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China Communications Services Corporation Limited Annual Report 2015
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
COST OF REVENUES
The Group’s cost of revenues in 2015 was RMB69,572 million, representing an increase of 11.3% from 2014 and accounting for
85.9% of the total revenues.
The following table sets out a breakdown of the Group’s cost of revenues in 2014 and 2015 and their respective changes:
2015
2014
Percentage
RMB’000
RMB’000
Change
Direct personnel costs
8,731,020
8,892,965
–1.8%
Depreciation and amortisation
447,031
450,741
–0.8%
Purchase of materials and telecommunications products
20,452,798
20,190,921
1.3%
Subcontracting charges
31,811,771
25,763,190
23.5%
Operating lease charges and others
8,129,685
7,196,732
13.0%
Total cost of revenues
69,572,305
62,494,549
11.3%
Direct Personnel Costs
In 2015, direct personnel costs was RMB8,731 million, representing a decrease of 1.8% from RMB8,893 million in 2014. Direct
personnel costs as a proportion to our total revenues was 10.8%, representing a decrease of 1.4 percentage points from 2014.
With the growth in business volume in 2015, the Group consistently applied reasonable control over its total headcount and
subcontracted its low-end businesses, and thereby minimized the staff costs. The Group also strictly complied with the newly-
amended Labour Contract Law and employed dispatch workers in accordance with the relevant regulations to avoid related risks.
