Huawei 2013 Annual Report Download - page 41

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40 Management Discussion and Analysis
Cash Flow from Operating Activities
CNY Million 2013 2012 YOY (%)
Restated
Net profit 21,003 15,624 34.4%
Adjustment for depreciation, amortization,
and non-operating loss, net 5,550 3,164 75.4%
Actuarial losses on defined benefit obligations (618) (244) 153.3%
Cash flow before change in
operating assets and liabilities 25,935 18,544 39.9%
Change in operating assets and liabilities (3,381) 6,425 (152.6%)
Cash flow from operating activities 22,554 24,969 (9.7%)
Cash flow from operating activities in 2013 decreased by 9.7% year-on-year to CNY22,554 million. This
decrease was attributable to:
■ Net profit growth of 34.4% year-on-year due to rapid growth of consumer and enterprise businesses
and reduction of internal management and operation costs.
■ Adjustment for depreciation, amortization, and non-operating loss, net contributed CNY5,550 million
to the cash flow from operating activities, increasing by CNY2,386 million year-on-year.
■ In 2013, the change in operating assets and liabilities tied up in the cash flow from operating activities
amounted to CNY3,381 million.
Financial Risk Management
In 2013, Huawei continuously 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.
Liquidity Risk
Huawei has continuously improved its system for cash flow planning, budgeting, and forecasting to better
assess its short-term and medium to long-term liquidity needs. The company has implemented a variety
of prudent financial measures to fulfill its overall liquidity needs, including centralizing cash management,
maintaining a reasonable level of funds, and gaining access to adequate and committed credit facilities. In
2013, Huawei established the Financial Risk Control Center (FRCC) in London and set up a global liquidity
risk monitoring team, to further improve its liquidity risk monitoring and management capabilities.
As of December 31, 2013, cash and short-term investments increased by 14.4% year-on-year to
CNY81,944 million. An adequate capital reserve and a stable cash flow from operating activities enabled
Huawei to manage its liquidity and borrowing risks, thus ensuring financial stability for the company.