GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Annual Report 2016
April 2017
Section I Important Notice, Table of Contents and Paraphrase The Board of Directors, Board of Supervisors, all directors, supervisors and Senior Management Personnel of the Company hereby guarantee that the contents are authentic, accurate and complete, and there are no false records, misleading representations or material omissions in the Annual Report, and shall take all the joint and several legal responsibilities.
Dong Mingzhu, the Company"s responsible person, Wang Jingdong, responsible person in charge of accounting work and Liao Jianxiong, in-charge person of accounting institution (accounting superintendent) hereby declare and warrant that the financial report in the Report is authentic, accurate and complete.
All the directors attended the meeting of the Board of Directors in respect of deliberation of the Report.
The Company"s profit distribution proposal passed upon deliberation at the meeting of the Board of Directors is set out as below: Based on the total stock capital of 6,015,730,878 of the Company, all directors were distributed a cash dividend of RMB 18 (tax included) per 10 stocks and given 0 bonus share (tax included). Public reserve funds were not used for capitalization.
Table of Contents
Section I Important Notice, Table of Contents and Paraphrase ................................................................ 1
Section II Company Profile and Main Financial Indices ............................................................................ 4
Section III Corporate Business Overview ................................................................................................. 9
Section IV Discussion and Analysis of Business Operation ...................................................................16
Section V Important Events ....................................................................................................................48
Section VI Changes in Stock Capital & Information of Shareholders......................................................57
Section VII Related Information of Preferred Stock ................................................................................63
Section VIII Directors, Supervisors, Senior Management Personnel and Employees ............................64
Section IX Corporate Governance..........................................................................................................85
Section X Financial Report .....................................................................................................................91
Section XI Index of Documents ............................................................................................................234
Paraphrase
Items Means Contents
Company, the Company, the enterprise, Means GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES or GREE
GREE GROUP Means Zhuhai Gree Group Co., Ltd.
Finance Company Means Zhuhai Gree Group Finance Company Limited
Jinghai Guaranteed Means Hebei Jinghai Guaranteed Investment Co., Ltd.
CSRC Means China Securities Regulatory Commission
Guangdong Securities Regulatory Bureau Means Guangdong Regulatory Bureau of CSRC
Report Period Means the period from 1 January 2016 to 31 December 2016
Section II Company Profile and Main Financial Indices I. Company information
Stock Abbreviation GREE ELECTRIC APPLIANCES Stock Code 000651
Stock Exchange Shenzhen Stock Exchange
Name in Chinese 珠海格力電器股份有限公司
Name Abbreviation in 格力電器
Chinese
Name in Foreign Language GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
(if any)
Name Abbreviation in foreign GREE
language (if any)
Legal Representative Dong Mingzhu
Registered Address Jinji West Road, Qianshan, Zhuhai City, Guangdong Province
Post Code of Registered 519070
Address
Office Address Jinji West Road, Qianshan, Zhuhai City, Guangdong Province
Post Code of Office Address 519070
Website http://www.gree.com.cn
Email gree@gree.com.cn
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Wang Jingdong
Address Jinji West Road, Qianshan, Zhuhai
City, Guangdong Province
Tel 0756-8669232
Fax 0756-8622581
Email gree0651@cn.gree.com
III. Information disclosure and place of the report
Media designated by the Company for information disclosure China Securities Journal, Securities Times,
Shanghai Securities News and Securities Daily
Website specified by CSRC for release of the Annual Report http://www.cninfo.com.cn
Place where the Annual Report is available for inspection Securities Legal Affairs Department of the Company
IV. Alteration of registration
Organization code 91440400192548256N
Changes (if any) in the main business since listing of the Company No change
Changes (if any) in the controlling shareholders No change
V. Other related information Accounting firm engaged by the Company
Name of the Accounting Firm Union Power Certified Public Accountants (Special General Partnership)
Office Address No. 169 Donghu Road, Wuchang District, Wuhan City
Names of Accountants as Signatories Wang Bing, He Li
Sponsor engaged by the Company to perform continuous supervision during the Report Period
□ Applicable √ Not applicable
Financial adviser engaged by the Company to perform continuous supervision during the Report Period
□ Applicable √ Not applicable
VI. Main accounting data and financial indices
Whether the Company will retroactively adjust and restate the accounting data of previous years because of changes on
the accounting policy and correction of accounting errors, etc.
□ Yes √ No
Increase/
Decrease over
2016 2015 the previous 2014
year
Operating Revenue (Yuan) 108,302,565,293.70 97,745,137,194.16 10.80% 137,750,358,395.70
Net profit attributable to
shareholders of listed Company 15,420,964,990.94 12,532,442,817.66 23.05% 14,155,167,229.36
(Yuan)
Net profit attributable to
losses (Yuan)
Net cash flow generated from 14,859,952,106.92 44,378,381,827.68 66.52% 18,939,165,507.73
-
operating activities (Yuan)
Basic earnings per share 2.56 2.08 23.08% 2.35
(Yuan per Share)
Diluted earnings per share 2.56 2.08 23.08% 2.35
(Yuan per Share)
Weighted average return on net 30.41% 27.31% 3.10% 35.23%
assets
Increase/
At the end of 2016 At the end of 2015 Decrease over At the end of 2014
the previous
year
Total asset (Yuan) 182,369,705,049.35 161,698,016,315.06 12.78% 156,230,948,479.88
Net asset attributable to shareholders of listed Company 53,863,951,278.13 47,521,376,091.77 13.35% 44,152,654,824.68(Yuan)VII. Accounting Data Differences under Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in the financial report disclosed under international accounting standards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under international accounting standards and that disclosed under domestic accounting standards during the Report Period.
2. Differences in net profit and net assets in the financial report disclosed under overseas accounting standards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under overseas accounting standards and that disclosed under domestic accounting standards during the Report Period.
VIII. Quarter-based Main Financial Indicators
Unit: Yuan
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Operating incomes 24,640,675,696.66 24,542,144,380.03 33,245,891,313.38 25,873,853,903.63
Net profit attributable to 3,159,816,132.99 3,242,653,852.65 4,826,589,275.21 4,191,905,730.09
Net profit attributable to
shareholders of listed
companies after deduction of 3,133,470,823.80 3,920,819,811.65 4,700,144,150.16 3,846,085,659.60
non-recurring profit and loss
Net cash flows from operating 6,117,619,903.98 5,337,251,013.81 2,707,392,718.78 697,688,470.35activitiesWhether major differences exist between the above financial indicators or their sum and those in the disclosed quarterly report and semi-annual report
□ Yes √ No
IX. Non-recurring Profit and Loss Items and Amounts
√ Applicable □ Not applicable
Unit: Yuan
Item Amount in 2016 Amount in 2015 Amount in 2014 Description
Gains and losses from disposal of non Profit and loss
-current from disposal of
assets (including the provision for asset -12,245,120.40 -8,078,976.10 -13,604,321.23 fixed/intangible
impairment write-off part) assets
Financial
Governmental subsidies recorded into the rewards,
current gains and losses (excluding the technological
governmental subsidies closely relating to the 960,287,886.56 1,160,736,574.04 681,875,856.67 innovation
business of the enterprise and enjoyed by a subsidies and
fixed quota or a fixed amount in accordance development
with the state policies) project grants,
etc.
Gains and losses of the fair value change of
the trading financial asset and liability held by Investment
the Company, investment income from the income, gains
disposal of the trading financial asset and -1,136,058,635.86 -916,913,668.52 -653,382,850.98 and losses from
liability and available-for-sale financial asset, changes in fair
except for the effective hedging business in value
relation to the normal operation of Company
Reversal of impairment provision for the
accounts receivable for which an independent 5,556,302.40
impairment test is conducted
Non-operating incomes and expenditures 28,307,584.72 37,595,046.55 5,068,130.68
-
other than the above items
Less: Influence amount of income tax 17,078,192.05 44,984,019.01 -4,880,796.83
Item Amount in 2016 Amount in 2015 Amount in 2014 Description
Influence amount of minority equity (after tax) 8,325,279.64 9,494,709.79 4,484,583.29
Total -179,555,454.27 218,860,247.17 10,216,767.32 --Explanation should be given for non-recurring profit and loss items defined by the Company according to Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss and for non-recurring profit and loss items which are listed in Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss and defined as recurring profit and loss items.
□ Applicable √ Not applicable
No non-recurring profit and loss items which are defined or listed in Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss were defined by the Company as recurring profit and loss items during the Report Period.
Section III Corporate Business Overview
I. Major Businesses Engaged in during the Report Period
1. Major businesses and position in industry
Currently, Gree runs two major brands of GREE and TOSOT, covering a wide range of products such as residential air conditioners, central air conditioners, air source water heaters, home appliances, industrial products and mobile phones. Gree has a number of subsidiaries including Landa Compressor, Gree Electrical, Kaibang Motor, Xinyuan Electronics, Intelligent Equipment, Precision Mould, and Renewable Resources, covering the whole industry chain from upstream production of components to downstream recycling of waste products.
Gree has developed products covering 20 major categories, 400 series and over 12,700 varieties, which have been sold to over 300 million users in over 160 countries and regions. Here, the production and sales volume of Gree residential air conditioners has been No.1 in the air conditioner industry of China for 22 consecutive years since 1995, and taken the lead in the world for 12 years since 2005.
According to the statistics of ChinaIOL.com, the domestic market share of Gree residential air conditioners reached 42.73% in 2016. According to the statistics of news.ehvacr.com, the domestic market share of Gree commercial air conditioners reached 16.2% and maintained the first place for five consecutive years.
2. Industry Overview
According to the statistics of ChinaIOL.com, due to the downward pressure on the overall
economy in China, the cumulative domestic sales volume of residential air conditioners
was 60,485,600 sets in 2016, indicating a year-on-year drop of 3.64%. Thanks to the
improved economic conditions abroad, the export volume increased by 9.74% as
compared to 2015, and 47,927,400 sets of air conditioners have been exported in total.
Among residential air conditioners, in addition to the intelligent characteristic of residential
air conditioners that becomes more and more significant, product energy efficiency, energy
saving and environmental protection also turn to be important conditions for a brand to
have a foothold in the market.
According to the statistics of aircon.com.cn, the overall capacity of China"s central air conditioner market in 2016 was about RMB70 billion, indicating an increase of 10% over 2015, and a trend of recovery on the market. The VRF units and unitary units were still the products that drove the market growth in 2016. "Coal-to-electricity" became one of the most noteworthy events in the HVAC industry in 2016. The significance of the air-source heat pump water heater, the major product of "coal-to-electricity", is self-evident to the whole HVAC industry. Especially under the situation that the central air conditioning project market is relatively sluggish, it seems that "coal-to-electricity" brings another possibility for the development of central air conditioner manufacturing enterprises.
In terms of brand concentration, as the industry brand concentration was further enhanced, the brands of domestic home appliance series and those of domestic chillers were combined into national brands to compete with American and European brands and Japanese and Korean brands, creating a situation of tripartite confrontation. The overall market share of nine major national brands including Gree has reached about 40%, far higher than that of the other two camps, wherein Gree ranked first with the market share of 16.2%.
II. Significant Changes in Major Assets
1. Significant changes in major assets
Major assets Significant changes
Equity assets None
Fixed assets None
Intangible assets None
Construction in progress Year-on-year decrease of 71%, caused by conversion to fixed assets from the construction in progress that has reached the intended usable condition2. Major overseas assets
□ Applicable √ Not applicable
III. Core Competence Analysis
1. Brand advantage of worldwide reputation and firm channel discourse power
Gree is the largest state-controlled listed company integrating R&D, production, sales and service in the world. The production and sales volume of Gree"s residential air conditioners has ranked No.1 in the air conditioner industry of China for 22 consecutive years since 1995, and taken the lead in the world for 12 consecutive years since 2005, securing its leading position in the industry.
In 2016, Gree shouldered the responsibility of the state, regarded re-energizing "Made in China" as its responsibility and implemented brand promotion and marketing by centering on "The Pillars of a Great Power". Both the brand promotion effect and activity ranked in the forefront of the industry: Gree won the "China Brand Innovation Award" granted by People"s Daily, "Industry No.1 of Chinese Brand Integrity Enterprises" conferred by the MS Weekly periodical office of People"s Daily and the editorial board of chinappzw.com, and the title of "Ten Major Influential Events of 2016 China Business Leader Festival - Gree Direct Marketing Storm on November 11" awarded by the Southern Metropolis Daily.
According to the "2016 China Brand Value Evaluation Information Session" held by the China Council for Brand Development and other organizations jointly, Gree got the first place in the light industry group with the brand strength of 967 and the brand value of RMB54.9 billion. The "GREE" brand has been deeply rooted in the hearts of people and enjoys a worldwide reputation. It has established a good reputation among distributors and consumers. Gree"s air conditioners have ranked No.1 in terms of customer satisfaction for five consecutive years. In the 2015 air conditioning product satisfaction evaluation results issued by the China Association for Quality and National Consumer Committee, Gree"s air conditioners got the highest score of 84.4 points in customer satisfaction of air conditioning brands, and ranked first in the industry in the sub-dimensions such as customer satisfaction, loyalty, overall brand image and perceived quality of industry.
Gree owns 27 regional sales companies and 25,000 exclusive stores in China. Its channel building ideas are unique in the home appliance industry and its channel mode is called "a
novel marketing mode in the economic sphere of the 21 st century" in the academic circle.
While, the marketing mode of its "self-built channel" enables "integrity" of the enterprise to be manifested throughout all phases from production to sales, thus ensuring that Gree stands firm in the fierce competition of channels and firmly grasps the discourse power and initiative of channels. At the same time, the company shows the advantage of solid online and offline business layout. It maintains a good strategic partnership offline with Gome, Suning and other large home appliance chain stores, and closely cooperates with Jingdong, Tmall and other online shopping platforms.
2. World"s largest production scale and a full range of product lines
Gree boasts 10 major production bases in the world, including Zhuhai, Chongqing, Hefei, Zhengzhou, Wuhan, Shijiazhuang, Wuhu, Changsha, Brazil, and Pakistan, with the annual capacity of residential air conditioners exceeding 60 million sets and that of commercial air conditioners exceeding 5.5 million sets, and the production scale ranks first in the world. Meanwhile, it has the perfect supporting capacity and the most complete industry chain in the field, effectively ensuring independent production and supply of key components for air conditioners.
Gree provides consumers with a wide range of products such as water purifiers, water heaters, air conditionners, boilers, and household appliances, and has developed products in 20 major categories, 400 series and over 12,700 specifications including residential air conditioners and commercial air conditioners, and the perfect and complete product lines can meet the general and personalized needs of customers at different levels. Gree"s products (including independent brands and OEM products) have been exported to more than 210 regions and countries worldwide. Air conditioners of self-owned brand "GREE" have been exported to more than 160 regions and countries around the world.
3. Opening up the upstream and downstream industry supply chains and boasting powerful supply chain control
In addition to the world"s maximum production scale and full range of production lines, the company further opened up the upstream and downstream industry supply chains including compressors, motors, capacitors, and enameled wire products, which greatly enhanced the capability of the company in controlling the upstream and downstream supply chains, and guarantees the production efficiency. Export of industrial products is promoted vigorously as the internal demands are satisfied.
In the aspect of compressor industry, the "three-cylinder two-stage compressor of variable volume ratio" independently developed by Gree was identified as the world leading level; Gree"s scroll compressors with class leading performance have pioneered the industry, dismantling the monopolistic domination of foreign scroll compressor technologies; Gree overcame the control technology of hybrid magnetic bearing and the control technology of high power and high speed motor, and realized independent R&D of high power and high speed motors.
In terms of motor industry, Gree developed 52 models of motors in 5 series of servo motors, and successfully used them for injection molding and sheet metal manipulators and 608 robots; it also developed a type of washing machine motor and put it into production. In terms of capacitor industry, trial assembly of samples was completed for the new energy automobile capacitor; and the 20A smart power module sample has been put into the reliability test.
In the aspect of enameled wire products, Gree focused on development of new products for new energy automobile such as corona resistant enameled wires and aluminum enameled wires, and grasped the key production technology and process requirements to meet the market demands in more fields.
4. Perfect independent innovation system and strong technology R&D strength
Adhering to the philosophy of "Science and technology change life; science and technology create life" and insisting on "Independent research and development of core technologies", Gree is dedicated to construction of the independent innovation system, and promotes the enterprise to realize strategic transformation from "scale driven performance growth" to "innovation driven sustainable development" by focusing on "creating an innovative culture of self transcendence, building a highly integrated R&D system, possessing original core technologies, and constructing a full range of product series".
As the largest air conditioner R&D center in the world, Gree currently has more than 8,000 scientific researchers, 2 state-level technology research centers, 1 state-level industrial design center, and 1 provincial-level key laboratory of enterprise; it has established 7 academies, 52 institutes and 632 laboratories; Gree has applied for over 27,000 technology patents in total, including more than 10,000 invention patents.
Gree is the only enterprise in the home appliance industry of China that does not set the upper limit for scientific research input, and the input depends on the need. In recent years, its investment in scientific research exceeded RMB4 billion. Gree regards the national standards and international standards as thresholds and consumer demands as the highest standards, pursues perfection in R&D, and accumulates experience steadily. Now, it boasts 15 world leading core technologies. Particularly, the pioneering PV air conditioner has made a great contribution to the human life and the nice environment. Gree undertook 29 major national science and technology projects, and won 2 second prizes of national science and technology progress, 1 second prize of national technical invention, 2 gold awards of China appearance design and 10 China patent excellence awards.
5. Powerful cost control capability and financial strength
Gree sets quality technical standards for internal control that are far above national standards to ensure high reliability of products, and never delivers immature or unqualified products to consumers. Gree establishes unique screening plants in the industry for implementing comprehensive check on all purchased parts; issues bans of the president and promotes the "Eight Prohibitions" policy; and implements strict quality control in all phases including trial preparation of new products, incoming inspection of components and parts, product manufacturing, transportation and installation so as to feasibly guarantee product quality. It also established and implemented 「Gree『s Comprehensive Quality Control Mode – T9 Management System」 oriented by customer demands and social responsibilities to implement overall control on product quality. This also made Gree famous for its excellent product quality.
Gree procures raw materials in a centralized manner to give full play to the scale advantages of the group, improve the bargaining power of procurement, and effectively control the procurement cost; it carries out regular or irregular special analysis on important raw material consumption differences to promote cost control of key materials and improve the material utilization efficiency of branch plants; it adopts positive measures such as the domestic first settlement mode of "quota-based material requisition and settlement", increasing the equipment utilization (including storage equipment), and reducing office costs to lower the manufacturing and routine office costs continuously.
Nowadays, when corporate loans prevail in China and many household electric appliance enterprises are trapped in hardship, Gree still maintains an abundant cash flow, and its powerful financial advantage is obvious.
6. Management innovation, talent innovation and cultural innovation
Gree follows the management policy of "Be Fair, Be Open, Be Dedicated". The company strengthens management by relying on institutional building, cultural construction and staff training, with a view to enhancing the internal core competitiveness. At the same time, it attaches importance to system establishment and keeps strictly the rules for reward and punishment to guarantee benefits and quality through system construction. Management of Gree also focuses on details such as a piece of paper and a drop of water, and strict and standardized management has enabled Gree to gain a momentum for rapid development. Gree has a complete talent training system of "selection, cultivation, appointment and retention" to promote competent employees and degrade incapable ones, providing a career path for all kinds of talents. It has established an effective incentive system to inspire employees" sense of honor and enthusiasm. For example, the cadre performance management system has operated for years, and the performance oriented evaluation mechanism has become a self-exercise and growth platform for middle-level cadres of the company. The increasingly perfect talent management mechanism has laid a solid foundation for sustainable development of the company.
The corporate culture of Gree regards "truth, faith, honesty, novelty and courtesy" as the core sense of worth, "loyalty, friendship, hardworking and aggressiveness" as the enterprise spirit and "less empty talk and more real work" as the working attitude. Meanwhile, Gree is committed to people-centered principles to persist in innovation and strive for excellence, and make contributions to quality improvement of the human life and social progress.
Due to implementation of corporate management and personnel and cultural innovation initiatives, Gree increased its overall production efficiency by 10.5% in 2016. The number of workers needed was reduced by 4,294, which is equivalent to 2,244 persons when working hours are taken into account.
Section IV Discussion and Analysis of Business Operation I. Overview
(I) General description
The year of 2016 is the first year of China"s Thirteenth Five-year Plan, as well as the first year of supply-side reform and a crucial year for the home appliance industry.
This year is also the first year for Gree to start transformation. By virtue of its courage and wisdom of reform, Gree regarded "transformation, breakthrough and innovation" as its guiding ideology of annual operations, objectively analyzed the economic situation at home and abroad, actively adapted itself to changes of the times, and sped up industrial transformation in the fields such as intelligent equipment, smart home and mould on the precondition of consolidating the existing air conditioner market share. The company"s net profit attributable to shareholders of the listed company in the year increased by 23.05% over last year when the overall income was kept basically stable.
This year Gree also became one of the first enterprises in the responsibility extension pilot list of electric appliance and electronic product manufacturers released by the Ministry of Industry and Information Technology. This greatly affirmed the performance of Gree in the sustainable development and recycling field of waste electronic products and electric appliances, and played an important role in development of the renewable resource industry in the entire home appliance industry and green transformation of the electric appliance and electronic product industry.
Gree did hard work in the year, and adopted environment-friendly practices to design and produce healthy, energy-saving and green products. Its three independently developed technologies or products, namely, efficient permanent magnet synchronous inverter centrifugal ice cool storage unit of dual operating conditions, cooling technology at the ambient temperature of -40°C and the three-cylinder two-stage compressor of variable volume ratio, were identified and deemed to reach the world leading level. Gree seized the opportunity of "coal-to-electricity" policy, and developed innovative heat pump heating products for all types of buildings. Moreover, it won the bid for "coal-to-electricity" projects in Beijing, Shanxi and Tianjin many times, giving full play to the scale effect of industry giants and winning the market opportunities and a good reputation among users. The accumulative quantity of authorized patents of the company reached 15,862 as of December 31, 2016, and the total quantity of authorized invention patents reached 911 in the whole year of 2016. Gree ranked No.7 in the national invention patent list and No.1 in the home appliance industry in 2016.
This year Gree increased the installation fee by RMB100 for installation workers and increased the wage of each employee by RMB1,000. From shareholders to installation workers and to employees, Gree"s benefits were distributed to all the stakeholders so that they shared the development achievements and the social responsibility was further highlighted.
Gree stood out from numerous Asian famous brands, and was appraised as "the most trusted brand in Asia" by the international brand consulting group of America in 2016. In addition, in the "2016 China Brand Value Evaluation Information Session" held by the China Council for Brand Development and other organizations jointly, Gree got the first place in the light industry group by relying on its brand strength of 967 and brand value of RMB54.9 billion. Gree"s air conditioners were also stationed in all kinds of Olympic venues in Rio of Brazil, and created "three uniquenesses" of Chinese air conditioner brand in the Rio Olympic Games project. "Direct Marketing Storm on November 11"conducted by Gree was awarded the title of "Ten Major Influential Events of 2016 China Business Leader Festival" by the Southern Metropolis Daily.
In 2016, the company regarded "transformation, breakthrough and innovation" as its guiding ideology of annual operations, objectively analyzed the economic situation at home and abroad, and actively adapted itself to changes of the times. In the macroenvironment of industrial destocking and upgrading of air conditioning products, Gree made great efforts continuously to make innovation and strive for excellence, achieved a breakthrough in perspectives of informatization, intelligence, diversity and multiple channels by carrying out the innovation driven strategy, promoting the diversified industry development and strengthening the strategic decisions such as deep integration of informatization with the manufacturing process, and made a lot of innovation achievements in the four aspects of platform, standard, management and talent.
The year of 2016 was also the critical year during which the company started adjustment and transformation. On the premise of consolidating the existing air conditioner market share, the company accelerated industry transformation in the intelligent equipment, mould and other fields. The company achieved the gross revenue of RMB110.1 billion for the year, indicating an increase of 9.5% over last year; it achieved the net profit of RMB15.4 billion attributable to shareholders of the listed company, indicating an increase of 23.05% over last year.
In 2016, the high-efficiency permanent-magnet synchronous inverter centrifugal ice-storage chiller developed independently by Gree was identified and deemed to reach the world leading level by the Department of Science and Technology of Guangdong Province; the cooling technology at the ambient temperature of -40°C was identified and deemed to reach the world leading level; and the research and application of the three-cylinder two-stage compressor of variable volume ratio was recognized as international initiative and deemed to reach the world leading level. The Underwriters Laboratories (UL) issued the first UL certificate of heat pump water heater to Gree, and Gree"s PV centrifugal chiller and low-temperature heating VRF were awarded the AHRI certificate of the United States.
Besides, the company won the "China Brand Innovation Award" granted by People"s Daily for the brand building field; the "Industry No.1 of Chinese Brand Integrity Enterprises" conferred by the MS Weekly periodical office of People"s Daily and the editorial board of chinappzw.com; the title of "Ten Major Influential Events of 2016 China Business Leader Festival-Gree Direct Marketing Storm on November 11" awarded by the Southern Metropolis Daily.
Due to its courage of representing "Made in China" and initiative of fulfilling corporate responsibilities, the company won the "Annual Enterprise Award of the Eleventh People"s Corporate Social Responsibility Award" issued by people.cn. Gree has always maintained the leading position in the air conditioner industry at home and abroad, and won the title of "2016 Meritorious Manufacturing Enterprise in Guangdong" awarded by Guangdong Manufacturers Association and Guangdong Association for the Promotion of Industrial Development; the title of "Top 50 Manufacturing Enterprises in Guangdong Province" awarded by Guangdong Manufacturers Association, Guangdong Research Institute for Industry Development and the Enterprise Competitiveness Research Center of Guangdong Academy of Social Sciences; and the honors such as "2016 Ten Major Air Conditioner Export Enterprises in China" and "2016 Ten Smart Home Appliance Export Enterprises in China" issued by China Chamber of Commerce for Machinery and Electronic Products Import and Export.
(II) Transformation, Innovation and Breakthrough in 2016
1. Four major transformations: informatization, intelligence, diversity and multiple channels
(1) Informatization transformation: Promoting in-depth integration of informatization and industrialization for enhanced development
In 2016, the company laid out the informatization strategy by centering on the main direction of deeply integrating informatization with industrialization, and put an emphasis on construction of a fully integrated information platform for real-time sharing. Horizontally, the upstream and downstream were extended and got through using the procurement collaboration platform and sales collaboration platform to support efficient collaboration in the supply chain and maintain competitiveness of the company on the whole chain. Vertically, the MES was used to connect through the field operators and the management, support fine management and maintain high efficiency of field operation.
The company has completed the implementation of ERP, MES and WMS systems in Changsha and other new bases, providing a uniform core information platform for the new bases.
In 2016, Gree"s intelligent manufacturing project obtained approval to become the national intelligent manufacturing special project and Guangdong intelligent manufacturing demonstration project of 2016. Seven internal management systems were built up in the company"s manufacturing system, including the HR system, synergistic system, cost system, equipment system, information system, production centralized control system, and operation performance system. Currently, all the departments have formed the operating model focusing on self-management and supplemented by functional supervision, further enhancing the management level of production system and the prevention and control capabilities.
Besides, the manufacturing system centering on "double benefit" was established to operate the management system, and the overall productivity of the company was increased by 10.5% in 2016. The number of workers needed was reduced by 4,294, which is equivalent to 2,244 persons when working hours are taken into account; the total cost amount of the year was reduced by about RMB387 million by implementing the projects such as new process development and utilization, quality inspection procedure optimization and production line arrangement optimization.
(2) Intelligent transformation: Implementing supply-side reform to take the lead in the air conditioner industry
The upgrading of consumption and development of Internet and Internet of things accelerated the process of product intelligence. Product intelligence not only changes the product functions of the enterprise, but also promotes industry changes, bringing great opportunities for enterprise transformation and upgrading. In 2016, Gree kept up with the times, implemented the supply-side reform, and seized the opportunity to transform and upgrade to product intelligence.
In terms of the inverter technology and product R&D, 10 major series and 15 main models (including 40 sub-models) of Gree"s air conditioners were all selected as "Energy Efficiency Leader" air conditioning products of 2016 publicized by the Ministry of Industry and Information Technology. Gree completed design and development of multiple new and intelligent energy-saving inverter air conditioners such as Rose Ⅱ , I-Cool, T-Fresh, Goldshell floor standing unit, inverter air conditioner Enjoy, BPJG, which were significantly improved in aspects of space saving and intelligence. Moreover, the company mastered the three core technologies, including carrying the photosensitive sensor, the global original self-cleaning technology of evaporator, and the intelligent voice control technology. Gree independently developed the high-end inverter washing machine series products in the new field and the pure electric vehicle air conditioner with a highly efficient and reliable heat pump.
To gain market share, Gree adjusted the product sales structure in 2016, and successively launched a variety of first-class energy efficiency inverter air conditioners, among which the high-end residential air conditioners represented by the "Energy Efficiency Leader-Run Series" received a very positive response from the market; the company constantly strengthened promotion and publicity of intelligent air conditioning products, e.g., Enjoy and Junyue equipped with the Wi-Fi function, in an effort to provide consumers with the most considerate products.
In terms of R&D of intelligent products, Gree, on the basis of completing local and remote control of a single machine, integrated the residential air conditioner, commercial air conditioner, household appliance and intelligent routing to work out an integrated smart home solution for linkage induction control; it developed household Goldshell local voice and App voice control, subsequently developed the functions such as voice dialog and facial recognition at the same time, and successfully used them for Gree medium/high-end air conditioners; it added intelligent Wi-Fi functions to water purifier, kitchen three-piece suit, electric fan and some special air conditioners, and studied the functions such as intelligent mode, intelligent network distribution, and data reporting.
In the aspect of R&D of commercial air conditioning products, Gree developed products by focusing on the concept of energy saving, environmental protection and intelligent interconnection, and created Gree intelligent residential central air conditioning system integrating multiple functions such as air conditioning, floor heating, hot water, lighting, temperature control and intelligent control; it developed GMV Shurui multi-function residential VRF unit to meet the air conditioning requirements of kitchen, bathroom, living room and dining room at the same time; it won the bidding for the MS01 nuclear power centrifugal chiller project and MS02 nuclear power air-cooled screw unit project to enter the nuclear power market; it developed the ultra-low temperature wall-mounted heat pump floor heating residential central air conditioner successfully and placed it on the northern part of the country.
(3) Diversified transformation: Maintaining the leading position in the air-conditioning sector and exploiting emerging areas
On July 23, 2016, Gree officially announced its entry into the era of diversification at the Second China Manufacturing Summit Forum. Gree extended from the air conditioner manufacturing technology by centering on the two sectors of smart home appliances and intelligent manufacturing, brought into play the synergistic effect from products to equipment, and achieved the development objective of advancing in line on a number of tracks, namely, heading for depth in the traditional fields such as home appliance manufacturing and constantly exploiting the boundary in the emerging fields such as intelligent equipment manufacturing.
① Developing household appliances towards fine quality, diversification and intelligence
In 2016, the company completed 346 household appliance development projects in total, among which IH rice cookers were promoted among media outlets nationwide through the National People"s Congress, and thus covering the high-, and mid-to-low end markets comprehensively; the wastewater challenges was resolved for water purifiers, and the realized waste water/clean water ratio of 1:1 kept the water purification technology of Gree stable at the forefront of the industry; the 2nd-generation apple-shape rice cooker has gained popularity for its design aesthetics and unique creativeness.
② Strengthening R&D of communication technologies by taking smart home as the entry points
With the product diversification and smart home as the entry points, Gree explored the way forward for household consumer electronics, communication and industrial control chips, and developed the chips with independent intellectual property rights. In 2016, Gree focused on R&D of intelligent interaction, intelligent connection and intelligent cloud platform, connected its products to the smart home system, and provided access for third party manufacturers through the wireless module, "Gree +" App and open interface of cloud platform, formulating a smart home ecosystem of Gree. Wireless connection has been achieved on all the key products of Gree such as Painting Era air conditioner, Goldshell air conditioner, Rose air conditioner, dehumidifier, rice cooker, air purifier, water purifier, intelligent range hood, disinfection cabinet plug-in, and washing machine, and remote control, fault alarm and maintenance services can be implemented through "Gree+" App for all the products.
Gree put the 2G mobile phones into mass production in 2016, and the 2G mobile phone with a 5.5-inch screen and 3G mobile phone with a 6-inch screen are in the R&D stage. Gree also established the complete and professional development processes and standards for mobile phone software, hardware, structure and test, and gathered a certain R&D strength in the mobile phone business.
③ Transforming and upgrading to the intelligent equipment industry and mould manufacturing industry to cultivate new profit growth points
In 2016, Gree gradually occupied the international and domestic high-end equipment market while completing transformation and upgrading of its own manufacturing system. This year, Gree mainly completed development of products such as the 750W servo driver based on the Ethernet bus type, three-axis and five-axis manipulator control systems, bus type motion controller, and compressor automatic on-line.
For the mould industry, Gree put an emphasis on research and application of new technologies and new materials such as spray-free injection molding of metal effect, in-mould hot cutting technology, PT-25 spool, integrated forward inclined centrifugal fan blade mould, and 3D printing technology to implement green manufacturing of moulds. Meanwhile, Gree improved the automation and information level of mould making to realize intelligent manufacturing of moulds.
④ Achieving intermediate results in PV products, PV systems and industrial touch screens by relying on PV air conditioners
The transition of PV air conditioners indicates the development of multiple models based on the existing PV centrifugal chiller and PV VRF unit, including the PV VRF for All Power Supply Application, single-phase side air outlet PV VRF unit, and airborne converter of 560KW PV centrifuge, so as to satisfy different occasions and needs. Gree PV systems have been sold in many regions at home and abroad.
The self-made 1G 12-inch industrial touch screen was been put into mass production and all the centrifugal units were switched uniformly in August, and all the machines operated properly; Gree made a breakthrough in technologies for the 7-inch industrial touch screen and high-end 23.8-inch industrial PC, and mastered the core technologies.
⑤ Sticking to the strategic direction of "Saving, green, environmental protection and resource regeneration" for sustainable development to formulate a closed loop industrial chain of resource regeneration and adhering to green ecological manufacturing
The self-built channel, cost reduction project and management system construction project were completed in the renewable resource sector, and the four bases (Changsha, Zhengzhou, Wuhu, and Shijiazhuang) passed the three-in-one system (18000, 14000 and 9000 systems) review conducted by the certification body SGS and received the corresponding certificate in June.
(4) Channel transformation: Building a platform to strengthen cooperation and making great efforts through online and offline linkage
Gree owns 27 regional sales companies in China and nearly 30,000 exclusive stores throughout the world. Gree observes the rule that the market emerges before factories, and its unique channel construction idea was distinguished in the home appliance industry. In 2016, Gree set up an innovative management model of sales company based on the original offline channel, and established Gree image stores and flagship stores in urban cities, highlighting the brand image of Gree exclusive stores and enhancing the experience of consumers. In addition, Gree established 20 new TOSOT home appliance stores in all regions throughout the country. Gree also paid more attention to entry into offline stores in 2016. Based on the original situation that all the sales companies cooperated with Gome stores, Gree signed agreements with Suning and entered more than 740 Suning stores. With the rapid scale expansion of China"s online shopping industry, the necessity of accelerating interconnection between the traditional manufacturing industry with Internet has become a consensus of the industry. In this situation, Gree carried out the strategic planning for online sales of Gree brand, and made huge investment to build its own comprehensive e-commerce sales platform "GREE Mall". It focused on layout on the most influential third party e-commerce platforms in China such as Jingdong mall, Tmall, Gome and Suning.com, ensured customer resource sharing with domestic key accounts (KAs), and achieved brilliant sales performance in great promotion activities such as June 18, June 28, November 11 and December 12, wherein air conditioners topped the sales list of similar products in the home appliance industry on JDcom platform, and the two major brands KINGHOME and TOSOT were also outstanding in the e-commerce home appliance category.
In 2016, the online e-commerce sales volume of the company reached RMB4,580 million (excluding the sales volume on Taobao), increased by 91.14% over last year, wherein the year-on-year increase on JDcom was 93.15% and that on Tmall was 84.42%; the year-on-year increase of Gree air conditioners on JDcom reached 145.5% in the refrigeration year of 2017 (August to December 2016), the sales volume of Gree air conditioners on JDcom in the "June 18" Shopping Festival of 2016 exceeded RMB380 million, and the sales volume of Gree air conditioners exceeded RMB310 million in the "November 11" Shopping Festival, topping the list of the air conditioner industry. According to statistics, the cumulative online and offline sales volume of Gree exceeded RMB3.4 billion during the "November 11" period of 2016, nearly doubled over the same period last year.
2. Four major innovations and breakthroughs: Platform, standard, management and talent
(1) Platform innovation: Building an innovation foundation platform to achieve technical breakthroughs
In 2016, Gree further improved the science and technology innovation system of the enterprise by centering on construction of the six major innovation foundation platforms: national public scientific research platform, intellectual property strategy management platform, standard strategy management platform, integrated R&D design platform, infrastructure testing platform, and information technology support platform.
The establishment and operation of the national public scientific research platform has become the core power for Gree to make innovations. Based on the two national technical research centers, namely, the existing national engineering research center and national enterprise technology center, the company added the two national scientific research platforms(the key state laboratory and state-level industrial design center) to further build the innovation chain focusing on "basic research-industrial design-engineering-production-automation".
In construction of the intellectual property strategy management platform, the company established the special intellectual property office in 2016, and used intellectual property rights in the three aspects of innovation driving, free use, and legal monopoly to help the company to expand the market share, enhance the added value of product intellectual property rights and increase the brand value. The company applied for 5,976 patents in the whole year, including 3,662 invention patents and 871 authorized invention patents, increased by 100% as compared to the previous year.
In terms of construction of the standard strategy management platform, Gree completed platform planning for 38 categories of products such as residential air conditioners, commercial air conditioners, and household appliances, combined the product platform to complete use planning for 504 categories of key materials, and created material libraries for all kinds of product platforms. Gree worked out regulations on all kinds of product platforms and material use, and sorted out development processes of the company to improve the document template and the review and signing process, making sure the product platform and material planning are strictly implemented in the product development process.
In the aspect of building the integrated R&D design platform, the company performed orderly development for the planning project of each product under the overall planning of project management in 2016. It completed 2,427 product projects, 401 technical research projects, 280 process research projects, and 165 management innovation projects in the whole year.
Regarding construction of the infrastructure testing platform, the company established a strategic cooperation partnership with an international authoritative certification and testing institution in 2016, and received the comprehensive strategic partner certificate of smart home product evaluation, testing and certification issued by SGS. Gree successively built the household appliance energy efficiency laboratory, automobile air conditioning laboratory, air purifier energy efficiency laboratory, and the inverter master process monitoring system, and constantly improved the testing function of the existing laboratory to provide users with more reliable, safe, comfortable and energy-saving products.
In terms of construction of the information technology support platform, the company vigorously promoted integrated application of multiple information systems, e.g., to use big data to establish a multidimensional analysis basis and implement flexible combination and query analysis based on analysis dimensions; to integrate the PLM system of the HQ with that of each subsidiary company to share the design and R&D business resources; and to realize the standardization of design and coordination between design and process to build an integrated closed loop change management system of digital design and manufacturing.
(2) Standard innovation: Customer-oriented, strict quality control
① Using the most strict standards and means to develop and manufacture productsBy relying on the Comprehensive Quality Control Mode – T9 Management System that is responsive to the needs of customer demands and social responsibilities, Gree studied the quality standard of residential air conditioner products, and delivered the full set of corresponding scientific research achievements from parts to overall units; studied key points of air conditioners for nuclear power projects and other core quality projects, and used key management points in the nuclear power quality system as reference to promoted their application in other air conditioner products; comprehensively implemented the strict quality management mode to deliver the special control requirements of key materials, and to strengthen the inspection control requirements, experimental verification control requirements and the approval and release requirements of department head.
② Carrying out reliability research with a view to improving the quality
In 2016, the company organized the structure, system, electrical component, controller, and process working teams to start the ten-year life research, and carried out 113 projects in total in the year according to the detailed analysis on after-sales failures, covering the core after-sales issues related to key components such as compressor, four-way valve, motor, motion mechanism, and controller. The research findings of all the projects have been included in the design specifications, inspection specifications and process documents to start control and improve the quality of products and parts at
(3) Management innovation: Strengthening institutional building to promote sustainable development of enterprise
In 2016, the company promulgated the Supervision and Management Measures to constantly improve the supervision and reporting mechanism. More than 60 complaints of all types were accepted through channels such as president mailbox, e-mail, letter, and call. The supervision unit carried out careful investigation for all the complaints, and punished the responsible person seriously once the fact was verified, creating an open and transparent atmosphere. The company carried audit projects from the aspects such as the company"s procurement, material consumption, expenditure, subsidiary control and infrastructural project settlement by aiming to sound internal control, improved operating management and increased economic benefit.
In 2016, Gree fully implemented the safety subject management responsibility system of "one position with two responsibilities" for safe production, steadily promoted the investigation and rectification of hidden dangers, and carried out special supervision and inspection work. It improved the lighting environment of workshop operation, and completed the special rectification work of harmful positions, annual monitoring plan for occupational health, on-site harmful substance detection of position operation, and occupational disease protection pre-evaluation of new projects, ensuring the occupational health of employees. There were no major safety accidents, occupational disease accidents, and environmental pollution accidents in the company in 2016.
(4) Talent innovation: Reinforcing talent training to meet the diversified talent demands
① Recruitment and training of skilled workers
Gree adopted the strategy of going out and introducing talents, through school-enterprise cooperation for instance, to introduce more skilled workers. It carried out the skill grade evaluation for the second batch of skilled workers, performed position skill grade evaluation for 408 persons in 16 work types, and granted skill allowance to skilled workers according to the allowance standard for skills at different levels and the actual work days. ② Creating a talent pool and deepening personnel training
Gree organized to implement the 2016 college student cultivation work called "Dreaming Gree", special training camp of excellent supervisors, and the pilot school of team leaders, helped the front-line managers to reserve basic management knowledge and skills and improve the capability of finding and solving problems, worked out the annual learning plan for all members by combining business innovation, performance breakthrough and capability improvement, and irregularly organized a series of lectures of experts at the technology frontier in numerous fields to broaden the horizon of technology R&D talents. ③ Perfecting the personnel assignment mechanism of the group to promote the utilization of human resources within the group
The company further improved the personnel assignment mechanism based on change adjustment of the sales and production plan, specified the assignment principle and division of labor, and smoothly fixed the staff shortage and surplus contradiction between different companies through personnel assignment in the group.
④ Strengthening the shift of thinking and enhancing the quality of cadres
The company strengthened the publicity and education work of conduct and clean government, organized all the party members of the company to carry out the learning and educational activity called "Two Studies, One Action", and completed activities of the discipline education and learning month of 2016.
All the cadres are required to be enterprising with the spirit of challenge, dare to emancipate the mind and break away from conventions, and acquire the regulating ability, decision making ability and coping ability. Gree organized the management cadre reading association, sorted out and recommended the reading list of one term every two months, and helped wide management cadres to construct a compound knowledge structure and widen the working field of view.
II. Analysis on principal businesses
1. Overview
See the description in "Overview" of "Discussion and Analysis of Business Operation".
2. Revenue and cost(1) Composition of operating income
Unit: Yuan
2016 2015 Increase/
Decrease over
Amount Proportion in Amount Proportion in the previous
Operating Income Operating Income year
Total operating 108,302,565,293.70 100% 97,745,137,194.16 100% 10.80%
income
Categorized by industry
Household
appliances 93,187,780,602.40 86.04% 87,930,981,568.34 89.96% 5.98%
manufacturing
Other businesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01%
Categorized by product
Air Conditioner 88,085,431,144.00 81.33% 83,717,936,071.67 85.65% 5.22%
Household
Appliances 1,717,749,799.40 1.59% 1,522,676,680.86 1.56% 12.81%
Other main 3,384,599,659.00 3.13% 2,690,368,815.81 2.75% 25.80%
business
Other businesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01%
Categorized by region
Domestic-main
business 76,937,875,361.69 71.04% 74,596,089,512.78 76.32% 3.14%
Overseas-main 16,249,905,240.71 15.00% 13,334,892,055.56 13.64% 21.86%
business
Other businesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01%
(2) Industry, product, or region accounting for more than 10% of the Company"s operating income or operating profit
Unit: Yuan
Increase or Increase or Increase or
Gross Decrease of Decrease of Decrease of
Operating incomes Operating Cost Profit Operating Operating Gross Profit
Margin Income over Cost over Margin over
Last Year Last Year Last Year
Categorized by industry
Household
appliances 93,187,780,602.40 58,696,494,773.92 37.01% 5.98% 2.26% 2.29%
manufacturing
Categorized by product
Air Conditioner 88,085,431,144.00 54,139,594,914.83 38.54% 5.22% 1.04% 2.54%
Categorized by region
Domestic 76,937,875,361.69 45,233,448,281.99 41.21% 3.14% -2.26% 3.25%
Overseas 16,249,905,240.71 13,463,046,491.93 17.15% 21.86% 21.09% 0.53%In case of adjustment of statistical caliber for the Company"s main business data during the Report Period, main business data after statistical caliber adjustment at the end of the Report Period in the recent year
□ Applicable √ Not applicable
(3) Physical item income is higher than service income √ Yes □ No
(4) Fulfillment of major sales contracts signed by the Company by the end of the Report Period □ Applicable √ Not applicable
(5) Composition of operating cost
Unit: Yuan
2016 2015 Increase/
Industry Item Proportion to Proportion to Decrease over
Category Amount Operating Amount Operating the previous
Cost Cost year
Raw material 50,686,746,372.66 86.35% 49,475,367,352.33 86.20% 0.15%
Household Labor wage 3,045,769,786.11 5.19% 2,857,770,151.94 4.98% 0.21%
appliances
manufacturing Depreciation 888,033,503.41 1.51% 718,107,626.91 1.25% 0.26%
Energy 570,886,040.26 0.97% 530,054,999.43 0.92% 0.05%(6) Changes in the consolidation scope occurred during the Report Period √ Yes □ No
① Establishment of subsidiaries
Amount of Amount of
subscribed paid-in Net assets of Net profit of the
Company Equity Time point capital capital Ratio of the end of the period
Name acquisition of equity contribution contribution contribution period (ten thousand
mode acquisition (ten (ten (%) (ten thousand Yuan)
thousand thousand Yuan)
Yuan) Yuan)
Gree Precision January
Mold (Wuhan) Establishment 2016 8,000.00 8,000.00 100.00 9,250.70 1,250.70
Co., Ltd.
Zhuhai Gree January
Precision Mold Establishment 10,000.00 10,000.00 100.00 10,729.95 729.95
Co., Ltd. 2016
Zhuhai Gree
New Material Establishment March 2016 3,000.00 3,000.00 100.00 3,003.19 3.19
Co., Ltd.
Zhuhai Gree
Energy
Environment Establishment May 2016 20,000.00 20,000.00 100.00 19,693.35 -306.65
Technology
Co., Ltd.
Gree Electric
Appliances Establishment April 2016 30,000.00 30,000.00 100.00 29,983.76 16.24
-
(Hangzhou)
Co., Ltd.
② Disposal of subsidiaries
The Company was not involved in disposal of subsidiaries in the current period. ③ Changes in the consolidation scope arising from other causes
The Company was not involved in changes in the consolidation scope arising from other causes in the
current period.
(7) Major changes or adjustment of businesses, products or services during the Report Period
□ Applicable √ Not applicable
(8) Major sales customers and suppliers of the Company
Major sales customers
Total sales amount of 5 top customers (RMB) 23,226,504,349.02
Proportion of total sales amount of 5 top customers to the annual sales volume 21.09%
Information of 5 top customers
Serial Number Customer Name Sales Volume (Yuan) Proportion to Annual Sales Volume
1 First 5,228,133,544.67 4.75%
2 Second 5,155,193,209.64 4.68%
3 Third 4,515,539,732.88 4.10%
4 Fourth 4,318,366,377.22 3.92%
5 Fifth 4,009,271,484.61 3.64%
Total -- 23,226,504,349.02 21.09%
Other description of major customers
□ Applicable √ Not applicableMajor suppliers of the Company
Total amount of purchase of top 5 suppliers (RMB) 11,099,378,125.82
Percentage to the total amount of annual purchase 20.34%
Information about top 5 suppliers of the Company
Serial Name of supplier Amount of purchase (yuan) Percentage to the total amount of
Number annual purchase
1 First 4,461,559,823.86 8.17%
2 Second 3,046,563,469.67 5.58%
3 Third 1,330,117,211.46 2.44%
4 Fourth 1,274,772,351.17 2.34%
5 Fifth 986,365,269.66 1.81%
Total -- 11,099,378,125.82 20.34%
Other information about the major suppliers
□ Applicable √ Not applicable3. Expenses
Unit: Yuan
Increase/
2016 2015 Decrease over Description of the material change
the previous year
Sales expense 16,477,265,963.04 15,506,341,694.21 6.26%
Overhead Expense 5,488,955,551.20 5,048,746,635.48 8.72%
Financial expense 4,845,546,598.04 1,928,797,250.18 151.22% Mainly attributable to the increase of - - exchange gains4. Investment in research and development
□ Applicable √ Not applicable
5. Cash flows
Unit: Yuan
Increase/ Description
2016 2015 the previous
year
Sub-total of cash inflows from 75,515,435,932.31 118,796,508,123.64 36.43%
-
operating activities
Sub-total of cash outflows from 60,655,483,825.39 74,418,126,295.96 18.49%
-
operating activities
Mainly attributable to
Net cash flows from operating 14,859,952,106.92 44,378,381,827.68 66.52% the decrease of cash
-
activities received from sales of
commodities
Sub-total of cash inflows from 3,440,714,420.01 1,179,307,976.84 191.76%
investing activities
Sub-total of cash outflows from 22,687,267,114.11 5,892,462,841.32 285.02%
investing activities
Mainly attributable to
Increase/ Description
2016 2015 the previous
year
Sub-total of cash inflows from 14,492,936,150.59 11,354,411,980.55 27.64%
financing activities
Sub-total of cash outflows from 20,244,496,336.04 19,037,433,985.61 6.34%
financing activities
Net Cash Flow from Financing 5,751,560,185.45 7,683,022,005.06 25.14%
- - -
Activities
Net increase in cash and cash
equivalents -6,043,656,822.39 33,858,545,732.13 -117.85%
Major factors that result in major changes in relevant data
√ Applicable □ Not applicableIII. Non-core business analysis
□ Applicable √ Not applicableIV. Assets and liabilities 1. Major changes in assets composition
Unit: Yuan
At the end of 2016 At the end of 2015
Change of
Amount Proportion to total Amount Proportion to total proportion
assets assets
Monetary capital 95,613,130,731.47 52.43% 88,819,798,560.53 54.93% -2.50%
Accounts receivable 2,960,534,651.37 1.62% 2,879,212,111.93 1.78% -0.16%
Inventories 9,024,905,239.41 4.95% 9,473,942,712.51 5.86% -0.91%
Investment real estate 597,736,633.95 0.33% 491,540,849.66 0.30% 0.03%
Long-term equity 103,913,171.51 0.06% 95,459,187.55 0.06% 0.00%
investment
Fixed assets 17,681,655,478.06 9.70% 15,431,813,077.20 9.54% 0.16%
Construction in 581,543,756.84 0.32% 2,044,837,830.02 1.26% 0.94%
-
Progress
Short-term borrowing 10,701,081,645.32 5.87% 6,276,660,136.03 3.88% 1.99%
2. Assets and liabilities measured by fair value
Unit: Yuan
Gains and Accumulated Depreciation Amount of Amount of
Amount at losses from fair value reserves buying in selling out Amount at
Item the beginning changes in fair changes withdrawn during the during the the end of
of the period value recognized in during the period period the period
equity period
Financial assets
1. Financial
assets measured
by fair value and
their changes
recognized in the 0.00 0.00 0.00 0.00 0.00 0.00 0.00
gains and losses
during the current
period (Excluding
derivative
financial assets)
2. Derivative 250,848,418.
63
3. Financial 2,614,719,17 - 1,235,305,7 1,312,303,56
-
assets available 257,463,774.
59
-
Subtotal 2,614,719,17 133,117,995.65 257,463,774. 0.00 0.00 1,235,305,7 1,563,151,97
7.56 99.23 9.03
59
-
Total 2,614,719,17 133,117,995.65 257,463,774. 0.00 0.00 1,235,305,7 1,563,151,97
7.56 99.23 9.03
59
Financial liabilities 1,189,028,36 794,264,876.04 394,763,490.
6.37 33
Whether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No
V. Investments
1. Overall review
□ Applicable √ Not applicable2. Major equity investments obtained during the Report Period
□ Applicable √ Not applicable3. Major non-equity investments during the Report Period
□ Applicable √ Not applicable4. Financial asset investment
(1) Securities investment
Unit: Yuan
Accumulated Amount
Initial Accounting Carrying Gains and fair value of buying Amount of Profit and Carrying Accounting Capital
Type of Security Abbreviation of investment amount at the losses from changes in during selling out loss during amount at calculation Source of
measurement
securities code security name method beginning of changes in recognized the during the the Report the end of items Investment
cost
the period fair value period Period the period
in equity period
Stocks listed
Available-
on domestic
WANDA 1,235,305,7 Measure at 1,224,378,63 89,659,496.0 1,235,305,7 120,851,956. for-sale
and overseas 3699 0.00 Private
COMM-H SHS 99.23 fair values 9.47 8 99.23 07 financial
stock
assets
exchanges
Stocks listed
Available-
on domestic RS - - -
617,323,352 Measure at 463,502,488. 417,612,710 for-sale
and overseas 1528 MACALLINE- 74,149,015.8 282,610,139. 0.00 49,087,059.8 Private
.86 fair values 09 .40 financial
stock H SHS 7 12 3
assets
exchanges
-
1,852,629,1 1,687,881,12 15,510,480.2 1,235,305,7 71,764,896.2 417,612,710
Total -- 282,610,139. 0.00 -- --
52.09 7.56 1 99.23 4 .40
12
2) Investment in derivatives
Unit: RMB 10,000
Proportion of
Withdrawing the ending Profits and
Operation Whether or Type of Initial amount Beginning Amount of Amount of depreciation Ending losses
contract
name of Incidence not buying in selling out
investment in of investment Start date Expiry date investment reserve investment amount to net during the
investment relation transaction during the during the
in derivative was related derivatives in derivatives amount period period amount (If amount assets at the report
any) end of the period
report period
Jinrui Futures
Non-related January December
Futures co., No Hedging -4,344.29 -4,344.29 930.31 0.02% -3,695.41
party 1, 2016 31, 2016
LTD Contract
Forward
(Buying in)
Forward
Financing Nonrelated Foreign January December
-
No Exchange -109,795.73 -109,795.73 -36,254.55 -0.67% -77,838.77
Institution party 1, 2016 31, 2016
Contract
(Selling out)
Total -123,897.13 -- -- -123,247.13 0 0 -13,461.2 -0.24% -241,862.4
Capital Source of Investment in Derivatives Private
Lawsuits (if apply) None
Disclosure Date of Announcement on Approval of 29 April, 2016
Investment in Derivatives by Board of Directors (if any)
Disclosure Date of Announcement on Approval of
Investment in Derivatives by Board of Shareholders (if May 20, 2016
any)
In order to evade any risk in the cost of purchase of raw materials by the company which might arise from wide fluctuations of the price of
bulk raw materials, the Company carried on the hedging business for part of the raw materials and duly locked the cost of rawmaterials
according to the futures market situation to reduce any uncertainty risk from fluctuations of the market price of the spot goods; meanwhile,
the Company carried out foreign exchange transactions by bank"s financial instruments to evade any risk in the fluctuations of exchange
rate and interest rate, reduce foreign exchange liabilities and conduct the cost locking, and realize the maintenance and increaseof the
value of foreign exchange assets. The Company laid down the Rules for Hedging Management of Futures and "Internal Control System of
Forward Foreign Exchange Transactions to execute the full appraisal and control of the investment in derivatives and risks inopen interest,
and the detailed description is provided below: 1. Legal and regulatory risk; While the Company carried onhedging and foreign exchange
transactions, it was required to follow the laws and regulations and specifically stipulate the rights and obligations with the agency. Control
Risk analysis of open interest of derivatives and control measures: The Company assigned the responsible department to strictly execute the contract review, clarify the rights and obligations,
measures during the Report Period (including but not strengthen compliance check and ensure the Company"s investment in derivatives and operation of open interest in accordance with any
limited to market risk, liquidity risk, credit risk, operation laws and regulations and internal control system of the Company. 2. Operation risk: it means any risk in operation arising out of imperfect
risk and legal risk) internal process, operation of employees and system. Control measures: The Company established the corresponding management
system, clarified the division of responsibilities and examination & approval procedures of the hedging and foreign exchange transactions,
built more perfect supervision mechanism and effectively reduced any operation risk through business, decision and transaction
processes. 3. Market risk: The price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchange market
bring a greater market risk to the futures business and foreign exchange transactions. Control measures: The principle of prudent and
moderate operation is upheld in the futures hedging and foreign exchange transactions of the Company, in which any speculative
transaction is not permitted. As to the hedging business, the Company strictly restricted the number of hedging not to exceedthe number
of actual spot transaction and the open interest of the futures not to exceed the number of hedged spot goods and implemented the
mechanism to stop loss. In respect of the foreign exchange transactions, the Company effectively prevented the market risk byjudging the
trend of foreign exchange rate and utilizing a contract to lock the settlement of exchange rate.
The detailed usage and related hypothesis and
parameter setting should be disclosed in terms of the The loss under the futures hedging contract during the Report Period was RMB 36.9541 million; the loss under the forward foreign
-
market price of the invested derivatives or changes in fair exchange contract during the Report Period wasRMB 1288.3377 million
-
value of the products during the Report Period and
analysis on the fair value of the derivatives.
Descriptions about whether there were major changes in
the accounting policies and detailed accounting principle No change
of the Company"s derivatives during the Report Period as
compared to the last report period.
In the opinion of the Company"s independent directors, the Company improved its management level by strengthening internal control and 5. Usage of raised funds □ Applicable √ Not applicableThe Company was not involved in any usage of raised funds during the Report Period.
VI. Sales of major assets and equities
1. Sales of major assets □ Applicable √ Not applicableThe Company was not involved in sales of major assets during the Report Period
2. Sale of major equities □ Applicable √ Not applicableVII. Analysis on major controlling shareholder and joint stock companies
Information regarding major subsidiaries and joint stock companies that contribute over 10% of net profits to the
Company
Unit: Yuan
Company Company Main business Registered Total assets Net assets Operating Operating Net profits
Name type capital incomes profit
Zhuhai Gree
Group Financial 1,500,000, 47,281,381, 3,991,395,5 1,806,178,7 755,239,78 565,683,875
Finance Subsidiary Services 000 537.98 96.38 86.46 7.64 .70
Company
Limited
Gree Electric
Appliances Subsidiary Air Conditioner 230,000,00 4,151,182,5 1,603,925,6 6,003,558,2 572,243,77 495,242,297
(Chongqing) Manufacturing 0 79.30 96.90 90.41 5.07 .87
Co., Ltd.
Zhuhai Gree Varnished Wire 169,315,58 4,389,384,0 558,318,60 5,271,208,5 89,283,939. 105,118,540
Electrical Subsidiary Manufacturing 6 73.36 0.96 19.11 10 .38
Co., Ltd.
Zhuhai
Kaibang Motor 2,192,560,5 1,148,288,8 2,547,696,5 342,640,96 307,394,086
Motor Subsidiary Manufacturing 82,000,000 64.73 56.44 69.08 2.51 .95
Manufacture
Co., Ltd.
Gree Electric Subsidiary Air Conditioner 150,000,00 13,536,010, 8,556,512,4 12,853,036, 848,317,97 781,659,370
Company Company Main business Registered Total assets Net assets Operating Operating Net profits
Name type capital incomes profit
Appliances Manufacturing 0 085.42 57.41 912.52 1.10 .16
(Hefei) Co.,
Ltd.
GREE
(Zhongshan) Small Home 593,451,749 267,745,43 742,546,78 24,768,806. 14,430,119.
Small Home Subsidiary Appliances 30,000,000 5.72 8.99 33 96
.77
Appliances Manufacturing
Co.
Zhuhai
Landa Subsidiary Compressor 93,030,000 12,048,122, 7,099,158,7 9,289,864,9 1,144,188,1 1,024,334,8
Compressor Manufacturing 098.67 45.39 23.44 26.31 18.93
Co., Ltd.
Gree Electric
Appliances Subsidiary Air Conditioner 20,000,000 5,498,716,4 3,130,074,8 5,754,348,5 508,354,65 497,797,529
(Zhengzhou) Manufacturing 88.60 61.48 38.31 6.08 .83
Co., Ltd.
Gree Electric
Appliances Subsidiary Air Conditioner 10,000,000 4,581,385,2 1,271,070,5 7,885,098,0 511,666,390 446,778,556
(Wuhan) Co., Manufacturing 24.78 74.07 48.92 .87 .34
Ltd.
Gree Electric
Appliances Subsidiary Air Conditioner 20,000,000 4,038,327,6 1,481,356,9 5,283,788,0 324,880,05 344,595,105
(Wuhu) Co., Manufacturing 22.59 91.42 52.62 3.06 .70
Ltd.
Gree Electric Appliances Subsidiary Air Conditioner 100,000,00 3,709,208,4 685,659,24 4,068,579,7 230,704,50 351,737,311(Shijiazhuan Manufacturing 0 21.97 7.38 28.71 9.93 .35g) Co., Ltd.Information about acquisition and disposal of subsidiaries during the Report Period
√ Applicable □ Not applicable
Unit: RMB 10,000
Company Name Methods of acquisition and disposal of Impact on overall production and
subsidiaries during the Report Period operation and financial results
Gree Precision Mold (Wuhan) Co., Ltd. Establishment 1,250.70
Zhuhai Gree Precision Mold Co., Ltd. Establishment 729.95
Zhuhai Gree New Material Co., Ltd. Establishment 3.19
Zhuhai Gree Energy Environment Establishment -306.65
Technology Co., Ltd.
Gree Electric Appliances (Hangzhou) Establishment 16.24 -Co., Ltd.VIII. Information about businesses controlled by the Company
□ Applicable √ Not applicable
IX. Prospects of the Company"s future development
In 2017, Electric Appliances regarded "challenging oneself and controlling the future" as the guiding ideology of the enterprise"s annual management work to lay out the diversification strategy, and constantly extend to the intelligent manufacturing, smart home and new energy industries as consolidating and developing the air conditioning industry. It adheres to the management policy of being fair and impartial, open and transparent, and scrupulous in separating public from private interests, scrupulously abides by the conduct code of telling the truth, doing practical things, attaching importance to principles and the spirit of dedication, and doing good deeds and great things, and steadfastly focuses on independent innovation and intelligent manufacturing to achieve good results in both efficiency and benefit.
(I) Vigorously implementing the innovation driven development strategy to realize technical breakthroughs of key products
1. Complete technical upgrading and innovative strategic planning based on classification. Use reversed thinking to consider technological progress, keep close to the market and users in product planning, and create demands as meeting consumer demands.
2. Improve the new product development efficiency. Continue to intensify the project management and product innovation R&D management, popularize big data applications, and constantly summarize sharing and technical exchanges, and improve the efficiency of new product development; improve the project team responsibility system and integrate the lean design method into the new product R&D process by centering on the project. 3. Carry out the product platform design comprehensively and improve the standardization level. Using software to manage the product family tree, and realize automatic control of the product platform and key material planning; promote generalization of key materials from the design source, reduce the production cost, and enhance the development and production efficiency; make sure that the product design idea is innovative and attach importance to skills to reduce the resource waste during the design.
4. Pay attention to the new development trend of the industry. Strengthen the research and development of artificial intelligence in the home appliance field, and promote the development of smart home technologies; keep concerned about the haze problem, make contributions to the "coal to electricity" market of the country, and improve the product performance as reducing costs.
5. Continue to reinforce the research into new technologies and original technologies. Continue to reinforce the research into the magnetic suspension bearing and control technologies, small size, light weight and high efficiency of compressor, new field motor products, ultra-low temperature air source heat pump heating products, technologies and products in the communication field, and washing machines, and keep the leading position in industry technologies.
(II) Consolidating the air conditioner market share and expanding the diversified new industry layout
1. Consolidate the domestic market share of residential air conditioners, optimize the sales structure of commercial air conditioner products, and steadily expand the market share of superior products.
2. Stick to the strategic deployment of maintaining growth, adjusting the structure and establishing an international brand in overseas sales and vigorously develop independent brands.
3. Focus on the development direction of "high end, intelligence and high-quality" to enrich the product lines of household appliances, and enhance the performance price ratio of products to provide consumers with health products.
4. Speed up the market development of the intelligent equipment and mould industry, carry out intensive study by focusing on the two major fields of robots and precision machine tools, and provide independently developed high-end equipment for "Made in China 2025" as completing transformation and upgrading of the company"s independent manufacturing system.
5. Reinforce promotion of all the industrial product brands. Take into account the domestic and overseas markets to build the brand image of "high quality, excellent service and strong lineup" of industrial products; actively seek cooperation opportunities with the e-commerce platform, and open up a new battlefield of Internet marketing.
6. Cooperate with Yinlong to broaden the related industry chain. Firmly grasp the opportunities and challenges brought by cooperation with Yinlong, and create new profit growth points in mould, motor, automotive air conditioning, intelligent equipment and other fields.
7. Accelerate the industrial layout and technological breakthroughs of the new energy industry sector, and launch independent and innovative new energy products; expand the market share of photovoltaic air conditioning products and achieve the technical breakthrough of optical storage integration; tackle the energy control protocol and strategy to achieve development of the distributed control systems and distributed energy systems at the home level, building level and urban level.
8. Make the mobile phone industry big and strong, and formally start offline channel sales of mobile phones.
9. Adhere to the sustainable development strategy direction of "saving, greenness, environmental protection and resource regeneration", form the closed loop industrial chain of resource regeneration, and insist on green ecological manufacturing.
(III) Vigorously promoting standardization and informatization to enhance the enterprise management level
1. Intensify the efforts to implement standardization in all the phases of product R&D to transit from design of good products to design of good products of meeting the needs of automation production.
2. Establish an information center, timely grasp the market, industry and related dynamics, and comprehensively analyze the inter-system information in the enterprise to ensure smooth implementation of the supply side reform.
3. Set up a big data center, and promote the analysis and application of big data in each operation link of the company to effectively increase the enterprise management level.
4. Guarantee quality management from the source, adopt the forced mechanism to enhance the management level, and make sure that everyone controls quality during routine production, process, management and design.
(IV) Promoting the transformation of intelligent manufacturing to improve per capita efficiency
1. Implement the autonomous management mode to further clarify the double-effect subject management responsibility of "efficiency and benefit".
2. Strengthen reform and innovation of the value chain, deepen lean production, improve supply chain logistics, promote the JIT mode, realize direct distribution of the supplier, and further eliminate transit stock and transport waste.
3. Build a "sales centered" internal service system and improve the flexibility of production and procurement supply.
4. Comprehensively introduce the efficiency oriented contract wage system and automatic accounting system of production efficiency to promote efficiency guarantee and increase.
(V) Tightening cost control to improve economic benefits
1. Implement cost control from the design source and optimize product pricing ideas. 2. Strengthen the audit supervision, especially reinforce the audit management aiming to management process control.
3. Reinforce risk control, including external risk, internal management risk and new business risk.
(VI) Strengthening personnel training to scientifically and efficiently meet the diversified talent demand of the company
1. Speed up construction of GREE College. Promote technician training to meet the company"s demand for transformation and upgrading of skilled workers; energetically cultivate expert talents, including management experts, technical experts and skill experts, so that the company can truly become a talent training base.
2. Establish a sound and dynamic group personnel planning and control mechanism, effectively control fluctuation of the personnel scale, and further strengthen the management work of post determination and organizational structure delimiting.
3. Continue to broaden the recruitment channels, enhance the independent recruitment ability, and scientifically and efficiently meet the need of diversified talents. 4. Provide the platform, direction and goal to young people so that they have the ability to undertake and control the future development of the company.
(VII) Strengthening the thinking transformation and quality improvement of cadres 1. Increase efforts to establish the cadre appointment and removal mechanism of promoting capable ones and demoting untalented ones Cultivate a capable and thoughtful team; create a corporate culture with the spirit of dedication and perseverance, and the atmosphere in which all members are united and companionate and willing to help and learn from each other, and build the core competitiveness of enterprise.
2. Strengthen the system construction, reinforce work style construction, and create a working atmosphere of mutual help to promote sustainable development of the enterprise. 3. Build and update the cadre reserve bank to find excellent talents.
X. Reception of activities including researches, communication and interviews
1. Registration form for reception of activities including researches, communication and
interviews √ Applicable □ Not applicable
Time of reception Method of Type of reception Basic situation index of research
reception object
For details, see the Record Table for Investor Relations
January 22, 2016 Others Institution Activities disclosed by the Company on www.cninfo.com.cn
from 5 January, 2016 to 22 January, 2016
August 23, 2016 Others Others For details, see the announcement disclosed by the
Company on www.cninfo.com.cn on 25 August, 2016
For details, see the Record Table for Investor Relations
September 2, 2016 Field Research Institution Activities disclosed by the Company on www.cninfo.com.cn
from 24 August, 2016 to 2 September, 2016
For details, see the Record Table for Investor Relations
September 27, 2016 Others Institution Activities disclosed by the Company on www.cninfo.com.cn
from 13 September, 2016 to 27 September, 2016
For details, see the Record Table for Investor Relations
November 21, 2016 Others Institution Activities disclosed by the Company on www.cninfo.com.cn
from 2 November, 2016 to 21 November, 2016
Times of reception 89
Number of received institutions 895
Number of received individuals 0
Number of other received objects 36
Whether undisclosed material
information is revealed, disclosed or No
divulged
Section V Important Events
I. Information about common stock profit distribution and capitalization from capital reserve funds
The common stock profit distribution policy in the report period, especially preparation, execution or adjustment of the cash dividend policy √ Applicable □ Not applicable
The Dividend program for the year of 2015 was implemented on July 7, 2016: Calculated by the total stock capital of the Company equivalent to 6,015,730,878 stocks, all directors will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317 and the balance to be carried forward to the next year.
Special description of the cash dividend policy
In compliance with provisions of the Articles of Association or requirements of the Yes
resolution of the general meeting of shareholders:
The dividend standard and ratio are definite and clear: Yes
The related decision procedures and mechanisms are complete: Yes
Independent directors perform their duties responsibly and play their due roles: Yes
Minority shareholders have the opportunity to fully express their opinions and demands Yes
and their legitimate rights and interests are fully protected:
The conditions and procedures are transparent and comply with regulations if the cash Yesdividend policy is adjusted or changed:The common stock dividend distribution plan (preplan) and the capitalization plan (preplan) from capital reserve funds in recent three years (including the Report Period)
1. Profit distribution preplan for the year of 2016
Calculated by the total stock capital equivalent to 6,015,730,878 stocks, all directors will be distributed a cash of RMB 18.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 10,828,315,580.40 and the balance to be carried forward to the next year.
This distribution plan still needs to be approved by the general meeting of shareholders for the year of 2016.
2. Profit distribution plan for the year of 2015
Calculated by the total stock capital of the Company equivalent to 6,015,730,878 stocks, all directors will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317 and the balance to be carried forward to the next year.
3. Profit distribution plan for the year of 2014
Calculated by the total stock capital of the Company equivalent to 3,007,865,439 stocks, all directors will be distributed a cash of RMB 30.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317 and the balance to be carried forward to the next year; capital reserve funds are used for capitalization, and 10 stocks will be added per 10 stocks for all directors based on the total stock capital of the Company equivalent to 3,007,865,439 stocks.
Table for common stock cash dividends of the Company in the recent three years (including the Report Period)
Unit: Yuan
Net profit attributable Proportion to net
to common profit attributable to Proportion of
Amount of cash shareholders of listed common Amount of cash cash dividends
Year dividend company in annual shareholders of dividends based based on other
(tax included) consolidated financial listed company in on other ways ways
consolidated
statements financial statements
2016 10,828,315,580.40 15,420,964,990.94 70.22% 0.00 0.00%
2015 9,023,596,317.00 12,532,442,817.66 72.00% 0.00 0.00%
2014 9,023,596,317.00 14,155,167,229.36 63.75% 0.00 0.00%The profits of the Company in the Report Period and the parent company’s profits distributable to common shareholders are positive, but the common stock cash dividend distribution preplan has not been put forward.
□ Applicable √ Not applicable
II. Preplan for profit distribution and capitalization from public reserve funds in the Report Period
√ Applicable □ Not applicable
Cash dividends of this distribution
If profits are distributed when the Company"s development stage has entered the mature period and significant capital
expenditure has been arranged, the minimum proportion of cash dividends to the profits to be distributed this time should
be 40%.
Detailed description of the preplan for profit distribution or capitalization from public reserve fundsIII. Fulfillment of commitments
1. Commitments of the Company"s actual controllers, shareholders and acquirers, the Company and other related parties of commitments that have been fulfilled completely in the Report Period or have not been fulfilled completely as of the end of the Report Period
□ Applicable √ Not applicable
1. The Company did not have any commitments of the Company, shareholders, actual controllers, acquirers, directors, supervisors, senior management personnel or other related parties that have been fulfilled completely in the Report Period or have not been fulfilled completely as of the end of the Report Period in the Report Period.
2. The Company’s assets or projects involve earnings forecast and the Report Period is still in the earnings forecast period and the Company explains the assets or projects that achieve the original earnings forecast and the relevant reasons
□ Applicable √ Not applicable
IV. The listed company』 non-operating funds occupied by the controlling shareholders and their related parties
□ Applicable √ Not applicable
No controlling shareholder or its related party occupied non-operating funds of the listed company in the Report Period of the Company.
V. Description about the 「Non-standard Audit Report」 of the accounting firm in the Report Period by the Board of Directors, Board of Supervisors and independent director (if any)
□ Applicable √ Not applicable
VI. Description about changes in the accounting policies, accounting estimates and accounting methods in comparison to the financial report of last year
□ Applicable √ Not applicable
The Company didn’t involve any change in the accounting policies, accounting estimates and accounting methods in the Report Period.
VII. Description about the retrospective restatement required for correction of significant accounting errors that occurred in the Report Period
□ Applicable √ Not applicable
The Company didn’t involve any correction of significant accounting errors in the Report Period that requires retrospective restatement.
VIII. Description about changes in the consolidated statement scope in comparison with the financial report of last year
√ Applicable □ Not applicable
① Establishment of subsidiaries
Amount of
subscribed Amount of Net assets of Net profit of
Equity Time point capital paid-in capital Ratio of the end of the the period
Company Name acquisition of equity contribution contribution contribution period (ten
mode acquisition (ten (ten thousand (%) (ten thousand thousand
thousand Yuan) Yuan) Yuan)
Yuan)
Gree Precision Mold Establishment January 8,000.00 8,000.00 100.00 9,250.70 1,250.70
(Wuhan) Co., Ltd. 2016
Zhuhai Gree Precision Establishment January 10,000.00 10,000.00 100.00 10,729.95 729.95
Mold Co., Ltd. 2016
Zhuhai Gree New Establishment March 2016 3,000.00 3,000.00 100.00 3,003.19 3.19
Material Co., Ltd.
Zhuhai Gree Energy
Environment Establishment May 2016 20,000.00 20,000.00 100.00 19,693.35 -306.65
Technology Co., Ltd.
Gree Electric Appliances Establishment April 2016 30,000.00 30,000.00 100.00 29,983.76 -16.24(Hangzhou) Co., Ltd.② Disposal of subsidiaries
The Company was not involved in disposal of subsidiaries in the current period.
③ Changes in the consolidation scope arising from other causes
The Company was not involved in changes in the consolidation scope arising from other causes in the current period.
IX. Engagement and disengagement of accounting firms
Currently engaged accounting firms
Name of domestic accounting firm Union Power Certified Public Accountants
(Special General Partnership)
Remuneration for the domestic accounting firm (RMB 10,000) 396
Consecutive years for the domestic accounting firm to render audit service 2
Names of certified public accountants of the domestic accounting firm Wang Bing and He Li
A new accounting firm was engaged in the current period
□ Yes √ No
Engagement of an accounting firm for internal control auditing, financial adviser or sponsor
□ Applicable √ Not applicableX. Suspension of listing and termination of listing after disclosure of the annual
report
□ Applicable √ Not applicableXI Matters related to bankruptcy reorganization
□ Applicable √ Not applicableThe Company was not involved in any matter related to bankruptcy reorganization in the Report Period.
XII. Major legal action or arbitration
□ Applicable √ Not applicableThe Company was not involved in any major legal action or arbitration during the Report Period.
XIII. Punishment and rectification
□ Applicable √ Not applicableThe Company was not involved in any punishment or rectification during the Report Period.
XIV. Integrity status of the Company and its controlling shareholders and actual
controllers
□ Applicable √ Not applicableXV. Implementation of the Company’s equity incentive plan, employee stock
ownership plan or other employee motivation measures
□ Applicable √ Not applicableThe Company was not involved in any equity incentive plan, employee stock ownership plan or other employee
motivation measures or their implementation during the Report Period.
XVI. Significant related transactions
1. Related transactions associated with day-to-day operation
□ Applicable √ Not applicable
Amount of Approved
Related Proportion Exceeding Available
Type of Contents of Prices of related transaction Settlement
Incidence transaction to amount the market price Date of Disclosure
Related parties relation related related pricing related transactions of similar amount (ten approved of related of similar disclosure index
transactions transactions inciple transactions (ten thousand transaction thousand transactions transactions
pr Yuan) Yuan) quota
The
Hebei company in
which the
Shengshi Company"s Sales of Sales Payment 29 April, www.cninfo.
Xinxing Gree director commodities Market price Market price 242,627.79 2.75% 500,000 No before Market price 2016
revenue com.cn
Trading Co., delivery
serves as
Ltd.
general
manager
The
Zhejiang company in
which the
Shengshi Company"s Sales of Sales Payment 29 April, www.cninfo.
Xinxing Gree director commodities Market price Market price 431,836.64 4.90% 800,000 No before Market price 2016
revenue com.cn
Trading Co., delivery
serves as
Ltd.
general
manager
The
Henan company in
which the
Shengshi Company"s Sales of Sales Payment 29 April, www.cninfo.
Xinxing Gree supervisor commodities Market price Market price 522,813.35 5.94% 1,000,000 No before Market price 2016
revenue com.cn
Trading Co., delivery
serves as
Ltd.
general
manager
Total -- -- 1,197,277.78 -- 2,300,000 -- -- -- -- --
Details of huge-amount sales return Not applicable
Actual fulfillment (if any) in the Report Period when the
total amount is estimated by category for the daily related Not applicable
transaction to take place in the current period
Cause (if applicable) of the large difference between the Not applicable
transaction price and market reference price
2. Related transactions of acquisition or sales of assets or equity
□ Applicable √ Not applicableThe Company was not involved in any related transaction of acquisition or sales of assets or equity in the Report Period.
3. Related transactions of common foreign investment
□ Applicable √ Not applicableThe Company was not involved in any related transaction of common foreign investment during the Report Period.
4. Associated credits and liabilities
□ Applicable √ Not applicableThe Company was not involved in any associated credit or liability in the Report Period.
5. Other significant related transactions
□ Applicable √ Not applicableThe Company was not involved in any other significant related transaction during the Report Period.
XVII. Major contracts and their fulfillment
1. Information about trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicableThe Company was not involved in any trusteeship during the Report Period.
(2) Contracting
□ Applicable √ Not applicableThe Company was not involved in any contracting matter during the Report Period.
(3) Lease
□ Applicable √ Not applicableThe Company was not involved in any lease during the Report Period.
2. Major guarantee □ Applicable √ Not applicableThe Company was not involved in any major guarantee during the Report Period.
3. Entrusting others to execute any cash asset management
(1) Entrusted financing □ Applicable √ Not applicableThe Company was not involved in any entrusted financing during the Report Period.
(2) Entrusted loan
□ Applicable √ Not applicableThe Company was not involved in any entrusted loan during the Report Period.
4. Other major contracts
□ Applicable √ Not applicable
The Company did not have any other major contract during the Report Period.
XVIII. Social responsibilities
1. Fulfilling the social responsibilities of taking targeted measures in poverty alleviation
(1) Summary of taking targeted measures in poverty alleviation in the year
Electric Appliances owns a salvage guarantee system for assisting employees in difficulties at multiple levels, including the social insurance of employees, sunshine mutual fund relief of critical diseases, and one-time temporary difficulty relief. The rescued group can basically cover the medical expense reimbursement and poverty relief arising from sudden major diseases of employees, poverty caused by unexpected accidents in the family, later expenses of chronic diseases and critical illnesses of employees, and sudden diseases of family members, so as to accurately solve practical difficulties of employees with a greater capital expenditure pressure, ensure active concern and active support in the real sense, and carry forward the collective spirit of mutual aid. In 2016, the Company rescued 238 employees, involving an amount of RMB1.687 million, making Gree employees in difficulties grateful, and injecting infinite force to the corporate development. (2) Subsequent targeted poverty alleviation plan
To help related employees to settle difficulties and shake off poverty, highlight the guiding demonstration effect of assistance, bring into full play the Company"s concern and care of employees in difficulties, earnestly solve difficulties for these employees, and strengthen the tenet consciousness and mass concept, the Company planned to carry out the long-term partner assistance plan for employees in difficulties to assist them in the "one-on-one" manner in 2017.
2. Fulfilling other social responsibilities
Gree actively and voluntarily performed its social responsibilities, effectively protected the lawful rights and interests of all stakeholders, won with its strength the recognition of the enterprise, brand and products from capital market and consumer market and promoted the low-carbon green growth in the industry through various activities. (Please refer to the Social Responsibilities Report for the Year 2016 on www.cninfo.com.cn)
If the listed company and its subsidiaries are key pollutant discharge units published by the environmental protection department
No
If any social responsibilities report is published
√ Yes □ No
Social responsibilities report of enterprise
If environmental If social If corporate Report disclosure standard
Enterprise nature information is information is governance
contained contained information is Domestic standard Foreign standard
contained
State-owned Yes Yes Yes CASSCSR1.0 OthersenterpriseSpecific circumstances
1. If the Company passed the environmental management Yes
system certification (ISO14001)
2. The Company"s annual expenditure on environmental 284
protection investment (ten thousand Yuan)
3. The Company"s emission reduction performance of No environmental pollution accidentwaste gas, waste water and waste residueXIX. Description of other significant matters
□ Applicable √ Not applicable
The Company did not have any other significant matter to be described in the Report Period.
XX. Significant matters of the Company’s subsidiaries
□ Applicable √ Not applicable
Section VI Changes in Stock Capital & Information of
Shareholders
I. Changes in stock capital
1. Changes in stock capital
Unit: Share
Before the change Increase/Decrease (+, -) After the change
Stock
Qty Percentage New Bonus Converted Others Subtotal Qty Percentage
Issue Issue from
Reserve
I. Stocks with
trading 43,613,644 0.72% 1,514,855 1,514,855 45,128,499 0.75%
restriction
conditions
3. Stocks held
by other 43,613,644 0.72% 1,514,855 1,514,855 45,128,499 0.75%
domestic capital
Stocks held by
the domestic 43,613,644 0.72% 1,514,855 1,514,855 45,128,499 0.75%
natural person
II. Tradable
Stocks without 5,970,602,
-
trading 5,972,117,234 99.28% 1,514,855 -1,514,855 379 99.25%
restriction
conditions
1. RMB ordinary 5,972,117,234 99.28% - 1,514,855 5,970,602, 99.25%
-
stocks 1,514,855 379
III. Total of 6,015,730,
stocks 6,015,730,878 100.00% 878 100.00%
Causes of changes in stock capital √ Applicable □ Not applicableMs. Dong Mingzhu, Chairperson & President of the Company, cumulatively increased the hold shares
by 498,000, Mr. Xu Zifa, Director, cumulatively increased the hold shares by 1,403,300, Mr. Wang Jingdong, Vice
President, Finance Chief and Board Secretary, cumulatively increased the hold shares by 155,800.
2. Changes in restricted shares
□ Applicable √ Not applicableII. Issuance and listing of securities
1. Issuance of securities (excluding the preferred stock) in the Report Period
□ Applicable √ Not applicable2. Description about changes in the Company’s total number of stocks and shareholder
structure, and assets and liability structure
□ Applicable √ Not applicable3. Existing internal employee stock
□ Applicable √ Not applicableIII. Information about the shareholders and actual controllers
1. Total number of shareholders and their shareholding status
Unit: Share
Total number of Total number of
Total number of Total number of preferred shareholders
common
common shareholders at preferred shareholders (if any) whose voting
shareholders at 396,962 the end of last 338,129 (if any) whose voting 0 rights were restored at 0
the end of the month before the rights were restored at the end of last month
Report Period disclosure date of the end of Report Period before the disclosure
the annual report (See Note 8) date of the annual
report (See Note 8)
Shareholding of the shareholders holding more than 5% of total stocks or shareholding of the top 10 shareholders
Total number Increase/ Number of Number of Pledge or freezing
Name of Nature of Shareholding of the stocks Decrease the trading the trading
shareholder shareholder proportion held at the end in the restricted unrestricted Stock
of the Report Report status Qty
Period Period stocks held stocks held
Zhuhai Gree State-owned 18.22% 1,096,255,624 1,096,255,62 Frozen 50,625,0
Hebei Jinghai Domestic
Guaranteed non-state- 8.91% 535,762,033 535,762,033
Investment Co., owned legal
Ltd. person
Qian Hai Life Domestic
Insurance Co., non-state- 4.12% 247,905,586 247,905,586
Ltd. – Hai Li Nian owned legal
Nian person
Hong Kong
Securities Foreign 2.38% 143,055,489 143,055,489
Clearing legal person
Company Ltd.
China Securities State-owned 2.08% 125,224,256 125,224,256
Finance Co., Ltd. legal person
Central Huijin
Asset State-owned 1.40% 84,483,000 84,483,000
Management legal person
Co., Ltd.
UBS AG Foreign 1.28% 77,157,409 77,157,409
legal person
Hillhouse Capital Foreign
Management – legal person 0.84% 50,457,100 50,457,100
HCM China Fund
National Social Domestic
Security Fund non-state-
owned legal 0.83% 49,855,164 49,855,164
108 portfolio person
Domestic
Dong Mingzhu natural 0.74% 44,318,492 44,318,492
person
Situation (if any) where a strategic investor or general legal person becomes None
one of top 10 shareholders due to placement of new shares (see Note 3)
Description for affiliated relationship or concerted action of the above None
shareholders
Shareholding of the top 10 shareholders without trading restriction conditions
Number of the trading unrestricted stocks held at Type of stocks
Name of shareholder the end of the Report Period
Type of stocks Qty
Zhuhai Gree Group Co., Ltd. 1,096,255,624 RMB ordinary 1,096,255,624
stocks
Hebei Jinghai Guaranteed 535,762,033 RMB ordinary 535,762,033
Investment Co., Ltd. stocks
Qian Hai Life Insurance Co., Ltd. – 247,905,586 RMB ordinary 247,905,586
Hai Li Nian Nian stocks
Hong Kong Securities Clearing 143,055,489 RMB ordinary 143,055,489
Company Ltd. stocks
China Securities Finance Co., Ltd. 125,224,256 RMB ordinary 125,224,256
stocks
Central Huijin Asset Management 84,483,000 RMB ordinary 84,483,000
Co., Ltd. stocks
UBS AG 77,157,409 RMB ordinary 77,157,409
stocks
Hillhouse Capital Management – 50,457,100 RMB ordinary 50,457,100
HCM China Fund stocks
National Social Security Fund 108 49,855,164 RMB ordinary 49,855,164
portfolio stocks
Dong Mingzhu 44,318,492 RMB ordinary 44,318,492
stocks
Description for affiliated relationship or concerted action among the top 10 shareholders holding tradable stocks
without trading restriction conditions and between the top 10 shareholders holding tradable stocks without trading None
restriction conditions and the top 10 shareholders
Description of the participation in margin trading business of the top None
10 common shareholders (if any) (see Note 4)
2. Information of the controlling shareholders of the Company
Nature of the controlling shareholder: Local state-owned holding Type of the controlling shareholder: Legal person
Legal
Name of the of representative/ Date of Organization code Principal business
controlling shareholder Person in establishment
charge
Investment and asset management;
Information regarding holding equity interests of other domestic and
oversea listed companies by controlling shareholders during the None
Report Period
3. Information of the actual controllers of the Company
Nature of the actual controller: Local state-owned assets management institution Type of the actual controller: Legal
person
Legal Date of
Name of the actual controller representative/P establishment Organization code Principal business
erson in charge
State-owned Assets
Supervision and November 30, Fulfill responsibilities of the
Administration Commission Wu Aicun 2004 71924557-8 owned assets investor
of Zhuhai Municipal People"s state-
Government
Information regarding equity
of other domestic and At the end of the Report Period, the State-owned Assets Supervision and Administration
oversea listed companies Commission of Zhuhai Municipal People"s Government also controlled Zhuhai League
controlled by the actual Stock Co., Ltd., Zhuhai Huafa Industrial Co., Ltd., Zhuhai Port Co., Ltd., Gree Real Estate
controller during the Report Co., Ltd., Zhuhai Holdings Investment Group Limited and iOne Holdings Limited.
Period
Change in the actual controller in the Report Period
□ Applicable √ Not applicable
The actual controller of the Company did not change in the Report Period.
Block diagram of property right and control relationships between the Company and actual controller
Zhuhai Municipal State-owned Assets Supervision and Administration Commission
100%
Zhuhai Gree Group Co., Ltd.
18.22%
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
The actual controller controlled the Company through trust or other asset management modes
□ Applicable √ Not applicable4. Other corporate shareholders holding more than 10% of shares
□ Applicable √ Not applicable5. Restricted share reduction of controlling shareholders and actual controllers, restructuring
party and other commitment subjects
□ Applicable √ Not applicable
Section VII Related Information of Preferred Stock
□ Applicable √ Not applicableThe Company did not have any preferred stock in the Report Period.
Section VIII Directors, Supervisors, Senior Management
Personnel and Employees
I. Shareholding changes of directors, supervisors and senior management
personnel
Number Number
of held of held
Stocks held Other Stocks
stocks stocks
Commencem Termination at the increase/ held at the
Tenure increased reduced
Name Title Gender Age ent of term of of term of beginning of decrease end of the
status in the in the
office office the Period changes Period
current current
(shares) period period (shares) (shares)
(shares) (shares)
Dong Chairman &
Incumbent F 62 May 25, 2012 May 31, 2018 43,820,492 498,000 44,318,492
Mingzhu President
Ye Zhixiong Director Incumbent M 59 June 1, 2015 May 31, 2018
Director &
Huang Hui Executive Vice Incumbent M 52 May 25, 2012 May 31, 2018 7,375,000 7,375,000
President
Zhang Director Incumbent M 56 May 25, 2012 May 31, 2018
Jundu
Xu Zifa Director Incumbent M 62 June 1, 2015 May 31, 2018 200,000 1,403,300 1,603,300
Wang Independent Incumbent M 52 May 20, 2014 May 31, 2018
Ruzhu Director
Lu Xin Independent Incumbent F 53 June 1, 2015 May 31, 2018
Director
Guo Yang Independent Incumbent F 58 June 1, 2015 May 31, 2018
Director
Chairman of
Xu Chuzhen Board of Incumbent M 58 September May 31, 2018
Supervisors 24, 2013
Guo
Shuzhan Supervisor Incumbent M 60 May 25, 2012 May 31, 2018
Staff October 15,
Wang Liqin Supervisor Incumbent F 40 2014 May 31, 2018
Zhuang Pei Vice President Incumbent M 51 May 25, 2012 May 31, 2018 5,955,202 5,955,202
Number Number
of held of held
Stocks held Other Stocks
stocks stocks
Commencem Termination at the increase/ held at the
Tenure increased reduced
Name Title Gender Age ent of term of of term of beginning of decrease end of the
status in the in the
office office the Period changes Period
current current
(shares) period period (shares) (shares)
(shares) (shares)
Vice President,
Wang Finance Chief, Incumbent M May 25, 2012 May 31, 2018
46 728,874 155,800 884,674
Jingdong Board
Secretary
Chen September 3,
Vice President Incumbent M 44 May 31, 2018
Weicai 2013
Liu Jun Vice President Incumbent M 40 August 31, May 31, 2018 12,000 12,000
2015
Meng Director Resigned M 55 May 20, 2013 November 17,000 17,000
Xiangkai 22, 2016
Total -- -- -- -- -- -- 58,108,568 2,057,100 0 60,165,668II. Changes in the directors, supervisors and senior management personnel
√ Applicable □ Not applicable
Name Title Type Date
Meng Xiangkai Director Resigned November 22, 2016III. Positions of directors, supervisors and senior management personnel
Professional background, major work experience and current main responsibilities in the Company of the current directors, supervisors and senior management personnel of the Company
Dong Mingzhu, female, a master, incumbent Chairperson & President of the Company Since she joined the Company in 1990, she has served as sales manager, vice director and director of Sales Department, manager, vice general manager, general manager and vice chairperson of sales company; she has served as President of the Company since April 2001, and Chairperson of the Company since May 2012. At present, she concurrently serves as chairperson of Gree Hefei, Gree Wuhan, and Gree Zhengzhou. Since August 2012, she has served as non-executive director of Kingdee International Software Group Company Limited; She consecutively served as deputy to the tenth, eleventh and twelfth National People"s Congresses and concurrently serves as a member of the Central Committee of China Democratic National Construction Association and the tenth Executive Committee of the All-China Women"s Federation, UNDP’s "messenger of sustainable urban development", director of Board of Directors of China Social Economic Investigation Research Center, member of Executive Committee of Guangdong Provincial Women"s Federation, vice chairperson of Guangdong Province Association of Women Entrepreneurs, chairperson of Zhuhai Municipal Association of Women Entrepreneurs and honorary president of Zhuhai Red Cross Society.
She was successively engaged by Northwest University, College of Management of Sun Yat-sen University and Shandong University as a part-time professor, engaged by School of Management, Nanjing University of Technology as "MBA off-campus tutor", and engaged by School of Management, University of Science and Technology of China as MBA "Course Professor". She was engaged by Beijing Normal University Zhuhai Campus and University of International Business and Economics as visiting professor, part-time professor of Zhongnan University of Economics and Law and member of MBA Education Advisory Committee. She was invited to be an instructor of Summer Davos Forum 2014, engaged by the School of Entrepreneurship & Innovation, SJTU as a member of Advisory Committee of Strategic Experts, engaged by the National Development and Reform Commission as a member of Expert Committee for the thirteenth five-year development planning, engaged by Guangdong Provincial Government as an entrepreneurs consultant and member of the government decision-making advisory committee and engaged by Hefei municipal government as a consultant of (household electric appliances) industrial development, etc. In 2016, she was awarded a founding member of Advisory Committee of the United Nations Development Programme by the UN General Administration and included in the list of world"s most influential businesswomen of Fortune for 10 consecutive years.
Ye Zhixiong, male, a master, incumbent director of the Company
Mr. Ye Zhixiong served as a member of Zhuhai Municipal Committee of the CPC, and the chairman, secretary of the Party committee and legal representative of Zhuhai Gree Group Co., Ltd. from May 2004 to August 2006; a member of Zhuhai Municipal Committee of the CPC, and the chairman, general manager and legal representative of Municipal Urban Asset Management and Operation Corporation from August 2006 to June 2009, and the secretary of the Party committee in September 2006; the chairman, general manager, legal representative and secretary of the Party committee of Zhuhai Urban Construction Group Co., Ltd. from June 2009 to January 2013; and the chairman, legal representative and secretary of the Party committee of Zhuhai Urban Construction Group Co., Ltd. from January 2013 to date. Since June 2015, he has served as a director of the Company.
Mr. Huang Hui, male, a master, incumbent Director, Executive Vice President and Chief Engineer of the Company.
Since August 2000 to May 2014, he has served as vice president of the Company; since 2014, he has served as executive vice president of the Company; since May 2007, he has served as chief engineer of the Company; since May 2012, he has served as director of the Company, and concurrently as chairman of Zhuhai Gree Dakin Device Co., Ltd., director of Chinese National Engineering Research Center of Green Refrigeration Equipment, part-time instructor of School of Energy and Power Engineering of Huazhong University of Science and Technology, member of Commission B2 of the International Institute of Refrigeration, vice president of Chinese Association of Refrigeration, member of the ninth council of China Quality Association, member of National Technical Committee for Standardization of Household Appliances, vice chairman of Industry Household Appliance Branch of China Electrical Equipment Industrial Association, expert of Guangdong Province Science and Technology Consultant Experts, vice president of Guangdong Provincial Institute of Refrigeration, vice chairman of Guangdong Light Industry Association, member of Technical Committee of Guangdong Provincial Institute of Standardization, member of Zhuhai Municipal Mayor Quality Award Evaluation Committee, member of Zhuhai municipal Mayor Quality Award Evaluation Committee, deputy director of the editorial board of Electrical Appliances, and editorial board member of Journal of Refrigeration.
Zhang Jundu, male, with a college degree, incumbent Director of the Company.
Since September 1999, he has served as chairman of Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. Since August 2012, he has concurrently served as general manager of Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. Since May 2012, he has served as director of the Company.
Xu Zifa, male, with a bachelor degree, incumbent Director of the Company.
He worked as the general manager of Hebei Xinxing Gree Electric Appliance Sales Co., Ltd. from July 1999 to June 2011; the general manager of Hebei Shengshi Xinxing Gree Trading Co., Ltd. from July 2011 to date, and the director of Hebei Jinghai Guaranteed Investment Co., Ltd. from 2006 to date. Since June 2015, he has served as a director of the Company.
Wang Ruzhu, male, doctor, incumbent Independent Director of the Company
Since December 1994, Mr. Wang Ruzhu has served as a professor of Shanghai Jiao Tong University and director of the Institute of Refrigeration and Cryogenic Engineering. Since 2008, he has served as the director of the Solar Power Generation and Refrigeration Project Research Center under Ministry of Education. Since 2012, he has worked as the vice president of Chinese Association of Refrigeration. Since May 2014, he has served as an independent director of the Company.
Guo Yang, female, doctor, incumbent Independent Director of the Company
Ms. Guo Yang served as the general counsel of Chinese law at Hong Kong Pengli Insurance Co., Ltd. and chief representative at its representative office in Beijing from 1995 to 1998; the assistant vice president of Pacific Century Insurance Holdings Ltd. and chief representative at the representative office of Pacific Century Insurance Holdings Ltd. from 1999 to 2008; the chief representative at the representative office of Holland Ageas Insurance International Inc. from 2008 to 2009; an associate professor at the College of Finance, Capital University of Economics and Business from 2010 to 2012; a director of the Company since June 2015 to date.
Lu Xin, female, doctor, incumbent Independent Director of the Company
Ms. Lu Xin has served Jinan University since January 2004. Now, she works as a professor at the Department of Accounting of the School of Management, Jinan University and deputy director at the Management Accounting Research Center of Jinan University. Concurrently, she is a deputy of the 12th National People’s Congress, member of the Central Committee at Taiwan Democratic Self-Government League, vice chairman of Guangdong Provincial Party Committee at Taiwan Democratic Self-Government League, special auditor of Guangdong Audit Office, as well as an independent director of TCL Corporation and Kingfa Sci. & Tech. Co., Ltd. She has served as an independent director of the Company since June 2015.
Xu Chuzhen, male, with a bachelor degree, Chairman of Board of Supervisors of the Company.
From May 1999 to May 2011, Mr. Xu Chuzhen served as the managing director of League Stock Co., Ltd. From 2002 to May 2011, he concurrently served as the managing director and vice chairman of Zhuhai League Environmental Protection Co., Ltd.; from August 2009 to May 2011, he concurrently served as the chairman of Zhuhai League Investment Co., Ltd. From May 2011 to May 2012, he served as a vice chief engineer of Zhuhai Water Group Co., Ltd. During this period, he also served as a director of League Stock Co., Ltd. During this period, he also served as a director of League Stock Co., Ltd. Since May 2012, he has served as a full-time director and supervisor of Zhuhai SASAC. During this period, he also served as the chairman of the board of supervisors of Zhuhai Port Holdings Co., Ltd, chairman of the board of supervisors of Zhuhai Port Co., Ltd, director of Zhuhai League Stock Co., Ltd, chairman of the board of supervisors of Zhuhai Investment Holdings Co., Ltd, and director of Zhuhai Duty Free Enterprises Group Co., Ltd. Since September 2013, he has concurrently served as the chairman of the board of supervisors of the Company.
Guo Shuzhan, male, with a college degree, incumbent Supervisor of the Company
Since August 2006, he has served as chairman of Hebei Jinghai Guaranteed Investment Co., Ltd. Since August 2012, he has served as general manager of Henan Shengshi Xinxing Gree Trading Co., Ltd. From May 2012 up to now, he has served as supervisor of the Company.
Wang Liqin, female, with a bachelor degree, incumbent Staff Representative Supervisor. From April 2004 to July 2010, Ms. Wang Liqin served as the HR supervisor of HR Department of GREE Electric Appliances Inc. of Zhuhai. Since August 2010, she has served as the head of HR Department of GREE Electric Appliances Inc. of Zhuhai. Since October 2014, she has served as the staff representative supervisor.
Zhuang Pei, male, with a bachelor degree, incumbent Vice President of the Company. From 2002 to April 2003, he served as assistant president of the Company. From April 2003 up to now, he has served as vice president of the Company.
Wang Jingdong, male, a master, incumbent Vice President, Finance Chief, Board Secretary.
From November 2002 to April 2006, he served as head of financial department, head of purchase department and chief of Audit Department. From April 2006 to September 2009, he served as assistant president of the Company. From January 2008 up to now, he served as finance chief of the Company. From July 2009 up to now, he served as board secretary of the Company. From October 2009 up to now, he has served as vice president, finance chief and board secretary of the Company.
Chen Weicai, male, a master, incumbent Vice President of the Company.
From July 1993 to April 2008, he served as clerk, staff member, senior staff member, deputy director and director of Huale Police Station in Dongshan District (Yuexiu District) of Bureau of Public Security in Guangzhou. From July 2005 to April 2008, he served as deputy secretary (concurrent) of Huale Street Party Committee in Dongshan District (Yuexiu District) in Guangzhou. From April 2008 to July 2013, he served as deputy director and director of personnel department of Bureau of Public Security in Guangzhou. From October 2008 to February 2012, he served as direction of office of Guangzhou Police’s Foundation (concurrent). Since September 2013, he has served as vice-president of the Company.
Liu Jun, male, with a bachelor degree, incumbent Vice President of the Company.
Mr. Liu Jun was an employee of the Company from July 1998 to October 2001. He successively served as the assistant director and factory deputy director of the controller factory of the Company, factory deputy director and factory director of the Incoming Materials Inspection Factory, and the deputy head and head of the Supply Department from October 2001 to August 2006; the assistant president of the Company, director of the Materials Purchasing Center and director of the Logistics Distribution Center from August 2006 to July 2015. He has served as a vice president of the Company since August 2015. Information of positions in shareholders
√ Applicable □ Not applicable
Remuneration
Name of Name of shareholder Position at the Commencement of and allowance
incumbent shareholder term of office received from
the shareholder
Guo Shuzhan Hebei Jinghai Guaranteed Investment Chairman and legal August 1, 2006 Yes
Co., Ltd. representative
Xu Zifa Hebei Jinghai Guaranteed Investment Director August 1, 2006 Yes
Co., Ltd.
State-owned Assets Supervision and Full time director and -Xu Chuzhen Administration Commission of Zhuhai full time supervisor May 1, 2012 Yes - Municipal People"s GovernmentInformation of positions in other companies
√ Applicable □ Not applicable
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Chairman, legal
Ye Zhixiong Zhuhai Urban Construction Group Co., representative and January 1, 2013 Yes
Ltd. secretary of the Party
committee
Zhang Jundu Zhejiang Tongcheng Gree Electric Chairperson September 1, 1999 Yes
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Appliances Co., Ltd.
Zhang Jundu Zhejiang Shengshi Xinxing Gree General Manager August 1, 2012 Yes
Trading Co., Ltd.
Xu Zifa Hebei Shengshi Xinxing Gree Trading General Manager July 1, 2011 Yes
Co., Ltd.
Lu Xin TCL Corporation Independent Director September 1, 2014 No
Lu Xin Kingfa Sci. & Tech. Co., Ltd. Independent Director May 21, 2014 No
Guo Shuzhan Henan Shengshi Xinxing Gree Trading General Manager August 1, 2012 Yes
Co., Ltd.
Xu Chuzhen Zhuhai League Stock Co., Ltd. Director May 20, 2014 Yes
Dong Mingzhu Zhuhai Landa Compressor Co., Ltd. Chairman and legal May 10, 1985 No
representative
Dong Mingzhu Hefei Landa Compressor Co., Ltd. Chairman and legal December 7, 2009 No
representative
Dong Mingzhu Zhengzhou Landa Compressor Co., Ltd. Chairman and legal March 2, 2011 No
representative
Dong Mingzhu Chongqing Landa Compressor Co., Ltd. Chairman and legal May 23, 2011 No
representative
Dong Mingzhu Wuhan Landa Compressor Co., Ltd. Chairman and legal May 17, 2011 No
representative
Dong Mingzhu Zhuhai Kaibang Motor Manufacture Co., Chairman and legal April 18, 2003 No
Ltd. representative
Dong Mingzhu Hefei Kaibang Motor Manufacture Co., Chairman and legal December 9, 2009 No
Ltd. representative
Dong Mingzhu Henan Kaibang Motor Manufacture Co., Chairman and legal August 4, 2011 No
Ltd. representative
Dong Mingzhu Chongqing Kaibang Motor Manufacture Chairman and legal August 31, 2011 No
Co., Ltd. representative
Dong Mingzhu Hong Kong Gree Electric Appliances Chairperson June 21, 2005 No
Sales Co., Ltd.
Dong Mingzhu GREE (Zhongshan) Small Home Chairman and legal April 3, 2009 No
Appliances Co. representative
Dong Mingzhu Gree Electric Appliances (Zhengzhou) Chairman and legal August 26, 2010 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Dong Mingzhu Gree Electric Appliances (Wuhan) Co., Chairman and legal August 30, 2010 No
Ltd. representative
Dong Mingzhu Shijiazhuang Green Resources Chairman and legal December 1, 2011 No
Recycling Co., Ltd. representative
Zhengzhou Gree Green Resources Chairperson, legal
Dong Mingzhu Recycling Co., Ltd representative and August 26, 2010 No
general manager
Dong Mingzhu Tianjin Green Energy Resource Chairman and legal March 13, 2013 No
Recycling Co., Ltd. representative
Dong Mingzhu Hunan Green Resources Recycling Co., Chairman and legal November 2, 2010 No
Ltd representative
Dong Mingzhu Gree Electric Appliances (Chongqing) Chairman and legal July 19, 2001 No
Co., Ltd. representative
Dong Mingzhu Gree (Shijiazhuang) Small Home Chairman and legal March 21, 2011 No
Appliances Co., Ltd. representative
Dong Mingzhu Gree Electric Appliances (Wuhu) Co., Chairman and legal March 29, 2011 No
Ltd. representative
Dong Mingzhu Wuhu Green Resources Recycling Co., Executive director and March 29, 2011 No
Ltd. legal representative
Dong Mingzhu Zhuhai Gree Group Finance Company Chairman and legal May 29, 1995 No
Limited representative
Dong Mingzhu Gree Electric Appliances (Shijiazhuang) Chairman and legal May 23, 2011 No
Co., Ltd. representative
Dong Mingzhu Zhuhai Ligao Precision Manufacturing Chairman and legal October 14, 2013 No
Co., Ltd. representative
Dong Mingzhu Zhuhai Gree TOSOT Life Electric Chairman and legal April 12, 2013 No
Appliances Co., Lid. representative
Dong Mingzhu Changsha Gree HVAC Equipment Co., Executive director and April 14, 2014 No
Ltd. legal representative
Dong Mingzhu Zhuhai HVAC Equipment Co., Ltd. Chairman and legal March 6, 2013 No
representative
Dong Mingzhu Wuhu Precision Manufacturing Co., Ltd. Chairman and legal November 20, 2014 No
representative
Dong Mingzhu Gree TOSOT (Suqian) Home Chairman and legal September 29, 2014 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Gree Electric Appliances (Hefei) Co., Executive director, legal
Dong Mingzhu Ltd. representative and December 19, 2006 No
general manager
Dong Mingzhu Zhuhai GREE Intelligent Equipment Co., Chairman and legal September 15, 2015 No
Ltd. representative
Dong Mingzhu Zhuhai GREE Intelligent Equipment Chairman and legal December 29, 2015 No
Technology Research Institute Co., Ltd. representative
Dong Mingzhu Gree HVAC Equipment (Wuhan) Co., Chairman and legal December 30, 2015 No
Ltd. representative
Dong Mingzhu GREE Intelligent Equipment (Wuhan) Chairman and legal December 30, 2015 No
Co., Ltd. representative
Dong Mingzhu Zhuhai Hengqin GREE business Chairman and legal December 28, 2015 No
factoring Co., Ltd. representative
Dong Mingzhu Zhuhai Gree Electrical Co., Ltd. Chairman and legal July 13, 1992 No
representative
Dong Mingzhu Zhuhai Gree Xinyuan Electronics Co., Chairman and legal May 30, 2016 No
Ltd. representative
Dong Mingzhu Zhuhai Gree Precision Mold Co., Ltd. Chairperson January 23, 2016 No
Dong Mingzhu Zhuhai Gree New Material Co., Ltd. Chairperson March 17, 2016 No
Dong Mingzhu Zhuhai Gree Energy Environment Chairperson May 11, 2016 No
Technology Co., Ltd.
Dong Mingzhu Gree Precision Mold (Wuhan) Co., Ltd. Chairperson January 26, 2016 No
Dong Mingzhu Gree Electric Appliances (Hangzhou) Chairperson April 15, 2016 No
Co., Ltd.
Gree Green Refrigeration Technology Executive director, legal
Huang Hui Center Co., Ltd. Of Zhuhai representative and December 28, 2009 No
general manager
Huang Hui Zhuhai Gree Dakin Device Co., Ltd. Chairman and legal March 10, 2009 No
representative
Huang Hui Zhuhai IVP Information Technology Co., Chairman and legal April 29, 2014 No
Ltd. representative
Huang Hui Zhuhai Landa Compressor Co., Ltd. Director May 10, 1985 No
Huang Hui Hefei Landa Compressor Co., Ltd. Director December 7, 2009 No
Huang Hui Zhengzhou Landa Compressor Co., Ltd. Director March 2, 2011 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Huang Hui Chongqing Landa Compressor Co., Ltd. Director May 23, 2011 No
Huang Hui Wuhan Landa Compressor Co., Ltd. Director May 17, 2011 No
Huang Hui Hefei Kaibang Motor Manufacture Co., Director December 9, 2009 No
Ltd.
Huang Hui Henan Kaibang Motor Manufacture Co., Director August 4, 2011 No
Ltd.
Huang Hui Chongqing Kaibang Motor Manufacture Director August 31, 2011 No
Co., Ltd.
Huang Hui Gree Electric Appliances (Zhengzhou) Director August 26, 2010 No
Co., Ltd.
Huang Hui Gree Electric Appliances (Wuhan) Co., Director August 30, 2010 No
Ltd.
Huang Hui Shijiazhuang Green Resources Director December 1, 2011 No
Recycling Co., Ltd.
Huang Hui Zhengzhou Gree Green Resources Director August 26, 2010 No
Recycling Co., Ltd
Huang Hui Gree (Shijiazhuang) Small Home Director March 21, 2011 No
Appliances Co., Ltd.
Huang Hui Gree Electric Appliances (Wuhu) Co., Director March 29, 2011 No
Ltd.
Huang Hui Zhuhai GREE Intelligent Equipment Co., Director September 15, 2015 No
Ltd.
Huang Hui Zhuhai GREE Intelligent Equipment Director December 29, 2015 No
Technology Research Institute Co., Ltd.
Huang Hui GREE Intelligent Equipment (Wuhan) Director December 30, 2015 No
Co., Ltd.
Huang Hui Gree HVAC Equipment (Wuhan) Co., Director December 30, 2015 No
Ltd.
Huang Hui Gree Precision Mold (Wuhan) Co., Ltd. Director January 26, 2016 No
Huang Hui Zhuhai Gree Precision Mold Co., Ltd. Director January 23, 2016 No
Huang Hui Gree Electric Appliances (Hangzhou) Director April 15, 2016 No
Co., Ltd.
Zhuang Pei Hefei Landa Compressor Co., Ltd. Director December 7, 2009 No
Zhuang Pei Zhengzhou Landa Compressor Co., Ltd. Director March 2, 2011 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Zhuang Pei Chongqing Landa Compressor Co., Ltd. Director May 23, 2011 No
Zhuang Pei Wuhan Landa Compressor Co., Ltd. Director May 17, 2011 No
Zhuang Pei Zhuhai Kaibang Motor Manufacture Co., Director April 18, 2003 No
Ltd.
Zhuang Pei Henan Kaibang Motor Manufacture Co., Director August 4, 2011 No
Ltd.
Zhuang Pei Chongqing Kaibang Motor Manufacture Director August 31, 2011 No
Co., Ltd.
Zhuang Pei Gree Electric Appliances (Zhengzhou) Director August 26, 2010 No
Co., Ltd.
Zhuang Pei Gree Electric Appliances (Wuhan) Co., Director August 30, 2010 No
Ltd.
Zhuang Pei Shijiazhuang Green Resources Director December 1, 2011 No
Recycling Co., Ltd.
Zhuang Pei Zhengzhou Gree Green Resources Director August 26, 2010 No
Recycling Co., Ltd
Zhuang Pei Tianjin Green Energy Resource Director March 13, 2013 No
Recycling Co., Ltd.
Zhuang Pei Hunan Green Resources Recycling Co., Director November 2, 2010 No
Ltd
Zhuang Pei Gree Electric Appliances (Chongqing) Director July 19, 2001 No
Co., Ltd.
Zhuang Pei Gree (Shijiazhuang) Small Home Director March 21, 2011 No
Appliances Co., Ltd.
Zhuang Pei Gree Electric Appliances (Wuhu) Co., Director March 29, 2011 No
Ltd.
Zhuang Pei Wuhu Green Resources Recycling Co., Director March 29, 2011 No
Ltd.
Zhuang Pei Gree Electric Appliances (Shijiazhuang) Director May 23, 2011 No
Co., Ltd.
Wang Zhuhai Gree Electric Appliances Sales Executive director and September 17, 2008 No
Jingdong Co., Ltd. legal representative
Wang Hefei Landa Compressor Co., Ltd. Director December 7, 2009 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Wang Zhengzhou Landa Compressor Co., Ltd. Director March 2, 2011 No
Jingdong
Wang Chongqing Landa Compressor Co., Ltd. Director May 23, 2011 No
Jingdong
Wang Wuhan Landa Compressor Co., Ltd. Director May 17, 2011 No
Jingdong
Wang Hefei Kaibang Motor Manufacture Co., Director December 9, 2009 No
Jingdong Ltd.
Wang Henan Kaibang Motor Manufacture Co., Director August 4, 2011 No
Jingdong Ltd.
Wang Chongqing Kaibang Motor Manufacture Director August 31, 2011 No
Jingdong Co., Ltd.
Wang Tianjin Green Energy Resource Director March 13, 2013 No
Jingdong Recycling Co., Ltd.
Wang Hunan Green Resources Recycling Co., Director November 2, 2010 No
Jingdong Ltd
Wang Zhuhai Gree Daikin Precision Mold Co., Director March 10, 2009 No
Jingdong Ltd.
Wang Zhuhai Gree Dakin Device Co., Ltd. Director March 10, 2009 No
Jingdong
Wang Wuhu Green Resources Recycling Co., Director March 29, 2011 No
Jingdong Ltd.
Wang Zhuhai Gree Group Finance Company Director May 29, 1995 No
Jingdong Limited
Wang Gree Electric Appliances (Shijiazhuang) Director May 23, 2011 No
Jingdong Co., Ltd.
Wang Zhuhai Gree TOSOT Life Electric Director April 12, 2013 No
Jingdong Appliances Co., Lid.
Wang Zhuhai HVAC Equipment Co., Ltd. Director March 6, 2013 No
Jingdong
Wang Gree TOSOT (Suqian) Home Director September 29, 2014 No
Jingdong Appliances Co., Ltd.
Wang Zhuhai Hengqin GREE business Director December 28, 2015 No
Jingdong factoring Co., Ltd.
Wang Zhuhai Landa Compressor Co., Ltd. Supervisor May 10, 1985 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Jingdong
Wang Zhuhai Meilingda Refrigeration Supervisor July 2, 2002 No
Jingdong Technology Co., Ltd.
Wang Zhuhai Meiling General Motors Co., Ltd. Supervisor June 27, 2002 No
Jingdong
Wang Zhuhai Gree Electrical Co., Ltd. Supervisor July 13, 1992 No
Jingdong
Wang Zhuhai Kaibang Motor Manufacture Co., Supervisor April 18, 2003 No
Jingdong Ltd.
Wang Gree Electric Appliances (Zhengzhou) Supervisor August 26, 2010 No
Jingdong Co., Ltd.
Wang Gree Electric Appliances (Wuhan) Co., Supervisor August 30, 2010 No
Jingdong Ltd.
Wang Shijiazhuang Green Resources Supervisor December 1, 2011 No
Jingdong Recycling Co., Ltd.
Wang Zhengzhou Gree Green Resources Supervisor August 26, 2010 No
Jingdong Recycling Co., Ltd
Wang Gree Electric Appliances (Chongqing) Supervisor July 19, 2001 No
Jingdong Co., Ltd.
Wang Gree (Shijiazhuang) Small Home Supervisor March 21, 2011 No
Jingdong Appliances Co., Ltd.
Wang Gree Electric Appliances (Wuhu) Co., Supervisor March 29, 2011 No
Jingdong Ltd.
Wang Zhuhai Gree Xinyuan Electronics Co., Supervisor April 25, 1988 No
Jingdong Ltd.
Liu Jun Zhuhai GREE Intelligent Equipment Co., Director September 15, 2015 No
Ltd.
Liu Jun Zhuhai GREE Intelligent Equipment Director December 29, 2015 No
Technology Research Institute Co., Ltd.
Liu Jun Zhuhai Hengqin GREE business Director December 28, 2015 No
factoring Co., Ltd.
Liu Jun GREE Intelligent Equipment (Wuhan) Director December 30, 2015 No
Co., Ltd.
Liu Jun Gree HVAC Equipment (Wuhan) Co., Director December 30, 2015 No
Remuneration
Name of Names of other companies Position at other Commencement of and allowance
incumbent companies term of office received from
other companies
Liu Jun Zhuhai Gree Precision Mold Co., Ltd. Director January 23, 2016 No
Liu Jun Gree Precision Mold (Wuhan) Co., Ltd. Director January 26, 2016 No
Liu Jun Gree Electric Appliances (Hangzhou) Director April 15, 2016 No Co., Ltd.Punishments given by the securities regulatory institution to the incumbent directors, supervisors and senior management personnel or those who resigned in the Report Period in the recent three years
□ Applicable √ Not applicable
IV. Remunerations of the directors, supervisors and senior management personnel Decision making procedures, determination basis, and actual payment regarding the remunerations of directors, supervisors and senior management personnel
Within the Report Period, the Board of Directors of the Company conducted the performance review of the achievements and performance of duties of the senior management personnel and implemented the assignment assessment system regarding the working results in ethic, competence, diligence and achievement. The Company adhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentive and spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling reward grade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritual incentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense of social responsibility and career achievement of the senior management personnel.
Remunerations of the directors, supervisors and senior management personnel in the Report Period
Unit: RMB 10,000
Total amount of Remuneration
Tenure pre-tax received from a
Name Title Gender Age remuneration related party of
status received from
the Company the Company
Dong Mingzhu Chairman & President F 62 Incumbent 619.83 No
Ye Zhixiong Director M 59 Incumbent 0 No
Huang Hui Director & Executive Vice President M 52 Incumbent 433.88 No
Zhang Jundu Director M 56 Incumbent 0 No
Xu Zifa Director M 62 Incumbent 0 No
Wang Ruzhu Independent Director M 52 Incumbent 12 No
Guo Yang Independent Director F 58 Incumbent 12 No
Lu Xin Independent Director F 53 Incumbent 12 No
Xu Chuzhen Supervisor M 58 Incumbent 0 No
Guo Shuzhan Supervisor M 60 Incumbent 0 No
Wang Liqin Staff Supervisor F 40 Incumbent 75.15 No
Zhuang Pei Vice President M 51 Incumbent 216.94 No
Wang Jingdong Vice President, Finance Chief, Board M 46 Incumbent 297.52 No
Secretary
Chen Weicai Vice President M 44 Incumbent 133.26 No
Liu Jun Vice President M 40 Incumbent 247.93 No
Meng Xiangkai Director M 55 Resigned No
Total -- -- -- -- 2,060.51 --Equity incentives granted to the directors and senior management personnel in the Report Period
□ Applicable √ Not applicable
V. Employees of the Company
1. Number of employees and their specialties and education level
Number (person) of on-the-job employees of the parent 26,505
company
Number (person) of on-the-job employees of the main 45,105
subsidiaries
Total number (person) of on-the-job employees 71,610
Total number (person) of employees receiving salaries in 71,610
Number (person) of retired employees for whom the parent 290
company and main subsidiaries need to bear expenses
Formation of Specialties
Category of formation of specialties Number (person) of employees in the formation
Manufacturing Personnel 58,323
Sales Personnel 1,749
Technicians 7,729
Financial Personnel 473
Administrative Personnel 3,336
Total 71,610
Education Level
Education level category Number (person) of employees
Bachelor Degree or above 9,814
College Degree 9,186
Technical Secondary School Education and below 52,610
Total 71,6102. Remuneration policy
The Company provides employees with competitive salary level in the industry and region according to the macroeconomic environment and its business benefits. Besides, the Company established standardized and systematized salary management system in accordance with the national laws and regulations and actual conditions of the enterprise to provide a guarantee for obtaining legal and due labor remuneration by employees. To share the innovative achievements of the Company with general employees and improve employee well-being, the Company decided to add RMB1000 to the salary of each employee per month in November 2016, which played an important role in talent introduction and talent motivation. Meanwhile, to realize rapid and standard training of talents and give full scope to the talents and appoint competent employees in relevant positions, the Company comprehensively consolidated and promoted the work of skill grade evaluation by focusing on skilled positions, made great efforts to promote the professional technical grade evaluation mechanism for technical positions, offered the skilled and technical talents who are competent and have good performance multi-ways occupational development path and comprehensively built the employing mechanism attracting, retaining and inspiring talents in 2016.
3. Training plan
The transformation breakthrough of manufacturing inevitably requires upgrading and development of the talent team. In 2016, the talent training and cultivation work of Gree followed the core thoughts of "whole staff learning, transformation support; intelligent manufacturing inheritance, development assistance" to promote the development and innovation of various businesses.
① Putting a different emphasis on each level and carrying out the whole staff learning (four levels) development plan
In 2016, the Company promoted the whole staff learning plan of "accelerated learning·transformation breakthrough" to forge and consolidate the four level learning plan system consisting of the company level, department level, section level and individual learning plan, and the plan system with complementary layers specified different responsibilities and key requirements of the learning subject at each level to fulfill the learning and development goals of "connecting to the strategy in the upstream and connecting to the performance in the downstream". The company implemented the whole staff learning development plan to mobilize the learning enthusiasm of all staff, attracted 60000 employees to participate in the series of platforms of promoting learning by competition such as the labor skill competition called "Build Dreams with Originality", product creative design competition and the contest called "Intelligent Manufacturing InheritanceGree Excellent Lecturers" organized by the Company, and dug the learning benchmarks and post elites such as "Gree Top 500 Skilled Workers", "Top 50 in Product Innovation" and "Gree Top 30 Good Lecturers".
At the same time, the Company supported and supervised all the units in setting up a complete talent training mechanism by facing all the bases and sales companies of the group to achieve talent training support of the whole industry chain. In 2016, the sales companies organized level-2 and level-3 after-sales technical training for 80000 employees. To achieve effective coverage of whole staff learning, the Company independently developed a "PDA" mobile learning platform to send the after-sales and terminal learning materials to the frontline directly so as to meet the quick and efficient learning requirements of the frontline personnel. There were 300,000 registered users for "PDA", and more than 40000 persons downloaded learning materials each month.
② Focusing on strategy to support training and cultivation of new businesses and key groups
According to its diversified development layout, the Company put an emphasis on the talent transformation support and cultivation topic in the new businesses and new fields such as intelligent equipment, moulds and mobile phones, and irregularly organized and implemented more than 30 lectures of technology frontier experts with 3000 attendants in the fields such as communication technology, information technology, quality technology, and innovative technology in 2016.
According to the Company"s automation development plan, the transformation and upgrading cultivation work of skilled workers was organized and carried within the group to cultivate 1000 special talents of automation skill workers in robot integrated application for the Company in the whole year of 2016.
The Company carried out 12 terms of special training camps for the key groups such as middle level cadres, supervisors and team leaders in the year, and totally 500 cadres at the middle level and basic level participated in the camps. Comprehensive means such as pre-training assessment, special training, management salon, action practice, and joint performance of growth were adopted for the training camps according to characteristics of different management positions in different stages of development to systematically boost the actual management capabilities of the management at the basic and medium levels. ③ Helping the frontline sales and service personnel to boosting levels in the market-oriented manner
To further enhance the terminal sales capacity, the Company further promoted construction of the sales company terminal training system in 2016. The Company organized and implemented the "Pearl Blooming" shopping guide development plan to provide development platform and resource support to terminal shopping guides, and organized the "Pearl" guide training camp activities to boost the sales level of shopping guide comprehensively.
In 2016, Gree comprehensively strengthened the professional construction of grassroots after-sales team, and started the after-sales skill training camp of 2016 "Travel of top quality products and professional construction of the future" for household and commercial products. The training camp adopted the modes such as nationwide tour and HQ assemble for training to enhance the personnel skills and service level comprehensively and has trained 45000 persons in total.
To enhance the sales ability of overseas market, Gree strengthened overseas customer product training and technical support in an all-round way, and conducted special activities such as "Global Gree Centralized Training and Global Tour" throughout the year, with the training activities covering nearly 1200 customers from 30 countries in the four continents, in the hope of passing the voice of Gree to the world and making the world love products made in China.
4. Labor outsourcing
□ Applicable √ Not applicable
Section IX Corporate Governance
I. Basic conditions of corporate governance
In strict accordance with the Company Law, Securities Law and other relevant national laws and regulations and Instructions on Standardized Operation of Companies Listed on the Main Board of Shenzhen Stock Exchange, the Company establishes normative corporate governance structure and rules of procedure for the General Meeting of Shareholders, Board of Directors and Board of Supervisors, clarifies the responsibilities and authorities in decision-making, performance and supervision, forms effective division of responsibilities and balance mechanism, continuously promotes the level of normal operation and safeguards the interests of investors and the Company.
The corporate governance conforms to the Company Law and requirements of CSRC for governance of listed companies.
Great differences exist between the actual corporate governance and the normative document related to listed company governance published by the CSRC
□ Yes √ No
II. Independence of the Company relative to the controlling shareholder in the aspects such as business operation, personnel, assets, organization and finance The Company has a sound corporate governance structure and completely separates from Gree Group as the controlling shareholder in business operation, personnel, assets, organization and finance, and the Company has independent and complete business operation and independent management capability.
III. Horizontal competition
□ Applicable √ Not applicable
IV. Convening of the annual general meeting of shareholders and interim general meeting of shareholders during the Report Period
1. General meetings of shareholders during the Report Period
Proportion of
Session of meeting Type of meeting participating Date of meeting Date of disclosure Disclosure index
investors
Announcement on
Resolutions of the
Annual general General Meeting of Shareh
2015 annual general meeting of 0.21% May 19, 2016 May 20, 2016 olders for
meeting of shareholders shareholders the Year 2015
published on
www.cninfo.com.cn,
etc.
Announcement on Resolutions of Convening tInterim General he First The first interim general Interim general October 28, Meeting of meeting of shareholders for meeting of 1.55% 2016 October 31, 2016 Shareholders for the year of 2016 shareholders the Year 2016 published on www.cninfo.com.cn, etc.2. Convening of an interim general meeting of shareholders requested by the preferred shareholders whose voting rights have been restored
□ Applicable √ Not applicable
V. Performance of duties by independent directors during the Report Period
1. Attendance of independent directors at meetings of the Board of Directors and general meetings of shareholders
Attendance of independent directors at meetings of the Board of Directors
Number of
meetings of the Failed to
Name of Board of Times of Times of Times of personally
independent Directors attendance on attendance in attendance by Times of attend the
director requiring site the way of proxy absence meeting for two
attendance in communication consecutive
the Report times
Period
Wang Ruzhu 6 2 4 0 0 No
Guo Yang 6 2 4 0 0 No
Lu Xin 6 1 5 0 0 No
Number of attendance of independent directors at the general 2meetings of ShareholdersDescription about the failure to personally attend the meeting of the Board of Directors for two consecutive times
None
2. Objection raised by independent directors to relevant issues of the Company
Independent directors raised objection to relevant issues of the Company
□ Yes √ No
The independent directors didn’t raise any objection to relevant issues of the Company.
3. Other descriptions for performance of duties by independent directors
Whether the relevant suggestions on the Company by independent directors were adopted
√ Yes □ No
Description about the relevant suggestions on the Company by independent directors that were adopted or not adopted
Within the Report Period, the independent directors of the Company were able to act in the best interest of the Company and its shareholders, faithfully perform their own duties in accordance with the relevant provisions, attend the meetings of the Board of Directors, review and discuss various proposals carefully, fully express their suggestions and opinions for the operation and management of the Company, play an active role in making correct decisions, improving management level and standardizing business operations by the Board of Directors of the Company, and practically safeguarding the interests of minority stock holders.
VI. Performance of duties by special committees under the Board of Directors during the Report Period
1. Performance of duties by audit committee under the Board of Directors
According to the Rules of Procedure of Audit Committee, the audit committee was mainly responsible for communication, supervision and check for internal and external audits: (1) The audit committee carried out full communications with the accounting firm responsible for the annual audit of the Company in respect of audit plan, engagement letter and risk and control, etc.
(2) Before the annual audit certified public accountants accessed to the site, the audit committee reviewed the preliminarily prepared financial statements of the Company and held that these statements reflected the present financial position of the Company in all major aspects.
(3) After the annual audit certified public accountants issued preliminary opinions, the audit committee reviewed financial statements of the Company, communicated with the accounting firm in respect of material particulars and significant accounting estimates, audit adjustments and significant accounting policies which might have potential influence on the financial statements and held that the financial statements of the Company gave a true, accurate and complete view of the whole position of the Company and agreed to prepare the annual report for the year 2016 on the basis of these financial statements.
(4) The audit committee reviewed the financial statements for the year 2016 which had been audited by the auditors and held that these financial statements gave a fair view of the financial position of the Company ended 31 December 2016 and operating results and cash flows for the year 2016 in all major aspects and agreed to submit them to the Board of Directors for deliberation.
(5) The audit committee summarized and evaluated the audit work for this year as done by Union Power CPAs Co., Ltd. and held that the annual audit certified public accountants performed their audit work in strict accordance with the Independent Auditing Standards for Chinese Certified Public Accountants and suggested the Company re-engage Union Power CPAs Co., Ltd. as the audit institution for the year 2017.
2. Performance of duties by the remuneration and appraisal committee under the Board of Directors
The remuneration and appraisal committee under the Board of Directors carried out the work in accordance with the Rules of Procedure of the Remuneration and Appraisal Committee, reviewed the annual remunerations disclosed by the directors, supervisors and senior management personnel of the Company according to the Trial Measures for Annual Salary System of Managers, and upon review held that the annual remunerations disclosed by the directors, supervisors and senior management personnel of the Company were consistent with those received actually by them from the Company. The remunerations of the directors, supervisors and senior management personnel of the Company were paid according to the provisions for wages management of the Company. 3. Nomination committee
The nomination committee under the Board of Directors carried out the work in accordance with the Rules of Procedure of the Nomination Committee, during the Report Period, it deliberated the proposals on appointment of directors and checked the qualifications of related persons.
VII. Work of the Board of Supervisors
The Board of Supervisors found whether there are risks in the supervision during the Report Period.
□ Yes √ No
The Board of Supervisors had no objection to the supervision during the Report Period.
VIII. Appraisal and incentive for senior management personnel
Within the Report Period, the Board of Directors of the Company conducted the performance review of the achievements and performance of duties of the senior management personnel and implemented the assignment assessment system regarding the working results in ethic, competence, diligence and achievement. The Company adhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentive and spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling reward grade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritual incentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense of social responsibility and career achievement of the senior management personnel.
IX. Internal control
1. Details about major defects found in internal control in the Report Period
□ Yes √ No
2. Internal control self-evaluation report
Full disclosure date of the internal control evaluation report April 27, 2017
Full disclosure index of the internal control evaluation report www.cninfo.com.cn
Proportion of the total amount of unit assets included in the
evaluation scope to the total amount of assets in the consolidated 99.00%
financial statements of the Company
Proportion of the unit operating income included in the evaluation 99.00%
scope to the unit operating income in the consolidated financial
statements of the Company
Defect identification standard
Category Financial report Non-financial report
For details, see the Internal Control Self- For details, see the Internal Control
evaluation Report of Gree Electric Self-evaluation Report of Gree
Qualitative standard Appliances, Inc. of Zhuhai for the Year Electric Appliances, Inc. of Zhuhai for
2016 disclosed on www.cninfo.com.cn by the Year 2016 disclosed on
the Company on 27 April. www.cninfo.com.cn by the Company
on 27 April.
For details, see the Internal Control Self- For details, see the Internal Control
evaluation Report of Gree Electric Self-evaluation Report of Gree
Quantitative standard Appliances, Inc. of Zhuhai for the Year Electric Appliances, Inc. of Zhuhai for
2016 disclosed on www.cninfo.com.cn by the Year 2016 disclosed on
the Company on 27 April. www.cninfo.com.cn by the Company
on 27 April.
Number of major defects in the financial 0
report
Number of major defects in the non- 0
financial report
Number of important defects in the 0
financial report
Number of important defects in the non- 0
financial report
X. Internal control audit report
Deliberation opinion section in the internal control audit report
We hold that Gree Electric Appliances, Inc. of Zhuhai has maintained effective internal control of financial reports in
accordance with the Basic Rules for Internal Control of Enterprises and relevant regulations.
Disclosure of internal control audit report Disclosed
Full disclosure date of the internal control April 27, 2017
audit report
Full disclosure index of the internal control www.cninfo.com.cn
audit report
Type of internal control audit report Standard without reserved opinion
opinions
Major defects found in the non-financial No
report
The accounting firm issued the internal control audit report of non-standard opinions
□ Yes √ NoThe internal control audit report issued by the accounting firm is consistent with the self-evaluation report opinion of the
Board of Directors
√ Yes □ No
Section X Financial Report
I. Audit report
Audit opinion type Standard without reserved opinion
Signing date of the audit report April 26, 2017
Name of the audit institution Union Power Certified Public Accountants (Special General
Partnership)
Audit Report Doc No. Union Power Audit No. (2017) No. 050018
Name of the certified public accountant Wang Bing and He Li
Audit report
Union Power Audit No. (2017) No. 050018All shareholders of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI:
We have audited the accompanying financial statements of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "your company"), including the consolidated and parent company"s balance sheets ended 31 December 2016 and consolidated and parent company"s income statements, consolidated and parent company"s cash flow statements and consolidated and parent company"s statements of changes in owners" equity and notes to financial statements for the year 2016.
1. Responsibility of management for financial statements
Preparing and fairly presenting these financial statements are the responsibilities of the management of your company. These responsibilities include: (1) Preparing these financial Statements in accordance with the Accounting Standards for Business Enterprises and enabling them to achieve a fair reflection; (2) designing, implementing and maintaining the necessary internal control to make these financial statements free of any material misstatement resulting from cheating.
2. Responsibility of certified public accountants
Our responsibility is to express an opinion on audit of these financial statements on the basis of implementation of audit work. We have conducted our audit work according to the provisions of Audit Standards for Certified Public Accountants of China. The Audit Standards for Certified Public Accountants of China require us to observe the code of professional ethics for Chinese certified public accountants and plan and implement audit work so as to reasonably assure the financial statements free of material misstatement. Our audit work involves implementation of audit procedures to obtain the audit evidences relating to amount and disclosure of financial statements. The selection of audit procedures depends on judgment of certified public accountants, including the appraisal of material misstatement risk of the financial statements resulting from cheating or errors. During the execution of risk appraisal, the certified public accountants have considered the internal control relating to preparation and fair presentation of financial statements to design proper audit procedures. The audit work also includes appraising whether the management applied proper accounting policy and made reasonable accounting estimate and appraising the overall presentation of these financial statements.
We believe the audit evidences obtained by us are sufficient and proper and shall provide the basis for expressing our audit opinion.
3. Audit opinion
In our opinion, these financial statements of your company have been prepared in all material aspects in accordance with the Accounting Standards for Business Enterprises and fairly reflected the consolidated and parent company"s financial position of your company ended 31 December 2016 and consolidated and parent company"s operating results and cash flows for the year 2016.
Union Power Certified Public Chinese CPA: Wang Bing
Accountants (Special General
Partnership) Chinese CPA: He Li
Wuhan, China 26 April 2017
Consolidated Balance Sheet
December 31, 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Assets Note Balance at the end of the Beginning Balance
period
Current assets:
Monetary capital 7 (1) 95,613,130,731.47 88,819,798,560.53
Settlement Reserves
Lending funds
Financial assets measured at their fair values and of which the changes
are recorded into the current profits and losses
Derivative financial assets 7(2) 250,848,418.63
Bills receivable 7(3) 29,963,355,478.45 14,879,805,537.96
Accounts receivable 7(4) 2,960,534,651.37 2,879,212,111.93
Prepayment 7(5) 1,814,945,790.78 847,929,149.71
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
Interests receivable 7(6) 1,045,542,563.43 1,109,776,449.77
Dividends receivable
Other receivables 7(7) 244,984,154.67 254,016,643.00
Buying back the sale of financial assets 7(8) 1,000,000,000.00
Inventories 7(9) 9,024,905,239.41 9,473,942,712.51
Assets classified as held for sale
Non-current assets due within one year
Other current assets 7(10) 1,992,536,503.43 1,684,833,479.54
Total current assets 142,910,783,531.64 120,949,314,644.95
Non-current assets:
Disbursement of loans and advances 7(11) 4,737,184,235.79 7,872,619,001.46
Available-for-sale financial assets 7(12) 1,384,303,560.40 2,704,719,177.56
Held-to-maturity investment
Long-term receivables
Long-term equity investment 7(13) 103,913,171.51 95,459,187.55
Investment real estate 7(14) 597,736,633.95 491,540,849.66
Fixed assets 7(15) 17,681,655,478.06 15,431,813,077.20
Construction in Progress 7(16) 581,543,756.84 2,044,837,830.02
Project goods and materials
Fixed assets in liquidation 36,949,646.14 22,010,122.57
Productive biological assets
Oil and gas assets
Intangible assets 7(17) 3,355,276,284.72 2,656,143,811.74
Development expenditures
Business reputation
Long-term deferred expenses 1,051,286.89 8,182,375.95
Deferred income tax assets 7(18) 9,667,717,152.15 8,764,376,136.27
Other non-current assets 7(19) 1,311,590,311.26 657,000,100.13
Total non-current assets 39,458,921,517.71 40,748,701,670.11
Total assets 182,369,705,049.35 161,698,016,315.06 Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Balance Sheet (Continued)
December 31, 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Liabilities and Owners" (or Shareholders") Equity Note Ending Balance Beginning Balance
Current liabilities:
Short-term borrowing 7(20) 10,701,081,645.32 6,276,660,136.03
Borrowings from the central bank 7(21) 4,274,000.00 8,000,000.00
Deposits from customers and interbank 7(22) 145,241,859.45 566,612,235.82
Loans from other banks
Financial liabilities measured at their fair values and of which the
changes are recorded into the current profits and losses
Derivative financial liabilities 7(23) 394,763,490.33 1,189,028,366.37
Bills payable 7(24) 9,127,336,849.68 7,427,635,753.74
Accounts payable 7(25) 29,541,466,861.10 24,794,268,372.47
Advances from customers 7(26) 10,021,885,515.93 7,619,598,042.86
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 7(27) 1,702,949,427.06 1,697,282,605.51
Taxes payable 7(28) 3,126,302,754.29 2,977,801,480.55
Interests payable 7(29) 41,781,977.25 48,386,709.75
Dividends payable 7(30) 87,732,811.56 707,913.60
Other payables 7(31) 2,222,613,974.82 2,607,601,936.21
Reinsurance accounts payable
Insurance contract reserves
Customer brokerage deposits
Securities underwriting brokerage deposits
Liabilities classified as held for sale
Non-current liabilities due within one year 7(32) 2,403,745,557.37
Other current liabilities 7(33) 59,758,848,571.94 55,007,851,867.48
Total current liabilities 126,876,279,738.73 112,625,180,977.76
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables
Long-term payroll payable 7(34) 117,732,064.00 127,518,492.00
Special payables
Accrued liabilities
Deferred income 7(35) 172,081,044.75 134,571,708.03
Deferred income tax liabilities 7(18) 280,009,411.36 244,136,559.35
Other non-current liabilities
Total non-current liabilities 569,822,520.11 506,226,759.38
Total liabilities 127,446,102,258.84 113,131,407,737.14
Owners" equity (or Shareholders" equity):
Paid-up capital (or stock capital) 7(36) 6,015,730,878.00 6,015,730,878.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves 7(37) 183,400,626.71 185,950,626.71
Less: Treasury stock
Other comprehensive income 7(38) -177,172,013.61 -124,928,526.03
Special reserves
Surplus reserve 7(39) 3,499,671,556.59 3,499,671,556.59
General risk provisions 7(40) 267,370,640.37 207,764,066.72
Undistributed profit 7(41) 44,074,949,590.07 37,737,187,489.78
Total owners" equity attributable to parent company 53,863,951,278.13 47,521,376,091.77
Minority equity 1,059,651,512.38 1,045,232,486.15
Total owners" equity 54,923,602,790.51 48,566,608,577.92
Total liabilities and owners" equity 182,369,705,049.35 161,698,016,315.06
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Balance Sheet of Parent Company
December 31, 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Assets Note Ending Balance Beginning Balance
Current assets:
Monetary capital 94,358,894,092.06 88,680,099,321.27
Financial assets measured at their fair values and of which the changes
are recorded into the current profits and losses
Derivative financial assets 250,848,418.63
Bills receivable 28,681,394,851.75 13,754,447,428.79
Accounts receivable 18 (1) 1,029,622,972.59 3,416,105,149.73
Prepayment 7,336,373,722.28 3,634,956,003.75
Interests receivable 1,289,154,900.73 1,477,241,737.32
Dividends receivable
Other receivables 18 (2) 848,175,367.89 574,622,000.79
Inventories 7,847,311,118.65 8,670,596,377.12
Assets classified as held for sale
Non-current assets due within one year
Other current assets 101,558,124.83 43,205,378.75
Total current assets 141,743,333,569.41 120,251,273,397.52
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term receivables
Long-term equity investment 18 (3) 7,713,333,058.50 6,854,879,074.54
Investment real estate 30,324,919.33 31,569,857.77
Fixed assets 3,482,273,291.47 3,986,232,943.74
Construction in Progress 92,157,312.16 45,748,249.58
Project goods and materials
Fixed assets in liquidation 28,267,150.92 8,704,526.44
Productive biological assets
Oil and gas assets
Intangible assets 526,591,622.40 223,794,602.31
Development expenditures
Business reputation
Long-term deferred expenses
Deferred income tax assets 9,063,947,017.39 8,077,471,456.41
Other non-current assets 243,648,986.71 363,632,959.20
Total non-current assets 21,180,543,358.88 19,592,033,669.99
Total assets 162,923,876,928.29 139,843,307,067.51 Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Balance Sheet of Parent Company (Continued)
December 31, 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Liabilities and Owners" (or Shareholders") Equity Note Ending Balance Beginning Balance
Current liabilities:
Short-term borrowing 7,136,785,600.00 2,675,363,200.00
Financial liabilities measured at their fair values and of which the
changes are recorded into the current profits and losses
Derivative financial liabilities 32,218,000.00 91,071,099.06
Bills payable 10,045,470,518.12 7,237,386,266.55
Accounts payable 41,793,337,033.46 40,616,067,475.26
Advances from customers 14,791,379,086.59 7,427,598,204.97
Payroll payable 733,818,959.96 875,567,613.73
Taxes payable 1,875,319,977.49 2,507,553,404.63
Interests payable 43,053,052.94 8,418,174.57
Dividends payable 602,881.87 602,881.87
Other payables 560,376,207.04 610,537,718.98
Liabilities classified as held for sale
Non-current liabilities due within one year 2,403,745,557.37
Other current liabilities 60,107,149,647.50 55,170,845,529.23
Total current liabilities 137,119,510,964.97 119,624,757,126.22
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables
Long-term payroll payable 117,732,064.00 127,518,492.00
Special payables
Accrued liabilities
Deferred income 130,349,609.28 113,796,827.32
Deferred income tax liabilities 232,395,962.90 221,586,260.60
Other non-current liabilities
Total non-current liabilities 480,477,636.18 462,901,579.92
Total liabilities 137,599,988,601.15 120,087,658,706.14
Owners" equity (or Shareholders" equity)
Paid-up capital (or stock capital) 6,015,730,878.00 6,015,730,878.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves 190,973,495.25 190,973,495.25
Less: Treasury stock
Other comprehensive income -18,336,753.00 -54,758,221.50
Special reserves
Surplus reserve 3,497,114,024.31 3,497,114,024.31
Undistributed profit 15,638,406,682.58 10,106,588,185.31
Total owners" equity (or shareholders" equity) 25,323,888,327.14 19,755,648,361.37
Total liabilities and owners" equity (or shareholders" equity) 162,923,876,928.29 139,843,307,067.51
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Income Statement
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Item Note Amount for the current Amount for the previous
period period
1. Total operating revenues 110,113,101,850.23 100,564,453,646.56
Including: Operating Revenue 7(42) 108,302,565,293.70 97,745,137,194.16
Interest revenue 7(43) 1,809,581,651.68 2,816,215,388.45
Earned premium
Fee and commission income 954,904.85 3,101,063.95
2. Total operating costs 91,529,379,824.61 86,134,609,086.80
Including: Operating Cost 7(42) 72,885,641,217.00 66,017,353,745.09
Interest expense 7(43) 93,317,462.31 652,352,307.92
Handling charges and commission expenses 333,542.60 399,791.57
Refunded premiums
Net payments for insurance claims
Net provision for insurance contracts
Expenditures dividend policy
Amortized reinsurance expenditures
Taxes and surcharges 7(44) 1,430,404,246.95 751,894,199.95
Sales expense 7(45) 16,477,265,963.04 15,506,341,694.21
Overhead Expense 7(46) 5,488,955,551.20 5,048,746,635.48
Financial expense 7(47) -4,845,546,598.04 -1,928,797,250.18
Asset impairment loss 7(48) -991,560.45 86,317,962.76
Add: Profits or losses on the changes in fair value (losses expressed with "-") 7(49) 1,093,332,134.65 -1,010,322,499.17
Income from investments (losses expressed with "-") 7(50) -2,221,356,324.55 96,654,919.95
Including: Investment incomes from joint venture and partnership 8,034,445.96 3,246,089.30
3. Operating profit (losses expressed with "-") 17,455,697,835.72 13,516,176,980.54
Add: Non-operating revenues 7(51) 1,096,234,774.23 1,404,291,659.85
Including: Gains from disposal of non-current assets 7(51) 2,838,642.05 1,039,883.33
Less: Non-operating expenses 7(52) 20,742,533.35 11,049,178.36
Including: Losses from disposal of non-current assets 7(52) 15,083,762.45 9,118,859.43
4. Total profit (total losses expressed with "-") 18,531,190,076.60 14,909,419,462.03
Less: Income tax expenses 7(53) 3,006,555,172.73 2,285,686,841.81
5. Net profit (net loss expressed with "-") 15,524,634,903.87 12,623,732,620.22
Net profit attributable to owners of parent company 15,420,964,990.94 12,532,442,817.66
Minority interest income 103,669,912.93 91,289,802.56
6. Net of tax of other comprehensive income -54,469,476.32 -139,722,316.44
Net of tax of other comprehensive income attributable to owners of parent -52,243,487.58 -142,675,233.57
company
(1) other comprehensive income not to be reclassified to profit orloss in -8,412,589.00 -17,952,049.00
subsequent periods
1. Changes due to remeasuring and redefining net liabilities or net assets of the -8,412,589.00 -17,952,049.00
benefit plan
2. Shares enjoyed in other comprehensive income not to be reclassified to profit or
loss in the invested entity under the equity method
(2) Other comprehensive income to be reclassified to profit or loss in subsequent -43,830,898.58 -124,723,184.57
periods
1. Shares enjoyed in other comprehensive income to be reclassified to profit or
loss in the invested entity under the equity method
2. Gains and losses from changes in fair value of financial assets available for sale -67,430,700.38 -230,765,894.39
3. Gains and losses from held-to-maturity investments reclassified as financial
assets available for sale
4. Effective part of cash flow hedging gains and losses 44,834,057.50 5,565,251.27
5. Difference arising from translation of financial statements in foreign currency -21,234,255.70 100,477,458.55
6. Others
Net of tax of other comprehensive income attributable to minority shareholders -2,225,988.74 2,952,917.13
7. Total comprehensive income 15,470,165,427.55 12,484,010,303.78
Total comprehensive income attributable to owners of parent company 15,368,721,503.36 12,389,767,584.09
Total comprehensive income attributable to minority shareholders 101,443,924.19 94,242,719.69
8. Earnings per share:
(1) Basic earnings per share 19(2) 2.56 2.08
(2) Diluted earningsper share 19(2) 2.56 2.08
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Income Statement of Parent Company For the Year 2016Prepared by: GREE ELECTRICAPPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Item Note Amount for the current Amount for the previous
period period
1. Operating revenues 18(4) 100,196,022,986.24 93,603,741,139.75
Less: Operating Cost 18(4) 74,157,492,256.23 72,014,671,656.89
Taxes and surcharges 775,947,515.17 432,775,315.43
Sales expense 15,982,757,141.77 16,128,392,011.95
Overhead Expense 2,018,741,946.11 2,132,369,143.60
Financial expense -5,474,190,948.12 -3,317,674,713.24
Asset impairment loss 99,779.73 -3,691,215.17
Add: Profits or losses on the changes in fair value (losses expressed with "-") 316,201,517.69 -175,248,617.29
Income from investments (losses expressed with "-") 18(5) 3,133,375,724.41 171,438,245.76
Including: Investment incomes from joint venture and partnership 8,034,445.96 3,246,089.30
2. Operating profit (losses expressed with "-") 16,184,752,537.45 6,213,088,568.76
Add: Non-operating revenues 96,856,023.21 136,619,359.37
Including: Gains from disposal of non-current assets 496,921.55 85,349.79
Less: Non-operating expenses 681,502.47 399,008.88
Including: Losses from disposal of non-current assets 150,495.17 370,704.12
3. Total profit (total losses expressed with "-") 16,280,927,058.19 6,349,308,919.25
Less: Income tax expenses 1,725,512,243.92 933,478,997.61
4. Net profit (net loss expressed with "-") 14,555,414,814.27 5,415,829,921.64
5. Net of tax of other comprehensive income 36,421,468.50 -12,386,797.73
(1) other comprehensive income not to be reclassified to profit or loss in -8,412,589.00 -17,952,049.00
subsequent periods
1. Changes due to remeasuring and redefining net liabilities or net assets of the -8,412,589.00 -17,952,049.00
benefit plan
2. Shares enjoyed in other comprehensive income not to be reclassified to profit
or loss in the invested entity under the equity method
(2) Other comprehensive income to be reclassified to profit or loss in subsequent 44,834,057.50 5,565,251.27
periods
1. Shares enjoyed in other comprehensive income to be reclassified to profit or
loss in the invested entity under the equity method
2. Gains and losses from changes in fair value of financial assets available for
sale
3. Gains and losses from held-to-maturity investments reclassified as financial
assets available for sale
4. Effective part of cash flow hedging gains and losses 44,834,057.50 5,565,251.27
5. Difference arising from translation of financial statements in foreign currency
6. Others
6. Total comprehensive income 14,591,836,282.77 5,403,443,123.91
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Cash Flow Statement
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Item Note Amount for the current Amount for the previous
period period
1. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 69,896,621,293.21 110,918,320,884.07
Net increase in deposits and due from banks -421,370,376.37 -239,900,888.66
Net increase in borrowings from central bank -3,726,000.00 -9,457,000.00
Net increase in placements from other financial institutions
Cash received from original insurance contracts
Net increase received from reinsurance business
Net increase in deposits from the insured and investment
Net increase fordisposal of financial assets measured at their fair values and of
which the changes are recorded into the current profits and losses
Cash received from interests, fees and commissions 1,965,747,102.22 2,793,577,944.23
Net increase in placements from other financial institutions
Net increase in repurchase business capital -586,000,000.00
Refund of tax and levies 1,139,337,699.60 1,237,326,987.91
Other cash received relating to operating activities 7(54) 2,938,826,213.65 4,682,640,196.09
Sub-total of cash inflows from operating activities 75,515,435,932.31 118,796,508,123.64
Cash payments for goods acquired and services received 40,478,783,811.27 42,541,255,260.22
Net increase in loans and advances to customers -4,216,183,377.63 2,465,300,268.21
Net increase in deposits with central bank and other financial institutions -1,064,180,189.98 -1,050,510,263.03
Cash paid for indemnity of original insurance contract
Cash paid for interests, fees and commissions 94,593,790.43 662,494,322.97
Cash paid for policy dividends
Cash paid to and on behalf of employees 5,657,046,182.44 5,590,514,442.03
Payments of all types of taxes 11,333,898,757.72 13,773,887,181.66
Other cash paid relating to operating activities 7(54) 8,371,524,851.14 10,435,185,083.90
Sub-total of cash outflows from operating activities 60,655,483,825.39 74,418,126,295.96
Net cash flows from operating activities 14,859,952,106.92 44,378,381,827.68
2. Cash flows from investing activities:
Cash received from recovery of investments 3,142,289,553.35 950,000,000.00
Cash received from return of investments 264,728,491.86 84,643,291.79
Net cash received from disposal of fixed assets, intangible assets and other long- 27,196,374.80 1,228,803.43
term assets
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities 7(54) 6,500,000.00 143,435,881.62
Sub-total of cash inflows from investingactivities 3,440,714,420.01 1,179,307,976.84
Cash paid for purchase and construction of fixed assets, intangible assets and other. 3,276,936,026.68 2,884,513,074.71
long-term assets
Cash paid for investments 1,496,403,698.86 2,832,663,335.62
Net increase in pledge loans
Net cash paid for acquisition of subsidiaries and other business units
Other cash paid relating to investing activities 7(54) 17,913,927,388.57 175,286,430.99
Sub-total of cash outflows from investing activities 22,687,267,114.11 5,892,462,841.32
Net Cash Flow from Investment Activities -19,246,552,694.10 -4,713,154,864.48
3. Cash flows from financing activities:
Cash received from absorbing investment
Including: Cash received from minority shareholder investment by subsidiary
Cash received from borrowings 12,382,413,204.61 10,096,926,967.84
Cash received from bond issue
Other cash received relating to financing activities 7(54) 2,110,522,945.98 1,257,485,012.71
Sub-total of cash inflows from financing activities 14,492,936,150.59 11,354,411,980.55
Cash repayments of amounts borrowed 11,054,156,840.31 9,512,423,538.15
Cash paid for dividend and profit distribution or interest payment 9,180,067,571.71 9,525,010,447.46
Including: Dividends and profits paid to minority shareholders by subsidiaries
Other cash paid relating to financing activities 10,271,924.02
Sub-total of cash outflows from financing activities 20,244,496,336.04 19,037,433,985.61
Net Cash Flow from Financing Activities -5,751,560,185.45 -7,683,022,005.06
4. Effect of foreign exchange rate changes on cash and cash equivalents 4,094,503,950.24 1,876,340,773.99
5. Net increase in cash and cash equivalents -6,043,656,822.39 33,858,545,732.13
Add: Beginning balance of cash and cash equivalents 77,365,016,845.22 43,506,471,113.09
6. Ending balance of cash and cash equivalents 71,321,360,022.83 77,365,016,845.22 Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Cash Flow Statements of Parent Company
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Item Note Amount for the current Amount for the previous
period period
1. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 73,772,247,201.55 100,825,366,279.54
Refund of tax and levies 892,479,335.10 1,159,795,819.86
Othercash received relating to operating activities 2,776,455,975.16 3,402,282,409.75
Sub-total of cash inflows from operating activities 77,441,182,511.81 105,387,444,509.15
Cash payments for goods acquired and services received 47,666,643,016.88 48,637,706,510.04
Cash paid to and on behalf of employees 2,461,753,957.31 2,254,402,964.71
Payments of all types of taxes 7,790,647,525.17 9,328,346,895.14
Other cash paid relating to operating activities 7,822,012,647.53 8,274,660,258.70
Sub-total of cash outflows from operating activities 65,741,057,146.89 68,495,116,628.59
Net cash flows from operating activities 11,700,125,364.92 36,892,327,880.56
2. Cash flows from investing activities:
Cash received from recoveryof investments
Cash received from return of investments 28,941,374.91
Net cash received from disposal of fixed assets, intangible assets and other 2,817,038.00 154,720.00
long-term assets
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities 6,500,000.00 143,435,881.62
Sub-total of cash inflows from investing activities 9,317,038.00 172,531,976.53
Cash paid for purchase and construction of fixed assets, intangible assets 487,437,576.81 1,005,797,949.58
and other. long-term assets
Cash paid for investments 850,419,538.00 220,000,000.00
Net cash paid for acquisition of subsidiaries and other business units
Other cash paid relating to investing activities 24,401,261,166.04
Sub-total of cash outflows from investing activities 25,739,118,280.85 1,225,797,949.58
Net Cash Flow from Investment Activities -25,729,801,242.85 -1,053,265,973.05
3. Cash flows from financing activities:
Cash received from absorbing investment
Cash received from borrowings 8,351,424,680.00 8,361,061,000.00
Other cash received relating to financing activities 2,110,522,945.98 1,257,485,012.71
Sub-total of cash inflows from financing activities 10,461,947,625.98 9,618,546,012.71
Cash repayments of amounts borrowed 6,765,973,061.39 7,098,162,324.08
Cash paid for dividend and profit distribution or interest payment 9,108,489,378.90 9,444,887,252.27
Other cash paid relating to financing activities 10,271,924.02
Sub-total of cash outflows from financing activities 15,884,734,364.31 16,543,049,576.35
Net Cash Flow from Financing Activities -5,422,786,738.33 -6,924,503,563.64
4. Effect of foreign exchange rate changes on cash and cash equivalents 4,034,988,007.34 1,733,758,931.75
5. Net increase in cash and cash equivalents -15,417,474,608.92 30,648,317,275.62
Add: Beginning balance of cash and cash equivalents 81,020,140,360.98 50,371,823,085.36
6. Ending balance of cash and cash equivalents 65,602,665,752.06 81,020,140,360.98 Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Statement of Changes In Owners" Equity
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Amount for the current period
Shareholders" equity attributable to the parent company
Item Paidup capital Other equity instruments Less: Other Special General risk Minority equity Total owners" equity
-
(or stock capital) Preferred Perpetual Others Capital reserves Treasury comprehensive reserves Surplus reserve provisions Undistributed profit
stock bond stock income
1. Ending balance for 6,015,730,878.00 185,950,626.71 -124,928,526.03 207,764,066.72 37,737,187,489.78 1,045,232,486.15 48,566,608,577.92
the previous year 3,499,671,556.59
Add: Changes in
accounting policies
Early error correction
Business combination
involving enterprises
under common control
Others
2. Beginning balance 6,015,730,878.00 185,950,626.71 -124,928,526.03 207,764,066.72 37,737,187,489.78 48,566,608,577.92
for the current year 3,499,671,556.59 1,045,232,486.15
3. Increase or
decrease in the
current year -2,550,000.00 -52,243,487.58 59,606,573.65 6,337,762,100.29 14,419,026.23 6,356,994,212.59
(decrease expressed
with 「」)
-
(1) Total -52,243,487.58 15,420,964,990.94 101,443,924.19 15,470,165,427.55
comprehensive income
(2) Capital invested by
owners and capital
decrease
1. Ordinary stocks
invested by
shareholders
2. Capital invested by
holders of other equity
instruments
3. Amounts of share-
based payments
recognized into
owner"s equity
4. Others
(3) Profit distribution 59,606,573.65 -9,083,202,890.65 -87,024,897.96 -9,110,621,214.96
1. Appropriation to
surplus reserves
2. Appropriation of 59,606,573.65 -59,606,573.65
general risk provisions
3. Allocation to owners -9,023,596,317.00 -87,024,897.96 -9,110,621,214.96
(or shareholders)
4. Others
(4) Internal carry-over
of owner"s equity
1. Transfer of capital
reserves into capital
(or stock capital)
2. Transfer of surplus
reserves into capital
(or stock capital)
3. Surplus reserves for
making up losses
4. Others
(5) Appropriative
reserve
1. Amount withdrawn
for the period
2. Amount used for the
period
(6) Others -2,550,000.00 -2,550,000.00
4. Ending balance for 6,015,730,878.00 183,400,626.71 -177,172,013.61 3,499,671,556.59 267,370,640.37 44,074,949,590.07 1,059,651,512.38 54,923,602,790.51
the current period
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Statement of Changes In Owners" Equity
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Amount for the current period
Shareholders" equity attributable to the parent company
Item Paidup capital Other equity instruments Less: Other Special General risk Minority equity Total owners"
- equity
(or stock capital) Preferred Perpetual Others Capital reserves Treasury comprehensive reserves Surplus reserve provisions Undistributed profit
stock bond stock income
1. Ending balance for 3,007,865,439.00 3,191,266,065.71 17,746,707.54 2,958,088,564.43 136,364,066.72 34,841,323,981.28 978,796,185.5045,131,451,010.18
the previous year
Add: Changes in
accounting policies
Early error correction
Business combination
involving enterprises
under common control
Others
2. Beginning balance 3,007,865,439.00 3,191,266,065.71 17,746,707.54 2,958,088,564.43 136,364,066.72 34,841,323,981.28 978,796,185.5045,131,451,010.18
for the current year
3. Increase or
decrease in the
current year 3,007,865,439.00 -3,005,315,439.00 -142,675,233.57 541,582,992.16 71,400,000.00 2,895,863,508.50 66,436,300.65 3,435,157,567.74
(decrease expressed
with 「」)
-
(1) Total
comprehensive -142,675,233.57 12,532,442,817.66 94,242,719.6912,484,010,303.78
income
(2) Capital invested by
owners and capital
decrease
1. Ordinary stocks
invested by
shareholders
2. Capital invested by
holders of other equity
instruments
3. Amounts of share-
based payments
recognized into
owner"s equity
4. Others
(3) Profit distribution 541,582,992.16 71,400,000.00 -9,636,579,309.16 -27,806,419.04 -9,051,402,736.04
1. Appropriation to 541,582,992.16 -541,582,992.16
surplus reserves
2. Appropriation of 71,400,000.00 -71,400,000.00
general risk provisions
3. Allocation to owners 9,023,596,317.00 27,806,419.04 9,051,402,736.04
- - -
(or shareholders)
4. Others
(4) Internal carry-over 3,007,865,439.00 -3,007,865,439.00
of owner"s equity
1. Transfer of capital
reserves into capital 3,007,865,439.00 -3,007,865,439.00
(or stock capital)
2. Transfer of surplus
reserves into capital
(or stock capital)
3. Surplus reserves for
making up losses
4. Others
(5) Appropriative
reserve
1. Amount withdrawn
for the period
2. Amount used for the
period
(6) Others 2,550,000.00 2,550,000.00
4. Ending balance for 6,015,730,878.00 185,950,626.71 -124,928,526.03 3,499,671,556.59 207,764,066.72 37,737,187,489.781,045,232,486.1548,566,608,577.92
the current period
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Statement of Changes In Owners" Equity of Parent Company
For the Year 2016
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Amount for the current period
Other equity instruments Less: Other
Item Paid-up capital Capital reservesTreasury omprehensive Special Surplus reserve General risk Undistributed profit Total owners" equity
(or stock capital) Preferred Perpetual c reserves provisions
stock bond Others stock income
1. Ending balance for the previous year 6,015,730,878.00 190,973,495.25 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37
Add: Changes in accounting policies
Early error correction
Others
2. Beginning balance for the current 6,015,730,878.00 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37
year 190,973,495.25
3. Increase or decrease in the current 36,421,468.50 5,531,818,497.27 5,568,239,965.77
year (decrease expressed with 「」)
-
(1) Total comprehensive income 36,421,468.50 14,555,414,814.27 14,591,836,282.77
(2) Capital invested by owners and capital
decrease
1. Ordinary stocks invested by
shareholders
2. Capital invested by holders of other
equity instruments
3. Amounts of share-based payments
recognized into owner"s equity
4. Others
(3) Profit distribution -9,023,596,317.00 -9,023,596,317.00
1. Appropriation to surplus reserves
2. Allocation to owners (or shareholders) -9,023,596,317.00 -9,023,596,317.00
3. Others
(4) Internal carry-over of owner"s equity
1. Transfer of capital reserves into capital
(or stock capital)
2. Transfer of surplus reserves into capital
(or stock capital)
3. Surplus reserves for making up losses
4. Others
(5) Appropriative reserve
1. Amount withdrawn for the period
2. Amount used for the period
(6) Others
4. Ending balance for the current period 6,015,730,878.00 190,973,495.25 -18,336,753.00 3,497,114,024.31 15,638,406,682.58 25,323,888,327.14
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Statement of Changes In Owners" Equity of Parent Company
For the Year 2016Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Amount for the previous period
Other equity instruments Less: Other
Item Paid-up capital (or Capital reserves Treasury comprehensive Special Surplus reserve General risk Undistributed profit Total owners" equity
stock capital) Preferred Perpetual Others stock income reserves provisions
stock bond
1. Ending balance for the previous 3,007,865,439.00 3,198,838,934.25 -42,371,423.77 2,955,531,032.15 14,255,937,572.83 23,375,801,554.46
year
Add: Changes in accounting policies
Early error correction
Others
2. Beginning balance for the current 3,007,865,439.00 3,198,838,934.25 -42,371,423.77 2,955,531,032.15 14,255,937,572.83 23,375,801,554.46
year
3. Increase or decrease in the current 3,007,865,439.00 - 12,386,797.73 541,582,992.16 4,149,349,387.52 3,620,153,193.09
- - -
year (decrease expressed with 「」) 3,007,865,439.00
-
(1) Total comprehensive income -12,386,797.73 5,415,829,921.64 5,403,443,123.91
(2) Capital invested by owners and
capital decrease
1. Ordinary stocks invested by
shareholders
2. Capital invested by holders of other
equity instruments
3. Amounts of share-based payments
recognized into shareholders" equity
4. Others
(3) Profit distribution 541,582,992.16 -9,565,179,309.16 -9,023,596,317.00
1. Appropriation to surplus reserves 541,582,992.16 -541,582,992.16
2. Allocation to owners (or shareholders) -9,023,596,317.00 -9,023,596,317.00
3. Others
-
(4) Internal carry-over of owner"s equity 3,007,865,439.00 3,007,865,439.00
1. Transfer of capital reserves into 3,007,865,439.00 -
capital (or stock capital) 3,007,865,439.00
2.Transfer of surplus reserves into
capital (or stock capital)
3. Surplus reserves for making up
losses
4. Others
(5) Appropriative reserve
1. Amount withdrawn for the period
2. Amount used for the period
(6) Others
4. Ending balance for the current 6,015,730,878.00 190,973,495.25 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37
period
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Notes to Financial Statements for the Year 2016 I. Basic information of the Company
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "the Company" or "Company") was formerly known as Haili Air-conditioning Engineering Co., Ltd. of Zhuhai which was established in 1989 upon approval of Zhuhai Municipal Industrial Committee and the people"s Bank of China Zhuhai Branch and was renamed GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "the Company" or "Company") in 1994 upon approval of Zhuhai City Commission for Economic Restructuring, and the Company was listed on Shenzhen Stock Exchange dated 18 November 1996 upon receipt of the approval document Zheng Jian Fa Zi (1996) No. 321 from China Securities Regulatory Commission, and it has obtained the unified social credit identifier No. 91440400192548256N and has the registered capital of RMB 6,015,730,878.00 as of December 31, 2016.
Legal representative: Dong Mingzhu
Business scope: export and import of goods and technologies (excluding items forbidden by laws and administrative regulations. Items restricted by laws and administrative regulations shall be conducted with special license); manufacturing and distribution of pumps, valves, compressors and similar machines, fan motors, packaging equipment and other general-purpose equipment, motors, equipment for power transmission and distribution and control equipment, electric wires and cables, optical cables and electrical equipment, and household electrical appliances; wholesale of mechanical equipment, hardware and electrical equipment and electronic products; retail of household electrical appliances and electronic products.
Main products of the Company: The Company is engaged in household electrical appliances business mainly including production and sales of air conditioners and their accessories, and household appliances and their accessories.
Company address: Jinji West Road, Qianshan, Zhuhai City, Guangdong Province The parent company of the Company is Zhuhai Gree Group Co., Ltd. and the final controller is Zhuhai Municipal State-owned Assets Supervision and Administration Commission.
This financial report was submitted under approval of the Board of Directors of the Company as of April 26, 2017.
II. Coverage of the consolidated statements
The Company incorporated over 50 subsidiaries such as Gree Electric Appliances (Chongqing) Co., Ltd. and Gree Electric Appliances (Hefei) Co., Ltd. in the coverage of the financial statements consolidated in the current period. For details, see 「Note 8 Change to the Consolidation Scope」 and 「Note 9 Equity in Other Subjects」.
III. Preparation basis of the financial statements
1. Preparation basis of the financial statements
The financial statements of the Company have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises – Basic Standards (issued by Decree No.33 of the Ministry of Finance and revised by Decree No. 76 of the Ministry of Finance) issued by the Ministry of Finance on 15 February, 2006 and 41 Specific Accounting Standards, application guidelines, explanations and other relevant regulations of the accounting standards subsequently promulgated (collectively referred to as the 「Accounting Standards for Business Enterprises」), and the disclosure requirements in accordance with the Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 1 5 - General Provisions on Financial Reports (2014 Revision) issued by China Securities Regulatory Commission.
2. Going concern
This financial statement was presented on a going concern basis. The management carefully evaluated factors of the Company in the future 12 months commencing from December 31, 2016 such as the macropolicy risk, market operation risk, current and long-term profitability and solvency of the enterprise, financial flexibility, and the management’s intention of changing the operations policy, and held that there was no event that can generate significant influence on the Company’s ability to continue as a going concern.
IV. Statements regarding observance of the Accounting Standards for Business Enterprises
The financial statements prepared by the Company conform to the requirements of the Accounting Standards for Business Enterprises and give a true and complete view of the financial position of the Company on December 31, 2016, and the related information such as operating results and cash flows in the year 2016. Besides, the financial statements prepared by the Company, in all the major aspects, also conform to the disclosure requirements of financial statements and their notes in the Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports revised by the China Securities Regulatory Commission in 2014.
V. Significant accounting policies and estimates and previous errors
Specific accounting policies and accounting estimate suggestions:
The Company and each subsidiary are engaged in production and sales of air conditioners and their accessories, and household appliances and their accessories. The Company and each subsidiary have prepared several specific accounting policies and accounting estimates for transactions and events such as revenue recognition based on the actual production management characteristics and in accordance with provisions of the related Accounting Standards for Business Enterprises. For details, see the detailed description in Note 5 herein. For the description about major accounting judgments and estimates made by the management, please see Note 5 (29) 「Major accounting estimates」 .
(1) Accounting period
Accounting period of the Company includes one year and interim periods. An interim period covers six-month, a quarter and a month. The accounting year of the Company commences on 1 January and ends on 31 December of each year. (2) Operating cycle
The normal operating cycle refers to the period from the Company’s purchase of assets used for processing to achieving of cash or cash equivalent. The Company regards 12 months as one operating cycle and uses it as the liquidity classification standard for assets and liabilities.
(3) Functional currency
RMB is the functional currency used by the Company.
(4) Accounting treatment of business combination involving enterprises under common control and business combination not involving enterprises under common control
Business combination refers to the transaction or event of combining two or more independent enterprises to form a reporting entity. Business combination is classified into business combination involving enterprises under common control and business combination not involving enterprises under common control.
1. Business combination involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For business combination involving enterprises under common control, the party that obtains the right to control other enterprises participating in the combination on the combination date is the combining party, and other enterprises participating in the combination are the combined party. The combination date refers to the date on which the combining party actually obtains the right to control the combined party.
Where business combination involving enterprises under common control arises from one transaction or equities of invested entities under common control are obtained step by step through multiple transactions and these transactions belong to a package deal, the Company will recognize the cost of combination according to the share of carrying amount of net assets obtained for the combined party in the ultimate controlling party’s consolidated financial statements on the combination date. The difference between the carrying amount of the consideration paid for the combination (or total par value of the issued stocks) and the combination cost is adjusted to capital reserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
Costs incurred that are attributable to the business combination made by the Company, including intermediary costs such as the audit fee, legal service charge and appraisal and consultation costs, and other related overhead expenses are charged to profits or losses in the period in which they are incurred; the transaction expenses directly attributable to the consideration paid for the combination through issuance of equity instruments are credited against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained earnings; the transaction expenses directly attributable to the consideration paid for the combination through issuance of debt instruments are recorded into the initially recognized amount of debt instruments. Where the equities of invested entities under common control are obtained step by step through multiple transactions to achieve business combination but these transactions do not belong to a package deal, the Company will recognize the cost of combination according to the share of carrying amount of net assets to be enjoyed by the combined party after the combination in the ultimate controlling party’s consolidated financial statements on the combination date. The difference between the combination cost and the sum of the carrying amount of long-term equity investments prior to the combination plus the carrying amount of the consideration newly paid for further acquisition of shares on the date of combination is adjusted to capital reserve (capital premium or capital stock premium); if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. For the equity investment held before the date of combination, accounting treatment is not performed temporarily for other comprehensive incomes that are accounted using the equity method or recognized using financial instruments and accounted according to the measurement standard for recognition. When this investment is disposed of, accounting treatment is conducted using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities. For other changes in owners』 equities other than the net profits/losses, other comprehensive income and profit distribution in net assets of the invested entity that are recognized because of accounting using the equity method, accounting treatment is not conducted temporarily; they shall be transferred to the profits and losses of the current period at the time of disposing of this investment.
2. Business combination not involving enterprises under common control
A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties both before and after the combination. For business combination not involving enterprises under common control, the party that obtains the right to control other enterprises participating in the combination on the date of combination is the acquiring party, and other enterprises participating in the combination are the acquired party. The date of acquisition refers to the date on which the acquiring party actually obtains the right to control the acquired party. For the business combination implemented through one transaction, the cost of business combination refers to the fair value of assets paid, liabilities incurred or assumed and equity securities issued by the Company on the date of acquisition for obtaining the right to control the acquired party. On the date of acquisition, the assets, liabilities and contingent liabilities obtained by the Company from the acquired party are recognized at the fair value.
For a business combination realized by two or more transactions of exchange, the accounting treatment for the combination costs shall be made by distinguishing individual financial statements and consolidated financial statements:
In the individual financial statements, where the held stocks are accounted using the equity method prior to the date of acquisition, the cost of combination of the investment is the aggregate of the carrying amount of the equity investment of the acquired party held before the date of acquisition and the investment cost newly increased on the date of acquisition. For other related comprehensive income, accounting treatment is performed during disposal of the investment using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities; the owner"s equity that is recognized due to other changes in owners』 equities other than the net profits/losses, other comprehensive income and profit distribution of the invested entity is accordingly transferred to the profits and losses of the current period at the time of disposing of this investment. Where the equity investment held before the date of acquisition is recognized using financial instruments and undergoes accounting treatment according to the measurement standard, the cost of combination of the investment is the aggregate of the fair value of the equity investment recognized according to this standard and the newly increased investment cost. The difference between the fair value of the originally held stocks and the carrying amount and all the cumulative fair value changes originally recorded into other comprehensive income are transferred to the investment income of the current period.
In the consolidated financial statements, the stocks of the acquired party held before the date of acquisition shall be remeasured based on the fair value of such stocks on the date of acquisition, and the difference between their fair value and carrying amount shall be charged to the investment income of the current period; where the stocks of the acquired party held before the date of acquisition involve other comprehensive income under accounting of the equity method and other changes in owners』 equities other than the net profits/losses, other comprehensive income and profit distribution, other comprehensive income and other changes in owners』 equities concerned with them shall be transferred to the investment income in the period in which the date of acquisition is included (excluding other comprehensive income arising from changes in the net assets or net liabilities of the benefit plan remeasured and redefined by the invested entity). The summation of the fair value of the stocks of the acquired party held before the date of acquisition on the date of acquisition and newly increased investment costs on the date of acquisition shall be the combination cost of the investment.
Costs incurred that are attributable to the business combination made by the Company, including intermediary costs such as the audit fee, legal service charge, and appraisal and consultation costs, and other related overhead expenses are charged to profits or losses in the period in which they are incurred. The transaction expenses directly attributable to the consideration paid for the combination through issuance of equity instruments are credited against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained earnings; the transaction expenses directly attributable to the consideration paid for the combination through issuance of debt instruments are recorded into the initially recognized amount of debt instruments.
In the Company, the positive balance between the business combination cost and the fair value of the identifiable net assets obtained by the Company from the acquired party shall be recognized as business reputation and subsequently measured after the accumulated provision for impairment is deducted from the cost; the negative balance between the business combination cost and the fair value of the identifiable net assets obtained by the Company from the acquired party shall be charged to profits or losses of the current period after being checked. 3. Principle of judging whether multiple transactions are 「a package deal」
When the terms and conditions of multiple transactions and the economic impact thereof accord with one or more of the following cases, usually it indicates that these transactions shall undergo accounting treatment as 「a package deal」: (1) these transactions are concluded at the same time or concluded in consideration of mutual influence; (2) only the whole of these transactions can achieve a complete business result; (3) occurrence of one transaction depends on occurrence of at least one of the other transactions; (4) one transaction is not economical when considered separately, but economical when taken into account together with other transactions.
(5) Preparation of consolidated financial statements
1. Principle of determining the scope of consolidated financial statements
The consolidation scope of consolidated financial statements shall be determined on the basis of control. Control means that the Company owns the power to the invested entity, enjoys variable return by participating relevant activities of the invested entity, and has the capacity of using the power to the invested entity to affect its return amount.
2. Preparation of consolidated financial statements
The consolidated financial statements of the Company are prepared by the Company based on individual financial statements of the Company and subsidiaries and according to other relevant data. During preparation of consolidated financial statements, the accounting policy and accounting period of the Company shall be consistent with those of subsidiaries, and the inter-company major transactions and balances shall be offset.
For the subsidiary added due to business combination involving enterprises under common control in the Report Period, the Company adjusts the amount at the beginning of the period in the consolidated balance sheet, incorporates the revenue, expense and profit of this subsidiary from the beginning of the period for consolidation to the end of the report period into the consolidated profit statement, includes its cash flow into the consolidated cash flow statement, and adjusts relevant items in the comparative statements; for the subsidiary added due to business combination not involving enterprises under common control, the Company does not adjust the amount at the beginning of the period in the consolidated balance sheet, but only incorporates the revenue, expense and profit of this subsidiary from the date of acquisition to the end of report period into the consolidated profit statement and its cash flow into the consolidated cash flow statement.
The portion of shareholders" equity of the subsidiaries that isn’t attributable to the Company shall be separately presented as the minority shareholders" equity under the shareholders" equity in the consolidated balance sheet. The share of net profits or losses of the subsidiaries in the current period that is attributable to the minority shareholders" equity shall be presented as the item of 「Minority interest income」 under the net profit in the consolidated profit statement. The share of comprehensive income of the subsidiaries in the current period that is attributable to the minority shareholders" equity shall be presented as the item of 「Total comprehensive income attributable to minority shareholders」 under the total comprehensive income in the consolidated profit statement. Where the losses of a subsidiary undertaken by minority shareholders exceed the share enjoyed by minority shareholders in the owners』 equities of this subsidiary at the beginning of the period, the balance shall be still adjusted against the minority shareholders" equity.
For acquisition of the subsidiary’s stocks owned by minority shareholders thereof, in the consolidated financial statements, the difference between the long-term equity investment newly obtained because of acquisition of minority shareholders』 stocks and the share of net assets of the subsidiary to be enjoyed and continuously calculated according to the proportion of newly added shares from the acquisition date or consolidation date is adjusted to capital reserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
For the transaction for which a part of equity investment is disposed of but the right to control this subsidiary is not lost, in the consolidated financial statements, the difference between the disposal price and the share of net assets of the subsidiary to be enjoyed accordingly for disposal of the long-term equity investment and continuously calculated from the acquisition date or consolidation date is adjusted to capital reserve (capital premium or capital stock premium); if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
Where the right to control the original subsidiary is lost due to disposal of a part of equity investment or other reasons, the remaining stocks shall be remeasured at their fair value on the date of losing the control right; the result of the sum of the consideration obtained from the equity disposal plus the fair value of remaining stocks, minus the share of net assets of the original subsidiary that should be enjoyed and is continuously calculated according to the original proportion of held shares from the acquisition date, shall be charged to the investment income in the period when the control right is lost, and adjusted against the business reputation at the same time; other comprehensive income related to the original subsidiary’s equity investment shall be transferred to the investment income of the current period when the control right is lost.
Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till the control right is lost and all the transactions belong to a package deal, accounting treatment shall be performed for the transactions by deeming all the transactions as one item for disposing of the subsidiary and losing the control right; however, prior to loss of the control right, the difference between every disposal price and the share of net assets of this subsidiary to be enjoyed accordingly for investment disposal shall be recognized as other comprehensive income in the consolidated financial statements and, at the time of losing the control right, be jointly transferred to the profits or losses in the period when the control right is lost.
Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till the control right is lost and the transactions do not belong to a package deal, all the transactions before loss of the right to control the subsidiary shall be handled according to the regulations of the Company on partial disposal of the subsidiary’s long term equity investment provided that the -Company does not lose the right to control the subsidiary.
This report period does not involve buying-in and selling-out of the same subsidiary’s stocks, or selling out and buying in in turn. - -
(6) Joint arrangement classification and accounting treatment of co-management
Joint arrangement refers to the arrangement for joint control by two or more participants.
1. Joint arrangement classification
Joint arrangement is classified into co-management and contractual enterprise. Co-management refers to the joint arrangement where the parties to the venture enjoy relevant assets of this arrangement and assume relevant liabilities of this arrangement. Contractual enterprise refers to the joint arrangement where the parties to the venture only enjoy rights to net assets of this arrangement.
2. Accounting treatment of co-management
(1) The Company recognizes the following items related to quantum of interest in co-management and performs accounting treatment in accordance with provisions of the corresponding Accounting Standards for Business Enterprises:
① Independently held assets, as well as the jointly held assets to be recognized according to the share of the Company;
② Independently undertaken liabilities, as well as the jointly undertaken liabilities to be recognized according to the share of the Company;
③ Revenue generated by selling the output share of co-management that is enjoyed by the Company;
④ Revenue that is generated by selling the output during co-management and recognized according to the share of the Company;
⑤ Independently incurred expense, as well as the expense incurred by co-management and recognized according to the share of the Company.
(2) Where the Company puts assets into or sells assets to the parties to co-management (except that the assets constitute business), before the said assets are sold to a third party by the parties to co-management, the Company recognizes only the part in the profits or losses arising from this transaction that is attributable to other participants in the co-management. In case that the put or sold assets involve the asset impairment loss complying with provisions in the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the Company shall recognize the said loss in full.
(3) Where the Company purchases assets from the parties to co-management (except that the assets constitute business), before said assets are sold to a third party, the Company recognizes only the part in the profits or losses arising from this transaction that is attributable to other participants in the co-management. In case that the purchased assets involve the asset impairment loss complying with provisions in the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the Company shall recognize this part of loss according to the share to undertake.
(7) Accounting measurement attribute
1. Measurement attribute
The Company takes the accrual system as the basis of accounting and measures the initial value using historical cost. The financial assets and liabilities measured at their fair value and of which the variation is recorded into the profits and losses of the current period and the financial assets available for sale and derivative instruments shall be measured at their fair value; The inventories and fixed assets for which the payment is delayed in excess of normal credit terms while they are purchased shall be measured at their present value of their purchase price; The inventories on which an impairment loss occurs shall be measured at their net realizable value, and other assets on which an impairment loss occurs shall be measured at their recoverable amount of their fair value and present value (whichever is higher); The asset inventory surplus and other assets shall be measured at their replacement cost.
2. Items in the financial statements with their measurement attribute changing during the period
There was no change in the accounting measurement attribute of the items in the financial statements during the Report Period.
(8) Criteria for cash and cash equivalents
The cash refers to the enterprise"s money on hand and deposits for payment at any time. Cash equivalents refer to investments held by the enterprise which are short in term (generally referring to those expiring within not more than 3 months from the date of acquisition), high in liquidity, convertible to the known amount of cash and insignificant in risk of change of value.
(9) Foreign currency transactions
1. Method of translation for foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in the foreign currency shall be translated into the amount in RMB currency at the spot exchange rate of the transaction date (generally referring to the medial rate of foreign exchange quotation published by the People"s Bank of China at the date of transaction, the same below).
2. Treatment of monetary items of foreign currencies and non-monetary items of foreign currencies on the balance sheet date
For the monetary items of foreign currencies, the translation is done according to spot rate of the balance sheet date. The exchange difference generated from the difference of spot rate of the current balance sheet date and the time of initial recognition of a foreign currency or the previous balance sheet date is charged to the profit or loss of the current period except that the exchange difference generated from foreign currency borrowings relating to assets of which the acquisition or production satisfies the capitalization conditions is capitalized in accordance with the Accounting Standards for Business Enterprises No. 1 7 –Borrowing Costs. For the non-monetary items of foreign currencies measured by historical cost, translation is done according to spot rate of the transaction date without change in their amount in functional currency. Non-monetary items of foreign currencies such as stocks and funds measured at their fair value are translated as per the spot rate on the date when their fair value is confirmed. The differences between the translated amounts in functional currency and the original amounts in functional currency are recorded into current profits and losses as fluctuation in fair value (including fluctuation in exchange rates).
3. Translation of foreign currency financial statements
The Company translates the financial statements expressed in foreign currency into ones expressed in RMB currency according to the following provisions:
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date; among the owners" equity items, except the ones as "undistributed profits", others shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the average exchange rate. The balance arisen from the translation of foreign currency financial statements in compliance with the aforesaid method shall be presented separately under the owners" equity item of the balance sheets. The foreign currency cash flow statement shall be translated at the average exchange rate on the cash flow date. The amount of influence of the exchange rate change on cashes shall be presented separately under the adjusted item in the cash flow statement.
(10) Financial instruments
1. Basis for recognition of financial instruments
The term "financial instruments" refers to the contracts under which the financial assets of an enterprise are formed and the financial liability or right instruments of any other entity are formed. When the Company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability.
Where a financial asset satisfies any of the following requirements, the recognition of it shall be terminated: Where the contractual rights for collecting the cash flow of the said financial asset are terminated; or where the said financial asset has been transferred and meets the conditions for recognizing the termination of financial assets as provided for in Accounting Standards for Enterprises No. 23 - Transfer of Financial Assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly.
2. Classification of financial assets and financial liabilities
Financial assets attributable to the Company are classified into the following four categories according to their investment purpose and economic essence: ① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, including transactional financial assets and the financial assets which are measured at their fair values and of which the variation is included in the current profits and losses; ② The investments which will be held to their maturity; ③ Loans and the account receivables; and ④ Financial assets available for sale.
Financial liabilities shall be classified into the following two categories according to their economic essence: ① The financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses, including transactional financial liabilities and the designated financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses; and ② Other financial liabilities.
3. Measurement of financial assets and financial liabilities
The financial assets and financial liabilities initially recognized by the Company shall be measured at their fair values. For the financial assets and liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, the transaction expenses thereof shall be directly recorded into the profits and losses of the current period; for other categories of financial assets and financial liabilities, the transaction expenses thereof shall be included into the initially recognized amount.
Subsequent measurement of financial assets and financial liabilities:
(1) For the financial assets and financial liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, they shall be measured at their fair values, and the variation of their fair values shall be recorded into the profits and losses of the current period.
(2) The investments held until their maturity and accounts receivable are measured at their amortization cost by actual interest rate.
(3) The profits and losses arising from the subsequent measurement of the financial assets available for sale at their fair value and the profits and losses arising from the change in their fair value shall be included directly in the owner’s equity with the exception of impairment losses and the exchange gains or losses arising from foreign exchange conversion of monetary financial assets in any foreign currency, and when the said financial asset is stopped from recognition and is transferred out, it shall be recorded into the profits and losses of the current period.
(4) The equity instrument investments for which there is no quoted price in the active market and whose fair value cannot be reliably measured, and the derivative financial assets which are connected with such equity instruments and are settled by delivering the said equity instruments shall be measured at their costs.
(5) The Company shall make subsequent measurement on other financial liabilities on the basis of the post-amortization costs, with the exception of those under the following circumstances:
①The derivative financial liabilities for which there is no quoted price in the
active market, which are connected with the equity instruments whose fair
value cannot be reliably measured and are settled by delivering the said
equity instruments shall be measured at their costs.
② For the financial guarantee contracts which are not designated as a financial
liability measured at its fair value and the variation thereof is recorded into
the profits and losses of the current period, and for the commitments to grant
loans which are not designated to be measured at the fair value and of
which the variation is recorded into the profits and losses of the current
period and which will enjoy an interest rate lower than that of the market, a
subsequent measurement shall be made after they are initially recognized
according to the higher one of the following:
A. the amount as determined according to the Accounting Standards for
Enterprises No. 13 - Contingencies; or
B. the surplus of the initially recognized amount with the subtraction of
accumulative amortization as determined according to the principles of the
Accounting Standards for Enterprises No. 14 - Revenues.
4. Recognition of fair values of financial assets and financial liabilities
The fair value refers to the amount that is agreed upon by the two parties to fair dealings who are familiar with the situation during assets exchange or performance of debt.
(1) Financial instruments with the active market
The fair values of the financial assets and financial liabilities of financial instruments which have the active market shall be recognized at their quoted prices in the active market. The quoted prices in the active market refer to the prices regularly obtained from stock exchanges, brokers, trade associations and pricing service institutions, and represent the prices of market transactions that actually occur in fair dealings. Quoted prices shall be determined according to the following principles:
① In the active market, the quoted prices of the Company for the financial
assets it holds or the financial liabilities it plans to assume shall be the
present actual offer, while the quoted prices of the Company for the financial
assets it plans to acquire or the financial liabilities it has assumed shall be
the available charge.
②Where there is no available offer or charge for a financial asset or financial
liability, the enterprise shall adopt the market quoted price of the latest
transaction or adjusted market quoted price of the latest transaction to
determine the fair value of the said financial asset or financial liability, unless
the enterprise has definite evidences to prove that the market quoted price
of the latest transaction is not a fair value.
(2) Where there is no active market for a financial asset or financial liability, the Company shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques include the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc.
5. Accrual method of the provision for impairment of financial assets
(1) Investments held until their maturity
Where an investment held until their maturity measured on the basis of post-amortization costs is impaired, the carrying amount of the said investment held until their maturity shall be written down to the present value of the predicted future cash flow (excluding the loss of future credits not yet occurred) (the discount rate adopts the original actual interest rate), and the amount as written down shall be recognized as loss of the impairment of the asset and shall be recorded into the profits and losses of the current period. When an impairment provision is made, an impairment test shall be made on the investment held until their maturity with significant single amounts. If any objective evidence shows that it has been impaired, the impairment-related losses shall be recognized and shall be recorded into the profits and losses of the current period. Where, upon independent test, the investment held until their maturity (including those financial assets with significant single amounts and those with insignificant amounts) has not been impaired, it shall be included in a combination of investment held until their maturity with similar risk features so as to conduct another impairment test. The investment held until their maturity which has suffered from an impairment loss in any single amount shall not be included in any combination of financial assets with similar risk features for any impairment test. Where any investment held until their maturity measured on the basis of post-amortization costs is recognized by the Company as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said investment held until their maturity has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than the post-amortization costs of the said investment held until their maturity on the day of reverse under the assumption that no provision is made for the impairment.
(2) Accounts receivable
See the Notes 5 (11) for the impairment test and accrual method of the provision for impairment of the accounts receivable.
(3) Disbursement of loans and advances
Loss provision shall be reserved for loans and advances according to the five level classification of credit assets risks and loan provision rate standard:
Risks are classified for the Company"s credit assets according to relevant provisions of the financial regulation agencies. The standard risk coefficients are as follows: 1.5% for the normal type, 3% for the concerned type, 30% for the secondary type, 60% for the suspicious type, and 100% for the loss type. Besides, in the document named Administrative Measures for the Loan Loss Reserves of Commercial Banks issued by the China Banking Regulatory Commission through Order [2011] No.4, the China Banking Regulatory Commission clearly put forward that the basic standard of loan provision rate is 2.5%, the basic standard of provision coverage ratio is 150%, and the higher one of the two shall prevail.
(4) Financial assets available for sale
① Available-for-sale financial assets measured at the fair value
When a significant or non-transient decline in the fair value of equity instrument investment available for sale is judged by comprehensively considering relevant factors, a decline in the equity instrument available for sale has occurred. Here, the 「significant decline」 means that the cumulative decline of fair value exceeds 20%; the 「non transient decline」 means that the fair value has declined -continuously for over 12 months.
When a decline in the financial assets available for sale has occurred, the cumulative loss generated from decline of fair value that had been recorded directly into the owners" equity shall be removed from the owners" equity and shall be recorded into the impairment loss. The said cumulative loss removed is the balance obtained by deducting the recovered principal and amortized amount, current fair value and the impairment loss originally charged to profits or losses from the initial acquisition cost of the said assets.
For debt instrument investment available for sale for which the impairment loss has been recognized, the recognized impairment loss shall be returned when there is an increase of fair value in a subsequent period and the increase objectively relates to events after impairment loss being recognized. When the impairment loss reversal of the equity instrument investment available for sale is recognized as other comprehensive income, the impairment loss reversal of the debt instrument investment available for sale shall be charged to profits or losses of the current period.
② Available-for-sale financial assets measured at cost
Where an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or a derivative financial asset which is connected with the equity instrument and which must be settled by delivering the equity instrument, suffers from any impairment, the gap between the carrying amount of the equity instrument investment or the derivative financial asset and the current value of the future cash flow of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as impairment-related losses and be recorded into the profits and losses of the current period, but cannot be returned.
6. Transfer of financial assets
The term "transfer of financial assets" refers to a company"s transferring or delivering a financial asset to a party (the transferee) other than the issuer of the financial assets.
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset; If it has retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing the financial asset. Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, it shall deal with it respectively according to the circumstances as follows: If it gives up its control over the financial asset, it shall stop recognizing the financial asset and shall recognize the assets and liabilities generated therefrom; If it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly.
7. Derivative instruments and embedded derivative instruments
Derivative instruments implement initial measurement at the fair value on the date of signing the contract, and also perform subsequent measurement at the fair value. Changes in the fair value of derivative instrument shall be charged to profits or losses of the current period.
For the hybrid instruments containing embedded derivative instruments, if the hybrid instruments are not specified as financial assets and financial liabilities measured at the fair value and of which the changes are recorded into the profits or losses of the current period the embedded derivative instruments are not closely related to this master contract in terms of economic characteristics and risks, and individual instruments with conditions the same as those of the embedded derivative instruments accord with the derivative instrument definition, the embedded derivative instruments shall be removed from the hybrid instruments and handled as independent derivative instruments. Where derivative instruments cannot be separately measured at the time of acquisition or the subsequent balance sheet date, the hybrid instruments shall be specified as financial assets and financial liabilities measured at the fair value as a whole and of which the changes shall be recorded into the profits or losses of the current period.
8. Offsetting financial assets with financial liabilities
When the Company has the statutory right to offset the recognized amount, this statutory right is executable at present, and the Company also plans to perform netting settlement or simultaneously realize the financial assets and liquidate the financial liabilities, the financial assets and financial liabilities shall be listed in the balance sheet using the net amount after mutual offsetting. In other cases, the financial assets and financial liabilities are presented respectively in the balance sheet and not mutually offset.
9. Equity instruments
Equity instruments refer to contracts that can prove ownership of the residual equity in assets of the Company after deduction of all the liabilities. The owners』 equities are increased after the transaction expenses are deducted from the consideration received at issuance of the equity instruments. The Company completes all kinds of allocations (excluding stock dividends) for the equity instrument holding parties to reduce the owners』 equities. The Company does not recognize the amount of change in the fair value of equity instruments.
(11) Receivables
The Company"s receivables (including accounts receivable and other receivables) shall take the contract or agreement price as their initially recorded amount. Due to bankruptcy of the debtor, collection is still not possible after settlement according to legal settlement procedures; or due to the death of the debtor leaving no legacies to pay off and nobody to assume the obligations, collection is really not possible; or due to the failure of the debtor to perform its repayment obligations within the specified time limit, the receivables shall be presented as a loss on bad debt upon examination and approval according to legal procedures. As for the Company"s transfer, pledge and discount to financial institutions like banks with receivable creditor’s right, according to the provisions of the relevant contract, when the debtor fails to pay back the due debts, if the Company bears the payment liability to the financial institutions, the receivable creditor’s right shall be treated as pledged loan; If the Company bears no payment liability to the financial institutions, the receivable creditor’s right shall be treated as the transferred one and the profit and loss of transfer shall be recognized.
When the Company recovers the receivables, the difference between the acquired price and the carrying amount of the receivables shall be recorded into the profits and losses of the current period.
1. Receivables with significant single amounts and single bad debt provision appropriated:
If a single amount accounts for 5% (including more than 5%) of total amount of the receivables, the Company shall recognize the said receivables as the receivables with significant single amounts.
On the balance sheet, the Company shall carry out an independent impairment test for the receivables with significant single amounts, where, upon independent test, the said receivables has been impaired, the negative balance between the present value of the future cash flow of the said receivables and their carrying amount shall be recognized as loss of the impairment of the said receivables, and a provision for bad debts shall be made accordingly. Where the receivables have not been impaired upon independent test, the several combinations between the said receivables and the receivables with insignificant single amounts shall be made based on similar credit risk features, and then the loss of the impairment of the said receivables shall be calculated and recognized at a certain proportion of the combinations of these receivables in the balance on the balance sheet date, and a provision for bad debts shall be made accordingly.
2. Receivables with a provision for bad debts based on combinations:
Basis for recognition of combinations
Aging combination Divided into groups based on aging of the receivables as credit risk
features
Divided into groups based on the receivables related to consolidated
Consolidation scope combination financial statements and the receivables which can fully obtain
customer"s credit information
Accrual method of a provision for bad debts based on combinations
Aging combination Make a provision for bad debts by aging analysis
An impairment test is carried out according to the debtor"s credit, and Consolidation scope combination a provision for bad debts shall not be made for the receivables of the Company that is clearly guaranteed. In the combinations, the receivables with a provision for bad debts made by aging analysis:
Aging Percentage of provisioning Percentage of provisioning other
accounts receivable (%) receivables(%)
Within 1 year 5.00 5.00
1 to 2 years 20.00 20.00
2 to 3 years 50.00 50.00
Over 3 years 100.00 100.003. Accounts receivable with insignificant single amounts but single bad debt provision appropriated:
As for the receivables with insignificant single amounts, if there are conclusive evidences to show that there is an obvious difference in their collectability, a provision for bad debts shall be made as per the negative balance between the present value of their future cash flow and their carrying amount.
(12) Inventories
1. Classification of inventories
Classification of inventories: The Company’s inventories are classified into raw materials, goods in process, and goods finished.
2. Valuation for delivered inventories
Valuation for delivered inventories: When various kinds of inventories of the Company are delivered, they shall be valuated at planned costs, and the planned costs shall be adjusted into actual costs based on the difference of costs of the current month at the end of the month.
3. Recognition of the net realizable value and measurement of provision for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. if the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories shall be made and shall be recorded into the profits and losses of the current period, where a provision for decline in value of inventories has been made, if the value of the said inventories is resumed later, the said value shall be reversed from the provision for decline in value of the inventories. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes.
4. Stock count system for inventories
The perpetual inventory system is adopted for stock count of the Company.
5. Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are written off in full when issued for use.
(13) Assets held for sale
1. Recognition standard
The component (or non-current assets; the same below) of the Company that matches the following conditions at the same time shall be recognized as assets held for sale: the said component can be sold immediately in its current status and only according to the usual terms on sales of this kind of components; the Company has adopted a resolution on disposal of this component (where shareholder approval is required in accordance with relevant regulations, approval shall be obtained from the general meeting of shareholders or corresponding organ of authority); the Company has signed an irrevocable transfer agreement with the transferee; such transfer will be completed within one year.
2. Accounting treatment
For the fixed assets held for sale, the Company adjusts the expected net salvage value of the fixed assets so that the expected net salvage value of the fixed assets can reflect the amount got by reducing the disposal expenses from their fair value, but cannot exceed the original carrying amount of the fixed assets when the fixed assets comply with the conditions for assets held for sale; the positive difference of the original carrying amount less the expected net salvage value after adjustment shall be charged to profits or losses of the current period as asset impairment loss. In case that an asset or a disposal group is included in the category held for sale but subsequently fails to meet the recognition conditions for fixed assets held for sale, the Company shall stop including it in the category held for sale and measure it according to the lower of the following two amounts:
(1) The carrying amount of this asset or disposal group before it is included in the category held for sale, according to the amount after adjustment of the depreciation, amortization or impairment that should be recognized originally on the assumption that the asset or disposal group is not included in the category held for sale;
(2) Re-recovered amount on the date when a decision is made to stop sales.
Other non-current assets such as intangible assets complying with the conditions for holding for sale shall be handled in the light of the above principle.
(14) Long-term equity investments
Long-term equity investments mainly include the equity investment held by the Company that is able to control, is under common control with or has significant influences on the invested entity and the equity investment to joint ventures.
1. Judgment standards of control and significant influence
Judgment standards of control: (1) The Company owns the power to the invested entity; (2) the Company enjoys variable return by participating relevant activities of the invested entity; (3) the Company has the capacity of using the power to the invested entity to affect its return amount. The Company acknowledges the control force for the invested entity that meets the above three conditions.
Judgment standards of significant influence: The Company has the power to participate in decision making for the financial and operations policies of the invested entity, but cannot control formulation of these policies independently or together with other parties. Where the Company can exert a great influence on the invested entity, the invested entity is an associated enterprise of the Company. The invested entity under common control by the Company and other participants is a contractual enterprise of the Company. Common control means that any participant cannot independently control this arrangement, and any participant with the right to common control on this arrangement can prevent other participants or the combination of participants from independently controlling this arrangement. 2. Investment cost recognition of long-term equity investment
The long-term equity investment of the Company is measured at the investment cost at the time of acquisition. Normally the investment cost refers to the assets paid, liabilities incurred or undertaken, and the fair value of equity securities issued for the acquisition of this investment, including the costs directly attributable to the acquisition. However, for the long-term equity investment formed by business combination involving enterprises under common control, the investment cost is the share of carrying amount of the combined party’s net assets acquired on the combination date in the ultimate controlling party’s consolidated financial statements.
3. Subsequent measurement of long-term equity investments and recognition of profits or losses
The Company adopts the cost method for accounting for the long-term equity investment based on which the Company is able to control the invested enterprise; the Company adopts the equity method for accounting for investments put into associated enterprises and contractual enterprises.
The price of a long-term equity investment accounted by employing the cost method shall be included at its initial investment cost. If there are additional investments or disinvestments, the cost of the long-term equity investment shall be adjusted. The cash dividends or profits declared to distribute by the invested entity shall be recognized as investment income and charged to profits or losses of the current period.
When the Company employs the equity method for accounting of the long-term equity investment, if the investment cost of a long-term equity investment is more than the investing enterprise』 attributable share of the fair value of the invested entity"s identifiable net assets for the investment, the investment cost of the long-term equity investment may not be adjusted; if the investment cost of a long-term equity investment is less than the investing enterprise』 attributable share of the fair value of the invested entity"s identifiable net assets for the investment, the carrying amount of the long-term equity investment shall be adjusted, and the difference shall be recorded into the profits or losses of the current period.
When the Company employs the equity method for accounting of the long-term equity investment, the Company first adjusts the invested entity’s net profits or losses and other comprehensive income in the aspects such as the fair value of the invested entity"s identifiable net assets at the time of investment acquisition, accounting policy and accounting period, and then recognizes the current-period investment profits or losses and other comprehensive income according to the investing enterprise』 attributable or shareable share of the invested entity"s net profits or losses and other comprehensive income. For other changes in owners』 equities other than the net profits or losses, other comprehensive income and profit distribution, the carrying amount of the long-term equity investment shall be adjusted and recorded into the owners』 equities.
For the unrealized internal transaction profits/losses that arise between the Company and the associated enterprises and contractual enterprises, the part attributable to the Company shall be calculated according to the shareholding proportion, and the investment profits/losses shall be recognized on the basis of offsetting.
For the long-term equity investments held already prior to January 1, 2007 for the associated enterprises and contractual enterprises, if there is any equity investment difference on the debit side, the investment profits/losses shall be recognized after deduction of the equity investment difference on the debit side amortized by the straight-line method according to the original residual maturity. 4. Recognition of common control and significant influences on the invested entity Common control is recognized as the control which does not exist unless the investing parties unanimously agree on sharing the control power over the relevant important financial and operating decisions of the invested entity according to the provisions of the contract.
Significant influences will be recognized where there is power to participate in making decisions on the financial and operating policies of the invested entity, but not to control or do joint control together with other parties over the formulation of these policies. When the Company holds more than 20% (included) but less than 50% of voting shares of the invested entity directly or indirectly through a subsidiary, significant influences on the invested entity shall be recognized, unless there is clear evidence indicating that the Company cannot participate in production and management decision-making of the invested entity in this situation and therefore cannot generate significant influences; if the Company holds less than 20% (excluded) of voting shares of the invested entity, usually the Company is not deemed to have a significant influence on the invested entity, unless there is clear evidence indicating that the Company can participate in production and management decision-making of the invested entity in this situation and therefore can generate significant influences.
5. Conversion of the long-term equity investment accounting method
Where the equity investment originally held by the Company, which is unable to control, is not under common control with or has no significant influences on the invested entity, is converted into an investment for an associated enterprise or contractual enterprise due to additional investment, the investment shall be accounted by the equity method instead, and the Company shall use the fair value of the original equity investment plus the fair value of the consideration paid to acquire the newly added investment as the initial investment cost accounted by the equity method instead. The difference between the fair value and carrying amount of the originally held equity investment prior to the additional investment, and the cumulative fair value changes originally recorded into other comprehensive income shall be transferred to the current-period profits or losses accounted by the equity method instead.
For the originally held investments for associated enterprises and contractual enterprises, if they are not able to be under common control with or have significant influences on the invested entity, if they are not able to be under common control with or have significant influences on the invested entity due to reason such as partial disposal, accounting treatment must be performed for remaining equity investments according to the recognization and measurement standards for financial instruments, and the difference between the fair value and carrying amount on the date on which the common control or significant influence is lost shall be charged to profits or losses of the current period. When accounting based on the equity method is terminated for other related comprehensive income originally subject to accounting of equity method, accounting treatment is performed using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities; all the owners" equities that are recognized due to other changes in owners』 equities other than the net profits/losses, other comprehensive income and profit distribution of the invested entity shall be transferred to the profits or losses of the current period when accounting based on the equity method is terminated.
Where the originally held investments for associated enterprises or contractual enterprises are converted to investments for subsidiaries due to additional investment, in the individual financial statements, the sum of the carrying value of the acquired party’s equity investment held prior to the acquisition date and the investment cost newly added on the acquisition date shall be used as the initial investment cost of such an investment; for the equity investment held prior to the acquisition date, other comprehensive income recognized due to accounting of the equity method shall undergo accounting treatment using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities when such an investment is disposed of.
When the influencing capability on the invested entity is converted from control to a significant influence or common control together with other investors due to investment disposal, the long-term equity investment cost, for which recognition shall be terminated, is first carried over according to the proportion of investment disposal. On such a basis, the remaining long-term equity investment cost is compared with the share attributable to the Company in the fair value of the invested entity"s identifiable net assets at the time of original investment, which is calculated according to the remaining shareholding proportion. For the business reputation part to be embodied in the investment evaluation, the carrying amount of long-term equity investment shall not be adjusted; where the investment cost is less than the share attributable to the Company in the fair value of the invested entity"s identifiable net assets at the time of original investment, any excess shall be adjusted against retained earnings when the long-term equity investment cost is adjusted. For the share attributable to the Company in the invested entity’s realized net profits/losses between acquisition of the original investment and conversion to accounting of the equity method due to investment disposal, the carrying amount of the long-term equity investment shall be adjusted, meanwhile, any excess shall be adjusted against retained earnings for the share attributable to the Company in the invested entity’s realized net profits/losses (excluding the cash dividends or profits distributed or declared to distribute) from acquisition of the original investment to the beginning of the period in which the investment is disposed of, and the current-period profits or losses shall be adjusted for the share attributable to the Company in the invested entity’s realized net profits/losses from the beginning of the period in which the investment is disposed of to the investment disposal date; the share attributable to the Company in the invested entity’s changes in other comprehensive income shall be recorded into other comprehensive income when the carrying amount of the long-term equity investment is adjusted; the share attributable to the Company in the invested entity’s other changes in owners』 equities arising from reasons other than the net profits or losses, other comprehensive income and profit distribution shall be recorded into 「Capital reserves Other capital reserves」 when the carrying --amount of the long-term equity investment is adjusted. After the cost method is converted to the equity method for the long-term equity investment, the share attributable to the Company in the invested entity’s realized net profits/losses, other comprehensive income and other changes in owners』 equities shall be calculated and recognized according to provisions of the standard in the future period.
For the originally held long-term equity investment that is able to control the invested entity, if the shareholding proportion declines due to reasons such as partial disposal and the investment cannot be able to control, be under common control with or have significant influences on the invested entity, accounting treatment must be performed for remaining equity investments according to the recognition and measurement standards for financial instruments. The difference between the fair value and carrying amount on the date of control loss shall be recorded into the investment income of the current period.
In the process of holding the long-term equity investment, if the Company decides to sell all or part of held stocks of the invested entity in consideration of all aspects, the carrying amount of the long-term equity investment corresponding to the sold stocks shall be carried over accordingly, and the difference between the selling price and the carrying amount of long-term equity investment for disposal shall be recognized as disposal profit or loss.
If the Company disposes of all the long-term equity investments accounted by the equity method, when accounting based on the equity method is terminated for other related comprehensive income originally subject to accounting of equity method, accounting treatment is performed using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities; all the owners" equities that are recognized due to changes in other owners』 equities other than the net profits/losses, other comprehensive income and profit distribution of the invested entity shall be transferred to the investment income of the current period when accounting based on the equity method is terminated; if a part of the long-term equity investment accounted by the equity method is disposed of and the remaining stocks are still accounted using the equity method, other related comprehensive income originally subject to accounting of equity method shall be handled using the basis the same as that used by the invested entity to directly dispose of relevant assets or liabilities and be carried over by proportion, and the owners" equities that are recognized due to other changes in owners』 equities other than the net profits/losses, other comprehensive income and profit distribution of the invested entity shall be carried over to the investment income of the current period according to the proportion.
(15) Investment real estate
The Company"s investment real estate includes a land use right that is leased out, a land use right held for transfer upon capital appreciation and a building that is leased out.
The Company"s investment real estate is measured at its cost, and the Company uses the cost model for a subsequent measurement of its investment real estate. The depreciation and amortization of the investment real estate shall be made in accordance with the accounting policies of fixed assets or intangible assets of the Company.
When the Company changes the purpose of the investment real estate, such as for self-use, it shall transfer the relevant investment real estate to other assets. (16) Fixed assets
1. Recognition standard of fixed assets
The Company"s fixed assets refer to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or business management and whose useful life is in excess of one fiscal year. Fixed assets can not be recognized unless they simultaneously meet the conditions as follows: (1) The economic benefits pertinent to the fixed assets are likely to flow into the enterprise; and
(2) The cost of the fixed assets can be measured reliably.
2. Measurement of fixed assets
The measurement of a fixed asset shall be made at its cost.
(1) The cost of a purchased fixed asset consists of the purchase price, the relevant taxes, freight, loading and unloading fees, professional service fees and other expenses that bring the fixed asset to the expected conditions for use and that may be relegated to the fixed asset.
If the payment for a fixed asset is delayed beyond the normal credit conditions and it is of financing nature in effect, the cost of the fixed asset shall be recognized based on the present value of the purchase price. The difference between the actual payment and the present value of the purchase price shall be included in the current profits and losses within the credit period, unless it shall be capitalized in accordance with the Accounting Standards No. 17 - Borrowing Costs.
(2) The cost of a self-constructed fixed asset shall be formed by the necessary expenses incurred for bringing the asset to the expected conditions for use.
(3) The cost invested to a fixed asset by the investor shall be recognized in accordance with the value as stipulated in the investment contract or agreement, other than those of unfair value as stipulated in the contract or agreement.
(4) The costs of fixed assets acquired through the exchange of non-monetary assets, recombination of liabilities, merger of enterprises, and financial leasing shall be respectively recognized in accordance with the Accounting Standards No. 7 - Exchange of Non-monetary Assets, Accounting Standards for Enterprises No. 12 - Debt Restructuring, Accounting Standards for Enterprises No. 20 - Merger of Enterprises and Accounting Standards for Enterprises No. 21 - Leases.
3. Classification of fixed assets
The Company"s fixed assets are classified into houses and buildings, machinery equipment, electronic equipment and transportation equipment and otherwise.
4. Depreciation of fixed assets
(1) Recognition of depreciation method and service life, expected net salvage value rate and annual depreciation rate:
The depreciation of fixed assets shall be made by the straight-line method. The annual depreciation rate recognized according to the category, service life and expected net salvage value rate of fixed assets is as follows:
Category of fixed assets Expected net salvage Expected service life Annual depreciation
value rate % rate %
Houses and buildings 5.00 20 to 30 years 3.17-4.75
Machinery equipment 5.00 6-10 years 9.50-15.83
Electronic equipment 5.00 2-5 years 19.00-47.50
Transportation equipment 5.00 3 to 6 years 15.83-31.67
Others 5.00 3-5 years 19.00-31.67Depreciation of fixed assets of which a provision for impairment has been made: For a fixed asset of which a provision for impairment has been made, the depreciation of the fixed asset shall be made based on the amount of deducting its expected net salvage value, depreciation amount and provision for impairment from the original price of the fixed asset and remaining service life of the fixed asset.
For the fixed assets that have reached intended usable condition but not prepared the final account for completion, their costs shall be recognized at their estimated value, and their depreciation shall be made accordingly; After completion of the final account for completion, the original estimated value of the fixed assets shall be adjusted by their actual costs, but the original depreciation amount does not require adjusting.
(2) Check of service life, expected net salvage value and depreciation method of fixed assets: The Company shall, at least at the end of each year, have a check on the service life, expected net salvage value, and the depreciation method of the fixed assets. If the Company finds that there is any difference between the expected service life and the previously estimated service life of a fixed asset, the expected service life of the fixed asset shall be adjusted; If there is any difference between the amount of expected net salvage value and the previously estimated amount of the net salvage value, the expected net salvage value shall be adjusted; If any significant change is made on the form of the realization of the expected economic benefits concerning a fixed asset, the method for the depreciation of the fixed asset shall be changed. If any change is made to the service life, expected net salvage value or the depreciation method of a fixed asset, it shall be regarded as a change of the accounting estimates.
5. Treatment of subsequent expenditures for fixed assets
Subsequent expenditures incurred on a fixed asset refer to repair expenses, renovation expenses, repair costs and decoration expenses and otherwise incurred in the course of use of the fixed asset. Their accounting treatment is as follows: Where subsequent expenditures of a fixed asset such as renovation expenses meet the conditions of recognizing the fixed asset, they shall be recorded into the cost of the fixed asset, and the carrying amount of the replaced part of the subsequent expenditures shall be deducted; Where subsequent expenditures of a fixed asset such as repair costs do not meet the conditions of recognizing the fixed asset, they shall be recorded into the profits and losses of the current period in which they are incurred; Where the decoration expenses of a fixed asset meet the conditions of recognizing the fixed asset, they shall be measured in a single detail account of "Fixed Assets", and the depreciation of the fixed asset shall be made separately by the straight-line method in a shorter time of the period of two decorations and remaining usable life of the fixed asset.
The improvement expenditures incurred on a fixed asset leased by operating lease shall be capitalized and reasonably amortized as long-term prepaid expenses.
(17) Construction in progress
The term "construction in progress" refers to all necessary expenditures incurred before the acquired fixed assets enable the project to reach expected usable condition, including project direct materials, direct employee remunerations, installation costs for equipment to be installed and project construction, project management fees, net profits and losses of project commissioning and approved capitalized borrowing costs.
1. Valuation of construction in progress
The Company"s construction in progress shall be measured individually by construction project and shall be valuated at actual cost.
2. Time point of carrying over construction in progress into fixed asset
When the construction in progress reaches the expected usable condition, they shall be transferred to fixed asset at their actual cost. For the fixed assets that have reached expected usable condition but not prepared the final account for completion, they shall be charged to the account at their estimated value and shall be adjusted after their actual value is recognized.
(18) Capitalization of borrowing costs
Borrowing costs are interests and other costs incurred by the Company in connection with the borrowing of the funds, including interests, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings.
1. Recognition of capitalization of borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalized, and the amounts of other borrowing costs incurred shall be recorded into the profits and losses of the period. in which they are incurred. Qualifying assets are fixed assets, investment real estate and inventories and otherwise that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.
2. Period of capitalization of borrowing costs
(1) Time point of capitalization of borrowing costs. The capitalization of borrowing costs commences only when all of the following conditions are satisfied:
① Expenditures for the asset have been incurred;
② Borrowing costs have been incurred; and
③ Activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced.(2) Time point of ceasing capitalization of borrowing costs: Capitalization of borrowing costs ceases when the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale. The subsequent borrowing costs shall be recorded into the profits and losses of the current period.
(3) Recognition of suspending capitalization of borrowing costs: Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use or sale, and the interruption is for a continuous period of over 3 months. Borrowing costs incurred during the period in which capitalization of borrowing costs is suspended shall be recorded into the profits and losses of the current period.
3. Calculation of capitalized amounts of borrowing costs
During the capitalization period, the amount of interest (including amortization of discounts or premiums) to be capitalized for each accounting period shall be recognized as follows:
(1) Where special funds are borrowed for the acquisition, construction or production of a qualifying asset, the amount of interest to be capitalized shall be the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.
(2) Where general funds are borrowed for the acquisition, construction or production of a qualifying asset, the amount of interest to be capitalized on such general borrowings shall be calculated and recognized by applying a capitalization rate of such general borrowings to the weighted average of the excess amounts of accumulated expenditures on the asset over and above the amounts of special borrowings. The capitalization rate shall be calculated and recognized by the weighted average interest rate of general borrowings.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be recognized by the real interest rate method, and an adjustment shall be made to the amount of interests in each period. During the period of capitalization, the amount of interest capitalized during each accounting period shall not exceed the amount of interest actually incurred to the relevant borrowings in the current period.
Ancillary costs in connection with special borrowings that are incurred before the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall be capitalized on the basis of the incurred amount when they are incurred, and they shall be recorded into the cost of qualifying asset; those incurred after the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall be recognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period. The ancillary costs arising from a general borrowing shall be recognized as expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period. (19) Intangible assets
1. Recognition of intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company. Intangible assets can be recognized only when they meet the conditions simultaneously as follows:
(1) They are consistent with the definition of intangible assets;
(2) The economic benefits related to intangible assets are likely to flow into the enterprise; and
(3) The cost of intangible assets can be measured reliably.
2. Measurement of intangible assets
The intangible assets shall be measured according to their cost or fair value (if increased through business combination not involving enterprises under common control).
3. Subsequent measurement
The Company shall analyze and judge the service life of intangible assets when it obtains intangible assets. If the Company is unable to forecast the period when the intangible asset can bring economic benefits to it, it shall be regarded as an intangible asset with uncertain service life.
With regard to an intangible asset with limited service life, its amortization amount shall be amortized by expected realization pattern of its economic benefits, if the Company is unable to recognize the expected realization pattern reliably, intangible assets shall be amortized by the straight-line method.
The Company shall, at least at the end of each year, check the service life and the amortization method of intangible assets with limited service life. If necessary, it shall adjust the said service life and amortization method.
With regard to an intangible asset with uncertain service life, its amortization amount shall not be amortized, but the Company shall check the service life of the said intangible asset every year and shall carry out an impairment test for it.
4. Estimation of service life
As for intangible assets with limited service life, the estimation of their service life generally considers the following factors:
(1) General life cycle of products manufactured by using the assets and information about service life of similar assets available;
(2) Present situation of technologies and process and estimation for future development trends;
(3) Market demand of products manufactured or services rendered by using the assets;
(4) Expected actions of present or potential competitors;
(5) Expected maintenance expenses for economic capacity from the assets and the Company"s expected capability to pay relevant expenses;
(6) Laws and regulations or similar restrictions relating to the control period of the assets, such as concession period and lease period;
(7) Relevance with service life of other assets held by the Company, etc.
5. Division of research expenditures and development expenditures included in expenditures for internal research and development projects
(1) Research expenditures in internal research and development projects shall be recorded into the profits and losses of the current period when they are incurred. (2) Development expenditures in internal research and development projects shall be recognized as intangible assets where they satisfy all of the following conditions: ①Technical feasibility of completing the intangible asset so that it will be
available for use or sale;
② Intention to complete the intangible asset and use or sell it;
③ How the intangible asset will generate economic benefits, including the
ability to demonstrate the existence of a market for the output of the
intangible asset or the intangible asset itself or, if it is to be used internally,
the usefulness of the intangible asset;
④Availability of adequate technical, financial and other resources to complete
the development and to use or sell the intangible asset;
⑤Ability to measure reliably the expenditure that is attributable to the
intangible asset during its development.
(20) Long-term deferred expenses
Long-term deferred expenses refer to the expenses incurred by the Company but attributable to the current and subsequent accounting periods of more than one year (excluding one year), including the expenses for improvement of fixed assets leased by operating lease.
Long-term deferred expenses shall be recorded into the account based on their actual amount of expenditure and shall be averagely amortized by their beneficial period, if long-term deferred expenses can not benefit subsequent accounting periods, the unamortized value of the project shall be all transferred to the profits and losses of the current period.
(21) Impairment of Assets
On the balance sheet date, if there is any sign showing possible impairment of assets (referring to the assets other than inventories, equity instruments that have no quoted price and reliable fair value measurement in active market, investment real estate measured by fair value model, consumable biological assets, assets formed under construction contract, deferred income tax assets, residual value not guaranteed by the renter in the financing lease and financial assets), their recoverable amount shall be estimated on the basis of single item assets; Where it is difficult to estimate the recoverable amount of the single item assets, the recoverable amount of the assets shall be recognized on the basis of their asset group or combination of asset groups.
The recoverable amount shall be recognized in light of the higher one of the net amount of the fair value of the single item assets, asset group or combination of asset groups less the disposal expenses and the present value of the expected future cash flow of the single item assets, asset group or combination of asset groups.
Where the recoverable amount of the single item assets is lower than their carrying amount, a provision for the asset impairment shall be made accordingly on the basis of the difference between the carrying amount of the single item assets and their recoverable amount. Where the recoverable amount of an asset group or a combination of asset groups is lower than its carrying amount, it shall be recognized as the corresponding impairment loss. The amount of the impairment loss shall first charge against the carrying amount of business reputation which is apportioned to the asset group or combination of asset groups, then charge it against the carrying amount of other assets in proportion to the weight of other assets in the asset group or combination of asset groups with the business reputation excluded. The charges against the carrying amount of the assets above shall be treated as the impairment loss of the single item assets (including the business reputation), and a provision for impairment of the single item assets shall be made accordingly.
Once the above loss of asset impairment is recognized, it shall not be switched back in future accounting periods.
(22) Estimated liabilities
1. Recognition of estimated liabilities
When the businesses related to contingencies such as external guarantee, pending action or arbitration, product quality assurance, plan for layoffs, loss contract, restructuring obligations and fixed asset disposal obligations meet all of the following conditions, they shall be recognized as liabilities:
(1) The liabilities are present liabilities assumed by the Company;
(2) The fulfillment of the liabilities might cause outflow of economic benefits from the enterprise.
(3) The amount of the liabilities can be reliably measured.
2. Measurement of estimated liabilities
The estimated liabilities shall be measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be recognized in accordance with the middle estimate within the range. In other cases, the best estimate shall be recognized in accordance with the following methods, respectively:
(1) If the contingencies concern a single item, it shall be recognized in the light of the most likely outcome.
(2) If the contingencies concern two or more items, the best estimate shall be calculated and recognized in accordance with all possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of estimated liabilities of the company is expected to be compensated by a third party or other parties, the compensation shall be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement shall not exceed the carrying amount of the recognized estimated liabilities.
(23) Employees』 wages and salaries
1. The term 「employees』 wages and salaries」 refers to all kinds of remunerations or compensations given by the enterprises in exchange of the employees』 services or for cancellation of labor relationships. The employees』 wages and salaries include the short-term wages and salaries, separation benefits, dismiss welfare and other long-term employee benefits, as well as the benefits provided by the enterprises to employees』 spouses, children and dependants, deceased employees』 survivors and other beneficiaries.
2. In addition to all the employees who have signed a labor contract with the enterprise, the scope of employees also covers members who have not signed a labor contract with the enterprise but have been formally appointed by the enterprise, and those who provide services to the enterprise which has signed an employment contract with a labor service agent.
3. In the accounting period during which employees provide services to the Company, the Company recognizes the short-term wages and salaries actually incurred as liabilities and charges them to the current-period profits and losses or relevant asset costs.
4. Separation benefits are classified into the defined contribution plan and defined benefit plan.
(1) In the accounting period during which employees provide services to the Company, the Company recognizes the amount to be deposited (calculated according to the defined contribution plan) as liabilities and charges it to the current-period profits and losses or relevant asset costs.
(2) Usually accounting treatment for the defined benefit plan consists of the following steps:
①According to the projected unit credit method, adopt the unbiased and
mutually consistent actuarial assumption to estimate the demographic
variables and financial variables, measure obligations generated by the
defined benefit plan, and determine the period to which relevant obligations
belong;
② In case that the defined benefit plan involves assets, recognize the deficit or
surplus formed by reducing the fair value of assets of the defined benefit
plan from the present obligation value of the defined benefit plan as one net
liability or net asset of the defined benefit plan. If the defined benefit plan has
any surplus, use the lower of the defined benefit plan surplus and the upper
asset limit to measure net assets of the defined benefit plan. The upper
asset limit refers to the present value of the economic interest that can be
obtained by the Company from refund of the defined benefit plan or by
reducing the fund to be deposited for the defined benefit plan in the future; ③At the end of the period, recognize the costs of employees』 wages and
salaries arising from the defined benefit plan as the service costs, net
interests of net liabilities or net assets of the defined benefit plan, and
changes arising from remeasurement of net liabilities or net assets of the
defined benefit plan, wherein the service costs and net interests of net
liabilities or net assets of the defined benefit plan are recorded into the
current-period profits/losses or relevant asset costs, changes arising from
remeasurement of net liabilities or net assets of the defined benefit plan are
recorded into other comprehensive income and cannot be reversed to
profits/losses in the subsequent accounting period, but such amount
recognized in other comprehensive income can be transferred within the
equity scope;
④ Recognize a settlement gain or loss during settlement of the defined benefit
plan.
5. If the Company provides employees with dismiss welfare, the liability of employees』 wages and salaries that arises from the dismiss welfare shall be recognized on the earlier one of the following two dates and charged to the current-period profits/losses: ① when the Company cannot unilaterally cancel the dismiss welfare provided for the labor relationship cancellation plan or staff reduction suggestion; ② when the Company recognizes the cost or expense related to reconstruction involving dismiss welfare payment.
6. If other long-term benefits offered by the Company to employees comply with conditions of the defined contribution plan, accounting treatment is conducted according to the defined contribution plan; the long-term benefits other than these shall undergo accounting treatment according to the defined benefit plan, but the changes arising from remeasurement of the net liabilities or net assets of other long-term benefits for employees shall be recorded into the current-period profits/losses or relevant asset costs.
(24) Recognition of revenues
Revenues shall be recognized where the relevant economic benefits are likely to flow into the Company, the relevant amount of revenue can be reliably measured and the following conditions are met simultaneously:
1. Revenue from selling goods
Where the Company has transferred significant risks and rewards of ownership of the goods to the buyer, and it neither retains continuous management right that usually keeps relation with the ownership nor implements effective control over the sold goods; and the relevant costs incurred or to be incurred can be reliably measured, the revenue from selling goods shall be recognized.
2. Revenue from rendering labor services
If the Company can, on the balance sheet date, reliably estimate the schedule of completion and outcome of a transaction concerning the labor services, and the costs related to the transaction incurred or to be incurred can be reliably measured, the Company shall recognize the revenue from rendering labor services adopting the percentage-of-completion method and shall ascertain the schedule of completion under the transaction concerning the rendering of labor services according to the proportion of the costs incurred against the estimated total costs. Where the Company can not, on the balance sheet date, reliably estimate the outcome of a transaction concerning the labor services, if it expects that the cost of labor services incurred can be made up, the Company shall recognize the revenue from rendering labor services based on the amount of the cost of labor services incurred and shall carry forward the cost of labor services in accordance with the same amount; If it is expected that the cost of labor services incurred can not be made up, the cost of labor services incurred shall be recorded into the profits and losses of the current period, and the revenue from rendering labor services shall not be recognized.
3. Abalienate the right to use assets
The amount of interest revenue shall be calculated and recognized in accordance with the length of time for which the Company"s cash is used by others and the actual interest rate; The amount of royalty revenue shall be calculated and recognized in accordance with the period and method of charging as stipulated in the relevant contract or agreement.
(25) Government subsidies
A government subsidy means the monetary and non-monetary assets obtained free by the Company from the government, but excluding the capital invested by the government as the owner. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income.
The Company defines the obtained government subsidies used for purchase or construction, or forming the long-term assets by other ways as government subsidies pertinent to assets, and all the other government subsidies as government subsidies pertinent to income. If the government document does not specify the subsidy object, the following mode is adopted to classify the subsidies into government subsidies pertinent to income and government subsidies pertinent to assets: (1) if the government document specifies the project to which the subsidy aims, the amount is divided according to the relative proportion of the paid amount to form assets to the paid amount to be recorded into expenses in the budget of this specific project, and this division proportion needs to be checked on every balance sheet date and be changed when necessary; (2) if the government document provides only a general presentation of the purpose without specifying the specific project, the subsidy shall be regarded as government subsidy pertinent to income.
The government subsidies of monetary assets shall be measured according to the amount received or receivable. Here, if there is any exact evidence showing that this subsidy is appropriated according to the fixed quota, it can be measured according to the amount receivable; otherwise it shall be measured according to the amount actually received. The government subsidies of non-monetary assets shall be measured at the fair value; if the fair value cannot be obtained in a reliable way, the subsidies shall be measured at the nominal amount of RMB1.
When a government subsidy is actually received, the Company usually recognizes and measures it according to the actually received amount. At the end of the period, however, if there is any exact evidence showing that the Company complies with relevant conditions provided in the financial supporting policy and it is expected to receive the capital support from the government, this subsidy shall be measured according to the amount receivable. The government subsidy measured according to the amount receivable shall comply with all the following conditions: (1) The amount of receivable subsidy has been confirmed by the authoritative government department by issuing a document, or the subsidy can be independently and reasonably measured and calculated in accordance with relevant provisions of the formally issued financial fund management measures and it is predicted that its amount does not involve significant uncertainty; (2) the subsidy is based on the financially supported project that is formally released by the local financial department and initiatively disclosed according to provisions of the Regulation of the People"s Republic of China on the Disclosure of Government Information, as well as its financial fund management measures, and the management measures must be generous (any enterprise meeting the defined conditions can apply for the subsidy) and are not formulated specially for specific enterprises; (3) the related subsidy approval document has clearly promised the time limit of appropriation and appropriation of the fund is guaranteed by the corresponding financial budget, so it can be surely received within the defined time limit; (4) other conditions (if any) that shall be matched according to specific conditions of the Company and this matter of subsidy.
The government subsidies pertinent to assets shall be recognized as deferred income and shall be equally distributed within the service life of the relevant assets, and recorded into the current-period profits and losses. If the government subsidies pertinent to incomes are used for compensating the related expenses or losses incurred to the Company, they shall be recorded into the current-period profits and losses; if the government subsidies pertinent to incomes are used for compensating the related future expenses or losses in the later period, the subsidies shall be recorded into the deferred income and shall be recorded into the current-period profits and losses during the period when the relevant expenses are recognized. The government subsidies measured at the nominal amount shall be directly recorded into the current-period profits and losses.
Where it is necessary to refund any government subsidy which has been recognized, if there is a deferred income balance concerned, the book balance of the deferred income shall be offset against, but the excessive part shall be included in the current profits and losses; If there is no deferred income concerned to the government subsidy, the amount of refund shall be directly included in the current profits and losses.
(26) Income taxes
Income taxes include all types of domestic and oversea tax amounts based on the amounts of taxable income of the Company. When the Company obtains assets or bears liabilities, it recognizes their tax base according to the national tax laws and regulations. If the carrying amount of assets is greater than their tax base or if the carrying amount of liabilities is less than their tax base, the difference between the tax base and their carrying amount shall be treated as a taxable temporary difference; If the carrying amount of assets is less than their tax base or if the carrying amount of liabilities is greater than their tax base, the difference between the tax base and their carrying amount shall be treated as a deductible temporary difference.
1. Except for the deferred income tax liabilities arising from the following transactions, the Company shall recognize the deferred income tax liabilities arising from all taxable temporary differences:
(1) The recognition of business reputation;
(2) Recognition of assets or liabilities arising from the transaction that has the following characteristics at the same time: The transaction is not business combination; the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected.
Unless the Company can control the time of the reverse of taxable temporary differences related to the investments of subsidiary companies, associated enterprises and contractual enterprises and the temporary differences are unlikely to be reversed in the predictable future, the Company shall recognize the corresponding deferred income tax liabilities.
2. The Company shall recognize the deferred income tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference, however, it shall not recognize the deferred income tax assets arising from the recognition of assets or liabilities during a transaction which is simultaneously featured by the following:
(1) This transaction is not business combination; and
(2) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected.
On the balance sheet date, where there is any exact evidence showing that it is likely to acquire sufficient amount of taxable income tax in a future period to offset against the deductible temporary difference, the Company shall recognize the deferred income tax assets unrecognized in prior periods. If the deductible temporary differences related to the investments of subsidiary companies, associated enterprises and contractual enterprises are likely to be reversed in the expected future and are likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences, the Company shall recognize the deferred income tax assets corresponding to the said differences.
3. On the balance sheet day, the current income tax liabilities (or assets) incurred in the current period or prior periods shall be measured by the Company in light of the expected payable (refundable) amount of income taxes according to the tax law; The deferred income tax assets and deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.
In case the applicable tax rate changes, the Company shall remeasure the deferred income tax assets and deferred income tax liabilities which have been recognized. Excluding the deferred income tax assets and deferred income tax liabilities arising from any transaction or event directly recognized as the owners" equity, the Company shall record the amount affected by tax rate change into the income tax expenses of the current period during which the change occurs.
The Company shall reexamine the carrying amount of deferred income tax assets on each balance sheet day. If it is unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the carrying amount of the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable income taxes, such write-down amount shall be subsequently reversed.
The Company shall record the income taxes of the current period and deferred income taxes other than business combinations and transactions or events directly recognized in the owners" equity into the profit statement as income tax expenses or incomes.
(27) Leases
The term "lease" refers to an agreement under which the lessor conveys to the lessee in return for rent the right to use an asset for an agreed period of time. Leases consist of financing leases and operating leases.
1. Financing leases
(1) Where a lease satisfies one or more of the following criteria, it shall be recognized as a financing lease: The ownership of the leased asset is transferred to the lessee when the term of lease expires; the lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can be reasonably determined that the option will be exercised; even if the ownership of the asset is not transferred, the lease term covers the major part (over 75% (included)) of the service life of the leased asset; in the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts to substantially all (over 90% (included)) of the fair value of the leased asset on the lease beginning date; in the case of the lessor, the present value of the minimum lease receipts on the lease beginning date amounts to substantially all (over 90% (included)) of the fair value of the leased asset on the lease beginning date; and the leased assets are of a specialized nature that only the lessee can use them without making major modifications.
A lease that does not satisfy the above conditions shall be recognized as an operating lease.
(2) The fixed assets leased by financing lease shall be recorded into the account based on the lower of the fair value of leased assets on the lease beginning date and the present value of the minimum lease payments, and a depreciation of the said fixed assets shall be made in accordance with the depreciation policies for the depreciable assets owned by the lessee.
2. Operating leases
The rents paid by the lessee shall be recorded by the Company into the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. The direct costs incurred from operating leases carried on by the Company shall be directly recorded into the profits and losses of the current period. The contingent rents involved in the operating lease agreement shall be recorded into the profits and losses of the current period in which they actually arise.
(28) Hedging
The Company designates main raw materials as a hedged item and forward contract as a hedging instrument to avoid the risks of changes in cash flows.
1. Recognition condition of hedging
(1) At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the relationship between the hedging instrument and the hedged item) and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. This document shall at least specify the contents of hedging instrument, the hedged item, the nature of the hedged risk and the method for the effectiveness assessment of the hedging and etc. The hedging shall be relevant to the designated specific identifiable risk, and will ultimately affect the profits and losses of the enterprise;
(2) The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by enterprise at the very beginning;
(3) For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses;
(4) The effectiveness of hedging can be reliably measured;
(5) The Company shall continuously evaluate the effectiveness of hedging and ensure that this hedging is highly effective in accounting period in which the hedging relationship is specified.
2. Measurement of hedging
The hedging instrument is measured at its fair value on the date when the hedging contract is signed, and its subsequent measurement is done at its fair value. The hedging instrument with a positive fair value shall be recognized as other current assets, and the hedging instrument with a negative fair value shall be recognized as other current liabilities. Where a cash flow hedging meets the conditions for adopting the hedging accounting method, it shall be dealt with in accordance with the following provisions:
(1) In the profit or loss of the hedging instrument, the portion, which is attributed to the effective hedging shall be directly recognized as the owner"s equity and shall be presented as a separate item. The amount of the portion of the effective hedging shall be confirmed in accordance with the lower of the accumulative profit or loss of the hedging instrument as of the commencement of hedging and the accumulative amount of changes in the present value of the estimated future cash flow of the hedged item as of the commencement of the hedging.
(2) In the profit or loss of the hedging instrument, the portion, which is attributed to the ineffective hedging (namely the other profit or loss after deducting the portion directly recognized as the owner"s equity) shall be recorded into the profit and loss of the current period.
(3) The relevant profit or loss directly recognized in the owner"s equity originally shall be shifted out during the same period in which this non-financial asset or non-financial liability affects the profit or loss of the enterprise and shall be recorded into the current profits and losses of the current period. However, when all or partial net loss expected by the enterprise to be directly recognized in the owner"s equity originally can not be made up in the future accounting period, the portion which can not be made up shall be shifted out and shall be recorded into profits and losses of the current period.
3. Evaluation of effectiveness of hedging
The Company adopts ratio analysis to evaluate the effectiveness of hedging instrument, that is, the Company recognizes the effectiveness of hedging instrument by comparing the hedging instrument resulting from the hedged risk with the fair value of the hedged item or change in cash flow ratio. When a hedging satisfies the following two conditions simultaneously, it shall be recognized as being highly efficient:
(1) At the beginning and in subsequent periods of a hedging, this hedging expectation shall be highly effective in offsetting the changes in the fair value or cash flows caused by the hedged item during the specified periods;
(2) The hedging’s actual offset results are within a range of 80% to 125%.
4. Conditions for terminating the fair value hedging accounting method
In case that hedging meets one of the following conditions, the Company will terminate use of fair value hedging accounting:
(1) The hedging instrument has expired or has been sold or exercised, or the relevant contract has been terminated.
(2) Where the hedging instrument has been extended or replaced by another hedging instrument and the extension or replacement is a composing part of the hedging strategy clearly stated on the Company’s written document, it shall not be deemed that the hedging instrument has expired or the related contract has been terminated.
(3) This hedging does not match the conditions for using the hedging accounting method any more.
(4) The Company has cancelled specification of hedging relationship.
(29) Critical accounting estimates
The management needs to make judgments and estimates in preparation of financial statements, and these judgments and estimates will affect the statement amounts of revenues, expenses, assets and liabilities and disclosure thereof, as well as disclosure of the contingent liability on the balance sheet date. However, the result arising from uncertainty of these estimates may lead to material adjustments for the carrying amount of future affected assets or liabilities.
The Company regularly reviews aforesaid judgments, estimates and assumptions on a going concern basis. Where changes in accounting estimates influence only the current period of changes, the amount affected by changes shall be recognized in the current period of changes; where changes influence both the current period of changes and the future period, the amount affected by changes shall be recognized in the current period of changes and the future period.
On the balance sheet date, the Company needs to make judgments, estimates and assumptions for amount of financial statement items in the following important fields:
1. Classification of leases
The Company classifies leases into operating leases and financing leases in accordance with provisions of Accounting Standards for Business Enterprises No. 21 – Leases. In classification, the management needs to make analysis and judgment based on whether all the risks and rewards related to the ownership of leased assets have been essentially transferred to the lessee or whether the Company has essentially assumed all the risks and rewards related to the ownership of leased assets.
2. Appropriation of bad debt provision
The Company adopts the allowance method to account the loss on bad debt according to the accounting policy of receivables. Impairment of accounts receivable is based on evaluation of collectability of accounts receivable. Identification of impairment of accounts receivable requires judgments and estimates made by the management. The difference between the actual result and the original estimate will affect the carrying amount of accounts receivable and appropriation or reversal of bad debt provision for accounts receivable in the period during which the estimate is changed.
3). Provision for obsolete stocks
The company measures inventories at the lower of the cost and net realizable value according to the inventory accounting policy. If the cost of inventories is higher than the net realizable value and the inventories are obsolete and slow moving ones, a provision for decline in value of inventories shall be made. The decline in value of inventories to the net realizable value is based on evaluation of inventories』 salability and realizable value. Identification of the decline in value of inventories requires the management to obtain exact evidence and make judgments and estimates on the basis of considering factors such as purposes of holding inventories and influences of events after the balance sheet date. The difference between the actual result and the original estimate will affect the carrying amount of inventories and making or reversal of provision for decline in value of inventories in the period during which the estimate is changed.
4. Fair value of financial instruments
For the financial instruments which have no active trading market, the Company uses various valuation methods such as discount cash flow model analysis to determine their fair values. In valuation, the Company needs to estimate aspects including the future cash flow, credit risk, market volatility and pertinency, and select a proper discount rate. These related hypotheses show uncertainty, and their changes will influence the fair value of a financial instrument.
5. Provision for non-financial and non-current asset impairment
On the balance sheet date, the Company judges whether the non-current assets other than financial assets may involve signs showing possible impairment. In addition to the impairment test conducted on an annual basis for the intangible assets with uncertain service life, when there is any sign showing impairment, such an asset shall also undergo an impairment test. For the non-current assets other than financial assets, if there is any sign showing that their carrying amount cannot be recovered, an impairment test shall be performed.
Where the carrying amount of an asset or asset group is higher than the recoverable amount, namely, the higher of the net amount got by reducing the disposal expenses from the fair value and the present value of the expected future cash flow, impairment has occurred.
The net amount got by reducing the disposal expenses from the fair value is recognized by referring to the sales agreement price of similar assets in a fair transaction or the observable market price and reducing the incremental cost directly attributable to disposal of this asset.
When the present value of the future cash flow is predicted, great judgments shall be made on this asset’s (or asset group’s) output, selling price, related operating cost and the discount rate used to calculate the present value. When estimating the recoverable amount, the Company adopts all the related data accessible, including the forecast about the output, selling price and related operating cost that is made according to the reasonable and supported hypotheses.
6. Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the company makes depreciation and amortization using the straight-line method in the service life after taking into account their salvage values. The Company regularly reviews the service life so as to determine the amount of depreciation and amortization expenses to be recorded into every report period. The service life is determined by the Company according to the previous experience in similar assets and in combination with the expected technology update. If major changes occur in the previous estimate, the depreciation and amortization expenses will be adjusted in the future period.
7. Deferred income tax assets
Within the limit that sufficient taxable profit can be obtained very likely to deduct the loss, the Company will recognize the deferred income tax assets regarding all the unused tax losses. This requires the management of the Company to use a lot of judgments to estimate the time and amount of the future taxable profit that may be generated and combine the tax planning strategy to determine the amount of the deferred income tax assets that should be recognized.
8. Income tax
In the normal operating activities of the Company, the final tax treatment and calculation of some transactions are uncertain to some extent. Whether certain items can be charged before tax depends on examination and approval of the tax authority. If the final recognition results of these tax issues differ from the initially estimated amount, the difference will influence the current income tax and deferred income tax in the period when it is finally recognized.
9. Accrued liabilities
Based on the contract terms, present knowledge and historical experience, the Company estimates the expected contract loss, delayed delivery penalty and litigation loss and makes corresponding provision. In case that such a contingency has formed a current obligation and the fulfillment of this current obligation likely causes outflow of economic benefits from the Company, the Company shall recognize the contingency as an accrued liability according to the best estimate of the necessary expense to be paid for the performance of the current obligation. To a great extent the recognition and measurement of accrued liabilities depend on judgments made by the management. In the judging process, the management shall evaluate the associated risks, uncertainty, and currency time value of such a contingency.
(30) Changes of accounting policies and accounting estimates and early error correction
1. Changes of accounting policies
There were no changes in accounting policies of the Company during the Report Period.
2. Changes of accounting estimates
There were no changes of accounting estimates in the Company during the period. 3. Early error correction
The Company was involved in no early error correction during the period.
VI. Taxes
(1) Main tax categories and tax rates of the Company
Category Tax Base Tax Rate
Added value tax Value added because of sales of 17.00%, 13.00%, 11.00%, 6.00%,
-
commodities or rendering of services 5.00%, 3.00%
Business tax Taxable turnover 3.00%, 5.00%
Urban maintenance & Circulation taxes payable 5.00%, 7.00%
construction tax
Educational Circulation taxes payable 3.00%
surcharges
Local education Circulation taxes payable 2.00%
surcharge
Embankment Sales revenue 0.03% 0.10%
-
protection fee
Business income tax Taxable income 15.00%, 25.00%, 16.50%, 34.00%Note: Hong Kong Gree Electric Appliances Sales Limited and Gree Electric Appliances (Brazil) Co., Ltd., the overseas subsidiary companies of the Company pay the corresponding taxes according to the local tax laws. Business income tax rates are 16.50% and 34.00% respectively.
(2) Business income tax rates of major tax payer enterprises subject to different tax rates
Taxpayer Income tax Taxpayer Income tax
rate rate
Gree Electric Appliances (Chongqing) 15.00% Gree Electric Appliances (Hefei) 15.00%
Co., Ltd. Co., Ltd.
Zhuhai Landa Compressor Co., Ltd. 15.00% Hong Kong Gree Electric 16.50%
Appliances Sales Co., Ltd.
Zhuhai Kaibang Motor Manufacture 15.00% Gree Electric Appliances (Brazil) 34.00%
Co., Ltd. Co., Ltd.
Gree Electric Appliances Technology Center Co., Ltd. Of Gree Green Refrigeration
(Shijiazhuang) Co., Ltd. 15.00% 15.00%
Zhuhai
Zhuhai Gree Xinyuan Electronics Co., 15.00% Gree Electric Appliances 15.00%
Ltd. (Zhengzhou) Co., Ltd.
Gree Electric Appliances (Wuhan) Co., 15.00% Gree Electric Appliances (Wuhu) 15.00%Ltd. Co., Ltd.(3) Tax preferences and approval documents
1. The Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises (High-tech Enterprise Certificate No. GR201444001043). The Company applied the income tax rate of 15.00%.
2. Deemed to be high and new tech enterprises, the following sub-subsidiaries of the Company have acquired high-tech enterprise certificates, and applied the enterprise income tax rate of 15.00% in 2016:
No. Name of tax payer Certificate number Time for acquiring Valid period
the certificate
1 Zhuhai Landa Compressor Co., Ltd. GR201444000002 10 October 2014 Three years
2 Hefei Landa Compressor Co., Ltd. GF201434000075 2 July 2014 Three years
3 Zhengzhou Landa Compressor Co., Ltd. GR201441000234 23 October 2014 Three years
4 Wuhan Landa Compressor Co., Ltd. GR201442000567 14 October 2014 Three years
5 Zhuhai Gree Electrical Co., Ltd. GR201544000739 10 October 2015 Three years
6 Gree Electric Enterprises (Ma"anshan) Ltd. GR201434000348 2 July 2014 Three years
7 Zhuhai Kaibang Motor Manufacture Co., GR201544101531 10 October 2015 Three years
Ltd.
8 Hefei Kaibang Motor Manufacture Co., Ltd. GF201434000014 2 July 2014 Three years
9 Henan Kaibang Motor Manufacture Co., GR201441000147 23 October 2014 Three years
Ltd.
10 Gree Electric Appliances (Hefei) Co., Ltd. GR201434000153 2 July 2014 Three years
11 Zhuhai Gree Xinyuan Electronics Co., Ltd. GR201644007287 December 9, Three years
2016
12 Zhuhai Gree Daikin Precision Mold Co., GR201644004203 November 30, Three years
Ltd. 2016
No. Name of tax payer Certificate number Time for acquiring Valid period
the certificate
13 Gree Green Refrigeration Technology GF201444000382 October 9, 2014 Three years
Center Co., Ltd. Of Zhuhai
14 Gree Electric Appliances (Wuhan) Co., Ltd. GR201642001340 December 13, Three years
2016
15 Co., Ltd.Gree Electric Appliances (Shijiazhuang) GR201613000193 November 2, Three years
2016
16 Gree Electric Appliances (Zhengzhou) Co., GR201441000307 October 23, 2014 Three years
Ltd.
17 Gree Electric Appliances (Wuhu) Co., Ltd. GR201434000562 July 2, 2014 Three years3. The following sub-subsidiaries of the Company enjoy the country’s western development policy, and applied the income tax rate of 15.00%.
No. Name of tax payer Preferential tax policy Start time
1 Gree Electric Appliances (Chongqing) Co., Preferential tax policy of January 1, 2008
Ltd. western development
2 Chongqing Landa Compressor Co., Ltd. Preferential tax policy of January 1, 2015
western development
3 Chongqing Kaibang Motor Manufacture Co., Preferential tax policy of January 1, 2013 Ltd. western developmentVII. Notes and description of major items in consolidated financial statements
Unless specially indicated, the monetary unit of the data listed in this section shall be RMB Yuan. "Beginning of the period" and "beginning of the year" mean 1 January 2016; "end of the period" and "end of the year" mean 31 December 2016; "previous period" means the year of 2015; "current period" means the year of 2016. (1) Monetary capital
Item Amount at the end of the period Amount at the beginning of the period
Cash 2,069,645.31 2,395,117.18
Bank deposits 54,348,628,591.21 39,951,097,932.43
Other monetary capital 6,108,277,792.95 7,687,087,609.64
Deposits in central bank 2,705,752,325.39 3,769,666,905.93
Deposits in other banks 32,448,402,376.61 37,409,550,995.35
Total 95,613,130,731.47 88,819,798,560.53
Including: Total amount 109,031,267.06 4,729,515,158.98deposited abroadNote:
1. The invoicing and guarantee deposit in other monetary capital of the Company is RMB 6,077,539,766.88; the credit margin is RMB 30,738,026.07;
2. The reserve requirements on deposit in the Company"s deposits in central bank are RMB 2,703,513,915.69.
3. The Company did not have any amount involving potential recovery risk at the end of the period.
(2) Derivative financial assets
Item Balance at the end of the period Beginning Balance
Derivative financial assets -
forward foreign exchange 250,848,418.63
settlement/sale
Total 250,848,418.63(3) Notes receivable
1. Notes receivable are presented by category
Item Amount at the end of the period Amount at the beginning of the
period
Banker’s acceptance 29,878,639,384.77 14,879,805,537.96
Trade acceptance 84,716,093.68
Total 29,963,355,478.45 14,879,805,537.962. Notes receivable which have been pledged but not yet due at the end of the period
Item Pledged amount at the end of the period
Banker’s acceptance 24,406,512,494.25
Total 24,406,512,494.253. Notes receivable which have been endorsed or discounted but not yet due at the end of the period
Item Amount whose recognition is Amount whose recognition is not
terminated at the end of the period terminated at the end of the period
Banker’s acceptance 42,426,151,663.20
Total 42,426,151,663.20 4. The Company had no notes carried forward to the accounts receivable due to incapability of performance by the drawer at the end of the period.
(4) Accounts receivable
1. The accounts receivable are disclosed by type
Amount at the end of the period
Type Book balance Bad debt provision
Amount Percentage Amount Percentage Carrying amount
(%) (%)
Receivables with
significant single 515,821,127. 379,709,258
amounts and single 36 14.62 .80 73.61 136,111,868.56
impairment provision
appropriated
Accounts receivable with
bad debt provision 2,991,849,61 84.80 167,426,833 5.60 2,824,422,782.81
appropriated by aging 6.67 .86
combination
Other insignificant
accounts receivable with 20,392,776.8 0.58 20,392,776. 100.00
single bad debt provision 2 82
appropriated
Total 3,528,063,52 100.00 567,528,869 16.09 2,960,534,651.37
0.85 .48
Continued
Amount at the beginning of the period
Type Book balance Bad debt provision
Amount Percentage Amount Percentage Carrying amount
(%) (%)
Receivables with
significant single 455,090,253. 335,028,47
amounts and single 61 13.44 9.96 73.62 120,061,773.65
impairment provision
appropriated
Accounts receivable with
bad debt provision 2,907,834,96 85.85 148,684,62 5.11 2,759,150,338.28
appropriated by aging 7.26 8.98
combination
Other insignificant
accounts receivable with 24,037,956.6 0.71 24,037,956. 100.00
single bad debt provision 3 63
appropriated
Total 3,386,963,17 100.00 507,751,06 14.99 2,879,212,111.93
7.50 5.57
2. Accounts receivable with bad debt provision provided by aging analysis in the
combinations
Amount at the end of the period
Aging Percentage of
Accounts receivable Bad debt provision appropriation
(%)
Within 1 year 2,889,416,405.09 144,479,573.99 5.00
1 to 2 years 98,424,647.70 19,684,929.55 20.00
Amount at the end of the period
Aging Percentage of
Accounts receivable Bad debt provision appropriation
(%)
2 to 3 years 1,492,467.12 746,233.56 50.00
Over 3 years 2,516,096.76 2,516,096.76 100.00
Total 2,991,849,616.67 167,426,833.86 5.603. Receivables with significant single amounts and single impairment provision appropriated
Percentage of Reason for
Name of debtor Book balance Bad debt provision appropriation appropriation
(%)
Customer 515,821,127.36 379,709,258.80 73.61 Insolvency
Total 515,821,127.36 379,709,258.80 73.614. Other insignificant accounts receivable with single bad debt provision appropriated
Name of debtor Book balance Bad debt provision Percentage of Reason for
appropriation (%) appropriation
Customer 1 13,458,727.43 13,458,727.43 100.00 Bankruptcy
Customer 2 4,715,115.32 4,715,115.32 100.00 Insolvency
Customer 3 1,466,529.62 1,466,529.62 100.00 Insolvency
Customer 4 444,592.97 444,592.97 100.00 Insolvency
Customer 5 307,811.48 307,811.48 100.00 Bankruptcy
Total 20,392,776.82 20,392,776.82 100.005. The amount of accounts receivable bad debt provision appropriated by the Company in the current period was RMB59,173,500.09, and there was no bad debt provision reversed in the current period.
6. The Company’s accounts receivable actually written off in this period was RMB8,077,488.07, and there was no important accounts receivable that was written off.
7. The aggregate balance amount of accounts receivable for the Company’s top 5 debtors at the end of the year was RMB1,079,712,287.83, accounting for 30.60% of the total balance of accounts receivable at the end of the year, and the aggregate balance amount of bad debt provision appropriated accordingly at the end of the year was RMB407,903,816.82.
8. The Company had no accounts receivable that were stopped from recognition due to financial asset transfer in the current period.
9. The Company had no assets or liabilities formed by transfer of accounts receivable and its continuous involvement into them in the current period.
(5) Prepayments
1). The prepayments are listed by aging as follows:
Amount at the end of the period Amount at the beginning of the period
Aging Amount Percentage Amount Percentage
(%) (%)
Within 1 year 1,801,709,353.49 99.27 809,311,758.91 95.45
1 to 2 years 8,874,382.78 0.49 29,420,687.55 3.47
2 to 3 years 1,223,829.65 0.07 2,743,640.94 0.32
Over 3 years 3,138,224.86 0.17 6,453,062.31 0.76
Total 1,814,945,790.78 100.00 847,929,149.71 100.002. At the end of the period, the Company had no prepayments whose aging exceeded one year and amount was important.
3. The Company’s total prepayment balance of top 5 prepaying entities at the end of the year was RMB1,338,718,433.44, accounting for 73.76% of the prepayment balance at the end of the year.
(6) Interests receivable
1. Classification of interests receivable
Item Balance at the end of the period Beginning Balance
Interest on deposit 983,107,894.67 1,032,368,135.50
Loan interest 7,893,862.11 7,150,605.17
Interest of securities 54,540,806.65 70,257,709.10
investment
Total 1,045,542,563.43 1,109,776,449.772. The Company had no overdue interests receivable in the current period.
(7) Other receivables1. Other receivables are disclosed by type
Amount at the end of the period
Type Book balance Bad debt provision
Percentage Percentage Carrying
Amount Amount amount
(%) (%)
Other receivables
with significant single
amounts and single
impairment provision
appropriated
Other receivable with
bad debt provision 287,515,010.46 100.00 42,530,855.79 14.79 244,984,154.67
appropriated by aging
combination
Other insignificant
receivables with
single bad debt
provision
appropriated
Total 287,515,010.46 100.00 42,530,855.79 14.79 244,984,154.67
Continued
Amount at the beginning of the period
Type Book balance Bad debt provision
Percentage Percentage Carrying
Amount Amount amount
(%) (%)
Other receivables
with significant single
amounts and single
impairment provision
appropriated
Other receivable with
bad debt provision 295,812,685.59 100.00 41,796,042.59 14.13 254,016,643.00
appropriated by aging
combination
Other insignificant
receivables with
single bad debt
provision
appropriated
Total 295,812,685.59 100.00 41,796,042.59 14.13 254,016,643.00
2. Other receivables with bad debt provision appropriated by aging analysis in the combinations
Amount at the end of the period
Aging Percentage of
Other receivables Bad debt provision appropriation
(%)
Within 1 year 243,235,448.07 12,161,522.52 5.00
1 to 2 years 10,931,010.76 2,186,202.18 20.00
2 to 3 years 10,330,841.12 5,165,420.58 50.00
Over 3 years 23,017,710.51 23,017,710.51 100.00
Total 287,515,010.46 42,530,855.79 14.793. The amount of bad debt provision appropriated by the Company in the current period was RMB688,536.07, and there was no bad debt provision reversed in the current period.
4. The amount of other receivables actually written off by the Company in the current period was RMB60,443.00, and there was no important accounts receivable that was written off.
5. Other receivables presented by the nature of money
Nature of money Amount at the end of the period Amount at the beginning of the
period
Intercourse funds 218,000,294.66 222,155,797.44
Hedging fund 69,514,715.80 73,656,888.15
Total 287,515,010.46 295,812,685.596. The top 5 debtors of other receivables
Relationship Percentage to
Name of entity with the Amount Aging total other Bad debt provision
Company receivables appropriated
(%)
First Non-related 69,514,715.80 Within 24.18 3,475,735.79
party 1 year
Second Non-related 9,881,000.00 Within 3.44 494,050.00
party 1 year
Third Non-related 9,802,900.00 Within 3.41 490,145.00
party 1 year
Fourth Non-related 7,752,619.62 Within 2.70 387,630.98
party 1 year
Fifth Non-related 7,109,244.49 Within 2.47 355,462.22
party 1 year
Total 104,060,479.91 36.20 5,203,023.997. The Company had no other receivables involving government subsidies in the current period.
8. The Company had no other receivables that were stopped from recognition due to financial asset transfer in the current period.
9. The Company had no assets or liabilities formed by transfer of other receivables and its continuous involvement into them in the current period.
(8) Buying back the sale of financial assets
1. Presented by the category of financial assets
Category of subject matter Balance at the end of the period Beginning Balance
Bonds 1,000,000,000.00
Including: treasury bonds 1,000,000,000.00
Less: provision for impairment
Carrying amount 1,000,000,000.002. Presented by the category of businesses
Item Balance at the end of the period Beginning Balance
Pledge-style reverse Repo 1,000,000,000.00
Total 1,000,000,000.003. Provided capital through the pledged repurchase was presented by category within the residual maturity
Term Balance at the end of the period Beginning Balance
Within 1 month 1,000,000,000.00
Total 1,000,000,000.00(9) Inventories
1). Type of inventories
Item Amount at the end of the period
Book balance Provision for price fall Carrying amount
Raw material 3,346,047,573.00 138,267,102.68 3,207,780,470.32
Goods in process 969,710,357.81 969,710,357.81
Finished goods 4,889,087,079.59 41,672,668.31 4,847,414,411.28
Total 9,204,845,010.40 179,939,770.99 9,024,905,239.41Continued
Item Amount at the beginning of the period
Book balance Provision for price fall Carrying amount
Raw material 3,779,129,197.57 112,001,486.87 3,667,127,710.70
Goods in process 1,292,887,741.96 1,292,887,741.96
Item Amount at the beginning of the period
Book balance Provision for price fall Carrying amount
Finished goods 4,554,349,862.15 40,422,602.30 4,513,927,259.85
Total 9,626,366,801.68 152,424,089.17 9,473,942,712.512. Provision for obsolete stocks
Increase in the current period Decrease for the
Amount at the current period
Type of beginning of Amount of Amount at the end
inventories the period appropriation Others Reversed Write-off of the period
for the current amount amount
period
Raw 112,001,486.87 14,309,951.01 11,955,664.80 138,267,102.68
material
Finished 40,422,602.30 681,057.07 569,008.94 41,672,668.31
goods
Total 152,424,089.17 14,991,008.08 12,524,673.74 179,939,770.99Specific bases for making a provision for decline in value of inventories and reasons of reversing or writing off the provision for decline in value of inventories in the current period
Reason of writing off
Specific basis for making a Reason of reversing the provision the provision for
Item provision for decline in value for decline in value of inventories in decline in value of
of inventories the current year inventories in the
current year
Raw The lower of the inventory cost
material and net realizable value
Finished The lower of the inventory cost goods and net realizable value3. The inventory balance at the end of the period did not contain capitalized amounts of borrowing costs.
4. The inventory balance at the end of the period did not involve finished but unsettled assets formed under construction contract.
(10) Other current assets
Item Amount at the end of the period Amount at the beginning of
the period
Hedging instruments 19,564,070.50 43,205,378.75
Financing products 1,300,000,000.00 1,580,000,000.00
Input tax to be deducted and prepaid tax 672,972,432.93 61,628,100.79
Total 1,992,536,503.43 1,684,833,479.54(11) Disbursement of loans and advances
1. Distribution of enterprises and individuals
Item Amount at the end of the period Amount at the beginning of
the period
Disbursement of corporate loans and
advances
Including: (1) Loan 3,019,591,337.33 5,297,312,000.00
(2) Discount 1,839,344,548.42 2,777,807,263.38
Including: discount asset interest -11,130,112.82 -24,891,213.22
adjustment
Total disbursement of corporate loans and 4,858,935,885.75 8,075,119,263.38
advances
Less: loan loss provision 121,751,649.96 202,500,261.92
Including: combined appropriation 121,751,649.96 202,500,261.92
Carrying amount of disbursement of 4,737,184,235.79 7,872,619,001.46
corporate loans and advances
2. Changes in loss provision for loans
Item Amount at the end of the period Amount at the beginning of
the period
Beginning Balance 202,500,261.92 165,867,755.21
Appropriation for the current year -80,748,611.96 36,632,506.71
Balance at the end of the period 121,751,649.96 202,500,261.92
(12) Financial assets available for sale
1. Classification of financial assets available for sale
Balance at the end of the period
Item Provision for
Book balance impairment Carrying amount
Debt instrument available for sale 894,690,850.00 894,690,850.00
Including: amount measured at the 894,690,850.00 894,690,850.00
fair value
Equity instrument available for sale 418,512,710.40 900,000.00 417,612,710.40
Including: amount measured at the 417,612,710.40 417,612,710.40
fair value
Amount measured by cost 900,000.00 900,000.00
Trust products 72,000,000.00 72,000,000.00
Total 1,385,203,560.40 900,000.00 1,384,303,560.40
Continued
Beginning Balance
Item Provision for
Book balance impairment Carrying amount
Debt instrument available for 926,838,050.00 926,838,050.00
sale
Including: amount measured at 926,838,050.00 926,838,050.00
Beginning Balance
Item Provision for
Book balance impairment Carrying amount
the fair value
Equity instrument available for 1,688,781,127.56 900,000.00 1,687,881,127.56
sale
Including: amount measured at 1,687,881,127.56 1,687,881,127.56
the fair value
Amount measured by 900,000.00 900,000.00
cost
Trust products 90,000,000.00 90,000,000.00
Total 2,705,619,177.56 900,000.00 2,704,719,177.56 2. Available-for-sale financial assets measured at the fair value at the end of the period
Classification of financial assets available for Equity instrument Debt instrument Total
sale available for sale available for sale
Equity instrument cost/Debt instrument 617,323,352.86 869,544,485.48 1,486,867,838.34
amortization cost
Fair value 417,612,710.40 894,690,850.00 1,312,303,560.40
Amount change in the fair value cumulatively -282,610,139.11 25,146,364.52 -257,463,774.59
recorded into other comprehensive income
Impairment amount appropriated3. Available-for-sale financial assets measured at cost at the end of the period
Book balance Provision for impairment Cash
Name of Amount at Increase Decrease Amount at Increase Decreas Shareholding dividend
invested the Amount at the e Amount at ratio in the for the
entities beginning in the for the the end of beginning in the for the the end of invested entity current
of the current current the period of the current current the period (%) period
period period period period period period
Zhuhai
Dasheng 900,000.00 900,000.00 900,000.00 900,000.00 3.13
Co. Ltd.
Total 900,000.00 900,000.00 900,000.00 900,000.004. Changes in impairment of available-for-sale financial assets in the Report Period
Classification of financial assets Equity instrument Debt instrument Total
available for sale available for sale available for sale
Balance of impairment appropriated at 900,000.00 900,000.00
the beginning of the period
Appropriation for the current period
Decrease for the current period
Balance of impairment appropriated at 900,000.00 900,000.00the end of the period5. The Company had no dramatic decrease or persistent decrease in the closing faire value of equity instrument available for sale in the current period.
(13) Long-term equity investments
Beginning Balance Increase/Decrease in the current period
Appropr Balance of
Name of invested Investment Adjustment Cash iated Balance at the provision for
entities Provision for Additional profits/losses of other Changes dividends provisio end of the impairment
Original value impairment investment Disinvestment recognized comprehens in other or profits n for Others period at the end of
under the ive income equities declared to impairm the period
equity method distribute ent
1. Partnership
Songyuan Food 60,891,468.90 4,234,163.53 65,125,632.43
Group Co., Ltd.
Subtotal 60,891,468.90 4,234,163.53 65,125,632.43
2. Joint venture
(Vietnam) Gree
Electric 1,940,009.35 1,940,009.35 1,940,009.35 1,940,009.35
Appliances, Inc.
Liaowang All
Media 22,423,869.04 3,851,569.67 26,275,438.71
Communication
Co., Ltd.
Beijing Gree
Technology Co., 1,252,032.71 291,384.83 1,543,417.54
Ltd.
Chongqing Pargo
Mechanical 10,891,816.90 523,735.65 10,368,081.25
-
Equipment Co.,
Ltd.
GREE VOLINCO
(HONG KONG) 419,538.00 181,063.58 600,601.58
LIMITED
Subtotal 36,507,728.00 1,940,009.35 419,538.00 3,800,282.43 40,727,548.43 1,940,009.35
Total 97,399,196.90 1,940,009.35 419,538.00 8,034,445.96 105,853,180.86 1,940,009.35(14) Investment real estate
1. Information of investment real estate
Item Houses and buildings Total
1. Total of original carrying amount
1. Beginning balance 574,204,838.52 574,204,838.52
2. Increased amount in the current period 127,410,609.25 127,410,609.25
Including: amount transferred into 127,410,609.25 127,410,609.25
construction in progress
3. Decreased amount in the current period 121,243.33 121,243.33
Including: amount transferred into fixed 121,243.33 121,243.33
assets
4. Balance at the end of the period 701,494,204.44 701,494,204.44
2. Accumulated depreciation and
accumulated amortization
1. Beginning balance 82,663,988.86 82,663,988.86
2. Increased amount in the current period 21,099,340.73 21,099,340.73
Including: appropriation or amortization 21,099,340.73 21,099,340.73
3. Decreased amount in the current period 5,759.10 5,759.10
Including: amount transferred into fixed 5,759.10 5,759.10
assets
4. Balance at the end of the period 103,757,570.49 103,757,570.49
3. Provision for impairment
4. Carrying amount
1. Carrying amount at the end of the period 597,736,633.95 597,736,633.95
2. Carrying amount at the beginning of the 491,540,849.66 491,540,849.66period2. The original value of the investment real estate of which the certificate of title has not yet obtained by the Company was RMB148,424,506.45 at the end of the period, and there was no flaw in property rights.
(15) Fixed assets
1. Information of fixed assets
Item Houses and buildings Machinery equipment Transportation equipment Electronic equipment Other equipments Total
1. Total of original carrying amount:
1. Beginning balance 11,023,730,601.04 9,134,149,525.49 598,887,765.65 650,098,351.71 316,050,673.13 21,722,916,917.02
2. Increased amount in the current period 2,072,952,725.78 1,749,920,708.73 43,004,494.37 122,165,231.73 81,861,388.34 4,069,904,548.95
Including: (1) Procurement 1,515,673,405.53 43,004,494.37 122,165,231.73 81,861,388.34 1,762,704,519.97
(2) Amount transferred into construction in 2,072,831,482.45 234,247,303.20 2,307,078,785.65
progress
(3)Amount transferred into investment real 121,243.33 121,243.33
estate
3. Decreased amount in the current period 178,733,755.29 22,835,247.51 15,000,334.61 7,333,598.06 223,902,935.47
Including: Disposal or scrap 178,733,755.29 22,835,247.51 15,000,334.61 7,333,598.06 223,902,935.47
4. Balance at the end of theperiod 13,096,683,326.82 10,705,336,478.93 619,057,012.51 757,263,248.83 390,578,463.41 25,568,918,530.50
2. Accumulated depreciation
1. Beginning balance 1,815,042,931.58 3,503,123,791.52 320,585,140.19 438,485,978.44 194,943,254.02 6,272,181,095.75
2. Increased amount in the current period 428,659,700.70 972,280,174.28 90,086,202.79 145,002,091.84 77,523,516.52 1,713,551,686.13
Including: (1) Appropriation 428,653,941.60 972,280,174.28 90,086,202.79 145,002,091.84 77,523,516.52 1,713,545,927.03
(2) Amount transferred into investment real 5,759.10 5,759.10
estate
3. Decreased amount in the current period 99,680,429.97 16,757,644.35 2,719,194.99 3,092,185.20 122,249,454.51
Including: Disposal or scrap 99,680,429.97 16,757,644.35 2,719,194.99 3,092,185.20 122,249,454.51
4. Balance at the end of the period 2,243,702,632.28 4,375,723,535.83 393,913,698.63 580,768,875.29 269,374,585.34 7,863,483,327.37
3. Provision for impairment
1. Beginning balance 13,995,429.77 4,462,623.00 124,245.35 340,445.95 18,922,744.07
2. Increased amount in the current period 4,861,077.55 8,282.39 24,475.49 10,171.84 4,904,007.27
Including: appropriation 4,861,077.55 8,282.39 24,475.49 10,171.84 4,904,007.27
3. Decreased amount in the current period 24,768.57 22,257.70 47,026.27
Including: Disposal or scrap 24,768.57 22,257.70 47,026.27
4. Balance at the end of the period 13,995,429.77 9,298,931.98 8,282.39 148,720.84 328,360.09 23,779,725.07
4. Carrying amount
1. Carrying amount at the end of the period 10,838,985,264.77 6,320,314,011.12 225,135,031.49 176,345,652.70 120,875,517.98 17,681,655,478.06
2. Carrying amount at the beginning of the 9,194,692,239.69 5,626,563,110.97 278,302,625.46 211,488,127.92 120,766,973.16 15,431,813,077.20Note: The depreciation appropriated in the current period was RMB1,713,545,927.03, and the original price of construction in progress transferred into fixed assets during the period was RMB2,307,078,785.65. As of December 31, 2016, the original value of houses and buildings of which the certificate of title has not yet obtained by the Company is RMB8,773,913,735.29. 2. The Company had no temporary idle fixed assets in the current period.
3. The Company had no fixed assets leased in through financing leases.
4. The Company had no fixed assets leased out through operating leases.
(16) Construction in progress
1. Information of construction in progress
Amount at the end of the period Amount at the beginning of the period
Item Provision Carrying Provision
Book balance for amount Book balance for Carrying amount
impairment impairment
Chongqing Gree 2,615.28 2,615.28 536,450,543.91 536,450,543.91
project
Wuhu Gree project 19,094,736.70 19,094,736.70 532,806,043.38 532,806,043.38
Zhengzhou Gree 8,730,392.91 8,730,392.91 286,394,999.36 286,394,999.36
Phase I project
Shijiazhuang Gree 15,648,723.23 15,648,723.23 121,878,738.99 121,878,738.99
project
Changsha HVAC 117,034,936.05 117,034,936.05 281,421,364.14 281,421,364.14
project
Wuhan Gree project 33,638,875.33 33,638,875.33 117,494,691.58 117,494,691.58
Landa compressor 109,077,729.01 109,077,729.01 37,684,587.53 37,684,587.53
project
Gree HQ project 92,157,312.16 92,157,312.16 45,748,249.58 45,748,249.58
Gree TOSOT 77,697,574.40 77,697,574.40 250,800.00 250,800.00
(Suqian) project
Wuhu Precision
Manufacturing 59,725,831.97 59,725,831.97 36,339,251.23 36,339,251.23
project
Others 48,735,029.80 48,735,029.80 48,368,560.32 48,368,560.32
Total 581,543,756.84 581,543,756.84 2,044,837,830.02 2,044,837,830.022. Changes in construction projects in progress
Including: Interest
Amount at the Amount Amount at the Amount of Amount of capitalization
Item Name beginning of the Increase in the Amount transferred transferred into end of the capitalization capitalization rate for the CapitalSource
period current period into fixed assets investment real period of interests of interests for current period of Investment
estate the current (%)
period
Chongqing Gree 536,450,543.91 42,144,491.26 578,592,419.89 2,615.28 Raised
project independently
Wuhu Gree 532,806,043.38 489,409,901.27 24,301,405.41 19,094,736.70 Raised
project independently
Zhengzhou Gree 286,394,999.36 42,908,975.78 218,068,244.74 102,505,337.49 8,730,392.91 Raised
Phase I project independently
Shijiazhuang 121,878,738.99 37,770,954.12 144,000,969.88 15,648,723.23 Raised
Gree project independently
Changsha HVAC 281,421,364.14 230,168,988.98 394,555,417.07 117,034,936.05 Raised
project independently
Wuhan Gree 117,494,691.58 121,104,755.30 204,626,178.41 334,393.14 33,638,875.33 Raised
project independently
Landa Raised
compressor 37,684,587.53 110,936,130.12 39,542,988.64 109,077,729.01 independently
project
Gree HQ project 45,748,249.58 61,901,439.29 15,492,376.71 92,157,312.16 Raised
independently
Gree TOSOT 250,800.00 77,446,774.40 77,697,574.40 Raised
(Suqian) project independently
Wuhu Precision Raised
Manufacturing 36,339,251.23 127,493,407.24 104,106,826.50 59,725,831.97 independently
project
Others 48,368,560.32 119,319,405.23 118,683,462.54 269,473.21 48,735,029.80 Raised
independently
Total 2,044,837,830.02 971,195,321.72 2,307,078,785.65 127,410,609.25 581,543,756.84 Raised
3. The Company had no impairment of construction in progress in the current
period.
(17) Intangible assets
Item Land use rights Patent rights and others Total
1. Total of original carrying amount
1. Beginning balance 2,945,239,569.13 18,899,842.05 2,964,139,411.18
2. Increased amount in the current period 772,205,744.28 969,474.81 773,175,219.09
Including: Procurement 772,205,744.28 969,474.81 773,175,219.09
3. Decreased amount in the current 1,367,530.52 1,367,530.52
period
Including: Disposal 1,367,530.52 1,367,530.52
4. Balance at the end of the period 3,716,077,782.89 19,869,316.86 3,735,947,099.75
2. Accumulated amortization
1. Beginning balance 297,811,763.91 10,183,835.53 307,995,599.44
2. Increased amount in the current period 70,871,084.89 2,436,385.33 73,307,470.22
Including: appropriation 70,871,084.89 2,436,385.33 73,307,470.22
3. Decreased amount in the current 632,254.63 632,254.63
period
Including: Disposal 632,254.63 632,254.63
4. Balance at the end of the period 368,050,594.17 12,620,220.86 380,670,815.03
3. Provision for impairment
4. Carrying amount
1. Carrying amount at the end of the 3,348,027,188.72 7,249,096.00 3,355,276,284.72
period
2. Carrying amount at the beginning of 2,647,427,805.22 8,716,006.52 2,656,143,811.74
the period
(18) Deferred income tax assets/Deferred income tax liabilities
1. Deferred income tax assets not offset
Balance at the end of the period Beginning Balance
Item Deductible temporary Deferred income Deductible Deferred income
differences tax assets temporary tax assets
differences
Assets depreciation 827,413,296.99 132,246,754.17 410,412,835.71 77,110,236.61
reserves
Deductible loss 456,836,817.78 114,209,204.47 301,321,074.64 75,330,268.67
Accrued expenses 57,983,419,537.57 8,697,537,604.97 51,189,425,884.98 7,678,526,424.69
Payroll payable 414,478,017.73 62,171,702.65 715,736,768.61 107,674,163.51
Amortization of 1,084,532,006.00 163,007,525.36 1,050,783,076.81 157,740,989.92
assets
Others 3,295,065,226.21 498,544,360.53 4,402,472,094.43 667,994,052.87
Total 64,061,744,902.28 9,667,717,152.15 58,070,151,735.18 8,764,376,136.27
2. Deferred income tax liabilities not offset
Balance at the end of the period Beginning Balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
differences tax liabilities differences tax liabilities
Changes in fair value
of financial assets 25,146,364.52 6,286,591.13 52,755,526.90 13,188,881.73
available for sale
Changes in fair value
of derivative financial 288,444,183.59 43,830,564.01
assets
Unrealized exchange 219,749,465.07 36,258,661.19
gain and loss
Interests receivable 1,045,542,563.43 192,010,519.27 1,109,776,449.77 222,911,701.49
Others 10,682,559.16 1,623,075.76 48,702,885.64 8,035,976.13
Total 1,589,565,135.77 280,009,411.36 1,211,234,862.31 244,136,559.353. Deferred income tax assets or liabilities listed by net amount after offsetting: none
4. Breakdown of deductible temporary differences or deductible losses of deferred income tax assets not recognized
Item Amount at the end of the Amount at the
period beginning of the period
Deductible temporary differences 618,551,183.95 414,210,775.76
Deductible loss 53,024,670.60 51,266,242.49
Total 671,575,854.55 465,477,018.255. The deductible losses of deferred income tax assets not recognized will become due in the following years:
Year Amount at the end of the Amount at the beginning of the period
period
2017 40,241,925.02 1,640,204.26
2018 7,462,548.70 40,241,925.02
2019 1,050,034.77 7,462,548.70
2020 871,529.74 1,050,034.77
2021 3,398,632.37 871,529.74
Total 53,024,670.60 51,266,242.49(19) Other non-current assets
Item Amount at the end of the period Amount at the beginning of the period
Advance payment for the project 9,662,883.09 13,936,886.60
Advance payment for equipment 1,183,323,428.17 643,063,213.53
Advance payment of land transfer 118,604,000.00
fee
Total 1,311,590,311.26 657,000,100.13(20) Short-term borrowings
1. Classification of short-term borrowings:
Item Amount at the end of the period Amount at the beginning of the period
Guaranteed loan 825,378,407.00 1,328,471,206.03
Borrowing on credit 9,875,703,238.32 4,948,188,930.00
Total 10,701,081,645.32 6,276,660,136.03
2. There was no short-term borrowing that has been overdue but not yet repaid in
the current period.
(21) Borrowings from central bank
Amount at the Increase in the Decrease for the Amount at the end of
Item beginning of the current period current period the period
period
Bills rediscounted 8,000,000.00 14,833,543.30 18,559,543.30 4,274,000.00
Total 8,000,000.00 14,833,543.30 18,559,543.30 4,274,000.00
(22) Deposits from customers and interbank
Item Amount at the end of the period Amount at the beginning of the period
Current deposits 24,465,859.45 60,747,235.82
Time deposits 80,776,000.00 80,865,000.00
Draft deposits 40,000,000.00 425,000,000.00
Total 145,241,859.45 566,612,235.82
(23) Derivative financial liabilities
Item Balance at the end of the period Beginning Balance
Derivative financial liabilities -
forward foreign exchange 394,763,490.33 1,189,028,366.37
settlement/sale
Total 394,763,490.33 1,189,028,366.37
(24) Notes payable
Item Amount at the end of the period Amount at the beginning of the period
Banker"s acceptance bill 9,127,336,849.68 7,427,635,753.74
Total 9,127,336,849.68 7,427,635,753.74
Note: There were no due and unpaid notes payable at the end of the period.
(25) Accounts payable 1. Classification
Item Amount at the end of the period Amount at the beginning of the period
Within 1 year 29,234,118,164.73 24,430,253,525.99
1 to 2 years 239,381,969.92 285,936,716.79
2 to 3 years 30,764,375.53 26,375,396.94
Item Amount at the end of the period Amount at the beginning of the period
Over 3 years 37,202,350.92 51,702,732.75
Total 29,541,466,861.10 24,794,268,372.472. There were no important accounts payable with aging exceeding 1 year at the end of the period.
(26) Advance received from customers
1. Classification
Item Amount at the end of the period Amount at the beginning of the period
Loans 10,021,885,515.93 7,619,598,042.86
Total 10,021,885,515.93 7,619,598,042.862. There was no advance received from customers with aging exceeding 1 year at the end of the period.
3. There were no accounts receivable in advance corresponding to any settled and uncompleted construction contract project at the end of the period.
(27) Payroll payable
1. Presentation by category
Item Beginning Balance Increase in the Decrease for the Balance at the
current period current period end of the period
1. Short-term wages 1,697,113,495.90 5,359,621,409.33 5,354,216,468.60 1,702,518,436.63
and salaries
2. Separation benefits
- defined contribution 169,109.61 402,134,238.26 401,872,357.44 430,990.43
plan
Total 1,697,282,605.51 5,761,755,647.59 5,756,088,826.04 1,702,949,427.062. Short-term wages and salaries
Item Beginning Balance Increase in the Decrease for the Balance at the
current period current period end of the period
1. Wages, bonuses,
subsidies and 1,308,427,557.99 4,557,980,643.63 4,629,378,402.56 1,237,029,799.06
allowances
2. Employee welfares 379,895,340.15 379,895,340.15
3. Social insurance 74,006.71 166,263,912.76 166,261,396.73 76,522.74
premiums
Including: Medical 67,252.73 138,544,493.43 138,542,054.94 69,691.22
insurance premium
Industrial injury 1,896.95 13,676,392.80 13,676,467.34 1,822.41
insurance premium
Birth insurance 4,857.03 14,043,026.53 14,042,874.45 5,009.11
premium
4. Housing 585,200.38 108,636,772.87 108,691,049.42 530,923.83
accumulation funds
Item Beginning Balance Increase in the Decrease for the Balance at the
current period current period end of the period
5. Labor union
expenditures and 388,026,730.82 146,844,739.92 69,990,279.74 464,881,191.00
employee education
funds
Total 1,697,113,495.90 5,359,621,409.33 5,354,216,468.60 1,702,518,436.63
3. Separation benefits - defined contribution plan
Item Beginning Balance Increase in the Decrease for the Balance at the
current period current period end of the period
1. Basic endowment 146,442.07 380,594,249.18 380,322,934.26 417,756.99
insurance premium
2. Unemployment 22,667.54 21,539,989.08 21,549,423.18 13,233.44
insurance premium
Total 169,109.61 402,134,238.26 401,872,357.44 430,990.43
(28) Taxes payable
Item Balance at the end of the period Beginning Balance
Added-value tax 972,091,939.14 679,065,489.72
Business income tax 1,756,176,018.77 1,945,548,593.78
Others 398,034,796.38 353,187,397.05
Total 3,126,302,754.29 2,977,801,480.55
(29) Interests payable
Item Amount at the end of the period Amount at the beginning of the period
Loan interest 40,686,738.58 45,942,872.26
Interest on customer bank deposits 1,095,238.67 2,443,837.49
Total 41,781,977.25 48,386,709.75
Note: There was no overdue and unpaid interest at the end of the period.
(30) Dividends payable
Name of entity Amount at the end of the period Amount at the beginning of the
period
Corporate shareholder 87,129,929.69 105,031.73
Public shareholder 602,881.87 602,881.87
Total 87,732,811.56 707,913.60
(31) Other payables
1. Other payables presented by the nature of money
Item Balance at the end of the period Beginning Balance
Intercourse funds 1,881,107,200.55 2,098,888,616.86
Deposit 341,506,774.27 508,713,319.35
Total 2,222,613,974.82 2,607,601,936.21
2. Other important payables with aging exceeding 1 year
Name of entity Balance at the end of the Aging Cause of failing to repay
period or carry over
Entity 1 187,342,963.94 2 - 3 years Unsettled
Total 187,342,963.94
(32) Non-current liabilities due within one year
Item Amount at the end of the period Amount at the beginning of the period
Long-term borrowings due within 2,403,745,557.37
one year
Including: Long-term pledge loans 2,403,745,557.37
due within one year
Total 2,403,745,557.37
(33) Other current liabilities
Item Amount at the end of the period Amount at the beginning of the period
Installation and repair costs 1,458,677,991.64 1,687,646,974.96
Sales rebate 58,219,962,218.02 53,049,708,823.35
Fair value of hedging instruments 43,442,850.00
Others 80,208,362.28 227,053,219.17
Total 59,758,848,571.94 55,007,851,867.48
(34) Long-term payroll payable 1. Long-term payroll payable
Item Amount at the end of the period Amount at the beginning of the period
Defined benefit plan 117,732,064.00 127,518,492.00
Total 117,732,064.00 127,518,492.00
2. Changes in the defined benefit plan
Item Amount for the current period Amount for the previous period
1. Beginning balance 127,518,492.00 106,716,248.00
2. Defined benefit cost recorded in the 13,931,648.00 7,022,449.00
-
current profits and losses
1) Service cost of the current period 2,028,468.00 3,053,868.00
2. Past service cost -20,082,414.00
3) Net interest 4,122,298.00 3,969,581.00
3. Defined benefit cost recorded in 8,412,589.00 17,952,049.00
other comprehensive income
Including: actuarial gains (losses 「 8,412,589.00 17,952,049.00
represented by 」)
-
4. Other changes -4,267,369.00 -4,172,254.00
Including: paid benefits (payment -4,267,369.00 -4,172,254.00
represented by 「 」)
-
5. Balance at the end of the period 117,732,064.00 127,518,492.00
3. Net liabilities (net assets) of the defined benefit plan
Item Amount for the current period Amount for the previous period
1. Beginning balance 127,518,492.00 106,716,248.00
2. Defined benefit cost recorded in the 13,931,648.00 7,022,449.00
-
current profits and losses
3. Defined benefit cost recorded in 8,412,589.00 17,952,049.00
other comprehensive income
4. Other changes (payment 4,267,369.00 4,172,254.00
- -
represented by 「 」)
-
5. Balance at the end of the period 117,732,064.00 127,518,492.004. Notes for the defined benefit plan:
(1) Contents and associated risks of the defined benefit plan, and its influences on the Company’s future cash flow, time and uncertainty
The Company’s defined benefit plan is a supplementary post-retirement pension plan for some retirees, early retirees and serving officers after normal retirement. The present obligation value of this defined benefit plan was recognized by Towers-Watson actuarial company using the projected unit credit method on December 31, 2016. This defined benefit plan didn’t involve big amount, so it didn’t lead to significant influence on the future cash flow the Company.
(2) Significant actuarial assumptions and sensitivity analysis results of the defined benefit plan
According to requirements of the Accounting Standards for Business Enterprises No. 9 - Employee Compensation, the discount rate adopted by the Company at the time of discount is recognized by the market yields of high-quality corporate bonds in the treasury bonds or active market that match the obligatory term and currency of the defined benefit plan on the balance sheet date; the annual growth rates and annual separation rates of all benefits are based on the actual measurement data of the Company; the death rate is recognized by referring to the experience life table for insurance business of China Life Insurance (Group) Company.
Sensitivity analysis of discount rate:
Sensitivity analysis of discount rate Influence on the amount at the end of the period
Influence on the present obligation value of defined -9,881,172.00
welfare benefit by increase of one percentage point
Influence on the present obligation value of defined 12,619,915.00
welfare benefit by decrease of one percentage point
Sensitivity analysis of discount rate Influence on the amount at the end of the period
Influence on the service cost by increase of one -311,141.00
percentage point
Influence on the service cost by decrease of one 329,177.00
percentage point
(35) Deferred income
Item Beginning Balance Increase in the Decrease for the Balance at the end
current period current period of the period
Government 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75
subsidies
Total 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75
Items involving government subsidies:
Amount of Amount Pertinent to
Beginning subsidies added recorded into Change Balance at the assets/Pertin
Item Balance in the current non-operating (Increase: +; end of the ent to
period revenue in the Decrease: -) period incomes
current period
Environmental Pertinent to
protection upgrade 89,226,025.30 2,598,666.78 29,529,174.05 62,295,518.03 incomes
project
Scientific research Pertinent to
project of 40,287,575.04 68,245,300.00 3,981,283.17 104,551,591.87 incomes
refrigerating field
Others 5,058,107.69 500,000.00 324,172.84 5,233,934.85 Pertinent to
incomes
Total 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75
(36) Equity
Amount at the Increase/Decrease for the period (+, -)
Item beginning of the Amount at the
period New Bonus Stock Converted Others Subtotal end of the period
Issue Issue from Reserve
Total
number 6,015,730,878.00 6,015,730,878.00
of stocks
(37) Capital reserves
Amount at the Increase in the Decrease for Amount at the end
Item beginning of the current period the current of the period
period period
Capital (equity) 106,499,089.83 106,499,089.83
premium
Other capital reserves 79,451,536.88 2,550,000.00 76,901,536.88
Total 185,950,626.71 2,550,000.00 183,400,626.71
(38) Other comprehensive income
Amount for the current period
Less: Amount
recognized into
Beginning other Amount Amount Balance at the
Item Balance Amount incurred comprehensive Less: Income attributable to the attributable to end of the period
before income tax in income in previous tax expenses parent company minority
the current period period and after tax shareholders
transferred to the after tax
current profits and
losses
1. Other comprehensive income not to be reclassified to profit -17,831,799.00 -8,412,589.00 -8,412,589.00 -26,244,388.00
or loss in subsequent periods
Including: Changes due to recalculating and redefining net -17,831,799.00 -8,412,589.00 -8,412,589.00 -26,244,388.00
liabilities and net assets of the benefit plan
Shares enjoyed in other comprehensive income not to be
reclassified to profit or loss in the invested entity under the
equity method
2. Other comprehensive income to be reclassified to profit or -107,096,727.03 -123,145,151.18 -124,270,264.68 47,182,000.82 -43,830,898.58 -2,225,988.74 -150,927,625.61
loss in subsequent periods
Including: Shares enjoyed in other comprehensive income to
be reclassified to profit or loss in the invested entity under the
equity method
Gains and losses from changes in fair value of financial 198,347,090.96 117,730,422.98 87,343,842.18 39,270,108.32 67,430,700.38 2,225,988.74 265,777,791.34
- - - - - -
assets available for sale
Gains and losses from held-to-maturity investments
reclassified as financial assets available for sale
Effective part of cash flow hedging gains and losses -36,926,422.50 15,819,527.50 -36,926,422.50 7,911,892.50 44,834,057.50 7,907,635.00
Difference arising from translation of financial statements in 128,176,786.43 -21,234,255.70 -21,234,255.70 106,942,530.73
foreign currency
Total -124,928,526.03 -131,557,740.18 -124,270,264.68 47,182,000.82 -52,243,487.58 -2,225,988.74 -177,172,013.61
(39) Surplus reserve
Amount at the Increase in the Decrease for the Amount at the end
Item beginning of the current period current period of the period
period
Statutory surplus 2,530,583,291.14 2,530,583,291.14
reserve
Discretionary 969,088,265.45 969,088,265.45
surplus reserve
Total 3,499,671,556.59 3,499,671,556.59
(40) General risk provisions
Amount at the Increase in the Decrease for the Amount at the end
Item beginning of the current period current period of the period
period
General risk 207,764,066.72 59,606,573.65 267,370,640.37
provisions
Total 207,764,066.72 59,606,573.65 267,370,640.37
(41) Undistributed profit
Amount for the Amount for the Extraction or
Item current period previous period distribution of
dividends
Undistributed profit at the end of previous 37,737,187,489.78 34,841,323,981.28
year before adjustment
Total amount of adjusted undistributed
profit at the beginning of the year (profit
increase adjusted expressed with "+" and
profit decrease adjusted expressed with "-")
Undistributed profit at the beginning of the 37,737,187,489.78 34,841,323,981.28
year after adjustment
Add: Net profit attributable to owners of 15,420,964,990.94 12,532,442,817.66
parent company for the current period
Less: Appropriation of statutory surplus 541,582,992.16
reserve
Appropriation of general risk provisions 59,606,573.65 71,400,000.00
Cash dividend
Ordinary stock dividends payable 9,023,596,317.00 9,023,596,317.00 RMB15 distributed
per 10 shares
Others
Undistributed profit at the end of the period 44,074,949,590.07 37,737,187,489.78
(42) Operating revenues and operating costs
1). Operating revenues and operating costs
Item Amount for the current period Amount for the previous period
Revenue Cost Revenue Cost
Main business 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10
Other businesses 15,114,784,691.30 14,189,146,443.08 9,814,155,625.82 8,619,999,717.99
Total 108,302,565,293.70 72,885,641,217.00 97,745,137,194.16 66,017,353,745.09
2). Main business (classified by industry)
Item Amount for the current period Amount for the previous period
Revenue Cost Revenue Cost
Household
appliances 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10
manufacturing
Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10
3). Main business (classified by product)
Name of product Amount for the current period Amount for the previous period
Operating incomes Operating Cost Operating incomes Operating Cost
Air Conditioner 88,085,431,144.00 54,139,594,914.83 83,717,936,071.67 53,581,503,247.77
Household 1,717,749,799.40 1,337,954,114.57 1,522,676,680.86 1,209,460,671.25
Appliances
Others 3,384,599,659.00 3,218,945,744.52 2,690,368,815.81 2,606,390,108.08
Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10
4). Main business (classified by region)
Name of region Amount for the current period Amount for the previous period
Operating incomes Operating Cost Operating incomes Operating Cost
Domestic 76,937,875,361.69 45,233,448,281.99 74,596,089,512.78 46,279,216,061.59
Overseas 16,249,905,240.71 13,463,046,491.93 13,334,892,055.56 11,118,137,965.51
Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10
(43) Interest revenue and interest expense
Item Amount for the current period Amount for the previous period
Interest revenue 1,809,581,651.68 2,816,215,388.45
Including: interest revenue from 1,317,476,875.61 1,641,482,866.81
deposits in other banks
Interest revenue from loans and 459,317,481.07 1,154,283,006.27
advances
Others 32,787,295.00 20,449,515.37
Interest expense 93,317,462.31 652,352,307.92
Including: expense from
transactions with financial 87,683,940.13 636,765,738.01
institutions
Others 5,633,522.18 15,586,569.91
Net interest revenue 1,716,264,189.37 2,163,863,080.53
(44) Taxes and surcharges
Item Amount for the current period Amount for the previous period
Urban maintenance & 504,887,574.65 389,355,259.75
construction tax
Educational surcharges 364,366,416.83 287,028,585.33
Waste electrical appliance 187,111,127.52
treatment fund
Item Amount for the current period Amount for the previous period
House property tax 118,635,319.27
Land use tax 96,475,027.51
Commodity circulation tax and 66,690,910.38 24,182,343.52
industrial product tax of Brazil
Others 92,237,870.79 51,328,011.35
Total 1,430,404,246.95 751,894,199.95
(45) Sales expense
Item Amount for the current period Amount for the previous period
Sales expense 16,477,265,963.04 15,506,341,694.21
Total 16,477,265,963.04 15,506,341,694.21
(46) Overhead expense
Item Amount for the current period Amount for the previous period
Overhead Expense 5,488,955,551.20 5,048,746,635.48
Total 5,488,955,551.20 5,048,746,635.48
(47) Financial expense
Item Amount for the current period Amount for the previous period
Interest expense 310,546,323.57 477,371,585.41
Less: Interest revenue 1,483,937,707.71 1,163,270,340.63
Exchange gain and loss -3,702,265,763.57 -1,269,372,081.56
Bank charges 25,583,325.41 22,348,829.52
Interest charges for defined 4,122,298.00 3,969,581.00
welfare benefit obligations
Others 404,926.26 155,176.08
Total -4,845,546,598.04 -1,928,797,250.18
(48) Asset impairment loss
Item Amount for the current period Amount for the previous period
Loss on bad debt 59,862,036.16 10,140,979.51
Inventory falling price loss 14,991,008.08 39,544,476.54
Fixed asset impairment loss 4,904,007.27
Loan loss -80,748,611.96 36,632,506.71
Total -991,560.45 86,317,962.76
(49) Incomes from changes in fair value
Sources of incomes from changes Amount for the current period Amount for the previous period
in fair value
Derivative financial instruments 1,093,332,134.65 -1,010,322,499.17
Total 1,093,332,134.65 -1,010,322,499.17
(50) Investment income
Item Amount for the current period Amount for the previous period
Long-term equity investment
income measured by equity 8,034,445.96 3,246,089.30
method
Investment income from disposal
of long-term equity investment
Investment income from derivative 2,499,880,308.06 31,834,830.97
- -
financial instruments
Investment income from held-to-
maturity investment
Investment income from financial
assets available for sale in the 106,026,836.37 69,975,774.52
holding period
Investment income from disposal
of financial assets available for 118,210,455.91
sale
Investment income from financing 46,252,245.27 55,267,887.10
products
Total -2,221,356,324.55 96,654,919.95
(51) Non-operating revenue
Amount for the current Amount for the previous Amount recorded into the
Item period period current non-recurring
profit and loss
Gains from disposal of 2,838,642.05 1,039,883.33 2,838,642.05
non-current assets
Including: Gains from 1,443,342.07 1,039,883.33 1,443,342.07
disposal of fixed assets
Gains from disposal of 1,395,299.98 1,395,299.98
intangible assets
Government subsidies 1,059,429,776.56 1,363,726,411.04 960,287,886.56
Others 33,966,355.62 39,525,365.48 33,966,355.62
Total 1,096,234,774.23 1,404,291,659.85 997,092,884.23
Including the schedule of government subsidies:
Amount for the current Amount for the previous Pertinent to
Item period period assets/Pertinent to
incomes
Financial rewards 560,811,066.20 1,129,948,692.58 Pertinent to incomes
Capital allowance for 434,422,081.17 200,437,312.96 Pertinent to incomes
development projects
Technological innovation 47,135,783.17 15,818,285.71 Pertinent to incomes
subsidies income
Others 17,060,846.02 17,522,119.79 Pertinent to incomes
Total 1,059,429,776.56 1,363,726,411.04
(52) Non-operating expenses
Amount for the current Amount for the previous Amount recorded into the
Item period period current non-recurring
profit and loss
Total losses from
disposal of non-current 15,083,762.45 9,118,859.43 15,083,762.45
assets
Including: Losses from 15,083,762.45 9,118,859.43 15,083,762.45
disposal of fixed assets
Other expenses 5,658,770.90 1,930,318.93 5,658,770.90
Total 20,742,533.35 11,049,178.36 20,742,533.35
(53) Income tax expenses
1. Classification
Item Amount for the current period Amount for the previous period
Income tax expenses of the 3,828,860,539.58 2,829,504,601.40
current period
Deferred income tax expenses -822,305,366.85 -543,817,759.59
Total 3,006,555,172.73 2,285,686,841.81
2. Adjustment process of accounting profits and income tax expenses
Item Amount for the current period
Total profit 18,531,190,076.60
Income tax expenses calculated by the 2,779,678,511.49
statutory/applicable tax rate
Impact by different tax rates applicable to subsidiaries 138,283,354.85
Impact by non-deductible costs, expenses and losses 6,273,466.01
Impact by deductible temporary differences or
deductible losses of deferred income tax assets not 57,804,056.12
recognized in the current period
Others 24,515,784.26
Income tax expenses 3,006,555,172.73
(54) Notes to cash flow statement
1). Other cash receipts relating to operating activities
Item Amount for the current period Amount forthe previous period
Government subsidies 904,422,050.73 1,401,723,859.34
Interest revenue 1,429,898,563.90 1,225,637,912.76
Project funds advanced 1,141,778,481.72
Others 604,505,599.02 913,499,942.27
Total 2,938,826,213.65 4,682,640,196.09
2). Other cash payments relating to operating activities
Item Amount for the current period Amount for the previous period
Cash repayments for selling 5,377,555,062.31 4,825,484,308.95
expenses
Cash repayments for overhead 1,570,776,084.61 1,018,131,336.10
expenses
Net increase in margin of bill 531,713,129.29 2,723,201,655.00
pledge
Returned project funds advanced 254,456,006.00 1,368,170,206.45
Other expenses 637,024,568.93 500,197,577.40
Total 8,371,524,851.14 10,435,185,083.90
3). Other cash receipts relating to investing activities
Item Amount for the current period Amount for the previous period
Receipts from forward foreign 143,435,881.62
exchange settlement and sales
Call option amount 6,500,000.00
Total 6,500,000.00 143,435,881.62
4). Other cash payments relating to investing activities
Item Amount for the current period Amount for the previous period
Payments from forward foreign 2,433,948,388.57 175,286,430.99
exchange settlement and sales
Net increase in time deposits 15,479,979,000.00
Total 17,913,927,388.57 175,286,430.99
5). Other cash receipts relating to financing activities
Item Amount for the current period Amount for the previous period
Net decrease in margin of loan 2,110,522,945.98 1,257,485,012.71
pledge
Total 2,110,522,945.98 1,257,485,012.71
(55) Supplementary information about cash flow statement
1). Supplementary information about cash flow statement
Item Amount for the Amount for the
current period previous period
1. Reconciliation of net profit to cash flows from operating
activities:
Net profits 15,524,634,903.87 12,623,732,620.22
Add: Assets depreciation reserves -991,560.45 86,317,962.76
Fixed assets depreciation, oil and gas assets accumulated
depreciation, productive biological assets accumulated 1,734,645,267.76 1,244,603,332.20
depreciation
Amortization of intangible assets 73,307,470.22 58,942,276.28
Amortization of long-term deferred expenses 8,722,728.06 14,181,491.53
Losses on disposal of fixed assets, intangible assets and other 12,245,120.40 8,078,976.10
Item Amount for the Amount for the
current period previous period
Losses on disposal of fixed assets (incomes expressed with 「 」)
-
Losses from changes in fair value (incomes expressed with 「 」) 1,093,332,134.65 1,010,322,499.17
-
-
Financial expenses (incomes expressed with 「 」) 3,245,961,681.45 728,541,278.89
- -
-
Investment losses (incomes expressed with 「 」) 2,221,356,324.55 96,654,919.95
-
-
Decrease in deferred income tax assets (increase expressed 909,857,443.38 526,223,837.16
「 」 - -
with - )
Increase in deferred income tax liabilities (decrease expressed 87,552,076.53 17,593,922.42
「 」 -
with - )
Decrease of inventories (increase expressed with 「 」) 421,521,791.28 902,221,722.06
-
-
Decrease in operating receivables (increase expressed with 「 」) 5,230,038,952.26 34,387,642,523.89
-
-
Increase in operating payables (decrease expressed with 「 」) 4,723,681,135.75 1,111,512,782.02
-
-
Others 532,467,060.69 -1,672,691,391.97
Net cash flows from operating activities 14,859,952,106.92 44,378,381,827.68
2. Major investing and financing activities not involving cash
receipts and payment:
Conversion of debt into capital
Convertible bonds expiring within one year
Fixed assets acquired under finance leases
3. Net changes in cash and cash equivalents:
Ending balance of cash 71,321,360,022.83 77,365,016,845.22
Less: Beginning balance of cash 77,365,016,845.22 43,506,471,113.09
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -6,043,656,822.39 33,858,545,732.13Note: 「Others」 includes RMB 501,348,103.22 net increase of bank’s acceptance bills, RMB 1,064,180,189.98 net decrease of legal deposit reserved and RMB30,365,026.07 net increase of credit margin.
2. There was no net cash paid for acquisition of subsidiaries in the period.
3. There was no net cash received for disposal of subsidiaries in the period.
4). Composition of cash and cash equivalents
Amount at the end of Amount at the
Item the period beginning of the
period
1. Cash 71,321,360,022.83 77,365,016,845.22
Including: Cash on hand 2,069,645.31 2,395,117.18
Bank deposit for payment at any time 38,868,649,591.21 39,951,097,932.43
Deposit in the central bank for payment 2,238,409.70 1,972,800.26
Amount at the end of Amount at the
Item the period beginning of the
period
Deposits in other banks 32,448,402,376.61 37,409,550,995.35
2. Cash equivalents
Including: Bond investments maturing within three months
3. Ending balance of cash and cash equivalents 71,321,360,022.83 77,365,016,845.22
(56) Assets with restricted ownerships or use rights
Item Amount Cause of restriction
Monetary capital 8,811,791,708.64 Pledged and legal deposit
reserved
Bills receivable 24,406,512,494.25 Pledged
Total 33,218,304,202.89
(57) Monetary items of foreign currencies 1. Monetary items of foreign currencies:
Item Balance in foreign currency at Exchange rate for Balance of RMB converted at
the end of period conversion the end of period
Monetary capital: 41,933,924,181.19
Wherein: USD 6,033,116,042.54 6.9370 41,851,725,987.13
Euro 1,861,586.31 7.3068 13,602,238.85
HKD 16,028,418.45 0.8945 14,337,580.59
JPY 2,788,414.87 0.0596 166,164.48
BRL 25,331,176.05 2.1354 54,092,193.34
Singapore Dollar 3.50 4.7995 16.80
Brunei dollar 46.90 4.8216 226.13
Rupiah 4,000.00 0.0516 206.40
Accounts 2,617,312,846.01
receivable:
Wherein: USD 356,739,468.26 6.9370 2,474,701,691.32
Euro 2,461,754.65 7.3068 17,987,548.91
HKD 35,956,833.64 0.8945 32,163,747.26
BRL 43,298,613.15 2.1354 92,459,858.52
Prepaid accounts: 84,258,637.14
Wherein: USD 7,156,202.84 6.9370 49,642,579.10
Euro 2,845,943.18 7.3068 20,794,737.63
HKD 12,018,489.54 0.8945 10,750,659.08
JPY 678,017.63 0.0596 40,403.76
Pounds 11,901.08 8.5094 101,271.05
Swiss franc 430,803.00 6.7989 2,928,986.52
Other receivables: 11,366,660.05
Wherein: USD 1,342,007.58 6.9370 9,309,506.58
Euro 9,716.65 7.3068 70,997.62
Item Balance in foreign currency at Exchange rate for Balance of RMB converted at
the end of period conversion the end of period
HKD 1,904,753.65 0.8945 1,703,821.19
Pounds 9,010.00 8.5094 76,669.69
BRL 96,312.15 2.1354 205,664.97
Short-term 10,528,978,600.00
borrowing:
Wherein: USD 1,517,800,000.00 6.9370 10,528,978,600.00
Accounts payable: 852,692,239.65
Wherein: USD 40,038,311.05 6.9370 277,745,763.75
Euro 3,991,912.52 7.3068 29,168,106.40
HKD 10,969,087.11 0.8945 9,811,958.11
JPY 375,692,170.00 0.0596 22,387,878.51
Pounds 4,201.80 8.5094 35,754.80
BRL 240,490,202.34 2.1354 513,542,778.08
Advance received 297,549,906.60
from customers:
Wherein: USD 29,896,816.85 6.9370 207,394,218.47
Euro 2,285,938.44 7.3068 16,702,895.00
HKD 20,154,838.86 0.8945 18,028,704.91
JPY 930,074,547.41 0.0596 55,424,088.22
Other payables: 179,698,938.47
Wherein: USD 24,983,405.85 6.9370 173,309,886.38
Euro 207,867.86 7.3068 1,518,848.88
HKD 4,862,487.36 0.8945 4,349,543.57
JPY 410,696.19 0.0596 24,473.80
BRL 232,362.01 2.1354 496,185.84 VIII. Change in the consolidation scope
(1) Business combination not involving enterprises under common control There was no business combination not involving enterprises under common control in the current period.
(2) Business combination involving enterprises under common control
There was no business combination involving enterprises under common control in the current period.
(3) Counter purchase
Counter purchase did not occur in the current period.
(4) Changes in the consolidation scope
1. Establishment of subsidiaries
Amount of Amount of
subscribed paid-in Net assets of Net profit
Equity Time point of capital capital Ratio of the end of the of the
Company Name acquisiti equity contribution contributio contributi period (ten period (ten
on mode acquisition (ten n (ten on (%) thousand thousand
thousand thousand Yuan) Yuan)
Yuan) Yuan)
Gree Precision Mold Establish January 2016 8,000.00 8,000.00 100.00 9,250.70 1,250.70
(Wuhan) Co., Ltd. ment
Zhuhai Gree Precision Establish January 2016 10,000.00 10,000.00 100.00 10,729.95 729.95
Mold Co., Ltd. ment
Zhuhai Gree New Establish March 2016 3,000.00 3,000.00 100.00 3,003.19 3.19
Material Co., Ltd. ment
Zhuhai Gree Energy Establish
Environment Technology ment May 2016 20,000.00 20,000.00 100.00 19,693.35 -306.65
Co., Ltd.
Gree Electric Appliances Establish April 2016 30,000.00 30,000.00 100.00 29,983.76 -16.24
(Hangzhou) Co., Ltd. ment
2. Disposal of subsidiaries The Company was not involved in disposal of subsidiaries in the current period.
3. Changes in the consolidation scope arising from other causes
The Company was not involved in changes in the consolidation scope arising from
other causes in the current period.
IX. Equity in other subjects (1) Equity in subsidiaries 1. Composition of the enterprise group
Serial Main Place of Nature of Shareholding ratio Voting right Acquisition
Number Name location of registration business (%) percentage mode
operation Direct Indirect (%)
Gree Electric Commercial
1 Appliances (Hefei) Hefei City Hefei City manufacture 100.00 100.00 Establishment
Co., Ltd.
Gree Electric Chongqing Chongqing Commercial
2 Appliances City City manufacture 97.00 97.00 Establishment
(Chongqing) Co., Ltd.
Gree Electric Commercial
3 Appliances (Wuhu) Wuhu City Wuhu City manufacture 100.00 100.00 Establishment
Co., Ltd.
Gree Electric Commercial
4 Appliances (Wuhan) Wuhan City Wuhan City manufacture 100.00 100.00 Establishment
Co., Ltd.
Gree Electric Zhengzhou Zhengzhou Commercial
5 Appliances City City manufacture 100.00 100.00 Establishment
Serial Main Place of Nature of Shareholding ratio Voting right Acquisition
Number Name location of registration business (%) percentage mode
operation Direct Indirect (%)
Business
Gree Electric combination
Appliances Shijiazhuan Shijiazhua Commercial not involving
6 (Shijiazhuang) Co., g City ng City manufacture 100.00 100.00 enterprises
Ltd. under
common
control
Gree Electric Manaus, Manaus, Commercial
7 Appliances (Brazil) Brazil Brazil manufacture 100.00 100.00 Establishment
Co., Ltd.
Business
combination
Zhuhai Gree Group involving
8 Finance Company Zhuhai City Zhuhai City Finance 88.31 0.94 89.25 enterprises
Limited under
common
control
Zhuhai Hengqin
9 GREE business Zhuhai City Zhuhai City Others 100.00 100.00 Establishment
factoring Co., Ltd.
Business
combination
Zhuhai Landa Commercial involving
10 Compressor Co., Ltd. Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
under
common
control
11 Hefei Landa Hefei City Hefei City Commercial 100.00 100.00 Establishment
Compressor Co., Ltd. manufacture
12 Zhengzhou Landa Zhengzhou Zhengzhou Commercial 100.00 100.00 Establishment
Compressor Co., Ltd. City City manufacture
13 Chongqing Landa Compressor Co., Ltd. Chongqing City Chongqing City Commercial 100.00 100.00 Establishment
manufacture
14 Wuhan Landa Wuhan City Wuhan City Commercial 100.00 100.00 Establishment
Compressor Co., Ltd. manufacture
Business
combination
Zhuhai Meilingda Commercial involving
15 Refrigeration Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
Technology Co., Ltd. under
common
control
Business
combination
Zhuhai Meiling Commercial involving
16 General Motors Co., Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
Ltd. under
common
control
Business
combination
Zhuhai Kaibang Motor Commercial not involving
17 Manufacture Co., Ltd. Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
under
common
control
18 Hefei Kaibang Motor Hefei City Hefei City Commercial 100.00 100.00 Establishment
Manufacture Co., Ltd. manufacture
19 Henan Kaibang Motor Zhengzhou Zhengzhou Commercial 100.00 100.00 Establishment
Manufacture Co., Ltd. City City manufacture
Chongqing Kaibang Chongqing Chongqing Commercial
20 Motor Manufacture City City manufacture 100.00 100.00 Establishment
Serial Main Place of Nature of Shareholding ratio Voting right Acquisition
Number Name location of registration business (%) percentage mode
operation Direct Indirect (%)
Business
combination
Zhuhai Gree Electrical Commercial involving
21 Co., Ltd. Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
under
common
control
Business
combination
Gree Electric Ma"anshan Ma"anshan Commercial involving
22 Enterprises City City manufacture 100.00 100.00 enterprises
(Ma"anshan) Ltd. under
common
control
23 Gree Electrician Meishan Meishan Commercial 100.00 100.00 Establishment
(Meishan) Co., Ltd. City City manufacture
GREE (Zhongshan) Zhongshan Zhongshan Commercial
24 Small Home City City manufacture 100.00 100.00 Establishment
Appliances Co.
Gree (Shijiazhuang) Small Home Shijiazhuan Shijiazhua Commercial
25 g City ng City manufacture 100.00 100.00 Establishment
Appliances Co., Ltd.
Gree Green Technical
26 Technology Center Refrigeration Zhuhai City Zhuhai City research and 100.00 100.00 Establishment
Co., Ltd. Of Zhuhai development
Zhengzhou Gree Green Resources Zhengzhou Zhengzhou Commercial
27 City City manufacture 100.00 100.00 Establishment
Recycling Co., Ltd
Shijiazhuang Green Shijiazhuan Shijiazhua Commercial
28 Resources Recycling g City ng City manufacture 100.00 100.00 Establishment
Co., Ltd.
Hunan Green Ningxiang Ningxiang Commercial
29 Resources Recycling County County manufacture 100.00 100.00 Establishment
Co., Ltd
Tianjin Green Commercial
30 Resources Recycling Tianjin City Tianjin City manufacture 100.00 100.00 Establishment
Co., Ltd.
Wuhu Green Commercial
31 Resources Recycling Wuhu City Wuhu City manufacture 100.00 100.00 Establishment
Co., Ltd.
32 Zhuhai Gree Dakin Zhuhai City Zhuhai City Commercial 51.00 51.00 Establishment
Device Co., Ltd. manufacture
Zhuhai Gree Daikin Commercial
33 Precision Mold Co., Zhuhai City Zhuhai City manufacture 51.00 51.00 Establishment
Ltd.
Wuhu Precision Commercial
34 Manufacturing Co., Wuhu City Wuhu City manufacture 100.00 100.00 Establishment
Ltd.
Zhuhai Ligao
35 Precision Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
Manufacturing Co., manufacture
Ltd.
Zhuhai Gree TOSOT Commercial
36 Life Electric Zhuhai City Zhuhai City manufacture 100.00 100.00 Establishment
Appliances Co., Lid.
Gree TOSOT (Suqian) Commercial
37 Home Appliances Co., Suqian City Suqian City manufacture 100.00 100.00 Establishment
Ltd.
38 Zhuhai HVAC Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
Equipment Co., Ltd. manufacture
39 Changsha Gree HVAC Equipment Co., Ltd. Changsha City Changsha City Commercial 100.00 100.00 Establishment
manufacture
Gree HVAC Commercial
40 Equipment (Wuhan) Wuhan City Wuhan City manufacture 100.00 100.00 Establishment
Serial Main Place of Nature of Shareholding ratio Voting right Acquisition
Number Name location of registration business (%) percentage mode
operation Direct Indirect (%)
Zhuhai IVP
41 Information Zhuhai City Zhuhai City IT 100.00 100.00 Establishment
Technology Co., Ltd.
Business
combination
Zhuhai Gree Xinyuan Commercial involving
42 Electronics Co., Ltd. Zhuhai City Zhuhai City manufacture 100.00 100.00 enterprises
under
common
control
Business
combination
Hong Kong Gree Kowloon, Kowloon, Sales not involving
43 Electric Appliances Hong Kong Hong Kong 100.00 100.00 enterprises
Sales Co., Ltd. under
common
control
Zhuhai Gree Electric
44 Appliances Sales Co., Zhuhai City Zhuhai City Sales 100.00 100.00 Establishment
Ltd.
Brazil United Electric
45 Appliances Industry Sao Paulo, Sao Paulo, Sales 100.00 100.00 Establishment
and Commerce Co., Brazil Brazil
Ltd.
Shanghai GREE Air Shanghai Shanghai
46 Conditioners Sales City City Sales 90.00 9.70 99.70 Establishment
Co., Ltd
47 Gree (USA) Sales Co., California, California, Sales 51.00 51.00 Establishment
Ltd. USA USA
Zhuhai GREE Commercial
48 Intelligent Equipment Zhuhai City Zhuhai City manufacture 100.00 100.00 Establishment
Co., Ltd.
GREE Intelligent Wuhan City Wuhan City Commercial
49 Equipment (Wuhan) manufacture 100.00 100.00 Establishment
Co., Ltd.
Zhuhai GREE
50 Intelligent Equipment Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
Technology Research manufacture
Institute Co., Ltd.
51 Gree Precision Mold Wuhan City Wuhan City Commercial 100.00 100.00 Establishment
(Wuhan) Co., Ltd. manufacture
52 Zhuhai Gree Precision Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
Mold Co., Ltd. manufacture
53 Zhuhai Gree New Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
Material Co., Ltd. manufacture
Zhuhai Gree Energy Zhuhai City Zhuhai City Commercial
54 Environment manufacture 100.00 100.00 Establishment
Technology Co., Ltd.
Gree Electric Hangzhou Hangzhou Commercial 55 Appliances City City manufacture 100.00 100.00 Establishment (Hangzhou) Co., Ltd.Note: The Company directly holds 90.00% of total stocks of Shanghai Gree Air Conditioners Sales Co., Ltd., and Gree Electric Appliances (Chongqing) Co., Ltd. as the subsidiary of the Company holds its remaining 9.70% stocks, so the Company holds its 99.70% stocks in the direct and indirect ways.
The Company directly holds 88.31% of total stocks of Zhuhai Gree Group Finance Company Limited, and Zhuhai Gree Electrical Co., Ltd. and Zhuhai Gree Xinyuan Electronics Co., Ltd. as the wholly-owned subsidiaries of the Company respectively hold its 0.47% stocks, so the Company holds its 89.25% stocks in the direct and indirect ways.
Gree (USA) Sales Co., Ltd., a sub-subsidiary company of the Company was not incorporated in the consolidation scope from 2014 due to restriction on transfer of funds.
2. Important non-wholly owned subsidiaries
Profits or losses Dividends
Shareholding Voting right attributable to declared to Equity balance
ratio of percentage of minority distribute to of minority
Name minority minority shareholders in minority shareholders at
shareholders shareholders the current shareholders in the end of the
(%) (%) period the current period
period
Gree Electric
Appliances 3.00 3.00 14,857,268.94 87,024,897.96 48,117,770.91
(Chongqing) Co.,
Ltd.
Zhuhai GreeGroup Finance 10.75 10.75 60,811,016.64 429,075,026.61Company Limited3. Main financial information of important non-wholly owned subsidiaries
(1) Financial status
Balance at the end of the period
Name Non-current
Current assets Non-current assets Current liabilities liabilities
Gree Electric
Appliances (Chongqing) Co., Ltd. 2,889,634,545.84 1,261,548,033.46 2,543,701,911.83 3,554,970.57
Zhuhai Gree Group Finance Company 35,511,283,801.20 11,770,097,736.78 43,194,419,559.68 95,566,381.92LimitedContinued
Beginning Balance
Name Non-current
Current assets Non-current assets Current liabilities liabilities
Gree Electric
Appliances (Chongqing) 4,267,831,515.11 1,228,196,742.01 1,485,186,099.71 1,328,826.45
Co., Ltd.
Zhuhai Gree Group Finance Company 44,319,401,521.88 9,834,481,659.64 50,554,233,985.97 153,230,603.09(2) Operating results
Amount for the current period
Name Operating Total Cash flows from
incomes Net profits comprehensive operating
income activities
Gree Electric Appliances 6,003,558,290.41 495,242,297.87 495,242,297.87 64,403,152.96
(Chongqing) Co., Ltd.
Zhuhai Gree Group Finance 1,806,178,786.46 565,683,875.70 544,977,003.92 -
Company Limited 5,377,361,048.61
Continued
Amount for the previous period
Name Operating Total Cash flows from
incomes Net profits comprehensive operating activities
income
Gree Electric Appliances 6,668,782,311.95 367,278,130.36 367,278,130.36 487,964,532.02
(Chongqing) Co., Ltd.
Zhuhai Gree Group Finance 2,852,036,700.04 592,829,933.87 620,298,930.28 15,342,532,527.17
Company Limited
(2) Equities in associated enterprises or contractual enterprises 1. Important associated enterprises or contractual enterprises
Name of associated Main Place of Nature of Shareholding ratio Voting right
enterprise or contractual location of registration business (%) percentage
enterprise operation Direct Indirect (%)
Songyuan Food Group Co., Songyuan Songyuan Food 50.00 50.00
Ltd. City City manufacture
2. Main financial information of important contractual enterprises
Balance at the end of the Balance at the beginning of the
Item period/Amount for the current period/Amount for the previous
period period
Current assets 407,574,846.75 288,769,751.43
Including: cash and cash 23,020,793.05 20,090,818.97
equivalents
Non-current assets 75,961,459.15 55,741,214.24
Total assets 483,536,305.90 344,510,965.67
Current liabilities 320,766,972.07 196,337,103.69
Non-current liabilities 16,249,370.16 13,546,800.00
Total liabilities 337,016,342.23 209,883,903.69
Minority equity 11,843,831.45 8,475,401.38
Equity attributable to the
shareholders of the parent 134,676,132.22 126,151,660.60
Balance at the end of the Balance at the beginning of the
Item period/Amount for the current period/Amount for the previous
period period
Share of net assets calculated by 67,338,066.11 63,075,830.30
the shareholding ratio
Operating incomes 317,020,789.86 219,398,899.40
Financial expense 1,104,901.12 3,133,133.84
Income tax expenses 2,917,430.30 1,205,151.39
Net profits 9,337,295.16 8,468,327.05
Net profit attributable to the parent 8,468,327.05 6,328,722.88
company
Total comprehensive income 8,468,327.05 6,328,722.88attributable to the parent company3. The Company has no important associated enterprises.
X. Risk associated with financial instruments
Main financial instruments of the Company include monetary capital, derivative financial assets, notes receivable, interests receivable, loans, receivables, buying back the sale of financial assets, financial assets available for sale, other financial liabilities (e.g., payables) arising from operation, etc. These financial instruments aim to provide funds for operation of the Company.
The financial instruments of the Company may lead to the main risks of credit risks, liquidity risks and market risks.
Set out below are changes in the Company’s financial instruments at the beginning and end of the period:
Financial assets
Item Amount at the beginning of the
Amount at the end of the period period
Monetary capital 95,613,130,731.47 88,819,798,560.53
Derivative financial assets 250,848,418.63
Bills receivable 29,963,355,478.45 14,879,805,537.96
Accounts receivable 2,960,534,651.37 2,879,212,111.93
Interests receivable 1,045,542,563.43 1,109,776,449.77
Other receivables 244,984,154.67 254,016,643.00
Buying back the sale of 1,000,000,000.00
financial assets
Disbursement of loans and 4,737,184,235.79 7,872,619,001.46
advances
Available-for-sale financial 1,384,303,560.40 2,704,719,177.56
assets
Other current assets 1,992,536,503.43 1,684,833,479.54
Financial assets
Item Amount at the beginning of the
Amount at the end of the period period
Total 138,192,420,297.64 121,204,780,961.75Continued
Financial liabilities
Item Amount at the beginning of the
Amount at the end of the period period
Short-term borrowing 10,701,081,645.32 6,276,660,136.03
Borrowings from the central 4,274,000.00 8,000,000.00
bank
Deposits from customers and 145,241,859.45 566,612,235.82
interbank
Derivative financial liabilities 394,763,490.33 1,189,028,366.37
Bills payable 9,127,336,849.68 7,427,635,753.74
Accounts payable 29,541,466,861.10 24,794,268,372.47
Interests payable 41,781,977.25 48,386,709.75
Other payables 2,222,613,974.82 2,607,601,936.21
Non-current liabilities due 2,403,745,557.37
within one year
Other current liabilities 59,758,848,571.94 55,007,851,867.48
Total 111,937,409,229.89 100,329,790,935.24(1) Credit risks
Credit risks refer to financial losses suffered by one party to the financial instrument due to the other party’s inability to fulfill obligations.
The Company will have transactions with recognized customers with a good reputation only. According to the policy of the Company, all the customers who require the credit form for transactions shall undergo credit review. Besides, the Company implements continuous monitoring on the balance of accounts receivable to ensure that the Company is not confronted with the major risk of bad debts.
Financial assets of the Company include monetary capital, accounts receivable, etc. The credit risks of these financial assets come from nonperformance of the transaction counterparty, and the maximum risk exposure is equal to the carrying amount of these instruments. Trade terms between the Company and customers focus on advances, banker"s acceptance bill or the mode of pay on delivery, assisted by deal on credit.
The monetary capital is deposited in state-owned financial institutions with a higher credit rating, minimizing the risk; all the notes receivable are banker"s acceptance bills, and the risk exposure is rather small. The carrying amount of interests receivable, accounts receivable, prepayments and other receivables in the consolidated balance sheet is the highest credit risk with which the Company may be confronted. As of the end of the report period, the total of the Company’s accounts receivable and other receivables accounted for 1.76% (which was 1.94% at the end of the previous year) of the total assets, and the Company was not confronted with any major credit risk within one year due to the above amounts. For the Company’s credit risk exposures arising from the accounts receivable and other receivables, refer to the disclosed information in 「7 (4) Accounts receivable, (7) Other receivables」.
(2) Liquidity risks
Liquidity risks refer to risks of fund shortage generated when the enterprise performs the obligation to settle accounts by cash payment or other financial assets.
As indicated by changes in the Company’s financial instruments at the beginning and end of the period, the proportion of the Company’s "Financial assets" to "Financial liabilities" at the end of the report period is 1.23, which shows that the Company has adequate liquidity and the risk in shortage of liquidity is low.
(3) Market risks
Market risks refer to fluctuation risks of the fair value or future cash flow of financial instrument due to changes in the market price, including exchange rate risk and interest rate risk.
1. Exchange rate risk
For presented amounts in RMB converted from foreign currency financial assets and foreign currency financial liabilities held by the Company as of 31 December 2016, see the 「Note 7 (57) Monetary items of foreign currencies」
.
The Company will minimize the exchange risk by carrying out the forward exchange transaction business and controlling the scale of foreign currency assets and liabilities according to changes in the market exchange rate.
2. Interest rate risks
Interest rate risk refers to the fluctuation risk of the fair value or future cash flow of financial instruments due to changes in the market rate of interest.
Set out below are the Company’s liabilities with interests as of December 31, 2016:
Report item Amount Interest rate range Remarks
Short-term borrowing 10,701,081,645.32 1.00%-5.80% Floating interest rate
Borrowings from the 4,274,000.00 1.875% Fixed interest rate
central bank
Deposits from customers 145,241,859.45 0.42%-4.25% Floating interest rateand interbankXI. Fair value
(1) Fair values of assets and liabilities at the end of period that are measured at the fair value
Fair value at the end of period
Item Measurement of the Measurement Measurement
fair value at the first of the fair value of the fair Total
layer at the second value at the
layer third layer
Continuous fair value
measurement
(1) Financial assets available 1,312,303,560.40 1,312,303,560.40
for sale
1. Equity instrument 417,612,710.40 417,612,710.40
investment
2. Debt instrument 894,690,850.00 894,690,850.00
investment
(2) Derivative financial 250,848,418.63 250,848,418.63
assets
(3) Derivative financial 394,763,490.33 394,763,490.33liabilities(2) Determination basis for the market price of continuous and non-continuous fair value measurement items at the first layer
The Company’s continuous fair value measurement items at the first layer focus on the held derivative financial instruments with an active market, all of which can obtain the quoted price unadjusted for the same assets or liabilities in the active market.
XII. Related parties and related transaction
(1) Parent company of the Company
Name Incidence Enterprise Place of Corporate Nature of Registered
relation type registration representative business capital
Zhuhai Gree Wholly Investment Group Co., Parent state- Zhuhai Zhou Lewei and asset RMB 800 Ltd. company owned management million enterpriseContinued
Shareholding Percentage of Unified social credit
Name ratio of parent voting rights of Ultimate controlling code/business license
company to the parent company to party of the Company cod
Company (%) the Company (%)
Zhuhai Municipal State-Zhuhai Gree owned Assets Group Co., Ltd. 18.22 18.22 Supervision and 914404001925371865 Administration Commission(2) Subsidiaries of the Company
For details, see the Company’s equities in subsidiaries provided in Notes 9 (1).(3) Joint venture and partnership of the Company
For details about the Company’s important contractual enterprises and associated enterprises, see the Company’s equities in contractual arrangements and associated enterprises provided in Notes 9 (2).
(4) Other related parties of the Company
Related party Relationship with the Company Unified social credit
code/business license cod
Hebei Shengshi Xinxing Gree The company in which the
Trading Co., Ltd. Company"s director serves as 91130104578233484U
general manager
Zhejiang Shengshi Xinxing Gree The company in which the
Trading Co., Ltd. Company"s director serves as 91330104574384699W
general manager
Henan Shengshi Xinxing Gree The company in which the
Trading Co., Ltd. Company"s supervisor serves as 914101005792072538
general manager
Zhuhai Gree MagnetoCo., Ltd. -Electric Holding subsidiary of the parent 440400400033940
company
Zhuhai Gree Island Investment Grandson company of holding 91440400698148911E
Co. Ltd. subsidiary of the parent company
Zhuhai Gree Zhiye Co., Ltd. Holding subsidiary of the parent 91440400192551084D
company
Zhuhai Gree Meida Technology Co., Ltd. Grandson company of holding 91440400551665906L
subsidiary of the parent company
Zhuhai Jianan Group Co., Ltd. Holding subsidiary of the parent 91440400192528511L
company
Related party Relationship with the Company Unified social credit
code/business license cod
Zhuhai Gree New Technology Development Co., Ltd. Holding subsidiary of the parent 440400000039750
company
Zhuhai Gree Service Co., Ltd. Wholly-owned subsidiary of the 91440400192555907E
parent company
Zhuhai Xima Pearl New Media An enterprise for which the
Co., Ltd. Chairman of the Company acts as 91440400MA4UJCE825
a director
Zhuhai Yinlong New Energy Co., An enterprise where the Chairman
Ltd. of the Company holds more than 914404006981977566
5% of its shares
A subsidiary of an enterprise
Hebei Yinlong New Energy Co., where the Chairman of the 91130481052675755J
Ltd. Company holds more than 5% of
its shares
A subsidiary of an enterprise
Co., Ltd.Shijiazhuang Zhongbo Automobile where the Chairman of the Company holds more than 5% of 91130123728816635P
its shares
A subsidiary of an enterprise
Zhuhai Yinlong Electric Appliance where the Chairman of the 91440400566684800M
Co., Ltd. Company holds more than 5% of
its shares
A subsidiary of an enterprise
Altairnano Inc. where the Chairman of the 91130481596827470T
Company holds more than 5% of
its shares
A subsidiary of an enterprise
Zhuhai Guangtong Automobile where the Chairman of the 91440400708129467A
Co., Ltd. Company holds more than 5% of
its shares
(5) Related transactions
(1) Purchase of commodities/receiving of services
Type of related Contents of Amount for Amount for
Related party transactions related the current the previous
transactions period period
Hebei Shengshi Xinxing Gree Bill margin deposit Interest 60,928.57
Trading Co., Ltd. expense
Zhejiang Shengshi Xinxing Bill margin deposit Interest 747,290.08 710,591.75
Gree Trading Co., Ltd. expense
Henan Shengshi Xinxing Gree Bill margin deposit Interest 167.63 150,953.97
Trading Co., Ltd. expense
Songyuan Food Group Co., Deposit-taking Interest 16,289.16
Ltd. expense
Zhuhai Gree Magneto-Electric Deposit-taking Interest 37.38 205.28
Co., Ltd. expense
Zhuhai Gree Island Investment Deposit taking Interest 2,201.45 101.26
-
Co. Ltd. expense
Zhuhai Gree Zhiye Co., Ltd. Deposit taking Interest 23.01 22.87
-
expense
Zhuhai Gree Meida Technology Deposit-taking Interest 5,051.25
Co., Ltd. expense
Type of related Contents of Amount for Amount for
Related party transactions related the current the previous
transactions period period
Zhuhai Jianan Group Co., Ltd. Deposit taking Interest 235.13
-
expense
Zhuhai Gree Group Co., Ltd. Deposit taking Interest 43,286.97 1,598,588.12
-
expense
Zhuhai Gree Service Co., Ltd. Deposit taking Interest 57,130.01 103,541.89
-
expense
Zhuhai Gree Meida Technology Materials Fittings 99,506.00
Co., Ltd. procurement
Beijing Gree Technology Co., Materials Fittings 15,391,683.84 19,670,398.04
Ltd. procurement
Zhuhai Gree New Technology Materials Fittings 22,500.00
Development Co., Ltd. procurement
Zhuhai Jianan Group Co., Ltd. Purchase of Infrastructure 60,260,151.24 10,877,679.83
services project
Liaowang All Media Service sourcing Publicity and 9,480,148.47
Communication Co., Ltd. advertising fee
Chongqing Pargo Mechanical Materials Fittings 9,424,113.00
Equipment Co., Ltd. procurement
Total 95,610,743.19 33,112,083.01
2. Sales of commodities/rendering of services
Type of related Contents of Amount for the Amount for the
Related party transactions related current period previous period
transactions
Gree Trading Co., Ltd.Hebei Shengshi Xinxing Loan Interest 73,954,466.93 13,314,704.27
revenue
Zhejiang Shengshi Xinxing Loan Interest 36,743,189.58 5,196,069.01
Gree Trading Co., Ltd. revenue
Gree Trading Co., Ltd.Henan Shengshi Xinxing Loan Interest 7,019,809.06 9,859,319.77
revenue
Songyuan Food Group Co., Loan Interest 1,131,000.00
Ltd. revenue
Gree Trading Co., Ltd.Hebei Shengshi Xinxing Sales of Sales 2,426,277,876.40 2,671,040,237.44
commodities revenue
Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. Sales of Sales 4,318,366,377.22 5,231,798,174.85
commodities revenue
commodities revenue
Sales of Sales/
Altairnano Inc. commodities/ international 140,163,417.09
international factoring
factoring income
Sales of Sales/internati
Hebei Yinlong New Energy commodities/ onal factoring 375,065,512.13
Co., Ltd. international income
factoring
Sales of Sales/
Shijiazhuang Zhongbo commodities/ international 352,389,421.47
Type of related Contents of Amount for the Amount for the
Related party transactions related current period previous period
transactions
Sales of Sales/
Zhuhai Yinlong Electric commodities/ international 440,049,319.68
Appliance Co., Ltd. international factoring
factoring income
Sales of Sales/
Zhuhai Yinlong New commodities/ international 497,553,383.40
Energy Co., Ltd. international factoring
factoring income
Sales of Sales/
international factoring
factoring income
Zhuhai Xima Pearl New Sales of Sales 2,006,407.36
Media Co., Ltd. commodities revenue
Total: 14,337,853,603.81 14,378,910,116.303. The Company was not involved in associated trusteeship management/contracting or entrusted management/contracting-out in the current period.
4. The Company was not involved in associated lease in the current period.
5. The Company was not involved in associated guarantee in the current period. 6. Fund borrowing of related party
Related party Borrowing/ Loan amount Start date Date due Description
lending
Lending 2016 to 30 to 17 June credit
Ltd. June 2016 2017
17 March 17
Hebei Shengshi Xinxing 2,300,000,000.00 2016 to 27 September Buyer"s
Gree Trading Co., Ltd. Lending October 2016 2016 to 27 credit
October
2017
8,949,967.50 September Factoring
Altairnano Inc. Lending 22, 2016 service
principal
Hebei Yinlong New 50,917,000.00 September Factoring
Energy Co., Ltd. Lending 18, 2016 service
principal
Shijiazhuang Zhongbo 6,980,915.10 September 8, Factoring
Automobile Co., Ltd. Lending 2016 service
principal
Zhuhai Yinlong Electric 115,008,471.17 August 24, Factoring
Appliance Co., Ltd. Lending 2016 service
principal
Zhuhai Yinlong New 182,027,397.52 Factoring
Energy Co., Ltd. Lending May 31, 2016 service
principal
Zhuhai Guangtong 137,858,372.08 August 24, Factoring Automobile Co., Ltd. Lending 2016 service principal7. Remunerations for key management
Item Amount for the current period Amount for the previous period
Total remuneration actually received from
the Company (before tax) within the 20,605,141.50 23,205,065.00
report period
(6) Accounts receivable and payable by related parties
1. Items receivable
Balance at the end of the period Beginning Balance
Item Name Related party Provision for Provision for
Book balance impairment Book balance impairment
Zhejiang Shengshi
Disbursem Trading Co., Ltd.Xinxing Gree 333,000,000.00 8,325,000.00
ent of
loans and Hebei Shengshi
advances Xinxing Gree 1,645,000,000.00 41,125,000.00
Trading Co., Ltd.
Hebei Shengshi 1,757,710,624.00 350,000,000.00
Trading Co., Ltd.Xinxing Gree
Bills Xinxing Gree Henan Shengshi 2,487,000,000.00 1,735,856,740.65
receivable Trading Co., Ltd.
Zhejiang Shengshi 294,190,332.90 921,084,690.00
Trading Co., Ltd.Xinxing Gree
Prepaid Automobile Co., Zhuhai Guangtong 1,921,596.00
accounts Ltd.
2. Items payable
Amount at the end of Amount at the
Item Name Related party the period beginning of the
period
Book balance Book balance
Zhuhai Gree Zhiye Co., Ltd. 5,403.59 5,380.58
Zhuhai Gree Magneto-Electric Co., 8,776.04 8,735.40
Ltd.
Zhuhai Gree Island Investment Co. 787,115.44 42,004.84
Ltd.
Zhuhai Jianan Group Co., Ltd. 435.90
Zhuhai Gree Meida Technology Co., 1,046,464.17
Customer deposit Ltd.
Hebei Shengshi Xinxing Gree Trading 139,581.61 23,434.74
Co., Ltd.
Zhejiang Shengshi Xinxing Gree 20,124.00 210,048,073.21
Trading Co., Ltd.
Zhuhai Gree Group Co., Ltd. 189,660.16 52,070,790.24
Zhuhai Gree Service Co., Ltd. 2,352,126.54 2,902,445.42
Henan Shengshi Xinxing Gree 6,558.89 1,417.33
Trading Co., Ltd.
Accounts payable Zhuhai Gree Meida Technology Co., 3,913.50
Amount at the end of Amount at the
Item Name Related party the period beginning of the
period
Book balance Book balance
Ltd.
Beijing Gree Technology Co., Ltd. 15,391,683.84 4,263,831.21
Hebei Shengshi Xinxing Gree Trading 729,581,825.37 265,591,592.37
Co., Ltd.
Advance received Zhejiang Shengshi Xinxing Gree 329,346,785.60 29,565,963.03
from customers Trading Co., Ltd.
Henan Shengshi Xinxing Gree 3,152,874,976.57 479,197,575.37
Trading Co., Ltd.
Hebei Yinlong New Energy Co., Ltd. 193,008,018.00
Zhuhai Gree Group Co., Ltd. 877.59 2,320.30
Zhuhai Gree Zhiye Co., Ltd. 0.69 0.69
Zhuhai Gree Magneto-Electric Co., 1.13 4.39
Ltd.
Zhuhai Gree Island Investment Co. 101.04 5.39
Ltd.
Interests payable Zhuhai Jianan Group Co., Ltd. 0.06
Zhuhai Gree Meida Technology Co., 134.30
Ltd.
Co., Ltd.Hebei Shengshi Xinxing Gree Trading 17.91 3.01
Zhejiang Shengshi Xinxing Gree 1,755.40 140,006.17 Trading Co., Ltd.XIII. Share-based payments
The Company had no share-based payments in the current period.
XIV. Commitments
As of December 31, 2016, the Company had no significant commitments to be disclosed.
XV. Contingencies
On 12 September, 2013, the Company initiatively applied for and gained permission of the US Consumer Product Security Commission (CPSC) and Health Canada to recall dehumidifiers sold in the US and Canada. The Company has accrued sufficient expenses based on the estimated loss. The recalling work for U.S. and Canada has been basically completed as of the approval date of the report.
MJC (GREE USA,INC.), a shareholder of United States Gree Ltd. (GREE USA INC) sued the Company and its subsidiary Hong Kong Gree Electric Appliances Co., Ltd. (HK GREE ELECTRIC APPLIANCES), seeking USD0.15 billion compensation for MJC』S loss. The Company should pay a compensation of USD42.5 million according to the first-instance judgment of the court on 2 June, 2015, and the Company has applied for appeal regarding this judgment result. An amicable settlement was reached as of 31 December 2016.
XVI. Events after the balance sheet date
According to the resolution passed at the twelfth meeting of the tenth session of the Board of Directors of the Company, the profit distribution plan of the Company for the year 2016 is as follows: calculated by total stock capital of the Company equivalent to 6,015,730,878 stocks, all directors will be distributed a cash of RMB18.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB10,828,315,580.40 and the balance to be carried forward to the next year. This distribution preplan still needs to be approved by the general meeting of shareholders.
XVII. Other Important Events
None.
XVIII. Notes to main items of financial statements of the parent company
(1) Accounts receivable
1. The accounts receivable are disclosed by type
Balance at the end of the period
Type Book balance Bad debt provision
Amount Percentage Amount Percentage Carrying amount
(%) (%)
Receivables with
significant single
amounts and
single impairment
provision
appropriated
Accounts
receivable with
impairment 1,065,828,407.54 99.99 36,205,434.95 3.40 1,029,622,972.59
provision
appropriated by
combination
Including: aging 708,422,824.33 66.46 36,205,434.95 5.11 672,217,389.38
combination
Consolidation 357,405,583.21 33.53 357,405,583.21
scope combination
Balance at the end of the period
Type Book balance Bad debt provision
Amount Percentage Amount Percentage Carrying amount
(%) (%)
Other insignificant
accounts
receivable with 6,626,237.91 0.01 6,626,237.91 100.00
single bad debt
provision
appropriated
Total 1,072,454,645.45 100.00 42,831,672.86 3.99 1,029,622,972.59Continued
Beginning Balance
Type Book balance Bad debt provision
Amount Percentage Amount Percentage Carrying amount
(%) (%)
Receivables with
significant single
amounts and
single impairment
provision
appropriated
Accounts
receivable with
impairment 3,448,181,921.97 99.86 32,076,772.24 0.93 3,416,105,149.73
provision
appropriated by
combination
Including: aging 617,539,971.74 17.88 32,076,772.24 5.19 585,463,199.50
combination
Consolidation 2,830,641,950.23 81.98 2,830,641,950.23
scope combination
Other insignificant
accounts
receivable with 4,715,115.32 0.14 4,715,115.32 100.00
single bad debt
provision
appropriated
Total 3,452,897,037.29 100.00 36,791,887.56 1.07 3,416,105,149.732. Accounts receivable with bad debt provision provided by aging analysis in the combinations
Amount at the end of the period
Aging Accounts receivable Bad debt provision Percentage of
appropriation (%)
Within 1 year 705,734,211.53 35,286,710.58 5.00
1 - 2 years 2,212,360.54 442,472.11 20.00
2 - 3 years
Over 3 years 476,252.26 476,252.26 100.00
Total 708,422,824.33 36,205,434.95 5.113. Accounts receivable with insignificant amounts but an independent impairment test conducted at the end of the period
Contents of accounts Book balance Bad debt Percentage of Cause
receivable amount appropriation (%)
Customer 1 4,715,115.32 4,715,115.32 100.00 Insolvency
Customer 2 1,466,529.62 1,466,529.62 100.00 Insolvency
Customer 3 444,592.97 444,592.97 100.00 Insolvency
Total 6,626,237.91 6,626,237.91 100.004. The amount of bad debt provision appropriated by the Company in the current period was RMB6,039,785.30, and there was no bad debt provision reversed in the current period.
5. There were no accounts receivable actually written off within the Report Period. 6. Top 5 debtors in the balance of accounts receivable at the end of the period
Percentage
Relationship with to total Bad debt
Name of entity the Company Amount Years accounts provision
receivable appropriated
(%)
First Related party 234,820,955.37 Within 1 21.90
year
Second Non related party 165,273,582.05 Within 1 15.41 8,263,679.10
-
year
Third Related party 122,584,627.84 Within 1 11.43
year
Fourth Non related party 78,388,872.23 Within 1 7.31 3,919,443.61
-
year
Fifth Non related party 62,117,494.65 Within 1 5.79 3,105,874.73
-
year
Total 663,185,532.14 Within 1 61.84 15,288,997.44 year7. The Company had no accounts receivable that were stopped from recognition due to financial asset transfer in the current period.
8. The Company had no assets or liabilities formed by transfer of accounts receivable and its continuous involvement into them.
(2) Other receivables 1. Other receivables are disclosed by type
Balance at the end of the period
Type Book balance Bad debt provision
Percentage Percentage Carrying
Amount Amount amount
(%) (%)
Other receivables with
significant single
amounts and single
impairment provision
appropriated
Other receivables with
impairment provision 858,883,497.54 100.00 10,708,129.65 1.25 848,175,367.89
appropriated by
combination
Including: aging 146,077,865.11 17.01 10,708,129.65 7.33 135,369,735.46
combination
Consolidation scope 712,805,632.43 82.99 712,805,632.43
combination
Other insignificant
receivables with single
bad debt provision
appropriated
Total 858,883,497.54 100.00 10,708,129.65 1.25 848,175,367.89
Continued
Beginning Balance
Type Book balance Bad debt provision
Percentage Percentage Carrying
Amount Amount amount
(%) (%)
Other receivables with
significant single
amounts and single
impairment provision
appropriated
Other receivables with
impairment provision 581,971,236.58 100.00 7,349,235.79 1.26 574,622,000.79
appropriated by
combination
Including: aging 118,505,911.90 20.36 7,349,235.79 6.20 111,156,676.11
combination
Consolidation scope 463,465,324.68 79.64 463,465,324.68
combination
Other insignificant
receivables with single
bad debt provision
appropriated
Total 581,971,236.58 100.00 7,349,235.79 1.26 574,622,000.79
2. Other receivables with bad debt provision provided by aging analysis in the combinations
Amount at the end of the period
Aging Other receivables Bad debt provision Percentage of
appropriation (%)
Within 1 year 138,708,558.08 6,935,427.91 5.00
1 to 2 years 575,711.59 115,142.32 20.00
2 to 3 years 6,272,072.05 3,136,036.03 50.00
Over 3 years 521,523.39 521,523.39 100.00
Total 146,077,865.11 10,708,129.65 7.333. The amount of bad debt provision appropriated by the Company in the current period was RMB3,388,893.86, and there was no bad debt provision reversed in the current period.
4. The amount of other receivables written off by the Company in the current period was RMB30,000.00.
5. Other receivables presented by the nature of money
Nature of money Book balance at the end of the Book balance at the beginning of the
period period
Intercourse funds 789,368,781.74 508,314,348.43
Hedging fund 69,514,715.80 73,656,888.15
Total 858,883,497.54 581,971,236.586. Top 5 debtors in the balance of other receivables at the end of the period
Relationship Percentage to Bad debt
Name of entity with the Amount Aging total other provision
Company receivables appropriated
(%)
First Related 186,587,737.59 Within 1 year 21.72
party
Second Related 181,618,708.26 Within 1 year 21.15
party
Third Related 140,661,273.17 Within 1 year 16.38
party
Fourth Non-related 69,514,715.80 Within 1 year 8.09 3,475,735.79
party
Fifth Related 62,976,000.00 Within 1 year 7.33
party
Total 641,358,434.82 74.67 3,475,735.79(3) Long-term equity investment
1. Long-term equity investment classification
Decrease
Item Beginning Increase in the for the Balance at the end
Balance current period current of the period
period
Investment in subsidiaries 6,759,419,886.99 850,000,000.00 7,609,419,886.99
Investment in contractual 60,891,468.90 4,234,163.53 65,125,632.43
enterprises
Investment in associated 36,507,728.00 4,219,820.43 40,727,548.43
enterprises
Subtotal 6,856,819,083.89 858,453,983.96 7,715,273,067.85
Minus: Provision for
impairment of long-term 1,940,009.35 1,940,009.35
equity investment
Total 6,854,879,074.54 858,453,983.96 7,713,333,058.50
2. Details of investment in subsidiaries
Appropriation
Shareholding Percentage of provision
Name of invested Accounting Increase/ Balance at the end ratio in the of voting Provision for Cash dividend
entities method Investment cost Beginning Balance decrease of the period invested rights in the for impairment
entity (%) invested impairment for the
entity (%) current
period
Gree Electric Cost
Appliances (Brazil) method 130,239,414.36 130,239,414.36 130,239,414.36 100.00 100.00
Co., Ltd.
Gree Electric Cost
Appliances method 223,100,000.00 223,100,000.00 223,100,000.00 97.00 97.00 2,813,805,033.97
(Chongqing) Co., Ltd.
Shanghai GREE Air Cost
Conditioners Sales method 1,800,000.00 1,800,000.00 1,800,000.00 99.70 99.70
Co., Ltd
Zhuhai Gree Group Cost
Finance Company method 1,400,371,239.99 1,400,371,239.99 1,400,371,239.99 89.25 89.25
Limited
Zhuhai Gree Electrical Cost 184,680,359.95 184,680,359.95 184,680,359.95 100.00 100.00
Co., Ltd. method
Zhuhai Landa Cost 968,225,519.93 968,225,519.93 968,225,519.93 100.00 100.00
Compressor Co., Ltd. method
Zhuhai Gree Xinyuan Cost 54,290,096.61 54,290,096.61 54,290,096.61 100.00 100.00
Electronics Co., Ltd. method
Zhuhai Gree TOSOT Cost
Life Electric method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00
Appliances Co., Lid.
Zhuhai Kaibang Motor Cost 83,860,929.67 83,860,929.67 83,860,929.67 100.00 100.00
Manufacture Co., Ltd. method
Gree Electric Cost
Appliances (Hefei) method 505,370,626.10 505,370,626.10 505,370,626.10 100.00 100.00
Co., Ltd.
Hong Kong Gree Cost
ElectricAppliances method 472,879.08 472,879.08 472,879.08 100.00 100.00
Sales Co., Ltd.
Zhuhai Gree Electric Cost
Appropriation
Shareholding Percentage of provision
Name of invested Accounting Increase/ Balance at the end ratio in the of voting Provision for Cash dividend
entities method Investment cost Beginning Balance decrease of the period invested rights in the for impairment
entity (%) invested impairment for the
entity (%) current
period
Zhuhai Gree Dakin Cost 283,117,574.47 283,117,574.47 283,117,574.47 51.00 51.00
Device Co., Ltd. method
Zhuhai Gree Daikin Cost
Precision Mold Co., method 201,911,186.86 201,911,186.86 201,911,186.86 51.00 51.00
Ltd.
GREE (Zhongshan) Cost
Small Home method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00
Appliances Co.
Gree Green
Refrigeration Cost 676,040,000.00 676,040,000.00 676,040,000.00 100.00 100.00
Technology Center method
Co., Ltd. Of Zhuhai
Zhuhai HVAC Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00
Equipment Co., Ltd. method
Gree Electric Cost
Appliances (Wuhan) method 510,000,000.00 510,000,000.00 510,000,000.00 100.00 100.00 1,237,168,070.90
Co., Ltd.
Gree Electric Cost
Appliances method 720,000,000.00 720,000,000.00 720,000,000.00 100.00 100.00
(Zhengzhou) Co., Ltd.
Zhengzhou Gree Cost
Green Resources method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Recycling Co., Ltd
Hunan Green Cost
Resources Recycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Co., Ltd
Wuhu Green Cost
Resources Recycling method 2,000,000.00 2,000,000.00 2,000,000.00 100.00 100.00
Co., Ltd.
Gree (Shijiazhuang) Cost
Appropriation
Shareholding Percentage of provision
Name of invested Accounting Increase/ Balance at the end ratio in the of voting Provision for Cash dividend
entities method Investment cost Beginning Balance decrease of the period invested rights in the for impairment
entity (%) invested impairment for the
entity (%) current
period
Gree Electric Cost
Appliances (Wuhu) method 20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Co., Ltd.
Shijiazhuang Green Cost
Resources Recycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Co., Ltd.
Gree Electric
Appliances Cost 98,940,059.97 98,940,059.97 98,940,059.97 100.00 100.00 677,650,338.60
(Shijiazhuang) Co., method
Ltd.
Tianjin Green Cost
Resources Recycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Co., Ltd.
Zhuhai Ligao Precision Cost
Manufacturing Co., method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00
Ltd.
Changsha Gree HVAC Cost 50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00
Equipment Co., Ltd. method
Zhuhai IVP Information Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00
Technology Co., Ltd. method
Gree TOSOT (Suqian) Cost
Home Appliances Co., method 140,000,000.00 140,000,000.00 140,000,000.00 100.00 100.00
Ltd.
Wuhu Precision Cost
Manufacturing Co., method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00
Ltd.
Zhuhai Gree New Cost 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00
Material Co., Ltd. method
Zhuhai GREE Cost
Intelligent Equipment method 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00
Co., Ltd.
Zhuhai Hengqin GREE Cost
Appropriation
Shareholding Percentage of provision
Name of invested Accounting Increase/ Balance at the end ratio in the of voting Provision for Cash dividend
entities method Investment cost Beginning Balance decrease of the period invested rights in the for impairment
entity (%) invested impairment for the
entity (%) current
period
Zhuhai Gree Precision Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00
Mold Co., Ltd. method
Gree Precision Mold Cost 80,000,000.00 80,000,000.00 80,000,000.00 100.00 100.00
(Wuhan) Co., Ltd. method
Zhuhai GREE
Intelligent Equipment Cost 50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00
Technology Research method
Institute Co., Ltd.
Zhuhai Gree Energy Cost
Environment method 200,000,000.00 200,000,000.00 200,000,000.00 100.00 100.00
Technology Co., Ltd.
Gree HVAC Cost
Equipment (Wuhan) method 40,000,000.00 40,000,000.00 40,000,000.00 100.00 100.00
Co., Ltd.
Gree Electric Cost
Appliances method 300,000,000.00 300,000,000.00 300,000,000.00 100.00 100.00
(Hangzhou) Co., Ltd.
Total 7,559,419,886.99 6,759,419,886.99 850,000,000.00 7,609,419,886.99 4,728,623,443.473. Details of investment in associated and contractual enterprises
Beginning Balance Increase/Decrease in the current period Balance of
Name of invested Investment Adjustment of Cash Balance at the provision for
entities Provision for Additional profits/losses other Changes dividends or Appropriated end of the impairment at
Original value impairment investment Disinvestment recognized comprehensive in other profits provision for Others period the end of the
under the income equities declared to impairment period
equity method distribute
1. Partnership
Songyuan Food 60,891,468.90 4,234,163.53 65,125,632.43
Group Co., Ltd.
Subtotal 60,891,468.90 4,234,163.53 65,125,632.43
2. Joint venture
(Vietnam) Gree
Electric 1,940,009.35 1,940,009.35 1,940,009.35 1,940,009.35
Appliances, Inc.
Beijing Gree
Technology Co., 1,252,032.71 291,384.83 1,543,417.54
Ltd.
Liaowang All
Media 22,423,869.04 3,851,569.67 26,275,438.71
Communication
Co., Ltd.
Chongqing Pargo
Mechanical 10,891,816.90 523,735.65 10,368,081.25
-
EquipmentCo.,
Ltd.
GREE VOLINCO
(HONG KONG) 419,538.00 181,063.58 600,601.58
LIMITED
Subtotal 36,507,728.00 1,940,009.35 419,538.00 3,800,282.43 40,727,548.43 1,940,009.35
Total 97,399,196.90 1,940,009.35 419,538.00 8,034,445.96 105,853,180.86 1,940,009.35
(4) Operating revenues and operating costs
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Main business 88,506,006,087.61 62,704,978,589.70 84,687,595,777.18 63,586,529,934.73
Other 11,690,016,898.63 11,452,513,666.53 8,916,145,362.57 8,428,141,722.16
businesses
Total 100,196,022,986.24 74,157,492,256.23 93,603,741,139.75 72,014,671,656.89
(5) Investment income
Item Amount for the current Amount for the
period previous period
Long-term equity investment income measured by 4,728,623,443.47 24,756,274.91
cost method
Long-term equity investment income measured by 8,034,445.96 3,246,089.30
equity method
Investment income from disposal of derivative 1,603,282,165.02 143,435,881.55
-
financial assets
Total 3,133,375,724.41 171,438,245.76
XIX. Supplementary information
(1) Schedule of non-recurring profit and loss for the year
Item Amount Description
Profit and loss
Profit and loss from disposal of non current assets 12,245,120.40 from disposal of
- -
fixed/intangible
assets
Governmental subsidies recorded into the current gains Financial rewards,
and losses (excluding the governmental subsidies closely technological
960,287,886.56 subsidies and
fixed quota or a fixed amount in accordance with the state development
policies) project grants, etc.
Gains and losses of the fair value change of the derivative Investment
Item Amount Description
business in relation to the normal operation of the
Company
Reversal of impairment provision for the accounts
receivable for which an independent impairment test is 5,556,302.40
conducted
Non-operating incomes and expenditures other than the 28,307,584.72
above items
Total non-recurring profit and loss -154,151,982.58
Less: Influence amount of income tax 17,078,192.05
Net non-recurring profit and loss -171,230,174.63
Including: non-recurring profit and loss attributable to 179,555,454.27
-
owners of the parent company
Non-recurring profit and loss attributable to minority 8,325,279.64shareholders(2) Calculating process of basic earnings per share and diluted earnings per share
1) Basic earnings per share
Item Serial Number Amount for the Amount for the
current period previous period
Total stocks at the beginning of the period a 6,015,730,878.00 3,007,865,439.00
The increased stocks by capitalization of
capital reserves or distribution of stock b 3,007,865,439.00
dividend during the report period
The increased stocks by issuance of new
stocks or debt-equity swap during the report c
period
The number of months from the next month
after increase of stocks to the end of the d
report period
The number of months of the report period e 12 12
The decreased stocks by repurchase during f
the report period
The number of months from the next month
after decrease of stocks to the end of the g
report period
The number of shrunk stocks during the h
Item Serial Number Amount for the Amount for the
current period previous period
The weighted average number of outstanding i=a+b+c×d÷e- 6,015,730,878.00 6,015,730,878.00
ordinary shares f×g÷e-h
Net profit attributable to shareholders of j 15,420,964,990.94 12,532,442,817.66
ordinary stocks of the Company
Net profit attributable to shareholders of
ordinary stocks of the Company after k 15,600,520,445.21 12,313,582,570.49
deduction of non-recurring profit and loss
Calculate according to the net
profit attributable to l=j÷i 2.56 2.08
shareholders of ordinary stocks
Basic of the Company
earnings Calculate according to the net
per share profit attributable to
shareholders of ordinary stocks m=k÷i 2.59 2.05
of the Company after deduction
of non-recurring profit and loss
2) Diluted earnings per share
Item Serial Amount for the Amount for the
Number current period previous period
Total stocks at the beginning of the period a 6,015,730,878.00 3,007,865,439.00
The increased stocks by capitalization of
capital reserves or distribution of stock b 3,007,865,439.00
dividend during the report period
The increased stocks by issuance of new
stocks or debt-equity swap during the report c
period
The number of months from the next month
after increase of stocks to the end of the report d
period
The number of months of the report period e 12 12
The decreased stocks by repurchase during f
the report period
The number of months from the next month
after decrease of stocks to the end of the g
report period
The number of shrunk stocks during the report h
Item Serial Amount for the Amount for the
Number current period previous period
The weighted average number of outstanding i=a+b+c×
ordinary shares d÷e- 6,015,730,878.00 6,015,730,878.00
f×g÷e-h
The weighted average number of increased
ordinary shares by warrants, stock option and j
convertible bonds
Net profit attributable to shareholders of k 15,420,964,990.94 12,532,442,817.66
ordinary stocks of the Company
Net profit attributable to shareholders of
ordinary stocks of the Company after l 15,600,520,445.21 12,313,582,570.49
deduction of non-recurring profit and loss
Calculate according to the net
profit attributable to shareholders m=k÷(i+j) 2.56 2.08
of ordinary stocks of the
Diluted Company
earnings Calculate according to the net
per share profit attributable to shareholders
of ordinary stocks of the n=l÷(i+j) 2.59 2.05
Company after deduction of non-
recurring profit and loss
3) Rate of return on net assets and earnings per share
Weighted Earnings per share
Profit during the report period average Diluted
return on Basic earnings earnings per
net assets per share share
Net profit attributable to shareholders of ordinary 30.41% 2.56 2.56
stocks of the Company
Net profit attributable to shareholders of ordinary
Section XI Index of Documents
(1) The accounting statements signed and sealed by Dong Mingzhu, the Company"s legal representative, Wang Jingdong, responsible person in charge of accounting work and Liao Jianxiong, in-charge person of accounting institution.
(2) The original audit report sealed by China Audit Union Power Certified Public Accountants Co., Ltd. and signed and sealed by certified public accountants Wang Bing and He Li.
(3) Originals and original drafts of all the Company"s documents and announcements published on the newspapers designated by CSRC and on www.cninfo.com.cn within the Report Period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Legal representative: Dong Mingzhu
27 April, 2017
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