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2 0 0 9 A N N U A L R E P O R T
 
Haier Electronics Group Co., Ltd.
Stock Code 01169
海爾電器集團有限公司*
 for identification purpose only
 
海爾電器集團有限公司*
年報
Haier AR09_2_cover x2A.indd 1 27/4/2010 10:38:22

Table of contents

  • Page 1
    * for identification purpose only Haier Electronics Group Co., Ltd Stock Code 01169 2 0 0 9 A N N U A L R E P O R T å¹´ å ±

  • Page 2

  • Page 3
    ... Corporate Structure Corporate Information Chairman's Letter Directors and Senior Management Business Review Financial Review Corporate Governance Report Report of the Directors 2 3 4 8 14 22 26 29 42 TABLE OF CONTENTS ç›® Independent Auditors' Report Audited Financial Statements...

  • Page 4
    .... (Stock code: 01169) (the "Company"), a subsidiary of Haier Group, is listed on the Main 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...

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

  • Page 6
    ... Law DLA Piper Hong Kong As to Bermuda Law Conyers Dill & Pearman Principal Banker in Hong Kong Industrial and Commercial Bank of China (Asia) Limited Principal Banker in the PRC China Construction Bank Corporation Auditors Ernst & Young 4 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 7
    ... The Stock Exchange of Hong Kong Limited: 01169 01169 Websites www.haier-elec.com.hk www.haier-elec.com.hk Investor Relations Contact Elite Investor Relations Limited 12/F, Wilson House, 19-27 Wyndnam Street Central, Hong Kong Telephone Number : (852) 3183 0225 Fax Number : (852) 2155 9165 E-mail...

  • Page 8
    å"ç‰Œæ˜¯å¸† Taking a brand name higher

  • Page 9

  • Page 10
    ... of the profit attributable to the owners of the Company of 172.1% in 2009. According to the data sources published by Euromonitor in December 2009, Haier washing machines brand shares ranked as world No. 1 in terms of retail volume globally 現 了GDP8.7 13.3 172.1 Euromonitor Review of...

  • Page 11
    ... 1.1% growth in gross profit margin and a 1.8% decrease of management expenses to revenue ratio from 2008, benefiting from decrease in raw material prices as well as the Group's effort to optimise product mix, strengthen cost control and improve profitability. Besides, the effective control over the...

  • Page 12
    ... of China's market for high-end products (especially along with China's economic growth), we will strengthen the image of Haier washing machines and water heaters as an industry leader to capture a larger market share of the high-end products sector and increase the overall gross profit margins of...

  • Page 13
    ...then delivering competitive white goods products to end-users through retail partners. Given China's 3rd and 4th tier markets are widely, geographically distributed with differentiated regional features, the Group will expand the marketing network deep into rural villages by innovative means such as...

  • Page 14
    ... to organizational structure, we will explore and build a customer-centered autonomous units system. The so-called autonomous unit refers to the line managers and staff members making decision from the intrinsic driving force to create value for customers rather than receiving instructions from...

  • Page 15
    ...team building, the Company recruited Mr. Zhou Yun Jie as a new general manager from Haier Group this year. Mr. Zhou has over 20 years of experience in Haier Group's manufacturing, sales, international and domestic markets and corporate management and is mainly responsible for global market expansion...

  • Page 16
    ... the president of Haier Group Corporation ("Haier Corp") and the chairman of Qingdao Haier Co., Ltd. (a company listed on the Shanghai Stock Exchange (the "A-Share Company")). Ms. Yang is also a director of certain subsidiaries of the Group. During the year, Fortune Magazine, USA published the world...

  • Page 17
    ... Group's corporate finance function. Mr. Cui graduated from Jilin Institute of Finance and Commerce, the PRC in 1982. He joined the Haier Group in 1993 and has over 22 years of experience in financial management and listed companies' operations. He is also the Deputy Managing Director of the A-Share...

  • Page 18
    ..., in particular in raw material procurement function and white goods business. He is also a Senior Vice President of Haier Corp, the Vice Chairman of A-Share Company and a director of certain subsidiaries of the Group. ，59 ，43 A 16 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 19
    ... on the boards of several listed companies in Hong Kong. Dr. LIU Xiao Feng, aged 47, was appointed as an Independent Non-executive Director of the Company on 21 June 2007. He is currently Managing Director of China Resources Capital Holdings Co., Ltd. He has worked in various international financial...

  • Page 20
    ... product division of the Company since June 2009. Mr. Shu has a Master's degree in International Trade from Ocean University of China, the PRC. He joined the Haier Group in 1995 and has since held a number of senior positions in the washing machine business. He is currently responsible for the sales...

  • Page 21
    ... responsible for the marketing of washing machines in PRC market of the Group. （續） 35 Company Secretary Mr. NG Chi Yin, aged 44, joined 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 22
    One World One Home 一個ä¸-界一個家

  • Page 23

  • Page 24
    ... REVIEW Although the impact of the global financial crisis and the world economic downturn persisted in 2009, the Group managed to leverage on some of the State's favourable policies such as the "Rural Area Subsidized Electrical Appliances Purchase Policy" and "Home Appliances Replacement Policy...

  • Page 25
    ... the market share of the sales of worldwide washing machine brands in 2009, ranking first in the world, mainly attributable to the decline in sales in the global washing machine market, the ongoing growth in China's washing machine market, and the Group's largest share in the Chinese washing machine...

  • Page 26
    ... "Home Appliances Replacement Policy". By optimizing product mix, developing premium and high value-added products, strengthening cost control and maintaining low inventory level so as to benefit from the decrease of raw materials prices in the market, the gross profit margin of the washing machine...

  • Page 27
    ... Award 2009 for home appliances at IFA trade fair in Germany. The Group's leading technologies and ongoing advances in research and development capability are expected to introduce new drivers for its future product sales. In 2009, the Group launched 90 types of new products into the water heater...

  • Page 28
    ... to 2008; office expenses, rental expenses and related administrative expenses dropped as well due to the higher operating efficiency based on its process reengineering 1.8 ERP Liquidity And Financial Resources The Group has been presenting the consolidated financial statements in Hong Kong...

  • Page 29
    FINANCIAL REVIEW Liquidity And Financial Resources (Cont'd) The Group has maintained a healthy financial and liquidity position with a current ratio of 130% as at 31 December 2009 (2008: 123%). As at 31 December 2009, the Group had a cash and cash equivalents balance of RMB1,295 million (2008: ...

  • Page 30
    FINANCIAL REVIEW Treasury Policies The Group employs a prudent approach to cash management and risk controls. Most of the Group's receipts and payments are denominated in Renminbi and Hong Kong dollars. Cash is generally placed in short term deposits denominated either in Renminbi or Hong Kong ...

  • Page 31
    ... and finance, business management and industry knowledge and the Board as a whole has achieved an appropriate balance of skills and experience. The Directors' biographical details are set out on pages 14 to 17 of this annual report. To the best of the Company's knowledge, there is no financial or...

  • Page 32
    ...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; 3. planning and deciding the Company's strategies on its business activities...

  • Page 33
    ... inspected by any members of the Board or the Board committees upon request. The Board reviews those arrangements and the Guidelines on a periodic basis to ensure that they remain appropriate to the needs of the Group. Chairman and Chief Executive Officer ("CEO") Under the Code Provision A.2.1, the...

  • Page 34
    ... of the Group. The Company's board meetings (the "Board Meeting(s)") are permitted to be held by means of telephone or other means of electronic communication under the Bye-laws. Reasonable notices are served and comprehensive information is provided to the Board members in advance of all...

  • Page 35
    .../held Executive Directors: Ms. Yang Mian Mian (Chairman) Mr. Cao Chun Hua (resigned on 12 November 2009) Mr. Cui Shao Hua (resigned on 19 April 2010) Mr. Sun Jing Yan Non-Executive Directors: Mr. Wu Ke Song (Deputy Chairman) (re-designated from an executive director from 12 November 2009) Mr...

  • Page 36
    ..., the procedures and arrangement of the Board Meeting in relation to the conduct of meetings, notice of meetings and recording of minutes. Further particulars of each of the Committees are set out below: （續） 10 34 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 37
    ... to ensure 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...

  • Page 38
    ... Director: Mr. Cui Shao Hua (resigned on 19 April 2010) Non-executive Director: Mr. Wu Ke Song (re-designated from executive director from 12 November 2009) INEDs: Mr. Wu Yinong Mr. Yu Hon To, David Dr. Liu Xiao Feng 2/2 2/2 2/2 0/2 1/2 36 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 39
    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 (resigned on 19 April 2010) and all ...

  • Page 40
    ... assessment of the Group's development and prospects in all corporate communications, including but not 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...

  • Page 41
    ... as risk management procedures. The Board is also responsible for ensuring that the management has discharged its duty to have an effective internal control system including the adequacy of resources, qualification and experience of staff of the Company's accounting and financial reporting function...

  • Page 42
    Innovation is the soul of Haier Corporate Culture

  • Page 43

  • Page 44
    ... report and the audited financial statements of the Company and the Group for the year ended 31 December 2009. 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...

  • Page 45
    ..., the Company's share premium account, in the amount of RMB1,035,693,000, may be capitalized and distributed to members in the form of fully paid bonus shares 748,150,000 1,035,693,000 Major Customers and Suppliers In the year under review, sales to the Group's five largest customers accounted...

  • Page 46
    ... OF THE DIRECTORS Directors The directors of the Company during the year and up to the date of this report were as follows: Executive directors: Ms. Yang Mian Mian Mr. Zhou Yun Jie (appointed on 12 November 2009) Mr. Cao Chun Hua (resigned on 12 November 2009) Mr. Cui Shao Hua (resigned on 19...

  • Page 47
    ... notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, were set out in note 30 to the financial statements XV 352 30ã€, Directors' Rights to Acquire Shares in or Debentures...

  • Page 48
    .... Ms. Yang Mian Mian and Mr. Zhou Yun Jie, executive directors of the Company, and Mr. Wu Ke Song and Mr. Liang Hai Shan, nonexecutive directors of the Company are also members of the board of management of Haier Collective Asset Management. 46 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 49
    ... Shares held by Haier Investment as at 31 December 2009. Ms. Yang Mian Mian and Mr. Zhou Yun Jie, executive directors of the Company, and Mr. Wu Ke Song and Mr. Liang Hai Shan, nonexecutive directors of the Company are also the members of the management committee of Haier Corp. 3. Haier Investment...

  • Page 50
    REPORT OF THE DIRECTORS Connected Transactions and Continuing Connected Transactions Connected transactions (a) Qingdao Economy and Technology Development Zone Haier Water Heater Co., Ltd. ("Qingdao Water Heater"), a wholly-owned subsidiary of the Company, and Qingdao Jiaonan Haier Microwave ...

  • Page 51
    ... with Haier Corp, Haier Investment, their subsidiaries and associates (collectively referred to as "Haier Affiliates"): Group 2009 年 Notes 附註 RMB'000 （續） 2008 RMB'000 Export sale of washing machines and water heaters Domestic sale of washing machines and water heaters Purchase...

  • Page 52
    ... sales of washing machines and water heaters of the Group. (ix) The other service fee expenses include advertising fee, research and development fee, property rental and management fee, software fee, legal consulting service fee, catering and travel agency service fee, human resources service...

  • Page 53
    ... with reference to the standard rates published by the People's Bank of China. The maximum loan balance taken out and the bank deposits placed with Haier Group Finance Co., Ltd. ("Haier Finance") related to the above interest expenses and income during 2009 were RMB143,000,000 and RMB699,738,000...

  • Page 54
    ... financial statements have been audited by Ernst & Young who retire and, being eligible, offer themselves for re-appointment at the forthcoming annual general meeting of the Company. ON BEHALF OF THE BOARD Yang Mian Mian Chairman Hong Kong 19 April 2010 主席 52 HAIER ELECTRONICS GROUP...

  • Page 55
    ... financial statements in accordance with International Financial Reporting Standards promulgated by the International Accounting Standards Board and the disclosure requirements of the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and maintaining internal control...

  • Page 56
    ...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 18æ¨" 8號 2 Hong Kong 19 April 2010 54 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 57
    ... INCOME STATEMENT Year ended 31 December 2009 Notes 附註 2009 年 RMB'000 2008 RMB'000 REVENUE Cost of sales 5 11,530,604 (8,084,214) 10,179,764 (7,244,969 ) Gross profit Other income and gains Selling and distribution costs Administrative expenses Other expenses Finance costs...

  • Page 58
    ...on translation of foreign operations 43) 760 TOTAL COMPREHENSIVE INCOME FOR THE YEAR å¹´ 420,311 156,876 Total comprehensive income attributable to: Owners of the Company Minority interests 11 369,668 50,643 136,540 20,336 420,311 156,876 56 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT...

  • Page 59
    CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December 2009 Notes 附註 NON-CURRENT ASSETS Property, plant and equipment Investment properties Prepaid land premiums Intangible assets Deferred tax assets 2009 年 RMB'000 2008 RMB'000 15 16 17 18 28 597,102 18,298 68,675 1,464 21,...

  • Page 60
    ... the Company Issued equity Reserves 29 31(a) 1,527,611 (86,813) 1,485,859 (463,767 ) 1,440,798 Minority interests 131,325 1,022,092 95,270 Total equity 1,572,123 1,117,362 Yang Mian Mian Zhou Yun Jie Chairman 主席 58 HAIER ELECTRONICS GROUP CO., LTD Director è'£äº‹ ANNUAL REPORT 2009

  • Page 61
    CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2009 Attributable to the owners of the Company Issued equity Capital reduction reserve Capital reserve Merger reserve Share option reserve Capital Reserve redemption funds reserve Retained profits Exchange fluctuation ...

  • Page 62
    ... with original maturity over three months when acquired 857,269 5,281 (80,638) 781,912 15 (70,211) (38,473) 18 20,839 (439) 2,268 (805) 49,000 (811) (74,000) (111,010) Net cash flows used in investing activities 60 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 63
    ... STATEMENT OF CASH FLOWS Year ended 31 December 2009 Notes 附註 CASH FLOWS FROM FINANCING ACTIVITIES Interest paid Dividends paid to minority interests Dividends paid Proceeds from issue of shares Share issue expenses Repayment of borrowings Repurchase and cancellation of ordinary shares...

  • Page 64
    STATEMENT OF FINANCIAL POSITION 31 December 2009 Notes 附註 2009 å¹´ RMB'000 2008 RMB'000 NON-CURRENT ASSETS Interests in subsidiaries 19 1,...1,815,565 1,790,820 Yang Mian Mian Chairman 主席 Zhou Yun Jie Director è'£äº‹ 62 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 65
    ... the directors, Haier Group Corporation ("Haier Corp") and Qingdao Haier Investment and Development Co., Ltd. ("Haier Investment") (collectively referred to as "Haier Group") are controlling shareholders of the Company. Haier Corp and Haier Investment are registered in the People's Republic of China...

  • Page 66
    ..., the date of the Group's transition to IFRSs was determined to be 1 January 2008, being the beginning of the earliest period for which the Group presents full comparative information in these financial statements. 2.1 （續） 1 64 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 67
    ... consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2009. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to...

  • Page 68
    ...18 IFRS 8 IAS 1 (Revised) IAS 18 Amendment* Operating Segments Presentation of Financial Statements Amendment to Appendix to IAS 18 Revenue - Determining whether an entity is acting as a principal or as an agent 18號 ä¿®è¨,本 66 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 69
    ...to IFRSs 2009 (as issued in April 2009). The Group adopted all the improvements to IFRSs issued in May 2008 except for the amendments to IFRS 5 Non-current assets Held for Sale and Discontinued Operations - Plan to sell the controlling interest in a subsidiary, which are effective for annual periods...

  • Page 70
    ... Reporting Standards1 Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards - Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters4 2.3 å ± 1 1 1 1號 7 ä¿®è¨,本4 68 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 71
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 2.3 Issued But Not Yet Effective International Financial Reporting Standards (Cont'd) IFRS 1 Amendments Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Additional Exemptions for First-time Adopters2 IFRS 2 ...

  • Page 72
    ... of the impact of these new and revised IFRSs upon initial application. So far, the Group considers that these new and revised IFRSs are unlikely to have a significant impact on the Group's results of operations and financial position. 70 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 73
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 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. The results of subsidiaries are...

  • Page 74
    ... or (g) the party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group. 2.4 （續） a i ii iii b) (c) (d (e) (a)æˆ-(d (f) (d)æˆ-(e (g) 72 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 75
    ... disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with IFRS 5. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its...

  • Page 76
    ... when completed and ready for use. Investment properties Investment properties are interests in buildings held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary...

  • Page 77
    ... or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which...

  • Page 78
    ...at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular...

  • Page 79
    ... markets and management's intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification from financial assets at fair value through profit or loss to loans and receivables, available-for-sale...

  • Page 80
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) Investments and other financial assets (Cont'd) Available-for-sale financial investments Available-for-sale financial investments are non-derivative financial assets in listed and unlisted ...

  • Page 81
    ...-for-sale financial investments (Cont'd) The Group evaluates its available-for-sale financial assets whether the ability and intention to sell them in the near term are still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management's intent...

  • Page 82
    ... financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. 2.4 （續） （續） 80 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT...

  • Page 83
    ... TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) Impairment of financial assets (Cont'd) Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence...

  • Page 84
    ...estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses on these assets are not reversed. Available-for-sale financial investments For available-for-sale financial investments, the Group assesses at the end of each reporting period...

  • Page 85
    ... TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and...

  • Page 86
    ... valuation techniques. Such techniques include using recent arm's length market transactions; reference to the current market value of another instrument which is substantially the same and a discounted cash flow analysis. 84 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 87
    ... is included in 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...

  • Page 88
    ... with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. 2.4 （續） 86 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 89
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) ...investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit...

  • Page 90
    ... receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ("equity-settled transactions"). 2.4 （續） (a) (b) (c) (d) 88 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 91
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) Share-based payment transactions (Cont'd) The cost of equity-settled transactions with employees for grants is measured by reference to the fair value at the date at which they are granted. ...

  • Page 92
    ... the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as...

  • Page 93
    ...Significant Accounting Policies (Cont'd) Borrowing costs Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of...

  • Page 94
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 2.4 Summary of Significant Accounting Policies (Cont'd) Foreign currencies These financial statements are presented in RMB, which is the Group's presentation currency. The functional currency of the Company is the Hong Kong dollar while RMB is used...

  • Page 95
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 3. Significant Accounting Judgements and Estimates The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, ...

  • Page 96
    ... in future are different from the original estimate, such differences will impact the recognition of deferred tax assets and income tax charge in the period in which such estimate has been changed. 3. （續） （續） 94 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 97
    ...Product warranty and installation provisions are made based on sales volume and past experience of the level of installation services rendered, repairs or returns. The assessment of the provision amount involves management's judgements and estimates. Where the actual outcome or expectation in future...

  • Page 98
    ... FINANCIAL STATEMENTS 31 December 2009 4. Operating Segment Information For management purposes, the Group is organised into business units based on their products and services and has three reportable segments as follows: (a) the washing machine business segment manufactures and sells washing...

  • Page 99
    ... 4. Operating Segment Information (Cont'd) 4. business （續） Water heater business 2008 2009 年 Washing machine Consolidated 2009 年 2009 年 2008 2008 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Segment revenue: Sales to external customers Other revenue...

  • Page 100
    ...FINANCIAL STATEMENTS 31 December 2009 4. Operating Segment Information (Cont'd) 4. business （續） Water heater business 2008 2009 年 Washing machine Consolidated 2009 年 2009 年 2008 2008...bearing borrowings Corporate and other ...HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 101
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 4. Operating Segment Information (Cont'd) 4. business （續） Water heater business 2008 2009 年 Washing machine Consolidated 2009 年 2009 年 2008 2008 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 Other ...

  • Page 102
    ...TO FINANCIAL STATEMENTS 31 December 2009 4. Operating Segment Information (Cont'd) Geographical information (a) All of the Group's revenue is derived from customers based in Mainland China. (b) Non-current assets 4. (a) （續） b 2009 年 RMB'000 2008 RMB'000 Mainland China Hong Kong...

  • Page 103
    ... net invoiced value of goods sold, net of value-added tax and after allowances for returns and trade discounts. An analysis of revenue, other income and gains is as follows: 5. Group 2009 å¹´ RMB'000 2008 RMB'000 Revenue Sale of washing machines Sale of water heaters 9,185,375 2,345...

  • Page 104
    ... of investment properties 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 salaries Welfare Pension scheme contributions Equity-settled share...

  • Page 105
    ..., disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, is as follows: 8. 161 Group 2009 å¹´ RMB'000 2008 RMB'000 Fees 袍é‡' 636 642 Other emoluments: Salaries, allowances and benefits in kind Equity-settled share option expense 1,732 - 438...

  • Page 106
    ... å¹´ RMB'000 2008 RMB'000 Mr. Wu Yinong Mr. Yu Hon To, David Dr. Liu Xiao Feng 212 212 212 214 214 214 636 642 There were no other emoluments payable to the independent non-executive directors during the year (2008: Nil). 104 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 107
    ... share option expense Total remuneration RMB'000 RMB'000 RMB'000 2009 Executive directors: Ms. Yang Mian Mian Mr. Cui Shao Hua Mr. Zhou Yun Jie * Mr. Sun Jing Yan Mr. Cao Chun Hua ** å¹´ 68 205 165 - - 565 165 243 - - 633 370 408 438 973 1,411 Non-executive directors: Mr. Wu Ke Song...

  • Page 108
    ... TO FINANCIAL STATEMENTS 31 December 2009 8. Directors' Remuneration (Cont'd) (b) Executive (Cont'd) * Mr. Zhou Yun Jie was appointed as an executive director of the Company on 12 November 2009. Mr. Cao Chun Hua resigned as an executive director of the Company on 12 November 2009. directors and...

  • Page 109
    ... as at the date of grant and the amount included in the financial statements for the current year is included in the above non-director, highest paid employees' remuneration disclosures. 30 10. Income Tax No provision for Hong Kong profits tax has been made as the Group did not generate any...

  • Page 110
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 10. Income Tax (Cont'd) 10. （續） Group 2009 年 RMB'000 2008 RMB'000 Current - Mainland China Underprovision/(overprovision) in prior year Deferred (note 28) 28 109,861 1,070 6,761 21,550 (24,817 ) 27,657 Total tax charge for the...

  • Page 111
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 10. Income Tax (Cont'd) Group - 2008 10. Hong Kong 香港 RMB'000 （續） Mainland China Total RMB'000 % RMB'000 % Profit/(loss) before tax 10 (13,500 ) 194,006 180,506 Tax at the statutory tax rate Adjustments in respect of ...

  • Page 112
    ...share amount presented for the year ended 31 December 2008 in respect of a dilution as the impact of the convertible notes had an antidilutive effect on the basic earnings per share amount presented. 13. 2,010,030,069 1,948,822,406 110 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 113
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 13. Earnings Per Share Attributable to Equity Holders of the Company (Cont'd) The calculations of basic and diluted earnings per share are based on: 13. （續） 2009 年 RMB'000 2008 RMB'000 Earnings Profit attributable to ordinary ...

  • Page 114
    ... these financial statements, the Group had the following material transactions with related parties during the year. (a) Qingdao Economy and Technology Development Zone Haier Water Heater Co., Ltd. ("Qingdao Water Heater"), a whollyowned subsidiary of the Company, and Qingdao Jiaonan Haier Microwave...

  • Page 115
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 14. Related Party Transactions (Cont'd) (c) Qingdao Jiaonan Haier Washing Machine Co., Ltd. ("Jiaonan Washing Machine"), a non-wholly-owned subsidiary of the Company, and Qingdao Haier Electronics Plastic Co., Ltd. ("Qingdao Electronics Plastic"), ...

  • Page 116
    ... with Haier Corp, Haier Investment, their subsidiaries and associates (collectively referred to as "Haier Affiliates"): Group 14. (e) （續） Notes 附註 2009 年 RMB'000 2008 RMB'000 Export sale of washing machines and water heaters Domestic sale of washing machines and water heaters...

  • Page 117
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 14. Related Party Transactions (Cont'd) (e) (Cont'd) Notes: (i) The export sales 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 118
    ... note 8 to the financial statements. Except for item (f), the above related party transactions also constitute continuing connected transactions or connected transactions as defined in Chapter 14A of the Listing Rules. 8ã€, 除(f 14A 116 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 119
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 15. Property, Plant and Equipment Group 15. Tools, furniture Plant and Buildings machinery and fixtures Motor Construction vehicles in progress Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 31 December 2009 At 1 January 2009: Cost ...

  • Page 120
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 15. Property, Plant and Equipment (Cont'd) Group (Cont'd) 15. （續） Tools, furniture Plant and Buildings æ¨"宇 RMB'000 machinery RMB'000 and fixtures RMB'000 （續） Motor Construction vehicles 汽車 RMB'000 in progress RMB'000 ...

  • Page 121
    ... the related acquisition and registration procedures have been completed. The aggregate net book value of the Group's buildings and investment properties indemnified by Haier Corp as at 31 December 2009 amounted to approximately RMB129,166,000 (2008: RMB155,712,000). In the opinion of the directors...

  • Page 122
    ... the name of the Company's subsidiary. The Group obtained an undertaking from Haier Corp in relation to such defective property title issue, details of which are set out in note 15 to the financial statements. 21,046,000 1,008,000 15ã€, 120 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 123
    ... the names of the respective subsidiaries of the Company, all of which were indemnified by Haier Corp as at 31 December 2009. 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. 8,825,000 9,384,000...

  • Page 124
    ...FINANCIAL STATEMENTS 31 December 2009 18. Intangible Assets Group 18. Patents and licences RMB'000 Software RMB'000 31 December 2009 At 1 January 2009: Cost Accumulated amortisation Net carrying amount Cost at 1 January 2009... ) 1,617 122 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 125
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 19. Interests in Subsidiaries Company 19. 2009 å¹´ RMB'000 2008 RMB'000 Unlisted investments, at cost Due from subsidiaries 1,745,393 143,711 1,745,393 143,662 1,889,104 Impairment for unlisted investments (note 2,075) 1,889,055 ...

  • Page 126
    ...Mainland China 25,000 25 74.02 Manufacture and sale of washing machines Foshan Shunde Haier Intelligent Electronic Co., Ltd PRC/ Mainland China 20,000 25 74.02 Manufacture and sale of accessories for electrical appliances 124 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 127
    ... Sales Co., Ltd PRC/ Mainland China 5,000 50 30 Sale of washing machines and water heaters Haier Indesit (Qingdao) Washing Machine Co., Ltd Qingdao Haier Drum Washing Machine Co., Ltd Qingdao Economy and Technology Development Zone Haier Water Heater Co., Ltd Wuhan Haier Water Heater...

  • Page 128
    ... directors, result in particulars of excessive length. 20. Inventories Group 20. 2009 å¹´ RMB'000 2008 RMB'000 Raw materials Work in progress Finished goods 32,163 16,116 340,937 33,083 7,028 230,360 389,216 270,471 126 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 129
    ... limit. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers...

  • Page 130
    ... are repayable on similar credit terms to those offered to the major customers of the Group. Further details of the sales to these related parties are set out in note 14 to the financial statements. 407,193,000 703,541,000 14ã€, 128 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 131
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 22. Prepayments, Deposits And Other Receivables 22. Group 2009 å¹´ RMB'000 2008 RMB'000 33,240 615 62,899 96,754 (7,087 ) 89,667 Company 2009 å¹´ RMB'000 2008 RMB'000 412 615 - 1,027 - 1,027 Prepayments Deposits Other receivables 71,576 ...

  • Page 132
    ... 0.36% per annum. Further details of the interest income attributable to the deposits placed with Haier Finance are set out in note 14 to the financial statements. 1,132,535,000 472,850,000 679,020,000 452,824,000 0.36 14ã€, 130 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 133
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 24. Trade Payables An aged analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows: 24. Group 2009 å¹´ RMB'000 2008 RMB'000 894,443 9,990 435 17,231 Within 1 month 1 to 2 months 2 to 3 ...

  • Page 134
    ... from 5.75% to 7.74% per annum and are repayable in 2011. Further details of the interest expenses attributable to the loans borrowed from Haier Finance are set out in note 14 to the financial statements. 143,000 - - 5.75至7.74 14ã€, 132 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 135
    ... on washing machines and water heaters, under which faulty products are repaired or replaced. The amount of the provision for the warranties is estimated based on sales volume and past experience of the level of installation services rendered, repairs and returns. The estimation basis is reviewed on...

  • Page 136
    ...31 December 21,459 28,220 Deferred tax liabilities Notes 附註 2009 年 RMB'000 2008 RMB'000 At 1 January Deferred tax charged to the income statement during the year 10 9,588 - - 9,588 At 31 December 9,588 9,588 134 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 137
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 28. Deferred Tax (Cont'd) The Group has tax losses arising in Hong Kong of RMB31,782,000 (2008: RMB31,782,000) that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. The Group also ...

  • Page 138
    ... engaging in the manufacture and sale of top loading washing machines and mobile phones to the Company. Accordingly, the Group applied the reverse acquisition basis of accounting to account for the effect of the Reorganisation. 136 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 139
    ... the amount of share capital (including share premium) of the Company issued for the acquisition of certain subsidiaries principally engaged in the manufacture and sale of front loading washing machines and water heaters in 2006 the changes in share capital and share premium of the Company since the...

  • Page 140
    ... 2009 å¹´ HK$'000 RMB'000 equivalent HK$'000 千港å...ƒ 2008 RMB'000 equivalent 等值 Issued and fully paid: 2,026,673,905 (2008: 1,951,673,905) shares of HK$0.1 each 2,026,673,905 1,951,673,905 0.1 202,667 212,209 195,167 205,596 138 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 141
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 29. Issued Equity (Cont'd) A summary of the transactions during the year involving the Company's issued share capital is as follows: 29. 下： （續） Number of shares in issue Issued share capital RMB'000 Share premium account RMB'000 ...

  • Page 142
    ... the operations of the Group. Eligible participants of the Share Option Scheme include 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...

  • Page 143
    ...TO FINANCIAL STATEMENTS 31 December 2009 30. Share Option Scheme (Cont'd) Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of their respective associates, are subject to the approval in advance by the independent nonexecutive directors of...

  • Page 144
    ... 31 December 2009 年 Date of grant of share options (note 1) Exercise period of share options Exercise Approximate price of share options % of issued Shares upon exercise of (note 2) Share options 1 2 per share HK$ Executive directors Mr. Sun Jing Yan Mr. Zhou Yun Jie (note 3 3） - - 2,300...

  • Page 145
    ... The exercise price of the share options is subject to adjustment(s) in the case of rights or bonus share issues, or other similar changes in the share capital of the Company. Mr. Zhou Yun Jie was appointed as an executive director of the Company with effect from 12 November 2009. Mr. Wu Ke Song was...

  • Page 146
    ... 4.2% of the Company's shares in issue as at that date. 30. （續） 2.38 67.61 1.475 4 150% 1.70 2.38 65.10 1.731 5 150% 1.70 84,450,000 84,450,000 7,431,600 8,445,000 118,905,600 135,120,000 84,450,000 4.2%ã€, 144 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 147
    ...on page 59 of the financial statements. Pursuant to the relevant PRC laws and regulations, certain of the Group's subsidiaries registered in the PRC are required to transfer a portion of their profits to reserve funds. These funds are non-distributable in the form of cash dividends. When determining...

  • Page 148
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 31. Reserves (Cont'd) (b) Company Share premium Contributed Notes 附註 RMB'000 RMB'000 account surplus 31. (b) （續） Retained Capital Exchange fluctuation reserve Share reserve profits/ losses) Total redemption reserve option (...

  • Page 149
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 31. Reserves (Cont'd) (b) Company (Cont'd) Share premium Contributed Notes 附註 RMB'000 RMB'000 account surplus 31. (b) （續） （續） Retained Capital Exchange fluctuation reserve Share reserve profits/ losses) Total redemption reserve...

  • Page 150
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 33. Operating Lease Arrangements (a) As lessor The Group leases its investment properties to Haier Affiliates under operating lease arrangements, with leases negotiated for a term of three years (note 16). At the end of the reporting period, the ...

  • Page 151
    ... By Category The carrying amounts of loans and receivables and financial liabilities at amortised cost of the Group at the end of the reporting period are as follows: Financial assets 35. Loans and receivables 2009 å¹´ RMB'000 2008 RMB'000 Trade and bills receivables Other receivables...

  • Page 152
    ...reporting period are as follows: Financial assets 2,197,347 Loans and receivables 2009 å¹´ RMB'000 2008 RMB'000 Due from subsidiaries (note 19) Cash and cash equivalents 19 143,711 162,738 143,662 140,067 306,449 283,729 150 HAIER ELECTRONICS GROUP CO., LTD ANNUAL REPORT 2009

  • Page 153
    ...'s financial instruments 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...

  • Page 154
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 36. Financial Risk Management Objectives and Policies (Cont'd) Interest rate risk (Cont'd) 36. （續） （續） Increase/(decrease) Increase/(decrease) in basis points in profit before tax RMB'000 2009 RMB RMB 2008 RMB RMB 年 (50) 50 ...

  • Page 155
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 36. Financial Risk Management Objectives and Policies (Cont'd) Foreign currency risk (Cont'd) 36. （續） （續） Increase/(decrease) Increase/(decrease) in exchange rates in profit before tax % RMB'000 2009 If RMB strengthens against ...

  • Page 156
    NOTES TO FINANCIAL STATEMENTS 31 December 2009 36. Financial Risk Management Objectives and Policies (Cont'd) Foreign currency risk (Cont'd) 36. （續） Increase/(decrease) in exchange rates （續） Increase/(decrease) in profit before tax RMB'000 2008 If RMB strengthens against ...

  • Page 157
    ...TO FINANCIAL STATEMENTS 31 December 2009 36. Financial Risk Management Objectives and Policies (Cont'd) Credit risk (Cont'd) Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are analysed by customer...

  • Page 158
    ... TO FINANCIAL STATEMENTS 31 December 2009 36. Financial Risk Management Objectives and Policies (Cont'd) Liquidity risk (Cont'd) The maturity profile of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows: 2009...

  • Page 159
    ... TO FINANCIAL STATEMENTS 31 December 2009 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 end of the reporting period, based on the contractual undiscounted payments, is as follows: 2009...

  • Page 160
    ..., 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 the years ended 31 December 2009 and 31 December 2008. The Group monitors capital...

  • Page 161
    ... pricing principles relating to the internal sales of the electronics and home appliance products from the Group to Haier Affiliates. The above transactions constituted continuing connected transactions of the Company and were approved by the shareholders at a special general meeting of the Company...

  • Page 162
    ...audited financial statements and restated/reclassified as appropriate, is set out below. Year ended 31 December å¹´ 2009 2008 2007 2006 2005 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RESULTS CONTINUING OPERATIONS REVENUE Cost of sales Gross profit Other income and gains Selling and distribution...

  • Page 163
    Cert no. SGS-COC-004298

  • Page 164