 2012; (iv) on 12 December 2012 for a period of one year from 1 January 2013; (v) on 15
August 2013 for a period of one year from 1 January 2014; (vi) on 14 August 2014 for a period of one year from 1
January 2015; and (vii) on 21 August 2015 for a period of one year from 1 January 2016. On 27 November 2015,
CM TieTong, entered into an acquisition agreement with TieTong under which CM TieTong has agreed to acquire,
and TieTong has agreed the disposal of certain assets, business and related liabilities as well as the transfer of related
employees. The acquisition by CM TieTong completed on 31 December 2015. Upon completion of the acquisition, as
the business contracts and relevant transactions between the Company, CMCC and TieTong as contemplated under
the Tripartite Agreement will be conducted by the Group, the interconnection settlement arrangements pursuant to
the Tripartite Agreement no longer constitute continuing connected transactions of the Company pursuant to Chapter
14A of the Hong Kong Listing Rules.
The transactions referred to in paragraph (4) above were entered into pursuant to the network capacity leasing
agreement between the Company and CMCC dated 29 December 2008 (the “Network Capacity Leasing
Agreement”). The entering into of the Network Capacity Leasing Agreement was announced by the Company on 29
December 2008. The Network Capacity Leasing Agreement has been renewed and announced by the Company
(i) on 6 November 2009 for a period of one year from 1 January 2010; (ii) on 21 December 2010 for a period of
one year from 1 January 2011; (iii) on 6 December 2011 for a period of one year from 1 January 2012; (iv) on 12
December 2012 for a period of one year from 1 January 2013; (v) on 15 August 2013 for a period of one year from 1
January 2014; (vi) on 14 August 2014 for a period of one year from 1 January 2015; and (vii) on 21 August 2015 for
a period of one year from 1 January 2016.
The transactions referred to in paragraph (5) above were entered into pursuant to the telecommunications services
cooperation agreement between the Company and CMCC dated 6 November 2009 (the “Telecommunications
Services Cooperation Agreement”). The entering into of the Telecommunications Services Cooperation Agreement
was announced by the Company on 6 November 2009. The Telecommunications Services Cooperation Agreement
has been renewed and announced by the Company (i) on 21 December 2010 for a period of one year from 1
January 2011; (ii) on 6 December 2011 for a period of one year from 1 January 2012; (iii) on 12 December 2012
for a period of one year from 1 January 2013; (iv) on 15 August 2013 for a period of one year from 1 January 2014;
(v) on 14 August 2014 for a period of one year from 1 January 2015; and (vi) on 21 August 2015 for a period of one
year from 1 January 2016.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
67
REPORT OF DIRECTORS
The transactions referred to in paragraph (6) above were entered into pursuant to the telecommunications network
operation assets leasing agreement between the Company and CMCC dated 18 August 2011 (the “Network Assets
Leasing Agreement”). The entering into of the Network Assets Leasing Agreement was announced by the Company
on 18 August 2011. The Network Assets Leasing Agreement has been renewed and announced by the Company (i)
on 6 December 2011 for a period of one year from 1 January 2012; (ii) on 12 December 2012 for a period of one
year from 1 January 2013; (iii) on 15 August 2013 for a period of one year from 1 January 2014; (iv) on 14 August
2014 for a period of one year from 1 January 2015; and (v) on 21 August 2015 for a period of one year from 1
January 2016.
CMCC is the ultimate controlling shareholder of the Company and therefore, a connected person of the Company.
TieTong is a wholly-owned subsidiary of CMCC and therefore, a connected person of the Company. Accordingly,
all the transactions referred to in paragraphs (1) to (6) above constitute continuing connected transactions for the
Company under the Hong Kong Listing Rules.
In the opinion of the independent non-executive directors, the Continuing Connected Transactions were entered into
by the Group:
(i)
in the ordinary and usual course of its business;
(ii)
on normal commercial terms or better; and
(iii) according to the agreements governing such transactions on terms that are fair and reasonable and in the
interests of the shareholders of the Company as a whole.
The auditors of the Company were engaged to report on the Group’s Continuing Connected Transactions in
accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other
Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s
Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute
of Certified Public Accountants. The auditors have issued their unqualified letter containing their findings and
conclusions in respect of the Continuing Connected Transactions in accordance with Rule 14A.56 of the Hong Kong
Listing Rules. The auditors’ letter has confirmed that nothing has come to their attention that cause them to believe
that the Continuing Connected Transactions:
(A) have not been approved by the Board;
(B) were not, in all material respects, in accordance with the pricing policies of the Group as stated in this annual
report;
(C) were not entered into, in all material respects, in accordance with the relevant agreements governing the
Continuing Connected Transactions; and
(D) have exceeded their respective annual caps for the financial year ended 31 December 2015 set out in the
previous announcements of the Company.
A copy of the auditors’ letter in relation to the Continuing Connected Transactions has been provided by the Company
to the Stock Exchange.
In respect of the Continuing Connected Transactions, the Company has complied with the disclosure requirements
under the Hong Kong Listing Rules in force from time to time, and has followed the policies and guidelines as laid
down in the guidance letter HKEx-GL73-14 issued by the Stock Exchange when determining the price and terms of
the transactions conducted during the year ended 31 December 2015.
68
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
REPORT OF DIRECTORS
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
The Company and its subsidiaries did not purchase, sell or redeem any of the listed securities of the Company during the
year ended 31 December 2015.
BANK AND OTHER LOANS
Particulars of bank and other loans of the Group as at 31 December 2015 are set out in note 33 to the consolidated
financial statements.
FINANCIAL SUMMARY
A summary of the results and of the statements of the assets and liabilities of the Group for the last five financial years is
set out on pages 143 to 144 of this annual report.
EMOLUMENT POLICY
In order to continue to maintain the sustainable development of the Group’s competitiveness, the Group has always
emphasized the importance of recruiting, incentivizing, developing and retaining its employees, paid close attention to the
external competitiveness, internal fairness of its remuneration structure and the cost-effectiveness of remuneration and
emphasized the importance of the correlation between remuneration management and performance management. For the
year ended 31 December 2015, employees’ remuneration comprised a basic salary, a performance-based bonus and a
long-term incentive scheme in the form of share option schemes for eligible employees, details of which are set out under
the paragraph headed “Share option scheme” above.
EMPLOYEE RETIREMENT BENEFITS
Particulars of the employee retirement benefits of the Group are set out in note 2 to the consolidated financial statements.
PUBLIC FLOAT
As at the date of this annual report and based on the information that is publicly available to the Company and to the
knowledge of the directors of the Company, the Company has maintained the public float prescribed under the Hong Kong
Listing Rules and agreed with the Stock Exchange.
AUDITORS
A resolution will be proposed at the forthcoming annual general meeting for the re-appointment of PricewaterhouseCoopers
and PricewaterhouseCoopers Zhong Tian LLP as the auditors of the Group for Hong Kong financial reporting and U.S.
financial reporting purposes, respectively.
OTHERS
Please also refer to the sections headed “Chairman’s Statement”, “Business Review”, “Financial Review” and “Human
Resources Development” in this annual report (for which they form part of this Report of Directors) for further details.
By order of the Board
Shang Bing
Chairman
Hong Kong, 17 March 2016
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
69
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of China Mobile Limited (the “Company”) will be held on Thursday,
26 May 2016 at 10:00 a.m. in the Conference Room, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong for the
following purposes:
1.
To receive and consider the audited financial statements and the Reports of the Directors and Auditors of the
Company and its subsidiaries for the year ended 31 December 2015.
2.
To declare a final dividend for the year ended 31 December 2015.
3.
To re-elect executive directors.
4.
To re-appoint PricewaterhouseCoopers and PricewaterhouseCoopers Zhong Tian LLP as the auditors of the Group for
Hong Kong financial reporting and U.S. financial reporting purposes, respectively, and to authorize the directors to fix
their remuneration.
And to consider and, if thought fit, to pass the following as ordinary resolutions:
ORDINARY RESOLUTIONS
5.
“THAT:
(a)
(b)
subject to paragraph (b) below, the exercise by the directors of the Company during the Relevant Period (as
defined below) of all the powers of the Company to buy back shares in the capital of the Company including
any form of depositary receipt representing the right to receive such shares (“Shares”) be and is hereby
generally and unconditionally approved;
the aggregate number of Shares which may be bought back on The Stock Exchange of Hong Kong Limited (the
“Stock Exchange”) or any other stock exchange on which securities of the Company may be listed and which is
recognized for this purpose by the Securities and Futures Commission of Hong Kong and the Stock Exchange
pursuant to the approval in paragraph (a) above shall not exceed or represent more than 10 per cent. of the
number of issued shares of the Company at the date of passing this resolution, and the said approval shall be
limited accordingly;
(c)
for the purpose of this resolution “Relevant Period” means the period from the passing of this resolution until
whichever is the earlier of:
(1)
the conclusion of the next annual general meeting of the Company; or
(2)
the expiration of the period within which the next annual general meeting of the Company is required by
law to be held; or
(3)
the revocation or variation of the authority given under this resolution by ordinary resolution of the
shareholders of the Company in general meeting.”
70
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTICE OF THE ANNUAL GENERAL MEETING
6.
“THAT a general mandate be and is hereby unconditionally given to the directors of the Company to exercise full
powers of the Company to allot, issue and deal with additional shares in the Company (including the making and
granting of offers, agreements and options which might require shares to be allotted, whether during the continuance
of such mandate or thereafter) provided that, otherwise than pursuant to (i) a rights issue where shares are offered to
shareholders on a fixed record date in proportion to their then holdings of shares; (ii) the exercise of options granted
under any share option scheme adopted by the Company; or (iii) any scrip dividend or similar arrangement providing
for the allotment of shares in lieu of the whole or part of a dividend in accordance with the articles of association of
the Company, the aggregate number of the shares allotted shall not exceed the aggregate of:
(a) 20 per cent. of the number of issued shares of the Company at the date of passing this resolution, plus
(b)
(if the directors of the Company are so authorized by a separate ordinary resolution of the shareholders of the
Company) the number of Shares bought back by the Company subsequent to the passing of this resolution (up
to a maximum equivalent to 10 per cent. of the number of issued shares of the Company at the date of passing
this resolution).
Such mandate shall expire at the earlier of:
(1)
the conclusion of the next annual general meeting of the Company; or
(2)
the expiration of the period within which the next annual general meeting of the Company is required by law to
be held; or
(3)
the date of any revocation or variation of the mandate given under this resolution by ordinary resolution of the
shareholders of the Company at a general meeting.”
7.
“THAT the directors of the Company be and are hereby authorized to exercise the powers of the Company referred to
in the resolution set out in item 6 in the notice of the annual general meeting in respect of the shares of the Company
referred to in paragraph (b) of such resolution.”
By Order of the Board
China Mobile Limited
Wong Wai Lan, Grace
Company Secretary
11 April 2016
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
71
NOTICE OF THE ANNUAL GENERAL MEETING
Notes:
1.
2.
3.
4.
5.
Any member entitled to attend and vote at the annual general meeting is entitled to appoint one or, if he is the holder of two or more shares, more
proxies to attend and, on a poll, vote in his stead. A proxy need not be a member of the Company.
In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy
thereof, must be deposited at the Company’s registered office at 60/F, The Center, 99 Queen’s Road Central, Hong Kong at least 24 hours before the
time for holding the annual general meeting. Completion and return of a form of proxy will not preclude a member from attending and voting in person
if he is subsequently able to be present.
The Board of Directors has recommended a final dividend of HK$1.196 per share for the year ended 31 December 2015 and, if such dividend is
declared by the members passing resolution number 2, it is expected to be paid on or about 24 June 2016 to those shareholders whose names
appear on the Company’s register of members on 8 June 2016. Shareholders should read the announcement issued by the Company on 17 March
2016 regarding the closure of register of members and the withholding and payment of enterprise income tax for non-resident enterprises in respect of
the proposed 2015 final dividend.
To ascertain shareholders’ eligibility to attend and vote at the annual general meeting, the register of members of the Company will be closed from 20
May 2016 to 26 May 2016 (both days inclusive), during which period no transfer of shares in the Company will be effected. In order to be entitled to
attend and vote at the annual general meeting, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s share
registrar, Hong Kong Registrars Limited, Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later
than 4:30 p.m. on 19 May 2016.
To ascertain shareholders’ entitlement to the proposed final dividend upon passing resolution number 2, the register of members of the Company
will be closed from 6 June 2016 to 8 June 2016 (both days inclusive), during which period no transfer of shares in the Company will be effected. In
order to qualify for the proposed final dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s share
registrar, Hong Kong Registrars Limited, Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later
than 4:30 p.m. on 3 June 2016.
Concerning resolution number 5 above, the directors of the Company wish to state that they will exercise the powers conferred thereby to buy back
shares of the Company in circumstances which they deem appropriate for the benefit of the shareholders. The explanatory statement containing
the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution to approve the
buy-back by the Company of its own shares, as required by the Rules Governing the Listing of Securities on the Stock Exchange will be set out in a
separate circular from the Company to be enclosed with the 2015 Annual Report.
72
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
To the Members of China Mobile Limited
(incorporated in Hong Kong with limited liability)
We have audited the consolidated financial statements of China Mobile Limited (the “Company”) and its subsidiaries set
out on pages 74 to 142, which comprise the consolidated balance sheet as at 31 December 2015, and the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and
fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards
Board, Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and
the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our
opinion solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance and for no other
purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of
Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements
that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and
its subsidiaries as at 31 December 2015, and of their financial performance and cash flows for the year then ended in
accordance with International Financial Reporting Standards and Hong Kong Financial Reporting Standards and have been
properly prepared in compliance with the Hong Kong Companies Ordinance.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 17 March 2016
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
73
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
(Expressed in Renminbi (“RMB”))
Operating revenue
Revenue from telecommunications services
Revenue from sales of products and others
Operating expenses
Leased lines and network assets
Interconnection
Depreciation
Employee benefit and related expenses
Selling expenses
Cost of products sold
Other operating expenses
Profit from operations
Gain on the transfer of Tower Assets
Other gains
Interest income
Finance costs
Share of profit of investments accounted for
using the equity method
Profit before taxation
Taxation
PROFIT FOR THE YEAR
2015
Million
2014
As restated
(Note 2(b))
Million
584,089
84,246
591,602
59,907
668,335
651,509
20,668
21,668
136,832
74,805
59,850
89,297
162,293
15,843
23,502
122,805
70,385
75,655
74,495
151,504
565,413
534,189
102,922
117,320
15,525
–
1,800
1,171
15,852
16,270
(455)
(487)
Note
4
5
6
7
8
9
19
8,090
8,248
143,734
142,522
12(a)
(35,079)
(33,179)
108,655
109,343
Other comprehensive income/(loss) for the year that may be
subsequently reclassified to profit or loss:
Exchange differences on translation of financial statements of
overseas entities
Share of other comprehensive income of associates
603
901
(169)
1,224
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
110,159
110,398
74
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
for the year ended 31 December 2015
(Expressed in RMB)
Profit attributable to:
Equity shareholders of the Company
Non-controlling interests
PROFIT FOR THE YEAR
Total comprehensive income attributable to:
Equity shareholders of the Company
Non-controlling interests
2015
Note
Million
2014
As restated
(Note 2(b))
Million
108,539
116
109,218
125
108,655
109,343
110,043
116
110,273
125
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
110,159
110,398
Earnings per share – Basic
13(a)
RMB5.30
RMB5.38
Earnings per share – Diluted
13(b)
RMB5.30
RMB5.35
The notes on pages 81 to 142 are an integral part of these consolidated financial statements.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
75
CONSOLIDATED BALANCE SHEET
as at 31 December 2015
(Expressed in RMB)
Assets
Non-current assets
Property, plant and equipment
Construction in progress
Land lease prepayments and others
Goodwill
Other intangible assets
Investments accounted for using the equity method
Deferred tax assets
Proceeds receivable for the transfer of Tower Assets
Restricted bank deposits
Other financial assets
Current assets
Inventories
Accounts receivable
Other receivables
Prepayments and other current assets
Amount due from ultimate holding company
Tax recoverable
Available-for-sale financial assets
Restricted bank deposits
Bank deposits
Cash and cash equivalents
Total assets
Equity and liabilities
Liabilities
Current liabilities
Interest-bearing borrowings
Accounts payable
Bills payable
Deferred revenue
Accrued expenses and other payables
Amount due to ultimate holding company
Obligations under finance leases
Current taxation
76
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
As at
31 December
2015
Note
Million
As at
31 December
2014
As restated
(Note 2(b))
Million
14
15
16
17
19
20
7
21
22
23
24
25
25
26
27
21
28
29
33
30
31
32
26
585,631
605,023
88,012
26,773
35,343
768
115,933
25,423
56,737
4,575
3
95,110
24,883
35,343
787
70,451
20,654
–
8,731
128
939,198
861,110
9,994
17,743
26,186
11,427
247
746
19,167
15
323,330
79,842
9,292
16,715
14,567
15,482
112
702
2,000
736
353,507
73,812
488,697
486,925
1,427,895
1,348,035
–
243,579
645
78,100
163,404
7,276
–
8,034
1,000
227,577
674
63,916
138,706
14,519
68
6,032
501,038
452,492
CONSOLIDATED BALANCE SHEET (CONTINUED)
as at 31 December 2015
(Expressed in RMB)
As at
31 December
2015
Note
Million
As at
31 December
2014
As restated
(Note 2(b))
Million
4,995
1,291
203
4,992
1,470
98
6,489
6,560
507,527
459,052
35(c)
402,130
515,206
400,737
486,179
Non-current liabilities
Interest-bearing borrowings – non-current
Deferred revenue – non-current
Deferred tax liabilities
33
31
20
Total liabilities
Equity
Share capital
Reserves
Total equity attributable to equity shareholders of the Company
917,336
886,916
Non-controlling interests
Total equity
3,032
2,067
920,368
888,983
Total equity and liabilities
1,427,895
1,348,035
The financial statements on pages 74 to 142 were approved by the Board of Directors on 17 March 2016 and were signed
on its behalf.
Li Yue
Name of Director
Xue Taohai
Name of Director
The notes on pages 81 to 142 are an integral part of these consolidated financial statements.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
77
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
(Expressed in RMB)
Attributable to equity shareholders of the Company
Share
capital
Million
Share
premium
Million
Capital
reserve
Million
General
reserve
Million
Exchange
reserve
Million
PRC statutory
reserves
Million
Retained
profits
Million
Non-
controlling
interests
Million
Total
Million
Total
equity
Million
As at 1 January 2014 (As previously reported)
Adjusted for business combination under common
control (note 2(b))
2,142
387,243
(293,052)
–
–
63,038
As at 1 January 2014 (As restated)
2,142
387,243
(230,014)
(600)
235,749
457,219
788,773
1,951
790,724
(7)
21
(32,654)
30,398
1
30,399
(607)
235,770
424,565
819,171
1,952
821,123
72
–
72
–
–
–
–
–
–
–
–
–
–
72
72
–
72
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
109,218
–
109,218
1,055
125
–
109,343
1,055
109,218
110,273
125
110,398
(26,044)
(26,044)
(10)
(26,054)
(24,880)
(24,880)
–
23,172
–
(22,991)
8,215
181
–
–
–
27
–
(8)
–
–
–
–
–
–
–
–
–
(24,880)
8,215
181
–
–
–
(768)
258,942
459,887
886,916
2,067
888,983
(761)
258,918
492,602
856,576
2,067
858,643
(7)
24
(32,715)
30,340
–
30,340
(768)
258,942
459,887
886,916
2,067
888,983
108,539
–
108,539
1,504
116
–
108,655
1,504
108,539
110,043
116
110,159
(22,283)
(22,283)
(21)
(22,304)
(25,629)
(25,629)
–
20,542
–
(20,502)
–
–
–
–
92
–
–
–
1,024
40
–
(31,967)
(808)
–
–
–
–
–
–
(25,629)
1,024
40
–
(31,967)
(808)
870
–
870
–
(169)
(169)
–
–
–
–
–
–
8
–
603
603
–
–
–
–
–
–
–
–
Changes in equity for 2014:
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Dividends approved in respect of previous year
(note 35(b)(ii))
Dividends declared in respect of current year
(note 35(b)(i))
Shares issued under share option scheme
(note 35(c))
Transfer to PRC statutory reserves (note 35(d)(ii))
Transfer between reserves upon expiry of options
(note 34(b))
Transition to no-par value regime (note 35(c))
Others
As at 31 December 2014 (As restated)
As at 1 January 2015 (As previously reported)
Adjusted for business combination under common
control (note 2(b))
As at 1 January 2015 (As restated)
Changes in equity for 2015:
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends approved in respect of previous year
(note 35(b)(ii))
Dividends declared in respect of current year
(note 35(b)(i))
Shares issued under share option scheme
(note 35(c))
Transfer to PRC statutory reserves (note 35(d)(ii))
Transfer between reserves upon expiry of options
(note 34(b))
Consideration for business combination under
common control (note 2(b))
Transfer of assets of entities under common control
to the ultimate holding company (note 2(b))
Capital injection from non-controlling interests of
a subsidiary
–
–
–
–
–
9,279
–
–
389,316
–
400,737
400,737
–
400,737
–
–
–
–
–
1,393
–
–
–
–
–
As at 31 December 2015
402,130
–
–
–
–
–
–
1,224
1,224
–
–
2,073
–
(3,137)
–
–
(389,316)
–
(27)
–
–
(231,954)
(294,992)
63,038
(231,954)
–
901
901
–
–
(369)
–
(92)
(31,967)
(808)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(264,289)
72
(165)
279,484
500,104
917,336
3,032
920,368
The notes on pages 81 to 142 are an integral part of these consolidated financial statements.
78
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2015
(Expressed in RMB)
Operating activities
Profit before taxation
Adjustments for:
2015
Note
Million
2014
As restated
(Note 2(b))
Million
143,734
142,522
– Depreciation of property, plant and equipment
136,832
122,805
– Amortization of other intangible assets
– Amortization of land lease prepayments
– Gain on the transfer of Tower Assets
– Gain on disposal of property, plant and equipment
– Write-off and impairment of property, plant and equipment
– Impairment loss of doubtful accounts
– Write-down of inventories
– Interest income
– Finance costs
– Dividend income from unlisted securities
– Share of profit of investments accounted for using the equity method
– Unrealized exchange loss, net
– Impairment loss of goodwill
– Gain on disposal of other financial assets
6
16
7
6
6
6
6
9
8
19
6
274
426
(15,525)
(4)
7,614
4,839
272
112
407
–
(1)
2,383
5,536
293
(15,852)
(16,270)
455
(11)
(8,090)
182
–
(14)
487
–
(8,248)
80
1,594
–
Operating cash flows before changes in working capital
255,132
251,700
Increase in inventories
Increase in accounts receivable
Increase in other receivables
Decrease/(increase) in prepayments and other current assets
Increase in amount due from ultimate holding company
(Decrease)/increase in accounts payable
Increase/(decrease) in bills payable
Increase in deferred revenue
Increase in accrued expenses and other payables
(Decrease)/increase in amount due to ultimate holding company
Cash generated from operations
Tax paid
– Hong Kong profits tax paid
– PRC enterprise income tax paid
(1,005)
(5,830)
(1,341)
276
(135)
(6,832)
12
14,005
18,633
(32)
(271)
(8,165)
(960)
(8,010)
(18)
8,191
(144)
1,200
7,722
4,249
272,883
255,494
(232)
(37,562)
(272)
(38,784)
Net cash generated from operating activities
235,089
216,438
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
79
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
for the year ended 31 December 2015
(Expressed in RMB)
2015
Note
Million
Investing activities
Capital expenditure
Land lease prepayments
Acquisition of other intangible assets
Proceeds from disposal of property, plant and equipment
Decrease in bank deposits
Decrease/(increase) in restricted bank deposits
Interest received
Payment for investment accounted for using the equity method
Dividends received from associates
Dividends received from unlisted securities
Purchase of available-for-sale financial assets
Maturity of available-for-sale financial assets
Short-term loans granted by China Mobile Finance and other investments
Proceeds from disposal of other financial assets
Net cash used in investing activities
Financing activities
Proceeds from issuance of shares under share option scheme
Capital injection from non-controlling shareholders of a subsidiary
Interest paid
Dividends paid to the Company’s equity shareholders
Dividends paid to non-controlling shareholders of subsidiaries
Consideration for business combination under common control
Proceeds from entrusted loans
Repayment of entrusted loans
Short-term deposits placed by ultimate holding company
Maturity of short-term deposits placed by ultimate holding company
Repayment of bonds
19
19
8
25
35(c)
35(b)
2(b)
37(a)
37(a)
37(a)
37(a)
33
2014
As restated
(Note 2(b))
Million
(174,673)
(1,028)
(23)
2
21,620
(2,609)
14,513
(9,508)
2,476
–
(2,000)
–
–
–
(172,243)
(1,450)
(212)
7
30,177
4,877
15,655
(376)
2,842
11
(24,965)
8,294
(5,500)
140
(142,743)
(151,230)
1,024
870
(442)
(47,912)
(21)
(31,880)
8,592
(18,834)
7,274
(4,181)
(1,000)
8,215
–
(480)
(50,924)
(10)
–
10,242
(9,573)
–
–
–
Net cash used in financing activities
(86,510)
(42,530)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of changes in foreign exchange rate
Cash and cash equivalents at end of year
29
5,836
73,812
194
79,842
22,678
51,180
(46)
73,812
Significant non-cash transactions
The Group recorded payables of RMB125,210,000,000 (2014: RMB120,327,000,000) to equipment suppliers as at 31
December 2015 for additions of construction in progress during the year then ended.
On 31 October 2015, the Group completed the transfer of its telecommunications towers and related assets to China
Tower Corporation Limited (“China Tower”). In addition to 45,151,000,000 equity shares at a par value of RMB1 per
share issued to the Group by China Tower to pay the consideration, China Tower would also pay cash consideration of
RMB57,585,000,000. In February 2016, China Tower has paid RMB5,000,000,000, and the remaining balance of cash
consideration is deferred and will be settled before 31 December 2017. See note 7 for details.
The notes on pages 81 to 142 are an integral part of these consolidated financial statements.
80
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in RMB unless otherwise indicated)
1
GENERAL INFORMATION
China Mobile Limited (the “Company”) was incorporated in the Hong Kong Special Administrative Region (“Hong
Kong”) of the People’s Republic of China (the “PRC”) on 3 September 1997. The principal activities of the Company
and its subsidiaries (together referred to as the “Group”) are the provision of telecommunications and related
services in Mainland China and in Hong Kong (For the purpose of preparing these consolidated financial statements,
Mainland China refers to the PRC excluding Hong Kong, Macau Special Administrative Region of the PRC and
Taiwan). The Company’s immediate holding company is China Mobile Hong Kong (BVI) Limited (incorporated in
British Virgin Islands), and the Company’s ultimate holding company is China Mobile Communications Corporation
(“CMCC”). The address of the Company’s registered office is 60th Floor, The Center, 99 Queen’s Road Central, Hong
Kong.
The shares of the Company were listed on The Stock Exchange of Hong Kong Limited (the “HKEx”) on 23 October
1997 and the American Depositary Shares of the Company were listed on the New York Stock Exchange on 22
October 1997.
2
SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of compliance
These financial statements have been prepared in accordance with all applicable International Financial
Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”), which
collective term includes all applicable individual International Financial Reporting Standards, International
Accounting Standards (“IASs”) and Interpretations issued by the IASB. Hong Kong Financial Reporting
Standards (“HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting
Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute
of Certified Public Accountants (“HKICPA”), are consistent with IFRSs as it relates to the Group’s financial
statements. These financial statements also comply with HKFRSs and the applicable disclosure provisions of
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”).
In addition, the requirements of Part 9 “Accounts and Audit” of the new Hong Kong Companies Ordinance
(Cap. 622) come into operation during the financial year. Except for the changes made to the presentation and
disclosures of certain information in the consolidated financial statements, the adoption of the new Hong Kong
Companies Ordinance did not have any significant impact on the consolidated financial statements. A summary
of the significant accounting policies adopted by the Group is set out below.
(b) Basis of preparation
The consolidated financial statements for the year ended 31 December 2015 comprise the Group and the
Group’s interest in associates and joint ventures.
The measurement basis used in the preparation of the financial statements is the historical cost basis, as
modified by the revaluation of available-for-sale financial assets which are carried at fair value.
The preparation of financial statements in conformity with IFRSs and HKFRSs requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs and HKFRSs that have significant effect on the
financial statements and major sources of estimation uncertainty are discussed in note 41.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Basis of preparation (Continued)
Acquisition of Target Assets and Businesses from China Tietong Telecommunications Corporation
On 27 November 2015, China Mobile TieTong Company Limited (“CM TieTong”), a wholly-owned subsidiary
of the Company, entered into an acquisition agreement with China Tietong Telecommunications Corporation
(“TieTong”), a wholly-owned subsidiary of CMCC, under which CM TieTong has agreed to acquire, and TieTong
has agreed to sell, certain assets, businesses and related liabilities as well as its related employees in relation to
the fixed-line telecommunications operations (“Target Assets and Businesses”). The final consideration for the
acquisition of the Target Assets and Businesses based on the acquisition agreement was RMB31,967,000,000.
The acquisition was completed on 31 December 2015 (“Completion Date”).
The acquisition of the Target Assets and Businesses was considered as a business combination under
common control as CM TieTong and the Target Assets and Businesses are both ultimately controlled by CMCC.
Under IFRSs and HKFRSs, the acquisition of the Target Assets and Businesses was accounted for using
merger accounting in accordance with the Accounting Guideline 5 “Merger Accounting for Common Control
Combinations” (“AG 5”) issued by the HKICPA (note 2(c)). Accordingly, the acquired Target Assets and
Businesses are stated at predecessor values, and were included in the consolidated financial statements from
the beginning of the earliest period presented as if the Target Assets and Businesses acquired had always
been part of the Group. As a result, the Group has restated the 2014 comparative amounts of the consolidated
statement of comprehensive income by including the operating results of Target Assets and Businesses and
eliminating its transactions with the Target Assets and Businesses, as if the acquisition had been completed
on the earliest date of the periods being presented, i.e., 1 January 2014. The consolidated balance sheet
of the Group as at 31 December 2014 was restated to include the assets and liabilities of Target Assets and
Businesses. Certain assets that had not been acquired by the Group were included in the consolidated financial
statements before the Completion Date, as they formed an integral part of the Target Assets and Businesses.
Upon the completion of the acquisition of the Target Assets and Businesses on 31 December 2015, these assets
amounting to RMB808,000,000 were recorded as a distribution to the ultimate holding company.
The following is a reconciliation of the effect arising from the common control combination on the consolidated
statement of comprehensive income and consolidated balance sheet in connection with the acquisition of
Target Assets and Businesses:
The Group
As previously
reported
Million
Effect arising
from acquisition
of Target Assets
and Businesses
Million
Profit for the year ended 31 December 2014
Net assets as at 31 December 2014
109,405
858,643
(62)
30,340
Effect arising
from acquisition
of Target Assets
and Businesses
Million
(6)
29,540
The Group
Million
108,661
890,828
Profit for the year ended 31 December 2015
Net assets as at 31 December 2015
82
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
The Group
As restated
Million
109,343
888,983
The Group
As reported
Million
108,655
920,368
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Basis of preparation (Continued)
Acquisition of Target Assets and Businesses from China Tietong Telecommunications Corporation (Continued)
The effect arising from the acquisition of Target Assets and Businesses has included the operating results,
assets and liabilities of Target Assets and Businesses and the elimination on its transactions with the Group.
The effect amounting to RMB29,540,000,000 as at 31 December 2015 was offset by the cash consideration of
RMB31,967,000,000, resulting a decrease of RMB2,427,000,000 in the Group’s net assets.
(c) Subsidiaries and non-controlling interests
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date
that control commences until the date that control ceases. Intra-group balances and transactions and any
unrealized gains arising from intra-group transactions are eliminated in full in preparing the consolidated
financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the
same way as unrealized gains but only to the extent that there is no evidence of impairment. Accounting
policies of subsidiaries would be changed where necessary in the consolidated financial statements to
ensure consistency with the policies adopted by the Group.
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the
Company, and in respect of which the Group has not agreed any additional terms with the holders of
those interests which would result in the Group as a whole having a contractual obligation in respect of
those interests that meets the definition of a financial liability. For each business combination, the Group
can elect to measure any non-controlling interests either at fair value or at their proportionate share of the
subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated balance sheet within equity, separately from
equity attributable to the equity shareholders of the Company. Non-controlling interests in the results
of the Group are presented on the face of the consolidated statement of comprehensive income as an
allocation of the total profit or loss and total comprehensive income for the year between non-controlling
interests and the equity shareholders of the Company.
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for
as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling
interests within consolidated equity to reflect the change in relative interests, but no adjustments are
made to goodwill and no gain or loss is recognized.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in
that subsidiary, with a resulting gain or loss being recognized in profit or loss. Any interest retained in that
former subsidiary at the date when control is lost is recognized at fair value and this amount is regarded as
the fair value on initial recognition of a financial asset or, when appropriate, the cost on initial recognition
of an investment in an associate or a joint venture.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Subsidiaries and non-controlling interests (Continued)
(ii) Separate financial statements
In the Company’s balance sheet, an investment in a subsidiary is stated at cost less impairment losses
(see note 2(j)). The results of subsidiaries are accounted for by the Company on the basis of dividends
received and receivable.
(iii) Business combination other than under common control
The Group applies the acquisition method to account for business combination of entities and businesses
which are not under common control. The consideration transferred for the acquisition of a subsidiary
is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. Acquisition-related costs are expensed as incurred.
(iv) Business combination under common control
Under IFRSs and HKFRSs, the Group use merger accounting to account for the business combination of
entities and businesses under common control in accordance with AG 5.
The consolidated financial statements incorporate the financial statements of the combining entities or
businesses in which the common control combination occurs as if they had been combined from the
date when the combining entities or businesses first came under the control of the controlling party.
The assets and liabilities of the combining entities or businesses are combined using the carrying book
values from the controlling parties’ perspective. No amount is recognized in consideration for goodwill
or excess of acquirers’ interest in the net fair value of acquiree’s identifiable assets, liabilities and
contingent liabilities over the consideration at the time of common control combination, to the extent of
the continuation of the controlling party’s interest.
The consolidated statement of comprehensive income includes the results of each of the combining
entities or businesses from the earliest date presented or since the date when the combining entities or
businesses first came under the common control, where there is a shorter period, regardless of the date
of the common control combination. Transaction costs, including professional fees, registration fees,
costs of furnishing information to shareholders, costs or losses incurred in combining operations of the
previously separate businesses, etc., incurred in relation to the common control combination that is to be
accounted for by using merger accounting is recognized as an expense in the period in which they were
incurred.
84
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d)
Investments accounted for using the equity method
Investments accounted for using the equity method include investment in associates and joint ventures.
An associate is an entity in which the Group has significant influence, but not control or joint control, over its
management, including participation in the financial and operating policy decisions.
The Group has applied IFRS/HKFRS 11 to all joint arrangements. Under IFRS/HKFRS 11, investments in joint
arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them
to be joint ventures.
Under the equity method, the investment is initially recorded at cost. Thereafter, the investment is adjusted for
the post-acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating
to the investment (see note 2(j)). The Group’s share of the post-acquisition post-tax results of the investee for
the year is recognized as share of profit or loss of investments accounted for using the equity method in the
consolidated statement of comprehensive income, whereas the Group’s share of the post-acquisition post-tax
items of the investee’s other comprehensive income is recognized as its share of other comprehensive income
in the consolidated statement of comprehensive income.
When the Group’s share of losses exceeds its interest in the associate or joint ventures, the Group’s interest is
reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s
interest in the investee is the carrying amount of the investment under the equity method together with the
Group’s long-term interests that in substance form part of the Group’s net investment in the associates or joint
ventures.
Unrealized profits and losses resulting from transactions between the Group and its associates or joint ventures
are eliminated to the extent of the Group’s interest in the investee, except where unrealized losses provide
evidence of an impairment of the asset transferred, in which case they are recognized immediately in profit or
loss. Accounting policies of associates or joint ventures would be changed where necessary in the consolidated
financial statements to ensure consistency with the policies adopted by the Group.
(e) Goodwill
Goodwill represents the excess of
(i)
the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over
(ii)
the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date.
When (ii) is greater than (i), then this excess is recognized immediately in profit or loss as a gain on a bargain
purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is
allocated to each cash-generating unit, or groups of cash-generating units, that is expected to benefit from
the synergies of the combination and is tested annually for impairment (see note 2(j)). Each unit or groups of
units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is
monitored for internal management purpose. Goodwill is monitored at the operating segment level.
On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is
included in the calculation of the gain or loss on disposal.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Other intangible assets
Other intangible assets that are acquired by the Group are stated in the balance sheet at cost less accumulated
amortization (where the estimated useful life is finite) and impairment losses (see note 2(j)). Amortization of
intangible assets with finite useful lives is recorded in other operating expenses on a straight-line basis over
the assets’ estimated useful lives, from the date they are available for use. Both the period and method of
amortization are reviewed annually.
Intangible assets are not amortized where their useful lives are assessed to be indefinite. The useful life
of an intangible asset that is not being amortized is reviewed annually to determine whether events and
circumstances continue to support the indefinite useful life assessment for that asset. Otherwise, the change
in useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in
accordance with the policy for amortization of intangible assets with finite lives as set out above.
(g) Other financial assets
Other financial assets represent investments in unquoted equity securities (other than investments in
subsidiaries and interest in associates), which are recognized in the balance sheet at cost less impairment
losses (see note 2(j)) when those investments in equity securities do not have a quoted market price in an
active market and their fair value cannot be reliably measured.
(h) Property, plant and equipment
Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and
impairment losses (see note 2(j)).
The cost of property, plant and equipment comprises the purchase price and any directly attributable costs of
bringing the asset to its working location and condition for its intended use. Subsequent expenditure relating
to an item of property, plant and equipment that has already been recognized is added to the carrying amount
of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of
performance of the existing asset, will flow to the entity. All other subsequent expenditure is recognized as an
expense in the period in which it is incurred.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are
determined as the difference between the net disposal proceeds and the carrying amount of the item and are
recognized in profit or loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated
residual value, if any, using the straight-line method over their estimated useful lives as follows:
Buildings
Telecommunications transceivers, switching centers,
transmission and other network equipment
Office equipment, furniture, fixtures and others
Both the assets’ useful lives and residual values, if any, are reviewed annually.
8–30 years
5–10 years
3–10 years
86
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i)
Leased assets
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group
determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time
in return for a payment or a series of payments. Such a determination is made based on an evaluation of the
substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.
(i)
Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group substantially all the risks and
rewards of ownership are classified as being held under finance leases. Leases which do not transfer
substantially all the risks and rewards of ownership to the Group are classified as operating leases.
(ii) Assets acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts representing the fair
value of the leased asset, or, if lower, the present value of the minimum lease payments of such assets is
included in property, plant and equipment and the corresponding liabilities, net of finance charges, are
recorded as obligations under finance leases. Depreciation is provided for at rates, which write off the
cost of the assets over the term of the relevant lease or, where it is likely the Group will obtain ownership
of the asset, the useful life of the asset as set out in note 2(h). Impairment losses are accounted for
in accordance with the accounting policy as set out in note 2(j). Finance charges implicit in the lease
payments are charged to profit or loss over the period of the leases so as to produce an approximately
constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. There
were no contingent rentals recognized by the Group during the years presented.
(iii) Operating lease charges
Where the Group has the use of assets held under operating leases, payments made under the leases
are charged to profit or loss in equal instalments over the accounting periods covered by the lease term,
except where an alternative basis is more representative of the pattern of benefits to be derived from the
leased asset. Lease incentives received are recognized in profit or loss as an integral part of the aggregate
net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in
which they are incurred. There were no contingent rentals recognized by the Group during the years
presented.
The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the
period of the lease term.
(iv) Sale and leaseback
A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset.
The accounting treatment of a sale and leaseback transaction depends upon the type of lease involved.
If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the
carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be
deferred and amortized over the lease term. If a sale and leaseback transaction results in an operating
lease, and it is clear that the transaction is established at fair value, any profit or loss shall be recognized
immediately. If the sale price is below fair value, any profit or loss shall be recognized immediately except
that, if the loss is compensated for by future lease payments at below market price, it shall be deferred
and amortized in proportion to the lease payments over the period for which the asset is expected to be
used. If the sale price is above fair value, the excess over fair value shall be deferred and amortized over
the period for which the asset is expected to be used.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Impairment of assets
(i)
Impairment of investments in equity securities, available-for-sale financial assets and receivables
Investments in equity securities (other than investments in subsidiaries), available-for-sale financial assets
and receivables are reviewed at the end of each reporting date to determine whether there is objective
evidence of impairment. Objective evidence of impairment includes observable data that comes to the
attention of the Group about one or more of the following loss events:
–
–
–
–
–
significant financial difficulty of the entity;
a breach of contract, such as a default or delinquency in interest or principal payments;
it becoming probable that the entity will enter bankruptcy or other financial reorganization;
significant changes in the technological, market, economic or legal environment that have an
adverse effect on the entity; and
a significant or prolonged decline in the fair value of an investment in an equity instrument below
its cost.
If any such evidence exists, any impairment loss is determined and recognized as follows:
–
–
–
For investment accounted for using the equity method (see note 2(d)), the impairment loss is
measured by comparing the recoverable amount of the investment with its carrying amount in
accordance with note 2(j)(ii). The impairment loss is reversed if there has been a favourable
change in the estimates used to determine the recoverable amount in accordance with note 2(j)(ii).
For unquoted equity securities carried at cost, the impairment loss is measured as the difference
between the carrying amount of the financial asset and the estimated future cash flows, discounted
at the current market rate of return for a similar financial asset where the effect of discounting is
material. Impairment losses for such equity securities are not reversed.
For debt instruments classified as available-for-sale financial assets, if any impairment evidence
exists, the cumulative loss (measured as the difference between the acquisition cost (net of any
principal repayment and amortization) and the current fair value, less any impairment loss on that
financial asset previously recognized in profit or loss) is removed from equity and recognized in
profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-
for-sale increases and the increase can be objectively related to an event occurring after the
impairment loss was recognized in profit or loss, the impairment loss is reversed through profit
or loss. For equity instruments classified as available-for-sale financial assets, a significant or
prolonged decline in the fair value of the security below its cost is also evidence that the assets
are impaired. If any impairment evidence exists, the cumulative loss (measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial
asset previously recognized in profit or loss) is removed from equity and recognized in profit or loss.
Impairment losses recognized in profit or loss on equity instruments are not reversed through profit
or loss.
88
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Impairment of assets (Continued)
(i)
Impairment of investments in equity securities, available-for-sale financial assets and receivables
(Continued)
–
For trade and other current receivables and other financial assets carried at amortized cost, the
impairment loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the financial asset’s original effective interest
rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect
of discounting is material. This assessment is made collectively where these financial assets share
similar risk characteristics, such as similar past due status, and have not been individually assessed
as impaired. Future cash flows for financial assets which are assessed for impairment collectively
are based on historical loss experience for assets with credit risk characteristics similar to the
collective group. If in a subsequent period the amount of an impairment loss decreases and the
decrease can be linked objectively to an event occurring after the impairment loss was recognized,
the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not
result in the asset’s carrying amount exceeding that which would have been determined had no
impairment loss been recognized in prior years.
Impairment losses are written off against the corresponding assets directly, except for impairment
losses recognized in respect of debtors included within trade and other receivables, whose recovery is
considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded
using an allowance account. When the Group is satisfied that recovery is remote, the amount considered
irrecoverable is written off against trade debtors directly and any amounts held in the allowance account
relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance
account are reversed against the allowance account. Other changes in the allowance account and
subsequent recoveries of amounts previously written off directly are recognized in profit or loss.
(ii)
Impairment of other assets
Internal and external sources of information are reviewed at the end of each reporting period to identify
indications that the following assets may be impaired or, except in the case of goodwill and intangible
assets with indefinite useful lives, an impairment loss previously recognized no longer exists or may have
decreased:
–
–
–
–
–
–
property, plant and equipment;
construction in progress;
prepaid interests in leasehold land classified as being held under an operating lease;
investments in subsidiaries;
goodwill; and
other intangible assets.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Impairment of assets (Continued)
(ii)
Impairment of other assets (Continued)
If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and other
intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether
or not there is any indication of impairment.
–
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. Where an asset does not generate cash inflows largely
independent of those from other assets, the recoverable amount is determined for the smallest
group of assets that generates cash inflows independently (i.e. a cash-generating unit).
–
Recognition of impairment losses
An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-
generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized
in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of
the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of
an asset will not be reduced below its individual fair value less costs of disposal, or value in use, if
determinable.
–
Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a
favourable change in the estimates used to determine the recoverable amount. An impairment loss
in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have been
determined had no impairment loss been recognized in prior years. Reversals of impairment losses
are credited to profit or loss in the year in which the reversals are recognized.
(k) Construction in progress
Construction in progress is stated at cost less impairment losses (see note 2(j)). Cost comprises direct
costs of construction as well as interest expense and exchange differences capitalized during the periods of
construction and installation. Capitalization of these costs ceases and the construction in progress is transferred
to property, plant and equipment when substantially all the activities necessary to prepare the assets for their
intended use are completed. No depreciation is provided for in respect of construction in progress until it is
completed and ready for its intended use.
90
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l)
Inventories
Inventories are carried at the lower of cost and net realizable value. Cost represents purchase cost of goods
calculated using the weighted average cost method. Net realizable value is determined by reference to the
sales proceeds of items sold in the ordinary course of business or to management’s estimates based on
prevailing market conditions.
When inventories are sold, the carrying amount of those inventories is recognized as cost of products sold.
The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized
as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of
inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of
inventories recognized as an expense in the period in which the reversal occurs. No reversal of any write-down
of inventories occurred during the years presented.
(m) Accounts receivable and other receivables
Accounts receivable and other receivables are initially recognized at fair value and thereafter stated at
amortized cost using the effective interest method less allowance for impairment loss (see note 2(j)), except
where the effect of discounting would be immaterial.
(n) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose of it within 12 months of the end of the reporting period.
Regular way purchases and sales of available-for-sale financial assets are recognized on the trade-date (the
date on which the Group commits to purchase or sell the asset). The investments are initially recognized at fair
value plus transaction costs and are subsequently carried at fair value. Changes in the fair value of available-
for-sale financial assets are recognized in other comprehensive income.
Available-for-sale financial assets are derecognized when the rights to receive cash flows from the investments
have expired or have been transferred and the Group has transferred substantially all risks and rewards of
ownership.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognized in equity is
removed and recognized in profit or loss.
Interest on available-for-sale debt instruments calculated using the effective interest method is recognized
in profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the
Group’s right to receive payments is established.
(o) Deferred revenue
Deferred revenue consists primarily of prepaid service fees received from customers which are generally not
refundable and revenue deferred for unredeemed point rewards under Customer Point Reward Program
(“Reward Program”, see note 2(s)(iv)).
The prepaid service fees are stated at the amount of proceeds received less the amount already recognized as
revenue.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p)
Interest-bearing borrowings
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent
to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between
the amount initially recognized and redemption value being recognized in profit or loss over the period of the
borrowings, together with any interest and fees payable, using the effective interest method.
(q) Accounts payable and other payables
Accounts payable and other payables are initially recognized at fair value and subsequently stated at amortized
cost unless the effect of discounting would be immaterial.
(r) Cash and cash equivalents
Cash and cash equivalents comprise bank deposits with original maturity within three months, cash at banks
and in hand, demand deposits with banks, and short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in value, having been
within three months of maturity at acquisition.
(s) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable
that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured
reliably, revenue is recognized in profit or loss as follows:
(i)
revenue derived from voice and data services are recognized when the service is rendered;
(ii)
sales of products are recognized when the title is passed to the buyer;
(iii)
(iv)
for offerings which include the provision of services and sale of mobile handset, the Group determines
the revenue from the sale of the mobile handset by deducting the fair value of the service element from
the total contract consideration; and
for transactions which offer customer points reward when services are provided, the consideration
allocated to the customer points reward is based on its fair value which is recorded as deferred revenue
when the rewards are granted and recognized as revenue when the points are redeemed or expired.
(t)
Interest income
Interest income is recognized as it accrues using the effective interest method.
(u)
Income tax
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax
and movements in deferred tax assets and liabilities are recognized in profit or loss except items recognized in
other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in
other comprehensive income or directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being
the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their
tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
92
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u)
Income tax (Continued)
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it
is probable that future taxable profits will be available against which the asset can be utilized, are recognized.
Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary
differences include those that will arise from the reversal of existing taxable temporary differences, provided
those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse
either in the same period as the expected reversal of the deductible temporary difference or in periods into
which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are
adopted when determining whether existing taxable temporary differences support the recognition of deferred
tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they
relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or
periods, in which the tax loss or credit can be utilized.
The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences
arising from initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit (provided they are not part of a business combination), and temporary differences
relating to investments in subsidiaries and associates to the extent that, in the case of taxable temporary
differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse
in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in
the future.
The amount of deferred tax recognized is measured based on the expected manner of realization or settlement
of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date. Deferred tax assets and liabilities are not discounted.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax
benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.
Current tax balances and deferred tax balances, and movements therein, are presented separately from each
other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets
against deferred tax liabilities, if the Group has the legally enforceable right to set off current tax assets against
current tax liabilities and the following additional conditions are met:
–
–
in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously; or
in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation
authority on either:
–
–
the same taxable entity; or
different taxable entities, which, in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets
and settle the current tax liabilities on a net basis or realize and settle simultaneously.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Provisions and contingent liabilities
Provisions are recognized for liabilities of uncertain timing or amount when the Group has a legal or
constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will
be required to settle the obligation and the amount can be estimated reliably. Where the time value of money is
material, provisions are stated at the present value of the expenditures expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic
benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-
occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of
outflow of economic benefits is remote.
(w) Employee benefits
(i)
Short-term employee benefits and contributions to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave, leave passage, contributions to defined contribution
retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated
services are rendered by employees. Where payment or settlement is deferred and the effect would be
material, these amounts are stated at their present values.
The Company and subsidiaries incorporated in Hong Kong are required to make contributions to
Mandatory Provident Funds under the Hong Kong Mandatory Provident Fund (“MPF”) Schemes
Ordinance. Under the MPF scheme, the employer and its employees are each required to make
contributions to the scheme at 5% of the employees’ relevant income, subject to a cap of monthly
relevant income of HK$30,000 (HK$25,000 prior to June 2014). Such contributions are recognized as
an expense in profit or loss as incurred.
The employees of the subsidiaries in Mainland China participate in the defined contribution retirement
plans managed by the local government authorities whereby the subsidiaries are required to contribute
to the schemes at fixed rates of the employees’ salary costs. In addition to the local governmental defined
contribution retirement plans, the subsidiaries also participate in a pension scheme launched by the
Group managed by an independent insurance company whereby the subsidiaries are required to make
contributions to the retirement plans at fixed rates of the employees’ salary costs or in accordance with
the terms of the plans. The Group’s contributions to these plans are charged to profit or loss when
incurred.
The Company and subsidiaries have no obligations for the payment of retirement and other post-
retirement benefits of staff other than the contributions described above.
94
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(w) Employee benefits (Continued)
(ii) Share-based payments
The fair value of share options granted to employees is recognized as an employee cost with a
corresponding increase in a capital reserve within equity. The fair value is measured at grant date using
the binomial lattice model, taking into account the terms and conditions upon which the options were
granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled
to the options, the total estimated fair value of the options is spread over the vesting period, taking into
account the probability that the options will vest.
During the vesting period, the number of share options that is expected to vest is reviewed at each
balance sheet date. Any resulting adjustment to the cumulative fair value recognized in prior years is
credited/charged to the profit or loss for the year of the review, unless the original employee expenses
qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting
date, the amount recognized as an expense is adjusted to reflect the actual number of share options that
vest (with a corresponding adjustment to the capital reserve). The equity amount is recognized in the
capital reserve until either the option is exercised (when it is transferred to the share capital account (share
premium account before 3 March 2014)) or the option expires (when it is released directly to retained
profits). In the Company’s balance sheet, share-based payment transactions in which the Company
grants share options to subsidiaries’ employees are accounted for as an increase in value of investments
in subsidiaries, which is eliminated on consolidation.
(iii) Termination benefits
Termination benefits are recognized when, and only when, the Group demonstrably commits itself to
terminate employment which is without realistic possibility of withdrawal or to provide benefits as a
result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of
withdrawal.
(x) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of
the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.
The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure
for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceased
when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are
interrupted or completed.
(y) Translation of foreign currencies
The functional currency of major entities within the Group is RMB. The Group adopted RMB as its presentation
currency in the preparation of the financial statements, which is the currency of the primary economic
environment in which most of the Group’s entities operate.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(y) Translation of foreign currencies (Continued)
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the
transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency
are retranslated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are
recognized in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates
ruling at the dates the fair value was determined.
The results of overseas entities are translated into RMB at the exchange rates approximating the foreign
exchange rate ruling at the dates of transactions. Balance sheet items are translated into RMB at the
exchange rates ruling at the balance sheet date. The resulting exchange differences are recognized in other
comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of an
overseas entity, the cumulative amount of the exchange differences relating to that particular foreign operation is
reclassified from equity to profit or loss.
For the purpose of the consolidated statement of cash flows, the cash flows of overseas entities within the
Group are translated into RMB by using the exchange rates approximating the foreign exchange rate ruling at
the dates of the cash flows.
(z) Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i)
has control or joint control of the Group;
(ii)
has significant influence over the Group; or
(iii)
is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i)
The entity and the Group are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others);
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member);
(iii) Both entities are joint ventures of the same third party;
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Group or an
entity related to the Group;
(vi) The entity is controlled or jointly controlled by a person identified in note 2(z)(a); or
(vii) A person identified in note 2(z)(a)(i) has significant influence over the entity or is a member of the
key management personnel of the entity (or of a parent of the entity).
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
96
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
2
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(aa) Segment reporting
An operating segment is a component of the Group that engages in business activities from which the Group
may earn revenue and incur expenses, and is identified on the basis of the internal financial reports that
are provided to and regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) in order to
allocate resources and assess performance of the segment. The CODM has been identified as the Executive
Directors of the Company. For the years presented, the Group as a whole is an operating segment since the
Group is only engaged in telecommunications and related businesses. No geographical information has been
disclosed as the majority of the Group’s operating activities are carried out in Mainland China. The Group’s assets
located and operating revenue derived from activities outside Mainland China are less than 5% of the Group’s
assets and operating revenue, respectively.
(ab) Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s and the
Company’s financial statements in the period in which the dividends are approved by the Company’s
shareholders or directors, where appropriate.
3
CHANGES IN ACCOUNTING POLICIES
The Group has adopted certain amended IFRS/HKFRS effective for accounting period beginning on 1 January 2015.
Details of the adoption are as follows:
–
–
–
Amendment to IAS/HKAS 19, “Employee Benefits”.
Amendments from annual improvements to IFRSs/HKFRSs 2010–2012 Cycle, on IFRS/HKFRS 8, “Operating
Segments”, IAS/HKAS 16, “Property, Plant and Equipment”, IAS/HKAS 38, “Intangible Assets” and IAS/HKAS
24, “Related Party Disclosures”.
Amendments from annual improvements to IFRSs/HKFRSs 2011–2013 Cycle, on IFRS/HKFRS 3, “Business
Combinations”, IFRS/HKFRS 13, “Fair Value Measurement” and IAS/HKAS 40, “Investment Property”.
The adoption of the above amended standards did not have material impact on the Group’s financial statements. The
Group did not apply any other amendments, new standards or interpretation that is not yet effective for the current
accounting year (see note 42).
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
4
OPERATING REVENUE
Revenue from telecommunications services
Voice services
Data services
Others
Revenue from sales of products and others
2015
Million
2014
As restated
Million
261,896
303,425
18,768
584,089
84,246
313,476
258,462
19,664
591,602
59,907
668,335
651,509
On 29 April 2014, a notification (the “Cai Shui [2014] No. 43”) was jointly issued by the Ministry of Finance and the
State Administration of Taxation of the People’s Republic of China (“SAT”), and as approved by the State Council of
the People’s Republic of China, the telecommunications industry would be included in the scope of the pilot program
for the transformation from business tax to value-added tax (the “VAT Program”) from 1 June 2014. According to the
Cai Shui [2014] No. 43, the value-added tax rates for the provision of basic telecommunications services and value-
added telecommunications services are 11% and 6%, respectively. With the implementation of the VAT Program
from 1 June 2014, the Group is not required to pay the business tax of 3% on the telecommunications services.
5
EMPLOYEE BENEFIT AND RELATED EXPENSES
Salaries, wages, labor service expenses and other benefits
Retirement costs: contributions to defined contribution retirement plans
2015
Million
67,622
7,183
2014
As restated
Million
64,715
5,670
74,805
70,385
In accordance with requirements of reducing the proportion of labor sourced by third parties that provide services
to the Group (“outsourcing labor”) among total labor under “Amendment to Labor Contract Law of the PRC” and its
associated rules and regulations, the Group has made adjustment on the structure of employees and outsourcing
labor. Such adjustment leads to the increase in number of employees and the decrease in number of outsourcing
labor in 2015. In order to reasonably reflect the composition and fluctuation of employee benefit and related
expenses, the Group presents employee benefit and related expenses by combining personnel expenses and labor
service expenses, the latter of which was presented under other operating expenses prior to 2015. The comparative
figures have been presented on the same basis.
98
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
6
OTHER OPERATING EXPENSES
Maintenance
Impairment loss of doubtful accounts
Impairment loss of goodwill (note 17)
Write-down of inventories
Amortization of other intangible assets
Operating lease charges
– land and buildings
– others
Gain on disposal of property, plant and equipment
Write-off and impairment of property, plant and equipment
(note 14)
Auditors’ remuneration
– audit services
– tax services
– other services
Others
Note:
Note
(i)
(ii)
(iii)
2015
Million
53,991
4,839
–
272
274
13,447
6,186
(4)
2014
As restated
Million
52,883
5,536
1,594
293
112
12,722
4,834
(1)
7,614
2,383
97
1
4
91
–
6
75,572
71,051
162,293
151,504
(i)
Other operating lease charges represent the operating lease charges for motor vehicles, computer and other office equipment.
(ii)
(iii)
Audit services include reporting on the Group’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of
the United States of America with the service fee amount of RMB20,000,000 (2014: RMB20,000,000).
Others consist of office expenses, utilities charges, travelling expenses, entertainment expenses, spectrum charges, consultancy and
professional fees, consumables and supplies, and other miscellaneous expenses.
7
GAIN ON THE TRANSFER OF TOWER ASSETS
In 2014, China Mobile Communication Co., Ltd. (“CMC”), a wholly-owned subsidiary of the Company, entered
into an agreement with China United Network Communications Corporation Limited (“China Unicom”) and China
Telecom Corporation Limited (“China Telecom”) to establish China Tower. Pursuant to the agreement, CMC
contributed RMB4,000,000,000 in cash, which represents 40.0% of the registered capital of China Tower upon its
establishment. China Tower engages in construction, maintenance and operation of telecommunications towers. The
Group recognized the investment as interest in an associate considering the Group can exercise significant influence
over financial and operating policy decisions of China Tower.
On 14 October 2015, CMC, jointly with China Unicom, China Telecom, and China Reform Holdings Corporation
Ltd. (“CRHC”), entered into an agreement with China Tower, pursuant to which China Tower (i) purchased
telecommunications towers and related assets (“Tower Assets”) from CMC, China Unicom and China Telecom and
(ii) issued new equity shares to CRHC. The consideration of Tower Assets was determined based on the appraised
value and subject to adjustment in accordance with the terms of the transaction agreement by each party as of the
date of delivery. China Tower agreed to settle the consideration by way of issuing its equity shares to each party, plus
cash consideration equalling to the excess of total consideration over the amount settled by equity shares. Upon
completion of the above transactions, China Tower would be owned by CMC, China Unicom, China Telecom and
CRHC with their respective shares of equity interests of 38.0%, 28.1%, 27.9% and 6.0%.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
7
GAIN ON THE TRANSFER OF TOWER ASSETS (CONTINUED)
On 31 October 2015, CMC completed the transfer of its Tower Assets to China Tower. In return, China Tower
issued 45,151,000,000 equity shares at a par value of RMB1 per share to CMC. In addition, China Tower shall
pay CMC the remaining cash consideration of RMB57,585,000,000, within which China Tower has made the first
payment of RMB5,000,000,000 in February 2016. The remaining balance of cash consideration amounting to
RMB52,585,000,000 is deferred and to be settled before 31 December 2017. In addition, China Tower will pay
interest associated with the unpaid cash consideration to CMC from 1 November 2015 at a pre-determined interest
rate, which is 90% of the financial institution’s one year benchmark lending rate announced by the People’s Bank of
China (“PBOC”) on the completion date of the transaction, i.e. 31 October 2015.
The gain arising from the transfer of CMC’s Tower Assets, which has eliminated unrealized profits due to the Group’s
interest in China Tower, is recorded as “Gain on the transfer of Tower Assets” in the consolidated statement of
comprehensive income for the year ended 31 December 2015. The following table summarizes the calculation of the
gain on the transfer of Tower Assets:
Total consideration
– Consideration in equity shares
– Consideration in cash, deferred and undiscounted
Net book value of the Tower Assets
Taxes, surcharges and others
Elimination of unrealized profits resulting from transactions
between the Group and its associate
Gain on the transfer of Tower Assets
2015
Million
102,736
45,151
57,585
(78,763)
(2,260)
(6,188)
15,525
The gain, net of taxation, on transfer of Tower Assets, after considering the income tax effect associated with the
transfer of Tower Assets, amounted to RMB10,096,000,000.
Upon the completion of the transfer of Tower Assets, based on the proposed pricing calculation mechanism of
Tower Assets’ usage and the actual usage, the Company has accrued the corresponding expense of approximately
RMB5,563,000,000 in the Group’s consolidated statement of comprehensive income for the year ended 31
December 2015.
8
OTHER GAINS
2015
Million
658
11
1,131
2014
As restated
Million
515
–
656
1,800
1,171
Penalty income
Dividend income from unlisted securities
Others
100 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
9
FINANCE COSTS
Interest on bonds
Interest on entrusted loans and bank deposits (note 37(a))
Others
10 DIRECTORS’ REMUNERATION
Directors’ remuneration during the year is as follows:
2015
Million
2014
As restated
Million
257
194
4
455
274
211
2
487
Contributions
relating to
social insurance,
housing fund and
retirement
scheme
’000
Salaries,
allowances
and bonuses
’000
Directors’ fees
’000
Executive directors (Expressed in RMB)
SHANG Bing*
XI Guohua**
LI Yue (Chief Executive Officer)
XUE Taohai
HUANG Wenlin***
SHA Yuejia
LIU Aili
Independent non-executive directors
(Expressed in Hong Kong dollar)
LO Ka Shui
WONG Kwong Shing, Frank
CHENG Mo Chi, Moses
CHOW Man Yiu, Paul
–
–
–
–
–
–
–
–
325.0
470.0
440.0
330.0
1,565.0
2015 Total
’000
136.7
489.6
574.9
521.5
160.4
498.1
498.1
106.7
376.6
437.1
386.9
138.8
365.4
365.4
30.0
113.0
137.8
134.6
21.6
132.7
132.7
2,176.9
702.4
2,879.3
–
–
–
–
–
–
–
–
–
–
325.0
470.0
440.0
330.0
1,565.0
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
10 DIRECTORS’ REMUNERATION (CONTINUED)
Directors’ remuneration during the year is as follows (Continued):
(Expressed in Hong Kong dollar)
Executive directors
XI Guohua
LI Yue (Chief Executive Officer)
XUE Taohai
HUANG Wenlin
SHA Yuejia
LIU Aili
Independent non-executive directors
LO Ka Shui
WONG Kwong Shing, Frank
CHENG Mo Chi, Moses
CHOW Man Yiu, Paul
Salaries,
allowances
and benefits
in kind
’000
Directors’ fees
’000
Performance
related
bonuses
’000
Retirement
scheme
contributions
’000
2014 Total
’000
180
180
180
180
180
180
325
470
440
330
1,174
1,067
960
960
960
960
–
–
–
–
565
513
462
462
462
462
–
–
–
–
256
234
210
210
210
210
–
–
–
–
2,175
1,994
1,812
1,812
1,812
1,812
325
470
440
330
2,645
6,081
2,926
1,330
12,982
*
Mr. SHANG Bing was appointed as an executive director and chairman of the Company with effect from 10 September 2015.
**
Mr. XI Guohua resigned from the position as executive director and chairman of the Company with effect from 24 August 2015.
*** Madam HUANG Wenlin resigned from the position as executive director of the Company with effect from 19 March 2015.
In 2015, executive directors of the Company voluntarily waived their directors’ fees.
The unpaid portion of executive directors’ performance related bonuses for 2015 will be paid based on the evaluation
conducted in 2016, and the additional bonuses related to their term of service will be paid based on the evaluation
conducted upon the completion of three-year evaluation period.
102 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
11
INDIVIDUALS WITH HIGHEST EMOLUMENTS
For the year ended 31 December 2014, all of the five individuals with the highest emoluments are directors whose
emoluments are disclosed in note 10.
For the year ended 31 December 2015, none of the five individuals with the highest emoluments in the Group are
directors. The emoluments payable to the five individuals during 2015 are as follows:
(Expressed in RMB)
Salaries, allowances and benefits in kind
Performance related bonuses
Retirement scheme contributions
The emoluments fell within the following bands:
Emolument bands (in RMB)
1,500,001–2,000,000
2,000,001–2,500,000
12
TAXATION
(a) Taxation in the consolidated statement of comprehensive income represents:
Current tax
Provision for Hong Kong profits tax
on the estimated assessable profits for the year
Provision for the PRC enterprise income tax
on the estimated taxable profits for the year
Note
(i)
(ii)
2015
’000
8,134.8
1,814.1
148.2
10,097.1
Number of
individuals
2015
4
1
2015
Million
2014
As restated
Million
164
113
39,588
36,204
39,752
36,317
Deferred tax
Origination and reversal of temporary
differences (note 20)
(iii)
(4,673)
(3,138)
35,079
33,179
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
12
TAXATION (CONTINUED)
(a) Taxation in the consolidated statement of comprehensive income represents: (Continued)
Note:
(i)
(ii)
(iii)
(iv)
The provision for Hong Kong profits tax is calculated at 16.5% (2014: 16.5%) of the estimated assessable profits for the year ended 31
December 2015.
The provision for the PRC enterprise income tax is based on the statutory tax rate of 25% (2014: 25%) on the estimated taxable profits
determined in accordance with the relevant income tax rules and regulations of the PRC for the year ended 31 December 2015.
Certain subsidiaries of the Company enjoy the preferential tax rate of 15% (2014: 15%).
Deferred taxes of the Group are recognized based on tax rates that are expected to apply to the periods when the temporary differences
are realized or settled.
On 22 April 2009, SAT issued the “Notice regarding Matters on Determination of Tax Residence Status of Chinese-controlled Offshore
Incorporated Enterprises under Rules of Effective Management” (“2009 Notice”). The Company is qualified as a PRC offshore-
registered resident enterprise for purposes of the 2009 Notice. In accordance with the 2009 Notice and the PRC enterprise income tax
law, the dividend income of the Company from its subsidiaries in the PRC is exempted from PRC enterprise income tax.
(b) Reconciliation between income tax expense and accounting profit at applicable tax rates:
Profit before taxation
Notional tax on profit before tax, calculated
at the PRC’s statutory tax rate of 25% (note)
Tax effect of non-taxable items
– Share of profit of associates
– Interest income
Tax effect of non-deductible expenses on the PRC operations
Tax effect of non-deductible expenses on Hong Kong operations
Rate differential of certain PRC operations (note 12(a)(ii))
Rate differential on Hong Kong operations
Tax effect of goodwill impairment loss
Tax effect of unrecognized temporary difference
Tax effect of unrecognized tax loss for
which no deferred tax asset was recognized
Tax effect on the eliminated unrealized profits related
to the transfer of Tower Assets
Others
Taxation
2015
Million
2014
As restated
Million
143,734
142,522
35,934
35,631
(2,023)
(2,062)
(31)
986
68
(1,576)
(122)
–
98
356
1,547
(158)
(26)
693
46
(1,329)
(107)
398
–
116
–
(181)
35,079
33,179
Note: The PRC’s statutory tax rate is adopted as the majority of the Group’s operations are subject to this rate.
104 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
13 EARNINGS PER SHARE
(a) Basic earnings per share
The calculation of basic earnings per share for the year is based on the profit attributable to equity shareholders
of the Company of RMB108,539,000,000 (2014: RMB109,218,000,000) and the weighted average number of
20,473,119,088 shares (2014: 20,293,253,516 shares) in issue during the year, calculated as follows:
Weighted average number of shares
Issued shares as at 1 January
Effect of share options exercised
2015
Number
of shares
2014
Number
of shares
20,438,426,514
20,102,539,665
34,692,574
190,713,851
Weighted average number of shares in issue during the year
20,473,119,088
20,293,253,516
(b) Diluted earnings per share
The calculation of diluted earnings per share for the year is based on the profit attributable to equity
shareholders of the Company of RMB108,539,000,000 (2014: RMB109,218,000,000) and the weighted
average number of 20,479,705,763 shares (2014: 20,408,441,343 shares), calculated as follows:
Weighted average number of shares (diluted)
2015
Number
of shares
2014
Number
of shares
Weighted average number of shares in issue during the year
20,473,119,088
20,293,253,516
Dilutive equivalent shares arising from share options
6,586,675
115,187,827
Weighted average number of shares (diluted) during the year
20,479,705,763
20,408,441,343
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
14 PROPERTY, PLANT AND EQUIPMENT
Telecommunications
transceivers,
switching centers,
transmission and
other network
equipment
Million
Buildings
Million
Office equipment,
furniture,
fixtures
and others
Million
Total
Million
Cost:
As at 1 January 2014 (As previously reported)
Acquisition of Target Assets and Businesses (note 2(b))
126,205
3,735
927,634
76,876
19,334
1,073,173
830
81,441
As at 1 January 2014 (As restated)
129,940
1,004,510
20,164
1,154,614
Additions
Transferred from construction in progress
Disposals
Assets written-off
Exchange differences
184
13,906
(3)
(431)
6
801
191,950
(7)
(42,416)
10
835
1,998
(10)
(1,450)
–
1,820
207,854
(20)
(44,297)
16
As at 31 December 2014 (As restated)
143,602
1,154,848
21,537
1,319,987
As at 1 January 2015 (As previously reported)
139,851
1,074,593
20,611
1,235,055
Acquisition of Target Assets and Businesses (note 2(b))
3,751
80,255
926
84,932
As at 1 January 2015 (As restated)
143,602
1,154,848
21,537
1,319,987
Additions
Transferred from construction in progress
Transfer of Tower Assets to China Tower (note 7)
Disposals
Assets written-off
Exchange differences
119
13,225
(25,014)
(1)
(2,588)
117
837
178,285
(133,164)
(84)
(26,130)
211
580
2,099
(212)
(24)
(1,199)
3
1,536
193,609
(158,390)
(109)
(29,917)
331
As at 31 December 2015
129,460
1,174,803
22,784
1,327,047
106 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Telecommunications
transceivers,
switching centers,
transmission and
other network
equipment
Million
Office equipment,
furniture,
fixtures
and others
Million
548,690
38,094
586,784
114,243
(7)
11,931
539
12,470
2,604
(9)
Total
Million
593,946
40,097
634,043
122,844
(17)
(40,190)
(1,335)
(41,914)
5
–
8
Buildings
Million
33,325
1,464
34,789
5,997
(1)
(389)
3
Accumulated depreciation and impairment:
As at 1 January 2014 (As previously reported)
Acquisition of Target Assets and Businesses (note 2(b))
As at 1 January 2014 (As restated)
Charge for the year
Written back on disposals
Assets written-off
Exchange differences
As at 31 December 2014 (As restated)
40,399
660,835
13,730
714,964
As at 1 January 2015 (As previously reported)
Acquisition of Target Assets and Businesses (note 2(b))
As at 1 January 2015 (As restated)
Charge for the year
Transfer of Tower Assets to China Tower (note 7)
Written back on disposals
38,796
1,603
40,399
6,542
(8,317)
(1)
618,275
42,560
660,835
127,888
(80,765)
(84)
13,189
541
13,730
2,428
(97)
(21)
Assets written-off and impairment loss
(1,813)
(18,456)
(1,014)
Exchange differences
15
146
1
670,260
44,704
714,964
136,858
(89,179)
(106)
(21,283)
162
As at 31 December 2015
36,825
689,564
15,027
741,416
Net book value:
As at 31 December 2015
92,635
485,239
7,757
585,631
As at 31 December 2014 (As restated)
103,203
494,013
7,807
605,023
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
During 2015, CMC transferred its Tower Assets including property, plant and equipment with cost and accumulated
depreciation and impairment of RMB158,390,000,000 and RMB89,179,000,000, respectively, to China Tower.
The gain arising from the transfer of the Tower Assets is recorded as “Gain on the transfer of Tower Assets” in the
consolidated statement of comprehensive income for the year ended 31 December 2015. Please refer to note 7 for
details.
Write-off of property, plant and equipment mainly represents the retirement of individual network asset due to
obsolescence or damages. Such assets have been disconnected from existing network, abandoned or demolished.
Total net book value of such assets written off was RMB2,667,000,000 in 2015 (2014: RMB2,383,000,000),
including the assets of net book value amounting to RMB765,000,000 attributable to the ultimate holding company.
These assets were disposed at scrap value.
With the rapid growth of the Group’s 4G operation in 2015, the strategy of ramping up the internet connection
speed with lower tariff, continuing technology changes, and further development of wireline broadband business,
management anticipates more pressure on the growth and profitability of the Wireless Local Area Network (“WLAN”)
business. Therefore, management performed impairment testing on the WLAN and related terminal transmission
equipment (“WLAN Equipment”) as at 31 December 2015. For the impairment testing purpose, the recoverable
values of WLAN Equipment was determined based on value-in-use calculations, i.e. the present value of estimated
future net cash flows expected to arise from the continuing use of the WLAN Equipment. In estimating the present
value of future net cash flows, after considering the historical results, the prevailing market trends and the expected
remaining useful lives of related WLAN Equipment, the Group has made key assumptions and estimates on the
appropriate pre-tax discount rate of 10%, the period covered by the cash flow forecast of 3 years, and the estimated
decrease in revenue by 10% per annum on average. Based on the impairment testing results, the Group recognized
an impairment loss of RMB5,967,000,000 for the year ended 31 December 2015 (2014: nil).
15 CONSTRUCTION IN PROGRESS
As at 1 January
Additions
Transferred to property, plant and equipment
Transfer of Tower Assets to China Tower (note 7)
2015
Million
95,110
192,737
2014
As restated
Million
91,600
211,364
(193,609)
(207,854)
(6,226)
–
As at 31 December
88,012
95,110
Construction in progress primarily comprises expenditure incurred on the network expansion projects but not yet
completed as at 31 December 2015.
108 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
16
LAND LEASE PREPAYMENTS AND OTHERS
For the year ended 31 December 2015, the land lease prepayments expensed in the profit or loss amounted to
approximately RMB426,000,000 (2014: approximately RMB407,000,000).
17 GOODWILL
As at 1 January
Impairment
As at 31 December
2015
Million
35,343
–
2014
As restated
Million
36,937
(1,594)
35,343
35,343
Impairment tests for goodwill
As set out in IAS/HKAS 36 “Impairment of Assets”, a cash-generating unit is the smallest identifiable group of assets
that generate cash inflows from continuing use that are largely independent of the cash flows from other assets or
groups of assets. For the purpose of impairment tests of goodwill, goodwill is allocated to groups of cash-generating
units (being subsidiaries acquired in each acquisition). Such groups of cash-generating units represent the lowest
level within the Group for which the goodwill is monitored for internal management purposes.
As at 31 December 2015, the goodwill of RMB35,300,000,000 is attributable to the cash-generating unit in relation
to the operation in Mainland China which management currently monitors. The recoverable amount of the cash-
generating unit is determined based on the value-in-use calculations. Value-in-use is calculated by using the
discounted cash flow method. This method considers the pre-tax cash flows of the subsidiaries (cash-generating
unit) for the five years ending 31 December 2020 with subsequent transition to perpetuity. For the five years ending
31 December 2020, the average growth rate is assumed 1.5% for the operation in Mainland China. For the years
beyond 31 December 2020, the assumed continual growth rates to perpetuity of 1% is used for the operation in
Mainland China. The present value of cash flows is calculated by discounting the cash flow using pre-tax interest
rates of approximately 12%. The management performed impairment test for the goodwill in relation to the operation
in Mainland China and determined such goodwill was not impaired. Reasonably possible changes in key assumptions
will not lead to the goodwill impairment loss.
For the year ended 31 December 2014, with the development of the 4G operation in Hong Kong, the competition
in Hong Kong telecommunications market had become increasingly fierce. Management anticipated more pressure
on the operating performance in future considering the necessity of investment in capital expenditure and increased
marketing expenses to sustain the development of business. As a result, the management made a provision for
impairment loss of goodwill amounting to RMB1,594,000,000 in relation to the operation in Hong Kong based on the
annual impairment test result.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
18 SUBSIDIARIES
The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities
of the Group. The class of shares held is ordinary unless otherwise stated.
Place of
incorporation/
establishment
and operation
Particulars of
issued and
paid up capital
Proportion of
ownership interest
Held by the
Company
Held by a
subsidiary
Principal activity
Name of company*
China Mobile Communication
British Virgin
HK$1
100%
–
Investment holding company
(BVI) Limited
Islands (“BVI”)
CMC **
PRC
RMB1,641,848,326
China Mobile Group
PRC
RMB5,594,840,700
Guangdong Co., Ltd.
(“Guangdong Mobile”)
China Mobile Group
Zhejiang Co., Ltd.
China Mobile Group
Jiangsu Co., Ltd.
China Mobile Group
Fujian Co., Ltd.
China Mobile Group
Henan Co., Ltd.
China Mobile Group
Hainan Co., Ltd.
PRC
PRC
PRC
PRC
PRC
RMB2,117,790,000
RMB2,800,000,000
RMB5,247,480,000
RMB4,367,733,641
RMB643,000,000
China Mobile Group Beijing
PRC
RMB6,124,696,053
Co., Ltd. (“Beijing Mobile”)
China Mobile Group
Shanghai Co., Ltd.
China Mobile Group
Tianjin Co., Ltd.
China Mobile Group
Hebei Co., Ltd.
China Mobile Group
Liaoning Co., Ltd.
PRC
PRC
PRC
PRC
RMB6,038,667,706
RMB2,151,035,483
RMB4,314,668,600
RMB5,140,126,680
110 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
–
–
–
–
–
–
–
–
–
–
–
–
100% Network and business
coordination center
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
18 SUBSIDIARIES (CONTINUED)
Place of
incorporation/
establishment
and operation
Particulars of
issued and
paid up capital
Proportion of
ownership interest
Held by the
Company
Held by a
subsidiary
Principal activity
Name of company*
China Mobile Group
Shandong Co., Ltd.
China Mobile Group
Guangxi Co., Ltd.
China Mobile Group
Anhui Co., Ltd.
China Mobile Group
Jiangxi Co., Ltd.
China Mobile Group
Chongqing Co., Ltd.
China Mobile Group
Sichuan Co., Ltd.
China Mobile Group
Hubei Co., Ltd.
China Mobile Group
Hunan Co., Ltd.
China Mobile Group
Shaanxi Co., Ltd.
China Mobile Group
Shanxi Co., Ltd.
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
RMB6,341,851,146
RMB2,340,750,100
RMB4,099,495,494
RMB2,932,824,234
RMB3,029,645,401
RMB7,483,625,572
RMB3,961,279,556
RMB4,015,668,593
RMB3,171,267,431
RMB2,773,448,313
China Mobile Group
PRC
RMB2,862,621,870
Neimenggu Co., Ltd.
China Mobile Group
Jilin Co., Ltd.
PRC
RMB3,277,579,314
China Mobile Group
PRC
RMB4,500,508,035
Heilongjiang Co., Ltd.
–
–
–
–
–
–
–
–
–
–
–
–
–
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
18 SUBSIDIARIES (CONTINUED)
Place of
incorporation/
establishment
and operation
Particulars of
issued and
paid up capital
Proportion of
ownership interest
Held by the
Company
Held by a
subsidiary
Principal activity
Name of company*
China Mobile Group
Guizhou Co., Ltd.
China Mobile Group
Yunnan Co., Ltd.
China Mobile Group
Xizang Co., Ltd.
China Mobile Group
Gansu Co., Ltd.
China Mobile Group
Qinghai Co., Ltd.
China Mobile Group
Ningxia Co., Ltd.
China Mobile Group
Xinjiang Co., Ltd.
PRC
PRC
PRC
PRC
PRC
PRC
PRC
RMB2,541,981,749
RMB4,137,130,733
RMB848,643,686
RMB1,702,599,589
RMB902,564,911
RMB740,447,232
RMB2,581,599,600
China Mobile Group Design
PRC
RMB160,232,500
Institute Co., Ltd.
–
–
–
–
–
–
–
–
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Mobile telecommunications
operator
100% Provision of telecommunications
network planning design and
consulting services
China Mobile Holding
Company Limited **
PRC
US$30,000,000
100%
–
Investment holding company
China Mobile (Shenzhen)
PRC
US$7,633,000
–
100% Provision of roaming clearance
Limited **
services
Aspire Holdings Limited
Cayman Islands
HK$93,964,583
66.41%
–
Investment holding company
Aspire (BVI) Limited#
Aspire Technologies
(Shenzhen) Limited **#
BVI
PRC
US$1,000
US$10,000,000
–
–
100% Investment holding company
100% Technology platform
development and
maintenance
112 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
18 SUBSIDIARIES (CONTINUED)
Place of
incorporation/
establishment
and operation
Name of company*
Aspire Information Network
(Shenzhen) Limited **#
PRC
Particulars of
issued and
paid up capital
US$5,000,000
Aspire Information Technologies
PRC
US$5,000,000
(Beijing) Limited **#
Fujian FUNO Mobile
PRC
US$3,800,000
Communication Technology
Company Limited ***
Proportion of
ownership interest
Held by the
Company
Held by a
subsidiary
Principal activity
–
–
–
100% Provision of mobile data
solutions, system integration
and development
100% Technology platform
development and
maintenance
51% Network planning and
optimizing construction
testing and supervising,
technology support,
development and training of
Nokia GSM900/1800 Mobile
Communication System
Advanced Roaming &
BVI
Clearing House Limited
US$2
100%
–
Provision of roaming clearance
services
Fit Best Limited
BVI
US$1
100%
–
Investment holding company
China Mobile Hong Kong
Hong Kong
HK$951,046,930
–
100% Provision of mobile
Company Limited (“CMHK”)
telecommunications and
related services
China Mobile International
Hong Kong
HK$10,500,000,000
100%
–
Investment holding company
Holdings Limited
(“CMI Holdings”)
China Mobile International
Hong Kong
HK$3,000,000,000
Limited
China Mobile Group
Device Co., Ltd.
PRC
RMB6,200,000,000
China Mobile Group
Finance Co., Ltd.
(“China Mobile Finance”) ##
PRC
RMB11,627,783,669
–
–
–
100% Provision of voice and roaming
clearance services, internet
services and value-added
services
99.97% Provision of electronic
communication products
design and sale of related
products
92% Provision of non-banking
financial services
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
18 SUBSIDIARIES (CONTINUED)
Place of
incorporation/
establishment
and operation
Particulars of
issued and
paid up capital
Proportion of
ownership interest
Held by the
Company
Held by a
subsidiary
Principal activity
Name of company*
China Mobile M2M Company
Limited (“M2M Company”)
China Mobile (Suzhou)
Software Technology
Co., Ltd.
China Mobile (Hangzhou)
Information Technology
Co., Ltd.
China Mobile Online
Service Co., Ltd.
PRC
PRC
RMB1,000,000,000
RMB700,000,000
PRC
RMB900,000,000
PRC
RMB50,000,000
MIGU Company Limited
PRC
RMB5,500,000,000
CM TieTong
PRC
RMB15,000,000,000
China Mobile Internet
Company Limited
PRC
RMB2,000,000,000
*
The nature of all the legal entities established in the PRC is limited liability company.
**
Companies registered as wholly owned foreign enterprises in the PRC.
***
Company registered as a sino-foreign equity joint venture in the PRC.
–
–
–
–
–
–
–
100% Provision of network services
100% Provision of computer hardware
and software research and
development services
100% Provision of computer hardware
and software research and
development services
100% Provision of call center services
100% Provision of Mobile Internet
digital content services
100% Provision of telecommunications
services
100% Provision of value added
telecommunications services
#
##
Effective interest held by the Group is 66.41%.
China Mobile Finance was established by CMCC and Beijing Mobile, a wholly-owned subsidiary of the Company, with original equity interest
of 8% and 92%, respectively. In 2015, China Mobile Finance received capital injections from CMCC and CMC, after which the equity interest
held by CMCC, CMC and Beijing Mobile are 8.00%, 52.44% and 39.56% respectively.
114 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
19
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The amounts recognized in the consolidated balance sheet are as follows:
Associates
Joint ventures
Details of major associates are as follows:
Name of associate
Unlisted company
China Tower
Listed company
Shanghai Pudong Development Bank Co., Ltd.
(“SPD Bank”)
IFLYTEK Co., Ltd. (“IFLYTEK”)
As at
31 December
2015
Million
115,558
375
As at
31 December
2014
As restated
Million
70,451
–
115,933
70,451
Place of
incorporation/
establishment
and operation
Proportion of
ownership interest held
by the Company or
its subsidiary
Principal Activity
PRC
PRC
PRC
38%
Construction, maintenance and
operation of telecommunications towers
20%
Provision of banking services
14%
Provision of Chinese speech and
language technology products
and services
True Corporation Public Company Limited
Thailand
18%
Provision of telecommunications services
(“True Corporation”)
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
19
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
During 2014, CMI Holdings, a wholly-owned subsidiary of the Company subscribed for 4,429,427,068 ordinary
shares of True Corporation (a fully-integrated, nationwide telecommunications service provider in Thailand) at the
price of Baht6.45 per share with a total consideration of Baht28.57 billion (equivalent to approximately RMB5.51
billion). Upon the completion of the subscription, CMI Holdings owns 18% of the share capital and has become the
second largest shareholder of True Corporation and two designees nominated by CMI Holdings have been appointed
as directors of True Corporation. Accordingly, the Group recognized the investment as interest in an associate
considering the Group can exercise significant influence over financial and operating policy decisions of True
Corporation.
Also in 2014, China Tower was established, of which the Group owns 40.0% of the registered capital upon
establishment. In 2015, upon the completion of the transaction of transfer of Tower Assets to China Tower (see note
7), the Group owns 38.0% of the equity interest in China Tower. The Group recognized the investment as interest in
an associate considering the Group can exercise significant influence over financial and operating policy decisions of
China Tower.
Summary financial information on principal associates:
Total assets
Total liabilities
Total equity
Total equity attributable to ordinary equity shareholders
Percentage of ownership of the Group
Total equity attributable to the Group
The impact of fair value adjustments at the time of acquisition and goodwill
SPD Bank
As at 31 December
2015
Million
5,044,352
4,725,752
318,600
285,250
20%
57,050
9,361
2014
Million
4,195,924
3,932,639
263,285
245,209
20%
49,042
10,512
Interest in associates
66,411
59,554
116 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
19
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Summary financial information on principal associates (Continued):
IFLYTEK
As at 31 December
True Corporation
As at 31 December
China Tower
As at 31 December
2015
Million
4,767
3,623
1,601
266
6,523
2014
Million
2,565
2,605
1,076
193
3,901
2015
Million
14,038
36,959
20,158
17,279
13,560
2014
Million
16,487
27,428
22,026
8,608
2015
Million
38,586
231,793
47,717
96,535
2014
Million
9,676
454
244
–
13,281
126,127
9,886
6,268
3,707
13,441
13,170
126,127
9,886
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Total equity
Total equity attributable to
equity shareholders
Percentage of ownership of
the Group
14%
15%
18%
18%
38%
40%
Total equity attributable
to the Group
The impact of fair value
adjustments at the time of
acquisition and goodwill
Elimination of unrealized
profits resulting from
transfer of Tower Assets
and its realisation
878
556
2,419
2,371
47,928
3,954
827
876
3,077
3,133
–
–
–
–
–
(5,989)
–
–
Interest in associates
1,705
1,432
5,496
5,504
41,939
3,954
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
19
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Summary financial information on principal associates (Continued):
Revenue
Profit before taxation
Profit attributable to ordinary equity
shareholders for the year
Other comprehensive income
Total comprehensive income
Dividends received from associates
Revenue
Profit/(loss) before taxation
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income/(loss)
Dividends received from associates
SPD Bank
IFLYTEK
2015
Million
146,550
66,877
49,704
4,458
54,162
2,824
2014
Million
123,181
62,030
47,026
6,119
53,145
2,462
True Corporation
2015
Million
21,416
839
795
–
795
–
2014
Million
20,447
(129)
267
–
267
–
2015
Million
2,501
465
425
–
425
18
2014
Million
1,775
434
379
–
379
14
China Tower
2015
Million
2014
Million
10,325
(3,864)
(2,944)
–
(2,944)
–
–
(114)
(114)
–
(114)
–
The fair values of the interests in SPD Bank, IFLYTEK and True Corporation are disclosed as follows:
SPD Bank
IFLYTEK
True Corporation
As at 31 December 2015
As at 31 December 2014
Carrying
amount
Million
66,411
1,705
5,496
Fair value
Million
68,160
6,639
5,339
Carrying
amount
Million
59,554
1,432
5,504
Fair value
Million
58,535
3,184
9,205
Interest in listed associates
73,612
80,138
66,490
70,924
The fair values of interest in SPD Bank, IFLYTEK and True Corporation are based on quoted market prices (level 1:
quoted price (unadjusted) in active markets) at the balance sheet date without any deduction for transaction costs.
As at 31 December 2015, the fair value of investment in SPD Bank was RMB68,160,000,000 (2014:
RMB58,535,000,000), exceeding its carrying amount by approximately 2.6% (2014: approximately 1.7% below).
118 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
19
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
As at 31 December 2015, the fair value of investment in True Corporation was RMB5,339,000,000, below its
carrying amount by approximately 2.9%, which was primarily due to the depreciation of Thai Baht during 2015.
Since the decline in the fair value of investment in True Corporation is not significant or prolonged, there was no
objective evidence of impairment as at 31 December 2015.
For the year ended 31 December 2015, China Tower has carried out operation for a short period. There was no
objective evidence of impairment associated with the investment in China Tower as at 31 December 2015.
The management has determined that there was no impairment indicator of the Group’s interests in other associates as
at 31 December 2015 and 2014.
On 18 May 2015, CMC entered into a partnership agreement with State Development & Investment Corporation and
China Mobile State Development & Investment Management Company Limited (45% of its registered capital is owned
by CMCC), under which they agreed to establish China Mobile Innovative Business Fund (Shenzhen) Partnership
(Limited Partnership) (the “Fund”). The principal business of the Fund is investment in portfolio companies with
high-growth potential in mobile internet and related sectors and seek favourable opportunities to exit by appropriate
means. CMC committed to invest RMB1,500,000,000 in cash, which represents 58.5% equity interest in the Fund.
As at 31 December 2015, CMC has contributed RMB360,000,000 to the Fund and has a commitment to invest
RMB1,140,000,000 to the fund upon the request by the Fund.
There are no contingent liabilities relating to the Group’s interest in the joint ventures.
20 DEFERRED TAX ASSETS AND LIABILITIES
The analysis of deferred tax assets and liabilities are as follows:
Deferred tax assets:
– Deferred tax asset to be recovered after 12 months
– Deferred tax asset to be recovered within 12 months
Deferred tax liabilities:
– Deferred tax liabilities to be settled after 12 months
– Deferred tax liabilities to be settled within 12 months
As at
31 December
2015
Million
4,935
20,488
As at
31 December
2014
As restated
Million
4,639
16,015
25,423
20,654
(166)
(37)
(203)
(80)
(18)
(98)
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
20 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Deferred tax assets and liabilities recognized and the movements during 2015
As at
1 January
2015
As restated
Million
Credited/
(charged) to
profit or loss
Exchange
differences
As at
31 December
2015
Million
Million
Million
Deferred tax assets arising from:
Write-down for obsolete inventories
188
29
Write-off and impairment of certain
network equipment and related assets
Accrued operating expenses
Deferred revenue from Reward Program
Impairment loss for doubtful accounts
Deferred tax liabilities arising from:
Depreciation allowance in excess of
related depreciation
2,624
10,641
5,621
1,580
1,528
3,484
(271)
(1)
20,654
4,769
(98)
(96)
Total
20,556
4,673
Deferred tax assets and liabilities recognized and the movements during 2014
–
–
–
–
–
–
(9)
(9)
217
4,152
14,125
5,350
1,579
25,423
(203)
25,220
Deferred tax assets arising from:
Write-down for obsolete inventories
Write-off of certain network equipment and related assets
Accrued operating expenses
Deferred revenue from Reward Program
Impairment loss for doubtful accounts
As at
1 January
2014
As restated
Million
Credited
to profit
or loss
As restated
Million
As at
31 December
2014
As restated
Million
132
2,256
9,184
4,500
1,450
56
368
1,457
1,121
130
188
2,624
10,641
5,621
1,580
17,522
3,132
20,654
Deferred tax liabilities arising from:
Depreciation allowance in excess of related depreciation
(104)
6
(98)
Total
17,418
3,138
20,556
120 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
21 RESTRICTED BANK DEPOSITS
As at 31 December 2015
As at 31 December 2014
Non-current
assets
Current
assets
Total
Note
Million
Million
Million
Non-current
assets
As restated
Million
Current
assets
As restated
Million
Total
As restated
Million
Restricted bank
deposits
– Statutory deposit
reserves
– Pledged bank
deposits
(i)
(ii)
4,526
49
4,575
–
15
15
4,526
8,666
–
8,666
64
65
736
801
4,590
8,731
736
9,467
Note:
(i)
(ii)
The statutory deposit reserves are deposited by China Mobile Finance with PBOC as required, which are not available for use in the Group’s
daily operations.
Non-current pledged bank deposits are primarily related to the performance bonds issued by banks in favor of the Office of the
Communications Authority of Hong Kong, in order to secure CMHK’s due performance of network and service rollout requirement in or before
2017 and 2018, respectively.
As at 31 December 2014, current pledged bank deposits primarily represent standby letters of credit in favor of the Office of the
Communications Authority of Hong Kong for CMHK fulfilling the deposit requirement for the public auction of spectrum with original maturity
within one year.
22 OTHER FINANCIAL ASSETS
Investment in unlisted equity securities in the PRC
23
INVENTORIES
SIM cards and handsets
Other consumables
As at
31 December
2015
Million
3
As at
31 December
2014
As restated
Million
128
As at
31 December
2015
Million
8,604
1,390
As at
31 December
2014
As restated
Million
8,194
1,098
9,994
9,292
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
24 ACCOUNTS RECEIVABLE
(a) Aging analysis
Aging analysis of accounts receivable, net of allowance for impairment loss of doubtful accounts is as follows:
Within 30 days
31–60 days
61–90 days
Over 90 days
As at
31 December
2015
Million
10,343
2,082
1,457
3,861
As at
31 December
2014
As restated
Million
10,007
2,247
1,244
3,217
17,743
16,715
Accounts receivable primarily comprise receivables from customers and telecommunications operators.
Accounts receivable from the provision of telecommunications services to customers are mainly due for
payment within one month from date of billing. Customers with balances that are overdue or exceed credit
limits are required to settle all outstanding balances before any further telecommunications services can be
provided. The increase of accounts receivable over 90 days is mainly due to receivables arising from other
telecommunications operators and certain corporate customers that are within credit term.
Accounts receivable are expected to be recovered within one year.
(b)
Impairment of accounts receivable
Impairment loss in respect of accounts receivable is recorded using an allowance account unless the Group
is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against
accounts receivable directly.
The following table summarizes the changes in impairment loss of doubtful accounts:
As at 1 January
Impairment loss recognized
Accounts receivable written off
2015
Million
6,575
4,921
(4,947)
2014
As restated
Million
6,081
5,674
(5,180)
As at 31 December
6,549
6,575
122 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
24 ACCOUNTS RECEIVABLE (CONTINUED)
(c) Accounts receivable that are not impaired
Accounts receivable that are neither individually nor collectively considered to be impaired are as follows:
Neither past due nor impaired
Less than 1 month past due
As at
31 December
2015
Million
17,240
503
As at
31 December
2014
As restated
Million
16,034
681
17,743
16,715
Receivables that were neither past due nor impaired relate to a wide range of customers for which there was no
recent history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good
track record with the Group. Based on past experience, management believes that no impairment allowance
is necessary in respect of these balances as there has not been a significant change in credit quality and the
balances are still considered fully recoverable. The Group does not hold any collateral over these balances.
25 OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS
Other receivables comprise certain items which are expected to be recovered within one year, primarily including
interest receivable from banks, utilities deposits and rental deposits, and short-term loans of RMB5,000,000,000
granted to other companies through China Mobile Finance at the interest rate agreed by each party with reference to
the market interest rate.
Prepayments and other current assets primarily consist of rental prepayments.
As at 31 December 2015 and 2014, there were no significant overdue amounts for other receivables.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
26 AMOUNTS DUE FROM/TO ULTIMATE HOLDING COMPANY
Amount due from ultimate holding company is unsecured, interest free, repayable on demand and arising in the
ordinary course of business.
As at 31 December 2015, amount due to ultimate holding company comprises the short-term deposits of CMCC in
China Mobile Finance amounting to RMB7,274,000,000 (2014: RMB4,181,000,000) and the corresponding interest
payable arising from the deposits. The deposits are unsecured and carry interest at prevailing market rate.
As at 31 December 2014, amount due to ultimate holding company also comprised entrusted loans of
RMB10,242,000,000 provided by CMCC to TieTong. The entrusted loans carried interest rate at 2% per annum and
have been fully repaid by TieTong during 2015.
27 AVAILABLE-FOR-SALE FINANCIAL ASSETS
As at
31 December
2015
Million
As at
31 December
2014
Million
Wealth management products issued by banks
19,167
2,000
The available-for-sale financial assets represent wealth management products issued by banks. These wealth
management products will mature within one year with variable return rates indexed to the performance of underlying
assets. As at 31 December 2015, the carrying amount approximated the fair value (level 3: inputs for the assets or
liability that are not based on observable market data (that is, unobservable inputs)). The fair values are based on
cash flow discounted using the judgement that expected return will be obtained upon maturity.
28 BANK DEPOSITS
Bank deposits represent term deposits with banks with original maturity exceeding three months. The applicable
interest rate is determined in accordance with the benchmark interest rate published by PBOC.
29 CASH AND CASH EQUIVALENTS
Bank deposits with original maturity within three months
Cash at banks and in hand
As at
31 December
2015
Million
7,312
72,530
As at
31 December
2014
As restated
Million
30,095
43,717
79,842
73,812
124 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
30 ACCOUNTS PAYABLE
Accounts payable primarily include payables for network expansion projects expenditure, maintenance and
interconnection expenses.
The aging analysis of accounts payable is as follows:
Due within 1 month or on demand
Due after 1 month but within 3 months
Due after 3 months but within 6 months
Due after 6 months but within 9 months
Due after 9 months but within 12 months
As at
31 December
2015
Million
205,724
17,002
8,980
3,488
8,385
As at
31 December
2014
As restated
Million
194,006
14,071
6,897
3,808
8,795
243,579
227,577
All of the accounts payable are expected to be settled within one year or are repayable on demand.
31 DEFERRED REVENUE
Deferred revenue primarily includes prepaid service fees received from customers and unredeemed point rewards.
As at 1 January
– Current portion
– Non-current portion
Additions during the year
Recognized in the consolidated statement of comprehensive income
As at 31 December
Less: Current portion
Non-current portion
2015
Million
65,386
63,916
1,470
321,417
(307,412)
2014
As restated
Million
64,342
63,155
1,187
236,910
(235,866)
79,391
(78,100)
65,386
(63,916)
1,291
1,470
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
32 ACCRUED EXPENSES AND OTHER PAYABLES
Receipts-in-advance
Other payables
Accrued salaries, wages, labor service expenses and other benefits
Accrued expenses
33
INTEREST-BEARING BORROWINGS
Bonds issued by Guangdong Mobile
Bonds issued by TieTong
Less: current portion
Non-current portion
As at
31 December
2015
Million
74,040
21,789
5,776
61,799
As at
31 December
2014
As restated
Million
66,774
17,794
5,667
48,471
163,404
138,706
As at
31 December
2015
Million
4,995
–
4,995
–
As at
31 December
2014
As restated
Million
4,992
1,000
5,992
1,000
4,995
4,992
Note
(i)
(ii)
Note:
(i)
The bonds represent the balance of fifteen-year guaranteed bonds issued by Guangdong Mobile, a subsidiary of the Company, with a principal
amount of RMB5,000,000,000, at an issue price equal to the face value of the bonds. The bonds are unsecured and bear interest at the rate
of 4.5% per annum which is payable annually. The bonds, redeemable at 100% of the principal amount, will mature on 28 October 2017.
The Company has issued a joint and irrevocable guarantee (the “Guarantee”) for the performance of the bonds. CMCC, the ultimate holding
company, has also issued a further guarantee in relation to the performance by the Company of its obligations under the Guarantee.
(ii)
The bonds were issued by TieTong on 18 August 2005, with a principal amount of RMB1,000,000,000, at an issue price equal to the face
value of the bonds. The bonds are unsecured and bear interest at rate of 4.6% per annum which is payable annually. The bonds were fully
repaid on 18 August 2015.
126 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
34 EQUITY SETTLED SHARE-BASED TRANSACTIONS
Pursuant to a resolution passed at the Annual General Meeting held on 24 June 2002, the current share option
scheme (the “Current Scheme”) was adopted.
Under the Current Scheme, the directors of the Company may, at their discretion, invite employees, including
executive directors and non-executive directors of the Company, any of its holding companies and any of their
respective subsidiaries and any entity in which the Company or any of its subsidiaries holds an equity interest, to
receive options to subscribe for shares of the Company. The consideration payable for the grant of option under the
Current Scheme is HK$1.00.
The maximum aggregate number of shares which can be subscribed for pursuant to options that are or may be
granted under the above scheme equals to 10% of the total issued share capital of the Company as at the date of
adoption of the Current Scheme. Options lapsed or cancelled in accordance with the terms of the Current Scheme
will not be counted for the purpose of calculating this 10% limit.
The HKEx requires the exercise price of options to be at least the higher of the nominal value of a share (no longer
existed after 3 March 2014, see note 35(c)), the closing price of the shares on the HKEx on the date on which the
option was granted and the average closing price of the shares on the HKEx for the five trading days immediately
preceding the date on which the option was granted.
For options granted under the Current Scheme, the exercise price of options shall be determined by the directors of
the Company at their discretion provided that such price may not be set below a minimum price which is the highest
of:
(i)
the nominal value of a share (no longer exists after 3 March 2014, see note 35(c));
(ii)
the closing price of the shares on the HKEx on the date on which the option was granted; and
(iii)
the average closing price of the shares on the HKEx for the five trading days immediately preceding the date on
which the option was granted.
Under the Current Scheme, the term of the option is determined by the directors at their discretion, provided that all
options shall be exercised within 10 years after the date on which the option is granted.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
34 EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED)
(a) The terms and conditions of the grants that existed as at the end of the years are as follows, whereby
all options are settled by physical delivery of shares:
Number of instruments
2015
2014
Vesting conditions
Contractual
life of
options
Options granted to directors
– on 8 November 2005
–
2,881,500
40% one year from the date of grant,
30% two years from the date of grant,
30% three years from the date of grant
10 years
Options granted to other
employees
– on 8 November 2005
– 43,351,922
40% one year from the date of grant,
30% two years from the date of grant,
30% three years from the date of grant
10 years
Total share options
– 46,233,422
(b) The number and weighted average exercise prices of share options are as follows:
2015
2014
Weighted
average
exercise
price
HK$
Number of
shares
involved in
the options
Weighted
average
exercise
price
HK$
Number of
shares
involved in
the options
34.87
34.87
34.87
46,233,422
(37,056,383)
(9,177,039)
31.28
30.86
23.33
385,273,559
(335,886,849)
(3,153,288)
–
–
–
–
34.87
46,233,422
34.87
46,233,422
As at 1 January
Exercised
Expired
As at 31 December
Options vested as at 31 December
The weighted average share price at the date of exercise for shares options exercised during the year was
HK$98.58 (2014: HK$79.40).
No options were outstanding as at 31 December 2015. The options outstanding as at 31 December 2014 had
exercise price HK$34.87 and a weighted average remaining contractual life of 0.9 year.
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the share options granted is measured based
on a binomial lattice model. The contractual life of the option is used as an input into this model. Expectations
of early exercise are incorporated into the binomial lattice model. No share options were granted during 2015
and 2014.
128 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
35 CAPITAL, RESERVES AND DIVIDENDS
(a) Movements in components of equity
The reconciliation between the opening and closing balances of each component of the Group’s consolidated
equity is set out in the consolidated statement of changes in equity. Details of the changes in the Company’s
individual components of equity between the beginning and the end of the year are set out below:
Share
capital
Million
Share
premium
Million
Capital
reserve
Million
General
reserve
Million
Retained
profits
Million
Total
Million
As at 1 January 2014
2,142
387,243
3,625
72
84,269
477,351
Changes in equity for 2014:
Profit for the year
Total comprehensive income
for the year
Dividends approved in respect of
previous year (note 35(b)(ii))
Dividends declared in respect of
current year (note 35(b)(i))
Shares issued under share option
–
–
–
–
–
–
–
–
–
–
–
–
scheme (note 35(c))
9,279
2,073
(3,137)
Transfer between reserves upon
expiry of options (note 34(b))
Transition to no-par value regime
–
–
(27)
(note 35(c))
389,316 (389,316)
–
–
50,328
50,328
–
–
–
–
–
–
50,328
50,328
(26,044)
(26,044)
(24,880)
(24,880)
–
8,215
27
–
–
–
As at 31 December 2014
400,737
As at 1 January 2015
400,737
Changes in equity for 2015:
Profit for the year
Total comprehensive income
for the year
Dividends approved in respect of
previous year (note 35(b)(ii))
Dividends declared in respect of
current year (note 35(b)(i))
Shares issued under share option
scheme (note 35(c))
Transfer between reserves upon
expiry of options (note 34(b))
–
–
–
–
1,393
–
As at 31 December 2015
402,130
–
–
–
–
–
–
–
–
–
461
72
83,700
484,970
461
72
83,700
484,970
–
–
–
–
(369)
(92)
–
43,854
43,854
–
–
–
–
–
43,854
43,854
(22,283)
(22,283)
(25,629)
(25,629)
–
1,024
92
–
–
72
79,734
481,936
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
35 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
(b) Dividends
(i)
Dividends attributable to the year:
Ordinary interim dividend declared and paid of HK$1.525
(equivalent to approximately RMB1.203) (2014: HK$1.540
(equivalent to approximately RMB1.222)) per share
Ordinary final dividend proposed after the balance sheet date of
HK$1.196 (equivalent to approximately RMB1.002)
(2014: HK$1.380 (equivalent to approximately RMB1.089))
per share
2015
Million
2014
Million
25,629
24,880
20,516
22,290
46,145
47,170
The proposed ordinary final dividend which is declared in Hong Kong dollar is translated into RMB at the
rate HK$1 = RMB0.83778, being the rate announced by the State Administration of Foreign Exchange in
the PRC on 31 December 2015. As the ordinary final dividend is declared after the balance sheet date,
such dividend is not recognized as liability as at 31 December 2015.
In accordance with the 2009 Notice and the PRC enterprise income tax law, the Company is required
to withhold enterprise income tax equal to 10% of any dividend when it is distributed to non-resident
enterprise shareholders whose names appeared on the Company’s register of members, as of the record
date for such dividend, and who were not individuals.
(ii) Dividends attributable to the previous financial year, approved and paid during the year:
Ordinary final dividend in respect of the previous financial year,
approved and paid during the year, of HK$1.380
(equivalent to approximately RMB1.089)
(2014: HK$1.615 (equivalent to approximately
RMB1.270)) per share
2015
Million
2014
Million
22,283
26,044
130 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
35 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
(c) Share capital
Ordinary shares, issued and fully paid:
Number of
shares
2015
HK$ Million
Equivalent
RMB Million
Number of
shares
2014
HK$ Million
As at 1 January
20,438,426,514
380,590
400,737
20,102,539,665
2,010
Shares issued under share
option scheme
Transition to no-par
value regime
37,056,383
1,673
1,393
335,886,849
11,004
–
–
–
–
367,576
389,316
Equivalent
RMB Million
2,142
9,279
As at 31 December
20,475,482,897
382,263
402,130
20,438,426,514
380,590
400,737
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to
one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s
residual assets.
Shares issued under share option scheme
During 2015, options were exercised to subscribe for 37,056,383 ordinary shares in the Company at a
consideration of HK$1,292,000,000 (equivalent to RMB1,024,000,000) which was credited to share capital.
RMB369,000,000 has been transferred from the capital reserve to the share capital account in accordance
with policy set out in note 2(w)(ii).
In accordance with the transitional provisions set out in section 37 of Schedule 11 to the new Hong Kong
Companies Ordinance (Cap. 622), on 3 March 2014, any amount standing to the credit of the share premium
account has become part of the Company’s share capital.
(d) Nature and purpose of reserves
Capital reserve
The capital reserve mainly comprises the following:
(i)
–
–
The fair value of unexercised share options granted to employees of the Group recognized in
accordance with the accounting policy adopted for share-based payments in note 2(w)(ii); and
RMB295,665,000,000 debit balance brought forward as a result of the elimination of goodwill
arising on the acquisition of subsidiaries before 1 January 2001 against the capital reserve in
previous years.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
35 CAPITAL, RESERVES AND DIVIDENDS (CONTINUED)
(d) Nature and purpose of reserves (Continued)
(ii) PRC statutory reserves
PRC statutory reserves mainly include statutory surplus reserve and discretionary surplus reserve.
In accordance with the Company Law of the PRC, domestic enterprises in Mainland China are required to
transfer 10% of their profit after taxation, as determined under accounting principles generally accepted
in the PRC (“PRC GAAP”), to the statutory surplus reserve until such reserve balance reaches 50% of
the registered capital of relevant subsidiaries. Moreover, upon a resolution made by the shareholders,
a certain percentage of domestic enterprises’ profit after taxation, as determined under PRC GAAP, is
transferred to the discretionary surplus reserve. During the year, appropriations were made by such
subsidiaries to the statutory surplus reserves and discretionary surplus reserves accordingly.
The statutory and discretionary surplus reserves can be used to reduce previous years’ losses, if any, and
may be converted into paid-up capital, provided that the statutory reserve after such conversion is not
less than 25% of the registered capital of relevant subsidiaries.
In accordance with relevant regulations issued by the Ministry of Finance of the PRC, a subsidiary of the
Company, China Mobile Finance, is required to set aside a reserve through appropriations of profit after
tax according to a certain ratio of the ending balance of its gross risk-bearing assets to cover potential
losses against such assets.
(iii) Exchange reserve
The exchange reserve comprises all foreign exchange differences arising from the translation of the
financial statements of overseas entities. The reserve is dealt with in accordance with the accounting
policies set out in note 2(y).
(e) Capital management
The Group’s primary objectives of capital management are to maintain a reasonable capital structure and to
safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders. The
Group actively and regularly reviews and manages its capital structure to stabilize the capital position and
prevent operation risk. Meanwhile, the Group will maximize the shareholders’ return when having high level
of borrowings and will make adjustment on the capital structure in accordance with the changes in economic
conditions.
The Group monitors capital on the basis of total debt-to-book capitalization ratio. This ratio is calculated as total
borrowings divided by book capitalization (equal to the total equity attributable to equity shareholders of the
Company as shown in the consolidated balance sheet and total borrowings).
As at 31 December 2015, the Group’s total debt-to-book capitalization ratio was 0.5% (2014: 1.8%).
Except China Mobile Finance, the Company and its subsidiaries are not subject to externally imposed capital
requirements.
132 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
36 BALANCE SHEET OF THE COMPANY
As at
31 December
2015
Million
As at
31 December
2014
Million
Note
Assets
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Current assets
Amounts due from subsidiaries
Other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Liabilities
Current liabilities
Amount due to a subsidiary
Accrued expenses and other payables
Non-current liabilities
Amount due to a subsidiary
Total liabilities
Equity
Share capital
Reserves
Total equity
Total liabilities and equity
1
485,108
1
485,109
485,109
485,110
1,346
4
753
2,103
1,743
91
3,030
4,864
487,212
489,974
271
10
281
4,995
4,995
5,276
–
12
12
4,992
4,992
5,004
35(c)
35(a)
402,130
79,806
400,737
84,233
481,936
484,970
487,212
489,974
The balance sheet of the Company was approved by the Board of Directors on 17 March 2016 and was signed on its
behalf.
Li Yue
Name of Director
Xue Taohai
Name of Director
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
37 RELATED PARTY TRANSACTIONS
(a) Transactions with CMCC Group
The following is a summary of principal related party transactions entered into by the Group with CMCC and
its subsidiaries (“CMCC Group”), for the years ended 31 December 2015 and 2014. The majority of these
transactions also constitute continuing connected transactions as defined under Chapter 14A of Listing Rules.
Further details of these continuing connected transactions are disclosed under the paragraph “Connected
Transactions” in the Report of Directors.
Please refer to note 2(b) for the acquisition of Targets Assets and Businesses, which constitutes a related party
transaction with CMCC Group. Since the acquisition of Target Assets and Businesses from TieTong has been
accounted for using merger accounting in accordance with AG 5, the transactions between the Group and
TieTong for the years ended 31 December 2015 and 2014 were eliminated and not disclosed as related party
transactions in the consolidated financial statements.
Telecommunications services revenue
Telecommunications services charges
Property leasing and management services revenue
Property leasing and management services charges
Network assets leasing charges
Network capacity leasing charges
Entrusted loans received
Entrusted loans repaid
Short-term bank deposits received
Short-term bank deposits repaid
Interest expenses
Note
(i)
(i)
(ii)
(ii)
(iii)
(iii)
(iv)
(iv)
(iv)
(iv)
(iv)
2015
Million
474
–
191
956
4,376
4,757
8,592
18,834
7,274
4,181
194
2014
As restated
Million
869
66
181
923
4,617
5,012
10,242
9,573
4,181
–
211
Note:
(i)
(ii)
(iii)
The amounts represent telecommunications services settlement received/receivable from or paid/payable to CMCC Group for the
telecommunications project planning, design and construction services, telecommunications line and pipeline construction services,
telecommunications line maintenance services, and installation and maintenance services in respect of transmission towers.
The amount represents the rental and property management fees received/receivable from or paid/payable to CMCC Group in respect
of business premises and offices, retail outlets and warehouses.
The amounts represent the network assets leasing settlement received/receivable from or paid/payable to CMCC Group and the TD-
SCDMA network capacity charges paid/payable to CMCC Group. On 29 December 2008, the Company entered into a network capacity
leasing agreement (the “Network Capacity Leasing Agreement”) with CMCC Group for the provision of TD-SCDMA related services. The
lease was effective from 1 January 2009 to 31 December 2009 and is automatically renewed for successive one-year periods unless
otherwise notified by one party to the other party. The Group is permitted to terminate the lease by giving 60 days advance written
notice to CMCC Group. No penalty will be imposed in the event of a lease termination. Pursuant to the Network Capacity Leasing
Agreement, the Group leases TD-SCDMA network capacity from CMCC Group and pays leasing fees to CMCC Group. The leasing fees
are determined on a basis that reflects the actual usage of CMCC Group’s TD-SCDMA network capacity and compensates CMCC Group
for the costs of such network capacity. At the end of the lease terms, there is no purchase option granted to the Group to purchase the
leased network assets. The Group also does not bear any gains or losses in the fluctuation in the fair value of the leased network assets
at the end of the lease terms. As a result, the Group does not bear the risks associated with the ownership of the leased network assets,
and accordingly the Group accounts for the network assets leasing and the network capacity leasing as operating leases.
(iv)
The amounts represent the entrusted loans/bank deposits received from or repaid to CMCC and interest expenses paid/payable to
CMCC in respect of the entrusted loans/bank deposits.
134 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
37 RELATED PARTY TRANSACTIONS (CONTINUED)
(b) Amounts due from/to CMCC Group
Amounts due from/to CMCC Group, other than amount due from/to ultimate holding company, are included in
the following accounts captions summarized as follows:
Accounts receivable
Other receivables
Accounts payable
Accrued expenses and other payables
As at
31 December
2015
Million
558
519
4,564
181
As at
31 December
2014
As restated
Million
790
3
2,705
272
The amounts are unsecured, interest-free, repayable on demand/on contract terms and arise in the ordinary
course of business.
(c) Significant transactions with associates of the Group and of CMCC Group
The Group has entered into transactions with associates over which the Group or CMCC Group can exercise
significant influence. The major transactions entered into by the Group and the associates and amount due
from/to the associates are follows:
Bank deposits
Available-for-sale financial assets
Interest receivable
Accounts payable
Accrued expenses
Other payable
Proceeds receivable for the transfer of
Tower Assets (note 7)
Other receivables
As at
31 December
2015
Million
33,888
9,300
1,187
358
5,563
128
56,737
8,907
As at
31 December
2014
As restated
Million
43,265
1,000
934
513
–
–
–
–
Note
(i)
(ii)
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
37 RELATED PARTY TRANSACTIONS (CONTINUED)
(c) Significant transactions with associates of the Group and of CMCC Group (Continued)
Interest income
Mobile telecommunications services revenue
Mobile telecommunications services charges
Gain on the transfer of Tower Assets
Charges for use of tower assets
Dividend income
Property leasing and management services revenue
Note
(iii)
(iv)
(v)
(i)
(i)
(vi)
2015
Million
1,699
767
774
15,525
5,563
2,842
6
2014
As restated
Million
1,659
127
1,839
–
–
2,476
6
Note:
(i)
(ii)
The amounts represent the gain arising from the transfer of Tower Assets on 31 October 2015 and the charges payable to China Tower
for the use of relevant tower assets (note 7).
Other receivables represent the short-team loans granted by China Mobile Finance to China Tower and amounts due from China Tower.
The loans will mature by December 2016.
(iii)
Interest income primarily represents interest earned from deposits placed with SPD Bank, which interest rate is determined in
accordance with the benchmark interest rate published by PBOC.
(iv)
The amount represents the mobile telecommunications services revenue received/receivable from SPD Bank and China Tower.
(v)
The amount represents the mobile telecommunications services charges paid/payable to Union Mobile Pay Co., Ltd., an associate of
CMCC Group.
(vi)
The amount represents the property leasing services revenue received/receivable from SPD Bank.
(d) Transactions with other government-related entities in the PRC
The Group is a government-related enterprise and operates in an economic regime currently dominated by
entities directly or indirectly controlled by the PRC government through government authorities, agencies,
affiliations and other organisation (collectively referred to as “government-related entities”).
Apart from transactions with CMCC Group (notes 26 and 37(a)) and associates (note 37(c)) and the transaction
to establish the Fund (note 19), the Group has collectively, but not individually, significant transactions with
other government-related entities which include but not limited to the following:
–
–
–
rendering and receiving telecommunications services, including interconnection revenue/charges
purchasing of goods, including use of public utilities
placing of bank deposits
These transactions are conducted in the ordinary course of the Group’s business on terms comparable
to the terms of transactions with other entities that are not government-related. The Group prices its
telecommunications services and products in accordance with rules and regulations stipulated by related
authorities of the PRC Government, where applicable, or based on commercial negotiations. The Group has
also established its procurement policies and approval processes for purchases of products and services,
which do not depend on whether the counterparties are government-related entities or not.
(e) For key management personnel remuneration, please refer to note 10.
136 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group’s
business. The Group’s exposure to these risks and the financial risk management policies and practices used by the
Group to manage these risks are described below:
(a) Credit risk and concentration risk
The Group’s credit risk is primarily attributable to the financial assets in the balance sheet, which mainly
include deposits with banks, wealth management products issued by banks, accounts receivable, other
receivables and deferred consideration for the transfer of Tower Assets. The maximum exposure to credit risk is
represented by the carrying amount of the financial assets.
Substantially all the Group’s cash at banks and bank deposits are deposited in financial institutions in Mainland
China and Hong Kong. The credit risk on liquid funds is limited as the majority of counterparties are financial
institutions with high credit ratings assigned by international credit-rating agencies and large state-controlled
financial institutions. Wealth management products are issued by major domestic banks investing in low risk
underlying assets, which mainly consist of bank deposits, treasury bond, central bank bill, local government
debt, corporate bond or debt with high credit ratings and low credit risks.
The accounts receivable of the Group is primarily comprised of receivables due from customers and
telecommunications operators. Accounts receivable from customers are spread among an extensive number of
customers and the majority of the receivables from customers are due for payment within one month from the
date of billing. Other receivables primarily comprise interest receivable from banks, utilities deposits and rental
deposits. Management has a credit policy in place and the exposures to these credit risks are monitored on
an ongoing basis, taking into account the counter parties’ financial position, the Group’s past experience and
other factors. As such, management considers the aggregate risks arising from the possibility of credit losses is
limited and to be acceptable.
Except for the deferred consideration for the transfer of Tower Assets, concentrations of credit risk with respect
to accounts receivable are limited due to the Group’s customer base being large and unrelated. As such,
management does not expect any significant losses of accounts receivable that have not been provided for by
way of allowances as shown in note 24(c).
The deferred consideration for the transfer of Tower Assets are due from China Tower, which is the Company’s
associate. China Tower is expected to generate stable cash flows from its principal business of leasing tower
related assets. Therefore, management considers the risk that the deferred consideration for the transfer of
Tower Assets are uncollectible is low.
(b) Liquidity risk
Liquidity risk refers to the risk that funds will not be available to meet liabilities as they fall due, and results from
timing and amount mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining
sufficient cash balances and bank deposits (which are readily convertible to known amounts of cash) to meet
its funding needs, including working capital, principal and interest payments on debts, dividend payments and
capital expenditures.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)
(b) Liquidity risk (Continued)
The following table sets out the remaining contractual maturities at the balance sheet date of the Group’s
financial liabilities, which are based on the undiscounted cash flows (including interest payments computed
using contractual rates or, if floating, based on prevailing rates at the balance sheet date) and the earliest date
the Group would be required to repay:
As at 31 December 2015
Total
contractual
undiscounted
cash flow
Million
Carrying
amount
Million
Within 1 year
or on demand
Million
More than 1
year but less
than 3 years
Million
More than 3
years but less
than 5 years
Million
Accounts payable
Bills payable
Accrued expenses and other
payables
Amount due to ultimate holding
company
Interest-bearing borrowings
243,579
243,579
243,579
645
645
645
163,404
163,404
163,404
7,276
4,995
7,339
5,410
7,339
225
–
–
–
–
5,185
419,899
420,377
415,192
5,185
–
–
–
–
–
–
As at 31 December 2014 (As restated)
Total
contractual
undiscounted
cash flow
Million
Carrying
amount
Million
Within 1 year
or on demand
Million
More than 1
year but less
than 3 years
Million
More than 3
years but less
than 5 years
Million
Accounts payable
Bills payable
Accrued expenses and other
payables
Amount due to ultimate holding
company
Interest-bearing borrowings
Obligations under finance leases
227,577
227,577
227,577
674
674
674
138,706
138,706
138,706
14,519
5,992
68
14,588
6,664
71
14,588
1,254
71
–
–
–
–
5,410
–
387,536
388,280
382,870
5,410
–
–
–
–
–
–
–
138 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (CONTINUED)
(c)
Interest rate risk
The Group consistently monitors the current and potential fluctuation of interest rates to monitor the interest
rate risk on a reasonable level. As at 31 December 2015, the Group did not have any interest-bearing
borrowings at variable rates, but had RMB5,000,000,000 (2014: RMB5,000,000,000) of bonds and
RMB7,274,000,000 (2014: RMB4,181,000,000) of short-term bank deposits placed by CMCC, both of which
were at fixed rate and expose the Group to fair value interest rate risk. The Group determines the amount of its
fixed rate borrowings depending on the prevailing market condition. Management does not expect fair value
interest rate risk to be high as the interest involved will not be significant.
As at 31 December 2015, total cash and bank balances of the Group amounted to RMB407,762,000,000 (2014:
RMB436,786,000,000), and interest-bearing receivables amounted to RMB63,085,000,000 (2014: nil), which
mainly included undiscounted deferred consideration of RMB57,585,000,000 in connection with the transfer
of Tower Assets and short-term loans of RMB5,000,000,000 provided to other companies. The interest income
for 2015 was RMB15,852,000,000 (2014: RMB16,270,000,000) and the average interest rate was 3.75%
(2014: 3.74%). Assuming the total cash and bank balances and interest-bearing receivables are stable in the
coming year and interest rate increases/decreases by 100 basis points, the profit for the year and total equity
would approximately increase/decrease by RMB3,531,000,000 (2014: RMB3,276,000,000).
(d) Foreign currency risk
The Group has foreign currency risk as certain cash and deposits with banks are denominated in foreign
currencies, principally US dollars and Hong Kong dollars. As the amount of the Group’s foreign currency
cash and deposits with banks represented 1.4% (2014: 1.4%) of the total cash and deposits with banks and
predominantly all of the business operations of the Group are transacted in RMB, the Group does not expect
the appreciation or depreciation of the RMB against foreign currency will materially affect the Group’s financial
position and result of operations.
(e) Fair values
All financial instruments are carried at amounts not materially different from their fair values as at 31 December
except as follows:
As at 31 December 2015
As at 31 December 2014
Carrying
Amount
Million
Fair value
Million
Carrying
Amount
Million
Fair value
Million
Interest-bearing borrowings – bonds
issued by Guangdong Mobile
4,995
5,150
4,992
4,951
The fair value of bonds is based on quoted market prices (level 1: quoted price (unadjusted) in active markets)
at the balance sheet date without any deduction for transaction costs.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
39 COMMITMENTS
(a) Capital commitments
The Group’s capital expenditure contracted for as at 31 December but not provided in the consolidated
financial statements were as follows:
Land and buildings
Telecommunications equipment
2015
Million
9,054
25,612
2014
As restated
Million
7,549
24,951
34,666
32,500
(b) Operating lease commitments
The total future minimum lease payments under non-cancellable operating leases as at 31 December are as
follows:
As at 31 December 2015
Within one year
After one year but within
five years
After five years
As at 31 December 2014
(As restated)
Within one year
After one year but
within five years
After five years
Land and
buildings
Million
Leased
lines and
network assets
Million
Others
Million
Total
Million
9,785
14,776
1,197
25,758
19,211
5,375
6,446
2,666
1,211
73
26,868
8,114
34,371
23,888
2,481
60,740
9,801
18,975
5,848
7,351
4,020
991
953
18,105
1,046
21
24,041
6,860
34,624
12,362
2,020
49,006
The Group leases certain land and buildings, leased lines and network assets, motor vehicles, computer and
other office equipment under operating leases. None of the leases include contingent rentals.
140 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
40 POST BALANCE SHEET EVENT
After the balance sheet date, the Board of Directors proposed a final dividend for the year ended 31 December 2015.
Further details are disclosed in note 35(b)(i).
41 ACCOUNTING ESTIMATES AND JUDGEMENTS
Key sources of estimation uncertainty
Note 17 contains information about the assumptions relating to goodwill impairment, and note 37 contains
information about the judgements on the lease classification of leasing of TD-SCDMA network capacity. Other key
sources of estimation uncertainty are as follows:
Impairment loss for doubtful accounts
The Group assesses impairment loss for doubtful accounts based upon evaluation of the recoverability of the
accounts receivable and other receivables at each balance sheet date. The estimates are based on the aging of the
accounts receivable and other receivables balances and the historical write-off experience, net of recoveries. If the
financial conditions of the customers were to deteriorate, additional impairment may be required.
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual
value, if any, using the straight-line method over their estimated useful lives. The Group reviews the estimated
useful lives and residual values of the assets annually in order to determine the amount of depreciation expense to
be recorded during any reporting period. The useful lives and residual values are determined based on the Group’s
historical experience with similar assets and take into account anticipated technological changes. The depreciation
expense for future periods is adjusted if there are significant changes from previous estimates.
Impairment of property, plant and equipment, interest in associates, goodwill and other intangible assets
The Group’s property, plant and equipment comprise a significant portion of the Group’s total assets. Changes in
technology or industry conditions may cause the estimated period of use or the value of these assets to change.
Property, plant and equipment, interest in associates and other intangible assets subject to amortization, are reviewed
at least annually to determine whether there is any indication of impairment. The recoverable amount is estimated
whenever events or changes in circumstances have indicated that their carrying amounts may not be recoverable.
In addition, for goodwill and other intangible assets with indefinite useful lives, the recoverable amount is estimated
annually whether or not there is any indication of impairment.
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset, which requires
significant judgement relating to level of revenue and amount of operating costs. The Group uses all readily available
information in determining an amount that is a reasonable estimation of the recoverable amount, including estimates
based on reasonable and supportable assumptions and projections of revenue and operating costs. Changes in these
estimates could have a significant impact on the carrying value of the assets and could result in further impairment
charge or reversal of impairment in future periods. Additional information for the impairment assessment of property,
plant and equipment and the goodwill impairment is disclosed in notes 14 and 17, respectively.
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Expressed in RMB unless otherwise indicated)
42 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS, INTERPRETATIONS AND DISCLOSURES ISSUED
BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31 DECEMBER 2015
Up to the date of issue of these financial statements, the IASB/HKICPA has issued a number of amendments and
new standards and interpretations which are not yet effective for the year ended 31 December 2015 and which have
not been adopted in these financial statements.
Of these developments, the following relate to matters that may be relevant to the Group’s operations and financial
statements:
Effective for
accounting
periods
beginning
on or after
Amendment to IFRS/HKFRS 11, “Joint Arrangements”
1 January 2016
Amendment to IAS/HKAS 16, “Property, Plant and Equipment”
1 January 2016
Amendment to IAS/HKAS 38, “Intangible Assets”
1 January 2016
Amendment to IFRS/HKFRS 10, “Consolidated Financial Statements”
1 January 2016
Amendment to IAS/HKAS 28, “Investments in Associates and Joint Ventures”
*
Amendment to IAS/HKAS 27, “Separate Financial Statements”
1 January 2016
Annual Improvement to IFRSs/HKFRSs 2012-2014 cycle
IFRS/HKFRS 15 “Revenue from Contracts with Customers”
IFRS/HKFRS 9 “Financial Instrument”
IFRS/HKFRS 16 “Leases”
1 January 2016
1 January 2018
1 January 2018
1 January 2019
*
The amendments were originally intended to be effective for annual periods beginning on or after 1 January 2016. The effective date has now
been deferred/removed. Early application of the amendments continues to be permitted.
Management is assessing the impact of such new standards, amendments to standards and will adopt the relevant
standards, amendments to standards in the subsequent periods as required.
142 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
FINANCIAL SUMMARY
(Expressed in RMB)
RESULTS
Operating revenue
2015
Million
2014
As restated
Million
2013
As restated
Million
2012
As restated
Million
2011
As restated
Million
Revenue from telecommunications services
Revenue from sales of products and others
584,089
84,246
591,602
59,907
600,424
39,624
569,522
21,484
536,988
10,298
Operating expenses
Leased lines and network assets
Interconnection
Depreciation
Employee benefit and related expenses
Selling expenses
Cost of products sold
Other operating expenses
668,335
651,509
640,048
591,006
547,286
20,668
21,668
136,832
74,805
59,850
89,297
162,293
15,843
23,502
122,805
70,385
75,655
74,495
151,504
14,816
25,983
111,493
66,681
91,719
61,409
136,523
8,597
25,156
105,658
59,499
79,987
41,497
119,923
6,358
23,638
101,066
52,548
78,556
23,124
111,251
565,413
534,189
508,624
440,317
396,541
Profit from operations
Gain on the transfer of Tower Assets
Other gains
Interest income
Finance costs
Share of profit of investments accounted for
using the equity method
102,922
15,525
1,800
15,852
(455)
117,320
–
1,171
16,270
(487)
131,424
–
989
15,368
(1,195)
150,689
–
672
12,696
(949)
150,745
–
598
8,447
(1,232)
8,090
8,248
7,063
5,685
4,306
Profit before taxation
143,734
142,522
153,649
168,793
162,864
Taxation
(35,079)
(33,179)
(36,746)
(41,887)
(40,593)
PROFIT FOR THE YEAR
108,655
109,343
116,903
126,906
122,271
Other comprehensive income/(loss) for the year
that may be subsequently reclassified to
profit or loss:
Exchange differences on translation of
financial statements of overseas entities
Share of other comprehensive income/(loss)
of associates
603
901
(169)
1,224
(176)
(767)
(6)
(16)
(312)
(229)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
110,159
110,398
115,960
126,884
121,730
Profit attributable to:
Equity shareholders of the Company
Non-controlling interests
108,539
116
109,218
125
116,791
112
126,799
107
122,162
109
PROFIT FOR THE YEAR
108,655
109,343
116,903
126,906
122,271
Total comprehensive income attributable to:
Equity shareholders of the Company
Non-controlling interests
110,043
116
110,273
125
115,849
111
126,777
107
121,623
107
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
110,159
110,398
115,960
126,884
121,730
CHINA MOBILE LIMITED • ANNUAL REPORT 2015
143
FINANCIAL SUMMARY (CONTINUED)
(Expressed in RMB)
ASSETS AND LIABILITIES
As at
31 December
2015
Million
As at
31 December
2014
As restated
Million
As at
31 December
2013
As restated
Million
As at
31 December
2012
As restated
Million
As at
31 December
2011
As restated
Million
Property, plant and equipment
585,631
605,023
520,571
469,627
429,836
Construction in progress
Land lease prepayments and others
Goodwill
Other intangible assets
Investments accounted for using the
equity method
Deferred tax assets
Proceeds receivable for the transfer of
Tower Assets
Restricted bank deposits
Other financial assets
Current assets
Total assets
88,012
26,773
35,343
768
115,933
25,423
56,737
4,575
3
95,110
24,883
35,343
787
70,451
20,654
–
8,731
128
91,600
19,784
36,937
1,090
53,946
17,522
–
6,816
128
68,551
14,266
36,938
952
48,356
13,622
–
5,418
128
68,612
12,863
36,938
848
43,806
10,949
–
122
130
488,697
486,925
474,290
452,620
387,831
1,427,895
1,348,035
1,222,684
1,110,478
991,935
Current liabilities
501,038
452,492
394,281
353,224
306,316
Interest-bearing borrowings – non-current
Deferred revenue – non-current
Deferred tax liabilities
4,995
1,291
203
4,992
1,470
98
5,989
1,187
104
29,619
30,617
764
51
587
17
Total liabilities
507,527
459,052
401,561
383,658
337,537
Total equity
Note:
920,368
888,983
821,123
726,820
654,398
The financial information for 2011, 2012, 2013 and 2014 has been restated to reflect the effect arising from acquisition of Target Assets and Businesses
under common control.
144 CHINA MOBILE LIMITED • ANNUAL REPORT 2015
China Mobile Limited
60/F., The Center, 99 Queen’s Road Central, Hong Kong
Tel : (852) 3121 8888
Fax : (852) 3121 8809
Website : www.chinamobileltd.com
Welcome to China Mobile Limited's website
This annual report is printed on environmentally friendly paper