GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Annual Report 2019
April 2020
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section I Important Notice, Table of Contents and Paraphrase
The Board of Directors, Board of Supervisors, all directors, supervisors and Senior
Management Personnel of the Company hereby guarantee that the contents are
authentic, accurate and complete, and there are no false records, misleading
representations or material omissions in the Annual Report, and shall take all the joint
and several legal responsibilities.
Dong Mingzhu, the Company's responsible person, Wang Jingdong, responsible
person in charge of accounting work and Liao Jianxiong, in-charge person of
accounting institution (accounting superintendent) hereby declare and warrant that
the financial report in the Report is authentic, accurate and complete.
All the directors attended the meeting of the Board of Directors in respect of
deliberation of the Report.
The forward-looking statements such as future plans and development strategies in the
Report do not constitute a substantive commitment of the Company to investors.
Investors and relevant persons should therefore be aware of risk factors attendant in
investment and understand the differences between plans, forecasts and commitments.
The Company's profit distribution proposal passed upon deliberation at the meeting of
the Board of Directors is set out as below: Based on the total stock capital of
6,015,730,878 of the Company, all directors were distributed a cash dividend of RMB
12 (tax included) per 10 stocks and given 0 bonus share (tax included). Public reserve
funds were not used for capitalization.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Table of Contents
Section I Important Notice, Table of Contents and Paraphrase .............................................................................. 1
Section II Company Profile and Main Financial Indices ....................................................................................... 4
Section III Corporate Business Overview ....................................................................................................... 10
Section IV Discussion and Analysis of Business Operation .................................................................................. 19
Section V Important Events ........................................................................................................................ 57
Section VI Changes in Stock Capital & Information of Shareholders .................................................................... 89
Section VII Related Information of Preferred Stock .......................................................................................... 94
Section VIII Related Information of Convertible Corporate Bonds ....................................................................... 95
Section IX Directors, Supervisors, Senior Management Personnel and Employees .................................................... 96
Section X Corporate Governance ............................................................................................................... 111
Section XI Related Information of Corporate Bonds ....................................................................................... 116
Section XII Financial Report ..................................................................................................................... 117
Section XIII References ........................................................................................................................... 278
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Paraphrase
Items Means Contents
Company, the Company, the enterprise,
Means GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES or GREE
GREE GROUP Means Zhuhai Gree Group Co., Ltd.
Zhuhai Mingjun Means Zhuhai Mingjun Investment Partnership (Limited Partnership)
Finance Company Means Zhuhai Gree Group Finance Company Limited
Jinghai Guaranteed Means Hebei Jinghai Guaranteed Investment Co., Ltd.
Yinlong Means Zhuhai Yinlong New Energy Co., Ltd.
CSRC Means China Securities Regulatory Commission
Report Period Means From 1 January, 2019 to 31 December, 2019
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section II Company Profile and Main Financial Indices
I. Company information
GREE ELECTRIC
Stock Abbreviation Stock Code 000651
APPLIANCES
Stock Exchange Shenzhen Stock Exchange
Name in Chinese 珠海格力电器股份有限公司
Name Abbreviation in Chinese 格力电器
Name in Foreign Language (if any) GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Name Abbreviation in Foreign Language
GREE
(if any)
Legal Representative Dong Mingzhu
Registered Address Jinji West Road, Qianshan, Zhuhai City, Guangdong Province
Post Code of Registered Address 519070
Office Address Jinji West Road, Qianshan, Zhuhai City, Guangdong Province
Post Code of Office Address 519070
Website http://www.gree.com.cn
Email gree@gree.com.cn
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Wang Jingdong Zhang Zhouhu,Yan Zhangxiang
Jinji West Road, Qianshan, Zhuhai City, Jinji West Road, Qianshan, Zhuhai City,
Address
Guangdong Province Guangdong Province
Tel 0756-8669232 0756-8669232
Fax 0756-8614998 0756-8614998
Email gree0651@cn.gree.com gree0651@cn.gree.com
III. Information disclosure and place of the report
Media designated by the Company for information China Securities Journal, Securities Times, Shanghai Securities News and
disclosure Securities Daily
Website specified by CSRC for release of the
http://www.cninfo.com.cn
Annual Report
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Place where the Annual Report is available for
Investment Management Department of the Company
inspection
IV. Alteration of registration
Organization code 91440400192548256N
Changes (if any) in the main business since listing
No change
of the Company
Changes (if any) in the controlling shareholders No change
V. Other related information
Accounting firm engaged by the Company
Name of the Accounting Firm Union Power Certified Public Accountants (Special General Partnership)
Office Address No. 169 Donghu Road, Wuchang District, Wuhan City
Names of Accountants as Signatories Gong Jingwei, Wu Zihao
Sponsor engaged by the Company to perform continuous supervision during the Report Period
√ Applicable □ Not applicable
Name of the
Name of the sponsor Office address of the sponsor recommended Continuous supervision period
representative
26F, CTS Tower, No.4011,
Huatai United Securities Co., Gu Chongxiang, Li
Shennan Boulevard, Futian From 26 July, 2019 to 25 July, 2020
Ltd. Shijing
District, Shenzhen
Financial adviser engaged by the Company to perform continuous supervision during the Report Period
□ Applicable √ Not applicable
VI. Main accounting data and financial indices
Whether the Company has retroactive adjustment or restatement of previous accounting data
□ Yes √ No
Unit: RMB Yuan
Increase/
2019 2018 Decrease over the 2017
previous year
Operating Revenue (Yuan) 198,153,027,540.35 198,123,177,056.84 0.02% 148,286,450,009.18
Net profit attributable to
shareholders of listed 24,696,641,368.84 26,202,787,681.42 -5.75% 22,400,484,001.26
Company (Yuan)
Net profit attributable to 24,171,511,911.32 25,580,865,501.38 -5.51% 21,170,184,740.88
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
shareholders of listed
Company less non-recurring
gains and losses (Yuan)
Net cash flow generated from
27,893,714,093.59 26,940,791,542.98 3.54% 16,338,082,774.25
operating activities (Yuan)
Basic earnings per share
4.11 4.36 -5.73% 3.72
(Yuan per Share)
Diluted earnings per
4.11 4.36 -5.73% 3.72
share(Yuan per Share)
Weighted average return on
25.72% 33.36% -7.64% 37.44%
net assets
Increase/
At the end of 2019 At the end of 2018 Decrease over the At the end of 2017
previous year
Total asset (Yuan) 282,972,157,415.28 251,234,157,276.81 12.63% 214,987,907,124.70
Net asset attributable to
shareholders of listed 110,153,573,282.67 91,327,095,069.10 20.61% 65,614,913,868.06
Company (Yuan)
VII. Accounting data differences under domestic and foreign accounting standards
1. Differences in net profit and net assets in the financial report disclosed under international accounting
standards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under international accounting standards and that
disclosed under domestic accounting standards during the Report Period.
2. Differences in net profit and net assets in the financial report disclosed under overseas accounting
standards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under overseas accounting standards and that
disclosed under domestic accounting standards during the Report Period.
VIII. Quarter-based main financial indicators
Unit: RMB Yuan
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Operating incomes 40,547,673,072.89 56,749,291,262.00 57,741,792,636.95 43,114,270,568.51
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net profit attributable to
5,671,869,041.09 8,078,325,047.80 8,367,302,278.13 2,579,145,001.82
shareholders of listed company
Net profit attributable to
shareholders of listed companies
5,113,678,278.15 8,279,748,411.85 8,172,069,543.75 2,606,015,677.57
after deduction of non-recurring
profit and loss
Net cash flows from operating
7,733,213,419.06 8,722,853,827.89 16,273,618,883.00 -4,835,972,036.36
activities
Whether major differences exist between the above financial indicators or their sum and those in the disclosed quarterly report and
semi-annual report
□ Yes √ No
IX. Non-recurring profit and loss items and amounts
√ Applicable □ Not applicable
Unit: RMB Yuan
Item Amount in 2019 Amount in 2018 Amount in 2017 Description
Gains and losses from
disposal of non-current For details, see Note
assets (including the -9,293,929.38 -23,064,935.35 -8,463,062.31 (VII) 57, Note (VII)
provision for asset 58 and Note (VII) 59
impairment write-off part)
Governmental subsidies
recorded into the current
gains and losses (excluding
the governmental subsidies
For details, see Note
closely relating to the
1,215,852,371.66 671,678,104.47 880,235,834.70 (VII) 52 and Note
business of the enterprise
(VII) 58
and enjoyed by a fixed
quota or a fixed amount in
accordance with the state
policies)
Capital occupation fee
collected from the
non-financial institution and 359,713.10 1,262,805.80 1,480,255.77
recorded into the current
gains and losses
All kinds of provisions for
impairment of assets
264,556.46
accrued due to force
majeure factors, e.g.,
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
suffering from natural
disasters
Net profits or losses of the
subsidiaries in the current
period from the beginning
of the period to the
combination date that are 184,503.98 -757,426.22
generated by business
combination involving
enterprises under common
control
Gains and losses caused by
fair value changes from the
holding of trading financial
assets, derivative financial
assets, trading financial
liabilities and derivative
financial liabilities, and
investment income obtained
from the disposal of trading
1,449,722.86 151,222,484.83 399,373,171.53
financial assets, derivative
financial assets, trading
financial liabilities,
derivative financial
liabilities and other debt
investments, except for the
effective hedging business
related to the Company's
normal business operations
Reversal of impairment
provision for the accounts
receivable and contract
2,320,229.26 4,225,536.19
assets for which an
independent impairment test
is conducted
Non-operating incomes and For details, see Note
expenditures other than the -530,486,147.03 32,323,207.44 18,316,586.90 (VII) 58 and Note
above items (VII) 59
Other profit and loss items
that conform to the
997,770.17 6,119,851.77 496,004.65
definition of non-recurring
profit and loss
Less: Influence amount of 147,189,032.83 170,139,883.37 55,182,008.00
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
income tax
Influence amount of
6,561,011.03 49,984,188.79 9,690,189.29
minority equity (after tax)
Total 525,129,457.52 621,922,180.04 1,230,299,260.38 --
Explanation should be given for non-recurring profit and loss items defined by the Company according to Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit and
Loss and for non-recurring profit and loss items which are listed in Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss and defined as recurring profit and loss items.
□ Applicable √ Not applicable
No non-recurring profit and loss items which are defined or listed in Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public -- Non-recurring Profit and Loss were defined by the Company as recurring profit
and loss items during the Report Period.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section III Corporate Business Overview
I. Major businesses engaged in during the Report Period
1. Major business and position in industry
Gree Electric Appliances, Inc. of Zhuhai is a diversified and technological global industrial group and has three
major brands: Gree, TOSOT and KINGHOME. Its business scope has been expanded to cover the fields of air
conditioning, home appliances, high-end equipment and communication equipment, including residential air
conditioners, commercial air conditioners, freezers and refrigeration equipment, air conditioners for nuclear power
projects, air conditioners for rail transit projects, and photovoltaic air conditioners in the air-conditioning field;
intelligent equipment, CNC machine tools, precision moulds, and precision casting equipment in the field of
high-end equipment; kitchen appliances, healthy appliances, environmental appliances, washing machines and
refrigerators in the field of home appliances; as well as Internet of Things devices, mobile phones, chips, and big
data in the field of communication equipment. Gree products are sold in more than 160 countries and regions,
providing more than 400 million users with satisfactory products and services, for the purpose of creating a better
life.
In 2019, Gree was listed in the Fortune 500 and ranked the 414th. Among the 129 Chinese enterprises on the list,
the return on equity (ROE) of Gree ranks the first; according to the data released by HVAC Information, Gree took
the lead in the central air conditioner market relying on a market share of 14.7% and has maintained the position
for eight consecutive years in the Chinese market; according to the market data of AVC, Gree's share in the offline
market of Chinese residential air conditioners ranked the first in 2019, with the retail sales accounting for 36.83%;
among the top 20 residential air conditioner models in offline retail sales, 12 are Gree products, accounting for
60%; according to the data of Nihon Keizai Shimbun, a world renowned economic media, in 2019, Gree ranked
No.1 in the field of residential air conditioners with the global market share of 20.6%.
Gree takes "building a globally advanced industrial group and making Gree a century-year world brand" as its
corporate vision, and "carrying forward the industrial spirit, pursuing perfect quality, providing professional
services and creating comfortable environment" as its mission. By adhering to the management philosophy that
"innovation never stops", Gree focuses on independent innovation and development, in order to grasp the pulse of
the times, build a world brand and create a development model with Chinese characteristics for Chinese
manufacturing enterprises.
2. Overview of industry development
(1) Field of household appliances
The Industry Analysis Report of Residential Air Conditioners in 2019 published by China Business Industry
Research Institute shows that, in 2019, the total output of industry increased by 1.21% year on year, the total sales
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
of the industry decreased by 0.74% year on year, the total export of the industry decreased by 0.82% year on year
and the total internal sales of the industry decreased by 0.69% year on year. In 2019, the total sales, export and
domestic sales of the industry decreased year on year and the whole air conditioner industry felt the pressure of
the market. On the other hand, according to the statistics of National Information Center for Household Appliance
Industry, the retail market share of top 3 brands in the offline air conditioner market increased from 73.6% in 2018
to 76.39%, and that of top 5 brands increased from 83.8% in 2018 to 85.74%. The influence of traditional
household appliance brands continued to rise, and the market share of domestic brands was further increased.
In the long run, as the upgrading process of resident consumption becomes accelerated, consumers put forward
higher requirements for brand recognition and product quality and higher standards for energy saving, comfort
and intelligent degree of air conditioners and show strong demand for high-quality life; as the policy of the new
national standards is implemented, the proportion of energy-saving products gradually increases. According to the
forecast of China National Institute of Standardization, after the new standards are implemented, the energy
efficiency standard of air conditioners will be increased by 14% in 2020 and by 30% in 2022 and the existing air
conditioners with low energy efficiency will be replaced by those air conditioners with high energy efficiency.
The household appliance market has entered the period in which the online and offline markets are promoted at
the same time and the scale of the online market increases continuously. According to the statistics of National
Information Center for Household Appliance Industry, in 2019, the online retail sales of the Chinese household
appliance industry was approximately RMB 310.8 billion, a year-on-year growth of 4.2%, and the market share
reached 38.7%; the offline retail sales was about RMB 492.4 billion, a year-on-year decrease of 5.8%, and the
market share reached 61.3%. The importance of the online market in Chinese consumer market is self-evident.
However, the offline market still has a comparative advantage. In the process in which old high-end products are
replaced by new high-end products, offline stores are more flexible. The deep combination of the online market
and offline market has always been the development direction of household appliance enterprises.
(2) High-end equipment field
The State Council issued "Made in China 2025" and "Development Plan for a New Generation of Artificial
Intelligence" in May 2015 and July 2017, respectively; the General Administration of Quality Supervision,
Inspection and Quarantine of the People's Republic of China, Standardization Administration of the People's
Republic of China and Ministry of Industry and Information Technology of the People's Republic of China jointly
issued the "Standardization and Quality Improvement Plan of the Equipment Manufacturing Industry" in 2016;
the Ministry of Industry and Information Technology issued the "High-End Intelligent Remanufacturing Action
Plan (2018-2020)" in October 2017. Under the support of policies, intelligent manufacturing equipment develops
quickly, the demand of the industry increases rapidly, the capacity increases rapidly, and industrial upgrading and
technological iteration become accelerated. Intelligent manufacturing has become the core of development for
China's manufacturing industry. According to the data of China Business Industry Research Institute, the global
market scale of intelligent manufacturing reached USD 868.7 billion in 2016 and China's intelligent
manufacturing accounts for about one fifth. In 2018, the scale exceeded USD 1 trillion. Based on the current
development and trend of global intelligent manufacturing, it is estimated that the global intelligent manufacturing
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
industry will maintain stable growth in the coming years.
Intelligent manufacturing has become a key factor in reshaping the industrial competitiveness in the world and
provides opportunities for development and transformation of countries. According to the Intelligent
Manufacturing Development Plan (2016-2020) issued by the Ministry of Industry and Information Technology,
the development foundation and supporting capacity of intelligent manufacturing will be significantly enhanced
and digital manufacturing will be basically realized in the key areas of traditional manufacturing industry in 2020;
the support system of intelligent manufacturing will be basically established, and intelligent transformation will be
initially realized for the key industries in 2025.
II. Significant changes in major assets
1. Significant changes in major assets
Major assets Significant changes
Year-on-year growth of 58.82%. See Note VII (11) of the financial report for the causes
Disbursement of loans and advances
of the change.
Year-on-year growth of 213.86%. This is mainly caused by the change in the fair value
Long-term equity investment of the equity of Wingtech Technology Co., Ltd. indirectly held by the Company through
"Zhuhai Ronglin Equity Investment Partnership (Limited Partnership)".
Year-on-year growth of 305.67%. This is mainly caused by the change in the fair value
Other equity instrument investments
of the equity investment of Wingtech Technology Co., Ltd.
Fixed assets Year-on-year growth of 4.00%. No significant change is made.
Intangible assets Year-on-year growth of 1.94%. No significant change is made.
Year-on-year growth of 46.10%. This is mainly caused by the increase of investment in
Construction in Progress
the infrastructure project of the current phase.
2. Major overseas assets
□ Applicable √ Not applicable
III. Core competence analysis
The mission drives creation of value and innovation makes the future of the world. In the background of the new
era, Gree has developed from the period in which it catches up with leading enterprises in innovation to a new
period in which it takes the lead in innovation and faces new opportunities and challenges. Gree adheres to the
principle of concentration, advocates the management policy of "be fair, be open, be dedicated", promotes the
code of conduct of "be truthful, work for real; be principled, work for good, be committed, work for success",
follows the "eight strict policies" for quality control, takes "mastering core technologies and forging perfect
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
quality" as the two wheels for driving, transfers and improves the value through unique marketing model, sticks to
independent people cultivation, independent innovation and independent production, and aims to achieve "Made
in China, Loved by the World" by carrying forward the industrial spirit, pursuing perfect quality, providing
professional services and creating comfortable environment.
1. World famous brand, adding luster to "Made in China"
Gree is a diversified technological global industrial group integrating R&D, production, sales and service. Gree
won the honors such as "World Brand", "Most Competitive Brand in the Market", "National Quality Award",
"Export Inspection Exemption Enterprise" and "China Brand Innovation Award". In 2019, Gree was listed in
Fortune 500, ranking the 414th. Meanwhile, Gree was listed in the "China's Most Admired Companies in 2019" in
the Fortune, ranking the third in China and continuously ranking the first in the household appliance industry. In
the "2019 China Brand Value Evaluation Information Session and China Brand Building Summit Forum" held in
Shanghai, Gree ranked the second in the light industry and the first in the household appliance industry. In 2019,
in the People's Daily "China Brand Development Index" initiated and compiled by People's Daily, Gree ranked the
seventh in the list with a total index of 917.73, ranking the first in the household appliance industry. This shows
the hard strength and brand influence of Gree in its development.
According to the customer satisfaction survey on 10 categories of household appliances in 2019 jointly issued by
the Customer Satisfaction Evaluation Center of China National Institute of Standardization, Tsinghua University
National Entrepreneurship Research Center and China Standard Science and Technology Group Co., Ltd., Gree
ranked the first in the industry in terms of comprehensive customer satisfaction score and various indicators in the
air conditioner category, ranking the first in the industry for eight consecutive years.
Gree has always been adhering to the "craftsman spirit", "innovation spirit" and "challenge spirit", insisting on
establishing a brand with excellent quality and world-leading technology, demonstrating its firm belief and
ambition to the society and declaring its responsibility of creating social value, environmental value and economic
value for the country, society and consumers.
2. Excellent R&D system, continuously leading technological innovation and product upgrading of the
industry
Gree adheres to the philosophy that "science and technology change life; science and technology create life" and
insists on "independent research and development of core technologies". It firmly believes that only the real
mastery of core technologies can enable us to grasp the fate of the enterprise and realize independent development
of the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as the
main player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,
cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leading
position in the field of refrigeration.
Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 research
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
institutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the National
Key Laboratory on Air Conditioning Equipment and Energy-saving System Operation, National Engineering
Research Center of Green Refrigeration Equipment , State Recognized Enterprise Technology Center and the
State-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base for
Standardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end Equipment
Manufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation and
has been successively approved to establish post-doctoral research centers and doctoral workstations in
Guangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises of
High-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", "Guangdong
Energy Internet Innovation Center" and "Guangdong Small Household Appliance Intelligent Manufacturing
Regional Innovation Center".
Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree won
seven awards, including one national second prize for technological invention and three provincial and ministerial
first prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugal
air-conditioning equipment" project won the second prize of national technological invention in 2019; Gree's "key
technology and application of direct current in optical storage air conditioners" project won the first prize of
Guangdong provincial technological invention, China Patent Gold Award and other awards.
3. Industry leading PQAM perfect quality assurance mode, shaping China's quality image with high
standards
"Quality is crucial to two lives: one is the life of consumers and the other is the life of enterprises". Gree always
considers product quality as the lifeline and insists on "not taking consumers as test targets". Gree adheres to the
quality policy of "pursuing the perfect quality, creating an international brand, and forging a century enterprise",
sticks to the quality culture of "strict, true and new" oriented to customer demand and social responsibility, sets no
upper limit of investment in the basic capacity building of quality, implements all-round quality training for all
staff, and extensively carries out QCC quality improvement activities and Six Sigma quality improvement projects.
It gradually forms a comprehensive quality management mode with independent innovation as the core.
Gree has strong consciousness of reform in quality management. It promoted quality management reform,
focusing on promoting the systematic development of Gree's quality management to deepen the construction of
high quality enterprise. On the basis of learning and absorbing the advantages of ISO9000, Six Sigma,
performance excellence model, and other management systems, Gree put forward the unique PQAM. Starting
from the quality management process, it used the five-step method of quality prevention to strictly control the
pre-event process, and adopted the quality technology innovation cycle D-CTFP to perform post-event tracking.
Gree ensured the applicability and reliability of products through active prevention and control and avoided
quality problems during use of products.
Under the guidance of the perfect quality philosophy, Gree runs quality management through the value chain links
such as product R&D and design, parts procurement, production and manufacturing, and marketing service and
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
continuously improves the technical basis, standard system, rules and regulations, information systems and
organizational guarantee of quality management, forming a comprehensive quality control system. Gree regards
"pursuing perfect quality" as the quality policy and "zero defect" and "best service not requiring after-sales
service" as the quality objectives, considers the "five-step method of quality prevention" and "quality technology
innovation cycle D-CTFP method" as the methods and summarizes and refines the perfect quality management
mode of Gree.
Gree's quality standards follow two principles: one is that the quality standards must be stricter than international
standard and national standards and the other is that the quality standards must be consumer-oriented. Gree
participated in the drafting and development of the Quality Management — Innovation Cycle Guide Based on
Customer Demand as a national standard, which sets Gree's quality management experience as a model in the
whole industry. Gree attaches great importance to quality management. It promotes and escalates quality
construction of the enterprise to the national standards, shapes an industry development benchmark relying on the
ingenuity of manufacturing, further improves the quality management system of China, and creates a more
competitive image of Chinese manufacturing quality.
4. Efficient and in-depth sales network and deep integration of online and offline channels lay a solid
foundation for the growth of Gree
Gree insists on the sales channel construction and sales model of independent management, mutual benefit and
win-win and creates a solid online and offline business layout. The two channels complement each other and are
deeply integrated to create a full channel sales platform. Gree has constructed competitive product experience
halls, Gree living centers and Gree exclusive shops all over the country to provide consumers with integrated
smart home solutions and bring consumers comfortable enjoyment and the experience of home.
As the business scale of the Company expands, the marketing mode of its "self-built channel" enables the
"integrity" concept of the enterprise to run through all phases from production to sales. Gree maintains good
cooperation with distributors and provides great support for terminal channel construction and advertising. Gree
has established a joint-stock regional sales company, which greatly enhances the motive power of distributors.
Through an established sound market management system, Gree guides sales companies to lead various channels
to carry out large diversified and rich promotional activities by using policies and constantly increases the market
share and improves corporate reputation. As a result, Gree stands out in the fierce channel competition and
realizes independent management and control of sales channels.
At present, Gree has accelerated expansion of its online sales channels and realized rapid expansion through
distribution stores. In addition, it realizes big data analysis, allocation and circulation of stock products with the
help of the cloud platform, further promotes optimization of the inventory structure and reduces the risk of
unsalable sales by reversing production plans through low inventory warning. Meanwhile, the Company carries
out further cooperation with major e-commerce platforms and actively holds large activities during festivals,
achieving extraordinary results. Big data analysis is carried out offline through a digital management system to
realize dynamic statistics and display of sales data. Market trends and problems can be found in time through
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
observation of dynamic data and strategic deployment can be adjusted in time.
5. Precise industrial layout and perfect supply chain system lay a solid foundation for business development
Gree now has 14 production bases in the world, located in Zhuhai, Chongqing, Hefei, Zhengzhou, Wuhan,
Shijiazhuang, Wuhu, Changsha, Hangzhou, Luoyang, Nanjing, Chengdu, Brazil and Pakistan, and the production
capacity ranks the first in the world.
In 2019, Gree further improved its structure layout, production capacity layout and variety layout, promoted the
upgrading of sales logistics services and coordinated to reduce the overall logistics operating cost based on the
new trend and new demand of e-commerce development. All bases spare no effort to produce low-end and
middle-range air conditioners, and high-end and medium-range air conditioners are produced in a centralized
manner in regions such as Wuhan, Hefei and Zhengzhou, radiating the whole country and giving full play to the
advantages of economic regions. E-commerce centers on nearby distribution with the platform transferring goods
from warehouses and the production bases of e-commerce products are deployed in Wuhan, Hefei and Zhengzhou.
Meanwhile, Gree accelerates construction of the bases in Changsha, Chengdu and Luoyang and accelerates the
product layout of refrigerators and washing machines. Gree has built upstream plants for raw materials of
household appliances, for example, compressors, motors, capacitors and enameled wires, in various bases, which
greatly enhances the control capability of the Company for upstream and downstream supply chain, guarantees the
efficient operation of production and meets the needs of consumers in a timely manner. Moreover, the Company
has built five renewable resource bases in Changsha, Zhengzhou, Shijiazhuang, Wuhu and Tianjin, covering the
whole industrial chain from upstream production to downstream recycling, and achieving green, cyclic and
sustainable development.
6. Refined cost control capability to provide guarantee for the steady development of the Group
Gree has been committed itself to establishing and improving the cost control system. It adheres to the philosophy
of refined cost control and saves unnecessary costs. The Company aims to increase the value by improving the
production efficiency, gradually optimizes the manufacturing system, implements full-process cost control and
routinizes the work of cost analysis relying on "quota management".
In 2019, Gree gradually optimized the lean manufacturing system (GMS), established an integrated human
demand assessment and allocation management mechanism and improved the production efficiency and human
resource utilization. By innovating in production automation, the Company improves the level of automation,
promotes the transformation and upgrading of intelligent manufacturing and reduces the demand for production
personnel; through digital innovation in production, the Company improves the level of production
informatization and lays a solid information foundation for intelligent manufacturing. In addition, to strengthen
the research of new technologies and eliminate high-cost technologies, Gree holds a lean design competition every
year to commend excellent lean products.
Through continuous application of lean, automation and digital technology, Gree's per capita efficiency increased
by 7.1% in 2019. In December 2019, the "2019 Chinese Enterprise Reform and Development Summit and
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Achievement Press Conference" organized by China Enterprise Reform and Development Society released the
"3rd Excellent Achievements of Chinese Enterprise Reform and Development". Gree's "Lean Management
Innovation Practice for Intelligent Manufacturing of Large Household Appliance Manufacturing Enterprises"
program won the first prize.
7. Adhere to independent training of talents and continuously upgrade the talent structure
Gree always adheres to the principle of "focusing on the strategic layout of the Company and adhering to
independent training of talents” and gradually forms an independent talent training mode with independent talent
introduction channel, independent training and development mechanism and all-round incentive and guarantee
system as the core based on the development experience and cultural deposit of the Company, striving to make
employees and the Company make progress and develop together.
Gree's talent team has been growing and its talent structure has been upgraded over the years. By the end of 2019,
the Company had about 90,000 employees, including more than 14,000 technological R&D personnel and more
than 30,000 skilled workers. During the process of talent introduction, Gree gives consideration to ideology and
morality, cultural identification, professional competence and development potential. The Company cooperates
with universities to carry out a variety of science and technology competition programs, arouse the enthusiasm of
students' invention and creation and explore outstanding talents with innovative ability; the Company actively sets
up an exchange platform between universities and the enterprise, invites teachers and students of universities
across the country to go into Gree and go into "Intelligent manufacturing in China", feel the unique industrial
culture of Gree and the development pulse of China's advanced manufacturing industry and set up a goal of
serving the country by devoting to the industry.
In order to continuously improve the level of technological innovation of the Company, enhance the core
competence of the Company and encourage the technological talents with outstanding technology and outstanding
abilities to make greater contributions to independent innovation of the Company, Gree insists on the principles of
" be fair, be open, be dedicated" and selects technological experts every year through internal recommendation of
each department, section review, on-site defense and publicity of selection results based on the technological level,
post value and performance level so as to further expand the team of technological experts and optimize the
structure of experts at all levels. Meanwhile, the Company applies the evaluation results to various personnel
decisions such as salary, further optimizes the salary adjustment mechanism and stimulates staff capacity
improvement in an all-around manner. Gree now has two leading talents in science and technology innovation
under the National 10000 Talents Program, one young and middle-aged expert with outstanding contributions to
the nation, three experts enjoying the special allowance of the State Council, one talent winning the Outstanding
Contribution Award of South Guangdong, one Guangdong special support program outstanding talent, 62
high-level talents of Zhuhai, more than 300 young outstanding talents and more than 470 science and technology
experts.
Gree has designed three career development paths for technical management employees, namely "professional,
management and comprehensive development", and designed a skill rating mechanism for front-line employees.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Based on staff competence, performance and determination, Gree creates a fair and just development environment,
which makes Gree have a large number of talents in all fields.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section IV Discussion and Analysis of Business Operation
I. Overview
In 2019, Gree steadfastly followed the development path of "independent innovation, winning by technology,
driving by two efficiency and global leading", improved the four business fields: air conditioning, home
appliances, high-end equipment and communication equipment, which are the main pillars, centered on users,
insisted on technological innovation, optimized the quality control system, strengthened the online and overseas
layout, promoted enterprise transformation and upgrading and created a more competitive and diversified
technological global industrial group. In 2019, the Company achieved the total operating revenue of RMB
200.508 billion, an increase of 0.24% year on year, and a net profit attributable to the parent company of RMB
24.697 billion, a decrease of 5.75% year on year.
1. Center on users, continuously improve product competitiveness and meet new needs of users
(1) Residential air conditioner sector
Gree insists on centering on user needs for development of new products, creates perfect quality management and
fully considers new needs of users. Based on the product R&D idea of "Study one generation, reserve one
generation and develop one generation”, Gree made significant breakthroughs in product intelligence, comfort and
energy savings. In order to meet the needs of different consumers, Gree divides the market based on three
dimensions: region, climate and economy, and strives to fully understand the market under the condition of market
segmentation. In response to the new needs of consumers, Gree focuses on the innovation and upgrading of
technologies and products from the aspects such as air supply comfort, heating comfort, healthy air and intelligent
interaction. It has developed new products such as fresh air conditioners, AI voice air conditioners, constant-warm
defrosting air conditioners and high-end art air conditioners to resolve pain points of users and improve user
experience.
For the problems such as indoor and outdoor air pollution and harm to people's health due to increase of carbon
dioxide concentration caused by long-term stay of people in closed rooms, the Company developed the “Freair”
series wall-mounted and floor-standing fresh air conditioners. The products provide the function of supplying
fresh air in two ways. The products can introduce outdoor fresh air after multi-stage of filtration and discharge
indoor dirty air at the same time, which enables the products to effectively and permanently keep the indoor air
fresh. Meanwhile, the built-in air quality sensor of the air conditioner can monitor the indoor air quality and the
intelligent opening and closing of the fresh air system brings convenient and healthy enjoyment to users.
For the problems that many steps are required to remotely control an air conditioner, user operation is
inconvenient and functions of the air conditioner are monotonous, Gree developed a series of AI voice air
conditioners such as Gree Kimbe II floor-standing unit, I-Poem II floor-standing unit, LEAD ROYAL
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
floor-standing unit and Kimbe wall-mounted unit. Equipped with the AI voice technology, the air conditioners
provide interactive functions such as music play, news broadcast, encyclopedia query and social chat and can even
link all home appliances in the house, making air conditioners become intelligent home terminals.
For the problem that frosting easily occurs on traditional air conditioners in winter and heat is absorbed from
indoors during defrosting, resulting in drop of indoor temperature and poor experience, Gree developed the
constant-warm defrosting air conditioners i-Yao floor-standing unit and Runyao wall-mounted unit. The heating
efficiency of the products is 32.4% higher than that of traditional air conditioners. During defrosting, the air
conditioners do not stop working or absorb heat from indoors. After defrosting, the air conditioners blow out hot
air immediately, effectively improving the heating comfort of air conditioners.
The innovative design of air outlet and the integration of romantic art elements create Rose III floor-standing air
conditioner, the current peak of Gree. The air conditioner inherits the romantic spirit and adopts the distributed air
supply technology uniquely developed by Gree. Cold air is not blowing people, the temperature is more uniform,
and the heat and cold air is more comfortable. The air conditioner can keep warm during defrosting and keep
heating. It provides strong heating under ultra-low temperature and improves the heating capacity and the degree
of comfort. In addition, the air conditioner is also equipped with the AI voice control system, which realizes
human-computer interaction and adds fun and convenience to our life.
Gree silent window-type air conditioner is a brand-new window-type air conditioner featuring novel appearance,
low noise and superior performance. In appearance, the panel adopts an inclined upward air outlet so that people
do not feel blowing wind, which improves user comfort. The new design of the honeycomb air inlet panel
highlights simplicity and fashion and the control area adopts touch buttons that are reasonably arranged and light
transmission display to highlight user-friendly operation. It is the first time that two motors and the brand-new air
duct system structure with cross-flow fan blades and axial flow fan blades are adopted in window-type air
conditioners of the Company. The refrigeration noise of the product is 42 dB, which is the industry leading level.
The environmental-friendly R32 refrigerant is adopted to realize high energy efficiency and meet the requirements
of North America E-STAR. The silent window-type air conditioner enriches the window-type air conditioner
product line of the Company and improves the market competitiveness of the corporate brand.
In 2019, Gree won the bid for the project of Shanghai Jiaotong University. Gree adopted split air conditioners and
VRF air conditioners to provide 12,000 dormitory rooms, classrooms, dinning halls and office rooms in multiple
campuses, totaling about 3 million square meters, with high-quality integrated air-conditioning guarantee services.
The project won the high praise of "providing first-class products for first-class universities and allowing
first-class teachers and students to enjoy first-class services". In addition, Gree signed strategic framework
agreements with large enterprises such as State Grid Corporation of China, Evergrande Real Estate Group, R&F
Properties and Huawei, laying a foundation for the continuous growth of air conditioner sales in the future.
(2) HVAC equipment sector
In 2019, Gree adhered to the orientation that products meet the needs of consumers, insisted on technological
innovation, continuously strengthened the planning and layout of technological research and development,
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
constantly made breakthroughs in key technologies, formed a strong technical reserve and promoted product
upgrading.
Gree's high-efficiency oil-free dynamic air bearing compressor breaks through the high-end air bearing technology,
develops the foil gas bearing with high loading capacity and long service life, which is suitable for refrigerants,
and breaks the monopoly of foreign technologies; Gree researches the ultra-high speed and high stability air
bearing rotor dynamics technology, micro flow coefficient and efficient pneumatic design technology and greatly
improves the performance and reliability of the compressor. The full load of the unit is COP6.35 W/W and the
IPLV reaches 10.15 W/W. On 7 December, 2019, the unit was identified by China Machinery Industry Federation
to reach the "world-leading" level.
Gree's luxury air conditioners for passenger trains break through the high-efficiency and high-reliability
technology of compressor under all working conditions, low-noise and high-efficiency wind blade technology,
high-strength frame anti-seismic structure design technology, 1 mm stainless steel sheet welding technology and
EMC anti-interference design and meet the requirements for high reliability and safety. In 2019, Gree completed a
series of work such as TS22163 rail transit quality management system certification, EN15085 welding system
certification and FAI first product quality appraisal. The Company has obtained the qualification to supply train
air conditioners and achieved the technological breakthrough of the Company's commercial air conditioners from
station air conditioners to vehicle-mounted air conditioners.
Through innovation and breakthrough of the magnetic bearing motor system, Gree magnetic bearing inverter
centrifugal chillers have completed the development and successful application of the 1300RT magnetic bearing
centrifugal chiller with the highest cooling capacity in the world and won the bid for Beijing Xinghuo High-speed
Railway Station project. This marks that Gree's magnetic bearing centrifugal technology advances to the
"depopulated zone" again and continues to lead in the field of central air-conditioning technology. By the end of
2019, Gree completed the development of the 80-1300RT full series magnetic bearing systems, including 6 series
and 28 models, becoming the only manufacturer in the world with the single compressor of high cooling capacity
and full series of magnetic bearing compressors and units. The project won the Gold Award of International
Exhibition of Inventions of Geneva, Morocco Special Gold Award and the first prize of the Fourth National
Quality Innovation Competition.
In 2019, closely catering to the market demand, Gree established the Institute of Building Environment and
Energy, launched the professional system solution of central air conditioners, continuously made breakthroughs in
the key technologies of system energy conservation and created the benchmarking project of efficient refrigeration
room. Gree provided ultra-high efficiency and large temperature difference centrifugal chillers for the ultra-high
efficiency air-conditioning system of Wuyi University, realizing the breakthrough of the annual average energy
efficiency of the refrigeration room higher than 6.0 and the average energy efficiency in September higher than
7.0, establishing a new benchmark of the domestic high-efficiency air-conditioning system and creating a new
record of the high-efficiency refrigeration room.
Gree's high-efficiency permanent magnetic synchronous inverter screw chiller won the bid for the Holiday Inn
Orchard Hotel Project in Singapore. The overall energy efficiency of the refrigeration room reaches 5.41, reaching
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
the highest level of Green Mark in Singapore: platinum certification. The project is recognized as a
"high-performance energy-saving project" by the National Construction Energy Conservation Quality Supervision
and Inspection Center. Chengdu National New Drug Safety Evaluation Center is currently the largest professional
institution for preclinical research and technical services of new drugs in China, which has high requirements for
the stability and safety of indoor environmental control. Gree provided the project with an efficient system
solution centering on high-efficiency permanent magnetic synchronous inverter centrifuge, which is recognized in
the field of high-end biopharmaceuticals and fills in the gap of domestic equipment in this field.
Gree building management system (GBMS) is a building management engine independently developed and
produced by Gree. It implements the functions such as integration, monitoring, alarm, operation and maintenance
of building equipment and creates a full building ecological intelligent management system, including
five-constant health system, eight-dimension safety system, multi-dimensional energy saving system and
intelligent and efficient system. The GBMS platform supports distributed and centralized scenario application and
can be widely used in different industries such as smart park, smart hotel, smart campus, smart community, smart
hospital and smart fire fighting. At present, the GBMS accumulatively has 26 patents for invention and 2 software
copyrights.
To solve user problems of low temperature adaptability, limited hot water consumption and slow heating that
occur on air source water heaters, the Company completed the development of Mu Zun air source water heater
series in 2019. Mu Zun air source water heater adopts the independently-developed and world-leading inverter
two-stage compression EVI heat pump technology and realizes abundant heat water during use, without being
limited by the volume of water tank. In addition, Mu Zun air source water heater saves energy by up to 75%
compared with electric water heaters and won the AWE2019 Award - Environmental Protection Award.
Gree U series close control air conditioners was listed in the Product Catalog of Advanced Applicable
Technologies for Green Data Center (Version 2019) prepared by the Ministry of Industry and Information
Technology and the product energy-saving index is recognized by experts in the HVAC construction industry,
safeguarding data centers.
(3) Home appliances sector
Relying on the deep understanding of fashion, international advanced technologies, attitude of constantly striving
for perfection and excellent detail control capability, Gree R&D team created high-quality home appliances for
global users and achieved perfect integration of technologies and fashion. In 2019, Gree micro-pressure IH
electric rice cooker GDCF-4009C won the "Copper Award" of the 71st Nuremberg International Invention
Exhibition in Germany; micro-pressure cooker and TOSOT multi-cooker were included in the Guide to Upgraded
and Innovative Consumer Products in the Light Industry.
In 2019, in the "15th China Household Appliances Innovation Result Selection" activity organized by China
Household Electric Appliances Research Institute, Gree's water purifier with the filter cartridge serviceable in
three years won the award of annual outstanding innovation results. In addition, relying on its advantages of small
size and long service life and 360-degree convenient operation for ring blind assembly and core replacement,
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Gree's two-core large-flow water purifier won the Thales Outstanding Product Award of GWPS Global Water
Purifier Market Summit in 2019. Relying on the reverse-osmosis engineering water purification equipment, Gree
successfully completed the demonstration projects of Diaoyutai State Guesthouse and Foreign Language School
Affiliated to Beijing Foreign Studies University. In "2019 Golden Tripod Award Ceremony for Two National
Purification Industries and Industry Leader Summit" organized by the Golden Tripod Award Organizing
Committee for Two National Purification Industries, Gree won the 2019 technological innovation brand in the
national water purification industry.
Gree's foldable baseboard electric heater adopts the innovative design of multi-angle folding and is applicable to
more scenarios in family use. It is convenient and easy to store the product. The baseboard is designed with an
innovative air-guide structure, which controls efficient heat dissipation at 45°of hot air and realizes carpet-type
heat transfer. Relying on the unremitting pursuit for innovation and quality, Gree's electric heater won the
"Industry Craftsmanship Brand of the Year" awarded by China Association for Quality Promotion in 2019.
The brand-new series of dishwashers developed by Gree includes Jinghuan series of embedded dishwashers and
Jingyun series of small table dishwashers. Jinghuan series of embedded dishwashers adopt the C-Max intelligent
washing system and dual-swirl heat drying technology to provide users with better washing and drying effect and
obtain 6A+ certification. Meanwhile, in order to meet the needs of different users, Gree developed Jingyun series
of small table dishwashers, which adopt 72°C high temperature for washing and the hot air drying system. The
sterilization rate reaches up to 99.99%.
In 2019, the Company completed the design of new categories of home appliances (such as piglet rice cooker,
portable juicer and electric teapot). Of these products, the piglet rice cooker adopts bionic design and its shape is
small and lovely; the portable juicer is colorful and the hidden hand strap design is unique and ingenious. The two
products won 2020 Red Dot Product Award at the same time. Gree electric teapot is the first automatic water
filling intelligent electric teapot independently developed by the Company. It is equipped with high-altitude
adaptive recognition and real-time variable frequency and adjustable power heating technology. While solving the
problem of continuous boiling under high altitude, the product guarantees the accuracy of temperature control.
The technology for accuracy of temperature control reaches the leading level in the industry.
(4) Refrigerator and washing machine sector
In 2019, Gree Kinghome continued to deepen and mine the application of three meat preservation technologies,
namely -3°C tender freezing, -5°C instant freezing and -33°C deep freezing. The high-end line-up of magic
refrigerators was upgraded: for the users' feedback on the demand for high capacity and long-term preservation of
meat, Kinghome developed a T-type variable temperature side-by-side door refrigerator supporting -33°C deep
freezing; for the need for different meat storage time in different usage scenarios, Kinghome developed a
large-capacity French multi-door refrigerator supporting tender freezing and instant freezing magic preservation;
for the decoration need of customers' integrated cupboards, Kinghome developed different series of thin products;
Gree Kinghome insists on leading green development relying on innovation, adheres to the ecological production
philosophy of environment-friendly and sustainable development of resources and implements energy saving,
emission reduction and green production. In 2019, Kinghome won the title of "First Batch Certified Enterprises of
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
CQC Certified Green Products". Meanwhile, Kinghome adheres to the modern enterprise craftsmanship, practices
the perfect quality mode of Gree, and strengthens the foundation of enterprise manufacturing relying on lean
quality and intelligent manufacturing. According to the statistics of ChinaIOL.com, under the situation that the
refrigerator sales in the whole industry increased by 3.1% year on year in 2019, the sales of Kinghome
refrigerators achieved a year-on-year growth of 28.1%, with the growth rate ranking top 4 in the industry and the
total sales ranking No.9 in the industry.
The upgraded version of Jingrou washing machine is equipped with a silver ion sterilization device. The silver ion
crystal is released slowly when it meets water, penetrates into the clothing fiber and kills bacteria on the clothing
efficiently. According to the test conducted by a third-party agency, the silver ion sterilization rate of Jingrou
upgraded version reaches as high as 99%. In addition, Jingrou washing machine adopts the new anti-mildew and
anti-bacterial door sealing design. According to the test conducted by the Technical Institute of Physics and
Chemistry of CAS, the anti-bacterial rate reaches 99%. Jingrou washing machines also uses the dynamic spatial
clothing distribution technology to increase the dehydration success rate of one clothes by 60%, saving time and
electric energy for consumers.
2. Adhere to independent innovation, constantly make breakthrough in world-leading technologies and lead
industry standards to the world
In 2019, Gree has made a series of new technological achievements thanks to continuous breakthroughs and
tackling of difficulties by its R&D personnel. According to evaluation of the authority, Gree has added four
"world-leading" technologies, including "High Performance Straight Line Servo Motor and Driver", "Research
and Development of Rare Earth Free Magnetic Resistance Master Drive Motor System for New Energy Vehicles",
"High-efficiency Dynamic Pressure Air Bearing Centrifugal Compressor Key Technologies and Applications",
and "Research and Application of High-efficiency Magnetic Resistance Inverter Scroll Compressor", which add
strength to the core technologies. By far, Gree has obtained 28 "world-leading" technologies in total.
Gree insists on innovation driving, regards consumer demands as the standards and sticks to the principle of R&D
expenditure on demand without upper limit. By the end of 2019, Gree accumulatively applied for 63,956 patents,
including 31,500 patents for inventions; in 2019, Gree applied for 15,259 patents in total, including 8,860 patents
for inventions.
In 2019, the number of Gree's authorized patents reached 1,739, ranking No.6 in the country. Gree has become the
only household appliances enterprise that entered the top 10 in terms of the number of authorized patents in China
for four consecutive years. In 2019, Gree won 16 Chinese patent awards, with the total number of won awarded
ranking No.1 in China, which promotes deep integration of intellectual property rights with industrial
development. In addition, Gree won five gold awards at the International Invention Exhibition in Geneva,
Switzerland and Nuremberg, Germany in 2019, and authorized three motor patent technologies to Grundfos, a
Danish company, which fully demonstrated the invention and creation capabilities and the world-leading strength
of Gree to the world.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
In 2019, Gree won 33 awards of four International Design Awards (16 IF Product Design Awards in Germany, 12
Red Dot Awards in Germany, 3 IDEA Awards in the United States and 2 excellent design awards in Japan), two
21st China Design Excellence Awards, one silver prize of 6th Guangdong Design Patent Award, 12 design awards
in the 5th Mayor's Cup, five export product design awards in 2019 China Import and Export Fair, one Good
Design Innovation Award in 2019 and one excellent award of 2019 Intelligent Manufacturing Award.
While increasing the introduction of R&D equipment, Gree insists on the improvement of testing technologies to
guarantee the product quality. It performed comprehensive combing and upgrading in the aspects such as
intelligent testing, automation, professional personnel and post standardization to guarantee the product testing
quality and greatly improve the testing efficiency. Meanwhile, evaluation of the authority shows that Gree
obtained seven important certificates at home and abroad in 2019 product certification, including the first batch of
"Ergonomics - Thermal Comfort" certificate in the industry, China's first CVC certificate for DC air conditioner
products, the first certificate with three characteristics: heat recovery, carbon dioxide removal and formaldehyde
removal of air conditioners supply fresh air in two ways, the first batch of ROHS certificate, China's first batch of
CCC certificate for gas appliances, the first software evaluation characteristic certificate for household appliance
industry, and the first CSA energy efficiency certificate for ultra-low temperature heat pump unit in the world. In
addition, Gree led and participated in standards development of 15 Chinese and foreign certification technical
specifications, leading the industry standards to the world. By the end of 2019, the Company joined 18
standardization organizations, including the Heat Pump Standard Workgroup of Sub-committee for Testing and
Assessment of Air-conditioning Heat Pumps of the ISO Committee of Refrigeration and Air Conditioning (ISO
TC86/SC6/WG12), the Chiller Engineer Committee of Association of Air-Conditioning, Heating, and
Refrigeration Institute (AHRI), Standard Technical Group of Inverters for Distributed Energy of Underwriter
Laboratories Inc (UL/STP 1741), European Partnership for Energy and the Environment (EPEE), and Australian
Institute of Refrigeration, Air Conditioning and Heating (AIRAH). Gree takes the initiative to participate in
development and revision of international standards and learn the industry dynamics and changes of international
standards policies in time, further improving the influence of the Company in the world.
3. Optimize the quality control system, insist on quality innovation and implement the perfect quality
assurance mode in an in-depth manner
Gree believes that "best service not requiring after-sales service", takes perfect quality as the highest pursuit of
quality management, tries to eliminate quality problems before consumers use products, ensures the applicability
and reliability of products and avoids quality problems during use of products. In order to achieve this goal, in
2019, Gree continued to fully and deeply implement the perfect quality assurance mode and continued to
emphasize the beforehand and afterward quality control in the whole process of value creation from product
research and development, procurement and logistics, manufacturing and marketing services. Meanwhile, Gree
summarized and extracted the five-step method of quality promotion. Starting from demand survey, Gree
promoted optimization through careful planning and strict implementation supplemented by inspection and
supervision, realized early planning and check of the quality control work, prevented and avoided occurrence of
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
quality problems from the source. Relying on deep implementation of the PQAM perfect quality assurance mode,
Gree's products of all categories completely passed spot test at all levels such as national spot test, provincial spot
test, municipal spot test, third-party spot test and overseas spot test, explaining the perfect quality of Gree's
products to consumers.
In 2019, Gree won the first prize in the 4th National Quality Innovation Competition relying on its Research and
Application of High-precision Magnetic Suspension System and won the second prize of the large enterprise
innovation category in the annual conference of International Quality Innovation Award (QIA) in 2019. Gree was
the first enterprise that won the award in China's household appliances industry. In November 2019, Gree
successfully won the "Best Improvement Project Award" in the "63rd Annual Conference of the European Quality
Organization and Bilateral Quality Exchange Meeting between China and the West", becoming the only Asian
enterprise that won this award in this conference.
The quality level of Gree's products has been continuously improved by strengthening the internal quality control,
and the first time yield of process reached 99.54%. The after-sales failure rate of products decreased from 16,429
PPM in 2004 to 488 PPM in 2019, with an average decline of 20% for 16 consecutive years. According to the
2019 Air Conditioner Customer Satisfaction Index Survey and Analysis Report issued by the Customer
Satisfaction Evaluation Center of China National Institute of Standardization, the customer satisfaction of Gree air
conditioners reaches 81 points, ranking the first in the industry for nine consecutive years.
4. Strengthen the online layout, vigorously carry out digital operation and achieve a breakthrough in sales
of all categories
In 2019, in the face the new consumption mode and communication mode of the e-commerce market, major
e-commerce brands perform continuous new exploration. In response to the online and offline integrated
development trend, Gree repackaged and upgraded its original self-built platform, namely Gree Mall, and made all
staff to participate in the Company's sales channel development and recommend high-quality products to their
relatives and friends based on the new business model of distribution mode and social media communication,
realizing the upgrading of Gree's marketing model. In 2019, the number of registered distribution stores of "Dong
Mingzhu's store" exceeded 100,000 and the accumulated sales in the whole year exceeded RMB 1.4 billion, a
year-on-year growth of 660%.
In the aspect of third-party platforms, in 2019, many brands in the online consumer market still adopted the low
price strategy. Gree insists on the development route of "quality e-commerce". In the market environment where
competition tends to be fierece, the online air conditioner sales of Gree increased by 16% year on year and the
sales of the household appliance category increased by 13%. In third-party operations in 2019, Gree was
recognized by jd.com, tmall.com and Suning.com platforms and won many platform awards such as "Outstanding
Achievement Award of jd.com in 2019", "Best National Product Cooperation Award of jd.com in 2019", "Best
Partner of the Year" award of jd.com in 2019, "Best Influencer" in live broadcast of jd.com in 2019 and "Best
Cooperation Award" of tmall.com in 2019. During the Shopping Festival on 11 November, 2019, the total online
sales of Gree's products exceeded RMB 4.1 billion, a year-on-year increase of 200%, of which the sales of air
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
conditioners on third-party platforms exceeded RMB 3.64 billion, a year-on-year increase of 178%. The sales of
Gree's air conditioner products on the Internet ranked the first. Gree became the sales champion in terms of air
conditioner on Tmall platform for six consecutive years. The sales of all categories of products on Gree's
proprietary platform "Dong Mingzhu's store" (https://fmall.gree.com) reached RMB 363 million, a year-on-year
increase of 48 times.
In October 2019, Gree e-commerce discussed the digital operation project with third-party platforms. By creating
a huge user database, analyzing internal laws of data and mining the internal data logic, Gree grasped consumer
demands, consumption habits and other user information and obtained user portraits. According to the user
portraits, Gree realizes customization of all aspects such as product, marketing, pre-sales and after-sales. Through
digital operation, Gree implements the "user-centered" sales philosophy.
In 2020, based on the analysis on the consumer market, Gree e-commerce will carry out digital operation and
achieve a new breakthrough in sales from the perspective of users. Meanwhile, with the further upgrading of the
new consumption model, "Gree Dong Mingzhu's store" will promote the new retail model nationwide in 2020 and
realize platform sharing with the existing sales channels, thereby realizing the gradual transformation from the
operation of single store distribution to professional platform operation of household appliances. In the future,
"Gree Dong Mingzhu's store" will sell Gree products of all categories. Relying on the advantage of offline
channels and high-quality brands and aiming to create a new online and offline integrated sales model, Gree will
realize the development strategy of Company's proprietary online channels, bringing new growth of sales.
5. Actively expand the overseas market, insist on the high-end leading strategy and energetically develop
proprietary brands
Gree continues to make more efforts in the overseas market. It centers on its proprietary brands, vigorously carries
out proprietary brand construction from the aspects such as strategy, technology, quality, training, talent and
service and adheres to the open, transparent, cooperative and win-win philosophy through the new customer
cooperation model to enhance the international popularity of Gree brand.
In 2019, Gree made great achievements in internationalization. It won the bids for large projects such as Mauritius
Stadium, Office Building of the Ministry of Foreign Affairs of Maldives, Gabon National Convention Center, Sri
Lanka Substation and Nepal Pokhara Airport. Meanwhile, Gree assisted local governments in implementing
assistance projects such as Cook Island Archives, Niue Parliament Building and Niue Airport. Meanwhile, Gree
continues to insist on the high-end leading strategy in the overseas market and its brand influence continues to
expand. In the whole year, Gree prepared for 14 international professional refrigeration exhibitions such as
Air-conditioning, HVAC and Refrigeration Exhibition in Atlanta and Chicago International Household Appliances
and Small Household Appliances Exhibition, demonstrating Gree's industrial strength of independent research and
development. In 2019, Gree held "Gree Makes the Future" 3rd Brands Strategic Partners Conference in Hefei
production base to strengthen the exchange and cooperation with global distributors, improving the brand
influence of Gree and demonstrating the strength of Made in China on the global stage.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
In order to strengthen the promotion of commercial air conditioners and construction of proprietary brand
channels and maintain quick upgrading of products, in 2019, Gree launched a photovoltaic multi VRF product in
Australia, a 24 V ultra-low temperature side discharge inverter household unit in North America, an
environmental-friendly refrigerant R32 side discharge multi VRF product in the EU, and a series of core products
such as new-generation GMV6 heat pump and GMV6 heat recovery multi VRF product, inverter air-cooled screw
unit and inverter module unit in the world. In terms of residential air conditioners, Gree launched the G-Tech air
conditioner featuring five-layer washing, separation of water and electricity and easy removal and washing and
the high-end Soyal air conditioner that provides eight air supply modes, which enable the wind to move with
people and avoid direct blowing, in the global market; in Southeast Asia, Gree launched Minty air conditioner that
integrates air-conditioning and purification and removes PM2.5 at a rate of 98%.
In the future, Gree will continue to strengthen the overseas strategic planning and the overall layout in the global
market, center on proprietary brands and explore new development models; maintain the long-term investment in
overseas brand construction, really root Gree's manufacturing, technologies and culture in all corners of the world
and realize the output of soft power such as brand, culture and management experience; carry out business
integration, brand construction, channel layout and industrial chain coordination and improve the efficient
operation system of overseas full value chain; strengthen cultivation of localized talents and broaden the
international vision; establish a new customer cooperation model, focus on later growth of the market based on the
three brands: Gree, Tosot and Kinghome, and classify products, sales channels and publicity strategies in a refined
and differentiated manner to further develop the market.
6. Pay close attention to industrial transformation, make efforts in the sectors of high-end equipment and
communication equipment and accelerate diversified layout
(1) Intelligent equipment sector
Aiming at "Excellent quality, created by Gree", Zhuhai Gree Intelligent Equipment Co., Ltd. insists on
independent R&D and lean manufacturing and helps upgrade the intelligent manufacturing industry through AI. It
forges ahead in the R&D, manufacturing, sales and service of intelligent equipment products and provides
professional and personalized products and services to realize "Intelligent manufacturing in China". Based on the
"production, industrialization, marketization and internationalization" development path, the Company has formed
a product system covering a dozen fields such as servo manipulators, industrial robots, intelligent warehousing
equipment, intelligent testing, special machine tool equipment for heat exchanger, unmanned automation
production line body and CNC machine tools and more than 100 products.
By the end of 2019, Zhuhai Gree Intelligent Equipment Co., Ltd. accumulatively applied for 2,501 patents and
authorized 840 patents, of which 653 patents were applied for and 470 patents were authorized in 2019. It
accumulatively helped multiple brands nationwide and more than 100 enterprises with intelligent manufacturing
transformation successfully and completed a batch of influential demonstration projects in the intelligent industry
in various sectors. Since it was founded in 2015, Zhuhai Gree Intelligent Equipment Co., Ltd. successively won
the tiles such as "Guangdong Robot Backbone Enterprise", "Zhuhai Intelligent Equipment Engineering
28
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Technology Center" and "Guangdong Small Household Appliances Intelligent Manufacturing Regional
Innovation Center". At present, the Company's machine tool products cover horizontal machining center, five-axis
machining center, gantry machining center, compound turning milling machining center, graphite machining
center and vertical machining center and provide customers with a complete set of production solutions such as
processing technology and automatic processing, which are widely used in the fields of moulds and 3C
processing.
In the field of industrial robot technology, the Company optimized the research on design methods, key
technologies of gear transmission, effective torque control technology and robot precision calibration algorithm
through the body of industrial robots, which makes Gree robots reach the first-class level in the industry. In terms
of technological innovation in the field of machine tools, the Company conquered the stepless inverter adjustment
technology, which realizes a temperature control accuracy of up to 0.1°C for the machine tool cooler unit and
solves the industry problems of slow cooling under the industry cooling mechanism and low temperature control
accuracy. In addition, the unit features efficient energy saving, high reliability, strong adaptability and convenient
installation and maintenance.
By independently developing the facial recognition technology, visual inspection technology, audio analysis
technology and process action analysis technology, Gree builds platform-level and equipment-level products and
provides cloud services and edge applications. In the aspects such as image collection and processing, signal
analysis and voice recognition, natural language processing and operation optimization, Gree established an
all-round intelligent manufacturing service system for internal and external users of the Company. In the aspect of
production application, by building six core systems such as facial recognition application system, industrial
visual inspection system, voice and audio analysis system, logistics and warehousing scheduling system,
intelligent search recommendation system and industrial engineering and operational research system, Gree
established an intelligent manufacturing service application system, which realizes deep integration with
production application requirements.
In 2020, Gree will continue with reform and innovation, continuously develop markets, explore new customers,
and focus on promoting conversion of technological achievements of robots, CNC machine tools, environmental
protection equipment, automated production line and warehousing equipment and increasing the market share;
actively implement the talent introduction strategy and implement the pyramid R&D talent management mode of
"expert team, core technical backbones, and technical staff"; in the aspect of product R&D, continue to promote
the "product-focused" and "project-based" management mode and further improve the market competitiveness of
products with high-speed and high-precision robots, gantry machining center, five-axis machining center,
heavy-duty and laser navigation AGV, energy-saving and environmental protection equipment and non-standard
automatic production equipment for household appliances as core new products.
(2) Precision mould sector
Mould is the "mother of industry" and provides important technical support for high efficiency, low cost and high
quality of product manufacturing. The industrial level of moulds is an important symbol of the manufacturing
level for a country provides important guarantee for industrial products of a country to maintain international
29
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
competitiveness. By the end of 2019, Gree invested in multiple mould bases. It has two automated processing
lines covering more than 1,200 CNC equipment, more than 20 independently developed mould automated
processing lines, and more than 2,200 mould employees, serving hundreds of enterprises in the fields of
household appliances, automobiles, 3C electronics and aerospace.
Gree precision moulds have become a benchmark in the mould industry in terms of technological innovation,
quality management, informatization and intelligent manufacturing. In 2019, Gree mold company accumulatively
applied for 121 patents, of which 39 are authorized patents, 4 are patents for inventions, 9 are patents for utility
models, 26 are design patents and 2 are software copyrights. In addition, the Company won the title of
"Guangdong Intellectual Property Demonstration Enterprise" and the certificate of integrated system. In 2019, the
Company undertook major provincial scientific and technological projects such as Research and Demonstrative
Application of the Intelligent Manufacturing System Integration Technology of Moulds and Manufacturing
Industry. Its cost management project Refined Cost Management Application and Practice of Large Mould
Enterprises won the second prize of Guangdong Enterprise Management Modernization Innovation
Achievements.
In order to accelerate the construction of the mold technology innovation system and build a high-level intelligent
mould technology innovation platform with international competitiveness, Gree Precision Mold Co., Ltd. Zhuhai
Guangchang Plant was officially put into production in 2019. Gree was also approved to build "Guangdong
Intelligent Mould Technology Innovation Center", leading moulds to develop toward the intelligent direction in
Guangdong Province. At present, the Company takes the lead in the research and application of Internet of Things,
cloud computing, big data analytics, artificial intelligence and industrial robots in the mould manufacturing
industry.
China's mould industry is transforming from the "traditional model" to "Internet plus" model. In 2020, Gree
Precision Mold Co., Ltd. will continuously focus on the layout in the aspects such as technological innovation,
intellectual property rights and intelligent manufacturing and transform towards the "Internet plus" model to
become the leader of China's mould industry.
(3) Semiconductor sector
In 2019, Gree made great progress in research of the semiconductor field, promoting the optimization and
upgrading of products such as smart home series of chips, industry standard MCU and power devices. At present,
Zhuhai Zero Boundary Integrated Circuit Co., Ltd., a subsidiary of Gree, has become a one-stop service provider
for embedded chips, power devices and their supporting development solutions and algorithms.
Gree smart home series chips are embedded AI cross-border processors launched for the markets such as smart
home, smart healthcare, smart education and smart energy management under the tide of IoT and intelligent AIot
applications. In 2019, Gree developed the latest AI cross-border series of chips, which integrates
high-performance AI computing capability and low power consumption feature of embedded SOC, provides
complete software and hardware solutions for related products and supports functions such as computer visual
recognition, image acceleration engine, real-time control capability and multiple hardware security encryption.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
The general industrial control MCU of Gree involves multiple series of products. It features high performance,
low energy consumption, high integration and low cost and can be widely used in three categories of electric
appliances (air conditioners, washing machines and refrigerators) and the industrial application market. At present,
the annual output of industrial-grade MCU exceeds 10 million, and the failure rate is as low as 15 PPM. The MCU
is widely used in products such as wall-mounted and floor-standing residential air conditioners, commercial multi
VRF indoor units, wired controllers, and air conditioner remote controllers.
Gree independently developed power devices, which cover the high reliability Trench Field-Stop IGBT, FRD, PM
module, PIM module and IPM intelligent power module of 600 V and 1200 V platforms. The power devices can
be used in a wide range of scenarios. They can be used in scenarios such as PFC circuit, motor drive, inverter
circuit, induction heating, and soft switch circuit in the fields such as household appliances, industrial equipment,
photovoltaic inverter, and new energy vehicle.
7. Focus on user needs, continue to explore core technologies and lead the era where everything is
connected
Gree insists on independent innovation, independent research and development and independent manufacturing,
uses core technologies to build a smart home where everything is connected, focuses on the consumer quality and
needs of life, and realizes the linkage of household appliances in the whole house by connecting intelligent,
high-quality and all categories of household appliances. Based on the goal of "connecting everything, responding
to any call", Gree independently developed smart home products, IoT platform, smart decision-making system,
G-Voice voice interaction system, smart visual system, G-OS IoT operating system, G-Learning comfortable and
energy-saving algorithm, and intelligent IoT technologies to provide family life with a solution for connecting
everything and create a high-quality life in which everything is connected. Consumers can experience the family
life of "connecting everything, responding to any call" through five control entries (Gree IoT air conditioner,
"Gree+" App, IoT mobile phone, smart door lock and Cube Monster).
On 28 December, 2019, Gree solemnly held the "2019 Made in China, Loved by the World Summit Forum".
During the forum, Gree demonstrated the blueprint of "smart household appliances in the whole house". Relying
on the full category and diversified development, through the powerful G-IoT and G-Voice technology cluster,
Gree built five systems: energy management, air management, health management, safety management and light
management, and established an intelligent, healthy and safe smart home system. A full smart home not only
connects all household appliances but also has the analysis, judgment and feedback capabilities on the basis of
perception, learning and detection, so as to provide accurate personalized services according to the user age,
interests, habits and other information.
At present, in the field of smart home, Gree has six key technologies: intelligent connection, intelligent perception,
intelligent interaction, intelligent cloud platform, intelligent energy management system, and artificial intelligence.
Intelligent connection: Through the 5G technology, Bluetooth distribution network technology and password-free
direct connection technology, Gree provides efficient connection guarantee to enable users to experience smart
home more stably and conveniently; intelligent perception: Gree adopts AI micro perception technology to reduce
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
worry of users about family privacy; intelligent interaction: Gree performs in-depth research and iterative
upgrading in the key voice interaction aspects such as ASR, NLP and TTS; intelligent cloud platform: On the
premise of guaranteeing security, Gree provides cloud services with the intelligent decision-making capability and
provides users with more humanized, considerate, intelligent, convenient and accurate services based on the
knowledge base and user behaviors and habits; intelligent energy: Gree realizes intelligent, economical, efficient
and clean energy utilization through an energy-saving algorithm; artificial intelligence: Gree sets up an artificial
intelligence platform and provides users with a more energy-saving, more environmental-friendly, more
comfortable and healthy intelligent decision-making system through a variety of deep learning algorithms.
In 2019, Gree focused on the combination of artificial intelligence with manufacturing industry and the layout of
production quality inspection, logistics scheduling, personnel management, voice interaction and informatization
and implemented the application of facial recognition, voice recognition, warehousing path optimization, product
quality and visual inspection based on a variety of technologies independently developed by Gree. Meanwhile,
Gree completed the setup of an artificial intelligence open platform, the construction of a facial recognition
service platform, the design and development of industrial visual inspection equipment, and the development of a
warehousing and logistics scheduling platform. By combing software with hardware, Gree realizes the application
of technologies and service platforms.
8. Focus on industrial positioning, accelerate market layout and occupy the commanding height of energy
interconnection
In the new energy sector, Gree made a series of deployment from technological projects and product development,
gathered resources, carried out team's activities of "going to the frontline", improved products from the angle of
customer thinking, formulated differentiated highlights and competitive product goals, and intensified efforts to
carry out comprehensive market promotion and layout. According to the characteristics and development trend of
the industry, Gree constantly explores and focuses on positioning. It gives more connotation and significance to
the distributed energy Internet, further consolidates the technologies and products of the six product lines, enriches
the product series, and expands the number of product categories to 7 categories, 39 types and 114 models.
Gree implemented the DC demonstration project in a centralized manner in key regions nationwide, fully
integrated the production, university and research resources of State Grid Corporation of China, China Southern
Power Grid Company Limited and the Construction Institute, and promoted the successful implementation of the
project. The Company completed Shanxi Datong Energy Revolution Pacesetter Exhibition Hall Project,
successfully building a full Micro DC-Grid and realizing zero energy consumption. Relying on the
implementation experience of the project, the Company was invited to participate in the compilation of
"Preparation of Technical Standards for Public Buildings with Near Zero Energy Consumption" for Shanxi
Province, which lays a foundation for the promotion and application of photovoltaic air conditioners and DC
ecology in local regions; the Company participated in a national demonstration new energy town project of State
Grid Corporation of China Jiangsu Branch in Tongli, Jiangsu Province, completed the supply and joint
commissioning of core DC equipment, and opened up an innovative way for energy transformation to drive
32
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
integrated development of cities; the patent titled "Method and Control Method for Suppressing Voltage
Fluctuation of DC Bus in Dual PWM Converters" won the Excellent Award of National Patents for Inventions; the
patent titled "Energy Gateway, Household Appliances, DC Micro-Grid System and their Energy Management
Methods" won the Excellent Award of Patents for Inventions in Guangdong Province.
In 2019, Gree was approved to build "Guangdong Energy Internet Innovation Center". Based on the operation
mode of "Company + Innovation Alliance", the center carries out research and tackling of distributed energy
Internet application technologies, conducts research based on the energy Internet system architecture, key
technologies and key equipment, and promotes the construction of standards system and intellectual property
protection; builds innovation demonstration projects and industrial incubators and carries out talent cultivation
and international exchange and cooperation to promote the DC new ecology, build a new world of network energy,
and create a better new life!
In the aspect of new energy electric vehicles, the Company successfully developed products such as 5.9-18m rare
earth main drive motors and controllers, covering five series, with power covering 60 W to 240 kW, which can
fully meet the needs of various commercial buses. At present, the products have been used in many cities such as
Zhuhai, Hangzhou, Changsha, Chengdu, Handan, Shijiazhuang, Tianjin, Lanzhou and Wuhu. Meanwhile, the first
new efficient reluctance motor used for new energy electric vehicles in the industry breaks the bottleneck of low
energy efficiency, poor safety and large noise encountered by the rare-earthless permanent reluctance main drive
motor system. In 2019, the technology was identified to be "world-leading" by China Machinery Industry
Federation and won the gold award of Nuremberg International Invention Exhibition. This technology makes the
main drive motors of new energy vehicles free from the dependence on rare earth resources, creates a new
technology research direction of the main drive motor system, and improves the competitiveness of core parts of
Chinese new energy vehicles.
9. Deepen the talent cultivation mechanism, build a staff incentive system in an all-round way and help the
Group develop steadily
In 2019, Gree's talent cultivation focused on the Company's development theme of "independent innovation, pursuit
for dreams in the new era", highlighted the key core talents of the Company and actual effects of cultivation in
various fields by taking measures such as "learning innovation of project design, deepening the cultivation mode and
mechanism, linking to improve management efficiency, and promoting upgrading of talent cultivation", and built a
diversified independent cultivation mechanism, promoting transformation and upgrading of talent cultivation,
helping and supporting development of the enterprise.
In 2019, in order to strengthen the cultivation of college students and middle and grassroots managers, Gree
focused on cultivation of cutting-edge technical talents and accelerated high-quality supply of talents. By closely
following the planning requirements of "insisting on independent cultivation of talents and building a high-quality
backbone team", Gree deepened the advanced cultivation mechanism of "foundation, improvement, and
reinforcement", organized and implemented advanced cultivation of backbones, strengthened the Company's
development confidence, set up a positive attitude of profession, and strengthened thinking transformation and
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
quality improvement.
Focusing on the important fields and topics of the Company's strategic development in 2019, the Company
organized and implemented 80 learning programs such as key special training camps, cutting-edge technology and
R&D support topics, and operation and management training topics to comprehensively connect strategies with
performance, and strengthened independent cultivation, all staff cultivation, systematic cultivation and lifelong
cultivation for talents of the Company. Meanwhile, in order to actively respond to new challenges brought by
market changes, better grasp the market and serve the market, the Company formulated a marketing strategic
blueprint with "Gree characteristics", continuously established a marketing team with outstanding comprehensive
abilities and excellent professional quality, organized and carried out the training camp for marketing service
personnel in 2019, integrated "theories as the basis and practices as the priority", and customized advanced
cultivation based on four dimensions: "culture practice, comprehensive competence, business skills, and product
learning" for marketing service personnel to help marketing service personnel improve their skills and better
support front-line marketing and services.
In 2019, in order to continuously improve employee satisfaction and happiness, Gree established an "all-round
employee incentive system", a well-equipped living area for employees, a Gree school with a beautiful
environment and complete teaching facilities, and a huge shuttle bus system, provided communication packages
for all staff, and prepared to build Gree Hospital. All these welfare guarantee measures build a happy factory for
Gree people. Meanwhile, in order to solve the housing problem of employees and make employees devote
themselves to career development, Gree implements the policy of "One Apartment for Each Gree Employee".
Hardbound residential buildings are handed over to employees and employees can move in by carrying their
luggage. At present, Gree is accelerating the construction of the Talent Apartment in Gree Mingzhu Plaza.
II. Analysis on principal businesses
1. Overview
See the description in "Overview" of "Discussion and Analysis of Business Operation".
2. Revenue and cost
(1) Composition of operating income
Unit: RMB Yuan
2019 2018
Proportion in Proportion in Increase/Decrease over
Amount Operating Amount Operating the previous year
Income Income
Total operating
198,153,027,540.35 100% 198,123,177,056.84 100% 0.02%
income
34
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Categorized by industry
Manufacturing 156,888,659,016.13 79.18% 170,592,428,489.17 86.10% -8.03%
Other businesses 41,264,368,524.22 20.82% 27,530,748,567.67 13.90% 49.88%
Categorized by product
Air Conditioner 138,665,055,103.82 69.99% 155,682,359,475.59 78.58% -10.93%
Home Appliances 5,575,911,375.57 2.81% 3,794,087,435.54 1.91% 46.96%
Intelligent
2,141,285,558.55 1.08% 3,108,531,271.87 1.57% -31.12%
equipment
Other main
10,506,406,978.19 5.30% 8,007,450,306.17 4.04% 31.21%
business
Other businesses 41,264,368,524.22 20.82% 27,530,748,567.67 13.90% 49.88%
Categorized by region
Domestic-main
136,073,206,974.43 68.67% 148,322,536,473.83 74.86% -8.26%
business
Overseas-main
20,815,452,041.70 10.51% 22,269,892,015.34 11.24% -6.53%
business
Other businesses 41,264,368,524.22 20.82% 27,530,748,567.67 13.90% 49.88%
(2) Industry, product, or region accounting for more than 10% of the Company's operating income or
operating profit
√ Applicable □ Not applicable
Unit: RMB Yuan
Increase or Increase or
Increase or
Gross Decrease of Decrease of
Decrease of
Operating Incomes Operating Cost Profit Operating Gross Profit
Operating Cost
Margin Income over Margin over
over Last Year
Last Year Last Year
Categorized by industry
Manufacturing 156,888,659,016.13 103,703,283,171.60 33.90% -8.03% -7.74% -0.21%
Other
41,264,368,524.22 39,796,089,409.76 3.56% 49.88% 54.07% -2.62%
businesses
Categorized by product
Air
138,665,055,103.82 87,192,449,061.21 37.12% -10.93% -11.83% 0.64%
Conditioner
Other
41,264,368,524.22 39,796,089,409.76 3.56% 49.88% 54.07% -2.62%
businesses
Categorized by region
35
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Domestic 136,073,206,974.43 85,697,917,155.53 37.02% -8.26% -7.95% -0.21%
Overseas 20,815,452,041.70 18,005,366,016.07 13.50% -6.53% -6.71% 0.16%
Other
41,264,368,524.22 39,796,089,409.76 3.56% 49.88% 54.07% -2.62%
businesses
In case of adjustment of statistical caliber for the Company's main business data during the Report Period, main business data after
statistical caliber adjustment at the end of the Report Period in the recent year
□ Applicable √ Not applicable
(3) Physical item income is higher than service income
(4) Fulfillment of major sales contracts signed by the Company by the end of the Report Period
□ Applicable √ Not applicable
36
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(5) Composition of operating cost
Unit: RMB Yuan
2019 2018 Increase/
Proportion Decrease
Industry Proportion
Item to over the
Category Amount Amount to Operating
Operating previous
Cost
Cost year
Raw material 88,126,710,086.12 86.66% 95,511,355,520.45 87.23% -7.73%
Household
Labor wage 4,943,375,465.37 4.86% 4,988,975,648.45 4.56% -0.91%
appliances
Depreciation 1,565,803,533.57 1.54% 1,456,650,827.31 1.33% 7.49%
manufacturing
Energy 836,728,653.04 0.82% 872,173,883.95 0.80% -4.06%
(6) Changes in the consolidation scope occurred during the Report Period
√ Yes □ No
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
Unit: RMB Yuan
Revenue of the Net profit of the
Proportion of
Time point of Equity acquired party from acquired party
Name of acquired Cost of equity equity Date of
equity acquisition the date of purchase from the date of
party acquisition acquisition purchase
acquisition mode to the end of the purchase to the
(%)
period end of the period
Nanjing Walsin Purchase by
31 May,
Nonferrous Metal 31 May, 2019 1,417,551,321.45 94.30 means of 10,411,966,740.54 46,316,187.50
2019
Co., Ltd. cash
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter
referred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Combination cost and business reputation
Unit: RMB Yuan
Item Nanjing Walsin Nonferrous Metal Co., Ltd.
Combination cost:
--Cash 1,071,239,072.20
--Other payables 346,312,249.25
Total combination cost 1,417,551,321.45
Less: Fair value share of the identifiable net assets acquired 1,143,436,281.34
37
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Business reputation 274,115,040.11
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of business
combination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,
2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China
Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] Appraisal
Report.
3) Reason for the formation of large-amount goodwill
In order to deepen the development of the Company's enameled wire business in the electrical sector and reduce
the impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of the
industrial chain. Due to the long construction cycle of the project, in order to expand production capacity and
occupy the market as soon as possible, the Company’s office meeting decided to acquire Nanjing Walsin
Nonferrous Metal Co., Ltd.;
The acquisition price was determined by referring to the price-to-book ratio of the target company’s comparable
listed company, comprehensively considering and fully evaluating the target company’s asset status, profitability,
brand influence, technology level, synergy effect and other factors;
Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;
B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark use
rights in intangible assets increased due to the appraisal.
Identifiable assets and liabilities of the acquired party on the date of purchase
Unit: RMB Yuan
Nanjing Walsin Nonferrous Metal Co., Ltd.
Item
Fair value on the date of purchase Carrying amount on date of purchase
Assets:
Monetary capital 313,841,040.72 313,841,040.72
Accounts receivable 306,347,724.29 306,347,724.29
Receivables financing 32,897,848.99 32,827,077.99
Prepaid accounts 3,774,390.86 3,774,390.86
Other receivables 250,561.22 250,561.22
Inventories 370,015,709.58 366,647,781.96
Other current assets 51,860,228.86 51,860,228.86
Fixed assets 148,157,020.23 38,678,328.99
Construction in Progress 8,162,465.21 9,544,356.01
Intangible assets 137,922,500.00 9,173,710.00
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Deferred income tax assets 10,028,895.44 10,116,258.43
Other non-current assets 1,295,685.45 1,635,079.39
Subtotal of assets 1,384,554,070.85 1,144,696,538.72
Liabilities:
Trading financial liabilities 16,785,750.00 16,785,750.00
Accounts payable 37,510,699.95 37,510,699.95
Advances from customers 8,143,309.65 8,143,309.65
Payroll payable 8,804,769.39 8,804,769.39
Taxes payable 3,546,574.30 3,546,574.30
Other payables 9,114,493.56 9,114,493.56
Other current liabilities 27,680,199.09 27,680,199.09
Deferred income tax liabilities 60,416,544.96
Subtitle of liabilities 172,002,340.90 111,585,795.94
Net assets 1,212,551,729.95 1,033,110,742.78
Less: minority equity 69,115,448.61 58,887,312.34
Net assets obtained 1,143,436,281.34 974,223,430.44
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,
equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).
The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin's
identifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement cost
minus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used to
appraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low price
coefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is the
income method. During the appraisal, the future income of the appraised intangible assets within a reasonable
income period will be discounted and accumulated at a reasonable discount rate, and the present value of income
will be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
39
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
None.
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on
17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,
and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established main bodies in this period are as follows:
Unit: RMB Yuan
Name Time of establishment Net assets of the end Net profit from the
of the period combination date to the
end of the period
Gree (Anji) Precision Mold Co., Ltd. 14 February, 2019 47,063,023.27 -236,976.73
Huzhou Landa Compressor Co., Ltd. 1 March, 2019 Not yet invested
Gree Material Supply (Wuhan) Co., Ltd. 20 March, 2019 12,716,347.67 -7,283,652.33
Gree Material Supply (Hefei) Co., Ltd. 20 March, 2019 24,858,404.13 4,858,404.13
Guangdong Guochuang Intelligent Technology Co., 22 March, 2019 30,270,563.23 270,563.23
Ltd.
Gree (Luoyang) Washing Machine Co., Ltd. 25 March, 2019 47,278,161.95 -2,721,838.05
Gree Material Supply (Chongqing) Co., Ltd. 27 March, 2019 18,056,402.39 -1,943,597.61
Gree Material Supply (Zhengzhou) Co., Ltd. 29 March, 2019 19,777,618.60 -222,381.40
Gree Rongzhu Copper (Nanjing) Co., Ltd. 29 March, 2019 Not yet invested
Zhuhai Gree Green Resources Recycling Co., Ltd 16 July, 2019 52,263,754.97 2,263,754.97
Luoyang Lianmei Real Estate Co., Ltd. 7 August, 2019 995,335,429.21 -4,664,570.79
Guochuang Energy Internet Innovation Center 20 August, 2019 29,874,379.59 -125,620.41
(Guangdong) Co., Ltd.
Zhuhai Hengqin Gree Huatai Energy Development 28 August, 2019 15,024,339.91 24,339.91
Co., Ltd.
Handan Yingdong New Energy Technology Co., 20 September, 2019 660.13 -1,339.87
Ltd.
Gree E-commerce Co., Ltd. 5 November, 2019 Not yet invested
Gelan Environmental Protection Technology 5 December, 2019 Not yet invested
(Shaoguan) Co., Ltd.
(7) Major changes or adjustment of businesses, products or services during the Report Period
□ Applicable √ Not applicable
40
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(8) Major sales customers and suppliers of the Company
Major sales customers
Total sales amount of 5 top customers (RMB) 34,174,890,230.35
Proportion of total sales amount of 5 top customers to the
17.05%
annual sales volume
Proportion of sales amount of related party in the sales
4.35%
amount of 5 top customers to the annual sales volume
Information of 5 top customers
Serial Number Customer Name Sales Volume (Yuan) Proportion to Annual Sales Volume
1 First 8,719,678,107.95 4.35%
2 Second 7,137,244,341.16 3.56%
3 Third 6,529,755,328.06 3.26%
4 Fourth 5,993,005,069.20 2.99%
5 Fifth 5,795,207,383.98 2.89%
Total -- 34,174,890,230.35 17.05%
Other description of major customers
√ Applicable □ Not applicable
Among the top five customers, Henan Shengshi Xinxing Gree Trading Co., Ltd. is a related party of the Company.
Other customers have no related-party relationship with the Company. The Company's directors, supervisors,
senior management personnel, core technical personnel, shareholders holding more than 5% of the shares, actual
controllers and other related parties have no direct or indirect interests in other customers.
Major suppliers of the Company
Total amount of purchase of top 5 suppliers (RMB) 33,461,077,701.75
Percentage to the total amount of annual purchase 25.07%
Percentage of related parties' purchase amount in the total
amount of purchase of top 5 suppliers to the total amount 0.00%
of annual purchase
Information about top 5 suppliers of the Company
Amount of Percentage to the total amount of annual
Serial Number Name of supplier
purchase (yuan) purchase
1 First 8,184,234,791.03 6.13%
2 Second 7,409,943,423.67 5.55%
3 Third 6,397,500,623.49 4.79%
4 Fourth 6,187,804,931.51 4.64%
5 Fifth 5,281,593,932.05 3.96%
41
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Total -- 33,461,077,701.75 25.07%
Other information about the major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB Yuan
Increase/Decrease Description of the
2019 2018
over the previous year material change
Sales expense 18,309,812,188.35 18,899,578,046.25 -3.12%
Overhead Expense 3,795,645,600.08 4,365,850,083.19 -13.06%
Mainly attributable to the
interest income and
Financial expense -2,426,643,429.91 -948,201,396.74 155.92%
increase of exchange
gains
R&D expenses 5,891,219,715.90 6,988,368,285.92 -15.70%
4. Investment in research and development
√ Applicable □ Not applicable
Gree adheres to the philosophy that "science and technology change life; science and technology create life" and
insists on "independent research and development of core technologies". It firmly believes that only the real
mastery of core technologies can enable us to grasp the fate of the enterprise and realize independent development
of the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as the
main player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,
cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leading
position in the field of refrigeration.
Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 research
institutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the National
Key Laboratory of Energy Saving for Air Conditioning Equipment and System Operation, National Engineering
Research Center of Green Refrigeration Equipment, State Recognized Enterprise Technology Center and the
State-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base for
Standardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end Equipment
Manufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation and
has been successively approved to establish post-doctoral research centers and doctoral workstations in
Guangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises of
High-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", and
"Guangdong Energy Internet Innovation Center".
42
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree won
seven awards, including one national second prize for technological invention and three provincial and ministerial
first prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugal
air-conditioning equipment" project won the second prize of national technological invention in 2019. Gree's "key
technology and application of direct current in optical storage air conditioners" project won the first prize of
Guangdong provincial technological invention, China Patent Gold Award and other awards.
R&D investment of the Company
2019 2018 Change ratio
Number of R&D personnel (persons) 14,251 11,808 20.69%
Proportion of number of R&D
16.04% 13.30% 2.74%
personnel
Investment amount in research and
6,011,210,604.21 7,268,369,454.61 -17.30%
development (Yuan)
Proportion of investment in research
3.03% 3.67% -0.64%
and development in operating income
Capitalization amount of research and
119,990,888.31 280,001,168.69 -57.15%
development investment (RMB)
Proportion of capitalized research and
development investment to research and 2.00% 3.85% -1.85%
development investment
Reason for the significant change in proportion of investment in research and development to the operating income compared to the
previous year
□ Applicable √ Not applicable
Reason of the great change in the capitalization rate of R&D investment and its rationality explanation
□ Applicable √ Not applicable
5. Cash flows
Unit: RMB Yuan
Increase/Decrease over the
Item 2019 2018
previous year
Sub-total of cash inflows from
175,195,923,314.18 146,209,763,702.97 19.83%
operating activities
Sub-total of cash outflows from
147,302,209,220.59 119,268,972,159.99 23.50%
operating activities
Net cash flows from operating
27,893,714,093.59 26,940,791,542.98 3.54%
activities
Sub-total of cash inflows from
8,445,533,871.01 9,948,975,741.20 -15.11%
investing activities
43
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Sub-total of cash outflows from
19,720,582,471.78 31,794,741,016.87 -37.98%
investing activities
Net Cash Flow from Investment
-11,275,048,600.77 -21,845,765,275.67 48.39%
Activities
Sub-total of cash inflows from
21,595,107,923.68 27,639,080,524.35 -21.87%
financing activities
Sub-total of cash outflows from
40,817,084,044.61 25,125,234,042.18 62.45%
financing activities
Net Cash Flow from Financing
-19,221,976,120.93 2,513,846,482.17 -864.64%
Activities
Net increase in cash and cash
-2,399,549,002.85 7,412,504,600.40 -132.37%
equivalents
Major factors that result in major changes in relevant data
√ Applicable □ Not applicable
Unit: RMB Yuan
Increase/
Item 2019 2018 decrease Cause of change
proportion
Net Cash Flow
Attributable to decrease of cash paid for
from Investment -11,275,048,600.77 -21,845,765,275.67 48.39%
investments
Activities
Net Cash Flow Attributable to increase of cash paid for
from Financing -19,221,976,120.93 2,513,846,482.17 -864.64% debts, distribution of dividends and
Activities profits or interests
The description of causes of major differences existing between the net cash flows from operating activities of the Company and net
profits of the current year in the Report Period
□ Applicable √ Not applicable
III. Non-core business analysis
□ Applicable √ Not applicable
IV. Assets and liabilities
1. Major changes in assets composition
Since 2019, the Company has implemented new financial instrument standards, new income standards or new lease standards for the
first time and adjusted and implemented relevant items in financial statements at the beginning of the year.
√ Applicable □ Not applicable
Unit: RMB Yuan
44
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
At the end of 2019 At the beginning of 2019 Description
Change of of the
Proportion to Proportion to
Amount Amount proportion material
total assets total assets
change
Monetary capital 125,400,715,267.64 44.32% 115,022,653,811.67 45.80% -1.48%
Accounts
8,513,334,545.08 3.01% 7,642,434,078.24 3.04% -0.03%
receivable
Inventories 24,084,854,064.29 8.51% 20,011,518,230.53 7.97% 0.54%
Investment real
498,648,691.85 0.18% 537,589,343.08 0.21% -0.03%
estate
Long-term
equity 7,064,186,161.29 2.50% 2,250,732,461.71 0.90% 1.60%
investment
Fixed assets 19,121,930,757.04 6.76% 18,385,761,475.54 7.32% -0.56%
Construction in
2,431,051,409.94 0.86% 1,663,938,988.55 0.66% 0.20%
Progress
Short-term
15,944,176,463.01 5.63% 22,197,899,406.88 8.84% -3.21%
borrowing
Long-term
46,885,882.86 0.02% 0.02%
borrowing
45
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
2 Assets and liabilities measured by fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
Depreciation
Amount at the Gains and losses Accumulated fair reserves
Amount of buying in Amount of selling out Amount at the end
Item beginning of the from changes in value changes withdrawn Other changes
during the period during the period of the period
period fair value recognized in equity during the
period
Financial assets
1. Trading financial
assets (excluding
1,012,470,387.43 28,348,042.95 2,937,144,194.29 3,022,754,041.09 955,208,583.58
derivative financial
assets)
2. Derivative financial
170,216,138.92 -77,823,513.23 92,392,625.69
assets
3. Other debt investments 1,064,120,569.43 -4,038,275.59 2,177,765.62 330,000,000.00 -426,789,360.26 296,836,282.20
4. Other equity
1,144,907,946.33 2,398,458,222.20 1,713,290,280.44 1,084,999,993.84 4,644,601,697.51
instrument investments
Subtotal 3,391,715,042.11 2,344,944,476.33 1,715,468,046.06 4,022,144,188.13 3,352,754,041.09 -426,789,360.26 5,989,039,188.98
Total 3,391,715,042.11 2,344,944,476.33 1,715,468,046.06 4,022,144,188.13 3,352,754,041.09 -426,789,360.26 5,989,039,188.98
Financial liabilities 257,364,882.07 274,150,632.07 16,785,750.00
Content of other changes
Whether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No
46
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
3. Limitation of asset rights by the end of the Report Period
Unit: RMB Yuan
Item Book balance at the end of the period Cause of restriction
Monetary capital 13,329,429,050.16 Legal deposit reserved and deposits
Financing of accounts receivable 8,874,415,345.76 Pledged
Other current assets 100,000,000.00 Pledged
Other equity instrument investments 3,316,957,037.50 Restricted shares
Intangible assets 153,191,226.30 Mortgage
Total 25,773,992,659.72
V. Investments
1. Overall review
√ Applicable □ Not applicable
Investment in the same period last year
Investment in the Report Period (RMB) Change percentage
(RMB)
7,192,756,039.01 15,477,712,506.03 -53.53%
2. Major equity investments obtained during the Report Period
□ Applicable √ Not applicable
3. Major non-equity investments during the Report Period
□ Applicable √ Not applicable
47
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
4. Financial asset investment
(1) Securities investment
√ Applicable □ Not applicable
Unit: RMB Yuan
Accounting Carrying amount at Gains and losses Accumulated fair value Profit and loss Accounting Capital
Abbreviation of Initial investment Amount of buying in Amount of selling Carrying amount at
Type of securities Security code measurement the beginning of the from changes in fair changes recognized in during the Report calculation Source of
security name cost during the period out during the period the end of the period
method period value equity Period items Investment
Stocks listed on
Other equity
domestic and Measure at fair
600745 Wingtech Technology 884,999,996.60 0.00 2,431,957,040.90 2,431,957,040.90 884,999,996.60 3,316,957,037.50 instrument Private
overseas stock values
investments
exchanges
Stocks listed on
Other equity
domestic and Measure at fair
600619 HIGHLY 1,145,070,921.73 801,289,952.19 -26,982,776.24 -369,871,271.40 14,408,571.49 775,199,650.33 instrument Private
overseas stock values
investments
exchanges
Stocks listed on
Other equity
domestic and RS MACALLINE- H Measure at fair
1528 701,240,501.50 343,617,994.14 -17,066,501.03 -359,345,947.63 14,398,299.50 341,894,553.87 instrument Private
overseas stock SHS values
investments
exchanges
Stocks listed on
Other equity
domestic and Measure at fair
600888 Xinjiang Joinworld 199,999,997.24 0.00 10,550,458.57 10,550,458.57 199,999,997.24 210,550,455.81 instrument Private
overseas stock values
investments
exchanges
Measure at fair Trading
Bonds 151191 19 Chang'an 01 503,813,082.19 18,866,237.81 1,296,701,369.86 792,888,287.67 34,927,670.83 522,679,320.00 Private
values financial assets
Measure at fair Other debt
Bonds 1080022 10 State grid bonds 01 344,572,550.00 369,461,328.07 -4,640,291.70 677,072.11 11,799,893.40 365,610,278.07 Private
values investments
16 Interest-bearing Measure at fair Other debt
Bonds 160017 288,405,500.00 291,920,782.20 3,792,759.76 1,695,134.07 13,135,500.00 296,836,282.20 Private
treasuries 17 values investments
Measure at fair Other debt
Bonds 101758021 17 Baoanji MTN001 59,940,000.00 60,850,102.19 308,588.72 -194,440.56 3,838,413.96 61,179,082.19 Private
values investments
Other securities investments 203,663,800.00 -- 341,888,356.97 -3,499,332.37 744,865,753.42 1,074,865,753.42 24,888,596.92 0.00 -- --
Total 4,331,706,349.26 -- 2,209,028,515.76 2,413,286,184.42 1,715,468,046.06 3,126,567,117.12 1,867,754,041.09 117,396,946.10 5,890,906,659.97 -- --
Disclosure date of Announcement on Approval of Portfolio
29 April, 2019
Investment by Board of Directors
Disclosure date of Announcement on Approval of Portfolio
27 June, 2019
Investment by Board of Shareholders (if any)
48
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Investment in derivatives
√ Applicable □ Not applicable
Unit: RMB 10,000
Proportion
of the
Amount
Operation Initial Withdrawing ending Profits
Whether or Type of Amount of of selling
name of amount of Beginning depreciation Ending contract and losses
Incidence not investment buying in out
investment investment Start date Expiry date investment reserve investmen amount to during the
relation transaction in during the during
in in amount amount t amount net assets at report
was related derivatives period the
derivative derivatives (If any) the end of period
period
the report
period
Jinrui Futures 31
Non-related 1 January,
Futures co., No Hedging -617.81 December, -617.81 613.47 0.01% -398.44
party 2019
LTD Contract 2019
Forward 31
Financing Non-related 1 January, -33,638.9
No Financial -8,714.87 December, -8,714.87 9,239.26 0.08%
Institution party 2019 1
Contract 2019
-34,037.3
Total -9,332.68 -- -- -9,332.68 0 0 0 9,852.73 0.09%
5
Capital Source of Investment in Derivatives Own funds
Lawsuits (if apply) None
Disclosure Date of Announcement on Approval of
Investment in Derivatives by Board of Directors (if 29 April, 2019
any)
Disclosure Date of Announcement on Approval of
Investment in Derivatives by Board of Shareholders 27 June, 2019
(if any)
In order to evade any risk in the cost of purchase of raw materials by the Company which might arise from wide fluctuations of
the price of bulk raw materials, the Company carried on the hedging business for part of the raw materials and duly locked the
cost of raw materials according to the futures market situation to reduce any uncertainty risk from fluctuations of the market
price of the spot goods; meanwhile, the Company carried out foreign exchange transactions by bank's financial instruments to
evade any risk in the fluctuations of exchange rate and interest rate, reduce foreign exchange liabilities and conduct the cost
locking, and realize the maintenance and increase of the value of foreign exchange assets. The Company laid down the Rules for
Hedging Management of Futures and "Internal Control System of Forward Foreign Exchange Transactions to execute the full
appraisal and control of the investment in derivatives and risks in open interest, and the detailed description is provided below:
Legal and regulatory risk; While the Company carried on hedging and foreign exchange transactions, it was required to follow
the laws and regulations and specifically stipulate the rights and obligations with the agency. Control measures: The Company
assigned the responsible department to strictly execute the contract review, clarify the rights and obligations, strengthen
Risk analysis of open interest of derivatives and
compliance check and ensure the Company's investment in derivatives and operation of open interest in accordance with any
control measures during the Report Period
laws and regulations and internal control system of the Company.
(including but not limited to market risk, liquidity
2. Operation risk: it means any risk in operation arising out of imperfect internal process, operation of employees and system.
risk, credit risk, operation risk and legal risk)
Control measures: The Company established the corresponding management system, clarified the division of responsibilities
and examination & approval procedures of the hedging and foreign exchange transactions, built more perfect supervision
mechanism and effectively reduced any operation risk through business, decision and transaction processes.
3. Market risk: The price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchange market
bring a greater market risk to the futures business and foreign exchange transactions. Control measures: The principle of prudent
and moderate operation is upheld in the futures hedging and foreign exchange transactions of the Company, in which any
speculative transaction is not permitted. As to the hedging business, the Company strictly restricted the number of hedging not
to exceed the number of actual spot transaction and the open interest of the futures not to exceed the number of hedged spot
goods and implemented the mechanism to stop loss. In respect of the foreign exchange transactions, the Company effectively
prevented the market risk by judging the trend of foreign exchange rate and utilizing a contract to lock the settlement of
exchange rate.
49
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
The detailed usage and related hypothesis and
parameter setting should be disclosed in terms of the
The loss under the futures hedging contract during the Report Period was RMB -3,984,400; the loss under the forward foreign
market price of the invested derivatives or changes
exchange contract during the Report Period was RMB -156,742,100.
in fair value of the products during the Report Period
and analysis on the fair value of the derivatives.
Descriptions about whether there were major
changes in the accounting policies and detailed
accounting principle of the Company's derivatives No change
during the Report Period as compared to the last
report period.
In the opinion of the Company's independent directors, the Company improved its management level by strengthening internal
Special opinions of independent directors regarding control and carrying out the risk prevention measures as well as stabilizing price fluctuations through futures hedging. It also
the investment in derivatives and risk control of the enhanced its foreign exchange risk control level through foreign exchange transactions. The above investment in derivatives
Company helps to give play to competitive advantages of the Company, so it is feasible for the Company to carry on the investment in
derivatives under controllable risk.
5 Usage of raised funds
□ Applicable √ Not applicable
The Company was not involved in any usage of raised funds during the Report Period.
VI. Sales of major assets and equities
1. Sales of major assets
□ Applicable √ Not applicable
The Company was not involved in sales of major assets during the Report Period
2. Sale of major equities
□ Applicable √ Not applicable
50
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
VII. Analysis on major controlling shareholder and joint stock companies
√ Applicable □ Not applicable
Information regarding major subsidiaries and joint stock companies that contribute over 10% of net profits to the Company
Unit: RMB Yuan
Company Name Company type Main business Registered capital Total assets Net assets Operating incomes Operating profit Net profits
Zhuhai Gree Group Finance Company
Subsidiary Financial Services 1,500,000,000.00 70,450,849,470.09 6,449,784,786.60 2,399,580,625.93 1,057,892,882.19 795,328,040.73
Limited
Gree Electric Appliances (Chongqing) Co., Air Conditioner
Subsidiary 230,000,000.00 4,943,677,549.76 2,387,623,740.36 10,703,012,677.06 924,700,401.68 784,272,003.69
Ltd. Manufacturing
Varnished Wire
Zhuhai Gree Electrical Co., Ltd. Subsidiary 1,669,315,586.15 9,038,392,090.84 2,742,570,888.17 37,487,458,843.09 198,015,868.59 246,873,908.91
Manufacturing
Zhuhai Kaibang Motor Manufacture Co., Ltd. Subsidiary Motor Manufacturing 82,000,000.00 3,165,078,452.44 936,607,925.54 3,268,915,837.06 104,343,372.27 94,891,085.95
Air Conditioner
Gree Electric Appliances (Hefei) Co., Ltd. Subsidiary 150,000,000.00 13,434,554,094.46 6,839,893,850.88 17,678,676,202.54 1,319,053,736.29 1,146,345,338.81
Manufacturing
GREE (Zhongshan) Home Appliances Co., Small Home Appliances
Subsidiary 30,000,000.00 767,498,126.19 345,588,332.67 1,308,967,399.32 20,000,756.45 19,979,115.24
Ltd. Manufacturing
Zhuhai Landa Compressor Co., Ltd. Subsidiary Compressor Manufacturing 93,030,000.00 12,009,778,160.54 6,739,234,453.82 18,296,919,165.74 975,334,931.42 839,171,836.50
Gree (Zhengzhou) Electric Appliances Co., Air Conditioner
Subsidiary 20,000,000.00 10,098,813,462.45 6,719,526,446.93 12,388,055,547.15 1,428,832,323.28 1,257,175,220.76
Ltd. Manufacturing
Air Conditioner
Gree (Wuhan) Electric Appliances Co., Ltd. Subsidiary 100,000,000.00 4,808,679,659.23 1,773,336,648.92 12,667,391,059.28 1,123,856,430.60 940,489,282.46
Manufacturing
Air Conditioner
Gree (Wuhu) Electric Appliances Co., Ltd. Subsidiary 20,000,000.00 9,144,901,772.10 2,583,021,379.88 7,300,613,248.36 538,250,961.53 524,690,033.11
Manufacturing
Gree (Shijiazhuang) Electric Appliances Co., Air Conditioner
Subsidiary 100,000,000.00 3,485,566,564.08 861,971,036.70 8,750,297,120.47 666,975,416.91 553,014,031.00
Ltd. Manufacturing
Zhuhai Gree Xinyuan Electronics Co., Ltd. Subsidiary Capacitor Manufacturing 126,180,000.00 1,825,318,035.27 854,492,987.09 1,679,187,933.25 225,753,813.76 189,048,061.77
51
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Information about acquisition and disposal of subsidiaries during the Report Period
√ Applicable □ Not applicable
Unit: RMB Yuan
Methods of acquisition and disposal
Impact on overall production and
Company Name of subsidiaries during the Report
operation and financial results
Period
Gree (Luoyang) Washing Machine Co., Ltd. Establishment -2,721,838.05
Guochuang Energy Internet Innovation Center
Establishment -125,620.41
(Guangdong) Co., Ltd.
Gree (Anji) Precision Mold Co., Ltd. Establishment -236,976.73
Zhuhai Gree Green Resources Recycling Co., Ltd Establishment 2,263,754.97
Gree E-commerce Co., Ltd. Establishment -
Huzhou Landa Compressor Co., Ltd. Establishment -
Gree Material Supply (Hefei) Co., Ltd. Establishment 4,858,404.13
Gree Material Supply (Zhengzhou) Co., Ltd. Establishment -222,381.40
Gree Material Supply (Chongqing) Co., Ltd. Establishment -1,943,597.61
Gree Material Supply (Wuhan) Co., Ltd. Establishment -7,283,652.33
Guangdong Guochuang Intelligent Technology Co.,
Establishment 270,563.23
Ltd.
Nanjing Walsin Nonferrous Metal Co., Ltd. Acquisition 46,316,187.50
Gree Rongzhu Copper (Nanjing) Co., Ltd. Establishment -
Zhuhai Hengqin Gree Huatai Energy Development
Establishment 24,339.91
Co., Ltd.
Luoyang Lianmei Real Estate Co., Ltd. Establishment -4,664,570.79
Handan Yingdong New Energy Technology Co.,
Establishment -1,339.87
Ltd.
Gelan Environmental Protection Technology
Establishment -
(Shaoguan) Co., Ltd.
Zhuhai Meiling General Motors Co., Ltd. Cancelled on 7 August, 2019 2,737,019.33
Anhui Gree Kinghome Electric Appliances Sales
Cancelled on 17 October, 2019 -9,003,490.77
Co., Ltd.
Total -- 30,266,801.11
VIII. Information about businesses controlled by the Company
□ Applicable √ Not applicable
52
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
IX. Prospects of the Company's future development
1. Development strategy of the Company
Gree takes "building a global advanced industrial group and making Gree a century-year world brand" as its
corporate vision and continues to insist on independent education, independent innovation and independent
production; driven by technological innovation, strengthens technological research and development and improves
the research and development efficiency; accelerates the transformation and upgrading of the marketing model
and comprehensively expands marketing channels; insists on quality innovation, optimizes the quality control
system, and gradually achieves the quality goal of "zero defect and zero after-sales"; strengthens fund
management, improves the risk control system, and guarantees the sound development of the Company; explores
deeply in the industrial field, accelerates intelligent manufacturing, and steadily develops emerging industries such
as precision mould, communication equipment and new energy, and builds a more competitive diversified and
technological global industrial group.
2. Key work of the Company in 2020
(1) Strengthen innovation of scientific research and improve the level of standardization and generalization
Gree will strengthen the construction of major scientific research platforms focusing on key national laboratories,
accelerate the judgment and deployment in major innovation fields, and actively undertake major national and
industrial scientific research projects; focus on the basic research directions consistent with the product strategy,
improve the quality of research projects, accelerate promoting the conversion of technological research results;
increase the R&D investment in new business sectors such as household appliances, refrigerators and washing
machines, and intelligent equipment, achieve greater technological leaps, and improve the product layout of new
business sectors; strengthen the platform-based and modular design of products and comprehensively improve the
level of standardization and generalization; improve the intellectual property protection system, enhance the
protection for technological innovation, and share independent innovation achievements with the world.
(2) Optimize the marketing model and cultivate market growth points
Gree will integrate superior online and offline resources, establish a new retail model with Gree characteristics,
and increase the speed of response to market demand; continue to go deep into the market segments of central air
conditioners and further increase the share in the commercial market through standard and professional technical
services; optimize the overseas business management model and strengthen the promotion of overseas proprietary
brands; vigorously promote the integration of refrigerators, washing machines and household appliances into the
full channel sales to make them gradually become the second major business sector; based on changes of the
market and industry reform, further improve the overall market competitiveness of intelligent equipment, moulds,
industrial products, new energy, and casting, continue to expand sales channels and cultivate market growth points;
actively go into the medical and healthcare industry and make more efforts to invest in the development and
production of epidemic prevention products and health products.
53
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(3) Improve top-level design of intelligent manufacturing and accelerate industrial transformation and
upgrading
Gree will accelerate the comprehensive application of new-generation information technology, set up a
full-process and full-element intelligent analysis and decision-making platform, and build an intelligent
information ecosystem; promote the rapid implementation of the intelligent demonstration base project and build a
leading, technological and intelligent benchmarking plant; promote the layout of the intelligent home industry
chain and expand the intelligent home ecosystem.
(4) Promote reform of the management system and improve the operation efficiency of the enterprise
Gree will accelerate the promotion of the block management model, establish an industry sector responsibility
system, define the target indicators of independent operation and make each business sector be responsible for the
profits and losses; improve existing business processes, make enterprise management more systematic, integrated
and synergistic, and increase the management and decision-making efficiency; solve the problems such as unclear
division of responsibilities between departments and repeated setting of posts in a targeted manner and establish a
normalized organization and a mechanism for simplifying posts, determining posts and staffing and improving the
work.
(5) Strengthen cost management and promote cost reduction and efficiency improvement
Gree will improve the full-process cost control system and encourage all staff to participate in cost reduction;
strengthen front-end design to reduce costs, improve the cost control awareness of R&D personnel, and reduce
unnecessary waste of resources and excessive services; analyze in an in-depth manner the cost drivers of products
from multiple perspectives such as standards, quality, production, procurement and sales and continue to promote
cost reduction and efficiency improvement.
(6) Improve the fund management and risk prevention system and strengthen audit
Gree will strengthen fund management, improve the financial management and control capability, and realize fund
maintenance and appreciation on the premise of strictly controlling capital risk; carry out audit in an in-depth and
efficient manner, fully mine the value of information, improve data analysis models, and enhance the full-process
audit and review; strengthen the information security management and control mechanism, identify and monitor
risks in advance, and improve the overall capability of responding to information security risks.
(7) Strengthen the backbone management and talent cultivation and establish a talent team
Gree will strengthen independent talent cultivation and cultivation of young employees, lay a solid talent
foundation for the long-term development of the enterprise, and cultivate more high-level technological R&D
talents and excellent industrial talents; strive to establish a backbone team with excellent quality, select and
cultivate backbones according to the requirements of "loyalty, cleanness and responsibility", and actively advocate
creation of a realistic and practical atmosphere and orientation inside the enterprise; strengthen the market
awareness of backbones, sort out and improve the backbone performance assessment mechanism oriented by
54
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
goals and results, determine management posts synchronously, and optimize the backbone structure.
3. Major risks in future development
(1) Macroeconomic fluctuation risk
The products sold by the Company are mainly HVAC and household appliances, and its market demand is greatly
influenced by the economic situation and macroeconomic regulation. The impact of the novel coronavirus
pneumonia may lead to a slowdown in the growth of macro-economy or consumer demand, and the growth of the
Company in the household appliances market will also slow down. Considering the expected impact of the
implementation of the new energy efficiency standards, the competition in the industry may be further intensified,
thus affecting sales of the Company's products.
(2) Risk of price fluctuation in production factors
The household appliance manufacturing industry in which Gree is engaged is a labor-intensive industry, wherein
the main raw materials used to produce household appliances are copper, steel, aluminium and plastics of various
grades, and their cost accounts for a large proportion. If the price of raw materials fluctuates considerably, or the
cost of labor, water, electricity, land and other production factors fluctuates substantially due to macroeconomic
environment changes and policy adjustments, it will have a certain impact on the Company's operating
performance.
(3) Market risks caused by "de-globalization"
Influenced by the novel coronavirus pneumonia, "de-globalization" and the trade protectionism trend in some
countries and regions become increasingly prominent. The uncertainty of global economy further increases, which
brings new challenges to the expansion in the overseas market and the risk of increasing the operating costs.
(4) Export market risks and exchange losses caused by exchange rate fluctuation
With continuous expansion of the Company's overseas market, the Company's export revenue continues to
increase. Exchange rate fluctuations may not only bring adverse effects on the Company's export of products, but
also cause the Company's exchange losses and increase the financial costs.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
X. Reception of activities including researches, communication and interviews
1. Registration form for reception of activities including researches, communication and interviews
√ Applicable □ Not applicable
Method of Type of reception
Time of reception Basic situation index of research
reception object
For details, see the Survey Activity Information (from
1 March, 2019 to 27
Field Research Institution 1 March, 2019 to 27 March, 2019) of Gree (000651)
March, 2019
disclosed by the Company at www.cninfo.com.cn.
For details, see the Activity Record of Meeting with
22 May, 2019 Field Research Institution Interested Investors disclosed by the Company at
www.cninfo.com.cn on 22 May, 2019.
Times of reception 35
Number of received institutions 60
Number of received individuals 0
Number of other received objects 0
Whether undisclosed material information is
No
revealed, disclosed or divulged
56
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section V Important Events
I. Information about common stock profit distribution and capitalization from capital reserve
funds
The common stock profit distribution policy in the report period, especially preparation, execution or adjustment of the cash dividend
policy
√ Applicable □ Not applicable
Profit distribution preplan of 2018 (executed already in 2019): Calculated by the total stock capital of the
Company equivalent to 6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included)
per 10 shares, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and the
balance to be carried forward to the future year.
Special description of the cash dividend policy
In compliance with provisions of the Articles of Association or requirements of the
Yes
resolution of the general meeting of shareholders:
The dividend standard and ratio are definite and clear: Yes
The related decision procedures and mechanisms are complete: Yes
Independent directors perform their duties responsibly and play their due roles: Yes
Minority shareholders have the opportunity to fully express their opinions and demands
Yes
and their legitimate rights and interests are fully protected:
The conditions and procedures are transparent and comply with regulations if the cash
Not applicable
dividend policy is adjusted or changed:
The common stock dividend distribution plan (preplan) and the capitalization plan (preplan) from capital reserve funds in recent three
years (including the Report Period)
1) Profit distribution preplan of 2019: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 12 (tax included) per 10 shares, with the
total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the balance to be carried
forward to the future year.
2) Profit distribution plan of 2018: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included) per 10 share, with the
total amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and the balance to be carried
forward to the future year.
3) Profit distribution plan for half year of 2018: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 6 (tax included) per 10 shares, with the
total amount of cashes to be distributed in such a way up to RMB 3,609,438,526.80 and the balance to be carried
forward to the future year.
4) Profit distribution plan of 2017: No cash dividend was distributed, no bonus share was given, public reserve
57
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
funds were not used for capitalization, and the balance was carried forward to the next year.
Table for common stock cash dividends of the Company in the recent three years (including the Report Period)
Unit: RMB Yuan
Proportion of total
Proportion of amount
Net profit Ratio of amount of cash cash dividend
of cash dividend to
attributable to Amount of cash dividend to net profit (including other ways)
net profit attributable
Amount of cash common dividends based attributable to common Total cash dividend to net profit
to common
Year dividend (tax shareholders of listed on other ways shareholders of listed (including other attributable to
shareholders of listed
included) company in annual (e.g., share company in consolidated ways) common shareholders
company in
consolidated repurchase) financial statements based of listed company in
consolidated
financial statements on other ways consolidated financial
financial statements
statements
2019 7,218,877,053.60 24,696,641,368.84 29.23% 0.00 0.00% 7,218,877,053.60 29.23%
2018 12,633,034,843.80 26,202,787,681.42 48.21% 0.00 0.00% 12,633,034,843.80 48.21%
2017 0.00 22,400,484,001.26 0.00% 0.00 0.00% 0.00 0.00%
The profits of the Company in the Report Period and the parent company's profits distributable to common shareholders are positive,
but the common stock cash dividend distribution preplan has not been put forward.
□ Applicable √ Not applicable
II. Profit distribution and capitalization from public reserve funds in the Report Period
√ Applicable □ Not applicable
Number of bonus shares (stock) given per 10 stocks 0
Dividend allocated per 10 stocks (RMB) (tax included) 12
Increase by transfer per 10 stocks (stock) 0
Equity base of distribution proposal (stock) 6,015,730,878
Cash dividend (RMB) (tax included) 7,218,877,053.60
Cash dividend in other ways (such as repurchasing shares) (RMB) 0.00
Total cash dividend (including other methods) (RMB) 0
Distributable profit (RMB) 53,971,127,295.29
Proportion of total cash dividends (including other methods) in total
100%
profit distribution
Cash dividends of this distribution
If the company's development stage is mature and there are no major capital expenditure arrangements, when the profit is
distributed, the minimum proportion of cash dividends in this profit distribution should reach 80%
Detailed description of the preplan for profit distribution or capitalization from public reserve funds
The Company plans to use the total share capital of 6,015,730,878 shares as the base to distribute all shareholders a cash of RMB
12 (tax included) per 10 shares, but does not plan to give any bonus share or use any public reserve funds for capitalization, with
the total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the remaining undistributed profits to
be carried forward to the future year.
If the total number of shares of the Company enjoying profit distribution rights changes from the date of this announcement to the
58
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
date of equity registration for the implementation of equity distribution due to convertible bonds to shares, share repurchase, etc.,
the Company will follow the principle of unchanged total distribution to adjust the distribution ratio per share accordingly.
III. Fulfillment of commitments
1. Commitments of the Company's actual controllers, shareholders and acquirers, the Company and other
related parties of commitments that have been fulfilled completely in the Report Period or have not been
fulfilled completely as of the end of the Report Period
√ Applicable □ Not applicable
Cause of Party of Type of Time of Period of Fulfillment
Content of commitment
commitment commitment commitment commitment commitment status
Share-splitting
commitment
1. The transferee commits that shares
acquired from Gree Electric Appliances due
to this transfer will be fully locked up when
the transfer registration is completed in this
transaction, and will not be transferred for
36 months from the date of completion of
the share transfer registration; if there are
relevant laws and regulations that require the
lock-up period of the transferred shares 36 months from
exceeds the above-mentioned lock-up period the date of Being under
Zhuhai 2 December,
Share lock-up committed by the transferee, the transferee completion of the normal
Mingjun 2019
agrees to extend the lock-up period of the share transfer fulfillment
shares accordingly to meet the prescribed registration
period. 2. After the completion of this share
transfer, for shares acquired by the
transferee from Gree Electric Appliances,
Inc. due to this transfer, their dividend
Commitments made shares generated due to bonus share and
in the acquisition capitalization from public reserve funds by
report or equity the listed company will also abide by the
change report above share lock-up commitment.
1. The transferee commits that after the
completion of the transfer, the overall
stability of Gree Electric Appliances'
Operation and Management Team will be
maintained within the scope of authority,
and no major changes will be made to Gree
Electric Appliances' management structure.
2. The transferee commits that during the Being under
Zhuhai Other 2 December, Effective for a
period of direct or indirect holding of shares normal
Mingjun commitments 2019 long time
of Gree Electric Appliances, it will not take fulfillment
the initiative to put forward any suggestions
and proposals regarding the relocation of
Gree Electric Appliances' headquarters and
registered address from Zhuhai City, and it
will actively urge all parties to ensure that
Gree Electric Appliances' headquarters and
registered address are not relocated from
59
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Zhuhai City; if any shareholder puts forward
any suggestions and proposals regarding the
relocation of Gree Electric Appliances'
headquarters and registered address from
Zhuhai City, the transferee commits to
participate in the general meeting of
shareholders and vote against such
proposals. 3. The transferee commits to do
its utmost to make effective industrial
investment and strategic resource
introduction for Zhuhai's economic
development, and urge Gree Electric
Appliances to make new contributions to the
sustainable and healthy development of
Zhuhai's economy. 4. Zhuhai Mingjun
commits to actively exercise the voting
rights of shareholders in the general meeting
of shareholders of the listed company
involving dividends and to prompt the
directors nominated by it to vote in favor of
the board of directors' resolution of the listed
company regarding an annual net profit
dividend ratio of not less than 50%.
Letter of Commitment on Maintaining the
Independence of the Listed Company: In
order to guarantee the independent operation
of the listed company after this equity
transfer, Zhuhai Mingjun, Zhuhai Xianying
and Zhuhai Yuxiu make the following
commitments. (I) To ensure asset
independence and completeness of the listed
company: 1. To ensure that Gree Electric
Appliances will be equipped with the
relevant production system, auxiliary
production system as well as supporting
facilities corresponding to its business
operations, have the right to own or use the
land, workshop and machines and facilities
Zhuhai
relating to its business operations as well as
Mingjun, Maintaining the Being under
the ownership or use right to its trademarks, 2 December, Effective for a
Zhuhai independence of normal
patent technologies and know-how, and have 2019 long time
Xianying, the listed company fulfillment
an independent purchase system of raw
Zhuhai Yuxiu
materials and sales system of products. 2. To
ensure that Gree Electric Appliances will
have independent and complete assets, and
all of their assets will be under the control of
Gree Electric Appliances and independently
owned and operated by Gree Electric
Appliances. 3. To ensure that Zhuhai
Mingjun and other enterprises controlled by
Zhuhai Mingjun will not illegally occupy
Gree Electric Appliances' assets in any way;
or provide guarantee for the debts of Zhuhai
Mingjun and other enterprises under its
control with Gree Electric Appliances'
assets. (II) To ensure personnel
independence of the listed company: 1. To
60
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
ensure that Gree Electric Appliances' labor,
personnel and compensation management
will be completely independent from related
companies. 2. To ensure that the
recommendation of directors, supervisors
and senior management personnel by the
enterprise to Gree Electric Appliances will
be conducted in accordance with legal
procedures, and will not be beyond the
personnel appointment and removal
decisions adopted at Gree Electric
Appliances' meeting of board of directors
and general meeting of shareholders. (III) To
ensure finance independence of the listed
company: 1. To ensure that Gree Electric
Appliances will establish an independent
financial department and an independent
financial accounting system, and have a
standardized and independent financial
accounting system. 2. To ensure that Gree
Electric Appliances will independently open
accounts in banks and will not share bank
accounts with its related companies. 3. To
ensure that Gree Electric Appliances'
financial personnel will not take part-time
jobs in its related companies. 4. To ensure
that Gree Electric Appliances will pay taxes
independently according to law. 5. To ensure
that Gree Electric Appliances can make
financial decisions independently, and the
intended transferee will not illegally
interfere with Gree Electric Appliances' use
of funds. (IV) To ensure organization
independence of the list company: 1. To
ensure that Gree Electric Appliances will
establish a sound corporate governance
structure for joint stock companies and have
an independent and complete organizational
structure. 2. To ensure that Gree Electric
Appliances' internal management
organization will independently exercise its
functions and powers in accordance with
laws, regulations and the Articles of
Association. (V) To ensure business
independence of the listed company: 1. To
ensure that Gree Electric Appliances will
have the assets, personnel, qualifications and
ability to independently carry out business
activities, and have the ability to
independently and continuously operate in
the market. 2. To ensure that, except through
the exercise of shareholders' rights, the
enterprise will not interfere in its business
activities of Gree Electric Appliances. 3. To
ensure that the enterprise and other
enterprises controlled by the enterprise will
avoid substantial industry competition with
61
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Gree Electric Appliances. 4. To ensure that,
when the enterprise and other enterprises
controlled by the enterprise conduct
necessary and unavoidable related
transactions with Gree Electric Appliances,
the enterprise will conduct fair operation in
accordance with the marketization principle
and at fair prices, and perform transaction
procedures and information disclosure
obligations in accordance with relevant laws
and regulations and regulatory documents. If
any one of the above commitments is
violated, the enterprise will be willing to
bear all the responsibilities arising
therefrom, and fully compensate or
reimburse all direct or indirect losses caused
to Gree Electric Appliances.
Letter of Commitment on Avoiding
Horizontal Competition: In order to avoid
horizontal competition with the listed
company, Zhuhai Mingjun, Zhuhai Xianying
and Zhuhai Yuxiu make the following
commitments: 1. the enterprise and other
enterprises controlled by the enterprise (me),
the controlling shareholders and actual
controllers of the enterprise will not engage
in the same or similar business with Gree
Electric Appliances and its subsidiaries in a
direct or indirect manner in the future, so as
to avoid possible direct or indirect business
competition with Gree Electric Appliances
and its subsidiaries. 2. If other enterprises
controlled by the enterprise further expand
their business scopes, other enterprises
controlled by the enterprise will take the
Zhuhai
principle of giving priority to the protection
Mingjun, Avoiding Being under
of the rights and interests of Gree Electric 2 December, Effective for a
Zhuhai horizontal normal
Appliances and take all possible measures to 2019 long time
Xianying, competition fulfillment
avoid horizontal competition with Gree
Zhuhai Yuxiu
Electric Appliances and its subsidiaries. 3. If
Gree Electric Appliances and its subsidiaries
or related regulatory authorities determine
that the enterprise and other enterprises
controlled by the enterprise are engaging in
or will engage in any business which
constitutes horizontal competition with Gree
Electric Appliances and its subsidiaries, the
enterprise will give up or cause the
enterprises which its subsidiaries directly or
indirectly hold to give up any business or
business opportunities that may result in
horizontal competition, or cause such
business or business opportunities to be
provided with a priority to Gree Electric
Appliances or its wholly-owned and holding
subsidiaries on a fair and reasonable basis or
to be transferred to other unrelated third
62
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
parties. 4. If any one of the above
commitments is violated, the enterprise will
be willing to bear all the responsibilities
arising therefrom, and fully compensate or
reimburse all direct or indirect losses caused
to Gree Electric Appliances.
Letter of Commitment on Regulating
Related Transactions: In order to protect the
interests of public shareholders and maintain
the sustained and healthy development of
the listed company, Zhuhai Mingjun, Zhuhai
Xianying, and Zhuhai Yuxiu make the
following commitments: 1. To ensure that
the future related transactions between the
enterprise and other enterprises controlled
by the enterprise and Gree Electric
Appliances will be fair and conducted in
accordance with the normal business
conduct standards; and that the enterprise
will continue to regulate related transactions
with Gree Electric Appliances and its
subsidiaries. 2. To ensure that the enterprise
will perform its obligations as a shareholder
of Gree Electric Appliances in good faith
and in good faith, and for related
transactions that cannot be avoided or exist
on reasonable grounds, it will sign a
standard related transaction agreement with
Gree Electric Appliances in accordance with
Zhuhai
the law, and in accordance with relevant
Mingjun, Being under
Regulating related laws, regulations, rules, other regulatory 2 December, Effective for a
Zhuhai normal
transactions documents and the articles of association, 2019 long time
Xianying, fulfillment
and fulfill the approval procedures; the price
Zhuhai Yuxiu
of related transactions will be determined in
accordance with fair and reasonable market
prices, and the price of related transactions
will be fair; it will perform the information
disclosure obligations of related transactions
in accordance with relevant laws,
regulations and the articles of association; it
will not use related transactions to illegally
transfer the funds and profits of Gree
Electric Appliances or damage the interests
of Gree Electric Appliances and related
shareholders. 3. To ensure that the enterprise
and other enterprises controlled by the
enterprise will, in accordance with the
provisions of laws, regulations and the
articles of association, when considering
related transactions involving the enterprise
and other enterprises controlled by the
enterprise, effectively abide by the
avoidance procedure during the voting on
related transactions at the meeting of the
board of shareholders or the general meeting
of shareholders of Gree Electric Appliances.
63
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Letter of Commitment on Maintaining the
Independence of the Listed Company: In
order to guarantee the independent operation
of the listed company after this equity
transfer, I make the following commitments.
(I) To ensure asset independence and
completeness of the listed company: 1. To
ensure that Gree Electric Appliances will be
equipped with the relevant production
system, auxiliary production system as well
as supporting facilities corresponding to its
business operations, have the right to own or
use the land, workshop and machines and
facilities relating to its business operations
as well as the ownership or use right to its
trademarks, patent technologies and
know-how, and have an independent
purchase system of raw materials and sales
system of products. 2. To ensure that Gree
Electric Appliances will have independent
and complete assets, and all of their assets
will be under the control of Gree Electric
Appliances and independently owned and
operated by Gree Electric Appliances. 3. To
ensure that Zhuhai Mingjun and other
enterprises controlled by Zhuhai Mingjun
will not illegally occupy Gree Electric
Maintaining the Appliances' assets in any way; or provide Being under
Dong 2 December, Effective for a
independence of guarantee for the debts of Zhuhai Mingjun normal
Mingzhu 2019 long time
the listed company and other enterprises under its control with fulfillment
Gree Electric Appliances' assets. (II) To
ensure personnel independence of the listed
company: 1. To ensure that Gree Electric
Appliances' labor, personnel and
compensation management will be
completely independent from related
companies. 2. To ensure that the
recommendation of senior management
personnel by I to Gree Electric Appliances
will be conducted in accordance with legal
procedures. (III) To ensure finance
independence of the listed company: 1. To
ensure that Gree Electric Appliances will
establish an independent financial
department and an independent financial
accounting system, and have a standardized
and independent financial accounting
system. 2. To ensure that Gree Electric
Appliances will independently open
accounts in banks and will not share bank
accounts with its related companies. 3. To
ensure that Gree Electric Appliances'
financial personnel will not take part-time
jobs in its related companies. 4. To ensure
that Gree Electric Appliances will pay taxes
independently according to law. 5. To ensure
that Gree Electric Appliances can make
64
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
financial decisions independently, and the
intended transferee will not illegally
interfere with Gree Electric Appliances' use
of funds. (IV) To ensure organization
independence of the list company: 1. To
ensure that Gree Electric Appliances will
establish a sound corporate governance
structure for joint stock companies and have
an independent and complete organizational
structure. 2. To ensure that Gree Electric
Appliances' internal management
organization will independently exercise its
functions and powers in accordance with
laws, regulations and the Articles of
Association. (V) To ensure business
independence of the listed company: 1. To
ensure that Gree Electric Appliances will
have the assets, personnel, qualifications and
ability to independently carry out business
activities, and have the ability to
independently and continuously operate in
the market. 2. To ensure that, except through
the exercise of shareholders' rights and the
performance of functions and duties of
board chairman / senior management
personnel of the listed company, I will not
interfere in its business activities of Gree
Electric Appliances. 3. To ensure that I and
other enterprises controlled by me will avoid
substantial industry competition with Gree
Electric Appliances. 4. To ensure that, when
I and other enterprises controlled by me
conduct necessary and unavoidable related
transactions with Gree Electric Appliances,
the enterprise will conduct fair operation in
accordance with the marketization principle
and at fair prices, and perform transaction
procedures and information disclosure
obligations in accordance with relevant laws
and regulations and regulatory documents. If
any one of the above commitments is
violated, I will be willing to bear all the
responsibilities arising therefrom, and fully
compensate or reimburse all direct or
indirect losses caused to Gree Electric
Appliances.
Letter of Commitment on Avoiding
Horizontal Competition: In order to avoid
horizontal competition with the listed
company, I make the following
Avoiding commitments: 1. I and other enterprises Being under
Dong 2 December, Effective for a
horizontal controlled by me will not engage in the same normal
Mingzhu 2019 long time
competition or similar business with Gree Electric fulfillment
Appliances and its subsidiaries in a direct or
indirect manner in the future, so as to avoid
possible direct or indirect business
competition with Gree Electric Appliances
65
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
and its subsidiaries. 2. If other enterprises
controlled by I further expand their business
scopes, other enterprises controlled by I will
take the principle of giving priority to the
protection of the rights and interests of Gree
Electric Appliances and take all possible
measures to avoid horizontal competition
with Gree Electric Appliances and its
subsidiaries. 3. If Gree Electric Appliances
and its subsidiaries or related regulatory
authorities determine that I and other
enterprises controlled by me are engaging in
or will engage in any business which
constitutes horizontal competition with Gree
Electric Appliances and its subsidiaries, I
will give up or cause the enterprises which
its subsidiaries directly or indirectly hold to
give up any business or business
opportunities that may result in horizontal
competition, or cause such business or
business opportunities to be provided with a
priority to Gree Electric Appliances or its
wholly-owned and holding subsidiaries on a
fair and reasonable basis or to be transferred
to other unrelated third parties. 4. If any one
of the above commitments is violated, I will
be willing to bear all the responsibilities
arising therefrom, and fully compensate or
reimburse all direct or indirect losses caused
to Gree Electric Appliances.
Letter of Commitment on Regulating
Related Transactions: I make the following
commitments: 1. To ensure that the future
related transactions between I and other
enterprises controlled by me and Gree
Electric Appliances will be fair and
conducted in accordance with the normal
business conduct standards; and that I will
continue to regulate related transactions with
Gree Electric Appliances and its
subsidiaries. 2. To ensure that I will perform
its obligations as a shareholder of Gree
Electric Appliances in good faith and in Being under
Dong Regulating related 2 December, Effective for a
good faith, and for related transactions that normal
Mingzhu transactions 2019 long time
cannot be avoided or exist on reasonable fulfillment
grounds, it will sign a standard related
transaction agreement with Gree Electric
Appliances in accordance with the law, and
in accordance with relevant laws,
regulations, rules, other regulatory
documents and the articles of association,
and fulfill the approval procedures; the price
of related transactions will be determined in
accordance with fair and reasonable market
prices, and the price of related transactions
will be fair; it will perform the information
disclosure obligations of related transactions
66
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
in accordance with relevant laws,
regulations and the articles of association; it
will not use related transactions to illegally
transfer the funds and profits of Gree
Electric Appliances or damage the interests
of Gree Electric Appliances and related
shareholders. 3. To ensure that I and other
enterprises controlled by I will, in
accordance with the provisions of laws,
regulations and the articles of association,
when considering related transactions
involving I and other enterprises controlled
by I, effectively abide by the avoidance
procedure during the voting on related
transactions at the meeting of the board of
shareholders or the general meeting of
shareholders of Gree Electric Appliances.
Commitments made
during asset
reorganization
Commitment issued during public issuance
of additional shares in 2007: 1. In the future,
the Company and the enterprises controlled
by the Company will not directly or
indirectly engage in the residentail air
conditioner, commercial air conditioner,
household appliances and other businesses
that constitute horizontal competition with
Gree Electric Appliances, Inc. of Zhuhai,
nor will they invest in the enterprises or
projects related to the above businesses or
having direct or indirect competition with
Gree Electric Appliances, Inc. of Zhuhai. 2.
If it is found that the Company and the
enterprises controlled by the Company are
engaged in or intend to engage in the
Commitments made residential air conditioner, commercial air
Avoiding Period of acting Being under
during initial public GREE conditioner, household appliances and other
horizontal 29 June, 2007 as a controlling normal
offering or GROUP businesses that constitute horizontal
competition shareholder fulfillment
refinancing competition with Gree Electric Appliances,
Inc. of Zhuhai, or have invested or plan to
invest in the enterprises or projects related to
the above businesses or having direct or
indirect competition with Gree Electric
Appliances, Inc. of Zhuhai, Gree Electric
Appliances, Inc. of Zhuhai has the right to
request the Company to stop engaging in the
above competitive business, stop
implementing the above competitive
projects and stop investing in the
above-mentioned related enterprises; if the
Company has completed the investment,
Gree Electric Appliances, Inc. of Zhuhai has
the right to request the Company to transfer
the relevant equity of the project or the
enterprise dealing with the business; if the
67
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Company breaches this commitment and
engages in related competitive businesses,
resulting in damage to the interests of Gree
Electric Appliances, Inc. of Zhuhai, the
Company is willing to assume the
corresponding liability for compensation.
Commitment issued during public issuance
of additional shares in 2007: promised to
ensure that Gree's business has the
independent and complete production,
supply, marketing and other auxiliary
supporting systems so as to reduce
unnecessary related transactions. When
related transactions occur, the relevant
matters of related transactions will be
handled in accordance with the principle of
Reducing and
good faith, fairness, impartiality, due
standardizing the Period of acting Being under
GREE diligence and public disclosure, the
related 29 June, 2007 as a controlling normal
GROUP transaction price will be determined in
transactions with shareholder fulfillment
accordance with the principle of market
Gree
fairness, and the relevant procedures of
avoiding voting by associated shareholders
and associated directors and the relevant
procedures for independent directors to
express their opinions on related
transactions independently will be strictly
implemented to ensure legitimacy and
fairness of the related transaction procedures
and fairness and reasonableness of the
related transaction results.
During the period of holding shares of Gree
The period when
Electric Appliances, the Company will fully
I am a Being under
Equity incentive GREE Other assume all reasonable expenses and
14 June, 2019 shareholder of normal
commitments GROUP commitments economic losses (if any) incurred by Gree
Gree Electric fulfillment
Electric due to the Company's termination of
Appliances
the remaining equity incentive plan.
Other commitments
made to minority
shareholders of the
Company
Commitments are
Yes
fulfilled in time
If commitments are
not fulfilled in time,
detail the specific
Not applicable
reason of fulfillment
failure and the work
plan for the next step
68
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
2. The Company's assets or projects involve earnings forecast and the Report Period is still in the earnings
forecast period and the Company explains the assets or projects that achieve the original earnings forecast
and the relevant reasons
□ Applicable √ Not applicable
IV. The listed company' non-operating funds occupied by the controlling shareholders and
their related parties
□ Applicable √ Not applicable
No controlling shareholder or its related party occupied non-operating funds of the listed company in the Report Period of the
Company.
V. Description about the "Non-standard Audit Report" of the accounting firm in the Report
Period by the Board of Directors, Board of Supervisors and independent director (if any)
□ Applicable √ Not applicable
VI. Description about changes in the accounting policies, accounting estimates and accounting
methods in comparison to the financial report of last year
√ Applicable □ Not applicable
I. Changes of major accounting policies
Changes in accounting policies resulting from the implementation of new standards for financial instruments
The Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (2017 Revision) (Finance and Accounting [2017] No. 7), the Accounting
Standards for Business Enterprises No. 23 - Transfer of Financial Assets (2017 Revision) (Finance and
Accounting [2017] No. 8), and the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting
(2017 Revision) (Finance and Accounting [2017] No. 9) on 31 March, 2017, and the Accounting Standards for
Business Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (Finance and Accounting
[2017] No. 14) on 2 May, 2017 (the above standards are collectively referred to as "new standards for financial
instruments"), requiring domestic listed companies to implement the new financial instruments standards from 1
January, 2019.
As approved by the resolution of the fourth meeting of the eleventh session of board of directors of the Company
on 29 April, 2019, the Company began to implement the aforementioned new standards for financial instruments
from 1 January, 2019.
Under the new standards for financial instruments, all recognized financial assets are subsequently measured at
amortization cost or fair value. On the implementation date of the new standards for financial instruments, the
69
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Company's business model for managing the financial assets is evaluated based on the Company's existing facts
and circumstances on that day, and the contractual cash flow characteristics on the financial assets are evaluated
based on the facts and circumstances at the time of initial recognition of the financial assets, and the financial
assets are divided into three categories: measured at amortization cost, measured at their fair values and of which
the changes are included into other comprehensive income, and measured at their fair values and of which the
changes are included into the current profits and losses. Among them, for equity instrument investment measured
at their fair values and of which the changes are included into other comprehensive income, when the financial
assets are derecognized, the cumulative gains or losses previously included into other comprehensive income will
be transferred from other comprehensive income to retained income, but will not be included into the current
profits and losses.
Under the new standards for financial instruments, the Company, on the basis of expected credit losses, makes
provisions for impairment of financial assets measured at amortization cost and debt instrument investments
which are measured at fair value and of which the changes are included into other comprehensive income, and
recognizes credit impairment losses.
The Company applies the new standards for financial instruments retrospectively. However, if the classification
and measurement (including impairment) involves any inconsistency between the data of the previous
comparative financial statements and the new standards for financial instruments, the Company chooses not to
restate. Therefore, for the cumulative impact of the implementation of the standards for the first time, the
Company adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amount
of other related items in the financial statements, and does not restate the 2018 financial statements.
Changes in the format of financial statements
The Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements of General
Enterprises for 2019 (Finance and Accounting [2019] No. 6) and the Notice on Revising and Issuing the Format of
Consolidated Financial Statements (2019 Version) (Finance and Accounting [2019] No. 16) in April and
September 2019 respectively, revising the format of financial statements of general enterprises and the format of
consolidated financial statements. The Company prepared financial statements according to the relevant
requirements and in accordance with the format of financial statements for general enterprises (applicable to the
enterprises that have implemented the new financial standards, the new revenue standards and the new lease
standards). Major changes are as follows:
A. The "notes receivable and accounts receivable" item is split into the "notes receivable" item and the "accounts
receivable" item; the "notes payable and accounts payable" item is split into the "notes payable" item and the
"account payable" item;
B. The "receivables financing" item is added;
C. Interest receivable or interest payable presented in the "other receivables" or "other payables" items only reflect
the interest which is receivable or payable upon the maturity of the relevant financial instruments but has not been
received or paid on the balance sheet date; the interest on financial instruments accrued based on the actual
70
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
interest rate method is included in the book balance of the corresponding financial instruments;
D. The "asset impairment loss" and "credit impairment loss" items move downward from the "other gains" item to
the "fair value change gain" item, and the "credit impairment loss" item is presented before the "asset impairment
loss" item;
E. The "investment income" item newly includes the "income from derecognition of financial assets measured at
amortization costs".
The Company has retrospectively restated the comparative statements accordingly according to the above
presentation requirements.
71
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Impact of implementation of new standards for financial instruments and changes in the format of financial statements on consolidated financial statements
Unit: RMB Yuan
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Impact of the
Reclassification Remeasurement
Item preparation of format
Transfer-in of assets
of financial statements Change from cost Impact of new standards for
31 December, 2018 Transfer-in of original originally classified as 1 January, 2019
measurement to fair financial instruments on
notes receivable available-for-sale
value measurement credit loss adjustment
financial assets
Assets:
Monetary capital 113,079,030,368.11 1,943,623,443.56 115,022,653,811.67
Trading financial assets 1,012,470,387.43 1,012,470,387.43
Financial assets measured at their fair values and 1,012,470,387.43 -1,012,470,387.43
of which the changes are recorded into the
current profits and losses
Notes receivable and accounts receivable 43,611,226,866.20 -9,229,039,643.82 -34,382,187,222.38
Including: Bills receivable 35,911,567,876.04 -1,529,380,653.66 -34,382,187,222.38
Accounts receivable 7,699,658,990.16 -7,699,658,990.16
Accounts receivable 7,699,658,990.16 -57,224,911.92 7,642,434,078.24
Receivables financing 34,382,187,222.38 -81,714,642.25 34,300,472,580.13
Other receivables 2,553,689,544.47 -2,257,098,901.99 -6,244,306.10 290,346,336.38
Including: Interests receivable 2,257,098,901.99 -2,257,098,901.99
Other current assets 17,110,921,223.89 1,802,424,633.81 18,913,345,857.70
Original value of available-for-sale financial 2,217,095,036.33 -2,217,095,036.33
assets
Less: Impairment provisions of available-for-sale 900,000.00 -900,000.00
72
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
financial assets
Net amount of available-for-sale financial assets 2,216,195,036.33 -2,216,195,036.33
Disbursement of loans and advances 9,071,332,784.86 10,381,298.66 9,081,714,083.52
Debt investment 1,216,700.19 36,000,000.00 37,216,700.19
Other debt investments 28,833,479.43 1,035,287,090.00 1,064,120,569.43
Other equity instrument investments 1,144,907,946.33 1,144,907,946.33
Deferred income tax assets 11,349,573,709.69 12,274,180.53 15,242,873.91 11,377,090,764.13
Liabilities:
Short-term borrowing 22,067,750,002.70 130,149,404.18 22,197,899,406.88
Deposits from customers and interbank 315,879,779.13 3,597,463.78 319,477,242.91
Other payables 4,747,139,263.00 -1,663,127,521.62 3,084,011,741.38
Including: Interests payable 133,746,867.96 -133,746,867.96
Other current liabilities 63,361,598,764.96 1,529,380,653.66 64,890,979,418.62
Owners' equity:
Including: Other comprehensive income -550,806,051.51 -69,440,461.72 -620,246,513.23
Undistributed profit 81,939,701,613.83 -48,226,344.11 81,891,475,269.72
73
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Impact of implementation of new standards for financial instruments and changes in the format of financial statements on the parent company's financial statements
Unit: RMB Yuan
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Impact of the Reclassification Remeasurement
Item preparation of format of Transfer-in of
Impact of new
financial statements assets originally Change from cost
31 December, 2018 Transfer-in of original standards for financial 1 January, 2019
classified as measurement to fair
notes receivable instruments on credit
available-for-sale value measurement
loss adjustment
financial assets
Assets:
Monetary capital 102,696,932,265.26 1,500,459,111.30 104,197,391,376.56
Trading financial assets 412,114,127.42 412,114,127.42
Financial assets measured at their fair values and of which 412,114,127.42 -412,114,127.42
the changes are recorded into the current profits and losses
Notes receivable and accounts receivable 35,047,382,637.60 -2,988,819,694.63 -32,058,562,942.97
Including: Bills receivable 32,516,210,775.80 -457,647,832.83 -32,058,562,942.97
Accounts receivable 2,531,171,861.80 -2,531,171,861.80
Accounts receivable 2,531,171,861.80 2,531,171,861.80
Receivables financing 32,058,562,942.97 -81,544,800.33 31,977,018,142.64
Other receivables 3,898,630,873.93 -1,719,333,737.63 -2,300,000.00 2,176,997,136.30
Including: Interests receivable 1,803,079,868.37 -1,803,079,868.37
Other current assets 12,311,814,484.26 676,522,459.16 12,988,336,943.42
Original value of available-for-sale financial assets 765,090,199.08 -765,090,199.08
Less: Impairment provisions of available-for-sale 900,000.00 -900,000.00
financial assets
74
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net amount of available-for-sale financial assets 764,190,199.08 -764,190,199.08
Other equity instrument investments 764,190,199.08 764,190,199.08
Deferred income tax assets 10,931,512,853.30 12,231,720.05 345,000.00 10,944,089,573.35
Liabilities:
Short-term borrowing 17,759,081,480.00 77,161,272.95 17,836,242,752.95
Other payables 1,795,358,032.57 -534,809,105.78 1,260,548,926.79
Including: Interests payable 108,650,144.21 -108,650,144.21
Other current liabilities 63,348,220,747.89 457,647,832.83 63,805,868,580.72
Owners' equity:
Including: Other comprehensive income -330,283,919.33 -69,313,080.28 -399,596,999.61
Undistributed profit 48,123,803,614.75 -1,955,000.00 48,121,848,614.75
2. Changes of accounting estimates
None.
75
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
VII. Description about the retrospective restatement required for correction of significant
accounting errors that occurred in the Report Period
□ Applicable √ Not applicable
The Company didn't involve any correction of significant accounting errors in the Report Period that requires retrospective
restatement.
VIII. Description about changes in the consolidated statement scope in comparison with the
financial report of last year
√ Applicable □ Not applicable
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
Unit: RMB Yuan
Revenue of the acquired Net profit of the acquired
Proportion of
Name of Time point of equity Cost of equity Equity party from the date of party from the date of
equity Date of purchase
acquired party acquisition acquisition acquisition mode purchase to the end of the purchase to the end of the
acquisition (%)
period period
Nanjing Walsin
Purchase by
Nonferrous 31 May, 2019 1,417,551,321.45 94.30 31 May, 2019 10,411,966,740.54 46,316,187.50
means of cash
Metal Co., Ltd.
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter
referred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Combination cost and business reputation
Unit: RMB Yuan
Item Nanjing Walsin Nonferrous Metal Co., Ltd.
Combination cost:
--Cash 1,071,239,072.20
--Other payables 346,312,249.25
Total combination cost 1,417,551,321.45
Less: Fair value share of the identifiable net assets acquired 1,143,436,281.34
Business reputation 274,115,040.11
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of business
combination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,
2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China
76
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] Appraisal
Report.
3) Reason for the formation of large-amount goodwill:
In order to deepen the development of the Company's enameled wire business in the electrical sector and reduce
the impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of the
industrial chain. Due to the long construction cycle of the project, in order to expand production capacity and
occupy the market as soon as possible, the Company's office meeting decided to acquire Nanjing Walsin
Nonferrous Metal Co., Ltd.;
The acquisition price was determined by referring to the price-to-book ratio of the target company's comparable
listed company, comprehensively considering and fully evaluating the target company's asset status, profitability,
brand influence, technology level, synergy effect and other factors;
Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;
B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark use
rights in intangible assets increased due to the appraisal.
(2) Identifiable assets and liabilities of the acquired party on the date of purchase
Unit: RMB Yuan
Nanjing Walsin Nonferrous Metal Co., Ltd.
Item
Fair value on the date of purchase Carrying amount on date of purchase
Assets:
Monetary capital 313,841,040.72 313,841,040.72
Accounts receivable 306,347,724.29 306,347,724.29
Receivables financing 32,897,848.99 32,827,077.99
Prepaid accounts 3,774,390.86 3,774,390.86
Other receivables 250,561.22 250,561.22
Inventories 370,015,709.58 366,647,781.96
Other current assets 51,860,228.86 51,860,228.86
Fixed assets 148,157,020.23 38,678,328.99
Construction in Progress 8,162,465.21 9,544,356.01
Intangible assets 137,922,500.00 9,173,710.00
Deferred income tax assets 10,028,895.44 10,116,258.43
Other non-current assets 1,295,685.45 1,635,079.39
Subtotal of assets 1,384,554,070.85 1,144,696,538.72
Liabilities:
Trading financial liabilities 16,785,750.00 16,785,750.00
Accounts payable 37,510,699.95 37,510,699.95
77
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Advances from customers 8,143,309.65 8,143,309.65
Payroll payable 8,804,769.39 8,804,769.39
Taxes payable 3,546,574.30 3,546,574.30
Other payables 9,114,493.56 9,114,493.56
Other current liabilities 27,680,199.09 27,680,199.09
Deferred income tax liabilities 60,416,544.96
Subtitle of liabilities 172,002,340.90 111,585,795.94
Net assets 1,212,551,729.95 1,033,110,742.78
Less: minority equity 69,115,448.61 58,887,312.34
Net assets obtained 1,143,436,281.34 974,223,430.44
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,
equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).
The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin's
identifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement cost
minus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used to
appraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low price
coefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is the
income method. During the appraisal, the future income of the appraised intangible assets within a reasonable
income period will be discounted and accumulated at a reasonable discount rate, and the present value of income
will be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
None.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on
17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,
and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established main bodies in this period are as follows:
Unit: RMB Yuan
Net profit from the
Net assets of the end of the
Name Time of establishment combination date to the end of
period
the period
Gree (Anji) Precision Mold Co., Ltd. 14 February, 2019 47,063,023.27 -236,976.73
Huzhou Landa Compressor Co., Ltd. 1 March, 2019 Not yet invested
Gree Material Supply (Wuhan) Co., Ltd. 20 March, 2019 12,716,347.67 -7,283,652.33
Gree Material Supply (Hefei) Co., Ltd. 20 March, 2019 24,858,404.13 4,858,404.13
Guangdong Guochuang Intelligent Technology Co., Ltd. 22 March, 2019 30,270,563.23 270,563.23
Gree (Luoyang) Washing Machine Co., Ltd. 25 March, 2019 47,278,161.95 -2,721,838.05
Gree Material Supply (Chongqing) Co., Ltd. 27 March, 2019 18,056,402.39 -1,943,597.61
Gree Material Supply (Zhengzhou) Co., Ltd. 29 March, 2019 19,777,618.60 -222,381.40
Gree Rongzhu Copper (Nanjing) Co., Ltd. 29 March, 2019 Not yet invested
Zhuhai Gree Green Resources Recycling Co., Ltd 16 July, 2019 52,263,754.97 2,263,754.97
Luoyang Lianmei Real Estate Co., Ltd. 7 August, 2019 995,335,429.21 -4,664,570.79
Guochuang Energy Internet Innovation Center (Guangdong)
20 August, 2019 29,874,379.59 -125,620.41
Co., Ltd.
Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. 28 August, 2019 15,024,339.91 24,339.91
Handan Yingdong New Energy Technology Co., Ltd. 20 September, 2019 660.13 -1,339.87
Gree E-commerce Co., Ltd. 5 November, 2019 Not yet invested
Gelan Environmental Protection Technology (Shaoguan) Co.,
5 December, 2019 Not yet invested
Ltd.
IX. Engagement and disengagement of accounting firms
Currently engaged accounting firms
Union Power Certified Public Accountants (Special
Name of domestic accounting firm
General Partnership)
Remuneration for the domestic accounting firm (RMB 10,000) 396
Consecutive years for the domestic accounting firm to render audit 5
79
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
service
Names of certified public accountants of the domestic accounting firm Gong Jingwei, Wu Zihao
Consecutive years for the domestic accounting firm to render CPA
3
audit service
A new accounting firm was engaged in the current period
□ Yes √ No
Engagement of an accounting firm for internal control auditing, financial adviser or sponsor
√ Applicable □ Not applicable
During the year, the Company hired Union Power CPAs Co., Ltd. (special general partnership) as its internal control accounting firm;
the Company hired Huatai United Securities Co., Ltd. as a sponsor for resolving the follow-up matters of the share split reform.
X. Suspension of listing and termination of listing after disclosure of the annual report
□ Applicable √ Not applicable
XI. Matters related to bankruptcy reorganization
□ Applicable √ Not applicable
The Company was not involved in any matter related to bankruptcy reorganization in the Report Period.
XII. Major legal action or arbitration
□ Applicable √ Not applicable
The Company was not involved in any major legal action or arbitration during the Report Period.
XIII. Punishment and rectification
□ Applicable √ Not applicable
The Company was not involved in any punishment or rectification during the Report Period.
XIV. Integrity status of the Company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the Company's equity incentive plan, employee stock ownership plan
or other employee motivation measures
□ Applicable √ Not applicable
The Company was not involved in any equity incentive plan, employee stock ownership plan or other employee motivation measures
or their implementation during the Report Period.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
XVI. Significant related transactions
1. Related transactions associated with day-to-day operation
√ Applicable □ Not applicable
Amount of Approved
Related Proportion Exceeding Available
Type of Contents of Prices of related transaction Settlement of
Related Incidence transaction to amount the market price Date of
related related related transactions amount (ten related Disclosure index
parties relation pricing of similar approved of similar disclosure
transactions transactions transactions (ten thousand thousand transactions
principle transaction quota transactions
Yuan) Yuan)
Companies
where
Zhejiang directors of
Shengshi the Company Payment
Sales of Sales Market 29 April,
Xinxing act as Market price 520,267.04 3.32% 800,000 No before Market price www.cninfo.com.cn
commodities revenue price 2019
Gree Trading executive delivery
Co., Ltd. directors and
general
managers
Companies
Henan where
Shengshi directors of Payment
Sales of Sales Market 29 April,
Xinxing the Company Market price 871,967.81 5.56% 1,250,000 No before Market price www.cninfo.com.cn
commodities revenue price 2019
Gree Trading act as delivery
Co., Ltd. executive
directors
Companies
Shandong
where
Shengshi Payment
supervisors Sales of Sales Market 29 April,
Xinxing Market price 493,541.24 3.15% 850,000 No before Market price www.cninfo.com.cn
of the commodities revenue price 2019
Gree Trading delivery
Company act
Co., Ltd.
as managers
Shanghai The
Highly company in
(Group) Co., which the
Materials Market Settlement 29 April,
Ltd. and its Company Raw material Market price 216,955.57 1.63% 500,000 No Market price www.cninfo.com.cn
procurement price by schedule 2019
subsidiaries holds more
and holding than 5.00%
subsidiaries of its shares
Shanghai The
Highly company in
(Group) Co., which the
Sales of Sales Market Settlement 29 April,
Ltd. and its Company Market price 148,755.48 0.95% 300,000 No Market price www.cninfo.com.cn
commodities revenue price by schedule 2019
subsidiaries holds more
and holding than 5.00%
subsidiaries of its shares
Companies
and their
Zhuhai
subsidiaries
Yinlong New
and holding
Energy Co., Energy
subsidiaries Materials Market Settlement 29 April,
Ltd. and its storage Market price 1,996.81 0.01% 70,000 No Market price www.cninfo.com.cn
where the procurement price by schedule 2019
subsidiaries equipment
chairman of
and holding
the Company
subsidiaries
serves as a
director
81
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Companies
and their
Zhuhai
subsidiaries
Yinlong New
and holding
Energy Co.,
subsidiaries Sales of Sales Market Settlement 29 April,
Ltd. and its Market price 32,108.78 0.20% 200,000 No Market price www.cninfo.com.cn
where the commodities revenue price by schedule 2019
subsidiaries
chairman of
and holding
the Company
subsidiaries
serves as a
director
Total -- -- 2,285,592.73 -- 3,970,000 -- -- -- -- --
Details of huge-amount sales return Not applicable
Actual fulfillment (if any) in the Report Period when the
total amount is estimated by category for the daily related Not applicable
transaction to take place in the current period
Cause (if applicable) of the large difference between the
Not applicable
transaction price and market reference price
2. Related transactions of acquisition or sales of assets or equity
□ Applicable √ Not applicable
The Company was not involved in any related transaction of acquisition or sales of assets or equity in the Report Period.
3. Related transactions of common foreign investment
□ Applicable √ Not applicable
The Company was not involved in any related transaction of common foreign investment during the Report Period.
4. Associated credits and liabilities
□ Applicable √ Not applicable
The Company was not involved in any associated credit or liability in the Report Period.
5. Other significant related transactions
□ Applicable √ Not applicable
The Company was not involved in any other significant related transaction during the Report Period.
XVII. Major contracts and their fulfillment
1. Information about trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
The Company was not involved in any trusteeship during the Report Period.
82
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Contracting
□ Applicable √ Not applicable
The Company was not involved in any contracting matter during the Report Period.
(3) Lease
□ Applicable √ Not applicable
The Company was not involved in any lease during the Report Period.
2. Major guarantee
□ Applicable √ Not applicable
The Company was not involved in any major guarantee during the Report Period.
3. Entrusting others to execute any cash asset management
(1) Entrusted financing
√ Applicable □ Not applicable
Overview of entrusted wealth management during the report period
Unit: RMB 10,000
Source of funds for Occurrence amount of
Amount overdue but not
Specific type entrusted wealth entrusted wealth Outstanding balance
recovered yet
management management
Broker wealth
Private 101,247.04 42,302.23
management products
Total 101,247.04 42,302.23
Specific situation of high-risk entrusted wealth management with large single amount or low security, poor liquidity and
non-guaranteed principal
□ Applicable √ Not applicable
Entrusted wealth management has the circumstance that it is expected to be unable to recover the principal or other circumstances
that may cause impairment
□ Applicable √ Not applicable
(2) Entrusted loan
□ Applicable √ Not applicable
The Company was not involved in any entrusted loan during the Report Period.
83
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
4. Other major contracts
□ Applicable √ Not applicable
The Company did not have any other major contract during the Report Period.
XVIII. Social responsibilities
1. Fulfilling social responsibilities
Gree actively and voluntarily performed its social responsibilities, effectively protected the lawful rights and
interests of all stakeholders, won with its strength the recognition of the enterprise, brand and products from
capital market and consumer market and promoted the low-carbon green growth in the industry through various
activities. (For details, please refer to the Company's Social Responsibility Report for the Year 2019 published on
www.cninfo.com.cn on 30 April, 2020.)
2. Fulfilling the social responsibilities of taking targeted measures in poverty alleviation
The Company didn't take targeted measures in poverty alleviation in the reporting year.
3. Circumstances related to environmental protection
If the listed company and its subsidiaries are key pollutant discharge units published by the environmental protection department
Yes
Names of Major
Number of Distribution of
Serial Company or Pollutants and Discharge Discharge Adopted Pollutant Total Approved Over-standard
Discharge Discharge Total Discharge
Number Subsidiary Name Particular Mode Concentration Discharge Standard Discharge Discharge
Ports Ports
Pollutants
Level 2 limit of the COD: COD:
COD: 25 mg/L;
second period, 9.19 tons/year; 14.315 tons/year;
COD, ammonia Intermittent Ammonia
5 Sewage station Discharge Limits of Ammonia Ammonia
nitrogen discharge nitrogen: 0.264
Water Pollutants (DB nitrogen: 0.443 nitrogen: 3.579
mg/L.
44/26-2001) tons/year. tons/year.
GREE ELECTRIC
Level 2 limit of the
1 APPLIANCES, None
second period in the
INC. OF ZHUHAI Sulfur dioxide: Sulfur dioxide:
Sulfur dioxide: Discharge Limits of
1.3731 1.9208
Sulphur dioxide, Organized Roof of factory 2.417 mg/m Air Contaminants (DB
19 tons/year; tons/year; Nitroge
nitrogen oxide discharge building Nitrogen oxide: 44/27-2001), Table 2
Nitrogen oxides: n oxides: 9.2878
15.413 mg/m in Emission Standard
8.4794 tons/year. tons/year.
of Boiler Air Pollutants
(GB 13271-2014)
COD: Table 1 of COD:
57.5mg/L; Comprehensive 3.21 tons/year;
COD, ammonia Continuous
1 Sewage station Ammonia Standard for Sewage Ammonia
Gree (Zhengzhou) nitrogen discharge
nitrogen: Discharge (GB nitrogen: 0.073
Electric 1.3mg/L. 8978–1996) tons/year.
2 Not approved None
Appliances Co.,
Ltd. Sulfur dioxides, Sulfur dioxide: Grade 2 in Table 2 of Sulfur dioxide:
particulate Organized Roof of factory 11 Comprehensive 1.90
9
matters, discharge building mg/m Nitrogen Emission Standards of tons/year; Nitrog
non-methane total oxide: Air Pollutants (GB en oxides: 0.69
84
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
hydrocarbons, 4.83 mg/m 16297-1996), tons/year;
nitrogen oxides Particulate matter: Zhengzhou Particulate matter:
6.6 mg/m Environmental 6.45 tons/year;
Total Document 2017 (172) Total non-methane
non-methane Circular on Restriction hydrocarbons:
hydrocarbons: Requirements for 0.84 mg/m
3.76 mg/m Non-methane Total
Hydrocarbons
Sulfur dioxide:
3.8525
Sulfur dioxide: Grade 2 in Table 2 of
tons/year;
3 mg/m Comprehensive
Nitrogen oxide:
Nitrogen oxide: Emission Standards of
Sulphur dioxide, 6.645 tons/year;
24.35 mg/m Air Pollutants (GB
nitrogen oxide, Dust:
Dust: 20 mg/m 16297-1996), Hebei
dust, tin and its Organized Roof of factory 19.39 tons/year;
53 Tin and its local standard
compounds, discharge building Tin and its
compounds: Standard for Volatile
non-methane total compounds:
0.00156 mg/m Organic Compound
hydrocarbons 0.00202
Total non-methane Emission Control in
tons/year;
hydrocarbons: Industrial Enterprises
Gree (Wuhu) Total non-methane
2.355 mg/m (DB132322-2016)
Electric hydrocarbons:
3 Not approved None
Appliances Co., 8.605 tons/year.
Ltd.
Chemical oxygen
Chemical oxygen
demand:
demand:
17.57 tons/year;
241.5 mg/L;
Chemical oxygen Grade 3 in Table 4 of Ammonia
Ammonia
demand, ammonia Total outlet of Comprehensive nitrogen: 1.63
Intermittent nitrogen: 27.55
nitrogen, 1 the small north Standard for Sewage tons/year;
discharge mg/L;
petroleum type, gate Discharge (GB Petroleum:
Petroleum:
phosphate 8978-88) 0.4035
10.4 mg/L;
tons/year;
Phosphate:
Phosphate:
0.007 mg/L.
0.355 tons/year.
COD: COD:
COD: 37.6mg/L Table 2 in Pollutant
6.51 tons/year; 18.7969 tons/year;
COD, ammonia Intermittent Ammonia Discharge Standard for
1 Sewage station Ammonia Ammonia
nitrogen emission nitrogen: Electroplating Water
nitrogen: 0.252 nitrogen: 3.0597
0.457mg/L DB44/1597-2015
tons/year. tons/year.
Level 2 limit of the
second period in the
Discharge Limits of
Air Contaminants (DB
44/27-2001); Metal
melting furnace Level
2 (mg/m3) in Table 2 in
Emission Standard for
Zhuhai Landa Air Pollutants from
4 Compressor Co., Industrial Kilns None
Ltd. GB9078-1996;
Sulfur dioxide: Sulfur dioxide: Sulfur dioxide:
Emission Standard for
Sulphur dioxide, Organized Roof of factory 7 mg/m 0.582 tons/year; 5.2852 tons/year;
13 Cooking Fume in the
nitrogen oxide discharge building Nitrogen oxide: Nitrogen oxide: Nitrogen oxides:
Catering Industry
144 mg/m 4.689 tons/year. 14.8987 tons/year.
GB18483-2001;
Screen printing in
period II in Table 2 of
Volatile Organic
Compounds Emission
Standards for Printing
Industry
DB44/815-2010;
Special emission limit
for gas-fired boilers
(mg/m3) in Table 3 of
85
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Emission Standards for
Boiler Air Pollutants
GB13271-2014;
Emission Standards for
Volatile Organic
Compounds in the
Furniture
Manufacturing
Industry
(DB44/814-2010); Air
Pollutant Emission
Limits for Newly Built
Facilities of Emission
Standards for
Electroplating
Pollutants
(GB21900-2008)
Grade 3 Standard in
Table 4 of
Comprehensive
6 discharge COD:
COD: 189 Sewage Discharge COD:
ports 10.777
mg/L; Standard 11.099 tons/year;
COD, ammonia Intermittent distributed tons/year;
6 Ammonia (GB8978-1996) and Ammonia
nitrogen discharge evenly in the Ammonia
nitrogen: 3.5 Inlet Water Quality nitrogen: 0.362
Gree east factory nitrogen: 0.2004
mg/L. Requirements of tons/year.
(Shijiazhuang) boundary tons/year.
Sewage Treatment
5 Electric None
Plants in the High-tech
Appliances Co.,
Zones
Ltd.
New kiln standard in
Sulfur dioxide: Table 1 and Table 2 of Sulfur dioxide: Sulfur dioxide:
Sulphur dioxide, Organized Roof of factory 5mg/m Emission Standard for 2.266 tons/year; 4.918 tons/year;
16
nitrogen oxide discharge building Nitrogen oxide: Air Pollutants from Nitrogen oxides: Nitrogen oxides:
32mg/m Industrial Kilns 7.133 tons/year. 11.647 tons/year.
(DB13/1640-2012)
Grade-3 Standard of
Comprehensive
Sewage Discharge
COD: COD:
Gree (Hefei) COD: 8.9 mg/l; Standard
2.13 tons/year; 225.72 tons/year;
Electric COD, ammonia Continuous Ammonia (GB8978-1996) and
6 2 Sewage station Ammonia Ammonia None
Appliances Co., nitrogen discharge nitrogen: 0.103 Requirements of
nitrogen: 0.025 nitrogen: 13.68
Ltd. mg/l. Takeover Standards for
tons/year. tons/year.
Sewage Treatment
Plants in Economic
Development Zones
COD:
0.1658
Suspended matter:
Grade-1 standard for tons/year;
Suspended 24 mg/L;
the second period in Ammonia
matter Intermittent COD: 37 mg/L;
1 Sewage station Discharge Limits of nitrogen: 1.2648
COD, ammonia emission Ammonia
Water Pollutants tons/year;
nitrogen nitrogen: 1.44
(DB44/26-2001) Ammonia
mg/L.
nitrogen: 0.195
Zhuhai Kaibang mg/L.
2019 sewage
Motor
7 permit not None
Manufacture Co., Toluene: Toluene:
approved
Ltd. 1.06mg/m 1.6032
Xylene: tons/year;
Grade-2 Standard of
Toluene, xylene, 2.11mg/m Xylene:
the Second Period in
sulfur dioxide, Organized Roof of factory Sulfur dioxide: 0.248 tons/year;
3 the Discharge Limits
nitrogen oxide, discharge building 3mg/m Sulfur dioxide:
of Air Contaminants
particulate matter Nitrogen oxide: 0.0063
(DB 44/27-2001)
3mg/m tons/year;
Particulate matter: Nitrogen oxide:
10mg/m 0.0072
86
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
tons/year;
Particulate matter:
3.174 tons/year.
Grade-2 Standard of
the Second Period in
the Discharge Limits
Xylene: Xylene:
of Air Contaminants
8.95mg/m 0.420 tons/year;
(DB 44/27-2001)
Xylene, phenolic Phenolic Phenolic 2019 sewage
Zhuhai Gree Organized Roof of factory II Period of Emission
8 compounds, 46 compounds: compounds: permit not None
Electrical Co., Ltd. discharge building Standards for Volatile
VOCs 0.868mg/m 0.264 tons/year; approved
Organic Compounds in
VOCs: VOCs:
the Furniture
8.48mg/m 0.486 tons/year.
Manufacturing
Industry
(DB44/814-2010)
Ammonia Ammonia
Ammonia
nitrogen: 9.2 nitrogen: 10.184
nitrogen: Grade 3 in Table 4 of
tons/year; tons/year;
15.55mg/L; Comprehensive
COD: COD:
Animal and Standard for Sewage
Ammonia 110 tons/year; 113.15 tons/year;
vegetable oil: Discharge (GB
nitrogen, animal Animal and Animal and
1.755mg/L; 8978–1996)
and vegetable oil, Indirect Phases I, II and vegetable oil: vegetable oil:
3 COD: 224mg/L; Grade B Limits in
COD, suspended emissions III 18 tons/year; 20.9 tons/year;
Suspended matter: Table 1 of Water
matter, petroleum, Suspended matter: Suspended matter:
35.3mg/L; Quality Standards for
total phosphorus 89 tons/year; 90.52 tons/year;
Gree (Chongqing) Petroleum: Sewage Discharged
Petroleum: Petroleum:
Electric 4.47mg/L; into Urban Sewers
9 0.28 tons/year; 0.365 tons/year; None
Appliances Co., Total phosphorus: (GB/T 31962-2015)
Total phosphorus: Total phosphorus:
Ltd. 0.14mg/L.
0.049 tons/year. 0.055 tons/year.
Particulate matter:
Particulates: Particulate matter:
126.042
28.3 mg/m Table 1 of Discharge 123 tons/year;
Particulate matter, tons/year;
Organized Phases I, II and Sulfur dioxide: Limits of Air Sulfur dioxide:
sulfur dioxide, 24 Sulfur dioxide:
discharge III 11mg/m Contaminants 46.2 tons/year;
nitrogen oxide 49.087 tons/year;
Nitrogen oxides: (DB 50/418-2016) Nitrogen oxide:
Nitrogen oxide:
39mg/m 46.2 tons/year.
49.087 tons/year.
Construction and operation of pollution prevention facilities
The Company and its subsidiaries are all equipped with corresponding sewage treatment facilities in accordance
with the environmental protection requirements for construction projects, as well as full-time environmental
protection managers, operators and monitors. Up to now, all the systems have been in normal operation, and met
the emission standards stably, without emissions beyond the standards.
Environmental impact assessment of construction projects and other administrative licenses for
environmental protection
Environmental impact assessment was carried out for the Company's construction project in accordance with
requirements of the Environmental Protection Bureau, the environmental protection approval and discharge permit
were acquired, and the project passed the environmental protection acceptance check.
Contingency plan for unexpected environmental events
87
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
The Company implemented requirements of the Emergency Management Measures for Unexpected
Environmental Events and related national laws and regulations. To ensure timely, orderly, efficient and
appropriate response to unexpected environmental events, protect the personal safety of employees and reduce
property losses, each subsidiary of the Company formulated a contingency plan for unexpected environmental
events and reported them to the environmental protection department for recording.
Environmental self-monitoring plan
The Company formulated an environmental self-monitoring plan according to the requirements of environmental
impact assessment, and detected wastewater pollutants once a day and air pollutants at least once a year.
Other environmental information that should be made public
None
Other environmental protection related information
None
XIX. Description of other significant matters
√ Applicable □ Not applicable
On 2 December, 2019, Gree Group and Zhuhai Mingjun signed the Share Transfer Agreement. Gree Group planned to transfer
902,359,632 shares of the Company with unlimited sales conditions held by Gree Group to Zhuhai Mingjun at a price of RMB
46.17/share (accounting for 15% of the Company's total equity); On 13 December, 2019, the Zhuhai Municipal People's Government
and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of Zhuhai City separately
approved the share transfer.
Gree Group obtained the Transfer Registration Confirmation issued by China Securities Depository and Clearing Corporation
Limited (CSDC) Shenzhen Branch on 3 February, 2020. The share transfer registration procedures for the transfer of this agreement
have been completed, and the transfer date is 23 January, 2020. After the completion of the share transfer registration, the Company
has neither a controlling shareholder nor an actual controller.
XX. Significant matters of the Company's subsidiaries
□ Applicable √ Not applicable
88
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section VI Changes in Stock Capital & Information of Shareholders
I. Changes in stock capital
1. Changes in stock capital
Unit: Share
Before the change Increase/Decrease (+, -) After the change
Stock
Converted
New Bonus
Qty Percentage from Housing Others Subtotal Qty Percentage
Issue Issue
Accumulation
Fund
I. Stocks with trading
45,013,250 0.75% 786,375 786,375 45,799,625 0.76%
restriction conditions
3. Stocks held by other
45,013,250 0.75% 786,375 786,375 45,799,625 0.76%
domestic capital
Stocks held by the
45,013,250 0.75% 786,375 786,375 45,799,625 0.76%
domestic natural person
II. Tradable Stocks
without trading 5,970,717,628 99.25% -786,375 -786,375 5,969,931,253 99.24%
restriction conditions
1. RMB ordinary stocks 5,970,717,628 99.25% -786,375 -786,375 5,969,931,253 99.24%
III. Total of stocks 6,015,730,878 100.00% 6,015,730,878 100.00%
Causes of changes in stock capital
□ Applicable √ Not applicable
Approval of changes in stock capital
□ Applicable √ Not applicable
Transfer due to changes in stock capital
□ Applicable √ Not applicable
Progress of share repurchase
□ Applicable √ Not applicable
Progress of reducing shares repurchased by centralized bidding
□ Applicable √ Not applicable
Impact by changes in stock capital on financial indicators such as basic earnings per share and diluted earnings per share, and the net
asset value per share attributable to common shareholders of the Company in the recent year and the recent period
□ Applicable √ Not applicable
Other contents that must be disclosed in the opinion of the Company or according to requirements of the securities regulatory
institution
□ Applicable √ Not applicable
89
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Number of Number of restricted sales Number of
Number of restricted
Name of restricted shares at released from the lock-up restricted shares at
shares increased in Reasons for restriction Release date
shareholder the beginning of requirements in the the end of the
the current period
the period current period period
Share lock-up of
Liu Jun 9,000 0 9,000 0 16 July, 2019
outgoing executives
Share lock-up of new
Duan Xiufeng 0 795,375 0 795,375 -
executives
Total 9,000 795,375 9,000 795,375 -- --
II. Issuance and listing of securities
1. Issuance of securities (excluding the preferred stock) in the Report Period
□ Applicable √ Not applicable
2. Description about changes in the Company's total number of stocks and shareholder structure, and
assets and liability structure
□ Applicable √ Not applicable
3. Existing internal employee stock
□ Applicable √ Not applicable
III. Information about the shareholders and actual controllers
1. Total number of shareholders and their shareholding status
Unit: Share
Total number of preferred
Total number of Total number of Total number of preferred
shareholders (if any) whose
common common shareholders at shareholders (if any) whose
voting rights were restored at
shareholders at 308,228 the end of last month 496,265 voting rights were restored 0 0
the end of last month before
the end of the before the disclosure at the end of Report Period
the disclosure date of the
Report Period date of the annual report (See Note 8)
annual report (See Note 8)
Shareholding of the shareholders holding more than 5% of total stocks or shareholding of the top 10 shareholders
Total number of the Number of the Pledge or freezing
Name of Nature of Shareholding Increase/Decrease in Number of the trading
stocks held at the end trading restricted
shareholder shareholder proportion the Report Period unrestricted stocks held Stock status Qty
of the Report Period stocks held
Zhuhai Gree State-owned
18.22% 1,096,255,624 1,096,255,624
Group Co., Ltd. legal person
90
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Hong Kong
Securities Foreign legal
14.88% 894,872,479 403,658,080 894,872,479
Clearing person
Company Ltd.
Hebei Jinghai
Domestic
Guaranteed
non-state-own 8.91% 536,022,233 536,022,233
Investment Co.,
ed legal person
Ltd.
China Securities State-owned
2.99% 179,870,800 179,870,800
Finance Co., Ltd. legal person
Central Huijin
Asset State-owned
1.40% 84,483,000 84,483,000
Management Co., legal person
Ltd.
Qian Hai Life
Insurance Co.,
Others 1.09% 65,610,782 -49,974,516 65,610,782
Ltd. – Hai Li
Nian Nian
Domestic
Dong Mingzhu 0.74% 44,488,492 33,366,369 11,122,123 Pledged 43,632,750
natural person
Hillhouse Capital
Foreign legal
Management－ 0.72% 43,396,407 43,396,407
person
HCM China Fund
National Social
Security Fund Others 0.69% 41,364,689 41,364,689
101 portfolio
Agricultural Bank
of China Co., Ltd.
- E-Fund
Consumption Others 0.51% 30,404,950 30,404,950
Industry Equity
Securities
Investment Fund
Situation (if any) where a strategic
investor or general legal person
becomes one of top 10 shareholders None
due to placement of new shares
(see Note 3)
Description for affiliated
relationship or concerted action of None
the above shareholders
Shareholding of the top 10 shareholders without trading restriction conditions
Number of the trading Type of stocks
Name of shareholder unrestricted stocks held at the
Type of stocks Qty
end of the Report Period
Zhuhai Gree Group Co., Ltd. 1,096,255,624 RMB ordinary stocks 1,096,255,624
Hong Kong Securities Clearing Company Ltd. 894,872,479 RMB ordinary stocks 894,872,479
Hebei Jinghai Guaranteed Investment Co., Ltd. 536,022,233 RMB ordinary stocks 536,022,233
China Securities Finance Co., Ltd. 179,870,800 RMB ordinary stocks 179,870,800
Central Huijin Asset Management Co., Ltd. 84,483,000 RMB ordinary stocks 84,483,000
Qian Hai Life Insurance Co., Ltd. – Hai Li Nian Nian 65,610,782 RMB ordinary stocks 65,610,782
Hillhouse Capital Management－HCM China Fund 43,396,407 RMB ordinary stocks 43,396,407
National Social Security Fund 101 portfolio 41,364,689 RMB ordinary stocks 41,364,689
Agricultural Bank of China Co., Ltd. - E-Fund Consumption Industry Equity Securities Investment Fund 30,404,950 RMB ordinary stocks 30,404,950
Central Bank Of Malaysia 28,571,660 RMB ordinary stocks 28,571,660
Description for affiliated relationship or concerted action among the top 10 shareholders holding tradable None
91
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
stocks without trading restriction conditions and between the top 10 shareholders holding tradable stocks
without trading restriction conditions and the top 10 shareholders
Description of the participation in margin trading business of the top 10 common shareholders (if any)
None
(see Note 4)
The top 10 common shareholders and top 10 common shareholders without trading restriction conditions of the Company conducted
agreed repurchase transactions in the Report Period
□ Yes √ No
The top 10 common shareholders and top 10 common shareholders without trading restriction conditions of the Company didn't
conduct agreed repurchase transactions in the Report Period.
2. Information of the controlling shareholders of the Company
Nature of the controlling shareholder: Local state-owned holding
Type of the controlling shareholder: Legal person
Legal
Name of the of
representative/ Date of establishment Organization code Principal business
controlling shareholder
Person in charge
Manufacturing of household electrical appliance;
investment, construction and operation management
of public facilities and municipal facilities;
investment, construction and operation management
of hotels; operation, investment and management of
state-owned assets; optimization allocation and
Zhuhai Gree Group
Zhou Lewei 15 December, 1990 914404001925371865 capital operation of state-owned assets; transfer and
Co., Ltd.
lease of state-owned property rights; corporate
management, planning and services; state-owned
assets income management; business services
(excluding licensed business items) (items that need
to be approved in accordance with law can only be
operated after approval by relevant departments)
Information regarding
holding equity interests
of other domestic and
oversea listed
None
companies by
controlling
shareholders during the
Report Period
Controlling shareholder change in the Report Period
□ Applicable √ Not applicable
The controlling shareholders of the Company didn't change in the Report Period.
3. Actual controller of the Company and its person acting in concert
Nature of the actual controller: Local state-owned assets management institution
Type of the actual controller: Legal person
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Legal representative/
Name of the actual controller Date of establishment Organization code Principal business
Person in charge
State-owned Assets Supervision and
Fulfill responsibilities of the state-owned
Administration Commission of Zhuhai Li Congshan 29 December, 2004 11440400719245578R
assets investor
Municipal People's Government
Information regarding equity of other At the end of the Report Period, the State-owned Assets Supervision and Administration Commission of Zhuhai Municipal
domestic and oversea listed companies People's Government indirectly controlled Zhuhai Port Co., Ltd., Zhuhai Huafa Industrial Co., Ltd., Gree Real Estate Co.,
controlled by the actual controller during Ltd., Zhuhai Huajin Capital Co., Ltd., Zhuhai Orbita Aerospace Science & Technology Co. Ltd., Zhuhai Holdings Investment
the Report Period Group Limited, Huajin International Capital Holding Co., Ltd. and Hong Kong Johnson Holdings Co., Ltd.
Change in the actual controller in the Report Period
□ Applicable √ Not applicable
The actual controller of the Company did not change in the Report Period.
Block diagram of property right and control relationships between the Company and actual controller
Zhuhai Municipal State-owned Assets Supervision and Administration Commission
100%
Zhuhai Gree Group Co., Ltd.
18.22%
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
The actual controller controlled the Company through trust or other asset management modes
□ Applicable √ Not applicable
4. Other corporate shareholders holding more than 10% of shares
□ Applicable √ Not applicable
5. Restricted share reduction of controlling shareholders and actual controllers, restructuring party and
other commitment subjects
□ Applicable √ Not applicable
93
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section VII Related Information of Preferred Stock
□ Applicable √ Not applicable
The Company did not have any preferred stock in the Report Period.
94
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section VIII Related Information of Convertible Corporate Bonds
□ Applicable √ Not applicable
The Company did not have any convertible corporate bonds in the Report Period.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section IX Directors, Supervisors, Senior Management Personnel and
Employees
I. Shareholding changes of directors, supervisors and senior management personnel
Number of held Number of held
Stocks held at the Other Stocks held at
Tenure Commencement Termination of stocks increased stocks reduced
Name Title Gender Age beginning of the increase/decrease the end of the
status of term of office term of office in the current in the current
Period (shares) changes (shares) Period (shares)
period (shares) period (shares)
Dong Chairperson
Incumbent F 65 25 May, 2012 15 January, 2022 44,488,492 44,488,492
Mingzhu & President
Director and
Huang Hui Incumbent M 56 25 May, 2012 15 January, 2022 7,380,000 7,380,000
CEO
Director,
Vice
President,
Wang Chief
Incumbent M 49 25 May, 2012 15 January, 2022 884,674 884,674
Jingdong Financial
Officer,
Board
Secretary
Zhang Wei Director Incumbent M 44 16 January, 2019 15 January, 2022
Zhang
Director Incumbent M 59 25 May, 2012 15 January, 2022
Jundu
Guo
Director Incumbent M 63 16 January, 2019 15 January, 2022
Shuzhan
Independent
Liu Shuwei Incumbent F 67 16 January, 2019 15 January, 2022
Director
Independent
Xing Ziwen Incumbent M 58 16 January, 2019 15 January, 2022
Director
Wang Independent
Incumbent M 59 16 January, 2019 15 January, 2022
Xiaohua Director
Chairman of
Li Xupeng Board of Incumbent M 51 16 January, 2019 15 January, 2022
Supervisors
Duan
Supervisor Incumbent M 57 16 January, 2019 15 January, 2022 1,060,500 265,000 795,500
Xiufeng
Wang Staff
Incumbent F 37 16 January, 2019 15 January, 2022
Fawen Supervisor
Vice
Zhuang Pei Incumbent M 54 25 May, 2012 15 January, 2022 5,955,202 5,955,202
President
Tan Vice
Incumbent M 56 31 August, 2017 15 January, 2022 1,297,300 1,297,300
Jianming President
Ye
Director Resigned M 62 1 June, 2015 16 January, 2019
Zhixiong
Wang Independent
Resigned M 55 20 May, 2014 16 January, 2019
Ruzhu Director
Independent
Lu Xin Resigned F 56 1 June, 2015 16 January, 2019
Director
Chairman of
Xu 24 September,
Board of Resigned M 61 16 January, 2019
Chuzhen 2013
Supervisors
96
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Guo
Supervisor Appointed M 63 25 May, 2012 16 January, 2019
Shuzhan
Staff
Wang Liqin Resigned F 43 15 October, 2014 16 January, 2019
Supervisor
Vice
Liu Jun Resigned M 43 31 August, 2015 16 January, 2019 12,000 8,000 20,000
President
Total -- -- -- -- -- -- 61,078,168 8,000 265,000 60,821,168
II. Changes in the directors, supervisors and senior management personnel
√ Applicable □ Not applicable
Name Title Type Date Reason
Ye Zhixiong Director Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
Wang Ruzhu Independent Director Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
Lu Xin Independent Director Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
Chairman of Board of
Xu Chuzhen Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
Supervisors
Guo Shuzhan Supervisor Appointed 16 January, 2019 Resigned after expiry of term of office
Wang Liqin Staff Supervisor Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
Liu Jun Vice President Resigned after expiry of term of office 16 January, 2019 Resigned after expiry of term of office
III. Positions of directors, supervisors and senior management personnel
Professional background, major work experience and current main responsibilities in the Company of the current
directors, supervisors and senior management personnel of the Company:
Ms. Dong Mingzhu, with a master degree, currently acts as the Chairperson of the Board & President of Gree
Electric Appliances, Inc. of Zhuhai.
She has served as sales manager of Gree Electric Appliances, vice director and director of Sales Department,
manager, Vice General Manager, General Manager, Vice Chairperson of the Board and President of sales company,
Chairperson of Zhuhai Gree Group, etc. She consecutively served as deputy to the tenth, eleventh, twelfth and
thirteenth National People's Congresses, and ever acted as a member of the ninth, tenth and eleventh Executive
Committees of the All-China Women's Federation, the "Messenger of UN Sustainable Urban Development" of the
United Nations, the first rotating presidency of the "Sustainable Development Commission" of the United Nations
Development Programme, Vice President of the China Quality Association, Vice Chairperson of China
Association of Women Entrepreneurs, member of Expert Committee for the thirteenth five-year development
planning of the National Development and Reform Commission, director of Board of Directors of China Social
Economic Investigation Research Center, member of WFEO-CHINA of China Association for Science and
Technology, etc. She has been successively appointed as a part-time professor or MBA tutor by Northwest
University, Sun Yat-sen University, China University of Science and Technology, Zhongnan University of
Economics and Law, Communication University of China and other colleges, and was awarded the title of
honorary academician by Beijing Normal University-Hong Kong Baptist University United International College
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(UIC). She was awarded the title of "National Labor Model" by the State Council in 2015, elected as "CCTV
China Economic Person of the Year" in 2006, 2010 and 2013, selected as "The Most Influential Women in
Business" by the Fortune magazine for 13 times from 2004 to 2019, ranked in the ranking list of "Top 50 Women
to Watch" of Financial Times for three consecutive years from 2009 to 2011, was enrolled in the ranking list of
"Global Best CEO" of the "Harvard Business Review" magazine in 2013, becoming China's only female on the
list. The projects initiated or led by her were ever awarded the honors and titles such as "National Model Worker",
"National 51 Labor Medal", "National March 8 Red Flag Pacesetter", "China Patent Gold Award", "Third China
Quality Award", "Liu Yuanzhang Quality and Technology Contribution Award", "Fudan University Enterprise
Management Outstanding Contribution Award", "Top 10 Leading Practitioners of Management Innovation" of
Tsinghua University and "China Outstanding Quality Person (National Quality Award Individual Award)".
Mr. Huang Hui, with a postgraduate degree, currently acts as the Director & CEO of Gree Electric Appliances,
Inc. of Zhuhai.
From August 2000 to May 2014, he served as Vice President of the Company; from June, 2014 to August 2017, he
served as Executive Vice President of the Company; since August 2017 to date, he has served as CEO of the
Company; from May 2007 to August 2017, he served as Chief Engineer of the Company; since May 2012 to date,
he has served as Chairman of Zhuhai Gree Dakin Device Co., Ltd. and Vice President of the Chinese Association
of Refrigeration.
Mr. Wang Jingdong, with a master degree and CPA and lawyer qualifications, currently acts as the Director, Vice
President, Finance Chief and Board Secretary of Gree Electric Appliances, Inc. of Zhuhai.
From November 2002 to April 2006, he served as head of Financial Department, head of Material Purchasing
Department and chief of Audit Department. From April 2006 to September 2009, he served as President Assistant
of the Company. From January 2008 up to now, he served as Finance Chief of the Company. From July 2009 up to
now, he served as Board Secretary of the Company. From October 2009 up to now, he has served as Vice
President, Finance Chief and Board Secretary of the Company.
Mr. Zhang Wei, with a bachelor degree, currently acts as the Director of Gree Electric Appliances, Inc. of Zhuhai.
He joined in Gree Electric Appliances in 1999 and served as the person in charge of Gree Electric Appliances Pipe
Branch, Material Supply Department, Outsourcing & Purchase Quality Management Department, and Enterprise
Management Department, President Assistant of Gree Electric Appliances; from 2013 to March 2020, he served as
Executive Deputy President; currently he serves as President Assistant of the Company.
Mr. Zhang Jundu, with a junior college degree, currently acts as the Director of Gree Electric Appliances, Inc. of
Zhuhai.
Since September 1999, he has served as Chairman of Zhejiang Tongcheng Gree Electric Appliances Co., Ltd.
Since August 2012, he has concurrently served as General Manager of Zhejiang Shengshi Xinxing Gree Trading
Co., Ltd. Since May 2012, he has served as Director of the Company.
Mr. Guo Shuzhan, with a junior college degree, currently acts as the Director of Gree Electric Appliances, Inc. of
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Zhuhai.
Since August 2006, he has been served as Chairman of Hebei Jinghai Guaranteed Investment Co., Ltd.; Since
August 2012, he has been served as General Manager of Henan Shengshi Xinxing Gree Trading Co., Ltd.; from
May 2012 to 16 January, 2019, he served as the Supervisor of the Company; since January 2019, he has been
served as the Director of the Company.
Ms. Liu Shuwei, with a master degree, currently acts as the Independent Director of the Board & President of
Gree Electric Appliances, Inc. of Zhuhai.
Ms. Liu Shuwei graduated from Peking University in 1986 with a master degree in economics. Ms. Liu Shuwei
studies under the famous economists Chen Daisun Professor and Li Yining Professor in China, and is a
well-known scholar in finance. In 2002, she was appraised as CCTV's "Economic Person of the Year" and
"Moving China - Person of 2002". She is currently an independent director and a member of the Audit Committee
under the Board of Directors of Vanke Enterprise Co., Ltd., and a director and a researcher at the China Enterprise
Research Center of Central University of Finance and Economics. Since January 2019, she has been an
independent director of the Company.
Mr. Xing Ziwen, with a doctor degree, currently acts as the Independent Director of Gree Electric Appliances, Inc.
of Zhuhai.
He is also a professor of Xi'an Jiaotong University, a distinguished professor of the Yangtze River Scholar
Program by the Ministry of Education, a national candidate for the Ten Million Talents Project in the New Century,
and enjoys special allowances from the State Council. Professor Xing Ziwen used to be the director of the
Department of Refrigeration and Cryogenic Engineering, School of Energy and Power Engineering, and the
director of the Compressor Research Institute at Xi'an Jiaotong University. He currently acts as the deputy director
of the National Engineering Center for Fluid Machinery and Compressors at Xi'an Jiaotong University. He has
won 2 national scientific and technological progress awards, 7 provincial and ministerial scientific and
technological progress awards, the Special Science and Technology Progress Award issued by the Chinese
Association of Refrigeration, the Special Invention and Entrepreneurship Award issued by the China Association
of Inventions, the Outstanding Professor Award issued by the Xia Anshi Education Foundation, and the Youth
Innovation Award issued by Ho Leung Ho Lee Foundation.
Mr. Wang Xiaohua, with a master degree, currently acts as the Independent Director of Gree Electric Appliances,
Inc. of Zhuhai.
Mr. Wang Xiaohua is the director of Guangdong Guangxin Junda Law Firm. He has successively studied law at
the Central University for Nationalities, Peking University, Wuhan University, Japan Faith Corporation and the
University of East London. In 2003, he obtained a master degree in law from the University of East London. Since
1988, he has been working as a part-time lawyer, sponsoring and leading a team to jointly handle over 1,000
litigation and non-litigation cases and projects, and assisting companies to raise tens of billions of yuan from
domestic and foreign securities markets. Since 1998, he has been a member of Guangdong Provincial Committee
of Chinese People's Political Consultative Conference (CPPCC) and has submitted about 50 proposals. He has
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
published four books such as Legal Issues on Enterprise Listing and more than 20 articles such as the rise and fall
of the nation concerns everyone and the progress of rule of law concerns every lawyer. He once served as the
President of the Guangzhou Lawyers Association, and currently serves as a Standing Committee of Guangdong
Provincial Committee of the CPPCC, a member of the Guangdong Provincial Election Committee for Judges and
Procurators, the legal consulting expert of the Guangzhou Municipal People's Government, and the legal
consultant at the Security Bureau of the Guangdong Provincial Committee of the CCP, Guangdong Provincial
Public Security Department (GDPSD) and Guangdong Provincial Tax Service, State Taxation Administration. He
also served as the Guangzhou Asian Games Torch-Bearer; and won the honorary titles such as "Outstanding
Lawyers of Guangdong Province", "Top Ten Innovation Leading Talents of Tianhe District", and "Guangzhou
Leading Talents of Innovation and Entrepreneurship Services".
Mr. Li Xupeng, with a graduate degree, currently acts as the Supervisor of Gree Electric Appliances, Inc. of
Zhuhai.
He is currently the Deputy Secretary of the Party Committee of Zhuhai Gree Group Co., Ltd. and the Secretary of
the Party Committee of Gree Electric Appliance Co., Ltd. He joined work in July 1991, joined the party in
November 1998, had the graduate degree, was awarded the Advanced Programmer Certificate by the Ministry of
Personnel, and the Advanced Programmer Certificate by the Japan Computer Application Technology Association.
He successively served as the deputy director of the Research Institute of Foshan Shengfa Development Co., Ltd.;
the engineer of Zhuhai Special Economic Zone Jinquanli Development Co., Ltd.; the deputy chief (deputy director)
of Cadre Information Section (Party Member Audio-Visual Center) and the deputy chief of the Cadre Supervision
Section of Organizational Department of Zhuhai Municipal Party Committee; the deputy director and director of
Zhuhai Municipal Information Center; the Chairman of the Information Association; the director of the Office of
the Science and Technology Bureau, and the chief of the Achievement and Technology Market Section; the deputy
investigator of the Zhuhai Science and Technology Bureau, and the Zhuhai Science, Technology, Industry, Trade
and Information Technology Bureau; a member of Zhuhai Municipal Assistance Construction Wenchuan Working
Group and Preparatory Team for the Development and Construction Headquarters of Western Central Urban Area
Development Construction Command Preparation Group; the deputy director and a member of the Party Group of
the Zhuhai Port Authority; the chief engineer and a member of the Party Group of the Zhuhai Municipal
Transportation Bureau; the deputy director and a member of the party group of Zhuhai Science, Technology,
Industry, Trade and Information Technology Bureau(Zhuhai Municipal Intellectual Property Office, Zhuhai
Municipal Private Economic Development Service Bureau).
Mr. Duan Xiufeng, currently acts as the Supervisor of Gree Electric Appliances, Inc. of Zhuhai.
Graduated from Shandong Party School in 1999, he is currently the General Manager of Shandong Shengshi
Xinxing Gree Trading Co., Ltd. He successively served as the Deputy General Manager and the General Manager
of Shandong Gree Electric Appliance Marketing Co., Ltd. and the General Manager of Shandong Shengshi
Xinxing Gree Trading Co., Ltd. Since January 2019, he has been the Supervisor of the Company.
Ms. Wang Fawen, with a master degree, currently acts as the Employee Supervisor of Gree Electric Appliances,
Inc. of Zhuhai.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
She has the national vocational qualification certificates such as Intermediate Economist and Professional in
Human Resources, and is currently the Director of Human Resources Department of Gree Electric Appliances, Inc.
of Zhuhai. From July 2007 to November 2013, she successively served as the human resources specialist of
Human Resources Department, the director of Personnel Integration Office, the head of Performance Section, and
the director of Training Section of the Company from December 2013 to the present, she has been serving as the
Director of Human Resources Department and the Head of Cultural Training and Communication Center of the
Company.
Mr. Zhuang Pei, with a master degree and the title of Senior Engineer, currently acts as the Vice President of
Gree Electric Appliances, Inc. of Zhuhai.
From 2002 to April 2003, he served as President Assistant of the Company. From April 2003 up to now, he has
served as Vice President of the Company.
Mr. Tan Jianming, with a master degree, currently acts as the Chief Engineer and Vice President of Gree Electric
Appliances, Inc. of Zhuhai.
He studied the major of refrigeration and low temperature technology of Huazhong University of Science and
Technology from 1982 to 1986 and received the Bachelor's Degree; from 1986 to 1989, he continued to study at
the major of refrigeration and low temperature technology of Huazhong University of Science and Technology
and received a master's degree, after graduation in 1989, he joined Gree Electric Appliances, Inc. of Zhuhai
immediately and successively served as designer, department head, president assistant, deputy chief engineer, etc.
Since August 2017, he has served as a Chief Engineer & Vice President of the Company.
Information of positions in shareholders
√ Applicable □ Not applicable
Remuneration
Position at the Commencement of Termination of term of and allowance
Name of incumbent Name of shareholder
shareholder term of office office received from the
shareholder
Hebei Jinghai Guaranteed Chairman and legal
Guo Shuzhan 1 August, 2006 No
Investment Co., Ltd. representative
Zhang Wei Zhuhai Gree Group Co., Ltd. Executive Vice President 3 December, 2017 31 March, 2020 Yes
Information of
positions in None
shareholders
Information of positions in other companies
√ Applicable □ Not applicable
Remuneration and
Position at other Commencement of Termination of term of allowance
Name of incumbent Names of other companies
companies term of office office received from
other companies
Zhuhai Gezhen Investment
Dong Mingzhu Management Partnership Executive Partner 26 September, 2019 No
(Limited Partnership)
Dong Mingzhu Zhuhai Xima Pearl New Media Director and Manager 1 October, 2015 No
101
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Co., Ltd.
Zhuhai Yinlong New Energy Co.,
Dong Mingzhu Director 1 February, 2017 No
Ltd.
Henan Shengshi Xinxing Gree
Guo Shuzhan Executive Director 1 August, 2010 Yes
Trading Co., Ltd.
Beijing Qianyuan Hengjiuhe
Guo Shuzhan Director 1 April, 2014 No
Liquor Co., Ltd.
Xiahe Hengsheng Hydropower
Guo Shuzhan Director 1 May, 2007 No
Co., Ltd.
Henan Sanli Real Estate
Guo Shuzhan Supervisor 1 November, 2006 No
Development Co., Ltd.
Nanyang Kaisheng Electrical Executive Director and
Guo Shuzhan 1 September, 2007 12 August, 2019 No
Appliance Sales Co., Ltd. General Manager
Henan Gree Electric Appliance Executive Director and
Guo Shuzhan 1 August, 2006 No
Customer Service Co., Ltd. General Manager
Luoyang Gree Electric Appliance Executive Director and
Guo Shuzhan 1 June, 2010 No
Logistics Co., Ltd. General Manager
Henan Huizhong Yifeng
Guo Shuzhan Chairperson 1 December, 2015 No
Electronic Commerce Co., Ltd.
Xiahe Hengfa Hydropower Co.,
Guo Shuzhan Director 1 June, 2005 No
Ltd.
Luqu Hengshun Hydropower Co.,
Guo Shuzhan Supervisor 1 September, 2009 No
Ltd.
Zhengzhou Hengzhixin Metal
Executive Director and
Guo Shuzhan Component Manufacturing Co., 1 March, 2017 No
General Manager
Ltd.
Zhejiang Tongcheng Gree
Zhang Jundu Chairperson 1 September, 1999 Yes
Electric Appliances Co., Ltd.
Ningbo Tongcheng Gree Electric
Zhang Jundu Director 1 July, 2013 No
Appliances Co., Ltd.
Zhejiang Shengshi Xinxing Gree Executive Director and
Zhang Jundu 1 January, 2017 No
Trading Co., Ltd. General Manager
Zhejiang Ruitong Automobile
Zhang Jundu Director 1 December, 2014 No
Co., Ltd.
Wenzhou Tongcheng Economic
Zhang Jundu Director 1 April, 2012 No
and Trade Co., Ltd.
Huzhou Tongcheng Gree Electric
Zhang Jundu Director 1 November, 2008 No
Appliances Co., Ltd.
Liu Shuwei China Vanke Co., Ltd. Independent Director 30 June, 2017 30 June, 2020 Yes
Liu Shuwei Costar Group Co., Ltd. Independent Director 10 April, 2019 10 April, 2022 Yes
Wang Xiaohua ETR Law Firm Partner Chairman 1 June, 2017 Yes
Guangzhou Nansha Reclamation
Wang Xiaohua External Director 1 October, 2015 Yes
Development Company
Guangdong Guangxin
Wang Xiaohua Independent Director 1 July, 2014 Yes
Information Industry Co., Ltd.
Guangdong Shirong Zhaoye Co.,
Wang Xiaohua Independent Director 26 March, 2019 26 March, 2022 Yes
Ltd.
Duan Xiufeng Beijing Rongzhi Xingwei Manager and Executive 2 July, 2013 No
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Management Consulting Co., Director
Ltd.
Shandong Jierui Logistics Co., Executive Director and
Duan Xiufeng 11 August, 2010 Yes
Ltd. General Manager
Beijing Rongpu Xingwei
Manager and Executive
Duan Xiufeng Management Consulting Co., 2 July, 2013 No
Director
Ltd.
Shandong Daming Electric Executive Director and
Duan Xiufeng 28 April, 2010 No
Appliances Co., Ltd. General Manager
Jinan Qihui Microfinance Co.,
Duan Xiufeng Director 4 February, 2009 No
Ltd.
Shandong Gree Electric
Executive Director and
Duan Xiufeng Appliances Customer Service No
General Manager
Co., Ltd.
Shandong Binzhou Dongsheng
Duan Xiufeng Executive Director 26 June, 2009 No
Real Estate Co., Ltd.
Shandong Blue Economy
Duan Xiufeng Industrial Fund Management Co., Chairperson 5 November, 2014 No
Ltd.
Jinan Rural Commercial Bank
Duan Xiufeng Supervisor 12 February, 2015 No
Co., Ltd.
Shandong Youbu Network
Duan Xiufeng Executive Director 27 October, 2015 No
Technology Co., Ltd.
Shandong Binzhou Jincai Trading Executive Director and
Duan Xiufeng 25 March, 2016 No
Co., Ltd. General Manager
Jinan Jierui New Energy Executive Director and
Duan Xiufeng 21 December, 2016 No
Technology Co., Ltd. General Manager
Shandong Red April Brand Executive Director and
Duan Xiufeng 1 August, 2017 No
Management Co., Ltd. General Manager
Shandong Red April E-commerce Executive Director and
Duan Xiufeng 30 August, 2017 No
Co., Ltd. General Manager
Zhongfu Huaxia Management
Duan Xiufeng Chairperson 23 December, 2005 No
Consulting Co., Ltd.
Shandong Red April Holdings Executive Director and
Duan Xiufeng 5 May, 2015 No
Group Co., Ltd. Manager
Shandong Red April Venture Executive Director and
Duan Xiufeng 24 April, 2017 No
Capital Co., Ltd. General Manager
Shandong Red April New Energy Executive Director and
Duan Xiufeng 13 December, 2017 No
Technology Co., Ltd. Manager
Shandong Red April Electrical Executive Director and
Duan Xiufeng 23 May, 2019 No
Appliance Sales Co., Ltd. Manager
Shandong Shengshi Xinxing Gree
Duan Xiufeng Manager 30 June, 2011 3 April, 2020 Yes
Trading Co., Ltd.
Punishments given by the securities regulatory institution to the incumbent directors, supervisors and senior management personnel
or those who resigned in the Report Period in the recent three years
□ Applicable √ Not applicable
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
IV. Remunerations of the directors, supervisors and senior management personnel
Decision making procedures, determination basis, and actual payment regarding the remunerations of directors, supervisors and
senior management personnel
Within the Report Period, the Board of Directors of the Company conducted the performance review of the
achievements and performance of duties of the senior management personnel and implemented the assignment
assessment system regarding the working results in ethic, competence, diligence and achievement. The Company
adhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentive
and spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling reward
grade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritual
incentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense of
social responsibility and career achievement of the senior management personnel.
Remunerations of the directors, supervisors and senior management personnel in the Report Period
Unit: RMB 10,000
Remuneration
Total amount of pre-tax
received from a
Name Title Gender Age Tenure status remuneration received
related party of the
from the Company
Company
Ye Zhixiong Director M 62 Resigned 0 No
Xu Chuzhen Supervisor M 61 Resigned 0 No
Wang Liqin Staff Supervisor F 43 Resigned 10.89 No
Lu Xin Independent Director F 56 Resigned 0.5 No
Wang Ruzhu Independent Director M 55 Resigned 0.5 No
Liu Jun Vice President M 43 Resigned 2.48 No
Guo Shuzhan Supervisor M 63 Resigned 0 Yes
Dong Mingzhu Chairperson & President F 65 Incumbent 865 No
Huang Hui Director and CEO M 56 Incumbent 416 No
Director, Vice President, Chief
Wang Jingdong Financial Officer, Board M 50 Incumbent 360 No
Secretary
Zhang Jundu Director M 59 Incumbent 0 Yes
Guo Shuzhan Director M 63 Incumbent 0 Yes
Zhang Wei Director M 44 Incumbent 0 Yes
Liu Shuwei Independent Director F 67 Incumbent 13.25 No
Wang Xiaohua Independent Director M 59 Incumbent 13.25 No
Xing Ziwen Independent Director M 58 Incumbent 13.25 No
Li Xupeng Supervisor M 51 Incumbent 0 Yes
Duan Xiufeng Supervisor M 57 Incumbent 0 Yes
Wang Fawen Staff Supervisor F 37 Incumbent 93.51 No
Zhuang Pei Vice President M 54 Incumbent 255 No
Tan Jianming Vice President M 56 Incumbent 320 No
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Total -- -- -- -- 2,363.63 --
Equity incentives granted to the directors and senior management personnel in the Report Period
□ Applicable √ Not applicable
V. Employees of the Company
1. Number of employees and their specialties and education level
Number (person) of on-the-job employees of the parent company 26,898
Number (person) of on-the-job employees of the main subsidiaries 61,948
Total number (person) of on-the-job employees 88,846
Total number (person) of employees receiving salaries in the current
88,846
period
Number (person) of retired employees for whom the parent company
344
and main subsidiaries need to bear expenses
Formation of Specialties
Category of formation of specialties Number (person) of employees in the formation
Manufacturing Personnel 67,113
Sales Personnel 2,822
Technicians 14,251
Financial Personnel 938
Administrative Personnel 3,722
Total 88,846
Education Level
Education level category Number (person) of employees
Bachelor Degree or above 17,791
College Degree 11,641
Technical Secondary School Education and below 59,414
Total 88,846
2. Remuneration policy
The Company adheres to the concept of "Comprehensive Incentive System", adopts a salary mechanism
combining fixed salary and floating performance salary, approves and pays salaries according to the position,
capacity and performance of the employees. At the same time, the Company establishes an award mechanism
based on innovative contributions to provide a powerful guarantee for providing employees with continuous and
effective incentives. In 2019, on the basis of employee professional technical grade evaluation, the Company
implemented the application of the evaluation results in salary adjustment, further optimizing the salary
adjustment mechanism for employees; and continued to spend a lot of money on encouraging scientific and
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
technological personnel and R & D technology breakthroughs, and mobilizing the majority of scientific and
technological personnel to actively participate in technological research and development and achieve continuous
breakthroughs in core technology fields.
3. Training plan
In 2019, the talent training program closely adhered to the development theme of "making independent
innovations and chasing a new era of dreams", adopted core measures such as "learning project design innovation,
deepening training model mechanism, jointly enhancing management efficiency, and promoting talent training
and upgrading", highlighted effective training of key core talents and fields of the Company, built a diversified
independent training mechanism, promoted the transformation and upgrading of talent training, and facilitated and
supported corporate development.
(1) Highlighting effective training of key core talents and fields of the Company
In 2019, the Company strongly strengthened the training for college students, middle-level management cadres,
and other groups, closely followed the cultivation of cutting-edge technical talents, accelerated the supply of
high-quality talents, and conducted trainings for supporting business development and highlighting actual
effectiveness.
1) Creating the practical projects for cadres at middle and grass-roots levels, and building the talent
echelon for corporate development
By closely following the requirements of the plan of "adhering to cultivating talents independently and building a
contingent of high-quality cadres", the Company deepened the advanced-form cadre training mechanism of
"foundation-promotion-strengthening", organized and implemented the advanced-form training of cadres,
solidified the Company's development confidence, established a positive Professional mentality, and strengthened
thinking transformation and quality improvement.
The "Special Training Camp of Supervisor Elites" was organized and implemented, and 164 students graduated.
The training camp aimed to "conduct targeted training and achieve accurate improvement" through four stages of
"selecting foal eagles, training flying eagles, raising hunting eagles, and allowing skilled eagles to fly freely and
high", so as to promotes the competence and personal development of director positions.
The cultivation plan of "Pilot School" was organized and implemented, and 73 students graduated. The project
aimed at "excellence training", adopted dual-track linkage training, focused on the learning resource system,
conducted practical training based on the ten competence model latitudes, and promoted the efficient and accurate
improvement of the business level of grassroots management personnel.
The college student training camp of "New Era Pursuing Dreams at Gree" was organized and implemented, and
the on-boarding training of nearly 4,000 college students was completed. The "6-1-3" training model was further
optimized and deepened, and carefully designed with the stage of professional development and the core of
training content, to promote the training of college students from all aspects and angles. Chairman Dong Mingzhu
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
personally opened the first lesson in life of "unleashing your style and striving for your future" for college
students.
2) Focusing on technologies in the Company's key areas and supported high-quality development of the
Company's core business
According to the Company's annual development goals, focusing on the important areas and topics of the
Company's strategic development in 2019, 80 learning projects such as key thematic training camps, cutting-edge
technology and R&D support topics, operation management training topics, etc. were organized and implemented,
to comprehensively connect strategy and performance, and practice the Company's self-training, full-staff training,
systematic training and lifelong training of talents.
Combined with actual business needs, the Company introduced external advantage learning resources together
with business unit, and organized and completed technological frontier expert lectures with a total of 20 topics in
8 major series of information technology, big data technology, communication technology, central air conditioning
technology, process technology, motor technology, equipment technology and washing technology, to promote the
development of employees to professional talents in the high-end, fine and sophisticated fields.
The Company implemented the "Fault Finding Action" plan, comprehensively improved the quality of the work of
the organization and employees, and cultivated the construction of quality culture, to facilitate the Company's
high-quality development. With quality as the center, and the system construction requirements as the core, the
Company joined hands with external units to organize quality series of special trainings so as to support the
effective implementation of the "Perfect Quality Model".
3) Boosting the skill improvement of marketing service personnel and supporting the Company's first-line
market sales and services
In order to actively respond to the new challenges brought about by market changes, and better grasp the market
and serve the market, the Company built a marketing strategy blueprint of "Gree Features", continued to create a
marketing team with outstanding comprehensive capabilities and excellent business qualities, and organized the
training camp of marketing service personnel for 2019. Through "theory-based, practice-oriented" organic
integration, focusing on the four dimensions of marketing service personnel "cultural cultivation, comprehensive
literacy, business skills, product learning", the Company customized advanced-form trainings to help marketing
service personnel improve their skills and better support sales and services in the first-line market.
4) Developing a skilled and innovative labor force, and supporting enterprises to achieve quality
manufacturing
In order to promote the transformation and upgrading of Gree's talent training, the cultivation of high-quality
skilled personnel was mainly promoted through two aspects: "skill upgrade and academic qualification upgrade",
highlighting the training practice of "skill upgrade promotes efficiency, and personal upgrade promotes
development".
The innovative mechanism for the cultivation of highly skilled talents was established. Such resource advantages
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
as training (cultivation) bases of high-skilled talents were fully utilized, the training mechanism of high-skilled
talents was further deepened, the four-level development plan of "skilled personnel, skilled elites, chief
technicians, and Gree craftsmen" was formed, and Gree's unique mechanism for training was created.
The independent skill training and evaluation system was established. Based on the four-step mechanism for
cultivation and development of front-line technicians, a three-level (company-level, branch-level, and team-level)
training model was established, and the effectiveness evaluation standard with "theory, practice, and performance"
as the core was built to form a new training model of skilled talents.
The Company's collaborative model for cultivating skilled talents was developed. Internal and external resources
were adopted to organize and carry out targeted trainings of enterprise vocational skills and competitions for
vocational skills, the Company's new apprenticeship mechanism was implemented, the subsidies for right position
training and skill upgrade were fully utilized to broaden the skills training channels and forms and build Gree's
collaborative mode for training of high-skilled new talents.
The spirit of model workers and craftsmen was vigorously promoted. The Company's innovative and technical
skilled talents were deeply explored and nurtured, the leading role of professional skill competitions was fully
played in the selection and cultivation of skilled talents, and 2019 Gree Electric Appliances' "Ingenuity Dream
Achieves Life" Labor Skill Competition was organized and carried out. The Company organized employees to
participate in the National Intelligent Manufacturing Application Technology Skill Competition, the Guangdong
Provincial Industrial Robot Competition, Zhuhai Municipal Welding Competition and other series of skill
competitions and "Xiangzhou Craftsman" Skill Competition, and undertook Zhuhai Municipal Mold Competition,
in which Zeng Zhixin from the precision mold company won the first place. The Company cultivated and
excavated China craftsmen, built the value orientation of labour being glorious, and created a strong atmosphere
of "learning skilled talents, respecting skilled talents, and striving to be skilled talents".
Up to now, the Group has 36,600 skilled talents, of which more than 5,000 are rated as intermediate and senior
technicians, and of which many have won the titles of "Guangdong Provincial Technical Expert", "Zhuhai
Municipal Technical Expert", "Zhuhai Municipal Post Technical Expert", "Zhuhai Artisan".
(2) Deepening the Company's independent talent training model
Gree Electric Appliances' talent team building never implements "borrowlism", but insists on "independent
training". Based on the Company's development experience and cultural heritage, it gradually forms a model of
independent training and development mechanism. In 2019, the Company continued to deepen the construction of
learning resources and platforms, developed high-quality learning projects, and built a diversified self-cultivation
mechanism, so that Gree's talent cultivation further highlighted its independence characteristics.
1) Implementing the requirement of "everyone acting as a lecturer" and creating high-quality learning
resources
The 2019 special activities called "Three auditoriums for extracting experience" were organized and held. The
activities called "Middle-level cadres on the platform - Micro classroom for managerial cadres" were organized,
and 130 courses were selected, to further deepen the accumulation of internal excellent management experience
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
and wisdom. The special activities called "Technology experts on the platform - Auditorium for technology
experts" were organized, and 150 courses were selected, to form a mechanism for inheriting business experience.
The activities called "Business elites on the platform - Auditorium for internal lecturers" were organized, to
provide employees with the training resources support needed for business learning and career development,
involving 49 major topics in 9 categories and attracting more than 5,000 participants.
2) Cultivating excellent lecturers and forming a learning atmosphere for all staff
The team of internal lecturers is a think tank for the Company to develop all kinds of talents and is a core force for
inheriting Gree's excellent corporate culture and corporate wisdom. In 2019, the Company's team of internal
lecturers developed the "empowering two-line" model based on internal lecturer competence and cultivation, and
comprehensively strengthened team building from the two dimensions of internal lecturer's "selection, cultivation,
use, retention" and growth and promotion. A Call for New Voices - Selection of New Lecturers was organized and
held, and 30 lecturers were selected. The "Intelligence and Inheritance Lecturer Glory" 2019 Gree Lecturer
Group Teacher's Day Condolences and Recognition Event was organized, creating a good atmosphere of
"respecting teachers and cherishing virtues, loving learning and giving thanks" throughout the Company. The
"Intelligent Manufacturing Heritage" competition was organized and implemented to explore the Group's top 30
and top 10 lecturers. In the 2019 Guangdong Provincial Enterprise Lecturer Competition, Gree's lecturer Zhang
Zhiqian won the first prize and the honorary title of "Guangdong Technical Expert", and another lecturer Lu
Qinghua won the honorary title of "Top Ten Lecturers" in Guangdong Province. In 2019, internal lecturers
conducted more than 2,100 training sessions for 3,800 hours, and the student satisfaction was 94.6%.
3) Creating high-quality learning products and forming a talent training experience sharing and exchange
platform
In order to further accumulate and inherit the talent training experience, and form a talent training experience
sharing and exchange platform, the Company organized and implemented the "Energizing Cup" learning project
design competition. The competition was themed by "casting product thinking and creating high-quality learning",
explored a batch of new development projects of design and operation talents, and accumulated a batch of classic
talent development projects for continuous development and improvement, thus creating high-quality learning
products to boost performance.
The Company organized and carried out the "My Product, My Creativity" product innovation design competition
for college students, to provide a platform for college students within the Group to "expand thinking, develop
creativity, and enhance cooperation". The Company organized and held the 2019 "Empowerment Organization
Get Together with Wisdom" training and development annual meeting, showing Gree's independent talent training
model and mechanism, and creating a sharing and exchange platform for internal and external training and
learning.
(3) Promoting the transformation and upgrading of Gree talent training
The Company accelerated the implementation of the construction of Gree College, promoted the operation of
Gree Pearl Industrial College, organized the construction and operation of primary and middle school students'
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
research practice education base, promoted the transformation of training system to education system, and solved
the systemic and effective problems of talent cultivation.
Accelerating the construction of Gree College
In 2019, with the strong support of Guangdong Provincial Department of Education, Zhuhai Municipal Party
Committee and Zhuhai Municipal Government, Gree College made breakthrough progress in project construction
land, project construction procedures, project planning and design, and discipline professional construction. Gree
College entered the essence construction stage from the preparatory stage. The College is located in the University
Town Area of Tangjiawan Town, Zhuhai High-tech Zone, covering an area of 200,000 square meters. Based on
high-end manufacturing, focusing on the "dual-smart" strategy, customized in collaboration with German
universities and by integrating university and enterprise, truly following the educational focus of "emphasis on
cultivating professional ethics, technology application skills, and innovation and entrepreneurship abilities", the
College will cultivate high-end enterprise management talents, applied high-end technology R & D talents and
practical high-end skill operation talents needed for the development of new manufacturing industry. At present,
the College is in the planning and design stage. In strict accordance with the high-standard and high-level campus
requirements of "informatization, intelligence, internationalization", the Company will accelerate the construction
of Gree College and creatively turn Gree College into a characteristic university striving to train
development-oriented, compound and innovative manufacturing multi-level elite talents.
2) Promoting the operation of Gree Pearl Industrial College
Gree Pearl Industrial College makes full use of the two favorable systems of enterprises and universities,
implements Gree's "enterprise spirit, management policy and quality policy" and other corporate management and
cultural concepts, sets up unique school-running concepts and teaching systems, and creatively builds the union
industry university a characteristic college closely and highly suitable for the development of manufacturing
industry. The College adheres to the guide of serving the development of Gree, and takes the development
experience and culture of Gree Electric Appliances as a China manufacturing brand, to create a new high-end
high-skilled talent education highland, so as to deliver high-quality technical and skilled employees with "strong
quality awareness, standardized behaviors and recognization of Gree culture" for the development of Gree. In
2019, the College experienced further development in aspects of enrollment, discipline and professional
construction, teacher internships, special projects, and co-construction of practical operation bases. There were 22
classes in 10 majors, with about 750 students. At the same time, a professional university-enterprise
co-construction system in the majors of electronic information, electrical automation, intelligent control
technology, cloud computing, big data, etc. was established to jointly build a professional training base for air
conditioning and refrigeration, and an intelligent equipment training center so as to cultivate the customization
talents required by Gree.
4. Labor outsourcing
□ Applicable √ Not applicable
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section X Corporate Governance
I. Basic conditions of corporate governance
In strict accordance with the Company Law, Securities Law and other relevant national laws and regulations and
the Guidelines for Standardized Operation of Companies Listed on the Main Board of Shenzhen Stock Exchange,
the Company establishes the normative corporate governance structure and the rules of procedure for the General
Meeting of Shareholders, Board of Directors and Board of Supervisors, clarifies the responsibilities and
authorities in decision-making, performance and supervision, forms effective division of responsibilities and
balance mechanism, continuously promotes the level of normal operation and safeguards the interests of investors
and the Company.
The corporate governance conforms to the Company Law and requirements of CSRC for governance of listed
companies.
Great differences exist between the actual corporate governance and the normative document related to listed company governance
published by the CSRC
□ Yes √ No
No great differences exist between the actual corporate governance and the normative document related to listed company
governance published by the CSRC
II. Independence of the Company relative to the controlling shareholder in the aspects such as
business operation, personnel, assets, organization and finance
The Company has a sound corporate governance structure and completely separates from Gree Group as the
controlling shareholder in business operation, personnel, assets, organization and finance, and the Company has
independent and complete business operation and independent management capability.
III. Horizontal competition
□ Applicable √ Not applicable
IV. Convening of the annual general meeting of shareholders and interim general meeting of
shareholders during the Report Period
1. General meetings of shareholders during the Report Period
Proportion of Date of
Session of meeting Type of meeting Date of meeting Disclosure index
participating investors disclosure
The first interim Interim general 38.76% 16 January, 2019 17 January, The Announcement on Resolutions of the
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
general meeting of meeting of 2019 First Interim General Meeting of
shareholders for the shareholders Shareholders for the Year 2019 and so on
year of 2019 on www.cninfo.com.cn
The Announcement on Resolutions of the
2018 annual general Annual general
General Meeting of Shareholders for the
meeting of meeting of 46.65% 26 June, 2019 27 June, 2019
Year 2018 and so on on
shareholders shareholders
www.cninfo.com.cn
The Second Interim The Announcement on Resolutions of the
Interim general
General Meeting of 19 November, Second Interim General Meeting of
meeting of 42.51% 18 November, 2019
Shareholders for the 2019 Shareholders for the Year 2019 and so on
shareholders
Year 2019 on www.cninfo.com.cn
2. Convening of an interim general meeting of shareholders requested by the preferred shareholders whose
voting rights have been restored
□ Applicable √ Not applicable
V. Performance of duties by independent directors during the Report Period
1. Attendance of independent directors at meetings of the Board of Directors and general meetings of
shareholders
Attendance of independent directors at meetings of the Board of Directors and general meetings of shareholders
Times of Times of
Number of meetings Times of attending Times of Failed to personally Times of
attending attending
Name of of the Board of meetings of the absence from attend the meetings attending the
meetings of the meetings of
independent Directors requiring Board of Directors meetings of of the Board of general
Board of the Board of
director attendance in the in the way of the Board of Directors for two meetings of
Directors on the Directors by
Report Period communication Directors consecutive times Shareholders
field entrusting
Liu Shuwei 8 2 6 0 0 No 2
Xing Ziwen 8 2 6 0 0 No 2
Wang Xiaohua 8 2 6 0 0 No 1
Description about the failure to personally attend the meeting of the Board of Directors for two consecutive times
2. Objection raised by independent directors to relevant issues of the Company
Independent directors raised objection to relevant issues of the Company
□ Yes √ No
The independent directors didn't raise any objection to relevant issues of the Company.
3. Other descriptions for performance of duties by independent directors
Whether the relevant suggestions on the Company by independent directors were adopted
√ Yes □ No
Description about the relevant suggestions on the Company by independent directors that were adopted or not adopted
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Within the Report Period, the independent directors of the Company were able to act in maintaining the best
interest of the Company and its shareholders, faithfully perform their own duties in accordance with the relevant
provisions, attend the meetings of the Board of Directors, review and discuss various proposals carefully, fully
express their suggestions and opinions for the operation and management of the Company, play an active role in
making effective decisions, improving management level and standardizing business operations by the Board of
Directors of the Company, and practically safeguarding the interests of minority stock holders.
VI. Performance of duties by special committees under the Board of Directors during the
Report Period
During the replacement of the Company's board of directors and board of supervisors in 2019, the nomination
committee carefully reviewed the qualifications of directors and supervisors nominated by each shareholder unit,
board of directors, and board of supervisors, and reviewed the qualifications of each candidate during the selection
of senior management personnel.
The remuneration and appraisal committee reviewed and approved the Remuneration Distribution Plan for
Directors, Supervisors and Senior Management Personnel for the Year 2019.
According to the Rules of Procedure of Audit Committee of the Company, the audit committee conducted
communication, supervision and check for internal and external audits of the Company:
a. The audit committee carried out full communications with the accounting firm responsible for the annual audit
of the Company in respect of audit plan, engagement letter and risk and control, etc.
b. Before the annual audit certified public accountants accessed to the site, the audit committee reviewed the
preliminarily prepared financial statements of the Company and held that these statements reflected the present
financial position of the Company in all major aspects.
c. After the annual audit certified public accountants issued preliminary opinions, the audit committee reviewed
the financial statements of the Company, communicated with the accounting firm in respect of material particulars
and significant accounting estimates, audit adjustments and significant accounting policies which might have
potential influence on the financial statements and held that the financial statements of the Company gave a true,
accurate and complete view of the whole position of the Company and agreed to prepare the annual report for the
year 2019 on the basis of these financial statements.
d. The audit committee reviewed the financial statements for the year 2019 which had been audited by the auditors
and held that these financial statements gave a fair view of the financial position of the Company ended 31
December, 2019 and operating results and cash flows for the year 2019 in all major aspects and agreed to submit
them to the board of directors for deliberation.
f. The audit committee summarized and evaluated the audit work for this year as done by Union Power CPAs Co.,
Ltd. and held that the annual audit certified public accountants performed their audit work in strict accordance
with the Independent Auditing Standards for Chinese Certified Public Accountants and suggested the Company
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
re-engage Union Power CPAs Co., Ltd. as the audit institution for the year 2020.
VII. Work of the Board of Supervisors
The Board of Supervisors found whether there are risks in the supervision during the Report Period.
□ Yes √ No
The Board of Supervisors had no objection to the supervision during the Report Period.
VIII. Appraisal and incentive for senior management personnel
Within the Report Period, the Board of Directors of the Company conducted the performance review of the
achievements and performance of duties of the senior management personnel and implemented the assignment
assessment system regarding the working results in ethic, competence, diligence and achievement. The Company
adhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentive
and spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling reward
grade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritual
incentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense of
social responsibility and career achievement of the senior management personnel.
IX. Internal control
1. Details about major defects found in internal control in the Report Period
□ Yes √ No
2. Internal control self-evaluation report
Full disclosure date of the internal control
30 April, 2020
evaluation report
Full disclosure index of the internal control
www.cninfo.com.cn
evaluation report
Proportion of the total amount of unit assets
included in the evaluation scope to the total
97.00%
amount of assets in the consolidated financial
statements of the Company
Proportion of the unit operating income
included in the evaluation scope to the unit
98.00%
operating income in the consolidated financial
statements of the Company
Defect identification standard
Category Financial report Non-financial report
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
For details, see the Internal Control For details, see the Internal Control
Self-evaluation Report of Gree Electric Self-evaluation Report of Gree Electric
Qualitative standard Appliances, Inc. of Zhuhai for the Year 2019 Appliances, Inc. of Zhuhai for the Year
disclosed on www.cninfo.com.cn by the 2019 disclosed on www.cninfo.com.cn by
Company on 30 April. the Company on 30 April.
For details, see the Internal Control For details, see the Internal Control
Self-evaluation Report of Gree Electric Self-evaluation Report of Gree Electric
Quantitative standard Appliances, Inc. of Zhuhai for the Year 2019 Appliances, Inc. of Zhuhai for the Year
disclosed on www.cninfo.com.cn by the 2019 disclosed on www.cninfo.com.cn by
Company on 30 April. the Company on 30 April.
Number of major defects in the financial
0
report
Number of major defects in the non-financial
0
report
Number of important defects in the financial
0
report
Number of important defects in the
0
non-financial report
X. Internal control audit report
√ Applicable □ Not applicable
Deliberation opinion section in the internal control audit report
We hold that the Company has maintained effective internal control of financial reports in accordance with the Basic Rules for Internal Control of
Enterprises and relevant regulations.
Disclosure of internal control audit report Disclosed
Full disclosure date of the internal control audit report 30 April, 2020
Full disclosure index of the internal control audit report www.cninfo.com.cn
Type of internal control audit report opinions Standard without reserved opinion
Major defects found in the non-financial report No
The accounting firm issued the internal control audit report of non-standard opinions
□ Yes √ No
The internal control audit report issued by the accounting firm is consistent with the self-evaluation report opinion of the Board of
Directors
√ Yes □ No
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section XI Related Information of Corporate Bonds
Whether the Company has any corporate bonds that have been issued publicly and listed on the stock exchange, and have not become
due on the approved submission date of the annual report or have become due but have not been not paid in full.
No
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section XII Financial Report
I. Audit report
Audit opinion type Standard without reserved opinion
Signing date of the audit report 29 April, 2020
Name of the audit institution Union Power Certified Public Accountants (Special General Partnership)
Audit Report Doc No. Union Power Audit No. (2020) No. 050146
Name of the certified public accountant Gong Jingwei, Wu Zihao
Text of the Audit Report
All shareholders of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI:
1 Audit opinion
We have audited the financial statements of Gree Electric Appliances, Inc. of Zhuhai (hereinafter referred to as "your company"),
including the consolidated and parent company's balance sheets ended 31 December, 2019 and consolidated and parent company's
income statements, consolidated and parent company's cash flow statements and consolidated and parent company's Statement of
Changes in Owners' Equity and notes to the financial statements for the year 2019.
In our opinion, the accompanying financial statements have been prepared in all material aspects in accordance with the Accounting
Standards for Business Enterprises and fairly reflected the consolidated and parent company's financial position of your company
ended 31 December, 2019 and consolidated and parent company's operating results and cash flows for the year 2019.
2 Basis for forming audit opinions
We have conducted our audit work according to the provisions of Audit Standards for Certified Public Accountants of China. The
part related to "CPA's responsibility for the audit of financial statements" in the audit report further elaborates our responsibilities
under these standards. In accordance with the China Code of Ethics for Certified Public Account, we are independent of your
company and performed other responsibilities in respect of professional ethics. We believe the audit evidences obtained by us are
sufficient and proper and shall provide the basis for expressing our audit opinion.
3 Key audit items
The key audit items are the items that are deemed to be the most important ones in the current financial statement audit according to
our professional judgment. The response to these items is based on the overall audit of the financial statements and the formation of
audit opinions. We do not give separate opinions on these items.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(1) Related party relationships and transactions
Key audit items How this item is dealt with in auditing
Refer to the description in "Note (XII) 4" "Note (XII) 5" 1. We understood, evaluated and tested the internal control related to
"Note (XII) 6" and "Note (XII) 8" in the financial report. the identification and disclosure of related party relationships and
In 2019, your company purchased RMB 2,450,099,500 their transactions, and reviewed effectiveness of the corresponding
of raw materials, fixed assets and other products from internal control design and implementation;
the related parties, and sold RMB 20,850,962,800 of air 2. We obtained the management's statement on integrity of the related
conditioners, intelligent equipment and other products to party relationships and their transactions, obtained a list of related
the related parties in total. party relationships provided by management, and checked it
against the information obtained from other public channels;
Because of the significant transaction amount of your
3. We checked the major procurement, sales and other contracts to
company's related party, the related party relationships
identify whether there was an undisclosed related party, and also
and integrity of its transaction disclosure and the fairness
obtained the resolution of the board of directors and the resolution
of the related transaction will have a significant impact
of the shareholders' meeting related to the related transaction,
on the business performance and disclosure of
checked the permissions and procedure of the related transaction
information. Therefore, we regard the related party
decision, judged the legality and compliance of related transactions,
relationships and their transactions as key audit items.
and checked if it was authorized and approved appropriately;
4. We carried out the sampling inspection procedure, checked the
corresponding transaction agreement, delivery order, receipt
document, sales invoice, purchase invoice, sales receipt and
purchase payment voucher, analyzed the purpose of transaction to
determine whether the way of obtaining cash flow of the two
parties before and after the transaction, amount and risks were
substantially changed, and whether the transaction has commercial
substance, and combined other audit procedures such as letters to
verify authenticity of the related transaction;
5. We compared the sale and purchase prices of the related party with
the sale and purchase prices of similar products of the non-related
parties or the market prices of similar products, and judged fairness
of the related transaction price;
6. We expanded the scope of the post-period test procedure and
checked whether there was a sales return so as to deal with false
sales;
7. We also checked adequacy of the information disclosure related to
the affiliated relationship and related transaction in "Note (XII) 4"
"Note (XII) 5" "Note (XII) 6" and "Note (XII) 8" in the financial
report.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Confirmation of deferred income tax assets
Key audit items How this item is dealt with in auditing
Refer to the description in "Note (V) 26" and "Note 1. We tested design and implementation of the internal control related
(VII) 22" in the financial report. to confirmation of deferred income tax assets;
Your company's consolidated balance sheet showed the 2. We invited tax experts to join the team and help us assess analysis
deferred income tax assets of RMB 12,541,085,100 as of of the management from the perspective of tax technology.
31 December, 2019.
3. We obtained the future usable tax profit confirming method by the
The confirmation of deferred income tax assets depends management and the important hypothesis, as well as forecast of
on significant judgment of the management. In making the financial situation in the corresponding future period, and
judgments, the management needs to assess whether evaluated whether its preparation is in conformity with the general
sufficient taxable income can be obtained in the future, trend of the household electrical appliance industry and the
and the possibility of generating the above taxable situation of the enterprise;
income and reversal of deductible temporary difference
in the future. In consideration of the importance of
4. We compared the estimate of the management during prediction in
the previous year with the actual payable income tax of this year to
confirmation of the deferred income tax assets to the
consider historical accuracy of the prediction result made by the
consolidated financial statements and the significant
management, and evaluated there was any sign of management bias
judgment and estimate involving the management in the
in selection of key hypothesis index by the management;
prediction of the future taxable income, there may be
error or potential management bias. Therefore, we 5. We also checked adequacy of the information disclosure related to
identified it as a key audit item of your company. the deferred income tax assets in "Note (V) 26" and "Note (VII)
22" in the financial report.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(3) Provision for obsolete stocks
Key audit items How this item is dealt with in auditing
Refer to the description in "Note (V) 12" "Note (VII) 8" 1. We tested implementation of the internal control related to
and "Note (VII) 56" in the financial report. confirmation of provision for obsolete stocks;
As of 31 December, 2019, the book value of inventory 2. We evaluated the important judgments, assumptions and
in your company's consolidated balance sheet was RMB estimates involved in calculation of the net realizable value by
24,084,854,100, wherein the book balance of inventory management, and also checked the bases and documents for the
was RMB 24,342,480,200 and the provision for obsolete management to determine items such as the future selling price of
stocks was RMB 257,626,100. stock, cost (e.g., the related cost) to be incurred by the time of
Confirmation of the provision for obsolete stocks completion, selling expenses, and the related tax amount;
depends on estimation of the net realizable value of the 3. We carried out the auditing procedures such as checking and
stock. For confirmation of the net realizable value of the recalculation, and particularly we recalculated to determine the
stock, the management should estimate the future selling net realizable value of the stock according to the related data;
price of stock, cost (e.g., the related cost) to be incurred
4. We conducted an analytic review of the inventory age to
by the time of completion, selling expenses, and the
determine whether the corresponding provision for obsolete
related tax amount.
stocks is adequate;
In consideration of the importance of confirmation of the
5. We conducted supervision of inventory taking. During
stocks and provision for obsolete stocks to the
supervision of inventory taking, we focused on authenticity and
consolidated financial statements and the complicated
accuracy of the inventory and use of the inventory, checked for
calculation process of provision for obsolete stocks, and
slow moving inventory and defective inventory so as to evaluate
major judgments, assumptions and estimates of the
adequacy of the provision for obsolete stocks;
management involved when the net realizable value of
the stock is determined, there may be error or potential 6. We also checked adequacy of the information disclosure related
management bias. Therefore, we identified it as a key to the provision for obsolete stocks in "Note (V) 12", "Note (VII)
audit item of your company. 8" and "Note (VII) 56" in the financial report.
4 Other information
The management of your company is responsible for other information. Other information includes the information covered in the
2019 annual report of your company, excluding the financial statements and our audit reports.
Our audit opinions published on financial statements do not cover any other information, and we will not publish any form of
forensic conclusion on other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above, and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we
conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report
in this regard.
5 Responsibilities of management and those charged with governance for financial statements
The management of your company is responsible for preparing the financial statements in accordance with the requirements of
Accounting Standards to achieve a fair presentation, and for the designing, implementing and maintaining internal control that is
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
necessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of your company is responsible for accessing your company's ability to continue
as a going concern, disclosing matters related to going concern and using the going concern basis of accounting unless management
either intends to liquidate your company or to cease operation, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing your company's financial reporting process.
6 Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material
misstatement when it exits. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with the audit standards, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as
fraud may involve collusion, forgery, omissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosure
made by management of your company.
(IV) Conclude on the appropriateness of using the going concern assumption by the management of your company, and conclude,
based on the audit evidence obtained, whether a material uncertainty exits related to events or conditions that may cast significant
doubt on our company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosure in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up the date of our auditor's report. However, future
events or conditions may cause your company to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, including the disclosure, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(VI) Obtain sufficient and appropriate audit evidence for the financial information of your company's entity or business activities so
as to express opinions on the financial statements. We are responsible for guiding, supervising and implementing group audits. We
assume full responsibility for the audit opinions.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit matters, including any significant deficiencies in internal control that we identify during our audit.
We also provide a statement to those charged with governance regarding the observed professional moral requirements related to
independence, and communicate with those charged with governance about all the relationships and other matters that may be
reasonably considered to affect our independence, as well as the related countermeasures (if applicable).
In the matters we communicated with those charged with governance, we determine the matters that are most important to audit of
the current period financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws
121
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
and regulations prohibit public disclosure of these matters, or, in a few cases, we confirm that the matter should not be communicated
in the audit report if it is reasonably anticipated that the negative consequence caused by communicating a matter in the audit report
exceeds the benefit generated in terms of public interests.
Union Power Certified Public Accountants
Chinese CPA:
(Special General Partnership)
(engagement partner):
Gong Jingwei
Chinese CPA:
Wu Zihao
Wuhan, China 29 April, 2020
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Consolidated Balance Sheet (assets)
Prepared by: GREE ELECTRIC APPLIANCES,
Unit: RMB Yuan
INC. OF ZHUHAI
Assets Note 31 December, 2019 1 January, 2019 31 December, 2018
Current assets:
Monetary capital (VII) 1 125,400,715,267.64 115,022,653,811.67 113,079,030,368.11
Cash and deposits in central bank
Deposits in other banks
Deposit for recognizance
Lending funds
Trading financial assets (VII) 2 955,208,583.58 1,012,470,387.43 Not applicable
Financial assets measured at their fair values and of
which the changes are recorded into the current profits Not applicable Not applicable 1,012,470,387.43
and losses
Derivative financial assets (VII) 3 92,392,625.69 170,216,138.92 170,216,138.92
Bills receivable 35,911,567,876.04
Accounts receivable (VII) 4 8,513,334,545.08 7,642,434,078.24 7,699,658,990.16
Receivables financing (VII) 5 28,226,248,997.12 34,300,472,580.13 Not applicable
Prepayment (VII) 6 2,395,610,555.26 2,161,876,009.22 2,161,876,009.22
Other receivables (VII) 7 159,134,399.10 290,346,336.38 2,553,689,544.47
Inventories (VII) 8 24,084,854,064.29 20,011,518,230.53 20,011,518,230.53
Assets held for sale
Non-current assets due within one year (VII) 9 445,397,710.39
Other current assets (VII) 10 23,091,144,216.68 18,913,345,857.70 17,110,921,223.89
Total current assets 213,364,040,964.83 199,525,333,430.22 199,710,948,768.77
Non-current assets:
Disbursement of loans and advances (VII) 11 14,423,786,409.22 9,081,714,083.52 9,071,332,784.86
Debt investment (VII) 12 37,216,700.19 Not applicable
Available-for-sale financial assets Not applicable Not applicable 2,216,195,036.33
Other debt investments (VII) 13 296,836,282.20 1,064,120,569.43 Not applicable
Held-to-maturity investment Not applicable Not applicable
Long-term receivables
Long-term equity investment (VII) 14 7,064,186,161.29 2,250,732,461.71 2,250,732,461.71
Other equity instrument investments (VII) 15 4,644,601,697.51 1,144,907,946.33 Not applicable
Other non-current financial assets (VII) 16 2,003,483,333.33 Not applicable
Investment real estate (VII) 17 498,648,691.85 537,589,343.08 537,589,343.08
Fixed assets (VII) 18 19,121,930,757.04 18,385,761,475.54 18,385,761,475.54
Construction in Progress (VII) 19 2,431,051,409.94 1,663,938,988.55 1,663,938,988.55
Productive biological assets
Oil and gas assets
Intangible assets (VII) 20 5,305,541,098.92 5,204,500,167.30 5,204,500,167.30
Development expenditures
Business reputation (VII) 21 325,919,390.58 51,804,350.47 51,804,350.47
Long-term deferred expenses 2,718,105.35 4,237,554.01 4,237,554.01
Deferred income tax assets (VII) 22 12,541,085,078.09 11,377,090,764.13 11,349,573,709.69
Other non-current assets (VII) 23 948,328,035.13 787,542,636.50 787,542,636.50
Total non-current assets 69,608,116,450.45 51,591,157,040.76 51,523,208,508.04
Total assets 282,972,157,415.28 251,116,490,470.98 251,234,157,276.81
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Consolidated Balance Sheet (liabilities and owner's equity)
Prepared by: GREE ELECTRIC APPLIANCES, INC.
Unit: RMB Yuan
OF ZHUHAI
Liabilities and owners' equity Note 31 December, 2019 1 January, 2019 31 December, 2018
Current liabilities:
Short-term borrowing (VII) 24 15,944,176,463.01 22,197,899,406.88 22,067,750,002.70
Borrowings from the central bank
Deposits from customers and interbank (VII) 25 352,512,311.72 319,477,242.91 315,879,779.13
Loans from other banks (VII) 26 1,000,446,666.67
Trading financial liabilities Not applicable
Financial liabilities measured at their fair values and of
which the changes are recorded into the current profits and Not applicable Not applicable
losses
Derivative financial liabilities (VII) 27 257,364,882.07 257,364,882.07
Financial assets sold for repurchase (VII) 28 2,074,500,000.00
Deposit-taking
Bills payable (VII) 29 25,285,207,843.86 10,835,428,282.29 10,835,428,282.29
Accounts payable (VII) 30 41,656,815,752.46 38,987,371,471.02 38,987,371,471.02
Advances from customers (VII) 31 8,225,707,662.42 9,792,041,417.16 9,792,041,417.16
Payroll payable (VII) 32 3,430,968,964.33 2,473,204,451.69 2,473,204,451.69
Taxes payable (VII) 33 3,703,779,716.33 4,848,347,673.70 4,848,347,673.70
Other payables (VII) 34 2,712,692,973.66 3,084,011,741.38 4,747,139,263.00
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities (VII) 35 65,181,491,855.14 64,890,979,418.62 63,361,598,764.96
Total current liabilities 169,568,300,209.60 157,686,125,987.72 157,686,125,987.72
Non-current liabilities:
Long-term borrowing (VII) 36 46,885,882.86
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables
Long-term payroll payable (VII) 37 141,021,228.00 130,840,170.00 130,840,170.00
Accrued liabilities
Deferred income (VII) 38 240,504,270.47 166,293,620.03 166,293,620.03
Deferred income tax liabilities (VII) 22 927,789,301.27 536,185,771.60 536,185,771.60
Other non-current liabilities
Total non-current liabilities 1,356,200,682.60 833,319,561.63 833,319,561.63
Total liabilities 170,924,500,892.20 158,519,445,549.35 158,519,445,549.35
Owners' equity:
Capital stock (VII) 39 6,015,730,878.00 6,015,730,878.00 6,015,730,878.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves (VII) 40 93,379,500.71 93,379,500.71 93,379,500.71
Less: Treasury stock
Other comprehensive income (VII) 41 6,260,291,981.13 -620,246,513.23 -550,806,051.51
Special reserves
Surplus reserve (VII) 42 3,499,671,556.59 3,499,671,556.59 3,499,671,556.59
General risk provisions (VII) 43 489,855,826.75 329,417,571.48 329,417,571.48
Undistributed profit (VII) 44 93,794,643,539.49 81,891,475,269.72 81,939,701,613.83
Total owners' equity attributable to parent company 110,153,573,282.67 91,209,428,263.27 91,327,095,069.10
Minority equity 1,894,083,240.41 1,387,616,658.36 1,387,616,658.36
Total owners' equity 112,047,656,523.08 92,597,044,921.63 92,714,711,727.46
Total liabilities and owners' equity 282,972,157,415.28 251,116,490,470.98 251,234,157,276.81
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance Sheet of Parent Company (assets)
Prepared by: GREE ELECTRIC
Unit: RMB Yuan
APPLIANCES, INC. OF ZHUHAI
Assets Note 31 December, 2019 1 January, 2019 31 December, 2018
Current assets:
Monetary capital 121,906,528,984.14 104,197,391,376.56 102,696,932,265.26
Trading financial assets 945,701,633.58 412,114,127.42 Not applicable
Financial assets measured at their fair values
and of which the changes are recorded into the Not applicable Not applicable 412,114,127.42
current profits and losses
Derivative financial assets 73,920,207.86 73,920,207.86
Bills receivable 32,516,210,775.80
Accounts receivable (XVI) 1 3,873,270,521.33 2,531,171,861.80 2,531,171,861.80
Receivables financing 24,599,149,450.48 31,977,018,142.64 Not applicable
Prepayment 16,755,065,015.75 11,907,653,260.68 11,907,653,260.68
Other receivables (XVI) 2 2,757,398,837.97 2,176,997,136.30 3,898,630,873.93
Inventories 9,763,530,439.65 8,529,208,778.48 8,529,208,778.48
Assets held for sale
Non-current assets due within one year
Other current assets 11,140,701,427.28 12,988,336,943.42 12,311,814,484.26
Total current assets 191,741,346,310.18 174,793,811,835.16 174,877,656,635.49
Non-current assets:
Debt investment Not applicable
Available-for-sale financial assets Not applicable Not applicable 764,190,199.08
Other debt investments Not applicable
Held-to-maturity investment Not applicable Not applicable
Long-term receivables
Long-term equity investment (XVI) 3 20,224,198,957.34 12,538,945,257.76 12,538,945,257.76
Other equity instrument investments 4,271,848,596.31 764,190,199.08 Not applicable
Other non-current financial assets 2,003,483,333.33 Not applicable
Investment real estate 24,475,730.79 26,777,855.79 26,777,855.79
Fixed assets 2,965,550,178.74 3,124,307,345.06 3,124,307,345.06
Construction in Progress 262,245,182.66 168,094,835.04 168,094,835.04
Productive biological assets
Oil and gas assets
Intangible assets 761,621,258.44 748,344,213.16 748,344,213.16
Development expenditures
Long-term deferred expenses
Deferred income tax assets 12,019,079,098.54 10,944,089,573.35 10,931,512,853.30
Other non-current assets 195,330,890.98 130,258,604.75 130,258,604.75
Total non-current assets 42,727,833,227.13 28,445,007,883.99 28,432,431,163.94
Total assets 234,469,179,537.31 203,238,819,719.15 203,310,087,799.43
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Consolidated Balance Sheet of Parent Company (liabilities and owner's equity)
Prepared by: GREE ELECTRIC
Unit: RMB Yuan
APPLIANCES, INC. OF ZHUHAI
Liabilities and owners' equity Note 31 December, 2019 1 January, 2019 31 December, 2018
Current liabilities:
Short-term borrowing 11,188,890,759.19 17,836,242,752.95 17,759,081,480.00
Trading financial liabilities Not applicable
Financial liabilities measured at their fair values
and of which the changes are recorded into the Not applicable Not applicable
current profits and losses
Derivative financial liabilities 45,078,940.00 45,078,940.00
Bills payable 23,013,715,200.07 9,836,497,468.09 9,836,497,468.09
Accounts payable 45,097,063,852.05 35,079,353,570.62 35,079,353,570.62
Advances from customers 11,832,592,136.06 13,470,828,988.39 13,470,828,988.39
Contractual liabilities
Payroll payable 1,398,044,643.25 1,114,026,322.53 1,114,026,322.53
Taxes payable 1,819,362,036.62 2,902,885,192.91 2,902,885,192.91
Other payables 4,897,515,153.02 1,260,548,926.79 1,795,358,032.57
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities 64,375,139,451.87 63,805,868,580.72 63,348,220,747.89
Total current liabilities 163,622,323,232.13 145,351,330,743.00 145,351,330,743.00
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred stock
Perpetual bond
Long-term payables
Long-term payroll payable 141,021,228.00 130,840,170.00 130,840,170.00
Accrued liabilities
Deferred income 51,891,300.00 30,607,319.00 30,607,319.00
Deferred income tax liabilities 528,382,787.62 311,380,274.15 311,380,274.15
Other non-current liabilities
Total non-current liabilities 721,295,315.62 472,827,763.15 472,827,763.15
Total liabilities 164,343,618,547.75 145,824,158,506.15 145,824,158,506.15
Owners' equity:
Capital stock 6,015,730,878.00 6,015,730,878.00 6,015,730,878.00
Other equity instruments
Including: Preferred stock
Perpetual bond
Capital reserves 179,564,695.55 179,564,695.55 179,564,695.55
Less: Treasury stock
Other comprehensive income 6,462,024,096.41 -399,596,999.61 -330,283,919.33
Special reserves
Surplus reserve 3,497,114,024.31 3,497,114,024.31 3,497,114,024.31
Undistributed profit 53,971,127,295.29 48,121,848,614.75 48,123,803,614.75
Total owners' equity 70,125,560,989.56 57,414,661,213.00 57,485,929,293.28
Total liabilities and owners' equity 234,469,179,537.31 203,238,819,719.15 203,310,087,799.43
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Consolidated Income Statement
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF
Unit: RMB Yuan
ZHUHAI
Item Note For the Year 2019 For the Year 2018
I. Total operating revenues 200,508,333,611.34 200,023,997,743.87
Including: Operating Revenue (VII) 45 198,153,027,540.35 198,123,177,056.84
Interest revenue (VII) 46 2,351,471,964.56 1,899,287,824.22
Earned premium
Fee and commission income (VII) 46 3,834,106.43 1,532,862.81
II. Total operating costs 170,723,573,765.20 169,327,655,069.32
Including: Operating Cost (VII) 45 143,499,372,581.36 138,234,167,710.13
Interest expense (VII) 46 110,579,966.36 45,341,946.69
Handling charges and commission expenses (VII) 46 603,394.43 657,689.31
Refunded premiums
Net payments for insurance claims
Net provision for insurance contracts
Expenditures dividend policy
Amortized reinsurance expenditures
Taxes and surcharges (VII) 47 1,542,983,748.63 1,741,892,704.57
Sales expense (VII) 48 18,309,812,188.35 18,899,578,046.25
Overhead Expense (VII) 49 3,795,645,600.08 4,365,850,083.19
R&D expenses (VII) 50 5,891,219,715.90 6,988,368,285.92
Financial expense (VII) 51 -2,426,643,429.91 -948,201,396.74
Including: Interest expense 1,598,276,258.59 1,068,308,309.96
Interest revenue 3,698,387,243.32 2,384,486,815.64
Add: Other incomes (VII) 52 936,148,644.87 408,553,205.53
Income from investments (losses expressed with "-") (VII) 53 -226,634,780.62 106,768,935.01
Including: Investment incomes from joint venture and
-20,983,248.83 560,513.87
partnership
Income from derecognition of financial
assets measured at amortization costs ("-" Not applicable
stands for losses)
Income from net exposure hedging
Not applicable
("-" stands for losses)
Income from changes in fair value
(VII) 54 228,264,067.88 46,257,424.83
("-" stands for losses)
Credit impairment losses ("-" stands for losses) (VII) 55 -279,448,586.27 Not applicable
Asset impairment losses ("-" stands for losses) (VII) 56 -842,893,299.94 -261,674,177.33
Income from disposal of assets (losses expressed with
(VII) 57 4,911,230.34 636,629.29
"-")
III. Operating profit (losses expressed with "-") 29,605,107,122.40 30,996,884,691.88
Add: Non-operating revenues (VII) 58 345,706,663.13 317,857,733.42
Less: Non-operating expenses (VII) 59 598,106,556.83 41,234,701.05
IV. Total profit (total losses expressed with "-") 29,352,707,228.70 31,273,507,724.25
Less: Income tax expenses (VII) 60 4,525,463,624.73 4,894,477,907.19
V. Net profit (net loss expressed with "-") 24,827,243,603.97 26,379,029,817.06
Including: Pre-combination net profits of the combined party in
the business combination involving enterprises under common 184,503.98
control
(I) Classification by going concern:
1. Continuous operating net profit (net loss expressed with "-") 24,827,761,617.47 26,379,101,213.82
2. Discontinued operation net profit (net loss expressed with "-") -518,013.50 -71,396.76
(II) Classification by ownership:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
1. Net profits attributable to shareholders of the parent company
24,696,641,368.84 26,202,787,681.42
in the current period ("-" stands for net losses)
2. Minority shareholders' gains and losses ("-" stands for net
130,602,235.13 176,242,135.64
losses)
VI. Net of tax of other comprehensive income (VII) 41 6,880,143,079.03 -457,274,293.16
(I) Net of tax of other comprehensive income attributable to
6,880,538,494.36 -459,105,380.38
shareholders of the parent company
1. Other comprehensive income which cannot be reclassified into
6,811,462,395.19 -16,491,946.00
profits and losses
(1) Recalculated changes in defined benefit plans -8,029,478.00 -16,491,946.00
(2) Other comprehensive income which cannot be transferred
4,784,432,411.50
to profit or loss under the equity method
(3) Changes in fair value of other equity instrument
2,035,059,461.69 Not applicable
investments
(4) Changes in fair value of the company's own credit risk Not applicable
2. Other comprehensive income which will be reclassified into
69,076,099.17 -442,613,434.38
profits and losses in the future
(1) Other comprehensive income that can be transferred to
4,536.91 187,494.29
profit or loss under the equity method
(2) Changes in fair value of other debt investments 9,498,573.66 Not applicable
(3) Gains and losses from changes in fair value of financial
Not applicable -519,311,273.76
assets available for sale
(4) Amount of financial assets reclassified and included into
Not applicable
other comprehensive income
(5) Gains and losses from held-to-maturity investments
Not applicable
reclassified as financial assets available for sale
(6) Provision for credit impairment of other debt investments Not applicable
(7) Cash flow hedge reserve (Effective part of cash flow
10,465,879.70 -17,863,663.45
hedging profits or losses)
(8) Difference arising from translation of financial statements
49,107,108.90 94,374,008.54
in foreign currency
(9) Others
(II) Net of tax of other comprehensive income attributable to
-395,415.33 1,831,087.22
minority shareholders
VII. Total comprehensive income 31,707,386,683.00 25,921,755,523.90
(I) Total comprehensive income attributable to shareholders of the
31,577,179,863.20 25,743,682,301.04
parent company
(II) Total comprehensive income attributable to minority
130,206,819.80 178,073,222.86
shareholders
VIII. Earnings per share: (XVIII) 2
(I) Basic earnings per share 4.11 4.36
(II) Diluted earning per share 4.11 4.36
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Income Statement of Parent Company
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
Item Note For the Year 2019 For the Year 2018
I. Operating revenues (XVI) 4 136,219,366,183.61 161,753,766,107.09
Less: Operating Cost (XVI) 4 98,709,058,850.15 119,138,891,358.78
Taxes and surcharges 594,645,728.21 794,981,560.14
Sales expense 17,663,837,022.22 19,690,156,573.66
Overhead Expense 963,036,368.05 940,247,027.67
R&D expenses 4,450,053,310.36 5,120,483,984.30
Financial expense -3,740,059,339.22 -2,190,327,164.77
Including: Interest expense 792,553,518.40 1,032,859,821.02
Interest revenue 4,022,458,638.70 2,957,965,151.82
Add: Other incomes 104,241,039.06 70,644,867.83
Income from investments (losses expressed with "-") (XVI) 5 4,621,766,925.83 3,846,958,399.63
Including: Investment incomes from joint venture and partnership -20,983,248.83 129,541.96
Income from derecognition of financial assets measured
Not applicable
at amortization costs ("-" stands for losses)
Income from net exposure hedging ("-" stands for losses) Not applicable
Income from changes in fair value ("-" stands for losses) -6,160,581.57 50,758,723.95
Credit impairment losses ("-" stands for losses) -116,414,495.32 Not applicable
Asset impairment losses ("-" stands for losses) -788,564,505.35 -70,695,217.15
Income from disposal of assets (losses expressed with "-") 2,293,132.37 -317,786.26
II. Operating profit (losses expressed with "-") 21,395,955,758.86 22,156,681,755.31
Add: Non-operating revenues 42,197,397.49 39,339,935.29
Less: Non-operating expenses 561,145,018.76 5,213,829.75
III. Total profit (total losses expressed with "-") 20,877,008,137.59 22,190,807,860.85
Less: Income tax expenses 2,394,694,613.25 2,811,122,896.75
IV. Net profit (net loss expressed with "-") 18,482,313,524.34 19,379,684,964.10
1. Continuous operating net profit (net loss expressed with "-") 18,482,313,524.34 19,379,684,964.10
2. Discontinued operation net profit (net loss expressed with "-")
V. Net of tax of other comprehensive income 6,861,621,096.02 -260,377,541.13
1. Other comprehensive income which cannot be reclassified into profits
6,835,662,576.38 -16,491,946.00
and losses
(1) Recalculated changes in defined benefit plans -8,029,478.00 -16,491,946.00
(2) Other comprehensive income which cannot be transferred to profit or
4,784,432,411.50
loss under the equity method
(3) Changes in fair value of other equity instrument investments 2,059,259,642.88 Not applicable
(4) Changes in fair value of the company's own credit risk Not applicable
2. Other comprehensive income which will be reclassified into profits and
25,958,519.64 -243,885,595.13
losses in the future
(1) Other comprehensive income that can be transferred to profit or loss
4,536.91 187,494.29
under the equity method
(2) Changes in fair value of other debt investments 15,488,103.03 Not applicable
(3) Gains and losses from changes in fair value of financial assets available
Not applicable -226,209,425.97
for sale
(4) Amount of financial assets reclassified and included into other
Not applicable
comprehensive income
(5) Gains and losses from held-to-maturity investments reclassified as
Not applicable
financial assets available for sale
(6) Provision for credit impairment of other debt investments Not applicable
(7) Cash flow hedge reserve (Effective part of cash flow hedging profits or
10,465,879.70 -17,863,663.45
losses)
129
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(8) Difference arising from translation of financial statements in foreign
currency
(9) Others
VI. Total comprehensive income 25,343,934,620.36 19,119,307,422.97
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
Consolidated Cash Flow Statement
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: Yuan
Item Note For the Year 2019 For the Year 2018
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 166,387,697,953.52 135,029,126,382.98
Net increase in deposits and due from banks 31,898,181.64 48,934,991.36
Net increase in borrowings from central bank
Net increase in placements from other financial institutions 1,000,000,000.00
Cash received from original insurance contracts
Net increase received from reinsurance business
Net increase in deposits from the insured and investment
Cash received from interests, fees and commissions 1,051,389,792.25 1,208,127,832.48
Net increase in placements from other financial institutions
Net increase in repurchase business capital 2,074,500,000.00
Refund of tax and levies 1,854,373,548.43 2,356,588,272.30
Other cash received relating to operating activities (VII) 61 (1) 2,796,063,838.34 7,566,986,223.85
Sub-total of cash inflows from operating activities 175,195,923,314.18 146,209,763,702.97
Cash payments for goods acquired and services received 94,214,771,389.83 78,045,526,788.80
Net increase in loans and advances to customers 7,529,473,836.40 2,343,375,955.55
Net increase in deposits with central bank and other financial institutions -31,341,719.47 104,458,700.38
Cash paid for interests, fees and commissions 103,327,387.96 31,566,054.63
Cash paid for policy dividends
Cash paid to and on behalf of employees 8,831,213,736.01 8,575,412,582.19
Payments of all types of taxes 15,128,311,796.96 15,141,797,894.72
Other cash paid relating to operating activities (VII) 61 (2) 21,526,452,792.90 15,026,834,183.72
Sub-total of cash outflows from operating activities 147,302,209,220.59 119,268,972,159.99
Net cash flows from operating activities 27,893,714,093.59 26,940,791,542.98
II. Cash flows from investing activities:
Cash received from recovery of investments 3,130,974,036.48 6,710,785,947.97
Cash received from return of investments 426,919,989.41 579,489,614.76
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 9,614,513.94 6,302,072.99
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities (VII) 61 (3) 4,878,025,331.18 2,652,398,105.48
Sub-total of cash inflows from investing activities 8,445,533,871.01 9,948,975,741.20
Cash paid for purchase and construction of fixed assets, intangible assets and other. long-term assets 4,713,187,965.97 3,837,549,166.56
Cash paid for investments 7,192,756,039.01 15,477,712,506.03
130
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net increase in pledge loans
Net cash paid for acquisition of subsidiaries and other business units 774,183,781.48 1,029,686,312.94
Other cash paid relating to investing activities (VII) 61 (4) 7,040,454,685.32 11,449,793,031.34
Sub-total of cash outflows from investing activities 19,720,582,471.78 31,794,741,016.87
Net Cash Flow from Investment Activities -11,275,048,600.77 -21,845,765,275.67
III. Cash flows from financing activities:
Cash received from absorbing investment 326,850,000.00
Including: Cash received from minority shareholder investment by subsidiary 326,850,000.00
Cash received from borrowings 21,268,257,923.68 27,633,970,524.35
Cash received from bond issue
Other cash received relating to financing activities (VII) 61 (5) 5,110,000.00
Sub-total of cash inflows from financing activities 21,595,107,923.68 27,639,080,524.35
Cash repayments of amounts borrowed 27,657,703,656.20 24,227,160,995.94
Cash paid for dividend and profit distribution or interest payment 13,159,380,388.41 862,910,396.59
Including: Dividends and profits paid to minority shareholders by subsidiaries
Other cash paid relating to financing activities (VII) 61 (6) 35,162,649.65
Sub-total of cash outflows from financing activities 40,817,084,044.61 25,125,234,042.18
Net Cash Flow from Financing Activities -19,221,976,120.93 2,513,846,482.17
IV. Effect of foreign exchange rate changes on cash 203,761,625.26 -196,368,149.08
V. Net increase in cash and cash equivalents -2,399,549,002.85 7,412,504,600.40
Add: Beginning balance of cash and cash equivalents 28,772,120,824.34 21,359,616,223.94
VI. Ending balance of cash and cash equivalents 26,372,571,821.49 28,772,120,824.34
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
131
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Cash Flow Statements of Parent Company
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF
Unit: RMB Yuan
ZHUHAI
Item Note For the Year 2019 For the Year 2018
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 112,341,680,710.73 104,307,759,700.58
Net increase in deposits and due from banks
Net increase in borrowings from central bank
Net increase in placements from other financial institutions
Cash received from interests, fees and commissions
Net increase in placements from other financial institutions
Net increase in repurchase business capital
Refund of tax and levies 1,465,166,072.58 1,879,978,085.63
Other cash received relating to operating activities 51,510,498,359.13 8,310,656,390.83
Sub-total of cash inflows from operating activities 165,317,345,142.44 114,498,394,177.04
Cash payments for goods acquired and services received 105,224,849,035.82 74,899,174,798.26
Net increase in loans and advances to customers
Net increase in financial assets held for trading purposes
Net increase in deposits with central bank and other financial
institutions
Cash paid for interests, fees and commissions
Cash paid to and on behalf of employees 3,453,320,937.66 3,342,083,985.11
Payments of all types of taxes 9,443,887,671.06 9,482,565,857.21
Other cash paid relating to operating activities 19,406,931,680.64 13,157,727,738.20
Sub-total of cash outflows from operating activities 137,528,989,325.18 100,881,552,378.78
Net cash flows from operating activities 27,788,355,817.26 13,616,841,798.26
II. Cash flows from investing activities:
Cash received from recovery of investments 4,302,974,036.48 1,520,299,695.69
Cash received from return of investments 201,582,776.58 39,636,400.79
Net cash received from disposal of fixed assets, intangible assets and
3,947,642.20 5,323,648.72
other long-term assets
Net cash received from disposal of subsidiaries and other business
units
Other cash received relating to investing activities 7,274,898,788.81 5,025,218,440.57
Sub-total of cash inflows from investing activities 11,783,403,244.07 6,590,478,185.77
Cash paid for purchase and construction of fixed assets, intangible
1,390,377,306.14 684,486,871.30
assets and other. long-term assets
Cash paid for investments 8,174,203,389.69 11,009,107,127.65
Net cash paid for acquisition of subsidiaries and other business units 1,247,087,108.76
Other cash paid relating to investing activities 14,656,152,091.36 7,785,360,046.49
Sub-total of cash outflows from investing activities 24,220,732,787.19 20,726,041,154.20
Net Cash Flow from Investment Activities -12,437,329,543.12 -14,135,562,968.43
III. Cash flows from financing activities:
Cash received from absorbing investment
132
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Cash received from borrowings 16,640,128,940.00 23,443,352,980.00
Cash received from bond issue
Other cash received relating to financing activities 3,805,792,927.96 1,727,534,511.00
Sub-total of cash inflows from financing activities 20,445,921,867.96 25,170,887,491.00
Cash repayments of amounts borrowed 23,372,991,990.00 17,648,573,616.66
Cash paid for dividend and profit distribution or interest payment 13,031,345,175.19 768,898,753.56
Other cash paid relating to financing activities 2,041,863,709.67 458,537,863.15
Sub-total of cash outflows from financing activities 38,446,200,874.86 18,876,010,233.37
Net Cash Flow from Financing Activities -18,000,279,006.90 6,294,877,257.63
IV. Effect of foreign exchange rate changes on cash 693,156,236.38 953,014,876.37
V. Net increase in cash and cash equivalents -1,956,096,496.38 6,729,170,963.83
Add: Beginning balance of cash and cash equivalents 32,315,862,463.84 25,586,691,500.01
VI. Ending balance of cash and cash equivalents 30,359,765,967.46 32,315,862,463.84
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
133
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Consolidated Statement of Changes In Owners' Equity
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
For the Year 2019
Owners' equity attributable to parent company
Item Other equity instruments
Less: Other Minority equity Total owners' equity
Preferred Perpetual Special General risk
Capital stock Others Treasury comprehensive Surplus reserve Undistributed profit
reserves provisions
stock bond stock income
1. Ending balance for the previous year 6,015,730,878.00 0.00 0.00 0.00 0.00 -550,806,051.51 0.00 3,499,671,556.59 329,417,571.48 81,939,701,613.83 1,387,616,658.36 92,714,711,727.46
Add: Changes in accounting policies -69,440,461.72 -48,226,344.11 0.00 -117,666,805.83
Early error correction 0.00
Business combination involving enterprises under
0.00
common control
Others 0.00
2. Beginning balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -620,246,513.23 0.00 3,499,671,556.59 329,417,571.48 81,891,475,269.72 1,387,616,658.36 92,597,044,921.63
III. Increase or decrease in the current year (decrease
0.00 0.00 0.00 0.00 0.00 6,880,538,494.36 0.00 0.00 160,438,255.27 11,903,168,269.77 506,466,582.05 19,450,611,601.45
expressed with "-")
(I) Total comprehensive income 6,880,538,494.36 24,696,641,368.84 130,206,819.80 31,707,386,683.00
(II) Capital invested by owners and stock capital decrease 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 395,965,448.59 395,965,448.59
1. Equity invested by owners 326,850,000.00 326,850,000.00
2. Stock capital invested by holders of other equity
0.00
instruments
3. Amounts of share-based payments recognized into
0.00
owner's equity
4. Others 69,115,448.59 69,115,448.59
(III) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 160,438,255.27 -12,793,473,099.07 -19,705,686.34 -12,652,740,530.14
1. Appropriation to surplus reserves 0.00 0.00 0.00
2. Appropriation to general risk provisions 160,438,255.27 -160,438,255.27 0.00
3. Allocation to owners -12,633,034,843.80 -19,705,686.34 -12,652,740,530.14
4. Others 0.00
(IV) Internal carry-over of owner's equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Transfer of capital reserves into capital 0.00
2. Transfer of surplus reserves into capital 0.00
3. Surplus reserves for making up losses 0.00
4. Set benefit plan change carried over into retained
0.00
earnings
5. Other comprehensive income carried forward to
0.00
retained earnings
6. Others 0.00
(V) Appropriative reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Amount withdrawn for the period 0.00
2. Amount used for the period 0.00
(VI) Others 0.00
IV. Ending balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 6,260,291,981.13 0.00 3,499,671,556.59 489,855,826.75 93,794,643,539.49 1,894,083,240.41 112,047,656,523.08
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
134
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Notes to items of the consolidated statement of changes in owners' equity (continued)
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
For the Year 2018
Owners' equity attributable to parent company
Item Other equity instruments
Less: Other Minority equity Total owners' equity
Preferred Perpetual Special General risk
Capital stock Others Treasury comprehensive Surplus reserve Undistributed profit
reserves provisions
stock bond stock income
1. Ending balance for the previous year 6,015,730,878.00 0.00 0.00 0.00 0.00 -91,700,671.13 0.00 3,499,671,556.59 327,347,621.67 55,740,076,085.90 1,239,791,691.45 66,834,797,763.19
Add: Changes in accounting policies 0.00
Early error correction 0.00
Business combination involving enterprises under common
-1,092,203.68 19,907,796.32
control
Others 0.00
2. Beginning balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -91,700,671.13 0.00 3,499,671,556.59 327,347,621.67 55,738,983,882.22 1,239,791,691.45 66,854,705,559.51
III. Increase or decrease in the current year (decrease
0.00 0.00 0.00 0.00 0.00 -459,105,380.38 0.00 0.00 2,069,949.81 26,200,717,731.61 147,824,966.91 25,860,006,167.95
expressed with "-")
(I) Total comprehensive income -459,105,380.38 26,202,787,681.42 178,073,222.86 25,921,755,523.90
(II) Capital invested by owners and stock capital decrease 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -31,501,100.00
1. Equity invested by owners 0.00
2. Stock capital invested by holders of other equity
0.00
instruments
3. Amounts of share-based payments recognized into owner's
0.00
equity
4. Others -31,501,100.00
(III) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,069,949.81 -2,069,949.81 -30,248,255.95 -30,248,255.95
1. Appropriation to surplus reserves 0.00 0.00 0.00
2. Appropriation to general risk provisions 2,069,949.81 -2,069,949.81 0.00
3. Allocation to owners 0.00 -30,248,255.95 -30,248,255.95
4. Others 0.00
(IV) Internal carry-over of owner's equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Transfer of capital reserves into capital 0.00
2. Transfer of surplus reserves into capital 0.00
3. Surplus reserves for making up losses 0.00
4. Set benefit plan change carried over into retained earnings 0.00
5. Other comprehensive income carried forward to retained
0.00
earnings
6. Others 0.00
(V) Appropriative reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Amount withdrawn for the period 0.00
2. Amount used for the period 0.00
(VI) Others 0.00
IV. Ending balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -550,806,051.51 0.00 3,499,671,556.59 329,417,571.48 81,939,701,613.83 1,387,616,658.36 92,714,711,727.46
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
135
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Statement of Changes In Owners' Equity of Parent Company
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
For the Year 2019
Other equity instruments Less:
Item Other comprehensive
Capital stock Treasury Special reserves Surplus reserve Undistributed profit Total owners' equity
Preferred stock Perpetual bond Others income
stock
1. Ending balance for the previous year 6,015,730,878.00 0.00 0.00 0.00 0.00 -330,283,919.33 0.00 3,497,114,024.31 48,123,803,614.75 57,485,929,293.28
Add: Changes in accounting policies -69,313,080.28 -1,955,000.00 -71,268,080.28
Early error correction 0.00
Others 0.00
2. Beginning balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -399,596,999.61 0.00 3,497,114,024.31 48,121,848,614.75 57,414,661,213.00
III. Increase or decrease in the current year (decrease
0.00 0.00 0.00 0.00 0.00 6,861,621,096.02 0.00 0.00 5,849,278,680.54 12,710,899,776.56
expressed with "-")
(I) Total comprehensive income 6,861,621,096.02 18,482,313,524.34 25,343,934,620.36
(II) Capital invested by owners and stock capital decrease 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Equity invested by owners 0.00
2. Stock capital invested by holders of other equity instruments 0.00
3. Amounts of share-based payments recognized into owner's
0.00
equity
4. Others 0.00
(III) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -12,633,034,843.80 -12,633,034,843.80
1. Appropriation to surplus reserves 0.00 0.00 0.00
2. Allocation to owners -12,633,034,843.80 -12,633,034,843.80
3. Others 0.00
(IV) Internal carry-over of owner's equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Transfer of capital reserves into capital 0.00
2. Transfer of surplus reserves into capital 0.00
3. Surplus reserves for making up losses 0.00
4. Set benefit plan change carried over into retained earnings 0.00
5. Other comprehensive income carried forward to retained
0.00
earnings
6. Others 0.00
(V) Appropriative reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Amount withdrawn for the period 0.00
2. Amount used for the period 0.00
(VI) Others 0.00
IV. Ending balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 6,462,024,096.41 0.00 3,497,114,024.31 53,971,127,295.29 70,125,560,989.56
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
136
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Notes to items of the parent company's statement of changes in owners' equity (continued)
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
For the Year 2018
Other equity instruments
Item Less: Treasury Other comprehensive Undistributed Total owners'
Capital stock Perpetual Special reserves Surplus reserve
Preferred stock Others stock income profit equity
bond
1. Ending balance for the previous year 6,015,730,878.00 0.00 0.00 0.00 0.00 -69,906,378.20 0.00 3,497,114,024.31 28,744,118,650.65 38,378,030,670.01
Add: Changes in accounting policies 0.00
Early error correction 0.00
Others 0.00
2. Beginning balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -69,906,378.20 0.00 3,497,114,024.31 28,744,118,650.65 38,378,030,670.01
III. Increase or decrease in the current year (decrease expressed
0.00 0.00 0.00 0.00 0.00 -260,377,541.13 0.00 0.00 19,379,684,964.10 19,107,898,623.27
with "-")
(I) Total comprehensive income -260,377,541.13 19,379,684,964.10 19,119,307,422.97
(II) Capital invested by owners and stock capital decrease 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -11,408,799.70
1. Equity invested by owners 0.00
2. Stock capital invested by holders of other equity instruments 0.00
3. Amounts of share-based payments recognized into owner's equity 0.00
4. Others -11,408,799.70
(III) Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Appropriation to surplus reserves 0.00 0.00 0.00
2. Allocation to owners 0.00 0.00
3. Others 0.00
(IV) Internal carry-over of owner's equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Transfer of capital reserves into capital 0.00
2. Transfer of surplus reserves into capital 0.00
3. Surplus reserves for making up losses 0.00
4. Set benefit plan change carried over into retained earnings 0.00
5. Other comprehensive income carried forward to retained earnings 0.00
6. Others 0.00
(V) Appropriative reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1. Amount withdrawn for the period 0.00
2. Amount used for the period 0.00
(VI) Others 0.00
IV. Ending balance for the current year 6,015,730,878.00 0.00 0.00 0.00 0.00 -330,283,919.33 0.00 3,497,114,024.31 48,123,803,614.75 57,485,929,293.28
Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution:
137
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Notes to Financial Statements for the Year 2019
(I) Basic information of the Company
Gree Electric Appliances, Inc. of Zhuhai (hereinafter referred to as "the Company") was established in December,
1989, with the unified social credit code 91440400192548256N.
The registered capital and equity of the Company was RMB 6,015,730,878.00 by the end of 31 December, 2019.
For the specific equity, see Note (VII) 39.
1. Registered address, organizational form and headquarters address of the Company
Organizational form of the Company: joint stock limited company
Registered address and headquarters office address of the Company: Jinji West Road, Qianshan, Zhuhai City,
Guangdong Province
2. Nature of business and main business activities of the Company
The Company falls in to the household electrical appliance industry and is engaged in production and sales of air
conditioners and their accessories, and home appliances and their accessories.
3. Names of the parent company and final parent company of the group
As at 31 December, 2019, Zhuhai Gree Group Co., Ltd. was the actual controller of the Company. For the specific
change in the actual controller of the Company, see Note (XII) 1.
4. Approved submitter and approved submission date of the financial report
This financial report was submitted under approval of the Board of Directors of the Company as of 29 April,
2020.
(II) Scope of consolidated financial statements of the current period and its change
Totally 92 subsidiaries were incorporated in the coverage of the consolidated financial statements by the end of
the Report Period. For details, see Note (IX) 1. For the detailed changes to the scope of consolidated financial
statements in the Report Period, see Note (VIII).
(III) Preparation basis of the financial statements
1. Preparation basis of the financial statements
The Company prepares the financial statements on the basis of a going concern and according to the transactions
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and events actually incurred and the disclosure provisions in the Accounting Standards for Business Enterprises -
Basic Standards (promulgated by the Ministry of Finance Order No. 33, revised by the Ministry of Finance Order
No. 76) and the specific accounting standards, the Implementation Guide for the Accounting Standards for
Business Enterprises, the Interpretations of the Accounting Standards for Business Enterprises and other
applicable regulations promulgated and revised by the Ministry of Finance on and after 15 February, 2006
(collectively referred to as "the Accounting Standards for Business Enterprises"), as well as the Preparation Rules
for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions on
Financial Reports (2014 Revision) promulgated by China Securities Regulatory Commission ("CSRC").
According to the relevant provisions of the Enterprise Accounting Standards, the Company's accounting is based
on the accrual basis. Except for certain financial instruments, the financial statements are measured on the basis of
historical cost. If an asset is impaired, the corresponding impairment provision shall be made in accordance with
relevant regulations.
2. Going concern
This financial statement was presented on a going concern basis. The management carefully evaluated factors of
the Company in the future 12 months commencing from 31 December, 2019 such as the macropolicy risk, market
operation risk, current and long-term profitability and solvency of the enterprise, financial flexibility, and the
management's intention of changing the operations policy, and held that there was no event that can generate
significant influence on the Company's ability to continue as a going concern.
(IV) Statements regarding observance of the Accounting Standards for Business Enterprises
The financial statements prepared by the Company conform to the requirements of the Accounting Standards for
Business Enterprises and give a true and complete view of the financial position of the Company on 31 December,
2019, and the related information such as operating results and cash flows in the year 2019. Besides, the financial
statements prepared by the Company, in all the major aspects, also conform to the disclosure requirements of
financial statements and their notes in the Preparation Rules for Information Disclosure by Companies Offering
Securities to the Public No. 15 - General Provisions on Financial Reports revised by the China Securities
Regulatory Commission in 2014.
(V) Significant accounting policies and estimates and previous errors
Specific accounting policies and accounting estimate suggestions:
The Company and each subsidiary are engaged in production and sales of air conditioners and their accessories,
and home appliances and their accessories. The Company has prepared several specific accounting policies and
accounting estimates for transactions and events such as revenue recognition based on the actual production
management characteristics and in accordance with provisions of the related Accounting Standards for Business
Enterprises. For details, see the detailed description in Note (V) herein.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
1. Accounting period
Accounting period of the Company includes one year and interim periods. An interim period covers six-month, a
quarter and a month. The accounting year of the Company commences on 1 January and ends on 31 December of
each year.
2. Operating cycle
The normal operating cycle refers to the period from the Company's purchase of assets used for processing to
achieving of cash or cash equivalent. The Company regards 12 months as one operating cycle and uses it as the
liquidity classification standard for assets and liabilities.
3. Functional currency
RMB is the functional currency used by the Company. Some subsidiaries of the Company adopt currencies other
than Renminbi as the functional currency.
4. Accounting treatment of business combination involving enterprises under common control and
business combination not involving enterprises under common control
Business combination refers to the transaction or event of combining two or more independent enterprises to form
a reporting entity. Business combination is classified into business combination involving enterprises under
common control and business combination not involving enterprises under common control.
(1) Business combination involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or parties both before and after the combination,
and that control is not transitory. For business combination involving enterprises under common control, the party
that obtains the right to control other enterprises participating in the combination on the combination date is the
combining party, and other enterprises participating in the combination are the combined party. The combination
date refers to the date on which the combining party actually obtains the right to control the combined party.
Where business combination involving enterprises under common control arises from one transaction or equities
of invested entities under common control are obtained step by step through multiple transactions and these
transactions belong to a package deal, the Company will recognize the cost of combination according to the share
of carrying amount of net assets obtained for the combined party in the ultimate controlling party's consolidated
financial statements on the combination date. The difference between the carrying amount of the consideration
paid for the combination (or total par value of the issued stocks) and the combination cost is adjusted to capital
reserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained
earnings.
Costs incurred that are attributable to the business combination made by the Company, including intermediary
costs such as the audit fee, legal service charge and appraisal and consultation costs, and other related overhead
expenses are charged to profits or losses in the period in which they are incurred; the transaction expenses directly
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attributable to the consideration paid for the combination through issuance of equity instruments are credited
against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained earnings;
the transaction expenses directly attributable to the consideration paid for the combination through issuance of
debt instruments are recorded into the initially recognized amount of debt instruments. Where the equities of
invested entities under common control are obtained step by step through multiple transactions to achieve
business combination but these transactions do not belong to a package deal, the Company will recognize the cost
of combination according to the share of carrying amount of net assets to be enjoyed by the combined party after
the combination in the ultimate controlling party's consolidated financial statements on the combination date. The
difference between the combination cost and the sum of the carrying amount of long-term equity investments
prior to the combination plus the carrying amount of the consideration newly paid for further acquisition of shares
on the date of combination is adjusted to capital reserve (capital premium or capital stock premium); if the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. For the equity
investment held before the date of combination, accounting treatment is not performed temporarily for other
comprehensive incomes that are accounted using the equity method or recognized using financial instruments and
accounted according to the measurement standard for recognition. When this investment is disposed of,
accounting treatment is conducted using the basis the same as that used by the invested entity to directly dispose
of relevant assets or liabilities. For other changes in owners' equities other than the net profits/losses, other
comprehensive income and profit distribution in net assets of the invested entity that are recognized because of
accounting using the equity method, accounting treatment is not conducted temporarily; they shall be transferred
to the profits and losses of the current period at the time of disposing of this investment.
(2) Business combination not involving enterprises under common control
A business combination not involving enterprises under common control is a business combination in which all of
the combining enterprises are not ultimately controlled by the same party or parties both before and after the
combination. For business combination not involving enterprises under common control, the party that obtains the
right to control other enterprises participating in the combination on the date of combination is the acquiring party,
and other enterprises participating in the combination are the acquired party. The date of acquisition refers to the
date on which the acquiring party actually obtains the right to control the acquired party.
For the business combination implemented through one transaction, the cost of business combination refers to the
fair value of assets paid, liabilities incurred or assumed and equity securities issued by the Company on the date of
acquisition for obtaining the right to control the acquired party. On the date of acquisition, the assets, liabilities
and contingent liabilities obtained by the Company from the acquired party are recognized at the fair value.
For a business combination realized by two or more transactions of exchange, the accounting treatment for the
combination costs shall be made by distinguishing individual financial statements and consolidated financial
statements:
In the individual financial statements, where the held stocks are accounted using the equity method prior to the
date of acquisition, the cost of combination of the investment is the aggregate of the carrying amount of the equity
investment of the acquired party held before the date of acquisition and the investment cost newly increased on
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the date of acquisition. For other related comprehensive income, accounting treatment is performed during
disposal of the investment using the basis the same as that used by the invested entity to directly dispose of
relevant assets or liabilities; the owner's equity that is recognized due to other changes in owners' equities other
than the net profits/losses, other comprehensive income and profit distribution of the invested entity is accordingly
transferred to the profits and losses of the current period at the time of disposing of this investment. Where the
equity investment held before the date of acquisition is recognized using financial instruments and undergoes
accounting treatment according to the measurement standard, the cost of combination of the investment is the
aggregate of the fair value of the equity investment recognized according to this standard and the newly increased
investment cost. The difference between the fair value of the originally held stocks and the carrying amount and
all the cumulative fair value changes originally recorded into other comprehensive income are transferred to the
investment income of the current period.
In the consolidated financial statements, the stocks of the acquired party held before the date of acquisition shall
be remeasured based on the fair value of such stocks on the date of acquisition, and the difference between their
fair value and carrying amount shall be charged to the investment income of the current period; where the stocks
of the acquired party held before the date of acquisition involve other comprehensive income under accounting of
the equity method and other changes in owners' equities other than the net profits/losses, other comprehensive
income and profit distribution, other comprehensive income and other changes in owners' equities concerned with
them shall be transferred to the investment income in the period in which the date of acquisition is included
(excluding other comprehensive income arising from changes in the net assets or net liabilities of the benefit plan
remeasured and redefined by the invested entity). The summation of the fair value of the stocks of the acquired
party held before the date of acquisition on the date of acquisition and newly increased investment costs on the
date of acquisition shall be the combination cost of the investment.
Costs incurred that are attributable to the business combination made by the Company, including intermediary
costs such as the audit fee, legal service charge, and appraisal and consultation costs, and other related overhead
expenses are charged to profits or losses in the period in which they are incurred. The transaction expenses
directly attributable to the consideration paid for the combination through issuance of equity instruments are
credited against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained
earnings; the transaction expenses directly attributable to the consideration paid for the combination through
issuance of debt instruments are recorded into the initially recognized amount of debt instruments.
In the Company, the positive balance between the business combination cost and the fair value of the identifiable
net assets obtained by the Company from the acquired party shall be recognized as business reputation and
subsequently measured after the accumulated provision for impairment is deducted from the cost; the negative
balance between the business combination cost and the fair value of the identifiable net assets obtained by the
Company from the acquired party shall be charged to profits or losses of the current period after being checked.
(3) Principle of judging whether multiple transactions are "a package deal"
When the terms and conditions of multiple transactions and the economic impact thereof accord with one or more
of the following cases, usually it indicates that these transactions shall undergo accounting treatment as "a
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package deal":
1) These transactions are concluded at the same time or concluded in consideration of mutual influence;
2) only the whole of these transactions can achieve a complete business result;
3) occurrence of one transaction depends on occurrence of at least one of the other transactions;
4) one transaction is not economical when considered separately, but economical when taken into account
together with other transactions.
5. Preparation of consolidated financial statements
(1) Principle of determining the scope of consolidated financial statements
The consolidation scope of consolidated financial statements shall be determined on the basis of control. Control
means that the Company owns the power to the invested entity, enjoys variable return by participating relevant
activities of the invested entity, and has the capacity of using the power to the invested entity to affect its return
amount.
(2) Preparation of consolidated financial statements
The consolidated financial statements of the Company are prepared by the Company based on individual financial
statements of the Company and subsidiaries and according to other relevant data. During preparation of
consolidated financial statements, the accounting policy and accounting period of the Company shall be consistent
with those of subsidiaries, and the inter-company major transactions and balances shall be offset.
For the subsidiary added due to business combination involving enterprises under common control in the Report
Period, the Company adjusts the amount at the beginning of the period in the consolidated balance sheet,
incorporates the revenue, expense and profit of this subsidiary from the beginning of the period for consolidation
to the end of the report period into the consolidated profit statement, includes its cash flow into the consolidated
cash flow statement, and adjusts relevant items in the comparative statements; for the subsidiary added due to
business combination not involving enterprises under common control, the Company does not adjust the amount
at the beginning of the period in the consolidated balance sheet, but only incorporates the revenue, expense and
profit of this subsidiary from the date of acquisition to the end of report period into the consolidated profit
statement and its cash flow into the consolidated cash flow statement.
The portion of owners' equity of the subsidiaries that isn't attributable to the Company shall be separately
presented as the minority shareholders' equity under the owners' equity in the consolidated balance sheet. The
share of net profits or losses of the subsidiaries in the current period that is attributable to the minority
shareholders' equity shall be presented as the item of "Minority interest income" under the net profit in the
consolidated profit statement. The share of comprehensive income of the subsidiaries in the current period that is
attributable to the minority shareholders' equity shall be presented as the item of "Total comprehensive income
attributable to minority shareholders" under the total comprehensive income in the consolidated profit statement.
Where the losses of a subsidiary undertaken by minority shareholders exceed the share enjoyed by minority
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shareholders in the owners' equities of this subsidiary at the beginning of the period, the balance shall be still
adjusted against the minority shareholders' equity.
For acquisition of the subsidiary's stocks owned by minority shareholders thereof, in the consolidated financial
statements, the difference between the long-term equity investment newly obtained because of acquisition of
minority shareholders' stocks and the share of net assets of the subsidiary to be enjoyed and continuously
calculated according to the proportion of newly added shares from the acquisition date or consolidation date is
adjusted to capital reserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjusted
against retained earnings.
For the transaction for which a part of equity investment is disposed of but the right to control this subsidiary is
not lost, in the consolidated financial statements, the difference between the disposal price and the share of net
assets of the subsidiary to be enjoyed accordingly for disposal of the long-term equity investment and
continuously calculated from the acquisition date or consolidation date is adjusted to capital reserve (capital
premium or capital stock premium); if the capital reserve is not sufficient to absorb the difference, any excess is
adjusted against retained earnings.
Where the right to control the original subsidiary is lost due to disposal of a part of equity investment or other
reasons, the remaining stocks shall be remeasured at their fair value on the date of losing the control right; the
result of the sum of the consideration obtained from the equity disposal plus the fair value of remaining stocks,
minus the share of net assets of the original subsidiary that should be enjoyed and is continuously calculated
according to the original proportion of held shares from the acquisition date, shall be charged to the investment
income in the period when the control right is lost, and adjusted against the business reputation at the same time;
other comprehensive income related to the original subsidiary's equity investment shall be transferred to the
investment income of the current period when the control right is lost.
Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till the
control right is lost and all the transactions belong to a package deal, accounting treatment shall be performed for
the transactions by deeming all the transactions as one item for disposing of the subsidiary and losing the control
right; however, prior to loss of the control right, the difference between every disposal price and the share of net
assets of this subsidiary to be enjoyed accordingly for investment disposal shall be recognized as other
comprehensive income in the consolidated financial statements and, at the time of losing the control right, be
jointly transferred to the profits or losses in the period when the control right is lost.
Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till the
control right is lost and the transactions do not belong to a package deal, all the transactions before loss of the
right to control the subsidiary shall be handled according to the regulations of the Company on partial disposal of
the subsidiary's long-term equity investment provided that the Company does not lose the right to control the
subsidiary.
This report period does not involve buying-in and selling-out of the same subsidiary's stocks, or selling-out and
buying-in turn.
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6. Joint arrangement classification and accounting treatment of co-management
Joint arrangement refers to the arrangement for joint control by two or more participants.
(1) Joint arrangement classification
Joint arrangement is classified into co-management and contractual enterprise. Co-management refers to the joint
arrangement where the parties to the venture enjoy relevant assets of this arrangement and assume relevant
liabilities of this arrangement. Contractual enterprise refers to the joint arrangement where the parties to the
venture only enjoy rights to net assets of this arrangement.
(2) Accounting treatment of co-management
1) The Company recognizes the following items related to quantum of interest in co-management and performs
accounting treatment in accordance with provisions of the corresponding Accounting Standards for Business
Enterprises:
a Independently held assets, as well as the jointly held assets to be recognized according to the share of the
Company;
b Independently undertaken liabilities, as well as the jointly undertaken liabilities to be recognized according to
the share of the Company;
c Revenue generated by selling the output share of co-management that is enjoyed by the Company;
d Revenue that is generated by selling the output during co-management and recognized according to the share of
the Company;
e Independently incurred expense, as well as the expense incurred by co-management and recognized according to
the share of the Company.
2) Where the Company puts assets into or sells assets to the parties to co-management (except that the assets
constitute business), before the said assets are sold to a third party by the parties to co-management, the Company
recognizes only the part in the profits or losses arising from this transaction that is attributable to other participants
in the co-management. In case that the put or sold assets involve the asset impairment loss complying with
provisions in the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the Company shall
recognize the said loss in full.
3) Where the Company purchases assets from the parties to co-management (except that the assets constitute
business), before said assets are sold to a third party, the Company recognizes only the part in the profits or losses
arising from this transaction that is attributable to other participants in the co-management. In case that the
purchased assets involve the asset impairment loss complying with provisions in the Accounting Standard for
Business Enterprises No. 8 - Impairment of Assets, the Company shall recognize this part of loss according to the
share to undertake.
7. Criteria for cash and cash equivalents
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The cash refers to the enterprise's money on hand and deposits for payment at any time. Cash equivalents refer to
investments held by the enterprise which are short in term (generally referring to those expiring within not more
than 3 months from the date of acquisition), high in liquidity, convertible to the known amount of cash and
insignificant in risk of change of value.
8. Foreign currency transactions
(1) Method of translation for foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in the foreign
currency shall be translated into the amount in RMB currency at the spot exchange rate of the transaction date
(generally referring to the medial rate of foreign exchange quotation published by the People's Bank of China at
the date of transaction, the same below).
(2) Treatment of monetary items of foreign currencies and non-monetary items of foreign currencies on the
balance sheet date
For the monetary items of foreign currencies, the translation is done according to spot rate of the balance sheet
date. The exchange difference generated from the difference of spot rate of the current balance sheet date and the
time of initial recognition of a foreign currency or the previous balance sheet date is charged to the profit or loss
of the current period except that the exchange difference generated from foreign currency borrowings relating to
assets of which the acquisition or production satisfies the capitalization conditions is capitalized in accordance
with the Accounting Standards for Business Enterprises No. 17 – Borrowing Costs. For the non-monetary items of
foreign currencies measured by historical cost, translation is done according to spot rate of the transaction date
without change in their amount in functional currency. Non-monetary items of foreign currencies such as stocks
and funds measured at their fair value are translated as per the spot rate on the date when their fair value is
confirmed. The differences between the translated amounts in functional currency and the original amounts in
functional currency are recorded into current profits and losses as fluctuation in fair value (including fluctuation in
exchange rates).
(3) Translation of foreign currency financial statements
The Company translates the financial statements expressed in foreign currency into ones expressed in RMB
currency according to the following provisions:
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet
date; Among the owners' equity items, except the ones as "undistributed profits", others shall be translated at the
spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall
be translated at the average exchange rate. The balance arisen from the translation of foreign currency financial
statements in compliance with the aforesaid method shall be presented separately under the owners' equity item of
the balance sheets. The foreign currency cash flow statement shall be translated at the average exchange rate on
the cash flow date. The amount of influence of the exchange rate change on cashes shall be presented separately
under the adjusted item in the cash flow statement.
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9. Financial instruments
When the Company becomes a party to a financial instrument contract, it recognizes a financial asset or financial
liability.
(1) Classification, recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics of
financial assets, the Company divides financial assets into: financial assets measured at amortization cost,
financial assets which are measured at their fair values and of which the changes are included into other
comprehensive income, and financial assets which are measured at their fair values and of which the changes are
included into the current profits and losses.
The financial assets initially recognized by the Company shall be measured at their fair values. For the financial
assets which are measured at their fair values and of which the changes are included into the current profits and
losses, the transaction expenses thereof are directly included into the current profits and losses; for other
categories of financial assets, the transaction expenses thereof are included into the initially recognized amount.
For the accounts receivable or notes receivable arising from the sale of products or the provision of services that
do not contain or do not consider significant financing components, the Company shall use the amount of
consideration expected to be entitled to be charged as the initial confirmation amount.
1) Financial assets measured at amortization costs
The Company's business model for managing financial assets measured at amortization cost is to collect
contractual cash flows, and the contractual cash flow characteristics of such financial assets are consistent with
basic borrowing arrangements, that is, cash flows generated on a specific date, are for the payment of principal
and interest based on the outstanding principal amount. The Company adopts the effective interest rate method for
such financial assets and performs subsequent measurement based on amortization cost. The gains or losses
arising from their amortization or impairment are included into the current profits and losses.
2) Financial assets which are measured at their fair values and of which the changes are included into other
comprehensive income
The Company's business model for managing such financial assets is to collect and sell contractual cash flows,
and the contractual cash flow characteristics of such financial assets are consistent with basic borrowing
arrangements. The Company measures such financial assets at fair value and includes the changes of fair value are
included in other comprehensive income, but impairment losses or gains, exchange gains and losses and interest
income calculated according to the actual interest rate method are included into the current profits and losses.
In addition, the Company designates some non-trading equity instrument investments as financial assets which are
measured at their fair values and of which the changes are included into other comprehensive income. The
Company includes the relevant dividend income of such financial assets into the current profits and losses, and
includes the changes of fair value in other comprehensive income. When the financial assets are derecognized, the
cumulative gains or losses previously included into other comprehensive income will be transferred from other
comprehensive income to retained income, but will not be included into the current profits and losses.
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3) Financial assets measured at their fair values and of which the changes are recorded into the current profits
and losses
The Company classifies the financial assets other than the above financial assets measured at amortization cost
and financial assets which are measured at their fair values and of which the changes are included into other
comprehensive income as financial assets which are measured at their fair values and of which the changes are
included into the current profits and losses. In addition, in the initial recognition, in order to eliminate or
significantly reduce the accounting mismatch, the Company designates some financial assets as financial assets
which are measured at fair value and of which the changes are included into the current profits and losses. For
such financial assets, the Company uses fair value for subsequent measurement, and the changes of fair value are
included in the current profits and losses.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities are initially classified as financial liabilities which are measured at fair value and of which the
changes are included in the current profits or losses and other financial liabilities. For the financial liabilities
which are measured at their fair values and of which the changes are included into the current profits and losses,
the transaction expenses thereof are directly included into the current profits and losses; for other financial
liabilities, the transaction expenses thereof are included into the initially recognized amount.
1) Financial liabilities measured at their fair values and of which the changes are recorded into the current
profits and losses
Financial liabilities which are measured at fair value and of which the changes are included in the current profits
or losses include trading financial liabilities (including derivatives that are financial liabilities) and financial
liabilities designated as those which are measured at fair value at the initial recognition and of which changes are
included in the current profits or losses.
Trading financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fair
value. Except for hedge accounting, the changes in fair value are included in current profits or losses.
For financial liabilities designated as those which are measured at fair value at the initial recognition and of which
changes are included in the current profits or losses, the changes of fair value caused by changes in the Company's
own credit risk are included in other comprehensive income, and when the recognition of the liabilities is
terminated, the cumulative changes in fair value caused by changes in own credit risk included in other
comprehensive income are transferred to retained earnings. Other changes in fair value are included in current
profits or losses. If the accounting mismatch in profits and losses may be caused or expanded as the effects of
changes in the own credit risk of such financial liabilities are processed in the above manner, the Company will
include all gains or losses of such financial liabilities (including the amount affected by changes in the Company's
own credit risk) included in the current profit and loss.
2) Other financial liabilities
Except for the transfer of financial assets that does not meet the conditions for derecognition or continued
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involvement in the financial liabilities and financial guarantee contracts formed by the transferred financial assets,
other financial liabilities are classified as financial liabilities measured at amortization cost, which are
subsequently measured at amortization cost. Gains or losses arising from derecognition or amortization are
included in the current profits and losses.
(3) Basis for the recognition and method for the measurement of financial assets
Financial assets that meet one of the following conditions shall be derecognized:
1) The contract right to receive the cash flow of the financial assets is terminated;
2) The financial assets have been transferred, and almost all the risks and rewards of ownership of the financial
assets are transferred to the transferring party;
3) The financial assets have been transferred, although the enterprise has neither transferred nor retained almost all
the risks and rewards of the ownership of the financial assets, it has given up control over the financial assets.
If the enterprise has neither transferred nor retained almost all the risks and rewards of the ownership of the
financial assets, and has not given up control over the financial assets, the relevant financial assets shall be
recognized according to the extent of continued involvement in the transferred financial assets, and the relevant
liabilities shall be recognized accordingly. The extent of continued involvement in the transferred financial assets
refers to the level of risk that the changes in the value of the financial assets expose the enterprise to.
If the overall transfer of financial assets meets the conditions for derecognition, the difference between the book
value of the transferred financial assets and the sum of the consideration received due to the transfer and the
cumulative amount of changes in fair value originally included in other comprehensive income is included in the
current profits and losses.
If the partial transfer of financial assets satisfies the conditions for derecognition, the book value of the transferred
financial assets will be apportioned between the portion derecognized and the portion not derecognized according
to their relative fair values, and the difference between the sum of the consideration received for the transfer and
the amount of cumulative changes in the fair value which was previously directly recognized in owner's equity
and which should be apportioned to the portion derecognized and the above book amount apportioned will be
include in the current profits and losses.
The Company must determine whether almost all the risks and rewards of ownership of the financial assets have
been transferred before endorsing the transfer of financial assets sold by means of recourse and financial assets
held. If almost all the risks and rewards of ownership of the financial asset have been transferred to the transferee,
the financial asset will be derecognized; if the risks and rewards of the ownership of the financial asset have been
retained, the financial asset will not be derecognized; if almost all the risks and rewards of ownership of the
financial asset have not been transferred or retained, the enterprise needs to continue to determine whether it
retains control over the asset and performs accounting treatment in accordance with the principles described in the
preceding paragraphs.
(4) Derecognition of financial liabilities
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If the present obligation for a financial liability has been fully or partially discharged, the financial liability or the
relevant portion thereof will be derecognized. If the Company (borrower) signs an agreement with the lender to
replace the original financial liability by assuming a new financial liability, and the contract terms of the new
financial liability and the original financial liability are substantially different, the original financial liability will
be derecognized and the new financial liability will be recognized at the same time. If a material amendment is
made to the contractual terms for the original financial liability or the relevant portion thereof, the original
financial liability will be derecognized, and the new financial liability will be recognized according to the
amended terms at the same time.
If the financial liability or the relevant portion thereof is derecognized, the difference between the book value of
the financial liability derecognized and the consideration paid for it (including the non-cash asset transferred or
the liability assumed) will be included in the current profits or losses.
(5) Offsetting financial assets with financial liabilities
When the Company has the legal right to offset the financial asset and the financial liability with recognized
amount, and such legal rights are currently enforceable, and the Company plans to settle in net or simultaneously
realize the financial asset and liquidate the financial liability, the financial asset and the financial liability will be
presented in the balance sheet in net amounts after mutual offset. In addition, financial assets and financial
liabilities are presented separately in the balance sheet, and are not offset against each other.
(6) Method for determining the fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant can receive for the sale of an asset or need to pay for the
transfer of a liability in the orderly transaction that occurs on the measurement date. For financial instruments for
which there is an active market, the fair value thereof will be determined by the Company based on the quotation
in the active market; Quotation in the active market refers to the price that is easily obtained from exchanges,
brokers, industry associations, pricing service agencies, etc. on a regular basis, and represents the price of market
transactions that actually occur in fair trading. For financial instruments for which there is no active market, the
fair value thereof will be determined by the Company using the valuation techniques. The value appraisal
techniques include the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other financial instruments of
the same essential nature, the cash flow capitalization method and the option pricing model, etc. At the time of
valuation, the Company adopts a valuation technique that is applicable in the current circumstances and that there
is sufficient available data and other information to support, selects the input values consistent with the asset or
liability characteristics considered by the market participants in the transaction of the underlying asset or liability,
and as far as possible uses relevant observable input values. Unobservable input values are used where the
relevant observable input values are not available or are not practicable.
(7) Equity instruments
Equity instruments refer to contracts that can prove ownership of the residual equity in assets of the Company
after deduction of all the liabilities. The Company treats issue (including refinancing), repurchases, sale or
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cancellation of equity instruments as changes in equity, and transaction expenses related to equity transactions are
deducted from equity. The Company does not recognize changes in the fair value of equity instruments.
If the Company's equity instruments distribute dividends (including "interest" generated by instruments classified
as equity instruments) during the existence period, such dividends will be treated as profit distribution.
10. Impairment of financial assets
Financial assets of which the Company needs to recognize impairment losses include financial assets measured at
amortization cost, and debt instrument investments which are measured at fair value and of which changes
included in other comprehensive income, mainly including receivables financing, accounts receivable, other
receivables, loans and advances, debt investment, other debt investment, long-term receivables, etc.
(1) Method for recognition of impairment provisions
Based on the expected credit loss, the Company makes impairment provision and recognizes credit impairment
loss according to the applicable expected credit loss measurement method (general method or simplified method)
for the above items.
Credit loss refers to the difference between all contractual cash flows that are due to the Company in accordance
with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at
the original effective interest rate. Among them, for purchased or originated credit-impaired financial assets, the
Company discounts the difference at the credit-adjusted effective interest rate of the financial assets.
The general method for measuring expected credit losses is that the Company assesses on each balance sheet date
whether the credit risk of financial assets has increased significantly since initial recognition. If the credit risk has
increased significantly since initial recognition, the Company measures the loss provisions according to the
amount equal to lifetime expected credit losses. If the credit risk has not increased significantly since initial
recognition, the Company measures the loss provisions according to the amount equal to 12-month expected
credit losses. The Company considers all reasonable and valid information, including forward-looking information,
when assessing expected credit losses.
For financial instruments with lower credit risk on the balance sheet date, the Company assumes that their credit
risk has not increased significantly since initial recognition.
(2) Criteria for judging whether credit risk has increased significantly since initial recognition
If the probability of default of a financial asset in the expected lifetime determined on the balance sheet date is
significantly higher than the probability of default in the expected lifetime determined at the time of initial
recognition, it indicates that the credit risk of the financial asset has increased significantly. Except for special
circumstances, the Company uses the change in default risk that occurs within the next 12 months as a reasonable
estimate of the change in default risk that occurs throughout the lifetime to determine whether the credit risk has
increased significantly since initial recognition.
(3) Combination method for assessing expected credit risk based on combination
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The Company individually assesses credit risk for financial assets that have significantly different credit risks,
such as: receivables in dispute with the other party or involving litigation and arbitration; and receivables with
obvious signs that the debtor is likely to fail to meet its repayment obligations.
In addition to financial assets of which credit risk is individually assessed, the Company divides financial assets
into different combinations based on common risk characteristics, and assesses credit risk on the basis of the
combination.
(4) Accounting treatment method of financing assets
At the end of the period, the Company calculates the estimated credit losses of various financial assets. If the
estimated credit losses are greater than the book value of the current impairment provisions, the difference is
recognized as an impairment loss; If the estimated credit losses are smaller than the book value of the current
impairment provisions, the difference is recognized as an impairment gain.
(5) Method for determining credit loss of various financial assets
1) Notes receivable
The Company measures the loss provision for notes receivable based on the lifetime expected credit loss amount.
Based on the credit risk characteristics of notes receivable, financial assets are divided into different
combinations:
Item Basis for recognition of combinations
Banker's acceptance bill The acceptor is a bank institution or a financial company
Trade acceptance draft The acceptor is a company other than a bank institution or financial company
2) Accounts receivable
For accounts receivable that do not contain significant financing components and contain significant financing
components, the Company measures the loss provision based on the lifetime expected credit loss amount.
In addition to accounts receivable of which credit risk is individually assessed, the Company divides accounts
receivable into different combinations based on their credit risk characteristics:
Item Basis for recognition of combinations
Combination 1: Account
The combination takes the account age of accounts receivable as the basis for the combination
age combination
Combination 2: Low risk The combination takes the dismantling subsidy of waste electrical and electronic products receivable
combination from government departments as the basis for the combination
Combination 3: None risk The combination takes the receivables from related units within the scope of consolidation as the basis
combination for the combination
3) Loans and advances
Based on the internal assessment results of the credit risk management system of the relevant financial
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instruments, the Company defines whether credit impairment has occurred: the Company calculates the expected
credit loss of the financial assets at the expected credit loss rate of different categories, according to the five-level
classification of the financial industry (normal, concerned, secondary, suspicious and loss) based on the
borrower's actual repayment ability.
4) Other receivables
The Company measures impairment losses using an amount equivalent to 12-month or lifetime expected credit
losses, based on whether the credit risk of other receivables has increased significantly since initial recognition. In
addition to other receivables of which credit risk is individually assessed, the Company divides other receivables
into different combinations based on their credit risk characteristics:
Item Basis for recognition of combinations
Combination 1: Account age
The combination takes the account age of other receivables as the basis for the combination
combination
Combination 2: None risk The combination takes the receivables from related units within the scope of consolidation as the
combination basis for the combination
5) Debt investment
Debt investment mainly accounts for bond investment measured at amortization cost. The Company measures
impairment losses using an amount equivalent to 12-month or lifetime expected credit losses, based on whether
the credit risk of debt investment has increased significantly since initial recognition.
6) Other debt investments
Other debt investments mainly accounts for the debt investments which are measured at their fair values and of
which the changes are included into other comprehensive income. The Company measures impairment losses
using an amount equivalent to 12-month or lifetime expected credit losses, based on whether the credit risk of
other debt investments has increased significantly since initial recognition.
11. Receivables financing
For notes receivable and accounts receivable classified as measured at fair value and of which changes are
included in other comprehensive income, the portion within one year (including one year) from the date of
acquisition is presented as receivables financing; while the portion beyond one year is presented as other debt
investment. For related accounting policies, please refer to Note (V), 9 "Financial Instruments" and Note (V), 10
"Impairment of Financial Assets".
12. Inventories
(1) Classification of inventories
The Company's inventories mainly include raw materials, work in progress, finished products, development costs,
and development products.
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Development cost refers to the property that has not been completed and is for sale; the Company accounts for the
land use rights purchased and used for commercial housing development as the development cost. Development
product refers to the property that has been completed and is to be sold.
(2) Valuation for delivered inventories
Valuation for delivered inventories: When various kinds of inventories of the Company are delivered, they shall
be valuated at planned costs, and the planned costs shall be adjusted into actual costs based on the difference of
costs of the current month at the end of the month.
Development cost and product development cost include land transfer fees, infrastructure expenditures,
construction and installation engineering expenditures, borrowing costs incurred before the development project is
completed, and other related costs incurred in the development process. When developing product is carried
forward the cost, the total cost is allocated between the sold and unsold properties in proportion to the
construction area.
(3) Recognition of the net realizable value and measurement of provision for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. if the cost of
inventories is higher than the net realizable value, a provision for decline in value of inventories shall be made and
shall be recorded into the profits and losses of the current period, where a provision for decline in value of
inventories has been made, if the value of the said inventories is resumed later, the said value shall be reversed
from the provision for decline in value of the inventories. Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale and relevant taxes.
(4) Stock count system for inventories
The perpetual inventory system is adopted for stock count of the Company.
(5) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are written off in full when issued for use.
13. Assets held for sale
(1) Recognition standard
Where the Company recovers its book value by selling (including the non monetary asset exchange with
commercial substance; it is the same below), not continuously using a non-current asset or disposal group, it shall
be classified into the category of assets held for sale. The non-current asset or disposal group to be classified into
the category of assets held for sale shall meet the following conditions at the same time:
According to the practice of selling such assets or disposal groups in similar transactions, they can be sold
immediately under the current circumstances;
The sale is very likely to happen, i.e., the Company has made a decision on a sale plan and has obtained the
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determined purchase commitment, and the sale is expected to be completed within one year. The relevant
regulations require that the relevant organ of authority of the Company or regulatory authorities must approve the
sale, it shall have been approved. A determined purchase commitment refers to a legally binding purchase
agreement signed between the Company and other parties. The agreement includes important terms such as the
transaction price, time and severe penalties for breach of contract, making it almost impossible to make major
adjustments or cancel the agreement.
For the non-current asset or disposal group specially obtained by the Company for resale, if it meets the specified
condition that "the sale is expected to be completed within one year" on the date of acquisition and it is very likely
to meet other classification conditions of the category held for sale in a short period of time (usually 3 months), it
shall be classified into the category held for sale on the date of acquisition.
The disposal group refers to a group of assets that are disposed of as a whole in a transaction through sale or other
means, and the liabilities that are directly related to these assets and transferred in the transaction. Where the
goodwill obtained in the merger of enterprises is apportioned for the asset group or asset group combination to
which the disposal group belongs according to Accounting Standards for Enterprises No.8 - Asset Impairment,
this disposal group should contain the goodwill apportioned to the disposal group.
(2) Accounting treatment
For the non-current asset and disposal group that is classified as the category held for sale, the Company carries
out initial measurement or re-measurement according to the smaller result of the net value of the book value and
the fair value minus the net amount of the disposal expense. Where the net value of the fair value minus the
disposal cost is lower than the original book value, the difference is confirmed as assets impairment loss and
include in the current profits and losses, and the provision for impairment of the assets held for sale is made at the
same time; for the amount of assets impairment loss confirmed by the disposal group held for sale, the book value
of the goodwill in the disposal group is deducted first, and then its book value is deducted in proportion according
to the ratios of the book values of various non-current assets applicable to measurement of the category held for
sales in the disposal group.
Where the net value of the fair value of non-current assets held for sale on the balance sheet date minus the selling
expense increases subsequently, the previous write-down amount is restored and will be reversed in the amount of
assets impairment loss after classification as the category held for sales is confirmed, and the reversed amount
shall be included in the current profits and losses. The assets impairment loss confirmed before classification as
the category held for sales shall not be reversed.
Where the net value of the fair value of disposal group held for sale on the balance sheet date minus the selling
expense increases subsequently, the previous write-down amount is restored and will be reversed in the amount of
assets impairment loss confirmed for non-current assets applicable to the measurement provisions of the category
held for sale after classification as the category held for sales, and the reversed amount shall be included in the
current profits and losses.
For the deducted book value of goodwill and the non-current assets applicable to the measurement provisions of
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the category held for sale, the assets impairment loss confirmed before classification as the category held for sales
shall not be reversed. For the subsequently reversed amount of assets impairment loss confirmed for the disposal
group held for sale, its book value is increased in proportion according to the ratios of the book values of various
non-current assets applicable to measurement provisions of the category held for sales in the disposal group
excluding the goodwill. The non-current assets held for sale or non-current assets in the disposal group are not
made for provision for impairment or amortized, and the interests on debts and other expenses in the disposal
group held for sale will be confirmed continuously.
The measurement methods of the category held for sale do not apply to the deferred income tax assets, financial
assets complying with the specifications of Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments, investment real estate and biological assets measured at fair value,
contract rights produced in the insurance contract, and the assets produced in the welfare of the workers, and they
are measured according to the relevant criteria or corresponding accounting policies formulated by the Company.
Where the disposal group contains the non-current assets applicable to the measurement method of the category
held for sale, the measurement method of the category held for sale is applicable to the whole disposal group. The
related accounting standards apply to measurement of liabilities in the disposal group.
When the non-current assets or disposal group is removed from the disposal group held for sale because it does
not meet the classification condition of the category held for sale anymore and will not be classified as the
category held for sale or non-current assets, it shall be measured according to the smaller one of the following
two:
1) Book value before being classified as held for sale, and the adjusted amount of depreciation, amortization or
impairment that should be recognized under the assumption that it is not classified as held for sale; and
2) Recoverable amount.
14. Long-term equity investment
Long-term equity investments mainly include the equity investment held by the Company that is able to control, is
under common control with or has significant influences on the invested entity and the equity investment to joint
ventures.
(1) Judgment standards of control and significant influence
Judgment standards of control:
1) The Company owns the power to the invested entity;
2) The Company enjoys variable return by participating relevant activities of the invested entity;
3) The Company has the ability to use the power over the invested entity to influence the Company's return
amount;
4) The Company acknowledges the control force for the invested entity that meets the above three conditions.
Judgment standards of significant influence:
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1) The Company has the power to participate in decision making for the financial and operations policies of the
invested entity, but cannot control formulation of these policies independently or together with other parties.
2) Where the Company can exert a great influence on the invested entity, the invested entity is an associated
enterprise of the Company.
3) The invested entity under common control by the Company and other participants is a contractual enterprise
of the Company. Common control means that any participant cannot independently control this arrangement,
and any participant with the right to common control on this arrangement can prevent other participants or
the combination of participants from independently controlling this arrangement.
(2) Investment cost recognition of long-term equity investment
The long-term equity investment of the Company is measured at the investment cost at the time of acquisition.
Normally the investment cost refers to the assets paid, liabilities incurred or undertaken, and the fair value of
equity securities issued for the acquisition of this investment, including the costs directly attributable to the
acquisition. However, for the long-term equity investment formed by business combination involving enterprises
under common control, the investment cost is the share of carrying amount of the combined party's net assets
acquired on the combination date in the ultimate controlling party's consolidated financial statements.
(3) Subsequent measurement of long-term equity investments and recognition of profits or losses
The Company adopts the cost method for accounting for the long-term equity investment based on which the
Company is able to control the invested enterprise; the Company adopts the equity method for accounting for
investments put into associated enterprises and contractual enterprises.
The price of a long-term equity investment accounted by employing the cost method shall be included at its initial
investment cost. If there are additional investments or disinvestments, the cost of the long-term equity investment
shall be adjusted. The cash dividends or profits declared to distribute by the invested entity shall be recognized as
investment income and charged to profits or losses of the current period.
When the Company employs the equity method for accounting of the long-term equity investment, if the
investment cost of a long-term equity investment is more than the investing enterprise' attributable share of the
fair value of the invested entity's identifiable net assets for the investment, the investment cost of the long-term
equity investment may not be adjusted; if the investment cost of a long-term equity investment is less than the
investing enterprise' attributable share of the fair value of the invested entity's identifiable net assets for the
investment, the carrying amount of the long-term equity investment shall be adjusted, and the difference shall be
recorded into the profits or losses of the current period.
When the Company employs the equity method for accounting of the long-term equity investment, the Company
first adjusts the invested entity's net profits or losses and other comprehensive income in the aspects such as the
fair value of the invested entity's identifiable net assets at the time of investment acquisition, accounting policy
and accounting period, and then recognizes the current-period investment profits or losses and other
comprehensive income according to the investing enterprise' attributable or shareable share of the invested entity's
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net profits or losses and other comprehensive income. For other changes in owners' equities other than the net
profits or losses, other comprehensive income and profit distribution, the carrying amount of the long-term equity
investment shall be adjusted and recorded into the owners' equities.
For the unrealized internal transaction profits/losses that arise between the Company and the associated
enterprises and contractual enterprises, the part attributable to the Company shall be calculated according to the
shareholding proportion, and the investment profits/losses shall be recognized on the basis of offsetting.
For the long-term equity investments held already prior to 1 January, 2007 for the associated enterprises and
contractual enterprises, if there is any equity investment difference on the debit side, the investment profits/losses
shall be recognized after deduction of the equity investment difference on the debit side amortized by the
straight-line method according to the original residual maturity.
(4) Recognition of common control and significant influences on the invested entity
Common control is recognized as the control which does not exist unless the investing parties unanimously agree
on sharing the control power over the relevant important financial and operating decisions of the invested entity
according to the provisions of the contract.
Significant influences will be recognized where there is power to participate in making decisions on the financial
and operating policies of the invested entity, but not to control or do joint control together with other parties over
the formulation of these policies. When the Company holds more than 20.00% (included) but less than 50.00% of
voting shares of the invested entity directly or indirectly through a subsidiary, significant influences on the
invested entity shall be recognized, unless there is clear evidence indicating that the Company cannot participate
in production and management decision-making of the invested entity in this situation and therefore cannot
generate significant influences; if the Company holds less than 20.00% (excluded) of voting shares of the invested
entity, usually the Company is not deemed to have a significant influence on the invested entity, unless there is
clear evidence indicating that the Company can participate in production and management decision-making of the
invested entity in this situation and therefore can generate significant influences.
(5) Conversion of the long-term equity investment accounting method
Where the equity investment originally held by the Company, which is unable to control, is not under common
control with or has no significant influences on the invested entity, is converted into an investment for an
associated enterprise or contractual enterprise due to additional investment, the investment shall be accounted by
the equity method instead, and the Company shall use the fair value of the original equity investment plus the fair
value of the consideration paid to acquire the newly added investment as the initial investment cost accounted by
the equity method instead. The difference between the fair value and carrying amount of the originally held equity
investment prior to the additional investment, and the cumulative fair value changes originally recorded into other
comprehensive income shall be transferred to the current-period profits or losses accounted by the equity method
instead.
For the originally held investments for associated enterprises and contractual enterprises, if they are not able to be
under common control with or have significant influences on the invested entity, if they are not able to be under
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common control with or have significant influences on the invested entity due to reason such as partial disposal,
accounting treatment must be performed for remaining equity investments according to the recognization and
measurement standards for financial instruments, and the difference between the fair value and carrying amount
on the date on which the common control or significant influence is lost shall be charged to profits or losses of the
current period. When accounting based on the equity method is terminated for other related comprehensive
income originally subject to accounting of equity method, accounting treatment is performed using the basis the
same as that used by the invested entity to directly dispose of relevant assets or liabilities; all the owners' equities
that are recognized due to other changes in owners' equities other than the net profits/losses, other comprehensive
income and profit distribution of the invested entity shall be transferred to the profits or losses of the current
period when accounting based on the equity method is terminated.
Where the originally held investments for associated enterprises or contractual enterprises are converted to
investments for subsidiaries due to additional investment, in the individual financial statements, the sum of the
carrying value of the acquired party's equity investment held prior to the acquisition date and the investment cost
newly added on the acquisition date shall be used as the initial investment cost of such an investment; for the
equity investment held prior to the acquisition date, other comprehensive income recognized due to accounting of
the equity method shall undergo accounting treatment using the basis the same as that used by the invested entity
to directly dispose of relevant assets or liabilities when such an investment is disposed of.
When the influencing capability on the invested entity is converted from control to a significant influence or
common control together with other investors due to investment disposal, the long-term equity investment cost,
for which recognition shall be terminated, is first carried over according to the proportion of investment disposal.
On such a basis, the remaining long-term equity investment cost is compared with the share attributable to the
Company in the fair value of the invested entity's identifiable net assets at the time of original investment, which
is calculated according to the remaining shareholding proportion. For the business reputation part to be embodied
in the investment evaluation, the carrying amount of long-term equity investment shall not be adjusted; where the
investment cost is less than the share attributable to the Company in the fair value of the invested entity's
identifiable net assets at the time of original investment, any excess shall be adjusted against retained earnings
when the long-term equity investment cost is adjusted. For the share attributable to the Company in the invested
entity's realized net profits/losses between acquisition of the original investment and conversion to accounting of
the equity method due to investment disposal, the carrying amount of the long-term equity investment shall be
adjusted, meanwhile, any excess shall be adjusted against retained earnings for the share attributable to the
Company in the invested entity's realized net profits/losses (excluding the cash dividends or profits distributed or
declared to distribute) from acquisition of the original investment to the beginning of the period in which the
investment is disposed of, and the current-period profits or losses shall be adjusted for the share attributable to the
Company in the invested entity's realized net profits/losses from the beginning of the period in which the
investment is disposed of to the investment disposal date; the share attributable to the Company in the invested
entity's changes in other comprehensive income shall be recorded into other comprehensive income when the
carrying amount of the long-term equity investment is adjusted; the share attributable to the Company in the
invested entity's other changes in owners' equities arising from reasons other than the net profits or losses, other
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comprehensive income and profit distribution shall be recorded into "Capital reserves -- Other capital reserves"
when the carrying amount of the long-term equity investment is adjusted. After the cost method is converted to
the equity method for the long-term equity investment, the share attributable to the Company in the invested
entity's realized net profits/losses, other comprehensive income and other changes in owners' equities shall be
calculated and recognized according to provisions of the standard in the future period.
For the originally held long-term equity investment that is able to control the invested entity, if the shareholding
proportion declines due to reasons such as partial disposal and the investment cannot be able to control, be under
common control with or have significant influences on the invested entity, accounting treatment must be
performed for remaining equity investments according to the recognization and measurement standards for
financial instruments. The difference between the fair value and carrying amount on the date of control loss shall
be recorded into the investment income of the current period.
In the process of holding the long-term equity investment, if the Company decides to sell all or part of held stocks
of the invested entity in consideration of all aspects, the carrying amount of the long-term equity investment
corresponding to the sold stocks shall be carried over accordingly, and the difference between the selling price and
the carrying amount of long-term equity investment for disposal shall be recognized as disposal profit or loss.
If the Company disposes of all the long-term equity investments accounted by the equity method, when
accounting based on the equity method is terminated for other related comprehensive income originally subject to
accounting of equity method, accounting treatment is performed using the basis the same as that used by the
invested entity to directly dispose of relevant assets or liabilities; all the owners' equities that are recognized due to
changes in other owners' equities other than the net profits/losses, other comprehensive income and profit
distribution of the invested entity shall be transferred to the investment income of the current period when
accounting based on the equity method is terminated; if a part of the long-term equity investment accounted by the
equity method is disposed of and the remaining stocks are still accounted using the equity method, other related
comprehensive income originally subject to accounting of equity method shall be handled using the basis the same
as that used by the invested entity to directly dispose of relevant assets or liabilities and be carried over by
proportion, and the owners' equities that are recognized due to other changes in owners' equities other than the net
profits/losses, other comprehensive income and profit distribution of the invested entity shall be carried over to
the investment income of the current period according to the proportion.
15. Investment real estate
The Company's investment real estate includes a land use right that is leased out, a land use right held for transfer
upon capital appreciation and a building that is leased out.
The Company's investment real estate is measured at its cost, and the Company uses the cost model for a
subsequent measurement of its investment real estate. The depreciation and amortization of the investment real
estate shall be made in accordance with the accounting policies of fixed assets or intangible assets of the
Company.
When the Company changes the purpose of the investment real estate, such as for self-use, it shall transfer the
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relevant investment real estate to other assets.
16. Fixed assets
(1) Recognition standard of fixed assets
The Company's fixed assets refer to the tangible assets that are held for the sake of producing commodities,
rendering labor service, renting or business management and whose useful life is in excess of one fiscal year.
Fixed assets can not be recognized unless they simultaneously meet the conditions as follows:
1) The economic benefits pertinent to the fixed assets are likely to flow into the enterprise; and
2) The cost of the fixed assets can be measured reliably.
(2) Measurement of fixed assets
The measurement of a fixed asset shall be made at its cost.
1) The cost of outsourcing fixed assets includes the purchase price, related taxes and charges, and transportation
costs, loading and unloading fees, installation fees, and professional service fees that can be attributed to the
asset before the fixed asset reaches its intended use state.
2) If the payment for the purchase of a fixed asset is delayed beyond the normal credit conditions, and is of a
financing nature in essence, the cost of the fixed asset is determined on the basis of the present value of the
purchase price. The difference between the actual payment and the present value of the purchase price shall
be included in the current profits and losses within the credit period, unless it shall be capitalized in
accordance with the Accounting Standards No. 17 - Borrowing Costs.
3) The cost of constructing a fixed asset on its own is composed of the necessary expenditures incurred before
the asset is constructed and ready for its intended use.
4) The cost invested by the investor in a fixed asset is determined according to the value stipulated in the
investment contract or agreement, unless the value stipulated in the contract or agreement is not fair.
5) The costs of the fixed assets which are obtained through non-monetary asset exchange, debt restructuring,
business merger or financial leases are determined according to the relevant provisions of the Accounting
Standards for Business Enterprises No.7 - Non-Monetary Asset Exchange, the Accounting Standards for
Business Enterprises No.12 - Debt Restructuring, the Accounting Standards for Business Enterprises No.20 -
Business Combinations, and the Accounting Standards for Business Enterprises No.21 - Leases respectively.
(3) Classification of fixed assets
The Company's fixed assets are classified into houses and buildings, machinery equipment, electronic equipment
and transportation equipment and otherwise.
(4) Depreciation of fixed assets
1) Recognition of depreciation method and service life, expected net salvage value rate and annual depreciation
rate:
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The depreciation of fixed assets shall be made by the straight-line method. The annual depreciation rate
recognized according to the category, service life and expected net salvage value rate of fixed assets is as follows:
Annual
Expected net salvage value Expected service life
Category of fixed assets depreciation rate
rate (%) (year)
(%)
Houses and buildings 5.00 20.00 4.75
Machinery equipment 5.00 6.00-10.00 9.50-15.83
Electronic equipment 5.00 2.00-3.00 31.67-47.50
Transportation equipment 5.00 3.00-4.00 23.75-31.67
Others 5.00 3.00-5.00 19.00-31.67
Depreciation of fixed assets of which a provision for impairment has been made: For a fixed asset of which a
provision for impairment has been made, the depreciation of the fixed asset shall be made based on the amount of
deducting its expected net salvage value, depreciation amount and provision for impairment from the original
price of the fixed asset and remaining service life of the fixed asset.
For the fixed assets that have reached intended usable condition but not prepared the final account for completion,
their costs shall be recognized at their estimated value, and their depreciation shall be made accordingly; After
completion of the final account for completion, the original estimated value of the fixed assets shall be adjusted by
their actual costs, but the original depreciation amount does not require adjusting.
2) Check of service life, expected net salvage value and depreciation method of fixed assets:
The Company shall, at least at the end of each year, have a check on the service life, expected net salvage value,
and the depreciation method of the fixed assets. If the Company finds that there is any difference between the
expected service life and the previously estimated service life of a fixed asset, the expected service life of the
fixed asset shall be adjusted; If there is any difference between the amount of expected net salvage value and the
previously estimated amount of the net salvage value, the expected net salvage value shall be adjusted; If any
significant change is made on the form of the realization of the expected economic benefits concerning a fixed
asset, the method for the depreciation of the fixed asset shall be changed. If any change is made to the service life,
expected net salvage value or the depreciation method of a fixed asset, it shall be regarded as a change of the
accounting estimates.
(5) Treatment of subsequent expenditures for fixed assets
Subsequent expenditures incurred on a fixed asset refer to repair expenses, renovation expenses, repair costs and
decoration expenses and otherwise incurred in the course of use of the fixed asset. Their accounting treatment is
as follows: Where subsequent expenditures of a fixed asset such as renovation expenses meet the conditions of
recognizing the fixed asset, they shall be recorded into the cost of the fixed asset, and the carrying amount of the
replaced part of the subsequent expenditures shall be deducted; Where subsequent expenditures of a fixed asset
such as repair costs do not meet the conditions of recognizing the fixed asset, they shall be recorded into the
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profits and losses of the current period in which they are incurred; Where the decoration expenses of a fixed asset
meet the conditions of recognizing the fixed asset, they shall be measured in a single detail account of "Fixed
Assets", and the depreciation of the fixed asset shall be made separately by the straight-line method in a shorter
time of the period of two decorations and remaining usable life of the fixed asset.
The improvement expenditures incurred on a fixed asset leased by operating lease shall be capitalized and
reasonably amortized as long-term prepaid expenses.
17. Construction in Progress
The term "construction in progress" refers to all necessary expenditures incurred before the acquired fixed assets
enable the project to reach expected usable condition, including project direct materials, direct employee
remunerations, installation costs for equipment to be installed and project construction, project management fees,
net profits and losses of project commissioning and approved capitalized borrowing costs.
(1) Valuation of construction in progress
The Company's construction in progress shall be measured individually by construction project and shall be
valuated at actual cost.
(2) Time point of carrying over construction in progress into fixed asset
When the construction in progress reaches the expected usable condition, they shall be transferred to fixed asset at
their actual cost. For the fixed assets that have reached expected usable condition but not prepared the final
account for completion, they shall be charged to the account at their estimated value and shall be adjusted after
their actual value is recognized.
18. Capitalization of borrowing costs
Borrowing costs are interests and other costs incurred by the Company in connection with the borrowing of the
funds, including interests, amortization of discounts or premiums related to borrowings, ancillary costs incurred in
connection with the arrangement of borrowings, and exchange differences arising from foreign currency
borrowings.
(1) Recognition of capitalization of borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset shall be capitalized, and the amounts of other borrowing costs incurred shall be recorded into the profits and
losses of the period. in which they are incurred. Qualifying assets are fixed assets, investment real estate and
inventories and otherwise that necessarily take a substantial period of time for acquisition, construction or
production to get ready for their intended use or sale.
(2) Period of capitalization of borrowing costs
1) Time point of capitalization of borrowing costs.
The capitalization of borrowing costs commences only when all of the following conditions are satisfied:
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a Expenditures for the asset have been incurred;
b Borrowing costs have been incurred; and
c Activities relating to the acquisition, construction or production of the asset that are necessary to prepare the
asset for its intended use or sale have commenced.
2) Time point of ceasing capitalization of borrowing costs:
Capitalization of borrowing costs ceases when the qualifying asset acquired, constructed or produced becomes
ready for its intended use or sale. The subsequent borrowing costs shall be recorded into the profits and losses of
the current period.
3) Recognition of suspending capitalization of borrowing costs:
When an abnormal interruption occurs during the construction or production of an asset which satisfies the
conditions for capitalization and the interruption continues for more than three months consecutively, the
capitalization of borrowing expense will be paused, the borrowing expense incurred during the suspension will be
included in the current profits and losses.
(3) Calculation of capitalized amounts of borrowing costs
During the capitalization period, the amount of interest (including amortization of discounts or premiums) to be
capitalized for each accounting period shall be recognized as follows:
1) As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred
of the specifically borrowed loan at the present period minus the income of interests earned on the unused
borrowing loans as a deposit in the bank or as a temporary investment.
2) Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the Company shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements minus the specifically borrowed loans by the capitalization rate of the general borrowing
used. The capitalization rate shall be calculated and recognized by the weighted average interest rate of
general borrowings.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each
accounting period shall be recognized by the real interest rate method, and an adjustment shall be made to the
amount of interests in each period. During the period of capitalization, the amount of interest capitalized during
each accounting period shall not exceed the amount of interest actually incurred to the relevant borrowings in the
current period.
Ancillary costs in connection with special borrowings that are incurred before the qualifying asset acquired,
constructed or produced becomes ready for its intended use or sale shall be capitalized on the basis of the incurred
amount when they are incurred, and they shall be recorded into the cost of qualifying asset; those incurred after
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the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall be
recognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded into the
profits and losses of the current period. The ancillary costs arising from a general borrowing shall be recognized
as expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses of
the current period.
19. Intangible assets
(1) Recognition of intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the
Company. Intangible assets can be recognized only when they meet the conditions simultaneously as follows:
1) They are consistent with the definition of intangible assets.
2) The economic benefits related to intangible assets are likely to flow into the enterprise; and
3) The cost of intangible assets can be measured reliably.
(2) Measurement of intangible assets
The intangible assets shall be measured according to their cost or fair value (if increased through business
combination not involving enterprises under common control).
(3) Subsequent measurement
The Company shall analyze and judge the service life of intangible assets when it obtains intangible assets. If the
Company is unable to forecast the period when the intangible asset can bring economic benefits to it, it shall be
regarded as an intangible asset with uncertain service life.
With regard to an intangible asset with limited service life, its amortization amount shall be amortized by expected
realization pattern of its economic benefits, if the Company is unable to recognize the expected realization pattern
reliably, intangible assets shall be amortized by the straight-line method.
The Company shall, at least at the end of each year, check the service life and the amortization method of
intangible assets with limited service life. If necessary, it shall adjust the said service life and amortization
method.
With regard to an intangible asset with uncertain service life, its amortization amount shall not be amortized, but
the Company shall check the service life of the said intangible asset every year and shall carry out an impairment
test for it.
(4) Estimation of service life
As for intangible assets with limited service life, the estimation of their service life generally considers the
following factors:
1) General life cycle of products manufactured by using the assets and information about service life of similar
assets available;
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2) Present situation of technologies and process and estimation for future development trends;
3) Market demand of products manufactured or services rendered by using the assets;
4) Expected actions of present or potential competitors;
5) Expected maintenance expenses for economic capacity from the assets and the Company's expected
capability to pay relevant expenses;
6) Laws and regulations or similar restrictions relating to the control period of the assets, such as concession
period and lease period;
7) Relevance with service life of other assets held by the Company, etc.
(5) Division of research expenditures and development expenditures included in expenditures for internal
research and development projects
1) Research expenditures in internal research and development projects shall be recorded into the profits and
losses of the current period when they are incurred.
2) Development expenditures in internal research and development projects shall be recognized as intangible
assets where they satisfy all of the following conditions:
a Technical feasibility of completing the intangible asset so that it will be available for use or sale;
b Intention to complete the intangible asset and use or sell it;
c How the intangible asset will generate economic benefits, including the ability to demonstrate the existence of a
market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
d Availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset;
e Ability to measure reliably the expenditure that is attributable to the intangible asset during its development.
20. Long-term deferred expenses
Long-term deferred expenses refer to the expenses incurred by the Company but attributable to the current and
subsequent accounting periods of more than one year (excluding one year), including the expenses for
improvement of fixed assets leased by operating lease.
Long-term deferred expenses shall be recorded into the account based on their actual amount of expenditure and
shall be averagely amortized by their beneficial period, if long-term deferred expenses can not benefit subsequent
accounting periods, the unamortized value of the project shall be all transferred to the profits and losses of the
current period.
21. Asset impairment
On the balance sheet date, if there is any sign showing possible impairment of assets (referring to the assets other
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than inventories, equity instruments that have no quoted price and reliable fair value measurement in active
market, investment real estate measured by fair value model, consumable biological assets, assets formed under
construction contract, deferred income tax assets, residual value not guaranteed by the renter in the financing lease
and financial assets), their recoverable amount shall be estimated on the basis of single item assets; Where it is
difficult to estimate the recoverable amount of the single item assets, the recoverable amount of the assets shall be
recognized on the basis of their asset group or combination of asset groups.
The recoverable amount shall be recognized in light of the higher one of the net amount of the fair value of the
single item assets, asset group or combination of asset groups less the disposal expenses and the present value of
the expected future cash flow of the single item assets, asset group or combination of asset groups.
Where the recoverable amount of the single item assets is lower than their carrying amount, a provision for the
asset impairment shall be made accordingly on the basis of the difference between the carrying amount of the
single item assets and their recoverable amount. Where the recoverable amount of an asset group or a combination
of asset groups is lower than its carrying amount, it shall be recognized as the corresponding impairment loss. The
amount of the impairment loss shall first charge against the carrying amount of business reputation which is
apportioned to the asset group or combination of asset groups, then charge it against the carrying amount of other
assets in proportion to the weight of other assets in the asset group or combination of asset groups with the
business reputation excluded. The charges against the carrying amount of the assets above shall be treated as the
impairment loss of the single item assets (including the business reputation), and a provision for impairment of the
single item assets shall be made accordingly.
Once the above loss of asset impairment is recognized, it shall not be switched back in future accounting periods.
22. Accrued liabilities
(1) Recognition of estimated liabilities
When the businesses related to contingencies such as external guarantee, pending action or arbitration, product
quality assurance, plan for layoffs, loss contract, restructuring obligations and fixed asset disposal obligations
meet all of the following conditions, they shall be recognized as liabilities:
1) The liabilities are present liabilities assumed by the Company;
2) The fulfillment of the liabilities might cause outflow of economic benefits from the enterprise.
3) The amount of the liabilities can be reliably measured.
(2) Measurement of estimated liabilities
The estimated liabilities shall be measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation. If there is a sequent range for the necessary expenses and if all the
outcomes within this range are equally likely to occur, the best estimate shall be recognized in accordance with
the middle estimate within the range. In other cases, the best estimate shall be recognized in accordance with the
following methods, respectively:
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1) If the contingencies concern a single item, it shall be recognized in the light of the most likely outcome.
2) If the contingencies concern two or more items, the best estimate shall be calculated and recognized in
accordance with all possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of estimated liabilities of the company is expected
to be compensated by a third party or other parties, the compensation shall be separately recognized as an asset
only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the
reimbursement shall not exceed the carrying amount of the recognized estimated liabilities.
23. Employees' wages and salaries
(1) Definition of employees' wages and salaries
It refers to all kinds of remunerations or compensations given by the enterprises in exchange of the employees'
services or for cancellation of labor relationships. The employees' wages and salaries include the short-term wages
and salaries, separation benefits, dismiss welfare and other long-term employee benefits, as well as the benefits
provided by the enterprises to employees' spouses, children and dependants, deceased employees' survivors and
other beneficiaries.
(2) Scope of employees
In addition to all the employees who have signed a labor contract with the enterprise, the scope of employees also
covers members who have not signed a labor contract with the enterprise but have been formally appointed by the
enterprise, and those who provide services to the enterprise which has signed an employment contract with a labor
service agent.
(3) Recognizing short-term wages and salaries
In the accounting period during which employees provide services to the Company, the Company recognizes the
short-term wages and salaries actually incurred as liabilities and charges them to the current-period profits and
losses or relevant asset costs.
(4) Separation benefits are classified into the defined contribution plan and defined benefit plan
1) During the accounting period when employees provide services to the Company, the Company recognizes
the contribution amount payable calculated according to the defined contribution plan as a liability, and
includes it in the current profits and losses or related asset costs.
2) The accounting treatment of the defined benefit plan usually includes the following steps:
a According to the projected unit credit method, adopt the unbiased and mutually consistent actuarial assumption
to estimate the demographic variables and financial variables, measure obligations generated by the defined
benefit plan, and determine the period to which relevant obligations belong;
b In case that the defined benefit plan involves assets, recognize the deficit or surplus formed by reducing the fair
value of assets of the defined benefit plan from the present obligation value of the defined benefit plan as one net
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liability or net asset of the defined benefit plan. If the defined benefit plan has any surplus, use the lower of the
defined benefit plan surplus and the upper asset limit to measure net assets of the defined benefit plan. The upper
asset limit refers to the present value of the economic interest that can be obtained by the Company from refund of
the defined benefit plan or by reducing the fund to be deposited for the defined benefit plan in the future;
c At the end of the period, recognize the costs of employees' wages and salaries arising from the defined benefit
plan as the service costs, net interests of net liabilities or net assets of the defined benefit plan, and changes arising
from remeasurement of net liabilities or net assets of the defined benefit plan, wherein the service costs and net
interests of net liabilities or net assets of the defined benefit plan are recorded into the current-period profits/losses
or relevant asset costs, changes arising from remeasurement of net liabilities or net assets of the defined benefit
plan are recorded into other comprehensive income and cannot be reversed to profits/losses in the subsequent
accounting period, but such amount recognized in other comprehensive income can be transferred within the
equity scope;
d Recognize a settlement gain or loss during settlement of the defined benefit plan.
(5) The Company provides employees with dismiss welfare
The liability of employees' wages and salaries that arises from the dismiss welfare shall be recognized on the
earlier one of the following two dates and charged to the current-period profits/losses:
1) When the Company cannot unilaterally cancel the dismiss welfare provided for the labor relationship
cancellation plan or staff reduction suggestion;
2) When the Company recognizes the cost or expense related to reconstruction involving dismiss welfare
payment.
(6) Employee welfares
If other long-term benefits offered by the Company to employees comply with conditions of the defined
contribution plan, accounting treatment is conducted according to the defined contribution plan; the long-term
benefits other than these shall undergo accounting treatment according to the defined benefit plan, but the changes
arising from remeasurement of the net liabilities or net assets of other long-term benefits for employees shall be
recorded into the current-period profits/losses or relevant asset costs.
24. Recognition of revenues
Revenues shall be recognized where the relevant economic benefits are likely to flow into the Company, the
relevant amount of revenue can be reliably measured and the following conditions are met simultaneously:
The Company is engaged in production and sales of air conditioners and their accessories, and home appliances
and their accessories. The corresponding income includes the income from selling goods, labor service provision
income, and the income of abalienating the right to use assets, in which the income from selling goods includes
the domestic sales income and export sales income.
(1) Income from selling goods
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Where the Company has transferred significant risks and rewards of ownership of the goods to the buyer, and it
neither retains continuous management right that usually keeps relation with the ownership nor implements
effective control over the sold goods; and the income amount and relevant costs incurred or to be incurred can be
reliably measured, and the relevant economic benefits are likely to flow into the enterprise, the income from
selling goods shall be recognized.
1) For the income from domestic sales of products, the Company adopts the form of payment in advance, and
recognizes the income when the product is outbound and delivered to the purchaser, the delivery order or
outbound order is issued, and the amount of income from product sales is determined;
2) For the income from export sales, the Company recognizes the income when the Company's products declare
and leave the port, the bill of lading is obtained and the amount of income from product sales is determined.
(2) Income from rendering labor services
The Company's income from rendering labor services includes the income from external provided storage services,
income from material processing services, service charge and commission income. The Company's progress in
completion of the transaction can be reliably determined, the income amount and relevant costs incurred or to be
incurred can be reliably measured, and the income from rendering labor services is confirmed when the relevant
economic benefits are likely to flow into the enterprise.
1) Regarding the income from storage services, after the relevant labor services are provided, the Company will
settle the income on a monthly basis when the amount of income has been determined according to the working
hours and standard wages of the services provided, facilities used and related expenses.
2) Regarding the income from processing services, the Company will determine the income when it processes the
materials according to the contract and delivers it to the customer to obtain the customer's receipt document, and
the amount of income is determined.
Method of determining the schedule of completion under the transaction concerning the rendering of labor
services: measuring the completed work (or the proportion of the provided service to the total amount of labor
service that should be provided, and the proportion of the cost that has been incurred to the total cost estimated).
Where the transaction result of the labor service provided on the balance sheet date cannot be estimated reliably, it
shall be handled according to the following circumstances:
a If it expects that the cost of labor services incurred can be made up, the Company shall recognize the income
from rendering labor services based on the amount of the cost of labor services incurred and shall carry forward
the cost of labor services in accordance with the same amount.
b If it expects that the cost of labor services incurred cannot be made up, the cost of labor services incurred shall
be recorded into the profits and losses of the current period, and the income from rendering labor services shall
not be recognized.
3) The Company's service charge and commission income include the service charge income of acceptance
business, service charge income of loan by mandate, etc.
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For the service charge and commission income, the time points for service rendering, risk and remuneration
transfer are confirmed according to the business settlement sheet formulated through settlement with the customer
when the business is completed, and the specific amount of income is recognized according to the terms and ratios
stipulated in the business contract or agreement.
(3) Income from abalienating the right to use assets
The income from abalienating the right to use assets includes the interest income, leasehold income, etc.
The Company confirms the income from abalienating the right to use assets when the income amount can be
reliably measured and the relevant economic benefits are likely to flow into the enterprise.
1) The Company's interest income is mainly the interest income from deposits of financial enterprises and interest
income from loans. The income from the interest of the money deposited at a financial enterprise is recognized by
period according to the time of depositing and the actual interest rate. The loan interest income is recognized
when the Company grants self-operating loan and the interest is accrued by period. The loan interest income is
recognized according to the effective interest rate method.
The effective interest rate method means that the amortization cost of a financial asset or financial liability and
interest income or interest expenditure of each period are calculated according to its effective rate of interest. The
effective rate of interest refers to the interest rate used to discount the future cash flow of a financial asset or
financial liability within the expected period of existence or a shorter period to the current book value of the
financial asset or financial liability. When determining the effective rate of interest, the Company predicts the
future cash flow on the basis of considering all the contract terms of financial asset or financial liability, but does
not consider the loss of future credits. All the charges paid or collected by the Company and becoming a
constituent part of the effective rate of interest, transaction expense and transaction premium or discount shall be
considered when the effective rate of interest is determined.
2) The Company's rental income recognition conditions are as follows:
a The lease contract, agreement or other settlement notices recognized by the lessee are available;
b The obligations stipulated in the contract are fulfilled, the lease invoice is issued, and the price has been
obtained or will be obtained for sure;
c The rental cost can be measured reliably.
25. Government subsidies
A government subsidy means the monetary and non-monetary assets obtained free by the Company from the
government, but excluding the capital invested by the government as the owner. Government subsidies consist of
the government subsidies pertinent to assets and government subsidies pertinent to income.
The Company defines the obtained government subsidies used for purchase or construction, or forming the
long-term assets by other ways as government subsidies pertinent to assets, and all the other government subsidies
as government subsidies pertinent to income. If the government document does not specify the subsidy object, the
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following mode is adopted to classify the subsidies into government subsidies pertinent to income and
government subsidies pertinent to assets:
(1) If the government document specifies the project to which the subsidy aims, the amount is divided according
to the relative proportion of the paid amount to form assets to the paid amount to be recorded into expenses in the
budget of this specific project, and this division proportion needs to be checked on every balance sheet date and be
changed when necessary;
(2) If the government document provides only a general presentation of the purpose without specifying the
specific project, the subsidy shall be regarded as government subsidy pertinent to income.
The government subsidies pertinent to assets shall be recognized as deferred income and included in the profits
and losses by period according to the reasonable and systematic methods in the service life of the relevant asset
when this asset reaches the intended state of use. Where the relevant asset is sold, transferred, scrapped or
damaged before the service life ends, the related deferred income balance unallocated is transferred to the profits
and losses of the current period of asset disposal.
If the government subsidies pertinent to incomes are used for compensating the related expenses or losses in the
later period, they shall be recognized as deferred income when being obtained and shall be recorded into the
current-period profits and losses in the period when the relevant expenses or losses are recognized; if the
government subsidies pertinent to incomes are used for compensating the related cost expenses or losses incurred,
they shall be recorded into the current-period profits and losses directly when being obtained.
The government subsidies pertinent to daily activities shall be recorded in other incomes; the government
subsidies not pertinent to daily activities shall be recorded in the non-operating incomes and expenditures.
(3) The obtained subsidized interest of policy preference undergoes accounting treatment by differentiating the
following two obtaining ways:
1) Where the financial department disburses the discount fund to the loan bank so that the loan bank provides a
loan to the Company at the policy-based preferential interest rate, the fair value of loan is used as the entry value
of loan, the borrowing cost is calculated according to the effective interest rate method, and the difference
between the actual amount received and the fair value of borrowing is recognized as deferred income. The
deferred income is amortized using the effective interest rate method in the borrowing remaining period to offset
the relevant borrowing cost.
2) Where the financial department disburses the discount fund to the Company directly, the corresponding
discount is used to offset the relevant borrowing cost.
(4) Where the government subsidies are monetary assets, they shall be measured according to the amount received
or receivable. Where the government subsidies of non-monetary assets, they shall be measured at the fair value; if
the fair value cannot be obtained in a reliable way, the subsidies shall be measured at the nominal amount. When a
government subsidy is actually received, the Company usually recognizes and measures it according to the
actually received amount. At the end of the period, however, if there is any exact evidence showing that the
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Company complies with relevant conditions provided in the financial supporting policy and it is expected to
receive the capital support from the government, this subsidy shall be measured according to the amount
receivable. The government subsidy measured according to the amount receivable shall comply with all the
following conditions:
1) The amount of receivable subsidy has been confirmed by the authoritative government department by issuing a
document, or the subsidy can be independently and reasonably measured and calculated in accordance with
relevant provisions of the formally issued financial fund management measures and it is predicted that its amount
does not involve significant uncertainty;
2) The subsidy is based on the financially supported project that is formally released by the local financial
department and initiatively disclosed according to provisions of the Regulation of the People's Republic of China
on the Disclosure of Government Information, as well as its financial fund management measures, and the
management measures must be generous (any enterprise meeting the defined conditions can apply for the subsidy)
and are not formulated specially for specific enterprises;
3) Other conditions that shall be matched according to specific conditions of the Company and this matter of
subsidy.
26. Income tax
Income taxes include all types of domestic and oversea tax amounts based on the amounts of taxable income of
the Company. When the Company obtains assets or bears liabilities, it recognizes their tax base according to the
national tax laws and regulations. If the carrying amount of assets is greater than their tax base or if the carrying
amount of liabilities is less than their tax base, the difference between the tax base and their carrying amount shall
be treated as a taxable temporary difference; If the carrying amount of assets is less than their tax base or if the
carrying amount of liabilities is greater than their tax base, the difference between the tax base and their carrying
amount shall be treated as a deductible temporary difference.
(1) Except for the deferred income tax liabilities arising from the following transactions, the Company shall
recognize the deferred income tax liabilities arising from all taxable temporary differences:
1) The recognition of business reputation;
2) The recognition of assets or liabilities arising from the following transactions which are simultaneously
featured by the following:
a The transaction is not business combination;
b At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the
deductible loss) be affected.
Unless the Company can control the time of the reverse of taxable temporary differences related to the
investments of subsidiary companies, associated enterprises and contractual enterprises and the temporary
differences are unlikely to be reversed in the predictable future, the Company shall recognize the corresponding
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deferred income tax liabilities.
(2) The Company shall recognize the deferred income tax liabilities arising from a deductible temporary
difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be
deducted from the deductible temporary difference, however, it shall not recognize the deferred income tax assets
arising from the recognition of assets or liabilities during a transaction which is simultaneously featured by the
following:
1) This transaction is not business combination; and
2) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the
deductible loss) be affected.
On the balance sheet date, where there is any exact evidence showing that it is likely to acquire sufficient amount
of taxable income tax in a future period to offset against the deductible temporary difference, the Company shall
recognize the deferred income tax assets unrecognized in prior periods. If the deductible temporary differences
related to the investments of subsidiary companies, associated enterprises and contractual enterprises are likely to
be reversed in the expected future and are likely to acquire any amount of taxable income tax that may be used for
making up the deductible temporary differences, the Company shall recognize the deferred income tax assets
corresponding to the said differences.
(3) On the balance sheet day, the current income tax liabilities (or assets) incurred in the current period or prior
periods shall be measured by the Company in light of the expected payable (refundable) amount of income taxes
according to the tax law; The deferred income tax assets and deferred income tax liabilities shall be measured at
the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are
expected to be settled.
In case the applicable tax rate changes, the Company shall remeasure the deferred income tax assets and deferred
income tax liabilities which have been recognized. Excluding the deferred income tax assets and deferred income
tax liabilities arising from any transaction or event directly recognized as the owners' equity, the Company shall
record the amount affected by tax rate change into the income tax expenses of the current period during which the
change occurs.
The Company shall reexamine the carrying amount of deferred income tax assets on each balance sheet day. If it
is unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the
carrying amount of the deferred income tax assets shall be written down. When it is probable to obtain sufficient
taxable income taxes, such write-down amount shall be subsequently reversed.
The Company shall record the income taxes of the current period and deferred income taxes other than business
combinations and transactions or events directly recognized in the owners' equity into the profit statement as
income tax expenses or incomes.
27. Lease
The term "lease" refers to an agreement under which the lessor conveys to the lessee in return for rent the right to
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use an asset for an agreed period of time. Leases consist of financing leases and operating leases.
(1) Financing leases
1) Where a lease satisfies one or more of the following criteria, it shall be recognized as a financing lease:
a The ownership of the leased asset is transferred to the lessee when the term of lease expires;
b The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value
of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can be
reasonably determined that the option will be exercised;
c Even if the ownership of the asset is not transferred, the lease term covers the major part (over 75.00%
(included)) of the service life of the leased asset;
d In the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts
to substantially all (over 90.00% (included)) of the fair value of the leased asset on the lease beginning date; in the
case of the lessor, the present value of the minimum lease receipts on the lease beginning date amounts to
substantially all (over 90.00% (included)) of the fair value of the leased asset on the lease beginning date; and
e The leased assets are of a specialized nature that only the lessee can use them without making major
modifications.
A lease that does not satisfy the above conditions shall be recognized as an operating lease.
2) The fixed assets leased by financing shall be accounted according to the lower of the fair value of the leased
asset on the lease commencement date and the present value of the minimum lease payment, and the depreciation
shall be accrued according to the depreciation policy of its own fixed assets.
(2) Operating leases
The rents paid by the lessee shall be recorded by the Company into the relevant asset costs or the profits and
losses of the current period by using the straight-line method over each period of the lease term. The direct costs
incurred from operating leases carried on by the Company shall be directly recorded into the profits and losses of
the current period. The contingent rents involved in the operating lease agreement shall be recorded into the
profits and losses of the current period in which they actually arise.
28. Discontinued operation
Discontinued operation refers to a constituent part that meets one of the following conditions and can be
distinguished separately, and this constituent part has been disposed of or classified into the category held for sale:
(1) This constituent part represents an independent main business or a separate main business area;
(2) This constituent part is one part of an associated plan for disposing of an independent main business or a
separate main business area;
(3) This constituent part is a subsidiary specially acquired for resale.
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The Company lists the continuous operation profit and loss and discontinued operation profit and loss in the
consolidated income statement and the income statement respectively. For the non-current asset or disposal group
held for sale that does not comply with the definition of discontinued operation, its impairment loss and reversed
amount and profit and loss from disposal shall be listed as continuous operation profit and loss. The impairment
loss and reversed amount of discontinued operation and other operation profits and losses and profits and losses
from disposal shall be listed as discontinued operation profits and losses.
For the discontinued operation listed in the current period, in the current financial statements, the information
originally listed as continuous operation profit and loss is re-listed as discontinued operation profits and losses of
the comparable accounting period. Where the disposal group for discontinued use that is not for sale meets the
condition of the relevant constituent part in the definition of discontinued operation, it shall be listed as
discontinued operation from the date of discontinued use. Where the control right of a subsidiary is lost due to
reasons such as selling the investment into the subsidiary and this subsidiary complies with the definition of
discontinued operation, the relevant discontinued operation profits and losses shall be listed in the consolidated
income statement.
29. Segment report
The Company determines the operating segment based on the internal organizational structure, management
requirements and internal reporting system, determines the report segment based on the operating segment, and
discloses the segment information.
The operating segment refers to the constituent part in the Company that meets the following conditions at the
same time:
(1) This constituent part can generate income and cost in daily activities;
(2) The management of the Company can regularly evaluate the operating results of the constituent part so as to
decide configuration of resources to it and evaluate its performance;
(3) The Company can obtain the relevant accounting information of this constituent part such as its financial
status, operating results and cash flows. If two or more operating segments have similar economic characteristics
and satisfy certain conditions, they can be combined into one operating segment.
30. Hedging
To avoid certain risks, the Company hedges certain financial instruments as hedging instruments. Hedge that
meets the prescribed conditions will be handled by the Company using hedge accounting methods. The
Company's hedging includes fair value hedge, cash flow hedge and hedge of net investment in overseas
operations.
At the beginning of the hedging, the Company officially designates the hedging tool and the hedged item, and
prepares written documents on the hedging relationship and the risk management strategy and risk management
objectives of the Company engages in hedging. In addition, the Company will continue to assess the effectiveness
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of the hedging when and after the hedging begins.
(1) Fair value hedge
For eligible hedging instruments designated as fair value hedge, the gains or losses generated thereby are included
in the current profits and losses. If a hedging instrument is hedged on a non-trading equity instrument investment
(or its component) that is selected to be measured at fair value and of which changes are included in other
comprehensive income, the gains and losses generated thereby are included in other comprehensive income. Gain
or loss of a hedged item due to hedging risk exposure is included in the current profits and losses, while adjusting
the book value of the hedged item. If a hedged item is measured at fair value, the gain or loss of the hedged item
due to hedging risk exposure does not need to adjust the book value of the hedged item, and the related gain and
loss are included in the current profits or losses or other comprehensive income.
When the Company revokes the designation of the hedging relationship, the hedging instrument has expired or is
sold, the contract is terminated or exercised, or the conditions for the use of hedging accounting is no longer met,
the use of hedging accounting is terminated.
(2) Cash flow hedge
For eligible hedging instruments designated as cash flow hedge, the portion of the gains or losses generated
thereby that is determined to be an effective hedge is included in other comprehensive income, while the portion
that is determined to be an ineffective hedge is included in the current profits and losses.
If the expected transaction causes the Company to subsequently recognize a non-financial asset or non-financial
liability, or the expected transaction of the non-financial asset or non-financial liability forms a firm commitment
applicable to fair value hedge accounting, the Company will transfer out the amount of cash flow hedge reserve
originally recognized in other comprehensive income and includes it in the initial recognition amount of the asset
or liability. For other cash flow hedging, the Company will, during the same period in which the hedged expected
cash flow affects the profit or loss, transfer out the amount of cash flow hedge reserve originally recognized in
other comprehensive income and includes it in the current profits and losses.
If it is expected that all or part of the net loss originally included in other comprehensive income cannot be
compensated in the future accounting period, the portion which cannot be compensated will be transferred out and
included in the current profits and losses.
When the Company terminates the use of hedging accounting for cash flow hedges, the accumulated cash flow
hedge reserve that has been included in other comprehensive income will be retained when future cash flow
expectations still occur, and will be transferred out of other comprehensive income and included in the current
profits and losses when future cash flow expectations no longer occur.
(3) Hedge of net investment in an overseas operation
Hedge of net investment in overseas operations is accounted for using a method similar to the cash flow hedge.
Among the gains or losses of hedging instruments, the portion that is determined to be an effective hedge is
included in other comprehensive income, while the portion that is determined to be an ineffective hedge is
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
included in the current profits and losses.
Gains and losses that have been included in other comprehensive income will be transferred out of other
comprehensive income and included in the current profits and losses when disposing of overseas operations.
31. Major accounting policies and accounting estimate changes
(1) Changes of major accounting policies
1) Changes in accounting policies resulting from the implementation of new standards for financial instruments
The Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments (2017 Revision) (Finance and Accounting [2017] No. 7), the Accounting
Standards for Business Enterprises No. 23 - Transfer of Financial Assets (2017 Revision) (Finance and
Accounting [2017] No. 8), and the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting
(2017 Revision) (Finance and Accounting [2017] No. 9) on 31 March, 2017, and the Accounting Standards for
Business Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (Finance and Accounting
[2017] No. 14) on 2 May, 2017 (the above standards are collectively referred to as "new standards for financial
instruments"), requiring domestic listed companies to implement the new financial instruments standards from 1
January, 2019.
As approved by the resolution of the fourth meeting of the eleventh session of board of directors of the Company
on 29 April, 2019, the Company began to implement the aforementioned new standards for financial instruments
from 1 January, 2019.
Under the new standards for financial instruments, all recognized financial assets are subsequently measured at
amortization cost or fair value. On the implementation date of the new standards for financial instruments, the
Company's business model for managing the financial assets is evaluated based on the Company's existing facts
and circumstances on that day, and the contractual cash flow characteristics on the financial assets are evaluated
based on the facts and circumstances at the time of initial recognition of the financial assets, and the financial
assets are divided into three categories: measured at amortization cost, measured at their fair values and of which
the changes are included into other comprehensive income, and measured at their fair values and of which the
changes are included into the current profits and losses. Among them, for equity instrument investment measured
at their fair values and of which the changes are included into other comprehensive income, when the financial
assets are derecognized, the cumulative gains or losses previously included into other comprehensive income will
be transferred from other comprehensive income to retained income, but will not be included into the current
profits and losses.
Under the new standards for financial instruments, the Company, on the basis of expected credit losses, makes
provisions for impairment of financial assets measured at amortization cost and debt instrument investments
which are measured at fair value and of which the changes are included into other comprehensive income, and
recognizes credit impairment losses.
The Company applies the new standards for financial instruments retrospectively. However, if the classification
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
and measurement (including impairment) involves any inconsistency between the data of the previous
comparative financial statements and the new standards for financial instruments, the Company chooses not to
restate. Therefore, for the cumulative impact of the implementation of the standards for the first time, the
Company adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amount
of other related items in the financial statements, and does not restate the 2018 financial statements.
2) Changes in the format of financial statements
The Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements of General
Enterprises for 2019 (Finance and Accounting [2019] No. 6) and the Notice on Revising and Issuing the Format
of Consolidated Financial Statements (2019 Version) (Finance and Accounting [2019] No. 16) in April and
September 2019 respectively, revising the format of financial statements of general enterprises and the format of
consolidated financial statements. The Company prepared financial statements according to the relevant
requirements and in accordance with the format of financial statements for general enterprises (applicable to the
enterprises that have implemented the new financial standards, the new revenue standards and the new lease
standards). Major changes are as follows:
A. The "notes receivable and accounts receivable" item is split into the "notes receivable" item and the "accounts
receivable" item; the "notes payable and accounts payable" item is split into the "notes payable" item and the
"account payable" item;
B. The "receivables financing" item is added;
C. Interest receivable or interest payable presented in the "other receivables" or "other payables" items only reflect
the interest which is receivable or payable upon the maturity of the relevant financial instruments but has not been
received or paid on the balance sheet date; the interest on financial instruments accrued based on the actual
interest rate method is included in the book balance of the corresponding financial instruments;
D. The "asset impairment loss" and "credit impairment loss" items move downward from the "other gains" item to
the "fair value change gain" item, and the "credit impairment loss" item is presented before the "asset impairment
loss" item;
E. The "investment income" item newly includes the "income from derecognition of financial assets measured at
amortization costs".
The Company has retrospectively restated the comparative statements accordingly according to the above
presentation requirements.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
3) Impact of implementation of new standards for financial instruments and changes in the format of financial statements on consolidated financial statements
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Reclassification Remeasurement
Impact of the
Item preparation of format Impact of new
of financial statements Transfer-in of assets Change from cost standards for
31 December, 2018 1 January, 2019
Transfer-in of original originally classified as measurement to financial
notes receivable available-for-sale fair value instruments on
financial assets measurement credit loss
adjustment
Assets:
Monetary capital 113,079,030,368.11 1,943,623,443.56 115,022,653,811.67
Trading financial assets 1,012,470,387.43 1,012,470,387.43
Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses 1,012,470,387.43 -1,012,470,387.43
Notes receivable and accounts receivable 43,611,226,866.20 -9,229,039,643.82 -34,382,187,222.38
Including: Bills receivable 35,911,567,876.04 -1,529,380,653.66 -34,382,187,222.38
Accounts receivable 7,699,658,990.16 -7,699,658,990.16
Accounts receivable 7,699,658,990.16 -57,224,911.92 7,642,434,078.24
Receivables financing 34,382,187,222.38 -81,714,642.25 34,300,472,580.13
Other receivables 2,553,689,544.47 -2,257,098,901.99 -6,244,306.10 290,346,336.38
Including: Interests receivable 2,257,098,901.99 -2,257,098,901.99
Other current assets 17,110,921,223.89 1,802,424,633.81 18,913,345,857.70
Original value of available-for-sale financial assets 2,217,095,036.33 -2,217,095,036.33
Less: Impairment provisions of available-for-sale financial assets 900,000.00 -900,000.00
Net amount of available-for-sale financial assets 2,216,195,036.33 -2,216,195,036.33
Disbursement of loans and advances 9,071,332,784.86 10,381,298.66 9,081,714,083.52
Debt investment 1,216,700.19 36,000,000.00 37,216,700.19
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Reclassification Remeasurement
Impact of the
Item preparation of format Impact of new
of financial statements Transfer-in of assets Change from cost standards for
31 December, 2018 1 January, 2019
Transfer-in of original originally classified as measurement to financial
notes receivable available-for-sale fair value instruments on
financial assets measurement credit loss
adjustment
Other debt investments 28,833,479.43 1,035,287,090.00 1,064,120,569.43
Other equity instrument investments 1,144,907,946.33 1,144,907,946.33
Deferred income tax assets 11,349,573,709.69 12,274,180.53 15,242,873.91 11,377,090,764.13
Liabilities:
Short-term borrowing 22,067,750,002.70 130,149,404.18 22,197,899,406.88
Deposits from customers and interbank 315,879,779.13 3,597,463.78 319,477,242.91
Other payables 4,747,139,263.00 -1,663,127,521.62 3,084,011,741.38
Including: Interests payable 133,746,867.96 -133,746,867.96
Other current liabilities 63,361,598,764.96 1,529,380,653.66 64,890,979,418.62
Owners' equity:
Including: Other comprehensive income -550,806,051.51 -69,440,461.72 -620,246,513.23
Undistributed profit 81,939,701,613.83 -48,226,344.11 81,891,475,269.72
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
4) Impact of implementation of new standards for financial instruments and changes in the format of financial statements on the parent company's financial statements
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Impact of the Reclassification Remeasurement
preparation of format
Item Impact of new
of financial Transfer-in of
Change from cost standards for
31 December, 2018 statements assets originally 1 January, 2019
Transfer-in of original measurement to financial
classified as
notes receivable fair value instruments on
available-for-sale
measurement credit loss
financial assets
adjustment
Assets:
Monetary capital 102,696,932,265.26 1,500,459,111.30 104,197,391,376.56
Trading financial assets 412,114,127.42 412,114,127.42
Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses 412,114,127.42 -412,114,127.42
Notes receivable and accounts receivable 35,047,382,637.60 -2,988,819,694.63 -32,058,562,942.97
Including: Bills receivable 32,516,210,775.80 -457,647,832.83 -32,058,562,942.97
Accounts receivable 2,531,171,861.80 -2,531,171,861.80
Accounts receivable 2,531,171,861.80 2,531,171,861.80
Receivables financing 32,058,562,942.97 -81,544,800.33 31,977,018,142.64
Other receivables 3,898,630,873.93 -1,719,333,737.63 -2,300,000.00 2,176,997,136.30
Including: Interests receivable 1,803,079,868.37 -1,803,079,868.37
Other current assets 12,311,814,484.26 676,522,459.16 12,988,336,943.42
Original value of available-for-sale financial assets 765,090,199.08 -765,090,199.08
Less: Impairment provisions of available-for-sale financial assets 900,000.00 -900,000.00
Net amount of available-for-sale financial assets 764,190,199.08 -764,190,199.08
Other equity instrument investments 764,190,199.08 764,190,199.08
Deferred income tax assets 10,931,512,853.30 12,231,720.05 345,000.00 10,944,089,573.35
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Book value presented Book value presented
according to the original Impact of the implementation of new standards for financial instruments according to the new
standards standards
Impact of the Reclassification Remeasurement
preparation of format
Item Impact of new
of financial Transfer-in of
Change from cost standards for
31 December, 2018 statements assets originally 1 January, 2019
Transfer-in of original measurement to financial
classified as
notes receivable fair value instruments on
available-for-sale
measurement credit loss
financial assets
adjustment
Liabilities:
Short-term borrowing 17,759,081,480.00 77,161,272.95 17,836,242,752.95
Other payables 1,795,358,032.57 -534,809,105.78 1,260,548,926.79
Including: Interests payable 108,650,144.21 -108,650,144.21
Other current liabilities 63,348,220,747.89 457,647,832.83 63,805,868,580.72
Owners' equity:
Including: Other comprehensive income -330,283,919.33 -69,313,080.28 -399,596,999.61
Undistributed profit 48,123,803,614.75 -1,955,000.00 48,121,848,614.75
(2) Changes of accounting estimates
None.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(VI) Taxes
1. Main tax categories and tax rates of the Company
Category Tax Base Tax Rate
Value added because of sales of commodities
Added-value tax 16.00%, 13.00%, 11.00%, 10.00%, etc.
or rendering of services
Urban maintenance &
Circulation taxes payable 7.00%, 5.00%
construction tax
Educational surcharges Circulation taxes payable 3.00%
Local education surcharge Circulation taxes payable 2.00%
Business income tax Taxable income 34.00%, 25.00%, 20.00%, 16.50%, 15.00%
[Note] The place of business of the Company's subsidiary Hong Kong Gree Electric Appliances Sales Limited is
Hong Kong Special Administrative Region, and the profit tax rate of Hong Kong is 16.50%; the place of business
of the Company's subsidiaries Gree (Brazil) Electric Appliances Co., Ltd. and Brazil United Electric Appliances
Industry and Commerce Co., Ltd. is Brazil, and the federal enterprise income tax rate of Brazil is 34.00%.
2. Tax preferences and approval documents
(1) The Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy
for the high and new tech enterprises (High-tech Enterprise Certificate No. GR201744011432). The Company
applied the income tax rate of 15.00%.
(2) Deemed to be high and new tech enterprises, the following subsidiaries of the Company applied the enterprise
income tax rate of 15.00% in 2019:
Time for acquiring the
No. Name of tax payer Certificate number Valid period
certificate
1 Zhuhai Landa Compressor Co., Ltd. GR201744006896 11 December, 2017 Three years
2 Hefei Landa Compressor Co., Ltd. GR201734000080 20 July, 2017 Three years
3 Zhengzhou Landa Compressor Co., Ltd. GR201741000023 29 August, 2017 Three years
4 Wuhan Landa Compressor Co., Ltd. GR201742002031 30 November, 2017 Three years
5 Gree Electric Enterprises (Ma'anshan) Ltd. GR201734000580 20 July, 2017 Three years
6 Zhuhai Kaibang Motor Manufacture Co., Ltd. GR201844002288 28 November, 2018 Three years
7 Hefei Kaibang Motor Manufacture Co., Ltd. GR201734000276 3 November, 2017 Three years
8 Henan Kaibang Motor Manufacture Co., Ltd. GR201741000090 29 August, 2017 Three years
9 Gree (Hefei) Electric Appliances Co., Ltd. GR201734000583 20 July, 2017 Three years
10 GREE (Zhongshan) Home Appliances Co., Ltd. GR201744005669 11 December, 2017 Three years
11 Zhuhai Gree Xinyuan Electronics Co., Ltd. GR201944009719 30 November, 2019 Three years
12 Zhuhai Gree Daikin Precision Mold Co., Ltd. GR201944005454 2 December, 2019 Three years
184
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Time for acquiring the
No. Name of tax payer Certificate number Valid period
certificate
13 Zhuhai Gree Dakin Device Co., Ltd. GR201844007626 28 November, 2018 Three years
14 Gree (Wuhan) Electric Appliances Co., Ltd. GR201942003097 28 November, 2019 Three years
Gree (Shijiazhuang) Electric Appliances Co.,
15 GR201913002804 2 December, 2019 Three years
Ltd.
16 Gree (Zhengzhou) Electric Appliances Co., Ltd. GR201741000063 29 August, 2017 Three years
17 Gree (Wuhu) Electric Appliances Co., Ltd. GR201734001093 20 July, 2017 Three years
18 Changsha Gree HVAC Equipment Co., Ltd. GR201743000499 5 September, 2017 Three years
19 Zhuhai IVP Information Technology Co., Ltd. GR201944005394 2 December, 2019 Three years
Gree Green Refrigeration Technology Center
20 GR201744008385 11 December, 2017 Three years
Co., Ltd. Of Zhuhai
21 Zhuhai Gree Precision Mold Co., Ltd. GR201744008914 11 December, 2017 Three years
Zhuhai Gree Energy Environment Technology
22 GR201744011297 11 December, 2017 Three years
Co., Ltd.
Gree (Shijiazhuang) Small Home Appliances
23 GR201913002825 2 December, 2019 Three years
Co., Ltd.
24 Hefei Kinghome Electrical Co., Ltd. GR201834001303 24 July, 2018 Three years
25 Zhuhai Gree New Material Co., Ltd. GR201944009559 2 December, 2019 Three years
(3) The following subsidiaries of the Company enjoy the country's western development policy, and applied the
income tax rate of 15.00%.
No. Name of tax payer Preferential tax policy Start time
Gree (Chongqing) Electric Appliances
1 Preferential tax policy of western development 1 January, 2008
Co., Ltd.
2 Chongqing Landa Compressor Co., Ltd. Preferential tax policy of western development 1 January, 2015
Chongqing Kaibang Motor Manufacture
3 Preferential tax policy of western development 1 January, 2013
Co., Ltd.
(VII) Item notes of consolidated financial statements
For the following note items (including notes to the main items of the parent company's financial statements),
unless otherwise specified, "the beginning of the period" means 1 January, 2019, "the end of the period" means 31
December, 2019, and "the end of the previous year" means 31 December, 2018, "the current year" refers to 2019,
and "the previous year" refers to 2018.
1. Monetary capital
Item Balance at the end of the period Beginning Balance
Cash 1,357,064.14 1,678,449.67
Bank deposits 62,105,349,148.41 64,418,416,813.66
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Item Balance at the end of the period Beginning Balance
Other monetary capital [Note 1] 10,695,206,587.82 3,608,319,521.92
Deposits in central bank [Note 2] 3,016,086,870.50 3,047,519,040.61
Deposits in other banks 47,928,688,430.00 42,003,096,542.25
Subtotal 123,746,688,100.87 113,079,030,368.11
Accrued interest 1,654,027,166.77 1,943,623,443.56
Total 125,400,715,267.64 115,022,653,811.67
Including: Total amount deposited abroad 631,329,193.55 819,859,100.33
[Note 1] The balance at the end of the period of other monetary capital refers to banks' acceptance bills, guarantee
deposits, credit margin deposits, etc., where the restricted fund was RMB 10,315,346,592.40.
[Note 2] The reserve requirements on deposit in the Company's deposits in central bank are RMB
3,014,082,457.76, and its use is restricted;
[Note 3] Except the above situations, there are no other funds in the end-of-period balance of monetary funds that
have limited use and potential recovery risks due to mortgage, pledge or freezing.
2. Trading financial assets
Balance at the end of the
Item Beginning Balance
period
Financial assets measured at their fair values and of which the changes are
955,208,583.58 1,012,470,387.43
recorded into the current profits and losses
Wherein: Debt instrument investment 955,208,583.58 1,012,470,387.43
Total 955,208,583.58 1,012,470,387.43
3. Derivative financial assets
Balance at the end of the
Item Beginning Balance
period
Forward foreign exchange settlement/sale and others 92,392,625.69 170,216,138.92
Total 92,392,625.69 170,216,138.92
4. Accounts receivable
(1) Disclosure by account age
Aging Balance at the end of the period
Within 1 year 7,697,417,213.86
1 to 2 years 926,391,719.35
2 to 3 years 355,717,739.24
Over 3 years 265,497,478.10
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Aging Balance at the end of the period
Subtotal 9,245,024,150.55
Less: Bad debt provisions 731,689,605.47
Total 8,513,334,545.08
[Note] The Company's accounts receivable with the account age of over 1 year are mainly subsidy receivables of
RMB 857,341,045.00 for dismantling waste electrical and electronic products and receivables of RMB
325,764,921.27 for commercial coal-to-electricity and subway projects.
(2) Presentation by accruing method for bad debt provisions
Balance at the end of the period
Book balance Bad debt provision
Category
Percentage of Carrying amount
Percentage
Amount Amount appropriation
(%)
(%)
Accounts receivable with bad
debt provisions accrued 132,904,666.21 1.44 132,904,666.21 100.00
separately
Accounts receivable with bad
debt provisions accrued 9,112,119,484.34 98.56 598,784,939.26 6.57 8,513,334,545.08
according to the combination
Including: Combination 1:
7,825,227,159.34 84.64 494,357,918.17 6.32 7,330,869,241.17
Account age combination
Combination 2: Low risk
1,286,892,325.00 13.92 104,427,021.09 8.11 1,182,465,303.91
combination
Total 9,245,024,150.55 100.00 731,689,605.47 7.91 8,513,334,545.08
(Continued)
Beginning Balance
Book balance Bad debt provision
Category
Percentage of Carrying amount
Percentage
Amount Amount appropriation
(%)
(%)
Accounts receivable with bad
debt provisions accrued 131,048,814.98 1.60 131,048,814.98 100.00
separately
Accounts receivable with bad
debt provisions accrued 8,081,100,658.05 98.40 438,666,579.81 5.43 7,642,434,078.24
according to the combination
Including: Combination 1:
7,176,263,253.05 87.38 381,441,667.89 5.32 6,794,821,585.16
Account age combination
Combination 2: Low risk
904,837,405.00 11.02 57,224,911.92 6.32 847,612,493.08
combination
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Total 8,212,149,473.03 100.00 569,715,394.79 6.94 7,642,434,078.24
1) Accounts receivable with bad debt provisions accrued separately at the end of the period
Balance at the end of the period
Accounts receivable Percentage of
Bad debt Reason for
Book balance appropriation
provision appropriation
(%)
Expected to be
A total of 11 units 132,904,666.21 132,904,666.21 100.00 difficult to
recover
Total 132,904,666.21 132,904,666.21 100.00
2) In the combination, the accounts receivable of which bad debt provisions are appropriated according to the
account age combination
Balance at the end of the period
Item Percentage of
Book balance Bad debt provision
appropriation (%)
Within 1 year 7,267,865,933.86 363,393,296.77 5.00
1 to 2 years 524,837,349.35 104,967,469.87 20.00
2 to 3 years 13,053,449.24 6,526,724.64 50.00
Over 3 years 19,470,426.89 19,470,426.89 100.00
Total 7,825,227,159.34 494,357,918.17 6.32
[Note] Please refer to Note (V) 10 for the basis for determining the combination.
(3) Particulars on bad debt provisions
Change of the current period
Increase due to Balance at the end
Category Beginning Balance
Resold or change in the of the period
Appropriation
wrote-off consolidation
scope
Aging
381,441,667.89 102,146,847.31 2,147,164.37 12,916,567.34 494,357,918.17
combination
Low risk
57,224,911.92 47,202,109.17 104,427,021.09
combination
Accrued
131,048,814.98 1,855,851.23 132,904,666.21
separately
Total 569,715,394.79 151,204,807.71 2,147,164.37 12,916,567.34 731,689,605.47
(4) Particulars on accounts receivable actually wrote-off in the current period
Item Wrote-off amount
Accounts receivable actually wrote-off 2,147,164.37
[Note] There was no significant writing-off of accounts receivable during the current period.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(5) Accounts receivable of top 5 debtors in the balance at the end of the period collected by the debtor
Balance at the end of the Percentage (%) in the total Balance of provision for
Name of entity period of accounts balance at the end of the bad debts at the end of
receivable period of accounts receivable the period
First 1,286,892,325.00 13.92 104,427,021.09
Second 1,191,750,098.12 12.89 59,587,504.91
Third 342,684,906.60 3.71 17,134,245.33
Fourth 325,578,866.60 3.52 16,278,943.33
Fifth 237,002,786.32 2.56 11,850,139.32
Total 3,383,908,982.64 36.60 209,277,853.98
(6) Accounts receivable derecognized due to the transfer of financial assets
None.
(7) Assets and liabilities formed due to the transfer and continuous involvement of accounts receivable
None.
5. Receivables financing
(1) Receivables financing presented by category
Balance at the end of the
Item Beginning Balance
period
Notes receivable measured at fair value 28,226,248,997.12 34,300,472,580.13
Wherein: Banker's acceptance 28,180,783,659.30 34,252,255,182.54
Including: Notes accepted by Gree Finance Company [Note 2] 3,534,750,791.04 703,493,516.64
Trade acceptance 45,465,337.82 48,217,397.59
Total 28,226,248,997.12 34,300,472,580.13
[Note 1] For details about the classification and combination of receivables financing, please refer to (V) 10 and
(V) 11 of this note.
[Note 2] As of the disclosure date of this report, the notes accepted by Zhuhai Gree Group Finance Co., Ltd. have
all been accepted.
(2) Receivables financing pledged at the end of the period
Pledged amount at the end of the
Item
period
Notes receivable measured at fair value 8,874,415,345.76
Wherein: Banker's acceptance 8,874,415,345.76
Total 8,874,415,345.76
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(3) Receivables financing that has been endorsed or discounted at the end of the period but has not yet expired
Amount whose
Amount whose recognition
recognition is
Item is not terminated at the end
terminated at the end of
of the period
the period
Notes receivable which have been endorsed or discounted but not yet due 35,021,232,248.70 802,418,995.36
Wherein: Banker's acceptance 35,021,232,248.70
Trade acceptance 802,418,995.36
Total 35,021,232,248.70 802,418,995.36
[Note] Regarding notes receivable that the Company has endorsed or discounted at the end of the period but has
not yet expired, for their details of the underrecognized amount at the end of the period, see Note (VII) 10.
(4) Notes transferred by the Company into accounts receivable due to the note issuer's failure of performance
None.
(5) Receivables financing actually wrote-off in the current period
None.
6. Prepayment
(1) The prepayments are listed by aging as follows:
Balance at the end of the period Beginning Balance
Aging Percentage
Amount Percentage (%) Amount
(%)
Within 1 year 2,375,291,199.19 99.15 2,116,062,087.45 97.89
1 to 2 years 16,328,421.09 0.68 39,664,171.13 1.83
2 to 3 years 1,401,531.66 0.06 4,157,995.19 0.19
Over 3 years 2,589,403.32 0.11 1,991,755.45 0.09
Total 2,395,610,555.26 100.00 2,161,876,009.22 100.00
(2) Prepayments whose aging exceeded one year and amount was important
None.
(3) Top 5 debtors of prepayment amount
The aggregate balance amount of prepayments of top 5 suppliers in the balance at the end of the period collected
by the supplier was RMB 1,039,393,363.58, accounting for 43.39% of the total balance of prepayments at the end
of the period.
7. Other receivables
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the
Item Beginning Balance
period
Other receivables 159,134,399.10 290,346,336.38
Total 159,134,399.10 290,346,336.38
[Note] The Company had no interest receivable and dividend receivable balances at the beginning and the end of
the period.
(1) Other receivables disclosed by account age
Aging Balance at the end of the period
Within 1 year 162,121,375.23
1 to 2 years 4,913,714.10
2 to 3 years 2,376,942.91
Over 3 years 8,292,663.13
Subtotal 177,704,695.37
Less: Bad debt provisions 18,570,296.27
Total 159,134,399.10
(2) Other receivables disclosed by amount nature
Book balance at the end Book balance at the
Nature of money
of the period beginning of the period
Current and low-risk payments 177,704,695.37 321,241,112.39
Less: Bad debt provisions 18,570,296.27 30,894,776.01
Total 159,134,399.10 290,346,336.38
(3) Particulars on accruing of bad debt provisions
Phase 1 Phase 2 Phase 3
Expected credit
Expected credit
loss for the
Bad debt provision Expected credit loss for the entire Total
entire duration
losses in the duration (no credit
(credit
next 12 months impairment
impairment
occurred)
occurred)
Balance as at 1 January, 2019 14,934,891.98 15,959,884.03 30,894,776.01
Balance as at 1 January, 2019 in the current period
Appropriation for the current period
Reserved in the current period 6,857,775.30 572,227.09 7,430,002.39
Wrote-off in the current period 4,914,193.73 4,914,193.73
Increase due to change in the consolidation scope 19,716.38 19,716.38
Balance as at 31 December, 2019 8,096,833.06 10,473,463.21 18,570,296.27
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(4) Particulars on accruing of provisions for bad debts in the current period
Change of the current period
Increase due to Balance at the
Beginning
Category Recovered or Resold or change in the end of the
Balance Appropriation
reversed wrote-off consolidation period
scope
Aging combination 30,894,776.01 7,430,002.39 4,914,193.73 19,716.38 18,570,296.27
Total 30,894,776.01 7,430,002.39 4,914,193.73 19,716.38 18,570,296.27
(5) Particulars on other receivables actually wrote-off in the current period
Item Wrote-off amount
Other receivables actually wrote-off 4,914,193.73
[Note] There was no significant writing-off of other receivables during the current period.
(6) Other receivables of top 5 debtors in the balance at the end of the period collected by the debtor
Balance of
Proportion to the
provision for
Balance at the end total balance of other
Name of entity Nature of money Aging bad debts at the
of the period receivables at the end
end of the
of the period (%)
period
First Intercourse funds 4,617,192.35 Within 1 year 2.60 230,859.62
Second Intercourse funds 4,051,289.71 Within 1 year 2.28 202,564.49
Third Intercourse funds 2,313,178.85 Within 1 year 1.30 115,658.94
Fourth Intercourse funds 2,209,431.01 Within 1 year 1.24 110,471.55
Fifth Intercourse funds 1,441,019.34 Within 1 year 0.81 72,050.97
Total 14,632,111.26 8.23 731,605.57
(7) Other receivables involving government subsidies
None.
(8) Other receivables derecognized due to the transfer of financial assets
None.
(9) Assets and liabilities formed due to the transfer and continuous involvement of other receivables
None.
8. Inventories
(1) Type of inventories
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period
Item Provision for price
Book balance Carrying amount
fall
Raw material 10,313,734,271.81 207,784,826.11 10,105,949,445.70
Goods in process 1,833,675,212.23 0.00 1,833,675,212.23
Finished goods 11,120,744,840.53 49,841,301.93 11,070,903,538.60
Development cost [Note] 1,074,325,867.76 0.00 1,074,325,867.76
Total 24,342,480,192.33 257,626,128.04 24,084,854,064.29
(Continued)
Beginning Balance
Item Provision for price
Book balance Carrying amount
fall
Raw material 8,790,176,373.99 251,248,578.65 8,538,927,795.34
Goods in process 1,833,419,414.90 1,833,419,414.90
Finished goods 9,668,991,016.29 29,819,996.00 9,639,171,020.29
Total 20,292,586,805.18 281,068,574.65 20,011,518,230.53
[Note] The development cost is a supporting project of Luoyang base real estate developed and constructed by the
Company based on the housing needs of employees.
(2) Provision for obsolete stocks
Increased amount in the current Decreased amount
period in the current period
Beginning Balance at the
Type of inventories Change in the
Balance end of the period
Appropriation consolidation Write-off amount
scope
Raw material 251,248,578.65 36,066,957.21 79,530,709.75 207,784,826.11
Finished goods 29,819,996.00 20,484,925.26 10,743,000.00 11,206,619.33 49,841,301.93
Total 281,068,574.65 56,551,882.47 10,743,000.00 90,737,329.08 257,626,128.04
Specific bases for making a provision for decline in value of inventories and reasons of reversing or writing off
the provision for decline in value of inventories in the current period
Specific basis for making a provision for Writing off the provision for decline in
Item
decline in value of inventories value of inventories in the current period
The lower of the inventory cost and net
Raw material Applied for or sold in the current period
realizable value
The lower of the inventory cost and net
Finished goods Sold in the current period
realizable value
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(3) Balance of inventories at the end of the period did not include the capitalization amount of the borrowing
expenses.
9. Non-current assets due within one year
Balance at the end of the
Item Beginning Balance Remarks
period
Other debt investments due within one See Note (VII) 13 for
410,404,100.00
year details
See Note (VII) 12 for
Debt investments due within one year 18,000,000.00
details
Subtotal 428,404,100.00
Accrued interest 16,993,610.39
Total 445,397,710.39
[Note] The Company had no significant debt investment due within one year at the end of the period. For other debt investments due
within one year at the end of the period, please refer to Note (VII) 13.
10. Other current assets
Balance at the end of the
Item Beginning Balance
period
Structured deposits and wealth management products 16,211,800,000.00 14,981,400,000.00
Input tax to be deducted and prepaid tax 3,744,248,963.45 2,112,824,647.14
Notes that have endorsed or discounted but have not yet expired [Note] 2,876,918,995.36 1,529,380,653.66
Hedging tools and others 37,399,876.25 16,696,576.75
Subtotal 22,870,367,835.06 18,640,301,877.55
Accrued interest 220,776,381.62 273,043,980.15
Total 23,091,144,216.68 18,913,345,857.70
[Note] As of the disclosure date of this report, the accepted amount of the notes that have endorsed or discounted
but have not yet expired was RMB 2,074,500,000.00.
11. Disbursement of loans and advances
(1) Distribution of enterprises and individuals
Item Balance at the end of the period Beginning Balance
Loans and advances measured at amortized
costs
Disbursement of corporate loans and
14,771,705,384.26 9,304,270,332.72
advances
Including: (1) Loan 14,723,530,000.00 7,067,977,952.89
(2) Discount 48,175,384.26 2,236,292,379.83
194
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Item Balance at the end of the period Beginning Balance
Including: discount asset interest adjustment -470,366.74 -13,231,581.88
Less: loan loss provision 369,304,393.78 232,937,547.86
Including: combined appropriation 369,304,393.78 232,937,547.86
Subtotal 14,402,400,990.48 9,071,332,784.86
Accrued interest 21,385,418.74 10,381,298.66
Carrying amount of disbursement of corporate
14,423,786,409.22 9,081,714,083.52
loans and advances
[Note] In order to promote the win-win development of the industrial chain, and strengthen financial credit
support for member units and upstream and downstream enterprises, based on the real transaction background, the
Company carefully verified the credit status and repayment ability of loan customers and fully played the role of
its own funds, enhanced the Company's capital income and increased foreign loans and advances.
(2) Changes in loss provision for loans
Balance at the end of the
Item Beginning Balance
period
Loans and advances measured at amortized costs
Beginning Balance 232,937,547.86 171,525,398.64
Appropriation for the current period 136,366,845.92 61,412,149.22
Balance at the end of the period 369,304,393.78 232,937,547.86
12. Debt investment
(1) Particulars on debt investment
Balance at the end of the period Beginning Balance
Item Provision Provision
Carrying Carrying
Book balance for Book balance for
amount amount
impairment impairment
Trust products 18,000,000.00 18,000,000.00 36,000,000.00 36,000,000.00
Accrued interest 608,350.13 608,350.13 1,216,700.19 1,216,700.19
Less: Debt
investments due 18,608,350.13 18,608,350.13
within one year
Total 37,216,700.19 37,216,700.19
(2) Important debt investment
None.
(3) Particulars on Accruing of impairment provisions
None.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
13. Other debt investments
(1) Particulars on other debt investments
Balance at the end of the period
Accumulated loss
provisions
Item Changes in fair recognized in
Cost Accrued interest Carrying amount
value other
comprehensive
income
Treasuries 291,763,065.93 3,378,082.20 1,695,134.07 296,836,282.20
Corporate bonds 409,921,468.45 16,385,260.26 482,631.55 426,789,360.26
Subtotal 701,684,534.38 19,763,342.46 2,177,765.62 723,625,642.46
Less: Other debt
investments due within 409,921,468.45 16,385,260.26 482,631.55 426,789,360.26
one year
Total 291,763,065.93 3,378,082.20 1,695,134.07 296,836,282.20
(Continued)
Beginning Balance
Accumulated
loss provisions
Item Changes in fair recognized in
Cost Accrued interest Carrying amount
value other
comprehensive
income
Treasuries 290,640,325.69 3,378,082.20 -2,097,625.69 291,920,782.20
Corporate bonds 738,430,653.09 25,455,397.23 8,313,736.91 772,199,787.23
Subtotal 1,029,070,978.78 28,833,479.43 6,216,111.22 1,064,120,569.43
Less: Other debt
investments due
within one year
Total 1,029,070,978.78 28,833,479.43 6,216,111.22 1,064,120,569.43
(2) Important other debt investments
Balance at the end of the period Beginning Balance
Item Real Real
Coupon Coupon
Face value interest Date due Face value interest Date due
rate rate
rate rate
16 Interest-bearing 4 August, 4 August,
200,000,000.00 2.74% 3.10% 200,000,000.00 2.74% 3.10%
treasuries 17 (1) 2026 2026
16 Interest-bearing 4 August, 4 August,
100,000,000.00 2.74% 3.44% 100,000,000.00 2.74% 3.44%
treasuries 17 (2) 2026 2026
17 Baoanji 18 August, 18 August,
60,000,000.00 6.20% 6.24% 60,000,000.00 6.20% 6.24%
MTN001 2020 2020
10 State grid bonds 5 February, 5
350,000,000.00 4.74% 4.98% 350,000,000.00 4.74% 4.98%
01 2020 February,
196
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period Beginning Balance
Item Real Real
Coupon Coupon
Face value interest Date due Face value interest Date due
rate rate
rate rate
2020
Total 710,000,000.00 —— —— —— 710,000,000.00 —— —— ——
(3) Particulars on Accruing of impairment provisions
None.
197
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
14. Long-term equity investment
Beginning Balance Increase/Decrease in the current period Balance at the end of the period
Cash
Investment Adjustment of
Name of invested entities Changes in dividends or Appropriated
Provision for Additional profits/losses other Provision for
Original value Disinvestment other profits provision for Others Original value
impairment investment recognized under comprehensive impairment
equities declared to impairment
the equity method income
distribute
1. Partnership
Songyuan Food Group
70,904,579.15 3,767,568.71 74,672,147.86
Co., Ltd.
Subtotal 70,904,579.15 3,767,568.71 74,672,147.86
2. Joint venture -
Gree (Vietnam) Electric
1,940,009.35 1,940,009.35 - - - - - - - - 1,940,009.35 1,940,009.35
Appliances, Inc.
Liaowang All Media
28,057,883.29 - - 3,453,907.07 - - - - - 31,511,790.36
Communication Co., Ltd.
Beijing Gree Technology
2,309,507.13 - - 392,326.58 - - - - - 2,701,833.71
Co., Ltd.
Chongqing Pargo
Mechanical Equipment 10,715,459.43 - - 850,045.78 - - - - - 11,565,505.21
Co., Ltd.
Gree Volinco (Hong Kong)
972,937.26 - - -53,146.98 4,536.91 - - - - 924,327.19
Ltd.
Wuhan Digital Design and
Manufacturing Innovation 14,483,961.08 - - 90,880.77 - - - - - 14,574,841.85
Center Co., Ltd.
Hunan Guoxin
Semiconductor Technology 9,950,321.68 - - 59,848.82 - - - - - 10,010,170.50
Co., Ltd.
Zhuhai Ronglin Equity
Investment Partnership 2,113,337,812.69 - - -30,054,643.59 4,784,432,411.50 - - - - 6,867,715,580.60
(Limited Partnership)
Henan Yuze Finance
- 50,000,000.00 - 509,964.01 - - - - - 50,509,964.01
Leasing Co., Ltd.
Subtotal 2,181,767,891.91 1,940,009.35 50,000,000.00 - -24,750,817.54 4,784,436,948.41 - - - - 6,991,454,022.78 1,940,009.35
Total 2,252,672,471.06 1,940,009.35 50,000,000.00 - -20,983,248.83 4,784,436,948.41 - - - - 7,066,126,170.64 1,940,009.35
[Note] According to the partnership agreement of Zhuhai Ronglin Equity Investment Partnership (L.P.) (hereinafter referred to as "Zhuhai Ronglin"), the Company holds a
91.27% equity of Zhuhai Ronglin, and the Company participates in the project regarding acquisition of Nexperia Holding B.V by Wingtech Technology Co., Ltd. through
investment in Zhuhai Ronglin, so it has no control over Zhuhai Ronglin. Therefore, during the report period, Zhuhai Ronglin was not included in the Company's
consolidation scope of financial statements.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
15. Other equity instrument investments
(1) Particulars on other equity instrument investments
Item Balance at the end of the period Beginning Balance
Shanghai Highly (Group) Co., Ltd. 775,199,650.33 801,289,952.19
Xinjiang Joinworld Company Limited 210,550,455.81
Wingtech Technology Co., Ltd. [Note] 3,316,957,037.50
RSMACALLINE-HSHS 341,894,553.87 343,617,994.14
Total 4,644,601,697.51 1,144,907,946.33
[Note] In November 2018, the Company signed a relevant investment agreement with Wingtech Technology Co.,
Ltd. (stock code: 600745, stock abbreviation: Wingtech Technology), Hefei Zhongwen Jintai Co., Ltd.
(hereinafter referred to as "Hefei Zhongwen Jintai") and Zhuhai Ronglin and invested RMB 3 billion to participate
in the project regarding acquisition of Nexperia Holdings B.V. (hereinafter referred to as "Nexperia Group") by
Wingtech Technology, of which RMB 885 million was invested in Hefei Zhongwen Jintai for accepting the
transfer of the share of LP property held by Hefei Xinping Industrial Investment Fund (L.P.) in Hefei Guangxin
Semiconductor Industry Center (L.P.); and RMB 2.115 billion was invested in Zhuhai Ronglin for accepting the
transfer of the share of LP property held by Zhuhai Rongyue Equity Investment Partnership (L.P.) in Hefei
Guangxun Semiconductor Industry Investment Center (L.P.) (hereinafter referred to as "Hefei Guangxun").
On 25 June, 2019, Wingtech Technology's reorganization was approved by the China Securities Regulatory
Commission (CSRC Approval [2019] No. 1112).
In October 2019, RMB 885 million equity interest held by the Company in Hefei Zhongwen Jintai (accounting for
6.88% of Hefei Zhongwen Jintai's equity) and the LP share indirectly held by the Company in Hefei Guangxun
through Zhuhai Ronglin, were transferred to Wingtech Technology, and at the same time, the registration
procedures for securities related to the new shares issued by Wingtech Technology for the issuance of shares and
the purchase of assets were completed. The Company and Zhuhai Ronglin became shareholders of Wingtech
Technology, holding 35,858,995 shares and 92,420,040 shares of Wingtech Technology respectively, which
accounted for 3.45% and 8.88% of the total equity of Wingtech before raising supporting funds.
The above-mentioned shares will be listed and traded on the Shanghai Stock Exchange. The shares held by the
Company and Zhuhai Ronglin are tradable shares with restricted sales, and the restricted period is 36 months from
the date of registration of the new shares.
(2) Particulars on non-trading equity instrument investment
Amount change in the
Amount transferred
fair value
Dividend income from other Reason for designation as
cumulatively recorded
Item recognized in the comprehensive at fair value through other
into other
current period income into comprehensive income
comprehensive
retained earnings
income
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Amount change in the
Amount transferred
fair value
Dividend income from other Reason for designation as
cumulatively recorded
Item recognized in the comprehensive at fair value through other
into other
current period income into comprehensive income
comprehensive
retained earnings
income
According to the
Shanghai Highly (Group)
14,408,571.49 -369,871,271.40 management's intention
Co., Ltd.
and contractual cash flow
According to the
Xinjiang Joinworld Company
10,550,458.57 management's intention
Limited
and contractual cash flow
According to the
Wingtech Technology Co.,
2,431,957,040.90 management's intention
Ltd.
and contractual cash flow
According to the
RSMACALLINE-HSHS 14,398,299.50 -359,345,947.63 management's intention
and contractual cash flow
Total 28,806,870.99 1,713,290,280.44
16. Other non-current financial assets
Balance at the end of the
Item Beginning Balance
period
Financial assets measured at their fair values and of which the changes are
2,003,483,333.33
recorded into the current profits and losses
Including: trust products 2,003,483,333.33
Total 2,003,483,333.33
17. Investment real estate
Investment real estate using cost measurement model
Item Houses and buildings Total
I. Total of original carrying amount - -
1. Beginning Balance 703,336,514.05 703,336,514.05
2. Increased amount in the current period 7,304,179.66 7,304,179.66
Including: amount transferred into
7,304,179.66 7,304,179.66
construction in progress
3. Decreased amount in the current period 6,845,296.61 6,845,296.61
Including: amount transferred into fixed
6,845,296.61 6,845,296.61
assets
4. Balance at the end of the period 703,795,397.10 703,795,397.10
II. Accumulated depreciation and
- -
accumulated amortization
1. Beginning Balance 165,747,170.97 165,747,170.97
2. Increased amount in the current period 39,464,443.54 39,464,443.54
Including: appropriation 39,464,443.54 39,464,443.54
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Item Houses and buildings Total
3. Decreased amount in the current period 64,909.26 64,909.26
Including: amount transferred into fixed
64,909.26 64,909.26
assets
4. Balance at the end of the period 205,146,705.25 205,146,705.25
III. Provision for impairment - -
IV. Carrying amount - -
1. Carrying amount at the end of the
498,648,691.85 498,648,691.85
period
2. Carrying amount at the beginning of
537,589,343.08 537,589,343.08
the period
[Note] As of 31 December, 2019, the book value of investment real estate - houses and buildings that the
Company has not obtained the property ownership certificates was RMB 62,328,158.02.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
18. Fixed assets
Item Balance at the end of the period Beginning Balance
Fixed assets 19,111,024,793.28 18,374,177,210.67
Fixed assets in liquidation 10,905,963.76 11,584,264.87
Total 19,121,930,757.04 18,385,761,475.54
[Note] The fixed assets in the table above refer to the fixed assets after deduction of the fixed assets in liquidation.
(1) Fixed assets
1) Information of fixed assets
Houses and Machinery Transportation Electronic
Item Other equipments Total
buildings equipment equipment equipment
I. Total of original carrying amount
1. Beginning Balance 15,111,600,882.63 12,981,060,812.52 1,010,182,345.44 1,111,422,671.43 397,225,896.87 30,611,492,608.89
2. Increased amount in the current period 1,197,281,256.99 2,255,730,830.69 111,778,135.41 341,221,610.26 61,556,660.28 3,967,568,493.63
Including: (1) Procurement 1,448,441,156.66 104,640,408.39 339,019,620.32 52,948,430.98 1,945,049,616.35
(2) Amount transferred into investment real estate 6,845,296.61 6,845,296.61
(3) Transfer-in from construction in progress 1,146,034,075.19 471,728,519.49 1,617,762,594.68
(4) Increase by business combination 44,401,885.19 335,561,154.54 7,137,727.02 2,201,989.94 8,608,229.30 397,910,985.99
3. Decreased amount in the current period 535,597.70 169,952,632.62 23,214,572.38 23,720,298.09 7,055,816.92 224,478,917.71
Including: Disposal or scrap 535,597.70 169,952,632.62 23,214,572.38 23,720,298.09 7,055,816.92 224,478,917.71
4. Balance at the end of the period 16,308,346,541.92 15,066,839,010.59 1,098,745,908.47 1,428,923,983.60 451,726,740.23 34,354,582,184.81
II. Accumulated depreciation
1. Beginning Balance 3,580,887,919.13 6,709,078,797.20 634,114,290.47 959,795,457.00 334,851,529.98 12,218,727,993.78
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Houses and Machinery Transportation Electronic
Item Other equipments Total
buildings equipment equipment equipment
2. Increased amount in the current period 878,924,843.01 1,846,763,395.18 107,744,066.74 326,620,575.29 27,404,904.30 3,187,457,784.52
Including: (1) Appropriation 858,300,789.80 1,631,118,304.21 102,353,401.78 325,056,352.04 20,810,061.67 2,937,638,909.50
(2) Increase by business combination 20,559,143.95 215,645,090.97 5,390,664.96 1,564,223.25 6,594,842.63 249,753,965.76
(3) Amount transferred into investment real estate 64,909.26 64,909.26
3. Decreased amount in the current period 55,100.00 136,227,712.00 21,588,120.46 17,286,909.16 4,806,204.50 179,964,046.12
Including: Disposal or scrap 55,100.00 136,227,712.00 21,588,120.46 17,286,909.16 4,806,204.50 179,964,046.12
4. Balance at the end of the period 4,459,757,662.14 8,419,614,480.38 720,270,236.75 1,269,129,123.13 357,450,229.78 15,226,221,732.18
III. Provision for impairment
1. Beginning Balance 13,995,429.77 4,126,388.66 8,282.39 141,619.69 315,683.93 18,587,404.44
2. Increased amount in the current period
3. Decreased amount in the current period 206,957.50 1,025,775.16 10,459.06 8,553.37 1,251,745.09
Including: Disposal or scrap 206,957.50 1,025,775.16 10,459.06 8,553.37 1,251,745.09
4. Balance at the end of the period 13,788,472.27 3,100,613.50 8,282.39 131,160.63 307,130.56 17,335,659.35
IV. Carrying amount
1. Carrying amount at the end of the period 11,834,800,407.51 6,644,123,916.71 378,467,389.33 159,663,699.84 93,969,379.89 19,111,024,793.28
2. Carrying amount at the beginning of the period 11,516,717,533.73 6,267,855,626.66 376,059,772.58 151,485,594.74 62,058,682.96 18,374,177,210.67
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
[Note] As of 31 December, 2019, the book value of fixed assets - houses and buildings that the Company has not
obtained the property ownership certificates was RMB 4,749,669,365.42.
2) The Company had no temporary idle fixed assets during the current period.
3) The Company had no fixed assets leased in under financing leases.
4) The Company had no fixed assets leased in under operating leases.
(2) Fixed assets in liquidation
Balance at the end of the
Item Beginning Balance
period
Fixed assets in liquidation 10,905,963.76 11,584,264.87
Total 10,905,963.76 11,584,264.87
19. Construction in Progress
Balance at the end of the
Item Beginning Balance
period
Construction in Progress 2,431,051,409.94 1,663,938,988.55
Total 2,431,051,409.94 1,663,938,988.55
[Note] The construction in progress in the above table refers to the construction in progress after deduction of
engineering materials.
(1) Basic information of construction in progress
Balance at the end of the period Beginning Balance
Item Provision
Provision for
Book balance Carrying amount Book balance for Carrying amount
impairment
impairment
Hangzhou Gree
638,157,589.99 0.00 638,157,589.99 602,859,503.86 0.00 602,859,503.86
project
Luoyang Gree
442,202,237.46 0.00 442,202,237.46 10,774,423.01 0.00 10,774,423.01
Project
Nanjing Gree
333,459,029.75 0.00 333,459,029.75 1,755,887.87 0.00 1,755,887.87
Project
Gree HQ project 262,245,182.66 0.00 262,245,182.66 168,094,835.04 0.00 168,094,835.04
Landa
compressor 132,330,042.15 0.00 132,330,042.15 99,768,186.70 0.00 99,768,186.70
project
Tianjin green
116,723,040.76 0.00 116,723,040.76 149,456,425.67 0.00 149,456,425.67
project
Wu'an Precision
113,318,790.64 0.00 113,318,790.64 650,943.40 0.00 650,943.40
Project
Wuhan Gree
104,859,292.68 0.00 104,859,292.68 28,981,609.46 0.00 28,981,609.46
project
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period Beginning Balance
Item Provision
Provision for
Book balance Carrying amount Book balance for Carrying amount
impairment
impairment
Zhengzhou
59,928,438.47 0.00 59,928,438.47 20,957,373.36 0.00 20,957,373.36
Gree project
Chengdu Gree
36,203,794.46 0.00 36,203,794.46 0.00 0.00 0.00
Project
Gree Mould
33,781,886.17 0.00 33,781,886.17 30,931,777.66 0.00 30,931,777.66
Project
Electrical
23,809,625.98 0.00 23,809,625.98 5,056,477.85 0.00 5,056,477.85
engineering
Wuhu Gree
23,740,409.47 0.00 23,740,409.47 29,664,001.36 0.00 29,664,001.36
project
Intelligent
equipment 18,837,539.53 0.00 18,837,539.53 47,301,293.44 0.00 47,301,293.44
project
Others 91,454,509.77 0.00 91,454,509.77 467,686,249.87 0.00 467,686,249.87
Total 2,431,051,409.94 0.00 2,431,051,409.94 1,663,938,988.55 0.00 1,663,938,988.55
(2) Changes in important construction projects in progress
Transfered-in this period
Increase for the Amount Balance at the end
Item Name Beginning Balance Amount transferred
current period transferred into of the period
into fixed assets investment real
estate
Hangzhou Gree
602,859,503.86 442,999,482.35 407,701,396.22 - 638,157,589.99
project
Luoyang Gree
10,774,423.01 431,427,814.45 - - 442,202,237.46
Project
Nanjing Gree
1,755,887.87 331,703,141.88 - - 333,459,029.75
Project
Gree HQ project 168,094,835.04 235,639,222.39 141,488,874.77 - 262,245,182.66
Landa compressor
99,768,186.70 183,848,653.58 151,286,798.13 - 132,330,042.15
project
Tianjin green
149,456,425.67 2,174,042.30 34,907,427.21 - 116,723,040.76
project
Wu'an Precision
650,943.40 112,667,847.24 - - 113,318,790.64
Project
Wuhan Gree
28,981,609.46 103,125,617.43 27,247,934.21 - 104,859,292.68
project
Zhengzhou Gree
20,957,373.36 58,369,830.84 19,398,765.73 - 59,928,438.47
project
Chengdu Gree
- 36,203,794.46 - - 36,203,794.46
Project
Gree Mould Project 30,931,777.66 79,479,793.79 76,629,685.28 - 33,781,886.17
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Electrical
5,056,477.85 60,938,827.82 42,185,679.69 - 23,809,625.98
engineering
Wuhu Gree project 29,664,001.36 38,357,552.32 44,281,144.21 - 23,740,409.47
Intelligent
47,301,293.44 1,457,127.53 29,920,881.44 - 18,837,539.53
equipment project
Others 467,686,249.87 273,786,447.35 642,714,007.79 7,304,179.66 91,454,509.77
Total 1,663,938,988.55 2,392,179,195.73 1,617,762,594.68 7,304,179.66 2,431,051,409.94
[Note] The Company had no impairment of construction in progress or interest capitalization in the current period.
20. Intangible assets
Patent technology
Item Land use rights Total
and others
I. Total of original carrying amount 0.00 0.00 0.00
1. Beginning Balance 4,953,018,535.94 996,209,258.71 5,949,227,794.65
2. Increased amount in the current period 901,111,198.53 193,676,700.88 1,094,787,899.41
Including: (1) Outsourcing 846,227,719.63 107,976,700.88 954,204,420.51
(2) Increase by business combination 54,883,478.90 85,700,000.00 140,583,478.90
3. Decrease amount of the current period [Note
235,145,374.23 235,145,374.23
1]
Including: write-off 235,145,374.23 235,145,374.23
4. Balance at the end of the period 5,854,129,734.47 954,740,585.36 6,808,870,319.83
II. Accumulated amortization 0.00 0.00 0.00
1. Beginning Balance 566,306,709.38 178,420,917.97 744,727,627.35
2. Increased amount in the current period 113,284,492.81 105,172,924.04 218,457,416.85
Including: (1) Amortization 110,623,513.91 105,172,924.04 215,796,437.95
(2) Increase by business combination 2,660,978.90 0.00 2,660,978.90
3. Decreased amount in the current period 0.00 235,145,374.23 235,145,374.23
Including: write-off 235,145,374.23 235,145,374.23
4. Balance at the end of the period 679,591,202.19 48,448,467.78 728,039,669.97
III. Provision for impairment 0.00 0.00 0.00
1. Beginning Balance
2. Increased amount in the current period [Note
775,289,550.94 775,289,550.94
2]
Including: appropriation 775,289,550.94 775,289,550.94
3. Decreased amount in the current period
4. Balance at the end of the period 775,289,550.94 775,289,550.94
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Patent technology
Item Land use rights Total
and others
IV. Carrying amount 0.00 0.00 0.00
1. Carrying amount at the end of the period 5,174,538,532.28 131,002,566.64 5,305,541,098.92
2. Carrying amount at the beginning of the
4,386,711,826.56 817,788,340.74 5,204,500,167.30
period
[Note 1] Write-off amounts of intangible assets - patented technology and others in the current period were the
used quota licensing rights;
[Note 2] Impairment provisions accrued for intangible assets - patented technology and others in the current
period were due to changes in market prices of quota licensing rights at the end of the period;
[Note 3] As of 31 December, 2019, the book value of intangible assets that the Company has not obtained the
property ownership certificates was RMB 660,833,169.61.
21. Business reputation
(1) Original carrying amount of business reputation
Decrease for the current
Increase in the current period
Name of invested entity or period
Beginning Balance at the end
matter generating business Formed by
Balance of the period
reputation business Others Disposal Others
combination
Hefei Kinghome
51,804,350.47 51,804,350.47
Electrical Co., Ltd.
Nanjing Walsin
Nonferrous Metal Co., 274,115,040.11 274,115,040.11
Ltd.
Total 51,804,350.47 274,115,040.11 325,919,390.58
[Note] The Company acquired 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter referred
to as "Nanjing Walsin") in the current period, the business combination cost was RMB 1,417,551,321.45, the
combination date was 31 May, 2019, the fair value of the identifiable net assets of Nanjing Walsin was RMB
1,143,436,281.34, and the amount of formed business reputation was RMB 274,115,040.11. For details, see Note
(VIII) 1.
(2) Business reputation group and impairment test
The Company tested the impairment of business reputation by combining the assets or assets group related to
business reputation that can benefit from the synergistic effect of business combination. Because it was difficult to
directly obtain the fair market value of assets or assets group containing business reputation, the Company
calculated the recoverable amount of assets group by using the method of predicting the present value of future
cash flow. Its predicted cash flow was based on the forecast of future cash flow of assets or asset groups, and the
future cash flow was compiled and predicted according to historical actual operation data, industry development
trend, capacity planning, expected income growth rate, gross interest rate and other indicators. Other key data
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
used in the impairment test include the expected product sales revenue, production costs and other related costs.
The Company determines the above key data based on the historical experience and forecast of market
development. The discount rate adopted by the Company is the pre-tax interest rate which reflects the time value
of the current market currency and specific risks of the relevant assets group.
At the end of this year, the assets group in which business reputation was located was consistent with the assets
group determined at the time of business reputation formation on the acquisition date, and its composition has not
changed.
The discount rate used by the Company's cash flow forecast was 11.47% ~ 13.40%. According to the test results,
the recoverable amount of the asset group related to business reputation was greater than the recognizable book
value of the asset group and the book value of all business reputations (including minority shareholders), and the
business reputation does not require provision for impairment.
22. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets recognized
Balance at the end of the period Beginning Balance
Item Deductible Deductible
Deferred income tax Deferred income tax
temporary temporary
assets assets
differences differences
Assets depreciation reserves 1,818,201,959.97 324,279,108.41 859,671,436.18 169,931,920.89
Deductible loss 442,563,341.90 106,861,346.18 323,800,099.52 75,245,195.07
Accrued expenses 78,082,911,509.22 11,713,704,909.46 70,839,789,625.69 10,626,930,497.14
Payroll payable 1,147,772,355.98 181,068,388.98 894,547,169.93 136,359,247.55
Amortization of assets 295,771,738.84 45,001,546.37 744,843,631.94 113,429,122.16
Changes in fair value of other
340,091,000.46 51,013,650.07
equity instrument investments
Others 1,115,621,255.53 170,169,778.69 1,284,207,382.91 204,181,131.25
Total 82,902,842,161.44 12,541,085,078.09 75,286,950,346.63 11,377,090,764.13
(2) Deferred income tax liabilities recognized
Balance at the end of the period Beginning Balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
differences tax liabilities differences tax liabilities
Changes in fair value of derivative financial
144,585,199.56 23,711,924.81 314,210,913.04 58,831,224.22
assets
Accrued interest 1,916,560,659.72 361,013,520.74 2,348,738,257.49 380,352,576.58
Amortization of assets 977,566,325.96 159,701,815.27 525,248,955.96 81,706,854.14
Changes in fair value of other equity
2,082,567,402.93 312,385,110.44
instrument investments
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period Beginning Balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
differences tax liabilities differences tax liabilities
Others 320,552,939.98 70,976,930.01 97,823,370.13 15,295,116.66
Total 5,441,832,528.15 927,789,301.27 3,286,021,496.62 536,185,771.60
(3) Breakdown of deductible temporary differences or deductible losses of deferred income tax assets not
recognized
Balance at the end of the
Item Beginning Balance
period
Deductible temporary differences 523,331,619.91 620,681,542.48
Deductible loss 196,707,582.91 229,002,253.83
Total 720,039,202.82 849,683,796.31
(4) The deductible losses of deferred income tax assets not recognized will become due in the following years:
Year Balance at the end of the period Beginning Balance
2021 2,681,316.95
2022 874,596.45
2023 33,889,569.81 63,536,169.91
2024 4,243.31
2029 437,450.85
Open-ended 162,376,318.94 161,905,241.24
Total 196,707,582.91 228,997,324.55
[Note] The decrease of the deductible loss balance of unrecognized deferred income tax assets in the current
period was profit achieved by some subsidiaries in the current year, which was caused by using the deductible loss
of unrecognized deferred income tax assets in previous years.
23. Other non-current assets
Balance at the end of the
Item Beginning Balance
period
Advance payment for the project and deposit 210,752,497.85 156,505,997.04
Advance payment for equipment 600,147,738.32 631,036,639.46
Advance payment of land transfer fee and others 137,427,798.96
Total 948,328,035.13 787,542,636.50
24. Short-term borrowing
(1) Classification of short-term borrowings
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Borrowing conditions Balance at the end of the period Beginning Balance
Pledge loans 60,000,000.00 4,354,000,000.00
Guaranteed loan 767,512,482.00
Borrowing on credit 14,905,397,876.22 17,713,750,002.70
Subtotal 15,732,910,358.22 22,067,750,002.70
Accrued interest 211,266,104.79 130,149,404.18
Total 15,944,176,463.01 22,197,899,406.88
(2) There was no short-term borrowing that has been overdue but not yet repaid in the current period.
25. Deposits from customers and interbank
Item Balance at the end of the period Beginning Balance
Current deposits 95,908,461.12 40,924,930.78
Fixed time deposits 134,656,999.65 110,897,348.35
Draft deposits 117,212,500.00 164,057,500.00
Subtotal 347,777,960.77 315,879,779.13
Accrued interest 4,734,350.95 3,597,463.78
Total 352,512,311.72 319,477,242.91
26. Loans from other banks
Item Balance at the end of the period Beginning Balance
Credit lending 1,000,000,000.00
Accrued interest 446,666.67
Total 1,000,446,666.67
27. Derivative financial liabilities
Balance at the end of the
Item Beginning Balance
period
Forward Foreign Exchange Contract 257,364,882.07
Total 257,364,882.07
28. Financial assets sold for repurchase
Balance at the end of the
Item Beginning Balance
period
Bills rediscounted 2,074,500,000.00
Total 2,074,500,000.00
29. Bills payable
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the
Item Beginning Balance
period
Banker's acceptance bill 25,284,631,379.70 10,835,428,282.29
Trade acceptance draft 576,464.16
Total 25,285,207,843.86 10,835,428,282.29
30. Accounts payable
Balance at the end of
Item Beginning Balance
the period
Trade payable 40,581,441,741.13 38,282,494,963.50
Others 1,075,374,011.33 704,876,507.52
Total 41,656,815,752.46 38,987,371,471.02
[Note] There were no important accounts payable with aging exceeding 1 year at the end of the period.
31.Advances from customers
Balance at the end of the
Item Beginning Balance
period
Loans 8,225,707,662.42 9,792,041,417.16
Total 8,225,707,662.42 9,792,041,417.16
32. Payroll payable
(1) Classification of payroll payable
Increase in the current Decrease for the Balance at the end of
Item Beginning Balance
period current period the period
I. Short-term wages and
2,471,155,103.64 9,352,117,659.17 8,396,439,821.08 3,426,832,941.73
salaries
Dimission benefits - defined
2,049,348.05 596,533,062.33 594,446,387.78 4,136,022.60
contribution plan
Total 2,473,204,451.69 9,948,650,721.50 8,990,886,208.86 3,430,968,964.33
(2) Listing of short-term wages and salaries
Increase in the Decrease for the Balance at the end
Item Beginning Balance
current period current period of the period
1. Wages, bonuses, subsidies and
1,768,463,148.33 8,019,949,735.97 7,165,065,550.62 2,623,347,333.68
allowances
2. Employee welfares 698,073,353.00 698,073,353.00
3. Social insurance premiums 589,032.53 238,428,671.27 238,456,383.21 561,320.59
Including: Medical insurance premium 447,212.06 206,085,276.01 206,004,469.73 528,018.34
Industrial injury insurance premium 110,325.81 12,071,162.53 12,155,387.68 26,100.66
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Increase in the Decrease for the Balance at the end
Item Beginning Balance
current period current period of the period
Birth insurance premium 31,494.66 20,272,232.73 20,296,525.80 7,201.59
4. Housing accumulation funds 1,530,298.45 157,970,844.10 158,131,088.64 1,370,053.91
5. Labor union expenditures and
700,572,624.33 237,695,054.83 136,713,445.61 801,554,233.55
employee education funds
Total 2,471,155,103.64 9,352,117,659.17 8,396,439,821.08 3,426,832,941.73
(3) Separation benefits - defined contribution plan listing
Balance at the
Beginning Increase in the Decrease for the
Item end of the
Balance current period current period
period
1. Basic endowment insurance premium 1,571,545.90 574,101,238.90 572,465,812.41 3,206,972.39
2. Unemployment insurance premium 477,802.15 22,431,823.43 21,980,575.37 929,050.21
Total 2,049,348.05 596,533,062.33 594,446,387.78 4,136,022.60
33. Taxes payable
Balance at the end of the
Item Beginning Balance
period
Added-value tax 1,672,108,943.75 2,289,562,480.63
Business income tax 1,678,470,486.79 2,082,978,156.94
Others 353,200,285.79 475,807,036.13
Total 3,703,779,716.33 4,848,347,673.70
34. Other payables
Balance at the end of the
Item Beginning Balance
period
Dividends payable 707,913.60 707,913.60
Other payables 2,711,985,060.06 3,083,303,827.78
Total 2,712,692,973.66 3,084,011,741.38
[Note] Other payables in the above table refers to other payables after deduction of the interest payable and
dividends payable.
(1) Dividends payable
Balance at the end of the
Item Beginning Balance
period
Corporate shareholder 105,031.73 105,031.73
Public shareholder 602,881.87 602,881.87
Total 707,913.60 707,913.60
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(2) Other payables
1) Other payables presented by amount nature
Balance at the end of the
Item Beginning Balance
period
Intercourse funds 1,880,900,981.33 2,323,368,234.27
Margin and deposit 831,084,078.73 759,935,593.51
Total 2,711,985,060.06 3,083,303,827.78
2) Other important payables with aging exceeding 1 year
Balance at the end of the Cause of failing to repay or
Item
period carry over
Failure to meet repayment
Entity 1 326,905,170.30
conditions
Total 326,905,170.30 ——
35. Other current liabilities
Balance at the end of the
Item Beginning Balance
period
Repair cost 2,032,816,015.42 1,405,491,811.34
Sales rebate 61,751,640,937.64 61,878,214,635.10
Obligation to pay commercial papers which is not derecognized 802,418,995.36 1,529,380,653.66
Others [Note] 594,615,906.72 77,892,318.52
Total 65,181,491,855.14 64,890,979,418.62
[Note] Other current liabilities - others, please refer to Note (VII) 59 for details.
36. Long-term borrowing
Item Balance at the end of the period Beginning Balance
Mortgaged borrowings 46,795,740.49
Accrued interest 90,142.37
Total 46,885,882.86
37. Long-term payroll payable
(1) Table of long-term payroll payable
Balance at the end of the
Item Beginning Balance
period
Dimission benefits - net liabilities of defined benefit plan 141,021,228.00 130,840,170.00
Total 141,021,228.00 130,840,170.00
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(2) Changes in the defined benefit plan
1) Present value of obligations under the defined benefit plan:
Amount for the current Amount for the previous
Item
period period
I. Beginning balance 130,840,170.00 112,708,961.00
II. Defined benefit cost recorded in the current profits and losses 7,311,017.00 6,565,827.00
1. Service cost of the current period 2,123,433.00 1,742,806.00
2. Net interest 4,487,322.00 4,684,674.00
3. Impact on new personnel 700,262.00 138,347.00
III. Defined benefit cost recorded in other comprehensive income 8,029,478.00 16,491,946.00
Including: actuarial gains (losses represented by "-") 8,029,478.00 16,491,946.00
IV. Other changes -5,159,437.00 -4,926,564.00
Including: paid benefits -5,159,437.00 -4,926,564.00
V. Balance at the end of the period 141,021,228.00 130,840,170.00
2) Net liabilities (net assets) of the defined benefit plan:
Amount for the current Amount for the previous
Item
period period
I. Beginning balance 130,840,170.00 112,708,961.00
II. Defined benefit cost recorded in the current profits and losses 7,311,017.00 6,565,827.00
III. Cost of the defined benefit plan included in other comprehensive
8,029,478.00 16,491,946.00
income
IV. Other changes -5,159,437.00 -4,926,564.00
V. Balance at the end of the period 141,021,228.00 130,840,170.00
(3) Contents and associated risks of the defined benefit plan, and its influences on the Company's future cash flow,
time and uncertainty
1) Explanation of the content of the defined benefit plan and its related risks, and its impact on the Company's
future cash flow, time and uncertainty
The Company's defined benefit plan is a supplementary post-retirement pension plan for some retirees, early
retirees and serving officers after normal retirement. The present obligation value of this defined benefit plan was
recognized by Towers-Watson actuarial company using the projected unit credit method on 31 December, 2019.
This defined benefit plan didn't involve big amount, so it didn't lead to significant influence on the future cash
flow the Company.
2) Explanation of major actuarial assumptions and sensitivity analysis results of the defined benefit plan
According to requirements of the Accounting Standards for Business Enterprises No. 9 - Employee Compensation,
the discount rate adopted by the Company at the time of discount is recognized by the market yields of
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high-quality corporate bonds in the treasury bonds or active market that match the obligatory term and currency of
the defined benefit plan on the balance sheet date; the annual growth rates and annual dimission rates of all
benefits are based on the actual measurement data of the Company; the death rate is recognized by referring to the
experience life table for insurance business of China Life Insurance (Group) Company.
Quantitative sensitivity analysis of all the used major assumptions by the end of the Report Period:
Influence on the amount at the
Sensitivity analysis of discount rate
end of the period
Influence on the present obligation value of defined welfare benefit by increase of one percentage
-18,362,457.00
point
Influence on the present obligation value of defined welfare benefit by decrease of one
23,196,126.00
percentage point
Influence on the service cost by increase of one percentage point -456,768.02
Influence on the service cost by decrease of one percentage point 625,016.78
38. Deferred income
(1) Classification of deferred income
Beginning Increase in the Decrease for the Balance at the
Item
Balance current period current period end of the period
Government subsidies 166,293,620.03 131,967,192.75 57,756,542.31 240,504,270.47
Total 166,293,620.03 131,967,192.75 57,756,542.31 240,504,270.47
(2) Items involving government subsidies:
Current period
Amount of amount
Other changes
Beginning subsidies added recorded in the Balance at the
Item (Increase: +;
Balance in the current current period end of the period
Decrease: -)
period profits and
losses
I. Government subsidies
128,706,598.64 51,430,634.49 40,828,185.81 139,309,047.32
pertinent to incomes
Including: environmental
442,945.26 1,600,000.00 174,726.34 1,868,218.92
protection upgrade project
Scientific research project of
84,429,669.82 28,280,032.42 25,388,049.03 87,321,653.21
refrigerating field
Others 43,833,983.56 21,550,602.07 15,265,410.44 50,119,175.19
II. Government subsidies
37,587,021.39 80,536,558.26 16,928,356.50 101,195,223.15
pertinent to assets
Including: environmental
8,384,588.19 8,730,000.00 2,629,503.35 14,485,084.84
protection upgrade project
Scientific research project of
26,699,364.02 65,416,258.26 12,203,870.71 79,911,751.57
refrigerating field
Others 2,503,069.18 6,390,300.00 2,094,982.44 6,798,386.74
Total 166,293,620.03 131,967,192.75 57,756,542.31 240,504,270.47
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39. Capital stock
Increase and decrease changes (+, -) in the Report Period
Stock Converted Balance at the end of
Item Beginning Balance New Bonus from Housing
Others Subtotal the period
Issue Issue Accumulation
Fund
Total number
6,015,730,878.00 6,015,730,878.00
of stocks
40. Capital reserves
Decrease for
Beginning Increase in the Balance at the end
Item the current
Balance current period of the period
period
Capital stock premium 26,979,063.83 26,979,063.83
Other capital reserves 66,400,436.88 66,400,436.88
Total 93,379,500.71 93,379,500.71
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41. Other comprehensive income
Amount for the current period
Less: Amount recognized
Amount attributable Balance at the end
Item Beginning Balance Amount incurred into other comprehensive Amount attributable
Less: Income tax to minority of the period
before income tax in income in previous period to the parent
expenses shareholders after
the current period and transferred to the current company after tax
tax
profits and losses
(I) Other comprehensive income not to be reclassified to profit
-670,287,654.70 7,174,861,155.70 363,398,760.51 6,811,462,395.19 6,141,174,740.49
or loss
Including: Changes due to remeasuring and redefining the
-36,133,363.00 -8,029,478.00 -8,029,478.00 -44,162,841.00
benefit plan
Other comprehensive income that can't be transferred to profit
4,784,432,411.50 4,784,432,411.50 4,784,432,411.50
or loss under the equity method
Changes in fair value of other equity instrument investments -634,154,291.70 2,398,458,222.20 363,398,760.51 2,035,059,461.69 1,400,905,169.99
Changes in fair value of the company's own credit risk
(II) Other comprehensive income to be reclassified to profit or
50,041,141.47 -15,768,266.55 -87,892,791.90 3,443,841.51 69,076,099.17 -395,415.33 119,117,240.64
loss
Including: Other comprehensive income that can be transferred
178,221.26 4,536.91 4,536.91 182,758.17
to profit or loss under the equity method
Changes in fair value of other debt investments -65,279,552.24 -71,014,562.36 -81,714,642.25 1,596,921.56 9,498,573.66 -395,415.33 -55,780,978.58
Amount of financial assets are reclassified and included into
profits and losses
Provision for credit impairment of other debt investments
Cash flow hedge reserve -5,251,427.20 6,134,650.00 -6,178,149.65 1,846,919.95 10,465,879.70 5,214,452.50
Difference arising from translation of financial statements in
120,393,899.65 49,107,108.90 49,107,108.90 169,501,008.55
foreign currency
Total other comprehensive income -620,246,513.23 7,159,092,889.15 -87,892,791.90 366,842,602.02 6,880,538,494.36 -395,415.33 6,260,291,981.13
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42. Surplus reserve
Decrease for
Increase in the Balance at the end
Item Beginning Balance the current
current period of the period
period
Statutory surplus reserve 2,530,583,291.14 - - 2,530,583,291.14
Discretionary surplus reserve 969,088,265.45 - - 969,088,265.45
Total 3,499,671,556.59 - - 3,499,671,556.59
43. General risk provisions
Decrease for
Beginning Increase in the Balance at the
Item the current
Balance current period end of the period
period
General risk provisions 329,417,571.48 160,438,255.27 - 489,855,826.75
Total 329,417,571.48 160,438,255.27 - 489,855,826.75
44. Undistributed profit
Item Amount for the current period Amount for the previous period
Undistributed profit at the beginning of the period 81,939,701,613.83 55,740,076,085.90
Add: Business combinations under common control -1,092,203.68
Add: Changes in accounting policies -48,226,344.11
Total adjustment amount of undistributed profits at
the beginning of the period ("+" stands for increase
-48,226,344.11 -1,092,203.68
by adjustment and "-" stands for decrease by
adjustment) [Note 1]
Undistributed profit at the beginning of the period
81,891,475,269.72 55,738,983,882.22
after adjustment
Add: Net profit attributable to owners of parent
24,696,641,368.84 26,202,787,681.42
company for the current period
Less: Appropriation of statutory surplus reserve
Arbitrary surplus reserve accrued
Appropriation of general risk provisions 160,438,255.27 2,069,949.81
Ordinary stock dividends payable [Note 2] 12,633,034,843.80
Undistributed profit at the end of the period 93,794,643,539.49 81,939,701,613.83
[Note 1] The Company retrospectively applied the new standards for financial instruments. For the cumulative
impact of the first implementation of the standards, the retained earnings at the beginning of 2019 were adjusted.
For details, see this Note (V) 31;
[Note 2] According to the resolutions of the Extraordinary General Meeting on 16 January, 2019 and the General
Meeting of Shareholders on 26 June, 2019, the Company distributed cash dividends to all shareholders, which
were RMB 6.00 (tax included) and RMB 15.00 (including tax) per 10 shares respectively. Calculated according to
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
the issued 6,015,730,878.00 shares, the actual cash dividend of RMB 12,633,034,843.80 were paid in the current
year.
45. Operating revenues and operating costs
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Main business 156,888,659,016.13 103,703,283,171.60 170,592,428,489.17 112,404,155,789.00
Other businesses 41,264,368,524.22 39,796,089,409.76 27,530,748,567.67 25,830,011,921.13
Total 198,153,027,540.35 143,499,372,581.36 198,123,177,056.84 138,234,167,710.13
(1) Main business (classified by industry)
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Manufacturing 156,888,659,016.13 103,703,283,171.60 170,592,428,489.17 112,404,155,789.00
Total 156,888,659,016.13 103,703,283,171.60 170,592,428,489.17 112,404,155,789.00
(2) Main business (classified by product)
Amount for the current period Amount for the previous period
Name of product
Operating incomes Operating Cost Operating incomes Operating Cost
Air Conditioner 138,665,055,103.82 87,192,449,061.21 155,682,359,475.59 98,890,052,827.63
Home Appliances 5,575,911,375.57 4,271,001,457.59 3,794,087,435.54 3,102,311,255.00
Intelligent equipment 2,141,285,558.55 2,014,056,867.41 3,108,531,271.87 2,907,041,559.95
Others 10,506,406,978.19 10,225,775,785.39 8,007,450,306.17 7,504,750,146.42
Total 156,888,659,016.13 103,703,283,171.60 170,592,428,489.17 112,404,155,789.00
(3) Main business (classified by region)
Amount for the current period Amount for the previous period
Name of region
Operating incomes Operating Cost Operating incomes Operating Cost
Domestic 136,073,206,974.43 85,697,917,155.53 148,322,536,473.83 93,103,971,438.42
Overseas 20,815,452,041.70 18,005,366,016.07 22,269,892,015.34 19,300,184,350.58
Total 156,888,659,016.13 103,703,283,171.60 170,592,428,489.17 112,404,155,789.00
46. Interest revenue and interest expense
Amount for the current Amount for the previous
Item
period period
Interest revenue 2,351,471,964.56 1,899,287,824.22
Including: interest revenue from deposits in other banks and central banks 1,676,328,736.19 1,249,442,905.14
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Amount for the current Amount for the previous
Item
period period
Interest revenue from loans and advances 496,600,631.52 426,618,074.89
Others 178,542,596.85 223,226,844.19
Interest expense 110,579,966.36 45,341,946.69
Including: expense from transactions with financial institutions 95,647,504.93 26,310,584.80
Others 14,932,461.43 19,031,361.89
Net interest revenue 2,240,891,998.20 1,853,945,877.53
47. Taxes and surcharges
Amount for the current Amount for the previous
Item
period period
Urban maintenance & construction tax 459,354,196.12 618,079,352.00
Educational surcharges 334,351,737.99 449,375,886.75
Waste electrical appliance treatment fund 286,294,935.08 293,247,090.00
House property tax 147,560,273.40 127,718,382.68
Land use tax 94,573,090.72 76,630,885.37
Commodity circulation tax and industrial product tax of Brazil 71,779,078.43 52,922,043.94
Others 149,070,436.89 123,919,063.83
Total 1,542,983,748.63 1,741,892,704.57
48. Sales expense
Amount for the current Amount for the previous
Item
period period
Sales expense 18,309,812,188.35 18,899,578,046.25
Total 18,309,812,188.35 18,899,578,046.25
[Note] In 2019, the selling expenses included the installation and maintenance cost, transportation and
warehousing fee and loading and unloading fee, sales rebate and promotion fee, accounting for more than 80% of
the total selling expenses.
49. Overhead Expense
Amount for the current Amount for the previous
Item
period period
Overhead Expense 3,795,645,600.08 4,365,850,083.19
Total 3,795,645,600.08 4,365,850,083.19
[Note] In 2019, the overhead expenses included the employees' wages and salaries, material consumption,
depreciation and amortization, accounting for more than 80% of the total overhead expenses.
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50. R&D expenses
Amount for the current Amount for the previous
Item
period period
R&D expenses 5,891,219,715.90 6,988,368,285.92
Total 5,891,219,715.90 6,988,368,285.92
[Note] In 2019, the R&D expenses included the employees' labor cost and direct investment cost, accounting for
more than 80% of the total R&D expenses.
51. Financial expense
Amount for the current Amount for the previous
Item
period period
Interest expense [Note 1] 1,598,276,258.59 1,068,308,309.96
Less: Interest income [Note 2] 3,698,387,243.32 2,384,486,815.64
Exchange gain and loss -366,166,349.99 228,556,360.16
Bank charges 35,131,571.19 128,629,122.01
Interest charges for defined welfare benefit obligations 4,487,322.00 4,684,674.00
Others 15,011.62 6,106,952.77
Total -2,426,643,429.91 -948,201,396.74
[Note 1] The above interest expenses included the long-term and short-term loan interest expenses and the note
discount interest expense immediately recognized upon the derecognition of notes
[Note 2] Both the above interest income and the interest income in Note (VII) 46 were capital gains.
52. Other incomes
(1) Classification of other incomes
Amount for the previous Amount recorded into the current
Item Amount for the current period
period non-recurring profit and loss
Government subsidies 935,150,874.70 403,676,714.90 923,560,958.61
Personal handling charge
997,770.17 4,876,490.63 997,770.17
refund
Total 936,148,644.87 408,553,205.53 924,558,728.78
(2) Government subsidies recorded in the profits and losses of current period
Amount for the previous Pertinent to assets/pertinent to
Subsidy items Amount for the current period
period incomes
Financial rewards 458,139,748.75 195,252,237.61 Pertinent to assets and incomes
Capital allowance for
149,396,154.17 111,460,558.80 Pertinent to assets and incomes
development projects
Technological innovation 147,525,365.16 51,398,026.35 Pertinent to assets and incomes
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Amount for the previous Pertinent to assets/pertinent to
Subsidy items Amount for the current period
period incomes
subsidies income
Human resources subsidy 103,289,308.06 16,497,832.55 Pertinent to incomes
Others 76,800,298.56 29,068,059.59 Pertinent to assets and incomes
Total 935,150,874.70 403,676,714.90
53. Investment income
Amount for the current Amount for the previous
Item
period period
Long-term equity investment income measured by equity method -20,983,248.83 560,513.87
Investment income from derivative financial instruments -336,389,070.84 -162,205,608.27
Investment income related to financial assets available for sale —— 92,546,955.76
Investment income related to financial assets measured at their fair values
—— 19,119,043.90
and of which the changes are recorded into the current profits and losses
Financing products and other investment incomes 156,748,029.75
Investment income related to trading financial assets and debt investment 63,410,268.30 ——
Investment income related to other equity instrument investments and
67,327,270.75 ——
other debt investments
Total -226,634,780.62 106,768,935.01
54. Incomes from changes in fair value
Amount for the current Amount for the previous
Sources of incomes from changes in fair value
period period
Derivative financial instruments 179,646,941.60 47,780,795.26
Financial assets measured at their fair values and of which the changes are
-1,523,370.43
recorded into the current profits and losses
Trading financial assets 48,617,126.28
Total 228,264,067.88 46,257,424.83
55. Credit impairment losses
Amount for the current Amount for the previous
Item
period period
Loss on bad debt -143,081,740.35 ——
Impairment losses of loans and advances -136,366,845.92 ——
Total -279,448,586.27 ——
56. Asset impairment loss
Amount for the current Amount for the previous
Item
period period
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Amount for the current Amount for the previous
Item
period period
Loss on bad debt —— -85,959,871.55
Inventory falling price loss -67,603,749.00 -113,397,943.06
Impairment losses of intangible assets [Note] -775,289,550.94
Fixed asset impairment loss -904,213.50
Loan impairment losses —— -61,412,149.22
Total -842,893,299.94 -261,674,177.33
[Note] For details, please refer to Note (VII) 20.
57. Income from disposal of assets
Amount for the current Amount for the previous
Item
period period
Profit from disposal of non-current assets (losses indicated with "-") 4,911,230.34 636,629.29
Total 4,911,230.34 636,629.29
58. Non-operating revenues
(1) Classification of non-operating revenues
Amount recorded into the
Amount for the current Amount for the previous
Item current non-recurring profit
period period
and loss
Government subsidies not pertinent to
292,291,413.05 268,001,389.57 292,291,413.05
operation
Net profit from destruction scrap of
738,673.12 3,804,752.28 738,673.12
non-current assets
Including: Gains from disposal of fixed assets 738,673.12 3,804,752.28 738,673.12
Others 52,676,576.96 46,051,591.57 52,676,576.96
Total 345,706,663.13 317,857,733.42 345,706,663.13
(2) Government subsidies recorded in the profits and losses of current period
Amount included in
Amount for the current Amount for the previous
Subsidy items non-recurring gains and
period period
losses of the very year
Financial rewards 291,949,736.50 253,415,049.57 291,949,736.50
Others 341,676.55 14,586,340.00 341,676.55
Total 292,291,413.05 268,001,389.57 292,291,413.05
59. Non-operating expenses
Amount for the current Amount for the previous Amount recorded into the
Item
period period current non-recurring profit
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
and loss
Net loss from destruction scrap of non-current
14,943,832.84 27,506,316.92 14,943,832.84
assets
Including: net losses from destruction scrap of
14,943,832.84 27,506,316.92 14,943,832.84
fixed assets
Others [Note] 583,162,723.99 13,728,384.13 583,162,723.99
Total 598,106,556.83 41,234,701.05 598,106,556.83
[Note] Non-operating expenses - others, mainly included settlement funds for the Company's dehumidifier recall
incident from the US market.
60. Income tax expenses
(1) Table of income tax expenses
Amount for the current Amount for the previous
Item
period period
Current income tax calculated according to the tax law and relevant
5,715,582,577.24 5,252,202,658.97
regulations
Add: deferred income tax expenses (revenue presented using "-") -1,190,118,952.51 -357,724,751.78
Total 4,525,463,624.73 4,894,477,907.19
(2) Adjustment process of accounting profits and income tax expenses
Item Amount for the current period
Total profit of current year 29,352,707,228.70
Income tax expenses calculated by the statutory/applicable tax rate 4,402,906,084.31
Impact by different tax rates applicable to subsidiaries 192,486,988.85
Impact by non-deductible costs, expenses and losses 13,536,512.28
Impact by deductible temporary differences or deductible losses of deferred income tax assets not
20,181,286.38
recognized in the current year
Others -103,647,247.09
Income tax expenses 4,525,463,624.73
61. Relevant information of cash flow statements
(1) Other cash received relating to operating activities
Amount for the current Amount for the previous
Item
period period
Government subsidies 1,301,652,938.19 726,492,184.73
Interest revenue 283,444,434.07 395,203,295.82
Net decrease in margin of bill pledge deposits 5,840,941,705.02
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Margin, deposit and others 1,210,966,466.08 604,349,038.28
Subtotal 2,796,063,838.34 7,566,986,223.85
(2) Other cash paid relating to operating activities
Amount for the current Amount for the previous
Item
period period
Cash repayments for selling expenses 11,601,156,921.11 12,135,151,238.29
Cash repayments for overhead expenses and R&D expenses 1,621,907,242.09 1,751,411,196.88
Net increase in margin of bill pledge and guarantee 7,323,512,969.28
Returned project funds advanced 193,648,219.08 745,496,451.32
Others 786,227,441.34 394,775,297.23
Subtotal 21,526,452,792.90 15,026,834,183.72
(3) Other cash received relating to investing activities
Amount for the current Amount for the previous
Item
period period
Receipts from forward foreign exchange settlement and sales 152,397,919.95
Fixed deposit interest revenue and others 4,878,025,331.18 2,500,000,185.53
Subtotal 4,878,025,331.18 2,652,398,105.48
(4) Other cash paid relating to investing activities
Amount for the current Amount for the previous
Item
period period
Net increase in time deposits and forward foreign exchange settlement and
7,029,966,816.61 11,449,720,529.14
sale payments
Others 10,487,868.71 72,502.20
Subtotal 7,040,454,685.32 11,449,793,031.34
(5) Other cash received relating to financing activities
Amount for the current Amount for the previous
Item
period period
Net decrease in margin of loan pledge 5,110,000.00
Subtotal 5,110,000.00
(6) Other cash paid relating to financing activities
Amount for the current Amount for the previous
Item
period period
Equity consolidation consideration under common control 31,501,100.00
Others 3,661,549.65
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Subtotal 35,162,649.65
62. Supplementary information about cash flow statement
(1) Reconciliation of net profit to cash flows from operating activities and other information
Amount for the current Amount for the previous
Item
period period
1. Reconciliation of net profit to cash flows from operating activities:
Net profits 24,827,243,603.97 26,379,029,817.06
Add: Assets depreciation reserves 1,122,341,886.21 261,674,177.33
Fixed assets depreciation, oil and gas assets accumulated depreciation,
2,977,103,353.04 2,859,799,547.55
productive biological assets accumulated depreciation
Amortization of intangible assets 215,796,437.95 249,550,269.72
Amortization of long-term deferred expenses 1,519,448.66 979,454.55
Losses from disposal of fixed assets, intangible assets and other long-term
-4,911,230.34 -636,629.29
assets ("-" stands for gains)
Losses from retirement of fixed assets ("-" stands for gains) 14,205,159.72 23,701,564.64
Losses from changes in fair value ("-" stands for gains) -228,264,067.88 -46,257,424.83
Financial expenses ("-" stands for income) -4,096,866,714.43 -1,112,658,684.94
Investment losses ("-" stands for gains) 226,634,780.62 -106,768,935.01
Decrease in deferred income tax assets ("-" stands for increase) -1,267,872,732.83 -472,601,783.52
Increase in deferred income tax liabilities ("-" stands for decrease) 77,753,780.32 115,790,793.93
Amortization of deferred income -57,756,542.31 -41,447,880.48
Decrease in inventories ("-" stands for increase) -4,049,893,387.15 -3,003,461,176.91
Decrease in operating receivables ("-" stands for increase) -3,656,032,331.71 -10,631,225,706.46
Increase in operating payables ("-" stands for decrease) 19,142,521,381.95 6,728,841,135.00
Others [Note] -7,349,808,732.20 5,736,483,004.64
Net cash flows from operating activities 27,893,714,093.59 26,940,791,542.98
2. Major investing and financing activities not involving cash receipts and
payment:
Conversion of debt into capital
Convertible bonds expiring within one year
Fixed assets acquired under finance leases
3. Net changes in cash and cash equivalents:
Ending balance of cash 26,372,571,821.49 28,772,120,824.34
Less: Beginning balance of cash 28,772,120,824.34 21,359,616,223.94
Add: Ending balance of cash equivalents
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Amount for the current Amount for the previous
Item
period period
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -2,399,549,002.85 7,412,504,600.40
[Note] "Others" includes the decreased amount RMB 31,341,719.47 of legal deposit reserved and the net
increased amount RMB 7,381,150,451.67 of bill margin.
(2) Net cash paid for acquisition of subsidiaries in the current period
Item Amount
Cash or cash equivalent paid in the current period for business combination that occurred in the
1,071,239,072.20
current period
Including: Nanjing Walsin Nonferrous Metal Co., Ltd. 1,071,239,072.20
Less: Cash and cash equivalents held by the subsidiary on the date of purchase 297,055,290.72
Including: Nanjing Walsin Nonferrous Metal Co., Ltd. 297,055,290.72
Net cash paid for acquisition of subsidiaries 774,183,781.48
(3) Net cash amount received from the disposal of subsidiaries in the current period
None.
(4) Composition of cash and cash equivalents
Balance at the end of the
Item Beginning Balance
period
I. Cash 26,372,571,821.49 28,772,120,824.34
Including: Cash on hand 1,357,064.14 1,678,449.67
Bank deposit for payment at any time 7,877,998,010.69 7,623,570,836.65
Other monetary capital for payment at any time 379,859,995.42 647,967,329.10
Deposit in the central bank for payment 2,004,412.74 2,094,863.38
Deposits in other banks 18,111,352,338.50 20,496,809,345.54
II. Cash equivalents
Including: Bond investments maturing within three months
III. Ending balance of cash and cash equivalents 26,372,571,821.49 28,772,120,824.34
(5) Adjustment of monetary capital and cash and cash equivalents
Amount for the current Amount for the previous
Item
period period
Monetary capital 125,400,715,267.64 115,022,653,811.67
Less: Deposits with restricted use 13,329,429,050.16 6,005,776,370.05
Including: Legal deposit reserved 3,014,082,457.76 3,045,424,177.23
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Bill, letter of credit and other deposits 10,315,346,592.40 2,960,352,192.82
Less: Fixed deposits and accrued interest not in the category of cash and
85,698,714,395.99 80,244,756,617.28
cash equivalents
Add: Other cash equivalents
Ending balance of cash and cash equivalents 26,372,571,821.49 28,772,120,824.34
(6) Bill payment
Amount for the current Amount for the previous
Bill payment items
period period
Bill endorsement and transfer for purchasing goods and accepting services 65,091,151,718.57 70,268,012,322.71
Bill endorsement and transfer for purchasing fixed assets and intangible
552,447,249.96 275,517,455.97
assets
Total 65,643,598,968.53 70,543,529,778.68
63. Assets with restricted ownerships or use rights
Item Book balance at the end of the period Cause of restriction
Monetary capital 13,329,429,050.16 Legal deposit reserved and deposits
Receivables financing 8,874,415,345.76 Pledged
Other current assets 100,000,000.00 Pledged
Other equity instrument investments 3,316,957,037.50 Restricted shares
Intangible assets 153,191,226.30 Mortgage
Total 25,773,992,659.72
64. Foreign currency item
(1) Monetary items of foreign currencies
Balance in foreign Balance of RMB
Exchange rate for
Item currency at the end converted at the end
conversion
of period of period
Monetary capital 15,504,677,890.54
Wherein: USD 2,135,958,621.77 6.9762 14,900,874,537.19
BRL 327,695,761.22 1.7378 569,469,693.85
Euro 3,229,358.83 7.8155 25,239,053.94
HKD 7,173,781.03 0.8958 6,426,273.05
Dirham 1,400,134.00 1.8992 2,659,134.49
Others Not applicable Not applicable 9,198.02
Accounts receivable 2,955,957,531.32
Wherein: USD 342,476,502.89 6.9762 2,389,184,579.43
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance in foreign Balance of RMB
Exchange rate for
Item currency at the end converted at the end
conversion
of period of period
BRL 279,591,897.30 1.7378 485,874,799.13
Dirham 24,297,030.98 1.8992 46,144,921.24
Euro 2,281,852.05 7.8155 17,833,814.70
HKD 18,887,493.66 0.8958 16,919,416.82
Other receivables 4,439,271.41
Wherein: USD 588,488.95 6.9762 4,105,416.60
Others Not applicable Not applicable 333,854.81
Subtotal of monetary assets of foreign currency 18,465,074,693.27
Short-term borrowing 5,598,440,904.60
Wherein: USD 771,809,993.47 6.9762 5,384,300,876.44
HKD 239,048,926.28 0.8958 214,140,028.16
Accounts payable 156,605,674.81
Wherein: USD 11,695,957.91 6.9762 81,593,341.59
BRL 29,169,670.98 1.7378 50,691,054.23
JPY 242,602,066.19 0.0641 15,547,396.01
Euro 915,440.00 7.8155 7,154,621.32
HKD 1,807,615.16 0.8958 1,619,261.66
Other payables 234,781,379.26
Wherein: USD 32,501,504.44 6.9762 226,736,995.27
Euro 648,118.62 7.8155 5,065,371.07
HKD 2,588,683.81 0.8958 2,318,942.96
Others Not applicable Not applicable 660,069.96
Subtotal of monetary liabilities of foreign currency 5,989,827,958.67
(2) Description of overseas operating entities
None.
(VIII) Change in the consolidation scope
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net profit of the
Proportion Revenue of the
Name of Time point Equity acquired party
Cost of equity of equity Date of acquired party from
acquired of equity acquisition from the date of
acquisition acquisition purchase the date of purchase to
party acquisition mode purchase to the
(%) the end of the period
end of the period
Nanjing
Walsin Purchase by
31 May, 31 May,
Nonferrous 1,417,551,321.45 94.30 means of 10,411,966,740.54 46,316,187.50
2019 2019
Metal Co., cash
Ltd.
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter
referred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Business combination cost and goodwill
Item Nanjing Walsin Nonferrous Metal Co., Ltd.
Combination cost:
--Cash 1,071,239,072.20
--Other payables 346,312,249.25
Total combination cost 1,417,551,321.45
Less: Fair value share of the identifiable net assets acquired 1,143,436,281.34
Business reputation 274,115,040.11
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of business
combination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,
2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China
Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] Appraisal
Report.
3) Reason for the formation of large-amount goodwill:
In order to deepen the development of the Company's enameled wire business in the electrical sector and reduce
the impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of the
industrial chain. Due to the long construction cycle of the project, in order to expand production capacity and
occupy the market as soon as possible, the Company's office meeting decided to acquire Nanjing Walsin
Nonferrous Metal Co., Ltd.;
The acquisition price was determined by referring to the price-to-book ratio of the target company's comparable
listed company, comprehensively considering and fully evaluating the target company's asset status, profitability,
brand influence, technology level, synergy effect and other factors;
Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark use
rights in intangible assets increased due to the appraisal.
(2) Identifiable assets and liabilities of the acquired party on the date of purchase
Nanjing Walsin Nonferrous Metal Co., Ltd.
Item Fair value on the date of Carrying amount on date of
purchase purchase
Assets:
Monetary capital 313,841,040.72 313,841,040.72
Accounts receivable 306,347,724.29 306,347,724.29
Receivables financing 32,897,848.99 32,827,077.99
Prepaid accounts 3,774,390.86 3,774,390.86
Other receivables 250,561.22 250,561.22
Inventories 370,015,709.58 366,647,781.96
Other current assets 51,860,228.86 51,860,228.86
Fixed assets 148,157,020.23 38,678,328.99
Construction in Progress 8,162,465.21 9,544,356.01
Intangible assets 137,922,500.00 9,173,710.00
Deferred income tax assets 10,028,895.44 10,116,258.43
Other non-current assets 1,295,685.45 1,635,079.39
Subtotal of assets 1,384,554,070.85 1,144,696,538.72
Liabilities:
Trading financial liabilities 16,785,750.00 16,785,750.00
Accounts payable 37,510,699.95 37,510,699.95
Advances from customers 8,143,309.65 8,143,309.65
Payroll payable 8,804,769.39 8,804,769.39
Taxes payable 3,546,574.30 3,546,574.30
Other payables 9,114,493.56 9,114,493.56
Other current liabilities 27,680,199.09 27,680,199.09
Deferred income tax liabilities 60,416,544.96
Subtitle of liabilities 172,002,340.90 111,585,795.94
Net assets 1,212,551,729.95 1,033,110,742.78
Less: minority equity 69,115,448.61 58,887,312.34
Net assets obtained 1,143,436,281.34 974,223,430.44
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,
equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).
The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin's
identifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement cost
minus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used to
appraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low price
coefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is the
income method. During the appraisal, the future income of the appraised intangible assets within a reasonable
income period will be discounted and accumulated at a reasonable discount rate, and the present value of income
will be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
None.
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on
17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,
and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established new bodies in this period are as follows:
Net profit from the
Time of Net assets of the end of
Name combination date to the end
establishment the period
of the period
Gree (Anji) Precision Mold Co., Ltd. 14 February, 2019 47,063,023.27 -236,976.73
Huzhou Landa Compressor Co., Ltd. 1 March, 2019 Not yet invested
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net profit from the
Time of Net assets of the end of
Name combination date to the end
establishment the period
of the period
Gree Material Supply (Wuhan) Co., Ltd. 20 March, 2019 12,716,347.67 -7,283,652.33
Gree Material Supply (Hefei) Co., Ltd. 20 March, 2019 24,858,404.13 4,858,404.13
Guangdong Guochuang Intelligent Technology
22 March, 2019 30,270,563.23 270,563.23
Co., Ltd.
Gree (Luoyang) Washing Machine Co., Ltd. 25 March, 2019 47,278,161.95 -2,721,838.05
Gree Material Supply (Chongqing) Co., Ltd. 27 March, 2019 18,056,402.39 -1,943,597.61
Gree Material Supply (Zhengzhou) Co., Ltd. 29 March, 2019 19,777,618.60 -222,381.40
Gree Rongzhu Copper (Nanjing) Co., Ltd. 29 March, 2019 Not yet invested
Zhuhai Gree Green Resources Recycling Co.,
16 July, 2019 52,263,754.97 2,263,754.97
Ltd
Luoyang Lianmei Real Estate Co., Ltd. 7 August, 2019 995,335,429.21 -4,664,570.79
Guochuang Energy Internet Innovation Center
20 August, 2019 29,874,379.59 -125,620.41
(Guangdong) Co., Ltd.
Zhuhai Hengqin Gree Huatai Energy
28 August, 2019 15,024,339.91 24,339.91
Development Co., Ltd.
Handan Yingdong New Energy Technology
20 September, 2019 660.13 -1,339.87
Co., Ltd.
Gree E-commerce Co., Ltd. 5 November, 2019 Not yet invested
Gelan Environmental Protection Technology
5 December, 2019 Not yet invested
(Shaoguan) Co., Ltd.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(IX) Equity in other subjects
1. Equity in subsidiaries
(1) Composition of the enterprise group
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Commercial
1 Gree (Chongqing) Electric Appliances Co., Ltd. Chongqing City Chongqing City 97.00 97.00 Establishment
manufacture
Commercial
2 Gree (Hefei) Electric Appliances Co., Ltd. Hefei City Hefei City 100.00 100.00 Establishment
manufacture
Commercial
3 Gree (Brazil) Electric Appliances Co., Ltd. Manaus, Brazil Manaus, Brazil 100.00 100.00 Establishment
manufacture
Commercial
4 Gree (Zhengzhou) Electric Appliances Co., Ltd. Zhengzhou City Zhengzhou City 100.00 100.00 Establishment
manufacture
Commercial
5 Gree (Wuhan) Electric Appliances Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
Commercial
6 Gree (Wuhu) Electric Appliances Co., Ltd. Wuhu City Wuhu City 100.00 100.00 Establishment
manufacture
Business combination
Commercial
7 Gree (Shijiazhuang) Electric Appliances Co., Ltd. Shijiazhuang City Shijiazhuang City 100.00 100.00 not involving enterprises
manufacture
under common control
Commercial
8 Gree (Hangzhou) Electric Appliances Co., Ltd. Hangzhou City Hangzhou City 100.00 100.00 Establishment
manufacture
Commercial
9 Gree (Luoyang) Electric Appliances Co., Ltd. Luoyang Luoyang 100.00 100.00 Establishment
manufacture
Commercial
10 Gree (Nanjing) Electric Appliances Co., Ltd. Nanjing Nanjing 100.00 100.00 Establishment
manufacture
11 Gree (Chengdu) Electric Appliances Co., Ltd. Chengdu Chengdu Commercial 100.00 100.00 Establishment
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
manufacture
Commercial
12 Changsha Gree HVAC Equipment Co., Ltd. Changsha City Changsha City 100.00 100.00 Establishment
manufacture
Commercial
13 Gree (Chengdu) HVAC Equipment Co., Ltd. Chengdu Chengdu 100.00 100.00 Establishment
manufacture
Business combination
14 Zhuhai Gree Group Finance Company Limited [Note 1] Zhuhai City Zhuhai City Finance 88.31 0.94 89.25 involving enterprises
under common control
15 Zhuhai Hengqin GREE business factoring Co., Ltd. Zhuhai City Zhuhai City Finance 100.00 100.00 Establishment
Business combination
Commercial
16 Zhuhai Landa Compressor Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 involving enterprises
manufacture
under common control
Commercial
17 Hefei Landa Compressor Co., Ltd. Hefei City Hefei City 100.00 100.00 Establishment
manufacture
Commercial
18 Zhengzhou Landa Compressor Co., Ltd. Zhengzhou City Zhengzhou City 100.00 100.00 Establishment
manufacture
Commercial
19 Chongqing Landa Compressor Co., Ltd. Chongqing City Chongqing City 100.00 100.00 Establishment
manufacture
Commercial
20 Wuhan Landa Compressor Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
Business combination
Commercial
21 Zhuhai Meilingda Refrigeration Technology Co., Ltd. Zhuhai City Zhuhai City 70.00 70.00 involving enterprises
manufacture
under common control
Business combination
Commercial
22 Zhuhai Meiling General Motors Co., Ltd. [Note 2] Zhuhai City Zhuhai City 100.00 100.00 involving enterprises
manufacture
under common control
Commercial
23 Zhuhai Landa Material Supply Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Business combination
Commercial
24 Zhuhai Kaibang Motor Manufacture Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 not involving enterprises
manufacture
under common control
Commercial
25 Hefei Kaibang Motor Manufacture Co., Ltd. Hefei City Hefei City 100.00 100.00 Establishment
manufacture
Commercial
26 Chongqing Kaibang Motor Manufacture Co., Ltd. Chongqing City Chongqing City 100.00 100.00 Establishment
manufacture
Commercial
27 Henan Kaibang Motor Manufacture Co., Ltd. Zhengzhou City Zhengzhou City 100.00 100.00 Establishment
manufacture
Business combination
Commercial
28 Zhuhai Gree Electrical Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 involving enterprises
manufacture
under common control
Business combination
Commercial
29 Gree Electric Enterprises (Ma'anshan) Ltd. Ma'anshan City Ma'anshan City 100.00 100.00 involving enterprises
manufacture
under common control
Commercial
30 Gree (Meishan) Electrician Co., Ltd. Meishan City Meishan City 100.00 100.00 Establishment
manufacture
Commercial
31 Gree (Nanjing) Electrician Co., Ltd. Nanjing Nanjing 100.00 100.00 Establishment
manufacture
Commercial
32 GREE (Zhongshan) Home Appliances Co., Ltd. Zhongshan City Zhongshan City 100.00 100.00 Establishment
manufacture
Commercial
33 Gree (Shijiazhuang) Small Home Appliances Co., Ltd. Shijiazhuang City Shijiazhuang City 100.00 100.00 Establishment
manufacture
Technical
Gree Green Refrigeration Technology Center Co., Ltd. Of
34 Zhuhai City Zhuhai City research and 100.00 100.00 Establishment
Zhuhai
development
Commercial
35 Zhengzhou Gree Green Resources Recycling Co., Ltd Zhengzhou City Zhengzhou City 100.00 100.00 Establishment
manufacture
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Commercial
36 Hunan Green Resources Recycling Co., Ltd Ningxiang County Ningxiang County 100.00 100.00 Establishment
manufacture
Commercial
37 Wuhu Green Resources Recycling Co., Ltd. Wuhu City Wuhu City 100.00 100.00 Establishment
manufacture
Commercial
38 Shijiazhuang Green Resources Recycling Co., Ltd. Shijiazhuang City Shijiazhuang City 100.00 100.00 Establishment
manufacture
Commercial
39 Tianjin Green Resources Recycling Co., Ltd. Tianjin City Tianjin City 100.00 100.00 Establishment
manufacture
Commercial
40 Zhuhai Gree Daikin Precision Mold Co., Ltd. Zhuhai City Zhuhai City 51.00 51.00 Establishment
manufacture
Commercial
41 Zhuhai Gree Dakin Device Co., Ltd. Zhuhai City Zhuhai City 51.00 51.00 Establishment
manufacture
Commercial
42 Zhuhai Ligao Precision Manufacturing Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
43 Zhuhai Gree TOSOT Life Electric Appliances Co., Lid. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
44 Gree TOSOT (Suqian) Home Appliances Co., Ltd. Suqian City Suqian City 100.00 100.00 Establishment
manufacture
Commercial
45 Zhuhai HVAC Equipment Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
46 Gree (Wuhan) HVAC Equipment Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
47 Zhuhai IVP Information Technology Co., Ltd. Zhuhai City Zhuhai City IT 100.00 100.00 Establishment
Business combination
Commercial
48 Zhuhai Gree Xinyuan Electronics Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 involving enterprises
manufacture
under common control
Commercial
49 Gree (Nanjing) Xinyuan Electronics Co., Ltd. Nanjing Nanjing 100.00 100.00 Establishment
manufacture
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Business combination
Kowloon, Hong Kowloon, Hong
50 Hong Kong Gree Electric Appliances Sales Co., Ltd. Sales 100.00 100.00 not involving enterprises
Kong Kong
under common control
51 Shanghai GREE Air Conditioners Sales Co., Ltd. [Note 3] Shanghai City Shanghai City Sales 90.00 9.70 99.70 Establishment
Brazil United Electric Appliances Industry and Commerce
52 Sao Paulo, Brazil Sao Paulo, Brazil Sales 100.00 100.00 Establishment
Co., Ltd.
53 Gree (USA) Sales Co., Ltd. California, USA California, USA Sales 100.00 100.00 Establishment
Commercial
54 Zhuhai GREE Intelligent Equipment Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Zhuhai GREE Intelligent Equipment Technology Research Commercial
55 Zhuhai City Zhuhai City 100.00 100.00 Establishment
Institute Co., Ltd. manufacture
Commercial
56 GREE (Wuhan) Intelligent Equipment Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
Technical
57 Gree (Luoyang) Robot Co., Ltd. Luoyang Luoyang research and 100.00 100.00 Establishment
development
Commercial
58 Zhuhai Gree Robot Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
59 Wuhu Precision Manufacturing Co., Ltd. Wuhu City Wuhu City 100.00 100.00 Establishment
manufacture
Commercial
60 Gree (Wuhan) Precision Mold Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
Commercial
61 Zhuhai Gree Precision Mold Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Gree (Wu'an) Precision Equipment Manufacturing Co., Commercial
62 Wu'an County Wu'an County 70.00 70.00 Establishment
Ltd. manufacture
63 Zhuhai Gree New Material Co., Ltd. Zhuhai City Zhuhai City Commercial 100.00 100.00 Establishment
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
manufacture
Commercial
64 Zhuhai Gree Energy Environment Technology Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
65 Zhuhai Gree Info Technology Co., Ltd. Zhuhai City Zhuhai City IT 51.00 51.00 Establishment
Technical
Zhuhai Gree CNC Machine Tool Research Institute Co.,
66 Zhuhai City Zhuhai City research and 100.00 100.00 Establishment
Ltd.
development
Transportation
67 Zhuhai Gree Transportation Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
industry
Commercial
68 Zhuhai Lianyun Technology Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
69 Zhuhai Zero Boundary Integrated Circuit Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
70 Zhuhai Gree Material Supply Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Commercial
71 Zhuhai Gree Lvkong Technology Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Business combination
Commercial
72 Hefei Kinghome Electrical Co., Ltd. Hefei City Hefei City 100.00 100.00 not involving enterprises
manufacture
under common control
Business combination
Anhui Gree Kinghome Electric Appliances Sales Co.,
73 Anhui Anhui Sales 100.00 100.00 not involving enterprises
Ltd.[Note 4]
under common control
Commercial
74 Gree (Chengdu) Precision Mold Co., Ltd. Chengdu Chengdu 100.00 100.00 Establishment
manufacture
Business combination
Zhuhai Gree Electrical and Mechanical Engineering Co., Commercial
75 Zhuhai City Zhuhai City 100.00 100.00 involving enterprises
Ltd. manufacture
under common control
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Commercial
76 Gree (Luoyang) Washing Machine Co., Ltd. Luoyang Luoyang 100.00 100.00 Establishment
manufacture
Guochuang Energy Internet Innovation Center
77 Zhuhai City Zhuhai City IT 75.00 75.00 Establishment
(Guangdong) Co., Ltd.
Commercial
78 Gree (Anji) Precision Mold Co., Ltd. Anji County Anji County 100.00 100.00 Establishment
manufacture
Commercial
79 Zhuhai Gree Green Resources Recycling Co., Ltd Zhuhai City Zhuhai City 100.00 100.00 Establishment
manufacture
Business combination
Commercial
80 Nanjing Walsin Nonferrous Metal Co., Ltd. Nanjing Nanjing 94.30 94.30 not involving enterprises
manufacture
under common control
Commercial
81 Guangdong Guochuang Intelligent Technology Co., Ltd. Lianjiang City Lianjiang City 60.00 60.00 Establishment
manufacture
82 Luoyang Lianmei Real Estate Co., Ltd. Luoyang Luoyang Real estate 51.00 51.00 Establishment
Zhuhai Hengqin Gree Huatai Energy Development Co., Commercial
83 Zhuhai City Zhuhai City 51.00 51.00 Establishment
Ltd. manufacture
Commercial
84 Handan Yingdong New Energy Technology Co., Ltd. Wu'an City Wu'an City 100.00 100.00 Establishment
manufacture
Commercial
85 Gree Material Supply (Wuhan) Co., Ltd. Wuhan City Wuhan City 100.00 100.00 Establishment
manufacture
Commercial
86 Gree Material Supply (Hefei) Co., Ltd. Hefei City Hefei City 100.00 100.00 Establishment
manufacture
Commercial
87 Gree Material Supply (Zhengzhou) Co., Ltd. Zhengzhou City Zhengzhou City 100.00 100.00 Establishment
manufacture
Commercial
88 Gree Material Supply (Chongqing) Co., Ltd. Chongqing City Chongqing City 100.00 100.00 Establishment
manufacture
Commercial
89 Huzhou Landa Compressor Co., Ltd. Anji County Anji County 100.00 100.00 Establishment
manufacture
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Shareholding ratio (%)
Serial Main location of Nature of Voting right
Name Place of registration Acquisition mode
Number operation business percentage (%)
Direct Indirect
Wholesale and
90 Gree E-commerce Co., Ltd. Zhuhai City Zhuhai City 100.00 100.00 Establishment
retail trade
Commercial
91 Gree Rongzhu Copper (Nanjing) Co., Ltd. Nanjing Nanjing 100.00 100.00 Establishment
manufacture
Gelan Environmental Protection Technology (Shaoguan)
92 Shaoguan City Shaoguan City Sales 100.00 100.00 Establishment
Co., Ltd.
[Note 1] The Company directly holds 88.31% of total stocks of Zhuhai Gree Group Finance Company Limited, and Zhuhai Gree Electrical Co., Ltd. and Zhuhai Gree
Xinyuan Electronics Co., Ltd. as the wholly-owned subsidiaries of the Company respectively hold its 0.47% stocks, so the Company holds its 89.25% stocks in the direct
and indirect ways.
[Note 2] Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019;
[Note 3]: The Company directly holds 90.00% of total stocks of Shanghai Gree Air Conditioners Sales Co., Ltd., and Gree (Chongqing) Electric Appliances Co., Ltd. as the
subsidiary of the Company holds its remaining 9.70% stocks, so the Company holds its 99.70% stocks in the direct and indirect ways.
[Note 4] Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on 17 October, 2019.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Important non-wholly owned subsidiaries
Information of rights and interests held by minority shareholders of important non-wholly owned subsidiaries and
profits and losses:
Dividends declared Equity balance of
Profits or losses
Shareholding to distribute to minority
attributable to minority
Name ratio of minority minority shareholders at
shareholders in the
shareholders (%) shareholders in the the end of the
current period
current period period
Gree (Chongqing) Electric Appliances
3.00 23,528,160.11 19,705,686.34 71,628,712.21
Co., Ltd.
Zhuhai Gree Group Finance Company
10.75 85,497,764.38 693,351,864.57
Limited
(3) Main financial information of important non-wholly owned subsidiaries
1) Amount at the end of the period/Amount of the current period
Gree (Chongqing) Electric Appliances Co., Zhuhai Gree Group Finance Company
Item
Ltd. Limited
Current assets 3,898,672,996.86 52,065,731,802.44
Non-current assets 1,045,004,552.90 18,385,117,667.65
Total assets 4,943,677,549.76 70,450,849,470.09
Current liabilities 2,542,579,996.06 63,819,886,177.95
Non-current liabilities 13,473,813.34 181,178,505.54
Total liabilities 2,556,053,809.40 64,001,064,683.49
Operating incomes 10,703,012,677.06 2,399,580,625.93
Net profits 784,272,003.69 795,328,040.73
Total comprehensive income 784,272,003.69 792,299,281.53
Cash flows from operating activities 1,209,651,124.46 3,359,858,744.18
2) Amount at the beginning of the period/of the previous period
Gree (Chongqing) Electric Appliances Co., Zhuhai Gree Group Finance Company
Item
Ltd. Limited
Current assets 4,023,171,282.05 46,110,618,353.77
Non-current assets 1,156,117,813.37 13,239,672,856.61
Total assets 5,179,289,095.42 59,350,291,210.38
Current liabilities 2,910,105,213.05 53,565,185,491.74
Non-current liabilities 8,975,934.60 127,620,213.57
Total liabilities 2,919,081,147.65 53,692,805,705.31
Operating incomes 12,186,621,897.68 2,175,875,798.99
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Net profits 1,051,779,596.69 1,040,346,636.08
Total comprehensive income 1,051,779,596.69 1,057,380,005.59
Cash flows from operating activities 1,224,130,752.80 9,709,298,229.36
(4) Financial support or other support provided to structured entities included in the scope of consolidated
financial statements
None.
2. Transactions which result in a change in the share of owners' equity in the subsidiary but the Company
still controls the subsidiary
None.
3. Equities in associated enterprises or contractual enterprises
(1) Basic information of important cooperative enterprises and associated enterprises
Main Shareholding ratio (%)
Place of Nature of Accounting
Name of invested entity location of
registration business Direct Indirect treatment
operation
Songyuan Songyuan Food Equity
Songyuan Food Group Co., Ltd. 50.00
City City manufacture method
Lease and
Zhuhai Ronglin Equity Investment Equity
Zhuhai City Zhuhai City business 91.27
Partnership (Limited Partnership) method
services
(2) Main financial information of important cooperative enterprises
Songyuan Food Group Co., Ltd.
Item Balance at the end of the period/Amount for Balance at the beginning of the
the current period period/Amount for the previous period
Current assets 382,476,305.91 444,584,169.27
Including: cash and cash equivalents 66,904,078.58 33,685,539.79
Non-current assets 113,422,747.61 108,911,970.58
Total assets 495,899,053.52 553,496,139.85
Current liabilities 296,940,055.48 380,277,548.33
Non-current liabilities 17,499,435.82 15,200,107.32
Total liabilities 314,439,491.30 395,477,655.65
Minority equity 25,594,815.38 11,629,575.78
Owners' equity attributable to parent
155,864,746.84 146,388,908.42
company
Share of net assets calculated by the
77,932,373.42 73,194,454.21
shareholding ratio
Operating incomes 725,838,705.34 591,397,421.11
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Songyuan Food Group Co., Ltd.
Item Balance at the end of the period/Amount for Balance at the beginning of the
the current period period/Amount for the previous period
Financial expense 11,721,953.89 9,154,340.75
Income tax expenses 1,417,596.12 2,053,722.15
Net profits 11,790,466.98 4,854,788.01
Net profit attributable to the parent
10,617,217.15 4,260,998.39
company
Total comprehensive income
10,617,217.15 4,260,998.39
attributable to the parent company
(3) Major financial information of important associates
Zhuhai Ronglin Equity Investment Partnership (Limited
Partnership)
Item Balance at the end of the Balance at the beginning of
period/Amount for the current the period/Amount for the
period previous period
Current assets 1,689,835.43 34,642,843.34
Including: cash and cash equivalents 1,689,835.43 3,190,763.74
Non-current assets 7,522,991,256.00 2,280,926,600.00
Total assets 7,524,681,091.43 2,315,569,443.34
Current liabilities 66,000.00 89,619.85
Total liabilities 66,000.00 89,619.85
Total net assets to be distributed to investors 7,524,615,091.43 2,315,479,823.49
Share of net assets calculated by the shareholding ratio 6,867,716,193.95 2,113,338,434.90
Overhead Expense 31,784,084.28 1,851,439.25
Financial expense -4,253.22 -30,262.74
Net profits attributable to investors -32,929,388.06 -1,821,176.51
Other comprehensive income 5,242,064,656.00
Total comprehensive income attributable to investors 5,209,135,267.94 -1,821,176.51
(4) Other information on associated enterprises of the Company
For details, see Note (VII) 14 "Long-term equity investment".
(X) Risks associated with financial instruments
Main financial instruments of the Company include monetary capital, trading financial assets, derivative financial
assets, receivables financing, accounts receivable, loans and receivables, buying back the sale of financial assets,
debt investments, other debt investments, other equity investments, other financial liabilities (e.g., payables)
arising from operation, etc. These financial instruments aimed to provide funds for operation of the Company.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
The financial instruments of the Company may lead to the main risks of credit risks, liquidity risks and market
risks.
1. Classification information of financial instruments
The book values of various financial instruments on the balance sheet date:
(1) Balance at the end of the period
Classification of financial assets
Financial assets which Financial assets
are measured at their measured at their
Item Financial assets fair values and of fair values and of
measured at amortization which the changes are which the changes Total
costs included into other are recorded into the
comprehensive current profits and
income losses
1. Measured by cost or
amortized cost
Monetary capital 125,400,715,267.64 125,400,715,267.64
Accounts receivable 8,513,334,545.08 8,513,334,545.08
Other receivables 159,134,399.10 159,134,399.10
Non-current assets due
within one year (debt 18,608,350.13 18,608,350.13
investment)
Other current assets [note] 19,346,895,253.23 19,346,895,253.23
Disbursement of loans and
14,423,786,409.22 14,423,786,409.22
advances
Subtotal 167,862,474,224.40 167,862,474,224.40
2. Measured at fair values
Trading financial assets 955,208,583.58 955,208,583.58
Derivative financial assets 92,392,625.69 92,392,625.69
Receivables financing 28,226,248,997.12 28,226,248,997.12
Non-current assets due
within one year (other debt 426,789,360.26 426,789,360.26
investments)
Other debt investments 296,836,282.20 296,836,282.20
Other equity instrument
4,644,601,697.51 4,644,601,697.51
investments
Other non-current financial
2,003,483,333.33 2,003,483,333.33
assets
Subtotal 33,594,476,337.09 3,051,084,542.60 36,645,560,879.69
Total 167,862,474,224.40 33,594,476,337.09 3,051,084,542.60 204,508,035,104.09
(Continued)
245
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Classification of financial liabilities
Item Derivative financial
Other financial liabilities Total
liabilities
1. Measured by cost or amortized cost
Short-term borrowing 15,944,176,463.01 15,944,176,463.01
Deposits from customers and interbank 352,512,311.72 352,512,311.72
Loans from other banks 1,000,446,666.67 1,000,446,666.67
Bills payable 25,285,207,843.86 25,285,207,843.86
Accounts payable 41,656,815,752.46 41,656,815,752.46
Financial assets sold for repurchase 2,074,500,000.00 2,074,500,000.00
Other payables 2,712,692,973.66 2,712,692,973.66
Other current liabilities 65,181,491,855.14 65,181,491,855.14
Long-term borrowing 46,885,882.86 46,885,882.86
Subtotal 154,254,729,749.38 154,254,729,749.38
Total 154,254,729,749.38 154,254,729,749.38
(2) Beginning Balance
Classification of financial assets
Financial assets which Financial assets
are measured at their measured at their
Item Financial assets fair values and of fair values and of
measured at which the changes are which the changes Total
amortization costs included into other are recorded into the
comprehensive current profits and
income losses
1. Measured by cost or
amortized cost
Monetary capital 115,022,653,811.67 115,022,653,811.67
Accounts receivable 7,642,434,078.24 7,642,434,078.24
Other receivables 290,346,336.38 290,346,336.38
Other current assets [note] 16,800,521,210.56 16,800,521,210.56
Disbursement of loans and
9,081,714,083.52 9,081,714,083.52
advances
Debt investment 37,216,700.19 37,216,700.19
Subtotal 148,874,886,220.56 148,874,886,220.56
2. Measured at fair values
Trading financial assets 1,012,470,387.43 1,012,470,387.43
Derivative financial assets 170,216,138.92 170,216,138.92
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Receivables financing 34,300,472,580.13 34,300,472,580.13
Other debt investments 1,064,120,569.43 1,064,120,569.43
Other equity instrument
1,144,907,946.33 1,144,907,946.33
investments
Subtotal 36,509,501,095.89 1,182,686,526.35 37,692,187,622.24
Total 148,874,886,220.56 36,509,501,095.89 1,182,686,526.35 186,567,073,842.80
(Continued)
Classification of financial liabilities
Item Derivative financial
Other financial liabilities Total
liabilities
1. Measured by cost or amortized cost
Short-term borrowing 22,197,899,406.88 22,197,899,406.88
Deposits from customers and interbank 319,477,242.91 319,477,242.91
Bills payable 10,835,428,282.29 10,835,428,282.29
Accounts payable 38,987,371,471.02 38,987,371,471.02
Other payables 3,084,011,741.38 3,084,011,741.38
Other current liabilities 64,890,979,418.62 64,890,979,418.62
Subtotal 140,315,167,563.10 140,315,167,563.10
2. Measured at fair values
Derivative financial liabilities 257,364,882.07 257,364,882.07
Subtotal 257,364,882.07 257,364,882.07
Total 257,364,882.07 140,315,167,563.10 140,572,532,445.17
[Note] The above other current assets did not include prepaid taxes and other items.
2. Credit risks
Credit risks refer to financial losses suffered by one party to the financial instrument due to the other party's
inability to fulfill obligations.
The Company will have transactions with recognized customers with a good reputation only. According to the
policy of the Company, all the customers who require the credit form for transactions shall undergo credit review.
Besides, the Company implements continuous monitoring on the balance of accounts receivable to ensure that the
Company is not confronted with the major risk of bad debts.
Financial assets of the Company include monetary capital, receivables financing, etc. The credit risks of these
financial assets come from nonperformance of the transaction counterparty, and the maximum risk exposure is
equal to the carrying amount of these instruments. Trade terms between the Company and customers focus on
advances, banker's acceptance bill or the mode of pay on delivery, assisted by deal on credit.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
The monetary capital is deposited in state-owned financial institutions with a higher credit rating, minimizing the
risk; the receivables financing is mainly banker's acceptance bills, and the risk exposure is rather small. The
carrying amount of receivables financing, accounts receivable, prepayments and other receivables in the
consolidated balance sheet is the highest credit risk with which the Company may be confronted. As of the end of
the report period, the total of the Company's receivables financing, accounts receivable and other receivables
accounted for 13.04% (which was 16.82% at the beginning of the period) of the total assets, and the Company was
not confronted with any major credit risk within one year due to the above amounts. For the Company's credit risk
exposures arising from the receivables financing, accounts receivable and other receivables, refer to the disclosed
information in Note (VII) 4 "Receivables", Note (VII) 5 "Receivables financing" and (VII) 7 "Other receivables".
3. Liquidity risks
Liquidity risks refer to risks of fund shortage generated when the enterprise performs the obligation to settle
accounts by cash payment or other financial assets.
As indicated by changes in the Company's financial instruments at the beginning and end of the period, the
proportion of the Company's "Financial assets" to "Financial liabilities" at the end of the report period was 1.33
(which was 1.33 at the beginning of the period). which shows that the Company has adequate liquidity and the
risk in shortage of liquidity is low.
4. Market risks
Market risks refer to fluctuation risks of the fair value or future cash flow of financial instrument due to changes
in the market price, including exchange rate risk and interest rate risk.
(1) Exchange rate risk
Exchange rate risk refers to the fluctuation risk of the fair value or future cash flow of financial instruments due to
changes in the foreign exchange rate.
For presented amounts in RMB converted from foreign currency financial assets and foreign currency financial
liabilities held by the Company as of 31 December, 2019, see Note (VII) 64 (1) "Monetary items of foreign
currencies".
The Company will minimize the exchange risk by carrying out the forward exchange transaction business and
controlling the scale of foreign currency assets and liabilities according to changes in the market exchange rate.
(2) Interest rate risks
Interest rate risk refers to the fluctuation risk of the fair value or future cash flow of financial instruments due to
changes in the market rate of interest.
Set out below are the Company's liabilities with interests as of 31 December, 2019:
Report item Amount Interest rate range Remarks
Short-term borrowing 15,944,176,463.01 1.09%-3.18% Floating interest rate
248
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Deposits from customers and interbank 352,512,311.72 0.35%-4.13% Floating interest rate
Loans from other banks 1,000,446,666.67 2.680%
Long-term borrowing 46,885,882.86 6.125%
Total 17,344,021,324.26
(XI) Fair value disclosure
1. Fair values of assets and liabilities at the end of period that are measured at the fair value
Fair value at the end of period
Measurement
Item Measurement of the Measurement of the
of the fair
fair value at the fair value at the Total
value at the
first layer second layer
third layer
I. Continuous fair value measurement
(I) Trading financial assets
1. Financial assets measured at their fair
values and of which the changes are
recorded into the current profits and losses
Including: Derivative financial assets 92,392,625.69 92,392,625.69
Debt instrument investment 955,208,583.58 955,208,583.58
(II) Other debt investments
Including: Other debt investments due
426,789,360.26 426,789,360.26
within one year
Other debt investments 296,836,282.20 296,836,282.20
(III) Other equity instrument investments
Including: Other equity instrument
investments designated as measured at
their fair values and of which the changes 4,644,601,697.51 4,644,601,697.51
are recorded into the current profits and
losses
(IV) Receivables financing
Including: Notes receivable designated as
measured at their fair values and of which
28,226,248,997.12 28,226,248,997.12
the changes are recorded into the current
profits and losses
(V) Other non-current financial assets
Including: Debt instrument investments
designated as measured at their fair values
2,003,483,333.33 2,003,483,333.33
and of which the changes are recorded into
the current profits and losses
Total of assets measured by fair value
6,323,435,923.55 30,322,124,956.14 0 36,645,560,879.69
continuously
249
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
2. Basis for determining market prices of items continuously and not continuously measured at the
first-level fair value
Market prices of trading financial assets - debt instruments, other debt investment, and other equity instrument
investments held by the Company are determined based on the quotation of corresponding products and
investment projects on the open market.
3. Qualitative and quantitative information on valuation techniques and important parameters adopted by
items continuously and not continuously measured at the second-level fair value
Receivables financing held by the Company is the bank acceptance bills and commercial acceptance bills held by
the Company, and their corresponding transfer and discounted amounts are used as the basis for determining their
market prices;
Derivative financial assets and other non-current financial assets held by the Company are mainly forward
hedging instruments and trust products with a recovery period of more than one year, and the recoverable amount
of the corresponding financial assets is used as the basis for determining the market price.
4. Qualitative and quantitative information on valuation techniques and important parameters adopted by
items continuously and not continuously measured at the third-level fair value
None.
5. Information on adjustment between the beginning carrying value and the closing carrying value of items
continuously measured at the third-level fair value and sensitivity analysis on unobservable parameters
None.
6. For items continuously measured at fair value, in case of any conversion between various levels during
the period, reasons for the conversion and policies to determine the conversion time should be provided
None.
7. Changes in valuation techniques and reasons for changes occurred during the report period
None.
8. Particulars on fair value of financial assets and liabilities which are not measured at fair value
None.
(XII) Related party relationships and their transactions
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
1. Parent company of the Company
Percentage of
Registered Shareholding
voting rights of
Place of capital (ten ratio of parent
Name Nature of business parent company
registration thousand company to the
to the Company
Yuan) Company (%)
(%)
Investment and asset
Zhuhai Gree Group Co., Ltd. Zhuhai 80,000.00 18.22 18.22
management
[Note] On 2 December, 2019, Zhuhai Gree Group Co., Ltd. (hereinafter referred to as "Gree Group"), the original
major shareholder of the Company, signed the Share Transfer Agreement with Zhuhai Mingjun Investment
Partnership (Limited Partnership) (hereinafter referred to as "Zhuhai Mingjun"), pursuant to which Gree Group
transferred its 902,359,632 non-restricted circulating shares held in the Company (accounting for 15.00% of the
Company's total equity) to Zhuhai Mingjun. The above equity change was approved by Zhuhai Municipal
People's Government and the State-owned Assets Supervision and Administration Commission of Zhuhai
Municipal People's Government on 13 December, 2019.
On 3 February, 2020, the Transfer Registration Confirmation issued by China Securities Depository and Clearing
Corporation Limited (CSDC) Shenzhen Branch showed that the share transfer registration procedures were
completed, the transfer date was 23 January, 2020, and the Company had neither a controlling shareholder nor an
actual controller.
2. Subsidiaries of the Company
For details, see Note (IX) 1 "Company's equities in subsidiaries".
3. Cooperative enterprises and associated enterprises of the Company
For important joint ventures and associates of the Company, see the Note (IX) 3.
4. Other related parties
Name of other related parties Relationships of other related parties with the Company
Subsidiaries and holding companies of Zhuhai Gree Group Co., Subsidiaries and holding subsidiaries of the Company's parent
Ltd. company
Companies where supervisors of the Company act as executive
Shandong Jierui Logistics Co., Ltd.
directors and general managers
Companies where supervisors of the Company act as executive
Shandong Zhirun Electric Appliances Co., Ltd.
directors
Shandong Shengshi Xinxing Gree Trading Co., Ltd. Companies where supervisors of the Company act as managers
Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and Companies and their subsidiaries and holding subsidiaries where
holding subsidiaries the chairman of the Company serves as a director
Companies where directors of the Company act as executive
Zhejiang Shengshi Xinxing Gree Trading Co., Ltd.
directors and general managers
Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its Companies where the Company's director holds equity and
holding companies serves as the board chairman
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Name of other related parties Relationships of other related parties with the Company
Companies where directors of the Company act as executive
Henan Shengshi Xinxing Gree Trading Co., Ltd.
directors
Shanghai Highly (Group) Co., Ltd. And its subsidiaries and The company in which the Company holds more than 5.00% of
holding subsidiaries its shares
Companies where supervisors of the Company act as executive
Shandong Red April Brand Management Co., Ltd.
directors and general managers
Companies where board chairman of the Company act as
Zhuhai Xima Pearl New Media Co., Ltd.
director
Wuhu Green Renewable Resources Recycling Co., Ltd. A company upon which the Company has great influence
Hunan Green Renewable Resources Recycling Co., Ltd. A company upon which the Company has great influence
Zhengzhou Gerun Waste Materials Recycling Co., Ltd. A company upon which the Company has great influence
Hebei Jinghai Guaranteed Investment Co., Ltd. Companies holding more than 5.00% of the Company's shares
Companies and their holding companies where the Company
Wingtech Technology Co., Ltd. and its holding company
holds more than 5.00% shares
Hefei Zhongwen Jintai Semiconductor Investment Co., Ltd. and Companies and their holding companies where the Company
its holding company holds more than 5.00% shares
Companies and their holding companies where the Company
Nexperia Holding B.V. and its holding company
holds more than 5.00% shares
Songyuan Grain Group Co., Ltd. and its subsidiaries The Company's joint ventures and their subsidiaries
5. Transaction of related party
(1) Related-party transactions for the purchase and sales of goods and the rendering and receipt of services
1) Purchase of commodities/receiving of services
Type of related Contents of related Amount for the Amount for the
Related party
transactions transactions current period previous period
Zhuhai Gree Group Co., Ltd. and its holding
Deposit-taking Interest expense 32,813.02 74,512.17
companies
Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. Deposit-taking Interest expense 26,350.32 17,895.57
Shandong Jierui Logistics Co., Ltd. Deposit-taking Interest expense 1,624.60
Songyuan Grain Group Co., Ltd. and its
Deposit-taking Interest expense 1,484.15 2,642.70
subsidiaries
Henan Shengshi Xinxing Gree Trading Co., Ltd. Deposit-taking Interest expense 1,290.45 23.04
Shandong Shengshi Xinxing Gree Trading Co.,
Deposit-taking Interest expense 185.25
Ltd.
Zhejiang Tongcheng Gree Electric Appliances Co.,
Deposit-taking Interest expense 102.16
Ltd. and its holding companies
Shandong Zhirun Electric Appliances Co., Ltd. Deposit-taking Interest expense 89.21
Shanghai Highly (Group) Co., Ltd. and its holding
Materials procurement Raw material 2,169,555,677.45 2,993,992,800.28
subsidiaries
Beijing Gree Technology Co., Ltd. Materials procurement Fittings 164,958,551.96 207,842,266.39
Zhuhai Yinlong New Energy Co., Ltd. and its New energy vehicles
subsidiaries Purchase of fixed assets
and energy storage 72,389,092.82 272,497,276.03
and materials
and holding companies [Note] equipment
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Type of related Contents of related Amount for the Amount for the
Related party
transactions transactions current period previous period
Chongqing Pargo Mechanical Equipment Co., Ltd. Materials procurement Fittings 18,138,184.74 20,205,725.08
Songyuan Grain Group Co., Ltd. and its
Materials procurement Foodstuff 8,097,519.11 14,702,362.59
subsidiaries
Publicity and
Liaowang All Media Communication Co., Ltd. Service sourcing 4,758,867.94 2,740,000.00
advertising fee
Zhuhai Gree Group Co., Ltd. and its holding Accessories and
Materials procurement 503,256.74 4,759,707.05
companies infrastructure projects
Wuhu Green Renewable Resources Recycling Co.,
Materials procurement Raw material 10,788,213.00 48,731,243.30
Ltd.
Gree Volinco (Hong Kong) Ltd. Materials procurement Fittings 7,474,336.68
Hunan Green Renewable Resources Recycling Co.,
Materials procurement Raw material 846,184.00 4,239,061.82
Ltd.
Zhengzhou Gerun Waste Materials Recycling Co.,
Materials procurement Raw material 60,307.28
Ltd.
Total 2,450,099,486.92 3,577,340,159.98
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.
and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
2) Sales of commodities/rendering of services
Type of related Contents of related Amount for the Amount for the previous
Related party
transactions transactions current period period
Henan Shengshi Xinxing Gree Trading
Loan Interest revenue 54,947,437.57
Co., Ltd.
Shandong Jierui Logistics Co., Ltd. Loan Interest revenue 24,460,821.26
Zhejiang Shengshi Xinxing Gree
Loan Interest revenue 9,588,766.71 14,044,778.08
Trading Co., Ltd.
Songyuan Grain Group Co., Ltd. and
Loan Interest revenue 7,658,695.92 6,449,630.77
its subsidiaries
Shandong Zhirun Electric Appliances
Loan Interest revenue 3,679,077.57
Co., Ltd.
Zhuhai Gree Group Co., Ltd. and its
Loan Handling charge income 801,650.95
holding companies
Shandong Shengshi Xinxing Gree
Loan Handling charge income 339,622.64
Trading Co., Ltd.
Shandong Jierui Logistics Co., Ltd. Loan Handling charge income 378.30
Henan Shengshi Xinxing Gree Trading
Loan Handling charge income 189.15
Co., Ltd.
Zhejiang Shengshi Xinxing Gree
Loan Handling charge income 189.15
Trading Co., Ltd.
Henan Shengshi Xinxing Gree Trading Sales of
Sales revenue 8,719,678,107.95 10,496,359,735.24
Co., Ltd. commodities
Shandong Shengshi Xinxing Gree Sales of
Sales revenue 4,935,412,388.65
Trading Co., Ltd. commodities
Zhejiang Shengshi Xinxing Gree Sales of
Sales revenue 5,202,670,390.20 6,698,292,374.49
Trading Co., Ltd. commodities
Shanghai Highly (Group) Co., Ltd. and Sales of
Sales revenue 1,487,554,791.81 1,722,755,847.66
its subsidiaries commodities
Zhuhai Yinlong New Energy Co., Ltd.
Sales of
and its subsidiaries and holding Sales revenue 321,087,832.12 2,654,821,257.97
commodities
subsidiaries [Note]
Sales of
Beijing Gree Technology Co., Ltd. Sales revenue 79,181,522.51 97,653,467.06
commodities
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Type of related Contents of related Amount for the Amount for the previous
Related party
transactions transactions current period period
Zhuhai Gree Group Co., Ltd. and its Sales of
Sales revenue 102,866.04 151,708.62
holding companies commodities
Shandong Red April Brand Sales of
Sales revenue 102,226.24
Management Co., Ltd. commodities
Zhuhai Xima Pearl New Media Co., Sales of
Sales revenue 75,195.22 169,483.08
Ltd. commodities
Sales of
Gree Volinco (Hong Kong) Ltd. Sales revenue 3,637,231,905.31
commodities
Wuhu Green Renewable Resources Sales of
Sales revenue 3,620,606.44 7,509,231.01
Recycling Co., Ltd. commodities
Total 20,850,962,756.40 25,335,439,419.29
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.
and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
(2) Associated trusteeship management/contracting or entrusted management/contracting-out
None.
(3) Associated lease
1) The Company as the lessor:
Confirmed income earned on leases
Type of leased
Name of the lessee
assets Amount for the Amount for the
current period previous period
Beijing Gree Technology Co., Ltd. House rental 6,113.20
Wuhu Green Renewable Resources Recycling Co., Ltd. House rental 621,678.57 1,492,028.57
Songyuan Grain Group Co., Ltd. and its subsidiaries House rental 98,297.13 98,297.13
Chongqing Pargo Mechanical Equipment Co., Ltd. House rental 4,402.87
Total 724,378.57 1,596,438.90
2) The Company as the lessee:
Confirmed rental expenditure
Type of leased
Name of the lessor Amount for the Amount for the
assets
current period previous period
Lease of fixed
Zhuhai Gree Group Co., Ltd. and its subsidiaries 1,561,299.20 1,480,384.20
assets
Total 1,561,299.20 1,480,384.20
(4) Associated guarantee
None.
(5) Fund borrowing of related party
Related party Amount of borrowing in Balance of Start date Date due Description
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
the current period borrowing at the
end of the period
Songyuan Grain
16 - 30 16 - 30 December,
Group Co., Ltd. and 1,100,000,000.00 1,100,000,000.00
December, 2019 2020
its subsidiaries
Zhejiang Shengshi
31 October, Buyer's
Xinxing Gree Trading 890,000,000.00 890,000,000.00 31 October, 2022
2019 credit
Co., Ltd.
Henan Shengshi
22 February, Buyer's
Xinxing Gree Trading 1,400,000,000.00 1,400,000,000.00 22 February, 2021
2019 credit
Co., Ltd.
29 September, 29 September,
Shandong Jierui Buyer's
217,400,000.00 517,400,000.00 2017 to 26 2020 to 14
Logistics Co., Ltd. credit
December, 2019 January, 2021
Shandong Zhirun
9 -11 February, 9 -11 February, Buyer's
Electric Appliances 80,000,000.00
2018 2020 credit
Co., Ltd.
Total 3,607,400,000.00 3,987,400,000.00
(6) Asset transfer and debt restructuring of the related party
None.
(7) Remunerations for key management
Amount for the current Amount for the previous
Item
period period
Remunerations for key management 23,636,286.12 30,237,000.00
6. Balance of accounts receivable and payable by related parties
(1) Receivable items
Balance at the end of the period Beginning Balance
Item Related party Bad debt
Book balance Book balance Bad debt provision
provision
Shanghai Highly (Group) Co.,
Accounts receivable Ltd. and its holding 342,684,906.60 17,134,245.33 421,763,035.60 21,088,151.79
subsidiaries
Zhuhai Yinlong New Energy
Accounts receivable Co., Ltd. and its subsidiaries 287,055,620.42 16,308,943.33 634,540,607.16 31,720,763.35
and holding subsidiaries
Zhuhai Xima Pearl New
Accounts receivable 61,437.00 3,071.85
Media Co., Ltd.
Zhuhai Gree Group Co., Ltd.
Accounts receivable 522,694.59 26,134.73
and its subsidiaries
Gree Volinco (Hong Kong)
Accounts receivable 112,395,330.32 5,619,766.52
Ltd.
Wuhu Green Renewable
Accounts receivable 6,629,024.73 331,451.24 48,383,305.89 2,419,165.29
Resources Recycling Co., Ltd.
Wuhu Green Renewable
Other receivables 1,696,192.13 405,141.73
Resources Recycling Co., Ltd.
Zhuhai Gree Group Co., Ltd.
Other receivables 44,880.00 2,244.00
and its holding companies
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period Beginning Balance
Item Related party Bad debt
Book balance Book balance Bad debt provision
provision
Hunan Green Renewable
Other receivables 6,445.00 6,445.00
Resources Recycling Co., Ltd.
Zhuhai Yinlong New Energy
Receivables
Co., Ltd. and its subsidiaries 866,644,774.28 858,789,559.36
financing
and holding subsidiaries
Receivables Shandong Shengshi Xinxing
1,445,558,820.62
financing Gree Trading Co., Ltd.
Receivables Henan Shengshi Xinxing Gree
1,378,451,569.12 1,745,561,383.18
financing Trading Co., Ltd.
Receivables Shandong Jierui Logistics Co.,
958,492,633.76
financing Ltd.
Receivables Zhejiang Shengshi Xinxing
962,599,288.80 829,454,801.96
financing Gree Trading Co., Ltd.
Receivables Shanghai Highly (Group) Co.,
209,149,853.41 401,435,410.08
financing Ltd. and its subsidiaries
Receivables Shandong Red April Brand
29,922,971.83
financing Management Co., Ltd.
Hunan Green Renewable
Prepayment 5,353,115.18
Resources Recycling Co., Ltd.
Beijing Gree Technology Co.,
Prepayment 2,921,904.70
Ltd.
Songyuan Food Group Co.,
Prepayment 729,649.40
Ltd.
Chongqing Pargo Mechanical
Prepayment 982,237.44 535,370.77
Equipment Co., Ltd.
Henan Shengshi Xinxing Gree
Prepayment 253,888.42
Trading Co., Ltd.
Shanghai Highly (Group) Co.,
Prepayment 2,038,333.25 31,743.96
Ltd. and its subsidiaries
Disbursement of Henan Shengshi Xinxing Gree
1,400,000,000.00 35,000,000.00
loans and advances Trading Co., Ltd.
Disbursement of Zhejiang Shengshi Xinxing
890,000,000.00 22,250,000.00 668,100,000.00 16,702,500.00
loans and advances Gree Trading Co., Ltd.
Disbursement of Shandong Jierui Logistics Co.,
517,400,000.00 12,935,000.00
loans and advances Ltd.
Disbursement of Songyuan Food Group Co.,
1,100,000,000.00 27,500,000.00 290,000,000.00 7,250,000.00
loans and advances Ltd.
Disbursement of Shandong Zhirun Electric
80,000,000.00 2,000,000.00
loans and advances Appliances Co., Ltd.
Loans and advances Henan Shengshi Xinxing Gree
2,046,916.67
- accrued interest Trading Co., Ltd.
Loans and advances Zhejiang Shengshi Xinxing
1,376,038.89 747,132.22
- accrued interest Gree Trading Co., Ltd.
Loans and advances Shandong Jierui Logistics Co.,
725,263.89
- accrued interest Ltd.
Loans and advances Shandong Zhirun Electric
117,528.89
- accrued interest Appliances Co., Ltd.
Loans and advances Songyuan Food Group Co.,
81,079.17 424,004.16
- accrued interest Ltd.
Zhuhai Yinlong New Energy
Other current assets Co., Ltd. and its subsidiaries 802,418,995.36 1,529,380,653.66
and holding subsidiaries
Other non-current Chongqing Pargo Mechanical
281,863.41 7,483,832.15
assets Equipment Co., Ltd.
Other non-current Zhuhai Gree Group Co., Ltd.
150,355.40
assets and its holding companies
Total 11,285,241,852.13 133,488,846.48 7,560,182,600.70 85,214,177.68
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.
and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
(2) Due to related parties
Balance at the end of the
Item Related party Beginning Balance
period
Advances from customers Shandong Shengshi Xinxing Gree Trading Co., Ltd. 1,195,005,559.21
Advances from customers Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. 403,079,407.15 106,201,641.67
Advances from customers Henan Shengshi Xinxing Gree Trading Co., Ltd. 129,447,292.74 2,311,588,189.76
Advances from customers Shandong Red April Brand Management Co., Ltd. 985,644.12
Advances from customers Shanghai Highly (Group) Co., Ltd. and its holding subsidiaries 142,950.74
Advances from customers Zhuhai Gree Group Co., Ltd. and its subsidiaries 1,114,913.66
Deposit-taking Songyuan Food Group Co., Ltd. 50,021,372.44 21,054.93
Deposit-taking Zhuhai Gree Group Co., Ltd. and its subsidiaries 9,208,139.00 18,141,031.67
Deposit-taking Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. 50,347.95 4,179,456.47
Deposit-taking Shandong Shengshi Xinxing Gree Trading Co., Ltd. 49,087.42
Deposit-taking Shandong Jierui Logistics Co., Ltd. 13,324.91
Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its
Deposit-taking 29,714.68
holding companies
Deposit-taking Henan Shengshi Xinxing Gree Trading Co., Ltd. 7,691.24 6,601.40
Deposit-taking Shandong Zhirun Electric Appliances Co., Ltd. 196.01
Deposits from customers -
Zhuhai Gree Group Co., Ltd. and its holding companies 1,522.01 16,763.75
Accrued interest
Deposits from customers -
Songyuan Grain Group Co., Ltd. and its subsidiaries 1,168.95 2.25
Accrued interest
Deposits from customers -
Shandong Jierui Logistics Co., Ltd. 914.35
Accrued interest
Deposits from customers -
Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. 5.38 899.90
Accrued interest
Deposits from customers -
Shandong Shengshi Xinxing Gree Trading Co., Ltd. 5.25
Accrued interest
Deposits from customers - Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its
3.18
Accrued interest holding companies
Deposits from customers -
Henan Shengshi Xinxing Gree Trading Co., Ltd. 0.82 0.71
Accrued interest
Deposits from customers -
Shandong Zhirun Electric Appliances Co., Ltd. 0.02
Accrued interest
Accounts payable Shanghai Highly (Group) Co., Ltd. and its subsidiaries 445,278,880.37 351,971,296.27
Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and
Accounts payable 59,560,969.05 51,162,882.95
holding subsidiaries
Accounts payable Beijing Gree Technology Co., Ltd. 20,290,119.30 26,985,029.06
Accounts payable Hunan Green Renewable Resources Recycling Co., Ltd. 4,111,822.34
Accounts payable Wuhu Green Renewable Resources Recycling Co., Ltd. 4,011,812.79 40,520,264.86
Accounts payable Chongqing Pargo Mechanical Equipment Co., Ltd. 3,885,008.94 962,213.46
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the
Item Related party Beginning Balance
period
Accounts payable Zhuhai Gree Group Co., Ltd. and its subsidiaries 769,880.13 476,161.05
Accounts payable Songyuan Grain Group Co., Ltd. and its subsidiaries 722,696.60 518,030.00
Accounts payable Henan Shengshi Xinxing Gree Trading Co., Ltd. 249,988.68
Other payables Shanghai Highly (Group) Co., Ltd. and its subsidiaries 30,293.52 14,443.52
Other payables Beijing Gree Technology Co., Ltd. 5,402.42 5,402.42
Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its
Other payables 204.24
holding companies
Other payables Zhuhai Gree Group Co., Ltd. and its subsidiaries 5,411.63 35,411.63
Other payables Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. 300,000.00
Other payables Henan Shengshi Xinxing Gree Trading Co., Ltd. 100,000.00
Total 2,326,966,837.58 2,914,321,691.39
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.
and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
7. Related party's commitment
None.
8. Related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries
(1) Purchase of commodities/receiving of services and payables and prepayments
Balance at the end of the
Beginning Balance
Amount for the current Amount for the previous period
Related party Type of related transactions Contents of related transactions
period period Other non-current assets Other non-current assets
(+)/accounts payable (-) (+)/accounts payable (-)
Zhuhai Guangtong Automobile Purchase of fixed assets and New energy vehicles and energy
54,076,060.52 271,844,689.83 -55,832,870.55 -51,506,908.59
Co., Ltd. materials storage equipment
Zhuhai Yinlong Electric New energy vehicles and energy
Materials procurement 1,931,623.93 44,827.58 -218,273.50 -763,974.36
Appliance Co., Ltd. storage equipment
Zhuhai Yinlong New Energy Purchase of fixed assets and New energy vehicles and energy
4,677,568.56 607,758.62 -2,946,841.40 1,108,000.00
Co., Ltd. materials storage equipment
Shijiazhuang Zhongbo Purchase of fixed assets and New energy vehicles and energy
7,434,867.09
Automobile Co., Ltd. materials storage equipment
Tianjin Guangtong Automobile New energy vehicles and energy
Materials procurement 2,175,159.89 -25,677.08
Co., Ltd. storage equipment
Tianjin Yinlong New Energy New energy vehicles and energy
Materials procurement 622,066.91 -288.00
Co., Ltd. storage equipment
Chengdu Yinlong New Energy New energy vehicles and energy
Materials procurement 253,529.85 -286,488.73
Co., Ltd. storage equipment
Hebei Yinlong New Energy Co., New energy vehicles and energy
Fixed assets purchase 300,000.00
Ltd. storage equipment
Chengdu Guangtong Automobile New energy vehicles and energy
Materials procurement 1,218,216.07 -550,529.79
Co., Ltd. storage equipment
Total 72,389,092.82 272,497,276.03 -59,560,969.05 -51,162,882.95
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Sales of commodities/rendering of services and receivables and advances from customers
Balance at the end of the period Beginning Balance
Contents of Accounts Accounts
Type of related Amount for the Amount for the
Related party related receivable Receivables financing receivable Receivables financing /
transactions current period previous period
transactions (+)/advances from / other current assets (+)/advances from other current assets
customers (-) customers (-)
Hebei Yinlong New Energy Co., Sales of Intelligent
12,771,027.31 148,377,977.28 -8,363,164.52 648,985,142.03 11,514,400.00
Ltd. commodities equipment
Sales of Intelligent
Altairnano Inc. 100,000.00 0 100,000.00
commodities equipment
Chengdu Guangtong Automobile Sales of Intelligent
5,399,830.77 112,147,926.28 -779,170.51 0
Co., Ltd. commodities equipment
Tianjin Guangtong Automobile Co., Sales of Intelligent
54,796,039.36 102,925,737.93 -728,658.77 0
Ltd. commodities equipment
Chengdu Yinlong New Energy Co., Sales of Intelligent
23,795,711.05 1,149,343,163.12 0
Ltd. commodities equipment
Zhuhai Yinlong New Energy Co., Sales of Intelligent
6,541,792.14 10,708,858.59 135,400,789.99 802,418,995.36 6,236,300.00 2,367,244,012.90
Ltd. commodities equipment
Handan Branch of Zhuhai Sales of Intelligent
9,188,838.46 0 100,000.00
Guangtong Automobile Co., Ltd. commodities equipment
Tianjin Yinlong New Energy Co., Sales of Intelligent
126,713,067.31 1,068,362,238.89 0 616,596,420.49
Ltd. commodities equipment
Zhuhai Guangtong Automobile Co., Sales of Intelligent
36,972.48 723,853.08 67,893,830.24 -6,513.33 2,313,736.00
Ltd. commodities equipment
Zhuhai Yinlong Electric Appliance Sales of Intelligent
6,932,279.71 -6,924,346.16 0 14,393,228.32
Co., Ltd. commodities equipment
Shijiazhuang Zhongbo Automobile Sales of Intelligent
85,627,235.11 3,376.07 149,765,802.01 29,919.00
Co., Ltd. commodities equipment
Zhuhai Yinlong New Energy Co., Sales of Bus air
5,406,156.59 168,300,170.39
Ltd. commodities conditioners
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Balance at the end of the period Beginning Balance
Contents of Accounts Accounts
Type of related Amount for the Amount for the
Related party related receivable Receivables financing receivable Receivables financing /
transactions current period previous period
transactions (+)/advances from / other current assets (+)/advances from other current assets
customers (-) customers (-)
Zhuhai Guangtong Automobile Co., Sales of Bus air
10,258,290.60 4,189,316.80
Ltd. commodities conditioners
Tianjin Guangtong Automobile Co., Sales of Bus air
12,335,897.44 0
Ltd. commodities conditioners
Chengdu Guangtong Automobile Sales of Bus air
6,167,521.37 0
Co., Ltd. commodities conditioners
Handan Branch of Zhuhai Sales of Bus air
17,345,299.15 50,000.00 0
Guangtong Automobile Co., Ltd. commodities conditioners
Total 321,087,832.12 2,654,821,257.97 287,055,620.42 1,669,063,769.64 634,540,607.16 2,388,170,213.02
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(XIII) Share-based payments
None.
(XIV) Commitments and contingencies
1. Important commitments
None.
2. Contingencies
There were no important contingent issues that need to be disclosed as at 31 December, 2019
3. Others
None.
(XV) Events after the balance sheet date
1. Important non-adjustment matters
After the balance sheet date, the Company's actual controller has undergone a major change. For details, see (XII)
1.
2. Profit distribution
According to the resolution of the eleventh meeting of the eleventh session of board of directors, the Company's
profit distribution preplan of 2019: Calculated by the total stock capital of the Company equivalent to
6,015,730,878 shares, all shareholders will be distributed a cash of RMB 12 (tax included) per 10 shares, with the
total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the balance to be carried
forward to the future year. This distribution preplan still needs to be approved by the general meeting of
shareholders.
3. Sales return
No important sales return occurred after the balance sheet date.
4. Other events after the balance sheet date
(1) The impact of COVID-19 on the Company
The Company's main operations are mainly research and development, production and sales of household air
conditioners and HVAC equipment. In the first quarter of 2020, the Company's revenue and profit decreased
significantly over the same period of last year, mainly because the terminal market sales and installation activities
of the air-conditioning industry could hardly be carried out and the Company and upstream and downstream
enterprises could not resume work and production in time due to COVID-19; In the first quarter, due to the
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
shrinking terminal consumer demand of the air-conditioning industry and the expected impact of the
implementation of new energy efficiency standards, the industry competition was further intensified, and the
Company continued to implement active promotional policies.
(2) Repayment after the disbursement of loans and advances
As described in Note (VII) 11 Disbursement of loans and advances, in order to promote the win-win development
of the industrial chain and strengthens financial credit support for member units and upstream and downstream
enterprises, the Company fully exerted its own funds and improved its capital income. In the current period, the
Company increased foreign loans and advances. The balance of loans and advances - loans at the end of the period
was RMB 14,723,530,000.00. As of the disclosure date of this report, the corresponding loan repayments were
normal, and the cumulative repayment amount was RMB 4,622,620,000.00.
(XVI) Other important events
1. Correction of early errors in accounting
The Company had no important correction of early errors in accounting in the current period.
2. Debt restructuring
The Company had no debt restructuring in the current period.
3. Asset replacement
The Company had no asset replacement in the current period.
4. Pension plan
The Company had no pension plan in the current period.
5. Discontinued operation
Profit from discontinued
Income tax
Item Revenue Expense Total profit Net profits operation attributable to
expenses
owners of parent company
Gree (USA) Sales
282,858.16 -282,858.16 235,155.34 -518,013.50 -518,013.50
Co., Ltd.
(Continued)
Net cash flows Net cash flows
Net cash flows from
Item from operating from financing
investment activities
activities activities
Gree (USA) Sales Co., Ltd. -120,896,763.07
6. Other important events affecting investor decisions
The Company's first extraordinary general meeting of shareholders in 2020 considered and approved the
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
"Proposal on Debt Financing Instruments to be Registered and Issued", and agreed that the Company registers
debt financing instruments with a total amount not exceeding RMB 18 billion (inclusive), of which the
ultra-short-term financing bonds to be registered do not exceed RMB 10 billion (inclusive), the short-term
financing bonds to be registered do not exceed RMB 3 billion (inclusive), and the medium-term notes to be
registered do not exceed RMB 5 billion (inclusive).
The China Interbank Market Dealers Association held the 37th registration meeting in 2020 on 7 April, 2020,
agreed to accept the registration of the Company's ultra-short-term financing bonds, short-term financing bonds
and medium-term bills, and issued the Registration Acceptance Notice for them respectively
According to the Company's capital plan arrangement and the inter-bank market situation, during 15-16 April,
2020, the Company issued the first phase of ultra-short-term financing bonds for 2020, and the total actual
issuance amount was RMB 3 billion.
(XVII) Notes to main items of financial statements of the parent company
1. Accounts receivable
(1) Disclosure by account age
Aging Balance at the end of the period
Within 1 year 3,779,915,115.11
1 to 2 years 311,703,479.94
2 to 3 years 3,451,107.21
Over 3 years 15,325,449.45
Subtotal 4,110,395,151.71
Less: Bad debt provisions 237,124,630.38
Total 3,873,270,521.33
(2) Presentation by accruing method for bad debt provisions
Balance at the end of the period
Book balance Bad debt provision
Category
Accruing Carrying amount
Percentage
Amount Amount percentage
(%)
(%)
Accounts receivable with bad
debt provisions accrued 4,715,115.32 0.11 4,715,115.32 100.00
separately
Accounts receivable with bad
debt provisions accrued 4,105,680,036.39 99.89 232,409,515.06 5.66 3,873,270,521.33
according to the combination
Including: Combination 1:
3,480,423,548.05 84.68 232,409,515.06 6.68 3,248,014,032.99
Account age combination
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Combination 2: None risk
625,256,488.34 15.21 625,256,488.34
combination
Total 4,110,395,151.71 100.00 237,124,630.38 5.77 3,873,270,521.33
(Continued)
Beginning Balance
Book balance Bad debt provision
Category
Accruing Carrying amount
Percentage
Amount Amount percentage
(%)
(%)
Accounts receivable with bad
debt provisions accrued 4,715,115.32 0.18 4,715,115.32 100.00
separately
Accounts receivable with bad
debt provisions accrued 2,645,849,978.73 99.82 114,678,116.93 4.33 2,531,171,861.80
according to the combination
Including: Combination 1:
2,120,670,464.91 80.01 114,678,116.93 5.41 2,005,992,347.98
Account age combination
Combination 2: None risk
525,179,513.82 19.81 525,179,513.82
combination
Total 2,650,565,094.05 100.00 119,393,232.25 4.50 2,531,171,861.80
3) Accounts receivable with bad debt provisions accrued separately at the end of the period
Balance at the end of the period
Accounts receivable Bad debt Percentage of Reason for
Book balance
provision appropriation (%) appropriation
Expected to be
Entity 1 4,715,115.32 4,715,115.32 100.00
difficult to recover
Total 4,715,115.32 4,715,115.32 100.00
4) In the combination, the accounts receivable of which bad debt provisions are appropriated according to the
account age combination
Balance at the end of the period
Item Percentage of
Book balance Bad debt provision
appropriation (%)
Within 1 year 3,154,658,626.77 157,732,931.33 5.00
1 to 2 years 311,703,479.94 62,340,695.99 20.00
2 to 3 years 3,451,107.21 1,725,553.61 50.00
Over 3 years 10,610,334.13 10,610,334.13 100.00
Total 3,480,423,548.05 232,409,515.06 6.68
[Note] Please refer to Note (V) 10 for the basis for determining the combination.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(3) Particulars on bad debt provisions
Change of the current period
Balance at the end
Category Beginning Balance Recovered or Resold or Other of the period
Appropriation
reversed wrote-off changes
Aging
114,678,116.93 117,731,822.52 424.39 232,409,515.06
combination
Accrued
4,715,115.32 4,715,115.32
separately
Total 119,393,232.25 117,731,822.52 424.39 237,124,630.38
(4) Particulars on accounts receivable actually wrote-off in the current period
Item Wrote-off amount
Accounts receivable actually wrote-off 424.39
(5) Accounts receivable of top 5 debtors in the balance at the end of the period collected by the debtor
Percentage (%) in the total Balance of provision for
Balance at the end of the period of
Name of entity balance at the end of the bad debts at the end of the
accounts receivable
period of accounts receivable period
First 1,188,138,220.65 28.91 59,406,911.03
Second 657,104,394.32 15.99
Third 236,979,286.32 5.77 11,848,964.32
Fourth 168,300,170.39 4.09 8,415,008.52
Fifth 159,713,662.98 3.89 7,985,683.15
Total 2,410,235,734.66 58.65 87,656,567.02
(6) Accounts receivable derecognized due to the transfer of financial assets
None.
(7) Assets and liabilities formed due to the transfer and continuous involvement of accounts receivable
None.
2. Other receivables
Balance at the end of the
Item Beginning Balance
period
Other receivables 2,757,398,837.97 2,176,997,136.30
Total 2,757,398,837.97 2,176,997,136.30
(1) Other receivables disclosed by account age
Aging Balance at the end of the period
Within 1 year 2,760,720,897.41
1 to 2 years 1,674,356.45
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
2 to 3 years 439,895.78
Over 3 years 1,343,631.22
Subtotal 2,764,178,780.86
Less: Bad debt provisions 6,779,942.89
Total 2,757,398,837.97
(2) Other receivables disclosed by amount nature
Book balance at the end Book balance at the
Nature of money
of the period beginning of the period
Intercourse funds and risk-free money 2,764,178,780.86 2,185,094,406.40
Less: Bad debt provisions 6,779,942.89 8,097,270.10
Total 2,757,398,837.97 2,176,997,136.30
(3) Particulars on accruing of other receivables
Phase 1 Phase 2 Phase 3
Expected credit loss Expected credit loss
Bad debt provision Expected credit for the entire for the entire Total
losses in the next duration (no credit duration (credit
12 months impairment impairment
occurred) occurred)
Balance as at 1 January, 2019 6,744,256.13 1,353,013.97 8,097,270.10
Balance as at 1 January, 2019 in the current
period
Appropriation for the current period 545,436.43 545,436.43
Reserved in the current period 1,862,763.64 1,862,763.64
Balance as at 31 December, 2019 4,881,492.49 1,898,450.40 6,779,942.89
(4) Particulars on accruing of other receivables in the current period
Change of the current period Balance at the
Beginning
Category Recovered or Resold or Other end of the
Balance Appropriation
reversed wrote-off changes period
Aging combination 8,097,270.10 545,436.43 1,862,763.64 6,779,942.89
Total 8,097,270.10 545,436.43 1,862,763.64 6,779,942.89
(5) Particulars on other receivables actually wrote-off in the current period
None.
(6) Other receivables of top 5 debtors in the balance at the end of the period collected by the debtor
Proportion to the Balance of
Balance at the end of total balance of provision for
Name of entity Nature of money Aging
the period other receivables at bad debts at
the end of the the end of the
267
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
period (%) period
First Risk-free money 1,285,473,348.47 Within 1 year 46.50
Second Risk-free money 1,089,817,314.64 Within 1 year 39.43
Third Risk-free money 196,497,262.94 Within 1 year 7.11
Fourth Risk-free money 45,000,000.00 Within 1 year 1.63
Fifth Risk-free money 14,176,715.32 Within 1 year 0.51
Total 2,630,964,641.37 95.18
(7) Receivables involving government subsidies
None.
(8) Other receivables derecognized due to the transfer of financial assets
None.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
3. Long-term equity investment
Balance at the end of the period Beginning Balance
Item
Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Investment in subsidiaries 13,160,012,796.05 13,160,012,796.05 10,288,212,796.05 10,288,212,796.05
Investment in associated and contractual enterprises 7,066,126,170.64 1,940,009.35 7,064,186,161.29 2,252,672,471.06 1,940,009.35 2,250,732,461.71
Total 20,226,138,966.69 1,940,009.35 20,224,198,957.34 12,540,885,267.11 1,940,009.35 12,538,945,257.76
(1) Investment in subsidiaries
Increase/Decrease in the current period
Balance of provision
Opening balance (book Closing balance (book
Name of invested entities Appropriated for impairment at the
value) value)
Additional investment Disinvestment provision for Others end of the period
impairment
Gree (Brazil) Electric Appliances Co., Ltd. 659,342,914.36 659,342,914.36
Gree (Chongqing) Electric Appliances Co.,
223,100,000.00 223,100,000.00
Ltd.
Shanghai GREE Air Conditioners Sales Co.,
1,800,000.00 1,800,000.00
Ltd
Zhuhai Gree Group Finance Company
1,400,371,239.99 1,400,371,239.99
Limited
Zhuhai Gree Electrical Co., Ltd. 184,680,359.95 1,500,000,000.00 1,684,680,359.95
Zhuhai Landa Compressor Co., Ltd. 968,225,519.93 968,225,519.93
Zhuhai Gree Xinyuan Electronics Co., Ltd. 154,290,096.61 154,290,096.61
Zhuhai Gree TOSOT Life Electric
30,000,000.00 30,000,000.00
Appliances Co., Lid.
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Increase/Decrease in the current period
Balance of provision
Opening balance (book Closing balance (book
Name of invested entities Appropriated for impairment at the
value) value)
Additional investment Disinvestment provision for Others end of the period
impairment
Zhuhai Kaibang Motor Manufacture Co.,
83,860,929.67 83,860,929.67
Ltd.
Gree Electric Appliances (Hefei) Co., Ltd. 505,370,626.10 505,370,626.10
Hong Kong Gree Electric Appliances Sales
472,879.08 472,879.08
Co., Ltd.
Zhuhai Gree Dakin Device Co., Ltd. 283,117,574.47 283,117,574.47
Zhuhai Gree Daikin Precision Mold Co., Ltd. 201,911,186.86 201,911,186.86
GREE (Zhongshan) Home Appliances Co.,
30,000,000.00 30,000,000.00
Ltd.
Gree Green Refrigeration Technology Center
676,040,000.00 676,040,000.00
Co., Ltd. Of Zhuhai
Zhuhai HVAC Equipment Co., Ltd. 100,000,000.00 100,000,000.00
Gree (Wuhan) Electric Appliances Co., Ltd. 600,000,000.00 600,000,000.00
Gree (Zhengzhou) Electric Appliances Co.,
720,000,000.00 720,000,000.00
Ltd.
Zhengzhou Gree Green Resources Recycling
5,000,000.00 5,000,000.00
Co., Ltd
Hunan Green Resources Recycling Co., Ltd 5,000,000.00 5,000,000.00
Wuhu Green Resources Recycling Co., Ltd. 2,000,000.00 2,000,000.00
Gree (Shijiazhuang) Small Home Appliances
10,000,000.00 10,000,000.00
Co., Ltd.
Gree (Wuhu) Electric Appliances Co., Ltd. 20,000,000.00 20,000,000.00
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Increase/Decrease in the current period
Balance of provision
Opening balance (book Closing balance (book
Name of invested entities Appropriated for impairment at the
value) value)
Additional investment Disinvestment provision for Others end of the period
impairment
Shijiazhuang Green Resources Recycling
5,000,000.00 5,000,000.00
Co., Ltd.
Gree (Shijiazhuang) Electric Appliances Co.,
98,940,059.97 98,940,059.97
Ltd.
Tianjin Green Resources Recycling Co., Ltd. 5,000,000.00 5,000,000.00
Zhuhai Ligao Precision Manufacturing Co.,
30,000,000.00 30,000,000.00
Ltd.
Changsha Gree HVAC Equipment Co., Ltd. 50,000,000.00 50,000,000.00
Zhuhai IVP Information Technology Co.,
100,000,000.00 100,000,000.00
Ltd.
Gree TOSOT (Suqian) Home Appliances
140,000,000.00 140,000,000.00
Co., Ltd.
Wuhu Precision Manufacturing Co., Ltd. 30,000,000.00 30,000,000.00
Zhuhai Gree New Material Co., Ltd. 30,000,000.00 30,000,000.00
Zhuhai GREE Intelligent Equipment Co.,
100,000,000.00 100,000,000.00
Ltd.
Zhuhai Hengqin GREE business factoring
100,000,000.00 100,000,000.00
Co., Ltd.
Zhuhai Gree Precision Mold Co., Ltd. 100,000,000.00 100,000,000.00
Gree (Wuhan) Precision Mold Co., Ltd. 80,000,000.00 80,000,000.00
Zhuhai GREE Intelligent Equipment
50,000,000.00 50,000,000.00
Technology Research Institute Co., Ltd.
Zhuhai Gree Energy Environment
200,000,000.00 200,000,000.00
Technology Co., Ltd.
271
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Increase/Decrease in the current period
Balance of provision
Opening balance (book Closing balance (book
Name of invested entities Appropriated for impairment at the
value) value)
Additional investment Disinvestment provision for Others end of the period
impairment
Gree (Wuhan) HVAC Equipment Co., Ltd. 40,000,000.00 40,000,000.00
Gree (Hangzhou) Electric Appliances Co.,
300,000,000.00 250,000,000.00 550,000,000.00
Ltd.
Zhuhai Gree Info Technology Co., Ltd. 510,000.00 510,000.00
Gree (Wu'an) Precision Equipment
210,000,000.00 210,000,000.00
Manufacturing Co., Ltd.
Zhuhai Gree Transportation Co., Ltd. 50,000,000.00 50,000,000.00
Gree Electric Appliances (Luoyang) Co.,
50,000,000.00 50,000,000.00
Ltd.
Gree Electric Appliances (Nanjing) Co., Ltd. 200,000,000.00 100,000,000.00 300,000,000.00
Zhuhai Gree Material Supply Co., Ltd. 30,000,000.00 120,000,000.00 150,000,000.00
Gree Electric Appliances (Chengdu) Co.,
100,000,000.00 300,000,000.00 400,000,000.00
Ltd.
Hefei Kinghome Electrical Co., Ltd. 1,247,087,108.76 1,247,087,108.76
Zhuhai Zero Boundary Integrated Circuit
50,000,000.00 50,000,000.00
Co., Ltd.
Zhuhai Lianyun Technology Co., Ltd. 7,000,000.00 33,000,000.00 40,000,000.00
Zhuhai Gree Electrical and Mechanical
20,092,300.30 129,000,000.00 149,092,300.30
Engineering Co., Ltd.
Zhuhai Gree Green Resources Recycling
50,000,000.00 50,000,000.00
Co., Ltd
Zhuhai Gree Lvkong Technology Co., Ltd. 270,000,000.00 270,000,000.00
272
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Increase/Decrease in the current period
Balance of provision
Opening balance (book Closing balance (book
Name of invested entities Appropriated for impairment at the
value) value)
Additional investment Disinvestment provision for Others end of the period
impairment
Gree (Luoyang) Washing Machine Co., Ltd. 50,000,000.00 50,000,000.00
Guochuang Energy Internet Innovation
22,500,000.00 22,500,000.00
Center (Guangdong) Co., Ltd.
Gree (Anji) Precision Mold Co., Ltd. 47,300,000.00 47,300,000.00
Total 10,288,212,796.05 2,871,800,000.00 13,160,012,796.05
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
(2) Investment in associated and contractual enterprises
Beginning Balance Increase/Decrease in the current period Balance at the end of the period
Investment Adjustment of Cash dividends
Name of invested entities Additional Changes Appropriated
Provision for profits/losses other or profits Provision for
Original value investment/withdr in other provision for Original value
impairment recognized under comprehensive declared to impairment
ew investment equities impairment
the equity method income distribute
1. Partnership
Songyuan Food Group Co.,
70,904,579.15 3,767,568.71 74,672,147.86
Ltd.
Subtotal 70,904,579.15 3,767,568.71 74,672,147.86
2. Joint venture
Gree (Vietnam) Electric
1,940,009.35 1,940,009.35 1,940,009.35 1,940,009.35
Appliances, Inc.
Liaowang All Media
28,057,883.29 3,453,907.07 31,511,790.36
Communication Co., Ltd.
Beijing Gree Technology
2,309,507.13 392,326.58 2,701,833.71
Co., Ltd.
Chongqing Pargo
Mechanical Equipment Co., 10,715,459.43 850,045.78 11,565,505.21
Ltd.
Gree Volinco (Hong Kong)
972,937.26 -53,146.98 4,536.91 924,327.19
Ltd.
Wuhan Digital Design and
Manufacturing Innovation 14,483,961.08 90,880.77 14,574,841.85
Center Co., Ltd.
Hunan Guoxin
Semiconductor Technology 9,950,321.68 59,848.82 10,010,170.50
Co., Ltd.
Zhuhai Ronglin Equity
Investment Partnership 2,113,337,812.69 -30,054,643.59 4,784,432,411.50 6,867,715,580.60
(Limited Partnership)
274
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Beginning Balance Increase/Decrease in the current period Balance at the end of the period
Investment Adjustment of Cash dividends
Name of invested entities Additional Changes Appropriated
Provision for profits/losses other or profits Provision for
Original value investment/withdr in other provision for Original value
impairment recognized under comprehensive declared to impairment
ew investment equities impairment
the equity method income distribute
Henan Yuze Finance
50,000,000.00 509,964.01 50,509,964.01
Leasing Co., Ltd.
Subtotal 2,181,767,891.91 1,940,009.35 50,000,000.00 -24,750,817.54 4,784,436,948.41 6,991,454,022.78 1,940,009.35
Total 2,252,672,471.06 1,940,009.35 50,000,000.00 -20,983,248.83 4,784,436,948.41 7,066,126,170.64 1,940,009.35
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
4. Operating revenues and operating costs
Amount for the current period Amount for the previous period
Item
Revenue Cost Revenue Cost
Main business 130,710,855,078.36 93,652,520,856.50 147,450,211,574.91 105,446,247,170.79
Other businesses 5,508,511,105.25 5,056,537,993.65 14,303,554,532.18 13,692,644,187.99
Total 136,219,366,183.61 98,709,058,850.15 161,753,766,107.09 119,138,891,358.78
5. Investment income
Amount for the current Amount for the previous
Item
period period
Long-term equity investment income measured by equity method -20,983,248.83 129,541.96
Investment income from disposal of long-term equity investment 974,832.42
Investment income from derivative financial instruments -77,928,757.80 -6,768,139.22
Investment income related to financial assets available for sale —— 24,305,463.38
Investment income related to financial assets measured at their fair values
—— 12,480,038.67
and of which the changes are recorded into the current profits and losses
Dividend share confirmed for long-term equity investment income
4,658,202,677.12 3,815,836,662.42
measured by cost method
Investment income related to trading financial assets 48,942,780.74 ——
Investment income related to other equity instrument investments 13,533,474.60 ——
Total 4,621,766,925.83 3,846,958,399.63
(XVIII) Supplementary information
1. Non-recurring profit and loss
The Company's non-recurring profit and loss incurred in the Report Period (profit presented with a positive
number and loss presented with a negative number):
Amount for the current
Item Description
period
For details, see Note (VII) 57, Note
Profit and loss from disposal of non-current assets -9,293,929.38
(VII) 58 and Note (VII) 59
Governmental subsidies recorded into the current gains and losses
(excluding the governmental subsidies closely relating to the For details, see Note (VII) 52 and
1,215,852,371.66
business of the enterprise and enjoyed by a fixed quota or a fixed Note (VII) 58
amount in accordance with the state policies)
Capital occupation fee collected from the non-financial institution
359,713.10
and recorded into the current gains and losses
Gains and losses caused by fair value changes from the holding of
trading financial assets, derivative financial assets, trading
1,449,722.86
financial liabilities and derivative financial liabilities, and
investment income obtained from the disposal of trading financial
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Amount for the current
Item Description
period
assets, derivative financial assets, trading financial liabilities,
derivative financial liabilities and other debt investments, except
for the effective hedging business related to the Company's
normal business operations
Non-operating incomes and expenditures other than the above For details, see Note (VII) 58 and
-530,486,147.03
items Note (VII) 59
Other profit and loss items that conform to the definition of
997,770.17
non-recurring profit and loss
Subtotal 678,879,501.38
Less: Influence amount of income tax 147,189,032.83
Impact of minority shareholders' equity 6,561,011.03
Total 525,129,457.52
2. Rate of return on net assets and earnings per share
Rate of return on net assets and earnings per share of the Company in the Report Period:
Weighted average Earnings per share
Item return on net assets Basic earnings per Diluted earnings
(%) share per share
Net profit attributable to shareholders of ordinary stocks of
25.72 4.11 4.11
the Company
Net profit attributable to shareholders of ordinary stocks of
25.17 4.02 4.02
the Company after deduction of non-recurring profit and loss
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GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2019
Section XIII References
(I) The accounting statements signed and sealed by Dong Mingzhu, the Company's legal representative, Wang
Jingdong, responsible person in charge of accounting work and Liao Jianxiong, in-charge person of accounting
institution.
(II) The original audit report sealed by China Audit Union Power Certified Public Accountants Co., Ltd. and
signed and sealed by certified public accountants Gong Jingwei and Wu Zihao.
(III) Originals and original drafts of all the Company's documents and announcements published on the
newspapers designated by CSRC and on www.cninfo.com.cn within the Report Period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
30 April, 2020
278
