KCQ’s from Latest Annual Report (2012)

Overall:

- To end 2012’s financial year Baofeng Modern remained in a strong financial gain of 233 870 RMB or the equivalent of $41 391.48 AUS. This can also convert to a 20.9% increase in their total revenue.

- There have been no changes through the directorial board of the company.

- During 2012 ‘Financial and Distribution Costs’ rose from 8.6% to 42.6%, the increase was primarily because of the expenses incurred due to major advertising and marketing campaigns.

Concepts:

- In the 2012 financial year Baofeng Modern had a 30.9% revenue increase.

- During the 2012 financial year Baofeng Modern ensured they won over the contracts with major brand licensees such as SpongeBob, NBA and FTA by releasing brand license lines.

- Baofeng Modern has 2704 employee’s, which has grown from 2636 in 2011.

- The company has endeavored to reach its goals of all future prospects, including both vertical (enhancing the value of current brands by continuous effective marketing efforts) and horizontal (seeking new brand co-operations)

- Baofeng Modern has never failed to pay out the dividends to their investors.

Questions:

- Baofeng is a Chinese company and therefore uses Chinese currency throughout their financial reports; more specifically they use RMB’s (Renminbi Yuan). I am having trouble understanding the relationship between this currency and dollars. Is anyone able to help me in this area?

- It refers to “long positions in ordinary shares of the Company”. Can anyone help me understand what this means and why it is relevant?

- In the directorial overview it states how many board meetings out of the total throughout the year the attended. I don’t understand why this is necessary to put in?

- The notes for my financial statements it states in the ‘Accounting Policies’ that the group has adopted a revised IFRSs for 2012 statements. What does IFRSs mean?

- It refers to the deferred tax liabilities in my statements? Does anyone know what this means?

- The share price has fallen from 1.16 to .42 in the last year yet they still consider themselves profitable.

Challenges and their strategies to overcome them:

- A challenge they have endured the slowdown of the economic growth in China during 2012 but following their strong and solid foundations they maintained growth momentum and achieved results.

- Another challenge Baofeng Modern has endured throughout the last year is the European debt crisis and their strategy to overcome this was to select only certain domestic and international orders that would create higher profits

*NOTE: My Company is Chinese so there most recent Annual Report is based on 2012 as their financial year ends 31^st December.

Please comment and help me out with any of my questions and even let me know if your company has similar key concepts.

Georgia