Stock Code: 600690 Short Name: Haier Smart HomeConvertible Bond Code: 110049 Convertible Bond Name: Haier Convertible BondsConvertible Stock Code: 190049 Convertible Stock Name: Haier Converted Stocks
Haier Smart Home Co., Ltd.Third Quarterly Report of
2019
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
Contents
I. Important Notice ..........................................................................................................................3
II. Company Profile ....................................................................................... ....................................3
III. Important Events ....................................................................................................................... 11
IV.Appendix ................................................................................................ ....................................21
I. Important Notice
1.1 The Board of Directors, the Board of Supervisors and directors, supervisors and senior management
of Haier Smart Home Co., Ltd. (the “Company”) hereby assure that the content set out in thequarterly report is true, accurate and complete, and free from any false record, misleadingrepresentation or material omission, and are individually and collectively responsible for thecontent set out therein.
1.2 All directors of the Company attend the Board Meeting of Directors to review the quarterly report.
1.3 Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify that thefinancial statement set out in the quarterly report is true, accurate and complete.
1.4 This Third Quarterly Report of the Company has not been audited.
II.Company Profile
2.1 Key financial information
Unit and Currency: RMB
| As at the end of the reporting period | As at the end of last year | Increase/decrease as at the end of the reporting period compared with the end of last year (%) | ||
| After adjustment | Before adjustment | |||
| Total assets | 184,273,943,674.56 | 167,623,755,907.07 | 166,699,544,243.79 | 9.93 |
| Net assets attributable to shareholders of the listed company | 44,881,019,057.59 | 39,527,134,756.93 | 39,402,350,791.68 | 13.54 |
| From the beginning of the year to the end of the reporting | From the beginning of last year to the end of the reporting period of last year (January to September) | Increase/decrease compared with the corresponding period of last year | ||
| period (January to September) | After adjustment | Before adjustment | (%) | |
| Net cash flows from operating activities | 9,006,912,568.45 | 10,902,332,232.22 | 11,049,179,807.06 | -17.39 |
| From the beginning of the year to the end of the reporting period (January to September) | From the beginning of last year to the end of the reporting period of last year (January to September) | Increase/decrease compared with the corresponding period of last year (%) | ||
| After adjustment | Before adjustment | |||
| Operating revenue | 148,896,109,856.46 | 138,227,311,459.35 | 138,138,774,411.21 | 7.72 |
| Net profit attributable to shareholders of the listed company | 7,772,860,902.81 | 6,161,001,081.50 | 6,126,787,121.21 | 26.16 |
| Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company | 5,834,398,305.26 | 5,522,473,377.30 | 5,522,473,377.30 | 5.65 |
| Weighted average return on net assets (%) | 18.17 | 18.02 | 17.42 | Increased by 0.15 pct |
| Basic earnings per share (RMB per share) | 1.221 | 1.010 | 1.005 | 20.89 |
| Diluted earnings per share (RMB per share) | 1.131 | 1.010 | 0.987 | 11.98 |
Note：
During the reporting period, the Company followed the strategy of smart home leadership. Drivenby the Rendanheyi model, the Company managed to achieve continuous growth against the adverseeconomic situation through continued product innovation, deepened retail transformation, globaloperation and multibrand operation. The Company also leaded the scenario transformation of eco brandand accelerated the landing of '5+7+N' smart home, all-scenario, customized and complete-set solutionsand creation of eco-scenario; and promoted the construction from the networked appliances to scenarioto ecology and built an eco brand in the IoT era. In 2019, Haier was listed in “BrandZ? Top 100 MostValuable Global Brands in 2019” and became the first and only IOT eco brand listed in the Top 100 inBrandZ?’s history.
1.As the logistics business would not be consolidated by the Company in Q3 of 2019, the revenueincreased by 4.6% in this quarter. If we exclude the impact from logistics equity swap, on a LOL basis,
the revenue from July to September would increase by 9.1% yoy and 9.5% for the first three quartersthis year. The disposal of logistics business resulted in investment income of RMB1.44 billion.
2. Continuously rising market share of online and offline whole-category products in domesticmarket. According to the statistics from China Market Monitor Co., Ltd (CMM), ①Offline market: theCompany's retail sales shares of refrigerators, washing machines, air conditioners, water heaters andkitchen appliances increased by 1.4, 2.7, 0.7, 1.9 and 0.8 pct from January to September 2019,respectively. In terms of refrigerators and washing machines, the Company maintained the top 1 in theindustry and continued to expand its leading advantages, with the market share being 3.3 and 2.1 timesas high as that of the second place, respectively. ②Online market: the Company's retail sales shares ofrefrigerators, washing machines, air conditioners, water heaters and kitchen appliances have increasedby 1.9, 1.3, 0.1, 1.5 and 1.1 pct, respectively.
3. Accelerating Growth of high-end brand Casarte. Revenue of Casarte brand from January toSeptember increased by 25%, of which the revenue from July to September increased by 42%; Casarterefrigerators and washing machines achieved absolute leading advantage in terms of the market share ofproducts priced over RMB10,000, which amounted to 40.6% and 76.8%, respectively.
4. Air conditioner business achieved breakthrough in high-end market. Casarte’s airconditioners achieved multiple growth through launching Commander series and expanding the productlineup with a revenue growth from January to September of 120%; the market share of Casarte airconditioners priced over RMB10,000 nearly doubled, achieving 10.2%; and the high-end market shareof products priced over RMB15,000 amounted to 41.24%, ranking top among the competitors; in theoverseas market, the Company insisted on self-owned brand, and the self-owned brand of Haier airconditioner ranked top in terms of export for two consecutive years.
5. Global brand corporate value demonstrated, overall growth in overseas market achieved andthe high-end presence established with remarkable success. The revenue from overseas marketincreased by 25%, representing 47% of the total revenue, while nearly 100% of the revenue fromoverseas was generated from self-owned brands. The revenue from all regional markets have realizedincrease with the North America, Europe, South Asia, Southeast Asia, Japan, Australia and New Zealandand Mid&East Africa increased by 11.6%, 224.5%, 14.1%, 22.4%, 9.7%, 3.2% and 9.2%, respectively.
The Company merged Italian brand Candy this year, and after 3 quarters of platform integration onlogistics, finance, after sales and human resources, and adopting measures in procurement and R&Dsynergy, the results of the third quarter improved significantly, and the fruits on operation have graduallycome into being.
6. Leading the transformation of scenario solution replacing the product. Complete-set smarthome solution gained market recognition. The Company replaced the past single product sales byproviding the whole-house smart scenario solution ‘5+7+N’ to meet the user's personalizedcustomization needs for smart home. Haier Smart Home 001 Experience Center opened on 6 Septemberin Shanghai, landing the scene experience of ‘5+7+N’, providing the user with new experience ofsolutions including whole-house interactive voice, whole-house fresh air, smart kitchen providing wholefamily’ healthy food, whole-house water using, sanitation and security, empowering the sales of Haiersmart home complete-set solutions with its differentiated advantages on all-scenario, complete-set andsmart solutions. The total sales in a single month reached RMB20 million, the average price percustomer of solutions of smart home appliances & household integration is RMB400,000, among whichthe average price per customer of solutions of smart home appliances scenario is RMB250,000, and thehighest price per customer reached RMB700,000. The Company realized transformation from sellingsingle product to providing comprehensive solutions of home appliances & household integration, andfrom products interaction to scenario interaction, and achieved iterative upgrades to enhance user’svalue and viscosity with comprehensive premium sets, comprehensive smart sets, process integration ofdesign, installation and after-sales and Smart Home’s cloud platform.
7. A leading eco system transformation with full industry coverage. The Company activelypromoted the ecosphere construction of the Internet of Clothing, Internet of Food and Internet ofAir, as well as the empowerment transformation of related industries. Haier’s ecosphere includingthe Internet of Clothing, Internet of Food and Internet of Air covering industries like clothing, textile,washing & dyeing and food with more than 1200 cooperative resource enterprises. During the reportingperiod, the ecological revenue of the Internet of Food, Internet of Clothing and Internet of Air increasedby 40%, 46% and 79%, reaching RMB0.73 billion, RMB1.62 billion and RMB0.94 billion, respectively;the ecological revenue of smart home increased by 55%, reaching RMB3.37 billion; and the ecological
yield was 15%, increased by 3 pct.
The Internet of Clothing of Haier provides users with the best experience throughout the wholeprocess based on the clothing lifetime cycle management platform of IoT and reliant on the homeappliances of the Internet of Clothing and the IoT technologies. By connecting fields, factories, storesand homes to label clothes with RFID ‘chip identity card’, and cooperating with clothing and textileindustry, washing and dyeing industry, and the Internet of Clothing technology industry to constructsmart scenario ecology together, the Company achieved digital management of smart clothes, providedusers with lifetime cycle solutions from clothes purchase to washing, caring, management and matching,and facilitated the transformation and upgrading of industry chain-cluster of clothes in the IoT era. TheInternet of Clothing promoted the application of IoT technologies in the clothing and textile industry,which enhanced the commodity management efficiency of the ecological resource enterprises, with theefficiency of receipt and delivery increased tenfold and the labor costs decreased by 50%.
8. We continued to expand the R&D investment of AI and IOT to create a dual-core drivecapability of networked appliances intelligence and data intelligence. The voice interactive portalcovers more than 60 types of networked appliances and more than 3,000 models. From January toSeptember 2019, the binding amount of networked appliances and activation rate of intelligent whitegoods increased by 137% and 92%, respectively and the active users increased by 195% year-on-year.
Leading the formulation of international/national standards: The Smart Home’s cloud platformfully deployed four major standard organizations including IEC, ISO, IEEE and OCF and realized anworldwide leading position in standard system of smart home cloud ecology. While leading theformulation of international standards for the IEEE food traceability; the Internet of Clothing releasednational standards for the GB clothing commodities encoding and RFID labels, initiated 4 internationalstandards, and participated in the formulation of 10 national & international standards.Transforming from the networked appliances to scenario and to ecology will provide the consumersa smart & precise life solution and keep iterating. The Company also transforms from current lowfrequency sales to high frequency interaction with lifetime users to increase the users marginal revenueand create value among users and ecosystem stakeholders in a win-win situation. We realized diversifiedrevenue expansion on the business model, such as revenue from the hardware to revenue from services,
platforms and others.
9. COSMOPlat Industrial Internet Platform: it established ‘1 (main platform) + 7 (modules) +N (industries) platform’ system, and realized cross-industry and cross-field applications by promotingplatform innovation, technology innovation and ecological innovation. For the time being, it can providea comprehensive solution of soft and hard integration for 15 industries such as ceramics, RV andagriculture, deeply empowering enterprises for transformation and upgrading. The revenue ofCOSMOPlat was RMB8.06 billion with an increase of 55%. 15 interconnected factories have been builtby the Company, constructing a large-scale user-oriented customization leading system in the IOT era,and forming a world's leading benchmark of high-end manufacturing.
Non-recurring Profit or Loss Items and Amount
√Applicable □Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period (July-September) | Amount from the beginning of the year to the end of the reporting period (January-September) |
| Profit or loss from disposal of non-current assets | 3,801,616,782.92 | 3,805,919,840.94 |
| Government grants included in current profit or loss, except those closely related to the normal operating business, complying with requirements of the national policies, and continuing to be granted with the amount and quantity determined under certain standards | 168,129,964.05 | 447,385,997.55 |
| Current net profit or loss of the subsidiaries from the consolidation of enterprises under common control from the beginning of the period to consolidation date | 13,950,738.83 | 13,950,738.83 |
| Profit or loss from contingencies not related to the ordinary operations of the |
| Company | ||
| Profit and loss of changes in fair value arising from holding of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities except for valid straddle business relevant to normal business of the company, as well as investment gain realized from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other debt investments | -3,644,829.80 | 152,554,135.11 |
| Other non-operating income and expenses except for the above mentioned | 139,277,208.60 | 304,162,252.10 |
| Effect of minority equity interests, net of tax | -2,169,874,488.09 | -2,263,926,589.46 |
| Income tax effect | -458,681,521.98 | -521,583,777.52 |
| Total | 1,490,773,854.53 | 1,938,462,597.55 |
2.2 Total number of shareholders, top ten shareholders and top ten shareholders holding circulating
shares (or shareholders not subject to selling restrictions) as of the end of the reporting period
Unit: share
| Total number of shareholders | 168,418 | ||||||
| Shareholdings of top ten shareholders | |||||||
| Name of Shareholder (full name) | Number of shares held at the end of the period | Percentage (%) | Number of shares held with selling restrictions | Status of shares pledged or frozen | Nature of shareholder | ||
| Status | Number | ||||||
| Haier Electric Appliances International Co., Ltd. | 1,258,684,824 | 19.76 | Nil | 1,258,684,824 | Domestic non-state-owned legal entity | ||
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| Haier Group Corporation | 1,072,610,764 | 16.84 | Nil | 1,072,610,764 | Domestic non-state-owned legal entity | ||
| Hong Kong Securities Clearing Co., Ltd. | 763,164,487 | 11.98 | Unknown | 763,164,487 | Unknown | ||
| China Securities Finance Corporation Limited | 182,592,697 | 2.87 | Unknown | 182,592,697 | Unknown | ||
| Qingdao Haier Venture & Investment Information Co., Ltd. (青岛海尔创业 投资咨询有限公司) | 172,252,560 | 2.70 | Unknown | 172,252,560 | Domestic non-state-owned legal entity | ||
| GIC PRIVATE LIMITED | 171,682,422 | 2.70 | Unknown | 171,682,422 | Unknown | ||
| Bank of China Limited- E Fund's small and medium-sized | 94,000,098 | 1.48 | Unknown | 94,000,098 | Unknown | ||
| CLEARSTREAM BANKING S.A. (Note) | 91,222,350 | 1.43 | Unknown | 91,222,350 | Unknown | ||
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | 73,011,000 | 1.15 | Nil | 73,011,000 | Domestic non-state-owned legal entity | ||
| National social security fund, Portfolio 103 | 72,009,282 | 1.13 | Unknown | 72,009,282 | Unknown | ||
| Shareholdings of top ten shareholders without selling restrictions | |||||||
| Name of shareholder | Number of tradable shares held without selling restrictions | Class and number of shares | |||||
| Class | Number | ||||||
| Haier Electric Appliances International Co., Ltd. | 1,258,684,824 | RMB ordinary | 1,258,684,824 | ||||
| Haier Group Corporation | 1,072,610,764 | RMB ordinary | 1,072,610,764 | ||||
| Hong Kong Securities Clearing Co., Ltd. | 763,164,487 | RMB ordinary | 763,164,487 | ||||
| China Securities Finance Corporation Limited | 182,592,697 | RMB ordinary | 182,592,697 | ||||
| Qingdao Haier Venture & Investment Information Co., Ltd. (青岛海尔创业投资咨询有限公司) | 172,252,560 | RMB ordinary | 172,252,560 | ||||
| GIC PRIVATE LIMITED | 171,682,422 | RMB ordinary | 171,682,422 | ||||
| Bank of China Limited- E Fund's small and medium-sized | 94,000,098 | RMB ordinary | 94,000,098 | ||||
| CLEARSTREAM BANKING S.A. | 91,222,350 | Overseas listed foreign shares | 91,222,350 |
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | 73,011,000 | RMB ordinary | 73,011,000 |
| National social security fund, Portfolio 103 | 72,009,282 | RMB ordinary | 72,009,282 |
| Related parties or parties acting in concert among the aforesaid shareholders | （1）Haier Electric Appliances International Co., Ltd. is a holding subsidiary of Haier Group Corporation. Haier Group Corporation holds 51.20% of its equity. Qingdao Haier Venture & Investment Information Co., Ltd. (青岛海尔创业投资咨询有限公司) and Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) is a party acting in concert with Haier Group Corporation; (2) The Company is not aware of the existence of any connections of other shareholders. | ||
| Explanation of preferential shareholders with restoration of voting rights and their shareholdings | N/A | ||
Note: This account is the Clearstream Banking collection account for the Company's D shares,which is the original data provided by the German securities registration agency to the Company afterthe merger according to local market practices and technical settings, not representing the ultimateshareholder.
2.3 Table of total number of preferential shareholders, top ten preferential shareholders, top ten
preferential shareholders without selling restrictions by the end of the reporting period
□Applicable√ Not Applicable
III. Important Events
3.1 The major changes and reasons for the items of accounting statement and financial indicators
√Applicable □Not Applicable
Reasons for the changes with the amount of variation exceeding ±30% are as follows:
1)Financial assets held for trading decreased by 53.97% as compared to the beginning of the period,
mainly due to the decrease of wealth management products during the current period;
2)Prepayments increased by 54.03% as compared to the beginning of the period, mainly due to the
increase of prepayments for materials.
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
3)Assets held for sale decreased by 98.46% as compared to the beginning of the period, mainly dueto the finished disposal of the assets to be disposed;
4)Long-term equity investments increased by 42.81% as compared to the beginning of the period,mainly due to the equity changes in the subsidiaries of Haier Electronics;
5)Development expenses decreased by 71.93% as compared to the beginning of the period, mainlydue to the transfer to intangible assets upon completion;
6)Short-term borrowings increased by 43.78% as compared to the beginning of the period, mainlydue to the increase of loans resulted from merging candy;
7)Financial liabilities held for trading decreased by 71.31% as compared to the beginning of theperiod, mainly due to the expiration of forward foreign exchange contacts during the current period;
8)Receipts in advance decreased by 100% as compared to the beginning of the period, mainly dueto the completion of contract performance during the last period;
9)Liabilities held for sale decreased by 57.37% as compared to the beginning of the period, mainlydue to the equity changes in the subsidiaries of Haier Electronics;10)Non-current liabilities due within one year increased by 222.09% as compared to the beginningof the period,mainly due to the reclassification of long-term loans due within one year;
11)Lease liabilities increased by 100% as compared to the beginning of the period, mainly due tothe lease liabilities recognized pursuant to the new lease standard;
12)Long-term payable increased by 103.09 % as compared to the beginning of the period, mainlydue to the increase of subsidiary’s items long-term payable.
13)Deferred income tax liabilities increased by 352.14% as compared to the beginning of theperiod, mainly due to the liabilities brought in by candy merged during the current period and theequity changes in the subsidiaries of Haier Electronics;
14)Other non-current liabilities decreased by 94.66% as compared to the beginning of the period,mainly due to the equity changes in the subsidiaries of Haier Electronics;
15)Capital reserve decreased by 39.95% as compared to the beginning of the period, mainly due tothe 1169 logistics business moved off the financial statements;
16)Other comprehensive income increased by 110.99% as compared to the beginning of the period,mainly due to the contribution from candy merged during the current period;
17)Other income increased by 32.40% as compared to the same period of last year, mainly due to
the increase in the government grants during the current period;
18)Investment income increased by 275.83% as compared to the same period of last year, mainlydue to the equity changes in the subsidiaries of Haier Electronics;
19)Losses and gains on change of fair value increased by 116.48% as compared to the same periodof last year, mainly due to the change of fair value in forward foreign exchange contracts during thecurrent period;20)Gains on asset disposal decreased by 111.91% as compared to the same period of last year,mainly due to the gains on asset disposal from the same period of the last year (current period: nil);
21)Non-operating income increased by 51.03% as compared to the same period of last year, mainlydue to the increase in one-off income during the current period;
22)Non-operating expenses increased by 125.45% as compared to the same period of last year,mainly due to the increase in one-off expenses during the current period;
23)Income tax expenses increased by 56.42% as compared to the same period of last year, mainlydue to the equity changes in the subsidiaries of Haier Electronics.
3.2 Analysis on the progress of significant events and their impacts and solutions
√Applicable □Not Applicable
(1) External Guarantees：As of the end of the reporting period, the external guarantees of theCompany and its subsidiaries are all guarantees among the Company and its subsidiaries, and thebalance of the external guarantees amounted to RMB29.255 billion in total (the balance of guaranteesfor the loan funds used to acquire GEA amounted to RMB7.875 billion, and the balance of guaranteesfor daily business amounted to RMB21.380 billion), representing 65.2% of the net assets of theCompany for the latest period, and 15.9% of the total assets for the latest period.
(2) Foreign Exchange Derivatives：As of the end of the reporting period, the balance of theCompany’s Foreign Exchange Derivatives amounted to approximately US$1.442 billion in total.
(3) Entrusted wealth management: By the end of the reporting period, the balance of theCompany’s entrusted wealth management amounted to RMB3.695 billion, including three parts: ①temporarily-idle fundraising wealth management: at the end of December 2018, the Company’sproceeds for the issuance of convertible corporate bonds were fully landed. In order to improve the yieldof temporarily-idle funds, the Company intends to carry out cash management with the amounts not
exceed RMB1.5 billion after approved by the Board of Directors. By the end of the reporting period, thebalance of the entrusted wealth management amounted to RMB0.728 billion; ② wealth management ofthe Company’s Hong Kong listed subsidiary: Haier Electronics Group Co., Ltd. (hereinafter referredto as “Haier Electronics” , stock code “01169.HK”), the holding subsidiary of the Company, haspurchased some short-term principal-protected wealth management and structural deposits from thelarge commercial banks as an independently operating Hong Kong listed company in order to increasethe efficiency of the use of idle funds within the authorities of the management and on the premise ofsafeguarding funds security. In the purchase process, all the necessary board reports were subject to theprocedures such as filling and management’ s review according to the regulations requirements for HongKong listed company, so as to ensure sufficient funds for the day-to-day operations of the main businessand improve the shareholders' returns. By the end of the reporting period, the balance of the entrustedwealth management amounted to RMB2.962 billion. ③Some subsidiaries of the Company usetemporarily-idle funds to manage their finances: In order to increase the yield of temporarily-idlefunds, some subsidiaries of the Company use temporarily-idle funds to conduct cash management withinthe authority of the general manager's office. By the end of the reporting period, the balance of theentrusted wealth management amounted to RMB5 million.
3.3 The undertakings that have been past due and not been performed during the reporting period
□Applicable √Not applicable
By the end of the reporting period, the Company has no undertakings that have past due but not performed. The undertakings that are still in the performanceperiod are as follows:
| Background | Type | Covenanter | Content | Time and term | Whether it has a term for performance | Whether it is performed in a timely and strict manner |
| Undertaking related to significant assets reorganization | Eliminate the property right defects in land and etc. | Haier Group Corporation | During the period from September 2006 to May 2007, the Company issued shares to Haier Group Corporation (“Haier Group”) to purchase the controlling equity in its four subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司), Guizhou Haier Electronics Co., Ltd. (贵州海尔电器有限公司). With regard to the land and property required in the operation of Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公司) , Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司) (the “Covenantees”), Haier Group made an undertaking (the “2006 Undertaking”). According to the content of 2006 Undertaking and current | 27 September 2006, long term | YES | YES |
| condition of each Covenantee, Haier Group will constantly assure that Covenantees will lease the land and property owned by Haier Group for free. Haier Group will make compensation in the event that the Covenantees suffer loss due to the unavailability of such land and property. | ||||||
| Undertaking related to refinancing | Eliminate the property right defects in land and etc. | Haier Group Corporation | Haier Group Corporation undertakes that it will assure Haier Smart Home and its subsidiaries of the constant, stable and unobstructed use of the leased property. In the event that Haier Smart Home or any of its subsidiaries suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all reasonable and practicable measures to support the impaired party to recover to normal operation before the occurrence of loss. Upon the expiration of relevant leasing period, Haier Group Corporation will grant or take practicable measures to assure Haier Smart Home and its subsidiaries of priority to continue to lease the property at a price not higher than the rent in comparable market at that time. Haier Group Corporation will assure Haier Smart Home and its subsidiaries of the constant, stable, free and unobstructed use of self-built property and land of the Group. In the event that Haier Smart Home or any of its subsidiaries fails to continue to use self-built property according to its own will or in original way due to the fact that self-built property has no relevant ownership certificate, Haier Group Corporation will take all reasonable and practicable measures to eliminate obstruction and impact, or will support Haier Smart Home or its affected subsidiary to obtain alternative property as soon as possible, if Haier Group Corporation anticipates it is unable to cope with or eliminate the external obstruction and impact with its | 24 December 2013, long term | YES | YES |
| reasonable effort. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. | |||||
| Eliminate the property right defects in land and etc. | Haier Smart Home Co., Ltd. | The Company undertakes that it will eliminate the property defects of the Company and main subsidiaries within five years with reasonable business effort since 24 December 2013, so as to achieve the legality and compliance of the Company and main subsidiaries in terms of land and property. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. During the aforesaid period, the Company has formulated relevant performance guarantee measures, including the re-application by the Company and its main subsidiaries to the competent government department for the property ownership certificate and to procure Haier Group Corporation to make guarantee undertakings in respect of the defective property owned by it and its subsidiaries. As of the expiration date, the Company has resolved the property defects of itself and its eight major subsidiaries, while that of the other remaining five major subsidiaries is in process. The Company will make reasonable business efforts to resolve the property | 24 December 2013, eight years | YES | YES |
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| defects of these five major subsidiaries. Because of historical issues and other reasons, the approval procedure involved in solving some defective property problems is complicated, including that of multiple government departments, and it takes a long time to handle and coordinate related matters. Due to the above external factors, the Company was unable to complete the above undertakings within the original undertaking period. Therefore, after the approval of the board meeting held by the Company on 5 November 2018 and the general meeting held on 21 December 2018, the term of the above undertakings were extended for three years on the basis of the original deadline. | ||||||
| Other undertakings | Asset injection | Haier Group Corporation | Inject the assets of Haier Photoelectric to the Company or dispose such assets through other ways according to the requirements of the domestic supervision before June 2020. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding Commitment of Haier Group Corporation (L2015-063) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015. | December 2015 to June 2020 | YES | YES |
| Other undertakings | Profit forecast and compensation | Haier Electric Appliances International | On August 2018, Guan Mei (Shanghai) Enterprise Management Co., Ltd. (贯美（上海）企业管理有限公司) (hereinafter referred to as the “Guan Mei Company”), an indirectly controlled subsidiary of the Company swapped the 55% equity interest held by it in Bing Ji (Shanghai) Enterprise Management Co., Ltd. (冰戟（上海）企业管理有限公司) for the 51% equity interests held by Haier Electric Appliances International Co., Ltd. (hereinafter referred to as the “Haier International”) in Qingdao HSW Water | By 30 April 2021 | YES | YES |
| Co., Ltd. | Appliance Co., Ltd. (hereinafter referred to as the “Water Appliance”). In this regard, Haier International has made a commitment that the accumulated actual net profit realized by the Water Appliance during the three fiscal years of the profit compensation period shall not be lower than its accumulated forecasted net profit in the corresponding year. Otherwise, Haier International shall be required to make performance compensation to Guan Mei Company according to the Asset Replacement Agreement. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on Related-party Transaction of Planning to Conduct Equity Replacement by Holding Subsidiary and Haier Electronics International Co., Ltd. (L2018-047) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 31 August 2018. |
3.4 Warning and explanation on reasons for accumulated net profit for the period from the beginning ofthe year to the end of the next reporting period to be at a loss or expected to have material changeas compared to that of the corresponding period of last year
□Applicable √Not Applicable
| Name of company | Haier Smart Home Co., Ltd. |
| Legal representative | Liang Haishan |
| Date | 29 October 2019 |
IV.Appendix
4.1 Financial Statements
Consolidated Balance Sheet30 September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | 30 September 2019 | 31 December 2018 |
| Current Assets: | ||
| Monetary capital | 35,856,337,564.34 | 38,158,102,172.38 |
| Provision of settlement funds | ||
| Placements with banks | ||
| Trading financial assets | 817,293,602.82 | 1,775,648,387.76 |
| Financial assets measured at fair value and changes of which included in current profit and loss | ||
| Derivative financial assets | 99,546,069.86 | 96,723,164.37 |
| Bills receivable | 14,650,736,013.47 | 14,220,937,323.02 |
| Accounts receivable | 13,204,139,379.93 | 10,495,278,842.04 |
| Financing receivables | ||
| Prepayments | 910,259,648.49 | 590,980,171.13 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserves receivable | ||
| Other receivables | 1,434,336,096.31 | 1,636,778,239.70 |
| Including: interests receivables | ||
| dividends receivables | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 25,080,406,390.86 | 22,404,245,381.62 |
| Contract assets | 477,276,371.01 | 456,781,406.54 |
| Assets held for sale | 2,217,741.47 | 144,091,213.39 |
| Non-current assets due within one year | ||
| Other current assets | 4,821,325,942.71 | 5,079,878,909.67 |
| Total current assets | 97,353,874,821.27 | 95,059,445,211.62 |
| Non-current assets: | ||
| Loans and advances granted | ||
| Debt investments | ||
| Available-for-sale financial assets | ||
| Other debt investments |
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| Held-to-maturity investments | ||
| Long-term receivables | 297,211,749.56 | 245,791,343.37 |
| Long-term equity investments | 19,945,696,979.72 | 13,966,481,596.07 |
| Investments in other equity instruments | 1,384,953,324.55 | 1,400,316,460.34 |
| Other non-current financial assets | 297,154,021.76 | 327,358,825.57 |
| Investment properties | 30,275,677.92 | 30,879,147.42 |
| Fixed assets | 19,036,592,854.99 | 17,321,414,060.72 |
| Construction in progress | 4,102,243,059.68 | 3,873,492,230.24 |
| Biological assets for production | ||
| Fuel assets | ||
| Right-of-use assets | 2,321,431,186.89 | |
| Intangible assets | 10,648,632,131.33 | 9,245,145,461.56 |
| Development expenses | 151,144,366.25 | 538,382,288.33 |
| Goodwill | 23,572,632,908.06 | 21,238,727,027.17 |
| Long-term deferred expenditures | 255,397,223.75 | 230,763,172.48 |
| Deferred income tax assets | 2,208,623,545.82 | 1,819,870,099.62 |
| Other non-current assets | 2,668,079,823.01 | 2,325,688,982.56 |
| Total non-current assets | 86,920,068,853.29 | 72,564,310,695.45 |
| Total assets | 184,273,943,674.56 | 167,623,755,907.07 |
| Current liabilities: | ||
| Short-term borrowings | 9,055,915,599.35 | 6,298,504,892.57 |
| Borrowings from central bank | ||
| Placements from banks | ||
| Trading financial liabilities | 62,765,149.64 | 218,748,280.33 |
| Financial liabilities measured at fair value and changes of which included in current profit and loss | ||
| Derivative financial liabilities | 43,501,550.19 | 35,603,754.54 |
| Bills payable | 18,461,702,634.57 | 19,968,443,915.65 |
| Accounts payable | 29,705,955,855.01 | 27,796,822,200.51 |
| Receipts in advance | 14,681,466.58 | |
| Disposal of repurchased financial assets | ||
| Absorbing deposit and deposit in inter-bank market | ||
| Customer deposits for trading in securities | ||
| Amounts due to issuer for securities underwriting | ||
| Payables for staff’s remuneration | 2,724,912,733.60 | 2,663,184,629.15 |
| Taxes payable | 2,233,732,585.46 | 1,843,147,094.27 |
| Other payables | 14,666,728,149.38 | 12,772,914,813.88 |
| Including: interests payable | ||
| dividends payable | ||
| Fees and commissions payable | ||
| Reinsurance accounts payable | ||
| Contract liabilities | 5,609,586,733.28 | 5,484,483,418.15 |
| Liabilities held for sale | 13,797,499.41 | 32,362,267.88 |
| Non-current liabilities due within one year | 9,711,065,124.20 | 3,015,060,105.58 |
| Other current liabilities | 464,624,078.32 | 423,638,804.62 |
| Total current liabilities | 92,754,287,692.41 | 80,567,595,643.71 |
| Non-current liabilities: | ||
| Deposits for insurance contracts | ||
| Long-term borrowings | 12,259,244,217.02 | 15,541,466,325.22 |
| Debentures payable | 9,596,777,288.62 | 9,191,896,302.70 |
| Including: preference shares | ||
| perpetual bonds | ||
| Lease liabilities | 2,091,697,133.96 | |
| Long-term payable | 216,828,987.86 | 106,763,243.99 |
| Long-term payable for staff’s remuneration | 1,069,153,829.26 | 934,974,735.49 |
| Estimated liabilities | 2,813,252,681.93 | 2,846,762,176.35 |
| Deferred income | 609,023,725.49 | 643,551,987.30 |
| Deferred income tax liabilities | 1,832,730,126.06 | 405,343,787.76 |
| Other non-current liabilities | 97,468,826.91 | 1,823,866,693.93 |
| Total non-current liabilities | 30,586,176,817.11 | 31,494,625,252.74 |
| Total liabilities | 123,340,464,509.52 | 112,062,220,896.45 |
| Owners’ equity（or shareholder’s equity） | ||
| Paid-in capital (or share capital ) | 6,368,482,759.00 | 6,368,416,700.00 |
| Other equity instruments | 904,334,798.56 | 904,485,788.71 |
| Including: preference shares | ||
| perpetual bonds | ||
| Capital reserve | 1,353,668,636.95 | 2,254,405,808.81 |
| Less: treasury stock | ||
| Other comprehensive income | 1,630,175,147.24 | 772,632,347.35 |
| Special reserve | ||
| Surplus reserve | 2,288,301,317.10 | 2,288,301,317.10 |
| General risk provisions | ||
| Undistributed profits | 32,336,056,398.74 | 26,938,892,794.96 |
| Total equity attributable to owners (or shareholder) of the parent company | 44,881,019,057.59 | 39,527,134,756.93 |
| Minority interests | 16,052,460,107.45 | 16,034,400,253.69 |
| Total owners’ equity (or shareholders’ | 60,933,479,165.04 | 55,561,535,010.62 |
| equity) | ||
| Total liabilities and owners’ equities (or shareholders’ equity) | 184,273,943,674.56 | 167,623,755,907.07 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Balance Sheet of the Parent Company
30 September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | 30 September 2019 | 31 December 2018 |
| Current Assets: | ||
| Monetary Capital | 6,273,438,237.00 | 7,068,899,574.96 |
| Trading financial assets | ||
| Financial assets measured at fair value and changes of which included in current profit and loss | ||
| Derivative financial assets | ||
| Bills receivable | ||
| Accounts receivable | 253,995,942.79 | 222,622,017.43 |
| Financing receivables | ||
| Prepayments | 12,994,199.46 | 28,809,797.43 |
| Other receivables | 2,236,872,809.17 | 2,082,767,166.58 |
| Including: interests receivable | ||
| dividends receivable | ||
| Inventories | 43,452,612.14 | 124,773,163.23 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 977,519,031.53 | 109,865,313.53 |
| Total current assets | 9,798,272,832.09 | 9,637,737,033.16 |
| Non-current assets: | ||
| Debt investments | ||
| Available-for-sale financial assets | ||
| Other debt investments | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 35,173,766,050.97 | 33,844,234,315.30 |
| Other equity instruments investments | 5,262,480.92 | 5,262,480.92 |
| Other non-current financial assets | ||
| Investment properties | ||
| Fixed assets | 135,828,593.84 | 119,546,157.40 |
| Construction in progress | 38,778,876.61 | 37,655,076.18 |
| Biological assets for production | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 16,296,591.72 | 17,186,540.33 |
| Development expenses | ||
| Goodwill | ||
| Long-term prepaid expenses | 5,791,081.40 | 5,779,229.64 |
| Deferred income tax assets | 81,511,748.07 | 81,511,748.07 |
| Other non-current assets | 28,632,829.14 | |
| Total non-current assets | 35,457,235,423.53 | 34,139,808,376.98 |
| Total assets | 45,255,508,255.62 | 43,777,545,410.14 |
| Current liabilities: | ||
| Short-term borrowings | 1,500,000,000.00 | |
| Trading financial liabilities | ||
| Financial liabilities measured at fair value and changes of which included in current profit and loss | ||
| Derivative financial liabilities | ||
| Bills payable | ||
| Accounts payable | 329,194,017.09 | 334,747,358.40 |
| Receipts in advance | ||
| Contract liabilities | 2,617,231,872.09 | 2,391,211,509.89 |
| Payables for staff’s remuneration | 55,566,564.83 | 65,387,056.03 |
| Taxes payable | 12,909,943.06 | 67,279,606.39 |
| Other payables | 26,706,442,400.01 | 21,834,869,774.34 |
| Including: interests payable | ||
| dividends payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | ||
| Other current liabilities | 1,736,229.06 | 2,089,282.56 |
| Total current liabilities | 29,723,081,026.14 | 26,195,584,587.61 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Debentures payable | 2,586,527,376.29 | 2,510,530,062.86 |
| Including: preference shares | ||
| perpetual bonds | ||
| Leasing liabilities | ||
| Long-term payable | 20,000,000.00 | 20,000,000.00 |
| Long-term payable for staff’s | ||
| remuneration | ||
| Estimated liabilities | ||
| Deferred income | 37,820,000.00 | 67,360,000.00 |
| Deferred income tax liabilities | 31,441,449.14 | 29,485,678.28 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,675,788,825.43 | 2,627,375,741.14 |
| Total liabilities | 32,398,869,851.57 | 28,822,960,328.75 |
| Owners’ equity (or shareholders’ equity) | ||
| Paid-in capital (or share capital) | 6,368,482,759.00 | 6,368,416,700.00 |
| Other equity instruments | 472,910,274.49 | 473,061,264.64 |
| Including: preference shares | ||
| perpetual bonds | ||
| Capital reserve | 4,150,363,429.02 | 4,182,825,672.98 |
| Less: treasury stock | ||
| Other comprehensive income | 12,245,064.39 | 7,791,344.47 |
| Special reserve | ||
| Surplus reserve | 1,683,155,091.65 | 1,683,155,091.65 |
| Undistributed profits | 169,481,785.50 | 2,239,335,007.65 |
| Total owners’ equity (or shareholders’ equity) | 12,856,638,404.05 | 14,954,585,081.39 |
| Total liabilities and owners’ equity (or shareholders’ equity) | 45,255,508,255.62 | 43,777,545,410.14 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Consolidated Income StatementJanuary-September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | Third quarter of 2019 (July-September) | Third quarter of 2018 (July-September) | First three quarters of 2019 (January-September) | First three quarters of 2018 (January-September) |
| I. Total operating revenue | 49,916,316,735.30 | 47,739,189,253.04 | 148,896,109,856.46 | 138,227,311,459.35 |
| Including: operating revenue | 49,916,316,735.30 | 47,739,189,253.04 | 148,896,109,856.46 | 138,227,311,459.35 |
| Interest income | ||||
| Insurance premiums earned | ||||
| Fee and commission income |
| II. Total cost of operations | 48,373,543,771.69 | 46,137,567,319.73 | 141,321,760,011.83 | 130,898,654,759.16 |
| Including: operating cost | 35,409,192,783.07 | 33,911,506,512.21 | 105,584,046,741.98 | 97,969,456,536.24 |
| Interest expenses | ||||
| Fee and commission expenses | ||||
| Insurance withdrawal payment | ||||
| Net payment from indemnity | ||||
| Net provisions for insurance liability | ||||
| Insurance policy dividend paid | ||||
| Reinsurance cost | ||||
| Taxes and surcharge | 282,495,267.19 | 245,701,371.99 | 683,425,767.84 | 653,678,813.51 |
| Selling expenses | 8,186,738,161.90 | 8,010,386,549.26 | 22,783,073,275.91 | 21,533,318,294.90 |
| Administrative expenses | 2,349,642,938.22 | 2,137,761,829.86 | 6,875,429,007.45 | 6,171,434,088.05 |
| R&D expenses | 1,718,648,297.19 | 1,557,183,175.74 | 4,460,212,113.00 | 3,809,813,731.12 |
| Financial expenses | 426,826,324.12 | 275,027,880.67 | 935,573,105.65 | 760,953,295.34 |
| Including: interest expenses | 462,949,083.66 | 304,546,395.79 | 1,348,633,037.94 | 988,211,900.04 |
| Interest income | 148,627,273.92 | 98,782,891.00 | 402,594,564.74 | 333,241,702.03 |
| Add: other income | 184,441,529.00 | 272,064,355.41 | 657,183,385.55 | 496,356,767.43 |
| Investment income (losses are represented by “-”) | 4,231,473,916.77 | 459,606,206.41 | 4,987,525,354.22 | 1,327,065,195.37 |
| Including: investment income of associates and joint ventures | ||||
| Derecognition income on financial assets measured at amortized cost | ||||
| Exchange gain (losses are represented by “-”) | ||||
| Gains on net exposure hedges (losses are represented by “-”) | ||||
| Income from change in fair value (losses are represented by “-”) | -42,821,065.32 | -125,212,550.50 | 14,588,891.48 | -88,550,629.00 |
| Credit impairment loss (losses are represented by “-”) | -72,795,938.53 | -88,495,545.44 | -35,020,333.14 | -47,956,263.17 |
| Impairment loss on assets (losses are represented by | 101,352.89 | 15,050,686.33 | -257,646,552.31 | -220,852,351.25 |
| “-”) | ||||
| Gains on disposal of assets (losses are represented by “-”) | -26,845,448.82 | 113,220,554.73 | -14,138,765.95 | 118,726,042.63 |
| III. Operating profit (losses are represented by “-”) | 5,816,327,309.60 | 2,247,855,640.25 | 12,926,841,824.48 | 8,913,445,462.20 |
| Add: non-operating income | 201,041,445.23 | 93,349,629.54 | 470,639,594.05 | 311,624,408.41 |
| Less: non-operating expenses | 61,764,236.63 | 28,647,585.13 | 175,970,944.55 | 78,052,030.82 |
| IV. Total profit (total losses are represented by “-”) | 5,955,604,518.20 | 2,312,557,684.66 | 13,221,510,473.98 | 9,147,017,839.79 |
| Less: income tax expense | 918,909,482.84 | 282,349,549.53 | 1,953,829,571.45 | 1,249,128,996.17 |
| V. Net profit (net losses are represented by “-”) | 5,036,695,035.36 | 2,030,208,135.13 | 11,267,680,902.53 | 7,897,888,843.62 |
| (I) Classification by continuous operation | ||||
| 1.Net profit from continuous operation (net losses are represented by “-”) | 1,724,566,022.73 | 1,794,560,157.49 | 7,955,551,889.90 | 7,662,240,865.98 |
| 2. Net profit from discontinuous operation (net losses are represented by “-”) | 3,312,129,012.63 | 235,647,977.64 | 3,312,129,012.63 | 235,647,977.64 |
| (II) Classification by ownership of the equity | ||||
| 1. Net profit attributable to owners of the parent company (net losses are represented by “-”) | 2,621,991,344.79 | 1,373,057,256.34 | 7,772,860,902.81 | 6,161,001,081.50 |
| 2. Profit or loss of minority shareholders (net losses are represented by “-”) | 2,414,703,690.57 | 657,150,878.79 | 3,494,819,999.72 | 1,736,887,762.12 |
| VI. Other comprehensive income, net of tax | 671,163,493.94 | 585,583,691.47 | 877,244,401.03 | 1,013,158,337.47 |
| Other comprehensive income attributable to owners of the parent company, net of tax | 623,918,532.71 | 530,340,096.74 | 857,542,799.89 | 833,824,709.33 |
| (I) Other comprehensive income that can not be reclassified to profit or loss | -3,931,545.48 | -8,226,800.44 | -16,174,504.60 | 32,404,205.47 |
| 1.Changes arising from re-measurement of defined benefit plans | 655,808.28 | -1,045,223.32 | 255,491.10 | -7,997,491.05 |
| 2. Other comprehensive income that cannot be |
| transferred into profit or loss under equity method | ||||
| 3. Changes in fair value of investments in other equity instruments | -4,587,353.76 | -7,181,577.12 | -16,429,995.70 | 40,401,696.52 |
| 4. Changes in fair value of credit risks of the enterprise | ||||
| (II) Other comprehensive income to be reclassified into profit or loss | 627,850,078.19 | 538,566,897.18 | 873,717,304.49 | 801,420,503.86 |
| 1. Other comprehensive income that can be transferred into profit or loss under equity method | 51,040,731.98 | 74,779,420.86 | 70,870,344.63 | 161,496,158.75 |
| 2. Changes in fair value of other debt investments | ||||
| 3. Profit or loss from changes in fair value of available-for-sale financial assets | ||||
| 4. Reclassified financial assets that are credited to other comprehensive income | ||||
| 5. Profit or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets | ||||
| 6. Credit impairment provision for other debt investments | ||||
| 7. Reserve for cash flow hedging (effective portion of profit or loss arising from cash flow hedging) | -10,608,611.29 | -3,980,007.63 | -36,007,555.07 | 42,876,348.23 |
| 8. Exchange differences on translation of financial statements denominated in foreign currencies | 587,417,957.50 | 467,767,483.95 | 838,854,514.93 | 597,047,996.88 |
| 9. Others | ||||
| Other comprehensive income attributable to minority shareholders, net of tax | 47,244,961.23 | 55,243,594.73 | 19,701,601.14 | 179,333,628.14 |
| Ⅶ. Total comprehensive income | 5,707,858,529.30 | 2,615,791,826.60 | 12,144,925,303.56 | 8,911,047,181.09 |
| Total comprehensive income attributable to the owners of parent company | 3,245,909,877.50 | 1,903,397,353.08 | 8,630,403,702.70 | 6,994,825,790.83 |
| Total comprehensive income attributable to the minority shareholders | 2,461,948,651.80 | 712,394,473.52 | 3,514,521,600.86 | 1,916,221,390.26 |
| Ⅷ . Earnings per share: | ||||
| (I) Basic earnings per share (RMB/share) | 0.412 | 0.225 | 1.221 | 1.010 |
| (II) Diluted earnings per share (RMB/share) | 0.353 | 0.225 | 1.131 | 1.010 |
The party being absorbed in the business combination under common control incurred in the currentperiod recorded a net profit of RMB13,950,738.83 before the combination.Legal representative: Liang Haishan Person in charge of accounting function: Gong Wei
Person in charge of accounting department: Ying Ke
Income Statement of the Parent Company
January-September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | Third quarter of 2019 (July-September) | Third quarter of 2018 (July-September) | First three quarters of 2019 (January-September) | First three quarters of 2018 (January-September) |
| Ⅰ. Operating revenue | 903,401,779.64 | 792,884,921.23 | 2,234,271,154.27 | 2,417,038,949.69 |
| Less: Operation cost | 665,370,343.10 | 555,280,503.90 | 1,615,752,876.42 | 1,675,343,056.16 |
| Taxes and surcharge | 5,324,414.17 | 6,419,524.05 | 14,118,655.09 | 16,393,690.67 |
| Selling expenses | 63,131,879.39 | 85,400,691.99 | 190,089,788.56 | 210,441,579.93 |
| Administrative expenses | 179,457,329.72 | 160,040,452.74 | 320,496,657.73 | 345,344,601.02 |
| R&D expenses | 54,550,067.46 | 64,104,050.19 | 156,533,395.84 | 166,500,505.81 |
| Financial expenses | 11,752,125.45 | 45,410,592.26 | 111,189,066.25 | 107,226,850.25 |
| Including: interest expenses | 25,477,118.45 | 80,070,880.63 | 139,021,578.60 | 210,180,419.77 |
| Interest income | 12,873,607.27 | 28,915,355.12 | 30,581,562.15 | 101,898,989.53 |
| Add: other income | 4,501,688.94 | 25,076,709.08 | 56,974,198.19 | 34,586,901.99 |
| Investment income (losses are represented by “-”) | 8,374,916.12 | 306,404,376.82 | 253,943,029.70 | 525,924,446.67 |
| Including: investment income of associates and joint |
| ventures | ||||
| Derecognition income on financial assets measured at amortized cost | ||||
| Gains on net exposure hedges (losses are represented by “-”) | ||||
| Income from change in fair value (losses are represented by “-”) | ||||
| Credit impairment loss (losses are represented by “-”) | -7,920.79 | 86,152,801.78 | 979,217.15 | -10,058,187.90 |
| Impairment loss on assets (losses are represented by “-”) | ||||
| Gains on disposal of assets (losses are represented by “-”) | 25,693.17 | 51,118.46 | 25,693.17 | |
| II. Operating profit (losses are represented by “-”) | -63,315,695.38 | 293,888,686.95 | 138,038,277.88 | 446,267,519.78 |
| Add: non-operating income | 3,590,569.68 | 6,536,549.52 | 13,003,372.98 | 34,283,951.35 |
| Less: non-operating expenses | 1,007,999.99 | 58,667.36 | 2,971,024.42 | 311,781.90 |
| III. Total Profit (total losses are represented by “-”) | -60,733,125.69 | 300,366,569.11 | 148,070,626.44 | 480,239,689.23 |
| Less: income tax expense | -123,118.24 | -4,749,277.12 | -17,410,712.14 | -8,231,021.09 |
| IV. Net Profit (net losses are represented by “-”) | -60,610,007.45 | 305,115,846.23 | 165,481,338.58 | 488,470,710.32 |
| (I) Net profit from continuous operation (net losses are represented by “-”) | -60,610,007.45 | 305,115,846.23 | 165,481,338.58 | 488,470,710.32 |
| (II) Net profit from discontinuous operation (net losses are represented by “-”) | ||||
| V. Other comprehensive income, net of tax | 5,204,966.29 | 39,894.27 | 4,453,719.92 | 14,706,726.13 |
| (I) Other comprehensive income that can not be reclassified to profit or loss | -67,243.43 | 39,894.27 | -410,391.76 | |
| 1.Changes arising from re-measurement of defined benefit plans | ||||
| 2. Other comprehensive |
| income that cannot be transferred into profit or loss under equity method | ||||
| 3. Changes in fair value of investments in other equity instruments | -67,243.43 | 39,894.27 | -410,391.76 | |
| 4. Changes in fair value of credit risks of the enterprise | ||||
| (II) Other comprehensive income to be reclassified into profit or loss | 5,272,209.72 | 4,453,719.92 | 15,117,117.89 | |
| 1. Other comprehensive income that can be transferred into profit or loss under equity method | 4,453,719.92 | 15,117,117.89 | ||
| 2. Changes in fair value of other debt investments | ||||
| 3. Profit or loss from changes in fair value of available-for-sale financial assets | ||||
| 4. Reclassified financial assets that are credited to other comprehensive income | ||||
| 5. Profit or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets | ||||
| 6. Credit impairment provision for other debt investments | ||||
| 7. Reserve for cash flow hedging (effective portion of profit or loss arising from cash flow hedging) | ||||
| 8. Exchange differences on translation of financial statements denominated in foreign currencies | ||||
| 9. Others | ||||
| VI. Total comprehensive income | -55,405,041.16 | 305,155,740.50 | 169,935,058.50 | 503,177,436.45 |
| VII. Earnings per share: | ||||
| (I) Basic earnings per share (RMB/share) | ||||
| (II) Diluted earnings per share (RMB/share) |
Legal representative: Liang Haishan Person in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Consolidated Cash Flow StatementJanuary-September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | First three quarters of 2019 (January-September) | First three quarters of 2018 (January-September) |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods and rendering of services | 147,718,346,195.03 | 136,441,116,163.62 |
| Net increase in customer and interbank deposits | ||
| Net increase in borrowing from PBOC | ||
| Net cash increase in borrowing from other financial institutes | ||
| Cash received from premiums under original insurance contract | ||
| Net cash received from reinsurance business | ||
| Net increase in deposits of policy holders and investment | ||
| Cash paid for interest, bank charges and commissions | ||
| Net increase in cash borrowed | ||
| Net increase in cash received from repurchase operation | ||
| Net cash received from customer deposits for trading in securities | ||
| Refunds of taxes | 1,048,233,743.88 | 963,420,315.42 |
| Cash received from other related operating activities | 1,012,063,934.60 | 701,885,605.50 |
| Sub-total of cash inflows from operating activities | 149,778,643,873.51 | 138,106,422,084.54 |
| Cash paid on purchase of goods and | 104,960,738,805.82 | 93,872,519,963.32 |
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| services | ||
| Net increase in loans and advances of customers | ||
| Net increase in deposits in the PBOC and inter-bank | ||
| Cash paid for compensation payments under original insurance contact | ||
| Net increase in cash lent | ||
| Cash paid for interest, bank charges and commissions | ||
| Cash paid for insurance policy dividend | ||
| Cash paid to and on behalf of employees | 16,460,484,438.59 | 14,389,104,685.38 |
| Cash paid for all types of taxes | 6,235,299,504.77 | 6,417,113,647.40 |
| Cash paid to other operation related activities | 13,115,208,555.88 | 12,525,351,556.22 |
| Sub-total of cash outflows from operating activities | 140,771,731,305.06 | 127,204,089,852.32 |
| Net cash flows from operating activities | 9,006,912,568.45 | 10,902,332,232.22 |
| II. Cash flows from investing activities: | ||
| Cash received from disposal of investments | 1,534,282,960.18 | 603,931,463.05 |
| Cash received from return on investments | 457,787,685.48 | 284,197,818.40 |
| Net cash received from the disposal of fixed assets, intangible assets and other long term assets | 200,940,694.81 | 312,264,347.04 |
| Net cash received from disposal of subsidiaries and other operating entities | 689,985,192.70 | |
| Cash received from other investment related activities | 279,515,688.66 | 95,500,810.35 |
| Sub-total of cash inflows from investing activities | 2,472,527,029.13 | 1,985,879,631.54 |
| Cash paid on purchase of fixed assets, intangible assets and other long term assets | 4,579,987,246.71 | 4,448,216,757.39 |
| Cash paid for investments | 3,646,257,901.57 | 6,715,502,945.49 |
| Net increase in secured loans | ||
| Net cash paid on acquisition of subsidiaries and other operating entities | 2,641,246,363.38 | 2,083,893,029.63 |
| Cash paid on other investment related activities | 1,167,045,427.42 | 22,762,249.49 |
| Sub-total of cash outflows from investing activities | 12,034,536,939.08 | 13,270,374,982.00 |
| Net cash flows from investing | -9,562,009,909.95 | -11,284,495,350.46 |
| activities | ||
| III. Cash flows from financing activities: | ||
| Cash received from investment | 14,318,688.54 | 692,072,695.51 |
| Including: cash received by subsidiaries from minority shareholders’ investment | ||
| Cash received from borrowings | 12,084,841,424.81 | 12,010,235,777.28 |
| Cash received from other financing related activities | 7,139,182.47 | 1,914,860.72 |
| Sub-total of cash inflows from financing activities | 12,106,299,295.82 | 12,704,223,333.51 |
| Cash paid on repayment of borrowings | 9,252,731,650.03 | 10,654,594,243.09 |
| Cash paid on distribution of dividends, profits, or interest expenses | 3,074,473,283.20 | 2,762,302,769.13 |
| Including: dividend, profit paid to minority shareholders by subsidiaries | ||
| Cash paid on other financing related activities | 1,020,361,634.10 | 659,367,060.70 |
| Sub-total of cash outflows from financing activities | 13,347,566,567.33 | 14,076,264,072.92 |
| Net cash flows from financing activities | -1,241,267,271.51 | -1,372,040,739.41 |
| IV. Effect of fluctuations in exchange rates on cash and cash equivalents | 585,698,697.12 | 372,251,814.37 |
| V. Net increase in cash and cash equivalents | -1,210,665,915.89 | -1,381,952,043.28 |
| Add: balance of cash and cash equivalents at the beginning of the period | 36,044,777,414.04 | 35,094,902,336.87 |
| VI. Balance of cash and cash equivalents at the end of the period | 34,834,111,498.15 | 33,712,950,293.59 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Cash Flow Statement of the Parent Company
January-September 2019Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB Unaudited
| Items | First three quarters of 2019 (January-September) | Amount in the first three quarters of 2018 (January-September) |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods and rendering of services | 1,219,703,551.51 | 1,318,190,025.50 |
| Refunds of taxes | 31,329,360.51 | 95,543,006.48 |
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| Cash received from other related operating activities | 182,304,374.25 | 173,528,179.29 |
| Sub-total of cash inflows from operating activities | 1,433,337,286.27 | 1,587,261,211.27 |
| Cash paid on purchase of goods and services | 57,147,717.08 | 458,713,553.43 |
| Cash paid to and on behalf of employees | 701,565,276.87 | 647,354,793.69 |
| Cash paid for all types of taxes | 116,443,799.11 | 139,250,644.36 |
| Cash paid to other operation related activities | 456,381,806.73 | 374,617,434.69 |
| Sub-total of cash outflows from operating activities | 1,331,538,599.79 | 1,619,936,426.17 |
| Net cash flows from operating activities | 101,798,686.48 | -32,675,214.90 |
| II. Cash flows from investing activities: | ||
| Cash received from disposal of investments | 505,207,895.00 | |
| Cash received from return on investments | 1,513,456,657.45 | 1,153,009,979.01 |
| Net cash received from the disposal of fixed assets, intangible assets and other long term assets | ||
| Net cash received from disposal of subsidiaries and other operating entities | ||
| Cash received from other investment related activities | 1,431,977,000.00 | |
| Sub-total of cash inflows from investing activities | 2,945,433,657.45 | 1,658,217,874.01 |
| Cash paid on purchase of fixed assets, intangible assets and other long term assets | 30,442,256.39 | 46,367,088.81 |
| Cash paid for investments | 3,521,662,503.09 | 73,572,235.00 |
| Net cash paid on acquisition of subsidiaries and other operating entities | ||
| Cash paid on other investment related activities | 246,801,379.00 | |
| Sub-total of cash outflows from investing activities | 3,798,906,138.48 | 119,939,323.81 |
| Net cash flows from investing activities | -853,472,481.03 | 1,538,278,550.20 |
| III. Cash flows from financing activities: | ||
| Cash received from investment | ||
| Cash received from borrowings | 1,500,000,000.00 | |
| Cash received from issuing bonds | 424,802,503.30 | |
| Cash received from other financing related activities | 3,728,909,076.12 |
Third Quarterly Report of 2019
Haier Smart Home Co., Ltd.
| Sub-total of cash inflows from financing activities | 3,728,909,076.12 | 1,924,802,503.30 |
| Cash paid on repayment of borrowings | 1,500,000,000.00 | |
| Cash paid on distribution of dividends, profits, or interest expenses | 2,262,440,498.23 | 2,106,817,045.14 |
| Cash paid on other financing related activities | 8,419,159.30 | |
| Sub-total of cash outflows from financing activities | 3,770,859,657.53 | 2,106,817,045.14 |
| Net cash flows from financing activities | -41,950,581.41 | -182,014,541.84 |
| IV. Effect of fluctuations in exchange rates on cash and cash equivalents | -1,836,962.00 | 2,417.25 |
| V. Net increase in cash and cash equivalents | -795,461,337.96 | 1,323,591,210.71 |
| Add: balance of cash and cash equivalents at the beginning of the period | 7,068,899,574.96 | 2,070,527,802.97 |
| VI. Balance of cash and cash equivalents at the end of the period | 6,273,438,237.00 | 3,394,119,013.68 |
Legal representative: Liang Haishan Person in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
4.2 Status in relation to adjustments to the first implementation of relevant items in financial statementsat the beginning of the year for implementation of New Financial Instruments Standard, NewIncome Standards and New Lease Standards for the first time
□Applicable √Not Applicable
4.3 Explanation on retroactive adjustments of previously comparative data for implementation of New
Financial Instruments Standards and New Lease Standards for the first time
□Applicable √Not Applicable
4.4 Audit Report
□Applicable √Not Applicable