Huawei 2014 Annual Report Download

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Table of contents

  • Page 1
    .[G]KO/T\KYZSKTZ .URJOTM)U2ZJ  'TT[GR 8KVUXZ

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    Contents

  • Page 3
    ...Business Highlights in 2014 Five-Year Financial Highlights Message from the Chairwoman Core Values 2 8 10 11 14 Management Discussion and Analysis Industry Trends Independent Auditor's Report Consolidated Financial Statements Summary and Notes 15 52 58 59 Risk Factors Corporate Governance Report...

  • Page 4
    ... value for global progress. As we can see, ICT is driving the tremendous advancement of society. Today, ICT is not only an important tool helping people overcome the limits of time and space to stay connected, but it is also a powerful driver for technological innovation, management transformation...

  • Page 5
    ...-oriented agile gateway; and our Cloud Fabric Data Center Network and Agile Branch solutions, just to name a few. Each of these offerings will help our customers build a technological foundation for their business innovation in the cloud In this past year, we continued to consolidate SoftCOM, our...

  • Page 6
    4 Huawei Investment & Holding Co., Ltd. 2014 Annual Report In our carrier business, our 4G equipment was widely deployed, and we constructed 186 commercial networks globally using our 400G core routers in 2014. We have worked with 20 leading carriers around the world on joint innovation for NFV/...

  • Page 7
    ... Shif ting from function-centered to projectcentered business management not only maintain technological leadership, but also learn from other companies and integrate their best practices with our existing advantages. This will help Customer projects and product projects will constitute our primary...

  • Page 8
    ... means more than just global operations and investment. It also requires new business philosophies. Network coverage is now higher than ever. Customers not only require secure and reliable networks, but also secure data storage. Therefore, protecting customers' information assets and user...

  • Page 9
    ... high-performing employees with access to fast-track promotions, with regard to both positions and job levels so that they will have more development opportunities and rewards. unleash the potential of ICT. Our goal is to promote industry innovation and transformation, and build a Better Connected...

  • Page 10
    ...; and our Cloud Fabric Data Center Network and Agile Branch solutions. Each of these offerings helps our customers build a technological foundation for business innovation in the cloud era. Becoming one of the world leaders in smartphones As part of our premium product strategy, we introduced dual...

  • Page 11
    ... raising spectrum efficiency, increasing peak rates, enabling massive numbers of connections, and achieving one-millisecond latency. In doing so, we helped to push the sustainable development of the mobile industry. In late 2014, Huawei worked with industry partners to build the world's first 5G...

  • Page 12
    .... 2014 Annual Report Five-Year Financial Highlights 2014 (USD Million) 46,515 5,521 11.9% 4,498 6,739 CNY Million Revenue Operating profit Operating margin Net profit Cash flow from operating activities Cash and short-term investments Working capital Total assets Total borrowings Owner's equity...

  • Page 13
    ... from the Chairwoman 11 Message from the Chairwoman We have remained focused on our goal: providing ubiquitous broadband connectivity, enabling agile innovations everywhere, and bringing a superior experience to everyone at an affordable price. With advanced ICT technologies and ideas, we will...

  • Page 14
    ...raising spectrum efficiency, increasing peak rates, enabling massive numbers of connections, and achieving one-millisecond latency. In doing so, we are helping to push the sustainable development of the mobile industry. In late 2014, Huawei worked with industry partners to build the world's first 5G...

  • Page 15
    ... exchanges to broadband networks, from fixed networks to mobile networks, from voice services to video services, and from devices to clouds - we have remained focused on In 2014, we gradually adjusted our business structure to focus on three dimensions - customers, products, and regions - and...

  • Page 16
    ...needs, we passionately pursue customer-centric innovations in an open manner. We believe that business success is the ultimate measure of the value of any technology, product, solution or process improvement. Integrity Teamwork Integrity is our most valuable asset. It drives us to behave honestly...

  • Page 17
    ... and Analysis Management Discussion and Analysis In 2014, Huawei's well-balanced, worldwide presence helped the company achieve stable and healthy growth in the carrier, enterprise, and consumer businesses. Annual sales revenues totaled CNY288,197 million, a 20.6% increase over the previous year.

  • Page 18
    ... providing enterprise ICT infrastructure, and a top smart device brand preferred and trusted by consumers. Building a Better Connected World Ubiquitous Broadband High-quality networks and diverse access â- Efficient digital operations â- High-quality content aggregation â- Continuous innovation...

  • Page 19
    ... utilization (e.g., storage, computing, and network resources). As a result, business systems can be quickly deployed, easily operated and maintained, and efficiently managed. Huawei also provides mobile office solutions to boost customers' work efficiency. Our intelligent data and home devices) in...

  • Page 20
    ... Investment & Holding Co., Ltd. 2014 Annual Report Business Review 2014 In 2014, Huawei's well-balanced, worldwide presence helped the company achieve stable and healthy growth in the carrier, enterprise, and consumer businesses. Annual sales revenues totaled CNY288,197 million, a 20.6% increase...

  • Page 21
    ...line card through joint innovation with customers, setting a new record in the industry. Worked with BT to pass the testing for 3 Tbit/s transmission on live networks. Proposed G.fast technology, which has been made an industry standard, and released SuperVector technology, which increased the speed...

  • Page 22
    .... Huawei passed all verification tests, and commercially deployed the industry's first cloudbased value-added service in the UK. In the future, we will deploy B2B public cloud, video, and security/ storage cloud services on a new cloud architecture. â- Rapid growth was seen in our data center...

  • Page 23
    ..., an increase of 16.4% year-on-year. In February 2014, Huawei attended the Mobile World Congress 2014 held in Barcelona and presented itself under the theme- "Mobile Changes the World". At the congress, Huawei discussed its innovative mobile ICT solutions, products, and services with customers...

  • Page 24
    ... carriers, device and chip makers, and research institutes to establish industry alliances that promote the healthy and sustainable development of the entire mobile industry. Huawei proposed the first 4.5G solution for smooth LTE evolution, which raised network speed and connections and shortened...

  • Page 25
    ... core of their business strategies. Globally, fixed broadband has become a focal point for investment in the ICT industry. â- world's first commercial deployment of carrier SDN in Beijing and T-SDN in Fujian. We also worked with leading carriers such as Telefonica to jointly drive the application...

  • Page 26
    24 Huawei Investment & Holding Co., Ltd. 2014 Annual Report In 2014, our innovative fixed network products and solutions as well as outstanding services gained recognition from more customers from around the world, as evidenced by the following: â- Global Services Huawei continued to increase ...

  • Page 27
    ...-based fine-grained network management. In 2014, our Quality Brand MBB solution helped more than 100 networks worldwide significantly boost their rankings in network quality, service quality, and branding. By the end of 2014, we had provided mobile network planning and design services for more than...

  • Page 28
    ... their digital services, and support our partners' business success. In 2014, our SDP solution helped carriers achieve business success in areas like communications, charging, Big Data, and traffic trading. Our digital home services focused on video, and improved our core competences in multi-screen...

  • Page 29
    ... network capabilities to help carriers tap into the Blue Ocean of the government and enterprise markets. Leveraging the government and enterprise business enabling platform, carriers can build alliances with third-party developers to carry out joint business innovation and design new business models...

  • Page 30
    ... insights into User Profile, ensures data openness management and security, and protects privacy, helping customers reduce operating risks and significantly increase revenue. The solution has been successfully deployed in the Big Data project of China Unicom Shanghai. We also jointly innovated with...

  • Page 31
    ...electronics technologies. Acting on the innovative concepts of digitalization, interconnection, and intelligence, we focused our energy solutions on telecom energy, data center energy, and smart PV plants to develop simple, efficient, and reliable intelligent network energy solutions. Huawei worked...

  • Page 32
    ... technologies to address customer needs. This solution ensures efficient power generation, smart O&M, security, and reliability in PV plants full-lifecycle. In 2014, we achieved the following: â- Our Smart PV Plant solution was deployed on a large scale globally, steering industry development...

  • Page 33
    ... solution helped Thailand's Provincial Electricity Authority build a secure high-speed production network, powering the rapid development of smart grids. CNPC used Huawei's Data Center Network In 2014, we focused our efforts on government, transportation, energy, and finance customers. We managed...

  • Page 34
    ... Huawei invested heavily in R&D. We made notable progress in the following domains: enterprise networking, data centers, office collaboration, cloud computing, and high-end storage. To increase network agility for services, we released our Agile Branch and Cloud Fabric Data Center Network solutions...

  • Page 35
    ... to the conference and an online audience of 13,000. HCC has become a new big IT event of global influence. By launching a series of innovative IT solutions covering multiple domains such as data centers, converged storage, cloud OS, and Big Data analytics platforms, Huawei added a new dimension...

  • Page 36
    34 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Consumer Business from open channels (including e-commerce), which accounted for 41% of the total revenue of the Crossing the 10-billion-dollar mark and enhancing the competitiveness of core products Consumer BG. By the end of 2014, ...

  • Page 37
    ... in MBB connectivity, we centered our efforts in the MBB & home device domain to tap into the opportunities offered by the IoV and IoT. Coupled with our expertise in Big Data and cloud technologies, we developed the "hardware + software + service" business model to provide better services for people...

  • Page 38
    ... smartphones, and establish our brand image as a symbol of innovation and high quality through our high-end products. For the Honor brand, we will focus on the Internet business, replicate our successful online Launched just a year ago, Honor performed so well in 2014 that it became a new engine...

  • Page 39
    ... business, and improved product structure helped increase gross margin by 3.2 percentage points year-on-year. Total Operating Expenses 2014 2013 Restated 40,845 14.2% 47,468 16.5% 4,933 1.7% 93,246 32.4% 31,563 13.2% 38,052 15.9% (723) (0.3%) 68,892 28.8% CNY Million Research and development...

  • Page 40
    ... year-on-year in exchange loss coupled with a decrease of CNY936 million year-on-year in other net finance gains/losses. Financial Position December 31, CNY Million 2014 December 31, 2013 Restated Non-current assets Current assets Total assets Among which: Cash and short-term investments Trade...

  • Page 41
    ... to massive 4G network roll-out, the balance of inventory and trade payables in 2014 increased over the previous year. As of December 31, 2014, total short-term and long-term borrowings amounted to CNY28,108 million, an increase of 22.0% year-on-year from CNY23,033 million in 2013. Cash Flow from...

  • Page 42
    40 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Financial Risk Management In 2014, Huawei amended and improved its financial risk management policies and processes to further enhance the company's capability to withstand financial risks and better support its business development. ...

  • Page 43
    ... Discussion and Analysis 41 With other conditions unchanged, exchange rate fluctuations will impact the Group's net profit as follows: Impact on net profit CNY million 2014 CNY appreciates 5% against USD CNY appreciates 5% against EUR 2013 CNY appreciates 5% against USD CNY appreciates 5% against...

  • Page 44
    ... determine customer credit ratings and credit limits. It has also implemented risk control points over key processes throughout the end-to-end sales cycle to manage credit risks in a closed loop. Huawei's Credit Mgmt Dept regularly assesses global credit risk exposures and develops IT tools to help...

  • Page 45
    ... G.fast prototype, and released SuperVector technology, which increased the speed of existing copper wires threefold. Launched the SmartAX MA5800, the industry's first smart OLT with distributed architecture at the Broadband World Forum 2014. This product supports non-blocking access for 100G-PON...

  • Page 46
    44 Huawei Investment & Holding Co., Ltd. 2014 Annual Report In the enterprise networking domain, Huawei has: â- In the cloud computing field, Huawei has: â- Used SDN technology to launch innovative Agile Network architecture that supports full network programmabilit y, dynamic net work ...

  • Page 47
    ... World by sharing insights into ICT advances, and working with top-level institutions in the industry and academia to jointly embrace major technology challenges. In 2014, we: Publicized the Huawei Innovation Research Program (HIRP) online, embracing global quality resources and storage devices...

  • Page 48
    ..., APT700, 3.5G, disaster recovery technology, and data centers. By the end of 2014, we had filed 48,719 patent applications in China and 23,917 outside of China, with 38,825 granted. In 2014, Huawei made it onto the Top 100 Global Innovators list1. In Europe, Huawei was elected to the Board of 5G...

  • Page 49
    ... considering end-to-end cyber security with your technology vendors. This white paper documents the top 100 things our customers talk to us about in relation to cyber security. When we developed this white paper, we studied the existing legal requirements and best practices to help technology buyers...

  • Page 50
    ... 2014, Huawei released its third cyber security white paper in Berlin, Germany, to promote the development of cyber security policies and standards. John Suffolk, Huawei Global Cyber Security Officer, delivered a keynote speech at the conference. â- performing high-quality and independent testing...

  • Page 51
    ... and Analysis 49 â- We have improved the compliance levels and delivery quality of our cyber security activities in the service delivery (SD) process, and re-evaluated and enhanced our managed services and GNOCs. We have also validated all tools in use and improved customer data management to...

  • Page 52
    ... may affect a customer's ability to pay. The company's provisions for doubtful accounts charged to the statement of profit or loss were CNY89 million and CNY1,075 million for fiscal years ended December 31, 2014 and December 31, 2013, respectively. If key customers' creditworthiness deteriorates...

  • Page 53
    ... provision for income taxes. The company's inventory provisions charged to the statement of profit or loss were CNY2,120 million and CNY1,231 million for fiscal years ended December 31, 2014 and December 31, 2013, respectively. During the ordinary course of business, there are many transactions and...

  • Page 54
    52 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Industry Trends

  • Page 55
    ... world to the digital world. Today, most of the exciting changes in his book - both to work and life - have come true thanks to digital and network technologies. The connected generation is also influencing the behavior of their parents and grandparents by teaching them how to use digital devices...

  • Page 56
    ...and Big Data technologies, will match or even exceed human intelligence in certain areas. This integration allows for the automation of knowledge work in such professions as medical diagnosis. revolution lies in the smart functionality of ubiquitous networks, smart devices, smart applications based...

  • Page 57
    ... World where everything is smart. speeds, flattening network architectures, reducing latency and packet loss, and slashing costs. Solving these challenges requires new solutions. Content and applications are the ultimate objective of Smart hardware may come in the form of electronic devices...

  • Page 58
    ... world square on if we are to create the building block for the new industrial revolution. â- New network technologies: 5G will power the Internet of Things and lay a foundation for the new industrial revolution. â- New network architectures: Cloud data centers will be at the core of software...

  • Page 59
    ...based "Broadened Service" model will redefine the customer-supplier relationship. DevOps (Development and Operations) has emerged as a software development methodology that facilitates communication and collaboration between software development, technological operations, and quality assurance...

  • Page 60
    ... 31, 2014. We have issued an unqualified audit report dated March 12, 2015 on the audited consolidated financial statements of the Group for the year ended December 31, 2014. Our responsibility is to express an opinion on the Huawei Investment & Holding Co., Ltd. is not a public company and is...

  • Page 61
    ... Segment reporting Goodwill Intangible assets Property, plant and equipment Long-term leasehold prepayments Interest in associates Interest in joint ventures Other investments Deferred tax assets and liabilities Inventories Trade and bills receivable Other assets Short-term investments Cash and cash...

  • Page 62
    ... Annual Report Consolidated Financial Statements Summary Consolidated Statement of Profit or Loss 2014 Note CNY million 2013 CNY million Restated Revenue Cost of sales Gross profit 3 288,197 (160,746) 127,451 239,025 (141,005) 98,020 Research and development expenses Selling and administrative...

  • Page 63
    ...Statement of Financial Position December 31, 2014 Note Assets Goodwill Intangible assets Property, plant and equipment Long-term leasehold prepayments Interest in associates Interest in joint ventures Other investments Deferred tax assets Trade receivables Other non-current assets Non-current assets...

  • Page 64
    62 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Consolidated Statement of Cash Flows 2014 Note Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Other operating cash flows Net cash from operating activities 367,827 (321,201) (4,871)...

  • Page 65
    ... Huawei Investment & Holding Co., Ltd. (the "Company") and its subsidiaries (together referred to as the "Group") have prepared a full set of consolidated financial statements ("consolidated financial statements") for the year ended December 31, 2014 in accordance with International Financial...

  • Page 66
    ...Huawei Investment & Holding Co., Ltd. 2014 Annual Report When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the exchange reserve related to that foreign operation is reclassified to profit...

  • Page 67
    ... control, over its management, including participation in the financial and operating policy decisions. A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement, and have rights to the net assets of the arrangement. An investment...

  • Page 68
    66 Huawei Investment & Holding Co., Ltd. 2014 Annual Report When the Group's share of losses equals or exceeds its interest in the associate or the joint venture, the Group's interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has ...

  • Page 69
    ... is charged to the consolidated statement of profit or loss on a straight-line basis over the period of the land use rights which is generally not exceeding 50 years. (j) Intangible assets i) Research and development Research and development costs comprise all costs that are directly attributable...

  • Page 70
    ... cost or are classified as available-for-sale securities are reviewed at the end of each reporting period to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the...

  • Page 71
    ... account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss. â- For available -for-sale securities, the ii) Impairment of other assets Internal and external sources of information are reviewed at the end of each reporting period to identify...

  • Page 72
    70 Huawei Investment & Holding Co., Ltd. 2014 Annual Report be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased: â- except that the carrying value of an asset will not be reduced below its individual fair value less ...

  • Page 73
    ... or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised...

  • Page 74
    72 Huawei Investment & Holding Co., Ltd. 2014 Annual Report and earnings not guaranteed are classified as available-for-sale financial assets. From time to time, the Group transfers its trade receivables to banks or financial institutions; the bank or the financial institution fully bears the ...

  • Page 75
    ... at the end of the reporting period on high quality corporate bonds that have maturity dates approximating the terms of the Group's obligations. Remeasurements arising from defined benefit plans are recognised immediately in other comprehensive income and shall not be reclassified to profit or loss...

  • Page 76
    74 Huawei Investment & Holding Co., Ltd. 2014 Annual Report the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises...

  • Page 77
    ... when the services are provided. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due, associated costs or the possible return of goods. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts. ii...

  • Page 78
    ... item reported in the financial statements, are identified from the financial information provided regularly to the Group's most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group's various lines of business and geographical locations...

  • Page 79
    ... or loss. These amendments do not have an impact on the consolidated financial statements as the Company does not qualify to be an investment entity. Amendments to IAS 32, Offsetting financial assets and financial liabilities The amendments to IAS 32 clarify the offsetting criteria in IAS 32. The...

  • Page 80
    .... During the year ended December 31, 2014, the Group received government grants of CNY521 million (2013: CNY686 million) which were conditional upon completion of certain research and development projects. These grants were initially recognised in the consolidated statement of financial position as...

  • Page 81
    ... bonus plan based on employee performance for all eligible employees ("recipients") in the Group. Under TUP, time-based units ("TBUs") are granted to the recipients, which entitle the recipients to receive cash incentive calculated based on the annual profit-sharing amount and the cumulative end-of...

  • Page 82
    ..., enterprises, energy, power, transportation and finance. China Europe, the Middle 2014 CNY million 108,881 2013 CNY million 82,785 Revenue information in respect of geographical segments â- Consumer Business Develops and manufactures mobile broadband devices, home devices, smartphones, as...

  • Page 83
    ... the Group's cash-generating units ("CGU") or group of CGUs, which is either an operating segment or at a level not larger than an operating segment, as follows: 2014 CNY million Sectors under Enterprise business group Beijing Huawei Longshine Information Technology Company Limited ("Beijing Huawei...

  • Page 84
    ... at December 31 2014 % Sectors under Enterprise business group - Discount rate - Terminal value growth rate 16.4 3.0 17.0 5.0 2013 % Beijing Huawei Longshine - Discount rate - Terminal value growth rate 15.5 3.0 17.9 3.0 Due to technology development and market change, the Group's expectation for...

  • Page 85
    ...) 5,030 Patents CNY million Trademark CNY million Total CNY million The amortisation charge for the year is included in "cost of sales", "research and development expenses", "selling and administrative expenses" in the consolidated statement of profit or loss. The impairment losses are included in...

  • Page 86
    84 Huawei Investment & Holding Co., Ltd. 2014 Annual Report 11. Property, plant and equipment Machinery, electronic equipment and other equipment CNY million Freehold land Buildings Motor vehicles Construction in progress Investment property Decoration and leasehold improvements CNY million...

  • Page 87
    ... price is not available: Form of business structure Place of incorporation and business Proportion of ownership interest 2014 49% 2013 49% Research and development, production and sale of TD-SCDMA telecommunication products Development, publication and operation of digital media related services...

  • Page 88
    ... consolidated financial statements summary Aggregate amounts of the Group's share of those associates' profit 207 2013 CNY million 143 62 42 14. Interest in joint ventures Details of the Group's interest in the material joint venture are as follows: Proportion of ownership interest 2014 51% 2013...

  • Page 89
    Consolidated Financial Statements Summary and Notes 87 Huawei Marine is an unlisted corporate entity whose quoted market price is not available. Chengdu Huawei Investment Co., Ltd. ("CD Investment"), a limited company incorporated in the PRC, was previously a joint venture of the Group, with 51% ...

  • Page 90
    ...2014 Annual Report Huawei Marine 2014 CNY million 2013 CNY million CD Investment 2014 CNY million 2013 CNY million Reconciled to the Group's interest in the joint ventures Gross amounts of net assets of the joint venture Group's effective interest Group's share of net assets of the joint venture...

  • Page 91
    ...,101 Reconciliation to the consolidated statement of financial position: 2014 CNY million Net deferred tax assets recognised in the consolidated statement of financial position Net deferred tax liabilities recognised in the consolidated statement of financial position 14,916 2013 CNY million 11,577...

  • Page 92
    90 Huawei Investment & Holding Co., Ltd. 2014 Annual Report (b) Deferred tax assets not recognised At December 31, 2014 and 2013, deferred tax assets were not recognised in relation to certain unused tax losses and other deductible temporary differences. The unrecognized unused tax losses and ...

  • Page 93
    ... 71,979 372 72,351 (a) Ageing analysis At the end of the reporting period, the ageing analysis of trade receivables due from third parties is as follows: 2014 CNY million 2013 CNY million Restated Not past due Less than 90 days past due 90 days to 1 year past due 1 year and above past due 55,700 15...

  • Page 94
    ...513 Advance payments to suppliers Tax related assets Pledged deposits Others 1,932 7,117 2,530 16,251 27,830 Non-current portion Current portion 2,917 24,913 27,830 20. Short-term investments 2014 CNY million Debt securities stated at fair value Wealth management products 662 27,326 27,988 2013...

  • Page 95
    ... and other financial institutions Highly liquid short-term investments Cash and cash equivalents in the consolidated statement of financial position and consolidated statement of cash flows 13 55,802 22,233 78,048 2013 CNY million 5 61,794 11,600 73,399 As at December 31, 2014, the Group had short...

  • Page 96
    ... covenants relating to draw down facilities had been breached (2013: nil). Corporate bond On 17 September 2014, Proven Honour Capital Limited, a wholly-owned subsidiary of the Company, issued a corporate bond with a principal amount of CNY1,600 million with three years maturity at an annual interest...

  • Page 97
    Consolidated Financial Statements Summary and Notes 95 On May 11, 2012, Proven Honour Capital Limited, a wholly-owned subsidiary of the Company, issued a corporate bond with a principal amount of CNY1,000 million with three years maturity at an annual interest rate of 5.30%. This corporate bond is...

  • Page 98
    96 Huawei Investment & Holding Co., Ltd. 2014 Annual Report 25. Provisions and contingencies (a) Provisions 2014 CNY million Provision for warranties Other provisions (i) (ii) 3,662 4,647 8,309 Non-current portion Current portion 964 7,345 8,309 2013 CNY million 2,963 2,537 5,500 782 4,718 5,500...

  • Page 99
    ... 2, 2013, IDC filed another two complaints with the USITC and the United States District Court for the District of Delaware against Huawei Tech, Futurewei, and Huawei Device USA Inc. ("USA Device"), another wholly-owned subsidiary of the Company. The complaints further alleged that the sales of...

  • Page 100
    98 Huawei Investment & Holding Co., Ltd. 2014 Annual Report On September 30, 2013, the Administrative Law Judge of the USITC issued an initial determination in respect of Flashpoint's complaint with USITC that Huawei Device and USA Device did not infringe the asserted patents. On March 14, 2014, ...

  • Page 101
    ... are receivable as follows: 2014 CNY million Within 1 year After 1 year but within 5 years 18 61 79 2013 CNY million 23 1 24 During the year ended December 31, 2014, CNY81 million was recognised as rental income in the consolidated statement of profit or loss (2013: CNY77 million). 27. Capital...

  • Page 102
    ... 2014 2013 PRC 100% 100% Development, manufacture and sale of telecommunication products and the technical support & maintenance of electrical equipment and spare parts Development, manufacture and sale of software and new products in mobile communication area and rendering of related services...

  • Page 103
    ...-sale services; design, development, manufacture and sale of satellite TV receiving antenna, tuners and digital satellite TV receiver; import and export business in compliance with relevant laws and regulations Huawei Device (Dongguan) Co., Ltd. Huawei Tech. Investment Co., Limited Huawei Device...

  • Page 104
    ... incorporated in September 2010. Nuel develops and supplies technology to allow network operators to provide a scalable, low power network service to connect small low power devices to their online digital presence in the Cloud. The acquisition of Neul gives the Group improved access to the market...

  • Page 105
    ... entrants. products and services while reducing total cost of ownership for customers. We will continue to invest in the future to build future technological advantages and become a low-profile industry leader. The FC makes routine decisions on corporate risk management. â- Business executives...

  • Page 106
    ... hinder Huawei's business operations and development. To address these risks, Huawei must have a high aptitude for risk management. We must closely monitor possible For further information on financial risks, see "Financial Risk Management" on pages 40 to 42 of this Annual Report. Financial Risks

  • Page 107
    ... Audit Committee Group Functions Human Resources Joint Committee of Regions Finance PR&GR Corporate Development Legal Affairs Strategy Marketing Internal Audit Quality, BP&IT Engineering Inspection Cyber Security & User Privacy Protection Ethics & Compliance 2012 Laboratories Chief Supply Chain...

  • Page 108
    ...Directors (BOD) is the decision-making body for corporate strategy and management. The BOD guides and oversees the overall business operations and makes decisions on significant strategic issues. The BOD has established the Human Resources Committee, the Finance Committee, the Strategy & Development...

  • Page 109
    ..., information security, M& A, and cooperation. In addition, the BOD organized a training session for new directors. core concepts to ensure policy consistency. These policies also reflect the business characteristics and management models of departments at all levels to support business development...

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    ... for different job levels and positions based on corporate strategies and future development needs; and implemented the Leadership Model and qualification management system to adapt managers to business strategies. The Finance Committee (FC) is the company's overall enterprise value integrator. It...

  • Page 111
    ... and various experts. â- â- strategic products. Manage the company's medium-to-long-term technology development planning, standards and patent strategy, and major technology investments. â- Chairman: Mr. Guo Ping. Members: Mr. Xu Zhijun, Mr. Hu Houkun, Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun...

  • Page 112
    ... compliance with accounting policies and all financial disclosures. Approve internal control KPIs at the beginning of each year, and instruct GPOs and business executives to report internal control results. Chairman: Mr. Xu Zhijun. Members: Mr. Guo Ping, Mr. Hu Houkun, Mr. Xu Wenwei, Mr. Li Jie, Mr...

  • Page 113
    .... As the primary owner of the company's operations and crisis management during the tenure, the Rotating and Acting CEO is responsible for the company's survival and development. Mr. Xu Zhijun: October 1, 2013 - March 31, 2014 Mr. Guo Ping: April 1, 2014 - September 30, 2014 Mr. Hu Houkun: October...

  • Page 114
    112 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Members of the Board of Directors, the Supervisory Board, and the BOD Committees Members of the Board of Directors From the left in the first row: Mr. Li Jin'ge, Mr. Guo Ping, Ms. Meng Wanzhou, Mr. Xu Zhijun, Mr. Ren Zhengfei, Mr. Hu ...

  • Page 115
    ..., Director of the Training Center, President of the Procurement Dept, General Manager of the Wuhan Office, President of the Marketing & Sales Dept, Chair of the Human Resources Committee, Chair of the Business Transformation Executive Steering Committee (BT-ESC), Chair of the Strategy and Customer...

  • Page 116
    ... Officer, Chief Sales & Service Officer, President of the Joint Committee of Regions, CEO of the Enterprise BG, and Chief Strategy Marketing Officer. and has served as Chief Representative of the Beijing Representative Office, Vice President of the International Marketing Dept, Deputy Director...

  • Page 117
    ... Wang) Mr. Li Yingtao Born in 1969, Mr. Li holds a doctorate degree from Harbin Institute of Technology. Mr. Li joined Huawei in 1997 and has served as Chief of the Sweden Research Center, Director of the Product Mgmt Dept of Wireless Marketing, Director of the Research Dept of Products & Solutions...

  • Page 118
    ... Research Center, and Director of the HR Branch of Products & Solutions. Currently, Mr. Zhou serves as Chief Ethics & Compliance Officer, Director of the Corporate Committee of Ethics and Compliance, and member of the Audit Committee. Mr. Ren Shulu (Steven Ren) Born in 1956, Mr. Ren holds a bachelor...

  • Page 119
    ...Optical Network Product Line, HR Director of Sales & Service Dept, and Vice President of the Procurement Qualification Mgmt Dept. Dept, PSST member, President of the Legal Affairs Dept, Chief Legal Officer, President of the Patent Review Board, Director of the Trade and Customs Compliance Committee...

  • Page 120
    ... as R&D Project Manager, Department Manager at Huawei Technologies India Private Limited, Deputy Chief of the Beijing Research Center, Director of the R&D Dept of the Data Communications Product Line, Director of the HR Branch of Products & Solutions, Vice President of the Human Resource Mgmt Dept...

  • Page 121
    ... auditing a company's annual financial statements. In accordance Mr. Peng Bo (Vincent Peng) Born in 1976, Mr. Peng holds a bachelor's degree from Harbin Institute of Technology. Mr. Peng joined Huawei in 1999 and has served as Account Manager of the Customer Relationship Mgmt Dept, Account Manager...

  • Page 122
    120 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Business Structure Improving the Management System In 2014, the company gradually adjusted its business structure to focus on three dimensions: customers, products, and regions. All organizations jointly create value for customers, ...

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    ... the world's top 50 carriers, and by enterprise customers from various sectors. These audits and assessments covered a wide range of items, including financial robustness, quality management, delivery, supply chain management, knowledge management, project management, information and cyber security...

  • Page 124
    ... integrated solutions that met customer needs. Helped customers manage assets and built new-style partnerships to forge an open and collaborative ecosystem that supports effective and sustained growth. Refined business models to link marketing, sales, services, delivery, supply, finance...

  • Page 125
    ...promptly respond to customer needs, continually reduce internal operating costs, improve the efficiency of business operations, and effectively support Huawei's global strategic objectives and sustainable development. Released the Retail BPA V1.0 (provisional). Implemented the PRM Project in 70...

  • Page 126
    ... its committees, group functions, and multi-level management teams. â- Huawei clearly defines the roles and responsibilities of its organizations to ensure the effective separation of rights and responsibilities. The CFO of Huawei is in charge of internal controls. The business control department...

  • Page 127
    ...monthly compliance tests on key control points and issue test reports to ensure continuous and effective monitoring of internal controls. â- Optimize processes and internal controls based on business pain points to improve operational efficiency and help achieve business objectives. â- Perform...

  • Page 128
    Huawei Investment & Holding Co., Ltd. 2014 Annual Report Sustainable Development

  • Page 129
    ... digital divide and provide high-quality network connectivity for all. We honored our commitment to supporting secure and stable network operations at all times and at all sites. To drive lowcarbon economic growth, we helped our customers and industries decrease energy...

  • Page 130
    ... the white paper Cyber Security Perspectives - 100 requirements when considering end-to-end cyber security with your technology vendors 1,500 customer Won the "Cyber networks 150 major events and natural disasters worldwide Security Organization of the Year" award World's first mobile phone...

  • Page 131
    ... or text message, and reach distant buyers to sell their agricultural products via mobile phones. Since 2013, Huawei has worked with the Zambia Information and Communication Technology Authority and a local carrier to implement the Universal Access Project, an initiative designed to deliver network...

  • Page 132
    130 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Broadband Inclusion for All Making Internet Access Available to over 3,000 Students in South Sudan In cooperation with a local carrier and UNESCO, Huawei helped schools in South Sudan connect to the Internet and access the information...

  • Page 133
    .... As broadband access issues are gradually resolved, the task of nurturing digitally literate ICT professionals has moved up our agenda. By the end of 2014, Huawei had established 45 training centers globally to nurture local professionals and transfer knowledge. In close collaboration with local...

  • Page 134
    132 Huawei Investment & Holding Co., Ltd. 2014 Annual Report ICT Application Expanding the Reach of Medical Services to People in Remote Areas Huawei's telemedicine solution boasts multiple benefits. First, it helps people in remote areas to receive a similar level of quality medical services ...

  • Page 135
    ... of devices - mobile phones, laptops, tablets, and even smart watches - to access social networking platforms and apps, as well as upload photos and videos. Some shared special moments with friends over their phones. Additionally, media outlets in Huawei team working to support network stability...

  • Page 136
    134 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Proactively Responding to Cyber Security Challenges Huawei Released a Cyber Security White Paper at EWI's Cyberspace Summit In December 2014, Huawei attended the global cyber security summit held by EastWest Institute (EWI) in Berlin,...

  • Page 137
    ... design, R&D, manufacturing, and delivery. Through continuous technological innovations, Huawei has increased the energy efficiency and environmental performance of its products. Furthermore, Huawei has provided customers with world-leading products and solutions that are highly energy efficient...

  • Page 138
    .... 2014 Annual Report Green Operations Using Clean Energy to Lower Carbon Emissions In recent years, Huawei has researched and utilized new energy sources to reduce product carbon footprint while seeking to slash OPEX. In 2014, Huawei continued to construct solar power stations to increase its...

  • Page 139
    ... Local Network China in recognition of its new public-private partnership model for building a green supply chain and protecting the environment. Number of Suppliers 4 20 CO 2 Emissions Reduction (Tons) 23,895 53,652 Year 2013 2014 Huawei has made every effort to ensure both its products and...

  • Page 140
    ..., and Thailand. Consumers can locate their nearest recycling stations on Huawei's official website: http://consumer.huawei.com/en/support/recycling/index.htm. Huawei has extended its recycling services to cover all mobile phone brands. As a free service, Huawei collects used phones at recycling...

  • Page 141
    ... Win-Win Development Caring for Employees Creating a Healthy and Relaxing Working Environment Huawei considers employees to be its most valuable asset, and unfailingly places employee health as its top priority. We have carried out a series of activities centering on employee care and creating...

  • Page 142
    ... to share ICT expertise and innovative technologies with local communities and facilitate knowledge transfers. In addition, Huawei has helped local communities develop highly efficient education systems that nurture ICT professionals and propel the ICT industry forward. As a global company, Huawei...

  • Page 143
    ... WTO and free trade agreements to support smooth international trade operations. On April 28, 2014, the World Customs Organization (WCO) Global AEO Conference was held in Madrid, Spain. Over 1,000 customs officials from 89 countries and regions attended the conference. Huawei's senior expert James...

  • Page 144
    142 Huawei Investment & Holding Co., Ltd. 2014 Annual Report Sustainability Risk Management Strengthening Professional Management to Ensure Safe Engineering Delivery In 2014, Huawei improved its professional management of the Environment, Health, and Safety (EHS) in delivery projects. ...

  • Page 145
    .... Sixth Global Supplier Sustainability Conference Huawei Rotating CEO Eric Xu attended the conference, and called for deeper collaboration from suppliers to discover opportunities for innovation, develop new products, enter new markets, explore new business models, and improve business efficiency...

  • Page 146
    ... Huawei Certified Internetwork Expert High Speed Packet Access In-building Solution Internal Controls over Financial Reporting Internet Data Center Integrated Financial Services IP Multimedia Subsystem Internet of Things Internet of Vehicles IP Radio Access Network Integrated Product Development...

  • Page 147
    ..., All-online, DIY, Social Return on Investment Recovery Point Objective Recovery Time Objective Semi-Annual Control Assessment Storage Area Network Session Border Controller Sparse Code Multiple Access Software-defined Networking Service Delivery Platform Service Operation Center Service Provider...

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    ... © 2015 HUAWEI INVESTMENT & HOLDING CO., LTD. All Rights Reserved. GENERAL DISCLAIMER THE INFORMATION IN THIS DOCUMENT MAY CONTAIN PREDICTIVE STATEMENTS INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE FUTURE FINANCIAL AND OPERATING RESULTS, FUTURE PRODUCT PORTFOLIO, NEW TECHNOLOGY, ETC...