GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Annual Report 2019
April 2020
Section I Important Notice, Table of Contents and Paraphrase
The Board of Directors, Board of Supervisors, all directors, supervisors and SeniorManagement Personnel of the Company hereby guarantee that the contents areauthentic, accurate and complete, and there are no false records, misleadingrepresentations or material omissions in the Annual Report, and shall take all the jointand several legal responsibilities.Dong Mingzhu, the Company's responsible person, Wang Jingdong, responsibleperson in charge of accounting work and Liao Jianxiong, in-charge person ofaccounting institution (accounting superintendent) hereby declare and warrant thatthe financial report in the Report is authentic, accurate and complete.All the directors attended the meeting of the Board of Directors in respect ofdeliberation of the Report.The forward-looking statements such as future plans and development strategies in theReport do not constitute a substantive commitment of the Company to investors.Investors and relevant persons should therefore be aware of risk factors attendant ininvestment and understand the differences between plans, forecasts and commitments.The Company's profit distribution proposal passed upon deliberation at the meeting ofthe Board of Directors is set out as below: Based on the total stock capital of6,015,730,878 of the Company, all directors were distributed a cash dividend of RMB12 (tax included) per 10 stocks and given 0 bonus share (tax included). Public reservefunds were not used for capitalization.
Table of Contents
Section I Important Notice, Table of Contents and Paraphrase ...... 1
Section II Company Profile and Main Financial Indices ...... 4
Section III Corporate Business Overview ...... 10
Section IV Discussion and Analysis of Business Operation ...... 19
Section V Important Events ...... 57
Section VI Changes in Stock Capital & Information of Shareholders ...... 89
Section VII Related Information of Preferred Stock ...... 94
Section VIII Related Information of Convertible Corporate Bonds ...... 95
Section IX Directors, Supervisors, Senior Management Personnel and Employees ...... 96
Section X Corporate Governance ...... 111
Section XI Related Information of Corporate Bonds ...... 116
Section XII Financial Report ...... 117
Section XIII References ...... 278
Paraphrase
| Items | Means | Contents |
| Company, the Company, the enterprise, GREE ELECTRIC APPLIANCES or GREE | Means | GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI |
| GREE GROUP | Means | Zhuhai Gree Group Co., Ltd. |
| Zhuhai Mingjun | Means | Zhuhai Mingjun Investment Partnership (Limited Partnership) |
| Finance Company | Means | Zhuhai Gree Group Finance Company Limited |
| Jinghai Guaranteed | Means | Hebei Jinghai Guaranteed Investment Co., Ltd. |
| Yinlong | Means | Zhuhai Yinlong New Energy Co., Ltd. |
| CSRC | Means | China Securities Regulatory Commission |
| Report Period | Means | From 1 January, 2019 to 31 December, 2019 |
Section II Company Profile and Main Financial Indices
I. Company information
| Stock Abbreviation | GREE ELECTRIC APPLIANCES | Stock Code | 000651 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Name in Chinese | 珠海格力电器股份有限公司 | ||
| Name Abbreviation in Chinese | 格力电器 | ||
| Name in Foreign Language (if any) | GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | ||
| Name Abbreviation in Foreign Language (if any) | GREE | ||
| Legal Representative | Dong Mingzhu | ||
| Registered Address | Jinji West Road, Qianshan, Zhuhai City, Guangdong Province | ||
| Post Code of Registered Address | 519070 | ||
| Office Address | Jinji West Road, Qianshan, Zhuhai City, Guangdong Province | ||
| Post Code of Office Address | 519070 | ||
| Website | http://www.gree.com.cn | ||
| gree@gree.com.cn | |||
II. Contacts and contact information
| Board Secretary | Securities Affairs Representative | |
| Name | Wang Jingdong | Zhang Zhouhu,Yan Zhangxiang |
| Address | Jinji West Road, Qianshan, Zhuhai City, Guangdong Province | Jinji West Road, Qianshan, Zhuhai City, Guangdong Province |
| Tel | 0756-8669232 | 0756-8669232 |
| Fax | 0756-8614998 | 0756-8614998 |
| gree0651@cn.gree.com | gree0651@cn.gree.com |
III. Information disclosure and place of the report
| Media designated by the Company for information disclosure | China Securities Journal, Securities Times, Shanghai Securities News and Securities Daily |
| Website specified by CSRC for release of the Annual Report | http://www.cninfo.com.cn |
| Place where the Annual Report is available for inspection | Investment Management Department of the Company |
IV. Alteration of registration
| Organization code | 91440400192548256N |
| Changes (if any) in the main business since listing of the Company | No change |
| Changes (if any) in the controlling shareholders | No change |
V. Other related informationAccounting firm engaged by the Company
| Name of the Accounting Firm | Union Power Certified Public Accountants (Special General Partnership) |
| Office Address | No. 169 Donghu Road, Wuchang District, Wuhan City |
| Names of Accountants as Signatories | Gong Jingwei, Wu Zihao |
Sponsor engaged by the Company to perform continuous supervision during the Report Period
√ Applicable □ Not applicable
| Name of the sponsor | Office address of the sponsor | Name of the recommended representative | Continuous supervision period |
| Huatai United Securities Co., Ltd. | 26F, CTS Tower, No.4011, Shennan Boulevard, Futian District, Shenzhen | Gu Chongxiang, Li Shijing | From 26 July, 2019 to 25 July, 2020 |
Financial adviser engaged by the Company to perform continuous supervision during the Report Period
□ Applicable √ Not applicable
VI. Main accounting data and financial indicesWhether the Company has retroactive adjustment or restatement of previous accounting data
□ Yes √ No
Unit: RMB Yuan
| 2019 | 2018 | Increase/ Decrease over the previous year | 2017 | |
| Operating Revenue (Yuan) | 198,153,027,540.35 | 198,123,177,056.84 | 0.02% | 148,286,450,009.18 |
| Net profit attributable to shareholders of listed Company (Yuan) | 24,696,641,368.84 | 26,202,787,681.42 | -5.75% | 22,400,484,001.26 |
| Net profit attributable to | 24,171,511,911.32 | 25,580,865,501.38 | -5.51% | 21,170,184,740.88 |
| shareholders of listed Company less non-recurring gains and losses (Yuan) | ||||
| Net cash flow generated from operating activities (Yuan) | 27,893,714,093.59 | 26,940,791,542.98 | 3.54% | 16,338,082,774.25 |
| Basic earnings per share (Yuan per Share) | 4.11 | 4.36 | -5.73% | 3.72 |
| Diluted earnings per share(Yuan per Share) | 4.11 | 4.36 | -5.73% | 3.72 |
| Weighted average return on net assets | 25.72% | 33.36% | -7.64% | 37.44% |
| At the end of 2019 | At the end of 2018 | Increase/ Decrease over the previous year | At the end of 2017 | |
| Total asset (Yuan) | 282,972,157,415.28 | 251,234,157,276.81 | 12.63% | 214,987,907,124.70 |
| Net asset attributable to shareholders of listed Company (Yuan) | 110,153,573,282.67 | 91,327,095,069.10 | 20.61% | 65,614,913,868.06 |
VII. Accounting data differences under domestic and foreign accounting standards
1. Differences in net profit and net assets in the financial report disclosed under international accountingstandards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under international accounting standards and thatdisclosed under domestic accounting standards during the Report Period.
2. Differences in net profit and net assets in the financial report disclosed under overseas accountingstandards and that disclosed under domestic accounting standards
□ Applicable √ Not applicable
There was no difference in net profit and net assets in the financial report disclosed under overseas accounting standards and thatdisclosed under domestic accounting standards during the Report Period.VIII. Quarter-based main financial indicators
Unit: RMB Yuan
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
| Operating incomes | 40,547,673,072.89 | 56,749,291,262.00 | 57,741,792,636.95 | 43,114,270,568.51 |
| Net profit attributable to shareholders of listed company | 5,671,869,041.09 | 8,078,325,047.80 | 8,367,302,278.13 | 2,579,145,001.82 |
| Net profit attributable to shareholders of listed companies after deduction of non-recurring profit and loss | 5,113,678,278.15 | 8,279,748,411.85 | 8,172,069,543.75 | 2,606,015,677.57 |
| Net cash flows from operating activities | 7,733,213,419.06 | 8,722,853,827.89 | 16,273,618,883.00 | -4,835,972,036.36 |
Whether major differences exist between the above financial indicators or their sum and those in the disclosed quarterly report andsemi-annual report
□ Yes √ No
IX. Non-recurring profit and loss items and amounts
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | Amount in 2019 | Amount in 2018 | Amount in 2017 | Description |
| Gains and losses from disposal of non-current assets (including the provision for asset impairment write-off part) | -9,293,929.38 | -23,064,935.35 | -8,463,062.31 | For details, see Note (VII) 57, Note (VII) 58 and Note (VII) 59 |
| Governmental subsidies recorded into the current gains and losses (excluding the governmental subsidies closely relating to the business of the enterprise and enjoyed by a fixed quota or a fixed amount in accordance with the state policies) | 1,215,852,371.66 | 671,678,104.47 | 880,235,834.70 | For details, see Note (VII) 52 and Note (VII) 58 |
| Capital occupation fee collected from the non-financial institution and recorded into the current gains and losses | 359,713.10 | 1,262,805.80 | 1,480,255.77 | |
| All kinds of provisions for impairment of assets accrued due to force majeure factors, e.g., | 264,556.46 |
| suffering from natural disasters | ||||
| Net profits or losses of the subsidiaries in the current period from the beginning of the period to the combination date that are generated by business combination involving enterprises under common control | 184,503.98 | -757,426.22 | ||
| Gains and losses caused by fair value changes from the holding of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment income obtained from the disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other debt investments, except for the effective hedging business related to the Company's normal business operations | 1,449,722.86 | 151,222,484.83 | 399,373,171.53 | |
| Reversal of impairment provision for the accounts receivable and contract assets for which an independent impairment test is conducted | 2,320,229.26 | 4,225,536.19 | ||
| Non-operating incomes and expenditures other than the above items | -530,486,147.03 | 32,323,207.44 | 18,316,586.90 | For details, see Note (VII) 58 and Note (VII) 59 |
| Other profit and loss items that conform to the definition of non-recurring profit and loss | 997,770.17 | 6,119,851.77 | 496,004.65 | |
| Less: Influence amount of | 147,189,032.83 | 170,139,883.37 | 55,182,008.00 |
| income tax | ||||
| Influence amount of minority equity (after tax) | 6,561,011.03 | 49,984,188.79 | 9,690,189.29 | |
| Total | 525,129,457.52 | 621,922,180.04 | 1,230,299,260.38 | -- |
Explanation should be given for non-recurring profit and loss items defined by the Company according to ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public -- Non-recurring Profit andLoss and for non-recurring profit and loss items which are listed in Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public -- Non-recurring Profit and Loss and defined as recurring profit and loss items.
□ Applicable √ Not applicable
No non-recurring profit and loss items which are defined or listed in Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public -- Non-recurring Profit and Loss were defined by the Company as recurring profitand loss items during the Report Period.
Section III Corporate Business OverviewI. Major businesses engaged in during the Report Period
1. Major business and position in industry
Gree Electric Appliances, Inc. of Zhuhai is a diversified and technological global industrial group and has threemajor brands: Gree, TOSOT and KINGHOME. Its business scope has been expanded to cover the fields of airconditioning, home appliances, high-end equipment and communication equipment, including residential airconditioners, commercial air conditioners, freezers and refrigeration equipment, air conditioners for nuclear powerprojects, air conditioners for rail transit projects, and photovoltaic air conditioners in the air-conditioning field;intelligent equipment, CNC machine tools, precision moulds, and precision casting equipment in the field ofhigh-end equipment; kitchen appliances, healthy appliances, environmental appliances, washing machines andrefrigerators in the field of home appliances; as well as Internet of Things devices, mobile phones, chips, and bigdata in the field of communication equipment. Gree products are sold in more than 160 countries and regions,providing more than 400 million users with satisfactory products and services, for the purpose of creating a betterlife.In 2019, Gree was listed in the Fortune 500 and ranked the 414th. Among the 129 Chinese enterprises on the list,the return on equity (ROE) of Gree ranks the first; according to the data released by HVAC Information, Gree tookthe lead in the central air conditioner market relying on a market share of 14.7% and has maintained the positionfor eight consecutive years in the Chinese market; according to the market data of AVC, Gree's share in the offlinemarket of Chinese residential air conditioners ranked the first in 2019, with the retail sales accounting for 36.83%;among the top 20 residential air conditioner models in offline retail sales, 12 are Gree products, accounting for60%; according to the data of Nihon Keizai Shimbun, a world renowned economic media, in 2019, Gree rankedNo.1 in the field of residential air conditioners with the global market share of 20.6%.Gree takes "building a globally advanced industrial group and making Gree a century-year world brand" as itscorporate vision, and "carrying forward the industrial spirit, pursuing perfect quality, providing professionalservices and creating comfortable environment" as its mission. By adhering to the management philosophy that"innovation never stops", Gree focuses on independent innovation and development, in order to grasp the pulse ofthe times, build a world brand and create a development model with Chinese characteristics for Chinesemanufacturing enterprises.
2. Overview of industry development
(1) Field of household appliances
The Industry Analysis Report of Residential Air Conditioners in 2019 published by China Business IndustryResearch Institute shows that, in 2019, the total output of industry increased by 1.21% year on year, the total sales
of the industry decreased by 0.74% year on year, the total export of the industry decreased by 0.82% year on yearand the total internal sales of the industry decreased by 0.69% year on year. In 2019, the total sales, export anddomestic sales of the industry decreased year on year and the whole air conditioner industry felt the pressure ofthe market. On the other hand, according to the statistics of National Information Center for Household ApplianceIndustry, the retail market share of top 3 brands in the offline air conditioner market increased from 73.6% in 2018to 76.39%, and that of top 5 brands increased from 83.8% in 2018 to 85.74%. The influence of traditionalhousehold appliance brands continued to rise, and the market share of domestic brands was further increased.In the long run, as the upgrading process of resident consumption becomes accelerated, consumers put forwardhigher requirements for brand recognition and product quality and higher standards for energy saving, comfortand intelligent degree of air conditioners and show strong demand for high-quality life; as the policy of the newnational standards is implemented, the proportion of energy-saving products gradually increases. According to theforecast of China National Institute of Standardization, after the new standards are implemented, the energyefficiency standard of air conditioners will be increased by 14% in 2020 and by 30% in 2022 and the existing airconditioners with low energy efficiency will be replaced by those air conditioners with high energy efficiency.The household appliance market has entered the period in which the online and offline markets are promoted atthe same time and the scale of the online market increases continuously. According to the statistics of NationalInformation Center for Household Appliance Industry, in 2019, the online retail sales of the Chinese householdappliance industry was approximately RMB 310.8 billion, a year-on-year growth of 4.2%, and the market sharereached 38.7%; the offline retail sales was about RMB 492.4 billion, a year-on-year decrease of 5.8%, and themarket share reached 61.3%. The importance of the online market in Chinese consumer market is self-evident.However, the offline market still has a comparative advantage. In the process in which old high-end products arereplaced by new high-end products, offline stores are more flexible. The deep combination of the online marketand offline market has always been the development direction of household appliance enterprises.
(2) High-end equipment field
The State Council issued "Made in China 2025" and "Development Plan for a New Generation of ArtificialIntelligence" in May 2015 and July 2017, respectively; the General Administration of Quality Supervision,Inspection and Quarantine of the People's Republic of China, Standardization Administration of the People'sRepublic of China and Ministry of Industry and Information Technology of the People's Republic of China jointlyissued the "Standardization and Quality Improvement Plan of the Equipment Manufacturing Industry" in 2016;the Ministry of Industry and Information Technology issued the "High-End Intelligent Remanufacturing ActionPlan (2018-2020)" in October 2017. Under the support of policies, intelligent manufacturing equipment developsquickly, the demand of the industry increases rapidly, the capacity increases rapidly, and industrial upgrading andtechnological iteration become accelerated. Intelligent manufacturing has become the core of development forChina's manufacturing industry. According to the data of China Business Industry Research Institute, the globalmarket scale of intelligent manufacturing reached USD 868.7 billion in 2016 and China's intelligentmanufacturing accounts for about one fifth. In 2018, the scale exceeded USD 1 trillion. Based on the currentdevelopment and trend of global intelligent manufacturing, it is estimated that the global intelligent manufacturing
industry will maintain stable growth in the coming years.Intelligent manufacturing has become a key factor in reshaping the industrial competitiveness in the world andprovides opportunities for development and transformation of countries. According to the IntelligentManufacturing Development Plan (2016-2020) issued by the Ministry of Industry and Information Technology,the development foundation and supporting capacity of intelligent manufacturing will be significantly enhancedand digital manufacturing will be basically realized in the key areas of traditional manufacturing industry in 2020;the support system of intelligent manufacturing will be basically established, and intelligent transformation will beinitially realized for the key industries in 2025.II. Significant changes in major assets
1. Significant changes in major assets
| Major assets | Significant changes |
| Disbursement of loans and advances | Year-on-year growth of 58.82%. See Note VII (11) of the financial report for the causes of the change. |
| Long-term equity investment | Year-on-year growth of 213.86%. This is mainly caused by the change in the fair value of the equity of Wingtech Technology Co., Ltd. indirectly held by the Company through "Zhuhai Ronglin Equity Investment Partnership (Limited Partnership)". |
| Other equity instrument investments | Year-on-year growth of 305.67%. This is mainly caused by the change in the fair value of the equity investment of Wingtech Technology Co., Ltd. |
| Fixed assets | Year-on-year growth of 4.00%. No significant change is made. |
| Intangible assets | Year-on-year growth of 1.94%. No significant change is made. |
| Construction in Progress | Year-on-year growth of 46.10%. This is mainly caused by the increase of investment in the infrastructure project of the current phase. |
2. Major overseas assets
□ Applicable √ Not applicable
III. Core competence analysisThe mission drives creation of value and innovation makes the future of the world. In the background of the newera, Gree has developed from the period in which it catches up with leading enterprises in innovation to a newperiod in which it takes the lead in innovation and faces new opportunities and challenges. Gree adheres to theprinciple of concentration, advocates the management policy of "be fair, be open, be dedicated", promotes thecode of conduct of "be truthful, work for real; be principled, work for good, be committed, work for success",follows the "eight strict policies" for quality control, takes "mastering core technologies and forging perfect
quality" as the two wheels for driving, transfers and improves the value through unique marketing model, sticks toindependent people cultivation, independent innovation and independent production, and aims to achieve "Madein China, Loved by the World" by carrying forward the industrial spirit, pursuing perfect quality, providingprofessional services and creating comfortable environment.
1. World famous brand, adding luster to "Made in China"
Gree is a diversified technological global industrial group integrating R&D, production, sales and service. Greewon the honors such as "World Brand", "Most Competitive Brand in the Market", "National Quality Award","Export Inspection Exemption Enterprise" and "China Brand Innovation Award". In 2019, Gree was listed inFortune 500, ranking the 414th. Meanwhile, Gree was listed in the "China's Most Admired Companies in 2019" inthe Fortune, ranking the third in China and continuously ranking the first in the household appliance industry. Inthe "2019 China Brand Value Evaluation Information Session and China Brand Building Summit Forum" held inShanghai, Gree ranked the second in the light industry and the first in the household appliance industry. In 2019,in the People's Daily "China Brand Development Index" initiated and compiled by People's Daily, Gree ranked theseventh in the list with a total index of 917.73, ranking the first in the household appliance industry. This showsthe hard strength and brand influence of Gree in its development.According to the customer satisfaction survey on 10 categories of household appliances in 2019 jointly issued bythe Customer Satisfaction Evaluation Center of China National Institute of Standardization, Tsinghua UniversityNational Entrepreneurship Research Center and China Standard Science and Technology Group Co., Ltd., Greeranked the first in the industry in terms of comprehensive customer satisfaction score and various indicators in theair conditioner category, ranking the first in the industry for eight consecutive years.Gree has always been adhering to the "craftsman spirit", "innovation spirit" and "challenge spirit", insisting onestablishing a brand with excellent quality and world-leading technology, demonstrating its firm belief andambition to the society and declaring its responsibility of creating social value, environmental value and economicvalue for the country, society and consumers.
2. Excellent R&D system, continuously leading technological innovation and product upgrading of theindustryGree adheres to the philosophy that "science and technology change life; science and technology create life" andinsists on "independent research and development of core technologies". It firmly believes that only the realmastery of core technologies can enable us to grasp the fate of the enterprise and realize independent developmentof the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as themain player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leadingposition in the field of refrigeration.Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 research
institutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the NationalKey Laboratory on Air Conditioning Equipment and Energy-saving System Operation, National EngineeringResearch Center of Green Refrigeration Equipment , State Recognized Enterprise Technology Center and theState-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base forStandardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end EquipmentManufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation andhas been successively approved to establish post-doctoral research centers and doctoral workstations inGuangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises ofHigh-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", "GuangdongEnergy Internet Innovation Center" and "Guangdong Small Household Appliance Intelligent ManufacturingRegional Innovation Center".Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree wonseven awards, including one national second prize for technological invention and three provincial and ministerialfirst prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugalair-conditioning equipment" project won the second prize of national technological invention in 2019; Gree's "keytechnology and application of direct current in optical storage air conditioners" project won the first prize ofGuangdong provincial technological invention, China Patent Gold Award and other awards.
3. Industry leading PQAM perfect quality assurance mode, shaping China's quality image with highstandards"Quality is crucial to two lives: one is the life of consumers and the other is the life of enterprises". Gree alwaysconsiders product quality as the lifeline and insists on "not taking consumers as test targets". Gree adheres to thequality policy of "pursuing the perfect quality, creating an international brand, and forging a century enterprise",sticks to the quality culture of "strict, true and new" oriented to customer demand and social responsibility, sets noupper limit of investment in the basic capacity building of quality, implements all-round quality training for allstaff, and extensively carries out QCC quality improvement activities and Six Sigma quality improvement projects.It gradually forms a comprehensive quality management mode with independent innovation as the core.Gree has strong consciousness of reform in quality management. It promoted quality management reform,focusing on promoting the systematic development of Gree's quality management to deepen the construction ofhigh quality enterprise. On the basis of learning and absorbing the advantages of ISO9000, Six Sigma,performance excellence model, and other management systems, Gree put forward the unique PQAM. Startingfrom the quality management process, it used the five-step method of quality prevention to strictly control thepre-event process, and adopted the quality technology innovation cycle D-CTFP to perform post-event tracking.Gree ensured the applicability and reliability of products through active prevention and control and avoidedquality problems during use of products.Under the guidance of the perfect quality philosophy, Gree runs quality management through the value chain linkssuch as product R&D and design, parts procurement, production and manufacturing, and marketing service and
continuously improves the technical basis, standard system, rules and regulations, information systems andorganizational guarantee of quality management, forming a comprehensive quality control system. Gree regards"pursuing perfect quality" as the quality policy and "zero defect" and "best service not requiring after-salesservice" as the quality objectives, considers the "five-step method of quality prevention" and "quality technologyinnovation cycle D-CTFP method" as the methods and summarizes and refines the perfect quality managementmode of Gree.Gree's quality standards follow two principles: one is that the quality standards must be stricter than internationalstandard and national standards and the other is that the quality standards must be consumer-oriented. Greeparticipated in the drafting and development of the Quality Management—Innovation Cycle Guide Based onCustomer Demand as a national standard, which sets Gree's quality management experience as a model in thewhole industry. Gree attaches great importance to quality management. It promotes and escalates qualityconstruction of the enterprise to the national standards, shapes an industry development benchmark relying on theingenuity of manufacturing, further improves the quality management system of China, and creates a morecompetitive image of Chinese manufacturing quality.
4. Efficient and in-depth sales network and deep integration of online and offline channels lay a solidfoundation for the growth of GreeGree insists on the sales channel construction and sales model of independent management, mutual benefit andwin-win and creates a solid online and offline business layout. The two channels complement each other and aredeeply integrated to create a full channel sales platform. Gree has constructed competitive product experiencehalls, Gree living centers and Gree exclusive shops all over the country to provide consumers with integratedsmart home solutions and bring consumers comfortable enjoyment and the experience of home.As the business scale of the Company expands, the marketing mode of its "self-built channel" enables the"integrity" concept of the enterprise to run through all phases from production to sales. Gree maintains goodcooperation with distributors and provides great support for terminal channel construction and advertising. Greehas established a joint-stock regional sales company, which greatly enhances the motive power of distributors.Through an established sound market management system, Gree guides sales companies to lead various channelsto carry out large diversified and rich promotional activities by using policies and constantly increases the marketshare and improves corporate reputation. As a result, Gree stands out in the fierce channel competition andrealizes independent management and control of sales channels.At present, Gree has accelerated expansion of its online sales channels and realized rapid expansion throughdistribution stores. In addition, it realizes big data analysis, allocation and circulation of stock products with thehelp of the cloud platform, further promotes optimization of the inventory structure and reduces the risk ofunsalable sales by reversing production plans through low inventory warning. Meanwhile, the Company carriesout further cooperation with major e-commerce platforms and actively holds large activities during festivals,achieving extraordinary results. Big data analysis is carried out offline through a digital management system torealize dynamic statistics and display of sales data. Market trends and problems can be found in time through
observation of dynamic data and strategic deployment can be adjusted in time.
5. Precise industrial layout and perfect supply chain system lay a solid foundation for business developmentGree now has 14 production bases in the world, located in Zhuhai, Chongqing, Hefei, Zhengzhou, Wuhan,Shijiazhuang, Wuhu, Changsha, Hangzhou, Luoyang, Nanjing, Chengdu, Brazil and Pakistan, and the productioncapacity ranks the first in the world.In 2019, Gree further improved its structure layout, production capacity layout and variety layout, promoted theupgrading of sales logistics services and coordinated to reduce the overall logistics operating cost based on thenew trend and new demand of e-commerce development. All bases spare no effort to produce low-end andmiddle-range air conditioners, and high-end and medium-range air conditioners are produced in a centralizedmanner in regions such as Wuhan, Hefei and Zhengzhou, radiating the whole country and giving full play to theadvantages of economic regions. E-commerce centers on nearby distribution with the platform transferring goodsfrom warehouses and the production bases of e-commerce products are deployed in Wuhan, Hefei and Zhengzhou.Meanwhile, Gree accelerates construction of the bases in Changsha, Chengdu and Luoyang and accelerates theproduct layout of refrigerators and washing machines. Gree has built upstream plants for raw materials ofhousehold appliances, for example, compressors, motors, capacitors and enameled wires, in various bases, whichgreatly enhances the control capability of the Company for upstream and downstream supply chain, guarantees theefficient operation of production and meets the needs of consumers in a timely manner. Moreover, the Companyhas built five renewable resource bases in Changsha, Zhengzhou, Shijiazhuang, Wuhu and Tianjin, covering thewhole industrial chain from upstream production to downstream recycling, and achieving green, cyclic andsustainable development.
6. Refined cost control capability to provide guarantee for the steady development of the GroupGree has been committed itself to establishing and improving the cost control system. It adheres to the philosophyof refined cost control and saves unnecessary costs. The Company aims to increase the value by improving theproduction efficiency, gradually optimizes the manufacturing system, implements full-process cost control androutinizes the work of cost analysis relying on "quota management".In 2019, Gree gradually optimized the lean manufacturing system (GMS), established an integrated humandemand assessment and allocation management mechanism and improved the production efficiency and humanresource utilization. By innovating in production automation, the Company improves the level of automation,promotes the transformation and upgrading of intelligent manufacturing and reduces the demand for productionpersonnel; through digital innovation in production, the Company improves the level of productioninformatization and lays a solid information foundation for intelligent manufacturing. In addition, to strengthenthe research of new technologies and eliminate high-cost technologies, Gree holds a lean design competition everyyear to commend excellent lean products.Through continuous application of lean, automation and digital technology, Gree's per capita efficiency increasedby 7.1% in 2019. In December 2019, the "2019 Chinese Enterprise Reform and Development Summit and
Achievement Press Conference" organized by China Enterprise Reform and Development Society released the"3rd Excellent Achievements of Chinese Enterprise Reform and Development". Gree's "Lean ManagementInnovation Practice for Intelligent Manufacturing of Large Household Appliance Manufacturing Enterprises"program won the first prize.
7. Adhere to independent training of talents and continuously upgrade the talent structureGree always adheres to the principle of "focusing on the strategic layout of the Company and adhering toindependent training of talents” and gradually forms an independent talent training mode with independent talentintroduction channel, independent training and development mechanism and all-round incentive and guaranteesystem as the core based on the development experience and cultural deposit of the Company, striving to makeemployees and the Company make progress and develop together.Gree's talent team has been growing and its talent structure has been upgraded over the years. By the end of 2019,the Company had about 90,000 employees, including more than 14,000 technological R&D personnel and morethan 30,000 skilled workers. During the process of talent introduction, Gree gives consideration to ideology andmorality, cultural identification, professional competence and development potential. The Company cooperateswith universities to carry out a variety of science and technology competition programs, arouse the enthusiasm ofstudents' invention and creation and explore outstanding talents with innovative ability; the Company actively setsup an exchange platform between universities and the enterprise, invites teachers and students of universitiesacross the country to go into Gree and go into "Intelligent manufacturing in China", feel the unique industrialculture of Gree and the development pulse of China's advanced manufacturing industry and set up a goal ofserving the country by devoting to the industry.In order to continuously improve the level of technological innovation of the Company, enhance the corecompetence of the Company and encourage the technological talents with outstanding technology and outstandingabilities to make greater contributions to independent innovation of the Company, Gree insists on the principles of" be fair, be open, be dedicated" and selects technological experts every year through internal recommendation ofeach department, section review, on-site defense and publicity of selection results based on the technological level,post value and performance level so as to further expand the team of technological experts and optimize thestructure of experts at all levels. Meanwhile, the Company applies the evaluation results to various personneldecisions such as salary, further optimizes the salary adjustment mechanism and stimulates staff capacityimprovement in an all-around manner. Gree now has two leading talents in science and technology innovationunder the National 10000 Talents Program, one young and middle-aged expert with outstanding contributions tothe nation, three experts enjoying the special allowance of the State Council, one talent winning the OutstandingContribution Award of South Guangdong, one Guangdong special support program outstanding talent, 62high-level talents of Zhuhai, more than 300 young outstanding talents and more than 470 science and technologyexperts.Gree has designed three career development paths for technical management employees, namely "professional,management and comprehensive development", and designed a skill rating mechanism for front-line employees.
Based on staff competence, performance and determination, Gree creates a fair and just development environment,which makes Gree have a large number of talents in all fields.
Section IV Discussion and Analysis of Business OperationI. Overview
In 2019, Gree steadfastly followed the development path of "independent innovation, winning by technology,driving by two efficiency and global leading", improved the four business fields: air conditioning, homeappliances, high-end equipment and communication equipment, which are the main pillars, centered on users,insisted on technological innovation, optimized the quality control system, strengthened the online and overseaslayout, promoted enterprise transformation and upgrading and created a more competitive and diversifiedtechnological global industrial group. In 2019, the Company achieved the total operating revenue of RMB
200.508 billion, an increase of 0.24% year on year, and a net profit attributable to the parent company of RMB
24.697 billion, a decrease of 5.75% year on year.
1. Center on users, continuously improve product competitiveness and meet new needs of users
(1) Residential air conditioner sector
Gree insists on centering on user needs for development of new products, creates perfect quality management andfully considers new needs of users. Based on the product R&D idea of "Study one generation, reserve onegeneration and develop one generation”, Gree made significant breakthroughs in product intelligence, comfort andenergy savings. In order to meet the needs of different consumers, Gree divides the market based on threedimensions: region, climate and economy, and strives to fully understand the market under the condition of marketsegmentation. In response to the new needs of consumers, Gree focuses on the innovation and upgrading oftechnologies and products from the aspects such as air supply comfort, heating comfort, healthy air and intelligentinteraction. It has developed new products such as fresh air conditioners, AI voice air conditioners, constant-warmdefrosting air conditioners and high-end art air conditioners to resolve pain points of users and improve userexperience.For the problems such as indoor and outdoor air pollution and harm to people's health due to increase of carbondioxide concentration caused by long-term stay of people in closed rooms, the Company developed the “Freair”series wall-mounted and floor-standing fresh air conditioners. The products provide the function of supplyingfresh air in two ways. The products can introduce outdoor fresh air after multi-stage of filtration and dischargeindoor dirty air at the same time, which enables the products to effectively and permanently keep the indoor airfresh. Meanwhile, the built-in air quality sensor of the air conditioner can monitor the indoor air quality and theintelligent opening and closing of the fresh air system brings convenient and healthy enjoyment to users.For the problems that many steps are required to remotely control an air conditioner, user operation isinconvenient and functions of the air conditioner are monotonous, Gree developed a series of AI voice airconditioners such as Gree Kimbe II floor-standing unit, I-Poem II floor-standing unit, LEAD ROYAL
floor-standing unit and Kimbe wall-mounted unit. Equipped with the AI voice technology, the air conditionersprovide interactive functions such as music play, news broadcast, encyclopedia query and social chat and can evenlink all home appliances in the house, making air conditioners become intelligent home terminals.For the problem that frosting easily occurs on traditional air conditioners in winter and heat is absorbed fromindoors during defrosting, resulting in drop of indoor temperature and poor experience, Gree developed theconstant-warm defrosting air conditioners i-Yao floor-standing unit and Runyao wall-mounted unit. The heatingefficiency of the products is 32.4% higher than that of traditional air conditioners. During defrosting, the airconditioners do not stop working or absorb heat from indoors. After defrosting, the air conditioners blow out hotair immediately, effectively improving the heating comfort of air conditioners.The innovative design of air outlet and the integration of romantic art elements create Rose III floor-standing airconditioner, the current peak of Gree. The air conditioner inherits the romantic spirit and adopts the distributed airsupply technology uniquely developed by Gree. Cold air is not blowing people, the temperature is more uniform,and the heat and cold air is more comfortable. The air conditioner can keep warm during defrosting and keepheating. It provides strong heating under ultra-low temperature and improves the heating capacity and the degreeof comfort. In addition, the air conditioner is also equipped with the AI voice control system, which realizeshuman-computer interaction and adds fun and convenience to our life.Gree silent window-type air conditioner is a brand-new window-type air conditioner featuring novel appearance,low noise and superior performance. In appearance, the panel adopts an inclined upward air outlet so that peopledo not feel blowing wind, which improves user comfort. The new design of the honeycomb air inlet panelhighlights simplicity and fashion and the control area adopts touch buttons that are reasonably arranged and lighttransmission display to highlight user-friendly operation. It is the first time that two motors and the brand-new airduct system structure with cross-flow fan blades and axial flow fan blades are adopted in window-type airconditioners of the Company. The refrigeration noise of the product is 42 dB, which is the industry leading level.The environmental-friendly R32 refrigerant is adopted to realize high energy efficiency and meet the requirementsof North America E-STAR. The silent window-type air conditioner enriches the window-type air conditionerproduct line of the Company and improves the market competitiveness of the corporate brand.In 2019, Gree won the bid for the project of Shanghai Jiaotong University. Gree adopted split air conditioners andVRF air conditioners to provide 12,000 dormitory rooms, classrooms, dinning halls and office rooms in multiplecampuses, totaling about 3 million square meters, with high-quality integrated air-conditioning guarantee services.The project won the high praise of "providing first-class products for first-class universities and allowingfirst-class teachers and students to enjoy first-class services". In addition, Gree signed strategic frameworkagreements with large enterprises such as State Grid Corporation of China, Evergrande Real Estate Group, R&FProperties and Huawei, laying a foundation for the continuous growth of air conditioner sales in the future.
(2) HVAC equipment sector
In 2019, Gree adhered to the orientation that products meet the needs of consumers, insisted on technologicalinnovation, continuously strengthened the planning and layout of technological research and development,
constantly made breakthroughs in key technologies, formed a strong technical reserve and promoted productupgrading.Gree's high-efficiency oil-free dynamic air bearing compressor breaks through the high-end air bearing technology,develops the foil gas bearing with high loading capacity and long service life, which is suitable for refrigerants,and breaks the monopoly of foreign technologies; Gree researches the ultra-high speed and high stability airbearing rotor dynamics technology, micro flow coefficient and efficient pneumatic design technology and greatlyimproves the performance and reliability of the compressor. The full load of the unit is COP6.35 W/W and theIPLV reaches 10.15 W/W. On 7 December, 2019, the unit was identified by China Machinery Industry Federationto reach the "world-leading" level.Gree's luxury air conditioners for passenger trains break through the high-efficiency and high-reliabilitytechnology of compressor under all working conditions, low-noise and high-efficiency wind blade technology,high-strength frame anti-seismic structure design technology, 1 mm stainless steel sheet welding technology andEMC anti-interference design and meet the requirements for high reliability and safety. In 2019, Gree completed aseries of work such as TS22163 rail transit quality management system certification, EN15085 welding systemcertification and FAI first product quality appraisal. The Company has obtained the qualification to supply trainair conditioners and achieved the technological breakthrough of the Company's commercial air conditioners fromstation air conditioners to vehicle-mounted air conditioners.Through innovation and breakthrough of the magnetic bearing motor system, Gree magnetic bearing invertercentrifugal chillers have completed the development and successful application of the 1300RT magnetic bearingcentrifugal chiller with the highest cooling capacity in the world and won the bid for Beijing Xinghuo High-speedRailway Station project. This marks that Gree's magnetic bearing centrifugal technology advances to the"depopulated zone" again and continues to lead in the field of central air-conditioning technology. By the end of2019, Gree completed the development of the 80-1300RT full series magnetic bearing systems, including 6 seriesand 28 models, becoming the only manufacturer in the world with the single compressor of high cooling capacityand full series of magnetic bearing compressors and units. The project won the Gold Award of InternationalExhibition of Inventions of Geneva, Morocco Special Gold Award and the first prize of the Fourth NationalQuality Innovation Competition.In 2019, closely catering to the market demand, Gree established the Institute of Building Environment andEnergy, launched the professional system solution of central air conditioners, continuously made breakthroughs inthe key technologies of system energy conservation and created the benchmarking project of efficient refrigerationroom. Gree provided ultra-high efficiency and large temperature difference centrifugal chillers for the ultra-highefficiency air-conditioning system of Wuyi University, realizing the breakthrough of the annual average energyefficiency of the refrigeration room higher than 6.0 and the average energy efficiency in September higher than
7.0, establishing a new benchmark of the domestic high-efficiency air-conditioning system and creating a newrecord of the high-efficiency refrigeration room.Gree's high-efficiency permanent magnetic synchronous inverter screw chiller won the bid for the Holiday InnOrchard Hotel Project in Singapore. The overall energy efficiency of the refrigeration room reaches 5.41, reaching
the highest level of Green Mark in Singapore: platinum certification. The project is recognized as a"high-performance energy-saving project" by the National Construction Energy Conservation Quality Supervisionand Inspection Center. Chengdu National New Drug Safety Evaluation Center is currently the largest professionalinstitution for preclinical research and technical services of new drugs in China, which has high requirements forthe stability and safety of indoor environmental control. Gree provided the project with an efficient systemsolution centering on high-efficiency permanent magnetic synchronous inverter centrifuge, which is recognized inthe field of high-end biopharmaceuticals and fills in the gap of domestic equipment in this field.Gree building management system (GBMS) is a building management engine independently developed andproduced by Gree. It implements the functions such as integration, monitoring, alarm, operation and maintenanceof building equipment and creates a full building ecological intelligent management system, includingfive-constant health system, eight-dimension safety system, multi-dimensional energy saving system andintelligent and efficient system. The GBMS platform supports distributed and centralized scenario application andcan be widely used in different industries such as smart park, smart hotel, smart campus, smart community, smarthospital and smart fire fighting. At present, the GBMS accumulatively has 26 patents for invention and 2 softwarecopyrights.To solve user problems of low temperature adaptability, limited hot water consumption and slow heating thatoccur on air source water heaters, the Company completed the development of Mu Zun air source water heaterseries in 2019. Mu Zun air source water heater adopts the independently-developed and world-leading invertertwo-stage compression EVI heat pump technology and realizes abundant heat water during use, without beinglimited by the volume of water tank. In addition, Mu Zun air source water heater saves energy by up to 75%compared with electric water heaters and won the AWE2019 Award - Environmental Protection Award.Gree U series close control air conditioners was listed in the Product Catalog of Advanced ApplicableTechnologies for Green Data Center (Version 2019) prepared by the Ministry of Industry and InformationTechnology and the product energy-saving index is recognized by experts in the HVAC construction industry,safeguarding data centers.
(3) Home appliances sector
Relying on the deep understanding of fashion, international advanced technologies, attitude of constantly strivingfor perfection and excellent detail control capability, Gree R&D team created high-quality home appliances forglobal users and achieved perfect integration of technologies and fashion. In 2019, Gree micro-pressure IHelectric rice cooker GDCF-4009C won the "Copper Award" of the 71st Nuremberg International InventionExhibition in Germany; micro-pressure cooker and TOSOT multi-cooker were included in the Guide to Upgradedand Innovative Consumer Products in the Light Industry.In 2019, in the "15th China Household Appliances Innovation Result Selection" activity organized by ChinaHousehold Electric Appliances Research Institute, Gree's water purifier with the filter cartridge serviceable inthree years won the award of annual outstanding innovation results. In addition, relying on its advantages of smallsize and long service life and 360-degree convenient operation for ring blind assembly and core replacement,
Gree's two-core large-flow water purifier won the Thales Outstanding Product Award of GWPS Global WaterPurifier Market Summit in 2019. Relying on the reverse-osmosis engineering water purification equipment, Greesuccessfully completed the demonstration projects of Diaoyutai State Guesthouse and Foreign Language SchoolAffiliated to Beijing Foreign Studies University. In "2019 Golden Tripod Award Ceremony for Two NationalPurification Industries and Industry Leader Summit" organized by the Golden Tripod Award OrganizingCommittee for Two National Purification Industries, Gree won the 2019 technological innovation brand in thenational water purification industry.Gree's foldable baseboard electric heater adopts the innovative design of multi-angle folding and is applicable tomore scenarios in family use. It is convenient and easy to store the product. The baseboard is designed with aninnovative air-guide structure, which controls efficient heat dissipation at 45° of hot air and realizes carpet-typeheat transfer. Relying on the unremitting pursuit for innovation and quality, Gree's electric heater won the"Industry Craftsmanship Brand of the Year" awarded by China Association for Quality Promotion in 2019.The brand-new series of dishwashers developed by Gree includes Jinghuan series of embedded dishwashers andJingyun series of small table dishwashers. Jinghuan series of embedded dishwashers adopt the C-Max intelligentwashing system and dual-swirl heat drying technology to provide users with better washing and drying effect andobtain 6A+ certification. Meanwhile, in order to meet the needs of different users, Gree developed Jingyun seriesof small table dishwashers, which adopt 72°C high temperature for washing and the hot air drying system. Thesterilization rate reaches up to 99.99%.In 2019, the Company completed the design of new categories of home appliances (such as piglet rice cooker,portable juicer and electric teapot). Of these products, the piglet rice cooker adopts bionic design and its shape issmall and lovely; the portable juicer is colorful and the hidden hand strap design is unique and ingenious. The twoproducts won 2020 Red Dot Product Award at the same time. Gree electric teapot is the first automatic waterfilling intelligent electric teapot independently developed by the Company. It is equipped with high-altitudeadaptive recognition and real-time variable frequency and adjustable power heating technology. While solving theproblem of continuous boiling under high altitude, the product guarantees the accuracy of temperature control.The technology for accuracy of temperature control reaches the leading level in the industry.
(4) Refrigerator and washing machine sector
In 2019, Gree Kinghome continued to deepen and mine the application of three meat preservation technologies,namely -3°C tender freezing, -5°C instant freezing and -33°C deep freezing. The high-end line-up of magicrefrigerators was upgraded: for the users' feedback on the demand for high capacity and long-term preservation ofmeat, Kinghome developed a T-type variable temperature side-by-side door refrigerator supporting -33°C deepfreezing; for the need for different meat storage time in different usage scenarios, Kinghome developed alarge-capacity French multi-door refrigerator supporting tender freezing and instant freezing magic preservation;for the decoration need of customers' integrated cupboards, Kinghome developed different series of thin products;Gree Kinghome insists on leading green development relying on innovation, adheres to the ecological productionphilosophy of environment-friendly and sustainable development of resources and implements energy saving,emission reduction and green production. In 2019, Kinghome won the title of "First Batch Certified Enterprises of
CQC Certified Green Products". Meanwhile, Kinghome adheres to the modern enterprise craftsmanship, practicesthe perfect quality mode of Gree, and strengthens the foundation of enterprise manufacturing relying on leanquality and intelligent manufacturing. According to the statistics of ChinaIOL.com, under the situation that therefrigerator sales in the whole industry increased by 3.1% year on year in 2019, the sales of Kinghomerefrigerators achieved a year-on-year growth of 28.1%, with the growth rate ranking top 4 in the industry and thetotal sales ranking No.9 in the industry.The upgraded version of Jingrou washing machine is equipped with a silver ion sterilization device. The silver ioncrystal is released slowly when it meets water, penetrates into the clothing fiber and kills bacteria on the clothingefficiently. According to the test conducted by a third-party agency, the silver ion sterilization rate of Jingrouupgraded version reaches as high as 99%. In addition, Jingrou washing machine adopts the new anti-mildew andanti-bacterial door sealing design. According to the test conducted by the Technical Institute of Physics andChemistry of CAS, the anti-bacterial rate reaches 99%. Jingrou washing machines also uses the dynamic spatialclothing distribution technology to increase the dehydration success rate of one clothes by 60%, saving time andelectric energy for consumers.
2. Adhere to independent innovation, constantly make breakthrough in world-leading technologies and leadindustry standards to the worldIn 2019, Gree has made a series of new technological achievements thanks to continuous breakthroughs andtackling of difficulties by its R&D personnel. According to evaluation of the authority, Gree has added four"world-leading" technologies, including "High Performance Straight Line Servo Motor and Driver", "Researchand Development of Rare Earth Free Magnetic Resistance Master Drive Motor System for New Energy Vehicles","High-efficiency Dynamic Pressure Air Bearing Centrifugal Compressor Key Technologies and Applications",and "Research and Application of High-efficiency Magnetic Resistance Inverter Scroll Compressor", which addstrength to the core technologies. By far, Gree has obtained 28 "world-leading" technologies in total.Gree insists on innovation driving, regards consumer demands as the standards and sticks to the principle of R&Dexpenditure on demand without upper limit. By the end of 2019, Gree accumulatively applied for 63,956 patents,including 31,500 patents for inventions; in 2019, Gree applied for 15,259 patents in total, including 8,860 patentsfor inventions.In 2019, the number of Gree's authorized patents reached 1,739, ranking No.6 in the country. Gree has become theonly household appliances enterprise that entered the top 10 in terms of the number of authorized patents in Chinafor four consecutive years. In 2019, Gree won 16 Chinese patent awards, with the total number of won awardedranking No.1 in China, which promotes deep integration of intellectual property rights with industrialdevelopment. In addition, Gree won five gold awards at the International Invention Exhibition in Geneva,Switzerland and Nuremberg, Germany in 2019, and authorized three motor patent technologies to Grundfos, aDanish company, which fully demonstrated the invention and creation capabilities and the world-leading strengthof Gree to the world.
In 2019, Gree won 33 awards of four International Design Awards (16 IF Product Design Awards in Germany, 12Red Dot Awards in Germany, 3 IDEA Awards in the United States and 2 excellent design awards in Japan), two21st China Design Excellence Awards, one silver prize of 6th Guangdong Design Patent Award, 12 design awardsin the 5th Mayor's Cup, five export product design awards in 2019 China Import and Export Fair, one GoodDesign Innovation Award in 2019 and one excellent award of 2019 Intelligent Manufacturing Award.While increasing the introduction of R&D equipment, Gree insists on the improvement of testing technologies toguarantee the product quality. It performed comprehensive combing and upgrading in the aspects such asintelligent testing, automation, professional personnel and post standardization to guarantee the product testingquality and greatly improve the testing efficiency. Meanwhile, evaluation of the authority shows that Greeobtained seven important certificates at home and abroad in 2019 product certification, including the first batch of"Ergonomics - Thermal Comfort" certificate in the industry, China's first CVC certificate for DC air conditionerproducts, the first certificate with three characteristics: heat recovery, carbon dioxide removal and formaldehyderemoval of air conditioners supply fresh air in two ways, the first batch of ROHS certificate, China's first batch ofCCC certificate for gas appliances, the first software evaluation characteristic certificate for household applianceindustry, and the first CSA energy efficiency certificate for ultra-low temperature heat pump unit in the world. Inaddition, Gree led and participated in standards development of 15 Chinese and foreign certification technicalspecifications, leading the industry standards to the world. By the end of 2019, the Company joined 18standardization organizations, including the Heat Pump Standard Workgroup of Sub-committee for Testing andAssessment of Air-conditioning Heat Pumps of the ISO Committee of Refrigeration and Air Conditioning (ISOTC86/SC6/WG12), the Chiller Engineer Committee of Association of Air-Conditioning, Heating, andRefrigeration Institute (AHRI), Standard Technical Group of Inverters for Distributed Energy of UnderwriterLaboratories Inc (UL/STP 1741), European Partnership for Energy and the Environment (EPEE), and AustralianInstitute of Refrigeration, Air Conditioning and Heating (AIRAH). Gree takes the initiative to participate indevelopment and revision of international standards and learn the industry dynamics and changes of internationalstandards policies in time, further improving the influence of the Company in the world.
3. Optimize the quality control system, insist on quality innovation and implement the perfect qualityassurance mode in an in-depth mannerGree believes that "best service not requiring after-sales service", takes perfect quality as the highest pursuit ofquality management, tries to eliminate quality problems before consumers use products, ensures the applicabilityand reliability of products and avoids quality problems during use of products. In order to achieve this goal, in2019, Gree continued to fully and deeply implement the perfect quality assurance mode and continued toemphasize the beforehand and afterward quality control in the whole process of value creation from productresearch and development, procurement and logistics, manufacturing and marketing services. Meanwhile, Greesummarized and extracted the five-step method of quality promotion. Starting from demand survey, Greepromoted optimization through careful planning and strict implementation supplemented by inspection andsupervision, realized early planning and check of the quality control work, prevented and avoided occurrence of
quality problems from the source. Relying on deep implementation of the PQAM perfect quality assurance mode,Gree's products of all categories completely passed spot test at all levels such as national spot test, provincial spottest, municipal spot test, third-party spot test and overseas spot test, explaining the perfect quality of Gree'sproducts to consumers.In 2019, Gree won the first prize in the 4th National Quality Innovation Competition relying on its Research andApplication of High-precision Magnetic Suspension System and won the second prize of the large enterpriseinnovation category in the annual conference of International Quality Innovation Award (QIA) in 2019. Gree wasthe first enterprise that won the award in China's household appliances industry. In November 2019, Greesuccessfully won the "Best Improvement Project Award" in the "63rd Annual Conference of the European QualityOrganization and Bilateral Quality Exchange Meeting between China and the West", becoming the only Asianenterprise that won this award in this conference.The quality level of Gree's products has been continuously improved by strengthening the internal quality control,and the first time yield of process reached 99.54%. The after-sales failure rate of products decreased from 16,429PPM in 2004 to 488 PPM in 2019, with an average decline of 20% for 16 consecutive years. According to the2019 Air Conditioner Customer Satisfaction Index Survey and Analysis Report issued by the CustomerSatisfaction Evaluation Center of China National Institute of Standardization, the customer satisfaction of Gree airconditioners reaches 81 points, ranking the first in the industry for nine consecutive years.
4. Strengthen the online layout, vigorously carry out digital operation and achieve a breakthrough in salesof all categoriesIn 2019, in the face the new consumption mode and communication mode of the e-commerce market, majore-commerce brands perform continuous new exploration. In response to the online and offline integrateddevelopment trend, Gree repackaged and upgraded its original self-built platform, namely Gree Mall, and made allstaff to participate in the Company's sales channel development and recommend high-quality products to theirrelatives and friends based on the new business model of distribution mode and social media communication,realizing the upgrading of Gree's marketing model. In 2019, the number of registered distribution stores of "DongMingzhu's store" exceeded 100,000 and the accumulated sales in the whole year exceeded RMB 1.4 billion, ayear-on-year growth of 660%.In the aspect of third-party platforms, in 2019, many brands in the online consumer market still adopted the lowprice strategy. Gree insists on the development route of "quality e-commerce". In the market environment wherecompetition tends to be fierece, the online air conditioner sales of Gree increased by 16% year on year and thesales of the household appliance category increased by 13%. In third-party operations in 2019, Gree wasrecognized by jd.com, tmall.com and Suning.com platforms and won many platform awards such as "OutstandingAchievement Award of jd.com in 2019", "Best National Product Cooperation Award of jd.com in 2019", "BestPartner of the Year" award of jd.com in 2019, "Best Influencer" in live broadcast of jd.com in 2019 and "BestCooperation Award" of tmall.com in 2019. During the Shopping Festival on 11 November, 2019, the total onlinesales of Gree's products exceeded RMB 4.1 billion, a year-on-year increase of 200%, of which the sales of air
conditioners on third-party platforms exceeded RMB 3.64 billion, a year-on-year increase of 178%. The sales ofGree's air conditioner products on the Internet ranked the first. Gree became the sales champion in terms of airconditioner on Tmall platform for six consecutive years. The sales of all categories of products on Gree'sproprietary platform "Dong Mingzhu's store" (https://fmall.gree.com) reached RMB 363 million, a year-on-yearincrease of 48 times.In October 2019, Gree e-commerce discussed the digital operation project with third-party platforms. By creatinga huge user database, analyzing internal laws of data and mining the internal data logic, Gree grasped consumerdemands, consumption habits and other user information and obtained user portraits. According to the userportraits, Gree realizes customization of all aspects such as product, marketing, pre-sales and after-sales. Throughdigital operation, Gree implements the "user-centered" sales philosophy.In 2020, based on the analysis on the consumer market, Gree e-commerce will carry out digital operation andachieve a new breakthrough in sales from the perspective of users. Meanwhile, with the further upgrading of thenew consumption model, "Gree Dong Mingzhu's store" will promote the new retail model nationwide in 2020 andrealize platform sharing with the existing sales channels, thereby realizing the gradual transformation from theoperation of single store distribution to professional platform operation of household appliances. In the future,"Gree Dong Mingzhu's store" will sell Gree products of all categories. Relying on the advantage of offlinechannels and high-quality brands and aiming to create a new online and offline integrated sales model, Gree willrealize the development strategy of Company's proprietary online channels, bringing new growth of sales.
5. Actively expand the overseas market, insist on the high-end leading strategy and energetically developproprietary brandsGree continues to make more efforts in the overseas market. It centers on its proprietary brands, vigorously carriesout proprietary brand construction from the aspects such as strategy, technology, quality, training, talent andservice and adheres to the open, transparent, cooperative and win-win philosophy through the new customercooperation model to enhance the international popularity of Gree brand.In 2019, Gree made great achievements in internationalization. It won the bids for large projects such as MauritiusStadium, Office Building of the Ministry of Foreign Affairs of Maldives, Gabon National Convention Center, SriLanka Substation and Nepal Pokhara Airport. Meanwhile, Gree assisted local governments in implementingassistance projects such as Cook Island Archives, Niue Parliament Building and Niue Airport. Meanwhile, Greecontinues to insist on the high-end leading strategy in the overseas market and its brand influence continues toexpand. In the whole year, Gree prepared for 14 international professional refrigeration exhibitions such asAir-conditioning, HVAC and Refrigeration Exhibition in Atlanta and Chicago International Household Appliancesand Small Household Appliances Exhibition, demonstrating Gree's industrial strength of independent research anddevelopment. In 2019, Gree held "Gree Makes the Future" 3
rdBrands Strategic Partners Conference in Hefeiproduction base to strengthen the exchange and cooperation with global distributors, improving the brandinfluence of Gree and demonstrating the strength of Made in China on the global stage.
In order to strengthen the promotion of commercial air conditioners and construction of proprietary brandchannels and maintain quick upgrading of products, in 2019, Gree launched a photovoltaic multi VRF product inAustralia, a 24 V ultra-low temperature side discharge inverter household unit in North America, anenvironmental-friendly refrigerant R32 side discharge multi VRF product in the EU, and a series of core productssuch as new-generation GMV6 heat pump and GMV6 heat recovery multi VRF product, inverter air-cooled screwunit and inverter module unit in the world. In terms of residential air conditioners, Gree launched the G-Tech airconditioner featuring five-layer washing, separation of water and electricity and easy removal and washing andthe high-end Soyal air conditioner that provides eight air supply modes, which enable the wind to move withpeople and avoid direct blowing, in the global market; in Southeast Asia, Gree launched Minty air conditioner thatintegrates air-conditioning and purification and removes PM2.5 at a rate of 98%.In the future, Gree will continue to strengthen the overseas strategic planning and the overall layout in the globalmarket, center on proprietary brands and explore new development models; maintain the long-term investment inoverseas brand construction, really root Gree's manufacturing, technologies and culture in all corners of the worldand realize the output of soft power such as brand, culture and management experience; carry out businessintegration, brand construction, channel layout and industrial chain coordination and improve the efficientoperation system of overseas full value chain; strengthen cultivation of localized talents and broaden theinternational vision; establish a new customer cooperation model, focus on later growth of the market based on thethree brands: Gree, Tosot and Kinghome, and classify products, sales channels and publicity strategies in a refinedand differentiated manner to further develop the market.
6. Pay close attention to industrial transformation, make efforts in the sectors of high-end equipment andcommunication equipment and accelerate diversified layout
(1) Intelligent equipment sector
Aiming at "Excellent quality, created by Gree", Zhuhai Gree Intelligent Equipment Co., Ltd. insists onindependent R&D and lean manufacturing and helps upgrade the intelligent manufacturing industry through AI. Itforges ahead in the R&D, manufacturing, sales and service of intelligent equipment products and providesprofessional and personalized products and services to realize "Intelligent manufacturing in China". Based on the"production, industrialization, marketization and internationalization" development path, the Company has formeda product system covering a dozen fields such as servo manipulators, industrial robots, intelligent warehousingequipment, intelligent testing, special machine tool equipment for heat exchanger, unmanned automationproduction line body and CNC machine tools and more than 100 products.By the end of 2019, Zhuhai Gree Intelligent Equipment Co., Ltd. accumulatively applied for 2,501 patents andauthorized 840 patents, of which 653 patents were applied for and 470 patents were authorized in 2019. Itaccumulatively helped multiple brands nationwide and more than 100 enterprises with intelligent manufacturingtransformation successfully and completed a batch of influential demonstration projects in the intelligent industryin various sectors. Since it was founded in 2015, Zhuhai Gree Intelligent Equipment Co., Ltd. successively wonthe tiles such as "Guangdong Robot Backbone Enterprise", "Zhuhai Intelligent Equipment Engineering
Technology Center" and "Guangdong Small Household Appliances Intelligent Manufacturing RegionalInnovation Center". At present, the Company's machine tool products cover horizontal machining center, five-axismachining center, gantry machining center, compound turning milling machining center, graphite machiningcenter and vertical machining center and provide customers with a complete set of production solutions such asprocessing technology and automatic processing, which are widely used in the fields of moulds and 3Cprocessing.In the field of industrial robot technology, the Company optimized the research on design methods, keytechnologies of gear transmission, effective torque control technology and robot precision calibration algorithmthrough the body of industrial robots, which makes Gree robots reach the first-class level in the industry. In termsof technological innovation in the field of machine tools, the Company conquered the stepless inverter adjustmenttechnology, which realizes a temperature control accuracy of up to 0.1°C for the machine tool cooler unit andsolves the industry problems of slow cooling under the industry cooling mechanism and low temperature controlaccuracy. In addition, the unit features efficient energy saving, high reliability, strong adaptability and convenientinstallation and maintenance.By independently developing the facial recognition technology, visual inspection technology, audio analysistechnology and process action analysis technology, Gree builds platform-level and equipment-level products andprovides cloud services and edge applications. In the aspects such as image collection and processing, signalanalysis and voice recognition, natural language processing and operation optimization, Gree established anall-round intelligent manufacturing service system for internal and external users of the Company. In the aspect ofproduction application, by building six core systems such as facial recognition application system, industrialvisual inspection system, voice and audio analysis system, logistics and warehousing scheduling system,intelligent search recommendation system and industrial engineering and operational research system, Greeestablished an intelligent manufacturing service application system, which realizes deep integration withproduction application requirements.In 2020, Gree will continue with reform and innovation, continuously develop markets, explore new customers,and focus on promoting conversion of technological achievements of robots, CNC machine tools, environmentalprotection equipment, automated production line and warehousing equipment and increasing the market share;actively implement the talent introduction strategy and implement the pyramid R&D talent management mode of"expert team, core technical backbones, and technical staff"; in the aspect of product R&D, continue to promotethe "product-focused" and "project-based" management mode and further improve the market competitiveness ofproducts with high-speed and high-precision robots, gantry machining center, five-axis machining center,heavy-duty and laser navigation AGV, energy-saving and environmental protection equipment and non-standardautomatic production equipment for household appliances as core new products.
(2) Precision mould sector
Mould is the "mother of industry" and provides important technical support for high efficiency, low cost and highquality of product manufacturing. The industrial level of moulds is an important symbol of the manufacturinglevel for a country provides important guarantee for industrial products of a country to maintain international
competitiveness. By the end of 2019, Gree invested in multiple mould bases. It has two automated processinglines covering more than 1,200 CNC equipment, more than 20 independently developed mould automatedprocessing lines, and more than 2,200 mould employees, serving hundreds of enterprises in the fields ofhousehold appliances, automobiles, 3C electronics and aerospace.Gree precision moulds have become a benchmark in the mould industry in terms of technological innovation,quality management, informatization and intelligent manufacturing. In 2019, Gree mold company accumulativelyapplied for 121 patents, of which 39 are authorized patents, 4 are patents for inventions, 9 are patents for utilitymodels, 26 are design patents and 2 are software copyrights. In addition, the Company won the title of"Guangdong Intellectual Property Demonstration Enterprise" and the certificate of integrated system. In 2019, theCompany undertook major provincial scientific and technological projects such as Research and DemonstrativeApplication of the Intelligent Manufacturing System Integration Technology of Moulds and ManufacturingIndustry. Its cost management project Refined Cost Management Application and Practice of Large MouldEnterprises won the second prize of Guangdong Enterprise Management Modernization InnovationAchievements.In order to accelerate the construction of the mold technology innovation system and build a high-level intelligentmould technology innovation platform with international competitiveness, Gree Precision Mold Co., Ltd. ZhuhaiGuangchang Plant was officially put into production in 2019. Gree was also approved to build "GuangdongIntelligent Mould Technology Innovation Center", leading moulds to develop toward the intelligent direction inGuangdong Province. At present, the Company takes the lead in the research and application of Internet of Things,cloud computing, big data analytics, artificial intelligence and industrial robots in the mould manufacturingindustry.China's mould industry is transforming from the "traditional model" to "Internet plus" model. In 2020, GreePrecision Mold Co., Ltd. will continuously focus on the layout in the aspects such as technological innovation,intellectual property rights and intelligent manufacturing and transform towards the "Internet plus" model tobecome the leader of China's mould industry.
(3) Semiconductor sector
In 2019, Gree made great progress in research of the semiconductor field, promoting the optimization andupgrading of products such as smart home series of chips, industry standard MCU and power devices. At present,Zhuhai Zero Boundary Integrated Circuit Co., Ltd., a subsidiary of Gree, has become a one-stop service providerfor embedded chips, power devices and their supporting development solutions and algorithms.Gree smart home series chips are embedded AI cross-border processors launched for the markets such as smarthome, smart healthcare, smart education and smart energy management under the tide of IoT and intelligent AIotapplications. In 2019, Gree developed the latest AI cross-border series of chips, which integrateshigh-performance AI computing capability and low power consumption feature of embedded SOC, providescomplete software and hardware solutions for related products and supports functions such as computer visualrecognition, image acceleration engine, real-time control capability and multiple hardware security encryption.
The general industrial control MCU of Gree involves multiple series of products. It features high performance,low energy consumption, high integration and low cost and can be widely used in three categories of electricappliances (air conditioners, washing machines and refrigerators) and the industrial application market. At present,the annual output of industrial-grade MCU exceeds 10 million, and the failure rate is as low as 15 PPM. The MCUis widely used in products such as wall-mounted and floor-standing residential air conditioners, commercial multiVRF indoor units, wired controllers, and air conditioner remote controllers.Gree independently developed power devices, which cover the high reliability Trench Field-Stop IGBT, FRD, PMmodule, PIM module and IPM intelligent power module of 600 V and 1200 V platforms. The power devices canbe used in a wide range of scenarios. They can be used in scenarios such as PFC circuit, motor drive, invertercircuit, induction heating, and soft switch circuit in the fields such as household appliances, industrial equipment,photovoltaic inverter, and new energy vehicle.
7. Focus on user needs, continue to explore core technologies and lead the era where everything isconnectedGree insists on independent innovation, independent research and development and independent manufacturing,uses core technologies to build a smart home where everything is connected, focuses on the consumer quality andneeds of life, and realizes the linkage of household appliances in the whole house by connecting intelligent,high-quality and all categories of household appliances. Based on the goal of "connecting everything, respondingto any call", Gree independently developed smart home products, IoT platform, smart decision-making system,G-Voice voice interaction system, smart visual system, G-OS IoT operating system, G-Learning comfortable andenergy-saving algorithm, and intelligent IoT technologies to provide family life with a solution for connectingeverything and create a high-quality life in which everything is connected. Consumers can experience the familylife of "connecting everything, responding to any call" through five control entries (Gree IoT air conditioner,"Gree+" App, IoT mobile phone, smart door lock and Cube Monster).On 28 December, 2019, Gree solemnly held the "2019 Made in China, Loved by the World Summit Forum".During the forum, Gree demonstrated the blueprint of "smart household appliances in the whole house". Relyingon the full category and diversified development, through the powerful G-IoT and G-Voice technology cluster,Gree built five systems: energy management, air management, health management, safety management and lightmanagement, and established an intelligent, healthy and safe smart home system. A full smart home not onlyconnects all household appliances but also has the analysis, judgment and feedback capabilities on the basis ofperception, learning and detection, so as to provide accurate personalized services according to the user age,interests, habits and other information.At present, in the field of smart home, Gree has six key technologies: intelligent connection, intelligent perception,intelligent interaction, intelligent cloud platform, intelligent energy management system, and artificial intelligence.Intelligent connection: Through the 5G technology, Bluetooth distribution network technology and password-freedirect connection technology, Gree provides efficient connection guarantee to enable users to experience smarthome more stably and conveniently; intelligent perception: Gree adopts AI micro perception technology to reduce
worry of users about family privacy; intelligent interaction: Gree performs in-depth research and iterativeupgrading in the key voice interaction aspects such as ASR, NLP and TTS; intelligent cloud platform: On thepremise of guaranteeing security, Gree provides cloud services with the intelligent decision-making capability andprovides users with more humanized, considerate, intelligent, convenient and accurate services based on theknowledge base and user behaviors and habits; intelligent energy: Gree realizes intelligent, economical, efficientand clean energy utilization through an energy-saving algorithm; artificial intelligence: Gree sets up an artificialintelligence platform and provides users with a more energy-saving, more environmental-friendly, morecomfortable and healthy intelligent decision-making system through a variety of deep learning algorithms.In 2019, Gree focused on the combination of artificial intelligence with manufacturing industry and the layout ofproduction quality inspection, logistics scheduling, personnel management, voice interaction and informatizationand implemented the application of facial recognition, voice recognition, warehousing path optimization, productquality and visual inspection based on a variety of technologies independently developed by Gree. Meanwhile,Gree completed the setup of an artificial intelligence open platform, the construction of a facial recognitionservice platform, the design and development of industrial visual inspection equipment, and the development of awarehousing and logistics scheduling platform. By combing software with hardware, Gree realizes the applicationof technologies and service platforms.
8. Focus on industrial positioning, accelerate market layout and occupy the commanding height of energyinterconnectionIn the new energy sector, Gree made a series of deployment from technological projects and product development,gathered resources, carried out team's activities of "going to the frontline", improved products from the angle ofcustomer thinking, formulated differentiated highlights and competitive product goals, and intensified efforts tocarry out comprehensive market promotion and layout. According to the characteristics and development trend ofthe industry, Gree constantly explores and focuses on positioning. It gives more connotation and significance tothe distributed energy Internet, further consolidates the technologies and products of the six product lines, enrichesthe product series, and expands the number of product categories to 7 categories, 39 types and 114 models.Gree implemented the DC demonstration project in a centralized manner in key regions nationwide, fullyintegrated the production, university and research resources of State Grid Corporation of China, China SouthernPower Grid Company Limited and the Construction Institute, and promoted the successful implementation of theproject. The Company completed Shanxi Datong Energy Revolution Pacesetter Exhibition Hall Project,successfully building a full Micro DC-Grid and realizing zero energy consumption. Relying on theimplementation experience of the project, the Company was invited to participate in the compilation of"Preparation of Technical Standards for Public Buildings with Near Zero Energy Consumption" for ShanxiProvince, which lays a foundation for the promotion and application of photovoltaic air conditioners and DCecology in local regions; the Company participated in a national demonstration new energy town project of StateGrid Corporation of China Jiangsu Branch in Tongli, Jiangsu Province, completed the supply and jointcommissioning of core DC equipment, and opened up an innovative way for energy transformation to drive
integrated development of cities; the patent titled "Method and Control Method for Suppressing VoltageFluctuation of DC Bus in Dual PWM Converters" won the Excellent Award of National Patents for Inventions; thepatent titled "Energy Gateway, Household Appliances, DC Micro-Grid System and their Energy ManagementMethods" won the Excellent Award of Patents for Inventions in Guangdong Province.In 2019, Gree was approved to build "Guangdong Energy Internet Innovation Center". Based on the operationmode of "Company + Innovation Alliance", the center carries out research and tackling of distributed energyInternet application technologies, conducts research based on the energy Internet system architecture, keytechnologies and key equipment, and promotes the construction of standards system and intellectual propertyprotection; builds innovation demonstration projects and industrial incubators and carries out talent cultivationand international exchange and cooperation to promote the DC new ecology, build a new world of network energy,and create a better new life!In the aspect of new energy electric vehicles, the Company successfully developed products such as 5.9-18m rareearth main drive motors and controllers, covering five series, with power covering 60 W to 240 kW, which canfully meet the needs of various commercial buses. At present, the products have been used in many cities such asZhuhai, Hangzhou, Changsha, Chengdu, Handan, Shijiazhuang, Tianjin, Lanzhou and Wuhu. Meanwhile, the firstnew efficient reluctance motor used for new energy electric vehicles in the industry breaks the bottleneck of lowenergy efficiency, poor safety and large noise encountered by the rare-earthless permanent reluctance main drivemotor system. In 2019, the technology was identified to be "world-leading" by China Machinery IndustryFederation and won the gold award of Nuremberg International Invention Exhibition. This technology makes themain drive motors of new energy vehicles free from the dependence on rare earth resources, creates a newtechnology research direction of the main drive motor system, and improves the competitiveness of core parts ofChinese new energy vehicles.
9. Deepen the talent cultivation mechanism, build a staff incentive system in an all-round way and help theGroup develop steadilyIn 2019, Gree's talent cultivation focused on the Company's development theme of "independent innovation, pursuitfor dreams in the new era", highlighted the key core talents of the Company and actual effects of cultivation invarious fields by taking measures such as "learning innovation of project design, deepening the cultivation mode andmechanism, linking to improve management efficiency, and promoting upgrading of talent cultivation", and built adiversified independent cultivation mechanism, promoting transformation and upgrading of talent cultivation,helping and supporting development of the enterprise.In 2019, in order to strengthen the cultivation of college students and middle and grassroots managers, Greefocused on cultivation of cutting-edge technical talents and accelerated high-quality supply of talents. By closelyfollowing the planning requirements of "insisting on independent cultivation of talents and building a high-qualitybackbone team", Gree deepened the advanced cultivation mechanism of "foundation, improvement, andreinforcement", organized and implemented advanced cultivation of backbones, strengthened the Company'sdevelopment confidence, set up a positive attitude of profession, and strengthened thinking transformation and
quality improvement.Focusing on the important fields and topics of the Company's strategic development in 2019, the Companyorganized and implemented 80 learning programs such as key special training camps, cutting-edge technology andR&D support topics, and operation and management training topics to comprehensively connect strategies withperformance, and strengthened independent cultivation, all staff cultivation, systematic cultivation and lifelongcultivation for talents of the Company. Meanwhile, in order to actively respond to new challenges brought bymarket changes, better grasp the market and serve the market, the Company formulated a marketing strategicblueprint with "Gree characteristics", continuously established a marketing team with outstanding comprehensiveabilities and excellent professional quality, organized and carried out the training camp for marketing servicepersonnel in 2019, integrated "theories as the basis and practices as the priority", and customized advancedcultivation based on four dimensions: "culture practice, comprehensive competence, business skills, and productlearning" for marketing service personnel to help marketing service personnel improve their skills and bettersupport front-line marketing and services.In 2019, in order to continuously improve employee satisfaction and happiness, Gree established an "all-roundemployee incentive system", a well-equipped living area for employees, a Gree school with a beautifulenvironment and complete teaching facilities, and a huge shuttle bus system, provided communication packagesfor all staff, and prepared to build Gree Hospital. All these welfare guarantee measures build a happy factory forGree people. Meanwhile, in order to solve the housing problem of employees and make employees devotethemselves to career development, Gree implements the policy of "One Apartment for Each Gree Employee".Hardbound residential buildings are handed over to employees and employees can move in by carrying theirluggage. At present, Gree is accelerating the construction of the Talent Apartment in Gree Mingzhu Plaza.
II. Analysis on principal businesses
1. Overview
See the description in "Overview" of "Discussion and Analysis of Business Operation".
2. Revenue and cost
(1) Composition of operating income
Unit: RMB Yuan
| 2019 | 2018 | Increase/Decrease over the previous year | |||
| Amount | Proportion in Operating Income | Amount | Proportion in Operating Income | ||
| Total operating income | 198,153,027,540.35 | 100% | 198,123,177,056.84 | 100% | 0.02% |
| Categorized by industry | |||||
| Manufacturing | 156,888,659,016.13 | 79.18% | 170,592,428,489.17 | 86.10% | -8.03% |
| Other businesses | 41,264,368,524.22 | 20.82% | 27,530,748,567.67 | 13.90% | 49.88% |
| Categorized by product | |||||
| Air Conditioner | 138,665,055,103.82 | 69.99% | 155,682,359,475.59 | 78.58% | -10.93% |
| Home Appliances | 5,575,911,375.57 | 2.81% | 3,794,087,435.54 | 1.91% | 46.96% |
| Intelligent equipment | 2,141,285,558.55 | 1.08% | 3,108,531,271.87 | 1.57% | -31.12% |
| Other main business | 10,506,406,978.19 | 5.30% | 8,007,450,306.17 | 4.04% | 31.21% |
| Other businesses | 41,264,368,524.22 | 20.82% | 27,530,748,567.67 | 13.90% | 49.88% |
| Categorized by region | |||||
| Domestic-main business | 136,073,206,974.43 | 68.67% | 148,322,536,473.83 | 74.86% | -8.26% |
| Overseas-main business | 20,815,452,041.70 | 10.51% | 22,269,892,015.34 | 11.24% | -6.53% |
| Other businesses | 41,264,368,524.22 | 20.82% | 27,530,748,567.67 | 13.90% | 49.88% |
(2) Industry, product, or region accounting for more than 10% of the Company's operating income oroperating profit
√ Applicable □ Not applicable
Unit: RMB Yuan
| Operating Incomes | Operating Cost | Gross Profit Margin | Increase or Decrease of Operating Income over Last Year | Increase or Decrease of Operating Cost over Last Year | Increase or Decrease of Gross Profit Margin over Last Year | |
| Categorized by industry | ||||||
| Manufacturing | 156,888,659,016.13 | 103,703,283,171.60 | 33.90% | -8.03% | -7.74% | -0.21% |
| Other businesses | 41,264,368,524.22 | 39,796,089,409.76 | 3.56% | 49.88% | 54.07% | -2.62% |
| Categorized by product | ||||||
| Air Conditioner | 138,665,055,103.82 | 87,192,449,061.21 | 37.12% | -10.93% | -11.83% | 0.64% |
| Other businesses | 41,264,368,524.22 | 39,796,089,409.76 | 3.56% | 49.88% | 54.07% | -2.62% |
| Categorized by region | ||||||
| Domestic | 136,073,206,974.43 | 85,697,917,155.53 | 37.02% | -8.26% | -7.95% | -0.21% |
| Overseas | 20,815,452,041.70 | 18,005,366,016.07 | 13.50% | -6.53% | -6.71% | 0.16% |
| Other businesses | 41,264,368,524.22 | 39,796,089,409.76 | 3.56% | 49.88% | 54.07% | -2.62% |
In case of adjustment of statistical caliber for the Company's main business data during the Report Period, main business data afterstatistical caliber adjustment at the end of the Report Period in the recent year
□ Applicable √ Not applicable
(3) Physical item income is higher than service income
(4) Fulfillment of major sales contracts signed by the Company by the end of the Report Period
□ Applicable √ Not applicable
(5) Composition of operating cost
Unit: RMB Yuan
| Industry Category | Item | 2019 | 2018 | Increase/ Decrease over the previous year | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Household appliances manufacturing | Raw material | 88,126,710,086.12 | 86.66% | 95,511,355,520.45 | 87.23% | -7.73% |
| Labor wage | 4,943,375,465.37 | 4.86% | 4,988,975,648.45 | 4.56% | -0.91% | |
| Depreciation | 1,565,803,533.57 | 1.54% | 1,456,650,827.31 | 1.33% | 7.49% | |
| Energy | 836,728,653.04 | 0.82% | 872,173,883.95 | 0.80% | -4.06% | |
(6) Changes in the consolidation scope occurred during the Report Period
√ Yes □ No
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
Unit: RMB Yuan
| Name of acquired party | Time point of equity acquisition | Cost of equity acquisition | Proportion of equity acquisition (%) | Equity acquisition mode | Date of purchase | Revenue of the acquired party from the date of purchase to the end of the period | Net profit of the acquired party from the date of purchase to the end of the period |
| Nanjing Walsin Nonferrous Metal Co., Ltd. | 31 May, 2019 | 1,417,551,321.45 | 94.30 | Purchase by means of cash | 31 May, 2019 | 10,411,966,740.54 | 46,316,187.50 |
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafterreferred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Combination cost and business reputation
Unit: RMB Yuan
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. |
| Combination cost: | |
| --Cash | 1,071,239,072.20 |
| --Other payables | 346,312,249.25 |
| Total combination cost | 1,417,551,321.45 |
| Less: Fair value share of the identifiable net assets acquired | 1,143,436,281.34 |
| Business reputation | 274,115,040.11 |
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of businesscombination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by ChinaAlliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] AppraisalReport.
3) Reason for the formation of large-amount goodwill
In order to deepen the development of the Company's enameled wire business in the electrical sector and reducethe impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of theindustrial chain. Due to the long construction cycle of the project, in order to expand production capacity andoccupy the market as soon as possible, the Company’s office meeting decided to acquire Nanjing WalsinNonferrous Metal Co., Ltd.;The acquisition price was determined by referring to the price-to-book ratio of the target company’s comparablelisted company, comprehensively considering and fully evaluating the target company’s asset status, profitability,brand influence, technology level, synergy effect and other factors;Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark userights in intangible assets increased due to the appraisal.
Identifiable assets and liabilities of the acquired party on the date of purchase
Unit: RMB Yuan
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. | |
| Fair value on the date of purchase | Carrying amount on date of purchase | |
| Assets: | ||
| Monetary capital | 313,841,040.72 | 313,841,040.72 |
| Accounts receivable | 306,347,724.29 | 306,347,724.29 |
| Receivables financing | 32,897,848.99 | 32,827,077.99 |
| Prepaid accounts | 3,774,390.86 | 3,774,390.86 |
| Other receivables | 250,561.22 | 250,561.22 |
| Inventories | 370,015,709.58 | 366,647,781.96 |
| Other current assets | 51,860,228.86 | 51,860,228.86 |
| Fixed assets | 148,157,020.23 | 38,678,328.99 |
| Construction in Progress | 8,162,465.21 | 9,544,356.01 |
| Intangible assets | 137,922,500.00 | 9,173,710.00 |
| Deferred income tax assets | 10,028,895.44 | 10,116,258.43 |
| Other non-current assets | 1,295,685.45 | 1,635,079.39 |
| Subtotal of assets | 1,384,554,070.85 | 1,144,696,538.72 |
| Liabilities: |
| Trading financial liabilities | 16,785,750.00 | 16,785,750.00 |
| Accounts payable | 37,510,699.95 | 37,510,699.95 |
| Advances from customers | 8,143,309.65 | 8,143,309.65 |
| Payroll payable | 8,804,769.39 | 8,804,769.39 |
| Taxes payable | 3,546,574.30 | 3,546,574.30 |
| Other payables | 9,114,493.56 | 9,114,493.56 |
| Other current liabilities | 27,680,199.09 | 27,680,199.09 |
| Deferred income tax liabilities | 60,416,544.96 |
| Subtitle of liabilities | 172,002,340.90 | 111,585,795.94 |
| Net assets | 1,212,551,729.95 | 1,033,110,742.78 |
| Less: minority equity | 69,115,448.61 | 58,887,312.34 |
| Net assets obtained | 1,143,436,281.34 | 974,223,430.44 |
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin'sidentifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement costminus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used toappraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low pricecoefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is theincome method. During the appraisal, the future income of the appraised intangible assets within a reasonableincome period will be discounted and accumulated at a reasonable discount rate, and the present value of incomewill be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
None.
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established main bodies in this period are as follows:
Unit: RMB Yuan
| Name | Time of establishment | Net assets of the end of the period | Net profit from the combination date to the end of the period |
| Gree (Anji) Precision Mold Co., Ltd. | 14 February, 2019 | 47,063,023.27 | -236,976.73 |
| Huzhou Landa Compressor Co., Ltd. | 1 March, 2019 | Not yet invested | |
| Gree Material Supply (Wuhan) Co., Ltd. | 20 March, 2019 | 12,716,347.67 | -7,283,652.33 |
| Gree Material Supply (Hefei) Co., Ltd. | 20 March, 2019 | 24,858,404.13 | 4,858,404.13 |
| Guangdong Guochuang Intelligent Technology Co., Ltd. | 22 March, 2019 | 30,270,563.23 | 270,563.23 |
| Gree (Luoyang) Washing Machine Co., Ltd. | 25 March, 2019 | 47,278,161.95 | -2,721,838.05 |
| Gree Material Supply (Chongqing) Co., Ltd. | 27 March, 2019 | 18,056,402.39 | -1,943,597.61 |
| Gree Material Supply (Zhengzhou) Co., Ltd. | 29 March, 2019 | 19,777,618.60 | -222,381.40 |
| Gree Rongzhu Copper (Nanjing) Co., Ltd. | 29 March, 2019 | Not yet invested | |
| Zhuhai Gree Green Resources Recycling Co., Ltd | 16 July, 2019 | 52,263,754.97 | 2,263,754.97 |
| Luoyang Lianmei Real Estate Co., Ltd. | 7 August, 2019 | 995,335,429.21 | -4,664,570.79 |
| Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | 20 August, 2019 | 29,874,379.59 | -125,620.41 |
| Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. | 28 August, 2019 | 15,024,339.91 | 24,339.91 |
| Handan Yingdong New Energy Technology Co., Ltd. | 20 September, 2019 | 660.13 | -1,339.87 |
| Gree E-commerce Co., Ltd. | 5 November, 2019 | Not yet invested | |
| Gelan Environmental Protection Technology (Shaoguan) Co., Ltd. | 5 December, 2019 | Not yet invested |
(7) Major changes or adjustment of businesses, products or services during the Report Period
□ Applicable √ Not applicable
(8) Major sales customers and suppliers of the Company
Major sales customers
| Total sales amount of 5 top customers (RMB) | 34,174,890,230.35 |
| Proportion of total sales amount of 5 top customers to the annual sales volume | 17.05% |
| Proportion of sales amount of related party in the sales amount of 5 top customers to the annual sales volume | 4.35% |
Information of 5 top customers
| Serial Number | Customer Name | Sales Volume (Yuan) | Proportion to Annual Sales Volume |
| 1 | First | 8,719,678,107.95 | 4.35% |
| 2 | Second | 7,137,244,341.16 | 3.56% |
| 3 | Third | 6,529,755,328.06 | 3.26% |
| 4 | Fourth | 5,993,005,069.20 | 2.99% |
| 5 | Fifth | 5,795,207,383.98 | 2.89% |
| Total | -- | 34,174,890,230.35 | 17.05% |
Other description of major customers
√ Applicable □ Not applicable
Among the top five customers, Henan Shengshi Xinxing Gree Trading Co., Ltd. is a related party of the Company.Other customers have no related-party relationship with the Company. The Company's directors, supervisors,senior management personnel, core technical personnel, shareholders holding more than 5% of the shares, actualcontrollers and other related parties have no direct or indirect interests in other customers.Major suppliers of the Company
| Total amount of purchase of top 5 suppliers (RMB) | 33,461,077,701.75 |
| Percentage to the total amount of annual purchase | 25.07% |
Information about top 5 suppliers of the Company
0.00%
Serial Number
| Serial Number | Name of supplier | Amount of purchase (yuan) | Percentage to the total amount of annual purchase |
| 1 | First | 8,184,234,791.03 | 6.13% |
| 2 | Second | 7,409,943,423.67 | 5.55% |
| 3 | Third | 6,397,500,623.49 | 4.79% |
| 4 | Fourth | 6,187,804,931.51 | 4.64% |
| 5 | Fifth | 5,281,593,932.05 | 3.96% |
| Total | -- | 33,461,077,701.75 | 25.07% |
Other information about the major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB Yuan
| 2019 | 2018 | Increase/Decrease over the previous year | Description of the material change | |
| Sales expense | 18,309,812,188.35 | 18,899,578,046.25 | -3.12% | |
| Overhead Expense | 3,795,645,600.08 | 4,365,850,083.19 | -13.06% | |
| Financial expense | -2,426,643,429.91 | -948,201,396.74 | 155.92% | Mainly attributable to the interest income and increase of exchange gains |
| R&D expenses | 5,891,219,715.90 | 6,988,368,285.92 | -15.70% |
4. Investment in research and development
√ Applicable □ Not applicable
Gree adheres to the philosophy that "science and technology change life; science and technology create life" andinsists on "independent research and development of core technologies". It firmly believes that only the realmastery of core technologies can enable us to grasp the fate of the enterprise and realize independent developmentof the enterprise. Meanwhile, Gree has set up a technological innovation system of "enterprise regarded as themain player, market orientation, enterprise-university-research cooperation". It insists on innovation driving,cultivates innovative talents, implements the leader strategy, and constantly consolidates its global leadingposition in the field of refrigeration.Gree boasts the largest R&D center of air conditioners in the world, four national R&D centers, 15 researchinstitutes, more than 900 laboratories and over 14,000 R&D members. Its national R&D centers are the NationalKey Laboratory of Energy Saving for Air Conditioning Equipment and System Operation, National EngineeringResearch Center of Green Refrigeration Equipment, State Recognized Enterprise Technology Center and theState-level Industrial Design Center. Meanwhile, it has been recognized as the "National Demonstration Base forStandardization of Consumer Goods" and "National Pilot Enterprise for Standardization of High-end EquipmentManufacturing Industry". In addition, Gree has established the "Motor and Control" academician workstation andhas been successively approved to establish post-doctoral research centers and doctoral workstations inGuangdong Province. In 2019, Gree was approved to establish "Guangdong Key Laboratory for Enterprises ofHigh-performance Servo System", "Guangdong Intelligent Mould Technology Innovation Center", and"Guangdong Energy Internet Innovation Center".
Gree has accumulatively won 33 national, provincial or ministerial and industrial awards. In 2019, Gree wonseven awards, including one national second prize for technological invention and three provincial and ministerialfirst prizes. Gree's "key technology and application of large-capacity and high-efficiency centrifugalair-conditioning equipment" project won the second prize of national technological invention in 2019. Gree's "keytechnology and application of direct current in optical storage air conditioners" project won the first prize ofGuangdong provincial technological invention, China Patent Gold Award and other awards.R&D investment of the Company
| 2019 | 2018 | Change ratio | |
| Number of R&D personnel (persons) | 14,251 | 11,808 | 20.69% |
| Proportion of number of R&D personnel | 16.04% | 13.30% | 2.74% |
| Investment amount in research and development (Yuan) | 6,011,210,604.21 | 7,268,369,454.61 | -17.30% |
| Proportion of investment in research and development in operating income | 3.03% | 3.67% | -0.64% |
| Capitalization amount of research and development investment (RMB) | 119,990,888.31 | 280,001,168.69 | -57.15% |
| Proportion of capitalized research and development investment to research and development investment | 2.00% | 3.85% | -1.85% |
Reason for the significant change in proportion of investment in research and development to the operating income compared to theprevious year
□ Applicable √ Not applicable
Reason of the great change in the capitalization rate of R&D investment and its rationality explanation
□ Applicable √ Not applicable
5. Cash flows
Unit: RMB Yuan
| Item | 2019 | 2018 | Increase/Decrease over the previous year |
| Sub-total of cash inflows from operating activities | 175,195,923,314.18 | 146,209,763,702.97 | 19.83% |
| Sub-total of cash outflows from operating activities | 147,302,209,220.59 | 119,268,972,159.99 | 23.50% |
| Net cash flows from operating activities | 27,893,714,093.59 | 26,940,791,542.98 | 3.54% |
| Sub-total of cash inflows from investing activities | 8,445,533,871.01 | 9,948,975,741.20 | -15.11% |
| Sub-total of cash outflows from investing activities | 19,720,582,471.78 | 31,794,741,016.87 | -37.98% |
| Net Cash Flow from Investment Activities | -11,275,048,600.77 | -21,845,765,275.67 | 48.39% |
| Sub-total of cash inflows from financing activities | 21,595,107,923.68 | 27,639,080,524.35 | -21.87% |
| Sub-total of cash outflows from financing activities | 40,817,084,044.61 | 25,125,234,042.18 | 62.45% |
| Net Cash Flow from Financing Activities | -19,221,976,120.93 | 2,513,846,482.17 | -864.64% |
| Net increase in cash and cash equivalents | -2,399,549,002.85 | 7,412,504,600.40 | -132.37% |
Major factors that result in major changes in relevant data
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | 2019 | 2018 | Increase/ decrease proportion | Cause of change |
| Net Cash Flow from Investment Activities | -11,275,048,600.77 | -21,845,765,275.67 | 48.39% | Attributable to decrease of cash paid for investments |
| Net Cash Flow from Financing Activities | -19,221,976,120.93 | 2,513,846,482.17 | -864.64% | Attributable to increase of cash paid for debts, distribution of dividends and profits or interests |
The description of causes of major differences existing between the net cash flows from operating activities of the Company and netprofits of the current year in the Report Period
□ Applicable √ Not applicable
III. Non-core business analysis
□ Applicable √ Not applicable
IV. Assets and liabilities
1. Major changes in assets composition
Since 2019, the Company has implemented new financial instrument standards, new income standards or new lease standards for thefirst time and adjusted and implemented relevant items in financial statements at the beginning of the year.
√ Applicable □ Not applicable
Unit: RMB Yuan
| At the end of 2019 | At the beginning of 2019 | Change of proportion | Description of the material change | |||
| Amount | Proportion to total assets | Amount | Proportion to total assets | |||
| Monetary capital | 125,400,715,267.64 | 44.32% | 115,022,653,811.67 | 45.80% | -1.48% | |
| Accounts receivable | 8,513,334,545.08 | 3.01% | 7,642,434,078.24 | 3.04% | -0.03% | |
| Inventories | 24,084,854,064.29 | 8.51% | 20,011,518,230.53 | 7.97% | 0.54% | |
| Investment real estate | 498,648,691.85 | 0.18% | 537,589,343.08 | 0.21% | -0.03% | |
| Long-term equity investment | 7,064,186,161.29 | 2.50% | 2,250,732,461.71 | 0.90% | 1.60% | |
| Fixed assets | 19,121,930,757.04 | 6.76% | 18,385,761,475.54 | 7.32% | -0.56% | |
| Construction in Progress | 2,431,051,409.94 | 0.86% | 1,663,938,988.55 | 0.66% | 0.20% | |
| Short-term borrowing | 15,944,176,463.01 | 5.63% | 22,197,899,406.88 | 8.84% | -3.21% | |
| Long-term borrowing | 46,885,882.86 | 0.02% | 0.02% | |||
2 Assets and liabilities measured by fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
| Item | Amount at the beginning of the period | Gains and losses from changes in fair value | Accumulated fair value changes recognized in equity | Depreciation reserves withdrawn during the period | Amount of buying in during the period | Amount of selling out during the period | Other changes | Amount at the end of the period |
| Financial assets | ||||||||
| 1. Trading financial assets (excluding derivative financial assets) | 1,012,470,387.43 | 28,348,042.95 | 2,937,144,194.29 | 3,022,754,041.09 | 955,208,583.58 | |||
| 2. Derivative financial assets | 170,216,138.92 | -77,823,513.23 | 92,392,625.69 | |||||
| 3. Other debt investments | 1,064,120,569.43 | -4,038,275.59 | 2,177,765.62 | 330,000,000.00 | -426,789,360.26 | 296,836,282.20 | ||
| 4. Other equity instrument investments | 1,144,907,946.33 | 2,398,458,222.20 | 1,713,290,280.44 | 1,084,999,993.84 | 4,644,601,697.51 | |||
| Subtotal | 3,391,715,042.11 | 2,344,944,476.33 | 1,715,468,046.06 | 4,022,144,188.13 | 3,352,754,041.09 | -426,789,360.26 | 5,989,039,188.98 | |
| Total | 3,391,715,042.11 | 2,344,944,476.33 | 1,715,468,046.06 | 4,022,144,188.13 | 3,352,754,041.09 | -426,789,360.26 | 5,989,039,188.98 | |
| Financial liabilities | 257,364,882.07 | 274,150,632.07 | 16,785,750.00 | |||||
Content of other changesWhether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No
3. Limitation of asset rights by the end of the Report Period
Unit: RMB Yuan
| Item | Book balance at the end of the period | Cause of restriction |
| Monetary capital | 13,329,429,050.16 | Legal deposit reserved and deposits |
| Financing of accounts receivable | 8,874,415,345.76 | Pledged |
| Other current assets | 100,000,000.00 | Pledged |
| Other equity instrument investments | 3,316,957,037.50 | Restricted shares |
| Intangible assets | 153,191,226.30 | Mortgage |
| Total | 25,773,992,659.72 |
V. Investments
1. Overall review
√ Applicable □ Not applicable
| Investment in the Report Period (RMB) | Investment in the same period last year (RMB) | Change percentage |
| 7,192,756,039.01 | 15,477,712,506.03 | -53.53% |
2. Major equity investments obtained during the Report Period
□ Applicable √ Not applicable
3. Major non-equity investments during the Report Period
□ Applicable √ Not applicable
4. Financial asset investment
(1) Securities investment
√ Applicable □ Not applicable
Unit: RMB Yuan
| Type of securities | Security code | Abbreviation of security name | Initial investment cost | Accounting measurement method | Carrying amount at the beginning of the period | Gains and losses from changes in fair value | Accumulated fair value changes recognized in equity | Amount of buying in during the period | Amount of selling out during the period | Profit and loss during the Report Period | Carrying amount at the end of the period | Accounting calculation items | Capital Source of Investment |
| Stocks listed on domestic and overseas stock exchanges | 600745 | Wingtech Technology | 884,999,996.60 | Measure at fair values | 0.00 | 2,431,957,040.90 | 2,431,957,040.90 | 884,999,996.60 | 3,316,957,037.50 | Other equity instrument investments | Private |
| Stocks listed on domestic and overseas stock exchanges | 600619 | HIGHLY | 1,145,070,921.73 | Measure at fair values | 801,289,952.19 | -26,982,776.24 | -369,871,271.40 | 14,408,571.49 | 775,199,650.33 | Other equity instrument investments | Private |
| Stocks listed on domestic and overseas stock exchanges | 1528 | RS MACALLINE- H SHS | 701,240,501.50 | Measure at fair values | 343,617,994.14 | -17,066,501.03 | -359,345,947.63 | 14,398,299.50 | 341,894,553.87 | Other equity instrument investments | Private |
| Stocks listed on domestic and overseas stock exchanges | 600888 | Xinjiang Joinworld | 199,999,997.24 | Measure at fair values | 0.00 | 10,550,458.57 | 10,550,458.57 | 199,999,997.24 | 210,550,455.81 | Other equity instrument investments | Private |
| Bonds | 151191 | 19 Chang'an 01 | 503,813,082.19 | Measure at fair values | 18,866,237.81 | 1,296,701,369.86 | 792,888,287.67 | 34,927,670.83 | 522,679,320.00 | Trading financial assets | Private |
| Bonds | 1080022 | 10 State grid bonds 01 | 344,572,550.00 | Measure at fair values | 369,461,328.07 | -4,640,291.70 | 677,072.11 | 11,799,893.40 | 365,610,278.07 | Other debt investments | Private |
| Bonds | 160017 | 16 Interest-bearing treasuries 17 | 288,405,500.00 | Measure at fair values | 291,920,782.20 | 3,792,759.76 | 1,695,134.07 | 13,135,500.00 | 296,836,282.20 | Other debt investments | Private |
| Bonds | 101758021 | 17 Baoanji MTN001 | 59,940,000.00 | Measure at fair values | 60,850,102.19 | 308,588.72 | -194,440.56 | 3,838,413.96 | 61,179,082.19 | Other debt investments | Private |
| Other securities investments | 203,663,800.00 | -- | 341,888,356.97 | -3,499,332.37 | 744,865,753.42 | 1,074,865,753.42 | 24,888,596.92 | 0.00 | -- | -- |
| Total | 4,331,706,349.26 | -- | 2,209,028,515.76 | 2,413,286,184.42 | 1,715,468,046.06 | 3,126,567,117.12 | 1,867,754,041.09 | 117,396,946.10 | 5,890,906,659.97 | -- | -- |
| Disclosure date of Announcement on Approval of Portfolio Investment by Board of Directors | 29 April, 2019 |
| Disclosure date of Announcement on Approval of Portfolio Investment by Board of Shareholders (if any) | 27 June, 2019 |
(2) Investment in derivatives
√ Applicable □ Not applicable
Unit: RMB 10,000
| Operation name of investment in derivative | Incidence relation | Whether or not transaction was related | Type of investment in derivatives | Initial amount of investment in derivatives | Start date | Expiry date | Beginning investment amount | Amount of buying in during the period | Amount of selling out during the period | Withdrawing depreciation reserve amount (If any) | Ending investment amount | Proportion of the ending contract amount to net assets at the end of the report period | Profits and losses during the report period |
| Jinrui Futures co., LTD | Non-related party | No | Futures Hedging Contract | -617.81 | 1 January, 2019 | 31 December, 2019 | -617.81 | 613.47 | 0.01% | -398.44 | |||
| Financing Institution | Non-related party | No | Forward Financial Contract | -8,714.87 | 1 January, 2019 | 31 December, 2019 | -8,714.87 | 9,239.26 | 0.08% | -33,638.91 | |||
| Total | -9,332.68 | -- | -- | -9,332.68 | 0 | 0 | 0 | 9,852.73 | 0.09% | -34,037.35 | |||
| Capital Source of Investment in Derivatives | Own funds | ||||||||||||
| Lawsuits (if apply) | None | ||||||||||||
| Disclosure Date of Announcement on Approval of Investment in Derivatives by Board of Directors (if any) | 29 April, 2019 | ||||||||||||
| Disclosure Date of Announcement on Approval of Investment in Derivatives by Board of Shareholders (if any) | 27 June, 2019 | ||||||||||||
| Risk analysis of open interest of derivatives and control measures during the Report Period (including but not limited to market risk, liquidity risk, credit risk, operation risk and legal risk) | In order to evade any risk in the cost of purchase of raw materials by the Company which might arise from wide fluctuations of the price of bulk raw materials, the Company carried on the hedging business for part of the raw materials and duly locked the cost of raw materials according to the futures market situation to reduce any uncertainty risk from fluctuations of the market price of the spot goods; meanwhile, the Company carried out foreign exchange transactions by bank's financial instruments to evade any risk in the fluctuations of exchange rate and interest rate, reduce foreign exchange liabilities and conduct the cost locking, and realize the maintenance and increase of the value of foreign exchange assets. The Company laid down the Rules for Hedging Management of Futures and "Internal Control System of Forward Foreign Exchange Transactions to execute the full appraisal and control of the investment in derivatives and risks in open interest, and the detailed description is provided below: Legal and regulatory risk; While the Company carried on hedging and foreign exchange transactions, it was required to follow the laws and regulations and specifically stipulate the rights and obligations with the agency. Control measures: The Company assigned the responsible department to strictly execute the contract review, clarify the rights and obligations, strengthen compliance check and ensure the Company's investment in derivatives and operation of open interest in accordance with any laws and regulations and internal control system of the Company. 2. Operation risk: it means any risk in operation arising out of imperfect internal process, operation of employees and system. Control measures: The Company established the corresponding management system, clarified the division of responsibilities and examination & approval procedures of the hedging and foreign exchange transactions, built more perfect supervision mechanism and effectively reduced any operation risk through business, decision and transaction processes. 3. Market risk: The price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchange market bring a greater market risk to the futures business and foreign exchange transactions. Control measures: The principle of prudent and moderate operation is upheld in the futures hedging and foreign exchange transactions of the Company, in which any speculative transaction is not permitted. As to the hedging business, the Company strictly restricted the number of hedging not to exceed the number of actual spot transaction and the open interest of the futures not to exceed the number of hedged spot goods and implemented the mechanism to stop loss. In respect of the foreign exchange transactions, the Company effectively prevented the market risk by judging the trend of foreign exchange rate and utilizing a contract to lock the settlement of exchange rate. | ||||||||||||
| The detailed usage and related hypothesis and parameter setting should be disclosed in terms of the market price of the invested derivatives or changes in fair value of the products during the Report Period and analysis on the fair value of the derivatives. | The loss under the futures hedging contract during the Report Period was RMB -3,984,400; the loss under the forward foreign exchange contract during the Report Period was RMB -156,742,100. |
| Descriptions about whether there were major changes in the accounting policies and detailed accounting principle of the Company's derivatives during the Report Period as compared to the last report period. | No change |
| Special opinions of independent directors regarding the investment in derivatives and risk control of the Company | In the opinion of the Company's independent directors, the Company improved its management level by strengthening internal control and carrying out the risk prevention measures as well as stabilizing price fluctuations through futures hedging. It also enhanced its foreign exchange risk control level through foreign exchange transactions. The above investment in derivatives helps to give play to competitive advantages of the Company, so it is feasible for the Company to carry on the investment in derivatives under controllable risk. |
5 Usage of raised funds
□ Applicable √ Not applicable
The Company was not involved in any usage of raised funds during the Report Period.VI. Sales of major assets and equities
1. Sales of major assets
□ Applicable √ Not applicable
The Company was not involved in sales of major assets during the Report Period
2. Sale of major equities
□ Applicable √ Not applicable
VII. Analysis on major controlling shareholder and joint stock companies
√ Applicable □ Not applicable
Information regarding major subsidiaries and joint stock companies that contribute over 10% of net profits to the Company
Unit: RMB Yuan
| Company Name | Company type | Main business | Registered capital | Total assets | Net assets | Operating incomes | Operating profit | Net profits |
| Zhuhai Gree Group Finance Company Limited | Subsidiary | Financial Services | 1,500,000,000.00 | 70,450,849,470.09 | 6,449,784,786.60 | 2,399,580,625.93 | 1,057,892,882.19 | 795,328,040.73 |
| Gree Electric Appliances (Chongqing) Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 230,000,000.00 | 4,943,677,549.76 | 2,387,623,740.36 | 10,703,012,677.06 | 924,700,401.68 | 784,272,003.69 |
| Zhuhai Gree Electrical Co., Ltd. | Subsidiary | Varnished Wire Manufacturing | 1,669,315,586.15 | 9,038,392,090.84 | 2,742,570,888.17 | 37,487,458,843.09 | 198,015,868.59 | 246,873,908.91 |
| Zhuhai Kaibang Motor Manufacture Co., Ltd. | Subsidiary | Motor Manufacturing | 82,000,000.00 | 3,165,078,452.44 | 936,607,925.54 | 3,268,915,837.06 | 104,343,372.27 | 94,891,085.95 |
| Gree Electric Appliances (Hefei) Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 150,000,000.00 | 13,434,554,094.46 | 6,839,893,850.88 | 17,678,676,202.54 | 1,319,053,736.29 | 1,146,345,338.81 |
| GREE (Zhongshan) Home Appliances Co., Ltd. | Subsidiary | Small Home Appliances Manufacturing | 30,000,000.00 | 767,498,126.19 | 345,588,332.67 | 1,308,967,399.32 | 20,000,756.45 | 19,979,115.24 |
| Zhuhai Landa Compressor Co., Ltd. | Subsidiary | Compressor Manufacturing | 93,030,000.00 | 12,009,778,160.54 | 6,739,234,453.82 | 18,296,919,165.74 | 975,334,931.42 | 839,171,836.50 |
| Gree (Zhengzhou) Electric Appliances Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 20,000,000.00 | 10,098,813,462.45 | 6,719,526,446.93 | 12,388,055,547.15 | 1,428,832,323.28 | 1,257,175,220.76 |
| Gree (Wuhan) Electric Appliances Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 100,000,000.00 | 4,808,679,659.23 | 1,773,336,648.92 | 12,667,391,059.28 | 1,123,856,430.60 | 940,489,282.46 |
| Gree (Wuhu) Electric Appliances Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 20,000,000.00 | 9,144,901,772.10 | 2,583,021,379.88 | 7,300,613,248.36 | 538,250,961.53 | 524,690,033.11 |
| Gree (Shijiazhuang) Electric Appliances Co., Ltd. | Subsidiary | Air Conditioner Manufacturing | 100,000,000.00 | 3,485,566,564.08 | 861,971,036.70 | 8,750,297,120.47 | 666,975,416.91 | 553,014,031.00 |
| Zhuhai Gree Xinyuan Electronics Co., Ltd. | Subsidiary | Capacitor Manufacturing | 126,180,000.00 | 1,825,318,035.27 | 854,492,987.09 | 1,679,187,933.25 | 225,753,813.76 | 189,048,061.77 |
Information about acquisition and disposal of subsidiaries during the Report Period
√ Applicable □ Not applicable
Unit: RMB Yuan
| Company Name | Methods of acquisition and disposal of subsidiaries during the Report Period | Impact on overall production and operation and financial results |
| Gree (Luoyang) Washing Machine Co., Ltd. | Establishment | -2,721,838.05 |
| Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | Establishment | -125,620.41 |
| Gree (Anji) Precision Mold Co., Ltd. | Establishment | -236,976.73 |
| Zhuhai Gree Green Resources Recycling Co., Ltd | Establishment | 2,263,754.97 |
| Gree E-commerce Co., Ltd. | Establishment | - |
| Huzhou Landa Compressor Co., Ltd. | Establishment | - |
| Gree Material Supply (Hefei) Co., Ltd. | Establishment | 4,858,404.13 |
| Gree Material Supply (Zhengzhou) Co., Ltd. | Establishment | -222,381.40 |
| Gree Material Supply (Chongqing) Co., Ltd. | Establishment | -1,943,597.61 |
| Gree Material Supply (Wuhan) Co., Ltd. | Establishment | -7,283,652.33 |
| Guangdong Guochuang Intelligent Technology Co., Ltd. | Establishment | 270,563.23 |
| Nanjing Walsin Nonferrous Metal Co., Ltd. | Acquisition | 46,316,187.50 |
| Gree Rongzhu Copper (Nanjing) Co., Ltd. | Establishment | - |
| Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. | Establishment | 24,339.91 |
| Luoyang Lianmei Real Estate Co., Ltd. | Establishment | -4,664,570.79 |
| Handan Yingdong New Energy Technology Co., Ltd. | Establishment | -1,339.87 |
| Gelan Environmental Protection Technology (Shaoguan) Co., Ltd. | Establishment | - |
| Zhuhai Meiling General Motors Co., Ltd. | Cancelled on 7 August, 2019 | 2,737,019.33 |
| Anhui Gree Kinghome Electric Appliances Sales Co., Ltd. | Cancelled on 17 October, 2019 | -9,003,490.77 |
| Total | -- | 30,266,801.11 |
VIII. Information about businesses controlled by the Company
□ Applicable √ Not applicable
IX. Prospects of the Company's future development
1. Development strategy of the Company
Gree takes "building a global advanced industrial group and making Gree a century-year world brand" as itscorporate vision and continues to insist on independent education, independent innovation and independentproduction; driven by technological innovation, strengthens technological research and development and improvesthe research and development efficiency; accelerates the transformation and upgrading of the marketing modeland comprehensively expands marketing channels; insists on quality innovation, optimizes the quality controlsystem, and gradually achieves the quality goal of "zero defect and zero after-sales"; strengthens fundmanagement, improves the risk control system, and guarantees the sound development of the Company; exploresdeeply in the industrial field, accelerates intelligent manufacturing, and steadily develops emerging industries suchas precision mould, communication equipment and new energy, and builds a more competitive diversified andtechnological global industrial group.
2. Key work of the Company in 2020
(1) Strengthen innovation of scientific research and improve the level of standardization and generalizationGree will strengthen the construction of major scientific research platforms focusing on key national laboratories,accelerate the judgment and deployment in major innovation fields, and actively undertake major national andindustrial scientific research projects; focus on the basic research directions consistent with the product strategy,improve the quality of research projects, accelerate promoting the conversion of technological research results;increase the R&D investment in new business sectors such as household appliances, refrigerators and washingmachines, and intelligent equipment, achieve greater technological leaps, and improve the product layout of newbusiness sectors; strengthen the platform-based and modular design of products and comprehensively improve thelevel of standardization and generalization; improve the intellectual property protection system, enhance theprotection for technological innovation, and share independent innovation achievements with the world.
(2) Optimize the marketing model and cultivate market growth points
Gree will integrate superior online and offline resources, establish a new retail model with Gree characteristics,and increase the speed of response to market demand; continue to go deep into the market segments of central airconditioners and further increase the share in the commercial market through standard and professional technicalservices; optimize the overseas business management model and strengthen the promotion of overseas proprietarybrands; vigorously promote the integration of refrigerators, washing machines and household appliances into thefull channel sales to make them gradually become the second major business sector; based on changes of themarket and industry reform, further improve the overall market competitiveness of intelligent equipment, moulds,industrial products, new energy, and casting, continue to expand sales channels and cultivate market growth points;actively go into the medical and healthcare industry and make more efforts to invest in the development andproduction of epidemic prevention products and health products.
(3) Improve top-level design of intelligent manufacturing and accelerate industrial transformation andupgradingGree will accelerate the comprehensive application of new-generation information technology, set up afull-process and full-element intelligent analysis and decision-making platform, and build an intelligentinformation ecosystem; promote the rapid implementation of the intelligent demonstration base project and build aleading, technological and intelligent benchmarking plant; promote the layout of the intelligent home industrychain and expand the intelligent home ecosystem.
(4) Promote reform of the management system and improve the operation efficiency of the enterpriseGree will accelerate the promotion of the block management model, establish an industry sector responsibilitysystem, define the target indicators of independent operation and make each business sector be responsible for theprofits and losses; improve existing business processes, make enterprise management more systematic, integratedand synergistic, and increase the management and decision-making efficiency; solve the problems such as uncleardivision of responsibilities between departments and repeated setting of posts in a targeted manner and establish anormalized organization and a mechanism for simplifying posts, determining posts and staffing and improving thework.
(5) Strengthen cost management and promote cost reduction and efficiency improvementGree will improve the full-process cost control system and encourage all staff to participate in cost reduction;strengthen front-end design to reduce costs, improve the cost control awareness of R&D personnel, and reduceunnecessary waste of resources and excessive services; analyze in an in-depth manner the cost drivers of productsfrom multiple perspectives such as standards, quality, production, procurement and sales and continue to promotecost reduction and efficiency improvement.
(6) Improve the fund management and risk prevention system and strengthen auditGree will strengthen fund management, improve the financial management and control capability, and realize fundmaintenance and appreciation on the premise of strictly controlling capital risk; carry out audit in an in-depth andefficient manner, fully mine the value of information, improve data analysis models, and enhance the full-processaudit and review; strengthen the information security management and control mechanism, identify and monitorrisks in advance, and improve the overall capability of responding to information security risks.
(7) Strengthen the backbone management and talent cultivation and establish a talent teamGree will strengthen independent talent cultivation and cultivation of young employees, lay a solid talentfoundation for the long-term development of the enterprise, and cultivate more high-level technological R&Dtalents and excellent industrial talents; strive to establish a backbone team with excellent quality, select andcultivate backbones according to the requirements of "loyalty, cleanness and responsibility", and actively advocatecreation of a realistic and practical atmosphere and orientation inside the enterprise; strengthen the marketawareness of backbones, sort out and improve the backbone performance assessment mechanism oriented by
goals and results, determine management posts synchronously, and optimize the backbone structure.
3. Major risks in future development
(1) Macroeconomic fluctuation risk
The products sold by the Company are mainly HVAC and household appliances, and its market demand is greatlyinfluenced by the economic situation and macroeconomic regulation. The impact of the novel coronaviruspneumonia may lead to a slowdown in the growth of macro-economy or consumer demand, and the growth of theCompany in the household appliances market will also slow down. Considering the expected impact of theimplementation of the new energy efficiency standards, the competition in the industry may be further intensified,thus affecting sales of the Company's products.
(2) Risk of price fluctuation in production factors
The household appliance manufacturing industry in which Gree is engaged is a labor-intensive industry, whereinthe main raw materials used to produce household appliances are copper, steel, aluminium and plastics of variousgrades, and their cost accounts for a large proportion. If the price of raw materials fluctuates considerably, or thecost of labor, water, electricity, land and other production factors fluctuates substantially due to macroeconomicenvironment changes and policy adjustments, it will have a certain impact on the Company's operatingperformance.
(3) Market risks caused by "de-globalization"
Influenced by the novel coronavirus pneumonia, "de-globalization" and the trade protectionism trend in somecountries and regions become increasingly prominent. The uncertainty of global economy further increases, whichbrings new challenges to the expansion in the overseas market and the risk of increasing the operating costs.
(4) Export market risks and exchange losses caused by exchange rate fluctuationWith continuous expansion of the Company's overseas market, the Company's export revenue continues toincrease. Exchange rate fluctuations may not only bring adverse effects on the Company's export of products, butalso cause the Company's exchange losses and increase the financial costs.
X. Reception of activities including researches, communication and interviews
1. Registration form for reception of activities including researches, communication and interviews
√ Applicable □ Not applicable
| Time of reception | Method of reception | Type of reception object | Basic situation index of research |
| 1 March, 2019 to 27 March, 2019 | Field Research | Institution | For details, see the Survey Activity Information (from 1 March, 2019 to 27 March, 2019) of Gree (000651) disclosed by the Company at www.cninfo.com.cn. |
| 22 May, 2019 | Field Research | Institution | For details, see the Activity Record of Meeting with Interested Investors disclosed by the Company at www.cninfo.com.cn on 22 May, 2019. |
| Times of reception | 35 | ||
| Number of received institutions | 60 | ||
| Number of received individuals | 0 | ||
| Number of other received objects | 0 | ||
| Whether undisclosed material information is revealed, disclosed or divulged | No | ||
Section V Important EventsI. Information about common stock profit distribution and capitalization from capital reservefundsThe common stock profit distribution policy in the report period, especially preparation, execution or adjustment of the cash dividendpolicy
√ Applicable □ Not applicable
Profit distribution preplan of 2018 (executed already in 2019): Calculated by the total stock capital of theCompany equivalent to 6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included)per 10 shares, with the total amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and thebalance to be carried forward to the future year.
| Special description of the cash dividend policy | |
| In compliance with provisions of the Articles of Association or requirements of the resolution of the general meeting of shareholders: | Yes |
| The dividend standard and ratio are definite and clear: | Yes |
| The related decision procedures and mechanisms are complete: | Yes |
| Independent directors perform their duties responsibly and play their due roles: | Yes |
| Minority shareholders have the opportunity to fully express their opinions and demands and their legitimate rights and interests are fully protected: | Yes |
| The conditions and procedures are transparent and comply with regulations if the cash dividend policy is adjusted or changed: | Not applicable |
The common stock dividend distribution plan (preplan) and the capitalization plan (preplan) from capital reserve funds in recent threeyears (including the Report Period)
1) Profit distribution preplan of 2019: Calculated by the total stock capital of the Company equivalent to6,015,730,878 shares, all shareholders will be distributed a cash of RMB 12 (tax included) per 10 shares, with thetotal amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the balance to be carriedforward to the future year.
2) Profit distribution plan of 2018: Calculated by the total stock capital of the Company equivalent to6,015,730,878 shares, all shareholders will be distributed a cash of RMB 15 (tax included) per 10 share, with thetotal amount of cashes to be distributed in such a way up to RMB 9,023,596,317.00 and the balance to be carriedforward to the future year.
3) Profit distribution plan for half year of 2018: Calculated by the total stock capital of the Company equivalent to6,015,730,878 shares, all shareholders will be distributed a cash of RMB 6 (tax included) per 10 shares, with thetotal amount of cashes to be distributed in such a way up to RMB 3,609,438,526.80 and the balance to be carriedforward to the future year.
4) Profit distribution plan of 2017: No cash dividend was distributed, no bonus share was given, public reserve
funds were not used for capitalization, and the balance was carried forward to the next year.Table for common stock cash dividends of the Company in the recent three years (including the Report Period)
Unit: RMB Yuan
| Year | Amount of cash dividend (tax included) | Net profit attributable to common shareholders of listed company in annual consolidated financial statements | Proportion of amount of cash dividend to net profit attributable to common shareholders of listed company in consolidated financial statements | Amount of cash dividends based on other ways (e.g., share repurchase) | Ratio of amount of cash dividend to net profit attributable to common shareholders of listed company in consolidated financial statements based on other ways | Total cash dividend (including other ways) | Proportion of total cash dividend (including other ways) to net profit attributable to common shareholders of listed company in consolidated financial statements |
| 2019 | 7,218,877,053.60 | 24,696,641,368.84 | 29.23% | 0.00 | 0.00% | 7,218,877,053.60 | 29.23% |
| 2018 | 12,633,034,843.80 | 26,202,787,681.42 | 48.21% | 0.00 | 0.00% | 12,633,034,843.80 | 48.21% |
| 2017 | 0.00 | 22,400,484,001.26 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
The profits of the Company in the Report Period and the parent company's profits distributable to common shareholders are positive,but the common stock cash dividend distribution preplan has not been put forward.
□ Applicable √ Not applicable
II. Profit distribution and capitalization from public reserve funds in the Report Period
√ Applicable □ Not applicable
| Number of bonus shares (stock) given per 10 stocks | 0 |
| Dividend allocated per 10 stocks (RMB) (tax included) | 12 |
| Increase by transfer per 10 stocks (stock) | 0 |
| Equity base of distribution proposal (stock) | 6,015,730,878 |
| Cash dividend (RMB) (tax included) | 7,218,877,053.60 |
| Cash dividend in other ways (such as repurchasing shares) (RMB) | 0.00 |
| Total cash dividend (including other methods) (RMB) | 0 |
| Distributable profit (RMB) | 53,971,127,295.29 |
| Proportion of total cash dividends (including other methods) in total profit distribution | 100% |
| Cash dividends of this distribution | |
| If the company's development stage is mature and there are no major capital expenditure arrangements, when the profit is distributed, the minimum proportion of cash dividends in this profit distribution should reach 80% | |
| Detailed description of the preplan for profit distribution or capitalization from public reserve funds | |
| The Company plans to use the total share capital of 6,015,730,878 shares as the base to distribute all shareholders a cash of RMB 12 (tax included) per 10 shares, but does not plan to give any bonus share or use any public reserve funds for capitalization, with the total amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the remaining undistributed profits to be carried forward to the future year. If the total number of shares of the Company enjoying profit distribution rights changes from the date of this announcement to the | |
III. Fulfillment of commitments
1. Commitments of the Company's actual controllers, shareholders and acquirers, the Company and otherrelated parties of commitments that have been fulfilled completely in the Report Period or have not beenfulfilled completely as of the end of the Report Period
√ Applicable □ Not applicable
date of equity registration for the implementation of equity distribution due to convertible bonds to shares, share repurchase, etc.,the Company will follow the principle of unchanged total distribution to adjust the distribution ratio per share accordingly.Cause ofcommitment
| Cause of commitment | Party of commitment | Type of commitment | Content of commitment | Time of commitment | Period of commitment | Fulfillment status |
| Share-splitting commitment | ||||||
| Commitments made in the acquisition report or equity change report | Zhuhai Mingjun | Share lock-up | 1. The transferee commits that shares acquired from Gree Electric Appliances due to this transfer will be fully locked up when the transfer registration is completed in this transaction, and will not be transferred for 36 months from the date of completion of the share transfer registration; if there are relevant laws and regulations that require the lock-up period of the transferred shares exceeds the above-mentioned lock-up period committed by the transferee, the transferee agrees to extend the lock-up period of the shares accordingly to meet the prescribed period. 2. After the completion of this share transfer, for shares acquired by the transferee from Gree Electric Appliances, Inc. due to this transfer, their dividend shares generated due to bonus share and capitalization from public reserve funds by the listed company will also abide by the above share lock-up commitment. | 2 December, 2019 | 36 months from the date of completion of the share transfer registration | Being under normal fulfillment |
| Zhuhai Mingjun | Other commitments | 1. The transferee commits that after the completion of the transfer, the overall stability of Gree Electric Appliances' Operation and Management Team will be maintained within the scope of authority, and no major changes will be made to Gree Electric Appliances' management structure. 2. The transferee commits that during the period of direct or indirect holding of shares of Gree Electric Appliances, it will not take the initiative to put forward any suggestions and proposals regarding the relocation of Gree Electric Appliances' headquarters and registered address from Zhuhai City, and it will actively urge all parties to ensure that Gree Electric Appliances' headquarters and registered address are not relocated from | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| Zhuhai City; if any shareholder puts forward any suggestions and proposals regarding the relocation of Gree Electric Appliances' headquarters and registered address from Zhuhai City, the transferee commits to participate in the general meeting of shareholders and vote against such proposals. 3. The transferee commits to do its utmost to make effective industrial investment and strategic resource introduction for Zhuhai's economic development, and urge Gree Electric Appliances to make new contributions to the sustainable and healthy development of Zhuhai's economy. 4. Zhuhai Mingjun commits to actively exercise the voting rights of shareholders in the general meeting of shareholders of the listed company involving dividends and to prompt the directors nominated by it to vote in favor of the board of directors' resolution of the listed company regarding an annual net profit dividend ratio of not less than 50%. | |||||
| Zhuhai Mingjun, Zhuhai Xianying, Zhuhai Yuxiu | Maintaining the independence of the listed company | Letter of Commitment on Maintaining the Independence of the Listed Company: In order to guarantee the independent operation of the listed company after this equity transfer, Zhuhai Mingjun, Zhuhai Xianying and Zhuhai Yuxiu make the following commitments. (I) To ensure asset independence and completeness of the listed company: 1. To ensure that Gree Electric Appliances will be equipped with the relevant production system, auxiliary production system as well as supporting facilities corresponding to its business operations, have the right to own or use the land, workshop and machines and facilities relating to its business operations as well as the ownership or use right to its trademarks, patent technologies and know-how, and have an independent purchase system of raw materials and sales system of products. 2. To ensure that Gree Electric Appliances will have independent and complete assets, and all of their assets will be under the control of Gree Electric Appliances and independently owned and operated by Gree Electric Appliances. 3. To ensure that Zhuhai Mingjun and other enterprises controlled by Zhuhai Mingjun will not illegally occupy Gree Electric Appliances' assets in any way; or provide guarantee for the debts of Zhuhai Mingjun and other enterprises under its control with Gree Electric Appliances' assets. (II) To ensure personnel independence of the listed company: 1. To | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| Gree Electric Appliances. 4. To ensure that, when the enterprise and other enterprises controlled by the enterprise conduct necessary and unavoidable related transactions with Gree Electric Appliances, the enterprise will conduct fair operation in accordance with the marketization principle and at fair prices, and perform transaction procedures and information disclosure obligations in accordance with relevant laws and regulations and regulatory documents. If any one of the above commitments is violated, the enterprise will be willing to bear all the responsibilities arising therefrom, and fully compensate or reimburse all direct or indirect losses caused to Gree Electric Appliances. | |||||
| Zhuhai Mingjun, Zhuhai Xianying, Zhuhai Yuxiu | Avoiding horizontal competition | Letter of Commitment on Avoiding Horizontal Competition: In order to avoid horizontal competition with the listed company, Zhuhai Mingjun, Zhuhai Xianying and Zhuhai Yuxiu make the following commitments: 1. the enterprise and other enterprises controlled by the enterprise (me), the controlling shareholders and actual controllers of the enterprise will not engage in the same or similar business with Gree Electric Appliances and its subsidiaries in a direct or indirect manner in the future, so as to avoid possible direct or indirect business competition with Gree Electric Appliances and its subsidiaries. 2. If other enterprises controlled by the enterprise further expand their business scopes, other enterprises controlled by the enterprise will take the principle of giving priority to the protection of the rights and interests of Gree Electric Appliances and take all possible measures to avoid horizontal competition with Gree Electric Appliances and its subsidiaries. 3. If Gree Electric Appliances and its subsidiaries or related regulatory authorities determine that the enterprise and other enterprises controlled by the enterprise are engaging in or will engage in any business which constitutes horizontal competition with Gree Electric Appliances and its subsidiaries, the enterprise will give up or cause the enterprises which its subsidiaries directly or indirectly hold to give up any business or business opportunities that may result in horizontal competition, or cause such business or business opportunities to be provided with a priority to Gree Electric Appliances or its wholly-owned and holding subsidiaries on a fair and reasonable basis or to be transferred to other unrelated third | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| parties. 4. If any one of the above commitments is violated, the enterprise will be willing to bear all the responsibilities arising therefrom, and fully compensate or reimburse all direct or indirect losses caused to Gree Electric Appliances. | |||||
| Zhuhai Mingjun, Zhuhai Xianying, Zhuhai Yuxiu | Regulating related transactions | Letter of Commitment on Regulating Related Transactions: In order to protect the interests of public shareholders and maintain the sustained and healthy development of the listed company, Zhuhai Mingjun, Zhuhai Xianying, and Zhuhai Yuxiu make the following commitments: 1. To ensure that the future related transactions between the enterprise and other enterprises controlled by the enterprise and Gree Electric Appliances will be fair and conducted in accordance with the normal business conduct standards; and that the enterprise will continue to regulate related transactions with Gree Electric Appliances and its subsidiaries. 2. To ensure that the enterprise will perform its obligations as a shareholder of Gree Electric Appliances in good faith and in good faith, and for related transactions that cannot be avoided or exist on reasonable grounds, it will sign a standard related transaction agreement with Gree Electric Appliances in accordance with the law, and in accordance with relevant laws, regulations, rules, other regulatory documents and the articles of association, and fulfill the approval procedures; the price of related transactions will be determined in accordance with fair and reasonable market prices, and the price of related transactions will be fair; it will perform the information disclosure obligations of related transactions in accordance with relevant laws, regulations and the articles of association; it will not use related transactions to illegally transfer the funds and profits of Gree Electric Appliances or damage the interests of Gree Electric Appliances and related shareholders. 3. To ensure that the enterprise and other enterprises controlled by the enterprise will, in accordance with the provisions of laws, regulations and the articles of association, when considering related transactions involving the enterprise and other enterprises controlled by the enterprise, effectively abide by the avoidance procedure during the voting on related transactions at the meeting of the board of shareholders or the general meeting of shareholders of Gree Electric Appliances. | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| Dong Mingzhu | Maintaining the independence of the listed company | Letter of Commitment on Maintaining the Independence of the Listed Company: In order to guarantee the independent operation of the listed company after this equity transfer, I make the following commitments. (I) To ensure asset independence and completeness of the listed company: 1. To ensure that Gree Electric Appliances will be equipped with the relevant production system, auxiliary production system as well as supporting facilities corresponding to its business operations, have the right to own or use the land, workshop and machines and facilities relating to its business operations as well as the ownership or use right to its trademarks, patent technologies and know-how, and have an independent purchase system of raw materials and sales system of products. 2. To ensure that Gree Electric Appliances will have independent and complete assets, and all of their assets will be under the control of Gree Electric Appliances and independently owned and operated by Gree Electric Appliances. 3. To ensure that Zhuhai Mingjun and other enterprises controlled by Zhuhai Mingjun will not illegally occupy Gree Electric Appliances' assets in any way; or provide guarantee for the debts of Zhuhai Mingjun and other enterprises under its control with Gree Electric Appliances' assets. (II) To ensure personnel independence of the listed company: 1. To ensure that Gree Electric Appliances' labor, personnel and compensation management will be completely independent from related companies. 2. To ensure that the recommendation of senior management personnel by I to Gree Electric Appliances will be conducted in accordance with legal procedures. (III) To ensure finance independence of the listed company: 1. To ensure that Gree Electric Appliances will establish an independent financial department and an independent financial accounting system, and have a standardized and independent financial accounting system. 2. To ensure that Gree Electric Appliances will independently open accounts in banks and will not share bank accounts with its related companies. 3. To ensure that Gree Electric Appliances' financial personnel will not take part-time jobs in its related companies. 4. To ensure that Gree Electric Appliances will pay taxes independently according to law. 5. To ensure that Gree Electric Appliances can make | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| financial decisions independently, and the intended transferee will not illegally interfere with Gree Electric Appliances' use of funds. (IV) To ensure organization independence of the list company: 1. To ensure that Gree Electric Appliances will establish a sound corporate governance structure for joint stock companies and have an independent and complete organizational structure. 2. To ensure that Gree Electric Appliances' internal management organization will independently exercise its functions and powers in accordance with laws, regulations and the Articles of Association. (V) To ensure business independence of the listed company: 1. To ensure that Gree Electric Appliances will have the assets, personnel, qualifications and ability to independently carry out business activities, and have the ability to independently and continuously operate in the market. 2. To ensure that, except through the exercise of shareholders' rights and the performance of functions and duties of board chairman / senior management personnel of the listed company, I will not interfere in its business activities of Gree Electric Appliances. 3. To ensure that I and other enterprises controlled by me will avoid substantial industry competition with Gree Electric Appliances. 4. To ensure that, when I and other enterprises controlled by me conduct necessary and unavoidable related transactions with Gree Electric Appliances, the enterprise will conduct fair operation in accordance with the marketization principle and at fair prices, and perform transaction procedures and information disclosure obligations in accordance with relevant laws and regulations and regulatory documents. If any one of the above commitments is violated, I will be willing to bear all the responsibilities arising therefrom, and fully compensate or reimburse all direct or indirect losses caused to Gree Electric Appliances. | |||||
| Dong Mingzhu | Avoiding horizontal competition | Letter of Commitment on Avoiding Horizontal Competition: In order to avoid horizontal competition with the listed company, I make the following commitments: 1. I and other enterprises controlled by me will not engage in the same or similar business with Gree Electric Appliances and its subsidiaries in a direct or indirect manner in the future, so as to avoid possible direct or indirect business competition with Gree Electric Appliances | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| and its subsidiaries. 2. If other enterprises controlled by I further expand their business scopes, other enterprises controlled by I will take the principle of giving priority to the protection of the rights and interests of Gree Electric Appliances and take all possible measures to avoid horizontal competition with Gree Electric Appliances and its subsidiaries. 3. If Gree Electric Appliances and its subsidiaries or related regulatory authorities determine that I and other enterprises controlled by me are engaging in or will engage in any business which constitutes horizontal competition with Gree Electric Appliances and its subsidiaries, I will give up or cause the enterprises which its subsidiaries directly or indirectly hold to give up any business or business opportunities that may result in horizontal competition, or cause such business or business opportunities to be provided with a priority to Gree Electric Appliances or its wholly-owned and holding subsidiaries on a fair and reasonable basis or to be transferred to other unrelated third parties. 4. If any one of the above commitments is violated, I will be willing to bear all the responsibilities arising therefrom, and fully compensate or reimburse all direct or indirect losses caused to Gree Electric Appliances. | |||||
| Dong Mingzhu | Regulating related transactions | Letter of Commitment on Regulating Related Transactions: I make the following commitments: 1. To ensure that the future related transactions between I and other enterprises controlled by me and Gree Electric Appliances will be fair and conducted in accordance with the normal business conduct standards; and that I will continue to regulate related transactions with Gree Electric Appliances and its subsidiaries. 2. To ensure that I will perform its obligations as a shareholder of Gree Electric Appliances in good faith and in good faith, and for related transactions that cannot be avoided or exist on reasonable grounds, it will sign a standard related transaction agreement with Gree Electric Appliances in accordance with the law, and in accordance with relevant laws, regulations, rules, other regulatory documents and the articles of association, and fulfill the approval procedures; the price of related transactions will be determined in accordance with fair and reasonable market prices, and the price of related transactions will be fair; it will perform the information disclosure obligations of related transactions | 2 December, 2019 | Effective for a long time | Being under normal fulfillment |
| in accordance with relevant laws, regulations and the articles of association; it will not use related transactions to illegally transfer the funds and profits of Gree Electric Appliances or damage the interests of Gree Electric Appliances and related shareholders. 3. To ensure that I and other enterprises controlled by I will, in accordance with the provisions of laws, regulations and the articles of association, when considering related transactions involving I and other enterprises controlled by I, effectively abide by the avoidance procedure during the voting on related transactions at the meeting of the board of shareholders or the general meeting of shareholders of Gree Electric Appliances. | ||||||
| Commitments made during asset reorganization | ||||||
| Commitments made during initial public offering or refinancing | GREE GROUP | Avoiding horizontal competition | Commitment issued during public issuance of additional shares in 2007: 1. In the future, the Company and the enterprises controlled by the Company will not directly or indirectly engage in the residentail air conditioner, commercial air conditioner, household appliances and other businesses that constitute horizontal competition with Gree Electric Appliances, Inc. of Zhuhai, nor will they invest in the enterprises or projects related to the above businesses or having direct or indirect competition with Gree Electric Appliances, Inc. of Zhuhai. 2. If it is found that the Company and the enterprises controlled by the Company are engaged in or intend to engage in the residential air conditioner, commercial air conditioner, household appliances and other businesses that constitute horizontal competition with Gree Electric Appliances, Inc. of Zhuhai, or have invested or plan to invest in the enterprises or projects related to the above businesses or having direct or indirect competition with Gree Electric Appliances, Inc. of Zhuhai, Gree Electric Appliances, Inc. of Zhuhai has the right to request the Company to stop engaging in the above competitive business, stop implementing the above competitive projects and stop investing in the above-mentioned related enterprises; if the Company has completed the investment, Gree Electric Appliances, Inc. of Zhuhai has the right to request the Company to transfer the relevant equity of the project or the enterprise dealing with the business; if the | 29 June, 2007 | Period of acting as a controlling shareholder | Being under normal fulfillment |
| Company breaches this commitment and engages in related competitive businesses, resulting in damage to the interests of Gree Electric Appliances, Inc. of Zhuhai, the Company is willing to assume the corresponding liability for compensation. | ||||||
| GREE GROUP | Reducing and standardizing the related transactions with Gree | Commitment issued during public issuance of additional shares in 2007: promised to ensure that Gree's business has the independent and complete production, supply, marketing and other auxiliary supporting systems so as to reduce unnecessary related transactions. When related transactions occur, the relevant matters of related transactions will be handled in accordance with the principle of good faith, fairness, impartiality, due diligence and public disclosure, the transaction price will be determined in accordance with the principle of market fairness, and the relevant procedures of avoiding voting by associated shareholders and associated directors and the relevant procedures for independent directors to express their opinions on related transactions independently will be strictly implemented to ensure legitimacy and fairness of the related transaction procedures and fairness and reasonableness of the related transaction results. | 29 June, 2007 | Period of acting as a controlling shareholder | Being under normal fulfillment | |
| Equity incentive commitments | GREE GROUP | Other commitments | During the period of holding shares of Gree Electric Appliances, the Company will fully assume all reasonable expenses and economic losses (if any) incurred by Gree Electric due to the Company's termination of the remaining equity incentive plan. | 14 June, 2019 | The period when I am a shareholder of Gree Electric Appliances | Being under normal fulfillment |
| Other commitments made to minority shareholders of the Company | ||||||
| Commitments are fulfilled in time | Yes | |||||
| If commitments are not fulfilled in time, detail the specific reason of fulfillment failure and the work plan for the next step | Not applicable | |||||
2. The Company's assets or projects involve earnings forecast and the Report Period is still in the earningsforecast period and the Company explains the assets or projects that achieve the original earnings forecastand the relevant reasons
□ Applicable √ Not applicable
IV. The listed company' non-operating funds occupied by the controlling shareholders andtheir related parties
□ Applicable √ Not applicable
No controlling shareholder or its related party occupied non-operating funds of the listed company in the Report Period of theCompany.V. Description about the "Non-standard Audit Report" of the accounting firm in the ReportPeriod by the Board of Directors, Board of Supervisors and independent director (if any)
□ Applicable √ Not applicable
VI. Description about changes in the accounting policies, accounting estimates and accountingmethods in comparison to the financial report of last year
√ Applicable □ Not applicable
I. Changes of major accounting policiesChanges in accounting policies resulting from the implementation of new standards for financial instrumentsThe Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (2017 Revision) (Finance and Accounting [2017] No. 7), the AccountingStandards for Business Enterprises No. 23 - Transfer of Financial Assets (2017 Revision) (Finance andAccounting [2017] No. 8), and the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting(2017 Revision) (Finance and Accounting [2017] No. 9) on 31 March, 2017, and the Accounting Standards forBusiness Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (Finance and Accounting[2017] No. 14) on 2 May, 2017 (the above standards are collectively referred to as "new standards for financialinstruments"), requiring domestic listed companies to implement the new financial instruments standards from 1January, 2019.As approved by the resolution of the fourth meeting of the eleventh session of board of directors of the Companyon 29 April, 2019, the Company began to implement the aforementioned new standards for financial instrumentsfrom 1 January, 2019.Under the new standards for financial instruments, all recognized financial assets are subsequently measured atamortization cost or fair value. On the implementation date of the new standards for financial instruments, the
Company's business model for managing the financial assets is evaluated based on the Company's existing factsand circumstances on that day, and the contractual cash flow characteristics on the financial assets are evaluatedbased on the facts and circumstances at the time of initial recognition of the financial assets, and the financialassets are divided into three categories: measured at amortization cost, measured at their fair values and of whichthe changes are included into other comprehensive income, and measured at their fair values and of which thechanges are included into the current profits and losses. Among them, for equity instrument investment measuredat their fair values and of which the changes are included into other comprehensive income, when the financialassets are derecognized, the cumulative gains or losses previously included into other comprehensive income willbe transferred from other comprehensive income to retained income, but will not be included into the currentprofits and losses.Under the new standards for financial instruments, the Company, on the basis of expected credit losses, makesprovisions for impairment of financial assets measured at amortization cost and debt instrument investmentswhich are measured at fair value and of which the changes are included into other comprehensive income, andrecognizes credit impairment losses.The Company applies the new standards for financial instruments retrospectively. However, if the classificationand measurement (including impairment) involves any inconsistency between the data of the previouscomparative financial statements and the new standards for financial instruments, the Company chooses not torestate. Therefore, for the cumulative impact of the implementation of the standards for the first time, theCompany adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amountof other related items in the financial statements, and does not restate the 2018 financial statements.Changes in the format of financial statementsThe Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements of GeneralEnterprises for 2019 (Finance and Accounting [2019] No. 6) and the Notice on Revising and Issuing the Format ofConsolidated Financial Statements (2019 Version) (Finance and Accounting [2019] No. 16) in April andSeptember 2019 respectively, revising the format of financial statements of general enterprises and the format ofconsolidated financial statements. The Company prepared financial statements according to the relevantrequirements and in accordance with the format of financial statements for general enterprises (applicable to theenterprises that have implemented the new financial standards, the new revenue standards and the new leasestandards). Major changes are as follows:
A. The "notes receivable and accounts receivable" item is split into the "notes receivable" item and the "accountsreceivable" item; the "notes payable and accounts payable" item is split into the "notes payable" item and the"account payable" item;B. The "receivables financing" item is added;C. Interest receivable or interest payable presented in the "other receivables" or "other payables" items only reflectthe interest which is receivable or payable upon the maturity of the relevant financial instruments but has not beenreceived or paid on the balance sheet date; the interest on financial instruments accrued based on the actual
interest rate method is included in the book balance of the corresponding financial instruments;D. The "asset impairment loss" and "credit impairment loss" items move downward from the "other gains" item tothe "fair value change gain" item, and the "credit impairment loss" item is presented before the "asset impairmentloss" item;E. The "investment income" item newly includes the "income from derecognition of financial assets measured atamortization costs".The Company has retrospectively restated the comparative statements accordingly according to the abovepresentation requirements.
Impact of implementation of new standards for financial instruments and changes in the format of financial statements on consolidated financial statements
Unit: RMB Yuan
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | Reclassification | Remeasurement | 1 January, 2019 | ||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Assets: | |||||||
| Monetary capital | 113,079,030,368.11 | 1,943,623,443.56 | 115,022,653,811.67 | ||||
| Trading financial assets | 1,012,470,387.43 | 1,012,470,387.43 | |||||
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 1,012,470,387.43 | -1,012,470,387.43 | |||||
| Notes receivable and accounts receivable | 43,611,226,866.20 | -9,229,039,643.82 | -34,382,187,222.38 | ||||
| Including: Bills receivable | 35,911,567,876.04 | -1,529,380,653.66 | -34,382,187,222.38 |
| Accounts receivable | 7,699,658,990.16 | -7,699,658,990.16 | |||||
| Accounts receivable | 7,699,658,990.16 | -57,224,911.92 | 7,642,434,078.24 |
| Receivables financing | 34,382,187,222.38 | -81,714,642.25 | 34,300,472,580.13 | ||||
| Other receivables | 2,553,689,544.47 | -2,257,098,901.99 | -6,244,306.10 | 290,346,336.38 | |||
| Including: Interests receivable | 2,257,098,901.99 | -2,257,098,901.99 |
| Other current assets | 17,110,921,223.89 | 1,802,424,633.81 | 18,913,345,857.70 | ||||
| Original value of available-for-sale financial assets | 2,217,095,036.33 | -2,217,095,036.33 | |||||
| Less: Impairment provisions of available-for-sale | 900,000.00 | -900,000.00 |
| financial assets | |||||||
| Net amount of available-for-sale financial assets | 2,216,195,036.33 | -2,216,195,036.33 |
| Disbursement of loans and advances | 9,071,332,784.86 | 10,381,298.66 | 9,081,714,083.52 | ||||
| Debt investment | 1,216,700.19 | 36,000,000.00 | 37,216,700.19 | ||||
| Other debt investments | 28,833,479.43 | 1,035,287,090.00 | 1,064,120,569.43 |
| Other equity instrument investments | 1,144,907,946.33 | 1,144,907,946.33 | |||||
| Deferred income tax assets | 11,349,573,709.69 | 12,274,180.53 | 15,242,873.91 | 11,377,090,764.13 |
| Liabilities: | |||||||
| Short-term borrowing | 22,067,750,002.70 | 130,149,404.18 | 22,197,899,406.88 | ||||
| Deposits from customers and interbank | 315,879,779.13 | 3,597,463.78 | 319,477,242.91 |
| Other payables | 4,747,139,263.00 | -1,663,127,521.62 | 3,084,011,741.38 | ||||
| Including: Interests payable | 133,746,867.96 | -133,746,867.96 | |||||
| Other current liabilities | 63,361,598,764.96 | 1,529,380,653.66 | 64,890,979,418.62 |
| Owners' equity: | |||||||
| Including: Other comprehensive income | -550,806,051.51 | -69,440,461.72 | -620,246,513.23 |
| Undistributed profit | 81,939,701,613.83 | -48,226,344.11 | 81,891,475,269.72 |
Impact of implementation of new standards for financial instruments and changes in the format of financial statements on the parent company's financial statements
Unit: RMB Yuan
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | 1 January, 2019 | ||||||
| Reclassification | Remeasurement | ||||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Assets: | |||||||
| Monetary capital | 102,696,932,265.26 | 1,500,459,111.30 | 104,197,391,376.56 |
| Trading financial assets | 412,114,127.42 | 412,114,127.42 | |||||
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 412,114,127.42 | -412,114,127.42 | |||||
| Notes receivable and accounts receivable | 35,047,382,637.60 | -2,988,819,694.63 | -32,058,562,942.97 |
| Including: Bills receivable | 32,516,210,775.80 | -457,647,832.83 | -32,058,562,942.97 | ||||
| Accounts receivable | 2,531,171,861.80 | -2,531,171,861.80 |
| Accounts receivable | 2,531,171,861.80 | 2,531,171,861.80 | |||||
| Receivables financing | 32,058,562,942.97 | -81,544,800.33 | 31,977,018,142.64 | ||||
| Other receivables | 3,898,630,873.93 | -1,719,333,737.63 | -2,300,000.00 | 2,176,997,136.30 |
| Including: Interests receivable | 1,803,079,868.37 | -1,803,079,868.37 | |||||
| Other current assets | 12,311,814,484.26 | 676,522,459.16 | 12,988,336,943.42 |
| Original value of available-for-sale financial assets | 765,090,199.08 | -765,090,199.08 | |||||
| Less: Impairment provisions of available-for-sale financial assets | 900,000.00 | -900,000.00 |
| Net amount of available-for-sale financial assets | 764,190,199.08 | -764,190,199.08 |
| Other equity instrument investments | 764,190,199.08 | 764,190,199.08 | |||||
| Deferred income tax assets | 10,931,512,853.30 | 12,231,720.05 | 345,000.00 | 10,944,089,573.35 | |||
| Liabilities: |
| Short-term borrowing | 17,759,081,480.00 | 77,161,272.95 | 17,836,242,752.95 | ||||
| Other payables | 1,795,358,032.57 | -534,809,105.78 | 1,260,548,926.79 |
| Including: Interests payable | 108,650,144.21 | -108,650,144.21 | |||||
| Other current liabilities | 63,348,220,747.89 | 457,647,832.83 | 63,805,868,580.72 | ||||
| Owners' equity: |
| Including: Other comprehensive income | -330,283,919.33 | -69,313,080.28 | -399,596,999.61 | ||||
| Undistributed profit | 48,123,803,614.75 | -1,955,000.00 | 48,121,848,614.75 |
2. Changes of accounting estimates
None.
VII. Description about the retrospective restatement required for correction of significantaccounting errors that occurred in the Report Period
□ Applicable √ Not applicable
The Company didn't involve any correction of significant accounting errors in the Report Period that requires retrospectiverestatement.VIII. Description about changes in the consolidated statement scope in comparison with thefinancial report of last year
√ Applicable □ Not applicable
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
Unit: RMB Yuan
| Name of acquired party | Time point of equity acquisition | Cost of equity acquisition | Proportion of equity acquisition (%) | Equity acquisition mode | Date of purchase | Revenue of the acquired party from the date of purchase to the end of the period | Net profit of the acquired party from the date of purchase to the end of the period |
| Nanjing Walsin Nonferrous Metal Co., Ltd. | 31 May, 2019 | 1,417,551,321.45 | 94.30 | Purchase by means of cash | 31 May, 2019 | 10,411,966,740.54 | 46,316,187.50 |
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafterreferred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Combination cost and business reputation
Unit: RMB Yuan
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. |
| Combination cost: |
| --Cash | 1,071,239,072.20 |
| --Other payables | 346,312,249.25 |
| Total combination cost | 1,417,551,321.45 |
| Less: Fair value share of the identifiable net assets acquired | 1,143,436,281.34 |
| Business reputation | 274,115,040.11 |
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of businesscombination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by China
Alliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] AppraisalReport.
3) Reason for the formation of large-amount goodwill:
In order to deepen the development of the Company's enameled wire business in the electrical sector and reducethe impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of theindustrial chain. Due to the long construction cycle of the project, in order to expand production capacity andoccupy the market as soon as possible, the Company's office meeting decided to acquire Nanjing WalsinNonferrous Metal Co., Ltd.;The acquisition price was determined by referring to the price-to-book ratio of the target company's comparablelisted company, comprehensively considering and fully evaluating the target company's asset status, profitability,brand influence, technology level, synergy effect and other factors;Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark userights in intangible assets increased due to the appraisal.
(2) Identifiable assets and liabilities of the acquired party on the date of purchase
Unit: RMB Yuan
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. | |
| Fair value on the date of purchase | Carrying amount on date of purchase | |
| Assets: | ||
| Monetary capital | 313,841,040.72 | 313,841,040.72 |
| Accounts receivable | 306,347,724.29 | 306,347,724.29 |
| Receivables financing | 32,897,848.99 | 32,827,077.99 |
| Prepaid accounts | 3,774,390.86 | 3,774,390.86 |
| Other receivables | 250,561.22 | 250,561.22 |
| Inventories | 370,015,709.58 | 366,647,781.96 |
| Other current assets | 51,860,228.86 | 51,860,228.86 |
| Fixed assets | 148,157,020.23 | 38,678,328.99 |
| Construction in Progress | 8,162,465.21 | 9,544,356.01 |
| Intangible assets | 137,922,500.00 | 9,173,710.00 |
| Deferred income tax assets | 10,028,895.44 | 10,116,258.43 |
| Other non-current assets | 1,295,685.45 | 1,635,079.39 |
| Subtotal of assets | 1,384,554,070.85 | 1,144,696,538.72 |
| Liabilities: | ||
| Trading financial liabilities | 16,785,750.00 | 16,785,750.00 |
| Accounts payable | 37,510,699.95 | 37,510,699.95 |
| Advances from customers | 8,143,309.65 | 8,143,309.65 |
| Payroll payable | 8,804,769.39 | 8,804,769.39 |
| Taxes payable | 3,546,574.30 | 3,546,574.30 |
| Other payables | 9,114,493.56 | 9,114,493.56 |
| Other current liabilities | 27,680,199.09 | 27,680,199.09 |
| Deferred income tax liabilities | 60,416,544.96 | |
| Subtitle of liabilities | 172,002,340.90 | 111,585,795.94 |
| Net assets | 1,212,551,729.95 | 1,033,110,742.78 |
| Less: minority equity | 69,115,448.61 | 58,887,312.34 |
| Net assets obtained | 1,143,436,281.34 | 974,223,430.44 |
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin'sidentifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement costminus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used toappraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low pricecoefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is theincome method. During the appraisal, the future income of the appraised intangible assets within a reasonableincome period will be discounted and accumulated at a reasonable discount rate, and the present value of incomewill be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
None.
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established main bodies in this period are as follows:
Unit: RMB Yuan
| Name | Time of establishment | Net assets of the end of the period | Net profit from the combination date to the end of the period |
| Gree (Anji) Precision Mold Co., Ltd. | 14 February, 2019 | 47,063,023.27 | -236,976.73 |
| Huzhou Landa Compressor Co., Ltd. | 1 March, 2019 | Not yet invested | |
| Gree Material Supply (Wuhan) Co., Ltd. | 20 March, 2019 | 12,716,347.67 | -7,283,652.33 |
| Gree Material Supply (Hefei) Co., Ltd. | 20 March, 2019 | 24,858,404.13 | 4,858,404.13 |
| Guangdong Guochuang Intelligent Technology Co., Ltd. | 22 March, 2019 | 30,270,563.23 | 270,563.23 |
| Gree (Luoyang) Washing Machine Co., Ltd. | 25 March, 2019 | 47,278,161.95 | -2,721,838.05 |
| Gree Material Supply (Chongqing) Co., Ltd. | 27 March, 2019 | 18,056,402.39 | -1,943,597.61 |
| Gree Material Supply (Zhengzhou) Co., Ltd. | 29 March, 2019 | 19,777,618.60 | -222,381.40 |
| Gree Rongzhu Copper (Nanjing) Co., Ltd. | 29 March, 2019 | Not yet invested | |
| Zhuhai Gree Green Resources Recycling Co., Ltd | 16 July, 2019 | 52,263,754.97 | 2,263,754.97 |
| Luoyang Lianmei Real Estate Co., Ltd. | 7 August, 2019 | 995,335,429.21 | -4,664,570.79 |
| Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | 20 August, 2019 | 29,874,379.59 | -125,620.41 |
| Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. | 28 August, 2019 | 15,024,339.91 | 24,339.91 |
| Handan Yingdong New Energy Technology Co., Ltd. | 20 September, 2019 | 660.13 | -1,339.87 |
| Gree E-commerce Co., Ltd. | 5 November, 2019 | Not yet invested | |
| Gelan Environmental Protection Technology (Shaoguan) Co., Ltd. | 5 December, 2019 | Not yet invested |
IX. Engagement and disengagement of accounting firmsCurrently engaged accounting firms
| Name of domestic accounting firm | Union Power Certified Public Accountants (Special General Partnership) |
| Remuneration for the domestic accounting firm (RMB 10,000) | 396 |
| Consecutive years for the domestic accounting firm to render audit | 5 |
| service | |
| Names of certified public accountants of the domestic accounting firm | Gong Jingwei, Wu Zihao |
| Consecutive years for the domestic accounting firm to render CPA audit service | 3 |
A new accounting firm was engaged in the current period
□ Yes √ No
Engagement of an accounting firm for internal control auditing, financial adviser or sponsor
√ Applicable □ Not applicable
During the year, the Company hired Union Power CPAs Co., Ltd. (special general partnership) as its internal control accounting firm;the Company hired Huatai United Securities Co., Ltd. as a sponsor for resolving the follow-up matters of the share split reform.X. Suspension of listing and termination of listing after disclosure of the annual report
□ Applicable √ Not applicable
XI. Matters related to bankruptcy reorganization
□ Applicable √ Not applicable
The Company was not involved in any matter related to bankruptcy reorganization in the Report Period.XII. Major legal action or arbitration
□ Applicable √ Not applicable
The Company was not involved in any major legal action or arbitration during the Report Period.
XIII. Punishment and rectification
□ Applicable √ Not applicable
The Company was not involved in any punishment or rectification during the Report Period.XIV. Integrity status of the Company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the Company's equity incentive plan, employee stock ownership planor other employee motivation measures
□ Applicable √ Not applicable
The Company was not involved in any equity incentive plan, employee stock ownership plan or other employee motivation measuresor their implementation during the Report Period.
XVI. Significant related transactions
1. Related transactions associated with day-to-day operation
√ Applicable □ Not applicable
| Related parties | Incidence relation | Type of related transactions | Contents of related transactions | Related transaction pricing principle | Prices of related transactions | Amount of related transactions (ten thousand Yuan) | Proportion to amount of similar transaction | Approved transaction amount (ten thousand Yuan) | Exceeding the approved quota | Settlement of related transactions | Available market price of similar transactions | Date of disclosure | Disclosure index |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Companies where directors of the Company act as executive directors and general managers | Sales of commodities | Sales revenue | Market price | Market price | 520,267.04 | 3.32% | 800,000 | No | Payment before delivery | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Companies where directors of the Company act as executive directors | Sales of commodities | Sales revenue | Market price | Market price | 871,967.81 | 5.56% | 1,250,000 | No | Payment before delivery | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Companies where supervisors of the Company act as managers | Sales of commodities | Sales revenue | Market price | Market price | 493,541.24 | 3.15% | 850,000 | No | Payment before delivery | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Shanghai Highly (Group) Co., Ltd. and its subsidiaries and holding subsidiaries | The company in which the Company holds more than 5.00% of its shares | Materials procurement | Raw material | Market price | Market price | 216,955.57 | 1.63% | 500,000 | No | Settlement by schedule | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Shanghai Highly (Group) Co., Ltd. and its subsidiaries and holding subsidiaries | The company in which the Company holds more than 5.00% of its shares | Sales of commodities | Sales revenue | Market price | Market price | 148,755.48 | 0.95% | 300,000 | No | Settlement by schedule | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | Companies and their subsidiaries and holding subsidiaries where the chairman of the Company serves as a director | Materials procurement | Energy storage equipment | Market price | Market price | 1,996.81 | 0.01% | 70,000 | No | Settlement by schedule | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | Companies and their subsidiaries and holding subsidiaries where the chairman of the Company serves as a director | Sales of commodities | Sales revenue | Market price | Market price | 32,108.78 | 0.20% | 200,000 | No | Settlement by schedule | Market price | 29 April, 2019 | www.cninfo.com.cn |
| Total | -- | -- | 2,285,592.73 | -- | 3,970,000 | -- | -- | -- | -- | -- | |||
| Details of huge-amount sales return | Not applicable | ||||||||||||
| Actual fulfillment (if any) in the Report Period when the total amount is estimated by category for the daily related transaction to take place in the current period | Not applicable | ||||||||||||
| Cause (if applicable) of the large difference between the transaction price and market reference price | Not applicable | ||||||||||||
2. Related transactions of acquisition or sales of assets or equity
□ Applicable √ Not applicable
The Company was not involved in any related transaction of acquisition or sales of assets or equity in the Report Period.
3. Related transactions of common foreign investment
□ Applicable √ Not applicable
The Company was not involved in any related transaction of common foreign investment during the Report Period.
4. Associated credits and liabilities
□ Applicable √ Not applicable
The Company was not involved in any associated credit or liability in the Report Period.
5. Other significant related transactions
□ Applicable √ Not applicable
The Company was not involved in any other significant related transaction during the Report Period.XVII. Major contracts and their fulfillment
1. Information about trusteeship, contracting and lease
(1) Trusteeship
□ Applicable √ Not applicable
The Company was not involved in any trusteeship during the Report Period.
(2) Contracting
□ Applicable √ Not applicable
The Company was not involved in any contracting matter during the Report Period.
(3) Lease
□ Applicable √ Not applicable
The Company was not involved in any lease during the Report Period.
2. Major guarantee
□ Applicable √ Not applicable
The Company was not involved in any major guarantee during the Report Period.
3. Entrusting others to execute any cash asset management
(1) Entrusted financing
√ Applicable □ Not applicable
Overview of entrusted wealth management during the report period
Unit: RMB 10,000
| Specific type | Source of funds for entrusted wealth management | Occurrence amount of entrusted wealth management | Outstanding balance | Amount overdue but not recovered yet |
| Broker wealth management products | Private | 101,247.04 | 42,302.23 | |
| Total | 101,247.04 | 42,302.23 | ||
Specific situation of high-risk entrusted wealth management with large single amount or low security, poor liquidity andnon-guaranteed principal
□ Applicable √ Not applicable
Entrusted wealth management has the circumstance that it is expected to be unable to recover the principal or other circumstancesthat may cause impairment
□ Applicable √ Not applicable
(2) Entrusted loan
□ Applicable √ Not applicable
The Company was not involved in any entrusted loan during the Report Period.
4. Other major contracts
□ Applicable √ Not applicable
The Company did not have any other major contract during the Report Period.XVIII. Social responsibilities
1. Fulfilling social responsibilities
Gree actively and voluntarily performed its social responsibilities, effectively protected the lawful rights andinterests of all stakeholders, won with its strength the recognition of the enterprise, brand and products fromcapital market and consumer market and promoted the low-carbon green growth in the industry through variousactivities. (For details, please refer to the Company's Social Responsibility Report for the Year 2019 published onwww.cninfo.com.cn on 30 April, 2020.)
2. Fulfilling the social responsibilities of taking targeted measures in poverty alleviationThe Company didn't take targeted measures in poverty alleviation in the reporting year.
3. Circumstances related to environmental protection
If the listed company and its subsidiaries are key pollutant discharge units published by the environmental protection departmentYes
| Serial Number | Company or Subsidiary Name | Names of Major Pollutants and Particular Pollutants | Discharge Mode | Number of Discharge Ports | Distribution of Discharge Ports | Discharge Concentration | Adopted Pollutant Discharge Standard | Total Discharge | Total Approved Discharge | Over-standard Discharge |
| 1 | GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | COD, ammonia nitrogen | Intermittent discharge | 5 | Sewage station | COD: 25 mg/L; Ammonia nitrogen: 0.264 mg/L. | Level 2 limit of the second period, Discharge Limits of Water Pollutants (DB 44/26-2001) | COD: 9.19 tons/year; Ammonia nitrogen: 0.443 tons/year. | COD: 14.315 tons/year; Ammonia nitrogen: 3.579 tons/year. | None |
| Sulphur dioxide, nitrogen oxide | Organized discharge | 19 | Roof of factory building | Sulfur dioxide: 2.417 mg/m?; Nitrogen oxide: 15.413 mg/m?. | Level 2 limit of the second period in the Discharge Limits of Air Contaminants (DB 44/27-2001), Table 2 in Emission Standard of Boiler Air Pollutants (GB 13271-2014) | Sulfur dioxide: 1.3731 tons/year; Nitrogen oxides: 8.4794 tons/year. | Sulfur dioxide: 1.9208 tons/year;Nitrogen oxides: 9.2878 tons/year. |
| 2 | Gree (Zhengzhou) Electric Appliances Co., Ltd. | COD, ammonia nitrogen | Continuous discharge | 1 | Sewage station | COD: 57.5mg/L; Ammonia nitrogen: 1.3mg/L. | Table 1 of Comprehensive Standard for Sewage Discharge (GB 8978–1996) | COD: 3.21 tons/year; Ammonia nitrogen: 0.073 tons/year. | Not approved | None |
| Sulfur dioxides, particulate matters, non-methane total | Organized discharge | 9 | Roof of factory building | Sulfur dioxide: 11 mg/m?;Nitrogen oxide: | Grade 2 in Table 2 of Comprehensive Emission Standards of Air Pollutants (GB | Sulfur dioxide: 1.90 tons/year;Nitrogen oxides: 0.69 |
| hydrocarbons, nitrogen oxides | 4.83 mg/m?; Particulate matter: 6.6 mg/m?; Total non-methane hydrocarbons: 3.76 mg/m?. | 16297-1996), Zhengzhou Environmental Document 2017 (172) Circular on Restriction Requirements for Non-methane Total Hydrocarbons | tons/year; Particulate matter: 6.45 tons/year; Total non-methane hydrocarbons: 0.84 mg/m?. |
| 3 | Gree (Wuhu) Electric Appliances Co., Ltd. | Sulphur dioxide, nitrogen oxide, dust, tin and its compounds, non-methane total hydrocarbons | Organized discharge | 53 | Roof of factory building | Sulfur dioxide: 3 mg/m?; Nitrogen oxide: 24.35 mg/m?; Dust: 20 mg/m?; Tin and its compounds: 0.00156 mg/m?; Total non-methane hydrocarbons: 2.355 mg/m?. | Grade 2 in Table 2 of Comprehensive Emission Standards of Air Pollutants (GB 16297-1996), Hebei local standard Standard for Volatile Organic Compound Emission Control in Industrial Enterprises (DB132322-2016) | Sulfur dioxide: 3.8525 tons/year; Nitrogen oxide: 6.645 tons/year; Dust: 19.39 tons/year; Tin and its compounds: 0.00202 tons/year; Total non-methane hydrocarbons: 8.605 tons/year. | Not approved | None |
| Chemical oxygen demand, ammonia nitrogen, petroleum type, phosphate | Intermittent discharge | 1 | Total outlet of the small north gate | Chemical oxygen demand: 241.5 mg/L; Ammonia nitrogen: 27.55 mg/L; Petroleum: 10.4 mg/L; Phosphate: 0.007 mg/L. | Grade 3 in Table 4 of Comprehensive Standard for Sewage Discharge (GB 8978-88) | Chemical oxygen demand: 17.57 tons/year; Ammonia nitrogen: 1.63 tons/year; Petroleum: 0.4035 tons/year; Phosphate: 0.355 tons/year. |
| 4 | Zhuhai Landa Compressor Co., Ltd. | COD, ammonia nitrogen | Intermittent emission | 1 | Sewage station | COD: 37.6mg/L Ammonia nitrogen: 0.457mg/L | Table 2 in Pollutant Discharge Standard for Electroplating Water DB44/1597-2015 | COD: 6.51 tons/year; Ammonia nitrogen: 0.252 tons/year. | COD: 18.7969 tons/year; Ammonia nitrogen: 3.0597 tons/year. | None |
| Sulphur dioxide, nitrogen oxide | Organized discharge | 13 | Roof of factory building | Sulfur dioxide: 7 mg/m?; Nitrogen oxide: 144 mg/m?; | Level 2 limit of the second period in the Discharge Limits of Air Contaminants (DB 44/27-2001); Metal melting furnace Level 2 (mg/m3) in Table 2 in Emission Standard for Air Pollutants from Industrial Kilns GB9078-1996; Emission Standard for Cooking Fume in the Catering Industry GB18483-2001; Screen printing in period II in Table 2 of Volatile Organic Compounds Emission Standards for Printing Industry DB44/815-2010; Special emission limit for gas-fired boilers (mg/m3) in Table 3 of | Sulfur dioxide: 0.582 tons/year; Nitrogen oxide: 4.689 tons/year. | Sulfur dioxide: 5.2852 tons/year; Nitrogen oxides: 14.8987 tons/year. |
Emission Standards forBoiler Air PollutantsGB13271-2014;Emission Standards forVolatile OrganicCompounds in the
FurnitureManufacturing
Industry(DB44/814-2010); Air
Pollutant EmissionLimits for Newly BuiltFacilities of Emission
Standards forElectroplating
Pollutants
(GB21900-2008)
| 5 | Gree (Shijiazhuang) Electric Appliances Co., Ltd. | COD, ammonia nitrogen | Intermittent discharge | 6 | 6 discharge ports distributed evenly in the east factory boundary | COD: 189 mg/L; Ammonia nitrogen: 3.5 mg/L. | Grade 3 Standard in Table 4 of Comprehensive Sewage Discharge Standard (GB8978-1996) and Inlet Water Quality Requirements of Sewage Treatment Plants in the High-tech Zones | COD: 10.777 tons/year; Ammonia nitrogen: 0.2004 tons/year. | COD: 11.099 tons/year; Ammonia nitrogen: 0.362 tons/year. | None |
| Sulphur dioxide, nitrogen oxide | Organized discharge | 16 | Roof of factory building | Sulfur dioxide: 5mg/m?; Nitrogen oxide: 32mg/m?. | New kiln standard in Table 1 and Table 2 of Emission Standard for Air Pollutants from Industrial Kilns (DB13/1640-2012) | Sulfur dioxide: 2.266 tons/year; Nitrogen oxides: 7.133 tons/year. | Sulfur dioxide: 4.918 tons/year; Nitrogen oxides: 11.647 tons/year. |
| 6 | Gree (Hefei) Electric Appliances Co., Ltd. | COD, ammonia nitrogen | Continuous discharge | 2 | Sewage station | COD: 8.9 mg/l; Ammonia nitrogen: 0.103 mg/l. | Grade-3 Standard of Comprehensive Sewage Discharge Standard (GB8978-1996) and Requirements of Takeover Standards for Sewage Treatment Plants in Economic Development Zones | COD: 2.13 tons/year; Ammonia nitrogen: 0.025 tons/year. | COD: 225.72 tons/year; Ammonia nitrogen: 13.68 tons/year. | None |
| 7 | Zhuhai Kaibang Motor Manufacture Co., Ltd. | Suspended matter COD, ammonia nitrogen | Intermittent emission | 1 | Sewage station | Suspended matter: 24 mg/L; COD: 37 mg/L; Ammonia nitrogen: 1.44 mg/L. | Grade-1 standard for the second period in Discharge Limits of Water Pollutants (DB44/26-2001) | COD: 0.1658 tons/year; Ammonia nitrogen: 1.2648 tons/year; Ammonia nitrogen: 0.195 mg/L. | 2019 sewage permit not approved | None |
| Toluene, xylene, sulfur dioxide, nitrogen oxide, particulate matter | Organized discharge | 3 | Roof of factory building | Toluene: 1.06mg/m?; Xylene: 2.11mg/m?; Sulfur dioxide: 3mg/m?; Nitrogen oxide: 3mg/m?; Particulate matter: 10mg/m?. | Grade-2 Standard of the Second Period in the Discharge Limits of Air Contaminants (DB 44/27-2001) | Toluene: 1.6032 tons/year; Xylene: 0.248 tons/year; Sulfur dioxide: 0.0063 tons/year; Nitrogen oxide: 0.0072 |
tons/year;Particulate matter:
3.174 tons/year.
| 8 | Zhuhai Gree Electrical Co., Ltd. | Xylene, phenolic compounds, VOCs | Organized discharge | 46 | Roof of factory building | Xylene: 8.95mg/m?; Phenolic compounds: 0.868mg/m?; VOCs: 8.48mg/m?. | Grade-2 Standard of the Second Period in the Discharge Limits of Air Contaminants (DB 44/27-2001) II Period of Emission Standards for Volatile Organic Compounds in the Furniture Manufacturing Industry (DB44/814-2010) | Xylene: 0.420 tons/year; Phenolic compounds: 0.264 tons/year; VOCs: 0.486 tons/year. | 2019 sewage permit not approved | None |
| 9 | Gree (Chongqing) Electric Appliances Co., Ltd. | Ammonia nitrogen, animal and vegetable oil, COD, suspended matter, petroleum, total phosphorus | Indirect emissions | 3 | Phases I, II and III | Ammonia nitrogen: 15.55mg/L; Animal and vegetable oil: 1.755mg/L; COD: 224mg/L; Suspended matter: 35.3mg/L; Petroleum: 4.47mg/L; Total phosphorus: 0.14mg/L. | Grade 3 in Table 4 of Comprehensive Standard for Sewage Discharge (GB 8978–1996) Grade B Limits in Table 1 of Water Quality Standards for Sewage Discharged into Urban Sewers (GB/T 31962-2015) | Ammonia nitrogen: 9.2 tons/year; COD: 110 tons/year; Animal and vegetable oil: 18 tons/year; Suspended matter: 89 tons/year; Petroleum: 0.28 tons/year; Total phosphorus: 0.049 tons/year. | Ammonia nitrogen: 10.184 tons/year; COD: 113.15 tons/year; Animal and vegetable oil: 20.9 tons/year; Suspended matter: 90.52 tons/year; Petroleum: 0.365 tons/year; Total phosphorus: 0.055 tons/year. | None |
| Particulate matter, sulfur dioxide, nitrogen oxide | Organized discharge | 24 | Phases I, II and III | Particulates: 28.3 mg/m?; Sulfur dioxide: 11mg/m?; Nitrogen oxides: 39mg/m?. | Table 1 of Discharge Limits of Air Contaminants (DB 50/418-2016) | Particulate matter: 123 tons/year; Sulfur dioxide: 46.2 tons/year; Nitrogen oxide: 46.2 tons/year. | Particulate matter: 126.042 tons/year; Sulfur dioxide: 49.087 tons/year; Nitrogen oxide: 49.087 tons/year. |
Construction and operation of pollution prevention facilitiesThe Company and its subsidiaries are all equipped with corresponding sewage treatment facilities in accordancewith the environmental protection requirements for construction projects, as well as full-time environmentalprotection managers, operators and monitors. Up to now, all the systems have been in normal operation, and metthe emission standards stably, without emissions beyond the standards.Environmental impact assessment of construction projects and other administrative licenses forenvironmental protectionEnvironmental impact assessment was carried out for the Company's construction project in accordance withrequirements of the Environmental Protection Bureau, the environmental protection approval and discharge permitwere acquired, and the project passed the environmental protection acceptance check.Contingency plan for unexpected environmental events
The Company implemented requirements of the Emergency Management Measures for UnexpectedEnvironmental Events and related national laws and regulations. To ensure timely, orderly, efficient andappropriate response to unexpected environmental events, protect the personal safety of employees and reduceproperty losses, each subsidiary of the Company formulated a contingency plan for unexpected environmentalevents and reported them to the environmental protection department for recording.Environmental self-monitoring planThe Company formulated an environmental self-monitoring plan according to the requirements of environmentalimpact assessment, and detected wastewater pollutants once a day and air pollutants at least once a year.Other environmental information that should be made publicNoneOther environmental protection related informationNoneXIX. Description of other significant matters
√ Applicable □ Not applicable
On 2 December, 2019, Gree Group and Zhuhai Mingjun signed the Share Transfer Agreement. Gree Group planned to transfer902,359,632 shares of the Company with unlimited sales conditions held by Gree Group to Zhuhai Mingjun at a price of RMB
46.17/share (accounting for 15% of the Company's total equity); On 13 December, 2019, the Zhuhai Municipal People's Governmentand the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of Zhuhai City separatelyapproved the share transfer.Gree Group obtained the Transfer Registration Confirmation issued by China Securities Depository and Clearing CorporationLimited (CSDC) Shenzhen Branch on 3 February, 2020. The share transfer registration procedures for the transfer of this agreementhave been completed, and the transfer date is 23 January, 2020. After the completion of the share transfer registration, the Companyhas neither a controlling shareholder nor an actual controller.
XX. Significant matters of the Company's subsidiaries
□ Applicable √ Not applicable
Section VI Changes in Stock Capital & Information of ShareholdersI. Changes in stock capital
1. Changes in stock capital
Unit: Share
| Before the change | Increase/Decrease (+, -) | After the change | |||||||
| Qty | Percentage | New Issue | Bonus Issue | Stock Converted from Housing Accumulation Fund | Others | Subtotal | Qty | Percentage | |
| I. Stocks with trading restriction conditions | 45,013,250 | 0.75% | 786,375 | 786,375 | 45,799,625 | 0.76% | |||
| 3. Stocks held by other domestic capital | 45,013,250 | 0.75% | 786,375 | 786,375 | 45,799,625 | 0.76% | |||
| Stocks held by the domestic natural person | 45,013,250 | 0.75% | 786,375 | 786,375 | 45,799,625 | 0.76% | |||
| II. Tradable Stocks without trading restriction conditions | 5,970,717,628 | 99.25% | -786,375 | -786,375 | 5,969,931,253 | 99.24% | |||
| 1. RMB ordinary stocks | 5,970,717,628 | 99.25% | -786,375 | -786,375 | 5,969,931,253 | 99.24% | |||
| III. Total of stocks | 6,015,730,878 | 100.00% | 6,015,730,878 | 100.00% | |||||
Causes of changes in stock capital
□ Applicable √ Not applicable
Approval of changes in stock capital
□ Applicable √ Not applicable
Transfer due to changes in stock capital
□ Applicable √ Not applicable
Progress of share repurchase
□ Applicable √ Not applicable
Progress of reducing shares repurchased by centralized bidding
□ Applicable √ Not applicable
Impact by changes in stock capital on financial indicators such as basic earnings per share and diluted earnings per share, and the netasset value per share attributable to common shareholders of the Company in the recent year and the recent period
□ Applicable √ Not applicable
Other contents that must be disclosed in the opinion of the Company or according to requirements of the securities regulatoryinstitution
□ Applicable √ Not applicable
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
| Name of shareholder | Number of restricted shares at the beginning of the period | Number of restricted shares increased in the current period | Number of restricted sales released from the lock-up requirements in the current period | Number of restricted shares at the end of the period | Reasons for restriction | Release date |
| Liu Jun | 9,000 | 0 | 9,000 | 0 | Share lock-up of outgoing executives | 16 July, 2019 |
| Duan Xiufeng | 0 | 795,375 | 0 | 795,375 | Share lock-up of new executives | - |
| Total | 9,000 | 795,375 | 9,000 | 795,375 | -- | -- |
II. Issuance and listing of securities
1. Issuance of securities (excluding the preferred stock) in the Report Period
□ Applicable √ Not applicable
2. Description about changes in the Company's total number of stocks and shareholder structure, andassets and liability structure
□ Applicable √ Not applicable
3. Existing internal employee stock
□ Applicable √ Not applicable
III. Information about the shareholders and actual controllers
1. Total number of shareholders and their shareholding status
Unit: Share
| Total number of common shareholders at the end of the Report Period | 308,228 | Total number of common shareholders at the end of last month before the disclosure date of the annual report | 496,265 | Total number of preferred shareholders (if any) whose voting rights were restored at the end of Report Period (See Note 8) | 0 | Total number of preferred shareholders (if any) whose voting rights were restored at the end of last month before the disclosure date of the annual report (See Note 8) | 0 | |||||||
| Shareholding of the shareholders holding more than 5% of total stocks or shareholding of the top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding proportion | Total number of the stocks held at the end of the Report Period | Increase/Decrease in the Report Period | Number of the trading restricted stocks held | Number of the trading unrestricted stocks held | Pledge or freezing | |||||||
| Stock status | Qty | |||||||||||||
| Zhuhai Gree Group Co., Ltd. | State-owned legal person | 18.22% | 1,096,255,624 | 1,096,255,624 | ||||||||||
| Hong Kong Securities Clearing Company Ltd. | Foreign legal person | 14.88% | 894,872,479 | 403,658,080 | 894,872,479 | |||||
| Hebei Jinghai Guaranteed Investment Co., Ltd. | Domestic non-state-owned legal person | 8.91% | 536,022,233 | 536,022,233 | ||||||
| China Securities Finance Co., Ltd. | State-owned legal person | 2.99% | 179,870,800 | 179,870,800 | ||||||
| Central Huijin Asset Management Co., Ltd. | State-owned legal person | 1.40% | 84,483,000 | 84,483,000 | ||||||
| Qian Hai Life Insurance Co., Ltd. – Hai Li Nian Nian | Others | 1.09% | 65,610,782 | -49,974,516 | 65,610,782 | |||||
| Dong Mingzhu | Domestic natural person | 0.74% | 44,488,492 | 33,366,369 | 11,122,123 | Pledged | 43,632,750 | |||
| Hillhouse Capital Management－HCM China Fund | Foreign legal person | 0.72% | 43,396,407 | 43,396,407 | ||||||
| National Social Security Fund 101 portfolio | Others | 0.69% | 41,364,689 | 41,364,689 | ||||||
| Agricultural Bank of China Co., Ltd. - E-Fund Consumption Industry Equity Securities Investment Fund | Others | 0.51% | 30,404,950 | 30,404,950 | ||||||
| Situation (if any) where a strategic investor or general legal person becomes one of top 10 shareholders due to placement of new shares (see Note 3) | None | |||||||||
| Description for affiliated relationship or concerted action of the above shareholders | None | |||||||||
| Shareholding of the top 10 shareholders without trading restriction conditions | ||||||||||
| Name of shareholder | Number of the trading unrestricted stocks held at the end of the Report Period | Type of stocks | ||||||||
| Type of stocks | Qty | |||||||||
| Zhuhai Gree Group Co., Ltd. | 1,096,255,624 | RMB ordinary stocks | 1,096,255,624 | |||||||
| Hong Kong Securities Clearing Company Ltd. | 894,872,479 | RMB ordinary stocks | 894,872,479 | |||||||
| Hebei Jinghai Guaranteed Investment Co., Ltd. | 536,022,233 | RMB ordinary stocks | 536,022,233 | |||||||
| China Securities Finance Co., Ltd. | 179,870,800 | RMB ordinary stocks | 179,870,800 | |||||||
| Central Huijin Asset Management Co., Ltd. | 84,483,000 | RMB ordinary stocks | 84,483,000 | |||||||
| Qian Hai Life Insurance Co., Ltd. – Hai Li Nian Nian | 65,610,782 | RMB ordinary stocks | 65,610,782 | |||||||
| Hillhouse Capital Management－HCM China Fund | 43,396,407 | RMB ordinary stocks | 43,396,407 | |||||||
| National Social Security Fund 101 portfolio | 41,364,689 | RMB ordinary stocks | 41,364,689 | |||||||
| Agricultural Bank of China Co., Ltd. - E-Fund Consumption Industry Equity Securities Investment Fund | 30,404,950 | RMB ordinary stocks | 30,404,950 | |||||||
| Central Bank Of Malaysia | 28,571,660 | RMB ordinary stocks | 28,571,660 | |||||||
| Description for affiliated relationship or concerted action among the top 10 shareholders holding tradable | None | |||||||||
| stocks without trading restriction conditions and between the top 10 shareholders holding tradable stocks without trading restriction conditions and the top 10 shareholders | |
| Description of the participation in margin trading business of the top 10 common shareholders (if any) (see Note 4) | None |
The top 10 common shareholders and top 10 common shareholders without trading restriction conditions of the Company conductedagreed repurchase transactions in the Report Period
□ Yes √ No
The top 10 common shareholders and top 10 common shareholders without trading restriction conditions of the Company didn'tconduct agreed repurchase transactions in the Report Period.
2. Information of the controlling shareholders of the Company
Nature of the controlling shareholder: Local state-owned holdingType of the controlling shareholder: Legal person
| Name of the of controlling shareholder | Legal representative/ Person in charge | Date of establishment | Organization code | Principal business |
| Zhuhai Gree Group Co., Ltd. | Zhou Lewei | 15 December, 1990 | 914404001925371865 | Manufacturing of household electrical appliance; investment, construction and operation management of public facilities and municipal facilities; investment, construction and operation management of hotels; operation, investment and management of state-owned assets; optimization allocation and capital operation of state-owned assets; transfer and lease of state-owned property rights; corporate management, planning and services; state-owned assets income management; business services (excluding licensed business items) (items that need to be approved in accordance with law can only be operated after approval by relevant departments) |
| Information regarding holding equity interests of other domestic and oversea listed companies by controlling shareholders during the Report Period | None | |||
Controlling shareholder change in the Report Period
□ Applicable √ Not applicable
The controlling shareholders of the Company didn't change in the Report Period.
3. Actual controller of the Company and its person acting in concert
Nature of the actual controller: Local state-owned assets management institutionType of the actual controller: Legal person
| Name of the actual controller | Legal representative/ Person in charge | Date of establishment | Organization code | Principal business |
| State-owned Assets Supervision and Administration Commission of Zhuhai Municipal People's Government | Li Congshan | 29 December, 2004 | 11440400719245578R | Fulfill responsibilities of the state-owned assets investor |
| Information regarding equity of other domestic and oversea listed companies controlled by the actual controller during the Report Period | At the end of the Report Period, the State-owned Assets Supervision and Administration Commission of Zhuhai Municipal People's Government indirectly controlled Zhuhai Port Co., Ltd., Zhuhai Huafa Industrial Co., Ltd., Gree Real Estate Co., Ltd., Zhuhai Huajin Capital Co., Ltd., Zhuhai Orbita Aerospace Science & Technology Co. Ltd., Zhuhai Holdings Investment Group Limited, Huajin International Capital Holding Co., Ltd. and Hong Kong Johnson Holdings Co., Ltd. | |||
Change in the actual controller in the Report Period
□ Applicable √ Not applicable
The actual controller of the Company did not change in the Report Period.Block diagram of property right and control relationships between the Company and actual controller
The actual controller controlled the Company through trust or other asset management modes
□ Applicable √ Not applicable
4. Other corporate shareholders holding more than 10% of shares
□ Applicable √ Not applicable
5. Restricted share reduction of controlling shareholders and actual controllers, restructuring party andother commitment subjects
□ Applicable √ Not applicable
Zhuhai Gree Group Co., Ltd.GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
18.22%
18.22%
Zhuhai Municipal State-owned Assets Supervision and Administration Commission
Zhuhai Municipal State-owned Assets Supervision and Administration Commission100%
Section VII Related Information of Preferred Stock
□ Applicable √ Not applicable
The Company did not have any preferred stock in the Report Period.
Section VIII Related Information of Convertible Corporate Bonds
□ Applicable √ Not applicable
The Company did not have any convertible corporate bonds in the Report Period.
Section IX Directors, Supervisors, Senior Management Personnel and
EmployeesI. Shareholding changes of directors, supervisors and senior management personnel
| Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | Stocks held at the beginning of the Period (shares) | Number of held stocks increased in the current period (shares) | Number of held stocks reduced in the current period (shares) | Other increase/decrease changes (shares) | Stocks held at the end of the Period (shares) |
| Dong Mingzhu | Chairperson & President | Incumbent | F | 65 | 25 May, 2012 | 15 January, 2022 | 44,488,492 | 44,488,492 | |||
| Huang Hui | Director and CEO | Incumbent | M | 56 | 25 May, 2012 | 15 January, 2022 | 7,380,000 | 7,380,000 | |||
| Wang Jingdong | Director, Vice President, Chief Financial Officer, Board Secretary | Incumbent | M | 49 | 25 May, 2012 | 15 January, 2022 | 884,674 | 884,674 | |||
| Zhang Wei | Director | Incumbent | M | 44 | 16 January, 2019 | 15 January, 2022 | |||||
| Zhang Jundu | Director | Incumbent | M | 59 | 25 May, 2012 | 15 January, 2022 | |||||
| Guo Shuzhan | Director | Incumbent | M | 63 | 16 January, 2019 | 15 January, 2022 | |||||
| Liu Shuwei | Independent Director | Incumbent | F | 67 | 16 January, 2019 | 15 January, 2022 | |||||
| Xing Ziwen | Independent Director | Incumbent | M | 58 | 16 January, 2019 | 15 January, 2022 | |||||
| Wang Xiaohua | Independent Director | Incumbent | M | 59 | 16 January, 2019 | 15 January, 2022 | |||||
| Li Xupeng | Chairman of Board of Supervisors | Incumbent | M | 51 | 16 January, 2019 | 15 January, 2022 | |||||
| Duan Xiufeng | Supervisor | Incumbent | M | 57 | 16 January, 2019 | 15 January, 2022 | 1,060,500 | 265,000 | 795,500 | ||
| Wang Fawen | Staff Supervisor | Incumbent | F | 37 | 16 January, 2019 | 15 January, 2022 | |||||
| Zhuang Pei | Vice President | Incumbent | M | 54 | 25 May, 2012 | 15 January, 2022 | 5,955,202 | 5,955,202 | |||
| Tan Jianming | Vice President | Incumbent | M | 56 | 31 August, 2017 | 15 January, 2022 | 1,297,300 | 1,297,300 | |||
| Ye Zhixiong | Director | Resigned | M | 62 | 1 June, 2015 | 16 January, 2019 | |||||
| Wang Ruzhu | Independent Director | Resigned | M | 55 | 20 May, 2014 | 16 January, 2019 | |||||
| Lu Xin | Independent Director | Resigned | F | 56 | 1 June, 2015 | 16 January, 2019 | |||||
| Xu Chuzhen | Chairman of Board of Supervisors | Resigned | M | 61 | 24 September, 2013 | 16 January, 2019 |
| Guo Shuzhan | Supervisor | Appointed | M | 63 | 25 May, 2012 | 16 January, 2019 | |||||
| Wang Liqin | Staff Supervisor | Resigned | F | 43 | 15 October, 2014 | 16 January, 2019 | |||||
| Liu Jun | Vice President | Resigned | M | 43 | 31 August, 2015 | 16 January, 2019 | 12,000 | 8,000 | 20,000 | ||
| Total | -- | -- | -- | -- | -- | -- | 61,078,168 | 8,000 | 265,000 | 60,821,168 |
II. Changes in the directors, supervisors and senior management personnel
√ Applicable □ Not applicable
| Name | Title | Type | Date | Reason |
| Ye Zhixiong | Director | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
| Wang Ruzhu | Independent Director | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
| Lu Xin | Independent Director | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
| Xu Chuzhen | Chairman of Board of Supervisors | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
| Guo Shuzhan | Supervisor | Appointed | 16 January, 2019 | Resigned after expiry of term of office |
| Wang Liqin | Staff Supervisor | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
| Liu Jun | Vice President | Resigned after expiry of term of office | 16 January, 2019 | Resigned after expiry of term of office |
III. Positions of directors, supervisors and senior management personnelProfessional background, major work experience and current main responsibilities in the Company of the currentdirectors, supervisors and senior management personnel of the Company:
Ms. Dong Mingzhu, with a master degree, currently acts as the Chairperson of the Board & President of GreeElectric Appliances, Inc. of Zhuhai.She has served as sales manager of Gree Electric Appliances, vice director and director of Sales Department,manager, Vice General Manager, General Manager, Vice Chairperson of the Board and President of sales company,Chairperson of Zhuhai Gree Group, etc. She consecutively served as deputy to the tenth, eleventh, twelfth andthirteenth National People's Congresses, and ever acted as a member of the ninth, tenth and eleventh ExecutiveCommittees of the All-China Women's Federation, the "Messenger of UN Sustainable Urban Development" of theUnited Nations, the first rotating presidency of the "Sustainable Development Commission" of the United NationsDevelopment Programme, Vice President of the China Quality Association, Vice Chairperson of ChinaAssociation of Women Entrepreneurs, member of Expert Committee for the thirteenth five-year developmentplanning of the National Development and Reform Commission, director of Board of Directors of China SocialEconomic Investigation Research Center, member of WFEO-CHINA of China Association for Science andTechnology, etc. She has been successively appointed as a part-time professor or MBA tutor by NorthwestUniversity, Sun Yat-sen University, China University of Science and Technology, Zhongnan University ofEconomics and Law, Communication University of China and other colleges, and was awarded the title ofhonorary academician by Beijing Normal University-Hong Kong Baptist University United International College
(UIC). She was awarded the title of "National Labor Model" by the State Council in 2015, elected as "CCTVChina Economic Person of the Year" in 2006, 2010 and 2013, selected as "The Most Influential Women inBusiness" by the Fortune magazine for 13 times from 2004 to 2019, ranked in the ranking list of "Top 50 Womento Watch" of Financial Times for three consecutive years from 2009 to 2011, was enrolled in the ranking list of"Global Best CEO" of the "Harvard Business Review" magazine in 2013, becoming China's only female on thelist. The projects initiated or led by her were ever awarded the honors and titles such as "National Model Worker","National 5?1 Labor Medal", "National March 8 Red Flag Pacesetter", "China Patent Gold Award", "Third ChinaQuality Award", "Liu Yuanzhang Quality and Technology Contribution Award", "Fudan University EnterpriseManagement Outstanding Contribution Award", "Top 10 Leading Practitioners of Management Innovation" ofTsinghua University and "China Outstanding Quality Person (National Quality Award Individual Award)".Mr. Huang Hui, with a postgraduate degree, currently acts as the Director & CEO of Gree Electric Appliances,Inc. of Zhuhai.From August 2000 to May 2014, he served as Vice President of the Company; from June, 2014 to August 2017, heserved as Executive Vice President of the Company; since August 2017 to date, he has served as CEO of theCompany; from May 2007 to August 2017, he served as Chief Engineer of the Company; since May 2012 to date,he has served as Chairman of Zhuhai Gree Dakin Device Co., Ltd. and Vice President of the Chinese Associationof Refrigeration.Mr. Wang Jingdong, with a master degree and CPA and lawyer qualifications, currently acts as the Director, VicePresident, Finance Chief and Board Secretary of Gree Electric Appliances, Inc. of Zhuhai.From November 2002 to April 2006, he served as head of Financial Department, head of Material PurchasingDepartment and chief of Audit Department. From April 2006 to September 2009, he served as President Assistantof the Company. From January 2008 up to now, he served as Finance Chief of the Company. From July 2009 up tonow, he served as Board Secretary of the Company. From October 2009 up to now, he has served as VicePresident, Finance Chief and Board Secretary of the Company.Mr. Zhang Wei, with a bachelor degree, currently acts as the Director of Gree Electric Appliances, Inc. of Zhuhai.He joined in Gree Electric Appliances in 1999 and served as the person in charge of Gree Electric Appliances PipeBranch, Material Supply Department, Outsourcing & Purchase Quality Management Department, and EnterpriseManagement Department, President Assistant of Gree Electric Appliances; from 2013 to March 2020, he served asExecutive Deputy President; currently he serves as President Assistant of the Company.Mr. Zhang Jundu, with a junior college degree, currently acts as the Director of Gree Electric Appliances, Inc. ofZhuhai.Since September 1999, he has served as Chairman of Zhejiang Tongcheng Gree Electric Appliances Co., Ltd.Since August 2012, he has concurrently served as General Manager of Zhejiang Shengshi Xinxing Gree TradingCo., Ltd. Since May 2012, he has served as Director of the Company.Mr. Guo Shuzhan, with a junior college degree, currently acts as the Director of Gree Electric Appliances, Inc. of
Zhuhai.Since August 2006, he has been served as Chairman of Hebei Jinghai Guaranteed Investment Co., Ltd.; SinceAugust 2012, he has been served as General Manager of Henan Shengshi Xinxing Gree Trading Co., Ltd.; fromMay 2012 to 16 January, 2019, he served as the Supervisor of the Company; since January 2019, he has beenserved as the Director of the Company.Ms. Liu Shuwei, with a master degree, currently acts as the Independent Director of the Board & President ofGree Electric Appliances, Inc. of Zhuhai.Ms. Liu Shuwei graduated from Peking University in 1986 with a master degree in economics. Ms. Liu Shuweistudies under the famous economists Chen Daisun Professor and Li Yining Professor in China, and is awell-known scholar in finance. In 2002, she was appraised as CCTV's "Economic Person of the Year" and"Moving China - Person of 2002". She is currently an independent director and a member of the Audit Committeeunder the Board of Directors of Vanke Enterprise Co., Ltd., and a director and a researcher at the China EnterpriseResearch Center of Central University of Finance and Economics. Since January 2019, she has been anindependent director of the Company.Mr. Xing Ziwen, with a doctor degree, currently acts as the Independent Director of Gree Electric Appliances, Inc.of Zhuhai.He is also a professor of Xi'an Jiaotong University, a distinguished professor of the Yangtze River ScholarProgram by the Ministry of Education, a national candidate for the Ten Million Talents Project in the New Century,and enjoys special allowances from the State Council. Professor Xing Ziwen used to be the director of theDepartment of Refrigeration and Cryogenic Engineering, School of Energy and Power Engineering, and thedirector of the Compressor Research Institute at Xi'an Jiaotong University. He currently acts as the deputy directorof the National Engineering Center for Fluid Machinery and Compressors at Xi'an Jiaotong University. He haswon 2 national scientific and technological progress awards, 7 provincial and ministerial scientific andtechnological progress awards, the Special Science and Technology Progress Award issued by the ChineseAssociation of Refrigeration, the Special Invention and Entrepreneurship Award issued by the China Associationof Inventions, the Outstanding Professor Award issued by the Xia Anshi Education Foundation, and the YouthInnovation Award issued by Ho Leung Ho Lee Foundation.Mr. Wang Xiaohua, with a master degree, currently acts as the Independent Director of Gree Electric Appliances,Inc. of Zhuhai.Mr. Wang Xiaohua is the director of Guangdong Guangxin Junda Law Firm. He has successively studied law atthe Central University for Nationalities, Peking University, Wuhan University, Japan Faith Corporation and theUniversity of East London. In 2003, he obtained a master degree in law from the University of East London. Since1988, he has been working as a part-time lawyer, sponsoring and leading a team to jointly handle over 1,000litigation and non-litigation cases and projects, and assisting companies to raise tens of billions of yuan fromdomestic and foreign securities markets. Since 1998, he has been a member of Guangdong Provincial Committeeof Chinese People's Political Consultative Conference (CPPCC) and has submitted about 50 proposals. He has
published four books such as Legal Issues on Enterprise Listing and more than 20 articles such as the rise and fallof the nation concerns everyone and the progress of rule of law concerns every lawyer. He once served as thePresident of the Guangzhou Lawyers Association, and currently serves as a Standing Committee of GuangdongProvincial Committee of the CPPCC, a member of the Guangdong Provincial Election Committee for Judges andProcurators, the legal consulting expert of the Guangzhou Municipal People's Government, and the legalconsultant at the Security Bureau of the Guangdong Provincial Committee of the CCP, Guangdong ProvincialPublic Security Department (GDPSD) and Guangdong Provincial Tax Service, State Taxation Administration. Healso served as the Guangzhou Asian Games Torch-Bearer; and won the honorary titles such as "OutstandingLawyers of Guangdong Province", "Top Ten Innovation Leading Talents of Tianhe District", and "GuangzhouLeading Talents of Innovation and Entrepreneurship Services".Mr. Li Xupeng, with a graduate degree, currently acts as the Supervisor of Gree Electric Appliances, Inc. ofZhuhai.He is currently the Deputy Secretary of the Party Committee of Zhuhai Gree Group Co., Ltd. and the Secretary ofthe Party Committee of Gree Electric Appliance Co., Ltd. He joined work in July 1991, joined the party inNovember 1998, had the graduate degree, was awarded the Advanced Programmer Certificate by the Ministry ofPersonnel, and the Advanced Programmer Certificate by the Japan Computer Application Technology Association.He successively served as the deputy director of the Research Institute of Foshan Shengfa Development Co., Ltd.;the engineer of Zhuhai Special Economic Zone Jinquanli Development Co., Ltd.; the deputy chief (deputy director)of Cadre Information Section (Party Member Audio-Visual Center) and the deputy chief of the Cadre SupervisionSection of Organizational Department of Zhuhai Municipal Party Committee; the deputy director and director ofZhuhai Municipal Information Center; the Chairman of the Information Association; the director of the Office ofthe Science and Technology Bureau, and the chief of the Achievement and Technology Market Section; the deputyinvestigator of the Zhuhai Science and Technology Bureau, and the Zhuhai Science, Technology, Industry, Tradeand Information Technology Bureau; a member of Zhuhai Municipal Assistance Construction Wenchuan WorkingGroup and Preparatory Team for the Development and Construction Headquarters of Western Central Urban AreaDevelopment Construction Command Preparation Group; the deputy director and a member of the Party Group ofthe Zhuhai Port Authority; the chief engineer and a member of the Party Group of the Zhuhai MunicipalTransportation Bureau; the deputy director and a member of the party group of Zhuhai Science, Technology,Industry, Trade and Information Technology Bureau(Zhuhai Municipal Intellectual Property Office, ZhuhaiMunicipal Private Economic Development Service Bureau).Mr. Duan Xiufeng, currently acts as the Supervisor of Gree Electric Appliances, Inc. of Zhuhai.Graduated from Shandong Party School in 1999, he is currently the General Manager of Shandong ShengshiXinxing Gree Trading Co., Ltd. He successively served as the Deputy General Manager and the General Managerof Shandong Gree Electric Appliance Marketing Co., Ltd. and the General Manager of Shandong ShengshiXinxing Gree Trading Co., Ltd. Since January 2019, he has been the Supervisor of the Company.Ms. Wang Fawen, with a master degree, currently acts as the Employee Supervisor of Gree Electric Appliances,Inc. of Zhuhai.
She has the national vocational qualification certificates such as Intermediate Economist and Professional inHuman Resources, and is currently the Director of Human Resources Department of Gree Electric Appliances, Inc.of Zhuhai. From July 2007 to November 2013, she successively served as the human resources specialist ofHuman Resources Department, the director of Personnel Integration Office, the head of Performance Section, andthe director of Training Section of the Company from December 2013 to the present, she has been serving as theDirector of Human Resources Department and the Head of Cultural Training and Communication Center of theCompany.Mr. Zhuang Pei, with a master degree and the title of Senior Engineer, currently acts as the Vice President ofGree Electric Appliances, Inc. of Zhuhai.From 2002 to April 2003, he served as President Assistant of the Company. From April 2003 up to now, he hasserved as Vice President of the Company.Mr. Tan Jianming, with a master degree, currently acts as the Chief Engineer and Vice President of Gree ElectricAppliances, Inc. of Zhuhai.He studied the major of refrigeration and low temperature technology of Huazhong University of Science andTechnology from 1982 to 1986 and received the Bachelor's Degree; from 1986 to 1989, he continued to study atthe major of refrigeration and low temperature technology of Huazhong University of Science and Technologyand received a master's degree, after graduation in 1989, he joined Gree Electric Appliances, Inc. of Zhuhaiimmediately and successively served as designer, department head, president assistant, deputy chief engineer, etc.Since August 2017, he has served as a Chief Engineer & Vice President of the Company.Information of positions in shareholders
√ Applicable □ Not applicable
| Name of incumbent | Name of shareholder | Position at the shareholder | Commencement of term of office | Termination of term of office | Remuneration and allowance received from the shareholder |
| Guo Shuzhan | Hebei Jinghai Guaranteed Investment Co., Ltd. | Chairman and legal representative | 1 August, 2006 | No | |
| Zhang Wei | Zhuhai Gree Group Co., Ltd. | Executive Vice President | 3 December, 2017 | 31 March, 2020 | Yes |
| Information of positions in shareholders | None | ||||
Information of positions in other companies
√ Applicable □ Not applicable
| Name of incumbent | Names of other companies | Position at other companies | Commencement of term of office | Termination of term of office | Remuneration and allowance received from other companies |
| Dong Mingzhu | Zhuhai Gezhen Investment Management Partnership (Limited Partnership) | Executive Partner | 26 September, 2019 | No | |
| Dong Mingzhu | Zhuhai Xima Pearl New Media | Director and Manager | 1 October, 2015 | No |
| Co., Ltd. | |||||
| Dong Mingzhu | Zhuhai Yinlong New Energy Co., Ltd. | Director | 1 February, 2017 | No | |
| Guo Shuzhan | Henan Shengshi Xinxing Gree Trading Co., Ltd. | Executive Director | 1 August, 2010 | Yes | |
| Guo Shuzhan | Beijing Qianyuan Hengjiuhe Liquor Co., Ltd. | Director | 1 April, 2014 | No | |
| Guo Shuzhan | Xiahe Hengsheng Hydropower Co., Ltd. | Director | 1 May, 2007 | No | |
| Guo Shuzhan | Henan Sanli Real Estate Development Co., Ltd. | Supervisor | 1 November, 2006 | No | |
| Guo Shuzhan | Nanyang Kaisheng Electrical Appliance Sales Co., Ltd. | Executive Director and General Manager | 1 September, 2007 | 12 August, 2019 | No |
| Guo Shuzhan | Henan Gree Electric Appliance Customer Service Co., Ltd. | Executive Director and General Manager | 1 August, 2006 | No | |
| Guo Shuzhan | Luoyang Gree Electric Appliance Logistics Co., Ltd. | Executive Director and General Manager | 1 June, 2010 | No | |
| Guo Shuzhan | Henan Huizhong Yifeng Electronic Commerce Co., Ltd. | Chairperson | 1 December, 2015 | No | |
| Guo Shuzhan | Xiahe Hengfa Hydropower Co., Ltd. | Director | 1 June, 2005 | No | |
| Guo Shuzhan | Luqu Hengshun Hydropower Co., Ltd. | Supervisor | 1 September, 2009 | No | |
| Guo Shuzhan | Zhengzhou Hengzhixin Metal Component Manufacturing Co., Ltd. | Executive Director and General Manager | 1 March, 2017 | No | |
| Zhang Jundu | Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. | Chairperson | 1 September, 1999 | Yes | |
| Zhang Jundu | Ningbo Tongcheng Gree Electric Appliances Co., Ltd. | Director | 1 July, 2013 | No | |
| Zhang Jundu | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Executive Director and General Manager | 1 January, 2017 | No | |
| Zhang Jundu | Zhejiang Ruitong Automobile Co., Ltd. | Director | 1 December, 2014 | No | |
| Zhang Jundu | Wenzhou Tongcheng Economic and Trade Co., Ltd. | Director | 1 April, 2012 | No | |
| Zhang Jundu | Huzhou Tongcheng Gree Electric Appliances Co., Ltd. | Director | 1 November, 2008 | No | |
| Liu Shuwei | China Vanke Co., Ltd. | Independent Director | 30 June, 2017 | 30 June, 2020 | Yes |
| Liu Shuwei | Costar Group Co., Ltd. | Independent Director | 10 April, 2019 | 10 April, 2022 | Yes |
| Wang Xiaohua | ETR Law Firm | Partner Chairman | 1 June, 2017 | Yes | |
| Wang Xiaohua | Guangzhou Nansha Reclamation Development Company | External Director | 1 October, 2015 | Yes | |
| Wang Xiaohua | Guangdong Guangxin Information Industry Co., Ltd. | Independent Director | 1 July, 2014 | Yes | |
| Wang Xiaohua | Guangdong Shirong Zhaoye Co., Ltd. | Independent Director | 26 March, 2019 | 26 March, 2022 | Yes |
| Duan Xiufeng | Beijing Rongzhi Xingwei | Manager and Executive | 2 July, 2013 | No |
| Management Consulting Co., Ltd. | Director | ||||
| Duan Xiufeng | Shandong Jierui Logistics Co., Ltd. | Executive Director and General Manager | 11 August, 2010 | Yes | |
| Duan Xiufeng | Beijing Rongpu Xingwei Management Consulting Co., Ltd. | Manager and Executive Director | 2 July, 2013 | No | |
| Duan Xiufeng | Shandong Daming Electric Appliances Co., Ltd. | Executive Director and General Manager | 28 April, 2010 | No | |
| Duan Xiufeng | Jinan Qihui Microfinance Co., Ltd. | Director | 4 February, 2009 | No | |
| Duan Xiufeng | Shandong Gree Electric Appliances Customer Service Co., Ltd. | Executive Director and General Manager | No | ||
| Duan Xiufeng | Shandong Binzhou Dongsheng Real Estate Co., Ltd. | Executive Director | 26 June, 2009 | No | |
| Duan Xiufeng | Shandong Blue Economy Industrial Fund Management Co., Ltd. | Chairperson | 5 November, 2014 | No | |
| Duan Xiufeng | Jinan Rural Commercial Bank Co., Ltd. | Supervisor | 12 February, 2015 | No | |
| Duan Xiufeng | Shandong Youbu Network Technology Co., Ltd. | Executive Director | 27 October, 2015 | No | |
| Duan Xiufeng | Shandong Binzhou Jincai Trading Co., Ltd. | Executive Director and General Manager | 25 March, 2016 | No | |
| Duan Xiufeng | Jinan Jierui New Energy Technology Co., Ltd. | Executive Director and General Manager | 21 December, 2016 | No | |
| Duan Xiufeng | Shandong Red April Brand Management Co., Ltd. | Executive Director and General Manager | 1 August, 2017 | No | |
| Duan Xiufeng | Shandong Red April E-commerce Co., Ltd. | Executive Director and General Manager | 30 August, 2017 | No | |
| Duan Xiufeng | Zhongfu Huaxia Management Consulting Co., Ltd. | Chairperson | 23 December, 2005 | No | |
| Duan Xiufeng | Shandong Red April Holdings Group Co., Ltd. | Executive Director and Manager | 5 May, 2015 | No | |
| Duan Xiufeng | Shandong Red April Venture Capital Co., Ltd. | Executive Director and General Manager | 24 April, 2017 | No | |
| Duan Xiufeng | Shandong Red April New Energy Technology Co., Ltd. | Executive Director and Manager | 13 December, 2017 | No | |
| Duan Xiufeng | Shandong Red April Electrical Appliance Sales Co., Ltd. | Executive Director and Manager | 23 May, 2019 | No | |
| Duan Xiufeng | Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Manager | 30 June, 2011 | 3 April, 2020 | Yes |
Punishments given by the securities regulatory institution to the incumbent directors, supervisors and senior management personnelor those who resigned in the Report Period in the recent three years
□ Applicable √ Not applicable
IV. Remunerations of the directors, supervisors and senior management personnelDecision making procedures, determination basis, and actual payment regarding the remunerations of directors, supervisors andsenior management personnelWithin the Report Period, the Board of Directors of the Company conducted the performance review of theachievements and performance of duties of the senior management personnel and implemented the assignmentassessment system regarding the working results in ethic, competence, diligence and achievement. The Companyadhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentiveand spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling rewardgrade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritualincentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense ofsocial responsibility and career achievement of the senior management personnel.
Remunerations of the directors, supervisors and senior management personnel in the Report Period
Unit: RMB 10,000
| Name | Title | Gender | Age | Tenure status | Total amount of pre-tax remuneration received from the Company | Remuneration received from a related party of the Company |
| Ye Zhixiong | Director | M | 62 | Resigned | 0 | No |
| Xu Chuzhen | Supervisor | M | 61 | Resigned | 0 | No |
| Wang Liqin | Staff Supervisor | F | 43 | Resigned | 10.89 | No |
| Lu Xin | Independent Director | F | 56 | Resigned | 0.5 | No |
| Wang Ruzhu | Independent Director | M | 55 | Resigned | 0.5 | No |
| Liu Jun | Vice President | M | 43 | Resigned | 2.48 | No |
| Guo Shuzhan | Supervisor | M | 63 | Resigned | 0 | Yes |
| Dong Mingzhu | Chairperson & President | F | 65 | Incumbent | 865 | No |
| Huang Hui | Director and CEO | M | 56 | Incumbent | 416 | No |
| Wang Jingdong | Director, Vice President, Chief Financial Officer, Board Secretary | M | 50 | Incumbent | 360 | No |
| Zhang Jundu | Director | M | 59 | Incumbent | 0 | Yes |
| Guo Shuzhan | Director | M | 63 | Incumbent | 0 | Yes |
| Zhang Wei | Director | M | 44 | Incumbent | 0 | Yes |
| Liu Shuwei | Independent Director | F | 67 | Incumbent | 13.25 | No |
| Wang Xiaohua | Independent Director | M | 59 | Incumbent | 13.25 | No |
| Xing Ziwen | Independent Director | M | 58 | Incumbent | 13.25 | No |
| Li Xupeng | Supervisor | M | 51 | Incumbent | 0 | Yes |
| Duan Xiufeng | Supervisor | M | 57 | Incumbent | 0 | Yes |
| Wang Fawen | Staff Supervisor | F | 37 | Incumbent | 93.51 | No |
| Zhuang Pei | Vice President | M | 54 | Incumbent | 255 | No |
| Tan Jianming | Vice President | M | 56 | Incumbent | 320 | No |
| Total | -- | -- | -- | -- | 2,363.63 | -- |
Equity incentives granted to the directors and senior management personnel in the Report Period
□ Applicable √ Not applicable
V. Employees of the Company
1. Number of employees and their specialties and education level
| Number (person) of on-the-job employees of the parent company | 26,898 |
| Number (person) of on-the-job employees of the main subsidiaries | 61,948 |
| Total number (person) of on-the-job employees | 88,846 |
| Total number (person) of employees receiving salaries in the current period | 88,846 |
| Number (person) of retired employees for whom the parent company and main subsidiaries need to bear expenses | 344 |
| Formation of Specialties | |
| Category of formation of specialties | Number (person) of employees in the formation |
| Manufacturing Personnel | 67,113 |
| Sales Personnel | 2,822 |
| Technicians | 14,251 |
| Financial Personnel | 938 |
| Administrative Personnel | 3,722 |
| Total | 88,846 |
| Education Level | |
| Education level category | Number (person) of employees |
| Bachelor Degree or above | 17,791 |
| College Degree | 11,641 |
| Technical Secondary School Education and below | 59,414 |
| Total | 88,846 |
2. Remuneration policy
The Company adheres to the concept of "Comprehensive Incentive System", adopts a salary mechanismcombining fixed salary and floating performance salary, approves and pays salaries according to the position,capacity and performance of the employees. At the same time, the Company establishes an award mechanismbased on innovative contributions to provide a powerful guarantee for providing employees with continuous andeffective incentives. In 2019, on the basis of employee professional technical grade evaluation, the Companyimplemented the application of the evaluation results in salary adjustment, further optimizing the salaryadjustment mechanism for employees; and continued to spend a lot of money on encouraging scientific and
technological personnel and R & D technology breakthroughs, and mobilizing the majority of scientific andtechnological personnel to actively participate in technological research and development and achieve continuousbreakthroughs in core technology fields.
3. Training plan
In 2019, the talent training program closely adhered to the development theme of "making independentinnovations and chasing a new era of dreams", adopted core measures such as "learning project design innovation,deepening training model mechanism, jointly enhancing management efficiency, and promoting talent trainingand upgrading", highlighted effective training of key core talents and fields of the Company, built a diversifiedindependent training mechanism, promoted the transformation and upgrading of talent training, and facilitated andsupported corporate development.
(1) Highlighting effective training of key core talents and fields of the CompanyIn 2019, the Company strongly strengthened the training for college students, middle-level management cadres,and other groups, closely followed the cultivation of cutting-edge technical talents, accelerated the supply ofhigh-quality talents, and conducted trainings for supporting business development and highlighting actualeffectiveness.
1) Creating the practical projects for cadres at middle and grass-roots levels, and building the talentechelon for corporate developmentBy closely following the requirements of the plan of "adhering to cultivating talents independently and building acontingent of high-quality cadres", the Company deepened the advanced-form cadre training mechanism of"foundation-promotion-strengthening", organized and implemented the advanced-form training of cadres,solidified the Company's development confidence, established a positive Professional mentality, and strengthenedthinking transformation and quality improvement.The "Special Training Camp of Supervisor Elites" was organized and implemented, and 164 students graduated.The training camp aimed to "conduct targeted training and achieve accurate improvement" through four stages of"selecting foal eagles, training flying eagles, raising hunting eagles, and allowing skilled eagles to fly freely andhigh", so as to promotes the competence and personal development of director positions.The cultivation plan of "Pilot School" was organized and implemented, and 73 students graduated. The projectaimed at "excellence training", adopted dual-track linkage training, focused on the learning resource system,conducted practical training based on the ten competence model latitudes, and promoted the efficient and accurateimprovement of the business level of grassroots management personnel.The college student training camp of "New Era · Pursuing Dreams at Gree" was organized and implemented, andthe on-boarding training of nearly 4,000 college students was completed. The "6-1-3" training model was furtheroptimized and deepened, and carefully designed with the stage of professional development and the core oftraining content, to promote the training of college students from all aspects and angles. Chairman Dong Mingzhu
personally opened the first lesson in life of "unleashing your style and striving for your future" for collegestudents.
2) Focusing on technologies in the Company's key areas and supported high-quality development of theCompany's core businessAccording to the Company's annual development goals, focusing on the important areas and topics of theCompany's strategic development in 2019, 80 learning projects such as key thematic training camps, cutting-edgetechnology and R&D support topics, operation management training topics, etc. were organized and implemented,to comprehensively connect strategy and performance, and practice the Company's self-training, full-staff training,systematic training and lifelong training of talents.Combined with actual business needs, the Company introduced external advantage learning resources togetherwith business unit, and organized and completed technological frontier expert lectures with a total of 20 topics in8 major series of information technology, big data technology, communication technology, central air conditioningtechnology, process technology, motor technology, equipment technology and washing technology, to promote thedevelopment of employees to professional talents in the high-end, fine and sophisticated fields.The Company implemented the "Fault Finding Action" plan, comprehensively improved the quality of the work ofthe organization and employees, and cultivated the construction of quality culture, to facilitate the Company'shigh-quality development. With quality as the center, and the system construction requirements as the core, theCompany joined hands with external units to organize quality series of special trainings so as to support theeffective implementation of the "Perfect Quality Model".
3) Boosting the skill improvement of marketing service personnel and supporting the Company's first-linemarket sales and servicesIn order to actively respond to the new challenges brought about by market changes, and better grasp the marketand serve the market, the Company built a marketing strategy blueprint of "Gree Features", continued to create amarketing team with outstanding comprehensive capabilities and excellent business qualities, and organized thetraining camp of marketing service personnel for 2019. Through "theory-based, practice-oriented" organicintegration, focusing on the four dimensions of marketing service personnel "cultural cultivation, comprehensiveliteracy, business skills, product learning", the Company customized advanced-form trainings to help marketingservice personnel improve their skills and better support sales and services in the first-line market.
4) Developing a skilled and innovative labor force, and supporting enterprises to achieve qualitymanufacturingIn order to promote the transformation and upgrading of Gree's talent training, the cultivation of high-qualityskilled personnel was mainly promoted through two aspects: "skill upgrade and academic qualification upgrade",highlighting the training practice of "skill upgrade promotes efficiency, and personal upgrade promotesdevelopment".The innovative mechanism for the cultivation of highly skilled talents was established. Such resource advantages
as training (cultivation) bases of high-skilled talents were fully utilized, the training mechanism of high-skilledtalents was further deepened, the four-level development plan of "skilled personnel, skilled elites, chieftechnicians, and Gree craftsmen" was formed, and Gree's unique mechanism for training was created.The independent skill training and evaluation system was established. Based on the four-step mechanism forcultivation and development of front-line technicians, a three-level (company-level, branch-level, and team-level)training model was established, and the effectiveness evaluation standard with "theory, practice, and performance"as the core was built to form a new training model of skilled talents.The Company's collaborative model for cultivating skilled talents was developed. Internal and external resourceswere adopted to organize and carry out targeted trainings of enterprise vocational skills and competitions forvocational skills, the Company's new apprenticeship mechanism was implemented, the subsidies for right positiontraining and skill upgrade were fully utilized to broaden the skills training channels and forms and build Gree'scollaborative mode for training of high-skilled new talents.The spirit of model workers and craftsmen was vigorously promoted. The Company's innovative and technicalskilled talents were deeply explored and nurtured, the leading role of professional skill competitions was fullyplayed in the selection and cultivation of skilled talents, and 2019 Gree Electric Appliances' "Ingenuity DreamAchieves Life" Labor Skill Competition was organized and carried out. The Company organized employees toparticipate in the National Intelligent Manufacturing Application Technology Skill Competition, the GuangdongProvincial Industrial Robot Competition, Zhuhai Municipal Welding Competition and other series of skillcompetitions and "Xiangzhou Craftsman" Skill Competition, and undertook Zhuhai Municipal Mold Competition,in which Zeng Zhixin from the precision mold company won the first place. The Company cultivated andexcavated China craftsmen, built the value orientation of labour being glorious, and created a strong atmosphereof "learning skilled talents, respecting skilled talents, and striving to be skilled talents".Up to now, the Group has 36,600 skilled talents, of which more than 5,000 are rated as intermediate and seniortechnicians, and of which many have won the titles of "Guangdong Provincial Technical Expert", "ZhuhaiMunicipal Technical Expert", "Zhuhai Municipal Post Technical Expert", "Zhuhai Artisan".
(2) Deepening the Company's independent talent training model
Gree Electric Appliances' talent team building never implements "borrowlism", but insists on "independenttraining". Based on the Company's development experience and cultural heritage, it gradually forms a model ofindependent training and development mechanism. In 2019, the Company continued to deepen the construction oflearning resources and platforms, developed high-quality learning projects, and built a diversified self-cultivationmechanism, so that Gree's talent cultivation further highlighted its independence characteristics.
1) Implementing the requirement of "everyone acting as a lecturer" and creating high-quality learningresourcesThe 2019 special activities called "Three auditoriums for extracting experience" were organized and held. Theactivities called "Middle-level cadres on the platform - Micro classroom for managerial cadres" were organized,and 130 courses were selected, to further deepen the accumulation of internal excellent management experience
and wisdom. The special activities called "Technology experts on the platform - Auditorium for technologyexperts" were organized, and 150 courses were selected, to form a mechanism for inheriting business experience.The activities called "Business elites on the platform - Auditorium for internal lecturers" were organized, toprovide employees with the training resources support needed for business learning and career development,involving 49 major topics in 9 categories and attracting more than 5,000 participants.
2) Cultivating excellent lecturers and forming a learning atmosphere for all staffThe team of internal lecturers is a think tank for the Company to develop all kinds of talents and is a core force forinheriting Gree's excellent corporate culture and corporate wisdom. In 2019, the Company's team of internallecturers developed the "empowering two-line" model based on internal lecturer competence and cultivation, andcomprehensively strengthened team building from the two dimensions of internal lecturer's "selection, cultivation,use, retention" and growth and promotion. A Call for New Voices - Selection of New Lecturers was organized andheld, and 30 lecturers were selected. The "Intelligence and Inheritance · Lecturer Glory" 2019 Gree LecturerGroup Teacher's Day Condolences and Recognition Event was organized, creating a good atmosphere of"respecting teachers and cherishing virtues, loving learning and giving thanks" throughout the Company. The"Intelligent Manufacturing Heritage" competition was organized and implemented to explore the Group's top 30and top 10 lecturers. In the 2019 Guangdong Provincial Enterprise Lecturer Competition, Gree's lecturer ZhangZhiqian won the first prize and the honorary title of "Guangdong Technical Expert", and another lecturer LuQinghua won the honorary title of "Top Ten Lecturers" in Guangdong Province. In 2019, internal lecturersconducted more than 2,100 training sessions for 3,800 hours, and the student satisfaction was 94.6%.
3) Creating high-quality learning products and forming a talent training experience sharing and exchangeplatformIn order to further accumulate and inherit the talent training experience, and form a talent training experiencesharing and exchange platform, the Company organized and implemented the "Energizing Cup" learning projectdesign competition. The competition was themed by "casting product thinking and creating high-quality learning",explored a batch of new development projects of design and operation talents, and accumulated a batch of classictalent development projects for continuous development and improvement, thus creating high-quality learningproducts to boost performance.The Company organized and carried out the "My Product, My Creativity" product innovation design competitionfor college students, to provide a platform for college students within the Group to "expand thinking, developcreativity, and enhance cooperation". The Company organized and held the 2019 "Empowerment Organization ?Get Together with Wisdom" training and development annual meeting, showing Gree's independent talent trainingmodel and mechanism, and creating a sharing and exchange platform for internal and external training andlearning.
(3) Promoting the transformation and upgrading of Gree talent training
The Company accelerated the implementation of the construction of Gree College, promoted the operation ofGree Pearl Industrial College, organized the construction and operation of primary and middle school students'
research practice education base, promoted the transformation of training system to education system, and solvedthe systemic and effective problems of talent cultivation.Accelerating the construction of Gree CollegeIn 2019, with the strong support of Guangdong Provincial Department of Education, Zhuhai Municipal PartyCommittee and Zhuhai Municipal Government, Gree College made breakthrough progress in project constructionland, project construction procedures, project planning and design, and discipline professional construction. GreeCollege entered the essence construction stage from the preparatory stage. The College is located in the UniversityTown Area of Tangjiawan Town, Zhuhai High-tech Zone, covering an area of 200,000 square meters. Based onhigh-end manufacturing, focusing on the "dual-smart" strategy, customized in collaboration with Germanuniversities and by integrating university and enterprise, truly following the educational focus of "emphasis oncultivating professional ethics, technology application skills, and innovation and entrepreneurship abilities", theCollege will cultivate high-end enterprise management talents, applied high-end technology R & D talents andpractical high-end skill operation talents needed for the development of new manufacturing industry. At present,the College is in the planning and design stage. In strict accordance with the high-standard and high-level campusrequirements of "informatization, intelligence, internationalization", the Company will accelerate the constructionof Gree College and creatively turn Gree College into a characteristic university striving to traindevelopment-oriented, compound and innovative manufacturing multi-level elite talents.
2) Promoting the operation of Gree Pearl Industrial College
Gree Pearl Industrial College makes full use of the two favorable systems of enterprises and universities,implements Gree's "enterprise spirit, management policy and quality policy" and other corporate management andcultural concepts, sets up unique school-running concepts and teaching systems, and creatively builds the unionindustry university a characteristic college closely and highly suitable for the development of manufacturingindustry. The College adheres to the guide of serving the development of Gree, and takes the developmentexperience and culture of Gree Electric Appliances as a China manufacturing brand, to create a new high-endhigh-skilled talent education highland, so as to deliver high-quality technical and skilled employees with "strongquality awareness, standardized behaviors and recognization of Gree culture" for the development of Gree. In2019, the College experienced further development in aspects of enrollment, discipline and professionalconstruction, teacher internships, special projects, and co-construction of practical operation bases. There were 22classes in 10 majors, with about 750 students. At the same time, a professional university-enterpriseco-construction system in the majors of electronic information, electrical automation, intelligent controltechnology, cloud computing, big data, etc. was established to jointly build a professional training base for airconditioning and refrigeration, and an intelligent equipment training center so as to cultivate the customizationtalents required by Gree.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X Corporate GovernanceI. Basic conditions of corporate governanceIn strict accordance with the Company Law, Securities Law and other relevant national laws and regulations andthe Guidelines for Standardized Operation of Companies Listed on the Main Board of Shenzhen Stock Exchange,the Company establishes the normative corporate governance structure and the rules of procedure for the GeneralMeeting of Shareholders, Board of Directors and Board of Supervisors, clarifies the responsibilities andauthorities in decision-making, performance and supervision, forms effective division of responsibilities andbalance mechanism, continuously promotes the level of normal operation and safeguards the interests of investorsand the Company.The corporate governance conforms to the Company Law and requirements of CSRC for governance of listedcompanies.
Great differences exist between the actual corporate governance and the normative document related to listed company governancepublished by the CSRC
□ Yes √ No
No great differences exist between the actual corporate governance and the normative document related to listed companygovernance published by the CSRCII. Independence of the Company relative to the controlling shareholder in the aspects such asbusiness operation, personnel, assets, organization and financeThe Company has a sound corporate governance structure and completely separates from Gree Group as thecontrolling shareholder in business operation, personnel, assets, organization and finance, and the Company hasindependent and complete business operation and independent management capability.III. Horizontal competition
□ Applicable √ Not applicable
IV. Convening of the annual general meeting of shareholders and interim general meeting ofshareholders during the Report Period
1. General meetings of shareholders during the Report Period
| Session of meeting | Type of meeting | Proportion of participating investors | Date of meeting | Date of disclosure | Disclosure index |
| The first interim | Interim general | 38.76% | 16 January, 2019 | 17 January, | The Announcement on Resolutions of the |
| general meeting of shareholders for the year of 2019 | meeting of shareholders | 2019 | First Interim General Meeting of Shareholders for the Year 2019 and so on on www.cninfo.com.cn | ||
| 2018 annual general meeting of shareholders | Annual general meeting of shareholders | 46.65% | 26 June, 2019 | 27 June, 2019 | The Announcement on Resolutions of the General Meeting of Shareholders for the Year 2018 and so on on www.cninfo.com.cn |
| The Second Interim General Meeting of Shareholders for the Year 2019 | Interim general meeting of shareholders | 42.51% | 18 November, 2019 | 19 November, 2019 | The Announcement on Resolutions of the Second Interim General Meeting of Shareholders for the Year 2019 and so on on www.cninfo.com.cn |
2. Convening of an interim general meeting of shareholders requested by the preferred shareholders whosevoting rights have been restored
□ Applicable √ Not applicable
V. Performance of duties by independent directors during the Report Period
1. Attendance of independent directors at meetings of the Board of Directors and general meetings ofshareholders
| Attendance of independent directors at meetings of the Board of Directors and general meetings of shareholders | |||||||
| Name of independent director | Number of meetings of the Board of Directors requiring attendance in the Report Period | Times of attending meetings of the Board of Directors on the field | Times of attending meetings of the Board of Directors in the way of communication | Times of attending meetings of the Board of Directors by entrusting | Times of absence from meetings of the Board of Directors | Failed to personally attend the meetings of the Board of Directors for two consecutive times | Times of attending the general meetings of Shareholders |
| Liu Shuwei | 8 | 2 | 6 | 0 | 0 | No | 2 |
| Xing Ziwen | 8 | 2 | 6 | 0 | 0 | No | 2 |
| Wang Xiaohua | 8 | 2 | 6 | 0 | 0 | No | 1 |
Description about the failure to personally attend the meeting of the Board of Directors for two consecutive times
2. Objection raised by independent directors to relevant issues of the CompanyIndependent directors raised objection to relevant issues of the Company
□ Yes √ No
The independent directors didn't raise any objection to relevant issues of the Company.
3. Other descriptions for performance of duties by independent directors
Whether the relevant suggestions on the Company by independent directors were adopted
√ Yes □ No
Description about the relevant suggestions on the Company by independent directors that were adopted or not adopted
Within the Report Period, the independent directors of the Company were able to act in maintaining the bestinterest of the Company and its shareholders, faithfully perform their own duties in accordance with the relevantprovisions, attend the meetings of the Board of Directors, review and discuss various proposals carefully, fullyexpress their suggestions and opinions for the operation and management of the Company, play an active role inmaking effective decisions, improving management level and standardizing business operations by the Board ofDirectors of the Company, and practically safeguarding the interests of minority stock holders.VI. Performance of duties by special committees under the Board of Directors during theReport Period
During the replacement of the Company's board of directors and board of supervisors in 2019, the nominationcommittee carefully reviewed the qualifications of directors and supervisors nominated by each shareholder unit,board of directors, and board of supervisors, and reviewed the qualifications of each candidate during the selectionof senior management personnel.The remuneration and appraisal committee reviewed and approved the Remuneration Distribution Plan forDirectors, Supervisors and Senior Management Personnel for the Year 2019.According to the Rules of Procedure of Audit Committee of the Company, the audit committee conductedcommunication, supervision and check for internal and external audits of the Company:
a. The audit committee carried out full communications with the accounting firm responsible for the annual auditof the Company in respect of audit plan, engagement letter and risk and control, etc.b. Before the annual audit certified public accountants accessed to the site, the audit committee reviewed thepreliminarily prepared financial statements of the Company and held that these statements reflected the presentfinancial position of the Company in all major aspects.c. After the annual audit certified public accountants issued preliminary opinions, the audit committee reviewedthe financial statements of the Company, communicated with the accounting firm in respect of material particularsand significant accounting estimates, audit adjustments and significant accounting policies which might havepotential influence on the financial statements and held that the financial statements of the Company gave a true,accurate and complete view of the whole position of the Company and agreed to prepare the annual report for theyear 2019 on the basis of these financial statements.d. The audit committee reviewed the financial statements for the year 2019 which had been audited by the auditorsand held that these financial statements gave a fair view of the financial position of the Company ended 31December, 2019 and operating results and cash flows for the year 2019 in all major aspects and agreed to submitthem to the board of directors for deliberation.f. The audit committee summarized and evaluated the audit work for this year as done by Union Power CPAs Co.,Ltd. and held that the annual audit certified public accountants performed their audit work in strict accordancewith the Independent Auditing Standards for Chinese Certified Public Accountants and suggested the Company
re-engage Union Power CPAs Co., Ltd. as the audit institution for the year 2020.VII. Work of the Board of SupervisorsThe Board of Supervisors found whether there are risks in the supervision during the Report Period.
□ Yes √ No
The Board of Supervisors had no objection to the supervision during the Report Period.VIII. Appraisal and incentive for senior management personnelWithin the Report Period, the Board of Directors of the Company conducted the performance review of theachievements and performance of duties of the senior management personnel and implemented the assignmentassessment system regarding the working results in ethic, competence, diligence and achievement. The Companyadhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentiveand spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling rewardgrade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritualincentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense ofsocial responsibility and career achievement of the senior management personnel.
IX. Internal control
1. Details about major defects found in internal control in the Report Period
□ Yes √ No
2. Internal control self-evaluation report
| Full disclosure date of the internal control evaluation report | 30 April, 2020 | |
| Full disclosure index of the internal control evaluation report | www.cninfo.com.cn | |
| Proportion of the total amount of unit assets included in the evaluation scope to the total amount of assets in the consolidated financial statements of the Company | 97.00% | |
| Proportion of the unit operating income included in the evaluation scope to the unit operating income in the consolidated financial statements of the Company | 98.00% | |
| Defect identification standard | ||
| Category | Financial report | Non-financial report |
| Qualitative standard | For details, see the Internal Control Self-evaluation Report of Gree Electric Appliances, Inc. of Zhuhai for the Year 2019 disclosed on www.cninfo.com.cn by the Company on 30 April. | For details, see the Internal Control Self-evaluation Report of Gree Electric Appliances, Inc. of Zhuhai for the Year 2019 disclosed on www.cninfo.com.cn by the Company on 30 April. |
| Quantitative standard | For details, see the Internal Control Self-evaluation Report of Gree Electric Appliances, Inc. of Zhuhai for the Year 2019 disclosed on www.cninfo.com.cn by the Company on 30 April. | For details, see the Internal Control Self-evaluation Report of Gree Electric Appliances, Inc. of Zhuhai for the Year 2019 disclosed on www.cninfo.com.cn by the Company on 30 April. |
| Number of major defects in the financial report | 0 | |
| Number of major defects in the non-financial report | 0 | |
| Number of important defects in the financial report | 0 | |
| Number of important defects in the non-financial report | 0 | |
X. Internal control audit report
√ Applicable □ Not applicable
| Deliberation opinion section in the internal control audit report | |
| We hold that the Company has maintained effective internal control of financial reports in accordance with the Basic Rules for Internal Control of Enterprises and relevant regulations. | |
| Disclosure of internal control audit report | Disclosed |
| Full disclosure date of the internal control audit report | 30 April, 2020 |
| Full disclosure index of the internal control audit report | www.cninfo.com.cn |
| Type of internal control audit report opinions | Standard without reserved opinion |
| Major defects found in the non-financial report | No |
The accounting firm issued the internal control audit report of non-standard opinions
□ Yes √ No
The internal control audit report issued by the accounting firm is consistent with the self-evaluation report opinion of the Board ofDirectors
√ Yes □ No
Section XI Related Information of Corporate BondsWhether the Company has any corporate bonds that have been issued publicly and listed on the stock exchange, and have not becomedue on the approved submission date of the annual report or have become due but have not been not paid in full.No
Section XII Financial ReportI. Audit report
| Audit opinion type | Standard without reserved opinion |
| Signing date of the audit report | 29 April, 2020 |
| Name of the audit institution | Union Power Certified Public Accountants (Special General Partnership) |
| Audit Report Doc No. | Union Power Audit No. (2020) No. 050146 |
| Name of the certified public accountant | Gong Jingwei, Wu Zihao |
Text of the Audit ReportAll shareholders of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI:
1 Audit opinionWe have audited the financial statements of Gree Electric Appliances, Inc. of Zhuhai (hereinafter referred to as "your company"),including the consolidated and parent company's balance sheets ended 31 December, 2019 and consolidated and parent company'sincome statements, consolidated and parent company's cash flow statements and consolidated and parent company's Statement ofChanges in Owners' Equity and notes to the financial statements for the year 2019.In our opinion, the accompanying financial statements have been prepared in all material aspects in accordance with the AccountingStandards for Business Enterprises and fairly reflected the consolidated and parent company's financial position of your companyended 31 December, 2019 and consolidated and parent company's operating results and cash flows for the year 2019.
2 Basis for forming audit opinionsWe have conducted our audit work according to the provisions of Audit Standards for Certified Public Accountants of China. Thepart related to "CPA's responsibility for the audit of financial statements" in the audit report further elaborates our responsibilitiesunder these standards. In accordance with the China Code of Ethics for Certified Public Account, we are independent of yourcompany and performed other responsibilities in respect of professional ethics. We believe the audit evidences obtained by us aresufficient and proper and shall provide the basis for expressing our audit opinion.3 Key audit itemsThe key audit items are the items that are deemed to be the most important ones in the current financial statement audit according toour professional judgment. The response to these items is based on the overall audit of the financial statements and the formation ofaudit opinions. We do not give separate opinions on these items.
(1) Related party relationships and transactions
| Key audit items | How this item is dealt with in auditing |
| Refer to the description in "Note (XII) 4" "Note (XII) 5" "Note (XII) 6" and "Note (XII) 8" in the financial report. In 2019, your company purchased RMB 2,450,099,500 of raw materials, fixed assets and other products from the related parties, and sold RMB 20,850,962,800 of air conditioners, intelligent equipment and other products to the related parties in total. Because of the significant transaction amount of your company's related party, the related party relationships and integrity of its transaction disclosure and the fairness of the related transaction will have a significant impact on the business performance and disclosure of information. Therefore, we regard the related party relationships and their transactions as key audit items. | 1. We understood, evaluated and tested the internal control related to the identification and disclosure of related party relationships and their transactions, and reviewed effectiveness of the corresponding internal control design and implementation; 2. We obtained the management's statement on integrity of the related party relationships and their transactions, obtained a list of related party relationships provided by management, and checked it against the information obtained from other public channels; 3. We checked the major procurement, sales and other contracts to identify whether there was an undisclosed related party, and also obtained the resolution of the board of directors and the resolution of the shareholders' meeting related to the related transaction, checked the permissions and procedure of the related transaction decision, judged the legality and compliance of related transactions, and checked if it was authorized and approved appropriately; 4. We carried out the sampling inspection procedure, checked the corresponding transaction agreement, delivery order, receipt document, sales invoice, purchase invoice, sales receipt and purchase payment voucher, analyzed the purpose of transaction to determine whether the way of obtaining cash flow of the two parties before and after the transaction, amount and risks were substantially changed, and whether the transaction has commercial substance, and combined other audit procedures such as letters to verify authenticity of the related transaction; 5. We compared the sale and purchase prices of the related party with the sale and purchase prices of similar products of the non-related parties or the market prices of similar products, and judged fairness of the related transaction price; 6. We expanded the scope of the post-period test procedure and checked whether there was a sales return so as to deal with false sales; 7. We also checked adequacy of the information disclosure related to the affiliated relationship and related transaction in "Note (XII) 4" "Note (XII) 5" "Note (XII) 6" and "Note (XII) 8" in the financial report. |
(2) Confirmation of deferred income tax assets
| Key audit items | How this item is dealt with in auditing |
| Refer to the description in "Note (V) 26" and "Note (VII) 22" in the financial report. Your company's consolidated balance sheet showed the deferred income tax assets of RMB 12,541,085,100 as of 31 December, 2019. The confirmation of deferred income tax assets depends on significant judgment of the management. In making judgments, the management needs to assess whether sufficient taxable income can be obtained in the future, and the possibility of generating the above taxable income and reversal of deductible temporary difference in the future. In consideration of the importance of confirmation of the deferred income tax assets to the consolidated financial statements and the significant judgment and estimate involving the management in the prediction of the future taxable income, there may be error or potential management bias. Therefore, we identified it as a key audit item of your company. | 1. We tested design and implementation of the internal control related to confirmation of deferred income tax assets; 2. We invited tax experts to join the team and help us assess analysis of the management from the perspective of tax technology. 3. We obtained the future usable tax profit confirming method by the management and the important hypothesis, as well as forecast of the financial situation in the corresponding future period, and evaluated whether its preparation is in conformity with the general trend of the household electrical appliance industry and the situation of the enterprise; 4. We compared the estimate of the management during prediction in the previous year with the actual payable income tax of this year to consider historical accuracy of the prediction result made by the management, and evaluated there was any sign of management bias in selection of key hypothesis index by the management; 5. We also checked adequacy of the information disclosure related to the deferred income tax assets in "Note (V) 26" and "Note (VII) 22" in the financial report. |
(3) Provision for obsolete stocks
| Key audit items | How this item is dealt with in auditing |
| Refer to the description in "Note (V) 12" "Note (VII) 8" and "Note (VII) 56" in the financial report. As of 31 December, 2019, the book value of inventory in your company's consolidated balance sheet was RMB 24,084,854,100, wherein the book balance of inventory was RMB 24,342,480,200 and the provision for obsolete stocks was RMB 257,626,100. Confirmation of the provision for obsolete stocks depends on estimation of the net realizable value of the stock. For confirmation of the net realizable value of the stock, the management should estimate the future selling price of stock, cost (e.g., the related cost) to be incurred by the time of completion, selling expenses, and the related tax amount. In consideration of the importance of confirmation of the stocks and provision for obsolete stocks to the consolidated financial statements and the complicated calculation process of provision for obsolete stocks, and major judgments, assumptions and estimates of the management involved when the net realizable value of the stock is determined, there may be error or potential management bias. Therefore, we identified it as a key audit item of your company. | 1. We tested implementation of the internal control related to confirmation of provision for obsolete stocks; 2. We evaluated the important judgments, assumptions and estimates involved in calculation of the net realizable value by management, and also checked the bases and documents for the management to determine items such as the future selling price of stock, cost (e.g., the related cost) to be incurred by the time of completion, selling expenses, and the related tax amount; 3. We carried out the auditing procedures such as checking and recalculation, and particularly we recalculated to determine the net realizable value of the stock according to the related data; 4. We conducted an analytic review of the inventory age to determine whether the corresponding provision for obsolete stocks is adequate; 5. We conducted supervision of inventory taking. During supervision of inventory taking, we focused on authenticity and accuracy of the inventory and use of the inventory, checked for slow moving inventory and defective inventory so as to evaluate adequacy of the provision for obsolete stocks; 6. We also checked adequacy of the information disclosure related to the provision for obsolete stocks in "Note (V) 12", "Note (VII) 8" and "Note (VII) 56" in the financial report. |
4 Other information
The management of your company is responsible for other information. Other information includes the information covered in the2019 annual report of your company, excluding the financial statements and our audit reports.Our audit opinions published on financial statements do not cover any other information, and we will not publish any form offorensic conclusion on other information.In connection with our audit of the financial statements, our responsibility is to read the other information identified above, and, indoing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained inthe audit, or otherwise appears to be materially misstated.If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, weconclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to reportin this regard.5 Responsibilities of management and those charged with governance for financial statementsThe management of your company is responsible for preparing the financial statements in accordance with the requirements ofAccounting Standards to achieve a fair presentation, and for the designing, implementing and maintaining internal control that is
necessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors.In preparing the financial statements, management of your company is responsible for accessing your company's ability to continueas a going concern, disclosing matters related to going concern and using the going concern basis of accounting unless managementeither intends to liquidate your company or to cease operation, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing your company's financial reporting process.6 Auditor's responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a materialmisstatement when it exits. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.As part of an audit in accordance with the audit standards, we exercise professional judgment and maintain professional skepticismthroughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, asfraud may involve collusion, forgery, omissions, misrepresentations, or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate.(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuremade by management of your company.(IV) Conclude on the appropriateness of using the going concern assumption by the management of your company, and conclude,based on the audit evidence obtained, whether a material uncertainty exits related to events or conditions that may cast significantdoubt on our company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required todraw attention in our auditor's report to the related disclosure in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up the date of our auditor's report. However, futureevents or conditions may cause your company to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, including the disclosure, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence for the financial information of your company's entity or business activities soas to express opinions on the financial statements. We are responsible for guiding, supervising and implementing group audits. Weassume full responsibility for the audit opinions.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit matters, including any significant deficiencies in internal control that we identify during our audit.We also provide a statement to those charged with governance regarding the observed professional moral requirements related toindependence, and communicate with those charged with governance about all the relationships and other matters that may bereasonably considered to affect our independence, as well as the related countermeasures (if applicable).In the matters we communicated with those charged with governance, we determine the matters that are most important to audit ofthe current period financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws
and regulations prohibit public disclosure of these matters, or, in a few cases, we confirm that the matter should not be communicatedin the audit report if it is reasonably anticipated that the negative consequence caused by communicating a matter in the audit reportexceeds the benefit generated in terms of public interests.
| Union Power Certified Public Accountants (Special General Partnership) | Chinese CPA: | ||
| (engagement partner): | |||
| Gong Jingwei | |||
| Chinese CPA: | |||
| Wu Zihao | |||
| Wuhan, China | 29 April, 2020 | ||
| Consolidated Balance Sheet (assets) | |||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||||
| Assets | Note | 31 December, 2019 | 1 January, 2019 | 31 December, 2018 | |
| Current assets: | |||||
| Monetary capital | (VII) 1 | 125,400,715,267.64 | 115,022,653,811.67 | 113,079,030,368.11 | |
| Cash and deposits in central bank | |||||
| Deposits in other banks | |||||
| Deposit for recognizance | |||||
| Lending funds | |||||
| Trading financial assets | (VII) 2 | 955,208,583.58 | 1,012,470,387.43 | Not applicable | |
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | Not applicable | Not applicable | 1,012,470,387.43 | ||
| Derivative financial assets | (VII) 3 | 92,392,625.69 | 170,216,138.92 | 170,216,138.92 | |
| Bills receivable | 35,911,567,876.04 | ||||
| Accounts receivable | (VII) 4 | 8,513,334,545.08 | 7,642,434,078.24 | 7,699,658,990.16 | |
| Receivables financing | (VII) 5 | 28,226,248,997.12 | 34,300,472,580.13 | Not applicable | |
| Prepayment | (VII) 6 | 2,395,610,555.26 | 2,161,876,009.22 | 2,161,876,009.22 | |
| Other receivables | (VII) 7 | 159,134,399.10 | 290,346,336.38 | 2,553,689,544.47 | |
| Inventories | (VII) 8 | 24,084,854,064.29 | 20,011,518,230.53 | 20,011,518,230.53 | |
| Assets held for sale | |||||
| Non-current assets due within one year | (VII) 9 | 445,397,710.39 | |||
| Other current assets | (VII) 10 | 23,091,144,216.68 | 18,913,345,857.70 | 17,110,921,223.89 | |
| Total current assets | 213,364,040,964.83 | 199,525,333,430.22 | 199,710,948,768.77 | ||
| Non-current assets: | |||||
| Disbursement of loans and advances | (VII) 11 | 14,423,786,409.22 | 9,081,714,083.52 | 9,071,332,784.86 | |
| Debt investment | (VII) 12 | 37,216,700.19 | Not applicable | ||
| Available-for-sale financial assets | Not applicable | Not applicable | 2,216,195,036.33 | ||
| Other debt investments | (VII) 13 | 296,836,282.20 | 1,064,120,569.43 | Not applicable | |
| Held-to-maturity investment | Not applicable | Not applicable | |||
| Long-term receivables | |||||
| Long-term equity investment | (VII) 14 | 7,064,186,161.29 | 2,250,732,461.71 | 2,250,732,461.71 | |
| Other equity instrument investments | (VII) 15 | 4,644,601,697.51 | 1,144,907,946.33 | Not applicable | |
| Other non-current financial assets | (VII) 16 | 2,003,483,333.33 | Not applicable | ||
| Investment real estate | (VII) 17 | 498,648,691.85 | 537,589,343.08 | 537,589,343.08 | |
| Fixed assets | (VII) 18 | 19,121,930,757.04 | 18,385,761,475.54 | 18,385,761,475.54 | |
| Construction in Progress | (VII) 19 | 2,431,051,409.94 | 1,663,938,988.55 | 1,663,938,988.55 | |
| Productive biological assets | |||||
| Oil and gas assets | |||||
| Intangible assets | (VII) 20 | 5,305,541,098.92 | 5,204,500,167.30 | 5,204,500,167.30 | |
| Development expenditures | |||||
| Business reputation | (VII) 21 | 325,919,390.58 | 51,804,350.47 | 51,804,350.47 | |
| Long-term deferred expenses | 2,718,105.35 | 4,237,554.01 | 4,237,554.01 | ||
| Deferred income tax assets | (VII) 22 | 12,541,085,078.09 | 11,377,090,764.13 | 11,349,573,709.69 | |
| Other non-current assets | (VII) 23 | 948,328,035.13 | 787,542,636.50 | 787,542,636.50 | |
| Total non-current assets | 69,608,116,450.45 | 51,591,157,040.76 | 51,523,208,508.04 | ||
| Total assets | 282,972,157,415.28 | 251,116,490,470.98 | 251,234,157,276.81 | ||
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||||
| Consolidated Balance Sheet (liabilities and owner's equity) | |||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||||
| Liabilities and owners' equity | Note | 31 December, 2019 | 1 January, 2019 | 31 December, 2018 | |
| Current liabilities: | |||||
| Short-term borrowing | (VII) 24 | 15,944,176,463.01 | 22,197,899,406.88 | 22,067,750,002.70 | |
| Borrowings from the central bank | |||||
| Deposits from customers and interbank | (VII) 25 | 352,512,311.72 | 319,477,242.91 | 315,879,779.13 | |
| Loans from other banks | (VII) 26 | 1,000,446,666.67 | |||
| Trading financial liabilities | Not applicable | ||||
| Financial liabilities measured at their fair values and of which the changes are recorded into the current profits and losses | Not applicable | Not applicable | |||
| Derivative financial liabilities | (VII) 27 | 257,364,882.07 | 257,364,882.07 | ||
| Financial assets sold for repurchase | (VII) 28 | 2,074,500,000.00 | |||
| Deposit-taking | |||||
| Bills payable | (VII) 29 | 25,285,207,843.86 | 10,835,428,282.29 | 10,835,428,282.29 | |
| Accounts payable | (VII) 30 | 41,656,815,752.46 | 38,987,371,471.02 | 38,987,371,471.02 | |
| Advances from customers | (VII) 31 | 8,225,707,662.42 | 9,792,041,417.16 | 9,792,041,417.16 | |
| Payroll payable | (VII) 32 | 3,430,968,964.33 | 2,473,204,451.69 | 2,473,204,451.69 | |
| Taxes payable | (VII) 33 | 3,703,779,716.33 | 4,848,347,673.70 | 4,848,347,673.70 | |
| Other payables | (VII) 34 | 2,712,692,973.66 | 3,084,011,741.38 | 4,747,139,263.00 | |
| Liabilities held for sale | |||||
| Non-current liabilities due within one year | |||||
| Other current liabilities | (VII) 35 | 65,181,491,855.14 | 64,890,979,418.62 | 63,361,598,764.96 | |
| Total current liabilities | 169,568,300,209.60 | 157,686,125,987.72 | 157,686,125,987.72 | ||
| Non-current liabilities: | |||||
| Long-term borrowing | (VII) 36 | 46,885,882.86 | |||
| Bonds payable | |||||
| Including: Preferred stock | |||||
| Perpetual bond | |||||
| Long-term payables | |||||
| Long-term payroll payable | (VII) 37 | 141,021,228.00 | 130,840,170.00 | 130,840,170.00 | |
| Accrued liabilities | |||||
| Deferred income | (VII) 38 | 240,504,270.47 | 166,293,620.03 | 166,293,620.03 | |
| Deferred income tax liabilities | (VII) 22 | 927,789,301.27 | 536,185,771.60 | 536,185,771.60 | |
| Other non-current liabilities | |||||
| Total non-current liabilities | 1,356,200,682.60 | 833,319,561.63 | 833,319,561.63 | ||
| Total liabilities | 170,924,500,892.20 | 158,519,445,549.35 | 158,519,445,549.35 | ||
| Owners' equity: | |||||
| Capital stock | (VII) 39 | 6,015,730,878.00 | 6,015,730,878.00 | 6,015,730,878.00 | |
| Other equity instruments | |||||
| Including: Preferred stock | |||||
| Perpetual bond | |||||
| Capital reserves | (VII) 40 | 93,379,500.71 | 93,379,500.71 | 93,379,500.71 | |
| Less: Treasury stock | |||||
| Other comprehensive income | (VII) 41 | 6,260,291,981.13 | -620,246,513.23 | -550,806,051.51 | |
| Special reserves | |||||
| Surplus reserve | (VII) 42 | 3,499,671,556.59 | 3,499,671,556.59 | 3,499,671,556.59 | |
| General risk provisions | (VII) 43 | 489,855,826.75 | 329,417,571.48 | 329,417,571.48 | |
| Undistributed profit | (VII) 44 | 93,794,643,539.49 | 81,891,475,269.72 | 81,939,701,613.83 | |
| Total owners' equity attributable to parent company | 110,153,573,282.67 | 91,209,428,263.27 | 91,327,095,069.10 | ||
| Minority equity | 1,894,083,240.41 | 1,387,616,658.36 | 1,387,616,658.36 | ||
| Total owners' equity | 112,047,656,523.08 | 92,597,044,921.63 | 92,714,711,727.46 | ||
| Total liabilities and owners' equity | 282,972,157,415.28 | 251,116,490,470.98 | 251,234,157,276.81 | ||
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||||
| Balance Sheet of Parent Company (assets) | ||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | |||||
| Assets | Note | 31 December, 2019 | 1 January, 2019 | 31 December, 2018 | ||
| Current assets: | ||||||
| Monetary capital | 121,906,528,984.14 | 104,197,391,376.56 | 102,696,932,265.26 | |||
| Trading financial assets | 945,701,633.58 | 412,114,127.42 | Not applicable | |||
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | Not applicable | Not applicable | 412,114,127.42 | |||
| Derivative financial assets | 73,920,207.86 | 73,920,207.86 | ||||
| Bills receivable | 32,516,210,775.80 | |||||
| Accounts receivable | (XVI) 1 | 3,873,270,521.33 | 2,531,171,861.80 | 2,531,171,861.80 | ||
| Receivables financing | 24,599,149,450.48 | 31,977,018,142.64 | Not applicable | |||
| Prepayment | 16,755,065,015.75 | 11,907,653,260.68 | 11,907,653,260.68 | |||
| Other receivables | (XVI) 2 | 2,757,398,837.97 | 2,176,997,136.30 | 3,898,630,873.93 | ||
| Inventories | 9,763,530,439.65 | 8,529,208,778.48 | 8,529,208,778.48 | |||
| Assets held for sale | ||||||
| Non-current assets due within one year | ||||||
| Other current assets | 11,140,701,427.28 | 12,988,336,943.42 | 12,311,814,484.26 | |||
| Total current assets | 191,741,346,310.18 | 174,793,811,835.16 | 174,877,656,635.49 | |||
| Non-current assets: | ||||||
| Debt investment | Not applicable | |||||
| Available-for-sale financial assets | Not applicable | Not applicable | 764,190,199.08 | |||
| Other debt investments | Not applicable | |||||
| Held-to-maturity investment | Not applicable | Not applicable | ||||
| Long-term receivables | ||||||
| Long-term equity investment | (XVI) 3 | 20,224,198,957.34 | 12,538,945,257.76 | 12,538,945,257.76 | ||
| Other equity instrument investments | 4,271,848,596.31 | 764,190,199.08 | Not applicable | |||
| Other non-current financial assets | 2,003,483,333.33 | Not applicable | ||||
| Investment real estate | 24,475,730.79 | 26,777,855.79 | 26,777,855.79 | |||
| Fixed assets | 2,965,550,178.74 | 3,124,307,345.06 | 3,124,307,345.06 | |||
| Construction in Progress | 262,245,182.66 | 168,094,835.04 | 168,094,835.04 | |||
| Productive biological assets | ||||||
| Oil and gas assets | ||||||
| Intangible assets | 761,621,258.44 | 748,344,213.16 | 748,344,213.16 | |||
| Development expenditures | ||||||
| Long-term deferred expenses | ||||||
| Deferred income tax assets | 12,019,079,098.54 | 10,944,089,573.35 | 10,931,512,853.30 | |||
| Other non-current assets | 195,330,890.98 | 130,258,604.75 | 130,258,604.75 | |||
| Total non-current assets | 42,727,833,227.13 | 28,445,007,883.99 | 28,432,431,163.94 | |||
| Total assets | 234,469,179,537.31 | 203,238,819,719.15 | 203,310,087,799.43 | |||
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | ||||||
| Consolidated Balance Sheet of Parent Company (liabilities and owner's equity) | |||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||||
| Liabilities and owners' equity | Note | 31 December, 2019 | 1 January, 2019 | 31 December, 2018 | |
| Current liabilities: | |||||
| Short-term borrowing | 11,188,890,759.19 | 17,836,242,752.95 | 17,759,081,480.00 | ||
| Trading financial liabilities | Not applicable | ||||
| Financial liabilities measured at their fair values and of which the changes are recorded into the current profits and losses | Not applicable | Not applicable | |||
| Derivative financial liabilities | 45,078,940.00 | 45,078,940.00 | |||
| Bills payable | 23,013,715,200.07 | 9,836,497,468.09 | 9,836,497,468.09 | ||
| Accounts payable | 45,097,063,852.05 | 35,079,353,570.62 | 35,079,353,570.62 | ||
| Advances from customers | 11,832,592,136.06 | 13,470,828,988.39 | 13,470,828,988.39 | ||
| Contractual liabilities | |||||
| Payroll payable | 1,398,044,643.25 | 1,114,026,322.53 | 1,114,026,322.53 | ||
| Taxes payable | 1,819,362,036.62 | 2,902,885,192.91 | 2,902,885,192.91 | ||
| Other payables | 4,897,515,153.02 | 1,260,548,926.79 | 1,795,358,032.57 | ||
| Liabilities held for sale | |||||
| Non-current liabilities due within one year | |||||
| Other current liabilities | 64,375,139,451.87 | 63,805,868,580.72 | 63,348,220,747.89 | ||
| Total current liabilities | 163,622,323,232.13 | 145,351,330,743.00 | 145,351,330,743.00 | ||
| Non-current liabilities: | |||||
| Long-term borrowing | |||||
| Bonds payable | |||||
| Including: Preferred stock | |||||
| Perpetual bond | |||||
| Long-term payables | |||||
| Long-term payroll payable | 141,021,228.00 | 130,840,170.00 | 130,840,170.00 | ||
| Accrued liabilities | |||||
| Deferred income | 51,891,300.00 | 30,607,319.00 | 30,607,319.00 | ||
| Deferred income tax liabilities | 528,382,787.62 | 311,380,274.15 | 311,380,274.15 | ||
| Other non-current liabilities | |||||
| Total non-current liabilities | 721,295,315.62 | 472,827,763.15 | 472,827,763.15 | ||
| Total liabilities | 164,343,618,547.75 | 145,824,158,506.15 | 145,824,158,506.15 | ||
| Owners' equity: | |||||
| Capital stock | 6,015,730,878.00 | 6,015,730,878.00 | 6,015,730,878.00 | ||
| Other equity instruments | |||||
| Including: Preferred stock | |||||
| Perpetual bond | |||||
| Capital reserves | 179,564,695.55 | 179,564,695.55 | 179,564,695.55 | ||
| Less: Treasury stock | |||||
| Other comprehensive income | 6,462,024,096.41 | -399,596,999.61 | -330,283,919.33 | ||
| Special reserves | |||||
| Surplus reserve | 3,497,114,024.31 | 3,497,114,024.31 | 3,497,114,024.31 | ||
| Undistributed profit | 53,971,127,295.29 | 48,121,848,614.75 | 48,123,803,614.75 | ||
| Total owners' equity | 70,125,560,989.56 | 57,414,661,213.00 | 57,485,929,293.28 | ||
| Total liabilities and owners' equity | 234,469,179,537.31 | 203,238,819,719.15 | 203,310,087,799.43 | ||
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||||
| Consolidated Income Statement | |||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||
| Item | Note | For the Year 2019 | For the Year 2018 |
| I. Total operating revenues | 200,508,333,611.34 | 200,023,997,743.87 | |
| Including: Operating Revenue | (VII) 45 | 198,153,027,540.35 | 198,123,177,056.84 |
| Interest revenue | (VII) 46 | 2,351,471,964.56 | 1,899,287,824.22 |
| Earned premium | |||
| Fee and commission income | (VII) 46 | 3,834,106.43 | 1,532,862.81 |
| II. Total operating costs | 170,723,573,765.20 | 169,327,655,069.32 | |
| Including: Operating Cost | (VII) 45 | 143,499,372,581.36 | 138,234,167,710.13 |
| Interest expense | (VII) 46 | 110,579,966.36 | 45,341,946.69 |
| Handling charges and commission expenses | (VII) 46 | 603,394.43 | 657,689.31 |
| Refunded premiums | |||
| Net payments for insurance claims | |||
| Net provision for insurance contracts | |||
| Expenditures dividend policy | |||
| Amortized reinsurance expenditures | |||
| Taxes and surcharges | (VII) 47 | 1,542,983,748.63 | 1,741,892,704.57 |
| Sales expense | (VII) 48 | 18,309,812,188.35 | 18,899,578,046.25 |
| Overhead Expense | (VII) 49 | 3,795,645,600.08 | 4,365,850,083.19 |
| R&D expenses | (VII) 50 | 5,891,219,715.90 | 6,988,368,285.92 |
| Financial expense | (VII) 51 | -2,426,643,429.91 | -948,201,396.74 |
| Including: Interest expense | 1,598,276,258.59 | 1,068,308,309.96 | |
| Interest revenue | 3,698,387,243.32 | 2,384,486,815.64 | |
| Add: Other incomes | (VII) 52 | 936,148,644.87 | 408,553,205.53 |
| Income from investments (losses expressed with "-") | (VII) 53 | -226,634,780.62 | 106,768,935.01 |
| Including: Investment incomes from joint venture and partnership | -20,983,248.83 | 560,513.87 | |
| Income from derecognition of financial assets measured at amortization costs ("-" stands for losses) | Not applicable | ||
| Income from net exposure hedging ("-" stands for losses) | Not applicable | ||
| Income from changes in fair value ("-" stands for losses) | (VII) 54 | 228,264,067.88 | 46,257,424.83 |
| Credit impairment losses ("-" stands for losses) | (VII) 55 | -279,448,586.27 | Not applicable |
| Asset impairment losses ("-" stands for losses) | (VII) 56 | -842,893,299.94 | -261,674,177.33 |
| Income from disposal of assets (losses expressed with "-") | (VII) 57 | 4,911,230.34 | 636,629.29 |
| III. Operating profit (losses expressed with "-") | 29,605,107,122.40 | 30,996,884,691.88 | |
| Add: Non-operating revenues | (VII) 58 | 345,706,663.13 | 317,857,733.42 |
| Less: Non-operating expenses | (VII) 59 | 598,106,556.83 | 41,234,701.05 |
| IV. Total profit (total losses expressed with "-") | 29,352,707,228.70 | 31,273,507,724.25 | |
| Less: Income tax expenses | (VII) 60 | 4,525,463,624.73 | 4,894,477,907.19 |
| V. Net profit (net loss expressed with "-") | 24,827,243,603.97 | 26,379,029,817.06 | |
| Including: Pre-combination net profits of the combined party in the business combination involving enterprises under common control | 184,503.98 | ||
| (I) Classification by going concern: | |||
| 1. Continuous operating net profit (net loss expressed with "-") | 24,827,761,617.47 | 26,379,101,213.82 | |
| 2. Discontinued operation net profit (net loss expressed with "-") | -518,013.50 | -71,396.76 | |
| (II) Classification by ownership: | |||
| 1. Net profits attributable to shareholders of the parent company in the current period ("-" stands for net losses) | 24,696,641,368.84 | 26,202,787,681.42 | |
| 2. Minority shareholders' gains and losses ("-" stands for net losses) | 130,602,235.13 | 176,242,135.64 | |
| VI. Net of tax of other comprehensive income | (VII) 41 | 6,880,143,079.03 | -457,274,293.16 |
| (I) Net of tax of other comprehensive income attributable to shareholders of the parent company | 6,880,538,494.36 | -459,105,380.38 | |
| 1. Other comprehensive income which cannot be reclassified into profits and losses | 6,811,462,395.19 | -16,491,946.00 | |
| (1) Recalculated changes in defined benefit plans | -8,029,478.00 | -16,491,946.00 | |
| (2) Other comprehensive income which cannot be transferred to profit or loss under the equity method | 4,784,432,411.50 | ||
| (3) Changes in fair value of other equity instrument investments | 2,035,059,461.69 | Not applicable | |
| (4) Changes in fair value of the company's own credit risk | Not applicable | ||
| 2. Other comprehensive income which will be reclassified into profits and losses in the future | 69,076,099.17 | -442,613,434.38 | |
| (1) Other comprehensive income that can be transferred to profit or loss under the equity method | 4,536.91 | 187,494.29 | |
| (2) Changes in fair value of other debt investments | 9,498,573.66 | Not applicable | |
| (3) Gains and losses from changes in fair value of financial assets available for sale | Not applicable | -519,311,273.76 | |
| (4) Amount of financial assets reclassified and included into other comprehensive income | Not applicable | ||
| (5) Gains and losses from held-to-maturity investments reclassified as financial assets available for sale | Not applicable | ||
| (6) Provision for credit impairment of other debt investments | Not applicable | ||
| (7) Cash flow hedge reserve (Effective part of cash flow hedging profits or losses) | 10,465,879.70 | -17,863,663.45 | |
| (8) Difference arising from translation of financial statements in foreign currency | 49,107,108.90 | 94,374,008.54 | |
| (9) Others | |||
| (II) Net of tax of other comprehensive income attributable to minority shareholders | -395,415.33 | 1,831,087.22 | |
| VII. Total comprehensive income | 31,707,386,683.00 | 25,921,755,523.90 | |
| (I) Total comprehensive income attributable to shareholders of the parent company | 31,577,179,863.20 | 25,743,682,301.04 | |
| (II) Total comprehensive income attributable to minority shareholders | 130,206,819.80 | 178,073,222.86 | |
| VIII. Earnings per share: | (XVIII) 2 | ||
| (I) Basic earnings per share | 4.11 | 4.36 | |
| (II) Diluted earning per share | 4.11 | 4.36 | |
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||
| Income Statement of Parent Company | |||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||
| Item | Note | For the Year 2019 | For the Year 2018 |
| I. Operating revenues | (XVI) 4 | 136,219,366,183.61 | 161,753,766,107.09 |
| Less: Operating Cost | (XVI) 4 | 98,709,058,850.15 | 119,138,891,358.78 |
| Taxes and surcharges | 594,645,728.21 | 794,981,560.14 | |
| Sales expense | 17,663,837,022.22 | 19,690,156,573.66 | |
| Overhead Expense | 963,036,368.05 | 940,247,027.67 | |
| R&D expenses | 4,450,053,310.36 | 5,120,483,984.30 | |
| Financial expense | -3,740,059,339.22 | -2,190,327,164.77 | |
| Including: Interest expense | 792,553,518.40 | 1,032,859,821.02 | |
| Interest revenue | 4,022,458,638.70 | 2,957,965,151.82 | |
| Add: Other incomes | 104,241,039.06 | 70,644,867.83 | |
| Income from investments (losses expressed with "-") | (XVI) 5 | 4,621,766,925.83 | 3,846,958,399.63 |
| Including: Investment incomes from joint venture and partnership | -20,983,248.83 | 129,541.96 | |
| Income from derecognition of financial assets measured at amortization costs ("-" stands for losses) | Not applicable | ||
| Income from net exposure hedging ("-" stands for losses) | Not applicable | ||
| Income from changes in fair value ("-" stands for losses) | -6,160,581.57 | 50,758,723.95 | |
| Credit impairment losses ("-" stands for losses) | -116,414,495.32 | Not applicable | |
| Asset impairment losses ("-" stands for losses) | -788,564,505.35 | -70,695,217.15 | |
| Income from disposal of assets (losses expressed with "-") | 2,293,132.37 | -317,786.26 | |
| II. Operating profit (losses expressed with "-") | 21,395,955,758.86 | 22,156,681,755.31 | |
| Add: Non-operating revenues | 42,197,397.49 | 39,339,935.29 | |
| Less: Non-operating expenses | 561,145,018.76 | 5,213,829.75 | |
| III. Total profit (total losses expressed with "-") | 20,877,008,137.59 | 22,190,807,860.85 | |
| Less: Income tax expenses | 2,394,694,613.25 | 2,811,122,896.75 | |
| IV. Net profit (net loss expressed with "-") | 18,482,313,524.34 | 19,379,684,964.10 | |
| 1. Continuous operating net profit (net loss expressed with "-") | 18,482,313,524.34 | 19,379,684,964.10 | |
| 2. Discontinued operation net profit (net loss expressed with "-") | |||
| V. Net of tax of other comprehensive income | 6,861,621,096.02 | -260,377,541.13 | |
| 1. Other comprehensive income which cannot be reclassified into profits and losses | 6,835,662,576.38 | -16,491,946.00 | |
| (1) Recalculated changes in defined benefit plans | -8,029,478.00 | -16,491,946.00 | |
| (2) Other comprehensive income which cannot be transferred to profit or loss under the equity method | 4,784,432,411.50 | ||
| (3) Changes in fair value of other equity instrument investments | 2,059,259,642.88 | Not applicable | |
| (4) Changes in fair value of the company's own credit risk | Not applicable | ||
| 2. Other comprehensive income which will be reclassified into profits and losses in the future | 25,958,519.64 | -243,885,595.13 | |
| (1) Other comprehensive income that can be transferred to profit or loss under the equity method | 4,536.91 | 187,494.29 | |
| (2) Changes in fair value of other debt investments | 15,488,103.03 | Not applicable | |
| (3) Gains and losses from changes in fair value of financial assets available for sale | Not applicable | -226,209,425.97 | |
| (4) Amount of financial assets reclassified and included into other comprehensive income | Not applicable | ||
| (5) Gains and losses from held-to-maturity investments reclassified as financial assets available for sale | Not applicable | ||
| (6) Provision for credit impairment of other debt investments | Not applicable | ||
| (7) Cash flow hedge reserve (Effective part of cash flow hedging profits or losses) | 10,465,879.70 | -17,863,663.45 | |
| (8) Difference arising from translation of financial statements in foreign currency | ||||||||
| (9) Others | ||||||||
| VI. Total comprehensive income | 25,343,934,620.36 | 19,119,307,422.97 | ||||||
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | ||||||||
| Consolidated Cash Flow Statement | ||||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: Yuan | |||||||
| Item | Note | For the Year 2019 | For the Year 2018 | |||||
| I. Cash flows from operating activities: | ||||||||
| Cash received from sale of goods or rendering of services | 166,387,697,953.52 | 135,029,126,382.98 | ||||||
| Net increase in deposits and due from banks | 31,898,181.64 | 48,934,991.36 | ||||||
| Net increase in borrowings from central bank | ||||||||
| Net increase in placements from other financial institutions | 1,000,000,000.00 | |||||||
| Cash received from original insurance contracts | ||||||||
| Net increase received from reinsurance business | ||||||||
| Net increase in deposits from the insured and investment | ||||||||
| Cash received from interests, fees and commissions | 1,051,389,792.25 | 1,208,127,832.48 | ||||||
| Net increase in placements from other financial institutions | ||||||||
| Net increase in repurchase business capital | 2,074,500,000.00 | |||||||
| Refund of tax and levies | 1,854,373,548.43 | 2,356,588,272.30 | ||||||
| Other cash received relating to operating activities | (VII) 61 (1) | 2,796,063,838.34 | 7,566,986,223.85 | |||||
| Sub-total of cash inflows from operating activities | 175,195,923,314.18 | 146,209,763,702.97 | ||||||
| Cash payments for goods acquired and services received | 94,214,771,389.83 | 78,045,526,788.80 | ||||||
| Net increase in loans and advances to customers | 7,529,473,836.40 | 2,343,375,955.55 | ||||||
| Net increase in deposits with central bank and other financial institutions | -31,341,719.47 | 104,458,700.38 | ||||||
| Cash paid for interests, fees and commissions | 103,327,387.96 | 31,566,054.63 | ||||||
| Cash paid for policy dividends | ||||||||
| Cash paid to and on behalf of employees | 8,831,213,736.01 | 8,575,412,582.19 | ||||||
| Payments of all types of taxes | 15,128,311,796.96 | 15,141,797,894.72 | ||||||
| Other cash paid relating to operating activities | (VII) 61 (2) | 21,526,452,792.90 | 15,026,834,183.72 | |||||
| Sub-total of cash outflows from operating activities | 147,302,209,220.59 | 119,268,972,159.99 | ||||||
| Net cash flows from operating activities | 27,893,714,093.59 | 26,940,791,542.98 | ||||||
| II. Cash flows from investing activities: | ||||||||
| Cash received from recovery of investments | 3,130,974,036.48 | 6,710,785,947.97 | ||||||
| Cash received from return of investments | 426,919,989.41 | 579,489,614.76 | ||||||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 9,614,513.94 | 6,302,072.99 | ||||||
| Net cash received from disposal of subsidiaries and other business units | ||||||||
| Other cash received relating to investing activities | (VII) 61 (3) | 4,878,025,331.18 | 2,652,398,105.48 | |||||
| Sub-total of cash inflows from investing activities | 8,445,533,871.01 | 9,948,975,741.20 | ||||||
| Cash paid for purchase and construction of fixed assets, intangible assets and other. long-term assets | 4,713,187,965.97 | 3,837,549,166.56 | ||||||
| Cash paid for investments | 7,192,756,039.01 | 15,477,712,506.03 | ||||||
| Net increase in pledge loans | |||
| Net cash paid for acquisition of subsidiaries and other business units | 774,183,781.48 | 1,029,686,312.94 | |
| Other cash paid relating to investing activities | (VII) 61 (4) | 7,040,454,685.32 | 11,449,793,031.34 |
| Sub-total of cash outflows from investing activities | 19,720,582,471.78 | 31,794,741,016.87 | |
| Net Cash Flow from Investment Activities | -11,275,048,600.77 | -21,845,765,275.67 | |
| III. Cash flows from financing activities: | |||
| Cash received from absorbing investment | 326,850,000.00 | ||
| Including: Cash received from minority shareholder investment by subsidiary | 326,850,000.00 | ||
| Cash received from borrowings | 21,268,257,923.68 | 27,633,970,524.35 | |
| Cash received from bond issue | |||
| Other cash received relating to financing activities | (VII) 61 (5) | 5,110,000.00 | |
| Sub-total of cash inflows from financing activities | 21,595,107,923.68 | 27,639,080,524.35 | |
| Cash repayments of amounts borrowed | 27,657,703,656.20 | 24,227,160,995.94 | |
| Cash paid for dividend and profit distribution or interest payment | 13,159,380,388.41 | 862,910,396.59 | |
| Including: Dividends and profits paid to minority shareholders by subsidiaries | |||
| Other cash paid relating to financing activities | (VII) 61 (6) | 35,162,649.65 | |
| Sub-total of cash outflows from financing activities | 40,817,084,044.61 | 25,125,234,042.18 | |
| Net Cash Flow from Financing Activities | -19,221,976,120.93 | 2,513,846,482.17 | |
| IV. Effect of foreign exchange rate changes on cash | 203,761,625.26 | -196,368,149.08 | |
| V. Net increase in cash and cash equivalents | -2,399,549,002.85 | 7,412,504,600.40 | |
| Add: Beginning balance of cash and cash equivalents | 28,772,120,824.34 | 21,359,616,223.94 | |
| VI. Ending balance of cash and cash equivalents | 26,372,571,821.49 | 28,772,120,824.34 | |
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||
| Cash Flow Statements of Parent Company | |||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||
| Item | Note | For the Year 2019 | For the Year 2018 |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods or rendering of services | 112,341,680,710.73 | 104,307,759,700.58 | |
| Net increase in deposits and due from banks | |||
| Net increase in borrowings from central bank | |||
| Net increase in placements from other financial institutions | |||
| Cash received from interests, fees and commissions | |||
| Net increase in placements from other financial institutions | |||
| Net increase in repurchase business capital | |||
| Refund of tax and levies | 1,465,166,072.58 | 1,879,978,085.63 | |
| Other cash received relating to operating activities | 51,510,498,359.13 | 8,310,656,390.83 | |
| Sub-total of cash inflows from operating activities | 165,317,345,142.44 | 114,498,394,177.04 | |
| Cash payments for goods acquired and services received | 105,224,849,035.82 | 74,899,174,798.26 | |
| Net increase in loans and advances to customers | |||
| Net increase in financial assets held for trading purposes | |||
| Net increase in deposits with central bank and other financial institutions | |||
| Cash paid for interests, fees and commissions | |||
| Cash paid to and on behalf of employees | 3,453,320,937.66 | 3,342,083,985.11 | |
| Payments of all types of taxes | 9,443,887,671.06 | 9,482,565,857.21 | |
| Other cash paid relating to operating activities | 19,406,931,680.64 | 13,157,727,738.20 | |
| Sub-total of cash outflows from operating activities | 137,528,989,325.18 | 100,881,552,378.78 | |
| Net cash flows from operating activities | 27,788,355,817.26 | 13,616,841,798.26 | |
| II. Cash flows from investing activities: | |||
| Cash received from recovery of investments | 4,302,974,036.48 | 1,520,299,695.69 | |
| Cash received from return of investments | 201,582,776.58 | 39,636,400.79 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 3,947,642.20 | 5,323,648.72 | |
| Net cash received from disposal of subsidiaries and other business units | |||
| Other cash received relating to investing activities | 7,274,898,788.81 | 5,025,218,440.57 | |
| Sub-total of cash inflows from investing activities | 11,783,403,244.07 | 6,590,478,185.77 | |
| Cash paid for purchase and construction of fixed assets, intangible assets and other. long-term assets | 1,390,377,306.14 | 684,486,871.30 | |
| Cash paid for investments | 8,174,203,389.69 | 11,009,107,127.65 | |
| Net cash paid for acquisition of subsidiaries and other business units | 1,247,087,108.76 | ||
| Other cash paid relating to investing activities | 14,656,152,091.36 | 7,785,360,046.49 | |
| Sub-total of cash outflows from investing activities | 24,220,732,787.19 | 20,726,041,154.20 | |
| Net Cash Flow from Investment Activities | -12,437,329,543.12 | -14,135,562,968.43 | |
| III. Cash flows from financing activities: | |||
| Cash received from absorbing investment | |||
| Cash received from borrowings | 16,640,128,940.00 | 23,443,352,980.00 | |
| Cash received from bond issue | |||
| Other cash received relating to financing activities | 3,805,792,927.96 | 1,727,534,511.00 | |
| Sub-total of cash inflows from financing activities | 20,445,921,867.96 | 25,170,887,491.00 | |
| Cash repayments of amounts borrowed | 23,372,991,990.00 | 17,648,573,616.66 | |
| Cash paid for dividend and profit distribution or interest payment | 13,031,345,175.19 | 768,898,753.56 | |
| Other cash paid relating to financing activities | 2,041,863,709.67 | 458,537,863.15 | |
| Sub-total of cash outflows from financing activities | 38,446,200,874.86 | 18,876,010,233.37 | |
| Net Cash Flow from Financing Activities | -18,000,279,006.90 | 6,294,877,257.63 | |
| IV. Effect of foreign exchange rate changes on cash | 693,156,236.38 | 953,014,876.37 | |
| V. Net increase in cash and cash equivalents | -1,956,096,496.38 | 6,729,170,963.83 | |
| Add: Beginning balance of cash and cash equivalents | 32,315,862,463.84 | 25,586,691,500.01 | |
| VI. Ending balance of cash and cash equivalents | 30,359,765,967.46 | 32,315,862,463.84 | |
| Legal representative: Responsible person in charge of accounting work: In-charge person of accounting institution: | |||
| Consolidated Statement of Changes In Owners' Equity | ||||||||||||||||||||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | |||||||||||||||||||||||
| Item | For the Year 2019 | |||||||||||||||||||||||
| Owners' equity attributable to parent company | Minority equity | Total owners' equity | ||||||||||||||||||||||
| Capital stock | Other equity instruments | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserve | General risk provisions | Undistributed profit | |||||||||||||||||
| Preferred stock | Perpetual bond | Others | ||||||||||||||||||||||
| 1. Ending balance for the previous year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -550,806,051.51 | 0.00 | 3,499,671,556.59 | 329,417,571.48 | 81,939,701,613.83 | 1,387,616,658.36 | 92,714,711,727.46 | ||||||||||||
| Add: Changes in accounting policies | -69,440,461.72 | -48,226,344.11 | 0.00 | -117,666,805.83 | ||||||||||||||||||||
| Early error correction | 0.00 | |||||||||||||||||||||||
| Business combination involving enterprises under common control | 0.00 | |||||||||||||||||||||||
| Others | 0.00 | |||||||||||||||||||||||
| 2. Beginning balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -620,246,513.23 | 0.00 | 3,499,671,556.59 | 329,417,571.48 | 81,891,475,269.72 | 1,387,616,658.36 | 92,597,044,921.63 | ||||||||||||
| III. Increase or decrease in the current year (decrease expressed with "-") | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,880,538,494.36 | 0.00 | 0.00 | 160,438,255.27 | 11,903,168,269.77 | 506,466,582.05 | 19,450,611,601.45 | ||||||||||||
| (I) Total comprehensive income | 6,880,538,494.36 | 24,696,641,368.84 | 130,206,819.80 | 31,707,386,683.00 | ||||||||||||||||||||
| (II) Capital invested by owners and stock capital decrease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 395,965,448.59 | 395,965,448.59 | ||||||||||||
| 1. Equity invested by owners | 326,850,000.00 | 326,850,000.00 | ||||||||||||||||||||||
| 2. Stock capital invested by holders of other equity instruments | 0.00 | |||||||||||||||||||||||
| 3. Amounts of share-based payments recognized into owner's equity | 0.00 | |||||||||||||||||||||||
| 4. Others | 69,115,448.59 | 69,115,448.59 | ||||||||||||||||||||||
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 160,438,255.27 | -12,793,473,099.07 | -19,705,686.34 | -12,652,740,530.14 | ||||||||||||
| 1. Appropriation to surplus reserves | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
| 2. Appropriation to general risk provisions | 160,438,255.27 | -160,438,255.27 | 0.00 | |||||||||||||||||||||
| 3. Allocation to owners | -12,633,034,843.80 | -19,705,686.34 | -12,652,740,530.14 | |||||||||||||||||||||
| 4. Others | 0.00 | |||||||||||||||||||||||
| (IV) Internal carry-over of owner's equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
| 1. Transfer of capital reserves into capital | 0.00 | |||||||||||||||||||||||
| 2. Transfer of surplus reserves into capital | 0.00 | |||||||||||||||||||||||
| 3. Surplus reserves for making up losses | 0.00 | |||||||||||||||||||||||
| 4. Set benefit plan change carried over into retained earnings | 0.00 | |||||||||||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | 0.00 | |||||||||||||||||||||||
| 6. Others | 0.00 | |||||||||||||||||||||||
| (V) Appropriative reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
| 1. Amount withdrawn for the period | 0.00 | |||||||||||||||||||||||
| 2. Amount used for the period | 0.00 | |||||||||||||||||||||||
| (VI) Others | 0.00 | |||||||||||||||||||||||
| IV. Ending balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,260,291,981.13 | 0.00 | 3,499,671,556.59 | 489,855,826.75 | 93,794,643,539.49 | 1,894,083,240.41 | 112,047,656,523.08 | ||||||||||||
| Legal representative: | Responsible person in charge of accounting work: | In-charge person of accounting institution: | ||||||||||||||||||||||
| Notes to items of the consolidated statement of changes in owners' equity (continued) | ||||||||||||||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | |||||||||||||||||
| Item | For the Year 2018 | |||||||||||||||||
| Owners' equity attributable to parent company | Minority equity | Total owners' equity | ||||||||||||||||
| Capital stock | Other equity instruments | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserve | General risk provisions | Undistributed profit | |||||||||||
| Preferred stock | Perpetual bond | Others | ||||||||||||||||
| 1. Ending balance for the previous year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -91,700,671.13 | 0.00 | 3,499,671,556.59 | 327,347,621.67 | 55,740,076,085.90 | 1,239,791,691.45 | 66,834,797,763.19 | ||||||
| Add: Changes in accounting policies | 0.00 | |||||||||||||||||
| Early error correction | 0.00 | |||||||||||||||||
| Business combination involving enterprises under common control | -1,092,203.68 | 19,907,796.32 | ||||||||||||||||
| Others | 0.00 | |||||||||||||||||
| 2. Beginning balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -91,700,671.13 | 0.00 | 3,499,671,556.59 | 327,347,621.67 | 55,738,983,882.22 | 1,239,791,691.45 | 66,854,705,559.51 | ||||||
| III. Increase or decrease in the current year (decrease expressed with "-") | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -459,105,380.38 | 0.00 | 0.00 | 2,069,949.81 | 26,200,717,731.61 | 147,824,966.91 | 25,860,006,167.95 | ||||||
| (I) Total comprehensive income | -459,105,380.38 | 26,202,787,681.42 | 178,073,222.86 | 25,921,755,523.90 | ||||||||||||||
| (II) Capital invested by owners and stock capital decrease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -31,501,100.00 | ||||||
| 1. Equity invested by owners | 0.00 | |||||||||||||||||
| 2. Stock capital invested by holders of other equity instruments | 0.00 | |||||||||||||||||
| 3. Amounts of share-based payments recognized into owner's equity | 0.00 | |||||||||||||||||
| 4. Others | -31,501,100.00 | |||||||||||||||||
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2,069,949.81 | -2,069,949.81 | -30,248,255.95 | -30,248,255.95 | ||||||
| 1. Appropriation to surplus reserves | 0.00 | 0.00 | 0.00 | |||||||||||||||
| 2. Appropriation to general risk provisions | 2,069,949.81 | -2,069,949.81 | 0.00 | |||||||||||||||
| 3. Allocation to owners | 0.00 | -30,248,255.95 | -30,248,255.95 | |||||||||||||||
| 4. Others | 0.00 | |||||||||||||||||
| (IV) Internal carry-over of owner's equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||
| 1. Transfer of capital reserves into capital | 0.00 | |||||||||||||||||
| 2. Transfer of surplus reserves into capital | 0.00 | |||||||||||||||||
| 3. Surplus reserves for making up losses | 0.00 | |||||||||||||||||
| 4. Set benefit plan change carried over into retained earnings | 0.00 | |||||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | 0.00 | |||||||||||||||||
| 6. Others | 0.00 | |||||||||||||||||
| (V) Appropriative reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||
| 1. Amount withdrawn for the period | 0.00 | |||||||||||||||||
| 2. Amount used for the period | 0.00 | |||||||||||||||||
| (VI) Others | 0.00 | |||||||||||||||||
| IV. Ending balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -550,806,051.51 | 0.00 | 3,499,671,556.59 | 329,417,571.48 | 81,939,701,613.83 | 1,387,616,658.36 | 92,714,711,727.46 | ||||||
| Legal representative: | Responsible person in charge of accounting work: | In-charge person of accounting institution: | ||||||||||||||||
| Statement of Changes In Owners' Equity of Parent Company | ||||||||||||||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | |||||||||||||||||
| Item | For the Year 2019 | |||||||||||||||||
| Capital stock | Other equity instruments | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserve | Undistributed profit | Total owners' equity | |||||||||||
| Preferred stock | Perpetual bond | Others | ||||||||||||||||
| 1. Ending balance for the previous year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -330,283,919.33 | 0.00 | 3,497,114,024.31 | 48,123,803,614.75 | 57,485,929,293.28 | ||||||||
| Add: Changes in accounting policies | -69,313,080.28 | -1,955,000.00 | -71,268,080.28 | |||||||||||||||
| Early error correction | 0.00 | |||||||||||||||||
| Others | 0.00 | |||||||||||||||||
| 2. Beginning balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -399,596,999.61 | 0.00 | 3,497,114,024.31 | 48,121,848,614.75 | 57,414,661,213.00 | ||||||||
| III. Increase or decrease in the current year (decrease expressed with "-") | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,861,621,096.02 | 0.00 | 0.00 | 5,849,278,680.54 | 12,710,899,776.56 | ||||||||
| (I) Total comprehensive income | 6,861,621,096.02 | 18,482,313,524.34 | 25,343,934,620.36 | |||||||||||||||
| (II) Capital invested by owners and stock capital decrease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
| 1. Equity invested by owners | 0.00 | |||||||||||||||||
| 2. Stock capital invested by holders of other equity instruments | 0.00 | |||||||||||||||||
| 3. Amounts of share-based payments recognized into owner's equity | 0.00 | |||||||||||||||||
| 4. Others | 0.00 | |||||||||||||||||
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -12,633,034,843.80 | -12,633,034,843.80 | ||||||||
| 1. Appropriation to surplus reserves | 0.00 | 0.00 | 0.00 | |||||||||||||||
| 2. Allocation to owners | -12,633,034,843.80 | -12,633,034,843.80 | ||||||||||||||||
| 3. Others | 0.00 | |||||||||||||||||
| (IV) Internal carry-over of owner's equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
| 1. Transfer of capital reserves into capital | 0.00 | |||||||||||||||||
| 2. Transfer of surplus reserves into capital | 0.00 | |||||||||||||||||
| 3. Surplus reserves for making up losses | 0.00 | |||||||||||||||||
| 4. Set benefit plan change carried over into retained earnings | 0.00 | |||||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | 0.00 | |||||||||||||||||
| 6. Others | 0.00 | |||||||||||||||||
| (V) Appropriative reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
| 1. Amount withdrawn for the period | 0.00 | |||||||||||||||||
| 2. Amount used for the period | 0.00 | |||||||||||||||||
| (VI) Others | 0.00 | |||||||||||||||||
| IV. Ending balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,462,024,096.41 | 0.00 | 3,497,114,024.31 | 53,971,127,295.29 | 70,125,560,989.56 | ||||||||
| Legal representative: | Responsible person in charge of accounting work: | In-charge person of accounting institution: | ||||||||||||||||
| Notes to items of the parent company's statement of changes in owners' equity (continued) | |||||||||||||||||||
| Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI | Unit: RMB Yuan | ||||||||||||||||||
| Item | For the Year 2018 | ||||||||||||||||||
| Capital stock | Other equity instruments | Less: Treasury stock | Other comprehensive income | Special reserves | Surplus reserve | Undistributed profit | Total owners' equity | ||||||||||||
| Preferred stock | Perpetual bond | Others | |||||||||||||||||
| 1. Ending balance for the previous year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -69,906,378.20 | 0.00 | 3,497,114,024.31 | 28,744,118,650.65 | 38,378,030,670.01 | |||||||||
| Add: Changes in accounting policies | 0.00 | ||||||||||||||||||
| Early error correction | 0.00 | ||||||||||||||||||
| Others | 0.00 | ||||||||||||||||||
| 2. Beginning balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -69,906,378.20 | 0.00 | 3,497,114,024.31 | 28,744,118,650.65 | 38,378,030,670.01 | |||||||||
| III. Increase or decrease in the current year (decrease expressed with "-") | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -260,377,541.13 | 0.00 | 0.00 | 19,379,684,964.10 | 19,107,898,623.27 | |||||||||
| (I) Total comprehensive income | -260,377,541.13 | 19,379,684,964.10 | 19,119,307,422.97 | ||||||||||||||||
| (II) Capital invested by owners and stock capital decrease | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -11,408,799.70 | ||||||||||
| 1. Equity invested by owners | 0.00 | ||||||||||||||||||
| 2. Stock capital invested by holders of other equity instruments | 0.00 | ||||||||||||||||||
| 3. Amounts of share-based payments recognized into owner's equity | 0.00 | ||||||||||||||||||
| 4. Others | -11,408,799.70 | ||||||||||||||||||
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
| 1. Appropriation to surplus reserves | 0.00 | 0.00 | 0.00 | ||||||||||||||||
| 2. Allocation to owners | 0.00 | 0.00 | |||||||||||||||||
| 3. Others | 0.00 | ||||||||||||||||||
| (IV) Internal carry-over of owner's equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
| 1. Transfer of capital reserves into capital | 0.00 | ||||||||||||||||||
| 2. Transfer of surplus reserves into capital | 0.00 | ||||||||||||||||||
| 3. Surplus reserves for making up losses | 0.00 | ||||||||||||||||||
| 4. Set benefit plan change carried over into retained earnings | 0.00 | ||||||||||||||||||
| 5. Other comprehensive income carried forward to retained earnings | 0.00 | ||||||||||||||||||
| 6. Others | 0.00 | ||||||||||||||||||
| (V) Appropriative reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
| 1. Amount withdrawn for the period | 0.00 | ||||||||||||||||||
| 2. Amount used for the period | 0.00 | ||||||||||||||||||
| (VI) Others | 0.00 | ||||||||||||||||||
| IV. Ending balance for the current year | 6,015,730,878.00 | 0.00 | 0.00 | 0.00 | 0.00 | -330,283,919.33 | 0.00 | 3,497,114,024.31 | 48,123,803,614.75 | 57,485,929,293.28 | |||||||||
| Legal representative: | Responsible person in charge of accounting work: | In-charge person of accounting institution: | |||||||||||||||||
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Notes to Financial Statements for the Year 2019(I) Basic information of the CompanyGree Electric Appliances, Inc. of Zhuhai (hereinafter referred to as "the Company") was established in December,1989, with the unified social credit code 91440400192548256N.The registered capital and equity of the Company was RMB 6,015,730,878.00 by the end of 31 December, 2019.For the specific equity, see Note (VII) 39.
1. Registered address, organizational form and headquarters address of the CompanyOrganizational form of the Company: joint stock limited companyRegistered address and headquarters office address of the Company: Jinji West Road, Qianshan, Zhuhai City,Guangdong Province
2. Nature of business and main business activities of the CompanyThe Company falls in to the household electrical appliance industry and is engaged in production and sales of airconditioners and their accessories, and home appliances and their accessories.
3. Names of the parent company and final parent company of the groupAs at 31 December, 2019, Zhuhai Gree Group Co., Ltd. was the actual controller of the Company. For the specificchange in the actual controller of the Company, see Note (XII) 1.
4. Approved submitter and approved submission date of the financial reportThis financial report was submitted under approval of the Board of Directors of the Company as of 29 April,2020.(II) Scope of consolidated financial statements of the current period and its changeTotally 92 subsidiaries were incorporated in the coverage of the consolidated financial statements by the end ofthe Report Period. For details, see Note (IX) 1. For the detailed changes to the scope of consolidated financialstatements in the Report Period, see Note (VIII).(III) Preparation basis of the financial statements
1. Preparation basis of the financial statements
The Company prepares the financial statements on the basis of a going concern and according to the transactions
and events actually incurred and the disclosure provisions in the Accounting Standards for Business Enterprises -Basic Standards (promulgated by the Ministry of Finance Order No. 33, revised by the Ministry of Finance OrderNo. 76) and the specific accounting standards, the Implementation Guide for the Accounting Standards forBusiness Enterprises, the Interpretations of the Accounting Standards for Business Enterprises and otherapplicable regulations promulgated and revised by the Ministry of Finance on and after 15 February, 2006(collectively referred to as "the Accounting Standards for Business Enterprises"), as well as the Preparation Rulesfor Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provisions onFinancial Reports (2014 Revision) promulgated by China Securities Regulatory Commission ("CSRC").According to the relevant provisions of the Enterprise Accounting Standards, the Company's accounting is basedon the accrual basis. Except for certain financial instruments, the financial statements are measured on the basis ofhistorical cost. If an asset is impaired, the corresponding impairment provision shall be made in accordance withrelevant regulations.
2. Going concern
This financial statement was presented on a going concern basis. The management carefully evaluated factors ofthe Company in the future 12 months commencing from 31 December, 2019 such as the macropolicy risk, marketoperation risk, current and long-term profitability and solvency of the enterprise, financial flexibility, and themanagement's intention of changing the operations policy, and held that there was no event that can generatesignificant influence on the Company's ability to continue as a going concern.(IV) Statements regarding observance of the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company conform to the requirements of the Accounting Standards forBusiness Enterprises and give a true and complete view of the financial position of the Company on 31 December,2019, and the related information such as operating results and cash flows in the year 2019. Besides, the financialstatements prepared by the Company, in all the major aspects, also conform to the disclosure requirements offinancial statements and their notes in the Preparation Rules for Information Disclosure by Companies OfferingSecurities to the Public No. 15 - General Provisions on Financial Reports revised by the China SecuritiesRegulatory Commission in 2014.(V) Significant accounting policies and estimates and previous errorsSpecific accounting policies and accounting estimate suggestions:
The Company and each subsidiary are engaged in production and sales of air conditioners and their accessories,and home appliances and their accessories. The Company has prepared several specific accounting policies andaccounting estimates for transactions and events such as revenue recognition based on the actual productionmanagement characteristics and in accordance with provisions of the related Accounting Standards for BusinessEnterprises. For details, see the detailed description in Note (V) herein.
1. Accounting period
Accounting period of the Company includes one year and interim periods. An interim period covers six-month, aquarter and a month. The accounting year of the Company commences on 1 January and ends on 31 December ofeach year.
2. Operating cycle
The normal operating cycle refers to the period from the Company's purchase of assets used for processing toachieving of cash or cash equivalent. The Company regards 12 months as one operating cycle and uses it as theliquidity classification standard for assets and liabilities.
3. Functional currency
RMB is the functional currency used by the Company. Some subsidiaries of the Company adopt currencies otherthan Renminbi as the functional currency.
4. Accounting treatment of business combination involving enterprises under common control andbusiness combination not involving enterprises under common controlBusiness combination refers to the transaction or event of combining two or more independent enterprises to forma reporting entity. Business combination is classified into business combination involving enterprises undercommon control and business combination not involving enterprises under common control.
(1) Business combination involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the combination,and that control is not transitory. For business combination involving enterprises under common control, the partythat obtains the right to control other enterprises participating in the combination on the combination date is thecombining party, and other enterprises participating in the combination are the combined party. The combinationdate refers to the date on which the combining party actually obtains the right to control the combined party.Where business combination involving enterprises under common control arises from one transaction or equitiesof invested entities under common control are obtained step by step through multiple transactions and thesetransactions belong to a package deal, the Company will recognize the cost of combination according to the shareof carrying amount of net assets obtained for the combined party in the ultimate controlling party's consolidatedfinancial statements on the combination date. The difference between the carrying amount of the considerationpaid for the combination (or total par value of the issued stocks) and the combination cost is adjusted to capitalreserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retainedearnings.Costs incurred that are attributable to the business combination made by the Company, including intermediarycosts such as the audit fee, legal service charge and appraisal and consultation costs, and other related overheadexpenses are charged to profits or losses in the period in which they are incurred; the transaction expenses directly
attributable to the consideration paid for the combination through issuance of equity instruments are creditedagainst the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained earnings;the transaction expenses directly attributable to the consideration paid for the combination through issuance ofdebt instruments are recorded into the initially recognized amount of debt instruments. Where the equities ofinvested entities under common control are obtained step by step through multiple transactions to achievebusiness combination but these transactions do not belong to a package deal, the Company will recognize the costof combination according to the share of carrying amount of net assets to be enjoyed by the combined party afterthe combination in the ultimate controlling party's consolidated financial statements on the combination date. Thedifference between the combination cost and the sum of the carrying amount of long-term equity investmentsprior to the combination plus the carrying amount of the consideration newly paid for further acquisition of shareson the date of combination is adjusted to capital reserve (capital premium or capital stock premium); if the capitalreserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. For the equityinvestment held before the date of combination, accounting treatment is not performed temporarily for othercomprehensive incomes that are accounted using the equity method or recognized using financial instruments andaccounted according to the measurement standard for recognition. When this investment is disposed of,accounting treatment is conducted using the basis the same as that used by the invested entity to directly disposeof relevant assets or liabilities. For other changes in owners' equities other than the net profits/losses, othercomprehensive income and profit distribution in net assets of the invested entity that are recognized because ofaccounting using the equity method, accounting treatment is not conducted temporarily; they shall be transferredto the profits and losses of the current period at the time of disposing of this investment.
(2) Business combination not involving enterprises under common control
A business combination not involving enterprises under common control is a business combination in which all ofthe combining enterprises are not ultimately controlled by the same party or parties both before and after thecombination. For business combination not involving enterprises under common control, the party that obtains theright to control other enterprises participating in the combination on the date of combination is the acquiring party,and other enterprises participating in the combination are the acquired party. The date of acquisition refers to thedate on which the acquiring party actually obtains the right to control the acquired party.For the business combination implemented through one transaction, the cost of business combination refers to thefair value of assets paid, liabilities incurred or assumed and equity securities issued by the Company on the date ofacquisition for obtaining the right to control the acquired party. On the date of acquisition, the assets, liabilitiesand contingent liabilities obtained by the Company from the acquired party are recognized at the fair value.For a business combination realized by two or more transactions of exchange, the accounting treatment for thecombination costs shall be made by distinguishing individual financial statements and consolidated financialstatements:
In the individual financial statements, where the held stocks are accounted using the equity method prior to thedate of acquisition, the cost of combination of the investment is the aggregate of the carrying amount of the equityinvestment of the acquired party held before the date of acquisition and the investment cost newly increased on
the date of acquisition. For other related comprehensive income, accounting treatment is performed duringdisposal of the investment using the basis the same as that used by the invested entity to directly dispose ofrelevant assets or liabilities; the owner's equity that is recognized due to other changes in owners' equities otherthan the net profits/losses, other comprehensive income and profit distribution of the invested entity is accordinglytransferred to the profits and losses of the current period at the time of disposing of this investment. Where theequity investment held before the date of acquisition is recognized using financial instruments and undergoesaccounting treatment according to the measurement standard, the cost of combination of the investment is theaggregate of the fair value of the equity investment recognized according to this standard and the newly increasedinvestment cost. The difference between the fair value of the originally held stocks and the carrying amount andall the cumulative fair value changes originally recorded into other comprehensive income are transferred to theinvestment income of the current period.In the consolidated financial statements, the stocks of the acquired party held before the date of acquisition shallbe remeasured based on the fair value of such stocks on the date of acquisition, and the difference between theirfair value and carrying amount shall be charged to the investment income of the current period; where the stocksof the acquired party held before the date of acquisition involve other comprehensive income under accounting ofthe equity method and other changes in owners' equities other than the net profits/losses, other comprehensiveincome and profit distribution, other comprehensive income and other changes in owners' equities concerned withthem shall be transferred to the investment income in the period in which the date of acquisition is included(excluding other comprehensive income arising from changes in the net assets or net liabilities of the benefit planremeasured and redefined by the invested entity). The summation of the fair value of the stocks of the acquiredparty held before the date of acquisition on the date of acquisition and newly increased investment costs on thedate of acquisition shall be the combination cost of the investment.Costs incurred that are attributable to the business combination made by the Company, including intermediarycosts such as the audit fee, legal service charge, and appraisal and consultation costs, and other related overheadexpenses are charged to profits or losses in the period in which they are incurred. The transaction expensesdirectly attributable to the consideration paid for the combination through issuance of equity instruments arecredited against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retainedearnings; the transaction expenses directly attributable to the consideration paid for the combination throughissuance of debt instruments are recorded into the initially recognized amount of debt instruments.In the Company, the positive balance between the business combination cost and the fair value of the identifiablenet assets obtained by the Company from the acquired party shall be recognized as business reputation andsubsequently measured after the accumulated provision for impairment is deducted from the cost; the negativebalance between the business combination cost and the fair value of the identifiable net assets obtained by theCompany from the acquired party shall be charged to profits or losses of the current period after being checked.
(3) Principle of judging whether multiple transactions are "a package deal"When the terms and conditions of multiple transactions and the economic impact thereof accord with one or moreof the following cases, usually it indicates that these transactions shall undergo accounting treatment as "a
package deal":
1) These transactions are concluded at the same time or concluded in consideration of mutual influence;
2) only the whole of these transactions can achieve a complete business result;
3) occurrence of one transaction depends on occurrence of at least one of the other transactions;
4) one transaction is not economical when considered separately, but economical when taken into accounttogether with other transactions.
5. Preparation of consolidated financial statements
(1) Principle of determining the scope of consolidated financial statements
The consolidation scope of consolidated financial statements shall be determined on the basis of control. Controlmeans that the Company owns the power to the invested entity, enjoys variable return by participating relevantactivities of the invested entity, and has the capacity of using the power to the invested entity to affect its returnamount.
(2) Preparation of consolidated financial statements
The consolidated financial statements of the Company are prepared by the Company based on individual financialstatements of the Company and subsidiaries and according to other relevant data. During preparation ofconsolidated financial statements, the accounting policy and accounting period of the Company shall be consistentwith those of subsidiaries, and the inter-company major transactions and balances shall be offset.For the subsidiary added due to business combination involving enterprises under common control in the ReportPeriod, the Company adjusts the amount at the beginning of the period in the consolidated balance sheet,incorporates the revenue, expense and profit of this subsidiary from the beginning of the period for consolidationto the end of the report period into the consolidated profit statement, includes its cash flow into the consolidatedcash flow statement, and adjusts relevant items in the comparative statements; for the subsidiary added due tobusiness combination not involving enterprises under common control, the Company does not adjust the amountat the beginning of the period in the consolidated balance sheet, but only incorporates the revenue, expense andprofit of this subsidiary from the date of acquisition to the end of report period into the consolidated profitstatement and its cash flow into the consolidated cash flow statement.The portion of owners' equity of the subsidiaries that isn't attributable to the Company shall be separatelypresented as the minority shareholders' equity under the owners' equity in the consolidated balance sheet. Theshare of net profits or losses of the subsidiaries in the current period that is attributable to the minorityshareholders' equity shall be presented as the item of "Minority interest income" under the net profit in theconsolidated profit statement. The share of comprehensive income of the subsidiaries in the current period that isattributable to the minority shareholders' equity shall be presented as the item of "Total comprehensive incomeattributable to minority shareholders" under the total comprehensive income in the consolidated profit statement.Where the losses of a subsidiary undertaken by minority shareholders exceed the share enjoyed by minority
shareholders in the owners' equities of this subsidiary at the beginning of the period, the balance shall be stilladjusted against the minority shareholders' equity.For acquisition of the subsidiary's stocks owned by minority shareholders thereof, in the consolidated financialstatements, the difference between the long-term equity investment newly obtained because of acquisition ofminority shareholders' stocks and the share of net assets of the subsidiary to be enjoyed and continuouslycalculated according to the proportion of newly added shares from the acquisition date or consolidation date isadjusted to capital reserve; if the capital reserve is not sufficient to absorb the difference, any excess is adjustedagainst retained earnings.For the transaction for which a part of equity investment is disposed of but the right to control this subsidiary isnot lost, in the consolidated financial statements, the difference between the disposal price and the share of netassets of the subsidiary to be enjoyed accordingly for disposal of the long-term equity investment andcontinuously calculated from the acquisition date or consolidation date is adjusted to capital reserve (capitalpremium or capital stock premium); if the capital reserve is not sufficient to absorb the difference, any excess isadjusted against retained earnings.Where the right to control the original subsidiary is lost due to disposal of a part of equity investment or otherreasons, the remaining stocks shall be remeasured at their fair value on the date of losing the control right; theresult of the sum of the consideration obtained from the equity disposal plus the fair value of remaining stocks,minus the share of net assets of the original subsidiary that should be enjoyed and is continuously calculatedaccording to the original proportion of held shares from the acquisition date, shall be charged to the investmentincome in the period when the control right is lost, and adjusted against the business reputation at the same time;other comprehensive income related to the original subsidiary's equity investment shall be transferred to theinvestment income of the current period when the control right is lost.Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till thecontrol right is lost and all the transactions belong to a package deal, accounting treatment shall be performed forthe transactions by deeming all the transactions as one item for disposing of the subsidiary and losing the controlright; however, prior to loss of the control right, the difference between every disposal price and the share of netassets of this subsidiary to be enjoyed accordingly for investment disposal shall be recognized as othercomprehensive income in the consolidated financial statements and, at the time of losing the control right, bejointly transferred to the profits or losses in the period when the control right is lost.Where the equity investment for a subsidiary is disposed of step by step through multiple transactions till thecontrol right is lost and the transactions do not belong to a package deal, all the transactions before loss of theright to control the subsidiary shall be handled according to the regulations of the Company on partial disposal ofthe subsidiary's long-term equity investment provided that the Company does not lose the right to control thesubsidiary.This report period does not involve buying-in and selling-out of the same subsidiary's stocks, or selling-out andbuying-in turn.
6. Joint arrangement classification and accounting treatment of co-managementJoint arrangement refers to the arrangement for joint control by two or more participants.
(1) Joint arrangement classification
Joint arrangement is classified into co-management and contractual enterprise. Co-management refers to the jointarrangement where the parties to the venture enjoy relevant assets of this arrangement and assume relevantliabilities of this arrangement. Contractual enterprise refers to the joint arrangement where the parties to theventure only enjoy rights to net assets of this arrangement.
(2) Accounting treatment of co-management
1) The Company recognizes the following items related to quantum of interest in co-management and performsaccounting treatment in accordance with provisions of the corresponding Accounting Standards for BusinessEnterprises:
a Independently held assets, as well as the jointly held assets to be recognized according to the share of theCompany;b Independently undertaken liabilities, as well as the jointly undertaken liabilities to be recognized according tothe share of the Company;c Revenue generated by selling the output share of co-management that is enjoyed by the Company;d Revenue that is generated by selling the output during co-management and recognized according to the share ofthe Company;e Independently incurred expense, as well as the expense incurred by co-management and recognized according tothe share of the Company.
2) Where the Company puts assets into or sells assets to the parties to co-management (except that the assetsconstitute business), before the said assets are sold to a third party by the parties to co-management, the Companyrecognizes only the part in the profits or losses arising from this transaction that is attributable to other participantsin the co-management. In case that the put or sold assets involve the asset impairment loss complying withprovisions in the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the Company shallrecognize the said loss in full.
3) Where the Company purchases assets from the parties to co-management (except that the assets constitutebusiness), before said assets are sold to a third party, the Company recognizes only the part in the profits or lossesarising from this transaction that is attributable to other participants in the co-management. In case that thepurchased assets involve the asset impairment loss complying with provisions in the Accounting Standard forBusiness Enterprises No. 8 - Impairment of Assets, the Company shall recognize this part of loss according to theshare to undertake.
7. Criteria for cash and cash equivalents
The cash refers to the enterprise's money on hand and deposits for payment at any time. Cash equivalents refer toinvestments held by the enterprise which are short in term (generally referring to those expiring within not morethan 3 months from the date of acquisition), high in liquidity, convertible to the known amount of cash andinsignificant in risk of change of value.
8. Foreign currency transactions
(1) Method of translation for foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in the foreigncurrency shall be translated into the amount in RMB currency at the spot exchange rate of the transaction date(generally referring to the medial rate of foreign exchange quotation published by the People's Bank of China atthe date of transaction, the same below).
(2) Treatment of monetary items of foreign currencies and non-monetary items of foreign currencies on the
balance sheet dateFor the monetary items of foreign currencies, the translation is done according to spot rate of the balance sheetdate. The exchange difference generated from the difference of spot rate of the current balance sheet date and thetime of initial recognition of a foreign currency or the previous balance sheet date is charged to the profit or lossof the current period except that the exchange difference generated from foreign currency borrowings relating toassets of which the acquisition or production satisfies the capitalization conditions is capitalized in accordancewith the Accounting Standards for Business Enterprises No. 17 – Borrowing Costs. For the non-monetary items offoreign currencies measured by historical cost, translation is done according to spot rate of the transaction datewithout change in their amount in functional currency. Non-monetary items of foreign currencies such as stocksand funds measured at their fair value are translated as per the spot rate on the date when their fair value isconfirmed. The differences between the translated amounts in functional currency and the original amounts infunctional currency are recorded into current profits and losses as fluctuation in fair value (including fluctuation inexchange rates).
(3) Translation of foreign currency financial statements
The Company translates the financial statements expressed in foreign currency into ones expressed in RMBcurrency according to the following provisions:
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheetdate; Among the owners' equity items, except the ones as "undistributed profits", others shall be translated at thespot exchange rate at the time when they are incurred. The income and expense items in the profit statements shallbe translated at the average exchange rate. The balance arisen from the translation of foreign currency financialstatements in compliance with the aforesaid method shall be presented separately under the owners' equity item ofthe balance sheets. The foreign currency cash flow statement shall be translated at the average exchange rate onthe cash flow date. The amount of influence of the exchange rate change on cashes shall be presented separatelyunder the adjusted item in the cash flow statement.
9. Financial instruments
When the Company becomes a party to a financial instrument contract, it recognizes a financial asset or financialliability.
(1) Classification, recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics offinancial assets, the Company divides financial assets into: financial assets measured at amortization cost,financial assets which are measured at their fair values and of which the changes are included into othercomprehensive income, and financial assets which are measured at their fair values and of which the changes areincluded into the current profits and losses.The financial assets initially recognized by the Company shall be measured at their fair values. For the financialassets which are measured at their fair values and of which the changes are included into the current profits andlosses, the transaction expenses thereof are directly included into the current profits and losses; for othercategories of financial assets, the transaction expenses thereof are included into the initially recognized amount.For the accounts receivable or notes receivable arising from the sale of products or the provision of services thatdo not contain or do not consider significant financing components, the Company shall use the amount ofconsideration expected to be entitled to be charged as the initial confirmation amount.
1) Financial assets measured at amortization costs
The Company's business model for managing financial assets measured at amortization cost is to collectcontractual cash flows, and the contractual cash flow characteristics of such financial assets are consistent withbasic borrowing arrangements, that is, cash flows generated on a specific date, are for the payment of principaland interest based on the outstanding principal amount. The Company adopts the effective interest rate method forsuch financial assets and performs subsequent measurement based on amortization cost. The gains or lossesarising from their amortization or impairment are included into the current profits and losses.
2) Financial assets which are measured at their fair values and of which the changes are included into othercomprehensive incomeThe Company's business model for managing such financial assets is to collect and sell contractual cash flows,and the contractual cash flow characteristics of such financial assets are consistent with basic borrowingarrangements. The Company measures such financial assets at fair value and includes the changes of fair value areincluded in other comprehensive income, but impairment losses or gains, exchange gains and losses and interestincome calculated according to the actual interest rate method are included into the current profits and losses.In addition, the Company designates some non-trading equity instrument investments as financial assets which aremeasured at their fair values and of which the changes are included into other comprehensive income. TheCompany includes the relevant dividend income of such financial assets into the current profits and losses, andincludes the changes of fair value in other comprehensive income. When the financial assets are derecognized, thecumulative gains or losses previously included into other comprehensive income will be transferred from othercomprehensive income to retained income, but will not be included into the current profits and losses.
3) Financial assets measured at their fair values and of which the changes are recorded into the current profitsand lossesThe Company classifies the financial assets other than the above financial assets measured at amortization costand financial assets which are measured at their fair values and of which the changes are included into othercomprehensive income as financial assets which are measured at their fair values and of which the changes areincluded into the current profits and losses. In addition, in the initial recognition, in order to eliminate orsignificantly reduce the accounting mismatch, the Company designates some financial assets as financial assetswhich are measured at fair value and of which the changes are included into the current profits and losses. Forsuch financial assets, the Company uses fair value for subsequent measurement, and the changes of fair value areincluded in the current profits and losses.
(2) Classification, recognition and measurement of financial liabilities
Financial liabilities are initially classified as financial liabilities which are measured at fair value and of which thechanges are included in the current profits or losses and other financial liabilities. For the financial liabilitieswhich are measured at their fair values and of which the changes are included into the current profits and losses,the transaction expenses thereof are directly included into the current profits and losses; for other financialliabilities, the transaction expenses thereof are included into the initially recognized amount.
1) Financial liabilities measured at their fair values and of which the changes are recorded into the currentprofits and lossesFinancial liabilities which are measured at fair value and of which the changes are included in the current profitsor losses include trading financial liabilities (including derivatives that are financial liabilities) and financialliabilities designated as those which are measured at fair value at the initial recognition and of which changes areincluded in the current profits or losses.Trading financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fairvalue. Except for hedge accounting, the changes in fair value are included in current profits or losses.For financial liabilities designated as those which are measured at fair value at the initial recognition and of whichchanges are included in the current profits or losses, the changes of fair value caused by changes in the Company'sown credit risk are included in other comprehensive income, and when the recognition of the liabilities isterminated, the cumulative changes in fair value caused by changes in own credit risk included in othercomprehensive income are transferred to retained earnings. Other changes in fair value are included in currentprofits or losses. If the accounting mismatch in profits and losses may be caused or expanded as the effects ofchanges in the own credit risk of such financial liabilities are processed in the above manner, the Company willinclude all gains or losses of such financial liabilities (including the amount affected by changes in the Company'sown credit risk) included in the current profit and loss.
2) Other financial liabilities
Except for the transfer of financial assets that does not meet the conditions for derecognition or continued
involvement in the financial liabilities and financial guarantee contracts formed by the transferred financial assets,other financial liabilities are classified as financial liabilities measured at amortization cost, which aresubsequently measured at amortization cost. Gains or losses arising from derecognition or amortization areincluded in the current profits and losses.
(3) Basis for the recognition and method for the measurement of financial assetsFinancial assets that meet one of the following conditions shall be derecognized:
1) The contract right to receive the cash flow of the financial assets is terminated;
2) The financial assets have been transferred, and almost all the risks and rewards of ownership of the financialassets are transferred to the transferring party;
3) The financial assets have been transferred, although the enterprise has neither transferred nor retained almost allthe risks and rewards of the ownership of the financial assets, it has given up control over the financial assets.If the enterprise has neither transferred nor retained almost all the risks and rewards of the ownership of thefinancial assets, and has not given up control over the financial assets, the relevant financial assets shall berecognized according to the extent of continued involvement in the transferred financial assets, and the relevantliabilities shall be recognized accordingly. The extent of continued involvement in the transferred financial assetsrefers to the level of risk that the changes in the value of the financial assets expose the enterprise to.If the overall transfer of financial assets meets the conditions for derecognition, the difference between the bookvalue of the transferred financial assets and the sum of the consideration received due to the transfer and thecumulative amount of changes in fair value originally included in other comprehensive income is included in thecurrent profits and losses.If the partial transfer of financial assets satisfies the conditions for derecognition, the book value of the transferredfinancial assets will be apportioned between the portion derecognized and the portion not derecognized accordingto their relative fair values, and the difference between the sum of the consideration received for the transfer andthe amount of cumulative changes in the fair value which was previously directly recognized in owner's equityand which should be apportioned to the portion derecognized and the above book amount apportioned will beinclude in the current profits and losses.The Company must determine whether almost all the risks and rewards of ownership of the financial assets havebeen transferred before endorsing the transfer of financial assets sold by means of recourse and financial assetsheld. If almost all the risks and rewards of ownership of the financial asset have been transferred to the transferee,the financial asset will be derecognized; if the risks and rewards of the ownership of the financial asset have beenretained, the financial asset will not be derecognized; if almost all the risks and rewards of ownership of thefinancial asset have not been transferred or retained, the enterprise needs to continue to determine whether itretains control over the asset and performs accounting treatment in accordance with the principles described in thepreceding paragraphs.
(4) Derecognition of financial liabilities
If the present obligation for a financial liability has been fully or partially discharged, the financial liability or therelevant portion thereof will be derecognized. If the Company (borrower) signs an agreement with the lender toreplace the original financial liability by assuming a new financial liability, and the contract terms of the newfinancial liability and the original financial liability are substantially different, the original financial liability willbe derecognized and the new financial liability will be recognized at the same time. If a material amendment ismade to the contractual terms for the original financial liability or the relevant portion thereof, the originalfinancial liability will be derecognized, and the new financial liability will be recognized according to theamended terms at the same time.If the financial liability or the relevant portion thereof is derecognized, the difference between the book value ofthe financial liability derecognized and the consideration paid for it (including the non-cash asset transferred orthe liability assumed) will be included in the current profits or losses.
(5) Offsetting financial assets with financial liabilities
When the Company has the legal right to offset the financial asset and the financial liability with recognizedamount, and such legal rights are currently enforceable, and the Company plans to settle in net or simultaneouslyrealize the financial asset and liquidate the financial liability, the financial asset and the financial liability will bepresented in the balance sheet in net amounts after mutual offset. In addition, financial assets and financialliabilities are presented separately in the balance sheet, and are not offset against each other.
(6) Method for determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can receive for the sale of an asset or need to pay for thetransfer of a liability in the orderly transaction that occurs on the measurement date. For financial instruments forwhich there is an active market, the fair value thereof will be determined by the Company based on the quotationin the active market; Quotation in the active market refers to the price that is easily obtained from exchanges,brokers, industry associations, pricing service agencies, etc. on a regular basis, and represents the price of markettransactions that actually occur in fair trading. For financial instruments for which there is no active market, thefair value thereof will be determined by the Company using the valuation techniques. The value appraisaltechniques include the prices adopted by the parties, who are familiar with the condition, in the latest markettransaction upon their own free will, the current fair value obtained by referring to other financial instruments ofthe same essential nature, the cash flow capitalization method and the option pricing model, etc. At the time ofvaluation, the Company adopts a valuation technique that is applicable in the current circumstances and that thereis sufficient available data and other information to support, selects the input values consistent with the asset orliability characteristics considered by the market participants in the transaction of the underlying asset or liability,and as far as possible uses relevant observable input values. Unobservable input values are used where therelevant observable input values are not available or are not practicable.
(7) Equity instruments
Equity instruments refer to contracts that can prove ownership of the residual equity in assets of the Companyafter deduction of all the liabilities. The Company treats issue (including refinancing), repurchases, sale or
cancellation of equity instruments as changes in equity, and transaction expenses related to equity transactions arededucted from equity. The Company does not recognize changes in the fair value of equity instruments.If the Company's equity instruments distribute dividends (including "interest" generated by instruments classifiedas equity instruments) during the existence period, such dividends will be treated as profit distribution.
10. Impairment of financial assets
Financial assets of which the Company needs to recognize impairment losses include financial assets measured atamortization cost, and debt instrument investments which are measured at fair value and of which changesincluded in other comprehensive income, mainly including receivables financing, accounts receivable, otherreceivables, loans and advances, debt investment, other debt investment, long-term receivables, etc.
(1) Method for recognition of impairment provisions
Based on the expected credit loss, the Company makes impairment provision and recognizes credit impairmentloss according to the applicable expected credit loss measurement method (general method or simplified method)for the above items.Credit loss refers to the difference between all contractual cash flows that are due to the Company in accordancewith the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted atthe original effective interest rate. Among them, for purchased or originated credit-impaired financial assets, theCompany discounts the difference at the credit-adjusted effective interest rate of the financial assets.The general method for measuring expected credit losses is that the Company assesses on each balance sheet datewhether the credit risk of financial assets has increased significantly since initial recognition. If the credit risk hasincreased significantly since initial recognition, the Company measures the loss provisions according to theamount equal to lifetime expected credit losses. If the credit risk has not increased significantly since initialrecognition, the Company measures the loss provisions according to the amount equal to 12-month expectedcredit losses. The Company considers all reasonable and valid information, including forward-looking information,when assessing expected credit losses.For financial instruments with lower credit risk on the balance sheet date, the Company assumes that their creditrisk has not increased significantly since initial recognition.
(2) Criteria for judging whether credit risk has increased significantly since initial recognitionIf the probability of default of a financial asset in the expected lifetime determined on the balance sheet date issignificantly higher than the probability of default in the expected lifetime determined at the time of initialrecognition, it indicates that the credit risk of the financial asset has increased significantly. Except for specialcircumstances, the Company uses the change in default risk that occurs within the next 12 months as a reasonableestimate of the change in default risk that occurs throughout the lifetime to determine whether the credit risk hasincreased significantly since initial recognition.
(3) Combination method for assessing expected credit risk based on combination
The Company individually assesses credit risk for financial assets that have significantly different credit risks,such as: receivables in dispute with the other party or involving litigation and arbitration; and receivables withobvious signs that the debtor is likely to fail to meet its repayment obligations.In addition to financial assets of which credit risk is individually assessed, the Company divides financial assetsinto different combinations based on common risk characteristics, and assesses credit risk on the basis of thecombination.
(4) Accounting treatment method of financing assets
At the end of the period, the Company calculates the estimated credit losses of various financial assets. If theestimated credit losses are greater than the book value of the current impairment provisions, the difference isrecognized as an impairment loss; If the estimated credit losses are smaller than the book value of the currentimpairment provisions, the difference is recognized as an impairment gain.
(5) Method for determining credit loss of various financial assets
1) Notes receivable
The Company measures the loss provision for notes receivable based on the lifetime expected credit loss amount.Based on the credit risk characteristics of notes receivable, financial assets are divided into differentcombinations:
| Item | Basis for recognition of combinations |
| Banker's acceptance bill | The acceptor is a bank institution or a financial company |
| Trade acceptance draft | The acceptor is a company other than a bank institution or financial company |
2) Accounts receivable
For accounts receivable that do not contain significant financing components and contain significant financingcomponents, the Company measures the loss provision based on the lifetime expected credit loss amount.In addition to accounts receivable of which credit risk is individually assessed, the Company divides accountsreceivable into different combinations based on their credit risk characteristics:
| Item | Basis for recognition of combinations |
| Combination 1: Account age combination | The combination takes the account age of accounts receivable as the basis for the combination |
| Combination 2: Low risk combination | The combination takes the dismantling subsidy of waste electrical and electronic products receivable from government departments as the basis for the combination |
| Combination 3: None risk combination | The combination takes the receivables from related units within the scope of consolidation as the basis for the combination |
3) Loans and advances
Based on the internal assessment results of the credit risk management system of the relevant financial
instruments, the Company defines whether credit impairment has occurred: the Company calculates the expectedcredit loss of the financial assets at the expected credit loss rate of different categories, according to the five-levelclassification of the financial industry (normal, concerned, secondary, suspicious and loss) based on theborrower's actual repayment ability.
4) Other receivables
The Company measures impairment losses using an amount equivalent to 12-month or lifetime expected creditlosses, based on whether the credit risk of other receivables has increased significantly since initial recognition. Inaddition to other receivables of which credit risk is individually assessed, the Company divides other receivablesinto different combinations based on their credit risk characteristics:
| Item | Basis for recognition of combinations |
| Combination 1: Account age combination | The combination takes the account age of other receivables as the basis for the combination |
| Combination 2: None risk combination | The combination takes the receivables from related units within the scope of consolidation as the basis for the combination |
5) Debt investment
Debt investment mainly accounts for bond investment measured at amortization cost. The Company measuresimpairment losses using an amount equivalent to 12-month or lifetime expected credit losses, based on whetherthe credit risk of debt investment has increased significantly since initial recognition.
6) Other debt investments
Other debt investments mainly accounts for the debt investments which are measured at their fair values and ofwhich the changes are included into other comprehensive income. The Company measures impairment lossesusing an amount equivalent to 12-month or lifetime expected credit losses, based on whether the credit risk ofother debt investments has increased significantly since initial recognition.
11. Receivables financing
For notes receivable and accounts receivable classified as measured at fair value and of which changes areincluded in other comprehensive income, the portion within one year (including one year) from the date ofacquisition is presented as receivables financing; while the portion beyond one year is presented as other debtinvestment. For related accounting policies, please refer to Note (V), 9 "Financial Instruments" and Note (V), 10"Impairment of Financial Assets".
12. Inventories
(1) Classification of inventories
The Company's inventories mainly include raw materials, work in progress, finished products, development costs,and development products.
Development cost refers to the property that has not been completed and is for sale; the Company accounts for theland use rights purchased and used for commercial housing development as the development cost. Developmentproduct refers to the property that has been completed and is to be sold.
(2) Valuation for delivered inventories
Valuation for delivered inventories: When various kinds of inventories of the Company are delivered, they shallbe valuated at planned costs, and the planned costs shall be adjusted into actual costs based on the difference ofcosts of the current month at the end of the month.Development cost and product development cost include land transfer fees, infrastructure expenditures,construction and installation engineering expenditures, borrowing costs incurred before the development project iscompleted, and other related costs incurred in the development process. When developing product is carriedforward the cost, the total cost is allocated between the sold and unsold properties in proportion to theconstruction area.
(3) Recognition of the net realizable value and measurement of provision for decline in value of inventoriesAt the balance sheet date, inventories are measured at the lower of cost and net realizable value. if the cost ofinventories is higher than the net realizable value, a provision for decline in value of inventories shall be made andshall be recorded into the profits and losses of the current period, where a provision for decline in value ofinventories has been made, if the value of the said inventories is resumed later, the said value shall be reversedfrom the provision for decline in value of the inventories. Net realizable value is the estimated selling price in theordinary course of business less the estimated costs of completion and the estimated costs necessary to make thesale and relevant taxes.
(4) Stock count system for inventories
The perpetual inventory system is adopted for stock count of the Company.
(5) Amortization methods of low-value consumables and packaging materialsLow-value consumables and packaging materials are written off in full when issued for use.
13. Assets held for sale
(1) Recognition standard
Where the Company recovers its book value by selling (including the non monetary asset exchange withcommercial substance; it is the same below), not continuously using a non-current asset or disposal group, it shallbe classified into the category of assets held for sale. The non-current asset or disposal group to be classified intothe category of assets held for sale shall meet the following conditions at the same time:
According to the practice of selling such assets or disposal groups in similar transactions, they can be soldimmediately under the current circumstances;The sale is very likely to happen, i.e., the Company has made a decision on a sale plan and has obtained the
determined purchase commitment, and the sale is expected to be completed within one year. The relevantregulations require that the relevant organ of authority of the Company or regulatory authorities must approve thesale, it shall have been approved. A determined purchase commitment refers to a legally binding purchaseagreement signed between the Company and other parties. The agreement includes important terms such as thetransaction price, time and severe penalties for breach of contract, making it almost impossible to make majoradjustments or cancel the agreement.For the non-current asset or disposal group specially obtained by the Company for resale, if it meets the specifiedcondition that "the sale is expected to be completed within one year" on the date of acquisition and it is very likelyto meet other classification conditions of the category held for sale in a short period of time (usually 3 months), itshall be classified into the category held for sale on the date of acquisition.The disposal group refers to a group of assets that are disposed of as a whole in a transaction through sale or othermeans, and the liabilities that are directly related to these assets and transferred in the transaction. Where thegoodwill obtained in the merger of enterprises is apportioned for the asset group or asset group combination towhich the disposal group belongs according to Accounting Standards for Enterprises No.8 - Asset Impairment,this disposal group should contain the goodwill apportioned to the disposal group.
(2) Accounting treatment
For the non-current asset and disposal group that is classified as the category held for sale, the Company carriesout initial measurement or re-measurement according to the smaller result of the net value of the book value andthe fair value minus the net amount of the disposal expense. Where the net value of the fair value minus thedisposal cost is lower than the original book value, the difference is confirmed as assets impairment loss andinclude in the current profits and losses, and the provision for impairment of the assets held for sale is made at thesame time; for the amount of assets impairment loss confirmed by the disposal group held for sale, the book valueof the goodwill in the disposal group is deducted first, and then its book value is deducted in proportion accordingto the ratios of the book values of various non-current assets applicable to measurement of the category held forsales in the disposal group.Where the net value of the fair value of non-current assets held for sale on the balance sheet date minus the sellingexpense increases subsequently, the previous write-down amount is restored and will be reversed in the amount ofassets impairment loss after classification as the category held for sales is confirmed, and the reversed amountshall be included in the current profits and losses. The assets impairment loss confirmed before classification asthe category held for sales shall not be reversed.Where the net value of the fair value of disposal group held for sale on the balance sheet date minus the sellingexpense increases subsequently, the previous write-down amount is restored and will be reversed in the amount ofassets impairment loss confirmed for non-current assets applicable to the measurement provisions of the categoryheld for sale after classification as the category held for sales, and the reversed amount shall be included in thecurrent profits and losses.For the deducted book value of goodwill and the non-current assets applicable to the measurement provisions of
the category held for sale, the assets impairment loss confirmed before classification as the category held for salesshall not be reversed. For the subsequently reversed amount of assets impairment loss confirmed for the disposalgroup held for sale, its book value is increased in proportion according to the ratios of the book values of variousnon-current assets applicable to measurement provisions of the category held for sales in the disposal groupexcluding the goodwill. The non-current assets held for sale or non-current assets in the disposal group are notmade for provision for impairment or amortized, and the interests on debts and other expenses in the disposalgroup held for sale will be confirmed continuously.The measurement methods of the category held for sale do not apply to the deferred income tax assets, financialassets complying with the specifications of Accounting Standards for Business Enterprises No. 22 - Recognitionand Measurement of Financial Instruments, investment real estate and biological assets measured at fair value,contract rights produced in the insurance contract, and the assets produced in the welfare of the workers, and theyare measured according to the relevant criteria or corresponding accounting policies formulated by the Company.Where the disposal group contains the non-current assets applicable to the measurement method of the categoryheld for sale, the measurement method of the category held for sale is applicable to the whole disposal group. Therelated accounting standards apply to measurement of liabilities in the disposal group.When the non-current assets or disposal group is removed from the disposal group held for sale because it doesnot meet the classification condition of the category held for sale anymore and will not be classified as thecategory held for sale or non-current assets, it shall be measured according to the smaller one of the followingtwo:
1) Book value before being classified as held for sale, and the adjusted amount of depreciation, amortization orimpairment that should be recognized under the assumption that it is not classified as held for sale; and
2) Recoverable amount.
14. Long-term equity investment
Long-term equity investments mainly include the equity investment held by the Company that is able to control, isunder common control with or has significant influences on the invested entity and the equity investment to jointventures.
(1) Judgment standards of control and significant influence
Judgment standards of control:
1) The Company owns the power to the invested entity;
2) The Company enjoys variable return by participating relevant activities of the invested entity;
3) The Company has the ability to use the power over the invested entity to influence the Company's returnamount;
4) The Company acknowledges the control force for the invested entity that meets the above three conditions.Judgment standards of significant influence:
1) The Company has the power to participate in decision making for the financial and operations policies of the
invested entity, but cannot control formulation of these policies independently or together with other parties.
2) Where the Company can exert a great influence on the invested entity, the invested entity is an associatedenterprise of the Company.
3) The invested entity under common control by the Company and other participants is a contractual enterpriseof the Company. Common control means that any participant cannot independently control this arrangement,and any participant with the right to common control on this arrangement can prevent other participants orthe combination of participants from independently controlling this arrangement.
(2) Investment cost recognition of long-term equity investment
The long-term equity investment of the Company is measured at the investment cost at the time of acquisition.Normally the investment cost refers to the assets paid, liabilities incurred or undertaken, and the fair value ofequity securities issued for the acquisition of this investment, including the costs directly attributable to theacquisition. However, for the long-term equity investment formed by business combination involving enterprisesunder common control, the investment cost is the share of carrying amount of the combined party's net assetsacquired on the combination date in the ultimate controlling party's consolidated financial statements.
(3) Subsequent measurement of long-term equity investments and recognition of profits or lossesThe Company adopts the cost method for accounting for the long-term equity investment based on which theCompany is able to control the invested enterprise; the Company adopts the equity method for accounting forinvestments put into associated enterprises and contractual enterprises.The price of a long-term equity investment accounted by employing the cost method shall be included at its initialinvestment cost. If there are additional investments or disinvestments, the cost of the long-term equity investmentshall be adjusted. The cash dividends or profits declared to distribute by the invested entity shall be recognized asinvestment income and charged to profits or losses of the current period.When the Company employs the equity method for accounting of the long-term equity investment, if theinvestment cost of a long-term equity investment is more than the investing enterprise' attributable share of thefair value of the invested entity's identifiable net assets for the investment, the investment cost of the long-termequity investment may not be adjusted; if the investment cost of a long-term equity investment is less than theinvesting enterprise' attributable share of the fair value of the invested entity's identifiable net assets for theinvestment, the carrying amount of the long-term equity investment shall be adjusted, and the difference shall berecorded into the profits or losses of the current period.When the Company employs the equity method for accounting of the long-term equity investment, the Companyfirst adjusts the invested entity's net profits or losses and other comprehensive income in the aspects such as thefair value of the invested entity's identifiable net assets at the time of investment acquisition, accounting policyand accounting period, and then recognizes the current-period investment profits or losses and othercomprehensive income according to the investing enterprise' attributable or shareable share of the invested entity's
net profits or losses and other comprehensive income. For other changes in owners' equities other than the netprofits or losses, other comprehensive income and profit distribution, the carrying amount of the long-term equityinvestment shall be adjusted and recorded into the owners' equities.For the unrealized internal transaction profits/losses that arise between the Company and the associatedenterprises and contractual enterprises, the part attributable to the Company shall be calculated according to theshareholding proportion, and the investment profits/losses shall be recognized on the basis of offsetting.For the long-term equity investments held already prior to 1 January, 2007 for the associated enterprises andcontractual enterprises, if there is any equity investment difference on the debit side, the investment profits/lossesshall be recognized after deduction of the equity investment difference on the debit side amortized by thestraight-line method according to the original residual maturity.
(4) Recognition of common control and significant influences on the invested entityCommon control is recognized as the control which does not exist unless the investing parties unanimously agreeon sharing the control power over the relevant important financial and operating decisions of the invested entityaccording to the provisions of the contract.Significant influences will be recognized where there is power to participate in making decisions on the financialand operating policies of the invested entity, but not to control or do joint control together with other parties overthe formulation of these policies. When the Company holds more than 20.00% (included) but less than 50.00% ofvoting shares of the invested entity directly or indirectly through a subsidiary, significant influences on theinvested entity shall be recognized, unless there is clear evidence indicating that the Company cannot participatein production and management decision-making of the invested entity in this situation and therefore cannotgenerate significant influences; if the Company holds less than 20.00% (excluded) of voting shares of the investedentity, usually the Company is not deemed to have a significant influence on the invested entity, unless there isclear evidence indicating that the Company can participate in production and management decision-making of theinvested entity in this situation and therefore can generate significant influences.
(5) Conversion of the long-term equity investment accounting method
Where the equity investment originally held by the Company, which is unable to control, is not under commoncontrol with or has no significant influences on the invested entity, is converted into an investment for anassociated enterprise or contractual enterprise due to additional investment, the investment shall be accounted bythe equity method instead, and the Company shall use the fair value of the original equity investment plus the fairvalue of the consideration paid to acquire the newly added investment as the initial investment cost accounted bythe equity method instead. The difference between the fair value and carrying amount of the originally held equityinvestment prior to the additional investment, and the cumulative fair value changes originally recorded into othercomprehensive income shall be transferred to the current-period profits or losses accounted by the equity methodinstead.For the originally held investments for associated enterprises and contractual enterprises, if they are not able to beunder common control with or have significant influences on the invested entity, if they are not able to be under
common control with or have significant influences on the invested entity due to reason such as partial disposal,accounting treatment must be performed for remaining equity investments according to the recognization andmeasurement standards for financial instruments, and the difference between the fair value and carrying amounton the date on which the common control or significant influence is lost shall be charged to profits or losses of thecurrent period. When accounting based on the equity method is terminated for other related comprehensiveincome originally subject to accounting of equity method, accounting treatment is performed using the basis thesame as that used by the invested entity to directly dispose of relevant assets or liabilities; all the owners' equitiesthat are recognized due to other changes in owners' equities other than the net profits/losses, other comprehensiveincome and profit distribution of the invested entity shall be transferred to the profits or losses of the currentperiod when accounting based on the equity method is terminated.Where the originally held investments for associated enterprises or contractual enterprises are converted toinvestments for subsidiaries due to additional investment, in the individual financial statements, the sum of thecarrying value of the acquired party's equity investment held prior to the acquisition date and the investment costnewly added on the acquisition date shall be used as the initial investment cost of such an investment; for theequity investment held prior to the acquisition date, other comprehensive income recognized due to accounting ofthe equity method shall undergo accounting treatment using the basis the same as that used by the invested entityto directly dispose of relevant assets or liabilities when such an investment is disposed of.When the influencing capability on the invested entity is converted from control to a significant influence orcommon control together with other investors due to investment disposal, the long-term equity investment cost,for which recognition shall be terminated, is first carried over according to the proportion of investment disposal.On such a basis, the remaining long-term equity investment cost is compared with the share attributable to theCompany in the fair value of the invested entity's identifiable net assets at the time of original investment, whichis calculated according to the remaining shareholding proportion. For the business reputation part to be embodiedin the investment evaluation, the carrying amount of long-term equity investment shall not be adjusted; where theinvestment cost is less than the share attributable to the Company in the fair value of the invested entity'sidentifiable net assets at the time of original investment, any excess shall be adjusted against retained earningswhen the long-term equity investment cost is adjusted. For the share attributable to the Company in the investedentity's realized net profits/losses between acquisition of the original investment and conversion to accounting ofthe equity method due to investment disposal, the carrying amount of the long-term equity investment shall beadjusted, meanwhile, any excess shall be adjusted against retained earnings for the share attributable to theCompany in the invested entity's realized net profits/losses (excluding the cash dividends or profits distributed ordeclared to distribute) from acquisition of the original investment to the beginning of the period in which theinvestment is disposed of, and the current-period profits or losses shall be adjusted for the share attributable to theCompany in the invested entity's realized net profits/losses from the beginning of the period in which theinvestment is disposed of to the investment disposal date; the share attributable to the Company in the investedentity's changes in other comprehensive income shall be recorded into other comprehensive income when thecarrying amount of the long-term equity investment is adjusted; the share attributable to the Company in theinvested entity's other changes in owners' equities arising from reasons other than the net profits or losses, other
comprehensive income and profit distribution shall be recorded into "Capital reserves -- Other capital reserves"when the carrying amount of the long-term equity investment is adjusted. After the cost method is converted tothe equity method for the long-term equity investment, the share attributable to the Company in the investedentity's realized net profits/losses, other comprehensive income and other changes in owners' equities shall becalculated and recognized according to provisions of the standard in the future period.For the originally held long-term equity investment that is able to control the invested entity, if the shareholdingproportion declines due to reasons such as partial disposal and the investment cannot be able to control, be undercommon control with or have significant influences on the invested entity, accounting treatment must beperformed for remaining equity investments according to the recognization and measurement standards forfinancial instruments. The difference between the fair value and carrying amount on the date of control loss shallbe recorded into the investment income of the current period.In the process of holding the long-term equity investment, if the Company decides to sell all or part of held stocksof the invested entity in consideration of all aspects, the carrying amount of the long-term equity investmentcorresponding to the sold stocks shall be carried over accordingly, and the difference between the selling price andthe carrying amount of long-term equity investment for disposal shall be recognized as disposal profit or loss.If the Company disposes of all the long-term equity investments accounted by the equity method, whenaccounting based on the equity method is terminated for other related comprehensive income originally subject toaccounting of equity method, accounting treatment is performed using the basis the same as that used by theinvested entity to directly dispose of relevant assets or liabilities; all the owners' equities that are recognized due tochanges in other owners' equities other than the net profits/losses, other comprehensive income and profitdistribution of the invested entity shall be transferred to the investment income of the current period whenaccounting based on the equity method is terminated; if a part of the long-term equity investment accounted by theequity method is disposed of and the remaining stocks are still accounted using the equity method, other relatedcomprehensive income originally subject to accounting of equity method shall be handled using the basis the sameas that used by the invested entity to directly dispose of relevant assets or liabilities and be carried over byproportion, and the owners' equities that are recognized due to other changes in owners' equities other than the netprofits/losses, other comprehensive income and profit distribution of the invested entity shall be carried over tothe investment income of the current period according to the proportion.
15. Investment real estate
The Company's investment real estate includes a land use right that is leased out, a land use right held for transferupon capital appreciation and a building that is leased out.The Company's investment real estate is measured at its cost, and the Company uses the cost model for asubsequent measurement of its investment real estate. The depreciation and amortization of the investment realestate shall be made in accordance with the accounting policies of fixed assets or intangible assets of theCompany.When the Company changes the purpose of the investment real estate, such as for self-use, it shall transfer the
relevant investment real estate to other assets.
16. Fixed assets
(1) Recognition standard of fixed assets
The Company's fixed assets refer to the tangible assets that are held for the sake of producing commodities,rendering labor service, renting or business management and whose useful life is in excess of one fiscal year.Fixed assets can not be recognized unless they simultaneously meet the conditions as follows:
1) The economic benefits pertinent to the fixed assets are likely to flow into the enterprise; and
2) The cost of the fixed assets can be measured reliably.
(2) Measurement of fixed assets
The measurement of a fixed asset shall be made at its cost.
1) The cost of outsourcing fixed assets includes the purchase price, related taxes and charges, and transportationcosts, loading and unloading fees, installation fees, and professional service fees that can be attributed to theasset before the fixed asset reaches its intended use state.
2) If the payment for the purchase of a fixed asset is delayed beyond the normal credit conditions, and is of afinancing nature in essence, the cost of the fixed asset is determined on the basis of the present value of thepurchase price. The difference between the actual payment and the present value of the purchase price shallbe included in the current profits and losses within the credit period, unless it shall be capitalized inaccordance with the Accounting Standards No. 17 - Borrowing Costs.
3) The cost of constructing a fixed asset on its own is composed of the necessary expenditures incurred beforethe asset is constructed and ready for its intended use.
4) The cost invested by the investor in a fixed asset is determined according to the value stipulated in theinvestment contract or agreement, unless the value stipulated in the contract or agreement is not fair.
5) The costs of the fixed assets which are obtained through non-monetary asset exchange, debt restructuring,
business merger or financial leases are determined according to the relevant provisions of the AccountingStandards for Business Enterprises No.7 - Non-Monetary Asset Exchange, the Accounting Standards forBusiness Enterprises No.12 - Debt Restructuring, the Accounting Standards for Business Enterprises No.20 -Business Combinations, and the Accounting Standards for Business Enterprises No.21 - Leases respectively.
(3) Classification of fixed assets
The Company's fixed assets are classified into houses and buildings, machinery equipment, electronic equipmentand transportation equipment and otherwise.
(4) Depreciation of fixed assets
1) Recognition of depreciation method and service life, expected net salvage value rate and annual depreciation
rate:
The depreciation of fixed assets shall be made by the straight-line method. The annual depreciation raterecognized according to the category, service life and expected net salvage value rate of fixed assets is as follows:
| Category of fixed assets | Expected net salvage value rate (%) | Expected service life (year) | Annual depreciation rate (%) |
| Houses and buildings | 5.00 | 20.00 | 4.75 |
| Machinery equipment | 5.00 | 6.00-10.00 | 9.50-15.83 |
| Electronic equipment | 5.00 | 2.00-3.00 | 31.67-47.50 |
| Transportation equipment | 5.00 | 3.00-4.00 | 23.75-31.67 |
| Others | 5.00 | 3.00-5.00 | 19.00-31.67 |
Depreciation of fixed assets of which a provision for impairment has been made: For a fixed asset of which aprovision for impairment has been made, the depreciation of the fixed asset shall be made based on the amount ofdeducting its expected net salvage value, depreciation amount and provision for impairment from the originalprice of the fixed asset and remaining service life of the fixed asset.For the fixed assets that have reached intended usable condition but not prepared the final account for completion,their costs shall be recognized at their estimated value, and their depreciation shall be made accordingly; Aftercompletion of the final account for completion, the original estimated value of the fixed assets shall be adjusted bytheir actual costs, but the original depreciation amount does not require adjusting.
2) Check of service life, expected net salvage value and depreciation method of fixed assets:
The Company shall, at least at the end of each year, have a check on the service life, expected net salvage value,and the depreciation method of the fixed assets. If the Company finds that there is any difference between theexpected service life and the previously estimated service life of a fixed asset, the expected service life of thefixed asset shall be adjusted; If there is any difference between the amount of expected net salvage value and thepreviously estimated amount of the net salvage value, the expected net salvage value shall be adjusted; If anysignificant change is made on the form of the realization of the expected economic benefits concerning a fixedasset, the method for the depreciation of the fixed asset shall be changed. If any change is made to the service life,expected net salvage value or the depreciation method of a fixed asset, it shall be regarded as a change of theaccounting estimates.
(5) Treatment of subsequent expenditures for fixed assets
Subsequent expenditures incurred on a fixed asset refer to repair expenses, renovation expenses, repair costs anddecoration expenses and otherwise incurred in the course of use of the fixed asset. Their accounting treatment isas follows: Where subsequent expenditures of a fixed asset such as renovation expenses meet the conditions ofrecognizing the fixed asset, they shall be recorded into the cost of the fixed asset, and the carrying amount of thereplaced part of the subsequent expenditures shall be deducted; Where subsequent expenditures of a fixed assetsuch as repair costs do not meet the conditions of recognizing the fixed asset, they shall be recorded into the
profits and losses of the current period in which they are incurred; Where the decoration expenses of a fixed assetmeet the conditions of recognizing the fixed asset, they shall be measured in a single detail account of "FixedAssets", and the depreciation of the fixed asset shall be made separately by the straight-line method in a shortertime of the period of two decorations and remaining usable life of the fixed asset.The improvement expenditures incurred on a fixed asset leased by operating lease shall be capitalized andreasonably amortized as long-term prepaid expenses.
17. Construction in Progress
The term "construction in progress" refers to all necessary expenditures incurred before the acquired fixed assetsenable the project to reach expected usable condition, including project direct materials, direct employeeremunerations, installation costs for equipment to be installed and project construction, project management fees,net profits and losses of project commissioning and approved capitalized borrowing costs.
(1) Valuation of construction in progress
The Company's construction in progress shall be measured individually by construction project and shall bevaluated at actual cost.
(2) Time point of carrying over construction in progress into fixed asset
When the construction in progress reaches the expected usable condition, they shall be transferred to fixed asset attheir actual cost. For the fixed assets that have reached expected usable condition but not prepared the finalaccount for completion, they shall be charged to the account at their estimated value and shall be adjusted aftertheir actual value is recognized.
18. Capitalization of borrowing costs
Borrowing costs are interests and other costs incurred by the Company in connection with the borrowing of thefunds, including interests, amortization of discounts or premiums related to borrowings, ancillary costs incurred inconnection with the arrangement of borrowings, and exchange differences arising from foreign currencyborrowings.
(1) Recognition of capitalization of borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifyingasset shall be capitalized, and the amounts of other borrowing costs incurred shall be recorded into the profits andlosses of the period. in which they are incurred. Qualifying assets are fixed assets, investment real estate andinventories and otherwise that necessarily take a substantial period of time for acquisition, construction orproduction to get ready for their intended use or sale.
(2) Period of capitalization of borrowing costs
1) Time point of capitalization of borrowing costs.
The capitalization of borrowing costs commences only when all of the following conditions are satisfied:
a Expenditures for the asset have been incurred;b Borrowing costs have been incurred; andc Activities relating to the acquisition, construction or production of the asset that are necessary to prepare theasset for its intended use or sale have commenced.
2) Time point of ceasing capitalization of borrowing costs:
Capitalization of borrowing costs ceases when the qualifying asset acquired, constructed or produced becomesready for its intended use or sale. The subsequent borrowing costs shall be recorded into the profits and losses ofthe current period.
3) Recognition of suspending capitalization of borrowing costs:
When an abnormal interruption occurs during the construction or production of an asset which satisfies theconditions for capitalization and the interruption continues for more than three months consecutively, thecapitalization of borrowing expense will be paused, the borrowing expense incurred during the suspension will beincluded in the current profits and losses.
(3) Calculation of capitalized amounts of borrowing costs
During the capitalization period, the amount of interest (including amortization of discounts or premiums) to becapitalized for each accounting period shall be recognized as follows:
1) As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurredof the specifically borrowed loan at the present period minus the income of interests earned on the unusedborrowing loans as a deposit in the bank or as a temporary investment.
2) Where a general borrowing is used for the acquisition and construction or production of assets eligible forcapitalization, the Company shall calculate and determine the to-be-capitalized amount of interests on thegeneral borrowing by multiplying the weighted average asset disbursement of the part of the accumulativeasset disbursements minus the specifically borrowed loans by the capitalization rate of the general borrowingused. The capitalization rate shall be calculated and recognized by the weighted average interest rate ofgeneral borrowings.Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during eachaccounting period shall be recognized by the real interest rate method, and an adjustment shall be made to theamount of interests in each period. During the period of capitalization, the amount of interest capitalized duringeach accounting period shall not exceed the amount of interest actually incurred to the relevant borrowings in thecurrent period.Ancillary costs in connection with special borrowings that are incurred before the qualifying asset acquired,constructed or produced becomes ready for its intended use or sale shall be capitalized on the basis of the incurredamount when they are incurred, and they shall be recorded into the cost of qualifying asset; those incurred after
the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall berecognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded into theprofits and losses of the current period. The ancillary costs arising from a general borrowing shall be recognizedas expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses ofthe current period.
19. Intangible assets
(1) Recognition of intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by theCompany. Intangible assets can be recognized only when they meet the conditions simultaneously as follows:
1) They are consistent with the definition of intangible assets.
2) The economic benefits related to intangible assets are likely to flow into the enterprise; and
3) The cost of intangible assets can be measured reliably.
(2) Measurement of intangible assets
The intangible assets shall be measured according to their cost or fair value (if increased through businesscombination not involving enterprises under common control).
(3) Subsequent measurement
The Company shall analyze and judge the service life of intangible assets when it obtains intangible assets. If theCompany is unable to forecast the period when the intangible asset can bring economic benefits to it, it shall beregarded as an intangible asset with uncertain service life.With regard to an intangible asset with limited service life, its amortization amount shall be amortized by expectedrealization pattern of its economic benefits, if the Company is unable to recognize the expected realization patternreliably, intangible assets shall be amortized by the straight-line method.The Company shall, at least at the end of each year, check the service life and the amortization method ofintangible assets with limited service life. If necessary, it shall adjust the said service life and amortizationmethod.With regard to an intangible asset with uncertain service life, its amortization amount shall not be amortized, butthe Company shall check the service life of the said intangible asset every year and shall carry out an impairmenttest for it.
(4) Estimation of service life
As for intangible assets with limited service life, the estimation of their service life generally considers thefollowing factors:
1) General life cycle of products manufactured by using the assets and information about service life of similarassets available;
2) Present situation of technologies and process and estimation for future development trends;
3) Market demand of products manufactured or services rendered by using the assets;
4) Expected actions of present or potential competitors;
5) Expected maintenance expenses for economic capacity from the assets and the Company's expectedcapability to pay relevant expenses;
6) Laws and regulations or similar restrictions relating to the control period of the assets, such as concessionperiod and lease period;
7) Relevance with service life of other assets held by the Company, etc.
(5) Division of research expenditures and development expenditures included in expenditures for internalresearch and development projects
1) Research expenditures in internal research and development projects shall be recorded into the profits andlosses of the current period when they are incurred.
2) Development expenditures in internal research and development projects shall be recognized as intangibleassets where they satisfy all of the following conditions:
a Technical feasibility of completing the intangible asset so that it will be available for use or sale;b Intention to complete the intangible asset and use or sell it;c How the intangible asset will generate economic benefits, including the ability to demonstrate the existence of amarket for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, theusefulness of the intangible asset;d Availability of adequate technical, financial and other resources to complete the development and to use or sellthe intangible asset;e Ability to measure reliably the expenditure that is attributable to the intangible asset during its development.
20. Long-term deferred expenses
Long-term deferred expenses refer to the expenses incurred by the Company but attributable to the current andsubsequent accounting periods of more than one year (excluding one year), including the expenses forimprovement of fixed assets leased by operating lease.Long-term deferred expenses shall be recorded into the account based on their actual amount of expenditure andshall be averagely amortized by their beneficial period, if long-term deferred expenses can not benefit subsequentaccounting periods, the unamortized value of the project shall be all transferred to the profits and losses of thecurrent period.
21. Asset impairment
On the balance sheet date, if there is any sign showing possible impairment of assets (referring to the assets other
than inventories, equity instruments that have no quoted price and reliable fair value measurement in activemarket, investment real estate measured by fair value model, consumable biological assets, assets formed underconstruction contract, deferred income tax assets, residual value not guaranteed by the renter in the financing leaseand financial assets), their recoverable amount shall be estimated on the basis of single item assets; Where it isdifficult to estimate the recoverable amount of the single item assets, the recoverable amount of the assets shall berecognized on the basis of their asset group or combination of asset groups.The recoverable amount shall be recognized in light of the higher one of the net amount of the fair value of thesingle item assets, asset group or combination of asset groups less the disposal expenses and the present value ofthe expected future cash flow of the single item assets, asset group or combination of asset groups.Where the recoverable amount of the single item assets is lower than their carrying amount, a provision for theasset impairment shall be made accordingly on the basis of the difference between the carrying amount of thesingle item assets and their recoverable amount. Where the recoverable amount of an asset group or a combinationof asset groups is lower than its carrying amount, it shall be recognized as the corresponding impairment loss. Theamount of the impairment loss shall first charge against the carrying amount of business reputation which isapportioned to the asset group or combination of asset groups, then charge it against the carrying amount of otherassets in proportion to the weight of other assets in the asset group or combination of asset groups with thebusiness reputation excluded. The charges against the carrying amount of the assets above shall be treated as theimpairment loss of the single item assets (including the business reputation), and a provision for impairment of thesingle item assets shall be made accordingly.Once the above loss of asset impairment is recognized, it shall not be switched back in future accounting periods.
22. Accrued liabilities
(1) Recognition of estimated liabilities
When the businesses related to contingencies such as external guarantee, pending action or arbitration, productquality assurance, plan for layoffs, loss contract, restructuring obligations and fixed asset disposal obligationsmeet all of the following conditions, they shall be recognized as liabilities:
1) The liabilities are present liabilities assumed by the Company;
2) The fulfillment of the liabilities might cause outflow of economic benefits from the enterprise.
3) The amount of the liabilities can be reliably measured.
(2) Measurement of estimated liabilities
The estimated liabilities shall be measured in accordance with the best estimate of the necessary expenses for theperformance of the current obligation. If there is a sequent range for the necessary expenses and if all theoutcomes within this range are equally likely to occur, the best estimate shall be recognized in accordance withthe middle estimate within the range. In other cases, the best estimate shall be recognized in accordance with thefollowing methods, respectively:
1) If the contingencies concern a single item, it shall be recognized in the light of the most likely outcome.
2) If the contingencies concern two or more items, the best estimate shall be calculated and recognized inaccordance with all possible outcomes and the relevant probabilities.When all or some of the expenses necessary for the liquidation of estimated liabilities of the company is expectedto be compensated by a third party or other parties, the compensation shall be separately recognized as an assetonly when it is virtually certain that the reimbursement will be obtained. The amount recognized for thereimbursement shall not exceed the carrying amount of the recognized estimated liabilities.
23. Employees' wages and salaries
(1) Definition of employees' wages and salaries
It refers to all kinds of remunerations or compensations given by the enterprises in exchange of the employees'services or for cancellation of labor relationships. The employees' wages and salaries include the short-term wagesand salaries, separation benefits, dismiss welfare and other long-term employee benefits, as well as the benefitsprovided by the enterprises to employees' spouses, children and dependants, deceased employees' survivors andother beneficiaries.
(2) Scope of employees
In addition to all the employees who have signed a labor contract with the enterprise, the scope of employees alsocovers members who have not signed a labor contract with the enterprise but have been formally appointed by theenterprise, and those who provide services to the enterprise which has signed an employment contract with a laborservice agent.
(3) Recognizing short-term wages and salaries
In the accounting period during which employees provide services to the Company, the Company recognizes theshort-term wages and salaries actually incurred as liabilities and charges them to the current-period profits andlosses or relevant asset costs.
(4) Separation benefits are classified into the defined contribution plan and defined benefit plan
1) During the accounting period when employees provide services to the Company, the Company recognizesthe contribution amount payable calculated according to the defined contribution plan as a liability, andincludes it in the current profits and losses or related asset costs.
2) The accounting treatment of the defined benefit plan usually includes the following steps:
a According to the projected unit credit method, adopt the unbiased and mutually consistent actuarial assumptionto estimate the demographic variables and financial variables, measure obligations generated by the definedbenefit plan, and determine the period to which relevant obligations belong;b In case that the defined benefit plan involves assets, recognize the deficit or surplus formed by reducing the fairvalue of assets of the defined benefit plan from the present obligation value of the defined benefit plan as one net
liability or net asset of the defined benefit plan. If the defined benefit plan has any surplus, use the lower of thedefined benefit plan surplus and the upper asset limit to measure net assets of the defined benefit plan. The upperasset limit refers to the present value of the economic interest that can be obtained by the Company from refund ofthe defined benefit plan or by reducing the fund to be deposited for the defined benefit plan in the future;c At the end of the period, recognize the costs of employees' wages and salaries arising from the defined benefitplan as the service costs, net interests of net liabilities or net assets of the defined benefit plan, and changes arisingfrom remeasurement of net liabilities or net assets of the defined benefit plan, wherein the service costs and netinterests of net liabilities or net assets of the defined benefit plan are recorded into the current-period profits/lossesor relevant asset costs, changes arising from remeasurement of net liabilities or net assets of the defined benefitplan are recorded into other comprehensive income and cannot be reversed to profits/losses in the subsequentaccounting period, but such amount recognized in other comprehensive income can be transferred within theequity scope;d Recognize a settlement gain or loss during settlement of the defined benefit plan.
(5) The Company provides employees with dismiss welfare
The liability of employees' wages and salaries that arises from the dismiss welfare shall be recognized on theearlier one of the following two dates and charged to the current-period profits/losses:
1) When the Company cannot unilaterally cancel the dismiss welfare provided for the labor relationshipcancellation plan or staff reduction suggestion;
2) When the Company recognizes the cost or expense related to reconstruction involving dismiss welfare
payment.
(6) Employee welfares
If other long-term benefits offered by the Company to employees comply with conditions of the definedcontribution plan, accounting treatment is conducted according to the defined contribution plan; the long-termbenefits other than these shall undergo accounting treatment according to the defined benefit plan, but the changesarising from remeasurement of the net liabilities or net assets of other long-term benefits for employees shall berecorded into the current-period profits/losses or relevant asset costs.
24. Recognition of revenues
Revenues shall be recognized where the relevant economic benefits are likely to flow into the Company, therelevant amount of revenue can be reliably measured and the following conditions are met simultaneously:
The Company is engaged in production and sales of air conditioners and their accessories, and home appliancesand their accessories. The corresponding income includes the income from selling goods, labor service provisionincome, and the income of abalienating the right to use assets, in which the income from selling goods includesthe domestic sales income and export sales income.
(1) Income from selling goods
Where the Company has transferred significant risks and rewards of ownership of the goods to the buyer, and itneither retains continuous management right that usually keeps relation with the ownership nor implementseffective control over the sold goods; and the income amount and relevant costs incurred or to be incurred can bereliably measured, and the relevant economic benefits are likely to flow into the enterprise, the income fromselling goods shall be recognized.
1) For the income from domestic sales of products, the Company adopts the form of payment in advance, andrecognizes the income when the product is outbound and delivered to the purchaser, the delivery order oroutbound order is issued, and the amount of income from product sales is determined;
2) For the income from export sales, the Company recognizes the income when the Company's products declareand leave the port, the bill of lading is obtained and the amount of income from product sales is determined.
(2) Income from rendering labor services
The Company's income from rendering labor services includes the income from external provided storage services,income from material processing services, service charge and commission income. The Company's progress incompletion of the transaction can be reliably determined, the income amount and relevant costs incurred or to beincurred can be reliably measured, and the income from rendering labor services is confirmed when the relevanteconomic benefits are likely to flow into the enterprise.
1) Regarding the income from storage services, after the relevant labor services are provided, the Company willsettle the income on a monthly basis when the amount of income has been determined according to the workinghours and standard wages of the services provided, facilities used and related expenses.
2) Regarding the income from processing services, the Company will determine the income when it processes thematerials according to the contract and delivers it to the customer to obtain the customer's receipt document, andthe amount of income is determined.Method of determining the schedule of completion under the transaction concerning the rendering of laborservices: measuring the completed work (or the proportion of the provided service to the total amount of laborservice that should be provided, and the proportion of the cost that has been incurred to the total cost estimated).Where the transaction result of the labor service provided on the balance sheet date cannot be estimated reliably, itshall be handled according to the following circumstances:
a If it expects that the cost of labor services incurred can be made up, the Company shall recognize the incomefrom rendering labor services based on the amount of the cost of labor services incurred and shall carry forwardthe cost of labor services in accordance with the same amount.b If it expects that the cost of labor services incurred cannot be made up, the cost of labor services incurred shallbe recorded into the profits and losses of the current period, and the income from rendering labor services shallnot be recognized.
3) The Company's service charge and commission income include the service charge income of acceptancebusiness, service charge income of loan by mandate, etc.
For the service charge and commission income, the time points for service rendering, risk and remunerationtransfer are confirmed according to the business settlement sheet formulated through settlement with the customerwhen the business is completed, and the specific amount of income is recognized according to the terms and ratiosstipulated in the business contract or agreement.
(3) Income from abalienating the right to use assets
The income from abalienating the right to use assets includes the interest income, leasehold income, etc.The Company confirms the income from abalienating the right to use assets when the income amount can bereliably measured and the relevant economic benefits are likely to flow into the enterprise.
1) The Company's interest income is mainly the interest income from deposits of financial enterprises and interestincome from loans. The income from the interest of the money deposited at a financial enterprise is recognized byperiod according to the time of depositing and the actual interest rate. The loan interest income is recognizedwhen the Company grants self-operating loan and the interest is accrued by period. The loan interest income isrecognized according to the effective interest rate method.The effective interest rate method means that the amortization cost of a financial asset or financial liability andinterest income or interest expenditure of each period are calculated according to its effective rate of interest. Theeffective rate of interest refers to the interest rate used to discount the future cash flow of a financial asset orfinancial liability within the expected period of existence or a shorter period to the current book value of thefinancial asset or financial liability. When determining the effective rate of interest, the Company predicts thefuture cash flow on the basis of considering all the contract terms of financial asset or financial liability, but doesnot consider the loss of future credits. All the charges paid or collected by the Company and becoming aconstituent part of the effective rate of interest, transaction expense and transaction premium or discount shall beconsidered when the effective rate of interest is determined.
2) The Company's rental income recognition conditions are as follows:
a The lease contract, agreement or other settlement notices recognized by the lessee are available;b The obligations stipulated in the contract are fulfilled, the lease invoice is issued, and the price has beenobtained or will be obtained for sure;c The rental cost can be measured reliably.
25. Government subsidies
A government subsidy means the monetary and non-monetary assets obtained free by the Company from thegovernment, but excluding the capital invested by the government as the owner. Government subsidies consist ofthe government subsidies pertinent to assets and government subsidies pertinent to income.The Company defines the obtained government subsidies used for purchase or construction, or forming thelong-term assets by other ways as government subsidies pertinent to assets, and all the other government subsidiesas government subsidies pertinent to income. If the government document does not specify the subsidy object, the
following mode is adopted to classify the subsidies into government subsidies pertinent to income andgovernment subsidies pertinent to assets:
(1) If the government document specifies the project to which the subsidy aims, the amount is divided accordingto the relative proportion of the paid amount to form assets to the paid amount to be recorded into expenses in thebudget of this specific project, and this division proportion needs to be checked on every balance sheet date and bechanged when necessary;
(2) If the government document provides only a general presentation of the purpose without specifying thespecific project, the subsidy shall be regarded as government subsidy pertinent to income.The government subsidies pertinent to assets shall be recognized as deferred income and included in the profitsand losses by period according to the reasonable and systematic methods in the service life of the relevant assetwhen this asset reaches the intended state of use. Where the relevant asset is sold, transferred, scrapped ordamaged before the service life ends, the related deferred income balance unallocated is transferred to the profitsand losses of the current period of asset disposal.If the government subsidies pertinent to incomes are used for compensating the related expenses or losses in thelater period, they shall be recognized as deferred income when being obtained and shall be recorded into thecurrent-period profits and losses in the period when the relevant expenses or losses are recognized; if thegovernment subsidies pertinent to incomes are used for compensating the related cost expenses or losses incurred,they shall be recorded into the current-period profits and losses directly when being obtained.The government subsidies pertinent to daily activities shall be recorded in other incomes; the governmentsubsidies not pertinent to daily activities shall be recorded in the non-operating incomes and expenditures.
(3) The obtained subsidized interest of policy preference undergoes accounting treatment by differentiating thefollowing two obtaining ways:
1) Where the financial department disburses the discount fund to the loan bank so that the loan bank provides aloan to the Company at the policy-based preferential interest rate, the fair value of loan is used as the entry valueof loan, the borrowing cost is calculated according to the effective interest rate method, and the differencebetween the actual amount received and the fair value of borrowing is recognized as deferred income. Thedeferred income is amortized using the effective interest rate method in the borrowing remaining period to offsetthe relevant borrowing cost.
2) Where the financial department disburses the discount fund to the Company directly, the correspondingdiscount is used to offset the relevant borrowing cost.
(4) Where the government subsidies are monetary assets, they shall be measured according to the amount receivedor receivable. Where the government subsidies of non-monetary assets, they shall be measured at the fair value; ifthe fair value cannot be obtained in a reliable way, the subsidies shall be measured at the nominal amount. When agovernment subsidy is actually received, the Company usually recognizes and measures it according to theactually received amount. At the end of the period, however, if there is any exact evidence showing that the
Company complies with relevant conditions provided in the financial supporting policy and it is expected toreceive the capital support from the government, this subsidy shall be measured according to the amountreceivable. The government subsidy measured according to the amount receivable shall comply with all thefollowing conditions:
1) The amount of receivable subsidy has been confirmed by the authoritative government department by issuing adocument, or the subsidy can be independently and reasonably measured and calculated in accordance withrelevant provisions of the formally issued financial fund management measures and it is predicted that its amountdoes not involve significant uncertainty;
2) The subsidy is based on the financially supported project that is formally released by the local financialdepartment and initiatively disclosed according to provisions of the Regulation of the People's Republic of Chinaon the Disclosure of Government Information, as well as its financial fund management measures, and themanagement measures must be generous (any enterprise meeting the defined conditions can apply for the subsidy)and are not formulated specially for specific enterprises;
3) Other conditions that shall be matched according to specific conditions of the Company and this matter ofsubsidy.
26. Income tax
Income taxes include all types of domestic and oversea tax amounts based on the amounts of taxable income ofthe Company. When the Company obtains assets or bears liabilities, it recognizes their tax base according to thenational tax laws and regulations. If the carrying amount of assets is greater than their tax base or if the carryingamount of liabilities is less than their tax base, the difference between the tax base and their carrying amount shallbe treated as a taxable temporary difference; If the carrying amount of assets is less than their tax base or if thecarrying amount of liabilities is greater than their tax base, the difference between the tax base and their carryingamount shall be treated as a deductible temporary difference.
(1) Except for the deferred income tax liabilities arising from the following transactions, the Company shallrecognize the deferred income tax liabilities arising from all taxable temporary differences:
1) The recognition of business reputation;
2) The recognition of assets or liabilities arising from the following transactions which are simultaneouslyfeatured by the following:
a The transaction is not business combination;b At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or thedeductible loss) be affected.Unless the Company can control the time of the reverse of taxable temporary differences related to theinvestments of subsidiary companies, associated enterprises and contractual enterprises and the temporarydifferences are unlikely to be reversed in the predictable future, the Company shall recognize the corresponding
deferred income tax liabilities.
(2) The Company shall recognize the deferred income tax liabilities arising from a deductible temporarydifference to the extent of the amount of the taxable income which it is most likely to obtain and which can bededucted from the deductible temporary difference, however, it shall not recognize the deferred income tax assetsarising from the recognition of assets or liabilities during a transaction which is simultaneously featured by thefollowing:
1) This transaction is not business combination; and
2) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or thedeductible loss) be affected.On the balance sheet date, where there is any exact evidence showing that it is likely to acquire sufficient amountof taxable income tax in a future period to offset against the deductible temporary difference, the Company shallrecognize the deferred income tax assets unrecognized in prior periods. If the deductible temporary differencesrelated to the investments of subsidiary companies, associated enterprises and contractual enterprises are likely tobe reversed in the expected future and are likely to acquire any amount of taxable income tax that may be used formaking up the deductible temporary differences, the Company shall recognize the deferred income tax assetscorresponding to the said differences.
(3) On the balance sheet day, the current income tax liabilities (or assets) incurred in the current period or priorperiods shall be measured by the Company in light of the expected payable (refundable) amount of income taxesaccording to the tax law; The deferred income tax assets and deferred income tax liabilities shall be measured atthe tax rate applicable to the period during which the assets are expected to be recovered or the liabilities areexpected to be settled.In case the applicable tax rate changes, the Company shall remeasure the deferred income tax assets and deferredincome tax liabilities which have been recognized. Excluding the deferred income tax assets and deferred incometax liabilities arising from any transaction or event directly recognized as the owners' equity, the Company shallrecord the amount affected by tax rate change into the income tax expenses of the current period during which thechange occurs.The Company shall reexamine the carrying amount of deferred income tax assets on each balance sheet day. If itis unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, thecarrying amount of the deferred income tax assets shall be written down. When it is probable to obtain sufficienttaxable income taxes, such write-down amount shall be subsequently reversed.The Company shall record the income taxes of the current period and deferred income taxes other than businesscombinations and transactions or events directly recognized in the owners' equity into the profit statement asincome tax expenses or incomes.
27. Lease
The term "lease" refers to an agreement under which the lessor conveys to the lessee in return for rent the right to
use an asset for an agreed period of time. Leases consist of financing leases and operating leases.
(1) Financing leases
1) Where a lease satisfies one or more of the following criteria, it shall be recognized as a financing lease:
a The ownership of the leased asset is transferred to the lessee when the term of lease expires;b The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair valueof the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can bereasonably determined that the option will be exercised;c Even if the ownership of the asset is not transferred, the lease term covers the major part (over 75.00%(included)) of the service life of the leased asset;d In the case of the lessee, the present value of the minimum lease payments on the lease beginning date amountsto substantially all (over 90.00% (included)) of the fair value of the leased asset on the lease beginning date; in thecase of the lessor, the present value of the minimum lease receipts on the lease beginning date amounts tosubstantially all (over 90.00% (included)) of the fair value of the leased asset on the lease beginning date; ande The leased assets are of a specialized nature that only the lessee can use them without making majormodifications.A lease that does not satisfy the above conditions shall be recognized as an operating lease.
2) The fixed assets leased by financing shall be accounted according to the lower of the fair value of the leasedasset on the lease commencement date and the present value of the minimum lease payment, and the depreciationshall be accrued according to the depreciation policy of its own fixed assets.
(2) Operating leases
The rents paid by the lessee shall be recorded by the Company into the relevant asset costs or the profits andlosses of the current period by using the straight-line method over each period of the lease term. The direct costsincurred from operating leases carried on by the Company shall be directly recorded into the profits and losses ofthe current period. The contingent rents involved in the operating lease agreement shall be recorded into theprofits and losses of the current period in which they actually arise.
28. Discontinued operation
Discontinued operation refers to a constituent part that meets one of the following conditions and can bedistinguished separately, and this constituent part has been disposed of or classified into the category held for sale:
(1) This constituent part represents an independent main business or a separate main business area;
(2) This constituent part is one part of an associated plan for disposing of an independent main business or aseparate main business area;
(3) This constituent part is a subsidiary specially acquired for resale.
The Company lists the continuous operation profit and loss and discontinued operation profit and loss in theconsolidated income statement and the income statement respectively. For the non-current asset or disposal groupheld for sale that does not comply with the definition of discontinued operation, its impairment loss and reversedamount and profit and loss from disposal shall be listed as continuous operation profit and loss. The impairmentloss and reversed amount of discontinued operation and other operation profits and losses and profits and lossesfrom disposal shall be listed as discontinued operation profits and losses.For the discontinued operation listed in the current period, in the current financial statements, the informationoriginally listed as continuous operation profit and loss is re-listed as discontinued operation profits and losses ofthe comparable accounting period. Where the disposal group for discontinued use that is not for sale meets thecondition of the relevant constituent part in the definition of discontinued operation, it shall be listed asdiscontinued operation from the date of discontinued use. Where the control right of a subsidiary is lost due toreasons such as selling the investment into the subsidiary and this subsidiary complies with the definition ofdiscontinued operation, the relevant discontinued operation profits and losses shall be listed in the consolidatedincome statement.
29. Segment report
The Company determines the operating segment based on the internal organizational structure, managementrequirements and internal reporting system, determines the report segment based on the operating segment, anddiscloses the segment information.The operating segment refers to the constituent part in the Company that meets the following conditions at thesame time:
(1) This constituent part can generate income and cost in daily activities;
(2) The management of the Company can regularly evaluate the operating results of the constituent part so as todecide configuration of resources to it and evaluate its performance;
(3) The Company can obtain the relevant accounting information of this constituent part such as its financialstatus, operating results and cash flows. If two or more operating segments have similar economic characteristicsand satisfy certain conditions, they can be combined into one operating segment.
30. Hedging
To avoid certain risks, the Company hedges certain financial instruments as hedging instruments. Hedge thatmeets the prescribed conditions will be handled by the Company using hedge accounting methods. TheCompany's hedging includes fair value hedge, cash flow hedge and hedge of net investment in overseasoperations.At the beginning of the hedging, the Company officially designates the hedging tool and the hedged item, andprepares written documents on the hedging relationship and the risk management strategy and risk managementobjectives of the Company engages in hedging. In addition, the Company will continue to assess the effectiveness
of the hedging when and after the hedging begins.
(1) Fair value hedge
For eligible hedging instruments designated as fair value hedge, the gains or losses generated thereby are includedin the current profits and losses. If a hedging instrument is hedged on a non-trading equity instrument investment(or its component) that is selected to be measured at fair value and of which changes are included in othercomprehensive income, the gains and losses generated thereby are included in other comprehensive income. Gainor loss of a hedged item due to hedging risk exposure is included in the current profits and losses, while adjustingthe book value of the hedged item. If a hedged item is measured at fair value, the gain or loss of the hedged itemdue to hedging risk exposure does not need to adjust the book value of the hedged item, and the related gain andloss are included in the current profits or losses or other comprehensive income.When the Company revokes the designation of the hedging relationship, the hedging instrument has expired or issold, the contract is terminated or exercised, or the conditions for the use of hedging accounting is no longer met,the use of hedging accounting is terminated.
(2) Cash flow hedge
For eligible hedging instruments designated as cash flow hedge, the portion of the gains or losses generatedthereby that is determined to be an effective hedge is included in other comprehensive income, while the portionthat is determined to be an ineffective hedge is included in the current profits and losses.If the expected transaction causes the Company to subsequently recognize a non-financial asset or non-financialliability, or the expected transaction of the non-financial asset or non-financial liability forms a firm commitmentapplicable to fair value hedge accounting, the Company will transfer out the amount of cash flow hedge reserveoriginally recognized in other comprehensive income and includes it in the initial recognition amount of the assetor liability. For other cash flow hedging, the Company will, during the same period in which the hedged expectedcash flow affects the profit or loss, transfer out the amount of cash flow hedge reserve originally recognized inother comprehensive income and includes it in the current profits and losses.If it is expected that all or part of the net loss originally included in other comprehensive income cannot becompensated in the future accounting period, the portion which cannot be compensated will be transferred out andincluded in the current profits and losses.When the Company terminates the use of hedging accounting for cash flow hedges, the accumulated cash flowhedge reserve that has been included in other comprehensive income will be retained when future cash flowexpectations still occur, and will be transferred out of other comprehensive income and included in the currentprofits and losses when future cash flow expectations no longer occur.
(3) Hedge of net investment in an overseas operation
Hedge of net investment in overseas operations is accounted for using a method similar to the cash flow hedge.Among the gains or losses of hedging instruments, the portion that is determined to be an effective hedge isincluded in other comprehensive income, while the portion that is determined to be an ineffective hedge is
included in the current profits and losses.Gains and losses that have been included in other comprehensive income will be transferred out of othercomprehensive income and included in the current profits and losses when disposing of overseas operations.
31. Major accounting policies and accounting estimate changes
(1) Changes of major accounting policies
1) Changes in accounting policies resulting from the implementation of new standards for financial instrumentsThe Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (2017 Revision) (Finance and Accounting [2017] No. 7), the AccountingStandards for Business Enterprises No. 23 - Transfer of Financial Assets (2017 Revision) (Finance andAccounting [2017] No. 8), and the Accounting Standards for Business Enterprises No. 24 - Hedging Accounting(2017 Revision) (Finance and Accounting [2017] No. 9) on 31 March, 2017, and the Accounting Standards forBusiness Enterprises No. 37 - Presentation of Financial Instruments (2017 Revision) (Finance and Accounting[2017] No. 14) on 2 May, 2017 (the above standards are collectively referred to as "new standards for financialinstruments"), requiring domestic listed companies to implement the new financial instruments standards from 1January, 2019.As approved by the resolution of the fourth meeting of the eleventh session of board of directors of the Companyon 29 April, 2019, the Company began to implement the aforementioned new standards for financial instrumentsfrom 1 January, 2019.Under the new standards for financial instruments, all recognized financial assets are subsequently measured atamortization cost or fair value. On the implementation date of the new standards for financial instruments, theCompany's business model for managing the financial assets is evaluated based on the Company's existing factsand circumstances on that day, and the contractual cash flow characteristics on the financial assets are evaluatedbased on the facts and circumstances at the time of initial recognition of the financial assets, and the financialassets are divided into three categories: measured at amortization cost, measured at their fair values and of whichthe changes are included into other comprehensive income, and measured at their fair values and of which thechanges are included into the current profits and losses. Among them, for equity instrument investment measuredat their fair values and of which the changes are included into other comprehensive income, when the financialassets are derecognized, the cumulative gains or losses previously included into other comprehensive income willbe transferred from other comprehensive income to retained income, but will not be included into the currentprofits and losses.Under the new standards for financial instruments, the Company, on the basis of expected credit losses, makesprovisions for impairment of financial assets measured at amortization cost and debt instrument investmentswhich are measured at fair value and of which the changes are included into other comprehensive income, andrecognizes credit impairment losses.The Company applies the new standards for financial instruments retrospectively. However, if the classification
and measurement (including impairment) involves any inconsistency between the data of the previouscomparative financial statements and the new standards for financial instruments, the Company chooses not torestate. Therefore, for the cumulative impact of the implementation of the standards for the first time, theCompany adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amountof other related items in the financial statements, and does not restate the 2018 financial statements.
2) Changes in the format of financial statements
The Ministry of Finance issued the Notice on Revising and Issuing the Format of Financial Statements of GeneralEnterprises for 2019 (Finance and Accounting [2019] No. 6) and the Notice on Revising and Issuing the Formatof Consolidated Financial Statements (2019 Version) (Finance and Accounting [2019] No. 16) in April andSeptember 2019 respectively, revising the format of financial statements of general enterprises and the format ofconsolidated financial statements. The Company prepared financial statements according to the relevantrequirements and in accordance with the format of financial statements for general enterprises (applicable to theenterprises that have implemented the new financial standards, the new revenue standards and the new leasestandards). Major changes are as follows:
A. The "notes receivable and accounts receivable" item is split into the "notes receivable" item and the "accountsreceivable" item; the "notes payable and accounts payable" item is split into the "notes payable" item and the"account payable" item;B. The "receivables financing" item is added;C. Interest receivable or interest payable presented in the "other receivables" or "other payables" items only reflectthe interest which is receivable or payable upon the maturity of the relevant financial instruments but has not beenreceived or paid on the balance sheet date; the interest on financial instruments accrued based on the actualinterest rate method is included in the book balance of the corresponding financial instruments;D. The "asset impairment loss" and "credit impairment loss" items move downward from the "other gains" item tothe "fair value change gain" item, and the "credit impairment loss" item is presented before the "asset impairmentloss" item;E. The "investment income" item newly includes the "income from derecognition of financial assets measured atamortization costs".The Company has retrospectively restated the comparative statements accordingly according to the abovepresentation requirements.
3) Impact of implementation of new standards for financial instruments and changes in the format of financial statements on consolidated financial statements
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | Reclassification | Remeasurement | 1 January, 2019 | ||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Assets: | |||||||
| Monetary capital | 113,079,030,368.11 | 1,943,623,443.56 | 115,022,653,811.67 | ||||
| Trading financial assets | 1,012,470,387.43 | 1,012,470,387.43 | |||||
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 1,012,470,387.43 | -1,012,470,387.43 | |||||
| Notes receivable and accounts receivable | 43,611,226,866.20 | -9,229,039,643.82 | -34,382,187,222.38 | ||||
| Including: Bills receivable | 35,911,567,876.04 | -1,529,380,653.66 | -34,382,187,222.38 | ||||
| Accounts receivable | 7,699,658,990.16 | -7,699,658,990.16 | |||||
| Accounts receivable | 7,699,658,990.16 | -57,224,911.92 | 7,642,434,078.24 | ||||
| Receivables financing | 34,382,187,222.38 | -81,714,642.25 | 34,300,472,580.13 | ||||
| Other receivables | 2,553,689,544.47 | -2,257,098,901.99 | -6,244,306.10 | 290,346,336.38 | |||
| Including: Interests receivable | 2,257,098,901.99 | -2,257,098,901.99 | |||||
| Other current assets | 17,110,921,223.89 | 1,802,424,633.81 | 18,913,345,857.70 | ||||
| Original value of available-for-sale financial assets | 2,217,095,036.33 | -2,217,095,036.33 | |||||
| Less: Impairment provisions of available-for-sale financial assets | 900,000.00 | -900,000.00 | |||||
| Net amount of available-for-sale financial assets | 2,216,195,036.33 | -2,216,195,036.33 | |||||
| Disbursement of loans and advances | 9,071,332,784.86 | 10,381,298.66 | 9,081,714,083.52 | ||||
| Debt investment | 1,216,700.19 | 36,000,000.00 | 37,216,700.19 | ||||
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | Reclassification | Remeasurement | 1 January, 2019 | ||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Other debt investments | 28,833,479.43 | 1,035,287,090.00 | 1,064,120,569.43 | ||||
| Other equity instrument investments | 1,144,907,946.33 | 1,144,907,946.33 | |||||
| Deferred income tax assets | 11,349,573,709.69 | 12,274,180.53 | 15,242,873.91 | 11,377,090,764.13 | |||
| Liabilities: | |||||||
| Short-term borrowing | 22,067,750,002.70 | 130,149,404.18 | 22,197,899,406.88 | ||||
| Deposits from customers and interbank | 315,879,779.13 | 3,597,463.78 | 319,477,242.91 | ||||
| Other payables | 4,747,139,263.00 | -1,663,127,521.62 | 3,084,011,741.38 | ||||
| Including: Interests payable | 133,746,867.96 | -133,746,867.96 | |||||
| Other current liabilities | 63,361,598,764.96 | 1,529,380,653.66 | 64,890,979,418.62 | ||||
| Owners' equity: | |||||||
| Including: Other comprehensive income | -550,806,051.51 | -69,440,461.72 | -620,246,513.23 | ||||
| Undistributed profit | 81,939,701,613.83 | -48,226,344.11 | 81,891,475,269.72 | ||||
4) Impact of implementation of new standards for financial instruments and changes in the format of financial statements on the parent company's financial statements
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | Reclassification | Remeasurement | 1 January, 2019 | ||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Assets: | |||||||
| Monetary capital | 102,696,932,265.26 | 1,500,459,111.30 | 104,197,391,376.56 | ||||
| Trading financial assets | 412,114,127.42 | 412,114,127.42 | |||||
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 412,114,127.42 | -412,114,127.42 | |||||
| Notes receivable and accounts receivable | 35,047,382,637.60 | -2,988,819,694.63 | -32,058,562,942.97 | ||||
| Including: Bills receivable | 32,516,210,775.80 | -457,647,832.83 | -32,058,562,942.97 | ||||
| Accounts receivable | 2,531,171,861.80 | -2,531,171,861.80 | |||||
| Accounts receivable | 2,531,171,861.80 | 2,531,171,861.80 | |||||
| Receivables financing | 32,058,562,942.97 | -81,544,800.33 | 31,977,018,142.64 | ||||
| Other receivables | 3,898,630,873.93 | -1,719,333,737.63 | -2,300,000.00 | 2,176,997,136.30 | |||
| Including: Interests receivable | 1,803,079,868.37 | -1,803,079,868.37 | |||||
| Other current assets | 12,311,814,484.26 | 676,522,459.16 | 12,988,336,943.42 | ||||
| Original value of available-for-sale financial assets | 765,090,199.08 | -765,090,199.08 | |||||
| Less: Impairment provisions of available-for-sale financial assets | 900,000.00 | -900,000.00 | |||||
| Net amount of available-for-sale financial assets | 764,190,199.08 | -764,190,199.08 | |||||
| Other equity instrument investments | 764,190,199.08 | 764,190,199.08 | |||||
| Deferred income tax assets | 10,931,512,853.30 | 12,231,720.05 | 345,000.00 | 10,944,089,573.35 | |||
| Item | Book value presented according to the original standards | Impact of the preparation of format of financial statements | Impact of the implementation of new standards for financial instruments | Book value presented according to the new standards | |||
| 31 December, 2018 | Reclassification | Remeasurement | 1 January, 2019 | ||||
| Transfer-in of original notes receivable | Transfer-in of assets originally classified as available-for-sale financial assets | Change from cost measurement to fair value measurement | Impact of new standards for financial instruments on credit loss adjustment | ||||
| Liabilities: | |||||||
| Short-term borrowing | 17,759,081,480.00 | 77,161,272.95 | 17,836,242,752.95 | ||||
| Other payables | 1,795,358,032.57 | -534,809,105.78 | 1,260,548,926.79 | ||||
| Including: Interests payable | 108,650,144.21 | -108,650,144.21 | |||||
| Other current liabilities | 63,348,220,747.89 | 457,647,832.83 | 63,805,868,580.72 | ||||
| Owners' equity: | |||||||
| Including: Other comprehensive income | -330,283,919.33 | -69,313,080.28 | -399,596,999.61 | ||||
| Undistributed profit | 48,123,803,614.75 | -1,955,000.00 | 48,121,848,614.75 | ||||
(2) Changes of accounting estimates
None.
(VI) Taxes
1. Main tax categories and tax rates of the Company
| Category | Tax Base | Tax Rate |
| Added-value tax | Value added because of sales of commodities or rendering of services | 16.00%, 13.00%, 11.00%, 10.00%, etc. |
| Urban maintenance & construction tax | Circulation taxes payable | 7.00%, 5.00% |
| Educational surcharges | Circulation taxes payable | 3.00% |
| Local education surcharge | Circulation taxes payable | 2.00% |
| Business income tax | Taxable income | 34.00%, 25.00%, 20.00%, 16.50%, 15.00% |
[Note] The place of business of the Company's subsidiary Hong Kong Gree Electric Appliances Sales Limited isHong Kong Special Administrative Region, and the profit tax rate of Hong Kong is 16.50%; the place of businessof the Company's subsidiaries Gree (Brazil) Electric Appliances Co., Ltd. and Brazil United Electric AppliancesIndustry and Commerce Co., Ltd. is Brazil, and the federal enterprise income tax rate of Brazil is 34.00%.
2. Tax preferences and approval documents
(1) The Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policyfor the high and new tech enterprises (High-tech Enterprise Certificate No. GR201744011432). The Companyapplied the income tax rate of 15.00%.
(2) Deemed to be high and new tech enterprises, the following subsidiaries of the Company applied the enterpriseincome tax rate of 15.00% in 2019:
| No. | Name of tax payer | Certificate number | Time for acquiring the certificate | Valid period |
| 1 | Zhuhai Landa Compressor Co., Ltd. | GR201744006896 | 11 December, 2017 | Three years |
| 2 | Hefei Landa Compressor Co., Ltd. | GR201734000080 | 20 July, 2017 | Three years |
| 3 | Zhengzhou Landa Compressor Co., Ltd. | GR201741000023 | 29 August, 2017 | Three years |
| 4 | Wuhan Landa Compressor Co., Ltd. | GR201742002031 | 30 November, 2017 | Three years |
| 5 | Gree Electric Enterprises (Ma'anshan) Ltd. | GR201734000580 | 20 July, 2017 | Three years |
| 6 | Zhuhai Kaibang Motor Manufacture Co., Ltd. | GR201844002288 | 28 November, 2018 | Three years |
| 7 | Hefei Kaibang Motor Manufacture Co., Ltd. | GR201734000276 | 3 November, 2017 | Three years |
| 8 | Henan Kaibang Motor Manufacture Co., Ltd. | GR201741000090 | 29 August, 2017 | Three years |
| 9 | Gree (Hefei) Electric Appliances Co., Ltd. | GR201734000583 | 20 July, 2017 | Three years |
| 10 | GREE (Zhongshan) Home Appliances Co., Ltd. | GR201744005669 | 11 December, 2017 | Three years |
| 11 | Zhuhai Gree Xinyuan Electronics Co., Ltd. | GR201944009719 | 30 November, 2019 | Three years |
| 12 | Zhuhai Gree Daikin Precision Mold Co., Ltd. | GR201944005454 | 2 December, 2019 | Three years |
| No. | Name of tax payer | Certificate number | Time for acquiring the certificate | Valid period |
| 13 | Zhuhai Gree Dakin Device Co., Ltd. | GR201844007626 | 28 November, 2018 | Three years |
| 14 | Gree (Wuhan) Electric Appliances Co., Ltd. | GR201942003097 | 28 November, 2019 | Three years |
| 15 | Gree (Shijiazhuang) Electric Appliances Co., Ltd. | GR201913002804 | 2 December, 2019 | Three years |
| 16 | Gree (Zhengzhou) Electric Appliances Co., Ltd. | GR201741000063 | 29 August, 2017 | Three years |
| 17 | Gree (Wuhu) Electric Appliances Co., Ltd. | GR201734001093 | 20 July, 2017 | Three years |
| 18 | Changsha Gree HVAC Equipment Co., Ltd. | GR201743000499 | 5 September, 2017 | Three years |
| 19 | Zhuhai IVP Information Technology Co., Ltd. | GR201944005394 | 2 December, 2019 | Three years |
| 20 | Gree Green Refrigeration Technology Center Co., Ltd. Of Zhuhai | GR201744008385 | 11 December, 2017 | Three years |
| 21 | Zhuhai Gree Precision Mold Co., Ltd. | GR201744008914 | 11 December, 2017 | Three years |
| 22 | Zhuhai Gree Energy Environment Technology Co., Ltd. | GR201744011297 | 11 December, 2017 | Three years |
| 23 | Gree (Shijiazhuang) Small Home Appliances Co., Ltd. | GR201913002825 | 2 December, 2019 | Three years |
| 24 | Hefei Kinghome Electrical Co., Ltd. | GR201834001303 | 24 July, 2018 | Three years |
| 25 | Zhuhai Gree New Material Co., Ltd. | GR201944009559 | 2 December, 2019 | Three years |
(3) The following subsidiaries of the Company enjoy the country's western development policy, and applied theincome tax rate of 15.00%.
| No. | Name of tax payer | Preferential tax policy | Start time |
| 1 | Gree (Chongqing) Electric Appliances Co., Ltd. | Preferential tax policy of western development | 1 January, 2008 |
| 2 | Chongqing Landa Compressor Co., Ltd. | Preferential tax policy of western development | 1 January, 2015 |
| 3 | Chongqing Kaibang Motor Manufacture Co., Ltd. | Preferential tax policy of western development | 1 January, 2013 |
(VII) Item notes of consolidated financial statementsFor the following note items (including notes to the main items of the parent company's financial statements),unless otherwise specified, "the beginning of the period" means 1 January, 2019, "the end of the period" means 31December, 2019, and "the end of the previous year" means 31 December, 2018, "the current year" refers to 2019,and "the previous year" refers to 2018.
1. Monetary capital
| Item | Balance at the end of the period | Beginning Balance |
| Cash | 1,357,064.14 | 1,678,449.67 |
| Bank deposits | 62,105,349,148.41 | 64,418,416,813.66 |
| Item | Balance at the end of the period | Beginning Balance |
| Other monetary capital [Note 1] | 10,695,206,587.82 | 3,608,319,521.92 |
| Deposits in central bank [Note 2] | 3,016,086,870.50 | 3,047,519,040.61 |
| Deposits in other banks | 47,928,688,430.00 | 42,003,096,542.25 |
| Subtotal | 123,746,688,100.87 | 113,079,030,368.11 |
| Accrued interest | 1,654,027,166.77 | 1,943,623,443.56 |
| Total | 125,400,715,267.64 | 115,022,653,811.67 |
| Including: Total amount deposited abroad | 631,329,193.55 | 819,859,100.33 |
[Note 1] The balance at the end of the period of other monetary capital refers to banks' acceptance bills, guaranteedeposits, credit margin deposits, etc., where the restricted fund was RMB 10,315,346,592.40.[Note 2] The reserve requirements on deposit in the Company's deposits in central bank are RMB3,014,082,457.76, and its use is restricted;[Note 3] Except the above situations, there are no other funds in the end-of-period balance of monetary funds thathave limited use and potential recovery risks due to mortgage, pledge or freezing.
2. Trading financial assets
| Item | Balance at the end of the period | Beginning Balance |
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 955,208,583.58 | 1,012,470,387.43 |
| Wherein: Debt instrument investment | 955,208,583.58 | 1,012,470,387.43 |
| Total | 955,208,583.58 | 1,012,470,387.43 |
3. Derivative financial assets
| Item | Balance at the end of the period | Beginning Balance |
| Forward foreign exchange settlement/sale and others | 92,392,625.69 | 170,216,138.92 |
| Total | 92,392,625.69 | 170,216,138.92 |
4. Accounts receivable
(1) Disclosure by account age
| Aging | Balance at the end of the period |
| Within 1 year | 7,697,417,213.86 |
| 1 to 2 years | 926,391,719.35 |
| 2 to 3 years | 355,717,739.24 |
| Over 3 years | 265,497,478.10 |
| Aging | Balance at the end of the period |
| Subtotal | 9,245,024,150.55 |
| Less: Bad debt provisions | 731,689,605.47 |
| Total | 8,513,334,545.08 |
[Note] The Company's accounts receivable with the account age of over 1 year are mainly subsidy receivables ofRMB 857,341,045.00 for dismantling waste electrical and electronic products and receivables of RMB325,764,921.27 for commercial coal-to-electricity and subway projects.
(2) Presentation by accruing method for bad debt provisions
| Category | Balance at the end of the period | ||||
| Book balance | Bad debt provision | Carrying amount | |||
| Amount | Percentage (%) | Amount | Percentage of appropriation (%) | ||
| Accounts receivable with bad debt provisions accrued separately | 132,904,666.21 | 1.44 | 132,904,666.21 | 100.00 | |
| Accounts receivable with bad debt provisions accrued according to the combination | 9,112,119,484.34 | 98.56 | 598,784,939.26 | 6.57 | 8,513,334,545.08 |
| Including: Combination 1: Account age combination | 7,825,227,159.34 | 84.64 | 494,357,918.17 | 6.32 | 7,330,869,241.17 |
| Combination 2: Low risk combination | 1,286,892,325.00 | 13.92 | 104,427,021.09 | 8.11 | 1,182,465,303.91 |
| Total | 9,245,024,150.55 | 100.00 | 731,689,605.47 | 7.91 | 8,513,334,545.08 |
(Continued)
| Category | Beginning Balance | ||||
| Book balance | Bad debt provision | Carrying amount | |||
| Amount | Percentage (%) | Amount | Percentage of appropriation (%) | ||
| Accounts receivable with bad debt provisions accrued separately | 131,048,814.98 | 1.60 | 131,048,814.98 | 100.00 | |
| Accounts receivable with bad debt provisions accrued according to the combination | 8,081,100,658.05 | 98.40 | 438,666,579.81 | 5.43 | 7,642,434,078.24 |
| Including: Combination 1: Account age combination | 7,176,263,253.05 | 87.38 | 381,441,667.89 | 5.32 | 6,794,821,585.16 |
| Combination 2: Low risk combination | 904,837,405.00 | 11.02 | 57,224,911.92 | 6.32 | 847,612,493.08 |
| Total | 8,212,149,473.03 | 100.00 | 569,715,394.79 | 6.94 | 7,642,434,078.24 |
1) Accounts receivable with bad debt provisions accrued separately at the end of the period
| Accounts receivable | Balance at the end of the period | |||
| Book balance | Bad debt provision | Percentage of appropriation (%) | Reason for appropriation | |
| A total of 11 units | 132,904,666.21 | 132,904,666.21 | 100.00 | Expected to be difficult to recover |
| Total | 132,904,666.21 | 132,904,666.21 | 100.00 | |
2) In the combination, the accounts receivable of which bad debt provisions are appropriated according to the
account age combination
| Item | Balance at the end of the period | ||
| Book balance | Bad debt provision | Percentage of appropriation (%) | |
| Within 1 year | 7,267,865,933.86 | 363,393,296.77 | 5.00 |
| 1 to 2 years | 524,837,349.35 | 104,967,469.87 | 20.00 |
| 2 to 3 years | 13,053,449.24 | 6,526,724.64 | 50.00 |
| Over 3 years | 19,470,426.89 | 19,470,426.89 | 100.00 |
| Total | 7,825,227,159.34 | 494,357,918.17 | 6.32 |
[Note] Please refer to Note (V) 10 for the basis for determining the combination.
(3) Particulars on bad debt provisions
| Category | Beginning Balance | Change of the current period | Balance at the end of the period | ||
| Appropriation | Resold or wrote-off | Increase due to change in the consolidation scope | |||
| Aging combination | 381,441,667.89 | 102,146,847.31 | 2,147,164.37 | 12,916,567.34 | 494,357,918.17 |
| Low risk combination | 57,224,911.92 | 47,202,109.17 | 104,427,021.09 | ||
| Accrued separately | 131,048,814.98 | 1,855,851.23 | 132,904,666.21 | ||
| Total | 569,715,394.79 | 151,204,807.71 | 2,147,164.37 | 12,916,567.34 | 731,689,605.47 |
(4) Particulars on accounts receivable actually wrote-off in the current period
| Item | Wrote-off amount |
| Accounts receivable actually wrote-off | 2,147,164.37 |
[Note] There was no significant writing-off of accounts receivable during the current period.
(5) Accounts receivable of top 5 debtors in the balance at the end of the period collected by the debtor
| Name of entity | Balance at the end of the period of accounts receivable | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of provision for bad debts at the end of the period |
| First | 1,286,892,325.00 | 13.92 | 104,427,021.09 |
| Second | 1,191,750,098.12 | 12.89 | 59,587,504.91 |
| Third | 342,684,906.60 | 3.71 | 17,134,245.33 |
| Fourth | 325,578,866.60 | 3.52 | 16,278,943.33 |
| Fifth | 237,002,786.32 | 2.56 | 11,850,139.32 |
| Total | 3,383,908,982.64 | 36.60 | 209,277,853.98 |
(6) Accounts receivable derecognized due to the transfer of financial assets
None.
(7) Assets and liabilities formed due to the transfer and continuous involvement of accounts receivableNone.
5. Receivables financing
(1) Receivables financing presented by category
| Item | Balance at the end of the period | Beginning Balance |
| Notes receivable measured at fair value | 28,226,248,997.12 | 34,300,472,580.13 |
| Wherein: Banker's acceptance | 28,180,783,659.30 | 34,252,255,182.54 |
| Including: Notes accepted by Gree Finance Company [Note 2] | 3,534,750,791.04 | 703,493,516.64 |
| Trade acceptance | 45,465,337.82 | 48,217,397.59 |
| Total | 28,226,248,997.12 | 34,300,472,580.13 |
[Note 1] For details about the classification and combination of receivables financing, please refer to (V) 10 and(V) 11 of this note.[Note 2] As of the disclosure date of this report, the notes accepted by Zhuhai Gree Group Finance Co., Ltd. haveall been accepted.
(2) Receivables financing pledged at the end of the period
| Item | Pledged amount at the end of the period |
| Notes receivable measured at fair value | 8,874,415,345.76 |
| Wherein: Banker's acceptance | 8,874,415,345.76 |
| Total | 8,874,415,345.76 |
(3) Receivables financing that has been endorsed or discounted at the end of the period but has not yet expired
| Item | Amount whose recognition is terminated at the end of the period | Amount whose recognition is not terminated at the end of the period |
| Notes receivable which have been endorsed or discounted but not yet due | 35,021,232,248.70 | 802,418,995.36 |
| Wherein: Banker's acceptance | 35,021,232,248.70 | |
| Trade acceptance | 802,418,995.36 | |
| Total | 35,021,232,248.70 | 802,418,995.36 |
[Note] Regarding notes receivable that the Company has endorsed or discounted at the end of the period but hasnot yet expired, for their details of the underrecognized amount at the end of the period, see Note (VII) 10.
(4) Notes transferred by the Company into accounts receivable due to the note issuer's failure of performanceNone.
(5) Receivables financing actually wrote-off in the current period
None.
6. Prepayment
(1) The prepayments are listed by aging as follows:
| Aging | Balance at the end of the period | Beginning Balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 2,375,291,199.19 | 99.15 | 2,116,062,087.45 | 97.89 |
| 1 to 2 years | 16,328,421.09 | 0.68 | 39,664,171.13 | 1.83 |
| 2 to 3 years | 1,401,531.66 | 0.06 | 4,157,995.19 | 0.19 |
| Over 3 years | 2,589,403.32 | 0.11 | 1,991,755.45 | 0.09 |
| Total | 2,395,610,555.26 | 100.00 | 2,161,876,009.22 | 100.00 |
(2) Prepayments whose aging exceeded one year and amount was importantNone.
(3) Top 5 debtors of prepayment amount
The aggregate balance amount of prepayments of top 5 suppliers in the balance at the end of the period collectedby the supplier was RMB 1,039,393,363.58, accounting for 43.39% of the total balance of prepayments at the endof the period.
7. Other receivables
| Item | Balance at the end of the period | Beginning Balance |
| Other receivables | 159,134,399.10 | 290,346,336.38 |
| Total | 159,134,399.10 | 290,346,336.38 |
[Note] The Company had no interest receivable and dividend receivable balances at the beginning and the end ofthe period.
(1) Other receivables disclosed by account age
| Aging | Balance at the end of the period |
| Within 1 year | 162,121,375.23 |
| 1 to 2 years | 4,913,714.10 |
| 2 to 3 years | 2,376,942.91 |
| Over 3 years | 8,292,663.13 |
| Subtotal | 177,704,695.37 |
| Less: Bad debt provisions | 18,570,296.27 |
| Total | 159,134,399.10 |
(2) Other receivables disclosed by amount nature
| Nature of money | Book balance at the end of the period | Book balance at the beginning of the period |
| Current and low-risk payments | 177,704,695.37 | 321,241,112.39 |
| Less: Bad debt provisions | 18,570,296.27 | 30,894,776.01 |
| Total | 159,134,399.10 | 290,346,336.38 |
(3) Particulars on accruing of bad debt provisions
| Bad debt provision | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January, 2019 | 14,934,891.98 | 15,959,884.03 | 30,894,776.01 | |
| Balance as at 1 January, 2019 in the current period | ||||
| Appropriation for the current period | ||||
| Reserved in the current period | 6,857,775.30 | 572,227.09 | 7,430,002.39 | |
| Wrote-off in the current period | 4,914,193.73 | 4,914,193.73 | ||
| Increase due to change in the consolidation scope | 19,716.38 | 19,716.38 | ||
| Balance as at 31 December, 2019 | 8,096,833.06 | 10,473,463.21 | 18,570,296.27 |
(4) Particulars on accruing of provisions for bad debts in the current period
| Category | Beginning Balance | Change of the current period | Balance at the end of the period | |||
| Appropriation | Recovered or reversed | Resold or wrote-off | Increase due to change in the consolidation scope | |||
| Aging combination | 30,894,776.01 | 7,430,002.39 | 4,914,193.73 | 19,716.38 | 18,570,296.27 | |
| Total | 30,894,776.01 | 7,430,002.39 | 4,914,193.73 | 19,716.38 | 18,570,296.27 | |
(5) Particulars on other receivables actually wrote-off in the current period
| Item | Wrote-off amount |
| Other receivables actually wrote-off | 4,914,193.73 |
[Note] There was no significant writing-off of other receivables during the current period.
(6) Other receivables of top 5 debtors in the balance at the end of the period collected by the debtor
| Name of entity | Nature of money | Balance at the end of the period | Aging | Proportion to the total balance of other receivables at the end of the period (%) | Balance of provision for bad debts at the end of the period |
| First | Intercourse funds | 4,617,192.35 | Within 1 year | 2.60 | 230,859.62 |
| Second | Intercourse funds | 4,051,289.71 | Within 1 year | 2.28 | 202,564.49 |
| Third | Intercourse funds | 2,313,178.85 | Within 1 year | 1.30 | 115,658.94 |
| Fourth | Intercourse funds | 2,209,431.01 | Within 1 year | 1.24 | 110,471.55 |
| Fifth | Intercourse funds | 1,441,019.34 | Within 1 year | 0.81 | 72,050.97 |
| Total | 14,632,111.26 | 8.23 | 731,605.57 |
(7) Other receivables involving government subsidies
None.
(8) Other receivables derecognized due to the transfer of financial assets
None.
(9) Assets and liabilities formed due to the transfer and continuous involvement of other receivablesNone.
8. Inventories
(1) Type of inventories
| Item | Balance at the end of the period | ||
| Book balance | Provision for price fall | Carrying amount | |
| Raw material | 10,313,734,271.81 | 207,784,826.11 | 10,105,949,445.70 |
| Goods in process | 1,833,675,212.23 | 0.00 | 1,833,675,212.23 |
| Finished goods | 11,120,744,840.53 | 49,841,301.93 | 11,070,903,538.60 |
| Development cost [Note] | 1,074,325,867.76 | 0.00 | 1,074,325,867.76 |
| Total | 24,342,480,192.33 | 257,626,128.04 | 24,084,854,064.29 |
(Continued)
| Item | Beginning Balance | ||
| Book balance | Provision for price fall | Carrying amount | |
| Raw material | 8,790,176,373.99 | 251,248,578.65 | 8,538,927,795.34 |
| Goods in process | 1,833,419,414.90 | 1,833,419,414.90 | |
| Finished goods | 9,668,991,016.29 | 29,819,996.00 | 9,639,171,020.29 |
| Total | 20,292,586,805.18 | 281,068,574.65 | 20,011,518,230.53 |
[Note] The development cost is a supporting project of Luoyang base real estate developed and constructed by theCompany based on the housing needs of employees.
(2) Provision for obsolete stocks
| Type of inventories | Beginning Balance | Increased amount in the current period | Decreased amount in the current period | Balance at the end of the period | |
| Appropriation | Change in the consolidation scope | Write-off amount | |||
| Raw material | 251,248,578.65 | 36,066,957.21 | 79,530,709.75 | 207,784,826.11 | |
| Finished goods | 29,819,996.00 | 20,484,925.26 | 10,743,000.00 | 11,206,619.33 | 49,841,301.93 |
| Total | 281,068,574.65 | 56,551,882.47 | 10,743,000.00 | 90,737,329.08 | 257,626,128.04 |
Specific bases for making a provision for decline in value of inventories and reasons of reversing or writing offthe provision for decline in value of inventories in the current period
| Item | Specific basis for making a provision for decline in value of inventories | Writing off the provision for decline in value of inventories in the current period |
| Raw material | The lower of the inventory cost and net realizable value | Applied for or sold in the current period |
| Finished goods | The lower of the inventory cost and net realizable value | Sold in the current period |
(3) Balance of inventories at the end of the period did not include the capitalization amount of the borrowingexpenses.
9. Non-current assets due within one year
| Item | Balance at the end of the period | Beginning Balance | Remarks |
| Other debt investments due within one year | 410,404,100.00 | See Note (VII) 13 for details | |
| Debt investments due within one year | 18,000,000.00 | See Note (VII) 12 for details | |
| Subtotal | 428,404,100.00 | ||
| Accrued interest | 16,993,610.39 | ||
| Total | 445,397,710.39 |
[Note] The Company had no significant debt investment due within one year at the end of the period. For other debt investments duewithin one year at the end of the period, please refer to Note (VII) 13.
10. Other current assets
| Item | Balance at the end of the period | Beginning Balance |
| Structured deposits and wealth management products | 16,211,800,000.00 | 14,981,400,000.00 |
| Input tax to be deducted and prepaid tax | 3,744,248,963.45 | 2,112,824,647.14 |
| Notes that have endorsed or discounted but have not yet expired [Note] | 2,876,918,995.36 | 1,529,380,653.66 |
| Hedging tools and others | 37,399,876.25 | 16,696,576.75 |
| Subtotal | 22,870,367,835.06 | 18,640,301,877.55 |
| Accrued interest | 220,776,381.62 | 273,043,980.15 |
| Total | 23,091,144,216.68 | 18,913,345,857.70 |
[Note] As of the disclosure date of this report, the accepted amount of the notes that have endorsed or discountedbut have not yet expired was RMB 2,074,500,000.00.
11. Disbursement of loans and advances
(1) Distribution of enterprises and individuals
| Item | Balance at the end of the period | Beginning Balance |
| Loans and advances measured at amortized costs | ||
| Disbursement of corporate loans and advances | 14,771,705,384.26 | 9,304,270,332.72 |
| Including: (1) Loan | 14,723,530,000.00 | 7,067,977,952.89 |
| (2) Discount | 48,175,384.26 | 2,236,292,379.83 |
| Item | Balance at the end of the period | Beginning Balance |
| Including: discount asset interest adjustment | -470,366.74 | -13,231,581.88 |
| Less: loan loss provision | 369,304,393.78 | 232,937,547.86 |
| Including: combined appropriation | 369,304,393.78 | 232,937,547.86 |
| Subtotal | 14,402,400,990.48 | 9,071,332,784.86 |
| Accrued interest | 21,385,418.74 | 10,381,298.66 |
| Carrying amount of disbursement of corporate loans and advances | 14,423,786,409.22 | 9,081,714,083.52 |
[Note] In order to promote the win-win development of the industrial chain, and strengthen financial creditsupport for member units and upstream and downstream enterprises, based on the real transaction background, theCompany carefully verified the credit status and repayment ability of loan customers and fully played the role ofits own funds, enhanced the Company's capital income and increased foreign loans and advances.
(2) Changes in loss provision for loans
| Item | Balance at the end of the period | Beginning Balance |
| Loans and advances measured at amortized costs | ||
| Beginning Balance | 232,937,547.86 | 171,525,398.64 |
| Appropriation for the current period | 136,366,845.92 | 61,412,149.22 |
| Balance at the end of the period | 369,304,393.78 | 232,937,547.86 |
12. Debt investment
(1) Particulars on debt investment
| Item | Balance at the end of the period | Beginning Balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Trust products | 18,000,000.00 | 18,000,000.00 | 36,000,000.00 | 36,000,000.00 | ||
| Accrued interest | 608,350.13 | 608,350.13 | 1,216,700.19 | 1,216,700.19 | ||
| Less: Debt investments due within one year | 18,608,350.13 | 18,608,350.13 | ||||
| Total | 37,216,700.19 | 37,216,700.19 | ||||
(2) Important debt investment
None.
(3) Particulars on Accruing of impairment provisions
None.
13. Other debt investments
(1) Particulars on other debt investments
| Item | Balance at the end of the period | ||||
| Cost | Accrued interest | Changes in fair value | Carrying amount | Accumulated loss provisions recognized in other comprehensive income | |
| Treasuries | 291,763,065.93 | 3,378,082.20 | 1,695,134.07 | 296,836,282.20 | |
| Corporate bonds | 409,921,468.45 | 16,385,260.26 | 482,631.55 | 426,789,360.26 | |
| Subtotal | 701,684,534.38 | 19,763,342.46 | 2,177,765.62 | 723,625,642.46 | |
| Less: Other debt investments due within one year | 409,921,468.45 | 16,385,260.26 | 482,631.55 | 426,789,360.26 | |
| Total | 291,763,065.93 | 3,378,082.20 | 1,695,134.07 | 296,836,282.20 | |
(Continued)
| Item | Beginning Balance | ||||
| Cost | Accrued interest | Changes in fair value | Carrying amount | Accumulated loss provisions recognized in other comprehensive income | |
| Treasuries | 290,640,325.69 | 3,378,082.20 | -2,097,625.69 | 291,920,782.20 | |
| Corporate bonds | 738,430,653.09 | 25,455,397.23 | 8,313,736.91 | 772,199,787.23 | |
| Subtotal | 1,029,070,978.78 | 28,833,479.43 | 6,216,111.22 | 1,064,120,569.43 | |
| Less: Other debt investments due within one year | |||||
| Total | 1,029,070,978.78 | 28,833,479.43 | 6,216,111.22 | 1,064,120,569.43 | |
(2) Important other debt investments
| Item | Balance at the end of the period | Beginning Balance | ||||||
| Face value | Coupon rate | Real interest rate | Date due | Face value | Coupon rate | Real interest rate | Date due | |
| 16 Interest-bearing treasuries 17 (1) | 200,000,000.00 | 2.74% | 3.10% | 4 August, 2026 | 200,000,000.00 | 2.74% | 3.10% | 4 August, 2026 |
| 16 Interest-bearing treasuries 17 (2) | 100,000,000.00 | 2.74% | 3.44% | 4 August, 2026 | 100,000,000.00 | 2.74% | 3.44% | 4 August, 2026 |
| 17 Baoanji MTN001 | 60,000,000.00 | 6.20% | 6.24% | 18 August, 2020 | 60,000,000.00 | 6.20% | 6.24% | 18 August, 2020 |
| 10 State grid bonds 01 | 350,000,000.00 | 4.74% | 4.98% | 5 February, 2020 | 350,000,000.00 | 4.74% | 4.98% | 5 February, |
| Item | Balance at the end of the period | Beginning Balance | ||||||
| Face value | Coupon rate | Real interest rate | Date due | Face value | Coupon rate | Real interest rate | Date due | |
| 2020 | ||||||||
| Total | 710,000,000.00 | —— | —— | —— | 710,000,000.00 | —— | —— | —— |
(3) Particulars on Accruing of impairment provisions
None.
14. Long-term equity investment
| Name of invested entities | Beginning Balance | Increase/Decrease in the current period | Balance at the end of the period | |||||||||
| Original value | Provision for impairment | Additional investment | Disinvestment | Investment profits/losses recognized under the equity method | Adjustment of other comprehensive income | Changes in other equities | Cash dividends or profits declared to distribute | Appropriated provision for impairment | Others | Original value | Provision for impairment | |
| 1. Partnership | ||||||||||||
| Songyuan Food Group Co., Ltd. | 70,904,579.15 | 3,767,568.71 | 74,672,147.86 | |||||||||
| Subtotal | 70,904,579.15 | 3,767,568.71 | 74,672,147.86 | |||||||||
| 2. Joint venture | - | |||||||||||
| Gree (Vietnam) Electric Appliances, Inc. | 1,940,009.35 | 1,940,009.35 | - | - | - | - | - | - | - | - | 1,940,009.35 | 1,940,009.35 |
| Liaowang All Media Communication Co., Ltd. | 28,057,883.29 | - | - | 3,453,907.07 | - | - | - | - | - | 31,511,790.36 | ||
| Beijing Gree Technology Co., Ltd. | 2,309,507.13 | - | - | 392,326.58 | - | - | - | - | - | 2,701,833.71 | ||
| Chongqing Pargo Mechanical Equipment Co., Ltd. | 10,715,459.43 | - | - | 850,045.78 | - | - | - | - | - | 11,565,505.21 | ||
| Gree Volinco (Hong Kong) Ltd. | 972,937.26 | - | - | -53,146.98 | 4,536.91 | - | - | - | - | 924,327.19 | ||
| Wuhan Digital Design and Manufacturing Innovation Center Co., Ltd. | 14,483,961.08 | - | - | 90,880.77 | - | - | - | - | - | 14,574,841.85 | ||
| Hunan Guoxin Semiconductor Technology Co., Ltd. | 9,950,321.68 | - | - | 59,848.82 | - | - | - | - | - | 10,010,170.50 | ||
| Zhuhai Ronglin Equity Investment Partnership (Limited Partnership) | 2,113,337,812.69 | - | - | -30,054,643.59 | 4,784,432,411.50 | - | - | - | - | 6,867,715,580.60 | ||
| Henan Yuze Finance Leasing Co., Ltd. | - | 50,000,000.00 | - | 509,964.01 | - | - | - | - | - | 50,509,964.01 | ||
| Subtotal | 2,181,767,891.91 | 1,940,009.35 | 50,000,000.00 | - | -24,750,817.54 | 4,784,436,948.41 | - | - | - | - | 6,991,454,022.78 | 1,940,009.35 |
| Total | 2,252,672,471.06 | 1,940,009.35 | 50,000,000.00 | - | -20,983,248.83 | 4,784,436,948.41 | - | - | - | - | 7,066,126,170.64 | 1,940,009.35 |
[Note] According to the partnership agreement of Zhuhai Ronglin Equity Investment Partnership (L.P.) (hereinafter referred to as "Zhuhai Ronglin"), the Company holds a
91.27% equity of Zhuhai Ronglin, and the Company participates in the project regarding acquisition of Nexperia Holding B.V by Wingtech Technology Co., Ltd. throughinvestment in Zhuhai Ronglin, so it has no control over Zhuhai Ronglin. Therefore, during the report period, Zhuhai Ronglin was not included in the Company'sconsolidation scope of financial statements.
15. Other equity instrument investments
(1) Particulars on other equity instrument investments
| Item | Balance at the end of the period | Beginning Balance |
| Shanghai Highly (Group) Co., Ltd. | 775,199,650.33 | 801,289,952.19 |
| Xinjiang Joinworld Company Limited | 210,550,455.81 | |
| Wingtech Technology Co., Ltd. [Note] | 3,316,957,037.50 | |
| RSMACALLINE-HSHS | 341,894,553.87 | 343,617,994.14 |
| Total | 4,644,601,697.51 | 1,144,907,946.33 |
[Note] In November 2018, the Company signed a relevant investment agreement with Wingtech Technology Co.,Ltd. (stock code: 600745, stock abbreviation: Wingtech Technology), Hefei Zhongwen Jintai Co., Ltd.(hereinafter referred to as "Hefei Zhongwen Jintai") and Zhuhai Ronglin and invested RMB 3 billion to participatein the project regarding acquisition of Nexperia Holdings B.V. (hereinafter referred to as "Nexperia Group") byWingtech Technology, of which RMB 885 million was invested in Hefei Zhongwen Jintai for accepting thetransfer of the share of LP property held by Hefei Xinping Industrial Investment Fund (L.P.) in Hefei GuangxinSemiconductor Industry Center (L.P.); and RMB 2.115 billion was invested in Zhuhai Ronglin for accepting thetransfer of the share of LP property held by Zhuhai Rongyue Equity Investment Partnership (L.P.) in HefeiGuangxun Semiconductor Industry Investment Center (L.P.) (hereinafter referred to as "Hefei Guangxun").On 25 June, 2019, Wingtech Technology's reorganization was approved by the China Securities RegulatoryCommission (CSRC Approval [2019] No. 1112).In October 2019, RMB 885 million equity interest held by the Company in Hefei Zhongwen Jintai (accounting for
6.88% of Hefei Zhongwen Jintai's equity) and the LP share indirectly held by the Company in Hefei Guangxunthrough Zhuhai Ronglin, were transferred to Wingtech Technology, and at the same time, the registrationprocedures for securities related to the new shares issued by Wingtech Technology for the issuance of shares andthe purchase of assets were completed. The Company and Zhuhai Ronglin became shareholders of WingtechTechnology, holding 35,858,995 shares and 92,420,040 shares of Wingtech Technology respectively, whichaccounted for 3.45% and 8.88% of the total equity of Wingtech before raising supporting funds.The above-mentioned shares will be listed and traded on the Shanghai Stock Exchange. The shares held by theCompany and Zhuhai Ronglin are tradable shares with restricted sales, and the restricted period is 36 months fromthe date of registration of the new shares.
(2) Particulars on non-trading equity instrument investment
| Item | Dividend income recognized in the current period | Amount change in the fair value cumulatively recorded into other comprehensive income | Amount transferred from other comprehensive income into retained earnings | Reason for designation as at fair value through other comprehensive income |
| Item | Dividend income recognized in the current period | Amount change in the fair value cumulatively recorded into other comprehensive income | Amount transferred from other comprehensive income into retained earnings | Reason for designation as at fair value through other comprehensive income |
| Shanghai Highly (Group) Co., Ltd. | 14,408,571.49 | -369,871,271.40 | According to the management's intention and contractual cash flow | |
| Xinjiang Joinworld Company Limited | 10,550,458.57 | According to the management's intention and contractual cash flow | ||
| Wingtech Technology Co., Ltd. | 2,431,957,040.90 | According to the management's intention and contractual cash flow | ||
| RSMACALLINE-HSHS | 14,398,299.50 | -359,345,947.63 | According to the management's intention and contractual cash flow | |
| Total | 28,806,870.99 | 1,713,290,280.44 |
16. Other non-current financial assets
| Item | Balance at the end of the period | Beginning Balance |
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | 2,003,483,333.33 | |
| Including: trust products | 2,003,483,333.33 | |
| Total | 2,003,483,333.33 |
17. Investment real estate
Investment real estate using cost measurement model
| Item | Houses and buildings | Total |
| I. Total of original carrying amount | - | - |
| 1. Beginning Balance | 703,336,514.05 | 703,336,514.05 |
| 2. Increased amount in the current period | 7,304,179.66 | 7,304,179.66 |
| Including: amount transferred into construction in progress | 7,304,179.66 | 7,304,179.66 |
| 3. Decreased amount in the current period | 6,845,296.61 | 6,845,296.61 |
| Including: amount transferred into fixed assets | 6,845,296.61 | 6,845,296.61 |
| 4. Balance at the end of the period | 703,795,397.10 | 703,795,397.10 |
| II. Accumulated depreciation and accumulated amortization | - | - |
| 1. Beginning Balance | 165,747,170.97 | 165,747,170.97 |
| 2. Increased amount in the current period | 39,464,443.54 | 39,464,443.54 |
| Including: appropriation | 39,464,443.54 | 39,464,443.54 |
| Item | Houses and buildings | Total |
| 3. Decreased amount in the current period | 64,909.26 | 64,909.26 |
| Including: amount transferred into fixed assets | 64,909.26 | 64,909.26 |
| 4. Balance at the end of the period | 205,146,705.25 | 205,146,705.25 |
| III. Provision for impairment | - | - |
| IV. Carrying amount | - | - |
| 1. Carrying amount at the end of the period | 498,648,691.85 | 498,648,691.85 |
| 2. Carrying amount at the beginning of the period | 537,589,343.08 | 537,589,343.08 |
[Note] As of 31 December, 2019, the book value of investment real estate - houses and buildings that theCompany has not obtained the property ownership certificates was RMB 62,328,158.02.
18. Fixed assets
| Item | Balance at the end of the period | Beginning Balance |
| Fixed assets | 19,111,024,793.28 | 18,374,177,210.67 |
| Fixed assets in liquidation | 10,905,963.76 | 11,584,264.87 |
| Total | 19,121,930,757.04 | 18,385,761,475.54 |
[Note] The fixed assets in the table above refer to the fixed assets after deduction of the fixed assets in liquidation.
(1) Fixed assets
1) Information of fixed assets
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Electronic equipment | Other equipments | Total |
| I. Total of original carrying amount | ||||||
| 1. Beginning Balance | 15,111,600,882.63 | 12,981,060,812.52 | 1,010,182,345.44 | 1,111,422,671.43 | 397,225,896.87 | 30,611,492,608.89 |
| 2. Increased amount in the current period | 1,197,281,256.99 | 2,255,730,830.69 | 111,778,135.41 | 341,221,610.26 | 61,556,660.28 | 3,967,568,493.63 |
| Including: (1) Procurement | 1,448,441,156.66 | 104,640,408.39 | 339,019,620.32 | 52,948,430.98 | 1,945,049,616.35 | |
| (2) Amount transferred into investment real estate | 6,845,296.61 | 6,845,296.61 | ||||
| (3) Transfer-in from construction in progress | 1,146,034,075.19 | 471,728,519.49 | 1,617,762,594.68 | |||
| (4) Increase by business combination | 44,401,885.19 | 335,561,154.54 | 7,137,727.02 | 2,201,989.94 | 8,608,229.30 | 397,910,985.99 |
| 3. Decreased amount in the current period | 535,597.70 | 169,952,632.62 | 23,214,572.38 | 23,720,298.09 | 7,055,816.92 | 224,478,917.71 |
| Including: Disposal or scrap | 535,597.70 | 169,952,632.62 | 23,214,572.38 | 23,720,298.09 | 7,055,816.92 | 224,478,917.71 |
| 4. Balance at the end of the period | 16,308,346,541.92 | 15,066,839,010.59 | 1,098,745,908.47 | 1,428,923,983.60 | 451,726,740.23 | 34,354,582,184.81 |
| II. Accumulated depreciation | ||||||
| 1. Beginning Balance | 3,580,887,919.13 | 6,709,078,797.20 | 634,114,290.47 | 959,795,457.00 | 334,851,529.98 | 12,218,727,993.78 |
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Electronic equipment | Other equipments | Total |
| 2. Increased amount in the current period | 878,924,843.01 | 1,846,763,395.18 | 107,744,066.74 | 326,620,575.29 | 27,404,904.30 | 3,187,457,784.52 |
| Including: (1) Appropriation | 858,300,789.80 | 1,631,118,304.21 | 102,353,401.78 | 325,056,352.04 | 20,810,061.67 | 2,937,638,909.50 |
| (2) Increase by business combination | 20,559,143.95 | 215,645,090.97 | 5,390,664.96 | 1,564,223.25 | 6,594,842.63 | 249,753,965.76 |
| (3) Amount transferred into investment real estate | 64,909.26 | 64,909.26 | ||||
| 3. Decreased amount in the current period | 55,100.00 | 136,227,712.00 | 21,588,120.46 | 17,286,909.16 | 4,806,204.50 | 179,964,046.12 |
| Including: Disposal or scrap | 55,100.00 | 136,227,712.00 | 21,588,120.46 | 17,286,909.16 | 4,806,204.50 | 179,964,046.12 |
| 4. Balance at the end of the period | 4,459,757,662.14 | 8,419,614,480.38 | 720,270,236.75 | 1,269,129,123.13 | 357,450,229.78 | 15,226,221,732.18 |
| III. Provision for impairment | ||||||
| 1. Beginning Balance | 13,995,429.77 | 4,126,388.66 | 8,282.39 | 141,619.69 | 315,683.93 | 18,587,404.44 |
| 2. Increased amount in the current period | ||||||
| 3. Decreased amount in the current period | 206,957.50 | 1,025,775.16 | 10,459.06 | 8,553.37 | 1,251,745.09 | |
| Including: Disposal or scrap | 206,957.50 | 1,025,775.16 | 10,459.06 | 8,553.37 | 1,251,745.09 | |
| 4. Balance at the end of the period | 13,788,472.27 | 3,100,613.50 | 8,282.39 | 131,160.63 | 307,130.56 | 17,335,659.35 |
| IV. Carrying amount | ||||||
| 1. Carrying amount at the end of the period | 11,834,800,407.51 | 6,644,123,916.71 | 378,467,389.33 | 159,663,699.84 | 93,969,379.89 | 19,111,024,793.28 |
| 2. Carrying amount at the beginning of the period | 11,516,717,533.73 | 6,267,855,626.66 | 376,059,772.58 | 151,485,594.74 | 62,058,682.96 | 18,374,177,210.67 |
[Note] As of 31 December, 2019, the book value of fixed assets - houses and buildings that the Company has notobtained the property ownership certificates was RMB 4,749,669,365.42.
2) The Company had no temporary idle fixed assets during the current period.
3) The Company had no fixed assets leased in under financing leases.
4) The Company had no fixed assets leased in under operating leases.
(2) Fixed assets in liquidation
| Item | Balance at the end of the period | Beginning Balance |
| Fixed assets in liquidation | 10,905,963.76 | 11,584,264.87 |
| Total | 10,905,963.76 | 11,584,264.87 |
19. Construction in Progress
| Item | Balance at the end of the period | Beginning Balance |
| Construction in Progress | 2,431,051,409.94 | 1,663,938,988.55 |
| Total | 2,431,051,409.94 | 1,663,938,988.55 |
[Note] The construction in progress in the above table refers to the construction in progress after deduction ofengineering materials.
(1) Basic information of construction in progress
| Item | Balance at the end of the period | Beginning Balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Hangzhou Gree project | 638,157,589.99 | 0.00 | 638,157,589.99 | 602,859,503.86 | 0.00 | 602,859,503.86 |
| Luoyang Gree Project | 442,202,237.46 | 0.00 | 442,202,237.46 | 10,774,423.01 | 0.00 | 10,774,423.01 |
| Nanjing Gree Project | 333,459,029.75 | 0.00 | 333,459,029.75 | 1,755,887.87 | 0.00 | 1,755,887.87 |
| Gree HQ project | 262,245,182.66 | 0.00 | 262,245,182.66 | 168,094,835.04 | 0.00 | 168,094,835.04 |
| Landa compressor project | 132,330,042.15 | 0.00 | 132,330,042.15 | 99,768,186.70 | 0.00 | 99,768,186.70 |
| Tianjin green project | 116,723,040.76 | 0.00 | 116,723,040.76 | 149,456,425.67 | 0.00 | 149,456,425.67 |
| Wu'an Precision Project | 113,318,790.64 | 0.00 | 113,318,790.64 | 650,943.40 | 0.00 | 650,943.40 |
| Wuhan Gree project | 104,859,292.68 | 0.00 | 104,859,292.68 | 28,981,609.46 | 0.00 | 28,981,609.46 |
| Item | Balance at the end of the period | Beginning Balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Zhengzhou Gree project | 59,928,438.47 | 0.00 | 59,928,438.47 | 20,957,373.36 | 0.00 | 20,957,373.36 |
| Chengdu Gree Project | 36,203,794.46 | 0.00 | 36,203,794.46 | 0.00 | 0.00 | 0.00 |
| Gree Mould Project | 33,781,886.17 | 0.00 | 33,781,886.17 | 30,931,777.66 | 0.00 | 30,931,777.66 |
| Electrical engineering | 23,809,625.98 | 0.00 | 23,809,625.98 | 5,056,477.85 | 0.00 | 5,056,477.85 |
| Wuhu Gree project | 23,740,409.47 | 0.00 | 23,740,409.47 | 29,664,001.36 | 0.00 | 29,664,001.36 |
| Intelligent equipment project | 18,837,539.53 | 0.00 | 18,837,539.53 | 47,301,293.44 | 0.00 | 47,301,293.44 |
| Others | 91,454,509.77 | 0.00 | 91,454,509.77 | 467,686,249.87 | 0.00 | 467,686,249.87 |
| Total | 2,431,051,409.94 | 0.00 | 2,431,051,409.94 | 1,663,938,988.55 | 0.00 | 1,663,938,988.55 |
(2) Changes in important construction projects in progress
| Item Name | Beginning Balance | Increase for the current period | Transfered-in this period | Balance at the end of the period | |
| Amount transferred into fixed assets | Amount transferred into investment real estate | ||||
| Hangzhou Gree project | 602,859,503.86 | 442,999,482.35 | 407,701,396.22 | - | 638,157,589.99 |
| Luoyang Gree Project | 10,774,423.01 | 431,427,814.45 | - | - | 442,202,237.46 |
| Nanjing Gree Project | 1,755,887.87 | 331,703,141.88 | - | - | 333,459,029.75 |
| Gree HQ project | 168,094,835.04 | 235,639,222.39 | 141,488,874.77 | - | 262,245,182.66 |
| Landa compressor project | 99,768,186.70 | 183,848,653.58 | 151,286,798.13 | - | 132,330,042.15 |
| Tianjin green project | 149,456,425.67 | 2,174,042.30 | 34,907,427.21 | - | 116,723,040.76 |
| Wu'an Precision Project | 650,943.40 | 112,667,847.24 | - | - | 113,318,790.64 |
| Wuhan Gree project | 28,981,609.46 | 103,125,617.43 | 27,247,934.21 | - | 104,859,292.68 |
| Zhengzhou Gree project | 20,957,373.36 | 58,369,830.84 | 19,398,765.73 | - | 59,928,438.47 |
| Chengdu Gree Project | - | 36,203,794.46 | - | - | 36,203,794.46 |
| Gree Mould Project | 30,931,777.66 | 79,479,793.79 | 76,629,685.28 | - | 33,781,886.17 |
| Electrical engineering | 5,056,477.85 | 60,938,827.82 | 42,185,679.69 | - | 23,809,625.98 |
| Wuhu Gree project | 29,664,001.36 | 38,357,552.32 | 44,281,144.21 | - | 23,740,409.47 |
| Intelligent equipment project | 47,301,293.44 | 1,457,127.53 | 29,920,881.44 | - | 18,837,539.53 |
| Others | 467,686,249.87 | 273,786,447.35 | 642,714,007.79 | 7,304,179.66 | 91,454,509.77 |
| Total | 1,663,938,988.55 | 2,392,179,195.73 | 1,617,762,594.68 | 7,304,179.66 | 2,431,051,409.94 |
[Note] The Company had no impairment of construction in progress or interest capitalization in the current period.
20. Intangible assets
| Item | Land use rights | Patent technology and others | Total |
| I. Total of original carrying amount | 0.00 | 0.00 | 0.00 |
| 1. Beginning Balance | 4,953,018,535.94 | 996,209,258.71 | 5,949,227,794.65 |
| 2. Increased amount in the current period | 901,111,198.53 | 193,676,700.88 | 1,094,787,899.41 |
| Including: (1) Outsourcing | 846,227,719.63 | 107,976,700.88 | 954,204,420.51 |
| (2) Increase by business combination | 54,883,478.90 | 85,700,000.00 | 140,583,478.90 |
| 3. Decrease amount of the current period [Note 1] | 235,145,374.23 | 235,145,374.23 | |
| Including: write-off | 235,145,374.23 | 235,145,374.23 | |
| 4. Balance at the end of the period | 5,854,129,734.47 | 954,740,585.36 | 6,808,870,319.83 |
| II. Accumulated amortization | 0.00 | 0.00 | 0.00 |
| 1. Beginning Balance | 566,306,709.38 | 178,420,917.97 | 744,727,627.35 |
| 2. Increased amount in the current period | 113,284,492.81 | 105,172,924.04 | 218,457,416.85 |
| Including: (1) Amortization | 110,623,513.91 | 105,172,924.04 | 215,796,437.95 |
| (2) Increase by business combination | 2,660,978.90 | 0.00 | 2,660,978.90 |
| 3. Decreased amount in the current period | 0.00 | 235,145,374.23 | 235,145,374.23 |
| Including: write-off | 235,145,374.23 | 235,145,374.23 | |
| 4. Balance at the end of the period | 679,591,202.19 | 48,448,467.78 | 728,039,669.97 |
| III. Provision for impairment | 0.00 | 0.00 | 0.00 |
| 1. Beginning Balance | |||
| 2. Increased amount in the current period [Note 2] | 775,289,550.94 | 775,289,550.94 | |
| Including: appropriation | 775,289,550.94 | 775,289,550.94 | |
| 3. Decreased amount in the current period | |||
| 4. Balance at the end of the period | 775,289,550.94 | 775,289,550.94 |
| Item | Land use rights | Patent technology and others | Total |
| IV. Carrying amount | 0.00 | 0.00 | 0.00 |
| 1. Carrying amount at the end of the period | 5,174,538,532.28 | 131,002,566.64 | 5,305,541,098.92 |
| 2. Carrying amount at the beginning of the period | 4,386,711,826.56 | 817,788,340.74 | 5,204,500,167.30 |
[Note 1] Write-off amounts of intangible assets - patented technology and others in the current period were theused quota licensing rights;[Note 2] Impairment provisions accrued for intangible assets - patented technology and others in the currentperiod were due to changes in market prices of quota licensing rights at the end of the period;[Note 3] As of 31 December, 2019, the book value of intangible assets that the Company has not obtained theproperty ownership certificates was RMB 660,833,169.61.
21. Business reputation
(1) Original carrying amount of business reputation
| Name of invested entity or matter generating business reputation | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period | ||
| Formed by business combination | Others | Disposal | Others | |||
| Hefei Kinghome Electrical Co., Ltd. | 51,804,350.47 | 51,804,350.47 | ||||
| Nanjing Walsin Nonferrous Metal Co., Ltd. | 274,115,040.11 | 274,115,040.11 | ||||
| Total | 51,804,350.47 | 274,115,040.11 | 325,919,390.58 | |||
[Note] The Company acquired 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafter referredto as "Nanjing Walsin") in the current period, the business combination cost was RMB 1,417,551,321.45, thecombination date was 31 May, 2019, the fair value of the identifiable net assets of Nanjing Walsin was RMB1,143,436,281.34, and the amount of formed business reputation was RMB 274,115,040.11. For details, see Note(VIII) 1.
(2) Business reputation group and impairment test
The Company tested the impairment of business reputation by combining the assets or assets group related tobusiness reputation that can benefit from the synergistic effect of business combination. Because it was difficult todirectly obtain the fair market value of assets or assets group containing business reputation, the Companycalculated the recoverable amount of assets group by using the method of predicting the present value of futurecash flow. Its predicted cash flow was based on the forecast of future cash flow of assets or asset groups, and thefuture cash flow was compiled and predicted according to historical actual operation data, industry developmenttrend, capacity planning, expected income growth rate, gross interest rate and other indicators. Other key data
used in the impairment test include the expected product sales revenue, production costs and other related costs.The Company determines the above key data based on the historical experience and forecast of marketdevelopment. The discount rate adopted by the Company is the pre-tax interest rate which reflects the time valueof the current market currency and specific risks of the relevant assets group.At the end of this year, the assets group in which business reputation was located was consistent with the assetsgroup determined at the time of business reputation formation on the acquisition date, and its composition has notchanged.The discount rate used by the Company's cash flow forecast was 11.47% ~ 13.40%. According to the test results,the recoverable amount of the asset group related to business reputation was greater than the recognizable bookvalue of the asset group and the book value of all business reputations (including minority shareholders), and thebusiness reputation does not require provision for impairment.
22. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets recognized
| Item | Balance at the end of the period | Beginning Balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Assets depreciation reserves | 1,818,201,959.97 | 324,279,108.41 | 859,671,436.18 | 169,931,920.89 |
| Deductible loss | 442,563,341.90 | 106,861,346.18 | 323,800,099.52 | 75,245,195.07 |
| Accrued expenses | 78,082,911,509.22 | 11,713,704,909.46 | 70,839,789,625.69 | 10,626,930,497.14 |
| Payroll payable | 1,147,772,355.98 | 181,068,388.98 | 894,547,169.93 | 136,359,247.55 |
| Amortization of assets | 295,771,738.84 | 45,001,546.37 | 744,843,631.94 | 113,429,122.16 |
| Changes in fair value of other equity instrument investments | 340,091,000.46 | 51,013,650.07 | ||
| Others | 1,115,621,255.53 | 170,169,778.69 | 1,284,207,382.91 | 204,181,131.25 |
| Total | 82,902,842,161.44 | 12,541,085,078.09 | 75,286,950,346.63 | 11,377,090,764.13 |
(2) Deferred income tax liabilities recognized
| Item | Balance at the end of the period | Beginning Balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Changes in fair value of derivative financial assets | 144,585,199.56 | 23,711,924.81 | 314,210,913.04 | 58,831,224.22 |
| Accrued interest | 1,916,560,659.72 | 361,013,520.74 | 2,348,738,257.49 | 380,352,576.58 |
| Amortization of assets | 977,566,325.96 | 159,701,815.27 | 525,248,955.96 | 81,706,854.14 |
| Changes in fair value of other equity instrument investments | 2,082,567,402.93 | 312,385,110.44 | ||
| Item | Balance at the end of the period | Beginning Balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Others | 320,552,939.98 | 70,976,930.01 | 97,823,370.13 | 15,295,116.66 |
| Total | 5,441,832,528.15 | 927,789,301.27 | 3,286,021,496.62 | 536,185,771.60 |
(3) Breakdown of deductible temporary differences or deductible losses of deferred income tax assets notrecognized
| Item | Balance at the end of the period | Beginning Balance |
| Deductible temporary differences | 523,331,619.91 | 620,681,542.48 |
| Deductible loss | 196,707,582.91 | 229,002,253.83 |
| Total | 720,039,202.82 | 849,683,796.31 |
(4) The deductible losses of deferred income tax assets not recognized will become due in the following years:
| Year | Balance at the end of the period | Beginning Balance |
| 2021 | 2,681,316.95 | |
| 2022 | 874,596.45 | |
| 2023 | 33,889,569.81 | 63,536,169.91 |
| 2024 | 4,243.31 | |
| 2029 | 437,450.85 | |
| Open-ended | 162,376,318.94 | 161,905,241.24 |
| Total | 196,707,582.91 | 228,997,324.55 |
[Note] The decrease of the deductible loss balance of unrecognized deferred income tax assets in the currentperiod was profit achieved by some subsidiaries in the current year, which was caused by using the deductible lossof unrecognized deferred income tax assets in previous years.
23. Other non-current assets
| Item | Balance at the end of the period | Beginning Balance |
| Advance payment for the project and deposit | 210,752,497.85 | 156,505,997.04 |
| Advance payment for equipment | 600,147,738.32 | 631,036,639.46 |
| Advance payment of land transfer fee and others | 137,427,798.96 | |
| Total | 948,328,035.13 | 787,542,636.50 |
24. Short-term borrowing
(1) Classification of short-term borrowings
| Borrowing conditions | Balance at the end of the period | Beginning Balance |
| Pledge loans | 60,000,000.00 | 4,354,000,000.00 |
| Guaranteed loan | 767,512,482.00 | |
| Borrowing on credit | 14,905,397,876.22 | 17,713,750,002.70 |
| Subtotal | 15,732,910,358.22 | 22,067,750,002.70 |
| Accrued interest | 211,266,104.79 | 130,149,404.18 |
| Total | 15,944,176,463.01 | 22,197,899,406.88 |
(2) There was no short-term borrowing that has been overdue but not yet repaid in the current period.
25. Deposits from customers and interbank
| Item | Balance at the end of the period | Beginning Balance |
| Current deposits | 95,908,461.12 | 40,924,930.78 |
| Fixed time deposits | 134,656,999.65 | 110,897,348.35 |
| Draft deposits | 117,212,500.00 | 164,057,500.00 |
| Subtotal | 347,777,960.77 | 315,879,779.13 |
| Accrued interest | 4,734,350.95 | 3,597,463.78 |
| Total | 352,512,311.72 | 319,477,242.91 |
26. Loans from other banks
| Item | Balance at the end of the period | Beginning Balance |
| Credit lending | 1,000,000,000.00 | |
| Accrued interest | 446,666.67 | |
| Total | 1,000,446,666.67 |
27. Derivative financial liabilities
| Item | Balance at the end of the period | Beginning Balance |
| Forward Foreign Exchange Contract | 257,364,882.07 | |
| Total | 257,364,882.07 |
28. Financial assets sold for repurchase
| Item | Balance at the end of the period | Beginning Balance |
| Bills rediscounted | 2,074,500,000.00 | |
| Total | 2,074,500,000.00 |
29. Bills payable
| Item | Balance at the end of the period | Beginning Balance |
| Banker's acceptance bill | 25,284,631,379.70 | 10,835,428,282.29 |
| Trade acceptance draft | 576,464.16 | |
| Total | 25,285,207,843.86 | 10,835,428,282.29 |
30. Accounts payable
| Item | Balance at the end of the period | Beginning Balance |
| Trade payable | 40,581,441,741.13 | 38,282,494,963.50 |
| Others | 1,075,374,011.33 | 704,876,507.52 |
| Total | 41,656,815,752.46 | 38,987,371,471.02 |
[Note] There were no important accounts payable with aging exceeding 1 year at the end of the period.
31.Advances from customers
| Item | Balance at the end of the period | Beginning Balance |
| Loans | 8,225,707,662.42 | 9,792,041,417.16 |
| Total | 8,225,707,662.42 | 9,792,041,417.16 |
32. Payroll payable
(1) Classification of payroll payable
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| I. Short-term wages and salaries | 2,471,155,103.64 | 9,352,117,659.17 | 8,396,439,821.08 | 3,426,832,941.73 |
| Dimission benefits - defined contribution plan | 2,049,348.05 | 596,533,062.33 | 594,446,387.78 | 4,136,022.60 |
| Total | 2,473,204,451.69 | 9,948,650,721.50 | 8,990,886,208.86 | 3,430,968,964.33 |
(2) Listing of short-term wages and salaries
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| 1. Wages, bonuses, subsidies and allowances | 1,768,463,148.33 | 8,019,949,735.97 | 7,165,065,550.62 | 2,623,347,333.68 |
| 2. Employee welfares | 698,073,353.00 | 698,073,353.00 | ||
| 3. Social insurance premiums | 589,032.53 | 238,428,671.27 | 238,456,383.21 | 561,320.59 |
| Including: Medical insurance premium | 447,212.06 | 206,085,276.01 | 206,004,469.73 | 528,018.34 |
| Industrial injury insurance premium | 110,325.81 | 12,071,162.53 | 12,155,387.68 | 26,100.66 |
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| Birth insurance premium | 31,494.66 | 20,272,232.73 | 20,296,525.80 | 7,201.59 |
| 4. Housing accumulation funds | 1,530,298.45 | 157,970,844.10 | 158,131,088.64 | 1,370,053.91 |
| 5. Labor union expenditures and employee education funds | 700,572,624.33 | 237,695,054.83 | 136,713,445.61 | 801,554,233.55 |
| Total | 2,471,155,103.64 | 9,352,117,659.17 | 8,396,439,821.08 | 3,426,832,941.73 |
(3) Separation benefits - defined contribution plan listing
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| 1. Basic endowment insurance premium | 1,571,545.90 | 574,101,238.90 | 572,465,812.41 | 3,206,972.39 |
| 2. Unemployment insurance premium | 477,802.15 | 22,431,823.43 | 21,980,575.37 | 929,050.21 |
| Total | 2,049,348.05 | 596,533,062.33 | 594,446,387.78 | 4,136,022.60 |
33. Taxes payable
| Item | Balance at the end of the period | Beginning Balance |
| Added-value tax | 1,672,108,943.75 | 2,289,562,480.63 |
| Business income tax | 1,678,470,486.79 | 2,082,978,156.94 |
| Others | 353,200,285.79 | 475,807,036.13 |
| Total | 3,703,779,716.33 | 4,848,347,673.70 |
34. Other payables
| Item | Balance at the end of the period | Beginning Balance |
| Dividends payable | 707,913.60 | 707,913.60 |
| Other payables | 2,711,985,060.06 | 3,083,303,827.78 |
| Total | 2,712,692,973.66 | 3,084,011,741.38 |
[Note] Other payables in the above table refers to other payables after deduction of the interest payable anddividends payable.
(1) Dividends payable
| Item | Balance at the end of the period | Beginning Balance |
| Corporate shareholder | 105,031.73 | 105,031.73 |
| Public shareholder | 602,881.87 | 602,881.87 |
| Total | 707,913.60 | 707,913.60 |
(2) Other payables
1) Other payables presented by amount nature
| Item | Balance at the end of the period | Beginning Balance |
| Intercourse funds | 1,880,900,981.33 | 2,323,368,234.27 |
| Margin and deposit | 831,084,078.73 | 759,935,593.51 |
| Total | 2,711,985,060.06 | 3,083,303,827.78 |
2) Other important payables with aging exceeding 1 year
| Item | Balance at the end of the period | Cause of failing to repay or carry over |
| Entity 1 | 326,905,170.30 | Failure to meet repayment conditions |
| Total | 326,905,170.30 | —— |
35. Other current liabilities
| Item | Balance at the end of the period | Beginning Balance |
| Repair cost | 2,032,816,015.42 | 1,405,491,811.34 |
| Sales rebate | 61,751,640,937.64 | 61,878,214,635.10 |
| Obligation to pay commercial papers which is not derecognized | 802,418,995.36 | 1,529,380,653.66 |
| Others [Note] | 594,615,906.72 | 77,892,318.52 |
| Total | 65,181,491,855.14 | 64,890,979,418.62 |
[Note] Other current liabilities - others, please refer to Note (VII) 59 for details.
36. Long-term borrowing
| Item | Balance at the end of the period | Beginning Balance |
| Mortgaged borrowings | 46,795,740.49 | |
| Accrued interest | 90,142.37 | |
| Total | 46,885,882.86 |
37. Long-term payroll payable
(1) Table of long-term payroll payable
| Item | Balance at the end of the period | Beginning Balance |
| Dimission benefits - net liabilities of defined benefit plan | 141,021,228.00 | 130,840,170.00 |
| Total | 141,021,228.00 | 130,840,170.00 |
(2) Changes in the defined benefit plan
1) Present value of obligations under the defined benefit plan:
| Item | Amount for the current period | Amount for the previous period |
| I. Beginning balance | 130,840,170.00 | 112,708,961.00 |
| II. Defined benefit cost recorded in the current profits and losses | 7,311,017.00 | 6,565,827.00 |
| 1. Service cost of the current period | 2,123,433.00 | 1,742,806.00 |
| 2. Net interest | 4,487,322.00 | 4,684,674.00 |
| 3. Impact on new personnel | 700,262.00 | 138,347.00 |
| III. Defined benefit cost recorded in other comprehensive income | 8,029,478.00 | 16,491,946.00 |
| Including: actuarial gains (losses represented by "-") | 8,029,478.00 | 16,491,946.00 |
| IV. Other changes | -5,159,437.00 | -4,926,564.00 |
| Including: paid benefits | -5,159,437.00 | -4,926,564.00 |
| V. Balance at the end of the period | 141,021,228.00 | 130,840,170.00 |
2) Net liabilities (net assets) of the defined benefit plan:
| Item | Amount for the current period | Amount for the previous period |
| I. Beginning balance | 130,840,170.00 | 112,708,961.00 |
| II. Defined benefit cost recorded in the current profits and losses | 7,311,017.00 | 6,565,827.00 |
| III. Cost of the defined benefit plan included in other comprehensive income | 8,029,478.00 | 16,491,946.00 |
| IV. Other changes | -5,159,437.00 | -4,926,564.00 |
| V. Balance at the end of the period | 141,021,228.00 | 130,840,170.00 |
(3) Contents and associated risks of the defined benefit plan, and its influences on the Company's future cash flow,time and uncertainty
1) Explanation of the content of the defined benefit plan and its related risks, and its impact on the Company'sfuture cash flow, time and uncertaintyThe Company's defined benefit plan is a supplementary post-retirement pension plan for some retirees, earlyretirees and serving officers after normal retirement. The present obligation value of this defined benefit plan wasrecognized by Towers-Watson actuarial company using the projected unit credit method on 31 December, 2019.This defined benefit plan didn't involve big amount, so it didn't lead to significant influence on the future cashflow the Company.
2) Explanation of major actuarial assumptions and sensitivity analysis results of the defined benefit planAccording to requirements of the Accounting Standards for Business Enterprises No. 9 - Employee Compensation,the discount rate adopted by the Company at the time of discount is recognized by the market yields of
high-quality corporate bonds in the treasury bonds or active market that match the obligatory term and currency ofthe defined benefit plan on the balance sheet date; the annual growth rates and annual dimission rates of allbenefits are based on the actual measurement data of the Company; the death rate is recognized by referring to theexperience life table for insurance business of China Life Insurance (Group) Company.Quantitative sensitivity analysis of all the used major assumptions by the end of the Report Period:
| Sensitivity analysis of discount rate | Influence on the amount at the end of the period |
| Influence on the present obligation value of defined welfare benefit by increase of one percentage point | -18,362,457.00 |
| Influence on the present obligation value of defined welfare benefit by decrease of one percentage point | 23,196,126.00 |
| Influence on the service cost by increase of one percentage point | -456,768.02 |
| Influence on the service cost by decrease of one percentage point | 625,016.78 |
38. Deferred income
(1) Classification of deferred income
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| Government subsidies | 166,293,620.03 | 131,967,192.75 | 57,756,542.31 | 240,504,270.47 |
| Total | 166,293,620.03 | 131,967,192.75 | 57,756,542.31 | 240,504,270.47 |
(2) Items involving government subsidies:
| Item | Beginning Balance | Amount of subsidies added in the current period | Current period amount recorded in the current period profits and losses | Other changes (Increase: +; Decrease: -) | Balance at the end of the period |
| I. Government subsidies pertinent to incomes | 128,706,598.64 | 51,430,634.49 | 40,828,185.81 | 139,309,047.32 | |
| Including: environmental protection upgrade project | 442,945.26 | 1,600,000.00 | 174,726.34 | 1,868,218.92 | |
| Scientific research project of refrigerating field | 84,429,669.82 | 28,280,032.42 | 25,388,049.03 | 87,321,653.21 | |
| Others | 43,833,983.56 | 21,550,602.07 | 15,265,410.44 | 50,119,175.19 | |
| II. Government subsidies pertinent to assets | 37,587,021.39 | 80,536,558.26 | 16,928,356.50 | 101,195,223.15 | |
| Including: environmental protection upgrade project | 8,384,588.19 | 8,730,000.00 | 2,629,503.35 | 14,485,084.84 | |
| Scientific research project of refrigerating field | 26,699,364.02 | 65,416,258.26 | 12,203,870.71 | 79,911,751.57 | |
| Others | 2,503,069.18 | 6,390,300.00 | 2,094,982.44 | 6,798,386.74 | |
| Total | 166,293,620.03 | 131,967,192.75 | 57,756,542.31 | 240,504,270.47 |
39. Capital stock
| Item | Beginning Balance | Increase and decrease changes (+, -) in the Report Period | Balance at the end of the period | ||||
| New Issue | Bonus Issue | Stock Converted from Housing Accumulation Fund | Others | Subtotal | |||
| Total number of stocks | 6,015,730,878.00 | 6,015,730,878.00 | |||||
40. Capital reserves
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| Capital stock premium | 26,979,063.83 | 26,979,063.83 | ||
| Other capital reserves | 66,400,436.88 | 66,400,436.88 | ||
| Total | 93,379,500.71 | 93,379,500.71 |
41. Other comprehensive income
| Item | Beginning Balance | Amount for the current period | Balance at the end of the period | ||||
| Amount incurred before income tax in the current period | Less: Amount recognized into other comprehensive income in previous period and transferred to the current profits and losses | Less: Income tax expenses | Amount attributable to the parent company after tax | Amount attributable to minority shareholders after tax | |||
| (I) Other comprehensive income not to be reclassified to profit or loss | -670,287,654.70 | 7,174,861,155.70 | 363,398,760.51 | 6,811,462,395.19 | 6,141,174,740.49 | ||
| Including: Changes due to remeasuring and redefining the benefit plan | -36,133,363.00 | -8,029,478.00 | -8,029,478.00 | -44,162,841.00 | |||
| Other comprehensive income that can't be transferred to profit or loss under the equity method | 4,784,432,411.50 | 4,784,432,411.50 | 4,784,432,411.50 | ||||
| Changes in fair value of other equity instrument investments | -634,154,291.70 | 2,398,458,222.20 | 363,398,760.51 | 2,035,059,461.69 | 1,400,905,169.99 | ||
| Changes in fair value of the company's own credit risk | |||||||
| (II) Other comprehensive income to be reclassified to profit or loss | 50,041,141.47 | -15,768,266.55 | -87,892,791.90 | 3,443,841.51 | 69,076,099.17 | -395,415.33 | 119,117,240.64 |
| Including: Other comprehensive income that can be transferred to profit or loss under the equity method | 178,221.26 | 4,536.91 | 4,536.91 | 182,758.17 | |||
| Changes in fair value of other debt investments | -65,279,552.24 | -71,014,562.36 | -81,714,642.25 | 1,596,921.56 | 9,498,573.66 | -395,415.33 | -55,780,978.58 |
| Amount of financial assets are reclassified and included into profits and losses | |||||||
| Provision for credit impairment of other debt investments | |||||||
| Cash flow hedge reserve | -5,251,427.20 | 6,134,650.00 | -6,178,149.65 | 1,846,919.95 | 10,465,879.70 | 5,214,452.50 | |
| Difference arising from translation of financial statements in foreign currency | 120,393,899.65 | 49,107,108.90 | 49,107,108.90 | 169,501,008.55 | |||
| Total other comprehensive income | -620,246,513.23 | 7,159,092,889.15 | -87,892,791.90 | 366,842,602.02 | 6,880,538,494.36 | -395,415.33 | 6,260,291,981.13 |
42. Surplus reserve
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| Statutory surplus reserve | 2,530,583,291.14 | - | - | 2,530,583,291.14 |
| Discretionary surplus reserve | 969,088,265.45 | - | - | 969,088,265.45 |
| Total | 3,499,671,556.59 | - | - | 3,499,671,556.59 |
43. General risk provisions
| Item | Beginning Balance | Increase in the current period | Decrease for the current period | Balance at the end of the period |
| General risk provisions | 329,417,571.48 | 160,438,255.27 | - | 489,855,826.75 |
| Total | 329,417,571.48 | 160,438,255.27 | - | 489,855,826.75 |
44. Undistributed profit
| Item | Amount for the current period | Amount for the previous period |
| Undistributed profit at the beginning of the period | 81,939,701,613.83 | 55,740,076,085.90 |
| Add: Business combinations under common control | -1,092,203.68 | |
| Add: Changes in accounting policies | -48,226,344.11 | |
| Total adjustment amount of undistributed profits at the beginning of the period ("+" stands for increase by adjustment and "-" stands for decrease by adjustment) [Note 1] | -48,226,344.11 | -1,092,203.68 |
| Undistributed profit at the beginning of the period after adjustment | 81,891,475,269.72 | 55,738,983,882.22 |
| Add: Net profit attributable to owners of parent company for the current period | 24,696,641,368.84 | 26,202,787,681.42 |
| Less: Appropriation of statutory surplus reserve | ||
| Arbitrary surplus reserve accrued | ||
| Appropriation of general risk provisions | 160,438,255.27 | 2,069,949.81 |
| Ordinary stock dividends payable [Note 2] | 12,633,034,843.80 | |
| Undistributed profit at the end of the period | 93,794,643,539.49 | 81,939,701,613.83 |
[Note 1] The Company retrospectively applied the new standards for financial instruments. For the cumulativeimpact of the first implementation of the standards, the retained earnings at the beginning of 2019 were adjusted.For details, see this Note (V) 31;[Note 2] According to the resolutions of the Extraordinary General Meeting on 16 January, 2019 and the GeneralMeeting of Shareholders on 26 June, 2019, the Company distributed cash dividends to all shareholders, whichwere RMB 6.00 (tax included) and RMB 15.00 (including tax) per 10 shares respectively. Calculated according to
the issued 6,015,730,878.00 shares, the actual cash dividend of RMB 12,633,034,843.80 were paid in the currentyear.
45. Operating revenues and operating costs
| Item | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 156,888,659,016.13 | 103,703,283,171.60 | 170,592,428,489.17 | 112,404,155,789.00 |
| Other businesses | 41,264,368,524.22 | 39,796,089,409.76 | 27,530,748,567.67 | 25,830,011,921.13 |
| Total | 198,153,027,540.35 | 143,499,372,581.36 | 198,123,177,056.84 | 138,234,167,710.13 |
(1) Main business (classified by industry)
| Item | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Manufacturing | 156,888,659,016.13 | 103,703,283,171.60 | 170,592,428,489.17 | 112,404,155,789.00 |
| Total | 156,888,659,016.13 | 103,703,283,171.60 | 170,592,428,489.17 | 112,404,155,789.00 |
(2) Main business (classified by product)
| Name of product | Amount for the current period | Amount for the previous period | ||
| Operating incomes | Operating Cost | Operating incomes | Operating Cost | |
| Air Conditioner | 138,665,055,103.82 | 87,192,449,061.21 | 155,682,359,475.59 | 98,890,052,827.63 |
| Home Appliances | 5,575,911,375.57 | 4,271,001,457.59 | 3,794,087,435.54 | 3,102,311,255.00 |
| Intelligent equipment | 2,141,285,558.55 | 2,014,056,867.41 | 3,108,531,271.87 | 2,907,041,559.95 |
| Others | 10,506,406,978.19 | 10,225,775,785.39 | 8,007,450,306.17 | 7,504,750,146.42 |
| Total | 156,888,659,016.13 | 103,703,283,171.60 | 170,592,428,489.17 | 112,404,155,789.00 |
(3) Main business (classified by region)
| Name of region | Amount for the current period | Amount for the previous period | ||
| Operating incomes | Operating Cost | Operating incomes | Operating Cost | |
| Domestic | 136,073,206,974.43 | 85,697,917,155.53 | 148,322,536,473.83 | 93,103,971,438.42 |
| Overseas | 20,815,452,041.70 | 18,005,366,016.07 | 22,269,892,015.34 | 19,300,184,350.58 |
| Total | 156,888,659,016.13 | 103,703,283,171.60 | 170,592,428,489.17 | 112,404,155,789.00 |
46. Interest revenue and interest expense
| Item | Amount for the current period | Amount for the previous period |
| Interest revenue | 2,351,471,964.56 | 1,899,287,824.22 |
| Including: interest revenue from deposits in other banks and central banks | 1,676,328,736.19 | 1,249,442,905.14 |
| Item | Amount for the current period | Amount for the previous period |
| Interest revenue from loans and advances | 496,600,631.52 | 426,618,074.89 |
| Others | 178,542,596.85 | 223,226,844.19 |
| Interest expense | 110,579,966.36 | 45,341,946.69 |
| Including: expense from transactions with financial institutions | 95,647,504.93 | 26,310,584.80 |
| Others | 14,932,461.43 | 19,031,361.89 |
| Net interest revenue | 2,240,891,998.20 | 1,853,945,877.53 |
47. Taxes and surcharges
| Item | Amount for the current period | Amount for the previous period |
| Urban maintenance & construction tax | 459,354,196.12 | 618,079,352.00 |
| Educational surcharges | 334,351,737.99 | 449,375,886.75 |
| Waste electrical appliance treatment fund | 286,294,935.08 | 293,247,090.00 |
| House property tax | 147,560,273.40 | 127,718,382.68 |
| Land use tax | 94,573,090.72 | 76,630,885.37 |
| Commodity circulation tax and industrial product tax of Brazil | 71,779,078.43 | 52,922,043.94 |
| Others | 149,070,436.89 | 123,919,063.83 |
| Total | 1,542,983,748.63 | 1,741,892,704.57 |
48. Sales expense
| Item | Amount for the current period | Amount for the previous period |
| Sales expense | 18,309,812,188.35 | 18,899,578,046.25 |
| Total | 18,309,812,188.35 | 18,899,578,046.25 |
[Note] In 2019, the selling expenses included the installation and maintenance cost, transportation andwarehousing fee and loading and unloading fee, sales rebate and promotion fee, accounting for more than 80% ofthe total selling expenses.
49. Overhead Expense
| Item | Amount for the current period | Amount for the previous period |
| Overhead Expense | 3,795,645,600.08 | 4,365,850,083.19 |
| Total | 3,795,645,600.08 | 4,365,850,083.19 |
[Note] In 2019, the overhead expenses included the employees' wages and salaries, material consumption,depreciation and amortization, accounting for more than 80% of the total overhead expenses.
50. R&D expenses
| Item | Amount for the current period | Amount for the previous period |
| R&D expenses | 5,891,219,715.90 | 6,988,368,285.92 |
| Total | 5,891,219,715.90 | 6,988,368,285.92 |
[Note] In 2019, the R&D expenses included the employees' labor cost and direct investment cost, accounting formore than 80% of the total R&D expenses.
51. Financial expense
| Item | Amount for the current period | Amount for the previous period |
| Interest expense [Note 1] | 1,598,276,258.59 | 1,068,308,309.96 |
| Less: Interest income [Note 2] | 3,698,387,243.32 | 2,384,486,815.64 |
| Exchange gain and loss | -366,166,349.99 | 228,556,360.16 |
| Bank charges | 35,131,571.19 | 128,629,122.01 |
| Interest charges for defined welfare benefit obligations | 4,487,322.00 | 4,684,674.00 |
| Others | 15,011.62 | 6,106,952.77 |
| Total | -2,426,643,429.91 | -948,201,396.74 |
[Note 1] The above interest expenses included the long-term and short-term loan interest expenses and the notediscount interest expense immediately recognized upon the derecognition of notes[Note 2] Both the above interest income and the interest income in Note (VII) 46 were capital gains.
52. Other incomes
(1) Classification of other incomes
| Item | Amount for the current period | Amount for the previous period | Amount recorded into the current non-recurring profit and loss |
| Government subsidies | 935,150,874.70 | 403,676,714.90 | 923,560,958.61 |
| Personal handling charge refund | 997,770.17 | 4,876,490.63 | 997,770.17 |
| Total | 936,148,644.87 | 408,553,205.53 | 924,558,728.78 |
(2) Government subsidies recorded in the profits and losses of current period
| Subsidy items | Amount for the current period | Amount for the previous period | Pertinent to assets/pertinent to incomes |
| Financial rewards | 458,139,748.75 | 195,252,237.61 | Pertinent to assets and incomes |
| Capital allowance for development projects | 149,396,154.17 | 111,460,558.80 | Pertinent to assets and incomes |
| Technological innovation | 147,525,365.16 | 51,398,026.35 | Pertinent to assets and incomes |
| Subsidy items | Amount for the current period | Amount for the previous period | Pertinent to assets/pertinent to incomes |
| subsidies income | |||
| Human resources subsidy | 103,289,308.06 | 16,497,832.55 | Pertinent to incomes |
| Others | 76,800,298.56 | 29,068,059.59 | Pertinent to assets and incomes |
| Total | 935,150,874.70 | 403,676,714.90 |
53. Investment income
| Item | Amount for the current period | Amount for the previous period |
| Long-term equity investment income measured by equity method | -20,983,248.83 | 560,513.87 |
| Investment income from derivative financial instruments | -336,389,070.84 | -162,205,608.27 |
| Investment income related to financial assets available for sale | —— | 92,546,955.76 |
| Investment income related to financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | —— | 19,119,043.90 |
| Financing products and other investment incomes | 156,748,029.75 | |
| Investment income related to trading financial assets and debt investment | 63,410,268.30 | —— |
| Investment income related to other equity instrument investments and other debt investments | 67,327,270.75 | —— |
| Total | -226,634,780.62 | 106,768,935.01 |
54. Incomes from changes in fair value
| Sources of incomes from changes in fair value | Amount for the current period | Amount for the previous period |
| Derivative financial instruments | 179,646,941.60 | 47,780,795.26 |
| Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | -1,523,370.43 | |
| Trading financial assets | 48,617,126.28 | |
| Total | 228,264,067.88 | 46,257,424.83 |
55. Credit impairment losses
| Item | Amount for the current period | Amount for the previous period |
| Loss on bad debt | -143,081,740.35 | —— |
| Impairment losses of loans and advances | -136,366,845.92 | —— |
| Total | -279,448,586.27 | —— |
56. Asset impairment loss
| Item | Amount for the current period | Amount for the previous period |
| Item | Amount for the current period | Amount for the previous period |
| Loss on bad debt | —— | -85,959,871.55 |
| Inventory falling price loss | -67,603,749.00 | -113,397,943.06 |
| Impairment losses of intangible assets [Note] | -775,289,550.94 | |
| Fixed asset impairment loss | -904,213.50 | |
| Loan impairment losses | —— | -61,412,149.22 |
| Total | -842,893,299.94 | -261,674,177.33 |
[Note] For details, please refer to Note (VII) 20.
57. Income from disposal of assets
| Item | Amount for the current period | Amount for the previous period |
| Profit from disposal of non-current assets (losses indicated with "-") | 4,911,230.34 | 636,629.29 |
| Total | 4,911,230.34 | 636,629.29 |
58. Non-operating revenues
(1) Classification of non-operating revenues
| Item | Amount for the current period | Amount for the previous period | Amount recorded into the current non-recurring profit and loss |
| Government subsidies not pertinent to operation | 292,291,413.05 | 268,001,389.57 | 292,291,413.05 |
| Net profit from destruction scrap of non-current assets | 738,673.12 | 3,804,752.28 | 738,673.12 |
| Including: Gains from disposal of fixed assets | 738,673.12 | 3,804,752.28 | 738,673.12 |
| Others | 52,676,576.96 | 46,051,591.57 | 52,676,576.96 |
| Total | 345,706,663.13 | 317,857,733.42 | 345,706,663.13 |
(2) Government subsidies recorded in the profits and losses of current period
| Subsidy items | Amount for the current period | Amount for the previous period | Amount included in non-recurring gains and losses of the very year |
| Financial rewards | 291,949,736.50 | 253,415,049.57 | 291,949,736.50 |
| Others | 341,676.55 | 14,586,340.00 | 341,676.55 |
| Total | 292,291,413.05 | 268,001,389.57 | 292,291,413.05 |
59. Non-operating expenses
| Item | Amount for the current period | Amount for the previous period | Amount recorded into the current non-recurring profit |
| and loss | |||
| Net loss from destruction scrap of non-current assets | 14,943,832.84 | 27,506,316.92 | 14,943,832.84 |
| Including: net losses from destruction scrap of fixed assets | 14,943,832.84 | 27,506,316.92 | 14,943,832.84 |
| Others [Note] | 583,162,723.99 | 13,728,384.13 | 583,162,723.99 |
| Total | 598,106,556.83 | 41,234,701.05 | 598,106,556.83 |
[Note] Non-operating expenses - others, mainly included settlement funds for the Company's dehumidifier recallincident from the US market.
60. Income tax expenses
(1) Table of income tax expenses
| Item | Amount for the current period | Amount for the previous period |
| Current income tax calculated according to the tax law and relevant regulations | 5,715,582,577.24 | 5,252,202,658.97 |
| Add: deferred income tax expenses (revenue presented using "-") | -1,190,118,952.51 | -357,724,751.78 |
| Total | 4,525,463,624.73 | 4,894,477,907.19 |
(2) Adjustment process of accounting profits and income tax expenses
| Item | Amount for the current period |
| Total profit of current year | 29,352,707,228.70 |
| Income tax expenses calculated by the statutory/applicable tax rate | 4,402,906,084.31 |
| Impact by different tax rates applicable to subsidiaries | 192,486,988.85 |
| Impact by non-deductible costs, expenses and losses | 13,536,512.28 |
| Impact by deductible temporary differences or deductible losses of deferred income tax assets not recognized in the current year | 20,181,286.38 |
| Others | -103,647,247.09 |
| Income tax expenses | 4,525,463,624.73 |
61. Relevant information of cash flow statements
(1) Other cash received relating to operating activities
| Item | Amount for the current period | Amount for the previous period |
| Government subsidies | 1,301,652,938.19 | 726,492,184.73 |
| Interest revenue | 283,444,434.07 | 395,203,295.82 |
| Net decrease in margin of bill pledge deposits | 5,840,941,705.02 |
| Margin, deposit and others | 1,210,966,466.08 | 604,349,038.28 |
| Subtotal | 2,796,063,838.34 | 7,566,986,223.85 |
(2) Other cash paid relating to operating activities
| Item | Amount for the current period | Amount for the previous period |
| Cash repayments for selling expenses | 11,601,156,921.11 | 12,135,151,238.29 |
| Cash repayments for overhead expenses and R&D expenses | 1,621,907,242.09 | 1,751,411,196.88 |
| Net increase in margin of bill pledge and guarantee | 7,323,512,969.28 | |
| Returned project funds advanced | 193,648,219.08 | 745,496,451.32 |
| Others | 786,227,441.34 | 394,775,297.23 |
| Subtotal | 21,526,452,792.90 | 15,026,834,183.72 |
(3) Other cash received relating to investing activities
| Item | Amount for the current period | Amount for the previous period |
| Receipts from forward foreign exchange settlement and sales | 152,397,919.95 | |
| Fixed deposit interest revenue and others | 4,878,025,331.18 | 2,500,000,185.53 |
| Subtotal | 4,878,025,331.18 | 2,652,398,105.48 |
(4) Other cash paid relating to investing activities
| Item | Amount for the current period | Amount for the previous period |
| Net increase in time deposits and forward foreign exchange settlement and sale payments | 7,029,966,816.61 | 11,449,720,529.14 |
| Others | 10,487,868.71 | 72,502.20 |
| Subtotal | 7,040,454,685.32 | 11,449,793,031.34 |
(5) Other cash received relating to financing activities
| Item | Amount for the current period | Amount for the previous period |
| Net decrease in margin of loan pledge | 5,110,000.00 | |
| Subtotal | 5,110,000.00 |
(6) Other cash paid relating to financing activities
| Item | Amount for the current period | Amount for the previous period |
| Equity consolidation consideration under common control | 31,501,100.00 | |
| Others | 3,661,549.65 |
| Subtotal | 35,162,649.65 |
62. Supplementary information about cash flow statement
(1) Reconciliation of net profit to cash flows from operating activities and other information
| Item | Amount for the current period | Amount for the previous period |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profits | 24,827,243,603.97 | 26,379,029,817.06 |
| Add: Assets depreciation reserves | 1,122,341,886.21 | 261,674,177.33 |
| Fixed assets depreciation, oil and gas assets accumulated depreciation, productive biological assets accumulated depreciation | 2,977,103,353.04 | 2,859,799,547.55 |
| Amortization of intangible assets | 215,796,437.95 | 249,550,269.72 |
| Amortization of long-term deferred expenses | 1,519,448.66 | 979,454.55 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets ("-" stands for gains) | -4,911,230.34 | -636,629.29 |
| Losses from retirement of fixed assets ("-" stands for gains) | 14,205,159.72 | 23,701,564.64 |
| Losses from changes in fair value ("-" stands for gains) | -228,264,067.88 | -46,257,424.83 |
| Financial expenses ("-" stands for income) | -4,096,866,714.43 | -1,112,658,684.94 |
| Investment losses ("-" stands for gains) | 226,634,780.62 | -106,768,935.01 |
| Decrease in deferred income tax assets ("-" stands for increase) | -1,267,872,732.83 | -472,601,783.52 |
| Increase in deferred income tax liabilities ("-" stands for decrease) | 77,753,780.32 | 115,790,793.93 |
| Amortization of deferred income | -57,756,542.31 | -41,447,880.48 |
| Decrease in inventories ("-" stands for increase) | -4,049,893,387.15 | -3,003,461,176.91 |
| Decrease in operating receivables ("-" stands for increase) | -3,656,032,331.71 | -10,631,225,706.46 |
| Increase in operating payables ("-" stands for decrease) | 19,142,521,381.95 | 6,728,841,135.00 |
| Others [Note] | -7,349,808,732.20 | 5,736,483,004.64 |
| Net cash flows from operating activities | 27,893,714,093.59 | 26,940,791,542.98 |
| 2. Major investing and financing activities not involving cash receipts and payment: | ||
| Conversion of debt into capital | ||
| Convertible bonds expiring within one year | ||
| Fixed assets acquired under finance leases | ||
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 26,372,571,821.49 | 28,772,120,824.34 |
| Less: Beginning balance of cash | 28,772,120,824.34 | 21,359,616,223.94 |
| Add: Ending balance of cash equivalents |
| Item | Amount for the current period | Amount for the previous period |
| Less: Beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -2,399,549,002.85 | 7,412,504,600.40 |
[Note] "Others" includes the decreased amount RMB 31,341,719.47 of legal deposit reserved and the netincreased amount RMB 7,381,150,451.67 of bill margin.
(2) Net cash paid for acquisition of subsidiaries in the current period
| Item | Amount |
| Cash or cash equivalent paid in the current period for business combination that occurred in the current period | 1,071,239,072.20 |
| Including: Nanjing Walsin Nonferrous Metal Co., Ltd. | 1,071,239,072.20 |
| Less: Cash and cash equivalents held by the subsidiary on the date of purchase | 297,055,290.72 |
| Including: Nanjing Walsin Nonferrous Metal Co., Ltd. | 297,055,290.72 |
| Net cash paid for acquisition of subsidiaries | 774,183,781.48 |
(3) Net cash amount received from the disposal of subsidiaries in the current periodNone.
(4) Composition of cash and cash equivalents
| Item | Balance at the end of the period | Beginning Balance |
| I. Cash | 26,372,571,821.49 | 28,772,120,824.34 |
| Including: Cash on hand | 1,357,064.14 | 1,678,449.67 |
| Bank deposit for payment at any time | 7,877,998,010.69 | 7,623,570,836.65 |
| Other monetary capital for payment at any time | 379,859,995.42 | 647,967,329.10 |
| Deposit in the central bank for payment | 2,004,412.74 | 2,094,863.38 |
| Deposits in other banks | 18,111,352,338.50 | 20,496,809,345.54 |
| II. Cash equivalents | ||
| Including: Bond investments maturing within three months | ||
| III. Ending balance of cash and cash equivalents | 26,372,571,821.49 | 28,772,120,824.34 |
(5) Adjustment of monetary capital and cash and cash equivalents
| Item | Amount for the current period | Amount for the previous period |
| Monetary capital | 125,400,715,267.64 | 115,022,653,811.67 |
| Less: Deposits with restricted use | 13,329,429,050.16 | 6,005,776,370.05 |
| Including: Legal deposit reserved | 3,014,082,457.76 | 3,045,424,177.23 |
| Bill, letter of credit and other deposits | 10,315,346,592.40 | 2,960,352,192.82 |
| Less: Fixed deposits and accrued interest not in the category of cash and cash equivalents | 85,698,714,395.99 | 80,244,756,617.28 |
| Add: Other cash equivalents | ||
| Ending balance of cash and cash equivalents | 26,372,571,821.49 | 28,772,120,824.34 |
(6) Bill payment
| Bill payment items | Amount for the current period | Amount for the previous period |
| Bill endorsement and transfer for purchasing goods and accepting services | 65,091,151,718.57 | 70,268,012,322.71 |
| Bill endorsement and transfer for purchasing fixed assets and intangible assets | 552,447,249.96 | 275,517,455.97 |
| Total | 65,643,598,968.53 | 70,543,529,778.68 |
63. Assets with restricted ownerships or use rights
| Item | Book balance at the end of the period | Cause of restriction |
| Monetary capital | 13,329,429,050.16 | Legal deposit reserved and deposits |
| Receivables financing | 8,874,415,345.76 | Pledged |
| Other current assets | 100,000,000.00 | Pledged |
| Other equity instrument investments | 3,316,957,037.50 | Restricted shares |
| Intangible assets | 153,191,226.30 | Mortgage |
| Total | 25,773,992,659.72 |
64. Foreign currency item
(1) Monetary items of foreign currencies
| Item | Balance in foreign currency at the end of period | Exchange rate for conversion | Balance of RMB converted at the end of period |
| Monetary capital | 15,504,677,890.54 | ||
| Wherein: USD | 2,135,958,621.77 | 6.9762 | 14,900,874,537.19 |
| BRL | 327,695,761.22 | 1.7378 | 569,469,693.85 |
| Euro | 3,229,358.83 | 7.8155 | 25,239,053.94 |
| HKD | 7,173,781.03 | 0.8958 | 6,426,273.05 |
| Dirham | 1,400,134.00 | 1.8992 | 2,659,134.49 |
| Others | Not applicable | Not applicable | 9,198.02 |
| Accounts receivable | 2,955,957,531.32 | ||
| Wherein: USD | 342,476,502.89 | 6.9762 | 2,389,184,579.43 |
| Item | Balance in foreign currency at the end of period | Exchange rate for conversion | Balance of RMB converted at the end of period |
| BRL | 279,591,897.30 | 1.7378 | 485,874,799.13 |
| Dirham | 24,297,030.98 | 1.8992 | 46,144,921.24 |
| Euro | 2,281,852.05 | 7.8155 | 17,833,814.70 |
| HKD | 18,887,493.66 | 0.8958 | 16,919,416.82 |
| Other receivables | 4,439,271.41 | ||
| Wherein: USD | 588,488.95 | 6.9762 | 4,105,416.60 |
| Others | Not applicable | Not applicable | 333,854.81 |
| Subtotal of monetary assets of foreign currency | 18,465,074,693.27 | ||
| Short-term borrowing | 5,598,440,904.60 | ||
| Wherein: USD | 771,809,993.47 | 6.9762 | 5,384,300,876.44 |
| HKD | 239,048,926.28 | 0.8958 | 214,140,028.16 |
| Accounts payable | 156,605,674.81 | ||
| Wherein: USD | 11,695,957.91 | 6.9762 | 81,593,341.59 |
| BRL | 29,169,670.98 | 1.7378 | 50,691,054.23 |
| JPY | 242,602,066.19 | 0.0641 | 15,547,396.01 |
| Euro | 915,440.00 | 7.8155 | 7,154,621.32 |
| HKD | 1,807,615.16 | 0.8958 | 1,619,261.66 |
| Other payables | 234,781,379.26 | ||
| Wherein: USD | 32,501,504.44 | 6.9762 | 226,736,995.27 |
| Euro | 648,118.62 | 7.8155 | 5,065,371.07 |
| HKD | 2,588,683.81 | 0.8958 | 2,318,942.96 |
| Others | Not applicable | Not applicable | 660,069.96 |
| Subtotal of monetary liabilities of foreign currency | 5,989,827,958.67 |
(2) Description of overseas operating entities
None.(VIII) Change in the consolidation scope
1. Business combination not involving enterprises under common control
(1) Business combination involving enterprises not under common control in the current period
| Name of acquired party | Time point of equity acquisition | Cost of equity acquisition | Proportion of equity acquisition (%) | Equity acquisition mode | Date of purchase | Revenue of the acquired party from the date of purchase to the end of the period | Net profit of the acquired party from the date of purchase to the end of the period |
| Nanjing Walsin Nonferrous Metal Co., Ltd. | 31 May, 2019 | 1,417,551,321.45 | 94.30 | Purchase by means of cash | 31 May, 2019 | 10,411,966,740.54 | 46,316,187.50 |
[Note] The Company purchased 94.30% equity of Nanjing Walsin Nonferrous Metal Co., Ltd. (hereinafterreferred to as "Nanjing Walsin") during the current period and obtained control on 31 May, 2019.
1) Business combination cost and goodwill
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. |
| Combination cost: | |
| --Cash | 1,071,239,072.20 |
| --Other payables | 346,312,249.25 |
| Total combination cost | 1,417,551,321.45 |
| Less: Fair value share of the identifiable net assets acquired | 1,143,436,281.34 |
| Business reputation | 274,115,040.11 |
2) Determination of fair value of combination cost
The Company acquired 94.30% equity of Nanjing Walsin in the current period, and the cost of businesscombination was RMB 1,417,551,321.45. The fair value of identifiable net assets of Nanjing Walsin as of 31 May,2019 was RMB 1,143,436,281.34. The fair value of corresponding identifiable net assets were appraised by ChinaAlliance Appraisal Co., Ltd. Which issued [China Alliance Appraisal Report (2019) No. 040863] AppraisalReport.
3) Reason for the formation of large-amount goodwill:
In order to deepen the development of the Company's enameled wire business in the electrical sector and reducethe impacts and constraints of upstream suppliers, Gree Electric Appliances needed to extend upstream of theindustrial chain. Due to the long construction cycle of the project, in order to expand production capacity andoccupy the market as soon as possible, the Company's office meeting decided to acquire Nanjing WalsinNonferrous Metal Co., Ltd.;The acquisition price was determined by referring to the price-to-book ratio of the target company's comparablelisted company, comprehensively considering and fully evaluating the target company's asset status, profitability,brand influence, technology level, synergy effect and other factors;Major reasons for increased value incurred from the appraisal:
A. Depreciation accruing life of some equipment assets was shorter than their economic life;
B. Value of land use rights and off-book identifiable assets such as customer relationships and trademark userights in intangible assets increased due to the appraisal.
(2) Identifiable assets and liabilities of the acquired party on the date of purchase
| Item | Nanjing Walsin Nonferrous Metal Co., Ltd. | |
| Fair value on the date of purchase | Carrying amount on date of purchase | |
| Assets: | ||
| Monetary capital | 313,841,040.72 | 313,841,040.72 |
| Accounts receivable | 306,347,724.29 | 306,347,724.29 |
| Receivables financing | 32,897,848.99 | 32,827,077.99 |
| Prepaid accounts | 3,774,390.86 | 3,774,390.86 |
| Other receivables | 250,561.22 | 250,561.22 |
| Inventories | 370,015,709.58 | 366,647,781.96 |
| Other current assets | 51,860,228.86 | 51,860,228.86 |
| Fixed assets | 148,157,020.23 | 38,678,328.99 |
| Construction in Progress | 8,162,465.21 | 9,544,356.01 |
| Intangible assets | 137,922,500.00 | 9,173,710.00 |
| Deferred income tax assets | 10,028,895.44 | 10,116,258.43 |
| Other non-current assets | 1,295,685.45 | 1,635,079.39 |
| Subtotal of assets | 1,384,554,070.85 | 1,144,696,538.72 |
| Liabilities: | ||
| Trading financial liabilities | 16,785,750.00 | 16,785,750.00 |
| Accounts payable | 37,510,699.95 | 37,510,699.95 |
| Advances from customers | 8,143,309.65 | 8,143,309.65 |
| Payroll payable | 8,804,769.39 | 8,804,769.39 |
| Taxes payable | 3,546,574.30 | 3,546,574.30 |
| Other payables | 9,114,493.56 | 9,114,493.56 |
| Other current liabilities | 27,680,199.09 | 27,680,199.09 |
| Deferred income tax liabilities | 60,416,544.96 | |
| Subtitle of liabilities | 172,002,340.90 | 111,585,795.94 |
| Net assets | 1,212,551,729.95 | 1,033,110,742.78 |
| Less: minority equity | 69,115,448.61 | 58,887,312.34 |
| Net assets obtained | 1,143,436,281.34 | 974,223,430.44 |
[Note] Increased value incurred from the appraisal mainly included fixed assets (including houses and buildings,equipment), and intangible assets (including land use rights, trademark use rights, and customer relationships).The Company engaged an independent external appraiser to evaluate the fair value of Nanjing Walsin'sidentifiable assets and liabilities. The appraisal methods of main assets were listed as follows:
1) The appraisal method of houses and buildings is the replacement cost method, which takes the replacement costminus the realizable discount as the appraised value and multiplies the appraised value by the renewal rate;
2) The appraisal method of equipment is mainly the replacement cost method, and the market method is used toappraise the equipment which of the transaction information can be obtained from the market;
3) The appraisal method of land use rights is the market comparison method and the benchmark low pricecoefficient correction method;
4) The appraisal method of other intangible assets such as trademark use rights and customer relations is theincome method. During the appraisal, the future income of the appraised intangible assets within a reasonableincome period will be discounted and accumulated at a reasonable discount rate, and the present value of incomewill be obtained.
2. Business combination involving enterprises under common control
None.
3. Counter purchase
None.
4. Disposal of subsidiaries
None.
5. Change in other consolidation scopes
(1) The main body of cancellation in the current period:
1) Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on17 October, 2019, and was no longer included in the consolidation scope from the date of deregistration;
2) Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019,and was no longer included in the consolidation scope from the date of deregistration.
(2) The newly established new bodies in this period are as follows:
| Name | Time of establishment | Net assets of the end of the period | Net profit from the combination date to the end of the period |
| Gree (Anji) Precision Mold Co., Ltd. | 14 February, 2019 | 47,063,023.27 | -236,976.73 |
| Huzhou Landa Compressor Co., Ltd. | 1 March, 2019 | Not yet invested |
| Name | Time of establishment | Net assets of the end of the period | Net profit from the combination date to the end of the period |
| Gree Material Supply (Wuhan) Co., Ltd. | 20 March, 2019 | 12,716,347.67 | -7,283,652.33 |
| Gree Material Supply (Hefei) Co., Ltd. | 20 March, 2019 | 24,858,404.13 | 4,858,404.13 |
| Guangdong Guochuang Intelligent Technology Co., Ltd. | 22 March, 2019 | 30,270,563.23 | 270,563.23 |
| Gree (Luoyang) Washing Machine Co., Ltd. | 25 March, 2019 | 47,278,161.95 | -2,721,838.05 |
| Gree Material Supply (Chongqing) Co., Ltd. | 27 March, 2019 | 18,056,402.39 | -1,943,597.61 |
| Gree Material Supply (Zhengzhou) Co., Ltd. | 29 March, 2019 | 19,777,618.60 | -222,381.40 |
| Gree Rongzhu Copper (Nanjing) Co., Ltd. | 29 March, 2019 | Not yet invested | |
| Zhuhai Gree Green Resources Recycling Co., Ltd | 16 July, 2019 | 52,263,754.97 | 2,263,754.97 |
| Luoyang Lianmei Real Estate Co., Ltd. | 7 August, 2019 | 995,335,429.21 | -4,664,570.79 |
| Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | 20 August, 2019 | 29,874,379.59 | -125,620.41 |
| Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. | 28 August, 2019 | 15,024,339.91 | 24,339.91 |
| Handan Yingdong New Energy Technology Co., Ltd. | 20 September, 2019 | 660.13 | -1,339.87 |
| Gree E-commerce Co., Ltd. | 5 November, 2019 | Not yet invested | |
| Gelan Environmental Protection Technology (Shaoguan) Co., Ltd. | 5 December, 2019 | Not yet invested |
(IX) Equity in other subjects
1. Equity in subsidiaries
(1) Composition of the enterprise group
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 1 | Gree (Chongqing) Electric Appliances Co., Ltd. | Chongqing City | Chongqing City | Commercial manufacture | 97.00 | 97.00 | Establishment | |
| 2 | Gree (Hefei) Electric Appliances Co., Ltd. | Hefei City | Hefei City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 3 | Gree (Brazil) Electric Appliances Co., Ltd. | Manaus, Brazil | Manaus, Brazil | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 4 | Gree (Zhengzhou) Electric Appliances Co., Ltd. | Zhengzhou City | Zhengzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 5 | Gree (Wuhan) Electric Appliances Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 6 | Gree (Wuhu) Electric Appliances Co., Ltd. | Wuhu City | Wuhu City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 7 | Gree (Shijiazhuang) Electric Appliances Co., Ltd. | Shijiazhuang City | Shijiazhuang City | Commercial manufacture | 100.00 | 100.00 | Business combination not involving enterprises under common control | |
| 8 | Gree (Hangzhou) Electric Appliances Co., Ltd. | Hangzhou City | Hangzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 9 | Gree (Luoyang) Electric Appliances Co., Ltd. | Luoyang | Luoyang | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 10 | Gree (Nanjing) Electric Appliances Co., Ltd. | Nanjing | Nanjing | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 11 | Gree (Chengdu) Electric Appliances Co., Ltd. | Chengdu | Chengdu | Commercial | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| manufacture | ||||||||
| 12 | Changsha Gree HVAC Equipment Co., Ltd. | Changsha City | Changsha City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 13 | Gree (Chengdu) HVAC Equipment Co., Ltd. | Chengdu | Chengdu | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 14 | Zhuhai Gree Group Finance Company Limited [Note 1] | Zhuhai City | Zhuhai City | Finance | 88.31 | 0.94 | 89.25 | Business combination involving enterprises under common control |
| 15 | Zhuhai Hengqin GREE business factoring Co., Ltd. | Zhuhai City | Zhuhai City | Finance | 100.00 | 100.00 | Establishment | |
| 16 | Zhuhai Landa Compressor Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| 17 | Hefei Landa Compressor Co., Ltd. | Hefei City | Hefei City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 18 | Zhengzhou Landa Compressor Co., Ltd. | Zhengzhou City | Zhengzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 19 | Chongqing Landa Compressor Co., Ltd. | Chongqing City | Chongqing City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 20 | Wuhan Landa Compressor Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 21 | Zhuhai Meilingda Refrigeration Technology Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 70.00 | 70.00 | Business combination involving enterprises under common control | |
| 22 | Zhuhai Meiling General Motors Co., Ltd. [Note 2] | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| 23 | Zhuhai Landa Material Supply Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 24 | Zhuhai Kaibang Motor Manufacture Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination not involving enterprises under common control | |
| 25 | Hefei Kaibang Motor Manufacture Co., Ltd. | Hefei City | Hefei City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 26 | Chongqing Kaibang Motor Manufacture Co., Ltd. | Chongqing City | Chongqing City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 27 | Henan Kaibang Motor Manufacture Co., Ltd. | Zhengzhou City | Zhengzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 28 | Zhuhai Gree Electrical Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| 29 | Gree Electric Enterprises (Ma'anshan) Ltd. | Ma'anshan City | Ma'anshan City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| 30 | Gree (Meishan) Electrician Co., Ltd. | Meishan City | Meishan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 31 | Gree (Nanjing) Electrician Co., Ltd. | Nanjing | Nanjing | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 32 | GREE (Zhongshan) Home Appliances Co., Ltd. | Zhongshan City | Zhongshan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 33 | Gree (Shijiazhuang) Small Home Appliances Co., Ltd. | Shijiazhuang City | Shijiazhuang City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 34 | Gree Green Refrigeration Technology Center Co., Ltd. Of Zhuhai | Zhuhai City | Zhuhai City | Technical research and development | 100.00 | 100.00 | Establishment | |
| 35 | Zhengzhou Gree Green Resources Recycling Co., Ltd | Zhengzhou City | Zhengzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 36 | Hunan Green Resources Recycling Co., Ltd | Ningxiang County | Ningxiang County | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 37 | Wuhu Green Resources Recycling Co., Ltd. | Wuhu City | Wuhu City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 38 | Shijiazhuang Green Resources Recycling Co., Ltd. | Shijiazhuang City | Shijiazhuang City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 39 | Tianjin Green Resources Recycling Co., Ltd. | Tianjin City | Tianjin City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 40 | Zhuhai Gree Daikin Precision Mold Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 51.00 | 51.00 | Establishment | |
| 41 | Zhuhai Gree Dakin Device Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 51.00 | 51.00 | Establishment | |
| 42 | Zhuhai Ligao Precision Manufacturing Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 43 | Zhuhai Gree TOSOT Life Electric Appliances Co., Lid. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 44 | Gree TOSOT (Suqian) Home Appliances Co., Ltd. | Suqian City | Suqian City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 45 | Zhuhai HVAC Equipment Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 46 | Gree (Wuhan) HVAC Equipment Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 47 | Zhuhai IVP Information Technology Co., Ltd. | Zhuhai City | Zhuhai City | IT | 100.00 | 100.00 | Establishment | |
| 48 | Zhuhai Gree Xinyuan Electronics Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| 49 | Gree (Nanjing) Xinyuan Electronics Co., Ltd. | Nanjing | Nanjing | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 50 | Hong Kong Gree Electric Appliances Sales Co., Ltd. | Kowloon, Hong Kong | Kowloon, Hong Kong | Sales | 100.00 | 100.00 | Business combination not involving enterprises under common control | |
| 51 | Shanghai GREE Air Conditioners Sales Co., Ltd. [Note 3] | Shanghai City | Shanghai City | Sales | 90.00 | 9.70 | 99.70 | Establishment |
| 52 | Brazil United Electric Appliances Industry and Commerce Co., Ltd. | Sao Paulo, Brazil | Sao Paulo, Brazil | Sales | 100.00 | 100.00 | Establishment | |
| 53 | Gree (USA) Sales Co., Ltd. | California, USA | California, USA | Sales | 100.00 | 100.00 | Establishment | |
| 54 | Zhuhai GREE Intelligent Equipment Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 55 | Zhuhai GREE Intelligent Equipment Technology Research Institute Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 56 | GREE (Wuhan) Intelligent Equipment Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 57 | Gree (Luoyang) Robot Co., Ltd. | Luoyang | Luoyang | Technical research and development | 100.00 | 100.00 | Establishment | |
| 58 | Zhuhai Gree Robot Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 59 | Wuhu Precision Manufacturing Co., Ltd. | Wuhu City | Wuhu City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 60 | Gree (Wuhan) Precision Mold Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 61 | Zhuhai Gree Precision Mold Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 62 | Gree (Wu'an) Precision Equipment Manufacturing Co., Ltd. | Wu'an County | Wu'an County | Commercial manufacture | 70.00 | 70.00 | Establishment | |
| 63 | Zhuhai Gree New Material Co., Ltd. | Zhuhai City | Zhuhai City | Commercial | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| manufacture | ||||||||
| 64 | Zhuhai Gree Energy Environment Technology Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 65 | Zhuhai Gree Info Technology Co., Ltd. | Zhuhai City | Zhuhai City | IT | 51.00 | 51.00 | Establishment | |
| 66 | Zhuhai Gree CNC Machine Tool Research Institute Co., Ltd. | Zhuhai City | Zhuhai City | Technical research and development | 100.00 | 100.00 | Establishment | |
| 67 | Zhuhai Gree Transportation Co., Ltd. | Zhuhai City | Zhuhai City | Transportation industry | 100.00 | 100.00 | Establishment | |
| 68 | Zhuhai Lianyun Technology Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 69 | Zhuhai Zero Boundary Integrated Circuit Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 70 | Zhuhai Gree Material Supply Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 71 | Zhuhai Gree Lvkong Technology Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 72 | Hefei Kinghome Electrical Co., Ltd. | Hefei City | Hefei City | Commercial manufacture | 100.00 | 100.00 | Business combination not involving enterprises under common control | |
| 73 | Anhui Gree Kinghome Electric Appliances Sales Co., Ltd.[Note 4] | Anhui | Anhui | Sales | 100.00 | 100.00 | Business combination not involving enterprises under common control | |
| 74 | Gree (Chengdu) Precision Mold Co., Ltd. | Chengdu | Chengdu | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 75 | Zhuhai Gree Electrical and Mechanical Engineering Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Business combination involving enterprises under common control | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 76 | Gree (Luoyang) Washing Machine Co., Ltd. | Luoyang | Luoyang | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 77 | Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | Zhuhai City | Zhuhai City | IT | 75.00 | 75.00 | Establishment | |
| 78 | Gree (Anji) Precision Mold Co., Ltd. | Anji County | Anji County | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 79 | Zhuhai Gree Green Resources Recycling Co., Ltd | Zhuhai City | Zhuhai City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 80 | Nanjing Walsin Nonferrous Metal Co., Ltd. | Nanjing | Nanjing | Commercial manufacture | 94.30 | 94.30 | Business combination not involving enterprises under common control | |
| 81 | Guangdong Guochuang Intelligent Technology Co., Ltd. | Lianjiang City | Lianjiang City | Commercial manufacture | 60.00 | 60.00 | Establishment | |
| 82 | Luoyang Lianmei Real Estate Co., Ltd. | Luoyang | Luoyang | Real estate | 51.00 | 51.00 | Establishment | |
| 83 | Zhuhai Hengqin Gree Huatai Energy Development Co., Ltd. | Zhuhai City | Zhuhai City | Commercial manufacture | 51.00 | 51.00 | Establishment | |
| 84 | Handan Yingdong New Energy Technology Co., Ltd. | Wu'an City | Wu'an City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 85 | Gree Material Supply (Wuhan) Co., Ltd. | Wuhan City | Wuhan City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 86 | Gree Material Supply (Hefei) Co., Ltd. | Hefei City | Hefei City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 87 | Gree Material Supply (Zhengzhou) Co., Ltd. | Zhengzhou City | Zhengzhou City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 88 | Gree Material Supply (Chongqing) Co., Ltd. | Chongqing City | Chongqing City | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 89 | Huzhou Landa Compressor Co., Ltd. | Anji County | Anji County | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| Serial Number | Name | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Voting right percentage (%) | Acquisition mode | |
| Direct | Indirect | |||||||
| 90 | Gree E-commerce Co., Ltd. | Zhuhai City | Zhuhai City | Wholesale and retail trade | 100.00 | 100.00 | Establishment | |
| 91 | Gree Rongzhu Copper (Nanjing) Co., Ltd. | Nanjing | Nanjing | Commercial manufacture | 100.00 | 100.00 | Establishment | |
| 92 | Gelan Environmental Protection Technology (Shaoguan) Co., Ltd. | Shaoguan City | Shaoguan City | Sales | 100.00 | 100.00 | Establishment | |
[Note 1] The Company directly holds 88.31% of total stocks of Zhuhai Gree Group Finance Company Limited, and Zhuhai Gree Electrical Co., Ltd. and Zhuhai GreeXinyuan Electronics Co., Ltd. as the wholly-owned subsidiaries of the Company respectively hold its 0.47% stocks, so the Company holds its 89.25% stocks in the directand indirect ways.[Note 2] Zhuhai Meiling General Motors Co., Ltd., a subsidiary of the Company, was deregistered on 7 August, 2019;[Note 3]: The Company directly holds 90.00% of total stocks of Shanghai Gree Air Conditioners Sales Co., Ltd., and Gree (Chongqing) Electric Appliances Co., Ltd. as thesubsidiary of the Company holds its remaining 9.70% stocks, so the Company holds its 99.70% stocks in the direct and indirect ways.[Note 4] Anhui Gree Kinghome Electric Appliances Sales Co., Ltd., a subsidiary of the Company, was deregistered on 17 October, 2019.
(2) Important non-wholly owned subsidiaries
Information of rights and interests held by minority shareholders of important non-wholly owned subsidiaries andprofits and losses:
| Name | Shareholding ratio of minority shareholders (%) | Profits or losses attributable to minority shareholders in the current period | Dividends declared to distribute to minority shareholders in the current period | Equity balance of minority shareholders at the end of the period |
| Gree (Chongqing) Electric Appliances Co., Ltd. | 3.00 | 23,528,160.11 | 19,705,686.34 | 71,628,712.21 |
| Zhuhai Gree Group Finance Company Limited | 10.75 | 85,497,764.38 | 693,351,864.57 |
(3) Main financial information of important non-wholly owned subsidiaries
1) Amount at the end of the period/Amount of the current period
| Item | Gree (Chongqing) Electric Appliances Co., Ltd. | Zhuhai Gree Group Finance Company Limited |
| Current assets | 3,898,672,996.86 | 52,065,731,802.44 |
| Non-current assets | 1,045,004,552.90 | 18,385,117,667.65 |
| Total assets | 4,943,677,549.76 | 70,450,849,470.09 |
| Current liabilities | 2,542,579,996.06 | 63,819,886,177.95 |
| Non-current liabilities | 13,473,813.34 | 181,178,505.54 |
| Total liabilities | 2,556,053,809.40 | 64,001,064,683.49 |
| Operating incomes | 10,703,012,677.06 | 2,399,580,625.93 |
| Net profits | 784,272,003.69 | 795,328,040.73 |
| Total comprehensive income | 784,272,003.69 | 792,299,281.53 |
| Cash flows from operating activities | 1,209,651,124.46 | 3,359,858,744.18 |
2) Amount at the beginning of the period/of the previous period
| Item | Gree (Chongqing) Electric Appliances Co., Ltd. | Zhuhai Gree Group Finance Company Limited |
| Current assets | 4,023,171,282.05 | 46,110,618,353.77 |
| Non-current assets | 1,156,117,813.37 | 13,239,672,856.61 |
| Total assets | 5,179,289,095.42 | 59,350,291,210.38 |
| Current liabilities | 2,910,105,213.05 | 53,565,185,491.74 |
| Non-current liabilities | 8,975,934.60 | 127,620,213.57 |
| Total liabilities | 2,919,081,147.65 | 53,692,805,705.31 |
| Operating incomes | 12,186,621,897.68 | 2,175,875,798.99 |
| Net profits | 1,051,779,596.69 | 1,040,346,636.08 |
| Total comprehensive income | 1,051,779,596.69 | 1,057,380,005.59 |
| Cash flows from operating activities | 1,224,130,752.80 | 9,709,298,229.36 |
(4) Financial support or other support provided to structured entities included in the scope of consolidatedfinancial statementsNone.
2. Transactions which result in a change in the share of owners' equity in the subsidiary but the Companystill controls the subsidiaryNone.
3. Equities in associated enterprises or contractual enterprises
(1) Basic information of important cooperative enterprises and associated enterprises
| Name of invested entity | Main location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Accounting treatment | |
| Direct | Indirect | |||||
| Songyuan Food Group Co., Ltd. | Songyuan City | Songyuan City | Food manufacture | 50.00 | Equity method | |
| Zhuhai Ronglin Equity Investment Partnership (Limited Partnership) | Zhuhai City | Zhuhai City | Lease and business services | 91.27 | Equity method | |
(2) Main financial information of important cooperative enterprises
| Item | Songyuan Food Group Co., Ltd. | |
| Balance at the end of the period/Amount for the current period | Balance at the beginning of the period/Amount for the previous period | |
| Current assets | 382,476,305.91 | 444,584,169.27 |
| Including: cash and cash equivalents | 66,904,078.58 | 33,685,539.79 |
| Non-current assets | 113,422,747.61 | 108,911,970.58 |
| Total assets | 495,899,053.52 | 553,496,139.85 |
| Current liabilities | 296,940,055.48 | 380,277,548.33 |
| Non-current liabilities | 17,499,435.82 | 15,200,107.32 |
| Total liabilities | 314,439,491.30 | 395,477,655.65 |
| Minority equity | 25,594,815.38 | 11,629,575.78 |
| Owners' equity attributable to parent company | 155,864,746.84 | 146,388,908.42 |
| Share of net assets calculated by the shareholding ratio | 77,932,373.42 | 73,194,454.21 |
| Operating incomes | 725,838,705.34 | 591,397,421.11 |
| Item | Songyuan Food Group Co., Ltd. | |
| Balance at the end of the period/Amount for the current period | Balance at the beginning of the period/Amount for the previous period | |
| Financial expense | 11,721,953.89 | 9,154,340.75 |
| Income tax expenses | 1,417,596.12 | 2,053,722.15 |
| Net profits | 11,790,466.98 | 4,854,788.01 |
| Net profit attributable to the parent company | 10,617,217.15 | 4,260,998.39 |
| Total comprehensive income attributable to the parent company | 10,617,217.15 | 4,260,998.39 |
(3) Major financial information of important associates
| Item | Zhuhai Ronglin Equity Investment Partnership (Limited Partnership) | |
| Balance at the end of the period/Amount for the current period | Balance at the beginning of the period/Amount for the previous period | |
| Current assets | 1,689,835.43 | 34,642,843.34 |
| Including: cash and cash equivalents | 1,689,835.43 | 3,190,763.74 |
| Non-current assets | 7,522,991,256.00 | 2,280,926,600.00 |
| Total assets | 7,524,681,091.43 | 2,315,569,443.34 |
| Current liabilities | 66,000.00 | 89,619.85 |
| Total liabilities | 66,000.00 | 89,619.85 |
| Total net assets to be distributed to investors | 7,524,615,091.43 | 2,315,479,823.49 |
| Share of net assets calculated by the shareholding ratio | 6,867,716,193.95 | 2,113,338,434.90 |
| Overhead Expense | 31,784,084.28 | 1,851,439.25 |
| Financial expense | -4,253.22 | -30,262.74 |
| Net profits attributable to investors | -32,929,388.06 | -1,821,176.51 |
| Other comprehensive income | 5,242,064,656.00 | |
| Total comprehensive income attributable to investors | 5,209,135,267.94 | -1,821,176.51 |
(4) Other information on associated enterprises of the Company
For details, see Note (VII) 14 "Long-term equity investment".(X) Risks associated with financial instrumentsMain financial instruments of the Company include monetary capital, trading financial assets, derivative financialassets, receivables financing, accounts receivable, loans and receivables, buying back the sale of financial assets,debt investments, other debt investments, other equity investments, other financial liabilities (e.g., payables)arising from operation, etc. These financial instruments aimed to provide funds for operation of the Company.
The financial instruments of the Company may lead to the main risks of credit risks, liquidity risks and marketrisks.
1. Classification information of financial instruments
The book values of various financial instruments on the balance sheet date:
(1) Balance at the end of the period
| Item | Classification of financial assets | |||
| Financial assets measured at amortization costs | Financial assets which are measured at their fair values and of which the changes are included into other comprehensive income | Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | Total | |
| 1. Measured by cost or amortized cost | ||||
| Monetary capital | 125,400,715,267.64 | 125,400,715,267.64 | ||
| Accounts receivable | 8,513,334,545.08 | 8,513,334,545.08 | ||
| Other receivables | 159,134,399.10 | 159,134,399.10 | ||
| Non-current assets due within one year (debt investment) | 18,608,350.13 | 18,608,350.13 | ||
| Other current assets [note] | 19,346,895,253.23 | 19,346,895,253.23 | ||
| Disbursement of loans and advances | 14,423,786,409.22 | 14,423,786,409.22 | ||
| Subtotal | 167,862,474,224.40 | 167,862,474,224.40 | ||
| 2. Measured at fair values | ||||
| Trading financial assets | 955,208,583.58 | 955,208,583.58 | ||
| Derivative financial assets | 92,392,625.69 | 92,392,625.69 | ||
| Receivables financing | 28,226,248,997.12 | 28,226,248,997.12 | ||
| Non-current assets due within one year (other debt investments) | 426,789,360.26 | 426,789,360.26 | ||
| Other debt investments | 296,836,282.20 | 296,836,282.20 | ||
| Other equity instrument investments | 4,644,601,697.51 | 4,644,601,697.51 | ||
| Other non-current financial assets | 2,003,483,333.33 | 2,003,483,333.33 | ||
| Subtotal | 33,594,476,337.09 | 3,051,084,542.60 | 36,645,560,879.69 | |
| Total | 167,862,474,224.40 | 33,594,476,337.09 | 3,051,084,542.60 | 204,508,035,104.09 |
(Continued)
| Item | Classification of financial liabilities | ||
| Derivative financial liabilities | Other financial liabilities | Total | |
| 1. Measured by cost or amortized cost | |||
| Short-term borrowing | 15,944,176,463.01 | 15,944,176,463.01 | |
| Deposits from customers and interbank | 352,512,311.72 | 352,512,311.72 | |
| Loans from other banks | 1,000,446,666.67 | 1,000,446,666.67 | |
| Bills payable | 25,285,207,843.86 | 25,285,207,843.86 | |
| Accounts payable | 41,656,815,752.46 | 41,656,815,752.46 | |
| Financial assets sold for repurchase | 2,074,500,000.00 | 2,074,500,000.00 | |
| Other payables | 2,712,692,973.66 | 2,712,692,973.66 | |
| Other current liabilities | 65,181,491,855.14 | 65,181,491,855.14 | |
| Long-term borrowing | 46,885,882.86 | 46,885,882.86 | |
| Subtotal | 154,254,729,749.38 | 154,254,729,749.38 | |
| Total | 154,254,729,749.38 | 154,254,729,749.38 | |
(2) Beginning Balance
| Item | Classification of financial assets | |||
| Financial assets measured at amortization costs | Financial assets which are measured at their fair values and of which the changes are included into other comprehensive income | Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | Total | |
| 1. Measured by cost or amortized cost | ||||
| Monetary capital | 115,022,653,811.67 | 115,022,653,811.67 | ||
| Accounts receivable | 7,642,434,078.24 | 7,642,434,078.24 | ||
| Other receivables | 290,346,336.38 | 290,346,336.38 | ||
| Other current assets [note] | 16,800,521,210.56 | 16,800,521,210.56 | ||
| Disbursement of loans and advances | 9,081,714,083.52 | 9,081,714,083.52 | ||
| Debt investment | 37,216,700.19 | 37,216,700.19 | ||
| Subtotal | 148,874,886,220.56 | 148,874,886,220.56 | ||
| 2. Measured at fair values | ||||
| Trading financial assets | 1,012,470,387.43 | 1,012,470,387.43 | ||
| Derivative financial assets | 170,216,138.92 | 170,216,138.92 | ||
| Receivables financing | 34,300,472,580.13 | 34,300,472,580.13 | ||
| Other debt investments | 1,064,120,569.43 | 1,064,120,569.43 | ||
| Other equity instrument investments | 1,144,907,946.33 | 1,144,907,946.33 | ||
| Subtotal | 36,509,501,095.89 | 1,182,686,526.35 | 37,692,187,622.24 | |
| Total | 148,874,886,220.56 | 36,509,501,095.89 | 1,182,686,526.35 | 186,567,073,842.80 |
(Continued)
| Item | Classification of financial liabilities | ||
| Derivative financial liabilities | Other financial liabilities | Total | |
| 1. Measured by cost or amortized cost | |||
| Short-term borrowing | 22,197,899,406.88 | 22,197,899,406.88 | |
| Deposits from customers and interbank | 319,477,242.91 | 319,477,242.91 | |
| Bills payable | 10,835,428,282.29 | 10,835,428,282.29 | |
| Accounts payable | 38,987,371,471.02 | 38,987,371,471.02 | |
| Other payables | 3,084,011,741.38 | 3,084,011,741.38 | |
| Other current liabilities | 64,890,979,418.62 | 64,890,979,418.62 | |
| Subtotal | 140,315,167,563.10 | 140,315,167,563.10 | |
| 2. Measured at fair values | |||
| Derivative financial liabilities | 257,364,882.07 | 257,364,882.07 | |
| Subtotal | 257,364,882.07 | 257,364,882.07 | |
| Total | 257,364,882.07 | 140,315,167,563.10 | 140,572,532,445.17 |
[Note] The above other current assets did not include prepaid taxes and other items.
2. Credit risks
Credit risks refer to financial losses suffered by one party to the financial instrument due to the other party'sinability to fulfill obligations.The Company will have transactions with recognized customers with a good reputation only. According to thepolicy of the Company, all the customers who require the credit form for transactions shall undergo credit review.Besides, the Company implements continuous monitoring on the balance of accounts receivable to ensure that theCompany is not confronted with the major risk of bad debts.Financial assets of the Company include monetary capital, receivables financing, etc. The credit risks of thesefinancial assets come from nonperformance of the transaction counterparty, and the maximum risk exposure isequal to the carrying amount of these instruments. Trade terms between the Company and customers focus onadvances, banker's acceptance bill or the mode of pay on delivery, assisted by deal on credit.
The monetary capital is deposited in state-owned financial institutions with a higher credit rating, minimizing therisk; the receivables financing is mainly banker's acceptance bills, and the risk exposure is rather small. Thecarrying amount of receivables financing, accounts receivable, prepayments and other receivables in theconsolidated balance sheet is the highest credit risk with which the Company may be confronted. As of the end ofthe report period, the total of the Company's receivables financing, accounts receivable and other receivablesaccounted for 13.04% (which was 16.82% at the beginning of the period) of the total assets, and the Company wasnot confronted with any major credit risk within one year due to the above amounts. For the Company's credit riskexposures arising from the receivables financing, accounts receivable and other receivables, refer to the disclosedinformation in Note (VII) 4 "Receivables", Note (VII) 5 "Receivables financing" and (VII) 7 "Other receivables".
3. Liquidity risks
Liquidity risks refer to risks of fund shortage generated when the enterprise performs the obligation to settleaccounts by cash payment or other financial assets.As indicated by changes in the Company's financial instruments at the beginning and end of the period, theproportion of the Company's "Financial assets" to "Financial liabilities" at the end of the report period was 1.33(which was 1.33 at the beginning of the period). which shows that the Company has adequate liquidity and therisk in shortage of liquidity is low.
4. Market risks
Market risks refer to fluctuation risks of the fair value or future cash flow of financial instrument due to changesin the market price, including exchange rate risk and interest rate risk.
(1) Exchange rate risk
Exchange rate risk refers to the fluctuation risk of the fair value or future cash flow of financial instruments due tochanges in the foreign exchange rate.For presented amounts in RMB converted from foreign currency financial assets and foreign currency financialliabilities held by the Company as of 31 December, 2019, see Note (VII) 64 (1) "Monetary items of foreigncurrencies".The Company will minimize the exchange risk by carrying out the forward exchange transaction business andcontrolling the scale of foreign currency assets and liabilities according to changes in the market exchange rate.
(2) Interest rate risks
Interest rate risk refers to the fluctuation risk of the fair value or future cash flow of financial instruments due tochanges in the market rate of interest.Set out below are the Company's liabilities with interests as of 31 December, 2019:
| Report item | Amount | Interest rate range | Remarks |
| Short-term borrowing | 15,944,176,463.01 | 1.09%-3.18% | Floating interest rate |
| Deposits from customers and interbank | 352,512,311.72 | 0.35%-4.13% | Floating interest rate |
| Loans from other banks | 1,000,446,666.67 | 2.680% | |
| Long-term borrowing | 46,885,882.86 | 6.125% | |
| Total | 17,344,021,324.26 |
(XI) Fair value disclosure
1. Fair values of assets and liabilities at the end of period that are measured at the fair value
| Item | Fair value at the end of period | |||
| Measurement of the fair value at the first layer | Measurement of the fair value at the second layer | Measurement of the fair value at the third layer | Total | |
| I. Continuous fair value measurement | ||||
| (I) Trading financial assets | ||||
| 1. Financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | ||||
| Including: Derivative financial assets | 92,392,625.69 | 92,392,625.69 | ||
| Debt instrument investment | 955,208,583.58 | 955,208,583.58 | ||
| (II) Other debt investments | ||||
| Including: Other debt investments due within one year | 426,789,360.26 | 426,789,360.26 | ||
| Other debt investments | 296,836,282.20 | 296,836,282.20 | ||
| (III) Other equity instrument investments | ||||
| Including: Other equity instrument investments designated as measured at their fair values and of which the changes are recorded into the current profits and losses | 4,644,601,697.51 | 4,644,601,697.51 | ||
| (IV) Receivables financing | ||||
| Including: Notes receivable designated as measured at their fair values and of which the changes are recorded into the current profits and losses | 28,226,248,997.12 | 28,226,248,997.12 | ||
| (V) Other non-current financial assets | ||||
| Including: Debt instrument investments designated as measured at their fair values and of which the changes are recorded into the current profits and losses | 2,003,483,333.33 | 2,003,483,333.33 | ||
| Total of assets measured by fair value continuously | 6,323,435,923.55 | 30,322,124,956.14 | 0 | 36,645,560,879.69 |
2. Basis for determining market prices of items continuously and not continuously measured at thefirst-level fair valueMarket prices of trading financial assets - debt instruments, other debt investment, and other equity instrumentinvestments held by the Company are determined based on the quotation of corresponding products andinvestment projects on the open market.
3. Qualitative and quantitative information on valuation techniques and important parameters adopted byitems continuously and not continuously measured at the second-level fair valueReceivables financing held by the Company is the bank acceptance bills and commercial acceptance bills held bythe Company, and their corresponding transfer and discounted amounts are used as the basis for determining theirmarket prices;Derivative financial assets and other non-current financial assets held by the Company are mainly forwardhedging instruments and trust products with a recovery period of more than one year, and the recoverable amountof the corresponding financial assets is used as the basis for determining the market price.
4. Qualitative and quantitative information on valuation techniques and important parameters adopted byitems continuously and not continuously measured at the third-level fair valueNone.
5. Information on adjustment between the beginning carrying value and the closing carrying value of itemscontinuously measured at the third-level fair value and sensitivity analysis on unobservable parametersNone.
6. For items continuously measured at fair value, in case of any conversion between various levels duringthe period, reasons for the conversion and policies to determine the conversion time should be providedNone.
7. Changes in valuation techniques and reasons for changes occurred during the report periodNone.
8. Particulars on fair value of financial assets and liabilities which are not measured at fair valueNone.(XII) Related party relationships and their transactions
1. Parent company of the Company
| Name | Place of registration | Nature of business | Registered capital (ten thousand Yuan) | Shareholding ratio of parent company to the Company (%) | Percentage of voting rights of parent company to the Company (%) |
| Zhuhai Gree Group Co., Ltd. | Zhuhai | Investment and asset management | 80,000.00 | 18.22 | 18.22 |
[Note] On 2 December, 2019, Zhuhai Gree Group Co., Ltd. (hereinafter referred to as "Gree Group"), the originalmajor shareholder of the Company, signed the Share Transfer Agreement with Zhuhai Mingjun InvestmentPartnership (Limited Partnership) (hereinafter referred to as "Zhuhai Mingjun"), pursuant to which Gree Grouptransferred its 902,359,632 non-restricted circulating shares held in the Company (accounting for 15.00% of theCompany's total equity) to Zhuhai Mingjun. The above equity change was approved by Zhuhai MunicipalPeople's Government and the State-owned Assets Supervision and Administration Commission of ZhuhaiMunicipal People's Government on 13 December, 2019.On 3 February, 2020, the Transfer Registration Confirmation issued by China Securities Depository and ClearingCorporation Limited (CSDC) Shenzhen Branch showed that the share transfer registration procedures werecompleted, the transfer date was 23 January, 2020, and the Company had neither a controlling shareholder nor anactual controller.
2. Subsidiaries of the Company
For details, see Note (IX) 1 "Company's equities in subsidiaries".
3. Cooperative enterprises and associated enterprises of the Company
For important joint ventures and associates of the Company, see the Note (IX) 3.
4. Other related parties
| Name of other related parties | Relationships of other related parties with the Company |
| Subsidiaries and holding companies of Zhuhai Gree Group Co., Ltd. | Subsidiaries and holding subsidiaries of the Company's parent company |
| Shandong Jierui Logistics Co., Ltd. | Companies where supervisors of the Company act as executive directors and general managers |
| Shandong Zhirun Electric Appliances Co., Ltd. | Companies where supervisors of the Company act as executive directors |
| Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Companies where supervisors of the Company act as managers |
| Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | Companies and their subsidiaries and holding subsidiaries where the chairman of the Company serves as a director |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Companies where directors of the Company act as executive directors and general managers |
| Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its holding companies | Companies where the Company's director holds equity and serves as the board chairman |
| Name of other related parties | Relationships of other related parties with the Company |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Companies where directors of the Company act as executive directors |
| Shanghai Highly (Group) Co., Ltd. And its subsidiaries and holding subsidiaries | The company in which the Company holds more than 5.00% of its shares |
| Shandong Red April Brand Management Co., Ltd. | Companies where supervisors of the Company act as executive directors and general managers |
| Zhuhai Xima Pearl New Media Co., Ltd. | Companies where board chairman of the Company act as director |
| Wuhu Green Renewable Resources Recycling Co., Ltd. | A company upon which the Company has great influence |
| Hunan Green Renewable Resources Recycling Co., Ltd. | A company upon which the Company has great influence |
| Zhengzhou Gerun Waste Materials Recycling Co., Ltd. | A company upon which the Company has great influence |
| Hebei Jinghai Guaranteed Investment Co., Ltd. | Companies holding more than 5.00% of the Company's shares |
| Wingtech Technology Co., Ltd. and its holding company | Companies and their holding companies where the Company holds more than 5.00% shares |
| Hefei Zhongwen Jintai Semiconductor Investment Co., Ltd. and its holding company | Companies and their holding companies where the Company holds more than 5.00% shares |
| Nexperia Holding B.V. and its holding company | Companies and their holding companies where the Company holds more than 5.00% shares |
| Songyuan Grain Group Co., Ltd. and its subsidiaries | The Company's joint ventures and their subsidiaries |
5. Transaction of related party
(1) Related-party transactions for the purchase and sales of goods and the rendering and receipt of services
1) Purchase of commodities/receiving of services
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period |
| Zhuhai Gree Group Co., Ltd. and its holding companies | Deposit-taking | Interest expense | 32,813.02 | 74,512.17 |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Deposit-taking | Interest expense | 26,350.32 | 17,895.57 |
| Shandong Jierui Logistics Co., Ltd. | Deposit-taking | Interest expense | 1,624.60 | |
| Songyuan Grain Group Co., Ltd. and its subsidiaries | Deposit-taking | Interest expense | 1,484.15 | 2,642.70 |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Deposit-taking | Interest expense | 1,290.45 | 23.04 |
| Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Deposit-taking | Interest expense | 185.25 | |
| Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its holding companies | Deposit-taking | Interest expense | 102.16 | |
| Shandong Zhirun Electric Appliances Co., Ltd. | Deposit-taking | Interest expense | 89.21 | |
| Shanghai Highly (Group) Co., Ltd. and its holding subsidiaries | Materials procurement | Raw material | 2,169,555,677.45 | 2,993,992,800.28 |
| Beijing Gree Technology Co., Ltd. | Materials procurement | Fittings | 164,958,551.96 | 207,842,266.39 |
| Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding companies [Note] | Purchase of fixed assets and materials | New energy vehicles and energy storage equipment | 72,389,092.82 | 272,497,276.03 |
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period |
| Chongqing Pargo Mechanical Equipment Co., Ltd. | Materials procurement | Fittings | 18,138,184.74 | 20,205,725.08 |
| Songyuan Grain Group Co., Ltd. and its subsidiaries | Materials procurement | Foodstuff | 8,097,519.11 | 14,702,362.59 |
| Liaowang All Media Communication Co., Ltd. | Service sourcing | Publicity and advertising fee | 4,758,867.94 | 2,740,000.00 |
| Zhuhai Gree Group Co., Ltd. and its holding companies | Materials procurement | Accessories and infrastructure projects | 503,256.74 | 4,759,707.05 |
| Wuhu Green Renewable Resources Recycling Co., Ltd. | Materials procurement | Raw material | 10,788,213.00 | 48,731,243.30 |
| Gree Volinco (Hong Kong) Ltd. | Materials procurement | Fittings | 7,474,336.68 | |
| Hunan Green Renewable Resources Recycling Co., Ltd. | Materials procurement | Raw material | 846,184.00 | 4,239,061.82 |
| Zhengzhou Gerun Waste Materials Recycling Co., Ltd. | Materials procurement | Raw material | 60,307.28 | |
| Total | 2,450,099,486.92 | 3,577,340,159.98 |
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
2) Sales of commodities/rendering of services
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Loan | Interest revenue | 54,947,437.57 | |
| Shandong Jierui Logistics Co., Ltd. | Loan | Interest revenue | 24,460,821.26 | |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Loan | Interest revenue | 9,588,766.71 | 14,044,778.08 |
| Songyuan Grain Group Co., Ltd. and its subsidiaries | Loan | Interest revenue | 7,658,695.92 | 6,449,630.77 |
| Shandong Zhirun Electric Appliances Co., Ltd. | Loan | Interest revenue | 3,679,077.57 | |
| Zhuhai Gree Group Co., Ltd. and its holding companies | Loan | Handling charge income | 801,650.95 | |
| Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Loan | Handling charge income | 339,622.64 | |
| Shandong Jierui Logistics Co., Ltd. | Loan | Handling charge income | 378.30 | |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Loan | Handling charge income | 189.15 | |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Loan | Handling charge income | 189.15 | |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | Sales of commodities | Sales revenue | 8,719,678,107.95 | 10,496,359,735.24 |
| Shandong Shengshi Xinxing Gree Trading Co., Ltd. | Sales of commodities | Sales revenue | 4,935,412,388.65 | |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | Sales of commodities | Sales revenue | 5,202,670,390.20 | 6,698,292,374.49 |
| Shanghai Highly (Group) Co., Ltd. and its subsidiaries | Sales of commodities | Sales revenue | 1,487,554,791.81 | 1,722,755,847.66 |
| Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries [Note] | Sales of commodities | Sales revenue | 321,087,832.12 | 2,654,821,257.97 |
| Beijing Gree Technology Co., Ltd. | Sales of commodities | Sales revenue | 79,181,522.51 | 97,653,467.06 |
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period |
| Zhuhai Gree Group Co., Ltd. and its holding companies | Sales of commodities | Sales revenue | 102,866.04 | 151,708.62 |
| Shandong Red April Brand Management Co., Ltd. | Sales of commodities | Sales revenue | 102,226.24 | |
| Zhuhai Xima Pearl New Media Co., Ltd. | Sales of commodities | Sales revenue | 75,195.22 | 169,483.08 |
| Gree Volinco (Hong Kong) Ltd. | Sales of commodities | Sales revenue | 3,637,231,905.31 | |
| Wuhu Green Renewable Resources Recycling Co., Ltd. | Sales of commodities | Sales revenue | 3,620,606.44 | 7,509,231.01 |
| Total | 20,850,962,756.40 | 25,335,439,419.29 |
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
(2) Associated trusteeship management/contracting or entrusted management/contracting-outNone.
(3) Associated lease
1) The Company as the lessor:
| Name of the lessee | Type of leased assets | Confirmed income earned on leases | |
| Amount for the current period | Amount for the previous period | ||
| Beijing Gree Technology Co., Ltd. | House rental | 6,113.20 | |
| Wuhu Green Renewable Resources Recycling Co., Ltd. | House rental | 621,678.57 | 1,492,028.57 |
| Songyuan Grain Group Co., Ltd. and its subsidiaries | House rental | 98,297.13 | 98,297.13 |
| Chongqing Pargo Mechanical Equipment Co., Ltd. | House rental | 4,402.87 | |
| Total | 724,378.57 | 1,596,438.90 | |
2) The Company as the lessee:
| Name of the lessor | Type of leased assets | Confirmed rental expenditure | |
| Amount for the current period | Amount for the previous period | ||
| Zhuhai Gree Group Co., Ltd. and its subsidiaries | Lease of fixed assets | 1,561,299.20 | 1,480,384.20 |
| Total | 1,561,299.20 | 1,480,384.20 | |
(4) Associated guarantee
None.
(5) Fund borrowing of related party
| Related party | Amount of borrowing in | Balance of | Start date | Date due | Description |
| the current period | borrowing at the end of the period | ||||
| Songyuan Grain Group Co., Ltd. and its subsidiaries | 1,100,000,000.00 | 1,100,000,000.00 | 16 - 30 December, 2019 | 16 - 30 December, 2020 | |
| Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 890,000,000.00 | 890,000,000.00 | 31 October, 2019 | 31 October, 2022 | Buyer's credit |
| Henan Shengshi Xinxing Gree Trading Co., Ltd. | 1,400,000,000.00 | 1,400,000,000.00 | 22 February, 2019 | 22 February, 2021 | Buyer's credit |
| Shandong Jierui Logistics Co., Ltd. | 217,400,000.00 | 517,400,000.00 | 29 September, 2017 to 26 December, 2019 | 29 September, 2020 to 14 January, 2021 | Buyer's credit |
| Shandong Zhirun Electric Appliances Co., Ltd. | 80,000,000.00 | 9 -11 February, 2018 | 9 -11 February, 2020 | Buyer's credit | |
| Total | 3,607,400,000.00 | 3,987,400,000.00 |
(6) Asset transfer and debt restructuring of the related party
None.
(7) Remunerations for key management
| Item | Amount for the current period | Amount for the previous period |
| Remunerations for key management | 23,636,286.12 | 30,237,000.00 |
6. Balance of accounts receivable and payable by related parties
(1) Receivable items
| Item | Related party | Balance at the end of the period | Beginning Balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Shanghai Highly (Group) Co., Ltd. and its holding subsidiaries | 342,684,906.60 | 17,134,245.33 | 421,763,035.60 | 21,088,151.79 |
| Accounts receivable | Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | 287,055,620.42 | 16,308,943.33 | 634,540,607.16 | 31,720,763.35 |
| Accounts receivable | Zhuhai Xima Pearl New Media Co., Ltd. | 61,437.00 | 3,071.85 | ||
| Accounts receivable | Zhuhai Gree Group Co., Ltd. and its subsidiaries | 522,694.59 | 26,134.73 | ||
| Accounts receivable | Gree Volinco (Hong Kong) Ltd. | 112,395,330.32 | 5,619,766.52 | ||
| Accounts receivable | Wuhu Green Renewable Resources Recycling Co., Ltd. | 6,629,024.73 | 331,451.24 | 48,383,305.89 | 2,419,165.29 |
| Other receivables | Wuhu Green Renewable Resources Recycling Co., Ltd. | 1,696,192.13 | 405,141.73 | ||
| Other receivables | Zhuhai Gree Group Co., Ltd. and its holding companies | 44,880.00 | 2,244.00 | ||
| Item | Related party | Balance at the end of the period | Beginning Balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Other receivables | Hunan Green Renewable Resources Recycling Co., Ltd. | 6,445.00 | 6,445.00 | ||
| Receivables financing | Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | 866,644,774.28 | 858,789,559.36 | ||
| Receivables financing | Shandong Shengshi Xinxing Gree Trading Co., Ltd. | 1,445,558,820.62 | |||
| Receivables financing | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 1,378,451,569.12 | 1,745,561,383.18 | ||
| Receivables financing | Shandong Jierui Logistics Co., Ltd. | 958,492,633.76 | |||
| Receivables financing | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 962,599,288.80 | 829,454,801.96 | ||
| Receivables financing | Shanghai Highly (Group) Co., Ltd. and its subsidiaries | 209,149,853.41 | 401,435,410.08 | ||
| Receivables financing | Shandong Red April Brand Management Co., Ltd. | 29,922,971.83 | |||
| Prepayment | Hunan Green Renewable Resources Recycling Co., Ltd. | 5,353,115.18 | |||
| Prepayment | Beijing Gree Technology Co., Ltd. | 2,921,904.70 | |||
| Prepayment | Songyuan Food Group Co., Ltd. | 729,649.40 | |||
| Prepayment | Chongqing Pargo Mechanical Equipment Co., Ltd. | 982,237.44 | 535,370.77 | ||
| Prepayment | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 253,888.42 | |||
| Prepayment | Shanghai Highly (Group) Co., Ltd. and its subsidiaries | 2,038,333.25 | 31,743.96 | ||
| Disbursement of loans and advances | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 1,400,000,000.00 | 35,000,000.00 | ||
| Disbursement of loans and advances | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 890,000,000.00 | 22,250,000.00 | 668,100,000.00 | 16,702,500.00 |
| Disbursement of loans and advances | Shandong Jierui Logistics Co., Ltd. | 517,400,000.00 | 12,935,000.00 | ||
| Disbursement of loans and advances | Songyuan Food Group Co., Ltd. | 1,100,000,000.00 | 27,500,000.00 | 290,000,000.00 | 7,250,000.00 |
| Disbursement of loans and advances | Shandong Zhirun Electric Appliances Co., Ltd. | 80,000,000.00 | 2,000,000.00 | ||
| Loans and advances - accrued interest | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 2,046,916.67 | |||
| Loans and advances - accrued interest | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 1,376,038.89 | 747,132.22 | ||
| Loans and advances - accrued interest | Shandong Jierui Logistics Co., Ltd. | 725,263.89 | |||
| Loans and advances - accrued interest | Shandong Zhirun Electric Appliances Co., Ltd. | 117,528.89 | |||
| Loans and advances - accrued interest | Songyuan Food Group Co., Ltd. | 81,079.17 | 424,004.16 | ||
| Other current assets | Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | 802,418,995.36 | 1,529,380,653.66 | ||
| Other non-current assets | Chongqing Pargo Mechanical Equipment Co., Ltd. | 281,863.41 | 7,483,832.15 | ||
| Other non-current assets | Zhuhai Gree Group Co., Ltd. and its holding companies | 150,355.40 | |||
| Total | 11,285,241,852.13 | 133,488,846.48 | 7,560,182,600.70 | 85,214,177.68 | |
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
(2) Due to related parties
| Item | Related party | Balance at the end of the period | Beginning Balance |
| Advances from customers | Shandong Shengshi Xinxing Gree Trading Co., Ltd. | 1,195,005,559.21 | |
| Advances from customers | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 403,079,407.15 | 106,201,641.67 |
| Advances from customers | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 129,447,292.74 | 2,311,588,189.76 |
| Advances from customers | Shandong Red April Brand Management Co., Ltd. | 985,644.12 | |
| Advances from customers | Shanghai Highly (Group) Co., Ltd. and its holding subsidiaries | 142,950.74 | |
| Advances from customers | Zhuhai Gree Group Co., Ltd. and its subsidiaries | 1,114,913.66 | |
| Deposit-taking | Songyuan Food Group Co., Ltd. | 50,021,372.44 | 21,054.93 |
| Deposit-taking | Zhuhai Gree Group Co., Ltd. and its subsidiaries | 9,208,139.00 | 18,141,031.67 |
| Deposit-taking | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 50,347.95 | 4,179,456.47 |
| Deposit-taking | Shandong Shengshi Xinxing Gree Trading Co., Ltd. | 49,087.42 | |
| Deposit-taking | Shandong Jierui Logistics Co., Ltd. | 13,324.91 | |
| Deposit-taking | Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its holding companies | 29,714.68 | |
| Deposit-taking | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 7,691.24 | 6,601.40 |
| Deposit-taking | Shandong Zhirun Electric Appliances Co., Ltd. | 196.01 | |
| Deposits from customers - Accrued interest | Zhuhai Gree Group Co., Ltd. and its holding companies | 1,522.01 | 16,763.75 |
| Deposits from customers - Accrued interest | Songyuan Grain Group Co., Ltd. and its subsidiaries | 1,168.95 | 2.25 |
| Deposits from customers - Accrued interest | Shandong Jierui Logistics Co., Ltd. | 914.35 | |
| Deposits from customers - Accrued interest | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 5.38 | 899.90 |
| Deposits from customers - Accrued interest | Shandong Shengshi Xinxing Gree Trading Co., Ltd. | 5.25 | |
| Deposits from customers - Accrued interest | Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its holding companies | 3.18 | |
| Deposits from customers - Accrued interest | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 0.82 | 0.71 |
| Deposits from customers - Accrued interest | Shandong Zhirun Electric Appliances Co., Ltd. | 0.02 | |
| Accounts payable | Shanghai Highly (Group) Co., Ltd. and its subsidiaries | 445,278,880.37 | 351,971,296.27 |
| Accounts payable | Zhuhai Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries | 59,560,969.05 | 51,162,882.95 |
| Accounts payable | Beijing Gree Technology Co., Ltd. | 20,290,119.30 | 26,985,029.06 |
| Accounts payable | Hunan Green Renewable Resources Recycling Co., Ltd. | 4,111,822.34 | |
| Accounts payable | Wuhu Green Renewable Resources Recycling Co., Ltd. | 4,011,812.79 | 40,520,264.86 |
| Accounts payable | Chongqing Pargo Mechanical Equipment Co., Ltd. | 3,885,008.94 | 962,213.46 |
| Item | Related party | Balance at the end of the period | Beginning Balance |
| Accounts payable | Zhuhai Gree Group Co., Ltd. and its subsidiaries | 769,880.13 | 476,161.05 |
| Accounts payable | Songyuan Grain Group Co., Ltd. and its subsidiaries | 722,696.60 | 518,030.00 |
| Accounts payable | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 249,988.68 | |
| Other payables | Shanghai Highly (Group) Co., Ltd. and its subsidiaries | 30,293.52 | 14,443.52 |
| Other payables | Beijing Gree Technology Co., Ltd. | 5,402.42 | 5,402.42 |
| Other payables | Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. and its holding companies | 204.24 | |
| Other payables | Zhuhai Gree Group Co., Ltd. and its subsidiaries | 5,411.63 | 35,411.63 |
| Other payables | Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. | 300,000.00 | |
| Other payables | Henan Shengshi Xinxing Gree Trading Co., Ltd. | 100,000.00 | |
| Total | 2,326,966,837.58 | 2,914,321,691.39 |
[Note] The related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd.and its subsidiaries and holding subsidiaries are detailed in Note (XII) 8.
7. Related party's commitment
None.
8. Related transactions and current amounts between the Company and Yinlong New Energy Co., Ltd. and its subsidiaries and holding subsidiaries
(1) Purchase of commodities/receiving of services and payables and prepayments
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period | Balance at the end of the period | Beginning Balance |
| Other non-current assets (+)/accounts payable (-) | Other non-current assets (+)/accounts payable (-) | |||||
| Zhuhai Guangtong Automobile Co., Ltd. | Purchase of fixed assets and materials | New energy vehicles and energy storage equipment | 54,076,060.52 | 271,844,689.83 | -55,832,870.55 | -51,506,908.59 |
| Zhuhai Yinlong Electric Appliance Co., Ltd. | Materials procurement | New energy vehicles and energy storage equipment | 1,931,623.93 | 44,827.58 | -218,273.50 | -763,974.36 |
| Zhuhai Yinlong New Energy Co., Ltd. | Purchase of fixed assets and materials | New energy vehicles and energy storage equipment | 4,677,568.56 | 607,758.62 | -2,946,841.40 | 1,108,000.00 |
| Shijiazhuang Zhongbo Automobile Co., Ltd. | Purchase of fixed assets and materials | New energy vehicles and energy storage equipment | 7,434,867.09 | |||
| Tianjin Guangtong Automobile Co., Ltd. | Materials procurement | New energy vehicles and energy storage equipment | 2,175,159.89 | -25,677.08 | ||
| Tianjin Yinlong New Energy Co., Ltd. | Materials procurement | New energy vehicles and energy storage equipment | 622,066.91 | -288.00 | ||
| Chengdu Yinlong New Energy Co., Ltd. | Materials procurement | New energy vehicles and energy storage equipment | 253,529.85 | -286,488.73 | ||
| Hebei Yinlong New Energy Co., Ltd. | Fixed assets purchase | New energy vehicles and energy storage equipment | 300,000.00 | |||
| Chengdu Guangtong Automobile Co., Ltd. | Materials procurement | New energy vehicles and energy storage equipment | 1,218,216.07 | -550,529.79 | ||
| Total | 72,389,092.82 | 272,497,276.03 | -59,560,969.05 | -51,162,882.95 |
(2) Sales of commodities/rendering of services and receivables and advances from customers
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period | Balance at the end of the period | Beginning Balance | ||
| Accounts receivable (+)/advances from customers (-) | Receivables financing / other current assets | Accounts receivable (+)/advances from customers (-) | Receivables financing / other current assets | |||||
| Hebei Yinlong New Energy Co., Ltd. | Sales of commodities | Intelligent equipment | 12,771,027.31 | 148,377,977.28 | -8,363,164.52 | 648,985,142.03 | 11,514,400.00 | |
| Altairnano Inc. | Sales of commodities | Intelligent equipment | 100,000.00 | 0 | 100,000.00 | |||
| Chengdu Guangtong Automobile Co., Ltd. | Sales of commodities | Intelligent equipment | 5,399,830.77 | 112,147,926.28 | -779,170.51 | 0 | ||
| Tianjin Guangtong Automobile Co., Ltd. | Sales of commodities | Intelligent equipment | 54,796,039.36 | 102,925,737.93 | -728,658.77 | 0 | ||
| Chengdu Yinlong New Energy Co., Ltd. | Sales of commodities | Intelligent equipment | 23,795,711.05 | 1,149,343,163.12 | 0 | |||
| Zhuhai Yinlong New Energy Co., Ltd. | Sales of commodities | Intelligent equipment | 6,541,792.14 | 10,708,858.59 | 135,400,789.99 | 802,418,995.36 | 6,236,300.00 | 2,367,244,012.90 |
| Handan Branch of Zhuhai Guangtong Automobile Co., Ltd. | Sales of commodities | Intelligent equipment | 9,188,838.46 | 0 | 100,000.00 | |||
| Tianjin Yinlong New Energy Co., Ltd. | Sales of commodities | Intelligent equipment | 126,713,067.31 | 1,068,362,238.89 | 0 | 616,596,420.49 | ||
| Zhuhai Guangtong Automobile Co., Ltd. | Sales of commodities | Intelligent equipment | 36,972.48 | 723,853.08 | 67,893,830.24 | -6,513.33 | 2,313,736.00 | |
| Zhuhai Yinlong Electric Appliance Co., Ltd. | Sales of commodities | Intelligent equipment | 6,932,279.71 | -6,924,346.16 | 0 | 14,393,228.32 | ||
| Shijiazhuang Zhongbo Automobile Co., Ltd. | Sales of commodities | Intelligent equipment | 85,627,235.11 | 3,376.07 | 149,765,802.01 | 29,919.00 | ||
| Zhuhai Yinlong New Energy Co., Ltd. | Sales of commodities | Bus air conditioners | 5,406,156.59 | 168,300,170.39 | ||||
| Related party | Type of related transactions | Contents of related transactions | Amount for the current period | Amount for the previous period | Balance at the end of the period | Beginning Balance | ||
| Accounts receivable (+)/advances from customers (-) | Receivables financing / other current assets | Accounts receivable (+)/advances from customers (-) | Receivables financing / other current assets | |||||
| Zhuhai Guangtong Automobile Co., Ltd. | Sales of commodities | Bus air conditioners | 10,258,290.60 | 4,189,316.80 | ||||
| Tianjin Guangtong Automobile Co., Ltd. | Sales of commodities | Bus air conditioners | 12,335,897.44 | 0 | ||||
| Chengdu Guangtong Automobile Co., Ltd. | Sales of commodities | Bus air conditioners | 6,167,521.37 | 0 | ||||
| Handan Branch of Zhuhai Guangtong Automobile Co., Ltd. | Sales of commodities | Bus air conditioners | 17,345,299.15 | 50,000.00 | 0 | |||
| Total | 321,087,832.12 | 2,654,821,257.97 | 287,055,620.42 | 1,669,063,769.64 | 634,540,607.16 | 2,388,170,213.02 | ||
(XIII) Share-based paymentsNone.(XIV) Commitments and contingencies
1. Important commitments
None.
2. Contingencies
There were no important contingent issues that need to be disclosed as at 31 December, 2019
3. Others
None.(XV) Events after the balance sheet date
1. Important non-adjustment matters
After the balance sheet date, the Company's actual controller has undergone a major change. For details, see (XII)1.
2. Profit distribution
According to the resolution of the eleventh meeting of the eleventh session of board of directors, the Company'sprofit distribution preplan of 2019: Calculated by the total stock capital of the Company equivalent to6,015,730,878 shares, all shareholders will be distributed a cash of RMB 12 (tax included) per 10 shares, with thetotal amount of cashes to be distributed in such a way up to RMB 7,218,877,053.60 and the balance to be carriedforward to the future year. This distribution preplan still needs to be approved by the general meeting ofshareholders.
3. Sales return
No important sales return occurred after the balance sheet date.
4. Other events after the balance sheet date
(1) The impact of COVID-19 on the Company
The Company's main operations are mainly research and development, production and sales of household airconditioners and HVAC equipment. In the first quarter of 2020, the Company's revenue and profit decreasedsignificantly over the same period of last year, mainly because the terminal market sales and installation activitiesof the air-conditioning industry could hardly be carried out and the Company and upstream and downstreamenterprises could not resume work and production in time due to COVID-19; In the first quarter, due to the
shrinking terminal consumer demand of the air-conditioning industry and the expected impact of theimplementation of new energy efficiency standards, the industry competition was further intensified, and theCompany continued to implement active promotional policies.
(2) Repayment after the disbursement of loans and advances
As described in Note (VII) 11 Disbursement of loans and advances, in order to promote the win-win developmentof the industrial chain and strengthens financial credit support for member units and upstream and downstreamenterprises, the Company fully exerted its own funds and improved its capital income. In the current period, theCompany increased foreign loans and advances. The balance of loans and advances - loans at the end of the periodwas RMB 14,723,530,000.00. As of the disclosure date of this report, the corresponding loan repayments werenormal, and the cumulative repayment amount was RMB 4,622,620,000.00.(XVI) Other important events
1. Correction of early errors in accounting
The Company had no important correction of early errors in accounting in the current period.
2. Debt restructuring
The Company had no debt restructuring in the current period.
3. Asset replacement
The Company had no asset replacement in the current period.
4. Pension plan
The Company had no pension plan in the current period.
5. Discontinued operation
| Item | Revenue | Expense | Total profit | Income tax expenses | Net profits | Profit from discontinued operation attributable to owners of parent company |
| Gree (USA) Sales Co., Ltd. | 282,858.16 | -282,858.16 | 235,155.34 | -518,013.50 | -518,013.50 |
(Continued)
| Item | Net cash flows from operating activities | Net cash flows from investment activities | Net cash flows from financing activities |
| Gree (USA) Sales Co., Ltd. | -120,896,763.07 |
6. Other important events affecting investor decisions
The Company's first extraordinary general meeting of shareholders in 2020 considered and approved the
"Proposal on Debt Financing Instruments to be Registered and Issued", and agreed that the Company registersdebt financing instruments with a total amount not exceeding RMB 18 billion (inclusive), of which theultra-short-term financing bonds to be registered do not exceed RMB 10 billion (inclusive), the short-termfinancing bonds to be registered do not exceed RMB 3 billion (inclusive), and the medium-term notes to beregistered do not exceed RMB 5 billion (inclusive).The China Interbank Market Dealers Association held the 37th registration meeting in 2020 on 7 April, 2020,agreed to accept the registration of the Company's ultra-short-term financing bonds, short-term financing bondsand medium-term bills, and issued the Registration Acceptance Notice for them respectivelyAccording to the Company's capital plan arrangement and the inter-bank market situation, during 15-16 April,2020, the Company issued the first phase of ultra-short-term financing bonds for 2020, and the total actualissuance amount was RMB 3 billion.(XVII) Notes to main items of financial statements of the parent company
1. Accounts receivable
(1) Disclosure by account age
| Aging | Balance at the end of the period |
| Within 1 year | 3,779,915,115.11 |
| 1 to 2 years | 311,703,479.94 |
| 2 to 3 years | 3,451,107.21 |
| Over 3 years | 15,325,449.45 |
| Subtotal | 4,110,395,151.71 |
| Less: Bad debt provisions | 237,124,630.38 |
| Total | 3,873,270,521.33 |
(2) Presentation by accruing method for bad debt provisions
| Category | Balance at the end of the period | ||||
| Book balance | Bad debt provision | Carrying amount | |||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | ||
| Accounts receivable with bad debt provisions accrued separately | 4,715,115.32 | 0.11 | 4,715,115.32 | 100.00 | |
| Accounts receivable with bad debt provisions accrued according to the combination | 4,105,680,036.39 | 99.89 | 232,409,515.06 | 5.66 | 3,873,270,521.33 |
| Including: Combination 1: Account age combination | 3,480,423,548.05 | 84.68 | 232,409,515.06 | 6.68 | 3,248,014,032.99 |
| Combination 2: None risk combination | 625,256,488.34 | 15.21 | 625,256,488.34 | ||
| Total | 4,110,395,151.71 | 100.00 | 237,124,630.38 | 5.77 | 3,873,270,521.33 |
(Continued)
| Category | Beginning Balance | ||||
| Book balance | Bad debt provision | Carrying amount | |||
| Amount | Percentage (%) | Amount | Accruing percentage (%) | ||
| Accounts receivable with bad debt provisions accrued separately | 4,715,115.32 | 0.18 | 4,715,115.32 | 100.00 | |
| Accounts receivable with bad debt provisions accrued according to the combination | 2,645,849,978.73 | 99.82 | 114,678,116.93 | 4.33 | 2,531,171,861.80 |
| Including: Combination 1: Account age combination | 2,120,670,464.91 | 80.01 | 114,678,116.93 | 5.41 | 2,005,992,347.98 |
| Combination 2: None risk combination | 525,179,513.82 | 19.81 | 525,179,513.82 | ||
| Total | 2,650,565,094.05 | 100.00 | 119,393,232.25 | 4.50 | 2,531,171,861.80 |
3) Accounts receivable with bad debt provisions accrued separately at the end of the period
| Accounts receivable | Balance at the end of the period | |||
| Book balance | Bad debt provision | Percentage of appropriation (%) | Reason for appropriation | |
| Entity 1 | 4,715,115.32 | 4,715,115.32 | 100.00 | Expected to be difficult to recover |
| Total | 4,715,115.32 | 4,715,115.32 | 100.00 | |
4) In the combination, the accounts receivable of which bad debt provisions are appropriated according to theaccount age combination
| Item | Balance at the end of the period | ||
| Book balance | Bad debt provision | Percentage of appropriation (%) | |
| Within 1 year | 3,154,658,626.77 | 157,732,931.33 | 5.00 |
| 1 to 2 years | 311,703,479.94 | 62,340,695.99 | 20.00 |
| 2 to 3 years | 3,451,107.21 | 1,725,553.61 | 50.00 |
| Over 3 years | 10,610,334.13 | 10,610,334.13 | 100.00 |
| Total | 3,480,423,548.05 | 232,409,515.06 | 6.68 |
[Note] Please refer to Note (V) 10 for the basis for determining the combination.
(3) Particulars on bad debt provisions
| Category | Beginning Balance | Change of the current period | Balance at the end of the period | |||
| Appropriation | Recovered or reversed | Resold or wrote-off | Other changes | |||
| Aging combination | 114,678,116.93 | 117,731,822.52 | 424.39 | 232,409,515.06 | ||
| Accrued separately | 4,715,115.32 | 4,715,115.32 | ||||
| Total | 119,393,232.25 | 117,731,822.52 | 424.39 | 237,124,630.38 | ||
(4) Particulars on accounts receivable actually wrote-off in the current period
| Item | Wrote-off amount |
| Accounts receivable actually wrote-off | 424.39 |
(5) Accounts receivable of top 5 debtors in the balance at the end of the period collected by the debtor
| Name of entity | Balance at the end of the period of accounts receivable | Percentage (%) in the total balance at the end of the period of accounts receivable | Balance of provision for bad debts at the end of the period |
| First | 1,188,138,220.65 | 28.91 | 59,406,911.03 |
| Second | 657,104,394.32 | 15.99 | |
| Third | 236,979,286.32 | 5.77 | 11,848,964.32 |
| Fourth | 168,300,170.39 | 4.09 | 8,415,008.52 |
| Fifth | 159,713,662.98 | 3.89 | 7,985,683.15 |
| Total | 2,410,235,734.66 | 58.65 | 87,656,567.02 |
(6) Accounts receivable derecognized due to the transfer of financial assetsNone.
(7) Assets and liabilities formed due to the transfer and continuous involvement of accounts receivable
None.
2. Other receivables
| Item | Balance at the end of the period | Beginning Balance |
| Other receivables | 2,757,398,837.97 | 2,176,997,136.30 |
| Total | 2,757,398,837.97 | 2,176,997,136.30 |
(1) Other receivables disclosed by account age
| Aging | Balance at the end of the period |
| Within 1 year | 2,760,720,897.41 |
| 1 to 2 years | 1,674,356.45 |
| 2 to 3 years | 439,895.78 |
| Over 3 years | 1,343,631.22 |
| Subtotal | 2,764,178,780.86 |
| Less: Bad debt provisions | 6,779,942.89 |
| Total | 2,757,398,837.97 |
(2) Other receivables disclosed by amount nature
| Nature of money | Book balance at the end of the period | Book balance at the beginning of the period |
| Intercourse funds and risk-free money | 2,764,178,780.86 | 2,185,094,406.40 |
| Less: Bad debt provisions | 6,779,942.89 | 8,097,270.10 |
| Total | 2,757,398,837.97 | 2,176,997,136.30 |
(3) Particulars on accruing of other receivables
| Bad debt provision | Phase 1 | Phase 2 | Phase 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment occurred) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance as at 1 January, 2019 | 6,744,256.13 | 1,353,013.97 | 8,097,270.10 | |
| Balance as at 1 January, 2019 in the current period | ||||
| Appropriation for the current period | 545,436.43 | 545,436.43 | ||
| Reserved in the current period | 1,862,763.64 | 1,862,763.64 | ||
| Balance as at 31 December, 2019 | 4,881,492.49 | 1,898,450.40 | 6,779,942.89 |
(4) Particulars on accruing of other receivables in the current period
| Category | Beginning Balance | Change of the current period | Balance at the end of the period | |||
| Appropriation | Recovered or reversed | Resold or wrote-off | Other changes | |||
| Aging combination | 8,097,270.10 | 545,436.43 | 1,862,763.64 | 6,779,942.89 | ||
| Total | 8,097,270.10 | 545,436.43 | 1,862,763.64 | 6,779,942.89 | ||
(5) Particulars on other receivables actually wrote-off in the current periodNone.
(6) Other receivables of top 5 debtors in the balance at the end of the period collected by the debtor
| Name of entity | Nature of money | Balance at the end of the period | Aging | Proportion to the total balance of other receivables at the end of the | Balance of provision for bad debts at the end of the |
| period (%) | period | ||||
| First | Risk-free money | 1,285,473,348.47 | Within 1 year | 46.50 | |
| Second | Risk-free money | 1,089,817,314.64 | Within 1 year | 39.43 | |
| Third | Risk-free money | 196,497,262.94 | Within 1 year | 7.11 | |
| Fourth | Risk-free money | 45,000,000.00 | Within 1 year | 1.63 | |
| Fifth | Risk-free money | 14,176,715.32 | Within 1 year | 0.51 | |
| Total | 2,630,964,641.37 | 95.18 |
(7) Receivables involving government subsidies
None.
(8) Other receivables derecognized due to the transfer of financial assets
None.
3. Long-term equity investment
| Item | Balance at the end of the period | Beginning Balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investment in subsidiaries | 13,160,012,796.05 | 13,160,012,796.05 | 10,288,212,796.05 | 10,288,212,796.05 | ||
| Investment in associated and contractual enterprises | 7,066,126,170.64 | 1,940,009.35 | 7,064,186,161.29 | 2,252,672,471.06 | 1,940,009.35 | 2,250,732,461.71 |
| Total | 20,226,138,966.69 | 1,940,009.35 | 20,224,198,957.34 | 12,540,885,267.11 | 1,940,009.35 | 12,538,945,257.76 |
(1) Investment in subsidiaries
| Name of invested entities | Opening balance (book value) | Increase/Decrease in the current period | Closing balance (book value) | Balance of provision for impairment at the end of the period | |||
| Additional investment | Disinvestment | Appropriated provision for impairment | Others | ||||
| Gree (Brazil) Electric Appliances Co., Ltd. | 659,342,914.36 | 659,342,914.36 | |||||
| Gree (Chongqing) Electric Appliances Co., Ltd. | 223,100,000.00 | 223,100,000.00 | |||||
| Shanghai GREE Air Conditioners Sales Co., Ltd | 1,800,000.00 | 1,800,000.00 | |||||
| Zhuhai Gree Group Finance Company Limited | 1,400,371,239.99 | 1,400,371,239.99 | |||||
| Zhuhai Gree Electrical Co., Ltd. | 184,680,359.95 | 1,500,000,000.00 | 1,684,680,359.95 | ||||
| Zhuhai Landa Compressor Co., Ltd. | 968,225,519.93 | 968,225,519.93 | |||||
| Zhuhai Gree Xinyuan Electronics Co., Ltd. | 154,290,096.61 | 154,290,096.61 | |||||
| Zhuhai Gree TOSOT Life Electric Appliances Co., Lid. | 30,000,000.00 | 30,000,000.00 | |||||
| Name of invested entities | Opening balance (book value) | Increase/Decrease in the current period | Closing balance (book value) | Balance of provision for impairment at the end of the period | |||
| Additional investment | Disinvestment | Appropriated provision for impairment | Others | ||||
| Zhuhai Kaibang Motor Manufacture Co., Ltd. | 83,860,929.67 | 83,860,929.67 | |||||
| Gree Electric Appliances (Hefei) Co., Ltd. | 505,370,626.10 | 505,370,626.10 | |||||
| Hong Kong Gree Electric Appliances Sales Co., Ltd. | 472,879.08 | 472,879.08 | |||||
| Zhuhai Gree Dakin Device Co., Ltd. | 283,117,574.47 | 283,117,574.47 | |||||
| Zhuhai Gree Daikin Precision Mold Co., Ltd. | 201,911,186.86 | 201,911,186.86 | |||||
| GREE (Zhongshan) Home Appliances Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Gree Green Refrigeration Technology Center Co., Ltd. Of Zhuhai | 676,040,000.00 | 676,040,000.00 | |||||
| Zhuhai HVAC Equipment Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Gree (Wuhan) Electric Appliances Co., Ltd. | 600,000,000.00 | 600,000,000.00 | |||||
| Gree (Zhengzhou) Electric Appliances Co., Ltd. | 720,000,000.00 | 720,000,000.00 | |||||
| Zhengzhou Gree Green Resources Recycling Co., Ltd | 5,000,000.00 | 5,000,000.00 | |||||
| Hunan Green Resources Recycling Co., Ltd | 5,000,000.00 | 5,000,000.00 | |||||
| Wuhu Green Resources Recycling Co., Ltd. | 2,000,000.00 | 2,000,000.00 | |||||
| Gree (Shijiazhuang) Small Home Appliances Co., Ltd. | 10,000,000.00 | 10,000,000.00 | |||||
| Gree (Wuhu) Electric Appliances Co., Ltd. | 20,000,000.00 | 20,000,000.00 | |||||
| Name of invested entities | Opening balance (book value) | Increase/Decrease in the current period | Closing balance (book value) | Balance of provision for impairment at the end of the period | |||
| Additional investment | Disinvestment | Appropriated provision for impairment | Others | ||||
| Shijiazhuang Green Resources Recycling Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Gree (Shijiazhuang) Electric Appliances Co., Ltd. | 98,940,059.97 | 98,940,059.97 | |||||
| Tianjin Green Resources Recycling Co., Ltd. | 5,000,000.00 | 5,000,000.00 | |||||
| Zhuhai Ligao Precision Manufacturing Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Changsha Gree HVAC Equipment Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Zhuhai IVP Information Technology Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Gree TOSOT (Suqian) Home Appliances Co., Ltd. | 140,000,000.00 | 140,000,000.00 | |||||
| Wuhu Precision Manufacturing Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Zhuhai Gree New Material Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Zhuhai GREE Intelligent Equipment Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Zhuhai Hengqin GREE business factoring Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Zhuhai Gree Precision Mold Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Gree (Wuhan) Precision Mold Co., Ltd. | 80,000,000.00 | 80,000,000.00 | |||||
| Zhuhai GREE Intelligent Equipment Technology Research Institute Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Zhuhai Gree Energy Environment Technology Co., Ltd. | 200,000,000.00 | 200,000,000.00 | |||||
| Name of invested entities | Opening balance (book value) | Increase/Decrease in the current period | Closing balance (book value) | Balance of provision for impairment at the end of the period | |||
| Additional investment | Disinvestment | Appropriated provision for impairment | Others | ||||
| Gree (Wuhan) HVAC Equipment Co., Ltd. | 40,000,000.00 | 40,000,000.00 | |||||
| Gree (Hangzhou) Electric Appliances Co., Ltd. | 300,000,000.00 | 250,000,000.00 | 550,000,000.00 | ||||
| Zhuhai Gree Info Technology Co., Ltd. | 510,000.00 | 510,000.00 | |||||
| Gree (Wu'an) Precision Equipment Manufacturing Co., Ltd. | 210,000,000.00 | 210,000,000.00 | |||||
| Zhuhai Gree Transportation Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Gree Electric Appliances (Luoyang) Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Gree Electric Appliances (Nanjing) Co., Ltd. | 200,000,000.00 | 100,000,000.00 | 300,000,000.00 | ||||
| Zhuhai Gree Material Supply Co., Ltd. | 30,000,000.00 | 120,000,000.00 | 150,000,000.00 | ||||
| Gree Electric Appliances (Chengdu) Co., Ltd. | 100,000,000.00 | 300,000,000.00 | 400,000,000.00 | ||||
| Hefei Kinghome Electrical Co., Ltd. | 1,247,087,108.76 | 1,247,087,108.76 | |||||
| Zhuhai Zero Boundary Integrated Circuit Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Zhuhai Lianyun Technology Co., Ltd. | 7,000,000.00 | 33,000,000.00 | 40,000,000.00 | ||||
| Zhuhai Gree Electrical and Mechanical Engineering Co., Ltd. | 20,092,300.30 | 129,000,000.00 | 149,092,300.30 | ||||
| Zhuhai Gree Green Resources Recycling Co., Ltd | 50,000,000.00 | 50,000,000.00 | |||||
| Zhuhai Gree Lvkong Technology Co., Ltd. | 270,000,000.00 | 270,000,000.00 | |||||
| Name of invested entities | Opening balance (book value) | Increase/Decrease in the current period | Closing balance (book value) | Balance of provision for impairment at the end of the period | |||
| Additional investment | Disinvestment | Appropriated provision for impairment | Others | ||||
| Gree (Luoyang) Washing Machine Co., Ltd. | 50,000,000.00 | 50,000,000.00 | |||||
| Guochuang Energy Internet Innovation Center (Guangdong) Co., Ltd. | 22,500,000.00 | 22,500,000.00 | |||||
| Gree (Anji) Precision Mold Co., Ltd. | 47,300,000.00 | 47,300,000.00 | |||||
| Total | 10,288,212,796.05 | 2,871,800,000.00 | 13,160,012,796.05 | ||||
(2) Investment in associated and contractual enterprises
| Name of invested entities | Beginning Balance | Increase/Decrease in the current period | Balance at the end of the period | |||||||
| Original value | Provision for impairment | Additional investment/withdrew investment | Investment profits/losses recognized under the equity method | Adjustment of other comprehensive income | Changes in other equities | Cash dividends or profits declared to distribute | Appropriated provision for impairment | Original value | Provision for impairment | |
| 1. Partnership | ||||||||||
| Songyuan Food Group Co., Ltd. | 70,904,579.15 | 3,767,568.71 | 74,672,147.86 | |||||||
| Subtotal | 70,904,579.15 | 3,767,568.71 | 74,672,147.86 | |||||||
| 2. Joint venture | ||||||||||
| Gree (Vietnam) Electric Appliances, Inc. | 1,940,009.35 | 1,940,009.35 | 1,940,009.35 | 1,940,009.35 | ||||||
| Liaowang All Media Communication Co., Ltd. | 28,057,883.29 | 3,453,907.07 | 31,511,790.36 | |||||||
| Beijing Gree Technology Co., Ltd. | 2,309,507.13 | 392,326.58 | 2,701,833.71 | |||||||
| Chongqing Pargo Mechanical Equipment Co., Ltd. | 10,715,459.43 | 850,045.78 | 11,565,505.21 | |||||||
| Gree Volinco (Hong Kong) Ltd. | 972,937.26 | -53,146.98 | 4,536.91 | 924,327.19 | ||||||
| Wuhan Digital Design and Manufacturing Innovation Center Co., Ltd. | 14,483,961.08 | 90,880.77 | 14,574,841.85 | |||||||
| Hunan Guoxin Semiconductor Technology Co., Ltd. | 9,950,321.68 | 59,848.82 | 10,010,170.50 | |||||||
| Zhuhai Ronglin Equity Investment Partnership (Limited Partnership) | 2,113,337,812.69 | -30,054,643.59 | 4,784,432,411.50 | 6,867,715,580.60 | ||||||
| Name of invested entities | Beginning Balance | Increase/Decrease in the current period | Balance at the end of the period | |||||||
| Original value | Provision for impairment | Additional investment/withdrew investment | Investment profits/losses recognized under the equity method | Adjustment of other comprehensive income | Changes in other equities | Cash dividends or profits declared to distribute | Appropriated provision for impairment | Original value | Provision for impairment | |
| Henan Yuze Finance Leasing Co., Ltd. | 50,000,000.00 | 509,964.01 | 50,509,964.01 | |||||||
| Subtotal | 2,181,767,891.91 | 1,940,009.35 | 50,000,000.00 | -24,750,817.54 | 4,784,436,948.41 | 6,991,454,022.78 | 1,940,009.35 | |||
| Total | 2,252,672,471.06 | 1,940,009.35 | 50,000,000.00 | -20,983,248.83 | 4,784,436,948.41 | 7,066,126,170.64 | 1,940,009.35 | |||
4. Operating revenues and operating costs
| Item | Amount for the current period | Amount for the previous period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 130,710,855,078.36 | 93,652,520,856.50 | 147,450,211,574.91 | 105,446,247,170.79 |
| Other businesses | 5,508,511,105.25 | 5,056,537,993.65 | 14,303,554,532.18 | 13,692,644,187.99 |
| Total | 136,219,366,183.61 | 98,709,058,850.15 | 161,753,766,107.09 | 119,138,891,358.78 |
5. Investment income
| Item | Amount for the current period | Amount for the previous period |
| Long-term equity investment income measured by equity method | -20,983,248.83 | 129,541.96 |
| Investment income from disposal of long-term equity investment | 974,832.42 | |
| Investment income from derivative financial instruments | -77,928,757.80 | -6,768,139.22 |
| Investment income related to financial assets available for sale | —— | 24,305,463.38 |
| Investment income related to financial assets measured at their fair values and of which the changes are recorded into the current profits and losses | —— | 12,480,038.67 |
| Dividend share confirmed for long-term equity investment income measured by cost method | 4,658,202,677.12 | 3,815,836,662.42 |
| Investment income related to trading financial assets | 48,942,780.74 | —— |
| Investment income related to other equity instrument investments | 13,533,474.60 | —— |
| Total | 4,621,766,925.83 | 3,846,958,399.63 |
(XVIII) Supplementary information
1. Non-recurring profit and loss
The Company's non-recurring profit and loss incurred in the Report Period (profit presented with a positivenumber and loss presented with a negative number):
| Item | Amount for the current period | Description |
| Profit and loss from disposal of non-current assets | -9,293,929.38 | For details, see Note (VII) 57, Note (VII) 58 and Note (VII) 59 |
| Governmental subsidies recorded into the current gains and losses (excluding the governmental subsidies closely relating to the business of the enterprise and enjoyed by a fixed quota or a fixed amount in accordance with the state policies) | 1,215,852,371.66 | For details, see Note (VII) 52 and Note (VII) 58 |
| Capital occupation fee collected from the non-financial institution and recorded into the current gains and losses | 359,713.10 | |
| Gains and losses caused by fair value changes from the holding of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment income obtained from the disposal of trading financial | 1,449,722.86 |
| Item | Amount for the current period | Description |
| assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other debt investments, except for the effective hedging business related to the Company's normal business operations | ||
| Non-operating incomes and expenditures other than the above items | -530,486,147.03 | For details, see Note (VII) 58 and Note (VII) 59 |
| Other profit and loss items that conform to the definition of non-recurring profit and loss | 997,770.17 | |
| Subtotal | 678,879,501.38 | |
| Less: Influence amount of income tax | 147,189,032.83 | |
| Impact of minority shareholders' equity | 6,561,011.03 | |
| Total | 525,129,457.52 |
2. Rate of return on net assets and earnings per share
Rate of return on net assets and earnings per share of the Company in the Report Period:
| Item | Weighted average return on net assets (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to shareholders of ordinary stocks of the Company | 25.72 | 4.11 | 4.11 |
| Net profit attributable to shareholders of ordinary stocks of the Company after deduction of non-recurring profit and loss | 25.17 | 4.02 | 4.02 |
Section XIII References(I) The accounting statements signed and sealed by Dong Mingzhu, the Company's legal representative, WangJingdong, responsible person in charge of accounting work and Liao Jianxiong, in-charge person of accountinginstitution.(II) The original audit report sealed by China Audit Union Power Certified Public Accountants Co., Ltd. andsigned and sealed by certified public accountants Gong Jingwei and Wu Zihao.(III) Originals and original drafts of all the Company's documents and announcements published on thenewspapers designated by CSRC and on www.cninfo.com.cn within the Report Period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
30 April, 2020