Wuxi Little Swan Company Limited Annual Report 2016
WUXI LITTLE SWAN COMPANY LIMITED
ANNUAL REPORT 2016
March 2017
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Wuxi Little Swan Company Limited Annual Report 2016
Section I Important Statements, Contents and Definitions
The board of directors (the ―Board‖), the supervisory board (the ―Supervisory Board‖) as well as
the directors, supervisors and executive officers of Wuxi Little Swan Company Limited (the
―Company‖) hereby guarantee the factuality, accuracy and completeness of the contents of this
Report, and shall be jointly and severally liable for any false representation, misleading statements
or material omissions in this Report.
Mr. Fang Hongbo, chairman of the Board, Mr. Sun Yunan, CFO, and Mr. Xu Yunwei, chief of the
accounting organ (chief of accounting), hereby confirm that the Financial Report carried in this
Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
The Board has considered and approved the following proposal for profit distribution: Based on the
total shares of 632,487,764, a cash dividend of RMB7.50 (tax inclusive) per 10 shares will be
distributed to all shareholders of the Company. No bonus shares will be granted, nor will any capital
reserve be converted into share capital.
Any plans for the future and other forward-looking statements mentioned in this Report shall NOT
be considered as virtual promises of the Company to investors. Therefore, investors are kindly
reminded to pay attention to possible investment risks.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
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Wuxi Little Swan Company Limited Annual Report 2016
Table of Contents
Section I Important Statements, Contents and Definitions ............................................................ 2
Section II Corporate Profile and Financial Results ........................................................................ 5
Section III Business Profile ............................................................................................................... 9
Section IV Performance Analysis ................................................................................................... 13
Section V Significant Events ........................................................................................................... 29
Section VI Share Changes and Shareholders’ Profile ................................................................... 46
Section VII Preference Shares......................................................................................................... 53
Section VIII Directors, Supervisors, Executive Officers and Staff .............................................. 54
Section IX Corporate Governance ................................................................................................. 60
Section X Corporate Bonds ............................................................................................................. 66
Section XI Financial Report ............................................................................................................ 67
Section XII Documents Available for Reference ......................................................................... 160
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Wuxi Little Swan Company Limited Annual Report 2016
Definitions
Term Definition
Company, the Company or Little Swan Wuxi Little Swan Company Limited
Midea Group Midea Group Co., Ltd.
TITONI TITONI Investments Development Ltd.
Midea Group Finance Midea Group Finance Co., Ltd.
GD Midea Holding GD Midea Holding Co., Ltd.
Hefei Midea Washing Machine Hefei Midea Washing Machine Co., Ltd.
Wuxi Little Swan General Appliance Wuxi Little Swan General Appliance Co., Ltd.
Wuxi FILIN Electronics Wuxi FILIN Electronics Co., Ltd.
Guangzhou Hualing Air Conditioner Guangzhou Hualing Air Conditioner Equipment Co., Ltd.
Attend Logistics Guangzhou Attend Logistics Co., Ltd.
CSRC China Securities Regulatory Commission
Reporting Period January 1, 2016-December 31, 2016
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Wuxi Little Swan Company Limited Annual Report 2016
Section II Corporate Profile and Financial Results
I Corporate information
Stock name Little Swan A, Little Swan B Stock code 000418, 200418
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 无锡小天鹅股份有限公司
Abbr. 小天鹅
Company name in English (if any) Wuxi Little Swan Company Limited
Legal representative Fang Hongbo
No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province,
Registered address
P.R.China
Zip code 214028
No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province,
Office address
P.R.China
Zip code 214028
Company website http://www.littleswan.com
Email ir@littleswan.com.cn
II Contact information
Board Secretary Securities Representative
Name Ms. Zhou Sixiu Mr. Zhao Yulin
No. 18, Changjiang Road S., National Hi-tech No. 18, Changjiang Road S., National Hi-tech
Address Development Zone, Wuxi, Jiangsu Province, Development Zone, Wuxi, Jiangsu Province,
P.R.China P.R.China
Tel. 0510-81082320 0510-81082377
Fax 0510-83720879 0510-83720879
E-mail ir@littleswan.com.cn ir@littleswan.com.cn
III Information disclosure and place where this Report is kept
Newspapers designated by the Company for
Securities Times, Ta Kung Pao (HK)
information disclosure
Website designated by the China Securities
http://www.cninfo.com.cn
Regulatory Commission (CSRC) for the
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Wuxi Little Swan Company Limited Annual Report 2016
publication of this Report
Place where this Report is kept Securities Department of the Company
IV Company registration and alteration
Credibility code 91320200704046760T
Change in main business activities of
No change
the Company after going public (if any)
The Company was incorporated in November 1993 by raising funds from targeted
sources, with Jiangsu Little Swan Group Co., Ltd. as the controlling shareholder. In June
2007, Wuxi Guolian Development (Group) Co., Ltd. became the controlling shareholder
as Jiangsu Little Swan Group Co., Ltd. transferred the 87,673,341 Little Swan A-shares to
Change of the controlling shareholder
it according to law. In April 2008, GD Midea Holding Co., Ltd. became the controlling
(if any)
shareholder as it took over, upon agreement, all the Company‘s shares held by Wuxi
Guolian Development (Group) Co., Ltd. In September 2013, Midea Group Co., Ltd.
became the controlling shareholder as it merged in GD Midea Holding Co., Ltd. in a stock
swap.
V Other information
The CPAs firm hired by the Company
Name PricewaterhouseCoopers Zhong Tian LLP
Office address 11/F, PricewaterhouseCoopers Center, 202 Hubin Road, Huangpu District, Shanghai
Accountants writing signatures Huang Meimei, Cai Xiujuan
Sponsor engaged by the Company to continuously perform its supervisory function during this Reporting Period
√ Applicable □ Not applicable
Name Office address Sponsor representative Supervisory period
From August 4, 2006 to the date when all
25/F, CTS Tower, No. 4011
Huatai United non-tradable share holders pay off the considerations
Shennan Road, Shenzhen, Bian Jianguang
Securities Co., Ltd. that have been paid in advance for them and the
Guangdong
non-tradable shares are unlocked.
Financial advisor engaged by the Company to continuously perform its supervisory function during this Reporting
Period
□ Applicable √ Not applicable
VI Accounting and financial results
Indicate by tick mark whether the Company performed any retroactive adjustments to or restatement of its
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Wuxi Little Swan Company Limited Annual Report 2016
accounting data due to changes of accounting policies or correction of accounting errors
□ Yes √ No
2016 2015 +/-% 2014
Operating revenues (RMB) 16,334,914,501.69 13,131,626,932.44 24.39% 10,804,217,288.60
Net profit attributable to shareholders of the
1,175,054,922.85 919,181,968.58 27.84% 698,195,731.48
Company (RMB)
Net profit attributable to shareholders of the
Company before exceptional profit and loss 1,162,942,494.37 903,388,867.00 28.73% 695,186,106.92
(RMB)
Net cash flows from operating activities
3,896,072,787.38 3,598,695,468.80 8.26% 1,657,114,317.33
(RMB)
Basic earnings per share (RMB/share) 1.86 1.45 28.28% 1.10
Diluted earnings per share (RMB/share) 1.86 1.45 28.28% 1.10
Weighted average return on equity (%) 21.14% 19.32% 1.82% 16.73%
December 31, 2016 December 31, 2015 +/-% December 31, 2014
Total assets (RMB) 18,885,986,837.64 14,327,655,366.60 31.81% 11,376,793,928.71
Net assets attributable to shareholders of the
5,983,847,862.72 5,124,866,173.14 16.76% 4,427,982,112.33
Company (RMB)
VII Differences in accounting data under domestic and foreign accounting standards
1. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and international accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
2. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and foreign accounting standards
□ Applicable √ Not applicable
No such differences for this Reporting Period.
VIII Financial results by quarter
Unit: RMB
1Q 2Q 3Q 4Q
Operating revenues 4,239,779,074.70 3,745,008,120.22 4,070,848,719.32 4,279,278,587.45
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Wuxi Little Swan Company Limited Annual Report 2016
Net profit attributable to
317,052,211.46 263,774,351.12 332,295,999.87 261,932,360.40
shareholders of the Company
Net profit attributable to
shareholders of the Company 311,794,446.12 255,649,556.94 326,278,938.30 269,219,553.01
before exceptional profit and loss
Net cash flows from operating
573,548,265.90 1,033,549,126.98 320,196,692.35 1,968,778,702.15
activities
Indicate by tick mark whether there are any material differences between the financial indicators above or their
summations and those which have been disclosed in quarterly or semi-annual reports
□ Yes √ No
IX Exceptional profit/loss
Unit: RMB
Item 2016 2015 2014 Note
Profit/loss on disposal of non-current assets (including
-1,833,734.45 -280,195.57 -3,482,781.03
offset asset impairment provisions)
Government grants charged to the profit/loss for this
Reporting Period (except for the government grants
closely related to the business of the Company and given 13,872,569.26 31,893,010.09 19,316,074.38
at a fixed quota or amount in accordance with the State‘s
uniform standards)
Profit/loss on debt restructuring 7,708,285.28
Effect on Reporting Period profit/loss when a one-off
adjustment is made to Reporting Period profit/loss
2,679,264.25 7,701,506.00
according to requirements of taxation, accounting and
other relevant laws and regulations
Other non-operating income and losses other than items
4,288,097.78 -8,815,676.21 7,821,536.57
above
Less: Corporate income tax 2,455,096.12 3,899,799.51 11,994,501.34
Minority interests (after tax) 1,759,407.99 5,783,501.47 24,060,495.30
Total 12,112,428.48 15,793,101.58 3,009,624.56 --
Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the
said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in this Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2016
Section III Business Profile
I Main business scope in this Reporting Period
As one of the earliest washing machine manufacturers in China, Wuxi Little Swan Company Limited is
principally engaged in R&D, production and sale of domestic washing machines. In 1978, China‘s first fully-auto
washing machine greeted the world in the Company. With 38 years of focus on washing machines, the Company
mainly produces front-loading washing machines (also known as ―roller washing machines‖) and top-loading
washing machines (also ―pulsator washing machines‖, divided into fully-auto ones and double-cylinder ones by
structure). In addition, the Company can also produce clothes dryers and agitator washing machines. Currently,
roller washing machines, fully-auto washing machines and double-cylinder washing machines are the mainstream
in the market. In 2016, the Company output over 18 million units of washing machines, representing a fast growth
from the year earlier.
The Company has a sound technological R&D system, including one state-level technological center and two
state-recognized labs. Little Swan holds on to independent innovation and has the internationally advanced
frequency-changing, intelligent control, structure design, industrial design and other core washing technologies.
We own 2 manufacturing bases, one in Wuxi, Jiangsu Province and the other one in Hefei, Anhui Province, with a
total floor area of more than 800,000 ㎡ as well as a combined annual production capacity reaching 22 million
units. We also have domestically and internationally first-class manufacturing equipments and an experienced
manufacturing team. Our products are sold to the domestic market as well as over 130 other countries and regions,
with the overseas market accounting for more than 20% in our total sales. In domestic sale, we adopt the
marketing mode of ―agents+direct sale‖ and simultaneously develop the online and offline channels. In overseas
sale, we focus on OEM and attach importance to our own brands at the same time. We adopt a two-brand strategy
(―Little Swan‖ and ―Midea‖) and the business under both brands has seen fast and sound growth in the recent
years.
The Company has been focusing on its main business, improving its product mix according to consumers‘ needs,
and increasing product quality. Therefore, its management efficiency has increased significantly, its profitability
has been enhanced and its position in the industry as well as its share in the market have kept increasing, which
have made the Company one of the most competitive washing machine manufacturers for all these years.
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Wuxi Little Swan Company Limited Annual Report 2016
According to China Market Monitor, the Company took up a share of 27.0% in the domestic retail of washing
machines in 2016, 1.6 percentage points higher than last year; and according to customs statistics, its share in
China‘s export of washing machines was 17.8% in 2016, 3.1 percentage points higher than last year.
The washing machine industry is now at a mature stage. And its status quo and periodic features are talked about
in detail in ―Macro-environment‖ under ―Section IV Performance Analysis‖ and ―Tendency of the industry
development‖ under ―IX Outlook of the Company‘s future development‖ of the aforesaid section.
II Significant changes in main assets
1. Significant changes in main assets
Main assets Reason for any significant change
In this Reporting Period, the Company and General Appliance (China) Co., Ltd. signed an equity transfer
agreement, with the latter transferring its 30% stake in Wuxi Little Swan General Appliance Co., Ltd. to
Equity assets the Company for USD10 million. Up to the end of this Reporting Period, the transfer had been concluded
and Wuxi Little Swan General Appliance Co., Ltd. has thus become a wholly-owned subsidiary of the
Company.
Fixed assets No change
Intangible assets No change
Construction in progress No change
2. Main assets overseas
□ Applicable √ Not applicable
III Core competitiveness analysis
Our core competitiveness is demonstrated in the following aspects:
1. Our knowledge and experience accumulated in the long history of our main business. We are the sole
company in China that has focused on the washing machine industry since the end of 1970s. Profound knowledge
and experience has been accumulated through these several decades in technology, R&D and innovation, market
research, business operation, etc., which has been transformed into our tacit knowledge through the accumulation
and inheritance by our talent team and has thus become our most important core competitiveness.
2. Our capability of seeing the industry clearly and R&D. We have our unique capability of judging and
foreseeing developments in the industry and technology. Through constant input of R&D resources over the years,
we have owned leading technological competitiveness in the industry. We have a sound technological R&D
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Wuxi Little Swan Company Limited Annual Report 2016
system, including one state-level technological center and two state-recognized labs. Little Swan Lab is the first
washing machine lab in China to pass the UL North American safety verification and the German VDE
verification. We hold on to independent innovation and have the internationally advanced frequency-changing,
intelligent control, structure design, industrial design and other core technologies. We connect technology,
products and customers through medium and long-term technological planning, and have research talent, talent
reserve and development talent for our R&D.
3. Our capability of managing the industrial chain. We keep building a customer-oriented supply chain
management system, have set up an industry-leading cross-enterprise procurement platform with the help of
Midea Group, constantly increase the efficiency of our supply chain and foster a strategic partnership with our
suppliers. In terms of channels, in the domestic first and secondary markets, we mainly work with Suning, Gome
and some other big regional customers; in the tertiary and fourth markets, we combine agent channels, flagship
stores and franchised stores to distribute our products to households. In e-commerce, we continue to improve our
online channels by enhancing cooperation with famous online shopping platforms and expanding our own online
shopping center. As a result, our online sales have achieved a fast growth. Overseas, we keep deepening our
cooperation with customers, expanding strategic overseas markets and enhancing the promotion of our own
brands, as well as moving manufacturing overseas and localizing overseas operations. We enjoy a good and
long-term cooperation with our major customers at home and abroad.
4. Our capability to respond to needs of consumers. We have been keeping a watchful eye on market changes,
studying consumers‘ needs, and focusing on improvement of the whole process experience of customers in
shopping, product use and after-sales service. Consumers are always looking for professional, intelligent, green
and individualized washing machines. And we satisfy customers‘ needs with the spirit of craftsman and provide
them with extremely easy use experience through our innovative solutions of intelligent accurate self-loading,
intelligent roller water cube, intelligent WIFI, silver nano-particle sterilization,and classified washing. We adopt a
two-brand strategy (―Little Swan‖ and ―Midea‖) to create differentiation for the satisfaction of different needs.
With a history of over three decades, Little Swan is considered a very reliable brand among consumers, with the
slogan of ―Whole-hearted Little Swan‖ being well-known among them. As for Midea, a comprehensive home
appliance brand, its share in the washing machine market keeps rising with increasing recognition.
5. Our capability of reform and self-improvement. Through years of accumulation, we have developed a
corporate culture of sustained reform and self-improvement. Along with rapid changes in the market and this new
era, we will keep reforming our organizational structure and operating model so as to ensure our capability of
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Wuxi Little Swan Company Limited Annual Report 2016
sustainable development. In order to adapt to the era of mobile internet, we restructure the Company with the
internet thinking and create a platformized operating model. Meanwhile, we are the first in the sector to adopt the
T+3 order-oriented production and sale mechanism to cope with the fast changes of market needs. And in order
for continuing vitality, we push forward reform of our remuneration mechanism and encourage creative sidelines
as a way to keep improving our management system.
No significant changes occurred to our core competitiveness in the Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2016
Section IV Performance Analysis
I Overview
(I) Macro-environment
2016 was the first year of China‘s 13th Five-Year Plan. In the year, China‘s home appliance market saw some
growth but was lacking in driving force due to factors such as a weak recovery of the world economy, the
slowdown in growth of the domestic economy, the soaring prices of raw materials, more fluctuations in exchange
rates and the changes in the real estate market.
In 2016, the trend of transformation and upgrade in washing machine industry was still obvious. Other than the
constantly rapid growth of roller, large-capacity, and inverter washing machines, the demand for smart and
high-end machines, dryers, and 2 machines for 1 family grew sharply as affected by the upgrade of consumption
and the motivation of innovation. A new round of consumption upgrade was gradually rising. The precise
understanding for the trigger points of consumer demand became the core of product competitiveness. The whole
society‘s demand for ―good products‖ was still pressing. The sales channels developed in diversity, showing a
sharp growth of online businesses, and the gradual integration of online and offline businesses, as well as the
continuous arising channels of company-self-established stores and shops on we-chat. Merge and integration of
giants in the home appliance industry speeded up. Enterprises in Chinese home appliance industry have been
transforming from the trade mode, which depends on exports, to a new international strategic mode. In the
reporting period, growth in the washing machine industry kept around low volumes, the competitions further
intensified, and the concentration ratio of the industry constantly improved. Based on data from the Industry
Online, in Jan-Dec 2016, the gross out-put of domestic washing machines in China was 58.8611 million units,
representing a year-on-year growth of 4.39%. The gross sales reached 59.5046 million units, showing a
year-on-year increase of 6.00%. Among them, sales volume in the domestic market was 41.1489 million units,
increasing by 5.37% as compared with last year; and exports volume was 18.3557 million units, with a
year-on-year increase of 7.44%.
(II) Analysis of main business
In face of the complex and changeable domestic and overseas environments, we continued to adhere closely to our
main strategy of ―leading products, efficiency-driven and global operations‖, focused on our main business, kept
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Wuxi Little Swan Company Limited Annual Report 2016
increasing the competitiveness of our products with customers as the center, and furthered transformation of our
operations for leaner management. And for that, we were rewarded with fine operating results. For the Reporting
Period, the Company achieved operating revenues of RMB16.335 billion, up 24.39% from the year earlier; the net
profit attributable to shareholders of the Company stood at RMB1.175 billion, representing a YoY growth of
27.84%; and the overall gross profit rate was 25.86%.
In the Reporting Period, the unit prices of the Company‘s products remained generally stable and the revenue
growth was mainly attributed to an increased sales volume, which was still resulted from better product
competitiveness and optimized structures. The percentage of roller washing machines in our total sales volume
exceeded 30% for the Reporting Period. Domestically, the online sales took up a much larger proportion; and the
sales to Europe, etc. witnessed fast growth. Meanwhile, the continuously growing business of clothes dryers also
contributed to the growth in the total sales. In the Reporting Period, sales of the Company went up 21.22% from
last year, a lot higher than the average growth in the industry.
The profit growth was attributed to a larger business scale, the increased efficiency and as well as exchange rate
effects. the Company had more self-owned funds and gained more from investments with the said funds. In
addition, the depreciation of Renminbi served as a favorable factor to the Company‘s export. For the Reporting
Period, the Company achi eved a net profit margin of
8.22%, 0.20 percentage points higher than last year.
(III) Work accomplished in 2016
1. The Company kept on more input on R&D,
optimized the administration system, and continuously
improved product competitiveness.
The Company continued to invest more on R&D,
constantly improved product competitiveness, built a
R&D platform with global competitiveness, and tried
efforts provide the society with ―good products‖. The
Company pushed the separation of research and
development, formulated middle and long term product
and technology routes, promoted the transformation for
R&D remuneration mechanism and the project manager
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Wuxi Little Swan Company Limited Annual Report 2016
mechanism, so as to constantly optimize the administration system, and further motivate the innovation vigor for
R&D. The Company strengthened research on users, continuously kept digging out user‘ trigger points and
invisible demands, preliminarily adopted the CDOC innovation method for product development, so that the hit
rate of planning can be improved. The Company kept intensified its efforts on technology innovation, and gained
remarkable results in the Beverly Products, Disney products, the auto put-in products, the water cube products,
and the smart products. In the reporting period, the Company had the honor to get technology certification of
―Water Cube with High Efficiency and Energy Saving‖ awarded by VDE, as well as the quality certification of
―BLDC Motor with 20-year Service Life‖. The Little Swan and Beverly products won the Red Dot Award. The
Beverly roller washing machines won the GD Award in Korea and the China Appliance Award. In the reporting
period, the product competiveness of the Company was further enhanced, and won broad market recognition.
2. The Company deepened the transformation of marketing, steadily developed domestic and international
sales, and kept high growth of E-commerce business
In aspect of domestic sales, the Company constantly promoted marketing transformation, guided agents to
transform to platform operators, continuously motivated organizational vitality and raised the efficiency of the
value chain. The Company thoroughly propelled the large-end management system, reinforced the flagship stores,
the TOP clients, the construction of end sites, for example, V200. The Company positively developed small-scale
and frequent promotion activities, so as to elaborately farm the market. The Company focused on products and
users, placed a major emphasis on new products including the high-end Beverly series, the Disney series, the auto
put-in series, and dryers, so as to continuously optimize product sales structure. The Company strived to develop
E-commerce business, continuously enhanced the sales volume in major e-commerce platforms, and at the same
time, positively enlarged the Little Swan Mall, continuously guided the offline clients to online shops, and
accelerated the integration of online and offline sales by degrees. In 2016, the gross online retail sales of the
Company reached RMB 4.58 billion, reaching a year-on-year increase of 84.6%. In the reporting period, domestic
sales revenue of the Company was RMB 11.449 billion, representing a year-on-year increase of 23.93%.
In aspect of international sales, the Company positively hit out and made remarkable breakthroughs in strategic
and key markets, further consolidated and enlarged the advantaged areas, constantly optimized the global
marketing layout. The Company kept enlarging the strategic cooperation with large clients, positively developed
new clients, and constantly optimized client structure. The Company emphasized on market survey and product
innovation, continuously optimized product sales structure, and achieved continuous sales ratio growth of roller
washing machines. The Company boosted the development of self-own brands, built the unique image of Midea
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Wuxi Little Swan Company Limited Annual Report 2016
products, enhanced marketing and channel enlargement, practiced localized operation in some areas, and achieved
rapid year-on-year growth of self-own brands. In the reporting period, the Company‘s international sales revenues
reached RMB 3.313 billion, showing a year-on-year increase of 23.10%.
3. The Company vigorously promoted the refine management on value chains, and obviously improved
operating efficiency
As for the marketing end, the Company insisted on and perfected the T+3 client order mechanism, launched
offline direct mailing, so as to deduct intermediate links, such as transfer, load, and unload, promoted sharing of
channel stocks, integrated the planning and allocation of stocks from the whole channels, and maximized the
deduction of unqualified stocks. The Company launched the pre-arranged-order system and the visible-capacity
system, balanced order allocation and accelerated turnover. As for the manufacturing end, the Company
continuously contributed to building smart manufacturing capability with the features of refinement, automation,
and informatization. The Company accomplished projects including launching the automate roller line body,
which continued to get the overall manufacturing efficiency improved. As for the supply end, the Company took
the informationized system control, gained the real-time access to business information of suppliers, improved the
rate of promptness and completeness of incomings, and meanwhile, continuously cleared away exclusive
suppliers, and kept optimizing the supply layout. As for the quality end, the Company insisted on the One-Veto
mechanism, put emphasis on improving product reliability, constantly decreased the maintenance ratio in market,
boosted the boutique engineering strategy, and gradually improved the boutique coverage ratio. In the reporting
period, the refining management of the Company achieved outstanding result, and remarkably improved the
operating efficiency.
4. The Company positively promoted the new business layout, and well developed dryers and smart-cloud
washing machines
The Company continuously reinforced on R&D, innovation, and business development of dryers, and had
developed a whole-category product layout covering direct-drained dryers, condensation dryers, heat pump dryers,
as well as washing-drying integral machines. With the synchronized online and offline sales, sales volume of
dryers and washing-drying integral machines in 2016 reached over RMB 1.2 billion, realizing a sharp
year-on-year increase. At the same time, the Company strived to develop the smart-cloud washing machine
project. Based on the combination of smart washing machines, dryers, and smart software platforms, the
Company realized the smart and convenient washing business in practice by applying the internet operating mode.
Currently, the Company has entered and stationed in over 280 colleges and universities, hotels, and flats, attracted
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Wuxi Little Swan Company Limited Annual Report 2016
more than 500 thousand users, achieving rapid growth. In the reporting period, the Company positively promoted
the new business layout, and has gained well development so far.
II Analysis of main business
1. Overview
The Company is mainly engaged in washing machines. And this remained the same during the Reporting Period.
Movements of revenue, cost, expense, etc. are as follows:
Unit: RMB
Item 2016 2015 +/- +/-%
Operating revenues 16,334,914,501.69 13,131,626,932.44 3,203,287,569.25 24.39%
Operating costs 12,111,213,286.28 9,646,390,824.36 2,464,822,461.92 25.55%
Period expense 2,676,141,071.58 2,387,468,126.14 288,672,945.44 12.09%
Operating profit 1,554,025,314.69 1,210,303,981.45 343,721,333.24 28.40%
Total profit 1,584,427,028.99 1,225,421,617.93 359,005,411.06 29.30%
Net profit attributable to the
1,175,054,922.85 919,181,968.58 255,872,954.27 27.84%
Company
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB
2016 2015
As a percentage of As a percentage of
+/-%
Amount operating revenues Amount operating revenues
(%) (%)
Operating revenues 16,334,914,501.69 100% 13,131,626,932.44 100% 24.39%
By business segment
Home appliance
14,761,654,334.87 90.37% 11,929,121,727.57 90.84% 23.74%
manufacturing
Other 1,573,260,166.82 9.63% 1,202,505,204.87 9.16% 30.83%
By product
Washing machines 14,761,654,334.87 90.37% 11,929,121,727.57 90.84% 23.74%
Other 1,573,260,166.82 9.63% 1,202,505,204.87 9.16% 30.83%
By geographical segment
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Wuxi Little Swan Company Limited Annual Report 2016
China 13,022,118,060.74 79.72% 10,440,519,133.71 79.51% 24.73%
Other countries 3,312,796,440.95 20.28% 2,691,107,798.73 20.49% 23.10%
(2) Business segments, products or geographical segments contributing over 10% of the operating revenues
or profit
Unit: RMB
Operating Gross profit
Gross profit Operating cost:
Operating revenue Operating cost revenue: YoY margin: YoY
margin YoY +/-%
+/-% +/-%
By business segment
Home appliance
14,761,654,334.87 10,775,398,510.01 27.00% 23.74% 23.66% 0.04%
manufacturing
By product
Washing
14,761,654,334.87 10,775,398,510.01 27.00% 23.74% 23.66% 0.04%
machines
By geographical segment
China 11,448,857,893.92 7,910,808,456.78 30.90% 23.93% 24.99% -0.59%
Other countries 3,312,796,440.95 2,864,590,053.23 13.53% 23.10% 20.14% 2.13%
Note: For a better understanding of the Company‘s operations, the table above only gives data of the Company‘s
main business.
Main business data of the prior year restated according to the changed statistical caliber for this Reporting Period
□ Applicable √ Not applicable
(3) Whether revenue from physical sales is higher than service revenue
Business segment Item Unit 2016 2015 +/-%
Sales volume Unit 17,287,074 14,294,646 20.93%
Home appliances Output volume Unit 18,891,795 14,567,161 29.69%
Inventory Unit 2,676,139 1,071,418 149.78%
Reason for any over 30% YoY movements in the data above
√ Applicable □ Not applicable
The YoY increase of the stock exceeded 30%, which mainly due to the increase of the scope and the stocking for
China‘s Spring Festival.
18
Wuxi Little Swan Company Limited Annual Report 2016
(4) Execution progress of major signed sales contracts in this Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of operating costs
Unit: RMB
2016 2015
Business segment Item As a percentage of As a percentage of +/-%
Amount Amount
operating costs (%) operating costs (%)
Washing
Raw materials 9,987,516,184.35 92.69% 8,054,839,050.08 92.44% 0.25%
machines
Washing
Labor costs 456,420,377.10 4.24% 398,109,632.96 4.57% -0.33%
machines
Washing
Depreciation 166,480,328.30 1.55% 136,687,138.85 1.57% -0.02%
machines
Washing
Energy 63,655,701.04 0.59% 59,950,304.43 0.69% -0.10%
machines
(6) Changes in the scope of the consolidated financial statements for this Reporting Period
□ Yes √ No
(7) Major changes in the business, products or services in this Reporting Period
□ Applicable √ Not applicable
(8) Main customers and suppliers
Main customers
Total sales to top five customers (RMB) 6,187,645,348.19
Total sales to top five customers as a percentage of the total sales for this Reporting Period (%) 37.88%
Total sales to related parties among top five customers as a percentage of the total sales for this
15.78%
Reporting Period (%)
Information about top five customers
As a percentage of the total sales for this
No. Customer Sales amount (RMB)
Reporting Period (%)
1 Customer A 2,577,162,601.61 15.78%
2 Customer B 1,617,389,536.64 9.90%
19
Wuxi Little Swan Company Limited Annual Report 2016
3 Customer C 1,420,119,056.70 8.69%
4 Customer D 392,837,621.69 2.40%
5 Customer E 180,136,531.55 1.10%
Total -- 6,187,645,348.19 37.88%
Other information about the main customers
Customer A is under the control of the Company‘s controlling shareholder.
Main suppliers
Total purchases from top five suppliers (RMB) 3,322,254,917.42
Total purchases from top five suppliers as a percentage of the total purchases for this Reporting
27.70%
Period (%)
Total purchases from related parties among top five suppliers as a percentage of the total
19.84%
purchases for this Reporting Period (%)
Information about top five suppliers
As a percentage of the total purchases for
No. Supplier Purchase amount (RMB)
this Reporting Period (%)
1 Supplier A 2,380,403,669.52 19.84%
2 Supplier B 300,295,382.90 2.50%
3 Supplier C 218,035,789.00 1.82%
4 Supplier D 216,519,905.80 1.81%
5 Supplier E 207,000,170.20 1.73%
Total -- 3,322,254,917.42 27.70%
Other information about the main suppliers
Supplier A is under the control of the Company‘s controlling shareholder.
3. Expense
Unit: RMB
2016 2015 +/-% Reason for any significant change
Selling expenses 2,325,645,712.65 1,957,833,768.25 18.79%
Administrative expenses 505,321,107.14 539,747,209.80 -6.38%
Increase in interest revenue and
Finance costs -154,825,748.21 -110,112,851.91 -40.61%
exchange earnings
20
Wuxi Little Swan Company Limited Annual Report 2016
4. R&D input
During the Reporting Period, the Company was market-oriented and took the customers‘ needs as the center. It
input more for R&D and optimized the management mechanism to build up a globally competitive platform of
R&D. The R&D input was mainly for: 1. strengthening R&D of intelligent, high-end and differentiate washing
machines and clothes dryers for better competitive edges in those sectors; 2. strengthening user research,
promoting standardized management, increasing manufacturability of products and creating continuous cost
advantages; and 3. expanding the high-end talent pool. In 2016, the Company‘s expenditure on R&D was
RMB695 million, representing 9.99% of its audited net assets and 4.26% of its operating revenues in the year.
Information about R&D input:
2016 2015 +/-%
Number of R&D personnel 707 564 25.35%
R&D personnel as a percentage in the total
9.20% 7.16% 2.04%
employees
R&D input (RMB) 695,077,712.27 557,319,550.74 24.72%
R&D input as a percentage in operating
4.26% 4.24% 0.02%
revenues
Capitalized R&D input (RMB) 0.00 0.00 0.00%
Capitalized R&D input as a percentage in
0.00% 0.00% 0.00%
the total R&D input
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable
5. Cash flows
Unit: RMB
Item 2016 2015 +/-%
Subtotal of cash inflows from operating activities 16,377,852,960.18 12,873,994,461.09 27.22%
Subtotal of cash outflows from operating
12,481,780,172.80 9,275,298,992.29
activities 34.57%
Net cash flows from operating activities 3,896,072,787.38 3,598,695,468.80 8.26%
Subtotal of cash inflows from investing activities 9,274,869,699.89 8,525,242,206.01 8.79%
Subtotal of cash outflows from investing activities 11,534,305,378.00 10,570,010,753.52 9.12%
Net cash flows from investing activities -2,259,435,678.11 -2,044,768,547.51 -10.50%
21
Wuxi Little Swan Company Limited Annual Report 2016
Subtotal of cash inflows from financing activities 183,813,064.12 215,915,154.66 -14.87%
Subtotal of cash outflows from financing
464,554,974.82 502,603,592.68 -7.57%
activities
Net cash flows from financing activities -280,741,910.70 -286,688,438.02 2.07%
Net increase in cash and cash equivalents 1,379,004,588.52 1,275,945,523.83 8.08%
Explanation of why the data above varied significantly
□ Applicable √ Not applicable
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
III Analysis of non-core business
□ Applicable √ Not applicable
IV Analysis of assets and liabilities
1. Significant changes in the asset composition
Unit: RMB
December 31, 2016 December 31, 2015
Change in Reason for any
As a percentage As a percentage
Item percentage significant
Amount of total assets Amount of total assets
(%) change
(%) (%)
Monetary funds 4,272,077,211.11 22.62% 3,042,843,924.81 21.24% 1.38%
Accounts receivable 1,465,654,497.90 7.76% 896,075,475.63 6.25% 1.51%
Inventories 1,724,837,944.69 9.13% 745,412,967.52 5.20% 3.93%
Investment property 64,854,903.25 0.34% 68,843,047.52 0.48% -0.14%
Fixed assets 970,859,291.03 5.14% 1,019,528,291.60 7.12% -1.98%
Short-term
183,813,064.12 0.97% 0.97%
borrowings
Other current assets 8,385,724,282.16 44.40% 5,733,188,604.23 40.01% 4.39%
Notes receivable 1,297,609,202.29 6.87% 2,205,189,379.10 15.39% -8.52%
2. Assets and liabilities measured at fair value
Unit: RMB‘0,000
Opening Profit/loss on Cumulative fair Impairment Purchased in Sold in this Closing
Item
balance fair value value changes provided in this Reporting Reporting balance
22
Wuxi Little Swan Company Limited Annual Report 2016
changes in charged to equity this Reporting Period Period
this Reporting Period
Period
Available-for-sale
305,267.56 -5,567.56 10,414.27 817,100.00 -527,800.00 599,414.27
financial assets
Total of the above 305,267.56 -5,567.56 10,414.27 817,100.00 -527,800.00 599,414.27
Significant changes in the measurement attributes of the main assets in this Reporting Period
□ Yes √ No
3. Restricted asset rights as of the end of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of the Company
were sealed, distrained, frozen, impawned, pledged or limited in any other way.
V Investments made
1. Total investments made
Investments made in this Reporting Period (RMB) Investments made in the prior year (RMB) +/-%
137,529,712.00 144,419,272.00 -4.77%
2. Significant equity investments made in this Reporting Period
□ Applicable √ Not applicable
3. Significant non-equity investments ongoing in this Reporting Period
□ Applicable √ Not applicable
4. Financial investments
(1) Securities investments
□ Applicable √ Not applicable
No such cases in this Reporting Period
(2) Investment in derivative financial instruments
□ Applicable √ Not applicable
No such cases in this Reporting Period
23
Wuxi Little Swan Company Limited Annual Report 2016
5. Use of funds raised
□ Applicable √ Not applicable
No such cases in this Reporting Period
VI Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Not applicable
2. Sale of major equity interests
□ Applicable √ Not applicable
VII Main controlled and joint stock companies
Unit: RMB‘0,000
Relationsh Main
business Registered Operating Operating
Company name ip with the Total assets Net assets Net profit
scope capital revenues profit
Company
Hefei Midea Washing
Washing Machine Subsidiary machine USD13,552 760,473.59 253,863.58 725,996.19 37,187.64 31,798.88
Co., Ltd. manufacture
Manufacture
Wuxi FILIN Subsidiary of electronic USD362.4564 125,468.12 74,148.77 90,494.04 24,219.88 22,325.72
components
Subsidiaries obtained or disposed in this Reporting Period
□ Applicable √ Not applicable
VIII Structured bodies controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the future development of the Company
(I) Development trends in the industry
In 2017, under the influence of uncertainty of world economy recovery, slowdown of domestic economic growth,
cost increase challenging operation capability of enterprises, continuous control of real estate, exchange rate
24
Wuxi Little Swan Company Limited Annual Report 2016
fluctuation and anti-dumping trade protectionism, household appliance industry is facing increasing growth
pressure.
2017 is the year of supply-side structural reform deepening, in which, industrial structure adjustment and
consumption upgrading shall continue and industrial concentration ratio shall further increase; new-type
urbanization and population structure change shall inject fresh impetus into consumption growth. As new
generation consumers grow and e-commerce logistics supporting facilities in rural areas are further improved,
online sales are expected to maintain high growth. The increase of residents' income and the change of
consumption concept shall further drive product quality improvement and structure upgrading. The popularity of
network and We Media greatly increases the participation of consumers in buying and using process, thus brand
reputation construction is particularly important. As living habits and external environment change, the need for
dryer shall increase in the future. The profound adjustment of global industrial pattern and re-division shall
provide new space for the internationalization of Chinese household appliances enterprises. In general, the
industry enters a new period of deep integration and rapid reform, the consumption upgrading trend remains
evident, the internationalization process of Chinese household appliance enterprises shall speed up and industry
development shall face new opportunities and challenges.
(II) Development plan of the Company
Main business thoughts in 2017: insist on the strategic
principal axis of "products prevailing, efficiency driven
and global operating‖, focus on the core main business of
the washing machines and actively develop dryer
business. Continue to increase R&D investment and
innovation, further optimize product structure, accelerate
the promotion of key market and private brand,
comprehensively improve fine management level and
ensure income and profit increase with multiple
measures.
Based on foregoing business thoughts, following tasks
shall be carried out as key points in 2017:
1. Continue to develop leading ability of products and
25
Wuxi Little Swan Company Limited Annual Report 2016
vigorously promote quality engineering
Continue to increase R&D investment, break conventional thinking, actively carry out innovation and
differentiation reform; adapt to the requirement of times, enhance consumers' pain point-based user research, build
big data-based scientific evaluation system, discover the real demand of users, create hot selling products; conduct
product development in strict accordance with CDOC innovation method, continue to simplify product model;
strengthen R&D system management, continue to increase R&D investment, update technology roadmap in
rolling way, develop the future product competitiveness; align with world first-class brands, continue to promote
technical standards for products, vigorously promote quality engineering strategy and continue to create quality
products and shape quality culture.
2. Firmly carry out efficiency driving and comprehensively improve fine management level
Drive the promotion of whole value chain and continue to improve company operation quality by taking fine
management as the direction and method. For the R&D part, continue to build global product platform, accelerate
the transformation of advanced technical achievements and promote the manufacturability level of products. For
the manufacturing part, systematically plan energy production investment, promote the effective ground operation
of MBS system and build more agile and flexible platform. For the marketing part, further remove intermediate
links, accelerate the transformation from agent to operator; continue to carry forward inventory share, promote
channel efficiency and improve sales structure. For the supply part, continue to optimize supply layout and
promote exclusive supply clearance and further promote supply efficiency and resources guarantee ability.
3. Develop global operation and actively explore overseas localized layout
Increase the promotion strength of private brand, fully participate in market operation through team dispatching
and channel sharing, promote rapid development of private brand; actively conduct cooperation with Toshiba
brand, continuously expand market area and promote global competitiveness of the Company; further focus on
strategy market, break through key market, exploit potential market, and meanwhile rapidly clear up blank market,
continuously optimize global market layout of the Company; actively explore overseas localized operation layout
in order to meet the development demand of global operation strategy.
(III) Key capital expenditure plan for the near future
To actively adapt to industry environment change and satisfy the future development demand of the Company, the
investment focus of the Company in 2017 shall be put on R&D and innovation, quality improvement, intelligent
manufacturing, structural capacity expansion, brand construction, e-commerce and dryer business development
26
Wuxi Little Swan Company Limited Annual Report 2016
and IT information system improvement etc. and meanwhile the Company shall actively explore overseas
localized operation layout and promote the global competitiveness of the Company. The Company shall strictly
control non-production operation investment. Investment fund comes from the Company's own fund.
(IV) Main risks in future development
1. Macro risk. Under the influence of uncertainty of world economy recovery, slowdown of domestic economic
growth, continuous control of real estate and turbulence of political and economical structure, consumption
market recession may continue and the industry may face the risk of insufficient growth power.
2. Market risk. Washing machine industry is a mature and fully competitive industry with many foreign
enterprises and local enterprises involved. Though the Company has strong competition advantage, it still faces
the impact brought by market risks such as intensification of industry competition, continuously upgrading of
consumption structure, profound adjustment of global industrial pattern and re-division.
3. Cost risk. Labor cost continues to rise, new overloading regulations lead to increased logistics cost. If the price
of raw materials continues to rise in 2017, cost pressure of the Company shall further increase to directly affect
the profitability of the Company.
4. Exchange rate risk. Since exchange rate fluctuation is very uncertain, though the Company has adopted
certain countermeasures to deal with exchange rate fluctuation risk, exchange rate fluctuation still greatly affect
the profitability of the export sales business of the Company.
5. Policy risk. Overseas non-tariff trade barriers and anti-dumping policy shall also have an impact on the scale
and profit of export sales business.
X Visits paid to the Company for purposes of research, communication, interview, etc.
1. In this Reporting Period
Type of
Date of visit Way of visit Index to main inquiry information
visitor
One-on-one The Sheet of Interactions with Investors Dated 01/22/2016 (No. 2016-01) on
01/22/2016 Institution
meeting www.cninfo.com.cn
The Sheet of Interactions with Investors Dated 03/15/2016 (No. 2016-02) on
03/15/2016 Ditto Ditto
www.cninfo.com.cn
The Sheet of Interactions with Investors Dated 05/12/2016 (No. 2016-03) on
05/12/2016 Ditto Ditto
www.cninfo.com.cn
27
Wuxi Little Swan Company Limited Annual Report 2016
07/05/2016-07/06/201 The Sheet of Interactions with Investors for 07/05/2016-07/06/2016 (No.
Ditto Ditto
6 2016-04) on www.cninfo.com.cn
08/10/2016-08/17/201 The Sheet of Interactions with Investors for 08/10/2016-08/17/2016 (No.
Ditto Ditto
6 2016-05) on www.cninfo.com.cn
09/22/2016-09/28/201 The Sheet of Interactions with Investors for 09/22/2016-09/28/2016 (No.
Ditto Ditto
6 2016-06) on www.cninfo.com.cn
11/30/2016-12/22/201 The Sheet of Interactions with Investors for 11/30/2016-12/22/2016 (No.
Ditto Ditto
6 2016-07) on www.cninfo.com.cn
Times of visit 19
Number of visiting institutions 74
Number of visiting individuals 89
Number of other visitors 0
Significant undisclosed information disclosed,
None
revealed or leaked
28
Wuxi Little Swan Company Limited Annual Report 2016
Section V Significant Events
I Profit distribution and converting capital reserve into share capital for common
shareholders
Plans/proposals for profit distribution and converting capital reserve into share capital for common shareholders
for the past three years (including this Reporting Period):
2016 profit distribution proposal: Based on the total 632,487,764 shares of the Company as of December 31, 2016,
it is proposed that a cash dividend of RMB7.5 (tax inclusive) per 10 shares should be distributed to all
shareholders of the Company and that no capital reserve should be converted into share capital. The said proposal
has been reviewed and approved by the Board of Directors and is to be submitted to the Shareholders‘ Meeting for
final approval.
2015 profit distribution plan: Based on the total 632,487,764 shares of the Company as of December 31, 2015, a
cash dividend of RMB6 (tax inclusive) per 10 shares would be distributed to all shareholders of the Company and
no capital reserve would be converted into share capital. The said plan has been carried out in May 2016.
2014 profit distribution plan: Based on the total 632,487,764 shares of the Company as of December 31, 2014, a
cash dividend of RMB4.5 (tax inclusive) per 10 shares would be distributed to all shareholders of the Company
and no capital reserve would be converted into share capital. The said plan has been carried out in June 2015.
Cash dividend distribution of the Company to common shareholders over the past three years (including this
Reporting Period)
Unit: RMB
Proportion in net profit
Net profit attributable to
attributable to common
common shareholders of
Cash dividends shareholders of the Ratio of cash
Cash dividends in
Year the Company in the dividends in other
(tax included) Company in the other forms
forms
consolidated statements
consolidated statements
for the year
for the year (%)
2016 474,365,823.00 1,175,054,922.85 40.37% 0.00 0.00%
2015 379,492,658.40 919,181,968.58 41.29% 0.00 0.00%
2014 284,619,493.80 698,195,731.48 40.77% 0.00 0.00%
Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to
common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend
distribution to its common shareholders
29
Wuxi Little Swan Company Limited Annual Report 2016
□ Applicable √ Not applicable
II Proposal for profit distribution and converting capital reserve into share capital for this
Reporting Period
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 7.50
Additional shares to be converted from capital reserve for every 10 shares (share) 0
Total shares as the basis for the profit distribution proposal (share) 632,487,764
Total cash dividends (RMB) (tax included) 474,365,823.00
Distributable profit (RMB) 2,608,364,062.12
Percentage of cash dividends in the total profit to be distributed (%) 100.00%
Cash dividend policy
Other
Details about the proposal for profit distribution and converting capital reserve into share capital
Pursuant to the Auditor‘s Report issued by PricewaterhouseCoopers Zhong Tian LLP, the Company realized a net profit of
RMB763,741,936.87 for 2016. Adding that figure to the undistributed profit at the beginning of the year of RMB2,224,114,783.65,
the distributable profit will come out at RMB2,987,856,720.52. Deducting the dividends of RMB379,492,658.40 for 2015, which
were distributed during this Reporting Period, the distributable profit at the end of this Reporting Period will come out at
RMB2,608,364,062.12.
2016 profit distribution proposal: Based on the total 632,487,764 shares of the Company as of December 31, 2016, it is proposed
that a cash dividend of RMB7.50 (tax inclusive) per 10 shares should be distributed to all shareholders of the Company, totaling
RMB474,365,823.00 (the rest of the undistributed profit to be carried forward for future distribution); and that no capital reserve
should be converted into share capital, nor should any bonus shares be granted.
III Fulfillment of commitments
1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as
the Company and other commitment makers, fulfilled in this Reporting Period or ongoing at the
period-end
Commit Date of Period of
Fulfillme
Commitment ment Contents commitme commitme
nt
maker nt making nt
Where the controlling shareholder Midea Group plans to sell
Controlli the Company‘s shares released from trading moratorium held
Commitments made in ng by it via the bid trading system of the Shenzhen Stock 02/28/200 Long-stan In
share reform sharehol Exchange, and Midea Group decreases over 5% shares within 8 ding execution
der six months since the first reduction of holdings, Midea Group
will disclose an indicative public announcement on share
30
Wuxi Little Swan Company Limited Annual Report 2016
selling through the Company two trading days before its first
reduction of holdings.
1. As for the commitment of avoiding horizontal competition,
Midea Group (the controlling shareholder) and Mr. He
Xiangjian (the actual controller) has promised that, for the
period after the said transaction when the Company‘s
controlling shareholder and actual controller remain unchanged,
the actual controller Mr. He Xiangjian, his immediate family,
Midea Group and its controlled other enterprises neither
recently nor in the future will engage in any production or
operation activity the same as or similar to the recently main
Controlli business of Little Swan or its controlled enterprises, as well as
ng will neither engage in nor participate in any competitive
12/01/201
sharehol business the same as the recently main business of Little Swan
0, Long-stan In
der and or its controlled enterprises through controlling other economic
06/06/201 ding execution
actual entities, institutions, economic organizations. If Little Swan and
4
controlle its controlled enterprises further developed its scope of the
r operation business on the basis of the recently business, and if
the actual controller Mr. He Xiangjian, his immediate family,
Midea Group and its controlled other enterprises had executed
production of that, would solve the corresponding horizontal
Commitments made in competition problems within the reasonable period. If recently
acquisition documents there was no any production or operation, would not engage in
or shareholding the similar new business that competed with Little Swan and its
alteration documents controlled enterprises. If there was any situation violated the
above commitments, the profits gained from the business
related to operation were belongs to Little Swan.
2. The commitment by Midea Group and the actual controller
on the specification of the related-party transaction. Midea
Group (the controlling shareholder) and Mr. He Xiangjian (the
actual controller) has promised that, for the period after the said
transaction when the Company‘s controlling shareholder and
Controlli actual controller remain unchanged, the actual controller Mr.
ng He Xiangjian, his immediate family, Midea Group and its
12/01/201
sharehol controlled other enterprises will specify and try their best to
0, Long-stan In
der and reduce the related-party transactions with Little Swan and its
06/06/201 ding execution
actual controlled enterprises. If occurred the unavoidable related
4
controlle transactions with Little Swan and its controlled enterprises,
r would sign the normative related-party transactions agreement
Little Swan according to laws and would execute the approval
procedure according to the relevant regulations to ensure the
fairness of the price of the related-party transactions; ensure to
execute the information disclose obligation of related-party
transactions according to the relevant regulations; ensure not to
31
Wuxi Little Swan Company Limited Annual Report 2016
make advantage of the related-party transactions for illegally
transferring the assets and profits of Little Swan, as well as not
to make advantage of the related-party transactions for harming
to the interests of Little Swan and the shareholders; would not
require Little Swan to offer any more favorable condition
compared with that offered to the independent third party in any
fair trade market transaction; execute the voting debarb
obligation when involved in the voting of the related events of
the actual controller Mr. He Xiangjian, his immediate family,
Midea Group and its controlled other enterprises. If Midea
Group and Mr. He Xiangjian violated the above commitments
and promises that led to the harm for the equity of Little Swan
or other shareholders, Midea Group and Mr. He Xiangjian
should take the responsibility of the corresponding liability for
damage.
3. As for the commitment on independence, Midea Group and
Controlli
the actual controller Mr. He Xiangjian has promised that, to
ng
further ensure the independent operation of Little Swan, Mr. He 12/01/201
sharehol
Xiangjian, Midea Group and its controlled other enterprises 0, Long-stan In
der and
would maintain the mutual independent in terms of personnel, 06/06/201 ding execution
actual
finance, assets, business and institutions with Little Swan 4
controlle
according to the relevant laws and regulations as well as the
r
normative documents.
4. As for the commitment on related-party deposits and
borrowings, up to April 8, 2010, the Financial Settlement
Controlli
Center of Midea Group had settled all internal deposits and
ng 12/01/201 Long-stan In
borrowings with Hefei Midea Washing Machine Co., Ltd.; and
sharehol 0 ding execution
Midea Group has promised that there will be no more deposits,
der
borrowings or other funds flows incurred between the Financial
Settlement Center and Hefei Midea Washing Machine Co., Ltd..
5. The commitment by Midea Group on housing properties with
no ownership certificates of the target company for sale is
detailed as follows. Two pieces of the buildings of Hefei Midea
Washing Machine Co., Ltd. assessed and sold to the Company
Controlli are of no ownership certificates—the warehouse for
ng half-finished products (176 square meters) and the workshop 12/01/201 Long-stan In
sharehol for injection molding (834 square meters), both located in the 0 ding execution
der old factory on Hewa Road, Hefei. Midea Group has promised
that if loss occurs due to the said two buildings without
ownership certificates in the asset disposal process in the future,
it will assume the loss thus caused and make compensation to
the Company.
Controlli 6. The commitment by Midea Group on trademarks is detailed 12/01/201 The use In
32
Wuxi Little Swan Company Limited Annual Report 2016
ng as follows. (1) Concerning the ―Midea‖ trademark: Upon 0 right of execution
sharehol approval and implementation of the equity transfer transaction, the
der Midea Group has promised that it will make sure that Hefei ―Royalstar
Midea Washing Machine Co., Ltd. uses the ―Midea‖ trademark ‖
in a proper manner. Hefei Midea Washing Machine Co., Ltd. trademark
will be allowed to use the ―Midea‖ trademark with a trademark detailed in
use fee not more than that paid by Midea Group (the controlling (2) expired
shareholder of Midea Group) and its subsidiaries (currently 3‰ on March
of the annual sales income generated by products using the 31, 2013
―Midea‖ trademark), and upon negotiation and signing of the and was
―Agreement for Trademark Use‖. The related-party transactions not
incurred due to the said use of the ―Midea‖ trademark will be renewed.
submitted to the decision-making organ of the Company for And the
approval according to the stipulated procedure. As such, other
interests of the Company and its minority shareholders will be commitme
safeguarded. (2) Concerning the ―Royalstar‖ trademark: Midea nt
Group has signed the ―Contract for Trademark Use‖ with Hefei continues.
Royalstar Group and obtained the ordinary use rights of the
―Royalstar‖ (both in Chinese and English) trademark. As the
transferor in the transfer transaction of equity interests of
Royalstar Washing Equipment, Midea Group has promised that
within the scope as agreed in the ―Contract for Trademark
Use‖, if any dispute arises between Hefei Midea Washing
Machine Co., Ltd. and Hefei Royalstar Group over the former‘s
execution of the ―Contract for Trademark Use‖, Little Swan
will not be involved. If Hefei Midea Washing Machine Co.,
Ltd. and Little Swan have to assume any responsibility or loss
due to the aforesaid dispute, Midea Group is willing to take on
the responsibility instead and make compensations to Hefei
Midea Washing Machine Co., Ltd. and Little Swan at full
amount.
7. The commitment by Midea Group on social security payment
and tax risks is detailed as follows. Midea Group has promised
that upon the completion of the said equity transfer deal, if
Hefei Midea Washing Machine Co., Ltd. is obliged to take on
any responsibility or pay relevant fares as required by relevant
Controlli
government authorities due to its social security payment before
ng 12/01/201 Long-stan In
the said deal, Midea Group is willing to pay relevant fares for
sharehol 0 ding execution
Hefei Midea Washing Machine Co., Ltd. to relevant
der
government authorities in a timely manner and assume any
other liability. If any loss thus occurs to Hefei Midea Washing
Machine Co., Ltd. or Little Swan, Midea Group is willing to
assume relevant responsibilities for compensation. Upon the
completion of the said equity transfer deal, if income tax
33
Wuxi Little Swan Company Limited Annual Report 2016
evasion or any other tax risk is found in Hefei Midea Washing
Machine Co., Ltd., Midea Group is willing to assume relevant
legal responsibilities and risks and pay relevant taxes in a
timely manner to relevant government authorities; and if any
loss thus occurs to Little Swan, Midea Group will assume the
corresponding responsibility for compensation.
8. The commitment by Midea Group on capital safety at the
finance companies of the Company: during the validity period
Controlli of the Financial Services Agreement, when Midea Group
ng occurred emergency situation of payment difficulty at finance 03/18/201 Three In
sharehol companies, it should adopt the effective measures such as 5 years execution
der increase the capital fund of the finance companies according to
the actual needs of solving the payment difficulty to ensure the
capital safety of the Company.
Commitments made in
time of asset
restructuring
Commitments made in
time of IPO or
refinancing
Other commitments
made to Minority
interests
Executed on time or
Yes
not
Specific reasons for
failing to fulfill
commitments on time N/A
and plans for next step
(if any)
2. Where there had been an earnings forecast for an asset or project and this Reporting Period was still
within the forecast period, explain why the forecast has been reached for this Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
34
Wuxi Little Swan Company Limited Annual Report 2016
V Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “auditor’s non-standard report” issued by the CPAs firm for
this Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VII Retroactive restatement due to correction of material accounting errors in this Reporting
Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY changes in the scope of the consolidated financial statements
□ Applicable √ Not applicable
No such cases in this Reporting Period.
IX Engagement and disengagement of CPAs firm
Current CPAs firm
Name of the domestic CPAs firm PricewaterhouseCoopers Zhong Tian LLP
The Company‘s payment for the domestic CPAs firm (RMB‘0,000) 235
Consecutive years of the audit service provided by the domestic CPAs firm 2
Names of the certified public accountants from the domestic CPAs firm Huang Meimei, Cai Xiujuan
Indicate by tick mark whether the CPAs firm was changed in this Reporting Period
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
During the Reporting Period, the Company hired PricewaterhouseCoopers Zhong Tian LLP as the accountant firm
of internal control during Reporting Period, the total amount of the audit expenses of the Financial Report the
external audit expenses paid for PricewaterhouseCoopers Zhong Tian LLP was RMB2.35 million. During the
35
Wuxi Little Swan Company Limited Annual Report 2016
Reporting Period, Huatai United Securities Co., Ltd. was as continuous supervision sponsor institution of the
equity division reform of the Company that continued to carry out the supervision responsibility of the Reporting
Period.
X Possibility of listing suspension or termination after disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XII Significant litigations and arbitrations
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIII Punishments and rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Not applicable
XV Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVI Significant related-party transactions
1. Related-party transactions relevant to routine operation
For details, please refer to ―14. Related-party and related-party transactions‖ under ―Section IX Financial Report‖.
36
Wuxi Little Swan Company Limited Annual Report 2016
2. Related-party transactions regarding purchase or sales of assets or equity interests
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Related-party transitions regarding joint investments
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
No such cases in this Reporting Period.
5. Other significant related-party transactions
(1) About the Financial Service Agreement which signed with the Midea Group Finance Co., Ltd. of related
transaction
It was agreed that, the financial company should provide the service of deposit, loan, note discount, guarantee,
settlement, and the series of the financial services that approved by the CBRC according to the requirements of
the Company as well as its subsidiaries. During the three-year validity after date of the validation of the agreement,
the maximum of the deposit balance that the Company and its subsidiaries disposed in the financial company
should not exceed the amount of RMB2 billion per day; and the maximum of the outstanding loan principal and
interest balance that the financial company granted to the Company and its subsidiaries should not exceed the
amount of RMB2 billion per day.
At the report-end, the deposit balance of the Company at Midea Group Finance Co., Ltd. was of RMB1.974
billion, with no loans.
(2) About trademark license of related transactions
①The Company permitted GD Midea Holding Co., Ltd. and its controlled subsidiaries to use trademark of
LITTLE SWAN and picture in air conditioner commodities; permitted Hubei Midea Refrigerator Co., Ltd. and its
controlled subsidiaries to use to use trademark of LITTLE SWAN and picture in the refrigerators and the freezers;
at the same time GD Midea Holding Co., Ltd. permitted the Company and subsidiaries of the Company to use
37
Wuxi Little Swan Company Limited Annual Report 2016
trademark of Midea in production, sales and ad campaign of washing machines and dryers. The aforesaid
licensing contracts were all contracted with 0.3% charges of net sales revenue of products with the authorized
trademark as trademark license fees, and the permitting period last from the January 1, 2014 to December 31,
2016.
(Notes: Approved by [2013] No. 1014 document of China Securities Regulatory Commission, Midea Group had
made share swap absorption merger of the original controlling shareholder—GD Midea Holding Co., Ltd. on
September 18, 2013, after which, Midea Group inherited and carried on the whole obligations and right such as
the whole assets and liabilities of GD Midea Holding Co., Ltd. as a remainder enterprise as well as had completed
the relevant share transfer registration procedures on December 31, 2013.)
②The Company permitted Midea Group Co., Ltd. and its controlled subsidiaries to use trademark of Beverly in
water heater, water purification equipment and machinery, which was charged with 0.3% charges of net sales
revenue of products with the authorized trademark as trademark license fees, and the permitting period last from
the December 1, 2015 to December 31, 2018.
(3) The Company held the 2015 Annual General Meeting on April 4, 2016 which reviewed and approved the
Proposal on Estimating the Amount of the 2016 Daily Related Transactions.
(4) The Company held the 6th Meeting of the 8th Board of Directors on August 8, 2016, which reviewed and
approved the Proposal on Adjusting the Amount of the 2016 Daily Related Transactions.
(5) The Company held the 7th Meeting of the 8th Board of Directors on October 24, 2016, which reviewed and
approved the Proposal on Adjusting the Amount of the 2016 Daily Related Transactions.
Index to the current announcements about the said related-party transactions disclosed
Title of current announcement Disclosure date Disclosure website
Announcement about the Estimating the Amount of the 2016 Daily
03/10/2016 www.cninfo.com.cn
Related Transactions.(No. 2016-04)
Announcement about the Adjusting the Amount of the 2016 Daily
08/10/2016 www.cninfo.com.cn
Related Transactions (No. 2016-17)
Announcement about the Adjusting the Amount of the 2016 Daily
10/25/2016 www.cninfo.com.cn
Related Transactions (No. 2016-24)
38
Wuxi Little Swan Company Limited Annual Report 2016
XVII Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in this Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in this Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Significant guarantees
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Guarante
Disclosure date
Actual occurrence Actual e for a
of the guarantee Line of Type of Term of Due or
Guaranteed party date (date of guarantee related
line guarantee guarantee guarantee not
agreement signing) amount party or
announcement
not
Total external guarantee line Total actual external
approved during this Reporting 0 guarantee amount during 0
Period (A1) this Reporting Period (A2)
Total actual external
Total approved external guarantee
guarantee balance at the
line at the end of this Reporting 0 0
end of this Reporting
Period (A3)
Period (A4)
Guarantees between the Company and its subsidiaries
Disclosure date Actual occurrence Actual Guarante
Line of Type of Term of Due or
Guaranteed party of the date (date of guarantee e for a
guarantee guarantee guarantee not
guarantee line agreement signing) amount related
39
Wuxi Little Swan Company Limited Annual Report 2016
announcement party or
not
Hefei Midea
Washing Machine 03/10/2016 125,000 06/27/2016 5,999.52 Joint-liability Half year Yes No
Co., Ltd.
Ditto Ditto 125,000 08/29/2016 3,959.34 Ditto Ditto No No
Ditto Ditto 125,000 11/25/2016 9,683.85 Ditto Ditto No No
Ditto Ditto 125,000 12/26/2016 5,671.14 Ditto Ditto No No
Total actual guarantee
Total guarantee line for
amount for subsidiaries
subsidiaries approved during this 125,000 25,313.85
during this Reporting
Reporting Period (B1)
Period (B2)
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries at
subsidiaries at the end of this 125,000 19,314.33
the end of this Reporting
Reporting Period (B3)
Period (B4)
Guarantees between subsidiaries
Guarante
Disclosure date
Actual occurrence Actual e for a
of the Line of Type of Term of Due or
Guaranteed party date (date of guarantee related
guarantee line guarantee guarantee guarantee not
agreement signing) amount party or
announcement
not
Total actual guarantee
Total guarantee line for
amount for subsidiaries
subsidiaries approved during this 0 0
during this Reporting
Reporting Period (C1)
Period (C2)
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries at
subsidiaries at the end of this 0 0
the end of this Reporting
Reporting Period (C3)
Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total actual guarantee
Total guarantee line approved
amount during this
during this Reporting Period 125,000 25,313.85
Reporting Period
(A1+B1+C1)
(A2+B2+C2)
Total actual guarantee
Total approved guarantee line at
balance at the end of this
the end of this Reporting Period 125,000 19,314.33
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net 3.23%
40
Wuxi Little Swan Company Limited Annual Report 2016
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller
0
and their related parties (D)
Amount of debt guarantees provided directly or indirectly for entities
0
with a liability-to-asset ratio over 70% (E)
Portion of the total guarantee amount in excess of 50% of net assets
0
(F)
Total amount of the three kinds of guarantees above (D+E+F) 0
Joint responsibilities possibly borne or already borne in this
N/A
Reporting Period for undue guarantees (if any)
Provision of external guarantees in breach of the prescribed
N/A
procedures (if any)
(2) Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Entrusted cash management
(1) Entrusted asset management
Unit: RMB'0,000
Actually
Actual Amount Actual
received/
Whether it principal provided profit and
paid
is a Value of amount for Projecte loss
Name of Product Commenc Terminat Method of profit/los
related-par entruste recovere impairm d amount for
trustee type ement date ion date remuneration s amount
ty d assets d for this ent (if income this
for this
transaction Reportin applicab Reporting
Reporting
g Period le) Period
Period
Floating
interest rate
Bank‘s
with the
wealth 01/01/201 12/31/20
Bank No 817,100 highest 537,800 0 20,024 20,024 20,024
manageme 6 16
annualized
nt product
return subject
to contract
Total 817,100 -- -- -- 537,800 0 20,024 20,024 --
41
Wuxi Little Swan Company Limited Annual Report 2016
All is self-owned capital of the Company. The amount of wealth management entrustment was the
Source of entrusted assets cumulative amount, the capital amount used for wealth management entrustment was no more
than RMB6 billion and repeated use was allowed within the line.
Cumulative amount of principal
0
and revenue overdue
Litigation involved (if
N/A
applicable)
Disclosure date of the
announcement about the board‘s
consent for the asset 03/10/2016
management entrustment (if
any)
Disclosure date of the
announcement about the
consent of the shareholders‘
04/08/2016
meeting for the asset
management entrustment (if
any)
On March 7, 2017, the Company held the 9th Meeting of the 8th Board of Directors, the Meeting
reviewed and approved the Proposal on the Self-own Idle Fund Entrusting Wealth Management in
Any plan for asset management 2017, the Board of Directors agree to put the self-owned idle funds no more than RMB6 billion
entrustment in the future into wealth management entrustment, the aforesaid amount can be and used for investing
short-term low-risk investment products on a rolling basis. The said proposal is still awaiting final
approval of a shareholders‘ meeting.
Note: Gains from the undue entrusted asset management in 2016 were RMB50 million (see ―Note 29 Other
comprehensive income‖ under ―Section IX Financial Report‖ for more details), and the actual gains and undue
gains combined reached RMB250 million for the year.
(2) Entrusted loans
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Other significant contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
42
Wuxi Little Swan Company Limited Annual Report 2016
XVIII Social responsibilities
1. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Not applicable
2. Other social responsibilities taken
The Company positively executed the social responsibility, paid attention on maintaining the legal equities of each
benefit-related party, insisted to harmonious coexist with each party. The Company positively participated in the
social and public welfare undertakings, paid attention on the environmental protection and positively responded to
the national appeal of energy saving and emission-reduction that made great efforts to contribute to the sustainable
development of the society as well as environment, with the specific work situation as follows:
(I) Safeguarding legitimate rights and interests of consumers: Being market-oriented, the Company centered
on the customers‘ needs and keeps improving quality management to offer products with a quality higher than the
expectation of consumers and an improved users experience. It has a national service hotline—4008228228—to
answer to customers‘ questions and complaints, ensure that they would be satisfied.
(II) Offering generous returns to shareholders. The
Company constructed a more perfect corporate governance
structure and formulated a corresponding management
system for ensure the shareholders to fully enjoy each legal
interests stipulated by the laws and regulations. In line with
the stipulation of the Articles of Association, the Company
realized the allocable profit positive, and there were no
significant investment plan or significant cash expenditure
events (excluding raise funds investment events).Any
within three consecutive years, the Company allocated the
profits in cash accumulatively no less than 30% of the
average distributive profits realized in recent three years.
When allocating profits, the Cash bonus should take the
minimum proportion of 20% in the profits allocation. The Company attached great importance to the retribution
and had been executing the cash dividends for recent years.
43
Wuxi Little Swan Company Limited Annual Report 2016
(III) Constructing strategic partnership. The Company positively constructed the strategic partnership with
suppliers and customers, complied with the business rule, paid attention on the communication and cooperation
with each related party, built up interests community with the partners for growing together and sharing
achievements, ensured the interests and relevant equities of the partners and jointly dedicated to maintain the
sustainable healthy development of the industry.
(IV) Safeguarding rights and interests of employees. The Company strictly implemented the state laws and
regulations to positively guarantee the legal interests of the staff. Withholding the ―people-oriented‖ spirit, the
Company offered a favorable working and living environment for its staff and built as well as improved the salary
standard and the incentive system, and provided competitive salary reward with improving space. The Company
offered various kinds of training to promote the career development of the staff by the method combined either in
internal or external. It also conducts many leisure activities to enrich employees‘ life.
(V) Promoting energy saving and environmental protection. In strict compliance with the country‘s laws and
regulations for environment protection, the Company carried out and promoted the energy conservation and
emission reduction and executed the social responsibility under the low-carbon time through innovation in
management, technology and products. During the progress of produce, the Company realized 100% of the
recycle and the reuse of the industrial water consumption; the Company explored the Accurate Automatic Launch
Detergent Technology, which gained the authentication of the international authority-UK Intertek, and at the same
time received the green leave label of Carbon Footprint that meant the Company be the first enterprise that
received that label in the domestic washing machine industry.
(VI) Being active in charity. At the activity named ―Jiangsu Province Disabled-aiding Welfare Project‖ held by
Jiangsu Province Disabled Person Welfare Foundation, the Company made donations for four years in a row, and
it also donated at the ―Give Your Love and Warmth‖ charity event organized by Wuxi Charity Federation, taking
on social responsibilities with actions.
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by
the environmental protection authorities of China
□ Yes √ No
Indicate by tick mark whether a social responsibility report is released
□ Yes √ No
44
Wuxi Little Swan Company Limited Annual Report 2016
XIX Other significant events
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XX Significant events of subsidiaries
In this Reporting Period, the Company and General Appliance (China) Co., Ltd. signed an equity transfer
agreement, with the latter transferring its 30% stake in Wuxi Little Swan General Appliance Co., Ltd. to the
Company for USD10 million. Up to the end of this Reporting Period, the transfer had been concluded and Wuxi
Little Swan General Appliance Co., Ltd. has thus become a wholly-owned subsidiary of the Company.
45
Wuxi Little Swan Company Limited Annual Report 2016
Section VI Share Changes and Shareholders’ Profile
I Share changes
1. Share changes
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
1. Restricted shares 3,711,190 0.59% -794,470 -794,470 2,916,720 0.46%
1.1 Shares held by other
3,711,190 0.59% -794,470 -794,470 2,916,720 0.46%
domestic investors
Among which: Shares
held by domestic 3,686,890 0.58% -770,170 -770,170 2,916,720 0.46%
corporations
Shares held
24,300 0.01% -24,300 -24,300
by domestic individuals
2. Non-restricted shares 628,776,574 99.41% 794,470 794,470 629,571,044 99.54%
2.1 RMB common shares 437,740,702 69.21% 794,470 794,470 438,535,172 69.34%
2.2 Domestically listed
191,035,872 30.20% 191,035,872 30.20%
foreign shares
3. Total shares 632,487,764 100.00% 632,487,764 100.00%
Reasons for the share changes
1. Reasons for changes in holdings of domestic individuals: The former Deputy GM Mao Zhiliang purchased
24,300 shares of the Company on May 28, 2015, and left his post on August 26, 2015. In line with the stipulation
No. 141 of Corporation Law, the Company's directors, supervisors and senior executives cannot transfer their
holdings in the Company within six months after demission. Now that it has been over half a year since Mr. Mao
left the Company, his holding of 24,300 shares has been released from lock-up.
2. Reasons for changes in holdings of domestic corporations: see the Indicative Announcement on Share
Unlocking disclosed by the Company dated September 12, 2016 and October 25, 2016 for details.
Approval of share changes
46
Wuxi Little Swan Company Limited Annual Report 2016
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders
of the Company and other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
Unit: share
Unlocked Increased
Opening Closing
Name of in this in this Date of
restricted restricted Reason for unlocking
shareholder Reporting Reporting unlocking
shares shares
Period Period
Mr. Mao Zhiliang is the former vice general
manager of the Company. He leaves office on
August 26, 2015. As per Article 141 of the
February 26,
Mao Zhiliang 24,300 24,300 0 0 Company Law, directors, supervisors and senior
2016
management of the Company shall not transfer
their shares in the Company within half a year
after they leave.
On August 22, 2016, as per the (2016) L 0211 ZH
No. 1184 Verdict issued by Dalian Ganjingzi
Anhui Huayu
District People's Court, 27,800 restricted September 13,
Cable Group 0 27,800 0 0
corporate shares under Dongbei Special Steel 2016
Co., Ltd.
Group Co., Ltd. were transferred to Anhui Huayu
Cable Group Co., Ltd.
Dalian On August 19, 2016, as per the (2016) L 0211 ZH
Dongya
0 46,958 0 0 No. 2246, 1005 and 1304 verdicts issued by
Switch Dalian Ganjingzi District People's Court, 46,958
Factory restricted corporate shares under Dongbei Special
Dongfang Steel Group Co., Ltd. were transferred to Dalian September 13,
Environmental Dongya Switch Factory; 195,484 restricted 2016
Engineering corporate shares under DONGBEI SPECIAL
0 195,484 0 0 STEEL GROUP CO., LTD. were transferred to
Design
Institute Co., Dongfang Environmental Engineering Design
Ltd. Institute Co., Ltd.; 374,320 restricted corporate
47
Wuxi Little Swan Company Limited Annual Report 2016
shares under Dongbei Special Steel Group Co.,
Shanghai Ltd. were transferred to Shanghai Heavy Machine
Heavy
0 374,320 0 0 Plant Co., Ltd.
Machine Plant
Co., Ltd.
Ningbo Tianan
(Group) Co., 0 26,356 0 0 On September 19, 2016, as per the (2016) L 0211
Ltd. ZH No. 71, 1275 and 2419 verdicts issued by
Dalian Ganjingzi District People's Court, 26,356
restricted corporate shares under Dongbei Special
Luyang Steel Group Co., Ltd. were transferred to Ningbo
Energy-saving
0 86,787 0 0 Tianan (Group) Co., Ltd.; 86,787 restricted October 26, 2016
Materials Co., corporate shares under DONGBEI SPECIAL
Ltd STEEL GROUP CO., LTD. were transferred to
Luyang Energy-saving Materials Co., Ltd; 12,465
Jiangyin restricted corporate shares under Dongbei Special
Pengjin Steel Group Co., Ltd. were transferred to Jiangyin
0 12,465 0 0 Pengjin Machinery Co., Ltd.
Machinery
Co., Ltd.
Total 24,300 794,470 0 0 -- --
II Issuance and listing of securities
1. Securities (excluding preference shares) issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability
structures
□ Applicable √ Not applicable
3. Existing staff-held shares
□ Applicable √ Not applicable
III Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total number of Total number of Total number of
Total number of
common preference preference shareholders
common
18,394 shareholders at the 16,226 shareholders with 0 with resumed voting 0
shareholders at
prior month-end resumed voting rights at the prior
the period-end
before the rights at the month-end before the
48
Wuxi Little Swan Company Limited Annual Report 2016
disclosure of this period-end (if any) disclosure of this Report
Report (if any)
5% or greater shareholders or the top 10 shareholders
Increase/dec Number Pledged or
Sharehol Number of
Total shares rease during of frozen shares
Nature of ding non-restricte
Name of shareholder held at the this restricte
shareholder percenta d shares Num
period-end Reporting d shares Status
ge (%) held ber
Period held
Domestic
MIDEA GROUP CO., LTD. non-state-owned 37.78% 238,948,117 0 238,948,117
corporation
TITONI INVESTMENTS Foreign
14.89% 94,204,942 0 94,204,942
DEVELOPMENT LTD. corporation
Foreign
GAOLING FUND,L.P. 3.43% 21,694,456 0 21,694,456
corporation
Domestic
NATIONAL SOCIAL SECURITY
non-state-owned 3.29% 20,798,894 19,198,855 20,798,894
FUND PORTFOLIO 108
corporation
GREENWOODS CHINA ALPHA Foreign
2.82% 17,846,794 5,853,413 17,846,794
MASTER FUND corporation
State-owned
FINANCE BUREAU OF WUXI 2.70% 17,054,071 0 17,054,071
corporation
Domestic
NATIONAL SOCIAL SECURITY
non-state-owned 2.29% 14,453,887 5,892,564 14,453,887
FUND PORTFOLIO 101
corporation
CENTRAL HUIJIN ASSET State-owned
1.61% 10,156,300 0 10,156,300
MANAGEMENT CO., LTD. corporation
BILL & MELINDA GATES Foreign
1.03% 6,537,874 6,537,874 6,537,874
FOUNDATION TRUST corporation
INDUSTRIAL AND
COMMERCIAL BANK OF CHINA Domestic
－CHINA UNIVERSAL GROWTH non-state-owned 0.95% 6,000,041 3,994,864 6,000,041
FOCUS MIXED SECURITIES corporation
INVESTMENT FUND
Strategic investors or general corporations becoming
top-ten shareholders due to placing of new shares (if N/A
any) (see Note 3)
Related or acting-in-concert parties among the Midea Group and TITONI Investments Development Ltd. are parties
shareholders above acting in concert.
Shareholdings of the top ten non-restricted shareholders
49
Wuxi Little Swan Company Limited Annual Report 2016
Number of non-restricted Type of shares
Name of shareholder
shares held at the period-end Type Number
MIDEA GROUP CO., LTD. 238,948,117 RMB ordinary share
TITONI INVESTMENTS DEVELOPMENT Domestically listed foreign
94,204,942
LTD. share
Domestically listed foreign
GAOLING FUND,L.P. 21,694,456
share
NATIONAL SOCIAL SECURITY FUND
20,798,894 RMB ordinary share
PORTFOLIO 108
GREENWOODS CHINA ALPHA MASTER Domestically listed foreign
17,846,794
FUND share
FINANCE BUREAU OF WUXI 17,054,071 RMB ordinary share
NATIONAL SOCIAL SECURITY FUND
14,453,887 RMB ordinary share
PORTFOLIO 101
CENTRAL HUIJIN ASSET MANAGEMENT
10,156,300 RMB ordinary share
CO., LTD.
BILL & MELINDA GATES FOUNDATION
6,537,874 RMB ordinary share
TRUST
INDUSTRIAL AND COMMERCIAL BANK OF
CHINA－CHINA UNIVERSAL GROWTH
6,000,041 RMB ordinary share
FOCUS MIXED SECURITIES INVESTMENT
FUND
Related or acting-in-concert parties among the top
ten non-restrictedly tradable share holders and Midea Group and TITONI Investments Development Ltd. are parties acting in
between the top ten non-restrictedly tradable concert.
share holders and the top ten shareholders
Top ten common shareholders conducting
N/A
securities margin trading (if any) (see Note 4)
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common
shareholders of the Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
2. Information about the controlling shareholder
Name of controlling Legal
Date of establishment Credibility code Main business scope
shareholder representativ
50
Wuxi Little Swan Company Limited Annual Report 2016
e
Home appliances and parts, robots and
Fang
Midea Group Co., Ltd. 04/07/2000 91440606722473344C automatic systems, as well as financial
Hongbo
service
Shareholdings of the
controlling shareholder in The Company‘s controlling shareholder is Midea Group Co., Ltd. with the securities code of 000333,
other listed companies at whose shares held in other listed companies by holding or shareholding is published on
home or abroad in this www.cninfo.com.cn.
Reporting Period
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Information about the actual controller
Name of actual controller Nationality Right of residence in other countries or regions
He Xiangjian Chinese No
Current board chairman of Midea Holding and former board chairman of Midea
Main occupation and duty
Group
Used-to-be-holding listed companies home Midea Group (000333.SZ), Welling Holding (00382.HK) and Little Swan (A:
and abroad in the last ten years 000418.SZ;B:200418)
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
51
Wuxi Little Swan Company Limited Annual Report 2016
He Xiangjian
94.55%
Midea Holding Co., Ltd.
34.75%
Midea Group Co., Ltd.
100%
Midea Electric Investment (BVI) Limited 37.78%
100%
TITONI Investments Development Ltd.
14.89%
Wuxi Little Swan Co., Ltd.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable
4. 10% or greater corporate shareholders
Name of corporate Legal representative / Date of
Registered capital Business scope
shareholder company principal establishment
Holding equity interests in Little
TITONI Xiao Mingguang 02/07/2007 USD50,000
Swan
5. Limited shareholding decrease by the Company’s controlling shareholder, actual controller, reorganizer
and other commitment makers
√ Applicable □ Not applicable
See ―Fulfillment of commitments‖ in ―Section V Significant Events‖ for details.
52
Wuxi Little Swan Company Limited Annual Report 2016
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in this Reporting Period.
53
Wuxi Little Swan Company Limited Annual Report 2016
Section VIII Directors, Supervisors, Executive Officers and Staff
I Changes in shareholdings of directors, supervisors and executive officers
Increa Decre Closi
Openi se in ase in Other ng
Incumbe ng this this increa share
Gende Starting date of Ending date of
Name Office title nt/forme Age shareh Report Report se/dec holdi
r tenure tenure
r olding ing ing rease ng
(share) Period Period (share) (share
(share) (share) )
Fang Chairman of Incumbe
Male 49 05/09/2008 08/25/2018 0 0 0 0
Hongbo the Board nt
Lu General Incumbe
Male 43 12/14/2016 08/25/2018 0 0 0 0
Jianfeng Manager nt
Xiao
Incumbe
Minggua Director Male 46 01/12/2010 08/25/2018 0 0 0 0
nt
ng
Board Incumbe Femal
43 01/10/2007 08/25/2018 0 0 0 0
Zhou Secretary nt e
Sixiu Incumbe Femal
Director 43 08/21/2012 08/25/2018 0 0 0 0
nt e
Incumbe
CFO Male 38 11/24/2014 08/25/2018 0 0 0 0
Sun nt
Yunan Incumbe
Director Male 38 08/26/2015 08/25/2018 0 0 0 0
nt
Jiang Independent Incumbe
Male 52 08/22/2014 08/25/2018 0 0 0 0
Qingyun director nt
Tao Independent Incumbe
Male 50 04/20/2015 08/25/2018 0 0 0 0
Xiangnan director nt
Zhu Independent Incumbe
Male 52 08/26/2015 08/25/2018 0 0 0 0
Heping director nt
Supervisory
Liang Incumbe
Board Male 39 08/22/2014 08/25/2018 0 0 0 0
Pengfei nt
Chairman
Wang Incumbe
Supervisor Male 35 08/22/2014 08/25/2018 0 0 0 0
Shouhu nt
Xu Staff Incumbe Male 47 08/05/2014 08/25/2018 0 0 0 0
54
Wuxi Little Swan Company Limited Annual Report 2016
Pengchen representative nt
g supervisor
General
Yin Former Male 48 08/02/2013 12/14/2016 0 0 0 0
Manager
Bitong
Director Former Male 48 08/27/2013 12/14/2016 0 0 0 0
Zhang
Director Former Male 41 11/02/2012 03/06/2017 0 0 0 0
Zhaofeng
Total -- -- -- -- -- -- 0 0 0 0
II Changes in directors, supervisors and executive officers
Name Office title Type of change Date Reason
Director & General
Yin Bitong Outgoing 12/14/2016 Job change
Manager
Zhang Zhaofeng Director Outgoing 03/06/2017 Job change
III Brief biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent
directors, supervisors and executive officers
(1) Mr. Fang Hongbo, born in Jan. 1967, holder of a master‘s degree, now serves in the Company as the Chairman
of the Board, the Chairman of the Board & President of Midea Group Co., Ltd. He once was the Board Chairman
and President of GD Midea Holding Co., Ltd., etc.
(2) Mr. Lu Jianfeng, born in Nov. 1973, holder of a master‘s degree, now serves as the General Manager of the
Company. He once was the Domestic Home A/C President, China Marketing President and Vice President of GD
Midea Holding Co., Ltd., as well as the Environmental Appliances General Manager of Midea Group, etc.
(3) Mr. Xiao Mingguang, was born in Feb. 1970, master degree, CPA. He now serves as Director in the Company,
Business Management Director of Midea Group. He ever took the posts as Deputy Director of financial
management of GD Midea Holding Co., Ltd., chief of Audit and Supervision Department Midea Group and
Director of GD Midea Holding Co., Ltd. ,etc.
(4) Ms. Zhou Sixiu, born in Feb. 1973, holder of a master‘s degree, CPA, now serves as a director and the Board
Secretary of the Company. She once was the Securities Representative of Wuxi Qingfeng Co., Ltd., etc.
(5) Sun Yunan, born in May 1978, holder of a master‘s degree, now serves as a director and the CFO of the
Company. He ever served as Finance Minister of Automatic Factory of the Company, Refrigerator Career Dept.
Factory and Manager of Accounting and Process Management of Midea Group, etc.
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Wuxi Little Swan Company Limited Annual Report 2016
(6) Jiang Qingyun, was born in Jun. 1964, doctor degree. He now serves as Independent Director of the Company,
Marketing Director of School of Management Fudan University. He ever acted as Associate Professor and Deputy
Dean of East China University of Science and Technology School of Business, Associate professor and Deputy
Market Director of School of Management of Fudan University, etc.
(7) Tao Xiangnan was born in Jan. 1966, doctor degree. He now serves as Independent Director of the Company,
Associate Professor of Nanjing University Business School, Adjunct Associate Professor of MUST and
Independent Director of Shenzhen Maida Digital Co., Ltd.
(8) Zhu Heping was born in Apr. 1964, doctor degree. He now serves as Independent Director of the Company,
Accounting Professor of school of business Jiangnan university, Member of CICPA and Independent Director of
Jiangsu Yataiqing Alloy Technology Co., Ltd., Jiangsu Pengyao Environment Protection Co., Ltd. and Wuxi
Shangji Numerical Control Co., Ltd., Jiangsu Yoke Technology Co.,Ltd.
(9) Liang Pengfei was born in Aug. 1977, bachelor. He now serves as Chairman of the Board of Supervisor,
Director of Operating and Human Resources. He ever acted as Manager of Marketing Center Compressor Dept.,
Manager of Supply Chain Management Dept. Minister of Manufacturing Management Dept. and Director of
Operating management of Midea Group etc.
(10) Wang Shouhu, was born in Sep. 1981, bachelor, He now serves as Supervisor Manager of Internal Audit. He
ever acted as Director of Management Audit of Media Daily Appliance Group and Supervision of Integrity officer
of Media Group, etc.
(11) Xu Pengcheng, was born in Dec. 1969, bachelor. He now serves as Staff Representative Supervisor and
Director of R&D of the Company. He ever acted as Minister of impeller Development Dept. officer of R&D of
Automatic Washing Machine Company and GM of Hefei Midea Washing Machine Co., Ltd., etc.
Posts concurrently held in shareholding entities
√Applicable □Not applicable
Allowance from
Starting date of Ending date of
Name Shareholding entity Post the shareholding
tenure tenure
entity
Midea Group Chairman of the Board 08/25/2012 09/17/2018 Yes
Fang Hongbo
Midea Group President 10/15/2013 09/17/2018 Yes
Xiao Midea Group CFO 12/02/2015 09/17/2018 Yes
Mingguang TITONI Director 12/23/2013 No
Posts held concurrently in other entities
√Applicable □Not applicable
56
Wuxi Little Swan Company Limited Annual Report 2016
Starting date of Ending date of Allowance from
Name Other entity Post
tenure tenure the entity
School of Management Professor and Marketing
Jiang Qingyun 08/01/1999 Yes
Fudan University Director
Nanjing University
Tao Xiangnan Associate Professor 01/01/2005 Yes
Business School
School of Business
Zhu Heping Professor 09/01/2007 Yes
Jiangnan university
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this Reporting Period
□ Applicable √ Not applicable
IV Remuneration of directors, supervisors and executive officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and
executive officers
(1) Decision-making procedure for the remuneration of directors, supervisors and executive officers: The
remuneration for executive officers is proposed by the Remuneration and Appraisal Committee under the Board
and finalized upon the Board‘s approval; and that for directors and supervisors is subject to their positions.
(2) Determining basis for the remuneration of directors, supervisors and senior management: The remuneration of
directors, supervisors and senior management receiving remuneration from the Company consist of the basic
annual salary and performance annual salary. The basic annual salary is decided according to the duties, risks,
pressure and other factors born by the directors, supervisors and senior management, and it stays unchanged;
while the performance annual salary is linked with the profit completion rate and the appraisal results of target
responsibility system of the Company. The remuneration system of the directors, supervisors and senior
management of the Company serves for its operating strategy, which is adjusted according to the changes of
operation situation of the Company so as to adapt to the needs of the further development of the Company. The
adjustment basis for the remuneration of directors, supervisors and senior management of the Company is as
follows: (1) the increase level of remuneration in the same industry; (2) the earnings of the Company; (3) the
adjustment of organization structure; (4) adjustment on positions. The allowances for independent directors is
RMB100, 000 (tax included) per year upon consideration and approval of the shareholders‘ meeting, and the
expenses occurred to execute their responsibilities are borne by the Company.
(3) Actual payment for the remuneration of directors, supervisors and senior management: The basic salary of
57
Wuxi Little Swan Company Limited Annual Report 2016
directors, supervisors and senior management receiving remuneration from the Company is paid monthly; the
allowance for independent directors is paid quarterly.
Remuneration of directors, supervisors and executive officers in this Reporting Period
Unit: RMB'0,000
Total before-tax Remuneration
remuneration from related
Name Office title Gender Age Incumbent/former
from the parties of the
Company Company
Fang Hongbo Chairman of the Board Male 49 Incumbent Yes
Lu Jianfeng General Manager Male 43 Incumbent Yes
Xiao Mingguang Director Male 46 Incumbent Yes
Director, Board
Zhou Sixiu Female 43 Incumbent 131.04
Secretary
Sun Yunan Director, CFO Male 38 Incumbent 136.03
Jiang Qingyun Independent director Male 52 Incumbent 10.00
Tao Xiangnan Independent director Male 50 Incumbent 10.00
Zhu Heping Independent director Male 52 Incumbent 10.00
Supervisory Board
Liang Pengfei Male 39 Incumbent 148.84
Chairman
Wang Shouhu Supervisor Male 35 Incumbent 49.99
Staff representative
Xu Pengcheng Male 47 Incumbent 361.42
supervisor
Yin Bitong Director, GM Male 48 Former 347.70
Zhang Zhaofeng Director Male 41 Former Yes
Total -- -- -- -- 1,205.02 --
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
V Employees
1. Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 4,400
Number of in-service employees of main subsidiaries 3,286
Total number of in-service employees 7,686
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Wuxi Little Swan Company Limited Annual Report 2016
Total number of employees with remuneration in this Reporting Period 8,580
Number of retirees to whom the Company or its main subsidiaries need
428
to pay retirement pension
Functions
Function Number of employees
Production 5,614
Sales 798
Technical 965
Financial 161
Administrative 148
Total 7,686
Educational backgrounds
Educational background Number of employees
Master and above 195
Bachelor 1,561
College, technical secondary school 3,932
Middle school and below 1,998
Total 7,686
2. Employee remuneration policy
The remuneration of employees is paid on time according to the Company‘s Methods for Remuneration
Management. The Company decides its employees‘ fixed salaries according to their positions and their floating
wages in line with its operating results. Meanwhile, the Company leans to strategic talent so as to ensure
competitive wages for core personnel. And the remuneration policy will be irregularly adjusted according to
regional differences, the talent supply, employees‘ turnover, changes in the industry environment and the
Company‘s paying ability.
3. Employee training plans
It will decide the training content for employees from different levels and groups according to the post
qualification, and promote the training of entire staff, so as to build a learning organization.
4. Labor outsourcing
□ Applicable √ Not applicable
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Wuxi Little Swan Company Limited Annual Report 2016
Section IX Corporate Governance
I Basic situation of corporate governance
The Company continuously perfected its corporate governance; promote the improvement of its operation and
formulate the corresponding internal control system, prevented and controlled risks and safeguarded the legitimate
rights and interests of the Company and the shareholders in accordance with the requirements of relevant laws and
rules such as Company Law, Securities Law issued by CSRC. The actual situation of the Company‘s corporate
governance is in accordance with the requirements of Administrative Rule for Listed Companies issued by CSRC.
For better governance, the Company has formulated the Rules of Procedure for the Board of Directors, the
Supervisory Board, shareholders‘ meetings and the specialized committees under the Board of Directors, as well
as the Disclosure of Information Management System, Raise Money Management System, Related Transaction
Management System, Information Source Insider Registration Management System, Internal Report System for
the Major Issues, System of Accountability for Management, the Preliminary Plan Regarding Risk Handling in
Financial Services (Accepting Deposits and Lending) Provided by Midea Group Finance Co., Ltd, etc. During the
Reporting Period, according to applicable laws and regulations and the need arising from its actual operations, the
Company held the 4th Meeting of the 8th Board of Directors on March 8, 2016, at which the Internal Control Rules
for Entrusted Asset Management has been revised, further improving its corporate governance mechanism.
In line with the relevant provisions of Company Law, the Articles of Association etc., the Company established a
comparative perfect organization control structure system The Board of Director conducted the resolutions of
general meeting of shareholders, response for the significant decision-making events and general meeting of
stockholders; the Company appointed GM by law, presided over the daily production operation and management,
organized the implementation of resolution of the Board, was responsible for the Board of Directors; the
supervisor of the Company was the supervisory organization for the Company which supervised the behaviors of
the directors, GM and the finance of the Company. The four committees, Strategy Committee, the Remuneration
and Appraisal Committee, Audit Committee, the Nomination Committee were under the Board of Directors. the
Company‘s General Meeting of shareholders, Board of Directors, Board of directors and operation managerial
personnel with clear responsibilities and rights, performing their duties, effective checks and balances, scientific
decision-making and coordinate operations, which laid a solid foundation for sustained, stable and healthy
development of the Company.
During this Reporting Period, the Company was granted the ―Top 20 Main Board Listed Companies in Value‖
60
Wuxi Little Swan Company Limited Annual Report 2016
Award and the ―Top 10 Management Teams of Main Board Listed Companies‖ Award in the 10th China Listed
Company Value Awards hosted by Securities Times and the New Fortune magazine, as well as co-hosted by
Jiangsu Financial Work Office, the Jiangsu CSRC and the Yangzhou municipal government. Looking forward,
the Company will continue to improve its ability of sustainable development and governance capability.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of
listed companies
□ Yes √ No
No such cases in this Reporting Period.
II Independence of businesses, personnel, asset, organizations and finance which are separate
from the controlling shareholder
The Company is completely separated from its controlling shareholder in aspects such as business, personnel,
assets, institutions and finance and possesses independent and complete business and self-dependent operating
ability.
1. In respect of business, the Company owned independent and integrated system of R&D, purchasing, production
and sales. Main business of the Company is washing machine that there isn‘t any horizontal competition between
the Company and the controlling shareholder. The Company was completely separated from the controlling
shareholder in business.
2.In respect of personnel, in terms of labor, personnel and salary management, the Company and the controlling
shareholder were independent each other, there existed no mixed operation and management between the
Company and the controlling shareholder. Such senior management staff as General Manager, CFO and Board
Secretary did not take any posts in shareholding companies.
3. In respect of assets, the Company‘s assets were complete, and there was the clear property right relationship
between the Company and the controlling shareholder.
4. In respect of organization, the Company has set up the organization that was independent from the controlling
shareholder completely, the Board of Directors, the Supervisory Board and internal organization could operate
independently.
5. In respect of financing, the Company owned independent financial department, established independent
accounting system and financial management system, opened independent bank account, paid tax in line with
laws.
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Wuxi Little Swan Company Limited Annual Report 2016
III Horizontal competition
□ Applicable √ Not applicable
IV Annual and special meetings of shareholders convened during this Reporting Period
1. Meetings of shareholders convened during this Reporting Period
Investor
Meeting Type participati Convened date Disclosure date Index to the disclosed information
on ratio
2016 Annual Meeting Announcement No. 2016-12 disclosed
Annual 58.21% 04/07/2016 04/08/2016
of Shareholders on www.cninfo.com.cn
The First Special
Announcement No. 2016-28 disclosed
Meeting of Special 5.55% 11/16/2016 11/17/2016
on www.cninfo.com.cn
Shareholders in 2016
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
□ Applicable √ Not applicable
V Performance of independent directors in this Reporting Period
1. Attendance of independent directors in board meetings and meetings of shareholders
Attendance of independent directors in board meetings
Due presence in Presence by Absence for two
Presence on site Presence through
Independent director this Reporting telecommunicati Absence (times) consecutive
(times) a proxy (times)
Period (times) on (times) times
Jiang Qingyun 5 1 4 0 0 No
Tao Xiangnan 5 1 4 0 0 No
Zhu Heping 5 1 4 0 0 No
Attendance of independent directors in
meetings of shareholders as non-voting 1
delegates (times)
2. Objections raised by independent directors on issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
No such cases in this Reporting Period.
62
Wuxi Little Swan Company Limited Annual Report 2016
3. Other details about the performance of duties by independent directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
During the Reporting Period, the independent directors of the Company in strict accordance with the relevant laws,
regulations and rules of Articles 0f Association, focus on the operation of the Company, perform their duties
independently and put forward the professional opinions to complete the system of the Company and daily
management decisions , for those events need issued opinions, the independent directors put forward independent
and impartial advice, which play a proper role to improve the company governance mechanism, safeguard the
legitimate rights and interests of the Company and all shareholders.
VI Performance of duties by specialized committees under the Board during this Reporting
Period
During the Reporting Period, the performance of the specialized committees under the Board was as follows:
1.The Audit Committee under the Board convened four meetings, at which reviewed and approved the Annual
Financial Statement Report 2015, Annual Report and Its Abstract 2015, Summary Report of the Audit Committee
on the 2015 Annual Audit Work, Proposal on Engaging the Audit Firm for 2016, First Quarter Report 2016,
Semi-annual Report 2016 and Third Quarter Report 2016.
2. The strategy Committee under the Board convened one meeting, at which reviewed and approved the proposal
on Mid-term Development Plan of the Company (2016-2018);
3.The Remuneration and Appraisal Committee under the Board convened one meeting, at which reviewed and
approved the Proposal on Paying the 2015 Annual Remuneration to the Senior Management;
4. The Nomination Committee under the Board convened one meeting, at which reviewed and approved the
Proposal on Appointment of GM of the Company.
VII Performance of duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and incentive for executive officers
The selection, appraisal and incentive system of the executive officers of the Company were implemented
according to relevant regulations of the Company Law and the Articles of Association of the Company. The
63
Wuxi Little Swan Company Limited Annual Report 2016
Company established examination and evaluation system on the basis of the target responsibility, determine the
evaluation index, evaluation method and evaluation method relate to the assessment results, according to the
annual signing of the Target Responsibility Assessment System Agreement with executive officers. During the
Reporting Period, the Company had in accordance with the measures for the management of target responsibility
system exam and the rate the executive officers, and had reflected in an annual performance remuneration, which
effectively improved the executive officers‘ responsibility and work enthusiasm.
IX Internal control
1. Serious internal control defects found in this Reporting Period
□ Yes √ No
2. Internal control self-evaluation report
Disclosure date of the internal
03/09/2017
control self-evaluation report
Index to the disclosed internal For details about the Internal Control Self-Evaluation Report 2016, see www.cninfo.com.cn,
control self-evaluation report the website designated by the Shenzhen Stock Exchange for information disclosure.
Total assets of the evaluated entities
as a percentage in the consolidated 100.00%
total assets
Operating revenues of the evaluated
entities as a percentage in the 100.00%
consolidated operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
For details, please refer to ―(III) Basis for For details, please refer to ―(III) Basis for
internal control appraisal and identification internal control appraisal and identification
standards for internal control defects‖ in standards for internal control defects‖ in
Nature standard
Section III of the Internal Control Section III of the Internal Control
Self-Evaluation Report 2016 disclosed on Self-Evaluation Report 2016 disclosed on
www.cninfo.com.cn dated March 9, 2017. www.cninfo.com.cn dated March 9, 2017.
Quantitative standard Ditto Ditto
Number of serious
0
financial-report-related defects
Number of serious
0
non-financial-report-related defects
64
Wuxi Little Swan Company Limited Annual Report 2016
Number of important
0
financial-report-related defects
Number of important
0
non-financial-report-related defects
X Auditor’s report on internal control
Opinion paragraph in the auditor‘s report on internal control
The audit firm for internal control believes that the Company makes valid internal control on financial report in all significant
aspects on December 31, 2016 according to the Basic Rules on Enterprise Internal Control and other relevant stipulations.
Auditor‘s report on internal control
Disclosed
disclosed or not
Disclosure date 03/09/2017
Index to the disclosed auditor‘s report For details about the Auditor‘s Report on Internal Control 2016, see www.cninfo.com.cn,
on internal control the website designated by the Shenzhen Stock Exchange for information disclosure.
Type of the auditor‘s opinion Standard unqualified opinion
Serious non-financial-report-related
None
defects
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor‘s report on the
Company‘s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor‘s report on the Company‘s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
65
Wuxi Little Swan Company Limited Annual Report 2016
Section X Corporate Bonds
Indicate by tick market whether there are any corporate bonds publicly offered and listed on the stock exchange,
which were undue before the approval date of this Report or were due but could not be redeemed in full
□ Yes √ No
66
Section XI Financial Report
[English translation for reference only. Should there be any inconsistency between the Chinese and English
versions, the Chinese version shall prevail.]
Auditor’s Report
PwC ZT Shen Zi (2017) No. 10036
(Page 1 of 2)
To the shareholders of Wuxi Little Swan Co., Ltd.,
We have audited the accompanying financial statements of Wuxi Little Swan Co., Ltd. (hereinafter ―the
Company‖), which comprise the consolidated and company balance sheets as at 31 December 2016, and the
consolidated and company income statements, the consolidated and company statements of changes in
shareholder‘s equity and the consolidated and company cash flow statements for the year then ended, and the
notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial
statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for such
internal control as management determines is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with China Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
67
PwC ZT Shen Zi (2017) No. 10036
(Page 2 of 2)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor‘s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity‘s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated
and company‘s financial position of the Company as at 31 December 2016, and their financial performance and
cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business
Enterprises.
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People‘s Republic of China
7 March 2017
68
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2016 31 December 2015
ASSETS
Consolidated Consolidated
Current Assets:
Cash at bank and in hand 4,272,077,211.11 3,042,843,924.81
Notes receivable 1,297,609,202.29 2,205,189,379.10
Accounts receivable 1,465,654,497.90 896,075,475.63
Advances to suppliers 131,513,792.18 97,628,578.17
Interests receivable 26,755,807.07 22,932,602.74
Other receivables 23,693,886.54 9,208,180.08
Inventories 1,724,837,944.69 745,412,967.52
Other current assets 8,385,724,282.16 5,733,188,604.23
Total current assets 17,327,866,623.94 12,752,479,712.28
Non-current assets:
Available-for-sale financial assets 200,000.00 200,000.00
Investment properties 64,854,903.25 68,843,047.52
Fixed assets 970,859,291.03 1,019,528,291.60
Intangible assets 192,283,486.15 197,521,625.03
Long-term prepaid expenses 4,387,728.14 4,238,244.38
Deferred tax assets 299,879,029.23 251,881,220.89
Other non-current assets 25,655,775.90 32,963,224.90
Total non-current assets 1,558,120,213.70 1,575,175,654.32
Total assets 18,885,986,837.64 14,327,655,366.60
69
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED BALANCE SHEET (Continued)
AS AT 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2016 31 December 2015
LIABILITIES AND OWNERS' EQUITY
Consolidated Consolidated
Current liabilities:
Short-term borrowings 183,813,064.12 -
Notes payable 2,620,549,815.47 1,953,065,274.06
Accounts payable 3,335,089,672.06 2,419,807,341.95
Advances from customers 3,014,347,762.24 1,652,908,781.44
Employee benefits payable 288,592,163.29 248,280,716.92
Taxes payable 412,238,029.96 325,108,227.91
Dividends payable 7,150,684.06 5,400,652.06
Other payables 199,926,402.04 171,807,137.94
Other current liabilities 1,844,413,154.26 1,521,734,293.24
Total current liabilities 11,906,120,747.50 8,298,112,425.52
Non-current liabilities:
Long-term employee benefits payable 16,101,348.60 28,439,299.25
Provisions 1,727,340.89 9,981,021.44
Deferred income 2,942,333.25 3,395,533.29
Total non-current liabilities 20,771,022.74 41,815,853.98
Total liabilities 11,926,891,770.24 8,339,928,279.50
Owners’ equity:
Share capital 632,487,764.00 632,487,764.00
Capital surplus 1,191,490,133.01 1,164,014,947.85
Other comprehensive income 70,757,524.61 34,813,284.64
Surplus reserve 332,594,722.29 332,594,722.29
Retained earnings 3,756,517,718.81 2,960,955,454.36
Equity attributable to the owners of the Company 5,983,847,862.72 5,124,866,173.14
Minority interests 975,247,204.68 862,860,913.96
Total owners’ equity 6,959,095,067.40 5,987,727,087.10
Total liabilities and owners’ equity 18,885,986,837.64 14,327,655,366.60
70
WUXI LITTLE SWAN CO., LTD.
BALANCE SHEET OF THE COMPANY
AS AT 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2016 31 December 2015
ASSETS
Company Company
Current Assets:
Cash at bank and in hand 2,397,428,457.92 2,092,430,579.63
Notes receivable 1,088,559,252.21 1,410,210,597.47
Accounts receivable 2,310,254,576.98 1,183,394,794.67
Advances to suppliers 89,477,823.29 98,437,350.05
Interests receivable 18,798,031.69 18,918,219.18
Other receivables 16,176,106.89 6,351,010.17
Inventories 1,068,494,123.28 482,807,868.13
Other current assets 4,965,682,855.69 3,178,113,808.28
Total current assets 11,954,871,227.95 8,470,664,227.58
Non-current assets:
Available-for-sale financial assets 150,000.00 150,000.00
Long-term equity investments 1,375,785,041.57 1,306,323,041.57
Investment properties 7,546,955.16 8,040,536.02
Fixed assets 490,047,802.72 514,950,803.50
Intangible assets 92,591,167.64 95,281,467.96
Long-term prepaid expenses 1,817,228.83 3,873,799.88
Deferred tax assets 197,091,251.29 159,759,565.25
Other non-current assets 18,313,858.80 23,027,173.60
Total non-current assets 2,183,343,306.01 2,111,406,387.78
Total assets 14,138,214,533.96 10,582,070,615.36
71
WUXI LITTLE SWAN CO., LTD.
BALANCE SHEET OF THE COMPANY (Continued)
AS AT 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2016 31 December 2015
LIABILITIES AND OWNERS' EQUITY
Company Company
Current liabilities:
Short-term borrowings 123,943,093.80 -
Notes payable 1,508,017,904.49 1,519,749,295.73
Accounts payable 3,913,090,507.89 2,038,397,769.71
Advances from customers 1,854,711,663.46 1,060,643,231.20
Employee benefits payable 216,530,836.37 184,287,498.34
Taxes payable 249,034,768.38 224,024,964.68
Dividends payable 7,150,684.06 5,400,652.06
Other payables 143,124,857.82 95,009,275.20
Other current liabilities 1,173,641,937.69 944,905,437.98
Total current liabilities 9,189,246,253.96 6,072,418,124.90
Owners’ equity:
Share capital 632,487,764.00 632,487,764.00
Capital surplus 1,350,656,531.65 1,319,496,538.02
Other comprehensive income 37,515,343.84 13,608,826.40
Surplus reserve 319,944,578.39 319,944,578.39
Retained earnings 2,608,364,062.12 2,224,114,783.65
Total owners’ equity 4,948,968,280.00 4,509,652,490.46
Total liabilities and owners’ equity 14,138,214,533.96 10,582,070,615.36
72
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Item
Consolidated Consolidated
Revenues 16,334,914,501.69 13,131,626,932.44
Less: Cost of sales -12,111,213,286.28 -9,646,390,824.36
Taxes and surcharges -99,204,438.58 -66,761,675.48
Selling and distribution expenses -2,325,645,712.65 -1,957,833,768.25
General and administrative expenses -505,321,107.14 -539,747,209.80
Finance income – net 154,825,748.21 110,112,851.91
Asset impairment losses -94,569,651.27 -22,451,935.85
Add: Investment income 200,239,260.71 201,749,610.84
Including: share of profits in an associate - 263,002.04
Operating profit 1,554,025,314.69 1,210,303,981.45
Add: Non-operating income 38,975,400.74 63,387,660.89
Including: Gains on disposal of non-current assets 1,008,085.77 444,371.81
Less: Non-operating expenses -8,573,686.44 -48,270,024.41
Including: Losses on disposal of non-current assets -2,841,820.22 -724,567.38
Total profit 1,584,427,028.99 1,225,421,617.93
Less: Income tax expenses -241,651,767.11 -172,296,831.78
Net profit 1,342,775,261.88 1,053,124,786.15
Attributable to owners of the Company 1,175,054,922.85 919,181,968.58
Minority interests 167,720,339.03 133,942,817.57
73
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED INCOME STATEMENT (Continued)
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Item
Consolidated Consolidated
Other comprehensive income, net of tax 41,216,788.60 48,553,778.03
Attributable to equity owners of the Company 35,944,239.97 38,262,974.21
Other comprehensive income that will be subsequently
reclassified to profit or loss 35,944,239.97 38,262,974.21
Changes in fair value of available-for-sale financial
assets 35,924,495.90 37,033,422.18
Foreign-currency financial statement translation
difference 19,744.07 1,229,552.03
Attributable to minority interests 5,272,548.63 10,290,803.82
Total comprehensive incomes 1,383,992,050.48 1,101,678,564.18
Attributable to owners of the Company 1,210,999,162.82 957,444,942.79
Attributable to minority interests 172,992,887.66 144,233,621.39
Earnings per share
Basic earnings per share 1.86 1.45
Diluted earnings per share 1.86 1.45
74
WUXI LITTLE SWAN CO., LTD.
INCOME STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Items
Company Company
Revenues 12,451,627,200.77 9,844,644,562.96
Less: Cost of sales -9,679,123,368.71 -7,456,129,294.02
Business taxes and surcharges -64,404,746.49 -42,679,139.04
Distribution expenses -1,521,389,300.24 -1,413,834,422.46
Administrative expenses -402,652,997.95 -382,512,004.73
Financial costs 99,230,544.04 70,967,103.94
Impairment loss -64,797,585.33 -12,035,597.15
Add: Investment income 76,128,199.93 110,021,226.68
Including: Share of profit of an associate - 263,002.04
Operating profit 894,617,946.02 718,442,436.18
Add: Non-operating income 10,913,249.33 27,773,563.63
Including: Gain on disposal of non-current assets 905,427.15 184,324.80
Less: Non-operating expenses -2,859,936.65 -34,731,819.32
Including: Losses on disposal of non-current assets -1,012,613.51 -111,821.73
Total profit 902,671,258.70 711,484,180.49
Less: Income tax expenses -138,929,321.83 -90,481,581.88
Net profit 763,741,936.87 621,002,598.61
Other comprehensive income, net of tax 23,906,517.44 13,608,826.40
Other comprehensive income that will be subsequently
reclassified to profit or loss 23,906,517.44 13,608,826.40
Changes in fair value of available-for-sale financial assets 23,906,517.44 13,608,826.40
Total comprehensive income 787,648,454.31 634,611,425.01
75
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Items
Consolidated Consolidated
Cash flows from operating activities
Cash received from sales of goods or rendering of services 16,223,050,621.37 12,740,160,550.07
Refund of taxes and surcharges 87,968,408.39 77,145,657.15
Cash received relating to other operating activities 66,833,930.42 56,688,253.87
Sub-total of cash inflows 16,377,852,960.18 12,873,994,461.09
Cash paid for goods and services -10,455,208,887.42 -6,084,201,536.57
Cash paid to and on behalf of employees -977,297,801.66 -893,989,108.53
Payments of taxes and surcharges -651,736,882.51 -543,482,333.15
Cash paid relating to other operating activities -397,536,601.21 -1,753,626,014.04
Sub-total of cash outflows -12,481,780,172.80 -9,275,298,992.29
Net cash flows from operating activities 3,896,072,787.38 3,598,695,468.80
Cash flows from investing activities
Cash received from disposal of investments 8,998,000,000.00 8,274,398,907.76
Cash received from returns on investments 200,239,260.71 202,012,612.84
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 5,447,359.13 6,561,716.52
Cash received relating to other investing activities 71,183,080.05 42,268,968.89
Sub-total of cash inflows 9,274,869,699.89 8,525,242,206.01
Cash paid to acquire fixed assets, intangible assets and other long-term
assets -63,305,378.00 -113,960,753.52
Cash paid to acquire additional interest in a subsidiary -11,471,000,000.00 -10,456,050,000.00
Sub-total of cash outflows -11,534,305,378.00 -10,570,010,753.52
Net cash flows from investing activities -2,259,435,678.11 -2,044,768,547.51
76
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Items
Consolidated Consolidated
Cash flows from financing activities
Cash received from borrowings 183,813,064.12 215,915,154.66
Sub-total of cash inflows 183,813,064.12 215,915,154.66
Cash repayments of borrowings - -215,915,154.66
Cash payments for distribution of dividends, profits or interest expenses -395,092,974.82 -286,688,438.02
Cash payments relating to other financing activities -69,462,000.00 -
Sub-total of cash outflows -464,554,974.82 -502,603,592.68
Net cash flows from financing activities -280,741,910.70 -286,688,438.02
Effect of foreign exchange rate changes on cash and cash equivalents 23,109,389.95 8,707,040.56
Net increase in cash and cash equivalents 1,379,004,588.52 1,275,945,523.83
Add: Cash and cash equivalents at beginning of year 2,792,685,328.69 1,516,739,804.86
Cash and cash equivalents at end of year 4,171,689,917.21 2,792,685,328.69
77
WUXI LITTLE SWAN CO., LTD.
CASH FLOW STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Items
Company Company
Cash flows from operating activities
Cash received from sales of goods or rendering of services 10,147,589,853.70 8,364,432,765.46
Cash received relating to other operating activities 39,602,069.13 29,865,585.50
Sub-total of cash inflows 10,187,191,922.83 8,394,298,350.96
Cash paid for goods and services -6,418,903,625.65 -3,793,842,616.29
Cash paid to and on behalf of employees -675,417,191.26 -595,390,188.36
Payments of taxes and surcharges -453,239,964.32 -274,650,446.03
Cash paid relating to other operating activities -269,070,271.83 -1,444,764,032.80
Sub-total of cash outflows -7,816,631,053.06 -6,108,647,283.48
Net cash flows from operating activities 2,370,560,869.77 2,285,651,067.48
Cash flows from investing activities
Cash received from disposal of investments 5,086,000,000.00 5,295,471,450.01
Cash received from returns on investments 76,128,199.93 110,453,700.06
Net cash received from disposal of fixed assets and intangible assets and
other long-term assets 1,606,025.78 1,952,876.70
Cash received relating to other investing activities 62,624,714.64 35,092,311.37
Sub-total of cash inflows 5,226,358,940.35 5,442,970,338.14
Cash paid to acquire fixed assets, intangible assets and other long-term
assets -32,673,329.11 -70,559,477.51
Cash paid to acquire investments -6,751,000,000.00 -6,112,000,000.00
Cash paid to relating to other investing activities -69,462,000.00 -
Sub-total of cash outflows -6,853,135,329.11 -6,182,559,477.51
Net cash flows from investing activities -1,626,776,388.76 -739,589,139.37
78
WUXI LITTLE SWAN CO., LTD.
CASH FLOW STATEMENT OF THE COMPANY (Continued)
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2016 2015
Items
Company Company
Cash Flows from Financing Activities:
Cash received from borrowings 123,943,093.80 16,404,201.00
Sub-total of cash inflows 123,943,093.80 16,404,201.00
Cash repayments of borrowings - -16,404,201.00
Cash payments for distribution of dividends, profits or interest expenses -389,009,428.38 -283,468,922.78
Sub-total of cash outflows -389,009,428.38 -299,873,123.78
Net cash flows from financing activities -265,066,334.58 -283,468,922.78
Effect of foreign exchange rate changes on cash and cash equivalents 8,547,293.68 3,619,003.80
Net increase in cash and cash equivalents 487,265,440.11 1,266,212,009.13
Add: Cash and cash equivalents at beginning of year 1,866,443,114.64 600,231,105.51
Cash and cash equivalents at end of year 2,353,708,554.75 1,866,443,114.64
79
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the owners of the Company
Share capital Capital surplus Other Surplus reserves Retained earnings
Item Minority interests Total owners’ equity
comprehensive
income
Balance at 1 January 2016 632,487,764.00 1,164,014,947.85 34,813,284.64 332,594,722.29 2,960,955,454.36 862,860,913.96 5,987,727,087.10
Movements for the year ended 31 December 2016 - 27,475,185.16 35,944,239.97 - 795,562,264.45 112,386,290.72 971,367,980.30
Total comprehensive income - - 35,944,239.97 - 1,175,054,922.85 172,992,887.66 1,383,992,050.48
-Net profit - - - - 1,175,054,922.85 167,720,339.03 1,342,775,261.88
-Other comprehensive income - - 35,944,239.97 - - 5,272,548.63 41,216,788.60
Capital contribution and withdrawal by owners - 27,475,185.16 - - - -60,606,596.94 -33,131,411.78
-Amount recorded in owners' equity arising from
share-based payment arrangements - 34,772,462.28 - - - 1,558,125.94 36,330,588.22
-Others - -7,297,277.12 - - - -62,164,722.88 -69,462,000.00
Profit distribution - - - - -379,492,658.40 - -379,492,658.40
-Profit distribution to equity owners - - - - -379,492,658.40 - -379,492,658.40
Balance at 31 December 2016 632,487,764.00 1,191,490,133.01 70,757,524.61 332,594,722.29 3,756,517,718.81 975,247,204.68 6,959,095,067.40
80
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
FOR THE YEAR ENDED 31 December 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the owners of the Company
Minority
Share capital Capital surplus Other comprehensive Surplus reserves Retained earnings Total owners’ equity
interests
income
Balance at 1 January 2015 632,487,764.00 1,139,956,336.03 -3,449,689.57 332,594,722.29 2,326,392,979.58 716,713,982.38 5,144,696,094.71
Movements for the year ended 31 December 2015 - 24,058,611.82 38,262,974.21 - 634,562,474.78 146,146,931.58 843,030,992.39
Total comprehensive income - - 38,262,974.21 - 919,181,968.58 144,233,621.39 1,101,678,564.18
-Net profit - - - - 919,181,968.58 133,942,817.57 1,053,124,786.15
-Other comprehensive income - - 38,262,974.21 - - 10,290,803.82 48,553,778.03
Capital contribution and withdrawal by owners - 24,058,611.82 - - - 1,913,310.19 25,971,922.01
-Amount recorded in owners' equity arising
from share-based payment arrangements - 22,544,356.36 - - - 1,353,341.72 23,897,698.08
-Others - 1,514,255.46 - - - 559,968.47 2,074,223.93
Profit distribution - - - - -284,619,493.80 - -284,619,493.80
-Profit distribution to equity owners - - - - -284,619,493.80 - -284,619,493.80
Balance at 31 December 2015 632,487,764.00 1,164,014,947.85 34,813,284.64 332,594,722.29 2,960,955,454.36 862,860,913.96 5,987,727,087.10
81
WUXI LITTLE SWAN CO., LTD.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other comprehensive
Item Share capital Capital surplus Surplus reserves Retained earnings Total owners’ equity
income
Balance at 1 January 2016 632,487,764.00 1,319,496,538.02 13,608,826.40 319,944,578.39 2,224,114,783.65 4,509,652,490.46
Movements for the year ended 31 December 2016 - 31,159,993.63 23,906,517.44 - 384,249,278.47 439,315,789.54
Total comprehensive income - - 23,906,517.44 - 763,741,936.87 787,648,454.31
Net profit - - - - 763,741,936.87 763,741,936.87
Other comprehensive income - - 23,906,517.44 - - 23,906,517.44
Capital contribution and withdrawal by owners - 31,159,993.63 - - - 31,159,993.63
Amount recorded in owners' equity arising from
share-based payment arrangements - 31,159,993.63 - - - 31,159,993.63
Profit distribution - - - - -379,492,658.40 -379,492,658.40
Profit distribution to equity owners - - - - -379,492,658.40 -379,492,658.40
Balance at 31 December 2016 632,487,764.00 1,350,656,531.65 37,515,343.84 319,944,578.39 2,608,364,062.12 4,948,968,280.00
82
WUXI LITTLE SWAN CO., LTD.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY (Continued)
FOR THE YEAR ENDED 31 December 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other comprehensive
Item Share capital Capital surplus Surplus reserves Retained earnings Total owners’ equity
income
Balance at 1 January 2015 632,487,764.00 1,300,124,962.20 - 319,944,578.39 1,887,731,678.84 4,140,288,983.43
Movements for the year ended 31 December 2015 - 19,371,575.82 13,608,826.40 - 336,383,104.81 369,363,507.03
Total comprehensive income - - 13,608,826.40 - 621,002,598.61 634,611,425.01
Net profit - - - - 621,002,598.61 621,002,598.61
Other comprehensive income - - 13,608,826.40 - - 13,608,826.40
Capital contribution and withdrawal by owners - 19,371,575.82 - - - 19,371,575.82
Amount recorded in owners' equity arising from - - - -
share-based payment arrangements 19,371,309.18 19,371,309.18
Others - 266.64 - - - 266.64
Profit distribution - - - - -284,619,493.80 -284,619,493.80
Profit distribution to equity owners - - - - -284,619,493.80 -284,619,493.80
Balance at 31 December 2015 632,487,764.00 1,319,496,538.02 13,608,826.40 319,944,578.39 2,224,114,783.65 4,509,652,490.46
83
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
I. Company profile
Wuxi Little Swan Co., Ltd. (hereinafter ―the Company") was formerly a SOE founded and reorganized as a private
placement limited liability company by the approval of Jiangsu Provincial Commission for Economic
Restructuring (SuTiGaiSheng (1993) No.253 Document) on 29th Nov,1993. As approved by Jiangsu Provincial
Government ((1996) No.52 Document), Securities Regulatory Commission under State Council (ZhengWeiFa
(1996) No.14 Document) and Shenzhen Securities and Exchange Commission (ShenZhengBanhan (1996) No.4
Document), the Company publicly issued 70 million RMB foreign shares (B-shares) in China, after which the
Company‘s share capital came to RMB 310 million.
In March 1997, as approved by China Securities Regulatory Commission (ZhengJianFaZi (1997) No.54
Document and ZhengJianFaZi (1997) No.55 Document, the Company publicly issued 60 million RMB common
shares (including 90 million staff shares). The public offerings raised 720.83 million RMB yuan and the A-shares
were formally listed at Shenzhen Stock Exchange in Mar, 1997. The abbreviation for A-shares is ―Little Swan A".
A-share code is 000418.
On 20 July 2006, the Company‘s proposal on reformation of segregated stocks was approved by relevant
shareholders‘ meeting. To gain liquidity for the restricted stocks of the Company, the holders of the restricted
stocks of the Company agreed to pay the following consideration: based on the stock registration as of 4 August
2006, the Company issued bonus shares on 7 August 2006 at the ratio of 2.5 shares to every 10 A-shares to
liquidated A-share holders which went public on the same day. After this bonus issue, the total number of shares of
the Company remained unchanged with corresponding changes in the composition of share holdings.
Pursuant to the resolution at the Annual General Meeting on 9 May 2008, programme of transference from
capital surplus to share capital at the ratio of 10 shares to 5 shares was approved. Additional 182,551,920 shares
were allotted at par from the capital surplus of the Company. As a result, the total shares of the Company increased
to 547,655,760.
In accordance to the resolution of the 4th seeion of the 6th board meeting and the 1st temprorary shareholders
meeting in 2010, as well as Document ZhengJianXuKe (2010) No. 1577 ―The approval of significant assets
reorganization of Wuxi Little Swan Co., Ltd. and stock offering with assets purchase to Guangdong Midea
Electric Appliances Co., Ltd.‖ issued by China Securities Regulatory Commission, a placement in A share was
84
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
completed in which additional 84,832,000 shares were issued to Guangdong Midea Electric Appliances Co., Ltd.
(Midea Electric Appliances), while 69.47% equity interest of Hefei Midea Washing Machine Limited (formerly as
Hefei Royal star Washing Machine Manufacture Limited) was acquired. Through the non-public offering of A
share, the Company‘s captital share increased by RMB 84,832,000.
On 18 September 2013, Midea Group Co., Ltd. (the Group) combined the Company‘s former controlling
shareholder Midea Electric Appliances through shares exchanges according to Document ZhengJianXuKe (2013)
No. 1014 ―The approval of the merger of Guangdong Midea Electric Appliances Co., Ltd. to Midea Group Co.,
Ltd.‖ issued by China Securities Regulatory Commission. After the consolidation by merger, the equity interest
held by Midea Electric Appliances previously was held by the Group and registration procedures for shares
transfer were completed by 31 December, 2013. Thus, the Group became the first major shareholder of the
Company.
As of 31 December 2015, the total share capital of the Company mounted to 632,487,764, 0.59% of which are
3,711,190 A shares with restriction of trading, 69.21% of which are 437,765,002 A shares without restriction of
trading, and 30.20% of which are 191,011,572 B shares without restriction of trading.
The address of the Company‘s registered office and the headquarters office address is No.18 Changjiang South
Road, National High-tech Industrial Development Zone, Wuxi, Jiangsu Province.
The Company is engaged in the industry of household electric appliances, the approved scope of business of
which includes manufacture, sales and after-sales service of household electric appliances, industrial ceramic
products, environmental-friendly dry cleaning equipment, washing apparatus for typical machines, processing
equipment and fittings. The Company provides laundry service, machining; exports and imports, or be agent for a
variety of products and technologies (excluding unauthorized or forbidden products and technologies for
operation according to state regulations for enterprises). It also provides appliance technical services, certified
outsourcing services (operated with a valid qualification certificate) and invests in financial instruments with
surplus funds.
The financial statements were authorized for issue by the board of directors of the Company on 7 March 2017.
Principle subsidiaries included in the scope of consolidation are listed in Note VI.
II. Important accounting policies and estimations
85
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
The Group determine the accounting policies and accounting estimates based on the operation of business, which
mainly reflected in the revenue recognition policies (note II (22)).
The critical judgements of the Group in determining the critical accounting policies are stated in note II (27).
(1) Basis of preparation
The Group prepared the financial statements with the Basic Standard of the Accounting Standards for Business
Enterprises, accounting policies and other regulations (hereafter referred to as ―the Accounting Standard for
Business Enterprises‖ or ―CAS‖) issued by the Ministry of Finance on and after 15 February 2006, and No. 15
Listing Rules on Disclosure Information for Public Business Entities – preparation of financial statements issued
by China Securities Regulatory Commission.
The financial statements are prepared on a going concern basis
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2015 are in compliance with the
Accounting Standards for Business Enterprises, and truly and completely present the financial position of the
Group and the Company as of 31 December 2015 and the operating results, cash flows and other information of
the Group and the Company for the year then ended.
(3) Accounting year
The company‘s accounting year starts on 1st January and ends on 31st December.
(4) Functional currency
The functional currency is Renminbi (RMB).
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at
the carrying amount. The difference between the carrying amount of the net assets obtained from the combination
and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus
(share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining
86
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit
or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt
securities for the business combination are included in the initially recognised amounts of the equity or debt
securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are
measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer‘s interest in
the fair value of the acquirer‘s identifiable net assets, the difference is recognised as goodwill; where the cost of
combination is lower than the acquirer‘s interest in the fair value of the acquirer‘s identifiable net assets, the
difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are
included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of
equity or debt securities for the business combination are included in the initially recognised amounts of the equity
or debt securities.
(6) Basis of preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the
date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises
under common control, it is included in the consolidated financial statements from the date when it, together with
the Company, comes under common control of the ultimate controlling party. The portion of the net profits
realised before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the
Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance
with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business
combinations involving enterprises not under common control, the individual financial statements of the
subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated
financial statements. The portion of a subsidiary‘s equity and the portion of a subsidiary‘s net profits, losses and
87
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
comprehensive income for the period not attributable to the Company are recognised as minority interests and
presented separately in the consolidated financial statements within equity, net profits and total comprehensive
income respectively. Unrealised gain or loss from selling assets to subsidiaries fully offsets the net income
attributable to equity holders of the company. Unrealised gain or loss from purchasing assets from subsidiaries
offsets the net income attributable to equity holders of the company and atrributable to the minority interest by the
distribution proportion regarding the company and the subsidiary. Unrealised gain or loss from transaction
between subsidiaries offsets the net income attributable to equity holders of the company and atrributable to the
minority interest by the distribution proportion regarding the company and the selling side of the subsidiaries.
If different recognition perspectives for the same transaction arise within different accounting identities setup,
there is adjustment for the transaction from the Group‘s perspective.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term
and highly liquid investments that are readily convertible to known amounts of cash and are subject to an
insignificant risk of changes in value.
(8) Foreign currency
(a) Foreign currency transaction
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the
transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the
spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised
in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been
taken out specifically for the acquisition or construction of qualifying assets, which are capitalised as part of the
cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs
are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of
exchange rate changes on cash is presented separately in the cash flow statement.
(b) Foreign currency financial statements translations
88
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Assets and liabilities, which are oversea operating, are translated into RMB using the spot exchange rate on the
balance sheet date. Items in Consolidated Statement of Changes in Equity are translated into RMB using the spot
exchange rate at the date of the transactions, except for the retained earnings. Incomes and expenses items, which
are oversea operating, are translated into RMB using the spot exchange rate at the date of the transactions. The
translation differences of foreign currency transactions are presented in other comprehensive income. Cash flow
items, which are oversea operating, are translated into RMB using the spot exchange rate at the date of the cash in
or cash out. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instruments
(a) Financial assets
(i) Classification
Financial assets are classified into the following categories at initial recognition: financial assets at fair value
through profit or loss, loan and receivables, available-for-sale financial assets and held-to-maturity investments.
The classification of financial assets depends on the Group‘s intention and ability to hold the financial assets.
Loan and receivables
Loan and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated to be available for sale
upon initial recognition and financial assets not classified in any other categories. Available-for-sale financial
assets are included in other current assets if management intends to dispose of them within 12 months from
balance sheet date.
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to the
contractual provisions of the financial instrument. Transaction costs that are attributable to the acquisition of the
financial assets at fair value through profits or losses are included in profit or loss in the period in which they are
incurred, and transaction costs that are attributable to the acquisition of other financial assets are included in their
89
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
initially recognized amounts.
Available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are
measured at cost when they do not have a quoted market price in an active market and whose fair value cannot be
reliably measured. Loan and receivables and held-to-maturity investments are measured at amortised cost using
the effective interest method.
Gains or losses arising from change in fair value of available-for-sale financial assets are recognized directly in
equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary
financial assets. When such financial assets are derecognized, the cumulative gains or losses previously
recognized directly into equity are recycled into profit or loss for the current period. Interests on available-for-sale
investments in debt instruments calculated using the effective interest method during the period in which such
investments are held and cash dividends declared by the investee on available-for-sale investments in equity
instruments are recognized as investment income, which is recognized in profits or losses for the period.
(iii) Impairment of financial assets
The Group assesses the carrying amount of financial assets at each balance sheet date. If there is objective
evidence that the financial asset is impaired, an impairment loss is provided for.
The objective evidence are matters that occur after the financial assets been recognised, affect its estimated future
cash flow and could be measured accuractly by the Group.
The objective evidence, of which provided for available-for-sale equity instruments being impaired, includes an
investment in an equity instrument with serious or prolonged decline. The Group assesses available-for-sale
equity instruments at each balance sheet date. If the fair value of equity instruments is less than its initial
investment cost of more than 50% (including 50%), or less than the duration of its initial investment cost of more
than one year (including one year), it indicates that the equity instruments are impaired. If the fair value of equity
instruments is less than its initial investment cost of more than 20% (including 20%) to 50% (not including 50%),
the Group will consider other relevant factors such as ratios of price fluctuation to judge that whether equity
instruments are impaired. The group measured the initial investment cost of available-for-sale equity instruments
using the weighted average method.
When an impairment loss on a financial asset carried at amortized cost has been incurred, the amount of loss is
90
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
measured at the difference between the asset‘s carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of
the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in
profits or losses.
When an impairment loss on available-for-sale financial assets incurred, the cumulative losses arising from the
decline in fair value that had been recognized directly in equity are transferred out from equity and into
impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses
have been recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related
to an event occurring after the impairment loss was recognized in profit or loss, the previously recognized
impairment loss is reversed into profit or loss for the current period. For an investment in an equity instrument
classified as available-for-sale on which impairment losses have been recognized, the increase in its fair value in a
subsequent period is recognized directly in equity.
If an impairment loss incurred on a financial asset carried at amortized cost, the amount of loss is measured as the
difference between the asset‘s carrying amount and the present value of estimated future cash flows discounted at
the current market rate of return for a similar financial asset and cannot be revert in the subsequent periods.
(iv) Derecognition of financial assets
Financial assets are derecognised when: i) the contractual rights to receive the cash flows from the financial assets
have expired; or ii) substantial risks and rewards of ownership of the financial assets have been transferred; or iii)
the control over the financial asset has been waived even if the Group does not transfer or retain nearly all of the
risks and rewards relating to the ownership of a financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the aggregate of
consideration received and the accumulative amount of the changes of fair value originally recorded in the
owner‘s equity is recognised in the profit or loss.
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: the financial liabilities at fair
value through profit or loss and other financial liabilities. The financial liabilities in the Group mainly comprise of
91
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
other financial liabilities, including short-term borrowings, notes payable, accounts payable, dividends payable,
other payables and other current liabilities, which are recognised initially at fair value and measured subsequently
at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently carried at
amortised costs using the effective interest method.
Other financial liabilities are classified as current liabilities if they mature within one year (one year included);
others are classified as non-current liabilities; non-current liabilities due for repayment within one year since the
balance sheet date are classified as current portion of non-current liabilities.
A financial liability (or a part of financial liability) is derecognised when and only when the obligation specified in
the contract is discharged or cancelled. The difference between the carrying amount of a financial liability (or a
part of financial liability) extinguished and the consideration paid is recognised in profit or loss.
(c) Determination of the fair value of the financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the
active market. The fair value of a financial instrument for which the market is not active is determined by using a
valuation technique. Valuation techniques include using prices of recent market transactions between
knowledgeable, willing parties, reference to the current fair value of another financial asset that is substantially the
same with this instrument, and discounted cash flow analysis. When a valuation technique is used to establish the
fair value of a financial instrument, management uses market data as much as possible and avoids use of data that
is particularly related to the Group.
(10) Receivables
Receivables comprise notes receivable, accounts receivable, interests receivable and other receivables. Accounts
receivable arising from sale of goods or rendering of services are initially recognised at fair value of the
contractual payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant are subject to separate assessment for impairment. If
there exists objective evidence that the Group will not be able to collect the amount under the original terms, a
provision for bad debts of that receivable is made at the difference between its carrying amount and the present
value of estimated future cash flows.
92
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
The criteria for individually significant receivables: the amount of account receivable individually accounts for
over 10% (including 10%) of total amount of accounts receivable on balance sheet date or is individually more
than RMB 10,000,000 (including RMB 10,000,000); the amount of other receivable individually accounts for over
10% (including 10%) of total amount of other receivable on balance sheet date or is individually more than RMB
5,000,000 (including RMB 5,000,000).
The provision for impairment of the receivables that are individually significant is established at the difference
between the carrying amount of the receivable and the present value of estimated future cash flows.
(b) Receivables with amounts that are not individually significant and those receivables that have been
individually assessed for impairment and have not been found impaired are classified into certain groupings based
on their credit risk characteristics. Provision for bad debts is determined based on the historical loss experience for
groupings of receivables with similar credit risk characteristics, taking into consideration of the current
circumstances.
A provision for impairment of the receivables is made based on the aging of receivables at the following
percentage:
□ Applicable √ Not applicable
Aging Provision as a percentage of receivables Provision as a percentage of other receivables
Within 1 year 5.00% 5.00%
Between 1 and 2 years 10.00% 10.00%
Between 2 and 3 years 30.00% 30.00%
Between 3 and 4 years 50.00% 50.00%
Between 4 and 5 years 50.00% 50.00%
Over 5 years 100.00% 100.00%
In the groups, those adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, those adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(c) Accounts receivable with an insignificant single amount but for which the bad debt provision is made
independently
93
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
The recognition criteria and method of provision for impairment of receivables those are not individually
significant:
Receivables that are not individually significant are subject to separate impairment assessment if there is objective
evidence that the Group will not be able to collect the full amounts according to the original terms.
The provision for impairment of the receivables is established at the difference between the carrying amount of the
receivables and the present value of estimated future cash flows.\
(11) Inventory
(a) classification
Inventories include raw materials, work in progress, finished goods and turnover materials, and are presented at
the lower of cost and net realizable value.
(b) Determination of cost
Cost is determined on the weighted average method. The cost of finished goods and work in progress comprises
raw materials, direct labour and an allocation of all production overhead expenditures incurred based on normal
operating capacity.
(c) The determination of net realizable value and the method of provisions for impairment of inventories
Provisions for declines in the value of inventories are determined at the carrying value of the inventories net of
their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary
course of business, less the estimated costs to completion and estimated costs necessary to make the sale and
relevant taxes.
(d) The Company and its sudsidiaries adopt the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(12) Long-term equity investments
Long-term equity investments include the company‘s long-term equity investments in its subsidiaries.
Subsidiaries are all entities over which the Company is able to control.
Investments in subsidiaries are measured using the cost method in the Company‘s financial statements, and
adjusted by using the equity method when preparing the consolidated financial statements.
(a) Determination of investment cost
94
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
For long-term equity investments acquired through a business combination: for long-term equity investments
acquired through a business combination involving enterprises under common control, the investment cost shall
be the absorbing party‘s share of the carrying amount of owners‘ equity of the party being absorbed at the
combination date; for long-term equity investment acquired through a business combination involving enterprises
not under common control, the investment cost shall be the combination cost.
For long-term equity investments acquired not through a business combination: for long-term equity investment
acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term
equity investment acquired by issuing equity securities, the initial investment cost shall be the fair value of the
equity securities.
(b) Subsequent measurement and recognition of related profits and losses
For long-term equity investments accounted for using the cost method, they are measured at the initial investment
costs, and cash dividends or profits distribution declared by the investees are recognised as investment income in
profits or losses.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a
long-term equity investment exceeds the Group‘s share of the fair value of the investee‘s identifiable net assets at
the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial
investment cost is less than the share of the Company and its subsidiaries of the fair value of the investee‘s
identifiable net assets at the acquisition date, the difference is included in profits or losses and the cost of the
long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Company and its subsidiaries
recognize the investment income according to its share of net profit or loss of the investee. The Company and its
subsidiaries discontinue recognizing its share of net losses of an investee after the carrying amount of the
long-term equity investment together with any long-term interests that, in substance, form part of the investor‘s net
investment in the investee are reduced to zero. However, if the Company and its subsidiaries have obligations for
additional losses and the criteria with respect to recognition of provisions under the accounting standards on
contingencies are satisfied, the Company and its subsidiaries continue recognizing the investment losses and the
provisions. For changes in owners‘ equity of the investee other than those arising from its net profit or loss,other
comprehensive income and profit distribution, the Company and its subsidiaries record its proportionate share
95
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
directly into capital surplus, provided that the proportion of the Company and its subsidiaries of shareholding in
the investee remains unchanged. The carrying amount of the investment is reduced by the share of the Company
and its subsidiaries of the profit distribution or cash dividends declared by an investee. The unrealized profits or
losses arising from the intra-group transactions amongst the Company, its subsidiaries and its investees are
eliminated in proportion to the equity of the Company and its subsidiaries interest in the investees, and then based
on which the investment gains or losses are recognised. For the loss on the intra-group transaction amongst the
Company, its subsidiaries and its investees attributable to asset impairment, any unrealized loss is not eliminated.
(c) Basis for determine existence of control, joint control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its
operating activities. When determining whether to control the investees or not, the potential voting rights, of
which convertible bonds and executable warrants issued by the investees in current period, should be considered
as well.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the
strategic financial and operating decisions relating to the activity require the unanimous consent of the parties
sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but
is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries is reduced to the recoverable amount when
the recoverable amount is less than the carrying amount (Note II (17)).
(13) Investment properties
Investment properties, including land use rights that have already been leased out and buildings that are held for
the purpose of leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an
investment property are included in the cost of the investment property when it is probable that the associated
economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are
recognised in profit or loss in the period in which they are incurred.
The Company and its subsidiaries adopt the cost model for subsequent measurement of investment properties,
96
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
which are depreciated or amortizerd using the straight-line method to allocate the cost of the assets to their
estimated residual values over their estimated useful lives.. The estimated useful lives, the estimated net residual
values that are expressed as a percentage of cost and the annual depreciation (amortisation) rates of investment
properties are as follows:
Annual Depreciation
Items Estimate Useful Lives Estimated residual value
(amortization) Rates
Buildings 20-35 years 5.00% 2.71%-4.75%
Land Use Rights 50 years - 2.00%
When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or
intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals
or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying
amount at the date of the transfer.
The investment property‘s estimated useful life, net residual value and depreciation (amortization) method applied
are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognised on disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale,
transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses
is recognised in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the recoverable amount is
below the carrying amount (Note II (17)).
(14) Fixed assets
(1) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles and office equipment, etc.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the Company and its
subsidiaries and the costs can be reliably measured. Fixed assets purchased or constructed by the Company and its
subsidiaries are initially measured at cost at the acquisition date.
Subsequent expenditures incurred for fixed assets are included in the cost of the fixed assets when it is probable
that the associated economic benefits will flow to the Company and its subsidiaries and the related costs can be
97
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent
expenditures are recognized in profit or loss in the period in which they are incurred.
(2) Depreciation method
Estimated useful
Estimated residual value Annual depreciation rate
lives
Buildings Straight-line method 20-35 years 5.00% 2.71%-4.75%
Machinery and equipment Straight-line method 10-15 years 5.00% 6.33%-9.50%
Motor vehicles Straight-line method 5 years 5.00% 19%
Office equipment Straight-line method 3-5 years 5.00% 19%-31.67%
(3) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note II(17)).
(4) Disposal
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or
disposal. The amount of proceeds on sale, transfer, retirement or damage of a fixed asset net of its carrying amount
and related taxes and expenses is recognized in profit or loss.
(15) Intangible assets
Intangible assets include land use rights, non-patented technology and computer soft wares, which initially
recognized at cost.
(a) Land use rights
A land use right granted by government with a infinite useful life would not be amortised. Other land use rights are
amortised on the straight-line basis over 50 years. If the acquisition costs of land use rights and the buildings
located thereon cannot be reliably allocated between the land use rights and the buildings, all of the acquisition
costs are recognised as fixed assets.
(b) Non-patented technology
Non-patented technology are amortised on the straight-line basis over the shorter of their useful life/benefit period
stipulated in the agreement or contract and the legal age.
(c) Computer softwares
98
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Computer softwares purchased by the Group are initially measured at cost, which are amortised on the
straight-line over their approved useful period of 3-5 years.
(d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at
each year-end, with adjustment made as appropriate.
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on the research
phase and expenditure on the development phase based on its nature and whether there is material uncertainty that
the research and development activities can form an intangible asset at end of the project.
Expenditure for investigation, evaluation and selection of production process researches is recognised in profit or
loss in the period in which it is incurred. Expenditure on the designation, assessment of the final utilization of the
production process before mass production, is capitalised only if all of the following conditions are satisfied:
development of the production process has been fully demonstrated by the technical team;
management has approved the budget of production development;
existed market research analysis suggests that the products produced by the new production technology are
able to be promoted;
adequate technical, financial and other resources to complete the development and subsequent mass
production and the ability to use or sell the intangible asset; and
the expenditure attributable to the intangible asset during its development phase can be reliably measured.
Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period
in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in
a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the
balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
(f) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is less
than the carrying amount (Note II (17)).
(16) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets held under operating leases,
99
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
and other expenditures that have been incurred but should be recognised as expenses over more than one year in
the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the
expected beneficial period and are presented at actual expenditure net of accumulated amortisation.
(17) Impairment of long-term assets
Fixed assets, intangible assets with finite useful lives, investment properties measured using the cost model,
long-term prepaid expense, other non-current assets and long-term equity investments in subsidiaries are tested for
impairment if there is any indication that an asset may be impaired at the balance date. Intangible assets which are
not yet ready to use should be tested at least annually for impairment, irrespective of whether there is any indication
that it may be impaired. If the result of the impairment test indicates that the recoverable amount of the asset is less
than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which
the asset‘s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset‘s fair
value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision
for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is
determined. A group of assets is the smallest identifiable group of assets that is able to generate independent cash
inflows.
Intangible assets with infinite useful lives are tested at least annually for impairment, irrespective of whether there is
any indication that it may be impaired.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent
periods.
(18) Employee benefits
(a) Short-term employee benefits
Short-term employee benefits mainly include wages or salaries, bonus, allowances and subsidies, staff welfare,
medical insurance, work injury insurance, maternity insurance, housing funds, and union running costs and
employee education costs. The employee benefits are recognised in the accounting period in which the service has
been rendered by the employees, and as costs of assets or expenses to whichever the employee service is
attributable.
(b) Pension obligations
10
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
The Company and its subsidiaries operate various post-employment schemes, including both defined benefit and
defined contribution pension plans. A defined contribution plan is a pension plan under which the Company and its
subsidiaries pay fixed contributions into a separate entity then the Company and its subsidiaries have no legal or
constructive obligations to pay further contributions. The current and past service cost of the defined benefit plan,
recognised in the income statement in employee benefit expense. The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is
included in employee benefit expense in the income statement. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income
in the period in which they arise. In the reporting period, The Company and its subsidiaries‘s pension obligations
mainly include the basic endowment insurance and unemployment insurance; both belong to the defined
contribution plan.
Pension insurance
Employees of the Group participate in the social pension insurance organized by the local labour and social security
departments. The Group pay pension insurance premium to the pension insurance agency with the local provision of
social pension insurance base pay and proportional monthly. When the employee is retired, the local labour and
social security departments have the responsibility to pay the basic pension insurance to retired employees.
(c) Termination benefits
Termination benefits are payable when employment is terminated by the Company and its subsidiaries before the
normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. the
Company and its subsidiaries recognises termination benefits at the earlier of the following dates, when the Group
can no longer withdraw the offer of those benefits and when the entity recognises costs related to restructuring.
(d) Retirement benefits
The Company and its subsidiaries provide termination benefits to employees who accept voluntary redundancy in
exchange for these benefits. Termination benefits are the payments of wages or salaries and social insurance for the
employees who accept termination plan before the normal retire age. The termination benefits plan covers the period
from the starting date of termination benefit plan to the normal retire age. When the Group terminates the
employment relationship with employees before the end of the employment contract, a provision for termination
benefits for the compensation arising from termination of the employment relationship with employees to the retire
10
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
age is recognised with a corresponding change to profit or loss. The difference from change of actuarial assumptions
and adjustment on benefit is recognised in the current profits and losses.
Retirement benefits falling due within a year are reclassified as a current liability.
(19) Dividend distribution
Cash dividends distribution is recognised as a liability in the period in which it is approved by the annual
shareholders‘ meeting.
(20) Provisions
Provisions for product warranties, onerous contracts etc. are recognised when the Group has a present obligation, it
is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the
obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present
obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are
taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of
money is material, the best estimate is determined by discounting the related future cash outflows. The increase in
the discounted amount of the provision arising from passage of time is recognised as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best
estimate.
The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities.
(21) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from employees as consideration for
equity instruments of the entity or by incurring liabilities for amounts based on the equity instruments. Equity
instruments include equity instruments of the Company, its parent company or other accounting entities of the
Group. Share-based payments are divided into equity-settled and cash-settled payments. The Group‘s share-based
payments are equity-settled payments. Equity-settled share-based payment The Group‘s stock optionstock option
plan is the equity-settled share-based payment in exchange of employees' services and is measured at the fair value
of the equity instruments at grant date. The equity instruments are exercisable after services in vesting period are
completed or specified performance conditions are met. In the vesting period, the services obtained in current period
10
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
are included in relevant cost and expenses at the fair value of the equity instruments at grant date based on the best
estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If the
subsequent information indicates the number of exercisable equity instruments differs from the previous estimate,
an adjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equity
instruments. On the exercise date, the recognised amount calculated based on the number of exercised equity
instruments is transferred into share capital.
(b) Determination of the fair value of equity instruments
The Group determines the fair value of stock optionstock options using option pricing model, which is Black -
Scholes option pricing model.
(c) Basis for determining best estimate of exercisable equity instruments At the end of each reporting period, the
group revises its estimates of the number of options that are expected to vest based on the non-marketing
performance and service conditions. On the exercise date, the final number of estimated exercisable equity
instruments is consistent with the number of exercised equity instruments.
(d) Accounting treatment related to the exercise of stock optionstock options When the options are exercised, the
company issues new shares. The proceeds received net of any directly attributable transaction costs are
credited to share capital (and share premium). At the same time, capital surplus recognised in the vesting
periond are carried forward to share premium..
(22) Revenue
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Company and its subsidiaries‘s activities. Revenue is
shown net of discounts and returns.
Revenue is recognized when the economic benefits associated with the transaction will flow to the Group, the
relevant revenue can be reliably measured and specific revenue recognition criteria have been met for each of the
Group‘s activities as described below:
(a) Sales of goods
The Group is engaged in manufacturing and sales of washing machine. Revenue from sales of goods is recognized
when the goods and confirmed documents are delivered, significant risks and rewards of ownership of the goods are
transferred to the customers, the Company retains neither continuing managerial involvement to the degree usually
10
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
associated with the ownership nor effective control over the goods sold, relevant consideration or the documents
which grant the right to receive the relevant consideration has been received, and related costs can be measured
reliably.
During the reporting period,the Company sales goods mainly through deals, large-scale chain supermarkets and
e-business platform. Revenue is recognized when products accepted by dealers, chain supermarkets and third-party
e-business platform. As for self-operation e-business website, revenue is recognized when products accepted by
ultimate customers.
The Group is engaged in sales of materials. Revenue from sales of materials is recognized when the materials and
confirmed documents are delivered, significant risks and rewards of ownership of the materials are transferred to the
customers, the Group retains neither continuing managerial involvement to the degree usually associated with the
ownership nor effective control over the materials sold, relevant consideration or the documents which grant the
right to receive the relevant consideration has been received, and related costs can be measured reliably.
(b) Transfer of assets use rights
Interest income is determined by using the effective interest method, based on the length of time for which the cash
of the Company and its subsidiaries is used by others.
Income from an operating lease is recognised on a straight-line basis over the period of the lease.
(23) Government Grants
Government grants are the monetary asset that the Group receives from the government for free, including tax
refund, financial subsidies, etc.
A government grant is recognized when the conditions attached to it can be complied with and the government grant
can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the
amount received or receivable.
The government grants pertinent to assets mean the government assets that are obtained by enterprises used for
purchase or construction， or forming the long-term assets by other ways.
The government grants pertinent to income refer to all the government grants except those pertinent to assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over
the useful life of the related asset.
10
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
For government grants related to income, where the grant is a compensation for related expenses or losses to be
incurred by the Company and its subsidiaries in the subsequent periods, the grant is recognized as deferred income,
and included in profit or loss over the periods in which the related costs are recognized; where the grant is a
compensation for related expenses or losses already incurred by the Company and its subsidiaries, the grant is
recognized immediately in profit or loss for the current period.
(24) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising
between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset
is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable
profit in accordance with the tax laws. No deferred tax asset or deferred tax liability is recognised for the temporary
differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business
combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date,
deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the
extent that it is probable that taxable profit will be available in the future against which the deductible temporary
differences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries, unless the
Company is able to control the timing of the reversal of the temporary difference, and it is probable that the
temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences
arising from investments in subsidiaries will be reversed in the foreseeable future and that the taxable profit will be
available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets
are recognized.
Deferred tax assets and liabilities are offset when:
The deferred taxes are relate to the same tax payer within the Group and the same taxation authority, and;
That tax payer has a legally enforceable right to offset current tax assets against current tax liabilities
(25) Leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease.
10
5
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
An operating lease is a lease other than a finance lease.
Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and
are either capitalised as part of the cost of related assets, or charged as an expense for the current period.
Rental income from an operating lease is recognised on a straight-line basis over the period of the lease.
(26) Segment information
The Company and its subsidiaries identify operating segments based on the internal organisation structure,
management requirements and the internal reporting system, and discloses segment information of reportable
segments determined on the basis of operating segments.
An operating segment is a component of the Company and its subsidiaries that satisfy all of the following
conditions:
(a) the component is able to earn revenues and incur expenses from its ordinary activities.
(b) whose operating results are regularly reviewed by the Group‘s management to make decisions about
resources to be allocated to the segment and to assess its performance.
(c) for which the information on financial position, operating results and cash flows is available to the Group. If
two or more operating segments have similar economic characteristics, and satisfy certain conditions, they are
aggregated into a single operating segment.
(27) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(i) Sales rebates
The Company and its subsidiaries apply the rebating policies with deals, large-scale chain supermarkets and
e-business platform. The amount of the rebates is estimated periodically taking into account related sales contracts,
examination of particular transactions, historical experiences, market environment, inventory stock and the agreed
indicator of particular customers. As it determined by the judgement and estimation of management, there is a
possibility that changes in the estimation will have significant effect on the provision of sales rebates of the period
10
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
when the changes occurred.
(ii) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are some transactions and events for which
the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is required
from the Group in determining the provision for income taxes in each of these jurisdictions. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
income tax and deferred tax provisions in the period in which such determination is made.
III. Taxation
(a) The types and rates of taxes applicable to the Group are set out below:
Types Taxable base Tax rate
Taxable value added amount (tax payable represents output VAT
Value-added tax calculated using the taxable sales amount multiplied by the
effective tax rate less deductible input VAT) 17%, 11% or 5%
Business tax Taxable turnover amount 5%
City maintenance and
The payment amount of VAT and business tax
construction tax 7% or 5%
Enterprise income tax Taxable income 15%, 17% or 25%
Pursuant to the 'Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax'(Cai
Shui [2016] 36) jointly issued by the Ministry of Finance and the State Administration of Taxation, revenue
from lease is subject to VAT from 1 May 2016, and the applicable tax rate is 11%(the Company) or 5%( Hefei
Midea Washing Machine Limited, simplied collection), while the business tax was 5% before then.
(b) Tax preferences
According to Enterprise income tax law of the People's Republic of China, Article 28, The Company and its three
subsidiaries, Hefei Washing Machine Limited, Wuxi Little Swan GE Limited and Wuxi Filin Electronics Limited,
shall be subject to the corporate income tax at the reduced rate of 15%(FY2015: same).
In July 2015, The Company gained the certificate of 'High-tech Enterprises, which is issued by Jiangsu Science and
Technology Department, Jiangsu Finance Department, Jiangsu State Administration of Taxation and Jiangsu Local
Taxation Bureau. The Certificate Number is GR201532000606. Term of validity for this Certificate is three years,
10
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
from 2015 to 2018.
In July 2014, The Companys subsidiary Hefei Midea Washing Machine Limited gained the certificate of
'High-tech Enterprises, which is issued by Anhui Science and Technology Department, Anhui Finance Department,
Anhui State Administration of Taxation and Anhui Local Taxation Bureau. The Certificate Number is
GR2001434000147. Term of validity for this Certificate is three years, from 2014 to 2017.
In July 2015, The Companys subsidiary Wuxi Little Swan GE Limited gained the certificate of 'High-tech
Enterprises, which is issued by Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu
State Administration of Taxation and Jiangsu Local Taxation Bureau. The Certificate Number is GR201532000557.
Term of validity for this Certificate is three years, from 2015 to 2018.
In July 2015, The Companys subsidiary Wuxi Filin Electronics Limited gained the certificate of 'High-tech
Enterprises, which is issued by Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu
State Administration of Taxation and Jiangsu Local Taxation Bureau. The Certificate Number is GR201532000557.
Term of validity for this Certificate is three years, from 2015 to 2018.
The Companys subsidiary Little Swan International (Singapore) Limited shall be subject to the corporate income
tax at the rate of 17%..
IV. Notes to the consolidated financial statements
(1) Cash and cash at bank
31 December 2016 31 December 2015
Cash at bank 4,171,689,917.21 2,792,685,328.69
Other cash balances 100,387,293.90 250,158,596.12
Total 4,272,077,211.11 3,042,843,924.81
including：cash deposited overseas 594,128.38 607,997.46
As at 31 December 2016, the other cash balances comprise: bank acceptance notes of RMB 93,781,938.00 and
deposits for letter of credit of RMB 6,605,355.90 (31 December 2015: Bank acceptance bills of RMB 97,393,915.78
and deposits for letter of credit of RMB 2,764,680.34, and time deposits over 3 months of RMB 150,000,000.00).
10
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2) Notes receivable
(a) Notes receivable classified by nature
31 December 2016 31 December 2015
Bank acceptance notes 1,297,609,202.29 2,205,189,379.10
As at 31 December 2016 and 31 December 2015, there is no pledged notes receivable
(b) As at 31 December 2016, notes receivable that have been endorsed but not yet expired are as follows:
Items Derecognised Not derecognised
Bank acceptance notes 2,162,685,355.85 -
(3) Accounts receivable
(a) Accounts receivable classified by nature:
31 December 2016
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped
1,542,798,634.63 100.00% 77,144,136.73 5.00% 1,465,654,497.90
by credit risk
31 December 2015
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped
943,243,995.63 100.00% 47,168,520.00 5.00% 896,075,475.63
by credit risk
Accounts receivable individually significant for which bad debt provision was assessed individually.
□Applicable √ Not applicable
Accounts receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2016
Aging Accounts receivable Bad debt provision % of provision Book
Value
Within 1 year 1,542,714,534.82 77,135,726.75 5.00% 1,465,578,808.07
1 to 2 years 84,099.81 8,409.98 10.00% 75,689.83
Total 1,542,798,634.63 77,144,136.73 5.00% 1,465,654,497.90
10
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015
Aging Accounts receivable Bad debt provision % of provision Book
Value
Within 1 year 943,117,591.22 47,155,879.56 5.00% 895,961,711.66
1 to 2 years 126,404.41 12,640.44 10.00% 113,763.97
Total 943,243,995.63 47,168,520.00 5.00% 896,075,475.63
As at 31 December 2016 and 2015, there were no material accounts receivable which were past due.
(b) Accounts receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2016, the net movement of provision for accounts receivable was RMB
29,975,616.73 (2015: RMB 632,077.76). There were no provision or reverse of provision for individual
significant accounts receivable.
(c) Accounts receivable written-off during the reporting period
There were no accounts receivable written-off during the reporting period.
(d) Top 5 of accounts receivable by customers
Amounts Bad debt provision % of total balance
Total amount of the top 5 accounts receivable
1,147,210,161.49 57,360,508.07 74.36%
by customers
(4) Prepayment
(a) Aging analysis of prepayment:
31 December 2016 31 December 2015
Aging
Balance % of total balance Balance % of total balance
Within 1 year 131,513,792.18 100.00% 95,192,076.23 97.50%
1 to 2 years - - 2,416,501.94 2.48%
2 to 3 years - - - -
Over 3 years - - 20,000.00 0.02%
Total 131,513,792.18 100.00% 97,628,578.17 100.00%
As at 31 December 2016, the balance of advance to suppliers with aging over one year amounts to RMB 0.00.
(31 December 2015: RMB 2,436,501.94, mainly comprising the prepayments for goods for which the standards
11
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
stipulated by the contract has not yet been reached)
(b) Top 5 prepayment by suppliers
Amounts % of total balance
Total amount of the top 5 by suppliers 96,563,794.36 73.42%
(5) Interests receivable
(a) Category
31 December 2016 31 December 2015
Interests receivable 26,755,807.07 22,932,602.74
(6) Other receivables
(a) Other receivable by category:
31 December 2016
Category Book balance Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped by credit risk 25,307,331.32 100.00% 1,613,444.78 6.38% 23,693,886.54
31 December 2015
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped by credit risk 9,956,212.29 100.00% 748,032.21 7.51% 9,208,180.08
Other receivable individually significant for which bad debt provision was assessed individually.
□ Applicable √ Not applicable
Other receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2016
Aging
Other receivables Bad debt provision % of provision Book value
Within 1 year 23,476,591.19 1,173,829.56 5.00% 19,845,075.14
1 to 2 years 1,043,047.12 104,304.71 6.44% 3,396,428.90
2 to 3 years 292,680.00 87,804.00 30.00% 204,876.00
3 to 5 years 495,013.01 247,506.51 50.00% 247,506.50
11
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 25,307,331.32 1,613,444.78 6.38% 23,693,886.54
31 December 2015
Aging
Other receivables Bad debt provision % of provision Book value
Within 1 year 8,422,416.66 421,120.83 5.00% 8,001,295.83
1 to 2 years 1,010,391.00 101,039.06 10.00% 909,351.94
2 to 3 years 179,150.00 53,745.00 30.00% 125,405.00
3 to 5 years 344,254.63 172,127.32 50.00% 172,127.31
Total 9,956,212.29 748,032.21 7.51% 9,208,180.08
As at 31 December 2016 and 31 December 2015, there were no material other receivable which were past due.
Other receivables adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Other receivables adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
(b) Other receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2016, the net movement of provision for other receivable was RMB
865,412.57 (2015: RMB 2,184,257.60). There were no provision or reverse of provision for individual significant
other receivable
(c) Other receivable written-off during the reporting period
There were no other receivable written-off during the reporting period
(d) Other receivables classified by nature
Nature of other receivables 31 December 2016 31 December 2015
Advances 14,330,097.53 1,544,575.33
Loan to employees 2,098,324.20 3,657,991.12
Deposits 2,018,096.36 1,194,312.63
Others 6,860,813.23 3,559,333.21
Bad debt provision -1,613,444.78 -748,032.21
Total 23,693,886.54 9,208,180.08
11
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(e) Top 5 of other receivable by customers
Proportion of the
Closing
Nature of other 31 December total year end
Name of the entities Aging balance of bad
receivables 2016 balance of the
debt provision
accounts receivable
Shenzhen Midea Payment Technology Advance and
10,835,423.12 Within 1 year 42.82% 541,771.16
Co., Ltd temporary payments
Guangdong Midea Group Wuhu Trademark royalty
3,428,921.06 Within 1 year 13.55% 171,446.05
Refrigeration Equipment Co., Ltd. charges
Long-term equity
Guangzhou Antaida Logistics
investments 2,587,038.41 Within 1 year 10.22% 129,351.92
Corporation
Liquidation
Hefei Hualing Co., Ltd. Advance payments 854,915.88 Within 1 year 3.38% 42,745.79
Wuxi China Resources Gas Co., Ltd. Deposits 820,800.00 Within 1 year 3.24% 41,040.00
Total -- 18,527,098.47 -- 73.21% 926,354.92
(7) Inventory
(a) Category of inventory
31 December 2016 31 December 2015
Book balance Provision for Book value Book balance Provision for Book value
wirite-down wirite-down
Raw materials 21,928,651.09 1,593,768.57 20,334,882.52 21,725,796.66 1,149,192.62 20,576,604.04
Goods in
11,864,254.41 - 11,864,254.41 8,189,804.33 - 8,189,804.33
process
Inventory goods 1,768,281,418.69 75,642,610.93 1,692,638,807.76 755,272,411.35 38,625,852.20 716,646,559.15
Total 1,802,074,324.19 77,236,379.50 1,724,837,944.69 785,188,012.34 39,775,044.82 745,412,967.52
(b) Provision for wirite-down of inventory
31 December Increased amount Decreased amount
31 December
2015
Withdrawal Other Reverse or
Other 2016
write-off
Raw materials 1,149,192.62 468,128.22 - -23,552.27 - 1,593,768.57
Inventory goods 38,625,852.20 60,902,807.00 - -23,886,048.27 - 75,642,610.93
Total 39,775,044.82 61,370,935.22 - -23,909,600.54 - 77,236,379.50
11
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
The provisions for inventories are provided to write down the book value to the net realizable value when the
net realizable value is lower.
(8) Other current assets
31 December 2016 31 December 2015
Financial products 5,994,142,671.24 3,152,675,560.00
Structured deposits 2,150,000,000.00 2,470,000,000.00
Input tax to be authenticated or deducted 197,355,573.10 78,446,417.44
others 44,226,037.82 32,066,626.79
Total 8,385,724,282.16 5,733,188,604.23
As at 31 December 2016, all financial products are matured within one year, which comprise products of
floating income and unprotected principles mounted to RMB 5,994,142,671.24 (As at 31 December 2015,
financial products comprise products of floating income and unprotected principles amounted to RMB
3,052,675,560 and products of floating income and protected principles amounted to RMB 100,000,000). As at 31
December 2016, the carrying value of financial products measured by fair value amounted to
RMB5,994,142,671.24, with principal amounted to RMB5,890,000,000.00, and accumulated fair value changes
recognised in other comprehensive income amounted to RMB104,142,671.24 (As at 31 December 2015, the
carrying value of financial products measured by fair value amounted to RMB3,052,675,560.00, with principal
amounted to RMB2,997,000,000.00, and accumulated fair value changes recognised in other comprehensive
income amounted to RMB55,675,560.00). All financial products mentioned above are structural objects which are
out of scope of consolidation. At 31 December 2016, the maximum risk exposure of financial products held by the
Company and its subsidiaries is limited to the carrying value of financial products. The Company and its
subsidiaries have no obligation or intention to provide financial support to the financial product funds mentioned
above.
(9) Available-for-sale financial assets
31 December 2016 31 December 2015
Book balance Bad debt provision Book value Book balance Bad debt provision Book value
Available-for-sale equity
instruments
11
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
measured at cost 200,000.00 - 200,000.00 200,000.00 - 200,000.00
Total 200,000.00 - 200,000.00 200,000.00 - 200,000.00
(10) Investment Properties
(a) Investment properties measured at cost method
Buildings Land use rights Total
Original book value
31 December 2015 88,425,049.29 22,949,959.07 111,375,008.36
Reduction -235,792.33 - -235,792.33
Disposal -235,792.33 - -235,792.33
31 December 2016 88,189,256.96 22,949,959.07 111,139,216.03
Accumulative depreciation and accumulative amortization
31 December 2015 24,340,722.34 5,615,173.21 29,955,895.55
Amortization 3,506,203.14 355,238.27 3,861,441.41
Disposal -109,089.47 - -109,089.47
31 December 2016 27,737,836.01 5,970,411.48 33,708,247.49
Provision for impairment loss
31 December 2015 12,576,065.29 - 12,576,065.29
31 December 2016 12,576,065.29 - 12,576,065.29
Net book value
31 December 2016 47,875,355.66 16,979,547.59 64,854,903.25
31 December 2015 51,508,261.66 17,334,785.86 68,843,047.52
Depreciation and amortization charge for 2016 amounted to RMB 3,861,441.41 (2015:RMB 4,583,668.43).
(11) Fixed assets
Buildings Machinery Motor vehicles Office equipment Total
and fixtures
and equipment
Original book value
11
5
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 730,443,485.05 877,011,703.05 27,335,068.10 113,116,467.37 1,747,906,723.57
Purchase 3,600,886.02 62,721,781.33 2,058,316.10 11,030,180.41 79,411,163.86
Disposal or Scrap -117,971.27 -28,823,461.74 -1,767,849.97 -5,619,144.95 -36,328,427.93
31 December 2016 733,926,399.80 910,910,022.64 27,625,534.23 118,527,502.83 1,790,989,459.50
Accumulative depreciation
31 December 2015 166,521,051.15 440,072,941.95 23,012,295.94 83,371,414.00 712,977,703.04
Addition 31,042,743.12 72,429,849.85 2,113,693.42 12,981,800.57 118,568,086.96
Disposal or Scrap -37,746.40 -21,092,170.92 -1,628,578.35 -5,023,491.35 -27,781,987.02
31 December 2016 197,526,047.87 491,410,620.88 23,497,411.01 91,329,723.22 803,763,802.98
Provision for impairment
loss
31 December 2015 3,918,452.47 11,165,580.56 64,570.25 252,125.65 15,400,728.93
Addition - 2,357,686.75 - - 2,357,686.75
Disposal or Scrap - -1,210,381.93 -29,076.04 -152,592.22 -1,392,050.19
31 December 2016 3,918,452.47 12,312,885.38 35,494.21 99,533.43 16,366,365.49
Net book value
31 December 2016 532,481,899.46 407,186,516.38 4,092,629.01 27,098,246.18 970,859,291.03
31 December 2015 560,003,981.43 425,773,180.54 4,258,201.91 29,492,927.72 1,019,528,291.60
Depreciation charges for 2016 amounted to RMB 118,568,086.96 (2015:RMB 114,810,675.67). The amount of
depreciation recognized in cost of sales, selling expense and operating expense are RMB 98,698,557.97 , RMB
516,024.94 and RMB 19,353,504.05 respectively. (2015: The amount of depreciation recognized in cost of sales,
selling expense and operating expense are RMB 94,295,000.40, RMB 544,100.15 and RMB 19,971,575.12
respectively).
(12) Intangible assets
(1) List of intangible assets
Land use right Non-patented Others Total
technology
11
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Original book value
31 December 2015 242,666,890.39 1,992,000.00 1,395,014.56 246,053,904.95
31 December 2016 242,666,890.39 1,992,000.00 1,395,014.56 246,053,904.95
Accumulated amortization
31 December 2015 45,145,265.36 1,992,000.00 1,395,014.56 48,532,279.92
Addition 5,238,138.88 - - 5,238,138.88
31 December 2016 50,383,404.24 1,992,000.00 1,395,014.56 53,770,418.80
Provision for impairment
loss
31 December 2015 - - - -
31 December 2016 - - - -
Book value
31 December 2016 192,283,486.15 - - 192,283,486.15
31 December 2015 197,521,625.03 197,521,625.03
In 2016, the amortization of intangible assets amounted to RMB 5,238,138.88. (2015: RMB 5,238,952.67)
(13) Long-term prepaid expenses
Item 31 December 2015 Addition Amortization Other reductions 31 December 2016
Leasehold
3,448,863.46 2,533,689.96 1,808,353.08 - 4,174,200.34
improvement
Others 789,380.92 - 575,853.12 - 213,527.80
Total 4,238,244.38 2,533,689.96 2,384,206.20 - 4,387,728.14
(14) Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets without taking into consideration of the offsetting of balances
31 December 2016 31 December 2015
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for impairment 160,340,693.36 24,051,104.00 90,583,724.89 13,587,558.73
11
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
of assets
Unrealized profit of
67,442,606.20 10,116,390.93 68,217,414.97 10,232,612.25
inter-group transaction
Termination benefits 17,699,114.41 2,654,867.16 32,192,522.18 4,828,878.33
Accrued expenses 1,844,401,155.54 276,660,173.33 1,521,730,526.58 228,259,578.99
Provisions 1,727,340.89 259,101.13 9,981,021.44 1,497,153.22
Deferred income 2,942,333.25 441,349.99 3,395,533.29 509,329.99
Others 8,782,955.88 1,317,443.38 8,782,955.88 1,317,443.38
Total 2,103,336,199.53 315,500,429.92 1,734,883,699.23 260,232,554.89
Deferred income tax assets details
Item 31 December 2016 31 December 2015
Expected to reverse within 1 year
(including 1 year) 311,339,611.98 253,576,903.19
Expected to reverse after 1 year 4,160,817.94 6,655,651.70
Total 315,500,429.92 260,232,554.89
(b）Deferred tax liabilities without taking into consideration the offsetting of balances
31 December 2016 31 December 2015
Item Taxable Temporary Deferred tax Taxable Temporary Deferred tax
difference liabilities difference liabilities
Fair change of available-for-sale
104,142,671.24 15,621,400.69 55,675,560.00 8,351,334.00
financial assets
Deferred tax liabilities details
Item 31 December 2016 31 December 2015
Expected to reverse within 1 year 15,621,400.69 8,351,334.00
(including 1 year)
Expected to reverse after 1 year - -
Total 15,621,400.69 8,351,334.00
（c）Net amounts of deferred income tax assets and liabilities taking into consideration the offsetting of
balances are set out as follows:
Netting amount Deferred income tax Netting amount Deferred income tax
Item
assets or liabilities, net assets or liabilities, net
Deferred income tax 15,621,400.69 299,879,029.23 8,351,334.00 251,881,220.89
11
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
assets
Deferred income tax
15,621,400.69 - 8,351,334.00 -
liabilities
(d) List of unrecognized deferred income tax assets
Item 31 December 2016 31 December 2015
Deductible temporary difference 27,153,343.58 24,307,336.03
Deductible tax losses 81,177,769.43 75,877,413.93
Total 108,331,113.01 100,184,749.96
(e) Deductible losses of unrecognized deferred income tax assets will due the following years
Years 31 December 2016 31 December 2015
2016 - 287,136.58
2017 57,917.22 89,186.59
2018 16,303,166.71 16,303,166.71
2019 49,620,940.42 49,620,940.42
2020 9,576,983.63 9,576,983.63
2021 5,618,761.45 -
Total 81,177,769.43 75,877,413.93
(15) Other non-current assets
Item 31 December 2016 31 December 2015
Prepayment for equipment 25,655,775.90 32,963,224.90
(16) Provision for impairment of assets
Item Increase Decrease
31 December 31 December
Revenue Write off
2015 2016
Bad debt provision 47,916,552.21 30,841,029.30 - - 78,757,581.51
-Accounts receivable 47,168,520.00 29,975,616.73 - - 77,144,136.73
-Other receivables 748,032.21 865,412.57 - - 1,613,444.78
Write-down of inventories 39,775,044.82 61,370,935.22 - -23,909,600.54 77,236,379.50
Impairment provision for 100,300.00 - - - 100,300.00
available-for-sale
11
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
financial assets
Impairment provision 12,576,065.29 - - - 12,576,065.29
for investment properties
Impairment provision for 15,400,728.93 2,357,686.75 - -1,392,050.19 16,366,365.49
fixed assets
Total 115,768,691.25 94,569,651.27 - -25,301,650.73 185,036,691.79
(17) Short-term borrowings
Category 31 December 2016 31 December 2015
Factoring of accounts receivables 183,813,064.12 -
(18) Notes payable
Category 31 December 2016 31 December 2015
Bank acceptance note 2,620,549,815.47 1,953,065,274.06
The total amount of the due but not pay notes payable at the period-end was of 0.
(19) Accounts payable
(a) List of accounts payable
Item 31 December 2016 31 December 2015
Material 3,301,435,137.79 2,359,604,637.06
Others 33,654,534.27 60,202,704.89
Total 3,335,089,672.06 2,419,807,341.95
(b) Accounts payable aging over one year
Item 31 December 2016 Reason for aging over one year
Material 81,244,372.58 Contract expiration has not yet come
(20) Advance from customers
(a) List of advance from customers
Item 31 December 2016 31 December 2015
12
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Advance from customers 3,014,347,762.24 1,652,908,781.44
(b) Significant advance from customers aging over one year
Item 31 December 2016 Unpaid/ Un-carry-over reason
Advance from customers 30,970,017.47 The project is under processing
(21) Payroll payable
(a) List of Payroll payable
Item 31 December 2015 Increase Decrease 31 December 2016
Short-term employee benefit payable 226,371,272.61 927,006,665.10 -890,688,255.24 262,689,682.47
Defined contribution plans payable 14,208,683.82 80,133,783.49 -72,575,097.45 21,767,369.86
Termination benefits payable 7,700,760.49 10,468,799.44 -14,034,448.97 4,135,110.96
Total 248,280,716.92 1,017,609,248.03 -977,297,801.66 288,592,163.29
(b) List of Short-term salary
Item 31 December 2015 Increase Decrease 31 December 2016
1. Salary, bonus, allowance and
subsidies 203,062,076.70 784,561,258.90 -748,546,151.56 239,077,184.04
2. Employee welfare 5,560,243.09 65,451,171.30 -66,137,478.58 4,873,935.81
3. Social insurance 6,877,301.07 34,113,837.10 -34,821,442.08 6,169,696.09
-Medical insurance 5,502,760.59 27,945,198.41 -28,268,052.00 5,179,907.00
-Employment injury insurance 950,454.45 4,320,447.42 -4,542,780.40 728,121.47
-Maternity insurance 424,086.03 1,848,191.27 -2,010,609.68 261,667.62
4. Housing fund 6,456,798.64 28,853,648.83 -28,143,895.23 7,166,552.24
5. Labor union funds and employee 14,026,748.97 -13,039,287.79 5,402,314.29
4,414,853.11
education fee
Total 226,371,272.61 927,006,665.10 -890,688,255.24 262,689,682.47
As at 31 December 2016, there were no overdue payroll and welfare payables. This balance of payroll and welfare
payables will be settled in 2017.
(c) Defined contribution plans
Item 31 December 2015 Increase Decrease 31 December 2016
Pension 13,201,271.54 76,521,029.71 -68,707,356.91 21,014,944.34
12
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Unemployment insurance 1,007,412.28 3,612,753.78 -3,867,740.54 752,425.52
Total 14,208,683.82 80,133,783.49 -72,575,097.45 21,767,369.86
(d) Termination benefits payable
Item 31 December 2016 31 December 2015
Termination benefits payable 4,055,110.96 6,800,760.49
Other termination benefits payable 80,000.00 900,000.00
Total 4,135,110.96 7,700,760.49
(22) Taxes payable
Item 31 December 2016 31 December 2015
Corporate income tax 317,599,561.26 279,867,360.71
VAT 43,959,339.80 8,884,701.12
House appliance recycling funds 22,600,123.00 22,335,614.00
Urban maintenance and construction tax 9,810,227.91 2,492,588.81
Education Surcharge 7,604,254.32 1,779,616.70
Others 10,664,523.67 9,748,346.57
Total 412,238,029.96 325,108,227.91
(23) Dividend payable
Item 31 December 2016 31 December 2015
Common stock dividend 7,150,684.06 5,400,652.06
Total 7,150,684.06 5,400,652.06
(24) Other payables
(a) Other payables listed by nature
Item 31 December 2016 31 December 2015
Payment for equipment 65,358,163.79 54,026,136.97
Payment for moulds 84,354,267.87 50,738,280.49
Guarantee and deposits 20,631,583.91 13,794,750.00
Prepaid expenses 7,782,998.86 18,631,746.58
Energy efficiency rebate 6,140,000.00 25,080,000.00
12
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Advances collected 5,410,822.47 5,407,965.76
Others 10,248,565.14 4,128,258.14
Total 199,926,402.04 171,807,137.94
(b) Significant other payable aging over one year
Item 31 December 2016 Unpaid/ Un-carry-over reason
Payment for moulds 33,189,575.18 Contracts expiration has not yet come
Payment for equipment 30,228,987.71 Contracts expiration has not yet come
Total 63,418,562.89
(25) Other current-liabilities
Item 31 December 2016 31 December 2015
Accrued sale rebate 1,095,875,998.29 868,491,961.48
Accrued maintenance and installation costs 248,172,966.72 199,287,081.29
Accrued sales promotion fees 223,209,831.40 249,793,144.13
Accrued transportation fee 139,146,303.25 127,259,322.97
Accrued household electrical appliances
recycling fund 15,830,282.99 3,768,666.99
Accrued trademark royalty charges 14,192,875.86 15,536,878.06
Others 107,984,895.75 57,597,238.32
Total 1,844,413,154.26 1,521,734,293.24
(26) Long-term payroll payable
Item 31 December 2016 31 December 2015
Retirement benefits 20,156,459.56 35,240,059.74
Less：Current portion within 1 year -4,055,110.96 -6,800,760.49
Total 16,101,348.60 28,439,299.25
Current portion within 1 year of retirement benefits payable is included in payroll payable.
(27) Provisions
Item 31 December 2016 31 December 2015 Causes
Quality guarantee deposits 1,727,340.89 9,981,021.44
12
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 1,727,340.89 9,981,021.44
(28) Deferred income
Item 31 December 2015 Addition Reduction 31 December 2016 Causes
Government grants 3,395,533.29 - 453,200.04 2,942,333.25 Government grants
Total 3,395,533.29 - 453,200.04 2,942,333.25
Projects involved in government grants:
31 December Amount recognised as Other 31 December Related to
Government Grants Project Addition
2015 non-operating income changes 2016 assets/ income
Hefei Midea automation
Related to
development of washing 3,033,333.29 - 350,000.04 - 2,683,333.25
assets
machine project
Jiangsu modern service Related to
185,600.00 - 52,800.00 - 132,800.00
development special fund assets
Subsidy for power substation Related to
176,600.00 - 50,400.00 - 126,200.00
renovation assets
Total 3,395,533.29 - 453,200.04 - 2,942,333.25
(29) Share capital
Increase/decrease (+/-)
31 December Shares 31 December
New shares
2015 Bonus shares transferred from Others Subtotal 2016
issued
capital reverse
Total share
632,487,764.00 - - - - - 632,487,764.00
capital
(30) Capital surplus
Item 31 December 2015 Increase Decrease 31 December 2016
Share premium 1,055,182,718.57 - - 1,055,182,718.57
Other capital surplus 108,832,229.28 34,772,462.28 -7,297,277.12 136,307,414.44
-Share options (a) 66,599,778.25 34,772,462.28 - 101,372,240.53
-Others (b) 42,232,451.03 - -7,297,277.12 34,935,173.91
12
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 1,164,014,947.85 34,772,462.28 -7,297,277.12 1,191,490,133.01
Notes：
(a) In 2016, RMB 34,772,462.28(2015: RMB 22,544,356.36) increase in capital surplus arises from the execution
of share options incentive plan.
(b) In 2016, The Company acquired the minority interest of its subsidiary, Wuxi Little Swan General Electric
Appliances Co. , Ltd., resulting in the decrease of capital surplus of RMB7,297,277.12.
(31) Other comprehensive income
Increase/decrease in the year
Amount for the Less: previously Less: Income Attributable
Attributable
year before tax recognized in tax expense
to the
to the
other
31 December 31 December
Item comprehensive minority
2015 Company 2016
income interest after
after tax
transferred to
tax
profit or loss
this year
Items that may be
subsequently
34,813,284.64 104,162,415.31 -55,675,560.00 -7,270,066.71 35,944,239.97 5,272,548.63 70,757,524.61
reclassified into
profits or losses
-change in
fair value of
available-for-sale 37,033,422.18 104,142,671.24 -55,675,560.00 -7,270,066.71 35,924,495.90 5,272,548.63 72,957,918.08
financial assets
-currency translation
-2,220,137.54 19,744.07 - - 19,744.07 - -2,200,393.47
differences
Total 34,813,284.64 104,162,415.31 -55,675,560.00 -7,270,066.71 35,944,239.97 5,272,548.63 70,757,524.61
Increase/decrease in the year
Amount for the Less: previously Less: Income Attributable
Attributable
year before tax recognized in tax expense
31 December to the 31 December
Item to the
2014 other 2015
comprehensive minority
Company
income interest after
after tax
transferred to
12
5
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
profit or loss tax
this year
Items that may be
subsequently
-3,449,689.57 56,905,112.03 - -8,351,334.00 38,262,974.2110,290,803.82 34,813,284.64
reclassified into
profits or losses
-change in
fair value of
- 55,675,560.00 - -8,351,334.00 37,033,422.18 10,290,803.82 37,033,422.18
available-for-sale
financial assets
-currency translation
-3,449,689.57 1,229,552.03 - - 1,229,552.03 - -2,220,137.54
differences
Total -3,449,689.57 56,905,112.03 - -8,351,334.00 38,262,974.21 10,290,803.82 34,813,284.64
(32) Surplus reserves
Item 31 December 2015 Increase Decrease 31 December 2016
Statutory surplus reserves 332,594,722.29 - - 332,594,722.29
In accordance with the Company Law of the PRC, the Company‘s Articles of Association, 10% of net profit
should be made to the statutory surplus reserve, after offsetting accumulated losses from prior years, unless the
accumulated statutory surplus reserve reaches 50% of the share capital. Statutory surplus reserve can be used to
make up losses or to increase share capital. At the end of 2016, there is no appropriation to the statutory surplus
reserve as the Company‘s accumulated statutory surplus reserve has already reached 50% of the share capital.
(33) Retained Earnings
Item Year ended 31 December 2016 Year ended 31 December 2015
31 December 2015 2,960,955,454.36 2,326,392,979.58
Add: net profit attributable to the shareholders of
1,175,054,922.85 919,181,968.58
the Company
Less: statutory surplus reserve - -
Dividends to ordinary shareholders -379,492,658.40 -284,619,493.80
31 December 2016 3,756,517,718.81 2,960,955,454.36
Pursuant to the resolution of general meeting of shareholders on 7 April 2016, cash dividends of RMB
379,492,658.40 (RMB 0.6 per share) was paid based on the issued shares of 632,487,764.
12
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Pursuant to the resolution of board of directors on 07 March 2017, cash dividends of RMB 474,365,823.00 (RMB
0.75 per share) was paid based on the issued shares of 632,487,764.
During the year ended 31 December 2016, statutory surplus reserve of RMB 22,090,679.85 was made from
retained earnings of the year ended 31 December 2016 of the Company‘s subsidiary Hefei Midea Washing
Machine Co., Ltd. (2015: RMB 19,748,700.45)
(34) Sales and cost of sales
Year ended 31 December 2016 Year ended 31 December 2015
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 14,761,654,334.87 10,775,398,510.01 11,929,121,727.57 8,713,461,567.66
Other operations 1,573,260,166.82 1,335,814,776.27 1,202,505,204.87 932,929,256.70
Total 16,334,914,501.69 12,111,213,286.28 13,131,626,932.44 9,646,390,824.36
Other operating income and expenses
Item Year ended 31 December 2016 Year ended 31 December 2015
Other operating Other operating Other operating Other operating
income expenses income expenses
Sales of materials 1,523,956,580.61 1,321,614,639.82 1,168,168,201.64 928,355,789.30
Others 49,303,586.21 14,200,136.45 34,337,003.23 4,573,467.40
Total 1,573,260,166.82 1,335,814,776.27 1,202,505,204.87 932,929,256.70
(35) Taxes and surcharges
Item Year ended 31 December 2016 Year ended 31 December 2015
Civil infrastructure maintenance and
construction fee 47,043,929.59 36,866,172.60
Education fee 36,099,067.67 28,980,795.86
Other 16,061,441.32 914,707.02
Total 99,204,438.58 66,761,675.48
(36) Selling expenses
Item Year ended 31 December 2016 Year ended 31 December 2015
Selling expenses 2,325,645,712.65 1,957,833,768.25
12
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
In 2016 , selling expenses maily include promotion expenses, transportation and storage expenses, employee
wages and benefits, maintenance and installation expenses and after-sales service expenses, which accounts for
above 90% of the total selling expenses (2015: above 90%).
(37) Administrative expenses
Item Year ended 31 December 2016 Year ended 31 December 2015
Administrative expenses 505,321,107.14 539,747,209.80
In 2016 , administrative expenses maily include employee wages and benefits, taxation and depreciation and
amortization costs, which accounts for above 90% of the total administrative expenses.
(38) Finance income - net
Item Year ended 31 December 2016 Year ended 31 December 2015
Interest expenses 13,763,829.67 9,536,939.00
Interest income -123,093,414.43 -83,981,673.66
Exchange gains -57,584,688.79 -40,188,776.26
Other financial expenses 12,088,525.34 4,520,659.01
Total -154,825,748.21 -110,112,851.91
(39) Asset impairment losses
Item Year ended 31 December 2016 Year ended 31 December 2015
Provision for bad debts 30,841,029.30 -2,816,335.36
Provision for inventory 61,370,935.22 23,886,048.29
Provision for fixed assets 2,357,686.75 1,382,222.92
Total 94,569,651.27 22,451,935.85
(40) Investment Income
Item Year ended 31 December 2016 Year ended 31 December 2015
Income from disposal of available-for-sale financial assets 169,302,270.03 201,658,430.62
Income from return of available-for-sale financial assets 30,936,990.68 6,050.00
Others - 85,130.22
Total 200,239,260.71 201,749,610.84
There is no significant restriction on the remittance of investment income to the Company and its subsidiaries
12
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(41) Non-operating income
Item Year ended 31 December 2016 Year ended 31 December 2015 Non-operating items
Gains on disposal of
1,008,085.77 444,371.81 1,008,085.77
non-current assets
Includes: Gains on disposal of
1,008,085.77 444,371.81 1,008,085.77
fixed assets
Government grants 33,024,499.34 31,893,010.09 13,872,569.26
Others 4,942,815.63 31,050,278.99 4,942,815.63
Total 38,975,400.74 63,387,660.89 19,823,470.66
Government grants list:
Whether Year ended Year ended
profit or Whether 31 December 31 December Related to
losses are special 2016 2015 assets /
Item Granter Causes Nature
affected by subsidie Related to
the grant in s income
current year
The subsidy is
acquired for engaging
VAT Wuxi New in specified industries
Related to
Rebate on District Taxation Subsidy encouraged and No No 19,151,930.08 16,273,049.89
income
collection Bureau supported by the
country in accordance
with national policies.
The subsidy is
Wuxi Municipal
Subsidies acquired for engaging
Bureau of
for export in specified industries
Commerce and Related to
credit Subsidy encouraged and No No 1,100,319.00 2,065,800.00
Wuxi Municipal income
insurance supported by the
Bureau of
premiums country in accordance
Finance
with national policies.
Wuxi economic
Related to
and information
Others Reward No No 12,772,250.26 13,554,160.20 income or
technology
assets
commission, etc.
Total 33,024,499.34 31,893,010.09
12
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(42) Non-operating expenses
Item Year ended 31 December 2016 Year ended 31 December 2015 Non-routine items
Losses on disposal of
2,841,820.22 724,567.38 2,841,820.22
non-current assets
Includes: Losses on disposal of
2,841,820.22 724,567.38 2,841,820.22
fixed assets
Refund of Energy efficiency
- 36,428,856.99 -
rebate
Others 5,731,866.22 11,116,600.04 654,717.85
Total 8,573,686.44 48,270,024.41 3,496,538.07
(43) Income tax expenses
(a) Income tax expenses
Item Year ended 31 December 2016 Year ended 31 December 2015
Current income tax 296,919,642.14 197,324,795.33
Deferred income tax - 55,267,875.03 -25,027,963.55
Total 241,651,767.11 172,296,831.78
(b) Reconciliation of tax payable
Year ended Year ended
Item
31 December 2016 31 December 2015
Profit before tax 1,584,427,028.99 1,225,421,617.93
Income tax calculated at applicable tax rates 237,664,054.35 183,813,242.69
Adjusted income tax of prior year 5,459,687.46 -10,782,157.42
Non- deductable costs, expenses and losses 5,157,878.49 4,089,000.62
Influence of deductible temporary difference or deductible losses of
deferred income tax assets derecognized in current year 2,036,590.76 2,394,245.89
Super deduction for development cost -8,666,443.95 -7,217,500.00
Income tax expense 241,651,767.11 172,296,831.78
13
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(44) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the consolidated net profit attributable to shareholders of the
Company by the weighted average number of ordinary shares in issue:
Year ended Year ended
Item
31 December 2016 31 December 2015
Consolidated net profit attributable to shareholders of the Company 1,175,054,922.85 919,181,968.58
Weighted average number of ordinary shares in issue 632,487,764.00 632,487,764.00
Basic earnings per share 1.86 1.45
(b) Diluted earnings per share
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary shareholders of the
Company adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of
ordinary shares in issue. There were no dilutive potential ordinary shares in 2016 (2015: nil). Therefore, diluted
earnings per share equal to basic earnings per share.
(45) Notes to consolidated cash flow statement
(a) Cash received relating to other operating activities
Item Year ended 31 December 2016 Year ended 31 December 2015
Interest income 48,087,130.05 12,858,360.87
Government grants 13,419,369.22 15,619,960.20
Others 5,327,431.15 28,209,932.80
Total 66,833,930.42 56,688,253.87
(b) Cash paid relating to other operating activities
During the year ended 31 December 2016, cash paid relating to other operating activities amounted to RMB
397,536,601.21, was other administrative expenses and selling expenses excluding payroll and taxes (2015:
RMB1,753,626,014.04).
13
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Cash received relating to other investing activities
Item Year ended 31 December 2016 Year ended 31 December 2015
Interest income of structured deposits 71,183,080.05 42,268,968.89
(46) Supplementary information of cash flow statements
(a) Supplementary information of cash flow statements
Year ended 31 December 2016 Year ended 31 December 2015
Reconciliation of net profit to cash flows from operating
activities:
Net profit 1,342,775,261.88 1,053,124,786.15
Add：Provision for asset impairment 94,569,651.27 22,451,935.85
Depreciation of fixed assets and amortization of
122,429,528.37 119,394,344.10
investment properties
Amortization of intangible assets 5,238,138.88 5,238,952.67
Amortization of long-term prepaid expenses 2,384,206.20 3,143,625.56
Losses on disposal of fixed assets, intangible assets and
1,833,734.45 280,195.57
other long-term assets
Financial income - 80,745,581.81 -75,219,066.77
Investment income -200,239,260.71 -201,749,610.84
Increase in deferred income tax assets - 55,267,875.03 -25,027,963.55
Amortization of deffered incomes -453,200.04 -453,200.04
Increase of inventory -1,040,795,912.39 -163,682,022.56
Decrease in operating receivables 127,720,638.07 1,734,355,028.92
Increase in operating payables 3,540,292,870.02 1,102,940,765.66
Share-based payments 36,330,588.22 23,897,698.08
Net cash flows from operating activities 3,896,072,787.38 3,598,695,468.80
2．Significant investing and financing activities that do not
involve cash receipts and payments
3．Not increase in cash and cash equivalents :
Cash at the end of the year 4,171,689,917.21 2,792,685,328.69
Less: Cash at the beginning of the year 2,792,685,328.69 1,516,739,804.86
Net increase in cash and cash equivalents 1,379,004,588.52 1,275,945,523.83
13
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Cash and cash equivalents
31 December 2016 31 December 2015
Cash 4,171,689,917.21 2,792,685,328.69
Including Cash in hand - -
Cash at bank 4,171,689,917.21 2,792,685,328.69
Ending balance of cash 4,171,689,917.21 2,792,685,328.69
(47) Foreign currency monetary items
(a) Foreign currency monetary items
31 December 2016
Item Foreign currency balance Exchange rate RMB balance
Cash at bank & in hand
-USD 123,572,720.03 6.9370 857,223,958.85
-EUR 5,609,814.13 7.3068 40,989,789.89
Receivables
-USD 77,586,438.35 6.9370 538,217,122.83
-EUR 4,075,798.56 7.3068 29,781,044.92
Payables
-USD 7,388,885.06 6.9370 51,256,695.66
-EUR 106,784.36 7.3068 780,251.96
-KRW 5,000,000.00 0.0058 28,785.00
(b) Explanation of oversea operating entities, including important oversea operating entities, should disclose the
principal places of business, the bookkeeping base currency and the reason of selection, and the causes if the
bookkeeping base currency changes.
□Applicable √ Not applicable
V. Changes in consolidation scope
In 2016, there is no change in the Group‘s Consolidation scope.
13
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
VI. Equity interests in other entities
(1) Equity interests in subsidiaries
(a) Components of the Company and its subsidiaries
Place of Place of Principle % of ownership
Name business registration activities interest Acquired by
Directly Indirectly
Wuxi Little Swan General Electric Manufacture Establishmenr or
Appliances Co. , Ltd. Wuxi Wuxi 100.00% Investment
Wuxi Filin Electronics Co. , Ltd. Wuxi Wuxi Manufacture 73.00% Establishmenr or
Investment
Jiangsu Little Swan Marketing and Sales Wuxi Wuxi Marketing 99.54% 0.09% Establishmenr or
Co. , Ltd. Investment
Wuxi Little Swan Import & Export Co. , Import and Establishmenr or
Wuxi Wuxi 88.46%
Ltd. export Investment
Little Swan International (Singapore) Co., Establishmenr or
Singapore Singapore Investing 100.00%
Ltd. Investment
Business merger
Little Swan (Jing Zhou) Sanjin Electronic
Jingzhou Jingzhou Manufacture 100.00% under common
Appliances Limited
control
Business merger
Hefei Midea Washing Machine Co., Ltd. Hefei Hefei Manufacture 69.47% under common
control
In 2016, the Company entered into an agreement with General Electric (China) Co., Ltd., who transfered its 30%
of equity interests in Wuxi Little Swan General Electric Appliances Co., Ltd to the Company, about USD
10,000,000. At 31 December 2016, this transfer completed and Wuxi Little Swan General Electric Appliances Co.,
Ltd became a wholly owned subsidiary of the Company. The transaction reduced minority interest about
62,164,722.88 and reduced capital surplus 7,297,277.12.
(b) Subsidiaries with significant minority interests
% of shares held by P&L attributable Dividends declaired to Minority interest at
minority shareholders tominority minority shareholders 31 December 2016
Name shareholders
Wuxi Filin Electronics Co. , Ltd. 27.00% 60,279,451.02 - 200,201,688.97
Hefei Midea Washing Machine Co., Ltd. 30.53% 97,081,971.47 - 775,045,515.71
13
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) The main financial information of significant not wholly owned subsidiary
Name 31 December 2016 31 December 2015
Non-current Current Non-current Non-current Current Non-current
Current assets assets Total assets liabilities liabilities Total liabilities Current assets assets Total assets liabilities liabilities Total liabilities
Wuxi Filin
Electronics
Co. , Ltd. 1,203,071,028.74 51,610,150.79 1,254,681,179.53 512,934,442.62 259,000.00 513,193,442.62 630,040,449.62 56,417,457.81 686,457,907.43 168,388,420.57 362,200.00 168,750,620.57
Hefei Midea
Washing
Machine
Limited. 6,955,889,821.64 648,846,122.85 7,604,735,944.49 5,049,130,635.42 16,969,489.50 5,066,100,124.92 4,899,597,642.19 660,802,382.62 5,560,400,024.81 3,323,567,046.22 36,569,848.57 3,360,136,894.79
Year ended 31 December 2016 Year ended 31 December 2015
Name
Total comprehensive Net cash flow from Total comprehensive Net cash flow from
Sales Net profit income operating activites Sales Net profit income operating activites
Wuxi Filin Electronics Co. , Ltd.
904,940,364.35 223,257,225.99 223,257,225.99 30,800,930.14 597,332,804.55 149,474,951.17 149,474,951.17 -89,990,112.02
Hefei Midea Washing Machine
Limited. 7,259,961,899.44 317,988,769.96 334,100,184.20 1,429,556,107.23 6,165,350,114.71 284,276,672.73 317,518,924.93 1,395,138,587.97
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2) Equity interest in associates and joint ventures
□Applicable √ Not applicable
VII. Segment reporting
Sales, expenses, assets and liabilities of the Company and its subsidiaries are primarily attributable to
manufacturing and sales of washing machines and related products. No segment information of the Group is
presented considering the internal organization and management structure, the system of internal financial
reporting to key management personnel, and similar business nature among various subsidiaries in the Group.
The domestic and overseas sales transaction and non-current assets excluding financial assets and deferred tax
asset are as follows:
(1) Sales transactions to third parties
31 December 2016 31 December 2015
China 13,022,118,060.74 10,440,519,133.71
Other countries 3,312,796,440.95 2,691,107,798.73
Total 16,334,914,501.69 13,131,626,932.44
(2) Non-current assets
31 December 2016 31 December 2015
China 1,258,041,184.47 1,323,094,433.43
Other countries - -
Total 1,258,041,184.47 1,323,094,433.43
VIII. Risk related to financial instruments
The Company and its subsidiaries' activities are exposed to a variety of financial risks: market risk (primarily
foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company and its subsidiaries'
overall risk management program focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Company and its subsidiaries' financial performance.
13
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(1) Market risk
(a) Foreign exchange risk
The Company and its subsidiaries' major operations are carried out in Mainland China and majority of its
transactions are denominated in RMB. The Company and its subsidiaries are exposed to foreign exchange risk
arising from assets and liabilities nominated in foreign currencies, primarily in USD. Headquarter of financial
department is responsible for monitoring foreign currency transactions and the scale of foreign currency assets
and liabilities of the Company and its subsidiaries, to minimize the foreign exchange risk. Therefore, the
Company and its subsidiaries may sign forward foreigh exchange contract or currency swap contract to avoid
foreign exchange risk. In 2015 and 2014, the Company and its subsidiaries did not use any forward contracts or
hedging instruments to mitigate the foreign exchange risk.
The following table presents the structure analysis of the Company and its subsidiaries‘ financial assets and
financial liabilities by currencies as at 31 December 2015 and 31 December 2014:
Item 31 December 2016
USD Other Total
Financial assets denominated in foreign currency -
Cash at bank and in hand 857,223,958.85 40,989,789.89 898,213,748.74
Receivables 538,217,122.83 29,781,044.92 567,998,167.75
Total 1,395,441,081.68 70,770,834.81 1,466,211,916.49
Financial liabilities denominated in foreign currency -
Payables 51,256,695.66 809,036.96 52,065,732.62
Item 31 December 2015
USD Other Total
Financial assets denominated in foreign currency -
Cash at bank and in hand 299,468,993.14 5,111,988.93 304,580,982.07
Receivables 665,033,732.65 4,291,192.21 669,324,924.86
Total 964,502,725.79 9,403,181.14 973,905,906.93
Financial liabilities denominated in foreign currency -
Payables 39,699,749.59 - 39,699,749.59
As at 31 December 2016, if the RMB had strengthened/ weakened by 7 % against the USD while all other
variables had been held constant, the Company and its subsidiaries‘ net profit for the year would have been
approximately RMB 79,980,000 (as at 31 December 2015: approximately RMB 55,026,000) lower/higher for
13
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
various financial assets and liabilities denominated in USD.
(b) Interest rate risk
As at 31 December 2016 and 31 December 2015, there is no any short-term or long-term interest bearing
borrowings issued at floating rates in the Company and its subsidiaries. The company and its subsidiaries expect
that there is no significant interest rate risk.
(2) Credit risk
Credit risk is managed on a group basis. Credit risk mainly arises from cash at bank, accounts receivable,
other receivables, notes receivable, other current assets-structured deposits and financial products, etc.
The Company and its subsidiaries expect that there is no significant credit risk associated with cash at bank
and structured deposits since they are deposited at state-owned banks and other medium or large size listed banks.
Management does not expect that there will be any significant losses from non-performance by these
counterparties.
The Company and its subsidiaries authorized commercial bank, trust company, asset management company
and other financial agencies to conduct short-term investment finance, such as bank financial products, trust plan
of trust company and assets management plan of assets management company, whose investment orientations are
mainly on financial instruments with high market credit rating among banks in China as well as fine liquidity and
trust product assets management plan with estimated earnings, including but not limited to national debt, financial
debt, central bank bill, bond repurchase and corporate bonds, short-term financial bills, etc. and commercial
bank‘s financial products, which have low risk, stable return and an investment period within one year. The
Company and its subsidiaries' idle funds which are authorized to finance won‘t be invested in stock and its
derivative products, securities investment funds, entrusted financial products aimed at security investment and
other investment related to securities.
In addition, the Company and its subsidiaries have policies to limit the credit exposure on accounts
receivable, other receivables and notes receivable. The Company and its subsidiaries assesse the credit quality of
and sets credit limits on its customers by taking into account their financial position, the availability of guarantee
from third parties, their credit history and other factors such as current market conditions. The credit history of the
customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Company
13
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
and its subsidiaries will use written payment reminders, or shorten or cancel credit periods, to ensure the overall
credit risk of the Company and its subsidiaries is limited to a controllable extent. There are no significant expired
receivables at 31 December 2016 (2015: Nil).
(3) Liquidity risk
Cash flow forecasting is performed by the Company and its subsidiaries and aggregated by the Group‘s
finance department in its headquarters. The Group‘s finance department at its headquarters monitors rolling
forecasts of the Company and its subsidiaries‘ short-term and long-term liquidity requirements to ensure it has
sufficient cash and securities that are readily convertible to cash to meet operational needs.
The financial liabilities of the Company and its subsidiaries at the balance sheet date are analysed by their
maturity date below at their undiscounted contractual cash flows :
31 December 2016
Item
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings 185,237,615.37 - - - 185,237,615.37
Notes payable
2,620,549,815.47 - - -
2,620,549,815.47
Accounts payable
3,335,089,672.06 - - -
3,335,089,672.06
Dividends payable 7,150,684.06 - - - 7,150,684.06
Other current liabilities 1,844,413,154.26 - - - 1,844,413,154.26
Other payables 199,926,402.04 - - - 199,926,402.04
Provisions 1,727,340.89 1,727,340.89
Total 8,194,094,684.15 - - - 8,194,094,684.15
31 December 2015
Item
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Notes payable 1,953,065,274.06 - - - 1,953,065,274.06
Accounts payable 2,419,807,341.95 - - - 2,419,807,341.95
Dividends payable 5,400,652.06 - - - 5,400,652.06
Other current liabilities 653,242,331.76 - - - 653,242,331.76
Other payables 171,807,137.94 - - - 171,807,137.94
Total 5,203,322,737.77 - - - 5,203,322,737.77
13
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
IX. Fair value disclosure
(1) Closing balance of assets and liabilities measured at fair value
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value
hierarchy has the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the assets or liabilities that are not based on observable market data (that is,unobservable
inputs).
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in
the active market. The fair value of a financial instrument for which the market is not active is determined by
using a valuation technique. Valuation techniques include cash flow discount model and market comparable
company model. The input of valuation techniques mainly include risk free rate, expected exchange rate,
estimated annual yield,etc.
31 December 2016
Item
Level 1 Level 2 Level 3 Total
Assets measured at fair value
on a continuous basis
Available-for-sale financial
- - 5,994,142,671.24 5,994,142,671.24
assets-financial products
Assets measured at fair value
on a non-continuous basis
31 December 2015
Item
Level 1 Level 2 Level 3 Total
Assets measured at fair value
on a continuous basis
Available-for-sale financial
- - 3,052,675,560.00 3,052,675,560.00
assets-financial products
Assets measured at fair value
on a non-continuous basis
14
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2) Valuation technique and qualitative and quantitative information of significant parameter used by
instruments measured at fair value by Level 3 on a continuous and non-continuous basis
As at 31 December 2016, the Company and its subsidiaries‘ financial assets measured at fair value by Level
3 are financial product investments with floating income and unprotected principles. The fair value is determined
by the Company and its subsidiaries using valuation techniques.
(3) Reasons of conversion among levels and policies of determining conversion date of instruments
measured at fair value on a continuous basis
The Company and its subsidiaries consider the date of events leading the conversion between different levels
as the conversion recognizing date. In 2016, there was no conversion between Level 1 and Level 2.
(4) The movement of financial assets measured at fair value by Level 3
Item Financial product investments
1 January 2016 3,052,675,560.00
Purchase 8,171,000,000.00
Sale -5,278,000,000.00
Total gains in current year 48,467,111.24
attributable to profit or loss -55,675,560.00
attributable to other comprehensive income 104,142,671.24
31 December 2016 5,994,142,671.24
Changes in unrealised gains or losses included in profit or loss -
for the current year with respect to assets still held as at 31
December 2016
Gain or loss on changes in fair value -
Item Financial product investments
1 January 2015 1,900,100,000.00
Purchase 6,042,300,000.00
Sale -5,144,315,650.60
Total gains in current year 254,591,210.60
attributable to profit or loss 198,915,650.60
attributable to other comprehensive income 55,675,560.00
14
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 3,052,675,560.00
Changes in unrealised gains or losses included in profit or loss
for the current year with respect to assets still held as at 31
December 2015 -
Gain or loss on changes in fair value -
The relevant information of financial assets measured at fair value by Level 3 are below:
Relationship Observable/
Fair value at 31 Valuation Non-observable
Item Range with fair
December 2016 technique unobservable
Input value
Available-for-sale financial assets
Moves in the
Financial Discount Estimated unobservable
5,994,142,671.23 3.9%-5.5% same
products cash flow annual yield
direction
Relationship Observable/
Fair value at 31 Valuation Non-observable
Item Range with fair
December 2015 technique unobservable
Input value
Available-for-sale financial assets
Moves in the
Financial Discount Estimated unobservable
3,052,675,560.00 3.5%~6.7% same
products cash flow annual yield
direction
(5) Financial assets and liabilities not measured at fair value
Financial assets and liabilities measured at amortized cost mainly include: notes receivable, accounts
receivable, other current assets-structured deposits, other receivables, notes payable, accounts payable, other
payables and other current liabilities.
Available-for-sale financial assets measured in cost model are investments on shares of unlisted companies,
which have no quoted price in the active market and the range of reasonable estimation of their fair value is
relatively wide and probabilities used to determine the estimation cannot be ascertained reasonably. Therefore, the
fair values cannot be measured reliably.
The carrying amount of financial assets and liabilities not measured at fair value is a reasonable approximation of
their fair value at 31 December 2016 and 31 December 2015.
14
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
X. Capital management
The Company and its subsidiaries‘ objectives of managing capital policies are to safeguard the Company and
its subsidiaries‘ ability to continue operating, in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company and its subsidiaries may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of
gearing ratios.
Item 31 December 2016 31 December 2015
Gearing ratios 63.15% 58.21%
XI. Related parties and related party transactions
(1) Major shareholders of the Company
Place of Nature of business Registered Capital % of share % of voting
Name
registeration holding rights
Midea Group Foshan, Manufacture and sales of household appliances,
6,458,766,808.00 52.67% 52.67%
Co., Ltd. Guang Dong
motor and fittings, along with after-sale service, etc.
(2) Registered capital and changes in registered capital of the parent company
Name 31 December 2015 Increase Decrease 31 December 2016
Midea Group Co., Ltd. 4,266,264,092.00 2,192,502,716.00 - 6,458,766,808.00
(3) The percentage of shareholding and voting rights in the Company held by the parent
31 December 2016 31 December 2015
Name
% of share holding % of voting rights % of share holding % of voting right
Midea Group Co., Ltd. 52.67% 52.67% 52.67% 52.67%
14
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(4) Subsidiaries of the Company
For the detailed information of subsidiaries, please refer to Note IX.
(5) Associates and joint ventures of the Company
There is no associates or joint ventures of the company and its subsidiaries at 31 December 2016.
(6) Other related parties
name Relationship with the Company and its subsidiaries
Ningbo Midea United Supply Limited Controlled by controlling shareholders of the Company
Ningbo Meian Logistics Co., Ltd. Controlled by controlling shareholders of the Company
Ningbo Meimei Garden Appliance service Limited Controlled by controlling shareholders of the Company
Andhra Logistics Co., Ltd. Controlled by controlling shareholders of the Company
Midea E-business Limited Controlled by controlling shareholders of the Company
Zhejiang Meizhi Compressor Limited Controlled by controlling shareholders of the Company
Guangdong Midea Hicks Electronics Limited Controlled by controlling shareholders of the Company
Foshan Shunde Century Technology Limited Controlled by controlling shareholders of the Company
Midea Wisdom Household Technology Co., Ltd. Controlled by controlling shareholders of the Company
Hefei Hualing Co., Ltd. Controlled by controlling shareholders of the Company
Ningbo Andhra Logistics Limited Controlled by controlling shareholders of the Company
Wuhu Midea Household Appliances Manufacture Limited Controlled by controlling shareholders of the Company
Midea Appliance (Singapore)Trading Limited Controlled by controlling shareholders of the Company
MIDEA SCOTT & ENGLISH ELECTRONICS SDN BHD Controlled by controlling shareholders of the Company
Midea Household Equipmental Appliance(Vietnam) Limited Controlled by controlling shareholders of the Company
PT. MIDEA PLANET INDONESIA Controlled by controlling shareholders of the Company
Orient Household Appliances Ltd. Controlled by controlling shareholders of the Company
Hefei Midea Materials Supply Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Refrigeration Equipment Limited Controlled by controlling shareholders of the Company
Chongqing Midea Refrigeration Equipment Limited Controlled by controlling shareholders of the Company
Guangdong Midea Group Wuhu Refrigeration Equipment Co., Controlled by controlling shareholders of the Company
Ltd.
Hubei Midea Refrigerator Limited Controlled by controlling shareholders of the Company
14
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Hefei Midea Refrigerator Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Environment Equipment Limited Controlled by controlling shareholders of the Company
Midea Group Finance Co., Ltd. Controlled by controlling shareholders of the Company
Foshan Midea Clear Lake Water Purification Equipment Controlled by controlling shareholders of the Company
Manufacturing Co., Ltd.
Wuhu Welling Motor Sales Co., Ltd. Controlled by controlling shareholders of the Company
Huaian Weiling motor manufacture Limited Controlled by controlling shareholders of the Company
Midea Welling Motor Technology (Shanghai) Co., Ltd Controlled by controlling shareholders of the Company
Shenzhen Midea Payment Technology Co., Ltd Controlled by controlling shareholders of the Company
(7) (7) Related party transactions
(a) Sale/Purchase of goods and services received/offered
Purchase of goods and services received
If it exceeds Year ended
Year ended Approved amount
Related parties Nature of transaction the approved
31 December 2016 of transaction 31 December 2015
amount
Ningbo Midea United
Materials purchase
Supply Limited 1,082,899,440.77 1,256,410,256.00 No 642,317,854.48
Huaian Weiling motor
manufacture Limited / Electric engines
Wuhu Welling Motor Sales purchase
Co., Ltd. 909,387,012.40 1,029,911,026.00 No 625,887,185.38
Ningbo Meian Logistics
Co., Ltd./ Storage & logistics
Andhra Logistics Co., Ltd. 596,152,613.40 585,585,585.60 Yes 75,627,390.93
Ningbo Meimei Garden
After-sales service
Appliance service Limited 170,460,492.92 256,410,256.40 No -
Midea E-business Limited Promotion service 28,280,507.93 33,018,867.92 No 5,202,073.88
Zhejiang Meizhi Compressor &
Compressor Limited material purchase 5,879,190.09 12,820,512.82 No 5,265,435.21
14
5
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Guangdong Midea Hicks
Electronics Limited /
Chip & Wifi Modules
Ningbo Midea United purchase
Supply Limited 35,734,928.99 49,572,649.57 No -
Foshan Shunde Century
Mould purchase 632,478.62 -
Technology Limited
Midea Wisdom Household
Materials purchase 286,969.84 -
Technology Co., Ltd.
Hefei Hualing Co., Ltd. Materials purchase 2,222.22 -
Ningbo Andhra Logistics
Storage & logistics
Co., Ltd. - 307,619,269.27
Wuhu Midea Household
Appliances Manufacture Material purchase
Limited - 53,333.33
Total
2,829,715,857.18 3,223,729,154.31 1,661,972,542.48
The pricing policies of related party transactions are agreed price.
Sales of goods and services provided
Year ended If it exceeds Year ended
Approved amount
Related parties Nature of transaction the approved
31 December 2016 of transaction 31 December 2015
amount
Sales of washing
Midea Appliance
machines and
(Singapore)Trading Limited 2,454,180,175.61 3,020,500,000.00 No 1,955,298,317.81
materials
MIDEA SCOTT &
Sales of washing
ENGLISH ELECTRONICS
machines 54,647,993.33 98,000,000.00 No 41,335,737.51
SDN BHD
Midea Household
Equipmental Sales of washing
Appliance(Vietnam) machines
Limited 24,473,060.87 45,000,000.00 No 9,413,711.55
PT. MIDEA PLANET Sales of washing
INDONESIA machines 23,243,634.98 50,000,000.00 No 15,660,128.95
14
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Orient Household Sales of washing
Appliances Ltd. machines 19,228,098.22 25,000,000.00 No -
Ningbo Meimei Garden
Sales of materials 11,050,814.22 34,188,034.00 No -
Appliance service Limited
Ningbo Meian Logistics Sales of washing
Co., Ltd. machines 934,535.79 -
Ningbo Midea United
Sales of materials 176,304.62 -
Supply Limited
Hefei Midea Materials
Sales of materials 147,098.63 181,010.15
Supply Co., Ltd.
Guangdong Midea
Sales of washing
Consumer Electric
machines 108,102.56 -
Manufacturing Co., Ltd.
Guangdong Midea
Sales of washing
Refrigeration Equipment
machines 104,923.08 812,888.89
Limited
Sales of washing
Andhra Logistics Co., Ltd. 34,536.74 1,242,839.32
machines
Ningbo Andhra Logistics Sales of washing
Limited machines - 1,832,343.59
Chongqing Midea
Sales of washing
Refrigeration Equipment
machines - 400,615.38
Limited
Total 2,588,329,278.65 3,272,688,034.00 2,026,177,593.15
The pricing policies of related party transactions are agreed price.
(b) Lease
Rental income of Approved amount of If it exceeds the
Lessee Type of assets Rental income of 2015
2016 transaction approved amount
Hefei Hualing Co., Ltd. House
property 10,466,576.72 14,150,943.40 No 11,667,537.60
Andhra Logistics Co., Ltd. House
19,888.81 -
property
Total 10,486,465.53 14,150,943.40 11,667,537.60
14
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Asset Transfer
Approved If it exceeds Year ended
Related-party Year ended
Related parties amount of the approved 31 December
Transactions 31 December 2016
transaction amount 2015
Guangdong Midea Group Wuhu Trademark royalty 3,234,831.39 3,187,769.20
Refrigeration Equipment Co., charges
Ltd.
Charged by
Hubei Midea Refrigerator Trademark royalty 767,582.21 0.3% of net No 841,058.36
Limited charges sales
Midea Group Co., Ltd. Trademark royalty 13,389,505.52 9,960,480.61
charges
Hefei Midea Refrigerator Co., Equipments 14,848.68 -
Ltd. purchase
Guangdong Midea Environment Equipments - 49,640.99
Equipment Limited purchase
Midea Group Co., Ltd. Equipments - 40,984.50
purchase
Guangdong Midea Refrigeration Equipments - 11,564.05
Equipment Limited purchase
Ningbo Meimei Garden Equipments sales 3,437.82 -
Appliance service Limited
Andhra Logistics Co., Ltd. Equipments sales - 7,332.44
Guangdong Midea Refrigeration Equipments sales - 7,017.43
Equipment Limited
Total 17,410,205.62 14,105,847.58
(d) Remuneration of key management
Item Year ended 31 December 2016 Year ended 31 December 2015
Remuneration of key management 12,050,200.00 12,258,201.20
(e) Transaction with Midea Group Finance Co., Ltd.
As at 31 December 2016, the Company and its subsidiaries‘ Cash at bank deposited in Midea Group Finance Co.,
Ltd. amounted to RMB 1,974,034,532.35 (as at 31 December 2015: RMB 1,997,171,470.18). During the year
ended 31 December 2016, interest income of cash at bank mentioned above was RMB 6,734,059.25 (2015: RMB
14
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
4,876,260.99).
As at 31 December 2016, the Company and its subsidiaries‘ bank acceptance notes accepted by Midea Group
Finance Co., Ltd. Amounted to RMB 1,493,984,805.34 (as at 31 December 2015, RMB 1,963,652,880.92).
During the year ended 31 December 2016, commission charges of the bank acceptance notes mentioned above
amounted to RMB 2,118,620.23 (2015: RMB 4,876,260.99).
(8) Receivables from and payables to related parties
(a) Receivables from related parties
31 December 2016 31 December 2015
Name of item Related parties Bad debt Bad debt
Book value provision Book value provision
Accounts Midea Appliance (Singapore)Trading
receivable Limited 475,357,280.44 23,767,864.02 497,669,561.47 24,883,478.07
Accounts Orient Household Appliances Ltd.
receivable 13,679,187.05 683,959.35 - -
Accounts Midea Household Equipmental
receivable Appliance(Vietnam) Limited 13,183,502.52 659,175.13 5,998,410.85 299,920.54
Accounts PT. MIDEA PLANET INDONESIA
receivable 8,404,017.46 420,200.87 4,712,904.79 235,645.24
Accounts MIDEA SCOTT & ENGLISH
receivable ELECTRONICS SDN BHD 3,485,105.76 174,255.29 11,531,302.72 576,565.14
Accounts Ningbo Meian Logistics Co., Ltd.
receivable 43,086.00 2,154.30 - -
Accounts Ningbo Andhra Logistics Limited
receivable - - 344,351.37 17,217.57
Accounts Andhra Logistics Co., Ltd.
receivable - - 288,245.00 14,412.25
Total 514,152,179.23 25,707,608.96 520,544,776.20 26,027,238.81
Other Shenzhen Midea Payment Technology Co.,
10,835,423.12 541,771.16 - -
receivables Ltd
Other Guangdong Midea Group Wuhu 3,379,035.35 168,951.77
3,428,921.06 171,446.05
receivables Refrigeration Equipment Co., Ltd.
Other Hefei Hualing Co., Ltd. 854,915.88 42,745.79 2,516,870.13 125,843.51
14
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
receivables
Other 891,521.86 44,576.09
Hubei Midea Refrigerator Limited 813,636.76 40,681.84
receivables
Total 15,932,896.82 796,644.84 6,787,427.34 339,371.37
Prepayment Ningbo Midea United Supply Limited 10,121,553.93 - - -
Prepayment Midea E-business Limited 1,549,712.32 - 1,072,593.00 -
Foshan Midea Clear Lake Water
Prepayment Purification Equipment Manufacturing Co., 75,816.00 - - -
Ltd.
Foshan Shunde Century Technology
Prepayment 48,100.00 - - -
Limited
Total 11,795,182.25 - 1,072,593.00 -
(b) Payables to related parties
Name of item Related parties 31 December 2016 31 December 2015
Accounts payable Wuhu Welling Motor Sales Co., Ltd. 201,074,837.49 -
Accounts payable Ningbo Midea United Supply Limited 110,265,994.59 73,289,057.95
Accounts payable Zhejiang Meizhi Compressor Limited 3,330,792.14 1,445,079.96
Accounts payable Guangdong Midea Hicks Electronics
1,305,066.18 -
Limited
Accounts payable Ningbo Meimei Garden Appliance service
499,870.00 39,107,819.41
Limited
Accounts payable Huaian Weiling motor manufacture
390,637.80 117,984,701.58
Limited
Accounts payable Ningbo Meian Logistics Co., Ltd. 151,302.88 -
Accounts payable Andhra Logistics Co., Ltd. 52,603.40 -
Accounts payable Midea Wisdom Household Technology Co.,
- 1,421.02
Ltd.
Accounts payable Ningbo Andhra Logistics Limited 342,449.48 -
Total 317,413,553.96 231,828,079.92
Other payables Wuhu Midea Household Appliances -
1,288,644.49
Manufacture Limited
Other payables Guangdong Midea Refrigeration Equipment -
283,510.28
Limited
Other payables Midea Welling Motor Technology 275,223.94 -
15
0
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(Shanghai) Co., Ltd
Other payables Guangdong Midea Consumer Electric -
84,774.82
Manufacturing Co., Ltd.
Other payables Midea Group Co., Ltd. 43,400.00 -
Other payables Ningbo Meimei Garden Appliance service -
9,949.00
Limited
Total 1,985,502.53
Other current liabilities Midea Group Co., Ltd 14,192,875.85 15,536,878.06
XII. Share-based payment
(1) Summary
According to the authorisation of 3rd extraordinariy general meeting of Midea Group in 2016, 15th meeting
of the 2nd term of Board of Midea Group have passed the share option incentive plan (The 3rd Incentive Plan)
and agree to grant 127,290,000 share options to 929 objects on 28th June 2016. As at 31 December 2016, the
number of benefit employees involved in the 1st Incentive Planmentioned above is 36, and the number of share
options granted is 7,762,500.The number of benefit employees involved in the 2nd Incentive Plan is 42,and the
number of share options granted is 7,200,000. The number of benefit employees involved in the 3rd Incentive
Plan is 67, and the number of share options granted is 9,225,000.
(2) Impact of share-based payment transactions on financial position and financial performance.
The total stock option expenses recognised in 2016 were RMB 36,330,588.22 (2015: RMB 23,897,698.08).
As at 31 December 2016, the balance relating to the option incentive plan and provided for in capital surplus was
RMB 101,372,240.53 (31 December 2014: RMB 66,599,778.25).
XIII. Commitment and contingency
(1) Significant commitments
As at 31 December 2016, no significant commitments shall be disclosed.
15
1
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
XIV. Contingency
As at 31 December 2016, no significant contingency shall be disclosed.
XV. Events after balance sheet date
Profit distribution after balance sheet date
Amount
Proposed profits or dividends (a) 474,365,823.00
Authorized dividends 474,365,823.00
(a) According to the resolution of the Board on 7 March,2017, the Board propose to distribute RMB
474,365,823.00 and it has not been recognized as a liability in the financial statement ended 31 December
2016. (Note IV (29))
XVI. Notes to the material items in the Company financial statements
(1) Accounts receivable
(a) Accounts receivable classified by nature:
31 December 2016
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed 1,262,331,696.77 53.37% - - 1,262,331,696.77
individually
Debtors grouped by credit risk 1,103,076,716.02 46.63% 55,153,835.81 5.00% 1,047,922,880.21
Total 2,365,408,412.79 53.37% 55,153,835.81 2.33% 2,310,254,576.98
31 December 2015
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed 763,953,231.04 63.37% - - 763,953,231.04
individually
Debtors grouped by credit risk 441,524,088.26 36.63% 22,082,524.63 5.00% 419,441,563.63
15
2
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 1,205,477,319.30 100.00% 22,082,524.63 1.83% 1,183,394,794.67
Accounts receivable individually significant for which bad debt provision was assessed individually.
□Applicable √Not applicable
Accounts receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2016
Aging
Account receivable Bad debt provision % of proportion Book Value
Within 1 year 1,103,076,716.02 55,153,835.81 5.00% 1,047,922,880.21
31 December 2015
Aging
Account receivable Bad debt provision % of proportion Book Value
Within 1 year 441,397,683.85 22,069,884.19 5.00% 419,327,799.66
1 to 2 year 126,404.41 12,640.44 10.00% 113,763.97
Total 441,524,088.26 22,082,524.63 5.00% 419,441,563.63
As at 31 December 2016 and 2015, there were no material accounts receivable which were past due.
Accounts receivable adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Accounts receivable adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
(b) Accounts receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2016, the net movement of provision for accounts receivable was RMB
33,071,311.18 (2015: RMB 3,439,821.47). There were no provision or reverse of provision for individual
significant accounts receivable.
(c) Top 5 of accounts receivable by customers
name Amounts Bad debt provision % of total balance
Total amount of the top 5 accounts
2,083,485,915.68 41,198,198.12 88%
receivable by customers
15
3
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2) Other receivables
(a) Other receivables classified by nature:
31 December 2016
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed 75,755,041.50 81.69% 75,408,191.50 99.54% 346,850.00
individually
Debtors grouped by credit risk 16,981,991.47 18.31% 1,152,734.58 6.79% 15,829,256.89
Total 92,737,032.97 100.00% 76,560,926.08 82.56% 16,176,106.89
31 December 2015
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed 75,736,975.50 92.10% 75,331,167.42 99.46% 405,808.08
individually
Debtors grouped by credit risk 6,499,053.39 7.90% 553,851.30 8.52% 5,945,202.09
Total 82,236,028.89 100.00% 75,885,018.72 92.28% 6,351,010.17
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period：
√ Applicable □ Not applicable
31 December 2016
Other accounts receivable (unit)
Other accounts % of Reason of
Bad debt provision Book value
receivable proportion provision
Jiangsu Littleswan Marketing and -
74,296,538.55 74,296,538.55 100% Uncollectible
Sales Co.,Ltd.
Wuxi Little Swan Import & Export -
1,111,652.95 1,111,652.95 100% Uncollectible
Co. , Ltd
Total 75,408,191.50 75,408,191.50 -
31 December 2015
Other accounts receivable (unit)
Other accounts % of Reason of
Bad debt provision Book value
receivable proportion provision
Jiangsu Littleswan Marketing and 75,736,975.50 75,331,167.42 99.46% 405,808.08 Uncollectible
15
4
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Sales Co.,Ltd.
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
31 December 2016
Aging Other accounts Bad debt provision Withdrawal proportion Book Value
receivable
Within 1 year 15,644,811.47 782,240.58 5.00% 14,862,570.89
1 to 2 years 598,900.00 59,890.00 10.00% 539,010.00
2 to 3 years 292,680.00 87,804.00 30.00% 204,876.00
Above 3 years 445,600.00 222,800.00 50.00% 222,800.00
Total 16,981,991.47 1,152,734.58 6.79% 15,829,256.89
31 December 2015
Aging Other accounts Bad debt provision Withdrawal proportion Book Value
receivable
Within 1 year 5,271,957.76 263,597.88 5.00% 5,008,359.88
1 to 2 years 718,661.00 71,866.10 10.00% 646,794.90
2 to 3 years 179,150.00 53,745.00 30.00% 125,405.00
Above 3 years 329,284.63 164,642.32 50.00% 164,642.31
Total 6,499,053.39 553,851.30 8.52% 5,945,202.09
As at 31 December 2016 and 31 December 2015, there were no material ohter receivable which were past due.
Other receivables adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Other receivables adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
(b) Other receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2016, the net movement of provision for other receivable was RMB
675,907.35 (2015: RMB 895,274.66). There were no provision or reverse of provision for individual significant
other receivable
15
5
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Other receivables written-off during the reporting period
There were no other receivables written-off during the reporting period
(d) Other receivables classified by nature
Nature of other receivables 31 December 2016 31 December 2015
Current accounts with subsidiaries 75,755,041.50 75,736,975.50
Deposits 1,477,683.35 878,058.00
Loans to employees 1,719,177.08 3,033,956.98
Others 13,785,131.04 2,587,038.41
Less：Bad debt provision -76,560,926.08 -75,885,018.72
Total 16,176,106.89 6,351,010.17
(e) The top five other receivables classified by debtor at period-end
Nature of other 31 December % of total other Bad debt provision
Name of the entity Aging
receivables 2016 receivables 31 December 2016
Jiangsu Littleswan Marketing and Inter-company Between 4
Sales Co.,Ltd. receivables 74,296,538.56 and 5 years 80.12% 74,296,538.55
Shenzhen Midea Payment Advance & temporaty Within 1
Technology Co., Ltd payments 6,945,518.53 year 7.49% 347,275.93
Guangdong Midea Group Wuhu Trademark royalty Within 1
Refrigeration Equipment Co., Ltd. charges 3,428,921.06 year 3.70% 171,446.05
Guangzhou Antaida Logistics Within 1
Long-term equity
Corporation 2,587,038.41 year 2.79% 129,351.92
investments Liquidation
Wuxi Little Swan Import & Inter-company Between 4
Export Co. , Ltd receivables 1,111,652.94 and 5 years 1.20% 1,111,652.95
Total 88,369,669.50 95.29% 76,056,265.40
(3) Long-term equity investments
31 December 2016 31 December 2015
Items
Carrying amount Impairment Book value Carrying amount Impairment Book value
15
6
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
provision provision
Subsidiaries 1,433,285,041.57 57,500,000.00 1,375,785,041.57 1,363,823,041.57 57,500,000.00 1,306,323,041.57
Investment in
total 1,433,285,041.57 57,500,000.00 1,375,785,041.57 1,363,823,041.57 57,500,000.00 1,306,323,041.57
(a) Investment in subsidiaries
Balance of
Balance at Balance at Impairment
Name of subsidiaries Addition Reduction impairment
1 January 2016 31 December 2016 provision
provision
Wuxi Little Swan Import & Export
57,500,000.00 - - 57,500,000.00 - 57,500,000.00
Co. , Ltd
Jiangsu Little Swan Marketing and
417,550,000.00 - - 417,550,000.00 - -
Sales Co. , Ltd.
Wuxi Filin Electronics Co. , Ltd. 25,660,308.10 - - 25,660,308.10 - -
Wuxi Little Swan General Electric
19,600,000.00 69,462,000.00 - 89,062,000.00 - -
Appliances Co. , Ltd.
Little Swan (Jing Zhou) Sanjin
11,869,431.12 - - 11,869,431.12 - -
Electronic Appliances Limited.
Little Swan International
681,050.00 - - 681,050.00 - -
(Singapore) Limited.
Hefei Midea Washing Machine
830,962,252.35 - - 830,962,252.35 - -
Limited.
Total 1,363,823,041.57 69,462,000.00 - 1,433,285,041.57 - 57,500,000.00
As at 31 December 2016, the Company provided credit guarantee for Hefei Midea Washing Machine Limited
amounted to RMB 193,143,310.84 (as at 31 December 2015: nil).
(4) Sales and cost of sales
Year ended 31 December 2016 Year ended 31 December 2015
Item
Income Cost of sales Income Cost of sales
Operating income 11,476,294,751.16 8,827,790,922.43 9,149,930,217.84 6,884,349,798.71
Other operating income 975,332,449.61 851,332,446.28 694,714,345.12 571,779,495.31
Total 12,451,627,200.77 9,679,123,368.71 9,844,644,562.96 7,456,129,294.02
Other operating income and expenses:
15
7
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Item Year ended 31 December 2016 Year ended 31 December 2015
Other operating
Other operating Other operating Other operating
income
expenses income expenses
Sale of materials 958,017,488.25 850,941,124.43 682,563,266.86 570,717,772.88
Others 17,314,961.36 391,321.85 12,151,078.26 1,061,722.43
Total 975,332,449.61 851,332,446.28 694,714,345.12 571,779,495.31
(5) Investment income
Item Year ended 31 December 2016 Year ended 31 December 2015
Income from disposal of available-for-sale financial assets 66,407,088.82 112,263,580.07
Investment income from holding available-for-sale equity
-
instrument 9,721,111.11
Long-term equity investment income measured at equity
- -255,029.37
method
Investment loss from disposal of long-term equity
-2,180,542.67
investment -
Income from disposal of financial assets measured at fair
193,218.65
value through profits or losses -
Total 76,128,199.93 110,021,226.68
There is no significant restriction on the remittance of investment income to the Company and its subsidiaries.
XVII. Supplementary information
(1) Non-recurring profits or losses
Item Year ended 31 December 2016 Year ended 31 December 2015
Net loss on disposal of non-current assets -1,833,734.45 -280,195.57
Government grants recognized in profits or losses for the 31,893,010.09
current period (exclude for those closely related to the 13,872,569.26
Company and its subsidiaries‘ operation and received at
national statutory standard and amount)
Gain or loss of debt restructuring - 2,679,264.25
Other non-operating income and losses other than items above 4,288,097.78 -8,815,676.21
Less: Effect of income tax - 2,455,096.12 -3,899,799.51
Effect of minority interest - 1,759,407.99 -5,783,501.47
15
8
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 12,112,428.48 15,793,101.58
Under requirements in Explanatory announcement No. 1 on information disclosure by companies offering
securities to the public – non-recurring profits or losses [2008] from CSRC, non-recurring profits or losses refer to
those arises from transactions and events that are not directly relevant to ordinary activities, or that are relevant to
ordinary activities, but are extraordinary and not expected to recur frequently that would have an influence on
users of financial statements making economic decisions on the financial performance and profitability of an
enterprise.
□ Applicable √ Not applicable
(2) Return on equity and earnings per share
Earnings per share
Weighted average return
Profit of the year Basic earnings per share Diluted earnings per share
on equity(%)
(RMB yuan per share) (RMB yuan per share)
Net profit attributable to ordinary shareholders of
21.14% 1.86 1.86
the Company
Net profit attributable to ordinary shareholders of
the Company, excluding non-recurring profits or
losses 20.92% 1.84 1.84
15
9
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Section XII Documents Available for Reference
I This Annual Report carrying the signature of the legal representative;
II The financial statements signed and sealed by the legal representative, the CFO and the accounting head for this
Report;
III The original Auditor‘s Report signed and sealed by the CPAs, as well as sealed by the CPAs firm; and
IV The originals of all the Company‘s documents and announcements which were disclosed on Securities Time
and Ta Kung Pao (HK) during this Reporting Period.
Wuxi Little Swan Company Limited
Legal representative: Fang Hongbo
March 9, 2017
16
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