CHINA MOBILE LTD /ADR/ | CIK:0001117795 |

Filed: 4/26/2018

Entity registrant name: CHINA MOBILE LTD /ADR/ (CIK: 0001117795)

Generator: Donnelley Financial Solutions

SEC filing page: http://www.sec.gov/Archives/edgar/data/1117795/000119312518133541/0001193125-18-133541-index.htm

XBRL Instance: http://www.sec.gov/Archives/edgar/data/1117795/000119312518133541/chl-20171231.xml

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19	INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

The amounts recognized in the consolidated balance sheets are as follows:

 

Details of major associates are as follows:

 

Note:

The Group’s shareholding percentage in SPD Bank has been diluted from 18.98% to 18.18% as a result from SPD Bank’s issuance of new ordinary shares to other companies in 2017. Up to the release day of these financial statements, SPD Bank has not yet announced its audited annual results for the year ended December 31, 2017, therefore, the Group has recognized its share of SPD Bank’s comprehensive income for the year 2017 based on the financial information which was already released by SPD Bank and publicly disclosed, with some information such as total liabilities and total equity not provided.

 

 

(i)

Summary financial information on principal associates:

 

		SPD Bank
		As of December 31
		2017				2016
		Million				Million
Total assets			6,135,061				5,857,263
Total liabilities			—				5,484,329
Total equity			—				372,934
Total equity attributable to ordinary equity shareholders			395,466				338,027
Percentage of ownership of the Group			18%				19%
Total equity attributable to the Group			71,896				64,158
The impact of fair value adjustments at the time of acquisition and goodwill			6,663				7,780
Interest in associates			78,559				71,938

 

		IFLYTEK								True Corporation								China Tower
		As of December 31								As of December 31								As of December 31
		2017				2016				2017				2016				2017				2016
		Million				Million				Million				Million				Million				Million
Total current assets			7,329				5,533				23,566				23,135				30,517				39,565
Total non-current assets			6,151				4,881				69,511				61,532				292,125				272,103
Total current liabilities			4,428				2,521				39,589				30,333				150,438				171,568
Total non-current liabilities			1,042				674				26,643				29,492				44,710				14,548
Total equity			8,010				7,219				26,845				24,842				127,494				125,552
Total equity attributable to equity shareholders			7,759				7,061				26,711				24,714				127,494				125,552
Percentage of ownership of the Group			13%				14%				18%				18%				38%				38%
Total equity attributable to the Group			1,047				962				4,808				4,449				48,448				47,710
The impact of fair value adjustments at the time of acquisition and goodwill			805				814				2,664				2,847				—				—
Elimination of unrealized profits resulting from the transfer of Tower Assets and its realization			—				—				—				—				(4,856	)			(5,474	)
Interest in associates			1,852				1,776				7,472				7,296				43,592				42,236

 

		SPD Bank												IFLYTEK
		2017				2016				2015				2017				2016				2015
		Million				Million				Million				Million				Million				Million
Revenue			168,619				160,792				146,550				5,458				3,320				2,501
Profit before taxation			69,785				69,975				66,877				584				561				465
Profit attributable to ordinary equity shareholders for the year			52,515				51,374				49,704				428				484				425
Other comprehensive (loss)/income			(5,568	)			(5,480	)			4,458				—				—				—
Total comprehensive income			46,947				45,894				54,162				428				484				425
Dividends received from associates			821				1,921				2,824				18				18				18

 

		True Corporation												China Tower
		2017				2016				2015				2017				2016				2015
		Million				Million				Million				Million				Million				Million
Revenue			28,262				23,520				21,416				68,665				54,474				10,325
Profit/(loss) before taxation			726				(437	)			839				2,685				(776	)			(3,864	)
Profit/(loss) for the year			465				(531	)			795				1,943				(575	)			(2,944	)
Other comprehensive income/(loss)			32				(87	)			—				—				—				—
Total comprehensive income/(loss)			497				(618	)			795				1,943				(575	)			(2,944	)
Dividends received from associates			—				5				—				—				—				—

 

(ii)

The fair values of the interests 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 and disclosed as follows:

 

		As of December 31, 2017								As of December 31, 2016
		Carrying amount				Fair value				Carrying amount				Fair value
		Million				Million				Million				Million
SPD Bank			78,559				67,166				71,938				66,522
IFLYTEK			1,852				10,598				1,776				4,854
True Corporation			7,472				7,450				7,296				8,297
Interest in listed associates			87,883				85,214				81,010				79,673

 

 

(iii)

The Group assesses at the end of each reporting period whether there is objective evidence that interest in associates are impaired.

As of December 31, 2017, the fair value of investment in SPD Bank was RMB67,166,000,000 (2016: RMB66,522,000,000), below its carrying amount by approximately 14.5% (2016: approximately 7.5%). Management performed impairment test accordingly considering such impairment indicator. The recoverable amount of the interest in SPD Bank is determined by VIU. The calculation used pre-tax cash flow projections for the five years ending December 31, 2022 with subsequent extrapolation to perpetuity. The discount rate used was based on a cost of capital used to evaluate investments in Mainland China. Management judgement is required in estimating the future cash flows of SPD Bank. The key assumptions are determined with reference to external sources of information. Based on management’s assessment results, there was no impairment as of December 31, 2017. Reasonably possible changes in key assumptions will not lead to the impairment loss.

As of December 31, 2017, the fair value of investment in True Corporation was RMB7,450,000,000 (2016: RMB8,297,000,000), below its carrying amount by approximately 0.3% (2016: exceeding by approximately 13.7%). Since the decline in the fair value of interest in True Corporation is not significant or prolonged, there was no objective evidence of impairment as of December 31, 2017.

The management has determined that there was no impairment indicator of the Group’s interests in other associates as of December 31, 2016 and 2017.

Details of major joint venture are as follows:

In 2015, CMC together with State Development & Investment Corporation and China Mobile State Development & Investment Management Company Limited (45% of its registered capital is owned by CMCC), established China Mobile Innovative Business Fund (Shenzhen) Partnership (Limited Partnership) (the “Fund”). The Group recognized the investment as interest in a joint venture. CMC committed to invest RMB1,500,000,000 in cash, which represents 50% equity interest in the Fund. As of December 31, 2017, CMC has contributed RMB759,000,000 (2016: RMB721,000,000) to the Fund and has a commitment to invest RMB741,000,000 (2016: RMB779,000,000) to the Fund upon the request by the Fund. There are no contingent liabilities relating to the Group’s interest in the joint venture.