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海爾電器集團有限公司*
年報
2008 Annual Report
Warm your Life
年報
* for identifi cation purpose only
僅供識別
Haier Electronics Group Co., Ltd.
Stock Code 股份代號: 01169
海爾電器集團有限公司*
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Table of contents

  • Page 1
    Warm your Life 2008 Annual Report Haier Electronics Group Co., Ltd. Stock Code 01169 for identification purpose only

  • Page 2

  • Page 3
    ... and Recent Development 3 Simplified Corporate Structure 4 Corporate Information 8 Chairman's Letter 14 Directors and Senior Management 18 Financial Review 23 Corporate Governance Report 36 Report of the Directors 48 Independent Auditors' Report 50 Consolidated Income Statement 51...

  • Page 4
    ... Board of The Stock Exchange of Hong Kong Limited. The Company and its subsidiaries (the "Group") are principally engaged in the research, development, production and sale of washing machines and water heaters under the brand name of "Haier". Founded in 1984, Haier Group is headquartered in Qingdao...

  • Page 5
    ...Electronics Group Co., Ltd. Washing Machine Business Water Heater Business Top Loading Washing Machine Business Front Loading Washing Machine Business 100% Qingdao Economy and Technology Development Zone Haier Water Heater Co., Ltd. 93.44% Qingdao Haier Washing 100% Qingdao Haier Machine Co...

  • Page 6
    ... Company Secretary Mr. Ng Chi Yin Legal Advisors As to Hong Kong Law DLA Piper Hong Kong As to Bermuda Law Conyers Dill & Pearman Principal Bankers in Hong Kong Industrial and Commercial Bank of China (Asia) Limited Principal Banker in the PRC China Construction Bank Corporation Annual Report...

  • Page 7
    ...Head Office and Principal Place of Business in Hong Kong Unit 3513, 35/F., The Center 99 Queen's Road Central Hong Kong 99 35 3513 Principal Place of Business in the PRC Haier Industrial Park No. 1, Haier Road, Qingdao, the PRC 1 Principal Share Registrar and Transfer Office Codan Services Limited...

  • Page 8
    6 Haier Electronics Group Co., Ltd Chairman's Letter Environmental Friendly • Heading Industy • Annual Report 2008

  • Page 9
    7 Haier Electronics Group Co., Ltd Chairman's Letter Thoughtful Technology - Annual Report 2008

  • Page 10
    ... the year ended 31 December, 2008 ("the Year"). However, the market position and the brand value of the Group both remained in leading positions in the industry. The number of overseas orders in 2008 was affected by the global financial crisis and the cost of export increased due to the appreciation...

  • Page 11
    9 Haier Electronics Group Co., Ltd Chairman's Letter Business Review Turnover for the Year amounted to HK$11,409 million, representing an increase of approximately 33.5% from HK$8,549 million in 2007. The sales in 2008 was affected by a number of unfavourable factors such as the global financial ...

  • Page 12
    ... of high value-added products and the products catering for the rural market, resulting in an increase in research and development expenses. The stepping up of efforts and resources in brand promotion during the Beijing Olympic Games caused an increase in marketing expenses. The expansion of the...

  • Page 13
    ...goods industry still exists. The penetration rate of washing machines and water heaters in the rural markets is relatively low as compared with the urban market, as fuelled by the growing market demand from rural areas and the Group's continuous efforts paid in the marketing activities and expansion...

  • Page 14
    ... included the subsidies to the purchase of washing machines and water heaters, was implemented throughout the PRC. The policy is stimulating the demand for home appliances in the rural market and provided new growth impetus for the sales of the Group. However, under the prevailing sluggish economic...

  • Page 15
    ... Appreciation I would like to take this opportunity to thank all my fellow directors and staff for their dedicated services, contributions and support during the year. By Order of the Board of Haier Electronics Group Co., Ltd. Yang Mian Mian Chairman Hong Kong, 17 April 2009 Annual Report 2008

  • Page 16
    ... of China (the "PRC") in 1963. As one of the founders of the Haier Group, she has been in charge of the overall management of the white goods business since 1984. She is currently the president of Haier Group Corporation ("Haier Corp") and the chairman of Qingdao Haier Co., Ltd. (a company listed on...

  • Page 17
    ... in corporate finance. Mr. Yu is a founder and a director of MCL Capital Limited (previously known as Management Capital Limited), which specialises in direct investment and financial advisory activities, and also sits on the boards of several listed companies in Hong Kong. 61 46 Annual Report 2008

  • Page 18
    ..., China. Dr. Liu is currently also an independent non-executive director of CNPC (Hong Kong) Limited and Honghua Group Limited, both of which are publicly listed companies on the Stock Exchange. 46 Senior Management Mr. PENG Jia Jun, aged 31, was appointed as Chief Financial Officer of the Company...

  • Page 19
    ... the water heater division. He is currently a director of Electrothermal Appliance Department. 34 Company Secretary Mr. NG Chi Yin, aged 43, jointed the Company on 18 March 2009 as Company Secretary. Mr. Ng graduated from the Faculty of Business Administration of the Chinese University of Hong Kong...

  • Page 20
    18 Haier Electronics Group Co., Ltd Financial Review BUSINESS REVIEW 2008 was a year full of challenges for many players in the white goods industry due to the fluctuation in raw material prices, negative market sentiment, slowdown of consumer spending and reduction in export brought by the global...

  • Page 21
    ... in washing machine market in the PRC with market share of approximately 31.5% according to China Market Monitor. To ensure steady business growth, the Group increased the expenses in brand promotion and marketing activities, research and development, expansion of distribution network in the rural...

  • Page 22
    ... its effort to the research and development of environmentally-friendly and energyefficient products such as solar power water heaters which achieved world-class technological level. Haier's laundry in Beijing Olympic Village Haier Electrical Appliances deliver to rural areas Annual Report 2008

  • Page 23
    ...Financial Review It is expected that the business environment in 2009 will continue to be volatile. However, the Group is confident that with its strong research and development capabilities, value-added customers-oriented product development, strong brand recognition and global talents development...

  • Page 24
    22 Haier Electronics Group Co., Ltd Financial Review Treasury Policies The Group employs a conservative approach to cash management and risk controls. Most of the Group's receipts and payments are in Renminbi and Hong Kong dollars. Cash is generally placed in short term deposits denominated either...

  • Page 25
    ...of Hong Kong Limited (the "Stock Exchange") except for certain deviations as described below. This report describes the Company's corporate governance practices, explains its applications of and deviations from the CG Code, together with considered reasons for such deviations. 14 Board of Directors...

  • Page 26
    ... Bye-laws of the Company (the "Bye-laws"), the Listing Rules and/or the Hong Kong Codes on Takeovers and Mergers and Share Repurchases; 2. formulating and implementing policies for business activities, internal controls and administration of the Company; 2. 1. 6. 5. 4. 2. 3. 1. Annual Report 2008

  • Page 27
    ...Haier Electronics Group Co., Ltd Corporate Governance Report Board of Directors (Cont'd) Delegation by the Board (Cont'd) 3. planning and deciding the Company's strategies on its business activities; and 4. keeping proper written records of its decisions taken which may be inspected by any members...

  • Page 28
    26 Haier Electronics Group Co., Ltd Corporate Governance Report Board of Directors (Cont'd) INEDs (Cont'd) The Company has received an annual confirmation of independence from each of the INEDs pursuant to Rule 3.13 of the Listing Rules and considers that all INEDs to be independent as the date of...

  • Page 29
    ... Board Meetings attended/held Executive Directors: Ms. Yang Mian Mian (Chairman) Mr. Wu Ke Song (Deputy Chairman) Mr. Liang Hai Shan Mr. Cao Chun Hua Mr. Cui Shao Hua Mr. Sun Jing Yan INEDs: Mr. Wu Yinong Mr. Yu Hon To, David Dr. Liu Xiao Feng 3/4 3/4 3/4 2/4 0/4 0/4 1/4 4/4 1/4 Annual Report 2008

  • Page 30
    ... to be in possession of unpublished price sensitive information of the Company on no less exacting terms than the Haier Electronics Model Code. Having made specific enquiry of all the Relevant Employees, the Company confirmed that all the Relevant Employees had complied with the required standard...

  • Page 31
    ... the objectivity and credibility of financial reporting, to make recommendation to the Board on the appointment, reappointment and removal of the Group's external auditors and review of the Company's financial controls, internal control and risk management systems. Each member of the Audit Committee...

  • Page 32
    30 Haier Electronics Group Co., Ltd Corporate Governance Report Board of Directors (Cont'd) Board Committees (Cont'd) (2) Remuneration Committee The Remuneration Committee currently comprises five members including two executive Directors, namely, Mr. Wu Ke Song and Mr. Cui Shao Hua and all three ...

  • Page 33
    31 Haier Electronics Group Co., Ltd Corporate Governance Report Board of Directors (Cont'd) Board Committees (Cont'd) (3) Nomination Committee The Nomination Committee was formed on 19 September 2008 and currently comprises four members including one executive Director, namely, Mr. Cui Shao Hua ...

  • Page 34
    ... limited to annual and interim reports, any price sensitive announcements and financial disclosures required under the Listing Rules, any reports to regulators as well as to information required to be disclosed pursuant to other statutory requirements. Internal Control and Risk Management The Group...

  • Page 35
    33 Haier Electronics Group Co., Ltd Corporate Governance Report Internal Control and Risk Management (Cont'd) During the year, the Company has engaged external independent professionals to assist in its review on the operation of individual divisions of the Group and in its assessment of the ...

  • Page 36
    34 Haier Electronics Group Co., Ltd Directors and Senior Management Innovation • Forward Progress • Annual Report 2008

  • Page 37
    35 Haier Electronics Group Co., Ltd Directors and Senior Management Taste: Trend to head - Annual Report 2008

  • Page 38
    ... financial statements of the Company and the Group for the year ended 31 December 2008. Principal Activities The principal activity of the Company is investment holding. The principal activities of the subsidiaries comprise the manufacture and sale of washing machines and water heaters. There...

  • Page 39
    ... the Company to offer new shares on a pro rata basis to existing shareholders. Purchase, Redemption or Sale of Listed Securities of the Company During the year, the Company purchased certain of its ordinary shares (the "Shares") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and...

  • Page 40
    ... and purchases from the largest supplier included therein amounted to 74%. During the year, Haier Group Corporation ("Haier Corp") and Qingdao Haier Investment and Development Co., Ltd. ("Haier Investment") (collectively the "Haier Group"), the substantial shareholders of the Company, had beneficial...

  • Page 41
    39 Haier Electronics Group Co., Ltd Report of the Directors Directors The directors of the Company during the year were: Executive directors: Yang Mian Mian Wu Ke Song Liang Hai Shan Cao Chun Hua Cui Shao Hua Sun Jing Yan Independent non-executive directors: Wu Yinong Liu Xiao Feng Yu Hon To, ...

  • Page 42
    ... 10 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules"). 10 XV 352 Directors' Rights to Acquire Shares in or Debentures of the Company At no time during the year were rights to acquire benefits by means of the acquisition of Shares in...

  • Page 43
    ...of shareholder Notes interested issued percentage of the Company's share capital 336 5% Qingdao Haier Collective Asset Management Association ("Haier Collective Asset Management") Haier Corp Haier Investment Qingdao Haier Co.,Ltd. ("Qingdao Haier") Qingdao Haier Group Holdings (BVI) Limited ("Haier...

  • Page 44
    42 Haier Electronics Group Co., Ltd Report of the Directors Substantial Shareholders' Interests in Shares and Underlying Shares (Cont'd) Notes: (Cont'd) Ms. Yang Mian Mian, Mr. Wu Ke Song and Mr. Liang Hai Shan, the executive directors of the Company, are also members of the board of management of...

  • Page 45
    ...Water Heater Co., Ltd. and Qingdao Haier Electronics Sales Co., Ltd. had the following material transactions with Haier Corp, Haier Investment, their subsidiaries and associates (collectively referred to as Haier Affiliates): Group 2008 Notes HK$'000 2007 HK$'000 (a) Export sale of washing machines...

  • Page 46
    ... Report of the Directors Connected Transactions and Continuing Connected Transactions (Cont'd) (a) (Cont'd) Notes: (i) The export sale of washing machines and water heaters were made to Haier Electrical Appliances Co., Ltd. ("Haier Electrical"), a subsidiary of Haier Investment, at selling prices...

  • Page 47
    ... commission income in 2007 was determined at 2% of the turnover of the sales of the outstanding inventories of washing machines and water heaters owned by subsidiaries of Haier Investment at 31 December 2006. (xiii) The sale of gift products were made at selling prices not higher than those sold by...

  • Page 48
    ... sheet date, Haier Corp provided corporate guarantees up to RMB143,000,000 (2007: RMB201,000,000) (equivalent to HK$162,419,000 (2007: HK$214,973,000)) to Haier Group Finance Co., Ltd. ("Haier Finance"), a subsidiary of Haier Corp and a financial institution approved by the People's Bank of China...

  • Page 49
    ... to the financial statements. 37 Auditors Ernst & Young retire and a resolution for their re-appointment as auditors of the Company will be proposed at the forthcoming annual general meeting of the Company. ON BEHALF OF THE BOARD Yang Mian Mian Chairman Hong Kong 17 April 2009 Annual Report 2008

  • Page 50
    ... statements in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and maintaining internal control...

  • Page 51
    ... Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. Ernst & Young Certified Public Accountants 18th Floor Two International Finance Centre 8 Finance Street Central 18 8 2 Hong Kong 17 April 2009 Annual...

  • Page 52
    ... Group Co., Ltd Consolidated Income Statement Year ended 31 December 2008 2008 Notes HK$'000 2007 HK$'000 REVENUE Cost of sales 5 11,409,480 (8,120,162) 8,549,239 (6,058,011 ) Gross profit Other income and gains Selling and distribution costs Administrative expenses Other expenses Finance...

  • Page 53
    ... Haier Electronics Group Co., Ltd Consolidated Balance Sheet 31 December 2008 2008 ...178,255 595,426 Total current assets 3,503,615 2,779,241 CURRENT LIABILITIES Trade payables Tax payable Other payables and accruals Provisions Interest-bearing borrowings Convertible notes ... Annual Report 2008

  • Page 54
    52 Haier Electronics Group Co., Ltd Consolidated Balance Sheet 31 December 2008 2008 Notes HK$'000 2007 HK$'000 EQUITY Equity attributable to ...847,400 94,724 31(a) Minority interests 108,208 Total equity 1,269,095 942,124 Yang Mian Mian Chairman Cui Shao Hua Director Annual Report 2008

  • Page 55
    ...Haier Electronics Group Co., Ltd Consolidated Statement of Changes in Equity Year ended 31 December 2008 Attributable to equity holders of the parent Issued equity Capital reduction reserve Equity component of Capital convertible reserve notes Merger reserve Retained Capital profits/ Exchange...

  • Page 56
    ... 429,862 5,169 (455,690 ) 272,382 (75,951 ) (177,972 ) 145,588 18,394 11,288 Cash generated from operations Interest received Mainland China corporate income tax paid 330,131 7,197 (48,430) 173,070 10,121 (40,058 ) Net cash inflow from operating activities 288,898 143,133 Annual Report 2008

  • Page 57
    55 Haier Electronics Group Co., Ltd Consolidated Cash Flow Statement Year ended 31 December 2008 2008 Notes HK$'000 2007 HK$'000 Net cash inflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment and interest capitalised Proceeds ...

  • Page 58
    ... subsidiaries 18 85,088 81,060 Net assets 2,034,013 1,835,275 EQUITY Issued capital Equity component of convertible notes Reserves 29 195,167 - 1,838,846 185,932 22,093 1,627,250 31(b) Total equity 2,034,013 1,835,275 Yang Mian Mian Chairman Cui Shao Hua Director Annual Report 2008

  • Page 59
    ... activities: • • manufacture and sale of washing machines manufacture and sale of water heaters 1. Clarendon House, 2 Church Street, Hamilton HM11, Bermuda In the opinion of the directors, Haier Group Corporation ("Haier Corp") and Qingdao Haier Investment and Development Co., Ltd. ("Haier...

  • Page 60
    58 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.1 Basis of Preparation (Cont'd) Basis of consolidation (Cont'd) Minority interests represent the interests of outside shareholders not held by the Group in the results and net assets of the Company's subsidiaries....

  • Page 61
    59 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.2 Impact of New and Revised Hong Kong Financial Reporting Standards (Cont'd) The principal effects of adopting these new and revised HKFRSs are as follows: (a) Amendments to HKAS 39 Financial Instruments: ...

  • Page 62
    60 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.2 Impact of New and Revised Hong Kong Financial Reporting Standards (Cont'd) (b) HK(IFRIC)-Int 11 HKFRS 2 Group and Treasury Share Transactions HK(IFRIC)-Int 11 requires arrangements whereby an employee is granted...

  • Page 63
    61 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.3 Impact of Issued But Not Yet Effective Hong Kong Financial Reporting Standards The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial ...

  • Page 64
    ...Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.3 Impact of Issued But Not Yet Effective Hong Kong Financial Reporting Standards (Cont'd) HKAS 39 Amendment Amendment to HKAS 39 Financial... 1 15 4 4 Hedges of a Net Investment in a Foreign Operation Owners 2 5 16 ...

  • Page 65
    63 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.3 Impact of Issued But Not Yet Effective Hong Kong Financial Reporting Standards (Cont'd) Apart from the above, the HKICPA has also issued Improvements to HKFRSs* which sets out amendments to a number of HKFRSs ...

  • Page 66
    64 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies Subsidiaries A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities...

  • Page 67
    ...Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Related parties A party is considered to be related to the Group if: (a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under...

  • Page 68
    ... straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows: Buildings Plant and machinery Tools, furniture and fixtures Motor vehicles 2% to 10% 5% to...

  • Page 69
    ...Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Property, plant and equipment and depreciation (Cont'd) An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits...

  • Page 70
    68 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Intangible assets (other than goodwill) (Cont'd) Research and development costs All research costs are charged to the income statement as incurred. Expenditure...

  • Page 71
    69 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Investments and other financial assets Financial assets in the scope of HKAS 39 are classified as financial assets at fair value through profit or loss, loans ...

  • Page 72
    ... Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Investments and other financial assets (Cont'd) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market...

  • Page 73
    71 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Investments and other financial assets (Cont'd) Fair value The fair value of investments that are actively traded in organised financial markets is determined ...

  • Page 74
    72 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Impairment of financial assets (Cont'd) Assets carried at amortised cost (Cont'd) In relation to trade and other receivables, a provision for impairment is ...

  • Page 75
    73 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is ...

  • Page 76
    74 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary pf Significant Accounting Policies (Cont'd) Financial liabilities at amortised cost (including interestbearing borrowings) Financial liabilities including trade and other payables and interestbearing ...

  • Page 77
    ... finance costs in the income statement. Provisions for installation services and product warranties granted by the Group on certain products are recognised based on sales volume and past experience of the level of installation services rendered, repairs or returns, discounted to their present values...

  • Page 78
    76 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Income tax Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in equity if it relates to items that are ...

  • Page 79
    77 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Income tax ... investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse ...

  • Page 80
    78 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching ...

  • Page 81
    79 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Employee benefits Pension schemes The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the "MPF Scheme") under the ...

  • Page 82
    ... China subsidiaries are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of these entities are translated into the presentation currency of the Company at exchange rates ruling at the balance sheet dates and their income statements are translated...

  • Page 83
    ... Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 2.4 Summary of Significant Accounting Policies (Cont'd) Foreign currencies (Cont'd) For the purpose of the consolidated cash flow statement, the cash flows of Mainland China subsidiaries are translated into Hong Kong...

  • Page 84
    82 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 3. Significant Accounting Judgements and Estimates (Cont'd) Judgements (Cont'd) Classification between investment properties and owneroccupied properties (Cont'd) Some properties comprise a portion that is held to ...

  • Page 85
    83 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 3. Significant Accounting Judgements and Estimates (Cont'd) Estimation uncertainty (Cont'd) Write-down of inventories to net realisable value Write-down of inventories to net realisable value is made based on the ...

  • Page 86
    ... unit that offers products and services which are subject to risks and returns that are different from those of the other business segments. Summary details of the business segments are as follows: (a) the washing machine business segment manufactures and sells washing machines; (b) the water heater...

  • Page 87
    ... ended 31 December 2008 and 2007. Washing machine business 2008 HK$'000 2007 HK$'000 4. Water heater business 2008 HK$'000 2007 HK$'000 Corporate and others 2008 HK$'000 2007 HK$'000 Consolidated 2008 HK$'000 2007 HK$'000 Segment revenue: Sales to external customers Other revenue 9,101,966 18...

  • Page 88
    86 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 4. Segment Information (Cont'd) Business segments (Cont'd) Washing machine business 2008 HK$'000 2007 4. Water heater business 2008 2007 Corporate and others 2008 2007 Eliminations 2008 2007 Consolidated 2008 ...

  • Page 89
    87 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 4. Segment Information (Cont'd) Business segments (Cont'd) Washing machine business 2008 HK$'000 2007 HK$'000 4. Water heater business 2008 HK$'000 2007 HK$'000 Corporate and others 2008 HK$'000 2007 HK$'000 ...

  • Page 90
    88 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 5. Revenue, Other Income and Gains Revenue, which is also the Group's turnover, represents the net invoiced value of goods sold, net of value-added tax and after allowances for returns and trade discounts. An ...

  • Page 91
    ... charging: 6. 2008 Notes HK$'000 2007 HK$'000 Cost of inventories sold Depreciation Recognition of prepaid land premiums Amortisation of intangible assets * Research and development costs * Auditors' remuneration Employee benefit expense (including directors' remuneration - note 8): Wages and...

  • Page 92
    90 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 7. Finance Costs Group 7. 2008 HK$'000 2007 HK$'000 Interest on borrowings wholly repayable within five years ... expense Less: Interest capitalised 15,733 - 25,466 (1,398 ) 15,733 24,068 Annual Report 2008

  • Page 93
    91 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 8. Directors' Remuneration Directors' remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and Section 161 ...

  • Page 94
    ... Group Co., Ltd Notes to Financial Statements 31 December 2008 8. Directors' Remuneration (Cont'd) (a) Independent non-executive directors: The fees paid to independent non-executive directors during the year were as follows: 8. (a) 2008 HK$'000 2007 HK$'000 Wu Yinong Liu Xiao Feng * Yu...

  • Page 95
    93 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 8. Directors' Remuneration (Cont'd) (b) Executive directors: 8. (b) Equitysettled share Pension option scheme Total expense contributions remuneration Salaries, allowances Performance and benefits related Fees in ...

  • Page 96
    94 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 9. Five Highest Paid Employees The five highest paid employees during the year included two director (2007: one), details of whose remuneration are set out in note 8 above. Details of the remuneration of the ...

  • Page 97
    ... Financial Statements 31 December 2008 10. Tax No provision for Hong Kong profits tax has been made as the Group did not generate any assessable profits arising in Hong Kong during the year (2007: Nil). Tax on profits assessable in Mainland China has been calculated at the applicable PRC corporate...

  • Page 98
    96 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 10. Tax (Cont'd) Group - 2008 10. Hong Kong HK$'000 % Mainland China HK$'000 % HK$'000 Total % Profit/(loss) before tax (15,131 ) 217,444 202,313 Tax at the statutory tax rate Adjustments in respect of ...

  • Page 99
    ... Notes to Financial Statements 31 December 2008 10. Tax (Cont'd) On 16 March 2007, the National People's Congress approved the Corporate Income Tax Law of the PRC (the "New CIT Law"), which is effective from 1 January 2008. Under the New CIT Law, the CIT rate applicable to domestic companies will...

  • Page 100
    98 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 13. ...on the convertible notes, where applicable. The weighted average number of ordinary shares used in the calculation is the number of ordinary shares in issue during... notes Annual Report 2008 152,839 179,810

  • Page 101
    ... elsewhere in these financial statements, the Group had the following material transactions with related parties during the year. (a) The Company's subsidiaries, Qingdao Haier Washing Machine Co., Ltd., Qingdao Jiaonan Haier Washing Machine Co., Ltd., Hefei Haier Washing Machine Co., Ltd., Foshan...

  • Page 102
    100 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 14. Related Party Transactions (Cont'd) (a) (Cont'd) Group 14. (a) 2008 Notes HK$'000 2007 HK$'000 Export sale of washing machines and water heaters Domestic sale of washing machines and water heaters Purchase ...

  • Page 103
    101 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 14. Related Party Transactions (Cont'd) (a) (Cont'd) Notes: (Cont'd) (ii) During the year, the domestic sale of washing machines and water heaters were made at unit prices not less than the average selling prices ...

  • Page 104
    ...to Financial Statements 31 December 2008 14. Related Party Transactions (Cont'd) (a) (Cont'd) Notes: (Cont'd) (xii) Consignment sale commission income in 2007 was determined at 2% of the turnover of the sales of the outstanding inventories of washing machines and water heaters owned by subsidiaries...

  • Page 105
    103 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 15. Property, Plant and Equipment Group 15. Tools, furniture Plant and Buildings machinery and fixtures Motor Construction vehicles in progress Total HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 31 ...

  • Page 106
    ...Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 15. Property, Plant and Equipment (Cont'd) Group (Cont'd) 15. Tools, furniture Plant and Buildings machinery and fixtures Motor.../write-off Depreciation provided during the year Transfers Exchange ...Annual Report 2008

  • Page 107
    ... procedures have been completed. The aggregate net book value of the Group's buildings indemnified by Haier Corp as at 31 December 2008 amounted to approximately HK$176,874,000 (2007: HK$169,851,000). In the opinion of the directors, the Group is entitled to lawfully and validly occupy and...

  • Page 108
    ...names of the respective subsidiaries of the Company, all of which (2007: HK$14,995,000) was indemnified by Haier Corp as at 31 December 2008. Details of the undertakings granted by Haier Corp to the Company in relation to such title issue are set out in note 15 to the financial statements. 15 14,995...

  • Page 109
    107 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 17. Intangible Assets 17. Group Patents, licences and software HK$'000 31 December 2008 At 1 January 2008: Cost Accumulated amortisation 2,596 (1,112) Net carrying amount 1,484 Cost at 1 January 2008, net of ...

  • Page 110
    108 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 17. Intangible Assets (Cont'd) 17. Patents, licenses and software HK$'000 31 December 2007 At 1 January 2007: Cost Accumulated amortisation 2,428 (694 ) Net carrying amount 1,734 Cost at 1 January 2007, net ...

  • Page 111
    109 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 18. Interests in Subsidiaries Company 18. 2008 HK$'000 2007 HK$'000 Unlisted investments, at cost Due from subsidiaries 1,982,417 163,171 1,982,417 163,575 2,145,588 Impairment for unlisted investments (note...

  • Page 112
    ... Sales Co., Ltd. * * Haier Indesit (Qingdao) Washing Machine Co., Ltd. *** *** PRC/ Mainland China RMB5,000,000 5,000,000 50 30 Sale of washing machines and water heaters PRC/ Mainland China USD24,000,000 24,000,000 - 100 Manufacture and sale of washing machines Annual Report 2008

  • Page 113
    ... to Financial Statements 31 December 2008 18. Interests in Subsidiaries (Cont'd) Place of registration and Name operations 18. Percentage of Nominal value of registered capital equity directly attributable to the Company Principal activities Direct Indirect Qingdao Haier Drum Washing Machine Co...

  • Page 114
    112 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 19. Inventories Group 19. 2008 HK$'000 2007 HK$'000 Raw materials Work in progress Finished goods 37,575 7,983 261,643 34,399 556 623,579 307,201 658,534 20. Trade and Bills Receivables The Group normally ...

  • Page 115
    ... relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality...

  • Page 116
    114 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 21. Prepayments, Deposits and Other Receivables 21. Group 2008 HK$ 000 2007 HK$'000 Company 2008 HK$ 000 2007 HK$'000 Prepayments Deposits Other receivables 37,754 698 71,335 51,069 304 126,882 468 698 - 695 ...

  • Page 117
    ... Bank of China. The interest rate on these deposits was 0.36% per annum. Further details of the interest income attributable to the deposits placed with Haier Finance are set out in note 14(b) to the financial statements. 14(b) 367,853,000 0.36 514,317,000 452,041,000 537,037,000 Annual Report 2008

  • Page 118
    116 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 23. Trade Payables An aged analysis of the trade payables as at the balance sheet date, based on the invoice date, is as follows: Group 23. 2008 HK$'000 2007 HK$'000 Trade payables: Within 1 month 1 to 2 months...

  • Page 119
    ... repayable on demand. There was no payable due to the directors of the Company as at 31 December 2008 (2007: HK$16,936,000). Last year's other payables included an amount due to Haier Electrical Appliances Third Holdings (BVI) Limited amounting to HK$175,443,000 which were unsecured, interest-free...

  • Page 120
    ... Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 25. Interest-Bearing Borrowings (Cont'd) Company 25. 2008 ...unsecured. The other loans represented loans borrowed from Haier Finance, which are guaranteed by Haier Corp, bear interest at rates ranging from 5.4%to...

  • Page 121
    ... in Hong Kong dollars. The carrying amounts of the Group's other borrowings approximate to their fair values. 25. 26. Convertible Notes On 28 January 2005, the Company issued convertible notes with an aggregate principal amount of HK$260 million to a subsidiary of Haier Group, Qingdao Haier Group...

  • Page 122
    120 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 26. Convertible Notes (Cont'd) Group and Company 26. Liability component 2008 Note HK$'000 2007 HK$'000 At 1 January Interest expenses Conversion of convertible notes 7 169,344 656 (170,000) 161,665 7,679 - ...

  • Page 123
    121 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 27. Provisions (Cont'd) The Group provides installation services and warranties of one to three years to its customers on washing machines and water heaters, under which faulty products are repaired or replaced. ...

  • Page 124
    ... and the jurisdiction of the foreign investors. For the Group, the applicable rate is 10%. The Group is therefore liable to withholding taxes on dividends distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008. 10% 10% 190,624,000 36,098...

  • Page 125
    ...the Group's subsidiaries established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China for...

  • Page 126
    ... of share options and conversion of convertible notes after the reverse acquisition. The equity structure (i.e., the number and type of shares) reflects the equity structure of the legal parent, Haier Electronics Group Co., Ltd. Company 29. (BVI) 2008 HK$'000 2007 HK$'000 Authorised: 30,000,000...

  • Page 127
    125 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 29. Issued Equity (Cont'd) A summary of the transactions during the year involving the Company's issued share capital is as follows: 29. Issued Number of shares in issue share capital HK$'000 Share premium ...

  • Page 128
    126 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 29. Issued Equity (Cont'd) Notes: (i) Details of the Company's share option scheme and the share options issued under the scheme are included in note 30 to the financial statements. Pursuant to a special resolution...

  • Page 129
    ... any employee, executive or officer of the Group (including executive and non-executive directors of the Company) and any supplier, consultant, agent, adviser, shareholder, customer, partner, business associate who, in the sole discretion of the board of directors of the Company (the "Board"), has...

  • Page 130
    ... day; (ii) the average closing price of the shares of the Company as stated in the Stock Exchange's daily quotation sheets for the five trading days immediately preceding the date of grant; and (iii) the nominal value of the shares of the Company. Share options do not confer rights on the holders to...

  • Page 131
    129 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 30. Share Option Scheme (Cont'd) 2007 Number of share options 30. Price of the Company s shares (note 3) 3 Date of grant of share options (note 1) Exercise period of share options Exercise price of share ...

  • Page 132
    130 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 30. Share Option Scheme (Cont'd) Notes: 1. The vesting period of the share options is from the date of grant until the commencement of the exercise period. The exercise price of the share options is subject to ...

  • Page 133
    131 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 31. Reserves (Cont'd) (a) Group (Cont'd) (ii) The Group's capital reduction reserve arose from the reduction in the nominal value of each of the issued shares of the Company from HK$0.10 to HK$0.01 by the ...

  • Page 134
    132 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 31. Reserves (Cont'd) (b) Company (Cont'd) 31. (b) Retained Share account surplus Capital reserve profits/ losses) Total premium Contributed redemption (accumulated Notes HK$'000 HK$'000 HK$'000 HK$'000 HK$'...

  • Page 135
    ... Notes to Financial Statements 31 December 2008 33. Operating Lease Arrangements The Group leases certain properties under operating lease arrangements. Leases for the properties are negotiated for terms ranging from one to five years. At the balance sheet date, the Group and the Company had total...

  • Page 136
    134 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 34. Commitments (Cont'd) At the balance sheet date, the Company did not have any significant commitments other than those disclosed in note 33 above. 34. 33 35. Financial Instruments by Category The carrying ...

  • Page 137
    135 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 35. Financial Instruments By Category (Cont'd) The carrying amounts of loans and receivables and financial liabilities at amortised cost of the Company at the balance sheet date are as follows: Financial assets 35...

  • Page 138
    ... are interest rate risk, foreign currency risk, credit risk and liquidity risk. The board review and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The Group's exposure to the risk of changes in market interest rates relates primarily to the...

  • Page 139
    137 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 36. Financial Risk Management Objectives and Policies (Cont'd) Interest rate risk (Cont'd) 36. ( ) Increase/(decrease) Increase/(decrease) in basis points in profit before tax HK$'000 2008 Renminbi Renminbi ...

  • Page 140
    138 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 36. Financial Risk Management Objectives and Policies (Cont'd) Foreign currency risk (Cont'd) 36. ( ) Increase/(decrease) Increase/(decrease) in exchange rates in profit before tax % HK$'000 2008 If Renminbi ...

  • Page 141
    139 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 36. Financial Risk Management Objectives and Policies (Cont'd) Credit risk The Group trades only with recognised and creditworthy third parties. It is the Group's policy that all customers who wish to trade on ...

  • Page 142
    ... Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 36. Financial Risk Management Objectives and Policies (Cont'd) Liquidity risk (Cont'd) 2008 36. ( ) Beyond one year or Within one year or on demand no fixed terms of repayment Total HK$'000 HK$'000 HK$'000 Trade...

  • Page 143
    141 Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 36. Financial Risk Management Objectives and Policies (Cont'd) Liquidity risk (Cont'd) The maturity profile of the Company's financial liabilities as at the balance sheet date, based on the contractual undiscounted...

  • Page 144
    ... the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for managing capital during...

  • Page 145
    ...Haier Electronics Group Co., Ltd Notes to Financial Statements 31 December 2008 37. Post Balance Sheet Events On 25 February 2009, the Company entered into a placing agreement with Roofer Securities Limited ("Roofer Securities"), pursuant to which the Company appointed Roofer Securities to procure...

  • Page 146
    ..., as extracted from the published audited financial statements and restated/reclassified as appropriate, is set out below. Year ended 31 December 2008 HK$ 000 2007 HK$'000 2006 HK$'000 2005 HK$'000 2004 HK$'000 RESULTS CONTINUING OPERATIONS REVENUE Cost of sales Gross profit Other income and gains...

  • Page 147
    Cert no. SGS-COC-004298

  • Page 148