(coco) #1

86 Huawei Investment & Holding Co., Ltd.

Cash Flow from Operating Activities

(CNY Million) 2019 2018 YoY
Net profit 62,656 59,345 5.6%
Adjustment for depreciation, amortization, net foreign
exchange losses and non-operating expenses, net
25,814 14,090 83.2%

Cash    flow    before  change  in  operating   assets  and liabilities 88,470 73,435 20.5%
Change in operating assets and liabilities 2,914 1,224 138.1%
Cash flow from operating activities 91,384 74,659 22.4%

In 2019, Huawei’s cash flow from operating activities increased by 22.4% year-on-year to CNY91,384 million. This
is attributable to the following factors:

■ Net profit grew by 5.6% year-on-year.

■ Depreciation, amortization, net foreign exchange losses, and non-operating expenses increased due to increased
investment in areas like cloud and R&D. This in turn increased Huawei’s total long-term assets and drove up
depreciation and amortization.

■ In 2019, changes in operating assets and liabilities contributed CNY2,914 million to the cash flow from
operating activities, up 138.1% year-on-year. This is mainly due to the rapid growth of our consumer business
and our increased operating efficiency facilitated by ongoing management improvement.

Financial Risk Management
In 2019, we closely monitored the changes in our external environment and proactively assessed their impact on
Huawei using the financial risk management system we have built over the past years. In addition, we continued
to amend and improve our financial risk management policies and processes to further enhance our ability to
withstand financial risks and better support our business development.

Liquidity Risk

We have continuously worked to improve our capital structure and short-term liquidity planning, budgeting, and
forecasting systems to better assess mid- to long-term liquidity needs and short-term funding shortfalls. We
have implemented prudent financial measures to meet our liquidity needs and guarantee our company’s business
development, including maintaining a robust capital structure and financial flexibility, keeping a proper level of
funds, gaining access to adequate and committed credit facilities, creating effective cash plans, and centralizing
cash management. As of December 31, 2019, the balance of our cash and short-term investments had increased by
39.6% year-on-year to CNY371,040 million, further reducing our liquidity risks.

(CNY Million) 2019 2018 YoY
Cash flow from operating activities 91,384 74,659 22.4%
Cash and short-term investments 371,040 265,857 39.6%
Short-term and long-term borrowings 112,162 69,941 60.4%
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