2015 Annual Report of Wuxi Little Swan Company Limited
Wuxi Little Swan Company Limited
2015 Annual Report
March 2016
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2015 Annual Report of Wuxi Little Swan Company Limited
Section I. Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Wuxi Little Swan Company Limited (hereinafter referred to as “the Company”)
warrant that this Report is factual, accurate and complete without any false information, misleading
statements or material omissions. And they shall be jointly and severally liable for that.
Mr. Fang Hongbo, chairman of the board, Mr. Sun Yunan, CFO, and Mr. Xu Yunwei, chief of the
accounting organ (chief of accounting), hereby guarantee that the Financial Report annexed to this
Report is factual, accurate and complete.
All directors attended the board meeting for reviewing this Report.
The Company’s profit distribution preplan upon review and approval of this board meeting: Based
on the total shares of 632,487,764, a cash dividend of RMB6.00 (tax included) will be distributed
for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve
will be turned into share capital.
This Report involves futures plans and some other forward-looking statements, which shall not be
considered as virtual promises to investors. Investors are kindly reminded to pay attention to
possible risks.
This Report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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2015 Annual Report of Wuxi Little Swan Company Limited
Contents
Section I. Important Statements, Contents & Terms ...................................................................... 2
Section II. Company Profile & Financial Highlights ...................................................................... 5
Section III. Business Highlights ...................................................................................................... 10
Section IV. Discussion & Analysis by Management ...................................................................... 13
Section V. Significant Events ........................................................................................................... 32
Section VI. Share Changes & Particulars about Shareholders ................................................... 49
Section VII. Directors, Supervisors, Senior Management Staff & Employees ........................... 55
Section VIII. Corporate Governance ............................................................................................. 62
Section IX. Financial Report ........................................................................................................... 68
Section X. Documents Available for Reference ........................................................................... 173
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2015 Annual Report of Wuxi Little Swan Company Limited
Terms
Term Refers to Content
Company, the Company or Little Swan Refers to Wuxi Little Swan Company Limited
Midea Group Refers to Midea Group Co., Ltd.
TITONI Refers to TITONI Investments Development Ltd.
Midea Group Finance Refers to Midea Group Finance Co., Ltd.
GD Midea Holding Refers to GD Midea Holding Co., Ltd.
Hefei Midea Washing Machine Refers to Hefei Midea Washing Machine Co., Ltd.
Wuxi Little Swan General Appliance Refers to Wuxi Little Swan General Appliance Co., Ltd.
Wuxi FILIN Electronics Refers to Wuxi FILIN Electronics Co., Ltd.
Guangzhou Hualing Air Conditioner Refers to Guangzhou Hualing Air Conditioner Equipment Co., Ltd.
Attend Logistics Refers to Guangzhou Attend Logistics Co., Ltd.
CSRC Refers to China Securities Regulatory Commission
Reporting period Refers to 1 Jan. 2015-31 Dec. 2015
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2015 Annual Report of Wuxi Little Swan Company Limited
Section II. Company Profile & Financial Highlights
I. Basic information of the Company
Stock abbreviation Little Swan A, Little Swan B Stock code 000418, 200418
Stock exchange Shenzhen Stock Exchange
Chinese name of the Company 无锡小天鹅股份有限公司
Abbr. of the Chinese name of the
小天鹅
Company
English name of the Company (if any) Wuxi Little Swan Company Limited
Legal representative of the Company Mr. Fang Hongbo
Registered address No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province
Zip code 214028
Office address No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi, Jiangsu Province
Zip code 214028
Internet website of the Company http://www.littleswan.com
Email address IR_littleswan@littleswan.com.cn
II. For contact
Company Secretary Securities Affairs Representative
Name Ms. Zhou Sixiu Mr. Zhao Yulin
No. 18, Changjiang Road S., National Hi-tech No. 18, Changjiang Road S., National Hi-tech
Contact address
Development Zone, Wuxi Development Zone, Wuxi
Tel. 0510-81082320 0510-81082377
Fax 0510-83720879 0510-83720879
E-mail address IR_littleswan@littleswan.com.cn IR_littleswan@littleswan.com.cn
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for information disclosure Securities Times, Ta Kung Pao (HK)
Internet website designated by CSRC for disclosing this Report http://www.cninfo.com.cn
Where this Report is placed Securities Department of the Company
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2015 Annual Report of Wuxi Little Swan Company Limited
IV. Changes in the registered information
Organizational code 91320200704046760T
Changes of the main business
Unchanged
since listing (if any)
The Company was incorporated in November 1993 by raising funds from targeted sources, with
Jiangsu Little Swan Group Co., Ltd. as the controlling shareholder. In June 2007, Wuxi Guolian
Development (Group) Co., Ltd. became the controlling shareholder as Jiangsu Little Swan Group
Changes of the controlling Co., Ltd. transferred the 87,673,341 Little Swan A-shares to it according to law. In April 2008, GD
shareholder (if any) Midea Holding Co., Ltd. became the controlling shareholder as it took over, upon agreement, all the
Company’s shares held by Wuxi Guolian Development (Group) Co., Ltd. In September 2013, Midea
Group Co., Ltd. became the controlling shareholder as it merged in GD Midea Holding Co., Ltd. in
a stock swap.
V. Other information
The CPAs firm hired by the Company:
Name PricewaterhouseCoopers Zhong Tian LLP
Office address 11/F, PricewaterhouseCoopers Center, 202 Hubin Road, Huangpu District, Shanghai
Signing accountants Lin Yupeng, Lin Xuyun
Sponsor engaged by the Company to conduct sustained supervision during the reporting period
√ Applicable □ Inapplicable
Name Office address Sponsor representative Consistent supervision period
25/F, CTS Tower, No. From 4 Aug. 2006 to the date when all non-tradable share
Huatai United
4011 Shennan Road, Bian Jianguang holders pay off the considerations that have been paid in
Securities Co., Ltd.
Shenzhen, Guangdong advance for them and the non-tradable shares are unlocked.
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate accounting data of previous years due to change of the
accounting policy or correction of any accounting error?
□ Yes √ No
Unit: RMB Yuan
Increase/decrease of current
2015 2014 2013
year over last year
Operating revenue (RMB Yuan) 13,131,626,932.44 10,804,217,288.60 21.54% 8,727,956,044.37
Net profit attributable to shareholders 919,181,968.58 698,195,731.48 31.65% 413,350,079.54
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2015 Annual Report of Wuxi Little Swan Company Limited
of the Company (RMB Yuan)
Net profit attributable to shareholders
of the Company after extraordinary 903,388,867.00 549,737,253.68 64.33% 310,261,096.43
gains and losses (RMB Yuan)
Net cash flows from operating
3,598,695,468.80 1,657,114,317.33 117.17% 904,882,101.01
activities (RMB Yuan)
Basic EPS (RMB Yuan/share) 1.45 1.10 31.82% 0.65
Diluted EPS (RMB Yuan/share) 1.45 1.10 31.82% 0.65
Weighted average ROE (%) 19.32% 16.73% 2.59% 10.88%
Increase/decrease of current
As at 31 Dec. 2015 As at 31 Dec. 2014 As at 31 Dec. 2013
year-end than last year-end
Total assets (RMB Yuan) 14,327,655,366.60 11,376,793,928.71 25.94% 9,222,527,380.74
Net assets attributable to shareholders
5,124,866,173.14 4,427,982,112.33 15.74% 3,908,897,654.74
of the Company (RMB Yuan)
Note: In the reporting period, “to make financial investments with the Company’s own funds” was added to the
business scope of the Company. As such, gains/losses on financial investments have been restated as recurrent
gains/losses. Dismissal expenses have been restated as recurrent gains/losses as well. In order to help investors
better understand the business results of the Company, the “net profit attributable to shareholders of the Company
after extraordinary gains and losses” of 2014 is restated as follows with the same caliber:
Unit: RMB Yuan
2015 2014 +/-
Net profit attributable to shareholders of the Company after
903,388,867.00 695,186,106.92 29.95%
extraordinary gains and losses
VII. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period
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2015 Annual Report of Wuxi Little Swan Company Limited
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenue 3,293,972,545.08 2,807,931,319.52 3,510,072,100.54 3,519,650,967.30
Net profit attributable to shareholders of the
242,314,468.72 188,379,799.83 255,058,086.36 233,429,613.67
Company
Net profit attributable to shareholders of the
217,515,263.04 154,566,522.55 224,346,001.07 306,961,080.34
Company after extraordinary gains and losses
Net cash flows from operating activities 394,282,134.54 970,987,348.92 1,207,953,636.35 1,025,472,348.99
Note: In the reporting period, “to make financial investments with the Company’s own funds” was added to the
business scope of the Company. As such, gains/losses on financial investments have been restated as recurrent
gains/losses. And the “net profit attributable to shareholders of the Company after extraordinary gains and losses”
for Q1, Q2 and Q3 in the table above is restated with the same caliber. Figures in other items are consistent with
those in the disclosed periodical reports.
IX. Extraordinary gains and losses
Unit: RMB Yuan
Item 2015 2014 2013 Note
Gain/loss on the disposal of non-current assets (including the offset
-280,195.57 -3,482,781.03 -1,078,789.83
part of the asset impairment provisions)
Government grants recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain 31,893,010.09 19,316,074.38 23,748,858.49
quotas or amounts according to the government’s unified standards
Gain/loss on debt restructuring 7,708,285.28 2,807,241.09
Impairment provision reversal of accounts receivable on which the
733,146.16
impairment test is carried out separately
Effect on current gains/losses when a one-off adjustment is made to
current gains/losses according to requirements of taxation, accounting 2,679,264.25 7,701,506.00 308,469.59
and other relevant laws and regulations
Non-operating income and expense other than the above -8,815,676.21 7,821,536.57 9,283,944.96
Other gain and loss items that meet the definition of an extraordinary
162,708,030.89 97,565,087.41
gain/loss
Dismissal expenses -17,259,177.65 -5,944,610.29
Less: Income tax effects 3,899,799.51 11,994,501.34 9,485,975.81
Minority interests effects (after tax) 5,783,501.47 24,060,495.30 14,848,388.66
Total 15,793,101.58 148,458,477.80 103,088,983.11 --
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2015 Annual Report of Wuxi Little Swan Company Limited
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item
√ Applicable □ Inapplicable
Item Amount (RMB Yuan) Reason
In the reporting period, “to make financial investments with the Company’s own
Gains on financial
201,658,430.62 funds” was added to the business scope of the Company. As such, gains/losses on
investment
financial investments have been restated as recurrent gains/losses.
Dismissal expenses -14,322,248.26 Necessary for routine operation
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2015 Annual Report of Wuxi Little Swan Company Limited
Section III. Business Highlights
I. Main business during the reporting period
As one of the earliest washing machine manufacturers in China, Wuxi Little Swan Company Limited is
principally engaged in R&D, production and sale of domestic washing machines. In 1978, China’s first fully-auto
washing machine greeted the world in the Company. With 37 years of focus on washing machines, the Company
mainly produces front-loading washing machines (also known as “roller washing machines”) and top-loading
washing machines (also “pulsator washing machines”). Pulsator washing machines can be divided into fully-auto
ones and double-cylinder ones according to structure. Currently, these three kinds of washing machines are the
mainstream in the market. In 2015, the Company produced and sold over 14 million units of such washing
machines, with the second largest market share in China’s washing machine industry. In addition, the Company
can also produce clothes dryers and agitator washing machines. The recent years have witnessed a fast growth in
the market of clothes dryers. In 2015, the Company achieved over RMB200 million by selling clothes dryers,
representing a considerable growth from the year earlier.
The Company has a sound technological R&D system, including one state-level technological center and two
state-recognized labs. Little Swan holds on to independent innovation and has the internationally advanced
frequency-changing, intelligent control, structure design, industrial design and other core washing technologies.
We own 2 manufacturing bases, one in Wuxi, Jiangsu Province and the other one in Hefei, Anhui Province, with a
total floor area of more than 800,000 ㎡ as well as a combined annual production capacity of over 18 million
units. We also have domestically and internationally first-class manufacturing equipments and an experienced
manufacturing team. Our products are sold to the domestic market as well as over 100 other countries and regions,
with the overseas market accounting for more than 20% in our total sales. In domestic sale, we adopt the
marketing mode of “agents+direct sale” and simultaneously develop the online and offline channels. In overseas
sale, we focus on OEM and attach importance to our own brands at the same time. We adopt a two-brand strategy
(“Little Swan” and “Midea”) and the business under both brands has seen fast and sound growth in the recent
years.
We have been focusing on our main business, improving our product mix according to consumers’ needs, and
increasing product quality. Therefore, our management efficiency has increased significantly, our profitability has
been enhanced and our position in the industry as well as our share in the market have kept increasing, which have
made the Company one of the most competitive washing machine manufacturers for all these years.
II. Material changes in main assets
□ Applicable √ Inapplicable
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2015 Annual Report of Wuxi Little Swan Company Limited
III. Core competitiveness analysis
The core competitiveness of the Company is demonstrated in the following aspects:
1. Our knowledge and experience accumulated in the long history of our washing machine business. We are
the sole company in China that has focused on the washing machine industry since the end of 1970s. Profound
knowledge and experience has been accumulated through these several decades in technology, R&D and
innovation, market research, business operation, etc., which has been transformed into tacit knowledge of the
Company through the accumulation and inheritance by our talent team and has thus become the most important
core competitiveness of the Company.
2. Our capability of seeing the industry clearly and R&D. We have our unique capability of judging and
foreseeing developments in the industry and technology. Through constant input of R&D resources over the years,
the Company has owned leading technological competitiveness in the industry. The Company has a sound
technological R&D system, including one state-level technological center and two state-recognized labs. Little
Swan Lab is the first washing machine lab in China to pass the UL North American safety verification and the
German VDE verification. Little Swan holds on to independent innovation and has the internationally advanced
frequency-changing, intelligent control, structure design, industrial design and other core technologies.
3. Our relationship management capability at the upstream and downstream ends of our business. We keep
building a customer-oriented supply chain management system, have set up an industry-leading cross-enterprise
procurement platform with the help of Midea Group, constantly increase the efficiency of our supply chain and
foster a strategic partnership with our suppliers. In terms of channels, in the domestic first and secondary markets,
the Company mainly works with Suning, Gome and some other big regional customers; in the tertiary and fourth
markets, the Company combines agent channels, flagship stores and franchised stores to distribute its products to
households. In e-commerce, we proactively make plans about online channels by enhancing our cooperation with
all famous online shopping platforms and our online sales have achieved a fast growth. Overseas, the Company
keeps deepening its cooperation with customers, expanding strategic overseas markets and enhancing the
promotion of its own brands in the regional markets. The Company enjoys a good and long-term cooperation with
its major customers at home and abroad.
4. Our capability to respond to needs of consumers. As a consumer appliance manufacturer, we have been
keeping a watchful eye on market changes, studying consumers’ needs, and focusing on improvement of the
whole process experience of customers in shopping, product use and after-sales service. In recent years, we have
adopted a two-brand strategy (“Little Swan” and “Midea”) to further satisfy diversified needs of consumers. With
a history of over three decades, Little Swan is considered a very reliable brand among consumers, with the slogan
of “Whole-hearted Little Swan” being well-known among them. As for Midea, a comprehensive home appliance
brand, its share in the washing machine market keeps rising with increasing recognition.
5. Our capability of innovation and self-improvement. The Company is one of the earliest washer
manufacturers in China. Through years of innovation and accumulation, we have developed a corporate culture of
R&D innovation, lean production and self-reform. We now have domestically and internationally first-class
manufacturing equipment and an experienced manufacturing team. Our wide product range covers roller,
wave-wheel full-automatic, double-cylinder and agitator washing machines, clothes dryers, etc., creating
incomparable scale competitiveness among washer manufacturers as well as a complete series of product lines.
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2015 Annual Report of Wuxi Little Swan Company Limited
Along with the constant developments of the market needs, we will further improve our capability of intelligent
manufacture. We have established a sound corporate governance mechanism, an effective performance appraisal
mechanism, a mature professional manager mechanism and a mature talent cultivating mechanism. Along with
changes in the market and this new era, we will keep reforming our organizational structure and operating model
so as to ensure our capability of sustainable development.
No significant changes occurred to the core competitiveness of the Company in the reporting period.
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2015 Annual Report of Wuxi Little Swan Company Limited
Section IV. Discussion & Analysis by Management
I. Business review
I. Macro-environment
In 2015, China’s economy was in a “new normal state” featuring stable development at a low level due to
structural adjustment and transformation. Affected by the macro economic environment, slow recovery in the real
estate market, etc, growth in domestic sale of home appliances was weak. And the export market as a whole was
also sluggish because the international economy was being hit by political and economic chaos, considerable
fluctuations in exchange rates, fading of the competitive edge of China’s home appliances in cost and so on.
However, the home appliance industry maintained a good momentum in consumption and transformation by
upgrading in spite of the slowdown in growth.
In 2015, the structure of washing machine products was further optimized, with roller, large-capacity, inverter and
smart products growing fast and becoming a new engine for the development of the industry. Traditional channels
were battered while the e-commerce channel rose quickly. The traditional way of manufacturing, stocking and
selling in a large size was in face of a serious challenge. In the reporting period, the washing machine industry
became more centralized due to slowing growth and increasing competition. According to statistics from
ChinaIOL, China sold a total of 56.1369 million units of washing machines in Jan.-Dec. 2015, down 0.40% from
the year earlier, of which 39.0534 million units were sold domestically, representing a YoY growth of 3.78%, and
17.0836 million units were exported, decreasing 8.80% year on year.
II. Main business analysis
In face of rapid changes in domestic and overseas environments, closely adhering to the strategic axis of “leading
products, efficiency-driven and global operation”, we focused on our main business, firmly pushed forward
organizational reform and operating transformation with customers as the center and production & sale as the
main line, and kept improving our capability in lean management and profitability. In 2014, we continued to
optimize our product structure, improve our product quality and steadily increase the operating efficiency, which
further solidified our capability of sustainable development. For the reporting period, the Company achieved
operating revenues of RMB13.132 billion, up 21.54% from the year earlier; net profit attributable to shareholders
of the Company stood at RMB919 million, representing a YoY growth of 31.65%; and the overall gross profit rate
stood at 26.54%, increasing by 0.66 percentage points from last year.
The revenue growth was mainly attributed to an increased sales volume, which was further attributed to optimized
structures. Firstly, the product structure was optimized. Through our continuous efforts in product innovation, our
product competitiveness and structure continued to improve, with a larger proportion of roller washing machines
and a smaller proportion of double-cylinder products. Secondly, the channel structure was optimized. We
vigorously pushed forward marketing reform, boosting growth in both the domestic and overseas sales, of which
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2015 Annual Report of Wuxi Little Swan Company Limited
the domestic online sales increased significantly from last year and the sales to Europe witnessed fast growth.
Finally, the brand structure was optimized. Steady growth in the sales of products under the “Little Swan” brand
as well as fast growth in the sales of products under the “Midea” brand both contributed to the growth in the total
sales. In the reporting period, sales of the Company went up 27% from last year, a lot higher than the average
growth in the industry.
The profit growth was attributed to a larger business scale, an increased gross profit margin as well as more
investment gains. Our product structure was further optimized, with a larger proportion of high-gross-profit
products. Our operating efficiency was obviously improved, with operating costs decreasing from last year due to
low prices of raw materials. The Company had more self-owned funds and gained more from investments with the
said funds. The reporting period also saw considerable increase in our profitability.
III. Accomplishments in 2015
1. Positively promote the rebuild of the organization and reorganize the operation mode by the Internet
For adapting to the development of the mobile Internet era, the Company positively promoted the rebuild of the
organization and reorganize the operation mode by the Internet and regarded the “users and products” as the
center, constructed four platforms namely “products, market, manufacture and service”, gave up the bureaucratic
system as well as the centralization of the departments, and through infusing the platformization into the thinking
and operation, the Company promoted the rebuild of the organization, the team, the performance and the culture,
reconstructed the organization system, the appraisal mechanism as well as the management process in order to
forge the performance-oriented culture of justness, fairness and open and to really realize the operation mode
taking the “users, products and one line” as a center.
For building the high-efficiency operating process management
system, forging the internal and external value chain and
information flow, the Company powerfully promoted the
rebuild projects of the 632 process which including 6 major
operating systems, 3 major management platforms and 2
technology platforms and specified, wholly improved the
process management process in every field through the unity of
the process, data and system, all of which were for the rebuild
of the Company organization and the long-term sustainable
development.
2. Take the “users, innovation and intelligence” as a core to
constantly enhance the products competitiveness
The Company further enlarged the R&D investment and
positively promoted the R&D innovation ability construction
and set up the projects team in USA for gradually construct the
global R&D system; take the “users, innovation and intelligence” as the core and set up the intelligence
technology, makers and Geek small team, as well as gradually promoted the products manager system mode for
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2015 Annual Report of Wuxi Little Swan Company Limited
further motivating the innovation vigor of the R&D; promoted the market-and-user oriented mode, strengthened
the users’ need research and focused on the whole process experience from purchase, use to after sale; enlarged
the R&D power of the intelligent products, positively distributed the intelligent home furnishing market, and
during the reporting period, the Company pushed out the i-bigger intelligent washing machines and the Internet
des objects washing machines for realizing the functions such as the APP long-range control, the washing
appointment, the washing state inquiry and the one-key-repair of intelligent inspection with the favorable
reputation of the market selling. During the reporting period, Little Swan washing machines were granted the
Innovation Price of 2015 China Home Appliances Appliance Award, the Germany Design “Red Dot Award”, the
First Price and the Third Price of China Home Appliances Science and Technology Progress Award and the Most
“Self-reasoning” Intelligent Home Appliances Award of the China First Intelligent Home Appliances Assessment
Activity. During the reporting period, the R&D and innovation ability of the Company products received the
widely recognition among the market.
3. Constantly promoted the marketing mode transformation and made the domestic and export sale
advanced side by side as well as the e-commerce business developed rapidly
As for the domestic sale, the Company constantly promoted the marketing mode transformation, examined
according to the distribution, pulled the transformation of the business team and the commercial agencies, reduced
the middle hierarchy for enhancing the terminal competitiveness of the products; put the emphasize on the channel
expanding, network construction and terminal distribution of the channel management, positively developed the
small-sized and multiple-frequency sales promotion by the whole-network-collaboration; energetically develop
the e-commerce channels, constantly enlarge the strategic cooperation with the platforms such as the JD, Tmall
and Suning E-commerce, led the offline to develop the online shops and the 2015 value of retail sales made a
breakthrough with the amount of RMB2.46 billion of the whole network with the YoY increase of 110%;
promoted the CCS storage management system and enlarged the storage supervision, and at the same time forced
the management and control by rigidly reducing the storage area; constantly enlarged the brand promotion power
and the Company had won the highest award of the China Advertising Industry – 2015 China Advertising Great
Wall Award, Media Marketing Gold Award and Interactive Creative Silver Award by the interactive creative
advertisement with the young consumers – My Mother Says, and signed the licensing agreement with Disney as
well as enhanced the brand impact by making the products line abundant. During the reporting period, according
to the data statistics from the Yee, the market shares of the 2015 domestic sale of the Company was of 25.39%
with a YoY increase of 4.57 percentage point.
As for the export sale, faced with the board environment of depressed export and market, the Company initiatively
executed the transformation and constantly optimized market layout, further consolidated and enlarged the
favorable area and positively expanded the strategic market as well as the blank market; adjusted the products and
clients structure, enlarged the strategic cooperation strength with the major clients, and accelerated the unique
distribution of the Midea brand by the Watertile, automatic release and WIFI Internet des objects technology as
well as constantly improved the selling structure of the products; further enlarged the self-brand promotion force
and promoted the rapidly increase of the self-brand among the local region market; constantly promoted the
offshoring manufacturing, enhanced the terminal market competitiveness of the products. During the reporting
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2015 Annual Report of Wuxi Little Swan Company Limited
period, according to the date from the customs, the market share of the 2015 export volume of the Company was
of 14.63% with a YoY increase of 3.12 percentage point.
4. Forged the new type production-marketing mode with the remarkable execution effect of the T+3
customer order system
For adapting the rapid changes of the market and the risks of the invalid of the traditional marketing mode, the
Company vigorously promoted the new type production-marketing mode of T+3 customer order system, which
transferred from the originally reserve type production to the customer order type production, promoted the offline
directly distribution and reduced the intermediate link such as the transfer in order to accelerate the turnover and
enhance the market competitiveness. In order to make sure the smoothly practice of the T+3 customer order
system, the sell side led the customers to change the consciousness, intensified the frequently purchase and rapidly
selling as well as the order and storage management; enlarged the exclusive supply clean of the supply side,
introduced the high-quality resources for improving the supply distribution, sorted out the materials management
for the timely supply; constantly simplified the products type of the R&D side, intensified the general utilization,
modular design for reducing the number of the products materials and enhancing the standardization degree;
enlarged the flexibility, automation and the steamline manufacturing upgrade of the manufacturing side, positively
participated in the products design phase in order to improve the manufacturability and forced the enhance of the
manufacturability through the production and marketing two-way assessment; to promote the high-end quality
products strategies with great efforts of the quality side and to improve the boutique coverage rate as well as to
forge the boutique public praise. During the reporting period, the production and marketing of the Company had
adopted the T+3 customer order system mode with a remarkable execution effect.
5. Intensified the quality rigid principles and vigorously promoted the high-quality goods project strategies
Constantly promoted the quality management and control system construction intensified the quality rigid
principle, resolutely implemented the quality “one-vote veto system”; intensified the management of two sources
(design and incoming materials) and one process (manufacturing). Strictly controlled the process such as the
products planning, trial-manufacture, trail-produce and the first patch of production on the design stage, which
avoided the quality problems from the volume production; strictly carried out process inspection such as the
sample confirm, type tests and routine tests on the incoming materials phase, which avoided the quality problems
from the production line; strictly controlled the transparency and visualization of the quality management,
executed the real-time monitor during the manufacturing for ensuring the products quality. Vigorously promoted
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2015 Annual Report of Wuxi Little Swan Company Limited
the high-quality goods project strategies, constructed the whole process refined management system and
assessment standard through five links such as the precise planning, exquisite R&D, lean manufacturing, choicest
quality and sincere service display, in order to gradually improve the boutique coverage rate and forge the
boutique reputation. During the reporting period, the market repair rate had an obvious YoY decline of the
Company, which meant the products quality had a remarkable improvement.
II. Main business analysis
1. Overview
The Company is mainly engaged in washing machines. And this remained the same during the reporting period.
Movements of revenue, cost, expense, etc. are as follows:
Unit: RMB Yuan
Item 2015 2014 +/- +/-%
Operating revenues 13,131,626,932.44 10,804,217,288.60 2,327,409,643.84 21.54%
Operating costs 9,646,390,824.36 8,007,492,218.69 1,638,898,605.67 20.47%
Period expense 2,387,468,126.14 1,945,862,660.03 441,605,466.11 22.69%
Operating profit 1,210,303,981.45 908,408,806.48 301,895,174.97 33.23%
Total profit 1,225,421,617.93 934,002,673.29 291,418,944.64 31.20%
Net profit attributable to the Company 919,181,968.58 698,195,731.48 220,986,237.08 31.65%
2. Revenues and costs
(1) Operating income form
Unit: RMB Yuan
2015 2014
Ratio of the Ratio of the YoY +/-%
Amount Amount
operating income operating income
Total of the operating income 13,131,626,932.44 100% 10,804,217,288.60 100% 21.54%
Classified by industries
Manufacture of the home appliances 11,929,121,727.57 90.84% 9,880,602,020.03 91.45% 20.73%
Other 1,202,505,204.87 9.16% 923,615,268.57 8.55% 30.20%
Classified by products
Washing machines 11,929,121,727.57 90.84% 9,880,602,020.03 91.45% 20.73%
Other 1,202,505,204.87 9.16% 923,615,268.57 8.55% 30.20%
Classified by regions
17
2015 Annual Report of Wuxi Little Swan Company Limited
China 10,440,519,133.71 79.51% 8,691,506,064.61 80.45% 20.12%
Other countries 2,691,107,798.73 20.49% 2,112,711,223.99 19.55% 27.38%
(2) List of the industries, products or regions exceed 10% of the operating income or operating profits of
the Company
Unit: RMB Yuan
YoY YoY YoY
Gross increase/decrease increase/decrease increase/decrease
Operating income Operating cost
margin of the operating of the operating of the gross
income cost margin
Classified by industries
Manufacture
of the home 11,929,121,727.57 8,713,461,567.66 26.96% 20.73% 21.36% -0.37%
appliances
Classified by products
Washing
11,929,121,727.57 8,713,461,567.66 26.96% 20.73% 21.36% -0.37%
machines
Classified by regions
China 9,238,013,928.84 6,329,146,939.40 31.49% 18.93% 21.22% -1.29%
Other
2,691,107,798.73 2,384,314,628.26 11.40% 27.38% 21.73% 4.11%
countries
Under the circumstances that the statistical standards for the Company’s main business data adjusted in the
Reporting Period, the Company's main business data in the recent year is calculated based on adjusted statistical
standards at the end of the Reporting Period
□ Applicable √ Inapplicable
(3) Whether the Company’s goods selling revenue higher than the service revenue
√ Yes □ No
Industries Items Units 2015 2014 YoY +/-%
Sales volume Unit 14,294,646 11,293,335 26.58%
Home appliances Output Unit 14,567,161 11,043,520 31.91%
Stock Unit 1,071,418 798,903 34.11%
Reasons for any over -30% YoY movement of the data above:
√ Applicable □ Inapplicable
The YoY increase of the output exceeded 30%, which mainly due to the YoY increase of the sales scope;
18
2015 Annual Report of Wuxi Little Swan Company Limited
The YoY increase of the stock exceeded 30%, which mainly due to the increase of the scope and the digestion of
the channel inventory of the fourth quarter of 2015.
(4) Execution of the significant sales contracts signed by the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Operating cost form
Unit: RMB Yuan
2015 2014
Industries Items Ratio of the Ratio of the YoY +/-%
Amount Amount
operating income operating income
Washing
Raw materials 8,054,839,050.08 92.44% 6,582,063,431.60 91.67% 1.78%
machines
Washing
Labor wages 398,109,632.96 4.57% 348,951,663.73 4.86% -0.29%
machines
Washing
Depreciation 136,687,138.85 1.57% 140,082,517.01 1.95% -0.38%
machines
Washing
Energy sources 59,950,304.43 0.69% 53,119,840.68 0.74% -0.05%
machines
(6) Whether the consolidated scope changed during the reporting period
□ Applicable √ Inapplicable
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
□ Applicable √ Inapplicable
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB Yuan) 4,278,464,118.88
Ratio of the total sales to the top 5 customers to the annual total sales 32.57%
Information of the top 5 customers of the Company
Serial No. Name of customer Sales amount (RMB Yuan) Proportion in annual total sales
1 No. 1 1,955,298,317.81 14.89%
2 No. 2 1,173,063,150.23 8.93%
19
2015 Annual Report of Wuxi Little Swan Company Limited
3 No. 3 717,270,820.75 5.46%
4 No. 4 239,370,401.59 1.82%
5 No. 5 193,461,428.50 1.47%
Total -- 4,278,464,118.88 32.57%
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan) 2,160,665,511.17
Ratio of the total purchase to the top 5 suppliers to the annual total purchase 22.03%
Information of the top 5 suppliers of the Company
No. Name of supplier Purchase amount (RMB Yuan) Ratio to the annual purchase amount
1 No. 1 1,268,205,039.86 12.93%
2 No. 2 255,967,175.78 2.61%
3 No. 3 237,422,588.66 2.42%
4 No. 4 223,982,428.53 2.28%
5 No. 5 175,088,278.34 1.79%
Total -- 2,160,665,511.17 22.03%
3. Expenses
Unit: RMB Yuan
2015 2014 YoY +/-% Notes of the significant changes
Selling expenses 1,957,833,768.25 1,519,482,348.76 28.85%
Management
539,747,209.80 441,240,435.76 22.32%
expenses
Financial Increase of the interests on deposit and
-110,112,851.91 -14,860,124.49 -641.00%
expenses the exchange earnings
4. R&D investment
During the reporting period, the Company was market-oriented and took the customers’ needs as the center and
further enlarged the R&D innovation ability construction as well as forged the long-term sustainable development
competition advantages. The expenditure of the R&D of the Company mainly applied in: 1. enlarged the R&D
strength of the intelligent products, constructed the competition advantages in the intelligent washing field and
positively distributed the intelligent home furnishing market; 2. constantly intensified the investigation on the
customers’ needs and constantly promoted the improvement of the whole process experience for the users; 3.
constantly promoted the expenditures management work, improved the manufacturability and constructed the
continuous cost advantages of the products; 4. constantly enlarged the introduction work of the high-end talents.
In 2015, the expenditures of the investment on R&D of the Company was of RMB0.557 billion, which of 9.31%
20
2015 Annual Report of Wuxi Little Swan Company Limited
to the audited net assets of 2015 and of 4.24% to the total operating income of 2015 of the Company.
List of the R&D investment of the Company
2015 2014 Varied ratio
Number of the R&D personnel (person) 564 633 -10.9%
Ratio to the R&D personnel 7.16% 7.45% -0.29%
Investment amount of the R&D (RMB10,000’) 55,731.96 43,803.47 27.23%
Ratio of the R&D investment to the operating income 4.24% 4.05% 0.19%
Amount of the capitalized R&D investment (RMB Yuan) 0.00 0.00 0.00%
Ratio of the capitalized R&D investment to the R&D investment 0.00% 0.00% 0.00%
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
income
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation
□ Applicable √ Inapplicable
List of the patents number of the recent 2 years
√ Applicable □ Inapplicable
Applied Gained Accumulative gained up to the period-end
Patent for invention 528 30 49
Utility model 524 444 879
Appearance design 142 113 311
List of the changes of the core During the reporting period, there was no any change of the core technology team or the key
technology team or the key technology personnel which had significant influences on the core competitiveness of the
technology personnel of 2015 Company as well as no any influence on the production and operation of the Company.
Whether belongs to the high-tech
Yes
enterprises recognized by the MOST
5. Cash flow
Unit: RMB Yuan
Item 2015 2014 YoY +/-%
Subtotal of cash inflows from operating activities 12,873,994,461.09 8,891,098,192.24 44.80%
Subtotal of cash outflows from operating activities 9,275,298,992.29 7,233,983,874.91 28.22%
Net cash flows from operating activities 3,598,695,468.80 1,657,114,317.33 117.17%
Subtotal of cash inflows from investing activities 8,525,242,206.01 10,280,083,245.17 -17.07%
21
2015 Annual Report of Wuxi Little Swan Company Limited
Subtotal of cash outflows from investing activities 10,570,010,753.52 11,785,485,490.22 -10.31%
Net cash flows from investing activities -2,044,768,547.51 -1,505,402,245.05 -35.83%
Subtotal of cash inflows from financing activities 215,915,154.66 103,860,740.00 107.89%
Subtotal of cash outflows from financing activities 502,603,592.68 297,147,898.14 69.14%
Net cash flows from financing activities -286,688,438.02 -193,287,158.14 -48.32%
Net increase in cash and cash equivalents 1,275,945,523.83 -41,465,061.67 3177.16%
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
Reason of the YoY increase of the net amount of the cash flow from operating activities: the increase of the
received cash led by the increase of the net profits, decrease of the accounts receivable and the increase of the
accounts received in advance;
Reason of the YoY decrease of the net amount of the cash flow from investment activities: the increase of the
bank financing and the structured deposit scale;
Reason of the YoY decrease of the net amount of the cash flow from financing activities: the increase of the cash
paid for the dividends distribution;
Reason of the YoY increase of the net increased amount of the cash and cash equivalents: the sharply increase of
the net amount of the cash flow from operating activities.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the
net profits of 2015 of the Company during the reporting period
√ Applicable □ Inapplicable
During the reporting period, the net cash flow from operating activities amounted to RMB 3.599 billion the net
profit amounted to RMB 1.053 billion. The material gap mainly comes from the decrease of receivables and
increase of paybles, owing to better cash management of the Company.
III. Analysis of the non-core business
□ Applicable √ Inapplicable
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB Yuan
As at 31 Dec. 2015 As at 31 Dec. 2014
Proportion
Proportion in Proportion in Explain any major change
Amount Amount change
total assets total assets
Monetary funds 3,042,843,924.81 21.24% 3,059,914,956.21 26.90% -5.66%
22
2015 Annual Report of Wuxi Little Swan Company Limited
Accounts receivable 896,075,475.63 6.25% 856,343,229.70 7.53% -1.28%
Inventories 745,412,967.52 5.20% 605,616,993.25 5.32% -0.12%
Investing real estate 68,843,047.52 0.48% 73,229,177.52 0.64% -0.16%
Long-term equity
2,850,040.45 0.03% -0.03%
investment
With the increasingly
amount of financial
products, the structured
other current assets 5,733,188,604.23 40.01% 1,947,972,214.72 17.12% 22.89% deposits were reclassified
from cash and cash
equivalents to other current
assets.
Fixed assets 1,019,528,291.60 7.12% 1,065,820,898.65 9.37% -2.25%
2. Assets and liabilities measured at fair value
Unit: RMB Ten thousand yuan
Gain/loss on fair Cumulative fair Impairment Purchased Sold amount
value change in value change provisions in amount in in the Closing
Item Opening amount
the reporting recorded into the reporting the reporting reporting amount
period equity period period period
Financial assets
1. Derivative
24.89 -24.89 0.00
financial assets
2. Available-for-sale
190,020.03 19,891.57 5,567.56 -10.03 604,230.00 -514,431.57 305,267.56
financial assets
Total of the above 190,044.92 19,866.67 5,567.56 -10.03 604,230.00 -514,431.57 305,267.56
Financial liabilities 0.00 0.00
Did any significant change occur to the attribute of the Company’s main asset measurement during the reporting
period?
□ Yes √ No
V. List of the investment
1. Overall condition
Investment amount of the reporting period Investment amount of the same period of
Variation amount
(RMB Yuan) last year (RMB Yuan)
144,419,272.00 90,486,260.00 59.60%
23
2015 Annual Report of Wuxi Little Swan Company Limited
2. List of the significant equity investment acquired from the reporting period
□ Applicable √ Inapplicable
3. List of the significant non-equity investment has been executing during the reporting period
□ Applicable √ Inapplicable
4. Investment on the financial assets
(1) List of the securities investment
There was no such situation of the Company during the reporting period.
(2) List of the derivative investment
Unit: RMB Ten Thousand Yuan
Amount Proportion
of the of the
Relate Openi Closin Actual
Type of Impair provisio closing
d-part Initial ng Sold g gain/los
derivativ ment n for investment
Operato Relatio y investme Beginning Ending invest invest s in
e provisi amoun impairm amount in
r n transac nt date date ment t ment reportin
investme on (if ent the
tion or amount amoun amoun g
nt any) losses (if Company’s
not t t period
any) closing net
assets (%)
Forward
exchang 16 May 19 May
Bank No No 5,770 5,770 0 5,770 0 0.00% 35
e 2013 2015
contract
Total 5,770 -- -- 5,770 0 5,770 0 0.00% 35
Capital source for derivative All self-owned funds
investment
Lawsuit situations (if applicable) Inapplicable
Disclosure date of the board
announcement approving the 20 Mar. 2015
wealth management entrustment
(if any)
Disclosure date of the general
meeting announcement approving 21 Apr. 2015
the wealth management
24
2015 Annual Report of Wuxi Little Swan Company Limited
entrustment (if any)
The Company has formulated the Management Methods for Exchange Funds upon review to
thoroughly assess and control derivative investment risks, which are detailed as follows:
1. Market risk
Fluctuations of exchange rates may incur a great market risk in the foreign exchange funds
business. Meanwhile, if the Company fails to input foreign exchanges on time for contract
execution in the foreign exchange funds business, contract breach risk may incur.
Counter-measures: The Company will not carry out speculative trading in its foreign exchange
funds business. And the Company will stick to the principle of being prudent in operations. A
from-the-bottom-up management mechanism is adopted. When subsidiaries or product
enterprises file applications for funds business, they will give a risk analysis on conditions or
circumstances that might affect gains and losses, estimate the maximum gain and loss, and state
the ratio or total amount of guarantee deposits they can bear. And the Company will, according
Analysis on risks and control to their applications, update operations in time in its funds business and make funds
measures of derivative products arrangements before the maturity date.
held in the reporting period
2. Operation risk
(including but not limited to
market risk, liquidity risk, credit The Company may suffer loss in its hedging business and foreign exchange funds business due
risk, operation risk, law risk, etc.) to faulty internal procedures, staff, systems and external events. Counter-measures:
Responsibility division and approval procedures for the hedging and foreign exchange business
have been specified in relevant management rules. And a sound supervision mechanism has
been established. And operation risk can be effectively reduced by enhancing risk control over
procedures for operation, decision-making and trading.
3. Risk concerning laws and regulations
The Company carries out its foreign exchange business in compliance with applicable laws and
regulations, with rights and duties between the Company and agencies being stated clearly.
Counter-measures: The Company urges responsible departments to understand better about
relevant laws, regulations and market rules; be strict in contract re-checks; make clear relevant
rights and duties; and enhance compliance checks to make sure that the Company operates
derivative investments in compliance with applicable laws, regulations and the Company’s
internal management rules.
Changes of market prices or fair
values in the reporting period of
the invested derivatives. And the
analysis on the fair value of the The Company adopts forward foreign exchange quotations declared by the People’s Bank of
derivatives should include the China in its analysis on fair values of derivative products.
specific use methods and the
relevant assumptions and
parameters.
Whether significant changes
No significant changes.
occurred to the Company’s
25
2015 Annual Report of Wuxi Little Swan Company Limited
accounting policy and specific
accounting principles of
derivatives in the reporting period
compared to the previous
reporting period
Independent directors of the Company believe that: The Company has formulated derivative
investment rules such as the Management Methods for Exchange Funds to help it effectively
Specific opinion from control risks involved; the Company’s derivative investments in the reporting period mainly
independent directors on the targeted its exports. It signed forward exchange contracts with domestic financial institutions,
Company’s derivatives investment which helped it to lock up the exchange rate and avoid the risk of exchange rate fluctuations.
and risk control The Company conducted no speculative operations, so there was no credit risk. And transaction
periods were determined according to expectations and payment receiving and making, with no
influence on the Company’s fluidity.
5. Use of raised funds
There was no such situation of the Company during the reporting period.
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
There was no such situation of the Company during the reporting period.
2. List of the selling of the significant equities
□ Applicable √ Inapplicable
VII. Analysis of the major controlling and stock-participating companies
Unit: RMB Ten Thousand Yuan
Name Type Registered Operating Operating
Main services Total assets Net assets Net profit
capital revenues profit
Hefei Midea
washing machine USD13,552 556,040.00 220,026.31 616,535.01 33,457.98 28,427.67
Washing Machine Subsidiary
manufacture
Co., Ltd.
Wuxi Little Swan
Washer-dryer 2,800 27,916.52 19,014.74 26,472.71 2,630.97 2,264.97
General Electrical Subsidiary
manufacture
Appliances Co., Ltd
Development and
Wuxi FILIN Subsidiary manufacture of USD362.4564 68,645.79 51,770.73 59,733.28 15,901.55 14,947.50
new electronic
26
2015 Annual Report of Wuxi Little Swan Company Limited
components
Subsidiaries acquired or disposed during the reporting period:
□ Applicable √ Inapplicable
VIII. List of the structured main bodies controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook of the Company’s future development
I. Tendency of the industry development
In 2016, the growth of the macro-economy slows down, and the market segmentation of the property aggravates,
so the depression of the consumer market will continue and the global economy will still be difficult to completely
walk out the crisis shadow, as well as influenced by the factors such as the slow growth of the trading and the
exchange rate fluctuation, the home appliances industry will continue to face with the challenge of the insufficient
growth impetus.
In 2016, under the overall background of “supply-side structural reforms”, the products transformation upgrade
and the consumer upgrade will continue to develop; the consumer structure of the urban and rural residents will
transit to the higher level with the consumer renewed requirements will be further released: the Internet, cloud
computing, big data and Internet des objects will deeply integrate with the manufacture industry, which will form
the new commerce mode the economy growth point; while the differentiated demand on the products of the users
has been changing remarkably and the consumer had stepped into the era of diversification, personalization and
customization; the domestic and overseas home appliances industry had deeply adjusted which is beneficial to the
realizing of the global expansion of the China home appliances industry; the intelligent manufacture such as the
automation and the intelligent factories are guiding the manufacture reform; the emerging channels namely the
e-commerce developed rapidly, which will rebuilding the industry value chain system and the marketing mode.
On a whole, the home appliances industry will step into the industry and consumer upgrade phase and transformed
from the factors investment type growth to the innovation driven growth, while the transformation and the
upgrade are the theme of the whole industry and be seen in the long run, the opportunities and challenges will be
side by side that the home appliances industry still possesses the potential for sustainable growth.
II. Development plan of the Company
27
2015 Annual Report of Wuxi Little Swan Company Limited
In 2016, the Company will continue to insist on the professionalized development path, focus on the core main
business of the washing machines, continue to take the “products prevailing, efficiency driven and global
operating” as the strategic principal axis and constantly promote the rebuild of the organization and the
transformation of the operating as well as forge the sustainable development capacity facing with the future of the
Company.
In 2016, the main work of each platform such as the products, market, manufacture and service are as follows
embracing the organization rebuild and operating transformation:
1. Products platform
As for the R&D of the products, the Company will focus on the products innovation upgrade which will take the
consumers as the core and intensify the global products planning and platform construct; will enlarge the users
demand investigation and the demonstration of the planning phase, and improve the planning ability as well as the
hit rate; will enlarge and the R&D ability of the intelligent products, improve the networking rate of the users and
enhance the users operation and maintain as well as the analysis ability of the background big data;
comprehensively carries out the products manager system, stimulate the R&D innovation ability and the
organization vigor through the reform of the examination mechanism, salary incentive and the organization
process; will constantly promote the standardized management work, simplify the products modularization degree.
As for the products quality, to build the products quality management and control system based on the
high-quality standard and to realize the quality prevention management; will constantly hold the boutique projects
strategic development in order to promote the enhance of the products whole value chain.
2. Market platform
As for the domestic market, the Company will further deepen the channel management, put the emphasis on the
e-commerce, the TOP customers and the construction of the flagship store, lead the commission agent transform
to the operating platform and enhance the terminal dynamic selling and distribution ability. To intensify the
double brand operation mechanism: to promote the rejumvanation and to keep the vigor of the Little Swan Brand
through the listing of the Disney products and the sponsor of the China Fencing Team; accelerates the market
share enhancing of the Midea brand through the differentiation of the products line and terminal layout. To forge
the high-end products image with great efforts for constantly enhancing the market shares of the high and medium
quality products. To enlarge the development strength of the innovative projects and to positively promote the
Wechat campus washing machine projects and so on. As for the export market, the Company will positively
28
2015 Annual Report of Wuxi Little Swan Company Limited
strengthen the strategic cooperation with the major clients, support the increase of the potential customers and
constantly enhance the market shares. To constantly consolidate the advantageous regions, to enlarge the power of
the products distribution, the channel expansion and brand promotion of the weak market, and to rapidly enhance
the market scale. To constantly promote the offshoring manufacturing, to improve the market competitiveness and
the profitable ability through the realization of the local manufacturing with the clients. To further enlarge the
promotion strength of the self-owned brand, which should firstly achieve the key breakthrough on parts of the
regional market then secondly gradually expand and promote the global operating.
3. Manufacture platform
To deeply promote the T+3 customer order system production-marketing mode, to increase the offline directly
distribution proportion, to enhance the softly production capacity and to constantly shorten the delivery cycle of
the orders. To enlarge the automation and intelligent manufacturing investment strength, to build up and gradually
promote the automatic benchmarking production line, and to gradually construct the digital, intelligent
manufacture factories depends on the combination of the 632 new system and the information technology. To
construct the strategic cooperation supply and demand mode with the suppliers and to positively develop the
cooperation with the excellent suppliers on the innovation aspect of the supply and to constantly improve the
quality and innovativeness of the supply products in order to realize the mutual interests sharing and the mutual
grow up of the both parties of the supply and demand. To further enlarge the cleaning strength of the exclusive
supplier and to positively introduce the excellent suppliers among the industry in order to constantly optimize the
suppliers’ resources and the supply distribution. To shorten the purchase cycle and to strengthen the abnormal
situation management and control of the supply products in order to guarantee the quality of the incoming
materials and the promptness for supporting the supply protection of the T+3 customer order system and to
enhance of the production efficiency.
4. Service platform
To constantly promote the organization rebuild and the operating transformation, to optimize the organization
system and the management process, and to promote the examination and the reform of the salary mechanism to
further stimulate the organization vigor. To embrace the achievement of the operation target, to strengthen the
process management and to supervise the operation risks as well as to improve the internal management
mechanism. To constantly enlarge the elaborate management level, to strengthen the basic management ability, to
enhance the resources cooperation and turnover efficiency, to optimize the whole logistics layout of the park and
29
2015 Annual Report of Wuxi Little Swan Company Limited
the workshop in order to improve the organization operation efficiency. To enlarge the excellent talents among the
industry and the strength of the Internet talents introduction, to intensify the employees training and the capability
construction, through internal cultivation and external introduce as well as construct the talent team to satisfy the
sustainable development of the Company. To constantly improve the govern mechanism of the Company in order
to ensure the sustainable normative operation.
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this reporting period
Time of reception Way of reception Visitor type Index of the researches basic information
www.cninfo.com.cn of the Record Chart of the Investor Relation
22 Jan. 2015 Field research Institution
Activities on 22 Jan. 2015 (No.: 2015-01)
www.cninfo.com.cn of the Record Chart of the Investor Relation
23 Apr. 2015 Field research Institution
Activities on 23 Apr. 2015 (No.: 2015-02)
www.cninfo.com.cn of the Record Chart of the Investor Relation
27 Apr. 2015 Field research Institution
Activities on 27 Apr. 2015 (No.: 2015-03)
www.cninfo.com.cn of the Record Chart of the Investor Relation
6 May 2015 Field research Institution
Activities on 6 Jun. 2015 (No.: 2015-04)
www.cninfo.com.cn of the Record Chart of the Investor Relation
15 May 2015 Field research Institution
Activities on 15 May 2015 (No.: 2015-05)
www.cninfo.com.cn of the Record Chart of the Investor Relation
30 Jun. 2015 Field research Institution
Activities on 30 Jun. 2015 (No.: 2015-06)
www.cninfo.com.cn of the Record Chart of the Investor Relation
12 Aug. 2015 Field research Institution
Activities on 21 Aug. 2015 (No.: 2015-07)
www.cninfo.com.cn of the Record Chart of the Investor Relation
19 Aug. 2015 Field research Institution
Activities on 19 Aug. 2015 (No.: 2015-08)
www.cninfo.com.cn of the Record Chart of the Investor Relation
11 Sep. 2015 Field research Institution
Activities on 11 Sep. 2015 (No.: 2015-09)
www.cninfo.com.cn of the Record Chart of the Investor Relation
15 Sep. 2015 Field research Institution
Activities on 15 Sep. 2015 (No.: 2015-10)
www.cninfo.com.cn of the Record Chart of the Investor Relation
18 Nov. 2015 Field research Institution
Activities on 18 Nov. 2015 (No.: 2015-11)
www.cninfo.com.cn of the Record Chart of the Investor Relation
3 Dec. 2015 Field research Institution
Activities on 3 Dec. 2015 (No.: 2015-12)
www.cninfo.com.cn of the Record Chart of the Investor Relation
4 Dec. 2015 Field research Institution
Activities on 4 Dec. 2015 (No.: 2015-13)
30
2015 Annual Report of Wuxi Little Swan Company Limited
www.cninfo.com.cn of the Record Chart of the Investor Relation
8 Dec. 2015 Field research Other
Activities on 8 Dec. 2015 (No.: 2015-14)
Reception times 14
Number of reception institutions 40
Number of reception person 47
Number of receipting other targets 0
Whether disclose, reveal or let out
No
unpublished significant information
2. Particulars about researches, visits and interviews received from the period-end to the disclosure date
Time of reception Way of reception Visitor type Index of the researches basic information
www.cninfo.com.cn of the Record Chart of the Investor
22 Jan. 2016 Field research Institution
Relation Activities on 22 Jan. 2016 (No.: 2016-01)
Reception times 1
Number of reception institutions 16
Number of reception person 18
Number of receipting other targets 0
Whether disclose, reveal or let out unpublished
No
significant information
31
2015 Annual Report of Wuxi Little Swan Company Limited
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning
capital reserve into share capital of the Company of the recent 3 years:
2015 profits distribution proposal: based on the 2015 total share capital of 632,487,764 shares, the Company
distributed a cash dividend of RMB6 (tax included) for every 10 shares held by its shareholders and there was no
turn from capital reserve to share capital. The proposal had reviewed and approved by the Board of Directors and
planed to submit to the Annual General Meeting for approval.
2014 profits distribution proposal: based on the 2014 total share capital of 632,487,764 shares, the Company
distributed a cash dividend of RMB4.5 (tax included) for every 10 shares held by its shareholders and there was
no turn from capital reserve to share capital. The proposal had completed the execution in Jun. 2015.
2013 profits distribution proposal: based on the 2013 total share capital of 632,487,764 shares, the Company
distributed a cash dividend of RMB3 (tax included) for every 10 shares held by its shareholders and there was no
turn from capital reserve to share capital. The proposal had completed the execution in Jun. 2014.
Cash dividend distribution of the common shares of the Company of the recent 3 years (including the reporting
period)
Unit: RMB Yuan
Net profit belonging to The ratio accounting in net profit Ratio of the
Amount of cash Amount of the
Dividend shareholders of the listed which belongs to shareholders of cash dividend
dividend cash dividend by
year company in consolidated the listed company in by other
(including tax) other methods
statement of dividend year consolidated statement methods
2015 379,492,658.40 919,181,968.58 41.29% 0.00 0.00%
2014 284,619,493.80 698,195,731.48 40.77% 0.00 0.00%
2013 189,746,329.20 413,350,079.54 45.90% 0.00 0.00%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
□ Applicable √ Inapplicable
32
2015 Annual Report of Wuxi Little Swan Company Limited
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax included) 6.00
Turning capital reserve into share capital for every 10 shares (share) 0
Total shares as the basis for the allocation preplan (share) 632,487,764
Total cash dividends (RMB Yuan) (tax included) 379,492,658.40
Distributable profit (RMB Yuan) 2,224,114,783.65
Percentage of the cash bonus of the total profits dividends 100.00%
Cash dividend situation
Other
Details about the profit allocation or turning capital reserve into share capital
The Audit Report issued by Price Waterhouse Coopers Zhongtian CPAs (LLP) indicated: the 2015 realized net profits of the parent
company was of RMB621,002,598.61, plus with the retained earnings of the last year-begin of RMB1,887,731,678.84, the total
amount of the distributable profits was added up to RMB2,508,734,277.45; distributed the 2014 annual dividends of
RMB284,619,493.80 and the profits affordable for the distribution of the shareholders at the period-end was of RMB
2,224,114,783.65.
The preplan of the 2015 distribution: planed to base on the total share capital of 632,487,764 shares at the year-end, the Company
distributed a cash dividend of RMB6 (tax included) for every 10 shares held by its shareholders, which amounted to
RMB379,492,658.40 by cash with the retained profits transferred to the following years. And there was no turn from capital reserve
to share capital in 2015.
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the
Directors, the Supervisors and the Senior Executives or the other related parties during the reporting
period and those hadn’t been completed execution up to the period-end
Commit Time of Period of
Commitmen Commitm Fulfillme
ment Contents making commitme
t ent type nt
maker commitment nt
Where the controlling shareholder GD Midea Holding Co.,
Ltd. (Midea Holding) plans to sell the Company’s shares
Commitm In the
Controlli released from trading moratorium held by it via the bid
Commitmen ent of process
ng trading system of the Shenzhen Stock Exchange, and Midea 28 Feb.
t on share shareholdi Long-term of
sharehol Holding decreases over 5% shares within six months since 2008
reform ng implemen
der the first reduction of holdings, Midea Holding will disclose
reducing tation
the suggestive announcement on share selling through the
Company two trading days before its first reduction of
33
2015 Annual Report of Wuxi Little Swan Company Limited
holdings.
1. As for the commitment of avoiding horizontal
competition, Midea Group (the controlling shareholder) and
Mr. He Xiangjian (the actual controller) has promised that,
for the period after the said transaction when the
Company’s controlling shareholder and actual controller
remain unchanged, the actual controller Mr. He Xiangjian,
his immediate family, Midea Group and its controlled other
enterprises neither recently nor in the future will engage in
any production or operation activity the same as or similar
to the recently main business of Little Swan or its
Controlli controlled enterprises, as well as will neither engage in nor
Commitm
ng participate in any competitive business the same as the In the
ent of
sharehol recently main business of Little Swan or its controlled process
avoiding 1 Dec. 2010,
der and enterprises through controlling other economic entities, Long-term of
horizontal 6 Jun. 2014
actual institutions, economic organizations. If Little Swan and its implemen
competitio
controlle controlled enterprises further developed its scope of the tation
n
r operation business on the basis of the recently business, and
if the actual controller Mr. He Xiangjian, his immediate
Commitmen family, Midea Group and its controlled other enterprises
t in the had executed production of that, would solve the
acquisition corresponding horizontal competition problems within the
report or the reasonable period. If recently there was no any production
report on or operation, would not engage in the similar new business
equity that competed with Little Swan and its controlled
changes enterprises. If there was any situation violated the above
commitments, the profits gained from the business related
to operation were belongs to Little Swan.
2. The commitment by Midea Group and the actual
controller on the specification of the related-party
transaction. Midea Group (the controlling shareholder) and
Mr. He Xiangjian (the actual controller) has promised that,
for the period after the said transaction when the
Controlli Commitm
Company’s controlling shareholder and actual controller
ng ent on the In the
remain unchanged, the actual controller Mr. He Xiangjian,
sharehol specificati process
his immediate family, Midea Group and its controlled other 1 Dec. 2010,
der and on of the Long-term of
enterprises will specify and try their best to reduce the 6 Jun. 2014
actual related-par implemen
related-party transactions with Little Swan and its
controlle ty tation
controlled enterprises. If occurred the unavoidable related
r transaction
transactions with Little Swan and its controlled enterprises,
would sign the normative related-party transactions
agreement Little Swan according to laws and would
execute the approval procedure according to the relevant
regulations to ensure the fairness of the price of the
34
2015 Annual Report of Wuxi Little Swan Company Limited
related-party transactions; ensure to execute the information
disclose obligation of related-party transactions according
to the relevant regulations; ensure not to make advantage of
the related-party transactions for illegally transferring the
assets and profits of Little Swan, as well as not to make
advantage of the related-party transactions for harming to
the interests of Little Swan and the shareholders; would not
require Little Swan to offer any more favorable condition
compared with that offered to the independent third party in
any fair trade market transaction; execute the voting debarb
obligation when involved in the voting of the related events
of the actual controller Mr. He Xiangjian, his immediate
family, Midea Group and its controlled other enterprises. If
Midea Group and Mr. He Xiangjian violated the above
commitments and promises that led to the harm for the
equity of Little Swan or other shareholders, Midea Group
and Mr. He Xiangjian should take the responsibility of the
corresponding liability for damage.
3. As for the commitment on independence, Midea Group
has promised to protect Little Swan’s independence in
Controlli terms of assets, staff, finance, organization and business. 3.
ng As for the commitment on independence, Midea Group and In the
Commitm
sharehol the actual controller Mr. He Xiangjian has promised that, to process
ent on 1 Dec. 2010,
der and further ensure the independent operation of Little Swan, Long-term of
independe 6 Jun. 2014
actual Mr. He Xiangjian, Midea Group and its controlled other implemen
nce
controlle enterprises would maintain the mutual independent in terms tation
r of personnel, finance, assets, business and institutions with
Little Swan according to the relevant laws and regulations
as well as the normative documents.
4. As for the commitment on related-party deposits and
Commitm
borrowings, up to 8 Apr. 2010, the Financial Settlement
ent on In the
Controlli Center of Midea Group had settled all internal deposits and
related-par process
ng borrowings with Hefei Midea Washing Machine Co., Ltd.;
ty deposits 1 Dec. 2010 Long-term of
sharehol and Midea Group has promised that there will be no more
and implemen
der deposits, borrowings or other funds flows incurred between
borrowing tation
the Financial Settlement Center and Hefei Midea Washing
s
Machine Co., Ltd..
Commitm 5. The commitment by Midea Group on housing properties
In the
Controlli ent on with no ownership certificates of the target company for
process
ng housing sale is detailed as follows. Two pieces of the buildings of
1 Dec. 2010 Long-term of
sharehol properties Hefei Midea Washing Machine Co., Ltd. assessed and sold
implemen
der with no to the Company are of no ownership certificates—the
tation
ownership warehouse for half-finished products (176 square meters)
35
2015 Annual Report of Wuxi Little Swan Company Limited
certificates and the workshop for injection molding (834 square
meters), both located in the old factory on Hewa Road,
Hefei. Midea Group has promised that if loss occurs due to
the said two buildings without ownership certificates in the
asset disposal process in the future, it will assume the loss
thus caused and make compensation to the Company.
6. The commitment by Midea Group on trademarks is
detailed as follows. (1) Concerning the “Midea” trademark:
Upon approval and implementation of the equity transfer
transaction, Midea Group has promised that it will make
sure that Hefei Midea Washing Machine Co., Ltd. uses the
“Midea” trademark in a proper manner. Hefei Midea
Washing Machine Co., Ltd. will be allowed to use the
“Midea” trademark with a trademark use fee not more than
that paid by Midea Group (the controlling shareholder of
Midea Group) and its subsidiaries (currently 3‰ of the
annual sales income generated by products using the No. (2),
“Midea” trademark), and upon negotiation and signing of RongShiD
the “Agreement for Trademark Use”. The related-party a
transactions incurred due to the said use of the “Midea” trademark
trademark will be submitted to the decision-making organ is due by
In the
Controlli Commitm of the Company for approval according to the stipulated March 31,
process
ng ent on procedure. As such, interests of the Company and its 2013 and
1 Dec. 2010 of
sharehol trademark minority shareholders will be safeguarded. (2) Concerning won’t
implemen
der s the “Royalstar” trademark: Midea Group has signed the renew its
tation
“Contract for Trademark Use” with Hefei Royalstar Group contract;
and obtained the ordinary use rights of the “Royalstar” (or Other
“RongShiDa”) trademark. As the transferor in the transfer items for a
transaction of equity interests of Royalstar Washing long term
Equipment, Midea Group has promised that within the implement
scope as agreed in the “Contract for Trademark Use”, if any
dispute arises between Hefei Midea Washing Machine Co.,
Ltd. and Hefei Royalstar Group over the former’s execution
of the “Contract for Trademark Use”, Little Swan will not
be involved. If Hefei Midea Washing Machine Co., Ltd. and
Little Swan have to assume any responsibility or loss due to
the aforesaid dispute, Midea Group is willing to take on the
responsibility instead and make compensations to Hefei
Midea Washing Machine Co., Ltd. and Little Swan at full
amount.
Commitm 7. The commitment by Midea Group on social security In the
Controlli
ent on payment and tax risks is detailed as follows. Midea Group process
ng 1 Dec. 2010 Long-term
social has promised that upon the completion of the said equity of
sharehol
security transfer deal, if Hefei Midea Washing Machine Co., Ltd. is implemen
36
2015 Annual Report of Wuxi Little Swan Company Limited
der payment obliged to take on any responsibility or pay relevant fares tation
and tax as required by relevant government authorities due to its
risks social security payment before the said deal, Midea Group
is willing to pay relevant fares for Hefei Midea Washing
Machine Co., Ltd. to relevant government authorities in a
timely manner and assume any other liability. If any loss
thus occurs to Hefei Midea Washing Machine Co., Ltd. or
Little Swan, Midea Group is willing to assume relevant
responsibilities for compensation. Upon the completion of
the said equity transfer deal, if income tax evasion or any
other tax risk is found in Hefei Midea Washing Machine
Co., Ltd., Midea Group is willing to assume relevant legal
responsibilities and risks and pay relevant taxes in a timely
manner to relevant government authorities; and if any loss
thus occurs to Little Swan, Midea Group will assume the
corresponding responsibility for compensation.
8. The commitment by Midea Group on capital safety at the
finance companies of the Company: during the validity
In the
Controlli Commitm period of the Financial Services Agreement, when Midea
process
ng ent on Group occurred emergency situation of payment difficulty 18 Mar. 3 years
of
sharehol capital at finance companies, it should adopt the effective measures 2015 validity
implemen
der safety such as increase the capital fund of the finance companies
tation
according to the actual needs of solving the payment
difficulty to ensure the capital safety of the Company.
Commitmen
ts made
upon the
assets
reorganizati
on
Commitmen
ts made
upon IPO or
refinancing
Commitmen
t on equity
incentive
Other
commitment
s made to
minority
shareholders
37
2015 Annual Report of Wuxi Little Swan Company Limited
Executed
timely or Yes
not?
If the
commitment
s failed to
complete the
execution
when
expired,
should
Inapplicable
specifically
explain the
reasons of
unfulfillmen
t and the net
stage of the
working
plan
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the Company
made note and explain to the assets or project arrived at original profit forecast
□ Applicable √ Inapplicable
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
No such cases in the reporting period.
V. Explanation by the Board of Directors and the Supervisory Committee about the
“non-standard audit report” issued by the CPAs firm for the reporting period
□ Applicable √ Inapplicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Inapplicable
No such cases in the reporting period.
38
2015 Annual Report of Wuxi Little Swan Company Limited
VII. Explain retrospective restatement due to correction of significant accounting errors in
the reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
□ Applicable √ Inapplicable
No such cases in the reporting period.
IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
Name of domestic CPAs firm PricewaterhouseCoopers (Special general partnership)
Remuneration for domestic CPAs firm for the reporting period (RMB Ten
235
Thousand Yuan)
Consecutive years of the audit services provided by domestic CPAs firm 1
Name of domestic CPAs firm Lin Yupeng, Lin Xuyun
Reengage the CPAs firm at current period or not?
√ Yes □ No
Reengage the CPAs firm during auditing period or not?
√ Yes □ No
Perform the approval procedures or not when change the CPAs firm?
√ Yes □ No
Notes:
The Company's original CPAs firm, Jiangsu Gongzheng Tianye Certified Public Accountants LLP (Hereinafter as
"Gongzheng Tianye") was the internal audit institution of financial report for 2015. Due to the Gongzheng Tianye
auditing team had serve for 8 years for the Company, in order to ensure the Independence and objectivity of
auditing for the listed company meanwhile better to adapt to the demand of future development of the Company,
after the deliberation, the Company decided to engaged PricewaterhouseCoopers (Special general partnership) as
the internal audit institution of financial report and internal control for 2015. The aforesaid event was reviewed
and approved by the Third Meeting of 8th Board of Directors on 17 Nov. 2015 and the Second Special Meeting of
the Board of Directors on 4 Dec. 2015.
39
2015 Annual Report of Wuxi Little Swan Company Limited
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√ Applicable □ Inapplicable
During the reporting period, the Company hired PricewaterhouseCoopers (Special general partnership )as the
accountant firm of internal control During reporting period, the total amount of the audit expenses of the Financial
Report the external audit expenses paid for PricewaterhouseCoopers (Special general partnership ) was RMB2.35
million. During reporting period, And Huatai United Securities Co., Ltd. was as continuous supervision sponsor
institution of the equity division reform of the Company that continued to carry out the supervision responsibility
of the reporting period.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Inapplicable
XI. Bankruptcy and reorganization
□Applicable √ Inapplicable
No such cases in the reporting period.
XII. Significant lawsuit or arbitration
□Applicable √ Inapplicable
No such cases in the reporting period.
XIII. Punishment and rectification
□Applicable √ Inapplicable
No such cases in the reporting period.
XIV. The honesty situations of the Company, its controlling shareholders and actual
controller
□Applicable √ Inapplicable
During reporting period, there was no effective judgment of a court and large amount of debt maturity that the
Company, its controlling shareholders and actual controller failed to perform or pay off.
XV. Actual implementation of the stock incentive plan, ESOP, or other Staff incentives
□Applicable √ Inapplicable
40
2015 Annual Report of Wuxi Little Swan Company Limited
No such cases in the reporting period.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
For the specific content of the daily related transactions, please refer to the Notes XIII. Related-party and
related-party transactions of Section IX. Financial Report.
2. Related-party transactions incurred by assets or equity purchase
□Applicable √ Inapplicable
No such cases in the reporting period.
3. Related-party transactions common external investment
□Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□Applicable √ Inapplicable
No such cases in the reporting period.
(5) Other significant related-party transactions
(1) About the Financial Service Agreement which signed with the Midea Group Finance Co., Ltd. of related
transaction
It was agreed that, the financial company should provide the service of deposit, loan, note discount, guarantee,
settlement, and the series of the financial services that approved by the CBRC according to the requirements of
the Company as well as its subsidiaries. During the three-year validity after date of the validation of the agreement,
the maximum of the deposit balance that the Company and its subsidiaries disposed in the financial company
should not exceed the amount of RMB2 billion per day; and the maximum of the outstanding loan principal and
interest balance that the financial company granted to the Company and its subsidiaries should not exceed the
amount of RMB2 billion per day.
At the report-end, the deposit balance of the Company at Midea Group Finance Co., Ltd. was of RMB 0.99 billion,
with no any loan. (2) About trademark license of related transactions
①The Company permitted GD Midea Holding Co., Ltd. and its controlled subsidiaries to use trademark of
41
2015 Annual Report of Wuxi Little Swan Company Limited
LITTLE SWAN and picture in air conditioner commodities; permitted Hubei Midea Refrigerator Co., Ltd. and its
controlled subsidiaries to use to use trademark of LITTLE SWAN and picture in the refrigerators and the
freezers; at the same time GD Midea Holding Co., Ltd. permitted the Company and subsidiaries of the Company
to use trademark of Midea in production, sales and ad campaign of washing machines and dryers. The aforesaid
licensing contracts were all contracted with 0.3% charges of net sales revenue of products with the authorized
trademark as trademark license fees, and the permitting period last from the 1 Jan. 2014 to 31 Dec. 2016.
(Notes: Approved by [2013] No. 1014 document of China Securities Regulatory Commission, Midea Group had
made share swap absorption merger of the original controlling shareholder—GD Midea Holding Co., Ltd. on 18
Sep. 2013, after which, Midea Group inherited and carried on the whole obligations and right such as the whole
assets and liabilities of GD Midea Holding Co., Ltd. as a remainder enterprise as well as had completed the
relevant share transfer registration procedures on 31 Dec. 2013.)
②The Company permitted Midea Group Co., Ltd. and its controlled subsidiaries to use trademark of Beverly in
water heater, water purification equipment and machinery, which was charged with 0.3% charges of net sales
revenue of products with the authorized trademark as trademark license fees, and the permitting period last from
the 1 Dec. 2015 to 31 Dec. 2018.
(3) The Company held the 2014 Annual General Meeting on 20 Apr. 2015 which reviewed and approved the
Proposal on Estimating the Amount of the 2015 Daily Related Transactions.
(4) The Company held the 16th Meeting of the 7th Board of Directors on 4 Aug. 2015, which reviewed and
approved the Proposal on Adjusting the Amount of the 2015 Daily Related Transactions.
(5) The Company held the 2nd Meeting of the 8th Board of Directors on 26 Oct. 2015, which reviewed and
approved the Proposal on Adjusting the Amount of the 2015 Daily Related Transactions.
Index for the interim announcements on significant related-party transactions disclosed on the relevant website:
Title of the interim announcement Disclosure date Disclosure website
Announcements about Trademark License of Related
6 Aug. 2013 www.cninfo.com.cn
Transactions (No. 2013-18)
Announcements about the Financial Service Agreement of
20 Mar. 2015 www.cninfo.com.cn
Related Transaction (No. 2015-08)
Announcements about the Estimating the Amount of the 2015
20 Mar. 2015 www.cninfo.com.cn
Daily Related Transactions.(No. 2015-04)
Announcements about the Adjusting the Amount of the
6 Aug. 2015 www.cninfo.com.cn
2015 Daily Related Transactions (No. 2015-16)
42
2015 Annual Report of Wuxi Little Swan Company Limited
Announcements about the Adjusting the Amount of the
27 Oct. 2015 www.cninfo.com.cn
2015 Daily Related Transactions (No. 2015-29)
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such cases in the reporting period.
(3) Leasing
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Significant guarantees
□ Applicable √ Inapplicable
(1) Guarantees provided by the Company
Unit: RMB Thousand Yuan
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Total external guarantee line Total actual occurred amount of
approved during the reporting 0 external guarantee during the 0
period (A1) reporting period (A2)
Total external guarantee line that Total actual external guarantee
has been approved at the end of the 0 balance at the end of the 0
reporting period (A3) reporting period (A4)
Guarantees provided by the Company for its subsidiaries
43
2015 Annual Report of Wuxi Little Swan Company Limited
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Execute
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee d or not
announcem amount party or
agreement)
ent not
22 Sep.
Hefei Midea Washing 7 Mar. General
127,000 22 Sep. 2014 26.31 2014-22 Yes No
Machine Co., Ltd. 2014 guarantee
Mar. 2015
Total guarantee line approved for Total actual occurred amount of
the subsidiaries during the 125,000 guarantee for the subsidiaries 26.31
reporting period (B1) during the reporting period (B2)
Total guarantee line that has been Total actual guarantee balance
approved for the subsidiaries at the 125,000 for the subsidiaries at the end of 0
end of the reporting period (B3) the reporting period (B4)
Guarantees provided by the subsidiaries of the Company for subsidiaries
Disclosure Guarante
date of Amount Actual occurrence Actual e for a
Type of Period of Executed
Guaranteed party relevant for date (date of guarantee related
guarantee guarantee or not
announcem guarantee agreement) amount party or
ent not
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 0 0
subsidiaries during the
reporting period (C1)
reporting period (C2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 0 0
at the end of the reporting
end of the reporting period (C3)
period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee during
during the reporting period 125,000 26.31
the reporting period
(A1+B1+C1)
(A1+B1+C1)
Total actual guarantee
Total guarantee line that has been
balance at the end of the
approved at the end of the 125,000 0
reporting period
reporting period (A1+B1+C1)
(A1+B1+C1)
Proportion of total guarantee amount (A4+B4+C4) to the net
0.00%
assets of the Company
Of which:
44
2015 Annual Report of Wuxi Little Swan Company Limited
Amount of guarantee for shareholders, actual controller and related parties (D) 0
Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio
0
is not less than 70% directly or indirectly (E)
Part of the amount of the total guarantee over 50% of net assets (F) 0
Total amount of the above three guarantees (D+E+F) 0
Explanation on possibility to bear joint liability due to undue guarantees (if any) Inapplicable
Explanation on the external guarantees in violation of stipulated procedures (if any) Inapplicable
(2) Illegal external guarantee
□ Applicable √ Inapplicable
No such case during reporting period
3. Cash assets management entrustment
(1) Wealth management entrustment
Unit: RMB Thousand Yuan
Principal Withdraw Amount of Actual
amount n actual withdraw
Name Related Remuneration
Initial Ended actually impairmen Estimate profits or of profits or
of the transacti Type Amount determination
date Date received in t profit losses in losses in
trustee on or not method
reporting provisions reporting reporting
period ( if any) period period
Floating interest
Financ
rate, the highest
ial 1 Jan. 31 Dec.
Bank No 639,905 annual yield of 520,715 20,166 20,166 20,166
Produc 2015 2015
contract
t
assumpsit
Total 639,905 -- -- -- 520,715 20,166 20,166 --
All self -owned capital of the Company The amount of wealth management entrustment was the
Capital resources cumulative amount, the capital amount used for wealth management entrustment was no more than
RMB4.4 billion reviewed by the Company.
Cumulative amount of
principal and earnings
0
maturity that fail to
recover
Cases involving lawsuit
Inapplicable
(if applicable)
Disclosure date of
20 Mar. 2015
announcement on
45
2015 Annual Report of Wuxi Little Swan Company Limited
wealth management
entrustment reviewed
and approved by the
Board of Directors
Disclosure date of
announcement on
wealth management
21 Apr. 2015
entrustment reviewed
and approved by the
Board of Shareholders
On 8 Mar. 2016, the Company held the 4th Meeting of 8th Board of Directors, the Meeting reviewed and
Whether there is wealth
approved the Proposal on the Self-own Idle Fund Entrusting Wealth Management, the Board of Directors
management
agree to put its self-own idle fund no more than RMB6 million into wealth management entrustment, the
entrustment plan in
aforesaid amount can be rolled and used for investing short-term low-risk investment products. The
future or not?
proposal had not yet been reviewed and approved and submitted to the Board of Directors.
(2) Entrustment loans
□ Applicable √ Inapplicable
No such cases in the reporting period.
(4) Other significant contracts
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVIII. Other significant events
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIX. Significant events of subsidiaries
□ Applicable √ Inapplicable
XX. Social responsibilities
The Company positively executed the social responsibility, paid attention on maintaining the legal equities of each
benefit-related party, insisted to harmonious coexist with each party. The Company positively participated in the
social and public welfare undertakings, paid attention on the environmental protection and positively responded to
the national appeal of energy saving and emission-reduction that made great efforts to contribute to the sustainable
46
2015 Annual Report of Wuxi Little Swan Company Limited
development of the society as well as environment, with the specific work situation as follows:
(I) Safeguarding legitimate rights and interests of consumers: Being market-oriented, the Company centered on
the customers’ needs and keeps improving quality management to offer products with a quality higher than the
expectation of consumers and an improved users experience. It has a national service hotline—4008228228—to
answer to customers’ questions and complaints, ensure that they would be satisfied.
(II) Positively paying back for the shareholders. The Company constructed a more perfect corporate governance
structure and formulated a corresponding management system for ensure the shareholders to fully enjoy each legal
interests stipulated by the laws and regulations. In line with the stipulation of the Articles of Association, the
Company realized the allocable profit positive, and there were no significant investment plan or significant cash
expenditure events (excluding raise funds investment events).Any within three consecutive years, the Company
allocated the profits in cash accumulatively no less than 30% of the average distributive profits realized in recent
three years. When allocating profits, the Cash bonus should take the minimum proportion of 20% in the profits
allocation. The Company attached great importance to the retribution and had been executing the cash dividends
for recent years.
(III) Constructing strategic partnership. The Company positively constructed the strategic partnership with
suppliers and customers, complied with the business rule, paid attention on the communication and cooperation
with each related party, built up interests community with the partners for growing together and sharing
achievements, ensured the interests and relevant equities of the partners and jointly dedicated to maintain the
sustainable healthy development of the industry.
(IV) Safeguarding rights and interests of employees. The Company strictly implemented the state laws and
regulations to positively guarantee the legal interests of the staff. The Company offered a favorable working and
living environment for its staff and built as well as improved the salary standard and the incentive system, and
provided competitive salary reward with improving space. The Company offered various kinds of training to
promote the career development of the staff by the method combined either in internal or external. It also conducts
many leisure activities to enrich employees’ life.
(V) Promoting energy saving and environmental protection. The Company carried out and promoted the energy
conservation and emission reduction and executed the social responsibility under the low-carbon time through
innovation in management, technology and products. During the progress of produce, the Company realized 100%
of the recycle and the reuse of the industrial water consumption; the Company explored the Accurate Automatic
Launch Detergent Technology, which gained the authentication of the international authority-UK Intertek, and at
47
2015 Annual Report of Wuxi Little Swan Company Limited
the same time received the green leave label of Carbon Footprint that meant the Company be the first enterprise
that received that label in the domestic washing machine industry.
(VI) Paying attention on the public welfare. At the activity named “Jiangsu Province Disabled-aiding Welfare
Project” held by Jiangsu Province Disabled Persons' Federation and Jiangsu Province Disabled Person Welfare
Foundation, the Company actively donated RMB80000 etc., which manifested the social responsibility by
practical action.
Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the
environmental protection authorities of the country?
□ Yes √ No
Whether issue social responsibility report or not?
□ Yes √ No
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not
fully paid on the approval report date of annual report
□ Yes √ No
48
2015 Annual Report of Wuxi Little Swan Company Limited
Section VI. Change in Shares & Shareholders
I. Changes in shares
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalizati
Newly Bonus
Amount Proportion on of public Other Subtotal Amount Proportion
issue share shares
reserves
I. Restricted shares 3,686,890 0.58% 24,300 3,711,190 0.59%
1. Shares held by
3,686,890 0.58% 24,300 3,711,190 0.59%
domestic investors
Among which: shares held
3,686,890 0.58% 3,686,890 0.58%
by domestic legal person
Shares held by domestic
24,300 24,300 0.01%
natural person
II. Shares not subject to
628,800,874 99.42% -24,300 628,776,574 99.41%
trading moratorium
1. RMB ordinary shares 437,765,002 69.21% -24,300 437,740,702 69.21%
2. Domestically listed
191,035,872 30.20% 191,035,872 30.20%
foreign shares
III. Total shares 632,487,764 100.00% 632,487,764 100.00%
Reason for the change in shares
The original Deputy GM Mao Zhiliang purchase 24,300 shares of the Company share on 28 May 2015, and left
his post on 26 Aug. 2015. In line with the stipulation No. 141 of Corporation Law, the Company's directors,
supervisors and senior executives cannot transfer the shareholding of the Company within six months after
demission. Thus, Mao Zhiliang's holding of 24,300 shares of the Company share became restricted shares of the
Company.
Approval of the change in shares
□ Applicable √ Inapplicable
Reason for the change in shares
□ Applicable √ Inapplicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common
49
2015 Annual Report of Wuxi Little Swan Company Limited
shareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Inapplicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
Unit: share
Number of Number of Increase Number of
Name of opening unlocked number of closing Date of
Reason
shareholder restricted restricted restricted restricted unlocked
share shares share share
The original Deputy GM Mao Zhiliang purchase 24,300
shares of the Company share on 28 May 2015, and left
his post on 26 Aug. 2015. In line with the stipulation No.
141 of Corporation Law, the Company's directors,
Mao
0 0 24,300 24,300 supervisors and senior executives cannot transfer the 2016-2-26
Zhiliang
shareholding of the Company within six months after
demission. Thus, Mao Zhiliang's holding of 24,300 shares
of the Company share became restricted shares of the
Company.
Total 0 0 24,300 24,300 -- --
II. Issuance and listing of securities
1. Issuance of securities over the past three years
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
□ Applicable √ Inapplicable
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
50
2015 Annual Report of Wuxi Little Swan Company Limited
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of Total number of Total number of preference
Total number
common shareholders preference shareholders shareholders with resumed
of common
22,046 at pervious month-end 20,833 with resumed voting 0 voting rights at pervious 0
shareholders
of this Report’s rights at period-end ( if month-end of this Report’s
at period-end
disclosure any) (see note 8) disclosure (if any) (see note 8)
Shareholding of shareholders holding more than 5% shares
Number of Increase and Number of Number of Pledged or
Holding shareholding decrease of shares held shares held frozen shares
Nature of
Name of shareholder percentage at the end of shares during subject to not subject
shareholder Status of Amo
(%) the reporting reporting trading to trading
shares unt
period period moratorium moratorium
Domestic
MIDEA GROUP CO., LTD. non-state-own 37.78% 238,948,117 0 238,948,117
ed corporation
TITONI INVESTMENTS Overseas
14.89% 94,204,942 0 94,204,942
DEVELOPMENT LTD. corporation
Overseas
GAOLING FUND,L.P. 3.43% 21,694,456 -5,033,230 21,694,456
corporation
FINANCE BUREAU OF On behalf of
2.70% 17,054,071 -5,003,586 17,054,071
WUXI government
GREENWOODS CHINA Overseas
1.90% 11,993,381 11,993,381 11,993,381
ALPHA MASTER FUND corporation
CHINA SECURITIES State-owned
1.73% 10,940,659 10,940,659 10,940,659
FINANCE CORP. corporation
CENTRAL HUIJIN ASSET State-owned
1.61% 10,156,300 10,156,300 10,156,300
MANAGEMENT CO., LTD. corporation
NATIONAL SOCIAL Domestic
SECURITY FUND non-state-own 1.35% 8,561,323 8,561,323 8,561,323
PORTFOLIO 101 ed corporation
NATIONAL SOCIAL Domestic
SECURITY FUND non-state-own 1.03% 6,500,029 -1,999,971 6,500,029
PORTFOLIO 102 ed corporation
Domestic
ICBC—GF LARGE-CAP
non-state-own 0.95% 6,000,809 6,000,809 6,000,809
GROWTH MIXED FUND
ed corporation
51
2015 Annual Report of Wuxi Little Swan Company Limited
Strategic investors or the general legal person due to the placement of new shares
Inapplicable
become the top 10 shareholders (if any) (note 3)
GD MIDEA HOLDING CO., LTD. and
TITONI INVESTMENTS
Explanation on associated relationship or/and persons
DEVELOPMENT LTD. are parties acting
in concert.
Particulars about shares held by top 10 shareholders not subject to trading moratorium
Number of shares held Type of share
not subject to trading
Name of shareholder
moratorium at the end Type of share Amount
of the period
MIDEA GROUP CO., LTD. 238,948,117 RMB ordinary shares
Domestically listed
TITONI INVESTMENTS DEVELOPMENT LTD. 94,204,942
foreign shares
Domestically listed
GAOLING FUND,L.P. 21,694,456
foreign shares
FINANCE BUREAU OF WUXI 17,054,071 RMB ordinary shares
Domestically listed
GREENWOODS CHINA ALPHA MASTER FUND 11,993,381
foreign shares
China Securities Finance Corp, 10,940,659 RMB ordinary shares
Central Huijin Asset Management Co., Ltd. 10,156,300 RMB ordinary shares
NATIONAL SOCIAL SECURITY FUND PORTFOLIO 101 8,561,323 RMB ordinary shares
NATIONAL SOCIAL SECURITY FUND PORTFOLIO 102 6,500,029 RMB ordinary shares
ICBC-GF Large-Cap Growth Mixed Type Fund 6,000,809 RMB ordinary shares
Explanation on associated relationship among the top ten
shareholders of tradable share not subject to trading moratorium, as GD MIDEA HOLDING CO., LTD. and TITONI
well as among the top ten shareholders of tradable share not subject INVESTMENTS DEVELOPMENT LTD. are parties acting
to trading moratorium and top ten shareholders, or explanation on in concert.
acting-in-concert
Particular about shareholder participate in the securities lending and
Inapplicable
borrowing business ( if any)
Did any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conduct any agreed buy-back
in the reporting period?
□ Yes √ No
52
2015 Annual Report of Wuxi Little Swan Company Limited
2. Particulars about the controlling shareholder
Legal representative
Name of controlling shareholder Date of establishment Organization code Business scope
/ company principal
Manufacture and
MIDEA GROUP CO., LTD. Fang Hongbo 7 Apr. 2000 91440606722473344C sales of household
electrical appliances
Shares held by the controlling
The Company’s controlling shareholder is MIDEA GROUP CO., LTD. with the securities
shareholder in other listed companies
code of 000333, whose shares held in other listed companies by holding or shareholding is
by holding or shareholding during the
published on www.cninfo.com.cn.
reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The controlling shareholder did not change during the reporting period
3. Particulars about actual controller
Whether gain the right of residence in
Name of the actual controller Nationality
other countries or regions or not
He Xiangjian The People’s Republic of China No
Occupation and position Current Chairman of the Board in Midea Holding and Midea Group
Particulars on his controlling listed Midea Holding (000527.SZ), Welling Holding (00382.HK) and Little Swan (A:
companies over the past ten years 000418.SZ;B:200418)
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
The actual controller did not change during the reporting period
The ownership and controlling relationship between the actual controller of the Company and the Company is
detailed as follows
53
2015 Annual Report of Wuxi Little Swan Company Limited
He Xiangjian
94.55%%
Midea Holding Co.,Ltd.
35.07%
Midea Group Co.,Ltd.
100%
Midea Electric Investment(BVI)Limited 37.78%
100%
Titoni Investments Development Ltd.
14.89%
Wuxi Little Swan Co.,Ltd
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
Name of corporate Legal representative / Date of Main business or management
Registered capital
shareholder company principal establishment activity
As share holding company hold
TITONI Xiao Mingguang 7 Feb. 2007 USD 50,000
share equity of Little Swan
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Inapplicable
54
2015 Annual Report of Wuxi Little Swan Company Limited
Section VII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Amount of
Amount of Shares
shares
Shares shares Other held at
decreased
Current/ Gende Ag held at the increased at changes the
Name Position Initial date Ended Date at the
former r e year-begin the reporting increase/ year-be
reporting
(share) period decrease gin
period
(share) (share)
(share)
Fang Chairman of
Current Male 48 9 May 2008 25 Aug. 2018 0 0 0 0
Hongbo the Board
Yin GM Current Male 47 2 Aug. 2013 25 Aug. 2018 0 0 0 0
Bitong Director Current Male 47 27 Aug. 2013 25 Aug. 2018 0 0 0 0
Xiao
Minggua Director Current Male 45 12 Jan. 2010 25 Aug. 2018 0 0 0 0
ng
Zhang
Zhaofen Director Current Male 40 2 Nov. 2012 25 Aug. 2018 0 0 0 0
g
Company Femal
Current 42 10 Jan. 2007 25 Aug. 2018 0 0 0 0
Zhou Secretary e
Sixiu Femal
Director Current 42 21 Aug. 2012 25 Aug. 2018 0 0 0 0
e
Sun CFO Current Male 37 24 Nov. 2014 25 Aug. 2018 0 0 0 0
Yunan Director Current Male 37 26 Aug. 2015 25 Aug. 2018 0 0 0 0
Jiang Independent
Current Male 51 22 Aug. 2014 25 Aug. 2018 0 0 0 0
Qingyun director
Tao
Independent
Xiangna Current Male 49 20 Apr. 2015 25 Aug. 2018 0 0 0 0
director
n
Zhu Independent
Current Male 51 26 Aug. 2015 25 Aug. 2018 0 0 0 0
Heping director
Liang Supervisory
Current Male 38 22 Aug. 2014 25 Aug. 2018 0 0 0 0
Pengfei Board
55
2015 Annual Report of Wuxi Little Swan Company Limited
Chairman
Wang
Supervisor Current Male 34 22 Aug. 2014 25 Aug. 2018 0 0 0 0
Shouhu
Xu Staff
Pengche representativ Current Male 46 5 Aug. 2014 25 Aug. 2018 0 0 0 0
ng e supervisor
Vice
Chai
chairman of Former Male 52 2 Aug. 2013 26 Aug. 2015 0 0 0 0
Xinjian
the Board
Independent Femal
Yu Lihui Former 50 16 Sep. 2009 26 Aug. 2015 0 0 0 0
director e
Liu Independent
Former Male 45 22 Aug. 2014 20 Apr. 2015 0 0 0 0
Chunlin director
Fu Wei Vice GM Former Male 39 21 Aug. 2012 26 Aug. 2015 0 0 0 0
Mao
Vice GM Former Male 58 21 Aug. 2012 26 Aug. 2015 0 24,300 0 24,300
Zhiliang
Total -- -- -- -- -- -- 0 24,300 0 24,300
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Chai Xinjian Vice chairman of the Board Left as serve term expired 26 Aug. 2015 Left as serve term expired
Yu Lihui Independent director Left as serve term expired 26 Aug. 2015 Left as serve term expired
Liu Chunlin Independent director Former 20 Apr. 2015 Resigned owning to personal reason
Fu Wei Vice GM Left as serve term expired 26 Aug. 2015 Left as serve term expired
Mao Zhiliang Vice GM Left as serve term expired 26 Aug. 2015 Left as serve term expired
Sun Yunan Director, CFO Engaged 26 Aug. 2015 General election
Tao Xiangnan Independent director Engaged 20 Apr. 2015 By-election independent director
Zhu Heping Independent director Engaged 26 Aug. 2015 General election
III. Resumes of important personnel
Main working experience of current directors, supervisors and senior management staff
(1) Mr. Fang Hongbo, was born in Jan. 1967, master degree. He now serves in the Company as the Chairman of
the Board, as the Chairman of the Board and concurrently President in Midea Group Co., Ltd. He ever took the
posts of General Manager and President of GD Midea Holding Co., Ltd., etc.
(2) Mr. Yin Bitong, was born in Dec. 1968, master degree. He now acts as Director and General Manager of the
56
2015 Annual Report of Wuxi Little Swan Company Limited
Company. He ever served as Assistant General Manager, Marketing Chief in Midea Air-conditioner Marketing
Company in China, Marketing General Manager in China in Midea (Guangzhou) Hualing Air Conditioner
Equipment Co., Ltd. Domestic Marketing General Manager of Hefei Midea Washing Equipment Manufacturing
Co., Ltd. ,etc.
(3) Mr. Xiao Mingguang, was born in Feb. 1970, master degree, CPAs. He now serves as Director in the Company,
Business Management Director of Midea Group. He ever took the posts as Deputy Director of financial
management of GD Midea Holding Co., Ltd., chief of Audit and Supervision Department Midea Group and
Director of GD Midea Holding Co., Ltd. ,etc.
(4) Mr. Zhang Zhaofeng, was born in Aug. 1975, master degree. Now he acts as the GM of Financial center of
Midea Group. He ever took the posts of Supervisor, Director and CFO of the Company and Media Group Co.,
Ltd., as Chief of the Audit and Supervision Department of GD Midea Holding Co., Ltd., etc.
(5) Ms. Zhou Sixiu, was born in Feb. 1973, bachelor degree, CPAs. Now, she holds the posts of Director and
Secretary to the Board in the Company. She ever served as Securities Affair Representative and other positions in
Wuxi Qingfeng Stock Co., Ltd., etc.
(6) Sun Yunan, was born in May, 1978, master degree. He ever served as Finance Minister of Automatic Factory
of the Company, Refrigerator Career Dept. Factory and Manager of Accounting and Process Management of
Midea Group , etc.
(7) Jiang Qingyun, was born in Jun. 1964, doctor degree. He now serves as Independent Director of the Company,
Marketing Director of School of Management Fudan University. He ever acted as Associate Professor and Deputy
Dean of East China University of Science and Technology School of Business, Associate professor and Deputy
Market Director of School of Management of Fudan University, etc.
(8) Tao Xiangnan was born in Jan. 1966, doctor degree. He now serves as Independent Director of the Company,
Associate Professor of Nanjing University Business School, Adjunct Associate Professor of MUST and
Independent Director of Shenzhen Maida Digital Co., Ltd.
(9) Zhu Heping was born in Apr. 1964, doctor degree. He now serves as Independent Director of the Company,
Accounting Professor of school of business Jiangnan university, Member of CICPA and Independent Director of
Jiangsu New Yuancheng Cable Co., Ltd.,Yoke Technology Co., Ltd. and Jiangsu Yataiqing Alloy Technology
Co., Ltd..
(10) Liang Pengfei was born in Aug. 1977, bachelor. He now serves as Chairman of the Board of Supervisor,
Director of Operating and Human Resources. He ever acted as Manager of Marketing Center Compressor Dept.,
57
2015 Annual Report of Wuxi Little Swan Company Limited
Manager of Supply Chain Management Dept. Minister of Manufacturing Management Dept. and Director of
Operating management of Midea Group etc.
(11) Wang Shouhu, was born in Sep. 1981, bachelor, He now serves as Supervisor Manager of Internal Audit. He
ever acted as Director of Management Audit of Media Daily Appliance Group and Supervision of Integrity officer
of Media Group, etc.
(12) Xu Pengcheng, was born in Dec. 1969, bachelor. He now serves as Staff Representative Supervisor and
Director of R&D of the Company. He ever acted as Minister of impeller Development Dept. officer of R&D of
Automatic Washing Machine Company and GM of Hefei Midea Washing Machine Co., Ltd., etc.
Post-holding in shareholder units
Name of the person Receives payment
Name of the shareholder Position in the shareholder Beginning date of Ending date of
holding any post in from the
unit unit office term office term
any shareholder unit shareholder unit?
Fang Hongbo Midea Group Chairman of the Board 25 Aug. 2012 17 Sep. 2018 Yes
Fang Hongbo Midea Group CEO 15 Oct. 2013 17 Sep. 2018 Yes
Director of finance and
Xiao Mingguang Midea Group 2 Dec. 2015 Yes
economics
Xiao Mingguang TITONI Director 23 Dec. 2013 No
Zhang Zhaofeng Midea Group GM of Financial Center 2 Dec. 2015 Yes
Post-holding in other units
Name of the person Receives payment
Beginning date of Ending date of
holding any post in Name of other unit Position in other unit from the
office term office term
any shareholder unit shareholder unit?
School of Management Professor and Marketing
Jiang Qingyun 1 Aug. 1999 Yes
Fudan University Director
Nanjing University
Tao Xiangnan Associate Professor 1 Jan. 2005 Yes
Business School
School of Business
Zhu Heping Professor 1 Sep. 2007 Yes
Jiangnan university
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities
Regulatory Institution of recent three years in reporting period
□ Applicable √ Inapplicable
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors
58
2015 Annual Report of Wuxi Little Swan Company Limited
and senior management
(1) Decision-making procedure for the remuneration of directors, supervisors and senior management: The
remuneration of directors, supervisors and senior management receiving remuneration from the Company is
decided after the approval of the Board of Directors.
(2) Determining basis for the remuneration of directors, supervisors and senior management: The remuneration of
directors, supervisors and senior management receiving remuneration from the Company consist of the basic
annual salary and performance annual salary. The basic annual salary is decided according to the duties, risks,
pressure and other factors born by the directors, supervisors and senior management, and it stays unchanged;
while the performance annual salary is linked with the profit completion rate and the appraisal results of target
responsibility system of the Company. The remuneration system of the directors, supervisors and senior
management of the Company serves for its operating strategy, which is adjusted according to the changes of
operation situation of the Company so as to adapt to the needs of the further development of the Company. The
adjustment basis for the remuneration of directors, supervisors and senior management of the Company is as
follows: (1) the increase level of remuneration in the same industry; (2) the earnings of the Company; (3) the
adjustment of organization structure; (4) adjustment on positions. The allowance for independent directors
approved by the Board of Directors is RMB100, 000 (tax included) per year which reviewed and approved by the
First General Meeting of Shareholders of 2015 on 26 Aug. 2015, and the expenses occurred to execute their
responsibilities are born by the Company.
(3) Actual payment for the remuneration of directors, supervisors and senior management: The basic salary of
directors, supervisors and senior management receiving remuneration from the Company is paid monthly; the
allowance for independent directors is paid quarterly.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period
Unit: RMB Thousand Yuan
Total before-tax Whether gained remuneration
Current
Name Position Gender Age remuneration gained from the related parties of the
/former
from the Company Company
Chairman of the
Fang Hongbo Male 48 Current Yes
Board
Yin Bitong Director, GM Male 47 Current 269.73
Xiao Mingguang Director Male 45 Current Yes
Zhang Zhaofeng Director Male 40 Current Yes
59
2015 Annual Report of Wuxi Little Swan Company Limited
Zhou Sixiu Company Secretary Female 42 Current 123.02
Sun Yunan Director, CFO Male 37 Current 130.25
Jiang Qingyun Independent director Male 51 Current 8.50
Tao Xiangnan Independent director Male 49 Current 6.50
Zhu Heping Independent director Male 51 Current 3.33
Supervisory Board
Liang Pengfei Male 38 Current 129.44
Chairman
Wang Shouhu Supervisor Male 34 Current 32.46
Staff representative
Xu Pengcheng Male 46 Current 274.58
supervisor
Vice chairman of the
Chai Xinjian Male 52 Former Yes
Board
Yu Lihui Independent director Female 50 Former 6.00
Liu Chunlin Independent director Male 45 Former 2.00
Fu Wei Vice GM Male 39 Former 145.17
Mao Zhiliang Vice GM Male 58 Former 94.84
Total -- -- -- -- 1,225.82 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company
during the reporting period
□ Applicable √ Inapplicable
V. About employees
Employee’s remuneration policy and training plan
(1) Employee’s remuneration policy: It will adopt irregular work system and integrated working hours for
employee’s remuneration according to the nature and content of the positions, and sign the collective wage
contract by collective wage consultation system.
(2) Employee’s training: It will decide the training content for employees from different levels and groups
according to the post qualification, and promote the training of entire staff, so as to build a learning organization.
As of 31 Dec. 2015, on-job employees 7872, retired staff of need to bear the cost were 430, and the structure was
as followed:
60
2015 Annual Report of Wuxi Little Swan Company Limited
Situation of remuneration cost of Company
Reporting period
Total number of employees accepted salaries(person) 8,206
Total salaries (Ten thousand Yuan) 89,398.91
Proportion of operation revenue in reporting period 6.81%
Average salary of senior executives (Ten thousand Yuan/person) 174.33
Average salary of total employees (Ten thousand Yuan/person) 10.89
61
2015 Annual Report of Wuxi Little Swan Company Limited
Section VIII. Corporate Governance
I. Basic details of corporate governance
The Company continuously perfected its corporate governance; promote the improvement of its operation
and formulate the corresponding internal control system, prevented and controlled risks and safeguarded
the legitimate rights and interests of the Company and the shareholders in accordance with the
requirements of relevant laws and rules such as Company Law, Securities Law issued by CSRC. The
actual situation of the Company’s corporate governance is in accordance with the requirements of
Administrative Rule for Listed Companies issued by CSRC
The Company set up Rules of Procedure for the operation of Board of Directors, Supervisory Board and
Shareholders’ General Meeting, Rules of Procedure, The Disclosure of Information Management System,
Raise Money Management System, Related Transaction Management System, Information Source Insider
Registration Management System, Internal Report System for the Major Issues, System of Accountability
for Management etc files of standard management for the Special Committee of the Board. During the
reporting period, the Company held Second Special Meeting of the Board of Directors in according to
the need of actual operation and stipulation of relevant laws and regulations, the meeting reviewed and
approved the formulating or revising of External Guarantee Decision-making System, Directors,
Supervisors and Senior Executive remuneration Management System, Rule of Procedure of
Shareholders' Meeting and Revision of Article of Association, which further perfect the corporate
governance
In line with the relevant provisions of Company Law, the Articles of Association etc., the Company
established a comparative perfect organization control structure system The Board of Director conducted
the resolutions of general meeting of shareholders, response for the significant decision-making events and
general meeting of stockholders; the Company appointed GM by law, presided over the daily production
operation and management, organized the implementation of resolution of the Board, was responsible for
the Board of Directors; the supervisor of the Company was the supervisory organization for the Company
which supervised the behaviors of the directors, GM and the finance of the Company. The four committees,
Strategy Committee, the Remuneration and Appraisal Committee, Audit Committee, the Nomination
Committee were under the Board of Directors. the Company’s General Meeting of shareholders, Board of
Directors, Board of directors and operation managerial personnel with clear responsibilities and rights,
performing their duties, effective checks and balances, scientific decision-making and coordinate
operations, which laid a solid foundation for sustained, stable and healthy development of the Company.
During reporting period, the Company acquired the Most Respectable Listed Company Finalist of China in
2015 hosted by Association of Chinese Listed Companies together with China Securities Investors
Protection Fund Limited Company, SSE, SZSE, SAC and Assets Management Association of China , and
undertaken by Securities Times
Whether it exists any difference between the corporate governance and the Company Law and relevant
62
2015 Annual Report of Wuxi Little Swan Company Limited
rules of CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of
CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in
respect of business, personnel, assets, organization and financial affairs
The Company totally kept separation from the controlling shareholder in respect of business, personnel,
assets, organization and financing that it owned an independent and complete business as well as
self-operation capability.
1. In respect of business, the Company owned independent and integrated system of R&D, purchasing,
production and sales. Main business of the Company is washing machine that there isn’t any horizontal
competition between the Company and the controlling shareholder. The Company was completely
separated from the controlling shareholder in business.
2.In respect of personnel, in terms of labor, personnel and salary management, the Company and the
controlling shareholder were independent each other, there existed no mixed operation and management
between the Company and the controlling shareholder. Such senior management staff as General Manager,
Deputy General Managers, CFO and Secretary to the Board. And they did not take any post other than
Director in Shareholding Companies respectively.
3. In respect of assets, the Company’s assets were complete, and there was the clear property right
relationship between the Company and the controlling shareholder.
4. In respect of organization, the Company has set up the organization that was independent from the
controlling shareholder completely, the Board of Directors, the Supervisory Committee and internal
organization could operate independently.
5. In respect of financing, the Company owned independent financial department, established independent
accounting system and financial management system, opened independent bank account, paid tax in line
with laws.
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Particulars about the annual shareholders’ general meeting and special
shareholders’ general meetings held during the reporting period
Particulars about the shareholders’ general meeting in reporting period
Proportion of
Session Type investors' Convening date Disclosure date Index to the disclosed
participation
The Annual
The Annual
Shareholders’ (Announcement No.: 2015-13) was
Shareholders’ 58.06% 20 Apr. 2015 21 Apr. 2015
General Meeting published on www.cninfo.com.cn
General Meeting
of 2014
The First Special Special 57.29% 26 Aug. 2015 27 Aug. 2015 (Announcement No.: 2015-23) was
63
2015 Annual Report of Wuxi Little Swan Company Limited
Shareholders’ Shareholders’ published on www.cninfo.com.cn
General Meeting for General Meeting
2015
The Second Special
Special
Shareholders’ (Announcement No.: 2015-39) was
Shareholders’ 57.61% 4 Dec. 2015 7 Dec. 2015
General Meeting for published on www.cninfo.com.cn
General Meeting
2015
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of
voting right
□ Applicable √ Inapplicable
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’
general meetings
1. Particulars about the independent directors attending the board sessions
Sessions required to Non-attendance in
Independent Attendance Attendance by way of Entrusted
attend during the Absence rate person for two
director in person telecommunication presence (times)
reporting period consecutive times
Jiang Qingyun 6 3 3 0 0 No
Yu Lihui 3 1 1 1 0 No
Liu Chunlin 1 1 0 0 0 No
Tao Xiangnan 5 2 3 0 0 No
Zhu Heping 3 1 2 0 0 No
General meetings sat in on by
3
independent directors
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the
Company.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Note to advices to the Company from independent directors were adopted or not adopted
During the reporting period, the independent directors of the Company in strict accordance with the
relevant laws, regulations and rules of Articles 0f Association, focus on the operation of the Company,
perform their duties independently and put forward the professional opinions to complete the system of the
Company and daily management decisions , for those events need issued opinions, the independent
directors put forward independent and impartial advice, which play a proper role to improve the company
governance mechanism, safeguard the legitimate rights and interests of the Company and all shareholders.
64
2015 Annual Report of Wuxi Little Swan Company Limited
VI. Performance of the Special Committees under the Board during the reporting
period
During the reporting period, the performance of the Special Committees under the Board was as follows:
1.The Audit Committee under the Board convened four meetings, at which reviewed and approved the
Annual Financial Statement Report 2014, Annual Report and Its Abstract 2014, Summary Report of the
Audit Committee on the 2014 Annual Audit Work, Proposal on Engaging the Audit Firm for the 2015
Annual Financial Report, Proposal on Engaging the Audit Firm for the 2015 Annual Internal Control,
Proposal on the Company's Write-off Asset Impairment Provision, 2015 Semi-annual Report,2015 Third
Quarter Report and Proposal on the Change of appointment of Accounting Firm
2. The strategy Committee under the Board convened one meeting, at which reviewed and approved the
proposal on Mid-term Development Plan of the Company (2015-2017);
3.The Remuneration and Appraisal Committee under the Board convened two meetings, at which reviewed
and approved the Proposal on Paying the 2014 Annual Remuneration to the Senior Management;
Remuneration Management System for Directors, Supervisors and Senior Executives, and Proposal on
Adjustment to the Remuneration for Independent Directors.
4. The Nomination Committee under the Board convened three meetings, at which reviewed and approved
the Proposal on the By-election of Independent Directors of the Company, Proposal on General Election of
the Board of Directors, Proposal on Appointment of GM of the Company, Proposal on the Appointment of
CFO of the Company and Proposal on Appointment of Secretary to the Board of Directors.
VII. Performance of the Supervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in
the supervisory activity
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.
VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff
The selection, appraisal and incentive system of the senior management staff of the Company were
implemented according to relevant regulations of the Company Law and the Articles of Association of the
Company. The Company established examination and evaluation system on the basis of the target
responsibility, determine the evaluation index, evaluation method and evaluation method relate to the
assessment results, according to the annual signing of the Target Responsibility Assessment System
Agreement with senior management. During the reporting period, the Company had in accordance with
the measures for the management of target responsibility system exam and the rate the senior management,
and had reflected in an annual performance remuneration, which effectively improved the senior
management’s responsibility and work enthusiasm.
65
2015 Annual Report of Wuxi Little Swan Company Limited
IX. Internal Control
1. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure index of the Auditor’s Report on Internal Control 10 Mar. 2016
For details about the Self-appraisal Report on the 2015
Annual Internal Control, please refer to
Disclosure index of the Auditor’s Report on Internal Control
www.cninfo.com.cn, which is the information disclosure
website designated by Shenzhen Stock Exchange.
The proportion of total assets included in evaluation scope entities
100.00%
in the Company's total assets of the consolidated financial statements
The proportion of operation revenue included in evaluation scope
entities in the Company's operation revenue of the consolidated 100.00%
financial statements
Defect judging standards
Category Financial Report Non-Financial Report
For details, please refer to Section III. (III) For details, please refer to Section III. (III)
Judgment of evaluation and defect judging Judgment of evaluation and defect judging
Qualitative criteria standards of internal control disclosed on the standards of internal control disclosed on the
Self-appraisal Report on the 2015 Annual Self-appraisal Report on the 2015 Annual
Internal Control on 10 Mar. 2016 Internal Control on 10 Mar. 2016
For details, please refer to Section III. (III) For details, please refer to Section III. (III)
Judgment of evaluation and defect judging Judgment of evaluation and defect judging
Quantitative criteria standards of internal control disclosed on the standards of internal control disclosed on the
Self-appraisal Report on the 2015 Annual Self-appraisal Report on the 2015 Annual
Internal Control on 10 Mar. 2016 Internal Control on 10 Mar. 2016
Number of significant defects of
0
financial report (Piece)
Number of significant defects of
0
non- financial report (Piece)
Number of important defects of
0
financial report (Piece)
Number of important defects of
0
non-financial report (Piece)
X. Audit report on internal control
Audit opinion paragraphs in the Audit Report on Internal Control
The audit firm for internal control believes that the Company makes valid internal control on financial report in all significant
aspects on 31 Dec. 2015 according to the Basic Rules on Enterprise Internal Control and other relevant stipulations.
Particulars about Audit Report on Internal Control Disclosure
Disclosure date of the Audit Report on Internal Control 10 Mar. 2016
For details about the Self-appraisal Report on the 2015Annual Internal
Disclosure index of the Audit Report on Internal Control Control, please refer to www.cninfo.com.cn, which is the information
disclosure website designated by Shenzhen Stock Exchange.
Type of Audit Report on Internal Control Unqualified auditor's report
Whether there is significant defect in non-financial report No
66
2015 Annual Report of Wuxi Little Swan Company Limited
Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal
Report from the Board or not?
67
2015 Annual Report of Wuxi Little Swan Company Limited
Section IX. Report of the Auditor
PwC ZT Shen Zi (2016) No.10009
Page 1 of 2
To the shareholders of Wuxi Little Swan C0., Ltd.
We have audited the accompanying financial statements of Wuxi Little Swan C0., Ltd. (hereinafter “the
Company”), which comprise the consolidated and company balance sheets as at 31 December 2015, and
the consolidated and company income statements, the consolidated and company statements of changes in
shareholder’s equity and the consolidated and company cash flow statements for the year then ended, and
the notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial
statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for
such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with China Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the
financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
68
2015 Annual Report of Wuxi Little Swan Company Limited
PwC ZT Shen Zi (2016) No.10009
Page 2 of 2
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated and company’s financial position of the Company as at 31 December 2015, and their financial
performance and cash flows for the year then ended in accordance with the requirements of Accounting
Standards for Business Enterprises.
PricewaterhouseCoopers Zhong Tian CPAs LLP
Shanghai, the People’s Republic of China
8th March 2016
69
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
II Financial statements
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 31 December 2014
ASSETS Consolidated Consolidated
Current assets
Cash at bank and in hand 3,042,843,924.81 3,059,914,956.21
Financial assets measured at fair value with changes included in
current profits and losses
- 248,907.75
Notes receivable 2,205,189,379.10 3,147,153,535.61
Accounts receivable 896,075,475.63 856,343,229.70
Advances to suppliers 97,628,578.17 142,977,522.28
Interests receivable 22,932,602.74 -
Other receivables 9,208,180.08 34,611,969.22
Inventories 745,412,967.52 605,616,993.25
Other current assets 5,733,188,604.23 1,947,972,214.72
Total current assets 12,752,479,712.28 9,794,839,328.74
Non-current assets
Available-for-sale financial assets 200,000.00 200,000.00
Long-term equity investments - 2,850,040.45
Investment properties 68,843,047.52 73,229,177.52
Fixed assets 1,019,528,291.60 1,065,820,898.65
Intangible assets 197,521,625.03 202,760,577.70
Long-term prepaid expenses 4,238,244.38 1,851,978.15
Deferred tax assets 251,881,220.89 235,241,927.50
Other non-current assets 32,963,224.90 -
Total non-current assets 1,575,175,654.32 1,581,954,599.97
TOTAL ASSETS 14,327,655,366.60 11,376,793,928.71
70
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED BALANCE SHEET (continued)
AS AT 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 31 December 2014
LIABILITIES AND OWNER’S EQUITY Consolidated Consolidated
Current liabilities
Notes payable 1,953,065,274.06 1,173,851,127.31
Accounts payable 2,419,807,341.95 2,166,696,911.21
Advances from customers 1,652,908,781.44 851,592,826.03
Employee benefits payable 248,280,716.92 220,566,191.81
Taxes and other levies payable 325,108,227.91 273,648,854.64
Dividends payable 5,400,652.06 4,088,128.36
Other payables 171,807,137.94 144,292,658.48
Other current liabilities 1,521,734,293.24 1,351,628,660.52
Total current liabilities 8,298,112,425.52 6,186,365,358.36
Non-current liabilities
Long-term employee benefits payable 28,439,299.25 29,811,618.11
Specific payables - 2,073,957.30
Provisions 9,981,021.44 9,960,830.74
Deferred income 3,395,533.29 3,848,733.33
Deferred tax liabilities - 37,336.16
Total non-current liabilities 41,815,853.98 45,732,475.64
Total liabilities 8,339,928,279.50 6,232,097,834.00
OWNERS’ EQUITY
Share capital 632,487,764.00 632,487,764.00
Capital surplus 1,164,014,947.85 1,139,956,336.03
Other comprehensive income 34,813,284.64 -3,449,689.57
Surplus reserve 332,594,722.29 332,594,722.29
Retained earnings 2,960,955,454.36 2,326,392,979.58
Equity attributable to the shareholders of the Company 5,124,866,173.14 4,427,982,112.33
Minority interests 862,860,913.96 716,713,982.38
Total owners’ equity 5,987,727,087.10 5,144,696,094.71
TOTAL LIABILITIES AND OWNERS’ EQUITY 14,327,655,366.60 11,376,793,928.71
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
71
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
BALANCE SHEET OF THE COMPANY
AS AT 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 31 December 2014
ASSETS Company Company
Current assets
Cash at bank and in hand 2,092,430,579.63 1,911,559,698.48
Financial assets measured at fair value with changes included in
- 169,471.35
current profits and losses
Notes receivable 1,410,210,597.47 1,995,701,371.99
Accounts receivable 1,183,394,794.67 599,080,895.73
Advances to suppliers 98,437,350.05 82,118,815.39
Interests receivable 18,918,219.18 -
Other receivables 6,351,010.17 16,162,292.29
Inventories 482,807,868.13 391,600,972.50
Other current assets 3,178,113,808.28 1,024,148,072.06
Total current assets 8,470,664,227.58 6,020,541,589.79
Non-current assets
Available-for-sale financial assets 150,000.00 150,000.00
Long-term equity investments 1,306,323,041.57 1,342,544,532.02
Investment properties 8,040,536.02 9,112,459.48
Fixed assets 514,950,803.50 536,196,976.55
Intangible assets 95,281,467.96 97,971,768.25
Long-term prepaid expenses 3,873,799.88 1,525,311.48
Deferred tax assets 159,759,565.25 156,000,386.72
Other non-current assets 23,027,173.60 -
Total non-current assets 2,111,406,387.78 2,143,501,434.50
TOTAL ASSETS 10,582,070,615.36 8,164,043,024.29
72
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
BALANCE SHEET OF THE COMPANY (continued)
AS AT 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
31 December 2015 31 December 2014
LIABILITIES AND OWNER’S EQUITY Company Company
Current liabilities
Notes payable 1,519,749,295.73 584,317,575.73
Accounts payable 2,038,397,769.71 1,606,513,789.06
Advances from customers 1,060,643,231.20 536,032,679.79
Employee benefits payable 184,287,498.34 156,971,021.63
Taxes and other levies payable 224,024,964.68 178,868,538.14
Dividends payable 5,400,652.06 4,088,128.36
Other payables 95,009,275.20 72,352,698.24
Other current liabilities 944,905,437.98 884,584,189.21
Total current liabilities 6,072,418,124.90 4,023,728,620.16
Non-current liabilities
Deferred tax liabilities - 25,420.70
Total non-current liabilities - 25,420.70
Total liabilities 6,072,418,124.90 4,023,754,040.86
OWNERS’ EQUITY
Share capital 632,487,764.00 632,487,764.00
Capital surplus 1,319,496,538.02 1,300,124,962.20
Other comprehensive income 13,608,826.40 -
Surplus reserve 319,944,578.39 319,944,578.39
Retained earnings 2,224,114,783.65 1,887,731,678.84
Total owners’ equity 4,509,652,490.46 4,140,288,983.43
TOTAL LIABILITIES AND OWNERS’ EQUITY 10,582,070,615.36 8,164,043,024.29
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
73
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items 2015 2014
Consolidated Consolidated
Sales 13,131,626,932.44 10,804,217,288.60
Less: Costs of sales 9,646,390,824.36 8,007,492,218.69
Taxes and surcharges 66,761,675.48 67,429,778.79
Selling and distribution expenses 1,957,833,768.25 1,519,482,348.76
General and administrative expenses 539,747,209.80 441,240,435.76
Finance income - net -110,112,851.91 -14,860,124.49
Asset impairment losses 22,451,935.85 38,221,081.62
Add: Losses from changes in fair value - -14,767,832.25
Investment income 201,749,610.84 177,965,089.26
Including:Share of results of associates -263,002.04 -319,108.43
Operating profit 1,210,303,981.45 908,408,806.48
Add: Non-operating income 63,387,660.89 39,803,014.02
Including:Gain on disposal of non-current assets 444,371.81 2,789,994.04
Less: Non-operating expenses 48,270,024.41 14,209,147.21
Including:Losses on disposal of non-current assets 724,567.38 6,272,775.07
Profit before tax 1,225,421,617.93 934,002,673.29
Less: Income tax expenses 172,296,831.78 143,176,568.98
Net profit 1,053,124,786.15 790,826,104.31
Attributable to shareholders of the Company 919,181,968.58 698,195,731.48
Minority interests 133,942,817.57 92,630,372.83
Other comprehensive income for the year, net of tax 48,553,778.03 -70,614.41
Attributable to shareholders of the Company,net of tax 38,262,974.21 -70,614.41
Items that may be subsequently reclassified subsequently to 38,262,974.21 -70,614.41
profit or lossGain (loss) on value of available-for-sale financial 37,033,422.18 -180,638.60
assets translation difference 1,229,552.03 110,024.19
Minority interests, net of tax 10,290,803.82 -
Total comprehensive income 1,101,678,564.18 790,755,489.90
Attributable to shareholders of the Company 957,444,942.79 698,125,117.07
Minority interests 144,233,621.39 92,630,372.83
Earnings per share
Basic earnings per share 1.45 1.10
Diluted earnings per share 1.45 1.10
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
74
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
INCOME STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Items 2015 2014
Company Company
Sales 9,844,644,562.96 7,916,825,870.36
Less: Cost of sales 7,456,129,294.02 5,946,187,059.49
Taxes and surcharges 42,679,139.04 47,038,494.76
Selling and distribution expenses 1,413,834,422.46 1,132,598,650.92
General and administrative expenses 382,512,004.73 299,648,027.37
Finance income - net -70,967,103.94 -4,529,436.09
Asset impairment losses 12,035,597.15 72,545,358.11
Add: Losses from changes in fair value - -8,558,268.65
Investment income 110,021,226.68 83,294,245.14
Including:Share of results of associates -263,002.04 -319,108.43
Operating profit 718,442,436.18 498,073,692.29
Add: Non-operating income 27,773,563.63 16,433,978.91
Including: Gain on disposal of non-current assets 184,324.80 2,305,062.47
Less: Non-operating expenses 34,731,819.32 10,639,169.83
Including: Losses on disposal of non-current assets 111,821.73 4,046,903.42
Profit before tax 711,484,180.49 503,868,501.37
Less: Income tax expenses 90,481,581.88 87,504,963.40
Net profit 621,002,598.61 416,363,537.97
Other comprehensive income for the year, net of tax 13,608,826.40 -180,638.60
Items that may be subsequently reclassified to profit or 13,608,826.40 -180,638.60
loss
Including: Gain (loss) on value of available-for-sale 13,608,826.40 -180,638.60
financial assets
Total comprehensive income 634,611,425.01 416,182,899.37
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
75
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2015 2014
Items
Consolidated Consolidated
I. Cash flows from operating activities
Cash generated from sales of goods or rendering of services 12,740,160,550.07 8,798,376,928.14
Refund of taxes and surcharges 77,145,657.15 33,025,802.90
Cash received relating to other operating activities 56,688,253.87 59,695,461.20
Sub-total of cash inflows 12,873,994,461.09 8,891,098,192.24
Cash paid for goods and services 6,084,201,536.57 4,594,554,278.14
Cash paid to and on behalf of employees 893,989,108.53 708,166,899.31
Payments of taxes and surcharges 543,482,333.15 608,666,666.17
Cash paid relating to other operating activities 1,753,626,014.04 1,322,596,031.29
Sub-total of cash outflows 9,275,298,992.29 7,233,983,874.91
Net cash flows from operating activities 3,598,695,468.80 1,657,114,317.33
II. Cash flows from investing activities
Cash received from return of investments 8,274,398,907.76 10,101,899,999.97
Cash received from returns on investments 202,012,612.84 170,532,691.69
Net cash received from disposal of fixed assets and intangible assets 6,561,716.52 7,650,553.51
Cash received relating to other investing activities 42,268,968.89 -
Sub-total of cash inflows 8,525,242,206.01 10,280,083,245.17
Cash paid to acquire fixed assets, intangible assets and other long-term 113,960,753.52 78,485,490.25
assets paid to acquire investments
Cash 10,456,050,000.00 11,706,999,999.97
Sub-total of cash outflows 10,570,010,753.52 11,785,485,490.22
Net cash flows from investing activities -2,044,768,547.51 -1,505,402,245.05
III. Cash flows from financing activities
Cash received from borrowings 215,915,154.66 100,360,740.00
Cash received from other financing activities - 3,500,000.00
Sub-total of cash inflows 215,915,154.66 103,860,740.00
Cash repayments of borrowings 215,915,154.66 100,360,740.00
Cash payments for interests and distribution of dividends 286,688,438.02 194,602,667.45
Cash payments relating to other financing activities - (194,602,667.45)
Sub-total of cash outflows 502,603,592.68 297,147,898.14
Net cash flows from financing activities -286,688,438.02 -193,287,158.14
IV. Effect of foreign exchange rate changes on cash 8,707,040.56 110,024.19
V. Net increase/(decrease) in cash 1,275,945,523.83 -41,465,061.67
Add: Opening balance of cash 1,516,739,804.86 1,558,204,866.53
VI. Ending balance of cash 2,792,685,328.69 1,516,739,804.86
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
76
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
CASH FLOW STATEMENT OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
2015 2014
Items
Company Company
I.Cash flows from operating activities
Cash generated from sales of goods or rendering of services 8,364,432,765.46 5,576,570,283.92
Cash received relating to other operating activities 29,865,585.50 28,571,367.48
Sub-total of cash inflows 8,394,298,350.96 5,605,141,651.40
Cash paid for goods and services 3,793,842,616.29 2,482,442,035.78
Cash paid to and on behalf of employees 595,390,188.36 443,649,148.78
Payments of taxes and surcharges 274,650,446.03 532,166,355.14
Cash paid relating to other operating activities 1,444,764,032.80 1,125,528,055.81
Sub-total of cash outflows 6,108,647,283.48 4,583,785,595.51
Net cash flows from operating activities 2,285,651,067.48 1,021,356,055.89
II. Cash flows from investing activities
Cash received from disposal of investments 5,295,471,450.01 5,380,000,000.00
Cash received from returns on investments 110,453,700.06 84,477,225.22
Net cash received from disposal of fixed assets and intangible assets 1,952,876.70 4,087,145.88
Net cash received from disposal of subsidiaries and other business units - 191,485,872.35
Cash received relating to other investing activities 35,092,311.37 -
Sub-total of cash inflows 5,442,970,338.14 5,660,050,243.45
Cash paid to acquire fixed assets, intangible assets and other long-term 70,559,477.51 39,089,960.84
assets paid to acquire investments
Cash 6,112,000,000.00 6,735,100,000.00
Sub-total of cash outflows 6,182,559,477.51 6,774,189,960.84
Net cash flows from investing activities -739,589,139.37 -1,114,139,717.39
III. Cash flows from financing activities
Cash received from borrowings 16,404,201.00 -
Sub-total of cash inflows 16,404,201.00 -
Cash repayments of borrowings 16,404,201.00 -
Cash payments for interests and distribution of dividends and profits 283,468,922.78 189,398,353.17
Sub-total of cash outflows 299,873,123.78 189,398,353.17
Net cash flows from financing activities -283,468,922.78 -189,398,353.17
IV. Effect of foreign exchange rate changes on cash 3,619,003.80 -
V. Net increase/(decrease) in cash and cash equivalent 1,266,212,009.13 -282,182,014.67
Add: Opening balance of cash and cash equivalent 600,231,105.51 882,413,120.18
VI. Ending balance of cash and cash equivalent 1,866,443,114.64 600,231,105.51
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
77
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the shareholders of the Company
Other
Share capital Capital surplus comprehensive income Surplus reserve Retained earnings Minority interests Total owners’ equity
I. As at 31 December 2014 632,487,764.00 1,139,956,336.03 -3,449,689.57 332,594,722.29 2,326,392,979.58 716,713,982.38 5,144,696,094.71
II. As at 1 January 2015 632,487,764.00 1,139,956,336.03 -3,449,689.57 332,594,722.29 2,326,392,979.58 716,713,982.38 5,144,696,094.71
III. Increase/(decrease) - 24,058,611.82 38,262,974.21 - 634,562,474.78 146,146,931.58 843,030,992.39
(I) Total comprehensive income - 38,262,974.21 - 919,181,968.58 144,233,621.39 1,101,678,564.18
(II) Increase/(decrease) in capital - 24,058,611.82 - - - 1,913,310.19 25,971,922.01
1. Capital contribution by the - - - - - - -
owners
2. share-based payments
recognized in shareholders' equity - 22,544,356.36 - - - 1,353,341.72 23,897,698.08
3. Others - 1,514,255.46 - - - 559,968.47 2,074,223.93
(III) Appropriation - - - -284,619,493.80 - -284,619,493.80
1. Transfer to surplus reserve - - - - - - -
2. Appropriation of General risk - - - - - - -
reserve
3. Attribution to the shareholders - - - - -284,619,493.80 - -284,619,493.80
4. Others - - - - - - -
IV. As at 31 December 2015 632,487,764.00 1,164,014,947.85 34,813,284.64 332,594,722.29 2,960,955,454.36 862,860,913.96 5,987,727,087.10
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2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Attributable to the shareholders of the Company
Other
Share capital Capital surplus comprehensive income Surplus reserve Retained earnings Minority interests Total owners’ equity
I. As at 31 December 2013 632,487,764.00 1,129,250,666.31 -3,379,075.16 290,958,368.49 1,859,579,931.10 625,431,730.92 4,534,329,385.66
II. As at 1 January 2014 632,487,764.00 1,129,250,666.31 -3,379,075.16 290,958,368.49 1,859,579,931.10 625,431,730.92 4,534,329,385.66
III. Increase/(decrease) - 10,705,669.72 -70,614.41 41,636,353.80 466,813,048.48 91,282,251.46 610,366,709.05
(I) Total comprehensive income - - -70,614.41 - 698,195,731.48 92,630,372.83 790,755,489.90
(II) Increase/(decrease) in capital - 10,705,669.72 - - -1,348,121.37 9,357,548.35
1. Common shares invested by
shareholders - - - - - - -
2. Share-based payments
recognized in shareholders' equity - 10,805,421.89 - - - 836,369.32 11,641,791.21
3. Others - -99,752.17 - - - -2,184,490.69 -2,284,242.86
(III) Appropriation - - - 41,636,353.80 -231,382,683.00 - -189,746,329.20
1. Transfer to surplus reserve - - - 41,636,353.80 -41,636,353.80 - -
2. Appropriation of General risk
reserve - - - - - - -
3. Attribution to the shareholders - - - - -189,746,329.20 - -189,746,329.20
4. Others - - - - - - -
IV. As at 31 December 2014 632,487,764.00 1,139,956,336.03 -3,449,689.57 332,594,722.29 2,326,392,979.58 716,713,982.38 5,144,696,094.71
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
79
2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2015
(All amounts in Renminbi yuan unless otherwise stated)
[English Translation for Reference Only]
Other
Share capital Capital surplus comprehensive income Surplus reserve Retained earnings Total owners’ equity
I. As at 31 December 2014 632,487,764.00 1,300,124,962.20 - 319,944,578.39 1,887,731,678.84 4,140,288,983.43
II. As at 1 January 2015 632,487,764.00 1,300,124,962.20 - 319,944,578.39 1,887,731,678.84 4,140,288,983.43
III. Increase/(decrease) - 19,371,575.82 13,608,826.40 - 336,383,104.81 369,363,507.03
(I) Total comprehensive income - - 13,608,826.40 - 621,002,598.61 634,611,425.01
(II) Increase/(decrease) in owner's capital - 19,371,575.82 - - - 19,371,575.82
1. Common shares invested by shareholders - - - - -
2. Share-based payments recognized in shareholders' equity - 19,371,309.18 - - - 19,371,309.18
3. Others - 266.64 - - - 266.64
(III) Appropriation - - - - -284,619,493.80 -284,619,493.80
1. Transfer to surplus reserve - - - - - -
2. Attribution to the shareholders - - - - -284,619,493.80 -284,619,493.80
3. Others - - - - - -
IV. As at 31 December 2015 632,487,764.00 1,319,496,538.02 13,608,826.40 319,944,578.39 2,224,114,783.65 4,509,652,490.46
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2015 Annual Report of Wuxi Little Swan Company Limited
WUXI LITTLE SWAN CO., LTD.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
(All amounts in Renminbi yuan unless otherwise stated)
Other
Share capital Capital surplus comprehensive income Surplus reserve Retained earnings Total owners’ equity
I. As at 31 December 2013 632,487,764.00 1,291,302,721.54 180,638.60 278,308,224.59 1,702,750,823.87 3,905,030,172.60
II. As at 1 January 2014 632,487,764.00 1,291,302,721.54 180,638.60 278,308,224.59 1,702,750,823.87 3,905,030,172.60
III. Increase/(decrease) - 8,822,240.66 -180,638.60 41,636,353.80 184,980,854.97 235,258,810.83
(I) Total comprehensive income - - -180,638.60 - 416,363,537.97 416,182,899.37
(II) Increase/(decrease) in owner's capital - 8,822,240.66 - - - 8,822,240.66
1. Common shares invested by shareholders - - - - - -
2. Share-based payments recognized in shareholders' equity - 8,820,742.83 - - - 8,820,742.83
3. Others 1,497.83 - - - 1,497.83
(III) Appropriation - - - 41,636,353.80 -231,382,683.00 -189,746,329.20
1. Appropriation of surplus reserves - - - 41,636,353.80 -41,636,353.80 -
2. Appropriation of General risk reserve - - - - - -
3. Attribution to the shareholders - - - - -189,746,329.20 -189,746,329.20
4. Others - - - - - -
IV. Balance at 31 December 2014 632,487,764.00 1,300,124,962.20 - 319,944,578.39 1,887,731,678.84 4,140,288,983.43
The accompanying notes form an integral part of these financial statements.
Legal Principal in charge of Head of
representative: accounting: accounting department:
81
2015 Annual Report of Wuxi Little Swan Company Limited
III General information
Wuxi Little Swan Co., Ltd. (hereinafter ‘the Company’) was formerly a SOE founded and
reorganized as a private placement limited liability company by the approval of Jiangsu Provincial
Commission for Economic Restructuring (SuTiGaiSheng (1993) No.253 Document) on 29th
Nov,1993. As approved by Jiangsu Provincial Government ((1996) No.52 Document), Securities
Regulatory Commission under State Council (ZhengWeiFa (1996) No.14 Document) and Shenzhen
Securities and Exchange Commission (ShenZhengBanhan (1996) No.4 Document), the Company
publicly issued 70 million RMB foreign shares (B-shares) in China, after which the Company’s
share capital came to RMB 310 million.
In March 1997, as approved by China Securities Regulatory Commission (ZhengJianFaZi (1997)
No.54 Document and ZhengJianFaZi (1997) No.55 Document, the Company publicly issued 60
million RMB common shares (including 90 million staff shares). The public offerings raised 720.83
million RMB yuan and the A-shares were formally listed at Shenzhen Stock Exchange in Mar, 1997.
The abbreviation for A-shares is “Little Swan A". A-share code is 000418.
On 20 July 2006, the Company’s proposal on reformation of segregated stocks was approved by
relevant shareholders’ meeting. To gain liquidity for the restricted stocks of the Company, the holders
of the restricted stocks of the Company agreed to pay the following consideration: based on the stock
registration as of 4 August 2006, the Company issued bonus shares on 7 August 2006 at the ratio of
2.5 shares to every 10 A-shares to liquidated A-share holders which went public on the same day.
After this bonus issue, the total number of shares of the Company remained unchanged with
corresponding changes in the composition of share holdings.
Pursuant to the resolution at the Annual General Meeting on 9 May 2008, programme of
transference from capital surplus to share capital at the ratio of 10 shares to 5 shares was approved.
Additional 182,551,920 shares were allotted at par from the capital surplus of the Company. As a
result, the total shares of the Company increased to 547,655,760.
In accordance to the resolution of the 4th seeion of the 6th board meeting and the 1st temprorary
shareholders meeting in 2010, as well as Document ZhengJianXuKe (2010) No. 1577 “The approval
of significant assets reorganization of Wuxi Little Swan Co., Ltd. and stock offering with assets
purchase to Guangdong Midea Electric Appliances Co., Ltd.” issued by China Securities Regulatory
Commission, a placement in A share was completed in which additional 84,832,000 shares were
issued to Guangdong Midea Electric Appliances Co., Ltd. (Midea Electric Appliances), while 69.47%
equity interest of Hefei Midea Washing Machine Limited (formerly as Hefei Royal star Washing
Machine Manufacture Limited) was acquired. Through the non-public offering of A share, the
Company’s captital share increased by RMB 84,832,000.
On 18 September 2013, Midea Group Co., Ltd. (hereinafter ‘the Midea Group’) combined the
Company’s former controlling shareholder Midea Electric Appliances through shares exchanges
according to Document ZhengJianXuKe (2013) No. 1014 The approval of the merger of Guangdong
Midea Electric Appliances Co., Ltd. to Midea Group Co., Ltd. issued by China Securities Regulatory
Commission. After the consolidation by merger, the equity interest held by Midea Electric Appliances
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2015 Annual Report of Wuxi Little Swan Company Limited
previously was held by the Group and registration procedures for shares transfer were completed by
31 December, 2013. Thus, the Group became the first major shareholder of the Company.
As of 31 December 2015, the total share capital of the Company mounted to 632,487,764, 0.59% of
which are 3,711,190 A shares with restriction of trading, 69.21% of which are 437,765,002 A shares
without restriction of trading, and 30.20% of which are 191,011,572 B shares without restriction of
trading.
III General information (continued)
The address of the Company’s registered office is No.18 Changjiang South Road, National High-tech
Industrial Development Zone, Wuxi, Jiangsu Province. The headquarters office address is No. 18,
Changjiang South Road, Wuxi, Jiangsu Province.
The Company is engaged in the industry of household electric appliances, the approved scope of
business of which includes manufacture, sales and after-sales service of household electric appliances,
industrial ceramic products, environmental-friendly dry cleaning equipment, washing apparatus for
typical machines, processing equipment and fittings. The Company provides laundry service,
machining; exports and imports, or be agent for a variety of products and technologies (excluding
unauthorized or forbidden products and technologies for operation according to state regulations for
enterprises). It also provides appliance technical services, certified outsourcing services (operated
with a valid qualification certificate) and invests in financial instruments with surplus funds.
The financial statements were authorized for issue by the board of directors of the Company on 8
March 2016.
Principle subsidiaries included in the scope of consolidation are listed in Note IX.
IV The basis of preparation of the financial statements
1 The basis of preparation
The Group prepared the financial statements with the Basic Standard of the Accounting Standards
for Business Enterprises, accounting policies and other regulations (hereafter referred to as “the
Accounting Standard for Business Enterprises” or “CAS”) issued by the Ministry of Finance on and
after 15 February 2006, and No. 15 Listing Rules on Disclosure Information for Public Business
Entities – preparation of financial statements issued by China Securities Regulatory Commission.
2 Going concrn basis
The company is operating healthily. With an overall assessment of information obtained, there are no
factors affecting continuous operation of the company for the next twelve months since end of the
repoting period. The financial statements for the year are thus prepaired on sustainable operation.
V Summary of significant accounting policies and accounting estimates
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2015 Annual Report of Wuxi Little Swan Company Limited
The Company and its subsidiaries determine the specific accounting policies and accounting estimates
according to the production management characteristics, shown mainly on the bad debt provision
withdrawing method for account receivable (Note V(10)), measurement of inventory (Note V(11)),
depreciation for PP&E, amortization for intangible asset and depreciation and amortization for
investment property (Note V(14), (17), (13)), judgement basis for impairment of long-term asset
(Note V(18)) and recognition timing of revenue (Note V(24)), etc.
V Summary of significant accounting policies and accounting estimates (continued)
1 Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2015 are in compliance
with the Accounting Standards for Business Enterprises, and truly and completely present the
financial position of the Group and the Company as of 31 December 2015 and the operating results,
cash flows and other information of the Group and the Company for the year then ended.
2 Accounting period
The accounting year starts on 1 January and ends on 31 December.
3 Operating period
The operating period of the company refers to process from procurement of assets for manufacture
to the realization of cash and cash equicalents. The operating period of the company is twelve
months.
4 Functional currency
The functional currency is Renminbi (RMB).
5 Accounting method for business combinations involving enterprises under common control
and not under common control
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are
measured at the carrying amount. The difference between the carrying amount of the net assets
obtained from the combination and the carrying amount of the consideration paid for the
combination is treated as an adjustment to capital surplus (share premium). If the capital surplus
(share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against
retained earnings. Costs directly attributable to the combination are included in profit or loss in the
period in which they are incurred. Transaction costs associated with the issue of equity or debt
securities for the business combination are included in the initially recognised amounts of the equity
or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business
combination are measured at fair value at the acquisition date. Where the cost of the combination
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2015 Annual Report of Wuxi Little Swan Company Limited
exceeds the acquirer’s interest in the fair value of the acquirer’s identifiable net assets, the difference
is recognised as goodwill; where the cost of combination is lower than the acquirer’s interest in the
fair value of the acquirer’s identifiable net assets, the difference is recognised in profit or loss for the
current period. Costs directly attributable to the combination are included in profit or loss in the
period in which they are incurred. Transaction costs associated with the issue of equity or debt
securities for the business combination are included in the initially recognised amounts of the equity
or debt securities.
V Summary of significant accounting policies and accounting estimates (continued)
6 Basis of preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its
subsidiaries.
Subsidiaries are consolidated from the date on which the Company obtains control and are
de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business
combination involving enterprises under common control, it is included in the consolidated financial
statements from the date when it, together with the Company, comes under common control of the
ultimate controlling party. The portion of the net profits realised before the combination date is
presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting
periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries
are adjusted in accordance with the accounting policies and the accounting period of the Company. For
subsidiaries acquired from business combinations involving enterprises not under common control, the
individual financial statements of the subsidiaries are adjusted based on the fair value of the
identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the
consolidated financial statements. The portion of a subsidiary’s equity and the portion of a subsidiary’s
net profits, losses and comprehensive income for the period not attributable to the Company are
recognised as minority interests and presented separately in the consolidated financial statements
within equity, net profits and total comprehensive income respectively. Unrealised gain or loss from
selling assets to subsidiaries fully offsets the net income attributable to equity holders of the company.
Unrealised gain or loss from purchasing assets from subsidiaries offsets the net income attributable to
equity holders of the company and atrributable to the minority interest by the distribution proportion
regarding the company and the subsidiary. Unrealised gain or loss from transaction between
subsidiaries offsets the net income attributable to equity holders of the company and atrributable to the
minority interest by the distribution proportion regarding the company and the selling side of the
subsidiaries.
If different recognition perspectives for the same transaction arise within different accounting identities
setup, there is adjustment for the transaction from the Group’s perspective.
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2015 Annual Report of Wuxi Little Swan Company Limited
7 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and
short-term and highly liquid investments that are readily convertible to known amounts of cash and are
subject to an insignificant risk of changes in value.
V Summary of significant accounting policies and accounting estimates (continued)
8 Foreign currency business and translation
(a)(a) Foreign currency transactions
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates
of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB
using the spot exchange rates on the balance sheet date. Exchange differences arising from these
translations are recognised in profit or loss for the current period, except for those attributable to
foreign currency borrowings that have been taken out specifically for the acquisition or construction of
qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items
denominated in foreign currencies that are measured at historical costs are translated at the balance
sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate
changes on cash is presented separately in the cash flow statement.
(b) Foreign currency financial statements translations
Assets and liabilities, which are oversea operating, are translated into RMB using the spot exchange
rate on the balance sheet date. Items in Consolidated Statement of Changes in Equity are translated
into RMB using the spot exchange rate at the date of the transactions, except for the retained earnings.
Incomes and expenses items, which are oversea operating, are translated into RMB using the spot
exchange rate at the date of the transactions. The translation differences of foreign currency
transactions are presented in other comprehensive income. Cash flow items, which are oversea
operating, are translated into RMB using the spot exchange rate at the date of the cash in or cash out.
The effect of exchange rate changes on cash is presented separately in the cash flow statement.
9 Financial Instruments
(a) Financial assets
(i) Classification
Financial assets are classified into the following categories at initial recognition: financial assets at fair
value through profits or losses, receivables, available-for-sale financial assets and held-to-maturity
investments. The classification of financial assets depends on the intention of the Company and its
subsidiaries and ability to hold the financial assets.
The financial assets held by the Company and its subsidiaries include financial assets at fair value
through profits or losses, receivables and available-for-sale financial assets.
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2015 Annual Report of Wuxi Little Swan Company Limited
Financial assets at fair value through profits or losses
Financial assets at fair value through profits or losses are derivatives, especially forward foreign
exchange contracts.
V Summary of significant accounting policies and accounting estimates (continued)
9 Financial Instruments (continued)
(a) Financial assets (continued)
(i) Classification (continued)
Receivables
Receivables, including notes receivable, accounts receivable, other receivables and structured
deposits, are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated to be
available for sale upon initial recognition and financial assets not classified in any other categories.
Available-for-sale financial assets are included in other current assets if management intends to
dispose of them within 12 months from balance sheet date.
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Company and its
subsidiaries become a party to the contractual provisions of the financial instrument. Transaction
costs that are attributable to the acquisition of the financial assets at fair value through profits or
losses are included in profit or loss in the period in which they are incurred, and transaction costs
that are attributable to the acquisition of other financial assets are included in their initially
recognized amounts.
Financial assets at fair value through profits or losses and available-for-sale financial assets are
subsequently measured at fair value. Investments in equity instruments are measured at cost when
they do not have a quoted market price in an active market and whose fair value cannot be reliably
measured. Receivables and held-to-maturity investments are measured at amortised cost using the
effective interest method.
Gains or losses arising from change in fair value of financial assets at fair value through profits or
losses are recognized as change in fair value in profit or loss for the period in which they are
incurred. Interests, cash dividends arising from its holding period and gains or losses arising from
the disposition are included in profit or loss for the period in which they are incurred.
除减 Gains or losses arising from change in fair value of available-for-sale financial assets are recognized
directly in equity, except for impairment losses and foreign exchange gains and losses arising from
translation of monetary financial assets. When such financial assets are derecognized, the
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2015 Annual Report of Wuxi Little Swan Company Limited
cumulative gains or losses previously recognized directly into equity are recycled into profit or loss
for the current period. Cash dividends declared by the investee on available-for-sale investments in
equity instruments are recognized as investment income, which is recognized in profits or losses for
the period.
V Summary of significant accounting policies and accounting estimates (continued)
9 Financial Instruments (continued)
(a) Financial assets (continued)
(iii) Impairment of financial assets
The Company and its subsidiaries assess the carrying amount of financial assets other than those at
fair value through profits or losses at each balance sheet date. If there is objective evidence that the
financial asset is impaired, an impairment loss is provided for.
The objective evidence are matters that occur after the financial assets been recognised, affect its
estimated future cash flow and could be measured accuractly by the Company and its subsidiaries.
表明 The objective evidence, of which provided for available-for-sale equity instruments being impaired,
includes an investment in an equity instrument with serious or prolonged decline. the Company and
its subsidiaries assess available-for-sale equity instruments at each balance sheet date. If the fair
value of equity instruments is less than its initial investment cost of more than 50% (including
50%), or less than the duration of its initial investment cost of more than one year (including one
year), it indicates that the equity instruments are impaired. If the fair value of equity instruments is
less than its initial investment cost of more than 20% (including 20%) to 50% (not including 50%),
the Company and its subsidiaries will consider other relevant factors such as ratios of price
fluctuation to judge that whether equity instruments are impaired. The Company and its
subsidiaries measured the initial investment cost of available-for-sale equity instruments using the
weighted average method.
When an impairment loss on a financial asset carried at amortized cost has been incurred, the
amount of loss is measured at the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred). If
there is objective evidence that the value of the financial asset recovered and the recovery is related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed and the amount of reversal is recognized in profits or losses.
When an impairment loss on available-for-sale financial assets incurred, the cumulative losses
arising from the decline in fair value that had been recognized directly in equity are transferred out
from equity and into impairment loss. For an investment in debt instrument classified as
available-for-sale on which impairment losses have been recognized, if, in a subsequent period, its
fair value increases and the increase can be objectively related to an event occurring after the
impairment loss was recognized in profit or loss, the previously recognized impairment loss is
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2015 Annual Report of Wuxi Little Swan Company Limited
reversed into profit or loss for the current period. For an investment in an equity instrument
classified as available-for-sale on which impairment losses have been recognized, the increase in its
fair value in a subsequent period is recognized directly in equity.
If an impairment loss incurred on a financial asset carried at amortized cost, the amount of loss is
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the current market rate of return for a similar financial asset and
cannot be revert in the subsequent periods.
V Summary of significant accounting policies and accounting estimates (continued)
9 Financial Instruments (continued)
(a) Financial assets (continued)
(iv) Derecognition of financial assets
Financial assets are derecognised when: i) the contractual rights to receive the cash flows from the
financial assets have expired; or ii) substantial risks and rewards of ownership of the financial assets
have been transferred; or iii) the control over the financial asset has been waived even if the
Company and its subsidiaries does not transfer or retain nearly all of the risks and rewards relating
to the ownership of a financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the aggregate
of consideration received and the accumulative amount of the changes of fair value originally
recorded in the owner’s equity is recognised in the profit or loss.
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: the financial
liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities in
the Company and its subsidiaries mainly comprise of other financial liabilities, including payables
and borrowings.
Payables comprise accounts payable and other payables, which are recognised initially at fair value
and measured subsequently at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently
carried at amortised costs using the effective interest method.
Other financial liabilities are classified as current liabilities if they mature within one year (one year
included); others are classified as non-current liabilities; non-current liabilities due for repayment
within one year since the balance sheet date are classified as current portion of non-current
liabilities.
A financial liability (or a part of financial liability) is derecognised when and only when the
obligation specified in the contract is discharged or cancelled. The difference between the carrying
amount of a financial liability (or a part of financial liability) extinguished and the consideration
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2015 Annual Report of Wuxi Little Swan Company Limited
paid is recognised in profit or loss.
(c) Determination of the fair value of the financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted
price in the active market. The fair value of a financial instrument for which the market is not active is
determined by using a valuation technique. Valuation techniques include using prices of recent market
transactions between knowledgeable, willing parties, reference to the current fair value of another
financial asset that is substantially the same with this instrument, and discounted cash flow analysis.
When a valuation technique is used to establish the fair value of a financial instrument, management
uses market data as much as possible and avoids use of data that is particularly related to the
Company and its subsidiaries.
V Summary of significant accounting policies and accounting estimates (continued)
10 Receivables
(1) The recognition criteria and method of provision for impairment of receivables those are
individually significant:
The criteria for individually significant receivables: the amount of account receivable individually
accounts for over 10% (including 10%) of total amount of accounts receivable on balance sheet date
or is individually more than RMB 10,000,000.00 (including RMB 10,000,000.00); the amount of
other receivable individually accounts for over 10% (including 10%) of total amount of other
receivable on balance sheet date or is individually more than RMB 5,000,000.00 (including RMB
5,000,000.00);
The provision for impairment of the receivables that are individually significant is established at the
difference between the carrying amount of the receivable and the present value of estimated future
cash flows.
(2) The recognition criteria and method of provision for impairment of receivables grouped on the basis
of similar credit risk:
Group Provision of bad debt method
Group based on aging of receivables Aging analysis method
A provision for impairment of the receivables is made based on the aging of receivables at the
following percentage:
Provision as a percentage of Provision as a percentage of other
receivables receivables
Within 1 year 5.00% 5.00%
Between 1 and 2 years 10.00% 10.00%
Between 2 and 3 years 30.00% 30.00%
Between 3 and 4 years 50.00% 50.00%
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Between 4 and 5 years 50.00% 50.00%
Over 5 years 100.00% 100.00%
(3) The recognition criteria and method of provision for impairment of receivables those are not
individually significant:
Receivables that are not individually significant are subject to separate impairment assessment if
there is objective evidence that the Company and its subsidiaries will not be able to collect the full
amounts according to the original terms.
The provision for impairment of the receivables is established at the difference between the carrying
amount of the receivables and the present value of estimated future cash flows.
When the Company and its subsidiaries transfer the accounts receivable to the financial institutions
without recourse, the difference between the proceeds received from the transaction and their
carrying amounts and the related taxes is recognised in profit or loss for the current period.
V Summary of significant accounting policies and accounting estimates (continued)
11 Inventories
(a) Classification
Inventories include raw materials, work in progress, finished goods and turnover materials, and are
presented at the lower of cost and net realizable value.
(b) Determination of cost
Cost is determined on the weighted average method. The cost of finished goods and work in
progress comprises raw materials, direct labour and an allocation of all production overhead
expenditures incurred based on normal operating capacity.
(c) The determination of net realizable value and the method of provisions for impairment of inventories
Provisions for declines in the value of inventories are determined at the carrying value of the
inventories net of their net realizable value. Net realizable value is determined based on the
estimated selling price in the ordinary course of business, less the estimated costs to completion and
estimated costs necessary to make the sale and relevant taxes.
(d) The Company and its sudsidiaries adopt the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed
when issued.
12 Long-term equity investments
长 期 Long-term equity investments comprise the Company’s long-term equity investments in its
subsidiaries and the long-term equity investments of the Company and its subsidiaries in its
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associates.
Subsidiaries are all entities over which the Company is able to control. Associates are all entities
over which the Company and its subsidiaries has significant influence, but not control, on their
financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial
statements, and adjusted by using the equity method when preparing the consolidated financial
statements. Interests in associates are accounted for using the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity
investments acquired through a business combination involving enterprises under common control,
the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of
the party being absorbed at the combination date; for long-term equity investment acquired through
a business combination involving enterprises not under common control, the investment cost shall
be the combination cost.
For long-term equity investments acquired not through a business combination: for long-term equity
investment acquired by payment in cash, the initial investment cost shall be the purchase price
actually paid; for long-term equity investment acquired by issuing equity securities, the initial
investment cost shall be the fair value of the equity securities.
V Summary of significant accounting policies and accounting estimates (continued)
12 Long-term equity investments (continued)
(b) Subsequent measurement and recognition of related profits and losses
For long-term equity investments accounted for using the cost method, they are measured at the
initial investment costs, and cash dividends or profits distribution declared by the investees are
recognised as investment income in profits or losses.
For long-term equity investments accounted for using the equity method, where the initial
investment cost of a long-term equity investment exceeds the Company and its subsidiaries’ share of
the fair value of the investee’s identifiable net assets at the acquisition date, the long-term equity
investment is measured at the initial investment cost; where the initial investment cost is less than
the share of the Company and its subsidiaries of the fair value of the investee’s identifiable net
assets at the acquisition date, the difference is included in profits or losses and the cost of the
long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Company and its
subsidiaries recognize the investment income according to its share of net profit or loss of the
investee. The Company and its subsidiaries discontinue recognizing its share of net losses of an
investee after the carrying amount of the long-term equity investment together with any long-term
interests that, in substance, form part of the investor’s net investment in the investee are reduced to
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zero. However, if the Company and its subsidiaries have obligations for additional losses and the
criteria with respect to recognition of provisions under the accounting standards on contingencies
are satisfied, the Company and its subsidiaries continue recognizing the investment losses and the
provisions. For changes in owners’ equity of the investee other than those arising from its net profit
or loss,other comprehensive income and profit distribution, the Company and its subsidiaries record
its proportionate share directly into capital surplus, provided that the proportion of the Company and
its subsidiaries of shareholding in the investee remains unchanged. The carrying amount of the
investment is reduced by the share of the Company and its subsidiaries of the profit distribution or
cash dividends declared by an investee. The unrealized profits or losses arising from the intra-group
transactions amongst the Company, its subsidiaries and its investees are eliminated in proportion to
the equity of the Company and its subsidiaries interest in the investees, and then based on which the
investment gains or losses are recognised. For the loss on the intra-group transaction amongst the
Company, its subsidiaries and its investees attributable to asset impairment, any unrealized loss is
not eliminated.
(c) Basis for determine existence of control, joint control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain
benefits from its operating activities. When determining whether to control the investees or not, the
potential voting rights, of which convertible bonds and executable warrants issued by the investees
in current period, should be considered as well.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only
when the strategic financial and operating decisions relating to the activity require the unanimous
consent of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee, but is not control or joint control over those policies.
V Summary of significant accounting policies and accounting estimates (continued)
12 Long-term equity investments (continued)
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries and associates is reduced to the
recoverable amount when the recoverable amount is less than the carrying amount (Note V (18)).
13 Investment properties
Method of depreciation or amortization
Investment properties, including land use rights that have already been leased out and buildings that
are held for the purpose of leasing, are measured initially at cost. Subsequent expenditures incurred
in relation to an investment property are included in the cost of the investment property when it is
probable that the associated economic benefits will flow to the Company and its subsidiaries and
their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss in
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the period in which they are incurred.
The Company and its subsidiaries adopt the cost model for subsequent measurement of investment
properties. Buildings and land use rights are depreciated or amortised to their estimated net residual
values over their estimated useful lives. The estimated useful lives, the estimated net residual values
that are expressed as a percentage of cost and the annual depreciation (amortisation) rates of
investment properties are as follows:
Estimated useful Estimated residual Annual depreciation
lives value (amortization) rates
Buildings 20-35 years 5.00% 2.71% to 4.75%
Land use rights 50 years - 2.00%
When an investment property is transferred to owner-occupied properties, it is reclassified as fixed
asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred
out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as
investment properties at its carrying amount at the date of the transfer.
The investment property’s estimated useful life, net residual value and depreciation (amortization)
method applied are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognised on disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from its disposal. The net amount
of proceeds from sale, transfer, retirement or damage of an investment property after its carrying
amount and related taxes and expenses are recognised in profit or loss for the current period.
The carrying amount of an investment property is reduced to the recoverable amount if the
recoverable amount is below the carrying amount (Note V (18)).
V Summary of significant accounting policies and accounting estimates (continued)
14 Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles and office equipment,
etc.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the
Company and its subsidiaries and the costs can be reliably measured. Fixed assets purchased or
constructed by the Company and its subsidiaries are initially measured at cost at the acquisition
date.
Subsequent expenditures incurred for fixed assets are included in the cost of the fixed assets when it
is probable that the associated economic benefits will flow to the Company and its subsidiaries and
the related costs can be reliably measured. The carrying amount of the replaced part is derecognised.
All the other subsequent expenditures are recognized in profit or loss in the period in which they are
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incurred.
(b) Depreciation
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their
estimated residual values over their estimated useful lives. For the fixed assets being provided for
impairment loss, the related depreciation charge is prospectively determined based upon the
adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, estimated residual values expressed as a percentage of cost and annual
depreciation rates are as follows:
Method of Estimated Annual
depreciation Estimated residual value Depreciation rate
Straight-line
Buildings method 20-35 years 5.00% 2.71%-4.75%
Machinery and Straight-line
equipment method 10-15 years 5.00% 6.33%-9.50%
Motor vehicles Straight-line method 5 years 5.00% 19%
Office Straight-line
equipment method 3-5 years 5.00% 19%-31.67%
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note V(18)).
V Summary of significant accounting policies and accounting estimates (continued)
14 Fixed assets (continued)
(d) Disposal
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its
use or disposal. The amount of proceeds on sale, transfer, retirement or damage of a fixed asset net
of its carrying amount and related taxes and expenses is recognized in profit or loss.
15 Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs,
installation costs, borrowing costs that are eligible for capitalization and other costs necessary to
bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed
assets when the assets are ready for their intended use, and depreciation begins from the following
month. The carrying amount of construction in progress is reduced to the recoverable amount when
the recoverable amount is less than the carrying amount (Note V (18)).
16 Borrowing costs
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The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset
that needs a substantially long period of time for its intended use commence to be capitalized and
recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have
been incurred, and the activities relating to the acquisition and construction that are necessary to
prepare the asset for its intended use have commenced. The capitalization of borrowing costs ceases
when the asset under acquisition or construction becomes ready for its intended use, the borrowing
costs incurred thereafter are recognized in profit or loss. Capitalization of borrowing costs is
suspended when the acquisition or construction of a fixed asset is interrupted abnormally and the
interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying
for capitalization, the amount of borrowing costs eligible for capitalisation is determined by
deducting any interest income earned from depositing the unused specific borrowings in the banks
or any investment income arising on the temporary investment of those borrowings during the
capitalization period.
For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying
for capitalization, the amount of borrowing costs eligible for capitalization is determined by
applying the weighted average effective interest rate of general borrowings, to the weighted average
of the excess amount of cumulative expenditures on the asset over the amount of specific
borrowings. The effective interest rate is the rate at which the estimated future cash flows during the
period of expected duration of the borrowings or applicable shorter period are discounted to the
initial amount of the borrowings.
V Summary of significant accounting policies and accounting estimates (continued)
17 Intangible assets
Intangible assets include land use rights, non-patented technology and computer soft wares, which
initially recognized at cost.
(a) Land use rights
A land use right granted by government with a infinite useful life would not be amortised. Other
land use rights are amortised on the straight-line basis over 50 years. If the acquisition costs of land
use rights and the buildings located thereon cannot be reliably allocated between the land use rights
and the buildings, all of the acquisition costs are recognised as fixed assets.
(b) Non-patented technology
Non-patented technology are amortised on the straight-line basis over the shorter of their
useful life/benefit period stipulated in the agreement or contract and the legal age.
(c) Computer softwares
Computer softwares purchased by the Company and its subsidiaries are initially measured at cost,
which are amortised on the straight-line over their approved useful period of 3-5 years.
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(d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is
performed at each year-end, with adjustment made as appropriate.
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on
the research phase and expenditure on the development phase based on its nature and whether there
is material uncertainty that the research and development activities can form an intangible asset at
end of the project.
Expenditure for investigation, evaluation and selection of production process researches is
recognised in profit or loss in the period in which it is incurred. Expenditure on the designation,
assessment of the final utilization of the production process before mass production, is capitalised
only if all of the following conditions are satisfied:
development of the production process has been fully demonstrated by the technical team;
management has approved the budget of production development;
existed market research analysis suggests that the products produced by the new production
technology are able to be promoted;
adequate technical, financial and other resources to complete the development and subsequent
mass production and the ability to use or sell the intangible asset; and
the expenditure attributable to the intangible asset during its development phase can be reliably
measured.
V Summary of significant accounting policies and accounting estimates (continued)
17 Intangible assets (continued)
(e) Research and development (continued)
Other development expenditures that do not meet the conditions above are recognised in profit or
loss in the period in which they are incurred. Development costs previously recognised as expenses
are not recognised as an asset in a subsequent period. Capitalised expenditure on the development
phase is presented as development costs in the balance sheet and transferred to intangible assets at
the date that the asset is ready for its intended use.
(f) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note V (18)).
18 Impairment of long-term assets
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Fixed assets, construction in progress, intangible assets with finite useful lives, investment
properties measured using the cost model and long-term equity investments in subsidiaries and
associates are tested for impairment if there is any indication that an asset may be impaired at the
balance sheet date. Intangible assets which are not yet ready to use should be tested at least annually
for impairment, irrespective of whether there is any indication that it may be impaired. If the result
of the impairment test indicates that the recoverable amount of the asset is less than its carrying
amount, a provision for impairment and an impairment loss are recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and the present value of the future cash flows expected to be
derived from the asset. Provision for asset impairment is determined and recognised on the
individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset,
the recoverable amount of a group of assets to which the asset belongs is determined. A group of
assets is the smallest identifiable group of assets that is able to generate independent cash inflows.
Intangible assets with infinite useful lives and capitalized development expenditures are tested at
least annually for impairment, irrespective of whether there is any indication that it may be
impaired.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in
the subsequent periods.
19 Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets under
operating leases, and other expenditures that have been made but should be recgonised as expenses
over more than one year in the current and subsequent periods. Long-term prepaid expenses are
amortised on the straight-line basis over the expected beneficial period and are presented at actual
expenditure net of accumulated amortization.
V Summary of significant accounting policies and accounting estimates (continued)
20 Employee benefits
(a) Short-term employee benefits
Short-term employee benefits mainly include wages or salaries, bonus, allowances and subsidies,
staff welfare, medical insurance, work injury insurance, maternity insurance, housing funds, and
union running costs and employee education costs. The employee benefits are recognised in the
accounting period in which the service has been rendered by the employees, and as costs of assets or
expenses to whichever the employee service is attributable.
(b) Pension obligations
The Company and its subsidiaries operate various post-employment schemes, including both
defined benefit plans and defined contribution plans. A defined contribution plan is a pension plan
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under which the Company and its subsidiaries pay fixed contributions into a separate entity then the
Company and its subsidiaries have no legal or constructive obligations to pay further contributions.
In the reporting period, The Company and its subsidiaries’s pension obligations mainly include the
basic endowment insurance and unemployment insurance; both belong to the defined contribution
plan.
Pension insurance
Employees of the Company and its subsidiaries participate in the social pension insurance organized
by the local labour and social security departments. The Company and its subsidiaries pay pension
insurance premium to the pension insurance agency with the local provision of social pension
insurance base pay and proportional monthly. When the employee is retired, the local labour and
social security departments have the responsibility to pay the basic pension insurance to retired
employees
(c) Termination benefits
Termination benefits are payable when employment is terminated by the Company and its
subsidiaries before the normal retirement date, or whenever an employee accepts voluntary
redundancy in exchange for these benefits. the Company and its subsidiaries recognise termination
benefits at the earlier of the following dates, when the Company and its subsidiaries can no longer
withdraw the offer of those benefits and when the entity recognises costs related to restructuring.
Retirement benefits
The Company and its subsidiaries provide termination benefits to employees who accept voluntary
redundancy in exchange for these benefits. Termination benefits are the payments of wages or
salaries and social insurance for the employees who accept termination plan before the normal retire
age. The termination benefits plan covers the period from the starting date of termination benefit
plan to the normal retire age. When the Company and its subsidiaries terminate the employment
relationship with employees before the end of the employment contract, a provision for termination
benefits for the compensation arising from termination of the employment relationship with
employees to the retire age is recognised with a corresponding change to profit or loss. The
difference from change of actuarial assumptions and adjustment on benefit is recognised in the
current profits and losses.
Retirement benefits falling due within a year are reclassified as a current liability.
V Summary of significant accounting policies and accounting estimates (continued)
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21 Dividend distribution
Cash dividends distribution is recognised as a liability in the period in which it is approved by the
annual shareholders’ meeting.
22 Provisions
Provisions for product warranties, onerous contracts etc. are recognised when the Company and its
subsidiaries has a present obligation, it is probable that an outflow of economic benefits will be
required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related
present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time
value of money, are taken into account as a whole in reaching the best estimate of a provision.
Where the effect of the time value of money is material, the best estimate is determined by
discounting the related future cash outflows. The increase in the discounted amount of the provision
arising from passage of time is recognised as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the
current best estimate.
23 Share-based payments
24 Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary course of the Company and its
subsidiaries’s activities. Revenue is shown net of discounts and returns.
Revenue is recognized when the economic benefits associated with the transaction will flow to the
Company and its subsidiaries, the relevant revenue can be reliably measured and specific revenue
recognition criteria have been met for each of the Company and its subsidiaries’ activities as
described below:
V Summary of significant accounting policies and accounting estimates (continued)
24 Revenue recognition (continued)
(a) Sales of goods
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The Company and its subsidiaries are engaged in manufacturing and sales of washing
machines. Revenue from sales of goods is recognized when the goods and confirmed documents are
delivered, significant risks and rewards of ownership of the goods are transferred to the customers,
the Company and its subsidiaries retain neither continuing managerial involvement to the degree
usually associated with the ownership nor effective control over the goods sold, relevant
consideration or the documents which grant the right to receive the relevant consideration has been
received, and related costs can be measured reliably.
During the reporting period,the Company and its subsidiaries sale goods mainly through dealers,
large-scale chain retailers, e-business platform and export to foreign countries. Revenue is
recognized when products accepted by dealers, chain retailerss and third-party e-business sellers.
After the acceptance, the risks of damage of goods or price fluctuations and the right to sale goods
belongs to dealers, chain retailers and e-business sellers. As for self-operation e-business website,
revenue is recognized when products accepted by ultimate customers. As for export sales, revenue is
recognized when goods are delivered to customs, ships go across the appointed ports and the
Company and its subsidiaries get the bills of landing.
(b) Transfer of asset use rights
Interest income is determined by using the effective interest method, based on the length of time for
which the cash of the Company and its subsidiaries is used by others.
Income from an operating lease is recognised on a straight-line basis over the period of the lease.
25 Government grants
Government grants are the monetary asset that the Company and its subsidiaries received from the
government for free, including tax refund, financial subsidies, etc.
A government grant is recognized when the conditions attached to it can be complied with and the
government grant can be received. For a government grant in the form of transfer of monetary
assets, the grant is measured at the amount received or receivable. For a government grant in the
form of transfer of non-monetary assets, the grant is measured at nominal value.
(a) Government grants related to assets
The government grants related to assets mean the government assets that are obtained by enterprises
used for purchase or construction, or forming the long-term assets by other ways. The government
grants related to income refer to all the government grants except those pertinent to assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset.
V Summary of significant accounting policies and accounting estimates (continued)
25 Government grants (continued)
(b) Government grants related to income
For government grants related to income, where the grant is a compensation for related expenses or
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losses to be incurred by the Company and its subsidiaries in the subsequent periods, the grant is
recognized as deferred income, and included in profit or loss over the periods in which the related
costs are recognized; where the grant is a compensation for related expenses or losses already
incurred by the Company and its subsidiaries, the grant is recognized immediately in profit or loss
for the current period.
26 Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences
arising between the tax bases of assets and liabilities and their carrying amounts (temporary
differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to
subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax
asset or deferred tax liability is recognised for the temporary differences resulting from the initial
recognition of assets or liabilities due to a transaction other than a business combination, which
affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date,
deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply
to the period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and
tax credits to the extent that it is probable that taxable profit will be available in the future against
which the deductible temporary differences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognized for temporary differences arising from investments in
subsidiaries and associates, unless the Company is able to control the timing of the reversal of the
temporary difference, and it is probable that the temporary difference will not reverse in the
foreseeable future. When it is probable that the temporary differences arising from investments in
subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be
available in the future against which the temporary differences can be utilized, the corresponding
deferred tax assets are recognized.
Deferred tax assets and liabilities are offset when:
The deferred taxes are relate to the same tax payer within the Company and its subsidiaries
and the same taxation authority, and;
That tax payer has a legally enforceable right to offset current tax assets against current tax
liabilities
27 Operating lease
Lease payments under an operating lease are recognized on a straight-line basis over the period of the
lease, and are either capitalized as part of the cost of related assets, or charged as an expense for the
current period.
28 Segment information
The Company and its subsidiaries identify operating segments based on the internal organisation
structure, management requirements and the internal reporting system, and discloses segment
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information of reportable segments determined on the basis of operating segments.
V Summary of significant accounting policies and accounting estimates (continued)
28 Segment information (continued)
An operating segment is a component of the Company and its subsidiaries that satisfy all of the
following conditions:
(a) the component is able to earn revenues and incur expenses from its ordinary activities.
(b) whose operating results are regularly reviewed by the Company and its subsidiaries’
management to make decisions about resources to be allocated to the segment and to assess its
performance.
(c) for which the information on financial position, operating results and cash flows is available to
the Company and its subsidiaries. If two or more operating segments have similar economic
characteristics, and satisfy certain conditions, they are aggregated into a single operating segment.
29 Critical accounting policies and estimates
The Company and its subsidiaries continually evaluate the critical accounting estimates and key
judgments applied based on historical experience and other factors, including expectations of future
events that are believed to be reasonable.
(a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined
below:
(i) Accounting estimates on impairment of accounts receivable
In accordance with the accounting policy of the Company and its subsidiaries (Note V (10)), the
Company’s management tests annually whether receivables have suffered any impairment. Impairment
of receivables has been assessed by taking into account the customers’ credit history and financial
position together with the current market conditions. Even if the Company and its subsidiaries’
management has made bad debt provision for the expected loss at its best estimate, there is a
possibility that changes in customers’ financial position or market conditions will alter the result.
(ii) Accounting estimates on impairment of inventories
In accordance with the accounting policy of the Company and its subsidiaries (Note V (11) (c)), the
management of the Company and its subsidiaries estimate the net realizable value of the inventory. Net
realisable value is determined based on the estimated selling price in the ordinary course of business,
less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
Even if the management of the Company and its subsidiaries have made provision for the expected
impairment of inventories at its best estimate, there is a possibility that changes in market conditions
will alter the result.
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(iii) Estimated residual value and useful lives of fixed assets, investment properties and intangible assets
The Company and its subsidiaries’ management estimates the useful lives and residual value of fixed
assets, investment properties and intangible assets. Fixed assets comprise buildings, machinery and
equipment, motor vehicles, office and electronic equipment, ect. Investment properties comprise
buildings and land use rights, ect. Intangible assets include land use rights, non-patent technology
and computer softwares, ect. The three kinds of assets mentioned above have been assessed by taking
into account the actual residul value and useful lives of assets with similar nature and function based
on historical experience. However, there is a possibility that changes in technical renovation or other
reason will alter the result. The management of the Company and its subsidiaries will increase
depreciation and amortizations when the residual value and estimated useful lives are less than the
previous estimate.
V Summary of significant accounting policies and accounting estimates (continued)
29 Critical accounting policies and estimates (continued)
(iv) Accounting estimates on impairment of fixed assets, intangible assets and other long-term assets
Fixed asssets, intangible assets and other long-term assets are reviewed for impairment if there is
any incident or environmental change that the value of the asset may be impossible to recover. The
recoverable amount is determined by the useful value or market value calculated which judgement
and estimate should be applied to.
The management of the Company and its subsidiaries shall determine the asset impairment,
especially when judging any of the incidents below: (i) if there is any indication that value of related
assets may be impossible to recover; (ii) whether the higher of an asset’s fair value less costs to sell
and the present value of the future cash flows expected to be derive form the asset based on the
continuous operation is higher than its carrying amount; (iii) whether the main assumptions of cash
flows forecasting are applied appropriately, including whether the cash flows forcasting is
discounted in a proper rate. Even if the management of the Company and its subsidiaries have chosen
proper assumptions for impairment assessment (including assumptions for discount rate and growth
rate for cash flow forecast), there is a possibility that changes in the assumptions will have significant
effect on the result.
(v) Sales rebates
The Company and its subsidiaries apply the rebating policies with buyers. The amount of the rebates
is estimated periodically taking into account related sales contracts, examination of particular
transactions, market environment, inventory stock, historical experiences and the agreed indicator of
particular customers. As it determined by the judgement and estimation of management, there is a
possibility that changes in the estimation will have significant effect on the provision of sales rebates
of the period when the changes occurred.
(vi) Income taxes
104
2015 Annual Report of Wuxi Little Swan Company Limited
The Company and its subsidiaries are subject to income taxes in different jurisdictions. There are
many transactions and events for which the ultimate tax determination is uncertain during the
ordinary course of business. Significant judgment is required from the management in determining
the provision for income taxes in each of these jurisdictions. The Company and its subsidiaries
recognise income taxes in each jurisdiction based on estimates. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the
income tax and deferred tax provisions in the period in which such determination is made.
VI Taxation
1 The types and rates of taxes applicable to the Company and its subsidiaries are set out below:
Types Taxable base Tax rate
Taxable value added amount (tax payable
represents output VAT calculated using the
taxable sales amount multiplied by the effective
Value-added tax tax rate less deductible input VAT) 17%, 11% or 6%
Business tax Rental income, interest income and etc. 5%
City maintenance and
construction tax VAT and business tax 7%or 5%
Enterprise income tax Taxable income 15% or 25%
Tax preferences
105
2015 Annual Report of Wuxi Little Swan Company Limited
In July 2015, The Company gained the certificate of 'High-tech Enterprises‘, which is issued by
Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu State
Administration of Taxation and Jiangsu Local Taxation Bureau. The Certificate Number is
GR201532000606. Term of validity for this Certificate is three years, from 2015 to 2018.
In July 2014, The Company‘s subsidiary Hefei Midea Washing Machine Limited gained the
certificate of 'High-tech Enterprises‘, which is issued by Anhui Science and Technology Department,
Anhui Finance Department, Anhui State Administration of Taxation and Anhui Local Taxation
Bureau. The Certificate Number is GR2001434000147. Term of validity for this Certificate is three
years, from 2014 to 2017.
In July 2015, The Company‘s subsidiary Wuxi Little Swan GE Limited gained the certificate of
'High-tech Enterprises‘, which is issued by Jiangsu Science and Technology Department, Jiangsu
Finance Department, Jiangsu State Administration of Taxation and Jiangsu Local Taxation Bureau.
The Certificate Number is GR201532000557. Term of validity for this Certificate is three years,
from 2015 to 2018.
In July 2015, The Company‘s subsidiary Wuxi Filin Electronics Limited gained the certificate of
'High-tech Enterprises‘, which is issued by Jiangsu Science and Technology Department, Jiangsu
Finance Department, Jiangsu State Administration of Taxation and Jiangsu Local Taxation Bureau.
The Certificate Number is GR201532000917. Term of validity for this Certificate is three years,
from 2015 to 2018.
According to Enterprise income tax law of the People's Republic of China, Article 28, The Company
and its three subsidiaries, Hefei Washing Machine Limited, Wuxi Little Swan GE Limited and Wuxi
Filin Electronics Limited, shall be subject to the corporate income tax at the reduced rate of
15%(FY2014: same).
VII Notes to the significant items in the consolidated financial statements
1 Cash at bank and in hand
31 December 2015 31 December 2014
Cash in hand - 8,158.18
Cash at bank 2,792,685,328.69 2,996,731,646.68
Other cash balances 250,158,596.12 63,175,151.35
Total 3,042,843,924.81 3,059,914,956.21
including：cash deposited overseas 607,997.46 30,358,441.79
106
2015 Annual Report of Wuxi Little Swan Company Limited
By the end of 2015 the other cash balances comprise the followings: Bank acceptance deposits RMB
97,393,915.78, Letter of Credit deposits RMB 2,764,680.34, and fixed deposits over 3 months RMB
150,000,000.00 (31 December 2014: Bank acceptance deposits RMB 60,837,430.56 and Letter of
Credit deposits RMB 2,337,720.79 with changes in profit or loss).
2 Financial assets measured at fair value through profit and loss
31 December 2015 31 December 2014
Tradable financial assets - 248,907.75
3 Notes receivable
(1) Notes receivable was itemized classified by nature
Items 31 December 2015 31 December 2014
Bank acceptance notes 2,205,189,379.10 3,147,153,535.61
As at 31 December 2015 and 31 December 2014, there is no pledged notes receivable.
(2) As at 31 December 2015, notes receivable that have been endorsed but not yet expired are as follows:
Derecognised Not derecognised
Bank acceptance notes 1,283,858,127.39 -
107
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
4 Accounts receivable
(1) Accounts receivable classified by nature:
31 December 2015 31 December 2014
Carrying amount Bad debt provision Book value Carrying amount Bad debt provision Book value
% of % of
Classification Amount % Amount provision Amount % Amount provision
Debtors grouped by 856,343,229.7
credit risk 943,243,995.63 100.00% 47,168,520.00 5.00% 896,075,475.63 901,464,563.21 98.68% 45,121,333.51 5.01% 0
Others with
insignificant balance
but assessed
individually - - - - - 12,059,452.56 1.32% 12,059,452.56 100.00%
856,343,229.7
Total 943,243,995.63 100.00% 47,168,520.00 5.00% 896,075,475.63 913,524,015.77 100.00% 57,180,786.07 6.26% 0
Bad debt provision provided on Aging Analysis:
31 December 2015
Aging Accounts receivable Bad Debt Provision % of provision
Within 1 Year 943,117,591.22 47,155,879.56 5.00%
1-2 Years 126,404.41 12,640.44 10.00%
Total 943,243,995.63 47,168,520.00 5.00%
As at 31 December 2015 and 31 December 2014, there is no accounts receivable that has been endorsed or discounted but has not yet expired.
- 108 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
4 Accounts receivable (continued)
(2) Bad debt provision made, collected or reversed in current year
The provision collected or reversed in 2015 was RMB 632,077.76 (In 2014: RMB 1,688,543.94).
There was not material balance collected or reversed individually in the current year.
(3) The written-off amount of accounts receivable in current year was RMB 9,380,188.31. The material
balance write-off individually in the current year is analysed as below:
Whether
due
from
Nature of related
accounts Written-off Procedure of party
Companies receivable amount Reason written off transactions
Chongqing Fuli Real Payment
Estate Development for Board
Co.,Ltd. goods 1,675,800.00 Slow collection Resolution No
Chongqing
Zhongcheng
Properties Payment
Development for Board
Co.,Ltd. goods 1,655,000.00 Slow collection Resolution No
Hunan Huitang Hot Payment
Spring Huatian for Board
Properties Co.,Ltd. goods 912,000.00 Slow collection Resolution No
Total 4,242,800.00 - - -
(4) As at 31 December 2015, amounts due from top five customers are summarised as below:
% of total
Items Amounts Bad Debt Provision balance
Due from top five
customers in total 699,761,390.03 -34,988,069.50 74.19%
- 109 -
2015 Annual Report of Wuxi Little Swan Company Limited
5 Advances to suppliers
(1) Advances to suppliers on aging analysis are as follows:
31 December 2015 31 December 2014
% of total
Amount balance Amount % of total balance
Within 1
year 95,192,076.23 97.50% 139,582,987.93 97.63%
Between
1 and 2
years 2,416,501.94 2.48% 2,448,887.67 1.71%
Between
2 and 3
years - - 925,646.68 0.65%
Over 3 years 20,000.00 0.02% 20,000.00 0.01%
97,628,578.17 100.00% 142,977,522.28 100.00%
As at 31 December 2015, the balance of advance to suppliers with aging over one year amounts to
RMB 2,436,501.94 (31 December 2014: RMB 3,394,534.35), mainly comprising the prepayments
for goods for which the standards stipulated by the contract is not yet been reached.
VII Notes to the significant items in the consolidated financial statements (continued)
5 Advances to suppliers (continued)
(2) As at 31 December 2015, amounts of the top five advances to suppliers are as below:
Amounts % of Total Balance
Total amounts of top five advances to
suppliers 54,902,906.54 56.24%
6. Interests receivable
31 December 2015 31 December 2014
7 Other receivables
(1) Other receivables classified by nature:
Interests receivable 22,932,602.74 -
- 110 -
2015 Annual Report of Wuxi Little Swan Company Limited
31 December 2015 31 December 2014
Bad Debt Bad Debt
Carrying Amount Provisions Carrying Amount Provisions
% of Book % of
Amount % Amountprovision value Amount % Amountprovision Book value
Debtors
grouped
by credit
risk 9,956,212.29100.00% 748,032.21 7.51%9,208,180.0839,207,573.91100.00%4,595,604.69 11.72%34,611,969.22
Total 9,956,212.29100.00% 748,032.21 7.51%9,208,180.0839,207,573.91100.00%4,595,604.69 11.72%34,611,969.22
Bad debt provision provided on Aging Analysis:
31 December 2015
Aging Other receivables Provision of bad debt % of Provision
Within 1 year 8,422,416.66 421,120.79 5.00%
Between 1 and 2 years 1,010,391.00 101,039.10 10.00%
Between 2 and 3 years 179,150.00 53,745.00 30.00%
Between 3 and 4 years 298,000.00 149,000.00 50.00%
Between 4 and 5 years 46,254.63 23,127.32 50.00%
Total 9,956,212.29 748,032.21 7.51%
As at 31 December 2015 and 31 December 2014, there is no other receivable that has been endorsed
or discounted but has not yet expired.
VII Notes to the significant items in the consolidated financial statements (continued)
7 Other receivables (continued)
(2) Bad debt provision made, collected or reversed in current year
The amount of bad debt provision made in the current year was nil. The amount of bad debt
provision collected or reversed in the current year was RMB 2,184,257.60.
(3) The written-off amount of other receivables in current year was RMB 13,012,171.87. The material
balance write-off individually in the current year is analysed as below:
Whether due
from related
Nature of the Procdure of party
Due From receivable Amount Reason written off transactions
- 111 -
2015 Annual Report of Wuxi Little Swan Company Limited
Ministry of Industry
and Information Energy efficiency Uncollectabl Board
Technology rebates 12,609,841.10 e Resolution No
According to the Notice of Popularzation of Energy Effiency Electric Washing Machine (CaiJian
[2012] No.277), Wuxi Little Swan CO., LTD. and Hefei Midea Washing Machine Limited have
claimed to the Ministry of Finance for subsidy amounted to RMB 137,638,261.10 and RMB
45,651,580.00, adding up to RMB 183,289,841.10.
During the period of 2015, RMB 127,900,000.00 and RMB 42,780,000.00 has been received
respectively, adding up to RMB 170,680,000.00, which were over the verified amount for Wuxi
Little Swan Co., LTD. (RMB 108,960,000.00) and Hefei Midea Washing Machine Limited (RMB
36,640,000.00) according to the newly revised notice of the Ministry of Finance (CaiJian[2015]
No.323). As a result, Wuxi Little Swan CO., LTD. and Hefei Midea Washing Machine Limited
should refund RMB 18,940,000.00 and RMB 6,140,000.00, adding up to RMB 25,080,000.00 and
accordingly wrote off uncollectible subsidy in the current year amounted to RMB 12,609,841.10.
(4) Other receivables classified by nature
Nature of other receivables 31 December 2015 31 December 2014
Deposits 1,194,312.63 1,198,434.12
Advance to third parties 1,544,575.33 5,449,979.96
Advance to employees 3,657,991.12 4,513,767.48
Energy efficiency rebates - 12,609,841.10
Tax reimbursement for export - 10,960,613.45
Others 3,559,333.21 4,474,937.80
Total 9,956,212.29 39,207,573.91
VII Notes to the significant items in the consolidated financial statements (continued)
7 Other receivables (contuinued)
(5) As at 31 December 2015, the top five debtor analysis is as below:
% of ending
Nature Amount Aging balance Provision
Guangzhou
Antaida long-term equity
Logistics investments
Corporation Liquidation 2,587,038.41 Within 1 year 25.98% 129,351.92
- 112 -
2015 Annual Report of Wuxi Little Swan Company Limited
Hefei Hualing Co.,
Rental and
Ltd.
advance
payments for
water and
electricity 2,516,870.13 Within 1 year 25.28% 125,843.51
Wuxi China
Resources Gas
Limited. Deposits 553,300.00 Within 1 year 5.56% 27,665.00
Hefei Gas Limited. Between 1
Deposits 270,000.00 and 2 years 2.71% 27,000.00
Dawei Xu Advance to
employees 212,272.50 Within 1 year 2.13% 10,613.63
Total 6,139,481.04 61.66% 320,474.06
8. Inventories
(1) Inventories classified by nature:
31 December 2015 31 December 2014
Provision for Net book Provision for Net book
Book value write-down value Book value write-down value
Raw
materials 21,725,796.66 1,149,192.62 20,576,604.04 34,295,334.89 3,831,331.14 30,464,003.75
Work in
progress 8,189,804.33 - 8,189,804.33 11,071,881.49 - 11,071,881.49
Finished
goods 755,272,411.35 38,625,852.20 716,646,559.15 604,929,570.05 40,848,462.04 564,081,108.01
Total 785,188,012.34 39,775,044.82 745,412,967.52 650,296,786.43 44,679,793.18 605,616,993.25
(2) Provisions for write-down of inventories are analysed as below:
31 December 31 December
2014 Increase Decrease 2015
Provision for Reversed or
write-down Other written-off Other
Raw 3,831,331.1
materials 4 - - 2,682,138.52 - 1,149,192.62
Finished 40,848,462.
goods 04 23,886,048.29 - 26,108,658.13 - 38,625,852.20
- 113 -
2015 Annual Report of Wuxi Little Swan Company Limited
44,679,793.
18 23,886,048.29 - 28,790,796.65 - 39,775,044.82
The provisions for inventories are provided to write down the book value to the net realizable
value when the net realizable value is lower.
VII Notes to the significant items in the consolidated financial statements (continued)
9 Other current assets
Items 31 December 2015 31 December 2014
Structural deposits 2,470,000,000.00 -
Financial products 3,152,675,560.00 1,905,100,000.00
Prepayment of taxes 78,446,417.44 25,705,220.99
Prepaid expense-mould 32,066,626.79 17,166,993.73
Total 5,733,188,604.23 1,947,972,214.72
As at 31 December 2015, financial products comprise products of floating income and unprotected
principles with the balance of RMB 3,052,675,560.00 and products of protected principles with the
balance of RMB 100,000,000.00. (As at 31 December 2014, financial products comprise products of
floating income and unprotected principles with the balance of RMB 1,900,100,000.00 and products
of protected principles with the balance of RMB 5,000,000.00).
10. Available-for-sale financial assets
(1) Available-for-sale financial assets instructions
31 December 2015 31 December 2014
Measured at fair value
-Available-for-sale equity instruments 100,300.00 100,300.00
-Financial products 3,052,675,560.00 1,900,100,000.00
Total 3,052,775,860.00 1,900,200,300.00
Measured at cost
-Available-for-sale equity instruments 200,000.00 200,000.00
Less：provision -100,300.00 -100,300.00
Total 3,052,875,560.00 1,900,300,000.00
Less: available-for-sale financial assets
listed on other current assets -3,052,675,560.00 -1,900,100,000.00
- 114 -
2015 Annual Report of Wuxi Little Swan Company Limited
200,000.00 200,000.00
VII Notes to the significant items in the consolidated financial statements (continued)
10 Available-for-sale financial assets (continued)
(1) Available-for-sale financial assets instructions (continued)
Available-for-sale financial assets are analysed as below:
(a) Available-for-sale financial assets measured at fair value:
31 December 2015 31 December 2014
Available-for-sale equity instruments
—fair value - -
—cost 100,300.00 100,300.00
—accumulated other comprehensive income - -
—accumulated provision -100,300.00 -100,300.00
Financial products
—fair value 3,052,675,560.00 1,900,100,000.00
—cost 2,997,000,000.00 1,900,100,000.00
—accumulated other comprehensive income 55,675,560.00 -
—accumulated provision - -
Total
—fair value 3,052,675,560.00 1,900,100,000.00
—cost 2,997,100,300.00 1,900,200,300.00
—accumulated other comprehensive income 55,675,560.00 -
—accumulated provision -100,300.00 -100,300.00
(b) Available-for-sale financial assets measured at cost:
% of
31 Shareholdings Cash
31 December December in invested dividends in
2014 Increase Decrease 2015 company current year
Available-for-sale equity instruments-cost
Suzhou People's
Department
Store Co., Ltd. 150,000.00 - - 150,000.00 0.25% -
- 115 -
2015 Annual Report of Wuxi Little Swan Company Limited
Inner-Mong olia
Baotou
Department
Store Co., Ltd. 50,000.00 - - 50,000.00 0.04% 6,050.00
Available-for-sale equity instruments-provisions
Suzhou People's
Department
Store Co., Ltd. - - - -
Inner-Mong olia
Baotou
Department
Store Co., Ltd. - - - -
200,000.00 - - 200,000.00
VII Notes to the significant items in the consolidated financial statements (continued)
10 Available-for-sale financial assets (continued)
(c) The information related to available-for-sale financial assets’ provision is as following:
31 December 2015
and 31 December 2014
Available-for-sale equity instruments 100,300.00
The available-for-sale financial assets measured at fair value held by the Company and its
subsidiaries are shareholdings of Wuhan Huaxin High Technology Co., Ltd., which was acquired
through National Equities Exchange and Quotations. During 2014, The Company and its subsidiaries
had made full provisions for the value of shareholdings, as NEEQ had suspended transference of
those shares due to the fact that Wuhan Huaxin was difficult in its continuous operation and was
undergoing bankruptcy restructuring by local court. In 2015, Wuhan Huaxin has finished
restructuring.
- 116 -
2015 Annual Report of Wuxi Little Swan Company Limited
As at 31 December 2015, financial products measured at fair value held by the Company and its
subsidiaries are products with floating income and unprotected principles, which was initially
acquired at the cost of RMB 2,997,000,000.00. As at 2015, the fair value of those financial
products is RMB 3,052,675,560.00, and changes in fair value amounted to RMB 55,675,560.00 has
been recorded in other comprehensive income. All financial products mentioned above are
structural objects which are out of scope of consolidation. At 31 December 2015,the maximum risk
exposure of financial products held by the Company and its subsidiaries is limited to the book value
of financial products. The Company and its subsidiaries have no obligation or intention to offer
financial support to the financial product funds mentioned above.
The available-for-sale financial assets measured at cost held by the Company and its subsidiaries are
shareholdings of unlisted companies. As there is no active market, and the range of reasonable
estimated fair value is large and the probability which is used for the estimation of fair value can not
be figured out reasonably, the fair value of the available-for-sale financial assets can not be measured
reliably. As at 31 December 2015, the Company and its subsidiaries have no intention to dispose
those investments.
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
11 Long-term equity investments
Movement
Adjusted
net profi Adjustment
t or loss of other Movement Provision for
31 based on compre- of other Cash dividends 31 Impairment
Provisions
as at 31
December Additional Disposal of equity hensive owner’s declared by for Others
December December
Investee 2014 investment investment method income equity associates impairment -Liquidation 2015 2015
Joint ventures
Associates
Guangzhou
Antaida
2,850,040.4
Logistics
Corporation 5 - - -255,029.37 - - - - -2,595,011.08 - -
As at 31 December 2014, the Company and its subsidiaries directly held 20% of the sharesshareholdings of Guangzhou Antaida Logistics Corporation and measured
Guangzhou Antaida Logistics Corporation as an associate using equity method. During 2015, the board of shareholders of Guangzhou Antaida Logistics Corporation
decided to shut up business and initiate liquidation procedure with the approval of board of shareholders due to difficulties in business operation. As at 31 December
2015, the liquidation has been completed. The residual net asset amounted to RMB 12,935,192.04 whcih is was distributed to all shareholders based on their
contributive proportions. As a result, the Company wrote off the equity investment and recognized distributed assets RMB 2,587,038.41 and investment loss RMB
7,972.67.
- 118 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
12 Investment Properties
(1) Investment properties measured at cost method
Buildings Land use rights Total
Cost
31 December 2014 88,227,510.86 22,949,959.07 111,177,469.93
Addition 197,538.43 - 197,538.43
Purchasing 197,538.43 - 197,538.43
31 December 2015 88,425,049.29 22,949,959.07 111,375,008.36
Accumulated depreciation/amortization
31 December 2014 20,111,084.24 5,261,142.88 25,372,227.12
Addition 4,229,638.10 354,030.33 4,583,668.43
Provision or
amortization 4,229,638.10 354,030.33 4,583,668.43
31 December 2015 24,340,722.34 5,615,173.21 29,955,895.55
Provisions for impairment loss
31 December 2014 12,576,065.29 - 12,576,065.29
31 December 2015 12,576,065.29 - 12,576,065.29
Net book value
31 December 2015 51,508,261.66 17,334,785.86 68,843,047.52
31 December 2014 55,540,361.33 17,688,816.19 73,229,177.52
In 2015, the depreciation and amortization of investment properties amounts to RMB 4,583,668.43.
(2014: RMB 2,091,889.13)
In 2015, there is no disposal of investment properties.
- 119 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
13 Fixed assets
Machinery Office
and Motor equipment
Buildings equipment vehicles and fixtures Total
Cost
31 December
2014 749,250,686.72 836,947,222.57 26,537,578.36 101,029,311.62 1,713,764,799.27
Addition 9,995,257.43 54,027,943.52 1,472,249.45 16,446,645.02 81,942,095.42
Purchase 9,165,257.43 54,027,943.52 1,472,249.45 16,446,645.02 81,112,095.42
Transferred
from
construction in
progress 830,000.00 - - - 830,000.00
Reduction 28,802,459.10 13,963,463.04 674,759.71 4,359,489.27 47,800,171.12
Disposal or
scrap 17,867,484.11 13,963,463.04 674,759.71 4,359,489.27 36,865,196.13
Others 10,934,974.99 - - 10,934,974.99
31 December
2015 730,443,485.05 877,011,703.05 27,335,068.10 113,116,467.37 1,747,906,723.57
Accumulated depreciation
31 December
2014 159,354,270.53 377,215,896.11 20,681,795.73 73,259,754.43 630,511,716.80
Addition 28,953,996.42 69,323,443.80 2,914,675.24 13,618,560.21 114,810,675.67
Provision 28,953,996.42 69,323,443.80 2,914,675.24 13,618,560.21 114,810,675.67
Reduction 21,787,215.80 6,466,397.96 584,175.03 3,506,900.64 32,344,689.43
Disposal 16,052,132.60 6,466,397.96 584,175.03 3,506,900.64 26,609,606.23
Others 5,735,083.20 - - - 5,735,083.20
31 December
2015 166,521,051.15 440,072,941.95 23,012,295.94 83,371,414.00 712,977,703.04
Provision for impairment losses
31 December 3,918,452.47 13,200,786.02 28,456.94 284,488.39 17,432,183.82
- 120 -
2015 Annual Report of Wuxi Little Swan Company Limited
2014
Addition - 1,219,489.77 64,570.25 98,162.90 1,382,222.92
Provision - 1,219,489.77 64,570.25 98,162.90 1,382,222.92
Reduction - 3,254,695.23 28,456.94 130,525.64 3,413,677.81
Disposal - 3,254,695.23 28,456.94 130,525.64 3,413,677.81
31 December
2015 3,918,452.47 11,165,580.56 64,570.25 252,125.65 15,400,728.93
Net book value
31 December
2015 560,003,981.43 425,773,180.54 4,258,201.91 29,492,927.72 1,019,528,291.60
31 December
2014 585,977,963.72 446,530,540.44 5,827,325.69 27,485,068.80 1,065,820,898.65
Depreciation charges for 2015 amounted to RMB 114,810,675.67 (2014:RMB 125,637,420.63). The
amount of depreciation recognized in cost of sales, selling expense and operating expense are RMB
94,295,000.40, RMB 544,100.15 and RMB 19,971,575.12 respectively. (2014: The amount of
depreciation recognized in cost of sales, selling expense and operating expense are RMB
98,642,512.98, RMB 579,659.41 and RMB 26,415,248.24 respectively).
VII Notes to the significant items in the consolidated financial statements (continued)
14 Intangible assets
Non-patente
Land use rights d technology Others Total
Original cost
31 December 2014 242,666,890.39 1,992,000.00 1,395,014.56 246,053,904.95
31 December 2015 242,666,890.39 1,992,000.00 1,395,014.56 246,053,904.95
Accumulated amortization
31 December 2014 39,906,312.69 1,992,000.00 1,395,014.56 43,293,327.25
Addition 5,238,952.67 - - 5,238,952.67
Disposal - - - -
31 December 2015 45,145,265.36 1,992,000.00 1,395,014.56 48,532,279.92
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2015 Annual Report of Wuxi Little Swan Company Limited
Provisions for impairment
31 December 2014 - - - -
31 December 2015 - - - -
Net book value
31 December 2015 197,521,625.03 - - 197,521,625.03
31 December 2014 202,760,577.70 - - 202,760,577.70
In 2015, the amortization of intangible assets amounts to RMB 5,238,952.67. (In 2014: RMB
5,553,777.06)
15 Long-term prepaid expenses
31 December 31 December
2014 Addition Amortization 2015
Leasehold
improvement cost - 5,199,891.79 1,751,028.33 3,448,863.46
IT consulting fee 1,362,590.60 330,000.00 903,209.68 789,380.92
Mould 489,387.55 - 489,387.55 -
1,851,978.15 5,529,891.79 3,143,625.56 4,238,244.38
VII Notes to the significant items in the consolidated financial statements (continued)
16 Deferred tax assets and liabilities
(1) Deferred tax assets without taking into consideration the offsetting of balances
31 December 2015 31 December 2014
Deductible Deductible
temporary temporary
differences and Deferred differences and Deferred
tax losses tax assets tax losses tax assets
Provision for assets
impairment 90,583,724.89 13,587,558.73 111,660,322.99 16,749,048.47
Unrealized profit
arising
from elimination of
inter-company 68,217,414.97 10,232,612.25 47,563,017.07 7,134,452.56
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2015 Annual Report of Wuxi Little Swan Company Limited
transactions
Termination benefits 32,192,522.18 4,828,878.33 36,765,633.21 5,514,844.98
Accrued expenses 1,521,730,526.58 228,259,578.99 1,353,081,356.67 202,962,203.50
Provisions 9,981,021.44 1,497,153.22 9,960,830.74 1,494,124.61
Deferred income 3,395,533.29 509,329.99 465,400.00 69,810.00
Investment differences 8,782,955.88 1,317,443.38 8,782,955.88 1,317,443.38
1,734,883,699.23 260,232,554.89 1,568,279,516.56 235,241,927.50
Includes:
31 December 2015 31 December 2014
Expected to reverse within 1 year
(including 1 year) 253,576,903.19 228,339,829.14
Expected to reverse after 1 year 6,655,651.70 6,902,098.36
Total 260,232,554.89 235,241,927.50
VII Notes to the significant items in the consolidated financial statements (continued)
16 Deferred tax assets and liabilities (continued)
(2) Deferred tax liabilities without taking into consideration the offsetting of balances
31 December 2015 31 December 2014
Taxable Taxable
Temporary Deferred Temporary Deferred
difference tax liabilities difference tax liabilities
Available-for-sale
financial assets 55,675,560.00 8,351,334.00 - -
Financial assets at fair
value through profits
or losses - - 248,907.75 37,336.16
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2015 Annual Report of Wuxi Little Swan Company Limited
55,675,560.00 8,351,334.00 248,907.75 37,336.16
Includes:
31 December 2015 31 December 2014
Expected to reverse within 1 year
(including 1 year) 8,351,334.00 37,336.16
Expected to reverse after 1 year
- -
8,351,334.00 37,336.16
(3) Net amounts of deferred tax assets and liabilities taking into consideration the offsetting of balances
are set out as follows:
31 December 2015 31 December 2014
Deferred tax Deferred tax
Netting assets or Netting assets or
amount liabilities, net amount liabilities, net
Deferred tax
assets, net 8,351,334.00 251,881,220.89 - 235,241,927.50
Deferred tax
liabilities, net 8,351,334.00 - - 37,336.16
(4) Deductible temporary differences and tax losses that are not recognised as deferred tax assets are
analysed as below:
31 December 2015 31 December 2014
Deductible temporary differences 24,307,336.03 24,904,410.07
Deductible tax losses 75,877,413.93 70,854,758.45
100,184,749.96 95,759,168.52
VII Notes to the significant items in the consolidated financial statements (continued)
16 Deferred tax assets and liabilities (continued)
(5) The detuctible tax losses for which deferred tax assets are not recognised will expire in the following
years:
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2015 Annual Report of Wuxi Little Swan Company Limited
31 December 2015 31 December 2014
2015 - 4,554,328.15
2016 287,136.58 287,136.58
2017 89,186.59 89,186.59
2018 16,303,166.71 16,303,166.71
2019 49,620,940.42 49,620,940.42
2020 9,576,983.63 -
75,877,413.93 70,854,758.45
17 Other non-current assets
31 December 2015 31 December 2014
Prepayment for equipments 32,963,224.90 -
18 Provision for impairment of assets
31 December Decrease 31 December
2014 Increase Write back Write off 2015
Bad debt provision 61,776,390.76 - -2,816,335.36-11,043,503.19 47,916,552.21
-Accounts
receivable 57,180,786.07 - -632,077.76 -9,380,188.31 47,168,520.00
-Other receivables 4,595,604.69 - -2,184,257.60-1,663,314.88 748,032.21
Write-down of
inventories 44,679,793.18 23,886,048.29 - -28,790,796.65 39,775,044.82
Impairment provision
for
available-for-sale
financial assets 100,300.00 - - - 100,300.00
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2015 Annual Report of Wuxi Little Swan Company Limited
Impairment provision
for investment
properties 12,576,065.29 - - - 12,576,065.29
Impairment provision
for fixed assets 17,432,183.82 1,382,222.92 - -3,413,677.81 15,400,728.93
136,564,733.0
Total 5 25,268,271.21 -2,816,335.36-43,247,977.65 115,768,691.25
VII Notes to the significant items in the consolidated financial statements (continued)
19 Notes payable
31 December 2015 31 December 2014
Bank acceptances 1,953,065,274.06 1,173,851,127.31
As at 31 December 2015, there is no notes payable expired but not yet paid.
20 Accounts payable
(1) Illustration of accounts payable
31 December 2015 31 December 2014
Payables for raw materials 2,359,604,637.06 2,118,446,507.24
Payables for installation and maintenance
cost 39,107,819.41 32,760,610.62
Payables for transportation costs 4,246,921.42 2,066,756,61
Others 16,847,964.06 13,423,036.74
Total 2,419,807,341.95 2,166,696,911.21
(2) Accounts payable aging over 1 year significant in value
As at 31 December 2015, accounts payable with aging over 1 year amounted to RMB 43,910,569.00
(31 December 2014: RMB 34,248,050.36), which mainly comprised of payables for raw materials.
The amounts have not been settled because contract expiration has not yet come or dispute over the
quality of materials is not yet solved.
21 Advances from customers
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2015 Annual Report of Wuxi Little Swan Company Limited
(1) Illustration of Advances from customers
31 December 2015 31 December 2014
Advances from customers 1,652,908,781.44 851,592,826.03
(2) Advances from customers aging over 1 year significant in value
As at 31 December 2015, advances from custmers with aging over 1 year amounted to RMB
28,512,383.82 (31 December 2014: RMB 49,446,273.22), which mainly comprised payments for
goods. As the delivery to customers have not been completed, the advances had not yet been settled.
VII Notes to the significant items in the consolidated financial statements (continued)
22 Employee benefits payable
(1) Illustration of Employee benefits payable
31 December 2014 Addition Decrease 31 December 2015
Short-term employee benefits
payable 207,053,076.75 809,880,376.02 790,562,180.16 226,371,272.61
Defined contribution plans
payable 5,469,599.96 90,673,885.87 81,934,802.01 14,208,683.82
Termination benefits payable 8,043,515.10 19,777,052.89 20,119,807.50 7,700,760.49
Total 220,566,191.81 920,331,314.78 892,616,789.67 248,280,716.92
(2) Short-term employee benefits
31 December 31 December
2014 Addition Decrease 2015
Salaries, bonuses,allowances
and subsidies 184,980,055.05 672,770,478.71 654,688,457.06 203,062,076.70
Staff welfare 8,440,970.34 52,564,002.05 55,444,729.30 5,560,243.09
Social insurance 2,595,681.91 44,282,595.42 40,000,976.26 6,877,301.07
-Medical insurance 2,122,080.36 35,426,076.34 32,045,396.11 5,502,760.59
-Employment injury insurance 300,678.25 6,747,824.06 6,098,047.86 950,454.45
-Maternity insurance 172,923.30 2,108,695.02 1,857,532.29 424,086.03
Housing fund 6,685,080.62 27,233,918.12 27,462,200.10 6,456,798.64
Labour union funds and
employee education fee 4,351,288.83 13,029,381.72 12,965,817.44 4,414,853.11
Total 207,053,076.75 809,880,376.02 790,562,180.16 226,371,272.61
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2015 Annual Report of Wuxi Little Swan Company Limited
As at 31 December 2015, there were no overdue payroll and welfare payables. This balance of payroll and welfare
payables will be settled in 2016.
(3) Defined contribution plans
31 December 31 December
2014 Addition Decrease 2015
Pension 5,075,081.72 84,347,800.81 76,221,610.99 13,201,271.54
Unemployment insurance 394,518.24 6,326,085.06 5,713,191.02 1,007,412.28
Total 5,469,599.96 90,673,885.87 81,934,802.01 14,208,683.82
(4) Termination benefits payable
31 December 2015 31 December 2014
Termination benefits payable (Current portion
within 1 year) 6,800,760.49 5,392,915.10
Other termination benefits payable 900,000.00 2,650,600.00
Total 7,700,760.49 8,043,515.10
VII Notes to the significant items in the consolidated financial statements (continued)
22 Employee benefits payable (continued)
(4) Termination benefits payable (continued)
In 2015, termination benefits used to optimize employee structures amounted to RMB
14,322,248.26. (In 2014: RMB 17,259,177.65)
23 Taxes and other levies payable
31 December 2015 31 December 2014
Value-added tax 8,884,701.12 2,480,795.51
Business tax 229,524.56 925,318.28
Corporate income tax 279,867,360.71 239,342,772.35
Individual income tax 1,641,343.76 2,176,903.49
Civil infrastructure maintenance and
construction fee 2,492,588.81 2,370,741.48
Household electrical appliances recycling
fund 22,335,614.00 16,234,575.00
Land using tax 3,166,208.90 3,107,842.26
House property tax 3,319,892.04 3,269,324.31
Education fee 1,779,616.70 1,930,360.51
Stamp tax 226,162.21 397,990.84
Others 1,165,215.10 1,412,230.61
- 128 -
2015 Annual Report of Wuxi Little Swan Company Limited
325,108,227.91 273,648,854.64
Household electrical appliances recycling fund
According to Stipulation of administration and ultilisation of Waste Electrical and Electronic
Product, electrical and electronic product producers are obliged to pay RMB 7.00 household
electrical appliances recycling fund for each good produced.
24 Dividends payable
31 December 2015 31 December 2014
Ordinary share dividends payable 5,400,652.06 4,088,128.36
VII Notes to the significant items in the consolidated financial statements (continued)
25 Other payables
(1) Other payables classified by nature
31 December 2015 31 December 2014
Payment for equipments 54,026,136.97 49,576,501.03
Payment for moulds 50,738,280.49 46,175,740.61
Energy efficiency rebate 25,080,000.00 -
Prepayments 18,631,746.58 16,256,757.54
Guarantee & deposits 13,794,750.00 14,905,101.19
Advance money collected or paid 5,407,965.76 4,648,736.95
Others 4,128,258.14 12,729,821.16
Total 171,807,137.94 144,292,658.48
(2) Other Accounts Payable aging over 1 year significant in value
As at 31 December 2015, other payables aging over 1 year amounted to RMB 47,035,155.00 (31
December 2014: RMB 72,314,023.54). which are mainly payment for equipments and moulds
(RMB 40,585,044.20, due to contract expiration has not yet come or dispute over the quality of
materials) and guarantee&deposits (RMB 6,450,110.80, due to the fact that contract is still under
execution).
26 Other current liabilities
31 December 2015 31 December 2014
Accrual expenses- sales rebate 868,491,961.48 925,846,165.66
Accrual expenses-sales promotion fee 249,793,144.13 170,902,946.59
Accrual expenses-transportation fee 127,259,322.97 89,246,575.74
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2015 Annual Report of Wuxi Little Swan Company Limited
Accrual expenses-maintenance and installation
cost 199,287,081.29 100,999,782.02
Accural expeses-trademark royalty charges 15,536,878.06 5,576,397.45
Accural expenses-Others 61,365,905.31 59,056,793.06
Total 1,521,734,293.24 1,351,628,660.52
27 Long-term employee benefits payable
31 December 2015 31 December 2014
Termination benefits payable
(non-current portion over 1 year) 28,439,299.25 29,811,618.11
VII Notes to the significant items in the consolidated financial statements (continued)
28 Specific payable
31 December 31 December
2014 Addition Decrease 2015 Causes
Demolition
compensati Demolition
on 2,073,957.30 - 2,073,957.30 - compensation
29 Provisions
31 December 2015 31 December 2014 Causes
Quality guarantee product quality
deposits 9,981,021.44 9,960,830.74 compensation
Other explanation, including explanation of significant assumption and estimates related to important
provisions:
The washing machine produced by the Company‘s subsidiary, namely Wuxi Little Swan GE Limited,
are mainly exported to the Unite State and other foreign market. There are two main risks of
compensation as below: the risk of insufficient insurance indemnity from the insurance compay and
the payment risk when FCR (Failure Call Rate) exceed the stipulated rate with General Electric
Company in the case of quality problems arising from washing machines. As at 31 December 2015,
Wuxi Little Swan GE Limited's estimated FCR payment of products that have been sold and the loss
of insufficient insurance indemnity amounted to RMB 9,981,021.44.
30 Deferred income
31 December 31 December
2014 Increase Decrease 2015 Causes
- 130 -
2015 Annual Report of Wuxi Little Swan Company Limited
Govern-ment
Government Grants 3,848,733.33 453,200.04 3,395,533.29 grants
Projects involved in government grants:
The amount
recognised as
Government 31 December non-operating Other 31 December Related to
Grants Project 2014 Addition income changes 2015 assets/ income
Hefei Midea
automation
development
of washing
machine Related to
project 3,383,333.33 - 350,000.04 - 3,033,333.29 assets
Subsidy for
power
substation Related to
renovation 227,000.00 - 50,400.00 - 176,600.00 assets
Jiangsu modern
service
development Related to
special fund 238,400.00 - 52,800.00 - 185,600.00 assets
3,848,733.33 - 453,200.04 - 3,395,533.29
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
31 Share capital
Increase/decrease in the year
Shares transferred
New shares Bonus from capital
31 December 2014 issued shares reserve Other Total 31 December 2015
Total shares 632,487,764.00 - - - - - 632,487,764.00
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
32 Capital surplus
31 December 31 December
2014 Addition Decrease 2015
Share premium 1,055,182,718.57 - - 1,055,182,718.57
Other capital surplus 84,773,617.46 24,058,611.82 - 108,832,229.28
-Share options 44,055,421.89 22,544,356.36 - 66,599,778.25
- Others 1,538,810.57 1,514,255.46 - 3,053,066.03
-Transfer of
capital surplus
recognized under the
previous accounting
system 39,179,385.00 - - 39,179,385.00
Total 1,139,956,336.03 24,058,611.82 - 1,164,014,947.85
Other explanation, including movement in the current period and reasons for the movement:
(a) In 2015, RMB 22,544,356.36 (2014: RMB 10,805,421.89) increase in capital surplus arises from the
execution of share options incentive plan.
(b) In 2015, the capital surplus increased RMB 1,514,255.46, including RMB 1,513,988.83 demolition
compensation for Wuxi Filin Electronics Co., Ltd. and RMB 266.63 due to sale of shares from equity
distributed by China Securities Depository and Clearing Co. Ltd. Shenzhen Branch or acquired from
other historical reasons, (2014: The capital surplus increased by RMB 1,497.83 due to the sale of
shares from equity distributed by China Securities Depository and Clearing Co. Ltd. Shenzhen
Branch or acquired from other historical reasons. The capital surplus decreased by RMB 101,250.00
due to the Company’s subsidiary Wuxi Little Swan Washing Machinery Limited’s cancellation.The
previously recognized capital surplus was therefore reversed in 2014).
- 133 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
33 Other comprehensive income
Increase/decrease in the year
Less:
previously
recognized
in other
comprehensive
income Attributable to
transferred to Attributable to the minority
31 December Amount for the profit or loss Less: Income the Company interest after 31 December
2014 year before tax this year tax expense after tax tax 2015
Items that may be
subsequently reclassified to
profit or loss -3,449,689.57 56,905,112.03 - 8,351,334.00 38,262,974.21 10,290,803.82 34,813,284.64
-Change in fair value of
available-for-sale financial
assets - 55,675,560.00 - 8,351,334.00 37,033,422.18 10,290,803.82 37,033,422.18
-Currency translation
differences -3,449,689.57 1,229,552.03 - - 1,229,552.03 - -2,220,137.54
Total -3,449,689.57 56,905,112.03 - 8,351,334.00 38,262,974.21 10,290,803.82 34,813,284.64
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
34 Surplus reserve
31 December 31 December
2014 Addition Decrease 2015
Statutory surplus
reserve 332,594,722.29 - - 332,594,722.29
Explanation of surplus reserve, including movement in the current period and reasons for the
movement:
In accordance with the Company Law of the PRC, the Company’s Articles of Association,
appropriations of 10% of net profit should be made to the statutory surplus reserve, after offsetting
accumulated losses from prior years, until the accumulated statutory surplus reserve reaches 50% of
the share capital. Statutory surplus reserve can be used to make up losses or to increase share capital.
By the end of 2015, there is no appropriation to the statutory surplus reserve as the Company’s
accumulated statutory surplus reserve has already reached 50% of the share capital (2014: 10% of
net profit, RMB 41,636,353.80).
35 Retained earnings
2015 2014
Opening balance of retained earnings before
adjustment 2,326,392,979.58 1,859,579,931.10
Opening balance of retained earnings after
adjustment 2,326,392,979.58 1,859,579,931.10
Add: net profit attributable to the shareholders of the
Company 919,181,968.58 698,195,731.48
Less: Appropriation of statutory surplus reserve - 41,636,353.80
Dividends distributable to ordinary
shareholders 284,619,493.80 189,746,329.20
Ending balance of retained earnings 2,960,955,454.36 2,326,392,979.58
There was no adjustment of opening balance of retained earnings.
36 Sales and cost of sales
2015 2014
Income Expenses Income Expenses
Main operations 11,929,121,727.57 8,713,461,567.66 9,880,602,020.03 7,180,075,385.38
Other operations 1,202,505,204.87 932,929,256.70 923,615,268.57 827,416,833.31
Total 13,131,626,932.44 9,646,390,824.36 10,804,217,288.60 8,007,492,218.69
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
36 Sales and cost of sales (continued)
(a) Other operating income and expenses
2015 2014
Other operating Other operating Other operating Other operating
income expenses income expenses
Rental income 13,608,065.10 4,573,467.40 5,639,452.08 904,453.32
Sales of
materials 1,168,168,201.64 928,355,789.30 901,816,701.78 826,512,379.99
Others 20,728,938.13 - 16,159,114.71 -
1,202,505,204.87 932,929,256.70 923,615,268.57 827,416,833.31
37 Taxes and surcharges
2015 2014
Business tax 914,707.02 1,523,903.96
Civil infrastructure maintenance and construction fee 36,866,172.60 37,106,017.94
Education fee 28,980,795.86 28,799,856.89
66,761,675.48 67,429,778.79
38 Selling and distribution expenses
2015 2014
Selling and distribution expenses 1,957,833,768.25 1,519,482,348.76
In 2015 and 2014, selling and distribution expenses maily include promotion expenses,
transportation and storage expenses, employee wages and benefits, installation expenses and
after-sales service expenses.
39 General and administrative expenses
2015 2014
General and Administrative expenses 539,747,209.80 441,240,435.76
In 2015 and 2014, general and administrative expenses maily include employee wages and benefits,
share-based payments, taxation and depreciation costs.
40 Finance income - net
Interest expenses 9,536,939.00 13,417,678.56
Less: Interest income -83,981,673.66 -29,881,510.21
Exchange gains -40,188,776.26 -1,235,973.90
- 136 -
2015 Annual Report of Wuxi Little Swan Company Limited
Other financial expenses 4,520,659.01 2,839,681.06
-110,112,851.91 -14,860,124.49
VII Notes to the significant items in the consolidated financial statements (continued)
41 Asset impairment losses
2015 2014
Provision for bad debts -2,816,335.36 -34,854.94
Provision of write-down of inventory 23,886,048.29 25,288,669.49
Provision of available-for-sale financial assets - 100,300.00
Provision of impairment on fixed assets 1,382,222.92 12,866,967.07
22,451,935.85 38,221,081.62
42 Gains from changes in fair value
2015 2014
Financial assets measured at fair value with changes
included in current profits and losses
- Gains from fair value movement of deriavatives - -14,767,832.25
- -14,767,832.25
43 Investment Income
2015 2014
Long-term equity investment income measured at
equity method -255,029.37 -319,108.43
Investment Income from disposal of long-term
equity investment -7,972.67 101,250.00
Income from disposal of financial assets measured
at fair value with changes included in current
profits and losses 348,132.26 7,818,030.00
Investment income from accumulated return of
available-for-sale financial assets 6,050.00 56,630.80
Income from disposal of available-for-sale financial
assets 201,658,430.62 170,308,286.89
201,749,610.84 177,965,089.26
In 2015, income from disposal of available-for-sale financial assets are gains from investments on
financial products, which amounts to RMB 201,658,430.62 ( In 2014: RMB 162,708,030.89 gains
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2015 Annual Report of Wuxi Little Swan Company Limited
from investments on financial products and RMB 7,600,256.00 income from disposal of equity
investment on Bank of Jiangsu Co., Ltd.)
There is no significant restriction on the remittance of investment income to the Company and its
subsidiaries.
VII Notes to the significant items in the consolidated financial statements (continued)
44 Non-operating income
Non-routine
2015 2014 items
Gains on disposal of non-current
assets 444,371.81 2,789,994.04 444,371.81
Includes: Gains on disposal of
fixed assets 444,371.81 2,789,994.04 444,371.81
Unclaimed payments 21,826,219.98 7,708,285.28 21,826,219.98
Government grants 31,893,010.09 19,316,074.38 31,893,010.09
Compensation or penalty income 8,285,972.68 9,955,448.93 8,285,972.68
Others 938,086.33 33,211.39 938,086.33
63,387,660.89 39,803,014.02 63,387,660.89
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
44 Non-operating income (continued)
(a) Government grants are listed below:
Whether profit or
losses are affected Whether
by the grant in special Related to assets/
Granter Causes Nature current year subsidies 2015 2014 Related to income
The subsidy is
acquired for engaging
in specified industries
encouraged and
Wuxi New supported by the
VAT Rebate on District Taxation country in accordance
collection Bureau subsidy with national policies. No No 16,273,049.89 6,679,787.87 Related to income
The subsidy is
acquired for engaging
in specified industries
Capital Support encouraged and
For foreign trade Hefei Municipal supported by the
and economic Bureau of country in accordance
development Finance subsidy with national policies. No No - 3,706,500.00 Related to income
The subsidy is
Wuxi Municipal acquired for engaging
Bureau of in specified industries
Subsidies for Commerce and encouraged and
export credit Wuxi Municipal supported by the
insurance Bureau of country in accordance
premiums Finance subsidy with national policies. No No 2,065,800.00 2,072,400.00 Related to income
Wuxi economic
and information
technology
Others commission, etc. reward No No 13,554,160.20 6,857,386.51 Related to income
31,893,010.09 19,316,074.38
- 139 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
45 Non-operating expenses
2015 2014 Non-routine items
Losses on disposal of
non-current assets 724,567.38 6,272,775.07 724,567.38
Includes: Losses on
disposal of fixed assets 724,567.38 6,073,731.68 724,567.38
Losses on disposal of
intangible assets - 199,043.39 -
Donations 916,674.79 1,092,937.50 916,674.79
Local fees (Flood control
&Security fund, etc.) 7,679,501.83 4,307,145.70
Refund of Energy efficiency
rebate 36,428,856.99 - 36,428,856.99
Others 2,520,423.42 2,536,288.94 2,520,423.42
48,270,024.41 14,209,147.21 40,590,522.58
46 Income tax expenses
(1) Income tax expenses
2015 2014
Current income tax 197,324,795.33 209,674,578.05
Deferred income tax -25,027,963.55 -66,498,009.07
172,296,831.78 143,176,568.98
(2) Adjustment process of accounting profit and income tax expenses
2015
Profit before tax 1,225,421,617.93
Income tax calculated at applicable tax rates 183,813,242.69
Adjust influence of income tax from prior period -10,782,157.42
Cost, expenses and loss not deductible for tax
purposes 4,089,000.62
Compensable loss of deferred corporate tax assets
unconfirmed current period 2,394,245.89
Super deduction for development cost -7,217,500.00
Enterprise income tax expenses 172,296,831.78
- 140 -
2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
47 Earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated by dividing the consolidated net profit attributable to
shareholders of the Company by the weighted average number of ordinary shares in issue:
2015 2014
Consolidated net profit attributable to shareholders
of the Company 919,181,968.58 698,195,731.48
Weighted average number of ordinary shares in
issue 632,487,764.00 632,487,764.00
Basic earnings per share 1.45 1.10
(2) Diluted earnings per share
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary
shareholders of the Company adjusted based on the dilutive potential ordinary shares by the adjusted
weighted average number of ordinary shares in issue. There were no dilutive potential ordinary
shares in 2015 (2014: nil). Therefore, diluted earnings per share equal to basic earnings per share.
48 Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities
2015 2014
Interest income 12,858,360.87 29,881,510.21
Government grants 15,619,960.20 19,096,207.71
Penalties 8,285,972.68 9,955,448.93
Others 19,923,960.12 762,294.35
56,688,253.87 59,695,461.20
(2) Cash paid relating to other operating activities
2015 2014
Cash paid for expenses 1,747,886,532.99 1,285,108,062.40
Commission Charges 4,520,658.83 2,839,681.06
Payables - 31,807,392.79
Others 1,218,822.22 2,840,895.04
1,753,626,014.04 1,322,596,031.29
(3) Cash received relating to other investing activities
2015 2014
Interest income of structured deposits 42,268,968.89 -
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2015 Annual Report of Wuxi Little Swan Company Limited
VII Notes to the significant items in the consolidated financial statements (continued)
48 Notes to consolidated cash flow statement (continued)
(4) Cash received from other financing activities
2015 2014
Government grants related to assets - 3,500,000.00
(5) Cash paid relating to other investing activities
2015 2014
Liquidation settlement for minority shareholders
of subsidiary:
Hefei Midea washing machine manufacture
Limited - 2,184,490.69
49 Supplementary information of cash flow statements
(1) Supplementary information of cash flow statements
Reconciliation of net profit to cash flows from operating activities:
2015 2014
Net profit 1,053,124,786.15 790,826,104.31
Add：Provision for asset impairment 22,451,935.85 38,221,081.62
Depreciation of fixed assets and
amortization of investment properties 119,394,344.10 127,729,309.76
Amortization of intangible assets 5,238,952.67 5,553,777.06
Amortization of long-term prepaid
expenses 3,143,625.56 3,239,931.94
Losses on disposal of fixed assets,
intangible assets and other long-term assets 280,195.57 3,482,781.03
Losses from changes in fair value - 14,767,832.25
Finance expenses -75,219,066.77 5,204,314.28
Investment income -201,749,610.84 -177,965,089.26
Decrease in deferred income tax asset -25,027,963.55 -66,498,009.07
Amortization of deferred incomes -453,200.04 -
(Increase) /Decrease of inventory -163,682,022.56 167,236,175.84
Decrease/(Increase) in operating
receivables 1,734,355,028.92 -3,846,361,785.76
Increase in operating payables 1,102,940,765.66 4,580,036,102.12
Share-based payments 23,897,698.08 11,641,791.21
Net cash flows from operating activities 3,598,695,468.80 1,657,114,317.33
Change of cash and cash equivalents :
Closing balance of cash 2,792,685,328.69 1,516,739,804.86
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2015 Annual Report of Wuxi Little Swan Company Limited
Less: Beginning balance of cash 1,516,739,804.86 1,558,204,866.53
Net increase in cash and cash equivalents 1,275,945,523.83 -41,465,061.67
VII Notes to the significant items in the consolidated financial statements (continued)
49 Supplementary information of cash flow statements (continued)
(2) Component of cash and cash equivalents
31 December 31 December
2015 2014
Cash 2,792,685,328.69 1,516,739,804.86
Including:Cash in hand - 8,158.18
Cash at bank 2,792,685,328.69 1,516,731,646.68
Ending balance of cash 2,792,685,328.69 1,516,739,804.86
50 Foreign currency monetary items
(1) Foreign currency monetary items
31 December 2015
Foreign currency
balance Exchange rate RMB balance
Cash at bank & in hand —
USD 46,117,560.85 6.4936 299,468,993.14
EUR 720,485.53 7.0952 5,111,988.93
Accounts receivable —
USD 102,413,720.07 6.4936 665,033,732.65
EUR 604,802.15 7.0952 4,291,192.21
Accounts payable —
USD 6,113,673.40 6.4936 39,699,749.59
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2015 Annual Report of Wuxi Little Swan Company Limited
VIII Changes in consolidation scope
In 2015, there is no change in the Group’s Consolidation scope.
IX Equity interests in other entities
1 Equity interests in subsidiaries
(1)(a) Components of the Company and its subsidiaries
Place of Place of Principal
Subsidiaries business registration activities % of ownership interest Acuqired by
Direct Indirect
Wuxi Little Swan General Electric
Appliances Co., Ltd. Wuxi Wuxi Manufacture 70.00% - Establishmenrt or Investment
Wuxi Filin Electronics Co., Ltd. Wuxi Wuxi Manufacture 73.00% - Establishmenrt or Investment
Jiangsu Little Swan Marketing and
Sales Co., Ltd. Wuxi Wuxi Marketing 99.54% 0.09% Establishmenrt or Investment
Wuxi Little Swan Import & Export Import and
Co., Ltd Wuxi Wuxi export 88.46% - Establishmenrt or Investment
Little Swan International
(Singapore) Limited Singapore Singapore Investing 100.00% - Establishmenrt or Investment
Little Swan (Jing Zhou) Sanjin Business merger under common
Electronic Appliances Limited Jinzhou Jinzhou Manufacture 100.00% - control
Hefei Midea Washing Machine Business merger under common
Limited Hefei Hefei Manufacture 69.47% - control
- 144 -
2015 Annual Report of Wuxi Little Swan Company Limited
IX Equity interests in other entities (continued)
1 Equity interests in subsidiaries (continued)
(2) Subsidiaries with significant minority interests
Subsidiaries % of shares held by P&L attributable to
minority minority Dividends declaired to Minority interest at
shareholders shareholders minority shareholders 31 December 2015
Wuxi Little Swan General Electric
Appliances Co., Ltd. 30.00% 6,794,912.56 - 51,339,612.92
Wuxi Filin Electronics Co., Ltd. 27.00% 40,358,236.82 - 139,780,967.45
Hefei Midea Washing Machine Limited
30.53% 86,789,668.19 - 671,740,333.59
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2015 Annual Report of Wuxi Little Swan Company Limited
IX Equity interests in other entities (continued)
1 Equity interests in subsidiaries (continued)
(3) Main financial information of the above significant subsidiaries is as follows:
31 December 2015 31 December 2014
Current Non-current Total Current Non-current Total Current Non-current Total Current Non-current Total
Assets Assets Assets Liabilities Liabilities Liabilities Assets Assets Assets Liabilities Liabilities Liabilities
Wuxi Little Swan
General Electric
Appliances Co.,
Ltd. 262,214,616.13 16,950,575.14 279,165,191.27 78,953,274.67 10,064,518.04 89,017,792.71 213,881,740.87 19,098,217.86 232,979,958.73 56,406,735.98 9,960,830.74 66,367,566.72
Wuxi Filin
Electronics Co.,
Ltd. 630,040,449.62 56,417,457.81 686,457,907.43 168,388,420.57 362,200.00 168,750,620.57 444,295,306.60 57,312,842.84 501,608,149.44 133,657,734.01 2,539,357.30 136,197,091.31
Hefei Midea
Washing
Machine
Limited 4,899,597,642.19 660,802,382.62 5,560,400,024.81 3,323,567,046.22 36,569,848.57 3,360,136,894.79 3,680,238,070.60 660,915,331.43 4,341,153,402.03 2,458,380,866.17 3,395,248.79 2,461,776,114.96
2015 2014
Total Net cash flows Total Net cash flows
comprehensive from operating Comprehensive from operating
Sales Net profit income activities Sales Net profit income activities
Wuxi Little Swan General Electric
Appliances Co. , Ltd. 264,727,064.29 22,649,708.51 23,122,855.91 1,409,625.54 222,124,975.98 12,776,126.23 12,776,126.23 29,805,510.00
Wuxi Filin Electronics Co. , Ltd. 597,332,804.55 149,474,951.17 149,474,951.17 -89,990,112.02 414,703,697.10 85,379,831.24 85,379,831.24 -19,098,530.00
Hefei Midea Washing Machine
Limited. 6,165,350,114.71 284,276,672.73 317,518,924.93 1,395,138,587.97 4,901,655,746.41 215,203,815.71 215,203,815.71 451,999,980.00
- 146 -
2015 Annual Report of Wuxi Little Swan Company Limited
IX Equity interests in other entities (continued)
2 Equity interest in associates and joint ventures
The Company held 20% of the shares of Guangzhou Antaida Logistics Corporation. Due to operation
difficulties, Guangzhou Antaida Logistics Corporation decided to shut up business and initiate
liquidation procedure with the approval of board of shareholders. As of the reporting date, all
liquidation work were being performed in accordance with liquidation priciples and processes
approved, and liquidation of assets and liabilities have been completed. The residual asset is cash
and cash equivalents with the amount of RMB 10,355,358.23, whcih is distributed to all shareholders
based on their contributive proportion. As a result, the Company recognized cash receivable of RMB
2,587,038.41.
X Segment reporting
Sales, expenses, assets and liabilities of the Company and its subsidiaries are primarily attributable
to manufacturing and sales of washing machines and related products. No segment information of
the Company and its subsidiaries is presented considering the internal organization and management
structure, the system of internal financial reporting to key management personnel, and similar
business nature among various subsidiaries.
The domestic and overseas sales transaction and non-current assets excluding financial assets and
deferred tax assets are as follows:
(1) Sales transactions to third parties
2015 2014
China 10,440,519,133.71 8,691,506,064.61
Other countries 2,691,107,798.73 2,112,711,223.99
Total 13,131,626,932.44 10,804,217,288.60
(2) Non-current assets
31 December 2015 31 December 2014
China 1,323,094,433.43 1,346,512,672.47
Other countries - -
Total 1,323,094,433.43 1,346,512,672.47
XI Risk related to financial instruments
The Company and its subsidiaries' activities are exposed to a variety of financial risks: market risk
(primarily foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company and
its subsidiaries' overall risk management program focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on the Company and its subsidiaries' financial
performance.
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2015 Annual Report of Wuxi Little Swan Company Limited
XI Risk related to financial instruments (continued)
(1) Market risk
(a) Foreign exchange risk
The Company and its subsidiaries' major operations are carried out in Mainland China and majority
of its transactions are denominated in RMB. The Company and its subsidiaries are exposed to foreign
exchange risk arising from assets and liabilities nominated in foreign currencies, primarily in USD.
Headquarter of financial department is responsible for monitoring foreign currency transactions and
the scale of foreign currency assets and liabilities of the Company and its subsidiaries, to minimize
the foreign exchange risk. Therefore, the Company and its subsidiaries may consider entering into
forward foreign exchange contracts or currency swap contracts to mitigate foreign exchange risk.
During 2015 and 2014, the Company and its subsidiaries did not enter into any forward exchange
contracts or currency swap contracts.
The following table presents the structure analysis of the Company and its subsidiaries’ financial
assets and financial liabilities by currencies as at 31 December 2015 and 31 December 2014:
31 December 2015
USD Other Total
Financial assets denominated in foreign
currency -
Cash at bank and in hand 299,468,993.14 5,111,988.93 304,580,982.07
Accounts receivable 665,033,732.65 4,291,192.21 669,324,924.86
Total 964,502,725.79 9,403,181.14 973,905,906.93
Financial liabilities denominated in
foreign currency -
Accounts payable -39,699,749.59 - -39,699,749.59
Total -39,699,749.59 - -39,699,749.59
31 December 2014
USD Other Total
Financial assets denominated in foreign
currency -
Cash at bank and in hand 152,573,308.46 3,831,778.14 156,405,086.60
Accounts receivable 331,396,379.33 160,867.17 331,557,246.50
Other receivables 34,890,137.02 306,559.36 35,196,696.38
518,859,824.81 4,299,204.67 523,159,029.48
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2015 Annual Report of Wuxi Little Swan Company Limited
Financial liabilities denominated in
foreign currency -
Accounts payable -36,280,761.00 -835,794.00 -37,116,555.00
Other payables -2,359,520.05 - -2,359,520.05
-38,640,281.05 -835,794.00 -39,476,075.05
XI Risk related to financial instruments (continued)
(1) Market risk (continued)
(a) Foreign exchange risk (continued)
As at 31 December 2015, if the currency had weakened/strengthened by 10 % against the USD
while all other variables had been held constant, the Company and its subsidiaries’ net profit for the
year would have been approximately RMB 78,608,252.98 (as at 31 December 2014: approximately
RMB 40,818,661.22) lower/higher for various financial assets and liabilities denominated in USD.
(b) Interest rate risk
As at 31 December 2015 and 31 December 2014, there is no any short-term or long-term borrowings
with floating rates in the Company and its subsidiaries. Therefore, the management expects that
there is no significant interest rate risk.
(2) Credit risk
Credit risk is managed on a group basis. Credit risk mainly arises from cash at bank, accounts
receivable, other receivables, notes receivable, etc.
The Company and its subsidiaries expect that there is no significant credit risk associated with cash
at bank and structured deposits since they are deposited at state-owned banks and other medium or
large size listed banks. Management does not expect that there will be any significant losses from
non-performance by these counterparties.
The Company and its subsidiaries authorized commercial bank, trust company, asset management
company and other financial agencies to conduct short-term and low-risk investment finance, such
as bank financial products, trust plan of trust company and assets management plan of assets
management company, whose investment orientations are mainly on financial instruments with high
market credit rating among banks in China as well as fine liquidity and trust product assets
management plan with estimated earnings, including but not limited to national debt, financial debt,
central bank bill, bond repurchase and corporate bonds, short-term financial bills, etc. and
commercial bank’s principal guaranteed financial business, which have low risk, stable return and an
investment period within one year. The Company and its subsidiaries’ idle funds which are
authorized to finance won’t be invested in stock or its derivative products, securities investment
funds, entrusted financial products aimed at security investment and other investment related to
securities.
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2015 Annual Report of Wuxi Little Swan Company Limited
In addition, the Company and its subsidiaries have policies to limit the credit exposure on accounts
receivable, other receivables and notes receivable. The Company and its subsidiaries assess the
credit quality of and sets credit limits on its customers by taking into account their financial position,
the availability of guarantee from third parties, their credit history and other factors such as current
market conditions. The credit history of the customers is regularly monitored by the Company. In
respect of customers with a poor credit history, the Company and its subsidiaries will use written
payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the
Company and its subsidiaries is limited to a controllable extent. There are no significant expired
receivables at 31 December 2015 (2014: Nil).
XI Risk related to financial instruments (continued)
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary and aggregated by the Company’s finance
department in its headquarters. The Company’s finance department at its headquarters monitors
rolling forecasts of the Company and its subsidiaries’ short-term and long-term liquidity requirements
to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational
needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from
major financial institution so that the Company and its subsidiaries do not breach borrowing limits or
covenants on any of its borrowing facilities to meet the short-term and long-term liquidity
requirements.
The financial liabilities of the Company and its subsidiaries at the balance sheet date are analysed by
their maturity date below at their undiscounted contractual cash flows :
31 December 2015
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Notes payable 1,953,065,274.06 - - - 1,953,065,274.06
Accounts payable 2,375,896,772.95 16,821,841.38 12,186,706.03 14,902,021.59 2,419,807,341.95
Dividends payable 5,400,652.06 - - - 5,400,652.06
Other current liabilities 653,242,331.76 - - - 653,242,331.76
Other payables 124,771,982.94 18,518,858.35 22,190,830.33 6,325,466.32 171,807,137.94
5,112,377,013.77 35,340,699.73 34,377,536.36 21,227,487.91 5,203,322,737.77
31 December 2015
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total
Notes payable 1,173,851,127.31 - - - 1,173,851,127.31
Accounts payable 2,132,448,860.85 5,542,129.44 19,391,504.71 9,314,416.21 2,166,696,911.21
Dividends payable 4,088,128.36 - - - 4,088,128.36
Other current liabilities 425,782,494.86 - - - 425,782,494.86
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2015 Annual Report of Wuxi Little Swan Company Limited
Other payables 71,978,634.94 21,651,536.67 37,491,392.67 13,171,094.20 144,292,658.48
3,808,149,246.32 27,193,666.11 56,882,897.38 22,485,510.41 3,914,711,320.22
As at 31 December 2015 and 31 December 2014, other current liabilities of financial liabilities listed
above do not include accrual sales rebate as this does not belong to financial liabilities.
XII Fair value disclosure
1 Closing balance of assets and liabilities measured at fair value
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair
value hierarchy has the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the assets or liabilities that are not based on observable market data (that is,
unobservable inputs).
XII Fair value disclosure (continued)
1 Closing balance of assets and liabilities measured at fair value (continued)
The fair value of a financial instrument that is traded in an active market is determined at the quoted
price in the active market. The fair value of a financial instrument for which the market is not active is
determined by using a valuation technique. Valuation techniques include cash flow discount model and
market comparable company model. The input of valuation techniques mainly include risk free rate,
benchmark interest rate, exchange rate, credit spreads, liquidity premium, EBITDA multiplier and
lack of liquidity discount,etc.
As at 31 December 2015, the financial assets measured at fair value by the above three levels are
analysed below:
Closing balance measured at fair value
Level 1 Level 2 Level 3 Total
Assets measured at fair
value on a continuous
basis - - - -
----Others - - 3,052,675,560.00 3,052,675,560.00
Assets measured at fair
value on a
non-continuous basis - - - -
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2015 Annual Report of Wuxi Little Swan Company Limited
2 Valuation technique and qualitative and quantitative information of significant parameter used
by instruments measured at fair value by Level 3 on a continuous and non-continuous basis
As at 31 December 2015, the Company and its subsidiaries’ financial assets measured at fair value by
Level 3 are financial product investments with floating income and unprotected principles. The fair
value is determined by the Company and its subsidiaries using valuation techniques.
3 Reasons of conversion among levels and policies of determining conversion date of instruments
measured at fair value on a continuous basis
The Company and its subsidiaries consider the date of events leading the conversion between
different levels as the conversion recognizing date. In 2015, there was no conversion between Level 1
and Level 2.
4 The movement of financial assets measured at fair value by Level 3
The movement of financial assets measured at fair value by Level 3 is analysed below:
Financial product investments
1 January 2015 1,900,100,000.00
Purchase 6,042,300,000.00
Sale -5,144,315,650.60
Total gains in current year 254,591,210.60
----attributable to profit or loss 198,915,650.60
----attributable to other comprehensive income 55,675,560.00
31 December 2015 3,052,675,560.00
Changes in unrealized gain or loss in 2015 from
holding-in-hand assets as at 31 December,2015
----Gain or loss from changes in fair value -
XII Fair value disclosure (continued)
4 The movement of financial assets measured at fair value by Level 3 (continued)
The relevant information of financial assets measured at fair value by Level 3 is below:
Fair value at 31 Valuation Non-observable Relationship
December 2015 technique Input Range with fair value
Available-for-sale
financial assets
---Financial Moves in
Estimated annual
products 3,052,675,560.00 Discount cash flow yield 3.5%~6.7% the same direction
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2015 Annual Report of Wuxi Little Swan Company Limited
5 Financial instruments not measured at fair value
Available-for-sale financial assets measured in cost model are investments on shares of unlisted
companies, which have no quoted price in the active market and the range of reasonable estimation
of their fair value is relatively wide and probabilities used to determine the estimation cannot be
ascertained reasonably. Therefore, the fair values cannot be measured reliably.
Financial assets and liabilities measured at amortized cost mainly represent receivables and
payables.
The book value of financial assets and liabilities not measured at fair value are close to their fair
value.
XIII Capital management
The Company and its subsidiaries’ objectives of managing capital policies are to safeguard the
Company and its subsidiaries’ ability to continue operating, in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company and its subsidiaries may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
The Company and its subsidiaries’ total capital is the total owners’ equity in balance sheet. The
Company and its subsidiaries do not adopt assets ratio as a compulsory factor to govern capital
investment.
The gearing ratios at 31 December 2015 and 2014 were as follows:
31 December 2015 31 December 2014
Gearing ratios 58.21% 54.78%
XIV Related party relationships and significant related party transactions
1 Major shareholders of the Company
Registered Principal business Registered % of % of
address capital equity interests voting right
Midea Group Foshan, Manufacture and 4,266,839,449.00 52.67% 52.67%
Co., Ltd. Guang sales of household
Dong appliances, motor
and fittings, along
with after-sale
service, etc.
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2015 Annual Report of Wuxi Little Swan Company Limited
2 Subsidiaries of the Company
For the detialed information of subsidiaries, please refer to Note IX.
3 Assocites and joint ventures of the Company
For the detialed information of important assocites and joint ventures of the Company, please refer
to Note IX.
4 Other related parties
Relationship with the Company and its subsidiaries
MIDEA SCOTT&ENGLISH SDN BHD Controlled by controlling shareholders of the Company
PT. Midea Planet Indonesia Controlled by controlling shareholders of the Company
Ningbo Midea United Supply Limited Controlled by controlling shareholders of the Company
Huai‘an Weiling motor manufacture Limited Controlled by controlling shareholders of the Company
Ningbo Andhra Logistics Limited Controlled by controlling shareholders of the Company
Andhra Logistics Co., Ltd. Controlled by controlling shareholders of the Company
Zhejiang Meizhi Compressor Limited Controlled by controlling shareholders of the Company
Midea E-business Limited Controlled by controlling shareholders of the Company
Wuhu Midea household appliance Consulting Controlled by controlling shareholders of the Company
Limited
Wuhu Midea Household Appliances Controlled by controlling shareholders of the Company
Manufacture Limited
Hefei Midea Materials Supply Co., Ltd Controlled by controlling shareholders of the Company
Hubei Midea refrigerator Limited Controlled by controlling shareholders of the Company
Hefei Hualing Co., Ltd. Controlled by controlling shareholders of the Company
Midea Household Equipmental Appliance Controlled by controlling shareholders of the Company
(Vietnam) Limited
Guangdong Midea Refrigeration Equipment Controlled by controlling shareholders of the Company
Limited
Chongqing Midea Refrigeration Equipment Controlled by controlling shareholders of the Company
Limited
Guangdong Midea Environment Equipment Controlled by controlling shareholders of the Company
Limited
Midea Appliance (Singapore) Trading Limited Controlled by controlling shareholders of the Company
Ningbo Meimei Garden Appliance service Controlled by controlling shareholders of the Company
Limited
Foshan Shunde Century Technology Limited Controlled by controlling shareholders of the Company
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2015 Annual Report of Wuxi Little Swan Company Limited
Hefei Century Molding Technology Limited Controlled by immediate family member of ultimate
controller of the Company controlled by controlling
shareholders of the Company
XIV Related party relationships and significant related party transactions (continued)
5 Related party transactions
(1) Sale/Purchase of goods and services received/offered
Purchase of goods and services received
Approved If it exceeds
Nature of amount of the approved
Related parties transaction 2015 transaction amount 2014
Ningbo Midea United
Supply Limited Materials purchase 642,317,854.48 649,572,649.57 No 383,401,808.32
Huai‘an Welling
Motor
Manufacturing Electric engines and
Limited materials 625,887,185.38 627,350,427.35 No 418,762,030.04
Ningbo Andhra
Logistics Limited. Logistics 307,619,269.27 394,534,447.36 No 190,917,658.19
Andhra Logistics Co.,
Ltd. Logistics 75,627,390.93 90,472,548.02 No 88,989.25
Zhejiang Meizhi
Compressor Electric engines and
Limited materials 5,265,435.21 - -
Midea Group Administratipn and
E-business Limited. Marketing 5,202,073.88 17,094,017.09 No -
Wuhu Midea
Household
Appliance
Manufacture
Limited Materials purchase 53,333.33 10,256,410.26 No -
Wuhu Midea household
Appliance Consulting
Limited Materials purchase - - No 5,217,094.02
Hefei Midea Material
supply Limited. Materials purchase - - 78,832,389.58
Guangdong Midea
Environmental
appliance
manufacture Materials purchase - - 9,793,162.39
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2015 Annual Report of Wuxi Little Swan Company Limited
Limited.
Hubei Midea Materials purchase
refrigerator Limited - - 770,148.67
Material and
Hefei Hualing Co., refrigerator
Ltd. purchase - - 40,259.03
1,661,972,542.48 1,087,823,539.49
XIV Related party relationships and significant related party transactions (continued)
5 Related party transactions (continued)
(1) Sale/Purchase of goods and services received/offered (continued)
Sales of goods and services provided
Approved If it exceeds
Nature of amount of the approved
Related parties transaction 2015 transaction amount 2014
Midea Appliance Sales of washing
(Singapore) Trading machines and
Limited materials 1,955,298,317.81 2,500,000,000.00 No 1,481,512,201.85
MIDEA SCOTT &
ENGLISH SDN Sales of washing
BHD machines 41,335,737.51 55,000,000.00 No 23,455,055.29
Sales of washing
PT. Midea Planet machines and
Indonesia materials 15,660,128.95 30,000,000.00 No 14,841,646.18
Midea Household
Equipment Sales of washing
(Vietnam) Limited machines 9,413,711.55 17,000,000.00 No 4,471,283.40
Ningbo Andhra Sales of washing
Logistics Limited. machines 1,832,343.59 - -
Andhra Logistics Sales of washing
Co., Ltd. machines 1,242,839.32 - -
Guangdong Midea
Refrigeration Sales of washing
equipment Limited machines 812,888.89 - -
Chongqing Midea
Refrigeration Sales of washing
equipment Limited machines 400,615.38 - -
Hefei Midea Material
supply Limited Sales of materials 181,010.15 - -
Huai‘an Welling Sales of materials - - 51,192.77
156
2015 Annual Report of Wuxi Little Swan Company Limited
Motor
Manufacturing
Limited
2,026,177,593.15 1,524,331,379.49
(2) Lease
The Company and its subsidiaries as leasers:
Approved If it exceeds
Rental income amount of the approved Rental income of
Lessees Type of assets of 2015 transaction amount 2014
Hefei Hualing Co.,
Ltd. Properties 11,667,537.60 14,150,943.40 No 4,861,474.00
XIV Related party relationships and significant related party transactions (continued)
5 Related party transactions (continued)
(3) Asset Transfer
Approved If it exceeds
Related-party amount of the approved
Related parties Transactions 2015 transaction amount 2014
Midea Group Co., Trademark
Ltd. royalty charges 9,960,480.61 No 5,576,397.45
Guangdong Midea
Apply a 0.3%
Refrigeration
royalty charge
equipment Trademark royalty
on net sales
Limited charges 3,187,769.20 No 2,472,238.03
Hubei Midea
Refrigerator Trademark
Limited royalty charges 841,058.36 No 1,365,053.13
Guangdong Midea
Environmental
Appliance
manufacture Equipments
Limited purchase 49,640.99 -
Midea Group Co., Equipments
Ltd. purchase 40,984.50 -
Guangdong Midea
Refrigeration Equipments
equipment purchase 11,564.05 -
157
2015 Annual Report of Wuxi Little Swan Company Limited
Limited
Andhra Logistics
Co., Ltd. Equipments sales 7,332.44 -
Guangdong Midea
Refrigeration
equipment
Limited Equipments sales 7,017.43 -
Hubei Midea
Refrigerator
Limited Equipments sales - 94,627.32
14,105,847.58 9,508,315.93
In the above related party transaction (1), (2) and (3), the actual amount without approvement was RMB
9,851,671.95, less than 0.5% of the audited net asset, 2014 (RMB 22,139,910.56). Therefore, there is no
need to perform the approvement procedure of the Board.
(4) Salaries of key management
2015 2014
Salaries of key management 12,258,201.20 13,915,200.08
158
2015 Annual Report of Wuxi Little Swan Company Limited
XIV Related party relationships and significant related party transactions (continued)
6 Receivables from and payables to related parties
(1) Receivables from related parties
31 December 2015 31 December 2014
Bad debt Bad debt
Book value provision Book value provision
Accounts receivable Midea (Singapore) Trading Limited. 497,669,561.47 24,883,478.07 229,629,569.18 11,481,478.46
MIDEA SCOTT & ENGLISH SDN BHD 11,531,302.72 576,565.14 6,096,576.22 304,828.81
PT. Midea Planet Indonesia 4,712,904.79 235,645.24 4,378,064.95 218,903.25
Guangdong Midea Refrigeration equipment Limited. 3,379,035.35 168,951.77 2,472,238.03 123,611.90
Midea Household Equipment (Vietnam) Limited. 5,998,410.85 299,920.54 1,763,032.11 88,151.61
Ningbo Andhra Logistics Limited. 344,351.37 17,217.57 1,531,491.60 76,574.58
Hubei Midea Refrigerator Limited.
891,521.86 44,576.09 1,365,053.13 68,252.66
Andhra Logistics Co., Ltd. 288,245.00 14,412.25 - -
524,815,333.41 26,240,766.67 247,236,025.22 12,361,801.27
Other receivables Hefei Hualing Co., Ltd. 2,516,870.13 125,843.51 972,294.80 48,614.74
Advances to Midea E-business Limited 1,072,593.00 -
suppliers Ningbo Midea United Supply Limited. - 18,549,101.34
1,072,593.00 18,549,101.34
159
2015 Annual Report of Wuxi Little Swan Company Limited
XIV Related party relationships and significant related party transactions (continued)
6 Receivables from and payables to related parties (continued)
(2) Payables to related parties
31 December 31 December
2015 2014
Huai‘an Weiling motor manufacture
Accounts payable Limited 117,984,701.58 67,504,962.19
Ningbo Midea United Supply Limited. 73,289,057.95 16,775,725.20
Ningbo Meimei Garden Application
Service Limited 39,107,819.41 -
Zhejiang Meizhi Compressor Limited 1,445,079.96 -
Ningbo Andhra Logistics Limited. 1,421.02 137,839.53
Midea Group Co., Ltd. - 5,576,397.45
Andhra Logistics Co., Ltd. - 90,630.06
Hefei Midea Materials Supply Limited - 22,735.18
Foshan Shunde Century Technology
Limited. - 8,800.00
Hefei Century Molding Development
Limited. - 880.73
231,828,079.92 90,117,970.34
Advances from
customers Midea (Singapore) Trading Limited. - 1,017,226.44
Midea Household Equipment
(Vietnam) Limited. - 1,812.14
- 1,019,038.58
XV Share-based payments settled in equities—share options
According to the authorisation of 1st extraordinariy general meeting of Midea Group in 2014, 16th
meeting of the 1st term of Board of Midea Group have passed the share option incentive plan (the 1st
Incentive Plan) and agree to grant 40,512,000 share options to 691 objects including directors, senior
management personnel as well as key technical staff of group and its subsidiaries (hereafter referred to as
‘incentive objects’) on 18th Feb, 2014.
160
2015 Annual Report of Wuxi Little Swan Company Limited
According to resolution of the 20th meeting of the 1st term of Board on 26th May, 2014, the Midea Group
has revised the share option incentive plan, considering adjustment caused by incentive objects’ quit and
equity distribution. The adjusted exercise price is 18.72 and share option number changes into 99,862,500.
According to the authorisation of 1st extraordinariy general meeting of Midea Group in 2015, 26th
meeting of the 2nd term of Board of Midea Group have passed the share option incentive plan (the 2nd
Incentive Plan) and agree to grant 83,790,000 share options to 733 objects on 27th May, 2015. The adjusted
exercise price is RMB 30.54.
As at 31 December 2015, the number of benefit employees involved in the 1st Incentive Planmentioned
above is 45, and the number of share options granted is 6,592,500.The number of benefit employees
involved in the 2nd Incentive Plan is 45, and the number of share options granted is 5,070,000.
XVI Commitment and contingency
1 Significant commitments
By the date of 31 December 2015, no significant commitments shall be disclosed.
2 Contingency
By the date of 31 December 2015, no significant contingency shall be disclosed.
XVII Events after balance sheet date
1 Profit distribution after balance sheet date
Amount
s Proposed profits or dividends 379,492,658.40
Authorized dividends 379,492,658.40
According to the resolution of the Board on 8th March 2016, the Board propose to distribute RMB
379,492,658.40 and it has not been recognized as a liability on financial statement in current
reporting period.
161
2015 Annual Report of Wuxi Little Swan Company Limited
XVII
I Notes to the material items in the Company financial statements
1 Accounts receivable
(1) Accounts receivable classified by nature:
31 December 2015 31 December 2014
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of % of
Classification Amount % Amount provision Book value Amount % Amount provision Book value
Debtors with significant balance
assessed individually 763,953,231.04 63.37% - - 763,953,231.04 165,062,098.52 26.07% - - 165,445,148.88
Debtors grouped by credit risk 441,524,088.26 36.63% 22,082,524.63 5.00% 419,441,563.63 456,861,891.80 72.14% 22,843,094.59 5.00% 433,635,746.85
Others with insignificant balance but
assessed individually - - - - - 11,347,358.13 1.79% 11,347,358.13 100.00% -
Total 1,205,477,319.30 100.00% 22,082,524.63 1.83% 1,183,394,794.67 633,271,348.45 100.00% 34,190,452.72 5.40% 599,080,895.73
162
2015 Annual Report of Wuxi Little Swan Company Limited
XVII
I Notes to the material items in the Company financial statements (continued)
1 Accounts receivable (continued)
(1) Accounts receivable classified by nature (continued):
Debtors with significant balance assessed individually is analyzed as below:
31 December 2015
Accounts Reason for
receivable Bad debt Provision% provision
Hefei Midea Washing
Machine Limited 763,953,231.04 - - -
Bad debt provision provided on Aging Analysis:
31 December 2015
Aging Other receivables Provision of bad debt Provision %
Within 1 year 441,397,683.85 22,069,884.19 5.00%
Between 1 and 2
years 126,404.41 12,640.44 10.00%
Total 441,524,088.26 22,082,524.63 5.00%
(2) The written-off amount of accounts receivable in current year was RMB 8,668,106.62. The material
balance write-off individually in the current year is analysed as below:
Nature of Procdure Whether
the Amount of Reason of of related party
receivable written-off written-off written-off transaction
Chongqing Fuli
Real Estate
Development Board
Co.,Ltd. Loan 1,675,800.00 Slow collection Resolution No
Chongqing
Zhongcheng
Properties
Development Board
Co.,Ltd. Loan 1,655,000.00 Slow collection Resolution No
Hunan Huitang
Hot Spring
Huatian
Properties Board
Co.,Ltd. Loan 912,000.00 Slow collection Resolution No
4,242,800.00
(3) As at 31 December 2015, amounts due from top five customers are summarised as below:
% of total
Amounts Bad debt provision balance
Due from top five customers
in total 1,060,214,653.67 14,813,071.13 87.95%
163
2015 Annual Report of Wuxi Little Swan Company Limited
XVII Notes to the material items in the Company financial statements (continued)
I
2 Other receivables
(1) Other receivables classified by nature:
31 December 2015 31 December 2014
Carrying amount Bad debt provision Carrying amount Bad debt provision
% of % of
Classification Amount % Amount provision Book value Amount % Amount provision Book value
Debtors with significant balance 75,736,975.5 75,412,295.9
assessed individually 0 92.10% 0 99.57% 324,679.60 75,746,709.83 80.65% 75,746,709.83 100.00% -
Debtors grouped by credit risk 6,499,053.39 7.90% 472,722.82 7.27% 6,026,330.57 18,169,701.95 19.35% 2,007,409.66 11.05% 16,162,292.29
82,236,028.8 75,885,018.7
Total 9 100.00% 2 92.28% 6,351,010.17 93,916,411.78 100.00% 77,754,119.49 82.79% 16,162,292.29
164
2015 Annual Report of Wuxi Little Swan Company Limited
XVII Notes to the material items in the Company financial statements (continued)
I
2 Other receivables (continued)
(1) Other receivables classified by nature (continued):
Debtors with significant balance assessed individually is analyzed as below:
31 December 2015
Other Reason for
receivables Bad debt Provision% provision
Jiangsu Littleswan
Marketing and Sales
Co.,Ltd. 75,736,975.50 75,412,295.90 99.57% Uncollectable
Bad debt provision provided on Aging Analysis:
31 December 2015
Aging
Other receivables Provision of bad debt Provision %
Within 1 year 5,452,242.39 272,611.72 5.00%
Between 1 and 2 years 718,661.00 71,866.10 10.00%
Between 2 and 3 years 179,150.00 53,745.00 30.00%
Between 3 and 4 years 149,000.00 74,500.00 50.00%
Total 6,499,053.39 472,722.82 7.27%
(2) Bad debt provision made, collected or reversed in the current year
The amount of bad debt provision collected or reversed in the current year was RMB 895,274.66.
(3) The written-off amount of other receivables in current year was RMB 9,738,261.10. The material
balance write-off individually in the current year is analysed as below:
Whether due
from related
Nature of the Procdure of party
Due From receivable Amount Reason written off transactions
Ministry of Industry Energy
and Information efficiency Board
Technology rebates 9,738,261.10 Uncollectable Resolution No
(4) Other receivables classified by nature
Nature of other receivables 31 December 2015 31 December 2014
165
2015 Annual Report of Wuxi Little Swan Company Limited
Internal current accounts 75,736,975.50 75,746709.83
Deposits 878,058.00 362,934.12
Advance to employees 3,033,956.98 3,645,699.48
Advance to third parties - 2,722,807.25
Energy efficiency rebates - 9,738,261.10
Overdue Notes receivable - 1,700,000.00
Others 2,587,038.41 -
Total 82,236,028.89 93,916,411.78
XVIII Notes to the material items in the Company financial statements (continued)
2 Other receivables (continued)
(5) As at 31 December 2015, the top five debtors analysis are as below:
Nature Amount Aging % of total balance Bad debt provision
Jiangsu Littleswan
Marketing and Inter-company
Sales Co.,Ltd. receivables 75,736,975.50 3 to 4 years 92.10% 75,412,295.90
Guangzhou Antaida Liqudation
Logistics settlement for
Corporation long-term
equity
investments 2,587,038.41 Within 1 year 3.15% 129,351.92
Wuxi Huarun Gas
0.67% 27,665.00
Co., Ltd. Borrowings 553,300.00 Within 1 year
Dawei Xu Borrowings 212,272.50 1 to 2 years 0.26% 21,227.25
Wang Ouyang Borrowings 176,000.00 Within 1 year 0.21% 8,800.00
Total 79,265,586.41 96.39% 75,599,340.07
3 Long-term equity investments
31 December 2015 31 December 2014
Carrying Impairment Carrying Impairment
Items amount provision Book value amount provision Book value
1,306,323,041. 1,397,194,491. 57,500,000.0 1,339,694,491.
Subsidiaries 1,363,823,041.57 57,500,000.00 57 57 0 57
Associates - - 2,850,040.45 2,850,040.45
1,306,323,041. 1,400,044,532. 57,500,000.0 1,342,544,532.
Total 1,363,823,041.57 57,500,000.00 57 02 0 02
The long-term equity investments of the Company are not subject to restriction on conversion into cash.
166
2015 Annual Report of Wuxi Little Swan Company Limited
XVIII Notes to the material items in the Company financial statements (continued)
3 Long-term equity investments (continued)
(1) Subsidiaries
Impairment Impairment
31 December Increase in Decrease in provided in the provision at 31
2014 investment investment 31 December 2015 current year December 2015
Wuxi Little Swan Import & Export Co. ,
Ltd 57,500,000.00 - - 57,500,000.00 - 57,500,000.00
Jiangsu Little Swan Marketing and Sales
Co. , Ltd. 417,550,000.00 - - 417,550,000.00 - -
Wuxi Filin Electronics Co. , Ltd. 25,660,308.10 - - 25,660,308.10 - -
Wuxi Little Swan General Electric
Appliances Co. , Ltd. 19,600,000.00 - - 19,600,000.00 - -
Little Swan (Jing Zhou) Sanjin Electronic
Appliances Limited. 11,869,431.12 - - 11,869,431.12 - -
Little Swan International (Singapore)
Limited. 34,052,500.00 - 33,371,450.00 681,050.00 - -
Hefei Midea Washing Machine Limited. 830,962,252.35 - 830,962,252.35 - -
1,397,194,491.57 - 33,371,450.00 1,363,823,041.57 - 57,500,000.00
167
2015 Annual Report of Wuxi Little Swan Company Limited
XVIII Notes to the material items in the Company financial statements (continued)
3 Long-term equity investments (continued)
(2) Associates
Movement
Adjusted net
profit or Provision for
loss Adjustment of Movement Cash Impairment
based on Other of other dividends Provision as at 31
31 December Additional Disposal of equity comprehensive owner’s declared by for 31 December December
Investee 2014 investment investment method income equity associates impairment Others 2015 2015
Joint ventures
Associates
--Guangzhou
Antaida
Logistics
Corporation 2,850,040.45 - - -255,029.37 - - - - -2,595,011.08 - -
168
2015 Annual Report of Wuxi Little Swan Company Limited
XVIII Notes to the material items in the Company financial statements (continued)
4 Sales and cost of sales
2015 2014
Income Expenses Income Expenses
Operating
income 9,149,930,217.84 6,884,349,798.71 7,388,407,743.28 5,459,568,825.28
Other operating
income 694,714,345.12 571,779,495.31 528,418,127.08 486,618,234.21
Total 9,844,644,562.96 7,456,129,294.02 7,916,825,870.36 5,946,187,059.49
Other operating income and expenses
2015 2014
Other
operating Other operating Other operating Other operating
income expenses income expenses
Rent income 695,000.00 1,061,722.43 1,215,000.00 354,317.62
Sale of
materials 682,563,266.86 570,717,772.88 522,254,302.35 486,263,916.59
Others 11,456,078.26 - 4,948,824.73 -
694,714,345.12 571,779,495.31 528,418,127.08 486,618,234.21
5 Investment income
Items 2015 2014
Long-term equity investment income measured at
equity method -255,029.37 -319,108.43
Investment loss from disposal of long-term equity
investment -2,180,542.67 -8,514,127.65
Income from disposal of financial assets measured
at fair value with changes included in current
profits and losses 193,218.65 4,651,580.00
Investment income from holding
available-for-sale equity instrument - 50,000.00
Income from disposal of available-for-sale financial
assets 112,263,580.07 87,425,901.22
169
2015 Annual Report of Wuxi Little Swan Company Limited
110,021,226.68 83,294,245.14
In 2015, income from disposal of available-for-sale financial assets are gains from investments on
financial products, which amounts to RMB 112,263,580.07 (In 2014: RMB 79,825,645.22 gains
from investments on financial products and RMB 7,600,256.00 income from disposal of equity
investment on Bank of Jiangsu Co., Ltd.)
There is no significant restriction on the remittance of investment income to the Company and its
subsidiaries.
XIX Reclassification for comparative information
Reclassification of information disclosed in comparative financial statements (2014 Financial
statements) are listed as follow:
XIX Reclassification for comparative information (continued)
Consolidated Balance Sheet of
Balance Sheet the Company Reclassification disclosure
Reclassify from accounts
payable to other current
Accrual expenses 1,351,628,660.52 884,584,189.21 liabilites
Payment for equipments Reclassify from accounts
and moulds 95,752,241.64 57,095,933.13 payable to other payables
Termination benefits Reclassify from employee
payable (Non-current benefits payables to long-term
portion over 1 year) 29,811,618.11 - employee benefits payable
XX Supplementary information
1 Non-routine items
2015
Net loss on disposal of non-current assets -280,195.57
170
2015 Annual Report of Wuxi Little Swan Company Limited
Government grants recognized in profits or losses for
the current period (exclude for those closely related
to the Company and its subsidiaries’ operation and
received at national statutory standard and amount) 31,893,010.09
Effect of One-off Adjustment to current profit and loss
according to taxation law and accounting regulations 2,679,264.25
Other non-operating income and losses other than items
above -8,815,676.21
Less: Effect of income tax 3,899,799.51
Effect of minority interest (after tax) 5,783,501.47
Total 15,793,101.58
Basis for preparation of statement of non-recurring profits or losses
Under requirements in Explanatory announcement No. 1 on information disclosure by companies
offering securities to the public – non-recurring profits or losses [2008] from CSRC, non-recurring
profits or losses refer to those arises from transactions and events that are not directly relevant to
ordinary activities, or that are relevant to ordinary activities, but are extraordinary and not expected
to recur frequently that would have an influence on users of financial statements making economic
decisions on the financial performance and profitability of an enterprise.
2 Return on equity and earnings per share
Earnings per share
Weighted average Basic earnings per
return on equity share (RMB yuan Diluted earnings per share
(%) per share) (RMB yuan per share)
171
2015 Annual Report of Wuxi Little Swan Company Limited
Consolidated net
profit attributable to
ordinary
shareholders of the
Company 19.32% 1.45 1.45
Consolidated net
profit attributable to
ordinary
shareholders of the
Company,
excluding
non-routine items 18.99% 1.43 1.43
172
2015 Annual Report of Wuxi Little Swan Company Limited
Section X. Documents Available For Reference
I. Text of the Annual Report with the signature of the Chairman of the Board of Directors.
II. Accounting statements with signatures and seals of the legal representative, the chief financial officer and the
head of accounting.
III. Original copy of the Auditor's Report stamped by the accounting firm and signed and stamped by registered
accountants
IV. Originals of all documents and announcements of the Company ever disclosed on Securities Times and Hong
Kong Ta Kung Pao in the reporting period.
Legal representative: Mr. Fang Hongbo
Wuxi Little Swan Company Limited
10 March 2016
173
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