Wuxi Little Swan Company Limited Annual Report 2017
WUXI LITTLE SWAN COMPANY LIMITED
ANNUAL REPORT 2017
March 2018
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Wuxi Little Swan Company Limited Annual Report 2017
Part I Important Statements, Table of Contents and Definitions
The Board of Directors (or the ―Board‖), the Supervisory Board, as well as the Directors,
Supervisors and senior management of Wuxi Little Swan Company Limited (the ―Company‖)
hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall
be jointly and severally liable for any false representations, misleading statements or material
omissions in this Report.
Mr. Fang Hongbo, the Company‘s legal representative, Mr. Sun Yunan, the Company‘s Chief
Financial Officer, and Mr. Xu Yunwei, the Company‘s Financial Manager hereby guarantee that the
Financial Statements carried in this Report are factual, accurate and complete.
All the Company‘s Directors have attended the Board meeting for the review of this Report.
Any plans for the future and other forward-looking statements mentioned in this Report shall NOT
be considered as virtual promises of the Company to investors. Therefore, investors are kindly
reminded to pay attention to possible investment risks.
The Board has considered and approved a proposal for profit distribution: Based on the total shares
of 632,487,764, a cash dividend of RMB10.00 (tax inclusive) per 10 shares would be distributed to
all the shareholders, with no stock dividend in any form.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
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Wuxi Little Swan Company Limited Annual Report 2017
Table of Contents
Part I Important Statements, Table of Contents and Definitions ......................................................... 2
Part II Corporate Profile and Key Operating Results .......................................................................... 5
Part III Business Summary .................................................................................................................. 9
Part IV Company Performance Discussion and Analysis .................................................................. 13
Part V Significant Events ................................................................................................................... 31
Part VI Share Changes and Shareholder Information ........................................................................ 47
Part VII Preference Shares ................................................................................................................. 53
Part VIII Directors, Supervisors, Executive Officers and Staff ......................................................... 54
Part IX Corporate Governance ........................................................................................................... 61
Part X Corporate Bonds ..................................................................................................................... 67
Part XI Financial Report ............................................................................................................... - 68 -
Part XII Documents Available for Reference................................................................................... 168
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Wuxi Little Swan Company Limited Annual Report 2017
Definitions
Term Definition
Company, the Company or Little Swan Wuxi Little Swan Company Limited
Midea Group Midea Group Co., Ltd.
TITONI TITONI Investments Development Ltd.
Midea Holding Midea Holding Co., Ltd.
Midea Group Finance Midea Group Finance Co., Ltd.
GD Midea Holding GD Midea Holding Co., Ltd.
Hefei Midea Washing Machine Hefei Midea Washing Machine Co., Ltd.
Wuxi FILIN Electronics Wuxi FILIN Electronics Co., Ltd.
CSRC The China Securities Regulatory Commission
The ―Reporting Period‖ The period from January 1, 2017 to December 31, 2017
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Wuxi Little Swan Company Limited Annual Report 2017
Part II Corporate Profile and Key Operating Results
I Corporate Information
Stock name Little Swan A, Little Swan B Stock code 000418, 200418
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 无锡小天鹅股份有限公司
Abbr. 小天鹅
Company name in English Wuxi Little Swan Company Limited
Legal representative Fang Hongbo
No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province,
Registered address
P.R.China
Zip code 214028
No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province,
Office address
P.R.China
Zip code 214028
Company website http://www.littleswan.com
Email address ir@littleswan.com.cn
II Contact Information
Board Secretary Securities Representative
Name Zhou Sixiu Zhao Yulin
No. 18, Changjiang Road S., National Hi-tech No. 18, Changjiang Road S., National Hi-tech
Address Development Zone, Wuxi, Jiangsu Province, Development Zone, Wuxi, Jiangsu Province,
P.R.China P.R.China
Tel. 0510-81082320 0510-81082377
Fax 0510-83720879 0510-83720879
Email address ir@littleswan.com.cn ir@littleswan.com.cn
III Media for Information Disclosure and Place where this Report is Kept
Newspapers designated by the Company for information disclosure Securities Times, Ta Kung Pao (HK)
Website designated by CSRC for publication of this Report http://www.cninfo.com.cn
Place where this Report is kept Securities Department of the Company
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Wuxi Little Swan Company Limited Annual Report 2017
IV Company Registered Information and Alterations
Credibility code 91320200704046760T
Changes in primary business scope of
No changes
the Company since going public
The Company was incorporated in November 1993 by raising funds from targeted sources,
with Jiangsu Little Swan Group Co., Ltd. as the controlling shareholder. In June 2007, Wuxi
Guolian Development (Group) Co., Ltd. became the controlling shareholder as Jiangsu
Little Swan Group Co., Ltd. transferred the 87,673,341 Little Swan A-shares to it according
Changes of controlling shareholder
to law. In April 2008, GD Midea Holding Co., Ltd. became the controlling shareholder as it
took over, upon agreement, all the Company‘s shares held by Wuxi Guolian Development
(Group) Co., Ltd. In September 2013, Midea Group Co., Ltd. became the controlling
shareholder as it merged in GD Midea Holding Co., Ltd. in a stock swap.
V Other Information
Independent certified public accounting (or ―CPA‖) firm hired by the Company:
Name PricewaterhouseCoopers Zhong Tian LLP
11/F PricewaterhouseCoopers Center Link Square 2, 202 Hu Bin Road, Huangpu District,
Office address
Shanghai 200021, PRC
Accountants writing signatures Huang Meimei, Cai Xiujuan
Independent sponsor hired by the Company to exercise constant supervision over the Company during the
Reporting Period:
√ Applicable □ Not applicable
Name Office address Representative of sponsor Period of supervision
From August 4, 2006 to the date when all non-tradable
25/F, CTS Tower, No.
Huatai United share holders pay off the considerations that have been
4011 Shennan Road, Bian Jianguang
Securities Co., Ltd. paid in advance for them and the non-tradable shares
Shenzhen, Guangdong
are unlocked.
Independent financial advisor hired by the Company to exercise constant supervision over the Company during
the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
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Wuxi Little Swan Company Limited Annual Report 2017
2017 2016 Change 2015
Operating revenue (RMB) 21,384,699,076.65 16,334,914,501.69 30.91% 13,131,626,932.44
Net income attributable to shareholders of
1,506,412,505.22 1,175,054,922.85 28.20% 919,181,968.58
the listed company (RMB)
Net income attributable to shareholders of
the listed company before nonrecurring 1,456,953,109.59 1,162,942,494.37 25.28% 903,388,867.00
gains and losses (RMB)
Net cash flows from operating activities
2,015,753,818.30 3,896,072,787.38 -48.26% 3,598,695,468.80
(RMB)
Basic earnings per share (RMB/share) 2.38 1.86 27.96% 1.45
Diluted earnings per share (RMB/share) 2.38 1.86 27.96% 1.45
Weighted average return on equity (%) 23.12% 21.14% 1.98% 19.32%
December 31, 2017 December 31, 2016 Change December 31, 2015
Total assets (RMB) 21,338,421,243.67 18,885,986,837.64 12.99% 14,327,655,366.60
Net assets attributable to shareholders of the
7,047,090,800.97 5,983,847,862.72 17.77% 5,124,866,173.14
listed company (RMB)
VII Accounting Data Differences under CAS (Chinese Accounting Standards) and IFRS
(International Financial Reporting Standards) and Foreign Accounting Standards
1. Net Income and Net assets Differences Arising from Reporting under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Income and Net Assets Differences Arising from Reporting under CAS and Foreign Accounting
Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 5,690,391,543.42 4,877,669,310.79 5,409,053,680.82 5,407,584,541.62
Net income attributable to shareholders of
397,203,444.77 334,337,057.70 411,479,306.87 363,392,695.88
the listed company
Net income attributable to shareholders of 395,282,206.35 319,515,008.40 399,291,895.16 342,863,999.68
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Wuxi Little Swan Company Limited Annual Report 2017
the listed company before nonrecurring
gains and losses
Net cash flows from operating activities -168,999,611.82 26,588,919.58 831,632,909.66 1,326,531,600.88
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially
from what have been disclosed in the Company‘s quarterly or semi-annual reports.
□ Yes √ No
IX Nonrecurring Gains and Losses
Unit: RMB
Item 2017 2016 2015 Note
Gains/Losses on disposal of non-current assets (inclusive of offset
-975,423.00 -1,833,734.45 -280,195.57
impairment allowances)
Government subsidy charged to current gains/losses (exclusive of
government grants closely related to the Company‘s normal
31,151,026.31 13,872,569.26 31,893,010.09
business operations and constantly given at fixed quotas or amounts
as per government‘s uniform standards)
Gains/Losses on changes in fair value of trading financial assets
and liabilities & investment income from disposal of trading
financial assets and liabilities and available-for-sale financial assets 22,954,813.04
(exclusive of effective portion of hedges related to normal business
operations of the Company)
Effects of all adjustments required by taxation, accounting and
2,679,264.25
other applicable laws and regulations on current gains and losses
Non-operating income and expense other than above 12,987,329.86 4,288,097.78 -8,815,676.21
Less: Income tax effects 12,040,092.19 2,455,096.12 3,899,799.51
Non-controlling interests effects (net of tax) 4,618,258.39 1,759,407.99 5,783,501.47
Total 49,459,395.63 12,112,428.48 15,793,101.58 --
Explanation of why the Company classified an item as a nonrecurring gain/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Nonrecurring Gains and Losses, or reclassified any nonrecurring gain/loss item given as an example in
the said explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2017
Part III Business Summary
I Primary Business Scope for Reporting Period
Wuxi Little Swan Company Limited designs, manufactures and markets washing machines and clothes driers. Its
main products include roller washing machines, fully-auto washing machines, double-cylinder washing machines
and clothes driers. Little Swan is the earliest washing machine manufacturer in China. In 1978, China‘s first
fully-auto washing machine greeted the world in the Company. And the Company has focused on clothes driers as
a new business in the recent years. The Company is one of the world‘s few manufacturers who can produce the
full lines of both washing machines and clothes driers.
The Company has attached great importance to continual investment in research and development, with a
RMB909 million investment in this respect in 2017 and over 800 R&D personnel. The Company has a sound
technological R&D system, including one state-level technological center and two state-recognized labs. Little
Swan Lab is the first washing machine lab in China to pass the UL North American safety verification and the
German VDE verification. Little Swan holds on to independent innovation and has the internationally advanced
frequency-changing, intelligent control, structure design, industrial design and other core washing technologies. It
owns 2 manufacturing bases, one in Wuxi, Jiangsu Province and the other one in Hefei, Anhui Province, with a
total floor area of more than 800,000 ㎡ as well as a combined annual production capacity reaching 24 million
units.. It also has domestically and internationally first-class manufacturing equipments and an experienced
manufacturing team. The Company‘s products are sold to the domestic market as well as over 160 other countries
and regions, with the overseas market accounting for approximately 20% in the Company‘s total sales. In
domestic sale, the Company adopts the marketing mode of ―agents+direct sale‖ and simultaneously develops the
online and offline channels. In overseas sale, the Company focuses on OEM and attaches importance to its own
brands at the same time. The Company adopts a two-brand strategy (―Little Swan‖ and ―Midea‖) and the business
under both brands has seen fast and sound growth in the recent years.
The Company has been focusing on its main business, improving its product mix according to consumers‘ needs,
and increasing product quality. Therefore, its management efficiency has increased significantly, its profitability
has been enhanced and its position in the industry as well as its share in the market have kept increasing, which
have made the Company one of the most competitive washing machine manufacturers. According to All View
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Wuxi Little Swan Company Limited Annual Report 2017
Cloud, a data company, the Company took up a share of 28.1% in the domestic retail market of washing machines
by unit sales in the period from January to December 2017, 0.8 percentage point higher than last year; and
accounted for 24.6% in domestic retail sales value, up by 1.3 percentage points. Meanwhile, according to customs
statistics, the Company‘s share in China‘s export volume of washing machines was 19.4% in the period from
January to December 2017, 1.6 percentage points higher than last year; and that percentage in China‘s export
value was 17.2%, up by 3.6 percentage points. These percentages were both the highest among the country‘s
washing machine makers.
For the status quo and seasonality of the laundry industry, which is currently at a mature stage, please see ―(I)
Macro-Environment‖ under ―I Overview‖ in ―Part IV Company Performance Discussion and Analysis‖, as well as
―Tendency of Industry Development‖ under ―IX Outlook of the Company‘s Future Development‖ in the same
part.
II Material Changes in Main Assets
1. Material Changes in Main Assets
Main assets Reason for any material change in the period
Equity assets No material change
Property, plant and equipment No material change
Intangible assets No material change
Due to equipment purchase for a roller washing machine capacity expansion program,
Construction in progress
construction in progress increased by RMB37.97 million
2. Main Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Our core competitiveness is demonstrated in the following aspects:
1. Our knowledge and experience accumulated in the long history of our main business. We are the sole
company in China that has focused on the washing machine industry since the end of 1970s. As of the end of the
Reporting Period, we have produced and sold over 100 million washing machines. Profound knowledge and
experience has been accumulated through these several decades in technology, R&D and innovation, market
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Wuxi Little Swan Company Limited Annual Report 2017
research, business operation, etc., which has been transformed into our tacit knowledge through the accumulation
and inheritance by our talent team and has thus become our most important core competitiveness.
2. Our capability of seeing the industry clearly and R&D. We have our unique capability of judging and
foreseeing developments in the industry and technology. Through constant input of R&D resources over the years,
we have owned leading technological competitiveness in the industry. We hold on to independent innovation and
have the internationally advanced frequency-changing, intelligent control, structure design, industrial design and
other core technologies. As of the end of the Reporting Period, we boast more than 2,000 washing
machine-related patents, as well as over 200 software copyrights. We connect technology, products and customers
through medium and long-term technological planning, and have research talent, talent reserve and development
talent for our R&D.
3. Our capability of managing the industrial chain. We keep building a customer-oriented supply chain
management system, have set up an industry-leading cross-enterprise procurement platform with the help of
Midea Group, constantly increase the efficiency of our supply chain and foster a strategic partnership with our
suppliers. In terms of channels, in the domestic first and secondary markets, we mainly work with Suning, Gome
and some other big regional customers; in the tertiary and fourth markets, we combine agent channels, flagship
stores and franchised stores to distribute our products to households. In e-commerce, we continue to enhance
cooperation with major online shopping platforms, expand our own online shopping center and optimize the
supply of products. As a result, our online sales have achieved a fast growth. Overseas, we keep optimizing our
global operations, deepening our cooperation with strategic customers and enhancing the promotion of our own
brands. We enjoy a good and long-term cooperation with our major customers at home and abroad.
4. Our capability to respond to needs of consumers. We have been keeping a watchful eye on market changes,
studying consumers‘ needs, and focusing on improvement of the whole process experience of customers in
shopping, product use and after-sales service. Consumers are always looking for professional, intelligent, green
and individualized washing machines. And we satisfy customers‘ needs with the spirit of craftsman and provide
them with extremely easy use experience through our innovative solutions of intelligent accurate self-loading,
intelligent roller water cube, intelligent WIFI, cold water washing, silver nano-particle sterilization, allergies
prevention, ultrasonic wave washing and classified washing. We adopt a two-brand strategy (―Little Swan‖ and
―Midea‖) to create differentiation for the satisfaction of different needs. With a history of nearly four decades,
Little Swan is considered a very reliable brand among consumers, with the slogan of ―Whole-hearted Little Swan‖
being well-known among them. As for Midea, a comprehensive home appliance brand, its share in the washing
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Wuxi Little Swan Company Limited Annual Report 2017
machine market keeps rising with increasing recognition.
5. Our capability of reform and self-improvement. Through years of accumulation, we have developed a
corporate culture of sustained reform and self-improvement. Along with rapid changes in the market and this new
era, we will keep reforming our organizational structure and operating model so as to ensure our capability of
sustainable development. We are the first in the sector to adopt a T+3 order-oriented production and sale system, a
direct delivery system, a shared inventory system, a CDOC (Concept→Design→Optimize→Capability) system
and a product manager system to cope with the fast changes of market needs. And in order for continuing vitality,
we keep seeking for creative incentive mechanisms, promoting organizational and cultural recreation, improving
our talent pool and furthering the reform of our operations, which has produced impressive results.
No significant changes occurred to our core competitiveness in the Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2017
Part IV Company Performance Discussion and Analysis
I Overview
(I) Macro-Environment
During 2017, despite unfavorable factors such as the appreciation of the RMB, rising raw material prices and a
stricter real estate policy, the continual recovery in the global economy and the steadily improving domestic
economy boosted market demand, which helped bring a steady growth in the home appliance sector.
China‘s supply-side structural reform went further during the year. Washing machine manufacturers were busy
upgrading by way of encouraging technological innovation and adjusting their product mix to include a larger
proportion of medium- and high-end products, which resulted in a more centralized market. Washing machine
consumption was still undergoing substantial change, with the priority consumers consider shifting from ―being
affordable‖ to diversified factors. Roller, smart, inverter and large-capacity washing machines, as well as clothes
driers continued to see rapid growth, while partitioned washing was gaining increasing popularity among
consumers. Online sales still grew faster than offline sales, with an increasing proportion of high-end products
being sold, but retail stores were developing faster. During the Reporting Period, the laundry industry saw a stable
growth in spite of the fiercer competition. According to ChinaIOL.com, during the period from January to
December 2017, China sold a total of 64,069,600 units of washing machines, representing a year-over-year
increase of 7.67%, of which 44,136,400 units were sold domestically, up 7.26% from last year, and 19,933,100
units were exported, up 8.59% from last year.
(II) Analysis of Main Business
In face of a complex and volatile international situation, as well as the rise of general cost in the home appliance
sector during 2017, the Company continued to adhere closely to its core strategy of ―Advanced Products,
Efficiency-Driven Growth and Global Operations‖, and focused on its main business of washing machines and
clothes driers. As a professional washing machine manufacturer, it provides quality products through intelligent
manufacturing to satisfy the needs of consumers. It upgraded its domestic marketing system, worked for a larger
share in the overseas market, and promoted quality operations throughout the value chain, which helped produce
good operating results. During the Reporting Period, the Company achieved operating revenue of RMB21.385
billion, up 30.91% compared to last year. The net income attributable to the shareholders of the parent stood at
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Wuxi Little Swan Company Limited Annual Report 2017
RMB1.506 billion, representing a year-over-year growth of 28.20%. And the average gross margin was 25.26%.
Increased unit sales and product selling prices resulted in the growth in revenue. The unit sales rose because of
better product and distribution channel structures. By product, roller washers maintained a fast growth in unit
sales while driers also saw a rapid increase in this respect. By distribution channel, domestic online channels
continued to generate fast growing unit sales, and there was also a strong growth in exports to regions such as
Europe and North America, with a fast growth in the unit sales of the Company‘s own products. The average
selling price of the Company‘s products also increased because the product mix had been further optimized and
the Company properly raised the prices due to higher costs caused by fluctuations in raw material prices and
foreign currency exchange rates. During the Reporting Period, the Company‘s unit sales witnessed a
year-over-year increase of 18.37%, far higher than the industry average.
The higher earnings came from a bigger business size, better efficiency and higher investment income. By
promoting quality operations throughout the value chain, the Company significantly improved its operating
efficiency. In addition, the investment income increased because of a greater amount of free cash. During the
Reporting Period, the Company achieved a net income of RMB1.708 billion, increasing 27.23% from the year
earlier.
(III) Work Done in 2017
1. Continuously enlarging input on R&D, and stably
improving the product power
The Company continuously reinforced R&D input, took
making qualified products as the principle, established the
4-grade R&D system from preliminary research to product
development, and scheduled mid-to-long term technology
reservation and long-term competitiveness construction. The
Company carried forward the reform of R&D and product
manager system, set itself oriented by operation, stretched the
value chain, clarified product managers‘ duty and
responsibility to the integration of research, layout, and
development, and further motivated the vigor of organization,
as well the innovation ability of R&D. The Company perfected
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Wuxi Little Swan Company Limited Annual Report 2017
the layout of mid-to-high end products, applied the innovative CDOC (Concept→Design→Optimize→Capability)
concept for product development, focused on user demand and the trend of consumption upgrade, continuously
launched the high-end Beverly series, the cold-water washing series, and the antiallergic series, and further
optimized product structure as a result. The Company reinforced the development of clothes-dryer products, made
all-around layout in the market of all-in-one machine of washing and drying, heat-pump clothes dryer,
condensation clothes dryer, and straight-line clothes dryer, and achieved rapid growth of clothes dryer products. In
the Reporting Period, the Little Swan washing machine won the China Appliance Innovation Award, the Beverly
compound washing machine won the Product Innovation Award in the industry of household appliances and a
―Red-Top‖ award at The 9th China High-End Household Appliance Awards, the Little Swan all-in-one machine of
washing and drying was certified for its resistance to the allergen, and the Little Swan test center was identified by
the German CTF Identification Lab. The advantage of the Company‘s technology foundation became more solid,
and the product competitive power was improved in a constant way, wining high recognition by the users and the
market.
2. Deepening marketing transformation for domestic sales, and achieving stable growth for both online and
offline sales
The Company kept deepening marketing transformation for domestic sales, focused on ends and improved
marketing efficiency through promoting channel reform, continuously optimized product structure, and
strengthened quality growth. The Company vigorously set the layout in mid-to-high end market, took the
promotion of the high-end Beverly series as a key job, and constantly improved the proportion of mid-to-high end
products. The Company reinforced the competitive power of all channels, positively helped with the
transformation of agencies for offline sales, and enlarged self-sales and optimized product structure for online
sales, reaching stable online and offline sales. According to the AVC data, the Company‘s e-commerce retail sales
volume and amount in the whole network ranked the top in the industry. The mobile system of CCS2.0 was
brought online, promoting the system application and data analysis in distributor level. The Company
continuously strengthened brand construction, positively improved brand influence and promoted the younger
tendency of the brand by positive application of new-media propagation. The Company named the Wuxi
International Marathon and the Snooker World Cup in 2017, which further improved its brand reputation. In 2017,
the Beverly series was selected into the national brand plan. In the Reporting Period, the Company‘s domestic
sales was RMB15.199 billion, showing a year-over-year increase of 32.76%.
3. Positively expanding overseas market, and achieving sharp growth for self-own brands
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Wuxi Little Swan Company Limited Annual Report 2017
The Company insisted on carrying forward global operation strategy, positively expanded overseas market,
constantly deepened its cooperation with strategic big clients, strived to develop new clients, further optimized
global business layout, focused on key breakthroughs in strategic markets, constantly cleared some blank markets,
and reached over 160 countries for the Company‘s exports. The Company centered on users, strengthened the
localization and individuation of product design, successively launched embedded washing machine and
high-capacity washing machine, applied technologies such as the roller water cube and antiallergic function to
export products, increased sales of differentiated and mid-to-high end products, and continuously optimized
product sales structure. The Company enlarged the development of self-own brands, reinforced the publicity and
promotion of the brand of Media, enriched and optimized product lines, realized key breakthroughs in certain
countries, achieved sharp growth for self-own brands. The Company focused on improving operation quality, and
positively took action against the impacts from the fluctuation of raw materials and exchange rates through
improving efficiency, improving structure, as well as managing and controlling finance. In the Reporting Period,
the Company‘s overseas sales reached RMB4.27 billion, representing a year-over-year increase of 28.89%.
4. Carrying forward operational excellence for the whole value chain, and continuously improving
operation efficiency
The Company focused on improving operation efficiency, implemented the digital 2.0 project, deepened the
reform of T+3 client order mechanism, promoted manufacturing upgrade, and gradually realized the digital, visual,
and mobile management for the whole value chain. The Company applied refining improvement and automation
to improve refining manufacturing and its efficiency, brought the roller automation line and SCOTT automation
box line into operation, and continuously improved the self-manufacturing rate for components. The Company
cooperated with Toshiba for OEM business, strengthened resource synergy step by step, and improved the
competitiveness of value chain. The Company reinforced channel inventory sharing, further stretched R&D,
manufacturing, and sales by organization reform, and improved the agility and efficiency of the whole value chain.
The Company continued to optimize the construction of mechanism and system, enhanced talent training and
introduction of specialists, promoted the reform of employment in the manufacturing system, improved the
Company‘s culture atmosphere, and solidly founded its competitive power for the future. In the reporting period,
the Company‘s operation efficiency was obviously improved.
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Wuxi Little Swan Company Limited Annual Report 2017
II Analysis of Main Business
1. Summary
The Company is mainly engaged in washing machines. And this remained the same during the Reporting Period.
Movements of revenue, cost, expense, etc. are as follows:
Unit: RMB
Item 2017 2016 Change Change (%)
Operating revenue 21,384,699,076.65 16,334,914,501.69 5,049,784,574.96 30.91%
Cost of operating revenue 15,982,893,658.84 12,111,213,286.28 3,871,680,372.56 31.97%
Period expense 3,529,363,681.05 2,676,141,071.58 853,222,609.47 31.88%
Operating income 2,048,866,736.50 1,552,191,580.24 496,675,156.26 32.00%
Pretax income 2,064,694,943.36 1,584,427,028.99 480,267,914.37 30.31%
Net income attributable to the parent 1,506,412,505.22 1,175,054,922.85 331,357,582.37 28.20%
2. Revenues and Costs
(1) Breakdown of Operating Revenue
Unit: RMB
2017 2016
Percentage of total Percentage of total Change
Revenue Revenue
operating revenue (%) operating revenue (%)
Total 21,384,699,076.65 100% 16,334,914,501.69 100% 30.91%
By business segment
Home appliance
19,469,125,226.23 91.04% 14,761,654,334.87 90.37% 31.89%
manufacturing
Others 1,915,573,850.42 8.96% 1,573,260,166.82 9.63% 21.76%
By product
Washing machines 19,469,125,226.23 91.04% 14,761,654,334.87 90.37% 31.89%
Others 1,915,573,850.42 8.96% 1,573,260,166.82 9.63% 21.76%
By geographic segment
Domestic 17,114,743,424.78 80.03% 13,022,118,060.74 79.72% 31.43%
Overseas 4,269,955,651.87 19.97% 3,312,796,440.95 20.28% 28.89%
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Wuxi Little Swan Company Limited Annual Report 2017
(2) Business Segment, Product or Geographic Segment Contributing over 10% of Operating Revenue or
Income
Unit: RMB
Gross YoY change in YoY change in
Cost of operating YoY change in
Operating revenue margin cost of operating gross margin
revenue operating revenue
percentage revenue percentage
By business segment
Home appliance
19,469,125,226.23 14,208,417,615.09 27.02% 31.89% 31.86% 0.02%
manufacturing
By product
Washing
19,469,125,226.23 14,208,417,615.09 27.02% 31.89% 31.86% 0.02%
machines
By geographic segment
Domestic 15,199,169,574.36 10,429,605,948.80 31.38% 32.76% 31.84% 0.48%
Overseas 4,269,955,651.87 3,778,811,666.29 11.50% 28.89% 31.91% -2.03%
Main business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
Business segment Item Unit 2017 2016 Change
Unit sales Unit 20,462,099 17,287,074 18.37%
Home appliance
Output Unit 20,393,476 18,891,795 7.95%
manufacturing
Inventory Unit 2,607,516 2,676,139 -2.56%
Reason for any over 30% YoY movements in the data above:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Operating Revenue
Unit: RMB
2017 2016
Business segment Item As a percentage of As a percentage of +/-%
Amount Amount
cost of operating cost of operating
18
Wuxi Little Swan Company Limited Annual Report 2017
revenue (%) revenue (%)
Washing machines Raw materials 13,209,710,404.00 92.97% 9,987,516,184.35 92.69% 32.26%
Washing machines Labor costs 632,054,812.60 4.45% 456,420,377.10 4.24% 38.48%
Washing machines Depreciation 201,388,852.40 1.42% 166,480,328.30 1.55% 20.97%
Washing machines Energy 77,018,797.10 0.54% 63,655,701.04 0.59% 20.99%
(6) Changes in the Scope of the Consolidated Financial Statements for this Reporting Period
□ Yes √ No
(7) Major Changes in the Business, Products or Services in this Reporting Period
□ Applicable √ Not applicable
(8) Main Customers and Suppliers
Main customers
Total sales to top five customers (RMB) 8,256,259,086.95
Total sales to top five customers as a percentage of the total sales for this Reporting Period (%) 42.41%
Total sales to related parties among top five customers as a percentage of the total sales for this
17.00%
Reporting Period (%)
Information about top five customers
No. Customer Sales amount (RMB) As a percentage of the total sales for this Reporting Period (%)
1 Customer A 3,308,956,411.77 17.00%
2 Customer B 2,261,109,007.59 11.61%
3 Customer C 1,943,204,169.04 9.98%
4 Customer D 463,332,880.04 2.38%
5 Customer E 279,656,618.51 1.44%
Total -- 8,256,259,086.95 42.41%
Other information about the main customers
Customer A is the total of partial subsidiaries controlled by controlling shareholders of the Company.
Main suppliers
Total purchases from top five suppliers (RMB) 4,653,026,833.03
Total purchases from top five suppliers as a percentage of the total purchases for this Reporting
35.22%
Period (%)
Total purchases from related parties among top five suppliers as a percentage of the total 24.12%
19
Wuxi Little Swan Company Limited Annual Report 2017
purchases for this Reporting Period (%)
Information about top five suppliers
No. Supplier Purchase amount (RMB) As a percentage of the total purchases for this Reporting Period (%)
1 Supplier A 3,186,487,808.47 24.12%
2 Supplier B 486,710,850.76 3.68%
3 Supplier C 347,424,603.43 2.63%
4 Supplier D 328,751,435.44 2.49%
5 Supplier E 303,652,134.93 2.30%
Total -- 4,653,026,833.03 35.22%
Other information about the main suppliers
Supplier A is the total of partial subsidiaries controlled by controlling shareholders of the Company.
3. Expense
Unit: RMB
2017 2016 +/-% Reason for any significant change
Selling expenses 2,872,849,586.14 2,325,645,712.65 23.53% Sales revenue increased
Administrative Due to the increase of R&D expenditure, employee
728,323,077.71 505,321,107.14 44.13%
expenses compensation, and share-based payment.
The loss of current exchange increased for
Finance costs -71,808,982.80 -154,825,748.21 -53.62%
appreciation of the RMB
4. R&D Input
During the Reporting Period, the Company was market-oriented and centered on customers‘ needs, intensifying
R&D continuously. The R&D input was mainly for: 1. strengthening R&D and innovation of high-end, intelligent,
and frequency conversion products and dryers for better competitive edges in the future; 2. strengthening user
research continuously, increasing manufacturability of products and creating continuous cost competitive
advantages; 3. expanding the high-end talent pool. In 2017, the Company‘s expenditure on R&D was RMB909
million, representing 11.07% of its audited net assets and 4.25% of its revenue in the year.
Information about R&D input:
2017 2016 +/-%
Number of R&D personnel 887 707 25.46%
R&D personnel as a percentage in the total employees 8.70% 9.20% -0.50%
20
Wuxi Little Swan Company Limited Annual Report 2017
R&D input (RMB) 909,450,308.84 695,077,712.27 30.84%
R&D input as a percentage in operating revenues 4.25% 4.26% -0.01%
Capitalized R&D input (RMB) 0.00 0.00 0.00
Capitalized R&D input as a percentage in the total R&D input 0.00% 0.00% 0.00%
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2017 2016 +/-%
Subtotal of cash inflows from operating activities 17,737,932,301.25 16,377,852,960.18 8.30%
Subtotal of cash outflows from operating activities 15,722,178,482.95 12,481,780,172.80 25.96%
Net cash flows from operating activities 2,015,753,818.30 3,896,072,787.38 -48.26%
Subtotal of cash inflows from investing activities 11,517,797,636.35 9,274,869,699.89 24.18%
Subtotal of cash outflows from investing activities 15,658,505,062.46 11,534,305,378.00 35.76%
Net cash flows from investing activities -4,140,707,426.11 -2,259,435,678.11 -83.26%
Subtotal of cash inflows from financing activities 680,166,782.34 183,813,064.12 270.03%
Subtotal of cash outflows from financing activities 1,267,750,117.45 464,554,974.82 172.90%
Net cash flows from financing activities -587,583,335.11 -280,741,910.70 -109.30%
Net increase in cash and cash equivalents -2,754,200,845.50 1,379,004,588.52 -299.72%
Explanation of why the data above varied significantly
√ Applicable □ Not applicable
The reason for the decrease of Net cash flows from operating activities: mainly due to the increase of payment in
cash for products, labor services, and employee remuneration.
The reason for the decrease of Net cash flows from investing activities: mainly due to the increase of bank
financial products purchase and the scale of structural deposits in the Reporting Period.
The reason for the decrease of Net cash flows from financing activities: the increase of payment in cash for
dividend, profits distribution and interests in the Reporting Period.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
21
Wuxi Little Swan Company Limited Annual Report 2017
□ Applicable √ Not applicable
III Analysis of Non-core Business
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in the Asset Composition
Unit: RMB
December 31, 2017 December 31, 2016
As a As a Change in
percentage percentage percentage Reason for any significant change
Amount Amount
of total of total (%)
assets (%) assets (%)
The structural deposits increased
Monetary assets 1,588,264,516.05 7.44% 4,272,077,211.11 22.62% -15.18% dramatically in the Reporting
Period, so monetary fund reduced.
Accounts
1,736,724,496.10 8.14% 1,465,654,497.90 7.76% 0.38%
receivable
Inventories 1,980,766,196.14 9.28% 1,724,837,944.69 9.13% 0.15%
Investment
61,695,825.00 0.29% 64,854,903.25 0.34% -0.05%
property
Property, plant
1,029,668,355.84 4.83% 970,859,291.03 5.14% -0.31%
and equipment
Construction in Equipment purchase increased in
37,972,252.60 0.18% 0.00% 0.18%
process the Reporting Period.
Accounts receivables factoring
Short-term
81,393,672.34 0.38% 183,813,064.12 0.97% -0.59% financing decreased in the
borrowings
Reporting Period.
Bank financial products purchase
Other current
12,778,240,745.22 59.88% 8,385,724,282.16 44.40% 15.48% and the scale of structural deposits
assets
increased in the Reporting Period
Notes receivable 1,283,192,684.28 6.01% 1,297,609,202.29 6.87% -0.86%
2. Assets and Liabilities Measured at Fair Value
Unit: RMB
Item Opening balance Profit/loss on Cumulative Impairm Purchased in this Sold in this Closing balance
22
Wuxi Little Swan Company Limited Annual Report 2017
fair value fair value ent Reporting Period Reporting Period
changes in this changes provided
Reporting charged to in this
Period equity Reportin
g Period
Financial assets
1.Financial
assets measured
at fair value
with its changes
recorded into
5,270,238.03 5,270,238.03
the current gain
and loss
(excluding
derivative
financial assets)
2.Available-for-
sale financial 5,994,142,671.24 -104,142,671.24 57,871,097.59 4,745,000,000.00 -6,900,000,000.00 3,792,871,097.59
assets
Total of the
5,994,142,671.24 -98,872,433.21 57,871,097.59 0.00 4,745,000,000.00 -6,900,000,000.00 3,798,141,335.62
above
Financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00
liabilities
Significant changes in the measurement attributes of the main assets in this Reporting Period
□ Yes √ No
3. Restricted Asset Rights as of the End of this Reporting Period
As of the end of this Reporting Period, there were no such circumstances where any main assets of the Company
were sealed, distrained, frozen, impawned, pledged or limited in any other way.
V Investments Made
1. Total Investments Made
Investments made in this Reporting Period (RMB) Investments made in the prior year (RMB) +/-%
320,566,388.23 137,529,712.00 133.09%
The reason for increase in investment: mainly due to the increase of capacity expansion of roller, improvement of
self-production rate, security and environmental protection, technical innovation, and etc.
23
Wuxi Little Swan Company Limited Annual Report 2017
2. Significant Equity Investments Made in this Reporting Period
□ Applicable √ Not applicable
3. Significant Non-equity Investments Ongoing in this Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in this Reporting Period
(2) Investment in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB‘0,000
Proportion of
Relati Openi
Impair closing Actual
onship Relate Initial ng Purchased Sold in Closing
ment investment gain/loss
with d Type of investme Starting Ending invest in the the investme
Operator provisi amount in the in the
the transac derivative nt date date ment Reporting Reportin nt
on (if Company‘s Reportin
Comp tion amount amoun Period g Period amount
any) closing net g Period
any t
assets
Forward
Not 03/02/20 12/26/20
Bank Not forex 0 0 143,431 125,755 17,676 2.51% 2,295
related 17 17
contract
Total 0 -- -- 0 143,431 125,755 17,676 2.51% 2,295
Capital source for derivative
All from the Company‘s own funds
investment
Lawsuits involved (if applicable) N/A
Disclosure date of board
announcement approving derivative 03/09/2017
investment (if any)
Disclosure date of shareholders‘
meeting announcement approving 04/11/2017
derivative investment (if any)
Analysis of risks and control The Company has considered and formulated the Management Methods for Forex Trading Business
measures associated with derivative to implement full assessment and control on its derivative investments, with highlights as follows:
24
Wuxi Little Swan Company Limited Annual Report 2017
investments held in the Reporting 1. About market risk: Exchange rate fluctuations may cause great risk to the Company‘s forex trading
Period (including but not limited to business. For instance, failure of capital required to arrive in time for performance in forex trading
market risk, liquidity risk, credit could result in loss and default.
risk, operational risk, legal risk, Control measures: Speculative trading is not allowed and a prudent and steady principle is adopted. A
etc.) hierarchical management mechanism has been implemented, whereby the operating unit which has
submitted applications for funds business should conduct a risk analysis on the conditions and
environment that could affect the operating profit and loss, evaluate the possible greatest revenue and
loss, and report the greatest acceptable margin ratio or total margin amount, so that the Company can
update the operating status of the funds business on a timely basis thus ensuring the arrangement of
proper funds before expiry dates.
2. About operational risk: Risks caused by imperfect internal processes, staff, systems and external
issues may cause the Company to incur losses during the course of its forex trading business.
Control measures: The Company has not only developed relevant management systems that clearly
define the assignment of responsibility and approval process for forex trading, but has also
established a well-developed monitoring mechanism, aimed at effectively reducing operational risk
by strengthening its risk control over the business, decision-making and trading processes.
3. About legal risk: The Company's forex trading business is conducted in compliance with laws and
regulations, with clearly defined responsibilities and obligations between the Company and agencies.
Control measures: The Company has designated relevant departments with the responsibility for
enhancing expertise in laws, regulations and market rules, conducting strict examination and
verification of contracts, defining responsibility and obligations, and strengthening compliance
checks, so as to ensure that the Company's derivatives investment and position operations meet the
requirements of the laws and regulations and internal management system of the Company.
Changes in market prices or fair
value of derivative investments
during the Reporting Period (fair Forward forex quotations announced by the Bank of China are used in the fair value analysis of the
value analysis should include Company‘s derivative investments.
measurement method and related
assumptions and parameters)
Significant changes in accounting
policies and specific accounting
principles adopted for derivative
No significant changes
investments in the Reporting Period
compared to previous reporting
period
The independent directors of the Company are of the opinion that the Company has formulated the
Management Methods for Forex Trading Business to, which enables the Company to effectively
control risks associated with derivative investment; that for the Reporting Period, derivative
Opinion of independent directors on
investment was conducted mainly on the Company‘s export business by signing forward forex
derivative investments and risk
contracts with domestic financial institutions to lock in exchange rates and avoid risk caused by
control
exchange rate fluctuations; that no speculative trading is allowed, leading to no risk of
non-performance; and that trading deadlines are all set according to the Company‘s expected
payments and collections of payments, with no impact on the Company‘s liquidity.
25
Wuxi Little Swan Company Limited Annual Report 2017
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in this Reporting Period
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in this Reporting Period
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
Main subsidiaries and joint stock companies with over 10% effect on the Company‘s net profit
Unit: RMB‘0,000
Relationsh Main business Registered Operating Operating
Company name ip with the scope Total assets Net assets Net profit
capital revenues profit
Company
Hefei Midea
Washing machine USD13,552 866,122.70 294,556.56 937,983.33 55,551.79 42,820.98
Washing Machine Subsidiary
manufacture
Co., Ltd.
Manufacture of
Wuxi FILIN Subsidiary electronic USD362.4564 166,178.69 100,713.34 114,498.76 30,983.09 26,398.27
components
Subsidiaries obtained or disposed in this Reporting Period
□ Applicable √ Not applicable
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the Future Development of the Company
(I) Development trends of the industry
26
Wuxi Little Swan Company Limited Annual Report 2017
In 2018, with the influence of uncertainty of global economy and possible slowdown of China's economic growth,
the high cost of home appliance industry, fluctuations in exchange rates, geopolitics and trade protectionism,
exports will face greater challenges. However, at the crossroads of "socialism with Chinese characteristics has
entered a new era" as the national strategy continues to be implemented, the income of urban and rural residents
will increase substantially. The consumption structure will move to a higher level. The great potential of demand
for good products from consumers will continue to bring opportunities for the upgrading of home appliance
industry structure. In the international market, the global pattern of home appliance industry has undergone major
changes, and the huge space for development in emerging markets has provided a good opportunity for China's
home appliance enterprises to achieve globalization. From the industry perspective, the development of science
and technology represented by artificial intelligence, big data and the Internet of Things will overturn the
traditional consumption experience. The upgrading of consumption and supply-side structural reforms will drive
the innovation of business model, and continuous change and innovation will become eternal themes. The
emergence and change of new technologies, new products, new formats and new models initiated by the core of
digitization, networking and intelligence will further accelerate the readjustment and reshuffle of the industrial
structure. Overall, opportunities and challenges for the development of the industry coexist and competition will
intensify. Consumption upgrading and replacement as well as global operation will continue to drive the steady
development of the industry.
(II). Development plan of the Company
In 2018, the Company will continue to adhere to its professional development path and focus on the core business
of washing machine and clothes dryer. It will continue to take "leading products, efficiency-driven and global
operation" as the strategic thrust, focus on product efficiency, work for endogenous growth and deepen business
transformation to pursue quality growth and ensure sustainable growth of revenue and earnings. The Company
will mainly carry out the following work with the strategic thrust in 2018:
1. Advanced products
Steadily increase R & D investment, strengthen transformation of R & D and management innovation, continue to
build a future-oriented R & D organization system and competitiveness. Implement an R & D pattern of
research for reservation and development take leading technologies as the leader, promote the transformation of
research achievements and continue to provide the market with leading products. Continue to promote the launch
of product manager responsibility system and focus on operation and user dissatisfaction. Carry on innovative
research with the CDOC methodology to constantly optimize product structure and high-end product layout.
27
Wuxi Little Swan Company Limited Annual Report 2017
Connect the manufacturing platform and R & D platform to co-ordinate the process of new product design to the
manufacture in factories. Develop the ability of process development and continuously improve product
manufacturability and reliability to produce good products for users.
2. Efficiency-driven growth
Continued to promote the excellent operation of full value chain, and built a new efficiency-driven cost
competitive advantage through supply chain improvement, manufacturing efficiency improvement and quality
efficiency improvement. Continue to deepen T+3 customer order system and enhance flexible information-based
manufacturing capability base on the digital 2.0 project. Enhance product manufacturability and quality reliability
through standardized modularization of products, and continuously speed up the market reaction speed through
digital transparency of marketing process, so as to improve the operation efficiency of value chain. Further
increase investment in automation to promote intelligent manufacturing upgrading. Continue to promote
organizational change, reshape manufacturing grassroots teams and optimize management mechanism to build
long-term competitiveness.
3. Global operations
For domestic sales, the Company will focus on retail deepening transformation and retail organization
restructuring. For offline products, adjust product layout and strengthen brand positioning to develop Beverly
high-end brands. For online products, continuous to optimize product structure and enhance professional
operation capability to improve online profitability. Achieve lean operation, deepen marketing changes and
improve organizational, channel and resource efficiency base on big data. Actively expand overseas business,
continue to deepen cooperation with major clients, improve product structure and layout, and develop
differentiated products and new sub-divided products with high-growth. Improve the layout of self-owned brands,
promote the sales of Toshiba-owned brands and promote local operations to speed up the development of
self-owned brands. Actively explore and create a global layout, and strengthen global competitiveness.
(III) Key Capital Expenditure Plan for the near Future
To actively adapt to internal and external environment change and satisfy the future development demand of the
Company, the investment focus of the Company in 2018 shall be put on R&D and innovation, quality
improvement, intelligent manufacturing, dryer products expansion, and information system improvement etc. and
meanwhile the Company shall actively explore global layout and promote the global competitiveness of the
Company. The Company shall strictly control non-production operation investment. Investment fund comes from
the Company's own fund.
28
Wuxi Little Swan Company Limited Annual Report 2017
(IV) Main Risks in Future Development
1. Macro risk. Under the influence of risk of world economy, slowdown of domestic economic growth,
continuous control of real estate and turbulence of political and economical structure, consumption market
recession may continue and the industry may face the risk of insufficient growth power.
2. Market risk. Washing machine industry is a mature and fully competitive industry with many foreign
enterprises and local enterprises involved. Though the Company has strong competition advantage, it still faces
the impact brought by market risks such as intensification of industry competition, continuously upgrading of
consumption structure, profound adjustment of global industrial pattern and re-division.
3. Cost risk. If the price of raw materials continues to rise in 2018, cost pressure of the Company shall further
increase to directly affect the profitability of the Company with continuous rise in Labor cost.
4. Exchange rate risk. Since exchange rate fluctuation is very uncertain, though the Company has adopted
certain countermeasures to deal with exchange rate fluctuation risk, exchange rate fluctuation still greatly affect
the profitability of the export sales business of the Company.
5. Policy risk. Overseas non-tariff trade barriers and anti-dumping policy shall also have an impact on the scale
and profit of export sales business of the Company.
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.
Date of visit Way of visit Type of visitor Index to main inquiry information
Little Swan A: The Sheet of Interactions with Investors Dated 04/25/2017
04/25/2017 Field research Institution
(No. 2017-01) on www.cninfo.com.cn
05/03/2017- Little Swan A: The Sheet of Interactions with Investors for
Field research Institution
05/17/2017 05/03/2017-05/17/2017 (No. 2017-02) on www.cninfo.com.cn
Little Swan A: The Sheet of Interactions with Investors Dated 07/04/2017
07/04/2017 Field research Institution
(No. 2017-03) on www.cninfo.com.cn
08/07/2017- Little Swan A: The Sheet of Interactions with Investors for
Field research Institution
08/10/2017 08/07/2017-08/10/2017 (No. 2017-04) on www.cninfo.com.cn
Little Swan A: The Sheet of Interactions with Investors Dated 08/23/2017
08/23/2017 Field research Institution
(No. 2017-05) on www.cninfo.com.cn
10/25/2017- Little Swan A: The Sheet of Interactions with Investors for
Field research Institution
11/01/2017 10/25/2017-11/01/2017 (No. 2017-06) on www.cninfo.com.cn
11/10/2017- Little Swan A: The Sheet of Interactions with Investors for
Field research Institution
11/24/2017 11/10/2017-11/24/2017 (No. 2017-07) on www.cninfo.com.cn
Times of visit 19
29
Wuxi Little Swan Company Limited Annual Report 2017
Number of visiting institutions 73
Number of visiting individuals 103
Number of other visitors 0
Significant undisclosed information disclosed,
No
revealed or leaked
30
Wuxi Little Swan Company Limited Annual Report 2017
Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Plans/proposals for profit distribution and converting capital reserve into share capital for common shareholders
for the past three years (including this Reporting Period):
2017 profit distribution proposal: Based on the total 632,487,764 shares of the Company as of December 31, 2017,
it is proposed that a cash dividend of RMB10 (tax inclusive) per 10 shares should be distributed to all
shareholders of the Company and that no capital reserve should be converted into share capital. The said proposal
has been reviewed and approved by the Board of Directors and is to be submitted to the Shareholders‘ Meeting for
final approval.
2016 profit distribution plan: Based on the total 632,487,764 shares of the Company as of December 31, 2016, a
cash dividend of RMB7.5 (tax inclusive) per 10 shares would be distributed to all shareholders of the Company
and no capital reserve would be converted into share capital. The said plan has been carried out in May 2017.
2015 profit distribution plan: Based on the total 632,487,764 shares of the Company as of December 31, 2015, a
cash dividend of RMB6 (tax inclusive) per 10 shares would be distributed to all shareholders of the Company and
no capital reserve would be converted into share capital. The said plan has been carried out in May 2016.
The Company raised RMB1.03 billion of cash through its initial public offering and has distributed RMB2.97
billion of cash dividend until 2017 (inclusive), with its dividend payout ratio over 40% for six consecutive years.
Cash dividend distribution of the Company to common shareholders over the past three years (including this
Reporting Period)
Unit: RMB
Proportion in net profit
Net profit attributable to
attributable to common
Cash dividends common shareholders of the Ratio of cash
Cash dividends
Year shareholders of the Company dividends in
(tax included) Company in the consolidated in other forms
other forms
in the consolidated
statements for the year
statements for the year (%)
2017 632,487,764.00 1,506,412,505.22 41.99% 0.00 0.00%
2016 474,365,823.00 1,175,054,922.85 40.37% 0.00 0.00%
2015 379,492,658.40 919,181,968.58 41.29% 0.00 0.00%
Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to
31
Wuxi Little Swan Company Limited Annual Report 2017
common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend
distribution to its common shareholders
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 10.00
Additional shares to be converted from capital reserve for every 10 shares (share) 0
Total shares as the basis for the profit distribution proposal (share) 632,487,764
Total cash dividends (RMB) (tax included) 632,487,764
Distributable profit (RMB) 2,794,932,872.49
Percentage of cash dividends in the total profit to be distributed (%) 100.00%
Cash dividend policy
Other
Details about the proposal for profit distribution and converting capital reserve into share capital
Pursuant to the Auditor‘s Report issued by PricewaterhouseCoopers Zhong Tian LLP, the Company realized a net profit of
RMB660,934,633.37 for 2017. Adding that figure to the undistributed profit at the beginning of the year of RMB2,608,364,062.12,
the distributable profit will come out at RMB3,269,298,695.49. Deducting the dividends of RMB474,365,823.00 for 2016, which
were distributed during this Reporting Period, the distributable profit at the end of this Reporting Period will come out at
RMB2,794,932,872.49.
2017 profit distribution proposal: Based on the total 632,487,764 shares of the Company as of December 31, 2017, it is proposed
that a cash dividend of RMB10 (tax inclusive) per 10 shares should be distributed to all shareholders of the Company, totaling
RMB632,487,764 (the rest of the undistributed profit to be carried forward for future distribution); and that no capital reserve
should be converted into share capital, nor should any bonus shares be granted for 2017.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirer, as well
as the Company and other Commitment Makers, Fulfilled in this Reporting Period or Ongoing at the
Period-end
Date
of Period
Commitmen Type of commi of Fulfill
Commitment Contents
t maker commitment tment commi ment
makin tment
g
32
Wuxi Little Swan Company Limited Annual Report 2017
Where the controlling shareholder Midea Group plans to sell the
Company‘s shares released from trading moratorium held by it
Commitmen
Commitments via the bid trading system of the Shenzhen Stock Exchange, and Long-s
Controlling t concerning 02/28/ Ongoin
made in share Midea Group decreases over 5% shares within six months since tandin
shareholder shareholding 2008 g
reform the first reduction of holdings, Midea Group will disclose an g
reduction
indicative public announcement on share selling through the
Company two trading days before its first reduction of holdings.
1. As for the commitment of avoiding horizontal competition,
Midea Group (the controlling shareholder) and Mr. He Xiangjian
(the actual controller) has promised that, for the period after the
said transaction when the Company‘s controlling shareholder and
actual controller remain unchanged, the actual controller Mr. He
Xiangjian, his immediate family, Midea Group and its controlled
other enterprises neither recently nor in the future will engage in
any production or operation activity the same as or similar to the
recently main business of Little Swan or its controlled
enterprises, as well as will neither engage in nor participate in
any competitive business the same as the recently main business
Controlling Commitmen 12/01/
of Little Swan or its controlled enterprises through controlling Long-s
shareholder t of avoiding 2010, Ongoin
other economic entities, institutions, economic organizations. If tandin
and actual horizontal 06/06/ g
Little Swan and its controlled enterprises further developed its g
controller competition 2014
scope of the operation business on the basis of the recently
Commitments
business, and if the actual controller Mr. He Xiangjian, his
made in
immediate family, Midea Group and its controlled other
acquisition
enterprises had executed production of that, would solve the
documents or
corresponding horizontal competition problems within the
shareholding
reasonable period. If recently there was no any production or
alteration
operation, would not engage in the similar new business that
documents
competed with Little Swan and its controlled enterprises. If there
was any situation violated the above commitments, the profits
gained from the business related to operation were belongs to
Little Swan.
2. The commitment by Midea Group and the actual controller on
the specification of the related-party transaction. Midea Group
(the controlling shareholder) and Mr. He Xiangjian (the actual
Commitmen controller) has promised that, for the period after the said
Controlling 12/01/
t on transaction when the Company‘s controlling shareholder and Long-s
shareholder 2010, Ongoin
regulation of actual controller remain unchanged, the actual controller Mr. He tandin
and actual 06/06/ g
related-party Xiangjian, his immediate family, Midea Group and its controlled g
controller 2014
transactions other enterprises will specify and try their best to reduce the
related-party transactions with Little Swan and its controlled
enterprises. If occurred the unavoidable related transactions with
Little Swan and its controlled enterprises, would sign the
33
Wuxi Little Swan Company Limited Annual Report 2017
normative related-party transactions agreement Little Swan
according to laws and would execute the approval procedure
according to the relevant regulations to ensure the fairness of the
price of the related-party transactions; ensure to execute the
information disclose obligation of related-party transactions
according to the relevant regulations; ensure not to make
advantage of the related-party transactions for illegally
transferring the assets and profits of Little Swan, as well as not to
make advantage of the related-party transactions for harming to
the interests of Little Swan and the shareholders; would not
require Little Swan to offer any more favorable condition
compared with that offered to the independent third party in any
fair trade market transaction; execute the voting debarb
obligation when involved in the voting of the related events of
the actual controller Mr. He Xiangjian, his immediate family,
Midea Group and its controlled other enterprises. If Midea Group
and Mr. He Xiangjian violated the above commitments and
promises that led to the harm for the equity of Little Swan or
other shareholders, Midea Group and Mr. He Xiangjian should
take the responsibility of the corresponding liability for damage.
3. As for the commitment on independence, Midea Group and the
actual controller Mr. He Xiangjian has promised that, to further
Controlling Commitmen ensure the independent operation of Little Swan, Mr. He 12/01/
Long-s
shareholder t on Xiangjian, Midea Group and its controlled other enterprises 2010, Ongoin
tandin
and actual independenc would maintain the mutual independent in terms of personnel, 06/06/ g
g
controller e finance, assets, business and institutions with Little Swan 2014
according to the relevant laws and regulations as well as the
normative documents.
4. As for the commitment on related-party deposits and
Commitmen borrowings, up to April 8, 2010, the Financial Settlement Center
t on of Midea Group had settled all internal deposits and borrowings Long-s
Controlling 12/01/ Ongoin
related-party with Hefei Midea Washing Machine Co., Ltd.; and Midea Group tandin
shareholder 2010 g
deposits and has promised that there will be no more deposits, borrowings or g
borrowings other funds flows incurred between the Financial Settlement
Center and Hefei Midea Washing Machine Co., Ltd..
5. The commitment by Midea Group on housing properties with
Commitmen no ownership certificates of the target company for sale is
t on housing detailed as follows. Two pieces of the buildings of Hefei Midea
Long-s
Controlling properties Washing Machine Co., Ltd. assessed and sold to the Company are 12/01/ Ongoin
tandin
shareholder with no of no ownership certificates—the warehouse for half-finished 2010 g
g
ownership products (176 square meters) and the workshop for injection
certificates molding (834 square meters), both located in the old factory on
Hewa Road, Hefei. Midea Group has promised that if loss occurs
34
Wuxi Little Swan Company Limited Annual Report 2017
due to the said two buildings without ownership certificates in the
asset disposal process in the future, it will assume the loss thus
caused and make compensation to the Company.
6. The commitment by Midea Group on trademarks is detailed as
follows. (1) Concerning the ―Midea‖ trademark: Upon approval
The
and implementation of the equity transfer transaction, Midea
use
Group has promised that it will make sure that Hefei Midea
right
Washing Machine Co., Ltd. uses the ―Midea‖ trademark in a
of the
proper manner. Hefei Midea Washing Machine Co., Ltd. will be
“Royal
allowed to use the ―Midea‖ trademark with a trademark use fee
star”
not more than that paid by Midea Group (the controlling
tradem
shareholder of Midea Group) and its subsidiaries (currently 3‰
ark
of the annual sales income generated by products using the
detaile
―Midea‖ trademark), and upon negotiation and signing of the
d in
―Agreement for Trademark Use‖. The related-party transactions
(2)
incurred due to the said use of the ―Midea‖ trademark will be
expire
submitted to the decision-making organ of the Company for
d on
Commitmen approval according to the stipulated procedure. As such, interests
Controlling 12/01/ March Ongoin
t on of the Company and its minority shareholders will be
shareholder 2010 31, g
trademarks safeguarded. (2) Concerning the ―Royalstar‖ trademark: Midea
2013
Group has signed the ―Contract for Trademark Use‖ with Hefei
and
Royalstar Group and obtained the ordinary use rights of the
was
―Royalstar‖ (both in Chinese and English) trademark. As the
not
transferor in the transfer transaction of equity interests of
renew
Royalstar Washing Equipment, Midea Group has promised that
ed.
within the scope as agreed in the ―Contract for Trademark Use‖,
And
if any dispute arises between Hefei Midea Washing Machine Co.,
the
Ltd. and Hefei Royalstar Group over the former‘s execution of
other
the ―Contract for Trademark Use‖, Little Swan will not be
commi
involved. If Hefei Midea Washing Machine Co., Ltd. and Little
tment
Swan have to assume any responsibility or loss due to the
contin
aforesaid dispute, Midea Group is willing to take on the
ues.
responsibility instead and make compensations to Hefei Midea
Washing Machine Co., Ltd. and Little Swan at full amount.
7. The commitment by Midea Group on social security payment
and tax risks is detailed as follows. Midea Group has promised
that upon the completion of the said equity transfer deal, if Hefei
Commitmen
Midea Washing Machine Co., Ltd. is obliged to take on any
t on social Long-s
Controlling responsibility or pay relevant fares as required by relevant 12/01/ Ongoin
security tandin
shareholder government authorities due to its social security payment before 2010 g
payment and g
the said deal, Midea Group is willing to pay relevant fares for
tax risks
Hefei Midea Washing Machine Co., Ltd. to relevant government
authorities in a timely manner and assume any other liability. If
any loss thus occurs to Hefei Midea Washing Machine Co., Ltd.
35
Wuxi Little Swan Company Limited Annual Report 2017
or Little Swan, Midea Group is willing to assume relevant
responsibilities for compensation. Upon the completion of the
said equity transfer deal, if income tax evasion or any other tax
risk is found in Hefei Midea Washing Machine Co., Ltd., Midea
Group is willing to assume relevant legal responsibilities and
risks and pay relevant taxes in a timely manner to relevant
government authorities; and if any loss thus occurs to Little
Swan, Midea Group will assume the corresponding responsibility
for compensation.
8. The commitment by Midea Group on capital safety at the
finance companies of the Company: during the validity period of
the Financial Services Agreement, when Midea Group occurred Effecti
Commitmen
Controlling emergency situation of payment difficulty at finance companies, 03/18/ ve for Ongoin
t on capital
shareholder it should adopt the effective measures such as increase the capital 2019 one g
safety
fund of the finance companies according to the actual needs of year
solving the payment difficulty to ensure the capital safety of the
Company.
Commitments
made in time of
asset restructuring
Commitments
made in time of
IPO or refinancing
Equity incentive
commitments
Other
commitments
made to minority
shareholders
Fulfilled on time Yes
Specific reasons
for failing to
fulfill
commitments on N/A
time and plans for
next step (if
any)
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still
within the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable √ Not applicable
36
Wuxi Little Swan Company Limited Annual Report 2017
IV Occupation of the Company’s Funds by the Controlling Shareholder or its Related Parties
for Non-operating Purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Auditor’s Non-standard Report” Issued by the CPAs Firm
for this Reporting Period
□ Applicable √ Not applicable
VI YoY Changes in Accounting Policies, Estimations and Methods
√ Applicable □ Not applicable
For the changes to the Company‘s key accounting policies during the Reporting Period, see Note V, (29) in Part
XI.
VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
□ Applicable √ Not applicable
No such cases in this Reporting Period.
IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
Name of the domestic CPAs firm PricewaterhouseCoopers Zhong Tian LLP
The Company‘s payment for the domestic CPAs firm (RMB‘0,000) 240
Consecutive years of the audit service provided by the domestic CPAs firm 3
Names of the certified public accountants from the domestic CPAs firm Huang Meimei, Cai Xiujuan
Indicate by tick mark whether the CPAs firm was changed in this Reporting Period
37
Wuxi Little Swan Company Limited Annual Report 2017
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
□Applicable √ Not applicable
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XII Significant Litigations and Arbitrations
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
38
Wuxi Little Swan Company Limited Annual Report 2017
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
√ Applicable □ Not applicable
For details, please refer to ―14. Related-party and related-party transactions‖ under ―Section XI Financial Report‖.
2. Related-party Transactions regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Related-party Transitions regarding Joint Investments
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in this Reporting Period.
5. Other Significant Related-party Transactions
(1) About the Financial Service Agreement which signed with the Midea Group Finance Co., Ltd. of related
transaction
It was agreed that, the financial company should provide the service of deposit, loan, note discount, guarantee,
settlement, and the series of the financial services that approved by the CBRC according to the requirements of
the Company as well as its subsidiaries. During the three-year validity after date of the validation of the agreement,
the maximum of the deposit balance that the Company and its subsidiaries disposed in the financial company
should not exceed the amount of RMB2 billion per day; and the maximum of the outstanding loan principal and
interest balance that the financial company granted to the Company and its subsidiaries should not exceed the
amount of RMB2 billion per day.
At the report-end, the deposit balance of the Company at Midea Group Finance Co., Ltd. was of RMB0.282
billion, with no loans.
39
Wuxi Little Swan Company Limited Annual Report 2017
(2) About Trademark License of Related Transactions
①The Company permitted Wuxi Little Swan Refrigeration Equipment Co., Ltd. and its controlled subsidiaries to
use trademark of LITTLE SWAN and picture in air conditioner, heating equipment, ventilating device, heat pump
water heater, unified products of air conditioner and hot water, as well as thermal energy saving equipment;
permitted GD Midea Group Co., Ltd. and its controlled subsidiaries to use to use trademark of LITTLE SWAN
and picture in the refrigerators and the freezers; at the same time GD Midea Holding Co., Ltd. permitted the
Company and subsidiaries of the Company to use trademark of Midea in production, sales and ad campaign of
washing machines and dryers. The aforesaid licensing contracts were all contracted with 0.3% charges of net
sales revenue of products with the authorized trademark as trademark license fees, and the permitting period last
from the January 1, 2017 to December 31, 2019.
②The Company permitted Midea Group Co., Ltd. and its controlled subsidiaries to use trademark of Beverly in
water heater, water purification equipment and machinery, which was charged with 0.3% charges of net sales
revenue of products with the authorized trademark as trademark license fees, and the permitting period last from
the December 1, 2015 to December 31, 2018.
(3) The Company held the 2016 Annual General Meeting on April 10, 2017which reviewed and approved the
Proposal on Estimating the Amount of the 2017 Daily Related Transactions.
(4) The Company held the 11th Meeting of the 8th Board of Directors on August 3, 2017, which reviewed and
approved the Proposal on Adjusting the Amount of the 2017 Daily Related Transactions.
(5) The Company held the 13th Meeting of the 8th Board of Directors on October 23, 2017, which reviewed and
approved the Proposal on Adjusting the Amount of the 2017 Daily Related Transactions.
Index to the current announcements about the said related-party transactions disclosed
Title of current announcement Disclosure date Disclosure website
Announcement about the Estimating the Amount of the
04/11/2017 www.cninfo.com.cn
2017 Daily Related Transactions.
Announcement about the Adjusting the Amount of the
08/05/2017 www.cninfo.com.cn
2017 Daily Related Transactions
Announcement about the Adjusting the Amount of the
10/25/2017 www.cninfo.com.cn
2017 Daily Related Transactions
40
Wuxi Little Swan Company Limited Annual Report 2017
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in this Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in this Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Significant Guarantees
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosure date of the Actual occurrence Actual Guarantee
Guaranteed Line of Type of Term of Due or
guarantee line date (date of guarantee for a related
party guarantee guarantee guarantee not
announcement agreement signing) amount party or not
Total external guarantee line approved during this Total actual external guarantee amount during this
0 0
Reporting Period (A1) Reporting Period (A2)
Total approved external guarantee line at the end of this Total actual external guarantee balance at the end of
0 0
Reporting Period (A3) this Reporting Period (A4)
Guarantees provided by the Company for its subsidiaries
Actual occurrence
Disclosure date of Actual Guarantee
Line of date (date of Type of Term of Due or
Guaranteed party the guarantee line guarantee for a related
guarantee agreement guarantee guarantee not
announcement amount party or not
signing)
Hefei Midea Washing
03/10/2016 125,000 08/29/2016 3,959.34 Joint-liability Half year Yes No
Machine Co., Ltd.
41
Wuxi Little Swan Company Limited Annual Report 2017
Hefei Midea Washing
03/10/2016 125,000 11/25/2016 9,683.85 Joint-liability Half year Yes No
Machine Co., Ltd.
Hefei Midea Washing
03/10/2016 125,000 12/26/2016 5,671.14 Joint-liability Half year Yes No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 03/27/2017 223.85 Joint-liability Half year Yes No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 04/19/2017 29.50 Joint-liability 10 months No No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 04/19/2017 28.12 Joint-liability 10 months No No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 04/21/2017 275.09 Joint-liability 10 months No No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 06/23/2017 4,552.35 Joint-liability Half year Yes No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 07/26/2017 12,010.46 Joint-liability Half year No No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 11/28/2017 10,897.83 Joint-liability Half year No No
Machine Co., Ltd.
Hefei Midea Washing
03/09/2016 125,000 11/29/2017 1,090.72 Joint-liability Half year No No
Machine Co., Ltd.
Total guarantee line for subsidiaries approved during Total actual guarantee amount for subsidiaries
125,000 48,422.24
this Reporting Period (B1) during this Reporting Period (B2)
Total approved guarantee line for subsidiaries at the end Total actual guarantee balance for subsidiaries at the
125,000 24,331.72
of this Reporting Period (B3) end of this Reporting Period (B4)
Guarantees between subsidiaries
Disclosure date of Actual occurrence Actual Guarantee
Guaranteed Line of Type of Term of
the guarantee line date (date of guarantee Due or not for a related
party guarantee guarantee guarantee
announcement agreement signing) amount party or not
Total guarantee line for subsidiaries approved during Total actual guarantee amount for subsidiaries
0 0
this Reporting Period (C1) during this Reporting Period (C2)
Total approved guarantee line for subsidiaries at the end Total actual guarantee balance for subsidiaries at the
0 0
of this Reporting Period (C3) end of this Reporting Period (C4)
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during this Reporting Total actual guarantee amount during this Reporting
125,000 48,422.24
Period (A1+B1+C1) Period (A2+B2+C2)
Total approved guarantee line at the end of this Total actual guarantee balance at the end of this
125,000 24,331.72
Reporting Period (A3+B3+C3) Reporting Period (A4+B4+C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net 3.45%
42
Wuxi Little Swan Company Limited Annual Report 2017
assets of the Company
Of which:
Amount of guarantees provided for shareholders, the actual controller and their related parties (D) 0
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) 0
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total amount of the three kinds of guarantees above (D+E+F) 0
Joint responsibilities possibly borne or already borne in this Reporting Period for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if any) N/A
Explanation on guarantee that adopts complex method
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Asset Management
Unit: RMB‘00,000,000
Type Capital resources Amount incurred Outstanding balance Overdue unrevoked amount
Bank financial products Self-owned funds 59.10 37.35 0
Total 59.10 37.35 0
Particulars about high risk entrusted asset management with no principal protection
Unit: RMB‘00,000,000
The
Plan
actual The
for
Name of Type of loss/ga actual Amoun Overview
Expect entruste
trustee trustee Capita Metho Annual in withdra t of Legal s of
Comme Funds ed d asset
institutio institutio Type of amoun l Terminat d of yield for amoun wal of provisi proce events
ncement allocat earnin manage
n (or n (or products t resour ion date remun referenc ts in loss/gain ons for dures and query
date ion gs (if ment in
name of name of ces eration e the n the impair or not index (if
any) the
trustee) trustee) Report Reportin ment any
future
ing g Period
or not
Period
Type of Self-o Plan Annua Receive www.cni
01/08/20 06/28/20 4.40%-
Bank Bank floating 12.35 wned for l yield 0.62 0.63 d as per Yes Yes nfo.com.c
16 17 5.50%
income funds asset for contract n (No.:
43
Wuxi Little Swan Company Limited Annual Report 2017
with no manag referen 2017-07)
capital ement ce
preserva subject
tion to
contra
Type of
ct
floating
income Self-o
02/23/20 06/08/20 Trust 4.10%-
Bank Bank with no 56.05 wned 2.37 2.07 Yes Yes
16 18 plan 5.25%
capital funds
preserva
tion
Type of
floating Bank
income Self-o financi
07/20/20 10/08/20 3.90%-
Bank Bank with no 37.95 wned al 1.23 0.33 Yes Yes
16 18 5.00%
capital funds produc
preserva ts
tion
Total 106.35 -- -- -- -- -- -- 4.22 3.03 -- -- --
Situations where principal can‘ t be taken back or other possibilities that result in impairment
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
The Company positively executed the social responsibility, paid attention on maintaining the legal equities of each
benefit-related party, insisted to harmonious coexist with each party. The Company positively participated in the
social and public welfare undertakings, paid attention on the environmental protection and positively responded to
44
Wuxi Little Swan Company Limited Annual Report 2017
the national appeal of energy saving and emission-reduction that made great efforts to contribute to the sustainable
development of the society as well as environment, with the specific work situation as follows:
(1) Safeguarding Legitimate Rights and Interests of Consumers: Being market-oriented, the Company
centered on the customers‘ needs and keeps improving quality management to offer products with a quality higher
than the expectation of consumers and an improved users experience. It has a national service
hotline—4008228228— and service number of after-sales Wechat to answer to customers‘ questions and
complaints, ensure that they would be satisfied.
(2) Offering Generous Returns to Shareholders. The Company constructed a more perfect corporate
governance structure and formulated a corresponding management system for ensure the shareholders to fully
enjoy each legal interests stipulated by the laws and regulations. In line with the stipulation of the Articles of
Association, the Company realized the allocable profit positive, and there were no significant investment plan or
significant cash expenditure events (excluding raise funds investment events). Any within three consecutive years,
the Company allocated the profits in cash accumulatively no less than 30% of the average distributive profits
realized in recent three years. The Company attached great importance to the retribution and had been executing
the cash dividends for recent years.
(3) Constructing Strategic Partnership. The Company positively constructed the strategic partnership with
suppliers and customers, complied with the business rule, paid attention on the communication and cooperation
with each related party, built up interests community with the partners for growing together and sharing
achievements, ensured the interests and relevant equities of the partners and jointly dedicated to maintain the
sustainable healthy development of the industry.
(4) Safeguarding Rights and Interests of Employees. The Company strictly implemented the state laws and
regulations to positively guarantee the legal interests of the staff. Withholding the ―people-oriented‖ spirit, the
Company offered a favorable working and living environment for its staff and built as well as improved the salary
standard and the incentive system, and provided competitive salary reward with improving space. The Company
offered various kinds of training to promote the career development of the staff by the method combined either in
internal or external. It also conducts many leisure activities to enrich employees‘ life.
(5) Promoting Energy Saving and Environmental Protection. In strict compliance with the country‘s laws and
regulations for environment protection, the Company carried out and promoted the energy conservation and
emission reduction and executed the social responsibility under the low-carbon time through innovation in
management, technology and products. During the progress of produce, the Company realized 100% of the
45
Wuxi Little Swan Company Limited Annual Report 2017
recycle and the reuse of the industrial water consumption; the Company explored the Accurate Automatic Launch
Detergent Technology, which gained the authentication of the international authority-UK Intertek, and at the same
time received the green leave label of Carbon Footprint that meant the Company be the first enterprise that
received that label in the domestic washing machine industry.
(6) Being Active in Charity. At the activity named ―Jiangsu Province Disabled-aiding Welfare Project‖ held by
Jiangsu Province Disabled Person Welfare Foundation, the Company made donations for several years in a row,
and it also donated at the ―Give Your Love and Warmth‖ charity event organized by Wuxi Charity Federation,
taking on social responsibilities with actions.
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
□ Applicable √ Not applicable
3. Particulars about Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by
the environmental protection authorities of China
□ Yes √ No
No such cases in the Reporting Period.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
46
Wuxi Little Swan Company Limited Annual Report 2017
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus Percentage
Number from capital Other Subtotal Number
(%) issues shares (%)
reserve
I. Restricted shares 2,916,720 0.46% -828,975 -828,975 2,087,745 0.33%
1. Shares held by other
2,916,720 0.46% -828,975 -828,975 2,087,745 0.33%
domestic investors
Among which: Shares
held by domestic 2,916,720 0.46% -864,000 -864,000 2,052,720 0.32%
corporations
Shares held
35,025 35,025 35,025 0.01%
by domestic individuals
II. Non-restricted shares 629,571,044 99.54% 828,975 828,975 630,400,019 99.67%
1. RMB common shares 438,535,172 69.34% 828,975 828,975 439,364,147 69.47%
2. Domestically listed
191,035,872 30.20% 191,035,872 30.20%
foreign shares
III. Total shares 632,487,764 100.00% 0 0 632,487,764 100.00%
Reasons for the share changes
1. Reasons for changes in holdings of domestic individuals: Mr. Lu Jianfeng, the Director and GM of the
Company, purchased 46,700 shares of the Company on March 10, 2017 and March 13, 2017 based on the
confidence in the Company‘s long-term steady growth. In line with the stipulation No. 141 of Corporation Law,
the transferred shares every year should be no more than 25% of total holding shares of the Company, so 35,025
shares of its total shares converted into restricted shares.
2. Reasons for changes in holdings of domestic corporations: see the Indicative Announcement on Share
Unlocking disclosed by the Company (No.: 2017-24) dated November 10, 2017 for details.
Approval of share changes
□ Applicable √ Not applicable
47
Wuxi Little Swan Company Limited Annual Report 2017
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders
of the Company and other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
Unit: share
Unlocked Increase
Opening Closing
Name of in this d in this
restricte restricte Reason for unlocking Date of unlocking
shareholder Reporting Reportin
d shares d shares
Period g Period
In March 2017, according to the Confirmation of
Jiangsu
Securities Transfer Registration (No. 1703150001) of
Jiangyin
CSDC Shenzhen, 864,000 shares of corporate shares
Rural
770,170 770,170 0 0 registered in the name of JiangyinSanjin Computer 11/10/2017
Commercial
Co., Ltd. were all transferred to Jiangyin Rural
Bank Co.,
Commercial Bank, and the nature of the shares after
Ltd
transfer is: institutional restricted shares pre issuance.
Jiangsu The restricted shares are the shares for considerations
Little Swan repaid by Jiangyin Rural Commercial Bank Co., Ltd.,
93,830 93,830 0 0 11/10/2017
Group and the nature of the repaid shares is: institutional
Limited restricted shares pre issuance.
Adjusting the
restricted shares and
Lu Jianfeng 0 0 35,025 35,025 Locked share by senior executives negotiable shares
every year according
to Corporation Law
Total 864,000 864,000 35,025 35,025 -- --
48
Wuxi Little Swan Company Limited Annual Report 2017
II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
Common shareholders Preferred shareholders Preferred shareholders with
Common
at month-end prior to with resumed voting resumed voting rights at
shareholders at 16,031 15,518 0 0
disclosure of this rights at period-end (if month-end prior to disclosure
period-end
Report any) of this Report (if any)
5% or greater shareholders or top ten shareholders
Shareholding Change during Pledged or
Nature of Restricted Non-restrict
Name of shareholder percentage at Shares Reporting frozen shares
shareholder shares ed shares
period-end (%) Period Status Shares
Domestic
MIDEA GROUP CO., LTD. non-state-owned 37.78% 238,948,117 0 238,948,117
corporation
TITONI INVESTMENTS
Foreign corporation 14.89% 94,204,942 0 94,204,942
DEVELOPMENT LTD.
GAOLING FUND,L.P. Foreign corporation 3.74% 23,664,125 1,969,669 23,664,125
NATIONAL SOCIAL Domestic
SECURITY FUND non-state-owned 3.34% 21,097,464 298,570 21,097,464
PORTFOLIO 108 corporation
GREENWOODS CHINA
Foreign corporation 2.81% 17,787,068 -59,726 17,787,068
ALPHA MASTER FUND
49
Wuxi Little Swan Company Limited Annual Report 2017
FINANCE BUREAU OF State-owned
2.70% 17,054,071 0 17,054,071
WUXI corporation
Domestic
HONGKONG SECURITIES
non-state-owned 2.24% 14,191,698 10,134,362 14,191,698
CLEARING CO., LTD
corporation
NATIONAL SOCIAL Domestic
SECURITY FUND non-state-owned 2.07% 13,061,462 -1,392,425 13,061,462
PORTFOLIO 101 corporation
CENTRAL HUIJIN ASSET State-owned
1.61% 10,156,300 0 10,156,300
MANAGEMENT CO., LTD. corporation
AGRICULTURAL BANK OF
CHINA－E FUND Domestic
COMSUMPTION SECTOR non-state-owned 1.13% 7,138,335 5,458,352 7,138,335
STOCK SECURITIES corporation
INVESTMENT FUND
Strategic investors or general corporations becoming top-ten
N/A
shareholders due to placing of new shares (if any)
Midea Group and TITONI Investments Development Ltd. are parties
Related or acting-in-concert parties among the shareholders above
acting in concert.
Shareholdings of the top ten non-restricted shareholders
Number of Type of shares
Name of shareholder non-restricted shares
Type Number
held at the period-end
MIDEA GROUP CO., LTD. 238,948,117 RMB ordinary share
TITONI INVESTMENTS DEVELOPMENT LTD. 94,204,942 Domestically listed foreign share
GAOLING FUND,L.P. 23,664,125 Domestically listed foreign share
NATIONAL SOCIAL SECURITY FUND PORTFOLIO 108 21,097,464 RMB ordinary share
GREENWOODS CHINA ALPHA MASTER FUND 17,787,068 Domestically listed foreign share
FINANCE BUREAU OF WUXI 17,054,071 RMB ordinary share
HONGKONG SECURITIES CLEARING CO., LTD 14,191,698 RMB ordinary share
NATIONAL SOCIAL SECURITY FUND PORTFOLIO 101 13,061,462 RMB ordinary share
CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD. 10,156,300 RMB ordinary share
AGRICULTURAL BANK OF CHINA－E FUND COMSUMPTION
7,138,335 RMB ordinary share
SECTOR STOCK SECURITIES INVESTMENT FUND
Midea Group and TITONI Investments
Related or acting-in-concert parties among the top ten non-restrictedly tradable share holders
Development Ltd. are parties acting in
and between the top ten non-restrictedly tradable share holders and the top ten shareholders
concert.
Top ten common shareholders conducting securities margin trading (if any) N/A
50
Wuxi Little Swan Company Limited Annual Report 2017
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common
shareholders of the Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
2. Information about the Controlling Shareholder
Legal
Name of controlling Date of
representative/ Credibility code Main business scope
shareholder establishment
Head of unit
Consumer appliances and heating
Midea Group Co., Ltd. Fang Hongbo 04/07/2000 91440606722473344C ventilation air conditioner, robots and
automatic systems, and etc.
Shareholdings of the controlling shareholder in The Company‘s controlling shareholder is Midea Group Co., Ltd. with the
other listed companies at home or abroad in this securities code of 000333, whose shares held in other listed companies by holding
Reporting Period or shareholding is published on www.cninfo.com.cn.
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Information about the Actual Controller
Name of actual controller Nationality Right of residence in other countries or regions
He Xiangjian Chinese No
Current board chairman of Midea Holding and former board chairman of Midea
Main occupation and duty
Group
Used-to-be-holding listed companies home and Midea Group (000333.SZ), Welling Holding (00382.HK) and Little Swan (A:
abroad in the last ten years 000418.SZ;B:200418), KUKA AG (KU2.DE)
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
51
Wuxi Little Swan Company Limited Annual Report 2017
He Xiangjian
94.55%
Midea Holding Co., Ltd.
33.71%
Midea Group Co., Ltd.
100%
Midea Electric Investment (BVI) Limited 37.78%
100%
TITONI Investments Development Ltd.
14.89%
Wuxi Little Swan Co., Ltd.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable
4. 10% or Greater Corporate Shareholders
Name of corporate Legal representative /
Date of establishment Registered capital Business scope
shareholder company principal
TITONI Xiao Mingguang 02/07/2007 USD50,000 Holding equity interests in Little Swan
5. Limited Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and other Commitment Makers
□ Applicable √ Not applicable
52
Wuxi Little Swan Company Limited Annual Report 2017
Part VII Preference Shares
□ Applicable √ Not applicable
No preference shares in this Reporting Period.
53
Wuxi Little Swan Company Limited Annual Report 2017
Part VIII Directors, Supervisors, Executive Officers and Staff
I Changes in Shareholdings of Directors, Supervisors and Executive Officers
Openi Increase Decreas Other Closin
ng in this e in this increas g
Incumbent/f Starting date Ending date
Name Office title Gender Age shareh Reportin Reportin e/decr shareh
ormer of tenure of tenure
olding g Period g Period ease olding
(share) (share) (share) (share) (share)
Fang Chairman of the
Incumbent Male 50 05/09/2008 08/25/2018 0 0 0 0 0
Hongbo Board
Lu General Manager Incumbent Male 44 12/14/2016 08/25/2018
0 46,700 0 0 46,700
Jianfeng Director Incumbent Male 44 04/11/2017 08/25/2018
Xiao
Director Incumbent Male 47 01/12/2010 08/25/2018 0 0 0 0 0
Mingguang
Jiang Peng Director Incumbent Male 44 04/11/2017 08/25/2018 0 0 0 0 0
Board Secretary Incumbent Female 44 01/10/2007 08/25/2018
Zhou Sixiu 0 0 0 0 0
Director Incumbent Female 44 08/21/2012 08/25/2018
CFO Incumbent Male 39 11/24/2014 08/25/2018
Sun Yunan 0 0 0 0 0
Director Incumbent Male 39 08/26/2015 08/25/2018
Jiang
Independent director Incumbent Male 53 08/22/2014 08/25/2018 0 0 0 0 0
Qingyun
Tao
Independent director Incumbent Male 51 04/20/2015 08/25/2018 0 0 0 0 0
Xiangnan
Zhu
Independent director Incumbent Male 53 08/26/2015 08/25/2018 0 0 0 0 0
Heping
Liang Supervisory Board
Incumbent Male 40 08/22/2014 03/08/2018 0 0 0 0 0
Pengfei Chairman
Wang
Supervisor Incumbent Male 36 08/22/2014 08/25/2018 0 0 0 0 0
Shouhu
Xu Staff representative
Incumbent Male 48 08/05/2014 08/25/2018 0 0 0 0 0
Pengcheng supervisor
Zhang
Director Former Male 42 11/02/2012 03/06/2017 0 0 0 0 0
Zhaofeng
Total -- -- -- -- -- -- 0 46,700 0 0 46,700
54
Wuxi Little Swan Company Limited Annual Report 2017
II Changes in Directors, Supervisors and Executive Officers
Name Office title Type of change Date Reason
Zhang Zhaofeng Director Outgoing 03/06/2017 Job change
Liang Pengfei Supervisory Board Chairman Outgoing 03/08/2018 Job change
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent
directors, supervisors and executive officers
(1) Mr. Fang Hongbo, born in 1967, holder of a master‘s degree, now serves in the Company as the Chairman of
the Board, the Chairman of the Board & President of Midea Group Co., Ltd. He once was the Board Chairman
and President of GD Midea Holding Co., Ltd., etc.
(2) Mr. Lu Jianfeng, born in 1973, holder of a master‘s degree, now serves as the Director and General Manager
of the Company. He once was the Domestic Home A/C President, China Marketing President and Vice President
of GD Midea Holding Co., Ltd., as well as the Environmental Appliances General Manager of Midea Group, etc.
(3) Mr. Xiao Mingguang, was born in 1970, master degree, CPA. He now serves as Director in the Company,
Business Management Director of Midea Group. He ever took the posts as Deputy Director of financial
management of GD Midea Holding Co., Ltd., chief of Audit and Supervision Department Midea Group and
Director of GD Midea Holding Co., Ltd. ,etc.
(4) Ms. Zhou Sixiu, born in 1973, holder of a master‘s degree, CPA, now serves as a director and the Board
Secretary of the Company. She once was the Securities Representative of Wuxi Qingfeng Co., Ltd., etc.
(5) Sun Yunan, born in 1978, holder of a master‘s degree, now serves as a director and the CFO of the Company.
He ever served as Finance Minister of Automatic Factory of the Company, Refrigerator Career Dept. Factory and
Manager of Accounting and Process Management of Midea Group, etc.
(6) Jiang Peng, born in 1973, holder of a master‘s degree, now serves as Director in the Company, Board
Secretary of Media Group Co., Ltd. He ever acted as the Securities Representative and Board Secretary of GD
Midea Holding Co., Ltd.
(7) Jiang Qingyun, was born in 1964, doctor degree. He now serves as Independent Director of the Company,
Marketing Director of School of Management Fudan University, and Independent Director of Misho Ecology &
Landscape Co., Ltd. and Galaxy Biomedical Investment Co., Ltd.
(8) Tao Xiangnan was born in 1966, doctor degree. He now serves as Independent Director of the Company,
Associate Professor of Nanjing University Business School, Professor of MUST.
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Wuxi Little Swan Company Limited Annual Report 2017
(9) Zhu Heping was born in 1964, doctor degree. He now serves as Independent Director of the Company,
Accounting Professor of school of business Jiangnan university, Member of CICPA and Independent Director of
Jiangsu Yataiqing Alloy Technology Co., Ltd., Jiangsu Pengyao Environment Protection Co., Ltd. and Jiangsu
Yoke Technology Co., Ltd.
(10) Liang Pengfei, was born in 1977, bachelor, He is currently the Chairman of Little Swan‘s Supervisory Board
and the Operation and Human Resources Manager of Midea Group‘s Cleaning Appliance Division. He used to be
Little Swan‘s Operation and Human Resources Manager, the Marketing Manager of Midea Group‘s Compressor
Division, etc.
(11) Wang Shouhu, was born in 1981, bachelor, He now serves as Supervisor Manager of Internal Audit. He ever
acted as Director of Management Audit of Media Daily Appliance Group and Supervision of Integrity officer of
Media Group, etc.
(12) Xu Pengcheng, was born in 1969, bachelor. He now serves as Staff Representative Supervisor and Director of
R&D of the Company. He ever acted as Minister of impeller Development Dept. officer of R&D of Automatic
Washing Machine Company and GM of Hefei Midea Washing Machine Co., Ltd., etc.
Posts concurrently held in shareholding entities
Allowance from the
Name Shareholding entity Post Starting date of tenure Ending date of tenure
shareholding entity
Midea Group Chairman of the Board 08/25/2012 09/17/2018 Yes
Fang Hongbo
Midea Group President 10/15/2013 09/17/2018 Yes
Xiao Midea Group CFO 12/02/2015 09/17/2018 Yes
Mingguang TITONI Director 12/23/2013 No
Posts held concurrently in other entities
Starting date of Ending date Allowance
Name Other entity Post
tenure of tenure from the entity
School of Management Fudan Professor and
Jiang Qingyun 08/01/1999 Yes
University Marketing Director
Nanjing University Business School Associate Professor 01/01/2005 Yes
Tao Xiangnan
MUST Professor 01/10/2018 Yes
School of Business Jiangnan
Zhu Heping Professor 09/01/2007 Yes
university
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this Reporting Period
56
Wuxi Little Swan Company Limited Annual Report 2017
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and
executive officers
(1) Decision-making procedure for the remuneration of directors, supervisors and executive officers: The
remuneration for executive officers is proposed by the Remuneration and Appraisal Committee under the Board
and finalized upon the Board‘s approval; and that for directors and supervisors is subject to their positions.
(2) Determining basis for the remuneration of directors, supervisors and senior management: The remuneration of
directors, supervisors and senior management receiving remuneration from the Company consist of the basic
annual salary and performance annual salary. The basic annual salary is decided according to the duties, risks,
pressure and other factors born by the directors, supervisors and senior management, and it stays unchanged;
while the performance annual salary is linked with the profit completion rate and the appraisal results of target
responsibility system of the Company. The remuneration system of the directors, supervisors and senior
management of the Company serves for its operating strategy, which is adjusted according to the changes of
operation situation of the Company so as to adapt to the needs of the further development of the Company. The
adjustment basis for the remuneration of directors, supervisors and senior management of the Company is as
follows: (1) the increase level of remuneration in the same industry; (2) the earnings of the Company; (3) the
adjustment of organization structure; (4) adjustment on positions. The allowances for independent directors are
RMB100, 000 (tax included) per year upon consideration and approval of the shareholders‘ meeting, and the
expenses occurred to execute their responsibilities are borne by the Company.
(3) Actual payment for the remuneration of directors, supervisors and senior management: The basic salary of
directors, supervisors and senior management receiving remuneration from the Company is paid monthly; the
allowance for independent directors is paid quarterly.
Remuneration of directors, supervisors and executive officers in this Reporting Period
Unit: RMB'0,000
Total before-tax Remuneration from
Name Office title Gender Age Incumbent/former remuneration from related parties of
the Company the Company
Fang Hongbo Chairman of the Board Male 50 Incumbent Yes
Lu Jianfeng Director & General Manager Male 44 Incumbent 325.54
Xiao Mingguang Director Male 47 Incumbent Yes
57
Wuxi Little Swan Company Limited Annual Report 2017
Jiang Peng Director Male 44 Incumbent Yes
Zhou Sixiu Director & Board Secretary Female 44 Incumbent 126.76
Sun Yunan Director & CFO Male 39 Incumbent 288.54
Jiang Qingyun Independent Director Male 53 Incumbent 10.00
Tao Xiangnan Independent director Male 51 Incumbent 10.00
Zhu Heping Independent director Male 53 Incumbent 10.00
Liang Pengfei Supervisory Board Chairman Male 40 Incumbent 132.97 Yes
Wang Shouhu Supervisor Male 36 Incumbent 54.80
Xu Pengcheng Staff representative supervisor Male 48 Incumbent 412.36
Zhang Zhaofeng Director Male 42 Former Yes
Total -- -- -- -- 1,370.97 --
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company 5,689
Number of in-service employees of main subsidiaries 4,201
Total number of in-service employees 9,890
Total number of employees with remuneration in this Reporting Period 11,444
Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension 424
Functions
Function Number of employees
Production 7,380
Sales 891
Technical 1,252
Financial 169
Administrative 198
Total 9,890
Educational backgrounds
Educational background Number of employees
Master and above 294
58
Wuxi Little Swan Company Limited Annual Report 2017
Bachelor 2,023
College and Technical secondary school 3,861
Middle school and below 3,712
Total 9,890
Financial Administrative Master and above
Technical Middle Bachelor
2% school and
below
2% 3%
13%
20%
38%
Sales
9%
Educational
Functions
background
75%
39%
Production
College and
Technical Secondary
School
2. Employee Remuneration Policy
The remuneration of employees is paid on time according to the Company‘s Methods for Remuneration
Management. The Company decides its employees‘ fixed salaries according to their positions and their floating
wages in line with its operating results. Meanwhile, the Company leans to strategic talent so as to ensure
competitive wages for core personnel. And the remuneration policy will be irregularly adjusted according to
regional differences, the talent supply, employees‘ turnover, changes in the industry environment and the
Company‘s paying ability.
3. Employee Training Plans
It will decide the training content for employees from different levels and groups according to the post
qualification, and promote the training of entire staff, so as to build a learning organization.
59
Wuxi Little Swan Company Limited Annual Report 2017
4. Labor Outsourcing
□ Applicable √ Not applicable
60
Wuxi Little Swan Company Limited Annual Report 2017
Part IX Corporate Governance
I Basic Situation of Corporate Governance
The Company continuously perfected its corporate governance; promote the improvement of its operation and
formulate the corresponding internal control system, prevented and controlled risks and safeguarded the legitimate
rights and interests of the Company and the shareholders in accordance with the requirements of relevant laws and
rules such as Company Law, Securities Law issued by CSRC. The actual situation of the Company‘s corporate
governance is in accordance with the requirements of Administrative Rule for Listed Companies issued by CSRC.
For better governance, the Company has formulated the Rules of Procedure for the Board of Directors, the
Supervisory Board, shareholders‘ meetings and the specialized committees under the Board of Directors, as well
as the Disclosure of Information Management System, Raise Money Management System, Related Transaction
Management System, Information Source Insider Registration Management System, Internal Report System for
the Major Issues, System of Accountability for Management, the Preliminary Plan Regarding Risk Handling in
Financial Services (Accepting Deposits and Lending) Provided by Midea Group Finance Co., Ltd, etc. During the
Reporting Period, according to applicable laws and regulations and the need arising from its actual operations, the
Company held the 9th Meeting of the 8th Board of Directors on March 7, 2017, at which the Articles of Association
and the Rules of Procedure for Shareholders Meeting have been revised, further improving its corporate
governance mechanism.
In line with the relevant provisions of Company Law, the Articles of Association etc., the Company established a
comparative perfect organization control structure system The Board of Director conducted the resolutions of
general meeting of shareholders, response for the significant decision-making events and general meeting of
stockholders; the Company appointed GM by law, presided over the daily production operation and management,
organized the implementation of resolution of the Board, was responsible for the Board of Directors; the
supervisor of the Company was the supervisory organization for the Company which supervised the behaviors of
the directors, GM and the finance of the Company. The four committees, Strategy Committee, the Remuneration
and Appraisal Committee, Audit Committee, the Nomination Committee were under the Board of Directors. the
Company‘s General Meeting of shareholders, Board of Directors, Board of directors and operation managerial
personnel with clear responsibilities and rights, performing their duties, effective checks and balances, scientific
61
Wuxi Little Swan Company Limited Annual Report 2017
decision-making and coordinate operations, which laid a solid foundation for sustained, stable and healthy
development of the Company.
During this Reporting Period, the Company was granted the ―Top 100 Main Board Listed Companies in Value‖
Award and the ―Excellent Board Secretary of Main Board Listed Companies‖ Award in the 11th China Listed
Company Value Awards hosted by Securities Times and the New Fortune magazine, and granted the ―Excellent
CFO‖ Title in the ―Money StewardExcellent CFO of Listed Companies in Yangtze River Delta‖ hosted by
Jiangsu Association for Public Companies, Anhui Association for Public Companies and Shanghai Association
for Public Companies. Looking forward, the Company will continue to improve its ability of sustainable
development and governance capability.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of
listed companies
□ Yes √ No
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separating from the Controlling Shareholder
The Company is completely separated from its controlling shareholder in aspects such as business, personnel,
assets, institutions and finance and possesses independent and complete business and self-dependent operating
ability.
1. In respect of business, the Company owned independent and integrated system of R&D, purchasing, production
and sales. Main business of the Company is washing machine that there isn‘t any horizontal competition between
the Company and the controlling shareholder. The Company was completely separated from the controlling
shareholder in business.
2.In respect of personnel, in terms of labor, personnel and salary management, the Company and the controlling
shareholder were independent each other, there existed no mixed operation and management between the
Company and the controlling shareholder. Such senior management staff as General Manager, CFO and Board
Secretary did not take any posts in shareholding companies.
3. In respect of assets, the Company‘s assets were complete, and there was the clear property right relationship
between the Company and the controlling shareholder.
4. In respect of organization, the Company has set up the organization that was independent from the controlling
shareholder completely, the Board of Directors, the Supervisory Board and internal organization could operate
independently.
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Wuxi Little Swan Company Limited Annual Report 2017
5. In respect of financing, the Company owned independent financial department, established independent
accounting system and financial management system, opened independent bank account, paid tax in line with
laws.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special Meetings of Shareholders Convened during this Reporting Period
1. Meetings of Shareholders Convened during this Reporting Period
Index to the disclosed
Meeting Type Investor participation ratio Convened date Disclosure date
information
Announcement No. 2017-11
2016 Annual Meeting
Annual 60.35% 04/10/2017 04/11/2017 disclosed on
of Shareholders
www.cninfo.com.cn
2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and Meetings of Shareholders
Attendance of independent directors in board meetings
Attendance
Due presence Attendance at Presence by Absence for
Presence at the
Independent in this Presence on on-site and telecommun Absence two
through a number of
director Reporting site (times) video meeting ication (times) consecutive
proxy (times) shareholders
Period (times) (times) (times) times
' meetings
Jiang Qingyun 5 1 1 3 0 0 No 0
Tao Xiangnan 5 1 1 3 0 0 No 0
Zhu Heping 5 1 1 3 0 0 No 1
2. Objections Raised by Independent Directors on Issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
No such cases in this Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2017
3. Other Details about the Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
During the Reporting Period, the independent directors of the Company in strict accordance with the relevant laws,
regulations and rules of Articles of Association, focus on the operation of the Company, perform their duties
independently and put forward the professional opinions to complete the system of the Company and daily
management decisions , for those events need issued opinions, the independent directors put forward independent
and impartial advice, which play a proper role to improve the company governance mechanism, safeguard the
legitimate rights and interests of the Company and all shareholders.
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
During the Reporting Period, the performance of the specialized committees under the Board for 2017 in
accordance with the Company Law, Guidelines for Governance of Listed Companies, Articles of Association and
Rules of Procedures for the specialized committees under the Board was as follows:
1.The Audit Committee under the Board convened four meetings, at which reviewed and approved the Annual
Financial Statement Report 2016, Annual Report and Its Abstract 2016, Summary Report of the Audit Committee
on the 2016 Annual Audit Work, Proposal on Engaging the Audit Firm for 2016, First Quarter Report 2017,
Semi-annual Report 2017 and Third Quarter Report 2017.
2. The strategy Committee under the Board convened one meeting, at which reviewed and approved the proposal
on Mid-term Development Plan of the Company (2017-2019);
3.The Remuneration and Appraisal Committee under the Board convened one meeting, at which reviewed and
approved the Proposal on Paying the 2016 Annual Remuneration to the Senior Management;
4. The Nomination Committee under the Board convened one meeting, at which reviewed and approved the
Proposal on Increasing Directors of the Company.
VII Performance of Duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Board raised no objections in this Reporting Period.
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Wuxi Little Swan Company Limited Annual Report 2017
VIII Appraisal and Incentive for Executive Officers
The selection, appraisal and incentive system of the executive officers of the Company were implemented
according to relevant regulations of the Company Law and the Articles of Association of the Company. The
Company established examination and evaluation system on the basis of the target responsibility, determine the
evaluation index, evaluation method and evaluation method relate to the assessment results, according to the
annual signing of the Target Responsibility Assessment System Agreement with executive officers. During the
Reporting Period, the Company had in accordance with the measures for the management of target responsibility
system exam and the rate the executive officers, and had reflected in an annual performance remuneration, which
effectively improved the executive officers‘ responsibility and work enthusiasm.
IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes √ No
2. Internal Control Self-evaluation Report
Disclosure date of the internal control self-evaluation report 03/13/2018
For details about the Internal Control Self-Evaluation Report
Index to the disclosed internal control self-evaluation report 2017, see www.cninfo.com.cn, the website designated by the
Shenzhen Stock Exchange for information disclosure.
Total assets of the evaluated entities as a percentage in the
100.00%
consolidated total assets
Operating revenues of the evaluated entities as a percentage in the
100.00%
consolidated operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
For details, please refer to ―(III) Basis for internal For details, please refer to ―(III) Basis for internal
control appraisal and identification standards for control appraisal and identification standards for
Nature standard internal control defects‖ in Section III of the Internal internal control defects‖ in Section III of the Internal
Control Self-Evaluation Report 2017 disclosed on Control Self-Evaluation Report 2017 disclosed on
www.cninfo.com.cn dated March 13, 2018. www.cninfo.com.cn dated March 13, 2018.
65
Wuxi Little Swan Company Limited Annual Report 2017
For details, please refer to ―(III) Basis for internal For details, please refer to ―(III) Basis for internal
control appraisal and identification standards for control appraisal and identification standards for
Quantitative standard internal control defects‖ in Section III of the Internal internal control defects‖ in Section III of the Internal
Control Self-Evaluation Report 2017 disclosed on Control Self-Evaluation Report 2017 disclosed on
www.cninfo.com.cn dated March 13, 2018. www.cninfo.com.cn dated March 13, 2018.
Number of serious financial-report-related defects 0
Number of serious non-financial-report-related defects 0
Number of important financial-report-related defects 0
Number of important non-financial-report-related defects 0
X Auditor’s Report on Internal Control
Opinion paragraph in the auditor‘s report on internal control
The audit firm for internal control believes that the Company makes valid internal control on financial report in all significant
aspects on December 31, 2017 according to the Basic Rules on Enterprise Internal Control and other relevant stipulations.
Auditor‘s report on internal control disclosed or not Disclosed
Disclosure date 03/13/2018
For details about the Auditor‘s Report on Internal Control 2017,
Index to the disclosed auditor‘s report on internal control see www.cninfo.com.cn, the website designated by the Shenzhen
Stock Exchange for information disclosure.
Type of the auditor‘s opinion Standard unqualified opinion
Serious non-financial-report-related defects None
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor‘s report on the
Company‘s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor‘s report on the Company‘s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
66
Wuxi Little Swan Company Limited Annual Report 2017
Part X Corporate Bonds
Indicate by tick market whether the Company has any corporate bonds publicly offered and listed on the stock
exchange, which were undue before the date of this Report‘s approval or were due but could not be redeemed in
full.
□ Yes √ No
67
Part XI Financial Report
[English Translation for Reference Only]
Auditor’s Report
PwC ZT Shen Zi (2018) No. 10036
(Page 1 of 5)
To the Shareholders of Wuxi Little Swan Company Limited,
Opinion
What we have audited
We have audited the accompanying financial statements of Wuxi Little Swan Company Limited (hereinafter
“the Company”), which comprise:
the consolidated and company balance sheets as at 31 December 2017;
the consolidated and company income statements for the year then ended;
the consolidated and company cash flow statements for the year then ended;
the consolidated and company statements of changes in shareholders’ equity for the year then ended;
and
notes to the financial statements.
Our opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated and company’s financial position of the Company as at 31 December 2017, and their financial
performance and cash flows for the year then ended in accordance with the requirements of Accounting
Standards for Business Enterprises (“CASs”).
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of
the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical
responsibilities in accordance with the CICPA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
68
PwC ZT Shen Zi (2018) No. 10036
(Page 2 of 5)
Key Audit Matters (cont’d)
The key audit matter identified in our audit is revenue recognition for sales of goods.
Key Audit Matter – Revenue How our audit addressed the
recognition for sales of goods Key Audit Matter
Revenue recognition for sales of goods We performed the following procedures for sales of goods:
Refer to Important accounting We discussed with management of business departments and
policies and estimations (23) and financial department of Little Swan for the process of sales of
Notes to the consolidated financial
goods in different sales channels. We understood and
statements (36) to the financial
statements. evaluated the relevant internal controls and performed testing
on the operating effectiveness of key controls.
The Company and its subsidiaries
recognise revenue when it is probable We examined samples of sales agreements with customers of
that future economic benefits will flow different sales channels of Little Swan. Based on our discussion
to the entity; when the amount of with management, our understanding and audit experience of
revenue can be reliably measured; and
the sales transactions, we assessed the accounting policy for
when specific criterias have been met
revenue recognition for sales of goods.
for each of the activities. In 2017, the
consolidated revenue of Little Swan We performed the following procedures for sales of goods
amounted to RMB 21,384,699 through different sales channels:
thousands of which 99.7% are revenue
from sales of goods. Performed risk assessment procedures including analysis on
We focus on the revenue recognition the fluctuations of monthly sales amounts and gross margin;
for sales of goods. Examined supporting documents related to the sales of goods
Our focus on the revenue recognition on sample basis, including sales agreements, sales orders,
for sales of goods is mainly due to a sales invoices, transportation documents and receipt notes
large number of goods of Little Swan from customers;
are sold to large amount of customers
in different sals channels domesticly Checked supporting documents including receipt notes or
and abroad. settlement notes from customers for sales of goods recognised
before or after the balance sheet date, so as to evaluate
whether the sales of goods was recorded in the correct period.
Based on the audit procedures performed, we found that the
revenue recognition for sales of goods was consistent with the
accounting policy of Little Swan.
69
PwC ZT Shen Zi (2018) No. 10036
(Page 3 of 5)
Other Information
Management of the Company is responsible for the other information. The other information comprises all
of the information included in 2017 annual report of the Company other than the financial statements and
our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
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, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management of the Company is responsible for the preparation and fair presentation of these financial
statements in accordance with the CASs, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing these financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether these 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 CSAs will always detect a material misstatement when it exists.
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.
70
PwC ZT Shen Zi (2018) No. 10036
(Page 4 of 5)
Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
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 for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the 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 disclosures in these financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
71
PwC ZT Shen Zi (2018) No. 10036
(Page 5 of 5)
Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
PricewaterhouseCoopers Zhong Tian LLP Signing CPA Huang Meimei
Shanghai , the People’s Republic of China (Engagement Partner)
9 March 2018 Signing CPA Cai Xiujuan
72
Financial statements
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2017 31 December 2016
ASSETS Note
Consolidated Consolidated
Current Assets:
Cash at bank and in hand VII(1) 1,588,264,516.05 4,272,077,211.11
Financial assets at fair value through profit or loss VII(2) 5,270,238.03 -
Notes receivable VII(3) 1,283,192,684.28 1,297,609,202.29
Accounts receivable VII(4) 1,736,724,496.10 1,465,654,497.90
Advances to suppliers VII(5) 84,346,792.38 131,513,792.18
Interests receivable VII(6) 60,943,907.98 26,755,807.07
Other receivables VII(7) 47,224,454.09 23,693,886.54
Inventories VII(8) 1,980,766,196.14 1,724,837,944.69
Other current assets VII(9) 12,778,240,745.22 8,385,724,282.16
Total current assets 19,564,974,030.27 17,327,866,623.94
Non-current assets:
Available-for-sale financial assets VII(10) 200,000.00 200,000.00
Investment properties VII(11) 61,695,825.00 64,854,903.25
Fixed assets VII(12) 1,029,668,355.84 970,859,291.03
Construction in progress VII(13) 37,972,252.60 -
Intangible assets VII(14) 187,045,347.27 192,283,486.15
Long-term prepaid expenses VII(15) 22,382,020.52 4,387,728.14
Deferred tax assets VII(16) 407,151,474.64 299,879,029.23
Other non-current assets VII(17) 27,331,937.53 25,655,775.90
Total non-current assets 1,773,447,213.40 1,558,120,213.70
Total assets 21,338,421,243.67 18,885,986,837.64
73
Financial statements
CONSOLIDATED BALANCE SHEET (continued)
AS AT 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2017 31 December 2016
LIABILITIES AND OWNERS' EQUITY Note
Consolidated Consolidated
Current liabilities:
Short-term borrowings VII(19) 81,393,672.34 183,813,064.12
Notes payable VII(20) 2,805,804,600.41 2,620,549,815.47
Accounts payable VII(21) 3,827,025,700.10 3,335,089,672.06
Advances from customers VII(22) 3,065,815,801.93 3,014,347,762.24
Employee benefits payable VII(23) 349,483,844.76 288,592,163.29
Taxes payable VII(24) 638,017,523.31 412,238,029.96
Dividends payable VII(25) 6,996,784.06 7,150,684.06
Other payables VII(26) 221,120,863.48 199,926,402.04
Other current liabilities VII(27) 2,107,700,604.61 1,844,413,154.26
Total current liabilities 13,103,359,395.00 11,906,120,747.50
Non-current liabilities:
Long-term employee benefits payable VII(28) 12,021,620.17 16,101,348.60
Provisions VII(29) 2,253,082.25 1,727,340.89
Deferred income VII(30) 2,489,133.21 2,942,333.25
Total non-current liabilities 16,763,835.63 20,771,022.74
Total liabilities 13,120,123,230.63 11,926,891,770.24
Owners’ equity:
Share capital VII(31) 632,487,764.00 632,487,764.00
Capital surplus VII(32) 1,252,947,546.80 1,191,490,133.01
Other comprehensive income VII(33) 40,496,366.85 70,757,524.61
Surplus reserve VII(34) 332,594,722.29 332,594,722.29
Retained earnings VII(35) 4,788,564,401.03 3,756,517,718.81
Equity attributable to the owners of the Company 7,047,090,800.97 5,983,847,862.72
Minority interests 1,171,207,212.07 975,247,204.68
Total owners’ equity 8,218,298,013.04 6,959,095,067.40
Total liabilities and owners’ equity 21,338,421,243.67 18,885,986,837.64
74
Financial statements
BALANCE SHEET OF THE COMPANY
AS AT 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2017 31 December 2016
ASSETS Note
Company Company
Current Assets:
Cash at bank and in hand 1,030,061,384.78 2,397,428,457.92
Financial assets at fair value through profit or loss 3,724,810.47 -
Notes receivable 938,342,347.95 1,088,559,252.21
Accounts receivable XVIII(1) 2,805,194,600.27 2,310,254,576.98
Advances to suppliers 67,278,861.92 89,477,823.29
Interests receivable 32,913,208.23 18,798,031.69
Other receivables XVIII(2) 28,973,048.36 16,176,106.89
Inventories 1,206,334,183.68 1,068,494,123.28
Other current assets 7,259,605,039.27 4,965,682,855.69
Total current assets 13,372,427,484.93 11,954,871,227.95
Non-current assets:
Available-for-sale financial assets 150,000.00 150,000.00
Long-term equity investments XVIII(3) 958,235,041.57 1,375,785,041.57
Investment properties 7,882,440.32 7,546,955.16
Fixed assets 532,803,209.18 490,047,802.72
Construction in progress 37,321,733.68 -
Intangible assets 89,900,867.32 92,591,167.64
Long-term prepaid expenses 5,905,684.35 1,817,228.83
Deferred tax assets 225,186,332.58 197,091,251.29
Other non-current assets 17,138,349.61 18,313,858.80
Total non-current assets 1,874,523,658.61 2,183,343,306.01
Total assets 15,246,951,143.54 14,138,214,533.96
75
Financial statements
BALANCE SHEET OF THE COMPANY (continued)
AS AT 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2017 31 December 2016
LIABILITIES AND OWNERS' EQUITY Note
Company Company
Current liabilities:
Short-term borrowings 16,806,882.34 123,943,093.80
Notes payable 1,678,546,630.26 1,508,017,904.49
Accounts payable 4,395,361,312.16 3,913,090,507.89
Advances from customers 1,862,974,982.38 1,854,711,663.46
Employee benefits payable 268,065,495.23 216,530,836.37
Taxes payable 353,920,883.93 249,034,768.38
Dividends payable 6,996,784.06 7,150,684.06
Other payables 146,982,721.63 143,124,857.82
Other current liabilities 1,336,384,942.60 1,173,641,937.69
Total current liabilities 10,066,040,634.59 9,189,246,253.96
Total liabilities 10,066,040,634.59 9,189,246,253.96
Owners’ equity:
Share capital 632,487,764.00 632,487,764.00
Capital surplus 1,405,575,239.68 1,350,656,531.65
Other comprehensive income 27,970,054.39 37,515,343.84
Surplus reserve 319,944,578.39 319,944,578.39
Retained earnings 2,794,932,872.49 2,608,364,062.12
Total owners’ equity 5,180,910,508.95 4,948,968,280.00
Total liabilities and owners’ equity 15,246,951,143.54 14,138,214,533.96
76
Financial statements
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Note 2017 Consolidated 2016 Consolidated
Revenues VII(36), VII(37) 21,384,699,076.65 16,334,914,501.69
Less: Cost of sales VII(36), VII(37) -15,982,893,658.84 -12,111,213,286.28
Taxes and surcharges VII(38) -131,791,477.12 -99,204,438.58
Selling and distribution expenses VII(39) -2,872,849,586.14 -2,325,645,712.65
General and administrative expenses VII(40) -728,323,077.71 -505,321,107.14
Finance income – net VII(41) 71,808,982.80 154,825,748.21
Asset impairment losses VII(42) -70,595,875.65 -94,569,651.27
Add: Profit and loss from fair value changes VII(43) 5,270,238.03 -
Add: Investment income VII(44) 320,623,463.23 200,239,260.71
Loss on disposals of assets VII(45) -975,423.00 -1,833,734.45
Othe income VII(46) 53,894,074.25 -
Operating profit 2,048,866,736.50 1,552,191,580.24
Add: Non-operating income VII(47) 17,448,715.84 37,967,314.97
Less: Non-operating expenses VII(48) -1,620,508.98 -5,731,866.22
Total profit 2,064,694,943.36 1,584,427,028.99
Less: Income tax expenses VII(49) -356,274,657.61 -241,651,767.11
Net profit 1,708,420,285.75 1,342,775,261.88
Classified by continuity of operations
Net profit from continuing operations 1,708,420,285.75 1,342,775,261.88
Classified by ownership the equity
Attributable to owners of the Company 1,506,412,505.22 1,175,054,922.85
Minority interests 202,007,780.53 167,720,339.03
77
Financial statements
CONSOLIDATED INCOME STATEMENT (continued)
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Note 2017 Consolidated 2016 Consolidated
Other comprehensive income, net of tax -39,345,928.61 41,216,788.60
Attributable to equity owners of the Company -30,261,157.76 35,944,239.97
Other comprehensive income that will be
subsequently reclassified to profit or loss -30,261,157.76 35,944,239.97
Including: Changes in fair value of available-for-sale
financial assets -30,246,066.76 35,924,495.90
Foreign-currency financial statement
translation difference -15,091.00 19,744.07
Attributable to minority interests -9,084,770.85 5,272,548.63
Total comprehensive incomes 1,669,074,357.14 1,383,992,050.48
Attributable to owners of the Company 1,476,151,347.46 1,210,999,162.82
Attributable to minority interests 192,923,009.68 172,992,887.66
Earnings per share VII(50)
Basic earnings per share 2.38 1.86
Diluted earnings per share 2.38 1.86
Notes thereon are parts of this financial report.
78
Financial statements
INCOME STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Notes 2017 Company 2016 Company
Revenues XVIII(4) 16,227,944,922.59 12,451,627,200.77
Less: Cost of sales XVIII(4) -12,576,166,337.97 -9,679,123,368.71
Business taxes and surcharges -87,954,972.46 -64,404,746.49
Distribution expenses -1,936,954,187.36 -1,521,389,300.24
Administrative expenses -560,388,308.38 -402,652,997.95
Financial costs 47,870,144.26 99,230,544.04
Impairment loss -464,901,476.21 -64,797,585.33
Add: Profit and loss from fair value changes 3,724,810.47 -
Add: Investment income XVIII(5) 169,205,446.47 76,128,199.93
Loss on disposal of assets 433,848.54 -107,186.36
Other income 17,697,350.94 -
Operating profit 840,511,240.89 894,510,759.66
Add: Non-operating income 8,471,093.21 10,007,822.18
Less: Non-operating expenses -1,289,079.79 -1,847,323.14
Total profit 847,693,254.31 902,671,258.70
Less: Income tax expenses -186,758,620.94 -138,929,321.83
79
Financial statements
INCOME STATEMENT OF THE COMPANY (continued)
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Notes 2017 Company 2016 Company
Net profit 660,934,633.37 763,741,936.87
Classified by operation continuity
Net profit from continuing operations 660,934,633.37 763,741,936.87
Other comprehensive income, net of tax -9,545,289.45 23,906,517.44
Other comprehensive income that will be subsequently
reclassified to profit or loss -9,545,289.45 23,906,517.44
Changes in fair value of available-for-sale financial
assets -9,545,289.45 23,906,517.44
Total comprehensive income 651,389,343.92 787,648,454.31
80
Financial statements
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Note 2017 Consolidated 2016 Consolidated
Cash flows from operating activities
Cash received from sales of goods or rendering of services 17,558,217,913.33 16,223,050,621.37
Refund of taxes and surcharges 65,523,277.52 87,968,408.39
Cash received relating to other operating activities VII(51)(a) 114,191,110.40 66,833,930.42
Sub-total of cash inflows 17,737,932,301.25 16,377,852,960.18
Cash paid for goods and services -13,209,347,707.13 -10,455,208,887.42
Cash paid to and on behalf of employees -1,267,020,460.78 -977,297,801.66
Payments of taxes and surcharges -721,750,460.90 -651,736,882.51
Cash paid relating to other operating activities VII(51)(b) -524,059,854.14 -397,536,601.21
Sub-total of cash outflows -15,722,178,482.95 -12,481,780,172.80
Net cash flows from operating activities VII(52)(a) 2,015,753,818.30 3,896,072,787.38
Cash flows from investing activities
Cash received from return of investments 11,100,000,000.00 8,998,000,000.00
Cash received from returns on investments 320,623,463.24 200,239,260.71
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 5,269,840.73 5,447,359.13
Cash received relating to other investing activities VII(51)(c) 91,904,332.38 71,183,080.05
Sub-total of cash inflows 11,517,797,636.35 9,274,869,699.89
Cash paid to acquire fixed assets, intangible assets and other
long-term assets -209,521,425.79 -63,305,378.00
Cash paid to acquire investments -15,448,983,636.67 -11,471,000,000.00
Sub-total of cash outflows -15,658,505,062.46 -11,534,305,378.00
Net cash flows from investing activities -4,140,707,426.11 -2,259,435,678.11
81
Financial statements
CONSOLIDATED CASH FLOW STATEMENT (continued)
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items Note 2017 Consolidated 2016 Consolidated
Cash flows from financing activities
Cash received from borrowings 680,166,782.34 183,813,064.12
Sub-total of cash inflows 680,166,782.34 183,813,064.12
Cash repayments of borrowings -782,586,174.12 -
Cash payments for distribution of dividends, profits or
interest expenses -485,163,943.33 -395,092,974.82
Cash payments relating to other financing activities - -69,462,000.00
Sub-total of cash outflows -1,267,750,117.45 -464,554,974.82
Net cash flows from financing activities -587,583,335.11 -280,741,910.70
Effect of foreign exchange rate changes on cash and cash
equivalents -41,663,902.58 23,109,389.95
Net increase in cash and cash equivalents -2,754,200,845.50 1,379,004,588.52
Add: Cash and cash equivalents at beginning of year 4,171,689,917.21 2,792,685,328.69
Cash and cash equivalents at end of year VII(52)(b) 1,417,489,071.71 4,171,689,917.21
82
Financial statements
CASH FLOW STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items 2017 Company 2016 Company
Cash flows from operating activities
Cash received from sale of commodities or rendering of service 13,498,207,711.94 10,147,589,853.70
Cash received relating to other operating activities 67,433,518.99 39,602,069.13
Sub-total of cash inflows 13,565,641,230.93 10,187,191,922.83
Cash paid for goods and services -10,552,165,814.20 -6,418,903,625.65
Cash paid to and on behalf of employees -886,884,259.02 -675,417,191.26
Payments of taxes and surcharges -422,322,982.87 -453,239,964.32
Cash paid relating to other operating activities -403,566,550.55 -269,070,271.83
Sub-total of cash outflows -12,264,939,606.64 -7,816,631,053.06
Net cash flows from operating activities 1,300,701,624.29 2,370,560,869.77
Cash flows from investing activities
Cash received from disposal of investments 6,440,000,000.00 5,086,000,000.00
Cash received from returns on investments 169,205,446.47 76,128,199.93
Net cash received from disposal of fixed assets and intangible assets 3,627,843.72 1,606,025.78
Cash received relating to other investing activities 66,127,555.36 62,624,714.64
Sub-total of cash inflows 6,678,960,845.55 5,226,358,940.35
Cash paid to acquire fixed assets, intangible assets and other long-term -106,969,634.65 -32,673,329.11
Cash paid to acquire investments -8,678,160,815.54 -6,751,000,000.00
Cash paid to relating to other investing activities - -69,462,000.00
Sub-total of cash outflows -8,785,130,450.19 -6,853,135,329.11
Net cash flows from investing activities -2,106,169,604.64 -1,626,776,388.76
Cash Flows from Financing Activities:
Cash received from borrowings 428,629,992.34 123,943,093.80
Sub-total of cash inflows 428,629,992.34 123,943,093.80
Cash repayments of borrowings -535,766,203.80 -
Cash payments for distribution of dividends, profits or interest expenses -480,899,391.48 -389,009,428.38
83
Financial statements
CASH FLOW STATEMENT OF THE COMPANY (continued)
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items 2017 Company 2016 Company
Sub-total of cash outflows -1,016,665,595.28 -389,009,428.38
Net cash flows from financing activities -588,035,602.94 -265,066,334.58
Effect of foreign exchange rate changes on cash and cash equivalents -14,445,909.84 8,547,293.68
Net increase in cash and cash equivalents -1,407,949,493.13 487,265,440.11
Add: Cash and cash equivalents at beginning of year 2,353,708,554.75 1,866,443,114.64
Cash and cash equivalents at end of year 945,759,061.62 2,353,708,554.75
84
Financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the owners of the Company
Other
Items Minority interests Total owners’ equity
Share capital Capital surplus comprehensive Surplus reserves Retained earnings
income
Note VII(31) VII(32) VII(33) VII(34) VII(35)
Balance at 1 January 2017 632,487,764.00 1,191,490,133.01 70,757,524.61 332,594,722.29 3,756,517,718.81 975,247,204.68 6,959,095,067.40
Movements for the year ended 31 December 2017 - 61,457,413.79 -30,261,157.76 - 1,032,046,682.22 195,960,007.39 1,259,202,945.64
Total comprehensive income - - -30,261,157.76 - 1,506,412,505.22 192,923,009.68 1,669,074,357.14
-Net profit - - - - 1,506,412,505.22 202,007,780.53 1,708,420,285.75
-Other comprehensive income - - -30,261,157.76 - - -9,084,770.85 -39,345,928.61
Capital contribution and withdrawal by owners - 61,457,413.79 - - - 3,036,997.71 64,494,411.50
-Amount recorded in owners' equity arising from
61,953,091.84 - - - 2,541,319.66 64,494,411.50
share-based payment arrangements -
-Others - -495,678.05 - - - 495,678.05 -
Profit distribution - - - - -474,365,823.00 - -474,365,823.00
-Profit distribution to equity owners - - - - -474,365,823.00 - -474,365,823.00
Balance at 31 December 2017 632,487,764.00 1,252,947,546.80 40,496,366.85 332,594,722.29 4,788,564,401.03 1,171,207,212.07 8,218,298,013.04
85
Financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the owners of the Company
Minority
Items Other comprehensive Total owners’ equity
Share capital Capital surplus Surplus reserves Retained earnings interests
income
Note VII(31) VII(32) VII(33) VII(34) VII(35)
Balance at 1 January 2016 632,487,764.00 1,164,014,947.85 34,813,284.64 332,594,722.29 2,960,955,454.36 862,860,913.96 5,987,727,087.10
Movements for the year ended 31 December 2016 - 27,475,185.16 35,944,239.97 - 795,562,264.45 112,386,290.72 971,367,980.30
Total comprehensive income - - 35,944,239.97 - 1,175,054,922.85 172,992,887.66 1,383,992,050.48
-Net profit - - - - 1,175,054,922.85 167,720,339.03 1,342,775,261.88
-Other comprehensive income - - 35,944,239.97 - - 5,272,548.63 41,216,788.60
Capital contribution and withdrawal by owners - 27,475,185.16 - - - -60,606,596.94 -33,131,411.78
-Amount recorded in owners' equity arising
- 34,772,462.28 - - - 1,558,125.94 36,330,588.22
from share-based payment arrangements
-Others - -7,297,277.12 - - - -62,164,722.88 -69,462,000.00
Profit distribution - - - - -379,492,658.40 - -379,492,658.40
-Profit distribution to equity owners - - - - -379,492,658.40 - -379,492,658.40
Balance at 31 December 2016 632,487,764.00 1,191,490,133.01 70,757,524.61 332,594,722.29 3,756,517,718.81 975,247,204.68 6,959,095,067.40
86
Financial statements
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
FOR THE YEAR ENDED 31 December 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other comprehensive
Items Share capital Capital surplus Surplus reserves Retained earnings Total owners’ equity
income
Balance at 1 January 2017 632,487,764.00 1,350,656,531.65 37,515,343.84 319,944,578.39 2,608,364,062.12 4,948,968,280.00
Movements for the year ended 31 December 2017 - 54,918,708.03 -9,545,289.45 - 186,568,810.37 231,942,228.95
Total comprehensive income - - -9,545,289.45 - 660,934,633.37 651,389,343.92
--Net profit - - - - 660,934,633.37 660,934,633.37
- Other comprehensive income - - -9,545,289.45 - - -9,545,289.45
Capital contribution and withdrawal by owners - 54,918,708.03 - - - 54,918,708.03
- Amount recorded in owners' equity arising from - 54,918,708.03 - - - 54,918,708.03
share-based payment arrangements
Profit appropriation - - - - -474,365,823.00 -474,365,823.00
--Surplus reserve - - - - - -
--Profit distribution to equity owners - - - - -474,365,823.00 -474,365,823.00
Balance at 31 December 2017 632,487,764.00 1,405,575,239.68 27,970,054.39 319,944,578.39 2,794,932,872.49 5,180,910,508.95
87
Financial statements
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY (continued)
FOR THE YEAR ENDED 31 December 2016
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other comprehensive
Items Share capital Capital surplus Surplus reserves Retained earnings Total owners’ equity
income
Balance at 1 January 2016 632,487,764.00 1,319,496,538.02 13,608,826.40 319,944,578.39 2,224,114,783.65 4,509,652,490.46
Movements for the year ended 31 December 2016 - 31,159,993.63 23,906,517.44 - 384,249,278.47 439,315,789.54
Total comprehensive income - - 23,906,517.44 - 763,741,936.87 787,648,454.31
--Net profit - - - - 763,741,936.87 763,741,936.87
- Other comprehensive income - - 23,906,517.44 - - 23,906,517.44
Capital contribution and withdrawal by owners - 31,159,993.63 - - - 31,159,993.63
- Amount recorded in owners' equity arising from - - - -
31,159,993.63 31,159,993.63
share-based payment arrangements
Profit appropriation - - - - -379,492,658.40 -379,492,658.40
--Profit distribution to equity owners - - - - -379,492,658.40 -379,492,658.40
Balance at 31 December 2016 632,487,764.00 1,350,656,531.65 37,515,343.84 319,944,578.39 2,608,364,062.12 4,948,968,280.00
88
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
III. Company profile
Wuxi Little Swan Co., Ltd. (hereinafter ―the Company") was formerly a SOE founded and reorganized as a private
placement limited liability company by the approval of Jiangsu Provincial Commission for Economic Restructuring
(SuTiGaiSheng (1993) No.253 Document) on 29th Nov,1993. As approved by Jiangsu Provincial Government ((1996)
No.52 Document), Securities Regulatory Commission under State Council (ZhengWeiFa (1996) No.14 Document) and
Shenzhen Securities and Exchange Commission (ShenZhengBanhan (1996) No.4 Document), the Company publicly
issued 70 million RMB foreign shares (B-shares) in China, after which the Company‘s share capital came to RMB 310
million.
In March 1997, as approved by China Securities Regulatory Commission (ZhengJianFaZi (1997) No.54 Document and
ZhengJianFaZi (1997) No.55 Document, the Company publicly issued 60 million RMB common shares (including 90
million staff shares). The public offerings raised 720.83 million RMB yuan and the A-shares were formally listed at
Shenzhen Stock Exchange in Mar, 1997. The abbreviation for A-shares is ―Little Swan A". A-share code is 000418.
On 20 July 2006, the Company‘s proposal on reformation of segregated stocks was approved by relevant shareholders‘
meeting. To gain liquidity for the restricted stocks of the Company, the holders of the restricted stocks of the Company
agreed to pay the following consideration: based on the stock registration as of 4 August 2006, the Company issued
bonus shares on 7 August 2006 at the ratio of 2.5 shares to every 10 A-shares to liquidated A-share holders which went
public on the same day. After this bonus issue, the total number of shares of the Company remained unchanged with
corresponding changes in the composition of share holdings.
Pursuant to the resolution at the Annual General Meeting on 9 May 2008, programme of transference from capital
surplus to share capital at the ratio of 10 shares to 5 shares was approved. Additional 182,551,920 shares were allotted at
par from the capital surplus of the Company. As a result, the total shares of the Company increased to 547,655,760 from
365,103,840.
In accordance to the resolution of the 4th seeion of the 6th board meeting and the 1st temporary shareholders meeting in
2010, as well as Document ZhengJianXuKe (2010) No. 1577 ―The approval of significant assets reorganization of
Wuxi Little Swan Co., Ltd. and stock offering with assets purchase to Guangdong Midea Electric Appliances Co., Ltd.‖
issued by China Securities Regulatory Commission, a placement in A share was completed in which additional
84,832,000 shares were issued to Guangdong Midea Electric Appliances Co., Ltd. (Midea Electric Appliances), while
69.47% equity interest of Hefei Midea Washing Machine Limited (formerly as Hefei Royal star Washing Machine
Manufacture Limited) was acquired. Through the non-public offering of A share, the Company‘s captital share
increased by RMB 84,832,000.
On 18 September 2013, Midea Group Co., Ltd. (the Group) combined the Company‘s former controlling shareholder
Midea Electric Appliances through shares exchanges according to Document ZhengJianXuKe (2013) No. 1014 ―The
approval of the merger of Guangdong Midea Electric Appliances Co., Ltd. to Midea Group Co., Ltd.‖ issued by China
Securities Regulatory Commission. After the consolidation by merger, the equity interest held by Midea Electric
Appliances previously was held by the Group and registration procedures for shares transfer were completed by 31
December, 2013. Thus, the Group became the first major shareholder of the Company.
As of 31 December 2017, the total share capital of the Company mounted to 632,487,764, 0.33% of which are
89
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2,087,745 A shares with restriction of trading, 69.47% of which are 439,364,147 A shares without restriction of trading,
and 30.20% of which are 191,035,872 B shares without restriction of trading.
The address of the Company‘s registered office and the headquarters office address is No.18 Changjiang South Road,
National High-tech Industrial Development Zone, Wuxi, Jiangsu Province.
The Company is engaged in the industry of household electric appliances, the approved scope of business of which
includes manufacture, sales and after-sales service of household electric appliances, industrial ceramic products,
environmental-friendly dry cleaning equipment, washing apparatus for typical machines, processing equipment and
fittings. The Company provides laundry service, machining; exports and imports, or be agent for a variety of products
and technologies (excluding unauthorized or forbidden products and technologies for operation according to state
regulations for enterprises). It also provides appliance technical services, certified outsourcing services (operated with a
valid qualification certificate) and invests in financial instruments with surplus funds.
The financial statements were authorized for issue by the board of directors of the Company on 9 March 2018.
Principle subsidiaries included in the scope of consolidation are listed in Note IX.
90
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
IV. Basis for the preparation of financial statements
(1) Basis of preparation
The Group prepared the financial statements with the Basic Standard of the Accounting Standards for Business
Enterprises, accounting policies and other regulations (hereafter referred to as ―the Accounting Standard for
Business Enterprises‖ or ―CAS‖) issued by the Ministry of Finance on and after 15 February 2006, and No. 15
Listing Rules on Disclosure Information for Public Business Entities – preparation of financial statements issued by
China Securities Regulatory Commission.
(2) Going concern
The financial report is prepared on the Group‘s ability to continue as a going concern.
V. Important accounting policies and estimations
The Group determine the accounting policies and accounting estimates based on the operation of business, which
mainly reflected in the revenue recognition policies (note V (23)).
The critical judgements of the Group in determining the critical accounting policies are stated in note V (28).
(1) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2017 are in compliance with the
Accounting Standards for Business Enterprises, and truly and completely present the financial position of the Group
and the Company as of 31 December 2017 and the operating results, cash flows and other information of the Group
and the Company for the year then ended.
(2) Accounting year
The company‘s accounting year starts on 1st January and ends on 31st December.
(3) Operating Cycle
Operating cycle is the time between the acquisition of an asset for production and the final cash or cash equivalent
realization from the acquisition. The Company‘s operating cycle amounted to 12 months.
(4) Recording currency
The Company‘s recording currency is Renminbi (RMB). The recording currency of the Company‘s subsidiaries is
determined based on the primary economic environment in which they operate, and the recording currency of Little
Swan International (Singapore) Limited is US dollar. The financial statements are presented in RMB.
(5) Business combinations
91
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the
carrying amount, or, at the book value of obtained assets and liabilities (including goodwill arising from
combination of the ultimate controlling party and its absorbed entity) on consolidated financial statements wherein
the absorbed party has been acquired by the ultimate controlling party from a third party in previous period. The
difference between the carrying amount of the net assets obtained from the combination and the carrying amount of
the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the
capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against
retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which
they are incurred. Transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured
at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer‘s interest in the fair
value of the acquirer‘s identifiable net assets, the difference is recognised as goodwill; where the cost of
combination is lower than the acquirer‘s interest in the fair value of the acquirer‘s identifiable net assets, the
difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are
included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of
equity or debt securities for the business combination are included in the initially recognised amounts of the equity
or debt securities.
(6) Basis for preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the
date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under
common control, it is included in the consolidated financial statements from the date when it, together with the
Company, comes under common control of the ultimate controlling party. The portion of the net profits realised
before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the
92
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance
with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business
combinations involving enterprises not under common control, the individual financial statements of the
subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial
statements. The portion of a subsidiary‘s equity and the portion of a subsidiary‘s net profits, losses and
comprehensive income for the period not attributable to the Company are recognised as minority interests and
presented separately in the consolidated financial statements within equity, net profits and total comprehensive
income respectively. Unrealised gain or loss from selling assets to subsidiaries fully offsets the net income
attributable to equity holders of the company. Unrealised gain or loss from purchasing assets from subsidiaries
offsets the net income attributable to equity holders of the company and atrributable to the minority interest by the
distribution proportion regarding the company and the subsidiary. Unrealised gain or loss from transaction between
subsidiaries offsets the net income attributable to equity holders of the company and atrributable to the minority
interest by the distribution proportion regarding the company and the selling side of the subsidiaries.
If different recognition perspectives for the same transaction arise within different accounting identities setup, there
is adjustment for the transaction from the Group‘s perspective.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and
highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant
risk of changes in value.
(8) Foreign currency
(a) Foreign currency transaction
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the
transactions.
On the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot
exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in
profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken
out specifically for the acquisition or construction of qualifying assets, which are capitalised as part of the cost of
93
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are
translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of
exchange rate changes on cash is presented separately in the cash flow statement.
(b) Foreign currency financial statements translations
Book value of assets and liabilities with oversea operating entities are translated into RMB at the spot exchange rate
on the balance sheet date. Items in Consolidated Statement of Changes in Equity are translated into RMB using the
spot exchange rate at the date of the transactions, except for the retained earnings. Incomes and expenses items,
which are oversea operating, are translated into RMB using the spot exchange rate at the date of the transactions.
The translation differences of foreign currency transactions are presented in other comprehensive income. Cash
flow items, which are oversea operating, are translated into RMB using the spot exchange rate at the date of the cash
in or cash out. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instruments
(a) Financial assets
(i) Classification
Financial assets are classified into the following categories at initial recognition: financial assets at fair value
through profit or loss, loan and receivables and available-for-sale financial assets. The classification of financial
assets depends on the Group‘s intention and ability to hold the financial assets.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are derivatives – forward foreign exchange contract.
Loan and receivables
Loan and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated to be available for sale
upon initial recognition and financial assets not classified in any other categories. Available-for-sale financial assets
are included in other current assets if they are intended to be disposed by management within 12 months from
balance sheet date.
(ii) Recognition and measurement
94
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to the contractual
provisions of the financial instrument. Transaction costs that are attributable to the acquisition of the financial assets
at fair value through profits or losses are included in profit or loss in the period in which they are incurred, and
transaction costs that are attributable to the acquisition of other financial assets are included in their initially
recognized amounts.
Financial assets at fair value through profit or loss and available-for-sale financial assets are subsequently measured
at fair value. Investments in equity instruments are measured at cost when they do not have a quoted market price in
an active market and whose fair value cannot be reliably measured. Loan and receivables and held-to-maturity
investments are measured at amortised cost using the effective interest method.
Gains or losses arising from change in fair value of financial assets at fair value through profit or loss are recognized
in profit and loss of the current period as profit or loss from changes in fair value. Interests or cash dividends yield
during asset holding period and gains and losses arising from asset disposal are recognized in the current period
profit and loss.
Gains or losses arising from change in fair value of available-for-sale financial assets are recognized directly in
equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary
financial assets. When such financial assets are derecognized, the cumulative gains or losses previously recognized
directly into equity are recycled into profit or loss for the current period. Interests on available-for-sale investments
in debt instruments calculated using the effective interest method during the period in which such investments are
held and cash dividends declared by the investee on available-for-sale investments in equity instruments are
recognized as investment income, which is recognized in profits or losses for the period.
(iii) Impairment of financial assets
Except for financial assets at fair value through profit or loss, the Group assesses the carrying amount of financial
assets at each balance sheet date. If there is objective evidence that the financial asset is impaired, an impairment
loss is provided for.
The objective evidence are matters that occur after the financial assets been recognised, affect its estimated future
cash flow and could be measured accurately by the Group.
The objective evidence, of which provided for available-for-sale equity instruments being impaired, includes an
investment in an equity instrument with serious or prolonged decline. The Group assesses available-for-sale equity
95
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
instruments at each balance sheet date. If the fair value of equity instruments is lower than its initial investment cost
of more than 50% (including 50%), or lower than its initial investment costs and the duration of such circumstances
lasts for more than 1 year ( including 1 year), it indicates that the equity instruments are impaired. If the fair value of
equity instruments is less than its initial investment cost of more than 20% (including 20%) to 50% (not including
50%), the Group will consider other relevant factors such as ratios of price fluctuation to judge that whether equity
instruments are impaired. The group measured the initial investment cost of available-for-sale equity instruments
using the weighted average method.
When an impairment loss on a financial asset carried at amortized cost has been incurred, the amount of loss is
measured at the difference between the asset‘s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred). If there is objective evidence that the value of the
financial asset recovered and the recovery is related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in
profits or losses.
When an impairment loss on available-for-sale financial assets incurred, the cumulative losses arising from the
decline in fair value that had been recognized directly in equity are transferred out from equity and into impairment
loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been
recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in profit or loss, the previously recognized impairment loss is
reversed into profit or loss for the current period. For an investment in an equity instrument classified as
available-for-sale on which impairment losses have been recognized, the increase in its fair value in a subsequent
period is recognized directly in equity.
If an impairment loss incurred on a financial asset carried at amortized cost, the amount of loss is measured as the
difference between the asset‘s carrying amount and the present value of estimated future cash flows discounted at
the current market rate of return for a similar financial asset and cannot be revert in the subsequent periods.
(iv) Derecognition of financial assets
Financial assets are derecognised when: i) the contractual rights to receive the cash flows from the financial assets
have expired; or ii) substantial risks and rewards of ownership of the financial assets have been transferred; or iii)
the control over the financial asset has been waived even if the Group does not transfer or retain nearly all of the
96
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
risks and rewards relating to the ownership of a financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the aggregate of consideration
received and the accumulative amount of the changes of fair value originally recorded in the owner‘s equity is
recognised in the profit or loss.
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: the financial liabilities at fair
value through profit or loss and other financial liabilities. The financial liabilities in the Group mainly comprise of
other financial liabilities, including short-term borrowings, notes payable, accounts payable, dividends payable,
other payables and other current liabilities, which are recognised initially at fair value and measured subsequently at
amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently carried at
amortised costs using the effective interest method.
Other financial liabilities are classified as current liabilities if they mature within one year (one year included);
others are classified as non-current liabilities; non-current liabilities due for repayment within one year since the
balance sheet date are classified as current portion of non-current liabilities.
A financial liability (or a part of financial liability) is derecognised when and only when the obligation specified in
the contract is discharged or cancelled. The difference between the carrying amount of a financial liability (or a part
of financial liability) extinguished and the consideration paid is recognised in profit or loss.
(c) Determination of the fair value of the financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the
active market. The fair value of a financial instrument for which the market is not active is determined by using a
valuation technique. In the process of valuation, the Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data and other supporting information are available while selecting inputs
that are consistent with the characteristics of the asset or liability that market participants would take into account in
a transaction for the asset or liability. The use of relevant observable inputs is maximized while that of unobservable
inputs is minimized. Unobservable inputs shall be used to the extent that the relevant observable inputs are
unavailable.
(10) Receivables
97
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Receivables comprise notes receivable, accounts receivable, interests receivable and other receivables. Accounts
receivable arising from sale of goods or rendering of services are initially recognised at fair value of the contractual
payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for
bad debts
The amount of account receivable individually accounts for over 10% (including 10%) of total amount
Criteria for recognition of of accounts receivable on balance sheet date or is individually more than RMB 10,000,000 (including
individually significant RMB 10,000,000); the amount of other receivable individually accounts for over 10% (including 10%)
receivables
of total amount of other receivable on balance sheet date or is individually more than RMB 5,000,000
(including RMB 5,000,000).
Receivables with amounts that are individually significant are subject to separate assessment for
impairment. If there exists objective evidence that the Group will not be able to collect the amount
Accural for receivables with
under the original terms, a provision for bad debts of that receivable is made at the difference between
amounts that are individually
significant are subject to its carrying amount and the present value of estimated future cash flows.
separate assessment for
The provision for impairment of the receivables that are individually significant is established at the
impairment
difference between the carrying amount of the receivable and the present value of estimated future
cash flows.
(b) Receivables that are subject to provision for bad debts on the grouping basis
Provision for bad debts
Receivables with amounts that are not individually significant and those receivables that have been
individually assessed for impairment and have not been found impaired are classified into certain
Grouping upon aging basis groupings based on their credit risk characteristics. Provision for bad debts is determined based on the
historical loss experience for groupings of receivables with similar credit risk characteristics, taking
into consideration of the current circumstances.
A provision for impairment of the receivables is made based on the aging of receivables at the following
percentage:
□ Applicable √ Not applicable
98
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Aging Provision as a percentage of receivables Provision as a percentage of other receivables
Within 1 year 5.00% 5.00%
Between 1 and 2 years 10.00% 10.00%
Between 2 and 3 years 30.00% 30.00%
Between 3 and 4 years 50.00% 50.00%
Between 4 and 5 years 50.00% 50.00%
Over 5 years 100.00% 100.00%
Notes receivables of the Group comprises bank‘s acceptance bill from banks with low credit risk level, thus no bad
debt provision is necessary to be accrued.
(c) Accounts receivable with an insignificant single amount but for which the bad debt provision is made
independently
Receivables that are not individually significant are subject to separate impairment assessment if
Recognition criteria there is objective evidence that the Group will not be able to collect the full amounts according to
the original terms.
The provision for impairment of the receivables is established at the difference between the
Recognition method
carrying amount of the receivables and the present value of estimated future cash flows.
(11) Inventory
(a) Classification
Inventories include raw materials, work in progress, finished goods and turnover materials, and are presented at the
lower of cost and net realizable value.
(b) Determination of cost
Cost is determined on the weighted average method. The cost of finished goods and work in progress comprises raw
materials, direct labour and an allocation of all production overhead expenditures incurred based on normal
operating capacity.
(c) The determination of net realizable value and the method of provisions for impairment of inventories
Provisions for declines in the value of inventories are determined at the carrying value of the inventories net of their
net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of
business, less the estimated costs to completion and estimated costs necessary to make the sale and relevant taxes.
(d) The Company and its subsidiaries adopt the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
99
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(12) Long-term equity investments
Long-term equity investments include the company‘s long-term equity investments in its subsidiaries.
Subsidiaries are all entities over which the Company is able to control.
Investments in subsidiaries are measured using the cost method in the Company‘s financial statements, and adjusted
by using the equity method when preparing the consolidated financial statements.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments
acquired through a business combination involving enterprises under common control, the investment cost shall be
the absorbing party‘s share of the carrying amount of owners‘ equity of the party being absorbed at the combination
date; for long-term equity investment acquired through a business combination involving enterprises not under
common control, the investment cost shall be the combination cost.
For long-term equity investments acquired not through a business combination: for long-term equity investment
acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term
equity investment acquired by issuing equity securities, the initial investment cost shall be the fair value of the
equity securities.
(b) Subsequent measurement and recognition of related profits and losses
For long-term equity investments accounted for using the cost method, they are measured at the initial investment
costs, and cash dividends or profits distribution declared by the investees are recognised as investment income in
profits or losses.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a
long-term equity investment exceeds the Group‘s share of the fair value of the investee‘s identifiable net assets at
the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial
investment cost is less than the share of the Company and its subsidiaries of the fair value of the investee‘s
identifiable net assets at the acquisition date, the difference is included in profits or losses and the cost of the
long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Company and its subsidiaries
recognize the investment income according to its share of net profit or loss of the investee. The Company and its
100
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
subsidiaries discontinue recognizing its share of net losses of an investee after the carrying amount of the long-term
equity investment together with any long-term interests that, in substance, form part of the investor‘s net investment
in the investee are reduced to zero. However, if the Company and its subsidiaries have obligations for additional
losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are
satisfied, the Company and its subsidiaries continue recognizing the investment losses and the provisions. For
changes in owners‘ equity of the investee other than those arising from its net profit or loss,other comprehensive
income and profit distribution, the Company and its subsidiaries record its proportionate share directly into capital
surplus, provided that the proportion of the Company and its subsidiaries of shareholding in the investee remains
unchanged. The carrying amount of the investment is reduced by the share of the Company and its subsidiaries of
the profit distribution or cash dividends declared by an investee. The unrealized profits or losses arising from the
intra-group transactions amongst the Company, its subsidiaries and its investees are eliminated in proportion to the
equity of the Company and its subsidiaries interest in the investees, and then based on which the investment gains or
losses are recognised. For the loss on the intra-group transaction amongst the Company, its subsidiaries and its
investees attributable to asset impairment, any unrealized loss is not eliminated.
(c) Basis for determine existence of control, joint control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its
operating activities. Joint control is the contractually agreed sharing of control over an economic activity, and exists
only when the strategic financial and operating decisions relating to the activity require the unanimous consent of
the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is
not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries is reduced to the recoverable amount when the
recoverable amount is less than the carrying amount (Note V(18)).
(13) Investment properties
Investment properties, including land use rights that have already been leased out and buildings that are held for the
purpose of leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an investment
property are included in the cost of the investment property when it is probable that the associated economic benefits
101
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit
or loss in the period in which they are incurred.
The Company and its subsidiaries adopt the cost model for subsequent measurement of investment properties,
which are depreciated or amortizerd using the straight-line method to allocate the cost of the assets to their estimated
residual values over their estimated useful lives.. The estimated useful lives, the estimated net residual values that
are expressed as a percentage of cost and the annual depreciation (amortisation) rates of investment properties are as
follows:
Annual Depreciation
Items Estimate Useful Lives Estimated residual value
(amortization) Rates
Buildings 20-35 years 5.00% 2.71%-4.75%
Land Use Rights 50 years - 2.00%
When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or
intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or
for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying
amount at the date of the transfer.
The investment property‘s estimated useful life, net residual value and depreciation (amortization) method applied
are reviewed and adjusted as appropriate at each year-end. An investment property is derecognised on disposal or
when the investment property is permanently withdrawn from use and no future economic benefits are expected
from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property
after its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the recoverable amount is
below the carrying amount (Note V(18)).
(14) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles and office equipment, etc. Fixed assets
are recognized when it is probable that the related economic benefits will flow to the Company and its subsidiaries
and the costs can be reliably measured. Fixed assets purchased or constructed by the Company and its subsidiaries
are initially measured at cost at the acquisition date. Subsequent expenditures incurred for fixed assets are included
102
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
in the cost of the fixed assets when it is probable that the associated economic benefits will flow to the Company and
its subsidiaries and the related costs can be reliably measured. The carrying amount of the replaced part is
derecognised. All the other subsequent expenditures are recognized in profit or loss in the period in which they are
incurred.
(b) Depreciation method
Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual values over its
estimated useful lives. For fixed asset subject to impairment, depreciation is calculated via writing off the asset‘s
carrying amount net of impairment over its useful life in subsequent periods.
Estimated Estimated residual value Annual depreciation rate
Buildings Straight-line method 20-35 years 5.00% 2.71%-4.75%
Machinery and equipment Straight-line method 10-15 years 5.00% 6.33%-9.50%
Motor vehicles Straight-line method 5 years 5.00% 19%
Office equipment Straight-line method 3-5 years 5.00% 19%-31.67%
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable amount is less than
the carrying amount (Note V(18)).
(d) Disposal
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal.
The amount of proceeds on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related
taxes and expenses is recognized in profit or loss.
(15) Construction in progress
Construction in progress is measured at its actual costs, which includes construction costs, installation costs,
borrowing costs capitalized and other costs necessary to bring construction in progress ready for their intended use.
Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and
depreciation is charged starting from the following month. The carrying amount of construction in progress is
reduced to the recoverable amount when the recoverable amount is less than the carrying amount.
(16) Intangible assets
Intangible assets include land use rights, non-patented technology and computer soft wares, which initially
recognized at cost.
103
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(a) Land use rights
A land use right granted by government with a infinite useful life would not be amortised whilst it incurs no
acquisition cost. Other land use rights are amortised on the straight-line basis over 50 years. If the acquisition costs
of land use rights and the buildings located thereon cannot be reliably allocated between the land use rights and the
buildings, all of the acquisition costs are recognised as fixed assets.
(b) Non-patented technology
Non-patented technology are amortised on the straight-line basis over the shorter of their useful life/benefit period
stipulated in the agreement or contract and the legal age.
(c) Computer softwares
Computer softwares purchased by the Group are initially measured at cost, which are amortised on the straight-line
over their approved useful period of 3-5 years.
(d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each
year-end, with adjustment made as appropriate.
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on the research phase
and expenditure on the development phase based on its nature and whether there is material uncertainty that the
research and development activities can form an intangible asset at end of the project.
Expenditure for investigation, evaluation and selection of production process researches is recognised in profit or
loss in the period in which it is incurred. Expenditure on the designation, assessment of the final utilization of the
production process before mass production, is capitalised only if all of the following conditions are satisfied:
development of the production process has been fully demonstrated by the technical team;
management has approved the budget of production development;
existed market research analysis suggests that the products produced by the new production technology are
able to be promoted;
adequate technical, financial and other resources to complete the development and subsequent mass production
and the ability to use or sell the intangible asset; and
the expenditure attributable to the intangible asset during its development phase can be reliably measured.
104
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period
in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a
subsequent period. Capitalised expenditure on the development phase is presented as development costs in the
balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
(f) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is less
than the carrying amount (Note V (18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets held under operating leases,
and other expenditures that have been incurred but should be recognised as expenses over more than one year in the
current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the
expected beneficial period and are presented at actual expenditure net of accumulated amortisation.
(18) Impairment of long-term assets
Fixed assets, intangible assets with finite useful lives, investment properties measured using the cost model,
long-term prepaid expense, other non-current assets and long-term equity investments in subsidiaries are tested for
impairment if there is any indication that an asset may be impaired at the balance date. Intangible assets which are
not yet ready to use should be tested at least annually for impairment, irrespective of whether there is any indication
that it may be impaired. If the result of the impairment test indicates that the recoverable amount of the asset is less
than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which
the asset‘s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset‘s fair
value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision
for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the
recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is
determined. A group of assets is the smallest identifiable group of assets that is able to generate independent cash
inflows.
Intangible assets with infinite useful lives are tested at least annually for impairment, irrespective of whether there is
any indication that it may be impaired. Once the above asset impairment loss is recognised, it will not be reversed
for the value recovered in the subsequent periods.
105
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(19) Employee benefits
(a) Short-term employee benefits
Short-term employee benefits mainly include wages or salaries, bonus, allowances and subsidies, staff welfare,
medical insurance, work injury insurance, maternity insurance, housing funds, and union running costs and
employee education costs. The employee benefits are recognised in the accounting period in which the service has
been rendered by the employees, and as costs of assets or expenses to whichever the employee service is
attributable.
(b) Pension obligations
The Company and its subsidiaries operate various post-employment schemes, including both defined benefit and
defined contribution pension plans. A defined contribution plan is a pension plan under which the Company and its
subsidiaries pay fixed contributions into a separate entity then the Company and its subsidiaries have no legal or
constructive obligations to pay further contributions. The current and past service cost of the defined benefit plan,
recognised in the income statement in employee benefit expense. The net interest cost is calculated by applying the
discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is
included in employee benefit expense in the income statement. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income
in the period in which they arise. In the reporting period, The Company and its subsidiaries‘s pension obligations
mainly include the basic endowment insurance and unemployment insurance; both belong to the defined
contribution plan.
Pension insurance
Employees of the Group participate in the social pension insurance organized by the local labour and social security
departments. The Group pay pension insurance premium to the pension insurance agency with the local provision of
social pension insurance base pay and proportional monthly. When the employee is retired, the local labour and
social security departments have the responsibility to pay the basic pension insurance to retired employees.
Calculated under the local provision mentioned above, the basic pesion insurance to be paid are then recognized in
the accounting period in which the service has been rendered by the employees and into profits and losses or costs of
relevant assets.
(c) Termination benefits
106
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Termination benefits are payable when employment is terminated by the Company and its subsidiaries before the
normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. the
Company and its subsidiaries recognises termination benefits into current period profits and losses at the earlier of
the following dates, when the Group can no longer withdraw the offer of those benefits and when the entity
recognises costs related to restructuring.
(d) Retirement benefits
The Company and its subsidiaries provide termination benefits to employees who accept voluntary redundancy in
exchange for these benefits. Termination benefits are the payments of wages or salaries and social insurance for the
employees who accept termination plan before the normal retire age. The termination benefits plan covers the period
from the starting date of termination benefit plan to the normal retire age. When the Group terminates the
employment relationship with employees before the end of the employment contract, a provision for termination
benefits for the compensation arising from termination of the employment relationship with employees to the retire
age is recognised with a corresponding change to profit or loss. The difference from change of actuarial assumptions
and adjustment on benefit is recognised in the current profits and losses.
Retirement benefits falling due within a year are reclassified as current liabilities.
(20) Dividend distribution
Cash dividends distribution is recognised as a liability in the period in which it is approved by the annual
shareholders‘ meeting.
(21) Provisions
Provisions for product warranties, onerous contracts etc. are recognised when the Group has a present obligation, it
is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the
obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present
obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are
taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of
money is material, the best estimate is determined by discounting the related future cash outflows. The increase in
the discounted amount of the provision arising from passage of time is recognised as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best
107
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
estimate.
The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities.
(22) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from employees as consideration for
equity instruments of the entity or by incurring liabilities for amounts based on the equity instruments. Equity
instruments include equity instruments of the Company, its parent company or other accounting entities of the
Group. Share-based payments are divided into equity-settled and cash-settled payments. The Group‘s share-based
payments are equity-settled payments. Equity-settled share-based payment The Group‘s stock optionstock option
plan is the equity-settled share-based payment in exchange of employees' services and is measured at the fair value
of the equity instruments at grant date. The equity instruments are exercisable after services in vesting period are
completed or specified performance conditions are met. In the vesting period, the services obtained in current period
are included in relevant cost and expenses at the fair value of the equity instruments at grant date based on the best
estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If the
subsequent information indicates the number of exercisable equity instruments differs from the previous estimate,
an adjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equity
instruments. On the exercise date, the recognised amount calculated based on the number of exercised equity
instruments is transferred into share capital.
(b) Determination of the fair value of equity instruments
The Group determines the fair value of stock optionstock options using option pricing model, which is Black -
Scholes option pricing model.
(c) Basis for determining best estimate of exercisable equity instruments
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest
based on the non-marketing performance and service conditions. On the exercise date, the final number of estimated
exercisable equity instruments is consistent with the number of exercised equity instruments.
(d) Accounting treatment related to the exercise of stock optionstock options
When the options are exercised on the exercise date, capital and capital surplus are recognized an dat the same time,
carried forward to share premium recognized in the vesting period.
108
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(23) Revenue
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Company and its subsidiaries‘s activities. Revenue is
shown net of discounts and returns.
Revenue is recognized when the economic benefits associated with the transaction will flow to the Group, the
relevant revenue can be reliably measured and specific revenue recognition criteria have been met for each of the
Group‘s activities as described below:
(a) Sales of goods
The Group is engaged in manufacturing and sales of washing machine. Revenue from sales of goods is recognized
when the goods and confirmed documents are delivered, significant risks and rewards of ownership of the goods are
transferred to the customers, the Company retains neither continuing managerial involvement to the degree usually
associated with the ownership nor effective control over the goods sold, relevant consideration or the documents
which grant the right to receive the relevant consideration has been received, and related costs can be measured
reliably.
During the reporting period,the Group sales goods mainly through distributors, large-scale chain supermarkets and
e-business platform. Revenue is recognized when products accepted by dealers, chain supermarkets and third-party
e-business platform. As for self-operation e-business website, revenue is recognized when products accepted by
ultimate customers. The risks of damage or price fluctuation of products as well as the rights to sell are transferred to
distributors, large-scale chain supermarkets and third-party e-business platform when the produtcs are accepted.
Revenue from the sale of goods via the Group‘s e-business platform is recognized when products are delivered and
accepted by the ultimate customer. Revenue from export sale is recognized when terms under the contract as follows
are met: the products‘ shipment from customs is cleared, the products are then passed over to the ship rail, bill of
lading is acquired by the buyer.
The Group is engaged in sales of materials. Revenue from sales of materials is recognized when the materials and
confirmed documents are delivered, significant risks and rewards of ownership of the materials are transferred to the
customers, the Group retains neither continuing managerial involvement to the degree usually associated with the
ownership nor effective control over the materials sold, relevant consideration or the documents which grant the
right to receive the relevant consideration has been received, and related costs can be measured reliably.
109
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Transfer of assets use rights
Interest income is determined by using the effective interest method, based on the length of time for which the cash
of the Company and its subsidiaries is used by others.
Income from an operating lease is recognised on a straight-line basis over the period of the lease.
(24) Government Grants
Government grants are the monetary asset that the Group receives from the government for free, including tax
refund, financial subsidies, etc.
(a) Accounting policies and judgement basis upon government grants pertinent to assets
A government grant is recognized when the conditions attached to it can be complied with and the government grant
can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the
amount received or receivable. For a government grant in the form of transfer of nonmonetary assets, the grant is
measured at its fair value. A government grant is measured at notional amount wherein its fair value cannot be
reliably measured.
The government grants pertinent to assets are referred to as government grants that are obtained and utilized by the
Group for the procurement, construction, or establishment of long-term assets in other manners. The government
grants pertinent to income refer to all the government grants except those pertinent to assets.
(b) Accounting policies and judgement basis upon government grants pertinent to incomes
Government grants pertinent to assets are either deducted against the carrying amount of the assets, or recorded as
deferred income and recognised in profit or loss on a systemic basis over the useful lives of the assets. Government
grants pertinent to incom that compensate the future costs, expenses or losses are recorded as deferred income and
recognised in profit or loss, or deducted against related costs, expenses or losses in reporting the related expenses;
government grants related to income that compensate the incurred costs, expenses or losses are recognised in profit
or loss, or deuducted against related costs, expenses or losses directly in current period.
The Company and its subsidiaries applies the presentation method consistently to the similar government grants in
the financial statements.
Government grants that are related to ordinary activities are included in operating profit, otherwise, they are
recorded in non-operating income or expenses.
(25) Deferred tax assets and deferred tax liabilities
110
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising
between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset
is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable
profit in accordance with the tax laws. No deferred tax asset or deferred tax liability is recognised for the temporary
differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business
combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date,
deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the
extent that it is probable that taxable profit will be available in the future against which the deductible temporary
differences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries, unless the
Company is able to control the timing of the reversal of the temporary difference, and it is probable that the
temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences
arising from investments in subsidiaries will be reversed in the foreseeable future and that the taxable profit will be
available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets
are recognized.
Deferred tax assets and liabilities are offset when:
The deferred taxes are relate to the same tax payer within the Group and the same taxation authority, and;
That tax payer has a legally enforceable right to offset current tax assets against current tax liabilities
(26) Leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An
operating lease is a lease other than a finance lease.
Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and are
either capitalised as part of the cost of related assets, or charged as an expense for the current period.
Rental income from an operating lease is recognised on a straight-line basis over the period of the lease.
(27) Segment information
The Company and its subsidiaries identify operating segments based on the internal organisation structure,
111
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
management requirements and the internal reporting system, and discloses segment information of reportable
segments determined on the basis of operating segments.
An operating segment is a component of the Company and its subsidiaries that satisfies all of the following
conditions:
(a) the component is able to earn revenues and incur expenses from its ordinary activities.
(b) whose operating results are regularly reviewed by the Group‘s management to make decisions about
resources to be allocated to the segment and to assess its performance.
(c) for which the information on financial position, operating results and cash flows is available to the Group. If
two or more operating segments have similar economic characteristics, and satisfy certain conditions, they are
aggregated into a single operating segment.
(28) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The critical accounting estimates and key assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined
below:
(a) Sales rebates
The Company and its subsidiaries apply the rebating policies with deals, large-scale chain supermarkets and
e-business platform. The amount of the rebates is estimated periodically taking into account related sales contracts,
examination of particular transactions, historical experiences, market environment, inventory stock and the agreed
indicator of particular customers. As it determined by the judgement and estimation of management, there is a
possibility that changes in the estimation will have significant effect on the provision of sales rebates of the period
when the changes occurred.
(b) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are some transactions and events for which
the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is
required from the Group in determining the provision for income taxes in each of these jurisdictions. Where the
final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
112
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
impact the income tax and deferred tax provisions in the period in which such determination is made.
(29) Significant changes in accounting policies
In 2017, the Ministry of Finance released the Accounting Standard for Business Enterprises No.
42—Non-current Assets or Disposal Groups Held for Sale and Discontinued Operations‘, revised Accounting
Standard for Business Enterprises No. 16—Government Grants‘ and the Circular on Amendment to Formats of
Financial Statements of General Industry‘ and its interpretation (Cai Kuai [2017] 30). The financial statements
are prepared in accordance with the above standards and circular, and impacts are as follows:
The nature and the reasons of the changes in accounting policies The line items affected The amounts affected
1 January 2017
The Company and its subsidiaries recorded the VAT return
obtained and other government grants related to ordinary
Not Applicable Not Applicable
activities in 2017 in other income. The comparatives as at 31
December 2016 were not restated
Year ended 31 December 2016
The Company and its subsidiaries recorded the gains or losses on Loss on disposal of assets 1,833,734.45
disposals of fixed assets occurred in 2017, in loss on disposals of
Non-operating income 1,008,085.77
assets. The comparatives as at 31 December 2016 were restated
accordingly Non-operating expense 2,841,820.22
VI. Taxation
(1) The types and rates of taxes applicable to the Group are set out below:
Types Taxable base Tax rate
Taxable value added amount (tax payable represents output VAT
Value-added tax calculated using the taxable sales amount multiplied by the 17%, 11% or 5%
effective tax rate less deductible input VAT)
City maintenance and
The payment amount of VAT and business tax 7% or 5%
construction tax
Enterprise income tax Taxable income 15%, 17% or 25%
(2) Tax preferences
According to Enterprise income tax law of the People's Republic of China, Article 28, The Company and its two
subsidiaries, Wuxi Little Swan GE Limited and Wuxi Filin Electronics Limited, shall be subject to the corporate
income tax at the reduced rate of 15% (FY2016: same).
113
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
In July 2015, The Company gained the certificate of 'High-tech Enterprises, which is issued by Jiangsu Science and
Technology Department, Jiangsu Finance Department, Jiangsu State Administration of Taxation and Jiangsu Local
Taxation Bureau. The Certificate Number is GR201532000606. Term of validity for this Certificate is three years,
from 2015 to 2018.
In July 2015, The Companys subsidiary Wuxi Little Swan GE Limited gained the certificate of 'High-tech
Enterprises, which is issued by Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu
State Administration of Taxation and Jiangsu Local Taxation Bureau. The Certificate Number is GR201532000557.
Term of validity for this Certificate is three years, from 2015 to 2018.
In July 2015, The Companys subsidiary Wuxi Filin Electronics Limited gained the certificate of 'High-tech
Enterprises, which is issued by Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu
State Administration of Taxation and Jiangsu Local Taxation Bureau. The Certificate Number is GR201532000917.
Term of validity for this Certificate is three years, from 2015 to 2018.
The Companys subsidiary Little Swan International (Singapore) Limited shall be subject to the corporate income
tax at the rate of 17%.
Upon article 1 of the Notice of the Ministry of Finance and the State Administration on Value Added Tax Policies
Applicable to Software Products (Cai Shui [2011] No.100), after levying a value-added-tax on the salef of
self-developed software products and services of the Company‘s subsidiary Wuxi Filin Electronics Co., Ltd. at the
statutory tax rate of 17%, the tax rebate policy will be imposed on the part of the tax that exceeds 3% of the actual
value-added-tax. Wuxi Filin Electronics Co., Ltd. recorded the VAT return obtained in 2017 in other income.
VII. Notes to the consolidated financial statements
(1) Cash and cash at bank
31 December 2017 31 December 2016
Cash at bank 1,417,489,071.71 4,171,689,917.21
Other cash balances 170,775,444.34 100,387,293.90
Total 1,588,264,516.05 4,272,077,211.11
Including: cash deposited overseas 503,115.69 594,128.38
As at 31 December 2017, the other cash balances comprise: bank acceptance notes of RMB 166,791,807.67 and
forward foreign exchange agreement of RMB 3,983,636.67 (31 December 2016: Bank acceptance bills of RMB
114
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
93,781,938.00 and deposits for letter of credit of RMB 6,605,355.90).
(2) Financial assets at fair value through profit or loss
31 December 2017 31 December 2016
Movements in fair value of forward foreign exchange contract 5,270,238.03 -
(3) Notes receivable
(a) Notes receivable classified by nature
31 December 2017 31 December 2016
Bank acceptance notes 1,283,192,684.28 1,297,609,202.29
Less: Provision for bad debts - -
1,283,192,684.28 1,297,609,202.29
As at 31 December 2017 and 31 December 2016, there is no trade acceptance receivable. The Company and its
subsidiaries do not recognize impairment risk of the bank acceptance notes, whereupon no bad debt provision is
accrued.
As at 31 December 2017 and 31 December 2016, there is no pledged notes receivable.
(b) As at 31 December 2017, notes receivable that have been endorsed or discounted but not yet
expired are as follows:
Items Derecognised Not derecognised
Bank acceptance notes 1,971,348,872.35 81,393,672.34
(4) Accounts receivable
(a) Accounts receivable classified by nature:
31 December 2017
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped by credit risk 1,828,131,048.42 100.00% 91,406,552.32 5.00% 1,736,724,496.10
31 December 2016
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped by credit risk 1,542,798,634.63 100.00% 77,144,136.73 5.00% 1,465,654,497.90
Accounts receivable individually significant for which bad debt provision was assessed individually.
115
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
□Applicable √ Not applicable
Accounts receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2017
Aging
Accounts receivable Bad debt provision % of provision Book Value
Within 1 year 1,828,131,048.42 91,406,552.32 5.00% 1,736,724,496.10
Total 1,828,131,048.42 91,406,552.32 5.00% 1,736,724,496.10
31 December 2016
Aging
Accounts receivable Bad debt provision % of provision Book Value
Within 1 year 1,542,714,534.82 77,135,726.75 5.00% 1,465,578,808.07
1 to 2 years 84,099.81 8,409.98 10.00% 75,689.83
Total 1,542,798,634.63 77,144,136.73 5.00% 1,465,654,497.90
As at 31 December 2017 and 2016, there were no material accounts receivable which were past due.
(b) Accounts receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2017, the net movement of provision for accounts receivable was RMB
14,262,415.59 (2016: RMB 29,975,616.73). There were no provision or reverse of provision for individual
significant accounts receivable.
(c) Accounts receivable written-off during the reporting period
There were no accounts receivable written-off during the reporting period.
(d) Top 5 of accounts receivable by customers
Amounts Bad debt provision % of total balance
Total amount of the top 5 accounts receivable by customers 1,368,595,567.07 68,429,778.35 74.86%
(e) Accounts receivable derecognised due to the transfer of financial assets
Derecognised Loss on derecognised
Accounts receivables transferred 1,396,967,895.11 27,699,357.90
For the year ended 31 December 2017, accounts receivable derecognised due to the transfer of financial assets
amounted to RMB 1,396,967,895.11 (2016: nil), of which loss on derecognised amounted to RMB 27,699,357.90
116
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2016: nil).
The accounts receivable transferred to the financial institutions without recourse amounted to RMB
1,396,967,895.11. (2016: nil.)
(5) Advances to Suppliers
(a) Aging analysis of advances to suppliers:
31 December 2017 31 December 2016
Aging
Balance % of total balance Balance % of total balance
Within 1 year 79,671,655.89 94.46% 131,513,792.18 100.00%
1 to 2 years 4,675,136.49 5.54% - -
Total 84,346,792.38 100.00% 131,513,792.18 100.00%
Explanation for advances to suppliers aging over 1 year with significant amount for which the standards stipulated
by the contract has not yet been reached:
As at 31 December 2017, the balance of advance to suppliers with aging over one year amounts to RMB
4,675,136.49 (31 December 2016: nil, mainly comprising the prepayments for goods for which the standards
stipulated by the contract has not yet been reached)
(b) Top 5 prepayment by suppliers
Amounts % of total balance
Total amount of the top 5 by suppliers 36,655,258.40 43.46%
(6) Interests receivable
(a) Category
31 December 2017 31 December 2016
Structured deposit interest 60,096,246.58 23,065,342.47
Bank deposit interest 847,661.40 3,690,464.60
Total 60,943,907.98 26,755,807.07
(7) Other receivables
(a) Other receivables by category:
31 December 2017
Category Book balance Bad debt provision
Book value
Amount % Amount % of provision
117
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Debtors grouped by credit risk 50,575,167.17 100.00% 3,350,713.08 6.63% 47,224,454.09
31 December 2016
Category Carrying Amount Bad debt provision
Book value
Amount % Amount % of provision
Debtors grouped by credit risk 25,307,331.32 100.00% 1,613,444.78 6.38% 23,693,886.54
Other receivables individually significant for which bad debt provision was assessed individually:
□ Applicable √ Not applicable
Other receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2017
Aging
Other accounts receivable Bad debt provision Withdrawal proportion Book value
Within 1 year 47,645,755.48 2,381,754.37 5.00% 45,264,001.11
1 to 2 years 1,435,667.86 143,566.79 10.00% 1,292,101.07
2 to 3 years 721,400.00 216,420.00 30.00% 504,980.00
3 to 5 years 326,743.83 163,371.92 50.00% 163,371.91
Over 5 years 445,600.00 445,600.00 100.00% -
Total 50,575,167.17 3,350,713.08 6.63% 47,224,454.09
31 December 2016
Aging
Other accounts receivable Bad debt provision Withdrawal proportion Book value
Within 1 year 23,476,591.19 1,173,829.56 5.00% 22,302,761.63
1 to 2 years 1,043,047.12 104,304.71 10.00% 938,742.41
2 to 3 years 292,680.00 87,804.00 30.00% 204,876.00
3 to 5 years 495,013.01 247,506.51 50.00% 247,506.50
Total 25,307,331.32 1,613,444.78 6.38% 23,693,886.54
As at 31 December 2017 and 31 December 2016, there were no material other receivables which were past due.
Other receivables adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Other receivables adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
118
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Other receivables withdraw, reversed or collected during the reporting period
During the year ended 31 December 2017, the net movement of provision for other receivables was RMB
1,737,268.30 (2016: RMB 865,412.57). There were no provision or reverse of provision for individual significant
other receivables.
(c) Other receivables written-off during the reporting period
There were no other receivable written-off during the reporting period.
(d) Other receivables classified by nature
Nature of other receivables 31 December 2017 31 December 2016
Deposit in third-party payment service accounts 44,740,888.28 10,835,423.12
Loan to employees 2,875,802.98 2,098,324.20
Deposits 2,515,443.83 2,018,096.36
Others 443,032.08 10,355,487.64
Less: Bad debt provision -3,350,713.08 -1,613,444.78
Total 47,224,454.09 23,693,886.54
(e) Top 5 of other receivables by customers
Proportion of
the total year Closing
Nature of other 31 December
Name of the entities Aging end balance of balance of bad
receivables 2017
the accounts debt provision
receivable
Alipay (China) Network Technology Balance in escrow
31,087,365.58 Within 1 year 61.47% 1,554,368.28
Co., Ltd account
Shenzhen Midea Payment Technology Balance in escrow
10,520,299.96 Within 1 year 20.80% 526,015.00
Co., Ltd account
Chinabank Payments (Beijing) Balance in escrow
2,417,863.65 Within 1 year 4.78% 120,893.18
Technology Co., Ltd account
Wuxi China Resources Gas Co., Ltd. Deposits 820,800.00 1 to 2 years 1.62% 82,080.00
Nanjing Suning Yifubao Network Balance in escrow
715,359.09 Within 1 year 1.41% 35,767.95
Technology Co., Ltd account
Total -- 45,561,688.28 90.08% 2,319,124.41
119
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(8) Inventory
(a) Category of inventory
31 December 2017 31 December 2016
Provision for Provision for
Book balance Book value Book balance Book value
wirite-down wirite-down
Raw materials 35,127,847.81 570,442.41 34,557,405.40 21,928,651.09 1,593,768.57 20,334,882.52
Goods in process 14,237,995.55 - 14,237,995.55 11,864,254.41 - 11,864,254.41
Inventory goods 1,995,530,607.75 63,559,812.56 1,931,970,795.19 1,768,281,418.69 75,642,610.93 1,692,638,807.76
Total 2,044,896,451.11 64,130,254.97 1,980,766,196.14 1,802,074,324.19 77,236,379.50 1,724,837,944.69
(b) Provision for wirite-down of inventory
Increased amount Decreased amount
31 December 31 December
Reverse or
2016 Withdrawal Other Other 2017
write-off
Raw materials 1,593,768.57 - - 1,023,326.16 - 570,442.41
Inventory goods 75,642,610.93 48,820,008.65 - 60,902,807.02 - 63,559,812.56
Total 77,236,379.50 48,820,008.65 - 61,926,133.18 - 64,130,254.97
Provisions for inventories are provided to write down the book value to net realizable value when the net
realizable value is lower.
(9) Other current assets
31 December 2017 31 December 2016
Financial products 3,792,871,097.59 5,994,142,671.24
Structured deposits 8,650,000,000.00 2,150,000,000.00
Input tax to be authenticated or deducted 283,158,673.31 197,355,573.10
others 52,210,974.32 44,226,037.82
Total 12,778,240,745.22 8,385,724,282.16
As at 31 December 2017, all financial products are matured within one year, which are products of floating
income and unprotected principles. As at 31 December 2017, the carrying value of financial products measured by
fair value amounted to RMB 3,792,871,097.59, with principal amounted to RMB 3,735,000,000.00, and
accumulated fair value changes recognised in other comprehensive income amounted to RMB 57,871,097.59 (As
at 31 December 2016, the carrying value of financial products measured by fair value amounted to RMB
5,994,142,671.24, with principal amounted to RMB 5,890,000,000.00, and accumulated fair value changes
120
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
recognised in other comprehensive income amounted to RMB 104,142,671.24). All financial products mentioned
above are structural objects which are out of scope of consolidation. At 31 December 2017, the maximum risk
exposure of financial products held by the Company and its subsidiaries is limited to the carrying value of
financial products. The Company and its subsidiaries have no obligation or intention to provide financial support
to the financial product funds mentioned above.
(10) Available-for-sale financial assets
31 December 2017 31 December 2016
Book balance Bad debt provision Book value Book balance Bad debt provision Book value
Available-for-sale equity
instruments
measured at cost 300,300.00 -100,300.00 200,000.00 300,300.00 -100,300.00 200,000.00
Total 300,300.00 -100,300.00 200,000.00 300,300.00 -100,300.00 200,000.00
(11) Investment Properties
(a) Investment properties measured at cost method
Buildings Land use rights Total
Original book value
31 December 2016 88,189,256.96 22,949,959.07 111,139,216.03
Reduction - - -
Disposal - - -
31 December 2017 88,189,256.96 22,949,959.07 111,139,216.03
Accumulative depreciation and accumulative amortization
31 December 2016 27,737,836.01 5,970,411.48 33,708,247.49
Addition
Amortization 2,114,259.85 1,044,818.40 3,159,078.25
Reduction - - -
Disposal - - -
31 December 2017 29,852,095.86 7,015,229.88 36,867,325.74
Depreciation reserves
121
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2016 12,576,065.29 - 12,576,065.29
31 December 2017 12,576,065.29 - 12,576,065.29
Net book value
31 December 2017 45,761,095.81 15,934,729.19 61,695,825.00
31 December 2016 47,875,355.66 16,979,547.59 64,854,903.25
Depreciation and amortization charge for 2017 amounted to RMB 3,159,078.25 (2016: RMB 3,861,441.41).
(12) Fixed assets
Machinery Office equipment
Buildings Motor vehicles Total
and equipment and fixtures
Original book value
31 December 2016 733,926,399.80 910,910,022.64 27,625,534.23 118,527,502.83 1,790,989,459.50
Add: Purchase 5,148,616.02 141,510,272.69 2,490,018.58 28,997,156.92 178,146,064.21
Transferred from
- 22,248,226.70 - - 22,248,226.70
construction in progress
Less: Disposal or Scrap -3,168,766.13 -21,582,179.18 -1,578,638.65 -7,596,841.16 -33,926,425.12
31 December 2017 735,906,249.69 1,053,086,342.85 28,536,914.16 139,927,818.59 1,957,457,325.29
Accumulative depreciation
31 December 2016
197,526,047.87 491,410,620.88 91,329,723.22 803,763,802.98
23,497,411.01
Withdrawal 31,225,812.51 82,176,469.22 1,094,408.76 15,067,088.77 129,563,779.26
Disposal or Scrap -1,360,049.07 -16,831,087.70 -1,480,093.62 -7,074,992.68 -26,746,223.07
31 December 2017 227,391,811.31 556,756,002.40 23,111,726.15 99,321,819.31 906,581,359.17
- - - - -
Depreciation reserves
31 December 2016 3,918,452.47 12,312,885.38 35,494.21 99,533.43 16,366,365.49
Increased amount of the -
5,776,183.11 - - 5,776,183.11
period
Decreased amount of the -
-920,425.17 -4,871.81 -9,641.34 -934,938.32
period
31 December 2017 3,918,452.47 17,168,643.32 30,622.40 89,892.09 21,207,610.28
122
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Net book value
31 December 2016 504,595,985.91 479,161,697.13 5,394,565.61 40,516,107.19 1,029,668,355.84
31 December 2017 532,481,899.46 407,186,516.38 4,092,629.01 27,098,246.18 970,859,291.03
Depreciation charges for 2017 amounted to RMB 129,563,779.26 (2016: RMB 118,568,086.96). The amount of
depreciation recognized in cost of sales, selling expense and operating expense are RMB 107,567,993.75, RMB
686,769.30 and RMB 21,309,016.21 respectively. (2016: The amount of depreciation recognized in cost of sales,
selling expense and operating expense are RMB 98,698,557.97, RMB 516,024.94 and RMB 19,353,504.05
respectively).
(13) Construction in progress
(a) List of construction in progress
31 December 2017 31 December 2016
Provision for Provision for
Book balance Book value Book balance Book value
impairment loss impairment loss
Automatic-stamping drum
37,167,679.63 - 37,167,679.63
cabinet rivet line - - -
Others 804,572.97 - 804,572.97 - - -
Total 37,972,252.60 - 37,972,252.60 - - -
(b) Changes in major construction-in-progress
31 Compl Fun
Transferred Red % of
Dece 31 December eted ding
Project Budget Addition into fixed ucti total
mber 2017 progre sour
assets on budget
2016 ss ces
Automatic
-stamping Equity
59,019,956.72 - 59,019,956.72 -21,852,277.09 - 37,167,679.63 95.00% 95.00%
drum cabinet fund
rivet line
Equity
9,189,949.61 - 1,200,522.58 -395,949.61 - 804,572.97 13.06% 13.06%
Others fund
Total 68,209,906.33 - 60,220,479.30 -22,248,226.70 - 37,972,252.60
123
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(14) Intangible assets
Land use right Non-patented technology Others Total
Original book value
31 December 2016 242,666,890.39 1,992,000.00 1,395,014.56 246,053,904.95
Reduction - -1,992,000.00 - -1,992,000.00
31 December 2017 242,666,890.39 - 1,395,014.56 244,061,904.95
Accumulated amortization
31 December 2016 50,383,404.24 1,992,000.00 1,395,014.56 53,770,418.80
Addition 5,238,138.88 - - 5,238,138.88
Reduction - -1,992,000.00 - -1,992,000.00
31 December 2017 55,621,543.12 - 1,395,014.56 57,016,557.68
Depreciation reserves
31 December 2016 - - - -
31 December 2017 - - - -
Book value
31 December 2017 187,045,347.27 - - 187,045,347.27
31 December 2016 192,283,486.15 - - 192,283,486.15
In 2017, the amortization of intangible assets amounted to RMB 5,238,138.88. (2016: RMB 5,238,138.88)
(15) Long-term prepaid expenses
Item 31 December 2016 Addition Amortization Other reductions 31 December 2017
Leasehold improvement
4,174,200.34 21,654,729.63 4,510,323.32 - 21,318,606.65
cost
Others 213,527.80 1,466,603.73 616,717.66 - 1,063,413.87
Total 4,387,728.14 23,121,333.36 5,127,040.98 - 22,382,020.52
(16) Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets without taking into consideration of the offsetting of balances
31 December 2017 31 December 2016
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
124
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Provision for impairment
171,883,829.48 25,782,574.43 160,340,693.36 24,051,104.00
of assets
Unrealized profit of
107,345,624.86 16,101,843.73 67,442,606.20 10,116,390.93
inter-group transaction
Termination benefits 13,089,160.95 1,963,374.14 17,699,114.41 2,654,867.16
Accrued expenses 2,107,686,604.61 370,746,106.98 1,844,401,155.54 276,660,173.33
Accrued liabilities 2,253,082.26 337,962.34 1,727,340.89 259,101.13
Deferred income 2,489,133.21 373,369.98 2,942,333.25 441,349.99
Others 8,782,955.88 1,317,443.38 8,782,955.88 1,317,443.38
Total 2,413,530,391.26 416,622,674.98 2,103,336,199.53 315,500,429.92
Deferred income tax assets details
Item 31 December 2017 31 December 2016
Expected to reverse within 1 year
412,971,858.44 311,339,611.98
(including 1 year)
Expected to reverse after 1 year 3,650,816.54 4,160,817.94
Total 416,622,674.98 315,500,429.92
(b) Deferred tax liabilities without taking into consideration the offsetting of balances
31 December 2017 31 December 2016
Item Taxable Temporary Deferred tax liabilities Taxable Temporary Deferred tax
difference difference liabilities
Financial assets at fair value
5,270,238.03 790,535.70 - -
through profit or loss
Fair change of available-for-sale
57,871,097.59 8,680,664.64 104,142,671.24 15,621,400.69
financial assets
Total 63,141,335.62 9,471,200.34 104,142,671.24 15,621,400.69
Deferred tax liabilities details
Item 31 December 2017 31 December 2016
Expected to reverse within 1
9,471,200.34 15,621,400.69
year (including 1 year)
Expected to reverse after 1 year - -
Total 9,471,200.34 15,621,400.69
125
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Net amounts of deferred income tax assets and liabilities taking into consideration the offsetting of
balances are set out as follows:
31 December 2017 Deferred income tax Netting amount Deferred income tax
Item
Netting amount assets or liabilities, net assets or liabilities, net
Deferred income tax assets 9,471,200.34 407,151,474.64 15,621,400.69 299,879,029.23
Deferred income tax liabilities 9,471,200.34 - 15,621,400.69 -
(d) List of unrecognized deferred income tax assets
Item 31 December 2017 31 December 2016
Deductible temporary difference 27,153,908.99 27,153,343.58
Deductible tax losses 81,636,690.06 81,177,769.43
Total 108,790,599.05 108,331,113.01
(e) Deductible losses of unrecognized deferred income tax assets will due the following years
Years 31 December 2017 31 December 2016
2017 - 57,917.22
2018 16,300,604.68 16,303,166.71
2019 49,620,940.42 49,620,940.42
2020 9,576,983.63 9,576,983.63
2021 5,618,761.45 5,618,761.45
2022 519,399.88 -
Total 81,636,690.06 81,177,769.43
(17) Other non-current assets
Item 31 December 2017 31 December 2016
Prepayment for equipment 27,331,937.53 25,655,775.90
(18) Provision for impairment of assets
Decrease
31
31 December
Item December Increase
Revenue Write off 2017
2016
Bad debt provision 78,757,581.51 15,999,683.89 - - 94,757,265.40
-Accounts receivable 77,144,136.73 14,262,415.59 - - 91,406,552.32
-Other receivables 1,613,444.78 1,737,268.30 - - 3,350,713.08
Write-down of inventories 77,236,379.50 48,820,008.65 - 61,926,133.18 64,130,254.97
126
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Impairment provision for available-for-sale
100,300.00 - - - 100,300.00
financial assets
Impairment provision
12,576,065.29 - - - 12,576,065.29
for investment properties
Impairment provision for fixed assets 16,366,365.49 5,776,183.11 - - 934,938.32 21,207,610.28
Total 185,036,691.79 70,595,875.65 - 62,861,071.50 192,771,495.94
(19) Short-term borrowings
Category 31 December 2017 31 December 2016
Discounted notes receivable financing 81,393,672.34 -
Factoring of accounts receivables - 183,813,064.12
Total 81,393,672.34 183,813,064.12
(20) Notes payable
Category 31 December 2017 31 December 2016
Bank acceptance note 2,805,804,600.41 2,620,549,815.47
The total amount of the due but not pay notes payable at the period-end was of 0.
(21) Accounts payable
(a) List of accounts payable
Item 31 December 2017 31 December 2016
Material 3,803,318,504.56 3,301,435,137.79
Others 23,707,195.54 33,654,534.27
Total 3,827,025,700.10 3,335,089,672.06
(b) Accounts payable aging over one year
Unit: RMB
Item 31 December 2017 Reason for aging over one year
Material 51,361,837.71 Contract expiration has not yet come
(22) Advance from customers
(a) List of advance from customers
Item 31 December 2017 31 December 2016
Advance from customers 3,065,815,801.93 3,014,347,762.24
127
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Significant advance from customers aging over one year
Item 31 December 2017 Unpaid/ Un-carry-over reason
Advance from customers 31,630,693.65 The project is under processing
(23) Payroll liabilities
(a) List of Payroll liabilities
Item 31 December 2016 Increase Decrease 31 December 2017
Short-term employee benefit payable 262,689,682.47 1,206,403,140.62 1,148,178,550.18 320,914,272.91
Defined contribution plans payable 21,767,369.86 109,002,889.34 104,994,650.10 25,775,609.10
Termination benefits payable 4,135,110.96 12,506,112.29 13,847,260.50 2,793,962.75
Total 288,592,163.29 1,327,912,142.25 1,267,020,460.78 349,483,844.76
(b) List of Short-term salary
Item 31 December 2016 Increase Decrease 31 December 2017
1. Salary, bonus, allowance and
239,077,184.04 993,811,703.22 950,417,751.92 282,471,135.34
subsidies
2. Employee welfare 4,873,935.81 94,413,466.31 90,955,629.42 8,331,772.70
3. Social insurance 6,169,696.09 56,870,968.50 50,742,898.16 12,297,766.43
-Medical insurance 5,179,907.00 46,070,769.14 41,290,032.34 9,960,643.80
-Employment injury insurance 728,121.47 7,554,351.50 6,742,226.74 1,540,246.23
-Maternity insurance 261,667.62 3,245,847.86 2,710,639.08 796,876.40
4. Housing fund 7,166,552.24 41,176,396.58 39,445,450.77 8,897,498.05
5. Labor union funds and employee
5,402,314.29 20,130,606.01 16,616,819.91 8,916,100.39
education fee
Total 262,689,682.47 1,206,403,140.62 1,148,178,550.18 320,914,272.91
As at 31 December 2017, there were no overdue payroll and welfare payables. This balance of payroll and welfare
payables will be settled in 2018.
(c) Defined contribution plans
Item 31 December 2016 Increase Decrease 31 December 2017
Pension 21,014,944.34 104,930,110.35 101,109,266.95 24,835,787.74
Unemployment insurance 752,425.52 4,072,778.99 3,885,383.15 939,821.35
Total 21,767,369.86 109,002,889.34 104,994,650.10 25,775,609.10
128
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(d) Termination benefits payable
Item 31 December 2017 31 December 2016
Termination benefits payable 2,793,962.75 4,055,110.96
Other termination benefits payable - 80,000.00
Total 2,793,962.75 4,135,110.96
(24) Taxes payable
Item 31 December 2017 31 December 2016
Corporate income tax 538,655,891.42 317,599,561.26
VAT 43,514,198.41 43,959,339.80
House appliance recycling funds 24,202,458.00 22,600,123.00
Urban maintenance and construction tax 10,431,895.61 9,810,227.91
Education Surcharge 7,895,593.79 7,604,254.32
Others 13,317,486.08 10,664,523.67
Total 638,017,523.31 412,238,029.96
(25) Dividends payable
Item 31 December 2017 31 December 2016
Dividends to ordinary shareholders 6,996,784.06 7,150,684.06
Total 6,996,784.06 7,150,684.06
(26) Other payables
(a) Other payables listed by nature
Item 31 December 2017 31 December 2016
Payment for equipment 119,000,776.50 65,358,163.79
Payment for moulds 66,898,435.10 84,354,267.87
Energy efficiency rebate 6,140,000.00 6,140,000.00
Advances collected 5,278,489.39 5,410,822.47
Prepaid expenses 3,831,550.67 7,782,998.86
Guarantee and deposits 3,027,766.49 20,631,583.91
Others 16,943,845.33 10,248,565.14
Total 221,120,863.48 199,926,402.04
(b) Significant other payable aging over one year
Item 31 December 2017 Unpaid/ Un-carry-over reason
129
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Payment for moulds 36,956,536.70 Contracts expiration has not yet come
Payment for equipment 18,568,098.88 Contracts expiration has not yet come
Total 55,524,635.58 --
(27) Other current-liabilities
Item 31 December 2017 31 December 2016
Accrued sale rebate 1,190,189,575.45 1,095,875,998.29
Accrued maintenance and installation costs 312,536,901.29 248,172,966.72
Accrued sales promotion fees 276,458,030.09 223,209,831.40
Accrued transportation fee 169,965,392.33 139,146,303.25
Accrued household electrical appliances
15,637,977.00 15,830,282.99
recycling fund
Accrued trademark royalty charges - 14,192,875.86
Others 142,912,728.45 107,984,895.75
Total 2,107,700,604.61 1,844,413,154.26
(28) Long-term employee benefits payable
Item 31 December 2017 31 December 2016
Termination benefits 14,815,582.92 20,156,459.56
Less：Current portion within 1 year -2,793,962.75 -4,055,110.96
Total 12,021,620.17 16,101,348.60
Current portion within 1 year of termination benefits payable is included in payroll payable.
(29) Provisions
Item 31 December 2017 31 December 2016 Causes
Quality guarantee deposits 2,253,082.25 1,727,340.89
Total 2,253,082.25 1,727,340.89 --
(30) Deferred income
Item 31 December 2016 Addition Reduction 31 December 2017 Causes
Government grants 2,942,333.25 - -453,200.04 2,489,133.21 Government grants
Total 2,942,333.25 - -453,200.04 2,489,133.21 --
Projects involved in government grants:
130
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Amount recognised
Government Grants Project 31 December 2016 31 December 2017 Related to assets/ income
as other incomes
Hefei Midea automation development
2,683,333.25 -350,000.04 2,333,333.21 Related to assets
of washing machine project
Jiangsu modern service development
132,800.00 -52,800.00 80,000.00 Related to assets
special fund
Subsidy for power substation
126,200.00 - 50,400.00 75,800.00 Related to assets
renovation
Total 2,942,333.25 -453,200.04 2,489,133.21
(31) Share capital
Increase/decrease (+/-)
31 December Shares 31 December
New shares
2016 Bonus shares transferred from Others Subtotal 2017
issued
capital reverse
The sum of
632,487,764.00 - - - - - 632,487,764.00
shares
(32) Capital surplus
Item 31 December 2016 Increase Decrease 31 December 2017
Share premium 1,055,182,718.57 - - 1,055,182,718.57
Other capital surplus 136,307,414.44 61,953,091.84 -495,678.05 197,764,828.23
-Share options (a) 101,372,240.53 61,953,091.84 - 163,325,332.37
-Others 34,935,173.91 - -495,678.05 34,439,495.86
Total 1,191,490,133.01 61,953,091.84 -495,678.05 1,252,947,546.80
Item 31 December 2015 Increase Decrease 31 December 2016
Share premium 1,055,182,718.57 - - 1,055,182,718.57
Other capital surplus 108,832,229.28 34,772,462.28 -7,297,277.12 136,307,414.44
-Share options (a) 66,599,778.25 34,772,462.28 - 101,372,240.53
-Others (b) 42,232,451.03 - -7,297,277.12 34,935,173.91
Total 1,164,014,947.85 34,772,462.28 -7,297,277.12 1,191,490,133.01
Note：
(a) In 2017, RMB 61,953,091.84 (2016: RMB 34,772,462.28) increase in capital surplus arises from the execution
131
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
of share options incentive plan.
(33) Other comprehensive income
Increase/decrease in the year
Amount for the Less: previously Less: Income Attributable to
Attributable
year before tax recognized in tax expense
the minority
to the
other
31 December 31 December
Item comprehensive interest after
2016 Company 2017
income tax
after tax
transferred to
profit or loss
this year
Items that may be
subsequently
70,757,524.61 57,856,006.59 -104,142,671.24 6,940,736.04 -30,261,157.76 -9,084,770.85 40,496,366.85
reclassified into
profits or losses
-change in fair
value of
72,957,918.08 57,871,097.59 -104,142,671.24 6,940,736.04 -30,246,066.76 -9,084,770.85 42,711,851.32
available-for-sal
e financial assets
-currency
translation -2,200,393.47 -15,091.00 - - -15,091.00 - -2,215,484.47
differences
Total 70,757,524.61 57,856,006.59 -104,142,671.24 6,940,736.04 -30,261,157.76 -9,084,770.85 40,496,366.85
Increase/decrease in the year
Amount for the Less: previously Less: Income Attributable to
Attributable
year before tax recognized in tax expense
the minority
to the
other
31 December 31 December
Item comprehensive interest after
2015 Company 2016
income tax
after tax
transferred to
profit or loss
this year
Items that may be
subsequently
34,813,284.64 104,162,415.31 -55,675,560.00 -7,270,066.71 35,944,239.97 5,272,548.63 70,757,524.61
reclassified into
profits or losses
132
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
-change in fair
value of
37,033,422.18 104,142,671.24 -55,675,560.00 -7,270,066.71 35,924,495.90 5,272,548.63 72,957,918.08
available-for-sal
e financial assets
-currency
translation -2,220,137.54 19,744.07 - - 19,744.07 -
-2,200,393.47
differences
Total 34,813,284.64 104,162,415.31 -55,675,560.00 -7,270,066.71 35,944,239.97 5,272,548.63 70,757,524.61
(34) Surplus reserves
Unit: RMB
Item 31 December 2016 Increase Decrease 31 December 2017
Statutory surplus reserves 332,594,722.29 - - 332,594,722.29
In accordance with the Company Law of the PRC, the Company‘s Articles of Association, 10% of net profit
should be made to the statutory surplus reserve, after offsetting accumulated losses from prior years, unless the
accumulated statutory surplus reserve reaches 50% of the share capital. Statutory surplus reserve can be used to
make up losses or to increase share capital. At the end of 2017, there is no appropriation to the statutory surplus
reserve as the Company‘s accumulated statutory surplus reserve has already reached 50% of the share capital.
(35) Retained Earnings
Item Year ended 31 December 2017 Year ended 31 December 2016
31 December 2016 3,756,517,718.81 2,960,955,454.36
Add: net profit attributable to the shareholders of
1,506,412,505.22 1,175,054,922.85
the Company
Less: statutory surplus reserve - -
Dividends to ordinary shareholders -474,365,823.00 -379,492,658.40
31 December 2017 4,788,564,401.03 3,756,517,718.81
Pursuant to the resolution of general meeting of shareholders on 10 April 2017, cash dividends of RMB
474,365,823.00 (RMB 0.75 per share) was paid based on the issued shares of 632,487,764.
Pursuant to the resolution of board of directors on 09 March 2018, proposal of paying cash dividends of RMB
632,487,764.00 (RMB 1.00 per share) based on the issued shares of 632,487,764 has been put forward and yet to
be approved by the general meeting of shareholders. (Note XVII(a))
During the year ended 31 December 2017, statutory surplus reserve of RMB 29,747,735.36 was made from
133
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
retained earnings of the year ended 31 December 2016 of the Company‘s subsidiary Hefei Midea Washing
Machine Co., Ltd (2016: RMB 22,090,679.85).
(36) Sales and cost of sales
Year ended 31 December 2017 Year ended 31 December 2016
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 19,469,125,226.23 14,208,417,615.09 14,761,654,334.87 10,775,398,510.01
Other operations 1,915,573,850.42 1,774,476,043.75 1,573,260,166.82 1,335,814,776.27
Total 21,384,699,076.65 15,982,893,658.84 16,334,914,501.69 12,111,213,286.28
(37) Other operating income and expenses
Item Year ended 31 December 2017 Year ended 31 December 2016
Other operating Other operating Other operating Other operating
income expenses income expenses
Sales of materials 1,851,646,327.57 1,750,661,648.85 1,523,956,580.61 1,321,614,639.82
Others 63,927,522.85 23,814,394.90 49,303,586.21 14,200,136.45
Total 1,915,573,850.42 1,774,476,043.75 1,573,260,166.82 1,335,814,776.27
(38) Taxes and surcharges
Item Year ended 31 December 2017 Year ended 31 December 2016
Civil infrastructure maintenance and
60,374,588.37 47,043,929.59
construction fee
Education fee 46,074,508.07 36,099,067.67
Other 25,342,380.68 16,061,441.32
Total 131,791,477.12 99,204,438.58
(39) Selling and distribution expenses
Item Year ended 31 December 2017 Year ended 31 December 2016
Selling and distribution expenses 2,872,849,586.14 2,325,645,712.65
In 2017, selling and distribution expenses mainly include promotion expenses, transportation and storage
expenses, employee wages and benefits, maintenance and installation expenses and after-sales service expenses,
which accounts for over 90% of the total selling expenses (2016: over 90%).
(40) Administrative expenses
Item Year ended 31 December 2017 Year ended 31 December 2016
Administrative expenses 728,323,077.71 505,321,107.14
134
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
In 2017 , administrative expenses mainly include employee wages and benefits, research and development
expenses as well as depreciation and amortization costs, these three components account for over 80% of
administrative expenses (2016: over 80%).
(41) Finance income - net
Item Year ended 31 December 2017 Year ended 31 December 2016
Interest expenses -43,471,999.43 -13,763,829.67
Interest income 195,433,894.48 123,093,414.43
Exchange gains -70,731,617.24 57,584,688.79
Other financial expenses -9,421,295.01 -12,088,525.34
Total 71,808,982.80 154,825,748.21
(42) Asset impairment losses
Item Year ended 31 December 2017 Year ended 31 December 2016
Provision for bad debts 15,999,683.89 30,841,029.30
Provision for inventory 48,820,008.65 61,370,935.22
Provision for fixed assets 5,776,183.11 2,357,686.75
Total 70,595,875.65 94,569,651.27
(43) Gain and loss from changes in fair value
Item Year ended 31 December 2017 Year ended 31 December 2016
Forward foreign exchange contract 5,270,238.03 -
(44) Investment Income
Item Year ended 31 December 2017 Year ended 31 December 2016
Income from available-for-sale financial assets 302,938,888.22 200,239,260.71
Income from disposal of financial assets at fair value
17,684,575.01 -
through profit or loss
Total 320,623,463.23 200,239,260.71
There is no significant restriction on the remittance of investment income to the Company and its subsidiaries
(45) Loss on disposal of assets
Year ended 31 December Year ended 31
Item Non-recurring gain or loss
2017 December 2016
135
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Loss on disposal of fixed assets 975,423.00 1,833,734.45 975,423.00
(46) Other incomes
Year ended 31 December Year ended 31 Asset-related/
Item
2017 December 2016
Income-related
VAT return 25,583,924.93 - Income related
Other government grants 28,310,149.32 - Asset and income related
Total 53,894,074.25 -
(47) Non-operating income
Item Year ended 31 December 2017 Year ended 31 December 2016 Non-recurring gain or loss
Government grants 2,840,876.99 33,024,499.34 2,840,876.99
Others 14,607,838.85 4,942,815.63 14,607,838.85
Total 17,448,715.84 37,967,314.97 17,448,715.84
Government grants list:
Whether Year ended Year ended
profit or 31 31 December Related to
Whether
losses are December 2016 assets /
Item Granter Causes Nature special
affected by 2017 Related to
subsidies
the grant in income
current year
The subsidy is
acquired for engaging
Wuxi New in specified industries
VAT Related to
District Taxation Subsidy encouraged and No No - 19,151,930.08
Retrun income
Bureau supported by the
country in accordance
with national policies.
Whether Whether Year ended Year ended Related to
profit or special 31 December 31 December assets /
Item Granter Causes Nature
losses are subsidie 2017 2016 Related to
affected by s income
136
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
the grant in
current year
The subsidy is
Wuxi Municipal
Subsidies acquired for engaging
Bureau of
for export in specified industries
Commerce and Related to
credit Subsidy encouraged and No No - 1,100,319.00
Wuxi Municipal income
insurance supported by the
Bureau of
premiums country in accordance
Finance
with national policies.
Wuxi economic
Related to
and information
Others Reward No No 2,840,876.99 12,772,250.26 income and
technology
assets
commission, etc.
Total 2,840,876.99 33,024,499.34
(48) Non-operating expenses
Item Year ended 31 December 2017 Year ended 31 December 2016 Non-recurring gain or loss
Others 1,620,508.98 5,731,866.22 1,620,508.98
(49) Income tax expenses
(a) Income tax expenses
Item Year ended 31 December 2017 Year ended 31 December 2016
Current income tax 456,606,366.97 296,919,642.14
Deferred income tax -100,331,709.36 -55,267,875.03
Total 356,274,657.61 241,651,767.11
(b) Reconciliation of tax payable
Year ended Year ended
Item
31 December 2017 31 December 2016
Profit before tax 2,064,694,943.36 1,584,427,028.99
Income tax calculated at applicable tax rates 365,838,075.61 237,664,054.35
Adjusted income tax of prior year 1,708,054.23 5,725,799.33
Influence of fluctuation in tax rate -1,454,532.93 -
Non- deductable costs, expenses and losses 10,783,709.89 5,797,596.23
Deductible losses of unrecognized deferred income tax assets in the prior year -640.51 -7,817.34
Influence of deductible temporary difference or deductible losses of deferred
129,991.32 1,138,578.49
income tax assets unrecognized in current year
137
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Super deduction for development cost -20,730,000.00 -8,666,443.95
Income tax expense 356,274,657.61 241,651,767.11
(50) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the consolidated net profit attributable to shareholders of the
Company by the weighted average number of ordinary shares in issue:
Year ended Year ended
Item
31 December 2017 31 December 2016
Consolidated net profit attributable to shareholders of the Company 1,506,412,505.22 1,175,054,922.85
Weighted average number of ordinary shares in issue 632,487,764.00 632,487,764.00
Basic earnings per share 2.38 1.86
(b) Diluted earnings per share
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary shareholders of the
Company adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of
ordinary shares in issue. There were no dilutive potential ordinary shares in 2017 (2016: nil). Therefore, diluted
earnings per share equal to basic earnings per share.
(51) Notes to consolidated cash flow statement
(a) Cash received relating to other operating activities
Item Year ended 31 December 2017 Year ended 31 December 2016
Interest income 66,042,642.09 48,087,130.05
Government grants 30,697,826.27 13,419,369.22
Others 17,450,642.04 5,327,431.15
Total 114,191,110.40 66,833,930.42
(b) Cash paid relating to other operating activities
Item Year ended 31 December 2017 Year ended 31 December 2016
Expenses 405,943,801.31 300,515,143.87
Others 118,116,052.83 97,021,457.34
Total 524,059,854.14 397,536,601.21
138
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Cash received relating to other investing activities
Item Year ended 31 December 2017 Year ended 31 December 2016
Interest income of structured deposits 91,904,332.38 71,183,080.05
(52) Supplementary information of cash flow statements
(a) Supplementary information of cash flow statements
Year ended 31 December 2017 Year ended 31 December 2016
1. Reconciliation of net profit to cash flows from operating
-- --
activities:
Net profit 1,708,420,285.75 1,342,775,261.88
Add：Provision for asset impairment 70,595,875.65 94,569,651.27
Depreciation of fixed assets and amortization of
132,722,857.51 122,429,528.37
investment properties
Amortization of intangible assets 5,238,138.88 5,238,138.88
Amortization of long-term prepaid expenses 5,127,040.98 2,384,206.20
Losses on disposal of fixed assets, intangible assets and
975,423.00 1,833,734.45
other long-term assets
Losses on the changes in fair value -5,270,238.03 -
Financial income, net -76,642,204.57 -80,745,581.81
Investment income -320,623,463.23 -200,239,260.71
Increase in deferred income tax assets -100,331,709.37 -55,267,875.03
Amortization of deffered incomes -453,200.04 -453,200.04
Increase of inventory -304,748,260.10 -1,040,795,912.39
Decrease in operating receivables -339,961,965.35 127,720,638.07
Increase in operating payables 1,176,210,825.71 3,540,292,870.02
Share-based payments 64,494,411.50 36,330,588.22
Net cash flows from operating activities 2,015,753,818.30 3,896,072,787.38
2. Significant investing and financing activities that do not
--
involve cash receipts and payments
3. Not increase in cash and cash equivalents : --
Cash at the end of the year 1,417,489,071.71 4,171,689,917.21
Less: Cash at the beginning of the year 4,171,689,917.21 2,792,685,328.69
Net increase in cash and cash equivalents -2,754,200,845.50 1,379,004,588.52
139
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Cash and cash equivalents
31 December 2017 31 December 2016
Cash 1,417,489,071.71 4,171,689,917.21
Including Cash in hand - -
Cash at bank 1,417,489,071.71 4,171,689,917.21
Ending balance of cash 1,417,489,071.71 4,171,689,917.21
(52) Foreign currency monetary items
(a) Foreign currency monetary items
31 December 2017
Item Foreign currency balance Exchange rate RMB balance
Cash at bank & in hand 206,491,202.92
- USD 29,318,706.01 6.5342 191,574,288.81
- EUR 1,911,861.02 7.8023 14,916,913.24
- JPY 15.03 0.0579 0.87
Receivables 607,945,287.84
- USD 81,353,223.98 6.5342 531,578,236.13
- EUR 9,787,761.52 7.8023 76,367,051.71
Payables 42,702,850.07
- USD 5,611,839.06 6.5342 36,668,878.79
- EUR 750,777.96 7.8023 5,857,794.88
- KRW 5,000,000.00 0.0061 30,500.00
- JPY 2,516,000.00 0.0579 145,676.40
Other payables 37,060,925.00
- EUR 4,750,000.00 7.8023 37,060,925.00
Monetary items listed above are referred to as currencies other than RMB (which is different from the
foreign currency items designated in Notes XI(1)(a)).
(b) Explanation of oversea operating entities, including important oversea operating entities, should disclose
the principal places of business, the bookkeeping base currency and the reason of selection, and the
causes if the bookkeeping base currency changes.
□Applicable √ Not applicable
140
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
VIII. Changes in consolidation scope
In 2017, there is no change in the Group‘s Consolidation scope.
IX. Equity interests in other entities
(1)Equity interests in subsidiaries
(a) Components of the Company and its subsidiaries
% of ownership
Place of Place of Principle
Name interest Acquired by
business registration activities
Directly Indirectly
Wuxi Little Swan General Electric Appliances Co. , Establishmenr or
Wuxi Wuxi Manufacture 100.00%
Ltd. Investment
Establishmenr or
Wuxi Filin Electronics Co. , Ltd. Wuxi Wuxi Manufacture 73.00%
Investment
Establishmenr or
Jiangsu Little Swan Marketing and Sales Co. , Ltd. Wuxi Wuxi Marketing 99.54% 0.09%
Investment
Import and Establishmenr or
Wuxi Little Swan Import & Export Co. , Ltd. Wuxi Wuxi 88.46%
export Investment
Establishmenr or
Little Swan International (Singapore) Co., Ltd. Singapore Singapore Investing 100.00%
Investment
Business merger
Little Swan (Jing Zhou) Sanjin Electronic
Jingzhou Jingzhou Manufacture 100.00% under common
Appliances Limited
control
Business merger
Hefei Midea Washing Machine Co., Ltd. Hefei Hefei Manufacture 69.47% under common
control
(b) Subsidiaries with significant minority interests
P&L attributable
% of shares held by Dividends declaired to Minority interest at
Name tominority
minority shareholders minority shareholders 31 December 2017
shareholders
Wuxi Filin Electronics Co. , Ltd. 27.00% 71,275,326.17 - 271,926,023.69
Hefei Midea Washing Machine Co., Ltd. 30.53% 130,732,454.36 - 899,281,188.38
141
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) The main financial information of significant not wholly owned subsidiary
31 December 2017 31 December 2016
Name Non-current Current Non-current Non-current Current Non-current
Current assets Total assets Total liabilities Current assets Total assets Total liabilities
assets liabilities liabilities assets liabilities liabilities
Wuxi Filin
Electronics 1,596,854,617.31 64,932,264.88 1,661,786,882.19 654,497,661.11 155,800.00 654,653,461.11 1,203,071,028.74 51,610,150.79 1,254,681,179.53 512,934,442.62 259,000.00 513,193,442.62
Co. , Ltd.
Hefei
Midea
Washing 7,918,309,471.76 742,917,514.76 8,661,226,986.52 5,702,514,412.64 13,146,938.82 5,715,661,351.46 6,955,889,821.64 648,846,122.85 7,604,735,944.49 5,049,130,635.42 16,969,489.50 5,066,100,124.92
Machine
Limited.
Year ended 31 December 2017 Year ended 31 December 2016
Name Total comprehensive Net cash flow from Total comprehensive Net cash flow from
Sales Net profit Sales Net profit
income operating activities income operating activities
Wuxi Filin Electronics Co. , Ltd.
1,144,987,638.37 263,982,689.50 263,982,689.50 -12,535,534.97 904,940,364.35 223,257,225.99 223,257,225.99 30,800,930.14
Hefei Midea Washing Machine
9,379,833,276.67 428,209,807.98 400,076,520.10 750,894,134.08 7,259,961,899.44 317,988,769.96 334,100,184.20 1,429,556,107.23
Limited.
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(2)Interests in Joint Ventures
There is no interests in joint ventures occurred in the year ended of 2017.
X. Segment reporting
Sales, expenses, assets and liabilities of the Company and its subsidiaries are primarily attributable to
manufacturing and sales of washing machines and related products. No segment information of the Group is
presented considering the internal organization and management structure, the system of internal financial
reporting to key management personnel, and similar business nature among various subsidiaries in the Group.
The domestic and overseas sales transaction and non-current assets excluding financial assets and deferred tax
asset are as follows:
(a) Sales transactions to third parties
31 December 2017 31 December 2016
China 17,114,743,424.78 13,022,118,060.74
Other countries 4,269,955,651.87 3,312,796,440.95
Total 21,384,699,076.65 16,334,914,501.69
(b) Non-current assets
31 December 2017 31 December 2016
China 1,366,095,738.76 1,258,041,184.47
Other countries - -
Total 1,366,095,738.76 1,258,041,184.47
XI. Risk related to financial instruments
The Company and its subsidiaries' activities are exposed to a variety of financial risks: market risk (primarily
foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company and its subsidiaries'
overall risk management program focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Company and its subsidiaries' financial performance.
(1) Market risk
(a) Foreign exchange risk
The Company and its subsidiaries' major operations are carried out in Mainland China and majority of its
transactions are denominated in RMB. The Group‘s recognized assets and liabilities nominated in foreign
143
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
currencies and future foreign currency transactions (mostly USD) are exposed to foreign exchange risk. Financial
department in the Group‘s headquater is in charge of monitoring foreign currency transactions and the scale of
foreign currency assets and liabilities of the Company and its subsidiaries, thus minimize the explosure to foreign
exchange risk. Therefore, the Company and its subsidiaries may enter into foreign exchange agreement or
currency swap contract to hedge foreign exchange risk. In the year ended 2017, foreign exchange agreement was
signed by the Company and its subsidiaries to hedge foreign exchange risk (2016: nil).
The following table presents the structure analysis of the Company and its subsidiaries‘ financial assets and
financial liabilities by currencies as at 31 December 2017 and 31 December 2016:
31 December 2017
Item
USD Other Total
Financial assets denominated in foreign currency -
Cash at bank and in hand 191,071,173.12 14,916,914.11 205,988,087.23
Receivables 531,578,236.13 76,367,051.71 607,945,287.84
Total 722,649,409.25 91,283,965.82 813,933,375.07
Financial liabilities denominated in foreign currency -
Payables 36,668,878.79 6,033,971.28 42,702,850.07
Other payables - 37,060,925.00 37,060,925.00
Total 36,668,878.79 43,094,896.28 79,763,775.07
31 December 2016
Item
USD Other Total
Financial assets denominated in foreign currency -
Cash at bank and in hand 857,223,958.85 40,989,789.89 898,213,748.74
Receivables 538,217,122.83 29,781,044.92 567,998,167.75
Total 1,395,441,081.68 70,770,834.81 1,466,211,916.49
Financial liabilities denominated in foreign currency -
Payables 51,256,695.66 809,036.96 52,065,732.62
As at 31 December 2017, if the RMB had strengthened/weakened by 6% against the USD while all other
variables had been held constant, the Company and its subsidiaries‘ net profit for the year would have been
approximately RMB 34,980,000 (as at 31 December 2016: approximately RMB 79,980,000) lower/higher for
various financial assets and liabilities denominated in USD.
144
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(b) Interest rate risk
As at 31 December 2017 and 31 December 2016, there is no any short-term or long-term interest bearing
borrowings issued at floating rates in the Company and its subsidiaries. The company and its subsidiaries expect
that there is no significant interest rate risk.
(2) Credit risk
Credit risk is managed on a group basis. Credit risk mainly arises from cash at bank, accounts receivable,
other receivables, notes receivable, other current assets-structured deposits and financial products, etc.
The Company and its subsidiaries expect that there is no significant credit risk associated with cash at bank
and structured deposits since they are deposited at state-owned banks and other medium or large size listed banks.
Management does not expect that there will be any significant losses from non-performance by these
counterparties.
The Company and its subsidiaries authorized commercial bank, trust company, asset management company
and other financial agencies to conduct short-term investment finance, such as bank financial products, trust plan
of trust company and assets management plan of assets management company, whose investment orientations are
mainly on financial instruments with high market credit rating among banks in China as well as fine liquidity and
trust product assets management plan with estimated earnings, including but not limited to commercial bank‘s
financial products, which have low risk, stable return and an investment period within one year. The Company and
its subsidiaries' idle funds which are authorized to finance won‘t be invested in stock and its derivative products,
securities investment funds, entrusted financial products aimed at security investment and other investment related
to securities.
In addition, the Company and its subsidiaries have policies to limit the credit exposure on accounts
receivable, other receivables and notes receivable. The Company and its subsidiaries assess the credit quality of
and sets credit limits on its customers by taking into account their financial position, the availability of guarantee
from third parties, their credit history and other factors such as current market conditions. The credit history of the
customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Company
and its subsidiaries will use written payment reminders, or shorten or cancel credit periods, to ensure the overall
credit risk of the Company and its subsidiaries is limited to a controllable extent. There are no significant expired
receivables at 31 December 2017 (2016: Nil).
145
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(3) Liquidity risk
Cash flow forecasting is performed by the Company and its subsidiaries and aggregated by the Group‘s
finance department in its headquarters. The Group‘s finance department in headquarter monitors rolling forecasts
on the Company and its subsidiaries‘ short-term and long-term liquidity requirements to ensure it has sufficient
cash and securities that are readily convertible to cash to meet operational needs.
The financial liabilities of the Company and its subsidiaries at the balance sheet date are analysed by their
maturity date below at their undiscounted contractual cash flows :
31 December 2017
Item
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings 81,393,672.34 81,393,672.34
Notes payable 2,805,804,600.41 - - - 2,805,804,600.41
Accounts payable 3,827,025,700.10 - - - 3,827,025,700.10
Dividends payable 6,996,784.06 - - - 6,996,784.06
Other current liabilities 2,107,700,604.61 - - - 2,107,700,604.61
Other payables 221,120,863.48 - - - 221,120,863.48
Provisions 2,253,082.25 - - - 2,253,082.25
Total 9,052,295,307.25 - - - 9,052,295,307.25
31 December 2016
Item
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Short-term borrowings 185,237,615.37 185,237,615.37
Notes payable 2,620,549,815.47 - - - 2,620,549,815.47
Accounts payable 3,335,089,672.06 - - - 3,335,089,672.06
Dividends payable 7,150,684.06 - - - 7,150,684.06
Other current liabilities 1,844,413,154.26 - - - 1,844,413,154.26
Other payables 199,926,402.04 - - - 199,926,402.04
Provisions 1,727,340.89 1,727,340.89
Total 8,194,094,684.15 - - - 8,194,094,684.15
XII. Fair value disclosure
(1) Closing balance of assets and liabilities measured at fair value
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value
hierarchy has the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
146
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the assets or liabilities that are not based on observable market data (that is,unobservable
inputs).
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in
the active market. The fair value of a financial instrument for which the market is not active is determined by
using a valuation technique. Valuation techniques include cash flow discount model and market comparable
company model. The input of valuation techniques mainly include risk free rate, expected exchange rate,
estimated annual yield, etc.
31 December 2017
Item
Level 1 Level 2 Level 3 Total
Assets measured at fair value on a continuous basis
Financial assets at fair value through profit or loss –
- 5,270,238.03 - 5,270,238.03
forward foreign exchange contract
Available-for-sale financial assets-financial products - - 3,792,871,097.59 3,792,871,097.59
31 December 2016
Item
Level 1 Level 2 Level 3 Total
Assets measured at fair value on a continuous basis -- -- -- --
Available-for-sale financial assets-financial products - - 5,994,142,671.24 5,994,142,671.24
(2) Valuation technique and qualitative and quantitative information of significant parameter used by
instruments measured at fair value by Level 2 and Level 3 on a continuous basis
As at 31 December 2017, the Company and its subsidiaries‘ financial assets measured at fair value by Level
2 are forward exchange agreements. The fair value is determined by observable forward exchange rate in current
market.
As at 31 December 2017 and at 31 December 2016, the Company and its subsidiaries‘ financial assets
measured at fair value by Level 3 are financial products of floating income and unprotected principles, which fair
value is determined via valuation techniques by the Group.
147
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(3) Reasons of conversion among levels and policies of determining conversion date of instruments
measured at fair value on a continuous basis
The Company and its subsidiaries consider the date of events leading the conversion between different levels
as the conversion recognizing date. In 2017, there was no conversion between Level 1 and Level 2.
(4) The movement of financial assets measured at fair value by Level 3
Item Financial product investments
1 January 2017 5,994,142,671.24
Purchase 4,745,000,000.00
Sale -6,900,000,000.00
Total gains in current year -46,271,573.65
----attributable to profit or loss -104,142,671.24
----attributable to other comprehensive income 57,871,097.59
31 December 2017 3,792,871,097.59
Changes in unrealised gains or losses included in profit or loss for the current
year with respect to assets still held as at 31 December 2017 -
----Gain or loss on changes in fair value -
Item Financial product investments
1 January 2016 3,052,675,560.00
Purchase 8,171,000,000.00
Sale -5,278,000,000.00
Total gains in current year 48,467,111.24
----attributable to profit or loss -55,675,560.00
----attributable to other comprehensive income 104,142,671.24
31 December 2016 5,994,142,671.24
Changes in unrealised gains or losses included in profit or loss for the current -
year with respect to assets still held as at 31 December 2016
----Gain or loss on changes in fair value -
The relevant information of financial assets measured at fair value by Level 3 are below:
Fair value at 31 Valuation Relationship
Item Non-observable Range Observable/
December 2017 technique with fair value
148
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Input
unobservable
Available-for-sale financial assets
---Financial Discount Estimated annual Moves in the
3,792,871,097.59 4.20%-5.25% unobservable
products cash flow yield same direction
Fair value at 31 Valuation Non-observable Relationship Observable/
Item Range
December 2016 technique Input with fair value
unobservable
Available-for-sale financial assets
---Financial Discount Estimated annual Moves in the
5,994,142,671.24 3.90%~5.50% unobservable
products cash flow yield same direction
(5) Financial assets and liabilities not measured at fair value
Financial assets and liabilities measured at amortized cost mainly include: notes receivable, accounts
receivable, other current assets-structured deposits, other receivables, notes payable, accounts payable, other
payables and other current liabilities.
Available-for-sale financial assets measured in cost model are investments on shares of unlisted companies,
which have no quoted price in the active market and the range of reasonable estimation of their fair value is
relatively wide and probabilities used to determine the estimation cannot be ascertained reasonably. Therefore, the
fair values cannot be measured reliably.
The carrying amount of financial assets and liabilities not measured at fair value is a reasonable approximation of
their fair value at 31 December 2017 and 31 December 2016.
XIII. Capital management
The Company and its subsidiaries‘ objectives of managing capital policies are to safeguard the Company and
its subsidiaries‘ ability to continue operating, in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company and its subsidiaries may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of
gearing ratios.
Item 31 December 2017 31 December 2016
149
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Gearing ratios 61.49% 63.15%
XIV. Related parties and related party transactions
(1) Major shareholders of the Company
Place of Nature of business Registered Capital % of share % of voting
Name
registeration holding rights
Manufacture and sales of household appliances and
Midea Group Foshan,
fittings, robot and robotization system, financial 6,561,053,319.00 52.67% 52.67%
Co., Ltd. Guangdong
service, etc.
(2) Registered capital and changes in registered capital of the parent company
Name 31 December 2016 Increase Decrease 31 December 2017
Midea Group Co., Ltd 6,458,766,808.00 102,286,511.00 - 6,561,053,319.00
(3) The percentage of shareholding and voting rights in the Company held by the parent
31 December 2017 31 December 2016
Name
% of share holding % of voting rights % of share holding % of voting right
Midea Group Co., Ltd. 52.67% 52.67% 52.67% 52.67%
(4) Subsidiaries of the Company
For the detailed information of subsidiaries, please refer to Note IX.
(5) Joint Ventures of the Company
Up to 31 December 2017, there is no joint ventures of the Company and its subsidiaries.
(6) Other related parties
Name Relationship with the Company and its subsidiaries
Ningbo Midea United Supply Limited Controlled by controlling shareholders of the Company
Ningbo Meimei Garden Appliance service Limited Controlled by controlling shareholders of the Company
Midea E-business Limited Controlled by controlling shareholders of the Company
Zhejiang Meizhi Compressor Limited Controlled by controlling shareholders of the Company
Guangdong Midea Hicks Electronics Limited Controlled by controlling shareholders of the Company
Guangdong Midea Precision Mold Technology Co., Ltd.
Controlled by controlling shareholders of the Company
(Originally known as Foshan Shunde Century Technology Limited)
Midea Wisdom Household Technology Co., Ltd. Controlled by controlling shareholders of the Company
150
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Hefei Hualing Co., Ltd. Controlled by controlling shareholders of the Company
Wuhu Midea Household Appliances Manufacture Limited Controlled by controlling shareholders of the Company
Midea Appliance (Singapore)Trading Limited Controlled by controlling shareholders of the Company
MIDEA SCOTT & ENGLISH ELECTRONICS SDN BHD Controlled by controlling shareholders of the Company
MIDEA CONSUMER ELECTRIC (VIETNAM) CO., LTD Controlled by controlling shareholders of the Company
PT. MIDEA PLANET INDONESIA Controlled by controlling shareholders of the Company
ORIENT HOUSEHOLD APPLIANCCES LTD. Controlled by controlling shareholders of the Company
Hefei Midea Materials Supply Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Consumer Electric Manufacturing Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Refrigeration Equipment Limited Controlled by controlling shareholders of the Company
Chongqing Midea Refrigeration Equipment Limited Controlled by controlling shareholders of the Company
Guangdong Midea Group Wuhu Refrigeration Equipment Co., Ltd. Controlled by controlling shareholders of the Company
Hubei Midea Refrigerator Limited Controlled by controlling shareholders of the Company
Hefei Midea Refrigerator Co., Ltd. Controlled by controlling shareholders of the Company
Guangdong Midea Environmental Equipment Limited Controlled by controlling shareholders of the Company
Midea Group Finance Co., Ltd. Controlled by controlling shareholders of the Company
Foshan Midea Clear Lake Water Purification Equipment
Controlled by controlling shareholders of the Company
Manufacturing Co., Ltd.
Wuhu Welling Motor Sales Co., Ltd. Controlled by controlling shareholders of the Company
Huaian Weiling motor manufacture Limited Controlled by controlling shareholders of the Company
Midea Welling Motor Technology (Shanghai) Co., Ltd Controlled by controlling shareholders of the Company
Shenzhen Midea Payment Technology Co., Ltd Controlled by controlling shareholders of the Company
Andhra Logistics Corperation (Originally known as Annto Logistics
Controlled by controlling shareholders of the Company
Corperation)
TOSHIBA LIFESTYLE PRODUCTS&SERVICES CORPORATION Controlled by controlling shareholders of the Company
TOSHIBA Household Appliances Manufacturing (Nanhai) Limited Controlled by controlling shareholders of the Company
Ningbo Andhra Logistics Co., Ltd. (Oringinaly known as Ningbo
Controlled by controlling shareholders of the Company
Meian Logistics Co., Ltd)
Jiangxi Midea Guiya Lighting Co., Ltd Controlled by controlling shareholders of the Company
Midea Group Wuhan Refrigerator Equipment Manuafacturing Co.,
Controlled by controlling shareholders of the Company
Ltd
MIDEA MIDDLE EAST Controlled by controlling shareholders of the Company
Wuhu Midea Kitchen and Bath Appliances Manufacturing Co., Ltd Controlled by controlling shareholders of the Company
151
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Guangzhou Hualing Refrigeration Equipment Co., Ltd Controlled by controlling shareholders of the Company
MIDEA AUSTRALIA PTY LTD Controlled by controlling shareholders of the Company
CARRIER MIDEA INDIA PRIVATE LIMITED Controlled by controlling shareholders of the Company
MIDEA ELECTRIC TRADING (THAILAND) CO., LTD. Controlled by controlling shareholders of the Company
(7) Related party transactions
(a) Sale/Purchase of goods and services received/offered
Purchase of goods and services received
If it
Year ended Year ended
Approved amount exceeds the
Related parties Nature of transaction
31 December 2017 of transaction approved 31 December 2016
amount
Ningbo Midea United Supply
Materials purchase 1,920,029,601.88 1,930,000,000.00 No 1,082,899,440.77
Limited
Huaian Weiling motor manufacture
Electric engines
Limited/Wuhu Welling Motor Sales 1,098,835,770.95 1,360,000,000.00 No 909,387,012.40
purchase
Co., Ltd.
Ningbo Andhra Logistics Co., Ltd./
Storage & logistics 837,227,988.48 970,000,000.00 No 596,152,613.40
Andhra Logistics Co., Ltd.
Ningbo Meimei Garden Appliance
After-sales service 293,939,774.67 320,000,000.00 No 170,460,492.92
service Limited
TOSHIBA Household Appliances Finished goods &
70,704,350.52 70,000,000.00 Yes -
Manufacturing (Nanhai) Co., Ltd. fittings purchase
Guangdong Midea Hicks
Electronics Limited / Ningbo Midea
Chip & Wifi
United Supply Limited / Midea 65,627,097.94 85,000,000.00 No 36,021,898.83
Modules purchase
Wisdom Household Technology
Co., Ltd.
Midea E-business Limited Promotion service 61,748,388.77 55,000,000.00 Yes 28,280,507.93
Mould , small
Midea Group Co., Ltd. and its household
15,799,723.28 24,000,000.00 No 634,700.84
subsidiaries appliances &
service purchase
152
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Zhejiang Meizhi Compressor Compressor &
15,491,263.90 19,000,000.00 No 5,879,190.09
Limited material purchase
Guangdong Midea Precision Mold
Mould purchase 13,583,760.70 632,478.62
Technology Co., Ltd.
Jiangxi Midea Guiya Lighting Small household
2,065,572.39 -
Limited appliances purchase
Foshan Midea Clear Lake Water
Small household
Purification Equipment 88,452.00 -
appliances purchase
Manufacturing Co., Ltd.
Shenzhen Midea Payment
Payment service 32,823.19 -
Technology Co., Ltd 24,000,000.00
Guangdong Midea Environmental Small household
13,951.00 -
Equipment Limited appliances purchase
Midea Group Wuhan Refridgeration Small household
8,364.00 -
Equipment Limited appliances purchase
Wuhu Midea Household Appliances Small household
6,800.00 -
Manufacture Limited appliances purchase
Hefei Huangling Corporation Material purchase - 2,222.22
Total 4,379,403,960.39 4,833,000,000.00 2,829,715,857.18
The pricing policies of related party transactions are agreed price.
Sales of goods and services provided
Year ended If it exceeds Year ended
Nature of Approved amount
Related parties the approved
transaction 31 December 2017 of transaction 31 December 2016
amount
Sales of washing
Midea Appliance
machines and 3,116,834,684.53 4,025,000,000.00 No 2,454,180,175.61
(Singapore)Trading Limited
materials
MIDEA SCOTT & ENGLISH Sales of washing
62,099,832.07 105,000,000.00 No 54,647,993.33
ELECTRONICS SDN BHD machines
TOSHIBA LIFESTYLE
Sales of washing
PRODUCTS&SERVICES 47,329,449.40 80,000,000.00 No -
machines
CORPORATION
Ningbo Meimei Garden Appliance Sales of materials 36,411,806.80 28,000,000.00 Yes 11,050,814.22
153
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Service Limited
PT. MIDEA PLANET Sales of washing
26,916,420.25 70,000,000.00 No 23,243,634.98
INDONESIA machines
ORIENT HOUSEHOLD Sales of washing
25,439,421.52 70,000,000.00 No 19,228,098.22
APPLIANCES LTD. machines
MIDEA CONSUMER ELECTRIC
Sales of materials 21,427,084.19 55,000,000.00 No 24,473,060.87
(VIETNAM) CO., LTD.
TOSHIBA Household Appliances Sales of materials
7,356,261.09 7,500,000.00 No -
Manufacturing (Nanhai) Limited
Sales of washing
Ningbo Andhra Logistics Co., Ltd. 4,008,676.76 - 934,535.79
machines
Sales of washing
MIDEA MIDDLE EAST 2,296,499.01 - -
machines
Sales of washing
Midea E-business Limited 963,464.56 - -
machines
Guangdong Midea Refrigeration Sales of washing
932,075.47 - 104,923.08
Equipment Limited machines
Sales of washing
Andhra Logistics Co. Ltd machines and 301,417.37 - 34,536.74
material
Midea Group Wuhan Refrigeration Sales of washing
223,179.49 - -
Equipment Co., Ltd machines
Wuhu Midea Kitchen and Bath Sales of washing
123,307.69 - -
Appliances Manufacturing Limited machines
Hefei Midea Materials Supply Co.,
Sales of materials 126,116.80 - 147,098.63
Ltd.
Guangzhou Hualing Refrigeration Sales of washing
37,094.02 - -
Equipment Limited machines
Midea Group Co., Ltd Sales of materials 19,999.98 - -
Ningbo Midea United Supply
Sales of materials 15,250.64 - 176,304.62
Limited
Sales of washing
MIDEA AUSTRALIA PTY LTD 3,805.46 - -
machines
Guangdong Midea Consumer Sales of washing
- - 108,102.56
Electric Manufacturing Co., Ltd. machines
154
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Total 3,352,865,847.10 4,440,500,000.00 2,588,329,278.65
The pricing policies of related party transactions are agreed price.
(b) Lease
Rental income of Approved amount If it exceeds the
Lessee Type of assets Rental income of 2016
2017 of transaction approved amount
Hefei Hualing Co., Ltd. House property 13,446,746.44 14,250,943.40 No 10,466,576.72
Andhra Logistics Co., Ltd. House property - - 19,888.81
Total 13,446,746.44 14,250,943.40 10,486,465.53
(c) Asset transfer and debt restructuring
Approved If it exceeds
Related-party Year ended Year ended
Related parties amount of the approved
Transactions 31 December 2017 31 December 2016
transaction amount
Trademark royalty
Midea Group Co., Ltd. 16,863,306.72 13,389,505.52
charges
Charged by
Guangdong Midea Group Wuhu Trademark royalty
5,262,362.33 0.3% of net No 3,234,831.39
Refrigeration Equipment Co., Ltd. charges
sales
Trademark royalty
Hubei Midea Refrigerator Limited 1,042,287.60 767,582.21
charges
Equipments - -
Hefei Midea Refrigerator Co., Ltd. 301,886.79 14,848.68
purchase
Ningbo Meimei Garden Appliance - -
Equipments sales - 3,437.82
Service Limited
Total 23,469,843.44 17,410,205.62
Note: In 2017, transaction value exceeds the approved quota from related party transactions listed in (a), (b), (c)
amounted to 25,217,320.13, therein lower than 5% (excluding 5%) of the Company‘s 2016 audited net assets
(amounted to: 29,919,239.31). Therefore the above-mentioned transactions are not required to be proposed to the
Board Meeting for deliberation and voting procedures.
155
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(d) Remuneration of key management
Item Year ended 31 December 2017 Year ended 31 December 2016
Remuneration of key management 13,709,700.00 12,050,200.00
(e) Transaction with Midea Group Finance Co., Ltd.
As at 31 December 2017, the Company and its subsidiaries‘ Cash at bank deposited in Midea Group Finance Co.,
Ltd. amounted to RMB 281,627,638.87 (as at 31 December 2016: RMB 1,974,034,532.35). During the year ended
31 December 2017, interest income of cash at bank mentioned above was RMB 8,435,527.09 (2016: RMB
6,734,059.25).
As at 31 December 2017, the Company and its subsidiaries‘ bank acceptance notes accepted by Midea Group
Finance Co., Ltd. Amounted to RMB 2,016,401,054.99 (as at 31 December 2016, RMB 1,493,984,805.34).
During the year ended 31 December 2017, commission charges of the bank acceptance notes mentioned above
amounted to RMB 1,567,491.73 (2016: RMB 2,118,620.23).
(8) Receivables from and payables to related parties
(a) Receivables from related parties
31 December 2017 31 December 2016
Name of item Related parties Bad debt Bad debt
Book value Book value
provision provision
Midea Appliance (Singapore)Trading
Accounts receivable 589,756,109.51 29,487,805.48 475,357,280.44 23,767,864.02
Limited
MIDEA CONSUMER ELECTRIC
Accounts receivable 11,868,764.19 593,438.21 13,183,502.52 659,175.13
(VIETNAM) CO., LTD.
Accounts receivable PT. MIDEA PLANET INDONESIA 9,792,445.24 489,622.26 8,404,017.46 420,200.87
TOSHIBA LIFESTYLE
Accounts receivable PRODUCTS&SERVICES 8,103,283.44 405,164.17 - -
CORPORATION
MIDEA SCOTT & ENGLISH
Accounts receivable 7,962,102.83 398,105.14 3,485,105.76 174,255.29
ELECTRONICS SDN BHD
Ningbo Meimei Garden Appliance
Accounts receivable 4,748,685.08 237,434.25 - -
Service Limited
ORIENT HOUSEHOLD
Accounts receivable 2,078,970.94 103,948.55 13,679,187.05 683,959.35
APPLIANCES LTD.
Accounts receivable Midea E-business Limited 125,900.58 6,295.03 - -
156
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Andhra Technology Co., Ltd 52,895.00 2,644.75 - -
Ningbo Andhra Technology Limited - - 43,086.00 2,154.30
Total 634,489,156.81 31,724,457.84 514,152,179.23 25,707,608.96
31 December 2017 31 December 2016
Name of item Related parties Bad debt Bad debt
Book value Book value
provision provision
Other receivables Shenzhen Midea Payment Technology Co., Ltd 10,520,299.96 526,015.00 10,835,423.12 541,771.16
Other receivables Guangdong Midea Group Wuhu Refrigeration - - 3,428,921.06 171,446.05
Equipment Co., Ltd.
Other receivables Hefei Hualing Co., Ltd. - - 854,915.88 42,745.79
Other receivables Hubei Midea Refrigerator Limited - - 813,636.76 40,681.84
Total 10,520,299.96 526,015.00 15,932,896.82 796,644.84
Prepayment Ningbo Midea United Supply Limited 7,407,695.59 - 10,121,553.93 -
Prepayment Midea E-business Limited 3,354,919.77 - 1,549,712.32 -
Guangdong Midea Precision Mold Technology
Prepayment 309,840.00 - 48,100.00 -
Co., Ltd.
Foshan Midea Clear Lake Water Purification
Prepayment - - 75,816.00 -
Equipment Manufacturing Co., Ltd.
Total 11,072,455.36 - 11,795,182.25 -
(b) Payables to related parties
Name of item Related parties 31 December 2017 31 December 2016
Accounts payable Wuhu Welling Motor Sales Co., Ltd. 146,551,812.62 201,074,837.49
TOSHIBA Household Appliances Manufacturing (Nanhai)
Accounts payable 38,171,577.41 -
Limited
Accounts payable Ningbo Midea United Supply Limited 7,300,152.98 110,265,994.59
Accounts payable Guangdong Midea Precision Mold Technology Co., Ltd. 5,995,300.00 -
Accounts payable Zhejiang Meizhi Compressor Limited 5,500,676.15 3,330,792.14
Accounts payable Midea Wisdom Household Technology Co., Ltd. 1,216,403.00 52,603.40
Foshan Midea Clear Lake Water Purification Equipment
Accounts payable 88,452.00 -
Manufacturing Co., Ltd.
Accounts payable Ningbo Meimei Garden Appliance service Limited 51,350.00 499,870.00
Accounts payable Guangdong Midea Environmental Equipment Manufacturing 13,951.00 -
157
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Limited
Accounts payable Wuhu Midea Household Appliances Manufacture Limited 6,800.00 -
Accounts payable Ningbo Andhra Technology Limited 68.38 -
Accounts payable Guangdong Midea Hicks Electronics Limited - 1,305,066.18
Accounts payable Huaian Weiling motor manufacture Limited - 390,637.80
Accounts payable Ningbo Andhra Logistics Co., Ltd. - 342,449.48
Accounts payable Andhra Logistics Co., Ltd. - 151,302.88
Total 204,896,543.54 317,413,553.96
Other payables Guangdong Midea Refrigeration Equipment Limited 351,404.33 283,510.28
Other payables Guangdong Midea Precision Mold Technology Co., Ltd. 100,000.00 -
Other payables Midea Welling Motor Technology (Shanghai) Co., Ltd 90,387.26 275,223.94
Other payables Guangdong Midea Consumer Electric Manufacturing Co., Ltd. 61,458.90 84,774.82
Other payables Wuhu Midea Household Appliances Manufacture Limited - 1,288,644.49
Other payables Midea Group Co., Ltd. - 43,400.00
Other payables Ningbo Meimei Garden Appliance service Limited - 9,949.00
Total 603,250.49 1,985,502.53
Other current liabilities Midea Group Co., Ltd - 14,192,875.85
Total - 14,192,875.85
Advances from TOSHIBA Household Appliances Manufacturing (Nanhai)
2,726,081.57 -
customers Limited
Advances from
Ningbo Meimei Garden Appliances Service Limited 607,507.13 -
customers
Advances from
Andhra Technology Co., Ltd 290,804.69 -
customers
Advances from
Hubei Midea Refrigerator Limited 104,580.00 -
customers
Advances from
MIDEA SCOTT & ENGLISH ELECTRONICS SDN BHD 22,283.28 -
customers
Advances from
CARRIER MIDEA INDIA PRIVATE LIMITED 1,206.21 -
customers
Advances from
MIDEA ELECTRIC TRADING (THAILAND) CO., LTD. 535.80 -
customers
Total 3,752,998.68 -
158
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
XV. Share-based payment
(1) Summary
Upon the authorisation of 2016 Annual General Meeting of Midea Group, 22nd meeting of the 2nd term of
Board of Midea Group have passed the equity options incentive plan (The 4th Incentive Plan), the restricted stocks
incentive plan. 98,274,000 shares of equity options are being granted to 1,463 objects and 24,240,000 shares of
restricted stocks are being granted to 140 objects on 12th May 2017. As at 31 December 2017, the 1st Equity
Options Incentive Plan grants 7,695,000 shares of equity options to 33 objects, the 2nd Equity Options Incentive
Plan grants 6,660,000 shares of equity options to 38 objects, the 3rd Equity Options Incentive Plan grants
8,430,000 shares of equity options to 61 objects, the 4th Equity Options Incentive Plan grants 7,980,000 shares of
equity options to 125 objects, the 1st Restricted Stocks Incentive Plan grants 1,590,000 shares of restricted stocks
to 9 objects.
(2) Impact of share-based payment transactions on financial position and financial performance.
The total stock option expenses recognised in 2017 were RMB 64,494,411.50 (2016: RMB 36,330,588.22).
As at 31 December 2017, the balance relating to the option incentive plan and provided for in capital surplus was
RMB 163,325,332.37 (31 December 2016: RMB 101,372,240.53 ).
XVI. Commitment and contingency
(1) Significant commitments
As at 31 December 2017, no significant commitments shall be disclosed.
(2) Contingency
As at 31 December 2017, no significant contingency shall be disclosed.
XVII. Events after balance sheet date
(1) Profit distribution after balance sheet date
Amount
Proposed profits or dividends (a) 632,487,764.00
(a) According to the resolution of the Board on 9 March, 2018, the Board propose to distribute RMB
632,487,764.00 and it has not been recognized as a liability in the financial statement ended 31 December
2017. (Note VII(35))
159
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
XVIII. Notes to the material items in the Company financial statements
(1) Accounts receivable
(a) Accounts receivable classified by nature:
31 December 2017
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed
1,434,934,642.83 49.87% - - 1,434,934,642.83
individually
Debtors grouped by credit risk 1,442,378,902.57 50.13% 72,118,945.13 5.00% 1,370,259,957.44
Total 2,877,313,545.40 100.00% 72,118,945.13 2.51% 2,805,194,600.27
31 December 2016
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance assessed
1,262,331,696.77 53.37% - - 1,262,331,696.77
individually
Debtors grouped by credit risk 1,103,076,716.02 46.63% 55,153,835.81 5.00% 1,047,922,880.21
Total 2,365,408,412.79 100.00% 55,153,835.81 2.33% 2,310,254,576.98
As all debtors of accounts receivable with amounts that are individually significant are subsidiaries of
the Company, the Company is convinced that impairment risks do not exist, thus no provision for bad
debt was accrued.
Accounts receivable individually significant for which bad debt provision was assessed individually.
□Applicable √Not applicable
Accounts receivable adopting aging analysis method for bad debt provision:
√ Applicable □ Not applicable
31 December 2017
Aging
Account receivable Bad debt provision % of proportion Book Value
Within 1 year 1,442,378,902.57 72,118,945.13 5.00% 1,370,259,957.44
31 December 2016
Aging
Account receivable Bad debt provision % of proportion Book Value
Within 1 year 1,103,076,716.02 55,153,835.81 5.00% 1,047,922,880.21
160
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
As at 31 December 2017 and 2016, there were no material accounts receivable which were past due.
Accounts receivable adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Accounts receivable adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
(b) Accounts receivable withdraw, reversed or collected during the reporting period
During the year ended 31 December 2017, the net movement of provision for accounts receivable was RMB
16,965,109.32 (2016: RMB 33,071,311.18 ). There were no provision or reverse of provision for individual
significant accounts receivable.
(c) Accounts receivable written-off during the reporting period
There were no accounts receivable written-off during the reporting period.
(d) Top 5 of accounts receivable by customers
name Amounts Bad debt provision % of total balance
Total amount of the top 5 accounts
2,557,418,479.81 56,411,596.99 88.88%
receivable by customers
(e) Accounts receivable derecognised due to the transfer of financial assets
For the year ended 31 December 2017, accounts receivable derecognised due to the transfer of financial assets
amounted to RMB 1,035,937,017.93 (2016: nil), of which loss on derecognised amounted to RMB 20,478,740.36
(2016: nil).
Derecognised Loss on derecognised
Accounts receivables transferred 1,035,937,017.93 20,478,740.36
The accounts receivable transferred to the financial institutions without recourse amounted to RMB
1,035,937,017.93. (2016: nil.)
(2) Other receivables
(a) Other receivables classified by nature:
31 December 2017
Category
Book balance Bad debt provision Book value
161
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Amount Proportion Amount % of proportion
Debtors with significant balance
76,278,456.92 71.55% 75,455,666.50 98.92% 822,790.42
assessed individually
Debtors grouped by credit risk 30,323,298.25 28.45% 2,173,040.31 7.17% 28,150,257.94
Total 106,601,755.17 100.00% 77,628,706.81 72.82% 28,973,048.36
31 December 2016
Category Book balance Bad debt provision
Book value
Amount Proportion Amount % of proportion
Debtors with significant balance
75,755,041.50 81.69% 75,408,191.50 99.54% 346,850.00
assessed individually
Debtors grouped by credit risk 16,981,991.47 18.31% 1,152,734.58 6.79% 15,829,256.89
Total 92,737,032.97 100.00% 76,560,926.08 82.56% 16,176,106.89
Other receivables with single significant amount and withdrawal bad debt provision separately at end of period：
√ Applicable □ Not applicable
31 December 2017
Other accounts receivable (unit)
Other accounts Bad debt % of Reason of
Book value
receivable provision proportion provision
Jiangsu Littleswan Marketing and Sales Co.,Ltd. 74,294,013.55 74,294,013.55 100% - Uncollectible
Wuxi Little Swan Import & Export Co. , Ltd 1,161,652.95 1,161,652.95 100% - Uncollectible
Wuxi Little Swan General Eletric Appliances Co., Ltd 416,186.85 - - 416,186.85 --
Little Swan International (Singapore) Limited 326,710.00 - - 326,710.00 --
Hefei Midea Washing Machine Co., Ltd. 79,893.57 - - 79,893.57 --
Total 76,278,456.92 75,455,666.50 822,790.42
31 December 2016
Other accounts receivable (unit)
Other accounts Bad debt % of Reason of
Book value
receivable provision proportion provision
Jiangsu Littleswan Marketing and Sales Co.,Ltd. 74,296,538.55 74,296,538.55 100% - Uncollectible
Wuxi Little Swan Import & Export Co. , Ltd 1,111,652.95 1,111,652.95 100% - Uncollectible
162
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Little Swan International (Singapore) Limited 346,850.00 - - 346,850.00 --
Total 75,755,041.50 75,408,191.50 346,850.00
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
31 December 2017
Aging Other accounts Bad debt provision Withdrawal proportion Book Value
receivable
Within 1 year 28,569,790.25 1,428,489.51 5.00% 27,141,300.74
1 to 2 years 747,308.00 74,730.80 10.00% 672,577.20
2 to 3 years 280,400.00 84,120.00 30.00% 196,280.00
3 to 5 years 280,200.00 140,100.00 50.00% 140,100.00
Above 5 years 445,600.00 445,600.00 100.00% -
Total 30,323,298.25 2,173,040.31 7.17% 28,150,257.94
31 December 2016
Aging Other accounts Bad debt provision Withdrawal proportion Book Value
receivable
Within 1 year 15,644,811.47 782,240.58 5.00% 14,862,570.89
1 to 2 years 598,900.00 59,890.00 10.00% 539,010.00
2 to 3 years 292,680.00 87,804.00 30.00% 204,876.00
3 to 5 years 445,600.00 222,800.00 50.00% 222,800.00
Total 16,981,991.47 1,152,734.58 6.79% 15,829,256.89
Other receivables adopting aging balance percentage method for bad debt provision:
□ Applicable √ Not applicable
Other receivables adopting aging other method for bad debt provision:
□ Applicable √ Not applicable
(b) Other receivables withdraw, reversed or collected during the reporting period
During the year ended 31 December 2017, the net movement of provision for other receivable was RMB
1,067,780.73 (2016: RMB 675,907.35). There were no provision or reverse of provision for individual significant
other receivable
163
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(c) Other receivables written-off during the reporting period
There were no other receivables written-off during the reporting period
(d) Other receivables classified by nature
Nature of other receivables 31 December 2017 31 December 2016
Deposit in escrow accounts 26,047,303.64 6,945,518.53
Current accounts with subsidiaries 76,278,456.92 75,755,041.49
Deposits 1,404,000.00 1,477,683.35
Loans to employees 2,439,630.53 1,719,177.08
Others 432,364.08 6,839,612.52
Less：Bad debt provision -77,628,706.81 -76,560,926.08
Total 28,973,048.36 16,176,106.89
(e) The top five other receivables classified by debtor at period-end
% of total
31 December Bad debt provision
Name of the entity Nature of other receivables Aging other
2017 31 December 2017
receivables
Jiangsu Littleswan Marketing
Inter-company receivables 74,294,013.55 Over 5 years 69.69% 74,294,013.55
and Sales Co.,Ltd.
Advance & temporary
Alipay (China) Network
payments deposit in escrow 17,316,823.66 Within 1 year 16.24% 865,841.18
Technology Co., Ltd.
accounts
Advance & temporary
Shenzhen Midea Payment
payments deposit in escrow 7,050,888.90 Within 1 year 6.61% 352,544.45
Technology Co., Ltd.
accounts
Chinabank Payments Advance & temporary
(Beijing) Technology Co., payments deposit in escrow 1,188,144.56 Within 1 year 1.11% 59,407.23
Ltd. accounts
Wuxi Little Swan Import &
Inter-company receivables 1,161,652.95 Over 5 years 1.09% 1,161,652.95
Export Co. , Ltd
Total 101,011,523.62 94.76% 76,733,459.36
164
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
(3) Long-term equity investments
31 December 2017 31 December 2016
Items Carrying amount Impairment Carrying amount Impairment
Book value Book value
provision provision
Investment in
1,433,285,041.57 475,050,000.00 958,235,041.57 1,433,285,041.57 57,500,000.00 1,375,785,041.57
subsidiaries
(a) Investment in subsidiaries
Balance at Balance of
Balance at Impairment
Name of subsidiaries 31 December Addition Reduction impairment
31 December 2017 provision
2016 provision
Wuxi Little Swan Import & Export
57,500,000.00 - - 57,500,000.00 - 57,500,000.00
Co. , Ltd
Jiangsu Little Swan Marketing and
417,550,000.00 - - 417,550,000.00 417,550,000.00 417,550,000.00
Sales Co. , Ltd.
Wuxi Filin Electronics Co. , Ltd. 25,660,308.10 - - 25,660,308.10 - -
Wuxi Little Swan General Electric
89,062,000.00 - - 89,062,000.00 - -
Appliances Co. , Ltd.
Little Swan (Jing Zhou) Sanjin
11,869,431.12 - - 11,869,431.12 - -
Electronic Appliances Limited.
Little Swan International
681,050.00 - - 681,050.00 - -
(Singapore) Limited.
Hefei Midea Washing Machine
830,962,252.35 - - 830,962,252.35 - -
Limited.
Total 1,433,285,041.57 - - 1,433,285,041.57 417,550,000.00 475,050,000.00
As at 31 December 2017, the Company provided credit guarantee for Hefei Midea Washing Machine Limited
amounted to RMB 291,079,100.00 (as at 31 December 2016: 193,143,310.84 ).
(4) Sales and cost of sales
Year ended 31 December 2017 Year ended 31 December 2016
Item
Income Cost of sales Income Cost of sales
Operating income 14,990,965,216.20 11,403,214,393.83 11,476,294,751.16 8,827,790,922.43
Other operating income 1,236,979,706.39 1,172,951,944.14 975,332,449.61 851,332,446.28
Total 16,227,944,922.59 12,576,166,337.97 12,451,627,200.77 9,679,123,368.71
Other operating income and expenses:
165
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Item Year ended 31 December 2017 Year ended 31 December 2016
Other operating
Other operating Other operating Other operating
income
expenses income expenses
Sale of materials 1,188,798,326.56 1,144,979,820.00 958,017,488.25 850,941,124.43
Others 48,181,379.83 27,972,124.14 17,314,961.36 391,321.85
Total 1,236,979,706.39 1,172,951,944.14 975,332,449.61 851,332,446.28
(5) Investment income
Item Year ended 31 December 2017 Year ended 31 December 2016
Income from available-for-sale financial assets 154,998,651.47 76,128,199.93
Income from disposal of financial assets measured at fair
14,206,795.00 -
value through profits or losses
Total 169,205,446.47 76,128,199.93
There is no significant restriction on the remittance of investment income to the Company and its subsidiaries.
XIX. Supplementary information
(1) Non-recurring profit or loss
Item Year ended 31 December 2017 Year ended 31 December 2016
Net loss on disposal of non-current assets -975,423.00 -1,833,734.45
Government grants recognized in profits or losses for the 31,151,026.31 13,872,569.26
current period
Holding-period return on financial assets at fair value
22,954,813.04 -
through profit or loss
Other non-operating income and losses other than items
12,987,329.86 4,288,097.78
above
Less: Effect of income tax -12,040,092.19 -2,455,096.12
Effect of minority interest -4,618,258.39 - 1,759,407.99
Total 49,459,395.63 12,112,428.48
Under requirements in Explanatory announcement No. 1 on information disclosure by companies offering
securities to the public – non-recurring profits or losses [2008] from CSRC, non-recurring profits or losses refer to
those arises from transactions and events that are not directly relevant to ordinary activities, or that are relevant to
ordinary activities, but are extraordinary and not expected to recur frequently that would have an influence on
users of financial statements making economic decisions on the financial performance and profitability of an
166
WUXI LITTLE SWAN CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
enterprise.
(2) Return on equity and earnings per share
Earnings per share
Weighted average return on
Profit of the year Basic earnings per share Diluted earnings per share
equity(%)
(RMB yuan per share) (RMB yuan per share)
Net profit attributable to ordinary
23.12% 2.38 2.38
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company, excluding 22.36% 2.30 2.30
non-recurring profits or losses
167
Wuxi Little Swan Company Limited Annual Report 2017
Part XII Documents Available for Reference
I This Annual Report carrying the signature of the legal representative;
II The financial statements signed and sealed by the legal representative, the CFO and the Financial Manager for
this Report;
III The original Auditor‘s Report signed and sealed by the CPAs, as well as sealed by the CPAs firm; and
IV The originals of all the Company‘s documents and announcements which were disclosed on Securities Time
and Ta Kung Pao (HK) during this Reporting Period.
Wuxi Little Swan Company Limited
Legal representative: Fang Hongbo
March 13, 2018
168
