GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
Annual Report 2013
April 2014
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 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 total stock capital of the Company at the end of the year 2013, all directors were distributed a cash dividend of RMB 15 (tax included) per 10 stocks without bonus shares (tax included) and without capitalization from public reserve funds.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 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 ..................................................................................................... 30 Section VI Changes in Stock Capital& Information of Shareholders ..................................... 32 Section VII Directors, Supervisors, Senior Management Personnel and Employees .............. 35 Section VIII Corporate Governance ......................................................................................... 45 Section IX Internal Control ...................................................................................................... 50 Section X Financial Report ...................................................................................................... 52 Section XI Index of Documents ............................................................................................. 174
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Paraphrase
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|-|-|-|
|Items|Means|Contents|
|Company, the Company, GREE ELECTRICAPPLIANCES or GREE|Means|GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI|
|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 2013 to 31 December 2013|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section II Company Profile
1. Company information
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|-|-|-|-|-|-|
|Stock Abbreviation|GREE ELECTRIC APPLIANCES|Stock Code||000651||
|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 ForeignLanguage|GREE ELECTRIC APPLIANCES, INC.OF ZHUHAI|Name Abbreviation in foreignlanguage|||GREE|
|Legal Representative|Dong Mingzhu|||||
|Registered Address andOffice Address|Jinji West Road, Qianshan, Zhuhai City,Guangdong Province|Post Code|519070|||
|Website|http: //www.gree.com.cn|Email|gree0651@cn.gree.com|||

 2. Contacts and contact information
|||||
|-|-|-|-|
|Board Secretary|Wang Jingdong|Securities AffairsRepresentative|Yang Yongxing|
|Address|Jinji West Road, Qianshan, Zhuhai City,Guangdong Province|Tel|0756-8669232|
|Fax|0756-8622581|Email|gree0651@gree.com.cn|

 3. Information disclosure and place of the report
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|-|-|
|Newspaper designated by the Company for informationdisclosure|China Securities Journal, Securities Times, Shanghai SecuritiesNews and Securities Daily|
|Website specified by CSRC for release of the AnnualReport|http: //www.cninfo.com.cn|
|Place where the Annual Report is available forinspection|Securities Legal Affairs Department of the Company|

4. Alteration of registration
|||||||
|-|-|-|-|-|-|
|Registrationdescription|Registrationdate|Registrationplace|Registration number ofcorporate business license|Tax registrationnumber|Organizationcode|
|Initial|13 December1989|Zhuhai MunicipalAdministration ofIndustry andCommerce ofGuangdongProvince|4400001008614|440401192548256|19254825-6|
|At the end ofthe ReportPeriod|20 June 2012||440000000040686|440401192548256|19254825-6|

5. Accounting firm engaged by the Company
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|-|-|-|
|Name of the Accounting Firm|Office Address|Name of Accountant asSignatory|
|China Audit Asia Pacific CertifiedPublic Accountants Co., Ltd.|22-23/F, Tianxingjian Building, No.47 Fuxing Rd,Haidian District, Beijing|Han Zhenping, GongJingwei|

6. Sponsor institution engaged by the Company responsible for continuous supervision during the report period
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|-|-|-|-|
|Name of sponsor institution|Office address|Name of sponsorrepresentative|Period of continuoussupervision|
|China Merchants Securities Co.,Ltd.|38-45/F, Jiangsu Building, Yitian Road,Futian District, Shenzhen|Wang Suwang,Liu Lihua|6 February 2012 to 31December 2013|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section III Summary of Accounting Data and Financial Indices 1. Main accounting data and financial indices:
||||||
|-|-|-|-|-|
||||Increase/Decrease||
|Item|2013|2012|over the previous|2011|
||||year (%)||
|Operating Revenue|||||
||118,627,948,208.59|99,316,196,265.19|19.44%|83,155,474,504.59|
|(Yuan)|||||
|Net profit attributable to|||||
|shareholders of listed|10,870,672,842.47|7,379,666,345.09|47.31%|5,236,938,608.43|
|Company (Yuan)|||||
|Net profit attributable to|||||
|shareholders of listed|||||
|Company less|8,907,843,107.98|6,995,208,275.30|27.34%|5,106,435,132.83|
|non-recurring gains and|||||
|losses (Yuan)|||||
|Net cash flow generated|||||
|from operating activities|12,969,837,129.83|18,408,746,271.56|-29.55%|3,356,159,992.13|
|(Yuan)|||||
|Basic earnings per share|||||
||3.61|2.47|46.15%|1.86|
|(Yuan per Share)|||||
|Diluted earnings per|||||
||3.61|2.47|46.15%|1.86|
|share(Yuan per Share)|||||
|Weighted average return|||||
||35.77%|31.38%|4.39%|34%|
|on net assets (%)|||||
||||Increase/Decrease||
|Item|At the end of 2013|At the end of 2012|over the end of|At the end of 2011|
||||previous year (%)||
|Total asset (Yuan)|133,702,103,359.54|107,566,899,919.95|24.3%|85,211,594,207.30|
|Net asset attributable to|||||
|shareholders of listed|34,582,810,312.23|26,743,134,404.77|29.31%|17,606,865,814.24|
|Company (Yuan)|||||

2. Non-recurring gains and losses and the amount thereof
Unit: RMB YUAN
|||||
|-|-|-|-|
|Item|Amount of 2013|Amount of 2012|Amount of 2011|
|Gains and losses from disposal of non-current assets (including theprovision for asset impairment write -off part)|-1,760,280.69|-12,332,978.15|-7,015,131.03|
|Governmental subsidies recorded into the current gains andlosses (excluding the governmental subsidies closely relatingto the business of the enterprise and enjoyed by a fixed quotaor a fixed amount in accordance with the state policies)|660,482,277.34|252,844,637.88|145,384,688.32|
|Gains and losses of the fair value change of the tradingfinancial asset and liability held by the Company, investmentincome from the disposal of the trading financial asset andliability and available-for-sale financial asset, except for theeffective hedging business in relation to the normal operationof Company|1,705,045,054.92|217,676,678.03|38,495,870.93|
|Non-operating incomes and expenditures other than the aboveitems|-29,808,150.26|16,485,229.47|-27,002,909.26|
|Minus: Influence amount of income tax|367,611,287.10|86,905,123.66|20,861,729.40|
|Influence amount of minority interests (After tax)|3,517,879.72|3,310,373.78|-1,502,686.04|
|Total|1,962,829,734.49|384,458,069.79|130,503,475.60|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section IV Report of the Board of Directors
1. Overview
In 2013, under the environment of domestic economy staying at a low level toward being stable and industry recession, influenced by real estate control, exiting of energy saving subsidy policy and climate, domestic market grew weakly; overseas market demands were comparatively fatigued under influence of factors such as political situation, economic and exchange rate. Adhering to the market-oriented, the Company made scientific decisions with composure and achieved good economic returns. The total operating income is RMB 120.043 billion, an increase of19.91% compared with the previous year; the total profit is RMB 12.892 billion, an increase of47.12% compared with the previous year; the net profit attributable to shareholders of listed company was RMB 10.871 billion, an increase of47.31% compared with the previous year; the basic earnings per share was RMB 3.61 per share, an increase of46.15% compared with the previous year.
According to the statistics of HVAC Information, Gree central air conditioner occupied15.7% of domestic market in 2013, exceeding 4.5 percent than the second and ranked first two years in row. According to the statistics of Industry On-line, Gree residential air conditioner production and sales ranked first for years. Of which production of 2013 is 11.99 million above the second and sales is 11.865 million above to improve on market shares while consolidating the top position.
2. Key works of the Company in 2013
The Company will internally keep practicing the management policy of "Be fair; Be open; Be dedicated", require the leading cadres to have a sense of crisis, sense of urgency and awareness of unexpected development and to live up to "not to abuse their power to seek personal gains and benefits or to bully others", encourage the staff to fulfill the code of conduct of "Be truthful, work for real; Be principled, work for good; Be committed, work for success", insist on doing work in strict accordance with any laws, regulations, systems and standards, effectively eliminate effects on work from selfish departmentalism and bureaucratism, build a fair and impartial working environment, and utilize rules and systems to create a space for fair development and a sharing platform so as to build an enterprise in
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 which everyone is willing to work hard, everyone is given equal opportunities and everyone has a wish.
By adhering to the above management concept, the Company completed the following key works in 2013:
1. By deepening management such as integration of operational module, informatization, collectivize control and joint management mode, the Company combined flat management and delicacy management to promote the level of management.
2. Persisting in the idea of “technology and innovation come first”, the Company listed the "Crown" series which adopts the pioneering two-stage compressor inverter technology. The photovoltaic direct-driven inverter centrifugal system called “Central Air Conditioner without Electric Charge” originated by GREE was unanimously appraised as "World Leading Technology" by the expert team. High quality water purifiers and air purifier which can dislodge PM 2.5 effectively were launched.
Core technologies in 2013:
(1) Photovoltaic direct-driven inverter centrifugal system
By development of the project, we have mastered core technology and patents of photovoltaic direct-driven inverter centrifugal technology, ternary converter, dynamic capacity load tracking MPPT and high-power permanent magnet synchronous motor high-speed drive based on PAWM interleaving modulation, combined photovoltaic power generation system and urban power grid in unit, achieved perfect energy-saving effect, as well as promoted application of photovoltaic power generation in air conditioners and national emission reduction policy, and got recognition by certifying commission.
(2) Magnetic suspension inverter centrifugal cooling compressor and water chiller
In this project, we developed the magnetic inverter centrifugal cooling compressor with the largest stand-alone capacity in the world, which was applied into water chiller with good performance. By breaking international monopoly, we promoted an improvement upon air-conditioning technique, which was valuable to national energy saving cause and got recognition by certifying commission.
(3) Study in twin-stage enthalpy-adding rotor type inverter compressor and the
application in air conditioner and heat-pump water heater
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 By resolving multiple technological difficulties of the project, we have mastered multiple core technologies and patents, such as efficient two-stage compressor technology of wide temperature, high reliability engineering, efficient shoot enhanced vapor and EER automatic optimization, realized application of product and reached high energy efficiency level.
3. The Company set up departments for production automation management, equipment manufacture and administration to promote mechanization and automation ofR&D, automatic reform in whole production chain and automation skills training of staff.
4. The Company set an informatization committee directed by Dong Mingzhu, Chairman and President of the Company, optimized business management process with informatization method, quickened the informatization planning and construction, as well as combination of informatization and automation, to develop business management level efficiently on low operational risk.
5. The Company upgraded marketing channels by setting flagship stores in major cities and setting updated image stores to build high-end oriented of product group, and also supplied stereoscopic services from model selection, design, and installation to maintain in profession, specification and humanization.
3. Analysis on change of principal business
(1) Revenues
1) The physical sales revenue of the Company is more than the service revenue.
2) Sales conditions of Top 5 clients
||||
|-|-|-|
|Client ranking|Sales revenue (Yuan)|Percentage to annual sales revenue of theCompany (%)|
|First|8,533,547,842.68|7.11%|
|Second|8,465,553,262.43|7.05%|
|Third|6,646,584,501.30|5.54%|
|Fourth|6,370,617,685.02|5.31%|
|Fifth|5,954,671,887.98|4.96%|
|Total|35,970,975,179.41|29.97%|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Costs
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Category ofindustry|Item|2013||2012||Increase/Decrease overprevious year(%)|
|||Amount|Proportion tooperating cost(%)|Amount|Proportion tooperating cost(%)||
|HouseholdAppliances|Raw Material|64,385,950,558.57|90.40%|66,418,900,466.80|90.73%|-0.33%|
||Labor Wages|2,770,523,689.98|3.89%|2,556,608,989.34|3.49%|0.40%|
||Depreciation|625,074,907.67|0.88%|467,268,117.30|0.64%|0.24%|
||EnergyResources|499,108,465.20|0.70%|431,066,730.78|0.59%|0.11%|

Information about Top 5 suppliers of the Company
||||||
|-|-|-|-|-|
|||||Percentage to total amount ofannual purchase (%)|
||Name of supplier||Amount of purchase (Yuan)||
|First||5,449,197,039.37||7.29%|
|Second||3,824,023,463.10||5.12%|
|Third||2,187,056,446.26||2.93%|
|Fourth||1,998,112,775.15||2.67%|
|Fifth||1,001,351,570.79||1.34%|
|Total||14,459,741,294.67||19.35%|

 (3) Expenses
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2013|2012|Increase/Decrease overprevious year (%)|Causes of change|
|Sales Expense|22,508,931,701.70|14,626,228,488.10|53.89%|Due to increase in sales andefforts intensified in marketing|
|Income taxexpense|1,956,168,768.13|1,316,781,289.57|48.56%|Taxes increase due to increase insales|

(4) Cash flows
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2013|2012|Increase/Decrease overprevious year (%)|Causes of change|
|Net Cash Flow fromOperating Activities|12,969,837,129.83|18,408,746,271.56|-29.55%|Mainly caused byincrease in tax paidand management fees|
|Net Cash Flow fromInvestment Activities|-2,185,987,355.41|-4,212,523,966.37|-48.11%|Mainly caused by cashdecrease of fixedassets and investmentactivities|
|Net Cash Flow fromFinancing Activities|-2,423,977,154.71|815,216,460.30|-397.34%|Mainly caused byincrease in issues instock into capital overthe past year.|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 4. Analysis on composition of principal business
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
||Operating revenue|Operating cost|Gross profitratio|Increase ofoperatingrevenue overprevious year(percentagepoint)|Increase ofoperating costover previousyear (percentagepoint)|Increase ofgross profitratio overprevious year(percentagepoint)|
|Industry|||||||
|Householdappliancesmanufacturing|108,052,844,520.69|71,219,846,531.15|34.09%|18.42%|7.31%|6.82%|
|Product|||||||
|AirConditioner|105,487,901,617.95|69,085,322,534.06|34.51%|18.68%|7.26%|6.97%|
|Householdappliances|1,617,926,821.24|1,296,614,727.67|19.86%|11.35%|15.33%|-2.76%|
|Others|947,016,081.50|837,909,269.42|11.52%|4.16%|0.44%|3.28%|
|Territory|||||||
|Domestic|92,051,726,504.66|57,156,463,906.86|37.91%|21.99%|8.28%|7.86%|
|Overseas|16,001,118,016.03|14,063,382,624.29|12.11%|1.34%|3.52%|-1.85%|

 Note: "Others" as stated in the product category under the Item mainly mean the compressor, motor, capacitor, varnished wire and mould etc.
5. Analysis on assets and liabilities
(1) Major changes in assets project
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
||At the end of 2013||At the end of 2012||Change ofproportion(percentagepoint)|
||Amount|Proportion tototal assets|Amount|Proportion tototal assets||
|Monetary Capital|38,541,684,470.83|28.83%|28,943,921,701.45|26.91%|1.92%|
|AccountsReceivable|1,849,275,342.79|1.38%|1,474,872,971.56|1.37%|0.01%|
|Inventories|13,122,730,425.78|9.81%|17,235,042,562.70|16.02%|-6.21%|
|InvestmentProperty|503,056,462.68|0.38%|208,009,129.76|0.19%|0.19%|
|Long-term EquityInvestments|97,568,533.30|0.07%|28,159,992.30|0.03%|0.04%|
|Fixed Assets|14,034,138,414.45|10.50%|12,700,394,289.32|11.81%|-1.31%|
|Construction inProgress|1,861,677,013.76|1.39%|2,304,317,913.92|2.14%|-0.75%|

(2) Major changes in liabilities project
Unit: RMB Yuan
|||||||
|-|-|-|-|-|-|
|Item|2013||2012||Change of proportion(percentage point)|
||Amount|Proportion tototal assets|Amount|Proportion tototal assets||
|Short-termBorrowing|3,316,971,153.31|2.48%|3,520,642,063.91|3.27%|-0.79%|
|Long-termBorrowing|1,375,348,442.79|1.03%|984,463,173.32|0.92%|0.11%|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (3) Assets and liabilities measured by fair value
There were no significant changes in the main asset measurement attribute of the Company during the Report Period.
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Gains and lossesfrom changes infair value|Accumulated fairvalue changesrecognized inequity|Depreciationreserveswithdrawn duringthe period||Amount at theend of theperiod|
|Financial assets|||||||
|1. Financial assets measuredby fair value and theirchanges recognised in thegains and losses during thecurrent period (excludingderivative financial assets)|263,460,017.40|990,563,610.10|||1,246,106,661.88||
|2. Derivative financial assets|13,752,940.26||1,234,495.04||15,205,287.36||
|3. Available-for-sale financialassets|554,912,450.00||-30,809,846.15||805,932,600.00||
|Subtotal|832,125,407.66|990,563,610.10|-29,575,351.11||2,067,244,549.24||
|Investment property|||||||
|Productive biological asset|||||||
|Others|||||||
|Total|832,125,407.66|990,563,610.10|-29,575,351.11||2,067,244,549.24||
|Financial liabilities|0.00|0.00|0.00||0.00||

 6. Analysis on core competitiveness
Through years of sustainable and steady development, the Company has had its own unique competitive advantages in corporate culture, focus strategy, independent innovation, core technology, quality brand, marketing channel, management team, scale cost, client resource and the whole industry chain, among which the core competitive advantage is reflected in the pragmatic corporate culture of "Be fair; Be open; Be dedicated ", based on the independent innovation gene and lofty mission of "for the Clear Sky and Greener Earth", the Company enables the excellent products to serve the consumers through independently controlled marketing channel.
During the Report Period, core competence of the Company was enhanced further.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 7. Investment analysis
(1) Investment in derivatives
Unit: RMB Yuan
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Operation nameofinvestment inderivatives|Relatedrelation|Whetherornottransactionwasrelated|Type ofinvestmentinderivatives||Initial amountof investmentin derivatives|Startdate|Expirydate|Beginninginvestment amount|Withdrawingdepreciationreserveamount(if any)|Endinginvestmentamount|Proportionof theendingcontractamount tonet assetsat the endof thereportperiod|Profits andlossesduring thereportperiod|
|JinruiFuturesco., LTD|None|No|FuturesHedgingContract||1,375.29|2013.1.1|2013.12.31|1,375.29|0.00|1,520.53|0.04%|-2,627.53|
|FinancingInstitution|None|No|ForwardForeignExchangeContract(Buyingin)||7,710.51|2013.1.1|2013.12.31|7,710.51|0.00|91,636.60|2.65%|23,587.08|
|FinancingInstitution|None|No|ForwardForeignExchangeContract(Sellingout)||18,635.49|2013.1.1|2013.12.31|18,635.49|0.00|32,974.06|0.95%|43,675.28|
|Total|||||27,721.29|||27,721.29|0.00|126,131.19|2.24%|64,634.83|
|Capital Source of Investment inDerivatives|||||Private||||||||
|Lawsuits (if apply)|||||None||||||||
|Risk analysis of openinterest of derivativesand control measuresduring the ReportPeriod (including butnot limited to marketrisk, liquidity risk,credit risk, operationrisk and legal risk)||||In order to evade any risk in the cost of purchase of raw materials by the company which might arisefrom wide fluctuations of the price of bulk raw materials, the Company carried on the hedgingbusiness for part of the raw materials and duly locked the cost of raw materials according to thefutures market situation to reduce any uncertainty risk from fluctuations of the market price of thespot goods; meanwhile, the Company carried out foreign exchange transactions by bank's financialinstruments to evade any risk in the fluctuations of exchange rate and interest rate, reduce foreignexchange liabilities and conduct the cost locking, and realize the maintenance and increase of thevalue of foreign exchange assets. The Company laid down the Rules for Hedging Management ofFutures and "Internal Control System of Forward Foreign Exchange Transactions to execute the fullappraisal and control of the investment in derivatives and risks in open interest, and the detaileddescription is shown as below:1. Legal and regulatory risk; While the Company carried on hedging and foreign exchangetransactions, it was required to follow the laws and regulations and specifically stipulate the rightsand obligations with the agency.Control measures: The Company assigned the responsible department to strictly execute the contractreview, clarify the rights and obligations, strengthen compliance check and ensure the Company'sinvestment in derivatives and operation of open interest in accordance with any laws and regulationsand internal control system of the Company.2. Operation risk: it means any risk in operation arising out of imperfect internal process, operationof employees and system.Control measures: The Company established the corresponding management system, clarified thedivision of responsibilities and examination & approval procedures of the hedging and foreignexchange transactions, built more perfect supervision mechanism and effectively reduced anyoperation risk through business, decision and transaction processes.3. Market riskThe price change of bulk goods and uncertainty of fluctuations of exchange rate of foreign exchangemarket bring a greater market risk to the futures business and foreign exchange transactions.Control measures: The principle of prudent and moderate operation is upheld in the futures hedgingand foreign exchange transactions of the Company, in which any speculative transaction is notpermitted. As to the hedging business, the Company strictly restricted the number of hedging not toexceed the number of actual spot transaction and the open interest of the futures not to exceed thenumber of hedged spot goods and implemented the mechanism to stop loss. In respect of the foreign|||||||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||
|-|-|
||exchange transactions, the Company effectively prevented the market risk by judging the trend offoreign exchange rate and utilizing a contract to lock the settlement of exchange rate.|
|The detailed usage andrelated hypothesis andparameter settingshould be disclosed interms of the marketprice of the investedderivatives or changesin fair value of theproducts during theReport Period andanalysis on the fairvalue of the derivatives.|The loss under the futures hedging contract during the Report Period was RMB -2,627.53; Theprofit under the forward foreign exchange contract during the Report Period was RMB 166,318.72.|
|Descriptions aboutwhether there weremajor changes in theaccounting policies anddetailed accountingprinciple of theCompany's derivativesduring the ReportPeriod as compared tothe last report period.|No change.|
|Special opinions ofindependent directorsregarding theinvestment inderivatives and riskcontrol of the Company|In the opinion of the Company's independent directors, the Company improved its managementlevel by strengthening internal control and carrying out the risk prevention measures as well asstabilizing price fluctuations through futures hedging. It also enhanced its foreign exchange riskcontrol level through foreign exchange transactions. The above investment in derivatives helps togive play to competitive advantages of the Company, so it is feasible for the Company to carry onthe investment in derivatives under controllable risk.|

(2) Usage of raised funds
1). Overall usage of raised funds
The total amount of the funds raised by the Company in 2012 was RMB 3,195.2870 million. As of Dec. 31, 2013, the accumulated total amount of the raised funds used for investment was RMB 2,784.9871 million, of which RMB 2,505.6714 million was invested in 2012 while 0.2793157 million in 2013. There were no changes in any projects financed by the raised funds.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Promised projects of raised funds
Unit: RMB ten thousand yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Promisedinvestment projectand investmentplace forover-raised funds|Whetheror not theprojecthas beenchanged(including thosechangedin part)|Totalamount ofpromisedinvestment of raisedfunds|Totalamount ofadjustedinvestment (1)|Amount ofinvestmentduring thereportperiod|Accumulatedamountofinvestment by theend of theperiod (2)|Investment progressby the endof theperiod(%)(3)=(2)/(1)|Date ofreachingtheintendedusage|Benefitsrealizedduringthe reportperiod|Whetheror nottheprojecthasachievedexpectedbenefits|Whether or nottherewereanymajorchanges in thefeasibility oftheproject|
|Promised investment project|||||||||||
|Technicalreformation projectof commercial airconditioners ofGREE HQ.|No|60,000|53,528.7|1,239.52|53,528.7|100%|31October2012|29,388.12|Yes|No|
|Wuhancommercial airconditioner project|No|50,000|50,000||50,000|100%|31 May2012|33,237.60|No|No|
|Zhengzhouhousehold airconditioner project|No|70,000|70,000||70,000|100%|30 April2012|31,423.92|No|No|
|Newenergy-savinghousehold airconditionercompressor projectwith an annualoutput of 6 million|No|90,000|90,000|15,163.92|84,110.53|93.46%|31 May2011|29,073.44|Yes|No|
|Technicalreformation projectof EngineeringResearch Center ofRefrigerationEquipment forEnergy-Saving|No|56,000|56,000|11,528.13|20,859.48|37.25%|31December 2014|Notapplicable|Notapplicable|No|
|Subtotal of thepromisedinvestment project|--|326,000|319,528.7|27,931.57|278,498.71|--|--||--|--|
|Total|--|326,000|319,528.7|250,567.14|250,567.14|--|--||--|--|
|Description andcauses for thefailure to achievethe plannedprogress oranticipatedrevenue (fordifferent specificprojects)|1. The technical reformation project of Engineering Research Center of Refrigeration Equipment forEnergy-Saving failed to achieve the planned progress because the Company postponed the projectinvestment progress due to the changes in the market circumstances, and it is expected that this projectwill be completed at the end of December 2014.||||||||||
|Initial investmentand replacement ofthe projectfinanced by raisedfunds|Applicable||||||||||
||According to the Special Audit Report (Zhong Shen Ya Tai Shen Zi (2012) No. 010075 regarding theadvanced investment of self-raised funds in the project by GREE ELECTRIC APPLIANCES which wasissued by China Audit Asia Pacific Certified Public Accountants Co., Ltd, as of 31 January 2012, theactual investment amount of the advanced investment of self-raised funds in the project by the Companywas RMB 2,255.2865, and the Company delibrated and passed the Proposal on Replacing Self-raisedFunds Invested in Advance in the Project Financed by Raised Funds with Raised Funds at the 21thmeeting of the 8th session of Board of Directors which was convened on 18 February 2012, in which theCompany was allowed to replace the self-raised funds of RMB 2,243.4069 million invested in advance inthe project financed by raised funds with the additional raised funds. The details of such replacement areshown as follows: ① Replacing the raised funds of RMB 353.1989 million invested in the technicalreformation project of GREE HQ commercial air conditioners; ② Replacing the raised funds of RMB 0.5||||||||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||
|-|-|
||billion invested in Wuhan commercial air conditioner project; ③ Replacing the raised funds of RMB 0.7billion invested in Zhengzhou household air conditioner project; ④ Replacing the raised funds of RMB637.7616 million invested in the new energy-saving household air conditioner compressor project withan annual output of 6 million; ⑤ Replacing the raised funds of RMB 52.4464 million invested in thetechnical reformation project of Engineering Research Center of Refrigeration Equipment forEnergy-Saving;|
|Purpose andinvestment placeof unused raisedfunds|As of 31 December 2013, the total amount of the unused raised funds was RMB 442.8234 million,including the net interest income of RMB 32.5234 million. The balance of the special account for theraised funds invested in the new energy-saving household air conditioner compressor project with anannual output of 6 million was RMB 703.275 million, including the net interest income of RMB 11.4327million. The raised funds invested in the project operation by intended increase of funds and replacementwas RMB 0.9 billion, of which the amount of the actually used funds was RMB 841.1053 million,accounting for 93.46% of total amount of the raised funds to be invested in the project; The balance ofthe special account for the raised funds invested in the technical reformation project of EngineeringResearch Center of Refrigeration Equipment for Energy-Saving was RMB 372.4928 million, includingthe net interest income of RMB 21.0876 million. The raised funds invested in the project operation byintended increase of funds and replacement was RMB 0.56 billion, of which the amount of the actuallyused funds was RMB 208.5948 million, accounting for 37.25% of total amount of the raised funds to beinvested in the project; the total amount of the unused balance was RMB 3300 in Wuhan commercial airconditioner project and Zhengzhou household air conditioner project (both are unused interest incomebalance). The unused raised funds will be invested based on the follow-up investment progress and plan.|
|Problems or otherconditions existingin the usage anddisclosure ofraised funds.|Not applicable|

(3) Major subsidiaries
Except that Zhuhai Gree Group Finance Company Limited carries on financial service, all the other subsidiaries carry on manufacturing business.
|||||||||
|-|-|-|-|-|-|-|-|
|Company name|Mainproduct orservice|Registered capital|Total assets|Net assets|Operatingrevenue|Operatingprofit|Net profit|
|Zhuhai Gree GroupFinance CompanyLimited|FinancialServices|150,000|2,189,984.01|235,349.58|150,863.70|35,756.07|26,774.63|
|Gree ElectricAppliances(Chongqing) Co., Ltd.|AirConditioner|23,000|536,876.73|317,321.60|713,191.56|56,286.48|48,494.10|
|Gree ElectricAppliances (Hefei)Co., Ltd.|AirConditioner|15,000|1,107,849.40|552,263.46|1,910,376.82|118,839.22|135,715.13|
|Gree ElectricAppliances(Zhengzhou) Co., Ltd.|AirConditioner|2,000|484,769.73|98,534.87|815,192.15|38,896.48|31,423.92|
|Gree ElectricAppliances (Wuhan)Co., Ltd.|AirConditioner|1,000|505,834.09|80,708.95|749,108.01|35,282.77|33,237.60|
|Gree ElectricAppliances (Wuhu)Co., Ltd.|AirConditioner|2,000|375,850.66|18,305.82|568,220.03|25,156.38|20,070.52|
|Gree ElectricAppliances(Shijiazhuang) Co.,Ltd.|AirConditioner|10,000|326,805.09|33,377.10|525,916.21|26,129.65|24,745.06|
|Zhuhai Gree ElectricalCo., Ltd.|VarnishedWire|16,932|67,529.98|35,053.21|149,302.78|2,614.49|2,439.16|
|Zhuhai Kaibang MotorManufacture Co., Ltd.|Motor|8,200|190,352.62|41,875.56|285,162.18|9,553.19|8,639.01|
|Gree (Zhongshan)Household ElectricAppliances Co., Ltd.|SmallHomeAppliances|3,000|50,598.62|18,215.29|89,006.74|5,560.09|4,480.11|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||||
|-|-|-|-|-|-|-|-|
|Zhuhai LandaCompressor Co., Ltd.|Compressor|9,303|795,699.94|315,431.23|934,475.76|120,416.52|100,702.79|

8. Prospects of the Company's future development
(1) Development strategy
The Company will continually persist in the development ideas of "self-expansion, independent innovation and self-owned brand", adhere to professional development, strengthen the integration of industries, seek the diversification (HVAC equipment) concerned with horizontal development and gradually realize the diversified operations in the professional development, depending on technical strength, brand tension and channel control, go forward at full speed to realize the sales income of RMB 140 billion in 2014; the Company will do its best to achieve a growth of RMB 20 billion in average annual sales income of the future five years to realize the creation of another "GREE" in five years.
(2) Development strategy implementation scheme
Mechanism innovation implementation scheme
(1) System innovation implementation scheme
Adhere to innovation strategy thoughts, Driven by "Four Innovations" (technical innovation, management innovation, channel innovation, talent training innovation), establish an innovation system and forge an innovation platform; through building a motivation system, construct good innovation atmosphere to maximize stimulate initiatives.
(2) Establish an innovation system and forge an innovation platform
Establish an innovation system and forge an innovation platform. In aspect of technological innovation, we need to intensify the professional development team further, exploit resource platforms of 2 state-level technology research centers, 4 institutes of technology and more than 400 international first-class laboratories and forge a new technology platform to support hardware for innovation.
Increase investment in technology innovation without upper limit, “distribute according to needs”, further update the Gree marketing channel mode and firmly grasp the market power; implement scientific management, quicken the perfection of the talent training system of
"selection, development, placement and retention" and innovate the talent training system.
(3) Build motivation system and construct good innovation atmosphere
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Further perfect the incentive system. Select Technological Progress Award, Management Innovation Award, Rationalization Suggestion Award, Company Benefit Bonus, Year-end Bonus, Science Specialist, HOPE, Advanced Individual, Innovation Model and Gold-metal Staff to construct good innovation atmosphere and encourage innovations.
Adhere to the people-oriented, set up an institute of technology and build a learning organization to make more employees to have opportunities to upgrade their skills and accumulate more positive energy.
2. Core business development implementation scheme
(1) Residential air conditioner
Keep sustainable competition advantages through technology innovation with market-oriented policy and create competitive product lines to maintain its top status: put emphasis on product line layout andR&D of special market and special occasion air conditioner, further study inverter energy-saving technology, application of advanced sensors and combination to Internet of Things to improvepeople’s living environment; research on performance index of air conditioners to enhance heating capacity of low-temperature, reduce noise and cost through promotion and innovation of technology.
High-end products applied strategies of production, developing and reserve; mass consumption occupied larger mid-market and the Company will develop market segment product year by year.
(2) Commercial air conditioner
Aimed at “Create Best Air Conditioner”, strive to develop environmental products based on energy conservation and emission reduction, expand to professional field and expressGree’R&D and production capacity in high-end technology.
a. Deepen the concept of energy saving and environment protection: to join the civilian market with the latest two-stage compressor technology of Gree, so as to develop the energy saving market with sophisticated technology of Heat Recovery, Ground Source and Water Source Heat Pump.
b. Put emphasis on the large-scale water chiller: quickenR&D on proprietary intellectual property rights and sophisticated technology of refrigeration and further enhance COP of the
water chiller to save energy.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 c. Develop air conditioners of special type and copious cooling industry: intensify promotion of special type air conditioning units and launch them to the market.
(3) Household electric appliance
By taking “Self-dependent Innovation” as the main technology innovation strategy and being supplemented by strategies such as “Innovation on Following Mode” and “Cooperation Innovation”, focus on new product development and technology innovation to form a household electric appliance group based on key products and sunrise products.
3. Implementation scheme of human resource
Improve the strategic status of human resource to support core business development with sufficient talents.
(1) Promotion plan oftalents’ timeliness rate
Enhance the annual recruitment, reserve and training plan to develop supplement of talents. Enhance recruitment skills, tool development and the scientificity of interview process and results; further widen recruitment channels, enrich employment forms to develop recruitment capacity of senior and scarce talents, as well as emergency recruitment capacity.
(2) Enhance training of skilled workers
Enhance training strength of skilled workers based on requirement of automatic development, and achieve systematization of training work, practice of training method and standardization of training content; set up Gree Academy to form a systematized and characteristic training mode.
(3) Perfect the incentive system of employee
Explore and establish a more scientific and practical wage defining and adjusting mechanism. Establish special incentive systems for employees in different levels and groups; establish a wage incentive system that matches with the development channel and skills of employees. Optimize secondary distribution of Contracted salary with supervision on wage exceptions; enhance daily supervision of overtime management and force transformation ofemployers’ management ideas.
(4) Perfect employee performance management system
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Performance management is an important tool for improvingemployees’ capability and ensuring realization of Company strategy. Currently, the Company has established an employee performance management system. In the future, the Company will enhance management by strengthening performance publication and substantial breakthrough, strengthen the application of compensation, training, promotion, and elimination module in performance management.
(5) Construct a qualification management system of employee
Construct a comprehensive qualification management system of employee by pilot exploration with steady steps, focus on the strait development channel and break through bottleneck of professional development, as well as take qualification management system of employee as standard guidelines to the training and growth of talents to promote the sustainable development of both staff and Company.
4. Technological management implementation scheme
(1) Adhere to the principles of “TechnicalR&D, Investment as Required and No Upper Limit” to carry on science and technology innovation activities.
(2) Enhance research on core technology, mainly study the exploitation of new type of energy-efficient household air conditioners and central air-conditioning products and research new technologies, materials and processes in these two areas; be engaged in the development of compressors; enhance study, application and promotion of environmentally-friendly refrigerant; simultaneously, enhance the research on common technologies, such as capacity emulation technique, CFD simulation technique and Internet of Things technology to drive development of upstream and downstream industry chain.
(3) Enhance construction and management of all enterprise platforms and connect industry, enterprise and market from innovation communication, technology cooperation and experiment testing platform. Mainly configure laboratory resources with Company advantages, form national key lab platforms actively; deepen university-industry cooperation through establishing the mode of industry-university-research cooperation combined with strategic alliances to strength core competence.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (4) Build six mechanisms including innovation input, innovative talents, innovation incentive, project innovation management, IPR and standard management innovation to guarantee efficiency in technical innovation.
5. Automation strategic planning implementation scheme
As being implemented in stages steadily, the automation planning and sample implementation have been completed. Currently, it is in process of validation and promotion and will go to comprehensive application. Being guided by the promotion of automation,R&D of automatic equipment, wider application of research results and overall optimization on efficiency, promote implementation of the automation strategy and standardization and generalization of product design; make the production models and logistics patterns leaner; make components more detailed; product high precision molds; normalize facility maintaining; introduce and train automation talents.
6. Implementation scheme of standardization, universalization and informatization
(1) Further prefer standardization system which takes technical standards as the main body and is supported by management and working standards is the body and supported by work standard, shoulder TC/SC secretariat work actively, strive for the formulation and speaking rights of government standard in order to apply corresponding standards into region and international, to improve popularity, brand effect and market competitiveness, and reduce the risk of technical barriers.
(2) Under guidance of national standardization strategies, organize industry integrated standardization and advanced standardization activities and establish favorable standardization principles to promote the management of industry standardization strategy, so as to improve the construction of technology standardization of all enterprises.
(3) Promote new standardization form of modularization on product design under the form of traditional standardization (simplify, unify and universalize) and develop the top form of standardization, namely, seriation of product.
(4) Establish an effect evaluation system of Company standardization. Based on actual conditions of the Company, formulate a method to evaluate standardization results to reflect benefits of standardization and further to supply power for sustaining standardization work and strategy.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (5) Strengthen the idea of “Reduce cost of design, purchase and product through design universalization”, as well as implement the project of modular design, assembly unit universalization and platform project engineering.
(6) Strengthen informationized controls ofCompany’s main informatization application platform, database, the whole principles and integration of all the material implement, items and parameters based.
(3) Security scheme of development strategy
1. Intellectual protection
(1) Perfect a diversified talent incentive system to improve treatment for managerial and technical backbone talents.
(2) Prepare to construct GREE Institute of Engineering and Technology and strengthen the training of backbone staff, especially the automation and technologyR&D talents. Build and perfect the staff training system and qualification system to improve staff quality as well as managerial and technical capabilities, concentrate on training leaders in automatic, standard management and technical fields and form an effective and backbone-oriented management project team so as to provide reliable intellectual protection for company development.
2. Innovative system protection
(1) Constantly perfect establishment of scientific research platforms, communicative and cooperative platforms as well as innovative mechanisms and construct a scientific research innovation system.
(2) Ensure that funds for scientific research are invested annually at a certain percentage to product sale revenues.
3. Automation protection
Build specialized teams for automation promotion, automation device manufacturing and advanced automation technology research which are guided by Chairman& President Ms. Dong Mingzhu and are entitled to cross-institute and cross-system scheduling rights.
4. Information protection
Integrate and perfect existing information management platforms, innovate and introduce advanced information management platforms, promote information construction to realize
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 visualization of whole process and all-round manufacturing as well as all work behaviors. Provide sufficient information resources for the improvement of management efficiency and effectiveness.
(4) Main key work plan in 2014
1. Constantly maintain technology leadership and strengthen greatlyR&D of original technologies and products.
(1) Persist in the principle of independent and original technology to carry out product explorations and develop more original products.
(2) Make the best, most fashionable, most stylistic products in the field and take advantage of an epoch-making mindset to make products.
(3) Succeed in creating products and markets which are capable of leading a new consumption wave.
2. Build a quality system of independent management and whole participation.
(1) Take “free of any product maintenance for 8 years” as its quality control goal and strengthen quality control from design.
(2) Strength product safety research and initially build the automation device quality assurance system.
3. Quicken transformation of automation and mechanization and enhance capabilities of researching and developing automation devices.
(1) Quicken transformation of automation and realize automation of posts, production lines and logistics distribution.
(2) Make mechanization the future development stress by studying deeply mechanization and further enhance capabilities of designing and producing automation devices so as to catapult GREE to the best device supplier in the world.
4. Reinforce information construction and heighten thecompany’s management level. (1) Quicken establishment of databases for different modules such as design module and business management module.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Quicken the training of an excellent information intellectual team, concentrate on turning company information team into an excellent consultancy agency in IT field and provide guarantee for the implementation of thecompany’s information strategies.
(3) Strengthen the research of internal and external environment in an era of big data and make long-term plans of information construction.
5. Strengthen system construction and reinforce audit supervision.
(1) Establish codes of conducts for cadres, administration staff and general staff, determine the criteria, compile the criterion into a book and supervise its implementation. (2) Foster the thought of bringing fish to prosperity by keeping water ever clean, intensify supervision and discipline inspection, strengthen innovation of supervision approaches.
(3) Innovate the incentive mode, intensify incentives, heap rewards on reporting problems and offering reasonable suggestions about enhancing efficiency and quality assurance and exert severe punishments against rule-breakers.
6. Strengthen management innovation and implement modular group management modes.
(1) Implement modular management modes of centralized purchasing, centralized sales, unified production management, unified quality management and unified personnel management.
(2) Strengthen network connections between the headquarters and bases as to enhance efficiency and decrease costs.
(3) Make comprehensive promotion and implementation of fixed picking and ground clearing work.
7. Strengthen cost management and improve business benefits.
(1) Intensify constantly cost consciousness of “a drop of water, a piece of paper” and enhance cost control.
(2) Strengthen material management and implement landing recoil to ensure consistency between accounts and actual ones.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (3) Build a database of product design costs and implement design cost optimization management as well as review control.
8. Deepen the work of fixing work posts and defining personal quota to ensure reasonable staffing.
(1) Push ahead the work of fixing work posts and defining personnel quota as regards the middle-level cadres of the headquarters and the subsidiaries.
(2) Perfect constantly the criterion of fixing work posts and defining personnel quota as regards the headquarters and promote its implementation as regards the subsidiaries.
9. Perfect cadre performance appraisal and strengthen cadre team construction.
(1) Determine and target at the quantification appraisal target of each institute with efficiency and effectiveness as the core; concentrate on appraising innovative capabilities of cadres; carry out the appraisal according to classifications of manufacturing, technology, administration and other categories.
(2) Strengthen cadre echelon construction, make good planning of cadre reservation, selection and elimination and incorporate talent training as a part of cadre appraisal.
(3) Implement cadre rotation system and enhance effectivelycadres’ comprehensive professional competence.
10. Strengthen expertise training of the staff and implement employee care projects.
(1) All staff accepts at least one full-time training annually with the duration of over one week.
(2) Provide unmarried staff with one-bedroom housing and married staff with two-bedroom transitional housing.
(5) Risk in future development
The major risks in future development derive from any adverse effects from slowdown in demands of global consumers.
9. Description of changes in the accounting policy, accounting estimates and accounting method compared with the financial report of previous year.
Not applicable.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 10. Description of changes in consolidated financial statements compared with the financial report of previous year.
(1) There were new subsidiaries included in the consolidated financial statements during the report period
On 6 March 2013, the Company invested RMB 100 million to establish the subsidiary Zhuhai HVAC Equipment Co., Ltd and held its100% equity. In 2013, it was incorporated in the consolidated financial statements.
On 13 March 2013, the Company invested RMB 5 million to establish the subsidiary Tianjin Green Resources Recycling Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
On 12 April 2013, the Company invested RMB 30 million to establish the subsidiary Zhuhai TOSOT Life Electric Appliances Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
On 14 October 2013, the Company invested RMB 30 million to establish the subsidiary Zhuhai Ligao Precision Manufacturing Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
(2) Subsidiaries not included in the consolidated financial statements during the report period
In June 2013, GREE Electric Appliances (Chongqing) Electronic Technology Co., Ltd was cancelled, so as of June 2013 it will not be included in the consolidated financial statements
11. Profit and dividend distribution
(1) Plan (Scheme) of profit distribution and capitalization from capital public reserve for the last three years
1. Plan of profit distribution for the year 2013
Upon audit of China Audit Asia Pacific Certified Public Accountants Co., Ltd, based on the net profit of RMB 5,986,905,538.79 realized by the parent company in 2013 plus the undistributed profit at the beginning of the year equivalent to RMB 8,814,610,174.42 less the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 distributed profit of RMB 3,007,865,439.00, the actual distributable profit is RMB 11,793,650,274.21.
Calculated by total stock capital of the Company equivalent to 3,007,865,439 stocks, all directors will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 4,511,798,158.50 and the balance to be carried forward to the next year.
The plan of profit distribution will not be executed until it is submitted to the general meeting of shareholders of the Company for the year 2013 for approval.
2. Scheme of profit distribution for the year 2012
Calculated by total stock capital of the Company equivalent to 3,007,865,439 stocks, all directors will be distributed a cash of RMB 10.00 (tax included) per 10 stocks, with the total amount of cashes distributed in such a way up to RMB 3,007,865,439.00 and the balance carried forward to the next year.
3. Scheme of profit distribution for the year 2011
Calculated by total stock capital of the Company equivalent to 3,007,865,439 stocks, all directors will be distributed a cash of RMB 5.00 (tax included) per 10 stocks, with the total amount of cashes distributed in such a way up to RMB 1,503,932,719.50 and the balance carried forward to the next year.
(2) Cash dividends for the last three year:
Unit: RMB Yuan
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|-|-|-|-|-|
|Year|Amount of cashdividend (taxincluded)|Net profit attributable toshareholders of listed company inannual consolidated financialstatements|Proportion to net profitattributable to shareholders oflisted company in consolidatedfinancial statements|Annual distributableprofit|
|2013|4,511,798,158.50|10,870,672,842.47|41.50%|11,793,650,274.21|
|2012|3,007,865,439.00|7,379,666,345.09|40.76%|8,814,610,174.42|
|2011|1,503,932,719.50|5,236,938,608.43|28.72%|6,205,484,705.91|

 12. Social responsibilities
The Company actively and voluntarily performed its social responsibilities, effectively protected the lawful rights and interests of all stakeholders, won with its strength recognition
of the enterprise, brand and products from capital market and consumer market and promoted
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 the low-carbon green growth in the industry through various activities. (Please refer to the Social Responsibilities Report for the Year 2013 on www.cninfo.com.cn)
13. Registration form of reception of activities including research, communication and interviews during the report period
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|Time of reception|Place of reception|Method ofreception|Type ofreceptionobject|Reception object|
|8, January, 2013|Conference Room ofthe Company|Field Research|Institution|Guangdong Fuchengwan InvestmentManagement Co., Ltd., Mirae Asset SecuritiesCo., Ltd.|
|14, January, 2013|Conference Room ofthe Company|Field Research|Institution|Zhongshan University Refco Wealth ManagementCenter, CIC Securities Co., Ltd.|
|15, January, 2013|Conference Room ofthe Company|Field Research|Institution|P Investment|
|17, January, 2013|Conference Room ofthe Company|Field Research|Institution|China Universal Asset Management Co., Ltd.|
|18, January, 2013|Conference Room ofthe Company|Field Research|Institution|Guodu Securities Co., Ltd.|
|23, January, 2013|Conference Room ofthe Company|Field Research|Institution|Japan Nikko Asset Management Co., Ltd.|
|24, January, 2013|Conference Room ofthe Company|Field Research|Institution|Harvest Fund Management Co., Ltd.|
|29, January, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Soros Asset Management Co., Ltd.|
|29, January, 2013|Zhuhai|Field Research|Institution|AP Asset Management Co., Ltd., Invesco AssetManagement Co., Ltd., Heqi Investment, YuantaSecurities Investment Trust Co., Ltd., HarvestGlobal Investments Limited, Fidelity WorldwideInvestment Co., Ltd., Barning Asset ManagementCo., Ltd., Manulife Asset Management Co., Ltd.,Hongcheng Capital, SAC, BNP PARIBAS|
|30, January, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|BS AG|
|31, January, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Falcon Edge Asset Management Co., Ltd.|
|1, February, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|GSI Bermuda|
|2, February, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Moore Capital Management|
|27, February, 2013|Conference Room ofthe Company|Field Research|Institution|E Fund Management Co., Ltd., Hengxing AssetManagement Co., Ltd., CITIC Securities Co.,Ltd., Haitong Securities Co., Ltd., StarRockInvestment Management Co., Ltd., RunhuiInvestment Management Co., Ltd., SWS MUFund Management Co., Ltd., Sunshine AssetManagement Co., Ltd., Yinghua FundManagement Co., Ltd., China Southern FundManagement Co., Ltd.|
|28, February, 2013|Conference Room ofthe Company|Field Research|Institution|Harvest Fund Management Co., Ltd.|
|5, March, 2013|Conference Room ofthe Company|Field Research|Institution|Barclays Bank|
|12, March, 2013|Conference Room ofthe Company|Field Research|Institution|Morgan Stanley|
|13, March, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Shin Kong Investment Trust|
|15, March, 2013|Conference Room ofthe Company|Field Research|Institution|China Merchants Securities Co., Ltd.|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
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|19, March, 2013|Conference Room ofthe Company|Field Research|Institution|ZIFF, Tong Shing Securities Co., Ltd., ICBCCredit Suisse Asset Management Co., Ltd.|
|21, March, 2013|Conference Room ofthe Company|Field Research|Institution|UBS Securities Co., Ltd|
|22, March, 2013|Conference Room ofthe Company|Field Research|Institution|China Merchants Securities Co., Ltd., ChinaSouthern Fund Management Co., Ltd., GF FundManagement Co., Ltd.|
|3, May, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|brookside|
|6, May, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|EARNEST Partners, LLC|
|7, May, 2013|Conference Room ofthe Company|Field Research|Institution|Azentus Capital, Imperia InvestmentManagement Co., Ltd, Indus Capital, UGInvestment, Myriad Asset Management Co., Ltd,Farallon Asset Management Co., Ltd, RCM Asia,Morgan Stanley, Azentus Capital|
|8, May, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Credit Suisse Group AG|
|16, May, 2013|Conference Room ofthe Company|Field Research|Institution|Fuhua Securities Investment Trust, Guotai JunanCo., Ltd.|
|21, May, 2013|Conference Room ofthe Company|Field Research|Institution|Zeal Asset Management|
|31, May, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|Tiger Fund|
|4, June, 2013|Conference Room ofthe Company|Field Research|Institution|Citi Bank|
|6, June, 2013|Conference Room ofthe Company|Field Research|Institution|T Rowe Price Rick De Los Reyes, Nordea,Allianz Global, Union Investment, HighlineCapital, China Everbright Assets, Aberdeen AssetManagement, GIC Maria Colangelo, KeywiseSachin Dhir, Amiya Capital Charles Morris,Morgan Stanley|
|19, June, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|ChinaRock|
|20, June, 2013|Shenzhen|Field Research|Institution|China Southern Fund Management Co., Ltd.,PengHua Fund Management Co., Ltd., InvescoGreat Wall Funds, Bosera Fund Management Co.,Ltd., DaCheng Fund Management Co., Ltd., GFFund Management Co., Ltd., First State CindaFund Management Co., Ltd., Harvest FundManagement Co., Ltd, Ashmore Investment Co.,Ltd., Barning Asset Management Co., Ltd., SMCFund, Power Corporation of Canada, KoreaInvestment Trust|
|21, June, 2013|Conference Room ofthe Company|Field Research|Institution|Xinsilu Investment Management Co., Ltd.|
|27, June, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|UBS|
|28, June, 2013|Conference Room ofthe Company|Field Research|Institution|China Asset Management Company Limited|
|2, July, 2013|Conference Room ofthe Company|Field Research|Institution|Fidelity Funds|
|10, July, 2013|Conference Room ofthe Company|Field Research|Institution|Research Works|
|12, July, 2013|Conference Room ofthe Company|Field Research|Institution|Fortune CLSA Securities Limited|
|15, July, 2013|Conference Room ofthe Company|TelephoneCommunication|Institution|BlackRock Funds|
|22, August, 2013|Conference Room ofthe Company|Field Research|Institution|Value Partners, Tybourne capital, Marco PoloPure Asset Management, China InternationalCapital Corporation|
|4, September, 2013|Conference Room ofthe Company|Field Research|Institution|Changjiang Securities Company Limited,Batach-Sophia Investment Management Co.,Ltd., Great Wall Fund Management Co., Ltd.,Runhui Investment Management Co., Ltd., Orient|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||
|-|-|-|-|-|
|||||Securities Company Limited, Chinese InsuranceAsset Management Co., Ltd., First State CindaFund Management Co., Ltd., Yimu AssetManagement Co., Ltd., EVA Eastern Version,TaiKang Asset Management Co., Ltd., GuoSenSecurities Management Co., Ltd., First StateCinda Fund Management Co., Ltd., HuaRongAsset Management Co., Ltd., Broad Capital,ShengTai Investment Management Co., Ltd.,E&B Investment Management Co., Ltd., AXASPDB Investment Managers, MinshengSecurities, Man Sum Investments, ChinaInvestment Securities Management Co., Ltd.,Dongguan Investment Management Co., Ltd.|
|22, August, 2013|Conference Room ofthe Company|Field Research|Institution|Value Partners, Tybourne capital, Marco PoloPure Asset Management, China InternationalCapital Corporation|
|4, September, 2013|Conference Room ofthe Company|Field Research|Institution|Batach-Sophia Investment Management Co.,Ltd., Great Wall Fund Management Co., Ltd.,Changjiang Securities Company Limited, RunhuiInvestment Management Co., Ltd., OrientSecurities Company Limited, Chinese InsuranceAsset Management Co., Ltd., First State CindaFund Management Co., Ltd., Yimu AssetManagement Co., Ltd., EVA Eastern Version,TaiKang Asset Management Co., Ltd., EVAEastern Version, GuoSen Securities ManagementCo., Ltd., First State Cinda Fund ManagementCo., Ltd., HuaRong Asset Management Co., Ltd.,Broad Capital, ShengTai Investment ManagementCo., Ltd., E&B Investment Management Co.,Ltd., AXA SPDB Investment Managers,Minsheng Securities, Man Sum Investments,China Investment Securities Management Co.,Ltd., Dongguan Investment Management Co.,Ltd.|
|20, December,2013|Conference Room ofthe Company|Field Research|Others|PengHua Fund Management Co., Ltd., Client ofPengHua Fund Management Co., Ltd.|
|All the above receptions mainly refer to production and operation and development strategies of the Company, no referencematerials provided.|||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section V Important Events
1. The Company was involved in no major legal action or arbitration during the report period.
2. During the report period, the Company was involved in no non-operating fund occupation by any controlling shareholders and other related parties.
In respect of the occupation of the Company's funds by any controlling shareholders and other related parties of the Company, China Audit Asia Pacific Certified Public Accountants Co., Ltd. issued the Special Description for Occupation of Non-Operation Fund and Transaction of Other Related Fund for the Year 2013 ( Zhong Shen Ya Tai Shen Zi ( 2014) No.010178-1).
3. There were no sale and purchase of assets and merger and acquisition of the Company during the report period.
4. Major related party transactions of the Company during the report period
|||||||||
|-|-|-|-|-|-|-|-|
|Related parties|Relatedrelationship|Type ofrelatedtransactions|Contents ofrelatedtransactions|Relatedtransactionpricingprinciples|Amount of relatedtransactions(10 thousand yuan)|Proportion toamount ofsimilartransaction|Settlement ofrelatedtransactions|
|Zhejiang Sheng ShiXin Xing GREETrading Co., Ltd.|The companyin which theCompany’sdirectorserves asgeneralmanager|Sales ofcommodities|Salesrevenue|Marketprice|637,061.77|5.31%|Paymentbeforedelivery|
|Henan Sheng ShiXin Xing GREETrading Co., Ltd.|The companyin which theCompany’ssupervisorserves asgeneralmanager|Sales ofcommodities|Salesrevenue|Marketprice|853,354.78|7.11%|Paymentbeforedelivery|
|Total||||--|1,490,416.55|--|--|

 5. The Company was involved in no trusteeship, contracting and lease of assets of other companies during the report period.
6. The Company was involved in no major external securities during the report period. 7. During the report period, the Company did not entrust others to execute any cash
asset management.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 8. The Company or shareholders holding more than5% of total stocks of the Company did not disclose any commitments in public during the report period.
9. Engagement and disengagement of accounting firm and payment of remuneration On 20 May 2013, the Re-engaging China Audit Asia Pacific Certified Public Accountants Co., Ltd. as the Company's Audit Institution in 2013 was deliberated and passed at the general meeting of shareholders in 2012 which was convened by the Company, in which China Audit Asia Pacific Certified Public Accountants Co., Ltd. was re-engaged as the Company's Audit Institution in 2013. The amount of remuneration paid for the audit in 2013 by the Company to the accounting firm was RMB 3.1 million (excluding travel expenses). China Audit Asia Pacific Certified Public Accountants Co., Ltd. will render the Company the audit services for 11 consecutive years.
10. The Company and its directors, supervisors, senior management personnel, controlling shareholders and actual controllers were not subject to any inspection, administrative penalty, or public criticism from CSRC or any public censure from the Stock Exchanges during the report period.
||||
|-|-|-|
|Name of shareholder holding morethan 5% of total stocks|Amount of recovered incomes from suspected illegalpurchase and sale of the Company's stocks|Time of recovery|
|Hebei Jinghai Guaranteed InvestmentCo. , Ltd.|RMB 138,968.00|10 December 2012|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section VI Changes in Stock Capital& Information of
Shareholders
1. Changes in stock capital
Unit: Stocks
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Increase/Decrease (+, -)|||||After the change||
||Number|Percentage (%)|New Issue|BonusIssue|StockConvertedfromReserve|Others|Subtotal|Number|Percentage (%)|
|1. Stockswithtradingrestrictionconditions|21,653,875|0.72%||||||21,653,875|0.72%|
|Stocks heldby seniormanagement personnel|21,653,875|0.72%||||||21,653,875|0.72%|
|2. TradableStockswithouttradingrestrictionconditions|2,986,211,564|99.28%||||||2,986,211,564|99.28%|
|RMBordinarystocks|2,986,211,564|99.28%||||||2,986,211,564|99.28%|
|3. Total ofstocks|3,007,865,439|100%||||||3,007,865,439|100%|

2. Issuance and listing of stocks
(1) Issuance of stocks in the last three years
According to the Approval Regarding Issuance of Additional Stocks by GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (Zheng Jian Xu Ke[2011] No. 1500) from CSRC, the Company issued in public 189,976,689 stocks at the price of RMB 17.16 per stock in 2012, and total amount of raised funds was RMB 3,259,999,983.24, from which the issuance cost of RMB 64,712,976.37 was deducted, the net amount of raised funds was RMB 3,195,287,006.87. Upon approval of Shenzhen Stock Exchange, these additional stocks issued by the Company had a total of 189,976,689 stocks, and they were listed on 3 February 2012. (2) Existence of no internal employee stock in the Company.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (3) Information of shareholders
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Total number of shareholdersat the end of the Report Period||58,820||Total number of shareholdersat the end of the 5th tradingday before disclosure date ofthe annual report||||81,556|||
|Shareholding of the shareholders holding more than 5% of total stocks or the top 10 shareholders|||||||||||
|Name ofshareholders|Nature ofshareholders|ShareholdingProportion (%)|Total numberof the stocksheld at the endof the ReportPeriod|Increase/Decrease in theReport Period||Number of thetradingunrestrictedstocks held||Pledge or Freezing|||
|||||||||Stock status|Number||
|Zhuhai GreeGroup Co.,Ltd.|State-ownedlegal person|18.22%|548,127,812|0||548,127,812||Pledged|464,073,750||
|Hebei JinghaiGuaranteedInvestmentCo., Ltd.|Domesticnon-state-owned legalperson|8.46%|254,429,476|0||254,429,476|||||
|Shareholding of the top 10 shareholders|||||||||||
|Name of shareholders|||||Number of thetradingunrestrictedstocks held at theend of the ReportPeriod||Type of stocks||||
||||||||Type of stocks|||Number|
|Zhuhai Gree Group Co., Ltd.|||||548,127,812||RMB ordinarystocks|||548,127,812|
|Hebei Jinghai Guaranteed Investment Co. , Ltd.|||||254,429,476||RMB ordinarystocks|||254,429,476|
|MERRILL LYNCH INTERNATIONAL|||||83,021,345||RMB ordinarystocks|||83,021,345|
|MORGAN STANLEY & CO. INTERNATIONAL PLC|||||68,006,010||RMB ordinarystocks|||68,006,010|
|CITIGROUP GLOBAL MARKETS LIMITED|||||64,481,719||RMB ordinarystocks|||64,481,719|
|YALE UNIVERSITY|||||63,822,993||RMB ordinarystocks|||63,822,993|
|UBS AG|||||42,770,854||RMB ordinarystocks|||42,770,854|
|Industrial & Commercial Bank of China -E Fund Value Growth MixedSecurities Investment Fund|||||42,588,601||RMB ordinarystocks|||42,588,601|
|Zhuhai Gree Real-Estate Co., Ltd.|||||34,452,437||RMB ordinarystocks|||34,452,437|
|Industrial & Commercial Bank of China - GF Jufeng Stock-SecuritiesInvestment Fund|||||33,900,000||RMB ordinarystocks|||33,900,000|
|Description for affiliated relationship or concerted action among the top10 shareholders holding tradable stocks without trading restrictionconditions and between the top 10 shareholders holding tradable stockswithout trading restriction conditions and the top 10 shareholders|||||Zhuhai Gree Real-Estate Co., Ltd. is a grandsoncompany of Zhuhai Gree Group Co., Ltd.||||||
|Description for the participation in margin trading business of the top 10shareholders (If any)|||||None||||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (4) Information of the controlling shareholders of the Company
|||||||
|-|-|-|-|-|-|
|Name|Legalrepresentative/Person in charge|Date ofestablishment|Organizationcode|Registeredcapital (tenthousandyuan)|Principal business|
|Zhuhai Gree Group Co.,Ltd.|Dong Mingzhu|15 December,1990|19253718-6|80,000|Investment and assetmanagement; enterprisemanagement service,enterprise planning; otherbusiness services (excludingany licensed business items)|
|Operating results, financialposition, cash flows andfuture development strategy|GREE Group is acclaimed as one of the present largest and most powerful enterprise groups inthe state-owned enterprises of Zhuhai city. Resorting to a global vision and an insightful mind,GREE Group has implemented the development pattern of “Group Diversification andSubsidiaries Specialization” and has formed a comprehensive development pattern with modernmanufacturing, real estate development and island tourism development businesses. GREEGroup has exerted efforts on asset securitization, brand internationalization as well as industrialscale magnification and promoted itself as an internationally leading enterprise of strong corecompetitiveness, independent intellectual property and advanced management so as to take aplace in the world’s top 500 list. As estimated, the Company won an operating revenue of 123billion increasing 20.04% over previous year and a gross profit of 10.9 billion increasing43.81% over previous year in the year 2013. Besides, GREE Group has undertaken artificialislands reclamation project for the Hong Kong-Zhuhai-Macao Bridge and upper Zhuhai portproject and invested in China Aviation Industry General Aircraft Co., Ltd. and other governmentprojects.|||||
|Information regardingholding equity interests ofother domestic and oversealisted companies bycontrolling shareholdersduring the Report Period|Gree Group directly holds 51.94% of total stocks of Gree Real Estate Co., Ltd. except for that ofthe Company.|||||

(5) Diagram of relationship of shareholding and control between the Company and its actual controller:
Zhuhai Municipal State-owned Assets Supervision and Administration Commission
100%
Zhuhai Gree Group Co., Ltd.
51.94%
Gree Real Estate Co., Ltd.
18.22%
100%
Zhuhai Gree Real-Estate Co., Ltd.
1.15%
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section VII Directors, Supervisors, Senior Management Personnel and Employees
1. Shareholding changes of directors, supervisors, senior management personnel
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Name|Title|Tenurestatus|Gender|Age|Commencement of termof office|Terminationof term ofoffice|Stocks held atthe beginning ofthe Period(Stocks)|Stocks reducedduring thePeriod (Stocks)|Stocks held atthe end of thePeriod (Stocks)|
|HuangHui|Director,VicePresidentand ChiefEngineer|Incumbent|M|50|25, May,2012|25, May,2015|3,847,500|160,000|3,687,500|
|ZhuangPei|VicePresident|Incumbent|M|49|25, May,2012|25, May,2015|3,227,601|250,000|2,977,601|
|Total|--|--|--|--|--|--|7,075,101|410,000|6,665,101|

 During the Report Period, there were no changes in the number of stocks held by the incumbent directors and senior management personnel, and the specific shareholding is as follows:
||||||||
|-|-|-|-|-|-|-|
|Name|Title|Gender|Age|Commencement of termof office|Termination of term ofoffice|Stocks held atthe beginningof the Period orheld at the endof the Period(Stocks)|
|DongMingzhu|Chairman & President|F|59|25, May, 2012|25, May, 2015|21,148,846|
|Lu Junsi|Director|M|48|25, May, 2012|25, May, 2015|0|
|ZhangJundu|Director|M|53|25, May, 2012|25, May, 2015|0|
|Feng Jiyong|Director|M|42|25, May, 2012|25, May, 2015|0|
|Qian Aimin|Independent Director|M|43|25, May, 2012|25, May, 2015|0|
|ZhuHengpeng|Independent Director|M|44|25, May, 2012|25, May, 2015|0|
|HeXiaoyong|Independent Director|M|41|25, May, 2012|25, May, 2015|0|
|Xu Chuzhen|Chairman of Board ofSupervisor|M|55|24, September, 2013|25, May, 2015|0|
|GuoShuzhan|Supervisor|M|57|25, May, 2012|25, May, 2015|0|
|Xu Peng|Staff Supervisor|M|34|25, May, 2012|25, May, 2015|0|
|WangJingdong|Vice President, FinanceChief, Board Secretary|M|43|25, May, 2012|25, May, 2015|647,888|
|Chen Weicai|Vice President|M|41|3, September,2013|25, May, 2015|0|
|Chen Hui|Chairman of Board ofSupervisor|M|42|25, May, 2012|24, September, 2013|0|
|Total|--|--|--|--|--|21,796,734|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2. Positions of directors, supervisors and senior management personnel
(1) Main work experience of incumbent directors, supervisors and senior management personnel
○ Ms. Dong Mingzhu, Chairman& President
She has served as president of the Company since April 2001; she has served as chairman of the Company since May 2012.
Since she joined the Company in 1990, she has served as business manager, vice director and director of Sales Department, manager, vice general manager, general manager and vice chairman of sales company; At present, she concurrently serves as chairman of Gree Group, Gree Hefei, Gree Wuhan, and Gree Zhengzhou; Since August 2012, she has served as non-executive director of Kingdee International Software Group Company Limited; She consecutively served as deputy to the tenth, eleventh and twelfth National People's Congresses and concurrently serves as a member of the Central Committee of China Democratic National Construction Association and the tenth Executive Committee of the All-China Women's Federation, vice chairman of China Home Appliances Association, director of Board of Directors China Social Economic Investigation Research Center, member of Executive Committee of Guangdong Provincial Women's Federation, vice chairman of Guangdong Province Association of Women Entrepreneurs, chairman of Zhuhai Municipal Association of Women Entrepreneurs and honorary president of Zhuhai Red Cross Society. She was successively engaged by Northwest University, College of Management National Sun Yat-sen University and Shandong University as part-time professor, engaged by School of Management, Nanjing University of Technology as "MBA off-campus tutor", and engaged by School of Management, University of Science and Technology of China as MBA "Course Professor". She was engaged by Beijing Normal University Zhuhai Campus and University of International Business and Economics as visiting professor, part-time professor of Zhongnan University of Economics and Law and member of MBA Education Advisory Committee, engaged by School of Entrepreneurship& Innovation, SJTU as member of Advisory Committee of Strategic Experts, engaged by Guangdong Provincial Government as entrepreneurs consultant, member of government decision-making advisory committee and
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 engaged by Hefei municipal government as (household electric appliances) industrial development consultant, etc.
○ Mr. Lu Junsi, Director
He has served as director of the Company since May 2006. He has served as chairman and vice president of Zhuhai Gree Group Co., Ltd from January 2004. He has served as vice chairman from May 2012. He has served as chairman (concurrently as general manager since November 2009) of Gree Real Estate Co., Ltd. since June 2008. He has served as director of China Civil Engineering Society, executive vice president of Guangdong Provincial Real Estate Association and standing committee member (concurrently as vice director of Economic Affairs Committee) of the 8th CPPCC National Committee of Zhuhai city.
○ Mr. Huang Hui, Director, Vice President, Chief Engineer
Since August 2000, he has served as vice president of the Company; since May 2007, he has served as chief engineer of the Company; since May 2012, he has served as director of the Company, and concurrently as chairman of Zhuhai Gree Dakin Device Co., Ltd., director of Chinese National Engineering Research Center of Green Refrigeration Equipment, vice president of Guangdong Provincial Institute of refrigeration, vice chairman of Guangdong Light Industry Association, deputy director of editorial board of Electrical Appliances, expert of Guangdong Province Science and technology Consultant Experts, member of Zhuhai municipal Mayor Quality Award Evaluation Committee, director of China Light Industry Federation, vice president of Chinese Association of Refrigeration, member of Commission B2 of the International Institute of Refrigeration, editorial board member of Journal of refrigeration, vice chairman of the National Standardization Technical Committee and part-time instructor of School of Energy and Power Engineering of Huazhong University of Science and Technology.
○ Mr. Zhang Jundu, Director
Since September 1999, he has served as chairman of Zhejiang Tongcheng Gree Electric Appliances Co., Ltd. From November 2004, he has served as chairman of Zhejiang Gree Home Appliances Sales Co., Ltd. Since August 2012, he has concurrently served as general manager of Zhejiang Shengshi Xinxing Gree Trading Co., Ltd. Since May 2012, he has served as director of the Company.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013○ Mr. Feng Jiyong, Director
Since 2007, he has been a partner of Beijing Zhong Lun Law Firm. Since May 2012, he has served as director of the Company. He now serves as member of the All-China Lawyers Association, member of Beijing Lawyers Association and concurrently as deputy director of Private Equity and Venture Investment Committee of Beijing Lawyers Association, secretary general of Renmin University of China Gaoli Institute and visiting professor of Renmin University of China Law School.
○ Mr. Zhu Hengpeng, Independent Director
Since July 2006, he has served as researcher (professor) of Institute of Economics of the Chinese Academy of Social Sciences and doctoral supervisor. Since January 2009, he has served as head of microeconomic research room of Institute of Economics of the Chinese Academy of Social Sciences and director of the center for public policy research. Since June 2008, he has served as independent director of the Company.
○ Ms. Qian Aimin, Independent Director
Since July 2000, she has been teaching in the University of International Business and Economics. She now serves as professor of accountancy and doctoral supervisor in the University of International Business and Economics International Business School. Since June 2008, she has served as independent director of the Company. Since May 2010, she has successively served as independent director of Zhejiang IDC Fluid Control Co., Ltd., Land Ocean Energy Services Co., Ltd., Minsheng Investment Management Co., Ltd. and Xinjiang Tebian Electric Apparatus Stock Co., Ltd.
○ Mr. He Xiaoyong, Independent Director
Since March 2006, he has been a professor and doctoral supervisor of International Economic Law in East China University of Political Science and Law. Since 2012, he has served as library director in East China University of Political Science and Law. Since May 2008, he has served as independent director of Jiangsu Tongda Power Technology Co., Ltd. Since April 2009, he has served as independent director of Bluedon Information Security Technology Co., Ltd. Since May 2009, he has served as independent director of the Company.○ Mr. Xu Chuzhen, Chairman of Board of Supervisors
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 From 1999 to May 2011, he served as managing director of League Stock Co., Ltd. From 2002 to June 2011, he served as managing director and vice chairman of Zhuhai League Environmental Protection Co., Ltd. From August 2009 to June 2011, he served as chairman of Zhuhai League Investment Co., Ltd. From May 2011 to August 2011, he served as vice chief engineer of Zhuhai Water Group Co., Ltd. Since September 2011, he has served as full-time director and supervisor of Zhuhai SASAC. Since May 2012, he has served as chief supervisor of zhuhai Port Holdings Co., Ltd and chairman of board of supervisors of Zhuhai Port Co., Ltd.. Since May 2011, he has served as director of Zhuhai League Stock Co., Ltd. Since September 2013, he has served as chairman of board of supervisors of the Company.
○ Mr. Guo Shuzhan, Supervisor:
Since August 2006, he has served as chairman of Hebei Jinghai Guaranteed Investment Co., Ltd. Since August 2012, he has served as general manager of Henan Shengshi Xinxing Gree Trading Co., Ltd. From May 2012 up to now, he has served as supervisor of the Company.
○ Mr. Xu Peng, Staff Supervisor:
From March 2007 to June 2009, he served as assistant factory manager and person in charge of No.4 AC Manufacturing Factory of the Company. From June 2009 to October 2012, he served as deputy head of HR Department of the Company. From October 2012 up to now, he served as deputy director of No.1 AC Manufacturing Factory of the Company. Since April 2013, he has served as vice chairman of Gree Trade Union Committee (concurrent). Since July 2010, he has served as staff representative supervisor.
○ Mr. Zhuang Pei, Vice President
From 2002 to April 2003, he served as assistant president of the Company. From April 2003 up to now, he has served as vice president of the Company.
○ Mr. Wang Jingdong, Vice President, Finance Chief, Board Secretary
From November 2002 to April 2006, he served as head of financial department, head of purchase department and chief of Audit Department. From April 2006 to September 2009, he served as assistant president of the Company. From January 2008 up to now, he served as finance chief of the Company. From July 2009 up to now, he served as board secretary of the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Company. From October 2009 up to now, he has served as vice president, finance chief and board secretary of the Company.
○ Mr. Chen Weicai, Vice-President
From July 1993 to April 2008, he served as clerk, staff member, senior staff member, deputy director and director of Huale Police Station in Dongshan District (Yuexiu District) of Bureau of Public Security in Guangzhou. From July 2005 to April 2008, he served as deputy secretary (concurrent) of Huale Street Party Committee in Dongshan District (Yuexiu District) in Guangzhou. From April 2008 to July 2013, he served as deputy director and director of personnel department of Bureau of Public Security in Guangzhou. From October 2008 to February 2012, he served as direction of office of GuangzhouPolice’s Foundation (concurrent). Since September 2013, he has served as vice-president of the Company.
(2) Information of positions of incumbent directors and supervisors in shareholders:
|||||||||
|-|-|-|-|-|-|-|-|
||Name||Name of Shareholder||Position||Term of Office|
|DongMingzhu||Zhuhai Gree Group Co., Ltd.||Chairman & legal representative||From May 2012 up to now||
|Lu Junsi||Zhuhai Gree Group Co., Ltd.||Vice chairman||From May 2012 up to now||
|||Zhuhai Gree Real-Estate Co., Ltd.||Chairman & legal representative||From September 2006 upto now||
|GuoShuzhan||Hebei Jinghai Guaranteed InvestmentCo., Ltd.||Chairman & legal representative||From August 2006 up tonow||

3. Remuneration of directors, supervisors and senior management personnel
(1) Decision making procedures regarding the remuneration of directors, supervisors and senior management personnel and basis to determine their remunerations.
The Board of Directors of the Company laid down the Trial Measures for Annual Salary System of Managers, and the annual salary includes basic post salary and incentive salary. The Board of Directors will, based on the operating performance of the Company, determine the remuneration payable to the managers in accordance with the Trial Measures for Annual Salary System of Managers. The incumbent directors and supervisors shall be treated as the managers to receive their remunerations, and the directors and supervisors who assume no other positions in the Company shall receive no remunerations from the Company.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Remunerations received by directors, supervisors and senior management personnel from the Company during the Report Period:
||||
|-|-|-|
|||Total remuneration received from the|
|Name|Title||
|||Company|
|Dong Mingzhu|Chairman & President|4.99 million|
|Huang Hui|Director, Vice President & Chief Engineer|4.19 million|
|Zhu Hengpeng|Independent Director|0.12 million|
|Qian Aimin|Independent Director|0.12 million|
|He Xiaoyong|Independent Director|0.12 million|
|Xu Peng|Staff Supervisor|0.52 million|
|Zhuang Pei|Vice President|2.36 million|
|Wang Jingdong|Vice President, Finance Chief, Board Secretary|2.1 million|
|Chen Weicai|Vice President|0.182 million|
|Total||14.702million|

4. Elected and retired directors and supervisors, and appointment or removal of senior management personnel during the Report Period
During the Report Period, chairman of board of supervisors Chen Hui resigned due to job removal. Xu Chuzhen was elected as supervisor of the ninth session of board of supervisors.
5. Change of the core technical team or key technical personnel (other than directors, supervisors and senior management personnel) during the Report Period
During the Report Period, the Company's core technical team or key technical personnel (other than directors, supervisors and senior management personnel) that have substantial influence on the core-competitiveness of the Company remained stable.
6. Employees of the Company
As of 31 December 2013, the Company had 72,150 on-the-job employees.
(1) Formation of employees' specialties:
||||
|-|-|-|
|Formation of specialties|Number of Employees|Proportion|
|Manufacturing Personnel|61,904|85.80%|
|Scientific Researchers|5,729|7.94%|
|Administrative Personnel|3,162|4.38%|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Marketing Personnel 926 1.28%
||||
|-|-|-|
|Financial Personnel|429|0.59%|
|Total|72,150|100.00%|

Marketing Personnel Formation of specialties
1.28%
Administrative Personnel
Financial Personnel
4.38%
0.59%
Scientific Researchers
7.94%
Manufacturing Personnel
Scientific Researchers
Administrative Personnel
Marketing Personnel
Financial Personnel
Manufacturing Personnel
85.80%
(2) Education level:
||||
|-|-|-|
|Education level|Number of employees|Proportion|
|College Degree/Technical Secondary School Education|41,036|56.88%|
|Bachelor Degree|9,503|13.17%|
|Master Degree or above|496|0.69%|
|Others|21,115|29.27%|
|Total|72,150|100.00%|

Education Level
Others
29.27%
College Degree/
Master Degree
Technical Secondary
or above
School Education
0.69%
56.88%
Bachelor Degree
13.17%
College Degree/Technical
Bachelor Degree
Master Degree
Others
Secondary School Education or above
(3) The retirees requiring the Company to bear costs has a total of 237 persons.
(4) Employee remuneration policy
The Company provides employees with competitive salary level in the industry and
region according to the macroeconomic environment and its business benefits. Besides, the
Company established standardized and systematized salary management system in accordance
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 with the national laws and regulations and actual conditions of the enterprise to provide a guarantee for obtaining legal and due labor remuneration by employees. Moreover, the Company set up double track occupational development mechanism to offer the personnel who are competent and have good performance multi-ways occupational development path and comprehensively built the employing mechanism attracting, retaining and inspiring talents.
(5) Employee training plan
Through the three-level training organization with company level, department branch level and administrative office team level to build up a professional team with about one hundred members committing to training management. By supervising, guiding and following up level-by-level to ensure the normal operation of the company's training system and gradually form a unique training system. The following training works will be executed in 2013:
1. The training target will achieve100% coverage in 2013 with all employees taking part in the training and more than 10,500 trainings of various types will be implemented.
2. Enhance development and management of internal lecturer team. Throughout the year, internal lecturers of the Company will conduct 14 trainings per person, with the teaching hour exceeding 23 hours per person, accounting for more than60% of the annual training volume. The average satisfaction rate of participants reaches91.8%. Meanwhile, develop and complete 12 categories of courses including technology research and development, financial costs, human administration, operations, marketing service, professionalism and team management.
3. Build a practical training base for the new front-line staff. The base covers an area of 2,700 square meters and completes practical operation training of nearly 4.500 employees in the year it is put into use.
4. Develop “Dreaming Gree College Training Camp Plan” with “6-1-3” training model as the core, providing a systematic training mechanism for different growth requirements and characteristics of students during their probationary period, novitiate period and early career development period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 5. Carry out team leader training and cultivation project, organize and implement twoperiods’ intensive training class and twoperiods’ enhanced training class to comprehensively enhance teamleader’s management ability and to create cadres of team leaders adapting to strategic needs of Gree Electric Appliances' development.
6. Open professional development channels and implement grading for skilled talents. Complete grading for 11 job categories and nearly 3000 skilled talents at the first batch.
7. Organize and implement trainings for middle management cadres, hold over 65 trainings on various specialties and management with more than 2500 trainees throughout the year.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section VIII Corporate Governance
1. Basic conditions of corporate governance
In strict accordance with the Company Law, Securities Law and other relevant national laws and regulations and Instructions on Standardized Operation of Companies Listed on the Main Board of Shenzhen Stock Exchange, the Company establishes normative corporate governance structure and rules of procedure for the General Meeting of Shareholders, Board of Directors and Board of Supervisors, clarifies the responsibilities and authorities in decision-making, performance and supervision, forms effective division of responsibilities and balance mechanism, continuously promotes the level of normal operation and safeguards the interests of investors and the Company.
The corporate governance conforms to the Company Law and requirements of CSRC for governance of listed companies.
During the Report Period, the Company amended the Articles of Association, Rules of Procedure of the Board of Directors and Working System of Independent Director.
During the Report Period, the Company can disclose the true, accurate, complete and timely information in strict accordance with the laws, regulations, Articles of Association and Administrative Measures on External Information Disclosure. Besides, the Company does well in information management and in particular the standard management of inside information in strict compliance with the Information Management Method, Measures for the Confidentiality Management of the Company, Internal Reporting System of Significant Information and Reporting and Filing System of Insiders of Inside Information so as to practically avoid disclosure of inside information and occurrence of insider trading behavior.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2. Convening of the general meeting of shareholders during the Report Period
(1) Annual general meeting of shareholders
|||||||
|-|-|-|-|-|-|
|Session ofmeeting|Date ofmeeting|Name of proposals|Resolution|Date ofdisclosure|Disclosure index|
|Annualgeneralmeeting ofshareholdersfor the year2012|20 May 2013|Work Report of the Board of Directors forthe Year 2012, Work Report of the Board ofSupervisors for the Year 2012, FinancialReport for the Year 2012, Annual Report forthe Year 2012 and its Summary, ProfitDistribution Plan for the Year 2012,Re-engaging China Audit Asia PacificCertified Public Accountants Co., Ltd. asthe Company's Audit Institution in 2013,Special Report for Foreign ExchangeTransactions of the Company in 2013,Proposal on Daily Related Transactions in2013, Amendment of Articles ofAssociation, Rules of Procedures of theBoard of Directors (Amendment), SpecialReport for conduct Bill Pool Business|All passed|21 May 2013|Announcement onResolutions of theGeneral Meeting ofShareholders forthe Year 2012published onwww.cninfo.com.cn|
||||||(2013-12)|

(2) Interim general meeting of shareholders
|||||||
|-|-|-|-|-|-|
|Session of Meeting|Date ofMeeting|Name of Proposals|Resolution|Date ofDisclosure|Disclosure Index|
|The first temporarygeneral meeting ofshareholders for theyear 2013|24 September2013|Proposal on By-election ofthe Ninth Supervisor|All passed|25 September2013|Announcement on Resolutionsof The first temporary generalmeeting of shareholders for theyear 2013 published onwww.cninfo.com.cn (2013-22)|

 3. Performance of duties by independent directors during the Report Period
(1) Attendance of independent directors at meetings of the Board of Directors
|||||||
|-|-|-|-|-|-|
|Name|Number ofMeetings RequiringAttendance|Attendance in Person(Times)|Attendance on site(Times)|Attendance viaCommunications(Times)|Attendance byProxy(Times)|
|Zhu Hengpeng|6|6|1|5|0|
|Qian Aimin|6|6|1|5|0|
|He Xiaoyong|6|6|1|5|0|
|Number of Attendance of Independent Directors at the General Meetings ofShareholders||||1|0|

(2) Objection raised by independent directors to relevant issues of the Company
Within the Report Period, no objection has been raised by any independent directors of the Company to the proposals of board meetings and other issues this year.
(3) Other descriptions for performance of duties by independent directors
Within the Report Period, the independent directors of the Company were able to act in
the best interest of the Company and its shareholders, faithfully perform their own duties in
accordance with the relevant provisions, attend the meetings of the Board of Directors, review
and discuss various proposals carefully, fully express their suggestions and opinions for the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 operation and management of the Company, play an active role in making correct decisions, improving management level and standardizing business operations by the Board of Directors of the Company, and practically safeguarding the interests of minority stock holders.
4. Performance of duties by special committees under the Board of Directors during the Report Period
(1) Performance of duties by audit committee under the Board of Directors
According to the Rules of Procedure of Audit Committee, the audit committee was mainly responsible for communication, supervision and check for internal and external audits: 1). The audit committee carried out full communications with the accounting firm responsible for the annual audit of the Company in respect of audit plan, engagement letter and risk and control, etc.
2). Before the annual audit certified public accountants accessed to the site, the audit committee reviewed the preliminarily prepared financial statements of the Company and held that these statements reflected the present financial position of the Company in all major aspects.
3). After the annual audit certified public accountants issued preliminary opinions, the audit committee reviewed financial statements of the Company, communicated with the accounting firm in respect of material particulars and significant accounting estimates, audit adjustments and significant accounting policies which might have potential influence on the financial statements and held that the financial statements of the Company gave a true, accurate and complete view of the whole position of the Company and agreed to prepare the annual report for the year 2013 on the basis of these financial statements.
4). The audit committee reviewed the financial statements for the year 2013 which had been audited by the auditors and held that these financial statements gave a fair view of the financial position of the Company ended 31 December 2013 and operating results and cash flows for the year 2013 in all major aspects and agreed to submit them to the Board of Directors for deliberation.
5). The audit committee summarized and evaluated the audit work for this year as done by China Audit Asia Pacific Certified Public Accountants Co., Ltd. and held that the annual
audit certified public accountants performed their audit work in strict accordance with the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Independent Auditing Standards for Chinese Certified Public Accountants and suggested the Company re-engage China Audit Asia Pacific Certified Public Accountants Co., Ltd. as the audit institution for the year 2014.
(2) Performance of duties by the remuneration and appraisal committee under the Board of Directors
The remuneration and appraisal committee under the Board of Directors carried out the work in accordance with the Rules of Procedure of the Remuneration and Appraisal Committee, reviewed the annual remunerations disclosed by the directors, supervisors and senior management personnel of the Company according to the Trial Measures for Annual Salary System of Managers, and upon review held that the annual remunerations disclosed by the directors, supervisors and senior management personnel of the Company were consistent with those received actually by them from the Company. The remunerations of the directors, supervisors and senior management personnel of the Company were paid according to the provisions for wages management of the Company.
(3) Nomination committee
The nomination committee under the Board of Directors carried out the work in accordance with the Rules of Procedure of the Nomination Committee, during the Report Period, it deliberated the proposals on appointment of senior management personnel and checked the qualifications of related persons.
5. Work of the Board of Supervisors
During the Report Period, the Board of Supervisors of the Company carefully performed the duties as stated in the Articles of Association, fully played the functions of supervision, carried out the check of the Company's operation and implementation of internal rules and regulations and supervised the performance of duties by the directors, supervisors and senior management personnel of the Company; The Board of Supervisors of the Company did not find any risks existing in the Company in the supervisory activity and had no objection to the supervision.
During the Report Period, the Board of Supervisors convened six meetings, for the details of the relevant work, please refer to the Work Report of the Board of Supervisors for
the Year 2013 as released by the Company on www.cninfo.com.cn.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 6. Separation of business operation, personnel, assets, organization and finance between the Company and controlling shareholder
The Company has a sound corporate governance structure and completely separates from Gree Group as the controlling shareholder in business operation, personnel, assets, organization and finance, and the Company has independent and complete business operation and independent management capability.
7. There was no horizontal competition between the Company and Gree Group as the controlling shareholder
8. Establishment and implementation of performance review and incentive mechanism and incentive system for senior management personnel
Within the Report Period, the Board of Directors of the Company conducted the performance review of the achievements and performance of duties of the senior management personnel and implemented the assignment assessment system regarding the working results in ethic, competence, diligence and achievement. The Company adhered to the principle of rationality, fairness and justice and laid emphasis on combination of material incentive and spiritual incentive. As for the material incentive, the Company paid attention to reasonably controlling reward grade and properly opening the reward gap and emphasized the time and frequency of reward. As for the spiritual incentive, the Company paid attention to combining the corporate objectives with the spirit of dedication, sense of social responsibility and career achievement of the senior management personnel.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section IX Internal Control
1. Construction of internal control
According to the Basic Rules for Internal Control of Enterprises and its ancillary guidance issued by five ministries including the Ministry of Finance and Audit Commission, on the basis of successful integration and effective operation of the quality management system, occupational health and safety management system, environmental management system, restricted substance management system and consumer management system, effectively combining the excellent performance management model implemented by the Company for many years and integrating the implementation of the internal control standards and promotion of the internal management level, the Company established sound internal control management system and elaborated the monitoring of key control activities for the business processes. The relevant control policies and procedures established by the Company mainly include the controlling over separation of incompatible duties, trading authorization and approval, accounting system, asset protection, budget, operation analysis and performance review.
According to the risk-oriented principle, the Company determines main institutes, business, items as well as high-risk fields incorporated in evaluation scope. Main institutes incorporated in evaluation scope include parent company and its subsidiaries. Total assets of institutes incorporated in evaluation scope account for99% that of theCompany’s consolidated financial statements and operating revenue account for99% that ofcompany’s consolidated financial statements.
2. Statement of the Board of Directors concerning internal control responsibility
The Company's Board of Directors has considered and approved the Self-evaluation Report on Internal Control for the Year 2013, and the Company's Board of Directors and all directors guarantee that there are not any false records, misleading representations or material omissions in this self-evaluation report, and shall take all the joint and several responsibilities for the authenticity, accuracy and completeness of the contents hereof.
Establishing and perfecting the internal control systems and effectively implementing them are the responsibilities of the Board of Directors of the Company; the Board of
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Supervisors carries out the supervision for the establishment and implementation of the internal control systems by the Board of Directors; the manager is responsible for daily operation of the internal control systems.
The Company's internal control systems aim at reasonably ensuring the legality and compliance of the operation and management of the Company, assets safety, authenticity and completeness of financial report and relevant information, improving the efficiency and effectiveness of operation and realizing the development strategy of the Company. Owing to the inherent limitations of the internal control systems, the Company can only provide reasonable guarantee for achieving the above objectives. The effectiveness of the internal control systems might change with the internal and external environment and business operations of the Company, once any defects in the internal control systems are discovered during the operation of the inspection and supervision mechanism of the internal control of the Company, the Company will immediately take rectification measures to ensure the internal control systems free from significant omissions.
3. Basis to establish the internal control systems as to financial report
The Company has set up internal control systems with respect to financial report based on the Company Law, Accounting Law, Code of Corporate Governance for Listed Companies in China, Basic Rules for Internal Control of Enterprises and its ancillary guidance, Internal Accounting Control Standard issued by the Ministry of Finance, Instructions on Standardized Operation of Companies Listed on the Main Board of Shenzhen Stock Exchange and the Circular concerning Properly Handling the Internal Control Regulations of Listed Companies from Guangdong Securities Regulatory Bureau.
4. Evaluation Report on Internal Control
On 25 April 2014, the Company released the Evaluation Report on Internal Control for the Year 2013 on www.cninfo.com.cn. During the Report Period, the Company established the internal control systems for the businesses and items included within the scope of evaluation and enabled it to be effectively implemented and achieve the objective of the internal control of the Company without major defects.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 There were no major changes in the internal control systems that might have substantial influence on the evaluation conclusion from the base date of the self-evaluation report on internal control to the date of sending out such report.
5. Audit Report on Internal Control
China Audit Asia Pacific Certified Public Accountants Co., Ltd. reviewed the recognition of effectiveness of the internal control systems of the Company ended 31 December 2013 and issued the Audit Report on Internal Control Zhong Shen Ya Tai Shen Zi (2014) No. 010178-2. Gree Electric Appliances has maintained effective internal control of the financial report ended 31 December 2013 in all major aspects in accordance with the Basic Rules for Internal Control of Enterprises and other relevant provisions. This report was published on www.cninfo.com.cn dated 25 April 2014.
6. Establishment and implementation of the system of accountability for significant errors in the disclosure of annual report
The Company formulated the System of Accountability for Significant Errors in the Disclosure of Annual Report which detailedly standardized the recognition of significant errors in the disclosure of annual report of the Company and procedures, forms and types of accountability.
During the Report Period, there were no corrections of significant accounting errors, supplement of major missing information and corrections of performance announcement.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section X Financial Report
1. Audit report
Zhong Shen Ya Tai Shen Zi (2014) No. 010178 All shareholders of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI:
We have audited the accompanying financial statements of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "GREE ELECTRIC APPLIANCES"), including the consolidated and parent company's balance sheets ended 31 December 2013 and consolidated and parent company's income statements, consolidated and parent company's cash flow statements and consolidated and parent company's statements of changes in owners' equity and notes to financial statements for the year 2013.
2. Responsibility of management for financial statements
Preparing and fairly presenting these financial statements are the responsibilities of the management of GREE ELECTRIC APPLIANCES. These responsibilities include: (1) Preparing these financial Statements in accordance with the Accounting Standards for Business Enterprises and enabling them to achieve a fair reflection; (2) designing, implementing and maintaining the necessary internal control to make these financial statements free of any material misstatement resulting from cheating.
3. Responsibility of certified public accountants
Our responsibility is to express an opinion on audit of these financial statements on the basis of implementation of audit work. We have conducted our audit work according to the provisions of Audit Standards for Certified Public Accountants of China. The Audit Standards for Certified Public Accountants of China require us to observe the code of professional ethics for Chinese certified public accountants and plan and implement audit work so as to reasonably assure the financial statements free of material misstatement.
Our audit work involves implementation of audit procedures to obtain the audit evidences relating to amount and disclosure of financial statements. The selection of audit procedures depends on judgment of certified public accountants, including the appraisal of material misstatement risk of the financial statements resulting from cheating or errors.
During the execution of risk appraisal, the certified public accountants have considered the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 internal control relating to preparation and fair presentation of financial statements to design proper audit procedures. The audit work also includes appraising whether the management applied proper accounting policy and made reasonable accounting estimate and appraising the overall presentation of these financial statements.
We believe the audit evidences obtained by us are sufficient and proper and shall provide the basis for expressing our audit opinion.
4. Audit opinion
In our opinion, these financial statements of GREE ELECTRIC APPLIANCES have been prepared in all material aspects in accordance with the Accounting Standards for Business Enterprises and fairly reflected the consolidated and parent company's financial position of GREE ELECTRIC APPLIANCES ended 31 December 2013 and consolidated and parent company's operating results and cash flows for the year 2013.
China Audit Asia Pacific Certified Public Accountants LLP Chinese CPA: Han Zhenping (Seal) (Seal and Sign)
Chinese CPA: Gong Jingwei (Seal and Sign)
Beijing, China 23 April 2014
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Consolidated Balance Sheet
31 December 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Assets|Note|Ending Balance|Beginning Balance|Liabilities andOwners' (orShareholders')Equity|Note|EndingBalance|Beginning Balance|
|Current assets:||||Current liabilities:||||
|Monetary Capital|5 (1)|38,541,684,470.83|28,943,921,701.45|Short-term Borrowing|5 (21)|3,316,971,153.31|3,520,642,063.91|
|SettlementReserves||||Borrowings from theCentral Bank|5 (22)|37,413,972.46||
|Lending funds||||Deposits fromcustomers andinterbank|5 (23)|542,265,495.74|81,078,010.98|
|Trading financialassets|5 (2)|1,246,106,661.88|263,460,017.40|Loans from otherbanks|5 (24)|300,000,000.00||
|Notes receivable|5 (3)|46,297,242,328.98|34,292,168,999.99|Trading financialliabilities||||
|AccountsReceivable|5 (4)|1,849,275,342.79|1,474,872,971.56|Notes payable|5 (25)|8,230,208,196.99|7,983,581,180.17|
|Prepayments|5 (5)|1,498,649,670.64|1,739,713,886.10|Accounts payable|5 (26)|27,434,494,665.72|22,665,011,613.66|
|Premiumsreceivable||||Advance receivedfrom customers|5 (27)|11,986,433,741.28|16,630,113,200.83|
|Reinsuranceaccountsreceivable||||Financial assets soldfor repurchase|5 (28)|186,000,000.00|350,000,000.00|
|Reinsurancecontract reserve||||Handling charges andcommissions payable||||
|Interestsreceivable|5 (6)|729,559,642.90|710,865,583.57|Payroll payable|5 (29)|1,640,155,578.39|1,357,672,403.95|
|Dividendsreceivable||||Taxes payable|5 (3)|6,157,486,617.37|2,522,100,351.45|
|Other receivables|5 (7)|346,419,748.75|290,356,401.60|Interests payable|5 (31)|25,480,292.28|20,199,098.55|
|Buying back thesale of financialassets||||Dividends payable|5 (32)|707,913.60|707,913.60|
|Inventories|5 (8)|13,122,730,425.78|17,235,042,562.70|Other payables|5 (33)|4,793,778,485.35|5,441,614,890.93|
|Non-currentassets due withinone year||||Reinsurance accountspayable||||
|Other currentassets|5 (9)|100,853,889.36|137,242,997.76|Insurance contractreserves||||
|Total currentassets||103,732,522,181.91|85,087,645,122.13|Customer brokeragedeposits||||
|||||Securitiesunderwritingbrokerage deposits||||
|Non-currentassets||||Non-current liabilitiesdue within one year|5 (34)|923,447,998.14|2,513,763,694.23|
|Totaldisbursement ofloans andadvances|5 ()|4,565,455,698.91|2,088,903,434.99|Other currentliabilities|5 (35)|30,916,369,463.68|15,743,875,054.32|
|Available-for-salefinancial assets|5 (1)|805,932,600.00|554,912,450.00|Total currentliabilities||96,491,213,574.31|78,830,359,476.58|
|Held-to-maturityinvestment||||Non-currentliabilities:||||
|Long-termreceivables||||Long-term borrowing|5 (36)|1,375,348,442.79|984,463,173.32|
|Long-term equityinvestment|5 (3)|97,568,533.30|28,159,992.30|Bonds payable||||
|Investment realestate|5 (4)|503,056,462.68|208,009,129.76|Long-term payables||||
|Fixed assets|5 (5)|14,034,138,414.45|12,700,394,289.32|Special payables||||
|Construction inProgress|5 (6)|1,861,677,013.76|2,304,317,913.92|Accrued liabilities||||
|Project goods andmaterials||||Deferred income taxliabilities|5 (9)|328,943,054.49|160,405,437.91|
|Fixed assets in||6,294,341.99|110,093.59|Other non-current|5 (37)|39,920,6|11,469,703.49|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 liquidation liabilities 03.17
|||||||||
|-|-|-|-|-|-|-|-|
|Productivebiological assets||||Total non-currentliabilities||1,744,212,100.45|1,156,338,314.72|
|Oil and gas assets||||Total liabilities||98,235,425,674.76|79,986,697,791.30|
|Intangible assets|5 (7)|2,370,179,675.29|1,635,272,965.12|Owners' equity (orShareholders' equity):||||
|Developmentexpenditures||||Paid-up capital (orstock capital)|5 (38)|3,007,865,439.00|3,007,865,439.00|
|Businessreputation||||Capital reserves|5 (39)|3,176,114,310.09|3,187,175,872.28|
|Long-termdeferred expenses|5 (8)|42,665,255.34|48,089,330.59|Less: Treasury stock||||
|Deferred incometax assets|5 (9)|5,682,613,181.91|2,911,085,198.23|Special reserves||||
|Other non-currentassets||||Surplus reserve|5 (4)|2,958,088,564.43|2,958,088,564.43|
|Totalnon-currentassets||29,969,581,177.63|22,479,254,797.82|General riskprovisions|5 (41)|47,114,066.72|7,593,539.68|
|||||Undistributed profit|5 (42)|25,395,563,880.38|17,572,277,003.95|
|||||Foreign currencytranslation differences||-1,935,948.39|10,133,985.43|
|||||Total owners' equityattributable toparent company||34,582,810,312.23|26,743,134,404.77|
|||||Minority equity||883,867,372.55|837,067,723.88|
|||||Total owners' equity||35,466,677,684.78|27,580,202,128.65|
|Total assets||133,702,103,359.54|107,566,899,919.95|Total liabilities andowners' equity||133,702,103,359.54|107,566,899,919.95|

Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong Balance Sheet of Parent Company
31 December 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Assets|Note|Ending Balance|BeginningBalance|Liabilities andOwners' (orShareholders')Equity|Note|EndingBalance|Beginning Balance|
|Current assets:||||Current liabilities:||||
|Monetary Capital||39,503,710,543.78|28,976,465,567.30|Short-termBorrowing||1,371,499,779.14|1,054,582,450.48|
|Trading financialassets||916,366,023.72|77,105,135.13|Trading financialliabilities||||
|Notes receivable||45,309,194,550.85|32,448,619,946.58|Notes payable||7,564,036,735.17|8,932,104,943.20|
|Accounts Receivable|11 (1)|772,755,153.09|757,987,897.69|Accounts payable||31,379,703,785.95|23,585,567,656.95|
|Prepayments||597,286,598.10|2,454,609,223.59|Advance receivedfrom customers||13,777,662,550.34|18,864,469,264.72|
|Interests receivable||794,608,647.89|690,977,494.55|Payroll payable||766,672,180.18|868,111,530.22|
|Dividends receivable||||Taxes payable||5,072,733,232.61|2,237,887,644.27|
|Other receivables|11 (2)|804,546,552.00|738,057,453.90|Interests payable||14,751,236.87|3,703,376.35|
|Inventories||9,301,853,183.85|12,774,675,268.70|Dividends payable||602,881.87|602,881.87|
|Non-current assetsdue within one year||||Other payables||540,716,495.94|857,366,654.74|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Non-current 205,00
Other current assets 100,853,889.36 137,242,997.76 liabilities due within 7,550.8 725,265,675.00 one year 4
||||||||
|-|-|-|-|-|-|-|
|Total current assets||98,101,175,142.64|79,055,740,985.20|Other currentliabilities|30,634,828,689.00|15,726,537,705.74|
|Non-current assets||||Total currentliabilities|91,328,215,117.91|72,856,199,783.54|
|Available-for-salefinancial assets||||Non-currentliabilities:|||
|Held-to-maturityinvestment||||Long-termborrowing|887,608,831.59|418,749,345.32|
|Long-termreceivables||||Bonds payable|||
|Long-term equityinvestment|11 (3)|5,978,184,120.05|5,486,555,135.75|Long-term payables|||
|Investment real estate||34,059,734.65|35,304,673.09|Special payables|||
|Fixed assets||3,621,368,109.21|3,458,656,601.56|Accrued liabilities|||
|Construction inProgress||216,275,796.27|399,439,861.45|Deferred income taxliabilities|258,933,140.83|117,275,335.49|
|Project goods andmaterials||||Other non-currentliabilities|23,932,402.89|3,620,000.00|
|Fixed assets inliquidation||5,685,130.31||Total non-currentliabilities|1,170,474,375.31|539,644,680.81|
|Productive biologicalassets||||Total liabilities|92,498,689,493.22|73,395,844,464.35|
|Oil and gas assets||||Owners' equity (orShareholders' equity)|||
|Intangible assets||217,012,134.42|223,104,712.38|Paid-up capital (orstock capital)|3,007,865,439.00|3,007,865,439.00|
|Developmentexpenditures||||Capital reserves|3,206,997,791.73|3,190,561,566.23|
|Business reputation||||Less: Treasury stock|||
|Long-term deferredexpenses||||Special reserves|||
|Deferred income taxassets||5,288,973,862.76|2,705,610,706.72|Surplus reserve|2,955,531,032.15|2,955,531,032.15|
|Other non-currentassets||||Undistributed profit|11,793,650,274.21|8,814,610,174.42|
|||||Foreign currencytranslationdifferences|||
|Total non-currentassets||15,361,558,887.67|12,308,671,690.95|Total owners'equity (orshareholders'equity)|20,964,044,537.09|17,968,568,211.80|
|Total assets||113,462,734,030.31|91,364,412,676.15|Total liabilities andowners' equity (orshareholders' equity)|113,462,734,030.31|91,364,412,676.15|

Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Consolidated Income Statement
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Amount for the currentperiod|Amount for the previousperiod|
|1. Total operating revenues|5 (43)|120,043,070,005.50|100,110,108,848.26|
|Including: Operating Revenue|5 (43)|118,627,948,208.59|99,316,196,265.19|
|Interest revenue|5 (43)|1,414,765,072.50|793,747,561.64|
|Earned premium||||
|Fee and commission income|5 (41)|356,724.41|165,021.43|
|2. Total operating costs||109,487,926,142.16|92,310,191,516.72|
|Including: Operating Cost|5 (43)|80,385,939,822.61|73,203,077,425.32|
|Interest expense|5 (43)|491,963,953.22|230,659,033.39|
|Handling charges and commission expenses|5 (43)|263,933.63|273,817.71|
|Refunded premiums||||
|Net payments for insurance claims||||
|Net provision for insurance contracts||||
|Expenditures dividend policy||||
|Amortized reinsurance expenditures||||
|Business taxes and surcharges|5 (44)|956,169,816.52|589,953,598.68|
|Sales expense|5 (45)|22,508,931,701.70|14,626,228,488.10|
|Overhead Expense|5 (46)|5,089,572,552.73|4,055,809,619.26|
|Financial expense|5 (47)|-137,308,621.87|-461,347,589.66|
|Asset impairment loss|5 (48)|192,392,983.62|65,537,123.92|
|Add: Profits or losses on the changes in fair value (lossesexpressed with "-")|5 (49)|990,563,610.10|246,884,832.05|
|Income from investments (losses expressed with "-")|5 (50)|717,337,242.63|-20,494,376.82|
|Including: Investment incomes from joint venture andpartnership||2,855,797.81|8,732,172.23|
|Exchange gains (losses expressed with "-")||-34,617.14|96.30|
|3. Operating profit (losses expressed with "-")||12,263,010,098.93|8,026,307,883.07|
|Add: Non-operating revenues|5 (51)|684,199,623.10|760,383,226.00|
|Less: Non-operating expenses|5 (52)|55,285,776.71|23,981,836.80|
|Including: Losses from disposal of non-current assets||3,782,455.16|14,294,914.48|
|4. Total profit (total losses expressed with "-")||12,891,923,945.32|8,762,709,272.27|
|Less: Income tax expenses|5 (53)|1,956,168,768.13|1,316,781,289.57|
|5. Net profit (net loss expressed with "-")||10,935,755,177.19|7,445,927,982.70|
|Net profit attributable to owners of parent company||10,870,672,842.47|7,379,666,345.09|
|Minority interest income||65,082,334.72|66,261,637.61|
|6. Earnings per share:||||
|(1) Basic earnings per share|5 (54)|3.61|2.47|
|(2) Diluted earning per share|5 (54)|3.61|2.47|
|7. Other comprehensive income|5 (55)|-41,350,030.41|52,177,046.43|
|8. Total comprehensive income||10,894,405,146.78|7,498,105,029.13|
|Total comprehensive income attributable to owners ofparent company||10,832,339,616.00|7,431,326,033.62|
|Total comprehensive income attributable to minorityshareholders||62,065,530.78|66,778,995.51|

Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Income Statement of Parent Company
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Amount for the currentperiod|Amount for the previousperiod|
|1. Operating revenues|11 (4)|113,451,559,029.47|96,826,436,400.15|
|Less: Operating Cost|11 (4)|83,523,033,950.67|76,484,384,303.03|
|Business taxes and surcharges||720,276,631.67|408,426,398.67|
|Sales expense||22,119,107,243.50|14,131,075,887.18|
|Overhead Expense||2,537,145,816.13|2,051,591,692.63|
|Financial expense||-825,590,616.83|-899,960,141.16|
|Asset impairment loss||139,947.16|-116,091,297.33|
|Add: Profits or losses on the changes in fair value (lossesexpressed with "-")||839,260,888.59|30,995,945.02|
|Income from investments (losses expressed with "-")|11 (5)|578,699,101.15|40,356,554.71|
|Including: Investment incomes from joint venture andpartnership||2,855,797.81|8,732,172.23|
|2. Operating profit (losses expressed with "-")||6,795,406,046.91|4,838,362,056.86|
|Add: Non-operating revenues||60,791,489.21|525,831,283.66|
|Less: Non-operating expenses||10,455,345.32|12,612,329.57|
|Including: Losses from disposal of non-current assets||663,466.07|7,312,428.97|
|3. Total profit (total losses expressed with "-")||6,845,742,190.80|5,351,581,010.95|
|Less: Income tax expenses||858,836,652.01|781,516,357.60|
|4. Net profit (net loss expressed with "-")||5,986,905,538.79|4,570,064,653.35|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Consolidated Cash Flow Statement
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Note|Amount for the currentperiod||Amount for the previousperiod|
|1. Cash flows from operating activities:|||||
|Cash received from sale of goods or rendering ofservices||70,211,403,596.83||70,077,120,666.33|
|Net increase in deposits and due from banks||461,187,484.76||29,735,229.48|
|Net increase in borrowings from central bank||37,413,972.46|||
|Net increase in placements from other financialinstitutions||136,000,000.00||150,000,000.00|
|Cash received from original insurance contracts|||||
|Net increase received from reinsurance business|||||
|Net increase in deposits from the insured and investment|||||
|Net increase from disposal of tradable financial assets|||||
|Cash received from interests, fees and commissions||1,284,480,138.27||765,588,687.61|
|Net increase in placements from other financialinstitutions|||||
|Net increase in repurchase business capital|||||
|Refund of tax and levies|||468,525,066.80|1,322,558,249.72|
|Other cash received relating to operating activities|5 (56).||3,032,456,938.53|3,206,677,262.60|
|Sub-total of cash inflows from operating activities|||75,631,467,197.65|75,551,680,095.74|
|Cash payments for goods acquired and services received|||38,588,727,356.34|40,446,157,770.68|
|Net increase in loans and advances to customers|||2,562,076,948.65|2,153,587,920.51|
|Net increase in deposits with central bank and otherfinancial institutions||||24,866,758.68|
||||1,491,888,457.98||
|Cash paid for indemnity of original insurance contract|||||
|Cash paid for interests, fees and commissions|||490,024,872.84|198,508,959.70|
|Cash paid for policy dividends|||||
|Cash paid to and on behalf of employees|||4,963,951,119.32|4,486,362,315.68|
|Payments of all types of taxes|||8,171,292,438.69|5,162,515,472.32|
|Other cash paid relating to operating activities|5 (56).||6,393,668,874.00|4,670,934,626.61|
|Sub-total of cash outflows from operating activities|||62,661,630,067.82|57,142,933,824.18|
|Net Cash Flow from Operating Activities|||12,969,837,129.83|18,408,746,271.56|
|2. Cash flows from investing activities:|||||
|Cash received from recovery of investments|||327,515,300.00|1,005,567,326.03|
|Cash received from return of investments|||241,352,080.54|47,292,902.09|
|Net cash received from disposal of fixed assets,intangible assets and other long-term assets||||469,211.04|
||||1,209,811.00||
|Net cash received from disposal of subsidiaries andother business units|||||
|Other cash received relating to investing activities|5 (56).||434,397,421.35|6,902,514.16|
|Sub-total of cash inflows from investing activities|||1,004,474,612.89|1,060,231,953.32|
|Cash paid for purchase and construction of fixed assets,intangible assets and other long-term assets||||3,602,409,280.98|
||||2,461,467,222.38||
|Cash paid for investments||704,068,043.20||1,558,356,464.32|
|Net increase in pledge loans|||||
|Net cash paid for acquisition of subsidiaries and otherbusiness units|||||
|Other cash paid relating to investing activities|5 (56)|24,926,702.72||111,990,174.39|
|Sub-total of cash outflows from investing activities||3,190,461,968.30||5,272,755,919.69|
|Net Cash Flow from Investment Activities||-2,185,987,355.41||-4,212,523,966.37|
|3. Cash flows from financing activities:|||||
|Cash received from absorbing investment||||3,197,870,006.87|
|Including: Cash received from minority shareholderinvestment by subsidiary|||||
|Cash received from borrowings||4,987,907,166.99||3,763,017,594.54|
|Cash received from bond issue|||||
|Other cash received relating to financing activities|5 (56)|1,996,700,658.64||1,127,918,464.58|
|Sub-total of cash inflows from financing activities||6,984,607,825.63||8,088,806,065.99|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Cash repayments of amounts borrowed 6,233,844,919.51 5,597,189,502.64
|||||
|-|-|-|-|
|Cash paid for dividend and profit distribution or interestpayment||3,174,740,060.83|1,673,817,103.05|
|Including: Dividends and profits paid to minorityshareholders by subsidiaries||||
|Other cash paid relating to financing activities|5 (56)||2,583,000.00|
|Sub-total of cash outflows from financing activities||9,408,584,980.34|7,273,589,605.69|
|Net Cash Flow from Financing Activities||-2,423,977,154.71|815,216,460.30|
|4. Effect of foreign exchange rate changes on cash andcash equivalents||-471,176,247.13|20,220,164.22|
|5. Net increase in cash and cash equivalents||7,888,696,372.58|15,031,658,929.71|
|Add: Beginning balance of cash and cash equivalents||21,370,486,691.03|6,338,827,761.32|
|6. Ending balance of cash and cash equivalents||29,259,183,063.61|21,370,486,691.03|

 Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Cash Flow Statements of Parent Company
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Amount for the currentperiod|Amount for the previousperiod|
|1. Cash flows from operating activities:||||
|Cash received from sale of goods or rendering of services||61,581,129,826.06|57,337,401,055.26|
|Refund of tax and levies||409,412,848.92|1,306,673,853.16|
|Other cash received relating to operating activities||2,176,543,361.33|1,646,395,492.81|
|Sub-total of cash inflows from operating activities||64,167,086,036.31|60,290,470,401.23|
|Cash payments for goods acquired and services received||39,819,995,898.06|34,473,030,420.82|
|Cash paid to and on behalf of employees||2,021,725,506.49|2,002,706,623.54|
|Payments of all types of taxes||5,447,946,168.06|3,023,334,831.80|
|Other cash paid relating to operating activities||5,024,411,625.09|4,501,917,658.94|
|Sub-total of cash outflows from operating activities||52,314,079,197.70|44,000,989,535.10|
|Net Cash Flow from Operating Activities||11,853,006,838.61|16,289,480,866.13|
|2. Cash flows from investing activities:||||
|Cash received from recovery of investments||||
|Cash received from return of investments||220,474,066.99|25,502,912.32|
|Net cash received from disposal of fixed assets,intangible assets and other long-term assets||26,230.00|325,518.97|
|Net cash received from disposal of subsidiaries and otherbusiness units|||107,000,000.00|
|Other cash received relating to investing activities|||6,902,514.16|
|Sub-total of cash inflows from investing activities||220,500,296.99|139,730,945.45|
|Cash paid for purchase and construction of fixed assets,intangible assets and other. long-term assets||269,303,482.81|529,967,271.15|
|Cash paid for investments||251,552,743.20|182,551,175.65|
|Net cash paid for acquisition of subsidiaries and otherbusiness units||||
|Other cash paid relating to investing activities||24,926,702.72|1,121,000.00|
|Sub-total of cash outflows from investing activities||545,782,928.73|713,639,446.80|
|Net Cash Flow from Investment Activities||-325,282,631.74|-573,908,501.35|
|3. Cash flows from financing activities:||||
|Cash received from absorbing investment|||3,197,870,006.87|
|Cash received from borrowings||2,393,992,106.76|1,230,538,844.24|
|Other cash received relating to financing activities||475,964,970.99|1,270,107,152.23|
|Sub-total of cash inflows from financing activities||2,869,957,077.75|5,698,516,003.34|
|Cash repayments of amounts borrowed||2,063,965,287.70|3,045,137,360.67|
|Cash paid for dividend and profit distribution or interestpayment||3,063,394,203.02|1,581,236,479.47|
|Other cash paid relating to financing activities|||2,583,000.00|
|Sub-total of cash outflows from financing activities||5,127,359,490.72|4,628,956,840.14|
|Net Cash Flow from Financing Activities||-2,257,402,412.97|1,069,559,163.20|
|4. Effect of foreign exchange rate changes on cash andcash equivalents||-447,758,783.98|14,278,589.58|
|5. Net increase in cash and cash equivalents||8,822,563,009.92|16,799,410,117.56|
|Add: Beginning balance of cash and cash equivalents||24,582,887,186.53|7,783,477,068.97|
|6. Ending balance of cash and cash equivalents||33,405,450,196.45|24,582,887,186.53|

Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Consolidated Statement of Changes In Owners' Equity
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Amount for the current period||||||||||
||Paid-up capital (orstock capital)|Capital reserves|Less:Treasurystock|Appropriativereserves|Surplusreserve|General riskprovisions|Undistributedprofit|Others|Minority equity|Total owners'equity|
|1. Ending balance for the previous year|3,007,865,439.00|3,187,175,872.28|||2,958,088,564.43|7,593,539.68|17,572,277,003.95|10,133,985.43|837,067,723.88|27,580,202,128.65|
|Add: Changes in accounting policies|||||||||||
|Early error correction|||||||||||
|Others|||||||||||
|2. Beginning balance for the current year|3,007,865,439.00|3,187,175,872.28|||2,958,088,564.43|7,593,539.68|17,572,277,003.95|10,133,985.43|837,067,723.88|27,580,202,128.65|
|3. Increase or decrease in the current year(decrease expressed with “-”)||-11,061,562.19||||39,520,527.04|7,823,286,876.43|-12,069,933.82|46,799,648.67|7,886,475,556.13|
|(1) Net profit|||||||10,870,672,842.47||65,082,334.72|10,935,755,177.19|
|(2) Other comprehensive income||-26,263,292.65||||||-12,069,933.82|-3,016,803.94|-41,350,030.41|
|Sub-total of the above Item (1) and Item (2)||-26,263,292.65|||||10,870,672,842.47|-12,069,933.82|62,065,530.78|10,894,405,146.78|
|(3) Capital invested by shareholders and capitaldecrease|||||||||||
|1). Capital invested by shareholders|||||||||||
|2). Amounts of share-based payments recognizedinto shareholders' equity|||||||||||
|3). Others|||||||||||
|(4) Profit distribution||||||39,520,527.04|-3,047,385,966.04||-15265882.11|-3,023,131,321.11|
|1). Appropriation to surplus reserves|||||||||||
|2). Appropriation to general risk provisions||||||39,520,527.04|-39,520,527.04||||
|3). Allocation to owners (or shareholders)|||||||-3,007,865,439.00||-15265882.11|-3,023,131,321.11|
|4). Others|||||||||||
|(5) Internal carry-over of shareholders' equity|||||||||||
|1). Transfer of capital reserves into capital (orstock capital)|||||||||||
|2). Transfer of surplus reserves into capital (orstock capital)|||||||||||
|3). Surplus reserves for making up losses|||||||||||
|4). General risk provisions for making up losses|||||||||||
|5). Others|||||||||||
|(6) Appropriative reserve|||||||||||
|1). Amount withdrawn for the period|||||||||||
|2). Amount used for the period|||||||||||
|(7) Others||15,201,730.46||||||||15,201,730.46|
|4. Ending balance for the current period|3,007,865,439.00|3,176,114,310.09|||2,958,088,564.43|47,114,066.72|25,395,563,880.38|-1,935,948.39|883,867,372.55|35,466,677,684.78|

Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Consolidated Statement of Changes In Owners' Equity
For the Year 2012
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Amount for the previous period||||||||||
||Paid-up capital (orstock capital)|Capital reserves|Less:Treasurystock|Appropriativereserves|Surplus reserve|General riskprovisions|Undistributedprofit|Others|Minority equity|Total owners'equity|
|1. Ending balance for the previous year|2,817,888,750.00|110,167,026.08|||2,501,082,099.09|5,645,388.34|12,155,497,995.04|16,584,555.69|770,288,728.37|18,377,154,542.61|
|Add: Changes in accounting policies|||||||||||
|Early error correction|||||||||||
|Others|||||||||||
|2. Beginning balance for the current year|2,817,888,750.00|110,167,026.08|||2,501,082,099.09|5,645,388.34|12,155,497,995.04|16,584,555.69|770,288,728.37|18,377,154,542.61|
|3. Increase or decrease in the current year(decrease expressed with “-”)|189,976,689.00|3,077,008,846.20|||457,006,465.34|1,948,151.34|5,416,779,008.91|-6,450,570.26|66,778,995.51|9,203,047,586.04|
|(1) Net profit|||||||7,379,666,345.09||66,261,637.61|7,445,927,982.70|
|(2) Other comprehensive income||58,110,258.79||||||-6,450,570.26|517,357.90|52,177,046.43|
|Sub-total of the above Item (1) and Item (2)||58,110,258.79|||||7,379,666,345.09|-6,450,570.26|66,778,995.51|7,498,105,029.13|
|(3) Capital invested by shareholders and capitaldecrease|189,976,689.00|3,005,310,317.87||||||||3,195,287,006.87|
|1). Capital invested by shareholders|189,976,689.00|3,005,310,317.87||||||||3,195,287,006.87|
|2). Amounts of share-based payments recognizedinto shareholders' equity|||||||||||
|3). Others|||||||||||
|(4) Profit distribution|||||457,006,465.34|1,948,151.34|-1,962,887,336.18|||-1,503,932,719.50|
|1). Appropriation to surplus reserves|||||457,006,465.34||-457,006,465.34||||
|2). Appropriation to general risk provisions||||||1,948,151.34|-1,948,151.34||||
|3). Allocation to owners (or shareholders)|||||||-1,503,932,719.50|||-1,503,932,719.50|
|4). Others|||||||||||
|(5) Internal carry-over of shareholders' equity|||||||||||
|1). Transfer of capital reserves into capital (orstock capital)|||||||||||
|2). Transfer of surplus reserves into capital (orstock capital)|||||||||||
|3). Surplus reserves for making up losses|||||||||||
|4). General risk provisions for making up losses|||||||||||
|5). Others|||||||||||
|(6) Appropriative reserve|||||||||||
|1). Amount withdrawn for the period|||||||||||
|2). Amount used for the period|||||||||||
|(7) Others||13,588,269.54||||||||13,588,269.54|
|4. Ending balance for the current period|3,007,865,439.00|3,187,175,872.28|||2,958,088,564.43|7,593,539.68|17,572,277,003.95|10,133,985.43|837,067,723.88|27,580,202,128.65|

 Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Statement of Changes In Owners' Equity of Parent Company
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item|Amount for the current period|||||||||
||Paid-up capital (orstock capital)|Capital reserves|Less:Treasurystock|Appropriativereserves|Surplus reserve|General riskprovisions|Undistributed profit|Others|Total owners' equity|
|1. Ending balance for the previous year|3,007,865,439.00|3,190,561,566.23|||2,955,531,032.15||8,814,610,174.42||17,968,568,211.80|
|Add: Changes in accounting policies||||||||||
|Early error correction||||||||||
|Others||||||||||
|2. Beginning balance for the current year|3,007,865,439.00|3,190,561,566.23|||2,955,531,032.15||8,814,610,174.42||17,968,568,211.80|
|3. Increase or decrease in the current year (decreaseexpressed with “-”)||16,436,225.50|||||2,979,040,099.79||2,995,476,325.29|
|(1) Net profit|||||||5,986,905,538.79||5,986,905,538.79|
|(2) Other comprehensive income||1,234,495.04|||||||1,234,495.04|
|Sub-total of the above Item (1) and Item (2)||1,234,495.04|||||5,986,905,538.79||5,988,140,033.83|
|(3) Capital invested by shareholders and capital decrease||||||||||
|1). Capital invested by shareholders||||||||||
|2). Amounts of share-based payments recognized intoshareholders' equity||||||||||
|3). Others||||||||||
|(4) Profit distribution|||||||-3,007,865,439.00||-3,007,865,439.00|
|1). Appropriation to surplus reserves||||||||||
|2). Appropriation to general risk provisions||||||||||
|3). Allocation to owners (or shareholders)|||||||-3,007,865,439.00||-3,007,865,439.00|
|4). Others||||||||||
|(5) Internal carry-over of shareholders' equity||||||||||
|1). Transfer of capital reserves into capital (or stock capital)||||||||||
|2). Transfer of surplus reserves into capital (or stock capital)||||||||||
|3). Surplus reserves for making up losses||||||||||
|4). General risk provisions for making up losses||||||||||
|5). Others||||||||||
|(6) Appropriative reserve||||||||||
|1). Amount withdrawn for the period||||||||||
|2). Amount used for the period||||||||||
|(7) Others||15,201,730.46|||||||15,201,730.46|
|4. Ending balance for the current period|3,007,865,439.00|3,206,997,791.73|||2,955,531,032.15||11,793,650,274.21||20,964,044,537.09|

 Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Statement of Changes In Owners' Equity of Parent Company
For the Year 2013
Prepared by: GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Unit: RMB Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item|Amount for the previous period|||||||||
||Paid-up capital (orstock capital)|Capital reserves|Less:Treasurystock|Appropriativereserves|Surplus reserve|General riskprovisions|Undistributed profit|Others|Total owners' equity|
|1. Ending balance for the previous year|2,817,888,750.00|117,739,894.64|||2,498,524,566.81||6,205,484,705.91||11,639,637,917.36|
|Add: Changes in accounting policies||||||||||
|Early error correction||||||||||
|Others||||||||||
|2. Beginning balance for the current year|2,817,888,750.00|117,739,894.64|||2,498,524,566.81||6,205,484,705.91||11,639,637,917.36|
|3. Increase or decrease in the current year (decreaseexpressed with “-”)|189,976,689.00|3,072,821,671.59|||457,006,465.34||2,609,125,468.51||6,328,930,294.44|
|(1) Net profit|||||||4,570,064,653.35||4,570,064,653.35|
|(2) Other comprehensive income||53,923,084.18|||||||53,923,084.18|
|Sub-total of the above Item (1) and Item (2)||53,923,084.18|||||4,570,064,653.35||4,623,987,737.53|
|(3) Capital invested by shareholders and capital decrease|189,976,689.00|3,005,310,317.87|||||||3,195,287,006.87|
|1). Capital invested by shareholders|189,976,689.00|3,005,310,317.87|||||||3,195,287,006.87|
|2). Amounts of share-based payments recognized intoshareholders' equity||||||||||
|3). Others||||||||||
|(4) Profit distribution|||||457,006,465.34||-1,960,939,184.84||-1,503,932,719.50|
|1). Appropriation to surplus reserves|||||457,006,465.34||-457,006,465.34|||
|2). Appropriation to general risk provisions||||||||||
|3). Allocation to owners (or shareholders)|||||||-1,503,932,719.50||-1,503,932,719.50|
|4). Others||||||||||
|(5) Internal carry-over of shareholders' equity||||||||||
|1). Transfer of capital reserves into capital (or stock capital)||||||||||
|2). Transfer of surplus reserves into capital (or stock capital)||||||||||
|3). Surplus reserves for making up losses||||||||||
|4). General risk provisions for making up losses||||||||||
|5). Others||||||||||
|(6) Appropriative reserve||||||||||
|1). Amount withdrawn for the period||||||||||
|2). Amount used for the period||||||||||
|(7) Others||13,588,269.54|||||||13,588,269.54|
|4. Ending balance for the current period|3,007,865,439.00|3,190,561,566.23|||2,955,531,032.15||8,814,610,174.42||17,968,568,211.80|

 Legal Representative: Dong Mingzhu Chief Accountant: Wang Jingdong Head of accounting department: Liao Jianxiong
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Notes to Financial Statements for the Year 2013
1. Basic information of the Company
The Company was formerly known as Haili Air-conditioning Engineering Co., Ltd. of Zhuhai which was established in 1989 upon approval of Zhuhai Municipal Industrial Committee and the people's Bank of China Zhuhai Branch and was renamed GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafter referred to as "the Company" or "Company") in1994 upon approval of Zhuhai City Commission for Economic Restructuring, and the Company was listed on Shenzhen Stock Exchange dated 18 November 1996 upon receipt of the approval document Zheng Jian Fa Zi (1996) No. 321 from China Securities Regulatory Commission, and it has obtained the business license of enterprise legal person No. 440000000040686 and has the registered capital of RMB 3,007,865,439.00.
The Company is engaged in household electrical appliances business mainly including: export and import of goods and technologies (excluding items forbidden by laws and administrative regulations. Items restricted by laws and administrative regulations shall be conducted with special license); manufacturing and distribution of pumps, valves, compressors and similar machines, fan motors, packaging equipment and other general-purpose equipment, electric motors, equipment for power transmission and distribution and control equipment, electric wires and cables, optical cables and electrical equipment, and household electrical appliances; wholesale of mechanical equipment, hardware and electrical equipment and electronic products; retail of household electrical appliances and electronic products.
II. Significant accounting policies and estimates and previous errors
(1) Preparation basis of the financial statements
The Company conducts accounting recognition and measurement on a going concern basis according to its transactions and events that have actually occurred in accordance with the Accounting Standards for Business Enterprises and on this basis has prepared the financial statements.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Statements regarding observance of the Accounting Standards for Business Enterprises
The financial statements prepared by the Company conform to the requirements of the Accounting Standards for Business Enterprises and give a true and complete view of the financial position, operating results and cash flows of the enterprise.
(3) Accounting period
Accounting period of the Company includes one year and interim periods. An interim period covers six-month, a quarter and a month. The accounting year of the Company commences on 1 January and ends on 31 December of each year.
(4) Functional currency
RMB is the functional currency used by the Company.
(5) Accounting treatment of business combination involving enterprises under common control and business combination not involving enterprises under common control
1). Business combination involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.
Generally, the business combination involving enterprises under common control refers to the combination among the enterprises occurring in the same enterprise group, other than that, any combination shall not be deemed as the business combination involving enterprises under common control.
Assets and liabilities that are obtained by the Company as a combining party in a business combination shall be measured at their carrying amounts at the combination date as recorded by the combined party. For a long-term equity investment acquired through a control merger involving enterprises under common control, the initial investment cost of the long-term equity investment is the combined party's share of the carrying amount of the owners' equity of the party being absorbed at the combination date. See the long-term equity investment for the accounting treatment involved; Assets and liabilities that are obtained in a merger by absorption involving enterprises under common control are entered in an account
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 by their original carrying amounts of the combined party. The difference between the carrying amount of net assets obtained by the Company and the carrying amount of the consideration paid for the combination (or total par value of the issued stocks) is adjusted to capital reserve; If the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
Costs incurred that are directly attributable to the business combination made by the Company as a combining party, including audit fee, appraisal cost and legal service charge paid are charged to profit or loss in the period in which they are incurred.
The bonds issued for a business combination or the handling fees, commissions and other expenses for assuming other liabilities shall be recorded into the amount of initial measurement of the bonds or other debts. The handling fees, commissions and other expenses for the issuance of equity securities for the business combination shall be credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset.
Where a relationship between a parent company and a subsidiary company is formed due to a control merger involving enterprises under common control, the parent company shall, on the combining date, prepare a consolidated balance sheet, a consolidated profit statement and a consolidated cash flow statement.
In the consolidated balance sheet, the carrying amounts of the assets and liabilities of the combined party shall be incorporated into the consolidated financial statements, and the transactions occurring between the combining party and the combined party on and before the combination date shall be treated as internal transactions and shall be offset according to the related principle of the consolidated financial statements; The consolidated profit statement and cash flow statement shall include the realized net profit and generated cash flow of the parties to the combination from the beginning of the current period to the combining date. The net profit and cash flow generated from transactions and internal transactions of the current period between the parties shall be offset according to the related principle of the consolidated financial statements.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2) Business combination not involving enterprises under common control
A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties both before and after the combination.
Recognition of the cost of business combination: The cost of business combination includes the cashes or non-cash assets paid by the acquiring party for the business combination and the fair value of issued or assumed liabilities and issued equity securities on the date of acquisition. Costs incurred that are directly attributable to the business combination shall be charged to profit or loss in the period in which they are incurred. For a business combination realized by two or more transactions of exchange, the accounting treatment for the combination costs shall be made by distinguishing individual financial statements and consolidated financial statements;
In the individual financial statements, the cost of combination of the investment is the aggregate of the carrying amount of the equity investment of the acquired party held before the date of acquisition and investment cost newly increased on the date of acquisition;
In the consolidated financial statements, the stocks of the acquired party held before the date of acquisition shall be remeasured based on the fair value of such stocks on the date of acquisition, and the difference between their fair value and carrying amount shall be charged to the investment income of the current period; Where the stocks of the acquired party held before the date of acquisition involve other composite income, other composite income concerned with them shall be transferred to the investment income in the period in which the date of acquisition is included. The summation of the fair value of the stocks of the acquired party held before the date of acquisition on the date of acquisition and newly increased investment costs on the date of acquisition shall be the combination costs of the investment. For the long-term equity investment obtained in the control merger not involving enterprises under common control, the initial investment cost of the long-term equity investment of the acquired party is the cost of business combination (excluding the cash dividend and profit received from the invested entity) recognized on the date of acquisition; The identifiable assets and liabilities that satisfy the recognition conditions, which are acquired in a merger by absorption not involving enterprises under common control, are
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 recognized by the Company as the assets and liabilities of the enterprise at their fair value on the date of acquisition. Where the control power or identifiable assets and liabilities of the acquired party that are obtained by the Company by using non-monetary assets as consideration, the difference between the fair value of the non-monetary assets on the date of acquisition and their carrying amounts shall be treated as the profit or loss of disposal of the assets and shall be charged to the profit statement in the period of business combination.
In the business combination not involving enterprises under common control, the positive balance between the business combination costs and the fair value of the identifiable net assets obtained by the acquired party from the combination shall be recognized as business reputation. In the case of merger by absorption, the positive balance is recognized as business reputation in the individual financial statement of the parent company; In the case of control merger, the positive balance is presented as business reputation in the consolidated financial statements. The negative balance between the combination costs and the fair value of the identifiable net assets obtained by the acquired party from the combination shall be charged by the Company to the profit or loss of the current period of combination (non-operating revenue). In the case of merger by absorption, the negative balance is charged to individual profit statement of the parent company in the current period of combination; In the case of control merger, the negative balance is charged to the consolidated profit statement in the current period of combination.
(6) Preparation of consolidated financial statements
The consolidated financial statements shall be prepared in accordance with the Accounting Standards for Business Enterprises No. 33– Consolidated Financial Statements, that is, they are prepared by the parent company on the basis of individual financial statements of the Company and holding subsidiaries incorporated in the scope of consolidated financial statements during the consolidation according to other relevant data after the long-term equity investment to the subsidiaries are adjusted by equity method. The investments, major transactions and dealings and unrealized profits between the parent company and subsidiaries shall be offset with each other and consolidated on an individual basis during the consolidation of the financial statements , and the minority owners' equity (profit or loss) shall be calculated.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 During the consolidation of financial statements, if the accounting policies of the subsidiaries incorporated in the scope of consolidated financial statements are inconsistent with those of the Company, the financial statements shall be consolidated after the accounting policies of the subsidiaries are adjusted according to the accounting policies of the Company. The portion of shareholders' equity of the subsidiaries thatisn’t attributable to the parent company shall be separately presented as the minority shareholders' equity under the shareholders' equity in the consolidated financial statements.
A subsidiary added by the Company through a business combination involving enterprises under common control shall be consolidated in the consolidated financial statements of the Company at the beginning of the current consolidation period, and the amounts both at the beginning of the year or in the previous year in the consolidated financial statements shall be adjusted. A subsidiary added by the Company through a business combination not involving enterprises under common control shall be consolidated in the consolidated financial statements of the Company from the date of acquisition. A subsidiary towards which the Company transfers the power of control shall not be included in the scope of consolidated financial statements from the date when the Company loses its actual power to control such subsidiary.
(7) Accounting measurement attribute
1). Measurement attribute
The Company takes the accrual system as the basis of accounting and measures the initial value using historical cost. The financial assets and liabilities measured at their fair value and of which the variation is recorded into the profits and losses of the current period and the financial assets available for sale and derivative instruments shall be measured at their fair value; The inventories and fixed assets for which the payment is delayed in excess of normal credit terms while they are purchased shall be measured at their present value of their purchase price; The inventories on which an impairment loss occurs shall be measured at their net realizable value, and other assets on which an impairment loss occurs shall be measured at their recoverable amount of their fair value and present value (whichever is higher); The asset inventory surplus and other assets shall be measured at their replacement cost.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Items in the financial statements with their measurement attribute changing during the period
There was no change in the accounting measurement attribute of the items in the financial statements during the Report Period.
(8) Criteria for cash and cash equivalents
The cash refers to the enterprise's money on hand and deposits for payment at any time. Cash equivalents refer to investments held by the enterprise which are short in term (generally referring to those expiring within not more than 3 months from the date of acquisition), high in liquidity, convertible to the known amount of cash and insignificant in risk of change of value.
(9) Foreign currency transactions
1). Method of translation for foreign currency transactions
At the time of initial recognition of a foreign currency transaction of the Company, the amount in the foreign currency shall be translated into the amount in RMB currency at the spot exchange rate of the transaction date (generally referring to the medial rate of foreign exchange quotation published by the People's Bank of China at the date of transaction, the same below).
2). Treatment of monetary items of foreign currencies and non-monetary items of foreign currencies on the balance sheet date
For the monetary items of foreign currencies, the translation is done according to spot rate of the balance sheet date. The exchange difference generated from the difference of spot rate of the current balance sheet date and the time of initial recognition of a foreign currency or the previous balance sheet date is charged to the profit or loss of the current period except that the exchange difference generated from foreign currency borrowings relating to assets of which the acquisition or production satisfies the capitalization conditions is capitalized in accordance with the Accounting Standards for Business Enterprises No. 17– Borrowing Costs. For the non-monetary items of foreign currencies measured by historical cost, translation is done according to spot rate of the transaction date without change in their amount in functional currency. Non-monetary items of foreign currencies such as stocks and
funds measured at their fair value are translated as per the spot rate on the date when their fair
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 value is confirmed. The differences between the translated amounts in functional currency and the original amounts in functional currency are recorded into current profits and losses as fluctuation in fair value (including fluctuation in exchange rates).
3). Translation of foreign currency financial statements
The Company translates the financial statements expressed in foreign currency into ones expressed in RMB currency according to the following provisions:
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date; Among the owners' equity items, except the ones as "undistributed profits", others shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date. The balance arisen from the translation of foreign currency financial statements in compliance with the aforesaid method shall be presented separately under the owners' equity item of the balance sheets. The foreign currency cash flow statement shall be translated at a spot exchange rate on the cash flow date. The amount of influence of the exchange rate change on cashes shall be presented separately under the adjusted item in the cash flow statement.
(10) Financial instruments
1). Basis for recognition of financial instruments
The term "financial instruments" refers to the contracts under which the financial assets of an enterprise are formed and the financial liability or right instruments of any other entity are formed. When the Company becomes a party to a financial instrument contract, it recognizes a financial asset or financial liability.
Where a financial asset satisfies any of the following requirements, the recognition of it shall be terminated: Where the contractual rights for collecting the cash flow of the said financial asset are terminated; or where the said financial asset has been transferred and meets the conditions for recognizing the termination of financial assets as provided for in Accounting Standards for Enterprises No. 23 - Transfer of Financial Assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Classification of financial assets and financial liabilities
Financial assets attributable to the Company are classified into the following four categories according to their investment purpose and economic essence:① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, including transactional financial assets and the financial assets which are measured at their fair values and of which the variation is included in the current profits and losses;② The investments which will be held to their maturity;③ Loans and the account receivables; and④ Financial assets available for sale.
Financial liabilities shall be classified into the following two categories according to their economic essence:① The financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses, including transactional financial liabilities and the designated financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses; and② Other financial liabilities.
3). Measurement of financial assets and financial liabilities
The financial assets and financial liabilities initially recognized by the Company shall be measured at their fair values. For the financial assets and liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, the transaction expenses thereof shall be directly recorded into the profits and losses of the current period; for other categories of financial assets and financial liabilities, the transaction expenses thereof shall be included into the initially recognized amount.
Subsequent measurement of financial assets and financial liabilities:
(1) For the financial assets and financial liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, they shall be measured at their fair values, and the variation of their fair values shall be recorded into the profits and losses of the current period.
(2) The investments held until their maturity and accounts receivable are measured at their amortization cost by actual interest rate.
(3) The profits and losses arising from the subsequent measurement of the financial
assets available for sale at their fair value and the profits and losses arising from the change in
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 their fair value shall be included directly in theowner’s equity with the exception of impairment losses and the exchange gains or losses arising from foreign exchange conversion of monetary financial assets in any foreign currency, and when the said financial asset is stopped from recognition and is transferred out, it shall be recorded into the profits and losses of the current period.
(4) The equity instrument investments for which there is no quoted price in the active market and whose fair value cannot be reliably measured, and the derivative financial assets which are connected with such equity instruments and are settled by delivering the said equity instruments shall be measured at their costs.
(5) The Company shall make subsequent measurement on other financial liabilities on the basis of the post-amortization costs, with the exception of those under the following circumstances:
① The derivative financial liabilities for which there is no quoted price in the active market, which are connected with the equity instruments whose fair value cannot be reliably measured and are settled by delivering the said equity instruments shall be measured at their costs.
② For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the variation thereof is recorded into the profits and losses of the current period, and for the commitments to grant loans which are not designated to be measured at the fair value and of which the variation is recorded into the profits and losses of the current period and which will enjoy an interest rate lower than that of the market, a subsequent measurement shall be made after they are initially recognized according to the higher one of the following:
A. the amount as determined according to the Accounting Standards for Enterprises No. 13 - Contingencies; or
B. the surplus of the initially recognized amount with the subtraction of accumulative amortization as determined according to the principles of the Accounting Standards for Enterprises No. 14 - Revenues.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 4). Recognition of fair values of financial assets and financial liabilities
(1) The fair values of the financial assets and financial liabilities which have the active market shall be recognized at their quoted prices in the active market. The quoted prices for the financial assets and financial liabilities shall be recognized according to any of the following principles:
① In the active market, the quoted prices of the Company for the financial assets it holds or the financial liabilities it plans to assume shall be the present actual offer, while the quoted prices of the Company for the financial assets it plans to acquire or the financial liabilities it has assumed shall be the available charge.
② Where there is no available offer or charge for a financial asset or financial liability, the enterprise shall adopt the market quoted price of the latest transaction or adjusted market quoted price of the latest transaction to determine the fair value of the said financial asset or financial liability, unless the enterprise has definite evidences to prove that the market quoted price of the latest transaction is not a fair value.
(2) Where there is no active market for a financial asset or financial liability, the Company shall adopt value appraisal techniques to determine its fair value.
5). Accrual method of the provision for impairment of financial assets
(1) Investments held until their maturity
Where an investment held until their maturity measured on the basis of post-amortization costs is impaired, the carrying amount of the said investment held until their maturity shall be written down to the present value of the predicted future cash flow (excluding the loss of future credits not yet occurred) (the discount rate adopts the original actual interest rate), and the amount as written down shall be recognized as loss of the impairment of the asset and shall be recorded into the profits and losses of the current period. When an impairment provision is made, an impairment test shall be made on the investment held until their maturity with significant single amounts. If any objective evidence shows that it has been impaired, the impairment-related losses shall be recognized and shall be recorded into the profits and losses of the current period. Where, upon independent test, the investment held until their maturity (including those financial assets with significant single amounts and those
with insignificant amounts) has not been impaired, it shall be included in a combination of
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 investment held until their maturity with similar risk features so as to conduct another impairment test. The investment held until their maturity which has suffered from an impairment loss in any single amount shall not be included in any combination of financial assets with similar risk features for any impairment test.
Where any investment held until their maturity measured on the basis of post-amortization costs is recognized by the Company as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said investment held until their maturity has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than the post-amortization costs of the said investment held until their maturity on the day of reverse under the assumption that no provision is made for the impairment.
(2) Accounts receivable
See the Notes 2 (11) for the impairment test and accrual method of the provision for impairment of the accounts receivable.
(3) Financial assets available for sale
When a decline in the financial assets available for sale has occurred, the cumulative loss generated from decline of fair value that had been recorded directly into the owners' equity shall be removed from the owners' equity and shall be recorded into the impairment loss. For debt instrument investment available for sale for which the impairment loss has been recognized, the recognized impairment loss shall be returned and recorded into current loss when there is an increase of fair value in a subsequent period and the increase objectively relates to events after impairment loss being recognized. For equity instrument investment available for sale for which the impairment loss has been recognized, increase of fair value in a subsequent period shall be directly recorded intoowner’s equity.
① Objective evidences indicating a decline in debt instrument investment available for sale include:debtor’s significant financial difficulties;debtor’s breach of contract, such as payment of interest or principle default or delinquency; taking economic and legal elements into consideration, the Company will make a concession to debtors in financial difficulties;
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 the debtor is likely to bankrupt or make other financial reorganization; the debt instrument is unable to continue trading in an active market due to thedebtor’s significant financial difficulties; other evidences indicating a decline in debt instrument has occurred.
② Objective evidences indicating a decline in equity instrument investment available for sale include a significant or non-transient decline in fair value of equity instrument investment.
(4) Others
Where an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or a derivative financial asset which is connected with the equity instrument and which must be settled by delivering the equity instrument, suffers from any impairment, the gap between the carrying amount of the equity instrument investment or the derivative financial asset and the current value of the future cash flow of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as impairment-related losses and be recorded into the profits and losses of the current period.
6). Transfer of financial assets
The term "transfer of financial assets" refers to a company's transferring or delivering a financial asset to a party (the transferee) other than the issuer of the financial assets.
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset; If it has retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing the financial asset.
Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, it shall deal with it respectively according to the circumstances as follows: If it gives up its control over the financial asset, it shall stop recognizing the financial asset and shall recognize the assets and liabilities generated therefrom; If it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (11) Receivables
The Company's receivables (including accounts receivable and other receivables) shall take the contract or agreement price as their initially recorded amount. Due to bankruptcy of the debtor, collection is still not possible after settlement according to legal settlement procedures; or due to the death of the debtor leaving no legacies to pay off and nobody to assume the obligations, collection is really not possible; or due to the failure of the debtor to perform its repayment obligations within the specified time limit, the receivables shall be presented as a loss on bad debt upon examination and approval according to legal procedures. As for the Company's transfer, pledge and discount to financial institutions like banks with receivablecreditor’s right, according to the provisions of the relevant contract,, when the debtor fails to pay back the due debts, if the Company bears the payment liability to the financial institutions, the receivablecreditor’s right shall be treated as pledged loan; If the Company bears no payment liability to the financial institutions, the receivablecreditor’s right shall be treated as the transferred one and the profit and loss of transfer shall be recognized.
When the Company recovers the receivables, the difference between the acquired price and the carrying amount of the receivables shall be recorded into the profits and losses of the current period.
1). Receivables with significant single amounts and single bad debt provision appropriated:
If a single amount accounts for5% (including more than5%) of total amount of the receivables, the Company shall recognize the said receivables as the receivables with significant single amounts.
On the balance sheet, the Company shall carry out an independent impairment test for the receivables with significant single amounts, where, upon independent test, the said receivables has been impaired, the negative balance between the present value of the future cash flow of the said receivables and their carrying amount shall be recognized as loss of the impairment of the said receivables, and a provision for bad debts shall be made accordingly. Where the receivables have not been impaired upon independent test, the several combinations between the said receivables and the receivables with insignificant single
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 amounts shall be made based on similar credit risk features, and then the loss of the impairment of the said receivables shall be calculated and recognized at a certain proportion of the combinations of these receivables in the balance on the balance sheet date, and a provision for bad debts shall be made accordingly.
2). Receivables with a provision for bad debts based on combinations:
|||
|-|-|
|Basis for recognition of combinations||
|Aging combination|Divided into groups based on aging of the receivables as credit risk features|
|Combination of other credit risks|Divided into groups based on the receivables related to consolidated financialstatements and the receivables which can fully obtain customer's creditinformation|
|Accrual method of a provision for bad debts based on combinations||
|Aging combination|Make a provision for bad debts by aging analysis|
|Combination of other credit risks|An impairment test of the receivables is carried out according to the debtor'scredit, and a provision for bad debts shall be made as per the negative balancebetween the present value of their future cash flow and their carrying amount.|

 1) In the combinations, the receivables with a provision for bad debts made by aging analysis:
||||
|-|-|-|
|Aging|Percentage of provisioningaccounts receivable (%)|Percentage of provisioning otherreceivables(%)|
|Within 1 year|5.00|5.00|
|1 to 2 years|20.00|20.00|
|2 to 3 years|50.00|50.00|
|Over 3 years|100.00|100.00|

 3). Accounts receivable with insignificant single amounts but single bad debt provision appropriated:
As for the receivables with insignificant single amounts, if there are conclusive evidences to show that there is an obvious difference in their collectability, a provision for bad debts shall be made as per the negative balance between the present value of their future cash flow and their carrying amount.
(12) Inventories
1). Classification of inventories
Classification of inventories: TheCompany’s inventories are classified into raw materials, goods in process, semi-finished goods, finished goods, and low-value consumables.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Valuation for delivered inventories
Valuation for delivered inventories: When various kinds of inventories of the Company are delivered, they shall be valuated at planned costs, and the planned costs shall be adjusted into actual costs based on the difference of costs of the current month at the end of the month. 3). Recognition of the net realizable value and measurement of provision for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. if the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories shall be made and shall be recorded into the profits and losses of the current period, where a provision for decline in value of inventories has been made, if the value of the said inventories is resumed later, the said value shall be reversed from the provision for decline in value of the inventories. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes.
4). Stock count system for inventories
The perpetual inventory system is adopted for stock count of the Company.
5). Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are written off in full when issued for use.
(13) Long-term equity investments
Long-term equity investments mainly include the equity investment held by the Company that is able to control, is under common control with or has significant influences on the invested entity and the equity investment which has no quoted price in the active market and of which the fair value cannot be reliably measured.
1). Measurement of investment cost of long-term equity investments
(1) The investment cost of the long-term equity investment formed in the business combination of the Company shall be recognized in accordance with the following provisions: For the business combination involving enterprises under common control with the Company, if the consideration of the combining enterprise is that it makes payment in cash,
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 transfers non-cash assets or bear its debts, it shall, on the date of combination, regard the share of the carrying amount of the owners' equity of the combined enterprise as the investment cost of the long-term equity investment. The difference between the investment cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the carrying amount of the debts borne by the combining party shall offset against the capital reserve; If the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. If the consideration of the combining enterprise is that it issues equity securities, it shall, on the date of combination, regard the share of the carrying amount of the owners' equity of the combined enterprise as the investment cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the investment cost of the long-term equity investment and total par value of the shares issued shall offset against the capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
For the business combination not involving enterprises under common control with the Company, investment cost of the long-term equity investment shall be recognized on the combination date in accordance with the following provisions:
① For a business combination realized by a transaction of exchange, the combination costs shall be the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the acquiree.
② For a business combination realized by two or more transactions of exchange, the accounting treatment for the combination costs shall be made individually in light of individual financial statements and consolidated financial statements: In the individual financial statements, the cost of combination of the investment is the aggregate of the carrying amount of the equity investment of the acquired party held before the date of acquisition and investment cost newly increased on the date of acquisition; In the consolidated financial statements, the stocks of the acquired party held before the date of acquisition shall be remeasured based on the fair value of such stocks on the date of acquisition, and the difference between their fair value and carrying amount shall be charged to the investment
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 income of the current period; Where the stocks of the acquired party held before the date of acquisition involve other composite income, other composite income concerned with them shall be transferred to the investment income in the period in which the date of acquisition is included. The summation of the fair value of the stocks of the acquired party held before the date of acquisition on the date of acquisition and newly increased investment costs on the date of acquisition shall be the combination costs of the investment.
③ All relevant direct costs incurred to the Company for the business combination shall be recorded into the profits and losses of the current period.
④ Where any future event that is likely to affect the combination costs is stipulated in the combination contract or agreement, if it is likely to occur and its effects on the combination costs can be measured reliably, the Company shall record the said amount into the combination costs.
(2) Except for the long-term equity investments formed in the combination of the Company, the investment costs of long-term equity investments obtained in other ways shall be recognized in accordance with the following provisions:
① The investment cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. The investment cost consists of the expenses directly relevant to the obtainment of the long-term equity investment, taxes and other necessary expenses.
② The investment cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued.
③ The investment cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement except the unfair value stipulated in the contract or agreement.
④ The investment cost of a long-term investment obtained by the exchange of non-monetary assets shall be ascertained in accordance with the Accounting Standards for Enterprises No. 7 - Exchange of Non-monetary Assets.
⑤ The investment cost of a long-term equity investment obtained by recombination of liabilities shall be ascertained in accordance with Accounting Standards for Enterprises No.
12 - Debt Restructuring.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Subsequent measurement of long-term equity investments and recognition of investment income
(1) Long-term equity investments measured by the Company by the cost method include: A long-term equity investment of an investing enterprise that is able to control the invested enterprise; A long-term equity investment of investment of the investing enterprise that is not under common control with or does not have significant influences on the invested entity, and entity, and has no offer in the active market and its fair value cannot be reliably measured. The price of a long-term equity investment measured by employing the cost method shall be included at its investment cost. If there are additional investments or disinvestments, the cost of the long-term equity investment shall be adjusted. The dividends or profits declared to distribute by the invested entity shall be recognized as the current investment income except those dividends declared to distribute at the time of acquisition are resumed as investment costs.
(2) Long-term equity investments measured by the Company by the cost method include the long-term equity investments of the investing entity which is under common control with or has significant influence over the invested entity. If the investment cost of a long-term equity investment is more than the investing enterprise' attributable share of the fair value of the invested entity's identifiable net assets for the investment, the investment cost of the long-term equity investment may not be adjusted; If the investment cost of a long-term equity investment is less than the investing enterprise' attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.
After the Company obtains a long-term equity investment, it shall, in accordance with the attributable share of the net profits or losses of the invested entity, recognize the investment profits or losses and adjust the carrying amount of the long-term equity investment. The Company shall, in the light of the profits or cash dividends declared to distribute by the invested entity, calculate the proportion it shall obtain, and shall reduce the carrying amount of the long-term equity investment correspondingly.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 The Company shall recognize the net losses of the invested enterprise until the carrying amount of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero, unless the Company has the obligation to undertake extra losses. If the invested entity realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits.
The Company shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. In the case of meeting the following conditions, the Company shall, on the basis of the carrying amount of net profits of the invested entity, calculate and recognize the investment income:① The company can not reasonably recognize the fair values of various identifiable assets of the invested entity when the investment is obtained.
② The difference between the fair values of identifiable assets of the invested entity and their carrying amounts is of no importance at the time of investment.
③ Other causes result in incapability of obtaining the relevant information of the invested entity, and the net profits and losses of the invested entity can not be adjusted according to the provisions.
Where the accounting policy and accounting period adopted by the invested entity is different from those adopted by the Company, the Company shall, according to the accounting policy and accounting period it adopts, adjust the relevant items in the financial statements of the invested entity, and shall recognize the investment income on the basis of such adjustment. Other changes in the owners' equity (other than net profits and losses) of the invested entity shall adjust the carrying amount of the long-term equity investment and shall be recorded into the owners' equity, upon disposal of the investment, the corresponding proportionate amount of the investment originally recorded into the owners' equity shall be transferred to the profits and losses of the current period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). Recognition of common control and significant influences on the invested entity
Common control is recognized as the control which does not exist unless the investing parties unanimously agree on sharing the control power over the relevant important financial and operating decisions of the invested entity according to the provisions of the contract.
Significant influences will be recognized where there is power to participate in making decisions on the financial and operating policies of the invested entity, but not to control or do joint control together with other parties over the formulation of these policies.
(14) Investment real estate
The Company's investment real estate includes a land use right that is leased out, a land use right held for transfer upon capital appreciation and a building that is leased out.
The Company's investment real estate is measured at its cost, and the Company uses the cost model for a subsequent measurement of its investment real estate. The depreciation and amortization of the investment real estate shall be made in accordance with the accounting policies of fixed assets or intangible assets of the Company.
When the Company changes the purpose of the investment real estate, such as for self-use, it shall transfer the relevant investment real estate to other assets.
(15) Fixed assets
1). Recognition standard of fixed assets
The Company's fixed assets refer to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or business management and whose useful life is in excess of one fiscal year. Fixed assets can not be recognized unless they simultaneously meet the conditions as follows:
(1) The economic benefits pertinent to the fixed assets are likely to flow into the enterprise; and
(2) The cost of the fixed assets can be measured reliably.
2). Measurement of fixed assets
The measurement of a fixed asset shall be made at its cost.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (1) The cost of a purchased fixed asset consists of the purchase price, the relevant taxes, freight, loading and unloading fees, professional service fees and other expenses that bring the fixed asset to the expected conditions for use and that may be relegated to the fixed asset.
If the payment for a fixed asset is delayed beyond the normal credit conditions and it is of financing nature in effect, the cost of the fixed asset shall be recognized based on the present value of the purchase price. The difference between the actual payment and the present value of the purchase price shall be included in the current profits and losses within the credit period, unless it shall be capitalized in accordance with the Accounting Standards No. 17 - Borrowing Costs.
(2) The cost of a self-constructed fixed asset shall be formed by the necessary expenses incurred for bringing the asset to the expected conditions for use.
(3) The cost invested to a fixed asset by the investor shall be recognized in accordance with the value as stipulated in the investment contract or agreement, other than those of unfair value as stipulated in the contract or agreement.
(4) The costs of fixed assets acquired through the exchange of non-monetary assets, recombination of liabilities, merger of enterprises, and financial leasing shall be respectively recognized in accordance with the Accounting Standards No. 7 - Exchange of Non-monetary Assets, Accounting Standards for Enterprises No. 12 - Debt Restructuring, Accounting Standards for Enterprises No. 20 - Merger of Enterprises and Accounting Standards for Enterprises No. 21 - Leases.
3). Classification of fixed assets
The Company's fixed assets are classified into houses and buildings, machinery equipment, electronic equipment and transportation equipment and otherwise.
4). Depreciation of fixed assets
(1) Recognition of depreciation method and service life, expected net salvage value rate and annual depreciation rate:
The depreciation of fixed assets shall be made by the straight-line method. The annual depreciation rate recognized according to the category, service life and expected net salvage value rate of fixed assets is as follows:
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||
|-|-|-|-|
|Category of fixed assets|Expected net salvagevalue rate %|Expected service life|Annual depreciation rate %|
|Houses and buildings|3 to 5|15 to 30 years|3.17 to 6.47|
|Machinery equipment|5 to 10|10 years|9 to 9.5|
|Electronic equipment|5 to 10|3 to 5 years|18 to 31.67|
|Transportation equipment|5|5 to 6 years|15.83-19|
|Others|5 to 10|5 years|18-19|

 Depreciation of fixed assets of which a provision for impairment has been made: For a fixed asset of which a provision for impairment has been made, the depreciation of the fixed asset shall be made based on the amount of deducting its expected net salvage value, depreciation amount and provision for impairment from the original price of the fixed asset and remaining service life of the fixed asset.
For the fixed assets that have reached intended usable condition but not prepared the final account for completion, their costs shall be recognized at their estimated value, and their depreciation shall be made accordingly; After completion of the final account for completion, the original estimated value of the fixed assets shall be adjusted by their actual costs, but the original depreciation amount does not require adjusting.
(2) Check of service life, expected net salvage value and depreciation method of fixed assets: The Company shall, at least at the end of each year, have a check on the service life, expected net salvage value, and the depreciation method of the fixed assets. If the Company finds that there is any difference between the expected service life and the previously estimated service life of a fixed asset, the expected service life of the fixed asset shall be adjusted; If there is any difference between the amount of expected net salvage value and the previously estimated amount of the net salvage value, the expected net salvage value shall be adjusted; If any significant change is made on the form of the realization of the expected economic benefits concerning a fixed asset, the method for the depreciation of the fixed asset shall be changed. If any change is made to the service life, expected net salvage value or the depreciation method of a fixed asset, it shall be regarded as a change of the accounting estimates.
5). Treatment of subsequent expenditures for fixed assets
Subsequent expenditures incurred on a fixed asset refer to repair expenses, renovation
expenses, repair costs and decoration expenses and otherwise incurred in the course of use of
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 the fixed asset. Their accounting treatment is as follows: Where subsequent expenditures of a fixed asset such as renovation expenses meet the conditions of recognizing the fixed asset, they shall be recorded into the cost of the fixed asset, and the carrying amount of the replaced part of the subsequent expenditures shall be deducted; Where subsequent expenditures of a fixed asset such as repair costs do not meet the conditions of recognizing the fixed asset, they shall be recorded into the profits and losses of the current period in which they are incurred; Where the decoration expenses of a fixed asset meet the conditions of recognizing the fixed asset, they shall be measured in a single detail account of "Fixed Assets", and the depreciation of the fixed asset shall be made separately by the straight-line method in a shorter time of the period of two decorations and remaining usable life of the fixed asset.
The improvement expenditures incurred on a fixed asset leased by operating lease shall be capitalized and reasonably amortized as long-term prepaid expenses.
(16) Construction in progress
The term "construction in progress" refers to all necessary expenditures incurred before the acquired fixed assets enable the project to reach expected usable condition, including project direct materials, direct employee remunerations, installation costs for equipment to be installed and project construction, project management fees, net profits and losses of project commissioning and approved capitalized borrowing costs.
1). Valuation of construction in progress
The Company's construction in progress shall be measured individually by construction project and shall be valuated at actual cost.
2). Time point of carrying over construction in progress into fixed asset
When the construction in progress reaches the expected usable condition, they shall be transferred to fixed asset at their actual cost. For the fixed assets that have reached expected usable condition but not prepared the final account for completion, they shall be charged to the account at their estimated value and shall be adjusted after their actual value is recognized. (17) Capitalization of borrowing costs
Borrowing costs are interests and other costs incurred by the Company in connection with the borrowing of the funds, including interests, amortization of discounts or premiums
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings.
1). Recognition of capitalization of borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalized, and the amounts of other borrowing costs incurred shall be recorded into the profits and losses of the period. in which they are incurred. Qualifying assets are fixed assets, investment real estate and inventories and otherwise that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.
2). Period of capitalization of borrowing costs
(1) Time point of capitalization of borrowing costs. The capitalization of borrowing costs commences only when all of the following conditions are satisfied:
-Expenditures for the asset have been incurred;
-Borrowing costs have been incurred; and
-Activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Time point of ceasing capitalization of borrowing costs: Capitalization of borrowing costs ceases when the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale. The subsequent borrowing costs shall be recorded into the profits and losses of the current period.
(3) Recognition of suspending capitalization of borrowing costs: Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use or sale, and the interruption is for a continuous period of over 3 months. Borrowing costs incurred during the period in which capitalization of borrowing costs is suspended shall be recorded into the profits and losses of the current period.
3). Calculation of capitalized amounts of borrowing costs
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 During the capitalization period, the amount of interest (including amortization of discounts or premiums) to be capitalized for each accounting period shall be recognized as follows:
(1) Where special funds are borrowed for the acquisition, construction or production of a qualifying asset, the amount of interest to be capitalized shall be the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.
(2) Where general funds are borrowed for the acquisition, construction or production of a qualifying asset, the amount of interest to be capitalized on such general borrowings shall be calculated and recognized by applying a capitalization rate of such general borrowings to the weighted average of the excess amounts of accumulated expenditures on the asset over and above the amounts of special borrowings. The capitalization rate shall be calculated and recognized by the weighted average interest rate of general borrowings.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be recognized by the real interest rate method, and an adjustment shall be made to the amount of interests in each period. During the period of capitalization, the amount of interest capitalized during each accounting period shall not exceed the amount of interest actually incurred to the relevant borrowings in the current period.
Ancillary costs in connection with special borrowings that are incurred before the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall be capitalized on the basis of the incurred amount when they are incurred, and they shall be recorded into the cost of qualifying asset; those incurred after the qualifying asset acquired, constructed or produced becomes ready for its intended use or sale shall be recognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period. The ancillary costs arising from a general borrowing shall be recognized as expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (18) Intangible assets
1). Recognition of intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company. Intangible assets can be recognized only when they meet the conditions simultaneously as follows:
(1) They are consistent with the definition of intangible assets.
(2) The economic benefits related to intangible assets are likely to flow into the enterprise; and
(3) The cost of intangible assets can be measured reliably.
2). Measurement of intangible assets
The intangible assets shall be measured according to their cost or fair value (if increased through business combination not involving enterprises under common control).
3). Subsequent measurement
The Company shall analyze and judge the service life of intangible assets when it obtains intangible assets. If the Company is unable to forecast the period when the intangible asset can bring economic benefits to it, it shall be regarded as an intangible asset with uncertain service life.
With regard to an intangible asset with limited service life, its amortization amount shall be amortized by expected realization pattern of its economic benefits, if the Company is unable to recognize the expected realization pattern reliably, intangible assets shall be amortized by the straight-line method.
The Company shall, at least at the end of each year, check the service life and the amortization method of intangible assets with limited service life. If necessary, it shall adjust the said service life and amortization method.
With regard to an intangible asset with uncertain service life, its amortization amount shall not be amortized, but the Company shall check the service life of the said intangible asset every year and shall carry out an impairment test for it.
4). Estimation of service life
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 As for intangible assets with limited service life, the estimation of their service life generally considers the following factors:
① General life cycle of products manufactured by using the assets and information about service life of similar assets available;
② Present situation of technologies and process and estimation for future development trends;
③ Market demand of products manufactured or services rendered by using the assets;④ Expected actions of present or potential competitors;
⑤ Expected maintenance expenses for economic capacity from the assets and the Company's expected capability to pay relevant expenses;
⑥ Laws and regulations or similar restrictions relating to the control period of the assets, such as concession period and lease period;
⑦ Relevance with service life of other assets held by the Company, etc.
5). Division of research expenditures and development expenditures included in expenditures for internal research and development projects
① Research expenditures in internal research and development projects shall be recorded into the profits and losses of the current period when they are incurred.
Development expenditures in internal research and development projects shall be recognized as intangible assets where they satisfy all of the following conditions:
② Technical feasibility of completing the intangible asset so that it will be available for use or sale;
③ Intention to complete the intangible asset and use or sell it;
④ How the intangible asset will generate economic benefits, including the ability to demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
⑤ Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;
⑥ Ability to measure reliably the expenditure that is attributable to the intangible asset
during its development.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (19) Long-term deferred expenses
Long-term deferred expenses refer to the expenses incurred by the Company but attributable to the current and subsequent accounting periods of more than one year (excluding one year), including the expenses for improvement of fixed assets leased by operating lease.
Long-term deferred expenses shall be recorded into the account based on their actual amount of expenditure and shall be averagely amortized by their beneficial period, if long-term deferred expenses can not benefit subsequent accounting periods, the unamortized value of the project shall be all transferred to the profits and losses of the current period.
(20) Impairment of Assets
On the balance sheet date, if there is any sign showing possible impairment of assets (referring to the assets other than inventories, equity instruments that have no quoted price and reliable fair value measurement in active market, investment real estate measured by fair value model, consumable biological assets, assets formed under construction contract, deferred income tax assets, residual value not guaranteed by the renter in the financing lease and financial assets), their recoverable amount shall be estimated on the basis of single item assets; Where it is difficult to estimate the recoverable amount of the single item assets, the recoverable amount of the assets shall be recognized on the basis of their asset group or combination of asset groups.
The recoverable amount shall be recognized in light of the higher one of the net amount of the fair value of the single item assets, asset group or combination of asset groups Less the disposal expenses and the present value of the expected future cash flow of the single item assets, asset group or combination of asset groups.
Where the recoverable amount of the single item assets is lower than their carrying amount, a provision for the asset impairment shall be made accordingly on the basis of the difference between the carrying amount of the single item assets and their recoverable amount. Where the recoverable amount of an asset group or a combination of asset groups is lower than its carrying amount, it shall be recognized as the corresponding impairment loss. The amount of the impairment loss shall first charge against the carrying amount of business reputation which is apportioned to the asset group or combination of asset groups, then charge
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 it against the carrying amount of other assets in proportion to the weight of other assets in the asset group or combination of asset groups with the business reputation excluded. The charges against the carrying amount of the assets above shall be treated as the impairment loss of the single item assets (including the business reputation), and a provision for impairment of the single item assets shall be made accordingly.
Once the above loss of asset impairment is recognized, it shall not be switched back in future accounting periods.
(21) Estimated liabilities
1). Recognition of estimated liabilities
When the businesses related to contingencies such as external guarantee, pending action or arbitration, product quality assurance, plan for layoffs, loss contract, restructuring obligations and fixed asset disposal obligations meet all of the following conditions, they shall be recognized as liabilities:
(1) The liabilities are present liabilities assumed by the Company;
(2) The fulfillment of the liabilities might cause outflow of economic benefits from the enterprise.
(3) The amount of the liabilities can be reliably measured.
2). Measurement of estimated liabilities
The estimated liabilities shall be measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be recognized in accordance with the middle estimate within the range. In other cases, the best estimate shall be recognized in accordance with the following methods, respectively:
(1) If the contingencies concern a single item, it shall be recognized in the light of the most likely outcome.
(2) If the contingencies concern two or more items, the best estimate shall be calculated and recognized in accordance with all possible outcomes and the relevant probabilities.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 When all or some of the expenses necessary for the liquidation of estimated liabilities of the company is expected to be compensated by a third party or other parties, the compensation shall be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement shall not exceed the carrying amount of the recognized estimated liabilities.
(22) Share-based payments and equity instruments
The term "share-based payment" refers to a transaction in which the Company grants equity instruments or undertakes equity-instrument-based liabilities in return for services from employee or other parties. The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments.
The term "equity-settled share-based payment" refers to a transaction in which the Company grants shares or other equity instruments as a consideration in return for services; The term "cash-settled share-based payment" refers to a transaction of payment of cash or any other asset obligation calculated and recognized on the basis of shares or other equity instruments undertaken by the Company in return for services.
1). The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees.
(1) As to an equity-settled share-based payment in return for services of employees, if the right may be exercised immediately after the grant, the fair value of the equity instruments shall, on the date of the grant, be included in the relevant cost or expense and the capital reserves shall be increased accordingly;
(2) As to an equity-settled share-based payment in return for employee services, if the right cannot be exercised until the service in the period during which the specified vesting conditions are to be satisfied (or vesting period) is completed or until the prescribed performance conditions are met, then on each balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the number of vested equity instruments, be included in the relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the date of the grant.
(3) If, on the balance sheet date, the subsequent information indicates that the number of
vested equity instruments is different from the previous estimate, an adjustment shall be made
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 and on the vesting date, the estimate shall be adjusted to equal the number of the actually vested equity instruments.
(4) The Company shall, after the vesting date, make no adjustment to the relevant costs or expenses as well as the total amount of the owner's equities which have been recognized. 2). A cash-settled share-based payment rendered by the Company shall be measured in accordance with the fair value of liability calculated and recognized based on the shares or other equity instruments undertaken by the Company.
(1) As to a cash-settled share-based payment instruments, if the right may be exercised immediately after the grant, the fair value of the liability undertaken by the enterprise shall, on the date of the grant, be included in the relevant costs or expenses, and the liabilities shall be increased accordingly;
(2) As to a cash-settled share-based payment, if the right may not be exercised until the vesting period comes to an end or until the specified performance conditions are met, on each balance sheet date within the vesting period, the services obtained in the current period shall, based on the best estimate of the information about the exercisable right, be included in the relevant costs or expenses and the corresponding liabilities at the fair value of the liability undertaken by the Company.
(3) If, on the balance sheet date, the subsequent information indicates that fair value of the current liability undertaken by the Company are different from the previous estimates, an adjustment shall be made and on the vesting date the estimate shall be adjusted to equal the actually exercisable right;
(4) The Company shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the current profits and losses.
3). The fair value of the equity instruments shall be determined according to the following methods:
(1) As for an equity instruments for which there is an active market, the quoted price in the active market shall be used to determine the fair value thereof;
(2) Where there is no active market for an equity instrument, the Company shall adopt
rational value appraisal techniques to determine its fair value. The value appraisal techniques
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 mainly include the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc.
4). The best estimate of vested equity instruments shall be estimated and recognized according to subsequent information such as changes in number of employees recently obtaining the exercisable right.
(23) Recognition of revenues
Revenues shall be recognized where the relevant economic benefits are likely to flow into the Company, the relevant amount of revenue can be reliably measured and the following conditions are met simultaneously:
1). Revenue from selling goods
Where the Company has transferred significant risks and rewards of ownership of the goods to the buyer, and it neither retains continuous management right that usually keeps relation with the ownership nor implements effective control over the sold goods; and the relevant costs incurred or to be incurred can be reliably measured, the revenue from selling goods shall be recognized.
2). Revenue from rendering labor services
If the Company can, on the balance sheet date, reliably estimate the schedule of completion and outcome of a transaction concerning the labor services, and the costs related to the transaction incurred or to be incurred can be reliably measured, the Company shall recognize the revenue from rendering labor services adopting the percentage-of-completion method and shall ascertain the schedule of completion under the transaction concerning the rendering of labor services according to the proportion of the costs incurred against the estimated total costs. Where the Company can not, on the balance sheet date, reliably estimate the outcome of a transaction concerning the labor services, if it expects that the cost of labor services incurred can be made up, the Company shall recognize the revenue from rendering labor services based on the amount of the cost of labor services incurred and shall carry forward the cost of labor services in accordance with the same amount; If it is expected that
the cost of labor services incurred can not be made up, the cost of labor services incurred shall
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 be recorded into the profits and losses of the current period, and the revenue from rendering labor services shall not be recognized.
3). Abalienate the right to use assets
The amount of interest revenue shall be calculated and recognized in accordance with the length of time for which the Company's cash is used by others and the actual interest rate; The amount of royalty revenue shall be calculated and recognized in accordance with the period and method of charging as stipulated in the relevant contract or agreement.
(24) Government subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the Company from the government, but excluding the capital invested by the government as the owner. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income.
The government subsidies pertinent to assets mean the government assets that are obtained by enterprises used for purchase or construction, or forming the long-term assets by other ways; The government subsidies pertinent to income refer to all the government subsides except those pertinent to assets.
Only when the Company can meet the conditions for the government subsidies and can obtain the government subsidies shall it recognize the government subsidies. A monetary government subsidy received by the Company shall be measured in the light of the received or receivable amount; A non-monetary government subsidy received shall be measured at its fair value; If its fair value cannot be obtained in a reliable way, it shall be measured at its nominal amount.
The government subsidies pertinent to assets received by the Company shall be recognized as deferred income when they are received and shall be equally distributed within the useful lives of the relevant assets, and recorded into the current profits and losses. But the government subsidies measured at their nominal amounts shall be directly recorded into the current profits and losses.
The government subsidies pertinent to incomes received by the Company that are used for compensating the related future expenses or losses of the Company shall be recognized as
deferred income and shall be recorded into the current profits and losses during the period
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 when the relevant expenses are recognized; if the government subsidies pertinent to incomes received by the Company are used for compensating the related expenses or losses incurred to the Company, they shall be directly recorded into the current profits and losses.
Where it is necessary to refund any government subsidy which has been recognized by the Company, if there is a deferred income concerned, the book balance of the deferred income shall be offset against, but the excessive part shall be included in the current profits and losses; If there is no deferred income concerned to the government subsidy, the amount of refund shall be directly included in the current profits and losses.
(25) Income taxes
Income taxes include all types of domestic and oversea tax amounts based on the amounts of taxable income of the Company. When the Company obtains assets or bears liabilities, it recognizes their tax base according to the national tax laws and regulations. If the carrying amount of assets is greater than their tax base or if the carrying amount of liabilities is less than their tax base, the difference between the tax base and their carrying amount shall be treated as a taxable temporary difference; If the carrying amount of assets is less than their tax base or if the carrying amount of liabilities is greater than their tax base, the difference between the tax base and their carrying amount shall be treated as a deductible temporary difference.
1). Except for the deferred income tax liabilities arising from the following transactions, the Company shall recognize the deferred income tax liabilities arising from all taxable temporary differences:
(1) The recognition of business reputation;
(2) The recognition of assets or liabilities arising from the following transactions which are simultaneously featured by the following:
① The transaction is not business combination;
② At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected.
Unless the Company can control the time of the reverse of taxable temporary differences related to the investments of subsidiary companies, associated enterprises and contractual
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 enterprises and the temporary differences are unlikely to be reversed in the predictable future, the Company shall recognize the corresponding deferred income tax liabilities.
2). The Company shall recognize the deferred income tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference, however, it shall not recognize the deferred income tax assets arising from the recognition of assets or liabilities during a transaction which is simultaneously featured by the following: (1) This transaction is not business combination; and
(2) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible loss) be affected.
On the balance sheet date, where there is any exact evidence showing that it is likely to acquire sufficient amount of taxable income tax in a future period to offset against the deductible temporary difference, the Company shall recognize the deferred income tax assets unrecognized in prior periods. If the deductible temporary differences related to the investments of subsidiary companies, associated enterprises and contractual enterprises are likely to be reversed in the expected future and are likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences, the Company shall recognize the deferred income tax assets corresponding to the said differences. 3). On the balance sheet day, the current income tax liabilities (or assets) incurred in the current period or prior periods shall be measured by the Company in light of the expected payable (refundable) amount of income taxes according to the tax law; The deferred income tax assets and deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.
In case the applicable tax rate changes, the Company shall remeasure the deferred income tax assets and deferred income tax liabilities which have been recognized. Excluding the deferred income tax assets and deferred income tax liabilities arising from any transaction or event directly recognized as the owners' equity, the Company shall record the amount affected by tax rate change into the income tax expenses of the current period during which the change occurs.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 The Company shall reexamine the carrying amount of deferred income tax assets on each balance sheet day. If it is unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the carrying amount of the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable income taxes, such write-down amount shall be subsequently reversed.
The Company shall record the income taxes of the current period and deferred income taxes other than business combinations and transactions or events directly recognized in the owners' equity into the profit statement as income tax expenses or incomes.
(26) Leases
The term "lease" refers to an agreement under which the lessor conveys to the lessee in return for rent the right to use an asset for an agreed period of time. Leases consist of financing leases and operating leases.
1). Financing leases
(1) Where a lease satisfies one or more of the following criteria, it shall be recognized as a financing lease:
① The ownership of the leased asset is transferred to the lessee when the term of lease expires;
② The lessee has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can be reasonably determined that the option will be exercised;
③ Even if the ownership of the asset is not transferred, the lease term covers the major part (over75% (included)) of the service life of the leased asset;
④ In the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts to substantially all (over90% (included)) of the fair value of the leased asset on the lease beginning date; in the case of the lessor, the present value of the minimum lease receipts on the lease beginning date amounts to substantially all (over90% (included)) of the fair value of the leased asset on the lease beginning date; and
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013⑤ The leased assets are of a specialized nature that only the lessee can use them without making major modifications.
A lease that does not satisfy the above conditions shall be recognized as an operating lease.
(2) The fixed assets leased by financing lease shall be recorded into the account based on the lower of the fair value of leased assets on the lease beginning date and the present value of the minimum lease payments, and a depreciation of the said fixed assets shall be made in accordance with the depreciation policies for the depreciable assets owned by the lessee.
2). Operating leases
The rents paid by the lessee shall be recorded by the Company into the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. The direct costs incurred from operating leases carried on by the Company shall be directly recorded into the profits and losses of the current period. The contingent rents involved in the operating lease agreement shall be recorded into the profits and losses of the current period in which they actually arise.
(27) Hedging
The Company designates main raw materials as a hedged item and forward contract as a hedging instrument to avoid the risks of changes in cash flows.
1). Recognition condition of hedging
(1) At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the relationship between the hedging instrument and the hedged item) and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. This document shall at least specify the contents of hedging instrument, the hedged item, the nature of the hedged risk and the method for the effectiveness assessment of the hedging and etc. The hedging shall be relevant to the designated specific identifiable risk, and will ultimately affect the profits and losses of the enterprise;
(2) The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by enterprise at the very beginning;
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (3) For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses;
(4) The effectiveness of hedging can be reliably measured;
(5) The Company shall continuously evaluate the effectiveness of hedging and ensure that this hedging is highly effective in accounting period in which the hedging relationship is specified.
2). Measurement of hedging
The hedging instrument is measured at its fair value on the date when the hedging contract is signed, and its subsequent measurement is done at its fair value. The hedging instrument with a positive fair value shall be recognized as other current assets, and the hedging instrument with a negative fair value shall be recognized as other current liabilities. Where a cash flow hedging meets the conditions for adopting the hedging accounting method, it shall be dealt with in accordance with the following provisions:
(1) In the profit or loss of the hedging instrument, the portion, which is attributed to the effective hedging shall be directly recognized as the owner's equity and shall be presented as a separate item. The amount of the portion of the effective hedging shall be confirmed in accordance with the lower of the accumulative profit or loss of the hedging instrument as of the commencement of hedging and the accumulative amount of changes in the present value of the estimated future cash flow of the hedged item as of the commencement of the hedging. (2) In the profit or loss of the hedging instrument, the portion, which is attributed to the ineffective hedging (namely the other profit or loss after deducting the portion directly recognized as the owner's equity) shall be recorded in the profit and loss of the current period. (3) The relevant profit or loss directly recognized in the owner's equity originally shall be shifted out during the same period in which this non-financial asset or non-financial liability affects the profit or loss of the enterprise and shall be recorded in the current profits and losses of the current period. However, when all or partial net loss expected by the enterprise to be directly recognized in the owner's equity originally can not be made up in the future accounting period, the portion which can not be made up shall be shifted out and shall be
recorded in profits and losses of the current period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). Evaluation of effectiveness of hedging
The Company adopts ratio analysis to evaluate the effectiveness of hedging instrument, that is, the Company recognizes the effectiveness of hedging instrument by comparing the hedging instrument resulting from the hedged risk with the fair value of the hedged item or change in cash flow ratio. When a hedging satisfies the following two conditions simultaneously, it shall be recognized as being highly efficient:
(1) At the beginning and in subsequent periods of a hedging, this hedging expectation shall be highly effective in offsetting the changes in the fair value or cash flows caused by the hedged item during the specified periods;
(2) Thehedging’s actual offset results are within a range of80% to125%.
(28) Changes of accounting policies and accounting estimates and early error correction 1). Changes of accounting policies
There were no changes of accounting policies in the Company during the period.
2). Changes of accounting estimates
There were no changes of accounting estimates in the Company during the period.
3). Early error correction
The Company was involved in no early error correction during the period.
3. Taxes
1). Value-added tax: The Company pays the value-added tax based on value-added amount from sale of goods or rendering of services, and the rate of value-added tax of the main goods is17%.
2). Income tax:
(1) The Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2008, upon expiration of the period, the Company passed the re-examination (High-tech Enterprise Certificate No. GF201144000202) and applied the income tax rate of15%.
(2) GREE (Zhongshan) Small Home Appliances Co., Ltd., a subsidiary company of the Company was registered in Zhongshan, Guangdong province, and has been enjoying the
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 preferential policy for the high and new tech enterprises as of 1 January 2012 (High-tech Enterprise Certificate No. GR201144000314) and applied the income tax rate of15%.
(3) Gree Electric Appliances (Chongqing) Co., Ltd., a subsidiary company of the Company has been enjoying the country's western development policy as of 1 January 2008, and applied the income tax rate of15%.
(4) Zhuhai Landa Compressor Co., Ltd., a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2012, upon expiration of the period, the Company passed the re-examination (High-tech Enterprise Certificate No. GR201144000037) and applied the income tax rate of15%. (Zhuhai Meilingda Refrigeration Technology Co., Ltd. as its subsidiary company applied the income tax rate of25%; Zhuhai Zhengang Foundry Co., Ltd. applies25%; Zhuhai Meiling General Motors Co., Ltd. applies25%; Hefei Landa Compressor Co., Ltd. applies15%; Zhengzhou Landa Compressor Co., Ltd. applies25%; Chongqing Landa Compressor Co., Ltd. applies25%; Wuhan Landa Compressor Co., Ltd. applies25%).
(5) Zhuhai Gree Electrical Co., Ltd., a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2008, upon expiration of the period, the Company passed the re-examination (High-tech Enterprise Certificate No. GR201144000361) and applied the income tax rate of15%. (Gree Electric Enterprises (Maanshan) Ltd. as its subsidiary company applied the income tax rate of15%, has been enjoying the preferential policy for the high and new tech enterprises (High-tech Enterprise Certificate No. GF201134000419).
(6) Zhuhai Kaibang Motor Manufacture Co., Ltd. a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2009, upon expiration of the period, the Company passed the re-examination (High-tech Enterprise Certificate No. GF201244000068) and applied the income tax rate of15% in this year (Hefei Kaibang Motor Manufacture Co., Ltd. as its subsidiary company applied the income tax rate of15%, has been enjoying the preferential policy for the high and new tech enterprises (High-tech Enterprise Certificate No.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 GR201134000018), Henan Kaibang Motor Manufacture Co., Ltd. applied the income tax rate of25%, and Chongqing Kaibang Motor Manufacture Co., Ltd. has been enjoying the country's western development policy as of 1 January 2013 and applied the income tax rate of15%).
(7) Gree Electric Appliances (Hefei) Co., Ltd., a subsidiary company of the Company was registered in Hefei city of Anhui province and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2008, upon expiration of the period, the Company passed the re-examination (High-tech Enterprise Certificate No. GF201134000349) and applied the income tax rate of15% in this year.
(8) Shanghai Gree Air Conditioners Sales Co., Ltd., a subsidiary company of the Company was registered in Shanghai and applied the income tax rate of25% in this year. (9) Zhuhai Gree Xinyuan Electronics Co., Ltd., a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2010 (High-tech Enterprise Certificate No. GR201044000512), and it applied the income tax rate of15% in this year.
(10) Gree Electric Appliances (Brazil) Co., Ltd., a subsidiary company of the Company was registered in Manaus of Brazil and applied the income tax rate of34% (Brazil United Electric Appliances Industry and Commerce Co., Ltd. as its subsidiary company was registered in Sao Paulo of Brazil and applied the income tax rate of34%).
(11) Zhuhai Gree Group Finance Company Limited, a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and applied the income tax rate of25% in this year.
(12) Hong Kong Gree Electric Appliances Sales Co., Ltd., a subsidiary company of the Company was registered in Kowloon, Hong Kong and applied the income tax rate of16.5% (Gree (USA) Sales Co., Ltd. as its subsidiary company was registered in California, USA and paid taxes in accordance with the local tax law).
(13) Shenzhen Gree Electric Appliances Sales Co., Ltd., a subsidiary company of the Company was registered in Shenzhen and applied the income tax rate of25%.
(14) Zhuhai Gree Daikin Device Co., Ltd., a subsidiary company of the Company was
registered in Zhuhai, Guangdong province, and applied the income tax rate of25%.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (15) Zhuhai Gree Daikin Precision Mold Co., Ltd., a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2013 (High-tech Enterprise Certificate No. GR201344000501),and applied the income tax rate of15%.
(16) Gree Green Refrigeration Technology Center Co., Ltd. Of Zhuhai, a subsidiary company of the Company was registered in Zhuhai, Guangdong province, and has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2011 (High-tech Enterprise Certificate No. GR201144000642), and it applied the income tax rate of15%.
(17) Gree Electric Appliances (Zhengzhou) Co., Ltd., a subsidiary company of the Company was registered in Zhengzhou city of Henan province and applied the income tax rate of25%.
(18) Gree Electric Appliances (Wuhan) Co., Ltd., a subsidiary company of the Company was registered in Wuhan city of Hubei province, has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2013 (High-tech Enterprise Certificate No. GR201342000397), and it applied the income tax rate of15%.
(19) Zhengzhou Gree Green Resources Recycling Co., Ltd., a subsidiary company of the Company was registered in Zhengzhou city of Henan province and applied the income tax rate of25%.
(20) Hunan Green Renewable Resources Co., Ltd., a subsidiary company of the Company was registered in Ningxiang county of Hunan province and applied the income tax rate of25%.
(21) Gree (Shijiazhuang) Small Home Appliances Co., Ltd., a subsidiary company of the Company was registered in Shijiazhuang city of Hebei province, has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2013 (High-tech Enterprise Certificate No. GR201313000094), and applied the income tax rate of15%.
(22) Gree Electric Appliances (Wuhu) Co., Ltd., a subsidiary company of the Company was registered in Wuhu city of Anhui province and applied the income tax rate of25%.
(23) Wuhu Green Resources Recycling Co., Ltd., a subsidiary company of the Company was registered in Wuhu city of Anhui province and applied the income tax rate of25%.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (24) Shijiazhuang Green Resources Recycling Co., Ltd., a subsidiary company of the Company was registered in Shijiazhuang city of Hebei province and applied the income tax rate of25%.
(25) Gree Electric Appliances (Shijiazhuang) Co., Ltd., a subsidiary company of the Company was registered in Shijiazhuang city of Hebei province, has been enjoying the preferential policy for the high and new tech enterprises as of 1 January 2013 (High-tech Enterprise Certificate No. GR201313000130), and it applied the income tax rate of15%.
(26) Zhuhai Gree Electric Appliances Sales Co., Ltd., a subsidiary company of the Company was registered in Zhuhai city of Guangdong province and applied the income tax rate of25%.
(27) Zhuhai HVAC Equipment Co., Ltd. a subsidiary company of the Company was registered in Zhuhai, Guangdong province and the income tax rate is25%.
(28) Zhuhai TOSOT Home Appliances Co., Lid. a subsidiary company of the Company was registered in Zhuhai, Guangdong province and the income tax rate is25%.
(29) Tianjin Green Resources Recycling Co., Ltd. a subsidiary company of the Company was registered in Tianjin and the income tax rate is25%.
(30) Zhuhai Ligao Precision Manufacturing Co., Ltd. a subsidiary company of the Company was registered in Zhuhai, Guangdong province and the income tax rate is25%.
3. Business tax: The tax rate is3%to-5%, and the business tax is paid based on the taxable income of the Company.
4). Urban maintenance& construction tax: The tax rate is5% to7%, and the urban maintenance& construction tax is paid based on the circulation Taxes payable.
5). Education surcharges: The tax rate is3%, and the education surcharge is paid based on the circulation Taxes payable.
6). Local education surcharge: The tax rate is2%, and the local education surcharge is paid based on the circulation Taxes payable.
7). Embankment protection fee: The fee rate is0.03% to0.1%, and the embankment protection fee is paid based on sales income.
8). Other taxes: Other taxes are paid in accordance with the national provisions.
9). The overseas subsidiary companies of the Company pay the corresponding taxes according to the local tax laws.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 4. Business combination and consolidated financial statements
(1) Information of subsidiaries
1). Subsidiaries acquired through establishment or investment
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type ofSubsidiary|Registered Place|Nature ofbusiness|RegisteredCapital (tenthousandyuan)|Scope of Business|ActualContributionat end of theperiod (tenthousandyuan)|Balance ofotherprojectssubstantiallyconstitutingnetinvestmentsto subsidiary|Shareholdingratio(%)|Votingrightpercentage(%)|Withinconsolidationscope(Y/N)|Minority equityinterests(Yuan)|Amountsofminorityequityintereststo chargeoffminorityequitygainsandlosses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity intereststhan the sharesheld by theminority share|
|Shenzhen GreeElectricAppliancesSales Co., Ltd|Holdingsubsidiary|ShenzhenCity|Sale|RMB 500|Sale of airconditioners|RMB 450||90|90|Yes|662,844.40|||
|Zhuhai GreeElectricAppliancesSales Co., Ltd.|Wholly-ownedsubsidiary|ZhuhaiCity|Sale|RMB 500|Sale, installationand repair ofhouseholdelectricalappliances|RMB 500||100|100|Yes||||
|Brazil UnitedElectricAppliancesIndustry andCommerce Co.,Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|SaoPaulo,Brazil|Sale|BRL200|Sale of airconditioners|BRL200||100|100|Yes||||
|Shanghai GreeAir ConditionersSales Co., Ltd|Holdingsubsidiary|ShanghaiCity|Sale|RMB 200|Sale of airconditioners|RMB 199.40||99.7|100|Yes|-282,371.69|||
|Gree (America)Sales Co., Ltd.|Holdingsubsidiary ofthewholly-ownedsubsidiary|California, USA|Sale|US$8|Sale of airconditioners|US$4.08||51|51|Yes|-26,144,551.15|||
|Gree ElectricAppliances(Hefei) Co., Ltd.|Wholly-ownedsubsidiary|Hefei City|Commercialmanufacture|RMB15,000|Production and saleof air conditioners|RMB50,537.06||100|100|Yes||||
|Gree ElectricAppliances(Brazil) Co.,Ltd.|Wholly-ownedsubsidiary|Manaus,Brazil|Commercialmanufacture|BRL 4,000|Production and saleof air conditioners|RMB13,023.94||100|100|Yes||||
|Gree ElectricAppliances(Zhengzhou)Co., Ltd.|Wholly-ownedsubsidiary|Zhengzhou City|Commercialmanufacture|RMB 2,000|Production and saleof air conditioners|RMB 72,000||100|100|Yes||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type ofSubsidiary|Registered Place|Nature ofbusiness|RegisteredCapital (tenthousandyuan)|Scope of Business|ActualContributionat end of theperiod (tenthousandyuan)|Balance ofotherprojectssubstantiallyconstitutingnetinvestmentsto subsidiary|Shareholdingratio(%)|Votingrightpercentage(%)|Withinconsolidationscope(Y/N)|Minority equityinterests(Yuan)|Amountsofminorityequityintereststo chargeoffminorityequitygainsandlosses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity intereststhan the sharesheld by theminority share|
|Gree ElectricAppliances(Wuhan) Co.,Ltd.|Wholly-ownedsubsidiary|WuhanCity|Commercialmanufacture|RMB 1,000|Production and saleof air conditioners|RMB 51,000||100|100|Yes||||
|Gree ElectricAppliances(Chongqing)Co., Ltd.|Holdingsubsidiary|Chongqing City|Commercialmanufacture|RMB23,000|Production and saleof air conditioners|RMB 22,310||97|97|Yes|95,196,480.86|||
|Gree ElectricAppliances(Wuhu) Co.,Ltd.|Wholly-ownedsubsidiary|WuhuCity|Commercialmanufacture|RMB 2,000|Production and saleof air conditioners|RMB 2,000||100|100|Yes||||
|GREE(Zhongshan)Small HomeAppliances Co.,Ltd.|Wholly-ownedsubsidiary|Zhongshan City|Commercialmanufacture|RMB 3,000|Production and saleof small householdelectricalappliances|RMB 3,000||100|100|Yes||||
|Gree(Shijiazhuang)Small HomeAppliances Co.,Ltd.|Wholly-ownedsubsidiary|Shijiazhuang|Commercialmanufacture|RMB 1,000|Production and saleof small householdelectricalappliances|RMB 1,000||100|100|Yes||||
|Gree GreenRefrigerationTechnologyCenter Co., Ltd.Of Zhuhai|Wholly-ownedsubsidiary|ZhuhaiCity|Technicalresearch anddevelopment|RMB11,604|Technical researchand developmentof energy savingand environmentalprotectionhouseholdappliances|RMB32,463.37||100.00|100.00|Yes||||
|Zhengzhou GreeGreenResourcesRecycling Co.,Ltd|Wholly-ownedsubsidiary|Zhengzhou City|Commercialmanufacture|RMB 500|Research &development andsale of secondaryresources recyclingtechnology|RMB 500||100|100|Yes||||
|ShijiazhuangGreenResourcesRecycling Co.,Ltd.|Wholly-ownedsubsidiary|Shijiazhuang|Commercialmanufacture|RMB 200|Research &development andsale of secondaryresources recyclingtechnology|RMB 200||100|100|Yes||||
|Wuhu GreenResourcesRecycling Co.,|Wholly-ownedsubsidiary|WuhuCity|Commercialmanufacture|RMB 200|Research &development andsale of secondary|RMB 200||100|100|Yes||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type ofSubsidiary|Registered Place|Nature ofbusiness|RegisteredCapital (tenthousandyuan)|Scope of Business|ActualContributionat end of theperiod (tenthousandyuan)|Balance ofotherprojectssubstantiallyconstitutingnetinvestmentsto subsidiary|Shareholdingratio(%)|Votingrightpercentage(%)|Withinconsolidationscope(Y/N)|Minority equityinterests(Yuan)|Amountsofminorityequityintereststo chargeoffminorityequitygainsandlosses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity intereststhan the sharesheld by theminority share|
|Ltd.|||||resources recyclingtechnology|||||||||
|Hunan GreenRenewableResources Co.,Ltd.|Wholly-ownedsubsidiary|NingxiangCounty|Commercialmanufacture|RMB 500|Research &development andsale of secondaryresources recyclingtechnology|RMB 500||100|100|Yes||||
|Tianjin GreenRenewableResources Co.,Ltd|Wholly-ownedsubsidiary|Tianjin|Commercialmanufacture|RMB 500|Research &development andsale of secondaryresources recyclingtechnology|RMB 500||100|100|Yes||||
|Zhuhai GreeDaikin PrecisionMold Co., Ltd.|Holdingsubsidiary|ZhuhaiCity|Commercialmanufacture|US$5,796|Development,production and saleof moulds andmoldings|RMB20,191.12||51|51|Yes|217,220,267.75|||
|Zhuhai GreeDakin DeviceCo., Ltd.|Holdingsubsidiary|ZhuhaiCity|Commercialmanufacture|US$8,129|Development,production and saleof compressors andcontrollers|RMB28,311.76||51|51|Yes|317,252,520.40|||
|Hefei LandaCompressor Co.,Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Hefei City|Commercialmanufacture|RMB10,000|Production and saleof compressors|RMB 94,110||100.00|100.00|Yes||||
|Hefei KaibangMotorManufactureCo., Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Hefei City|Commercialmanufacture|RMB 3,000|Production and saleof motors|RMB 3,000||100|100|Yes||||
|ZhengzhouLandaCompressor Co.,Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Zhengzhou City|Commercialmanufacture|RMB 3,000|Production and saleof compressors|RMB 3,000||100|100|Yes||||
|ChongqingLandaCompressor Co.,Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Chongqing City|Commercialmanufacture|RMB 3,000|Production and saleof compressors|RMB 3,000||100|100|Yes||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type ofSubsidiary|Registered Place|Nature ofbusiness|RegisteredCapital (tenthousandyuan)|Scope of Business|ActualContributionat end of theperiod (tenthousandyuan)|Balance ofotherprojectssubstantiallyconstitutingnetinvestmentsto subsidiary|Shareholdingratio(%)|Votingrightpercentage(%)|Withinconsolidationscope(Y/N)|Minority equityinterests(Yuan)|Amountsofminorityequityintereststo chargeoffminorityequitygainsandlosses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity intereststhan the sharesheld by theminority share|
|Wuhan LandaCompressor Co.,Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|WuhanCity|Commercialmanufacture|RMB 3,000|Production and saleof compressors|RMB 3,000||100|100|Yes||||
|Henan KaibangMotorManufactureCo., Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Zhengzhou|Commercialmanufacture|RMB 1,000|Production and saleof motors|RMB 1,000||100|100|Yes||||
|ChongqingKaibang MotorManufactureCo., Ltd.|Wholly-ownedsubsidiary ofthewholly-ownedsubsidiary|Chongqing|Commercialmanufacture|RMB 1,000|Production and saleof motors|RMB 1,000||100|100|Yes||||
|Zhuhai LigaoPrecisionManufacturingCo., Ltd.|Wholly-ownedsubsidiary|ZhuhaiCity|Commercialmanufacture|RMB 3,000|Production and saleof compressors|RMB 3,000||100.00|100.00|Yes||||
|Zhuhai HVACEquipment Co.,Ltd.|Wholly-ownedsubsidiary|ZhuhaiCity|Commercialmanufacture|RMB10,000|Production and saleof air-conditioners|RMB 10,000||100.00|100.00|Yes||||
|Zhuhai TOSOTHomeAppliances Co.,Lid.|Wholly-ownedsubsidiary|ZhuhaiCity|Commercialmanufacture|RMB 3,000|Production and saleof small householdelectricalappliances|RMB 3,000||100.00|100.00|Yes||||

The Company directly holds90% of total stocks of Shanghai GREE Air Conditioners Sales Co., Ltd., and Gree Electric Appliances (Chongqing) Co., Ltd. as the subsidiary of the Company holds its remaining10% stocks, so the Company holds its99.7% stocks in the direct and indirect ways;
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2. Subsidiaries acquired through business combination involving enterprises under common control
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type ofSubsidiary|RegisteredPlace|Nature ofbusiness|RegisteredCapital (tenthousandyuan)|Scope of Business|ActualContribution atend of theperiod (tenthousand yuan)|Balance ofother projectssubstantiallyconstituting netinvestments tosubsidiary|Shareholdingratio (%)|Votingrightpercentage(%)|Withinconsolidationscope (Y/N)|Minority equityinterests (Yuan)|Amounts ofminorityequityinterests tocharge offminorityequity gainsand losses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity interests thanthe shares held bythe minority share|
|Zhuhai LandaCompressor Co.,Ltd.|Wholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|RMB 9,303|Production and saleof compressors|RMB90,933||100|100|Yes||||
|Zhuhai GreeElectrical Co., Ltd.|Wholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|RMB 16,932|Production and saleof varnished wires|RMB 20,395||100|100|Yes||||
|Zhuhai GreeXinyuanElectronics Co.,Ltd.|Wholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|RMB 2,618|Production and saleof capacitors|RMB 5,926||100|100|Yes||||
|Zhuhai Gree GroupFinance CompanyLimited|Holdingsubsidiary|Zhuhai City|FinancialServices|RMB150,000|Carry on thebusiness approvedby China BankingRegulatoryCommission|RMB 141,437||89.25|89.25|Yes|253,000,794.51|||
|Zhuhai MeilingdaRefrigerationTechnology Co.,Ltd.|Holdingsubsidiary of thewholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|RMB 1,000|Production and saleof compressors|RMB 700||70|70|Yes|26,961,387.47|||
|Zhuhai ZhengangFoundry Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|HKD50|Production and saleof metal precisioncasting parts|RMB 1,759||100|100|Yes||||
|Zhuhai MeilingGeneral MotorsCo., Ltd.|Holding grandsoncompany of thewholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|US$625|Production and saleof compressors|RMB 1,959||100|100|Yes||||
|Gree ElectricEnterprises(Maanshan) Ltd|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Ma'anshan|Commercialmanufacture|RMB 1,530|Production and saleof varnished wires|RMB 1,578||100|100|Yes||||

The Company directly holds88.31% of total stocks of Zhuhai Gree Group Finance Company Limited, and Zhuhai Gree Electrical Co., Ltd. and Zhuhai Gree Xinyuan Electronics Co., Ltd. as the wholly-owned subsidiaries of the Company respectively hold its0.47% stocks, so the Company holds its89.25% stocks in the direct and indirect ways.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3. Subsidiaries acquired through business combination not involving enterprises under common control
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Full Name ofSubsidiary|Type of subsidiary|Registeredplace|Nature ofbusiness|RegisteredCapital (tenthousand yuan)|Scope ofbusiness|ActualContribution atend of theperiod (tenthousand yuan)|Balance ofother projectssubstantiallyconstituting netinvestments tosubsidiary|Shareholding ratio(%)|Votingrightpercentage (%)|Withinconsolidation scope(Y/N)|Minority equityinterests (Yuan)|Amountsofminorityequityintereststo chargeoffminorityequitygains andlosses|Amounts of theexcess of currentlosses undertakenby the subsidiary'sminorityshareholders andcharged off by theparent company'sequity interests thanthe shares held bythe minority share|
|Zhuhai KaibangMotor ManufactureCo., Ltd.|Wholly-ownedsubsidiary|Zhuhai City|Commercialmanufacture|RMB 8200|Production andsale of motors|RMB 8,386||100|100|Yes||||
|Hong Kong GreeElectric AppliancesSales Co., Ltd.|Wholly-ownedsubsidiary|Kowloon,Hong Kong|Sale|HKD10|Sale of airconditioners|HKD47.29||100|100|Yes||||
|Gree ElectricAppliances(Shijiazhuang) Co.,Ltd.|Wholly-ownedsubsidiary|Shijiazhuang|Commercialmanufacture|RMB 10,000|Production andsale of airconditioners|RMB 9,894.01||100|100|Yes||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Description for changes in the scope of consolidation
1). New subsidiaries incorporated in the scope of consolidated financial statements during the period
On 6 March 2013, the Company invested RMB 10 million to establish the subsidiary Zhuhai HVAC Equipment Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
On 13 March 2013, the Company invested RMB 5 million to establish the subsidiary Tianjin Green Renewable. Resources Co., Ltd. and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
On 12 April 2013, the Company invested RMB 30 million to establish the subsidiary Zhuhai TOSOT Life Electric Appliances Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
On 14 October 2013, the Company invested RMB 30 million to establish the subsidiary Zhuhai Ligao Precision Manufacturing Co., Ltd and held its100% equity. In 2013 it was incorporated in the consolidated financial statements.
2). Subsidiaries not incorporated in the scope of consolidated financial statements during the period
In June 2013, Gree Electric Appliances (Chongqing) and Electronic Technology Co., Ltd was cancelled, so as of June 2013 it will not be included in the consolidated financial statements
(3) New subjects incorporated in the scope of consolidation and subjects not incorporated in the scope of consolidation during the current period
1). New subjects incorporated in the scope of consolidation during the current period
||||
|-|-|-|
|Name|Net assets of the end of the period(Yuan)|Net profit of the period (Yuan)|
|Tianjin Green Resources Recycling Co., Ltd.|5,000,000.00|-|
|Zhuhai HVAC Equipment Co., Ltd.|98,406,339.79|-1,593,660.21|
|Zhuhai TOSOT Home Appliances Co., Lid.|30,100,196.10|100,196.10|
|Zhuhai Ligao Precision Manufacturing Co., Ltd.|25,744,464.76|-4,255,535.24|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Subjects not incorporated in the scope of consolidation during the current period
||||
|-|-|-|
|Name|Net asset on the date of disposal(Yuan)|Net profit from the beginning ofthe period to date of disposal(Yuan)|
|Gree Electric Appliances (Chongqing) andElectronic Technology Co., Ltd.|17,263,912.34|829,801.64|

(4) Treatment of conversion rate and translation differences of main items of the financial statements involving foreign entities in the consolidated financial statements In the consolidated financial statements, Hong Kong Gree Electric Appliances Sales Co., Ltd. and its subsidiary Gree (America) Sales Co., Ltd., Gree Electric Appliances (Brazil) Co., Ltd. and its subsidiary Brazil United Electric Appliances Industry and Commerce Co., Ltd. are all foreign entities. For the translation method of foreign currency statements, please refer to the Notes 2 (9) - foreign currency transactions.
Exchange rate of main statements items of foreign operating entities
Exchange rate of main financial statements items of foreign operating entities included in financial statements that consolidated in the report period is: the asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date($ 1= RMB 6.0969 , HK$ 1= RMB 0.7862 and 1BRL= RMB 2.5869). The owners' equity items, except the ones as "undistributed profits", shall be translated at the spot exchange rate at the time when they are incurred. Income statements and cash flow statements shall be translated at approximate exchange rate of the spot exchange rate of the transaction date($ 1= RMB 6.1896, HK$ 1= RMB 0.7979 and 1 BRL= RMB 2.8715).
5. Description of important items in the notes to important items of consolidated financial statements
Unless specially indicated, the monetary unit of the data listed in this section shall be RMB yuan. "Beginning of the period" means 1 January 2013, "End of the period" means 31 December 2013, "Previous period" means the year 2012, "Current period" means the year 2013.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (1) Monetary capital
||||||||
|-|-|-|-|-|-|-|
|Item|Amount at the end of the period|||Amount at the beginning of the period|||
||Foreign currencyamount|Conversionrate||Foreign currencyamount|Conversionrate||
|Cash:|||2,183,756.28|||1,667,396.41|
|RMB|2,113,183.87|1.0000|2,113,183.87|1,608,423.83|1.0000|1,608,423.83|
|Hong Kongdollar|23,390.92|0.7862|18,389.94|16,433.16|0.8109|13,325.65|
|U.S. dollar|819.30|6.0969|4,995.19|353.00|6.2855|2,218.78|
|BRL|5,539.00|2.5869|14,328.84|4,576.00|3.0201|13,819.98|
|Japanese yen|21,606.75|0.0578|1,248.87|23,718.00|0.0730|1,731.41|
|Rupee|54,115.53|0.0979|5,297.91||||
|New Zealanddollar|3.50|4.7857|16.75|80.00|5.1298|410.38|
|Pounds||||370.00|10.1611|3,759.61|
|Singaporedollar||||790.50|5.0929|4,025.94|
|Australiandollar|485.00|5.4301|2,633.60|765.00|6.5363|5,000.27|
|Euro|2,810.50|8.4189|23,661.31|1,765.00|8.3176|14,680.56|
|Bank deposits:|||16,905,988,342.59|||12,410,887,248.92|
|RMB|1,732,037,762.06|1.0000|1,732,037,762.06|2,309,071,214.27|1.0000|2,309,071,214.27|
|Hong Kongdollar|547,486,239.99|0.7862|430,433,681.88|11,657,723.89|0.8109|9,453,248.30|
|U.S. dollar|2,413,142,525.83|6.0969|14,712,688,665.74|1,298,659,918.35|6.2855|8,162,726,916.79|
|Japanese yen|1,917,392.21|0.0578|110,825.27|5,481,558.00|0.0730|400,153.73|
|Euro|488,316.03|8.4189|4,111,083.84|229,503,711.35|8.3176|1,908,920,069.52|
|BRL|10,285,022.15|2.5869|26,606,323.80|6,726,812.46|3.0201|20,315,646.31|
|Other monetarycapital:|||6,312,293,138.58|||9,545,956,761.46|
|RMB|2,903,885,211.03|1.0000|2,903,885,211.03|5,704,342,722.02|1.0000|5,704,342,722.03|
|U.S. dollar|559,039,500.00|6.0969|3,408,407,927.55|611,186,705.82|6.2855|3,841,614,039.43|
|Deposits incentral bank:|-||2,993,409,470.37|||1,499,462,197.28|
|RMB|2,993,409,470.37|1.0000|2,993,409,470.37|1,499,462,197.28|1.0000|1,499,462,197.28|
|Deposits inother banks:|||12,327,809,763.01|||5,485,948,097.38|
|RMB|12,326,705,283.27|1.0000|12,326,705,283.27|5,484,811,883.97|1.0000|5,484,811,883.97|
|U.S. dollar|4,245.13|6.0969|25,882.13|4,218.72|6.2855|26,516.76|
|Hong Kongdollar|1,371,912.50|0.7862|1,078,597.61|1,368,475.34|0.8109|1,109,696.65|
|Total|||38,541,684,470.83|||28,943,921,701.45|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Note: the margin deposit for the banker's acceptance bill in other monetary capital of the Company is RMB 2,521,537,489.74; the loan pledge margin is RMB 3,769,613,409.78; the reserve requirements on deposit in the Company's deposits in central bank is RMB 2,991,350,507.70.
(2) Transactional financial assets
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Derivative financial assets|1,246,106,661.88|263,460,017.40|
|Total|1,246,106,661.88|263,460,017.40|

 Note: The ending balance of the derivative financial instruments of the Company during the period is the income from changes in fair value generated from the unsettled foreign exchange forward contract.
(3) Notes receivable
||||
|-|-|-|
|Type of notes|Amount at the end of the period|Amount at the beginning of the period|
|Banker's acceptance bill|46,297,242,328.98|34,292,168,999.99|
|Total|46,297,242,328.98|34,292,168,999.99|

 Note: As of 31 December 2013, the amount of the pledged notes receivable was RMB 222,996,160.00, and the amount of the notes receivable which have been endorsed to others but not yet expired was RMB 27,286,928,460.98, and the amount of the notes receivable which have been discounted but not yet expired was RMB 1,500,000,000.00; the Company had no notes carried forward to the accounts receivable due to incapability of performance by the drawer during the period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (4) Accounts receivable
1). The accounts receivable are disclosed by type:
||||||
|-|-|-|-|-|
|Type|Amount at the end of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Accounts receivable with significant singleamounts and single bad debt provisionappropriated|||||
|Accounts receivable with bad debt provision provided by combination|||||
|Aging combination|1,952,883,810.66|97.22|103,608,467.87|5.31|
|Combination of other credit risks|||||
|Subtotal of combinations|1,952,883,810.66|97.22|103,608,467.87|5.31|
|Accounts receivable with insignificantsingle amounts but single bad debt provisionappropriated|55,900,113.07|2.78|55,900,113.07|100.00|
|Total|2,008,783,923.73|100.00|159,508,580.94|7.94|

 Continued
||||||
|-|-|-|-|-|
|Type|Amount at the beginning of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Accounts receivable with significant singleamounts and single bad debt provisionappropriated|||||
|Accounts receivable with bad debt provision provided by combination|||||
|Aging combination|1,561,677,574.58|98.83|86,804,603.02|5.56|
|Combination of other credit risks|||||
|Subtotal of combinations|1,561,677,574.58|98.83|86,804,603.02|5.56|
|Accounts receivable with insignificant singleamounts but single bad debt provisionappropriated|18,481,654.23|1.17|18,481,654.23|100.00|
|Total|1,580,159,228.81|100.00|105,286,257.25|6.66|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Accounts receivable with bad debt provision provided by aging analysis in the combinations
||||||||
|-|-|-|-|-|-|-|
|Aging|Amount at the end of the period|||Amount at the beginning of the period|||
||Book balance||Bad debtprovision|Book balance||Bad debtprovision|
||Amount|Percentage(%)||Amount|Percentage(%)||
|Within 1year|1,946,242,489.17|99.66|97,312,124.49|1,552,134,454.83|99.39|77,606,722.75|
|1 to 2 years|404,900.14|0.02|80,980.03|42,116.00|0.00|8,423.20|
|2 to 3 years|42,116.00|0.00|21,058.00|623,093.37|0.04|311,546.69|
|Over 3 years|6,194,305.35|0.32|6,194,305.35|8,877,910.38|0.57|8,877,910.38|
|Total|1,952,883,810.66|100.00|103,608,467.87|1,561,677,574.58|100.00|86,804,603.02|

 3). Accounts receivable with insignificant single amounts but single bad debt provision appropriated at the end of the year:
||||||
|-|-|-|-|-|
|Name of debtor|Book balance|Bad debt provision|Percentage ofappropriation(%)|Reason forappropriation|
|Client 1|4,715,115.32|4,715,115.32|100.00|Insolvency|
|Client 2|13,458,727.43|13,458,727.43|100.00|Bankruptcy|
|Client 3|307,811.48|307,811.48|100.00|Bankruptcy|
|Client 4|35,479,109.14|35,479,109.14|100.00|Bankruptcy|
|Client 5|1,939,349.70|1,939,349.70|100.00|Bankruptcy|
|Total|55,900,113.07|55,900,113.07|||

4). As of 31 December 2013, among the accounts receivable, there was not any money owed to a voting entity shareholder holding5% or more shares of the Company.
5). The top 5 debtors of accounts receivable
||||||
|-|-|-|-|-|
|Name of entity|Relationship with theCompany|Amount|Years|Percentage to totalaccounts receivable (%)|
|First|Non-related party|392,677,699.28|Within 1 year|19.55|
|Second|Non-related party|119,630,367.95|Within 1 year|5.96|
|Third|Non-related party|62,736,153.86|Within 1 year|3.12|
|Fourth|Non-related party|55,811,087.80|Within 1 year|2.78|
|Fifth|Non-related party|39,767,355.79|Within 1 year|1.98|
|Total||670,622,664.68||33.39|

6). As of 31 December 2013, among the accounts receivable, there was not any amount
receivable from related parties.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (5) Prepayments
1). The prepayments are listed by aging as follows:
||||||
|-|-|-|-|-|
|Aging|Amount at the end of the period||Amount at the beginning of the period||
||Amount|Percentage (%)|Amount|Percentage (%)|
|Within 1 year|1,202,825,889.73|80.27|1,478,286,686.63|84.97|
|1 to 2 years|228,274,823.66|15.23|235,890,859.47|13.56|
|2 to 3 years|60,593,031.79|4.04|25,333,992.44|1.46|
|Over 3 years|6,955,925.46|0.46|202,347.56|0.01|
|Total|1,498,649,670.64|100.00|1,739,713,886.10|100.00|

 2). The top 5 prepaying entities of the prepayments
|||||||
|-|-|-|-|-|-|
|Name of entity||Relationship withthe Company|Amount|Time|Causes of arrears|
|Angang Steel Company Limited.||Non-related party|167,471,614.10|Within 1 year|Goods not received|
|Hebei Shougang Qian'an Iron & SteelCo., Ltd.||Non-related party|122,795,508.60|Within 1 year|Goods not received|
|Magang (Hefei) Iron and SteelProcessing Co., Ltd.||Non-related party|117,739,623.84|Within 1 year|Goods not received|
||Guangzhou WISCO South China|Non-related party|108,115,534.33|Within 1 year|Goods not received|
||Marketing Co., Ltd.|||||
|Guangzhou Bao Steel SouthernTrading Co., Ltd.||Non-related party|72,283,877.41|Within 1 year|Goods not received|
|Total|||588,406,158.28|||

3). As of 31 December 2013, among the prepayments, there was not any money prepaid to a voting entity shareholder holding5% or more shares of the Company.
(6) Interests receivable
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Interest on deposit|706,084,756.86|692,042,580.41|
|Loan interest|5,057,680.56|1,942,875.00|
|Interest of bond investment|18,417,205.48|16,869,771.16|
|Others||10,357.00|
|Total|729,559,642.90|710,865,583.57|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (7) Other receivables
1). Other receivables are disclosed by type:
||||||
|-|-|-|-|-|
|Type|Amount at the end of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Other receivables with significant single amounts and singlebad debt provision appropriated|||||
|Other receivables with bad debt provision appropriated by combination|||||
|Aging combination|382,438,353.20|100.00|36,018,604.45|9.42|
|Combination of other credit risks|||||
|Subtotal of combinations|382,438,353.20|100.00|36,018,604.45|9.42|
|Other receivables with insignificant single amounts but singlebad debt provision appropriated|||||
|Total|382,438,353.20|100.00|36,018,604.45|9.42|

 Continued
||||||
|-|-|-|-|-|
|Type|Amount at the beginning of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Other receivables with significant single amounts and singlebad debt provision appropriated|||||
|Other receivables with bad debt provision appropriated by combination|||||
|Aging combination|320,164,470.14|100.00|29,808,068.54|9.31|
|Combination of other credit risks|||||
|Subtotal of combinations|320,164,470.14|100.00|29,808,068.54|9.31|
|Other receivables with insignificant single amounts but singlebad debt provision appropriated|||||
|Total|320,164,470.14|100.00|29,808,068.54|9.31|

 2). Other receivables with bad debt provision appropriated by aging analysis in the combinations:
||||||||
|-|-|-|-|-|-|-|
|Aging|Amount at the end of the period|||Amount at the beginning of the period|||
||Book balance||Bad debtprovision|Book balance||Bad debtprovision|
||Amount|Percentage(%)||Amount|Percentage(%)||
|Within 1 year|342,711,477.25|89.62|17,135,572.90|284,906,994.74|88.99|14,245,349.77|
|1 to 2 years|21,887,289.11|5.72|4,377,458.82|23,482,517.55|7.33|4,696,503.52|
|2 to 3 years|6,668,028.27|1.74|3,334,014.15|1,817,485.19|0.57|908,742.59|
|Over 3 years|11,171,558.57|2.92|11,171,558.58|9,957,472.66|3.11|9,957,472.66|
|Total|382,438,353.20|100.00|36,018,604.45|320,164,470.14|100.00|29,808,068.54|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). The top 5 debtors of other receivables
||||||
|-|-|-|-|-|
|Name of entity|Relationshipwith theCompany|Amount|Years|Percentage tototal otherreceivables (%)|
|Jinrui Futures Co., Ltd.|Non-relatedparty|170,162,028.73|Within 1 year|44.49|
|Zhengzhou High-Tech Industrial DevelopmentZone Accounting Service Center|Non-relatedparty|14,382,900.00|Within 1 year|3.76|
|Hefei Gas Group Co., Ltd.|Non-relatedparty|3,264,872.40|Within 1 year|0.85|
|Wuhan Labor and Social Security SupervisionTeam|Non-relatedparty|2,500,000.00|1 to 2 years|0.65|
|China Resources Gas Co., Ltd|Non-relatedparty|1,160,000.00|Within 1 year|0.30|
|Total||191,469,801.13||50.05|

 4). As of 31 December 2013, among the other receivables, there was not any amount receivable from related parties.
(8) Inventories
1). Type of inventories
|||||
|-|-|-|-|
|Item|Amount at the end of the period|||
||Book balance|Provision for pricefall|Carrying amount|
|Raw material|5,365,668,616.08|84,887,853.04|5,280,780,763.04|
|Goods in process|2,081,236,417.97||2,081,236,417.97|
|Finished goods|5,848,856,641.44|88,143,396.67|5,760,713,244.77|
|Total|13,295,761,675.49|173,031,249.71|13,122,730,425.78|

 Continued
|||||
|-|-|-|-|
|Item|Amount at the beginning of the period|||
||Book balance|Provision for pricefall|Carrying amount|
|Raw material|5,613,005,938.38|75,073,112.48|5,537,932,825.90|
|Goods in process|1,388,555,920.98||1,388,555,920.98|
|Finished goods|10,341,885,771.98|33,331,956.16|10,308,553,815.82|
|Total|17,343,447,631.34|108,405,068.64|17,235,042,562.70|

 2). Provision for obsolete stocks
|||||||
|-|-|-|-|-|-|
|Type ofinventories|Amount at thebeginning of theperiod|Amount ofappropriation forthe currentperiod|Decrease for the current period||Amount at the endof the period|
||||Reversed amount|Write-offamount||
|Raw material|75,073,112.48|9,814,740.56|||84,887,853.04|
|Finished goods|33,331,956.16|54,811,440.51|||88,143,396.67|
|Total|108,405,068.64|64,626,181.07|||173,031,249.71|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). Description of provision for obsolete stocks
|||||
|-|-|-|-|
|Item|Basis to appropriate theprovision for obsolete stocks|Cause for reversal toprovision for obsolete stocksfor the current period|Percentage of reversed amountfor the current period to endingbalance of the inventories (%)|
|Raw material|Cost is higher than netrealizable value|||
|Goods in process|Cost is higher than netrealizable value|The market price picks up|0.13|
|Finished goods|Cost is higher than netrealizable value|||

(9) Other current assets
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Hedging instruments|15,205,287.36|13,752,940.26|
|Hedging instrument margin|85,648,602.00|123,490,057.50|
|Total|100,853,889.36|137,242,997.76|

 (10) Disbursement of loans and advances
1). Schedule of disbursement of loans and advances
||||
|-|-|-|
|Item|Amount at the end of theperiod|Amount at the beginning of theperiod|
|Disbursement of loans and advances|||
|Disbursement of loans|2,224,000,000.00|1,039,500,000.00|
|Wherein: pledged loans|2,224,000,000.00|1,039,500,000.00|
|Discounted value|2,459,347,320.64|1,103,243,133.00|
|Subtotal|4,683,347,320.64|2,142,743,133.00|
|Total disbursement of loans and advances|4,683,347,320.64|2,142,743,133.00|
|Less: loan loss provision|117,891,621.73|53,839,698.01|
|Including: single appropriation|||
|Combined appropriation|117,891,621.73|53,839,698.01|
|Carrying amount of disbursement of loans andadvances|4,565,455,698.91|2,088,903,434.99|

2). Changes in loss provision for disbursement of loans and advances
||||||
|-|-|-|-|-|
|Item|Amount at the end of the period||Amount at the beginning of the period||
||Single|Combined|Single|Combined|
|Balance at the beginning of the year||53,839,698.01|||
|Appropriation for the current year||64,051,923.72||53,839,698.01|
|Amount transferred out in the current year|||||
|Write-off amount in the current year|||||
|Amount recovered in the current year|||||
|Amounts recovered from receipt ofpreviously amortized loans and advances|||||
|Amounts recovered from appreciation ofdiscounted value of loans and advances|||||
|Amounts recovered from other factors|||||
|Balance at the end of the period||117,891,621.73||53,839,698.01|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (11) Financial assets available for sale
1). Classification of financial assets available for sale
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Bonds available for sale|805,932,600.00|544,912,450.00|
|Others||10,000,000.00|
|Total|805,932,600.00|554,912,450.00|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Long-term debt investment of financial assets available for sale
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item of bond|Type of bond|Par value|Initial investmentcost|Maturitydate|Balance at thebeginning of the year|Interest of currentperiod|Accumulated interest|Ending balance|
|State Grid bond|State Gridbonds|350,000,000.00|344,572,550.00|2020-2-5|346,077,550.00|16,585,653.48|31,589,178.07|327,135,200.00|
|SDIC|State Gridbonds|100,000,000.00|98,102,399.99|2014-11-20|100,347,200.00|4,790,000.00|5,341,178.08|98,711,800.00|
|Railway|Railway bond|200,000,000.00|195,338,400.00|2019-9-22|98,487,700.00|10,941,369.88|13,532,054.81|186,446,400.00|
|State Grid|State Gridbonds|200,000,000.00|200,000,000.00|2016-12-23||9,810,410.96|9,810,410.96|193,639,200.00|
|Total||850,000,000.00|838,013,349.99||544,912,450.00|42,127,434.32|60,272,821.92|805,932,600.00|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (12) Investment to joint venture and partnership
|||||||||
|-|-|-|-|-|-|-|-|
|Name of investedentities|Shareholdingratio of theCompany (%)|Percentageof votingrights in theinvestedentity heldby theCompany(%)|Total assets atthe end of theperiod|Total liabilitiesat the end of theperiod|Total net assetsat the end of theperiod|Total operatingrevenues for thecurrent period|Net profitfor the currentperiod|
|1. Partnership||||||||
|Songyuan FoodGroup Co., Ltd.|50.00|50.00|120,975,939.51|3,796,976.73|117,178,962.78|9,644,221.44|-2,797,553.37|
|Subtotal|||120,975,939.51|3,796,976.73|117,178,962.78|9,644,221.44|-2,797,553.37|
|2. Joint venture||||||||
|(Vietnam) GreeElectricAppliances, Inc.|31.25|33.75||||||
|Zhuhai LidaInternationalSupply ChinaManagement Co.,Ltd.|30.00|30.00|5,947,681.77|99,212.45|5,848,469.32||-24,920.95|
|Liaowang AllMediaCommunicationCo., Ltd.|49.00|49.00|67,814,825.36|15,851,986.52|51,962,838.84|60,919,083.58|5,472,313.60|
|Beijing GreeTechnology Co.,Ltd.|15.00|15.00|40,010,465.52|35,173,720.51|4,836,745.01|96,671,183.84|1,286,792.29|
|Chongqing PargoMechanicalEquipment Co.,Ltd.|38.70|38.70|38,892,033.41|10,372,115.23|28,519,918.18|24,268,913.97|2,986,673.60|
|Subtotal|||152,665,006.06|61,497,034.71|91,167,971.35|181,859,181.39|9,720,858.54|
|Total|||273,640,945.57|65,294,011.44|208,346,934.13|191,503,402.83|6,923,305.17|

 Note: 1. Investment to (Vietnam) Gree Electric Appliances, Inc. has appropriated the provision for impairment in full, at present the Company has not participated in its production, operation and management.
2. In December 2013, the Company and Songyuan Financial Investment Management Center jointly established Songyuan Food Group Limited and its registered capital is RMB 121.2 million. The Company subscribed RMB 60.6 million, accounting for50% of the registered capital.
3. In September 2012, the Company purchased from Chongqing Shiji Jingxin Industrial (Group) Co., Ltd.38.7% of total stocks of Chongqing Pargo Mechanical Equipment Co., Ltd. held by it, and the transfer price was RMB 8,503,918.85. As of 31 December 2013, the Company actually paid a total sum of stock transfer of RMB 8,503,918.85 and held38.7% of
total stocks of Chongqing Pargo Mechanical Equipment Co., Ltd.
(13) Long-term equity investments
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 1). Classification
||||||
|-|-|-|-|-|
|Item|Amount at the end of the period||Amount at the beginning of the period||
||Amount|Provision forimpairment|Amount|Provision forimpairment|
|Investments to jointventure|58,589,481.39||||
|Investments to jointventure|40,919,061.26|1,940,009.35|30,100,001.65|1,940,009.35|
|Other equityinvestments|900,000.00|900,000.00|900,000.00|900,000.00|
|Total|100,408,542.65|2,840,009.35|31,000,001.65|2,840,009.35|

 2). Long-term equity investments
||||||||
|-|-|-|-|-|-|-|
|Name of investedentities|Accountingmethod|Investment cost|Amount at thebeginning ofthe period|Increase/decrease|Amount at theend of the period|Shareholdingratio in theinvestedentity (%)|
|Zhuhai Dasheng Co.Ltd.|Costmethod|900,000.00|900,000.00||900,000.00|3.13|
|Chongqing PargoMechanical EquipmentCo., Ltd.|Equitymethod|8,503,918.85|2,964,409.70|8,072,798.64|11,037,208.34|38.7|
|(Vietnam) GreeElectric Appliances,Inc.|Equitymethod|10,572,422.97|1,940,009.35||1,940,009.35|31.25|
|Zhuhai LidaInternational SupplyChina ManagementCo., Ltd.|Equitymethod|1,760,000.00|1,762,016.81|-7,476.02|1,754,540.79|30.00|
|Liaowang All MediaCommunication Co.,Ltd.|Equitymethod|24,500,000.00|22,901,072.89|2,560,718.14|25,461,791.03|49.00|
|Beijing GreeTechnology Co., Ltd.|Equitymethod|300,000.00|532,492.90|193,018.85|725,511.75|15.00|
|Songyuan Food GroupCo., Ltd.|Equitymethod|60,600,000.00||58,589,481.39|58,589,481.39|50.00|
|Total||107,136,341.82|31,000,001.65|69,408,541.00|100,408,542.65||

Continued
|||||||
|-|-|-|-|-|-|
|Name of investedentities|Percentage ofvoting rights inthe investedentity (%)|Description of inconsistency betweenthe shareholding ratio and percentageof voting rights in the invested entity|Provision forimpairment|Appropriationof provisionfor impairmentfor the currentperiod|Cashdividendfor thecurrentperiod|
|Zhuhai Dasheng Co.Ltd.|3.13||900,000.00|||
|Chongqing PargoMechanicalEquipment Co., Ltd.|38.70|||||
|(Vietnam) GreeElectricAppliances, Inc.|33.75|The shareholding ratio of theCompany in the invested entity is31.25%, of which 2.5% stocks arefounder's stocks which are entitled todouble vote. The percentage of votingrights of the Company in the investedentity is in total 33.75%.|1,940,009.35|||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||
|-|-|-|-|-|-|
|Name of investedentities|Percentage ofvoting rights inthe investedentity (%)|Description of inconsistency betweenthe shareholding ratio and percentageof voting rights in the invested entity|Provision forimpairment|Appropriationof provisionfor impairmentfor the currentperiod|Cashdividendfor thecurrentperiod|
|Zhuhai LidaInternationalSupply ChinaManagement Co.,Ltd.|30.00|||||
|Liaowang AllMediaCommunicationCo., Ltd.|49.00|||||
|Beijing GreeTechnology Co.,Ltd.|15.00|||||
|Songyuan FoodGroup Co., Ltd.|50.00|||||
|Total|||2,840,009.35|||

(14) Investment real estate
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in thecurrent period|Decrease forthe currentperiod|Amount at the endof the period|
|1. Total of original carrying amount|235,950,395.79|312,284,456.47||548,234,852.26|
|Houses and buildings|235,950,395.79|312,284,456.47||548,234,852.26|
|2. Total of accumulated depreciationand accumulated amortization|27,941,266.03|17,237,123.55||45,178,389.58|
|Houses and buildings|27,941,266.03|17,237,123.55||45,178,389.58|
|3. Total net carrying amount ofinvestment real estate|208,009,129.76|||503,056,462.68|
|Houses and buildings|208,009,129.76|||503,056,462.68|
|4. Total amount of provisions forimpairment of investment real estate|||||
|Houses and buildings|||||
|5. Total carrying amount ofinvestment real estate|208,009,129.76|||503,056,462.68|
|Houses and buildings|208,009,129.76|||503,056,462.68|

 Note: The investment real estate is measured at cost, and the amount of depreciation appropriated for the current period is RMB 17,237,123.55; there was no impairment of investment real estate during the current period.
(15) Fixed assets
1). Schedule of fixed assets
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in the currentperiod|Decrease forthe currentperiod|Amount at the endof the period|
|1. Total of original carryingamount:|16,433,587,088.53|2,752,382,091.82|701,828,381.53|18,484,140,798.82|
|Including: Houses andbuildings|8,296,333,988.43|1,558,558,442.67|293,370,239.07|9,561,522,192.03|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in the currentperiod||Decrease forthe currentperiod|Amount at the endof the period|
|Machinery equipment|6,768,996,483.56|1,051,262,177.47||290,485,363.73|7,529,773,297.30|
|Electronic equipment|612,322,459.30|68,264,527.66||68,842,035.38|611,744,951.58|
|Means of transportation|412,030,767.41|59,518,911.92||21,729,552.82|449,820,126.51|
|Other equipments|343,903,389.83|14,778,032.10||27,401,190.53|331,280,231.40|
|||Appropriationfor the currentperiod|Newincreasefor thecurrentperiod|||
|2. Total accumulateddepreciation:|3,725,006,521.01|1,128,518,328.01||410,404,607.77|4,443,120,241.25|
|Including: Houses andbuildings|842,180,333.25|293,578,910.65||9,764,656.14|1,125,994,587.76|
|Machinery equipment|2,274,673,480.92|634,213,427.85||287,538,589.17|2,621,348,319.60|
|Electronic equipment|338,741,712.54|82,582,397.24||66,009,599.24|355,314,510.54|
|Means of transportation|140,273,854.53|64,921,598.60||20,649,767.40|184,545,685.73|
|Other equipments|129,137,139.77|53,221,993.67||26,441,995.82|155,917,137.62|
|3. Total net carrying amountof fixed assets|12,708,580,567.52||||14,041,020,557.57|
|Including: Houses andbuildings|7,454,153,655.18||||8,435,527,604.27|
|Machinery equipment|4,494,323,002.64||||4,908,424,977.70|
|Electronic equipment|273,580,746.76||||256,430,441.04|
|Means of transportation|271,756,912.88||||265,274,440.78|
|Other equipments|214,766,250.06||||175,363,093.78|
|4. Total provision forimpairment|8,186,278.20|||1,304,135.08|6,882,143.12|
|Including: Houses andbuildings||||||
|Machinery equipment|7,455,350.58|||1,052,785.01|6,402,565.57|
|Electronic equipment|137,127.65|||11,932.02|125,195.63|
|Means of transportation||||||
|Other equipments|593,799.97|||239,418.05|354,381.92|
|5. Total carrying amount offixed assets|12,700,394,289.32||||14,034,138,414.45|
|Including: Houses andbuildings|7,454,153,655.18||||8,435,527,604.27|
|Machinery equipment|4,486,867,652.06||||4,902,022,412.13|
|Electronic equipment|273,443,619.11||||256,305,245.41|
|Means of transportation|271,756,912.88||||265,274,440.78|
|Other equipments|214,172,450.09||||175,008,711.86|

 Note: The amount of depreciation appropriated for the current period is RMB 1,128,518,328.01. The original price of construction in progress transferred into fixed assets
during the period is RMB 1,984,440,499.92. As of 31 December 2013, the original value of
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 fixed assets of which the certificate of title has not yet obtained by the Company is RMB 6,217,273,492.88.
(16) Construction in progress
1). Schedule of construction in progress
||||||||
|-|-|-|-|-|-|-|
|Item|Amount at the end of the period|||Amount at the beginning of the period|||
||Book balance|Provision forimpairment|Net carryingamount|Book balance|Provision forimpairment|Net carryingamount|
|Total|1,875,672,443.53|13,995,429.77|1,861,677,013.76|2,318,313,343.69|13,995,429.77|2,304,317,913.92|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2. Changes of major construction projects in progress
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Name of project|Amount at thebeginning of theperiod|Increase in thecurrent period|Amounttransferred intofixed assets|Otherdecrease|Amount ofcapitalization ofinterests|Including:Amount ofcapitalization ofinterests for thecurrent period|Interestcapitalization rate for thecurrentperiod (%)|Source of Funds|Amount at the endof the period|
|Gree Hong Lok YuenPhase II|120,314,336.98|83,528,926.08||||||Self-raised funds|203,843,263.06|
|Zhuhai Phase 9 project|172,684,126.53|21,210,799.47|193,894,926.00|||||Self-raised\raised funds||
|Electrical plant project|18,630,034.10|1,242,322.04|598,185.95|||||Self-raised funds|19,274,170.19|
|Ma'anshan project|48,480,519.23|1,606,466.48|49,428,985.71|||||Self-raised funds|658,000.00|
|Longshan compressorPhase II project|88,538,503.37|152,150.00|88,538,503.37|||||Self-raised funds|152,150.00|
|Gree Daikin MoldPhase I project|358,320.51|1,769,701.83|2,128,022.34|||||Self-raised funds||
|Gree Daikinmechanical andelectrical engineering|3,690,775.07|5,171,177.45|2,538,553.47|||||Self-raised funds|6,323,399.05|
|Chongqing Greeproject|333,168,946.11|115,388,849.60||||||Self-raised funds|448,557,795.71|
|Hefei Landacompressor project|1,706,499.24|10,754,827.32|10,754,827.32|||||Self-raised\raised funds|1,706,499.24|
|Wuhu Gree project|605,947,040.34|326,172,765.96|454,622,757.55|||||Self-raised funds|477,497,048.75|
|Hefei Gree project||177,884,902.18|158,970,684.78|18,914,217.40||||Self-raised funds||
|Zhengzhou Gree PhaseI project|346,387,177.60|165,115,905.31|74,420,240.95|||||Self-raised funds|437,082,841.96|
|Zhengzhou GreenProject|25,832,452.74|2,887,344.08||||||Self-raised funds|28,719,796.82|
|Wuhan Gree project|235,058,991.25|425,398,328.03|597,247,553.01|||||Self-raised funds|63,209,766.27|
|Shijiazhuang Greeproject|66,284,647.42|72,266,242.42|24,456.70|||||Self-raised funds|138,526,433.14|
|ShijiazhuangHousehold AppliancesPhase I project|2,555,670.77|6,622,605.41||||||Self-raised funds|9,178,276.18|
|Other projects|248,675,302.43|143,540,503.50|351,272,802.77|||||Self-raised funds|40,943,003.16|
|Total|2,318,313,343.69|1,560,713,817.16|1,984,440,499.92|18,914,217.40|||||1,875,672,443.53|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3. Provision for impairment of construction in progress
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in thecurrent period|Decrease for thecurrent period|Amount at theend of the period|Cause of appropriation|
|Electrical plantproject|13,995,429.77|||13,995,429.77|The plant can not beused because thefoundations havesubsided.|
|Total|13,995,429.77|||13,995,429.77||

(17) Intangible assets
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in thecurrent period|Decrease for thecurrent period|Amount at the end ofthe period|
|1. Total of original carryingamount|1,780,643,679.79|784,015,733.95|422,469.00|2,564,236,944.74|
|(1). Land use rights|1,764,634,718.89|781,909,866.25||2,546,544,585.14|
|(2). Industrial property rightsand know-how|16,008,960.90|2,105,867.70|422,469.00|17,692,359.60|
|2. Total accumulatedamortization|145,370,714.67|49,107,763.02|421,208.24|194,057,269.45|
|(1). Land use rights|138,838,355.41|47,238,823.07||186,077,178.48|
|(2). Industrial property rightsand know-how|6,532,359.26|1,868,939.95|421,208.24|7,980,090.97|
|3. Total net carrying amount ofintangible assets|1,635,272,965.12|||2,370,179,675.29|
|(1). Land use rights|1,625,796,363.48|||2,360,467,406.66|
|(2). Industrial property rightsand know-how|9,476,601.64|||9,712,268.63|
|4. Total provision forimpairment|||||
|(1). Land use rights|||||
|(2). Industrial property rightsand know-how|||||
|5. Total carrying amount ofintangible assets|1,635,272,965.12|||2,370,179,675.29|
|(1). Land use rights|1,625,796,363.48|||2,360,467,406.66|
|(2). Industrial property rightsand know-how|9,476,601.64|||9,712,268.63|

(18) Long-term deferred expenses
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning of|Increase for thecurrent period|Amortization forthe current period|Other decreases|Amount at the end ofthe period|
|Long-termdeferred|the period48,089,330.59|29,873,310.38|35,297,385.63||42,665,255.34|
|expensesTotal|48,089,330.59|29,873,310.38|35,297,385.63||42,665,255.34|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (19) Deferred income tax assets/Deferred income tax liabilities
(1) Recognized deferred income tax assets and deferred income tax liabilities
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Deferred income tax assets:|||
|Assets depreciation reserves|68,759,284.04|45,880,246.06|
|Deductible loss|16,244,325.84|34,931,950.34|
|Accrued but unpaid expenses|5,061,994,433.94|2,656,746,274.76|
|Payroll payable|216,054,032.89|118,718,532.91|
|Changes in fair value of financial assetsavailable for sale|8,706,111.33||
|Long-term assets amortization|184,551,430.08||
|Others|126,303,563.79|54,808,194.16|
|Subtotal|5,682,613,181.91|2,911,085,198.23|
|Deferred income tax liabilities:|||
|Interests receivable|130,189,704.17|114,464,333.65|
|Changes in fair value of financial assetsavailable for sale||1,563,837.38|
|Hedging instruments|2,280,793.10|2,062,941.04|
|Trading financial assets|191,862,108.86|42,314,325.84|
|Others|4,610,448.36||
|Subtotal|328,943,054.49|160,405,437.91|

 (2) Schedule of deductible temporary differences and taxable temporary differences
|||
|-|-|
|Item|Amount of temporary differences|
|Deductible temporary differences:||
|Assets depreciation reserves|383,478,965.39|
|Deductible loss|66,911,547.28|
|Accrued but unpaid expenses|33,737,663,547.17|
|Payroll payable|1,328,321,713.94|
|Changes in fair value of financial assets available for sale|34,824,445.33|
|Amortization of long-term assets|1,188,986,320.05|
|Others|739,853,265.24|
|Subtotal|37,480,039,804.40|
|Taxable temporary differences:||
|Interests receivable|729,559,642.90|
|Hedging instruments|15,205,287.36|
|Trading financial assets|1,246,106,661.88|
|Others|18,458,185.41|
|Subtotal|2,009,329,777.55|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (20) Schedule of assets depreciation reserves
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning ofthe period|Increase in thecurrent period|Decrease for the current period||Amount at theend of the period|
||||Reversed amount|Write-offamount||
|Bad debt provision|135,094,325.79|63,714,878.83||3,282,019.23|195,527,185.39|
|Provision for obsoletestocks|108,405,068.64|64,626,181.07|||173,031,249.71|
|Provision for impairmentof long-term equityinvestment|2,840,009.35||||2,840,009.35|
|Fixed assets depreciationreserves|8,186,278.20|||1,304,135.08|6,882,143.12|
|Provision for impairmentof construction inprogress|13,995,429.77||||13,995,429.77|
|Loan loss provision|53,839,698.01|64,051,923.72|||117,891,621.73|
|Total|322,360,809.76|192,392,983.62||4,586,154.31|510,167,639.07|

 (21) Short-term borrowings
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Pledge loans|2,716,971,153.31|3,520,642,063.91|
|Borrowing on credit|600,000,000.00||
|Total|3,316,971,153.31|3,520,642,063.91|

 Note: As of 31 December 2013, the pledge loans with a balance of RMB
2,716,971,153.31 were foreign exchange loans pledged by time deposit certificate, among the ending balance of the short-term borrowings, there was not any borrowing that has expired but not yet repaid. (22) Borrowings from central bank
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Bill rediscount|37,413,972.46||
|Total|37,413,972.46||

(23) Deposits from customers and interbank
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Current deposits|2,214,780.74|21,267,418.63|
|Time deposits|40,050,715.00|59,810,592.35|
|Draft deposits|500,000,000.00||
|Total|542,265,495.74|81,078,010.98|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (24) Loans from other banks
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Credit lending|300,000,000.00||
|Total|300,000,000.00||

(25) Notes payable
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Banker's acceptance bill|8,230,208,196.99|7,983,581,180.17|
|Total|8,230,208,196.99|7,983,581,180.17|

 Note: As of 31 December 2013, among the notes payable, there were not any notes payable to a voting entity shareholder holding5% or more shares of the Company.
(26) Accounts payable
1). Classification
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Within 1 year|26,752,894,610.94|22,355,490,705.01|
|1 to 2 years|537,921,487.11|173,690,378.71|
|2 to 3 years|99,399,179.52|94,838,669.27|
|Over 3 years|44,279,388.15|40,991,860.67|
|Total|27,434,494,665.72|22,665,011,613.66|

 2). As of 31 December 2013, among the accounts payable, for the accounts payable to a voting entity shareholder holding5% or more shares of the Company or related parties, please refer to the Notes 6 (6).
(27) Advance received from customers
1). Classification
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Within 1 year|11,964,249,413.54|16,608,273,583.83|
|1 to 2 years|21,602,609.54|21,648,705.56|
|2 to 3 years|442,323.36|140,926.36|
|Over 3 years|139,394.84|49,985.08|
|Total|11,986,433,741.28|16,630,113,200.83|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). As of 31 December 2013, for the advance received from a voting entity shareholder holding5% or more shares of the Company or other related parties, please refer to the Notes 6 (6).
(28) Financial assets sold for repurchase
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Bonds (Pledge-style Repo)|186,000,000.00|350,000,000.00|
|Total|186,000,000.00|350,000,000.00|

 (29) Payroll payable
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase in thecurrent period|Decrease for thecurrent period|Amount at the end ofthe period|
|1. Wages, bonuses, subsidies andallowances|1,150,339,609.26|4,382,123,288.01|4,148,613,438.49|1,383,849,458.78|
|2. Employee welfares||379,680,385.24|379,680,385.24||
|3. Social insurance premiums|662,522.61|488,257,791.83|486,716,073.78|2,204,240.66|
|Including: 1. Medical insurancepremium|12,644.84|103,462,697.98|102,973,687.89|501,654.93|
|2. Basic endowmentinsurance premium|641,761.89|325,994,555.89|325,095,911.12|1,540,406.66|
|3. Unemploymentinsurance premium|3,893.90|30,306,003.61|30,228,795.42|81,102.09|
|4. Industrial injuryinsurance premium|2,594.26|16,122,096.84|16,084,032.72|40,658.38|
|5. Birth insurancepremium|1,627.72|12,059,596.82|12,020,805.93|40,418.61|
|6. Accident insurancepremium||312,840.68|312,840.68||
|4. Housing accumulation funds|539,278.83|85,001,889.91|85,046,279.91|494,888.83|
|5. Others|206,130,993.25|117,096,765.17|69,620,768.30|253,606,990.12|
|1. Labour unionexpenditures|44,352,273.03|68,168,613.85|61,670,249.22|50,850,637.66|
|2. Employeeeducation funds|161,490,123.66|48,447,941.57|7,680,077.67|202,257,987.56|
|3. Others|288,596.56|480,209.75|270,441.41|498,364.90|
|Total|1,357,672,403.95|5,452,160,120.16|5,169,676,945.72|1,640,155,578.39|

 Note: There was no amount in arrears in the payroll payable at the end of the period, and the balances of the labour union expenditures and employee education funds at the end of the period were RMB 253,108,625.22.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (30) Taxes payable
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|1. Added-value tax|2,132,179,090.06|459,511,336.74|
|2. House property tax|34,638,527.54|12,200,454.50|
|3. Urban maintenance & construction tax|248,410,886.12|108,614,525.19|
|4. Educational surcharges|175,830,346.56|72,277,634.59|
|5. Business tax|5,272,881.54|4,397,814.22|
|6. Business income tax|3,533,566,618.60|1,841,329,085.39|
|7. Individual income tax|15,824,926.39|1,211,110.00|
|8. Land use tax|7,784,719.68|5,003,945.86|
|9. Embankment protection fee|7,493,497.52|2,638,701.01|
|10. Stamp duty|791,624.76|418,846.69|
|11. Others|-4,306,501.40|14,496,897.26|
|Total|6,157,486,617.37|2,522,100,351.45|

 (31) Interests payable
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Loan interest|20,392,906.45|18,578,897.04|
|Interest on customer bank deposits|4,985,085.83|402,653.56|
|Interest from financial assets sold forrepurchase|102,300.00|1,217,547.95|
|Total|25,480,292.28|20,199,098.55|

 (32) Dividends payable
|||||
|-|-|-|-|
|Name of entity|Amount at the end of theperiod|Amount at the beginning ofthe period|Cause of nonpayment inexcess of 1 year|
|Corporate shareholder|105,031.73|105,031.73|Temporarily unable toconfirm|
|Public shareholder|602,881.87|602,881.87|Temporarily unable toconfirm|
|Total|707,913.60|707,913.60||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (33) Other payables
1). Classification
||||||
|-|-|-|-|-|
|Item|Amount at the end of the period||Amount at the beginning of the period||
||Carrying amount|Percentage (%)|Carrying amount|Percentage (%)|
|Within 1 year|2,289,069,825.84|47.75|4,582,858,777.01|84.22|
|1 to 2 years|1,838,366,492.69|38.35|663,455,076.29|12.19|
|2 to 3 years|627,581,607.77|13.09|142,713,289.77|2.62|
|Over 3 years|38,760,559.05|0.81|52,587,747.86|0.97|
|Total|4,793,778,485.35|100.00|5,441,614,890.93|100.00|

 Note: The sums of money with the aging more than one year are mainly margins and infrastructure advances.
2). As of 31 December 2013, among the other payables, there was not any amount payable to a voting entity shareholder holding5% or more shares of the Company or related parties.
(34) Non-current liabilities due within one year
1). Classification
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Long-term borrowings due withinone year|923,447,998.14|2,513,763,694.23|
|Total|923,447,998.14|2,513,763,694.23|

 2). Long-term borrowings due within one year
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Pledge loans|923,447,998.14|2,513,763,694.23|
|Total|923,447,998.14|2,513,763,694.23|

 (35) Other current liabilities
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Installation and repair costs|1,796,367,522.09|1,369,570,640.58|
|Sales rebate|28,827,378,989.77|14,346,498,887.77|
|Others|292,622,951.82|27,805,525.97|
|Total|30,916,369,463.68|15,743,875,054.32|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (36) Long-term borrowings
1). Classification of long-term borrowings
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Pledge loans|1,168,772,867.59|984,463,173.32|
|Borrowing on credit|206,575,575.20||
|Total|1,375,348,442.79|984,463,173.32|

 2). The top 5 lenders of long-term borrowings
||||||||
|-|-|-|-|-|-|-|
|Loan unit|Start date|Terminationdate|Currency|Amount at the end of the period||Conditions ofloan|
|||||Foreign currencyamount|Amount in localcurrency||
|First|2013-1-22|2015-1-22|USD|80,000,000.00|487,752,000.00|Pledged|
|Second|2012-3-29|2015-3-27|USD|32,998,938.36|201,191,227.29|Pledged|
|Third|2013-12-27|2015-12-18|USD|31,356,332.64|191,176,424.47|Credit|
|Fourth|2013-5-24|2015-5-22|USD|17,196,719.09|104,846,676.62|Pledged|
|Fifth|2013-4-25|2015-4-25|USD|12,550,306.13|76,517,961.44|Pledged|
|Total||||174,102,296.22|1,061,484,289.82||

(37) Other non-current liabilities
||||
|-|-|-|
|Item|Amount at the end of the period|Amount at the beginning of the period|
|Deferred income|39,920,603.17|11,469,703.49|
|Total|39,920,603.17|11,469,703.49|

 (38) Stock capital
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Increase/Decrease for the period (+, -)|||||Amount at theend of the period|
|||New Issue|BonusIssue|StockConvertedfrom Reserve|Others|Subtotal||
|Total numberof stocks|3,007,865,439.00||||||3,007,865,439.00|

(39) Capital reserves
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of the|Increase in the currentperiod|Decrease for thecurrent period|Amount at the end of theperiod|
|Capital premium (capitalstock premium)|period3,114,318,892.05|||3,114,318,892.05|
|Other capital reserves|72,856,980.23||11,061,562.19|61,795,418.04|
|Total|3,187,175,872.28||11,061,562.19|3,176,114,310.09|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (40) Surplus reserves
||||||
|-|-|-|-|-|
|Item|Amount at the beginning ofthe period|Increase in the currentperiod|Decrease for thecurrent period|Amount at the end of theperiod|
|Statutory surplusreserve|1,989,000,298.98|||1,989,000,298.98|
|Discretionarysurplus reserve|969,088,265.45|||969,088,265.45|
|Total|2,958,088,564.43|||2,958,088,564.43|

 (41) General Risk Provisions
||||||
|-|-|-|-|-|
|Item|Amount at thebeginning of the period|Increase in thecurrent period|Decrease for thecurrent period|Amount at the end ofthe period|
|General risk provisions|7,593,539.68|39,520,527.04||47,114,066.72|
|Total|7,593,539.68|39,520,527.04||47,114,066.72|

 (42) Undistributed profit
||||
|-|-|-|
|Item|Amount|Proportion of appropriation ordistribution|
|Undistributed profit at the end of previous yearbefore adjustment|17,572,277,003.95||
|Total amount of adjusted undistributed profit at thebeginning of the year (profit increase adjustedexpressed with "+" and profit decrease adjustedexpressed with "-")|||
|Undistributed profit at the beginning of the year afteradjustment|17,572,277,003.95||
|Add: Net profit attributable to owners of parentcompany for the current period|10,870,672,842.47||
|Less: Appropriation of statutory surplus reserve|||
|Appropriation of discretionary surplus reserve|||
|Appropriation of general risk provisions|39,520,527.04||
|Ordinary stock dividends payable|3,007,865,439.00|Distribute RMB 10.00 per 10stocks (tax included)|
|Ordinary stock dividends transferred to stock capital|||
|Undistributed profit at the end of the period|25,395,563,880.38||

(43) Operating revenues and operating costs
1). Operating revenues and operating costs
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Operating Revenue|120,043,070,005.50|100,110,108,848.26|
|Including: Prime operating revenue|108,052,844,520.69|91,248,254,915.96|
|Other operating revenue|11,990,225,484.81|8,861,853,932.30|
|Operating Cost|80,878,167,709.46|73,434,010,276.42|
|Including: Prime operating cost|71,219,846,531.15|66,370,257,422.23|
|Other operating cost|9,658,321,178.31|7,063,752,854.19|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Main business (classified by industry)
||||||
|-|-|-|-|-|
|Name of industry|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Household appliancesmanufacturing|108,052,844,520.69|71,219,846,531.15|91,248,254,915.96|66,370,257,422.23|
|Total|108,052,844,520.69|71,219,846,531.15|91,248,254,915.96|66,370,257,422.23|

 3). Main business (classified by product)
||||||
|-|-|-|-|-|
|Name of product|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Air Conditioner|105,487,901,617.95|69,085,322,534.06|88,886,091,863.25|64,411,756,737.38|
|Household Appliances|1,617,926,821.24|1,296,614,727.67|1,452,989,500.63|1,124,294,624.81|
|Others|947,016,081.50|837,909,269.42|909,173,552.08|834,206,060.04|
|Total|108,052,844,520.69|71,219,846,531.15|91,248,254,915.96|66,370,257,422.23|

 4). Main business (classified by region)
||||||
|-|-|-|-|-|
|Name of region|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Domestic sales|92,051,726,504.66|57,156,463,906.86|75,458,160,917.80|52,784,837,671.57|
|Export sales|16,001,118,016.03|14,063,382,624.29|15,790,093,998.16|13,585,419,750.66|
|Total|108,052,844,520.69|71,219,846,531.15|91,248,254,915.96|66,370,257,422.23|

 5). Operating revenues of the top 5 clients of the Company
||||
|-|-|-|
|Name of entity|Sales revenue|Proportion to total sales revenues ofthe Company (%)|
|First|8,533,547,842.68|7.11|
|Second|8,465,553,262.43|7.05|
|Third|6,646,584,501.30|5.54|
|Fourth|6,370,617,685.02|5.31|
|Fifth|5,954,671,887.98|4.96|
|Total|35,970,975,179.41|29.97|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (44) Business tax and surcharges
|||||
|-|-|-|-|
|Item|Amount for the current period|Amount for the previousperiod|Calculation andpayment standard|
|Urban maintenance &construction tax|507,123,737.67|284,059,922.57|See the Notes 3|
|Educational surcharges|366,116,172.32|199,173,453.85|See the Notes 3|
|Embankment protection fee|35,599,887.70|34,832,321.87|See the Notes 3|
|Business tax|21,394,317.85|18,977,663.75|See the Notes 3|
|Channel maintenance fee|2,143,186.34|471,186.48|-|
|Commodity circulation tax andindustrial product tax of Brazil|23,792,514.64|52,439,050.16|-|
|Others|956,169,816.52|589,953,598.68|-|
|Total|507,123,737.67|284,059,922.57|-|

 (45) Sales expenses
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Sales expense|22,508,931,701.70|14,626,228,488.10|
|Total|22,508,931,701.70|14,626,228,488.10|

 (46) Overhead expenses
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Overhead Expense|5,089,572,552.73|4,055,809,619.26|
|Total|5,089,572,552.73|4,055,809,619.26|

 (47) Financial expenses
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Interest expense|227,072,467.38|229,430,698.81|
|Less: Interest revenue|834,845,293.21|740,435,741.70|
|Exchange loss|457,864,097.31|14,737,596.19|
|Less: Exchange gain|18,108,745.70|2,623,135.83|
|Bank charges|30,584,714.76|36,744,796.46|
|Others|124,137.59|798,196.41|
|Total|-137,308,621.87|-461,347,589.66|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (48) Asset impairment loss
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Loss on bad debt|63,714,878.83|-21,519,745.63|
|Inventory falling price loss|64,626,181.07|33,217,171.54|
|Loan loss|64,051,923.72|53,839,698.01|
|Total|192,392,983.62|65,537,123.92|

 (49) Incomes from changes in fair value
||||
|-|-|-|
|Sources of incomes from changes in fair value|Amount for the current period|Amount for the previous period|
|Trading financial assets|990,563,610.10|246,884,832.05|
|Including: Incomes from changes in fair valuegenerated from derivative financial instruments|990,563,610.10|246,884,832.05|
|Total|990,563,610.10|246,884,832.05|

 (50) Income from investments
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previousperiod|
|Long-term equity investment income measured by equitymethod|2,855,797.81|8,732,172.23|
|Investment income from disposal of long-term equityinvestment||-18,395.03|
|Investment income from financial assets available for sale|38,901,351.98|24,888,908.99|
|Investment income from disposal of trading financial assets|675,580,092.84|-54,097,063.01|
|Total|717,337,242.63|-20,494,376.82|

 (51) Non-operating revenue
|||||
|-|-|-|-|
|Item|Amount for the currentperiod|Amount for the previousperiod|Amount recorded into thecurrent non-recurring profitand loss|
|Total gains from disposal ofnon-current assets|2,022,174.47|1,961,936.33|2,022,174.47|
|Including: Gains from disposal offixed assets|2,022,174.47|1,961,936.33|2,022,174.47|
|Government subsidies|660,482,277.34|732,249,137.88|660,482,277.34|
|Others|21,695,171.29|26,172,151.79|21,695,171.29|
|Total|684,199,623.10|760,383,226.00|684,199,623.10|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Including the schedule of government subsidies:
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Financial rewards|240,678,609.24|112,654,809.14|
|Capital allowance for developmentprojects|375,730,312.57|113,502,070.70|
|Technological innovation subsidiesincome|5,158,962.93|7,399,865.87|
|Tax deduction and exemption|25,886,756.18|5,336,705.00|
|Subsidies for energy-saving||479,404,500.00|
|Others|13,027,636.42|13,951,187.17|
|Total|660,482,277.34|732,249,137.88|

 (52) Non-operating expenses
|||||
|-|-|-|-|
|Item|Amount for the currentperiod|Amount for theprevious period|Amount recorded into the currentnon-recurring profit and loss|
|Total losses from disposal ofnon-current assets|3,782,455.16|14,294,914.48|3,782,455.16|
|Including: Losses fromdisposal of fixed assets|3,782,455.16|14,294,914.48|3,782,455.16|
|Foreign donations|632,244.48|4,813,504.25|632,244.48|
|Other expenses|50,871,077.07|4,873,418.07|50,871,077.07|
|Total|55,285,776.71|23,981,836.80|55,285,776.71|

 (53) Income tax expenses
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previousperiod|
|Current income tax stipulated by Enterprise IncomeTax Law|4,549,107,038.58|2,431,976,527.22|
|Deferred income tax adjustment|-2,592,938,270.45|-1,115,195,237.65|
|Total|1,956,168,768.13|1,316,781,289.57|

 (54) Calculating process of basic earnings per share and diluted earnings per share
1). Basic earnings per share
|||||
|-|-|-|-|
|Item|Serial Number|Amount for thecurrent period|Amount for theprevious period|
|Total stocks at the beginning of the period|a|3,007,865,439.00|2,817,888,750.00|
|The increased stocks by capitalization of capital reservesor distribution of stock dividend during the Report Period|b|||
|The increased stocks by issuance of new stocks ordebt-equity swap during the Report Period|c||189,976,689.00|
|The number of months from the next month afterincrease of stocks to the end of the Report Period|d||11|
|The number of months of the Report Period|e|12|12|
|The decreased stocks by repurchase during the ReportPeriod|f|||
|The number of months from the next month afterdecrease of stocks to the end of the Report Period|g|||
|The number of shrunk stocks during the Report Period|h|||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||
|-|-|-|-|-|
|Item||Serial Number|Amount for thecurrent period|Amount for theprevious period|
|The weighted averaged number of outstanding ordinaryshares||i=a+b+c×d÷e-f×g÷e-h|3,007,865,439.00|2,992,034,048.25|
|Net profit attributable to shareholders of ordinary stocksof the Company||j|10,870,672,842.47|7,379,666,345.09|
|Net profit attributable to shareholders of ordinary stocksof the Company after deduction of non-recurring profitand loss||k|8,907,843,107.98|6,995,208,275.30|
|Basicearningsper share|Calculate according to the net profitattributable to shareholders of ordinarystocks of the Company|l=j÷i|3.61|2.47|
||Calculate according to the net profitattributable to shareholders of ordinarystocks of the Company after deduction ofnon-recurring profit and loss|m=k÷i|2.96|2.34|

2). Diluted earnings per share
||||||
|-|-|-|-|-|
|Item||Serial Number|Amount for thecurrent period|Amount for theprevious period|
|Total stocks at the beginning of the period||a|3,007,865,439.00|2,817,888,750.00|
|The increased stocks by capitalization of capital reserves ordistribution of stock dividend during the Report Period||b|||
|The increased stocks by issuance of new stocks or debt-equityswap during the Report Period||c||189,976,689.00|
|The number of months from the next month after increase ofstocks to the end of the Report Period||d||11|
|The number of months of the Report Period||e|12|12|
|The decreased stocks by repurchase during the Report Period||f|||
|The number of months from the next month after decrease ofstocks to the end of the Report Period||g|||
|The number of shrunk stocks during the Report Period||h|||
|The weighted averaged number of outstanding ordinary stocks||i=a+b+c×d÷e-f×g÷e-h|3,007,865,439.00|2,992,034,048.25|
|The weighted averaged number of increased ordinary shares bywarrants, stock option and convertible bonds||j|||
|Net profit attributable to shareholders of ordinary stocks of theCompany||K|10,870,672,842.47|7,379,666,345.09|
|Net profit attributable to shareholders of ordinary stocks of theCompany after deduction of non-recurring profit and loss||l|8,907,843,107.98|6,995,208,275.30|
|Dilutedearnings pershare|Calculate according to the net profit attributableto shareholders of ordinary stocks of theCompany|m=k÷(i+j)|3.61|2.47|
||Calculate according to the net profit attributableto shareholders of ordinary stocks of theCompany after deduction of non-recurring profitand loss|n=l÷(i+j)|2.96|2.34|

Remark:i=a+b+c×d÷e-f×g÷e-h
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (55) Other comprehensive income
||||
|-|-|-|
|Item|Amount for the currentperiod|Amount for the previousperiod|
|1. Gains (losses) from financial assets available for sale|-41,079,794.86|6,255,349.53|
|Less: Income tax impact from financial assets available for sale|-10,269,948.71|1,563,837.38|
|Net amount recognized into other comprehensive income inprevious period and transferred to the current profits and losses|||
|Subtotal|-30,809,846.15|4,691,512.15|
|2. Share of other comprehensive income of the investeemeasured by equity method|||
|Less: Income tax impact from share of other comprehensiveincome of the investee measured by equity method|||
|Net amount recognized into other comprehensive income inprevious period and transferred to the current profits and losses|||
|Subtotal|||
|3. Gains/ (losses) from cash flow hedging instruments|1,452,347.11|63,438,922.56|
|Less: Income tax impact from cash flow hedging instruments|217,852.07|9,515,838.38|
|Net amount recognized into other comprehensive income inprevious period and transferred to the current profits and losses|||
|Adjusted amount of initial recognized amount transferred tohedging items|||
|Subtotal|1,234,495.04|53,923,084.18|
|4. Difference arising from translation of financial statements inforeign currency|-11,774,679.30|-6,437,549.90|
|Less: net amount from disposal of overseas operation transferredto the current profits and losses|||
|Subtotal|-11,774,679.30|-6,437,549.90|
|5. Others|||
|Less: income tax impact from others recognized into othercomprehensive income|||
|Net amount transferred to the current profits and losses fromothers in previous period recognized into other comprehensiveincome|||
|Subtotal|||
|Total|-41,350,030.41|52,177,046.43|

 (56) Notes to cash flow statement
1). Other cash receipts relating to operating activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Net decrease in margin of bill pledge||968,045,273.45|
|Government subsidies|630,872,384.27|727,667,479.64|
|Interest revenue|816,151,233.88|269,309,879.09|
|Project funds advanced|1,199,230,415.18|938,610,190.55|
|Others|386,202,905.20|303,044,439.87|
|Total|3,032,456,938.53|3,206,677,262.60|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 2). Other cash payments relating to operating activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Cash repayments for selling expenses|2,947,384,204.17|3,329,875,220.92|
|Cash repayments for overhead expenses|952,377,574.66|911,242,822.63|
|Net increase in margin of bill pledge|2,213,878,597.46||
|Other expenses|280,028,497.71|429,816,583.06|
|Total|6,393,668,874.00|4,670,934,626.61|

 3). Other cash receipts relating to investing activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Receipts from forward foreign exchangesettlement and sales|434,397,421.35|6,902,514.16|
|Total|434,397,421.35|6,902,514.16|

 4). Other cash payments relating to investing activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Payment for forward foreign exchangesettlement and sales|24,926,702.72|111,990,174.39|
|Total|24,926,702.72|111,990,174.39|

 5). Other cash receipts relating to financing activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Net decrease in margin of loan pledge|1,996,700,658.64|1,127,918,464.58|
|Total|1,996,700,658.64|1,127,918,464.58|

 6). Other cash payments relating to financing activities
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Costs of issuance of additional shares||2,583,000.00|
|Total||2,583,000.00|

 (57) Supplementary information about cash flow statement
1). Supplementary information about cash flow statement
||||
|-|-|-|
|Item|Amount for thecurrent period|Amount for theprevious period|
|1. Reconciliation of net profit to cash flows from operating activities:|||
|Net profit|10,935,755,177.19|7,445,927,982.70|
|Add: Assets depreciation reserves|192,392,983.62|65,537,123.92|
|Fixed assets depreciation, oil and gas assets accumulated depreciation,productive biological assets accumulated depreciation|1,145,755,451.56|882,799,953.25|
|Amortization of intangible assets|49,107,763.02|68,571,452.82|
|Amortization of long-term deferred expenses|35,297,385.63|27,004,172.75|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||
|-|-|-|
|Item|Amount for thecurrent period|Amount for theprevious period|
|Losses on disposal of fixed assets, intangible assets and other long-termassets (incomes expressed with “-”)|1,760,280.69|12,332,978.15|
|Losses on disposal of fixed assets (incomes expressed with “-”)|||
|Losses from changes in fair value (incomes expressed with “-”)|-990,563,610.10|-246,884,832.05|
|Financial expenses (incomes expressed with “-”)|621,934,236.21|154,485,748.52|
|Investment losses (incomes expressed with “-”)|-717,337,242.63|20,494,376.82|
|Decrease in deferred income tax assets (increase expressed with “-”)|-2,762,821,872.35|-1,228,805,549.01|
|Increase in deferred income tax liabilities (decrease expressed with “-”)|169,883,601.90|113,610,851.37|
|Decrease of inventories (increase expressed with “-”)|4,047,685,955.85|234,847,605.32|
|Decrease in operating receivables (increase expressed with “-”)|-15,181,805,520.62|-2,489,481,646.22|
|Increase in operating payables (decrease expressed with “-”)|19,128,559,595.30|12,380,260,779.77|
|Others|-3,705,767,055.44|968,045,273.45|
|Net cash flow from operating activities|12,969,837,129.83|18,408,746,271.56|
|2. Major investing and financing activities not involving cash receipts andpayment:|||
|Conversion of debt into capital|||
|Convertible bonds expiring within one year|||
|Fixed assets acquired under finance leases|||
|3. Net changes in cash and cash equivalents:|||
|Ending balance of cash|29,259,183,063.61|21,370,486,691.03|
|Less: Beginning balance of cash|21,370,486,691.03|6,338,827,761.32|
|Add: Ending balance of cash equivalents|||
|Less: Beginning balance of cash equivalents|||
|Net increase in cash and cash equivalents|7,888,696,372.58|15,031,658,929.71|

 Note: “others” includes RMB 2,213,878,597.46 net increase ofbank’s acceptance bills and RMB 491,888,457.98 net increase of legal deposit reserved.
2). Information about acquisition or disposal of subsidiaries and other business units during the current period
||||
|-|-|-|
|Item|Amount for thecurrent period|Amount for theprevious period|
|1. Information about acquisition of subsidiaries and other business units:|||
|(1) Price of acquisition of subsidiaries and other business units|||
|(2) Cash and cash equivalents paid for acquisition of subsidiaries andother business units|||
|Less: Cash and cash equivalents held by subsidiaries and otherbusiness units|||
|(3) Net cash paid for acquisition of subsidiaries and other business units|||
|(4) Net asset for acquisition of subsidiaries|||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||
|-|-|-|
|Item|Amount for thecurrent period|Amount for theprevious period|
|Current assets|||
|Non-current assets|||
|Current liabilities|||
|Non-current liabilities|||
|2. Information about disposal of subsidiaries and other business units:|||
|(1) Price of disposal of subsidiaries and other business units|17,263,912.34|7,027,319.69|
|(2) Cash and cash equivalents received from disposal of subsidiaries andother business units||7,027,319.69|
|Less: Cash and cash equivalents held by subsidiaries and otherbusiness units||7,027,319.69|
|(3) Net cash received from disposal of subsidiaries and other businessunits|||
|(4) Net asset from disposal of subsidiaries|17,263,912.34|7,018,395.03|
|Current assets|17,412,797.34|7,022,825.03|
|Non-current assets|||
|Current liabilities|148,885.00|4,430.00|
|Non-current liabilities|||

3). Composition of cash and cash equivalents
||||
|-|-|-|
|Item|Amount at the end ofthe period|Amount at thebeginning of theperiod|
|1. Cash|29,259,183,063.61|21,370,486,691.03|
|Including: Cash on hand|2,183,756.28|1,667,396.41|
|Bank deposit for payment at any time|16,905,988,342.59|12,410,887,248.92|
|Other monetary capital for payment at any time|21,142,239.06|3,471,983,800.76|
|Deposit in the central bank for payment|2,058,962.67|147.56|
|Deposits in other banks|12,327,809,763.01|5,485,948,097.38|
|Inter-bank lending|||
|2. Cash equivalents|||
|Including: Bond investments maturing within three months|||
|3. Ending balance of cash and cash equivalents|29,259,183,063.61|21,370,486,691.03|

 6. Related parties and related transaction
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 1). Parent company of the Company
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Name of parentcompany|Incidencerelation|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholdingratio of parentcompany to theCompany|Percentage ofvoting rights ofparent company tothe Company|Ultimate controllingparty of the Company|Organization Code|
|Zhuhai GreeGroup Co., Ltd.|Parentcompany|Whollystate-ownedenterprise|Zhuhai|DongMingzhu|Investment andassetmanagement|RMB 800million|18.22%|18.22%|Zhuhai MunicipalState-owned AssetsSupervision andAdministrationCommission|19253718-6|

2). Subsidiaries of the Company
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Full name of subsidiary|Type of subsidiary|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholdingratio(%)|Votingrightpercentage (%)|Organization Code|
|Zhuhai Gree Group FinanceCompany Limited|Holding subsidiary|Companywith limitedliability|Zhuhai City|DongMingzhu|Carry on thebusinessapproved byChinaBankingRegulatoryCommission|RMB 1.5 billion|89.25|89.25|19259174-8|
|Gree Electric Appliances(Chongqing) Co., Ltd.|Holding subsidiary|Companywith limitedliability|ChongqingCity|DongMingzhu|Commercialmanufacture|RMB 0.23billion|97.00|97.00|709410891|
|Shanghai GREE Air ConditionersSales Co., Ltd|Holding subsidiary|Companywith limitedliability|ShanghaiCity|Tan Aijun|Sale of airconditioners|RMB 2 million|99.70|100.00|72949916-8|
|Shenzhen Gree Electric AppliancesSales Co., Ltd|Holding subsidiary|Companywith limitedliability|ShenzhenCity|He Tao|Sale of airconditioners|RMB 5 million|90.00|90.00|67481833-5|
|Zhuhai Gree Daikin Precision MoldCo., Ltd.|Holding subsidiary|Companywith limitedliability|Zhuhai City|XieDongbo|Commercialmanufacture|US$ 57.96million|51.00|51.00|68448190-8|
|Zhuhai Gree Dakin Device Co., Ltd.|Holding subsidiary|Companywith limitedliability|Zhuhai City|HuangHui|Commercialmanufacture|US$ 81.29million|51.00|51.00|68448188-7|
|Zhuhai Gree Electrical Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|ZhangJian|Commercialmanufacture|RMB 169.32million|100.00|100.00|61748836-8|
|Zhuhai Gree Xinyuan ElectronicsCo., Ltd.|Wholly-ownedsubsidiary|Companywith limited|Zhuhai City|ZhangJian|Commercialmanufacture|RMB 26.18million|100.00|100.00|19252571-6|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Full name of subsidiary|Type of subsidiary|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholdingratio(%)|Votingrightpercentage (%)|Organization Code|
|||liability||||||||
|Zhuhai Kaibang Motor ManufactureCo., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|DongMingzhu|Commercialmanufacture|RMB 82 million|100.00|100.00|74918290-X|
|Gree Electric Appliances (Hefei)Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Hefei City|DongMingzhu|Commercialmanufacture|RMB 150million|100.00|100.00|79810324-3|
|GREE (Zhongshan) Small HomeAppliances Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|ZhongshanCity|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|68640957-1|
|Zhuhai Gree Electric AppliancesSales Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|WangJingdong|Sale of airconditioners|RMB 5 million|100.00|100.00|67889955-8|
|Hong Kong Gree ElectricAppliances Sales Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Kowloon,Hong Kong|XiaoYouyuan|Sale|HKD0.1 million|100.00|100.00||
|Gree (America) Sales Co., Ltd.|Holding subsidiaryof the wholly-ownedsubsidiary|Companywith limitedliability|USA|Le Jiashi|Sale|US$ 80,000|51.00|51.00||
|Gree Electric Appliances (Brazil)Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Manaus,Brazil|XieDongbo|Commercialmanufacture|BRL 40 million|100.00|100.00|13519135/0001-56|
|Gree Green RefrigerationTechnology Center Co., Ltd. OfZhuhai|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|HuangHui|Technicalresearch anddevelopment|RMB 116.04million|100.00|100.00|69818608-8|
|Zhuhai Landa Compressor Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|ChenDaguang|Commercialmanufacture|RMB 93.03million|100.00|100.00|617495656|
|Zhuhai Meilingda RefrigerationTechnology Co., Ltd.|Holding subsidiaryof the wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|ChenDaguang|Commercialmanufacture|RMB 10 million|70.00|70.00|738594618|
|Zhuhai Zhengang Foundry Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|LiuJianxun|Commercialmanufacture|HKD 0.5million|100.00|100.00|738594626|
|Zhuhai Meiling General Motors Co.,Ltd.|Holding grandsoncompany of thewholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|LiuJianxun|Commercialmanufacture|US$ 6.25million|70.00|70.00|739882312|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Full name of subsidiary|Type of subsidiary|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholdingratio(%)|Votingrightpercentage (%)|Organization Code|
|Hefei Landa Compressor Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Hefei City|DongMingzhu|Commercialmanufacture|RMB 100million|100.00|100.00|69739561-1|
|Zhengzhou Landa Compressor Co.,Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|ZhengzhouCity|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|56982781-1|
|Chongqing Landa Compressor Co.,Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|ChongqingCity|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|57616375-0|
|Wuhan Landa Compressor Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Wuhan City|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|57491565-6|
|Gree Electric Enterprises(Ma'anshan) Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Ma'anshanCity|ZhuJianbin|Commercialmanufacture|RMB 15.3million|100.00|100.00|737337898|
|Hefei Kaibang Motor ManufactureCo., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Hefei City|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|69739554-X|
|Brazil United Electric AppliancesIndustry and Commerce Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Sao Paulo,Brazil|XiaoYouyuan|Sale|BRL 2 million|100.00|100.00|35215319621|
|Gree Electric Appliances(Zhengzhou) Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|ZhengzhouCity|DongMingzhu|Commercialmanufacture|RMB 20 million|100.00|100.00|56102331-7|
|Gree Electric Appliances (Wuhan)Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Wuhan City|DongMingzhu|Commercialmanufacture|RMB 10 million|100.00|100.00|55844350-5|
|Zhengzhou Gree Green ResourcesRecycling Co., Ltd|Wholly-ownedsubsidiary|Companywith limitedliability|ZhengzhouCity|DongMingzhu|Commercialmanufacture|RMB 5 million|100.00|100.00|56102314-9|
|Hunan Green Resources RecyclingCo., Ltd|Wholly-ownedsubsidiary|Companywith limitedliability|NingxiangCounty|HuangJiahai|Commercialmanufacture|RMB 5 million|100.00|100.00|56590163-1|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Full name of subsidiary|Type of subsidiary|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholdingratio(%)|Votingrightpercentage (%)|Organization Code|
|Gree (Shijiazhuang) Small HomeAppliances Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Shijiazhuang|DongMingzhu|Commercialmanufacture|RMB 10 million|100.00|100.00|57130933-5|
|Gree Electric Appliances (Wuhu)Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Wuhu City|DongMingzhu|Commercialmanufacture|RMB 20 million|100.00|100.00|57177460-8|
|Wuhu Green Resources RecyclingCo., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Wuhu City|DongMingzhu|Commercialmanufacture|RMB 2 million|100.00|100.00|57179479-9|
|Henan Kaibang Motor ManufactureCo., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Zhengzhou|DongMingzhu|Commercialmanufacture|RMB 10 million|100.00|100.00|58032934-6|
|Chongqing Kaibang MotorManufacture Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|Companywith limitedliability|Chongqing|DongMingzhu|Commercialmanufacture|RMB 10 million|100.00|100.00|58148776-8|
|Shijiazhuang Green ResourcesRecycling Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Shijiazhuang|DongMingzhu|Commercialmanufacture|RMB 2 million|100.00|100.00|58693185-6|
|Gree Electric Appliances(Shijiazhuang) Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Shijiazhuang|DongMingzhu|Commercialmanufacture|RMB 100million|100.00|100.00|57553062-7|
|Tianjin Green Resources RecyclingCo., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Tian Jin|DongMingzhu|Commercialmanufacture|RMB 5 million|100.00|100.00|06400944-2|
|Zhuhai HVAC Equipment Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|DongMingzhu|Commercialmanufacture|RMB 100million|100.00|100.00|06213288-5|
|Zhuhai TOSOT Home AppliancesCo., Lid.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|06665225-5|
|Zhuhai Ligao PrecisionManufacturing Co., Ltd.|Wholly-ownedsubsidiary|Companywith limitedliability|Zhuhai City|DongMingzhu|Commercialmanufacture|RMB 30 million|100.00|100.00|08255205-1|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). Joint venture and partnership of the Company
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Name of investedentities|Enterprisetype|RegisteredPlace|Corporaterepresentative|Nature ofbusiness|Registeredcapital|Shareholding ratio of theCompany(%)|Percentage ofvoting rightsin the investedentity held bythe Company(%)|Incidencerelation|OrganizationCode|
|1. Partnership||||||||||
|Songyuan FoodGroup Co., Ltd.|Companywith limitedliability|SongyuanCity|BaoMengquan|Foodmanufacture|RMB 121.2million|50.00|50.00|Jointventure|598809970|
|2. Joint venture||||||||||
|Liaowang All MediaCommunication Co.,Ltd.|Companywith limitedliability|Beijing|Ji Bin|Mediacommunication|RMB 50million|49.00|49.00|Jointventure|71782504-2|
|(Vietnam) GreeElectric Appliances,Inc.|Joint-stockcompany|BecamexBinhDuong,Vietnam|Wu Qingxiao|Commercialmanufacture|VND80billion|31.25|33.75|Jointventure||
|Zhuhai LidaInternational SupplyChina ManagementCo., Ltd.|Companywith limitedliability|ZhuhaiCity|Wang Gang|Logisticsservice|RMB 5.88million|30.00|30.00|Jointventure|68636367-3|
|Beijing GreeTechnology Co.,Ltd.|Companywith limitedliability|Beijing|Xia Yongbin|Technologicaldevelopment|RMB 2million|15.00|15.00|Jointventure|55686262-6|
|Chongqing PargoMechanicalEquipment Co., Ltd.|Companywith limitedliability|ChongqingCity|Huang Hui|Commercialmanufacture|RMB 30million|38.70|38.70|Jointventure|66356755-0|

4). Other related parties of the Company
||||
|-|-|-|
|Name of other related parties|Relationship between other related parties and the Company|OrganizationCode|
|Hebei Jinghai Guaranteed InvestmentCo. , Ltd.|The second largest shareholder of the company|792675304|
|Zhuhai Gree Real-Estate Co., Ltd.|Grandson company of holding subsidiary of the parentcompany|617488325|
|Zhuhai Gree Building Materials Co., Ltd.|Grandson company of holding subsidiary of the parentcompany|192528060|
|Zhuhai Gree Zhisheng Real Estate Co.,Ltd.|Grandson company of holding subsidiary of the parentcompany|763811792|
|Zhuhai Gree Zhiye Co., Ltd.|Holding subsidiary of the parent company|19255108-4|
|Zhuhai Gree Island Investment Co. Ltd.|Grandson company of holding subsidiary of the parentcompany|698148911|
|Zhongshan Gree Zhiye Co., Ltd.|Holding subsidiary of the parent company|72784384-2|
|Zhuhai Jianan Group Co., Ltd.|Holding subsidiary of the parent company|192528511|
|Zhuhai Gree Property Management Co.,Ltd.|Holding subsidiary of the parent company|192559457|
|Zhuhai Gree New TechnologyDevelopment Co., Ltd.|Holding subsidiary of the parent company|752091347|
|Zhuhai Gree Magneto-Electric Co., Ltd.|Holding subsidiary of the parent company|61751538-9|
|China Aviation Industry General AircraftCo., Ltd.|Equity joint venture of the parent company|710935839|
|Zhuhai Gree Service Co., Ltd.|Wholly-owned subsidiary of the parent company|19255590-7|
|Henan Chengxin Gree ElectricAppliances Marketing Co., Ltd.|The company in which the Company's supervisor serves asgeneral manager|66466462-7|
|Henan Shengshi Xinxing Gree TradingCo., Ltd.|The company in which the Company's supervisor serves asgeneral manager|57920725-3|
|Zhejiang Shengshi Xinxing Gree TradingCo., Ltd.|The company in which the Company's director serves asgeneral manager|71761180-2|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 5). Related transactions
(1) Purchase of commodities/receiving of services
|||||||||
|-|-|-|-|-|-|-|-|
|Related parties|Type of relatedtransactions|Contents ofrelatedtransactions|Relatedtransactionpricingprinciple|Amount for the currentperiod||Amount for the previousperiod||
|||||Amount|Proportionto amountof similartransaction(%)|Amount|Proportionto amountof similartransaction(%)|
|Zhuhai Gree GroupCo., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|439,790.82|0.09|357,844.28|0.16|
|Zhuhai Gree ZhiyeCo., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|992.87|0.00|1,132.94|0.00|
|Zhuhai GreeMagneto-ElectricCo., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|188.26|0.00|214.79|0.00|
|Zhuhai GreeReal-Estate Co.,Ltd.|Deposit-taking|Interestexpense|Fair marketprice|||11,466.78|0.00|
|Zhuhai GreePropertyManagement Co.,Ltd.|Deposit-taking|Interestexpense|Fair marketprice|79.79|0.00|91.03|0.00|
|Zhuhai Gree NewTechnologyResearch InstituteCo., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|5.32|0.00|194.02|0.00|
|Zhuhai GreeBuilding MaterialsCo., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|||574.89|0.00|
|Zhuhai GreeZhisheng RealEstate Co., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|||508.89|0.00|
|China AviationIndustry GeneralAircraft Co., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|||180,001.58|0.08|
|Zhuhai GreeService Co., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|141,951.06|0.03|164,497.85|0.07|
|Zhejiang ShengshiXinxing GreeTrading Co., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|52.60|0.00|4,808.05|0.00|
|Zhuhai JiananGroup Co., Ltd.|Purchase ofservices|Infrastructureproject|Fair marketprice|13,857,683.22|0.89|||
|Henan ChengxinGree ElectricAppliancesMarketing Co., Ltd.|Deposit-taking|Interestexpense|Fair marketprice|245.47|0.00|1,441.00|0.00|
|Zhuhai Gree IslandInvestment Co. Ltd.|Deposit-taking|Interestexpense|Fair marketprice|213.28|0.00|||
|Liaowang AllMediaCommunicationCo., Ltd.|Servicesourcing|Publicity andadvertising|Fair marketprice|13,128,555.48|0.06|39,703,852.46|0.27|
|Beijing GreeTechnology Co.,Ltd.|Materialsprocurement|Fittings|Fair marketprice|11,598,711.40|0.01|19,929,947.29|0.03|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (2) Sales of commodities/rendering of services
|||||||||
|-|-|-|-|-|-|-|-|
|Relatedparties|Type ofrelatedtransactions|Contents ofrelatedtransactions|Relatedtransactionpricingprinciple|Amount for the current period||Amount for the previousperiod||
|||||Amount|Proportionto amountof similartransaction|Amount|Proportionto amountof similartransaction(%)|
|HenanChengxinGreeElectricAppliancesMarketingCo., Ltd.|Loan|Interestrevenue|Fairmarketprice|2,881,666.66|0.35|1,283,333.33|0.16|
|HenanChengxinGreeElectricAppliancesMarketingCo., Ltd.|Discountedvalue|Interestrevenue|Fairmarketprice|||2,107,371.60|0.27|
|ZhejiangShengshiXinxingGreeTradingCo., Ltd.|Discountedvalue|Interestrevenue|Fairmarketprice|||1,503,604.74|0.19|
|HenanShengshiXinxingGreeTradingCo., Ltd.|Sales ofcommodities|Salesrevenue|Marketprice|8,533,547,842.68|7.11|7,347,118,532.86|7.34|
|ZhejiangShengshiXinxingGreeTradingCo., Ltd.|Sales ofcommodities|Salesrevenue|Marketprice|6,370,617,685.02|5.31|5,031,691,197.47|5.03|
|ZhuhaiGreeGroup Co.,Ltd.|Otherinflows|Feesincome|Fairmarketprice|||259.50|0.16|
|ChinaAviationIndustryGeneralAircraftCo., Ltd.|Otherinflows|Feesincome|Fairmarketprice|||182.64|0.11|
|ZhejiangShengshiXinxingGreeTradingCo., Ltd.|Otherinflows|Feesincome|Fairmarketprice|||7,961.50|4.82|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 6). Accounts receivable and payable by related parties
|||||
|-|-|-|-|
|Name ofproject|Related parties|Amount at the end ofthe period|Amount at thebeginning of the period|
|Customerdeposit|Zhuhai Gree Group Co., Ltd.|958,929.78|18,631,267.95|
||Zhuhai Gree Zhiye Co., Ltd.|254,946.92|253,954.17|
||Zhuhai Gree Service Co., Ltd.|3,878,565.91|4,691,351.35|
||Zhuhai Gree Magneto-Electric Co., Ltd.|48,338.37|48,150.14|
||Zhuhai Gree Property Management Co., Ltd.|20,484.77|20,404.99|
||Zhuhai Gree New Technology Research InstituteCo., Ltd.||43,488.12|
||Zhuhai Gree Zhisheng Real Estate Co., Ltd.||0.01|
||Zhuhai Gree Building Materials Co., Ltd.|0.01|0.01|
||Henan Chengxin Gree Electric Appliances MarketingCo., Ltd.|7,574.06|7,328.62|
||Zhejiang Shengshi Xinxing Gree Trading Co., Ltd.|13,502.19|13,449.60|
||Zhuhai Gree Island Investment Co. Ltd.|1,921.70||
|Notesreceivable|Henan Shengshi Xinxing Gree Trading Co., Ltd.|5,314,346,552.98|4,778,730,100.00|
||Zhejiang Shengshi Xinxing Gree Trading Co., Ltd.|3,670,279,163.99|2,549,371,822.79|
|Accountspayable|Beijing Gree Technology Co., Ltd.|2,073,136.52|2,351,900.61|
|Advancereceived fromcustomers|Henan Shengshi Xinxing Gree Trading Co., Ltd.|1,613,575,660.06|2,246,944,769.56|
||Zhejiang Shengshi Xinxing Gree Trading Co., Ltd.|380,233,447.68|1,025,193,804.99|
|Interestsreceivable|Henan Chengxin Gree Electric Appliances MarketingCo., Ltd.||128,333.33|
|Interestspayable|Zhuhai Gree Zhiye Co., Ltd.|29.99|29.87|
||Zhuhai Gree Service Co., Ltd.|67,385.19|129,871.52|
||Zhuhai Gree Magneto-Electric Co., Ltd.|5.69|5.66|
||Zhuhai Gree Property Management Co., Ltd.|2.41|2.40|
||Zhuhai Gree Group Co., Ltd.|947.22|5,652.33|
||Zhuhai Gree New Technology Research InstituteCo., Ltd.||5.12|
||Zhejiang Shengshi Xinxing Gree Trading Co., Ltd.|1.59|1.58|
||Henan Chengxin Gree Electric Appliances MarketingCo., Ltd.|0.89|0.86|
||Zhuhai Gree Island Investment Co. Ltd.|1.28||
|Short-termand long-termloans|Henan Chengxin Gree Electric Appliances MarketingCo., Ltd.||70,000,000.00|

7). Credit conditions of related parties
On 23 April 2013, Zhuhai Gree Group Finance Company Limited (hereinafter referred to
as "Finance Company") as the Company's holding subsidiary and Zhuhai Gree Group Co.,
Ltd. (hereinafter referred to as "Gree Group") as the Company's controlling shareholder
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 signed a Financial Services Framework Agreement, with the transaction amount up to RMB 1 billion. As of 31 December 2013, the Finance Company had no balance of loans to Gree Group and its subsidiaries.
7. Contingencies
On 12 September 2013, the Company initiatively applied for and gained permission of the US Consumer Product Security Commission (CPSC) and Health Canada to recall dehumidifiers sold in the US and Canada from January 2005 to June 2013. The Company has accrued sufficient expenses based on the estimated loss.
MJC (also called Soleus), shareholder of United States Gree Ltd. (GREE USA INC) sues the company and its subsidiary Hong Kong Gree Electric Appliances Co., Ltd. (HK GREE ELECTRIC APPLIANCES), seeking USD 0.15 billion compensation forMJC’S loss. The company hires professional lawyers to actively respond to the litigation. The company believes thatMJC’ allegation has no merit and will insist to protectcompany’s legal rights. It is expected that the litigation will not affect thecompany’s results of operations. At present the case is still in litigation documents served and pretrial preparation phase and not yet ruled. 8. Commitments
As of 23 April 2013, the Company had no significant commitments to be disclosed.
9. Events after the balance sheet date
According to the resolution passed at the eleventh meeting of the ninth session of the Board of Directors of the Company, the profit distribution plan of the Company for the year 2013 is as follows: calculated by total stock capital of the Company equivalent to 3,007,865,439 stocks, all directors will be distributed a cash of RMB 15.00 (tax included) per 10 stocks, with the total amount of cashes to be distributed in such a way up to RMB 4,511,798,158.50 and the balance to be carried forward to the next year.
10. Other matters
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Gains and lossesfrom changes infair value|Fair valuechangesrecognized inequity|Depreciationreserveswithdrawnduring theperiod|Amount at the endof the period|
|1. Financial assets measured attheir fair values and of whichthe changes are recorded intothe current profits and losses|263,460,017.40|990,563,610.10|||1,246,106,661.88|
|2. Derivative financial assets|13,752,940.26||1,234,495.04||15,205,287.36|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
|||||||
|-|-|-|-|-|-|
|Item|Amount at thebeginning of theperiod|Gains and lossesfrom changes infair value|Fair valuechangesrecognized inequity|Depreciationreserveswithdrawnduring theperiod|Amount at the endof the period|
|3. Available-for-sale financialassets|554,912,450.00||-30,809,846.15||805,932,600.00|
|Total|832,125,407.66|990,563,610.10|-29,575,351.11||2,067,244,549.24|

 11. Notes to main items of financial statements of the parent company
(1) Accounts receivable
1). The accounts receivable are disclosed by type
||||||
|-|-|-|-|-|
|Type|Amount at the end of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Accounts receivable with significant single amountsand single bad debt provision appropriated|||||
|Accounts receivable with bad debt provision provided by combination|||||
|Aging combination|547,791,894.09|68.03|27,709,519.02|5.06|
|Combination of other credit risks|252,672,778.02|31.38|||
|Subtotal of combinations|800,464,672.11|99.41|27,709,519.02|3.46|
|Accounts receivable with insignificant single amountsbut single bad debt provision appropriated|4,715,115.32|0.59|4,715,115.32|100.00|
|Total|805,179,787.43|100.00|32,424,634.34|4.03|

 Continued
||||||
|-|-|-|-|-|
|Type|Amount at the beginning of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Accounts receivable with significant single amountsand single bad debt provision appropriated|||||
|Accounts receivable with bad debt provision provided by combination|||||
|Aging combination|440,982,764.73|56.18|22,184,358.66|5.03|
|Combination of other credit risks|339,189,491.62|43.22|||
|Subtotal of combinations|780,172,256.35|99.40|22,184,358.66|2.84|
|Accounts receivable with insignificant single amountsbut single bad debt provision appropriated|4,715,115.32|0.60|4,715,115.32|100.00|
|Total|784,887,371.67|100.00|26,899,473.98|3.43|

 2). Accounts receivable with bad debt provision appropriated by aging analysis in the combinations:
||||||
|-|-|-|-|-|
|Aging|Amount at the end of the period||Amount at the beginning of the period||
||Book balance|Bad debt|Book balance|Bad debt|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||||
|-|-|-|-|-|-|-|
||Amount|Percentage(%)|provision|Amount|Percentage(%)|provision|
|Within 1 year|547,262,202.19|99.90|27,363,110.11|440,680,701.57|99.93|22,034,035.08|
|1 to 2 years|227,628.74|0.04|45,525.75|2,360.00|0.00|472.00|
|2 to 3 years|2,360.00|0.00|1,180.00|299,703.16|0.07|149,851.58|
|Over 3 years|299,703.16|0.06|299,703.16||||
|Total|547,791,894.09|100.00|27,709,519.02|440,982,764.73|100.00|22,184,358.66|

 3). Accounts receivable with insignificant single amounts but single bad debt provision appropriated at the end of the year:
||||||
|-|-|-|-|-|
|Name of debtor|Book balance|Bad debt provision|Percentage ofappropriation(%)|Reason forappropriation|
|Vietnam HOME APPLIANCE (MHI)|4,715,115.32|4,715,115.32|100.00|Insolvency|
|Total|4,715,115.32|4,715,115.32|100.00||

4). As of 31 December 2013, among the accounts receivable, there was not any money owed to a voting entity shareholder holding5% or more shares of the Company.
5). The top 5 debtors of accounts receivable
||||||
|-|-|-|-|-|
|Name of entity|Relationship with theCompany|Amount|Years|Percentage to totalaccounts receivable(%)|
|First|Non-related party|218,782,811.88|Within 1 year|27.17|
|Second|Wholly-owned subsidiary|129,347,358.03|Within 1 year|16.06|
|Third|Wholly-owned subsidiary ofthe wholly-owned subsidiary|123,325,419.99|Within 1 year|15.32|
|Fourth|Non-related party|35,784,457.26|Within 1 year|4.44|
|Fifth|Non-related party|20,418,538.82|Within 1 year|2.54|
|Total||527,658,585.98||65.53|

 6). Accounts receivable from related parties
|||||
|-|-|-|-|
|Name of entity|Relationship with theCompany|Amount|Proportion to total accountsreceivable (%)|
|Brazil United Electric AppliancesIndustry and Commerce Co., Ltd.|Wholly-ownedsubsidiary of thewholly-ownedsubsidiary|123,325,419.99|15.32|
|Gree Electric Appliances (Brazil)Co., Ltd.|Wholly-ownedsubsidiary|129,347,358.03|16.06|
|Total||252,672,778.02|31.38|

 (2) Other receivables
1). Other receivables are disclosed by type
||||
|-|-|-|
|Type|Amount at the end of the period||
||Book balance|Bad debt provision|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||
|-|-|-|-|-|
||Amount|Percentage(%)|Amount|Percentage(%)|
|Other receivables with significant single amounts andsingle bad debt provision appropriated|||||
|Other receivables with bad debt provision appropriated by combination|||||
|Aging combination|209,508,326.57|25.69|10,893,019.07|5.20|
|Combination of other credit risks|605,931,244.50|74.31|||
|Subtotal of combinations|815,439,571.07|100.00|10,893,019.07|1.34|
|Other receivables with insignificant single amounts butsingle bad debt provision appropriated|||||
|Total|815,439,571.07|100.00|10,893,019.07|1.34|

 Continued
||||||
|-|-|-|-|-|
|Type|Amount at the beginning of the period||||
||Book balance||Bad debt provision||
||Amount|Percentage(%)|Amount|Percentage(%)|
|Other receivables with significant single amounts andsingle bad debt provision appropriated|||||
|Other receivables with bad debt provision appropriated by combination|||||
|Aging combination|191,429,499.15|25.58|9,933,644.01|5.19|
|Combination of other credit risks|556,561,598.76|74.42|||
|Subtotal of combinations|747,991,097.91|100.00|9,933,644.01|1.33|
|Other receivables with insignificant single amounts butsingle bad debt provision appropriated|||||
|Total|747,991,097.91|100.00|9,933,644.01|1.33|

 2). Other receivables with bad debt provision appropriated by aging analysis in the combinations:
||||||||
|-|-|-|-|-|-|-|
|Aging|Amount at the end of the period|||Amount at the beginning of the period|||
||Book balance||Bad debtprovision|Book balance||Bad debtprovision|
||Amount|Percentage(%)||Amount|Percentage(%)||
|Within 1year|208,992,381.19|99.75|10,449,619.06|190,942,790.09|99.75|9,547,139.50|
|1 to 2years|29,315.20|0.01|5,863.04|98,186.42|0.05|19,637.28|
|2 to 3years|98,186.42|0.05|49,093.21|43,310.83|0.02|21,655.42|
|Over 3years|388,443.76|0.19|388,443.76|345,211.81|0.18|345,211.81|
|Total|209,508,326.57|100.00|10,893,019.07|191,429,499.15|100.00|9,933,644.01|

 3). As of 31 December 2013, among the other receivables, there was not any money owed to a voting entity shareholder holding5% or more shares of the Company.
4). The top 5 debtors of other receivables
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||
|-|-|-|-|-|
|Name of entity|Relationship with theCompany|Amount|Years|Percentage to totalother receivables (%)|
|Gree Electric Appliances(Wuhu) Co., Ltd.|Wholly-owned subsidiary|198,114,292.36|Within 1 year|24.30|
|Jinrui Futures Co., Ltd.|Non-related party|170,162,028.73|Within 1 year|20.87|
|Zhengzhou Green ResourcesRecycling Co., Ltd|Wholly-owned subsidiary|140,614,833.17|Within 1 year|17.24|
|Hunan Green ResourcesRecycling Co., Ltd|Wholly-owned subsidiary|127,754,584.29|Within 1 year|15.67|
|Shijiazhuang Green ResourcesRecycling Co., Ltd.|Wholly-owned subsidiary|37,671,552.00|Within 1 year|4.62|
|Total||674,317,290.55||82.70|

 5). Accounts receivable from related parties
|||||
|-|-|-|-|
|Name of entity|Relationship with theCompany|Amount|Percentage to totalother receivables (%)|
|Gree Electric Appliances (Wuhu) Co., Ltd.|Wholly-owned subsidiary|198,114,292.36|24.30|
|Zhengzhou Green Resources Recycling Co., Ltd|Wholly-owned subsidiary|140,614,833.17|17.24|
|Hunan Green Resources Recycling Co., Ltd|Wholly-owned subsidiary|127,754,584.29|15.67|
|Shijiazhuang Green Resources Recycling Co., Ltd.|Wholly-owned subsidiary|37,671,552.00|4.62|
|Zhuhai Gree Electrical Co., Ltd.|Wholly-owned subsidiary|27,361,755.46|3.36|
|Wuhu Green Resources Recycling Co., Ltd|Wholly-owned subsidiary|32,513,890.02|3.99|
|Gree Electric Enterprises (Ma'anshan) Ltd.|Wholly-owned subsidiaryof the wholly-ownedsubsidiary|11,116,134.67|1.36|
|Zhuhai Green Refrigeration Technology Center Co.,Ltd.|Wholly-owned subsidiary|12,415,329.38|1.52|
|Gree Electric Appliances (Wuhan) Co., Ltd.|Wholly-owned subsidiary|3,320,092.95|0.41|
|Gree Electric Appliances (Hefei) Co., Ltd.|Wholly-owned subsidiary|3,408,456.90|0.42|
|Gree Electric Appliances (Chongqing) Co., Ltd.|Holding subsidiary|3,203,778.83|0.39|
|Zhuhai Gree Group Finance Company Limited|Holding subsidiary|645,613.86|0.08|
|GREE (Zhongshan) Small Home Appliances Co.,Ltd.|Wholly-owned subsidiary|1,874,708.76|0.23|
|Zhuhai Gree Xinyuan Electronics Co., Ltd.|Wholly-owned subsidiary|2,133,561.93|0.26|
|Shijiazhuang Gree Small Home Appliances Co., Ltd.|Wholly-owned subsidiary|81,611.21|0.01|
|Hefei Kaibang Motor Manufacture Co., Ltd.|Wholly-owned subsidiaryof the wholly-ownedsubsidiary|30,625.04|0.00|
|Zhuhai Kaibang Motor Manufacture Co., Ltd.|Wholly-owned subsidiary|3,666,586.87|0.45|
|Zhuhai TOSOT Home Appliances Co., Lid.|Wholly-owned subsidiary|1,133.00|0.00|
|Zhuhai Ligao Precision Manufacturing Co., Ltd.|Wholly-owned subsidiary|963.00|0.00|
|Zhuhai HVAC Equipment Co., Ltd.|Wholly-owned subsidiary|938.00|0.00|
|Zhuhai Gree Daikin Precision Mold Co., Ltd.|Holding subsidiary|802.80|0.00|
|Total||605,931,244.50|74.31|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (3) Long-term equity investment
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Name of invested entities|Accountingmethod|Investment cost|BeginningBalance|Increase/decrease|Balance at the endof the period|Shareholdingratio in theinvestedentity (%)|Percentageof votingrights in theinvestedentity (%)|Provision forimpairment|Appropriationof provisionforimpairmentfor the currentperiod|Cash dividend|
|Zhuhai Gree Group FinanceCompany Limited|Cost method|1,400,371,239.99|1,400,371,239.99||1,400,371,239.99|89.25|89.25||||
|Zhuhai Landa Compressor Co.,Ltd.|Cost method|757,688,325.50|757,688,325.50|151,639,145.71|909,327,471.21|100.00|100.00||||
|Gree Electric Appliances(Zhengzhou) Co., Ltd.|Cost method|720,000,000.00|720,000,000.00||720,000,000.00|100.00|100.00||||
|Gree Electric Appliances(Wuhan) Co., Ltd.|Cost method|510,000,000.00|510,000,000.00||510,000,000.00|100.00|100.00||||
|Gree Electric Appliances (Hefei)Co., Ltd.|Cost method|505,370,626.10|505,370,626.10||505,370,626.10|100.00|100.00||||
|Zhuhai Gree Dakin Device Co.,Ltd.|Cost method|283,117,574.47|283,117,574.47||283,117,574.47|51.00|51.00|||15,567,109.06|
|Gree Electric Appliances(Chongqing) Co., Ltd.|Cost method|223,100,000.00|223,100,000.00||223,100,000.00|97.00|97.00||||
|Zhuhai Green RefrigerationTechnology Center Co., Ltd.|Cost method|209,352,450.89|209,352,450.89|115,281,297.60|324,633,748.49|100.00|100.00||||
|Zhuhai Gree Daikin PrecisionMold Co., Ltd.|Cost method|201,911,186.86|201,911,186.86||201,911,186.86|51.00|51.00||||
|Zhuhai Gree Electrical Co., Ltd.|Cost method|184,680,359.95|184,680,359.95||184,680,359.95|100.00|100.00||||
|Gree Electric Appliances (Brazil)Co., Ltd.|Cost method|130,239,414.36|130,239,414.36||130,239,414.36|100.00|100.00||||
|Gree Electric Appliances(Shijiazhuang) Co., Ltd.|Cost method|98,940,059.97|98,940,059.97||98,940,059.97|100.00|100.00||||
|Zhuhai Kaibang MotorManufacture Co., Ltd.|Cost method|83,860,929.67|83,860,929.67||83,860,929.67|100.00|100.00||||
|Zhuhai Gree Xinyuan ElectronicsCo., Ltd.|Cost method|54,290,096.61|54,290,096.61||54,290,096.61|100.00|100.00||||
|GREE (Zhongshan) Small HomeAppliances Co.|Ltd.|30,000,000.00|30,000,000.00||30,000,000.00|100.00|100.00||||
|Gree Electric Appliances (Wuhu)Co., Ltd.|Cost method|20,000,000.00|20,000,000.00||20,000,000.00|100.00|100.00||||
|Gree (Shijiazhuang) Small HomeAppliances Co., Ltd.|Cost method|10,000,000.00|10,000,000.00||10,000,000.00|100.00|100.00||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Name of invested entities|Accountingmethod|Investment cost|BeginningBalance|Increase/decrease|Balance at the endof the period|Shareholdingratio in theinvestedentity (%)|Percentageof votingrights intheinvested|Provision forimpairment|Appropriationof provisionforimpairmentfor the currentperiod|Cash dividend|
|Gree Electric Appliances(Chongqing) ElectronicTechnology Co., Ltd.|Cost method|9,700,000.00|9,700,000.00|-9,700,000.00|||entity (%)|||317,419,051.62|
|Zhuhai Gree Electric AppliancesSales Co., Ltd.|Cost method|5,000,000.00|5,000,000.00||5,000,000.00|100.00|100.00||||
|Zhengzhou Gree GreenResources Recycling Co., Ltd|Cost method|5,000,000.00|5,000,000.00||5,000,000.00|100.00|100.00||||
|Hunan Green ResourcesRecycling Co., Ltd|Cost method|5,000,000.00|5,000,000.00||5,000,000.00|100.00|100.00||||
|Shenzhen Gree ElectricAppliances Sales Co., Ltd|Cost method|4,500,000.00|4,500,000.00||4,500,000.00|90.00|90.00||||
|Wuhu Green ResourcesRecycling Co., Ltd.|Cost method|2,000,000.00|2,000,000.00||2,000,000.00|100.00|100.00||||
|Shijiazhuang Green ResourcesRecycling Co., Ltd.|Cost method|2,000,000.00|2,000,000.00||2,000,000.00|100.00|100.00||||
|Shanghai GREE AirConditioners Sales Co., Ltd|Cost method|1,800,000.00|1,800,000.00||1,800,000.00|99.70|100.00||||
|Hong Kong Gree ElectricAppliances Sales Co., Ltd.|Cost method|472,879.08|472,879.08||472,879.08|100.00|100.00||||
|Zhuhai TOSOT Life ElectricAppliances Co., Lid.|Cost method|30,000,000.00||30,000,000.00|30,000,000.00|100.00|100.00||||
|Zhuhai Ligao PrecisionManufacturing Co., Ltd.|Cost method|30,000,000.00||30,000,000.00|30,000,000.00|100.00|100.00||||
|Zhuhai HVAC Equipment Co.,Ltd.|Cost method|100,000,000.00||100,000,000.00|100,000,000.00|100.00|100.00||||
|Tianjin Green ResourcesRecycling Co., Ltd.|Cost method|5,000,000.00||5,000,000.00|5,000,000.00|100.00|100.00||||
|Zhuhai Dasheng Co. Ltd.|Cost method|900,000.00|900,000.00||900,000.00|3.13|3.13|900,000.00|||
|Subtotal||5,624,295,143.45|5,459,295,143.45|422,220,443.31|5,881,515,586.76|||900,000.00||332,986,160.68|
|Chongqing Pargo MechanicalEquipment Co., Ltd.|Equitymethod|8,503,918.85|2,964,409.70|8,072,798.64|11,037,208.34|38.70|38.70||||
|Songyuan Food Group Co., Ltd.|Equitymethod|60,600,000.00||58,589,481.39|58,589,481.39|50.00|50.00||||
|Liaowang All MediaCommunication Co., Ltd.|Equitymethod|24,500,000.00|22,901,072.89|2,560,718.13|25,461,791.02|49.00|49.00||||

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Name of invested entities|Accountingmethod|Investment cost|BeginningBalance|Increase/decrease|Balance at the endof the period|Shareholdingratio in theinvestedentity (%)|Percentageof votingrights intheinvested|Provision forimpairment|Appropriationof provisionforimpairmentfor the currentperiod|Cash dividend|
|Beijing Gree Technology Co.,Ltd.|Equitymethod|300,000.00|532,492.90|193,018.85|725,511.75|15.00|entity (%)15.00||||
|Zhuhai Lida International SupplyChina Management Co., Ltd.|Equitymethod|1,760,000.00|1,762,016.81|-7,476.02|1,754,540.79|30.00|30.00||||
|(Vietnam) Gree ElectricAppliances, Inc.|Equitymethod|10,572,422.97|1,940,009.35||1,940,009.35|31.25|33.75|1,940,009.35|||
|Subtotal||106,236,341.82|30,100,001.65|69,408,540.99|99,508,542.64|||1,940,009.35|||
|Total||5,730,531,485.27|5,489,395,145.10|491,628,984.30|5,981,024,129.40|||2,840,009.35||332,986,160.68|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (4) Total operating revenues and costs
1). Operating revenues and operating costs
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previous period|
|Operating Revenue|113,451,559,029.47|96,826,436,400.15|
|Including: Prime operatingrevenue|105,681,479,447.51|90,505,815,560.81|
|Other operatingrevenue|7,770,079,581.96|6,320,620,839.34|
|Operating Cost|83,523,033,950.67|76,484,384,303.03|
|Including: Prime operating cost|76,223,302,551.28|70,627,921,806.56|
|Other operating cost|7,299,731,399.39|5,856,462,496.47|

 2). Main business (classified by industry)
||||||
|-|-|-|-|-|
|Name of industry|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Household appliancesmanufacturing|105,681,479,447.51|76,223,302,551.28|90,505,815,560.81|70,627,921,806.56|
|Total|105,681,479,447.51|76,223,302,551.28|90,505,815,560.81|70,627,921,806.56|

 3). Main business (classified by product)
||||||
|-|-|-|-|-|
|Name of product|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Air Conditioner|104,387,171,004.79|75,072,173,714.53|89,408,861,848.09|69,628,799,791.83|
|Household Appliances|1,294,308,442.72|1,151,128,836.75|1,096,953,712.72|999,122,014.73|
|Total|105,681,479,447.51|76,223,302,551.28|90,505,815,560.81|70,627,921,806.56|

 4). Main business (classified by areas)
||||||
|-|-|-|-|-|
|Name of product|Amount for the current period||Amount for the previous period||
||Operating Revenue|Operating Cost|Operating Revenue|Operating Cost|
|Internal sales|91,101,203,679.77|63,265,811,476.49|75,361,121,742.19|57,177,148,233.10|
|External sales|14,580,275,767.74|12,957,491,074.79|15,144,693,818.62|13,450,773,573.46|
|Total|105,681,479,447.51|76,223,302,551.28|90,505,815,560.81|70,627,921,806.56|

 5). Sales revenues of the top 5 clients of the Company
||||
|-|-|-|
|Name of entity|Sales revenue|Proportion to total sales revenues ofthe Company (%)|
|First|8,501,663,214.44|7.49|
|Second|8,450,802,347.04|7.45|
|Third|6,609,316,252.55|5.83|
|Fourth|6,356,926,771.33|5.60|
|Fifth|5,954,671,887.98|5.25|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||
|-|-|-|
|Total|35,873,380,473.34|31.62|

 (5) Investment income
||||
|-|-|-|
|Item|Amount for the current period|Amount for the previousperiod|
|Long-term equity investment income measured by costmethod|332,986,160.68||
|Long-term equity investment income measured by equitymethod|2,855,797.81|8,732,172.23|
|Investment income from long-term equity investment|6,986,389.75||
|Investment income from disposal of trading financial assets|235,870,752.91|31,624,382.48|
|Total|578,699,101.15|40,356,554.71|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 (6) Supplementary information about cash flow statement
||||
|-|-|-|
|Item|Amount for the currentperiod|Amount for theprevious period|
|Net profit|5,986,905,538.79|4,570,064,653.35|
|Add: Assets depreciation reserves|139,947.16|-116,091,297.33|
|Fixed assets depreciation, oil and gas assets accumulated depreciation,productive biological assets accumulated depreciation|305,254,794.85|339,649,055.05|
|Amortization of intangible assets|6,092,577.96|6,494,559.44|
|Amortization of long-term deferred expenses|||
|Losses on disposal of fixed assets, intangible assets and other long-termassets (incomes expressed with “-”)|657,579.32|7,013,692.58|
|Losses on disposal of fixed assets (incomes expressed with “-”)|||
|Losses from changes in fair value (incomes expressed with “-”)|-839,260,888.59|-30,995,945.02|
|Financial expenses (incomes expressed with “-”)|522,587,827.78|85,078,116.01|
|Investment losses (incomes expressed with “-”)|-578,699,101.15|-40,356,554.71|
|Decrease in deferred income tax assets (increase expressed with “-”)|-2,583,363,156.04|-1,090,892,358.68|
|Increase in deferred income tax liabilities (decrease expressed with “-”)|141,875,657.40|74,096,356.61|
|Decrease of inventories (increase expressed with “-”)|3,475,855,769.13|1,259,606,867.87|
|Decrease in operating receivables (increase expressed with “-”)|-11,160,521,611.09|-4,693,493,583.70|
|Increase in operating payables (decrease expressed with “-”)|18,756,128,840.64|15,677,307,304.66|
|Others|-2,180,646,937.55|242,000,000.00|
|Net cash flow from operating activities|11,853,006,838.61|16,289,480,866.13|
|2. Major investing and financing activities not involving cashreceipts and payment:|||
|Conversion of debt into capital|||
|Convertible bonds expiring within one year|||
|Fixed assets acquired under finance leases|||
|3. Net changes in cash and cash equivalents:|||
|Ending balance of cash|33,405,450,196.45|24,582,887,186.53|
|Less: Beginning balance of cash|24,582,887,186.53|7,783,477,068.97|
|Add: Ending balance of cash equivalents|||
|Less: Beginning balance of cash equivalents|||
|Net increase in cash and cash equivalents|8,822,563,009.92|16,799,410,117.56|

 Note: “other” is RMB 2,180,646,937.55 net increase ofbanks’ acceptance bill..
12. Supplementary information
1). Schedule of non-recurring profit and loss for the year
||||
|-|-|-|
|Item|Amount|Description|
|Profit and loss from disposal of non-current assets|-1,760,280.69|They are mainly profit|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013
||||
|-|-|-|
|Item|Amount|Description|
|||and loss from disposalof fixed assets|
|Governmental subsidies recorded into the current gains and losses(excluding the governmental subsidies closely relating to the business of theenterprise and enjoyed by a fixed quota or a fixed amount in accordancewith the state policies)|660,482,277.34|Financial rewards,technologicalinnovation subsidiesand developmentproject grants, etc.|
|Gains and losses of the fair value change of the trading financial asset andliability held by the Company, investment income from the disposal of thetrading financial asset and liability and available-for-sale financial asset,except for the effective hedging business in relation to the normal operationof Company|1,705,045,054.92|Investment income,gains and losses fromchanges in fair value|
|Non-operating incomes and expenditures other than the above items|-29,808,150.26||
|Total non-recurring profit and loss|2,333,958,901.31||
|Less: Influence amount of income tax|367,611,287.10||
|Net non-recurring profit and loss|1,966,347,614.21||
|Including: non-recurring profit and loss attributable to minorityshareholders|3,517,879.72||
|Including: non-recurring profit and loss attributable to owners of the parentcompany|1,962,829,734.49||

2). Rate of return on net assets and earnings per share
|||||
|-|-|-|-|
|Profit during the Report Period|Weighted averagereturn on netassets|Earnings per share||
|||Basicearnings pershare|Dilutedearnings pershare|
|Net profit attributable to shareholders of ordinary stocks of theCompany|35.77%|3.61|3.61|
|Net profit attributable to shareholders of ordinary stocks of theCompany after deduction of non-recurring profit and loss|29.31%|2.96|2.96|

GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 3). Changes of key accounting statements of the Company and reasons
||||||
|-|-|-|-|-|
|Item|Ending amount as ofDecember 2013 oraccumulated amount fromJanuary to December2013|Ending amount as ofDecember 2012 oraccumulated amount fromJanuary to December2012|Ratio ofchange %|Reason of change|
|Monetary Capital|38,541,684,470.83|28,943,921,701.45|33.16|Increase of operatingrevenues and dueacceptance of bills|
|Trading financialassets|1,246,106,661.88|263,460,017.40|372.98|Increase of fair value offorward foreign exchangecontract|
|Bills receivable|46,297,242,328.98|34,292,168,999.99|35.01|Increase of pre-sale dealerbills|
|Disbursement of loansand advances|4,565,455,698.91|2,088,903,434.99|118.56|Increase of financecompany’s disbursementof loans and advances|
|Financial assetsavailable for sale|805,932,600.00|554,912,450.00|45.24|Increase of bondsinvestment from financecompanies|
|Investment real estate|503,056,462.68|208,009,129.76|141.84|Increase of external rentalhouses|
|Intangible assets|2,370,179,675.29|1,635,272,965.12|44.94|Increase of land use rights|
|Deferred income taxassets|5,682,613,181.91|2,911,085,198.23|95.21|Increase of deductibletemporary differences forthe period|
|Tax payable|6,157,486,617.37|2,522,100,351.45|144.14|Increase of taxesoutstanding|
|Non-current liabilitiesdue within a year|923,447,998.14|2,513,763,694.23|-63.26|Repayment of long-termloans due within a year|
|Other currentliabilities|30,916,369,463.68|15,743,875,054.32|96.37|Increase of expensesoutstanding|
|Sales expense|22,508,931,701.70|14,626,228,488.10|53.89|Increase of sales expensedue to increase of salesand great efforts made inmarketing|
|Income from changesin fair value|990,563,610.10|246,884,832.05|301.22|Increase of incomes fromchanges in fair value offorward foreign exchangecontract|
|Investment income|717,337,242.63|-20,494,376.82|3600.17|Substantial increase ofincomes from forwardforeign exchangetransactions|
|Income tax expense|1,956,168,768.13|1,316,781,289.57|48.56|Taxes increase due to salesincrease|

13. Approval of financial report
The financial report for this year has been approved by the Board of Directors of the Company as of 23 April 2014.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Annual Report 2013 Section XI Index of documents
(1) The accounting statements signed and sealed by Dong Mingzhu, the Company's legal representative, Wang Jingdong, responsible person in charge of accounting work and Liao Jianxiong, in-charge person of accounting institution.
(2) The original audit report sealed by China Audit Asia Pacific Certified Public Accountants Co., Ltd. and signed and sealed by certified public accountants Han Zhenping and Gong Jingwei.
(3) Originals and original drafts of all the Company's documents and announcements published on the newspapers designated by CSRC within the Report Period.
GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI Board of Directors
23 April 2014