Wuxi Little Swan Company Limited Annual Report 2011
Contents
Important Notes------0 I. Company Profile------1 II. Summary of Accounting Highlights and business Highlights------3 III. Changes in Share Capital and Particulars about Shareholders------5 IV. Directors, Supervisors, Senior Management Staff and Employees------11 V. Corporate Governance------15 VI. Particulars about Establishment and Accomplishment of Internal Control------19 VII. Brief Introduction to Shareholders’ General Meetings------23 VIII. Report of the Board of Directors------24 IX. Report of the Board of Supervisors------35 X. Significant Events------37 XI. Financial Report------46 XII. Documents Available for Reference------131
Wuxi Little Swan Company Limited Annual Report 2011
Important Notes
The Board of Directors, the Board of Supervisors as well as all directors, supervisors and senior management staffs of Wuxi Little Swan Company Limited (hereinafter referred to as “the Company”) warrant that this report does not contain any false or misleading statements or omit any material facts and hereby accept, individually and collectively, responsibility for the truth, accuracy and completeness of the contents of this report.
No directors, supervisors or senior management staffs can’t guarantee or have objection to the truth, accuracy or completeness of contents of this report.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. issued an Auditors’ Report 2010 with unqualified opinion for the Company.
Mr. Fang Hongbo, the Chairman of the Board, Mr. Chai Xinjian, General Manager, Ms. Xiao Li, Chief Financial Officer, and Mr. Zhong Fangliu, Accounting Manager, hereby confirm that the Financial Report enclosed in this Annual Report 2011 is true and complete.
GD Midea Holding Co., Ltd., controlling holder of the Company increased holding of 6,319,556 A-shares of the Company from 15 Dec. 2011 to 16 Jan. 2012 on Shenzhen Stock Exchange System, which takes 1% of total shares of the Company. After the increase, GD Midea Holding Co., Ltd. and TITONI held 253,513,285 shares of the Company in total, which is 40.08% of the total shares of the Company. According to the increase holding plan, GD Midea Holding Co., Ltd.’s increased holding of A-shares should not excess 2% of total shares of the Company in 12 months from the first increase date.
This report was prepared in both Chinese and English. Should there be any difference in interpretation between the two versions, the Chinese version shall prevail.
Wuxi Little Swan Company Limited Annual Report 2011
Section I Company Profile
1. Legal Name of the Company:
In Chinese: 无锡小天鹅股份有限公司 In English: Wuxi Little Swan Company Limited 2. Legal Representative: Mr. Fang Hongbo
3. Secretary to the Board: Ms. Zhou Sixiu Contact address: No. 18, Changjiang Road S., National Hi-tech Industrial Development Zone, Wuxi Post Code: 214028
Tel: 0510-81082320 Fax: 0510-83720879
E-mail: [email protected] Securities Affairs Representative: Mr. Yao Yanfeng
Contact address: No. 18, Changjiang Road S., National Hi-tech Industrial Development Zone, Wuxi Post Code: 214028 Tel: 0510-81082280
Fax: 0510-83720879 E-mail: [email protected]
4. Registered Address: No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi Post Code: 214028 Office Address: No. 18, Changjiang Road S., National Hi-tech Industrial Development Zone, Wuxi Post Code 214028 International Website of the Company http://www.littleswan.com
E-mail of the Company [email protected]
5. Newspaper Designated by the Company for Disclosing Securities Times and Ta Kung Pao the Information Internet Website designated by CSRC for Publishing the http://www.cninfo.com.cn Annual Report Place Where the Annual Report is Prepared and Placed: Securities Department of the Company 6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Little Swan A, Little Swan B
Stock Code: 000418, 200418 7. Other Information:
1 Wuxi Little Swan Company Limited Annual Report 2011 Initial Registration Date: 29 November 1993 Registration Date after Change: 25 March 2011
Registration place: Industrial and Commercial Administration Bureau of Wuxi, Jiangsu Registration Code of Enterprise Corporation’s Business 320200000014723 License: Registration Code of Taxation (State Taxation Bureau)： 320200704046760
Registration Code of Taxation (Local Taxation Bureau)： 320200704046760 Name of Accounting Firm Engaged by the Company: Jiangsu GongZheng TianYe Certified Public Accountants Co., Ltd. Office Address of Accounting Firm Engaged by the No. 28, Liangxi Road, Wuxi Company: Independent finance consultant engaged by the Company to fulfill responsibility of consistent supervision Name: CITIC Securities Co., Ltd
Office address: A/F, China Merchants Bank Tower, No. 7088 Shennan Road, Shenzhen, Guangdong Organizer of independent finance consultant: Zhang Li, Chen Zilin
Sponsors engaged by the Company to fulfill consistent supervision Name: Huatai United Securities Co., Ltd
Office address: 25/F, CTS Tower, No. 4011 Shennan Road, Shenzhen, Guangdong Sponsor: Bian Jianguang
2 Wuxi Little Swan Company Limited Annual Report 2011 Section II Summary of Accounting Highlights and Business Highlights
I. Major accounting data over the past three years as ended the reporting period: Unit: RMB Yuan Increase or decrease of this 2009 （After 2011 2010 year than last year (%) adjustment） Total revenue 10,975,621,704.52 11,202,366,806.14 -2.02% 6,758,869,327.05 Operating profit 593,269,277.10 668,243,530.05 -11.22% 312,955,662.77 Total profit 670,373,100.26 721,681,608.49 -7.11% 383,657,316.39
Net profit attributable to equity 453,327,963.81 506,917,078.13 -10.57% 283,733,939.70 holders of the Company
Net profit attributable to equity holders of the Company after 364,358,220.01 370,959,019.17 -1.78% 147,312,717.28 extraordinary gains and losses Net cash flows from operating 242,531,309.07 724,134,271.23 -66.51% 247,340,296.47 activities Increase or decrease of this 2009 （After As at 31 Dec. 2011 As at 31 Dec. 2010 year than last year (%) adjustment） Total assets 9,145,185,476.94 8,001,576,321.32 14.29% 6,004,327,705.73 Total liabilities 5,180,156,445.70 4,490,734,039.52 15.35% 3,090,835,483.91 Owners’ equity attributable to 3,441,144,937.45 3,056,480,975.76 12.59% 2,547,005,149.49 shareholders of the Company Total share capital （share） 632,487,764.00 632,487,764.00 0.00% 547,655,760.00
Differences of accounting standards between China and abroad No Difference.
II. Major financial indexes over the past three years as ended the reporting period: Increase or decrease 2009 （After Name 2011 2010 of this year than last ） year (%) adjustment EPS-basic (RMB/share) 0.72 0.80 -10.00% 0.45
EPS-diluted (RMB/share) 0.72 0.80 -10.00% 0.45
Basic EPS after deducting extraordinary gains and losses 0.58 0.66 -12.12% 0.27 (RMB/share)
Weighted average return on net assets (%) 13.99% 18.09% -4.10% 14.93%
Weighted average return on net assets after deducting 11.24% 16.50% -5.26% 8.39% extraordinary gains and losses (%)
Net cash flow per share arising from operation activities 0.38 1.14 -66.51% 0.45 (RMB/share) Increase or decrease As at 31 Dec. As at 31 Dec. of this year than last 2011 2010 year (%) Net assets per share attributable to shareholders of listed 5.44 4.83 12.59% 4.65 company (RMB/share)
Asset-liability ratio (%) 56.64% 56.12% 0.52% 51.48%
In accordance with “Calculation and Disclosure of Return on Net Assets and Earnings Per Share under Regulation on the Preparation of Information Disclosures of Companies
3 Wuxi Little Swan Company Limited Annual Report 2011 Issuing Public Shares No. 9 (revised in 2010)” issued by the CSRC, the Company’s return on net assets and earnings per share are calculated as follows: 2011
Profit as of the reporting period Return on net assets (%) Earnings per share (RMB/share)
Weighted average Basic Diluted Net profit attributable to the Company’s ordinary equity 13.99% 0.72 0.72 shareholders Net profit deducted extraordinary gain and loss attributable to the 11.24% 0.58 0.58 Company’s ordinary equity shareholders
III. Non-current gains and losses over the past three years as ended the reporting period: Unit: RMB Yuan Items 2011 Note 2010 2009 Gains/losses on the disposal of non-current 53,601,089.33 none 2,313,638.24 77,221,516.89 assets Government subsidies accounted into current income account (except for those government subsidies closely related to the Company’s 61,717,786.34 none 22,178,681.06 5,365,188.08 business, and received at national statutory standard and amount) Expenses for business reorganization, such as 10,188,474.84 none 10,480.00 1,278,877.34 expenses for staffing, reorganization etc. Current gains and losses of subsidies acquired from business combination under the same 0.00 none 198,136,177.36 107,087,903.78 control as from period-begin to combination date Other non-operation income and expenses 4,214,334.91 none 3,518,089.86 -6,067,078.74 other than the above Other non-recurring gains/losses -8,652,014.96 none -3,242,739.32 -3,529,364.47 Influenced amount of income tax -18,070,842.88 none -33,333,639.00 -29,897,749.18 Influenced amount of minority shareholders’ -14,029,083.78 none -53,622,629.24 -27,842,298.85 equity (after tax) Gains and losses from change in fair value of tradable financial assets and tradable financial liabilities and investment income from disposal of tradable financial assets, tradable 0.00 none 0.00 12,804,227.57 financial liabilities and available-for-sale financial assets except for effective hedging business related to normal operation business of the Company Total 88,969,743.80 - 135,958,058.96 136,421,222.42
4 Wuxi Little Swan Company Limited Annual Report 2011 Section III Change in Share Capital and Particulars about Shareholders
I. Change in shares 1. Statement of change in shares Unit: Share Before the change Increase/decrease for this time (+, -) After the change Issuance Capitalization Items Number of Proportion Bonus Number of Proportion of new of public Other Subtotal shares % shares shares % share reserve I. Shares subject to trading 254,873,249 40.30 - - - 1,262,571 1,262,571 256,135,820 40.50 moratorium
1. Shares held by the State 2. Share held by state-owned corporation 3. Shares held by other 224,021,535 35.42 - - - 1,262,571 1,262,571 225,284,106 35.62 domestic corporation Among which: shares held by domestic 223,636,451 35.36 1,539,655 1,539,655 225,176,106 35.60 non-state-owned corporation Shares held by domestic natural 385,084 0.06 -277,084 -277,084 0.02 108,000 persons 4. Shares held by foreign 30,851,714 4.88 - - - - - 4.88 30,851,714 investors Among which: Shares held by 30,851,714 4.88 4.88 foreign - 30,851,714 corporation Shares held by foreign natural - - persons 5. Share held by senior - - management staff II. Shares not subject to 377,614,515 59.71 - - - -1,262,571 -1,262,571 376,351,944 59.50 trading moratorium
1. Renminbi 217,430,357 34.38 -1,262,571 -1,262,571 216,167,786 34.18 ordinary shares 2. Domestically listed foreign 160,184,158 25.33 - 160,184,158 25.33 shares 3. Overseas listed foreign - - shares
4. Others - -
III. Total shares 632,487,764 100.00 - - - - - 632,487,764 100.00
5 Wuxi Little Swan Company Limited Annual Report 2011
Note: On 12 July 2011, a total of 1,576,800 shares held by five shareholders that subject to trading moratorium were released for listing. Details please refer to Informative Notice of Wuxi Little Swan Company Limited on Listing of Shares Subject to Trading Moratorium(Notice No.:2011-25, published on Securities Times, HongKong Ta Kung Pao and information disclosure website http://www.cninfo.com.cn dated 7 July 2011).
2. Changes in shares subject to trading moratorium Unit: Share Shares subject to Releasing from Shares subject to Name of trading trading Increase in this trading Reason Date of releasing shareholders moratorium at moratorium in year moratorium at the year-begin 2011 the year-end GD Midea Note 1, Holding Co., 216,342,015 2,839,371 219,181,386 18 Nov. 2013 Note 2 Ltd. TITONIINVES TMENTS 30,851,714 0 0 30,851,714 Note 1 18 Nov. 2013 DEVELOPMEN T LTD. CHINA TECHNOLOGY INTERNATION 962,712 962,712 0 12 Jul. 2011 AL TRUST INVESTMENT LTD. WUXI HONGGUANG 57,763 57,763 0 12 Jul. 2011 CAPACITOR CO., LTD Zeng Jianchun 192,542 192,542 0 12 Jul. 2011
Wu Hongying 192,542 192,542 0 12 Jul. 2011 Jiangsu Little Swan Group 171,241 171,241 0 12 Jul. 2011 Co., Ltd.
0 108,000 108,000 Note 3
Other domestic 6,102,720 -108,000 5,994,720 Note 4 corporation Total 254,873,249 1,576,800 2,839,371 256,135,820 Note 1: During the reporting period, the Company privately issued A-shares to GD Midea Holding Co., Ltd. that GD Midea Holding Co., Ltd. made a commitment that it would not transfer the shares of the Company within 36 months since the final day of private issuing.
Note 2: GD Midea Holding Co., Ltd. increased A-shares-holding of the Company by ways of centralized price biding on Shenzhen Stock Exchange. GD Midea Holding Co., Ltd. and its concert parties made commitment that it would not decrease its holding of A-shares of the Company on secondary market during the increase period and statutory period.
Note 3: On Jul. 2011, according to rulings of Civil Award ((2011)PZZ No.769) of the Peoples’ Court of Pukou District, Nanjing, corporate shares of 108,000 shares of the Company, which was registered under Taiyi Moving Company of Jiangpu County then transferred under Cui Kai’s name.
6 Wuxi Little Swan Company Limited Annual Report 2011
Note 4: The Company accomplished the share merger reform on 4 Aug. 2006. There were 14 shareholders participated in the share merger reform among all non-circulating shareholders of the Company, and the rest 94 shareholders’ considerations of the share merger reform were paid in advance by the former controlling shareholder, Jiangsu Little Swan (Group) Co., Ltd.. By the end of reporting period, there are still 19 non-circulating shareholders did not release from trading moratorium with total shares amounting to 6,102,720 shares.
3. Issuance and listing of securities 1) Securities issuance over the past three years In accordance with the Reply on Approving the Significant Assets Reorganization of Wuxi Little Swan Co., Ltd. and its Share Issuance to GD Midea Holding Co., Ltd. in exchange of assets (ZJXK[2010] Document No.1577) issued by China Securities Regulatory Committee(CSRC), the Company issued 84,832,004 A-shares to GD Midea Holding Co., Ltd. at the issue price as RMB 8.63 per share, which is the consideration in exchange of 69.47% of Hefei Royalstar Water Industry Facilities Co., Ltd. Under the approval of Shenzhen Stock Exchange, the privately issued 84,832,004 shares of RMB common share were listed in Shenzhen Stock Exchange since 2 Dec. 2010. GD Midea Holding Co., Ltd. made a commitment that it would not transfer the shares of the Company within 36 months after the final day of private issuing, and thereafter will trade according the stipulations of CSRC and Shenzhen Stock Exchange.
2) Changes in total shares of the Company and structure During the reporting period, there existed no changes in total shares of the Company, or changes in structure of shares or in asset-liability structure of the Company due to bonus shares, capitalization of shares, allotment of shares, issuance of new shares, private issuance of shares or other reasons.
3) Existent shares held by internal staffs of the Company There existed no shares held by internal staffs of the Company.
II. About shareholders 1. As at 31 Dec. 2011, the Company has 31,490 shareholders in total, including 25,368 ones of A-share and 6,122 ones of B-share.
As at 31 Jan. 2012, the Company has 31,522 shareholders in total, including 25,397 ones of A-share and 6,125 ones of B-share.
2. Particulars about shares held by the top ten shareholders and top ten shareholders holding shares not subject to trading moratorium.
Unit: share Total number of 31,490 shareholders
Particulars about shares held by the top ten shareholders Number of Nature of Sharehol Total number of shares subject to Shares pledged Name of shareholder shareholder ding ratio shares held trading or frozen moratorium held
7 Wuxi Little Swan Company Limited Annual Report 2011 Domestic non-state-own GD Midea Holding Co., Ltd. 34.65% 219,181,386 219,181,386 None ed corporation Overseas GAOLING FUND,L.P. 8.04% 50,830,062 None None corporation
TITONI INVESTMENTS Overseas 4.88% 30,851,714 30,851,714 None DEVELOPMENT LTD. corporation
On behalf of Finance Bureau of Wuxi 3.49% 22,057,657 None None the state Industrial and Commercial Bank of China- Penghua Overseas Goodquality Government 3.34% 21,119,737 None None corporation Securities Investment Fund (LOF) Domestic BOCI SECURITIES non-state-own 3.32% 20,976,486 None None LIMITED ed corporation China Construction Domestic Bank—Yinhua Wealth Theme non-state-own 1.91% 12,089,775 None None Stock Securities Investment ed Fund corporation Domestic GUOTAI UNAN non-state-own SECURITIES(HONGKONG) 1.68% 10,595,810 None None ed LIMITED corporation Domestic NATIONAL SOCIAL non-state-own SECURITY FUND 1.14% 7,214,376 None None ed PORTFOLIO 102 corporation China Construction Bank- Penghua Value Advantage Overseas 1.10% 6,933,828 None None Stock-linked Securities corporation Investment Fund Particulars about shares held by the top ten shareholders holding shares not subject to moratorium
Number of shares not subject to Name of shareholder Type of shares moratorium held Domestically listed foreign GAOLING FUND,L.P. 50,830,062 shares
Finance Bureau of Wuxi 22,057,657 Renminbi ordinary shares
Industrial and Commercial Bank of China- Penghua Goodquality Government Securities 21,119,737 Renminbi ordinary shares Investment Fund (LOF) Domestically listed foreign BOCI SECURITIES LIMITED 20,976,486 shares China Construction Bank—Yinhua Wealth Theme 12,089,775 Renminbi ordinary shares Stock Securities Investment Fund GUOTAI JUNAN SECURITIES(HONGKONG) Domestically listed foreign 10,595,810 LIMITED shares NATIONAL SOCIAL SECURITY FUND 7,214,376 Renminbi ordinary shares PORTFOLIO 102 China Construction Bank- Penghua Value Advantage Stock-linked Securities Investment 6,933,828 Renminbi ordinary shares Fund SUN HUNG KAI INVESTMENT SERVICES Domestically listed foreign 6,774,081 LTD-CUSTOMERS A/C shares
8 Wuxi Little Swan Company Limited Annual Report 2011
Domestically listed foreign TRISKELE CHINA FUND 6,074,554 shares Explanation on associated relationship among the top GD Midea Holding Co., Ltd. and TITONI INVESTMENTS DEVELOPMENT LTD. are parties ten shareholders or acting in concert. acting-in-concert
3. Introduction to the controlling shareholder and actual controller (1) About change in the controlling shareholder and the actual controller During the reporting period, the Company’s controlling shareholder and actual controller remained unchanged.
(2) Introduction to the controlling shareholder and actual controller 1) About the controlling shareholder Company Name: GD Midea Holding Co., Ltd. Legal Representative: Fang Hongbo Registered Capital: RMB 3,120,265,276 Business Scope: Production, manufacture and selling of household appliances, TV sets, communication equipments and spare parts thereof; technical consulting services for the aforesaid products; manufacture of moulds and production equipments; hotel management; advertisement agency services; marketing services; hardware, electrical appliances and accessories; electronic products; metal materials; construction materials; chemicals (excluding hazardous chemicals); machines; general merchandise; export of products and relevant technologies owned by the company and its subsidiaries; production and processing; plastic products; import of R&D raw and auxiliary materials, machines, instruments and meters, spare parts and relevant technologies; processing of imported materials and three types of processing plus compensation trades (The aforesaid businesses are operated in accordance with the Document [99] Wai-Jing-Mao-Zheng-Shen-Han-Zi No.528 and include no businesses for which a license is needed for operation.)
2) Actual controller Name: He Xiangjian Nationality: the People’s Republic of China (with no rights of residence in other countries or regions) Mr. He Xiangjian has been the Chairman of the Board in Midea Group over the past five years. 3) The ownership and controlling relationship between the actual controller of the Company and the Company is detailed as follows:
9 Wuxi Little Swan Company Limited Annual Report 2011
He Xiangjian 94.55%
Foshan Shunde Midea Investment & Holding Co., Ltd. 70% 65.15% 30%
Midea Group Co., Ltd. Foshan Shunde Kailian Industrial Development Co., Ltd.
1.66% 41.17% 0.12% GD Midea Holding Co., Ltd.
100%
Midea Holding（BVI）Ltd.
100%
Titoni Investments Development Ltd.
4.88% 34.65%
Wuxi Little Swan Company Limited
Note: 1. As to 31 Dec. 2011, share holding proportion is listed above; 2. During 15 Dec. 2011 to 16 Jan. 2012, GD Midea Holding Co., Ltd. increased holdings of A-shares of the Company totaling 6,319,556 shares through Shenzhen Stock Exchange, which takes up 1% of total shares of the Company. After the increase, GD Midea Holding Co., Ltd. and TITONI together held 253,513,285 shares of the Company, which takes up 40.08% of total shares of the Company. According to the share-increase plan, GD Midea Holding Co., Ltd.’s increase proportion of A-shares of the Company shall not excess 2% within 12 months from the first increase day.
10 Wuxi Little Swan Company Limited Annual Report 2011 Section IV Directors, Supervisors, Senior Management Staffs and Employees I. Directors, supervisors and senior management staffs 1. Basic information Whether Amount of Shares Reas drawing the Shares payment from held at on payment from Ending held at the Company Name Office title Sex Age Start date the for shareholders’ date the in the year-beg chang entities or year-end reporting in e other related period (RMB) entities Fang Chairman of the Male 44 Sep. 2009 Sep. 2012 0 0 No - Yes Hongbo Board Chai Director , Male 49 Sep. 2009 Sep. 2012 0 0 No 217.50 Xinjian General Manager Li Jianwei Director Male 45 Sep. 2009 Sep. 2012 0 0 No - Yes
Xiao Director Male 42 Jan. 2010 Sep. 2012 0 0 No - Yes Mingguang
Liu Jufeng Director Male 33 Jan. 2011 Sep. 2012 0 0 No 66.04
Wu Director Male 37 Sep. 2009 Sep. 2012 0 0 No 2.00 Ganping Zhao Independent Male 58 Sep. 2009 Sep. 2012 0 0 No 8.00 Shuming director Independent Ye Yongfu Male 63 Sep. 2009 Sep. 2012 0 0 No 8.00 director Independent Yu Lihui Female 46 Sep. 2009 Sep. 2012 0 0 No 8.00 director Chairman of Zhang Supervisory Male 37 Apr. 2011 Sep. 2012 0 0 No - Yes Zhaofeng Committee Jiang Supervisor Male 36 Sep. 2009 Sep. 2012 0 0 No 53.86 Huafang
Li Mingde Staff supervisor Male 31 Mar. 2011 Sep. 2012 0 0 No 20.00
Yin Bitong Deputy GM Male 44 Sep. 2009 Sep. 2012 0 0 No 156.51
Xiao Li Vice president Female 35 Dec. 2010 Sep. 2012 0 0 No 43.76
Secretary to the Zhou Sixiu Female 39 Sep. 2009 Sep. 2012 0 0 No 36.64 Board Supervisor, Xiao Bing Male 41 Feb. 2009 Mar. 2011 0 0 No - already left work Le Supervisor, Male 50 Sep. 2009 Apr. 2011 0 0 No 3.74 Xiang’an already left work Deputy GM, Li Hong Male 49 Sep. 2009 Apr. 2011 0 0 No 22.59 already left work Deputy GM, Xu Li Female 41 Sep. 2009 Aug. 2012 0 0 No 44.92 already left work
Total ------691.56 -
2. The situation of the working experience of, office title held by and concurrent post held by the present director, supervisor and senior management staff: (1) Mr. Fang Hongbo, Chairman of the Board, master degree. He now serves in the Company as the Chairman of the Board, in GD Midea Holding Co., Ltd. as the
11 Wuxi Little Swan Company Limited Annual Report 2011 Chairman of the Board and concurrently President. He ever took the posts of General Manager of Air-conditioner Division Marketing Company in China, as well as of Deputy General Manager and General Manager of Air-conditioner Division subordinate to GD Midea Holding Co., Ltd., of Vice President, Vice Chairman of the Board and President in GD Midea Holding Co., Ltd.
(2) Mr. Chai Xinjian, Director, doctor degree, researcher-level Senior Engineer. Now he acts as Director and General Manager of the Company. He ever took the posts of Director of the Technology Center and of Standing Deputy General Manager in Wuxi Little Swan Company Limited.
(3) Mr. Li Jianwei, Director, master degree. He now occupies Director of the Company, Director and concurrently Vice President in Midea Group Co., Ltd., Vice Chairman of the Board in GD Midea Holding Co., Ltd.. He ever took the post of secretary to the Board in GD Midea Holding Co., Ltd..
(4) Mr. Xiao Mingguang, Director, master degree, CPAs. He serves in the Company as director and Assistant President of GD Midea Holding Co., Ltd. He ever took the posts as chief of Audit and Supervision Department at present, as chief of Financial Management Department in GD Midea Holding Co., Ltd., as chief of Operating and HR Department of Laundry Division and Refrigeration Division in Midea, as chief of Supply Chain Management Department of Residential Air-conditioning Division, and of chief of financial management department in Refrigeration Royalstar Joint-venture Company.
(5) Mr. Liu Jufeng, Director, bachelor degree, senior accountant. He now occupies director and chief of Operating Management Department. He ever worked as chief of Operating and HR Department of the Company
(6) Mr. Wu Ganping, Director, bachelor degree, Senior Accountant. Now he serves as Assistant General Manager in Guolian Financial Company Limited. He ever worked in Wuxi Guolian Development (Group) Co., Ltd., Wuxi Passenger Transport Co., Ltd. and Jiangsu Kuailu Motor Transport Co., Ltd., etc..
(7) Mr. Zhao Shuming, Independent Director, doctor degree. He now serves as Independent Director of the Company and Honorary Dean, Professor and Ph.D. Candidate Tutor of School of Business of Nanjing University. He ever served as Dean of School of Business, Assistant Principal of Nanjing University.
(8) Mr. Ye Yongfu, Independent Director, master degree. He now serves as Independent Director of the Company. He ever took the posts of Deputy Director of Wuxi Municipal Economic Commission, of Director and Secretary of CPC in Wuxi Development Plan Committee, of Director and Secretary of CPC in Wuxi Municipal Economic and Trade Commission, and concurrently held Deputy Secretary-general of the Municipal Government, of Director of the Enterprise Management Center, of Director and Secretary of CPC of Training Center of National Center for Management Development at Wuxi, as well as Deputy Leader of Wuxi Support Leading Group.
(9) Ms. Yu Lihui, Independent Director, master degree. She now serves as Independent Director of the Company and acts as the associate professor in the School of Business of
12 Wuxi Little Swan Company Limited Annual Report 2011 East China University of Science and Technology, Senior Lecturer of Ourui Management Consultant Co., Ltd. at present. She has served as Training Specialist of AMA.
(10) Mr. Li Mingdeng, Supervisor, bachelor degree. Now he acts as the Supervisor and Senior Manager of IT Operating Management Department of the Company. He ever took the post as chief engineer in Domestic Sale System of IT Management System in GD Midea Holding Co., Ltd.
(11) Mr. Zhang Zhaofeng, Supervisor, master degree. Now he acts as the Supervisor and Chief of Audit & Supervision Department of Midea Group. He ever took the posts of Director, CFO of the Company; Chief of Finance Department of Residential Air-conditioning Domestic Division, CFO of Residential Air-conditioning Business Division as well as CFO of Midea-Toshiba-Carrier Air-conditioners.
(12) Mr. Jiang Huafang, Supervisor, bachelor degree. He serves as Supervisor and Director of overseas supporter department in the Company at present. He ever took the posts of chief of supply chain management department of Wuxi Little Swan Company Limited, of Regional Sales Manager of Midea Central Air Conditioner Marketing Company, of Deputy Purchasing Manager of Hefei Hualing Electric Appliances Co., Ltd., of Department Director and Chief of supply chain management department in Hefei Royalstar Washing Equipment Manufacturing Co., Ltd..
(13) Mr. Yin Bitong, master degree, Deputy General Manager. He acts as General Manager of Domestic Marketing Company of the Company. He has served as Assistant General Manager, Marketing Chief and Chief of large region market in South China 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 Royalstar Washing Equipment Manufacturing Co., Ltd..
(14) Ms. Xiao Li, CFO, bachelor degree. Now she serves as CFO of the Company; Financial Planning Manager of Financial Department, Financial Manager of Overseas Marketing Company in Central Air Conditioning Division, Financial Manager of Manufacturing and R&D Centre, Financial Manager of Residential Air-conditioning International Division and Commercial Air-Conditioning Division in GD Midea Holding Co., Ltd..
(15) Ms. Zhou Sixiu, bachelor degree, accountant. Now, she holds a post of Secretary to the Board in the Company. She has served as Securities Affair Representative, Deputy Chief of Securities Investment Department, and Deputy Director of GM Office, etc. in Wuxi Qingfeng Stock Co., Ltd.
3. Changes in engagement and dismissal of Directors, Supervisors and Senior Management Staffs within the reporting period:
(1) Changes in directors: The 1st Special Shareholders’ General Meeting 2011 was convened on 7 Jan. 2011, which reviewed and approved Proposal on Additionally Elected the Director of the Company, deciding to elect Mr. Liu Jufeng as Director of the 6th Board of Directors. His
13 Wuxi Little Swan Company Limited Annual Report 2011 work term is from the said shareholders’ meeting and end with this term of Board of Directors.
(2) Changes in supervisors: On 9 Mar. 2011, due to job change, Mr. Xiao Bing, staff representative supervisor of the Company submitted resignation report to the Company to resign from supervisor of the Company and other posts acted in the Supervisory Board.
On 9 Mar. 2011, through examination and approval, the 4th Joint Conference of the 5th Staff Representative Assembly and Principal of Special Group agreed unanimously to elect Mr. Li Mingde as staff representative supervisor of the 6th Supervisory Committee.
On 14 Mar. 2011, due to job change, Mr. Le Xiang’an resigned from supervisor of the Company and other posts acted in the Supervisory Board. Resignation of the above supervisors led to the total members of the Supervisory Board is less than statutory number that according to relevant regulations, they would remain their responsibilities before new directors take office.
The Annual Shareholders’ General Meeting was held on 15 Apr. 2011, through examination and approval on Proposal of Additionally Elected Supervisor of the Company, they agreed to elect Mr. Zhang Zhaofeng as supervisor of the 6th Supervisory Committee. His work term is from the said shareholders’ meeting and end with this term of Board of Directors.
On 15 Apr. 2011, the Company convened the 9th Session of the 6th Supervisory Board, of which elected Mr. Zhang Zhaofeng as Chairman of the 6th Supervisory Board.
(3) Changes in senior management staffs On 15 Apr. 2011, due to personal reasons, Mr. Li Hong resigned from post of Deputy GM of the Company. After his resignation, he never took any posts of the Company.
On 23 Aug. 2011, due to personnel reasons, Ms. Xu Li resigned from post of Deputy GM of the Company. After her resignation, she never took any posts of the Company.
II. About employees As to 31 Dec. 2011, there were 1,073 employees-in-service in the Company, its compositions is listed as follows:
Picture 1: Composition of profession Picture 2: Composition of education
Administrative Production Personnel personnel Bachelor degree Junior College Degree
Financial Personnel
Technician
Technician Sales Personnel
Master degree or over
14 Wuxi Little Swan Company Limited Annual Report 2011 Section V Corporate Governance
I. Corporate governance of the Company The Company continuously perfected its corporate governance, set up modern enterprise system and standardized its operation strictly in accordance with the requirements of relevant laws and rules such as Company Law, Securities Law and Administrative Rule for Listed Companies issued by CSRC. In the reporting period:
①. The Company promulgated the Management System on Related-party Transactions, which enforced management of related-party transactions forwardly, and controls risks of related-party transactions.
②. The Company promulgated Management System of Investor Relationships, which further standardized management of investors’ relationships. The Company designated special persons to in charge of contact telephone, e-mail and fax between investors and the Company, making reception of field research of investors, and informing investors the information of the company in an overall way.
③. The Company promulgated Management System on Directors, Supervisors and Senior Executives Holding, Selling and Purchasing Shares of the Company, which standardized selling and purchasing behavior of the above mentioned personnel and prevented trading against legal regulations from happening.
④. The Company promulgated Working Plan on Standardized Conduction of Internal Control, engaged Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. as internal audit union for the Company. Currently, implement of standardizing internal control was basically finished. With the implement of standardizing internal control, the Company made amendment on the aspects of optimizing procedure, perfecting system, adjusting personnel, improving method and so on, reinforced requirements on management of important business and high-risk area, then provided a more effective internal control for the healthy and sustainable development of the Company.
⑤. The Company further standardized the operation of Board of Directors, Supervisory Board and Shareholders’ General Meeting, increasing the training and popularization for directors, supervisors and senior executives about relevant laws and rules of securities, so as to enhance their awareness and responsibility of protecting the interest of the Company and shareholders.
The Company strictly in line with relevant regulations of system of modern corporation to conduct operation that there existed no differences between the actual corporate governance of the Company and requirements of relevant documents promulgated by CSRC. All systems and particulars about public information disclosure that already established are listed as below: Last meeting that made the review No. Name of system Media for disclosure Time of disclosure and approval of the said system 1st Special Shareholders’ General 1 Articles of Association http://www.cninfo.com.cn 7 Jan. 2011 Meeting 2011 Management System for Information The 5th Session of the 6th Board of 2 http://www.cninfo.com.cn 4 Mar. 2010 Disclosure Directors
15 Wuxi Little Swan Company Limited Annual Report 2011 Internal Reporting System on Significant The 14th Session of the 5th Board of 3 http://www.cninfo.com.cn 25 Oct. 2007 Events Directors Management System on Related-party The 2nd Special Shareholders’ 4 http://www.cninfo.com.cn 14 Sep. 2011 Transactions General Meeting 2011 Management System for Investment The 10th Session of the 6th Board of 5 http://www.cninfo.com.cn 15 Dec. 2010 (trial) Directors Administration of Futures Hedging The 10th Session of the 6th Board of 6 http://www.cninfo.com.cn 15 Dec. 2010 Business Directors Administration of Foreign Currency The 10th Session of the 6th Board of 7 http://www.cninfo.com.cn 15 Dec. 2010 Business Directors The 6th Special Shareholders’ 8 Administration of Capital Financing http://www.cninfo.com.cn 14 Dec. 2007 Meeting 2007 The 10th Session of the 5th Board of 9 Internal Control System http://www.cninfo.com.cn 27 Jun. 2007 Directors The 27th Session of the 5th Board of 10 Accountability System on Managements http://www.cninfo.com.cn 4 Mar. 2009 Directors Management System on Directors, Supervisors and Senior Executives The 12th Session of the 6th Board of 11 http://www.cninfo.com.cn 25 Apr. 2011 Holding, Selling and Purchasing Shares Directors of the Company Registration System of Insiders on Inside The 8th Session of the 6th Board of 12 http://www.cninfo.com.cn 24 Aug. 2010 Information Directors Management System on Investor The 12th Session of the 6th Board of 13 http://www.cninfo.com.cn 25 Apr. 2011 Relationships Directors Working System on Reception and The 10th Session of the 5th Board of 14 http://www.cninfo.com.cn 27 Jun. 2007 Promotion Directors Rules for Procedure of Shareholders’ The 4th Special Shareholders’ General 15 http://www.cninfo.com.cn 5 Sep. 2007 Meeting Meeting 2007 Rules of Procedure for the Board of The 4th Special Shareholders’ General 16 http://www.cninfo.com.cn 5 Sep. 2007 Directors Meeting 2007 Working Articles for Strategic Committee The 12th Session of the 5th Board of 17 http://www.cninfo.com.cn 15 Aug. 2007 of the Board of Directors Directors Working Articles of Remuneration and The 12th Session of the 5th Board of 18 Evaluation Committee of the Board of http://www.cninfo.com.cn 15 Aug. 2007 Directors Directors Working Articles of Audit Committee of The 24th Session of the 5th Board of 19 http://www.cninfo.com.cn 21 Oct. 2008 the Board of Directors Directors Working Rules of Annual Audit of Audit The 17th Session of the 5th Board of 20 http://www.cninfo.com.cn 4 Apr. 2008 Committee Directors The 12th Session of the 5th Board of 21 Working Articles of General Manager http://www.cninfo.com.cn 15 Aug. 2007 Directors Working System of Independent The 4th Special Shareholders’ General 22 http://www.cninfo.com.cn 5 Sep. 2007 Directors Meeting 2007 Working System on Annual Report of The 17th Session of the 5th Board of 23 http://www.cninfo.com.cn 4 Apr. 2008 Independent Directors Directors Working Articles of Secretary to the The 12th Session of the 5th Board of 24 http://www.cninfo.com.cn 15 Aug. 2007 Board Directors The 4th Special Shareholders’ General 25 Rules for Procedure of Supervisory Board http://www.cninfo.com.cn 5 Sep. 2007 Meeting 2007
II. Performance of the Independent Directors The Company perfected the independent director system in accordance with the requirements of Guideline Opinion on Establishing Independent Director System in Listed Companies promulgated by the CSRC. The Company has 3 independent directors at present, taking up one third of all directors of the Board of the Company. The said three independent directors fulfilled their duties diligently and seriously, attended the Board meetings and the shareholders general meetings held in the reporting period on time and expressed their independent opinion on such significant events such as related-party transactions according to the regulations. They also proposed some reasonable opinions and suggestions for the Company’s development, which play a positive effect for scientific and objective decision made by the Board,
16 Wuxi Little Swan Company Limited Annual Report 2011 maintained the whole interests of the Company and legal rights of all shareholders.
1. Particulars about the independent directors attending the Board meetings: Name of Due presence Presence in person Entrusted presence Independent Absence (times) (times) (times) (times) Directors
Zhao Shuming 4 4 0 0
Ye Yongfu 4 4 0 0
Yu Lihui 4 4 0 0
2. Particulars about independent directors attending the shareholders’ general meeting: Name of Due presence Presence in person Entrusted presence Independent Absence (times) (times) (times) (times) Directors
Zhao Shuming 3 0 0 3
Ye Yongfu 3 3 0 0
Yu Lihui 3 0 0 3
3. Particulars about independent directors attending special committee of the Board In the reporting period, the Company convened twice audit committee meetings, once remuneration and evaluation meeting, and one strategic committee meeting. All independent directors of Special Committee of the Board made attendance to the above meetings in time and performed their duties.
4. Particulars about independent directors propose objection on relevant events In the reporting period, the Company’s independent directors did not propose the objection on all proposals made by the Board and other significant events of the Company.
III. Particulars about the Company’s “five-separation” from the controlling shareholder in respect of personnel, assets, financing, organization and business The Company totally kept separation from the controlling shareholder in respect of personnel, assets, financing, organization and business 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
17 Wuxi Little Swan Company Limited Annual Report 2011 shareholder. Such senior management staff as General Manager, Deputy General Managers, CFO and Secretary to the Board 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.
IV. Performance appraisal and incentive system for senior management staffs 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 comprehensive management system based on KPI, continued to implement the annual compensation system closely linked with the Company’s operating achievements, which was decided by the Board of Directors, and it has effectively strengthened the sense of responsibility and improved work enthusiasm of the whole senior management staffs.
18 Wuxi Little Swan Company Limited Annual Report 2011 Section VI Particulars about Establishment and Accomplishment of Internal Control I. Establishment and accomplishment of internal control of the Company Strictly in line with laws and regulations stipulated in Company Law, Securities Law as well as Corporate Governance Principle for Listed Company promulgated by CSRC, the Company standardized corporate operation, continuing established and perfected corporate governance, drafted relevant internal control system, enforced and improved internal control work, made prevention to control company risk and safeguarded lawful rights and interests of the Company and shareholders.
1. General establishment of internal control system According to regulations of Company Law, Articles of Association and relevant laws, the Company set up relatively completed frame system of organizational control, established rules for procedure for the Board of Directors, Supervisory Board and Shareholders’ General Meeting and corporate governance. The Board of the Company worked out proposals of Shareholders’ General Meeting, shouldered significant decisions of the Company and was responsible for Shareholders’ General Meeting. The Company installed general manager pursuant to the law, presided daily production, operation and management of the Company, gathered and formulated proposals of the Board as well as responsible for the Board. Supervisory Board was supervision union of the Company, which was responsible for supervision of behavior of directors, general manager and finance of the Company. The Board divided into strategic committee, remuneration and evaluation committee, and audit committee. The strategic committee, remuneration and evaluation committee, and audit committee formed a system of internal control as they accounted for separate responsibility, cooperated with each other while restricted each other at the same time. According to requirements stipulated in Company Law, Securities Law and relevant laws and regulations of CSRC etc., the Company established and perfected Articles of Association, Rules of Procedure for Shareholders’ General Meeting, Rules of Procedure for Supervisory Board, System of Independent Director, Management System of Investor Relations, Management System of Information Disclosure, Internal Reporting System of Significant Information etc., standardized and perfected corporate governance of the Company.
2. Major work implemented for the establishment and perfection of internal control in 2011 In the reporting period, acted as one of the first six experimental listed companies for internal control of Jiangsu Province, the Company conducted standardized work of internal control in an overall way in accordance with Standards for Enterprises Internal Control. On the 11th Session of the 6th Board of the Company, reviewed and convened Working Plan concerning Standardized Implement of Internal Control of the Company. According to the work plan, the Company established work team for standardized implement of internal control, and pointed Chairman of the Board to be chief of the work team; engaged professional institution to be consultant for authorized program. With the guidance of the consultant, the Company completed authorized program plan of internal control, evaluation of internal control design and amendment of flaw etc., drafted evaluation report of internal control. Through the conduction of standardizing internal control work, the Company made
19 Wuxi Little Swan Company Limited Annual Report 2011 rectification and improvement in aspects of optimizing procedure, accomplishing system, adjustment of personnel, improvement of method and so on, reinforced management requirements on target business and high risk areas, which providing an effective support for the healthy and sustainable development of the Company. Besides, the Company also engaged Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. to carry out independent audit toward the effectiveness of internal control of the Company.
II. Self-appraise report of internal control 1. Self-appraise report on internal control system For details about Self-appraise Report of Internal Control for 2011, please refer to information disclosure website http://www.cninfo.com.cn designated by Shenzhen Stock Exchange dated 2 Mar. 2012.
2. Appraise opinion of Supervisory Board According to relevant regulations of Guidelines for Internal Control of Listed Companies, Guidelines for Standard Operation of Main board Listed Companies, Supervisory Board of the Company issued the following opinions: In line with Basic Standards for Enterprise Internal Control, Supporting Guidelines for Enterprise Internal Control, and relevant regulations stipulated by securities supervision unions on the establishment of internal control, the Company combined actual operation circumstances of the Company into consideration and then established a internal control system that including all aspects of operation management of the Company and adapting to the requirements of management and demand of development. The existing control system is relatively standardized and complete, the structure of it is complete with proper installment that can guarantee the standardizing operation of management of the Company and the development of operating business in order. In the reporting period, there existed no situations that violating laws and regulations, Guidelines for Standard Operation of Main board Listed Companies of Shenzhen Stock Exchange, Articles of Association and internal control system of the Company. The Supervisory Committee believed that the Self-appraise Report of Internal Control for 2011 is objective and true; the actual situation of the internal control was in compliance with the regulations and requirements of regulatory documents such as the Guidelines for Internal Control of Listed Companies.
3. Appraise opinions of independent directors Opinions on self-appraise report of internal control issued by independent directors are as follows: In the reporting period, in accordance with Working Plan for Standardizing Implement of Internal Control which was reviewed and approved on the 11th Session of the 6th Board, the Company engaged intermediate company to assist the Company to implementing standardizing work of internal control, further accomplished internal control system. The established internal control system is complete and in accordance with relevant laws and regulations as well as rules of ministry; it including full aspects of operation of the Company that all operation activities of the Company were strictly carried out in line with relevant systems. In aspects of internal control on management of subsidies, related-party transactions, external security, significant investment, information disclosure etc., they were severe, complete and effective. They were accord with actual circumstances of the
20 Wuxi Little Swan Company Limited Annual Report 2011 Company that ensured a normal operation of the operation management. In the reporting period, there existed no situations that violating laws and regulations, Guidelines for Standard Operation of Main board Listed Companies of Shenzhen Stock Exchange, Articles of Association and internal control system of the Company. Independent directors of the Company believed that the Self-appraise Report of Internal Control for 2011 is objective and true; the actual situation of the internal control was in compliance with the regulations and requirements of regulatory documents such as the Guidelines for Internal Control of Listed Companies.
III. Announcement from the Board to the responsibility of internal control It is the responsibility of the Board of the Company to establish, to perfect as well as to effective conduct internal control. Since the implement of internal control, framework of internal control is more perfect, system of internal control is more proper and adapting to changes in operation and development of the Company. The internal control system is running well and the risk of operation is in control. The Board of the Company and all directors guaranteed that the Self-appraise Report of Internal Control for 2011 does not contain any false or misleading statements or omit any material facts and hereby accept, individually and collectively, responsibility for the truth, accuracy and completeness of the contents of this report.
IV. Particulars about internal control of financial report The Company set up department of finance management, which was responsible for the draft of annual budget, financial accounting, supervision of accounting, capital management etc.. Department of finance management was made up of manager of finance, accountants, cashier and other personnel. Accounting practitioners have professional qualifications and refund experience and post arrangement is put into effect with code of “separate responsibility, interact influence”. The Company has established and completed all aspects of relevant system concerning finance work such as Management Standard of Finance, Management of Finance Units etc.. Financial accounting and management of internal control is complete, rational and valid.
V. Audit report of internal control of the Company issued by audit department of internal control According to Audit Guidelines for Enterprises Internal Control and relevant requirements of professional standards of CICPA, Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. audited the validity of internal control on financial report on 31 Dec. 2011, and considered that in terms of all significant aspects, the Company is in line with Basic Standard for Enterprises Internal Control and relevant regulations to maintain a valid internal control in financial report.
VI. Establishment and execution of rules of accountability for significant mistakes in annual report information disclosure The Company already formulated Rules of Accountability for Significant Mistakes in Annual Report Information Disclosure in Chapter XI., Section I of Management System for Information Disclosure. In the reporting period, there isn’t any
21 Wuxi Little Swan Company Limited Annual Report 2011 amendment of significant accounting false, complement of significant information omit or adjustment in prediction of performance etc..
22 Wuxi Little Swan Company Limited Annual Report 2011 VII Brief Introduction to the Shareholders’ General Meeting During the reporting period, the Company held three shareholders’ general meetings in total. Details about the meeting are as follows: I. The 1st Special Shareholders’ General Meeting 2011 was held on 7 Jan. 2011. The meeting reviewed and approved the following proposals: 1. Proposal on the Company Writing Off Assets Impairment Provision; 2. Proposal on Increasing Routine Related-party Transactions for 2010; 3. Proposal on Additionally Elected Director of the Company; 4. Proposal on Holding Subsidy Hefei Royalstar Washing Equipment Manufacturing Co., Ltd. Increasing Routine Related-party Transactions after Accomplishment of Significant Assets-Reorganization; 5. Proposal on Revising Articles of Association; 6. Proposal on Routine Related-party Transactions for 2011; 7. Proposal on Appling for Bank Loan Line of Credit and Offering Accumulative Guarantee Amount of the Company and the Subsidies for 2011; 8. Proposal on Opening Forward Exchange Transactions for 2011; 9. Proposal on the Company Transferring Equity of Huayin Electric Appliances Co., Ltd. and Related-party Transactions; 10. Proposal on License for Trademark Usage and Related-party Transaction. Resolutions of such meeting were published on Securities Times, HongKong Ta Kung Pao and http://www.cninfo.com.cn dated 10 Jan. 2011.
II. The Annual Shareholders’ General Meeting 2010 was held on 15 Apr. 2011. The meeting reviewed and approved the following proposals: 1. Annual Financial Statement Report 2010; 2. Annual Profit Distribution Plan 2010; 3. Annual Work Report of the Board 2010; 4. Annual Work Report of the Supervisory Board 2010; 5. Annual Report and Its Abstract 2010; 6. Proposal on Engaging Annual Audit Union 2011; 7. Proposal on Additionally Elected Supervisors of the Company. Resolutions of such meeting were published on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn dated 18 Apr. 2011.
III. On 14 Sep. 2011, the Company convened the 2nd Special Shareholders’ General Meeting, of which reviewed and approved the following proposals: 1. Proposal on Engaging Auditor for Internal Control; 2. Proposal on Changing Entities of Routine Related-party Transactions; 3. Proposal on Newly Increased Routine Related-party Transactions of Subsidies 2011; 4. Management System of Related-parties of the Company; 5. Proposal on Newly Increased Routine Related-party Transactions Entities of the Company 2011. Resolutions of such meeting were published on Securities Times, Hong Kong Ta Kung Pao and http://www.cninfo.com.cn dated 15 Sep. 2011.
24
Wuxi Little Swan Company Limited Annual Report 2011 Section VIII Report of the Board of Directors
I. Business review for the reporting period
1. General situation in the industry for the reporting period In the first half of 2011, the home appliance industry continued to grow at a high speed like it did in 2010. However, due to sharp price fluctuations of bulk raw materials, Renminbi appreciation, a tight domestic credit, weak real estate markets, fadeout of the “home appliances go to the countryside” policy, the European debt crisis and other domestic or foreign factors, it began to slow down in the third and fourth quarters, dragging down overall growth throughout the year.
In the second half of 2011, the washing machine industry slowed down in growth in domestic sale. At the same time, growth in export also dropped sharply. According to statistics from ChinaIOL, throughout the year 2011, China produced a total of 55,582,500 units of washing machines, up 10.57% over last year; sold a total of 55,746,300 units, a 9.52% increase as compared with last year; and exported 19,388,400 units, rising 14.56% year on year, and sold 36,359,900 units domestically, up 7.01% on a year-on-year basis.
2. Performance of the Company for the reporting period During the reporting period, based on market changes, the Company adjusted its operating strategies in a timely manner, pushed through organizational reform, and modified its operating mechanism, which helped effectively control operating risks and basically maintain stability of its business performance. For the reporting year, the Company achieved operating revenue of RMB 10.976 billion, net profit of RMB 539 million, and net profit attributable to the Company (as the parent company) of RMB 453 million.
3. Review of major work that was done in the year In 2011, according to changes of the market competition situation, the Company took initiative to adjust its operating strategies and promoted transformation of its operating model to one “driven by efficiency and technology” under the guidance of “adjust structure to maintain profit”.
(1) Pushed through organizational reform in a timely manner to adapt to changes After years of quick expansion, the Company has currently entered a stage of steady development. Since the second half of 2011, the Company has started to adjust its operating strategies and “leading products, efficiency-driven and global operation” has become a direction for the Company’s operation. In order to adapt to changes, the Company accordingly integrated and adjusted its organizational structure, with the focus on enhancing control of the headquarters over various product subsidiaries. To be specific, it set up the Quality Control Department to integrate QC functions that had been previously decentralized to various product subsidiaries, set up the R&D Center to centralize the previously dispersed R&D functions, established the Supply Chain Management Department to combine all the supply chain management functions, and re-integrated and re-positioned functions of the sales department. By doing these, the Company aimed at laying a solid foundation for further increasing its growth quality and developing sustainable organizing ability.
(2) Enhanced R&D management to increase competitiveness of its products In 2011, the Company continuously enhanced its product development and technological
24 Wuxi Little Swan Company Limited Annual Report 2011 research, focused on design innovation, reinforced management over the basic R&D process, and deepened management over the whole product life cycle (PLC). Meanwhile, it encouraged R&D personnel to concentrate on quality, efficiency and profitability; activate their vitality and innovation ability; and attached importance to effective development of new products. As a result, remarkable achievements were made.
Also in the year, the Company did many things that had not ever been done in the industry. Firstly, after years of painstaking research, the heat pump drier developed by the Company passed the new product and technology certification hosted by the China National Council of Light Industry and was certificated as the first of such a kind in China and a product with internationally leading technology. The Company was also the first in China to obtain carbon footprint certification from an international authority, paving the way for developing and producing low-carbon products. Meanwhile, the Little Swan washer with the function of automatically putting in detergent was honored as “The Most Innovative Product” and a “Trustworthy Washer Brand for 2011”. Thus, the Company became one of the few brands that applied the automatically putting in technology on rotary drum washers and tumbling-box washers. Besides, in the year, the Company’s Little Swan New Magic Water Cube 5188CL won the red dot design award. Little Swan washers also won the “Technological Innovation Award” and the “Industrial Design Innovation Award” granted by China Household Electric Appliance Research Institute.
(3) Adjusted investment strategies to increase efficiency At the beginning of 2011, considering the rising demand expectation and its increasingly insufficient production capacity, the Company decided to input RMB 389 million for expanding the production capacity of the Jingzhou base and RMB 850 million for establishing the Tianjin base. During the execution of the said plan, great changes happened to markets. The overall demand decreased and the growth of the industry slowed down. In quick response to that, the Company adjusted its investment strategies in time, re-examined some projects, and postponed some construction, preventing a lot of resources from being wasted or left unused. In the year, the Company adopted thorough measures to increase efficiency within itself, continuously improving operating, management and resource efficiency. By whole-staff trainings, the Company successfully made efficiency improvement an important task in its staff’s mind. Efficiency in R&D, production and sales was all effectively increased through follow-up of key efficiency driving indicators. Besides, significant projects for increasing efficiency were launched to carry on with efficiency improvement to a higher level. The common effort of the whole staff produced a good result, where the Company’s overall operating capacity was greatly improved.
(4) Expanded markets and improved brand image The Company deepened the marketing channel reform step by step, considered the whole picture, continued to go deeper with the reform, steadily increased the number of excellent sales points and dealers, constantly increased the span, depth and efficiency of marketing channels, and planned a marketing network for medium and high-end products. Currently, the number of the Company’s dealers has increased to over 30,000. In 2011, upon the existing dealer network, the Company launched construction of Little Swan franchised stores. Up to the end of the reporting period, the number of Little Swan franchised stores exceeded 400.
In 2011, the Company launched a large-scale promotion—“Witness a Quality Legend of 33 Years—Little Swan Looks for Old Customers with One Million”—as a way to express
25 Wuxi Little Swan Company Limited Annual Report 2011 gratitude to customers and at the same time activate markets and stimulate peak sales. The promotion won attention from a great number of consumers. Over 70,000 took part in the promotion. The thoughtful theme of the promotion fully demonstrated Little Swan’s brand positioning of doing our best for customers, assured customers’ confidence in the quality of Little Swan washers, and fully indicated Little Swan’s importance and leading position in China’s washer industry.
In 2011, Little Swan appeared on the list of “China’s Most Valuable Brands” with a brand value of RMB 18 billion.
(5) Standardized internal control to perfect the internal control system During the reporting period, as one of the first six listed companies for internal control pilot execution in Jiangsu Province, the Company thoroughly implemented internal control regulations according to the Internal Control Standards for Enterprises. To be specific, it set up a task team for implementing the internal control standards; hired an external professional agency to provide consultancy on its compliance with the standards; completed planning, evaluation and debugging for internal control projects; prepared a self-evaluation report of internal control; and appointed a CPAs firm to audit its internal control. Upon all the internal control standardization efforts, the Company optimized its internal control flow chart, perfected the relevant mechanisms, bettered the relevant personnel allocation, improved its internal control methods, and imposed stricter management requirements in terms of important business maters and matters with high risks. In this way, it was able to provide more effective internal control support for its healthy and sustainable development.
4. Main business scope and the operation status The Company is mainly engaged in the production, sale and technological service of household appliances and their fittings. In the reporting period, the Company achieved an operating income of RMB 10,975.6217 million with an operating profit of RMB 593.2693 million.
(1) Main businesses classified according to industries Unit: RMB 0’000 Main businesses classified according to industries Increase/decrease Increase/decrease Increase/decrease Operating Gross profit rate of operating Industries or products Operating cost of operating cost of gross profit rate income (%) income over last over last year (%) over last year (%) year (%) Household appliances 963,520.86 793,970.89 17.60% -1.82% -2.67% 0.71%
Others 134,041.31 121,342.47 9.47% -3.44% -5.80% 2.26%
Main businesses classified according to products
Washing machine 963,520.86 793,970.89 17.60% -1.82% -2.67% 0.71%
Others 134,041.31 121,342.47 9.47% -3.44% -5.80% 2.26%
(2) Main businesses classified according to regions Unit: RMB 0’000 Region Operating income Increase/decrease over last year (%)
26 Wuxi Little Swan Company Limited Annual Report 2011
Domestic 873,540.79 -0.95%
Overseas 224,021.38 -5.99%
(3) Main suppliers and customers Unit: RMB 0’000 Proportion in the total Total purchase from the top five suppliers 171,659.02 16.42% purchase
Total sales to the top five customers 208,707.67 Proportion in the total sales 19.02%
5. Changes in the asset composition of the Company in the reporting period Proportion in the total assets as at the Proportion in the total assets as at the end Year-on-year Asset composition end of 2011 of 2010 increase/decrease
Notes receivable 30.16% 19.53% 10.63%（Note 1）
Accounts receivable 10.16% 11.32% -1.16%
Inventory 8.85% 13.13% -4.28%
Long-term equity 0.06% 1.37% -1.30% investment
Fixed assets 14.93% 14.95% -0.02%
Construction in 0.00% 0.33% -0.33% progress
Short-term borrowings 0.08% 0.11% -0.04% Note 1: The notes receivable registered a year-on-year increase of RMB 1,195,420,800, mainly because the use of bank notes increased in the reporting period, and reduced the endorsement of notes receivable.
6. Changes in the expense of the Company in the reporting period Unit: RMB0’000 Expense Year-on-year Ratio of year-on-year Occurred amount of 2011 Occurred amount of 2010 composition increase/decrease（%） increase/decrease
Sales expense 89,403.54 73,845.27 15,558.28 21.07%（Note 1）
Administration 37,331.52 32,568.93 4,762.60 14.62%（Note 2） expense
Financial expense -101.83 3,383.82 -3,485.65 -103.01%（Note 3）
Income tax 13,180.83 11,194.36 1,986.48 17.75% Note 1: The sales expense increased mainly because the input for sales promotion increased; Note 2: The administration expense increased mainly because the R&D input increased during the reporting period;
27 Wuxi Little Swan Company Limited Annual Report 2011 Note 3: The financial expense decreased mainly because the interest income from deposits increased.
7. Changes in the cash flow of the Company in the reporting period Unit: RMB0’000 Amount of year-on-year Ratio of year-on-year Index Y2011 Y2010 increase/decrease increase/decrease Net cash flows arising from operating 24,253.13 72,413.43 -48,160.30 -66.51%（Note 1） activities Net cash flows arising from investing 57.71 -15,813.66 15,871.37 -100.36%（Note 2） activities Net cash flows arising from financing -8,087.17 778.74 -8,865.92 -1138.49%（Note 3） activities Net increase of cash 16,063.01 57,302.37 -41,239.36 -71.97%（Note 4） and cash equivalents Note 1: As for net cash flows arising from operating activities: mainly because the cash paid for purchase of goods increased. Note 2: As for net cash flows arising from investing activities: mainly because the cash received from the recover of investment and the disposal of subsidiary increased. Note 3: As for net cash flows arising from financing activities: mainly because the cash dividends were distributed in the reporting period. Note 4: As for net increase of cash and cash equivalents: mainly because the net cash flows arising from operating activities decreased.
8. Analysis on the operation and performance of the main controlling subsidiaries (1) Operation of the main wholly-funded affiliated enterprises and controlling subsidiaries Unit: RMB 0’000 Shareho Total assets at Net assets at Operating Net profit in Name of the Registered lding the end of the the end of the income in the Main businesses the reporting company capital proporti reporting reporting reporting period on period period period Development of software products as Wuxi FILIN well as the USD Electronics Co., development and 73% 31,438.38 20,241.11 43,174.93 5,878.90 362.4564 Ltd manufacture of new electronic components, etc
Hefei Royalstar Research & Washing USD development, Equipment 69.47% 349,507.69 144,548.30 547,824.82 20,817.07 13,552 manufacture and sales Manufacturing of washing machines Co., Ltd.
Little Swan Research & (Jingzhou) Sanjin development, Electric 1,107 100% 32,073.15 1,186.91 49,489.56 588.87 manufacture and sales Appliances Co., of washing machines Ltd. Research & Wuxi Little Swan development, General Electrical 2,800 manufacture and sales 70% 25,761.04 10,635.20 38,690.54 1,918.95 Appliances Co., of washing machines Ltd and dry-cleaning machines
28 Wuxi Little Swan Company Limited Annual Report 2011
(2) In the reporting period, there’s no profit of any joint stock company influencing more than 10% net profit of the Company.
II. Outlook for the Company’s future development In 2012, the Company will continue to hold onto the operating strategy with market as the direction and performance as the core, and thoroughly pushed operating transformation in depth. The general target is to materialize the transformation from “market scale-directed” to “profit growth-directed” and to maintain a proper scale while assuring profit. Based on the existing scale, the Company will work hard on improving efficiency, enhancing new product developing capacity, optimizing the system cost, further improve quality, formulate a long-term ability advantage based on customer value, and provide competitive differentiate products and service. Meanwhile, it will continue to carry forward organizational and mechanism reforms, increase operating ability and management efficiency, reduce operating cost, minimize operating risks and constantly improve profitability.
The following specific measures will be taken: (1) To transform management thinking and unify understanding of the transformation The priority of the transformation task is to transform the thinking of the management. All management personnel’s thinking must be transformed from “scale-directed” to “profit-directed”, focus on “operation”, and base all operations on “increase gross profit rate and profitability”. The Company will enhance its strength and very basis and carefully operate every link of R&D, production and sale, as well as every process in operation. The Company will promote development through upgrading its products, transform its operating model by increasing profit, and affirmatively carry forward mechanism reform under the principles of “focus on responsibility, supervise power and maintain permanent profit”. It is emphasized that every person, every department and every operating unit are operators of the Company. All of them should create value for the Company and be responsible for giving full play to the Company’s unique and leading technological advantage and the results thereof.
(2) To transform the R&D management mode and further increase the power of product The Company will give play to its unique and leading technology advantage and solve problems for consumers with innovative technologies. To be specific, it will enhance product management with the PLC process and sharply reduce models of products. It will also promote reform in the R&D management mode, encourage innovations in R&D, formulate the product manager mechanism, introduce the competition mechanism and perfect the incentive mode. Meanwhile, it will attach importance to product structural upgrading, solidify competitiveness of its basic products, proactively encourage core and frontier technology breakthroughs, continuously create and steer market demands, and try to make product power the core competitiveness of the Company.
(3) To enhance quality control and ensure constant improvement of product quality Quality is a brand’s support, and a company’s dignity. Customers’ satisfaction and fidelity provide the basis for the long-term survival and development of an enterprise. In 2012, the Company will continue its concentration and persistence on product quality, further increase QC input and increase product quality in a systematic and constant way. It will hold onto the “rigid quality principle”, strictly execute QC standards, perfect the information collecting and appraisal system, ensure the comparative independence of the
29 Wuxi Little Swan Company Limited Annual Report 2011 QC organization, clearly demonstrate the quality performance indicator in the responsibility mechanism for all departments, capitalize on advanced QC methods, give full play to the quality problem prevention system, effectively improve product quality through common efforts from the whole system, and constantly increase customer satisfaction.
(4) To thoroughly optimize organization and formulate organizational ability for sustainable development In 2012, the Company will continue to deepen its organizational operation mechanism, flatten organization, optimize personnel allocation and clarify responsibility and power. It will also adjust the previous operation mode of its product subsidiaries and adopt base operation by setting up the Wuxi base and the Hefei base (including the Jingzhou base). Meanwhile, it will clarify internal responsibility and power, simplify the organization and business flow charts, and prevent any “power decentralization officialism”; reform its performance assignment mode, activate operating awareness of management personnel at all tiers, and clarify responsibility and interests; enhance the supply chain operation mechanism, promote a business mode transformation for a mode where production is planned according to sales for domestic sale, improve the operating ability of the supply chain, and minimize risks; activate idle assets, dispose loss-generating business, and strictly control new inputs; reform the appraisal system, enhance the financial management function, move from risk control to risk prevention, enhance the prevention, coordination, settlement and accountability mechanism, and formulate organizational ability for sustainable development.
III. Investments of the Company
1. Use of raised proceeds The raised proceeds of the Company have been used up. In the reporting period, the Company did not raise proceeds. And no use of the proceeds raised in the previous periods was carried down to the reporting period.
2. Use of non-raised proceeds The 11th Session of the Sixth Board of Directors was held on 10 Mar. 2011, approving the Proposal on the Investment Plan for 2011. According to the plan, the Company and its subsidiaries were expected to make a total investment of RMB 0.65 billion for 2011. As to 31 Dec. 2011, the accumulated amount of investment was 191.85 million.
The 12th Session of the Sixth Board of Directors was held on 25 Apr. 2011, approving the Proposal on Adjusting an Investment Project in 2010. According to the resolution, the Nansha Industrial Park project was shut down to build a new base in Tianjing, with the total investment estimated at RMB 0.85 billion. As to 31 Dec. 2011, the accumulated amount of input was 88 million.
IV. Auditing opinion of the CPAs firm
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. engaged by the Company issued a standard non-qualified auditor’s report for the 2011 Annual Report of the Company.
V. Routine work of the Board of Directors
30 Wuxi Little Swan Company Limited Annual Report 2011
1. Sessions of the Board of Directors and the resolutions made in the reporting period Newspaper designated for information Information Sessions Time of convention disclosure disclosure date The 11th Session of the 6th Board of 14 Mar. 2011 Securities Times and Ta Kung Pao (HK) 16 Mar. 2011 Directors The 12th Session of the 6th Board of 25 Apr. 2011 Securities Times and Ta Kung Pao (HK) 26 Apr. 2011 Directors The 13th Session of the 6th Board of 23 Aug. 2011 Securities Times and Ta Kung Pao (HK) 25 Aug. 2011 Directors The 14th Session of the 6th Board of 20 Oct. 2011 Note 1 21 Oct. 2011 Directors Note 1: the 14th Session of the 6th Board of Directors reviewed the Third Quarterly Report 2011 of the Company and its Summary, and the text without financial statements of the Third Quarterly Report was published on Securities Times and Ta Kung Pao (HK) on 21 Oct. 2011.
2. Execution of the Board of Directors on the resolutions made at the Shareholders’ General Meeting (1) The 1st Special Shareholder’s General Meeting 2011 convened by the Company reviewed and approved the Proposal on Revising the Articles of Association. The Company’s share capital changed due to significant assets reorganization, thus the Company finished revising the Articles of Association and registering the change with the industry and commerce administration.
(2) The profit distribution plan for 2010 was reviewed and approved at the 2010 Annual Shareholders’ General Meeting held on 15 Apr. 2011. Based on the total 632,487,764 shares as at 31 Dec. 2010, a cash dividend of RMB 1.00 (tax included) was distributed for every 10 shares. The Board of Directors disclosed the Announcement of Wuxi Little Swan Co., Ltd. on Implementation of Profit Distribution for 2010 (Announcement No. 2011-24) on 26 May 2011. For A-share holders, the date of record was 31 May 2011 and the ex-dividend date was 1 Jun. 2011; for B-share holders, the lasting trading date was 31 May 2011, the ex-dividend date was 1 Jun. 2011 and the date of record was 3 Jun. 2011. The profit distribution plan for 2010 was accomplished during the reporting period.
3. Duty performance of the Audit Committee under the Board of Directors The Audit Committee under the Board of Directors consisted of three independent directors, with a professional accountant taking the position of Chairman.
According to the relevant regulations of CSRC and the Shenzhen Stock Exchange, as well as the Company’s Specific Implementation Rules for Audit Committee of the Board of Directors, Working Rules for Independent Directors on Annual Reports, Working Procedure for Audit Committee of the Board of Directors on Annual Reports, the Committee performed the following duties based on the diligent and responsible principle:
(1) Deciding the work plan for the 2011 annual audit The Audit Committee convened a session on 9 Jan. 2012 and conscientiously reviewed the work plan for the 2011 annual audit and relevant materials, and arranged the schedule for the audit of the 2011 Annual Financial Report together with the CPAs from Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. who were in charge of this annual audit.
31 Wuxi Little Swan Company Limited Annual Report 2011
(2) Reviewing the financial statements prepared by the Company The Audit Committee convened a session on 18 Jan. 2012 and conscientiously reviewed the financial statements drafted by the Company, and then issued a written review opinion. Through inquiring the relevant financial and management personnel of the Company, examining the relevant account books and documents, and conducting the analysis procedure on the material financial data, the Audit Committee was of the opinion that: The financial statements prepared by the Company factually presented the position of assets and liabilities of the Company as at 31 Dec. 2011 and the operating results of the Company as of the year 2011; It was universally agreed to conduct the 2011 annual audit based on the said financial statements, and the Financial Department of the Company was urged to prepare relevant statements in strict accordance with the New Accounting Standards for Enterprises, so as to ensure the factuality, completeness and fairness of the financial statements.
(3) Urging the CPAs firm to finish the auditing work as schedule by written communication After the entry of the CPAs for the annual audit, the Audit Committee of the Board of Directors communicated with the CPAs on the issues arising in the audit process and the date for the submission of the Auditor’s Report. Besides, the Committee sent the Urging Letter for Auditing Work twice to require the CPAs firm to finish the auditing work in accordance with the general plan for auditing work, so as to ensure the preparation and disclosure of the annual report on time.
(4) After the CPAs firm issued the preliminary auditing opinion, the Committee reviewed the financial statements of the year 2011 again and formed a written review opinion.
The Audit Committee of the Company reviewed the financial statements submitted by the Financial Department of the Company on 16 Feb. 2012, on which the CPAs for the annual audit had issued the preliminary auditing opinion, and the Committee was of the opinion that：the 2011 financial statements prepared by the Company factually presented the position of assets and liabilities of the Company as at 31 Dec. 2011 and the operating results of the Company as of the year 2011, which was prepared in compliance with the stipulations in the Accounting Standards for Business Enterprises, thus the CPAs firm issued a standard and unqualified preliminary auditors’ report; It was universally agreed to prepare the 2011 Annual Report and its Summary based on the said financial statements, and the 2011 Annual Report and its Summary must be submitted to the Meeting of the Board of Directors for approval and review after the review of the Committee, besides, the Committee also required the CPAs firm to finish the auditing work as soon as possible according to the general plan for the auditing work, so as to ensure that the Company was able to disclose the 2011 Annual Report as scheduled.
(5) After Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd issued the auditors’ report 2011, the Company’s annual auditing work for 2011 was completed. On 28 Feb. 2012, the CPAs firm finished the final draft of the auditors’ report in accordance with the general plan for auditing work, and issued the Special Statement on Appropriation of Listed Company’s Capital by the Controlling Shareholder or Other Related Party of Wuxi Little Swan Company Limited in 2011.
(6) The assessment opinions of the Audit Committee on the Summary of the Auditing
32 Wuxi Little Swan Company Limited Annual Report 2011 Work for 2011 by the CPAs Firm and the review of relevant proposals The Audit Committee considered that the Certified Public Accountants conducted their audit in accordance with the China’s Independent Auditing Standard with enough time, reasonable arrangement of auditing personnel and professional ability, also the issued financial statement adequately reflected the financial position of the Company as at 31 December 2011, and the results of operations and the cash flows of the Company for the year then ended, and the audit conclusion complied with the actual situation of the Company.
The 5th Session of the Audit Committee of the Sixth Board of Directors was held at the Company’s conference room on 28 Feb. 2012. Three commissioners should attend this meeting and all of them presented at the meeting. All members of the Audit Committee unanimously agreed on the following resolutions by means of voting ways of signature. Reviewed and approved the Financial Settlement Report 2011; Reviewed and approved the Annual Report 2011 and its Summary; Reviewed and approved the Summary Report for Auditing Work 2011 of the Audit Committee of the Board of Directors; Reviewed and approved the Proposal on the Engagement of the Audit Firm for the Company’s Financial Report 2012; Reviewed and approved the Proposal on the Engagement of the Audit Firm for the Company’s Internal Audit 2012.
4. Performance of the Remuneration and Appraisal Committee of the Board of Directors The Remuneration and Appraisal Committee of the 6th Board of Directors consists of three directors, of which the Chairman is an independent director. During the reporting period, the Remuneration and Appraisal Committee of the Board of Directors strictly appraised directors, supervisors and senior management in accordance with standard and procedures for performance appraisal. Remuneration of senior management of the Company will be paid once confirmed by the Remuneration and Appraisal Committee. In the reporting period, the Remuneration and Appraisal Committee convened the meeting and sincerely heard Report on Remuneration Paid for Senior Management of the Company 2011.
VI. Draft proposal for profit distribution and capitalization of public reserves of 2011
According to Auditors’ Report issued by Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd, the Company (parent company) realized net profit RMB 365,442,988.35 in 2011, adding retained profit at the beginning of the year amounting to RMB 1,379,624,686.82, the profit available for distribution was RMB 1,745,067,675.17, after withdrawal of RMB 36,544,298.84 as statutory surplus reserve and distribution of RMB 63,248,776.40 as dividends in 2010, the profit available for distribution to shareholders at the end of period was RMB 1,645,274,599.93.
Annual Distribution Plan 2011: the Company intended to distribute RMB 2 (tax included) for every 10 shares to all shareholders based on the total share capital of 632,487,764 shares at the end of 2011. Distributed cash totaled to RMB 126,497,552.80. The retained undistributed profit amounted to RMB 1,518,777,047.13, which would be carried forward in the next year. Public reserves were not capitalized in 2011.
33 Wuxi Little Swan Company Limited Annual Report 2011 Cash dividend of the Company over the last three years Unit: RMB Yuan Net profit attributable to Ratio in net profit shareholders of listed attributable to Amount of cash dividend Distributable profit of the Year companies under the shareholders of listed (tax included) year consolidated statement in companies under the the year consolidated statement
2010 63,248,776.40 506,917,078.13 12.48% 1,379,624,686.82
2009 0.00 283,733,939.70 0.00% 1,157,412,068.79
2008 0.00 40,038,312.01 0.00% 914,988,698.82 Proportion of accumulative amount of cash dividend over recent three years to 22.84% recent average annual net profit (%)
VII. During the reporting period, the newspapers for information disclosure of the Company were Securities Times and Hong Kong Ta Kung Pao, while the internet website for information disclosure was http://www.cninfo.com.cn
VIII. Opinion of the independent directors on the external guarantee of the Company
In accordance with the requirements of Zheng-Jian-Fa (2003) No. 56 document and China Zheng-Jian-Fa (2005) No.120 document, as independent director of the Company, we conducted carefully review on the external guarantee in line with practical and realistic manner. Now we express the following opinion: 1. As of 31 Dec. 2011, balance of the external guarantees of the Company totaled RMB 303.53 million, accounting for 8.82% of the Company’s net assets.. 2. As of 31 Dec. 2011, the Company had not provided any guarantees for the controlling shareholder or its related parties. 3. As of 31 Dec. 2011, the Company had not provided guarantees for the guaranteed parties that had an asset liability ratio over 70% directly or indirectly. 4. As to the external guarantees, the Company had signed all counter-guarantee agreements with the guaranteed parties according to requirements 5. The Company had fulfilled its responsibility of information disclosure concerning the external guarantees according to the relevant stipulations in the Listing Rules and the Articles of Association, and had disclosed all external guarantees of the Company faithfully.
IX. Establishment and perfect of the management system on external user of the Company’s information
During the reporting period, in accordance with the Regulation on Establishing the Management System for the Registration of Insiders, the Company revised the Management System for the Registration of Insiders, and further strengthened the administration on report & submit and use of inside information during period of preparation, review and disclosure of periodic report and significant events. The Company established the record of insiders and memorandum on the progress of significant events, so as to perfect the management on external user of the Company’s information.
34 Wuxi Little Swan Company Limited Annual Report 2011 Section IX Report of the Board of Supervisors
I. Sessions held by the Board of Supervisors during the reporting period During the reporting period, the Board of Supervisors convened 5 sessions.
1. The 8th Session of the 6th Board of Supervisors of the Company was held on 14 Mar. 2011. Following proposals were reviewed and approved unanimously at the session: (1) Reviewed and approved the Work Report 2010 of the Board of Supervisors; (2 Reviewed and approved the Annual Report 2010 of the Company and its Summary; (3) Reviewed and approved the Self-appraisal Report on Internal Control of the Company for 2010; (4) Reviewed and approved the Proposal on Adding the Supervisor of the Company; (5) Reviewed and approved the Proposal on Work Plan on the Standardized Implementation of the Company’s Management System of Internal Control.
2. The 9th Session of the 6th Board of Supervisors of the Company was held on 15 Apr. 2011, at which reviewed and approved the Proposal on Electing the Chairman of the Board of Supervisors of the Company.
3. The 10th Session of the 6th Board of Supervisors of the Company was held on 25 Apr. 2011, at which reviewed and approved the following proposals: (1) Reviewed and approved the First Quarterly Report 2011 of the Company and its Summary; (2) Reviewed and approved the Proposal on Written-off of Assets Impairment Provision of the Company.
4. The 11th Session of the 6th Board of Supervisors of the Company was held on 23 Aug. 2011, at which reviewed and approved the Semi-annual Report 2011 of the Company and its Summary.
5. The 12th Session of the 6th Board of Supervisors of the Company was held on 20 Oct. 2011, at which reviewed and approved the Third Quarterly Report 2011 of the Company and its Summary.
II. Opinion of the Board of Supervisors
During the reporting period, all members of the Board of Supervisors of the Company, according to Company Law of PRC and the Articles of Association of the Company, carefully and faithfully performed their supervision functions in the operation activities of the Company, and the following opinions were formed based upon a series of supervision and review:
1. During the reporting period, the various decision-making procedures of the Company were legal and standard, and a relatively perfect internal control system had been established. The directors and senior management staffs of the Company had fulfilled their responsibilities during the course of performing his duties. Moreover, none of the directors or senior management staffs violated of the laws, regulations or Articles of Association, nor did anyone of them do anything harmful to the interests of the Company;
2. The Board of Supervisors had seriously checked and reviewed the Auditors’ Report 2011 35
Wuxi Little Swan Company Limited Annual Report 2011 of the Company issued by Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. The Board of Supervisors believed that the unqualified Auditors’ Reports issued by the Certified Public Accountants is true, and had truly and fairly reflected the financial status and operating results of the Company for the year 2011.
3. During the reporting period, the transaction prices of assets purchase or sales were reasonable. Inside dealings had not been detected, nor any cases that had done harm to the interests of the shareholders or had led to the loss of the Company’s assets.
4. There were related transactions between the Company and related parties in the reporting period. The transactions were fair and reasonable, and the prices were fair. No related transaction harmful to the rights, interests of the nonrelated parties or to the interests of listed company had been found.
36
Wuxi Little Swan Company Limited Annual Report 2011 Section X Significant Events
I. There was no significant lawsuit or arbitration during the reporting period.
II. Important purchases, sales of assets, or mergers of the Company in the reporting period
1. Purchase of assets During the reporting period, the Company had no significant purchase.
2. Sales of assets During the reporting period, the Company transferred 40% equities of BSW Household Appliances Co., Ltd. to BSH Home Appliances (China) Co., Ltd. with the price of RMB 127.2 million. The transaction was decided in accordance with the change in the market structure of washing machines in recent years, which was in compliance with the requirements of the Company’s strategic development. As at 16 Nov. 2011, transfer procedures of relevant equity had been finished.
III. Significant related transactions:
1. Related transaction concerning routine operation Unit: RMB’0000 Yuan Selling products and providing labor service Purchasing products and accepting labor to related parties service from related parties Related party Proportion in the total Proportion in the total Amount of the Amount of the transactions of the transactions of the transaction transaction same kind same kind
GD Midea Holding Co., Ltd. 42.66 0.00%
Wuhu Annto Logistics Company Limited 4,898.32 0.54%
Hefei Midea Material Supply Co., Ltd. 45,736.64 5.00%
Hefei Bainian Mould & Plastics Technology 14,280.73 1.30% 19,859.69 2.17% Co., Ltd. Huaian Weiling Motor Manufacturing Co., 66,861.53 7.30% Ltd.
Hefei Orinko New Plastics Co., Ltd. 7,112.48 0.65% 13,964.05 1.53%
MIDEA ITALIA S.R.L 374.31 0.03%
MIDEA EUROPE GMBH 881.60 0.08%
MIDEA SCOTT & ENGLISH SDN BHD 1,269.95 0.12%
Midea Electric Espana, S.L. 237.12 0.02%
PT. Midea Planet Indonesia 1,636.68 0.15%
Hefei Hualing Electrics Co., Ltd. 4,335.96 0.40%
37
Wuxi Little Swan Company Limited Annual Report 2011
Hefei Midea Royalstar Refrigerator Co., Ltd. 4.87 0.00%
Hefei Midea Royalstar Refrigerator Co., Ltd. 223.62 0.02%
Hefei Midea Heating and Ventilation 257.60 0.02% Equipment Co., Ltd. Guangdong Meizhi Precision Manufacturing 2.32 0.00% Co., Ltd. Huaian Weiling Motor Manufacturing Co., 0.54 0.00% Ltd.
GD Midea Holding (Singapore) Co., Ltd. 113,258.61 10.34%
Total 143,876.39 13.13% 151,362.89 16.54%
Explanation on difference from the estimation The business environment changed during the reporting period, so the estimated business at year-begin disclosed provisionally scale had not been achieved.
2. Related transaction concerning purchase and sales of assets During the reporting period, the Company had no related transaction concerning purchase and sales of assets
3. Other related transaction (1) The Company convened the 10th Session of the 6th Board of Directors on 14 Dec. 2010 and the 1st Special Shareholder’s General Meeting 2011 on 7 Jan. 2011, which reviewed and approved the Proposal on Related Transaction on Trademark Licensing. The Company permitted GD Midea Holding Co., Ltd and its controlled subsidiaries to use trademark of “小天鹅 LITTLE SWAN and picture” in air conditioner commodities, with trademark license fees estimated as no more than RMB 20,000,000. 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, with trademark license fees estimated as no more than RMB 20,000,000. 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 licensing period ranged from 1 Jan. 2011 to 31 Dec. 2013. At the same time, the Company will renew and sign the Contract on Trademark Licensing with Little Swan (Jingzhou) Electric Appliances Co., Ltd. As negotiated by both parties, the deadline of licensing period extends from 19 Jun. 2011 to 31 Dec. 2013.
(2) The 1st Special Shareholder’s General Meeting 2011 was convened on 7 Jan. 2011, at which reviewed and approved the Proposal on the Routine Related Transaction of the Company for 2011; the 2nd Special Shareholder’s General Meeting 2011 was convened on 14 Sept. 2011, at which reviewed and approved the Proposal on the Company Changed the Subject of the Routine Related Transaction, the Proposal on the Newly Added Routine Related Transaction of the Subsidiaries for 2011 and the Proposal on the Newly Added Subject of the Routine Related Transaction for 2011. For details of the routine related transaction, please refer to Note 6 of the financial report.
IV. Credits, debts between the Company and related parties, as well as influence and solutions:
38
Wuxi Little Swan Company Limited Annual Report 2011 1. As at 31 Dec. 2011, there was no any non-operational capital occupied by the principal shareholder and related parties of the Company. 2. There was no any current credit, debt and guarantee between the Company and related parties.
V. Significant contract in the reporting period that need to be disclosed 1. During the reporting period, there were no events such as significant entrustment, contracting, or leasing;
2. Significant guarantees; As at 31 Dec. 2011, the accumulated amount of guarantee provided by the Company for its shareholding subsidiary companies was RMB 483.53 million, taking up 14.05% of net assets of the Company. All the guarantees were provided for the controlling subsidiaries. Unit: RMB0’000 Yuan Guarantees provided for external parties (excluding guarantees provided for subsidiaries) Disclosure date and No. Impleme of the Date of Actual ntation Guarantee Name of the announceme Guarantee occurrence Type of Term of amount of accompl for related guaranteed party nt specifying line (Date of signing guarantee guarantee guarantee ished or parties or not the agreement) not guarantee line Total external guarantees lines Total external guarantees examined and approved in the 0.00 occurred in the reporting 0.00 reporting period (A1) period (A2) Total external guarantee lines Balance of actual guarantees at examined and approved at the 0.00 0.00 the period end (A4) period end (A3) Guarantees provided for subsidiary companies Disclosure date and No. Impleme of the Date of Actual ntation Guarantee Name of the announceme Guarantee occurrence Type of Term of amount of accompl for related guaranteed party nt specifying line (Date of signing guarantee guarantee guarantee ished or parties or not the agreement) not guarantee line Pledge 2011-5-25 8,000 Six months Yes No guarantee Pledge 2011-5-31 10,000 Six months Yes No guarantee Pledge 2011-7-1 5,684 Six months No No Hefei Royalstar guarantee Washing 2010-12-16, Pledge Equipment 73,000 2011-7-28 5,394 Six months No No 2010-45 guarantee Manufacturing Co., Ltd. Pledge 2011-9-27 4,898 Six months No No guarantee Pledge 2011-9-26 9,999 Six months No No guarantee Pledge 2011-10-28 4,378 Six months No No guarantee Total guarantees lines for Total guarantees for subsidiaries examined and 0 subsidiaries occurred in the 48,353 approved in the reporting reporting period (B2) period (B1)
39
Wuxi Little Swan Company Limited Annual Report 2011 Total guarantee lines for subsidiaries examined and Balance of actual guarantees at 83,000 30,353 approved at the period end the period end (B4) (B3) Total guarantees of the Company (Total of the two above) Total guarantees lines Total guarantees occurred in examined and approved in the 0 48,353 the reporting period (A2+B2) reporting period (A1+B1) Total guarantees lines Total balance of actual examined and approved at the 83,000 guarantees at the period end 30,353 reporting period (A3+B3) (A4+B4) Proportion of total actual guarantee amount (A4+B4) in net assets 8.82% of the Company Among which: Amount of guarantees provided for shareholders, actual controller 0.00 and other related parties (C) Amount of debt guarantees provided directly or indirectly for 0.00 parties with asset-liability ratio exceeding 70% (D) Proportion of total guarantee amount exceeding 50% of the 0.00 Company’s net assets (E) Total amount of the above three guarantees (C+D+E) 0.00 Explanation on possibility of taking several and joint liability N/A involving immature guarantees
3. There was no particular on entrusting the others to manage the cash assets in the reporting period.
4. Other significant contracts Please refer to “III. 3. Other related transaction” under “X. Significant Events”.
Ⅵ. The commitment of the Company or shareholders holding more than 5% of shares and the performance thereof
1. Commitments concerning share trading moratorium: If the controlling shareholder GD Midea Holding Co., Ltd. and actual controller made the plan to sell the Company’s circulation shares released from trading restrictions in the future through the tendering system, furthermore, the number of share reduction reached to 5% and over during six months from the first reduction, so then, the controlling shareholder GD Midea Holding Co., Ltd. shall publish outward suggestive announcement through the listed company within two trading days before the first reduction.
2. Commitment made in the significant asset reorganization: 1) As for GD Midea Holding’s commitment on share lock-up, it has committed that it will not transfer Little Swan shares held by it within 36 months since the date when the private share offering deal is closed.
2) As for the commitment of avoiding horizontal competition, GD Midea Holding (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 remains unchanged, GD Midea Holding, Mr. He Xiangjian and other subsidiary companies under their control excluding the Company and the Company’s subordinate companies will not increase business or establish new subsidiary companies engaged in business which is the same with or similar to the Company’s main business or forms substantial horizontal competition with the Company. If they act against the 40
Wuxi Little Swan Company Limited Annual Report 2011 commitment above, profits thus generated will be attributable to the Company.
3) As for the commitment for regulating related-party transactions, GD Midea Holding (the controlling shareholder) and Mr. He Xiangjian (the actual controller) have promised that when there are inevitable related-party transactions or such transaction incurred with rational reasons after the completion of the transaction, they will follow the fair, reasonable and market principles in formulating and signing relevant agreements on such related-party transactions and ensure that no harm will be done to interests of the Company and other shareholders. Where GD Midea Holding and Mr. He Xiangjian act against the promise above and damage interests of the Company and other shareholders, they will assume liabilities for compensation according to relevant provisions.
4) As for the commitment on independence, GD Midea Holding has promised to protect Little Swan’s independence in terms of assets, staff, finance, organization and business.
5) As for the commitment on related-party deposits and borrowings, up to 8 Apr. 2010, the Financial Settlement Center of GD Midea Holding had settled all internal deposits and borrowings with Hefei Royalstar Washing Equipment Manufacturing Co., Ltd.; and GD Midea Holding has promised that there will be no more deposits, borrowings or other funds flows incurred between the Financial Settlement Center and Hefei Royalstar Washing Equipment Manufacturing Co., Ltd..
6) The commitment by GD Midea Holding on housing properties with no ownership certificates of the target company for sale is detailed as follows. Two pieces of the buildings of Royalstar Washing Equipment assessed and sold to the Company are of no ownership certificates—the warehouse for half-finished products (176 square meters) and the workshop for injection molding (834 square meters), both located in the old factory of Royalstar Washing Equipment, Hewa Road, Hefei. GD Midea Holding 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.
7) The commitment by GD Midea Holding on trademarks is detailed as follows. (1) Concerning the “Midea” trademark: Upon approval and implementation of the equity transfer transaction, GD Midea Holding has promised that it will make sure that Royalstar Washing Equipment uses the “Midea” trademark in a proper manner. Royalstar Washing Equipment 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 GD Midea Holding) and its subsidiaries (currently 3‰ of the annual sales income generated by products using the “Midea” trademark), and upon negotiation and signing of the “Agreement for Trademark Use”. The related-party transactions incurred due to the said use of the “Midea” trademark will be submitted to the decision-making organ of the Company for approval according to the stipulated procedure. As such, interests of the Company and its minority shareholders will be safeguarded. (2) Concerning the “Royalstar” trademark: GD Midea Holding has signed the “Contract for Trademark Use” with Royalstar Group and obtained the ordinary use rights of the “Royalstar” (or “荣事达”) trademark. As the transferor in the transfer transaction of equity interests of Royalstar Washing Equipment, GD Midea Holding has promised that within the scope as agreed in the “Contract for Trademark Use”, if any dispute arises between Royalstar Washing Equipment and Royalstar Group over the former’s execution of the “Contract for Trademark Use”, Little Swan will not be involved. 41
Wuxi Little Swan Company Limited Annual Report 2011 If Royalstar Washing Equipment and Little Swan have to assume any responsibility or loss due to the aforesaid dispute, GD Midea Holding is willing to take on the responsibility instead and make compensations to Royalstar Washing Equipment and Little Swan at full amount.
8) The commitment by GD Midea Holding on social security payment and tax risks is detailed as follows. GD Midea Holding has promised that upon the completion of the said equity transfer deal, if Royalstar Washing Equipment is obliged to take on any responsibility or pay relevant fares as required by relevant government authorities due to its social security payment before the said deal, GD Midea Holding is willing to pay relevant fares for Royalstar Washing Equipment to relevant government authorities in a timely manner and assume any other liability. If any loss thus occurs to Royalstar Washing Equipment or Little Swan, GD Midea Holding 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 Royalstar Washing Equipment, GD Midea Holding 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, GD Midea Holding will assume the corresponding responsibility for compensation.
9) The agreement on compensations in relation to earning estimates is detailed as follows. As recognized both by Little Swan and GD Midea Holding, net profits achieved by Royalstar Washing Equipment for 2009, 2010 and 2011 as estimated in the “Asset Evaluation Report” by adopting the income present value method are RMB 65.32 million, 81.52 million and 91.53 million respectively. As such, estimated net profits for 2009, 2010 and 2011 attributable to the holder of the 69.47% equity interests of Royalstar Washing Equipment are RMB 45,377,800, RMB 56,631,900 and RMB 63,585,900 respectively. If Royalstar Washing Equipment achieves actual annual profits less than net annual profits as estimated in the “Asset Evaluation Report” by adopting the income present value method in any year of 2009, 2010 and 2011, the difference thereof will be paid, at the ratio of 69.47% (the ratio of equity interests of Royalstar Washing Equipment sold by GD Midea Holding to Little Swan), by GD Midea Holding to Little Swan in cash. And the corresponding difference will be paid to the bank account designated by Little Swan within 10 working days since the date when the corresponding annual report of Little Swan is disclosed.
Ⅶ. Accounting firms, sponsor institutions, and financial consultants appointed and dismissed
At the Annual Shareholders’ General Meeting 2010 held on 15 Apr. 2011, the proposal on engaging audit firm for the financial report 2011 was passed. The Company continued to engage Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. as the audit firm of the Company for the financial report 2011. Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. provided auditing service for five years in succession for the Company.
On 14 Sept. 2011, the Company convened the 2nd Special Shareholders’ General Meeting, at which reviewed and approved the Proposal on the Engagement of the Audit Firm of the Company for Internal Control, deciding to engage Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. as the audit firm of the Company for internal control.
42
Wuxi Little Swan Company Limited Annual Report 2011
During the reporting period, the Company paid the auditing fees for the financial report and internal control totaling RMB 1,900,000 to Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd.
During the reporting period, CITIC Securities, as the Company’s independent financial consultant for the significant assets reorganization event on acquiring 69.47% equities of Hefei Royalstar Washing Equipment Manufacturing Co., Ltd., continued to perform its continuous supervisory responsibility.
During the reporting period, Huatai United Securities Co., Ltd., as the Company’s sponsor institution for continuous supervision on its share splitting reform, continued to perform its continuous supervisory responsibility.
Ⅷ. Securities invested by the Company during the reporting period
1. Shares of other listed companies held by the Company Unit: RMB Yuan Proportion Changes of Gain/loss in Short form of in the Closing book owners’ equity Accounting Source of Stock code Initial investment reporting stock entity’s value in reporting item shares period total shares period Financial assets Non-public 400038 Huaxin Gaoke 100,300.00 0.01% 284,592.00 0.00 -23,990.40 available for offering sale Total 100,300.00 - 284,592.00 0.00 -23,990.40 - -
2. Shares of non-listed financial institutions held by the Company Unit: RMB Yuan Name of the Change of entity in Ratio to Profit and Number of owners’ which the Initial equity of the Book value at the loss in the Accountin Source of stock held by equity in the Company investment invested year-end reporting g item stock the Company reporting holds company period period equities Long-term Bank of Non-public 1,100,000.00 2,202,564 0.00% 1,210,000.00 0.00 0.00 equity Jiangsu offering investment Total 1,100,000.00 2,202,564 - 1,210,000.00 0.00 0.00 - -
IX. Management on investor relations Reception Reception Main discussion and materials Reception date Name of investor place way provided by the Company Meeting Room Field 26 Jan. 2011 Beijing Gao Hua Securities of the Company research Meeting Room Field Main discussion: Overall operation and 29 Mar. 2011 China Merchants Securities of the Company research development planning of the Company, Meeting Room Field overall conditions of washer industry and 30 Mar. 2011 Pingan Asset Management Co., Ltd. of the Company research future development and development Meeting Room Field space 30 Mar. 2011 E Fund Management of the Company research Taiwan-based Fubon Securities, Materials provided: public notice of the Teleconferen Reliance Securities Investment Company 13 Apr. 2011 Teleconference ce Trust, SinoPac SITC, Fubon Securities Investment Trust, Fuh 43
Wuxi Little Swan Company Limited Annual Report 2011 Hwa Securities Investment Trust, Capital Investment Trust, Cathay Securities Investment Trust, President Investment Trust, KGI Securities Investment Trust
Meeting Room Field China Jianyin Investment Securities, 14 Apr. 2011 of the Company research Invesco Great Wall
Meeting Room Field Guolian Securities, 14 Apr. 2011 of the Company research CITIC-Prudential Fund Management Meeting Room Field SinoPac Securities, Taishin 18 Apr. 2011 of the Company research Securities Investment Trust Meeting Room Field Emerging Markets Management Co., 20 Apr. 2011 of the Company research Ltd. Teleconferen 3 May 2011 Teleconference Target Asset Management ce Meeting Room Field 10 May 2011 Changjiang Securities of the Company research Meeting Room Field 12 May 2011 Bosera Funds of the Company research Meeting Room Field 16 May 2011 Minsheng Securities of the Company research Meeting Room Field Colonial First State Global Asset 25 May 2011 of the Company research Management Meeting Room Field 2 Jun. 2011 Penghua Fund Management of the Company research Strategy Conference One-to-one Bank of China Investment 10 Jun. 2011 held by Guosen meeting Management Securities Meeting Room Field 17 Jun. 2011 Industrial Securities of the Company research Meeting Room Field 28 Jun. 2011 Morgan Stanley of the Company research Meeting Room Field 7 Jul. 2011 UBS Securities of the Company research Meeting Room Field 19 Jul. 2011 Bohai Securities of the Company research Meeting Room Field 19 Jul. 2011 Yinhua Fund Management Co., Ltd. of the Company research Meeting Room Field Changjiang Securities, E Fund 22 Jul. 2011 of the Company research Management Co., Ltd. The Government of Singapore Meeting Room Field 26 Jul. 2011 Investment Corporation Pte Ltd., of the Company research Deutsche Bank AG Meeting Room Field Great Wall Fund Management Co., 7 Sept. 2011 of the Company research Ltd. Meeting Room Field 8 Sept. 2011 Ambrosetti (Beijing) Consulting Ltd. of the Company research Meeting Room Field BOC International (China) Limited, 9 Sept. 2011 of the Company research GF Fund Management Co., Ltd. Meeting Room Field 25 Oct. 2011 Everbright Securities of the Company research Shenyin & Wanguo Securities, SWS MU Fund Management, Beijing Meeting Room Field StarRock Investment Management 26 Oct. 2011 of the Company research Co., Ltd., Fullgoal Fund Management Co., Ltd., Neuberger Berman Fund, Industrial Securities Changjiang Securities, AEGON-INDUSTRIAL Fund Meeting Room Field Management Co., Ltd., Chang Xin 26 Oct. 2011 of the Company research Asset Management Co., Ltd., BOCOM Schroders Fund Management Co., Ltd. 44
Wuxi Little Swan Company Limited Annual Report 2011 Guolian Securities Co., Ltd., ICBC Meeting Room Field 26 Oct. 2011 Credit Suisse Asset Management of the Company research Co., Ltd. Meeting Room Field Changsheng Fund Management Co., 27 Oct. 2011 of the Company research Ltd. Meeting Room Field UBP Asset Management (Asia) Co 16 Nov. 2011 of the Company research Ltd. Meeting Room Field Minsheng Securities, Harfor Fund 1 Dec. 2011 of the Company research Management Co., Ltd. Meeting Room Field CICC, Anbang Asset Management 8 Dec. 2011 of the Company research Co., Ltd. GF Securities, Meeting Room Field CITIC-PRUDENTIAL Fund 20 Dec. 2011 of the Company research Management Co., Ltd., Taikang Asset Management Co., Ltd. Meeting Room Field 9 Jan. 2012 Sinolink Securities of the Company research
X. Punishments received by the Company, the Board of Directors or the directors, supervisors and senior management staffs: During the reporting period, there was no administrative punishment or public criticism imposed on the Company, the Board of Directors and directors, supervisors and senior management by China Securities Regulatory Commission, and there was no public censure imposed on them from Shenzhen Stock Exchange.
XI. Other significant events Naught
45
Wuxi Little Swan Company Limited Annual Report 2011 XI Financial Report
Auditor’s Report WCPAA[2012]No.A091
All shareholders of Wuxi Little Swan Company Limited,
We have audited the accompanying consolidated financial statements of Wuxi Little Swan Company (the “Company”) which comprise the Balance sheet as of December 31, 2011, and the Income statement, Statement of changes in equity and Cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Ⅰ. Responsibilities of the management concerning the financial statements The management is responsible for the preparation and the true and fair presentation of these financial statements in accordance with Accounting Standard for Business Enterprises and China Accounting System for Business Enterprises. These responsibilities include: (ⅰ)designing , implementing and maintaining internal control relevant to the preparation and the true and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; (ⅱ)selecting and applying appropriate accounting policies; (ⅲ) and making accounting estimates that are reasonable in the circumstances.
Ⅱ. 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 the Standards on Auditing for Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to 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 and true and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the 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.
Ⅲ. Auditing opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as of 31 December 2011 and of its financial performance and cash flows for the year then ended in accordance with the Accounting Standards for Business Enterprises and China Accounting System for Business Enterprises.
46
Wuxi Little Swan Company Limited Annual Report 2011 Balance Sheet
Prepared by Wuxi Little Swan Company Limited 31 December 2011 Unit: RMB Balance as at 31 Dec. 2011 Balance as at 1 Jan. 2011 Items Consolidation The Company Consolidation The Company Current assets: Monetary funds 2,415,450,351.24 1,550,043,784.36 2,215,812,460.40 1,569,023,753.38 Settlement fund reserve Outgoing call loans Transactional financial assets 4,292,300.00 2,668,300.00 7,778,633.32 Notes receivable 2,757,923,958.94 1,764,588,946.47 1,562,503,246.83 1,185,633,571.38 Accounts receivable 929,389,061.45 707,158,935.38 905,872,836.47 588,100,719.26 Accounts paid in advance 250,051,980.25 338,046,007.02 357,089,867.91 132,440,302.69 Premium receivables Receivables from reinsurers Reinsurance contract reserve receivables Interest receivable Dividend receivable Other accounts receivable 15,548,447.50 11,930,349.24 13,559,014.95 10,953,922.66 Financial assets purchased under agreements to resell Inventories 809,400,728.98 449,255,444.14 1,050,674,093.84 491,235,367.91 Non-current assets due within 1 year Other current assets 112,052,669.26 75,984,449.98 129,556,121.17 58,455,392.54 Total current assets 7,294,109,497.62 4,899,676,216.59 6,242,846,274.89 4,035,843,029.82 Non-current assets: Loans and advances Available-for-sale financial assets 284,592.00 284,592.00 312,816.00 312,816.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 5,838,851.75 1,669,582,930.82 109,347,118.51 1,621,854,827.58 Investing property 5,242,947.48 5,242,947.48 Fixed assets 1,365,332,660.33 630,160,566.16 1,196,176,706.65 596,576,900.61 Projects in construction 26,005,677.68 5,624,583.36 Engineering materials Fixed asset disposal Bearer biological assets Oil and gas assets Intangible assets 316,860,016.08 109,720,754.23 240,226,821.62 112,562,533.23 Development expense Goodwill Long-term expense to be apportioned 52,754,858.43 46,948,131.13 63,595,950.35 42,367,001.54 Deferred income tax assets 104,762,053.25 61,626,184.39 123,064,955.62 74,350,415.21 Other non-current assets Total of non-current assets 1,851,075,979.32 2,523,566,106.21 1,758,730,046.43 2,453,649,077.53 Total assets 9,145,185,476.94 7,423,242,322.80 8,001,576,321.32 6,489,492,107.35 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
47
Wuxi Little Swan Company Limited Annual Report 2011 Balance Sheet (Continued)
Prepared by Wuxi Little Swan Company Limited 31 December 2011 Unit: RMB Balance as at 31 Dec. 2011 Balance as at 1 Jan. 2011 Items Consolidation The Company Consolidation The Company Current liabilities: Short-term borrowings 6,961,486.36 9,039,354.88 9,039,354.88 Borrowings from Central Bank Customer bank deposits and due to banks and other financial institutions Placements from banks and other financial institutions Transactional financial liabilities Notes payable 1,539,319,483.44 1,046,275,176.33 804,597,930.44 689,495,306.02 Accounts payable 2,815,488,171.38 1,923,823,612.54 2,972,319,633.40 2,000,850,684.30 Accounts received in advance 485,754,049.80 385,922,579.96 467,168,360.41 238,691,673.79 Financial assets sold under agreements to repurchase Handling charges and commissions payable Employee’s compensation payable 135,480,654.26 42,610,721.50 146,946,246.73 43,287,248.99 Tax payable 1,463,883.21 54,075,370.51 -23,947,043.15 1,410,002.45 Interest payable dividend payable 2,838,070.21 2,838,070.21 2,719,702.95 2,669,154.60 Other accounts payable 165,405,271.16 192,113,998.82 84,178,532.28 31,631,524.42 Due to reinsurers Insurance contract reserve Acting trading securities Acting underwriting securities Non-current liabilities due within 1 year Other current liabilities Total current liabilities 5,152,711,069.82 3,647,659,529.87 4,463,022,717.94 3,017,074,949.45 Non-current liabilities: Long-term borrowings Debentures payable Long-term payables Special accounts payable Estimated liabilities 20,152,637.08 1,199,402.08 18,487,799.18 Deferred income tax liabilities 671,488.80 427,888.80 1,198,672.40 31,877.40 Other non-current liabilities 6,621,250.00 1,200,000.00 8,024,850.00 1,800,000.00 Total non-current liabilities 27,445,375.88 2,827,290.88 27,711,321.58 1,831,877.40 Total liabilities 5,180,156,445.70 3,650,486,820.75 4,490,734,039.52 3,018,906,826.85 Owners’ equity (or shareholders’ equity) Paid-in capital (or share capital) 632,487,764.00 632,487,764.00 632,487,764.00 632,487,764.00 Capital reserve 1,096,157,314.51 1,258,209,369.74 1,099,965,927.10 1,258,233,360.14 Less: treasury stock Specific reserve Surplus reserve 249,433,912.28 236,783,768.38 212,889,613.44 200,239,469.54 General risk provision Retained earnings 1,465,610,508.78 1,645,274,599.93 1,112,075,620.21 1,379,624,686.82 Foreign exchange difference -2,544,562.12 -937,948.99 Total owners' equity attributable to the 3,441,144,937.45 3,772,755,502.05 3,056,480,975.76 3,470,585,280.50 Company Minority interests 523,884,093.79 454,361,306.04 Total owner’s equity 3,965,029,031.24 3,772,755,502.05 3,510,842,281.80 3,470,585,280.50 Total liabilities and owner’s equity 9,145,185,476.94 7,423,242,322.80 8,001,576,321.32 6,489,492,107.35 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
48
Wuxi Little Swan Company Limited Annual Report 2011 Income Statement Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2011 2010 Items Consolidation The Company Consolidation The Company I. Total revenues 10,975,621,704.52 6,854,882,051.89 11,202,366,806.14 6,929,526,238.20 Including: Sales 10,975,621,704.52 6,854,882,051.89 11,202,366,806.14 6,929,526,238.20 Interest income Premium income Handling charge and commission income II. Total operating cost 10,456,237,668.38 6,551,408,996.79 10,545,906,390.37 6,652,108,998.90 Including: Cost of sale 9,153,133,555.97 5,890,472,346.59 9,445,348,989.18 6,009,526,295.89 Interest expenses Handling charge and commission expenses Surrenders Claim expenses-net Provision for insurance contract reserve-net Policyholder dividends Reinsurance expense Taxes and associate charges 22,435,896.13 8,037,392.47 23,799,193.19 21,754,563.07 Selling and distribution expenses 894,035,414.82 512,846,788.60 738,452,660.85 419,513,706.74 Administrative expenses 373,315,207.86 207,670,588.92 325,689,250.06 192,639,129.14 Financial expense -1,018,277.92 -11,871,223.38 33,838,215.66 20,397,095.85 Asset impairment loss 14,335,871.52 -55,746,896.41 -21,221,918.57 -11,721,791.79 Add: gain/(loss) from change in fair value (“-” for -3,486,333.32 2,668,300.00 7,778,633.32 loss) Gain/(loss) from investment (“-” for loss) 77,371,574.28 105,563,654.64 4,004,480.96 -139,469.04 Including: gains from investments in associates and joint ventures Foreign exchange difference (“-” for loss) III. Business profit (“-” for loss) 593,269,277.10 411,705,009.74 668,243,530.05 277,277,770.26 Add: non-business income 97,259,519.24 42,844,735.25 73,874,151.62 35,151,073.60 Less: non-business expense 20,155,696.08 13,828,704.19 20,436,073.18 14,637,390.80 Including: loss from non-current asset disposal IV. Total profit (“-” for loss) 670,373,100.26 440,721,040.80 721,681,608.49 297,791,453.06 Less: Income tax expense 131,808,348.70 75,278,052.45 111,943,594.04 50,888,544.14 V. Net profit (“-” for loss) 538,564,751.56 365,442,988.35 609,738,014.45 246,902,908.92 Attributable to owners of the Company 453,327,963.81 365,442,988.35 506,917,078.13 246,902,908.92 Minority shareholder gains/losses 85,236,787.75 102,820,936.32 VI. Earnings per share (I) basic earnings per share 0.72 0.58 0.80 0.39 (II) diluted earnings per share 0.72 0.58 0.80 0.44 Ⅶ. Other comprehensive incomes -1,630,603.53 -23,990.40 -937,948.99 0.00 Ⅷ. Total comprehensive incomes 536,934,148.03 365,418,997.95 608,800,065.46 246,902,908.92 Attributable to owners of the Company 451,697,360.28 365,418,997.95 505,979,129.14 246,902,908.92 Attributable to minority shareholders 85,236,787.75 102,820,936.32 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
49
Wuxi Little Swan Company Limited Annual Report 2011 Cash Flow Statement Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2011 2010 Items Consolidation The Company Consolidation The Company 1. Cash flows from operating activities: Cash received from sales of goods or 10,215,551,444.35 5,186,177,716.98 6,475,128,321.22 4,270,086,518.69 rending of services Net increase of cash received on customer bank deposits and from banks and other financial institutions Net increase of cash received on borrowings from central bank Net increase of cash received on placements from other financial institutions Premium received from original insurance contracts Net cash received from reinsurance Net increase of cash received on policyholder deposits and investments Net increase of cash received from disposal of held-for-trading financial assets Interest, handling charges and commissions received Cash received on placements from banks, net Cash received under repurchasing, net
Tax and fare refunds 252,601,590.14 163,013,824.31 134,521,919.57 58,218,984.78 Other cash received relating to 116,680,308.66 43,914,713.92 65,987,467.60 27,389,744.33 operating activities Sub-total of cash inflows from 10,584,833,343.15 5,393,106,255.21 6,675,637,708.39 4,355,695,247.80 operating activities Cash paid for goods and services 8,409,341,382.33 4,396,502,795.26 4,177,323,007.29 2,612,302,179.45 Net increase in loans and advances drawn Net increase of deposits in central bank, banks and other financial institutions Claims paid for original insurance contracts Interest, handling charges and commissions paid Dividends paid to policyholders Cash paid to and on behalf of 550,374,769.21 289,916,717.81 446,294,485.30 235,538,589.65 employees Taxes and fares paid 339,233,527.88 184,654,545.34 473,908,273.67 250,910,856.25 Other cash paid relating to operating 1,043,352,354.66 565,901,960.48 853,977,670.90 453,048,585.50 activities Sub-total of cash outflows from 10,342,302,034.08 5,436,976,018.89 5,951,503,437.16 3,551,800,210.85 operating activities Net cash flows from operating 242,531,309.07 -43,869,763.68 724,134,271.23 803,895,036.95 activities 2. Cash Flows from Investment
Activities: Cash received from disposing 127,200,000.00 127,200,000.00 12,699,593.38 12,699,593.38 investments 50
Wuxi Little Swan Company Limited Annual Report 2011 Cash received from return on 32,363,941.40 55,635,551.40 21,983,846.70 21,983,846.70 investments Net cash received from disposal of fixed assets, intangible assets and 20,230,813.20 18,215,403.07 32,321,054.85 29,813,914.53 other long-term assets Proceeds from sale of subsidiaries and 34,472,210.51 75,000,000.00 other operating units Other cash received relating to 1,579,033.10 4,996,250.00 investment activities Sub-total of cash inflows from 215,845,998.21 276,050,954.47 72,000,744.93 64,497,354.61 investing activities Cash paid for acquiring fixed assets, intangible assets and other long-term 215,268,857.20 -19,471,447.52 200,687,304.26 81,600,472.68 assets Cash paid for acquiring investments
Net increase of pledged loans Net cash used in acquiring 200,000,000.00 29,450,000.00 45,325,000.00 subsidiaries and other operating units Other cash paid relating to investment activities Sub-total of cash outflows from 215,268,857.20 180,528,552.48 230,137,304.26 126,925,472.68 investment activities Net cash flows from investing 577,141.01 95,522,401.99 -158,136,559.33 -62,428,118.07 activities 3. Cash Flows from Financing
Activities: Cash received from absorbing investments Including: Cash received by subsidiaries from investments of minority shareholders Cash received from borrowings 83,597,256.84 76,635,770.48 9,039,354.88 9,039,354.88 Cash received from issuing debentures Other proceeds relating to financing activities Sub-total of cash inflows from 83,597,256.84 76,635,770.48 9,039,354.88 9,039,354.88 financing activities Cash paid for settling debts 85,675,125.36 85,675,125.36 1,000,000.00 Cash paid for distribution of dividends or profit or reimbursing 78,793,860.79 63,079,860.79 251,907.50 248,220.00 interest Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to financing activities Sub-total of cash outflows from 164,468,986.15 148,754,986.15 1,251,907.50 248,220.00 financing activities Net cash flows from financing -80,871,729.31 -72,119,215.67 7,787,447.38 8,791,134.88 activities 4. Effect of foreign exchange rate -1,606,613.13 -761,500.00 changes on cash and cash equivalents 5. Net increase in cash and cash 160,630,107.64 -20,466,577.36 573,023,659.28 750,258,053.76 equivalents Add : Cash and cash equivalents at 2,119,023,194.93 1,492,995,931.54 1,545,999,535.65 742,737,877.78 year-begin 6. Cash and cash equivalents at the 2,279,653,302.57 1,472,529,354.18 2,119,023,194.93 1,492,995,931.54 end of the year Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
51
Wuxi Little Swan Company Limited Annual Report 2011
Consolidated Statement of Changes in Owners’ Equity Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2011 Equity attributable to the Company’s owners Less: Specif Items Paid-in capital General Minority Total owners’ treasu ic (or share Capital reserve Surplus reserve risk Retained profit Others interests equity ry reserv capital) reserve stock e Ⅰ. Balance at the end of the previous year 632,487,764.00 1,099,965,927.10 212,889,613.44 1,112,075,620.21 -937,948.99 454,361,306.04 3,510,842,281.80 Add: changes of accounting policy Correction of errors in previous periods Others Ⅱ. Balance at year-begin 632,487,764.00 1,099,965,927.10 212,889,613.44 1,112,075,620.21 -937,948.99 454,361,306.04 3,510,842,281.80 Ⅲ. Increase/decrease in the year (“-” means -3,808,612.59 36,544,298.84 353,534,888.57 -1,606,613.13 69,522,787.75 454,186,749.44 decrease) (Ⅰ) Net profit 453,327,963.81 85,236,787.75 538,564,751.56 (Ⅱ) Other comprehensive income -23,990.40 -1,606,613.13 -1,630,603.53 Subtotal of (Ⅰ) and (Ⅱ) -23,990.40 453,327,963.81 -1,606,613.13 85,236,787.75 536,934,148.03 (Ⅲ) Capital input and reduced by owners -3,784,622.19 -15,714,000.00 -19,498,622.19 1. Input by owners 2. Share-based payments recognized in owners’ equity 3. Others -3,784,622.19 -15,714,000.00 -19,498,622.19 (Ⅳ) Profit distribution 36,544,298.84 -99,793,075.24 -63,248,776.40 1. Surplus reserve withdrawn 36,544,298.84 -36,544,298.84 2. General risk reserve withdrawn 3. Distribution to owners (or -63,248,776.40 -63,248,776.40 shareholders) 4. Others (Ⅴ) Internal carrying forward of owners’ equity 1. Transferring capital reserve to capital (or share capital) 2. Transferring surplus reserve to capital (or share capital)
52
Wuxi Little Swan Company Limited Annual Report 2011
3. Making up loss with surplus reserve 4. Others (Ⅵ) Specific reserve 1. Withdrawn in this period 2. Used in this period (Ⅶ) Others Ⅳ. Closing balance 632,487,764.00 1,096,157,314.51 0 0 249,433,912.28 0 1,465,610,508.78 -2,544,562.12 523,884,093.79 3,965,029,031.24 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
Consolidated Statement of Changes in Owners’ Equity (Continued) Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2010 Equity attributable to the Company’s owners Specif Items Paid-in capital Less: General Minority Total owners’ ic (or share Capital reserve treasur Surplus reserve risk Retained profit Others interests equity reserv capital) y stock reserve e Ⅰ. Balance at the end of the previous year 547,655,760.00 1,181,301,233.97 188,199,322.55 629,848,832.97 366,487,072.33 2,913,492,221.82 Add: changes of accounting policy Correction of errors in previous periods Others Ⅱ. Balance at year-begin 547,655,760.00 1,181,301,233.97 188,199,322.55 629,848,832.97 366,487,072.33 2,913,492,221.82 Ⅲ. Increase/decrease in the year (“-” means decrease) 84,832,004.00 -81,335,306.87 24,690,290.89 482,226,787.24 -937,948.99 87,874,233.71 597,350,059.98 (Ⅰ) Net profit 506,917,078.13 102,820,936.32 609,738,014.45 (Ⅱ) Other comprehensive income -937,948.99 -937,948.99 Subtotal of (Ⅰ) and (Ⅱ) 506,917,078.13 -937,948.99 102,820,936.32 608,800,065.46 (Ⅲ) Capital input and reduced by owners 84,832,004.00 -81,335,306.87 -14,946,702.61 -11,450,005.48 1. Input by owners 84,832,004.00 -84,832,009.48 -5.48 2. Share-based payments recognized in owners’ equity 3. Others 3,496,702.61 -14,946,702.61 -11,450,000.00
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Wuxi Little Swan Company Limited Annual Report 2011
(Ⅳ) Profit distribution 24,690,290.89 -24,690,290.89 1. Surplus reserve withdrawn 24,690,290.89 -24,690,290.89 2. General risk reserve withdrawn 3. Distribution to owners (or shareholders) 4. Others (Ⅴ) Internal carrying forward of owners’ equity 1. Transferring capital reserve to capital (or share capital) 2. Transferring surplus reserve to capital (or share capital) 3. Making up loss with surplus reserve 4. Others (Ⅵ) Specific reserve 1. Withdrawn in this period 2. Used in this period (Ⅶ) Others Ⅳ. Closing balance 632,487,764.00 1,099,965,927.10 212,889,613.44 1,112,075,620.21 -937,948.99 454,361,306.04 3,510,842,281.80 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
The Company’s Statement of Changes in Owners’ Equity Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2011 Less: Items Paid-in capital Specific General risk Capital reserve treasury Surplus reserve Retained profit Total owners’ equity (or share capital) reserve reserve stock Ⅰ. Balance at the end of the previous year 632,487,764.00 1,258,233,360.14 200,239,469.54 1,379,624,686.82 3,470,585,280.50 Add: changes of accounting policy Correction of errors in previous periods Others Ⅱ. Balance at year-begin 632,487,764.00 1,258,233,360.14 200,239,469.54 1,379,624,686.82 3,470,585,280.50 Ⅲ. Increase/decrease in the year (“-” means -23,990.40 36,544,298.84 265,649,913.11 302,170,221.55
54
Wuxi Little Swan Company Limited Annual Report 2011 decrease) (Ⅰ) Net profit 365,442,988.35 365,442,988.35 (Ⅱ) Other comprehensive income -23,990.40 -23,990.40 Subtotal of (Ⅰ) and (Ⅱ) -23,990.40 365,442,988.35 365,418,997.95 (Ⅲ) Capital input and reduced by owners 1. Input by owners 2. Share-based payments recognized in owners’ equity 3. Others (Ⅳ) Profit distribution 36,544,298.84 -99,793,075.24 -63,248,776.40 1. Surplus reserve withdrawn 36,544,298.84 -36,544,298.84 2. General risk reserve withdrawn 3. Distribution to owners (or shareholders) -63,248,776.40 -63,248,776.40 4. Others (Ⅴ) Internal carrying forward of owners’ equity 1. Transferring capital reserve to capital (or share capital) 2. Transferring surplus reserve to capital
(or share capital) 3. Making up loss with surplus reserve 4. Others (Ⅵ) Specific reserve 1. Withdrawn in this period 2. Used in this period (Ⅶ) Others Ⅳ. Closing balance 632,487,764.00 1,258,209,369.74 236,783,768.38 1,645,274,599.93 3,772,755,502.05 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
The Company’s Statement of Changes in Owners’ Equity (Continued) Prepared by Wuxi Little Swan Company Limited Jan.-Dec. 2011 Unit: RMB Yuan 2010 Less: Items Paid-in capital Specific General risk Capital reserve treasury Surplus reserve Retained profit Total owners’ equity (or share capital) reserve reserve stock
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Wuxi Little Swan Company Limited Annual Report 2011
Ⅰ. Balance at the end of the previous year 547,655,760.00 512,103,117.27 175,549,178.65 1,157,412,068.79 2,392,720,124.71 Add: changes of accounting policy Correction of errors in previous periods Others Ⅱ. Balance at year-begin 547,655,760.00 512,103,117.27 175,549,178.65 1,157,412,068.79 2,392,720,124.71 Ⅲ. Increase/decrease in the year (“-” means 84,832,004.00 746,130,242.87 24,690,290.89 222,212,618.03 1,077,865,155.79 decrease) (Ⅰ) Net profit 246,902,908.92 246,902,908.92 (Ⅱ) Other comprehensive income Subtotal of (Ⅰ) and (Ⅱ) 246,902,908.92 246,902,908.92 (Ⅲ) Capital input and reduced by owners 84,832,004.00 746,130,242.87 830,962,246.87 1. Input by owners 84,832,004.00 746,130,242.87 830,962,246.87 2. Share-based payments recognized in owners’ equity 3. Others (Ⅳ) Profit distribution 24,690,290.89 -24,690,290.89 1. Surplus reserve withdrawn 24,690,290.89 -24,690,290.89 2. General risk reserve withdrawn 3. Distribution to owners (or shareholders) 4. Others (Ⅴ) Internal carrying forward of owners’ equity 1. Transferring capital reserve to capital (or share capital) 2. Transferring surplus reserve to capital
(or share capital) 3. Making up loss with surplus reserve 4. Others (Ⅵ) Specific reserve 1. Withdrawn in this period 2. Used in this period (Ⅶ) Others Ⅳ. Closing balance 632,487,764.00 1,258,233,360.14 200,239,469.54 1,379,624,686.82 3,470,585,280.50 Legal representative of the Company: Fang Hongbo Person-in-charge of the accounting work: Xiao Li Person-in-charge of the accounting organ: Zhong Fangliu
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Wuxi Little Swan Company Limited Annual Report 2011
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2011
Note I Corporate information
Wuxi Little Swan Company Ltd. (hereinafter referred to as “the Company”) was formerly a state‐collectively–owned enterprises founded in 1958 in Jiangsu Province of the People’s Republic of China (the “PRC”). It was reorganized into a joint stock limited company in 1993 and registered in Wuxi, Jiangsu. The company and its subsidiaries are collectively referred to as the Group.
According to the fourth Session of the Sixth Board meeting and the first extraordinary general meeting of shareholders in 2010, having approved by China Securities Regulatory Commission (SFC license [2010] 1577), the company launched directional add‐issuance of 84,832,004 A shares to buy 69.47% of the shares of Hefei Royalstar Washing Machine Manufacture Co., Ltd. from its shareholder Midea Electric Appliances Co., Ltd. Par value per share is RMB 1, and the issue price is RMB8.63 per share. This add‐issuance increased the company’s share capital by RMB 84,832,004.
As of December 31th of 2011, registered capital of the company is RMB 632,487,764, among which the restricted exchange‐traded A shares are 225,284,106 shares, accounting for 35.62% of the whole shares; the unrestricted exchange‐traded A shares are 216,167,786 shares, accounting for 34.18% ; the restricted exchange‐traded B shares are 30,851,714 shares, accounting for 4.88%; and the unrestricted exchange‐traded B shares are 160,184,158 shares, accounting for 25.33% of the whole shares.
1. Company profile Registered Address: No. 18 Changjiang South Road, National High‐tech Industrial Development Zone, Wuxi Office Address: No. 18, Changjiang South Road, Wuxi, Jiangsu Province Form of Business Organization: Share‐holding Company
2. Operations and business scope of the Company Business scope: manufacture and sales of household appliances and accessories, fittings and industrial ceramic. Export business of “Little Swan” products and technologies; import and export
57 Wuxi Little Swan Company Limited Annual Report 2011 business of raw and accessory materials, mechanical equipment and technologies necessary for operation and production; development of foreign joint venture and cooperative production and business that “process raw materials on clients’ demands, assemble parts for the clients and process according to the clients’ samples; or engages in compensation trade”. Technical service for household appliances; contracting foreign engineering in mechanical industry and domestic engineering in international bidding; export of equipment and materials necessary for the said foreign engineering; dispatching the labors necessary for the said foreign engineering to overseas.
3. Name of the parent company Parent company: GD MIDEA HOLDING CO.,LTD. Ultimate controller: Mr. He Xiangjian
4. Authorization and date of issuing the financial statements The financial statements were approved and authorized for issue by the board of directors on the date of March 2nd, 2012.
Note II Summary of Main Accounting Policies and Accounting Estimate
1. Preparation basis of the financial statements The company recognizes and measures transactions occurred according to Chinese Accounting Standards – Basic standard and other related accounting standards, prepares the financial statements based on accrual accounting and the underlying assumption of going concern.
2. Statement of compliance with Enterprise accounting standards The financial statements of the company comply with the requirements of Accounting Standards; the company's financial position, operating results, cash flows and other relevant information are truly and completely disclosed in the financial statements.
3. Accounting period The company's accounting year is from 1st January to 31st December for each calendar year.
4. Recording currency The recording currency of the company is Renminbi
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5. Accounting processing method of business combination under common control and not under common control
(1) The business combinations which are under common control The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid‐in capital shall be adjusted. If the additional paid‐in capital is not sufficient to be offset, the retained earnings shall be adjusted.
(2) The business combinations which are not under common control The acquirer shall recognize the initial cost of combination under the following principles: a) When business combination is achieved through a single exchange transaction, the cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree; b) For the business combination involved more than one exchange transaction, the cost of the combination is the aggregate cost of the individual transactions; c) The costs directly attributed to business combination are included in the cost of combination; The acquirer shall recognize the difference that the combination costs are over the fair value of the identifiable net assets obtained from acquiree as goodwill; if the combination costs are less than the fair value of the identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree as well as the combination costs; and then after the reexamination, the result is still the same, the difference shall be recorded in the profit and loss of the current period.
6. Preparation method of consolidated financial statements (1) Determination of consolidation scope The combination scope of the consolidated financial statement will be determined on the basis of the control. The consolidated financial statements will be subject to the No. 33 Enterprise Accounting Standards –Consolidated Financial Statement that was issued in February 2006. In preparing the consolidated financial statements, all key accounts and transactions between the company and subcompanies, subcompanies and subcompanies will be offset. The net assets of merged subcompanies that are attributable to the minority of shareholder equities will be separately listed in the shareholder equities of consolidated financial statements. In case the accounting policies and accounting periods of subcompanies differ from those of parent company, the financial statements of subcompanies will be adjusted.
59 Wuxi Little Swan Company Limited Annual Report 2011
7. Cash and cash equivalent For the purposes of the cash flow statement, cash refers to all cash in hand and all deposits which are readily available for payment. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
8. Foreign currency transactions and translations All foreign currency transactions during the period have been translated in to RMB at the spot exchange rate of the transaction date. The foreign currency conversions and any transactions involved foreign currency conversions have been translated in to RMB at the actually used exchange rate during the transaction process.
On the balance sheet date, the company treats the foreign currency monetary items and foreign currency non‐monetary items according to the following provisions: (1)The foreign currency monetary assets and liabilities items have been translated at the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the construction of fixed assets, which are capitalized as part of fixed assets' costs.
(2)A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on the transaction date, of which the amount of functional currency shall not be changed; the foreign currency non-monetary items measured at their fair values have been translated at the spot exchange rate on the balance sheet date, the exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded in changes in fair value gains and losses of the current period.
The asset and liability items in the balance sheet about the overseas businesses of the company have been translated at the spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items have been translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statement have been translated at an exchange rate which is approximate to the spot exchange rate
60 Wuxi Little Swan Company Limited Annual Report 2011 of the transaction date. The differences arising from the translation of foreign currency financial statements in compliance with the aforesaid items have been presented separately under the owner’s equities of the balance sheets. Foreign currency cash flows and the cash flows of foreign subsidiaries have been translated at an exchange rate which is approximate to the spot exchange rate at the time when the cash flows incurred. The differences arising from fluctuations in exchange have been presented separately in the statement of cash flows.
9. Financial instruments (1) Classification and measurement of financial assets and financial liabilities Based on the investment purpose and economic essence, the company classifies the financial assets into the following four categories: a) transactional financial assets, which are measured at fair value with variations of fair value accounted into current income account; b) financial assets available for sale, which are measured at fair value with the variations accounted into shareholders' equity; c) account receivables measured at the post‐amortization costs; and d) held‐to‐maturity investments, which are also measured at the costs.
The company has divided its financial liabilities into one category measured at fair value with variations accounted into current profit and loss and another category measured at the post‐amortization costs.
(2) Recognition of the fair value of financial assets and liabilities. When there is an active market for the financial instrument, the quoted prices for the financial assets the company holds or the financial liabilities it plans to assume shall be the present actual offer, while the quoted prices for the financial assets the company plans to acquire or the financial liabilities it has assumed shall be the available charge. When there isn’t any active market, fair value will be recognized by evaluation techniques. Evaluation techniques include referencing to the prices adopted in latest voluntary transaction between parties with full understanding of the situation, referencing to the current fair value of other substantially similar financial instruments and other evaluation techniques.
(3) Recognition and measurement of finance asset transferring The term "transfer of a financial asset" refers to the company’s (the transferor's) transferring or delivering a financial asset to a party other than the issuer of the financial asset (the transferee). Transfer of a financial asset could be the whole asset or part of it. It includes the following two cases: a) The company transfers the right to another party for receiving the cash flow of the financial
61 Wuxi Little Swan Company Limited Annual Report 2011 asset; and; b) The company transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the company has transferred nearly all of the risks and rewards related to the ownership of the financial asset or part of this asset to the transferee, it shall stop recognizing the financial asset or part of this asset. The difference arising from the sum of consideration received from the transfer and the book value of this asset should be accounted into the profit and loss. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing the financial asset.
(4) Impairment testing on financial assets, providing of impairment provision At balance sheet date, the Company performs testing on the book value of financial assets other than those measured by fair value and changes accounted into current income account.
10. Accounts Receivable (1) Individually significant accounts receivable on which the bad debt provisions are provided individually ① Standards of the individually significant accounts receivable The accounts receivable whose individual amount accounts for over 10% (including 10%) of accounts receivable balance at the end of this period or amount of the individual account receivable which is greater than RMB 10 millions (and including 10 millions); Standards of the individually significant other receivable: the other receivable whose individual amount accounts for over 10% (including 10%) of other receivables balance at the end of this period or amount of the individual other receivable which is greater than RMB 5 millions (and including 5 millions). ② Providing method for bad debt provisions of individually significant receivables For the individually significant receivables, the impairment test is carried on individually; the Company provides provision for impairment loss for the amount which is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows.
(2) Accounts receivable which are not individually significant, but still the bad debt provisions are provided individually ① Reasons for providing the bad debt provisions individually for receivables which are not individually significant The receivables are not individually significant, but are assessed at high risk level through credit
62 Wuxi Little Swan Company Limited Annual Report 2011 risk combination. Confirmation of credit risk characteristics’ combination: the receivables which are involved in pending lawsuits or dissolution of the debtor company, and the receivables with the age of over 3years (excluding the individually significant receivables). ② Providing method for bad debt provisions For the receivables which are not individually significant, but which are assessed at high risk level through credit risk combination, the impairment test is carried on individually, the company provides provision for impairment loss for the amount which is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows.
(3) Accounts receivable on which the bad debt provisions are provided by combinations ① Basis for recognition of Combination Combination 1：For the receivables which are not individually significant, as well as the individually tested receivables which the test has not recognize any impairment loss, the company categorizes them according to their age and provides the bad debt reserve for these receivables in different proportions to the closing balance of each category. Combination 2：Accounts receivables in the scope of combination statements ② Providing method for bad debt provisions of receivables by combination Combination 1：On the basis of the actual loss rate of receivable account age package in the previous year, the company will consider the current situation to determine the percentage of providing the bad debt reserve for the following receivable account package at the end of this period:
Provision rate for Accounts Provision rate for Other Aging Receivable（%） Receivables（%） Within 1 year 5 5
From 1‐2 years 10 10
From 2‐3 years 20 20
From 3‐5 years 60 60
Over 5 years 100 100
Combination 2：The company does not provide bad debt provision for receivables of subsidiaries in the combination scope. When the subsidiaries suffer excess loss, impairment tests are carried on and impairment provisions are provided individually.
11. Inventories (1) Categorizing of inventories Inventories are those under the Company’s possession for the purpose of selling, in the process of production, or materials and goods used in production process or providing of services, including
63 Wuxi Little Swan Company Limited Annual Report 2011 materials purchased, raw materials, low-value consumables, products in process, semi-finished goods, stock merchandises (finished goods) and consigned goods.
(2) Pricing of delivering inventory Inventories are measured at cost when procured, including purchase cost, processing cost, and other costs. Actual costs are recognized at weight average when delivered.
(3) Recognition of inventory realizable value and providing of impairment provision On the balance sheet date, inventories are accounted depending on which is lower between the cost and the net realisable value. At overall verification of inventories at the end of year, when the net realisable value is lower than the cost, provisions for impairment of inventories shall be drawn. Provisions for impairment of inventories shall be accounted according to the difference between the cost of individual inventory items and the net realisable value. Including: for inventories such as finished products or materials which will be directly sold, in the normal operation, the realizable net value will be the balance of estimated selling price less sales expenses and relative taxations; for those inventories need further processing, in the normal operation, the realizable net value will be the balance of estimated sales price less costs to make it finished, less estimated sales expenses, and less relative taxation. At the balance sheet day, inventories with contract prices will be determined for realizable value separately from those without contract prices. Where certain items of inventory have similar purposes or end uses and relate to the same product line produced and marketed in the same geographical area, and therefore cannot be practicably evaluated separately from other items in that product line, costs and net realisable values of those items may be determined on an aggregate basis. For large quantity and low value items of inventories, cost and net realisable value are determined based on categories of inventories.
(4) Inventory system The Company uses perpetual inventory system. Inventories are checked periodically and the gains and losses from inventory checking are accounted into current gain/loss account.
(5) Amortizing of low-value consumables and packaging materials Low-value consumables and packaging materials are amortized on on-off amortization basis at using.
12. Long-term share equity investment （1）Recognition of initial investment costs Investments of the Company in subsidiaries are valued at investment costs. For long-term share equity investment formed by shareholding and merger please see Note II(V). Retrospective or retrieved investments are adjusted to the cost of long term equity investment.
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For long-term equity investment of the Company with or without common control or major influence on the investee, and there is no quotation in an active market, and the fair value is not reliably measured, values are on initial investment costs.
（2）Subsequent measurement and recognition of gain/loss The Company uses cost basis in subsequent measurement of investment in subsidiaries, and adjusted on equity basis when preparing the consolidated financial statement. Except for the announced cash dividend or profit included in the practical cost or price when the investment was made, the investment gains are recognized at the announced cash dividend or profit distribution. Subsequent measurement of long-term equity investment in investees under common control or significant influence is on equity basis. When the initial investment cost is larger than the share of fair value of net asset, the initial cost of long-term equity investment shall not be adjusted. When the initial investment cost is lower than the share of fair value of net asset, the balance share be accounted into current gain/loss, and the long-term investment cost shall be adjusted meanwhile. After obtaining of the long-term equity investment, the investment gain/loss is recognized according to the share of the net gain/loss realized by the invested company, and the book value of the long-term equity investment shall be adjusted accordingly. The share of profit distributions or cash dividends announced by the invested company is used to reduce the book value of the long-term equity investment. If the Company has no common control or significant influence on the investee, also there is no quotation in an active market, and the fair value of the long-term investment is not able to be reliably measured, the subsequent measurement shall be on cost basis.
（3）Basis of recognizing common control and significant influence Common control is the mutual control of investors over an economic action basing on a contract, only effective when it is agreed by all of the investors who have the share of control on the financial and business control power. When the investors hold common control over the investee, the investee is regarded as their affiliate. Significant influences mean an entity has the power to participate in the decision making of another, but cannot dominate individually or jointly with other parties. When the investor may significantly influence the investee, the investee is regarded as the affiliate.
（4） Impairment examination and providing of impairment provision At the balance sheet day, if evidence showing that impairment occurred on the long-term equity investment, the recoverable amount shall be decided by the higher one of net amount of fair value less disposal fees and the current value of predicted future cash flow. When the recoverable amount of the long-term equity investment is lower than the book value, the book value will be reduced down to the recoverable amount, the reduced amount is recognized as asset impairment
65 Wuxi Little Swan Company Limited Annual Report 2011 loss and counted into current gain/loss account, asset impairment provision shall be provided accordingly. Once the long-term equity investment impairment loss is recognized, it will not be written back in following fiscal terms, excluding sellable financial assets, whose impairment provision can be written back through equity accounts.
13. Investment properties Investment real estate is measured according to the initial cost. Cost of real estate purchased from outside includes purchasing price, tax, and other expenses directly related to the real estate; cost of real estate constructed by the Company itself is composed of the essential costs to make the real estate usable. Investment properties invested by investors are booked at the value according to the investment contract, whereas when the contract value is not fairly acceptable, it will be booked at the fair value. The Company employs the cost mode to calculate the investment properties, and withdraws the depreciation or amortization in accordance with the same depreciation or amortization policies of fixed assets and intangible assets in the Company. The Company adopts straight‐line method in depreciation and amortization of investment properties. Providing of impairment provisions for investment properties is in accordance with impairment providing of fixed assets.
14. Fixed assets (1) Conditions for fixed asset recognition Fixed assets are defined as the tangible assets which are held for the purpose of producing goods, providing services, leasing or for operation & management, and have more than one year of service life. Other than the fixed assets which have already been provided depreciations in full but still in use, the Company provides depreciations upon all of the fixed assets. Straight-line method is adopted by the Company in depreciation. (2)Categories, useful life, predicted salvage value, and annual depreciation rate of fixed assets are as the followings: Categories Useful life Salvage value Annual depreciation ratio Plant & buildings 30‐40 years 5% 2.38‐3.17% Machinery equipment 10‐18 years 5% 5.28‐9.00% Electric equipment 3‐8 years 5% 11.88‐31.67% Transportation vehicles 4‐12 years 5% 7.92‐23.75% Others 5‐8 years 5% 11.88‐19% Fit up fee 3‐8 years 12.50‐33%
66 Wuxi Little Swan Company Limited Annual Report 2011
（3）Impairment testing and impairment provisions At the balance sheet day, fixed assets are accounted at the lower one of book value and retrievable value. If the retrievable value is lower than the book value, the book value will be deducted to the retrievable value, and the deducted amount will be recorded as asset impairment loss into current income account, and impairment provision shall be provided accordingly. Once the impairment loss was recognized, it will not be written back in coming fiscal terms.
It suggests that a fix asset may be impaired if there are any of the following indications and retrievable value of this asset needs to be calculated for impairment testing: a) during the period, a fix asset's market value has declined significantly more than it would be expected as a result of the passage of time or normal use during the current period; b) evidence is available of obsolescence or physical damage of an asset; c) significant changes with an adverse effect on the predicted usage mode of the fixed assets have taken place. The asset becomes idle, or the Company plans to discontinue or to dispose of an asset before the previously expected date, which will cause negative effect on the Company. d) significant changes with an adverse effect on the Company have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the Company operates or in the market to which an asset is dedicated; e) market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used by the company in calculating an asset's present value by predicted future cash flows, and decrease the asset's recoverable amount materially; f) evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected, for example, the net cash flow generated from fixed assets or the operating profit (or loss) realized by fixed assets is lower (higher) than the excepted amount, etc.; and g) Other evidence indicates that fixed assets may be impaired.
(4) Recognition and measurement of fixed assets acquired under finance lease The Company identifies a lease of asset as finance lease when it satisfies the following one or several conditions:
67 Wuxi Little Swan Company Limited Annual Report 2011
① The Company gains ownership of the asset at the end of the lease period.
② The lease contains a bargain purchase option to buy the equipment at less than fair market value, thus it could be predicted that the Company will exercise this option.
③ Even though the Company will not gain ownership of the asset, the life of the lease is
75% or greater of the asset’s useful life.
④ The present value of lease payments is greater than 90% of the asset's fair value on the date of lease.
⑤ The asset for lease is special and it can only be used by the Company unless it is extensively modified. A fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased asset and the present value of the minimum lease payments at the inception of lease. The depreciation method of fixed assets acquired under finance lease is consistent with that for depreciable assets owned by the Company. If the Company can reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful life of the leased asset. If the Company cannot reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the shorter one of the useful life of the leased asset and the lease term.
15. Construction in process (1) Measurement of construction in process Constructions in process are measured at the actual cost. For the constructions in process conducted by the Company itself, the actual cost consists of essential costs of carrying on the construction till it reaches usable status.
(2) Standards and timing for construction in process transferring into fixed assets Cost of fixed asset which has already become usable but not settled yet, is recognized according to estimated value or the actual construction cost, and depreciations share be provided from the next month. Upon completion of settlement, the original estimated value shall be adjusted according to the actual cost.
(3) Basis of recognizing impairment and providing of impairment provision. At the balance sheet day, the Company performs overall testing on constructions in process and evaluates the retrievable value if evidence shows impairment occurred on the constructions. If the retrievable value is lower than the book value, the book value will be deducted to the
68 Wuxi Little Swan Company Limited Annual Report 2011 retrievable value, and the deducted amount will be recorded as asset impairment loss into current income account, and impairment provision shall be provided accordingly. Once the impairment loss was recognized, it will not be written back in coming fiscal terms.
16. Borrowing expenses (1) Capitalization of borrowing costs Borrowing expenses include the interest of loans incurred, amortization of discounts or premiums and ancillary costs, as well as foreign currency exchange differences from foreign currency loans. The costs of borrowings designated for acquisition or construction of qualifying assets should be capitalized as part of the cost of the assets. Assets satisfying the conditions of capitalization are referring to the fixed assets, investment properties, and inventories that need one year or more than one year’s construction or production process to reach the usable or sellable status. Borrowing expenses incurred for these assets should be accounted into costs of these assets. The other borrowing expenses should be accounted into current gains and losses when incurred.
Borrowing expenses start to be capitalized when all of the followings are satisfied: ① The capital expenditures have incurred; ② The borrowing costs have incurred; ③ The acquisition and construction activities that are necessary to bring the asset to its expected usable condition have commenced.
(2)Capitalization period of borrowing costs Capitalization of borrowing costs should be suspended during periods in which the acquisition or construction is interrupted abnormally, and the interruption period is three months or longer. These borrowing costs should be recognized directly in profit or loss during the current period. Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is substantially ready for its intended use. Subsequent borrowing costs should be expensed off during the period in which they are incurred.
(3) Calculation method of capitalization for borrowing costs To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of the borrowing. To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a qualifying asset, the amount of borrowing costs eligible for capitalization shall be determined by applying a capitalization rate to the weighted average of excess of accumulated
69 Wuxi Little Swan Company Limited Annual Report 2011 expenditures on qualifying asset over that on specific purpose borrowing. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of acquiring or constructing a qualifying asset.
17. Intangible assets (1) Recognition of intangible assets： The intangible assets refer to the land-use right, patent, non-patent technology and software. Intangible assets are initially measured by their costs. Intangible assets purchased are booked at the actual cost to purchase and relative expenses. Intangible assets inputted by investors are booked at the contract or agreement price, but if the contract or agreement price is not fairly acceptable, it will be booked at fair value. In case the non‐currency asset exchange is characteristic of commercial substance and the fair values of received or delivered assets can be reliably calculated, the book values of received intangible assets in the non‐currency asset exchange will normally be determined based on the fair values of delivered assets, except that the accurate evidences indicate that the fair values of received assets are more reliable. In case any non‐currency asset exchange does not meet the above conditions, the book values of delivered assets and the payable taxes will be deemed as the costs of received intangible assets. No profit and loss will be confirmed. In case the intangible assets are obtained by the liability restructure to write off the liabilities of debtors, their book values will be determined based on the fair values of this intangible asset. Expenditures incurred during the research phase of an internal project shall be recognized as expenses in the period in which they are incurred. Expenditures incurred during the development phase of an internal project shall be recognized as an intangible asset if, and only if, the Company can demonstrate all of the following: ①The technical feasibility of completing the intangible asset so that it will be available for use or sale; ②Its intention to complete the intangible asset and use or sell it; ③The method that the intangible asset will generate probable future economic benefits. Among other things, the Company can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; ④The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; ⑤ Its ability to measure reliably the expenditure attributable to the intangible asset during its development. ⑥The use of the intangible products cycle more than 1 year. Usage life and amortization of intangible assets：
70 Wuxi Little Swan Company Limited Annual Report 2011
The land‐use rights is amortized straightly to the useful life, from the starting date, when accept the land‐use rights, The patent, non‐patent technology and other intangible assets are amortized straightly to the less number among the useful life, contract years and the effective year of the law. The amortization assigned to the related assets and current profit and loss. For the intangible assets with the uncertain usage life, such as trade mark, no amortization will be made.
(2) Amortization of intangible assets： Intangible assets without certain useful life are not amortized. They will be reconsidered in each accounting period, if strong evidence showing that the useful life became limited, then it will be estimated, and amortized on straight basis. On the balance sheet date, the Company measures intangible assets according to the lower of book value and retrievable value, intangible asset impairment provisions shall be provided at the difference of retrievable value lower than the book value, and the corresponding impairment loss shall be recorded to current income account. Once intangible asset impairment losses are recognized, they will not be written back in successive fiscal periods. ① It has been replaced by other new technologies, and significantly decreased its ability to create economic interests for the Company; ② The price fell sharply in current period, and is not expected to increase in its remaining amortization period; ③ Over the time limit of legal protection, but still has some use-value； ④ Other facts that prove the assets actually impaired.
18. Long-term deferred expenses The Company recognizes all expenses which have occurred during the period but shall be amortized beyond one year, such as improvement expenditures of operating leased fixed assets, as long-term deferred expenses. The Company amortizes long-term deferred expenses using straight-line method according to relevant beneficial periods or its usage life in five years if can’t estimate the periods.
19. Expected liabilities When responsibilities occurred in connection to contingent issues, and all of the following conditions are satisfied, they are recognized as expected liability in the balance sheet: ① This responsibility is a current responsibility undertaken by the Company; ② Execution of this responsibility may cause financial benefit outflow from the Company; ③ Amount of the liability can be reliably measured. Expected liabilities are initially measured at the best estimation on the expenses to exercise the
71 Wuxi Little Swan Company Limited Annual Report 2011 current responsibility, and the Company shall give considerations to the relative risks, uncertainty, and periodic value of currency. When the periodic value of currency is with major influence, then the best estimation will be determined at the discount of future cash outflow. The book value of expected liability is revised at balance sheet day, and adjustment will be made to reflect current best estimation. Increasing of book value over time will be recognized as interest expenses
20. Revenue recognition (1) Sales of goods When all of the following conditions are satisfied, the sales of goods are recognized as sales income according to the contract amount received or receivable from the buyer: ① Main risks and rewards attached to the ownership of the goods have been transferred to the buyer; ② No succeeding power of administration or effective control is reserved which are usually attached to ownership; ③ Amount received can be reliably measured; ④ Related financial benefit may inflow to the Company; ⑤ Relative costs, occurred or will occur, can be reliably measured; ⑥ When collection of contract payment is by differed way, and practically with financing characters, sales income shall be recognized at the fair value of the receivable contract amount. (2) Providing of labor service Labor service started and completed in a same fiscal year is recognized as income at completion. If they are not in the same year, then use the estimation on percentage basis when it is possible. When the labor cost occurred is expectable to be covered, the labor service income is recognized at the cost already occurred, and recorded to labor cost as well. When the labor cost occurred is not expectable to be covered, the cost will be recorded to current gain/loss account without recognizing as labor service income. (3) Demising of asset using rights Income is recognized when the financial benefit in connection with the demising of asset using right was received and the amount can be reliably measured.
21. Government grant The income approach for government grants, to retrieve expense or loss of the Company in further period, the government grants are recognized as deferred income, and shall be recorded in profit and loss when that expense or loss occurred. To retrieve expense or loss of the Company in current period, the government grants shall be recorded directly in current profit and loss. If related assets were disposed before using period ended, undistributed deferred
72 Wuxi Little Swan Company Limited Annual Report 2011 income shall be shift to current profit and loss at once. The Capital approach for government grants, the grant is recognized as deferred income when it is acquired. Since the related assets achieve its intended using status, the deferred income is amortized and recognized in profit and loss during asset’s using period.
22. Differed income tax assets/ differed income tax liabilities Based on the differences between the book values of assets and liabilities and taxation basis (for the items that have not been confirmed as the assets and liabilities, if their taxation basis may be determined in accordance with the taxation provisions, the difference between such taxation basis and their book values will be applied), the deferred income tax assets or deferred income tax liabilities will be confirmed at the applicable tax rate during the expected periods of returning such assets or settling such liabilities. The Company will confirm the deferred income tax assets generated by the deductible temporary difference within the limit of taxable income amount that may be obtained and used to deduct such difference. On the preparation date of balance sheet, if enough evidences prove that the taxable income amounts that maybe probably obtained in the future periods may be used to deduct the deductible temporary differences, they will be confirmed as the deferred income tax assets that have not been confirmed in the previous accounting periods. On the preparation date of balance sheet, the Company will recheck the book values of deferred income tax assets. If the taxable income amounts cannot be obtained in the future periods to be used to deduct the benefits of deferred income tax assets, the Company will reduce the book values of deferred income tax assets. If there is great possibility to obtain enough taxable income amounts, the reduced amounts may be reversed.
23. Hedging Accounting The term " hedging" refers to one or more hedging instruments which are designated by the company for avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item.
The term "hedging instrument" shall refer to a derivative instrument which is designated by the company for hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value or cash flow of the hedged item. For a hedging of foreign exchange risk, a non‐derivative financial asset or non‐derivative financial liability may be used as a hedging instrument.
The "hedged items" refer to items which make the company faced with changes in fair value or cash flow and are designated as the hedged objectives.
For a hedging which satisfies all the following conditions, the company will deal with it through
73 Wuxi Little Swan Company Limited Annual Report 2011 the hedging accounting method.
(1) At the commencement of the hedging, the company shall specify the hedging relationship formally and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. (2) The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by the company at the very beginning. (3) For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the company faced to the risk of changes in cash flow, which will ultimately affect the profits and losses. (4) The effectiveness of hedging can be reliably measured. (5) The hedging is highly effective in the accounting period in which the hedging relationship is designated. 24. Change of main accounting policies and estimations (1) Change of accounting policies No change of accounting policies occurred in the year. (2) Change of accounting estimations No change of accounting estimations occurred in the year.
25. Correction of previous accounting faults No correction of previous accounting faults occurred in the report term.
NoteⅢ. Taxation
1. Operation tax and rate
Items Tax basis tax rate
VAT deducting value added input tax. 17%
Business tax operating revenue 5% Urban maintenance and Payable circulating tax amount 7% construction Educational fee Payable circulating tax amount 4%or5%
Corporate income Payable income tax amount 25%or15% tax Flood Control operating revenue 0.1%or0.06% Security Fund
Levee fee Payable circulating tax amount 2%
74 Wuxi Little Swan Company Limited Annual Report 2011
2. Notes In November of 2008, Hefei Royalstar Washing Machine Manufacture Co., Ltd. was filed as the high technology qualification with the number GR200834000011. In March of 2009, the Company and Wuxi Little Swan GE Co., Ltd were also filed as the high technology qualification, and the qualification number are GR200932000077 and GR200932000078. Wuxi Filin Electronics Co., Ltd. was qualified In May of 2009 and the qualification number is GR200932000397. Term of validity for this qualification is three years, and Hefei Royalstar Washing Machine Manufacture Co., Ltd. has passed the review with the re-examination certificate GF201134000043 when the qualification expired. According to document guoshuifa 〔 2008 〕 111 issued by National Tax Bureau, and guoshuihan[2008]985, the Company and its three subsidiaries, Hefei Royalstar Washing Machine Manufacture Co., Ltd., Wuxi Little Swan GE Co., Ltd and Wuxi Filin Electronics Co., Ltd, were approved to enjoy income tax rate 15%.
75 Wuxi Little Swan Company Limited Annual Report 2011
NOTE IV：Business Combination and Consolidated Financial Statements 1. Subsidiaries (1) The subsidiaries obtained through establishment or investment Unit：RMB(0’000) Balance of parent company’s equity The Other Included after deducting the proporti essentia in Deductibl difference that loss Paid‐in Shareho on Categori Reg. Business Registered l consolidat Minority e of minority Subsidiaries Business scope capital lding of es Add. nature capital investm ed Interest minority interests exceed ratio (%) voting ents statement interest equity rights s obtained by (%) minority shareholders
Wuxi Little Manufacture Swan General Holding and sale of Productio 2,620.1 Electric subsidia Wuxi 2,800.00 washing 1,960.00 70.00 70.00 Yes n 0 Appliances ries machine and Co. , Ltd. dryers Wuxi Little Development & Swan Driving Holding research of & Control subsidia Wuxi R&D 500 450.00 97.30 100.00 Yes 31.67 Driving & Development ries Control Technology
76 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity The Other Included after deducting the proporti essentia in Deductibl difference that loss Paid‐in Shareho on Categori Reg. Business Registered l consolidat Minority e of minority Subsidiaries Business scope capital lding of es Add. nature capital investm ed Interest minority interests exceed ratio (%) voting ents statement interest equity rights s obtained by (%) minority shareholders
Co. , Ltd.
Manufacture and sales of Wuxi Filin Holding computer Productio 5,465.1 Electronics subsidia Wuxi USD362.46 control 1,962.00 73.00 73.00 Yes n 0 Co. , Ltd. ries components for washing machine Wuxi Little Manufacture Holding Swan Washing Productio and sale of subsidia Wuxi 4967.95 3,725.96 99.91 99.91 Yes ‐ ‐3,796.85 Machine Co. , n commercial ries Ltd. washing
77 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity The Other Included after deducting the proporti essentia in Deductibl difference that loss Paid‐in Shareho on Categori Reg. Business Registered l consolidat Minority e of minority Subsidiaries Business scope capital lding of es Add. nature capital investm ed Interest minority interests exceed ratio (%) voting ents statement interest equity rights s obtained by (%) minority shareholders machine , dryers and spare parts Wuxi Meitian Holding Refrigerator Sales of subsidia Wuxi Trading USD400 2,484.00 75 75 Yes ‐ ‐2,846.77 Market Co., refrigerator ries Ltd. Jiangsu Little Sales of Holding Swan household subsidia Wuxi Trading 41,950.00 41,755.00 99.63 99.63 Yes ‐ ‐6,558.05 Marketing and electrical ries Sales Co. , Ltd. appliances Wuxi Little Swan Holding Wux Import & Import & export 6,500.00 5,750.00 88.46 88.46 Yes ‐1,258.67 Import & Export subsidia i Export of electric
78 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity The Other Included after deducting the proporti essentia in Deductibl difference that loss Paid‐in Shareho on Categori Reg. Business Registered l consolidat Minority e of minority Subsidiaries Business scope capital lding of es Add. nature capital investm ed Interest minority interests exceed ratio (%) voting ents statement interest equity rights s obtained by (%) minority shareholders
Co. , Ltd ries machine products
Wholly‐ Manufacture of P.T. Little Swan owned Malay washing Prima Trading USD100 422.47 51.00 51.00 No subsidia sia machine and air Industries ry conditioners Little Swan Wholly‐ International owned Singap Investmen USD500 Investment USD500 100.00 100.00 Yes (Singapore) subsidia ore t Co., Ltd. ry Tianjin Little Wholly‐o Manufacture of Swan wned Tianji Produ 20,000 washing 20,000 100.00 100.00 Yes
Washing subsidiary n ction machine
79 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity The Other Included after deducting the proporti essentia in Deductibl difference that loss Paid‐in Shareho on Categori Reg. Business Registered l consolidat Minority e of minority Subsidiaries Business scope capital lding of es Add. nature capital investm ed Interest minority interests exceed ratio (%) voting ents statement interest equity rights s obtained by (%) minority shareholders
Machine Co., Ltd.
(2) The subsidiaries obtained through business combination under common control
80 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity Includ Deduc after deducting the Other The The ed in tible difference that loss Paid‐in essential proportio proportio Business Registere Business consol Minority minori of minority Subsidiaries Categories Reg. Add. capital investmen n n nature d capital scope idated Interest ty interests exceed t of holding of voting state intere equity shares (%) rights (%) ments st obtained by minority shareholders
Little Swan Manufact (Jing Zhou) Wholly‐o ure and Electronic wned Jingzhou Production 1,107.02 sale of 1,186.94 100.00 100.00 Yes ‐ Appliances subsidiary washing Co., Ltd. machines Hefei Manufact Royalstar ure and Washing Holding Hefei Production USD13,552 sale of 83,096.23 69.47 69.47 Yes 44,062.84 Machine subsidiari washing Manufactur es machines e Co., Ltd. Hefei Midea Holding Manufact Hefei Production 2,000.00 2,000.00 62.523 90.00 是 202.89 Washing subsidiari ure and
81 Wuxi Little Swan Company Limited Annual Report 2011
Balance of parent company’s equity Includ Deduc after deducting the Other The The ed in tible difference that loss Paid‐in essential proportio proportio Business Registere Business consol Minority minori of minority Subsidiaries Categories Reg. Add. capital investmen n n nature d capital scope idated Interest ty interests exceed t of holding of voting state intere equity shares (%) rights (%) ments st obtained by minority shareholders
Machine es sale of Manufactur washing e Co., Ltd. machines
82 Wuxi Little Swan Company Limited Annual Report 2011
2. Changing of consolidation scope a. L.S.M. Corporation (M) SDN BHD has been stopped operation for years; the full impairment of provisions for the company has been accrued and it has been excluded in the consolidated scope for years;
3. Business combination under common control occurred in the current period None
4. The companies which are excluded from consolidation scope of the current period In Jan 10th of 2011, the company’s board of shareholders adopted the resolution and transferred its 100% shares of Wuxi Little Swan Huayin Electric Appliance Co., Ltd. to Foshan Welling Washing Motor Manufacturing Co., Ltd. at the price of RMB 75,000,000. This subsidiary was no longer included in the combination scope since the date of transfer. (Net assets on the disposal date are RMB 57,468,722.55, and net profit from beginning of the term to the disposal date is zero.)
5. The minority shareholders’ interests bought in current period None
Note V：Notes to the items of consolidated financial statements (Uint: RMB yuan)
1. Monetary fund (1) Items analysis Closing year Opening year Items Original Exchange Translated to Original Exchange Translated to currency rate RMB currency rate RMB Cash： USD RMB 184,735.57 203,697.44 Cash subtotal 184,735.57 203,697.44 Bank savings： USD 34,251,584.61 6.3009 215,815,809.48 13,859,763.12 6.6227 91,789,053.21 EUR 1,632,175.27 8.1625 13,322,630.65 1,494,145.06 8.8065 13,158,188.47 RMB 1,651,624,526.87 924,842,665.81 Subtotal 1,880,762,967.00 1,029,789,907.49
83 Wuxi Little Swan Company Limited Annual Report 2011
Closing year Opening year Items Original Exchange Translated to Original Exchange Translated to currency rate RMB currency rate RMB Other monetary funds USD 257,333.45 6.3009 1,621,432.34 RMB 532,881,216.33 1,185,818,855.47 Subtotal 534,502,648.67 1,185,818,855.47 Total 2,415,450,351.24 2,215,812,460.40
(2) Detailed information about other monetary funds Items Closing balance Opening balance
Guarantee deposits 135,797,048.67 96,789,265.47
Time deposits 398,705,600.00 1,089,029,590.00
Total 534,502,648.67 1,185,818,855.47
2. Trading financial assets Items Closing balance Opening balance
Derivative financial assets ‐ Forward foreign exchange 4,292,300.00 7,778,633.32
contract
3. Notes receivable
Categories Closing balance Opening balance
Bank acceptance 2,757,923,958.94 1,562,503,246.83 List of top five notes that have been endorsed to any other party by the Company but are not mature Drawer Date of issue Maturity date Amount Gansu Midea Refrigeration Production Sales 2011‐07‐12 2012‐01‐12 11,500,000.00 Co., Ltd Wuxi Midea Refrigeration Production Sales 2011‐07‐07 2012‐01‐07 10,000,000.00 Co., Ltd Wuxi Midea Refrigeration Production Sales 2011‐07‐07 2012‐01‐07 10,000,000.00 Co., Ltd Fuyang Midea Refrigeration Production Sales 2011‐09‐29 2012‐03‐29 10,000,000.00 Co., Ltd Fujian Midea Refrigeration Production Sales 2011‐09‐30 2012‐03‐30 10,000,000.00 Co., Ltd
84 Wuxi Little Swan Company Limited Annual Report 2011
4. Accounts receivable (1) Accounts receivable is categorized as:
Closing balance Opening balance
Category Balance Bad debts Balance Bad debts Amount (%) Amount (%) Amount (%) Amount (%) Individually significant accounts receivable on which the bad debt provisions are provided individually Accounts receivable on which the bad debt 979,012,513.4 99.88 50,073,451.81 5.11 955,411,170.03 100.00 49,538,333.56 5.19 provisions are provided by 6 combinations (1) Combination 979,012,513.4 according to account 99.88 50,073,451.81 5.11 955,411,170.03 100.00 49,538,333.56 5.19 6 age (2) Combination according to accounts in the
scope of ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ combination statements
Accounts receivable which are not individually significant, but still the bad 1,201,107.52 0.12 751,107.72 62.53 ‐ ‐ ‐ ‐ debt provisions are provided individually 980,213,620.9 Total 100 50,824,559.53 5.19 955,411,170.03 100 49,538,333.56 5.19 8
(2) Aging analysis for combination according to account age：
Closing balance Opening balance Balance Balance
Aging Amount (%) Bad debts Amount (%) Bad debts
Within 1 year 960,988,170.25 98.16 48,049,408.52 950,292,650.28 99.46 48,457,848.10
1‐2 years 17,498,321.16 1.79 1,749,832.12 4,054,707.35 0.43 459,833.31
2‐3 years 103,505.15 0.01 20,701.03 655,070.19 0.07 216,440.04
3‐5 years 422,516.90 0.04 253,510.14 289,366.23 0.03 284,836.13
Over 5years ‐ ‐ ‐ 119,375.98 0.01 119,375.98
Total 979,012,513.46 100 50,073,451.81 955,411,170.03 100 49,538,333.56
85 Wuxi Little Swan Company Limited Annual Report 2011
(3) Foreign currencies are:
Closing balance Opening balance Items Original Exchange Translated to Original Exchange Translated to currency rate RMB currency rate RMB USD 90,514,869.11 6.3009 570,325,138.78 93,265,781.61 6.6227 617,671,291.87 EUR 1,366,110.98 8.1625 11,150,880.87 8,030,133.04 8.8065 70,717,366.62
(4) There was no accounts receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company.
(5) The information list for the top 5 customers: Proportion to Names Relationship Amount Aging total accounts Receivable (%) Midea (Singapore) 336,640,501.81 34.34 Trading Co., Ltd. Retailer Within 1 year
GEA PRODUCTS Retailer 64,903,257.99 Within 1 year 6.62 Electrolux Home Product Retailer 53,091,999.63 Within 1 year 5.42 (Belgium) Beijing Midea Refrigeration Retailer 51,458,202.77 Within 1 year 5.25 Production Sales Co., Ltd.
Shanxi Midea Refrigeration Retailer 27,737,075.88 Within 1 year 2.83 Production Sales Co., Ltd
Total 533,831,038.08 54.46
(6) Details of accounts receivables from related parties Proportion to total Names Relationship Amount accounts Receivable (%) Under control of holding Midea (Singapore) Trading Co., Ltd. 336,640,501.81 34.34 stockholders of the company Under control of holding PT. Midea Planet Indonesia 14,234,767.83 1.45 stockholders of the company
86 Wuxi Little Swan Company Limited Annual Report 2011
Under control of holding MIDEA SCOTT & ENGLISH SDN BHD 8,957,356.60 0.91 stockholders of the company Under control of holding Hefei Hualing Co., Ltd. 5,451,575.78 0.56 stockholders of the company Under control of holding Midea Electric Espana, S.L. 2,397,592.23 0.24 stockholders of the company Guangdong Midea Heating Equipment Under control of holding 1,013,933.83 0.10 Co., Ltd. stockholders of the company Under control of holding MIDEA ITALIA S.R.L. 706,673.25 0.07 stockholders of the company Little Swan (Jing Zhou) Electronic Under control of holding 245,238.66 0.03 Appliances Co., Ltd. stockholders of the company Hefei Midea Royalstar Refrigerator Co., Under control of holding 206,182.52 0.02 Ltd. stockholders of the company Jiangsu Midea Chunhua Electric Under control of holding 100,000.00 0.01 Appliance Co., Ltd. stockholders of parent company Hefei Midea Royalstar Refrigerator Under control of holding 12,005.81 0.00 Co. , Ltd. stockholders of the company Total 369,965,828.32 37.78
(7) Accounts receivables written off in current period: Amount written Nature of Name Reason of written‐off off receivables Ametek Motors Shanghai Co., Ltd. 27,619.77 Goods payment Uncollectible
Jilin Midea Refrigeration Products Sales 111,622.00 Goods payment Uncollectible Co., Ltd. Guangxi Midea Refrigeration Products Sales 77,090.00 Goods payment Uncollectible Co., Ltd. Cangzhou Midea Refrigeration Products 28,177.00 Goods payment Uncollectible Sales Co., Ltd. Shandong Five star Co., Ltd.(Yantai) ‐82,210.37 Goods payment Bad debt recovery
Changchun Eurasia Group Co., Ltd. ‐41,183.44 Goods payment Bad debt recovery
Total 121,114.96
5. Advances to the supplier (1) Aging analysis： Closing balance Opening balance Aging structure Amount (%) Amount (%) Within 1 year 240,224,053.71 96.07 347,859,376.50 97.41
1‐2 years 9,071,326.54 3.63 9,017,440.06 2.53
2‐3 years 756,600.00 0.30 206,251.35 0.06
3‐5 years ‐ ‐ ‐ ‐
87 Wuxi Little Swan Company Limited Annual Report 2011
Over 5 years ‐ ‐ 6,800.00 0.00
Total 250,051,980.25 100 357,089,867.91 100.00
(2) Details of the prepayments of the top 5 suppliers are as follows.
Reason of Name Relationship Amount Aging outstanding The administration committee of Jingzhou Government Within 1 Advance payment 74,258,965.00 economic development zone Department year for land Beijing Zhongtian Riyue Advertising Co., Advertising Within 1 Services not 46,311,369.00 Ltd. company year provided Within 1 Advance payment Sales Branch of SINOPEC in North China Supplier 13,759,092.28 year for materials Sales Branch of PETRO CHINA COMPANY Within 1 Advance payment Supplier 10,185,000.00 LIMITED in East China year for materials Within 1 Advance payment Suzhou Jiahe Plastics Co., Ltd. Supplier 5,650,000.00 year for materials Total 150,164,426.28
(3) The balance related to the shareholders holding over 5 percent stocks are as followings:
Closing balance Opening balance Names Amount Bad debts Amount Bad debts
GD MIDEA HOLDING CO.,LTD. —— —— 1,291,336.94 ——
6. Other receivables (1) category analysis:
Closing balance Opening balance
Category Balance Bad debts Balance Bad debts Amount (%) Amount (%) Amount (%) Amount (%) Individually significant other receivables on which the bad ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ debt provisions are provided individually Other receivables on which the bad debt provisions 18,288,490.78 98.81 2,740,043.28 14.98 20,611,718.09 100 7,052,703.14 34.22 are provided by combinations (1) Combination according to 18,288,490.78 98.81 2,740,043.28 14.98 20,611,718.09 100 7,052,703.14 34.22 account age
88 Wuxi Little Swan Company Limited Annual Report 2011
(2) Combination according to accounts in ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ the scope of combination statements Other receivables which are not individually significant, but 221,066.34 1.19 221,066.34 100.00 ‐ ‐ ‐ ‐ still the bad debt provisions are provided individually
Total 18,509,557.12 100 2,961,109.62 16.00 20,611,718.09 100 7,052,703.14 34.22
(2) Aging analysis for combination according to account age：
Closing balance Opening balance Balance Balance Bad debts Bad debts Aging Amount (%) Amount (%) provision provision Within 1 12,046,610.07 65.87 606,818.71 8,224,886.18 39.90 408,885.59 year 1‐2 years 2,968,361.21 16.23 292,347.92 1,957,107.63 9.50 195,710.76
2‐3 years 336,837.63 1.84 67,367.53 4,091,025.24 19.85 818,205.05
3‐5 years 2,907,931.87 15.90 1,744,759.12 1,771,993.26 8.60 1,063,195.96
Over 5 years 28,750.00 0.16 28,750.00 4,566,705.78 22.16 4,566,705.78
Total 18,288,490.78 100 2,740,043.28 20,611,718.09 100 7,052,703.14
(3) There was no other receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company.
(4) The information list for the top 5 customers: Proportion to Names Relationship Amount Aging total other Receivables (%) Wuxi Little Swan Ceramics Co., Receivables from Ltd. 2,386,444.38 3‐4 years 12.89 transfer of shares
Hangzhou Xixi Investment and Cooperation 1,491,170.00 Within 2 years 8.06 Development Co., Ltd. partner Asset custody account in Beijing Cooperation Branch of Industrial & 1,200,000.00 1‐2 years 6.48 partner Commercial Bank of China
89 Wuxi Little Swan Company Limited Annual Report 2011
Hefei High‐tech Industrial Development Zone, the Government 1,000,000.00 1‐2 years 5.40 National Treasury payment department center Household Electric Appliance Cooperation 728,144.00 Within 1 year 3.93 Research Institute of China partner
Total 6,805,758.38 36.76
(5) Other receivables due from related parties ：
There are no other receivables due from the related parties on the balance sheet day.
(6) Other receivables written off in the current period: Generated Amount Nature of Reason of through Name written off receivables written‐off related‐party transactions Business BSW Household Appliances Co. , Ltd. 4,566,705.78 Uncollectible Yes Receivables
7. Inventory (1) Category Closing balance Opening balance Items Balance Bad debts Net book value Balance Bad debts Net book value
Raw materials 67,170,191.52 4,846,662.22 62,323,529.30 94,252,521.54 3,895,468.21 90,357,053.33
Low price 63,247.86 63,247.86 consumables Finished goods in 746,889,129.82 22,993,564.94 723,895,564.88 944,445,431.73 24,410,760.03 920,034,671.70 stock Consigned finished 14,805,049.55 14,805,049.55 goods Materials in outside 1,231,355.59 1,231,355.59 3,584,342.90 3,584,342.90 processing Product in 22,713,702.97 763,423.76 21,950,279.21 22,362,520.85 532,792.35 21,829,728.50 process
Total 838,004,379.90 28,603,650.92 809,400,728.98 1,079,513,114.43 28,839,020.59 1,050,674,093.84
(2) Change of inventory impairment provisions
Provided in Decreased this year Category Opening balance Closing balance current year Written back Written off
Raw materials 3,895,468.21 3,230,489.59 2,279,295.58 4,846,662.22
90 Wuxi Little Swan Company Limited Annual Report 2011
Finished 24,410,760.03 1,441,280.75 207,192.54 2,651,283.30 22,993,564.94 goods in stock Product in 532,792.35 230,631.41 763,423.76 process
Total 28,839,020.59 4,902,401.75 207,192.54 4,930,578.88 28,603,650.92
8. Other current asset
Items Closing balance Opening balance
Deferred expenses‐Molds 112,052,669.26 129,431,121.17
Other - 125,000.00
Total 112,052,669.26 129,556,121.17
9. Sellable financial assets
Categories Closing balance Opening balance
Sellable equity instrument investment Initial cost Fair value Initial cost Fair value
Wuhan Huaxin Hi‐Tech Co. , Ltd.（400038） 100,300.00 284,592.00 100,300.00 312,816.00
Total 100,300.00 284,592.00 100,300.00 312,816.00
91 Wuxi Little Swan Company Limited Annual Report 2011
10. Co‐operative & Joint‐operative subsidiaries investments The Registered compan The Total Total net Total Busin Total assets Net profit Legal Business capital y’s company’s liabilities at assets at operating Invested party ess Reg. Add. at the end of of current representative Scope (RMB0’00 share voting the end of the end of revenue of type year year 0) proport rights (%) year year current year ion (%) Joint – operative Ltd. Guangzhou liabilit Guangz Logistics 17,144,258.7 11,366,927.7 Antaida Material y Ye Weilong 1,000 20 20 26,690,230.81 9,545,972.06 ‐1,494,670.14 hou service 5 1 Distribution Co. comp any
11. Long‐term equity investment Note for difference Impair Proportio Proportions between ment Amount of Opening Increase/ Closing ns of of proportion Provision for provid Cash dividends Company Method Initial balance Decrease balance shareholdi voting s of voting impairment ed in in current year investment ng (%) rights (%) rights and curren shareholdi t year ng ratio BSW Household Appliances Co., Equity 97,482,661.00 103,209,332.73 ‐103,209,332.73 40 40 Ltd. Guangzhou Antaida Material Equity 2,000,000.00 3,727,785.78 ‐298,934.03 3,428,851.75 20 20 Distribution Co.
92 Wuxi Little Swan Company Limited Annual Report 2011
Note for difference Impair Proportio Proportions between ment Amount of Opening Increase/ Closing ns of of proportion Provision for provid Cash dividends Company Method Initial balance Decrease balance shareholdi voting s of voting impairment ed in in current year investment ng (%) rights (%) rights and curren shareholdi t year ng ratio P.T. Little Swan Prima Industries Cost 4,224,744.00 51 51 4,224,744.00 (Malaysia) Hengtai Insurance Cost 1,000,000.00 1,000,000.00 1,000,000.00 3.33 3.33 25,000.00 Brokers Ltd. Suzhou People's Shopping Centre Cost 150,000.00 150,000.00 150,000.00 ‐ ‐ 30,000.00 (150000 shares) Bank of Jiangsu Cost 1,100,000.00 1,210,000.00 1,210,000.00 ‐ ‐ (2202564 shares) Inner Mongolia Baotou Cost 50,000.00 50,000.00 50,000.00 ‐ ‐ Department Store Co., Ltd. ‐103,508,266.7 Total 139,775,525.00 109,347,118.51 5,838,851.75 4,224,744.00 ‐ 55,000.00 6
93 Wuxi Little Swan Company Limited Annual Report 2011
12. Fixed assets (1) Details:
1) Cost of the fixed assets Item Opening balance Increase Decrease Closing balance
Property and buildings 721,223,111.70 105,280,266.33 11,011,226.05 815,492,151.98
Machineries 738,160,283.23 191,135,135.05 84,187,389.64 845,108,028.64
Vehicles 21,583,208.64 5,320,466.04 2,113,341.12 24,790,333.56 Electronic and other 93,609,603.14 23,483,131.23 28,907,429.04 88,185,305.33 equipment Total 1,574,576,206.71 325,218,998.65 126,219,385.85 1,773,575,819.51
2) Depreciation ‐
Item Opening balance Increase Decrease Closing balance
Property and buildings 58,682,939.80 28,341,079.21 2,664,040.78 84,359,978.23
Machineries 258,211,615.23 58,994,948.51 70,507,264.94 246,699,298.80
Vehicles 6,469,337.60 3,144,684.27 1,381,925.39 8,232,096.48 Electronic and other 36,523,259.49 11,193,536.10 4,251,235.40 43,465,560.19 equipment Total 359,887,152.12 101,674,248.09 78,804,466.51 382,756,933.70
‐
3) The net book value
Item Opening balance Increase Decrease Closing balance
Property and buildings 662,540,171.90 76,939,187.12 8,347,185.27 731,132,173.75
Machineries 479,948,668.00 132,140,186.54 13,680,124.70 598,408,729.84
Vehicles 15,113,871.04 2,175,781.77 731,415.73 16,558,237.08 Electronic and other 57,086,343.65 12,289,595.13 24,656,193.64 44,719,745.14 equipment Total 1,214,689,054.59 223,544,750.56 47,414,919.34 1,390,818,885.81
4) Provision for impairment loss Opening balance Increase Decrease Closing balance Item
Property and buildings 15,098,707.55 641,121.23 1,510,636.69 14,229,192.09
Machineries 2,357,106.32 5,758,034.46 97,885.56 8,017,255.22
Vehicles 24,351.50 376,393.54 400,745.04
94 Wuxi Little Swan Company Limited Annual Report 2011
Electronic and other 1,032,182.57 2,192,072.53 385,221.97 2,839,033.13 equipment Total 18,512,347.94 8,967,621.76 1,993,744.22 25,486,225.48
5) Carrying amount
Item Opening balance Closing balance
Property and buildings 647,441,464.35 716,902,981.66
Machineries 477,591,561.68 590,391,474.62
Vehicles 15,089,519.54 16,157,492.04 Electronic and other 56,054,161.08 41,880,712.01 equipment Total 1,196,176,706.65 1,365,332,660.33
Depreciation of the current period is RMB 101,674,248.09. The original carrying amount of fixed assets transferred from construction-in-progress during current period is RMB151,653,945.27.
13. Construction in progress (1) Details: Closing balance Opening balance Impair Impair Items ment ment Amount Net book value Amount Net book value provis provisi ion on Little Swan Industrial Park 5,624,583.36 5,624,583.36 Shifts house of Royalstar 17,004,603.60 17,004,603.60 company 35KV Electric Power 2,545,498.72 2,545,498.72 Substation Sporadic projects 830,992.00 830,992.00
Total 26,005,677.68 26,005,677.68
(2) Changes of main construction in process: Aggregate Transferred to Other Incl. amount Opening Increased fixed asset decreas Interest Capital Closing Project Budget of interest balance this year this ed this capitaliz source balance capitalize year year ation d Little Swan 0.5 Self‐ra Industrial 5,624,583.36 8,609,966.62 14,234,549.98 billion ised Park Shifts house 60 Self‐ra 17,004,603.60 19,459,179.80 36,463,783.40 of Royalstar million ised
95 Wuxi Little Swan Company Limited Annual Report 2011
Injection Self‐ra 71,918,349.35 71,918,349.35 Machine ised
Total 22,629,186.96 99,987,495.77 122,616,682.73
14. Intangible assets (1) Details of intangible assets 1) Cost of the intangible assets Increased this Decreased this Project Opening balance Closing balance year year Land use right 260,306,528.19 83,553,400.00 343,859,928.19
Non‐patented technology 1,992,000.00 1,992,000.00
Software 1,715,321.61 33,000.05 1,682,321.56 Total 264,013,849.80 83,553,400.00 33,000.05 347,534,249.75
2) Amortization Increased this Decreased this Project Opening balance Closing balance year year Land use right 21,369,441.66 6,351,365.70 27,720,807.36
Non‐patented technology 1,643,400.00 199,200.00 1,842,600.00
Software 774,186.52 369,639.84 33,000.05 1,110,826.31 Total 23,787,028.18 6,920,205.54 33,000.05 30,674,233.67
3)The net book value Increased this Decreased this Project Opening balance Closing balance year year Land use right 238,937,086.53 77,202,034.30 316,139,120.83
Non‐patented technology 348,600.00 ‐199,200.00 149,400.00
Software 941,135.09 ‐369,639.84 571,495.25 Total 240,226,821.62 76,633,194.46 316,860,016.08 ‐ ‐ 4) Provision for impairment loss Increased this Decreased this Project Opening balance Closing balance year year Land use right ‐‐‐ ‐
Non‐patented technology ‐‐‐ ‐
Software ‐‐‐ ‐ Total ‐‐‐ ‐
96 Wuxi Little Swan Company Limited Annual Report 2011
5) Carrying amount Increased this Decreased this Project Opening balance Closing balance year year Land use right 238,937,086.53 77,202,034.30 316,139,120.83
Non‐patented technology 348,600.00 ‐199,200.00 149,400.00
Software 941,135.09 ‐369,639.84 571,495.25 Total 240,226,821.62 76,633,194.46 316,860,016.08
15. Long‐term deferred expenses Reasons for Opening Increased this Other Closing Project Amortization other balance year decrease balance decrease Transfer‐out Moldings 59,798,327.43 24,911,130.23 31,832,987.52 6,204,666.71 46,671,803.43 of Huayin company’s IT consulting fee 1,872,505.23 4,493,493.84 1,603,838.81 4,762,160.26 ‐ molds, etc. Expenditure on
leasehold 1,925,117.69 0.00 604,222.95 1,320,894.74 ‐ improvements Total 63,595,950.35 29,404,624.07 34,041,049.28 6,204,666.71 52,754,858.43
16. Deferred tax assets/deferred tax liabilities （1）Confirmed deferred tax assets and deferred tax liabilities
Project Closing balance Opening balance
Deferred tax assets
Asset impairment provision 13,848,685.40 13,782,634.28
Payroll and dismissal expenses 7,208,346.05 11,568,550.43
Accrued expenses 75,474,152.06 91,422,699.53
Internal unrealized profits 3,653,800.80 1,866,168.12
Provisions for foreseeable 3,022,895.56 2,773,169.88 liabilities Deferred revenue (government 236,730.00 334,290.00 subsidies)
Investment differences 1,317,443.38 1,317,443.38
Total 104,762,053.25 123,064,955.62 Opening Project Closing balance balance
Deferred tax liabilities
Change of fair value 671,488.80 1,198,672.40
Total 671,488.80 1,198,672.40
97 Wuxi Little Swan Company Limited Annual Report 2011
(2) Details about the temporary difference. Amount of temporary difference Item Closing balance Opening balance
Asset impairment provision 92,267,684.65 92,564,693.66
Payroll and dismissal expenses 48,055,640.35 77,123,669.53
Accrued expenses 503,161,013.70 609,484,663.57
Internal unrealized profits 24,358,671.97 12,441,120.83
Foreseeable liabilities 20,152,637.08 18,487,799.18
Deferred revenue (government subsidies) 1,578,200.00 2,228,600.00
Investment differences 8,782,955.88 8,782,955.88 Change of fair value 4,476,592.00 7,991,149.32
Total 702,833,395.63 829,104,651.97
17. Provisions for impairment loss Opening Increased this Transfer out Item Written back Written off Closing balance balance year Provision for bad debts 56,591,036.70 8,719,272.06 6,535,594.82 301,224.05 4,687,820.74 53,785,669.15 Provision for impairment of 28,839,020.59 4,902,401.75 207,192.54 4,849,420.23 81,158.65 28,603,650.92 inventories Provision for impairment of financial assets available for - sale Provision for impairment of held‐to‐maturity - investments Provision for impairment of long‐term equity 4,224,744.00 - 4,224,744.00 investments Provision for impairment of - investment property Total provision for 18,512,347.94 7,456,985.07 0.00 16,549.00 466,558.53 25,486,225.48 impairment of fixed assets Provision for impairment of construction materials -
Provision for impairment of - construction in process Provision for impairment of - intangible assets Goodwill impairment - provision Others -
Total 108,167,149.23 21,078,658.88 6,742,787.36 5,167,193.28 5,235,537.92 112,100,289.55
98 Wuxi Little Swan Company Limited Annual Report 2011
18. Short‐term loans (1) Categories of Short‐term loans：
Category Closing balance Opening balance
Guaranteed loan
Pledge loan 6,961,486.36 9,039,354.88 Total 6,961,486.36 9,039,354.88
(2) The pledge loan at the balance sheet date is RMB 6,961,486.36, which is pledged by the company’s cash deposit of RMB 7,090,000.00.
19. Notes payable
Category Closing balance Opening balance
Bank acceptance 1,539,319,483.44 804,597,930.44
Total 1,539,319,483.44 804,597,930.44
The maturity date of RMB 800,278,600 notes payable is within 2 months, and RMB 739,040,800 notes payable will be matured in 3 to 6months.
The company provides a deposit of RMB 135,797,000for the bank acceptance.
20. Accounts payable (1) Details of accounts payable
Aging(year) Closing balance Opening balance
Within 1 year 2,732,569,705.52 2,891,828,944.70
1 ‐2 years 39,885,209.61 47,850,671.17
2‐3 years 18,043,425.86 10,254,174.06
3‐5 years 17,016,288.79 16,373,122.40
Over 5 years 7,973,541.60 6,012,721.07
Total 2,815,488,171.38 2,972,319,633.40
(2) Details of payables related to the shareholders holding over 5 percent stocks:
Name of shareholders Closing balance Opening balance
GD MIDEA HOLDING CO.,LTD. 261,331.97
99 Wuxi Little Swan Company Limited Annual Report 2011
(3) List of foreign exchange payables ： Closing balance Opening balance Foreign Project Foreign currency Conversion Conversion Amount in RMB currency Amount in RMB amount rate rate amount
USD 11,385,926.00 6.3009 71,741,581.13 18,533,685.02 6.6227 122,743,035.78
EUR 158,850.03 8.1625 1,296,613.37 202,817.42 8.8065 1,786,111.61
(4) The list of the top five companies in the amount of accounts payable：
Relationship with Proportion to total Company name Closing balance Aging the company accounts payable (%) Huai’an Welling Motor 66,518,916.19 2.36 Manufacturing Co., Ltd. Supplier Within 1 year Ningbo Qijing Machinery 59,536,045.97 2.11 Co., Ltd. Supplier Within 1 year Wuxi Feihuang Electric 39,566,231.00 1.41 Manufacturing Co., Ltd. Supplier Within 1 year Jiang Su Furen Group Co., 37,965,635.39 1.35 Ltd. Supplier Within 1 year Guangzhou Borche Machinery Co., Ltd. Supplier 25,972,001.75 Within 1 year 0.92
21. Advance from customers (1) Aging analysis： Items Closing balance Opening balance Within 1 year 457,067,857.84 437,513,477.74 1‐2 years 2,418,192.18 11,035,844.41 2‐3 years 8,345,151.20 6,280,571.46 3‐5 years 7,470,342.54 2,705,690.83 Over 5 years 10,452,506.04 9,632,775.97 Total 485,754,049.80 467,168,360.41
(2) There was no advance from customers due from shareholders with more than 5% (including 5%) of the voting shares of the Company. (3) Foreign currencies are: Closing balance Opening balance Items Original Exchange Translated to Original Exchange Translated to currency rate RMB currency rate RMB
USD 3,223,376.73 6.3009 20,310,174.44 2,438,644.23 6.6227 16,150,409.14
EUR 11,404.36 8.1625 93,088.09 97.01 8.8065 854.32
100 Wuxi Little Swan Company Limited Annual Report 2011
(4) The information list for the top 5 customers: Proportion to total Names Relationship Amount Aging advance from customers (%) Shenzhen Midea Refrigeration 97,419,526.18 20.06 Production Sales Co., Seller Within 1 year Ltd. Xinyang Midea Refrigeration 51,235,702.50 10.55 Production Sales Co., Seller Within 1 year Ltd. Wenzhou Midea Refrigeration 43,938,171.42 9.05 Production Sales Co., Seller Within 1 year Ltd. Luoyang Midea Refrigeration 40,263,658.14 8.29 Production Sales Co., Seller Within 1 year Ltd Weifang Midea Refrigeration 38,622,101.64 7.95 Production Sales Co., Seller Within 1 year Ltd
22. Employees’ wage payable
Items Opening balance Increase Decrease Closing balance
Wage, bonus, allowance and 63,829,570.40 421,082,230.81 424,022,804.06 60,888,997.15 subsidies
Employee welfare 7,163,743.29 30,877,988.46 34,176,143.98 3,865,587.77
Social insurance 7,747,207.03 58,243,047.63 57,345,188.88 8,645,065.78
Housing fund 5,326,957.85 15,304,055.91 15,283,835.40 5,347,178.36
Trade union and education 3,923,927.01 6,102,934.71 6,085,208.09 3,941,653.63 allowance Compensations for cancellation of the labor relationship with 58,801,147.50 7,452,612.88 13,461,588.81 52,792,171.57 employees
Others 153,693.65 ‐153,693.65
Total 146,946,246.73 538,909,176.75 550,374,769.22 135,480,654.26
The accrued wages payable at the end of current period has been completely paid in January of 2012.
101 Wuxi Little Swan Company Limited Annual Report 2011
23. Tax payable
Items Closing balance Opening balance
VAT ‐75,048,177.29 ‐116,373,767.08
Business tax 2,013,293.60 1,930,713.14
Enterprise income tax 63,401,496.70 81,517,576.64
Personal income tax 281,459.64 182,554.28
Property tax 1,897,977.50 851,909.81
Land using tax 1,959,774.34 318,039.42
Stamp tax 721,059.67 1,177,899.16
Urban maintenance and 1,998,223.92 1,128,454.69 construction tax
Education surtax 1,372,998.32 1,449,209.17
Other taxes 2,865,776.81 3,870,367.63
Total 1,463,883.21 ‐23,947,043.15
24. Dividends payable Reason of unpaid Names Closing balance Opening balance over 1 year Other corporate shareholders of 2,838,070.21 2,719,702.95 Unable to pay restricted shares
25. Other payables (1) Aging analysis of other payables
Item Closing balance Opening balance
Within 1year 128,170,235.14 54,137,520.01
1 ‐2years 22,787,614.91 17,033,556.89
2‐3years 8,593,080.06 5,432,950.60
3‐5years 2,291,622.53 2,822,118.43
Over 5years 3,562,718.52 4,752,386.35
Total 165,405,271.16 84,178,532.28
(2) List of other payables due to shareholders with more than 5% (including 5%) of the voting shares of the Company. Proportion to Name Relationship Amount total other
receivables (%) GD Midea Holding Co., Ltd. 390,636.00 0.24 Holding stockholders of the Company (3) Other payables ageing more than one year were mainly suspended temporary credits and payables.
102 Wuxi Little Swan Company Limited Annual Report 2011
26. Estimated liabilities
Item Opening balance Increase Decrease Closing balance
Quality guarantee 18,487,799.18 11,504,490.68 11,039,054.86 18,953,235.00 payables Compensation for - 1,199,402.08 - 1,199,402.08 suppliers’ inventory loss
Total 18,487,799.18 12,703,892.76 11,039,054.86 20,152,637.08
The washing machines produced by subsidiary of the company, Wuxi Little Swan General Electric Co., Ltd., are mainly sold to the United States and other foreign markets. Overseas sale of these washing machines involves the two kinds of risks:1) The insurance company may only afford an insufficient compensation when the quality problems take place, and 2) there is a risk of liability for damages when the failure rate is higher than FCR stipulated in the contract with General Electric Company. As of December 31, 2011, the company has estimated a risk loss of RMB 18,953,200 for the sold products.
27. Other non‐current liabilities Opening Item Closing balance balance
Deferred revenue‐ Project appropriation 6,621,250.00 8,024,850.00
28. Share capital Increase/Decrease (+/‐) Opening Issuing Restricted Item Closing balance balance new Shares lifting Others shares the ban
A shares – restrictive 224,021,535.00 - ‐1,576,800.00 2,839,371.00 225,284,106.00
A shares – common 217,430,357.00 - 1,576,800.00 ‐2,839,371.00 216,167,786.00
B shares – restrictive 30,851,714.00 - - - 30,851,714.00
B shares – common 160,184,158.00 - - - 160,184,158.00
Total 632,487,764.00 - - - 632,487,764.00
103 Wuxi Little Swan Company Limited Annual Report 2011
29. Capital surplus Opening Closing Item Increase Decrease balance balance
Share premium 1,058,967,340.76 3,784,622.19 1,055,182,718.57
Capital surplus of the original system transferred 39,179,385.00 39,179,385.00 in
Loss/profit from change of 180,638.60 23,990.40 156,648.20 fair value Provision of equity 1,638,562.74 1,638,562.74 investment
Total 1,099,965,927.10 3,808,612.59 1,096,157,314.51
Among the capital reserves decreased this year, RMB 3,784,622.19 was caused by investment difference from stock right transfer of the subsidiary Wuxi Huayin Electric Appliances Co. , Ltd. and RMB 23,990.40 was caused by changes in fair value of available‐for‐sale financial assets in the current year.
30. Surplus reserves
Item Opening balance Increase Decrease Closing balance
Legal reserve 212,889,613.44 36,544,298.84 249,433,912.28
31. Retained earnings Extraction or Item Amounts allocation proportion Before adjustment Retained earnings at the end of last 1,112,075,620.21 year
Adjustment：Retained earnings at the beginning of the year
Adjusted retained earnings at the beginning of the year 1,112,075,620.21
Plus: Net profit attributable to parent company transferred 453,327,963.81 in
Less: Appropriation of statutory surplus reserve 36,544,298.84 10%
Appropriation of discretionary surplus reserve
Common share dividend payable 63,248,776.40 Ordinary shares dividends converted to share capital
Retained earnings at the end of the year 1,465,610,508.78
104 Wuxi Little Swan Company Limited Annual Report 2011
32. Operational turnover and costs (1) Details of business turnover and costs:
Occurred this year Occurred last year Items Turnover Operation cost Turnover Operation cost
Washing machines 9,635,208,564.70 7,939,708,858.05 9,814,149,428.32 8,157,277,794.34
Other goods 13,806,949.98 13,083,309.20 39,218,612.59 35,523,396.53
Raw materials 1,321,547,355.66 1,200,200,788.72 1,340,584,013.14 1,251,763,368.29
Others 5,058,834.18 140,600.00 8,414,752.09 784,430.02
Total 10,975,621,704.52 9,153,133,555.97 11,202,366,806.14 9,445,348,989.18
(2) Turnover from top 5 clients: Proportion in total Name of clients Turnover turnover (%) Midea (Singapore) Trading Co., Ltd. 1,132,586,137.66 10.32
GEAPRODUCTS 307,459,216.38 2.80 Chongqing Midea Refrigeration 230,308,958.90 2.10 Production Sales Co., Ltd. Hunan Midea Refrigeration Production 218,999,042.01 2.00 Sales Co., Ltd Jiangxi Midea Refrigeration Production 206,078,007.88 1.88 Sales Co., Ltd
Total 2,095,431,362.83 19.10
33. Business tax and surcharge Items Occurred this year Occurred last year
City maintenance and construction tax 13,306,679.39 14,686,914.97
Education surtax 8,669,567.88 8,681,166.83
Local fee 341,688.35 282,655.74
Business tax 117,960.51 148,455.65
Total 22,435,896.13 23,799,193.19
34. Selling expenses
Occurred this Occurred last Items year year
Selling expenses 894,035,414.82 738,452,660.85
Compared to last year, Selling expenses increased by 21.07%，because the Company invested more resources in marketing and warehousing for promotion.
105 Wuxi Little Swan Company Limited Annual Report 2011
35. G&A expenses Occurred this Occurred last Items year year
G&A expenses 373,315,207.86 325,689,250.06 The modest increase of G&A expenses compared to last term was caused by larger investment in R&D expenses in current term.
36. Financial expenses Occurred this Occurred last Items year year
Interest expenses 10,987,739.43 27,863,605.20
Less: Interest income 47,083,684.49 22,259,880.47
Exchange losses 31,172,114.97 20,727,938.69
Commission charge 3,905,552.17 7,506,552.24
Total ‐1,018,277.92 33,838,215.66
37. Impairment provisions of assets
Items Occurred this year Occurred last year
Bad debt losses 2,183,677.24 ‐23,729,128.43
Inventory impairment 4,695,209.21 ‐616,166.13 losses Fixed assets impairment 7,456,985.07 3,123,375.99 losses
Total 14,335,871.52 ‐21,221,918.57
38. Gains from changes in fair values Item Occurred this year Occurred last year Trading financial assets ‐3,486,333.32 7,778,633.32
39. Investment income (1) Details of investment income Items Occurred this year Occurred last year Long‐term equity investment gains on 55,000.00 35,000.00 cost basis –cash dividends from non‐subsidiaries Long‐term equity investment gains on equity basis ‐298,934.03 6,983,831.04
Gains from disposal of long‐term equity investment 45,306,566.91 ‐7,158,300.08
Investment gains from disposal of sellable financial assets, etc.
106 Wuxi Little Swan Company Limited Annual Report 2011
Investment gains from holding of sellable financial assets, etc.
Investment gains from holding of trading financial assets, etc. 32,308,941.40 4,143,950.00
Total 77,371,574.28 4,004,480.96 (2) Investment gains from disposal of long‐term equity investment
Reason for the changes Name of Investee Occurred this year of increase/decrease
BSW Household Appliances Co. , Ltd. 23,990,667.27 Stock right transfer
Wuxi Little Swan Huayin Electric 21,315,899.64 Stock right transfer Appliances Co. , Ltd. Total 45,306,566.91
40. Non‐operating income Items Occurred this year Occurred last year Gains from disposal of fixed 16,501,957.10 21,156,375.16 assets Unpayable accounts payable 10,188,474.84 10,480.00 Gains from governmental 61,717,786.34 47,310,581.06 subsidy Penalty income 7,038,247.99 1,741,779.08
Other 1,813,052.97 3,654,936.32
Total 97,259,519.24 73,874,151.62
Details of gains from government subsidies: Occurred last Items Occurred this year year Awards for growth maintenance of key 43,933,100.00 6,919,300.00 enterprises
VAT refund upon collection 11,558,589.14 8,653,570.90
Science and technology award funds 1,800,000.00 1,815,600.00
Workers resettlement funds 945,814.00 900,000.00 Subsidies for special guide of modern 753,200.00 - service industry Subsidies for export credit insurance 706,323.00 247,000.00 premiums New District Administrative Committee 584,400.00 383,900.00 Fund grants Support funds of foreign economy and 370,100.00 21,800.00 trade Patent fund from Science and 259,500.00 36,705.00 Technology Burea
107 Wuxi Little Swan Company Limited Annual Report 2011
International market development funds 90,000.00 35,000.00 Subsidies for enterprises’ technological transformation and fixed assets 50,400.00 1,075,000.00 construction
Support fund for general trade export 33,640.00 953,700.00 Subsidies for investment of Hefei - 15,000,000.00 Washing Machine Industrial Park Subsidies for the sixth and seventh batch - 6,500,000.00 of key industries Restructuring
Awards for the distribution of industry - 2,100,000.00
Returned flood control fund - 896,518.98 Subsidies for technology development - 600,000.00 projects
Returned land use tax - 490,041.77 Funds for promoting the growth of - 250,000.00 export and foreign trade Subsidies from China Import and Export - 124,800.00 Commodities Fair Experts funds for Introduction of - 94,000.00 Intelligence
Awards for energy saving - 80,000.00
Subsidies on interest payment of import - 62,604.00
Incubation enterprise subsidies - 60,000.00
Others 632,720.20 11,040.41
Total 61,717,786.34 47,310,581.06
41. Non‐operating expenses
Items Occurred this year Occurred last year
Loss from disposal of fixed assets 8,207,434.68 11,861,011.80
Penalties paid 248,359.75 150,857.71
Compensation expenses 2,939,257.29
Donations expenses 150,000.00 540,812.00
Local fees (Flood control fund, etc.) 7,311,295.35 6,687,542.06
Others 1,299,349.01 1,195,849.61
Total 20,155,696.08 20,436,073.18
42. Income tax expenses
Items Occurred this year Occurred last year
Income tax calculated according to the law 115,320,194.65 119,657,310.58 and regulations in current period
108 Wuxi Little Swan Company Limited Annual Report 2011
Adjustment of differed income tax 16,488,154.05 ‐7,713,716.54
Total 131,808,348.70 111,943,594.04
43. Rate of return on common stockholders’ equity (ROE), primary earnings per share, and diluted earnings per share
(1) Calculation outcome
Current Year Previous Year
Weighted Basic Weighted Basic Diluted Diluted Profit of the reporting earnings per earnings period Average ROE earnings Average ROE earnings share per share per share per share Net profit attributable to common share holders of 13.99% 0.72 0.72 18.09% 0.80 0.80 the Company
Net profit attributable to common share holders of the Company after 11.24% 0.58 0.58 16.50% 0.66 0.66 deducting the non‐recurring gain/loss
(2) Formula of earnings per share Items No. Current Year Previous Year Net profit attributable to common 1 453,327,963.81 506,917,078.13 shareholders of the Company Non‐recurring gain/loss attributable to the net profit of common shareholders of the 2 88,969,743.80 135,958,058.96 parent company after deducting of income tax influences Net profit attributable to common share holders of the Company after deducting of 3=1‐2 364,358,220.01 370,959,019.17 non‐recurring gain/loss Total of shares at beginning of year 4 632,487,764.00 547,655,760.00 Amount of shares increased by capitalizing of 5 ‐ ‐ common reserves or share dividend Amount of shares increased by issuing of new 6 ‐ 84,832,004.00 shares or transforming of debt to shares Number of months from the next month of new share issuing or converting of 7 ‐ 2.00 debt to shares to the end of report term Amount of shares decreased by repurchasing 8 ‐ ‐ of shares in the report term Number of months from the next month of 9 ‐ ‐ share decreasing to the end of report term
109 Wuxi Little Swan Company Limited Annual Report 2011
Items No. Current Year Previous Year
Amount of shares reduced in the report term 10 ‐ ‐
Number of months in the report term 11 12.00 12.00
Weighted average of common shares issued 12=4+5+6×7÷11‐8× 632,487,764.00 561,794,427.33 outside (I) 9÷11‐10 Weighted average of common shares issued outside adjusted for combination under 13 632,487,764.00 632,487,764.00 common control (II) Basic earnings per share (I) 14=1÷13 0.72 0.80
Basic earnings per share (II) 15=3÷12 0.58 0.66 Diluting potential common share interests 16 ‐ ‐ recognized as expenses Income tax rate 17 15% 15%
Transformation fees 18 ‐ ‐ Amount of shares increased by transforming or exercising of company bond, subscription 19 ‐ ‐ certificate, or share option 20=[1+(16‐18)×(1‐1 Diluted earnings per share (I) 0.72 0.80 7)]÷(13+19) 21=[3+(16‐18)×(1‐1 Diluted earnings per share (II) 0.58 0.66 7)]÷(12+19)
44. Other misc. incomes Occurred this Occurred last Items year year 1. Gains (losses) from sellable financial assets ‐28,224.00
Less: Income tax influence of sellable financial assets ‐4,233.60 Net amount written into other gains in previous terms and transferred
into gain/loss in current term Sub‐total ‐23,990.40 ‐
2. Shares in other gains of investees on equity basis Less: Income tax influence of shares in other gains of investees on
equity basis Net amount written into other gains in previous terms and transferred
into current gain/loss Sub‐total ‐ ‐
3. Amount of gains (or losses) from cash flow hedge instrument
Less: Income tax influence of cash flow hedge instruments Net amount written into other gains in previous terms and transferred
into current gain/loss Adjusted amount transferred to initial amount of the target project
110 Wuxi Little Swan Company Limited Annual Report 2011
Subtotal ‐ ‐
4. Difference from translating of foreign currency financial statements ‐1,606,613.13 ‐937,948.99 Less: Net amount of disposing overseas business and transferred to
current gain/loss Sub‐total ‐1,606,613.13 ‐937,948.99
5. Others Less: Income tax influence by other accounted into other misc.
incomes Net amount accounted into other misc. income in previous terms and
transferred into current gain/loss Sub‐total ‐ ‐
Total ‐1,630,603.53 ‐937,948.99
45. Notes to the Cash Flow Statement (1) Other cash inflow related to operation
Items Amount
Revenue from fines 7,038,247.99
Government Subsidies 61,717,786.34
Interest income 47,083,684.49
Other non‐operating‐related cash 840,589.84 income
Total 116,680,308.66
(2) Other cash paid related to operation
Items Amount
Sales expense 858,977,269.72
Administrative expense 174,500,574.25
The amount of fee expenditures in 3,905,552.17 financial expenses
Others 5,968,958.52
Total 1,043,352,354.66
(3) Other cash received related to operation
Item Amount Removal and Rebuilding 1,579,033.10 Compensations
111 Wuxi Little Swan Company Limited Annual Report 2011
46. Appendix of Cash Flow Statement
Items Closing balance Opening balance
1.Net profit adjusted to cash flow of operation: Net profit 538,564,751.56 609,738,014.45 Plus: Asset impairment provision 14,335,871.52 ‐21,221,918.57 Fixed asset depreciation, gas and petrol depreciation, 101,674,248.09 73,985,120.56 production goods depreciation Amortizing of intangible assets 6,920,205.54 6,220,449.59 Amortizing of long‐term expenses 34,041,049.28 26,805,170.65 Loss from disposal of fixed assets, intangible assets, and ‐8,294,522.42 ‐16,586,270.70 other long‐term assets (“‐“ for gains) Loss from fixed asset discard ‐ 7,290,907.34 Loss from fluctuation of fair value 3,486,333.32 ‐7,778,633.32 Financial expenses ‐ 3,687.50 Investment loss (“‐“ for gains) ‐77,371,574.28 ‐4,004,480.96 Decrease of deferred income tax asset (“‐“ for increase) 17,011,104.05 ‐8,880,511.56 Increase of deferred income tax liabilities (“‐“ for ‐522,950.00 1,166,795.00 decrease) Decrease of inventory (“‐“ for increase) 241,508,734.53 ‐339,622,574.29 Decrease of operational receivable items (“‐“ for increase) ‐1,121,381,670.27 ‐588,184,930.58 Increase of operational payable items (“‐“ for decrease) 492,559,728.15 985,203,446.12 Others ‐‐ Net cash flow generated by business operation 242,531,309.07 724,134,271.23 2. Investment and financing activities not involving in cash ‐‐ flow Liabilities converted to capital ‐‐ Convertible bond expire within 1 year ‐‐ Fixed assets acquired under finance leases ‐‐ Others ‐‐ 3. Change of cash and cash equivalents ‐‐ Balance of cash at end of year 2,279,653,302.57 2,119,023,194.93 Less: Balance of cash at beginning of year 2,119,023,194.93 1,545,999,535.65 Plus: Balance of cash equivalents at end of term Less: Balance of cash equivalents at beginning of term Net increase of cash and cash equivalents 160,630,107.64 573,023,659.28
47. Notes of the Changes in owner's equity
The items of Capital surplus ‐ Invested capital of the owners‐others： Amount
Equity investment difference transfer‐out from transferring stock right of Wuxi 3,784,622.19 Huayin Electric Appliances Co. , Ltd.
Others
Conversion difference of foreign currency statements of Little Swan International (Singapore) Co., Ltd. ‐1,606,613.13
112 Wuxi Little Swan Company Limited Annual Report 2011
NOTE VI：Relationship and Related party transactions 1. Details of the parent party:
Proportion s of parent Regist Name of the Corporate company’s Proportions of parent Ultimate Relationshi Enterprise Registered ered parent representativ Business Nature shareholdi company’s voting right to controller of the Organization Code p Nature place Capita company e ng to the the company (%) company l company (%)
Manufacture and sales of commercial air conditioners、 GD MIDEA HO Parent Joint stock Foshan,Gua refrigerators、 3,384,350,0 LDING CO.,LT Fang Hongbo 39.53 39.53 He Xiangjian 19033709‐2 Company company ngdong washing‐machin 00.00 D. es and compressors, after‐sale service of productions
113 Wuxi Little Swan Company Limited Annual Report 2011
2. Other related parties of the company Name of the parties Relationship
BSW Household Appliances Co. , Ltd. Joint – operative
Guangzhou Antaida Material Distribution Co. , Joint – operative Ltd. Foshan Welling Washing Motor Manufacturing Controlled by the holding stockholders of the Co., Ltd. company’s parent company
Huaian Welling Motor Manufacturing Co., Ltd. Controlled by the holding stockholders of the company’s parent company Controlled by the holding stockholders of the Wuhu Andhra Logistics Co., Ltd. company’s parent company Under control of the company’s ultimate controlling Hefei Century molding Development Co., Ltd. shareholder’s direct relative Under control of the company’s ultimate controlling Hefei Huitong New Materials Co., Ltd shareholder’s direct relative
Hefei Hualing Co., Ltd Under control of holding stockholders of the company
Hefei Midea Royalstar Refrigerator Co. , Ltd. Under control of holding stockholders of the company
Hefei Midea Materials Supply Co. , Ltd. Under control of holding stockholders of the company
Foshan Midea Materials Supply Co., Ltd. Under control of holding stockholders of the company
Guangdong Midea Heating Equipment Co., Ltd Under control of holding stockholders of the company
MIDEA EUROPE GMBH Under control of holding stockholders of the company
MIDEA ITALIA S.R.L. Under control of holding stockholders of the company
MIDEA SCOTT & ENGLISH SDN BHD Under control of holding stockholders of the company
MIDEA FRANCE CHEZ FATTON SERVICE Under control of holding stockholders of the company LOGISTIQUE
Midea Electric Espana, S.L. Under control of holding stockholders of the company
PT. Midea Planet Indonesia Under control of holding stockholders of the company
Midea (Singapore) Trading Co., Ltd. Under control of holding stockholders of the company
Little Swan (Jing Zhou) Electronic Appliances Co., Under control of holding stockholders of the company Ltd. Controlled by the holding stockholders of the Wuhu Century Technology Co., Ltd. company’s parent company Controlled by the holding stockholders of the Guangdong GANEY Precision Machinery Co., Ltd company’s parent company Zhongshan Midea Environmental electrical Controlled by the holding stockholders of the company’s parent company engineering products Installation Services Co., Ltd.
114 Wuxi Little Swan Company Limited Annual Report 2011
Jiangsu Midea Chunhua Electric Appliance Co., Controlled by the holding stockholders of the company’s parent company Ltd.
3. Related Party Transactions (1) Purchase and sale of goods, services provided and received among the related‐party (Unit: RMB 0,000)
Transact Occurred this year Occurred last year Name of company Details ion Type Amount % Amount % Foshan Midea Materials Supply Co., Purchase Materials 75.08 0.01 Ltd. Foshan Welling Washing Motor Purchase Motor 62,737.56 6.72 Manufacturing Co., Ltd.
GD MIDEA HOLDING CO.,LTD. Purchase Materials 42.66 0.00 19,975.26 2.14 Wuhu Century Technology Purchase Materials 315.13 0.03 Co., Ltd. Wuhu Andhra Logistics Co., Logistics Purchase 4,898.32 0.54 6,336.05 0.68 Ltd. service Hefei Midea Materials Supply Co., Purchase Materials 45,736.64 5.00 19,544.78 2.09 Ltd. Hefei Century molding Purchase Materials 19,859.69 2.17 20,658.45 2.21 Development Co., Ltd. Chongqing Midea General Air‐condition Refrigeration Equipment Co., Purchase 66.41 0.01 ers Ltd. Guangdong Midea Heating Air‐condition Purchase 4.96 0.00 Equipment Co., Ltd. ers Guangdong GANEY Precision Air‐condition Purchase 154.44 0.02 Machinery Co., Ltd ers Zhongshan Midea Environmental electrical engineering products Purchase Fans 56.47 0.01 Installation Services Co., Ltd. Huai’an Welling Motor Purchase Motor 66,861.53 7.30 Manufacturing Co., Ltd. Hefei Huitong New Materials Purchase Materials 13,964.05 1.53 Co., Ltd Total 151,362.89 16.54 129,924.59 13.92
Note:
1) % refers to the proportion taking up the total amount of purchase transactions for the current period; 2) The transfer price among the related parities is determined by the market prices.
Washing MIDEA ITALIA S.R.L Sale 374.31 0.03 8,747.69 0.78 machines MIDEA FRANCE CHEZ FATTON Washing Sale 393.02 0.04 SERVICE LOGISTIQUE machines
115 Wuxi Little Swan Company Limited Annual Report 2011
Transact Occurred this year Occurred last year Name of company Details ion Type Amount % Amount % Washing MIDEA EUROPE GMBH Sale 881.60 0.08 3,301.57 0.29 machines MIDEA SCOTT & ENGLISH SDN Washing Sale 1,269.95 0.12 1,319.81 0.12 BHD machines Washing Midea Electric Espana, S.L. Sale 237.12 0.02 machines Washing PT. Midea Planet Indonesia Sale 1,636.68 0.15 machines Hefei Huitong New Materials Co., Sale Materials 7,112.48 0.65 Ltd Hefei Century molding Sale Materials 14,280.73 1.30 13,996.21 1.25 Development Co., Ltd. Foshan Welling Washing Motor Sale Materials 2.04 0.00
Manufacturing Co., Ltd.
Hefei Hualing Co., Ltd Sale Materials 4,335.96 0.40 1,238.27 0.11 Jiangsu Midea Chunhua Electric Sale Materials 94.90 0.01 Appliance Co., Ltd. Hefei Midea Royalstar Sale Materials 4.87 0.00 80.68 0.01
Refrigerator Co. , Ltd. Hefei Royalstar Refrigerator Co. , Sale Materials 223.62 0.02
Ltd. Hefei Midea Heating Equipment Sale Materials 257.60 0.02 Co., Ltd Guangdong Meizhi Precision Sale Materials 2.32 0.00 Manufacturing Co., Ltd. Huai’an Welling Motor Sale Motor 0.54 0.00 381.25 0.03 Manufacturing Co., Ltd. Midea (Singapore) Trading Co., Washing Sale 113,258.61 10.34 Ltd. machines Total 143,876.39 13.13 29,555.44 2.64
Note:
1) % refers to the proportion taking up the total amount of the operating revenue for the current period;
2) The transfer price among the related parties is determined by the market prices.
(2) Details of Property Transfer and Debt Restructuring between related parties. In Jan 10th of 2011, the company’s board of shareholders adopted the resolution and transferred its 100% shares of Wuxi Little Swan Huayin Electric Appliance Co., Ltd. to Foshan Welling Washing Motor Manufacturing Co., Ltd., which is under the control of actual controller of the Company. The transfer price is RMB 75,000,000 and the industrial and commercial change procedures were finished in the same month.
4. Amount due to/from related parties (Unit: RMB 0,000 )
116 Wuxi Little Swan Company Limited Annual Report 2011
Name Closing balance Opening balance
Accounts Receivable
Midea (Singapore) Trading Co., Ltd. 33,664.05 -
PT. Midea Planet Indonesia 1,423.48 -
MIDEA SCOTT & ENGLISH SDN BHD 895.74 745.69
Hefei Hualing Co., Ltd 545.16 33.86 Midea Electric Espana, S.L. 239.76 -
Guangdong Midea Heating Equipment Co., Ltd 101.39 -
MIDEA ITALIA S.R.L. 70.67 2,726.86
Little Swan (Jing Zhou) Electronic Appliances Co., Ltd. 24.52 -
Hefei Royalstar Refrigerator Co. , Ltd. 20.62 -
Jiangsu Midea Chunhua Electric Appliance Co., Ltd. 10.00 49.23
Hefei Midea Royalstar Refrigerator Co. , Ltd. 1.20 3.54 Huai’an Welling Motor Manufacturing Co., Ltd. - 301.55
Wuhu Andhra Logistics Co., Ltd. - 1.71
MIDEA FRANCE CHEZ FATTON SERVICE LOGISTIQUE - 139.70
MIDEA EUROPE GMBH - 3,627.35
Total 36,996.59 7,629.49
Other Accounts Receivable
BSW Household Appliances Co. - 456.67
Total - 456.67
Advance Prepayment
GD MIDEA HOLDING CO., LTD. - 119.40
Total - 119.40
Accounts payable
Huai’an Welling Motor Manufacturing Co., Ltd. 6,651.89 -
Hefei Midea Materials Supply Co., Ltd. 2,695.11 5,617.58
Hefei Century molding Development Co., Ltd. 1,680.74 1,713.53
Wuhu Century Technology Co., Ltd. 355.35 316.48
117 Wuxi Little Swan Company Limited Annual Report 2011
Hefei Huitong New Materials Co., Ltd 206.11 -
Wuhu Andhra Logistics Co., Ltd. 68.16 - Zhongshan Midea Environmental electrical engineering 22.84 5.65 products Installation Services Co., Ltd. Guangdong GANEY Precision Machinery Co., Ltd 11.21 79.38
Foshan Welling Washing Motor Manufacturing Co., Ltd. - 7,020.05
GD MIDEA HOLDING CO.,LTD. - 16.40
Total 11,691.41 14,769.07
Advances from the customers
MIDEA SCOTT & ENGLISH SDN BHD 2.71 -
Total 2.71 -
Other payables:
Wuhu Andhra Logistics Co., Ltd. - 720.84
GD MIDEA HOLDING CO.,LTD. 39.06 -
Total 39.06 720.84
Note VII：Contingent events As of December 31, 2011, no other significant contingent events should be disclosed.
Note VIII：Commitment issues 1. Considering the company’s subsidiaries’ fund demand for production and operation as well as the business development, the company provided guaranteed transactions for banker’s acceptance bill of Hefei Royalstar Washing Machine Manufacture Co., Ltd. Details of guarantee amount are: RMB 483,530,000. 2. The subsidiary Hefei Royalstar Washing Machine Manufacture Co., Ltd. has already provided the amount of cash deposit RMB9,999,130 for the bank acceptance from Swan Lake Branch of Huishang Bank.
118 Wuxi Little Swan Company Limited Annual Report 2011
Note IX.：Events after balance sheet date 1. Believing that the Company will have a sustainable and stable development in future, the holding stockholder, GD Midea Holding Co., Ltd, planed to increase its shareholding to share more profit of the Company. From Dec.15th,2011 to Jan 16th ,2012, it increased 6,319,556 A shares through trading system of Shenzhen Stock exchange, among which, 2,839,371 shares were increased in December 2011 and 3,480,185 shares were increased in January 2012. GD Midea Holding Co., Ltd. also planed to keep increasing holding of less than 2% of the company’s total equity within 12 months after the first time of shareholding increase.
2. The Company held the Fifteenth Session of the Sixth Board meeting on Feb 29th, 2012. The meeting adopted annual cash dividend distribution plan of year 2011: based on the total number of 632,487,764 shares at the end of 2011, the company will distribute cash dividend of RMB 2(including tax) for every 10 shares, the total amount of dividend will be RMB 126,497,552.80. The remained undistributed profit, which is RMB 1,518,777,047.13, will be carried forward to the next year. No capital surplus will transfer into share capital in 2011.
3. The Company’s subsidiary, Hefei Royalstar Washing Machine Manufacture Co., Ltd. has already provided the amount of cash deposit RMB 7,090,000.00 as the pledge for the “Paying for another in advance” service from Gaoxin Branch in Hefei, Bank of China.
Note X: Other significant events As of December 31, 2011, no other significant events should be disclosed.
Note Ⅺ: Notes to the financial statements of parent Company
1. Accounts receivable (1) category analysis:
Closing balance Opening balance
Category Balance Bad debts Balance Bad debts
Amount (%) Amount Amount (%) Amount (%) (%) Individually significant accounts receivable on which the bad debt provisions are provided individually
119 Wuxi Little Swan Company Limited Annual Report 2011
Accounts receivable on which the bad debt provisions are 726,987,381.83 99.85 20,278,446.25 2.79 632,588,623.50 100.00 44,487,904.24 7.03 provided by combinations
(1) Combination according to 389,054,823.78 53.52 20,278,446.25 5.21 393,900,034.79 62.27 19,890,194.06 5.05 account age
(2) Combination according to accounts in the 337,932,558.05 46.48 238,688,588.71 37.73 24,597,710.18 10.31 scope of combination statements Accounts receivable which are not individually 57.3 significant, but still 1,056,206.22 0.15 606,206.42 9 the bad debt provisions are provided individually Total 728,043,588.05 100.00 20,884,652.67 2.87 632,588,623.50 100.00 44,487,904.24 7.03
(2) aging analysis:
Closing balance Opening balance
Balance Balance
Aging Amount (%) Bad debts (%) Balance (%) Bad debts (%)
Within 1 710,670,881.71 97.76 18,636,916.18 2.62 629,281,195.57 99.48 44,127,340.53 7.01 year 1‐2 years 16,217,699.58 2.23 1,621,769.96 10.00 3,009,218.73 0.48 300,921.87 10.00
2‐3 years 98,800.54 0.01 19,760.11 20.00 298,209.20 0.05 59,641.84 20.00
Total 726,987,381.83 100 20,278,446.25 2.79 632,588,623.50 100 44,487,904.24 7.03
(3) There was no accounts receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company.
(4) The information list for the top 5 customers: Proportion to total accounts Names Relationship Amount Aging Receivables (%) Hefei Royalstar Washing Within 1 year Machine Manufacture Subsidiary 350,142,811.14 48.09 Co., Ltd. Midea (Singapore) 96,506,329.29 Within 1 year 13.26 Trading Co., Ltd. Retailer
120 Wuxi Little Swan Company Limited Annual Report 2011
Belgium Electrolux 53,091,999.63 Within 1 year 7.29 Home Product Retailer Beijing Midea Refrigeration 28,001,049.04 3.85 Production Sales Co., Retailer Within 1 year Ltd Nanjing Midea Refrigeration 15,097,592.16 2.07 Production Sales Co., Retailer Within 1 year Ltd
(5) There was no accounts receivable written off in current period:
2. Other receivables
(1) category analysis:
Closing balance Opening balance Category Balance Bad debts Balance Bad debts Amount (%) Amount (%) Amount (%) Amount (%) Individually significant accounts receivable on which the bad debt provisions are provided individually Accounts receivable on which the bad debt provisions are 31,088,035.22 100 19,157,685.98 61.62 78,328,307.70 100.00 67,374,385.04 86.02 provided by combinations (1) Combination according to 14,162,247.81 45.56 2,241,696.59 15.83 16,741,532.05 21.37 6,766,425.68 40.42 account age (2) Combination according to accounts in the 16,925,787.41 54.44 16,915,989.39 99.94 61,586,775.65 78.63 60,607,959.36 98.41 scope of combination statements Accounts receivable which are not individually significant, but still the bad debt provisions are provided individually Total 31,088,035.22 100.00 19,157,685.98 61.62 78,328,307.70 100.00 67,374,385.04 86.02
121 Wuxi Little Swan Company Limited Annual Report 2011
(2) Aging analysis:
Closing balance Opening balance
Balance Balance Bad debts Bad debts Aging Amount (%) (%) Amount (%) (%) provision provision Within 1 12,731,633.95 40.95 3,074,737.08 24.15 18,528,486.04 23.66 12,845,993.87 69.33 year 1‐2 years 4,752,107.23 15.29 3,524,525.94 74.17 21,677,209.10 27.68 20,335,156.10 93.81
2‐3 years 10,960,866.34 35.26 10,960,866.34 100.00 18,410,186.92 23.50 15,137,366.73 82.22
3‐5 years 2,614,677.70 8.41 1,568,806.62 60.00 10,466,325.05 13.36 9,809,767.75 93.73 Over 5 28,750.00 0.09 28,750.00 100.00 9,246,100.59 11.80 9,246,100.59 100.00 years Total 31,088,035.22 100 19,157,685.98 61.62 78,328,307.70 100.00 67,374,385.04 86.02
(3) There was no accounts receivable due from shareholders with more than 5% (including 5%) of the voting shares of the Company.
(4) The information list for the top 5 customers:
Proportion to total accounts Names Relationship Amount Aging Receivables (%) Wuxi Little Swan Ceramics Co., Receivables from 2,386,444.38 3‐4 years 7.68 Ltd. transfer of shares Hangzhou Xixi Investment and Within 2 Cooperation partner 1,491,170.00 4.80 Development Co., Ltd. years Asset custody account in Beijing Branch of Industrial & Cooperation partner 900,000.00 1‐2 years 2.90 Commercial Bank of China China Household Electric Cooperation partner 728,144.00 Within 1 year 2.34 Appliance Research Institute Wuxi Customs District of Government 573,000.00 Within 1 year 1.84 People’s Republic of China Department (1) Other receivables written off in the current period: Generated Amount Nature of Reason of through Name written off receivables written‐off related‐party transactions Business BSW Household Appliances Co., Ltd. 4,566,705.78 Uncollectible Yes Receivables
122 Wuxi Little Swan Company Limited Annual Report 2011
3. Long-term equity investment Note for Proporti Proporti Difference Impairment Cash Amount of ons of ons of between provisions Opening Increase/ Closing Provision for dividends in Company Method Initial shareho voting proportions increase in balance Decrease balance impairment current investment lding Rights of voting current year (%) (%) rights and year shareholding BSW Household Appliances Co., Equity 97,482,661.00 103,209,332.73 ‐103,209,332.73 - 40.00 40.00 - - - - Ltd. Guangzhou Antaida Material Equity 2,000,000.00 3,727,785.78 ‐298,934.03 3,428,851.75 20.00 20.00 - - - - Distribution Co. Wuxi Little Swan Import & Export Cost 57,500,000.00 57,500,000.00 - 57,500,000.00 88.46 88.46 - - - - Co., Ltd. Wuxi Little Swan Huayin Electric Cost 37,313,630.00 48,763,630.00 ‐48,763,630.00 - 100.00 100.00 - - - - Appliances Co., Ltd. Wuxi Little Swan Washing Machine Cost 37,259,587.50 37,259,587.50 - 37,259,587.50 75.00 75.00 - - - - Co., Ltd. Wuxi Meitian Refrigerator Cost 24,840,000.00 24,840,000.00 - 24,840,000.00 75.00 75.00 - - - - Marketing and sale Co., Ltd. Jiangsu Little Swan Marketing Cost 417,550,000.00 417,550,000.00 - 417,550,000.00 99.54 99.54 - - - - and Sales Co. , Ltd. Wuxi Filin Electronics Co. , Cost 19,620,041.50 25,660,308.10 - 25,660,308.10 73.00 73.00 - - - - Ltd.
123 Wuxi Little Swan Company Limited Annual Report 2011
Note for Proporti Proporti Difference Impairment Cash Amount of ons of ons of between provisions Opening Increase/ Closing Provision for dividends in Company Method Initial shareho voting proportions increase in balance Decrease balance impairment current investment lding Rights of voting current year (%) (%) rights and year shareholding Wuxi Little Swan General Electric Cost 19,600,000.00 19,600,000.00 - 19,600,000.00 70.00 70.00 - - - - Appliances Co. , Ltd. San Jin (Jing Zhou) Electrical Appliances Cost 11,869,431.12 11,869,431.12 - 11,869,431.12 100.00 100.00 - - - - Manufactory Co. , Ltd. Wuxi Little Swan Driving & Control Development Cost 4,500,000.00 4,500,000.00 - 4,500,000.00 90.00 90.00 - - - - Technology Co. , Ltd. Little Swan International Cost 34,052,500.00 34,052,500.00 - 34,052,500.00 100.00 100.00 - - - - (Singapore) Co., Ltd. Hefei Royalstar Washing Machine Cost 830,962,252.35 830,962,252.35 - 830,962,252.35 69.47 69.47 - - - - Manufacture Co., Ltd. Tianjin Little Swan Washing Machine Cost 200,000,000.00 - 200,000,000.00 200,000,000.00 100.00 100.00 - - - - Co., Ltd. P.T. Little Swan Prima Industries Cost 4,224,744.00 - - 0.00 51.00 51.00 4,224,744.00 - -
(Malaysia) Hengtai Insurance Cost 1,000,000.00 1,000,000.00 - 1,000,000.00 3.33 3.33 - - 25,000.00 Brokers Ltd.
124 Wuxi Little Swan Company Limited Annual Report 2011
Note for Proporti Proporti Difference Impairment Cash Amount of ons of ons of between provisions Opening Increase/ Closing Provision for dividends in Company Method Initial shareho voting proportions increase in balance Decrease balance impairment current investment lding Rights of voting current year (%) (%) rights and year shareholding Suzhou People's Shopping Centre Cost 150,000.00 150,000.00 - 150,000.00 - - - - 30,000.00
(150000 shares) Bank of Jiangsu Cost 1,100,000.00 1,210,000.00 - 1,210,000.00 - - - - - (2202564 shares)
Total 1,621,854,827.58 47,728,103.24 1,669,582,930.82 4,224,744.00 55,000.00
125 Wuxi Little Swan Company Limited Annual Report 2011
4. Operational turnover and costs (1) Details of business turnover and costs: Occurred this year Occurred last year Category Turnover cost Turnover cost
Washing machine 6,157,113,735.76 5,226,671,876.87 6,179,290,604.42 5,301,501,814.87
Raw materials 696,233,768.63 663,659,869.72 745,647,811.49 707,246,288.49
Others 1,534,547.50 140,600.00 4,587,822.29 778,192.53
Total 6,854,882,051.89 5,890,472,346.59 6,929,526,238.20 6,009,526,295.89
(2) Turnover from top 5 clients: Proportion in total Name of clients Turnover turnover (%) Midea (Singapore) Trading Co., 419,576,674.70 6.12 Ltd. Hunan Midea Refrigeration 165,211,976.00 2.41 Production Sales Co., Ltd. Wuhan Midea Refrigeration 148,462,842.68 2.17 Production Sales Co., Ltd. Chongqing Midea Refrigeration 136,249,724.58 1.99 Production Sales Co., Ltd. Jiangxi Midea Refrigeration 128,292,429.58 1.87 Production Sales Co., Ltd.
Total 997,793,647.54 14.56
5. Investment income Occurred this Sources of investment gains Occurred last year year Long‐term equity investment gains on 55,000.00 35,000.00 cost basis –cash dividends from non‐subsidiaries Long‐term equity investment gains on 36,666,000.00 cost basis ‐ cash dividends from subsidiaries Long‐term equity investment gains on ‐298,934.03 6,983,831.04 equity basis Investment gains from disposal of long term 50,227,037.27 ‐7,158,300.08 equity investment Investment gains in the period of holding trading financial assets 18,914,551.40
Investment gains in the period of holding sellable financial assets, etc.
Total 105,563,654.64 ‐139,469.04
126 Wuxi Little Swan Company Limited Annual Report 2011
6. Appendix of Cash Flow Statement Items Current year Last year
1.Net profit adjusted to cash flow of operation:
Net profit 365,442,988.35 246,902,908.92
Plus: Asset impairment provision ‐55,746,896.41 ‐11,721,791.79 Fixed asset depreciation, gas and petrol 48,555,026.50 32,470,747.36 depreciation, production goods depreciation Amortizing of intangible assets 2,841,779.00 2,849,112.38
Amortizing of long‐term expenses 24,287,853.45 9,142,246.94 Loss from disposal of fixed assets, intangible assets, ‐23,681,336.42 ‐20,483,448.32 and other long‐term assets (“‐“ for gains) Loss from fixed asset discard 7,269,778.81
Loss from fluctuation of fair value ‐2,668,300.00
Financial expenses
Investment loss (“‐“ for gains) ‐105,563,654.64 139,469.04 Decrease of deferred income tax asset (“‐“ for 12,724,230.82 7,818,424.68 increase) Increase of deferred income tax liabilities (“‐“ for 400,245.00 decrease) Decrease of inventory (“‐“ for increase) 37,927,053.19 ‐162,880,949.98 Decrease of operational receivable items (“‐“ for ‐3,002,073,187.33 ‐509,562,536.16 increase) Increase of operational payable items (“‐“ for 2,653,684,434.81 1,201,951,075.07 decrease) Others
Net cash flow generated by business operation ‐43,869,763.68 803,895,036.95 2. Investment and financing activities not involving in ‐‐ cash flow Liabilities converted to capital ‐‐
Convertible bond expire within 1 year ‐‐
Fixed assets acquired under finance leases ‐‐
Others ‐‐
3. Change of cash and cash equivalents ‐‐
Balance of cash at end of year 1,472,529,354.18 1,492,995,931.54
Less: Balance of cash at beginning of year 1,492,995,931.54 742,737,877.78
Plus: Balance of cash equivalents at end of term Less: Balance of cash equivalents at beginning of
term Net increase of cash and cash equivalents ‐20,466,577.36 750,258,053.76
127 Wuxi Little Swan Company Limited Annual Report 2011
Note XII.：Supplementary Info.
1. Details of non-recurring gain/loss of current term
Items Occurred this year Occurred last year Gain/loss from disposal of non‐current assets 53,601,089.33 2,313,638.24 Refunding and exemption of taxes in excess of authority
or without official approval documents Government subsidies accounted into current income account (except for those government subsidies closely 61,717,786.34 22,178,681.06 related to the Company’s business, and received at national statutory standard and amount)
Capital adoption fee collected from non‐financial
organizations and accounted into current gain/loss
Gain/loss from differences between the cost of enterprise merger and the fair value of recognizable net asset of the invested entities
Gain/loss from exchange of non‐monetary assets
Gain/loss from commissioned investment or assets
Asset impairment provisions provided for force‐majeure
Gain/loss from debt reorganization Enterprise reorganizing expenses, such as employee 10,188,474.84 10,480.00 placement fee and integration fee
Gain/loss from trade departing from fair value
Current net gain/loss of subsidiaries combined under same control from beginning of term till date of 198,136,177.36 consolidation Gain/loss generated by contingent liabilities unrelated to
main businesses of the company
Gain/loss from change of fair value of transactional asset and liabilities, and investment gains from disposal of transactional financial assets & liabilities and sellable financial assets, other than the company’s effective hedging related to its common businesses
Restoring of receivable account impairment provision
tested individually
Gain/loss from commissioned loans
Gain/loss from changes of fair value of investment
property measured at fair value pattern in follow‐up
128 Wuxi Little Swan Company Limited Annual Report 2011
Items Occurred this year Occurred last year measurement
Influence of one‐time adjustment made on current gain/loss account according to the laws and regulations regarding tax and accounting
Trustee fee received for trusteeship of operation
Other non‐business income and expenditures other than 4,214,334.91 3,518,089.86 the above items Other gain/loss items satisfying the definition of
nonrecurring gain/loss account Estimated liabilities ‐1,199,402.08 Dismiss welfare ‐7,452,612.88 ‐3,242,739.32 Total of non‐recurring gain/loss (influence on gross 121,069,670.46 222,914,327.20 profit) Less: Influenced amount of income tax 18,070,842.88 33,333,639.00 Less: Influenced amount of minority equity(after‐tax) 14,029,083.78 53,622,629.24 Total 88,969,743.80 135,958,058.96
2. Explanations for abnormal changes of main accounting statements items Unit: (RMB 0’000)
Change Items This year Last year Increase/decrease Notes percentage %
① Trading financial Decrease of Foreign 429.23 777.86 ‐348.63 ‐44.82 Exchange Forward Contract assets with banks in this term ①Growth of use of note receivable and decrease of Note receivables 275,792.40 156,250.32 119,542.08 76.51 note receivables endorsement ①Advances to suppliers of Advances to suppliers 25,005.20 35,708.99 ‐10,703.79 ‐29.98 construction projects decreased in current year.
①The company intended to Inventory 80,940.07 105,067.41 ‐24,127.34 ‐22.96 reduce the operating risk by controlling scale of inventory.
① Long‐term equity Shares transfer of Huayin 583.89 10,934.71 ‐10,350.82 ‐94.66 Electric and BSW Household investment Appliances Co. , Ltd. ① Construction in Finished projects ‐ 2,600.57 ‐2,600.57 ‐100.00 transferred to fixed assets in process current year
①Purchase of land in current Intangible assets 31,686.00 24,022.68 7,663.32 31.90 year
①Decrease of Foreign Short‐term loan 696.15 903.94 ‐207.79 ‐22.99 Exchange Financing
①The company Notes payable 153,931.95 80,459.79 73,472.16 91.32 strengthened financial management and adjusted
129 Wuxi Little Swan Company Limited Annual Report 2011
Change Items This year Last year Increase/decrease Notes percentage %
the payment form by using more notes payable in current period. ①Influenced by the production and sales cycle, Tax payable 146.39 ‐2,394.70 2,541.09 106.11 tax payable increased in this term.
①Temporary receipts Other payables 16,540.53 8,417.85 8,122.68 96.49 increased.
① Deferred income tax Decrease of changes in fair 67.15 119.87 ‐52.72 ‐43.98 value of trading financial liabilities assets Converted difference ①Caused by the overseas in foreign currency ‐254.46 ‐93.79 ‐160.67 ‐171.29 subsidiary in Singapore.. statements
①Caused by increase of sales Sales expenses 89,403.54 73,845.27 15,558.27 21.07 and relative resource investmeng
①Caused by increase of Financial expenses ‐101.83 3,383.82 ‐3,485.65 ‐103.01 interest income from deposits
①Decrease of accounts receivable within 1 year caused drop of provision for Impairment loss 1,436.75 ‐2,122.19 3,558.94 167.70 bad debts in last term, but it did not have a big change in current period. ①The Foreign Exchange Forward Contract the Gains from changes in company signed with banks ‐348.63 777.86 ‐1,126.49 ‐144.82 this term decreased fair value compared with last term, which caused the changes in fair value. ①Increased gain from disposal of Foreign Exchange Investment income 7,737.16 400.45 7,336.71 1,832.12 Forward Contracts and subsidiaries ① Non‐operating The company acquired 9,725.95 7,387.42 2,338.53 31.66 more financial subsidies from income the government ①Influenced by fluctuations of exchange rate, currency Other misc. incomes ‐163.06 ‐93.79 ‐69.27 ‐73.85 translation differences from the company’s subsidiary in Singapore changed.
130 Wuxi Little Swan Company Limited Annual Report 2011
Section XII Documents Available for Reference 1. Annual Report with the signature of the Chairman of the Board; 2. Accounting statements with the signatures and seals of the Legal Representative, the Chief Financial Officer and the person in charge of the accounting work; 3. Originals of Auditors’ Reports with the seals of the Certified Public Accountants as well as the signatures and seals of the CPAs firm; 4. Texts of all the Company’s documents ever disclosed on Securities Times and Hong Kong Ta Kung Pao in the reporting period, and the originals of the public notices.
Chairman of the Board: Fang Hongbo
Wuxi Little Swan Company Limited
2 March 2012
131