Company Code: 600690.SH, 690D.DE Short Name: Haier Smart Home
Haier Smart Home Co., Ltd.
2022 Interim Report
Haier Smart Home Co., Ltd. Interim Report 2022
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Haier Smart Home Co., Ltd. (the “Company”) are individually and collectivelyresponsible for the content set out therein and hereby assure that the content set out in theinterim report is true, accurate and complete, and free from any false record, misleadingrepresentation or material omission.
II. All directors attend the Board of Directors.
III. The interim report is unaudited.
IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of the
Company) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the interim report is true, accurate and complete.
V. Proposal of profit distribution or proposal of converting capital reserves into share capital forthis reporting period resolved and passed by the Board
No
VI. Disclaimer in respect of forward-looking statements
√ Applicable □ Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report donot constitute our substantial commitment to investors. Investors are advised to pay attention toinvestment risks.
VII. Is there any fund occupation by controlling shareholders and their related parties for non-operational purposes
No
VIII. Is there any provision of external guarantee in violation of prescribed decision-making
procedures?
No
IX. Are there more than half of the Directors could not warrant the truthfulness, accuracy and
completeness of the interim report disclosed by the Company
No
X. Important risk warnings
For the possible risks which the Company may encounter, please refer to the relevant information setout in the section of “MANAGEMENT DISCUSSION AND ANALYSIS” in this report.
Haier Smart Home Co., Ltd. Interim Report 2022
Important Notice
XI. Others
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Contents
| SECTION I — DEFINITIONS | 4 |
| SECTION II — GENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS | 6 |
| SECTION III — MANAGEMENT DISCUSSION AND ANALYSIS | 11 |
| SECTION IV — CORPORATE GOVERNANCE | 46 |
| SECTION V — ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES | 50 |
| SECTION VI — SIGNIFICANT ISSUES | 61 |
| SECTION VII — CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS | 76 |
| SECTION VIII — RELEVANT INFORMATION OF PREFERRED SHARES | 84 |
| SECTION IX — RELEVANT INFORMATION OF CORPORATE BONDS | 85 |
| SECTION X — FINANCIAL REPORT | 88 |
| Documents Available for Inspection | I. 2022 Interim Report of Haier Smart Home Co., Ltd. with signature of the legal representative. |
| II. Financial statements with signatures or seals of the person in charge of the entity, chief accountant and person in charge of accounting department. | |
| III. All documents publicly disclosed on China Securities Journal, Shanghai Securities News, Securities Daily, Securities Times and the website of Shanghai Stock Exchange (www.sse.com.cn) during the reporting period. |
Haier Smart Home Co., Ltd. Interim Report 2022
Section I Definitions
Unless otherwise stated in context, the following terms should have the following meanings in this report:
DEFINITION OF FREQUENTLY USED TERMS
| CSRC | China Securities Regulatory Commission |
| SSE | Shanghai Stock Exchange |
| The Company, Haier Smart Home | Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”, and the original short name is “Qingdao Haier” |
| Four Major Securities Newspapers | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily |
| Haier Electronics, 1169 | Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong, stock code: 01169.HK), a subsidiary as accounted for in the consolidated statement of the Company. Haier Electronics has been privatized by way of H shares issuance on 23 December 2020 and became a wholly owned subsidiary of the Company since then. |
| GEA | GE Appliances, household appliances assets and business of General Electric Group, have currently been owned by the Company. |
| FPA | Fisher & Paykel Appliances Holdings Limited (Chinese Name: 斐雪派克) was established in 1934 and is known as the national appliance brand of New Zealand, the global top-level kitchen appliance brand and the famous luxury brand of the world. It has products including ventilator, gas stove, oven, dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer and etc. Its business covers over 50 countries/regions across the world. FPA is wholly-owned subsidiary of the Company. |
| Candy | Candy Group (Candy S.p.A) is an international professional appliances manufacturer from Italy. Since its establishment in 1945, it has been committed to enabling the global users to enjoy a higher quality of life through innovative technologies and quality services. Candy Group has been prestigious in the global market with users all over the world via its ten self- owned professional household appliance brands. In January 2019, Candy became a wholly-owned subsidiary of the Company. |
| CMM | China Market Monitor Co., Ltd., as an authoritative market research institute in Chinese home appliances area, was established in 1994 and has been focusing on research of retail sales in China consumption market ever since. |
Haier Smart Home Co., Ltd. Interim Report 2022
Section I Definitions
| Euromonitor | Euromonitor, established in 1972, is the leading strategic market information supplier and has over 40-years of experience in respect of publishing market report, commercial reference data and on-line database. They create data and analysis on thousands of products and services around the world. |
| All View Cloud | All View Cloud (AVC) is a big data integrated solution provider to the smart home field, providing enterprises with big data information services, regular data information services and special data services. |
| IEC | The International Electrotechnical Commission. Founded in 1906, it is the world’s first organization for the preparation and publication of international electrotechnical standardization and is responsible for international standardization for electrical engineering and electronic engineering. The goals of the commission include: to effectively meet the needs of the global market; to ensure that the standards and conformity assessment programs are applied globally in a prioritized manner and to the greatest extent; to assess and improve the quality of products and services involved in its standards; to create conditions for the common use of complicated systems; to improve the effectiveness of the industrialization process; to improve human health and safety, and to protect the environment. |
| IEEE | The Institute of Electrical and Electronics Engineers, an international association of electronic technology and information science engineers, is currently the largest non-profit professional technology society in the world. It is committed to the development and research of electrical, electronic, computer engineering and science-related fields, and has now developed into an international academic organization with great influence in terms of the fields of space, computer, telecommunications, biomedicine, power and consumer electronics. |
| Model of Rendanheyi (人单合一) | The concept of “Achieving win-win via Rendanheyi ( 人 单 合 一 ) “is the guarantee of Haier’s sustainable operation and the driving force of the Company featuring a self-motivated and empowering corporate culture. “Ren” is an employee who has the spirit of entrepreneurship and innovation; “Dan” is to create value for users. The “Rendanheyi (人单合一) “management model encourages employees to create value for users with an entrepreneurial mindset, and to achieve self-value in line with the those of the Company and its shareholders. |
| “1+3+5+N” Whole House Intelligence All-Scenario Solutions | Whole House Intelligence All-Scenario Solutions: 1: Smart Home APP; 3: solutions including whole-house air, water, intelligence; 5. five intelligent spaces including balcony, living room, kitchen, bathroom and bedroom; N: various personalized intelligent scenario experience. |
Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of theCompany and Key Financial Indicators
I.INFORMATION OF THE COMPANY
| Chinese name | 海尔智家股份有限公司 |
| Chinese short name | 海尔智家 |
| English name | Haier Smart Home Co., Ltd. |
| English short name | Haier Smart Home |
| Legal representative | Li Huagang |
II.CONTACT PERSON AND CONTACT INFORMATION
| Secretary to the Board | Representative of securities affairs | Company Secretary (D/H shares) | Others | |
| Name | Liu Xiaomei | Liu Tao | Ng Chi Yin, Trevor | Global Customer Service Hotline |
| Address | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao City | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao City | Room 3513, 35/F, The Center, 99 Queen’s Road Central, Central, Hong Kong | / |
| Tel | 0532–88931670 | 0532–88931670 | +852 2169 0000 | 4006 999 999 |
| Fax | 0532–88931689 | 0532–88931689 | +852 2169 0880 | / |
| finance@haier.com | finance@haier.com | ir@haier.hk | / |
Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
III.SUMMARY OF THE CHANGES IN GENERAL INFORMATION
| Registered address | Haier Industrial Park, Laoshan District, Qingdao City |
| Historical change of the registered address | Prior to the Company’s listing in 1993, the registered address of the Company was No.165 Xiaobaigan Road, Sifang District, Qingdao City, Shandong Province, and has changed to the current address since 1994, during which the address name was adjusted in line with the change of name of the industrial park but the actual site remains unchanged. |
| Business address | Haier Information Industrial Park, Laoshan District, Qingdao City |
| Postal code of the business address | 266101 |
| Website | https://smart-home.haier.com/cn/ |
| 9999@haier.com | |
| Query index for any changes during the reporting period | Not applicable |
IV.MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE ANDDEPOSIT
| Designated newspaper for information disclosure | Shanghai Securities News, Securities Times, China Securities Journal, Securities Daily |
| Website for publishing interim report | www.sse.com.cn |
| Other websites for annual report disclosure | https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de, https://www.hkexnews.hk |
| Deposit place of interim report | Department of Securities of Haier Smart Home Co., Ltd. Haier Information Industrial Park, No. 1 Haier Road, Qingdao City |
| Query index for any changes during the reporting period | Not applicable |
V.SUMMARIZED INFORMATION OF SHARES OF THE COMPANY
| Type of Shares | Stock Exchange of Shares Listed | Stock Short Name | Stock Code | Stock Short Name Before Variation |
| A share | Shanghai Stock Exchange | Haier Smart Home | 600690 | Qingdao Haier |
| D share | Frankfurt Stock Exchange | Haier Smart Home | 690D | Qingdao Haier |
| H Share | Hong Kong Stock Exchange | Haier Smart Home | 6690 | / |
Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
VI.OTHER RELATED INFORMATION
□ Applicable √ Not Applicable
VII.KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THECOMPANY(I)Key accounting data
Unit and Currency: RMB
| Key accounting data | For the reporting period (January-June) | The corresponding period of last year | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
| After adjustment | Before adjustment | |||
| Operating revenue | 121,857,522,462.22 | 111,727,756,211.06 | 111,618,822,064.73 | 9.07 |
| Net profit attributable to shareholders of the listed Company | 7,949,084,472.70 | 6,858,902,854.55 | 6,852,271,812.97 | 15.89 |
| Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company | 7,490,693,705.38 | 6,269,906,406.72 | 6,269,906,406.72 | 19.47 |
| Net cash flows from operating activities | 5,964,247,657.22 | 8,442,195,160.31 | 8,423,823,726.89 | –29.35 |
| As at the end of the reporting period | As at the end of reporting period of last year | Increase/ decrease as at the end of the reporting period compared with that of last year (%) | ||
| After adjustment | Before adjustment | |||
| Net assets attributable to shareholders of the listed Company | 86,251,016,004.21 | 79,851,734,427.42 | 79,810,927,325.55 | 8.01 |
| Total assets | 226,652,759,534.60 | 217,599,384,435.63 | 217,459,494,212.74 | 4.16 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
(II)Key financial indicators
| Key financial indicators | For the reporting period (January-June) | The corresponding period of last year | Increase/decrease for the reporting period compared with the corresponding period of last year (%) | |
| After adjustment | Before adjustment | |||
| Basic earnings per share (RMB/ share) | 0.85 | 0.74 | 0.74 | 14.86 |
| Diluted earnings per share (RMB/ share) | 0.85 | 0.73 | 0.73 | 16.44 |
| Basic earnings per share after deducting non-recurring profit or loss (RMB/share) | 0.80 | 0.68 | 0.68 | 17.65 |
| Weighted average return on net assets (%) | 9.24 | 9.29 | 9.29 | decreased by 0.05 percentage point |
| Weighted average return on net assets after deducting non- recurring profit or loss (%) | 8.71 | 8.50 | 8.50 | Increased by 0.21 percentage point |
Explanation of the key accounting data and financial indicators of the Company
□ Applicable √ Not Applicable
VIII.DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS
√ Applicable □ Not Applicable
(I)Difference in net profit and net assets attributable to shareholders of the listedcompany in financial statements as disclosed in accordance with InternationalAccounting Standards and Chinese Accounting Standards
□ Applicable √ Not Applicable
There is no difference between the net profit and net assets attributable to shareholders of thelisted company presented in the consolidated financial statements as disclosed in accordancewith International Accounting Standards and Chinese Accounting Standards by the Company.
(II)Difference in net profit and net assets attributable to shareholders of the listedcompany in financial statements as disclosed in accordance with overseasaccounting standards and Chinese Accounting Standards
□ Applicable √ Not Applicable
Apart from the financial statements prepared in accordance with International AccountingStandards, the Company has not prepared financial statements in accordance with otheroverseas accounting standards.
Haier Smart Home Co., Ltd. Interim Report 2022
Section II General Information of the Company and Key Financial Indicators
(III)Explanation on difference in domestic and overseas accounting standards
□ Applicable √ Not Applicable
IX.NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Non-recurring profit and loss items | Amount |
Profit and loss on disposal of non-current assets
| Profit and loss on disposal of non-current assets | 33,807,493.39 |
| Government subsidies through the profit and loss, except for government subsidies that are closely related to the Company’s normal business operations, comply with national policies and regulations, and continue to be enjoyed in a fixed amount or fixed quantity according to certain standards | 434,830,465.43 |
| Net profit and loss of subsidiaries arising from business combinations under common control of the current period from the beginning of the period to the date of consolidation | 4,473,481.70 |
| Profit and loss from fair value changes of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities, as well as investment gains arising from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities and other debt investments, except the effective hedging related to the normal operations of the Company | 59,249,736.54 |
| Other non-operating income and expenses except the aforementioned items | 34,282,312.26 |
| reduction: Effect of income tax | 98,050,857.35 |
| Effect of minority equity interest (After Tax) | 10,201,864.65 |
| Total | 458,390,767.32 |
Explain the reasons for determination of the non-recurring profit and loss items that are in conformitywith the definition of non-recurring profit and loss items as set out in the Explanatory Announcementon Information Disclosure by Companies Publicly Issuing Securities No. 1—Non-recurring Profit andLoss Items
□ Applicable √ Not Applicable
X.OTHERS
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and
Analysis
I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESAND ITS MAJOR BUSINESS DURING THE REPORTING PERIODFounded in 1984, the Company is committed to being an enterprise of the times. Through relentlessinnovation and iterations, the Company seized opportunities in the industry by continuously launchingnew products that steer market development. After more than 30 years, the Company has become aglobal leader in the major home appliance industry, as well as a pioneer in global smart home solutions.
?Global leader of the major home appliance industry: According to data from Euromonitor—anauthoritative market researcher, the Company ranked first in terms of sales volume in globalmajor appliance market for 13 consecutive years. The Company has a global portfolio of brands,including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. From 2008 to2021, Haier brand refrigeration and laundry appliances ranked first among major home appliancebrands in sales volume for 14 and 13 consecutive years, respectively.
?Pioneer of global smart home solutions: Capitalizing on the Company’s full-range home appliancesproducts, the Company is recognized by Euromonitor as one of the first in the industry tointroduce smart home solutions. Leveraging the Company’s connected home appliance productsand partners, supported by Haier Smart Home APP and Haier Smart Home Experiential CloudPlatform, with integration of experience centres and franchised stores, the Company providesusers with smart home solutions for a variety of application scenarios, satisfying their pursuit fora better life.
Over the years, the Company has established three business segments, namely the Smart Home Businessin China, the Overseas Smart Home Business, and Other Business.
Smart Home Business in ChinaThe Company provides a full range of home appliance products and value-added services in Chinamarket through online Haier Smart Home APP, supplemented by the Company’s offline experiencecentres, in order to cater for users’ needs for different lifestyle scenarios. Smart Home Business inChina comprises Household Food Solutions (Internet of Food), Household Clothing Solutions (Internetof Clothing), Household Air Solutions (Internet of Air), and Household Water Solutions (Internet ofWater).
?Household Food Solutions (Internet of Food): The Company provides users with refrigerators,freezers, kitchen appliances and other products through domestic market sales and exports.Leveraging the connectivity amongst products, the Company is able to provide users with value-added dietary solutions featuring a combination of products and services including smart cookingand nutrition planning in order to meet users’ demands for convenience, wellbeing and taste.
?Household Clothing Solutions (Internet of Clothing): The Company provides users with washingmachines, dryers and other products through domestic market sales and exports. Leveraging theconnectivity amongst the Company’s smart products, the Company is able to provide users withvalue-added laundry solutions featuring a combination of products and services in order to meetusers’ demands for washing and caring of apparels.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
?Household Air Solutions (Internet of Air): The Company provides users with residential air-conditioners, commercial air-conditioners, purifiers, ventilation systems and other productsthrough domestic market sales and exports. Leveraging the connectivity amongst the Company’ssmart products, the Company is able to provide users with smart air solutions in order to meetusers’ demands for temperature, humidity, cleanliness and freshness.
?Household Water Solutions (Internet of Water): The Company provides users with electric waterheaters, gas water heaters, solar water heaters, heat pump water heaters, POE water purifiers,POU water purifiers, water softening equipments and other products through domestic marketsales and exports. Leveraging the connectivity amongst the Company’s smart products, theCompany is able to provide users with smart water solutions in order to meet users’ demandsfor water purification, softening and heating.
Overseas Smart Home BusinessIn addition, the Company also manufactures and sells a comprehensive portfolio of home applianceproducts and provides value-added services in more than 160 countries and regions, including NorthAmerica, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan, Middle East, andAfrica.
In the overseas market, the Company has been manufacturing and selling proprietary applianceproducts catering for local users’ demands for more than 20 years. During the time, a number ofacquisitions contributed to the Company’s growth including acquisition of Haier Group Corporation’soverseas white goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan andSoutheast Asia) in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candyin 2019. The development of the Company’s overseas smart home businesses has been fuelled bysynergies among its self- developed business and acquired businesses.
At present, the overseas smart home business of the Company has entered a stage of promising growth,having achieved a multi-brand, cross-product, and cross-regional presence on a global basis. Accordingto Euromonitor, the Company’s share of the global market (retail volume) for major home appliances inkey regions in 2021 is as follows: ranked first in Asia with a market share of 20.4%; ranked second inAmerica with a market share of 15.1% and ranked second in Australia and New Zealand with a marketshare of 11.6%. The Company ranked third in Middle East and Africa with a market share of 7.4% andranked fourth in Europe with a market share of 8.1%.
Other Businesses
Building on its established smart home businesses, the Company has also developed parts andcomponents, small home appliances, channel distribution and other businesses. In particular, the partsand components business mainly involve procurement, production, and sales of upstream ancillarycomponents for home appliances. The small home appliance business primarily involves small homeappliances designed by the Company, produced by outsourced third-party manufacturers and soldunder the Company’s brands and products serving to enrich the Company’s smart home solutions.The channel distribution business primarily offers distribution services for products such as televisionsand personal electronics products for Haier Group or third-party brands, which leverages theCompany’s sales network.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
During the reporting period, the Company was once again listed among the Top 500 World’sCompanies by Fortune Magazine in 2022. The Company was named as the ‘2022 World’s MostAdmired Companies’ by the Fortune Magazine. The Company was the only company being selected inEurope and Asia in the home appliances industry and was the only selected company incorporatedoutside the US. Meanwhile, the Company is also the world’s only Internet-of-Things (IoT) ecosystembrand being named again as BrandZ
TM
Top 100 Most Valuable Global Brands in 2022.
(I)Industry overview for the first half of 20221.The Chinese marketIn the first half of 2022, demand was sluggish in the domestic home appliance market dueto economic slowdown, weakened consumer confidence, real estate market downturn, andpandemic containment measures which impacted offline sales, distribution, and installation.Data from CMM showed that the retail sales of the China’s home appliance market(excluding 3C & digital products) in the first half of 2022 was RMB397.951 billion, down 9.89%year-on-year. At the same time, high commodity prices have dragged down industry’s profitmargins.
Retail sales declined year-on-year in refrigerators, washing machines and airconditioners, while emerging categories including tumble dryers continued to grow.(1)Retail sales of the refrigerator and washing machine industries reached RMB43.667billion and RMB32.671 billion in the first half of 2022, down 5.26% and 8.34% year-on-year, respectively. Instead of competing over prices, leading players’ focus on userexperience and R&D-driven product innovation has contributed to a steady increase inaverage prices, in particular in offline channels. According to CMM, average retail price ofrefrigerator and washing machine across online and offline channels have surged 12.87%and 9.99% respectively. In addition, benefiting from the rise in consumer demand for foodstorage during the pandemic, retail sales of freezer increased 12.12% to RMB7.394 billion.(2)Air conditioner industry was impacted by the real estate market slowdown and lowertemperature in May and June, retail sales reached RMB84.24 billion in the first half of 2022,down 14.09%. After the price war in 2019, competitions have become more rational, andaverage prices of the industry rose 7.46% year-on-year. (3) Traditional kitchen appliancessuch as range hoods and gas stoves recorded negative growths impacted by the coolingreal estate market, increasing penetration and competition from integrated stoves. Data fromCMM showed that in the first half of 2022, retail sales of range hood and gas stove dropped
14.95% and 9.41% year-on-year respectively to RMB16.754 billion and RMB10.999 billion. ②Retail sales of integrated stoves amounted to RMB11.783 billion, representing an increase of
6.54% year-on-year. (4) The water heater industry was impacted by the downturn of thereal estate market, retail sales in the first half of the year amounted to RMB27.327 billion,down 13.90% compared to the same period in 2021. (5) Emerging categories such as tumbledryers, dishwashers and residential central air conditioners continued to grow.According to data from CMM, retail sales of dishwashers reached RMB5.567 billion in thefirst half of 2022, a growth of 7.43% year-on-year. Retail sales of tumble dryers amounted toRMB4.361 billion, a surge of 41.08% over the same period in 2021. (6) Small kitchenappliances are consumer discretionary in nature with high penetration, industry demand iscooling. According to AVC, retail sales of such products reached RMB26.38 billion in thefirst half of 2022, down 4.9% year-on-year.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Although demand remains suppressed in the short term, industry upgradecontinues to happen on health, smart, and green energy. According to AVC, retailsales of refrigerators above RMB10,000 per unit, washing machines above RMB10,000 perunit and air conditioners above RMB15,000 per unit have grown against the headwind by10%, 12% and 17% respectively in the first half of the year. For instance, (1) consumersincreasingly favoured large-size refrigerators and “refrigerator + freezer” combos, withfeatures of freshness preservation, sterilization, and odour control. According to CMM, forthe first half of the year, 500 litre refrigerators accounted for 62.3% of the industry’s totalretail sales offline, up 7.5 percentage points year-on-year; and accounted for 41.6% of totalretail sales online, a year-on-year increase of 5.7 percentage points. Market demand for self-cleaning, disinfection cabin and fresh air features of air conditioners were on the rise too. (2)Consumer demand for effective space utilization, consistency in design and smarttechnologies continued to grow, with increasing attention on design and installation ofhome appliances and decorations. On one hand, this has promoted the rapid growth ofnew categories such as “built-in refrigerators, built-in washing machines, residential centralair conditioners” and according to statistics of China IoL, residential central air conditioners’output reached RMB18.853 billion in the first half of 2022, representing a year-on-yeargrowth of 7.78%. On the other hand, this has contributed to the growth in suite products.In addition, young consumers in their twenties and thirties are less willing to engage incomplicated home furnishing, resulting in a growing demand for one-stop solutions of homefurnishing, home improvement and home appliances.
Leading player continued to capture market shares by leveraging technological innovation,brand, and extensive distribution network. Industry concentration continued to increase.According to AVC, the combined offline shares of the top three players in refrigerator, washingmachine, air conditioner, water heater and range hood reached 70%, 80%, 84%, 60% and 65%respectively. Those equipped with superior R&D, design, and distribution capabilities for suiteproducts were better positioned to acquire and convert user traffic, increase user value, andaccumulate goodwill.
Online retail sales accounting for 53.8% of total sales. Offline chain retailors werechallenged as foot traffic and store expansions were restricted by pandemic containmentmeasures. Appliance sales in home improvement channels achieved rapid growthbenefitting from user traffic during home renovation and the capability of providing one-stopsolutions integrating appliances with home furnishing. As user’s time is becomingincreasingly fragmented, traffic has gradually migrated to content platforms such as TikTok,Kuaishou, Xiaohongshu, bilibili, and Zhihu, who have become vibrant sites for productpromotion. In addition, consumption preferences continued to differ, high-end products gainsignificance offline while consumers tend to look for value-for-money items online, leadingto faster growth in mid to low-end markets.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
The government issued policies to promote home appliance consumption andupgrade. Incentive programmes targeting home appliance consumption have beenlaunched by several municipal governments in the second quarter of 2022. In July 2022,the Ministry of Commerce issued the “Notice on Several Measures to Promote theConsumption of Green and Smart Home Appliances”, which introduced measures toencourage consumption upgrade of green and smart home appliances, including launchinga nationwide home appliances “trade-in” campaign, promoting green and smart homeappliances in villages and townships, expanding consumption scenarios to enhanceconsumption experience, and optimizing the supply of green and smart home appliances.
According to statistics from General Administration of Customs, China’s total exports ofhome appliances in the first half of 2022 amounted to RMB283.3 billion, down 8.2% year- on-year. Refrigerator exports amounted to RMB28.6 billion, down 11.8% year-on-year; washingmachine exports reached RMB8.8 billion, down 13.2% year-on-year; air-conditioner exportstotalled RMB34.1 billion, down 1.6% year-on-year. Such reduction was also due to an extent,the higher base of China’s home appliances exports in the corresponding period in 2021.
2.Overseas marketsIn the first half of 2022, consumption volume was weakened by high inflation withconsumer confidence reduced by economic slowdown overseas. The University ofMichigan’s Consumer Sentiment Index dropped from 68.30 in December 2021 to 47.50 inJune 2022. In the second quarter of 2022, shipment of core appliances in European andU.S. home appliance markets recorded a single-digit decline year-on-year. The rise of productprices has contributed to growth in the industry’s retail sales.
(1)The U.S.: In the first half of 2022, the home appliance industry was challenged bysupply chain shortages and high inflation. According to AHAM (Association of HomeAppliance Manufacturers), the total shipment of the U.S. home appliance market fell
6.5% year-on-year in the first half of 2022, with the shipment of core appliancesdown 5.3%. However, total shipment value of home appliances increased 3.8% whilecore appliances’ shipment value grew 4.2%.
(2)Europe: Influenced by inflation and rising energy prices, products with class A energy-efficiency were more favoured by consumers. Sales volume remained flat year-on-yearas consumer confidence in Western Europe declined. According to GFK, to cover thecost inflation caused by rising commodity prices, average unit prices of white goodshave increased by 9%, and retail revenue of the industry has grown 4.9% year-on-year. Record level temperatures this summer also contributed to the robust revenuegrowth of air conditioners.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(3)South Asia: In India, GDP began to rebound in the second quarter of 2022. Health-conscious and large-size products remained popular and high-end demand was robust.The overall retail sales in Pakistan have tumbled by 8% in the first half of the year, withsales volume dropped by more than 10%. Average prices have hiked 5%–10% tomitigate the pressure brought about by currency fluctuations and rising raw materialcosts.
(4)Southeast Asia: According to GFK: Thailand’s home appliance industry was sluggishdue to inflation and currency depreciation. Sales volume of refrigerator fell 9.3% in thefirst half of the year. Sales volume of residential air conditioner dropped 9.9% in thefirst half of the year due to economic downturn and an early monsoon season, whichalso resulted in 30% volume decline in second quarter. Market demand continued topolarize with mid to low-end consumers focused on meeting their basic needs, whilemid-to high-end market opted for variable-frequency air conditioners, large-capacityrefrigerators and washing machines.
Retail volume in the Indonesian market grew 8.7% year-on-year.
(5)Australia & New Zealand: According to distributor’s data, sales revenue of homeappliance industry in Australia has grown 10% year-on-year. High inflation, escalatingshipping cost and supply chain shortages caused the average unit price to surge 20%.
GDP fell 0.2% in New Zealand in the first half of 2022, lower consumer confidenceand rising food and fuel prices have forced consumers to cut back on big ticketitems such as home appliances. Distributors’ data estimated that industry salesrevenue have dropped by 2.7%
(6)Japan: The industry was challenged by the sharp depreciation of the yen, escalatingprices of energy and food, and the decline in disposable income. According to GFK,the combined sales volume and sales revenue of freezer, refrigerator and washingmachine increased by 1% and 4% respectively in the first half. Consumers haveincreased demand for large-size, health-conscious and energy-saving products, suchas large refrigerators with outstanding freshness preservation performance, a secondfreezer, and large front-load washers with low noise level.
(II)Industry Outlook for the second half of 20221.The Chinese Market:
In the second half of 2022, stabilizing economy and the implementation of policy incentiveswill help restore market confidence and propel recovery. Commodity prices have slumpedsince the second quarter, which is conducive to easing cost pressure and improvingprofitability. CMM forecasts retail revenue of China’s major home appliance market willgrow 3%, reaching RMB320 billion in the second half of 2022.
Looking ahead in the second half of 2022, although commodity and shipping costs continueto drop and foreign trade stabilization policies are gradually taking effect, given the high basevolume in 2021, the trend of export market is projected to be neutral.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2.The Global Market:
In May 2022, the United Nation’s World Economic Situation and Prospects Report loweredthe projected growth rate of the global economy from 4% earlier in the year to 3.1%.Global inflation is expected to jump to 6.7% in 2022, which is twice the average in 2010–2020. However, there are new opportunities amid challenges. Energy-saving andenvironmentally friendly home appliances, along with alternative energy heat pumps, havebecome new growth drivers. The trend of smart connectivity is also catching on in theindustry.
Chinese home appliance players with comprehensive brand portfolio, advanced R&D andmanufacturing capabilities, extensive localized distribution networks, and efficient managementare positioned to gain share globally.
II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTINGPERIOD
√ Applicable □ Not Applicable
The Company has established a solid strategic presence and competitive advantage in China andoverseas markets. In China’s major home appliance market, the Company has long maintained aleading position across all product categories. According to CMM’s report, the Company hasestablished a continued leading market position in key major home appliance categories in 2021. Inoverseas markets, the Company has adhered to its high-end brand creation strategy, building capacityto create leading sustainable growth, which has continuously improved its market shares. Building onthis foundation, the Company will further consolidate its leadership position in the industry byleveraging integrated synergies of its global unified platforms, through efficiency transformations drivenby digitalization, and by leveraging its technological strengths and innovative capabilities. Ascornerstone for sustainable development, the Company’s ‘Rendanheyi (人单合一）’ Model also providedmanagement guidance to the Company to replicate successful experiences. It is believed that thefollowing advantages will help the Company to continue to strengthen its leading position:
(i)Dominance in China’s high-end market; rapid growth of overseas high-endbrands
Riding the trend of consumption upgrade in China, the Company started to develop the high-end brand Casarte in the Chinese market more than 10 years ago. The creation of high-endbrands required not only focus, experience, and patience, but also continuous innovation oftechnological standards and differentiated service capabilities to fulfil user demand for high-qualityexperiences. The Casarte brand combined the Company’s global technological strengths, productdevelopment capabilities and manufacturing craftsmanship, as well as privilege marketing anddifferentiation services, and has gradually won the trust of users in China’s high-end market.According to statistics from CMM, the Casarte brand has assumed a definitive leading position inChina’s high-end major home appliance market, ranking first in the retail sales of refrigerator,washing machine and air conditioner categories in the high-end segment. In the first half of 2022,in terms of offline retail sales, shares of the Casarte brand of washing machines and refrigeratorsreached 75.2% and 38.6% respectively in the market with product price above RMB10,000 per unitin China, while its share of air conditioners priced above RMB15,000 per unit in the China’smarket reached 31.2%. The Company’s overall average price for refrigerators, air conditioners andwashing machines was roughly two to three times the average price of the industry.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. The Company has enhanced its high-end brand profile through launch ofproducts such as professional gas range, large multi-door refrigerators, ultra-fresh dishwasherswith stainless steel interior, Opal ice makers, and automatic espresso machines. CAF?BELLISSIMO Espresso Machine was named in CBS News (a renowned media outlet in the UnitedStates) Best Mother’s Gift, GE Profile new Kitchen Hub received 30s Choice Award from NKBA(National kitchen & Bath Association). Through the creation of luxurious, customizable, and smarttechnology-enabled user experience, high-end Monogram, Café and GE Profile have grownrapidly. In the first half 2022, three high-end brands recorded over 40% revenue growth.
(ii)Smart household solutions that continue to expand and upgradeAs users continued to demand for higher living quality, coupled with the development oftechnologies such as Internet of Things, big data, cloud computing and artificial intelligence, theindustry has shown a smart and high-end development trend that prioritized product suites,based upon scenarios, and home appliances integrated with home furnishings. With leading userinsights, extensive product coverage and technological accumulation from intelligent AIalgorithms, home big data and IoT equipment technology, the Company provided scenariosolutions such as food storage and cooking management, clothes laundry and mix-and-matchmanagement, whole-house air comfort and purification management, and healthy drinking watermanagement for five major spaces at home, including the living room, kitchen, bathroom,bedroom and balcony, thereby ‘Designing a home, building a home, and serving a home’ forusers.
Three-Winged Bird stores provided users with scenario solutions that integrates smart homeappliances and smart home furnishings, and through having a service steward to attend to theneeds of users throughout the process, through coordination and arranging with the internalspecialised team, providing users with a whole-process service that comprised design andimplementation, building materials selection, as well as installation and fulfilment. For example,the Three-Winged Bird kitchen scenario solution could provide users with a whole-processservice from a suite of smart kitchen appliances to cabinet design, delivery, installation, andfulfilment.
Based on the Haier Smart Home Brain platform, users could upgrade the functions of smarthome appliances, enjoy services such as professional fitness training, recipe recommendations,purchase of ingredients through refrigerator, automatic selection of laundry programs, andpersonalized scenarios through interfaces including the Haier Smart Home App and the XiaoyouSpeaker. In the future, the Company will continue to address the needs of user experience, andto further improve and enrich the smart home solutions provided by the Company. Throughscenario solutions and ecosystem services, the Company will provide lifelong services for usersand further enhance users’ loyalty.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(iii)Extensive and solid global presence with localized operational capability
In addition to success in the Chinese market, the Company also prospered in overseas markets.The Company seeks overseas expansion of its own brands as well as synergies with acquiredbrands to develop overseas markets. Such business strategy has guided the Company toestablish R&D, manufacturing and marketing three-in-one structure across multiple brands,products, and regions, as well as the model of self-development, interconnection and synergizedoperation.
The Company’s extensive global presence depends on its localized business teams as well as itsflexible and autonomous management mechanisms established in various overseas markets,which have enabled the Company to gain rapid insights and respond swiftly to local userdemands. The Company also proactively integrates into local markets and cultures and hasestablished a corporate image that is recognized by local communities in the overseas regionswhere the Company operates.
In 2021, the Company operated 10 R&D centres, 122 manufacturing centres, and 108 marketingcentres around the world, and achieved a coverage of nearly 130,000 points of sales in overseasmarkets.
(iv)A comprehensive portfolio of proprietary brands recognised by users of all tiers
Through organic growth and acquisitions, the Company has formed seven brand clusters,including Haier, Casarte, Leader, GE Appliances, Candy, Fisher&Paykel and AQUA. To addressthe needs of users from different tiers in various markets around the world, the Company hasadopted a differentiated multi- brand strategy in different regions that centred around users, soas to achieve an extensive and in-depth user coverage. For example, in the Chinese market: thethree brands of Casarte, Haier and Leader achieved the coverage of high-end, mainstream andniche market groups respectively; in the U.S. market, the six major brands such as Monogram,Café, GE Profile, GE, Haier, Hotpoint comprehensively covered all segments of high-end, mid-range and low-end markets, thereby meeting the preferences and needs of different types of users.
(v)Cross-border acquisition and synergy realisation capabilities
The Company has an excellent track record of acquisition and integration. The Company hasacquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliancebusiness of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (whichhas been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all, the Company implements the ‘Rendanheyi (人单合一）’ Model in theacquired companies, which is a value-added sharing mechanism for the whole-process teamunder a common goal. Such model can motivate the acquired companies and their employeesand enable them to generate more value. Secondly, the Company made use of its globalplatform to empower the acquired companies in terms of strategic planning, R&D, andprocurement in order to enhance their competitiveness. Thirdly, the Company’s open andinclusive corporate culture can support the acquired companies in establishing a flexible andautonomous management mechanism, which can easily earn recognition from the acquiredcompanies and is conducive to the promotion of integration.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(vi)Comprehensive and in-depth global collaborations and empowermentThe Company has made full use of its global collaborative platform, as well as its integratedfunctions of R&D, product development, procurement, supply chain, sales, and brand marketing.It was able to share and expand its successful market development experience to variousmarkets around the world. By strengthening the synergies among its global businesses, theCompany has created a strong driving force for its future development.
?Global collaborative R&D: The Company has a global collaborative R&D system and hasestablished global technology R&D mechanisms to share common modules, utilize commontechnologies, and share patents within the scope of compliance. For example, ① theCompany successfully applied the direct-drive motor technology developed byFisher&Paykel to the Casarte brand of washing machines and achieved satisfactory results.
② integrating global R&D platform resources and leveraging technologies around the globe,such as China’s product structures and hydraulic technology, Japan’s functional designtechnology, New Zealand’s driver system, and the American control system, the Companylaunched the GE brand’s large-volume front-load washers in the U.S. market, which has ledto increases in both the market share and average price of washing machine products inthe U.S. market.
?Global collaborative product development: The Company has established a global productdevelopment mechanism to coordinate global collaborative product development, which canenable regional collaboration and supplementation across product categories. For example,the Company successfully supported GE Appliances to relaunch water heater business: thedevelopment teams in North America and China are highly integrated, benchmarking thedifferences in standards between Haier and products in North America. Haier’s R&Dadvantages were combined with GE Appliance’s quality assurance system to jointly developthe product. The resulting electric water heater product has achieved industry leadership interms of design, manufacturing, and inspection, with annual sales of more than 50,000 units,thus providing solid support for GE brand’s water heaters to successfully enter the NorthAmerican market.
?Global collaborative procurement: The Company’s global procurement activities arecoordinated by its global procurement guidance committee. By leveraging the Company’sglobal procurement operations platform, the Company’s operating divisions in differentregions can share global procurement resources, thereby achieving economies of scale.
?Global collaborative supply chain: The Company has a visualizable and digitalized globalsupply chain management system, which has enabled flexible deployment of globalproduction capacity, and sharing and collaboration in the development of smartmanufacturing technologies.
?Global collaborative marketing and brand promotion: The Company operates a multi-levelbrand portfolio on a global scale, which can realize global collaborative brand promotion.The Company also promotes and introduces successful marketing strategies amongregional markets around the world. For example, the Company successfully replicated itssales and marketing model from third and fourth- tier markets in China, in markets such asIndia, Pakistan, and Thailand, which have strengthened the Company’s brand image and itsregional market competitiveness.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(vii)Industry-leading R&D and technological capabilitiesTo ensure better living experience for users, the Company has established a global leading R&Dsystem under the premise of developing original technologies, thereby using original technologiesto support the overall industry-leading positions of the Company’s high-end brands, scenariobrands and ecosystem brands.
?Leadership in terms of patent quality: As of the end of June 2022, Haier Smart Home hasaccumulated more than 83,000 patents applications globally, of which there were morethan 53,000 invention patents which accounted for more than 63%. The number ofoverseas invention patents, which have been obtained in 30 countries, exceeded 15,000,making us the Chinese home appliance enterprise with the largest number of overseaspatents.
Haier Smart Home won 1 more gold award in the 23rd China Patent Gold Awards. Havingobtained 11 state patent gold awards, Haier Smart Home ranked first in the domestic market.
In the ‘Global Smart Home Invention Patent Ranking’ in the first half of 2022, Haier outran itscounterparts from all over the world with 2,655 published patent applications, ranking first in the worldfor seven consecutive years. There were 20,298 published patents for the smart home segment.
?Leadership in terms of international standards: As of June 2022, Haier Smart Home hascumulatively led and participated in formulation of 82 international standards and hasissued 611 state/industrial standards, among which 389 were state standards and 222were industrial standards.
It is the only company in the industry to obtain comprehensive coverage in the five majorinternational standard organizations, namely the IEC, ISO, IEEE, OCF and Matter. It is also theonly enterprise in the world to serve on the Council Board (CB) and Market Strategy Board(MSB) of IEC, its two highest management authorities, at the same time, which have enabled theCompany to stay actively involved in international standardization work and have a voice in theformulation of standards.
?Leadership in terms of original technologies: The Company has innovated a range of solutionsthat exceeded users’ expectations, such as the launch of the Casarte’s ‘simultaneous five-ring fire’ gas stove, which enlarged the pot heating area by 40% through the use of multi-ring uniform combustion system, ingredients in the pot could therefore be more evenly andcomprehensively heated. The Company also introduced the Casarte’s Zhongzihemei all-in-one laundry machine that could perform the three functions of washing, fabric-caring anddrying in the same machine; through continuous iteration of original technologies, it solvedthe three major pain points of high-end washing, drying and fabric-caring. We thereforecreated a new product category in the laundry industry and has continued to increase ourmarket share of high-end washing machines.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
In January 2022, the National Development and Reform Commission of China announced the listof national engineering research centers to incorporate new sequence management. The NationalEngineering Research Center for Digital Home Network built by Haier successfully passed theselection for optimization and integration. The center has achieved a number of breakthroughs inresolving bottlenecks in core and key technologies constraining the development of smart homeappliance industry, especially in the application of three key areas: operating system, artificialintelligence and SOC chips.
Our HOPE platform, as Haier’s window for external technology collaboration, tracks, analyses andresearches technologies closely related to industry development that are 3–5 years ahead of time,and promotes the industrialization of related technologies, continue to build on the coremethodologies of user insights, demand analysis, technology analysis and resource assessment,while brings together the supply and demand side of technologies, knowledge and creativity,providing interactive scenarios and tools to facilitate the creation and iterations of innovativeproducts/scenarios. Taking Haier’s air conditioner’s ‘variable shunt technology’ as an example,through collaboration with relevant experts, 36 patents have been applied for the technology,including 4 PCT international patents. According to results from a real device test conducted byCHEARI (Beijing) Certification & Testing Co. Ltd., the energy- efficiency of a 1.5 HP Haier variablerefrigerant flow air conditioner is 12% higher over a period of one year than that of an air conditionerwith the new national standard of first-class energy efficiency with same power level.
(viii)Staying committed to the principle of ‘value of people comes first’‘Value of people comes first’ has always been a guiding principle for Haier’s development. Fromthe autonomous operation team at the start of the venture to the current ‘Rendanheyi’ ( 人 单 合一 ) model, Haier encourages every employee to maximize their own values while creating valuesfor users. In Haier’s ‘Rendanheyi’ ( 人 单 合 一 ) model, ‘Ren’ refers to creators; ‘Dan’ refers to uservalue; ‘Heyi’ refers to the integration of values realized by employees and the values created forusers. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (人单合一) model.
Haier Smart Home adheres to the values of recognizing users’ demand as priority and denyingour own perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship andinnovation. We turned employees into creators, implementers into entrepreneurs, and transformedenterprises into open ecosystem platforms, which have supported the Company to become aglobal leader of smart home in the Internet of Things era.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
III. DISCUSSION AND ANALYSIS ON OPERATIONSAmid the challenging first half of 2022, the Company leveraged strengths in high-end brands, overseasproprietary brands while accelerating digital transformation, to deliver solid results.
In the first half of 2022, the Company realized sales revenue of RMB121.858 billion, representing anincrease of 9.1% year-on-year. The growth was driven by: (1) strengths of high-end brands, suiteproducts and scenario-based solutions in the Chinese market which enhanced user value; (2) overseasmarket share gain supported by localized “R&D, manufacturing & sales” and global integration; (3)expansion in distribution network and accelerated digitalization which improved customer acquisitionand conversion.
In the first half of 2022, net profit attributable to the owners of the parent company reachedRMB7.949 billion, representing an increase of 15.9% compared to the same period of 2021.
(1)The Company’s gross profit margin reached 30.2%, up 0.2 percentage points year-on-year, drivenby product mix upgrade with enhanced competitiveness, effective supply chain costmanagement, streamlined SKUs supported by integrating R&D and distribution; improvedmanagement of tier 2 & 3 suppliers, increased level of in-house produced components, all ofwhich aimed at improving the Company’s competitiveness of the entire value chain.
(2)The Company’s selling expense ratio was 14.4%, representing a reduction of 0.6 percentage pointsyear-on-year. The optimization was due to digitalization aiming at improve marketing precisionand efficiency; integrating manufacturing, distribution & logistics to improve fulfilment efficiencyand optimize inventory turnover; replacing service dispatch centres with system’s direct matchingof user request and maintenance personnel; accurate prediction of manufacturing and storage ofspare parts & components using algorithm to reduce spare parts expense ratio
.
(3)The Company’s administrative expense ratio was 4.2%, representing a reduction of 0.3 percentagepoints year-on-year, because of digital reform and process redesign.
(4)The Company’s financial expense ratio was–
0.2% (represented as financial income for the period),
optimized by 0.5 percentage points year-on-year. This was due to the increase in interest incomefrom the Company’s improved capital management and the increase in foreign exchange gainfrom the optimization of foreign exchange management.
(5)In the first half of 2022, the Company’s net cash inflow from operating activities was RMB5.964billion, a drop of RMB2.478 billion year-on-year; in the second quarter, the Company’s net cashinflow from operating activities amounted to RMB4.809 billion, a surge of 316.5% compared tothe first quarter. ① In the first quarter, the Company’s net cash inflow from operating activitiesdecreased by RMB1.714 billion year-on-year, which was due to increase in commodity inventoryand chips procurements in China, reduced payment collection amid pandemic, and increasedstockpiling caused by overseas logistics constraints. ② The net cash flow generated fromoperating activities in the second quarter decreased by RMB764 million on a year-on-year basis,mainly due to the increase in cash expenditure for purchasing goods and services in overseasbusiness due to the sharp rise in raw material prices and shipping fees, as well as the increasein product and raw material stock due to the growth of overseas business and the constructionof new factories overseas.
Spare parts expense ratio: the costs of spare parts used for maintenance divided by revenue.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(I)Smart Home Business in ChinaIn the first half of 2022, smart home business in China achieved sales revenue of RMB64.763 billion,representing an increase of 12.7% year-on-year. Operating profit grew by 27.7% to RMB4.944 billion.The revenue growth was attributable to the Company’s increase in market shares across the board,strong momentum of Casarte, network expansion and enhancement in customer acquisition andconversion.
1.Household Food Storage and Cooking Solutions(1)Refrigerator and Freezer BusinessIn the first half of 2022, the refrigerator and freezer business achieved sales revenueof RMB21.744 billion, a year-on-year increase of 13.3%, with market share gains andstrengthened high-end leadership. According to CMM, Haier’s offline market shareincreased 2.7 percentage points to 43.3%, online market share went up 0.4percentage points to 39.2%, and offline market share of products above RMB15,000per unit amounted to 53.1%, up 9.9 percentage points year-on-year.
Casarte focused on kitchen aesthetics and cell-level freshness preservation andintroduced the seamless built-in series meetings consumers’ demand for large capacity,appealing design, and combination of multiple units. Casarte’s built-in products achievedrevenue growth of 36% year-on-year, contributing to RMB1,000 increase in average priceper unit.
The Company published Built-in Refrigerator Standards 3.0, which upgraded thestandards for seamless built-in refrigerator and spearheaded the development of built-in products and kitchen aesthetics in the industry. During the reporting period,seamless built-in technology obtained 155 invention patents and passed the ULcertification in the U.S., and consolidated the Company’s advantages with its heatdissipation efficiency and flexibility in assembling.
Haier brand adhered to technological upgrades in precise cooling of storage zones,image recognition, and intelligent voice interaction, in order to drive the growth of high-end products such as Boguan ( 博 观 ) series; according to CMM, Haier brand aloneaccounted for 9.5% of the retail share of products with price per unit above RMB10,000.During the reporting period, Haier brand pioneered the industry with the launch of arefrigerator containing a freezing capacity of 265 litres to meet users’ need for largerstorage space. The Company was chiefly responsible for the drafting of IECInternational Refrigerator Preservation Standards and the “Level 1 HealthyPreservation” Standards 2.0, and led the development of preservation technologiesbased on international standard to address healthy diet concern. The Company hasmade technological breakthrough with the “bottom-based refrigeration system”,featuring “zero-temperature-fluctuation, zero-air-blow, and zero-delay” to ensure thefreshness of food. This technology has obtained 236 invention patents and passedthe European VDE certification and the American UL certification.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
During the reporting period, the Company focused on cell-level freezing and preservationtechnology to grasp the surge in demand for upright freezers. Sales revenue of freezersin the domestic market grew by 15%.
The Company also catered to demands for additional refrigeration devices, with theintroduction of fridge + freezer (ice bar) and fridge + wine cooler sets.
The Company continued to iterate high-end products, grasped the market opportunityfor larger volume refrigerators, high-end T-door refrigerators and French doorrefrigerators accounting for over 70% of total export revenue, which helped exportbusiness outperform the industry.
(2)Kitchen appliance businessDuring the reporting period, China’s kitchen appliance recorded revenue of RMB1.988billion, a year-on-year increase of 11.4%. Revenue of Casarte’s kitchen appliancesgrew 46.0% year-on-year, accounting for 27.1% of domestic kitchen appliancerevenue, up 6 percentage points. Dishwasher grew 26.9% year-on-year, of whichCasarte’s dishwasher increased 54.4% year-on-year. According to CMM, theCompany’s offline retail share of kitchen appliances went up 1 percentage point,reaching 8% in the first half of the year, with Casarte’s market share grew by 1.3percentage points to 3.9%; overall online retail share amounted to 4%.
During the period, the Company focused on showcasing Casarte’s best-sellingscenarios to increase presence in home improvement channels, gaining ground inretail through forming designers’ alliances, and fostering user conversion with cleaningand replacement services. The Company added 313 new Three-Winged Bird smartkitchen stores and entered 902 stores in villages and townships.
The Company continued to leverage technological expertise from GEA, FPA andCandy to establish differentiated competitiveness and gain user goodwill. (1) Casarte’srange hood continued to upgrade its smart air technology, which solved the problemof poor smoke exhaust on upper floors and allowed customization of air flow volumeaccording to users’ environment. (2) The performance of built-in ovens, steamers andintegrated steam ovens continued to improve. The precise and constant temperaturecontrol technology enabled consistent baking quality and ensured similar colour andtaste of every layer during multi-layer baking. (3) Casarte’s Zhongzihemei (中子和美)dishwasher is equipped with FPA direct-drive motor on the upper drawer, and asterilizer in the lower drawer with medical-grade light wave pasteurization, addressinggrowing demands for cleansing and caring of fine tableware.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2.Household Clothing SolutionsDuring the reporting period, the Company’s washing machine business achieved salesrevenue of RMB14.784 billion, representing a year-on-year increase of 14.1%. Accordingto CMM, the washing machine business continued to lead the industry in terms of marketshare. Online and offline shares by retail revenue were 40.2% and 45.9% respectively, ofwhich, the share of offline retail revenue grew 3.3 percentage points year-on-year.
During the period, the Company launched Casarte’s Zhongzihemei (中子和美) washer anddryer combo, which integrated washing, drying and clothes caring functions while sharingrealtime data of each process, it was designed to reduce creases, wear & tear while usinglower level of energy. Air Wash with negative ion was also used to enhance experience byremoving wrinkles, odour, and bacteria. Zhongzi series adopted an all-flat design thatperfectly blended in with the home environment. According to CMM, the Company has 75%of market share of washers above RMB10,000 per unit, demonstrating a leading advantagein the high-end market.
In addition, the Company continued to expand the tumble dryer business. In the first half ofthe year, domestic revenue of dryers grew 94% year-on-year. To solve the pain points ofincomplete drying and tangled laundry, the Company pioneered the dual-engine heat pumptechnology, to keep the laundry untangled and evenly heated, thus greatly improved userexperience. In addition, the Company has optimized its supply chain and started building anew dryer factory in Shanghai which is expected to add 2 million units in capacity. Duringthe period, the Company’s dryer business ranked No.1 with offline retail share of 37%, up5 percentage points year-on-year. Online retail sales skyrocketed 108% year-on-year.
During the period, despite pandemic outbreak, rising shipping costs and currencyfluctuations overseas, the washing machine business remained committed to brandpremiumization and product mix upgrade, meeting the needs of overseas users withdifferentiated products. According to China IoL, the Company achieved growth despitedeclining revenue and volume in the sector. Export volume rose 11.5%, accounting for 26.2%of market share, and export revenue grew 2.7%, accounting for 23.9% of market share.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
3.Air SolutionsDuring the reporting period, the Company’s air conditioner business achieved revenue ofRMB19.46 billion, an increase of 10.3% from the same period in 2021.
(1)Residential air conditioner businessThe residential air conditioner improved operational efficiency by accelerating networkexpansion. Online and offline domestic market shares continued to grow. Accordingto CMM, the Company’s offline retail share of air conditioners (standing & wall-mounted units) increased 3.96 percentage points to 19.84% in the first half of 2022,whereas online retail share rose 0.9 percentage points to 14.1%. Meanwhile, retailshare in the offline high-end market (wall-mounted units priced above RMB4,000 perunit and standing units priced above RMB10,000 per unit) reached 25.5%, anincrease of 6.3 percentage points. Residential central air conditioner continued togrow rapidly: according to China IoL, the Company’s share of residential central airconditioners was 15.88%, an increase of 1.55 percentage points year-on-year.Overseas business also boomed, data from China IoL showed that the Company’sexport revenue increased 32.26% in the first half of 2022.
During the reporting period, the Company launched ‘Haier polymerized ionic Air Wash’wall-mounted air conditioner with innovative air flow structure for improved experience,and it can remove seven types of air pollutants including PM2.5, while increasing humidityand negative ions.
During the reporting period, the Company’s residential central air conditioner recordedrevenue growth of 38%. The Company launched “Tianfudishui” (天氟地水) series withultra-low refrigerant noise and high cooling efficiency, the air conditioner, floor heatingand ventilation system could be controlled on the same screen, making this productthe focal point of air solutions at home.
The Company improved in-store product display, by demonstrating cooling & heatingspeed, low noise level and sterilization features while gaining goodwill by providing airconditioner cleaning services in the lower tier market. More than 2,800 new franchiseoutlets were added in the first half of the year. On the e-commerce channel, the Companyconcentrated on creating best-sellers such as ‘Machinist’ series to capture mid to highend markets opportunities. The Company also enhanced presence in lower-tier marketswith 30% increase in the number of outlets.
In the first half of the year, Haier’s residential air conditioner registered a growth of
32.6% in export revenue. The rapid growth was due to the Company’s commitmentto health-conscious products. The LED-UVC module in Haier’s health-boosting airconditioners can emit ultraviolet rays, it was verified by Texcell in France for its 99.998%inhibitory effect on the COVID-19 virus. The Company also enhanced competitivenessof its export business by integrating product platforms and optimizing SKU portfolio.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Significant improvement in profitability of residential air conditioner was achieved by ①streamlining SKUs through platform integration, with 17% increase in revenuecontribution per SKU. ② implementing supply chain forward integration to increasethe in-house manufacturing of five modules including circuit boards, thus, reducingmaterial cost by 5.5 percentage points. ③ establishing a full process cost committee,upgrading the databases of material suppliers, module suppliers, and technicalsuppliers, and building lean cost models to improve individual model’s gross profitmargin. Taking the components of tube modules as an example introducing lean costmodel has saved over RMB16 million.
(2)Commercial air conditioner businessThe Company provided users with customized solutions to quickly grasp marketopportunities, leading to a 26.1% revenue increase in the domestic commercial airconditioner business. In the domestic market, the Company’s share increased 0.9percentage points year-on-year to 10.4% in the first half of the year. The Companyranked second in the export market with 16% market share, up 1.5 percentagepoints year-on-year.
During the reporting period, the Company continued to innovate IoT central airconditioners and spearheaded the industry development in energy efficiencyperformance. The Company also made breakthroughs in compressor and high-speedfrequency invertor technologies. ① The Company’s EVI MRV has undergone upgradewith low-temperature heating performance improved by 30% and stable performanceunder 56?C. The application of smart IoT technology not only realized remote control,centralized coordination, and separate billing, but also performed load prediction andreal-time monitoring of refrigerant quantity through big data analysis. The600,000-square-meter Shandong University Industry Science Park project in Jinan hasa glass structure with high demand for heating and Haier’s customized IoT-basedVRF units perfectly solved the difficulties of significant difference in drop height andplacement of outdoor units and fulfilled the needs for separate billing and intelligentenergy-saving. ② The Company introduced the air-cooled modular chiller, with room-temperature unit that can produce heat under the full-working condition of–15?C to50?C to cater to the heating and cooling demand of offices, hotels, hospitals, schoolsand others scenarios, whereas the low ambient temperature unit can achieve a waterdischarge temperature of 45?C at–35?C, meeting heating demand under extremelycold conditions. ③ Luxshare ICT’s production site required high precision intemperature and humidity, Haier provided a comprehensive energy-saving solution of151 water-cooled magnetic bearing centrifugal chiller units, thus laying down foundationsfor long term strategic partnerships. ④ In response to the market opportunities from cleanenergy replacement initiated by the “carbon peaking and carbon zero” strategy, theCompany introduced building energy saving, manufacturing engineering energy savingand waste heat recovery solutions, and grew this business by 26% in the first half of theyear.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Export revenue of the Company’s commercial air conditioners rose 32% in the firsthalf of the year, attributable to: ① The implementation of carbon neutrality policy inthe European Union has fuelled consumer demand for heat pumps, the Companyquickly seized the market through its comprehensive HVAC channels and doubled itsrevenue. ② In the American market, the Company developed the market for multi-split products through its localized brands. ③ In the Southeast Asian market, theCompany built a professional workforce to make headway in the water chiller marketand established competitive edge with water-cooled magnetic bearing centrifugalchiller units in Thailand.
4.Household Water SolutionsDuring the period, the Company’s water heater and water purifier business achievedrevenue of RMB6.786 billion, an increase of 15.3% year-on-year.
(1)Water heaterDuring the reporting period, the Company continued to strengthen its leadingadvantages. The offline retail share of the Company’s water heater business was
30.6%, an increase of 3.5 percentage points year-on-year; online retail share was
33.7%, an increase of 3.4 percentage points year-on-year. Casarte consolidated itshigh-end market position through differentiated technologies such as crystal tank,seamless titanium tank and gas-electric hybrid system. It is one of the top threebrands in the industry with market share of 13.4%.
Following the launch of the limescale-free, leakage-free, and rust-free Casarte CrystalTank Galaxy series, the Company expanded its dual-tank product line-up meetinguser demand for small-size, appealing design, and large-capacity electric waterheaters. During the period, the Company’s retail share of electric water heatersreached 41.7%, an increase of 2.2 percentage points year-on-year. Casarte’s retailshare amounted to 15.5%, a growth of 1.8 percentage points year-on-year.
Gas water heater expanded its edge through technological innovation, with revenueincrease of more than 20%. During the period, the online retail share of Haier’s gaswater heaters reached 23.3%, up 2.1 percentage points compared to the sameperiod of last year; offline retail share reached 22.4%, representing a rise of 3.4percentage points year-on-year. The Company pioneered the hybrid gas/electricconstant temperature technology that alternates between gas and electricity to solveusers’ pain points of slow heat up and inconsistent temperature by providing water atconstant temperature, and create enhanced bathing experience.
During the period, the Company’s air-sourced heat pump water heater has acceleratedthe R&D of health-oriented products which featured high water temperature, disinfection,frequency conversion and energy saving. Haier brand has consolidated its leadership witha cumulative offline retail share of over 70%, and an online retail share of 65%. Haierdominated the industry with nine out of ten best- selling models.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(2)Water purifierAccording to CMM, during the period, Haier’s water purifier achieved a retail growthof 14.3% offline with retail share increased by 5 percentage points year-on-year andranking the Company amongst the top three brands in the industry.
During the period, water purifiers strengthened its competitiveness through productinnovation. Following the launch of Casarte’s Yunzun ( 云 鳟 ) mineral water purifierseries that solved users’ pain point of lack of minerals in purified water, the Companyiterated the product and introduced Yunlan (云澜) series with easy filter replacement,helping the Company ranking No. 1 in terms of market share of products aboveRMB5,000 per unit.
Water purifier concentrated on supply chain optimization and realized in-housemanufacturing of filters, water circuit boards and injection mouldings to facilitate productdevelopment, scenario implementation and strong revenue growth.
5.China operation: accelerating reform and taking the initiative to grow against theheadwind.Facing industry downturn in the first half of the year, in particular multiple pandemic outbreaks inthe second quarter, the Company managed to grow against the headwind by accelerateddigitalization and distribution network expansion as well as capturing opportunities fromgovernment’s consumption incentives. According to CMM, the market share of Haier’s majorhome appliances reached 27.4% in the first half of 2022, up 2.4 percentage points year-on-year.
Selling expense ratio was optimized by 0.9 percentage points in China, leveraging reductionin cost redundancies and improvement in marketing efficiency driven by process reform andimplementation of digital management tools; increase factory-to-DC fulfilment, whilereducing inventory and warehousing handling to reduce logistics expenses.
Strengthening distribution network to enhance competitiveness.
(1)Revenue from franchised channel grew 8% driven by ① store digitalization, as of theend of June, more than 8,000 franchised stores were operating on the platformcovering 90% of the entire network; digital marketing tools helped conversion ratereach 19% with total transaction value of RMB21.2 billion. ② unlocking the growthpotential of weak areas through targeted deployment of staff, products, andmarketing resources.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(2)In the first half of the year, retail sales grew by 25% online, driven by: ① integratedmultiple platforms online and offline, facilitating sharing of membership privileges tomaximize user value. ② continued product mix optimization, during the reportingperiod, 22 new products were launched online by high-end Casarte brand,contributing to 12% increase in ASP. Tmall flagship store’s revenue from suiteproducts increased 11 percentage points year-on-year, reaching 56% of total. ③implementing order management model using algorithm to improve accuracy of orderforecasting and inventory turnover, the proportion of factory-to-DC delivery increasedby 8 percentage points, realizing over RMB21 million reduction in expenses. ④strengthened presence on new retail platforms including TikTok and Kuaishou,facilitating promotions with rich contents and increases in private domain traffic. TheCompany has become No.1 major home appliance brand on both TikTok andKuaishou.
(3)In the first half of 2022, the Company’s retail revenue from home improvementchannels amounted to RMB5.1 billion, an increase of 66% year-on-year. During thereporting period, the Company formed strategic partnerships with leading playersincluding Red Star Macalline and Easyhome Furnishing, to share marketing and userresources. The Company also established additional presence in 69 Red StarMacalline malls, 55 Easyhome Furnishing malls, 15 Yuexing Furnishing malls, 9Ouyada malls and 185 local building materials malls.
Strengthening multi-brand strategy to meet diversified user demands
(1)Casarte brand continued to lead the high-end market with 38.6% and 75.2% sharein refrigerators and washing machines above RMB10,000 per unit as well as 31.2%share in air conditioners above RMB15,000 per unit. In the first half of 2022,Casarte’s revenue increased by 20.8% with a growth of over 30% in the first quarter.Pandemic containment measures put pressure on sales and fulfilment offline in Apriland May, however momentum restored and growth resumed to 20% in June as theoutbreaks were gradually under control.
“Connoisseur series” and “Z series” were introduced targeting high-end and youngconsumers, while more efforts were made to enhance Casarte’s comprehensive setsofferings, in the first half this year, revenue contribution of Casarte’s product suitesreached 38.6%, a year-on-year increase of 1.5 percentage points. The Company alsofocused on expanding home improvements related products, Casarte’s tumble dryer anddishwasher grew over 50% in the first half of the year, the growth of residential central airconditioners exceeded 80%. The Company accelerated the development in homeimprovement channels to better meet high-end users’ needs for one-stop comprehensivesets of products.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(2)Positioned as “Gen Z’s home appliances”, Leader achieved 7.0% growth against theheadwind. The breakthrough was made with renewed brand image and a collection ofbest sellers including “Bigger wind curtain” air conditioner that enjoying popularity withstrong blow technology, soft wind blow and smart wind control.
6.The Three-Winged Bird focused on “customizing smart home living” for users andcontinued to grow its capabilities in “scenario solutions, the Smart Home Brain,digital platforms and the 1+N system”, to optimize scenario experience andenhance user value.The Company continued to iterate its scenario solutions. During the reporting period, theCompany launched the “1+3+5+N” whole-house complete-scenario smart solution,leveraging Smart Home Brain and whole house connectivity to fulfil users’ needs in variousliving scenarios. During the reporting period, sales volume of the Company’s smart devicesgrew 14.5% year-on-year; daily active users of smart devices surged 63% year-on-year;daily active users of scenario solutions soared 88% year-on-year from 1.5 million to 2.83million.
Leveraging scenario experience, 1+N capabilities and digital tools, the Company enhancedin-store scenario solutions with increased user value. During the reporting period, theCompany added more than 200 new Three-Winged Bird touch points, sales per squaremetre has increased by 8.2% to RMB21,000/year. Sales of high-end products accountedfor 39.74% in Three-Winged Bird stores, an increase of 4.65 percentage points year-on-year.
(II)Overseas home appliances and smart home businesses
During the reporting period, the Company’s overseas business achieved revenue of RMB61.481billion, up 8.0% year-on-year. Operating profit grew 13.0% year-on-year to RMB3.634 billionoperating profit margin reached 5.9%, a growth of 0.2 percentage points year-on-year. The robustperformance exceeding the industry was contributed by the Company’s swift action to grasp high endmarket opportunity under the “Rendanheyi (人单合一)” Model, i.e. high-end brands’ revenue growth ofover 40% in North America. The Company also accelerated channel expansion, in particular in HVACchannel; strengthened local manufacturing capabilities by leveraging global supply chain platform;while mitigating the impact from escalating sea freight and chip shortages with global procurementnegotiation, resources optimization and joint procurement.
1.AmericaIn the first half, sales revenue reached RMB37.434 billion in the American market, a growthof 6.0%. High-end brands recorded 40% sales increase and continued the success in themarketplace.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
The Company’s growth in a negative industry is attributable to long term commitment of productinnovation and consumer satisfaction. The successful new launches in the marketplace includeMonogram 36 inch integrated panel-ready Column refrigerator, GE Profile? smart top load andfront load washing machine, the first washer with latest Alexa built-in, GE Profile? UltraFresh?System Dishwasher with Microban? Antimicrobial Technology, premium brand pro-range, andGE Profile? ClearView? Energy Star certified window air conditioner, all of which effectivelycapturing consumers’ demand for improved experience at home.
In the meantime, the Company dedicated to being agile, and to be the easiest to dobusiness with. The Company established favourable customer relationships in not onlynational retail channel, Builder Groups & Independents, contract channel but also DTCchannel, and win the flooring and continuously gain growth. The Company set up 4 specialworkgroups specializing in manufacture, sourcing, etc. respectively to address the risingcost pressure of H1 through leveraging global synergy platform and resources co-sharing.
The Company opened the water heating manufacturing plant in Camden, South Carolina.Through a vertical integration of the plant, the Company is able to produce high-qualitywater heaters out of steel coils, serving homes across the U.S. The new plant includesadvanced systems for metal fabrication and welding, robotics for material handling andprocessing, and enamelling of the steel. 140 positions were added in the plant. TheCompany also opened new West Coast area distribution centre (ADC) in Dixon, Californianear Sacramento. This addition to the Company’s distribution network will help ease supplychain congestion in the Company’s ADC near the Port of Los Angeles and reduce deliverytimes by half for customers in northern California, southern Oregon, and western Nevada,allowing for next day delivery.
During the reporting period, GEA released its 2021 Corporate Citizenship Report,highlighting the latest progress and five bold new goals that will power the company’sfuture work across its five core pillars: Community Engagement, Inclusion & Diversity,Operations Sustainability, Product Sustainability, and Compliance & Ethics. GEA achieved aperfect score on the Human Rights Campaign’s Corporate Equality Index (CEI), earning thedesignation as a “Best Place to Work for LGBTQ Equality” five years in a row.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2.EuropeDuring the period, the European business achieved revenue of RMB10.245 billion, an increaseof 12.7% year-on-year. According to the data from GFK, the Company’s market share in Europehas reached 6.8%, up 0.5 percentage points, growth in both revenue and volume ranked first inthe market with share expansion in multiple categories including washing machines,refrigerators, dishwashers, and kitchen appliances. The Company’s washing machinesaccounted for 12.7% of the market’s volume, an increase of 1.6 percentage points, moved oneplace up to No. 2 in the industry.
During the period, challenged by high inflation, escalated energy prices and rising shippingand commodity costs, the Company continued to strengthen high-end brand strategy,accumulated consumer insight, accelerated the localization of supply chain and enhancedchannel competitiveness to achieve steady growth. The Company met demand for energy-saving products with technological innovation. During the period, 905CD refrigerator and939 washing machines were launched under Haier brand to raise average prices. Large-volume and energy saving products such as the new ultra-thin iPro7plus washing machineand 905 refrigerators have gained market recognition. The production capacity of therefrigerator factory in Romania was gradually ramping up with accumulated output of200,000 units, contributing to the rapid growth of built-in refrigerators. In addition, newfactories for dishwashers, tumble dryers and kitchen appliances in Turkey were underway.The Company also expanded the room for growth through successive launches of built-inwashing machines and refrigerators in home improvement channels.
3.Australian and New ZealandThe Company remained committed to product premiumization and recorded sales revenueof RMB3.49 billion in Australia and New Zealand, up 0.9% year-on-year, a 9.2% growth inlocal currency. The share of retail revenue in Australia’s mainstream channels reached
17.5%, an increase of 1.7 percentage points, while the market share of retail sales inmainstream channels in New Zealand was 37%, an increase of 3 percentage points year- on-year.
Several premium SKUs were launched under both FPA and Haier brands, adding to thecompetitiveness of comprehensive solutions; the Company also became No.1 in washingmachine category in Australia with 28% market share while best-selling heat pump dryerachieved a record breaking 4.6 percentage points market share gain in one month.
A Specialized team was set up to capture the growth from strong housing market,particular efforts were made to develop new partnerships with interior designers while retailperformance was improved with enhanced offerings featuring connectivity and IoTtechnologies. In addition, the Company also increased manufacturing capacity and agility ofthe factory in Thailand, where total output grew by 14% during the reporting period.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
4.South AsiaDuring the reporting period, the Company achieved sales revenue of RMB4.823 billion, anincrease of 22.8% year-on-year. Among which,
(1)The market share in India increased by 1.2 percentage points to 10.4%. The Companypressed ahead with brand premiumization and multi-brand strategic implementation,expanded the presence in high-quality channels, and improved supply chaincapabilities. ① The Company implemented the multi-brand strategy of Casarte, Haierand Candy to increase the share of mid and high-end sales revenue to 46%, up 5percentage points year-on-year. ② The Company continued to introduce productsthat fulfilled local needs, by integrating global design resources, the Companylaunched the first French door refrigerator. The Company also introduced washingmachines with heating function to address users’ pain points. ③ The Companyenhanced presence of quality channels and expanded penetration to 70%. ④ TheCompany enhanced operation efficiency of the North Industrial Park and the PuneIndustrial Park and developed the supply chain to improve whole-processcompetitiveness.
(2)In Pakistan, the Company strengthened leadership in refrigerators, freezers, airconditioners and washing machines. The Company’s overall share reached 37%, up 2percentage points year-on-year. The Company grasped the local demand for high-efficiency and energy-saving products and launched the variable-frequency freshnesspreservation refrigerator series. The Company introduced the T3 air conditioner thatcan operate under temperature as high as 53?C, thus solving the problem ofoperation suspension under high temperature condition in the southern region. TheCompany also launched large-freezer & small-fridge refrigerator to meet large family’sdemand for more freezing space. The Company’s penetration exceeded 70% in Tier 3and Tier 4 markets with over 300 franchised stores.
5.Southeast AsiaDuring the reporting period, the Company achieved revenue of RMB2.922 billion, an increaseof 11.9% year-on-year. The Company grasped demand for large capacity and health-conscioussterilization and accelerated new product launches to grow market share.
In the Thai market, the Company accelerated high-end brand development, with the marketshare of T-door and French door refrigerators reaching 35% and topped the industry. Theresidential air conditioner UV series met the users’ needs for health-conscious sterilizationin the post-pandemic era, driving the retail volume share of air conditioners to 13.6%,ranking first in the industry. 601 large front-load washing machine gained leadership in theindustry, retail sales of front-load washing machines surged 95% in the first half of the year.The Company upgraded retail channels and seized opportunities online, the number ofstore presence in Thailand’s chain store channels increased by 40%, while the number ofretail touch points in the Philippines grew 51%. In Vietnam, the Company streamlined salesnetwork into district-province-county-township levels and improved the wholesalecapabilities and retail efficiency. In the first half of the year, sales revenue grew 80% onlinein Southeast Asia market. A flagship store was launched on Lazada in June in Vietnam, theGTM system went live in Malaysia and facilitated digital management of store display, awarehouse management system was also launched in Thailand.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
6.JapanDuring the period, the Company achieved revenue of RMB1.837 billion in Japan, up 3.3%year-on-year, a growth of 17.9% in local currency. The Company’s market share forfreezers, refrigerators and washing machines combined reached 15%, with 15.2% inrefrigerators and 42.8% in freezers, both ranked first in the industry. During the period, theCompany accelerated the transformation towards mid- to high-end products, and activelyexpanded the line-up of medium- and large-sized products. The Company seized therefrigerators’ market share with Delie series and ultra-thin T-style products under AQUAbrand, as well as 468/406 T-door and brand new ultra-narrow 3-door products under Haierbrand. The Company captured the market opportunity of health-conscious laundry broughtabout by the pandemic with AQUA’s superior line-up of variable-frequency washing machineproducts line-up and high-end heat pump front-load washers, as well as Haier’s medium-and large-size variable-frequency washing machines. The Company strengthened the freezerproduct line-up with the differentiated Slim series and the 20th anniversary edition. AQUA’shigh-end revenue contribution grew 5 percentage points to 61%, while Haier’s mid to high-end revenue contribution rose 11 percentage points to 50%.
In addition, the community laundry business continued to lead the industry with a marketshare of 70%. The Company has established more than 100 multi-scenario experiencestores offering laundry, maintenance, clothing, food, and transportation solutions with cross-industry partners including FamilyMart, P&G, ENEOS petrol stations and MUJI, to optimizeuser experience.
(III)Strengthening digitalization for all processes to improve efficiency.During the reporting period, the Company has strengthened its digital transformation focusing onCRM, lean manufacturing and R&D.
The development of a digital user operation platform. Centring around full life cycle ofproduct purchase, usage, and services, the Company leveraged its User Experiential Brain tointegrate marketing, logistics, after-sales and smart devices, so as to visualize user experience,enhance operational efficiency and user satisfaction. In the first half of 2022, 26.59 million newmembers were added, total number of platform users reached 257 million. Average ticket sizeper member was 34.3% greater than regular users. ① Establishing digital marketing platform toimprove user retention and conversion efficiency. In the first half of 2022, the number of userswith retained information
amounted to 11.41 million, a growth of 219% year-on-year; conversionreached 18.93%, an increase of 58% year-on-year; digital retail
accounted for 22.6% of totalsales, a rise of 112% year-on-year. ② Replacing service dispatch centres with system’s directmatching of user request and maintenance personnel; accurate prediction and manufacturing ofparts & components using algorithm to optimize spare parts expense ratio.
Number of users with retained information: users who allow us to manage the information they submit digitally
Digital retail: sales revenue generated by users acquired through digital tools divided by total sales revenue
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Lean manufacturing platform:
① The manufacturing platform primarily focused on the implementation of digital order management,and DFX new product introduction to improve manufacturing cost competitiveness and deliveryefficiency. For example, establish schedule workbenches, which enabled digital management ofscheduling, dispatch and logistics coordination, resulting in a 92% accuracy of dispatches with95% on-time delivery of orders.
② Digital procurement service platform facilitated collaborations with third party big dataplatforms to dynamically optimized supply side resources, increasing the proportion ofshared components to save procurement cost.
③ Supply chain platform improved management and the accuracy of demand forecasting whilefacilitating sharing of inventories. In the first half of the year, inventory turnover at regionalheadquarter level was optimized by 15%.
④ The logistics platform targeted end to end optimization of logistics expense by connecting people,cars and data to match vehicles, goods, and orders. In the first half of 2022, truck loading timewas reduced by 30%, and logistics expense ratio was reduced by 10%.
Digitalized R&D platform was established to optimize product planning process, product lifecycle management and standard system, product efficiency
was improved by 23% in the firsthalf of the year; in addition, it was also used to implement end to end cost optimization basedon modules iterations and facilitate mass application of cost-effective new materials andprocesses.
Development plan for the second half of the yearIn the second half of 2022, the Company will press ahead with the three-level brand upgradestrategy of “high-end brand, scenario-based brand and ecosystem brand”. Amid macrouncertainties, the Company will seize the opportunities of innovation and structural change in themarket through strengthened leadership and forward-looking global deployment. The Companywill define the Company’s second curve development path by strategizing the smart home trendand building a smart home appliance ecosystem. At the same time, the Company will pushforward with digital restructuring to enhance the efficiency throughout the entire value chain.
In the domestic market, the Company remains committed to high-end brand strategic implementationto increase Casarte’s market share in all categories, continue to improve competitiveness of airconditioners with a focus on developing core technologies from in-house R&D and strategic alliances;accelerate growth in consumer robotics and small appliances while grasping the suite-oriented andhome furnishing market trend as well as new opportunities in tumble dryers and dishwashers, focuson creating value for users and distributors with steady performance; accelerate digital reform tofacilitate cost reduction and efficiency enhancement.
Product efficiency: Sales revenue divided by quantity of product models
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
The Company will continue to implement high-end brand strategy in the overseas market,meeting the pressing worldwide demand for energy-efficient and green products leveraging globalR&D capabilities, introduce differentiated and efficient products; speeding up development inHVAC channels supported by localized energy efficient facilities; mitigating cost pressure withglobal supply chain management platform; with Rendanheyi (人单合一) management model andwell-established incentive programmes to inspire employees’ enthusiasm, capture growthopportunities, while minimizing market risks.
Significant changes in the Company’s operating conditions during the reportingperiod, and matters occurring during the reporting period that have andexpected to have a significant impact on the Company’s operating conditions
□ Applicable √ Not Applicable
IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD(I)Analysis of principal business1.Table of movement analysis on the related items in financial statements
Unit and Currency: RMB
| Items | Current period | Corresponding period of last year | Change (%) |
Operating revenue
| Operating revenue | 121,857,522,462.22 | 111,727,756,211.06 | 9.07 |
| Operating cost | 85,061,133,319.20 | 78,156,467,866.57 | 8.83 |
| Selling expenses | 17,605,612,224.80 | 16,731,407,296.02 | 5.22 |
| Administrative expenses | 5,132,033,156.92 | 5,047,535,410.71 | 1.67 |
| Financial expenses | –202,227,082.17 | 295,546,337.17 | –168.42 |
| R&D expenses | 4,595,691,525.07 | 3,738,316,873.21 | 22.93 |
| Net cash flow generated from operating activities | 5,964,247,657.22 | 8,442,195,160.31 | –29.35 |
| Net cash flow generated from investing activities | –4,160,668,747.75 | –3,237,011,990.71 | Not Applicable |
| Net cash flow generated from | |||
| financing activities | 2,160,173,397.21 | –9,607,019,105.46 | Not Applicable |
| Other income | 546,242,698.94 | 378,116,328.72 | 44.46 |
| Gain on fair value changes | –118,790,175.68 | 64,269,511.32 | –284.83 |
| Loss on credit impairment | –258,076,846.14 | –44,031,423.21 | Not Applicable |
| Gain from disposal of assets | 31,589,207.10 | 142,414,954.25 | –77.82 |
| Income tax expenses | 2,000,741,926.36 | 1,525,749,793.00 | 31.13 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
Analysis on the reasons for significant changes in certain indicators:
1)Reasons for changes in financial expenses: the decrease of 168.42% in finance costsover the corresponding period was primarily due to the increases in the period’sinterest income and exchange gains over the corresponding period;
2)Reasons for changes in net cash flow generated from financing activities: primarilyattributable to the new policy borrowing raised and additional issuance of proceedsduring the period;
3)Reasons for changes in other income: the increase of 44.46% in other gains over thecorresponding period was primarily due the increase in the period’s governmentgrants over the corresponding period;
4)Reasons for changes in gain on fair value changes: the decrease of 284.83% in gainson fair value changes over the corresponding period was primarily due to thedecrease in fair value changes in forward contracts over the corresponding period;
5)Reasons for changes in loss on credit impairment: primarily due to the increase inprovision for the bad debt of receivables during the period;
6)Reasons for changes in gain from disposal of assets: the decrease of 77.82% in gainson property disposal was primarily due to the decrease in the periods’ gains onproperty disposal from subsidiaries over the corresponding period;
7)Reasons for changes in income tax expenses: the increase of 31.13% in income taxover the corresponding period was primarily due to the increase in taxable profit ofthe period.
2.Detailed explanation on significant changes in the operation types and the components ofprofit or sources of profit of the Company during the period
□ Applicable √ Not Applicable
(II)Explanations on the major changes in profits caused by non-principal businesses
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(III)Analysis of assets and liabilities
√ Applicable □ Not Applicable
1.Assets and liabilities
Unit: RMB
| Items | Amount as at the end of the period | Percentage of amount at the end of the period over total assets (%) | Amount as at the end of the corresponding period of last year | Percentage of amount at the end of the corresponding period of last year over total assets (%) | Percentage of change in amount from the end of the corresponding period of last year to current period (%) | Explanations |
| Derivative financial assets | 163,084,726.42 | 0.07 | 79,819,974.01 | 0.04 | 104.32 | Mainly due to the fluctuation in value of foreign currency forward contracts |
| Bills receivable | 8,417,636,171.41 | 3.71 | 13,354,791,068.29 | 6.14 | –36.97 | Mainly due to the change of repayment terms for channels |
| Right-of-use assets | 3,664,479,071.10 | 1.62 | 2,734,678,906.53 | 1.26 | 34.00 | Mainly due to the increase in lease liabilities |
| Trading financial liabilities | 79,270,648.00 | 0.03 | 6,294,014.40 | 0.00 | 1,159.46 | Mainly due to the fluctuation in value of foreign currency forward contracts |
| Contractual liabilities | 5,397,435,938.66 | 2.38 | 10,027,091,593.60 | 4.61 | –46.17 | Mainly due to the decrease in advance receipts with performance obligations |
| Other current liabilities | 1,286,194,473.81 | 0.57 | 2,238,767,551.40 | 1.03 | –42.55 | Mainly due to the decrease in the amount of value-added tax to be transferred to output tax |
| Long-term borrowings | 2,119,243,998.96 | 0.94 | 3,038,573,824.53 | 1.40 | –30.26 | Mainly due to the reclassification to non-current liabilities due within one year |
| Bonds payable | 334,730,048.82 | 0.15 | –100.00 | Mainly due to the reclassification to non-current liabilities due within one year | ||
| Lease liabilities | 2,763,944,633.73 | 1.22 | 1,960,894,981.47 | 0.90 | 40.95 | Mainly due to the increase in lease liabilities |
| Long-term payables | 49,353,671.92 | 0.02 | 99,602,707.76 | 0.05 | –50.45 | Mainly due to the repayment of long- term payables |
| Other equity instruments | 81,340,387.43 | 0.04 | 118,017,507.59 | 0.05 | –31.08 | Mainly due to the decrease in the conversion equity component of the convertible bonds |
| Treasury stock | 3,962,689,830.07 | 1.75 | 2,424,038,819.70 | 1.11 | 63.47 | Mainly due to the share repurchase |
| Other comprehensive income | 1,689,673,248.96 | 0.75 | –1,176,851,699.92 | –0.54 | 243.58 | Mainly due to the translation of foreign currency financial statements |
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
2.Overseas Assets
√ Applicable □ Not Applicable
(1)Scope of assetsAmong the assets, overseas assets amounted to 10,833,800 (unit and currency:
RMB10,000), representing 47.80% of the total assets.
(2)Relevant information on high percentage of overseas assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Name of overseas asset | Reason for Formation | Operation mode | Operating revenue during the reporting period | Net profit during the reporting period |
Overseas Home Appliance andSmart Home Business
| Overseas Home Appliance and Smart Home Business | Overseas mergers & acquisitions and the Company’s own development | Localized Operations with the integration of R&D, manufacturing and marketing | 61,480,633,415.58 | 3,634,319,014.7 |
Note: Net profit stated in the above table represents operating profit.
3.Restrictions on major assets as of the end of reporting period
□ Applicable √ Not Applicable
4.Other explanations
□ Applicable √ Not Applicable
(IV)Analysis of investment
1.Overall analysis on external equity investment
√ Applicable □ Not Applicable
In order to establish the competitiveness of service robots for household cleaning, promotethe development of the Company’s cleaning appliance business, as well as to enhance itscorporate governance and reduce routine connected transactions, Qingdao Haier Smart LifeElectric Co. Ltd., a wholly-owned subsidiary of the Company, proposed to acquire the 100%equity interest in Qingdao TAB Robot Technology Co., LTD. held by Qingdao HaierInterconnect Technology Co. Ltd., with a cash consideration of RMB125 million. After thecompletion of the transaction, Qingdao TAB Robot Technology Co., LTD. has become awholly-subsidiary of Haier Smart. As at the end of the reporting period, the transaction hasbeen completed. For details of the investment, please refer to the Announcement of HaierSmart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao TAB RobotTechnology Co., LTD. by a Subsidiary and Connected Transaction disclosed on 29 April2022 by the Company.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(1)Significant equity investment
√ Applicable □ Not Applicable
Please see the above “1. Overall analysis on external equity investment”.
(2)Significant non-equity investment
√ Applicable □ Not Applicable
In order to further enhance the sustained high-quality growth of Haier refrigerators inthe domestic market, optimize the domestic supply chain, further strengthen themarket competitiveness in Shandong, Southwest and Central China and achieve rapidgrowth in Shandong, Southwest and Central China, the Company invested in theconstruction of a project with an annual production capacity of 2 million units of largerefrigerators in Jiulong Industrial Zone, Jiaozhou, Qingdao through a newly establishedsubsidiary, with a total investment of RMB3.07 billion. The project is currently inprogress. For details of the investment, please refer to the Announcement of HaierSmart Home Co., Ltd. on Investing in Large Refrigerator Project with an AnnualCapacity of 2 Million Units disclosed on 29 April 2022 by the Company.
(3)Financial assets measured at fair value
√ Applicable □ Not Applicable
RMB
| Items | Initial investment cost | Source of funds | Current purchase/ sale during the reporting period | Investment income during the reporting period | Changes in fair value during the reporting period |
| Wealth management products | 2,142,050,007.50 | Self-owned | –15,583,835.62 | 42,007,117.65 | 1,621,089.28 |
| Investments in other equity instruments | 3,587,415,678.11 | Self-owned | 2,596,583.32 | –56,965,311.85 | |
| Investments in trading equity instrument | 284,382,243.23 | Self-owned | –200,041,952.15 | 45,206,370.39 | –24,266,144.66 |
| Investment funds | 124,067,582.04 | Self-owned | 42,633,245.20 | –43,056,624.92 | |
| Derivative financial assets | 29,450,000.00 | Self-owned | — | 132,833,541.83 | 89,404,517.91 |
| Total | 6,167,365,510.88 | –172,992,542.57 | 222,643,613.19 | –33,262,474.24 |
Note: As of 30 June 2022, the aggregate balance of foreign exchange derivative transaction amounted toapproximately US$1.579 billion.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
(V)Sale of material assets and equity
√ Applicable □ Not Applicable
In order to focus on the main business of smart home, optimize resources allocation and realizeinvestment income, Haier Shareholdings (Hong Kong) Limited, a wholly-owned subsidiary of theCompany, transferred 25% equity interest in Qingdao Haier Mold Co., Ltd. to Qingdao HaierMold Smart Cloud Technology Co., Ltd. for an amount of RMB277 million. After the completionof the transaction, Haier Shareholdings (Hong Kong) Limited will no longer hold any equityinterest in Qingdao Haier Mold Co., Ltd. As at the end of the reporting period, the transactionhas been completed. For details of the investment, please refer to the Announcement of HaierSmart Home Co., Ltd. on the Transfer of 25% Equity Interest in Qingdao Haier Mold Co., Ltd. bya Subsidiary and Connected Transaction disclosed on 29 April 2022 by the Company.
(VI)Analysis on major subsidiaries and Investees
□ Applicable √ Not Applicable
(VII)Structured entities controlled by the Company
□ Applicable √ Not Applicable
V. OTHER DISCLOSURES
(I)Potential risks
√ Applicable □ Not Applicable
1.Risk of decreasing market demand due to macroeconomic slowdown. Sales of white goodsas durable consumer appliances are subject to users’ income level and their expectationsof future income growth which will have a certain impact on their willingness to purchaseproducts. A slowdown in macroeconomic growth causing a decline in users’ purchasingpower will have a negative impact on industry growth. In addition, a slowdown in realestate market will also have a negative impact on market demand.
2.Risk of price war caused by intensified industry competitions. The white goods industry ishighly competitive with a high degree of product homogeneity, industry concentration hascontinued to increase. However, the increase in inventory in individual sub-sectors due todemand-supply imbalance may lead to price war. Furthermore, rapid technologicaladvancements, scarce talents in the industry, shortened product life cycles and ease ofimitation are making it increasingly difficult to profit. Although new products, services andtechnologies are often associated with higher selling prices, it has become necessary forthe Company to invest more in R&D.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
3.Risk of fluctuations in raw material prices. The Company’s products and core componentsuse metal such as steel, aluminium, and copper, as well as commodities such as plasticsand foam. If the prices of raw materials continue to rise, it will put certain pressure on theCompany’s production and operations. In addition, the Company relies on third partymanufacturers and suppliers for key raw materials, components and manufacturingequipment, any disruption in supply or significant price increases by these suppliers willhave a negative impact on the Company’s businesses. As a leader in the industry, theCompany will take measures including volume & price adjustment mechanism as well ashedging to reduce the risk of raw material fluctuations on its operations.
4.Operational risk in overseas business. The Company has established production bases, R&Dcentres, and marketing centres in many parts of the world, with the proportion of overseasrevenue increasing year by year. Overseas markets are subject to political and economicsituations (including events such as military conflicts), legal systems and regulatory regimesof those countries and regions. Significant changes in these factors will pose certain risksto the Company’s local operations in these markets. The Company has taken variousmeasures to mitigate the relevant impacts, including collaborating with suppliers anddistributors, improving production efficiency, expanding supply chain to other countries, andsafety measures to protect its people and assets.
5.Risk of exchange rate fluctuations. As the Company expands its global footprint, the importand export of products involve the exchange of foreign currencies such as the U.S. dollar,the Euro, and the Japanese yen. If the exchange rates of relevant currencies fluctuate, itwill have a certain impact on the Company’s financial position. In addition, the Company’sconsolidated financial statements are denominated in Renminbi, while the financialstatements of its subsidiaries are measured and reported in the currency of their primaryeconomic environment in which the entity operates and are therefore subject to currencyexchange risk. In this regard, the Company uses hedging instruments to reduce itsexposure to exchange rate fluctuations.
6.Risk of policy changes. The home appliance industry is closely related to the consumermarket and the real estate market. Changes in macroeconomic policies, consumptioninvestment policies, real estate policies and relevant laws and regulations will affect productdemand, which in turn will affect product sales of the Company. The Company will closelymonitor changes in policies, laws, and regulations to ensure stable operation of itsbusinesses.
7.Risk of uncertainties resulted from COVID-19 outbreak. The COVID-19 outbreak that graduallyspread around the end of 2019 may lead to a further weakening of consumer demand forhome appliances, which in turn will affect the Company’s product sales. Lockdowns andtravel restrictions will reduce people’s mobility and hamper the operations of sales networks.Besides, the pandemic may also cause disruptions to the operations of distributors, logisticaldisruptions in the delivery of product could result in distributors’ dissatisfaction with theCompany’s services and consequently reduced demand for the Company’s products. TheCompany will leverage its anti-pandemic experience in the Chinese market and coordinate itsglobal resources to mitigate the impact of the pandemic on its businesses.
Haier Smart Home Co., Ltd. Interim Report 2022
Section III Management Discussion and Analysis
8.Credit risk. If the Company is not able to collect all trade receivables from its distributors,or distributors are not able to settle the Company’s trade receivables in a timely manner,the Company’s business, financial status, and operation performance may be adverselyaffected. In relation to this risk, the Company will maintain flexibility by offering credit periodof 30 to 90 days to certain distributors based on their credit history and transaction amount.
9.Inventory risk. Excess inventory might occur as the Company cannot always accurately predicttrends and events and maintain appropriate inventory levels; thus, the Company may beforced to offer discounts or promotions to manage the slow-moving inventory. On the otherhand, a shortage of inventory may lead to loss of sales opportunities for the Company.However, the Company will conduct regular impairment assessment of its inventory andmanage its inventory according to market situation.
(II)Other disclosures
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
I.INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS
| Meeting | Date | Index for details of websites designated for publishing resolutions | Date of disclosure | Resolutions approved |
| 2021 Annual General Meeting | 28 June 2022 | For details, please refer to the Announcement on Resolutions passed at the 2021 Annual General Meeting, 2022 First A Shares Class Meeting, 2022 First D Shares Class Meeting and 2022 First H Shares Class Meeting of Haier Smart Home Co., Ltd. (L2022–042) published by the Company on the website of Shanghai Stock Exchange (www.sse. com.cn) and the four major securities newspapers | 29 June 2022 | Considered and approved the resolutions related to annual report, internal control audit report, profit distribution proposal, re-appointment of auditor, external guarantees, routine connected transactions, general mandate to issue additional shares ／ repurchase shares, share option incentives, re-election of the Board of Directors ／ the Board of Supervisors and amendment of the Company’s system, etc. |
| 2022 First A Shares Class Meeting 2022 First D Shares Class Meeting 2022 First H Shares Class Meeting | Considered and approved the resolutions for share option incentives and general mandate to repurchase shares, etc. |
Preferred shareholders whose voting rights have been restored requested anextraordinary general meeting
□ Applicable √ Not Applicable
Explanation of Shareholders’ general meeting
√ Applicable □ Not Applicable
The 2021 Annual General Meeting and the 2022 First A/D/H Shares Class Meetings of the Companywas held in successive order by way of on-site voting and network voting by poll at Room B101, HaierRendanheyi Research Center, Haier Information Park, No.1 Haier Road, Qingdao, the PRC, in theafternoon on 28 June 2022, considering the annual report and other relevant resolutions. The totalnumber of the shares of the Company carrying voting right amounted to 9,337,037,472 shares (ofwhich 6,198,798,156 shares were A shares, 271,013,973 shares were D shares and 2,867,225,343shares were H shares). 820 shareholders and proxies, representing 6,456,427,607 shares or 69.15% ofthe total number of the shares of the Company carrying voting right, were present at the 2021 AnnualGeneral Meeting. 770 shareholders and proxies, representing 4,203,253,922 shares or 67.81% of thetotal number of A shares of the Company carrying voting rights, were present at the 2022 First AShares Class Meeting; 40 shareholders and proxies, representing 147,537,203 shares or 54.44% of thetotal number of D shares of the Company carrying voting rights, were present at the 2022 First DShares Class Meeting; 9 shareholders and proxies, representing 2,103,823,118 shares or 73.37% ofthe total number of H shares of the Company carrying voting rights, were present at the 2022 First H
Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
Shares Class Meeting. The Directors, supervisors, and senior management of the Company as well asthe lawyers engaged by the Company also attended the abovementioned four meetings. Theabovementioned meetings were convened by the Board of the Company and Chairman Mr. LiangHaishan presided over the meetings. The Company had 11 Directors, of whom 9 Directors attendedthe meetings (Directors Xie Juzhi and Wu Qi were unable to attend the meetings due to personalengagement); the Company had 3 supervisors, of whom 3 supervisors attended the meeting. Thesecretary to the Board of the Company attended the abovementioned meetings and other members ofsenior management of the Company were invited to attend the abovementioned meetings.
II.CHANGES IN OF DIRECTORS, SUPERVISORS AND SENIORMANAGEMENT OF THE COMPANY
√ Applicable □ Not Applicable
| Name | Position | Change Situation |
| Li Huagang | Chairman and President | Election |
| Liang Haishan | Chairman | Resignation |
| Shao Xinzhi | Vice Chairman | Election |
| Xie Juzhi | Vice Chairman | Resignation |
| Gong Wei | Director, Chief Financial Officer, and Vice President | Election |
| Wu Changqi | Director | Resignation |
| Lin Sui | Director | Resignation |
| Xie Juzhi | Vice President | Appointment |
| Song Yujun | Vice President | Appointment |
| Zhao Yanfeng | Vice President | Appointment |
| Wang Li | Vice President | Retired |
| Liu Xiaomei | Secretary to the Board | Appointment |
| Ming Guozhen | Secretary to the Board | Resignation |
Explanation of changes in Directors, supervisors and senior management of theCompany
√ Applicable □ Not Applicable
During the reporting period, the term of office of the 10th session of the Board of Directors, the Boardof Supervisors, and senior management expired, and the 10th session was renewed to the 11thsession. Some members of the directors and senior management or their positions have changed inthe 11th session as compared to the 10th session, which is shown in the preceding table (thosewithout changes are not presented).
III.PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OFCAPITAL RESERVE
Proposal for interim profit distribution and proposal for reverse conversion into sharecapital
| Whether distributed or converted | No |
Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
IV.EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OROTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF
(I)Relevant incentive events disclosed in provisional announcements but withoutsubsequent development or changes during implementation
√ Applicable □ Not Applicable
| Summary of Matters | Query Index |
| Completion of registration of grant of reserved options under the 2021 A Share Option Incentive Scheme: According to the relevant resolutions of the 25th meeting of the 10th session of the Board of Directors held by the Company on 15 December 2021, it was confirmed that the total number of reserved options granted under the Company’s 2021 A Share Option Incentive Scheme was 4,525,214. In accordance with this resolution, the Company completed the registration of the aforementioned grant of shares on 17 January 2022. | For details, please refer to the Announcement of Haier Smart Home Co., Ltd on the Completion of Registration of the Grant of the Reserved Share Options under the 2021 A Share Option Incentive Scheme disclosed by the Company on 19 January 2022. |
| Introduction of 2022 A Share Option Incentive and completion of grant: As the Company is leading the effort to upgrade its Internet of Things from “high-end brands” to “scenario brands”, and to “ecological brands”, the Company needs to have long-term planning to ensure the achievement of its strategic results and also improve its long-term incentive scheme in line with the above objectives. Therefore, considered and approved at the General Meeting and Class Meeting convened on 28 June 2022, the Company introduced the 2022 A Share Option Incentive. And as considered and approved at the Board Meeting held on the same date, 104,756,896 options were granted to the incentive recipients. | For details, please refer to the 2022 A Share Option Scheme of Haier Smart Home Co., Ltd (draft) disclosed by the Company on 29 April 2022, the Announcement on the Adjustment to the Company’s 2022 A Share Option Incentive Scheme and Grant of 2022 A Share Option to Incentive Recipients by Haier Smart Home Co., Ltd disclosed by the Company on 29 June 2022, and relevant contents of the announcements of resolutions at the General Meeting. |
Haier Smart Home Co., Ltd. Interim Report 2022
Section IV Corporate Governance
| Summary of Matters | Query Index |
| Introduction of New Phase of A Share and H Share Employee Stock Ownership Plan: In order to further improve the governance mechanism of the Company, create shareholder value and promote the comprehensive implementation of the Company’s IoT smart home ecological brand strategy, as considered and authorized at the 2020 Annual General Meeting held by the Company on 25 June 2021, the Company considered and introduced the 2022 H Share Core Employee Stock Ownership Plan of Haier Smart Home Co., Ltd (Draft) and the 2022 A Share Core Employee Stock Ownership Plan of Haier Smart Home Co., Ltd (Draft) at the 28th meeting of the 10th session of the Board of Directors held by the Company on 28 April 2022. During the reporting period, the Company promoted the opening of accounts and other related works for the 2022 A Share and H Share Employee Stock Ownership Plan. | For details, please refer to the 2022 A Share Core Employee Stock Ownership Plan of Haier Smart Home Co., Ltd (Draft), the 2022 H Share Core Employee Stock Ownership Plan of Haier Smart Home Co., Ltd (Draft) and relevant contents disclosed by the Company on 29 April 2022. |
(II)Incentive events not disclosed in provisional announcements or with subsequentdevelopment
Equity incentive
□Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
Employee stock ownership plan
□ Applicable √ Not Applicable
Other Incentives
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and SocialResponsibilities
1.ENVIRONMENTAL INFORMATION(I)Explanation of the environmental protection status of companies and theirimportant subsidiaries that are key emission units announced by theenvironmental protection department
√ Applicable □ Not Applicable
1.Information on pollutant discharge
√ Applicable □ Not Applicable
The Company’s indirect non-wholly owned subsidiaries Zhengzhou Haier Air-conditioningCo., Ltd. (“Zhengzhou Air-conditioning”), Qingdao Jiaonan Haier Washing Machine Co., Ltd.(“Jiaonan Washing Machine”), Hefei Haier Refrigerator Co., Ltd. (“Hefei Refrigerator”),Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan Haier Freezer Co.,Ltd. (“Wuhan Freezer”), Dalian Haier Refrigerator Co., Ltd. (“Dalian Refrigerator”), QingdaoHaier (Jiaozhou) Co., Limited (“Jiaozhou Air-Conditioning”), Qingdao Haier SpecialRefrigerator Co., Ltd. (“Huangdao Special Refrigerator”) and Tianjin Haier Cleaning ElectricalAppliances Co., Ltd. (“Tianjin Washing Machine”) are among the key emission unitsannounced by the local environmental protection department.
The main information on pollutant discharge is as follows:
(1)Zhengzhou Air-conditioning
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuanceof Pollutant Permit—Wastewater Treatment (for Trial) (HJ 978–2018),Development Zone Energy should apply for a pollutant discharge permit and detect17 types of pollutants (including specific pollutants), namely, total cadmium, totalchromium, total mercury, total lead, total arsenic, hexavalent chromium, COD,ammonia nitrogen, total phosphorus, total nitrogen, PH, suspended solids, chroma,petroleum, BOD, rate of flow and temperature
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, north of the wastewatertreatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 20.74 mg/L | 0.24 tons | 6.25 tons | No |
| 2 | Ammonia nitrogen | 3.72 mg/L | 0.02 tons | 0.63 tons | No |
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962–2015)
(2)Jiaonan Washing Machine
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuanceof Pollutant Permit—Wastewater Treatment (for Trial) (HJ 978–2018),Development Zone Energy should apply for a pollutant discharge permit and detect17 types of pollutants (including specific pollutants), namely, total cadmium, totalchromium, total mercury, total lead, total arsenic, hexavalent chromium, COD,ammonia nitrogen, total phosphorus, total nitrogen, PH, suspended solids, chroma,petroleum, BOD, rate of flow and temperature.
② Way of discharge: intermittent discharge
③ Number and distribution of discharge outlets: one, north of the wastewatertreatment plant, pipeline discharge
④ Concentration and total amount of discharge and approved total amount of
discharge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 60.3mg/L | 3.091 tons | 60 tons | No |
| 2 | Ammonia nitrogen | 7.67mg/L | 0.396 tons | 5.48 tons | No |
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for
Discharge to Municipal Sewers (GBT 31962-2015)
(3)Hefei Refrigerator
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuanceof Pollutant Permit—Wastewater Treatment (for Trial) (HJ 978–2018),Development Zone Energy should apply for a pollutant discharge permit and detect8 types of pollutants (including specific pollutants), namely, total nitrogen (as N),total phosphorus (as P), rate of flow, suspended solids, PH, Chemical oxygendemand (COD), ammonia nitrogen (NH3-N), and five-day biochemical oxygendemand (BOD5)
Exhaust gas. According to the Volatile Organic Unorganized Emission ControlStandard (GB 37822–
–2019), Development Zone Energy should apply for apollutant discharge permit and detect pollutants. Main types of atmosphericpollutants: particulate matter, non-methane total hydrocarbons
② Way of discharge: continuous discharge
③ Number and distribution of discharge outlets: 1 sewage, at the north entrance
of the refrigerator Park; 22 exhaust gas, at the refrigerator block A(10), blockB(10), and Phase III Factory(2)
④ Concentration of discharge and discharge standard:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 101.603 mg/L | 17.2 tons | 300 tons | No |
| 2 | Ammonia nitrogen | 12.523 mg/L | 2.13 tons | 28 tons | No |
| 3 | total nitrogen | 33.95 mg/L | 5.68 tons | 20 tons | No |
| 4 | total phosphorus | 1.635 mg/L | 1.082 tons | 5 tons | No |
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962–2015)
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
(4)Wuhan water heater
① Main pollutants:
Wastewater. According to the Technical Specification for Application and Issuanceof Pollutant Permit—Wastewater Treatment (for Trial) (HJ 978–2018), Wuhanwater heater should apply for a pollutant discharge permit and detect 9 types ofpollutants (including specific pollutants), namely, COD, total zinc, suspended solids,ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5), PH,anionic surface active agent, total phosphorus, and animal and vegetable oils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the southwest of thewastewater treatment plant, pipeline discharge
④ Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 40 mg/L | 4.58 tons | 9.075 ton | No |
| 2 | Ammonia nitrogen | 0.336 mg/L | 0.0385 tons | 0.9075 ton | No |
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962–2015)
(5)Wuhan freezer
① Main pollutants:
Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit—Wastewater Treatment (for Trial) (HJ 978–2018),Wuhan freezer should apply for a pollutant discharge permit and detect 9 typesof pollutants (including specific pollutants), namely, COD, total zinc, suspendedsolids, ammonia nitrogen (NH3-N), five-day biochemical oxygen demand (BOD5),PH, anionic surface active agent, total phosphorus, and animal and vegetableoils.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, on the south of the wastewatertreatment plant, pipeline discharge
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 46 mg/L | 0.96 tons | 4.3628 tons | No |
| 2 | Ammonia nitrogen | 0.497 mg/L | 0.01 tons | 0.4365 ton | No |
⑤ Pollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962–2015)
(6)Dalian Refrigerator
① Main pollutants:
Wastewater. According to the Environmental Impact Report Form ofConstruction Project, a total of 6 types of pollutants should be tested, namely, PH,COD, total phosphorus, suspended solids, total nitrogen and petroleum.
② Way of discharge: indirect discharge
③ Number and distribution of discharge outlets: one, energy wastewater plant,
pipeline discharge
④ Concentration and total amount of discharge and approved total amount ofdischarge:
The concentration and total amount of pollutant discharge subject to approvalfor the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 0mg/L | 0 tons | Pollutant discharge permit management, no requirements regarding the total amount | No |
| 2 | Ammonia nitrogen | 0mg/L | 0 tons | Pollutant discharge permit management, no requirements regarding the total amount | No |
⑤ Pollutant discharge standards implemented: Integrated Wastewater DischargeStandard of Liaoning Province (DB 21/1627–2008)
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
(7)Jiaozhou Air-Conditioning
① Main pollutants:
Hazardous waste. According to the national directory, 10 types of hazardous wastedetected are namely: waste oil, sludge, slag powder, computer boards, activatedcarbon, cotton filters, lightning tubes, soldering flux buckets, paint buckets andpackaging bags.
② Way of discharge: Hazardous waste is transferred to a qualified hazardous wastedisposal unit for disposal.
③ Total amount of discharge and approved total amount of discharge:
| No. | Name of hazardous waste | Total amount of transfer (tons) | Total amount of the management plan (tons) | Whether it is excessive discharge |
| 1 | Packaging bags | 0.08 | 0.5 | no |
| 2 | Waste oil | 17.7 | 40 | no |
| 3 | Slag powder | 15.48 | 30 | no |
| 4 | Forklift battery | 17.92 | 22 | no |
| 5 | Sludge | 3.68 | 5 | no |
| 6 | Paint buckets | 1 | 4 | no |
④ Pollutant discharge standards implemented: Directory of National HazardousWastes (Version 2021), Law of the People’s Republic of China on thePrevention and Control of Environmental Pollution by Solid Waste
(8)Huangdao Special Refrigerator
① Main pollutants:
Organic exhaust gas. According to legislative requirements, Development ZoneEnergy should apply for a pollutant discharge permit and detect the primarytype of pollutant in the atmosphere, namely non-methane hydrocarbon (VOC),with the maximum concentration of discharge not exceeding 60mg/m?. Aqualified third-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a quarterly basis.
② Way of discharge: Continuous discharge
③ Number and distribution of discharge outlets: Four in total, one absorption exhaustport at the northeast corner of the plant roof, and two welding exhaust portsand one foam exhaust port at the west side of the plant roof
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
④ Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organicexhaust gas
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | VOC | 2.8mg/m? | 0.52 tons | No control regarding the total amount of discharge of VOC | no |
⑤ Implementation of the Volatile Organic Compounds Discharge Standards Part 7:
Other Industries in Shandong Province (DB37/2801.7–2019)
(9)Tianjin Washing Machine
① Main pollutants:
Wastewater. According to legislative requirements, a pollutant discharge permitshould be applied and enforced, and 4 types of pollutants should be tested, namely,COD, ammonia nitrogen, PH and suspended solids.
② Way of discharge: Indirect discharge
③ Number and distribution of discharge outlets: one, the wastewater plant, pipelinedischarge
④ Concentration and total amount of discharge and approved total amount ofdischarge:
According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:
| No. | Name of pollutant | Concentration of discharge | Total amount of discharge | Approved total amount of discharge | Whether it is excessive discharge |
| 1 | COD | 23mg/L | 0.177 tons | 34.742 tons | no |
| 2 | Ammonia nitrogen | 0.628mg/L | 0.0048 tons | 3.127 tons | no |
⑤ Pollutant discharge standards implemented: Integrated wastewater dischargestandard (DB12356–2018)
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
2.Construction and operation of pollution prevention and treatment facilities:
√ Applicable □ Not Applicable
Zhengzhou Air-conditioning, Jiaozhou Air-Conditioning, Wuhan Freezer, Wuhan WaterHeater and Tianjin Washing Machine have one, one, one, two and one wastewatertreatment plants with a designed treatment capacity of 550 tons/day, 300 tons/day, 550tons/day, 300 tons/day and 260 tons/day, and 300 tons/day, respectively; there is onewastewater treatment plant in Dalian Haier Park responsible for collecting and treating thewastewater produced by the Dalian Park Companies with a wastewater treatment capacityof 300 tonnes/day. The construction, maintenance and daily operation of all wastewatertreatment facilities are conducted in accordance with the requirements of national and localenvironmental laws and regulations. Information on all wastewater discharge is subject to24-hour online monitoring and such monitored information is transmitted to environmentalauthorities in a real-time manner. All equipment is operating normally. In addition, theCompany fully promotes all plants to install exhaust treatment facilities and VOCs onlinemonitoring facilities. All equipment is operating normally and exhaust produced is treated bythe prevention and treatment facilities before compliant release and is monitored.
3.Environmental impact assessment of construction projects and other environmentalprotection administrative permits
√ Applicable □ Not Applicable
The Company and its subsidiaries execute construction project implementation and productionin accordance with the requirements of laws and regulations and strictly comply with the “threesimultaneous” requirements of environmental protection for construction projects in the processof environmental impact assessment, and have passed environmental assessment acceptanceand are not involved in any environmental illegal conducts such as construction before approval.
4.Emergency plans for environmental incidents
√ Applicable □ Not Applicable
The Company and its subsidiaries have formulated Emergency Plans for EnvironmentalIncidents in accordance with the requirements of laws and regulations and organized drills, andcontinue to improve and upgrade the plans based on drill results.
5.Self-monitoring environmental programs
√ Applicable □ Not Applicable
The Company complies with national and local environmental standard requirements inrespect of all pollutant discharge. Wastewater collected is subject to standard treatmentand is released in a compliant manner. It is under real-time monitoring through theautomatic online wastewater monitoring system, which shares its information with Haier
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
Smart Energy System. In March 2017, the Company passed the upgraded certification inrelation to ISO14001 environment management system. In May 2021, a professionalcertification firm was appointed to conduct a review and audit on the operation ofISO14001 system in 2020, where satisfactory results were obtained to demonstrate itsgood operating condition; In May 2022, a second review and audit was conducted on theoperation of the system in 2021.
6.Administrative penalty due to environmental issues during the Reporting Period
□ Applicable √ Not Applicable
7.Other environmental information that should be disclosed
□ Applicable √ Not Applicable
(II)Explanation on environmental protection of companies other than majorpollutant-emission units
√ Applicable □ Not Applicable
1.Administrative penalty due to environmental issues
□Applicable √ Not Applicable
2.Other environmental information disclosure with reference to majorpollutant-emission units
√ Applicable □ Not Applicable
All division of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the“three simultaneous” requirements of environmental protection for construction projects inthe process of environmental impact assessment, and have passed environmentalassessment acceptance and are not involved in any environmental illegal conducts such asconstruction before approval.
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
Through Haier Smart Energy Center, an industry leading energy big data analysis system, theCompany implements centralized dynamic monitoring and digitalized management in respect ofmajor energy consumption, such as water, electricity and gas, of all plants across the countryby utilizing automatized and informationalized technology and an integrated managementmodel. It automatically collects precise information on energy resources and completesprediction and analysis of energy consumption information to optimize energy adjustment,reduce energy consumption per unit production to achieve low-carbon production.
3.Reasons for failure to disclose other environmental information
□Applicable √ Not Applicable
(III)Explanation of the subsequent progress or changes in the disclosure ofenvironmental information content during the Reporting Period
√ Applicable □ Not Applicable
The Company will continue to maintain and improve existing results and strictly comply with existingenvironmental protection and emission standards to achieve compliant emission.
(IV)Relevant information favorable to ecological protection, pollution prevention andcontrol and environmental responsibility fulfillment
√ Applicable □ Not Applicable
The Company proactively advances product iteration and upgrade and participates in thedevelopment of ecological environment. The Company took part in the formulation of energyconsumption standard of household appliances organized by Beijing Institute of Standardizationto promote the shift to energy-saving models in the household appliance field. We cooperatedwith relevant organizations in relevant refrigerant research and development projects to strive forthe application of refrigerants with lower greenhouse gas emission. Meanwhile, the Company andHaier’s suppliers, among others, cooperated in the research and development of low-carbonrelated technology, such as recyclable packaging materials, to facilitate environmental protection.
The Company proactively responds to the household appliance recycling policies of the NDRC bylaunching a household appliance recycling project and investing in the construction of Haier’shousehold appliance recycling interconnection factory. With the recycling business as the startingpoint, we tapped into the disintegration process and implemented extended accountability forhousehold appliance manufacturers. The measure will significantly boost the efficiency ofresource utilization to achieve sustainable development.
Haier Smart Home Co., Ltd. Interim Report 2022
Section V Environmental and Social Responsibilities
(V)Measures taken during the Reporting Period to reduce its carbon emission andtheir effectiveness
√ Applicable □ Not Applicable
As the leading enterprise in the industry, the Company proactively seeks ways to achieve carbonneutrality and carbon peak and optimize industrial structure and energy structure. Currently, theCompany has designed and established Haier Zhong De Smart Park, Haier’s first “beacon base”in the world to achieve carbon neutrality, and intends to expand its coverage within theCompany in the future, with a view to reaching carbon neutrality for Haier Smart Home’sindustrial parks in the PRC within a reasonable time, while giving due regards to comprehensiveelements, such as costs.
2.Particulars on the efforts to consolidate and expand its achievements in povertyalleviation and rural area invigoration
√ Applicable □ Not Applicable
In accordance with the national targeted poverty alleviation plan and documentationrequirements, the Company emphasizes poverty alleviation and conducts targeted povertyalleviation within the authority granted on the general meeting in respect of, among others,donations.
For years, the Company has made genuine contributions to education to improve the basiccultural quality of people in poverty and skills of families in poverty, with an emphasis onshoring up the weak link of the education sector and stopping inter-generational poverty.As of now, the Company, Haier Group Companies (the effective controller of the Company)and its subordinate enterprises have constructed over 300 hope primary schools and hopesecondary schools, covering 26 provinces, municipalities and autonomous regions in thePRC. It also offers continuous resource assistance to such schools every year to effectivelyboost the base education capacity in poverty regions and improve education quality. At thesame time, the Company focuses on poverty alleviation in agricultural development andpublic welfare fund support to actively respond to the government’s call for socialresponsibility fulfillment. In the first half of 2022, the Company spent approximatelyRMB6.62 million on targeted poverty alleviation.
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
I.FULFILLMENT STATUS OF UNDERTAKINGS(I)The undertakings made by the ultimate controllers, shareholders, related parties,acquirer as well as the Company and other relevant parties during or up to thereporting period
√ Applicable □ Not Applicable
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Undertaking related to significant reorganization | Eliminate the property right defects in land 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 then 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. | 27 September 2006, long-term | Yes | Yes |
| Address competition issues | Haier Smart Home Co., Ltd. | Prior to the Transaction (hereinafter “the Transaction” refers to the transaction in relation to the privatisation of Haier Electronics by Haier Smart Home), Haier Electric was a controlling subsidiary of the Company and did not compete with the Company; after the completion of the Transaction, Haier Electric became a wholly- owned or controlling subsidiary of the Company and no new competition with the Company existed or will arise. There is no new peer competition or potential competition between the Company and other related parties controlled by the controlling shareholders or the de facto controllers of the Company. | 31 July 2020 long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Address connected transactions | Haier Group Corporation | 1. The Transaction constitutes a connected transaction and the connected transaction procedures performed under the Transaction are in compliance with the relevant regulations. The pricing of the connected transaction is fair and there are no circumstances under which the interests of the listed company and the non-connected shareholders are prejudiced. 2. Upon completion of the Transaction, the Company and its affiliates will take lawful and effective measures to minimize and regulate the connected transactions with the listed company, take the initiative to safeguard the interests of the listed company and all shareholders, and refrain from taking advantages of connected transactions for improper benefits. 3. Provided that there is no conflict with laws and regulations, if connected transactions between the Company and its affiliates and the listed company occur or exist which cannot be avoided or for which there are reasonable reasons, the Company and its affiliates will legally enter into a transaction agreement with the listed company to ensure strict compliance with the procedures of connected transactions required by the laws, regulations, regulatory documents and the articles of association of the Company, conduct transactions in accordance with the principles of marketability and fair prices to ensure the fairness and compliance of connected transactions, and refrain from taking advantages of such connected transactions to engage in any acts that are detrimental to the interests of the listed company or its minority shareholders, and at the same time, comply with the information disclosure obligations in accordance with relevant regulations. | 29 July 2020, long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Address competition issues | Haier Group Corporation | 1. The Company and its controlling subsidiary, Haier COSMO Co., Ltd., were principally engaged in investment business during the reporting period, and the Company and its controlling subsidiary, Haier COSMO Co., Ltd. (including its subsidiaries and entities with more than 30% shareholding), have no real or potential competition with Haier Smart Home; 2. the domestic and overseas white goods businesses and assets held by the Company (including the Company’s subsidiaries and entities with more than 30% shareholding) have been injected into Haier Smart Home through asset consolidation and equity transfer in accordance with the commitments made by the Company in January 2011 and the requirements for adjusting such commitments as considered and approved by Haier Smart Home at its 2014 annual general meeting; 3, Since the acquisition of 100% of Haier New Zealand Investment Holding Company Limited (which holds 100% of the shares in Fisher & Paykel Appliances Holdings Limited) by Haier Smart Home’s offshore subsidiary, Haier Singapore Investment Holding Co., Ltd., following the completion in July 2018, the Company (including the Company’s subsidiaries and entities with more than 30% shareholding) and Haier Smart Home do not have any competing relationship in any business areas both within and outside the PRC. During the reporting period, the Company (including the Company’s subsidiaries and entities with more than 30% shareholding) did not have any new peer competition with Haier Smart Home; 4. Upon completion of the Transaction, the Company (including the Company’s subsidiaries and entities with more than 30% shareholding) and its affiliates do not have any new or potential peer competition with Haier Smart Home; 5. During the period when the Company is the controlling shareholder of Haier Smart Home and the shares of Haier Smart Home are listed on the Hong Kong Stock Exchange, the Company and its other subsidiaries and entities with more than 30% shareholding will not operate any business that competes with the business engaged by Haier Smart Home and will not engage in real or potential competition with Haier Smart Home. | 29 July 2020, long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Others | Haier Group Corporation | Upon completion of the Transaction, the Company will strictly comply with the Company Law, the Securities Law, the relevant regulations of the China Securities Regulatory Commission, the Shanghai Stock Exchange and the articles of association of Haier Smart Home, etc., fairly exercise shareholders’ rights and fulfill shareholders’ obligations, refrain from taking advantage of its shareholding position for improper benefits, ensure the listed company will continue to be completely separate from the Company and other enterprises on which the Company exercises control and exerts significant influence in terms of management, personnel, assets, finance, organization and business operations, and maintain the continued independence of the listed company in terms of management, personnel, assets, finance, organization and business operations. Upon completion of the Transaction, the Company will comply with the provisions of the Notice on Several Issues concerning Regulating Fund Transactions between Listed Companies and Their Affiliates and the External Guarantee of Listed Companies and the Circular of China Securities Regulatory Commission and China Banking Regulatory Commission on Regulating the External Guaranties Provided by Listed Companies to regulate the external guarantees by listed companies and their subsidiaries, and will not misappropriate the funds of the listed company and their subsidiaries. The Company undertakes to strictly fulfill the above commitments. In the event that the interests of the listed company are damaged as a result of any breach of the above commitments by the Company and other enterprises on which the Company exercises control and exerts significant influence, the Company will legally bear the corresponding liability for damage. | 29 July 2020, long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Address connected transactions | HCH (HK) INVESTMENT MANAGEMENT CO., LIMITED | 1. The Transaction constitutes a connected transaction and the connected transaction procedures performed under the Transaction are in compliance with the relevant regulations. The pricing of the connected transaction is fair and there are no circumstances under which the interests of the listed company and the non-connected shareholders are prejudiced. 2. Upon completion of the Transaction, the Company and other enterprises on which the Company exercises control will take lawful and effective measures to minimize and regulate the connected transactions with the listed company, take the initiative to safeguard the interests of the listed company and all shareholders, and refrain from taking advantages of connected transactions for improper benefits. 3. Provided that there is no conflict with laws and regulations, if connected transactions between the Company and other enterprises on which the Company exercise control and the listed company occur or exist which cannot be avoided or for which there are reasonable reasons, the Company and other enterprises on which the Company exercises control will legally enter into a transaction agreement with the listed company to ensure strict compliance with the procedures of connected transactions required by the laws, regulations, regulatory documents and the articles of association of the Company, conduct transactions in accordance with the principles of marketability and fair prices, and refrain from taking advantages of such connected transactions to engage in any acts that are detrimental to the interests of the listed company or its minority shareholders, and at the same time, comply with the information disclosure obligations in accordance with relevant regulations. 4. Any covenants and arrangements between the Company and other enterprises on which the Company exercise control and the listed company in relation to connected transactions shall not prevent the other party from conducting business or dealing with any third party for its own benefit and on equal competitive terms in the market. | 29 July 2020, long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Undertaking related to refinancing | Eliminate the property right defects in land 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 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 (L2014–005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. | 24 December 2013, long-term | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
| Background of undertakings | Type of undertakings | Covenanter | Contents of undertakings | Date and term of undertakings | Any deadline for performance | Whether performed in a timely and strict way |
| Eliminate the property right defects in land etc. | Haier Smart Home Co., Ltd. | The Company undertakes that it will eliminate the property rights defects of the Company and main subsidiaries within five years with reasonable business effort since 24 December 2013, 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. As at the end of 2018, the Company has resolved the property defects of itself and its eight major subsidiaries. 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 was extended for three years based on the original deadline. At present, the property defects of the five major subsidiaries have been properly resolved by applying for property ownership certificates, relocating the defective properties and categorizing them as reserve alongside the lands, divesting the defective properties with the equity of the subsidiaries and other means. The Company has fulfilled this undertaking. | 24 December 2013, eight years | Yes | Yes | |
| Undertakings related to equity incentive | Others | Haier Smart Home Co., Ltd | The Company will not provide loans or any other forms of financial assistance, including guaranteeing their loans, to any incentive recipient for acquiring relevant stock options under this incentive plan. | 15 September 2021/28 June 2022, the completion of equity incentive implementation | Yes | Yes |
| 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 2025. For more details, please refer to the Announcement of Haier Smart Home Co., Ltd. on the Changes of Some Commitments on Asset Injection (L2020–024) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 30 April 2020. | December 2015 to June 2025 | Yes | Yes |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
II.NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLINGSHAREHOLDERS AND OTHER RELATED PARTIES DURING THEREPORTING PERIOD.
□ Applicable √ Not Applicable
III.INFORMATION ON NON-COMPLIANCE GUARANTEES
□ Applicable √ Not Applicable
IV.INFORMATION ON INTERIM AUDIT
□ Applicable √ Not Applicable
V.CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDITOPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITSHANDLING
□ Applicable √ Not Applicable
VI.MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING
□ Applicable √ Not Applicable
VII.MATERIAL LITIGATION AND ARBITRATION MATTERS
□ Material litigation and arbitration matter during the reporting period
√ No material litigation and arbitration matters during the reporting period
VIII.PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITSDIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECTOF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION
□ Applicable √ Not applicable
IX.EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY ANDITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERDURING THE REPORTING PERIOD
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
X.SIGNIFICANT RELATED-PARTY TRANSACTIONS(I)Related-party transactions relating to daily operation
1.Matters that have been disclosed in temporary announcements and with nosubsequent progress or change
□ Applicable √ Not applicable
2.Matters that have been disclosed in temporary announcements and with subsequentprogress or change
√ Applicable □ Not applicable
Pursuant to the “Resolution on Proposal to the General Meeting to Authorize the Board ofDirectors and its Authorized Persons to Sign the Framework Agreement on ConnectedTransactions for 2020–2022” 《( 关于提请股东大会授权董事会及其授权人士签署2020–2022年关联交易框架协定的议案》) considered and approved at the 10th meeting of the 10thsession of the Board of Directors and the Second Extraordinary General Meeting of 2020,the “Resolution on Signing the Framework Agreement on Connected Transactions” 《( 关 于签署关联交易框架协定的议案》) considered and approved at the 14th meeting of the 10thsession of the Board of Directors, and the “Resolution of Haier Smart Home Co., Ltd. onRenewing the Framework Agreement on Financial Services with Haier Group Corporationand Estimated Amount of Connected Transactions” 《( 海尔智家股份有限公司关于与海尔集团公司续签〈金融服务框架协定〉暨预计关联交易额度的议案》) considered and approved atthe 18th meeting of the 10th session of the Board of Directors and the 2020 Annual GeneralMeeting, the Company has made estimation on the connected transactions for thenext three years, as detailed in the aforesaid announcements regarding the resolutions ofthe meetings.
For the actual performance of the Company’s connected transactions in the first half of 2022,please refer to “XII. Related parties and related-party transactions” under section X—Financialand Accounting Report set out in this regular report.
3.Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
(II)Related-party transactions regarding acquisition or disposal of assets/equity1.Matters disclosed in temporary announcements and with no subsequent progressor change
√ Applicable □ Not applicable
| Summary of matters | Query index |
| The acquisition of 100% equity interest in Qingdao TAB Robot Technology Co., LTD. and connected transaction: In order to establish the competitiveness of service robots for household cleaning and promote the development of the Company’s cleaning appliance business, as well as to enhance its corporate governance and reduce routine connected transactions, Qingdao Haier Smart Life Electric Co., Ltd., a wholly-owned subsidiary of the Company, acquired 100% equity interest in Qingdao TAB Robot Technology Co., LTD., which was owned by Qingdao Haier Interconnect Technology Co., Ltd., at a consideration of RMB125.0 million in cash. | For details, please refer to the Announcement of Haier Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao TAB Robot Technology Co., LTD. by a Subsidiary and Connected Transaction disclosed on 29 April 2022 |
| The transfer of 25% equity interest in Qingdao Haier Mold Co., Ltd. and connected transaction: In order to focus on the smart home appliance business, optimize resource allocation and generate investment income, Haier Shareholdings (Hong Kong) Limited, a wholly-owned subsidiary of the Company, transferred 25% equity interest in Qingdao Haier Mold Co., Ltd. to Qingdao Haier Mold Smart Cloud Technology Co., Ltd., at a consideration of RMB277.0 million in cash. | For details, please refer to the Announcement of Haier Smart Home Co., Ltd. on the Transfer of 25% Equity Interest in Qingdao Haier Mold Co., Ltd. by a Subsidiary and Connected Transaction disclosed on 29 April 2022 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
2.Matters that have been disclosed in temporary announcements and with subsequentprogress or change
□ Applicable √ Not applicable
3.Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
4.If performance agreement is involved, the performance achieved during the reportingperiod shall be disclosed
□ Applicable √ Not applicable
(III)Significant related-party transactions of joint external investment
1.Matters that have been disclosed in temporary announcements and with nosubsequent progress or change
□ Applicable √ Not applicable
2.Matters that have been disclosed in temporary announcements and with subsequentprogress or change
□ Applicable √ Not applicable
3.Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
(IV)Amounts due to or from related parties
1.Matters that have been disclosed in temporary announcements and with nosubsequent progress or change
□ Applicable √ Not applicable
2.Matters that have been disclosed in temporary announcement and with subsequentprogress or change
□ Applicable √ Not applicable
3.Matters not disclosed in temporary announcements
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
(V)Financial business between the Company and the finance company with whichit has a related relationship, the company’s controlling finance company andrelated parties
√ Applicable □ Not applicable
1.Deposit business
√ Applicable □ Not applicable
Unit and Currency: RMB
Changes of the period
Related partyRelationship
Maximum dailydeposit limit
Range of deposit
interest
Balance as at the
beginning of the
period
Total amountdeposited during
the period
Total amountwithdrawn during
the period
Balance as at theend of the period
Haier Finance Co.,Ltd.
Subsidiary of Haier
Group
32 billion 0.385% to 3.5% 28,744,602,432.65 225,622,196,116.58 222,369,714,439.54 31,997,084,109.69
Total / / / 28,744,602,432.65 225,622,196,116.58 222,369,714,439.54 31,997,084,109.69
2.Lending business
√ Applicable □ Not applicable
Unit and Currency: RMB
| Changes of the period | |||||||
| Related party | Relationship | Loan limit | Range of loan interest | Balance as at the beginning of the period | Total amount deposited during the period | Total amount withdrawn during the period | Balance as at the end of the period |
| Haier Finance Co., Ltd. | Subsidiary of Haier Group | 7 billion | 1.81%–2.00% | 336,507,659.12 | 53,834,130.12 | 282,673,529.00 | |
| Total | / | / | / | 336,507,659.12 | 53,834,130.12 | 282,673,529.00 | |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
3.Trustee business or other finance businesses
√ Applicable □ Not applicable
Unit and Currency: RMB
| Related party | Relationship | Type of business | Total amount | Actual number of occurrence |
| Haier Finance Co., Ltd. | Subsidiary of Haier Group | Foreign exchange derivatives products | 5.5 billion | 188,966,929.21 |
| Haier Finance Co., Ltd. | Subsidiary of Haier Group | Service charge | 80 million | 13,688,276.03 |
4.Others
□ Applicable √ Not applicable
(VI)Other material related transactions
□ Applicable √ Not applicable
(VII)Others
□ Applicable √ Not applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
XI.SIGNIFICANT CONTRACTS AND THEIR EXECUTION
Trusteeship, contracting and leasing
□ Applicable √ Not applicable
Significant guarantees performed and outstanding during the reporting period
√ Applicable □ Not Applicable
Unit and Currency: RMB10’000
Relationship
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date ofoccurrence
Whether
between the
of the
Whether the
Overdue
Whether
Related-
guarantor
guarantee
Commencement Expiry date
Status of
guarantee Whether the amount of
there is a
party
and the listed
Secured
Amount of
(date of
date of
of Type of
principle Collateral
has been
guarantee
the
counter-
guarantee
Guarantor
company
party
guarantee
agreement)
guarantee
guarantee
guarantee
liabilities
(if any)
fulfilled
is overdue
guarantee
guarantee
or not Relationship
Total amount of guarantee occurred during the reporting period (excluding guarantees for subsidiaries)Total balance of guarantee at the end of the reporting period (A) (excluding guarantees for subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries occurred during the reporting period1,133,669
Total balance of guarantees for subsidiaries at the end of the reporting period (B) 1,013,666
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
| Total amount of guarantee (A + B) | 1,013,666 |
| Ratio of total amount of guarantees to net assets of the Company (%) | 11.8 |
| Including: | |
| Amount of guarantees for shareholders, ultimate controllers and their related parties (C) | 0 |
| Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D) | 210,252 |
| The amount of total amount of guarantee in excess of 50% of net assets (E) | 0 |
| Total amount of the above three guarantees (C + D + E) | 210,252 |
| Explanation of possibly bearing related discharge duty for premature guarantees | Not applicable |
| Explanation of guarantee status | None |
Other major contracts
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VI Significant Issues
XII.STATEMENT ON OTHER SIGNIFICANT EVENTS
√ Applicable □ Not Applicable
(1)Entrusted wealth management: By the end of the reporting period, the balance of the Company’sentrusted wealth management amounted to RMB3.692 billion, including two parts: ① temporarily-idle fundraising wealth management: at the end of December 2018, the Company’s proceeds forthe issuance of convertible corporate bonds were fully landed. In order to improve the yield oftemporarily-idle funds, the Company intended to carry out cash management with the amounts notexceeding RMB0.5 billion after approved by the Board of Directors. By the end of the reportingperiod, the balance of the entrusted wealth management amounted to RMB75 million; ②Temporary-idle funds wealth management by the Company and certain subsidiaries: Under thepremise of ensuring sufficient capital required by the principal operating activities and dailyoperations, the Company and certain subsidiaries purchased some low risk wealth managementproducts and structured deposits from major commercial banks to improve the yield of temporarily-idle funds and the return for shareholders within the authority of the president’s office meeting andunder the condition of ensuring fund safety. By the end of the reporting period, the balance ofthe entrusted wealth management amounted to RMB3.617 billion.
(2)Progress of the A-share repurchase: On 30 March 2022, the Company convened the 27th meetingof the 10th session of the Board of Directors, which considered and approved the Resolution inRelation to the Repurchase Plan of a Portion of Public A Shares of Haier Smart Home Co., Ltd.It approved the Company to use its own funds to repurchase a portion of A shares of theCompany by way of centralised bidding. The repurchase price is no more than RMB35 per shareand the proposed total repurchase amount is no more than RMB3.0 billion and no less thanRMB1.5 billion. The period of this repurchase is within 12 months from the date the Boardconsidered and approved the resolution of repurchase of shares. As at the end of the reportingperiod, the Company had repurchased a total of 55,702,939 shares, representing 0.59% of thetotal share capital of the Company. The highest price purchased was RMB26.00 per share andthe lowest price was RMB23.50 per share, and the amount paid was RMB1,406,719,792.04. Fordetails, please refer to the announcements on the related progress disclosed by the Company ona monthly basis.
(3)Progress of the Shareholding Increase by shareholders: On 8 March 2022, Qingdao HaichuangzhiManagement Consulting Enterprise (Limited Partnership) (hereinafter referred to as“Haichuangzhi”), a concerted actor of Haier Group Corporation (the actual controller of HaierSmart Home Co., Ltd.), informed the Company that Haichuangzhi intended to increase itsshareholding of the Company’s A shares within the time frame permitted by relevant laws andregulations in the next 6 months, with the amount no less than RMB200 million and no morethan RMB350 million (including the increased shares of the Shareholding Increase). As at the endof the reporting period, the Shareholding Increase was completed. Haichuangzhi’s shareholding ofthe Company’s A shares increased by 15,712,200 accumulatively, with an amount ofshareholding increase of approximately RMB347,719,237.42. For details, please refer to theAnnouncement of Haier Smart Home Co., Ltd. on the Increase in Shareholding of the Companyby Actual Controller’s Concerted Actor, and the Announcement of Haier Smart Home Co., Ltd.on Implementation Result of the Increase in Shareholding of the Company by Actual Controller’sConcerted Actor disclosed on 9 March 2022 and 19 March 2022 respectively, and other relatedannouncements.
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares andInformation About Shareholders
I.CHANGES IN SHARE CAPITAL(I)Table of Changes in shares1.Table of Changes in shares
| Prior to changes | Increase/decrease in shares | After changes | ||||||||
| Amount | Percentage (%) | Issue of new shares | Bonus shares | Reserves converted to shares | Others | Sub-total | Amount | Percentage (%) | ||
| I. Restricted shares | ||||||||||
| 1. | State-owned shares | — | — | — | — | — | — | — | — | — |
| 2. | Shares held by state-owned legal entities | — | — | — | — | — | — | — | — | — |
| 3. | Other domestic entities held shares | — | — | — | — | — | — | — | — | — |
| Including: | ||||||||||
| Shares held by domestic non-state- owned legal entities | — | — | — | — | — | — | — | — | — | |
| Shares held by domestic individuals | — | — | — | — | — | — | — | — | — | |
| 4. | Shares held by foreign entities | — | — | — | — | — | — | — | — | — |
| Including: | ||||||||||
| Shares held by offshore legal entities | — | — | — | — | — | — | — | — | — | |
| Shares held by offshore individuals | — | — | — | — | — | — | — | — | — | |
| II. Non-restricted shares | 9,398,704,530 | 100.00 | 41,413,600 | — | — | 6,673,840 | 48,087,440 | 9,446,791,970 | 100.00 | |
| 1. | Ordinary shares in RMB | 6,308,552,654 | 67.12 | — | — | — | — | — | 6,308,552,654 | 66.78 |
| 2. | Domestically listed foreign-owned Shares | — | — | — | — | — | — | — | — | — |
| 3. | Offshore listed foreign-owned Shares | 3,090,151,876 | 32.88 | 41,413,600 | — | — | 6,673,840 | 48,087,440 | 3,138,239,316 | 33.22 |
| 4. | Others | — | — | — | — | — | — | — | — | — |
| III. Total shares | 9,398,704,530 | 100.00 | 41,413,600 | — | — | 6,673,840 | 48,087,440 | 9,446,791,970 | 100.00 | |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
2.Statement on the changes in shares
√ Applicable □Not Applicable
(1)H-share convertible bonds: On 27 October 2020, the China Securities RegulatoryCommission issued the “Reply to the Approval of Issuance of Overseas Listed ForeignShares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《( 关 于 核 准海尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng JianXu Ke [2020] No. 2768), which approved that: (1) the Company to issue not morethan 2,856,526,138 overseas listed foreign shares (including additional shares issuedto holders of convertible corporate bonds not exceeding HK$8.0 billion or equivalentin foreign currencies upon the exercise of the convertible rights), with a par value ofRMB1 each, all of which are ordinary shares. After the completion of this issuance,the Company can be listed on the main board of the Stock Exchange of Hong KongLimited (hereinafter referred to as the “Hong Kong Stock Exchange”); (2) the issuanceof corporate bonds not exceeding HK$8.0 billion or equivalent in foreign currenciesthat can be converted into the Company’s overseas listed foreign shares by theoverseas wholly-owned subsidiaries guaranteed by the Company. On 23 December2020, 2,448,279,814 H shares of the Company, issued for the privatisation of HaierElectronics (a Hong Kong listed company), were listed and traded on the Main Boardof the Hong Kong Stock Exchange, and the related convertible bonds under the Hshare convertible bonds scheme amounting to HK$7,993 million became valid and ineffect immediately after the listing. During the reporting period, HK$124,000,000 ofthe convertible bonds were converted into a total of 6,673,840 H shares of theCompany and the outstanding amount was HK$275,000,000.
(2)Placing of H share: Pursuant to the Resolution on Granting General Mandate to theBoard of Directors on Additional Issuance of H shares of the Company consideredand passed at the Company’s 2020 Annual General Meeting, the Resolution of HaierSmart Home Co., Ltd. on the Issue and Listing of New H Shares on the Main Boardof the Stock Exchange of Hong Kong Limited considered and passed at the 23rdmeeting of the 10th session of the Board of Directors of the Company, etc. and theChina Securities Regulatory Commission’s “Reply to the Approval of Issuance ofOverseas Listed Foreign Shares by Haier Smart Home Co., Ltd.” 《( 关于核准海尔智家股份有限公司发行境外上市外资股的批复》) (Zheng Jian Xu Ke [2021] No. 4055), theCompany can additionally issue no more than 73,000,000 overseas listed foreignshares (H shares), with a par value of RMB1 each, all of which are ordinary shares.On the 26th meeting of the 10th session of the Board of Directors of the Companyon 11 January 2022, the Resolution on the Placing of New H Shares Under theGeneral Mandate of Haier Smart Home Co., Ltd. was considered and passed and41,413,600 H shares will be issued by the Company.
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
On 21 January 2022, in accordance with the aforesaid resolutions and reply, theCompany issued 41,413,600 overseas listed foreign shares (H shares). The newshares accounted for 0.439% of the total number of issued shares and 1.448% of thetotal number of H shares, respectively, upon completion of placing and the StockExchange of Hong Kong Limited has granted the approval for the listing of andpermission to deal in the shares on its Main Board.
Based on the above, during the reporting period, the share capital of the Companywas changed from 9,398,704,530 shares at the beginning of the reporting period to9,446,791,970 shares.
3.Effect of changes in shares on the financial indicators such as earnings per shareand net assets per share (if any) after the reporting period to the disclosure dateof interim report
√ Applicable □ Not Applicable
For the interim period in 2022, the Company recorded a net profit attributable toshareholders of the parent company of RMB7,949,084,472.70 and equity attributable toowners of the parent company as at the end of the reporting period ofRMB86,251,016,004.21, representing earnings per Share of RMB0.841 and net asset perShare of RMB9.130, based on the total share capital as at the end of the reporting periodof 9,446,791,970 Shares; and earnings per Share of RMB0.841 and net asset per Share ofRMB9.129, based on the total share capital as at the date of disclosure of the interimreport of 9,448,155,076 Shares.
4.Other disclosure deemed necessary by the Company or required by securitiesregulatory authorities
□ Applicable √ Not Applicable
(II)Changes in shares with selling restrictions
□ Applicable √ Not Applicable
II.INFORMATION ON SHAREHOLDERS
(I)Total number of shareholders:
| Total number of ordinary shareholders by the end of the reporting period | 150,163 |
| Total numbers of preferential shareholders with restoration of voting rights by the end of the reporting period | 0 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
(II)Table of shareholdings of top ten shareholders, top ten shareholders of tradableshares (or shares without selling restrictions) by the end of the reportingperiod
Unit: share
Shareholdings of top ten shareholders
| Name of shareholder (full name) | Increase/ decrease during the reporting period | Number of shares held at the end of the period | Percentage (%) | Number of shares held with selling restrictions | Status of shares pledged, marked or frozen | Nature of shareholder | |
| Status | Number | ||||||
| HKSCC NOMINEES LIMITED | — | 2,239,863,660 | 23.71 | — | Unknown | — | Unknown |
| Haier COSMO Co., Ltd. (海尔卡奥斯股份有限公司) | — | 1,258,684,824 | 13.32 | — | None | — | Domestic non-state- owned legal entity |
| Haier Group Corporation | — | 1,072,610,764 | 11.35 | — | None | — | Domestic non-state- owned legal entity |
| Hong Kong Securities Clearing Co., Ltd. | — | 715,059,902 | 7.57 | — | None | — | Unknown |
| HCH (HK) INVESTMENT MANAGEMENT CO., LIMITED | — | 538,560,000 | 5.70 | — | None | — | Foreign legal entity |
| China Securities Finance Corporation Limited | — | 182,592,654 | 1.93 | — | None | — | 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 | 1.82 | — | None | — | Domestic non-state- owned legal entity |
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) (青岛海创智管理 咨询企业（有限合伙）) | — | 118,724,416 | 1.26 | — | None | — | Domestic non-state- owned legal entity |
| ALIBABA INVESTMENT LIMITED | — | 83,823,993 | 0.89 | — | Unknown | — | Foreign legal entity |
| China Merchant Bank Co., Ltd. — Xingquan Herun mixed securities investment fund | — | 78,018,741 | 0.83 | — | None | — | Unknown |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
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 | ||
HKSCC NOMINEESLIMITED
| HKSCC NOMINEES LIMITED | 2,239,863,660 | Overseas listed foreign shares | 2,239,863,660 |
| Haier COSMO Co., Ltd. (海尔卡奥斯股份有限公司) | 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. | 715,059,902 | RMB ordinary | 715,059,902 |
| HCH (HK) INVESTMENT MANAGEMENT CO., LIMITED | 538,560,000 | Overseas listed foreign shares | 538,560,000 |
| China Securities Finance Corporation Limited | 182,592,654 | RMB ordinary | 182,592,654 |
| 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 |
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) (青岛海创智管理咨询 企业（有限合伙）) | 118,724,416 | RMB ordinary | 118,724,416 |
| ALIBABA INVESTMENT LIMITED | 83,823,993 | Overseas listed foreign shares | 83,823,993 |
| China Merchant Bank Co., Ltd. — Xingquan Herun mixed securities investment fund | 78,018,741 | RMB ordinary | 78,018,741 |
| Explanation on repurchase account of top ten shareholders | The repurchase accounts of the Company held a total of 109,754,498 shares | ||
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
| Name of shareholder | Number of tradable shares held without selling restrictions | Class and number of shares |
| Class | Number | |
| Explanation on delegated voting rights, entrusted voting rights, abstained voting rights of the above shareholders | Nil | |
| Related parties or parties acting in concert among the aforesaid shareholders | (1) Haier COSMO Co., Ltd. (海尔卡奥斯股份有限公司) is a 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), HCH (HK) INVESTMENT MANAGEMENT CO., LIMITED and Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) (青岛海创智管理咨询企业（有限合伙）) are parties 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 | Not applicable | |
Note: (1) HKSCC NOMINEES LIMITED is the Collection Account for the shareholders of the Company’s H-shares, which is
the original data provided by the securities registration agency of Hong Kong, China to the Company after themerger according to local market practices and technical settings, not representing the ultimate shareholder.
(2) As at the end of the reporting period, Qingdao Haichuangzhi Management Consulting Enterprise (Limited
Partnership) (青岛海创智管理咨询企业（有限合伙）) engaged in refinancing and securities lending business,involving a total of 1,898,000 shares, whilst the ownership of which had not been transferred. The actual numberof shares held by it totaled 120,622,416 shares.
Number of shares held by top ten shareholders with selling restrictions and the sellingrestrictions
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
(III)Strategic investors or general legal persons who became the top tenshareholders due to placing of new shares
□ Applicable √ Not Applicable
III.DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT(I)Changes of shareholding of current and retired directors, supervisors and seniormanagement during the reporting period
□ Applicable √ Not Applicable
Other explanations
□ Applicable √ Not Applicable
(II)Incentive share option granted to directors, supervisors and senior managementduring the reporting period
√ Applicable □ Not Applicable
Unit: 10,000 shares
| Name | Position | Number of stock options held at the beginning of the period | Number of stock options newly granted during the reporting period | Exercisable shares options during the reporting period | Shares from stock option exercised during the reporting period | Number of stock options held at the end of the period |
| Li Huagang | Director | 91.39 | 0 | 0 | 0 | 91.39 |
| Gong Wei | Director | 45.70 | 0 | 0 | 0 | 45.70 |
| Xie Juzhi | Senior Management | 91.39 | 0 | 0 | 0 | 91.39 |
| Li Pan | Senior Management | 45.70 | 0 | 0 | 0 | 45.70 |
| Song Yujun | Senior Management | 31.21 | 0 | 0 | 0 | 31.21 |
| Zhao Yanfeng | Senior Management | 46.82 | 0 | 0 | 0 | 46.82 |
| Huang Xiaowu | Senior Management | 45.70 | 0 | 0 | 0 | 45.70 |
| Wu Yong | Senior Management | 22.85 | 0 | 0 | 0 | 22.85 |
| Li Yang | Senior Management | 45.70 | 0 | 0 | 0 | 45.70 |
| Guan Jiangyong | Senior Management | 22.85 | 0 | 0 | 0 | 22.85 |
| Liu Xiaomei | Senior Management | 0 | 11.65 | 0 | 0 | 11.65 |
| Total | / | 489.31 | 11.65 | 0 | 0 | 500.96 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section VII Changes in Shares and Information About Shareholders
(III)Other explanations
□ Applicable √ Not Applicable
IV.CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATECONTROLLER
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section VIII Relevant Information ofPreferred Shares
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Section IX Relevant Information of
Corporate Bonds
I.ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIALCORPORATE DEBT FINANCING INSTRUMENTS
□ Applicable √ Not Applicable
II.CONVERTIBLE CORPORATE BOND
√ Applicable □ Not Applicable
(1)Convertible bond issue
On 27 October 2020, CSRC issued “Reply to the Approval of Issuance of Overseas ListedForeign Shares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd.” 《( 关于核准海尔智家股份有限公司发行境外上市外资股及可转换公司债券的批覆》) (Zheng Jian Xu Ke [2020]No. 2768) (hereinafter referred to as “CSRC Reply”) to approve: (1) Haier Smart Home to issuenot more than 2,856,526,138 overseas listed foreign shares (including shares to be issuedpursuant to the exercise of conversion rights by the holders of convertible corporate bonds withan amount of not more than HK$8.0 billion or equivalent in any foreign currency) with a par valueof RMB1, all registered as ordinary shares. Upon the completion of the issue, Haier Smart Homemay be listed on the main board of the Hong Kong Stock Exchange; (2) With the guarantee ofHaier Smart Home, its wholly-owned foreign subsidiary issued overseas corporate bonds with anamount of not more than HK$8.0 billion or equivalent in any foreign currency, convertible intooverseas listed foreign shares of the issuer. Pursuant to this and approval from relevant parties,2,448,279,814 H-shares and convertible bonds (exchangeable bonds of HK$8.0 billion issued inNovember 2017 were converted into convertible bonds, resulting in valid convertible bonds ofHK$7.993 billion, which were convertible into H-shares of the Company) were issued by theCompany and Harvest International Company, a wholly-owned subsidiary of the Company, on theHong Kong Stock Exchange on 23 December 2020, respectively. Please refer to the prospectusand other relevant documents disclosed by the Company in the Hong Kong market during thereporting period and the Report on the Implementation of Significant Asset Acquisition andConnected Transactions 《( 重大资产购买暨关联交易实施情况报告书》) and other documentsdisclosed by the Company on 26 December 2020 for details.
For the above-mentioned bonds, 105.11% of the remaining par value of the bonds were repaidin an one-off repayment of principal and interest upon maturity.
(2)Convertible bond holders and guarantors for the Reporting Period
Name of convertible corporate bondHarvest International CompanyHK$8,000,000,000 Zero CouponGuaranteed Convertible Bonds due2022 (hereafter, “H Share ConvertibleBonds”)
| Number of convertible bond holders as at the end of the period | 1 |
| Guarantor of the Company’s convertible bonds | Haier Smart Home Co., Ltd. |
| Material changes of the profitability, asset and credibility of the guarantor | Nil |
Haier Smart Home Co., Ltd. Interim Report 2022
Section IX Relevant Information of Corporate Bonds
Top 10 holders of convertible bonds are as follows:
| Name of holder of corporate convertible bonds | Holdings as at the end of the period (RMB) | Holding percentage (%) |
| HSBC Nominees (Hong Kong) Limited | 275,000,000 | 100 |
Note: (1) the aforementioned bonds as at the end of the period are denominated in Hong Kong Dollar; (2) H Share ConvertibleBonds of the Company are held by HSBC Nominees (Hong Kong) Limited as the sole legal holder, who is not theultimate holder. Information on the ultimate holders of the bonds is only stored in the clearing system and, withoutthe authorization from the ultimate holder, the clearing system shall not directly provide the detailed list of ultimatebond holders to any party.
(3)Conversion of convertible bonds for the Reporting Period
Unit and Currency: HKD
| Name of convertible corporate bond | Prior to the changes | Increase/decrease | After the changes | ||
| Conversion | Redemption | Resale | |||
| H Share Convertible Bonds | 399,000,000 | 124,000,000 | — | — | 275,000,000 |
(4)Cumulative conversion of convertible bond for the Reporting Period
Currency: HKD
| Name of convertible corporate bond | H Share Convertible Bonds |
Amount of conversion for the Reporting Period (HKD)
| Amount of conversion for the Reporting Period (HKD) | 124,000,000 |
| Number of conversion for the Reporting Period (Shares) | 6,673,840 |
| Cumulative number of conversion (Shares) | 409,884,729 |
| Percentage of cumulative number of conversion to total issued shares of the Company prior to the conversion (%) | 4.54 |
| Outstanding amount (HKD) | 275,000,000 |
| Percentage of outstanding amount to total amount of convertible bonds issued (%) | 3.44 |
(5)Historical adjustment of conversion price
Unit and Currency: HKD
| Name of convertible corporate bond | H Share Convertible Bonds |
| Latest conversion price as at the end of the Reporting Period | 18.58 |
Haier Smart Home Co., Ltd. Interim Report 2022
Section IX Relevant Information of Corporate Bonds
(6)Liabilities, change in credit and cash arrangements of repayment in the comingyear of the CompanyAs at the end of the reporting period, liabilities of the Company amounted toRMB139,076,271,000, in which current liabilities amounted to RMB127,717,442,200 and non-current liabilities amounted to RMB11,358,828,800.
The Company remains stable in every operating condition with reasonable asset structure andgood credibility, and is capable of providing stable and sufficient working capital for therepayment of the interests and principal of convertible corporate bonds in the coming year.
(7)Other information on convertible bondsOn 23 November 2017, the first 2017 Extraordinary General Meeting of the Company adoptedthe Resolution of Qingdao Haier Co., Ltd. on the Scheme for Public Offering of ConvertibleCorporate Bonds (the “A-share Convertible Bonds”) upon consideration. Pursuant to theresolution at this general meeting and the approval documents of the China Securities RegulatoryCommission and others, the Company completed the issue of convertible corporate bonds inDecember 2018, with a total issue amount of RMB3,007.49 million. The bonds were listed on 18January 2019, which is referred to as “Haier Convertible Bonds” and its bond code is 110049.For details, please refer to the Prospectus for the Public Offering of A-share ConvertibleCorporate Bonds by Qingdao Haier Co., Ltd. as disclosed on 14 December 2018, and theAnnouncement on the Listing of Convertible Corporate Bonds by Qingdao Haier Co., Ltd. asdisclosed on 16 January 2019 and other relevant documents. As the convertible bonds in 2019met the redemption conditions and the Board of Directors of the Company decided to exercisethe redemption right after consideration and approval, the Company redeemed the balance of theconvertible bonds in full up to the registered amount on redemption registration date. After theredemption, the convertible bonds of the Company were delisted on 17 December 2019. At present,the A-share convertible bonds have ceased to be in existence, but the funds raised from theissuance of the bonds have not been fully utilized. As of 30 June 2022, RMB2,791.68 million ofthe funds raised from A-share convertible bonds has been utilized, with a balance of RMB260.91million (the account balance includes the income generated from the purchase of wealthmanagement products, interest on demand deposits, foreign exchange gains and losses and thenot-yet-invested capital raised). For details of the use of funds, please refer to the Special Reporton the Deposit and Actual Use of Raised Funds in the First Half of 2022 of Haier Smart Home Co.,Ltd., which was disclosed on the same date as this report.
Haier Smart Home Co., Ltd. Interim Report 2022
I.AUDIT REPORT
□ Applicable √ Not Applicable
II.FINANCIAL STATEMENTS
Consolidated Balance Sheet
30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
| Items | Notes | Closing balance | Opening balance |
| Current assets: | |||
| Monetary funds | VII.1 | 50,316,121,259.28 | 45,971,035,763.51 |
| Provision of settlement fund | |||
| Funds lent | |||
| Financial assets held for trading | VII.2 | 2,560,172,076.58 | 2,786,075,529.09 |
| Derivative financial assets | VII.3 | 163,084,726.42 | 79,819,974.01 |
| Bills receivable | VII.4 | 8,417,636,171.41 | 13,354,791,068.29 |
| Accounts receivable | VII.5 | 17,920,101,868.72 | 14,642,659,450.22 |
| Financing receivables | |||
| Prepayments | VII.6 | 868,112,660.47 | 857,234,399.26 |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance contract reserves receivable | |||
| Other receivables | VII.7 | 2,156,760,190.99 | 1,956,721,621.66 |
| Including: Interest receivable | 400,015,260.13 | 294,379,438.82 | |
| Dividend receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | VII.8 | 41,006,635,494.22 | 39,901,262,689.59 |
| Contract assets | VII.9 | 280,621,191.36 | 304,434,294.70 |
| Assets held for sale | |||
| Non-current assets due in one year | |||
| Other current assets | VII.10 | 4,515,557,117.17 | 3,920,750,476.57 |
| Total current assets | 128,204,802,756.62 | 123,774,785,266.90 | |
| Non-current assets: | |||
| Loans and advances granted | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | 306,402,281.56 | 308,998,755.30 | |
| Long-term equity investments | VII.11 | 24,110,645,622.66 | 23,200,884,340.57 |
| Investments in other equity instruments | VII.12 | 4,852,445,212.91 | 4,848,709,438.96 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | Closing balance | Opening balance |
| Other non-current financial assets | |||
| Investment properties | VII.13 | 25,624,249.19 | 24,964,888.48 |
| Fixed assets | VII.14 | 24,242,589,167.64 | 22,307,090,168.64 |
| Construction in progress | VII.15 | 4,858,973,923.48 | 4,183,263,398.79 |
| Biological assets for production | |||
| Oil and gas assets | |||
| Right-of-use assets | VII.16 | 3,664,479,071.10 | 2,734,678,906.53 |
| Intangible assets | VII.17 | 9,578,002,832.45 | 9,550,384,743.90 |
| Development cost | VII.18 | 225,378,688.91 | 227,892,229.13 |
| Goodwill | VII.19 | 22,746,678,157.03 | 21,827,103,060.76 |
| Long-term prepaid expenses | VII.20 | 686,383,400.01 | 588,796,706.24 |
| Deferred income tax assets | VII.21 | 1,399,363,197.75 | 1,857,448,518.29 |
| Other non-current assets | VII.22 | 1,750,990,973.29 | 2,164,384,013.14 |
| Total non-current assets | 98,447,956,777.98 | 93,824,599,168.73 | |
| Total assets | 226,652,759,534.60 | 217,599,384,435.63 | |
| Current liabilities: | |||
| Short-term borrowings | VII.23 | 13,159,569,303.47 | 11,226,212,134.39 |
| Borrowings from central bank | |||
| Due to banks and other financial institutions | |||
| Financial liabilities held for trading | VII.24 | 79,270,648.00 | 6,294,014.40 |
| Derivative financial liabilities | VII.25 | 77,066,966.55 | 80,212,433.24 |
| Bills payable | VII.26 | 27,955,088,267.08 | 25,023,238,406.72 |
| Accounts payable | VII.27 | 38,977,127,139.49 | 42,396,109,648.76 |
| Receipts in advance | |||
| Contract liabilities | VII.28 | 5,397,435,938.66 | 10,027,091,593.60 |
| 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 | VII.29 | 3,155,954,164.86 | 4,115,939,635.24 |
| Taxes payable | VII.30 | 2,748,011,705.59 | 2,605,508,703.56 |
| Other payables | VII.31 | 22,391,504,810.19 | 17,533,370,017.01 |
| Including: Interest payable | |||
| Dividend payable | 4,321,692,240.21 | 10,639,313.22 | |
| Fees and commissions payable | |||
| Reinsurance Accounts payables | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | VII.32 | 12,490,218,783.46 | 9,624,339,170.46 |
| Other current liabilities | VII.33 | 1,286,194,473.81 | 2,238,767,551.40 |
| Total current liabilities | 127,717,442,201.16 | 124,877,083,308.78 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | Closing balance | Opening balance |
| Non-current liabilities: | |||
| Deposits for insurance contracts | |||
| Long-term borrowings | VII.34 | 2,119,243,998.96 | 3,038,573,824.53 |
| Bonds payable | VII.35 | 334,730,048.82 | |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | VII.36 | 2,763,944,633.73 | 1,960,894,981.47 |
| Long-term payables | VII.37 | 49,353,671.92 | 99,602,707.76 |
| Long-term payables for staff’s remuneration | VII.38 | 1,172,642,077.88 | 1,173,151,761.64 |
| Estimated liabilities | VII.39 | 1,776,817,160.27 | 1,948,565,477.11 |
| Deferred income | VII.40 | 906,543,570.12 | 852,794,567.20 |
| Deferred income tax liabilities | VII.21 | 2,517,001,943.72 | 2,121,803,173.83 |
| Other non-current liabilities | 53,281,708.05 | 49,461,683.90 | |
| Total non-current liabilities | 11,358,828,764.65 | 11,579,578,226.26 | |
| Total liabilities | 139,076,270,965.81 | 136,456,661,535.04 | |
| Owners’ equity (or shareholders’ equity): | |||
| Paid-in capital (or share capital) | VII.41 | 9,446,791,970.00 | 9,398,704,530.00 |
| Other equity instruments | VII.42 | 81,340,387.43 | 118,017,507.59 |
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | VII.43 | 23,820,929,638.40 | 22,579,374,739.46 |
| Less: treasury stock | 3,962,689,830.07 | 2,424,038,819.70 | |
| Other comprehensive income | VII.44 | 1,689,673,248.96 | –1,176,851,699.92 |
| Special reserve | |||
| Surplus reserve | VII.45 | 3,438,615,909.84 | 3,438,615,909.84 |
| General risk provisions | |||
| Undistributed profits | VII.46 | 51,736,354,679.65 | 47,917,912,260.15 |
| Total equity attributable to owners (or shareholders) of the Parent Company | 86,251,016,004.21 | 79,851,734,427.42 | |
| Minority shareholders’ interests | 1,325,472,564.58 | 1,290,988,473.17 | |
| Total owners’ equity (or shareholders’ equity) | 87,576,488,568.79 | 81,142,722,900.59 | |
| Total liabilities and owners’ equity (or shareholders’ equity) | 226,652,759,534.60 | 217,599,384,435.63 |
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Balance Sheet of the Parent Company30 June 2022
Prepared by: Haier Smart Home Co., Ltd.
Unit and Currency: RMB
| Items | Notes | Closing balance | Opening balance |
| Current Assets: | |||
| Monetary funds | 4,514,223,019.08 | 4,043,535,735.48 | |
| Financial assets held for trading | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | XVIII.1 | 594,883,399.99 | 546,532,442.90 |
| Financing receivables | |||
| Prepayments | 4,228,627.14 | 275,052,864.92 | |
| Other receivables | XVIII.2 | 18,054,815,019.15 | 16,245,280,168.41 |
| Including: Interest receivable | 85,694,396.74 | 51,632,471.99 | |
| Dividend receivable | 4,015,840,000.00 | 3,615,840,000.00 | |
| Inventories | 42,213,555.64 | 1,139,135.32 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 1,576,901,109.42 | 337,476,209.01 | |
| Total current assets | 24,787,264,730.42 | 21,449,016,556.04 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | XVIII.3 | 52,725,448,184.23 | 52,513,760,277.77 |
| Investments in other equity instruments | 1,615,450,032.92 | 1,615,450,032.92 | |
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 181,459,945.43 | 179,789,817.34 | |
| Construction in progress | 10,549,969.42 | 17,569,516.17 | |
| Biological assets for production | |||
| Oil and gas assets | |||
| Right-of-use assets | 787,591.26 | 1,217,186.49 | |
| Intangible assets | 51,705,499.18 | 55,171,485.39 | |
| Development cost | |||
| Goodwill | |||
| Long-term prepaid expenses | 3,120,559.80 | 3,781,398.54 | |
| Deferred income tax assets | 159,338,211.77 | 159,338,211.77 | |
| Other non-current assets | 798,000,000.00 | 803,323,404.28 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | Closing balance | Opening balance |
| Total non-current assets | 55,545,859,994.01 | 55,349,401,330.67 | |
| Total assets | 80,333,124,724.43 | 76,798,417,886.71 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Financial liabilities held for trading | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payables | 282,420,326.44 | 183,690,889.86 | |
| Receipts in advance | |||
| Contract liabilities | 12,605,139.93 | 12,605,139.93 | |
| Payables for staff’s remuneration | 637,966.36 | 12,323,670.21 | |
| Taxes payable | 1,539,895.66 | 1,747,023.87 | |
| Other payables | 39,882,708,592.97 | 34,484,355,762.60 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 897,357.83 | 877,995.65 | |
| Other current liabilities | 8,517,052.13 | 5,420,156.55 | |
| Total current liabilities | 40,189,326,331.32 | 34,701,020,638.67 | |
| Non-current liabilities: | |||
| Long-term borrowings | 2,100,000,000.00 | ||
| Bonds payable | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term payables for staff’s remuneration | |||
| Estimated liabilities | |||
| Deferred income | 11,730,000.00 | 19,270,000.00 | |
| Deferred income tax liabilities | 448,965,654.25 | 448,965,654.25 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,560,695,654.25 | 468,235,654.25 | |
| Total liabilities | 42,750,021,985.57 | 35,169,256,292.92 | |
| Owners’ equity (or Shareholders’ equity): | |||
| Paid-in capital (or share capital) | 9,446,791,970.00 | 9,398,704,530.00 | |
| Other equity instruments | |||
| Including: Preference shares | |||
| Perpetual bonds | |||
| Capital reserve | 27,121,923,173.96 | 25,802,279,483.13 | |
| Less: treasury stock | 2,902,003,244.14 | 1,495,170,675.08 | |
| Other comprehensive income | 618,738,786.66 | 621,302,944.83 | |
| Special reserve | |||
| Surplus reserve | 2,833,469,684.39 | 2,833,469,684.39 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | Closing balance | Opening balance |
| Undistributed profits | 464,182,367.99 | 4,468,575,626.52 | |
| Total owners’ equity (or shareholders’ equity) | 37,583,102,738.86 | 41,629,161,593.79 | |
| Total liabilities and owners’ equity (or shareholders’ equity) | 80,333,124,724.43 | 76,798,417,886.71 |
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Consolidated Profit Statement
January-June 2022
Unit and Currency: RMB
| Items | Notes | 2022 Interim | 2021 Interim |
| I. Total operating revenue | 121,857,522,462.22 | 111,727,756,211.06 | |
| Including: Operating revenue | VII.47 | 121,857,522,462.22 | 111,727,756,211.06 |
| Interest income | |||
| Insurance premiums earned | |||
| Fee and commission income | |||
| II. Total cost of operations | 112,549,408,749.25 | 104,308,762,442.84 | |
| Including: Operating cost | VII.47 | 85,061,133,319.20 | 78,156,467,866.57 |
| Interest expenses | |||
| Fee and commission expenses | |||
| Insurance withdrawal payment | |||
| Net payment from indemnity | |||
| Net provisions withdrew for insurance liability | |||
| Insurance policy dividend paid | |||
| Reinsurance cost | |||
| Taxes and surcharges | VII.48 | 357,165,605.43 | 339,488,659.16 |
| Selling expenses | VII.49 | 17,605,612,224.80 | 16,731,407,296.02 |
| Administrative expenses | VII.50 | 5,132,033,156.92 | 5,047,535,410.71 |
| R&D expenses | VII.51 | 4,595,691,525.07 | 3,738,316,873.21 |
| Financial expenses | VII.52 | –202,227,082.17 | 295,546,337.17 |
| Including: Interest expenses | 345,810,365.32 | 363,287,457.45 | |
| Interest income | 362,045,401.51 | 264,658,985.86 | |
| Add: other income | VII.53 | 546,242,698.94 | 378,116,328.72 |
| investment income (losses are represented by “–”) | VII.54 | 1,170,336,743.41 | 1,136,280,339.22 |
| Including: Investment income of associates and joint ventures | |||
| Income generated from the derecognition of financial assets measured at amortized cost (losses are represented by “–”) | |||
| 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 “–”) | VII.55 | –118,790,175.68 | 64,269,511.32 |
| Loss on credit impairment (losses are represented by “–”) | VII.56 | –258,076,846.14 | –44,031,423.21 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| Loss on assets impairment (losses are represented by “–”) | VII.57 | –707,061,947.81 | –653,387,326.88 |
| Gain from disposal of assets (losses are represented by “–”) | VII.58 | 31,589,207.10 | 142,414,954.25 |
| III. Operating profit (losses are represented by “–”) | 9,972,353,392.79 | 8,442,656,151.64 | |
| Add: non-operating income | VII.59 | 68,854,227.41 | 80,167,397.14 |
| Less: non-operating expenses | VII.60 | 43,535,551.68 | 51,064,696.04 |
| IV. Total profit (total losses are represented by “–”) | 9,997,672,068.52 | 8,471,758,852.74 | |
| Less: income tax expense | VII.61 | 2,000,741,926.36 | 1,525,749,793.00 |
| V. Net profit (net losses are represented by “–”) | 7,996,930,142.16 | 6,946,009,059.74 | |
| (I) Classification by continuous operation | |||
| 1. Net profit from continuous operation (net losses are represented by “–”) | 7,996,930,142.16 | 6,946,009,059.74 | |
| 2. Net profit from discontinued operation (net losses are represented by “–”) | |||
| (II) Classification by ownership of the equity | |||
| 1. Net profit attributable to shareholders of the Parent Company (net losses are represented by “–”) | 7,949,084,472.70 | 6,858,902,854.55 | |
| 2. Profit or loss attributable to minority shareholders (net losses are represented by “–”) | 47,845,669.46 | 87,106,205.19 | |
| VI. Other comprehensive income, net of tax | VII.62 | 2,864,992,299.95 | –296,041,116.28 |
| (I) Other comprehensive income attributable to owners of the Parent Company, net of tax | 2,866,524,948.88 | –293,997,754.26 | |
| 1. Other comprehensive income that cannot be reclassified into the profit or loss | —45,646,560.54 | 38,290,357.71 | |
| (1) Changes arising from re-measurement of defined benefit plans | 4,562,166.91 | –595,263.81 | |
| (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 | —50,208,727.45 | 38,885,621.52 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| (4) Changes in fair value of credit risks of the enterprise | |||
| 2. Other comprehensive income to be reclassified into the profit or loss | 2,912,171,509.42 | –332,288,111.97 | |
| (1) Other comprehensive income that can be transferred into profit or loss under equity method | 108,350,151.43 | 55,956,231.90 | |
| (2) Changes in fair value of other debt investments | |||
| (3) Reclassified financial assets that are credited to other comprehensive income | |||
| (4) Credit impairment provision for other debt investments | |||
| (5) Reserve for cash flow hedging | 25,995,214.10 | 112,586,182.47 | |
| (6) Exchange differences on translation of financial statements denominated in foreign currencies | 2,777,826,143.89 | –500,830,526.34 | |
| (7) Others | |||
| (II) Other comprehensive income attributable to minority shareholders, net of tax | —1,532,648.93 | –2,043,362.02 | |
| VII. Total comprehensive income | 10,861,922,442.11 | 6,649,967,943.46 | |
| (I) Total comprehensive income attributable to the owners of Parent Company | 10,815,609,421.58 | 6,564,905,100.29 | |
| (II) Total comprehensive income attributable to the minority shareholders | 46,313,020.53 | 85,062,843.17 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | XVIII.1 | 0.85 | 0.74 |
| (II) Diluted earnings per share (RMB/ share) | XVIII.1 | 0.85 | 0.73 |
For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB4,473,481.70, and the net profit of the acquiree for the previousperiod was RMB5,535,635.66.
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Profit Statement of the Parent CompanyJanuary-June 2022
Unit and Currency: RMB
| Items | Notes | 2022 Interim | 2021 Interim |
| I. Operating income | XVIII.4 | 93,323,883.33 | 196,151,588.84 |
| Less: operating cost | XVIII.4 | 80,891,389.46 | 170,532,414.76 |
| Taxes and surcharges | 1,171,987.68 | 1,174,776.60 | |
| Selling expenses | 4,615,963.20 | 1,542,784.65 | |
| Administration expenses | 328,116,657.42 | 143,500,790.38 | |
| R&D expenses | 5,806,423.66 | 17,296,703.96 | |
| Financial expenses | —42,487,430.75 | –32,789,762.71 | |
| Including: Interest expenses | 4,530,273.29 | 7,372,782.23 | |
| Interest income | 53,365,585.67 | 35,812,614.94 | |
| Add: other income | 17,240,565.58 | 39,709,407.90 | |
| investment income (losses are represented by “–”) | XVIII.5 | 548,236,536.95 | 113,153,980.76 |
| Including: Investment income of associates and joint ventures | |||
| Derecognition income on financial assets measured at amortized cost (losses are represented by “–”) | |||
| Gains on net exposure hedges (losses are represented by “–”) | |||
| Income from change in fair value (losses are represented by “–”) | |||
| Loss on credit impairment (losses are represented by “–”) | 116,871.97 | –7,122,909.94 | |
| Loss on assets impairment (losses are represented by “–”) | |||
| Gain from disposal of assets (losses are represented by “–”) | 35,074,022.45 | 142,444,000.00 | |
| II. Operating profit (losses are represented by “–”) | 315,876,889.61 | 183,078,359.92 | |
| Add: non-operating income | 204,216.74 | 60,749.06 | |
| Less: non-operating expenses | 28,698.02 | 50,687.25 | |
| III. Total profit (total losses are represented by “–”) | 316,052,408.33 | 183,088,421.73 | |
| Less: income tax expenses | —15,190,900.38 | ||
| IV. Net profit (net losses are represented by “–”) | 316,052,408.33 | 198,279,322.11 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| (I) Net profit from continuous operations (net losses are represented by “–”) | 316,052,408.33 | 198,279,322.11 | |
| (II) Net profit from discontinued operations (net losses are represented by “–”) | |||
| V. Other comprehensive income, net of tax | —2,564,158.17 | 11,664,510.69 | |
| (I) Other comprehensive income that cannot be reclassified into the profit or loss | |||
| 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 | |||
| 4. Changes in fair value of credit risks of the enterprise | |||
| (II) Other comprehensive income to be reclassified into the profit or loss | —2,564,158.17 | 11,664,510.69 | |
| 1. Other comprehensive income that can be transferred into profit or loss under equity method | —2,564,158.17 | 11,664,510.69 | |
| 2. Changes in fair value of other debt investments | |||
| 3. Reclassified financial assets that are credited to other comprehensive income | |||
| 4. Credit impairment provision for other debt investments | |||
| 5. Reserve for cash flow hedging | |||
| 6. Exchange differences on translation of financial statements denominated in foreign currencies | |||
| 7. Others | |||
| VI. Total comprehensive income | 313,488,250.16 | 209,943,832.80 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | |||
| (II) Diluted earnings per share (RMB/share) |
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Consolidated Cash Flow StatementJanuary-June 2022
Unit and Currency: RMB
| Items | Notes | 2022 Interim | 2021 Interim |
| I. Cash flow from operating activities: | |||
| Cash received from the sale of goods and rendering services | 125,785,043,134.22 | 117,944,101,751.66 | |
| Net increase in customer and inter-bank deposits | |||
| Net increase in borrowing from the central bank | |||
| 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 received from interest, fee and commissions | |||
| Net increase in placement from banks and other financial institutions | |||
| Net increase in cash received from repurchase operation | |||
| Net cash received from customer deposits for trading in securities | |||
| Refunds of taxes | 1,359,611,570.36 | 964,437,758.54 | |
| Cash received from other related operating activities | VII.63 | 841,294,815.74 | 737,260,365.59 |
| Sub-total of cash inflows from operating activities | 127,985,949,520.32 | 119,645,799,875.79 | |
| Cash paid on purchase of goods and services | 89,586,479,170.53 | 80,310,181,952.46 | |
| 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 contract | |||
| Net increase in cash lent | |||
| Cash paid for interest, bank charges and commissions | |||
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| Cash paid for insurance policy dividend | |||
| Cash paid to and on behalf of employees | 13,701,958,122.17 | 12,773,459,633.28 | |
| Cash paid for all types of taxes | 5,091,644,757.74 | 5,080,969,771.64 | |
| Cash paid to other operation related activities | VII.64 | 13,641,619,812.66 | 13,038,993,358.10 |
| Sub-total of cash outflows from operating activities | 122,021,701,863.10 | 111,203,604,715.48 | |
| Net cash flow from operating activities | |||
| II. Cash flow from investing activities: | VII.67 | 5,964,247,657.22 | 8,442,195,160.31 |
| Cash received from recovery of investments | 4,997,285,703.11 | 2,869,349,936.62 | |
| Cash received from return on investments | 421,887,380.66 | 313,949,022.75 | |
| Net cash received from the disposal of fixed assets, intangible assets and other long-term assets | 74,590,057.10 | 19,269,652.96 | |
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received from investment activities | |||
| Sub-total of cash inflows from investing activities | 5,493,763,140.87 | 3,202,568,612.33 | |
| Cash paid on purchase of fixed assets, intangible assets and other long-term assets | 3,342,824,864.02 | 3,155,717,619.84 | |
| Cash paid for investments | 6,274,280,514.60 | 3,283,612,983.20 | |
| Net increase in secured loans | |||
| Net cash paid on acquisition of subsidiaries and other operating entities | 37,326,510.00 | ||
| Other cash paid on investment activities | 250,000.00 | ||
| Sub-total of cash outflows from investing activities | 9,654,431,888.62 | 6,439,580,603.04 | |
| Net cash flow from investing activities | —4,160,668,747.75 | –3,237,011,990.71 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| III. Cash flow from financing activities: | |||
| Cash received from capital contributions | 986,491,004.94 | 8,600,000.00 | |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | |||
| Cash received from borrowings | 8,044,351,638.86 | 4,920,230,964.76 | |
| Other cash received from financing activities | VII.65 | 1,000,235.35 | |
| Sub-total of cash inflows from financing activities | 9,031,842,879.15 | 4,928,830,964.76 | |
| Cash paid on repayment of loans | 4,667,753,225.90 | 11,117,743,195.81 | |
| Cash paid on distribution of dividends, profits or repayment of interest expenses | 327,338,483.19 | 327,295,977.88 | |
| Including: Dividend and profit paid to minority shareholders by subsidiaries | |||
| Other cash paid to financing activities | VII.66 | 1,876,577,772.85 | 3,090,810,896.53 |
| Sub-total of cash outflows from financing activities | 6,871,669,481.94 | 14,535,850,070.22 | |
| Net cash flow from financing activities | 2,160,173,397.21 | –9,607,019,105.46 | |
| IV.Effect of fluctuations in exchange rates on cash and cash equivalents | 230,069,372.19 | –107,597,142.14 | |
| V. Net increase in cash and cash equivalents | 4,193,821,678.87 | –4,509,433,078.00 | |
| Add: balance of cash and cash equivalents at the beginning of the period | VII.68 | 45,071,366,271.21 | 45,738,120,000.70 |
| VI.Balance of cash and cash equivalents at the end of the period | VII.68 | 49,265,187,950.08 | 41,228,686,922.70 |
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Cash Flow Statement of the Parent CompanyJanuary-June 2022
Unit and Currency: RMB
| Items | Notes | 2022 Interim | 2021 Interim |
| I. Cash flow from operating activities: | |||
| Cash received from the sale of goods and rendering of services | 25,976,480.20 | 4,574,156,292.06 | |
| Refunds of taxes | 7,799,497.52 | 15,641,231.71 | |
| Other cash received from operating activities | 311,936,036.56 | 60,444,554.93 | |
| Sub-total of cash inflows from operating activities | 345,712,014.28 | 4,650,242,078.70 | |
| Cash paid on purchase of goods and services | 141,857.64 | 81,405,473.91 | |
| Cash paid to and on behalf of employees | 24,825,638.14 | 138,942,956.91 | |
| Cash paid for all types of taxes | 1,578,405.68 | 33,242,176.88 | |
| Other cash paid to operation activities | 81,136,892.33 | 9,853,987.61 | |
| Sub-total of cash outflows from operating activities | 107,682,793.79 | 263,444,595.31 | |
| Net cash flow from operating activities | 238,029,220.49 | 4,386,797,483.39 | |
| II. Cash flow from investing activities: | |||
| Cash received from recovery of investments | 803,860,000.00 | 273,250,000.00 | |
| Cash received from return on investments | 72,346,255.88 | 92,194,698.15 | |
| Net cash received from the disposal of fixed assets, intangible assets and other long-term assets | 35,206,354.85 | ||
| Net cash received from disposal of subsidiaries and other operating entities | |||
| Other cash received from investment activities | |||
| Sub-total of cash inflows from investing activities | 911,412,610.73 | 365,444,698.15 | |
| Cash paid on purchase of fixed assets, intangible assets and other long-term assets | 15,544,095.62 | 31,022,950.45 | |
| Cash paid for investments | 2,173,745,507.20 | 231,500,000.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Notes | 2022 Interim | 2021 Interim |
| Net cash paid on acquisition of subsidiaries and other operating entities | |||
| Other cash paid on investment activities | 1,521,600,000.00 | 75,886,144.59 | |
| Sub-total of cash outflows from investing activities | 3,710,889,602.82 | 338,409,095.04 | |
| Net cash flow from investing activities | —2,799,476,992.09 | 27,035,603.11 | |
| III. Cash flow from financing activities: | |||
| Cash received from capital contributions | 940,041,004.94 | ||
| Cash received from borrowings | 2,100,000,000.00 | ||
| Other cash received from financing activities | 1,408,448,043.37 | ||
| Sub-total of cash inflows from financing activities | 4,448,489,048.31 | ||
| Cash paid on repayment of borrowings | 5,520,000,000.00 | ||
| Cash paid on distribution of dividends, profits or repayment of interest expenses | 3,091,905.56 | 43,159,752.53 | |
| Other cash paid on financing activities | 1,409,796,873.02 | 5,359,441,498.61 | |
| Sub-total of cash outflows from financing activities | 1,412,888,778.58 | 10,922,601,251.14 | |
| Net cash flow from financing activities | 3,035,600,269.73 | –10,922,601,251.14 | |
| IV.Effect of fluctuations in exchange rates on cash and cash equivalents | —3,465,214.53 | 5,596,792.78 | |
| V. Net increase in cash and cash equivalents | 470,687,283.60 | –6,503,171,371.86 | |
| Add: balance of cash and cash equivalents at the beginning of the period | 4,043,535,735.48 | 8,286,549,909.64 | |
| VI.Balance of cash and cash equivalents at the end of the period | 4,514,223,019.08 | 1,783,378,537.78 | |
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
Haier Smart Home Co., Ltd.
Interim Report 2022
Haier Smart Home Co., Ltd.
Interim Report 2022
Consolidated Statement of Changes in Owner’s EquityJanuary-June 2022
Unit and Currency: RMB
Other equity instruments
2022 InterimEquity attributable to owners of the Parent Company
Other
Items
Paid-in capital(or share capital)
Preferenceshares
Perpetual
bonds Others Capital reserve
Less: treasury
stock
comprehensive
income Special reserve Surplus reserve
General risk
provision
Undistributed
profits Others Sub-total Minority equity
Total owners’
equity
I. Closing balance for the previous year 9,398,704,530.00 118,017,507.59 22,549,345,568.94 2,424,038,819.70–1,176,851,699.92 3,438,615,909.84—47,907,134,328.80 79,810,927,325.55 1,272,034,100.17 81,082,961,425.72
Add: changes in accounting policiesError correction for prior periodBusiness combination under common
control30,029,170.52 10,777,931.35 40,807,101.8718954373 59761474.87
Others 0.00 0
II. Opening balance for the current year 9,398,704,530.00 118,017,507.59 22,579,374,739.46 2,424,038,819.70–1,176,851,699.92 3,438,615,909.84 47,917,912,260.15 79,851,734,427.42 1,290,988,473.17 81,142,722,900.59
III.Increase/decrease for the current period
(decrease is represented by “–”) 48,087,440.00–36,677,120.16 1,241,554,898.94 1,538,651,010.37 2,866,524,948.88 3,818,442,419.50 6,399,281,576.79 34,484,091.41 6,433,765,668.20
(I) Total comprehensive income 2,866,524,948.88 7,949,084,472.70 10,815,609,421.5846,313,020.53 10,861,922,442.11
(II) Capital injection and reduction by
owners48,087,440.00–36,677,120.16 1,238,717,313.17 1,538,651,010.37–288,523,377.36–11,072,350.20–299,595,727.56
1. Ordinary shares invested by owners 41,413,600.00 898,627,404.94 940,041,004.94 11,072,350.20 928,968,654.74
2.Capital contribution by holders of
other equity instruments 6,673,840.00–36,677,120.16 134,131,566.36104,128,286.20104,128,286.20
3.Share-based payment included in
owners’ equity 332,853,517.66 332,853,517.66332,853,517.66
4. Others
–126,895,175.79 1,538,651,010.37–1,665,546,186.16–1,665,546,186.16
(III) Profit distribution–4,320,445,666.86–4,320,445,666.86–756,578.92–4,321,202,245.78
1.Withdrawal of surplus reserves–
0.00
2.Withdrawal of provisions for generalrisks
3.Distribution to owners
(or shareholders)–4,320,445,666.86–4,320,445,666.86–756,578.92–4,321,202,245.78
4.Others
(IV)Internal transfer of owner’s equity
1.Transfer of capital reserves intocapital (or share capital)
2.Transfer of surplus reserves intocapital (or share capital)
3.Surplus reserves used forremedying loss
4.Changes in defined benefit planscarried forward to retainedearnings
5.Other comprehensive incomecarried forward to retainedearnings
6.Others
(V)Special reserve
1.Withdrawal for the period
2.Utilization for the period
| (VI) Others | 2,837,585.77 | 189,803,613.66 | 192,641,199.43 | 192,641,199.43 | ||||||
| IV.Closing balance for the period | 9,446,791,970.00 | 81,340,387.43 | 23,820,929,638.40 | 3,962,689,830.07 | 1,689,673,248.96 | 3,438,615,909.84 | 51,736,354,679.65 | 86,251,016,004.21 | 1,325,472,564.58 | 87,576,488,568.79 |
Section X Financial Report
Haier Smart Home Co., Ltd.
Interim Report 2022
2021 InterimEquity attributable to owners of the Parent Company
Other equity instruments
| Paid-in capital Items (or share capital) | Preference shares | Perpetual bonds | Others Capital reserve | Other Less: treasury comprehensive stock income | Special reserve | Surplus reserve | General risk Undistributed provision profits | Others | Sub-total | Minority equity | Total owners’ equity | |||
| I. Closing balance for the previous year 9,027,846,441.00 | 2,364,195,333.79 15,007,475,607.40 | 28,896,550.65 –1,046,216,729.06 | 3,045,334,539.60 | 38,467,787,059.79 | 66,837,525,701.87 | 1,294,584,557.09 | 68,132,110,258.96 | |||||||
| Add: changes in accounting policies | 37,788,663.41 | 183,214,768.11 | 221,003,431.52 | 289,732.70 | 221,293,164.22 | |||||||||
| Error correction for prior period | ||||||||||||||
| Business combination under common | ||||||||||||||
| control | 30,029,170.52 | 7,891,303.69 | 37,920,474.21 | 17015869.18 | 54936343.39 | |||||||||
| Others II. Opening balance for the current year 9,027,846,441.00 | 2,364,195,333.79 15,037,504,777.92 | 28,896,550.65 –1,008,428,065.65 | 3,045,334,539.60 | 38,658,893,131.59 | 67,096,449,607.60 | 1,311,890,158.97 | 68,408,339,766.57 | |||||||
| III. Increase/decrease for the current period (decrease is represented by “–”) | 365,324,040.00 | –2,215,712,153.81 | 7,301,326,543.56 | 1,767,258,036.36 | –293,925,605.96 | 3,425,666,565.86 | 6,815,421,353.29 | 60,278,653.37 | 6,875,700,006.66 | |||||
| (I) Total comprehensive income | –293,997,754.26 | 6,858,902,854.55 | 6,564,905,100.29 | 85,062,843.17 | 6,649,967,943.46 | |||||||||
| (II) Capital injection and reduction by owners | 365,324,040.00 | –2,215,712,153.81 | 7,301,398,691.86 | 1,767,258,036.36 | 3,683,752,541.69 | 16,167,229.15 | 3,699,919,770.84 | |||||||
| 1. Ordinary shares invested by owners | 0.00 | 0.00 | ||||||||||||
| 2. Capital contribution by holders of other equity instruments | 397,676,840.00 | –2,215,712,153.81 | 8,095,619,066.22 | 6,277,583,752.41 | 0 | 6,277,583,752.41 | ||||||||
| 3. Share-based payment included in owners’ equity | ||||||||||||||
| 4. Others (III) Profit distribution | -32,352,800.00 | –794,220,374.36 | 1,767,258,036.36 | –3,420,918,669.85 | –2,593,831,210.72 –3,420,918,669.85 | 16167229.15 –40,951,418.95 | –2,577,663,981.57 –3,461,870,088.80 | |||||||
| 1. Withdrawal of surplus reserves | 0.00 | 0 | ||||||||||||
| 2. Withdrawal of provisions for general | ||||||||||||||
| risks | 0.00 | 0 | ||||||||||||
| 3. Distribution to owners (or shareholders) | –3,420,918,669.85 | –3,420,918,669.85 | –40,951,418.95 | –3,461,870,088.80 | ||||||||||
4. Others
(IV)Internal transfer of owner’s equity
1.Transfer of capital reserves intocapital (or share capital)
2.Transfer of surplus reserves intocapital (or share capital)
3.Surplus reserves used forremedying loss
4.Changes in defined benefit planscarried forward to retainedearnings
5.Other comprehensive incomecarried forward to retainedearnings
6.Others
(V)Special reserve
1.Withdrawal for the period
2.Utilization for the period
| (VI) Others | –72,148.30 | 72,148.30 | –12,317,618.84 | –12,317,618.84 | –12,317,618.84 | |||
| IV. Closing balance for the period | 9,393,170,481.00 | 148,483,179.98 22,338,831,321.48 | 1,796,154,587.01 –1,302,353,671.61 | 3,045,334,539.60 | 42,084,559,697.45 | 73,911,870,960.89 | 1,372,168,812.34 | 75,284,039,773.23 |
Person in charge of the Company: Li Huagang Person in charge of accounting function: Gong Wei Person in charge of accounting department: Ying Ke
Statement of Changes in Owners’ Equity of the Parent Company
January-June 2022
Section X Financial Report
Unit and Currency: RMB
| 2022 Intecim | |||||||||||
| Other equity instruments | |||||||||||
| Items | Paid-in capital (or share capital) | Preference shares | Perpetual bonds | Others | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owners’ equity |
| I. Closing balance for the previous year | 9,398,704,530.00 | 25,802,279,483.13 | 1,495,170,675.08 | 621,302,944.83 | 2,833,469,684.39 | 4,468,575,626.52 | 41,629,161,593.79 | ||||
| Add: changes in accounting policies | |||||||||||
| Error correction for prior period | |||||||||||
| Others | |||||||||||
| II. Opening balance for the current year | 9,398,704,530.00 | 25,802,279,483.13 | 1,495,170,675.08 | 621,302,944.83 | 2,833,469,684.39 | 4,468,575,626.52 | 41,629,161,593.79 | ||||
| III. Increase/decrease for the current period (decrease is represented by “–”) | 48,087,440.00 | 1,319,643,690.83 | 1,406,832,569.06 | –2,564,158.17 | –4,004,393,258.53 | –4,046,058,854.93 | |||||
| (I) Total comprehensive income | –2,564,158.17 | 316,052,408.33 | 313,488,250.16 | ||||||||
| (II) Capital injection and reduction by owners | 48,087,440.00 | 1,319,643,690.83 | 1,406,832,569.06 | –39,101,438.23 | |||||||
| 1. Ordinary shares invested by owners | 41,413,600.00 | 898,627,404.94 | 940,041,004.94 | ||||||||
| 2. Capital contribution by holders of other equity instruments | 6,673,840.00 | 97,454,446.20 | 104,128,286.20 | ||||||||
| 3. Share-based payment included in owners’ equity | 323,222,114.26 | 323,222,114.26 | |||||||||
| 4. Others | 339,725.43 | 1,406,832,569.06 | –1,406,492,843.63 | ||||||||
| (III) Profit distribution | –4,320,445,666.86 | –4,320,445,666.86 | |||||||||
| 1. Withdrawal of surplus reserves | |||||||||||
| 2. Distribution to owners (or shareholders) | –4,320,445,666.86 | –4,320,445,666.86 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserves into capital (or share capital) | |||||||||||
| 3. Surplus reserves used for remedying loss | |||||||||||
| 4. Changes in defined benefit plans carried forward to retained earnings | |||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Closing balance for the period | 9,446,791,970.00 | 27,121,923,173.96 | 2,902,003,244.14 | 618,738,786.66 | 2,833,469,684.39 | 464,182,367.99 | 37,583,102,738.86 | ||||
Haier Smart Home Co., Ltd. Interim Report 2022
| 2021 Interim | |||||||||||
| Other equity instruments | |||||||||||
| Items | Paid-in capital (or share capital) | Preference shares | Perpetual bonds | Others | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Total owners’ equity |
| I. Closing balance for the previous year | 9,027,846,441.00 | 20,408,352,380.95 | –10,030,704.15 | 2,440,188,314.15 | 4,349,961,964.23 | 36,216,318,396.18 | |||||
| Add: changes in accounting policies | |||||||||||
| Error correction for prior period | |||||||||||
| Others | |||||||||||
| II. Opening balance for the current year | 9,027,846,441.00 | 20,408,352,380.95 | –10,030,704.15 | 2,440,188,314.15 | 4,349,961,964.23 | 36,216,318,396.18 | |||||
| III. Increase/decrease for the current period (decrease is represented by “–”) | 365,324,040.00 | 5,085,971,596.28 | 1,767,258,036.36 | 11,664,510.69 | –3,222,639,347.74 | 473,062,762.87 | |||||
| (I) Total comprehensive income | 11,664,510.69 | 198,279,322.11 | 209,943,832.80 | ||||||||
| (II) Capital injection and reduction by owners | 365,324,040.00 | 5,085,971,596.28 | 1,767,258,036.36 | 3,684,037,599.92 | |||||||
| 1. Ordinary shares invested by owners | -32,352,800.00 | –793,935,316.13 | –826,288,116.13 | ||||||||
| 2. Capital contribution by holders of other equity instruments | 397,676,840.00 | 5,879,906,912.41 | 6,277,583,752.41 | ||||||||
| 3. Share-based payment included in owners’ equity | |||||||||||
| 4. Others | 1,767,258,036.36 | –1,767,258,036.36 | |||||||||
| (III) Profit distribution | –3,420,918,669.85 | –3,420,918,669.85 | |||||||||
| 1. Withdrawal of surplus reserves | |||||||||||
| 2. Distribution to owners (or shareholders) | –3,420,918,669.85 | –3,420,918,669.85 | |||||||||
| 3. Others | |||||||||||
| (IV) Internal transfer of owner’s equity | |||||||||||
| 1. Transfer of capital reserves into capital (or share capital) | |||||||||||
| 2. Transfer of surplus reserves into capital (or share capital) | |||||||||||
| 3. Surplus reserves used for remedying loss | |||||||||||
| 4. Changes in defined benefit plans carried forward to retained earnings | |||||||||||
| 5. Other comprehensive income carried forward to retained earnings | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Withdrawal for the period | |||||||||||
| 2. Utilization for the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Closing balance for the period | 9,393,170,481.00 | 25,494,323,977.23 | 1,767,258,036.36 | 1,633,806.54 | 2,440,188,314.15 | 1,127,322,616.49 | 36,689,381,159.05 | ||||
Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke
Haier Smart Home Co., Ltd. Interim Report 2022
III.GENERAL INFORMATION OF THE COMPANY1.Overview of the Company
√ Applicable □ Not Applicable
The predecessor of Haier Smart Home Co., Ltd. (herein after referred to as the Company) wasQingdao Refrigerator Factory, which was established in 1984. As permitted to offering byPeople’s Bank of China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao RefrigeratorFactory, a limited company was set up by directional fund raising of RMB150 million. In Marchand September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9issued by the pilot leading team of Qingdao joint stock company, the Company was convertedfrom a directional offering company to a public subscription company and issued additional 50million shares to the public and listed with trading on Shanghai Stock Exchange in November 1993.In October 2018, D-shares in issue of the Company were listed on the China Europe InternationalExchange AG. In December 2020, H-shares in issue of the Company were listed on the StockExchange of Hong Kong Limited by way of introduction.
The Company’s registered office is located at the Haier Industrial Park of Laoshan District, Qingdao,Shandong Province, and the headquarter is located at the Haier Industrial Park of Laoshan District,Qingdao, Shandong Province.
The Company is mainly engaged in research and development, manufacturing and sales of homeappliances including refrigerators/freezers, kitchen appliances, air- conditioners, laundryappliances and water appliances, and other smart home business, as well as providing smarthome packaged solutions.
The ultimate holding company of the Company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on29 August 2022.
2.Scope of consolidated financial statements
√ Applicable □ Not Applicable
For details of changes in the scope of consolidated financial statements for the current period, pleaserefer to “VIII. Changes in Consolidation Scope” and “IX. Interest in Other Entities” of this note.
Haier Smart Home Co., Ltd. Interim Report 2022
IV.BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
1.Basis of PreparationThe financial statements of the Company were prepared on the going concern basis according tothe transactions and matters actually occurred, in accordance with the Accounting Standards forBusiness Enterprises—Basic Standards published by the Ministry of Finance, specificaccounting standards, and guidance on application of accounting standards for businessenterprises, interpretations to accounting standards for business enterprises and other relevantrequirements (herein after collectively referred to as the “Accounting Standards for BusinessEnterprises”) which issued subsequently, and in combination with the disclosure provisions of theRules for the Information Disclosure and Compilation of Companies Publicly Issuing SecuritiesNo.15: General Provisions for Financial Report (Revised in 2014) of CSRC as well as thefollowing significant accounting policies and accounting estimation.
2.Going Concern
√ Applicable □ Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of the reportingperiod and there are no significant events affecting its ability to continue as a going concern.
V.SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
√ Applicable □ Not Applicable
According to the characteristics of its production and operation, the Company formulated a series ofspecific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); theamortization of intangible assets (Note V.18); the criterion for determining of long-term assetsimpairment (Note V.19); and the date of revenue recognition (Note V.25), etc.
1.Statement of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the AccountingStandards for Business Enterprises, which accurately and completely reflected informationrelating to the financial condition as at 30 June 2022, the operating results of January to June2022 and cash flow of the Company.
2.Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the sameyear in solar calendar.
Haier Smart Home Co., Ltd. Interim Report 2022
3.Operating cycle
√ Applicable □ Not Applicable
The Company takes 12 months as an operating cycle, which is also the classification basis forthe liquidity of its assets and liabilities.
4.Recording currency
√ Applicable □ Not Applicable
Renminbi is the recording currency of the Company.
5.Accounting methods of business combinations under common control and notunder common control
√ Applicable □ Not Applicable
A business combination is a transaction or event that brings together two or more separateentities into one reporting entity. Business combinations are classified into business combinationsunder common control and business combinations not under common control.
(1)Business combinations under common controlA business combination under common control is a business combination in which all thecombining entities are ultimately controlled by the same party or parties both before andafter the combination, and that control is not transitory. For business combination undercommon control, the party that obtains the control over the other parties on thecombination date is the acquirer, and other parties involving in the business combinationare the transferors. The combination date is the date on which the acquiring partyeffectively obtains the control over the party being acquired.
In case the consideration for long-term equity investments formed in business combinationunder common control is paid by ways of cash, transfer of non-cash assets or assumptionof debts, the Company will regard the share of carrying amounts of the net assets of thetransferor in the ultimate controller’s consolidated financial statements obtained as the initialinvestment cost of long-term equity investments as at the date of combination. For carryingvalue of net assets of the transferor is negative as at the date of combination, investmentcost of long-term equity investment is calculated as zero. In case the transferor iscontrolled by the ultimate controller by the business combination not under common controlbefore combination, the initial investment cost of the long-term equity investment of theacquirer includes relevant goodwill. The Company should adjust the capital reserve (capitalpremium or share premium) in accordance with the differences between initial investmentcost of the long-term equity investment and the cash paid, the non-cash assets transferredand the carrying value of liability assumed; in case the balance of the capital reserve(capital premium or share premium) is insufficient for the elimination, the surplus reservesand undistributed profits shall be used to dilute such expenses in order. In case theconsideration for the combination is paid by issuance of equity instruments, the aggregatenominal value of shares issued will be deemed as the share capital. The difference betweenthe initial investment cost of long-term equity investments and aggregate nominal valueof
Haier Smart Home Co., Ltd. Interim Report 2022
shares issued shall be adjusted to capital reserve (capital premium or share premium); incase the capital reserve (capital premium or share premium) is insufficient for theelimination, the surplus reserves and undistributed profits shall be used to dilute suchexpenses in order.
Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the acquirer arecredited in profit or loss in the period when they occurred. Trading expenses in directrelation to the issuance of equity instrument as the consideration for the combination iswritten down to the capital reserve (share premium), where the capital reserve (sharepremium) is insufficient, and to surplus reserves and undistributed profits in order. Tradingexpenses in direct relation to the issuance of debt instrument as the consideration for thecombination is included in the initial recognition amount of the debt instrument.
For business combination under common control realized through several transactions stepby step, in case of a package transaction, each transaction is accounted as onetransaction that has acquired the control; in case of not a package transaction, in thefinancial statement of parent company the capital reserve (share premium) is adjusted bythe difference between the initial investment cost and the sum of the carrying value of theoriginal long-term equity investment and the book value of the new payment considerationfor further acquisition of shares with the share of acquirer’s owner’s equity on the date ofcombination in case calculated on the proportion of shareholding on the date ofcombination as its initial investment cost; where the capital reserve is insufficient, theretained earnings will be used to offset such expenses.
In the consolidated financial statements, the long-term equity investment held by thecombining party before the date of acquiring control of the combined parties, and relevantprofit and loss, the other comprehensive income and changes in the other owners’ equityrecognized during the period between the later of the date of acquisition and the datewhen the combining and the combined parties are under the common control of the sameparty and the date of combination, are written down to the retained earnings or profit orloss at the beginning of the comparative reporting period, respectively.
(2)Business combinations not under common controlA business combination not under common control is a business combination in which allof the combining entities are not ultimately controlled by the same party or parties bothbefore and after the combination. For business combination not under common control, theparty that obtains the control of the other parties involving in the business combination atthe combination date is the acquirer; other parties involving in the business combination arethe transferors. The combination date is the date on which the acquirer effectively obtainscontrol of the transferors.
Haier Smart Home Co., Ltd. Interim Report 2022
In business combination not under common control, the cost of combination shall be thesum of the assets paid, obligations incurred or assumed and the fair value of the equitysecurities issued by the acquirer for obtaining control of the transferor at the date ofacquisition. Intermediary fees (such as audit, legal services and valuation consultancy) andother relevant management fees incurred by the acquirer for the purpose of businesscombination are credited in profit or loss in the period when they occurred. Transactionfees for the equity instruments or debt instruments issued by the acquirer as combinationconsideration is included in the initial recognition amount of such equity instruments or debtinstruments. Contingent consideration involved shall be recorded as the combination costbased on its fair value on the acquisition date. Should any new or further evidence arisewithin 12 months after the acquisition date and makes it necessary to adjust thecontingent consideration on the acquisition date, the goodwill arising from the businesscombination shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in a businesscombination are measured at fair value on the acquisition date. Where the cost of thecombination exceeds the acquirer’s interest in the fair value of the transferor’s identifiablenet assets obtained on the acquisition date, the difference is recognized as goodwill; wherethe cost of combination is lower than the acquirer’s interest in the fair value of thetransferor’s identifiable net assets, the difference is initially recognized in profit or loss forthe current year after a review of computation for the identifiable assets, liabilities or fairvalue of contingent liabilities and combination cost, and where the combination cost is stilllower than the acquirer’s interest in the fair value of the identifiable net assets of thetransferor obtained during the course of combination, then the difference is recorded in theprofit and loss.
In business combination not under common control that is realized in phases throughmultiple exchange transactions, in the Company individual financial statements, the sum ofthe book value of the equity investment of the transferor held before the date of acquisitionand the cost of new investment on the date of acquisition are recognized as the initialinvestment cost of such investment.
In the consolidated financial statement, the equity of the transferor held before the date ofacquisition is re-measured at the fair value on the date of acquisition, and the differencebetween the fair value and book value is included in current investment income; where theequity of the transferor held before the date of acquisition involves the other comprehensiveincome, such equity and relevant other comprehensive income are transferred to currentinvestment income on the date of acquisition, other than the other comprehensive income thatcannot be reclassified in the profit or loss.
The fair value on the acquisition date of equity interest in the transferor prior to theacquisition date and the fair value of the considerations paid for the acquisition of the newequity on the acquisition date are regarded as the combination costs of the Company,comparing with acquirer’s share of the fair value on the acquisition date of the transferor’snet identifiable assets on the proportion of the shareholding on the acquisition date toconfirm the goodwill that required to be recognized on the acquisition date or the amountthat shall be included in the profit or loss.
Haier Smart Home Co., Ltd. Interim Report 2022
6.Preparation method of consolidated financial statements
√ Applicable □ Not Applicable
(1)Scope of consolidated financial statementsThe Company incorporated all of its subsidiaries (including the separate entities controlledby the Company) into the scope of consolidation financial statements, including theenterprises under the Company’s control, divisible part in the investees and structuredentities.
(2)To unify the accounting policies, balance sheets date and accounting periods of theCompany and subsidiariesWhen preparing consolidated financial statements, adjustments are made if subsidiaries’accounting policies or accounting periods are different from that of the Company, in accordancewith the Company’s accounting policies and accounting periods.
(3)Offset matters in the consolidated financial statementsThe consolidated financial statements shall be prepared on the basis of the balance sheetsof the Company and subsidiaries, which offset the internal transactions incurred betweenthe Company and subsidiaries and among subsidiaries. The owner’s equity of thesubsidiaries not attributable to the Company shall be presented as “minority interests”under the owner’s equity item in the consolidated balance sheet.
The long-term equity investment of the Company held by the subsidiaries, deemed as treasurystock of the corporate group as well as the reduction of owners’ equity, shall be presented as“Less: Treasury stock” under the owner’s equity item in the consolidated balance sheet.
(4)Accounting treatment of subsidiaries acquired from combinationFor subsidiaries acquired from business combination under common control, the assets,liabilities, operating results and cash flow of the subsidiaries are included in theconsolidated financial statements from the beginning of the period in which the combinationtook place, as if the combination has taken since the ultimate controller began its control.When preparing the consolidated financial statements, for the subsidiaries acquired frombusiness combination not under common control, separate financial statement will beadjusted on the basis of their fair values of the identifiable net assets on the date ofacquisition.
Haier Smart Home Co., Ltd. Interim Report 2022
7.Classification of joint arrangement and accounting methods of joint operations
√ Applicable □ Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordancewith the Company’s rights and obligations under a joint arrangement, the Company classifies jointarrangements into joint operations and joint ventures.
Joint operations refer to a joint arrangement in which the Company is a party and is entitled torelevant assets and obligations of this arrangement. The Company recognizes the following itemsin relation to its interest in a joint operation, and accounts the same in accordance with relevantaccounting standards for business enterprises:
(1) recognize the assets held solely by the Company, and recognize assets held jointly by theCompany in appropriation to the share of the Company; (2) recognize the obligationsassumed solely by the Company, and recognize obligations assumed jointly by theCompany in appropriation to the share of the Company; (3) recognize revenue fromdisposal of joint operations in appropriation to the share of the Company; (4) recognizerevenue from disposal of joint operations in appropriation to the share of the Company; (5)recognize fees solely occurred by the Company and recognize fees from joint operations inappropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (theassets do not constitute a business, the same below) from joint operations, the Companyshall only recognize the part of profit or lost from this transaction attributable to otherparties of joint operations before these assets are sold to a third party. In case of animpairment loss incurred on these assets which meets the requirements as set out in“Accounting Standards for Business Enterprises No. 8—Asset Impairment ”, the Companyshall full recognize the amount of this loss in relation to its investment in or sale of assetsto joint operations or recognize the loss according to the Company’s share of commitmentin relation to its purchase of assets from joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled to netassets of this arrangement. Investment in joint venture is accounted for using the equity methodaccording to the accounting policies referred to under “12 Long-term equity investment” of NoteV.
8.Recognition standard for cash and cash equivalentsCash recognized in the cash flow statements represents the cash on hand and deposits availablefor payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquidinvestments held by the Company that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk on change in value.
Haier Smart Home Co., Ltd. Interim Report 2022
9.Foreign currency businesses and translation of foreign currency statements
√ Applicable □ Not Applicable
(1)Foreign currency transactionsIf foreign currency transactions occur, they are translated into the amount of functional currencyby applying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currenciesat the rates of exchange ruling at the balance sheet date. All foreign exchange differenceare credited in the profit or loss, except ①those arising from the funds denominated inforeign currency specially borrowed for the establishment of the qualifying assets aretreated based on the principal of capitalization of borrowing costs; ②those arising from theother changes in the balance other than amortized cost of available-for-sale monetary itemsdenominated in foreign currency are recognized in the other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using thespot exchange rate prevailing on the date when transaction occurred and its functionalcurrency shall remain unchanged. Non-monetary items denominated in foreign currenciesthat are measured at fair value are translated using the foreign exchange rate at the datethe fair value is determined; the exchange differences between the translated and originalamounts of functional currencies are recognized in the statement of profit or loss or othercomprehensive income as changes in fair value (including changes in exchange rate).
(2)Translation of foreign currency financial statementsIf the functional currencies used as the bookkeeping base currency by the subsidiaries, jointventures and associates under the control of the Company are different from that of theCompany, their financial statements denominated in foreign currencies shall be translated toperform accounting and prepare the consolidated financial statements.
The assets and liabilities of the balance sheet are translated using the spot exchange rateat the balance sheet date; all items except for “undistributed profits” of the owner’s equityare translated at the spot exchange rate on the transaction date. The revenue andexpenses in the income statement are translated using the approximate rate of the spotexchange rate on the transaction date. Differences arising from the translation of foreigncurrency financial statements are presented as the “other comprehensive income” in theowner’s equity of the balance sheet.
Foreign currency cash flow is translated using the approximate rate of the spot exchangerate on the transaction date. The impact of exchange rate changes on cash amount isreflected separately in the cash flow.
When disposing overseas operations, converted difference in foreign currency statementsrelated to the overseas operation shall be transferred together or as the percentage ofdisposing the overseas operation to profit or loss in the current period of disposal.
Haier Smart Home Co., Ltd. Interim Report 2022
10.Financial instruments
√ Applicable □ Not Applicable
A financial instrument refers to any contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity. A financial asset or financial liability isrecognized when the Company becomes a party to the contract of a financial instrument.
(1)Financial assets1 Classification and measurementAccording to the business model for managing financial assets and the contractual cashflow characteristics of financial assets, the Company classifies financial assets into: (1)Financial assets measured at amortized cost; (2) financial assets measured at fair valuethrough other comprehensive income; (3) financial assets measured at fair value throughprofit or loss of the current period.
Financial assets are measured at fair value upon initial recognition. For financialassets measured at fair value through profit or loss of the current period, relatedtransaction costs are directly included in profit and loss of the current period; forother types of financial assets, related transaction costs are included in their initialrecognized amounts. For the accounts receivable or bills receivable arising from thesale of products or the provision of labor services that do not contain or consider thesignificant financing components, the Company shall take the consideration amountentitled to be received as the initial recognized amount.
a.Debt instrumentThe debt instruments held by the Company refer to the tools that are in conformitywith the definition of financial liability from the perspective of the issuing party,which are measured in the following three ways, respectively:
(a)Measured at amortized cost:
The Company’s business model for managing such financial assets is: withthe aim of obtaining contractual cash flow, the contractual cash flowcharacteristics of such financial assets shall be consistent with the basiclending arrangements, that is, the cash flow generated on a specific dateis only the payment for the principal and the interest based on theoutstanding principal amount. For such financial assets, the Companyrecognizes the interest income in accordance with the effective interestmethod. Such financial assets mainly include cash and cash equivalents,bills receivable and accounts receivable, other receivables, creditor’s rightinvestment and long-term receivables. The Company lists the creditor’srights investments and long-term receivables matured within one year(inclusive) from the balance sheet date as non-current assets maturedwithin one year; the creditor’s rights investments matured within one year(inclusive) when being obtained are listed as other current assets.
Haier Smart Home Co., Ltd. Interim Report 2022
(b)Measured at fair value through other comprehensive income:
The Company’s business mode for managing such financial assets is: withthe aim of obtaining contractual cash flow and selling the financial assets,the contractual cash flow characteristics of such financial assets shall beconsistent with the basic lending arrangements. Such financial assets aremeasured at fair value through other comprehensive income, butimpairment gains and losses, exchange gains and losses, and interestincome calculated by the effective interest method are included in profitand loss of the current period. Such financial assets are listed as othercreditor’s rights investments. Other creditor’s rights investments maturedwithin one year (inclusive) from the balance sheet date are listed as non-current assets matured within one year; other creditor’s rights investmentsmatured within one year (inclusive) when being obtained are listed asother current assets.
(c)Measured at fair value through profit or loss of the current period:
The Company lists its held debt instruments that are neither measured atamortized cost nor at fair value through other comprehensive income asfinancial assets held for trading measured at fair value through profit orloss of the current period. At the time of initial recognition, in order toeliminate or significantly reduce accounting mismatch, the Companydesignated some financial assets as financial assets measured at fair valuethrough profit or loss of the current period. Investments that are maturedmore than one year and are expected to be held for more than one yearfrom the balance sheet date are listed as other non-current financial assets.
b.Equity instrumentsThe Company lists equity instrument investments that have no control, jointcontrol and significant influence on itself as financial assets held for tradingmeasured at fair value through profit or loss of the current period; investmentsthat are expected to be held for more than one year from the balance sheetdate are listed as other non-current financial assets.
In addition, the Company designated some non-trading equity instrumentinvestments as financial assets measured at fair value through othercomprehensive income, which are listed as other equity instrument investments.The relevant dividends and interest income of such financial assets are includedin profit and loss of the current period.
② Impairment
For financial assets measured at amortized cost and debt instrumentinvestments measured at fair value through other comprehensive income,contract assets and financial guarantee contracts, the Company recognizesthe loss provision based on the expected credit losses.
Haier Smart Home Co., Ltd. Interim Report 2022
The Company considers reasonable and reliable information about pastevents, current conditions and forecasts of future economic conditions,and takes the risk of default as a weight, and calculates the probability-weighted amount of the present value of the difference between the cashflow receivable and the cash flow expected to be received of the contractto confirm the expected credit losses.
On each balance sheet date, the Company measures the expected creditlosses of financial instruments in different phases. If the credit risk has notincreased significantly since the initial recognition, the financial instrumentsare in the first phase. The Company measures the loss provisionaccording to the expected credit losses in the next 12 months; if creditrisk has increased significantly but credit impairment has not yet occurredsince the initial recognition, the financial instruments are in the secondphase. The Company measures the loss provision according to theexpected credit losses of the instruments during the entire duration; ifcredit impairment has occurred since the initial recognition, the financialinstruments are in the third phase. The Company measures the lossprovision according to the expected credit losses of the instrumentsduring the entire duration.
For financial instruments with lower credit risk on the balance sheet date,the Company measures the loss provision according to the expectedcredit losses in the next 12 months, assuming that its credit risk has notincreased significantly since the initial recognition.
For financial instruments in the first phase and second phase and financialinstruments with relatively lower credit risk, the Company calculates interestincome based on their book balance before the deduction of impairmentprovisions and effective interest rate. For financial instruments in the thirdphase, the Company calculates interest income based on their amortized costafter the impairment provision has been deducted from the book balance andeffective interest rate.
For bills receivable, accounts receivable and contractual assets, whetherthere exist significant financing components, the Company measures lossprovision based on expected credit loss over the entire duration.
The Company classifies accounts receivable into groups on the basis ofshared credit risk characteristics, and calculates the expected creditlosses on groups, the bases of group determination are as follows:
Haier Smart Home Co., Ltd. Interim Report 2022
For each group of bills receivable, the Company applies exposure atdefault and expected credit losses rate over the entire duration tocalculate the expected credit losses on the historical credit lossesexperience, the existing conditions and forecast of future economicconditions.
For each group of accounts receivable, the Company makes the comparisonof expected credit losses rates of accounts receivable in overdue days andover the entire duration to calculate the expected credit losses by taking intoaccount the historical credit losses experience, the existing conditions andforecast of future economic conditions.
For each group of other accounts receivable, the Company appliesexposure at default and expected credit losses rate within the next 12months or over the entire duration to calculate the expected credit lossesby taking into account the historical credit losses experience, the existingconditions and forecast of future economic conditions.
The Company recognizes the loss impairment provision or reversed inprofit or loss of the current period. For held debt instruments at fair valuethrough other comprehensive income, the Company recognizes loss/gainon impairment in profit or loss of the current period, and adjusts othercomprehensive income at the same time.
③ Derecognition
A financial asset is derecognized when any of the below criteria is met: a.the contractual rights to receive the cash flow from the financial assethave been terminated; b. the financial asset has been transferred and theCompany transfers substantially all the risks and rewards of ownership ofthe financial asset to the transferee; c. the financial asset has beentransferred and the Company has not retained control of the financialasset, although the Company neither transfers nor retains substantially allthe risks and rewards of ownership of the financial asset.
On de-recognition of other equity instruments investment, the differencebetween the book balance and the sum of the consideration received andany cumulative profit or loss of fair value that had been recognized inother comprehensive income is recognized in the retained earnings. On de-recognition of other financial assets, the difference between the bookbalance and the sum of the consideration received and any cumulativeprofit or loss of fair value that had been recognized in othercomprehensive income is recognized in the profit and loss of the currentperiod.
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Financial liabilitiesFinancial liabilities are classified as financial liabilities measured at amortized cost andfinancial liabilities at fair value through profit or loss of the current period at initialrecognition.
The financial liabilities of the Company are financial liabilities measured at amortized cost,including bills payable, accounts payable, other payables, borrowings, bonds payable, etc.Such financial liabilities are recognized initially at fair value less transaction costs andsubsequently measured using the effective interest method. Financial liabilities with amaturity of less than one year (inclusive) are listed as current liabilities: those with maturityof more than one year but are mature within one year from the balance sheet date(inclusive) are listed as non-current liabilities due within one year; the rest are presented asnon-current liabilities.
When all or partial current obligations of financial liabilities have been discharged, suchfinancial liabilities or the part with obligations discharged are derecognized by the Company.The difference between the carrying amount of a financial liability de-recognized and theconsideration paid is recognized in the profit and loss of the current period.
(3)Determination of fair value of financial instrumentsThe fair value of a financial instrument that is traded in an active market is determined atthe quoted price in the active market. The fair value of a financial instrument that is nottraded in an active market is determined by using a valuation technique. During thevaluation, the Company adopts an applicable valuation technique under current conditionsand there are enough available data and other information to support. Those inputs shouldbe consistent with the inputs a market participant would use when trading the asset orliability, and the Company should maximize the use of relevant observable inputs. Whenrelated observable inputs can’t be acquired or are not feasible to be acquired, then useunobservable inputs.
(4)Significant accounting estimates and judgments
① Significant accounting estimates and key assumptions
Measurement of expected credit lossThe Company applies exposure at default and expected credit loss rate to calculateexpected credit loss, and determines expected credit loss rate based on probability ofdefault and loss given default. For the determination of expected credit loss rate, theCompany applies data including internal historical credit losses experience, and adjustshistorical data taking account current conditions and forward-looking information. Regardingforward-looking information, indicators used by the Company include economic downturnrisk, growth in expected unemployment rate, changes in external market environment,technology environment and customer status. The Company monitors and reviewsassumptions related to the calculation of expected credit loss on a regular basis. No majorchange occurred in the above-mentioned estimate techniques and key assumptions in thisyear.
Haier Smart Home Co., Ltd. Interim Report 2022
2 Critical judgments on application of accounting policies
a.Classification of financial assetsOn classification of financial assets, critical judgments considered by the Companyinclude the business mode, an analysis of contractual cash flow characteristics andothers.
From the dimension of financial asset portfolio, the Company determines thebusiness mode of financial asset management. Considerations cover assessments,reporting methods of financial asset performance to key management personnel,risks impacting financial asset performance and relevant management methods, aswell as methods of relevant business management personnel receivingremuneration.
In assessing the consistency between contractual cash flow of financial assets andthe basic lending arrangements, the Company makes the following majorjudgments: whether the time distribution or amount of the principal changes duringthe duration of the financial assets due to prepayment, etc.; and whether theinterest includes considerations for the currency time value, credit risk, as well asother basic borrowing risks, costs and profits. For example, whether theprepayment amount merely reflects the principal unpaid and interest incurred by theprincipal unpaid, as well as reasonable compensation paid due to prematuretermination of contracts.
b.Judgment that credit risk increases significantlyThe main standards for the Company to judge significant increase in credit riskare that overdue days are more than 30 days, or that significant changes occurin one or more of the following indicators: business environment of debtors,internal and external credit rating, the significant change of actual or expectedbusiness performance, value of collaterals or significant drop in credit rating ofguarantors.
The main standards for the Company to judge incurred credit impairment arethat overdue days are more than 90 days (i.e. default occurred), or that one ormore of the following conditions are met: a debtor is under significant financialdifficulty; other ongoing debt restructuring or high possibility of bankruptcy.
11.Inventories
√ Applicable □ Not Applicable
(1)Classification of inventoriesInventories refer to the finished goods or commodities held for sale in daily activities, goodsin progress in the production process, consumed materials and supplies in the productionprocess or providing services of the Company, which mainly include raw materials,revolving materials, entrusted processed materials, wrap page, goods in progress, self-made semi-finished goods, finished goods (merchandise inventory) and engineeringconstruction, etc.
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Measurement of inventories transferred outAt delivery, inventories are accounted using the weighted average method.
(3)Provision for inventory impairmentAt balance sheet date, inventories are measured at the lower of cost or net realizablevalue.
The net realizable value of inventories (including finished products, merchandize andmaterials for sale) that can be sold directly is determined based on the estimated sellingprice of such inventory deducted by the estimated selling expenses and relevant taxes. Thenet realizable value of materials held for production is determined based on the estimatedselling price of the finished product deducted by the estimated cost to be incurred uponcompletion, estimated selling expenses and relevant taxes. The net realizable value ofinventory held for performance of sales contract or labor service contract is determinedbased on the contractual price; in case the amount of inventory held by the enterpriseexceeds the contractual amount, the net realizable value of the excess portion of inventoryis calculated based on the general selling price.
Provision for impairment of inventories is made for individual inventory. For items ofinventories that is produced and marketed in the same geographical area and with thesame or similar end uses or purposes, which cannot be practicable evaluated separatelyfrom other items, cost and net realizable value of inventories may be determined on anaggregate basis. For large quantity and low value items of inventories, cost and netrealizable value of inventories may be determined on types of inventories.
Provision for inventory impairment is made and recognized as profit or loss when the costis higher than the net realizable value on the balance sheet date. If the factors that giverise to the provision in prior years are not in effect in current year, provision would bereversed within the amount of provision for inventory impairment originally recognized, andthe reversed amount shall be recognized in the profit or loss.
(4)Inventory systemThe Company adopts perpetual inventory system.
(5)Amortization of low-value consumables and packagingLow-value consumables and packages of the Company are amortized by one-time write-off.
Haier Smart Home Co., Ltd. Interim Report 2022
12.Long-term equity investments
√ Applicable □ Not Applicable
Long-term equity investments in this section refer to equity investments held by the Companythat give it control, joint control or significant influence over the investee. Long-term equityinvestments where the Company does not exercise control, joint control or significant influenceover the investee are accounted for as other equity instrument investments.
(1)Recognition of initial cost of investment
① For long-term equity investment obtained from business consolidation under commoncontrol, the initial cost is measured at the combining party’s share of the carryingamount of the equity of the combined party; for a long-term equity investmentobtained from business consolidation not under common control, the initial cost is theconsolidation cost at the date of acquisition;
② For the long-term equity investment acquired in a manner other than businesscombination: the initial investment cost of the long-term equity investment acquired bypayment in cash shall be the purchase price actually paid; the initial investment costof the long-term equity investment acquired by issuing equity securities shall be thefair value of the equity securities issued; for long-term equity investment acquired bydebt restructuring, the initial investment cost shall be determined in accordance withthe relevant requirements under Accounting Standards for Enterprises No. 12—DebtRestructuring ; for long-term equity investment acquired by the exchange of non-monetary assets, the initial investment cost shall be determined in accordance withrelevant requirements under the Rules.
(2)Subsequent measurement and profit or loss recognition
① Cost method
Where the investor has a control over the investee, long-term equity investments aremeasured using cost method. For long-term equity investments using cost method, unlessincreasing or recovering the investment, the carrying value is generally unchanged. Theprofit distributions or cash dividends declared by the investee attributable to the Companyare recognized as investment income.
② Equity method
Investor’s long-term equity investments in associates and joint ventures are measuredusing equity method. Where part of the equity investments of an investor in itsassociates are held indirectly through venture investment institutions, common fund,trust companies or other similar entities including investment linked insurance funds,such part of equity investments indirectly held by the investor shall be measured atfair value through profit or loss according to relevant requirements of AccountingStandards for Business Enterprises No. 22—Recognition and measurement ofFinancial Instruments regardless whether the above entities have significant influenceon such part of equity investments, while the remaining part shall be measured usingequity method.
Haier Smart Home Co., Ltd. Interim Report 2022
Under the equity method, where the initial investment cost of a long-term equityinvestment exceeds the Company’s share of the fair value of the investee’sidentifiable net assets at the time of acquisition, no adjustment is made to the initialinvestment cost. Where the initial investment cost is less than the Company’s shareof the fair value of the investee’s identifiable net assets at the time of acquisition, thedifference is recognized in profit or loss for the period, and the cost of the long-termequity investment is adjusted accordingly.
For long-term equity investments accounted for using the equity method, theCompany recognizes the investment income and other comprehensive incomeaccording to its share of net profit or loss and other comprehensive income of theinvestee, and the carrying amount of the long-term equity investments shall beadjusted accordingly; the carrying amount of the investment is reduced by theCompany’s share of the profit distribution or cash dividends declared by an investee;for changes in owner’s equity of the investee other than those arising from its netprofit or loss, other comprehensive income and profit distribution, the carrying amountof the long-term equity investment shall be adjusted and recognized to capital reserve.When recognizing attributable share of the net profit and losses of the investee, the netprofit of the investee shall be recognized after adjustment on the ground of the fairvalue of all identifiable assets of the investee when it obtains the investment. If theaccounting policies and accounting periods adopted by the investee are different fromthose adopted by the Company, an adjustment shall be made to the financialstatements of the investee in accordance with the accounting policies and accountingperiods of the Company and recognize the investment incomes and othercomprehensive income.
The Company’s share of net losses of the investee shall be recognized to the extentthat the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of the investor’s net investment in theinvestee are reduced to zero. If the Company has to assume additional obligations,the estimated obligation assumed shall be provided for and charged to the profit orloss as investment loss for the period. Where the investee is making net profits insubsequent periods, the Company shall resume recognizing its share of profits aftersetting off against the share of unrecognized losses.
(3)Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method: where the
equity investment originally held have no control, joint control or significant impact onthe investee, and that are accounted according to the Standards for Recognition andMeasurement of Financial Instruments and can impose common control or placesignificant impact on the investee due to addition of investment which resulted in theincrease of shareholding, the investee shall take the fair value of the equityinvestment originally held determined in accordance with the Standards forRecognition and Measurement of Financial Instruments plus the fair value of theconsideration payable for new investment as the initial investment cost accountedafter the equity method is adopted.
Haier Smart Home Co., Ltd. Interim Report 2022
② Change of measurement at fair value or accounting under equity method to cost method:
the equity investment originally held by the investor with no control, joint control orsignificant impact on the investee and accounted according to the Standards forRecognition and Measurement of Financial Instruments, or the long- term equityinvestment originally held in associates or joint ventures that can impose control overthe investee due to addition of investment, shall be accounted as long- term equityinvestment formed by combination of relevant enterprises.
③ Change of accounting under equity method to measurement at fair value: for the long-
term equity investment originally held with common control or significant impact onthe investee that can no longer impose common control or significant impact on theinvestee due to a decrease of shareholding as a result of factors such as partialdisposal, the remaining equity investment shall be accounted in accordance withStandards for Recognition and Measurement of Financial Instruments, and thedifference between the fair value on the date when the common control or significantimpact no longer exists and the book value is included in profit or loss.
④ Change of cost method to equity method or measured at fair value: For loss of control
in the invested company due to reasons such as partial disposal of equity investment,in the preparation of separate financial statements, the residual equity which canapply common control or impose significant influence to the invested company afterdisposal shall be accounted for under equity method. Such residual equity shall betreated as accounting for under equity method since the equity is obtained andadjusted. For residual equity which cannot apply common control or imposesignificant influence after disposal, it shall be accounted for in accordance withrelevant requirements of “Accounting Standards for Business Enterprises No. 22—Recognition and Measurement of Financial Instrument”, and the difference betweenthe fair value and the carrying value of residual equity on the date loss of control shallbe included in the profit or loss for such period. In the preparation of combinedfinancial statements, it shall be accounted for in accordance with relevantrequirements of “Accounting Standards for Business Enterprises No. 33—CombinedFinancial Statements”.
(4)Basis of conclusion for common control and significant impact over the investee
① Joint control over an investee means that activities which have a significant impact on
the return of a certain arrangement could be decided only by mutual consent of theinvesting parties sharing the right of control, which includes the sales and purchase ofgoods or services, management of financial assets, acquisition and disposal of assets,research and development activities and financing activities, etc.
② Significant impact on the investee exists when the investing parties hold more than 20%
but less than 50% of the shares with voting rights in the investee or, if the investingparties hold less than 20% shares in the investee, they:
1)have representatives in the board of directors or similar governing body of theinvestee;
Haier Smart Home Co., Ltd. Interim Report 2022
2)participate in the investee’s policy formulation;
3)assign management personnel to the investee;
4)provide technology or technical information that the investor is dependent on;
5)have major transactions with the investee.
(5)methods of impairment test and provision for impairmentAt the balance sheet date, the Company reviews whether there are signs for theimpairment of long-term equity investments. If yes, the recoverable amount is determinedthrough impairment test and provision for impairment is made based on the differencebetween the recoverable amount and the carrying value. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it.
The recoverable amount is the higher of net fair value of long-term equity investments ondisposal and the present value of estimated future cash flow.
(6)Disposal of long-term equity investmentsFor disposal of long-term equity investment, the difference between the considerationsactually received and the carrying value of the disposed investment is recognized in currentprofit or loss. For long-term equity investment accounted for using the equity method, thepart previously recognized in other comprehensive income is accounted on pro rata basisupon disposal in the same way as the relevant assets or liabilities are disposed of directlyby the investee.
13.Investment properties
Investment properties of the Company include leased land use rights and leased buildings.
An investment property is initially measured at cost, and cost method is adopted for subsequentmeasurement.
The buildings leased out of investment properties of the Company are depreciated over theiruseful lives using the straight-line method. The specific measurement policy is the same as thatof fixed assets. For land use rights leased out of investment properties or held for resale afterappreciation in value, they are amortized using the straight-line method. The specificmeasurement policy is the same as that of intangible assets.
At the balance sheet date, the Company reviews whether there are signs for impairment ofinvestment properties. If yes, the recoverable amount is recognized through an impairment testand provision for impairment is made based on the difference between the carrying value and therecoverable amount. Impairment loss will not be reversed in subsequent accounting periods onceprovision is made for it.
Haier Smart Home Co., Ltd. Interim Report 2022
14.Fixed assets
(1).
Recognition criteria
√ Applicable □ Not Applicable
Fixed assets are tangible assets that are held for production of goods, provision of laborservices, leasing or operation and management purposes, and have a useful life of morethan one fiscal year, which are recognized when the following conditions are met:
economic benefits in relation to the fixed assets are very likely to flow into the enterprise;
the cost of the fixed assets can be measured reliably.
(2).
Depreciation methodThe fixed assets of the Company can be divided into: houses and buildings, productionequipment, transportation equipment, office equipment, etc. The straight-line method overuseful lives is used to measure depreciation. The useful lives and the expected net residualvalue of fixed assets are determined according to the nature and usage of various fixed assets.At the end of each year, the useful lives, expected net residual value and depreciation methodof fixed assets are reviewed, and adjusted if there is variance with original estimates. TheCompany has made provisions for all the fixed assets except for the fixed assets that havebeen fully depreciated and still in use.
| Type | Depreciation life (year) | Residual ratio |
| Land ownership | — | — |
| Buildings | 8–40 years | 0%-5% |
| Machinery equipment | 4–20 years | 0%-5% |
| Transportation equipment | 5–10 years | 0%-5% |
| Office equipment and others | 3–10 years | 0%-5% |
(3).
Method of test and provision for impairment of fixed assetsAt the balance sheet date, the Company reviews whether there are signs for impairment ofthe fixed assets. If yes, the recoverable amount is recognized through an impairment testand provision for impairment is made based on the difference between the carrying valueand the recoverable amount. Impairment loss will not be reversed in subsequentaccounting periods once provision is made for it.
(4).
Disposal of fixed assetsWhen fixed assets are disposed of or are expected to fail to generate economic benefitsafter the use or disposal, the fixed assets shall be derecognized. The difference of theincome from sales, transfer, retirement or damage of fixed assets deducting the book valueand related taxes should be included in the current profit and loss.
Haier Smart Home Co., Ltd. Interim Report 2022
15.Construction in progress
√ Applicable □ Not Applicable
(1)Measurement of construction in progressCosts of construction in progress are recognised based on actual construction expense,including various necessary construction expenses incurred during construction, borrowingcosts to be capitalised before reaching estimated usable status and other relevant fees.
(2)Standard and timing of transfer from construction in progress to fixed assetsThe construction in progress of the Company is transferred to fixed assets when theproject is completed and ready for its intended use, which shall satisfy one of the followingconditions:
① The construction of the fixed assets (including installation) has been completed orsubstantially completed;
② The fixed asset has been used for trial production or operation and it is evidenced thatthe asset can operate ordinarily or steadily produce qualified products; or the result oftrial operation proves that it can operate normally or be opened for business;
③ Further expenditure incurred for construction of the fixed asset is very minimal orremote;
④ The constructed fixed asset reaches or almost reaches the design or contractual
requirements, or complies with the design or contractual requirements.
(3)Method of test and provision for impairment of impairment of construction inprogressAt the balance sheet date, the Company reviews the construction in progress to checkwhether there is any sign of impairment. If yes, the recoverable amount is recognizedthrough an impairment test and provision for impairment is made based on the differencebetween the carrying value and the recoverable amount. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it.
The recoverable amount of construction in progress should base on the higher of net fair valueof asset less disposal expense and the present value of estimated future cash flow of the asset.
Haier Smart Home Co., Ltd. Interim Report 2022
16.Borrowing costs
√ Applicable □ Not Applicable
(1)Recognition principles for capitalization of borrowing costsThe Company’s borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalized into the cost of relevantassets. Other borrowing costs are recognized as expenses in current profit or loss basedon the amount incurred. Qualifying assets for capitalization include fixed assets, investmentproperties and inventories that necessarily take a substantial period of time for acquisition,construction or production to get ready for their intended use or for sale.
(2)Computation of capitalized amountPeriod of capitalization refers to the period from the commencement to the cessation ofcapitalization timing of borrowing costs, excluding the periods in which capitalization ofborrowing costs is suspended.
Period of suspended capitalization: Capitalization of borrowing costs is suspended duringperiods in which the acquisition, construction or production of a qualifying asset issuspended abnormally and the suspension lasts for more than 3 months.
Computation of capitalized amount: ①Specific borrowings will be determined based on theactual interest expense incurred in the current period of the special borrowings less theinterest income from unutilized borrowings deposited in banks or investment income fromtemporary investment; ②Normal borrowings utilized are calculated based on the weightedaverage of the asset expenses accumulated exceeding the asset expenses of the portion ofspecial borrowings multiplied by the capitalization ratio of the normal borrowings utilized.Capitalization ratio is calculated based on weighted average interest rate of normalborrowings; ③For borrowings with discount or premium, the discount or premium whichshould be amortized in each accounting period is determined based on the effectiveinterest rate method and an adjustment should be made to the amount of interests in eachperiod.
17.Right-of-use assets
√ Applicable □ Not Applicable
Right-of-use assets are the right of the Company as a lessee to use leased assets during thelease term. On the commencement date of the lease term, the Company as lessee shallrecognize the right-of-use assets and lease liabilities for the lease, except for short-term leasesand low value assets leases which are treated with practical expedient. The commencement dateof the lease term refers to the start date when the lessor provides the leased assets to make itavailable to the lessee.
Haier Smart Home Co., Ltd. Interim Report 2022
The Company’s right-of-use assets shall be initially measured at the costs. The costs include:
(1)initial measurement amount of the lease liability;
(2)a lease payment paid on or before the date of commencement of the lease period, wherethere was lease incentive, such incentives shall be deducted;
(3)initial direct costs incurred by the Company as lessee;
(4)costs expected to be incurred by the Company for demolition and removal of leased assets,restoration of the premises where the leased assets are located, or restoration of theleased assets to the conditions of the lease terms.
The Company refers to the relevant depreciation provisions of Accounting Standards for BusinessEnterprises No. 4—Fixed Assets to accrue depreciation for right-of-use assets. If the Companycan reasonably determine that the ownership of the leased asset can be acquired at theexpiration of the lease term, the leased asset shall be depreciated within its remaining useful life.If the Company cannot reasonably determine that the ownership of the leased asset can beacquired at the expiration of the lease term, the leased asset shall be depreciated within thelease term or its remaining useful life (whichever is shorter).
The Company determines whether the right-of-use assets are impaired in accordance with theprovisions of Accounting Standards for Business Enterprises No. 8—Asset Impairment and performsaccounting treatment on the identified impairment losses.
When the lease liabilities are remeasured in accordance with the Standards, the Companyadjusts the book value of the right-of-use assets accordingly. If the book value of the right-of-use assets is reduced to zero, but needs a further reduction in the measurement of the leaseliabilities, the Company recognizes any remaining amount of the remeasurement in current profitor loss.
If the lease change results in a narrower lease or a shorter lease term, the Company reduces thebook value of the right-of-use assets accordingly and recognizes the related gains or losses ofthe partially terminated or completely terminated leases into current profit and loss. For otherlease changes which result in the remeasurement of lease liabilities, the Company adjusts thebook value of the right-of-use assets accordingly.
Haier Smart Home Co., Ltd. Interim Report 2022
18.Intangible assets
√ Applicable □ Not Applicable
Intangible assets are the identifiable non-monetary assets which have no physical form and arepossessed or controlled by the Company.
(1)Measurement of intangible assets
Intangible assets of the Company are initially recognized at costs. The actual costs ofpurchased intangible assets include the consideration and relevant expenses actually paid.For intangible assets contributed by investors, relevant actual costs are determined basedon the value agreed in the investment contract or agreement. But if the value agreed in theinvestment contract or agreement is not a fair value, the actual costs should be determinedbased on the fair value. The cost of a self-developed intangible asset is the totalexpenditure incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: ①Intangible assets withfinite useful lives are amortized on a straight-line basis; their useful lives and amortizationmethods are reviewed at the end of each year, and adjusted accordingly if there is anyvariance with the previous estimates; ②Intangible assets with indefinite useful lives are notamortized and their useful lives are reviewed at the end of each year. If there is anobjective evidence that the useful life of an intangible asset is finite, an estimation shouldbe made on the useful life and the intangible asset should be amortized using the straight-line method.
(2)Criterion of determining indefinite useful lifeThe useful life of an intangible asset is indefinite if the period in which the asset bringseconomic benefits for the Company is unforeseeable, or the useful life could not be ascertained.
Criterion of determining indefinite useful lives: ① the period is derived from contractualrights or other legal rights and there are no explicit years of use stipulated in the contractor laws and regulations; ② the period in which the intangible assets generate benefits forthe Company still could not be estimated after considering the industrial practice orrelevant expert opinions.
At the end of each year, the useful lives of the intangible assets with indefinite useful livesare reviewed. The assessment is primarily reviewed by relevant departments that use theintangible assets, using the down-to-top approach, to determine if there are changes to thedetermination basis of indefinite useful lives.
Haier Smart Home Co., Ltd. Interim Report 2022
(3)Methods of test and provision for impairment of intangible assetsAt the balance sheet date, the Company reviews intangible assets to check whether thereis any sign of impairment. If yes, the recoverable amount is recognized through animpairment test and provision for impairment is made based on the difference between thecarrying value and the recoverable amount. Impairment loss will not be reversed insubsequent accounting periods once provision is made for it.
The recoverable amount of intangible assets should be based on the higher of the net fairvalue of the assets less the disposal expense and the present value of estimated futurecash flow of the assets.
(4)Basis for research and development phases for internal research and developmentproject and basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the researchstage is recognized in the profit or loss as incurred. Expenses incurred in the developmentstage are recognized as intangible assets if all of the following conditions are met: ①thetechnical feasibility of completing the intangible assets so that they will be available for useor for sale; ②the intention to complete the intangible assets for use or for sale; ③ how theintangible assets will generate economic benefits, including there is evidence that theproducts produced by the intangible assets has a market or the intangible assetsthemselves have a market; if the intangible assets are for internal use, there is evidencethat there exists usage for the intangible assets; ④ the availability of adequate technical,financial and other resources to complete the development and gain the ability to use orsell the intangible assets; ⑤ the capability to reliably measure the expenditures attributableto the development stage of the intangible assets.
Specific standards for distinguishing research stage and development stage of an internalresearch and development project: research stage refers to the stage of plannedinvestigation and search for obtaining new technology and knowledge, which featuresplanning and exploration; before commercial production or other uses, the stage ofapplying the research achievements and other knowledge in a plan or design to producenew or substantially improved materials, equipment and products is regarded asdevelopment stage, which features pertinence and is very likely to form results.
All the expenditures incurred on research and development which cannot be distinguishedbetween research stage and development stage are recognized in the profit or loss.
Haier Smart Home Co., Ltd. Interim Report 2022
19.Impairment of long-term assets
√ Applicable □ Not Applicable
Long-term equity investment, investment properties measured based on cost model, fixed assets,construction in progress, intangible assets and other long-term assets are tested for impairmentif there is any sign of impairment at the balance sheet date. If the result of the impairment testindicates that the recoverable amount of the assets is less than the carrying amount, a provisionfor impairment will be made based on the difference and will be recorded in impairment loss. Therecoverable amount is the higher of the net fair value of the assets less the disposal expenseand the present value of estimated future cash flow of the assets. Provision for asset impairmentis calculated and recognized on the individual asset basis. If it is not possible to estimate therecoverable amount of an individual asset, the recoverable amount of the asset group to whichthe asset belongs is determined. An asset group is the smallest asset portfolio that can generatecash inflows independently.
Goodwill is tested for impairment at least at the end of each year.
In terms of impairment test of the goodwill of the Company, the carrying amount of the goodwill,arising from business combination, shall be allocated to the related asset groups on reasonablebasis since the acquisition date, or to the related asset group portfolios if it is difficult to beallocated to the related asset groups. When the carrying amount of the goodwill is allocated tothe related asset groups or asset group portfolios, it shall be allocated in the proportion of thefair value of each asset group or asset group portfolio against the total fair value of related assetgroups or asset group portfolios. If it is difficult to measure the fair value reliably, it shall beallocated in the proportion of the carrying amount of each asset group or asset group portfolioagainst the total carrying amount of related asset groups or asset group portfolios.
When impairment test is made to the related asset groups or asset group portfolios includinggoodwill, if there is a sign that the related asset groups or asset group portfolios are prone toimpair, the Company shall first conduct impairment test on the asset groups or asset groupportfolios excluding goodwill, calculate the recoverable amount and recognize the correspondingimpairment loss by comparing with its carrying amount. The Company shall then conductimpairment test on the asset groups or asset group portfolios including goodwill and comparethe carrying amount (including the carrying amount of allocated goodwill) of related asset groupsor asset group portfolios with the recoverable amount thereof. Impairment loss on goodwill shallbe recognized when the recoverable amount of the related asset groups or asset groupportfolios is lower than the carrying amount thereof.
Once the above impairment loss on assets is recognized, it shall not be reversed in any subsequentaccounting period.
20.Long-term prepaid expense
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Long-term prepaid expenses of the Company are expenditures which have incurred but thebenefit period of which is more than one year (exclusive). They are amortized by installments overthe benefit period based on each item under the expenses. If items under the long-term pre-paidexpenses are no longer beneficial to the subsequent accounting periods, the amortized value ofsuch unamortized items is then fully transferred to the profit or loss.
21.Staff’s remuneration
(1).
Accounting treatment of short-term remuneration
√ Applicable □ Not Applicable
Staff’s remunerations are all forms of compensation and other relevant expenditure given by theCompany in exchange for services rendered by employees, including short-term remunerations,post-employment benefits, termination benefits and other long-term benefits.
Short-term remunerations include short-term salaries, bonus, allowance, subsidies,employee welfare, housing provident fund, labor union fee and education fee, medicalinsurance premiums, work-related injury insurance premiums, maternity insurance premiums,short-term compensated leave, short-term profit-sharing plans, etc. During the accountingperiod when employees render services, short-term remunerations that actually incurredshall be recognized as liabilities and credited into the current profit or loss or the cost ofrelevant assets on an accrual basis by the benefit objects.
(2).
Accounting treatment of post-employment benefits
√ Applicable □ Not Applicable
Post-employment benefits mainly include the basic pension insurance, enterprise annuity,etc., In accordance with the risks and obligations undertaken by the Company, the post-employment benefits are classified as defined contribution plans and defined benefit plans.Defined contribution plans: the Company shall recognize the sinking funds paid on thebalance sheet date to individual entities in exchange for services from employees in theaccounting period as liabilities, and shall credit such funds into the profit or loss or the costof relevant assets in accordance with the benefit objects. Defined benefit plans: the cost forproviding benefits is determined using the expected cumulative welfare unit method, withactuarial valuations being carried out by independent actuary at the interim and annualbalance sheet date. The costs for staff’s remunerations incurred by the defined benefit plansof the Group are categorized as follows: (1) service cost, including current period service cost,past service cost and settlement profit or loss. Specifically, current period service cost meansthe increase of the present value of defined benefit obligations resulted from the currentperiod services offered by employees. Past service cost means the increase or decrease ofthe present value of defined benefit obligations resulted from the revision of the definedbenefit plans related to the prior period services offered by employees; (2) interest expensesof defined benefit plans; (3) changes caused by the remeasurement of liabilities for definedbenefit plans. Unless other accounting standards require or permit the credit of the costs foremployee welfare into the cost of assets, the Company will credit (1) and (2) above into theprofit or loss; and recognize (3) above as other comprehensive income and will not transferit back to the profit or loss in subsequent accounting periods.
(3).
Accounting treatment of termination benefits
√ Applicable □ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
Termination benefits: The indemnity proposal provided by the Company for employees forthe purpose of terminating labor relations with employees before expiry of the laborcontracts or encouraging employees to accept downsizing voluntarily. When the followingconditions are met, the Company will recognize and credit into the profit or loss theaccrued liabilities arising from the indemnity as a result of terminating labor relations withthe employees: the Company has made a formal plan for termination of labor relations orhas made an offer for voluntary redundancy which will be implemented immediately; and theCompany could not unilaterally withdraw the plan for termination of labor relations or theredundancy offer. Early retirement plans for employees will be handled in the principle thesame as the termination benefits above. The Company will credit the salaries and socialinsurance premiums to be paid to the early retirees during the period from the date of earlyretirement to the normal retirement date to the profit or loss when recognition conditions forestimated liabilities are met.
(4).
Accounting treatment of other long-term employee benefits
□ Applicable √ Not Applicable
22.Lease liabilities
√ Applicable □ Not Applicable
On the commencement date of the lease term, the Company as the lessee shall recognize theright-of-use assets and lease liabilities for the lease. The Company’s lease liabilities are initiallymeasured at the present value of the lease payment that has not been paid on thecommencement date of the lease term.
When calculating the present value of the lease payment, the Company adopts interest rateimplicit in lease as discount rate; if it is impossible to determine the interest rate implicit in lease,the incremental borrowing rate of the Company (i.e. lessee) shall be adopted as the discount rate.
The interest rate implicit in lease refers to the interest rate that makes the sum of the presentvalue of the lessor’s lease receivable amount and the present value of the unguaranteed residualvalue equal to the sum of the fair value of the leased asset and the initial direct cost of the lessor.The lessee’s incremental borrowing rate refers to the interest rate that the lessee is required topay for borrowing funds under similar mortgage conditions in a similar economic environment inorder to obtain assets close to the value of the right-of-use assets during a similar period.
The Company shall calculate the interest expenses of lease liabilities over the lease term at the fixedperiodic interest rate, and include it into current profit or loss or assets cost.
Haier Smart Home Co., Ltd. Interim Report 2022
After the commencement date of the lease term, where the assessment results of the renewal ofthe option, the termination of the lease option and the purchase option have changed, theCompany re-determines the lease payment and re-measures the lease liabilities in accordancewith the present value of the lease payment after changes and the revised discount rate.
After the commencement date of the lease term, in the event that the future lease paymentchanges due to a change in expected payment under a guaranteed remaining value or changesin an index or rate used in determining the lease payments, the Company shall re-measure leaseliabilities based on present value of the lease payment after changes. In such cases, thediscount rate adopted by the Company shall remain unchanged; however, if the change in leasepayment results from a change in floating interest rates, the Company shall use a reviseddiscount rate.
23.Estimated liability
√ Applicable □ Not Applicable
(1)Criterion for determining of estimated liabilityIf an obligation in relation to contingencies such as external guarantees, discounting ofcommercial acceptance bills, pending litigation or arbitration and product quality assuranceis the present obligation of the Company and the performance of such obligation is likely tolead to an outflow of economic interests and its amount can be reliably measured, suchobligation shall be recognized as an estimated liability.
(2)Measurement of estimated liabilityThe estimated liability shall be initially measured according to the best estimate of thenecessary expenses for the performance of the present obligation. If there is a continuousrange for the necessary expenses and if all the outcomes within this range are equally likelyto occur, the best estimate shall be determined according to the middle estimate within therange.; if there are two or more items involved, the best estimate should be determinedaccording to all possible outcomes and relevant probabilities.
At the balance sheet date, the carrying value of estimated liabilities should be reviewed. If thereis objective evidence that the carrying value could not reflect in the current best estimate, thecarrying value shall be adjusted to reflect the current best estimate.
24.Share-based payments
√ Applicable □ Not Applicable
For equity-settled share-based payment transaction in return for services from employees, it shallbe measured at the fair value of equity instruments granted to the employees at the grant date.For the payment of such fair value that may only be exercised if services are fulfilled during thevesting period or the specified performance condition is achieved, the amount of such fair valueshall, based on the best estimate of the number of exercisable equity instruments during thevesting period, be recognized in relevant costs or expenses in straight-line method with theincrease in the capital reserve accordingly.
Haier Smart Home Co., Ltd. Interim Report 2022
The cash-settled share-based payment shall be measured at the fair value of liability assumed bythe Company, which is determined based on the shares or other equity instruments. For the cash-settled share-based payment that may be exercised immediately after the grant, the fair value ofthe liability assumed by the Company shall, on the date of the grant, be recognized in relevantcosts or expenses and the liabilities shall be increased accordingly. For cash-settled share-basedpayment that may be exercised if services are fulfilled during the vesting period or the specifiedperformance condition is achieved, on each balance sheet date within the vesting period, theservices acquired in the current period shall, based on the best estimate of exercise, berecognized in relevant costs or expenses at the fair value of the liability assumed by the Company,and the liabilities shall be adjusted correspondingly.
At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fair valueof the liability is re-measured with its change consolidated in profit/loss.
When there are changes to the Company’s share-based payment plans, if the modificationincreases the fair value of the equity instruments granted, corresponding recognition of serviceincrease in accordance with the increase in the fair value of the equity instruments; if themodification increases the number of equity instruments granted, the increase in fair value of theequity instruments is recognized as a corresponding increase in service achieved. Increase in thefair value of equity instruments refer to the difference between the fair values of the equityinstrument on the modified date before or after the modification. If the Company modifies thevesting conditions in such manner conductive to the employees, including the shortening of thevesting period, change or cancellation of the performance conditions (rather than marketconditions), the Company shall consider the modified vesting conditions upon the disposal ofvesting conditions. If the modification reduces the total fair value of shares paid or the Companyuses other methods not conductive to employees to modify the terms and conditions of share-based payment plans, it will continue to be accounted for the services obtained in theaccounting treatment, as if the change had not occurred, unless the Company cancelled some orall of the equity instruments granted.
During the vesting period, if the Company cancel equity instruments granted which will be treatedas accelerating the exercise of rights and any amount to be charged over the remaining vestingperiod should be recognized immediately in the profit or loss, while at the same time recognizethe capital reserve. Employees or other parties can choose to meet non-vesting conditions, butfor those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.
25.Revenue
√ Applicable □ Not Applicable
Revenue is the total inflow of economic benefits formed by the Company and its subsidiariesduring day-to-day operations which might lead to increase of shareholders’ equity and beirrelevant to capital invested by shareholders.
The Company and its subsidiaries performed performance obligations stated in the contract, i.e.,recognized revenue when the client obtains the control right of relevant goods or services.
Haier Smart Home Co., Ltd. Interim Report 2022
Where the contract includes two or more performance obligations, during the starting date of thecontract, the Company and its subsidiaries allocate transaction price to various single performanceobligation in accordance with the relevant proportion of separate selling price of goods or servicespromised by various single performance obligation, and measure revenue in accordance withtransaction price allocated to various single performance obligation.
Transaction price is the amount of consideration that the Company and its subsidiaries areexpected to be entitled to collect due to transfer of goods and services transferred to the client,excluding the amount collected for any third party. The transaction price recognized by theCompany and its subsidiaries does not exceed the amount of recognized revenue when relevantuncertainties are eliminated and might not incur material carrying back. The amount that isexpected to be returned to the client is taken as liability of returned goods and is not recordedin transaction price.
When one of the following conditions is met, the Company and its subsidiaries perform performanceobligations during a certain time horizon, otherwise, it belongs to fulfilling performance obligations at acertain time point:
① The client simultaneously obtains and consumes economic benefits as the Company and itssubsidiaries perform the contract;
② The client is able to control goods under construction during the process of performance of
the Company and its subsidiaries;
③ Goods produced by the Company and its subsidiaries during the process of performance
have no alternative use, and the Company and its subsidiaries are entitled to collect theamount for the cumulative completed and performed portion to date during the entirecontractual period.
For the performance obligations performed during a certain time horizon, the Company and itssubsidiaries recognize revenue in accordance with the schedule of performance during such timehorizon. When the schedule of performance can’t be reasonably recognized, where the costs thathave been incurred by the Company and its subsidiaries are estimated to be compensated,revenue shall be recognized in accordance with the amount of costs that has been incurred untilthe schedule of performance can be reasonably confirmed.
For performance obligations performed at a certain time point, the Company and its subsidiariesrecognize revenue at the time point when the client obtains the control right of relevant goods orservices. When judging whether the client has obtained control right over goods or services, theCompany and its subsidiaries will consider the following signs:
① The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;
② The Company and its subsidiaries have transferred the material objects of such goods to
the client;
Haier Smart Home Co., Ltd. Interim Report 2022
③ The Company and its subsidiaries have transferred statutory ownership right of the goodsor major risks and rewards of the ownership to the client;
④ The client has accepted such goods or service.
The right that the Company and its subsidiaries are entitled to collect the consideration forhaving transferred goods or services to the client (and such right depends on other factors otherthan time lapse) is presented as contractual asset, and contractual asset is provisionedimpairment on the basis of expected credit losses. The right owned by and unconditionallycollected from the client by the Company and its subsidiaries (only depend on time lapse) shallbe presented as accounts receivable. Obligations that the Company and its subsidiaries havecollected or shall collect consideration from the client and shall transfer goods or services to theclient are presented as contractual obligations.
Specific accounting policies relating to major activities that the Company and its subsidiariesobtain revenue are described as follows:
(1)Sale of goodsGenerally, contracts for sale of goods between the Company and its clients only includeperformance obligation of transferring the whole machine of home appliance. Generally, on thebasis of taking into account the following factors comprehensively, the Company recognizes therevenue at the time point of transfer of control right of goods: the right of instant collection forobtaining goods, transfer of major risks and rewards on ownership of goods, transfer ofstatutory ownership of goods, transfer of assets of material objects of goods, the client’sacceptance of such goods.
(2)Construction contract incomeConstruction contract between the Company and the client generally includes performanceobligations of construction and installation of commercial air-conditioner and smart home,because the client is able to control goods under construction during the Company’sperformance process, the Company takes them as performance obligations performedduring a certain time horizon, and recognizes revenue in accordance with the schedule ofperformance, and it is an exemption when the schedule of performance can’t bereasonably confirmed. The Company confirms the schedule of performance of servicesprovided in accordance with the input method. When the schedule of performance can’t bereasonably confirmed, where the costs that have been incurred by the Company areestimated to be compensated, the revenue will be recognized in accordance with theamount of costs that has been incurred until the schedule of performance can bereasonably confirmed.
Haier Smart Home Co., Ltd. Interim Report 2022
(3) Warranty obligations
According to contractual agreement and regulations of laws, the Company provides qualityassurance for goods sold and project constructed. For guarantee-type quality assurance inorder to ensure the client that goods sold comply with existing standards, the Companyconducts accounting treatment in accordance with estimated liabilities. For service-typequality assurance in order to ensure the client that we also provide a separate service otherthan that the goods sold comply with existing standards, the Company takes it as aseparate performance obligation, and allocates partial transaction price to service-typequality assurance in accordance with the relevant proportion of separate selling price ofgoods and service-type quality assurance, and recognizes revenue when the client obtainscontrol right over services. When assessing whether quality assurance provides a separateservice other than ensuring the client that the goods sold comply with existing standards,the Company shall consider factors such as whether such quality assurance is understatutory requirements or industrial practices, the term of quality assurance and the natureof the Company’s commitment to perform the tasks.
26.Government grants
√ Applicable □ Not Applicable
(1)Types of government grantsGovernment grants refer to the gratuitous monetary assets or non-monetary assetsobtained by the Company from the government, excluding the capital invested by thegovernment as an owner. The government grants are mainly divided into asset-relatedgovernment grants and revenue-related government grants.
(2)Accounting treatment of government grantsAsset-related government grants shall be recognized as deferred income in current profit orloss on an even basis over the useful life of relevant assets; government grants measuredat nominal amount shall be recognized directly in current profit or loss. Revenue-relatedgovernment grants shall be treated as follows: ①those used to compensate relevantexpenses or losses to be incurred by the enterprise in subsequent periods are recognizedas deferred income and recorded in current profit or loss when such expenses arerecognized; ②those used to compensate relevant expenses or losses that have beenincurred by the enterprise are recorded directly in current profit or loss.
(3)Basis for determination of asset-related government grant and revenue-relatedgovernment grantIf the government grant received by the Company is used for purchase, construction orother project that forms a long-term asset, it is recognized as asset-related governmentgrant.
If the government grant received by the Company is not asset-related, it is recognized asrevenue-related government grant.
Haier Smart Home Co., Ltd. Interim Report 2022
Government grant received without clear objective shall be classified as asset-relatedgovernment grant or revenue-related government grant by:
① Government grant subject to a certain project shall be separated according to theproportion of expenditure budget and capitalization budget, and the proportion shallbe reviewed and modified if necessary on each balance sheet date;
② Government grant shall be categorized as revenue-related if its usage is described ingeneral statement and no specific project is specified in the relevant governmentdocument.
(4)Amortization method and determination of amortization period of deferred revenuerelated to government grantsAsset-related government grant received by the Company is recognized as deferredrevenue and is evenly amortized to the profit or loss in the current period over theestimated useful life of the relevant asset starting from the date when the asset is availablefor use.
(5)Recognition of government grantsGovernment grant measured at the amounts receivable is recognized at the end of theperiod when there is clear evidence that the relevant conditions set out in the financialsubsidy policies and regulations are fulfilled and the receipt of such financial subsidy isassured.
Other government grants other than those measured at the account receivable isrecognized upon actual receipt of such subsidies.
27.Deferred income tax assets/deferred income tax liabilities
√ Applicable □ Not Applicable
Deferred income tax assets and deferred income tax liabilities of the Company are recognized:
(1)Based on the difference between the carrying amount and the tax base amount of an assetor a liability (items not recognized as assets and liabilities but their tax base is ascertainedby the tax laws and regulations, the tax base is the difference), deferred income tax assetor deferred income tax liability is calculated using the applicable tax rate prevailing at theexpected time of recovering the asset or discharging the liability.
(2)Deferred income tax asset is recognized to the extent that there is enough taxable incomefor the deduction of the deductible temporary difference. At the balance sheet date, if thereis sufficient evidence that there will be enough taxable income in the future for thededuction of the deductible temporary difference, the deferred income tax asset notrecognized in previous accounting period is recognized. If there is no sufficient evidencethat there will be enough taxable income in the future for the deduction of the deferredincome tax asset, the carrying value of the deferred income tax asset is reduced.
Haier Smart Home Co., Ltd. Interim Report 2022
(3)Deferred income tax liability is recognized for taxable temporary difference arising frominvestments in subsidiaries and associated companies, unless the Company could controlthe time of reversal of the temporary differences and the temporary differences would notbe probably reversed in the foreseeable future. For deductible temporary differences arisingfrom investments in subsidiaries and associated companies, deferred income tax asset isrecognized if the temporary difference will be very probably reversed in the foreseeablefuture and it is highly probable that taxable income will be available in the future to deductthe deductible temporary difference.
(4)No deferred income tax liability is recognized for a temporary difference arising from the initialrecognition of goodwill. No deferred income tax asset or deferred income tax liability isrecognized for the temporary differences resulting from the initial recognition of assets orliabilities due to a transaction other than a business combination, which affects neitheraccounting profit nor taxable income (or deductible loss). At the balance sheet date,deferred income tax assets and deferred income tax liabilities are measured at the tax ratesthat apply to the period when the asset is expected to be recovered or the liability isexpected to be settled.
28.Other significant accounting policies and accounting estimations
√ Applicable □ Not Applicable
(1)Asset securitization businessSome of the Company’s receivables are securitized. The Company’s underlying assets aretrusted to a special purpose entity which issues securities to investors. The Company servesas the asset service supplier, providing services including asset maintenance and its dailymanagement, formulation of the annual asset disposal plan, formulation and implementation ofthe asset disposal plan, signing relevant asset disposal agreements and periodic preparation ofasset service report.
The Company has evaluated the extent to which it transfers the risks and rewards ofassets to other entities and the extent it exercises control over such entities while applyingthe accounting policy in respect of securitization of financial assets:
① The financial asset is derecognized when the Company transfers substantially all therisks and rewards of ownership of the financial asset;
② Recognition of the financial asset is continued when the Company retains substantially
all the risks and rewards of ownership of the financial asset;
③ When the Company neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset, the Company evaluates whether it retains controlover the financial asset. If the Company does not retain control, it derecognizes thefinancial asset and recognizes separately as assets or liabilities any rights andobligations created or retained in the transfer. If the Company retains control, itcontinues to recognize the financial asset to the extent of its continuing involvementin the financial asset.
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Hedge accountingHedge refers to risk management activities that enterprises designate financial instrumentsas hedge instruments in order to manage risk exposure caused by specific risks such asforeign exchange risk, interest rate risk, price risk and credit risk, allowing to expectchanges in fair value or cash flow of hedge instruments to offset all or partial changes infair value or cash flow of hedged items.
Hedged items refer to items which make enterprises face risks of changes in fair value or cashflow and are designated as hedged objects and can be reliably measured.
A hedging instrument is a financial instrument designated by an enterprise for the purposeof hedging, whose fair value or cash flow changes are expected to offset the change in thefair value or cash flow of the hedged items.
The Company continuously conducts assessment over whether hedge relationship complieswith requirements of hedge effectiveness on the starting date of hedge and during follow-on period. Hedge effectiveness refers to the extent that changes in fair value or cash flowof hedge instruments can offset that of hedged items caused by the risks of being hedged.The portion that the changes in fair value or cash flow of hedge instruments is greater orless than that of hedged items is the ineffective portion of hedge.
(3)Explanations on significant accounting estimatesJudgments, estimates and assumptions shall be made to book value of the financialstatements items, which could not be measured accurately, due to the inherentuncertainties of operating activities, while applying accounting policy. Such judgments,estimates and assumptions were based on the management’s historical experience andmade after other various factors are considered. These judgments, estimates andassumptions will influence the amount of revenues, expenses, assets and liabilitiespresented in financial reports and the disclosure of contingent liabilities on the balancesheet date. However, the actual results caused by the uncertainties of these estimationsmay be different from the current estimates of the management, and thus cause a materialadjustment to the carrying amounts of assets and liabilities affected in the future. Thejudgments, estimates and assumptions mentioned above shall be reviewed on a goingconcern basis. If the revisions to accounting estimates only affect the current period, theamount affected shall be recognized in the current period; if the revisions affect both thecurrent and future periods, the amount affected shall be recognized in both the current andfuture periods.
Haier Smart Home Co., Ltd. Interim Report 2022
On the balance sheet date, the Company needs to have judgments, estimates and assumptionsabout the following items on the financial statements:
① Estimated liabilities
Provision for product quality guarantee, expected contract losses, and other estimatesshall be made in accordance with the terms of contracts, current knowledge andhistorical experience. If the contingent event has formed a present obligation theperformance of which is very probable to result in outflow of economic benefits fromthe Company, an estimated liability shall be recognized by the Company on the basisof the best estimate of the expenditures to settle relevant present obligation.Recognition and measurement of the estimated liability significantly rely to a greatextent on the management’s judgments. In the process of judgment, the Companytakes into consideration the assessment of relevant risks, uncertainties, time value ofmoney and other factors related to the contingent events. Among them, the Companywill undertake estimated liabilities with respect to the after-sales services provided forthe return, maintenance and installation of goods. When estimating liabilities, theCompany has considered the empirical data on maintenance in recent years, but theprevious maintenance experiences may fail to reflect the future circumstances. Anyincrease or decrease in this provision is likely to affect the profits and losses of thenext year.
② Provision of expected credit losses
The Company calculates the expected credit losses in accordance with breach riskexposure and expected credit loss rate, and confirms expected credit loss rate on thebasis of breach possibilities and breach loss rate. When confirming expected credit lossrate, the Company uses data such as internal historical credit loss experiences, andconducts adjustments over historical data in combination with current status and forward-looking information. When considering forward-looking information, indexes used by theCompany include risks such as economic downturn, growth of expected unemploymentrate, changes in external market environment, technological environment and clientconditions. The Company regularly monitors and reviews relevant assumptions relating tocalculation of expected credit losses. The aforesaid estimation techniques and keyassumptions have not changed substantially in this year.
Haier Smart Home Co., Ltd. Interim Report 2022
③ Impairment provision of inventories
Inventories are measured by lower of cost and net realizable value according to theaccounting policies of inventories; for inventories whose costs are higher than the netrealizable value or those obsolete and unsalable, the impairment provision ofinventories shall be made. The carrying value of inventory shall be written down to thenet realizable value on the basis of the evaluation of the salability of inventories andthe net realizable value thereof. Authenticating inventory impairment requires themanagement’s obtaining of solid evidence, and their judgments and estimations madeafter considering the purpose of holding inventories and the effect of events after thebalanced sheet date and etc. The difference between the actual outcome and thepreviously estimated outcome will influence the carrying value of inventories and theprovision or reversal of impairment provision of inventories during the period when theestimates are changed.
④ Fair value of financial instruments
For financial instruments where there is no active market, the Company will determinetheir fair value through a variety of valuation methods. Such valuation methodsinclude discounted cash flow analysis. In the valuation, the Company shall estimatethe future cash flow, credit risk, market volatility and correlation, and select theappropriate discount rate. Such related assumptions are uncertain, and their changesmay affect the fair value of financial instruments.
⑤ Impairment of investment in other equity instruments
The Company largely relies on judgments and assumptions of the management whendetermining whether investments of other equity instruments are impaired todetermine whether it is needed to recognize their impairment. During the process ofconducting judgments or making assumptions, the Company shall assess the extentand duration period that the fair value of such investments is below the cost, as wellas financial conditions and short-term business prospects of the invested objects,including industry conditions, technological reform, credit rating, breach rate and risksof counterparties.
Haier Smart Home Co., Ltd. Interim Report 2022
⑥ Provision of long-term assets impairment
As at the balance sheet date, the Company shall judge whether there is any possibleindication of impairment against non-current assets other than financial assets. Theintangible assets with indefinite useful life must be tested for impairment on an annualbasis as well as when there is any indication of impairment. Other non-current assetsother than financial assets shall be tested for impairment when there is an indicationshowing that the carrying value is not recoverable. Impairment occurs while thecarrying value of an asset or asset group is higher than the recoverable value, whichis the higher of the net of fair value less disposal expenses and the present value ofexpected future cash flow. The net of fair value less disposal expenses is determinedwith reference to the price in the sale agreement regarding analogous asset in fairtransactions or the observable market price less the increase of cost that is directlyattributable to the disposal of assets. Significant judgments regarding the output,sales price, relevant operating costs of the assets (or assets group) and the discountrate used to calculate the present value shall be made when estimating the presentvalue of future cash flow. Recoverable amount shall be estimated by the Companyusing all accessible relevant information, including predictions made on the output,sales price, and relevant operating costs based on reasonable and supportiveassumptions. The Company shall test for goodwill impairment at least every year. Thisrequires the Company to estimate the present value of future cash flow for suchassets groups or asset group portfolios allocated with goodwill. When estimating thepresent value of future cash flow, the Company shall not only estimate the futurecash flow generated by such asset groups or asset group portfolios, but also selectthe appropriate discount rate to determine the present value of such future cash flow.
⑦ Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated andamortized by the Company with a straight-line approach over their useful life bytaking into consideration the residual value. Useful life shall be periodically reviewedby the Company to determine the amount of depreciation and amortization expensesfor each reporting period and be determined on the basis of historical experienceregarding analogous assets and the expected technological updates. Significantchanges to previous accounting estimates will result in adjustments againstdepreciation and amortization expenses in the future periods.
⑧ Deferred income tax assets
Deferred income tax asset is recognized by the Company for all the uncompensatedtax losses to the extent that there is sufficient taxable profit for the deduction of loss.In order to determine the amount of deferred income tax assets, the management ofthe Company needs to predict the timing and the amount of taxable profits in thefuture by making abundant judgments, as well as through the strategy of tax planning.
Haier Smart Home Co., Ltd. Interim Report 2022
⑨ Income tax
In the ordinary course of business of the Company, the ultimate tax treatment andcalculations of some transactions are uncertain. Whether some items could be presentedbefore taxation shall be approved by relevant tax authorities. Where there are differencesbetween the final tax outcome of these items and the initial estimated amount, suchdifferences will impact the current and deferred tax in the period of final confirmation.
⑩ Provisions for sales rebates
The Company and its subsidiaries adopt the policy of sales rebates for consumers.According to the relevant conventions in the sales agreement, the review of specifictransactions, the market situation, the pipeline inventory levels and the historicalexperiences, the Company and its subsidiaries estimate and accrue sales rebate on aregular basis with reference to the completion of agreed assessment indexes bycustomers. Accrual of sales rebate involves the judgment and estimates of themanagement. In case of any significant changes in the previous estimates, the differenceabove will have an impact on the sales rebate during the period when relevant changes inestimates occur.
29.Changes in the significant accounting policies and accounting estimates
(1).
Changes in the significant accounting policies
□ Applicable √ Not Applicable
(2).
Changes in the significant accounting estimates
□ Applicable √ Not Applicable
VI.TAXATION
1.Main tax categories and rates
Main tax categories and rates
√ Applicable □ Not Applicable
| Tax categories | Basis of taxation | Tax rate |
| Value-added tax | Taxable revenue from sales of goods or rendering services | 6%, 9%, 13% |
| City maintenance and construction tax | Circulation Taxes payable | 7% |
| Enterprise income tax | Taxable income | Statutory tax rate or preferential rates as follows |
| (Local) education surcharge | Circulation Taxes payable | 1%, 2%, 3% |
Disclosure of tax entities with different enterprise income tax rates
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
2. Preferential tax
√ Applicable □ Not Applicable
Companies subjected to preferential tax:
| Name of company | Tax rate | Preferential tax |
Qingdao Haier Refrigerator Co., Ltd.
| Qingdao Haier Refrigerator Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Special Refrigerator Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Dishwasher Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Special Freezer Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Intelligent Home Appliance Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Wuhan Haier Electronics Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Wuhan Haier Freezer Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Refrigerator Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Air-conditioning Co., Limited | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Zhengzhou Haier Air-conditioning Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Shenyang Haier Refrigerator Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Air-Conditioner Electronics Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Meier Plastic Powder Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Hai Gao Design and Manufacture Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Hairi Hi-Tech Model Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Intelligent Technology Development Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
Haier Smart Home Co., Ltd. Interim Report 2022
| Name of company | Tax rate | Preferential tax |
| Foshan Haier Freezer Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Central Air Conditioning Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Air Conditioner Gen Corp., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Haier U+smart Intelligent Technology (Beijing) Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Beijing Zero Micro Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Washing Machine Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Washing Machine Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Jiaonan Haier Washing Machine Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Foshan Shunde Haier Electric Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Tianjin Haier Washing Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Economic and Technological Development Zone Haier Water Heater Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Wuhan Haier Water Heater Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Foshan Drum Washing Machine Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Strauss Water Equipment Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Smart Living Appliances Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier New Energy Electric Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Washing Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Ririshun Lexin Cloud Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Drum Washing Machine Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Zhengzhou Haier New Energy Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Electronic Plastic Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
Haier Smart Home Co., Ltd. Interim Report 2022
| Name of company | Tax rate | Preferential tax |
| Qingdao Wei Xi Intelligent Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Special Refrigerating Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Smart Kitchen Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Hefei Haier Air-conditioning Co., Limited | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Beijing Lingli Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Hairuijiejing Electronics Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Shanghai Haier Medical Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Yunshang Yuyi IOT Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Haier (Shanghai) Home Appliance Research and Development Center Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Haier (Shenzhen) R&D Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Ririshun Lejia IOT Technology Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Qingdao Haier Smart Electrical Equipment Limited | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Laiyang Haier Smart Kitchen Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Guangdong Heilong Intelligent Technology Co. Ltd | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Dalian Haier Refrigerator Co., Ltd. | 15.00% | entitled to the preferential taxation policies as a hi-tech enterprise |
| Chongqing Haier Electronics Sales Co., Ltd. and some Western companies | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Xin Ririshun Electric Sales Co., Ltd. and some Western companies | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Air-conditioning Co., Ltd. | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Refrigeration Appliance Co., Ltd. | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
Haier Smart Home Co., Ltd. Interim Report 2022
| Name of company | Tax rate | Preferential tax |
| Guizhou Haier Electronics Co., Ltd. | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Washing Machine Co., Ltd | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Water Heater Co., Ltd | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Chongqing Haier Drum Washing Machine Co., Ltd | 15.00% | entitled to the preferential taxation policies under the Western Development initiative of the PRC |
| Qingdao Haier Technology Co., Ltd. | 10.00% | entitled to half deduction the preferential taxation policies as a key software enterprise |
Haier Smart Home Co., Ltd. Interim Report 2022
VII.EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIALSTATEMENTS
Unless otherwise specified, the following closing balance refers to the amount as of 30 June 2022.The opening balance refers to the amount as of 31 December 2021. The amount for the current periodrefers to the amount in the period from 1 January to 30 June 2022. The amount of the previous periodrefers to the amount of the period from 1 January to 30 June 2021.
1.Monetary funds
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Cash on hand | 912,949.13 | 3,085,964.28 |
| Deposit in bank | 48,618,833,840.21 | 44,884,013,498.57 |
| Other monetary funds | 1,696,374,469.94 | 1,083,936,300.66 |
| Total | 50,316,121,259.28 | 45,971,035,763.51 |
| Including: Total amount deposit overseas | 8,844,868,035.47 | 8,966,246,518.74 |
Other explanations:
Other monetary funds mainly were the investment fund, the deposit on third party payment platforms,security deposit and other restricted fund, etc.
2.Financial assets held for trading
| Items | Closing balance | Opening balance |
| Short-term wealth management products | 2,153,399,840.01 | 2,168,622,090.00 |
| Investment in equity instruments | 106,249,514.01 | 330,557,610.82 |
| Investment fund | 158,003,403.16 | 150,516,274.37 |
| Forward foreign exchange contracts | 142,519,319.40 | 136,379,553.90 |
| Total | 2,560,172,076.58 | 2,786,075,529.09 |
Haier Smart Home Co., Ltd. Interim Report 2022
3.Derivative financial assets
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
Forward foreign exchange contracts
| Forward foreign exchange contracts | 151,624,141.73 | 72,822,190.59 |
| Interest rate swap agreement | 11,460,584.69 | |
| Forward commodity contracts | 6,997,783.42 | |
| Total | 163,084,726.42 | 79,819,974.01 |
4.Bills receivable
(1)Details of bills receivable
| Items | Closing balance | Opening balance |
| Bank acceptance notes | 8,200,648,941.32 | 13,053,809,505.49 |
| Commercially acceptance notes | 282,194,019.57 | 368,076,810.80 |
| Balance of bills receivable | 8,482,842,960.89 | 13,421,886,316.29 |
| Allowance for bad debts | 65,206,789.48 | 67,095,248.00 |
| Bills receivable, net | 8,417,636,171.41 | 13,354,791,068.29 |
(2)Changes in allowance for bad debts of bills receivable in the current period
√ Applicable □ Not Applicable
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance | ||
| Provision | Other increases | Reversal | Write-off/ other movement | |||
| Allowance for bad debts | 67,095,248.00 | 35,478,414.82 | 3,986,104.53 | 33,380,768.81 | 65,206,789.48 | |
| Total | 67,095,248.00 | 35,478,414.82 | 3,986,104.53 | 33,380,768.81 | 65,206,789.48 | |
The Company’s bills receivable was mainly generated from daily operation activities such assales of commodity, provision of labor, etc., and the allowance for bad debts was measuredbased on expected credit loss over the entire duration whether there exist significant financingcomponents.
The bills receivable pledged by the Company at the end of the period wasRMB7,905,189,214.59 (amount at the beginning of the period: RMB12,526,757,275.50).
Haier Smart Home Co., Ltd. Interim Report 2022
5.Accounts receivable
① Accounts receivable are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 17,992,836,678.82 | 14,794,015,085.51 |
| 1–2 years | 632,122,299.07 | 376,187,052.43 |
| 2–3 years | 187,957,672.11 | 78,861,353.76 |
| Over 3 years | 106,770,894.99 | 135,768,657.33 |
| Accounts receivable, balance | 18,919,687,544.99 | 15,384,832,149.03 |
| Allowance for bad debts | 999,585,676.27 | 742,172,698.81 |
| Accounts receivable, net | 17,920,101,868.72 | 14,642,659,450.22 |
② By method of provision of allowance for bad debts
√ Applicable □ Not Applicable
| Categories | Closing balance | |||
| Book balance | Allowance for bad debts | Percentage of provision (%) | Carrying value | |
Account receivables
subject to provision forbad debts on aseparate basis
| Account receivables subject to provision for bad debts on a separate basis | 523,300,149.88 | 517,255,653.38 | 98.84 | 6,044,496.50 |
| Account receivables subject to provision for bad debts on a collective basis | 18,396,387,395.11 | 482,330,022.89 | 2.62 | 17,914,057,372.22 |
| Total | 18,919,687,544.99 | 999,585,676.27 | 5.28 | 17,920,101,868.72 |
Haier Smart Home Co., Ltd. Interim Report 2022
(continued)
| Categories | Opening balance | |||
| Book balance | Allowance for bad debts | Percentage of provision (%) | Carrying value | |
Account receivables subjectto provision for baddebts on a separatebasis
| Account receivables subject to provision for bad debts on a separate basis | 381,406,983.17 | 320,303,932.13 | 83.98 | 61,103,051.04 |
| Account receivables subject to provision for bad debts on a collective basis | 15,003,425,165.86 | 421,868,766.68 | 2.81 | 14,581,556,399.18 |
| Total | 15,384,832,149.03 | 742,172,698.81 | 4.82 | 14,642,659,450.22 |
③ Account receivables subject to provision for bad debts on a collective basis
√ Applicable □ Not Applicable
| Items | Balance as at the end of the period | ||
| Book Balance | Allowance for bad debts | Percentage of provision (%) | |
| Within 1 year | 17,789,646,425.90 | 386,576,175.00 | 2.17 |
| 1–2 years | 439,466,228.58 | 10,765,414.88 | 2.45 |
| 2–3 years | 74,455,469.23 | 21,507,533.99 | 28.89 |
| Over 3 years | 92,819,271.40 | 63,480,899.02 | 68.39 |
| Total | 18,396,387,395.11 | 482,330,022.89 | 2.62 |
(continued)
| Items | Balance as at the beginning of the period | ||
| Book Balance | Allowance for bad debts | Percentage of provision (%) | |
| Within 1 year | 14,566,776,731.02 | 312,565,470.27 | 2.15 |
| 1–2 years | 229,160,440.39 | 9,396,866.15 | 4.10 |
| 2–3 years | 76,516,782.74 | 23,388,497.43 | 30.57 |
| Over 3 years | 130,971,211.71 | 76,517,932.83 | 58.42 |
| Total | 15,003,425,165.86 | 421,868,766.68 | 2.81 |
Haier Smart Home Co., Ltd. Interim Report 2022
④ Changes in allowance for bad debts of accounts receivable in the current period:
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance | ||
| Provision for the current period | Other movement | Reversal | Write-off/other movement | |||
| Allowance for bad debts | 742,172,698.81 | 264,092,566.49 | 33,380,768.81 | 41,415,511.37 | –1,355,153.53 | 999,585,676.27 |
⑤ The aggregate amount of the top 5 account receivables as at the end of the period was
RMB4,500,321,373.99 (amount at the beginning of the period: RMB3,856,035,612.12),accounting for 23.79% of the book balance of account receivables (as at the beginning ofthe period: 25.06%).
⑥ Actual write-off of accounts receivable in the current period The amount of accounts
receivable actually written off in the current period is RMB13,058,370.53 (amount for thecorresponding period: RMB10,143,124.34) and there is no important bad debt write-off ofaccounts receivable.
⑦ The company’s accounts receivable that were terminated due to the transfer of financialassets in the current period.
At the end of the period, the amount of accounts receivable that were terminated due tothe transfer of financial assets was RMB5,148,671,077.42 (amount at the beginning of theperiod: RMB4,127,671,197.04) and the transfer method was outright sale factoring/assetsecuritization.
⑧ Restricted accounts receivable in the current period
The amount of accounts receivable restricted at the end of the period is RMB2,848,722,579.01(amount at the beginning of the period: RMB1,913,582,226.30).
Haier Smart Home Co., Ltd. Interim Report 2022
6.Prepayments(1)Prepayments are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 820,552,086.75 | 816,906,386.84 |
| 1–2 years | 31,756,515.81 | 22,367,994.84 |
| 2–3 years | 9,516,658.41 | 9,728,842.63 |
| Over 3 years | 6,287,399.50 | 8,231,174.95 |
| Total | 868,112,660.47 | 857,234,399.26 |
(2)The amount of the top 5 in the prepayments at the end of the period totalsRMB88,045,020.96, which accounts for 10.14% of the book balance of prepayment(amount at the beginning of the period: RMB174,076,576.41, accounting for 20.31%).
7.Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Interest receivable | 400,015,260.13 | 294,379,438.82 |
| Other receivables | 1,756,744,930.86 | 1,662,342,182.84 |
| Total | 2,156,760,190.99 | 1,956,721,621.66 |
Other explanations:
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022
(1)Interest receivable
| Aging | Closing balance | Opening balance |
| Within one year | 266,633,376.88 | 231,011,687.28 |
| 1–2 years | 79,940,828.30 | 47,983,727.86 |
| 2–3 years | 45,391,054.95 | 15,384,023.68 |
| Over 3 years | 8,050,000.00 | |
| Total | 400,015,260.13 | 294,379,438.82 |
(2)Other receivables
① Other receivables are disclosed by aging as follows:
| Aging | Closing balance | Opening balance |
| Within one year | 1,348,982,183.92 | 1,274,872,226.90 |
| 1–2 years | 118,830,576.45 | 109,677,138.52 |
| 2–3 years | 361,449,614.43 | 355,219,038.13 |
| Over 3 years | 127,053,718.52 | 113,213,998.61 |
| Other receivables balance | 1,956,316,093.32 | 1,852,982,402.16 |
| Allowance for bad debts | 199,571,162.46 | 190,640,219.32 |
| Other receivables, net | 1,756,744,930.86 | 1,662,342,182.84 |
② The total amount of the top 5 other receivables at the end of the period is
RMB776,125,043.70 (amount at the beginning of the period: RMB588,207,363.50), whichaccounts for 39.67% of the book balance of other receivables (at the beginning of theperiod: 31.74%).
Haier Smart Home Co., Ltd. Interim Report 2022
③ Provision of allowance for bad debts
| Allowance for bad debts | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses for the coming 12 months | Lifetime expected credit losses (not credit- impaired) | Lifetime expected credit losses (credit- impaired) | ||
| Balance as at the beginning of the period | 112,022,673.37 | 78,617,545.95 | 190,640,219.32 | |
| Provision for the current period | 9,354,271.38 | 9,354,271.38 | ||
| Reversal for the current period | 5,446,790.65 | 5,446,790.65 | ||
| Write-off and others for the current period | –5,076,162.41 | 52,700.00 | –5,023,462.41 | |
| Balance as at the end of the period | 121,006,316.51 | 78,564,845.95 | 199,571,162.46 |
④ Changes in allowance for bad debt provision of other receivables in the current period
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance | ||
| Provision for the current period | Other movement | Reversal | Write-off/ other movement | |||
| Allowance for bad debts | 190,640,219.32 | 9,354,271.38 | 5,446,790.65 | –5,023,462.41 | 199,571,162.46 | |
⑤ Other receivables written off during the period
The amount of other receivables actually written off in the current period is RMB306,025.66(amount for the corresponding period: RMB4,293,611.04), and no significant other receivablesare written off for bad debts.
⑥ Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,
and advance payments, etc.
Haier Smart Home Co., Ltd. Interim Report 2022
8.Inventories(1)Details of Inventories
| Items | Closing balance | Opening balance | ||
| Book value balance | Impairment provision | Book value balance | Impairment provision | |
Raw material
| Raw material | 5,505,526,057.02 | 129,495,787.11 | 5,160,836,755.15 | 117,428,681.85 |
| Work in progress | 148,110,212.49 | 115,676,026.77 | ||
| Finished goods | 36,906,925,191.71 | 1,424,430,179.89 | 35,990,645,130.23 | 1,248,466,540.71 |
| Total | 42,560,561,461.22 | 1,553,925,967.00 | 41,267,157,912.15 | 1,365,895,222.56 |
(2)Impairment provision of inventories
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other Increases | Reversal | Write-off/other movement | |||
| Raw material | 117,428,681.85 | 13,180,554.37 | 1,113,449.11 | 129,495,787.11 | ||
| Work in progress | ||||||
| Finished goods | 1,248,466,540.71 | 372,249,744.36 | 13,571,021.80 | 182,715,083.38 | 1,424,430,179.89 | |
| Total | 1,365,895,222.56 | 385,430,298.73 | 13,571,021.80 | 183,828,532.49 | 1,553,925,967.00 | |
9.Contract assets
(1)Details
| Items | Closing balance | Opening balance | ||
| Book value balance | Impairment Provision | Book value balance | Impairment Provision | |
Relating to constructionservice contract
| Relating to construction service contract | 280,621,191.36 | 304,434,294.70 | ||
| Total | 280,621,191.36 | 304,434,294.70 |
Haier Smart Home Co., Ltd. Interim Report 2022
10.Other current assets
(1)Details
| Items | Closing balance | Opening balance | ||
| Book value balance | Impairment provision | Book value balance | Impairment provision | |
| Bank deposit for financial products | 1,551,745,385.00 | 316,590,333.42 | ||
| Taxes to be deducted | 2,588,443,347.96 | 3,275,762,776.66 | ||
| Return cost receivable | 657,641,276.81 | 336,533,252.53 | 585,140,752.69 | 328,552,987.70 |
| Others | 54,260,359.93 | 71,809,601.50 | ||
| Total | 4,852,090,369.70 | 336,533,252.53 | 4,249,303,464.27 | 328,552,987.70 |
(2)Impairment provision
| Items | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Other Increases | Reversal | Write-off/other movement | |||
| Return cost receivables | 328,552,987.70 | 336,533,252.53 | 1,330,581.65 | 327,222,406.05 | 336,533,252.53 | |
| Total | 328,552,987.70 | 336,533,252.53 | 1,330,581.65 | 327,222,406.05 | 336,533,252.53 | |
Haier Smart Home Co., Ltd. Interim Report 2022
11.Long-term equity investments
√ Applicable □ Not Applicable
InvesteesOpening balance Increase/decrease for the period
Adjustment in
| Investment increase | Investment profit recognized under equity method | other comprehensive income | Other changes in equity | Declaration of cash dividends or profits | ||
| Associate: Haier Group Finance Co., Ltd. | 7,108,709,375.38 | 318,680,094.64 | 7,661,131.00 | –218,400,000.00 | ||
| Bank of Qingdao Co., Ltd. | 2,654,248,436.12 | 352,102,643.20 | 165,347,683.41 | –6,472,692.99 | 7,483,342.53 | –76,288,906.40 |
| Wolong Electric (Jinan) Motor | ||||||
| Co., Ltd. | 151,837,378.99 | 12,237,610.99 | ||||
| Qingdao Hegang New Material | ||||||
| Technology Co., Ltd. | 312,493,256.21 | 10,746,218.86 | ||||
| Qingdao Haier SAIF Smart | ||||||
| Home Industry Investment Center (Limited Partnership) | 393,598,372.59 | –904,601.39 | –17,199,060.82 | |||
Mitsubishi Heavy Industries
Haier (Qingdao)
Air-conditioners Co., Ltd. 682,901,976.7352,979,520.61Qingdao Haier Carrier
Refrigeration Equipment
Co., Ltd.409,053,808.05 10,936,464.63–17,900,226.81
Qingdao Haier multimedia Co.,
Ltd.277,102,563.88–14,629,468.29
Qingdao Haier Moulds Co., Ltd. 269,158,534.54–272,577,907.923,419,373.38
Hefei Feier Smart Technology
Co., Ltd.265,106.27–265,106.27
Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,877,574.14109,595.88Zhejiang Futeng Fluid
Technology Co., Ltd.*82,098,847.75Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75
Beijing Xiaobei Technology Co.,
Ltd.2,687,341.82–2,687,341.82
Beijing ASU Tech Co., Ltd.15,529,700.01–12,256,393.219,809,616.09
Shenzhen Genyuan Environment
al Protection Technology
Co., Ltd.6,914,487.73681,807.62
Qingdao Haimu Investment
Management Co., Ltd. 2,465,299.70–53,862.77Qingdao Haimu Smart Home
Investment Partnership
(Limited Partnership) 59,424,662.44–100,251.06
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
| Investees | Opening balance | Increase/decrease for the period | ||||
| Investment increase | Investment profit recognized under equity method | Adjustment in other comprehensive income | Other changes in equity | Declaration of cash dividends or profits | ||
| Guangzhou Heying Investment Partnership (Limited Partnership) | 285,793,577.87 | |||||
| Qingdao Home Wow Cloud Network Technology Co., Ltd. | 2,600,050.50 | –34,037.86 | ||||
| Bingji (Shanghai) Corporate Management Co., Ltd. | 972,200,487.88 | 23,218,909.91 | ||||
| Youjin (Shanghai) Corporate Management Co., Ltd | 1,766,819,068.86 | 42,216,199.84 | ||||
| RRS (Shanghai) Investment Co., Ltd. | 3,211,580,125.21 | 76,756,726.98 | ||||
| Haier Best Water Technology Co., Ltd. | 79,785,557.39 | –1,432,974.65 | ||||
| Huizhixiangshun Equity Investment Fund (Qingdao) Partnership (Limited Partnership) | 119,008,967.03 | 119,797,980.61 | ||||
| Qingdao Ririshun Huizhi Investment Co., Ltd. | 2,083,482.78 | 2,000,000.00 | ||||
| Qingdao Xinshenghui Technology Co., Ltd. | 9,964,773.52 | –953,012.17 | ||||
| Meiling Candy Washing Machine Co., Ltd. | 22,752,232.07 | –92,564.23 | ||||
| EuropaltersItaliaS.r.l. | 9,361,965.48 | |||||
| OryginLLC | 13,494,211.65 | |||||
| Konan Electronic Co., Ltd. | 69,273,712.61 | 305,414.02 | –7,882,359.76 | –237,150.00 | ||
| HNR Company (Private) Limited | 114,055,318.97 | 17,731,336.90 | –7,497,761.95 | |||
| HPZ LIMITED | 71,269,048.97 | 6,432,609.47 | 2,444,486.30 | |||
| Haier Raya Electric S.A.E | 10,568,507.40 | –716,353.69 | ||||
| CONTROLADORAMABES. A.deC.V. | 4,131,983,673.10 | 246,779,790.69 | 119,156,456.19 | –47,111,575.26 | ||
| Middle East Airconditioning Company, Limited | 10,318,898.13 | –2,475,341.75 | 465,090.46 | |||
| Total | 23,327,293,929.87 | 212,129,585.72 | 954,665,390.49 | 107,874,349.25 | 17,292,958.62 | –377,136,919.29 |
Haier Smart Home Co., Ltd. Interim Report 2022
(Continued)
Investees Increase/decrease for the period Closing balance
Impairment
provisionClosing balanceOthermovement
Disposal of theinvestment
Associate:
Haier Finance Co., Ltd. 7,216,650,601.02Bank of Qingdao Co., Ltd. 3,096,420,505.87Wolong Electric (Jinan)Motor Co., Ltd. 164,074,989.98Qingdao Hegang New
Material Technology Co.,Ltd. 323,239,475.07Qingdao Haier SAIF Smart
| Home Industry Investment Center | |
| (Limited Partnership) | 375,494,710.38 |
| Mitsubishi Heavy Industries | |
| Haier (Qingdao) Air- | |
| conditioners Co., Ltd. | 735,881,497.34 |
Qingdao Haier CarrierRefrigeration Equipment
Co., Ltd. 402,090,045.87–21,000,000.00Qingdao Haier MultimediaCo., Ltd 262,473,095.59–88,300,000.00Qingdao Haier Moulds Co.,LtdHefei Feier Smart
Technology Co., Ltd.Anhui Kunhe Intelligent
Technology Co., Ltd.* 1,987,170.02Zhejiang Futeng Fluid
Technology Co., Ltd.* 82,098,847.75Beijing Mr. Hi Network
Technology Company
Limited 7,507,759.75–7,507,759.75Beijing Xiaobei Technology
Co., Ltd.
| Beijing ASU Tech Co., Ltd. Shenzhen Genyuan Environmental Protection | 13,082,922.89 | |
| Technology Co., Ltd. | 7,596,295.35 | –6,914,487.73 |
| Qingdao Haimu Investment | ||
| Management Co., Ltd. | 2,411,436.93 |
Qingdao Haimu Zhijia
Investment Partnership
(Limited Partnership) 59,324,411.38
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
| Investees | Increase/decrease for the period | Closing balance | Impairment provision Closing balance | |
| Other movement | Disposal of the investment | |||
| Guangzhou Heying Investment Partnership (Limited Partnership) | 285,793,577.87 | |||
| Qingdao Home Wow Cloud Network Technology Co., Ltd. | 2,566,012.64 | |||
| Bingji (Shanghai) Corporate Management Co., Ltd. | 995,419,397.79 | |||
| Youjin (Shanghai) Corporate Management Co., Ltd | 1,809,035,268.70 | |||
| RRS (Shanghai) Investment Co., Ltd. | 3,288,336,852.19 | |||
| Haier Best Water Technology Co., Ltd. | 78,352,582.74 | |||
| Huizhixiangshun Equity Investment Fund (Qingdao) Partnership (Limited Partnership) | 238,806,947.64 | |||
| Qingdao Ririshun Huizhi Investment Co., Ltd. | 4,083,482.78 | |||
| Qingdao Xinshenghui Technology Co., Ltd. | 9,011,761.35 | |||
| Meiling Candy Washing Machine Co., Ltd. | 22,659,667.84 | |||
| EuropaltersItaliaS.r.l. | 9,361,965.48 | |||
| OryginLLC | 13,494,211.65 | |||
| Konan Electronic Co., Ltd. | 61,459,616.87 | |||
| HNR Company (Private) Limited | 124,288,893.92 | |||
| HPZ LIMITED | 80,146,144.74 | |||
| HaierRayaElectricS.A.E | 9,852,153.71 | |||
| CONTROLADORAMABES. A.deC.V. | –7,751,424.52 | 4,443,056,920.20 | ||
| Middle East Airconditioning Company, Limited | 8,308,646.84 | |||
| Total | –7,751,424.52 | 24,234,367,870.14 | –123,722,247.48 | |
Haier Smart Home Co., Ltd. Interim Report 2022
12.Investment in other equity instruments(1)Details of investment in other equity instruments:
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
SINOPEC Fuel Oil Sales Corporation Limited
| SINOPEC Fuel Oil Sales Corporation Limited | 1,285,836,952.03 | 1,290,487,901.40 |
| Haier COSMO IOT Ecosystem Technology Co., Ltd. | 2,812,000,000.00 | 2,812,000,000.00 |
| Others | 754,608,260.88 | 746,221,537.56 |
| Total | 4,852,445,212.91 | 4,848,709,438.96 |
(2)Dividends from investment in other equity during the current period:
| Items | Amount for the current period |
| Others — Shenzhen Toposcend Capital, etc. | 2,596,583.32 |
| Total | 2,596,583.32 |
13.Investment properties
Measure mode for investment properties(1)The changes in investment properties measured at cost for this year are as follows:
Items
Houses and
buildings Land use rights Total
I.Original book value
1. Opening balance 34,022,711.50 2,128,550.51 36,151,262.012.Increase for the period(1)Outsourced(2)Inventories\fixedassets\construction inprogress transferred in(3)Increase in businesscombinations3.Decrease for the period(1)Disposal(2)Disposal of subsidiary(3)Other transferring out
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Houses and buildings | Land use rights | Total |
| 4. Converted difference in foreign currency statements | 1,594,734.05 | 1,594,734.05 | |
| 5. Closing balance | 35,617,445.55 | 2,128,550.51 | 37,745,996.06 |
| II. Accumulated depreciation and accumulated amortization | |||
| 1. Opening balance | 10,555,753.15 | 630,620.38 | 11,186,373.53 |
| 2. Increase for the period | |||
| (1) Provision or amortization | 649,271.97 | 20,118.11 | 669,390.08 |
| 3. Decrease for the period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Other transferring out | |||
| 4. Converted difference in foreign currency statements | 265,983.26 | 265,983.26 | |
| 5. Closing balance | 11,471,008.38 | 650,738.49 | 12,121,746.87 |
| III. Impairment provision | |||
| 1. Opening balance | |||
| 2. Increase for the period | |||
| (1) Provision | |||
| 3. Decrease for the period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Other transferring out | |||
| 4. Converted difference in foreign currency statements | |||
| 5. Closing balance | |||
| IV. Book value | |||
| 1. Closing book value | 24,146,437.17 | 1,477,812.02 | 25,624,249.19 |
| 2. Opening book value | 23,466,958.35 | 1,497,930.13 | 24,964,888.48 |
(2)The depreciation and amortization amount charge for the period is RMB669,390.08 (amountfor the corresponding period: RMB920,365.49).
(3)The recoverable amount of the investment real estate of the Company at the end of theperiod is not less than its book value, so no provision for impairment is made.
Haier Smart Home Co., Ltd. Interim Report 2022
14.Fixed assets
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Fixed assets | 24,238,045,798.12 | 22,302,546,799.12 |
| Disposals of fixed assets | 4,543,369.52 | 4,543,369.52 |
| Total | 24,242,589,167.64 | 22,307,090,168.64 |
Fixed assets(1)Fixed assets:
| Items | Houses and buildings | Production equipment | Transportation equipment |
| I. Original book value | |||
| 1. Opening balance | 11,353,869,023.33 | 26,553,243,290.47 | 179,083,687.93 |
| 2. Increase for the period | |||
| (1) Acquisition | 24,855,788.90 | 648,692,116.07 | 890,259.74 |
| (2) Construction in progress transferred in | 473,266,969.36 | 1,316,653,800.21 | 6,815,087.61 |
| (3) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or Write-off | 13,836,783.88 | 275,325,898.20 | 3,042,808.78 |
| (2) Disposal of subsidiary | 754,649.79 | ||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 362,938,367.98 | 1,035,957,018.26 | 4,804,656.26 |
| 5. Closing balance | 12,201,093,365.69 | 29,279,220,326.81 | 187,796,232.97 |
| II. Accumulated depreciation | |||
| 1. Opening balance | 3,922,452,407.13 | 13,208,010,163.95 | 107,950,259.30 |
| 2. Increase for the period | |||
| (1) Provision | 266,310,942.35 | 1,250,733,974.65 | 9,978,627.44 |
| (2) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or write-off | 7,174,156.14 | 212,276,135.09 | 2,883,264.99 |
| (2) Disposal of subsidiary | 645,746.91 | ||
| (3) Transfer to hold for sale | |||
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Houses and buildings | Production equipment | Transportation equipment |
| 4. Converted difference in foreign currency statements | 38,318,137.17 | 478,123,536.12 | 1,941,465.37 |
| 5. Closing balance | 4,219,907,330.51 | 14,724,591,539.63 | 116,341,340.21 |
| III. Impairment provision | |||
| 1. Opening balance | 29,499,438.21 | 21,647,562.09 | 173,485.13 |
| 2. Increase for the period | |||
| (1) Provision | |||
| (2) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or Write-off | 20,287.80 | ||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | –2,488,257.57 | –263,526.91 | –10,241.16 |
| 5. Closing balance | 27,011,180.64 | 21,363,747.38 | 163,243.97 |
| IV. Book value | |||
| 1. Closing book value | 7,954,174,854.54 | 14,533,265,039.80 | 71,291,648.79 |
| 2. Opening book value | 7,401,917,177.99 | 13,323,585,564.43 | 70,959,943.50 |
(Continued)
| Items | Office furniture | Others | Total |
| I. Original book value | |||
| 1. Opening balance | 1,030,764,014.90 | 2,464,395,005.90 | 41,581,355,022.53 |
| 2. Increase for the period | |||
| (1) Acquisition | 78,881,852.21 | 34,929,055.41 | 788,249,072.33 |
| (2) Construction in progress transferred in | 84,566,124.47 | 162,827,779.57 | 2,044,129,761.22 |
| (3) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or Write-off | 25,668,390.60 | 52,084,817.45 | 369,958,698.91 |
| (2) Disposal of subsidiary | 37,980.00 | 792,629.79 | |
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 19,135,686.09 | 149,484,827.72 | 1,572,320,556.31 |
| 5. Closing balance | 1,187,679,287.07 | 2,759,513,871.15 | 45,615,303,083.69 |
| II. Accumulated depreciation | |||
| 1. Opening balance | 565,204,246.86 | 1,418,493,692.20 | 19,222,110,769.44 |
| 2. Increase for the period |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Office furniture | Others | Total |
| (1) Provision | 142,392,072.66 | 125,203,692.69 | 1,794,619,309.79 |
| (2) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or Write-off | 13,259,061.00 | 14,233,168.34 | 249,825,785.56 |
| (2) Disposal of subsidiary | 36,090.25 | 681,837.16 | |
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 7,271,653.01 | 31,510,438.78 | 557,165,230.45 |
| 5. Closing balance | 701,608,911.53 | 1,560,938,565.08 | 21,323,387,686.96 |
| III. Impairment provision | |||
| 1. Opening balance | 258,528.08 | 5,118,440.46 | 56,697,453.97 |
| 2. Increase for the period | |||
| (1) Provision | |||
| (2) Increase in business combinations | |||
| 3. Decrease for the period | |||
| (1) Disposal or Write-off | 4,406.40 | 24,694.20 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | –27,194.93 | –13,940.59 | –2,803,161.16 |
| 5. Closing balance | 226,926.75 | 5,104,499.87 | 53,869,598.61 |
| IV. Book Value | |||
| 1. Closing book value | 485,843,448.79 | 1,193,470,806.20 | 24,238,045,798.12 |
| 2. Opening book value | 465,301,239.96 | 1,040,782,873.24 | 22,302,546,799.12 |
(2)In the current period, the balance of the construction in progress transferred to the originalvalue of the fixed assets is total RMB2,044,129,761.22 (amount for the correspondingperiod: RMB1,484,788,584.15).
Haier Smart Home Co., Ltd. Interim Report 2022
(3)There was no mortgage secured by the fixed assets mortgage at the end of the period, andthere was no mortgage secured by the fixed assets mortgage at the beginning of theperiod.
(4)Disposals of fixed assets
| Items | Closing balance | Opening balance | Reason for transferring to disposal |
| Relocation of Qingdao Industrial Park | 4,543,369.52 | 4,543,369.52 | Demolition |
| Total | 4,543,369.52 | 4,543,369.52 |
15.Construction in progress
Presented as
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Construction in progress | 4,858,973,923.48 | 4,183,263,398.79 |
| Construction materials | ||
| Total | 4,858,973,923.48 | 4,183,263,398.79 |
Haier Smart Home Co., Ltd. Interim Report 2022
Construction in progress(1)Details of construction in progress
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Projects | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Smart Home Appliance Technology Project | 822,506,153.78 | 822,506,153.78 | 598,122,551.15 | 598,122,551.15 | ||
| Eastern Europe Project | 410,516,576.87 | 410,516,576.87 | 182,497,069.58 | 182,497,069.58 | ||
| Shanghai Haier Washing Appliance Project | 304,975,083.42 | 304,975,083.42 | 4,756,839.22 | 4,756,839.22 | ||
| Europe Candy Project | 431,710,887.15 | 431,710,887.15 | 153,117,404.68 | 153,117,404.68 | ||
| Special Freezer Project | 222,065,402.53 | 222,065,402.53 | 220,203,225.72 | 220,203,225.72 | ||
| America GEA Project | 221,394,829.44 | 221,394,829.44 | 722,008,600.99 | 722,008,600.99 | ||
| Qingdao Jiaozhou Washing Appliance Project | 192,445,321.17 | 192,445,321.17 | 167,168.14 | 167,168.14 | ||
| Hailvyuan Recycling Technology Project | 186,280,749.74 | 186,280,749.74 | 58,589,285.46 | 58,589,285.46 | ||
| Zhengzhou New Energy Project | 163,699,647.98 | 163,699,647.98 | 125,734,579.67 | 125,734,579.67 | ||
| New Zealand FPA Project | 161,190,432.03 | 161,190,432.03 | 111,516,266.46 | 111,516,266.46 | ||
| Qingdao Haier Washing Machine Project | 140,224,507.71 | 140,224,507.71 | 139,065,246.00 | 139,065,246.00 | ||
| Haier India Project | 127,636,129.62 | 127,636,129.62 | 179,479,688.03 | 179,479,688.03 | ||
| Foshan Freezer Project | 114,194,193.12 | 114,194,193.12 | 199,726,996.70 | 199,726,996.70 | ||
| Haier Dishwasher Project | 112,460,548.93 | 112,460,548.93 | 91,964,708.57 | 91,964,708.57 | ||
| Wuhan Haier Freezer Project | 89,806,704.07 | 89,806,704.07 | 103,052,450.36 | 103,052,450.36 | ||
| Hefei Haier Drum Washing Machine Project | 87,599,984.93 | 87,599,984.93 | 54,949,612.93 | 54,949,612.93 | ||
| Hefei Refrigerator Project | 69,449,237.57 | 69,449,237.57 | 208,080,465.14 | 208,080,465.14 | ||
| Qingdao Smart Appliance Equipment Project | 62,138,638.82 | 62,138,638.82 | 39,116,050.61 | 39,116,050.61 | ||
| Tianjin Haier Washing Appliance Project | 51,851,612.74 | 51,851,612.74 | 59,409,379.45 | 59,409,379.45 | ||
| Foshan Drum Washing Machine Project | 46,487,983.76 | 46,487,983.76 | 35,705,132.24 | 35,705,132.24 | ||
| Special Refrigerator Project | 44,668,942.12 | 44,668,942.12 | 55,838,238.24 | 55,838,238.24 | ||
| Others | 796,764,668.50 | 1,094,312.52 | 795,670,355.98 | 841,367,421.17 | 1,204,981.72 | 840,162,439.45 |
| Total | 4,860,068,236.00 | 1,094,312.52 | 4,858,973,923.48 | 4,184,468,380.51 | 1,204,981.72 | 4,183,263,398.79 |
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Details of significant changes of construction in progress for the period
| Project Name | Opening balance | Increase for the current period | Transfer to fixed tax | Other decrease | Converted difference in foreign currency statements | Closing balance | Source of fund |
| Smart home appliance technology project | 598,122,551.15 | 224,383,602.63 | 822,506,153.78 | Self-funding | |||
| Eastern Europe Project | 182,497,069.58 | 311,848,282.34 | 214,893,401.62 | 131,064,626.57 | 410,516,576.87 | Self-funding | |
| Shanghai Haier Washing Appliance Project | 4,756,839.22 | 300,218,244.20 | 304,975,083.42 | Self-funding | |||
| Europe Candy Project | 153,117,404.68 | 225,876,944.09 | 61,928,761.17 | 114,645,299.55 | 431,710,887.15 | Self-funding | |
| Special freezer Project | 220,203,225.72 | 30,677,004.00 | 28,814,827.19 | 222,065,402.53 | Self-funding | ||
| America GEA Project | 722,008,600.99 | 156,597,708.77 | 677,235,170.56 | 20,023,690.24 | 221,394,829.44 | Self-funding | |
| Qingdao Jiaozhou Washing Appliance Project | 167,168.14 | 192,445,321.17 | 167,168.14 | 192,445,321.17 | Self-funding | ||
| Hailvyuan Recycling Technology Project | 58,589,285.46 | 127,691,464.28 | 186,280,749.74 | Self-funding | |||
| Zhengzhou New Energy Project | 125,734,579.67 | 67,690,537.98 | 29,725,469.67 | 163,699,647.98 | Self-funding | ||
| New Zealand FPA Project | 111,516,266.46 | 97,733,306.99 | 45,251,422.96 | –2,807,718.46 | 161,190,432.03 | Self-funding | |
| Qingdao Haier Washing Machine Project | 139,065,246.00 | 3,628,288.25 | 2,469,026.54 | 140,224,507.71 | Self-funding | ||
| Haier Indian Project | 179,479,688.03 | 50,251,103.87 | –1,592,454.54 | 127,636,129.62 | Self-funding/fund raising | ||
| Foshan freezer Project | 199,726,996.70 | 28,921,954.44 | 114,454,758.02 | 114,194,193.12 | Self-funding | ||
| Haier Dishwasher Project | 91,964,708.57 | 64,617,999.76 | 44,122,159.40 | 112,460,548.93 | Self-funding | ||
| Wuhan Haier Freezer Project | 103,052,450.36 | 14,019,389.30 | 27,265,135.59 | 89,806,704.07 | Self-funding | ||
| Hefei Haier Drum Washing Machine Project | 54,949,612.93 | 54,785,576.69 | 22,135,204.69 | 87,599,984.93 | Self-funding | ||
| Hefei Refrigerator Project | 208,080,465.14 | 24,729,111.19 | 163,360,338.76 | 69,449,237.57 | Self-funding | ||
| Qingdao Smart Appliance Equipment Project | 39,116,050.61 | 24,324,358.55 | 1,301,770.34 | 62,138,638.82 | Self-funding | ||
| Tianjin Haier Washing Appliance Project | 59,409,379.45 | 16,185,270.24 | 23,743,036.95 | 51,851,612.74 | Self-funding | ||
| Foshan Drum Washing Machine Project | 35,705,132.24 | 19,869,545.53 | 9,086,694.01 | 46,487,983.76 | Self-funding | ||
| Special Refrigerator Project | 55,838,238.24 | 20,579,388.16 | 31,748,684.28 | 44,668,942.12 | Self-funding | ||
| Others | 841,367,421.17 | 454,583,937.62 | 496,286,027.46 | –2,900,662.83 | 796,764,668.50 | Self-funding/fund raising | |
| Total | 4,184,468,380.51 | 2,461,407,236.18 | 2,044,240,161.22 | 258,432,780.53 | 4,860,068,236.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
(3) Impairment provision of construction in progress
| Project name | Opening balance | Increase for the period | Transfer to fixed assets | Other decrease | Exchange differences | Closing balance |
| Lejia IOT Project | 837,735.85 | 837,735.85 | ||||
| Other | 367,245.87 | 110,400.00 | –269.20 | 256,576.67 | ||
| Total | 1,204,981.72 | 110,400.00 | –269.20 | 1,094,312.52 |
16.Right-of-use assets
| Items | Houses and buildings | Production equipment | Transportation equipment |
| I. Original book value: | |||
| 1. Opening balance | 3,565,296,279.05 | 43,142,180.40 | 205,005,241.06 |
| 2. Increase for the current period | |||
| (1) Increase | 1,161,271,114.89 | 301,257.21 | 25,412,104.57 |
| 3. Decrease for the current period | |||
| (1) Disposal | 611,788,508.76 | 795,530.81 | 20,112,631.09 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | 156,242,728.76 | –8,765,414.49 | –8,987,426.53 |
| 5. Closing balance | 4,271,021,613.94 | 33,882,492.31 | 201,317,288.01 |
| II. Accumulated amortization | |||
| 1. Opening balance | 1,186,766,506.57 | 18,538,537.80 | 104,827,622.22 |
| 2. Increase for the current period | |||
| (1) Provision | 323,725,547.97 | 4,949,946.49 | 34,038,164.63 |
| 3. Decrease for the current period | |||
| (1) Disposal | 588,472,607.50 | 795,530.81 | 19,949,709.83 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | 9,634,131.77 | –1,636,435.14 | –7,304,649.12 |
| 5. Closing balance | 931,653,578.81 | 21,056,518.34 | 111,611,427.90 |
| III. Impairment provision | |||
| 1. Opening balance | |||
| 2. Increase for the current period | |||
| (1) Provision | |||
| 3. Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | |||
| 5. Closing balance | |||
| IV. Book Value | |||
| 1. Closing book value | 3,339,368,035.13 | 12,825,973.97 | 89,705,860.11 |
| 2. Opening book value | 2,378,529,772.48 | 24,603,642.60 | 100,177,618.84 |
Haier Smart Home Co., Ltd. Interim Report 2022
(Continued)
| Items | Office furniture | Other | Total |
I. Original book value:
| I. Original book value: | |||
| 1. Opening balance | 56,885,631.59 | 392,228,761.08 | 4,262,558,093.18 |
| 2. Increase for the current period | |||
| (1) Increase | 8,136,184.29 | 33,108,576.29 | 1,228,229,237.25 |
| 3. Decrease for the current period | |||
| (1) Disposal | 1,559,558.19 | 202,958,067.53 | 837,214,296.38 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | —13,517,335.54 | 14,659,575.00 | 139,632,127.20 |
| 5. Closing balance | 49,944,922.15 | 237,038,844.84 | 4,793,205,161.25 |
| II. Accumulated amortization | |||
| 1. Opening balance | 17,981,428.91 | 199,765,091.15 | 1,527,879,186.65 |
| 2. Increase for the current period | |||
| (1) Provision | 5,060,790.35 | 43,718,264.38 | 411,492,713.82 |
| 3. Decrease for the current period | |||
| (1) Disposal | 1,559,558.19 | 202,958,067.53 | 813,735,473.86 |
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | —2,593,846.00 | 4,990,462.03 | 3,089,663.54 |
| 5. Closing balance | 18,888,815.07 | 45,515,750.03 | 1,128,726,090.15 |
| III. Impairment provision | |||
| 1. Opening balance | |||
| 2. Increase for the current period | |||
| (1) Provision | |||
| 3. Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| 4. Converted difference in foreign currency statements | |||
| 5. Closing balance | |||
| IV. Book Value | |||
| 1. Closing book value | 31,056,107.08 | 191,523,094.81 | 3,664,479,071.10 |
| 2. Opening book value | 38,904,202.68 | 192,463,669.93 | 2,734,678,906.53 |
Haier Smart Home Co., Ltd. Interim Report 2022
17.Intangible assets
√ Applicable □ Not Applicable
| Items | Proprietary technology | Licenses and franchises | Land use rights |
I. Original book value
| I. Original book value | |||
| 1. Opening balance | 1,852,677,632.57 | 4,242,396,745.16 | 1,266,446,332.10 |
| 2. Increase for the current period | |||
| (1) Purchase | 1,037,735.83 | 961,872.37 | 46,392,458.56 |
| (2) Internal research and development | 67,576,805.41 | ||
| (3) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | 20,192,568.03 | 60,749,402.91 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | –2,494,817.42 | 200,306,753.65 | –500,060.67 |
| 5. Closing balance | 1,918,797,356.39 | 4,423,472,803.15 | 1,251,589,327.08 |
| II. Accumulated amortization | |||
| 1. Opening balance | 946,309,396.14 | 822,985,645.24 | 215,300,271.80 |
| 2. Increase for the current period | |||
| (1) Provision | 102,719,184.79 | 15,472,631.47 | 15,366,965.82 |
| (2) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | 17,102,272.21 | 656,357.40 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 3,510,077.04 | 72,622,670.10 | 52,947.00 |
| 5. Closing balance | 1,052,538,657.97 | 893,978,674.60 | 230,063,827.22 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Proprietary technology | Licenses and franchises | Land use rights |
| III. Impairment provision | |||
| 1. Opening balance | |||
| 2. Increase for the current period | |||
| (1) Provision | |||
| (2) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreig currency statements | n | ||
| 5. Closing balance | |||
| IV. Book Value | |||
| 1. Closing book value | 866,258,698.42 | 3,529,494,128.55 | 1,021,525,499.86 |
| 2. Opening book value | 906,368,236.43 | 3,419,411,099.92 | 1,051,146,060.30 |
(Continued)
| Items | Trademark rights | Application management software and others | Total |
| I. Original book value | |||
| 1. Opening balance | 2,475,717,142.63 | 4,195,088,908.80 | 14,032,326,761.26 |
| 2. Increase in the current period | |||
| (1) Purchase | 72,126,713.97 | 120,518,780.73 | |
| (2) Internal research and development | 232,742,532.42 | 300,319,337.83 | |
| (3) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | 35,194.39 | 25,688,952.22 | 106,666,117.55 |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Trademark rights | Application management software and others | Total |
| 4. Converted difference in foreign currency statements | –21,246,625.22 | 85,326,599.51 | 261,391,849.85 |
| 5. Closing balance | 2,454,435,323.02 | 4,559,595,802.48 | 14,607,890,612.12 |
| II. Accumulated amortization | |||
| 1. Opening balance | 2,441,416,170.95 | 4,426,011,484.13 | |
| 2. Increase in the current period | |||
| (1) Provision | 312,603,464.66 | 446,162,246.74 | |
| (2) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | 17,946,662.17 | 35,705,291.78 | |
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | 61,303,113.21 | 137,488,807.35 | |
| 5. Closing balance | 2,797,376,086.65 | 4,973,957,246.44 | |
| III. Impairment provision | |||
| 1. Opening balance | 55,930,533.23 | 55,930,533.23 | |
| 2. Increase in the current period | |||
| (1) Provision | |||
| (2) Increase in business combination | |||
| 3. Decrease for the current period | |||
| (1) Disposal | |||
| (2) Disposal of subsidiary | |||
| (3) Transfer to hold for sale | |||
| 4. Converted difference in foreign currency statements | |||
| 5. Closing balance | 55,930,533.23 | 55,930,533.23 | |
| IV. Book value | |||
| 1. Closing book value | 2,454,435,323.02 | 1,706,289,182.60 | 9,578,002,832.45 |
| 2. Opening book value | 2,475,717,142.63 | 1,697,742,204.62 | 9,550,384,743.90 |
At the end of the period, the intangible assets developed through the Company accounted for 18.76%of the original value (at the beginning of the period：17.06%).
Haier Smart Home Co., Ltd. Interim Report 2022
18.Development cost
| Items | Opening balance | Increase for the period | Decrease for the period | Converted difference in foreign currency statements | Closing balance | |
| Confirmed as an intangible asset | Included in Current profit and loss | Disposal of subsidiaries | ||||
| 91ABD.ERP IT Program | 41,946,252.47 | 37,987,997.64 | 49,262,205.87 | 1,818,982.22 | 32,491,026.46 | |
| IOT Project | 110,027,251.84 | 151,890,695.99 | 161,537,475.35 | 12,660,213.46 | 87,720,259.02 | |
| Others | 75,918,724.82 | 210,205,140.79 | 89,519,656.61 | 76,108,815.49 | –15,327,990.08 | 105,167,403.43 |
| Total | 227,892,229.13 | 400,083,834.42 | 300,319,337.83 | 88,769,028.95 | –13,509,007.86 | 225,378,688.91 |
19.Goodwill
| Items | Opening balance | Increase for the period | Decrease for the period | Impact of fluctuation in exchange rate for the period | Closing balance |
| GEA | 18,938,463,729.43 | 993,795,916.39 | 19,932,259,645.82 | ||
| Candy | 1,877,121,985.56 | –19,282,820.54 | 1,857,839,165.02 | ||
| Others | 1,011,517,345.77 | –54,937,999.58 | 956,579,346.19 | ||
| Total | 21,827,103,060.76 | 919,575,096.27 | 22,746,678,157.03 |
In the case of a goodwill impairment test, the Company compares the carrying amount of therelevant asset group or asset group combination (including goodwill) with its recoverable amount.If the recoverable amount is less than the book value, corresponding difference will berecognized in profit or loss.
The recoverable amount of the asset group (including goodwill) is calculated with discountedestimated future cash flow method based on a management-approved 5–15 years budget. Futurecash flows beyond the budget period are estimated using the estimated perpetual annual growthrate. The perpetual annual growth rate (mainly 2%) adopted by the management is consistentwith industry forecast data and does not exceed the long-term average growth rate of eachproduct. The management determines the compound income growth rate (mainly 3%- 15.54%)and the EBITDA profit margin (mainly 3%–14%) based on historical experience and marketdevelopment forecasts, and adopts the pre-tax interest rate that can reflect the specific risks ofthe relevant asset group as the discount rate (mainly 9.42%–
17.85%). The management analyzes
the recoverable amount of each asset group based on these assumptions and believes that thereis no need to make provision for goodwill.
Haier Smart Home Co., Ltd. Interim Report 2022
20.Long-term prepaid expenses
| Items | Opening balance | Increase for the current period | Amortization for the current period | Other decrease | Converted difference in foreign currency statements | Closing balance |
| Renovation | 341,401,034.69 | 221,864,471.45 | 147,742,517.01 | 49,069.43 | 415,572,058.56 | |
| Improvement on leased property | 153,829,229.13 | 6,586,874.52 | 11,665,192.70 | 1,337,698.99 | 150,088,609.94 | |
| Others | 93,566,442.42 | 49,364,367.49 | 24,090,767.44 | 1,882,689.04 | 120,722,731.51 | |
| Total | 588,796,706.24 | 277,815,713.46 | 183,498,477.15 | 3,269,457.46 | 686,383,400.01 |
21.Deferred income tax assets and deferred income tax liabilities
(1)Deferred income tax assets before elimination
| Items | Closing balance | Opening balance |
| Provision for assets impairment | 455,770,682.35 | 354,806,051.43 |
| Liabilities | 1,199,049,482.58 | 1,405,119,092.59 |
| Internal unrealized earnings eliminated due to combination | 412,996,571.07 | 619,291,715.60 |
| Government grants | 65,451,012.87 | 163,806,221.87 |
| Uncovered losses | 827,520,243.52 | 817,306,157.01 |
| Others | 306,999,705.89 | 286,586,600.19 |
| Total | 3,267,787,698.28 | 3,646,915,838.69 |
(2)Deferred income tax liabilities before elimination
| Item | Closing balance | Opening balance |
Asset amortisation
| Asset amortisation | 2,612,909,276.23 | 2,318,829,386.48 |
| Remeasurement of fair value of the remaining equity interest on the date of loss of control | 878,623,804.46 | 878,623,804.46 |
| Changes in fair value of investments in other equity instruments | 292,550,406.68 | 292,476,080.49 |
| Others | 601,342,956.88 | 421,341,222.80 |
| Total | 4,385,426,444.25 | 3,911,270,494.23 |
(3)The deferred income tax assets and the deferred income tax liabilities eliminated at the endof this period was RMB1,868,424,500.53 (amount at the beginning of the period:
RMB1,789,467,320.40).
Haier Smart Home Co., Ltd. Interim Report 2022
22.Other non-current assets
| Item | Closing balance | Opening balance |
Prepayments for equipment and land
| Prepayments for equipment and land | 1,493,069,487.59 | 1,859,693,694.07 |
| Others | 257,921,485.70 | 304,690,319.07 |
| Total | 1,750,990,973.29 | 2,164,384,013.14 |
23.Short-term borrowings
(1)Classification of short-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Closing balance | Opening balance |
| Borrowings — secured by pledge | 132,610,219.46 | 255,103,925.36 |
| Borrowings － secured by gurantee | 287,673,529.00 | 304,896,830.40 |
| Borrowings — unsecured | 12,728,578,402.59 | 10,661,927,352.96 |
| Interest payable for short-term borrowings | 10,707,152.42 | 4,284,025.67 |
| Total | 13,159,569,303.47 | 11,226,212,134.39 |
24.Financial liabilities held for trading
| Item | Closing balance | Opening balance |
Forward foreign exchange contracts
| Forward foreign exchange contracts | 79,270,648.00 | 6,294,014.40 |
| Total | 79,270,648.00 | 6,294,014.40 |
25.Derivative financial liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Closing balance | Opening balance |
Forward foreign exchange contracts
| Forward foreign exchange contracts | 50,925,674.51 | 60,527,532.76 |
| Forward commodity contracts | 24,918,179.06 | |
| Interest rate swap agreement | 1,223,112.98 | 19,684,900.48 |
| Total | 77,066,966.55 | 80,212,433.24 |
Haier Smart Home Co., Ltd. Interim Report 2022
26.Bills payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Closing balance | Opening balance |
Commercially acceptance notes
| Commercially acceptance notes | 3,942,641,684.10 | 3,022,602,833.31 |
| Bank acceptance notes | 24,012,446,582.98 | 22,000,635,573.41 |
| Total | 27,955,088,267.08 | 25,023,238,406.72 |
27.Accounts payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Closing balance | Opening balance |
Accounts payable
| Accounts payable | 38,977,127,139.49 | 42,396,109,648.76 |
| Total | 38,977,127,139.49 | 42,396,109,648.76 |
The ending book balance is mainly the advance payment that has been collected and has notyet performed the contractual obligations.
28.Contract liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Closing balance | Opening balance |
Contract liabilities
| Contract liabilities | 5,397,435,938.66 | 10,027,091,593.60 |
| Total | 5,397,435,938.66 | 10,027,091,593.60 |
The book balance at the end of the period was mainly due to the advance payment that hasbeen collected and has not yet performed the contractual obligations.
Haier Smart Home Co., Ltd. Interim Report 2022
29.Payables for staff’s remuneration
(1)Payables for staff’s remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Short-term remuneration | 3,985,572,611.32 | 12,372,081,213.66 | 13,380,927,669.30 | 2,976,726,155.68 |
| II. Post-employment benefits-defined contribution plan | 18,949,702.17 | 692,714,047.99 | 636,031,124.88 | 75,632,625.28 |
| III. Termination benefits | 9,818,188.41 | 1,385,509.59 | 1,385,509.59 | 9,818,188.41 |
| IV. Other benefits due within one year | 101,599,133.34 | 56,162,753.31 | 63,984,691.16 | 93,777,195.49 |
| Total | 4,115,939,635.24 | 13,122,343,524.55 | 14,082,328,994.93 | 3,155,954,164.86 |
(2)Short-term remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Salaries, bonus, allowance and benefit | 2,845,636,628.83 | 9,253,069,040.11 | 10,202,853,922.29 | 1,895,851,746.65 |
| II. Employee welfare | 321,996,794.22 | 449,278,231.27 | 455,875,857.26 | 315,399,168.23 |
| III. Social benefit | 171,645,833.66 | 798,357,880.79 | 778,939,560.28 | 191,064,154.17 |
| IV. Housing fund | 11,137,621.51 | 249,412,342.32 | 222,501,879.20 | 38,048,084.63 |
| V. Labor union fee and education fee | 3,512,041.39 | 50,357,157.86 | 50,352,259.63 | 3,516,939.62 |
| VI. Short-term compensated absences | 268,213,164.85 | 245,925,928.71 | 238,516,364.01 | 275,622,729.55 |
| VII. Others | 363,430,526.86 | 1,325,680,632.60 | 1,431,887,826.63 | 257,223,332.83 |
| Total | 3,985,572,611.32 | 12,372,081,213.66 | 13,380,927,669.30 | 2,976,726,155.68 |
Haier Smart Home Co., Ltd. Interim Report 2022
(3)Defined contribution plan
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for current the period | Closing balance |
I. Basic pension insurance
| I. Basic pension insurance | 18,396,477.11 | 651,265,918.55 | 595,881,144.31 | 73,781,251.35 |
| II. Unemployment insurance | 132,417.35 | 16,469,204.68 | 16,153,403.18 | 448,218.85 |
| III. Enterprise annuity payment | 420,807.71 | 24,978,924.76 | 23,996,577.39 | 1,403,155.08 |
| Total | 18,949,702.17 | 692,714,047.99 | 636,031,124.88 | 75,632,625.28 |
(4)Termination benefits
| Items | Closing balance | Opening balance |
Termination compensation
| Termination compensation | 9,818,188.41 | 9,818,188.41 |
| Total | 9,818,188.41 | 9,818,188.41 |
30.Taxes payable
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Value-added tax | 1,132,740,094.75 | 961,177,432.39 |
| Enterprise income tax | 1,359,436,105.72 | 1,307,101,572.02 |
| Individual income tax | 56,493,685.90 | 94,881,505.62 |
| City maintenance and construction tax | 31,212,179.57 | 40,370,470.70 |
| Education surcharge | 13,646,982.77 | 16,171,169.66 |
| The electrical and electronic products waste treatment fund | 80,351,158.58 | 95,522,090.50 |
| Other taxes | 74,131,498.30 | 90,284,462.67 |
| Total | 2,748,011,705.59 | 2,605,508,703.56 |
Haier Smart Home Co., Ltd. Interim Report 2022
31.Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
Dividends payable
| Dividends payable | 4,321,692,240.21 | 10,639,313.22 |
| Other payables | 18,069,812,569.98 | 17,522,730,703.79 |
| Total | 22,391,504,810.19 | 17,533,370,017.01 |
(1)Dividends payable:
| Name of company | Closing balance | Opening balance |
| Haier Group Corporation | 494,859,702.08 | |
| Haier Cosmo Co., Limited | 580,706,830.40 | |
| Other Shareholders of Social Shares | 3,246,125,707.73 | 10,639,313.22 |
| Total | 4,321,692,240.21 | 10,639,313.22 |
(2)Other payables
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
Other payables
| Other payables | 18,069,812,569.98 | 17,522,730,703.79 |
| Total | 18,069,812,569.98 | 17,522,730,703.79 |
The closing balance at the end of the period mainly included the incurred but unpaid costs.
Haier Smart Home Co., Ltd. Interim Report 2022
32.Non-current liabilities due within one year
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
Long-term borrowings due within one year
| Long-term borrowings due within one year | 9,321,663,925.51 | 6,745,950,334.20 |
| Lease liabilities due within one year | 830,251,373.67 | 687,991,183.42 |
| Estimated liabilities due within one year | 2,093,647,663.56 | 2,190,397,652.84 |
| Bond payables due within one year | 244,655,820.72 | |
| Total | 12,490,218,783.46 | 9,624,339,170.46 |
33.Other current liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Payable refund | 641,035,214.33 | 655,801,519.33 |
| Tax amount to be written off | 633,816,441.43 | 1,568,670,492.94 |
| Super-short-term bonds | ||
| Others | 11,342,818.05 | 14,295,539.13 |
| Total | 1,286,194,473.81 | 2,238,767,551.40 |
Other explanations:
□ Applicable √ Not Applicable
34.Long-term borrowings
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| Borrowings — unsecured | 2,119,243,998.96 | 3,038,573,824.53 |
| Total | 2,119,243,998.96 | 3,038,573,824.53 |
Interest rates of long-term loans of the Company ranged from 1.54% to 5.00%.
Haier Smart Home Co., Ltd. Interim Report 2022
35.Bonds payableIn November 2017, Harvest International Company, the Company’s wholly-owned subsidiary,issued HK$8 billion five-year exchangeable corporate bonds, with a coupon rate of zero and arate on investment of 1%. In September 2020, the Company approved the plan to convert theexchangeable bonds into convertible bonds, pursuant to which, target shares of the originalexchangeable bonds were changed from shares of Haier Electrics to newly issued H Shares ofHaier Smart Home (the “EB-to-CB Proposal”). On 23 December 2020, H Shares of Haier SmartHome was listed, and the EB-to-CB Proposal became effective. The outstanding principal of theoriginal exchangeable bonds amounted to HK$7.993 billion and the maturity, coupon rate andrate on investment remained unchanged. The convertible bonds were divided into liabilities andequities on initial recognition:
| Items | Exchangeable corporate bonds issued on 23 December 2020 |
| Initial recognition: | 9,105,660,619.93 |
| Including: | |
| Equity portion of the exchangeable bond | 2,364,195,333.79 |
| Liability portion of the exchangeable bond | 6,741,465,286.14 |
(1)Changes in the liability portion of corporate bonds in the current period:
| Items | Opening balance | Increase for the current period | Accrued bond interest for the current period | Less: Bond interest paid for the current period | Exchange rate impact | Shares converted in the current period | Shares redeemed in the current period | Closing balance |
| Convertible corporate bonds (“CB”) | 334,730,048.82 | 3,645,444.33 | 104,128,286.20 | 10,408,613.77 | 244,655,820.72 | |||
| Total | 334,730,048.82 | 3,645,444.33 | 104,128,286.20 | 10,408,613.77 | 244,655,820.72 |
(2)Closing balance of bond payables
| Items | Closing balance | Opening balance |
Bond payables
| Bond payables | 244,655,820.72 | 334,730,048.82 |
| Less: bond payables due within one year | 244,655,820.72 | |
| Total | — | 334,730,048.82 |
Haier Smart Home Co., Ltd. Interim Report 2022
36.Lease liabilities
| Items | Closing balance | Opening balance |
Lease liabilities
| Lease liabilities | 3,594,196,007.40 | 2,648,886,164.89 |
| Less: lease liabilities due within one year | 830,251,373.67 | 687,991,183.42 |
| Total | 2,763,944,633.73 | 1,960,894,981.47 |
37.Long-term payables
| Items | Closing balance | Opening balance |
| Investment from CDB development fund | 36,500,000.00 | 36,500,000.00 |
| Others | 12,853,671.92 | 63,102,707.76 |
| Less: long-term payables due within one year | ||
| Total | 49,353,671.92 | 99,602,707.76 |
Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of 1.2%by means of dividends or buyback premium for the above investments. As at 30 June 2022,subsidiaries of the Company repurchased RMB36.50 million.
38.Long-term payables for staff’s remuneration
√ Applicable □ Not Applicable
(1)Long-term payables for staff’s remuneration
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
| I. Post-employment benefits-net liability of defined benefit plan | 543,028,353.07 | 517,077,143.43 |
| II. Termination benefits | 427,728,738.99 | 453,425,129.57 |
| III. Other long-term benefits | ||
| IV. Provision for work-related injury compensation | 201,884,985.82 | 202,649,488.64 |
| Total | 1,172,642,077.88 | 1,173,151,761.64 |
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Defined benefit planSome subsidiaries of the Company have set several defined benefit plans for the qualifiedstaff. Under these plans, the employees are entitled to the retirement benefits agreed insuch defined benefit plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary andother risks.
The recent actuarial evaluation of the assets and the present value of defined benefitobligations under such plans are determined by using the projected unit credit method.
①The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the Company.Actuarial assumption used in the defined benefit plan
| Items | Rate |
| Discount rate | 0.50% |
| Expected rate of return | 2.00% |
Present value of defined benefit obligations
| Items | Amount |
I. Opening balance
| I. Opening balance | 279,152,422.12 |
| II. Defined benefit cost recognized in current profit or loss | 8,127,898.84 |
| 1. Current service cost | 8,127,898.84 |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “–”) | |
| 4. Interest expenses | |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “–”) | |
| IV. Other changes | –32,185,093.79 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | |
| 3. Exchange differences | –32,185,093.79 |
| V. Closing balance | 255,095,227.17 |
Haier Smart Home Co., Ltd. Interim Report 2022
Fair value of plan assets
| Items | Amount |
I. Opening balance
| I. Opening balance | 337,081,685.24 |
| II. Defined benefit cost recognized in current profit or loss | |
| 1. Interest income | |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Return on plan assets (except those included in net interests) | |
| 2. Changes in impact of asset cap (except those included in net interests) | |
| IV. Other changes | –29,042,363.63 |
| 1. Employer contributions | 9,822,252.35 |
| 2. Benefits paid | |
| 3. Exchange differences | –38,864,615.98 |
| V. Closing balance | 308,039,321.61 |
Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.
Net liability (net asset) of defined benefit plan
| Items | Amount |
| I. Opening balance | –57,929,263.12 |
| II. Defined benefit cost recognized in current profit or loss | 8,127,898.84 |
| III. Defined benefit cost recognized in other comprehensive income | |
| IV. Other changes | –3,142,730.16 |
| V. Closing balance | –52,944,094.44 |
The average term for the defined benefit obligation is 11.73 years at the balancesheet date.
Haier Smart Home Co., Ltd. Interim Report 2022
②The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has provided qualified staff withdefined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 2.91% |
Present value of defined benefit obligations
| Item | Amount |
| I. Opening balance | 128,979,684.17 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 11,151,712.37 |
| 1. Current period service cost | 7,729,103.67 |
| 2. Past service cost | |
| 3. Settlement gains ((loss indicated in “–”) | |
| 4. Interest expenses | 3,422,608.70 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “–”) | |
| V. Other changes | –442,300.02 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | –7,364,356.69 |
| 3. Exchange differences | 6,922,056.67 |
| VI. Closing balance | 139,689,096.52 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
I. Opening balance
| I. Opening balance | 128,979,684.17 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 11,151,712.37 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | –442,300.02 |
| VI. Closing balance | 139,689,096.52 |
The average term for the defined benefit obligation is 10.68 years at the balancesheet date.
Haier Smart Home Co., Ltd. Interim Report 2022
③The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the Company.Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided qualifiedstaff with defined benefit plan for post-retirement health care benefits.
Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 2.62% |
Present value of defined benefit obligations
| Items | Amount |
| I. Opening balance | 221,602,455.52 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 14,160,180.44 |
| 1. Current period service cost | 11,302,750.80 |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “–”) | |
| 4. Interest expenses | 2,857,429.64 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “–”) | |
| V. Other changes | –14,185,489.79 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | –25,462,931.24 |
| 3. Exchange differences | 11,277,441.45 |
| VI. Closing balance | 221,577,146.17 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
I. Opening balance
| I. Opening balance | 221,602,455.52 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 14,160,180.44 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | –14,185,489.79 |
| VI. Closing balance | 221,577,146.17 |
Haier Smart Home Co., Ltd. Interim Report 2022
④The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary
of the Company.Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provided qualifiedstaff with defined benefit plan for post-retirement pension.
Actuarial assumptions used in defined benefit plans
| Item | Rate |
| Discount rate | 2.61% |
Present value of defined benefit obligations
| Items | Amount |
| I. Opening balance | 166,510,439.87 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 5,234,493.60 |
| 1. Current service cost | 4,697,968.57 |
| 2. Past service cost | |
| 3. Settlement gains (loss indicated in “–”) | |
| 4. Interest expenses | 536,525.03 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| 1. Actuarial loss (gain indicated in “–”) | |
| V. Other changes | –25,682,890.10 |
| 1. The consideration paid at the time of settlement | |
| 2. Benefits paid | –33,474,257.78 |
| 3. Exchange differences | 7,791,367.68 |
| VI. Closing balance | 146,062,043.37 |
Haier Smart Home Co., Ltd. Interim Report 2022
Fair value of plan assets
| Items | Amount |
I. Opening balance
| I. Opening balance | 126,020,077.85 |
| II. Defined benefit cost recognized in current profit or loss | 1,415,308.99 |
| 1. Interest income | 1,415,308.99 |
| III. Defined benefit cost recognized in other comprehensive income | |
| 1. Return on plan assets (except those included in net interests) | |
| 2. Changes in impact of asset cap (except those included in net interests) | |
| IV. Other changes | –24,249,168.88 |
| 1. Employer contributions | 3,574,130.55 |
| 2. Benefits paid | –33,474,257.78 |
| 3. Exchange differences | 5,650,958.35 |
| V. Closing balance | 103,186,217.96 |
Net liability (net asset) of defined benefit plan
| Items | Amount |
| I. Opening balance | 40,490,362.02 |
| II. Business combination not under common control | |
| III. Defined benefit cost recognized in current profit or loss | 3,819,184.61 |
| IV. Defined benefit cost recognized in other comprehensive income | |
| V. Other changes | –1,433,721.22 |
| VI. Closing balance | 42,875,825.41 |
Haier Smart Home Co., Ltd. Interim Report 2022
(3)Provision for work-related injury compensationHaier U.S. Appliance Solutions, Inc., a subsidiary of the Company, made a provision forwork-related injury claims for the staff injured during the production accidents from 1January 1991, which was used to pay for the claim made by the injured staff. Theprovision was calculated by Beechercarlson Insurance Services, LLC., based on actuarialmethod and a discount rate of 3.72%.
| Items | Amount |
I. Opening balance
| I. Opening balance | 202,649,488.64 |
| II. Business combination not under common control | |
| III. Compensation recognized in current profit and loss | 42,595,195.29 |
| IV. Actual compensation paid in the current period | –31,089,549.42 |
| V. Other changes | –12,270,148.69 |
| VI. Closing balance | 201,884,985.82 |
Classification of the balance of defined benefit plan
| Items | Closing balance | Opening balance |
| Short-term salary | 20,343,350.71 | 32,502,729.33 |
| Long-term salary | 543,028,353.07 | 517,077,143.43 |
| Total | 563,371,703.78 | 549,579,872.76 |
39.Estimated liabilities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Closing balance |
Pending litigation
| Pending litigation | 29,259,869.48 | 28,403,516.67 |
| Others | 252,996,489.56 | 237,072,214.65 |
| Projection of three guarantees and installation fees | 1,666,309,118.07 | 1,511,341,428.95 |
| Total | 1,948,565,477.11 | 1,776,817,160.27 |
Significant assumption and estimation relating to projection of three guarantees and installationfees: the Company reasonably estimated the three guarantees and installation fee rate based onits actual expenses on the three guarantees and installation fees as well as sales data in the past.The Company estimated the three guarantees and installation fees that are likely to be incurred inthe future according to its policies on the three guarantees and installation fees, as well as theactual sales data.
Haier Smart Home Co., Ltd. Interim Report 2022
40.Deferred income
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
Government grants
| Government grants | 852,794,567.20 | 121,524,102.45 | 67,775,099.53 | 906,543,570.12 |
| Total | 852,794,567.20 | 121,524,102.45 | 67,775,099.53 | 906,543,570.12 |
41.Share capital
| Categories of shares | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| I. Restricted shares | ||||
| 1. State-owned shares | ||||
| 2. Shares held by domestic non-state- owned legal entities | ||||
| 3. Shares held by domestic individuals | ||||
| 4. Shares held by offshore non-state- owned legal entities | ||||
| II. Non-restricted shares | 9,398,704,530 | 48,087,440 | 9,446,791,970 | |
| 1. Ordinary shares in RMB | 6,308,552,654 | 6,308,552,654 | ||
| 2. Domestic listed foreign Shares | ||||
| 3. Offshore listed foreign Shares | 3,090,151,876 | 48,087,440 | 3,138,239,316 | |
| 4. Others | ||||
| III. Total shares | 9,398,704,530 | 48,087,440 | 9,446,791,970 | |
Haier Smart Home Co., Ltd. Interim Report 2022
42.Other equity instruments
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
Equity portion of convertible
bonds
| Equity portion of convertible bonds | 118,017,507.59 | 36,677,120.16 | 81,340,387.43 | |
| Total | 118,017,507.59 | 36,677,120.16 | 81,340,387.43 |
43.Capital reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
| Capital premium (share capital premium) | 21,504,525,556.91 | 1,061,307,365.80 | 155,443,570.29 | 22,410,389,352.42 |
| Other capital reserve | 1,074,849,182.55 | 350,146,476.28 | 14,455,372.85 | 1,410,540,285.98 |
| Total | 22,579,374,739.46 | 1,411,453,842.08 | 169,898,943.14 | 23,820,929,638.40 |
The main reasons for the change in share premium: The non-public offering of H shares duringthe period resulted in the increase in share premium of RMB898,627,404.94; the conversion ofCB shares during the period resulted in the increase in share premium of RMB134,131,566.36;the common control combination occurred during the period resulted in the decrease in sharepremium by RMB152,818,769.28.
The main reasons for the change in other capital reserve: The amortized share-based paymentfor the period included in other capital reserve was RMB332,853,517.66.
Haier Smart Home Co., Ltd. Interim Report 2022
44.Other comprehensive income
| Items | Amount for the current period | ||||||
| Opening balance | Amount before income tax in the current period | Deduction of impact on income tax | Amount attributable to the parent company after tax | Amount attributable to minority shareholders after tax | Others | Closing balance | |
| a | –341,470,688.45 | 108,350,151.43 | 108,350,151.43 | –233,120,537.02 | |||
| b | 1,618,386.47 | 44,150,892.48 | –13,269,887.07 | 25,995,214.10 | 4,885,791.31 | 27,613,600.57 | |
| c | –1,916,614,455.79 | 2,771,447,499.33 | 2,777,826,143.89 | –6,378,644.56 | 861,211,688.10 | ||
| d | 1,005,776,349.60 | —56,688,764.76 | 6,440,238.56 | –50,208,727.45 | –39,798.75 | 955,567,622.15 | |
| e | 73,838,708.25 | 5,026,518.27 | –464,348.29 | 4,562,166.91 | 3.07 | 78,400,875.16 | |
| Total | –1,176,851,699.92 | 2,872,286,296.75 | –7,293,996.80 | 2,866,524,948.88 | –1,532,648.93 | 1,689,673,248.96 | |
Notes:
(1)Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, the details are as follows:
Item a represents other comprehensive income classified into profit and loss under the equity method.Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge). Item crepresents the balance arising from translation of foreign currency financial statements.(2)Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:
Item d represents the change in fair value of investments in other equity instruments.Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.
Haier Smart Home Co., Ltd. Interim Report 2022
45.Surplus reserve
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Opening balance | Increase for the current period | Decrease for the current period | Closing balance |
Statutory surplus reserve
| Statutory surplus reserve | 3,390,959,108.25 | 3,390,959,108.25 | ||
| Discretionary surplus reserve | 26,042,290.48 | 26,042,290.48 | ||
| Reserve fund | 11,322,880.64 | 11,322,880.64 | ||
| Enterprise development fund | 10,291,630.47 | 10,291,630.47 | ||
| Total | 3,438,615,909.84 | 3,438,615,909.84 |
46.Undistributed profits
√ Applicable □ Not Applicable
| Items | Amounts |
| Undistributed profits at the end of previous year | 47,907,134,328.80 |
| Changes in accounting policies | |
| Business combination under common control | 10,777,931.35 |
| Undistributed profits at the beginning of the year | 47,917,912,260.15 |
| Add: net profit attributable to owners of the parent company | 7,949,084,472.70 |
| Other transfer in | 189,803,613.66 |
| Adjustment due to implementation of enterprise accounting standard① | |
| Profit available for appropriation for the year | 56,056,800,346.51 |
| Less: appropriation of statutory surplus reserve | |
| Appropriation of staff incentive and welfare fund | |
| Dividend payable for ordinary shares | –4,320,445,666.86 |
| Undistributed profits at the end of period | 51,736,354,679.65 |
Haier Smart Home Co., Ltd. Interim Report 2022
47.Operating income and operating cost
(1)Operating income
| Items | Amount for the current period | Amount for the previous period |
| Primary business | 121,248,482,590.74 | 111,070,737,835.16 |
| Other business | 609,039,871.48 | 657,018,375.90 |
| Total | 121,857,522,462.22 | 111,727,756,211.06 |
(2)Primary business income and primary business cost by product category
| Amount for the current period | Amount for the previous period | |||
| Categories | Primary business income | Primary business cost | Primary business income | Primary business cost |
| Air conditioner | 23,670,538,686.34 | 17,107,788,658.52 | 21,626,942,343.55 | 15,570,568,221.85 |
| Refrigerator | 37,913,367,317.50 | 26,475,741,807.66 | 33,637,015,872.13 | 23,400,300,288.46 |
| Kitchen appliance | 18,750,037,462.88 | 12,816,780,100.13 | 16,918,040,488.85 | 11,715,172,134.94 |
| Water appliance | 6,713,300,912.43 | 3,934,510,287.34 | 5,778,983,645.59 | 3,336,143,841.42 |
| Washing machine | 26,516,919,361.82 | 17,907,657,332.94 | 24,988,233,426.16 | 16,920,815,831.58 |
| Equipment product and integrated channel services | 7,684,318,849.77 | 6,682,457,643.78 | 8,121,522,058.88 | 7,069,369,377.40 |
| Total | 121,248,482,590.74 | 84,924,935,830.37 | 111,070,737,835.16 | 78,012,369,695.65 |
Haier Smart Home Co., Ltd. Interim Report 2022
48.Taxes and surcharge
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
City construction tax
| City construction tax | 122,226,136.72 | 117,279,029.59 |
| Education surcharge | 88,480,235.93 | 85,175,835.15 |
| Property tax | 28,716,064.84 | 25,464,790.86 |
| Land use tax | 7,536,240.97 | 7,635,139.14 |
| Stamp duty | 91,371,622.87 | 84,907,708.18 |
| Others | 18,835,304.10 | 19,026,156.24 |
| Total | 357,165,605.43 | 339,488,659.16 |
49.Selling expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Selling expenses | 17,605,612,224.80 | 16,731,407,296.02 |
| Total | 17,605,612,224.80 | 16,731,407,296.02 |
The Company’s selling expenses are mainly salary expenses, transportation and storage expenses,advertising and promotion expenses, and after-sales expenses etc.
50.Administrative expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Administrative expenses | 5,132,033,156.92 | 5,047,535,410.71 |
| Total | 5,132,033,156.92 | 5,047,535,410.71 |
The Company’s management expenses are mainly salary expenses, administrative office expenses,depreciation and amortization of assets fees, etc.
Haier Smart Home Co., Ltd. Interim Report 2022
51.R&D expenses
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Item | Amount for the current period | Amount for the previous period |
R&D expenses
| R&D expenses | 4,595,691,525.07 | 3,738,316,873.21 |
| Total | 4,595,691,525.07 | 3,738,316,873.21 |
The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, inspectionand testing fees.
52.Financial expenses
| Items | Amount for the current period | Amount for the previous period |
| Interest expenses | 345,810,365.32 | 363,287,457.45 |
| Less: Interest income | 362,045,401.51 | 264,658,985.86 |
| Less: Cash discount | 79,106,314.27 | 82,709,178.40 |
| Exchange gains and losses | –169,143,266.33 | 211,633,480.85 |
| Others | 62,257,534.62 | 67,993,563.13 |
| Total | –202,227,082.17 | 295,546,337.17 |
Interest expenditure in lease liabilities in the current period is RMB37,109,559.27 (interest expenditurein lease liabilities in the corresponding period: RMB50,962,914.77).
53.Other income
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Government grants related to revenue | 493,172,631.97 | 338,438,305.23 |
| Government grants related to assets | 53,070,066.97 | 39,678,023.49 |
| Total | 546,242,698.94 | 378,116,328.72 |
Haier Smart Home Co., Ltd. Interim Report 2022
54.Investment income
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Income from long-term equity investment calculated by equity method | 936,511,207.40 | 942,666,393.83 |
| Investment income from disposal of long-term equity investment | 11,181,922.82 | |
| Dividend income from other equity instruments investment during holding period | 2,596,583.32 | 440,255.20 |
| Income from wealth management products | 42,007,117.65 | 28,216,179.52 |
| Investment income from disposal of financial assets at fair value through profit or loss | 178,039,912.22 | 164,957,510.67 |
| Total | 1,170,336,743.41 | 1,136,280,339.22 |
55.Gains on changes in fair value (losses are represented by “-”)
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Changes in fair value of forward foreign exchange contracts | –53,088,495.38 | 46,929,961.72 |
| Changes in fair value of equity instrument investments | –67,322,769.58 | 15,457,768.79 |
| Changes in fair value of wealth management products | 1,621,089.28 | 1,881,780.81 |
| Total | –118,790,175.68 | 64,269,511.32 |
Haier Smart Home Co., Ltd. Interim Report 2022
56.Credit impairment loss
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period | Amount for the previous period |
| Bad debts losses on bills receivable | –31,492,310.29 | 156,696.60 |
| Bad debts losses on accounts receivable | –222,677,055.12 | –33,122,995.20 |
| Bad debts losses on other receivables | –3,907,480.73 | –11,065,124.61 |
| Total | –258,076,846.14 | –44,031,423.21 |
57.Impairment loss on assets (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Impairment losses on inventory | –371,859,276.93 | –402,766,436.32 |
| Impairment losses on other current assets | –335,202,670.88 | –228,869,824.32 |
| Impairment losses on fixed assets | –21,751,066.24 | |
| Total | –707,061,947.81 | –653,387,326.88 |
58.Gains on disposal of assets (losses are represented by “-”)
| Items | Amount for the current period | Amount for the previous period |
| Gains on disposal of non-current assets | 38,409,742.18 | 157,808,087.44 |
| Losses on disposal of non-current assets | –6,820,535.08 | –15,393,133.19 |
| Total | 31,589,207.10 | 142,414,954.25 |
Haier Smart Home Co., Ltd. Interim Report 2022
59.Non-operating income
√ Applicable □ Not Applicable
| Items | Amount for the current period | Amount for the previous period |
Gains on disposal of non-current assets
| Gains on disposal of non-current assets | 96,551.42 | 924,615.55 |
| Quality claims and fines | 25,959,518.87 | 19,559,885.95 |
| Others | 42,798,157.12 | 59,682,895.64 |
| Total | 68,854,227.41 | 80,167,397.14 |
60.Non-operating expenses
| Items | Amount for the current period | Amount for the previous period |
| Losses on disposal of non-current assets | 9,060,187.94 | 7,928,197.15 |
| Others | 34,475,363.74 | 43,136,498.89 |
| Total | 43,535,551.68 | 51,064,696.04 |
61.Income tax expenses
(1)Statement of income tax expenses
| Items | Amount for the current period | Amount for the previous period |
Current income tax expenses
| Current income tax expenses | 1,240,831,826.79 | 985,282,651.38 |
| Deferred income tax expenses | 759,910,099.57 | 540,467,141.62 |
| Total | 2,000,741,926.36 | 1,525,749,793.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
(2) Current reconciliation between accounting profit and income tax expenses
| Items | Amounts |
Total accounting profit
| Total accounting profit | 9,997,672,068.52 |
| Income tax expenses calculated pursuant to statutory tax rate(s) | 2,499,418,017.12 |
| Impact from different tax rates applicable to subsidiaries | –544,232,640.78 |
| Impact from adjustment to income tax in prior periods | –162,828,321.06 |
| Impact from non-taxable income | –224,434,783.55 |
| Impact from non-deductible cost, expense and loss | 67,350,658.86 |
| Impact from deductible provisional differences or deductible losses of unrecognized deferred tax | 434,970,684.94 |
| Others | –69,501,689.17 |
| Total income tax expense | 2,000,741,926.36 |
62.Other comprehensive income
√ Applicable □ Not Applicable
Please refer to Note VII. 44 for details.
63.Other cash received from operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period |
| Deposits and securities | 93,387,920.50 |
| Government grants | 373,042,872.09 |
| Non-operating income excluding government grants | 26,813,348.55 |
| Interest income | 258,507,374.28 |
| Others | 89,543,300.32 |
| Total | 841,294,815.74 |
Haier Smart Home Co., Ltd. Interim Report 2022
64.Other cash paid to operating activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period |
Cash paid on selling expenses
| Cash paid on selling expenses | 10,010,028,996.55 |
| Cash paid on administrative and R&D expenses | 3,442,392,616.83 |
| Cash paid on financial expenses | 68,146,435.16 |
| Non-operating expenses | 3,136,224.43 |
| Others | 117,915,539.69 |
| Total | 13,641,619,812.66 |
65.Other cash received from financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period |
| Others | 1,000,235.35 |
| Total | 1,000,235.35 |
66.Other cash paid to financing activities
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Amount for the current period |
Cash paid to lease
| Cash paid to lease | 333,323,858.52 |
| Repurchase of shares | 1,538,651,010.37 |
| Expenses from issuance of H-shares | 2,964,303.96 |
| Others | 1,638,600.00 |
| Total | 1,876,577,772.85 |
Haier Smart Home Co., Ltd. Interim Report 2022
67.Net profit adjusted to cash flow of operating activities
| Net profit adjusted to cash flow of operating activities | Amount for the current period | Amount for the previous period |
| 1. Net profit | 7,996,930,142.16 | 6,946,009,059.74 |
| Add: impairment provision for assets | 965,138,793.95 | 697,418,750.09 |
| Depreciation of fixed assets | 2,206,781,413.69 | 2,112,591,601.45 |
| Amortization of intangible assets | 446,162,246.74 | 465,527,405.85 |
| Amortization of long-term prepaid expenses | 183,498,477.15 | 110,874,756.18 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (‘-’ represents ‘gains’) | –22,625,570.58 | –135,411,372.65 |
| Loss and gains on change of fair value (‘-’ represents ‘gains’) | 118,790,175.68 | –64,269,511.32 |
| Financial expenses (‘-’ represents ‘gains’) | 176,667,098.99 | 574,900,097.68 |
| Loss on investments (‘-’ represents ‘gains’) | –1,170,336,743.41 | –1,136,280,339.22 |
| Decrease in deferred income tax assets (‘-’ represents ‘increase’) | 404,639,263.48 | 549,883,365.96 |
| Increase of deferred income tax liabilities (‘-’ represents ‘decrease’) | 355,270,836.09 | –9,416,224.31 |
| Decrease in inventories (‘-’ represents ‘increase’) | –1,477,232,081.57 | –3,760,150,208.14 |
| Decrease of operational account receivables (‘-’ represents ‘increase’) | –3,324,723,794.98 | –2,216,760,781.29 |
| Increase of operational account payables (‘-’ represents ‘decrease’) | –1,281,315,120.75 | 4,323,142,646.68 |
| Others | 386,602,520.58 | –15,864,086.39 |
| Net cash flow generated from operational activities | 5,964,247,657.22 | 8,442,195,160.31 |
| 2. Significant investment and financing activities not involving cash inflows and outflows: | ||
| Capital transferred from debts | 104,128,286.20 | 6,277,583,752.41 |
| Convertible corporate bonds due within one year | 244,655,820.72 | |
| Fixed assets under finance lease | ||
| 3. Net changes of cash and cash equivalents: | ||
| Cash balance at the end of the period | 49,265,187,950.08 | 41,228,686,922.70 |
| Less: cash balance at the beginning of the period | 45,071,366,271.21 | 45,738,120,000.70 |
| Add: cash equivalents balance at the end of the period | ||
| Less: cash equivalents balance at the beginning of the period | ||
| Net increase of cash and cash equivalents | 4,193,821,678.87 | —4,509,433,078.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
68.Cash and cash equivalents
| Items | Closing balance | Opening balance |
I. Cash
| I. Cash | 49,265,187,950.08 | 45,071,366,271.21 |
| Including: cash on hand | 912,949.13 | 3,085,964.28 |
| Bank deposits always available for payment | 48,618,833,840.21 | 44,884,013,498.57 |
| Other monetary funds always available for payment | 645,441,160.74 | 184,266,808.36 |
| II. Cash equivalents | ||
| Including: Bond investments due within three months | ||
| III. Closing balance of cash and cash equivalents | 49,265,187,950.08 | 45,071,366,271.21 |
Haier Smart Home Co., Ltd. Interim Report 2022
69. Monetary items in foreign currency
| Items | Closing balance | Opening balance | ||||
| Balance in foreign currency | Exchange rate | Balance in RMB | Balance in foreign currency | Exchange rate | Balance in RMB | |
Monetary funds
| Monetary funds | ||||||
| USD | 821,482,280.28 | 6.7114 | 5,513,296,175.84 | 850,630,647.69 | 6.3757 | 5,423,365,820.48 |
| EUR | 78,855,228.66 | 7.0084 | 552,648,984.57 | 149,225,110.60 | 7.2197 | 1,077,360,530.99 |
| JPY | 5,996,642,282.85 | 0.049136 | 294,651,015.21 | 10,520,503,841.74 | 0.055415 | 582,993,720.39 |
| HKD | 556,953,838.73 | 0.8552 | 476,306,922.88 | 483,444,582.35 | 0.8176 | 395,264,290.53 |
| Others | 2,832,750,561.34 | 2,955,290,563.22 | ||||
| Subtotal | 9,669,653,659.84 | 10,434,274,925.61 | ||||
| Accounts receivables | ||||||
| USD | 954,504,870.98 | 6.7114 | 6,406,063,991.10 | 721,343,093.77 | 6.3757 | 4,599,067,162.94 |
| EUR | 451,436,990.50 | 7.0084 | 3,163,851,004.22 | 413,528,990.85 | 7.2197 | 2,985,555,255.25 |
| JPY | 4,145,366,008.83 | 0.049136 | 203,686,704.21 | 4,064,574,659.93 | 0.055415 | 225,238,404.78 |
| Others | 4,219,899,122.68 | 3,668,237,038.46 | ||||
| Subtotal | 13,993,500,822.21 | 11,478,097,861.43 | ||||
| Short-term borrowings | ||||||
| USD | 389,158,946.13 | 6.7114 | 2,611,801,351.09 | 347,844,969.69 | 6.3757 | 2,217,755,173.25 |
| EUR | 1,044,112,198.27 | 7.0084 | 7,317,555,930.38 | 883,863,602.21 | 7.2197 | 6,381,230,048.85 |
| JPY | 740,035,110.71 | 0.049136 | 36,362,365.20 | 623,360,869.80 | 0.055415 | 34,543,542.60 |
| HKD | 2,600,000,000.00 | 0.8552 | 2,223,520,000.00 | 2,600,000,000.00 | 0.8176 | 2,125,760,000.00 |
| Others | 752,120,202.25 | 328,850,057.11 | ||||
| Subtotal | 12,941,359,848.92 | 11,088,138,821.81 | ||||
| Accounts payables | ||||||
| USD | 2,215,683,621.44 | 6.7114 | 14,870,339,056.95 | 2,033,952,669.54 | 6.3757 | 12,967,872,035.21 |
| EUR | 617,905,515.03 | 7.0084 | 4,330,529,011.55 | 640,851,532.98 | 7.2197 | 4,626,755,812.65 |
| JPY | 6,923,831,822.49 | 0.049136 | 340,209,400.43 | 8,161,874,338.90 | 0.055415 | 452,290,266.49 |
| NZD | 207,421,161.10 | 4.1771 | 866,418,932.05 | 151,371,298.46 | 4.3553 | 659,267,416.20 |
| Others | 3,422,870,500.22 | 3,268,885,987.84 | ||||
| Subtotal | 23,830,366,901.20 | 21,975,071,518.39 | ||||
| Non-current liabilities due in one year | ||||||
| USD | 1,088,778,232.77 | 6.7114 | 7,307,226,231.42 | 757,148,488.12 | 6.3757 | 4,827,351,615.72 |
| EUR | 172,986,633.48 | 7.0084 | 1,212,359,522.06 | 214,053,730.55 | 7.2197 | 1,545,403,718.47 |
| JPY | 1,664,720,591.01 | 0.049136 | 81,797,710.96 | 3,705,244,389.61 | 0.055415 | 205,326,117.85 |
| RUB | 532,452,480.00 | 0.1285 | 68,420,143.68 | 651,073,870.06 | 0.0855 | 55,666,815.89 |
| Others | 1,535,283,774.82 | 1,589,397,292.33 | ||||
| Subtotal | 10,205,087,382.94 | 8,223,145,560.26 | ||||
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Closing balance | Opening balance | ||||
| Balance in foreign currency | Exchange rate | Balance in RMB | Balance in foreign currency | Exchange rate | Balance in RMB | |
| Long-term borrowings | ||||||
| USD | 52,000,000.00 | 6.7114 | 348,992,800.00 | 403,838,717.50 | 6.3757 | 2,574,754,511.17 |
| EUR | 34,145,508.68 | 7.0084 | 239,305,383.00 | 37,498,911.17 | 7.2197 | 270,730,888.98 |
| RUB | 250,000,000.00 | 0.1285 | 32,125,000.00 | 186,061,000.00 | 0.0855 | 15,908,215.50 |
| JPY | 2,640,540,340.48 | 0.049136 | 129,745,590.17 | 3,197,333,012.36 | 0.055415 | 177,180,208.88 |
| Subtotal | 750,168,773.17 | 3,038,573,824.53 | ||||
VIII.CHANGES OF CONSOLIDATION SCOPE
1.Business combination not under common control
√ Applicable □ Not Applicable
2.Business consolidation under common control
√ Applicable □ Not Applicable
(1). Business combination under common control occurring in the current period
| Name of the acquiree | The proportion of equity acquired in the business combination | The basis for the transaction of constituting business combination under common control | Combination date | Recognition basis of combination date |
Qingdao Ririshun
Service Co., Ltd.
| Qingdao Ririshun Service Co., Ltd. | 100.00% | Controlled by Haier Group Corporation before and after combination | 2022.6 | Subject equity- related right and obligation transferred to the Company |
| Qingdao TAB Robot Technology Co., LTD. | 100.00% | Controlled by Haier Group Corporation before and after combination | 2022.6 | Subject equity- related right and obligation transferred to the Company |
Haier Smart Home Co., Ltd. Interim Report 2022
(Continued)
| Name of the acquiree | The income of the acquiree from the beginning of the current period to combination date | Net profit of the acquiree from the beginning of the current period to combination date | The income of the acquiree during the comparison period | Net profit of the acquiree during the comparison period |
| Qingdao Ririshun Service Co., Ltd. | 37,211.90 | 1,421,013.21 | 66,451,627.95 | 1,008,319.99 |
| Qingdao TAB Robot Technology Co., LTD. | 205,120,142.19 | 3,052,468.49 | 94,431,139.69 | 4,527,315.67 |
(2).
Combination cost
√ Applicable □ Not Applicable
Unit and Currency: RMB10,000
| Combination cost | Qingdao Ririshun Service Co., Ltd. | Qingdao TAB Robot Technology Co., LTD. |
| —Cash | 5,095.78 | 12,500.00 |
| —Equity | 3,216.91 | / |
(3).
Book value of acquiree’s assets and liabilities as at the combination date
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Qingdao Ririshun Service Co., Ltd. | |
| Combination date | End of the previous period | |
| Monetary funds | 46,604,249.71 | 59,493,989.32 |
| Accounts receivables | 1,041,138.30 | 1,144,058.93 |
| Inventories | 1,837,248.48 | 1,879,270.49 |
| Other current assets | 4,840.17 | 778,605.93 |
| Less: Accounts payables | 12,023,461.45 | 26,719,700.69 |
| Payables for staff’s remuneration | 65,143.90 | 988,310.00 |
| Taxes payable | 383,755.86 | 337.90 |
| Other current liabilities | 118,797.58 | 112,271.42 |
| Net assets | 36,896,317.87 | 35,475,304.66 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items | Qingdao TAB Robot Technology Co., LTD. | |
| Combination date | End of the previous period | |
| Monetary funds | 70,965,249.26 | 54,371,498.79 |
| Accounts receivables | 35,633,561.58 | 32,228,299.73 |
| Inventories | 64,895,694.34 | 36,212,378.79 |
| Other current assets | 990,753.45 | |
| Long-term assets | 742,124.92 | 1,559,671.95 |
| Deferred income tax assets | 2,638,785.39 | 2,638,785.39 |
| Less: Accounts payables | 108,357,839.93 | 64,054,579.25 |
| Payables for staff’s remuneration | 997,688.00 | 1,069,738.28 |
| Taxes payable | 2,702,903.89 | 1,824,903.82 |
| Non-current liabilities due in one year | 647,508.67 | 1,324,322.70 |
| Other current liabilities | 3,514,317.62 | 4,125,155.16 |
| Net assets | 58,655,157.38 | 55,602,688.89 |
3.Disposal of subsidiary
Whether single disposal of investment in subsidiary will result in losing control power:
| Items | Yantai Ririshun Electronics Co., Ltd. |
| Equity disposal price | 26,139,242.23 |
| Proportion of equity disposal | 81% |
| Method of equity disposal | Disposal |
| Time of loss-of-control | 2022.1 |
| Basis for determination the time of loss-of-control | Transfer |
| Difference between consideration and its share of net assets of the subsidiary as respect to the disposal in the consolidated level | –4,432,192.08 |
4.Changes of consolidation scope due to other reasons
√ Applicable □ Not Applicable
(1)Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Chengdu Yunshang Meier Yilian Technology Co., Ltd. (成都云裳美尔衣联科技有限公司) for the period.
(2)Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda subsidiary, Beijing Yunshang Yilian Technology Co., Ltd. (北京云裳衣联科技有限公司) forthe period.
(3)Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, establisheda wholly-owned subsidiary, Chengdu Yunshang Yilian Technology Co., Ltd. (成都云裳衣联科技有限公司) for the period.
(4)Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company, established a wholly-owned subsidiary, Qingdao Haier Water Ecology Technology Co., Ltd. (青岛海尔水生态科技有限公司) for the period.
Haier Smart Home Co., Ltd. Interim Report 2022
IX.INTERESTS IN OTHER ENTITIES1.Interests in subsidiaries
(1).
Composition of the Group
√ Applicable □ Not Applicable
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
% of the
voting
rights (%) Acquiring method
| Direct | Indirect | ||||||
| Flourishing Reach | Mainland of China | British Virgin | Group company, which | 100.00 | 100.00 | Establishment | |
| Limited | Islands | mainly engage in | |||||
| investment holding, the | |||||||
| production and sale of | |||||||
| washing machines and | |||||||
| water heaters, | |||||||
| distribution service | |||||||
| Haier Electronics | Mainland of China | Bermuda | Group company, which | 100.00 | 100.00 | Establishment | |
| Group Co., Ltd. | and Hong Kong | mainly engage in | |||||
| investment holding, the | |||||||
| production and sale of | |||||||
| water equipment, | |||||||
| distribution service | |||||||
| Haier U.S. Appliance | the United States | the United | Group company, which | 100.00 | 100.00 | Establishment | |
| Solutions, Inc. | States | mainly engage in home | |||||
| appliances production | |||||||
| and distribution | |||||||
| business | |||||||
| Haier Singapore | Singapore and | Singapore | Group company, which | 100.00 | 100.00 | Business | |
| Investment Holding | other overseas | mainly engage in home | combination | ||||
| Co., Ltd. | areas | appliances production | under common | ||||
| and distribution | control | ||||||
| business | |||||||
| Haier New Zealand | New Zealand | New Zealand | Group company, which | 100.00 | 100.00 | Business | |
| Investment Holding | mainly engage in home | combination | |||||
| Company Limited | appliances production | under common | |||||
| and distribution | control | ||||||
| business | |||||||
| Candy S.p.A | Europe | Italy | Group company, which | 100.00 | 100.00 | Business | |
| mainly engage in home | combination not | ||||||
| appliances production | under common | ||||||
| and distribution | control | ||||||
| business | |||||||
| Qingdao Haier Air | Qingdao High-tech | Qingdao | Manufacture and sale of | 100.00 | 100.00 | Business | |
| Conditioner Gen | Zone | High-tech | household air- | combination | |||
| Corp., Ltd.* | Zone | conditioners | under common | ||||
| control | |||||||
| Guizhou Haier | Huichuan District, | Huichuan | Manufacture and sale of | 59.00 | 59.00 | Business | |
| Electronics Co., | Zunyi City, | District, Zunyi | refrigerator | combination | |||
| Ltd.* | Guizhou Province | City, Guizhou | under common | ||||
| Province | control | ||||||
| Hefei Haier Air- | Hefei Haier | Hefei Haier | Manufacture and sale of | 99.22 | 99.22 | Business | |
| conditioning Co., | Industrial Park | Industrial Park | air- conditioners | combination | |||
| Limited* | under common | ||||||
| control | |||||||
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
% of the
voting
rights (%) Acquiring method
| Direct | Indirect | ||||||
| Wuhan Haier | Wuhan Haier | Wuhan Haier | Manufacture and sale of | 60.00 | 60.00 | Business | |
| Electronics Holding | Industrial Park | Industrial Park | air- conditioners | combination | |||
| Co., Ltd.* | under common | ||||||
| control | |||||||
| Qingdao Haier | Qingdao | Qingdao | Manufacture and sale of | 100.00 | 100.00 | Business | |
| Air- Conditioner | Development | Development | air- conditioners | combination | |||
| Electronics Co., | Zone | Zone | under common | ||||
| Ltd.* | control | ||||||
| Qingdao Haier | Qingdao High-tech | Qingdao | Manufacturing of plastic | 100.00 | 100.00 | Business | |
| Information Plastic | Zone | High-tech | products | combination | |||
| Development Co., | Zone | under common | |||||
| Ltd.* | control | ||||||
| Dalian Haier Precision | Dalian Export | Dalian Export | Manufacture and sale of | 90.00 | 90.00 | Business | |
| Products Co., Ltd.* | Expressing Zone | Expressing | precise plastics | combination | |||
| Zone | under common | ||||||
| control | |||||||
| Hefei Haier Plastic | Hefei Economic & | Hefei Economic | Manufacture and sale of | 77.36 | 4.83 | 82.19 | Business |
| Co., Ltd.* | Technological | & | plastic parts | combination | |||
| Development | Technological | under common | |||||
| Area | Development | control | |||||
| Area | |||||||
| Qingdao Meier Plastic | Qingdao | Qingdao | Manufacture of plastic | 40.00 | 60.00 | 100.00 | Business |
| Powder Co., Ltd.* | Development | Development | powder, plastic sheet | combination | |||
| Zone | Zone | and high-performance | under common | ||||
| coatings | control | ||||||
| Chongqing Haier | Jiangbei District, | Jiangbei District, | Plastic products, sheet | 90.00 | 10.00 | 100.00 | Business |
| Precision Plastic | Chongqing City | Chongqing | metal work, electronics | combination | |||
| Co., Ltd.* | City | and hardware | under common | ||||
| control | |||||||
| Qingdao Haier | Qingdao High-tech | Qingdao | Manufacture and | 100.00 | 100.00 | Establishment | |
| Refrigerator Co., | Zone | High-tech | production of | ||||
| Ltd.* | Zone | fluorine-free | |||||
| refrigerators | |||||||
| Qingdao Haier | Pingdu | Pingdu | Manufacture of | 100.00 | 100.00 | Establishment | |
| Refrigerator | Development | Development | refrigerators | ||||
| (International) Co., | Zone, Qingdao | Zone, Qingdao | |||||
| Ltd.* | |||||||
| Qingdao Household | Qingdao High-tech | Qingdao | Research and | 100.00 | 100.00 | Establishment | |
| Appliance | Zone | High-tech | development of home | ||||
| Technology and | Zone | appliances mold and | |||||
| Equipment Research | technological equipment | ||||||
| Institute* | |||||||
| Qingdao Haier Whole | Qingdao High-tech | Qingdao | Research, development | 98.33 | 98.33 | Establishment | |
| Set Home Appliance | Zone | High-tech | and sales of | ||||
| Service Co., Ltd.* | Zone | health- related small | |||||
| home appliance | |||||||
| Qingdao Haier Special | Qingdao | Qingdao | Manufacture and sales of | 100.00 | 100.00 | Establishment | |
| Refrigerator Co., | Development | Development | fluorine-free | ||||
| Ltd.* | Zone | Zone | refrigerators | ||||
| Qingdao Haier | Qingdao | Qingdao | Manufacture of dish | 100.00 | 100.00 | Establishment | |
| Dishwasher Co., | Development | Development | washing machine and | ||||
| Ltd.* | Zone | Zone | gas stove |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
% of the
voting
rights (%) Acquiring method
| Direct | Indirect | ||||||
| Qingdao Haier Special | Qingdao | Qingdao | Research, manufacture | 100.00 | 100.00 | Establishment | |
| Freezer Co., Ltd.* | Development | Development | and sales of freezer and | ||||
| Zone | Zone | other refrigeration | |||||
| products | |||||||
| Dalian Haier | Dalian Export | Dalian Export | Air conditioner processing | 90.00 | 90.00 | Establishment | |
| Air- conditioning | Expressing Zone | Expressing | and manufacturing | ||||
| Co., Ltd.* | Zone | ||||||
| Dalian Haier | Dalian Export | Dalian Export | Refrigerator processing | 100.00 | 100.00 | Establishment | |
| Refrigerator Co., | Expressing Zone | Expressing | and manufacturing | ||||
| Ltd.* | Zone | ||||||
| Qingdao Haier | Qingdao | Qingdao | Development, assembling | 100.00 | 100.00 | Establishment | |
| Electronic Plastic | Development | Development | and sales of plastics, | ||||
| Co., Ltd.* | Zone | Zone | electronics and | ||||
| products | |||||||
| Wuhan Haier Freezer | Wuhan Economic & | Wuhan Economic | Research, manufacture | 95.00 | 5.00 | 100.00 | Establishment |
| Co., Ltd* | Technological | & | and sales of freezer and | ||||
| Development | Technological | other refrigeration | |||||
| Zone High-tech | Development | products | |||||
| Industrial Park | Zone High-tech | ||||||
| Industrial Park | |||||||
| Qingdao Haidarui | Qingdao High-tech | Qingdao | Development, purchase | 98.00 | 2.00 | 100.00 | Establishment |
| Procurement Service | Zone | High-tech | and sale of electrical | ||||
| Co., Ltd.* | Zone | products and | |||||
| components | |||||||
| Qingdao Haier | Qingdao High-tech | Qingdao | Development and | 98.91 | 1.09 | 100.00 | Establishment |
| Intelligent Home | Zone | High-tech | application of home | ||||
| Appliance | Zone | appliances, | |||||
| Technology Co., | communication, | ||||||
| Ltd.* | electronics and network | ||||||
| engineering technology | |||||||
| Chongqing Haier | Jiangbei District, | Jiangbei District, | Manufacture and sales of | 76.92 | 23.08 | 100.00 | Establishment |
| Air- conditioning | Chongqing City | Chongqing | air conditioners | ||||
| Co., Ltd.* | City | ||||||
| Qingdao Haier | Qianwang ang | Qianwang ang | Development and | 70.00 | 70.00 | Establishment | |
| Precision Products | Road, Jiaonan | Road, Jiaonan | manufacture of precise | ||||
| Co., Ltd.* | City | City | plastic, metal plate, | ||||
| mold and electronic | |||||||
| products for home | |||||||
| appliances | |||||||
| Qingdao Haier Air | Jiaonan City, | Jiaonan City, | Manufacture of home | 100.00 | 100.00 | Establishment | |
| Conditioning | Qingdao | Qingdao | appliances and | ||||
| Equipment Co., | electronics | ||||||
| Ltd.* | |||||||
| Dalian Free Trade | Dalian Export | Dalian Export | Domestic trade | 100.00 | 100.00 | Establishment | |
| Zone Haier | Expressing Zone | Expressing | |||||
| Air-conditioning | Zone | ||||||
| Trading Co., Ltd.* | |||||||
| Dalian Free Trade | Dalian Export | Dalian Export | Domestic trade | 100.00 | 100.00 | Establishment | |
| Zone Haier | Expressing Zone | Expressing | |||||
| Refrigerator Trading | Zone | ||||||
| Co., Ltd.* | |||||||
| Chongqing Haier | Jiangbei District, | Jiangbei District, | Sales of home appliances | 95.00 | 5.00 | 100.00 | Establishment |
| Electronics Sales | Chongqing City | Chongqing | |||||
| Co., Ltd.* | City |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
% of thevoting
rights (%) Acquiring method
| Direct | Indirect | ||||||
| Chongqing Haier | Jiangbei District, | Jiangbei District, | Processing and | 84.95 | 15.05 | 100.00 | Establishment |
| Refrigeration | Chongqing City | Chongqing | manufacturing of | ||||
| Appliance Co., Ltd.* | City | refrigerator | |||||
| Hefei Haier | Hefei Haier | Hefei Haier | Processing and | 100.00 | 100.00 | Establishment | |
| Refrigerator Co., | Industrial Park | Industrial Park | manufacturing of | ||||
| Ltd.* | refrigerator | ||||||
| Qingdao Haier HVAC | Qingdao | Qingdao | Air-conditioning engineer | 100.00 | 100.00 | Establishment | |
| Engineering Co., | Development | Development | |||||
| Ltd.* | Zone | Zone | |||||
| Chongqing | Jiangbei District, | Jiangbei District, | Sales of home appliances | 51.00 | 51.00 | Establishment | |
| Goodaymart Electric | Chongqing City | Chongqing | and electronics | ||||
| Appliance Sale Co., | City | ||||||
| Ltd.* | |||||||
| Qingdao Haier | Jiaozhou City, | Jiaozhou City, | Manufacture and sale of | 100.00 | 100.00 | Establishment | |
| (Jiaozhou) | Qingdao | Qingdao | air- conditioners | ||||
| Air-conditioning Co., | |||||||
| Limited* | |||||||
| Qingdao Haier | Jiaozhou City, | Jiaozhou City, | Manufacture and sales of | 100.00 | 100.00 | Establishment | |
| Component Co., | Qingdao | Qingdao | plastic and precise | ||||
| Ltd.* | sheet metal products | ||||||
| Haier Shareholdings | Hong Kong | Hong Kong | Investment | 100.00 | 100.00 | Establishment | |
| (Hong Kong) | |||||||
| Limited* | |||||||
| Harvest International | Cayman Islands | Cayman Islands | Investment | 100.00 | 100.00 | Establishment | |
| Company* | |||||||
| Shenyang Haier | Shenbei New Area, | Shenbei New | Manufacture and sales of | 100.00 | 100.00 | Establishment | |
| Refrigerator Co., | Shenyang City | Area, | refrigerator | ||||
| Ltd.* | Shenyang City | ||||||
| Foshan Haier Freezer | Sanshui District, | Sanshui District, | Manufacture and sales of | 100.00 | 100.00 | Establishment | |
| Co., Ltd.* | Foshan City | Foshan City | freezer | ||||
| Zhengzhou Haier | Zhengzhou | Zhengzhou | Manufacture and sales of | 100.00 | 100.00 | Establishment | |
| Air- conditioning | Economic and | Economic and | air conditioner | ||||
| Co., Ltd.* | Technological | Technological | |||||
| Development | Development | ||||||
| Zone | Zone | ||||||
| Qingdao Haidayuan | Qingdao | Qingdao | Development, purchase | 100.00 | 100.00 | Establishment | |
| Procurement Service | Development | Development | and sale of electrical | ||||
| Co., Ltd.* | Zone | Zone | products and | ||||
| components | |||||||
| Qingdao Haier | Qingdao High-tech | Qingdao | Development and | 100.00 | 100.00 | Establishment | |
| Intelligent | Zone | High-tech | research of home | ||||
| Technology | Zone | appliance products | |||||
| Development Co., | |||||||
| Ltd.* | |||||||
| Qingdao Hairi Hi-Tech | Qingdao High-tech | Qingdao | Design, manufacture and | 100.00 | 100.00 | Business | |
| Model Co., Ltd.* | Zone | High-tech | sales of product model | combination | |||
| Zone | and mould | under common | |||||
| control | |||||||
| Qingdao Hai Gao | Qingdao High-tech | Qingdao | Industrial design and | 75.00 | 75.00 | Business | |
| Design and | Zone | High-tech | prototype production | combination | |||
| Manufacture Co., | Zone | under common | |||||
| Ltd.* | control |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
% of thevoting
rights (%) Acquiring method
| Direct | Indirect | ||||||
| Beijing Haier Guangke | Beijing | Beijing | Development, promotion | 55.00 | 55.00 | Business | |
| Digital Technology | and transfer of | combination | |||||
| Co., Ltd.* | technology | under common | |||||
| control | |||||||
| Shanghai Haier Medical | Shanghai | Shanghai | Wholesale and retail of | 80.93 | 80.93 | Establishment | |
| Technology Co., Ltd.* | medical facility | ||||||
| Qingdao Haier | Qingdao | Qingdao | Development and sales of | 100.00 | 100.00 | Business | |
| Technology Co., Ltd.* | software and information | combination | |||||
| product | under common | ||||||
| control | |||||||
| Qingdao Haier | Qingdao | Qingdao | Entrepreneurship | 100.00 | 100.00 | Establishment | |
| Technology | investment and | ||||||
| Investment Co., Ltd.* | consulting | ||||||
| Qingdao Casarte Smart | Qingdao | Qingdao | Development, production | 100.00 | 100.00 | Establishment | |
| Living Appliances Co., | and sales of appliances | ||||||
| Ltd.* | |||||||
| Qingdao Haichuangyuan | Qingdao | Qingdao | Sales of home appliances | 100.00 | 100.00 | Establishment | |
| Appliances Sales Co., | and digital products | ||||||
| Ltd.* | |||||||
| Haier Overseas Electric | Qingdao | Qingdao | Sales of home appliances, | 100.00 | 100.00 | Establishment | |
| Appliance Co., Ltd.* | international freight | ||||||
| forwarding | |||||||
| Haier Group (Dalian) | Dalian | Dalian | Sales of home appliances, | 100.00 | 100.00 | Business | |
| Electrical Appliances | international freight | combination | |||||
| Industry Co., Ltd.* | forwarding | under common | |||||
| control | |||||||
| Qingdao Haier Central | Qingdao | Qingdao | Production and sales of | 100.00 | 100.00 | Establishment | |
| Air Conditioning Co., | air conditioners and | ||||||
| Ltd.* | refrigeration equipment | ||||||
| Chongqing Haier Home | Hefei | Hefei | Sales of home appliances | 100.00 | 100.00 | Establishment | |
| Appliance Sale Hefei | |||||||
| Co., Ltd.* | |||||||
| Qingdao Weixi Smart | Qingdao | Qingdao | Intelligent sanitary ware | 71.43 | 71.43 | Establishment | |
| Technology Co., Ltd.* | |||||||
| Haier U+smart | Beijing | Beijing | Software development | 100.00 | 100.00 | Establishment | |
| Intelligent Technology | |||||||
| (Beijing) Co., Ltd.* | |||||||
| Haier (Shanghai) | Shanghai | Shanghai | Sales, research and | 100.00 | 100.00 | Establishment | |
| Electronics Co., Ltd.* | development of home | ||||||
| appliances | |||||||
| Shanghai Haier | Shanghai | Shanghai | Business management | 100.00 | 100.00 | Establishment | |
| Zhongzhi Fang | consulting, chuangke | ||||||
| Chuang Ke | management | ||||||
| Management Co., | |||||||
| Ltd.* | |||||||
| Qingdao Haier Smart | Qingdao | Qingdao | Production and sales of | 100.00 | 100.00 | Establishment | |
| Kitchen Appliance | kitchen smart home | ||||||
| Co., Ltd.* | appliances | ||||||
| GE Appliance | Shanghai | Shanghai | Sales of home appliances | 100.00 | 100.00 | Establishment | |
| (Shanghai) Co., Ltd.* | |||||||
| Qingdao Haier Special | Qingdao | Qingdao | Production and sales of | 100.00 | 100.00 | Establishment | |
| Refrigerating | home appliances | ||||||
| Appliance Co., Ltd.* | |||||||
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
DirectIndirect
% of the
voting
rights (%) Acquiring method
Beijing Zero MicroTechnology Co.,Ltd.*
Laiyang Haier SmartKitchen ApplianceCo., Ltd.*
Hefei Haier AirConditioningElectronics Co.,Ltd.*
Haier (Shanghai)Home ApplianceResearch andDevelopment CenterCo., Ltd.*
Haier (Shenzhen) R&D
Co., Ltd.*
Guangzhou Haier Air
Conditioner Co.,Ltd.*
Qingdao Yunshang
Yuyi IOT TechnologyCo., Ltd.*
Qingdao Haizhi
InvestmentManagement Co.,Ltd.*
Qingdao Jijia Cloud
IntelligentTechnology Co.,Ltd.*
Qingdao HaimeihuiManagementConsulting Co., Ltd.Wuxi YunshangInternet of ClothingTechnology Co.,
Ltd.*
Hangzhou Gandao
IntelligentTechnology Co.,Ltd.*
Qingdao Haidacheng
Procurement ServiceCo., Ltd.*
Guangdong Heilong
IntelligentTechnology Co. Ltd*
Beijing Beijing Promotion of
technologicaldevelopment
Laiyang Laiyang Production and sales of
home appliances
Hefei Hefei Production and sales of
home appliances
Shanghai ShanghaiResearch and
development of homeappliances
Shenzhen Shenzhen Development, research
and technical services ofhousehold andcommercial electricalappliances
Guangdong GuangdongManufacturing of
refrigeration and airconditioning equipment
Qingdao QingdaoIoT technology research
and development
Qingdao QingdaoAsset management,
equity investment
Qingdao Qingdao R&D and sales of lighting
appliances
Qingdao QingdaoLeasing and business
services
Wuxi Wuxi Internet of Things
technology R & D
Hangzhou HangzhouTechnology development,
service
Qingdao QingdaoDevelopment, purchaseand sale of electricalproducts andcomponents
Guangzhou Guangzhou Scientific research and
technology servicesector
55.00
55.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
70.00
70.00 Establishment
100.00
100.00 Establishment
80.00
80.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
52.58
52.58 Establishment
100.00
100.00 Establishment
76.72 76.72 Business
combination notunder commoncontrol
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
DirectIndirect
% of thevoting
rights (%) Acquiring method
Beijing Haixianghui
Technology Co.,Ltd.*
Qingdao Hairuijiejing
Electronics Co.,Ltd.*
Haier Smart HomeExperience CloudEcologicalTechnology Co.,Ltd.*
Haier Smart Home(Qingdao) NetworkCo., Ltd.*
Haier Smart Home
(Qingdao) NetworkOperation Co., Ltd.*
Qingdao Internet of
Wine TechnologyCo., Ltd.*
Qingdao Linghai Air
ConditioningEquipment Co.,Ltd.*
Chongqing Yunshang
Yilian TechnologyCo., Ltd.*
Shenzhen Yunshang
Yilian TechnologyCo., Ltd.*
Qingdao HaixiangxueHuman ResourcesCo., Ltd.*
Jiangxi Haier Medical
Technology Co.,Ltd.*
Qingdao Haizhi
Shenlan TechnologyCo., Ltd.*
Qingdao Haishengze
Technology Co.,Ltd.*
Beijing BeijingScientific research and
technology servicesector
Qingdao Qingdao Electronic equipment
technology research,development, transfer,consulting and services
Qingdao QingdaoTechnology developmentof smart homeproducts, wholefurniture customization,etc.
Qingdao Qingdao Technical services,
development,consulting, transfer, etc.
Qingdao Qingdao Residential interior
decoration, professionalconstruction operation,special equipmentinstallation, upgradingand repair, etc.
Qingdao Qingdao Urban distribution and
transportation services,import and export ofgoods, technologyimport and export andfood business, etc.
Qingdao Qingdao Manufacture and
production of airconditioner andrefrigeration equipment
Chongqing ChongqingFood business,commodity import andexport, technologyimport and export,Internet informationservices, etc.
Shenzhen ShenzhenImport and export
business, Internet,Internet of things, bigdata, AI, AR andtechnical servicesoperation
Qingdao QingdaoProfessional intermediary
activities
Jiangxi Jiangxi Wholesale and retail of
medical equipment
Qingdao QingdaoTechnical service
development
Qingdao Qingdao Air conditioning
equipment technicalservices
100.00 100.00 Establishment
51.00 51.00 Business
combination notunder commoncontrol
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
DirectIndirect
% of the
voting
rights (%) Acquiring method
Qingdao Hailvyuan
RecyclingTechnology Co.,Ltd.*
Tianjin Internet ofclothes EcologicalTechnology Co.,Ltd.*
Qingdao Haier HVAC
Equipment Co.,Ltd.*
Qingdao Haier HomeAI IndustryInnovation CenterCo., Ltd.*
Qingdao QingdaoElectrical and electronic
products wastetreatment
Tianjin TianjinIoT technology
development
Qingdao QingdaoManufacture and sale of
air- conditioners
Qingdao Qingdao Integrated service of AI
industry applicationsystem
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
Zhejiang Weixi IoT
Technology Co.,Ltd.*
Zhejiang Zhejiang IoT application service 100.00 100.00 Establishment
Qingdao Haier QualityInspection Co., Ltd.*
Qingdao
HaiyongchengCertification ServiceCo., Ltd*
Qingdao Zhonghai
Borui TestingTechnology ServiceCo., Ltd*
Qingdao Haixianghui
Technology Co.,Ltd.*
Haier Smart Home
(Xiongan, Hebei)Technology Co.,Ltd.*
Qingdao Ruibo
EcologicalEnvironmentalTechnology Co.,Ltd.*
Qingdao Sanyiniao
Technology Co.,Ltd.*
Qingdao Jingzhi
RecycleEnvironmentalTechnology Co.,Ltd.*
Qingdao Yunshang
Jieshen YilianTechnology Co.,Ltd.*
Qingdao QingdaoInspection and testing of
home appliance
Qingdao QingdaoProduct certification
service
Qingdao QingdaoHome appliance testing
and technologyconsulting
Qingdao QingdaoSoftware development
and sale of dailynecessities
Qingdao QingdaoPromotion of energy-
saving technology
Qingdao Qingdao Environmental and AI
technology consulting
Qingdao QingdaoTechnology service and
advertisement design
Qingdao QingdaoOperation of dangerous
waste
Qingdao QingdaoProfessional cleaning and
sale of daily necessities
100.00 100.00 Business
combinationunder commoncontrol
100.00 100.00 Business
combinationunder commoncontrol
100.00 100.00 Business
combinationunder commoncontrols
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
51.00
51.00 Establishment
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Name of subsidiary
Principal place ofbusiness
Place of
registrationNature of businessShareholding (%)
DirectIndirect
% of thevoting
rights (%) Acquiring method
Shanghai YunshangYuyi IoT TechnologyCo., Ltd.*ShijiazhuangYunshang YilianTechnology Co.,
Ltd.*
Nanjing Yunshang
Yilian TechnologyCo., Ltd.*
Yunshang ZhonglianTechnology(Shanghai) Co.,Ltd.*
Shanxi Yunshang
Yilian TechnologyCo., Ltd.*
Tianjin Yunshang
Yilian TechnologyCo., Ltd.*
Chongqing YunshangHaihong YilianTechnology Co.,Ltd.*
Chengdu YunshangMeier YilianTechnology Co.,Ltd.
Beijing YunshangYilian TechnologyCo., Ltd.
Chengdu YunshangYilian TechnologyCo., Ltd.
Qingdao Haier Water
Ecology TechnologyCo., Ltd.
Qingdao Haixiangmian
Technology Co.,Ltd.*
Qingdao Haier Kitchen
IoT Technology Co.,Ltd.*
Tibet Haifeng
Intelligent InnovationTechnology Co.,Ltd.*
Shanghai ShanghaiProfessional cleaning and
sale of daily necessities
Shijiazhuang ShijiazhuangProfessional cleaning and
sale of daily necessities
Nanjing NanjingProfessional cleaning and
sale of daily necessities
Shanghai ShanghaiProfessional cleaning and
sale of daily necessities
Shanxi ShanxiProfessional cleaning and
sale of daily necessities
Tianjin TianjinProfessional cleaning and
sale of daily necessities
Chongqing ChongqingProfessional cleaning and
sale of daily necessities
Chengdu ChengduProfessional cleaning and
sale of daily necessities
Beijing BeijingProfessional cleaning and
sale of daily necessities
Chengdu ChengduProfessional cleaning and
sale of daily necessities
Qingdao Qingdao Technical services,
development, consulting
Qingdao Qingdao Sale of food and daily
necessities
Qingdao Qingdao Technology service and
sale of daily necessities
Tibet TibetDevelopment of software
and medical equipment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
51.00
51.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
100.00
100.00 Establishment
Microenterprises such
as Qingdao HaiHeng Feng ElectricalAppliances Sale &Service Co., Ltd.*
All over the
country
All over the
country
Sales of home appliances Establishment
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
Reasons for including subsidiaries in which the Company has 50% or less of the equity into thescope of consolidated financial statements:
At the end of the reporting period, the Company had substantial control over the financeand operation decisions of microenterprises such as Qingdao Hai Heng Feng ElectricalAppliances Sale & Service Co., Ltd*, which were included into the scope of consolidatedfinancial statements.
(2).
Material non-wholly owned subsidiaries
Name ofsubsidiary
Shareholdingof minority
shareholders
Profit or loss
attributableto minority
shareholdersin the current
period
Dividendsannounced tobe distributed
to minority
shareholdersin the current
period
Balance of
minorityinterests at
the end of the
period
Guizhou Haier
Electronics Co.,Ltd.* 41.00% 5,369,901.24 114,047,911.86Wuhan Haier
Electronics Co.,Ltd.* 40.00% 925,353.74 249,848,547.86
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
(3). Summarized financial information in respect of material non-wholly ownedsubsidiaries
Name of
subsidiaryClosing balance
Currentassets
Non-current
AssetsTotal assets
Currentliabilities
Non-current
liabilities Total liabilities
Guizhou HaierElectronics
Co., Ltd.*395,923,946.65 83,135,071.60 479,059,018.25 193,634,661.14 7,258,718.48200,893,379.62
Wuhan HaierElectronics
Co., Ltd.*733,916,522.83 137,255,826.48 871,172,349.31 246,550,979.65246,550,979.65
(continued)
| Name of Subsidiary | Opening balance | |||||
| Current assets | Non-current Assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Guizhou Haier Electronics Co., Ltd.* | 548,369,499.75 | 90,003,558.19 | 638,373,057.94 | 368,134,127.34 | 5,170,612.06 | 373,304,739.40 |
| Wuhan Haier Electronics Co., Ltd.* | 795,204,982.68 | 144,368,337.05 | 939,573,319.73 | 317,265,334.43 | — | 317,265,334.43 |
| Name of subsidiary | Amount for the current period | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Guizhou Haier Electronics Co., Ltd.* | 687,283,541.12 | 13,097,320.09 | 13,097,320.09 | –258,232,502.08 |
| Wuhan Haier Electronics Co., Ltd.* | 820,118,983.24 | 2,313,384.36 | 2,313,384.36 | –40,171,033.70 |
(continued)
| Name of subsidiary | Amount for the previous period | |||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Guizhou Haier Electronics Co., Ltd.* | 662,890,916.60 | 15,818,829.01 | 15,818,829.01 | –96,960,642.56 |
| Wuhan Haier Electronics Co., Ltd.* | 1,116,565,155.40 | 9,676,024.48 | 9,676,024.48 | 146,467,762.05 |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
2.Control over subsidiaries’ transactions despite change in owners’ equity insubsidiaries
√ Applicable □ Not Applicable
(1).
Descriptions of change in owners’ equity in subsidiaries
√ Applicable □ Not Applicable
Capital increase by minority shareholders of the Company’s subsidiaries resulted in the changein the Company’s shareholding ratio.
(2).
Impact of the transactions on minority interests and the equity attributable toshareholders of the Parent Company:
| Items | Others |
Total consideration for acquisition/disposal
| Total consideration for acquisition/disposal | |
| Less: share of net assets of subsidiaries in respect to the shareholding proportion acquired/disposed | –28,548,394.50 |
| Difference | 28,548,394.50 |
| Including: capital reserve adjustment | 28,548,394.50 |
Haier Smart Home Co., Ltd. Interim Report 2022
3.Interests in joint ventures or associates
√ Applicable □ Not Applicable
(1)Joint ventures or associates
| Name of joint ventures or associates | Principal place of business | Place of registration | Nature of business | Shareholding | Accounting treatment of investment |
| Haier Finance Co., Ltd.* | Qingdao | Qingdao | Financial services | 42.00% | Equity method |
| Bank of Qingdao Co., Ltd.* Wolong Electric (Jinan) Motor Co., Ltd.* Qingdao Hegang New Material Technology Co., Ltd.* Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership)* Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd.* Qingdao Haier Carrier Refrigeration Equipment Co., Ltd.* Qingdao Haier Multimedia Co., Ltd.* Hefei Feier Smart Technology Co., Ltd.* Anhui Kunhe Intelligent Technology Co., Ltd.* Zhejiang Futeng Fluid Technology Co., Ltd.* Beijing Mr. Hi Network Technology Company Limited* Beijing ASU Tech Co. Ltd* | Qingdao Jinan Qingdao Qingdao Qingdao Qingdao Qingdao Hefei Hefei Huzhou Beijing Beijing | Qingdao Jinan Qingdao Qingdao Qingdao Qingdao Qingdao Hefei Hefei Huzhou Beijing Beijing | Commercial Bank Motor Manufacturing Steel plate Manufacturing Venture Capital Manufacturing of household appliances Manufacturing of household appliances R&D and sales of televisions Technology development Electrical equipment R&D Gas compression machinery development and manufacturing Technology development Technical service import and export business | 8.19% 30.00% 23.94% 63.13% 45.00% 49.00% 20.20% 40.00% 30.00% 48.00% 36.29% 36.45% | Equity method Equity method Equity method Equity method Equity method Equity method Equity method Equity method Equity method Equity method Equity method Equity method |
| Shenzhen Genyuan Environmental Protection Technology Co., Ltd.* | Shenzhen | Shenzhen | Technical advisory services | 14.70% | Equity method |
| Qingdao Haimu Investment Management Co., Ltd.* | Qingdao | Qingdao | Investment Management | 49.00% | Equity method |
| Qingdao Haimu Smart Home Investment Partnership (Limited Partnership)* | Qingdao | Qingdao | Investment Management | 24.00% | Equity method |
| Qingdao Guochuang Intelligent Household Appliance Research Institute Co., Ltd.* | Qingdao | Qingdao | Development of Technology | 35.51% | Equity method |
| Guangzhou Heying Investment Partnership (Limited Partnership)* | Guangzhou | Guangzhou | Investment | 49.00% | Equity method |
| Qingdao Java Cloud Network Technology Co., Ltd.* | Qingdao | Qingdao | Home online service | 24.93% | Equity method |
| Bingji (Shanghai) Corporate Management Co., Ltd.* | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| Youjin (Shanghai) Corporate Management Co., Ltd.* | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| RRS (Shanghai) Investment Co., Ltd.* | Shanghai | Shanghai | Investment management | 45.00% | Equity method |
| Haier Best Water Technology Co., Ltd.* * For identification purposes only | Qingdao | Qingdao | Water equipment technology development service | 49.00% | Equity method |
Haier Smart Home Co., Ltd. Interim Report 2022
Name of joint ventures or associates
Principal place ofbusiness
Place of
registrationNature of businessShareholding
Accounting treatmentof investment
Huizhi Xiangshun Equity Investment Fund(Qingdao) Partnership (LimitedPartnership)*
Qingdao QingdaoInvestment management
30.00% Equity method
Qingdao RRS Huizhi Investment Co., Ltd.*Qingdao QingdaoInvestment management
50.00% Equity method
Qingdao Xinshenghui Technology Co., Ltd.*Qingdao Qingdao Technology service
developmentMeiling Candy Washing Machine Co., Ltd.*Hefei HefeiManufacturing of home
appliances
20.00% Equity method
40.00% Equity method
Konan Electronic Co., Ltd. Japan JapanMotor Manufacturing
50.00% Equity method
HPZ LIMITED Nigeria Nigeria Manufacturing of
household appliances
HNR Company (Private) Limited Pakistan Pakistan Manufacturing of
household appliances
Haier Raya Electric S.A.E Egypt Egypt Manufacturing of home
appliances
Controladora Mabe S.A.deC.V.Mexico Mexico Manufacturing of
household appliances
25.01% Equity method
31.72% Equity method
15.00% Equity method
48.41% Equity method
Middle East Air conditioning Company,
Limited
Saudi Arabia Saudi ArabiaSales of household
appliances
49.00
% Equity method
(1).
Major
financial informationofsignificantjoi
nt
ventures
□ Applicable √ Not Applicable
(2).
Major
financial
informationofsignifi
cantassociates
√ Applicable □ Not Applicable
①Basic information of significant associates:
Haier Finance Co., Ltd. (hereinafterreferredto as “FinanceCompany”)was
established by Haier Group Corporation and its three affiliates via capital contribution. Theplace of registration and principal place of business of the Finance Company is YulongInternational Center, No.178-2 Haier Road, Laoshan District, Qingdao City. TheCompany’s subsidiaries hold an aggregate of 42.00% equity in the Finance Company.
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
②Financial Information of significant associates:
Unit and Currency: RMB
| Items | Finance company | |
| Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period | |
Current assets
| Current assets | 63,774,900,733.81 | 61,294,606,916.47 |
| Non-current assets | 10,659,822,054.73 | 9,404,030,263.35 |
| Total assets | 74,434,722,788.54 | 70,698,637,179.82 |
| Current liabilities | 57,002,029,453.95 | 53,403,515,414.15 |
| Non-current liabilities | 250,191,903.78 | 369,623,253.07 |
| Total liabilities | 57,252,221,357.73 | 53,773,138,667.22 |
| Minority equity interests | ||
| Equity interest attributable to shareholders of the Parent Company | 17,182,501,430.81 | 16,925,498,512.60 |
| Including: share of net assets calculated based on shareholding percentage | 7,216,650,600.94 | 7,108,709,375.29 |
| Operating income | 1,033,551,173.17 | 1,071,931,150.97 |
| Net profit | 758,762,130.10 | 790,600,102.99 |
| Other comprehensive income | 18,240,788.11 | 73,947,771.60 |
| Total comprehensive income | 777,002,918.21 | 864,547,874.59 |
| Dividend received from associates for the year | 218,400,000.00 | 126,000,000.00 |
(3).
Summarized financial information of insignificant joint ventures or associates
Investment in Associates
Closing balance/Amount for thecurrent period
Opening balance/
Amount for theprevious period
Bank of Qingdao Co., Ltd.*3,096,420,505.872,654,248,436.12Wolong Electric (Jinan) Motor Co., Ltd.*164,074,989.98 151,837,378.99Qingdao Hegang New Material Technology Co., Ltd.*323,239,475.07 312,493,256.21Qingdao Haier SAIF Smart Home Industry InvestmentCenter (Limited Partnership)*375,494,710.38393,598,372.59Mitsubishi Heavy Industries Haier (Qingdao)
Air Conditioner Co., Ltd.* 735,881,497.34682,901,976.73Qingdao Haier Carrier Refrigeration Equipment
| Co., Ltd.* | 402,090,045.87 | 409,053,808.05 |
| Qingdao Haier Multimedia Co., Ltd.* | 262,473,095.59 | 277,102,563.88 |
| Qingdao Haier Moulds Co., Ltd.* | 269,158,534.54 | |
| Hefei Feier Smart Technology Co., Ltd.* | 265,106.27 |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
| Investment in Associates | Closing balance/ Amount for the current period | Opening balance/ Amount for the previous period |
Anhui Kunhe Intelligent Technology Co., Ltd.*
| Anhui Kunhe Intelligent Technology Co., Ltd.* | 1,987,170.02 | 1,877,574.14 |
| Zhejiang Futeng Fluid Technology Co., Ltd.* | 82,098,847.75 | 82,098,847.75 |
| Beijing Mr. Hi Network Technology Company Limited* | 7,507,759.75 | 7,507,759.75 |
| Beijing Xiaobei Technology Co., Ltd.* | 2,687,341.82 | |
| Beijing ASU Tech Co., Ltd.* | 13,082,922.89 | 15,529,700.01 |
| Shenzhen Genyuan Environmental Protection | ||
| Technology Co., Ltd.* | 7,596,295.35 | 6,914,487.73 |
| Qingdao Haimu Investment Management Co., Ltd.* | 2,411,436.93 | 2,465,299.70 |
| Qingdao Haimu Smart Home Investment Partnership | ||
| (Limited Partnership)* | 59,324,411.38 | 59,424,662.44 |
| Guangzhou Heying Investment Partnership | ||
| (Limited Partnership)* | 285,793,577.87 | 285,793,577.87 |
| Qingdao Java Cloud Network Technology Co., Ltd.* | 2,566,012.64 | 2,600,050.50 |
| Bingji (Shanghai) Corporate Management Co., Ltd.* | 995,419,397.79 | 972,200,487.88 |
| Youjin (Shanghai) Corporate Management Co., Ltd.* | 1,809,035,268.70 | 1,766,819,068.86 |
| RRS (Shanghai) Investment Co., Ltd.* | 3,288,336,852.19 | 3,211,580,125.21 |
| Haier Best Water Technology Co., Ltd.* | 78,352,582.74 | 79,785,557.39 |
| Huizhi Xiangshun Equity Investment Fund (Qingdao) | ||
| Partnership (Limited Partnership)* | 238,806,947.64 | 119,008,967.03 |
| Qingdao RRS Huizhi Investment Co., Ltd.* | 4,083,482.78 | 2,083,482.78 |
| Qingdao Xinshenghui Technology Co., Ltd.* | 9,011,761.35 | 9,964,773.52 |
| Meiling Candy Washing Machine Co., Ltd.* | 22,659,667.84 | 22,752,232.07 |
| Europalters Italia S.r.l. | 9,361,965.48 | 9,361,965.48 |
| Orygin LLC | 13,494,211.65 | |
| Konan Electronic Co., Ltd. | 61,459,616.87 | 69,273,712.61 |
| HNR Company (Private) Limited | 124,288,893.92 | 114,055,318.97 |
| HPZ LIMITED | 80,146,144.74 | 71,269,048.97 |
| Haier Raya Electric S.A.E | 9,852,153.71 | 10,568,507.40 |
| Controladora Mabe S.A.deC.V. | 4,443,056,920.20 | 4,131,983,673.10 |
| Middle East Airconditioning Company, Limited | 8,308,646.84 | 10,318,898.13 |
| Total book value of investment | 17,017,717,269.12 | 16,218,584,554.49 |
| Total amount of the following financial data of | ||
| associates calculated based on shareholding | ||
| percentage | ||
| Net profit | 635,985,295.85 | 610,614,350.57 |
| Other comprehensive income | 100,213,218.25 | 25,022,215.72 |
| Total comprehensive income | 736,198,514.10 | 635,636,566.29 |
* For identification purposes only
Haier Smart Home Co., Ltd. Interim Report 2022
X.SEGMENT REPORT
√ Applicable □ Not Applicable
The Company principally engaged in manufacture and sales of household appliances and relevantservices business, manufacture of upstream household appliances parts business and distribution ofproducts of third-party and after-sale business. The Company has three business segments: (1) Chinasmart home business segment; (2) Overseas home appliance and smart home business segment; (3)Other business segments. The management of the Company assesses operating performance of eachsegment and allocates resources according to the division. Sales between segments were mainlybased on market price.
(1)China smart home business segment consists of:
① Internet of Food solutions: mainly engages in production and sales of refrigerator/freezers
and kitchen appliances.
② Internet of Clothing solutions: mainly engages in production and sales of washing machine
products.
③ Air energy solutions: mainly engages in production and sales of air conditioners products.
④ Whole house water solutions: mainly engages in production and sales of water home
appliances such as water heaters and water purification products.
(2)Overseas home appliance and smart home business segment mainly includes overseas businesssegments such as GEA, FPA, Candy, etc.
(3)Other business segments: mainly include channel, equipment components, small home appliancebusiness and others.
Due to centralized management under the headquarters or exclusion from the assessment scope ofsegment management, the total assets of segments exclude monetary funds, financial assets held fortrading, derivative financial assets, dividends receivable, held-for-sale financial assets, other currentassets, other equity instruments investment, long-term accounts receivable, long-term equityinvestment, goodwill and deferred income tax assets; the total liabilities of segments exclude long-termand short-term borrowings, financial liabilities held for trading, derivative financial liabilities, taxespayable, interests payable, dividends payable, held-for-sale liabilities, bonds payable, deferred incometax liabilities and other non-current liabilities; profits of segments exclude financial expenses, profit orloss in fair value changes, income from investment, and income on disposal of assets, Non-value-added tax refundable upon imposition component of other income, non-operating incomes andexpenses and income tax.
Haier Smart Home Co., Ltd. Interim Report 2022
(1)Information of reportable segmentsSegment information for the current period
| Segment information | China smart home business | ||||
| Internet of Food solutions | Air energy solutions | Internet of clothing solutions | Whole house water solutions | ||
| Refrigerator/ freezers | Kitchen appliances | Air conditioners | Washing machine | Water home appliances | |
| Segment revenue | 21,744,034,195.34 | 1,988,398,642.99 | 19,460,445,551.54 | 14,783,761,779.19 | 6,786,264,746.43 |
| Including: external revenue | 19,263,438,400.09 | 1,655,732,227.00 | 15,920,771,259.18 | 12,473,357,903.20 | 6,677,037,998.51 |
| Inter-segment revenue | 2,480,595,795.25 | 332,666,415.99 | 3,539,674,292.36 | 2,310,403,875.99 | 109,226,747.92 |
| Total segment operating cost | 19,442,607,634.74 | 1,943,862,296.11 | 19,004,620,002.77 | 13,489,839,349.11 | 5,938,407,699.27 |
| Segment operating profit | 2,301,426,560.60 | 44,536,346.88 | 455,825,548.77 | 1,293,922,430.08 | 847,857,047.16 |
| Total segment assets | 13,947,960,634.62 | 2,336,367,873.37 | 18,574,611,480.04 | 12,119,100,356.71 | 4,696,763,365.04 |
| Total segment liabilities | 33,573,717,325.74 | 2,007,978,966.42 | 10,793,012,958.08 | 6,106,984,807.46 | 4,328,337,137.59 |
(Continued)
| Segment information | Overseas home appliance and smart home business | Other businesses | Inter-segment offsetting | Total |
| Segment revenue | 61,480,633,415.58 | 43,031,566,226.70 | –47,417,582,095.55 | 121,857,522,462.22 |
| Including: external revenue | 61,195,622,271.60 | 4,671,562,402.64 | — | 121,857,522,462.22 |
| Inter-segment revenue | 285,011,143.98 | 38,360,003,824.06 | –47,417,582,095.55 | — |
| Total segment operating cost | 57,846,314,400.88 | 43,496,297,716.75 | –47,556,586,707.77 | 113,605,362,391.86 |
| Segment operating profit | 3,634,319,014.70 | –464,731,490.05 | 139,004,612.22 | 8,252,160,070.36 |
| Total segment assets | 68,392,051,106.40 | 44,008,099,650.93 | –48,392,664,583.87 | 115,682,289,883.24 |
| Total segment liabilities | 38,284,912,733.13 | 57,501,775,867.52 | –48,204,054,758.87 | 104,392,665,037.07 |
Haier Smart Home Co., Ltd. Interim Report 2022
Segment information for the corresponding period of last year
| Segment information | China smart home business | ||||
| Internet of Food solutions | Air energy solutions | Internet of Clothing solutions | Whole house water solutions | ||
| Refrigerator/ freezers | Kitchen appliances | Air conditioners | Washing machine | Water home appliances | |
| Segment revenue | 19,188,607,407.17 | 1,784,628,763.28 | 17,645,069,189.02 | 12,958,083,453.07 | 5,884,989,693.13 |
| Including: external revenue | 16,898,259,985.27 | 1,495,140,647.14 | 15,095,177,397.57 | 10,900,998,372.57 | 5,806,336,225.56 |
| Inter-segment revenue | 2,290,347,421.90 | 289,488,116.14 | 2,549,891,791.45 | 2,057,085,080.50 | 78,653,467.57 |
| Total segment operating cost | 17,158,967,925.84 | 1,746,319,577.28 | 17,416,889,248.90 | 12,111,188,820.80 | 5,157,901,538.45 |
| Segment operating profit | 2,029,639,481.33 | 38,309,186.00 | 228,179,940.12 | 846,894,632.27 | 727,088,154.68 |
| Total segment assets | 17,849,098,835.46 | 2,547,615,110.79 | 17,958,004,697.79 | 20,919,506,189.82 | 8,406,963,618.39 |
| Total segment liabilities | 42,593,142,081.38 | 2,371,416,306.28 | 15,600,383,361.76 | 11,249,225,999.71 | 7,865,505,122.98 |
(Continued)
| Segment information | Overseas home appliance and smart home business | Other business | Inter-segment offsetting | Total |
| Segment revenue | 56,916,219,464.44 | 43,378,230,663.00 | -46,028,072,422.05 | 111,727,756,211.06 |
| Including: external revenue | 56,669,104,381.43 | 4,862,739,201.52 | 111,727,756,211.06 | |
| Inter-segment revenue | 247,115,083.01 | 38,515,491,461.48 | -46,028,072,422.05 | — |
| Total segment operating cost | 53,698,944,763.59 | 43,451,860,533.69 | -46,125,082,855.89 | 104,616,989,552.66 |
| Segment operating profit | 3,217,274,700.85 | -73,629,870.69 | 97,010,433.84 | 7,110,766,658.40 |
| Total segment assets | 57,368,272,498.73 | 51,142,515,604.10 | -63,393,417,976.51 | 112,798,558,578.57 |
| Total segment liabilities | 33,874,070,274.78 | 59,762,657,521.50 | -63,126,518,841.51 | 110,189,881,826.88 |
(2) Geographical information
“Other countries/regions” in this report refers to all other countries/regions (including Hong Kong andMacau Special Administration Region and Taiwan) other than the mainland China for the purpose ofinformation disclosure.
Haier Smart Home Co., Ltd. Interim Report 2022
External transaction revenue
| Items | Amount for the current period | Amount for the previous period |
| Mainland China | 59,357,352,517.26 | 53,700,041,129.00 |
| Other countries/regions | 62,500,169,944.96 | 58,027,715,082.06 |
| Including: | ||
| America | 37,433,676,787.86 | 35,324,883,693.09 |
| Australia | 3,489,830,122.80 | 3,458,819,500.44 |
| South Asia | 4,822,648,942.01 | 3,925,925,777.81 |
| Europe | 10,245,305,312.81 | 9,093,752,866.83 |
| Southeast Asia | 2,922,334,445.85 | 2,610,757,476.24 |
| Central East and Africa | 1,163,078,229.45 | 909,684,097.45 |
| Japan | 1,836,927,420.37 | 1,778,184,357.59 |
| Others | 586,368,683.81 | 925,707,312.61 |
| Total | 121,857,522,462.22 | 111,727,756,211.06 |
Total non-current assets
| Items | Closing balance | Opening balance |
| Mainland China | 17,488,703,477.71 | 16,572,158,325.12 |
| Other countries/regions | 27,543,718,828.36 | 25,209,296,729.73 |
| Total | 45,032,422,306.07 | 41,781,455,054.85 |
The total non-current assets exclude other equity instruments investment, long-term accountsreceivable, long-term equity investment, goodwill, deferred income tax assets and other non- currentfinancial assets.
XI.DISCLOSURE OF FAIR VALUE
1.Assets and liabilities measured at fair value
The level to which the fair value measurement result belongs is determined by the lowest level ofinputs which are significant to the fair value measurement as a whole:
Level 1: Unadjusted quotes for the same asset or liability in an active market
Level 2: Inputs that are directly or indirectly observable for related assets or liabilities, except
for Level 1 inputs.
Level 3: Unobservable inputs of related assets or liabilities.
Haier Smart Home Co., Ltd. Interim Report 2022
At the end of the period
| Items | Inputs used for fair value measurement | |||
| Quotes in an active market (Level 1) | Important observable input (Level 2) | Important unobservable input (Level 3) | Total | |
Continuously measured at fair
value
| Continuously measured at fair value | ||||
| Financial assets held for trading | 158,003,403.16 | 2,295,919,159.41 | 106,249,514.01 | 2,560,172,076.58 |
| Including: Bank wealth management products | 2,153,399,840.01 | 2,153,399,840.01 | ||
| Forward foreign exchange contract | 142,519,319.40 | 142,519,319.40 | ||
| Investment funds | 158,003,403.16 | 158,003,403.16 | ||
| Equity instruments investment | 106,249,514.01 | 106,249,514.01 | ||
| Derivative financial assets | 163,084,726.42 | 163,084,726.42 | ||
| Including: Forward foreign exchange contract | 151,624,141.73 | 151,624,141.73 | ||
| Interest rate swap agreement | 11,460,584.69 | 11,460,584.69 | ||
| Other equity instruments | 21,244,171.82 | 2,812,000,000.00 | 2,019,201,041.09 | 4,852,445,212.91 |
| Including: Equity instruments measured at fair value through other comprehensive income | 21,244,171.82 | 2,812,000,000.00 | 2,019,201,041.09 | 4,852,445,212.91 |
| Other non-current assets | 46,832,494.61 | 46,832,494.61 | ||
| Including: Other non-current financial assets | 46,832,494.61 | 46,832,494.61 | ||
| Financial liabilities held for trading | 79,270,648.00 | 79,270,648.00 | ||
| Including: Forward foreign exchange contract | 79,270,648.00 | 79,270,648.00 | ||
| Derivative financial liabilities | 77,066,966.55 | 77,066,966.55 | ||
| Including: Forward foreign exchange contract | 50,925,674.51 | 50,925,674.51 | ||
| Forward commodity contract | 24,918,179.06 | 24,918,179.06 | ||
| Interest rate swap agreement | 1,223,112.98 | 1,223,112.98 |
Haier Smart Home Co., Ltd. Interim Report 2022
At the beginning of the period
| Items | Input used for fair value measurement | |||
| Quotes in an active market (Level 1) | Important observable input (Level 2) | Important unobservable input (Level 3) | Total | |
Continuously measured at fair value
| Continuously measured at fair value | ||||
| Financial assets held for trading | 374,782,417.76 | 2,305,001,643.90 | 106,291,467.43 | 2,786,075,529.09 |
| Including: Bank wealth management products | 2,168,622,090.00 | 2,168,622,090.00 | ||
| Forward foreign exchange contract | 136,379,553.90 | 136,379,553.90 | ||
| Investment funds | 150,516,274.37 | 150,516,274.37 | ||
| Investment in equity instruments | 224,266,143.39 | 106,291,467.43 | 330,557,610.82 | |
| Derivative financial assets | 79,819,974.01 | 79,819,974.01 | ||
| Including: Forward foreign exchange contract | 72,822,190.59 | 72,822,190.59 | ||
| Forward commodity contract | 6,997,783.42 | 6,997,783.42 | ||
| Other equity instruments | 21,055,159.54 | 2,812,000,000.00 | 2,015,654,279.42 | 4,848,709,438.96 |
| Including: Equity instruments measured at fair value and changes of which included in other comprehensive income | 21,055,159.54 | 2,812,000,000.00 | 2,015,654,279.42 | 4,848,709,438.96 |
| Other non-current assets | 46,832,494.61 | 46,832,494.61 | ||
| Including: Other non-current financial assets | 46,832,494.61 | 46,832,494.61 | ||
| Financial liabilities held for trading | 6,294,014.40 | 6,294,014.40 | ||
| Including: Forward foreign exchange contract | 6,294,014.40 | 6,294,014.40 | ||
| Derivative financial liabilities | 80,212,433.24 | 80,212,433.24 | ||
| Including: Forward foreign exchange contract | 60,527,532.76 | 60,527,532.76 | ||
| Interest rate swap agreement | 19,684,900.48 | 19,684,900.48 |
For financial instruments traded in an active market, the Company determines its fair value basedon its quotes in an active market; for financial instruments not traded in an active market, theCompany uses valuation techniques to determine its fair value.
Haier Smart Home Co., Ltd. Interim Report 2022
2.Continual and non-continual Level 2 fair value measurement items, the valuationtechniques adopted and the qualitative and quantitative information ofimportant parameters
√ Applicable □ Not Applicable
| Items | Closing fair value | Valuation techniques | ||
| Financial assets held for trading | ||||
| Including: Bank wealth management products | 2,153,399,840.01 | Discounted | cash | flow |
| Forward exchange contract | 142,519,319.40 | Discounted | cash | flow |
| Derivative financial assets | ||||
| Including: Forward exchange contract | 151,624,141.73 | Discounted | cash | flow |
| Interest rate swap agreement | 11,460,584.69 | Discounted | cash | flow |
| Other equity instruments investment | ||||
| Including: Equity instruments measured at fair value and changes of which included in other comprehensive income | 2,812,000,000.00 | Recent transaction method | ||
| Financial liabilities held for trading | ||||
| Including: Forward exchange contract | 79,270,648.00 | Discounted | cash | flow |
| Derivative financial liabilities | ||||
| Including: Forward exchange contract | 50,925,674.51 | Discounted | cash | flow |
| Forward commodity contract | 24,918,179.06 | Discounted | cash | flow |
| Interest rate swap agreement | 1,223,112.98 | Discounted | cash | flow |
Haier Smart Home Co., Ltd. Interim Report 2022
3.Continual and non-continual Level 3 fair value measurement items, the valuationtechniques adopted and the qualitative and quantitative information ofimportant parameters
√ Applicable □ Not Applicable
| Items | Fair value at the end of the period | Valuation technique | Significant unobservable input | Range | Sensitivity of the input to fair value |
| Other equity Instruments | |||||
| Including: 1. SINOPEC Fuel Oil Sales Corporation Limited | 1,285,836,952.03 | Market approach | 1. Average P/E multiple of peers 2. Discount for lack of marketability | 1. 17.77–18.13 2. 11%–13% | 1. 1% increase (decrease) in average P/E multiple of the Comparable Companies would result in increase (decrease) in fair value by RMB11,177,000.00. 2. 1% increase (decrease) in the lack of marketability would result in decrease (increase) in fair value by RMB12,701,000.00. |
4.Fair value of financial assets and financial liabilities not measured at fair value
√ Applicable □ Not Applicable
| Items | Closing book value | Closing fair value |
| Bonds payable (convertible corporate bonds) | 244,655,820.72 | 355,949,322.87 |
Financial assets and financial liabilities not measured at fair value include: monetary funds, billsreceivable, accounts receivable, other receivables, other current assets, long-term and short-termborrowings, bills payable, accounts payable, other payables, long-term payables, bonds payable,etc. Except for the difference between the book value and the fair value of bonds payabledisclosed above, the difference between the book value and the fair value of financial assets andfinancial liabilities not measured at fair value at the end of the period is small.
Haier Smart Home Co., Ltd. Interim Report 2022
XII.RELATED PARTIES AND RELATED PARTY TRANSACTIONS
(I)Explanation for basis of identifying related partyAccording to Accounting Standards for Business Enterprises No. 36—Related Party Disclosures,parties are considered to be related if one party has the ability to control or jointly control theother party or exercise significant influence over the other party. Parties (two or more than two)are also considered to be related if they are subject to common control, joint control orsignificant influence from another party.
According to Management Practices for Information Disclosure of Listed Company (ChinaSecurities Regulatory Commission Order No. 182), related legal entity or individual will beidentified as related parties in certain occasions.
(II)Relationships between related parties
1.Information about the parent company and other companies holding shares of theCompany
| Name of enterprise | Type of enterprise | Registered place | Registered capital | Legal representative | Relations hips with the Company | Interest in the Company | Voting rights to the Company |
| Haier Group Corporation | Collective ownership company | Qingdao High-tech Zone Haier Park | 311,180,000 | Zhou Yunjie | Parent Company | 11.35% | 11.35% |
| Haier COSMO Co., Ltd. | Joint-stock company | Qingdao High-tech Zone Haier Park | 631,930,000 | Zhou Yunjie | Subsidiary of Parent Company | 13.32% | 13.32% |
| HCH (HK) Investment Management Co.,Limited | Private company | Hong Kong | HKD 10,000 | / | Parties acting in concert of Parent Company | 5.70% | 5.70% |
| Qingdao Haier Venture & Investment Information Co., Ltd. | Company with limited liability | Qingdao Free Trade Zone | 923,000,000 | Zhou Yunjie | Parties acting in concert of Parent Company | 1.82% | 1.82% |
| Qingdao Haichuangzhi Management Consulting Enterprise (Limited Partnership) | Limited partnership | Qingdao High-tech Zone Haier Park | 118,924,416 | Zhang Ruimin | Parties acting in concert of Parent Company | 1.28% | 1.28% |
| Haier International Co., Limited | Private company | Hong Kong | HKD 2 | / | Parties acting in concert of Parent Company | 0.62% | 0.62% |
2.Subsidiaries of the Company
√ Applicable □ Not Applicable
The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure ofinterests in subsidiaries
Haier Smart Home Co., Ltd. Interim Report 2022
3.Associates and joint venturesThe details of associates and joint ventures of the Company are detailed in Note VII. 11and Note IX. 3.
4.Related company with no controlling relationship
| Name of company | Relationship with the Company |
| Qingdao Haier Parts Procurement Co., Ltd. | Subsidiary of Haier Group |
| Gooday Supply Chain Technologies Co., Ltd. | Subsidiary of Haier Group |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | Subsidiary of Haier Group |
| Shanghai Cotai Supply Chain Management Co., Ltd. | Subsidiary of Haier Group |
| Hotoem Information Technology | Subsidiary of Haier Group |
| Cosmoplat Chuangzhi IOT Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Moulds Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier International Trading Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Special Plastic Development Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier International Travel Agency Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haina Cloud Intelligent System Co., Ltd. | Subsidiary of Haier Group |
| Chongqing Haier Smart Electronics Co., Ltd. | Subsidiary of Haier Group |
| Chongqing Zhonglian Energy Technology Co., Ltd. | Subsidiary of Haier Group |
| Shanghai Zhiyu Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haiyongda Property Management Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Oasis Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Energy and Power Co., Ltd. | Subsidiary of Haier Group |
| Dalian Haier International Trade Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Goodaymart Supply Chains Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier Brothers Animation Industry Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Manniq Intelligent Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Manniq Intelligent Equipment Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Ding Xin Electronics Technology Co., Ltd. | Subsidiary of Haier Group |
| Qingdao Haier New Materials R & D Co., Ltd. | Subsidiary and associate of Haier Group |
| Controladora Mabe S.A.deC.V. | Associate |
| HNR Company (Private) Limited | Associate |
Haier Smart Home Co., Ltd. Interim Report 2022
| Name of company | Relationship with the Company |
Qingdao Haier Multimedia Co., Ltd.
| Qingdao Haier Multimedia Co., Ltd. | Associate |
| HPZ Limited | Associate |
| Wolong Electric (Jinan) Motor Co., Ltd. | Associate |
| Qingdao Hegang New Material Technology Co., Ltd. | Associate |
| Hefei Hegang New Material Technology Co., Ltd. | Subsidiary of associate |
| Qingdao HBIS Composite New Material Co., Ltd. | Subsidiary of associate |
(III)Related party transactions1.Details of the goods and services purchased by the Company from the related partiesare as follows:
| Related parties | Amount for the current period | Amount for the previous period |
| Controladora Mabe S.A.deC.V. | 5,992,396,585.28 | 5,919,857,050.59 |
| Qingdao Haier Parts Procurement Co., Ltd. | 3,437,294,477.05 | 243,004,611.97 |
| Gooday Supply Chain Technologies Co., Ltd. | 2,566,807,694.51 | 1,795,893,473.89 |
| HNR Company (Private) Limited | 2,225,964,262.84 | 1,753,260,194.66 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 1,428,396,771.15 | 1,735,448,645.80 |
| Shanghai Cotai Supply Chain Management Co., Ltd. | 760,063,618.26 | 837,090,677.39 |
| Hotoem Information Technology | 323,614,793.49 | 15,780,675.02 |
| Cosmoplat Chuangzhi IOT Technology Co., Ltd. | 306,393,628.09 | 1,007,738,751.14 |
| Qingdao Haier Moulds Co., Ltd. | 264,629,834.22 | 283,420,737.56 |
| Wolong Electric (Jinan) Motor Co., Ltd. | 218,455,947.50 | 494,269,324.67 |
| Qingdao HBIS Composite New Material Co., Ltd. | 155,274,371.48 | 392,032,148.49 |
| Qingdao Ding Xin Electronics Technology Co., Ltd. | 125,203,847.62 | 429,570,435.77 |
| Chongqing Haier Intelligent Electronics Co., Ltd. | 119,484,178.14 | 493,639,084.84 |
| Hefei Hegang New Material Technology Co., Ltd. | 117,399,517.14 | 474,928,583.73 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 66,199,048.27 | 217,734,562.12 |
| Other related parties | 1,868,504,632.15 | 2,534,023,594.60 |
| Total | 19,976,083,207.19 | 18,627,692,552.24 |
Haier Smart Home Co., Ltd. Interim Report 2022
2.Details of the Company’s sales of goods to the related parties are as follows:
| Related parties | Amount for the current period | Amount for the previous period |
| Controladora Mabe S.A.deC.V. | 540,669,324.96 | 468,040,995.25 |
| HNR Company (Private) Limited | 371,766,028.14 | 314,817,192.25 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 273,537,316.50 | 324,988,575.86 |
| Qingdao Haier International Trading Co., Ltd. | 231,644,878.27 | 312,037,256.25 |
| Qingdao Haier International Travel Agency Co., Ltd. | 118,333,617.35 | 105,505,398.38 |
| Qingdao Haier Multimedia Co., Ltd. | 62,200,352.87 | 25,743,020.75 |
| HPZ Limited | 46,402,303.46 | 85,694,941.35 |
| Other related parties | 383,482,730.84 | 451,160,486.74 |
| Total | 2,028,036,552.39 | 2,087,987,866.83 |
Haier Smart Home Co., Ltd. Interim Report 2022
3.Amount for outstanding items of related parties
| Items and name of customers | Closing Balance | Opening Balance |
| Bills receivable: | ||
| Qingdao Haier Special Plastic Development Co., Ltd. | 35,258,514.73 | |
| Qingdao Haina Cloud Intelligent System Co., Ltd. | 18,392,400.67 | 21,511,057.07 |
| Chongqing Haier Smart Electronics Co., Ltd. | 10,693,195.91 | 2,528,394.74 |
| Qingdao Haier Moulds Co., Ltd. | 6,220,430.00 | 600,000.00 |
| Cosmoplat Chuangzhi IOT Technology Co., Ltd. | 5,710,000.00 | 13,520,000.00 |
| Other related parties | 18,803,440.35 | 20,326,664.87 |
| Accounts receivable: | ||
| HNR Company (Private) Limited | 692,724,378.50 | 588,605,242.72 |
| Qingdao Haier International Travel Agency Co., Ltd. | 87,754,866.94 | 99,648,729.88 |
| Qingdao Haier Special Plastic Development Co., Ltd. | 59,912,071.24 | 39,101,648.72 |
| HPZ Limited | 59,823,027.70 | — |
| Controladora Mabe S.A.deC.V. | 56,877,475.23 | 123,524,843.42 |
| Chongqing Zhonglian Energy Technology Co., Ltd. | 51,648,147.74 | 45,405,801.21 |
| Qingdao Haier International Trading Co., Ltd. | 51,507,251.38 | 34,295,519.63 |
| Shanghai Zhiyu Technology Co., Ltd. | 43,917,268.67 | 43,349,588.61 |
| Qingdao Haina Cloud Intelligent System Co., Ltd. | 31,656,497.71 | 31,824,063.09 |
| Other related parties | 198,063,150.61 | 223,239,739.94 |
| Prepayments: | ||
| Qingdao Haier International Travel Agency Co., Ltd. | 23,158,794.37 | 23,936,807.36 |
| Qingdao Haiyongda Property Management Co., Ltd. | 16,886,792.00 | 17,069,128.00 |
| Qingdao Oasis Technology Co., Ltd. | 15,085,363.44 | — |
| Qingdao Haier Moulds Co., Ltd. | 13,664,084.98 | 7,287,661.33 |
| Other related parties | 27,520,134.41 | 152,967,725.88 |
| Other receivables: | ||
| Controladora Mabe S.A.deC.V. | 23,141,410.56 | 16,260,655.41 |
| Gooday Supply Chain Technologies Co., Ltd. | 19,979,917.89 | 27,180,000.00 |
| Qingdao Haier International Trading Co., Ltd. | 16,291,509.07 | 16,601,596.21 |
| Qingdao Haier Energy and Power Co., Ltd. | 15,515,825.00 | 15,315,825.00 |
| Other related parties | 65,933,332.86 | 71,877,028.63 |
| Items and name of suppliers | Closing Balance | Opening Balance |
| Bills payable: | ||
| Qingdao Haier New Materials R & D Co., Ltd. | 304,428,684.81 | 90,348,253.59 |
| Wolong Electric (Jinan) Motor Co., Ltd. | 44,870,947.00 | 4,127,872.00 |
| Other related parties | 57,995,232.71 | 50,019,985.82 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Items and name of customers | Closing Balance | Opening Balance |
| Accounts payable: | ||
| Controladora Mabe S.A.deC.V. | 1,437,362,278.03 | 941,545,815.41 |
| Qingdao Haier Parts Procurement Co., Ltd. | 1,270,602,288.35 | 1,985,902,077.10 |
| Qingdao Haier International Trading Co., Ltd. | 198,134,907.93 | 106,344,044.12 |
| Dalian Haier International Trade Co., Ltd. | 146,623,099.52 | 175,739,251.85 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 126,873,182.47 | 332,415,203.41 |
| Qingdao Haier New Materials R & D Co., Ltd. | 117,832,792.95 | 21,654,400.63 |
| Qingdao Haier Moulds Co., Ltd. | 79,707,945.36 | 136,685,798.49 |
| Cosmoplat Chuangzhi IOT Technology Co., Ltd. | 49,049,546.13 | 268,605,818.56 |
| Wolong Electric (Jinan) Motor Co., Ltd. | 47,439,179.69 | 117,800,983.85 |
| Qingdao HBIS Composite New Material Co., Ltd. | 44,967,206.10 | 161,242,782.98 |
| Qingdao Hegang New Material Technology Co., Ltd. | 30,430,316.84 | 72,015,400.20 |
| Other related parties | 71,230,012.81 | 1,223,019,630.13 |
| Contract liabilities: | ||
| Wolong Electric (Jinan) Motor Co., Ltd. | 15,133,132.31 | 21,373,101.27 |
| Qingdao Haier Parts Procurement Co., Ltd. | 7,939,821.15 | 91,082,063.05 |
| Chongqing Haier Electrical Appliances Sales Co., Ltd. | 4,897,848.16 | 779,853.29 |
| Other related parties | 13,395,732.42 | 41,359,339.35 |
| Dividends payable: | ||
| Haier COSMO Co., Ltd. | 580,706,830.40 | |
| Haier Group Corporation | 494,859,702.08 | |
| HCH (HK) Investment Management Co., Limited | 248,470,041.60 | |
| Other related parties | 161,942,052.03 | |
| Other payables: | ||
| Gooday Supply Chain Technologies Co., Ltd. | 1,013,756,001.98 | 687,378,382.22 |
| Shanghai Cotai Supply Chain Management Co., Ltd. | 317,902,528.95 | 154,351,301.35 |
| Qingdao Goodaymart Supply Chains Co., Ltd. | 69,476,766.47 | 72,545,343.35 |
| Qingdao Haier Brothers Animation Industry Co., Ltd. | 40,538,987.00 | — |
| Qingdao Manniq Intelligent Technology Co., Ltd. | 32,559,033.02 | — |
| Qingdao Haier Moulds Co., Ltd. | 29,846,291.87 | 21,298,170.87 |
| Qingdao Manniq Intelligent Equipment Co., Ltd. | 26,540,689.73 | 18,114,339.24 |
| Qingdao Haier International Travel Agency Co., Ltd. | 22,412,379.87 | 16,372,400.80 |
| Dalian Haier International Trade Co., Ltd. | 21,800,000.00 | 21,800,000.00 |
| Other related parties | 120,035,044.34 | 184,728,610.07 |
Haier Smart Home Co., Ltd. Interim Report 2022
4.Other related party transactions(1)On 29 April 2021, Haier Group Corporation and Haier Group Finance Co., Ltd.(hereafter, the “Finance Company”) renewed the Financial Services FrameworkAgreement, and the “Resolution on the Renewal of the Financial Services FrameworkAgreement between Haier Smart Home Co., Ltd. and Haier Group Corporation andthe Estimated Amount of Connected Transaction” was considered and passed at the2020 Annual General Meeting held on 25 June 2021. The Financial ServicesFramework Agreement became effective from the passing of the resolution at thegeneral meeting.
Various current balances of the Company and the Finance Company are as follows:
| Items | Closing Balance | Opening Balance |
| Monetary funds deposited at the Finance Company | 31,997,084,109.69 | 28,744,602,432.65 |
| Interest receivable from the Finance Company | 359,448,232.39 | 260,262,550.46 |
| Loans of the Finance Company | 282,673,529.00 | 336,507,659.12 |
| Interest payable to the Finance Company | 3,921,345.84 | 1,813,534.66 |
| Bank acceptance note issued | 23,758,244,622.90 | 21,697,666,574.19 |
| Foreign exchange derivatives of the Finance Company | 111,771,387.14 | 1,577,848.15 |
Various balances of the Company and the Finance Company are as follows:
| Items | Amount for the current period | Amount for the previous period |
| Interest income of the Finance Company | 260,517,401.68 | 131,478,780.14 |
| Interest expense of the Finance Company | 4,004,749.21 | 6,396,052.75 |
| Service fee of the Finance Company | 13,688,276.03 | 11,729,401.16 |
(2)The lease expense of the Company and its subsidiaries for production and operationleased from related parties for the current period was RMB60 million (amount for thecorresponding period: RMB60 million).
(3)Related information on the guarantor of the Company’s guaranteed borrowings as arelated party at the end of period:
| Lender | Closing Balance | Opening Balance | Guarantor |
Haier Russian Electric
Co., Ltd.
| Haier Russian Electric Co., Ltd. | 282,673,529.00 | 304,896,830.40 | Haier Group Corporation |
| Total | 282,673,529.00 | 304,896,830.40 |
Haier Smart Home Co., Ltd. Interim Report 2022
(4)Haier Group Corporation provided joint liability guarantee for certain bills payable ofthe subsidiaries of the Company with the guaranteed amount ofRMB1,805,486,348.06 at the end of the period.
(IV)Pricing policy1.Related party salesSome related parties purchase components through the independent procurement platformof the Company, purchase electrical appliances for sales from the Company, and receiveafter-sales services, R&D service, housing rental and other business provided by thecompany due to their business needs. In November 2020, according to the implementationof connected transactions in the early stage and the relevant listing requirements in HongKong, the Company and Haier Group Corporation revised and signed the Product andMaterials Sales Framework Agreement, the Service Provision Framework Agreement and theProperty Leasing Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thatboth parties should agree on the price which is not less favourable than those provided bythe Company to the Independent Third Parties on arm’s length to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement commencedfrom the listing date to 31 December 2022, which can be renewed for another three yearsupon expire.
2.Related parties ProcurementIn addition to independent procurement platform, the Company entrusted Haier GroupCorporation and its subsidiaries for procurements of part of raw materials. Moreover, theCompany entrusted Haier Group Corporation and its subsidiaries to provide the Companywith logistics and distribution, energy and power, basic research and testing, equipmentleasing, house leasing and maintenance, greening and cleaning, gift procurement, design,consulting, various ticket booking and other services. In November 2020, according to theimplementation of connected transactions in the early stage and the relevant listingrequirements in Hong Kong, the Company and Haier Group Corporation revised and signedthe Product and Materials Sales Framework Agreement, the Service Provision FrameworkAgreement and the Property Leasing Framework Agreement on the basis of the originalexecution contract, which agreed on the financial connected transactions. The pricingprinciple included that both parties should agree on the price which is not less favourablethan those provided by the Company to the Independent Third Parties on arm’s length toensure the fairness and reasonableness of connected transactions. The valid term of theagreement commenced from the listing date to 31 December 2022, which can be renewedfor another three years upon expire.
Haier Smart Home Co., Ltd. Interim Report 2022
3.Financial aspectSome of the financial services such as deposit and loan service, discounting service andforeign exchange derivatives needed by the Company are provided by Haier GroupCorporation, its subsidiaries and other companies. According to the Financial ServiceAgreement entered among the Company, Haier Group Corporation and other parties, theprice of financial services is determined by the principle of not less favourable than marketvalue fair. The Company is entitled to decide whether to keep cooperation relationship withthem with the knowledge of the price prevailing in the market and in combination with itsown interests. While performing the agreement, the Company could also require otherfinancial service institutions to provide related financial services basing on actual situation.In order to meet the Company’s demands such as the avoidance of foreign exchangefluctuation risk, the Company may choose Haier Group Finance Co., Ltd. to provide someforeign exchange derivative business after comparing with comparable companies. TheCompany will uphold the safe and sound, appropriate and reasonable principle, underwhich all foreign exchange capital business shall have a normal and reasonable businessbackground to eliminate speculative operation. At the same time, the Company hasspecified the examination and permission rights, management positions and responsibilitiesat all levels for its foreign exchange capital business to eradicate the risks of operation bypersons and improved its response speed to risks on the premise that the risks areeffectively controlled. In June 2021, the Company and Haier Group Corporation signed theFinancial Services Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thedeposit interest rate not lower than the maximum interest rate of major banks listed andthe loan interest rate not less favourable than the market price to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement expires at 31December 2023, which can be renewed for another three years upon expire.
4.OthersThe Company signed the Intellectual Property Licensing Framework Agreement with HaierGroup Corporation in November 2020. According to the agreement, Haier Group hasagreed to grant or procure its subsidiaries and contact persons to grant the license to theCompany at nil consideration to use all its intellectual property rights, including but notlimited to trademarks, patents, copyrights and logos for the products, packaging, servicesand business introduction documents of the Company. The date of the Intellectual PropertyLicensing Framework Agreement shall be permanently effective from the H Share listingdate. When such specific intellectual property rights expire and are not renewed by HaierGroup, our right to use certain intellectual property rights under the Intellectual PropertyLicensing Framework Agreement will terminate.
Haier Smart Home Co., Ltd. Interim Report 2022
XIII.SHARE-BASED PAYMENTS(1)Share Options
According to the “Resolution on Adjustment to the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co., Ltd.” and the “Resolution on the Grant of Share Option to the IncentiveTarget of Haier Smart Home Co., Ltd.” passed on the 1st meeting of the 11th session of theBoard of Directors of the Company on 28 June 2022, it was agreed that on the date of thegrant on 28 June 2022, 104,756,896 share options would be granted to 1,834 qualifyingincentive targets at the exercise price of RMB23.86 per Share.
| Share Options | Number for the current period | Number for the previous period |
| At the beginning of the period | 50,525,214.00 | |
| Granted during the period | 104,756,896.00 | 50,525,214.00 |
| Vested during the period | ||
| Lapsed during the period | ||
| At the end of the period | 155,282,110.00 | 50,525,214.00 |
(2)Restricted Shares
| Number of restricted shares | Number for the current period | Number for the previous period |
At the beginning of the period
| At the beginning of the period | 4,438,027.00 | |
| Granted during the period | 4,438,027.00 | |
| Vested during the period | ||
| Lapsed during the period | ||
| At the end of the period | 4,438,027.00 | 4,438,027.00 |
(3)Method of determining the fair value of equity instrument on the date of grant:
The Company has adopted the B-S model to determine the fair value of the share options.
The B-S model is subject to six variables: current price of the target share (S), exercise price ofthe option (K), risk-free rate (r), valid term of the option (t), expected volatility of the share price(σ), and the dividend rate of the target share (i).
Parameters selected for the calculation of the value of the option of the Company are as follows:
① share price (S): RMB27.01 per share (closing price on the date of grant on 28 June 2022).
② exercise price (K): RMB23.86 per share.
Haier Smart Home Co., Ltd. Interim Report 2022
③ risk-free rate (r): according to the maturity yield rate of the China Government Bonds fromBloomberg’s system, the risk-free rate for one year was1.997%; 2.358% for two years; 2.452%for three years; 2.561% for four years; and 2.67% for five years, where the risk- free ratefor the fourth year was calculated as the arithmetic average of the risk-free rate of the thirdand fifth year.
④ lifetime of the option (t): 1 year, 2 years, 3 years and 4 years, respectively (from the date of
grant to the deadline of the first exercisable date of each tranche).
⑤ historical volatility rate (σ): 0.3677 (1 year); 0.4016 (2 years); 0.3783 (3 years); 0.3795 (4years). The interval adopted for the calculation of historical volatility was the continuousclosing price of the Company in the preceding four years. At the same time, the historicalvolatility for the preceding 1, 2, 3, and 4 years was calculated, respectively based on thedifferences in waiting period.
⑥ yield rate (i) 1.7031% based on the yield rate shown in Bloomberg’s system on the valuation
date (28 June 2022), dividing the dividend per share by the closing price on the date of grant.According to the calculation under the above pricing model, the theoretical aggregatevalue of the 10,475.6896 share options granted under this incentive plan of the Companyamounted to RMB777,000,000.
(4) Based on the latest available subsequent information, such as change in number of vestingemployee, result condition of the Company and evaluation of personal performance appraisal ofincentive targets, the Company makes the best estimation of the number of vesting equityinstruments, based on which, the Company includes services received for the current period inrelevant costs of expenses in accordance with the fair value of the equity instrument on the dateof grant, and accordingly included in the capital reserve.
Expense recognized in respect of the share-based payment incentive plan for the period:
RMB251,000,000 for the stock ownership plan; RMB73,000,000 for the share options; andHKD10,000,000 for the restricted shares.
On 30 June 2022, balance associated with the above share-based payment incentive plans providedin the capital reserve amounted to RMB594,000,000.
XIV.CONTINGENCIES
√ Applicable □ Not Applicable
As of 29 August 2022, the Company has no significant contingencies that need to be disclosed.
XV.EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
√ Applicable □ Not Applicable
As of 29 August 2022, the Company has no significant events subsequent to the balance sheet datethat need to be disclosed.
Haier Smart Home Co., Ltd. Interim Report 2022
XVI.RISKS RELATED TO FINANCIAL INSTRUMENTS
√ Applicable □ Not Applicable
The book value of various financial instruments on the balance sheet date is as follows:
Financial assets
| Items | Closing balance | |||
| Financial assets measured at fair value and changes of which included in current profit and loss | Measured at amortized cost | Financial assets measured at fair value and changes of which included in other comprehensive income | Total | |
| Monetary funds | 50,316,121,259.28 | 50,316,121,259.28 | ||
| Financial assets held for trading | 2,560,172,076.58 | 2,560,172,076.58 | ||
| Derivative financial assets | 163,084,726.42 | 163,084,726.42 | ||
| Bills receivable | 8,417,636,171.41 | 8,417,636,171.41 | ||
| Accounts receivable | 17,920,101,868.72 | 17,920,101,868.72 | ||
| Other receivables | 2,156,760,190.99 | 2,156,760,190.99 | ||
| Other current assets | 1,551,745,385.00 | 1,551,745,385.00 | ||
| Long-term receivables | 306,402,281.56 | 306,402,281.56 | ||
| Other equity instruments | 4,852,445,212.91 | 4,852,445,212.91 | ||
| Other non-current assets | 46,832,494.61 | 46,832,494.61 | ||
Financial assets (Continued)
| Items | Opening balance | |||
| Financial assets measured at fair value and changes of which included in current profit and loss | Measured at amortized cost | Financial assets measured at fair value and changes of which included in other comprehensive income | Total | |
| Monetary funds | 45,971,035,763.51 | 45,971,035,763.51 | ||
| Financial assets held for trading | 2,786,075,529.09 | 2,786,075,529.09 | ||
| Derivative financial assets | 79,819,974.01 | 79,819,974.01 | ||
| Bills receivable | 13,354,791,068.29 | 13,354,791,068.29 | ||
| Accounts receivable | 14,642,659,450.22 | 14,642,659,450.22 | ||
| Other receivables | 1,956,721,621.66 | 1,956,721,621.66 | ||
| Other current assets | 316,590,333.42 | 316,590,333.42 | ||
| Long-term receivables | 308,998,755.30 | 308,998,755.30 | ||
| Other equity instruments | 4,848,709,438.96 | 4,848,709,438.96 | ||
| Other non-current assets | 46,832,494.61 | 46,832,494.61 | ||
Haier Smart Home Co., Ltd. Interim Report 2022
Financial liabilities
| Items | Closing balance | ||
| Financial liabilities measured at fair value | Financial liabilities measured at amortized cost | Total |
Short-term borrowings
| Short-term borrowings | 13,159,569,303.47 | 13,159,569,303.47 | |
| Financial liabilities held for trading | 79,270,648.00 | 79,270,648.00 | |
| Derivative financial liabilities | 77,066,966.55 | 77,066,966.55 | |
| Bills payable | 27,955,088,267.08 | 27,955,088,267.08 | |
| Accounts payable | 38,977,127,139.49 | 38,977,127,139.49 | |
| Other payables | 22,391,504,810.19 | 22,391,504,810.19 | |
| Non-current liabilities due within one year | 9,566,319,746.23 | 9,566,319,746.23 | |
| Long-term borrowings | 2,119,243,998.96 | 2,119,243,998.96 | |
| Long-term payables | 49,353,671.92 | 49,353,671.92 |
Financial liabilities (Continued)
| Items | Opening balance | ||
| Financial liabilities measured at fair value | Financial liabilities measured at amortized cost | Total | |
| Short-term borrowings | 11,226,212,134.39 | 11,226,212,134.39 | |
| Financial liabilities held for trading | 6,294,014.40 | 6,294,014.40 | |
| Derivative financial liabilities | 80,212,433.24 | 80,212,433.24 | |
| Bills payable | 25,023,238,406.72 | 25,023,238,406.72 | |
| Accounts payable | 42,396,109,648.76 | 42,396,109,648.76 | |
| Other payables | 17,533,370,017.01 | 17,533,370,017.01 | |
| Non-current liabilities due within one year | 6,745,950,334.20 | 6,745,950,334.20 | |
| Long-term borrowings | 3,038,573,824.53 | 3,038,573,824.53 | |
| Bonds payable | 334,730,048.82 | 334,730,048.82 | |
| Long-term payables | 99,602,707.76 | 99,602,707.76 |
Please refer to related items in Note VII for details on each of the financial instruments of the Company.Risks related to these financial instruments and the risk management policies taken by the Company tomitigate these risks are summarized below. The management of the Company manages and monitorsthese risk exposures to ensure the above risks are well under control.
Haier Smart Home Co., Ltd. Interim Report 2022
1.Credit riskThe credit risk of the Company mainly arises from bank deposits, bills receivable, accounts receivable,interest receivable, other receivables and wealth management products.
(1)The Company’s bank deposits and wealth management products are mainly deposited inHaier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks. Theinterest receivables are mainly the accrued interests from fixed deposits which are deposited inthe above banks. The Group does not believe there is any significant credit risk due to defaultsof its counterparties which would cause any significant loss. (2) Accounts receivable and billsreceivable: The Company only trades with approved and reputable third parties. All customerswho are traded by credit are subject to credit assessment according to the policies of the Company,and the payment terms shall be determined on a reasonable basis. The Company monitors thebalances of accounts receivable on an ongoing basis and purchases credit insurance forreceivables of large-amount credit customers in order to ensure the Company is free frommaterial bad debts risks. (3) Other receivables of the Company mainly include export tax refund,borrowings and contingency provision. The Company strengthened its management andcontinuous monitoring in respect of these receivables and relevant economic business based onhistorical data, so as to ensure that the Company’s significant risk of bad debts is controllableand will be further reduced.
2.Liquidity riskLiquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfillingobligations associated with financial liabilities. To control such risk, the Company utilizes variousfinancing methods such as notes settlement and bank loans to strive for a balance betweensustainable and flexible financing. It also has obtained bank credit facilities from severalcommercial banks to satisfy its needs for working capital and capital expenditures.
3.Exchange rate riskThe Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, South Asia,central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and other currencies.
The Company’s overseas assets and liabilities denominated in foreign currencies as well astransactions to be settled in foreign currencies expose the Company to fluctuations in exchangerates. The Company’s finance department is responsible for monitoring the size of transactions inforeign currencies and assets and liabilities denominated in foreign currencies to minimize the riskof exposure to fluctuation in exchange rate; the Company resorts the way of signing forwardforeign exchange contracts to avoid the risk of exchange fluctuation.
4.Interest rate riskThe Company’s interest rate risk arises primarily from its long- and short-term bank loans and bondspayables which are interest-bearing debts. Financial liabilities with floating interest rates expose theCompany to cash flow interest rate risk, while financial liabilities with fixed interest rates expose theCompany to fair value interest rate risk. The Group determines the relative proportion of fixed-interestrate and floating interest rate contracts in light of the prevailing market conditions.
Haier Smart Home Co., Ltd. Interim Report 2022
XVII.OTHER SIGNIFICANT EVENTSThe Company has no other significant events that need to be disclosed.
XVIII.NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THEPARENT COMPANY
1.Accounts receivable
| Aging | Closing balance | Opening balance |
| Within 1 year | 62,789,403.13 | 546,532,442.90 |
| 1-2 years | 532,093,996.86 | |
| 2-3 years | ||
| Over 3 years | ||
| Accounts receivable, balance | 594,883,399.99 | 546,532,442.90 |
| Allowance for bad debts | ||
| Accounts receivable, net | 594,883,399.99 | 546,532,442.90 |
Changes in allowance for bad debts of accounts receivable during the current period:
Items
OpeningBalance
Increase for the current
period
Provision for
Decrease for the current
period
Write-off
ClosingBalance
the current
period
Other
increaseReversal
and othermovement
Allowance for bad
debts
Haier Smart Home Co., Ltd. Interim Report 2022
2.Other receivables
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Items | Closing balance | Opening balance |
Interest receivable
| Interest receivable | 85,694,396.74 | 51,632,471.99 |
| Dividend receivable | 4,015,840,000.00 | 3,615,840,000.00 |
| Other receivables | 13,953,280,622.41 | 12,577,807,696.42 |
| Total | 18,054,815,019.15 | 16,245,280,168.41 |
(1)Interest receivable:
| Items | Closing balance | Opening balance |
Within 1 year
| Within 1 year | 85,694,396.74 | 51,632,471.99 |
| Over 1 year | ||
| Total | 85,694,396.74 | 51,632,471.99 |
(2)Dividend receivable
| Aging | Closing Balance | Opening Balance |
Within 1 year
| Within 1 year | 4,015,840,000.00 | 3,615,840,000.00 |
| More than 1 year | ||
| Total | 4,015,840,000.00 | 3,615,840,000.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
(3) Other receivables:
① The disclosure of other receivables by aging is as follows:
| Aging | Closing balance | Opening balance |
Within one year
| Within one year | 12,789,835,911.72 | 12,040,141,153.64 |
| Over 1 year | 1,163,452,674.94 | 537,791,379.00 |
| Other receivables, balance | 13,953,288,586.66 | 12,577,932,532.64 |
| Allowance for bad debts | 7,964.25 | 124,836.22 |
| Other receivables, net | 13,953,280,622.41 | 12,577,807,696.42 |
② Changes in allowance for bad debt of other receivables in the current period:
| Increase for the current period | Decrease for the current period | |||||
| Items | Opening balance | Provision for the current period | Other increase | Reversal | Write-off and other movement | Closing balance |
| Allowance for bad debts | 124,836.22 | 116,871.97 | 7,964.25 | |||
3.Long-term equity investment
√ Applicable □ Not Applicable
(1)Details of long-term equity investments:
| Closing balance | Opening balance | |||
| Items | Book balance | Provision for impairment | Book balance | Provision for impairment |
| Long-term equity investments | ||||
| Including: long-term equity investments in subsidiaries | 49,377,425,428.31 | 7,100,000.00 | 49,377,425,428.31 | 7,100,000.00 |
| Long-term equity investments in associates | 3,464,422,755.92 | 109,300,000.00 | 3,252,734,849.46 | 109,300,000.00 |
| Total | 52,841,848,184.23 | 116,400,000.00 | 52,630,160,277.77 | 116,400,000.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
(2)Long-term equity investments in subsidiaries
| Name of investee | Opening balance | Increase/ Decrease for the current period | Closing balance | Impairment provisions at the end of the period provisions |
| I. Subsidiaries: | ||||
| Chongqing Haier Electronics Sales Co., Ltd. | 9,500,000.00 | 9,500,000.00 | ||
| Haier Group (Dalian) Electrical Appliances Industry Co., Ltd | 34,735,489.79 | 34,735,489.79 | ||
| Qingdao Haier Refrigerator Co., Ltd. | 402,667,504.64 | 402,667,504.64 | ||
| Qingdao Haier Special Refrigerator Co., Ltd. | 329,832,047.28 | 329,832,047.28 | ||
| Qingdao Haier Information Plastic Development Co., Ltd | 102,888,407.30 | 102,888,407.30 | ||
| Dalian Haier Precision Products Co., Ltd. | 41,836,159.33 | 41,836,159.33 | ||
| Hefei Haier Plastic Co., Ltd. | 42,660,583.21 | 42,660,583.21 | ||
| Qingdao Haier Technology Co., Ltd. | 16,817,162.03 | 16,817,162.03 | ||
| Qingdao Household Appliance Technology and Equipment Research Institute | 66,778,810.80 | 66,778,810.80 | ||
| Qingdao Meier Plastic Powder Co., Ltd. | 24,327,257.77 | 24,327,257.77 | ||
| Chongqing Haier Precision Plastic Co., Ltd. | 47,811,283.24 | 47,811,283.24 | ||
| Qingdao Haier Electronic Plastic Co., Ltd. | 69,200,000.00 | 69,200,000.00 | ||
| Dalian Haier Refrigerator Co., Ltd. | 138,600,000.00 | 138,600,000.00 | ||
| Dalian Haier Air Conditioner Co., Ltd. | 99,000,000.00 | 99,000,000.00 | ||
| Guizhou Haier Electronics Co., Ltd. | 96,904,371.71 | 96,904,371.71 | ||
| Hefei Haier Air-conditioning Co., Limited | 67,110,323.85 | 67,110,323.85 | ||
| Qingdao Haier Refrigerator (International) Co., Ltd. | 238,758,240.85 | 238,758,240.85 | ||
| Qingdao Haier Air-Condition Electronic Co., Ltd. | 1,131,107,944.51 | 1,131,107,944.51 | ||
| Qingdao Haier Air Conditioner General Corp., Ltd. | 220,636,306.02 | 220,636,306.02 | ||
| Qingdao Haier Special Freezer Co., Ltd. | 471,530,562.76 | 471,530,562.76 | ||
| Qingdao Haier Dishwasher Co., Ltd. | 206,594,292.82 | 206,594,292.82 | ||
| Wuhan Haier Freezer Co., Ltd. | 47,310,000.00 | 47,310,000.00 | ||
| Wuhan Haier Electronics Co., Ltd. | 100,715,445.04 | 100,715,445.04 | ||
| Chongqing Haier Air Conditioner Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Hefei Haier Refrigerator Co., Ltd. | 49,000,000.00 | 49,000,000.00 | ||
| Qingdao Haier Whole Set Home Appliances Services Co., Ltd. | 118,000,000.00 | 118,000,000.00 | ||
| Chongqing Haier Refrigeration Appliance Co., Ltd. | 91,750,000.00 | 91,750,000.00 | ||
| Shanghai Haier Zhongzhi Fang Chuang Ke Space Management Co., Ltd. | 2,000,000.00 | 2,000,000.00 | ||
| Qingdao Haier Special Refrigerating Appliance Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Haier Shareholdings (Hong Kong) Limited | 26,022,782,526.24 | 26,022,782,526.24 |
Haier Smart Home Co., Ltd. Interim Report 2022
| Name of investee | Opening balance | Increase/ Decrease for the current period | Closing balance | Impairment provisions at the end of the period provisions |
| Shenyang Haier Refrigerator Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Foshan Haier Freezer Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Zhengzhou Haier Air Conditioner Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Qingdao Haidayuan Procurement Service Co., Ltd. | 20,000,000.00 | 20,000,000.00 | ||
| Qingdao Haier Intelligent Technology Development Co., Ltd. | 130,000,000.00 | 130,000,000.00 | ||
| Qingdao Haier Technology Investment Co., Ltd. | 367,505,635.00 | 367,505,635.00 | ||
| Qingdao Casarte Smart Living Appliances Co., Ltd. | 10,000,000.00 | 10,000,000.00 | ||
| Haier Overseas Electric Appliance Co., Ltd. | 500,000,000.00 | 500,000,000.00 | ||
| Haier (Shanghai) Electronics Co., Ltd. | 12,500,000.00 | 12,500,000.00 | ||
| Haier U+smart Intelligent Technology (Beijing) Co., Ltd. | 143,000,000.00 | 143,000,000.00 | ||
| Haier Electronics Group Co., Ltd. | 3,979,407,602.61 | 3,979,407,602.61 | 7,100,000.00 | |
| Flourishing Reach Limited (SPVX) | 12,751,300,336.02 | 12,751,300,336.02 | ||
| Qingdao Haidarui Procurement Service Co., Ltd. | 107,800,000.00 | 107,800,000.00 | ||
| Qingdao Haier Intelligent Household Appliances Co., Ltd. | 326,400,000.00 | 326,400,000.00 | ||
| Qingdao Haidacheng Procurement Service Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Qingdao Haier Quality Inspection Co. Ltd. | 18,657,135.49 | 18,657,135.49 | ||
| Qingdao Haier Home AI Industry Innovation Center Co. Ltd. | 20,000,000.00 | 20,000,000.00 | ||
| Haier Smart Home Experience Cloud Ecological Technology Co., Ltd. | 100,000,000.00 | 100,000,000.00 | ||
| Total | 49,377,425,428.31 | 49,377,425,428.31 | 7,100,000.00 |
Haier Smart Home Co., Ltd. Interim Report 2022
(3)Long-term equity investments in associates
| Increase/decrease for the current period | ||||||
| Name of investee | Opening balance | Increase/ decrease for the current period | Recognized investment income under equity method | Others | Closing balance | Impairment provisions at the end of the period |
Wolong Electric (Jinan)
Motor Co., Ltd.
| Wolong Electric (Jinan) Motor Co., Ltd. | 145,209,273.31 | 12,492,538.14 | 157,701,811.45 | |||
| Qingdao Haier SAIF Smart Home Industry Investment Center (Limited Partnership) | 393,598,372.59 | –904,601.39 | –17,199,060.82 | 375,494,710.38 | ||
| Bank of Qingdao Co., Ltd. | 1,051,480,863.27 | 139,485,507.20 | 65,502,506.22 | –29,821,491.89 | 1,226,647,384.80 | |
| Mitsubishi Heavy Industries Haier (Qingdao) Air-conditioners Co., Ltd. | 682,901,976.73 | 52,979,520.61 | 735,881,497.34 | |||
| Qingdao Haier Carrier Refrigeration Equipment Co., Ltd. | 409,053,808.05 | 10,936,464.63 | –17,900,226.81 | 402,090,045.87 | 21,000,000.00 | |
| Qingdao Haier Multimedia Co., Ltd. | 277,102,563.87 | –14,629,468.29 | 262,473,095.58 | 88,300,000.00 | ||
| Qingdao HBIS New Material Technology Co., Ltd. | 293,387,991.64 | 10,746,218.86 | 304,134,210.50 | |||
| Total | 3,252,734,849.46 | 139,485,507.20 | 137,123,178.78 | –64,920,779.52 | 3,464,422,755.92 | 109,300,000.00 |
4.Operating revenue and operating cost
√ Applicable □ Not Applicable
Unit and Currency: RMB
| Amount for the current period | Amount for the previous period | |||
| Items | Revenue | Cost | Revenue | Cost |
| Primary business | 53,149,966.60 | 46,742,634.57 | 100,011,103.11 | 93,685,159.99 |
| Other business | 40,173,916.73 | 34,148,754.89 | 96,140,485.73 | 76,847,254.77 |
| Total | 93,323,883.33 | 80,891,389.46 | 196,151,588.84 | 170,532,414.76 |
Haier Smart Home Co., Ltd. Interim Report 2022
5. Investment income
| Items | Amount for the current period | Amount for the previous period |
Investment income from long-term equity investmentaccounted for using equity method
| Investment income from long-term equity investment accounted for using equity method | 137,123,178.78 | 89,661,570.77 |
| Investment income generated from disposal of long- term equity investment | ||
| Investment income from long-term equity investments accounted for using cost method | 400,000,000.00 | 17,700,000.00 |
| Income from wealth management products | 11,113,358.17 | 5,792,409.99 |
| Investment income from investment in other equity instrument during the holding period | ||
| Total | 548,236,536.95 | 113,153,980.76 |
XIX.APPROVAL OF FINANCIAL REPORT
This financial report was approved for publication by the Directors of the Company on 29 August2022.
XX.OTHER SUPPLEMENTARY INFORMATION1.Basic earnings per share and diluted earnings per share
| Amount for the current period | Amount for the previous period | |||||
| Earnings per share (RMB) | Earnings per share (RMB) | |||||
| Items | Weighted average return rate on net assets | Basic earnings per share | Diluted earnings per share | Weighted average return rate on net assets | Basic earnings per share | Diluted earnings per share |
| Net profit attributable to ordinary shareholders of the Parent Company | 9.24% | 0.85 | 0.85 | 9.29% | 0.74 | 0.73 |
| Net profit attributable to ordinary shareholders of the Parent Company after deduction of non- recurring profit or loss | 8.71% | 0.80 | 0.80 | 8.50% | 0.68 | 0.67 |
Haier Smart Home Co., Ltd. Interim Report 2022
2.Non-recurring profit or loss
| Items | Amount for the current period | Amount for the previous period |
| Net profit attributable to ordinary shareholders of the Parent Company | 7,949,084,472.70 | 6,858,902,854.55 |
| Less: non-recurring profit or loss | 458,390,767.32 | 588,996,447.83 |
| Net profit attributable to ordinary shareholders of the Parent Company after deduction of non-recurring profit or loss | 7,490,693,705.38 | 6,269,906,406.72 |
Statement of non-recurring profit or loss for the current period
| Non-recurring profit and loss items | Amount for the current period |
| Profit and loss on disposal of non-current assets | 33,807,493.39 |
| Government subsidies through the profit and loss, except for government subsidies that are closely related to the Company’s normal business operations, comply with national policies and regulations, and continue to be enjoyed in a fixed amount or fixed quantity according to certain standards | 434,830,465.43 |
| Gains on investments in subsidiaries, associates and joint ventures in which the investment cost was less than the fair value of identifiable net assets of the investees at the time of acquisition | |
| Profit and loss from fair value changes of financial assets held for trading and financial liabilities held for trading, as well as investment gains arising from disposal of financial assets held for trading, financial liabilities held for trading and financial assets held for sale, except the effective hedging related to the normal operations of the Company | 59,249,736.54 |
| Other non-operating income and expenses except the aforementioned items | 34,282,312.26 |
| Effect of minority equity interest (After Tax) | –10,201,864.65 |
| Effect of income tax | –98,050,857.35 |
| Effect of profit from business combination under common control | 4,473,481.70 |
| Total | 458,390,767.32 |
Chairman of the Board: LI HuagangDate of approval for publication by the Board: 29 August 2022
Information of amendment
□ Applicable √ Not Applicable
Haier Smart Home Co., Ltd. Interim Report 2022 259