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Annual Report 2017

Consolidated Statement of Cash Flows

(All amounts in RMB millions)

Year ended 31 December
Note 2017 2016
Cash flows from operating activities
Cash generated from operations (a) 91,519 81,168
Interest received 807 335
Interest paid (6,293) (4,938)
Income tax paid (979) (1,972)
Net cash inflow from operating activities 85,054 74,593
Cash flows from investing activities
Purchase of property, plant and equipment (61,489) (98,293)
Proceeds from disposal of Tower Assets and
other property, plant and equipment 22,121 6,390
Dividends received from financial assets at fair value through
other comprehensive income 167 357
Proceeds from disposal of financial assets at fair value through
profit and loss 60 68
Dividends received from associates 10 -
(Increase)/Decrease in short-term bank deposits and restricted deposits (3,094) 2
Purchase of other assets (4,204) (4,092)
Acquisition of financial assets at fair value through profit and loss (74) (51)
Acquisition of financial assets at fair value through other
comprehensive income (8) (18)
Acquisition of interest in associates (5) (48)
Acquisition of interest in joint ventures (620) (64)
Lending by China Unicom Finance Company Limited ("Finance Company") (700) -
Repayment of loan lent by Finance Company 500 -
Net cash outflow from investing activities (47,336) (95,749)
Cash flows from financing activities
Proceeds from shares issued 74,954 -
Capital contributions from non-controlling interests - 270
Proceeds from commercial papers 26,941 59,880
Proceeds from short-term bank loans 117,571 142,567
Proceeds from long-term bank loans 1,549 3,307
Loans from ultimate holding company 5,237 -
Loans from related parties 535 -
Proceeds from corporate bonds - 17,965
Repayment of commercial papers (54,000) (44,000)
Repayment of short-term bank loans (172,065) (149,425)
Repayment of long-term bank loans (2,686) (84)
Repayment of related party loan (60) -
Repayment of ultimate holding company loan (3,893) (1,344)
Repayment of finance lease (695) (406)
Repayment of promissory notes (19,000) (2,500)
Repayment of corporate bonds (2,000) -
Payment of issuing expense for promissory notes (82) (102)
Dividends paid to equity shareholders of the Company 30 - (4,071)
Net (withdrawal)/deposits by Unicom Group and
its subsidiaries from/with Finance Company (112) 2,397
Net deposits from a joint venture with Finance Company 12 -
Increase in statutory reserve deposits placed by Finance Company 26(i) (620) (1,577)
Net cash (outflow)/inflow from financing activities (28,414) 22,877
Net increase in cash and cash equivalents 9,304 1,721
Cash and cash equivalents, beginning of year 23,633 21,755
Effect of changes in foreign exchange rate (101) 157
Cash and cash equivalents, end of year 27 32,836 23,633
Analysis of the balances of cash and cash equivalents:
Cash balances 3 1
Bank balances 32,833 23,632
32,836 23,633

(a) The reconciliation of profit before income tax to cash generated from operating activities is as follows:

Year ended 31 December
2017 2016
Profit before income tax 2,593 784
Adjustments for:
Depreciation and amortisation 77,492 76,805
Interest income (1,647) (1,160)
Finance costs 5,363 4,832
Loss on disposal of property, plant and equipment 3,489 355
Impairment losses for doubtful debts and write-down of inventories 3,955 4,173
Dividends from financial assets at fair value through other comprehensive income (206) (357)
Share of net profit of associates (893) (204)
Share of net profit of joint ventures (574) (153)
Other investment gain (19) (9)
Changes in working capital:
Increase in accounts receivable (3,667) (2,664)
Decrease in inventories and consumables 81 1,354
(Increase)/Decrease in short-term bank deposits and restricted deposits (58) 23
Increase in other assets (2,034) (4,763)
Decrease in prepayments and other current assets 166 4,171
Increase in amounts due from ultimate holding company (39) -
Decrease/(Increase) in amounts due from related parties 112 (3,302)
Increase in amounts due from domestic carriers (775) (1,914)
Increase/(Decrease) in accounts payable and accrued liabilities 5,752 (835)
Increase/(Decrease) in taxes payable 362 (1,176)
Increase/(Decrease) in advances from customers 2,255 (1,329)
Increase in deferred revenue 365 395
Increase in other obligations 45 69
(Decrease)/Increase in amounts due to ultimate holding company (203) 73
(Decrease)/Increase in amounts due to related parties (945) 5,311
Increase in amounts due to domestic carriers 549 689
Cash generated from operations 91,519 81,168