GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Annual Report 2014
April 2015
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Section I Important Notice, Table of Contents and Paraphrase
The Board of Directors, Board of Supervisors, all directors, supervisors
and officers of the Company hereby guarantee that there are not any
false records, misleading representations or material omissions in the
Report, and shall take all the joint and several responsibilities for the
authenticity, accuracy and completeness of the contents hereof.
Dong Mingzhu, the Company's responsible person, Wang Jingdong,
responsible person in charge of accounting work and Liao Jianxiong,
in-charge person of accounting institution hereby declare and warrant
that the financial report in the Report is authentic, accurate and
complete.
All directors personally attended the meeting of the Board of Directors in
respect of deliberation of the Report.
The profit distribution proposal passed upon deliberation at the meeting
of the Board of Directors is set out as below: Based on the total capital
of 3,007,865,439 stocks of the Company, all directors were distributed a
cash dividend of RMB 30 (tax included) per 10 stocks. By way of
capitalization from public reserve funds, bonus stocks were issued to all
shareholders in the ratio of 10 stocks for every 10 stocks.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Table of Contents
Section I Important Notice, Table of Contents and Paraphrase ................................................................1
Section II Company Profile .......................................................................................................................4
Section III Summary of Accounting Data and Financial Indices ................................................................5
Section IV Report of the Board of Directors..............................................................................................6
Section V Important Events ....................................................................................................................46
Section VI Changes in Stock Capital & Information of Shareholders ......................................................47
Section VII Directors, Supervisors, Senior Management Personnel and Employees .............................51
Section VIII Corporate Governance ........................................................................................................63
Section IX Internal Control......................................................................................................................68
Section X Financial Report .....................................................................................................................72
Section XI Index of documents .............................................................................................................209
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Paraphrase
Items Means Contents
Company, the Company, GREE
Means GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
ELECTRIC APPLIANCES or GREE
GREE GROUP Means ZHUHAI GREE GROUP CORP.
Finance Company Means Zhuhai Gree Group Finance Company Limited
Jinghai Guaranteed Means Hebei Jinghai Guaranteed Investment Co., Ltd.
CSRC Means China Securities Regulatory Commission
Guangdong Securities Regulatory Bureau Means Guangdong Regulatory Bureau of CSRC
Report Period Means the period from 1 January 2014 to 31 December 2014
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Section II Company Profile
1. Company information
Stock Abbreviation GREE ELECTRIC APPLIANCES Stock Code
Stock Exchange Shenzhen Stock Exchange
Name in Chinese 珠海格力电器股份有限公司 Name Abbreviation in Chinese 格力电器
Name in Foreign GREE ELECTRIC APPLIANCES, Name Abbreviation in foreign
GREE
Language INC. OF ZHUHAI language
Legal Representative Dong Mingzhu
Registered Address Jinji West Road, Qianshan, Zhuhai
Post Code
and Office Address City, Guangdong Province
Website http: //www.gree.com.cn Email gree0651@cn.gree.com
2. Contacts and contact information
Securities Affairs
Board Secretary Wang Jingdong Yang Yongxing
Representative
Jinji West Road, Qianshan,
Address Tel 0756-8669232
Zhuhai City, Guangdong Province
Fax 0756-8622581 Email gree0651@gree.com.cn
3. Information disclosure and place of the report
Newspaper designated by the Company for China Securities Journal, Securities Times,
information disclosure Shanghai Securities News and Securities Daily
Website specified by CSRC for release of the
http: //www.cninfo.com.cn
Annual Report
Place where the Annual Report is available for
Securities Legal Affairs Department of the Company
inspection
4. Alteration of registration
Registration number
Registration Registration Registration Tax registration Organization
of corporate
description date place number code
business license
13 December Zhuhai Municipal
Initial 4400001008614 440401192548256 19254825-6
1989 Administration
of Industry and
At the end of Commerce of
the Report 20 June 2012 Guangdong 440000000040686 440401192548256 19254825-6
Period Province
5. Accounting firm engaged by the Company
Name of Accountant
Name of the Accounting Firm Office Address
as Signatory
China Audit Asia Pacific Certified 22-23/F, Tianxingjian Building, No.47 Fuxing Han Zhenping,
Public Accountants Co., Ltd. Rd, Haidian District, Beijing Gong Jingwei
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Section III Summary of Accounting Data and Financial
Indices
1. Main accounting data and financial indices:
Increase/
Decrease
Item 2014 2013
over the
previous year
Operating Revenue (Yuan) 137,750,358,395.70 118,627,948,208.59 16.12% 99,316,196,265.19
Net profit attributable to shareholders of listed
14,155,167,229.36 10,870,068,311.47 30.22% 7,379,666,345.09
Company (Yuan)
Net profit attributable to shareholders of listed
Company less non-recurring gains and 14,144,950,462.04 8,907,238,576.98 58.80% 6,995,208,275.30
losses (Yuan)
Net cash flow generated from operating
18,939,165,507.73 12,969,837,129.83 46.02% 18,408,746,271.56
activities (Yuan)
Basic earnings per share (Yuan per Share) 4.71 3.61 30.47% 2.47
Diluted earnings per share(Yuan per Share) 4.71 3.61 30.47% 2.47
Weighted average return on net assets (%) 35.23% -0.54%
35.77% 31.38%
Increase/
Decrease
Item At the end of 2014 At the end of 2013 At the end of 2012
over the
previous year
Total asset (Yuan) 156,230,948,479.88 133,719,278,987.40 16.84% 107,605,180,156.61
Net asset attributable to shareholders of
44,152,654,824.68 34,489,886,750.23 28.02% 26,637,820,793.77
listed Company (Yuan)
2. Non-recurring gains and losses and the amount thereof
Unit: RMB
Item Amount of 2014 Amount of 2013 Amount of 2012
Gains and losses from disposal of non-current assets
-13,604,321.23 -1,760,280.69 -12,332,978.15
(including the provision for asset impairment write -off part)
Governmental subsidies recorded into the current gains
and losses (excluding the governmental subsidies
closely relating to the business of the enterprise and 681,875,856.67 660,482,277.34 252,844,637.88
enjoyed by a fixed quota or a fixed amount in
accordance with the state policies)
Gains and losses of the fair value change of the trading
financial asset and liability held by the Company,
investment income from the disposal of the trading
financial asset and liability and available-for-sale -653,382,850.98 1,705,045,054.92 217,676,678.03
financial asset, except for the effective hedging
business in relation to the normal operation of
Company
Non-operating incomes and expenditures other than
-5,068,130.68 -29,808,150.26 16,485,229.47
the above items
Minus: Influence amount of income tax -4,880,796.83 367,611,287.10 86,905,123.66
Influence amount of minority interests (After tax) 4,484,583.29 3,517,879.72 3,310,373.78
Total 10,216,767.32 1,962,829,734.49 384,458,069.79
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
Section IV Report of the Board of Directors
1. Overview
Over the past year, the economic development showed a new state and shifted
from rapid extensive growth with an emphasis on scale and speed to medium
and rapid intensive growth with an emphasis on quality and efficiency, while the
driving force of the economic development shifted from traditional growth points
to new ones.
Over the past year, big data of Internet penetrated into every industry with an
unstoppable momentum, changing people's way of thinking and behavior
pattern and influencing the development and revolution of the global household
appliance industry.
Over the past year, the household appliance industry stayed at a juncture of
structural transformation and upgrade, while the growth speed was slowed
down. According to data issued by the National Bureau of Statistics, the
principal business income of the household appliance industry in 2014 was
RMB 1.41391 trillion, indicating a cumulative year-on-year increase of 10.0%,
which slowed down significantly compared with an increase of 14.2% in 2013.
The total profit was RMB 93.16 billion, indicating a cumulative year-on-year
increase of 18.5%.
In 2014, the retail volume of residential air conditioners increased over 2013,
with an increased proportion of inverter air conditioners in the overall market.
According to the statistics of Industry On-line, a total of 116.9107 million sets of
residential air conditioners were sold in 2014, indicating an increase of 5.2%
over 2013. Meanwhile, the retail volume of residential air conditioners in
e-commerce had grown faster with a smaller base. On the basis of energy
saving and frequency conversion, residential air conditioner technologies faced
all-dimensional requirements on air temperature, cleanliness, humidity and
comfort, showing a significant development trend towards smart air
conditioners.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
In 2014, the central air conditioner industry stepped into rapid growth to steady
growth. According to the statistics of HVAC Information, the overall market
capacity of the central air conditioner industry in China exceeded RMB 70
billion for the first time in 2014. The growth rate decreased by 0.1% compared
with that in 2013, indicating that the growth of central air conditioners entered a
stable period. Most companies attached more importance to fine management
and market operation. In terms of concentration of brands, the market share of
authoritative brands increased in 2014. Under the situation of tripartite
confrontation of \"China, US and Japan,\" national brands represented by Gree
became the most powerful camp in 2014.
At present, the world is facing a new round of technological and industrial
revolution, which is a significant historical opportunity to Gree. Digital,
network-based, and smart manufacturing is a core technology for revolutionary
change in the manufacturing industry. In this year's government work report,
Premier Li Keqiang mentioned the need to implement the \"Made in China 2025\"
strategy; seek innovation-driven development; apply smart technologies;
strengthen foundations; pursue green development; and redouble efforts to
upgrade China from a big manufacturing country to a powerful one. According
to the relevant planning, China will select 8 major industries close to the world
leading level before 2020, including aerospace equipment, communications
equipment, power generation and power transmission equipment, construction
machinery, rail transportation, steel, petroleum refining, and household
appliances, to make major breakthroughs and strive to become powerful in
these fields by the year of 2020.
As China's new international strategic framework, the \"One Belt And One Road\"
strategy has brought multiple opportunities to economic development of China.
Based on interconnection of infrastructure along the road, the \"One Belt And One
Road\" strategy will optimize allocation of trade and production factors along the
road, so as to promote regional integration. In addition, China’s opening to
countries along the road will stimulate regional investment into construction of
infrastructure, including border facilities and municipal infrastructure of central
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
cities as well as interconnection project construction such as expansion and
reconstruction of cross-border railways and highways to ports.
Enterprises in the household appliance industry of China should seize the
historic opportunity brought by the world's technological and industrial reform;
accelerate transformation and upgrade to medium/high-end enterprises by
taking advantage of implementation of the \"Made in China 2025\" strategy; and
speed up deployment of the international development strategy by virtue of the
\"One Belt And One Road\" strategy.
With rapid development of the Internet, many household appliance enterprises
have started deep cooperation with fields such as mobile Internet business and
built smart home appliance platforms, which caused the emergence of massive
smart products. Therefore, 2014 is called \"the first year\" for development of
smart home. The trend towards smart development becomes increasingly
obvious and the smart home field of China will embrace the development peak
in 2015. Smart home will become a key factor for breaking through the
development bottleneck of the household appliance industry. According to the
forecast provided by the Study Repot on the Development Trend of China’s
Smart Home Industry and Investment Opportunity in 2010-2015 issued by the
Technical Research Center of Guomai Internet of Things, the output value of
China's smart home in 2015 is expected to reach RMB 138 billion and this
figure will rise to RMB 2000 billion by 2020. In addition, with advancement of
\"urbanization with Chinese characteristics\" and exploitation of the \"trade-in\"
program in cities, the possessive quantity of household appliances in the
domestic market are expected to increase continuously, becoming new driving
forces for development of China's household appliance industry.
2. Analysis on principal businesses
(1) Overview
In 2014, under the ideological guidance of \"Change to Win the Future\", all staff
members of the Company worked hard and overcame difficulties to pursue
continuous innovation in terms of technological innovation, marketing and
internal management, improved product quality continuously, and optimized the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2014
product structure to form a development pattern with Gree as the major brand
accompanied by other brands such as TOSOT. In this way, the Company’s
competitive advantage was further reinforced. The Company still achieved
growth under the downward press
