海尔智家：2022年年度报告(英文版)

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Haier Smart Home Co., Ltd. Annual Report 2022

Company Code：600690.SH, 690D.DE Short Name：Haier Smart Home

Haier Smart Home Co., Ltd.

2022 Annual Report

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Haier Smart Home Co., Ltd. Annual Report 2022

Important Notice

I. The Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of Haier Smart Home Co., Ltd. (‘the Company’) hereby assure that the contentset out in the annual report is true, accurate and complete, and free from any false record,misleading representation or material omission, and are individually and collectivelyresponsible for the content set out therein.II. All Directors of the Company have attended the board meetings.III. Hexin Certified Public Accountants Limited LLP has issued a standard and unqualified auditreport for the Company.IV. Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the annual report is true, accurate and complete.V. Proposal of profit distribution or proposal of capitalizing capital reserves for the reportingperiod resoluted and adopted by the BoardProposal of profit distribution for the reporting period are examined and reviewed by the Board: todeclare a cash dividend of RMB5.66 per 10 shares (tax inclusive) to all shareholders based on the totalnumber of shares held on record date and after deducting the repurchased shares from therepurchase account upon the execution of distribution proposal, with proposed distribution amountingto RMB5,297,529,553.10 (tax inclusive). The proportion of cash distribution is 36.01% of the net profitattributable to shareholder of parent company of the Company for the year. If there is any change inthe total share capital of the Company during the period from the date of this report to the recorddate of the equity distribution, the total distribution amount will be remained unchanged withcorresponding adjustment to the proportion of distribution per share.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 the Company’s substantial commitment to investors. Investors are advised to payattention to investment risks.VII. Is there any fund occupation by controlling shareholders and other related parties for non-

operational purposes?NoVIII. Is there any provision of external guarantee in violation of the prescribed decision-makingprocedures?No

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Haier Smart Home Co., Ltd. Annual Report 2022

Important Notice

IX. Are there more than half of the Directors who are unable to guarantee the truthfulness,accuracy and completeness of the annual report disclosed by the Company?NoX. Important Risk WarningsFor 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.XI. Others

□ Applicable √ Not Applicable

Chairman: Li HuagangHaier Smart Home Co., Ltd

30 March 2023

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Haier Smart Home Co., Ltd. Annual Report 2022

Contents

LETTER TO SHAREHOLDERS4SECTION IDEFINITIONS7SECTION IIGENERAL INFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORS9SECTION IIIMANAGEMENT DISCUSSION AND ANALYSIS16SECTION IVCORPORATE GOVERNANCE53SECTION VENVIRONMENTAL AND SOCIAL RESPONSIBILITIES93SECTION VISIGNIFICANT EVENTS108SECTION VIICHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS127SECTION VIIIRELEVANT INFORMATION OF PREFERRED SHARES140SECTION IXRELEVANT INFORMATION OF BONDS141SECTION XFINANCIAL REPORT144

DOCUMENTSAVAILABLE FORINSPECTION

(I) Financial statements with signatures and seals of the legal representative,chief accountant and person in charge of accounting department.(II) Original audit report with seals of accounting firm, signatures and seals of

registered accountants.(III) Originals of all documents and announcements of the Company which havebeen publicly disclosed on the newspaper designated by China SecuritiesRegulatory Commission during the reporting period.

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Haier Smart Home Co., Ltd. Annual Report 2022

Letter to shareholders

Haier Smart Home delivered another year of record performance in 2022. Our global sales revenue grew

7.2% to RMB243.514 billion, net profit increased by 12.5% to RMB14.711 billion and recurring net profit

rose by 18% to RMB13.963 billion under China GAAP. Our products are gaining grounds in almost allmarkets around the world.As one of the Fortune 500 companies, Haier Smart Home is committed to meeting the expectations of ourstakeholders on ESG practices by lowering carbon emissions through the lifetime of our products,advocating diversity and inclusion, implementing responsible sourcing, creating value in the interest of thesociety, and promoting sustainable corporate governance. Haier Smart Home continued to be named “MostAdmired Company” by Fortune in 2022, and our subsidiary GE Appliances was once again certified as GreatPlace to Work in the US.In 2022, unprecedented inflationary pressure in the US and looming energy crisis in Europe causedretraction in demand for home appliances; while our supply chain, distribution network, logistic operation andfulfilment system in the Company’s biggest market were disrupted by public health emergency in the fourthquarter. What we have achieved in an extraordinary year like 2022 was truly remarkable, and it could only bemade possible with winning spirit, shared goal and decisive actions from the entire organization in fulfillingour commitment to always prioritize consumer experience.In taking on the role of Chairman of Haier Smart Home in June 2022, I have spent a great deal of time withour customers, employees, partners as well as Haier Group, amongst other shareholders. What has beenreinforced is our stakeholders’ shared expectation for Haier Smart Home to become a long-standing leaderwith sustainability that transcends the ups and downs in the economy. This requires Haier Smart Home tocontinue outperforming the industry in the next three years, in order to attract and retain talents, whilecreating greater value for shareholders and employees. During this time, we must be more efficient andtransparent not only in the way we interact with our users, in the product we make and in the service weprovide, but also in the business operations and supply chain system; we ought to become the elephantthat can dance by being agile and embrace the latest technological development. In the next three years,Haier Smart Home will strengthen the foundation of our sustainable development. As a responsible corporatecitizen of global influence, we remain committed to reducing carbon emissions in product design,manufacturing and recycling; building a sustainable and ethical supply chain; creating a workplace for ourpeople to fulfil their dreams and realize individual value; eliminating bureaucracy and avoiding disorientationin processes. Across the globe, we will enhance our commitment to local communities, and strengthen ourties with the places where we operate.Looking ahead, the abrupt reversal in globalisation and increasing financial volatility remain source ofuncertainty during Haier Smart Home’s global brand portfolio building. The way to success lies with placingusers experience at the heart of our business while transforming ourselves by accelerating digitalisation andinnovation.

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Haier Smart Home Co., Ltd. Annual Report 2022

Letter to shareholders

The pandemic appears to be over, however lingering aftereffects such as lower labour participation rate andsupply chain fragmentation will inevitably impact demand in home appliance and HVAC sectors, against thisbackdrop, quality growth is only made possible in countries with substantial domestic market, manufacturingscales and ample supply of engineering talents; and businesses that can achieve rapid profit growth arethose with engaged workforce, production efficiency and consumer goodwill. Capitalising on our advantagesin the world’s largest home appliance market, efficient supply chain and engineering expertise in China, HaierSmart Home is in the best position to strengthen our global competitiveness as long as we drive innovationwith technology, redefine experience with digitalization and manage the business with start-up sensibility.The Internet of Things (IoT) and advancements in energy efficiency are two driving forces that will transformthe industry. Harnessing these technologies is the focus of Haier Smart Home’s future R&D. IoT technologygives home appliance businesses better consumer insights via interactive experience. After the initialconfiguration, home appliance businesses can accelerate product upgrades and improve algorithm toenhance user recognition based on feedback on product quality, functionality and scenario applicationsutilising sensors, user behaviour analysis and big data applications. In addition to the breakthrough inconsumer robotics and smart lighting we made in 2022, future IoT development will focus on appliances forelderly, cleaning robots and whole house smart management systems.In January 2023, the Company established a rotary compressor joint venture with Shanghai Highly, a leadingmanufacturer of residential compressors, to facilitate integrated R&D of our home air conditioning products.In addition, we consolidated leadership with air-sourced heat pump & solar water heater solutions designedto provide efficient alternative heating solutions for hotels, campuses and hospitals. Since 2006, we havebeen developing magnetic centrifugal chiller in Chinese market since 2006. Compared to MRV systems, thistechnology could increase COP/IPLV by 100% and we have been number one globally in magnetic chillersfor four consecutive years. The Company has also developed air levitation centrifugal chiller and integratedenergy management solutions, which will become solid foundation facilitating innovations in our globalcommercial HVAC business.Aspired to be the global leader like refrigerator and washing machine businesses, our home and central airconditioner businesses ought to become the new pillar of future growth, while investments must continue insmall appliance and kitchen appliance to grow R&D and supply chain competitiveness. We have establishedleadership in the more significant markets of China and the US, but our position and profitability demandfurther progress in other regions. The way forward is through relentless product innovation and brandbuilding, during which process Haier Smart Home must remain committed to designing high quality andcreative appliances that deliver user-centric experience. We must stay attuned to local markets and build asolid reputation with reliable and attentive services. This strategy also requires us to allocate our supplychain and distribution resource to cater for the characteristics of each product category, for instance, we donot necessarily have to make all of the small appliances in our own factories and digital applications onlinecould be playing a more important role in marketing our small appliance.

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Haier Smart Home Co., Ltd. Annual Report 2022

Letter to shareholders

The new generation of consumers is demanding personalised and customised scenarios that integrateappliances with home furnishings, thus unlocking significant business opportunities that inspired us to createscenario-based project of Three-Winged Bird, specializing in redefining in-store experience by creatingimmersive display of smart lighting, smart kitchen, smart air & temperature solution as well as watermanagement, all of which could be mixed & matched to suit personal taste. More importantly, we would likethis entire process to be efficient and transparent, and we are committed to being their trustworthy partnerin creating the smart home experience right from the beginning.It is rather lamentable that as companies grow bigger, they often lose touch with the latest trends andtechnological breakthroughs when the organization becomes too entwined with bureaucracy. In order toachieve long-standing prosperity, our next step is to make Haier a place that inspires young generation Zwith dreams, to take pride in creating amazing value for our users, instead of burying their passion withfrivolous details. Adopting a ‘start-up’ mindset is fundamental to the vitality of our organisation. We haveinitiated an internal debate trying to encourage practices that lead to operational excellence and eliminatethose who don’t. I would like our marketing department to look beyond sales figures, and spend more timewith our customers and focus on their future prospects in Haier’s ecosystem. I have tasked our product andscenario designers to better understand what end-users think of our products, and draw inspirations throughuser engagement. Decisions should be made based on critical consumer insights generated from sharing ofmarket demand in a boundaryless organization. The next three years will see a determined drive tore-engineer the organisation, not only to improve operational efficiency, but to free up financial resourcesthat will fuel investments in talents and technologies for the future.I feel a great sense of responsibility during this turbulent time, a bold transformation is what will positionHaier Smart Home better in value creation. Motivated by our winning spirit and guided by our goals, we lookforward to embarking upon this exciting journey to a brighter future.Once again, I would like to thank all our shareholders for your trust and support as we embrace asustainable future together!

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Haier Smart Home Co., Ltd. Annual Report 2022

Section I Definitions

I. DEFINITIONS

Unless otherwise stated in the context, the following terms should have the following meanings in thisreport:

Definition of frequently used terms

CSRCChina Securities Regulatory CommissionSSEShanghai Stock ExchangeThe 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 DailyHaier Electrics, 1169Haier Electronics Group Co., Ltd. (a company originally listed in Hong

Kong, stock code: 01169.HK), a subsidiary as accounted for in theconsolidated statement of the Company. Haier Electrics has beenprivatized by way of H shares issuance on 23 December 2020 andbecame a wholly owned subsidiary of the Company since then.GEAGE Appliances, household appliances assets and business of General

Electric Group, have currently been owned by the Company.FPAFisher & 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 a wholly-owned subsidiary of the

Company.CandyCandy 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.CMMChina Market Monitor Co., Ltd., as an authoritative market research

institute in Chinese household appliances area, was established in 1994

and has been focusing on research of retail sales in China consumption

market ever since.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section I Definitions

EuromonitorEuromonitor, established in 1972, is the leading strategic market

information supplier and has over 40-years of experience in respect ofpublishing market report, commercial reference data and on-linedatabase. They create data and analysis on thousands of products andservices around the world.All View CloudAll View Cloud (AVC) is a big data integrated solution provider to the

smart home field, providing enterprises with big data informationservices, regular data information services and special data services.GFKGFK Group, the world's leading market research company. After a long

period of development and accumulation, GFK Group's global marketresearch business covers consumer durables research, consumerresearch, media research, healthcare market research and specialstudies.IECThe International Electrotechnical Commission, founded in 1906, is the

world’s first organization for the preparation and publication ofinternational electrotechnical standardization and is responsible forinternational standardization for electrical engineering and electronicengineering. The goals of the commission include: to effectively meetthe needs of the global market; to ensure that the standards andconformity assessment programs are applied globally in a prioritizedmanner and to the greatest extent; to assess and improve the quality ofproducts and services involved in its standards; to create conditions forthe common use of complicated systems; to improve the effectivenessof the industrialization process; to improve human health and safety,and to protect the environment.IEEEThe 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 theworld. It is committed to the development and research of electrical,electronic, computer engineering and science-related fields, and hasnow developed into an international academic organization with greatinfluence in terms of the fields of space, computer, telecommunications,biomedicine, power and consumer electronics.Model of RenDanHeYiThe concept of ‘Achieving win-win via RenDanHeYi’is the guarantee of

Haier’s sustainable operation and the driving force of the Companyfeaturing a self-motivated and empowering corporate culture. “Ren” is anemployee who has the spirit of entrepreneurship and innovation; “Dan”is to create value for users. The “RenDanHeYi “management modelencourages employees to create value for users with an entrepreneurialmindset, and to achieve self-value in line with the those of theCompany and its shareholders.

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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 nameHaier Smart Home Co., Ltd.English short nameHaier Smart HomeLegal representativeLi HuagangII. CONTACT PERSON AND CONTACT INFORMATION

Secretary to theBoard

Representative ofsecurities affairs

Company Secretary(D/H shares)OthersNameLiu XiaomeiLiu TaoNg Chi Yin, TrevorGlobal Customer

Service HotlineAddressDepartment of

Securities of HaierSmart Home Co.,Ltd., Haier Scienceand TechnologyInnovationEcological Park,No.1 Haier Road,Qingdao City

Department ofSecurities of HaierSmart Home Co.,Ltd., Haier Scienceand TechnologyInnovationEcological Park,No.1 Haier Road,Qingdao City

Room 3513, 35th

Floor, The Center,99 Queen’s RoadCentral, Central,Hong Kong

/

Tel0532–889316700532–88931670+852 2169 00004006 999 999Fax0532–889316890532–88931689+852 2169 0880/[e-mail]@[e-mail]/

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Section II General Information of the Company and Key Financial Indicators

III. SUMMARY OF THE GENERAL INFORMATION

Registered AddressHaier Industrial Park, Laoshan District, Qingdao City (now known as

Haier Science and Technology Innovation Ecological Park, LaoshanDistrict, Qingdao City)Historical Changes to 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 since1994, during which the address name was adjusted in line with thechange of name of the industrial park but the actual site remainsunchanged.Business addressHaier Science and Technology Innovation Ecological Park,

Laoshan District, Qingdao CityPostal code of the business

address

266101Websitehttps://smart-home.haier.com/cn/[e-mail]

IV. PLACE FOR INFORMATION DISCLOSURE AND DEPOSIT

Newspapers and websites

for annual reportdisclosure

Shanghai Securities News, Securities Times, China Securities Journal,

Securities DailyStock Exchange Website for

annual report disclosureas designated by theCSRC

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.hkDeposit place of annual

report

Department of Securities of Haier Smart Home Co., Ltd.,Haier Science and Technology Innovation Ecological Park,No.1 Haier Road, Qingdao City

V. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY

Summarized information of shares of the CompanyType of Shares

Stock Exchange ofShares Listed

Stock ShortNameStock Code

Stock ShortName BeforeVariationA-sharesShanghai Stock

Exchange

Haier Smart Home600690Qingdao HaierD-sharesFrankfurt Stock

Exchange

Haier Smart Home690DQingdao HaierH-sharesHong Kong Stock

Exchange

Haier Smart Home6690/

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Haier Smart Home Co., Ltd. Annual Report 2022

Section II General Information of the Company and Key Financial Indicators

VI. OTHER RELATED INFORMATION

Accounting firm engagedby the Company(domestic)

NameHexin Certified Public Accountants LLPBusiness Address24th Floor, Century Building,

No.39 Donghai Road West, Qingdao CityName of signingaccountant

Zhao Bo, Li Xiang ZhiAccounting firm engagedby the Company(overseas)

NameHLB Hodgson Impey Cheng LimitedBusiness address31st Floor, Gloucester Tower, The Landmark,

11 Pedder Street, Central, Hong Kong Special

Administrative RegionName of signingaccountant

Jack, Tian Sun KitNote:

Accounting firm engaged by the Company (domestic and overseas): Pursuant to the motion for the appointment of an auditorapproved at the Company’s 2021 Annual Shareholders‘Meeting, the Company engaged Hexin Certified Public Accountants LLP andHLB Hodgson Impey Cheng Limited to issue the China Accounting Standards and International Accounting Standards auditingreport respectively for the Company’s 2022 annual report.VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS IN THE

RECENT THREE YEARS(I) Key accounting data

Unit and Currency: RMB

Key accounting data20222021

Yoychange

(%)2020After adjustmentBefore adjustmentOperating revenue243,513,563,670.73227,105,817,641.69227,556,143,618.177.22209,723,430,081.03Net profit attributable to

shareholders of thelisted company14,710,923,491.9913,078,840,517.1013,067,038,271.8512.488,883,129,055.16Net profit after

deduction ofnon- recurring profitor loss attributable toshareholders of thelisted company13,962,931,853.7811,831,272,558.2911,831,272,558.2918.026,457,813,335.37Net cash flows from

operating activities20,153,505,783.3523,235,380,690.9523,129,640,417.72–

13.2617,609,513,831.64

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Section II General Information of the Company and Key Financial Indicators

At the end of 2022At the end of 2021

Yoychange(%)At the end of 2020After adjustmentBefore adjustmentNet assets attributable

to shareholders ofthe listed company93,422,647,664.4379,985,092,528.0679,810,927,325.5516.8066,837,525,701.87Total assets235,842,254,826.77217,741,133,577.31217,459,494,212.748.31203,498,169,276.71

(II) Key financial indicators

Key financial

indicators20222021

Yoychange

(%)2020After adjustmentBefore adjustmentBasic earnings per

share(RMB/share)1.581.411.4112.061.34Diluted earnings pershare (RMB/share)1.571.401.4012.141.31Basic earnings per

share after deducting

non-recurring profit

or loss (RMB/share)1.501.271.2718.110.97Weighted average

return on net assets

(%)16.8117.2617.29

Decreasedby 0.45percentagepoint17.68Weighted average

return on net assets

after deducting

non- recurring profit

or loss (%)15.9515.6515.65

Increasedby 0.30percentage

point12.85

Explanation of the key accounting data and financial indicators of the Company as at the end ofthe reporting period for the previous three years

□ Applicable √ Not applicable

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Section II General Information of the Company and Key Financial Indicators

VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC ANDOVERSEAS ACCOUNTING STANDARDS(I) Differences in net profit and net asset attributable to shareholders of listedcompany in financial report disclosed in accordance with InternationalAccounting Standards and China 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 disclosed in accordance withInternational Accounting Standards and China Accounting Standards.(II) Differences in net profit and net asset attributable to shareholders of the listedcompany in financial statements disclosed in accordance with overseasaccounting standards and China Accounting Standards

□ Applicable √ Not applicable

Apart from the financial statements prepared in accordance with International AccountingStandards, the Company did not prepared any financial statements in accordance with otheroverseas accounting standards.(III) Explanation on the difference between the domestic and overseas accounting

standards:

□ Applicable √ Not applicable

IX. KEY FINANCIAL DATA OF 2022 BY QUARTER

Unit and Currency: RMBQ1(January-March)Q2 (April-June)

Q3(July-September)

Q4(October-December)Operating revenue60,250,997,851.4661,606,524,610.7662,891,243,547.8858,764,797,660.63Net profit attributable to shareholders ofthe listed Company3,517,044,899.454,432,039,573.253,716,522,018.593,045,317,000.70Net profit after deduction of non-

recurring profit or loss attributable toshareholders of the listed Company3,190,978,313.064,299,715,392.323,730,558,477.252,741,679,671.15Net cash flows from operating activities1,154,796,354.404,809,451,302.825,240,826,180.558,948,431,945.58Explanation on the difference between quarterly data and disclosed regular reporting data

□ Applicable √ Not applicable

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Section II General Information of the Company and Key Financial Indicators

X. NON-RECURRING PROFIT AND LOSS ITEMS AND AMOUNT

Non-recurring profit and loss itemsAmount in 2022Amount in 2021Profit and loss from disposal of non-current assets209,436,774.9595,443,538.78Government subsidies included in current profit or loss,except for government subsidies that are closely related tothe Company’s normal business operations and gainedconstantly at a fixed amount or quantity according tocertain standard based on state policies766,426,467.17717,084,575.78Net profit and loss of subsidiaries arising from businesscombinations under common control of the current periodfrom the beginning of the period to the date ofconsolidation12,934,615.5110,786,626.61Profit and loss from fair value changes of financial assetsheld for trading, derivative financial assets, financialliabilities held for trading and derivative financial liabilities,as well as investment gains arising from disposal offinancial assets held for trading, derivative financial assets,financial liabilities held for trading and derivative financialliabilities and other debt investments, except the effectivehedging related to the normal operations of the Company–23,321,060.42512,402,328.52Other non-operating income and expenses except the

aforementioned items–29,750,173.2560,282,401.05reduction: Effect of income tax167,413,005.22135,105,480.15Effect of minority equity interest (After Tax)20,321,980.5313,326,031.78Total747,991,638.211,247,567,958.81For the Company’s designation of extraordinary gain or loss items as defined in the”ExplanatoryAnnouncement on Information Disclosure for Companies Offering Their Securities to the Public No.1—

Extraordinary Gains or Losses”, and for extraordinary gain or loss items as illustrated inthe”Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to thePublic No.1—Extraordinary Gains or Losses“designated as recurring gain or loss items, reasons shallbe specified.

□ Applicable √ Not applicable

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Section II General Information of the Company and Key Financial Indicators

XI. ITEMS MEASURED BY FAIR VALUE

√ Applicable □ Not applicable

Unit and Currency: RMB

ItemsOpening balanceClosing balance

Changes in the

current period

Affected amountto profit of current

periodWealth management products2,168,622,090.0014,638,968.26–2,153,983,121.7492,094,300.47Investment in other equity instruments4,851,884,944.635,851,882,930.20999,997,985.5731,607,357.22Investment in trading equity instruments330,557,610.82336,743,065.026,185,454.20106,216,247.55Investment funds150,516,274.37168,430,847.6317,914,573.26–37,211,579.82Derivative financial instruments176,525,574.8861,674,330.75–114,851,244.13142,693,890.40Total7,678,106,494.706,433,370,141.86–1,244,736,352.84335,400,215.82

XII. OTHERS

□ Applicable √ Not Applicable

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Section III Management Discussion andAnalysis

I. DISCUSSION AND ANALYSIS ON OPERATIONSIn 2022, the Company realized sales revenue of RMB243.514 billion, representing an increase of 7.2%from 2021. Revenue growth was driven by: (1) the strengths of high-end brands which enhanced uservalue, along with the promotion of Three-Winged Bird brand that boosted sales of scenario-basedproduct sets and increased transaction value; (2) overseas market expansions leveraging globalisedsupply chain and R&D platforms as well as in-depth market network to launch leading products andimprove price index; (3) the development of new product categories including tumble dryers,dishwashers, heat pumps and home cleaning robots.In 2022, net profit attributable to the owners of the Company amounted to RMB14.711 billion,representing a growth of 12.5% from 2021; net profit attributable to owners of the Company afternon-recurring items reached RMB13.963 billion, up 18.0% from 2021. (1) Gross profit margin remainedflat to 2021 at 31.3%, domestic gross margin expansion was driven by product mix upgrade,development of globalised platforms, digitalization in procurement and R&D, as well as lowercommodities prices in the second half of the year; the overseas market recorded minor gross margincontraction as the benefits of better product mix and price increases were offset by cost pressurerelated to rising commodities prices. (2) Selling expense ratio reduced by 0.3 percentage points to

15.9%, attributable to efficiency enhancement from digitalizing marketing, logistics and warehouses. (3)

Administrative expense ratio reduced by 0.2 percentage points to 4.5%, achieved by digitally enhancedoperational processes and organizational efficiency. (4) Financial expense ratio went down by 0.4percentage points to–

0.1%, the reduction was attributable to increase in interest income, improved

exchange risk management, however this was partially offset by higher interest expense caused byinterest rate increase overseas.Net cash flow from operating activities in 2022 was RMB20.154 billion, operations remained solid withnet cash flow to net profit ratio reached 1.37, attributable to improved working capital management inChina.(I) Smart Home Business in China

In 2022, revenue of smart home business in China grew by 4.6% from 2021 reachingRMB126.379 billion, the growth was attributable to ① market share gains from outperforming theindustry in refrigerators, washing machines, air conditioners, and water heaters; ② distributionnetwork expansion to capture strong momentum from e-commerce and franchised stores; ③increased sales of product sets with higher average ticket price from Three-Winged Birdscenario-based solutions; ④ enhanced user engagement and conversions through providingservices and design solutions in first and second tier markets, and offering door-to-door servicesto rural households.

1. Household Food Storage and Cooking Solutions

(1) Refrigerator and Freezer Business

In 2022, refrigerator business achieved sales revenue of RMB43.199 billion,representing an increase of 3.5% year-on-year. According to CMM, the Company’sretail share of refrigerators went up 2.5 percentage points to 43.9% offline; andincreased 0.5 percentage points to 39.2% online.

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Section III Management Discussion and Analysis

The Company spearheaded industry development in food preservation, large-volumeproducts and connectivity. The Company served a variety of user needs throughbrand portfolio of Casarte, Haier and Leader. (1) Leveraging breakthroughs in built-indesign, structural configuration and heat dissipation technology, Casarte was able tointroduce seamless built-in range and achieved 180% revenue growth from its built-inrefrigerators during the reporting period. (2) Featuring cutting-edge freshnesspreservation and refrigeration technologies, more than one million units of Haierfull-space freshness preservation refrigerator were sold, including Boguan (博觀)series, could maintain humidity level at 90% in the refrigerator zone with zerotemperature fluctuations in the freezer, allowing ingredients to stay fresh for 7 and 15additional days in the chilled and frozen sections compared to ordinary refrigerators,over 50,000 units were sold in its first year on the market at an average price of overRMB15,000.During the reporting period, freezer business achieved a revenue growth of 11%partly driven by the introduction of large-size upright freezers designed for home use.In May 2022, Haier’s upright freezer was awarded the highest honour of recognitionby Stiftung Warentest, Germany’s leading consumer testing institution. Meanwhile,revenue of commercial freezers also grew by 19%.

Export business

The Company focused on brand premiumisation and product innovation featuringlarge multi-door refrigerators and freshness preservation technology to expand marketshare overseas. In Europe, Haier ranked first in large multi-door refrigerators withmarket share of over 40%. In Japan, the Company launched ultra-thin large-volumeTZ freezer series, boosting market share of large refrigerators by 4.6 percentagepoints to 43%. In Vietnam, market share of high-end large refrigerators reached 40%.

(2) Kitchen appliance business

In 2022, kitchen appliance segment recorded sales revenue of RMB3.763 billion, ayear-on-year increase of 7.7% and Casarte’s revenue contribution continued toincrease. According to CMM, the Company’s offline retail share of kitchen appliancesrose 1.4 percentage points year-on-year to 8.4%, ranking top three in the industry forthe first time.The Company launched a series of innovative products that were well-received by themarket. Casarte’s constant air volume range hood was equipped with wind pressuresensor and automatic fan adjustment, to provide strong ventilation and efficientextraction, while reducing noise level by 5dB to 43dB. Casarte’s ovens createdself-cooking technology at 300?C, a pizza could be cooked within three minutes, andbaking is automatically stopped once the food is ready. This product ranked first inmarket share among ovens priced above RMB11,000. Casarte’s dishwashersfeaturing drawer-style compartments equipped with large-diameter spray arm thatrinsed dishes at 360? to achieve thorough cleaning. During the reporting period,revenue of Casarte’s dishwashers recorded double-digit revenue growth.

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Section III Management Discussion and Analysis

Export businessExport revenue grew 25% in 2022. In addition, the Company continued making effortto increase in-house production and improve operational efficiency.

2. Household Laundry Management Solutions

During the reporting period, the Company’s washing machine business achieved salesrevenue of RMB31.614 billion, a year-on-year increase of 3.1%. According to CMM, theCompany’s offline retail share of washing machines rose 1.8 percentage points to 46%,and retail share stayed flat at 40.4% online. Retail share of tumble dryers increased 6.4percentage points to 39.3% offline and 6 percentage points to 31% online.The Company has strengthened high-end washing machine market leadership throughproduct innovation. (1) Casarte’s Zhongzihemei (中子和美) washer & dryer combointegrated washing, drying and clothes caring with real-time data sharing during eachprocess. It was designed to reduce creases, wear & tear, and consume less energy. (2)Haier brand is committed to developing innovative technologies that enhance energy andwater efficiency. Its Essence Wash washing machine was equipped with a premixcompartment and high-pressure spraying technology to achieve powerful stain removal andreduce wear & tear by pre-mixing detergent. More than 200,000 units have been soldwithin three months since its launch. The Company also captured new opportunities intumble dryers with revenue growth of over 80% in 2022. Casarte Xiannuo (纖諾) dryerhelped grow the Company’s market share in units above RMB10,000 to 46.6%.Export Business

The Company focused on product upgrade and user interaction to enhance experience.Despite industry-wide weakness, IoL data indicates that the Company still managed togrow export revenue by 4%, by capturing energy efficiency market opportunities with swiftupgrade of entire washing machine range to energy efficiency Class A in Europe; in Japan,heat pump and front-load washer combo contributed to the 50% revenue growth.

3. Air and Energy Solutions

During the reporting period, the Company’s air and energy solution business realized salesrevenue of RMB33.947 billion, up 5.4% year-on-year.

(1) Home air conditioner business

During the reporting period, home air conditioner business achieved significant marketshare increase by consolidating distribution network, boosting distributor and userreputation, increasing in-house components production, and accelerating supply chainintegration. According to CMM, offline retail share rose 2.8 percentage pointsyear-on-year to 19.5% in 2022, and retail share increased 0.8 percentage pointsyear-on-year to 14.4% online. In addition, retail share in the high-end market(wall-mounted units priced above RMB4,000 and standing units priced aboveRMB10,000) grew 3.9 percentage points, reaching 24.2%.

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Section III Management Discussion and Analysis

The Company capitalised on the development of home central air-conditioners byimproving design, installation and service standards, while enhancing distributors’service capabilities through trainings to garner consumer goodwill. According to ChinaIoL, the Company’s market share of home central air-conditioners increased 0.25percentage points year-on-year to 14.7% in 2022.The Company strived to provide users with healthier, more comfortable,energy-efficient and environmentally friendly air solutions by utilizing IoT technologies.For example, Casarte’s Yunding (雲鼎) deluxe air conditioners could wash and purifyair through a 19-layer water curtain, effectively removing seven types of pollutantsincluding formaldehyde and PM2.5. It is also equipped with Smart Home system thatcould identify users and surrounding environment in order to provide customized andpersonal temperature settings.The Company created immersive experience to improve store traffic conversion bydemonstrating technological strengths in cooling and heating efficiency, ultra-lownoise, and health benefits. The Company also increased average contribution ofindividual models by streamlining SKUs and increasing the volume of each order.The Company strengthened supply chain and optimized design & procurement costsby increasing in-house manufacturing of core components and enhancingmanagement of tier two & three suppliers. In January 2023, the Company formed acompressor joint venture with Shanghai Highly, aiming to secure an integrated supplyof compressors, enhance production stability, reduce costs, in order to improveoverall profitability and enhance competitiveness through coordinated development ofcompressors and air-conditioning units.Export businessExport revenue rose by over 25% in 2022, ranking number one in the industryaccording to China IoL. The growth was driven by breakthroughs in new productssuch as dehumidifiers and strong performance in the US and Europe marketsleveraging localized distribution network and product innovation.

(2) Commercial air-conditioner business

During the reporting period, revenue from commercial air conditioners grew over 20%.According to China IoL, the Company’s share increased 0.9 percentage pointsyear-on-year to 11.1% in the domestic market and 0.7 percentage points to 14.2% inthe export market as compared to 2021.During the reporting period, the Company started expanding from commercial HVACequipment to energy management and smart integrated solutions for buildings. Bycreating MetaBuilding control system that integrates air conditioners, elevators,lighting, water, electricity and security, the Company aims at offering green and smartbuilding solutions that combine technology, experience and space.

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Section III Management Discussion and Analysis

Drawing on strengths in magnetic centrifugal chillers, the Company won contract of37 underground lines in 17 cities in 2022, reinforcing number one position indomestic market. In addition, the Company developed air-suspending centralair-conditioners and pioneered magnetic & air-centrifugal chillers solutions leveragingair-suspending centrifugal compressor technology to enhance energy efficiency andeliminate frictions in the switch on/off process.During the reporting period, heat pump revenue grew by 26%. The Companylaunched–37?C Low Ambient heat pumps with performance above and beyond thescope of China Energy Label grade 1 products by adopting leading R32 refrigerantsystem. The Company also launched Air to Water heat pump that could provideconstant 90?C water under wide temperature, making it an efficient alternative tofossil-fuel boilers in many industrial settings. In 2022, the Company won Tangshan’sGuye District (古冶區) Heating Renovation Project, the largest project of its kind inChina.Export businessThe Company also developed oil-free magnetic centrifugal chillers overseas, withexport revenue up by over 40% in 2022. During the reporting period, the Companyalso won several contracts including Suvarnabhumi Airport in Thailand and theMinistry of Health in Malaysia.

4. Household Water Solutions

During the period, water heaters and purifiers revenue grew by 9.1% to RMB13.855 billion.According to CMM, the Company strengthened its leadership in 2022, with market shareincrease of 1.3 percentage points to 29.8% offline, and online retail share rose 2.4percentage points to 34.0%.Following the launch of Casarte’s Crystal Tank Galaxy series, the Company expandeddual-tank line-up to capture demand for water heaters with small-size, tasteful appearanceand large-capacity. Leveraging gas-electric hybrid technology, the Company was able toconsolidate premium leadership in gas water heaters with revenue growth of 16% in 2022;and the Company remained number one in units priced above RMB8,000. During theperiod, the offline retail share of gas water heaters increased by 1.9 percentage pointsyear-on-year to 22.2%. Air-sourced heat pump water heater accelerated R&D in high watertemperature, disinfection, frequency conversion and energy saving. In 2022, its domesticrevenue grew by 19% and overseas revenue rose by over 290%. Casarte’s Tianhe (天合)NC7 air-sourced water heater could rapidly heat up at–15?C and reduce electricity usageby over 76%.

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Section III Management Discussion and Analysis

The water purifier business strengthened competitiveness through product innovation andsupply chain optimization. During the period, the Company expanded high-end marketshare with cutting edge technologies including zinc-strontium mineral spring. Since April2021, Haier smart water purifier factory has not only been able to produce the entireunder-sink range in house, but also its own filter, water circuit board and mouldingmodules, all of which contributed to increase cost competitiveness.

5. Sales Platform in China

Despite macro uncertainties during the reporting period, the Company remained committedto enhancing user experience, increasing user recognition and growing average user valuevia several initiatives to enhance efficiency of franchised network with digital transformationand service innovation; accelerate development in new retail channels and improve userinteraction online; increase presence in home improvement channels, establish design,installation & service one-stop stores, as well as establishing partnerships with designers.According to CMM, the Company’s overall retail market share went up 2 percentage pointsyear-on-year to 27.2% in China in 2022.Challenged by declining traffic and store closures in KA channels, the Company acceleratedomni channel network expansion, and strengthened its franchised stores with digital tools toimprove traffic acquisition and conversion. The Company stimulated replacement demand inthe rural market by offering door-to-door appliance cleaning services, while driving the salesof product sets in the urban areas by building showrooms featuring tailored designsolutions. Furthermore, the Company actively developed shopping mall channels throughscenario-based solutions and integrated offline/online interactions, showcasing qualitylifestyle and boosting replacement demand.Increasing number of consumers started to buy appliances online. During the reportingperiod, the Company expanded product portfolio online, while strengthening the premiumCasarte brand by introducing over 70 new units. The Company also made efforts toimprove membership management by streamlining online and offline user database utilizingdigital tools. In 2022, the Company topped the industry with 20% growth of its aggregatedGMV online; user engagement efficiency increased 23%; total number of Haier brandmembership surged 41% to over 45 million.The Company made dedicated effort to capture the growth opportunities of live streamingplatforms and short video marketing by creating quality content integrating brand stories toincrease consumer recognition. In 2022, over 40,000 short videos were released, and dailyaverage live streaming coverage exceeded 16 hours in flagship store online. Streamingrelated transaction value exceeded RMB10 billion in 2022, ranking first amongst majorhome appliance businesses online.

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Section III Management Discussion and Analysis

Growing number of consumers started to buy major appliances at the beginning of theirrenovation project, thus the Company enhanced traffic conversion and average ticket priceby showcasing scenario-based solutions in Three-Winged Bird stores, providing professionaldesign toolkit to distributors and promoting existing home renovation and kitchenrenovation solutions. In 2022, over 900 new Three-Winged Bird stores were added, andretail sales of Three-Winged Bird stores went up by 257% year-on-year.Amid the growing traffic towards home improvement channels, the Company establishedwide partnership with home furnishing industry and expanded distribution network inbuilding material markets with retail sales increase of 51% and 401 new sales outletsadded in 2022.In 2022, business operations remained under constant pressure offline, the weakness in KAchannels also had an impact on sales of mid and high-end products. During the reportingperiod, Casarte brand managed to grow against the headwind through product renovation,development of set product portfolio and distribution network enhancement. In 2022,revenue contribution from product sets went up by 2.4 percentage points, according toCMM, Casarte’s core appliance market share went up by 1.4 percentage points from 2021to 12.3%.

6. Accelerating digitalization to facilitate end-to-end innovation, enhance operational

efficiency and user experience.During the reporting period, the Company implemented digital transformation inprocurement, lean manufacturing, marketing, and R&D, achieved cost reduction andefficiency improvement through data integration, operational digitalization andtransformation.Improve procurement efficiencyThe Company established selective vendor database to reduce supplier complexity,increase commonly used parts and improve material quality. In 2022, the number ofcomponents was reduced by 17.5% and proportion of common parts increased by 12%,the Company also cut new supplier process time by 10% and shortened supplierinspection time by 10% to accelerate new product pipeline.Improved efficiency of lean manufacturing

The Company has successfully increased scheduling accuracy to 85%, increased factoryUPH by 9.3%. and reduced inventory of semi-finished goods by 20% thanks to promotingmanufacturing digitalization, integrated scheduling in assembly, pre-process, and sequentialproduction. Loading efficiency of finished goods logistics also enhanced 30% by integratinglogistics data.In 2022, the Company reduced OTD lead time by reduced by 7% in China throughadvancing SKU classification system, as well as simplifying process during examination,scheduling, and shipment to reduce order fulfilment delays. Meanwhile, the Company alsooptimized inventory replenishment model in e-commerce channels and implemented VMImodel, to reduce inventory turnover days in regional branches by 10%.

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Section III Management Discussion and Analysis

(II) Overseas home appliances and smart home business

Revenue amounted to RMB125.424 billion in 2022, up 10.3% from 2021, driven by productinnovation leveraging globalised platforms, several new products have been successfully launchedglobally including the large front-load washer; flexible and efficiency from globalised supply chain;worldwide deployment of production capacity to cater for local demand; continued growth inprice index thanks to global premium brand building.

1. North America

The North American Home Appliance market encountered a significant challenge in 2022.Fears of recession exacerbated the weakness of consumer spending, and the coreappliance industry declined by around 6%, while costs faced severe inflationary pressures.However, the Company acted decisively in implementing its strategy during the reportingperiod and again delivered a solid performance, with sales revenue increasing by 9.0% (up

4.6% in local currency). The Company’s resilience and sustainability are built on long-term

investments in technology, product innovation, distribution network expansion, brandbuilding, and supply chain management, ultimately continuing to meet its commitment to itsusers.During the reporting period, the Company adhered to its high-end strategy and launchednew differentiated premium products such as the first Profile Front Load and Top Loadwashing machine with built-in Alexa voice assistant, Café counter-depth multi-doorrefrigerator, industry-leading Striker smart cooktop with precise temperature control andultra-fresh dishwasher with stainless steel tub to improve product mix and supportdouble-digit growth of premium brands.The Company continues to expand the growing space for new categories. During thereporting period, the product line-up of HVAC continued to improve, and the launch ofducted AC marked the Company’s entry into the mainstream HVAC market in the UnitedStates; the water heater factory in South Carolina went into operation, becoming the coremanufacturing base for premium water heater products; the small domestic appliancecategory expanded, and Opal ice maker ranked in the top in the premium countertop icemaker category at Amazon, etc.The Company has always been committed to continuously improving user experience,building the end-to-end digital platform to improve the Company’s efficiency internally andinteract with users externally. The Company has remotely upgraded the Steakhouse Modeand Turkey Mode for tens of thousands of users successively; during the same time theCompany opened a micro-factory in the Co-Creation Centre in Stamford, Connecticut. TheCompany once again won the annual “Smart Appliance Company of the Year” and“Cybersecurity Breakthrough Award” in the United States.Facing the challenging of a downward market environment and raw material inflation etc.,the Company continues to deepen RenDanHeYi to motivate employees. Employees set upfive teams spontaneously to build a synergistic system of sales and operation in the areasof material cost takeout, operation efficiency, structure improvement, revenue, and cashflow respectively to achieve sustainable growth. With high recognition of the employees, theCompany was again certified as the “Great Place to Work” in the US in 2022.

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Section III Management Discussion and Analysis

The Company continues to be a local corporate citizen. During the reporting period, theCompany launched the Every Voice program, which aims to provide jobs for refugeegroups who have left their homes; the first batch of Einride electric trucks have been putinto service, effectively reducing carbon emissions during the Company’s operation whileimproving supply chain efficiency; and Blue Wave public service program has expandedfrom the U.S. to a global scale and will contribute to public welfare around the world.

2. Europe

In 2022, the Company recorded revenue of RMB23.032 billion in Europe, an increase of

16.7% year-on-year. GFK statistics suggests the Company was the fastest growing

appliances business with retail volume market share up by 1 percentage point to 7.4%,and retail revenue market share increase of 1.4 percentage points to 6.8%. The Companyachieved growth against the headwind by strengthening high-end brand strategy, seizingmarket opportunities for energy-saving and built-in products, as well as accelerating supplychain localization. During the period, Haier brand’s price index rose to 131; the Companycapture market opportunity for energy-efficient products by launching Haier905CDrefrigerator, ultra-thin Ipro7plus washing machine, 939 washing machine and 979Plus12kgwashing machine with an energy-efficiency rating of A-20%. Heat pump revenue grew by200% and the Company launched air-source heat pump water heater which providesheating under–30?C to meet growing demand. In the meantime, the Company acceleratedgo-to market strategy by utilizing local facilities from dishwasher & kitchen appliancefactories Turkey and refrigerator factory in Romania.

3. Australia and New Zealand

During the reporting period, the Company recorded revenue of RMB6.962 billion, down by

0.7% year-on-year (up by 5.9% in local currency) in Australia and New Zealand, market

share exceeded 18% in main-stream channels (including TGG & NARTA) in Australia withstrengthening leadership in New Zealand. The growth was attributable to continued productinnovation driven by long term technological advancement. In 2022, the Company launched60cm Contemporary and New Minimal series equipped with full steam to provide users witha healthier gourmet experience, and FPA’s premium 7, 8 and 9 series contributed toalmost 50% of total kitchen appliance revenue. FPA brand Rf605T refrigerator with precisetemperature control and variable temperate zone was created to deliver superiorpreservation performance, it was an instant best-seller and soon became number one inmarket share of units’ capacity between 600–650L. On the other hand, the Company alsomade greater efforts in customizing smart and comprehensive solutions in the offlinechannels, while establishing partners with designs leveraging FPA’s premium productportfolio.

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Section III Management Discussion and Analysis

4. South Asia

During the period, revenue from South Asia market grew 16.1% year-on-year to RMB8.284billion. Retail market share in India grew by 2 percentage points to 11% leveraging brandportfolio of Casarte, Haier and Candy to meet mid to high-end demand for large-capacityand health-oriented products, while catering to the third and fourth-tier market withenergy-saving and entry level products. High-end market share grew by 3.5 percentagepoints to 14% leveraging continued product launches including Haier high-end T-doorrefrigerators and front-load washers with heating function. In Pakistan, the Companyoutperform the industry in all categories and remained number one with overall marketshare, an increase of 2 percentage points year-on-year to 36%. High end market sharerose by 5 percentage points, driven by introducing Casarte products that cater for premiummarket demand of smart and stylish appliances; the Company also developed deepfreezing and rapid cooling freezer to meet demand for large freezing capacity in third andfourth tier markets.

5. Southeast Asia

During the period, the Company realized revenue of RMB5.18 billion in Southeast Asia, up

9.3% year-on-year. The Company accelerated brand premiumization in response to growing

demand for large capacity, health oriented and energy efficient products. In Thailand, highend refrigerators revenue grew 165%, air-conditioners ranked first in market share, andT-door refrigerators rose to number one online. In Vietnam, the Company became numberone in washing machines supported by successful launch of 601 large front-load washer. InMalaysia, retail volume market share rose 1.3 percentage points year-on-year to 6.1%, andrevenue contribution of mid and high-end products reached 38%. In Indonesia, mid andhigh-end market share continued to grow and dual brand strategies of Candy and AQUAhave been established.

6. Japan

During the period, revenue from amounted to RMB3.569 billion in Japan, up 2.2% (up

16.5% in local currency) year-on-year. The Company’s combined market share for freezers,

refrigerators and washing machines reached 17.3%, amongst 15.3% in refrigerators and

43.3% in freezers, ranked the Company number one in the industry. Through differentiating

product portfolio, high-end revenue contribution went up by 2 percentage points to 51%.The Company became the fastest growing refrigerators business with several launchesincluding AQUA ultra-thin T-style and Delie series, as well as 468/406 T-door andultra-narrow 3-door series under Haier brand. The Company also grasped thepandemic-driven market opportunity of health-conscious laundry with AQUAvariable-frequency washing machine, high-end heat pump front-load washers, and Haiermedium and large size variable-frequency washing machines. More than 50,000 units ofheat pump front-load washer-dryer combo have been sold in the first year since its launch.

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Section III Management Discussion and Analysis

II. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATESDURING THE REPORTING PERIOD(I) Industry Overview for 2022

1. The Chinese market

In 2022, home appliance industry was sluggish amid real estate downturn, weak consumersentiment and rising commodity prices. Data from CMM showed that the retail sales of theChina’s home appliance (excluding 3C & digital products) retail revenue across all channelsin China was RMB799.9 billion in 2022, down 6.4% year-on-year when compared to 2021,amongst which refrigerator retail sales was RMB96.4 billion, down 1.7% year-on-year;washing machine retail sales was RMB68.1 billion, down 7.3%; thanks to hot temperaturein July and August, home air-conditioner retail sales grew by 1.6% year-on-year toRMB160.1 billion; retail sales of range hoods and stoves amounted to RMB54.0 billion,down 13.9% year-on-year. Impacted property weakness and saturating penetration, waterheater retail sales went down by 14.5% to RMB52.0 billion. The rise of the middle classand the growing consumer sophistication drive the popularity of new categories such astumble dryers, whose retail sales reached RMB9.3 billion in 2022, up 22.5% year-on-year.On the other hand, consumption momentum was weakened by lower income expectation,and people started to make fewer impulsive purchases; consumer preference is becomingpolarized with high end focusing on quality and wellbeing while entry level users appreciatevalue-for-money offerings. Nonetheless, high end market continued to expand, for example,consumers started to appreciate compartmentalized storage and healthy preservationtechnologies, while built-in refrigerators that blend in well with ambience at home hasbecome one of the main directions of appliance upgrade. According to AVC, share ofrefrigerators priced above RMB10,000 went up 5.4 percentage points to 37.1% in theoffline market in 2022.In a well penetrated market, appliances business ought to make dedicated effort indeveloping consumer insights and unlocking new opportunities with constant productinnovation, while increasing value of existing users with a variety of product sets that alsoecho the trend of appliances and home furnishing integration. Wall-mounted washingmachine, micro washers and separated laundry washers have become popular withgrowing number of families choose to have more than one child. New-air ventilation systemand kitchen-specialised air conditions are the latest revenue drivers. According to AVC,New-air ventilation AC revenue contribution went up by 2.2 percentage points to 8.4% in2022, and washer-dryer combo contributed 40.4% of the revenue in the offline market inthe first nine months of 2022, up 5.5 percentage points year-on-year.Export marketsIn 2022, China’s home appliance industry was under significant pressure caused byinflation, over-consumption from previous years and high level of inventories. According toChina Household Electrical Appliances Association, total annual export was USD97.25 billionin 2022, down 6.9%; with quarterly growth of 1.8%,–

1.3%,

–7% and–

20.2% from Q1 to

Q4. Refrigerators, air conditioners, freezers and washing machines export revenue grew by–

23.1%, 4.2%,

–

9.6% and

–

6.3%, respectively, in 2022.

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2. Overseas markets

The global economy recovered gradually in 2022. IMF estimated global GDP growth to be

3.4%. According to Euromonitor, global home appliances retail revenue (including major

appliances and small appliances) was USD518.3 billion in 2022, increased by 0.5% for theyear, of which, retail sales of core appliances dropped 0.3%, while small appliances grew

1.5% year-on-year.

By market:

(1) The U.S.: Costs remained under inflationary pressure from raw materials, commodities,

logistics and labour. Competition in the home appliance industry was intense, andinterest rate increases have slowed down new home constructions and home sales.Consumer confidence and spending remained subdued. Core appliances shipmentwent down by 6.4% in 2022.

(2) Europe: According to GFK, overall sales volume amounted to approximately 96.27

million units in Europe, down 8.9% year-on-year due to various factors includinginflation. At the same time, the energy crisis spurred rapid growth of alternativeenergy product such as heat pumps. Consumers continue to favour large-volume,health-conscious and energy efficient products.

(3) South Asia: ① In India, demand for large-volume, health-conscious and variable-frequency

products grew steadily in the mid-range to high-end market, whereas demand forenergy-saving entry level products in third- and fourth-tier markets were on the rise.Chain retailors expanded rapidly across the country, and e-commerce channelcontinued to increase in revenue contribution. ② Due to flood damages and inflationin Pakistan, people’s purchasing power plummeted causing appliance market volumeto decline by 10%. Import policy change led to structural shortages of raw materials.However, mid and high-end products continued to grow.

(4) Southeast Asia: As markets fully reopened economic recovery continued, however

industry performances varied in the region. According to GFK, appliance industrysuffered a decline in Thailand while, Vietnamese market experienced a mild growth.Demand for mid to high end products with large-volume, health-conscious, protectionand sterilization features continued to dominate.

(5) Australia & New Zealand: ① In 2022, sales volume in Australia recorded a mild increase

of 3%, with falling demand in the fourth quarter due to interest rate hikes andinflation. Average unit prices rose year-on-year driven by inflation and growth in highend products. ②According to customs’ data, white goods market experienced adouble-digit year-on-year volume decline in New Zealand in 2022.

(6) Japan: White goods market was sluggish in Japan due to currency depreciation and

pandemic resurgence, annual sales volume of refrigerators, freezers and washingmachines dropped by 1.5% year-on-year. Demand grew for large-volume, small-sized,health-conscious, energy-saving, and smart products.

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(II) Industry Outlook for 2023

1. The Chinese market

Domestic GDP is expected to accelerate in 2023 after re-opening, positive for incomeprospects and confidence. Market momentum could benefit from concrete housing demandunleased by policy support in the property sector, appliances replacement & upgrade, andgreen & smart appliance initiatives.CMM estimates appliance retail sales to grow 5% in 2023, with new opportunities from thehome improvement channel unlocked by appliances and interior integration; and growingtraffic from social media platforms such as TikTok and Xiaohongshu.Export marketsHome appliance exports is expected to stay flat in 2023 as fundamental improvementsremain less likely for global economy, particularly in Europe and the US. Sequentialrecovery could be expected in the second half as inflationary pressure, inventory build-upand high comps should start to ease. The pandemic and Russia-Ukraine conflict willcontinue to reshape global supply chains, with accelerated manufacturing localization thatcould affect China’s export in the long run.

2. The Global Market

According to IMF’s World Economic Outlook, global economic recovery is slow amidtightening monetary policy and financial conditions worldwide. The global GDP is forecastedto grow at 2.9% in 2023.Euromonitor forecasts global core appliance industry will exceed USD290 billion in 2023,up 2.5% year-on-year. Recovery of high-end market offline could accelerate innovation andpromote appliance connectivity; demand remain strong for efficient products amid energyshortage; on the other hand, regional instabilities could put global appliance supply chainunder pressure.III. INTRODUCTION OF THE COMPANY’S BUSINESS DURING THE

REPORTING PERIODFounded in 1984, the Company is committed to being an enterprise of the times. Through relentlessinnovation and iterations, we seize opportunities in the industry by continuously launching newproducts that steer market development. After more than 30 years, the Company has become a globalleader 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 to2022, Haier brand refrigerators and washing machines ranked first among global major homeappliance brands in sales volume for 15 and 14 consecutive years respectively.

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? Pioneer of global smart home solutions: Capitalizing on our full-range home appliances products,

the Company is recognized by Euromonitor as one of the first in the industry to introduce smarthome solutions. Three-Winged Bird focuses on customising smart home experience, by buildingup five core competencies including the Smart Home Brain, scenario-based solutions, experientialstores, the Three-Winged Bird interior design tool and the digital platform, we provide end-to-endand full life cycle services that “design a home, build a home and serve a home” for users.Over the years, the Company has established three business segments, namely the Chinese SmartHome Business, the Overseas Home Appliance and Smart Home Business, and Other BusinessSmart Home Business in ChinaThe Company provides a full range of home appliance products and value-added services in Chinamarket through Haier Smart Home APP and Three-Winged Bird APP, supplemented by our offlineexperience centres, in order to cater for users’ needs for different lifestyle scenarios. Smart HomeBusiness in China comprises Household Food Storage and Cooking Solutions (Internet of Food),Household Laundry Solutions (Internet of Clothing), Air Solutions (Internet of Air), and Household WaterSolutions (Internet of Water).? Household Food Storage and Cooking Solutions (Internet of Food): Through selling in domestic

market and exporting products such as refrigerators, freezers, kitchen appliances, as well asproviding one-stop smart kitchen scenario solutions and ecosystem solutions including smartcooking and nutrition planning, the Company fully addresses users’ need for convenient, healthyand tasteful gourmet experiences.? Household Laundry Solutions (Internet of Clothing): Haier’s washing machine focuses on applying

original technologies to directly solve users’ pain points in home living scenarios, and create newexperiences and value for users. With a product lineup of washing machines, tumble dryers,all-in-one laundry machines, garment care machines, and heated drying racks, the Company hasevolved from selling individual products to providing scenario-based solutions, and offeringend-to-end laundry care services. For example, the Zhongzihemei (中子和美) three-in-one washercombines washing, drying, and fabric care functions into a single unit, and the Essence Washwashing machine reduces washing time and improves cleaning effectiveness by producing ahighly concentrated detergent solution that can quickly soak into clothes through detergentpre-mixing and high pressure spraying.? Air Solutions (Internet of Air):

Home air conditioners: Through domestic sales in China and exports, the Company providesproducts such as home air-conditioners and fresh air systems, as well as a comprehensive rangeof full-cycle solutions including coordination of multiple air-conditioners and purifiers, adaptive airflow, air quality monitoring and air disinfection, thereby delivering a healthy and comfortableexperience at home and during commute that caters to the user needs in terms of airtemperature, humidity and quality.

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Commercial air conditioners: The Company is committed to becoming a leader in efficient,sustainable and smart building solutions based on the state’s “carbon peaking and carbonneutrality” strategy. Focusing on the business areas of smart control, environment, energy andsystem integration of buildings, the Company provides green and smart building solutionsintegrating “technology + experience + space” for government and commercial buildings,railways, schools, and hospitals.? Household Water Solutions (Internet of Water): Through selling in domestic market and exporting,the Company provides users with electric water heaters, gas water heaters, solar water heaters,air energy heat pump water heaters, POE water purifiers, POU water purifiers, water softeningequipment, at the same time, we offer smart water solutions including interactions between waterheaters and purifiers, and between heating appliances and water heaters, so as tocomprehensively cater to users’ needs for water purification, softening and heating.

Overseas Home Appliance and Smart Home BusinessIn addition, the Company manufactures and sells a comprehensive portfolio of home applianceproducts and provides value-added services in more than 200 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 our growth including acquisition of Haier Group Corporation’s overseaswhite goods business (Sanyo Electric Co., Ltd.’s white goods business in Japan and Southeast Asia)in 2015, home appliances of GE in the US in 2016, Fisher&Paykel in 2018, and Candy in 2019. Thedevelopment of the Company’s overseas businesses has been fuelled by synergies among ourself-developed business and our acquired businesses.At present, the overseas business of the Company has entered a stage of promising growth, havingachieved a multi-brand, cross-product and cross-regional presence on a global basis. According toEuromonitor, 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 in terms of retail volume, with a 21.4% marketshare; ranked second in America, with a market share of 15.6%; ranked second in Australia and NewZealand, with a market share of 12.8%. The Company ranked third in Middle East and Africa with amarket share of 7.5%, and ranked fourth in Europe with a market share of 8.3%.

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Other Businesses

Building on our established smart home businesses, the Company has also developed small homeappliances, channel distribution and other businesses. In particular, the small home appliance businessprimarily involves small home appliances designed by the Company, produced by outsourcedthird-party manufacturers and sold under the Company’s brands, which serve to enrich our smarthome solutions product mix. The channel distribution business primarily offers distribution services forproducts such as televisions and user electronics for the Haier Group or third-party brands, whichleverages the Company’s sales network.During the reporting period, the Company was once again listed among the Top 500 World’sCompanies and named again as the 2022 World’s Most Admired Companies by the Fortune Magazine.We are the only company being selected in Europe and Asia in the home appliances industry, and arethe only selected company incorporated outside the US. Meanwhile, the Company is also the world’sonly Internet-of-Things (IoT) ecosystem brand being named again as BrandZtm Top 100 Most ValuableGlobal Brands in 2022.At the same time, the Company was named among Fortune’s first China ESG Impact list and Forbes’The World’s Best Employers 2022 list. The Company’s ESG effort has also been recognized byexternal rating agencies, receiving an MSCI ESG rating of BBB and a Wind ESG rating of AAA, both ofwhich are at leading levels in China. Thanks to the above performance, Haier Smart Home wasselected into the three major ESG indices of the Hang Seng Index, including the HSI ESG EnhancedIndex, the HSI ESG Enhanced Select Index and the HSCEI ESG Enhanced Index.IV. 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 2022. 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 share. Building onthis foundation, the Company will further consolidate its leadership position in the industry byleveraging integrated synergies of its global unified platforms, through efficiency transformation drivenby digitalization, and by leveraging its technological strength and innovative capabilities. As cornerstonefor sustainable development, our ‘Rendanheyi (人單合一)’ Model also provided management guidanceto the Company, and enabled us to replicate successful experiences. It is believed that the followingadvantages will help the Company to continue to strengthen its leading position:

(i) Dominance in China’s high-end market; rapid growth of overseas high-end

brandsRiding the trend of consumption upgrade in China, the Company has started to develop thehigh-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-quality

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experiences. The Casarte brand combined the Company’s global technological strengths, productdevelopment capabilities and manufacturing craftsmanship, as well as privilege marketing anddifferentiation services, which has won the trust of users in China’s high-end market. Accordingto data from CMM, the Casarte brand has assumed a definitive leading position in China’shigh-end major home appliance market in 2022, ranking first in the retail sales of refrigerator,washing machine and air conditioner categories in the high-end segment. Specifically, in terms ofoffline retail sales, shares of the Casarte brand of washing machines and refrigerators reached

77.2% and 38.5% respectively in the market with product price above RMB10,000 in China, while

its share of air conditioners priced above RMB15,000 in the China’s market reached 30.6%. Ouroverall average price for Carsate refrigerators, air conditioners and washing machines is two tothree times the average price of the industry.In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. We enhanced our high-end brand profile through launching leading productsincluding high-end steam ovens, drawer-style microwave ovens and lift-up cooker hoods.Through the creation of luxurious, customizable and smart technology-enabled user experience,our high-end brands Monogram, Café and GE Profile have grown rapidly.(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 on whole-house water usage, air, and smart control for five major spaces at homeincluding the living room, kitchen, bathroom, bedroom and balcony.First of all, the Smart Home Brain created the best intelligent experience for users by upgradingthe brain technology system. Through iteration of the whole-house sensing system, we unifieddata collection from multiple devices and constructed a whole-house sensing service model. Atthe same time, through software and hardware integration and end-to-end cloud integration, weenabled diversified and multi-modal voice and image interactions which opened up a new form ofmulti-dimensional connectivity.Secondly, in terms of our capabilities in scenario solutions, Three-Winged Bird continued to buildinsightful smart scenarios that boosted health, comfort, safety and energy efficiency based on itsstrategic focus on tailored smart home experience. We addressed user needs on intelligencethrough the design and implementation of nine thematic scenarios of kitchen, sleep, ambience,low carbon, air, water, cleaning, security, and perception.In addition, Three-Winged Bird’s interior design tool focused on “building a home”, providingusers with smart home appliances + smart home solutions. The VR function allowed users tovirtually visualise the look, size and style of their smart appliances from different viewing angles.The Three-Winged Bird interior design tool has now facilitated more than 30,000 localised designsolutions.

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Finally, Three-Winged Bird’s digital platform is integrated with the Three-Winged Bird APP and theSmart Home APP to offer full life cycle service for users, thereby enhancing the value added toactive users and increasing conversion of scenario-based transactions.(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 2022, the Company established 10+N innovative ecosystems, 122 manufacturing centres, and108 marketing centres around the world, and achieved a coverage of nearly 230,000 point ofsales in overseas markets.(iv) A comprehensive portfolio of proprietary brands recognised by users of all tiersThrough 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, so asto 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 ofusers.

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(v) Cross-border acquisition and synergy realisation capabilitiesThe 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 (人單合一)’ 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 employees,and 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.(vi) Comprehensive and in-depth global collaborations and empowerment

The 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 has

established global technology R&D mechanisms to share common modules, utilize commontechnologies, and share patents within the scope of compliance. For example, theCompany’s R&D team in China joined hands with FPA’s and CANDY’s R&D teams todevelop the H20 spray technology, which has been applied to freestanding and built-indishwashers of Haier, Fisher&Paykel, CANDY and HOOVER, hence strengthening theCompany’s overall leadership in product performance.? Global collaborative product development: The Company has established a global

product development mechanism to coordinate global collaborative product development,which can enable regional collaboration and supplementation across product categories. Forexample, the R&D teams in South Asia and China embarked on a 10-month collaboration,breaking away from the traditional product development model by innovating on teamorganisation, quality control, product testing and cost control leveraging complementarylocal resources. The HRT-683 refrigerator jointly developed by this collaboration hasbecome a local mainstream high-end product.

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? Global collaborative procurement: The Company has established a global procurementguidance committee to coordinate global procurement activities. The committee has built aglobal digital sourcing platform that brought together partners across industries and regionsto develop an autonomous and controlled global supply chain ecosystem. The committeealso created a global database of preferred suppliers and materials to achieve costreduction by aggregating common resources at the Group level. By unifying procurementrules and processes, the Company established a standardised operating system withdifferentiated procurement strategies to enhance procurement efficiency while lowering risks.We have also developed a Group-level digital procurement platform to enhance sharedcapabilities through connecting “materials, businesses, people and mechanisms” to theplatform, thereby improving the resilience of our global supply chain.? Global collaborative supply chain: The Company has built an end-to-end digitalmanagement system for the global supply chain that spanned from marketing to suppliersto production and logistics. Using intelligent algorithms, the system enabled real-timeflexible deployment of global production capacity, and factories across the globe couldshare and develop smart manufacturing technologies to boost manufacturingcompetitiveness.? Global collaborative marketing and brand promotion: the Company operates amulti-level brand portfolio on a global scale, which can realize global collaborative brandpromotion. The Company also promotes and introduces successful marketing strategiesamong regional markets around the world. For example, the Company successfullyreplicated its sales and marketing model from third and fourth-tier markets in China, inmarkets such as India, Pakistan, and Thailand, which have strengthened the Company’sbrand image and its regional market competitiveness.(vii) Industry-leading R&D and technological capabilities

To ensure better living experience for users, the Company has established a global leading R&Dsystem under the premise of developing original technologies. In early 2022, the Companyestablished a science and technology committee to leverage our technological innovation systemand strengthen our enterprises’ innovation capabilities, which have facilitated our high-endbrands, scenario brands and ecosystem brands to achieve leadership positions.? Leadership in terms of original technologies: In 2022, the Company has innovated arange of solutions that exceeded users’ expectations and made technology more integral toeveryday life. For example, the seamless built-in refrigerator adopted the innovative bottomheat dissipation technology to realise a zero-gap integration with the cabinet. The use ofthe dual-axis variable hinges allowed the fridge door to be opened to 113? without hittingsurrounding walls. By advancing the foam layer technology, the thickness of the wholefridge was reduced to 600mm which matched the international standard depth of cabinets,hence enabling the refrigerator to be flush with the cabinet.

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? Certification from state authorities: As of the end of 2022, the Company received a totalof 16 State Science and Technology Progress Award and 245 leading internationalachievements, more than any other company in the industry. Haier Smart Home wasamong the first batch of “Leading Digital Enterprises” selected by the Ministry of Industryand Information Technology. The HOPE Platform was selected by Innovation China as oneof the “Top 10 Industry-Academia Collaboration Organisations” and part of the first batch ofInnovation Bases. The Platform also earned the Golden Bridge Award from the ChinaTechnology Market Association, was named as the only five-star technology serviceorganisation in the home appliance industry, and became the Model National Public ServicePlatforms for Small and Medium-Sized Enterprises.? Leadership in terms of patent quality: As of the end of 2022, Haier Smart Home hasaccumulated more than 92,000 patents applications globally, including more than 59,000invention patents. The number of overseas invention patents exceeded 16,000, coveringmore than 30 countries, making us the Chinese home appliance enterprise with the largestnumber of overseas patents. The Company also accumulated 11 state patent gold awards,ranking first in the domestic market. In the ‘Global Smart Home Invention Patent Ranking’in 2022, Haier Smart Home once again topped the list with 5,691 published patentapplications, ranking first in the world for the eighth consecutive times.? Leadership in terms of international standards: As of the end of 2022, Haier Smart

Home has cumulatively led and participated in the formulation of 92 international standardsand 637 state/industrial standards. We are the only company in the industry to obtaincomprehensive coverage of smart home standards from international organizations includingthe IEC, ISO, IEEE, OCF and Matter. We are also the only enterprise in the world to serveon both the IEC Council Board and the IEC Market Strategy Board, which have enabledthe Company to stay actively involved in international standardization efforts and have avoice in the formulation of standards.? Leadership in terms of experience design: In the Red Dot Design Awards 2022, HaierSmart Home broke its own record and earned 56 product design awards, once againtopped the industry with the highest cumulative number of awards. Haier Smart Home alsowon 42 accolades from the German iF Design Awards, ranking first in the industry. TheCompany has cumulatively received more than 500 international design awards, as well as5 China Excellent Industrial Design Awards, which is the only enterprise in China that haveearned three consecutive gold awards.(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’ (人單合一) model, Haier encourages every employee to maximize their own values while creating valuesfor users. In Haier’s ‘Rendanheyi’ (人單合一) 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’ (人單合一)model.

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Section III Management Discussion and Analysis

Haier Smart Home adheres to the values of recognizing users’ demand as priority and denying ourown perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship and innovation. Weturned employees into creators, implementers into entrepreneurs, and transformed enterprises intoopen ecosystem platforms, which have supported the Company to become a global leader of smarthome in the Internet of Things era.V. MAJOR OPERATIONS DURING THE REPORTING PERIODPlease refer to “I. DISCUSSION AND ANALYSIS ON OPERATIONS” and “III. INTRODUCTION OF THECOMPANY’S BUSINESS DURING THE REPORTING PERIOD” under this section.(I) Analysis of principal business

1. Table of movement analysis on the related items in income statement and cash flow

statement

Unit and Currency: RMB

ItemsCurrent Period

CorrespondingPeriod of Last YearChange (%)Operating revenue243,513,563,670.73227,105,817,641.697.22Operating cost167,223,167,396.20155,949,547,009.407.23Selling expenses38,597,810,391.1036,584,438,840.055.50Administrative expenses10,837,316,878.5010,471,531,966.203.49Financial expenses–245,629,371.05684,721,619.75–

135.87

R&D expenses9,499,191,097.858,363,868,872.7613.57Net cash flow from operatingactivities20,153,505,783.3523,235,380,690.95–

13.26

Net cash flow from investing activities–8,920,323,018.92–8,062,743,538.43N/ANet cash flow from financing activities–3,822,128,075.36–15,660,138,902.78N/AGain on fair value change–122,442,933.65119,277,623.85–

202.65

Gain from disposal of assets206,742,815.79110,983,720.0486.28Non-operating income136,527,269.96199,068,358.48–

31.42

Analysis on the reasons of signification changes in certain indicators:

1) Reasons for the changes in gain from fair value change: Gain from fair value change

decreased by 202.65% over the corresponding period, which was mainly due to thedecrease in fair value change of forward contracts;

2) Reasons for changes in gain on disposal of assets: Gain on disposal of assets increased

by 86.28% over the corresponding period, which was mainly due to the increase ingain on disposal of assets in the current period;

3) Reason for changes in non-operating revenue: Non-operating revenue decreased by

31.42% over the corresponding period, which was mainly due to the decrease in

revenue not related to ordinary operation in the current period.

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Section III Management Discussion and Analysis

Detailed explanation of significant changes in the operation types and the components ofprofit or sources of profit of the company during the period

□ Applicable √ Not applicable

2. Analysis of Income and Cost

□ Applicable √ Not applicable

(1). Principle Operating Activities by Sector, Product, Region and Sales Mode

Unit and Currency: RMBPrincipal operating activities by productBy product

Operating

revenueOperating cost

Gross profitmargin (%)

Operatingrevenueincreased/decreasedyoy (%)

Operatingcostincreased/decreasedyoy (%)

Gross profit marginincreased/decreasedyoy (%)Air conditioner40,059,458,698.7528,599,397,831.6728.616.745.73Increase by 0.68

percentage pointsRefrigerator77,637,761,907.8552,883,745,098.8031.888.488.29Increase by 0.12

percentage pointsKitchen appliances38,740,706,547.1226,213,735,106.8232.349.9210.44Decrease by 0.31

percentage pointsWater Appliances13,786,852,209.997,443,373,512.2846.0110.5510.10Increase by 0.22

percentage pointsWashing Machine57,721,991,613.3338,583,555,563.9733.165.416.19Decrease by 0.49

percentage pointsEquipment parts and

channel integratedservices

14,484,542,254.1913,065,622,141.689.80–

0.420.59Decrease by 0.90

percentage pointsPrincipal operating activities by regionBy region

OperatingrevenueOperating cost

Gross profitmargin (%)

Operating

revenueincreased/decreased

yoy (%)

Operating

costincreased/decreased

yoy (%)

Gross profit marginincreased/decreasedyoy (%)Domestic116,330,655,265.5174,630,330,387.8935.854.431.76Increase by 1.69

percentage pointsOverseas126,100,657,965.7292,159,098,867.3326.929.9111.90Decrease by 1.29

percentage points

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Section III Management Discussion and Analysis

Principal operating activities by sales modeSale mode

Operating

revenueOperating cost

Gross profitmargin (%)

Operating

revenueincreased/decreasedyoy (%)

Operatingcostincreased/decreasedyoy (%)

Gross profit marginincreased/decreasedyoy (%)Domestic—direct salecustomers

11,085,779,646.456,024,135,893.0845.662.18–

4.93Increase by 4.06

percentage pointsDomestic—distributionand others

105,244,875,619.0668,606,194,494.8134.814.672.39Increase by 1.45

percentage pointsOverseas—direct salecustomers

4,695,394,135.444,181,889,393.4010.9418.9815.80Increase by 2.45

percentage pointsOverseas—tradingcompanies sales

121,405,263,830.2887,977,209,473.9327.539.5911.72Decrease by 1.38

percentage points

(2) Table of production and sales analysis

√ Applicable □ Not applicable

Main productsUnits

Productionvolume

Sales

VolumnInventory

Production

volumeincreased/decreased

yoy (%)

Sales volume

increased/decreased

yoy (%)

Inventoryincreased/decreased

yoy (%)Home Appliance10,000 units/sets11,39711,2632,5027.8–

1.11.6

(3). Performance of major purchase contracts and major sales contracts

□ Applicable √ Not Applicable

(4). Table of cost analysis

Unit: RMB0’000

By sector

By sectorCost component

Amount for thecurrent period

Percentage of the

amount for thecurrent period in

total costs (%)

Amount for thecorrespondingperiod of last year

Percentage of theamount for thecorrespondingperiod of last yearin total costs (%)

Percentage ofchange of theamount for thecurrent periodcompared to the

correspondingperiod of last year

(%)Home Appliance

Industry

Primary operation

costs

15,372,381100.014,468,983100.06.24Raw materials13,135,82485.512,400,43185.75.93Labor950,4816.2893,8326.26.34Depreciation254,0041.7238,3311.66.58Energy81,6210.572,3630.512.79Others950,4506.2864,0266.010.00

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Section III Management Discussion and Analysis

(5). Change of consolidation scope due to changes on shareholdings of major

subsidiaries during the reporting period

□ Applicable √ Not applicable

(6). Relevant information on significant changes or adjustments in the Company’s

business, products or services during the reporting period

□ Applicable √ Not Applicable

(7). Major distributors and major suppliers

A. Major distributors of the Company

√ Applicable □ Not Applicable

Revenue from the top five distributors was RMB54,151.39 million, representing

22.2% of the total sales for the year; among the revenue from the top five

distributors, the revenue from related parties was RMB0 million, representing0% of the total sales for the year.The proportion of sales to a single distributor exceeded 50% of the total duringthe reporting period, and new distributor or depending heavily on a fewdistributors were seen among the top five distributors.

□ Applicable √ Not Applicable

B. Major suppliers of the Company

√ Applicable □ Not Applicable

The purchase amount from the top five suppliers amounted to RMB41,880.79million, representing 19.3% of the total purchase amount for the year; amongthe purchase amount from the top five suppliers, the purchase amount fromrelated parties was RMB21,131.01 million, representing 9.8% of the totalpurchase amount for the year.The proportion of purchase from a single supplier exceeded 50% of the totalduring the reporting period, and new supplier or depending heavily on a fewsuppliers were seen among the top five suppliers.

□ Applicable √ Not Applicable

3. Expenses

√ Applicable □ Not applicable

Financial costs decreased by 135.87% over the corresponding period, which was mainlydue to the increase in interest income and exchange gain in the current period.

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Section III Management Discussion and Analysis

4. R&D expenditure

(1). Table of R&D expenditure

√ Applicable □ Not applicable

Unit: RMBExpensed R&D expenditure for the current period 9,499,191,098Capitalized R&D expenditure for the current period741,064,144Total R&D expenditure10,240,255,242Total R&D expenditure as a percentage in operating revenue(%)4.21Proportion of capitalization of R&D expenditure (%)7.24

(2). Table of R&D Personnel

√ Applicable □ Not applicable

Number of R&D personnel24,647Percentage of R&D personnel took up in the total employees(%)22

Educational structure of R&D personnelCategories of educational structure

Number of

personnelDoctor’s degree121Master’s degree4,103Bachelor’s degree12,764College Diploma5,207High School diploma or below2,452

Age structure of R&D personnelCategories of age structure

Number of

personnelUnder 30 years old (not including 30)9,010

–40 years old (including 30 and not including 40)10,506

–50 years old (including 40 and not including 50)3,765

–60 years old (including 50 and not including 60)1,15060 years old and above216

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Section III Management Discussion and Analysis

(3). Explanation

√ Applicable √ Not Applicable

Haier Smart Home always focuses on user experience. Under the guidance ofadhering to the strategy of original technology, it has continuously increased itsinnovation investment, established a global leading R&D system, and has seen acontinuous emergence of innovative achievements. Original technologies havesupported the overall industry-leading positions of the Company’s high-end brands,scenario brands and ecosystem brands. In terms of products, in 2022, the Companycreated a series of excellent solutions that were beyond users‘expectations withlifestyle embodied in technology, such as flat-back refrigerator, essence washingmachine, mechanic window air conditioner and constant airflow range hood, etc. Inthe next step, we will continue to increase investment in basic research andsubversive technology research. In terms of intelligence promotion: focusing on all-scenario solutions such as Smart Home APP and whole house intelligence, we haveconstructed smart living scenarios based on user demand. We are continuouslyincreasing our investment in the research and development of IoT, cloud computing,artificial intelligence and related advanced technologies to advance the development ofhome appliances towards intelligence and scenario-based development. In terms ofgreen and dual-carbon: we will undertake the national dual-carbon strategy andactively implement the ESG concept. In 2022, the construction of the first domesticrecycling interconnected factory was completed and put into operation, integrating lowcarbon and energy saving into the whole life cycle of products, driving the greendevelopment of the whole industry chain and leading the high-quality development ofthe industry.

(4). Reason for significant change in the composition of R&D personnel and its

impact on the future development of the Company

□ Applicable √ Not applicable

5. Cash flow

√ Applicable □ Not applicable

Net cash outflows from financing activities decreased by 75.59% over the correspondingperiod, which was mainly due to the new policy borrowing raised in China, the newworking capital borrowing raised overseas and additional issuance of proceeds during thecurrent period.(II) Explanation for major changes in profit caused by non-principal businesses

□ Applicable √ Not applicable

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Section III Management Discussion and Analysis

(III) Analysis of assets and liabilities

√ Applicable □ Not applicable

1. Assets and liabilities

Unit: RMB

Name of Item

Amount at theEnd of CurrentPeriod

Percentage ofAmount at theEnd of CurrentPeriod to TotalAssets (%)

Amount at theEnd of Previous

PeriodPercentage ofAmount at theEnd of PreviousPeriod to Total

Assets (%)

Change in theAmount at theend of CurrentPeriod to theEnd of PreviousPeriod (%)DescriptionTrading financial assets519,812,880.910.222,786,075,529.091.28–

81.34Mainly due to the expiration

of short-term wealthmanagement productsmeasured at fair valueDerivative financial assets183,185,160.510.0879,819,974.010.04129.50Mainly due to the

fluctuation in value offoreign currencyforward contractsDebt investments1,034,222,222.220.44100.00Mainly due to the new

long-term depositsRight-of-use assets3,795,225,353.891.612,734,678,906.531.2638.78Mainly due to the increase

in leaseDevelopment expenses154,480,515.670.07227,892,229.130.10–

32.21Mainly due to the transfer

of R&D expensesTrading financial liabilities6,294,014.400.00–

100.00Mainly due to the expiration

of foreign currency

forward contractsDerivative financial liabilities104,594,040.660.0480,212,433.240.0430.40Mainly due to the

fluctuation in value of

foreign currency

forward contractsNon-current Liabilities due within

one year

6,294,750,667.082.679,624,339,170.464.42–

34.60Mainly due to the

repayment of long-term

borrowings due within

one yearLong-term borrowings13,590,866,873.435.763,038,573,824.531.40347.28Mainly due to the

replacement of

long-term borrowings

due within one year and

new policy borrowingBonds payable334,730,048.820.15–

100.00Mainly due to the

conversion of the

convertible bonds

during the periodLease liabilities2,824,477,670.611.201,960,894,981.470.9044.04Mainly due to the increase

in leaseLong-term payables44,240,087.940.0299,602,707.760.05–

55.58Mainly due to the

repayment of long-term

payablesOther non- current liabilities107,332,101.070.0549,461,683.900.02117.00Mainly due to the increase

in forward payments for

purchase of assetsTreasury stock3,857,807,196.381.642,424,038,819.701.1159.15Mainly due to the share

repurchase

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Section III Management Discussion and Analysis

Name of Item

Amount at theEnd of Current

Period

Percentage ofAmount at theEnd of CurrentPeriod to TotalAssets (%)

Amount at theEnd of PreviousPeriod

Percentage ofAmount at theEnd of PreviousPeriod to TotalAssets (%)

Change in theAmount at theend of CurrentPeriod to theEnd of PreviousPeriod (%)DescriptionOther equity instruments118,017,507.590.05–

100.00Mainly due to the decrease

in the conversion equitycomponent of theconvertible bondsOther comprehensive income1,990,683,498.450.84–1,176,851,699.92–

0.54269.15Mainly due to the

translation of foreigncurrency financialstatements

2. Overseas Assets

√ Applicable □ Not Applicable

(1) Scope of assets

Among the assets, overseas assets amounted to 10,856,027 (unit and currency:

RMB0,000), representing 46% of the total assets.

(2) Explanation of high percentage of overseas assets

√ Applicable □ Not Applicable

Unit and Currency: RMB

Name of overseasassetReason for FormationOperating mode

Operating Revenueduring the reporting

period

Net Profit of thereporting periodOverseas Home

Appliance andSmart HomeBusiness

Overseas mergers &

acquisitions and theCompany’s owndevelopment

Localized Operations

with the integration ofR&D, manufacturingand marketing

125,423,825,543.856,249,105,890.26Note: 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 industry operating information

□ Applicable √ Not Applicable

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Section III Management Discussion and Analysis

(V) Analysis of investmentOverall analysis on external equity investment

√ Applicable □ Not applicable

In the purpose of promoting the business development of the Company and enhancing theCompany’s corporate governance, subsidiaries of the Company have made a series ofinvestment layouts. In order to promote the development of the Company’s home robotbusiness, upon the consideration and approval at the 28th meeting of the 10th session of theBoard of Directors of the Company on 28 April 2022, Qingdao Haier Smart Life Appliance Co.,Ltd. (青島海爾智慧生活電器有限公司), a wholly-owned subsidiary of the Company, acquired100% equity in Qingdao TAB Robotics Co., Ltd. (青島塔波爾機器人技術有限責任公司) (nowknown as “Haier Robot Technology (Qingdao) Co., Ltd. (海爾機器人科技（青島）有限公司)) at atransaction consideration of RMB125 million. As at the end of the Reporting Period, thetransaction was completed. In order to reduce routine connected transactions and enhancegovernance, upon the consideration and approval at the 2nd meeting of the 11th session of theBoard of Directors of the Company on 29 August 2022, Qingdao Haier Special Refrigerator Co.,Ltd., a wholly-owned subsidiary of the Company, acquired 100% equity in Qingdao Haier SpecialPlastic R&D Co., Ltd. (青島海爾特種塑料研製開發有限公司) at a transaction consideration ofRMB152 million. As at the end of the Reporting Period, the transaction was completed.

1. Significant equity investment

√ Applicable □ Not Applicable

Unit and Currency: RMB00’000’000

Name of investeeMain Business

Is subject amaininvestmentbusiness ornotInvestment

Investment

amountShareholding

Consolidated ornot

Statementitems (ifapplicable)

Capitalsource

Partners (ifapplicable)

InvestmentTerm (if any)

ProgressUpdate as atBalanceSheet Date

Expectedgains (if any)

Impact ofprofit or lossduring thePeriod

Lawsuitrelated ornot

Disclosuredate (if any)

DisclosureIndexes(if any)Qingdao TAB RoboticsCo., Ltd. (青島塔波爾機器人技術有限責任公司)

Smart homerobot businessNoAcquisition1.25100%Yes/Self-owned

funds

//Transaction

completed

//No29 April 2022L2022–

Qingdao Haier Special

Plastic R&D Co., Ltd.(青島海爾特種塑料研製開發有限公司)

Refrigerator door

body business

NoAcquisition1.52100%Yes/Self-owned

funds

//Transaction

completed

//No30 August

2022

L2022–

Total///2.77////////////

2. Significant non-equity investment

□ Applicable √ Not Applicable

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Section III Management Discussion and Analysis

3. Items measured at fair value

√ Applicable □ Not Applicable

Unit and Currency: RMB

Asset Type

OpeningBalanceProfits or Lossesof Changes inFair Value duringthe Period

CumulativeChanges in FairValue Included inEquity

Provision forImpairment of

during thePeriod

Purchasesduring thePeriodSold/RedeemedAmount duringthe PeriodOther ChangesClosing BalanceWealth management

products

2,168,622,090.0060,591,951.035,360,147,787.607,574,722,860.3714,638,968.26Investments in other equityinstruments

4,851,884,944.63–150,669,101.681,032,370,425.42118,296,661.835,851,882,930.20Investments in tradingequity instrument

330,557,610.82104,729,258.7599,999,996.80245,376,295.9646,832,494.61336,743,065.02Investment funds150,516,274.37–37,211,579.8242,532,603.9612,593,549.12168,430,847.63Derivative financial

instruments

176,525,574.88–67,337,319.582,817,487.53–50,331,412.0861,674,330.75Total7,678,106,494.7060,772,310.38–147,851,614.156,535,050,813.787,820,099,156.33127,391,293.486,433,370,141.86Note: As of 31 December 2022, the aggregate balance of foreign exchange derivative transaction amounted to

approximately US$ 1.953 billion.Investment in securities

√ Applicable □ Not Applicable

Unit and Currency: RMB

Type ofsecurities

Securitiescode

Securitiesabbreviation

Initial investment

cost

Sources offunding

Carrying amountat the beginning

of the Period

Profit and loss

arising fromchanges in fairvalue during thePeriodAccumulated fairvalue changesincluded in

equity

Purchases during

the Period

Disposals during

the Period

Investment profitor loss during the

period

Carrying amountat the end of the

PeriodAccounting itemsStock601328Bank of

Communications

1,803,769.50Self-funding6,279,981.72177,092.766,457,074.48Investments in other

equity instrumentsStock600827Bailian Group154,770.00Self-funding525,042.04–47,659.48477,382.56Investments in other

equity instrumentsStock300183Neusoft Carrier18,713,562.84Self-funding14,250,135.78–4,830,819.489,419,316.30Investments in other

equity instrumentsStock000959Beijing Shougang99,999,996.80Self-funding224,266,143.39–55,678,783.0699,999,996.80245,206,369.1246,693,359.1970,074,347.20Trading financial assetsStock688455KENGIC29,450,000.00Self-funding46,832,494.61110,349,395.39157,181,890.00Trading financial assetsTotal//150,122,099.14/292,153,797.5454,670,612.33–4,701,386.2099,999,996.80245,206,369.1246,693,359.19243,610,010.54/

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Section III Management Discussion and Analysis

Private equity investment

√ Applicable □ Not Applicable

By the end of the reporting period, the Company has historically invested in private equityfunds as follows: the Company invested 63.13% share in Qingdao Haier SAIF Smart HomeIndustry Investment Center (Limited Partnership); Qingdao RRS Huitong InvestmentManagement Co., Ltd. (青島日日順匯通投資管理有限公司), a subsidiary of the Company,invested 49% share in Guangzhou Heying Investment Partnership (Limited Partnership);Qingdao RRS Chuangzhi Investment Management Co., Ltd. (青島日日順創智投資管理有限公司)，a subsidiary of the Company, invested 30% share in Huizhixiangshun EquityInvestment Fund (Qingdao) Partnership (Limited Partnership), a private equity fund, and50% equity of Qingdao Ririshun Huizhi Investment Co., Ltd., a managing partner of funds;Qingdao Haier Technology Investment Co., Ltd. (青島海爾科技投資有限公司), a subsidiaryof the Company, invested in private equity funds: 1% share in Beijing-Tianjin-HebeiIndustrial Coordinated Development Investment Fund (Limited Partnership) (京津冀產業協同發展投資基金（有限合伙）), 14.85% share in Shenzhen TopoScend Capital Phase I Fund(Limited Partnership) (深圳市投控東海一期基金（有限合伙）), 24% share in Qingdao HaimuSmart Home Investment Partnership (Limited Partnership), and invested in fundmanagement companies: 5.01% equity of CMG-SDIC Capital Co., Ltd. (國投招商投資管理有限公司), 15% equity of Shenzhen TopoScend Capital Co., Ltd. (深圳市投控東海投資有限公司), 49% equity of Qingdao Haimu Investment Management Co., Ltd.

Derivative investment

√ Applicable □ Not Applicable

RMB0’000

Operator nameof derivativesinvestment

Type of derivativesinvestment

Initialinvestmentamount ofderivativesinvestment

StartingdateEnding date

Openinginvestment

amount

Amountpurchasedduring thereporting

period

Amount sold

during thereporting

period

Provision for

impairment

(if any)

Closinginvestmentamount

Proportionof closinginvestmentamount overnet assets at

end ofreporting

period

Actual profit

or loss forthe reportingperiodBankForward foreign

exchange contract

1,247,8802022/1/12022/12/311,247,8801,360,07620,134BankInterest rate/exchange

rate swap

209,7372022/1/12022/12/31209,7370–

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Section III Management Discussion and Analysis

Funding sources of derivativesinvestmentsOwn funds of the CompanyFor changes in the market price or fairvalue of the invested derivativesproducts during the reporting period,the specific methodology used and thesettings of relevant assumptions andparameters should be disclosed in thefair value analysis of the derivatives.

Changes in market prices or fair value ofproducts,

1. The profit or loss of the foreign exchange

forward contracts amounted to RMB201.34million during the reporting period;

2. The profit and loss arising from the interest

rate/exchange rate swap was RMB–

8.22

million during the reporting period.The specific methodology used and the relatedassumptions and parameter settings are based onthe forward quotations of foreign exchange andinterest rate swaps of the financial institutions

4. Detailed progression of material asset regroup and integration during the reporting

period

□ Applicable √ Not applicable

(VI) 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, upon consideration and approval at the 28th meeting of the 10th session ofthe Board of Directors of the Company on 28 April 2022, Haier Shareholdings (Hong Kong)Limited, a wholly-owned subsidiary of the Company, transferred 25% equity interest in QingdaoHaier Mold Co., Ltd. at a transaction consideration of RMB277 million. As at the end of thereporting period, the transaction was completed.(VII) Analysis on major subsidiaries and Investees

√ Applicable □ Not applicable

For details, please refer to the relevant contents of “(2) Explanation of high percentage ofoverseas assets” under “(III) Analysis of assets and liabilities” in this section.(VIII) Structured entities controlled by the Company

□ Applicable √ Not applicable

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Section III Management Discussion and Analysis

VI. DISCUSSION AND ANALYSIS ON THE COMPANY’S FUTUREDEVELOPMENT(I) Setup and trend of the industry

√ Applicable □ Not applicable

For details, please refer to the relevant contents of “II. INTRODUCTION OF THE INDUSTRYWHERE THE COMPANY OPERATES DURING THE REPORTING PERIOD” under “Section IIIManagement Discussion and Analysis” in this report.(II) Development strategy of the Company

√ Applicable □ Not applicable

It is the Company’s development strategy to become a user-oriented digital enterprise in the IoTera and achieve leadership as the world’s first IoT-based smart home ecosystem brand.Through product & solution upgrades and scenario innovation of competitive refrigerator, washingmachine and water heater businesses, the Company continues to enhance user value andachieve market growth and business expansion. By accelerating end-to-end transformation of thehome air conditioner and kitchen appliance businesses, the Company enhance businesscompetitiveness, achieve rapid revenue growth, and improve profitability. The Company will forgenew paths for growth by capitalising on the replacement demand for energy-efficient productsand focusing on smart buildings. By accelerating growth in new product categories such astumble dryers and dishwashers, and actively expanding into new business areas such as lifestyleappliances and cleaning appliances, the Company establishes a second growth curve. TheCompany develops a competitive edge for today’s world by strengthening the Three-Winged Birdscenario brand, enhancing competitiveness in high-end suite products, design & installation &service capabilities in home improvement channels, and store digitalisation.(III) Business plan

√ Applicable □ Not applicable

In 2023, the Company will press ahead with the three-level brand upgrade strategy of ‘high-endbrand → scenario brand → ecosystem brand’, improving operational efficiency throughend-to-end digital transformation, and implementing profit-oriented institutional changes toimprove operational quality.

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Section III Management Discussion and Analysis

In the domestic market: ① By focusing on user experience, transforming retail touch pointswith digital platforms that integrate the five networks of distribution channel, marketing, service,logistics and recycling, the Company will integrate online and offline touch points, digitalise allprocesses of user engagement, transaction, and delivery, and reach users more precisely.Through reconstructing “objectives, models, mechanisms and organisations”, the Company willbuild an efficient system to manage resources and improve cost efficiency. ② The Three-WingedBird scenario brand, backed by its strong footholds of the Smart Home Brain, scenario-basedsolutions, along with digitalised design tools, store operation and platforms, will createcustomised design solutions for users while enhancing store efficiency and user value for thebusiness.In the overseas markets: By pursuing high-end transformation, leveraging innovative spirit, andproactively creating opportunities even amid difficult industry conditions, the Company aims tobecome the number one company in the global market. The Company will ① adhere to high-endbrand strategy by launching differentiated new products to meet user needs; ② prioritiselocalisation and develop regional markets to become self-sustainable; ③ capitalise on industrytrends and cultivate room for growth by accelerating innovation of new products such as built-inunits and heat pumps; and ④ strengthen global competitiveness through leveraging synergiesacross global platforms in branding, R&D, procurement, supply chain, and human resources.(IV) Potential risks of the Company

√ Applicable □ Not applicable

1. Risk of decreasing market demand due to macroeconomic slowdown. Sales of white

goods as durable consumer appliances are subject to users’ income levels and theirexpectations of future income growth which will have a certain impact on their willingnessto purchase products. A slowdown in macroeconomic growth causing a decline in users’purchasing power will have a negative impact on industry growth. In addition, a slowdownin real estate market will also have a negative impact on market demand, which willindirectly affect end-user demand for home appliances.

2. Risk of price war caused by intensified industry competitions. The white goods industry

is highly competitive with a high degree of product homogeneity, industry concentration hascontinued to increase in recent years. However, the increase in industry inventory capacityin individual sub-sectors due to the demand-supply imbalance may lead to risks such asprice wars. Furthermore, rapid technological advancements, scarce talents in the industry,shortened product life cycles and ease of imitation are making it increasingly difficult toprofit. Although new products, services and technologies are often associated with higherselling prices, it has become necessary for the Company to invest more in R&D. TheCompany will actively invest in R&D to attract more users through continuous innovation inproducts and services, to build a lasting brand awareness.

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Section III Management Discussion and Analysis

3. Risk of fluctuations in raw material prices. The Company’s products and core

components use metal raw materials such as steel, aluminium, and copper, as well ascommodities such as plastics and foam. If the prices of raw materials continue to surge, itwill put certain pressure on the Company’s production and operations. In addition, theCompany relies on third party manufacturers and suppliers for key raw materials,components, and manufacturing equipment, as well as OEM suppliers, and any disruptionin supply or significant price increases by these suppliers will have a negative impact on theCompany’s business. As a leader in the industry, the Company will take measuresincluding volume & price adjustment mechanism as well as hedging to reduce the risk ofraw material fluctuations on its operations.

4. Operational risks in overseas business. The Company has steadily developed its global

business and has established production bases, R&D centres, and marketing centres inmany parts of the world, with the proportion of overseas revenue increasing year by year.Overseas markets are subject to political and economic situations (including events such asmilitary conflicts and wars), legal systems and regulatory regimes of those countries andregions. Significant changes in these factors will pose certain risks to the Company’s localoperations in these markets. The Company has taken various measures to mitigate therelevant impacts, including collaborating with suppliers and distributors, improvingproduction efficiency to offset the impact on the overall cost of sales, potentially expandingthe Company’s supply resources to other countries, and adopting safety measures toprotect its people and assets.

5. Risk of exchange rate fluctuations. As the Company expands its global footprint, the

import and export of the Company’s products involve the exchange of foreign currenciessuch as the U.S. dollar, the Euro, and the Japanese yen. If the exchange rates of therelevant currencies fluctuate, it will have a certain impact on the Company’s financialposition and increase its financial costs. In addition, the Company’s consolidated financialstatements are denominated in Renminbi, while the financial statements of its subsidiariesare measured and reported in the currency of their primary economic environment in whichthe entity operates and are therefore subject to currency exchange risk. In this regard, theCompany uses hedging instruments to reduce its exposure to exchange rate fluctuations.

6. Risk of policy changes. The home appliance industry is closely related to the consumer

market and the real estate market. Changes in macroeconomic policies, consumptioninvestment policies, real estate policies and relevant laws and regulations will affect productdemand from distributors, which in turn will affect product sales of the Company. TheCompany will closely monitor changes in the relevant policies, laws, and regulations, andmake forecasts of market changes, in order to ensure further development of theCompany.

7. Credit risk. There is possibility that the Company will be unable to collect all trade receivables

from its distributors, or distributors are not able to settle the Company’s trade receivablesin a timely manner, in which the Company’s business, financial status, and operationperformance may be affected. In relation to this risk, the Company will maintain flexibility byoffering credit period of 30 to 90 days to certain distributors based on their credit historyand transaction amount.

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Section III Management Discussion and Analysis

8. Inventory risk. Excess inventory might occur as the Company cannot always accurately predict trends

and events and maintain appropriate inventory levels; thus, the Company may be forced to offerdiscounts or promotions to manage the slow-moving inventory. On the other hand, a shortage ofinventory may lead to loss of sales opportunities for the Company. However, the Company willmanage its inventory and adjust according to market situation and will conduct regular impairmentassessment of its inventory.

9. Risk of changes in retail channels. The retail channel landscape in China is experiencing a major

shift. National retail chains, which previously dominated first- and second-tier markets, are shrinking insize. As these chains accounted for a significant share of mid-range to high-end product sales, theirdecline will impact high-end sales for a certain period.(V) Others

□ Applicable √ Not applicable

VII. EXPLANATION OF CIRCUMSTANCES AND REASONS FOR NON-DISCLOSURE BY THE COMPANY IN CONSIDERATION OFINAPPLICABLE REGULATIONS, STATE SECRETS AND COMMERCIALSECRETES

□ Applicable √ Not applicable

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Section IV Corporate Governance

I. EXPLANATION OF CORPORATE GOVERNANCE

√ Applicable □ Not applicable

During the reporting period, the Company has strictly complied with the requirements of the relevantlaws and regulations, including the Company Law of the People’s Republic of China, Securities Law ofthe People’s Republic of China, Code of Corporate Governance of Listed Companies and the listingrules of its listed jurisdictions. While maintaining high quality development in terms of performance, theCompany has been continuously improving its governance structure, regulating its operation, enhancingthe transparency and quality of its information disclosure, treating various investors fairly, focusing onshareholder return, implementing its equity incentive mechanism and upgrading the level of itscorporate governance.

1. Improving the governance structure

The Company has set up a standardized and orderly corporate governance structure composedof the general meeting of shareholders, the Board of Directors and its special committees(including the Strategy Committee, Audit Committee, Nomination Committee, Remuneration andAssessment Committee and ESG Committee (i.e. Environmental, Social and GovernanceCommittee)), the Board of Supervisors, and the senior management. We have established agovernance mechanism with clear lines of authority and responsibility, mutual coordination andchecks and balances, which has guaranteed efficient and compliant corporate governance.

Board of Supervisors

Remuneration and Assessment Committee

ESG Committee

Audit CommitteeStrategy Committee

Nomination Committee

General meeting of shareholders

Board of DirectorsSenior management

Governance structureDuring the reporting period, the Company has convened a total of four general meeting ofshareholders, six Board meetings, six meetings of the Board of Supervisors, two meetings of theStrategy Committee, six meetings of the Audit Committee, two meetings of the Remunerationand Assessment Committee, two meetings of the Nomination Committee and two meetings of theESG Committee. All meetings and voting procedures complied with relevant provisions specifiedin laws and regulations, the Articles of Association and rules of negotiation, and all voting resultswere legal and valid. These laid a solid foundation for the Company’s standardized operation.

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Section IV Corporate Governance

2. General meetings

The Company has strictly complied with the provisions of the Articles of Association and theRules of Procedure for the General Meetings in convening and holding general meetings. Generalmeetings are witnessed by lawyers on site and legal opinions are issued on their legality. TheCompany has established and improved effective channels of communication betweenshareholders and the Board of Directors to ensure the shareholders’ right to information,participatation and voting in respect of any significant issues of the Company. During thereporting period, the Company has held a total of four general meetings.

3. Board of Directors

The Board of Directors is mainly responsible for deciding the Company’s operational andinvestment plans, formulating the Company’s annual financial budget and final account plans,formulating the Company’s profit distribution plan and loss recovery plans, formulating theCompany’s plans for the increase or reduction of registered capital, issuance of bonds or othersecurities and listing, as well as the powers as stipulated in other laws and regulations and theArticles of Association. During the reporting period, the Board of Directors has held 6 meetings.The Board of Directors operated in accordance with rules and were able to perform their dutiesunder Articles of Association and relevant laws and regulations and practically implement relevantdecisions at the general meetings. The decision-making procedure and particulars of theresolutions of the Board of Directors were in compliance with Articles of Association and relevantrequirements under laws and regulations, and the resolutions made were legal and valid.

(1) Board Diversity

The Company is fully aware that board diversity will help to improve the efficiency indecision-making of the Board of Directors, reduce management risks, and make betterdecisions for the sustainable and healthy development of the Company. In determining thecomposition of the Board of Directors, the Company took full account of the diversity of themembers of the Board, including but not limited to gender, age, culture, educationbackground, industry experience, professional skills, knowledge, term of service and otherrelevant factors. The Nomination Committee is responsible for reviewing the effectivenessand implementation of the Board Diversity Policy and conducting regular annual diversityassessments.During the reporting period, the Company completed the change of session of the Board ofDirectors. The new Board of Directors consists of 9 directors, including two executivedirectors, three non-executive directors and four independent directors. 2 directors arefemale, accounting for 22.2% of the Board of Directors, representing an increase of 13.2%as compared with the previous Board of Directors (9%); 4 of whom are independentdirectors, accounting for 44.4% of the Board of Directors, representing an increase of 8.1%as compared with the previous Board of Directors (36.3%). The new members of the Boardhave extensive knowledge and experience in industry experience, Internet of Things,corporate governance, global market experience, financial management and riskmanagement, which will help the Board to make the best decisions and promote thesustainable and healthy development of the Company.

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Section IV Corporate Governance

(2) Board Independence

The independent directors of the Company are all senior professionals with expertise inaccounting, finance and business management. During the reporting period, theindependent directors of the Company performed specific duties in accordance with theArticles of Association and the listing rules of its listed jurisdictions, including participating inthe meetings of each of the Company’s special committees, providing advice to theCompany on its operation and management; and providing independent opinion onconnected transactions, profit distribution plans and other significant transactions of theCompany. By performing their duties as mentioned above, the independent directors helpprotect the interests of the Company and the shareholders as a whole, and promote thedevelopment of the Company. The chairman of each of the Company’s special committees(except the Strategy Committee and ESG Committee) are all independent directors. Thenumber of independent directors present at the meetings of the Audit Committee, theRemuneration and Assessment Committee, the Nomination Committee and the StrategyCommittee accounted for at least one-half of the quorum of such meeting (inclusive).

4. Board of Supervisors

During the reporting period, the Board of Supervisors operated in accordance with rules andwere able to perform their duties under Articles of Association and relevant laws and regulations.The number and composition of the members of the Board of Supervisors complied withrequirements under laws and regulations. During the reporting period, the Supervisors of theCompany performed their duties earnestly and supervised finance matters of the Company andperformance of duty by the Company’s director and senior management in accordance withrequirements under Articles of Association and Rules of Procedure for the Board of Supervisors.

5. ESG Governance Structure

Good ESG governance is important in ensuring the stability of a company’s operations,responding to unexpected crises and seizing development opportunities. The Company hasformed an ESG governance structure comprising governance, management and executioncovering its overseas business units. The ESG Committee has been established by the Board ofDirectors of the Company to conduct comprehensive supervision over the ESG related matters ofthe Company and perform relevant ESG governance duties on behalf of the Board of Directors.The ESG Executive Office and Working Group have been set up under the ESG Committee totake charge of specific ESG work of the Company.The Company’s overseas subsidiaries, GEA, FPA, CANDY and the subsidiary in India, have alsoestablished sustainable development management structures to promote the relevant ESG workin accordance with their applicable laws and regulations. For details, please refer to relevantinformation in 2022 Environmental, Social and Governance Report of Haier Smart Home Co., Ltd.published on the same date of this report.

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Section IV Corporate Governance

6. Information disclosure

Haier Smart Home has strictly complied with the regulatory requirements on informationdisclosure in China and overseas and fulfilled its information disclosure obligations. During thereporting period, on the basis of high-quality mandatory information disclosure, the Companyincreased voluntary disclosure on matters of key concern to domestic and overseas investors andthe capital market, such as corporate strategy, corporate governance, green operations andsupply chain management, so as to continuously enhance the quality and transparency ofdisclosure.

7. Treating various investors fairly and focusing on shareholder return

During the reporting period, the Company strengthened communication and exchange withinvestors in an active, open, innovative and professional manner so as to enhance investors’understanding and recognition of the Company and safeguard the legal rights of investors. Inaccordance with guideline of the Management System for Investor Relation, the Companyintegrated business and financial resources by the office of the board of Directors and realizedpositive and all-around access to investors in a multi-layer and diversified format throughintroduction reference, annual investor conference, result announcement conference, and onlineforum. Meanwhile, the Company replied investors on a timely basis by ways of interview, e-mail,phone, fax and the website (http://sns.sseinfo.com) and enhanced interaction with investors, soas to respect and protect the interests of investors, with the aim of achieving harmonious andmutual success with the Company, staff and investors.The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles ofAssociation and in the Shareholder Return Plan for the Next Three Years of the Company inimplementing the profit distribution policy. As at 31 December 2022, the Company had achievedcumulative cash dividends of RMB24,389 million. During the reporting period, the Companyrepurchased a total of 59,055,239 shares in the A-share market, with a payment of RMB1,491million; in the H-share market, a total of 14,970,200 shares were repurchased, with a payment ofHK$364 million.

8. Sustainable performance evaluation and incentive mechanisms

The Company has been adhering to the management model of”RenDanHeYi”, and takingthe”maximization of the value of people“as the core. In line with the global landscape of thecapital market, the Company has established a short-term plus mid to long-term incentivesystem which aligns the interests of employees and all shareholders. During the reporting period,the Company has continued its incentive plan for 2021 and continued to introduce domestic andoverseas incentive plans with various appraisal cycle, multi-level and all-round benefits, includingA-Share Core Employee Stock Ownership Plan, H-Share Core Employee Stock Ownership Plan,H-Share Overseas Trust Incentive Plan, and A-Share Option Incentive Scheme.Whether there is a significant difference between the corporate governance and requirements inrespect of corporate governance of listed companies of laws, administrative regulations and theCSRC; if so, the reasons should be explained

□ Applicable √ Applicable

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Section IV Corporate Governance

II. SPECIFIED MEASURES ADOPTED BY THE CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS TO MAINTAININDEPENDENCE WITH RESPECT TO ASSETS, PERSONNEL, FINANCE,ORGANIZATION, BUSINESS, AND THE SOLUTIONS ADOPTED,WORKING PROGRESS AND SUBSEQUENT WORKING PLANS IN CASEOF THE COMPANY’S INDEPENDENCE BEING AFFECTED

□ Applicable √ Applicable

Controlling shareholders, ultimate controllers and other parties controlled by them engaged in businessthat are same as or similar to the company, peer competition and impact of significant changes inpeer competition on the company, solutions adopted, working progress and subsequent solution plans

□ Applicable √ Applicable

III. BRIEF INTRODUCTION TO THE GENERAL MEETINGS OF

SHAREHOLDERSMeetingsDate

Index for details of websites designatedfor publishing resolutionsDate of disclosureResolutions approved2021 Annual GeneralMeeting

28 June 2022For details, please refer to the Announcement

on Resolutions Passed at the 2021 AnnualGeneral Meeting, 2022 First A SharesClass Meeting, 2022 First D Shares ClassMeeting and 2022 First H Shares ClassMeeting of Haier Smart Home Co., Ltd.(L2022–042) published by the Company onthe website of Shanghai Stock Exchange(www.sse.com.cn) and the four majorsecurities Newspapers.

29 June 2022Considered and approved the

resolutions related to annualreport, internal control auditreport, profit distributionproposal, reappointment ofauditor, external guarantees,daily connected transactions,general mandate to additionalissue/repurchase, equityincentive, election of newsession of the Board/Supervisory Committee,amendments to theCompany’s rules andregulation, etc.2022 First A Shares Class

Meeting

Considered and approved the

resolutions for equity incentive,general mandate torepurchase2022 First D Shares Class

Meeting2022 First H Shares Class

MeetingPreferred shareholders whose voting rights have been restored requested an extraordinary generalmeeting

□ Applicable √ Not applicable

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Section IV Corporate Governance

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 HShares 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 four meetings were convened by the Board of the Company, and Chairman Mr. LiangHaishan presided over these meetings. The Company had 11 Directors, of whom directors XIE Juzhiand WU Qi were unable to attend the meetings due to personal engagement); the Company had 3supervisors, of whom 3 supervisors attended the meetings. The secretary of the Board of theCompany attended the abovementioned meetings and other members of senior management of theCompany were invited to attend the abovementioned meetings.

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Section IV Corporate Governance

IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

(I) Changes of shareholding and remuneration of current and retired directors,supervisors and senior management during the reporting period

√ Applicable □ Not Applicable

Unit: share

NameTitle (note)GenderAge

Appointmentdate

Expirationdate ofappointment

Shareholdingsat the beginningof the year

Shareholdingsat the end of theyearIncrease/decrease inshares for the

year

Reason for increase/decrease

Totalremunerationreceived fromthe Companyduring thereportingperiod(RMB0’000)(before tax)

Whetherreceiveremunerationfrom theCompany’srelated partyLiang Haishan

(retired)

ChairmanMale572019/6/182022/6/2816,411,20916,749,309338,100Employee shareholding

scheme vested

77.03YES

Li HuagangChairman, Chief Executive

Officer

Male542019/6/182025/6/27764,145814,24550,100Employee shareholding

scheme vested

246.21NO

Shao XinzhiVice presidentFemale532022/6/282025/6/27YESGong WeiDirector, Chief Financial

Officer, vice president

Male502019/6/182025/6/271,911,9701,943,49831,528Employee shareholding

scheme vested

142.61NO

Yu Hon ToDirectorMale752021/3/52025/6/2730.58NOLi Kam FunDirectorFemale712021/3/52025/6/2730.58NOChien Da-chunIndependent directorMale702019/6/182025/6/2730.58NOWong Hak KunIndependent directorMale672020/5/192025/6/2730.58NOLi ShipengIndependent directorMale562021/3/52025/6/2730.58NOWu QiIndependent directorMale562021/6/252025/6/2730.58NOWu Changqi

(retired)

DirectorMale682019/6/182022/6/2817.25NOLin Sui (retired)DirectorMale672019/6/182022/6/2817.25NOLiu DalinChairman of the Supervisory

Committee

Male432021/6/252025/6/2711,47011,470Employee shareholding

scheme vested

YESMa YingjieSupervisorFemale542021/6/252025/6/273,9047,0453,141Employee shareholding

scheme vested

32.65NO

Yu MiaoEmployee supervisorMale412019/6/182025/6/272,4792,479Employee shareholding

scheme vested

36.34NO

Xie JuzhiVice presidentMale572021/3/52025/6/2733,69533,695Employee shareholding

scheme vested andshares acquired fromsecondary market

181.05NO

Li PanVice presidentMale472021/2/72025/6/27533,218567,22534,007Employee shareholding

scheme vested

141.63NO

Zhao YanfengVice presidentMale462021/2/72025/6/2753,50081,22927,729Employee shareholding

scheme vested

152.84NO

Li YangVice presidentMale472021/2/72025/6/2723,02023,020Employee shareholding

scheme vested

145.44NO

Song YujunVice presidentMale482021/2/72025/6/27100,000130,34530,345Employee shareholding

scheme vested

136.72NO

Guan JiangyongVice presidentMale452021/2/72025/6/2764,21895,60931,391Employee shareholding

scheme vested

139.31NO

Wu YongVice presidentMale452021/2/72025/6/27146,743176,20829,465Employee shareholding

scheme vested

130.35NO

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Section IV Corporate Governance

NameTitle (note)GenderAge

Appointmentdate

Expirationdate ofappointment

Shareholdingsat the beginningof the year

Shareholdingsat the end of the

yearIncrease/decrease inshares for theyearReason for increase/decrease

Totalremunerationreceived fromthe Companyduring thereportingperiod(RMB0’000)(before tax)

Whetherreceiveremunerationfrom theCompany’srelated partyHuang XiaowuVice presidentMale462021/2/72025/6/2726,23426,234Employee shareholding

scheme vested

98.00NO

Liu XiaomeiSecretary to the board of

directors

Female382022/6/282025/6/278005,1064,306Employee shareholding

scheme vested

46.83NO

Ming Guozhen

(retired)

Secretary to the board of

directors

Female592019/6/182022/6/281,395,4891,440,47444,985Employee shareholding

scheme vested

25.57NO

Wang Li (retired)Vice presidentFemale582021/2/72022/4/27575,100632,55757,457Employee shareholding

scheme vested

3.81NO

Total/////21,960,29622,739,748779,452/1,954.38/

Note: (1) “Shareholdings at the beginning of the year” as stated in the above table represent the later of “the beginning ofthe year” of the appointment or “appointment date” of such directors, supervisors and senior management; (2) all theaforesaid shares are A-shares.NameMajor working experienceLiang Haishan

(retired)

Male, born in 1966, is a senior engineer. He served as head of thequality department of Qingdao Haier Refrigerator Co., Ltd., generalmanager of Qingdao Haier Air Conditioner Gen Corp., Ltd, vice presidentof Haier Group, senior vice president of Haier Group, rotating president ofHaier Group, vice chairman, Chairman and president of Haier SmartHome Co., Ltd. He is currently the vice chairman of the board ofdirectors of Haier Group and president of Haier Group; he was awardedthe National May 1st Labor Medal, Outstanding Leadership Award of theNational Light Industry Enterprise Information (全國輕工業企業信息化優秀領導獎), Top 10 Leaders in China Strategic Emerging Industries; Prizeof Technology Advancement for China Household Appliances, First PrizeAward of Science and Technology Progress of China National LightIndustry Council, China Patent Gold Prize, Labor Model of ShandongProvince, Taishan Industry Leading Talent of Shandong Province.

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Section IV Corporate Governance

NameMajor working experienceLi HuagangMale, born in 1969. He graduated from Huazhong University of Science

and Technology in 1991 with a Bachelor’s degree of Economics, andfrom China Europe International Business School in 2014 with a degreeof Executive Master of Business Administration (EMBA). He is currentlychairman and president of Haier Smart Home Co., Ltd. Mr. LI Huagangjoined Haier in 1991 and served as the sales head of the Marketing andPromotion Division of Haier (海爾商流本部銷售事業部長) and the generalmanager of China operations of Haier Smart Home. From August 2017 toMarch 2019, he served as the chief executive officer of Haier Electronics.Since March 2019, Mr. LI has been appointed as an executive director ofHaier Electronics. He has been an executive director and president of theCompany since 2019. Mr. LI Huagang has extensive experience in thefields of corporate management, marketing, brand operation, and globalbusiness operation. Mr. LI Huagang was successively awarded 2015China Home Appliance Marketing Leader, Award of OutstandingContribution in 40-Years Development of China’s Home ApplianceIndustry 2018, 2019 Person of the Year of China’s Top Ten Brands and2021 Taishan Industry Leading Talent.Shao XinzhiFemale, born in 1970. She graduated from the University of International

Business and Economics with a degree of Executive Master of BusinessAdministration. She is currently the vice president and Chief FinancialOfficer of Haier Group, as well as the vice chairman of Haier SmartHome. Ms. SHAO adheres to the goal of innovation and value-enhancement, empowering the high-quality development of the industry,and comprehensively builds the group’s financial ecosystem throughfinancial strategy formulation, financial system construction and operation,asset management, capital operation and other financial full value chainmanagement. In 2000, Ms. SHAO served as the chief accountant of HaierAir Conditioning Division and the general manager of the strategy centerof Haier Group’s financial management department. In 2007, Ms. SHAOestablished the first financial sharing center in the home applianceindustry, pioneering the “cloud + end” financial management innovationmodel with Chinese characteristics to provide enterprises withcomprehensive financial best solutions, becoming one of the industrybenchmarks and winning the first prize of the National EnterpriseManagement Modernization Innovation Achievement. In 2019, Ms. SHAOwas appointed as the vice president of Haier Group and the operator ofthe Big Sharing Empowerment Platform. In 2020, Ms. SHAO wasappointed as vice president and Chief Financial Officer of Haier Group.Ms. SHAO has been honored as “National Advanced AccountingWorker”, “Qingdao Top Talent”, “ACCA Outstanding Achievement Award”and “IMA Outstanding Contribution Leader in Management Accounting”over the years.

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Section IV Corporate Governance

NameMajor working experienceGong WeiMale, born in 1973. He graduated from the University of International

Business and Economics in December 2011, and obtained a degree ofExecutive Master of Business Administration. He also holds membershipin the CIMA Chartered Institute of Management Accountants. Mr. GongWei served as the financial manager of Haier Smart Home Co., Ltd, thesenior finance manager and senior financial analyst of Haier Group, theChief Financial Officer of Haier Washing Machine Division, the ChiefFinancial Officer of Haier Air Conditioning Division, the Chief FinancialOfficer of Haier White Goods Group, with extensive experience infinancial management. Mr. Gong Wei was granted honorary titles such asYoung Post Expert in Qingdao City (青島市青年崗位能手), OutstandingAccounting Workers in Shandong Province (山東省優秀會計工作者) andNational Outstanding Accounting Workers (全國優秀會計工作者), andreceived several awards, including 2011 Top Ten CFO in China by “NewMoney” Magazine (《新理財雜志》), 2020 International Finance Leaders ofthe Year in China. He is currently a director, the Chief Financial Officerand vice president of Haier Smart Home Co., Ltd.Yu Hon ToMale, born in 1948. He holds a Bachelor of Social Science degree from

Chinese University of Hong Kong. He is a Fellow of the Institute ofChartered Accountants in England and Wales and an Associate Memberof Hong Kong Institute of Certified Public Accountants. Mr. Yu is achartered accountant with over 40 years’ experience in the fields ofauditing, corporate finance (including advisory on IPO, mergers &acquisitions and financial restructuring), financial investigation andcorporate governance. Mr. Yu was formerly a partner of Coopers &Lybrand (now merged as PricewaterhouseCoopers) in Hong Kong withextensive experience in the corporate finance advisory assignments inGreater China for Hong Kong corporations, private equity groups andmultinationals. Mr. Yu also served as an independent non-executivedirector and the chairman of the audit committee of Haier Electronics,over the past three years. Mr. Yu had served various public officesincluding being a member of the Listing Committee of the Hong KongStock Exchange from 1992 to 1995, a member of the InvestmentCommittee and the Audit Committee of Employees Retraining Board(established under the Employees Retraining Ordinance of Hong Kong)from 1999 to 2020, and a member of the Board of Review (establishedunder Inland Revenue Ordinance of Hong Kong) from 2006 to 2012. Heis currently a director of 11th session of the Board of Directors of HaierSmart Home Co., Ltd.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceLi Kam FunFemale, born in 1952. She graduated from University of Hong Kong with

Bachelor of Arts and Master of Business Administration degrees. She wasconferred with the degree of Doctor of Business Administration, honoriscausa, from the Open University of Hong Kong in 2014. Ms. Li Kam Funcurrently serves as an independent non-executive director of Nestle S.A,a publicly listed company on the SIX Swiss Exchange. Ms. Li Kam Funserved as an independent non-executive director of Haier Electronics,over the past three years. Prior to joining Our Hong Kong Foundation,Ms. Li Kam Fun had a distinguished career that spanned 34 years withAmway Corporation. When she retired in 2011, she held the concurrentpositions of Executive Vice President of Amway Corporation andExecutive Chairman of Amway China Co. Ltd. responsible for AmwayGreater China & Southeast Asia Region. During the last three years, Ms.Li Kam Fun had also been an independent non-executive director ofAmcor Limited (a company listed on the Australian Securities Exchange)from 2014 to 2019, an independent non-executive director of TrinityLimited (a company listed on the Main Board of the Hong Kong StockExchange) from 2011 to 2020, and the president of Our Hong KongFoundation from 2015–2022. Ms. Li Kam Fun’s leadership was wellrecognised in the business community. She was twice named the“World’s 100 Most Powerful Women” by Forbes Magazine in 2008 and2009. CNBC awarded Ms. Li Kam Fun with the “China TalentManagement Award” in its 2007 China Business Leaders Awards. Ms. LiKam Fun currently holds several positions in public service includingmember of the Election Committee of Hong Kong (2021–2025), deputysecretary of Hong Kong Coalition, director of the Chinese Association ofHong Kong & Macao Studies, honorary special representative, conferenceconsultant and honorary president of All-China Women’s Federation、honorary president of the Hong Kong Federation of Women, permanenthonorary director of The Chinese General Chamber of Commerce、courtmember of the Open University of Hong Kong and member of theadvisory panel of the Xiqu Centre of the West Kowloon Cultural DistrictAuthority. She is currently a director of the 10th Board of Directors ofHaier Smart Home Co., Ltd.Chien Da-chunMale, born in 1953. He served as Chief Executive Officer of IBM ASEAN/

South Asia, Chairman and Chief Executive of IBM Greater China region.He graduated from the Department of Mathematics of TamkangUniversity of Taiwan, and studied advanced management courses in theInstitute of Business Administration of Harvard University, as well as theglobal senior manager courses of International Business MachinesCorporation (IBM). He is currently an independent director of the 11thBoard of Directors of Haier Smart Home Co., Ltd, a director of ENNGroup and professor of Management Practice at the School of Businessof Renmin University of China/Academic Director of EE Centre.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceWong Hak KunMale, born in 1956. He received a Bachelor’s of Social Science degree

from University of Hong Kong. He has over 36 years of experience inauditing, assurance and management in Deloitte China. He has been apartner of Deloitte China since 1992 and served as a member of theboard of directors of Deloitte China from 2000 to 2008. Prior to hisretirement in May 2017, he was Deloitte China’s National ManagingPartner of Audit & Assurance. Mr. Wong is an associate of the HongKong Institute of Certified Public Accountants (HKICPA), an associate ofthe Association of Chartered Certified Accountants (ACCA), an associateof the Chartered Institute of Management Accountants (CIMA), anassociate of The Chartered Governance Institute (previously known as“The Institute of Chartered Secretaries and Administrators”). He currentlyserves as an independent non-executive director of Yue Yuen IndustrialHoldings (Limited), Lung Kee (Bermuda) Holdings Limited, GuangzhouAutomobile Group Co., Ltd., Hangzhou SF Intra-City Industrial Co., Ltd.and Haier Smart Home Co., Ltd.Li ShipengMale, born in 1967. He holds a bachelor’s and Master’s degree from

University of Science and Technology of China, and a PhD degree fromLehigh University, USA. Mr. Li has extensive experience in Internet ofThings technology and artificial intelligence. Mr. Li is currently the directorof Applied Intelligence Research Center of Suzhou Industrial TechnologyResearch Institute. Prior to that, he served as the Chief Researcher andDeputy Dean of Microsoft Research Asia, Chief Technology Officer ofCogobuy Group, Vice President of iFlytek Group, Executive President andChief Scientist of Shenzhen Institute of Artificial Intelligence and Robotics.Mr. Li is a member of the International Eurasian Academy of Sciencesand a fellow of the International Institute of Electrical and ElectronicsEngineers (IEEE fellow). He was listed as one of the world’s top 1,000computer scientists by Guide2Research and ranked top 20 in MainlandChina in 2020. Mr. Li is a renowned expert in Internet, computer vision,cloud computing, Internet of Things and artificial intelligence. He iscurrently an independent director of the 11th Board of Directors of HaierSmart Home Co., Ltd.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceWu QiMale, born in 1967. He has 25 years of (New PCEBG) experience in

world-class management and consulting companies. He is currently anindependent director of the 11th session of the Board of Haier SmartHome Co., Ltd. He served as the vice president (Global) and vicechairman (Greater China) of Accenture, and the chairman of Shun ZheTechnology Development Co., Ltd. He was a member and the president(Greater China) of Roland Berger’s Global Management Committee, amember of Roland Berger’s Global Supervisory Board, a seniorconsultant for Foxconn’s D sub-business group strategy and intelligentmanufacturing and a consultant of Xnode, a famous accelerator forstartups. He was awarded 2015 Outstanding Talent in Jing’an District,Shanghai. Mr. Wu’s experience in consulting industry involvestransportation/logistics, high-tech manufacturing, tourism, finance,consumer goods, real estate, government departments and otherindustries. His has extensive experience in development strategy,organizational change, sales and brand strategy, corporate innovation,digital transformation and intelligent manufacturing, post-mergerintegration, regional industrial and economic development and upgrading.He is a well-known expert in China in Industry 4.0, transportation andregional planning and development. He served as a consultant forHangzhou Bay Development Planning, a member of the IntelligentManufacturing Expert Committee of Municipal Government, deputy headof the 13th Five-Year Planning Expert Committee of Zhengzhou City,Henan Province, vice chairman of China Cold Chain Alliance.Wu Changqi (retired)Male, born in 1955. He is currently a professor of strategic management

and doctoral supervisor of Guanghua School of Management, PekingUniversity. He graduated from Shandong University with a Bachelor’sdegree of Economics in 1982, and Katholieke Universiteit Leuven inBelgium with a Master’s degree of Business Administration and aDoctoral degree in applied economics in 1990. He served as an assistantprofessor and associate professor in the Department of Economics ofSchool of Business and Management of Hong Kong University of Scienceand Technology, a professor and head of the Department of StrategicManagement of Guanghua School of Management of Peking University, adeputy dean of the Guanghua School of Management of PekingUniversity, a director of the EMBA degree programme center and adirector of Haier Smart Home. He is currently the executive vicepresident of the Academy of Development Strategy for National High-techIndustry Zones, Peking University and the dean of the School ofManagement of Shandong University.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceLin Sui (retired)Male, born in 1956. He was a partner of Deloitte Touche Tohmatsu

China (retired on 31 May 2019). He has been engaged in internationaltax consultancy in USA and China for nearly 30 years. He participated intransactions, mergers and acquisitions, initial public offerings, financingprojects, supply chain taxation optimization, internal tax risk control andother aspects of professional tax consultancy of many PRC internationalenterprises, and has abundant experience in restructuring, acquisition,equity arrangement, tax accounting and business transformation. In recentyears, he has been mainly engaged in the consulting of digitaltransformation of corporate financial and tax management. In 1989, hepursued his studies in USA and obtained a Master’s degree in BusinessAdministration and a Master’s degree of Science in Taxation. He joinedDeloitte Touche Tohmatsu USA in 1993 and was transferred to DeloitteTouche Tohmatsu China in 2002. Mr. Lin Sui is a Certified PublicAccountant in USA. Prior to his return to China, he was employed byMinistry of Science and Technology of China as a member of theoverseas scholars’ advisory committee of the National High-techDevelopment Torch Program and an expert on the United Nationsdevelopment projects in China. He served as a director of Haier SmartHome. At present, he has been invited as an external lecturer of ChinaEurope International Business School and Shanghai National Institute ofAccounting, a part-time master degree tutor of Fudan University andShanghai University of Finance and Economics, Deputy Director of theAdvisory Committee of China Tax Institute of Large Business (TILB) and acouncil member of the Shanghai branch of China Association for Fiscaland Tax Law.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceLiu DalinMale, born in 1980, Chinese nationality with no right of permanent

residency abroad. He graduated from the School of MechanicalEngineering of Jinan University and holds a Master’s degree in BusinessAdministration from Renmin University of China. He is a senior engineer.From August 2005 to September 2010, he served as a designer of waterheater department of Heater Head Office at Haier Group, an assistantR&D engineer, a R&D engineer and a R&D model manager of the heaterR&D center of the Heater Head Office of Haier Group successively. FromSeptember 2010 to October 2015, he was the deputy secretary of theYouth League Committee of Haier Group. From October 2015 to July2020, he was the deputy secretary of the Disciplinary Committee of HaierGroup. From July 2020 to March 2021, he was the executive deputysecretary of the Disciplinary Committee of Haier Group and the presidentof the Supervisory Committee of Gooday Supply Chain Technologies Co.,Ltd. From March 2021 to June 2022, he served as the president of theSupervisory Committee, the secretary of Society and Communitydepartment and executive deputy secretary of the Disciplinary Committeeof Haier Group. From June 2022 to date, he serves as a member of theParty Committee, chairman of the Supervisory Committee and head of theorganization department of Haier Group. Mr. Liu has been the presidentof the Supervisory Committee of Haier Smart Home Co., Ltd. since June2021.Ma YingjieFemale, born in 1969. She once served as the secretary of the Youth

League Committee of Haier Smart Home Co., Ltd., the secretary of thelabour union of Haier Smart Home Co., Ltd., the contact person of thecustomer service department of Qingdao Haier Dishwasher Co., Ltd.Currently, she is the head of Society and Community department and thesupervisor of the 11th session of the Supervisory Committee of HaierSmart Home Co., Ltd.Yu MiaoMale, born in 1982, Chinese nationality. Mr. Yu holds a master’s degree.

He serves as the legal manager of Haier Smart Home Co., Ltd. sinceApril 2012, and serves as the employee supervisor of Haier Smart HomeCo., Ltd. since January 2019.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceXie JuzhiMale. He graduated from Shandong University of Finance and Economics

in July 1989 with a Bachelor’s degree, and joined Haier in the same year.Mr. Xie has experience in whole-process product management, product-wide services and product-wide marketing. Mr. Xie has held seniorpositions in Electrothermal Division of Haier Group and East ChinaMarketing and Promotion Division of the Haier Group. Since August2002, he has been the general manager of Haier Customer ServiceCompany (海爾顧客服務公司). Since July 2012, he has been the VicePresident of Haier Group in charge of the Group’s integration ofcommunity sales services in first and second-tier cities, and developingthe online and offline sales of new household products. Since December2015, he has been managing the newly developed business segments ofHaier Group, including water purification, logistics, Haier home andGooday services. He is also in charge of the water heater business since2019 and has been appointed as Chief Executive Officer and executivedirector of Haier Electronics since 27 March 2019. Since April 2021, he isresponsible for supervising the smart living appliances segment. Mr. Xiewas awarded honorary titles including the Gold Award of OutstandingContribution Award of China’s Home Appliance Services Industry (中國家電服務行業突出貢獻獎金獎) and Outstanding Entrepreneur of ShandongProvince (山東省優秀企業家). He is currently responsible for supervisingthe intelligent industrial platform and is the vice president of Haier SmartHome.Li PanMale, born in 1976, is a senior engineer. He graduated from Wuhan

University in 1997 and obtained the double degree in economics andinternational business administration. He obtained a Master’s degree fromChina Europe International Business School in 2017. He joined Haier in1997 and currently serves as the general manager of the overseasplatform of Haier Smart Home. Mr. Li has held various positions in HaierGroup, including the assistant director of Asia-Pacific Division, themanager of the Haier ASEAN Center, the manager of the OverseasBrands Marketing Center, the manager of the Overseas Strategic Centerand the director on the operation of overseas markets. He has heldimportant positions of the overseas platform of Haier Group since 2004with extensive frontline management experience in product planning,brand marketing, market exploration and corporate operation. He iscurrently the vice president of Haier Smart Home Co., Ltd.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceZhao YanfengMale, born in 1977. He graduated from Tianjin Institute of Light Industry

and obtained a Bachelor’s degree in Mechanical and ElectronicEngineering in 2001. He graduated from Renmin University of China andobtained an Executive Master degree in Business Administration in 2019.He is currently the vice president and general manager of therefrigeration business of Haier Smart Home Co., Ltd. Mr. Zhao joinedHaier in 2001 and served as the general manager of Haier Group’sregional branch, general manager of the domestic market of refrigerationbusiness and general manager of the refrigeration business in China. Hepossesses whole-process management experience in product planning,research and development, manufacturing and marketing.Li YangMale, born in 1976, is a senior engineer. He currently serves as the

general manager of washing machine and the internet of clothingplatform and vice president of Haier Smart Home Co., Ltd. Mr. Li Yanggraduated from Qingdao University of Science & Technology in 1998 andobtained a Bachelor’s degree in Fine Chemical Engineering. He joinedHaier in August. Mr. Li was the head of quality department of HaierSmart Home and the manufacturing director and he has held importantpositions of the internet of clothing platform since 2008 with extensiveexperience in the quality and systemic management of washingmachines, production and manufacturing. He obtained a degree ofExecutive Master of Business Administration (EMBA) from Xi’an JiaotongUniversity in 2022. The ecological platform of the internet of clothingincubated under his leadership was awarded the first prize for “InnovationResults in Modern Management of National Light Industry Enterprises”(全國輕工業企業管理現代化創新成果) in 2019. He received the “MostPromising Entrepreneur in Qingdao in 2018” and the “Advanced Individualin Management Innovation of National Light Industry Enterprises”. He iscurrently the vice president of Haier Smart House Co., Ltd.Song YujunMale, born in 1975. He graduated from Shandong University of

Technology with a bachelor’s degree in equipment engineering andmanagement in 1998, and received a degree of Executive Master ofBusiness Administration from Tsinghua University in 2015. He joined Haierin 1998 and served as general manager of the Operation Department ofHaier Overseas Promotion Headquarters, director and general manager ofHaier Pakistan Company, executive director of Haier India Company,director of Haier Overseas businesses in South Asia and Southeast Asiaregion, and vice president of Haier Home Appliance Industry Group.Since 1998, he has held various important positions in Haier overseascompanies and has rich experience in product, manufacturing, R&D andmarketing. He was awarded the Labor Model of Qingdao City, theOutstanding Talent in Professional Technology in Qingdao City, QingdaoHigh-level Service Talent and other honorary titles. He is currently thegeneral manager of Haier Air Industry Group and vice president of HaierSmart Home Co., Ltd.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceGuan JiangyongMale, born in 1978. He graduated from Northeast Electric Power

University in 2001 and obtained a Bachelor’s degree in ManagementInformation System. Mr. Guan joined Haier in 2001 and currently servesas the general manager of water heater and the internet of waterplatform. Mr. Guan has been responsible for product management,production and manufacturing, product marketing and industrial pipelinemanagement and served as a regional general manager, the marketdirector of the water heater business and the general manager of theinternet of water platform and the water heater business. He possesseswhole-process management experience in product manufacturing,marketing, corporate planning management and industrial platforms. He iscurrently the vice president of Haier Smart Home Co., Ltd.Wu YongMale, born in 1978. He graduated from Tianjin College of Commerce in

2001 and obtained a Bachelor’s degree in Heat Supply, Ventilation andAir-conditioning Engineering. He obtained the double degree of EMBAfrom the School of Economics and Management of Tsinghua Universityand the INSEAD in 2015. Mr. WU Yong joined Haier Group in 2001 andcurrently serves as the general manager of the kitchen appliances andthe internet of food platform of Haier Smart Home. Mr. WU has servedas the general manager of the PRC Region on manufacturing andproduction of refrigerators, overseas marketing and the air-conditioningbusiness since joining the Group and possesses whole-processmanagement experience in high-end manufacturing, marketing andindustrial platforms.Huang XiaowuMale, born in 1977. He graduated from the College of Photoelectric

Engineering, Chongqing University with a Bachelor’s degree inengineering in 1998 and graduated from the Faculty of Business andEconomics of the University of Hong Kong with a master’s degree inbusiness administration in 2004. Mr. Huang has many years of extensiveworking experience in commercial banking, strategic investment, industrialfund, corporate finance and capital market operation and management,and has participated in and led important strategic investment andfinancing projects involving numerous fields such as marketing channels,logistics, home appliances and technology industry. Mr. Huang wasappointed as the vice president of the Company in 2021, responsible for,amongst others, investor relations, capital market, equity financing andstrategic investment, and served as the Director of the ESG ExecutiveOffice of Haier. Prior to that, Mr. Huang worked as the deputy generalmanager of Haier Electronics Group Co., Ltd., a company listed on theStock Exchange, which is controlled by the Company. Before joiningHaier Group, Mr. Huang worked at the Ningbo branch and Shanghaibranch of the Industrial and Commercial Bank of China, InvestmentBanking Division of Guosen Securities and Anglo Chinese InvestmentBanking Group (英高投資銀行集團).

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IV Corporate Governance

NameMajor working experienceLiu XiaomeiFemale, born in 1985. She graduated from the Law School of Minzu

University of China with a double bachelor’s degree in law and literaturein 2009, and graduated from the Department of International Law of theChina Foreign Affairs University with a master’s degree in internationallaw in 2011, and is qualified to practice law in China. Ms. Liu joined theCompany in June 2015 and has been in charge of legal and compliancematters of corporate governance, capital market, M&A and corporatefinance at Haier Electronics Group Co., Ltd. and Haier Smart Home. Priorto joining the Company, Ms. Liu worked for Jingtian & Gongcheng inBeijing. Ms. Liu has accumulated extensive work experience in corporategovernance, capital market, industrial fund, and investment and financing.Ming Guozhen(retired)

Female, born in 1964. She graduated from Southwestern University ofFinance and Economics with a Master’s degree in Economics in 1986.She is a senior economist, and she was the lecturer of investmentdepartment of China Institute of Finance, deputy head of the Teachingand Research section of Investment Economy Department, a member oftreasury department of Everbright International Investment ConsultancyCompany, deputy director and director of general manager office, generalmanager of business management department and general manager ofpersonnel department, assistant to the general manager, executive vicepresident of Everbright International Investment Consultancy Company;she was the office director of analysts professional committee of theSecurities Association of China, vice director of Qualification ManagementDepartment of the Securities Association of China, vice director ofPractice Standards Committee (執業標準委員會) of the SecuritiesAssociation of China. She joined Haier in August 2007 and served as thebusiness director and merger & acquisition director of Haier AssetOperation Division from August 2007 to May 2008. She has been a vicegeneral manager since May 2008 and the board secretary since April2009 of Haier Smart Home. She has played a leading role andparticipated in the introduction of strategic investors, M&A of GEA/FPAand internal integration, issue of convertible bonds/exchangeable bonds,issue of D-Share/H-Share. She was awarded as a member of “BoardSecretary Hall of Fame (金牌董秘名人堂)” at the 12th session of NewFinance Election in June 2016.She served as the secretary to the Boardof Haier Smart Home.

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Section IV Corporate Governance

NameMajor working experienceWang Li (retired)Female, born in 1965. She graduated from Qingdao University of Science

& Technology in 1986 and obtained a Bachelor’s degree in Heat Supply,Ventilation and Air-conditioning Engineering. She obtained a Master’sdegree in Business Administration from Renmin University of China inJune 2013. Ms. Wang Li joined Qingdao Air-conditioner Company in1988. She has held various positions since 1988, including generalmanager of Haier’s central air-conditioner business, general manager ofHaier’s residential facilities business and general manager of Haier’s airbusiness. Ms. Wang Li has management experience in products andmarketing. Ms. Wang Li has served various industrial positions, includinga member of China Refrigeration and Air-Conditioning IndustryAssociation. Ms. Wang Li receives grants from the State Council and wasawarded the Outstanding Entrepreneur in Light Industry in ShandongProvince, the Labor Model of Qingdao City, the Outstanding Talent inProfessional Technology in Qingdao City and other honorary titles. Sheserved as the vice president of Haier Smart Home Co., Ltd.Other information

□ Applicable √ Not Applicable

(II) Appointment of current and departing of Directors, Supervisors and SeniorManagement during the reporting period

1. Appointment in shareholder units

√ Applicable □ Not Applicable

NameName of shareholder unitPosition

Start date ofappointment

End date ofappointmentLiang HaishanHaier GroupVice chairman of the Board, vice

presidentLiang HaishanHaier COSMO Co., Ltd.Director, general managerShao XinzhiHaier GroupVice president and Chief Financial

Officer of Haier Group

2020Shao XinzhiQingdao Haier Venture &

Investment InformationCo., Ltd.

SupervisorLiu DalinHaier Group CorporationMember of the Party Committee,

president of the SupervisoryCommittee, head of theorganization department

June 2022Explanation of

appointment inshareholder units

Nil

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Section IV Corporate Governance

2. Appointment in other units

√ Applicable □ Not applicable

NameName of other unitPosition

Start date ofappointment

End date ofappointmentLiang HaishanHaier Group Finance Co., Ltd.DirectorLi HuagangQingdao Haier multimedia Co

Ltd.

ChairmanGong WeiHaier Group Finance Co., Ltd.DirectorGong WeiQingdao Haier multimedia Co.,

Ltd.

DirectorShao XinzhiHaier Group Finance Co., Ltd.ChairmanShao XinzhiQingdao Junyi Holding Group

Co., Ltd.

SupervisorShao XinzhiWanlian Holding Co., Ltd.SupervisorYu Hon ToKeck Seng Investments (Hong

Kong) Limited

Independent non-executive directorApril 2013Yu Hon ToMS Group Holdings LimitedIndependent non-executive directorMay 2018Yu Hon ToChina Resources Gas Group

Limited

Independent non-executive directorDecember 2012Yu Hon ToOne Media Group LimitedIndependent non-executive directorJune 2005Yu Hon ToChina Renewable Energy

Investment Limited

Independent non-executive directorApril 2008January 2022Yu Hon ToPlaymates Toys LimitedIndependent non-executive directorMay 2021Li Kam FunNestle S.AIndependent non-executive directorWong Hak KunYue Yuen Industrial (Holdings)

Limited

Independent directorJune 2018Wong Hak KunLung Kee (Bermuda) Holdings

Limited

Independent directorJune 2018Wong Hak KunGuangzhou Automobile Group

Co., Ltd.

Independent directorMay 2020Wong Hak KunHangzhou SF Intra-City

Industrial Co., Ltd.

Independent directorDecember 2021Li ShipengApplied Artificial Intelligence

Research Center Of theSuzhou IndustrialTechnology ResearchInstitute

Director

Li ShipengThe Chinese University of

Hong Kong (Shenzhen)

Visiting ProfessorWu ChangqiWanhua Chemical Group Co

Ltd

Independent directorApril 2022Wu ChangqiPeking UniversityProfessorWu ChangqiShandong UniversityDean of School of ManagementOctober 2019Wu ChangqiTianneng Battery Group Co.,

Ltd.

Independent directorFebruary 2019Wu ChangqiShenwan Hongyuan Group

Co., Ltd.

Independent directorMay 2021Lin SuiFocus Hotmelt Company Ltd.Independent directorAugust 2020July 2023Liu DalinGooday Supply Chain

Technologies Co., Ltd.

Chairman of the Supervisory

Committee

March 2021Xie JuzhiGooday Supply Chain

Technologies Co., Ltd.

Director

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NameName of other unitPosition

Start date ofappointment

End date ofappointmentXie JuzhiQingdao Eoroom Technology

Co., Ltd.

DirectorExplanation of

appointment in otherunits

Nil

(III) Compensation of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

Decision-making process of

compensation of Directors,Supervisors and SeniorManagement

The Remuneration and Assessment Committee of theCompany shall formulate the remuneration standards,adjust principles, and assess and implement the principlesof the remuneration of directors, supervisors and seniormanagement personnel and submit to the Board ofDirectors for consideration and approval.Determining basis of matrixcompensation of Directors,Supervisors and SeniorManagement

The cash remuneration of executives in 2022 consists ofmonthly remuneration, bonuses and sharing, and is linkedto orders triggered by the upgrade of the Company’sInternet of Things from”high-end brands“to”scenariobrands“to”ecological brands”. Focusing on the rapidimprovement of profitability and through digitaltransformation, the Company maintained itscompetitiveness as a leader in the whole process, andachieved the commitment targets and sharing of highadded-value. Through the innovation of the mechanism, theCompany encouraged its executives to achieve highermarket goals, thus achieving a win-win situation for users,employees, enterprises and stakeholders. At the sametime, the Company continues to promote theimplementation of the employee stock ownership and otherlong-term incentive plans; multiple incentive tools will beeffectively utilised to mobilise competent management,frontline managers and business and technical backboneson a wider scale, further aligning the interests ofshareholders, the Company and incentive recipients, andbringing more efficient and sustainable returns toshareholders. After the approval by the general meeting,the allowance for directors is RMB320,000/year before tax.The travelling expenses of directors attending Boardmeetings and general meetings and the expenses requiredfor performing their duties and according to the Articles ofAssociation will be reimbursed.

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Section IV Corporate Governance

Actual compensation paid toDirectors, Supervisors and SeniorManagement

Paid as prescribed.Total of actual compensation paidto all Directors, Supervisors andSenior Management at the endof the reporting period

RMB19,543,800

(IV) Changes in of Directors, supervisors and senior management of the Company

√ Applicable □ Not Applicable

NamePositionMethod of ChangeReason for ChangeLi HuagangChairman, presidentElectionElection of the new session of the Board and

Senior ManagementLiang HaishanChairmanRetirementElection of the new session of the BoardShao XinzhiVice chairmanElectionElection of the new session of the BoardXie JuzhiVice chairmanRetirementElection of the new session of the BoardGong WeiDirector, Chief Financial

Officer, vice president

ElectionElection of the new session of the Board and

Senior ManagementWu ChangqiDirectorRetirementElection of the new session of the BoardLin SuiDirectorRetirementElection of the new session of the BoardXie JuzhiVice presidentAppointmentElection of the new session of the Senior

ManagementSong YujunVice presidentAppointmentElection of the new session of the Senior

ManagementZhao YanfengVice presidentAppointmentElection of the new session of the Senior

ManagementWang LiVice presidentRetirementElection of the new session of the Senior

ManagementLiu XiaomeiSecretary to the board of

directors

AppointmentElection of the new session of the Senior

ManagementMing GuozhenSecretary to the board of

directors

RetirementElection of the new session of the Senior

Management(V) Explanation of penalties imposed by securities regulators in the past three years

□ Applicable √ Not Applicable

(VI) Others

□ Applicable √ Not Applicable

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Section IV Corporate Governance

V. RELEVANT INFORMATION ON THE BOARD MEETINGS HELD DURINGTHE REPORTING PERIODMeetingDateResolutions approvedThe 26th meeting of the Tenth session of

the Board of Directors

6 January 2022Considered and approved the Resolution on the Placing of New H Shares Under the

General Mandate of Haier Smart Home Co., Ltd.The 27th meeting of the Tenth session ofthe Board of Directors

30 March 2022Considered and approved Report on the 2021 Annual Financial Statements of Haier Smart

Home Co., Ltd., 2021 Annual Report and Annual Report Summary of Haier Smart Home

Co., Ltd., 2021 Annual Work Report of the Board of Directors of Haier Smart Home Co.,

Ltd., 2021 Annual Internal Control Evaluation Report of Haier Smart Home Co., Ltd., 2021

Annual Internal Control Audit Report of Haier Smart Home Co., Ltd., 2021 Annual Profit

Distribution Plan of Haier Smart Home Co., Ltd., the Proposal on Re-appointment of PRC

GAAP Auditor of Haier Smart Home Co., Ltd., the Proposal on Re-appointment of IFRS

Auditor of Haier Smart Home Co., Ltd., the Risk Assessment Report on Haier Finance Co.,

Ltd. in 2021 of Haier Smart Home Co., Ltd., the Resolution on the Anticipated Provision of

Guarantees for its Subsidiaries in 2022 of Haier Smart Home Co., Ltd., the Resolution on

the Conduct of Foreign Exchange Fund Derivatives Business of Haier Smart Home Co., Ltd.,

the Resolution on the Special Report on the Deposit and Actual Use of Raised Funds in

2021 of Haier Smart Home Co., Ltd., the Resolution on Adjusting the Allowance of Directors

of Haier Smart Home Co., Ltd., the 2021 Environment, Social and Governance Report of

Haier Smart Home Co., Ltd., the Resolution on the Proposed Registration and Issue of Debt

Financing Instruments of Haier Smart Home Co., Ltd., the Resolution on Proposing the

General Meeting to Grant General Mandate to the Board of Directors on Additional Issuance

of A-shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General

Meeting to Grant General Mandate to the Board of Directors on Additional Issuance of

H-shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General Meeting

to Grant General Mandate to the Board of Directors on Additional Issuance of D-shares of

Haier Smart Home Co., Ltd., the Resolution in Relation to the Repurchase Plan of a Portion

of Public A Shares of Haier Smart Home Co., Ltd., the Resolution on Proposing the General

Meeting to Grant the General Mandate to the Board of Directors to Repurchase not more

than 10% of the Total Number of H-shares of the Company in Issue of Haier Smart Home

Co., Ltd., the Resolution on Proposing the General Meeting to Grant the General Mandate to

the Board of Directors to Repurchase not more than 10% of the Total Number of D-shares

of the Company in Issue of Haier Smart Home Co., Ltd., the Resolution on Amending the

Articles of Association of Haier Smart Home Co., Ltd., the Resolution on Amending the

Rules of Procedure for the General Meetings of Haier Smart Home Co., Ltd., the Resolution

on Amending the Rules of Procedure for the Board of Directors of Haier Smart Home Co.,

Ltd., the Resolution on Amending the Management System of Investment of Haier Smart

Home Co., Ltd., the Resolution on Amending the Management Practices for Fundraising of

Haier Smart Home Co., Ltd., the Resolution on Amending the Fair Decision-Making System

for Related-party Transactions of Haier Smart Home Co., Ltd., the Resolution on Amending

the System of Independent Directors of Haier Smart Home Co., Ltd., the Resolution on

Amending the Management System of External Guarantees of Haier Smart Home Co., Ltd.,

the Resolution on Amending the Management System of Foreign Exchange Derivative

Transaction Business of Haier Smart Home Co., Ltd., the Resolution on Amending the

Management System of Entrusted Wealth Management of Haier Smart Home Co., Ltd., the

Resolution on Amending Systems Including the Registration System of Insider and the

Management System of Investor Relations of Haier Smart Home Co., Ltd., the Resolution on

Convening the 2021 Annual General Meeting and the First A-shares/D-shares/H-shares

Class Meetings of 2022 of Haier Smart Home Co., Ltd.

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Section IV Corporate Governance

MeetingDateResolutions approvedThe 28th meeting of the Tenth session of

the Board of Directors

28 April 2022Considered and approved the 2022 First Quarterly Report of Haier Smart Home Co., Ltd.,

the Resolution of Haier Smart Home Co., Ltd. on the Acquisition of 100% Equity Interest inQingdao TAB Robot Technology Co., LTD. by a Subsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. on the Transfer of 25% Equity Interest in QingdaoHaier Mold Co., Ltd. by a Subsidiary and Connected Transaction, the Resolution of HaierSmart Home Co., Ltd. on the Renewal of the Product and Materials Purchase FrameworkAgreement between Haier Smart Home Co., Ltd. and Haier Group Corporation, theResolution of Haier Smart Home Co., Ltd. on the Renewal of the Service PurchaseFramework Agreement between Haier Smart Home Co., Ltd. and Haier Group Corporation,the Resolution of Haier Smart Home Co., Ltd. on the Renewal of the Product and MaterialsSales Framework Agreement between Haier Smart Home Co., Ltd. and Haier GroupCorporation, the Resolution of Haier Smart Home Co., Ltd. on the Renewal of the ServiceProvision Framework Agreement between Haier Smart Home Co., Ltd., the Resolution ofHaier Smart Home Co., Ltd. on Investing in Large Refrigerator Project with an AnnualCapacity of 2 Million Units, the 2022 A Share Core Employee Stock Ownership Plan of HaierSmart Home Co., Ltd (draft) and its Summary, the 2022 H Share Core Employee StockOwnership Plan of Haier Smart Home Co., Ltd (draft) and its Summary, the 2022 A ShareOption Incentive Scheme of Haier Smart Home Co., Ltd. (draft) and its Summary, theManagement Practices for the Assessment of the 2022 A Share Option Incentive Scheme ofHaier Smart Home Co., Ltd., the Resolution of Haier Smart Home Co., Ltd. on Proposal tothe General Meeting to Authorize the Board of Directors and its Authorized Persons to TakeFull Control of the Matters Relating to the Company’s 2022 A Share Option IncentiveScheme, the Resolution of Haier Smart Home Co., Ltd. on the Appointment of VicePresident, the Resolution of Haier Smart Home Co., Ltd. on the Appointment of VicePresident, the Resolution of Haier Smart Home Co., Ltd. on the Re-election of the Board ofDirectors and the Election of Independent Directors, the Resolution of Haier Smart HomeCo., Ltd. on the Re-election of the Board of Directors and the Election of Non-independentDirectorsThe 1st meeting of the Eleventh session ofthe Board of Directors

28 June 2022Considered and approved the Resolution of Haier Smart Home Co., Ltd. on the Election of

Chairman of the Company, the Resolution of Haier Smart Home Co., Ltd. on the Election ofVice-chairman of the Company, the Resolution of Haier Smart Home Co., Ltd. on theElection of Members of the Strategy Committee of the Board of Directors, the Resolution ofHaier Smart Home Co., Ltd. on the Election of Members of the Nomination Committee of theBoard of Directors, the Resolution of Haier Smart Home Co., Ltd. on the Election ofMembers of the Audit Committee of the Board of Directors, the Resolution of Haier SmartHome Co., Ltd. on the Election of Members of the Remuneration and Appraisal Committeeof the Board of Directors, the Resolution of Haier Smart Home Co., Ltd. on the Election ofMembers of the ESG Committee of the Board of Directors, the Resolution of Haier SmartHome Co., Ltd. on the Appointment of President of the Company, the Resolution of HaierSmart Home Co., Ltd. on the Appointment of Vice-president of the Company, theResolution of Haier Smart Home Co., Ltd. on the Appointment of Chief Financial Officer ofthe Company, the Resolution of Haier Smart Home Co., Ltd. on the Appointment ofSecretary to the Board of Directors of the Company, the Resolution of Haier Smart HomeCo., Ltd. on the Appointment of Representative of Securities Affairs of the Company, theResolution of Haier Smart Home Co., Ltd. on Adjusting the 2022 A Share Option IncentiveScheme, the Resolution of Haier Smart Home Co., Ltd. on the Grant of Share Options toIncentive Scheme Participants, the Resolution of Haier Smart Home Co., Ltd. on Adjustingthe Composition of the Administration Committee of the H Share Restricted Share UniteScheme (2021–2025)

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Section IV Corporate Governance

MeetingDateResolutions approvedThe 2nd meeting of the Eleventh session of

the Board of Directors

29 August 2022Considered and approved the 2022 Interim Report of Haier Smart Home Co., Ltd. and its

Summary, the Risk Assessment Report on Haier Finance Co., Ltd. in the First Half of 2022of Haier Smart Home Co., Ltd., the Special Report on the Deposit and Actual Use of RaisedFunds in the First Half of 2022 of Haier Smart Home Co., Ltd., the Resolution of HaierSmart Home Co., Ltd. on the Acquisition of 100% Equity Interest in Qingdao Haier SpecialPlastic Development Co., Ltd. by a Subsidiary.The 3rd meeting of the Eleventh session ofthe Board of Directors of Haier SmartHome Co., Ltd.

28 October 2022Considered and approved the 2022 Third Quarterly Report of Haier Smart Home Co., Ltd.VI. PERFORMANCE OF DUTIES BY DIRECTORS(I) Attendance of board meetings and general meetings by directorsName of director

Whether anIndependentdirector or notAttendance of Board meetings

Attendances at

generalmeetingsRequiredattendances of

Board meetings

Attendance inperson

Attendance bytelecommunication

Attendance byproxyAbsence

Absence fromtwo consecutivemeetings inperson or not

Number ofattendance of

generalmeetingsLiang HaishanNO33100NO4Li HuagangNO66100NO4XieJuzhiNO33100NO0Shao XinzhiNO33000NO0Gong WeiNO33000NO0Wu ChangqiNO33300NO4Lin SuiNO33300NO4Chien Da-chunYES66600NO4Wong Hak KunYES66600NO4Li ShipengYES66600NO4Wu QiYES66600NO0Yu Hon ToNO66600NO4Li Kam FunNO66600NO4

Explanation for absence from two consecutive Board meetings in person

□ Applicable √ Not applicable

Number of Board meetings held in the year6Of which: Number of on-site meetings0Number of meetings held by telecommunication1Number of meetings held both on site and by telecommunication5

(II) Directors’ objection to the relevant matters of the Company

□ Applicable √ Not applicable

(III) Others

□ Applicable √ Not applicable

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Section IV Corporate Governance

VII. THE SPECIAL COMMITTEES OF THE BOARD

√ Applicable □ Not Applicable

(1). Personnel of The Special Committees of the Board

Categories ofThe Special CommitteesName of PersonnelAudit CommitteeWong Hak Kun, Yu Hon To, Chien Da-chun, Wu Qi, Shao XinzhiNomination CommitteeWu Qi, Li Shipeng, Li HuagangRemuneration and AppraisalCommittee

Chien Da-chun, Li Shipeng, Li HuagangStrategy CommitteeLi Huagang, Li Shipeng, Wu Qi, Gong WeiESG (“Environment, Societyand Governance”)Committee

Li Kam Fun, Chien Da-chun, Gong Wei

(2). The Company convened 6 Audit Committee meetings during the reporting period

Date of MeetingContents of Meeting

Major Opinions andSuggestions

Other Notes onPerformance of Duty23 March 2022Considered and Approved the 2021 Annual

Financial Report of Haier Smart Home Co., Ltd.,the 2021 Annual Audit Report of InternalControl of Haier Smart Home Co., Ltd.

No ObjectionsNil28 March 2022Considered and approved the 2021 Annual

Financial Accounts Report of Haier Smart HomeCo., Ltd., the 2021 Annual Report on theSelf-Assessment on Internal Control of HaierSmart Home Co., Ltd., the 2021 Annual AuditReport of Internal Control of Haier Smart HomeCo., Ltd., the Resolution of Haier Smart HomeCo., Ltd. on the Re-assignment of ChinaAccounting Standards Auditor, the Resolution ofHaier Smart Home Co., Ltd on the Re-assignment International Accounting StandardsAuditor, the Resolution of Haier Smart HomeCo., Ltd. on the Expected Provision ofGuarantee for Subsidiaries in 2022, theResolution of Haier Smart Home Co., Ltd. onConducting Foreign Exchange Funds DerivativesBusiness, 2021 Annual Profit Distribution Plan ofHaier Smart Home Co., Ltd., the Resolution ofHaier Smart Home Co., Ltd. on the SpecialReport on the Deposit and Actual Use of FundsRaised in 2021, 2021 Annual Report onPerformance of Duties of the Audit Committeeof the Board of Haier Smart Home Co., Ltd.

No objectionsNil

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Section IV Corporate Governance

Date of MeetingContents of Meeting

Major Opinions andSuggestions

Other Notes onPerformance of Duty27 April 2022Considered and approved the 2022 First Quarterly

Financial Report of Haier Smart Home Co., Ltd.,the Resolution of Haier Smart Home Co., Ltd.on the Acquisition of 100% Equity in QingdaoTAB Robot Technology Co., Ltd. by itsSubsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. onthe Transfer of 25% Equity in Qingdao HaierMold Co., Ltd. by its Subsidiary and ConnectedTransaction, the Resolution of Haier SmartHome Co., Ltd. on Renewing the Product andMaterial Purchase Framework Agreementbetween Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of HaierSmart Home Co., Ltd. on Renewing theServices Purchase Framework Agreementbetween Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of HaierSmart Home Co., Ltd. on Renewing the Productand Material Sales Framework Agreementbetween Haier Smart Home Co., Ltd. and HaierGroup Corporation, the Resolution of HaierSmart Home Co., Ltd. on Renewing theServices Provision Framework Agreementbetween Haier Smart Home Co., Ltd. and HaierGroup Corporation.

No ObjectionsNil

25 August 2022Considered and approved the 2022 Interim

Financial Report of Haier Smart Home Co., Ltd.,the 2022 Interim Risk Assessment Report onHaier Group Finance Co., Ltd. by Haier SmartHome Co., Ltd., the Special Report on theDeposit and Actual Use of Funds Raised in theFirst Half of 2022 by Haier Smart Home Co.,Ltd., the Resolution of Haier Smart Home Co.,Ltd. on the Acquisition of 100% Equity inQingdao Haier Special Plastics Research andDevelopment Co., Ltd. by its Subsidiary andConnected Transaction.

No ObjectionsNil

27 October 2022Considered and approved the 2022 third quarterly

Financial Report of Haier Smart Home Co., Ltd.

No ObjectionsNil8 December

2022

Considered and approved the 2022 Annual Report

on Audit work Plan of Haier Smart Home Co.,Ltd.

No ObjectionsNil

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Section IV Corporate Governance

(3). The Company convened 2 Nomination Committee meetings during the reporting

periodDate of MeetingContents of Meeting

Major Opinions andSuggestions

Other Notes onPerformance of Duty30 March 2022Considered and approved the Report of Haier

Smart Home Co., Ltd. on the Performance ofDuty of Current Directors, Supervisors andSenior Management, the 2021 Annual Report onthe Performance of Duty of the NominationCommittee of the Board of Haier Smart HomeCo., Ltd.

No ObjectionsNil

27 April 2022Considered and approved the Resolution on the

Proposed Candidates of Independent Directorsfor the Eleventh Session of the Board of HaierSmart Home Co., Ltd., the Resolution on theProposed Candidates of Non-independentDirectors for the Eleventh Session of the Boardof Haier Smart Home Co., Ltd., the Resolutionon the Proposed Candidates of Vice Presidentof Haier Smart Home Co., Ltd.

No ObjectionsNil

(4). The Company convened 2 Remuneration and Appraisal Committee meetings

during the reporting periodDate of MeetingContents of Meeting

Major Opinions andSuggestions

Other Notes onPerformance of Duty30 March 2022Considered and approved the 2021 Annual Report

of Haier Smart Home Co., Ltd. on Incentives forSenior Management of the Company andImplementation of Remuneration Assessment forDirectors and Senior Management, the 2022Annual Report of Haier Smart Home Co., Ltd.on Remuneration and Assessment Scheme ofDirectors and Senior Management, theResolution of Haier Smart Home Co., Ltd. onthe Adjustment of Director Allowance, the 2021Annual Report of Haier Smart Home Co., Ltd.on Performance of Duties of the Remunerationand Appraisal Committee of the Board

No ObjectionsNil

27 April 2022Considered and approved the 2022 Stock

Ownership Plan of A Share Core Employee ofHaier Smart Home Co., Ltd. (Draft) andSummary, the 2022 Stock Ownership Plan of HShare Core Employee of Haier Smart HomeCo., Ltd.(Draft) and Summary, the 2022 AShare Option Incentive Scheme of Haier SmartHome Co., Ltd. (Draft) and Summary, the 2022Management Practices for the Assessment of AShare Option Incentive Scheme of Haier SmartHome Co., Ltd.

No ObjectionsNil

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Section IV Corporate Governance

(5). The Company convened 2 Strategy Committee meetings during the reporting

periodDate of MeetingContents of Meeting

Major Opinions andSuggestions

Other Notes onPerformance of Duty30 March 2022Considered and approved the 2021 Annual Report

on the Performance of Duties of the StrategyCommittee of the Board of Haier Smart HomeCo., Ltd.,

No ObjectionsNil28 April 2022Considered and approved the Resolution of Haier

Smart Home Co., Ltd. on the Acquisition of100% Equity in Qingdao TAB Robot TechnologyCo., Ltd. by its Subsidiary and ConnectedTransaction, the Resolution of Haier SmartHome Co., Ltd. on the Transfer of 25% Equityin Qingdao Haier Mold Co., Ltd. by itsSubsidiary and Connected Transaction, theResolution of Haier Smart Home Co., Ltd. onthe Investment of a New Refrigerator Projectwith an Annual Production Capacity of 2 MillionUnits.

No ObjectionsNil

(6). The Company convened 2 meetings of the ESG Committee during the reporting

period

Date of MeetingContents of Meeting

Major Opinions and

Suggestions

Other Notes onPerformance of Duty28 March 2022Considered and approved the 2021 Corporate

Environmental, Social and Governance Report ofHaier Smart Home Co., Ltd.

No ObjectionsNil25 August 2022Considered and approved the Report on the

Progress of ESG Works in the First Half of2022 and Related Plans in the Second Half ofthe year.

No ObjectionsNil

(7). Details of Disagreements

□ Applicable √ Not applicable

VIII. SUPERVISORY COMMITTEE’ EXPLANATION ON RISKS ABOUT THE

COMPANY

□ Applicable √ Not applicable

Supervisory Committee had no objections to the supervising items during the reporting period.

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Section IV Corporate Governance

IX. INFORMATION ON STAFF OF THE PARENT COMPANY AND PRINCIPALSUBSIDIARIES AT THE END OF THE REPORTING PERIOD(I) Staff Information

Number of staff of the parent company55Number of staff of Principal subsidiaries109,531Total number of staff109,586Number of employees whose retirement expenses are borne by the parentcompany and the principal subsidiaries

Breakdown by FunctionFunctionNumberProduction61,967Sales18,844Technical24,647Financial1,741Administrative2,387Total109,586

Breakdown by Education BackgroundEducationNumber (person)Bachelor and above36,332College Diploma28,534Secondary vocational training diploma and below44,720Total109,586

(II) Remuneration policies

√ Applicable □ Not applicable

Under the guidance of the”RenDanHeYi“management model, the Company adheres to theremuneration philosophy of uniting user pay, value creation and value sharing, and providesemployees with a short, medium and long-term remuneration incentive system that combineslabour income, super-profit sharing and capital gain, as well as all-rounded welfare policies andemployee caring schemes. The Company encourages its employees to work with anentrepreneurial mindset, aligning employee value with company value and shareholder value,continuously improving user experience and achieving a win-win development for both theCompany and its employees.The Company has established a rich and multi-dimensional incentive mechanism and continuesto implement the”A+H“global incentive system covering both domestic and overseas employeesto attract, motivate and stabilise the Company’s core talent.

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Section IV Corporate Governance

(III) Personnel Training

√ Applicable □ Not applicable

The Company puts high priority on talent cultivation and has set up a hierarchical system fortalent training accordingly. By providing employees with rich learning resources throughdiversified methods such as course training, special training and temporary exchange, theCompany promotes talent growth in multiple dimensions for employees with different needs, thusassisting them in improving their professionalism, expertise and leadership skills. In 2022, theCompany organized a number of trainings with courses covering corporate culture, officemanagement, professional skills and other contents, and adopted live broadcast, communityforums and other learning methods.For details, please refer to relevant information in 2022 Environmental, Social and GovernanceReport of Haier Smart Home Co., Ltd. published on the same date of this announcement.

(IV) Labor Outsourcing

□ Applicable √ Not applicable

X. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OF

CAPITAL RESERVE(I) Formulation, implementation or adjustment of the cash dividend policies

√ Applicable □ Not applicable

The Company’s 2021 profit distribution plan was passed on its 2021 Annual General Meetingheld on 28 June 2022: based on the Company’s total existing shares (deducting the repurchasedshares) of 9,364,586,585 (including 6,224,810,911 A shares, 271,013,973 D shares and2,868,761,701 H shares), it was proposed that the Company would distribute cash dividends ofRMB4.61357 (tax inclusive) per 10 shares to all shareholders, with a total amount before tax ofRMB4,320,413,011.54(tax inclusive). The plan was implemented and completed in August 2022.Details were set out in the Announcement on Implementation of Rights and Interests Distributionof A-shares for 2021 of Haier Smart Home Co., Ltd. (No: L2022–062) published by the Companyon the four major securities newspapers and the website of Shanghai Stock Exchange on 17August 2022 and relevant announcements in respect of dividend distribution of D shares and Hshares published on the Company’s website, Hong Kong Stock Exchange and other publicationplatforms.

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Section IV Corporate Governance

The Company has always applied a stable and sustainable profit distribution policy. During thereporting period, the Company strictly followed the requirements set out in the Articles ofAssociation and in the Shareholder Return Plan for the Next Three Years of the Company. Duringthe formulation of the profit distribution plan, the Company took full account of return forinvestors, the long-term interests of the Company, overall interests of all shareholders andsustainable development of the Company, and continued to implement the stable dividenddistribution policy to provide investors an opportunity to share the growth of value, so thatinvestors could form the expectation of a stable return. The procedures and mechanisms fordecision-making such as Articles of Association and planning of return of shareholdersimplemented by the Company were complete in compliance with laws and regulations. Theprocess was open and transparent while the standard and ratio of dividends was clear.Responsibilities of independent directors were clear during the policy-making process, andindependent directors were given the opportunities to play their roles. Minority shareholders werealso given the opportunity to fully express their views and demands, and the legitimate interestsof minority shareholders were adequately protected.The dividend distribution plan of 2022 of the Company: based on the total number of sharesafter deducting the repurchased shares on equity interest record date for future profitdistribution, it is proposed that the Company will distribute cash dividend of RMB5.66 per 10shares (tax inclusive) with cash dividend of RMB5,297,529,553.10. The retained undistributedprofit would be for the Company’s principal business in order to maintain sustainable and stabledevelopment and to create value for investors. The proportion of this distribution is 36.01% ofthe net profit attributable to owners’ parent company in 2022 (In 2022, the Company spentRMB1.491 billion and HK$364 million on the purchase of A shares and H shares; if this isincluded in cash dividends, the ratio of cash dividends to net profit attributable to owners’ parentcompany for the year would be more than48%).100% dividend is paid in cash. If there is anychange in the total share capital of the Company during the period from the date of this reportto the record date of the equity distribution, the total distribution amount will be remainedunchanged with corresponding adjustment to the proportion of distribution per share.(II) Notes to the cash dividend policies

√ Applicable □ Not Applicable

Whether in compliance with regulations of the Articles of Association andRequirements of the resolutions of the general meeting

√ Yes □ No

Whether the standard and ratio of dividends were clear√ Yes □ NoWhether relevant procedures and mechanisms for decision-making werecomplete

√ Yes □ No

Whether independent directors performed their duties and responsibilities√ Yes □ NoWhether minority shareholders were given the opportunity to fully express theirviews and demands, and whether their legitimate interests were adequatelyprotected

√ Yes □ No

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Section IV Corporate Governance

(III) The Company made profits and the profits for distribution to the owners’ Parent

Company was positive during the reporting period, but no cash profitdistribution plan was proposed; the Company should disclose the reasons indetail and the purpose of undistributed profits

□ Applicable √ Not Applicable

(IV) Profit distribution and conversion of capital reserve into share capital for thereporting period

√ Applicable □ Not Applicable

Unit and Currency: RMBNumber of shares to be distributed for every ten shares (share)0Amount to be distributed for every ten shares (RMB) (tax inclusive)5.66Number of shares to be converted into share capital for every tenshares (share)

Amount of cash dividend (tax inclusive)5,297,529,553.10Net profit attributable to ordinary shareholders of listed company in the

consolidated financial statement during the year of distribution

14,710,923,491.99Percentage of the net profit attributable to the ordinary shareholders ofthe listed companies in the consolidated financial statement (%)

36.01

Repurchase of shares by cash included in the amount of cash dividend1,816,280,590.58Total dividend amount (tax inclusive)7,113,810,143.68Percentage of total dividend amount to the net profit attributable to the

ordinary shareholders of the listed companies in the consolidatedfinancial statement (%)

48.36

Note: The above figures involving conversion in Hong Kong dollars to RMB are translated at the exchange rate as at 30December 2022.

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Section IV Corporate Governance

XI. THE COMPANY’S SHARE OPTION INCENTIVE SCHEME, EMPLOYEESHAREHOLDING PLAN OR OTHER EMPLOYEE INCENTIVE MEASURESAND ITS INFLUENCE(I) Matters disclosed in temporary announcements and without any subsequentprogress or change

√ Applicable □ Not Applicable

Summary of mattersQuery indexCompletion of registration of grant of reserved

options under the 2021 A Share OptionIncentive Scheme: According to the relevantresolutions of the 25th meeting of the 10thsession of the Board of Directors held bythe Company on 15 December 2021, itwas confirmed that the total number ofreserved options granted under theCompany’s 2021 A Share Option IncentiveScheme was 4,525,214. In accordance withthis resolution, the Company completed theregistration of the aforementioned grant ofshares on 17 January 2022.

For details, please refer to theAnnouncement of Haier Smart Home Co.,Ltd. on the Completion of Registration ofthe Grant of the Reserved Share Optionsunder the 2021 A Share Option IncentiveScheme disclosed by the Company on 19January 2022 and relevant contents.

Introduction of 2022 A Share Option Incentive

and completion of grant and registration:

The 2022 A Share Option IncentiveScheme wasconsidered and approved atthe General Meeting and Class Meetingconvened on 28 June 2022. On the samedate, as considered and approved at theBoard Meeting, 104,756,896 options weregranted to the incentive recipients. TheCompany completed the registration of theaforementioned grant of shares on 13 July2022.

For details, please refer to the 2022 A

Share Option Scheme of Haier SmartHome Co., Ltd (draft) disclosed by theCompany on 29 April 2022, theAnnouncement on the Adjustment to theCompany’s 2022 A Share OptionIncentive Scheme and Grant of 2022 AShare Option to Incentive Recipients byHaier Smart Home Co., Ltd disclosed bythe Company on 29 June 2022, andrelevant contents of the announcements ofresolutions at the General Meeting and theAnnouncement of Haier Smart Home Co.,Ltd. on the Completion of Registration ofthe Grant of the 2022 A Share OptionIncentive Scheme disclosed by theCompany on 15 July 2022.

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Section IV Corporate Governance

Summary of mattersQuery indexIntroduction of New Phase of A Share and H

Share Core Employee Stock OwnershipPlan and Completion of Position Opening：

In order to further improve the corporategovernance mechanism, create value forshareholders and promote the fullimplementation of the Company’s IoT smarthome ecological brand strategy, asconsidered and authorized at the 2020Annual General Meeting held by theCompany on 25 June 2021, the Companyconsidered and introduced the 2022 HShare Core Employee Stock OwnershipPlan of Haier Smart Home Co., Ltd (Draft)and the 2022 A Share Core EmployeeStock Ownership Plan of Haier Smart HomeCo., Ltd (Draft) at the 28th meeting of the10th session of the Board of Directors heldby the Company on 28 April 2022. Duringthe reporting period, the Companycompleted the position opening and otherrelated works for the 2022 A Share and HShare Core Employee Stock OwnershipPlan.

For details, please refer to the 2022 A

Share Core Employee Stock OwnershipPlan of Haier Smart Home Co., Ltd (Draft),the 2022 H Share Core Employee StockOwnership Plan of Haier Smart Home Co.,Ltd (Draft) disclosed by the Company on29 April 2022, the Announcement of HaierSmart Home Co., Ltd. on the Completionof Non-trading Transfer of Shares underthe 2022 A Share Core Employee StockOwnership Plan disclosed by theCompany on 22 July 2022, theAnnouncement of Haier Smart Home Co.,Ltd. on the Completion of Share Purchaseunder the 2022 H Share Core EmployeeStock Ownership Plan disclosed by theCompany on 26 July 2022 and relevantcontents.

(II) Incentive events not disclosed in provisional announcements or with subsequentdevelopmentEquity incentive

□ Applicable √ Not Applicable

Other explanations

□ Applicable √ Not Applicable

Employee stock ownership plan

□ Applicable √ Not Applicable

Other Incentives

□ Applicable √ Not Applicable

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Section IV Corporate Governance

(III) Share option granted to directors and senior management during the reportingperiod

√ Applicable □ Not Applicable

Unit: 10,000 shares

NamePosition

Number of

stockoptions heldat thebeginning ofthe year

Number ofnew stockoptionsgrantedduring the

reportingperiodExercisable

sharesduring thereporting

period

Sharessubject tostock option

exercisedduring the

reporting

period

Stockoptionsexerciseprice (RMB)

Number ofstockoptions heldat the endingof thereportingperiodMarket valueat the end ofthe reporting

period(RMB)Li HuagangChairman, President91.3900091.39Gong WeiDirector, Chief

Financial Officer, VicePresident

45.7000045.70XieJuzhiVice President91.3900091.39Li PanVice President45.7000045.70Song YujunVice President31.2100031.21Zhao YanfengVice President46.8200046.82Huang XiaowuVice President45.7000045.70Wu YongVice President22.8500022.85Li YangVice President45.7000045.70Guan JiangyongVice President22.8500022.85Liu XiaomeiSecretary to the board

of directors

011.650011.65Total/489.3111.6500500.96/

(IV) Establishment and implementation of appraisal and incentive mechanism for

senior management during the reporting period

√ Applicable □ Not Applicable

The cash remuneration of executives in 2022 consists of monthly remuneration, bonuses andsharing, and is linked to orders triggered by the upgrade of the Company’s Internet of Thingsfrom”high-end brands“to”scenario brands“to”ecological brands”. Focusing on the rapidimprovement of profitability and through digital transformation, the Company maintained itscompetitiveness as a leader in the whole process, and sharing of high added-value. Through theinnovation of the mechanism, the Company encouraged its executives to achieve higher marketgoals, thus achieving a win-win situation for users, employees, enterprises and stakeholders. Atthe same time, the Company continues to promote the implementation of the employee stockownership and other long-term incentive plans; multiple incentive tools will be effectively utilisedto mobilise competent management, frontline managers and business and technical backboneson a wider scale, further aligning the interests of shareholders, the Company and incentiverecipients, and bringing more efficient and sustainable returns to shareholders.

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Section IV Corporate Governance

XII. CONSTRUCTION AND IMPLEMENTATION OF INTERNAL CONTROLSYSTEM DURING THE REPORTING PERIOD

√ Applicable □ Not applicable

In accordance with the”Rules for the Preparation and Reporting of Information Disclosure by ListedIssuers of Securities No. 21—General Provisions on the Annual Internal Control AssessmentReport“jointly issued by the China Securities Regulatory Commission and the Ministry of Finance,the”Guidelines for Self-regulation of Listed Companies on the Shanghai Stock Exchange No. 1—

Regulation of Operations”, the “Guidelines for Self-Regulation of Listed Companies on the ShanghaiStock Exchange No. 2—Business Handling” and other relevant guidelines and requirements, theCompany has conducted a self-assessment of its internal control work. Based on the identification ofsignificant deficiencies in the Company’s internal control of financial reporting, no significantdeficiencies in the Company’s internal control of financial reporting were identified as at the basis dateof the internal control assessment report, and the Company had maintained effective internal control offinancial reporting in all material respects in accordance with the requirements of the internal controlregulatory system and relevant regulations. Based on the identification of significant deficiencies in theCompany’s internal control of non-financial reporting, no significant deficiencies in the Company’sinternal control of non-financial reporting were identified as at the basis date of the internal controlassessment report. No events have occurred between the basis date of the internal controlassessment report and the date of issuance of the internal control assessment report that would affectthe effectiveness of the internal control assessment.For details, please refer to the 2022 Internal Control Assessment Report of Haier Smart Home Co.,Ltd. disclosed on the same day of this report.Explanations on material defects found in internal control during the reporting period

□ Applicable √ Not applicable

XIII. CONTROL OVER MANAGEMENT OF SUBSIDIARIES DURING THE

REPORTING PERIOD

√ Applicable □ Not applicable

The listed company established an internal control and management system covering all subsidiarieswithin the scope of consolidated statement, which included four major areas of strategy, finance,operation and compliance with a total of 22 primary business processes and control metrics. Inparticular,

1. Unified control environment, such as strategy and culture, risk management system, internal control

manual, Rendanheyi remuneration system, unified accounting and information system in thefinancial sharing center, etc.

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Section IV Corporate Governance

2. The company has clear selection methods and terms of reference in respect of appointment of

directors, supervisors and important senior management to their controlling subsidiaries.Meanwhile, relevant departments of the parent company stipulate the criteria and scope ofauthorization for major decision and important events, formulate the approval procedure for majordecision and important events beyond the scope of authorization. The management ofsubsidiaries at different levels shall exercise their authority and take responsibility within thescope of authorization.

3. Management of major events of subsidiaries: The relevant authority of the parent company of the

listed company stipulates the criteria and scope of authorization for major decision and importantevents, formulate the approval procedure for major decision and important events beyond thescope of authorization. If the Company and its subsidiaries provide external guarantees, the totalamount of which shall propose for consideration at the general meetings after approval by theBoard. Subject to the authorization by the general meetings, the Board decides the Company’sexternal investment, acquisition and disposal of assets, external guarantees, entrusted wealthmanagement, related-party transactions and other events.

4. Management of budget: The finance and budget center formulates the budget preparation policy

and guidance for the following year at the end of each year, and distributes them to eachsubsidiary together with the budget template, requiring the preparation of a comprehensivebudget in accordance with the unified budget preparation policy and guidance, which containsdetails of the preparation principles, explanation of filling the template, submission process andexamination. Each subsidiary has prepared a comprehensive budget in accordance with theunified budget preparation policy and guidance. Annual budgeting of the following year iscommenced in the third quarter every year by making profit and loss budgets for each industryand subsidiaries based on market forecasts to ensure accurate estimation in advance. Theexecution and adjustment of budgets are regularly monitored and evaluated.For non-fixed assets investment projects, the person in charge of fund of each subsidiary willsummarize the actual investment situation and report it to the manager of the investment,financing and fund management department of Haier Smart Home. The manager of theinvestment, financing and fund management department will monitor the execution of the budgetof investment and financing by comparing the report with the corresponding budget of theinvestment plan.

5. Operation analysis and performance evaluation: The Company regularly convenes global and

industry-specific performance and operations meetings to discuss the operations andperformance and carries out performance evaluation.

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Section IV Corporate Governance

6. Information transmission: The Company widely collects macroeconomic and industry development

information, market information, regulatory compliance and other external information throughvarious channels, and analyzes and organizes the collected information into research reportsevery month, which are submitted to different levels of management after review. Themanagement of the parent company holds regular meetings with industries and segments toconvey the management requirements of the parent company and to be aware of the operationstatus of subsidiaries in a timely manner. At the same time, the Company has formulated theinformation security and internal report confidentiality system, which specifies the confidentialitycontent, confidentiality measures, confidentiality level and transmission scope to prevent thedisclosure of commercial secrets.

7. Test and audit of internal control: During the reporting period, the parent company conducts internal

test and audit of subsidiaries, more than 91% and 90% of revenue and assets of which belongto the parent Company, respectively, to identify problems in a timely manner and facilitate theclosed-loop rectification of problems.During the reporting period, there were no new significant subsidiaries.

XIV. RELEVANT EXPLANATIONS ON THE AUDIT REPORT OF INTERNALCONTROL

√ Applicable □ Not applicable

The Company’s auditor Hexin Certified Public Accountants LLP has audited the efficiency of internalcontrol relating to the financial report of the Company, and has issued its standard unqualified auditreport for the Company’s internal control (He Xin Shen Zi (2023) No. 000367).For the details of Audit Report of Internal Control of Haier Smart Home Co., Ltd., please refer torelevant announcements published on the website of Shanghai Stock Exchange (www.sse.com.cn) onthe same day of this report.Whether to disclose the audit report on internal control: YesType of opinion on the audit report on internal control: Standard unqualified opinionXV. RECTIFICATION OF THE SELF-ASSESSMENT PROBLEMS UNDER THEGOVERNANCE SPECIAL ACTION OF THE LISTED COMPANYNot Applicable

XVI. OTHERS

□ Applicable √ Not Applicable

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Section V Environmental and Social

Responsibilities

I. ENVIRONMENTAL INFORMATIONEstablished environmental protection related mechanism or notYesEnvironmental protection funds invested during the Reporting Period(Unit: RMB10,000)

54,128Note: During the reporting period, environmental protection funds were invested in aspects of R&D of environmental protectiontechnology, clean production, environmental protection equipment purchase and renovation, pollution control, ecologicalprotection, environmental management expenditure, etc.(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 Qingdao Jiaonan Haier WashingMachine Co., Ltd. (Jiaonan Washing Machine), Hefei Haier Refrigerator Co., Ltd. (“HefeiRefrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan HaierFreezer Co., Ltd. (“Wuhan Freezer”), Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited(“Jiaozhou Air-conditioning”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao SpecialRefrigerator”), Qingdao Economy and Technology Development Zone Haier Water HeaterCo., Ltd. (“Development Zone Water Heater”), Qingdao Haier Refrigerator Co., Ltd.(“Qingdao Refrigerator”), Qingdao Haier Special Freezer Co., Ltd. (“Qingdao Special FreezerFactory I”), Qingdao Haier Special Freezer Co., Ltd. (“Qingdao Special Freezer Factory II”),Qingdao Haier Special Plastic Research and Development Co., Ltd. (“Huangdao SpecialPlastic”) and Tianjin Haier Cleaning Electrical Appliances Co., Ltd. (“Tianjin WashingMachine”) are among the key emission units announced by the local environmentalprotection department. The main information on pollutant discharge is as follows:

(1) Jiaonan Washing Machine

① Main pollutants：

Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Development Zone Energy should apply for the Receipt on the Registration ofPollution Discharge for Fixed Pollution Sources and detect 17 types ofpollutants (including specific pollutants), namely, total cadmium, total chromium,total mercury, total lead, total arsenic, hexavalent chromium, COD (Chemicaloxygen demand), 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 wastewater

treatment plant, pipeline discharge

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Section V Environmental and Social Responsibilities

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 ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD

61.2mg/L8.085 tons

60 tonsNo2Ammonia

nitrogen

6.96mg/L0.971 tons

6 tonsNo

⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(2) Hefei Refrigerator

① Main Pollutants：

Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Development Zone Energy should apply for a pollutant discharge permit anddetect 8 types of pollutants (including specific pollutants), namely, total nitrogen(as N), total phosphorus (as P), rate of flow, suspended solids, value of PH,Chemical oxygen demand (COD), ammonia nitrogen (NH3-N) and five-daybiochemical oxygen demand (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: particle matter, non-methane total hydrocarbons

② Way of discharge: continuous discharge

③ Number and distribution of discharge outlets: 1 for sewage, at the north entrance

of the refrigerator Park; 22 for exhaust gas, at the refrigerator block A(10), Bfactories(10) and Phase III Factory(2).

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Section V Environmental and Social Responsibilities

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 ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD

99.95 mg/L37.55 tons

300 tonsNo2ammonia

nitrogen

12.59 mg/L4.93 tons

28 tonsNo3total nitrogen

30.28 mg/L11.69 tons

20 tonsNo4total phosphorus

2.19 mg/L0.87 tons

5 tonsNo

⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(3) Wuhan Water Heater

① Main Pollutant：

Wastewater. According to the Technical Specification for Application andIssuance of Pollutant Permit— Wastewater Treatment (for Trial) (HJ 978–2018),Wuhan water heater should apply for a pollutant discharge permit and detect 9types of pollutants (including specific pollutants), namely, COD, total zinc,suspended solids, ammonia nitrogen (NH3-N), five-day biochemical oxygendemand (BOD5), PH, anionic surface active agent, total phosphorus, and animaland vegetable oils.

② Way of discharge: indirect discharge

③ Number and distribution of discharge outlets: one, on the southwest of the

wastewater treatment 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 ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approved

total amount

of discharge

Whether it isexcessivedischarge1COD40 mg/L3.196 tons

9.075 tonsNo

2Ammonia

nitrogen

0.336 mg/L0.391 tons

0.9075 tonsNo

⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

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Section V Environmental and Social Responsibilities

(4) 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 wastewater

treatment plant, pipeline discharge

④ Concentration and total amount of discharge and approved total amount of

discharge: According to the discharge permit, the concentration and totalamount of pollutant discharge subject to approval for the total amount are asfollows:

No.Name ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD46 mg/L0.96 tons

4.3628 tonsNo

2Ammonia

nitrogen

0.497 mg/L0.01 tons

0.4365 tonsNo

⑤ Pollutant discharge standards implemented: Wastewater Quality Standards for

Discharge to Municipal Sewers (GBT 31962–2015)

(5) Jiaozhou Air-conditioning

① Main Pollutants：

Hazardous waste. According to the national directory, 10 types of hazardouswaste detected are namely: waste oil, sludge, slag powder, computer boards,activated carbon, cotton filters, lightning tubes, soldering flux buckets, paintbuckets and packaging bags.

② Way of discharge: Hazardous waste is transferred to a qualified hazardous waste

disposal unit for disposal

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Section V Environmental and Social Responsibilities

③ Total amount of discharge and approved total amount of discharge:

No.Name of hazardous waste

Total amountof transfer(tons)

Total amountof managedplan (tons)

Whether it isexcessivedischarge1Packaging bags0.080.5No2Waste oil24.8840No3Slag powder15.4830No4Forklift battery17.9222No5Sludge18.0618.1No6Paint buckets14No7Computer board14.7615No

④ Pollutant discharge standards implemented: Directory of National Hazardous

Wastes (Version 2021), Law of the People’s Republic of China on thePrevention and Control of Environmental Pollution by Solid Waste

(6) Qingdao Special Refrigerator

① Main Pollutants：

Exhaust gas. According to legislative requirements, Qingdao Special Refrigeratorshould apply for a pollutant discharge permit and detect the primary type ofpollutant in the atmosphere, namely non-methane hydrocarbon, with themaximum concentration of discharge not exceeding 60mg/m?; particulatematter, with the maximum concentration of discharge not exceeding 150mg/m?.A qualified third-party testing unit is commissioned to conduct organic exhaustgas concentration testing and issue a report on a quarterly basis.

② Way of discharge: Continuous emission

③ Number and distribution of discharge outlets: four in total, one for absorption

exhaust port at the northeast corner of the plant roof, and two for weldingexhaust ports and one for foam exhaust port at the west side of the plant roof.

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the total amount of discharge of organicexhaust gas and particulate matter

No.

Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1Non-methane

hydrocarbon

1.23 mg/m?/No total amount of

discharge control

No

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Section V Environmental and Social Responsibilities

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standards Part 7: Other Industries DB37/2801.7–2019, Integrated airpollutants discharge standard GB16297–1996.

(7) Development Zone Water Heater

① Main pollutants:

Exhaust gas. According to the requirements of laws and regulations,Development Zone Water Heater should apply for a pollutant discharge permitand detect the primary types of pollutant in the atmosphere, namely, non-methane hydrocarbons, with the maximum concentration of discharge notexceeding 50mg/m?; particulate matter, with the maximum concentration ofdischarge not exceeding 150mg/m?. A qualified third-party testing unit iscommissioned to conduct organic exhaust gas concentration testing and issuea report on a quarterly basis.Wastewater: There is no wastewater treatment plant in the business departmentand thus wastewater is transported by pipeline to the wastewater treatmentplant of energy companies for discharge after treatment.

② Way of discharge: Continuous discharge

③ Number and distribution of discharge outlets: twelve in total, two for exhaust

ports for powder coating line at the southeast and northeast side of the plantrespectively, nine for welding exhaust ports at the plant roof and one for foamexhaust port at the east side of the plant roof.

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the amount of discharge of organic exhaust gasand particulate matter

No.

Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1non-methane

hydrocarbons

1.29mg/m?/No control regarding the

total amount of dischargeof non-methanehydrocarbons

no

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standard Part 5:Surface coating industry DB37/2801.5–2019,Integrated emission standard of air pollutants GB16297–1996.

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Section V Environmental and Social Responsibilities

(8) Qingdao Refrigerator

① Main pollutants:

Exhaust gas. According to requirements of laws and regulations, QingdaoRefrigerator should apply for a pollutant discharge permit and detect theprimary type of pollutant in the atmosphere, namely non-methane hydrocarbonwith the maximum concentration of discharge not exceeding 60mg/m? andparticulate matter with the maximum concentration of discharge not exceeding150mg/m?. A qualified third-party testing unit is commissioned to conductorganic exhaust gas concentration testing and issue a report on a quarterlybasis.

② Way of discharge: Continuous discharge

③ Number and distribution of discharge outlets: Four in total, one for absorption

exhaust port, one for welding exhaust port on the west side of the plant roof,and two foam exhaust ports with one on the west side and one on the eastside of the plant roof.

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the total amount of discharge of organicexhaust gas and particulate matter

No.Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1non-methane

hydrocarbon

1.2mg/m?/No control regarding the

total amount of discharge

No

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standards Part 7: Other Industries (DB37/2801.7–2019),Comprehensive Emission Standards of Air Pollutants (GB16297–1996).

(9) Qingdao Special Freezer factory I

① Main pollutants:

Exhaust gas. According to requirements of laws and regulations, it should applyfor a pollutant discharge permit and detect the primary type of pollutant in theatmosphere, namely non-methane hydrocarbon with the maximum concentrationof discharge not exceeding 50mg/m? and particulate matter with the maximumconcentration of discharge not exceeding 150mg/m?. A qualified third-partytesting unit is commissioned to conduct organic exhaust gas concentrationtesting and issue a report on a quarterly basis.Wastewater. There is no sewage station in the business department, and theproduction wastewater is piped to the sewage station of the energy companyfor treatment and discharge.

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Section V Environmental and Social Responsibilities

② Way of discharge: Continuous discharge

③ Number and distribution of discharge outlets: Six in total, one for exhaust port

for powder coating on the north of the plant, one for welding exhaust port onthe east of the plant, and four for foam exhaust ports on the east side of theplant roof.

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the total amount of discharge of organicexhaust gas and particulates

No.Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1non-methane

hydrocarbon

1.53mg/m?/No control regarding the

total amount of discharge

No

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standards Part 5: Surface Coating Industry (DB37/2801.5–2019),Comprehensive Emission Standards of Air Pollutants (GB16297–1996).

(10) Qingdao Special Freezer Factory II

① Main pollutants:

Exhaust gas. According to the requirements of laws and regulations, QingdaoSpecial Freezer Factory II should apply for a pollutant discharge permit anddetect the primary types of pollutant in the atmosphere, namely, non-methanehydrocarbons, with the maximum concentration of discharge not exceeding50mg/m?; particulate matter, with the maximum concentration of discharge notexceeding 150mg/m?. A qualified third-party testing unit is commissioned toconduct organic exhaust gas concentration testing and issue a report on aquarterly basis.Wastewater: There is no wastewater treatment plant in the business departmentand thus wastewater is transported by pipeline to the wastewater treatmentplant of energy companies for discharge after treatment.

② Way of discharge: continuous discharge

③ Number and distribution of discharge outlets: five in total, one for exhaust port

for powder coating line at the north side of the plant, one for absorptionexhaust port at the east side of the plant roof and three for foam exhaust portsat the east side of the plant roof.

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Section V Environmental and Social Responsibilities

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the amount of discharge of organic exhaust gasand particulate matter

No.Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1Non-methane

hydrocarbons

1.44mg/m?/No control regarding the

total amount of dischargeof non-methanehydrocarbons

no

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standard Part 5:Surface coating industry DB37/2801.5–2019,Integrated emission standard of air pollutants GB16297–1996.

(11) Huangdao Special Plastic

① Main pollutants:

Exhaust gas. According to the requirements of laws and regulations, HuangdaoSpecial Plastic should apply for a pollutant discharge permit and detect theprimary type of pollutant in the atmosphere, namely non-methane hydrocarbons,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: three in total, one for absorption

exhaust port at the northwest corner of the plant roof and two for foam exhaustports at the south side of the plant roof.

④ Concentration and total amount of discharge and approved total amount of

discharge

No.

Name ofpollutant

Concentration ofdischarge

Total amountof discharge

Approved total amount ofdischarge

Whether it isexcessivedischarge1Non-methane

hydrocarbons

1.17mg/m?/No control regarding the

total amount of dischargeof non-methanehydrocarbons

no

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Section V Environmental and Social Responsibilities

⑤ Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standard Part 7: Other industries DB37/2801.7–2019, Integratedemission standard of air pollutants GB16297–1996.

(12) Tianjin Washing Machine

① Main Pollutant：

Wastewater. According to requirements of laws and regulations, a pollutantdischarge permit should be applied and enforced, and 4 types of pollutantsshould be tested, namely, COD, ammonia nitrogen, PH and suspended solids.Exhaust gas: According to requirements of laws and regulations, a pollutantdischarge permit should be applied and enforced, and 4 types of pollutantsshould be tested, namely, particulate matter, sulphur dioxide, nitrogen oxidesand VOCs.

② Way of discharge: indirect discharge for wastewater, continuous discharge for

exhaust gas

③ Number and distribution of discharge outlets: one for wastewater, the wastewater

treatment plant, pipeline discharge; eleven for exhaust gas, two in the plasticinjection department, six in the powder coating department and three in theboiler room.

④ Concentration and total amount of discharge and approved total amount of

discharge: No control regarding the total amount of discharge of organicexhaust gasAccording to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.Name ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD23mg/L0.177

tonnes

34.742

tonnes

no2ammonia

nitrogen

0.628mg/L0.0048

tonnes

3.127 tonnesno

⑤ Pollutant discharge standards implemented: Integrated wastewater discharge

standard (DB12356–2018)

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Section V Environmental and Social Responsibilities

2. Construction and operation of pollution prevention and treatment facilities:

√ Applicable □ Not Applicable

Jiaonan Washing Machine, Jiaozhou Air-conditioning, Wuhan Freezer, Wuhan Water Heater,Tianjin Washing Machine have one, one, one, two and one wastewater treatment plantswith a designed treatment capacity of 600 tonnes/day, 300 tonnes/day, 550 tonnes/day,300 tonnes/day,260 tonnes/day and 300 tonnes/day, respectively. The construction,maintenance and daily operation of all wastewater treatment facilities are conducted inaccordance with the requirements of national and local environmental laws and regulations.Information on all wastewater discharge is subject to 24-hour online monitoring and suchmonitored information is transmitted to environmental authorities in a real-time manner. Allequipment is operating normally. In addition, the Company fully promotes all plants toinstall exhaust treatment facilities and VOCs online monitoring facilities. All equipment isoperating normally and exhaust produced is treated by the prevention and treatmentfacilities before compliant release and is monitored.

3. Environmental impact assessment of construction projects and other environmental

protection administrative permits

√ Applicable □ Not Applicable

The Company and its subsidiaries execute construction project implementation andproduction in accordance with the requirements of laws and regulations and strictly complywith the three simultaneous requirements of environmental protection for constructionprojects in the process of environmental impact assessment, and have passedenvironmental assessment acceptance and are not involved in any environmental illegalconducts 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,and continue 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 HaierSmart 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 ISO14001 system in 2021.

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Section V Environmental and Social Responsibilities

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 major pollutantemission units

√ Applicable □ Not Applicable

1. Administrative penalty due to environmental issues

□ Applicable √ Not Applicable

2. Other environmental information disclosure with reference to major pollutant

emission units

√ Applicable □ Not Applicable

All divisions of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the threesimultaneous requirements of environmental protection for construction projects in theprocess of environmental impact assessment, and have passed environmental assessmentacceptance and are not involved in any environmental illegal conducts such as constructionbefore approval.Through Haier Smart Energy Center, an industry leading energy big data analysis system,the Company implements centralized dynamic monitoring and digitalized management inrespect of major energy consumption, such as water, electricity and gas, of all plantsacross the country by utilizing automatized and informationalized technology and anintegrated management model. It automatically collects precise information on energyresources and completes prediction and analysis of energy consumption information tooptimize energy adjustment, reduce energy consumption per unit production to achievelow-carbon production.

3. Reasons for failure to disclose other environmental information

□ Applicable √ Not Applicable

(III) Relevant information favorable to ecological protection, pollution prevention and

control and environmental responsibility fulfillment

√ Applicable □ Not Applicable

In order to better protect our homeland, the Company has been committed to implementingnational “dual carbon” strategy by integrating low-carbon, recycling, energy conservation andemission reduction into daily operation and actively exploring a model for achieving carbonreduction throughout the product lifecycle. We continuously promoted green technologiesupgrading in the industry by capitalizing on our industrial leading role in green technologies, andworked together to move towards a greener, win-win and sustainable future.

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Section V Environmental and Social Responsibilities

For details, please refer to relevant information in 2022 Environmental, Social andGovernance Report of Haier Smart Home Co., LTD. published on the same date of thisreport.(IV) Measures taken during the Reporting Period to reduce its carbon emission and

their effectivenessWhether carbon reductionmeasures were implemented

YesReduction of carbon dioxide

equivalent emission (unit:

tonnes)

14,017Types of carbon reductionmeasures (such as using cleanenergy for power generation,using carbon reductiontechniques in the productionprocess, developing andproducing new productswhich help reduce carbonemission, etc.)

The Company’s carbon reduction measures mainly include:

(1) Identifying the carbon emission of products:

The Company has conducted carbon review of itsfactories to understand the current status of its carbonemission and the carbon footprint of some of itsproducts, and will take targeted carbon reductionactions based on the results of the carbon review.

(2) Practising green concept throughout the lifecycle:

The Company actively cooperates with parties along theupstream and downstream industrial chain, from rawmaterial manufacturers to logistics enterprises, fromconsumers to recycling and dismantling factories, inorder to explore carbon reduction throughout theproduct lifecycle centering around”R&D, raw materials,production, packaging and transportation, and productrecycling“Carbon reduction.

(3) Climate-related financial information disclosure

The Company actively identifies, evaluates and managesthe impact of climate change risks and opportunities onits operations, and formulates risk management andstrategic planning to prepare for strict compliance withthe TCFD disclosure framework for climate-relatedfinancial information.For details of the above-mentioned measures, pleaserefer to relevant information in 2022 Environmental,Social and Governance Report of Haier Smart HomeCo., LTD. published on the same date of this report.Note: The scope of the aforementioned CO2 equivalent emission reduction statistics is the scope 1 and scope 2 data forthe Company’s domestic operations.Specifications

□ Applicable √ Not Applicable

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Section V Environmental and Social Responsibilities

II. PERFORMANCE OF SOCIAL RESPONSIBILITIES

1. Whether the social responsibility report, sustainable development report or ESG

report is disclosed individually

√ Applicable □ Not Applicable

Haier Smart Home has actively participated in health education, rural construction, voluntaryservice, and other community public charity while striving to create social value and practisingsocial responsibility in order to make its contribution to promoting the construction of a fairer andbetter society wholeheartedly and sincerely.

1. Caring about education and health

The Company pays attention to the growth and education of young people by participatingin the establishment of the Haier Education Foundation, the Hope Project and the”LightCatcher Project“to support public welfare activities in respect of the health and education ofyoung people and children around the world.

2. Supporting rural construction

The Company is actively involved in the revitalisation of villages by providing paired-upassistance with villages in the areas of industry, employment, education and health, andusing its skills and knowledge to help build beautiful villages and improve their standard ofliving.

3. Helping rescue and relief enthusiastically

The Company has extensively participated in disaster assistance around the world, took thelead in rescue operations and donated disaster relief materials.

4. Volunteering to serve the society

All members of the Company at home and abroad insist on participating in socialgovernance through voluntary services, creating public value with their professional ability intheir spare time, and giving back to the society with love.For details, please refer to the 2022 Environment, Social and Governance Report of HaierSmart Home Co., Ltd. disclosed on the date of this report.

2. Details of social responsibility works

√ Applicable □ Not Applicable

External donation, public welfare projectsQuantity/ContentTotal Contribution (RMB10,000)797Among which: Funds (RMB10,000)797Specifications

√ Applicable □ Not Applicable

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Section V Environmental and Social Responsibilities

For details, please refer to the 2022 Environment, Social and Governance Report of Haier SmartHome Co., Ltd. disclosed on the date of this periodic report.III. PARTICULARS ON THE EFFORTS TO CONSOLIDATE AND EXPAND ITSACHIEVEMENTS IN POVERTY ALLEVIATION AND RURAL AREAINVIGORATION

√ Applicable □ Not Applicable

Poverty alleviation and rural revitalization projectsQuantity/ContentTotal Contribution (RMB10,000)1,117Among which: Funds (RMB10,000)1,117Forms of assistance (such as poverty alleviation throughindustry development, poverty alleviation throughemployment, poverty alleviation through education, etc.)

Assistance is mainly provided in the formof poverty alleviation through educationand poverty alleviation in healthSpecifications

√ Applicable □ Not Applicable

In accordance with the national targeted poverty alleviation plan and documents requirements, theCompany emphasizes poverty alleviation and conducts targeted poverty alleviation within the authoritygranted on the general meeting in respect of, among others, donations.For years, the Company has made genuine contributions to education to improve the basic culturalquality of people in poverty and skills of families in poverty, with an emphasis on shoring up the weaklink of the education sector and stopping inter-generational poverty. As of now, the Company, HaierGroup Companies (the effective controller of the Company) and its subordinate enterprises (hereafter,the “Haier Group”) have constructed over 300 hope primary schools and hope secondary schools,covering 26 provinces, municipalities and autonomous regions in the PRC. It also offers continuousresource assistance to such schools every year to effectively boost the base education capacity inpoverty regions and improve education quality. At the same time, during the earthquake in Ganzi,Sichuan, the Company set up an earthquake relief service commando to go to the front line to providethe affected people with three free services for home appliances, i.e. free inspection, free repair andfree relocation, and opened an exclusive call channel for user services in the disaster area; on theother hand, the Company donated RMB3 million, taking up social responsibilities voluntarily andsupporting the reconstruction of disaster areas. The Company maintains its support to ruraldevelopment in respect of poverty alleviation in agricultural development and poverty alleviation infarmers’ health to promote beautiful rural development. During the Reporting Period, it offered, amongother assistance, funds to Pangxi Village, Yuxi Town and Yuya Village, Zunyi City.In 2022, the Company’s capital expenditure in targeted poverty alleviation amounted to approximatelyRMB11.17 million, primarily attributable to education poverty alleviation, poverty alleviation in health andconstruction of disaster areas, etc., to proactively respond to the government’s call for socialresponsibility fulfillment.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

I. FULFILLMENT STATUS OF UNDERTAKINGS(I) The undertakings made by the ultimate controller, shareholders, related parties,

acquirer as well as the Company and other relevant parties during or up to thereporting period

√ Applicable □ Not Applicable

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayUndertaking

related tosignificantreorganization

Eliminate the right defects

in land property etc.

Haier Group

Corporation

During the period from September 2006 to May

2007, the Company issued shares to HaierGroup Corporation (“Haier Group”) to purchasethe controlling equity in its four subsidiaries,namely Qingdao Haier Air-ConditionerElectronics Co., Ltd. (青島海爾空調電子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan HaierElectronics Holding Co., Ltd. (武漢海爾電器股份有限公司), Guizhou Haier Electronics Co., Ltd.(貴州海爾電器有限公司). With regard to the landand property required in the operation of threecompanies, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青島海爾空調電子有限公司), Hefei Haier Air-conditioning Co.,Limited (合肥海爾空調器有限公司), Wuhan HaierElectronics Holding Co., Ltd. (武漢海爾電器股份有限公司) (the “Covenantees”), Haier Groupmade an undertaking (the “2006 Undertaking”).According to the content of 2006 Undertakingand current condition of each Covenantee, HaierGroup will constantly assure that Covenanteeswill lease the land and property owned by HaierGroup for free. Haier Group will makecompensation in the event that the Covenanteessuffer loss due to the unavailability of such landand property.

27 September2006,long-term

YesYes

Address peer competitionHaier Smart Home

Co., Ltd.

Prior to the Transaction (hereinafter “the

Transaction” refers to the transaction in relationto the privatization of Haier Electronics by HaierSmart Home), Haier Electric was a controllingsubsidiary of the Company and did not havepeer competition with the Company; after thecompletion of the Transaction, Haier Electricbecame a wholly-owned or controlling subsidiaryof the Company and no new peer competitionwith the Company existed or will arise. There isno new peer competition or potential competitionbetween the Company and other related partiescontrolled by the controlling shareholders or thede facto controller of the Company.

31 July 2020,long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayAddress connected

transactions

Haier GroupCorporation

1. The Transaction constitutes a connected

transaction and the connected transactionprocedures performed under the Transaction arein compliance with the relevant regulations. Thepricing of the connected transaction is fair andthere are no circumstances under which theinterests of the listed company and thenon-connected shareholders are prejudiced. 2.Upon completion of the Transaction, theCompany and its affiliates will take lawful andeffective measures to minimize and regulate theconnected transactions with the listed company,take the initiative to safeguard the interests ofthe listed company and all shareholders, andrefrain from taking advantages of connectedtransactions for improper benefits. 3. Providedthat there is no conflict with laws andregulations, if connected transactions betweenthe Company and its affiliates and the listedcompany occur or exist which cannot beavoided or for which there are reasonablereasons, the Company and its affiliates willlegally enter into a transaction agreement withthe listed company to ensure strict compliancewith the procedures of connected transactionsrequired by the laws, regulations, regulatorydocuments and the articles of association of theCompany, conduct transactions in accordancewith the principles of marketability and fair pricesto ensure the fairness and compliance ofconnected transactions, and refrain from takingadvantages of such connected transactions toengage in any acts that are detrimental to theinterests of the listed company or its minorityshareholders, and at the same time, comply withthe information disclosure obligations inaccordance with relevant regulations.

29 July 2020,

long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayAddress peer competitionHaier Group

Corporation

1. The Company and its controlling subsidiary, Haier

COSMO Co., Ltd., were principally engaged ininvestment business during the reporting period,and the Company and its controlling subsidiary,Haier COSMO Co., Ltd. (including itssubsidiaries and entities with more than 30%shareholding), have no real or potential percompetition with Haier Smart Home; 2. thedomestic and overseas white goods businessesand assets held by the Company (including theCompany’s subsidiaries and entities with morethan 30% shareholding) have been injected intoHaier Smart Home through asset consolidationand equity transfer in accordance with thecommitments made by the Company in January2011 and the requirements for adjusting suchcommitments as considered and approved byHaier Smart Home at its 2014 annual generalmeeting; 3. Since the acquisition of 100% ofHaier New Zealand Investment Holding CompanyLimited (which holds 100% of the shares inFisher & Paykel Appliances Holdings Limited) byHaier Smart Home’s offshore subsidiary, HaierSingapore Investment Holding Co., Ltd.,following the completion in July 2018, theCompany (including the Company’s subsidiariesand entities with more than 30% shareholding)and Haier Smart Home do not have any peercompeting relationship in any business areasboth within and outside the PRC. During thereporting period, the Company (including theCompany’s subsidiaries and entities with morethan 30% shareholding) did not have any newpeer competition with Haier Smart Home; 4.Upon completion of the Transaction, theCompany (including the Company’s subsidiariesand entities with more than 30% shareholding)and its affiliates do not have any new orpotential peer competition with Haier SmartHome; 5. During the period when the companyis the controlling shareholder of Haier SmartHome and the shares of Haier Smart Home arelisted on the Hong Kong Stock Exchange, thecompany and its other subsidiaries and entitieswith more than 30% shareholding will notoperate any business that competes with thebusiness engaged by Haier Smart Home and willnot engage in real or potential peer competitionwith Haier Smart Home.

29 July 2020,

long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayOthersHaier Group

Corporation

Upon completion of the Transaction, the companywill strictly comply with the Company Law, theSecurities Law, the relevant regulations of theChina Securities Regulatory Commission, theShanghai Stock Exchange and the articles ofassociation of Haier Smart Home, etc., fairlyexercise shareholders‘rights and fulfillshareholders‘obligations, refrain from takingadvantage of its shareholding position forimproper benefits, ensure the listed company willcontinue to be completely separate from thecompany and other enterprises on which thecompany exercises control and exerts significantinfluence in terms of management, personnel,assets, finance, organization and businessoperations, and maintain the continuedindependence of the listed company in terms ofmanagement, personnel, assets, finance,organization and business operations. Uponcompletion of the Transaction, the company willcomply with the provisions of the Notice onSeveral Issues concerning Regulating FundTransactions between Listed Companies andTheir Affiliates and the External Guarantee ofListed Companies and the Circular of ChinaSecurities Regulatory Commission and ChinaBanking Regulatory Commission on Regulatingthe External Guaranties Provided by ListedCompanies to regulate the external guaranteesby listed companies and their subsidiaries, andwill not misappropriate the funds of the listedcompany and their subsidiaries. The companyundertakes to strictly fulfill the abovecommitments. In the event that the interests ofthe listed company are damaged as a result ofany breach of the above commitments by thecompany and other enterprises on which thecompany exercises control and exerts significantinfluence, the company will legally bear thecorresponding liability for damage.

29 July 2020,

long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayAddress connected

transactions

HCH (HK)

INVESTMENTMANAGEMENTCO., LIMITED

1. The Transaction constitutes a connected

transaction and the connected transactionprocedures performed under the Transaction arein compliance with the relevant regulations. Thepricing of the connected transaction is fair andthere are no circumstances under which theinterests of the listed company and thenon-connected shareholders are prejudiced. 2.Upon completion of the Transaction, thecompany and other enterprises on which thecompany exercises control will take lawful andeffective measures to minimize and regulate theconnected transactions with the listed company,take the initiative to safeguard the interests ofthe listed company and all shareholders, andrefrain from taking advantages of connectedtransactions for improper benefits. 3. Providedthat there is no conflict with laws andregulations, if connected transactions betweenthe company and other enterprises on which thecompany exercise control and the listedcompany occur or exist which cannot beavoided or for which there are reasonablereasons, the company and other enterprises onwhich the company exercises control will legallyenter into a transaction agreement with the listedcompany to ensure strict compliance with theprocedures of connected transactions requiredby the laws, regulations, regulatory documentsand the articles of association of the company,conduct transactions in accordance with theprinciples of marketability and fair prices, andrefrain from taking advantages of suchconnected transactions to engage in any actsthat are detrimental to the interests of the listedcompany or its minority shareholders, and at thesame time, comply with the informationdisclosure obligations in accordance withrelevant regulations. 4. Any covenants andarrangements between the company and otherenterprises on which the company exercisecontrol and the listed company in relation toconnected transactions shall not prevent theother party from conducting business or dealingwith any third party for its own benefit and onequal competitive terms in the market.

29 July 2020,long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayUndertaking

related torefinancing

Eliminate the right defectsin land property andetc.

Haier Group

Corporate

Haier Group Corporation undertakes that it will

assure Haier Smart Home and its subsidiaries ofthe constant, stable and unobstructed use of theleased property. In the event that Haier SmartHome or any of its subsidiaries suffers anyeconomic loss due to the fact that leasedproperty has no relevant ownership certificate,Haier Group Corporation will makecompensation to impaired party in a timely andsufficient way and take all reasonable andpracticable measures to support the impairedparty to recover to normal operation before theoccurrence of loss. Upon the expiration ofrelevant leasing period, Haier Group Corporationwill grant or take practicable measures to assureHaier Smart Home and its subsidiaries of priorityto continue to lease the property at a price nothigher than the rent in comparable market atthat time. Haier Group Corporation will assureHaier Smart Home and its subsidiaries of theconstant, stable, free and unobstructed use ofself-built property and land of the Group. In theevent that Haier Smart Home or any of itssubsidiaries fails to continue to use self-builtproperty according to its own will or in originalway due to the fact that self-built property hasno relevant ownership certificate, Haier GroupCorporation will take all reasonable andpracticable measures to eliminate obstructionand impact, or will support Haier Smart Home orits affected subsidiary to obtain alternativeproperty as soon as possible, if Haier GroupCorporation anticipates it is unable to cope withor eliminate the external obstruction and impactwith its reasonable effort. For details, pleaserefer to the Announcement of Qingdao Haier Co.,Ltd. on the Formation, Current Situation of theDefective Property, the Influence on Operation ofIssuer Caused by Uncertainty of Ownership,Solution for the Defect and Guarantee Measures(L2014–005) published by the Company on thefour major securities newspapers and thewebsite of Shanghai Stock Exchange on 29March 2014.

24 December

2013,long-term

YesYes

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Background ofundertakingsType of undertaking sCovenanterContents of undertakings

Date and

term ofundertakings

Any

deadline forperformance

Whetherperformed in

a timely andstrict wayUndertakings

related toEquityincentive

OthersHaier Smart Home

Co., Ltd.

The Company will not provide loans or any otherforms of financial assistance, includingguaranteeing their loans, to any incentiverecipient for acquiring relevant stock optionsunder this incentive plan.

15 September2021/28 June2022, thecompletion ofequity incentiveimplementation

YesYes

Other

undertakings

Asset injectionHaier Group

Corporation

Inject the assets of Haier Photoelectric to the

Company or dispose such assets through otherways according to the requirements of thedomestic supervision before June 2025. Formore details, please refer to the Announcementof Haier Smart Home Co., Ltd. on the Changesof Some Commitments on Asset Injection(L2020- 024) published on the four majorsecurities newspapers and the website ofShanghai Stock Exchange on 30 April 2020.

December 2015 toJune 2025

YesYes

(II) The Company’s explanation on whether the earnings forecast on assets or

projects was met and its reasons in the situation that earnings in theCompany’s assets or projects have a forecast, and the period of whichincludes the reporting period.

□ Reached □ Not Reached √ Not Applicable

(III) Completion of performance commitments and their impact on the impairmenttest of goodwill

□ Applicable √ Not Applicable

II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLING

SHAREHOLDERS AND OTHER RELATED PARTIES DURING THEREPORTING PERIOD

□ Applicable √ Not Applicable

III. INFORMATION ON NON-COMPLIANCE GUARANTEES

□ Applicable √ Not Applicable

IV. EXPLANATION OF THE BOARD OF THE COMPANY ON THE ‘NON-

STANDARD AUDIT REPORT’ ISSUED BY THE ACCOUNTING FIRM

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

V. EXPLANATION OF THE COMPANY’S ANALYSIS ON REASONS ANDEFFECTS OF CHANGES IN ACCOUNTING POLICIES ANDACCOUNTING ESTIMATES OR CORRECTION OF SIGNIFICANTACCOUNTING ERRORS(I) Explanation of the Company’s analysis on reasons and effects of changes inaccounting policies and accounting estimates

□ Applicable √ Not Applicable

(II) Explanation of the Company’s analysis on reasons and effects of correction ofsignificant accounting errors

□ Applicable √ Not Applicable

(III) Communication with former accounting firm

□ Applicable √ Not Applicable

(IV) Other explanations

□ Applicable √ Not Applicable

VI. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRMUnit and Currency: RMB million

Current appointmentName of domestic accounting firmHexin Certified Public Accountants

LLPRemuneration of domestic accounting firm6.55Audit period of domestic accounting firm10 yearsNames of certified public accountants of domestic accounting

firm

Zhao Bo, Li Xiang ZhiNumber of consecutive years of audit services of certified

public accountants in domestic accounting firms

Name of overseas accounting firmHLB Hodgson Impey Cheng LimitedRemuneration of overseas accounting firm3.89Audit period of overseas accounting firm3 years

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

NameRemunerationAccounting firm for Internal control auditHexin Certified Public

Accountants LLP

2.23

Explanation of appointment and dismissal of accounting firm

□ Applicable √ Not Applicable

Explanation of change of accounting firm during the auditing period

□ Applicable √ Not Applicable

VII. POSSIBILITY OF DELISTING(I) Reasons of warning for delisting risks

□ Applicable √ Not Applicable

(II) Response measures to be taken by the Company

□ Applicable √ Not Applicable

(III) Circumstances and reasons for termination of listing

□ Applicable √ Not Applicable

VIII. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING

□ Applicable √ Not Applicable

IX. MATERIAL LITIGATION AND ARBITRATION MATTERS

□ Material litigation and arbitration matters during the year

√ No material litigation and arbitration matters during the year

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Haier?18703[3]?E08?Section?6?1st?Proof?Time:?04-04-2023_17:39:20?P.117?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

X. 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

XI. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY AND

ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERDURING THE REPORTING PERIOD

□ Applicable √ Not applicable

XII. SIGNIFICANT RELATED-PARTY TRANSACTIONS

(I) Related-party transactions from daily operation

1. Matters that have been disclosed in temporary announcements and with no

subsequent progress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcements and with subsequent

progress 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” (《關於提請股東大會授權董事會及其授權人士簽署 2020–2022年關聯交易框架協定的議案》) 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” (《關於簽署關聯交易框架協定的議案》) 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” (《海爾智家股份有限公司關於與海爾集團公司續簽暨預計關聯交易額度的議案》) considered and approved at the 18th meeting ofthe 10th session of the Board of Directors and the 2020 Annual General Meeting, theCompany has made estimation on the connected transactions for the next three years, asdetailed in the aforesaid announcements regarding the resolutions of the meetings.For the actual performance of the Company’s connected transactions in the year of 2022,please refer to”XII. Related parties and related-party transactions “under Section X—

Financial and Accounting Report set out in this regular report.

3. Matters not disclosed in temporary announcements

□ Applicable √ Not applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

(II) Related-party transactions regarding acquisition or disposal of assets/equity

1. Matter disclosed in temporary announcements and with no subsequent progress or

change

√ Applicable □ Not Applicable

Summary of mattersQuery indexThe acquisition of 100% equity interest inQingdao TAB Robot Technology Co.,LTD* (青島塔波爾機器人技術有限責任公司) and connected transaction: inorder to establish the competitiveness ofservice robots for household cleaning,promote the development of theCompany’s cleaning appliance business,as well as to enhance its corporategovernance and reduce routineconnected transactions, Qingdao HaierSmart Life Electric Co. Ltd.* (青島海爾智慧生活電器有限公司), a wholly-owned subsidiary of the Company,acquired 100% equity interest inQingdao TAB Robot Technology Co.,LTD* (青島塔波爾機器人技術有限責任公司) held by Qingdao HaierInterconnect Technology Co. Ltd.* (青島海爾互聯科技有限公司) for aconsideration of RMB125 million incash.

For details, please refer to the”Announcementin relation to the Acquisition of 100% EquityInterest in Qingdao TAB Robot TechnologyCo., LTD* (青島塔波爾機器人技術有限責任公司) by a Subsidiary of Haier Smart HomeCo., Ltd.* (海爾智家股份有限公司) andConnected Transaction” as disclosed by theCompany on 29 April 2022

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

Summary of mattersQuery indexTransfer of 25% equity interest in Qingdao

Haier Mold Co., Ltd.* (青島海爾模具有限公司) and connected transaction: inorder to focus on our principal businessof smart home, optimize resourceallocation and acquire investmentincome, Haier Shareholdings (HongKong) Limited, a wholly-ownedsubsidiary of the Company transferredto Qingdao Haier Mold Smart CloudTechnology Co., Ltd.* (青島海模智雲科技有限公司) 25% equity interest inQingdao Haier Mold Co., Ltd.* (青島海爾模具有限公司) for a consideration ofRMB277 million in cash.

For details, please refer to the”Announcementin relation to the Transfer of 25% EquityInterest in Qingdao Haier Mold Co., Ltd.* (青島海爾模具有限公司) by a Subsidiary of HaierSmart Home Co., Ltd.* (海爾智家股份有限公司) and Connected Transaction” as disclosedby the Company on 29 April 2022

Acquisition of 100% equity interest inQingdao Haier Special Plastic R&D Co.,Ltd. (“Qingdao Special Plastic”) by asubsidiary and connected transaction:

Qingdao Haier Special Refrigerator Co.,Ltd. (“Haier Special Refrigerator”), awholly-own subsidiary of the Company,intends to acquire 30.23% equityinterest in Qingdao Haier Special PlasticR&D Co., Ltd. held by Haier GroupCorporation for RMB45,953,500,

65.58% equity interest in Qingdao

Special Plastic held by Haier COSMOCo. Ltd. for RMB99,683,700 and 4.19%equity interest in Qingdao SpecialPlastic held by Qingdao Haier ToolingDevelopment Co., Ltd. forRMB6,362,800. After the completion ofthe transaction, the subject companybecame a wholly-owned subsidiary ofHaier Special Refrigerator.

For details, please refer to the”Announcementin relation to the Acquisition of 100% EquityInterest in Qingdao Haier Special Plastic R&DCo., Ltd.* (青島海爾特種塑料研製開發有限公司) by a Subsidiary of Haier Smart HomeCo., Ltd.* (海爾智家股份有限公司) andConnected Transaction” as disclosed by theCompany on 30 August 2022

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

2. Matters that have been disclosed in temporary announcements and with subsequent

progress 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 reporting

period 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 no

subsequent progress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcements and with subsequent

progress 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 no

subsequent progress or change

□ Applicable √ Not applicable

2. Matters that have been disclosed in temporary announcement and with subsequent

progress or change

□ Applicable √ Not applicable

3. Matters that haven’t been disclosed in temporary announcements

□ Applicable √ Not applicable

(V) Financial business between the Company and the finance company with whichit has a related relationship, or it is the company’s controlling finance companyand related parties

√ Applicable □ Not applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

1. Deposit business

√ Applicable □Not applicable

Unit and Currency: RMB

Changes of the periodRelated partyRelationship

Maximum daily

deposit limit

Range of depositinterest

Balance as at thebeginning of theperiod

Total amountdeposited duringthe period

Total amountwithdrawn duringthe period

Balance as at theend of the periodHaier Finance Co.,

Ltd.

Subsidiary of HaierGroup

32 billion0.385% to 3.50%28,870,880,571.84451,072,007,538.64448,518,469,390.3531,424,418,720.13Total///28,870,880,571.84451,072,007,538.64448,518,469,390.3531,424,418,720.13

2. Lending business

√ Applicable □ Not applicable

Unit and Currency: RMBChanges of the periodRelated partyRelationshipLoan limit

Range of loaninterest

Balance as atthe beginningof the period

Total loanamount forthe period

Totalrepaymentamount forthe period

Balance as atthe end of the

periodHaier Finance

Co., Ltd.

Subsidiary of

Haier Group

7 billion336,507,659.1260,000,000.00336,507,659.1260,000,000.00Total///336,507,659.1260,000,000.00336,507,659.1260,000,000.00

3. Credit business or other finance businesses

√ Applicable □ Not applicable

Unit and Currency: RMBRelated partyRelationshipType of businessTotal amount

Actual amountof occurrenceHaier Finance Co.,

Ltd.

Subsidiary of Haier

Group

Foreign exchange

derivativesproducts

5.5 billion412,724,607.88

Haier Finance Co.,

Ltd.

Subsidiary of Haier

Group

Service charge80 million29,446,933.09

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

4. Other explanations

□ Applicable √ Not Applicable

(VI) Others

□ Applicable √ Not Applicable

XIII. SIGNIFICANT CONTRACTS AND THEIR EXECUTION

(I) Trusteeship, contracting and leasing

1. Trusteeship

□ Applicable √ Not applicable

During the reporting period, the Company had no material escrow matters. Up to now, thefollowing entrusted assets that have been approved by the Company’sshareholders‘meeting are still in effect:

According to Haier Group’s commitment in 2011 on further supporting the development ofQingdao Haier and resolving peer competition to reduce connected transactions, based onthe fact that Qingdao Haier Optoelectronics Co., Ltd. (青島海爾光電有限公司) and itssubsidiaries, the main body of Haier Group engaging in the color television business, arestill in a period of transformation and integration, and their financial performance has notyet met the Company’s expectations, Haier Group is unable to complete the transfer beforethe aforesaid commitment period. Haier Group intends to entrust the Company with theoperation and management of the escrow assets and pay the Company an annual escrowfee of RMB1 million during the escrow period.

2. Contracting

□ Applicable √ Not applicable

3. Leasing

□ Applicable √ Not applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

(II) Guarantee

√ Applicable □ Not applicable

Unit and Currency: RMB0’000External guarantees provided by the Company (excluding guarantees for subsidiaries)

Guarantor

Relationshipbetween theguarantor and

the listedcompany

Securedparty

Amount ofguarantee

Date ofoccurrenceof theguarantee

(date ofagreement)

Commencement

date ofguarantee

Expirationdate ofguarantee

Type ofguarantee

Collateral

(if any)

Whether the

guaranteehas beenfulfilledWhether theguarantee isoverdueOverdueamount of

theguarantee

Whetherthere is acounter-guarantee

WhetherRelated-partyguarantee

or notRelationshipTotal 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 subsidiariesTotal amount of guarantees for subsidiaries occurred during the reporting period1,868,555Total balance of guarantees for subsidiaries at the end of the reporting period (B)1,284,382

Total amount of guarantees provided by the Company (including guarantees for subsidiaries)Total amount of guarantee (A + B)1,284,382Ratio of total amount of guarantees to net assets of the Company (%)13.7Including:

Amount of guarantees for shareholders, ultimate controllers and their related parties(C)0Amount of debt guarantees provided directly or indirectly for the secured party with asset-liability ratio exceeding 70% (D)687,732The amount of total amount of guarantee in excess of 50% of net assets (E)0Total amount of the above three guarantees (C + D + E)687,732Explanation of possibly bearing related discharge duty for premature guaranteesNilExplanation of guarantee statusNil

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

(III) Entrusted others to manage cash assets

1. Entrusted wealth management

(1) Overall of entrusted wealth management

√ Applicable □ Not applicable

Unit and Currency: RMB

Type

Sources of

fundsAmount

Premature

balance

Past dueuncollectedamountWealth

management inbanks

Self-owned funds14,286,710,0001,464,000,0000Wealthmanagementin banks

Fundraising

through CB

475,000,000175,000,0000OthersSelf-owned

funds (Assetmanagementaccount foremployeestockownership)

14,638,96814,638,9680

Others

√ Applicable □ Not applicable

By the end of the reporting period, the balance of the Company’s entrusted wealthmanagement amounted to RMB1,654 million, including three parts:①Temporarily-idlefunds wealth management by certain subsidiaries of the Company: Under the premiseof ensuring sufficient capital required by the principal operating activities and dailyoperations, some subsidiaries of the Company purchased some short-term principal-guaranteed wealth management products and structured deposits from majorcommercial banks to improve the yield of temporarily-idle funds and the return forshareholders within the authority of the president’s office meeting and under thecondition of ensuring fund safety. By the end of the reporting period, the balance ofthe entrusted wealth management amounted to RMB1,464 million; ②Temporarily-idlefundraising wealth management: at the end of December 2018, the Company’sproceeds for the issuance of convertible corporate bonds were fully landed. In orderto improve the yield of temporarily-idle funds, the Company intended to carry outcash management with the amounts not exceeding RMB0.5 billion after approved bythe Board of Directors. By the end of the reporting period, the balance of theentrusted wealth management amounted to RMB175 million; ③Idle funds in the assetmanagement account of the Employee Stock Ownership Scheme: the assetmanagement institution purchased cash products such as money funds according tothe liquidity of the products with some idle funds in the asset management accountof the Employee Stock Ownership Scheme of the Company. The balance of cashassets amounted to RMB15 million.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

(2) Individual entrusted wealth management

√ Applicable □ Not applicable

Unit and Currency: RMB

Trustee

Type ofentrustedwealthmanagement

Amount ofentrustedwealthmanagement

Commencementdate of entrustedwealthmanagement

Expirationdate ofentrustedwealthmanagement

Sources offundsInvestment

Determinationof return

Annualizedyield

Expectedreturn(if any)Actual gainsor lossesCollection

Whetherapprovedby dueprocess

Any futureplan forentrustedwealthmanagement

Amount ofprovisionforimpairment(if any)Qingdao branch ofShanghai PudongDevelopment Bank

Linkedstructureddeposit

600,000,0002022/11/212023/2/21Self-owned

funds

Notexpired

YESYESQingdao branch ofShanghai PudongDevelopment Bank

Linkedstructureddeposit

200,000,0002022/10/82023/1/9Self-owned

funds

Notexpired

YESYESQingdao branch ofBank ofCommunications

Linkedstructureddeposit

314,000,0002022/10/172023/1/17Self-owned

funds

Notexpired

YESYESHaier Road sub-branchof Construction Bank

Linkedstructureddeposit

75,000,0002022/6/102023/1/3Fundraising

throughCB

Notexpired

YESYESHaier Road sub-branchof Construction Bank

Linkedstructureddeposit

100,000,0002022/7/62023/1/3Fundraising

throughCB

Notexpired

YESYESAsset managementaccount of IndustrialBank CO., LTD.

Short-termwealthmanagement

14,638,968Self-owned

funds

Notexpired

YESYESQingdao Sub-branch ofBank of China

Linkedstructureddeposit

176,000,0002022/10/262023/1/12Self-owned

funds

Notexpired

YESYESQingdao Sub-branch ofBank of China

Linkedstructureddeposit

174,000,0002022/10/252023/1/11Self-owned

funds

Notexpired

YESYES

Others

□ Applicable √ Not applicable

(3) Provisions for impairment of entrusted wealth management

□ Applicable √ Not applicable

2. Entrusted loans

(1) Overall entrusted loans

□ Applicable √ Not applicable

Others

□ Applicable √ Not Applicable

(2) Individual entrusted loans

□ Applicable √ Not applicable

Others

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VI Significant Events

(3) Provisions for impairment of entrusted loans

□ Applicable √ Not Applicable

3. Others

□ Applicable √ Not Applicable

(IV) Other Major Contracts

□ Applicable √ Not Applicable

XIV. EXPLANATION OF OTHER SIGNIFICANT MATTERS THAT HAVE A

SIGNIFICANT IMPACT ON THE VALUE JUDGMENTS AND INVESTMENTDECISIONS OF INVESTORS

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares andInformation about Shareholders

I. CHANGES IN SHARE CAPITAL(I) Table of Changes in shares

1. Table of Changes in shares

Unit: sharePrior to the changeIncrease and decrease of the change (,-)After the changeNumber

Percentage(%)New sharesissued

Bonusshares

Sharesconvertedfrom reserveOthersSubtotalNumber

Percentage

(%)I. Shares with sellingrestrictions

1. Shares held by

the state

2. Shares held by

the state-ownedlegal entities

3. Shares held by

other domesticinvestorsIncluding:

shares heldby Domesticnon-state-owned legalentitiesShares held by

domesticindividuals

4. Shares held by

foreign investorsIncluding:

shares heldby foreignlegal entitiesShares held by

foreignindividualsII. Tradable shares

without sellingrestrictions9,398,704,530100.0041,413,6006,480,36347,893,9639,446,598,493100.00

1. RMB ordinary

shares6,308,552,65467.126,308,552,65466.78

2. Domestic listed

foreign shares

3. Overseas listed

foreign shares3,090,151,87632.8841,413,6006,480,36347,893,9633,138,045,83933.22

4. Others

III. Total shares9,398,704,530100.0041,413,6006,480,36347,893,9639,446,598,493100.00

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Haier Smart Home Co., Ltd. Annual 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 Regulatory

Commission issued the Reply to the Approval of Issuance of Overseas Listed ForeignShares and Convertible Corporate Bonds by Haier Smart Home Co., Ltd. (《關於核準海爾智家股份有限公司發行境外上市外資股及可轉換公司債券的批复》) (Zheng JianXu Ke [2020] No. 2768), which approved that: (1) the Company issued no more than2,856,526,138 overseas listed foreign shares (including additional shares issued byholders of convertible corporate bonds not exceeding HK$8.0 billion or equivalent inforeign 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 Group Co., Ltd. (a Hong Kong listed company), were listed and traded onthe Main Board of the Hong Kong Stock Exchange and the related convertible bondsunder the H share convertible bonds scheme became valid and in effect immediatelyafter the listing amounting to HK$7,993,000,000. During the reporting period,HK$394,000,000 of the convertible bonds were converted into a total of 21,450,563H shares of the Company.

(2) Placing of H share: Pursuant to the Resolution on Granting General Mandate to the

Board 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.” (《關於核準海爾智家股份有限公司發行境外上市外資股的批复》) (Zheng Jian Xu Ke [2021] No. 4055),the Company 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.

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Haier Smart Home Co., Ltd. Annual 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.

(3) Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual General

Meeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of2022 for A D shares and the First Class Meeting of 2022 for H shares of theCompany considered and approved the Resolution on Proposing the General Meetingto Grant the General Mandate to the Board of Directors to Repurchase not morethan 10% of the Total Number of H shares of the Company in Issue of Haier SmartHome Co., Ltd., in which the Company intends to repurchase H shares and cancelthem within the agreed period. During the reporting period, the Companyrepurchased a total of 14,970,200 H shares and all such shares have beencancelled.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 to9,446,598,493 shares.

3. Effect of changes in shares on the financial indicators such as earnings per share

and net assets per share (if any) over the last year and the last reporting period

√ Applicable □ Not Applicable

In 2022, the Company achieved net profit attributable to shareholders of the ParentCompany of RMB14,710,923,491.99, equity attributable to owners of the Parent Companyof RMB93,422,647,664.43, in terms of total share capital of 9,398,704,530 shares at thebeginning of the period, profit per share was RMB1.57 and net asset was RMB9.94 pershare accordingly; in terms of total share capital of 9,446,598,493 shares at the end of theperiod, profit per share was RMB1.56 and net asset was RMB9.89 per share accordingly.

4. Other disclosure deemed necessary by the Company or required by

securitiesregulatory authorities

□ Applicable √ Not Applicable

(II) Changes in shares with selling restriction

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

II. ISSUANCE AND LISTING OF SECURITIES(I) Issuance of securities as of the reporting period

√ Applicable □ Not Applicable

Unit: share Currency: HKD

Type of shares and itsderivative securities

Date ofissue

Issuingprice (orinterestsrate)

Number of

issuance

Date oflisting

Number ofshares underlisting approval

Date ofterminationConvertible corporation bonds,convertible bonds withwarrantsCorporate bonds convertible

into H-shares

23 December

2020

/7,993,000,00023 December

2020

7,993,000,00021 November 2022

Details of issuance of securities as of the reporting period (please specify separately for bondswith different interest rates within the duration):

√ Applicable □ Not Applicable

On 27 October 2020, China Securities Regulatory Commission (CSRC) issued the Reply onApproval of the Foreign Public Issuance of Convertible Bonds by Qingdao Haier Co., Ltd.” (ZhengJian Xu Ke [2020] No. 2768, hereinafter referred to as “CSRC Reply”), which approved: (1) HaierSmart Home shall issue not more than 2,856,526,138 overseas listed foreign capital shares(including not more than HK$8 billion or the equivalent in foreign currencies of shares issued forthe holders of convertible corporate bonds upon the exercise of conversion rights), with a parvalue of RMB1 each and all of which are ordinary shares. Upon the completion of this issue,Haier Smart Home can be listed on the Main Board of The Stock Exchange of Hong KongLimited; (2) the overseas wholly-owned subsidiary guaranteed by Haier Smart Home can issuecorporate bonds of not exceeding HK$8 billion or equivalent in foreign currencies that can beconverted into overseas listed foreign capital shares of the issuer. Pursuant to which and withthe approval of the relevant parties, the Company and Harvest International Company, a wholly-owned subsidiary of the Company, issued 2,448,279,814 H-shares and convertible bondsrespectively on Hong Kong Stock Exchange on 23 December 2020 (the ex-changeable bonds ofHK$8 billion issued in November 2017 were converted into convertible bonds, and theconvertible bonds in effect amounted to HK$7,993 million, which can be converted into H-sharesof the Company). For details, please refer to the prospectus and other relevant documentsdisclosed in Hong Kong market during the reporting period of the Company and the Report onthe Implementation of Material Asset Purchase and Related Party Transactions and other relevantdocuments disclosed on 26 December 2020.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

For the above-mentioned H-share convertible bonds, 105.11% of the remaining par value of thebonds were repaid in a one-off repayment of principal and interest upon maturity. During thelisting and transaction period, the H-share convertible bonds can be converted into H-shares ofthe Company. Upon the maturity in November 2022, the Company repaid the principal andinterest on the outstanding H-share convertible bonds of HK$5 million. The H-share convertiblebonds were fully repaid and delisted.(II) Changes in total shares and shareholder structure as well as assets and liabilities

structure of the Company

√ Applicable □ Not Applicable

For the total number of ordinary shares of the Company and changes in shareholder structure,please refer to the relevant explanations in ‘I. Changes in share capital’ and ‘III. Information onshareholder and ultimate controllers’ in this section. For the impact of the aforesaid changes on‘Paid-in capital (or share capital)’ in the Company’s balance sheet and other items, please referto the relevant content in ‘Section X Financial Report’ of this report.

(III) Information on existing shares specifically issued for staff

□ Applicable √ Not Applicable

III. INFORMATION ON SHAREHOLDERS AND ULTIMATE CONTROLLERS

(I) Total number of shareholders

Total number of ordinary shareholders up to the end of the reporting period137,372Total number of ordinary shareholders as at the end of the last month prior to

the disclosure day of the annual report

130,537

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

(II) Table of top ten shareholders, top ten common shareholders (or the shareholdersnot subject to selling restrictions) by the end of the reporting period

Unit: shareShareholdings of top ten shareholders

Name of shareholder(full name)

Increase/decreaseduring thereportingperiodNumber ofshares heldat the end of

the period

Percentage(%)Number ofshares heldwith sellingrestrictions

Status of shares pledged,marked or frozen

Nature ofshareholderStatusNumberHKSCC NOMINEES LIMITED(Note)

2,239,834,55223.71UnknownUnknownHaier COSMO Co., Ltd. (海尔卡奥斯股份有限公司)

1,258,684,82413.32NoneDomestic non-state-

owned legal entityHaier Group Corporation1,072,610,76411.35NoneDomestic non-state-

owned legal entityHong Kong Securities Clearing

Co., Ltd.

706,522,8617.48NoneUnknownHCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED

538,560,0005.70NoneForeign legal entityChina Securities Finance

Corporation Limited

182,592,6541.93NoneUnknownQingdao Haier Venture &

Investment Information Co.,Ltd. (青島海爾創業投資諮詢有限公司)

172,252,5601.82NoneDomestic non-state-

owned legal entityQingdao Haichuangzhi

Management ConsultingEnterprise (LimitedPartnership) (青島海創智管理諮詢企業 (有限合伙))

120,622,4161.28NoneDomestic non-state-

owned legal entityALIBABA INVESTMENT LIMITED83,823,9930.89UnknownForeign legal entityChina Merchant Bank Co., Ltd.

—Yifangda ConsumerIndustry Equity SecuritiesInvestment Fund

71,347,9820.76NoneUnknown

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

Shareholdings of top ten shareholders not subject to selling restrictions

Name of shareholder

Number oftradable shares

without sellingrestrictionsClass and number of shares

ClassNumberHKSCC NOMINEES

LIMITED

2,239,834,552Overseas listed foreign

shares

2,239,834,552Haier COSMO Co., Ltd.(海爾卡奧斯股份有限公司)

1,258,684,824RMB ordinary1,258,684,824Haier GroupCorporation

1,072,610,764RMB ordinary1,072,610,764Hong Kong Securities

Clearing Co., Ltd.

706,522,861RMB ordinary706,522,861HCH (HK) INVESTMENT

MANAGEMENT CO.,LIMITED

538,560,000Overseas listed foreign

shares

538,560,000China Securities Finance

Corporation Limited

182,592,654RMB ordinary182,592,654Qingdao Haier Venture &

InvestmentInformation Co., Ltd.(青島海爾創業投資諮詢有限公司)

172,252,560RMB ordinary172,252,560

Qingdao Haichuangzhi

ManagementConsulting Enterprise(Limited Partnership)(青島海創智管理諮詢企業（有限合伙）)

120,622,416RMB ordinary120,622,416

ALIBABA INVESTMENT

LIMITED

83,823,993Overseas listed foreign

shares

83,823,993China Merchant Bank

Co., Ltd.—YifangdaConsumer IndustryEquity SecuritiesInvestment Fund

71,347,982RMB ordinary71,347,982

Explanation on

repurchase account oftop ten shareholders

The Company’s repurchase account held a total of 86,292,743

shares

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

Name of shareholder

Number oftradable shareswithout sellingrestrictionsClass and number of shares

ClassNumberExplanation ondelegated votingrights, entrustedvoting rights,abstained votingrights of the aforesaidshareholders

Nil

Related parties orparties acting inconcert among theaforesaidshareholders

(1) Haier COSMO Co., Ltd. (海爾卡奧斯股份有限公司) is a holding

subsidiary of Haier Group Corporation. Haier GroupCorporation holds 51.20% of its equity. Each of QingdaoHaier Venture & Investment Information Co., Ltd.(青島海爾創業投資諮詢有限公司), HCH (HK) INVESTMENTMANAGEMENT CO., LIMITED and Qingdao HaichuangzhiManagement Consulting Enterprise (Limited Partnership) (青島海創智管理諮詢企業（有限合伙）) is a party acting in concertwith Haier Group Corporation;

(2) The Company is not aware of the existence of any connections

of other shareholders.Explanation ofpreferentialshareholders withrestoration of votingrights and theirshareholdings

Not applicable

Number of shares held by top ten shareholders with selling restrictions and the sellingrestrictions

□ Applicable √ Not Applicable

Note: HKSCC NOMINEES LIMITED is the Banking Collection Account for the shareholders of the Company’s H-shares, which

is the original data provided by China Hong Kong securities registration agency to the Company after the mergeraccording to local market practices and technical settings, not representing the ultimate shareholder.

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Haier Smart Home Co., Ltd. Annual 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

IV. CONTROLLING SHAREHOLDER AND THE ULTIMATE CONTROLLER

(I) Status of controlling shareholder

1 Legal person

√ Applicable □ Not Applicable

NameHaier COSMO Co., Ltd. (海尔卡奥斯股份有限公司)Person in charge of theCompany or legalrepresentative

Zhou Yunjie (周雲杰)Establishment date1988–

–

Principal businessInformation technology integration and Internet of Things

technology services: industrial automation technologyresearch and development, technical consulting; researchand development and manufacturing of electricalappliances, electronic products, mechanical products,communication equipment and related accessories,industrial automation control equipment, computerhardware and software and auxiliary equipment; importand export business (operated within the scopeapproved by MOFCOM); wholesale and retail: domesticcommerce (except for merchandises prohibited by thestate); investment in medical industry; investmentadvisory services; enterprise management consulting.(For projects subject to approval, business activities canonly be carried out after the approval by relevantdepartments)Shareholding of other

controlling andparticipating domesticand overseas listedcompanies in thereporting period

Indirect controlling/participating Company: ‘Qingdao Haier

Biomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司)(stock name: ‘Haier Biomedical’, stock code: 688139),Yingkang Life Technology Co., Ltd. (盈康生命科技股份有限公司)(stock name: ‘Yingkang Life’, stock code:

300143), ‘Qingdao Bank Co., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank of Qingdao’, stock code: 002948and 3866.HK), ‘China International Capital CorporationLimited’ (stock name: ‘CICC’, stock code: 601995 and3908.HK), etc.Other explanationNil

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

2 Natural person

□ Applicable √ Not Applicable

3 Explanation on the absence of controlling shareholders of the Company

□ Applicable √ Not Applicable

4 Explanation on the change in controlling shareholders during the reporting period

□ Applicable √ Not Applicable

5 Framework of the ownership and controlling relationship between the Company and

its controlling shareholder

√ Applicable □ Not Applicable

Haier Smart Home Co., Ltd.

13.32%

Haier COSMO Co., Ltd.()

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

(II) Status of the ultimate controller

1 Legal person

√ Applicable □ Not Applicable

NameHaier Group CorporationPerson in charge of theCompany or legalrepresentative

Zhou Yunjie (周雲杰)Establishment date1980–

–

Principal businessTechnology development, technology consultation,

technology transfer and technology services (includingindustrial Internet, etc.); data processing; digitaltechnology, intelligent technology, software technology;research and development, sales and after-sales serviceof robots and automation equipment products; logisticsinformation service; research and development and salesof software technology for smart home products andsolutions systems; manufacturing of householdappliances, electronic products, communicationequipment, electronic computers and accessories,general machinery, kitchen utensils, industrial robots;wholesale and retail of domestic commerce (except forthe national dangerous prohibition franchise exclusivecontrol merchandises); import and export business (seethe foreign trade enterprise finalized certification fordetails); economic and technological consultation;research and development and transfer of technologicalachievements; rental of owned properties. (For projectssubject to approval, business activities can only becarried out after the approval by relevant departments)Shareholding of othercontrolling andparticipating domesticand overseas listedcompanies in thereporting period

Indirect controlling/participating Company: ‘Qingdao Haier

Biomedical Co., Ltd.’ (青島海爾生物醫療股份有限公司)(stock name: ‘Haier Biomedical’, stock code: 688139),Yingkang Life Technology Co., Ltd. (盈康生命科技股份有限公司) (stock name: ‘Yingkang Life’, stock code:

300143), ‘Qingdao Bank Co., Ltd.’ (青島銀行股份有限公司) (stock name: ‘Bank of Qingdao’, stock code: 002948and 3866.HK), China International Capital CorporationLimited’ (stock name: ‘CICC’, stock code: 601995 and3908.HK), ‘Qingdao Thunderobot Technology Co., Ltd.’(stock name: ‘THUNDEROBOT’, stock code: 872190)etc.Other explanationNil

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Haier Smart Home Co., Ltd. Annual Report 2022

Section VII Changes in Shares and Information about Shareholders

2 Natural person

□ Applicable √ Not Applicable

3 Explanation on the absence of ultimate controller of the Company

□ Applicable √ Not Applicable

4 Explanation on the change in control over the Company during the reporting period

□ Applicable √ Not Applicable

5 Framework of ownership and controlling relationship between the Company and theultimate controllers

√ Applicable □ Not Applicable

Haier Smart Home Co., Ltd.

Haier Group Corporationpartiesin concert100%

1.82%

(A Shares)

1.28%

(A Shares)

11.35%

(A Shares)

13.32%

(A Shares)

5.70%

(H Shares)

0.62%

(D Share

51.20%

67%

%1

00%

Qingdao Haier Venture &Investment Information

Co., Ltd.(

)

Qingdao HaichuangzhiManagement Consulting

Enterprise(Limited Partnership)(

)

Haier COSMO

Co., Ltd.(

)

HCH (HK)INVESTMENTMANAGEMENTCO., LIMITED

HaierInternationalCo. Limited

6 The ultimate controller controls the Company by way of Trust or other assets

management

□ Applicable √ Not Applicable

(III) Introduction of controlling shareholders and ultimate controllers

√ Applicable □ Not Applicable

Haier Group Company is registered as a joint-stock enterprise. According to the statementissued by the State-owned Assets Management Office of Qingdao on 1 June 2002, it is believedthat the enterprise nature of Haier Group Company is a collective owned enterprise.V. THE PROPORTION OF THE ACCUMULATED NUMBER OF SHARES

PLEDGED BY THE CONTROLLING SHAREHOLDERS OR THE LARGESTSHAREHOLDER OF THE COMPANY, TOGETHER WITH THE PARTIESACTING IN CONCERT WITH THEM, TO THE NUMBER OF SHARES OFTHE COMPANY HELD BY THEM AMOUNTS TO MORE THAN 80%

□ Applicable √ Not Applicable

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Section VII Changes in Shares and Information about Shareholders

VI. OTHER CORPORATE SHAREHOLDERS WITH A SHAREHOLDING

PERCENTAGE OVER 10%

□ Applicable √ Not Applicable

VII. EXPLANATION OF RESTRICTIONS ON SHAREHOLDING REDUCTION

□ Applicable √ Not Applicable

VIII. SPECIFIC IMPLEMENTATION OF SHARE REPURCHASE DURING THEREPORTING PERIOD

√ Applicable □ Not Applicable

Unit and Currency: RMBName of share repurchase planHaier Smart Home Co., Ltd.’s public share

proposal in relation to the partial repurchaseof A SharesDate of disclosure of the share repurchase plan31 March 2022Number of shares proposed to repurchased and

its percentage to the total share capital (%)

42,857,143 shares to 85,714,286 shares, 0.45

to 0.91Proposed amount of repurchaseRMB1.5–3 billionProposed period of repurchase31 March 2022–30 March 2023Purpose of repurchaseUsed for employee share ownership plansAmount repurchased (share)59,055,239Repurchased amount as a percentage to theunderlying shares covered by the equityincentive scheme (%) (if any)

Not applicableProgress of the Company’s reduction of itsholdings of repurchased shares by way ofcentralised bidding

Not applicableNote: During the reporting period, the Company also implemented the H-share repurchase scheme. For details, please refer to”2.Statement on the changes in shares“under”Section VII Changes in Shares and Information about Shareholders “of this reportand the Announcement on the Changes in Shares of Overseas Listed Foreign Shares (H Shares) of Haier Smart Home Co.,Ltd. (《海尔智家股份有限公司關於境外上市外資股 (H股) 股份变动情況的公告》) (No.: Lin 2022–082) disclosed by theCompany on 31 December 2022.

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Section VIII Relevant Information ofPreferred Shares

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IX Relevant Information of Bonds

I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIALCORPORATE DEBT FINANCING INSTRUMENTS

□ Applicable √ Not Applicable

II. CONVERTIBLE CORPORATE BOND

√ Applicable □ Not Applicable

(I) Convertible bond issue

√ Applicable □ Not Applicable

On 27 October 2020, the CSRC issued “reply to the approval for the issue of overseas listedforeign shares and convertible corporate bonds by Haier Smart Home Co., Ltd.” (《關於核準海爾智家股份有限公司發行境外上市外資股及可轉換公司債券的批复》) (Zheng Jian Xu Ke [2020]No. 2768) (hereafter, the “CSRC Reply”) to approve: (1) Haier Smart Home to issue not morethan 2,856,526,138 overseas listed foreign Shares (including Shares to be issued pursuant to theexercise of conversion rights by the holders of convertible corporate bonds with an amount of notmore than HK$8 billion or equivalent in any foreign currency) with a par value of RMB1, allregistered as ordinary shares. Upon the completion of the issue, Haier Smart Home may belisted on the main board of the Hong Kong Stock Exchange; (2) With the guarantee of HaierSmart Home, its wholly-owned foreign subsidiary issued overseas corporate bonds with anamount of not more than HK$8 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 were issued by the Company and HarvestInternational Company, a wholly-owned subsidiary of the Company in the Hong Kong StockExchange on 23 December 2020, respectively (exchangeable bonds of HK$8 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). Please refer to theprospectus and other relevant documents disclosed by the Company in the Hong Kong marketduring the reporting period and the Report on Implementation of Significant Asset Acquisition andConnected Transactions (《重大資產購買暨關聯交易實施情況報告書》) disclosed by the Companyon 26 December 2020 for details.For the above-mentioned H-share related convertible bonds, 105.11% of the remaining par valueof the bonds were repaid in a one-off repayment of principal and interest upon maturity, andH-share convertible bonds can be converted into H-shares during the listing and trading period.By the maturity of H-share convertible bonds in November 2022, a cumulative amount of HKD7,988,000,000 H-share convertible bonds were converted into H-share of the Company, andcumulative number of H-shares formed as a result of the conversion was 424,661,452 shares; atmaturity of the bonds in November, the Company has repaid the principal and interest of theunconcerted H-share convertible bonds amounted to HKD 5,000,000, and the H-shareconvertible bonds have been fully repaid and delisted.(II) Convertible bond holders and guarantors for the reporting period

□ Applicable √ Not Applicable

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IX Relevant Information of Bonds

As of the end of the reporting period, the H-share convertible bonds have been fully repaid.(III) Conversion of convertible bonds for the reporting period

√ Applicable □ Not Applicable

Unit and Currency: HKDNumber of convertiblecorporate bond

Before theconversionIncrease/decrease for the conversion

After theconversionConversionRedemptionResaleH Share ConvertibleBonds399,000,000394,000,0005,000,0000Cumulative conversion of convertible bond for the reporting period

√ Applicable □ Not Applicable

Name of convertible corporate bond H ShareConvertible BondsH Share Convertible BondsAmount of conversion for the Reporting Period ($)394,000,000Number of conversion for the Reporting Period (Share)21,450,563Cumulative number of conversion (Share)424,661,452Percentage of cumulative number of conversion to totalissued Shares of the Company prior to the conversion (%)4.50Outstanding amount ($)0Percentage of outstanding amount to total amount of

convertible bonds issued (%)0

(IV) Historical adjustment of conversion price

√ Applicable □ Not Applicable

Unit and Currency: HKD

Name of convertible corporate bondH Share Convertible BondsDate ofadjustment toconversionprice

conversion price(adjusted)

Date ofdisclosure

Media fordisclosure

Explanation onadjustment toconversionprice23 August 202218.202 September

2022

Hong Kong StockExchange, etc.

Theimplementationof theCompany’s 2021equitydistribution planLatest conversion price as of the end ofthe reporting period

18.20

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Haier Smart Home Co., Ltd. Annual Report 2022

Section IX Relevant Information of Bonds

(V) Liabilities, change in credit and cash arrangements of repayment in the coming

year of the Company

√ Applicable □ Not Applicable

As at the end of the reporting period, liabilities of the Company amounted to RMB141,128.7121million, in which current liabilities amounted to RMB118,632.4233 million and non-currentliabilities amounted to RMB22,496.2888 million.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 the interestsof convertible corporate bonds and repayment of the bonds in the coming year.(VI) Other information on convertible bonds

√ Applicable □ Not Applicable

On 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. Atpresent, the A-share convertible bonds have ceased to be in existence, but the funds raised fromthe issuance of the bonds have not been fully utilized. As of 31 December 2022, RMB2,823.91million of the funds raised from A-share convertible bonds have been utilized, with a balance ofRMB235.9447 million (the account balance includes the income generated from the purchase ofwealth management products, interest on demand deposits, foreign exchange gains and lossesand the not-yet-invested capital raised). For details of the use of funds, please refer to theSpecial Audit Report of Haier Smart Home Co., Ltd. on the Deposit and Actual Utilization ofFunds Raised in 2022, which was disclosed on the same date as this report.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

I. AUDIT REPORT

√ Applicable □ Not Applicable

Audit ReportHe Xin Shen Zi. (2023) No.000369To all shareholders of Haier Smart Home Co., Ltd.:

I. AUDIT OPINION

We have audited the financial statements of Haier Smart Home Co., Ltd. (hereinafter referred to as the‘Haier Smart Home Co.’), which comprise the Consolidated and the Company’s Balance Sheet as at31 December 2022, the Consolidated and the Company’s Income Statement, the Consolidated and theCompany’s Cash Flow Statement, the Consolidated and the Company’s Statement of Changes inShareholders’ Equity for the year 2022, and notes related to the financial statements.In our opinion, the accompanying financial statements present fairly, in all material respects, theConsolidated and the Company’s financial position of the Haier Smart Home Co as at 31 December2022, and the Consolidated and the Company’s financial performance and cash flow for the year 2022in accordance with the requirements of Accounting Standards for Business Enterprises.II. BASIS OF OUR AUDIT OPINION

We conducted our audit in accordance with China Standards on Auditing. Our responsibilities underthose standards are further described in Auditor’s responsibilities for the Audit of Financial Statementssection of the report. We are independent of Haier Smart Home Co in accordance with the CICPA’sCode of Ethics for Professional Accountants (the Code), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

III. KEY AUDIT MATTERSKey audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the financial statements for the current period. These matters were addressed in the contextof our audit of the financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. We identify the following matters as the key auditmatters that need to be communicated in the audit report:

Key Audit MattersAudit Response(I) Provision for impairment of goodwill and intangible assets with indefinite useful livesRelevant disclosures are included in Note V. 28Other significant accounting policies andaccounting estimates and Note V.19 Impairmentof long-term assets to the financial statements.As of 31 December 2022, the book value ofgoodwill was RMB23.644 billion, and the bookvalue of intangible assets with indefinite usefullives was RMB2.583 billion, without any provisionfor asset impairment. Whether the provision forimpairment of long-term assets was sufficient hadgreat influence to the financial statements.Significant management judgments are involved incalculation of asset group’s recoverable amount,such as revenue growth rate, gross margin,discount rate, etc.Provision for impairment of goodwill andintangible assets with indefinite useful lives isconsidered as the key audit matter due to thesignificant amount and management judgementinvolved in calculation.

We mainly implemented the following auditprocedures on the provisions for the impairment ofgoodwill and intangible assets with indefinite usefullife:

(1) Compared the actual operating results of the

related assets group with previous year’sforecasted figures, to assess the reliability ofthe management forecast on cash flow;

(2) Compared the input of cash flow forecast with

historical data, approved budget and businessplan;

(3) Tested the calculation accuracy of the

discounted cash flow model;

(4) Assessed the appropriateness of parameters

in the cash flow conversion model, such asthe discount rate and the perpetual growthrate. The assessment is based ourunderstanding of the Company’s businessesand the industry.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Key Audit MattersAudit Response(II) Provision for impairment of inventoryRelevant disclosures are included in Note VII.8Inventory to the financial statements.The Company’s inventories are measured at thelower of cost and net realizable value. As of 31December 2022, the inventory balance wasRMB43.154 billion, and the provision forimpairment of inventory was RMB1.611 billion andthe book value was RMB41.543 billion. Whetherthe provision for the impairment of inventorieswas sufficient and accurate had great influence tothe financial statements.The Company determines the net realizable valueof inventory based on the estimated selling priceminus the estimated selling expenses and relatedtaxes.Management estimates the selling price based onthe status of inventory. The estimation processinvolves significant management judgments suchas inventory status, repair rate, discount rate, etc.

Provision for inventories is considered as the keyaudit matter due to the significant amount andmanagement judgement involved in calculation.We mainly implemented the following auditprocedures on the provision for impairment ofinventories:

(1) Obtained the calculation table for provision for

impairment of inventory of the Company, andreviewed the conditions and aging of theproducts models stated in the table to seewhether they are consistent with theinformation obtained through physicalinventory on a sample basis;

(2) Compared the major parameters estimated by

management with historical data, andassessed the appropriateness;

(3) Assessed the selling price estimated by the

management, and checked the inventoryagainst the actual selling price after thebalance sheet date on a sample basis;

(4) Assessed selling expenses and related tax

estimated by management and compared withactual amounts incurred.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Key Audit MattersAudit Response(III) Product warrantyRelevant disclosures are included in Note VII. 33Non-current liabilities due within one year andNote VII. 40 Estimated liabilities to the financialstatements.Estimated liabilities of the Company are mainlyaccrued due to current obligations arising fromproduct warranty. As of 31 December 2022, thebalance of the estimated liabilities and non-currentliabilities due within one year related to productwarranty was RMB3.502 billion, and whether theprovision for warranty was sufficient and accuratehad great influence to the financial statements.Estimated liabilities for product warranty of theCompany were measured in accordance with thebest estimate of the cost to fulfill the relevantcurrent obligations.Calculation of the product warranty involvesmanagement’s significant judgments based onhistorical experience, such as: replacement rate,repair rate, and loss due to disassemble product.Estimated liabilities are considered as the keyaudit matters due to the significant amount andmanagement judgement involved in calculation.

We mainly implemented the following auditprocedures on the estimated liabilities:

(1) Obtained the calculation table on provisions of

the management;

(2) Compared the main parameters estimated by

management with historical data;

(3) Tested the accuracy of the calculation on

estimated liabilities;

(4) Compared and analyzed the calculation results of

the estimated liabilities and the Company’sactual operation;

IV. OTHER INFORMATIONThe management of Haier Smart Home Co (hereinafter referred to as the “Management”) is responsiblefor other information. Other information includes the information covered in the 2022 annual report ofHaier Smart Home Co, but does not include the financial statements and our audit reports.Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

V. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGEDWITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

The Management is responsible for the preparation of the financial statements that give a true and fairview in accordance with the requirements as set out in the Accounting Standards for BusinessEnterprises, and for such internal control as necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the Management are responsible for assessing the ability of HaierSmart Home Co to continue as a going concern, disclosing, as applicable, matters related to goingconcern and using the going concern basis of accounting unless the management either intends toliquidate Haier Smart Home Co or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the financial reporting process of HaierSmart Home Co.

VI. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF FINANCIALSTATEMENTSOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an audit report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee thatan audit conducted in accordance with auditing standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.As part of an audit in accordance with auditing standards, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also perform the following tasks:

(I) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsible to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances.(III) Evaluate the appropriateness of accounting policies used by the Management and thereasonableness of accounting estimates and related disclosures made by the Management.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(IV) Conclude on the appropriateness of the Management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cause significant doubt on the ability of Haier SmartHome Co to continue as a going concern. If we conclude that a material uncertainty exists, weare required by the auditing standards to draw attention in our audit report to the relateddisclosures in the financial statements or; if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditreport. However, future events or conditions may cause Haier Smart Home Co to cease tocontinue as a going concern.(V) Evaluate the overall presentation, structure and content of the financial statements, and whetherthe financial statements represent the underlying transactions and events in a manner thatachieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entitiesor business activities within Haier Smart Home Co to express an opinion on the financialstatements. We are responsible for the direction, supervision and performance of the groupaudit, and remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.From the matters communicated with those charged with governance, we determine those matters thatare of most significance in the audit of the financial statements of the current period and thereforeconstitute the key audit matters. We describe these matters in our audit report unless law orregulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our audit report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.Hexin Certified Public Accountants LLPCertified Public Accountant: Zhaobo (Engagement Partner)Certified Public Accountant: Li Xiang ZhiJinan, China30 March 2023

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

II. FINANCIAL STATEMENTSConsolidated Balance Sheet31 December 2022Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMBItemsNotes

31 December

2022

31 December

2021Current assets:

Monetary fundsVII.154,138,815,682.5146,097,333,903.45Provision of settlement fundFunds lentFinancial assets held for tradingVII.2519,812,880.912,786,075,529.09Derivative financial assetsVII.3183,185,160.5179,819,974.01Bills receivableVII.49,580,191,838.1513,354,791,068.29Accounts receivableVII.515,913,691,537.1114,625,260,856.04Financing receivablesPrepaymentsVII.61,120,756,199.86863,748,085.06Premiums receivableReinsurance accounts receivableReinsurance contract reserves receivableOther receivablesVII.72,380,929,623.191,957,886,257.19Including: Interest receivables513,320,376.79295,017,551.76Dividends receivablesFinancial assets purchased under resaleagreementsInventoriesVII.841,542,713,111.8239,913,949,898.86Contract assetsVII.9309,930,359.25304,434,294.70Assets held for saleNon-current assets due in one yearOther current assetsVII.104,692,515,577.233,928,788,608.23Total current assets130,382,541,970.54123,912,088,474.92Non-current assets:

Loans and advances grantedDebt investmentsVII.111,034,222,222.22Other debt investmentsLong-term receivables305,070,001.45308,998,755.30Long-term equity investmentsVII.1224,527,800,290.8423,200,884,340.57Investments in other equity instrumentsVII.135,851,882,930.204,851,884,944.63Other non-current financial assetsInvestment propertiesVII.1425,678,492.5724,964,888.48Fixed assetsVII.1527,158,348,424.2822,308,014,224.98Construction in progressVII.164,094,684,500.494,183,263,398.79

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes

31 December

2022

31 December

2021Biological assets for productionOil and gas assetsRight-of-use assetsVII.173,795,225,353.892,734,678,906.53Intangible assetsVII.1810,505,881,377.219,550,384,743.90Development costVII.19154,480,515.67227,892,229.13GoodwillVII.2023,643,595,643.8721,827,103,060.76Long-term prepaid expensesVII.21759,883,174.20589,143,077.89Deferred income tax assetsVII.221,722,223,037.711,857,448,518.29Other non-current assetsVII.231,880,736,891.632,164,384,013.14Total non-current assets105,459,712,856.2393,829,045,102.39Total assets235,842,254,826.77217,741,133,577.31Current liabilities:

Short-term borrowingsVII.249,643,374,732.4611,226,212,134.39Borrowings from central bankFunds borrowedFinancial liabilities held for tradingVII.256,294,014.40Derivative financial liabilitiesVII.26104,594,040.6680,212,433.24Bills payableVII.2725,090,945,421.2825,023,238,406.72Accounts payablesVII.2841,883,694,299.2442,363,218,840.33Receipts in advanceContract liabilitiesVII.299,329,554,748.3410,027,091,593.60Disposal of repurchased financial assetsAbsorbing deposit and deposit in inter-

bank marketCustomer deposits for trading in securitiesAmounts due to issuer for securitiesunderwritingPayables for staff’s remunerationVII.304,050,464,754.374,119,425,287.60Taxes payableVII.312,872,846,827.172,607,822,656.37Other payablesVII.3217,511,771,662.7017,570,339,925.76Including: Interest payablesDividends payables1,246,573.3510,639,313.22Fees and commissions payableReinsurance Accounts payablesLiabilities held for saleNon-current liabilities due within one yearVII.336,294,750,667.089,624,339,170.46Other current liabilitiesVII.341,850,426,115.792,238,767,551.40Total current liabilities118,632,423,269.09124,886,962,014.27Non-current liabilities:

Deposits for insurance contractsLong-term borrowingsVII.3513,590,866,873.433,038,573,824.53Bonds payableVII.36334,730,048.82Including: Preference shares

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes

31 December

2022

31 December

2021Perpetual bondsLease liabilitiesVII.372,824,477,670.611,960,894,981.47Long-term payablesVII.3844,240,087.9499,602,707.76Long-term payables for staff’sremunerationVII.391,010,547,202.341,173,151,761.64Estimated liabilitiesVII.401,611,029,220.171,948,565,477.11Deferred incomeVII.41948,935,134.05852,794,567.20Deferred income tax liabilitiesVII.222,358,860,559.192,121,803,173.83Other non-current liabilities107,332,101.0749,461,683.90Total non-current liabilities22,496,288,848.8011,579,578,226.26Total liabilities141,128,712,117.89136,466,540,240.53Owners’ equity (or shareholders’

equity):

Paid-in capital (or share capital)VII.429,446,598,493.009,398,704,530.00Other equity instrumentsVII.43118,017,507.59Including: Preference sharesPerpetual bondsCapital reserveVII.4423,852,037,324.7622,665,374,739.46Less: treasury stock3,857,807,196.382,424,038,819.70Other comprehensive incomeVII.451,990,683,498.45–1,176,851,699.92Special reserveSurplus reserveVII.464,014,190,623.243,438,615,909.84General risk provisionsUndistributed profitsVII.4757,976,944,921.3647,965,270,360.79Total equity attributable to owners (or

shareholders) of the Parent Company93,422,647,664.4379,985,092,528.06Minority shareholders’ interests1,290,895,044.451,289,500,808.72Total owners’ equity (or shareholders’

equity)94,713,542,708.8881,274,593,336.78Total liabilities and owners’ equity (or

shareholders’ equity)235,842,254,826.77217,741,133,577.31Person 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. Annual Report 2022

Section X Financial Report

Balance Sheet of the Parent Company31 December 2022Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMBItemsNotes

31 December

2022

31 December

2021Current Assets:

Monetary funds5,747,356,591.194,043,535,735.48Financial assets held for tradingDerivative financial assetsBills receivableAccounts receivableXVIII.1913,643,071.06546,532,442.90Financing receivablesPrepayments3,116,793.21275,052,864.92Other receivablesXVIII.214,387,031,657.5716,245,280,168.41Including: Interest receivables29,783,516.9551,632,471.99Dividends receivables1,015,840,000.003,615,840,000.00Inventories9,245,507.971,139,135.32Contract assetsAssets held for saleNon-current assets due within one yearOther current assets1,642,423,149.85337,476,209.01Total current assets22,702,816,770.8521,449,016,556.04Non-current assets:

Debt investments1,034,222,222.22Other debt investmentsLong-term receivablesLong-term equity investmentsXVIII.352,744,139,527.8752,513,760,277.77Investments in other equity instruments1,618,513,056.481,615,450,032.92Other non-current financial assetsInvestment propertiesFixed assets167,043,774.16179,789,817.34Construction in progress2,667,680.6217,569,516.17Biological assets for productionOil and gas assetsRight-of-use assets357,996.031,217,186.49Intangible assets48,239,513.1255,171,485.39Development costGoodwillLong-term prepaid expenses3,910,065.393,781,398.54Deferred income tax assets159,338,211.77Other non-current assets1,302,773,743.02803,323,404.28

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes

31 December

2022

31 December

2021Total non-current assets56,921,867,578.9155,349,401,330.67Total assets79,624,684,349.7676,798,417,886.71Current liabilities:

Short-term borrowingsFinancial liabilities held for tradingDerivative financial liabilitiesBills payableAccounts payables521,733,555.60183,690,889.86Receipts in advanceContract liabilities13,084,442.8512,605,139.93Payables for staff’s remuneration9,696,654.1812,323,670.21Taxes payable7,479,878.131,747,023.87Other payables32,659,845,830.0534,484,355,762.60Including: Interest payableDividends payableLiabilities held for saleNon-current liabilities due within one year877,995.65Other current liabilities5,876,886.895,420,156.55Total current liabilities33,217,717,247.7034,701,020,638.67Non-current liabilities:

Long-term borrowings2,195,000,000.00Bonds payableIncluding: Preference sharesPerpetual bondsLease liabilitiesLong-term payableLong-term payables for staff’s

remunerationEstimated liabilitiesDeferred income12,355,000.0019,270,000.00Deferred income tax liabilities420,805,600.57448,965,654.25Other non-current liabilitiesTotal non-current liabilities2,628,160,600.57468,235,654.25Total liabilities35,845,877,848.2735,169,256,292.92Owners’ equity (or Shareholders’

equity):

Paid-in capital (or share capital)9,446,598,493.009,398,704,530.00Other equity instrumentsIncluding: Preference sharesPerpetual bondsCapital reserve27,300,899,019.7625,802,279,483.13Less: treasury stock2,308,138,558.421,495,170,675.08Other comprehensive income602,091,349.74621,302,944.83

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes

31 December

2022

31 December

2021Special reserveSurplus reserve3,409,044,397.792,833,469,684.39Undistributed profits5,328,311,799.624,468,575,626.52Total owners’ equity (or shareholders’equity)43,778,806,501.4941,629,161,593.79Total liabilities and owners’ equity (orshareholders’ equity)79,624,684,349.7676,798,417,886.71Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Consolidated Profit Statement

January-December 2022

Unit and Currency: RMBItemsNotes20222021I. Total operating revenue243,513,563,670.73227,105,817,641.69

Including: Operating revenueVII.48243,513,563,670.73227,105,817,641.69Interest incomeInsurance premiums earnedFee and commission incomeII. Total cost of operations226,725,145,620.43212,862,720,627.22Including: Operating costVII.48167,223,167,396.20155,949,547,009.40Interest expensesFee and commission expensesInsurance withdrawal paymentNet payment from indemnityNet provisions withdrew for insurance

contract liabilityInsurance policy dividend paidReinsurance costTaxes and surchargesVII.49813,289,227.83808,612,319.06Selling expensesVII.5038,597,810,391.1036,584,438,840.05Administrative expensesVII.5110,837,316,878.5010,471,531,966.20R&D expensesVII.529,499,191,097.858,363,868,872.76Financial expensesVII.53–245,629,371.05684,721,619.75Including: Interest expenses984,142,709.25712,462,772.83Interest income855,178,860.53566,432,900.38Add: Other incomeVII.541,069,763,608.56958,514,200.94Investment income (losses are

represented by ‘-’)VII.551,832,656,952.602,404,876,121.61Including: investment income of

associates and joint ventures1,582,178,829.861,887,911,034.17Income generated from the derecognition

of financial assets measured at

amortized costExchange 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.56–122,442,933.65119,277,623.85Loss on credit impairment (losses are

represented by ‘-’)VII.57–431,377,480.82–520,299,915.42

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021

Loss on assets impairment (losses are

represented by ‘-’)VII.58–1,499,859,761.26–1,418,753,618.82Gain from disposal of assets (losses arerepresented by ‘-’)VII.59206,742,815.79110,983,720.04III. Operating profit (losses are representedby ‘-’)17,843,901,251.5215,897,695,146.67Add: non-operating incomeVII.60136,527,269.96199,068,358.48Less: non-operating expensesVII.61190,706,969.79159,250,278.25IV. Total profit (total losses are representedby ‘-’)17,789,721,551.6915,937,513,226.90Less: income tax expenseVII.623,057,539,933.162,705,253,855.89V. Net profit (net losses are represented by‘-’)14,732,181,618.5313,232,259,371.01

(1) Classification by continuous operation

1. Net profit from continuous operation

(net losses are represented by ‘-’)14,732,181,618.5313,232,259,371.01

2. Net profit from discontinued

operation (net losses arerepresented by ‘-’)

(2) Classification by ownership of the

equity

1. Net profit attributable to shareholders

of the Parent Company (net lossesare represented by ‘-’)14,710,923,491.9913,078,840,517.10

2. Profit or loss attributable to minority

shareholders (net losses arerepresented by ‘-’)21,258,126.54153,418,853.91VI. Other comprehensive income, net of taxVII.633,164,841,092.31–148,110,004.96(I) Other comprehensive income

attributable to owners of the ParentCompany, net of tax3,167,199,045.79–132,249,780.03

1. Other comprehensive income that

cannot be reclassified into theprofit or loss–103,425,450.861,201,363,091.13

(1) Changes arising from re-

measurement of defined benefitplans33,063,471.1536,214,421.81

(2) Other comprehensive income

that cannot be transferred intoprofit or loss under equitymethod

(3) Changes in fair value of

investments in other equityinstruments–136,488,922.011,165,148,669.32

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021

(4) Changes in fair value of credit

risks of the enterprise

2. Other comprehensive income to be

reclassified into the profit or loss3,270,624,496.65–1,333,612,871.16

(1) Other comprehensive income

that can be transferred intoprofit or loss under equitymethod99,921,599.99–50,414,905.68

(2) Changes in fair value of other

debt Investments

(3) Reclassified financial assets that

are credited to othercomprehensive income

(4) Credit impairment provision for

other debt investments

(5) Reserve for cash flow hedging2,308,423.98102,858,281.74

(6) Exchange differences on

translation of financialstatements denominated inforeign currencies3,168,394,472.68–1,386,056,247.22

(7) Others

(II) Other comprehensive income

attributable to minority shareholders,net of tax–2,357,953.48–15,860,224.93VII. Total comprehensive income17,897,022,710.8413,084,149,366.05

(I) Total comprehensive income

attributable to the owners of ParentCompany17,878,122,537.7812,946,590,737.07(II) Total comprehensive income

attributable to the minorityshareholders18,900,173.06137,558,628.98VIII. Earnings per share:

(I) Basic earnings per share (RMB/share)XVIII.11.581.41(II) Diluted earnings per share (RMB/

share)XVIII.11.571.40For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB12,934,615.51, and the net profit of the acquiree for theprevious period was RMB10,786,626.61.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. Annual Report 2022

Section X Financial Report

Profit Statement of the Parent CompanyJanuary-December 2022

Unit and Currency: RMBItemsNotes20222021I. Operating incomeXVIII.4424,661,926.32353,798,248.52Less: operating costXVIII.4370,625,212.62315,357,106.14Taxes and surcharges3,356,878.041,315,011.31Selling expenses2,255,208.688,325,070.07Administration expenses844,381,395.30126,563,950.19R&D expenses19,067,424.8929,294,763.78Financial expenses–137,417,983.20–41,920,112.37Including: interest expenses33,870,759.407,328,997.57

Interest income158,040,013.8956,558,735.54Add: other income32,862,065.5845,491,181.80

Investment income (losses are

represented by ‘-’)XVIII.56,431,738,015.983,918,401,070.56Including: investment income of

associates and joint ventures71,408,243.76275,575,730.42Derecognition income on

financial assetsmeasured at amortizedcostGains 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 ‘-’)–3,315,122.80187,273.03Loss on assets impairment (losses

are represented by ‘-’)Gain from disposal of assets (losses

are represented by ‘-’)102,421,078.9240,509,776.77II. Operating profit (losses are represented by

‘-’)5,886,099,827.673,919,451,761.56Add: non-operating income209,515.11855,197.78Less: non-operating expenses149,806.5553,850.65III. Total profit (total losses are represented

by ‘-’)5,886,159,536.233,920,253,108.69Less: income tax expenses130,412,402.20–12,560,593.69IV. Net profit (net losses are represented by

‘-’)5,755,747,134.033,932,813,702.38

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021(I) Net profit from continuous operations(net losses are represented by ‘-’)5,755,747,134.033,932,813,702.38(II) Net profit from discontinued operations(net losses are represented by ‘-’)V. Other comprehensive income, net of tax–19,211,595.09631,333,648.98(I) Other comprehensive income thatcannot be reclassified into the profit orloss2,297,267.67608,336,353.75

1. Changes arising from re-

measurement of defined benefitplans

2. Other comprehensive income that

cannot be transferred into profit orloss under equity method

3. Changes in fair value of investments

in other equity instruments2,297,267.67608,336,353.75

4. Changes in fair value of credit risks

of the enterprise(II) Other comprehensive income to bereclassified into the profit or loss–21,508,862.7622,997,295.23

1. Other comprehensive income that

can be transferred into profit or loss

under equity method–21,508,862.7622,997,295.23

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 income5,736,535,538.944,564,147,351.36VII. 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

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Consolidated Cash Flow StatementJanuary-December 2022

Unit and Currency: RMBItemsNotes20222021I. Cash flow from operating activities:

Cash received from the sale of goods andrendering services258,086,116,120.44259,848,073,159.87Net increase in distributor and inter-bank

depositsNet increase in borrowing from the central

bankNet cash increase in borrowing from other

financial institutesCash received from premiums under original

insurance contractNet cash received from reinsurance

businessNet increase in deposits of policy holders

and investmentCash received from interest, fee and

commissionsNet increase in cash borrowedNet increase in cash received from

repurchase operationNet cash received from customer deposits

for trading in securitiesRefunds of taxes2,043,785,545.291,759,484,379.01Cash received from other related operating

activitiesVII.641,669,717,133.901,883,522,634.01Sub-total of cash inflows from operating

activities261,799,618,799.63263,491,080,172.89Cash paid on purchase of goods and

services179,333,522,197.23180,953,963,164.86Net increase in loans and advances of

distributorsNet increase in deposits in the PBOC and

inter bankCash paid for compensation payments

under original insurance contactNet increase in cash lentCash paid for interest, bank charges and

commissionsCash paid for insurance policy dividend

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021Cash paid to and on behalf of employees27,235,422,735.3624,400,078,515.22Cash paid for all types of taxes10,823,009,974.5010,090,612,020.78Cash paid to other operation relatedactivitiesVII.6524,254,158,109.1924,811,045,781.08Sub-total of cash outflows from operating

activities241,646,113,016.28240,255,699,481.94Net cash flow from operating activitiesVII.6920,153,505,783.3523,235,380,690.95II. Cash flow from investing activities:

Cash received from recovery of

investments12,147,228,999.626,687,038,126.49Cash received from return on investments686,445,555.44703,938,754.46Net cash received from the disposal of fixed

assets, intangible assets and other

long-term assets228,856,132.92289,831,105.17Net cash received from disposal of

subsidiaries and other operating entities18,224,929.86Other cash received from investment

activitiesSub-total of cash inflows from investing

activities13,080,755,617.847,680,807,986.12Cash paid on purchase of fixed assets,

intangible assets and other long-term

assets8,204,474,537.117,372,428,832.38Cash paid for investments13,538,137,214.168,151,830,046.62Net increase in secured loansNet cash paid on acquisition of subsidiaries

and other operating entities40,026,037.55—Other cash paid on investment activitiesVII.66218,440,847.94219,292,645.55Sub-total of cash outflows from investing

activities22,001,078,636.7615,743,551,524.55Net cash flow from investing activities–8,920,323,018.92–8,062,743,538.43III. Cash flow from financing activities:

Cash received from capital contributions987,339,004.9441,513,900.00Including: cash received from capital

contributions by minority shareholders of

subsidiariesCash received from borrowings18,358,512,304.4112,051,534,836.66Other cash received from financing

activitiesVII.671,000,000.001,091,077.43Sub-total of cash inflows from financing

activities19,346,851,309.3512,094,139,814.09Cash paid on repayment of loans14,686,219,899.9919,550,437,489.34Cash paid on distribution of dividends,

profits or repayment of interest expenses5,134,957,030.484,036,372,354.42

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021Including: dividend and profit paid tominority shareholders by subsidiariesOther cash paid to financing activitiesVII.683,347,802,454.244,167,468,873.11Sub-total of cash outflows from financingactivities23,168,979,384.7127,754,278,716.87Net cash flow from financing activities–3,822,128,075.36–15,660,138,902.78IV. Effect of fluctuations in exchangerates on cash and cash equivalents760,094,284.39–105,423,623.70V. Net increase in cash and cash

equivalents8,171,148,973.46–592,925,373.96Add: balance of cash and cash equivalentsat the beginning of the periodVII.7045,197,664,411.1545,790,589,785.11VI. Balance of cash and cash equivalents

at the end of the periodVII.7053,368,813,384.6145,197,664,411.15Person 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. Annual Report 2022

Section X Financial Report

Cash Flow Statement of the Parent CompanyJanuary-December 2022

Unit and Currency: RMBItemsNotes20222021I. Cash flow from operating activities:

Cash received from the sale of goodsand rendering of services72,931,789.115,372,947,747.51Refunds of taxes19,008,796.0721,335,747.71Other cash received from operatingactivities373,367,957.9368,763,057.13Sub-total of cash inflows from operatingactivities465,308,543.115,463,046,552.35Cash paid on purchase of goods andservices147,652.63129,965,401.55Cash paid to and on behalf of

employees30,719,560.38111,120,434.68Cash paid for all types of taxes9,583,573.1545,674,576.87Other cash paid to operation activities35,896,845.7663,480,813.55Sub-total of cash outflows from operating

activities76,347,631.92350,241,226.65Net cash flow from operating activities388,960,911.195,112,805,325.70II. Cash flow from investing activities:

Cash received from recovery of

investments4,072,370,000.00660,600,000.00Cash received from return on

investments9,114,011,850.11251,846,511.15Net cash received from the disposal of

fixed assets, intangible assets and

other long-term assets35,206,354.8540,244,472.35Net cash received from disposal of

subsidiaries and other operating

entitiesOther cash received from investment

activities792,521,903.31Sub-total of cash inflows from investing

activities14,014,110,108.27952,690,983.50Cash paid on purchase of fixed assets,

intangible assets and other long-term

assets29,560,476.4939,508,054.66Cash paid for investments6,790,729,807.20710,121,200.00Net cash paid on acquisition of

subsidiaries and other operating

entities

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsNotes20222021

Other cash paid on investment activities2,862,532,098.24155,218,996.43Sub-total of cash outflows from investingactivities9,682,822,381.93904,848,251.09Net cash flow from investing activities4,331,287,726.3447,842,732.41III. Cash flow from financing activities:

Cash received from capital injections940,041,004.94Cash received from borrowings2,200,000,000.00Other cash received from financingactivities2,877,023,451.15Sub-total of cash inflows from financingactivities3,140,041,004.942,877,023,451.15Cash paid on repayment of borrowings5,000,000.005,520,000,000.00Cash paid on distribution of dividends,

profits or repayment of interestexpenses4,344,971,295.803,463,452,916.42Other cash paid on financing activities1,826,254,269.503,296,944,621.19Sub-total of cash outflows from financing

activities6,176,225,565.3012,280,397,537.61Net cash flow from financing activities–3,036,184,560.36–9,403,374,086.46IV. Effect of fluctuations in exchange

rates on cash and cash equivalents19,756,778.54–288,145.81V. Net increase in cash and cash

equivalents1,703,820,855.71–4,243,014,174.16Add: balance of cash and cash

equivalents at the beginning of the

period4,043,535,735.488,286,549,909.64VI. Balance of cash and cash equivalents

at the end of the period5,747,356,591.194,043,535,735.48Person 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. Annual Report 2022

Section X Financial Report

Consolidated Statement of Changes in Owner’s EquityJanuary-December 2022

Unit and Currency: RMB

2022

Equity attributable to owners of the Parent Company

Other equity instruments

Items

Paid-in capital

(or share capital)PreferencesharesPerpetual bondsOthersCapital reserve

Less: treasury

stockOther

comprehensive

incomeSpecial reserveSurplus reserve

General risk

provisionUndistributed

profitsOthersSub-total

Minority

shareholders’

interestsTotal owners’

equity

I. Closing balance for the previous year9,398,704,530.00118,017,507.5922,549,345,568.942,424,038,819.70

–1,176,851,699.923,438,615,909.8447,907,134,328.8079,810,927,325.551,272,034,100.1781,082,961,425.72

Add: changes in accounting policiesError correction for prior periodBusiness combination under common

control116,029,170.5258,136,031.99174,165,202.5117,466,708.55191,631,911.06

OthersII. Opening balance for the current year9,398,704,530.00118,017,507.5922,665,374,739.462,424,038,819.70

–1,176,851,699.923,438,615,909.8447,965,270,360.7979,985,092,528.061,289,500,808.7281,274,593,336.78

III. Increase/decrease for the current period

(decrease is represented by ‘-’)47,893,963.00

–118,017,507.591,186,662,585.301,433,768,376.683,167,535,198.37575,574,713.4010,011,674,560.5713,437,555,136.371,394,235.7313,438,949,372.10

(I) Total comprehensive income3,167,199,045.7914,710,923,491.9917,878,122,537.7818,900,173.0617,897,022,710.84(II) Capital injection and reduction by

owners47,893,963.00

–118,017,507.591,353,547,865.691,433,768,376.68

–150,344,055.581,810,903.91

–148,533,151.67

1. Ordinary shares invested by owners41,413,600.00898,627,404.94940,041,004.941,810,903.91941,851,908.85

2. Capital contribution by holders of

other equity instruments21,450,563.00

–118,017,507.59457,962,768.76361,395,824.17361,395,824.17

3. Share-based payment included in

owners’ equity693,835,462.71693,835,462.71693,835,462.71

4. Others

–14,970,200.00

–696,877,770.721,433,768,376.68

–2,145,616,347.40

–2,145,616,347.40

(III) Profit distribution575,574,713.40

–4,872,209,504.61

–4,296,634,791.21–19,316,841.24–4,315,951,632.45

1. Withdrawal of surplus reserves575,574,713.40

–575,574,713.40

2. Withdrawal of general risk provision

3. Distribution to owners (or

shareholders)

–4,296,634,791.21

–4,296,634,791.21–19,316,841.24–4,315,951,632.45

4. 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 retainedearnings

5. Other comprehensive income

carried forward to retainedearnings

6. Others

(V) Special reserve

1. Withdrawal for the period

2. Utilization for the period

(VI) Others

–166,885,280.39336,152.58172,960,573.196,411,445.386,411,445.38

IV. Closing balance for the period9,446,598,493.0023,852,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,976,944,921.3693,422,647,664.431,290,895,044.4594,713,542,708.88

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2021

Equity attributable to owners of the Parent Company

Other equity instruments

Items

Paid-in capital(or share capital)PreferencesharesPerpetual bondsOthersCapital reserve

Less: treasury

stockOthercomprehensiveincomeSpecial reserveSurplus reserve

General risk

provisionUndistributed

profitsOthersSub-total

Minorityshareholders’

interestsTotal owners’

equity

I. Closing balance for the previous year9,027,846,441.002,364,195,333.7915,007,475,607.4028,896,550.65

–1,046,216,729.063,045,334,539.6038,467,787,059.7966,837,525,701.871,294,584,557.0968,132,110,258.96

Add: changes in accounting policiesError correction for prior periodBusiness combination under commoncontrol116,029,170.5265,044,545.95181,073,716.4714,076,761.30195,150,477.77OthersII. Opening balance for the current year9,027,846,441.002,364,195,333.7915,123,504,777.9228,896,550.65

–1,046,216,729.063,045,334,539.6038,532,831,605.7467,018,599,418.341,308,661,318.3968,327,260,736.73

III. Increase/decrease for the current period(decrease is represented by ‘-’)370,858,089.00

–2,246,177,826.207,541,869,961.542,395,142,269.05

–130,634,970.86393,281,370.249,432,438,755.0512,966,493,109.72

–19,160,509.6712,947,332,600.05

(I) Total comprehensive income

–132,249,780.0313,078,840,517.1012,946,590,737.07137,558,628.9813,084,149,366.05

(II) Capital injection and reduction by

owners370,858,089.00

–2,246,177,826.207,542,034,703.882,395,142,269.053,271,572,697.63

–93,710,059.353,177,862,638.28

1. Ordinary shares invested by owners

–136,417,222.36

–136,417,222.36–93,710,059.35–230,127,281.71

2. Capital contribution by holders of

other equity instruments403,210,889.00-2,246,177,826.208,211,218,327.056,368,251,389.856,368,251,389.85

3. Share-based payment included in

owners’ equity261,635,166.10261,635,166.10261,635,166.10

4. Others

–32,352,800.00

–794,401,566.912,395,142,269.05

–3,221,896,635.96

–3,221,896,635.96

(III) Profit distribution393,281,370.24

–3,804,025,640.63

–3,410,744,270.39–63,252,252.15–3,473,996,522.54

1. Withdrawal of surplus reserves393,281,370.24

–393,281,370.24

2. Withdrawal of general risk

provision

–2,246,177,826.208,211,218,327.05

3. Distribution to owners (or

shareholders)

–3,410,744,270.39

–3,410,744,270.39–63,252,252.15–3,473,996,522.54

4. 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 retainedearnings

5. Other comprehensive income

carried forward to retainedearnings

6. Others

(V) Special reserve

1. Withdrawal for the period

2. Utilization for the period

(VI) Others

–164,742.341,614,809.17157,623,878.58159,073,945.41243,172.85159,317,118.26

IV. Closing balance for the period9,398,704,530.00118,017,507.5922,665,374,739.462,424,038,819.70

–1,176,851,699.923,438,615,909.8447,965,270,360.7979,985,092,528.061,289,500,808.7281,274,593,336.78

Legal representative of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: YingKe

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Statement of Changes in Owners’ Equity of the Parent Company

January-December 2021

Unit and Currency: RMB2022Other equity instrumentsItems

Paid-in capital(or share

capital)Preference

shares

PerpetualbondsOthersCapital reserve

Less: treasurystock

OthercomprehensiveincomeSpecial reserveSurplus reserve

UndistributedprofitsTotal owners’equityI. Closing balance for the previousyear9,398,704,530.0025,802,279,483.131,495,170,675.08621,302,944.832,833,469,684.394,468,575,626.5241,629,161,593.79Add: changes in accountingpoliciesError correction for priorperiodOthersII. Opening balance for thecurrent year9,398,704,530.0025,802,279,483.131,495,170,675.08621,302,944.832,833,469,684.394,468,575,626.5241,629,161,593.79III. Increase/decrease for the

current period (decrease isrepresented by ‘-’)47,893,963.001,498,619,536.63812,967,883.34–19,211,595.09575,574,713.40859,736,173.102,149,644,907.70(I) Total comprehensive income–19,211,595.095,755,747,134.035,736,535,538.94(II) Capital injection and

reduction by owners47,893,963.001,559,004,664.94812,967,883.34793,930,744.60

1. Ordinary shares invested

by owners41,413,600.00898,627,404.94940,041,004.94

2. Capital contribution by

holders of other equityinstruments21,450,563.00339,945,261.17361,395,824.17

3. Share-based payment

included in owners’equity639,163,385.88639,163,385.88

4. Others

–14,970,200.00–318,731,387.05812,967,883.34–1,146,669,470.39(III) Profit distribution575,574,713.40–4,896,010,960.93–4,320,436,247.53

1. Withdrawal of surplus

reserves575,574,713.40–575,574,713.40

2. Distribution to owners (or

shareholders)–4,320,436,247.53–4,320,436,247.53

3. Others

(IV) Internal transfer of owner’s

equity

1. Transfer of capital

reserves into capital (orshare capital)

2. Transfer of surplus

reserves into capital (orshare capital)

3. Surplus reserves used

for remedying loss

4. Changes in defined

benefit plans carriedforward to retainedearnings

5. Other comprehensive

income carried forwardto retained earnings

6. Others

(V) Special reserve

1. Withdrawal for the

period

2. Utilization for the period

(VI) Others–60,385,128.31–60,385,128.31IV. Closing balance for the period9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2021Other equity instrumentsItems

Paid-in capital(or sharecapital)

Preferenceshares

Perpetual

bondsOthersCapital reserve

Less: treasurystock

OthercomprehensiveincomeSpecial reserveSurplus reserve

Undistributed

profitsTotal owners’

equityI. Closing balance for the previousyear9,027,846,441.0020,408,352,380.95–10,030,704.152,440,188,314.154,349,961,964.2336,216,318,396.18Add: changes in accountingpoliciesError correction for priorperiodOthersII. Opening balance for thecurrent year9,027,846,441.0020,408,352,380.95–10,030,704.152,440,188,314.154,349,961,964.2336,216,318,396.18III. Increase/decrease for the

current period (decrease isrepresented by ‘-’)370,858,089.005,393,927,102.181,495,170,675.08631,333,648.98393,281,370.24118,613,662.295,412,843,197.61(I) Total comprehensiveincome631,333,648.983,932,813,702.384,564,147,351.36(II) Capital injection and

reduction by owners370,858,089.005,393,927,102.181,495,170,675.084,269,614,516.10

1. Ordinary shares invested

by owners–17,642,864.51–17,642,864.51

2. Capital contribution by

holders of other equityinstruments403,210,889.005,965,040,500.856,368,251,389.85

3. Share-based payment

included in owners’equity245,199,533.31245,199,533.31

4. Others

–32,352,800.00–798,670,067.471,495,170,675.08–2,326,193,542.55(III) Profit distribution393,281,370.24–3,814,200,040.09–3,420,918,669.85

1. Withdrawal of surplus

reserves393,281,370.24–393,281,370.24

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 (orshare capital)

2. T ransfer of surplus

reserves into capital(or share capital)

3. Surplus reserves used

for remedying loss

4. Changes in defined

benefit plans carriedforward to retainedearnings

5. Other comprehensive

income carried forwardto retained earnings

6. Others

(V) Special reserve

1. Withdrawal for the

period

2. Utilization for the period

(VI) OthersIV. Closing balance for the period9,398,704,530.0025,802,279,483.131,495,170,675.08621,302,944.832,833,469,684.394,468,575,626.5241,629,161,593.79Legal representative of the Company:

Li Huagang

Person in charge of accounting function:

Gong Wei

Person in charge of accountingdepartment: YingKe

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

III. GENERAL INFORMATION OF THE COMPANY

1. Overview of the Company

√ Applicable □ Not Applicable

The predecessor of Haier Smart Home Co., Ltd (hereinafter 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, with the document of Qing TiGai [1989] No. 3 issued on 24 March 1989, based on the reconstruction of the original QingdaoRefrigerator Factory, a limited company was set up by directional fund raising of RMB150 million.In March and September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2and No. 9 issued by the pilot leading team of Qingdao joint stock company, the Company wasconverted from a directional offering company to a public subscription company and issuedadditional 50 million shares to the public and listed with trading on Shanghai Stock Exchange inNovember 1993. In October 2018, D-shares in issue of the Company were listed on the ChinaEurope International Exchange AG. In December 2020, H-shares in issue of the Company werelisted on the Stock Exchange of Hong Kong Limited by way of introduction.The Company’s registered office is located at the Haier Science and Technology InnovationEcological Park of Laoshan District, Qingdao, Shandong Province, and the headquarters islocated at the Haier Science and Technology Innovation Ecological 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, laundry appliancesand water appliances, and other smart home business, as well as providing smart homepackaged solutions.The ultimate controlling parent company of the Company is Haier Group Corporation.These financial statements have been approved for publication by the Board of the Company on30 March 2023.

2. Scope of consolidated statements

√ Applicable □ Not Applicable

For details of changes in the scope of consolidated financial statements for the current period,please refer to ‘VIII. Changes in Consolidation Scope’ and ‘IX. Interest in Other Entities’ of thisnote.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

IV. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

1. Basis of preparation

The 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 forEnterprises—Basic Standards published by the Ministry of Finance, specific accountingstandards, and guidance on application of accounting standards for enterprises, interpretations toaccounting standards for enterprises and other relevant requirements (hereinafter collectivelyreferred to as the ‘Accounting Standards for Enterprises’) which issued subsequently, and incombination with the disclosure provisions of the Rules for the Information Disclosure andCompilation of Companies Publicly Issuing Securities No. 15: General Provisions for FinancialReport (Revised in 2014) of CSRC as well as the following significant accounting policies andaccounting estimation.

2. Going Concern

√ Applicable □ Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a goingconcern.V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATESSpecific 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 Enterprises

The financial statements prepared by the Company meet the requirements of the AccountingStandards for Enterprises, which accurately and completely reflected information relating to thefinancial position as of 31 December 2022, results of operations in 2022 and cash flows of theCompany.

2. Accounting period

The accounting year of the Company is from 1 January each year to 31 December of the sameyear in solar calendar.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

3. Operating period

√ Applicable □ Not Applicable

The Company takes the period from the acquisition of assets for processing to the ultimaterealization of cash or cash equivalents as a normal operating cycle. The Company takes 12months as an operating period, which is also the classification basis for the liquidity of its assetsand liabilities.

4. Recording currency

Renminbi is the recording currency of the Company

5. Accounting methods of business combinations under common control and not

under 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 control

A business combination under common control is a business combination in which all ofthe combining entities are ultimately controlled by the same party or parties both beforeand after the combination, and that control is not transitory. For business combinationunder common 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.For business combination under common control, the transferor’s assets and liabilitiesobtained by the Company (as the acquirer) in a business combination are accounted for atthe carrying amount of the transferor in the ultimate controller’s consolidated financialstatements as at the date of combination, except for adjustments due to differences inaccounting policies. The difference between the carrying amount of the combinationconsideration paid by the Company (or the aggregate nominal value of shares issued) andthe carrying amount of net assets obtained in a business combination shall be adjusted tocapital reserve, in case the capital reserve is insufficient for the elimination, the retainedearnings shall be adjusted.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Intermediary fees (such as audit, legal services and valuation consultancy) and otherrelevant management fees incurred in the business combination by the Company (as theacquirer) are credited in profit or loss in the period when they occurred. Trading expensesin direct relation to the issuance of equity instrument as the consideration for thecombination is written down to the capital reserve (share premium), where the capitalreserve (share premium) is insufficient, and to surplus reserves and undistributed profits inorder. Trading expenses in direct relation to the issuance of debt instrument as theconsideration for the combination is included in the initial recognition amount of the debtinstrument.

(2) Business combinations involving entities not under common control

A 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 at the combination date is the acquirer;other parties involving in the business combination are the transferors. The combinationdate is the date on which the acquirer effectively obtains control of the transferors.In business combination involving entities not under common control, the cost ofcombination of the Company (as the acquirer) shall be the sum of the assets paid,obligations incurred or assumed and the fair value of the equity securities issued by theCompany for obtaining control of the transferor at the date of acquisition. Intermediary fees(such as audit, legal services and valuation consultancy) and other relevant managementfees incurred by the Company for the purpose of business combination are credited inprofit or loss in the period when they occurred. Transaction fees for the equity instrumentsor debt instruments issued by the Company as combination consideration is included in theinitial recognition amount of such equity instruments or debt instruments. Contingentconsideration involved shall be recorded as the combination cost based on its fair value onthe acquisition date. Should any new or further evidence arise within 12 months after theacquisition date and makes it necessary to adjust the contingent consideration on theacquisition date, the goodwill arising from the business combination shall be amendedaccordingly.The cost of combination and identifiable net assets obtained by the Company (as theacquirer) in a business combination involving entities not under common control aremeasured at fair value on the acquisition date. Where the cost of the combination exceedsthe acquirer’s interest in the fair value of the transferor’s identifiable net assets, thedifference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of the transferor’s identifiable net assets, the differenceis initially recognized in profit or loss for the current year after the Company conducted areview of computation for the identifiable assets, liabilities or fair value of contingentliabilities and combination cost, and where the combination cost is still lower than the fairvalue of the identifiable net assets of the transferor obtained during the course ofcombination, then the difference is recorded in the profit and loss.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

6. Preparation method of consolidated accounting statements

√ Applicable □ Not Applicable

(1) Scope of consolidated financial statements

The Company incorporated all subsidiaries under its control (including the separate entitiescontrolled by the Company) into the scope of consolidation financial statements, includingthe enterprises under the Company’s control, divisible part in the investees and structuredentities. Control refers to the Company having power over the investee and is entitled tovariable returns from its involvement with the investee and has the ability to use its powerover the investee to affect the amount of those return.

(2) To unify the accounting policies, balance sheets date and accounting periods of the

Company and subsidiariesWhen preparing consolidated financial statements, adjustments are made if subsidiaries’accounting policies or accounting periods are different from that of the Company, inaccordance with the Company’s accounting policies and accounting periods.

(3) Offset matters in the consolidated financial statements

The consolidated financial statements shall be prepared by the Company on the basis ofthe financial statements of the Company and subsidiaries and based on other relevantinformation. In preparing the consolidated financial statements, all significant balances,transactions and unrealized profits between the Company and subsidiaries and amongsubsidiaries are eliminated. In preparing the consolidated financial statements, the Companytreats the entire enterprise group as one accounting entity and reflects the overall financialposition, operating results and cash flows of the Group in accordance with therequirements for recognition, measurement and presentation of relevant accountingstandards for enterprises and consistent accounting policies. The owner’s equity of thesubsidiaries not attributable to the Company shall be presented separately as ‘minorityequity’ under the owner’s equity item in the consolidated balance sheet. The minority equityattributable to net profit or loss of subsidiaries in the current period shall be presented as‘minority interest’ under the ‘net profit’ item in the consolidated profit statement. Where theamount of loss of a subsidiary attributable to the minority shareholders exceeds their shareof the opening balance of owner’s equity of the subsidiary, the excess shall be allocatedagainst minority equity. The long-term equity investment of the Company held by thesubsidiaries, deemed as treasury stock of the corporate group as well as the reduction ofowners’ equity, shall be presented as ‘Less: Treasury stock’ under the owner’s equity itemin the consolidated balance sheet.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(4) Accounting treatment of subsidiaries acquired from combination

For subsidiaries acquired from business combination under common control of theCompany, the opening amount of the consolidated balance sheet is adjusted, as if thebusiness combination has taken place since the ultimate controller began its control. Theincome, expenses and profits of subsidiaries or business combinations from the beginningof the current period to the end of the reporting period are included in the consolidatedprofit statement. The cash flows from the beginning of the current period to the end of thereporting period of a subsidiary or business combination are included in the consolidatedcash flow statement, and the related items in the comparative statements are adjustedWhere control can be exercised over the investee under the same control due to additionalinvestment and other reasons, the Company shall deem the parties participating in thebusiness combination to have made adjustments in their current status when the ultimatecontroller began its control. Equity investments held by the Company before control of thetransferor are recognised for profit or loss, other comprehensive income and other changesin net assets between the later of the date on which the original equity interest is acquiredand the date on which the Company and the transferor are under the same control and thedate of combination, which are offset against the opening retained earnings or current profitor loss, respectively, in the period of the comparative statements.For subsidiaries acquired from business combination under non-common control, theopening amount of the consolidated balance sheet is not adjusted. The income, expensesand profits of the subsidiary or business from the date of purchase to the end of thereporting period are included in the consolidated profit statement. The cash flows of thesubsidiary or business from the date of purchase to the end of the reporting period areincluded in the consolidated statement of cash flows. Where control can be exercised overan investee that is not under the same control due to additional investment or otherreasons, the Company remeasures the equity interest of the investee held before thepurchase date based on the fair value of the equity interest at the purchase date, and thedifference between the fair value and its carrying amount is included in the currentinvestment income. Where the equity interest in the transferor held before the purchasedate relates to other comprehensive income under the equity method and other changes inowner’s equity other than net profit or loss, other comprehensive income and profitdistribution, other comprehensive income and other changes in owner’s equity relatingthereto are transferred to investment income of the current period as at the purchase date,except for other comprehensive income arising from the remeasurement of net liabilities orchanges in net assets of defined benefit plans by the investee.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(5) Dispose of equity interests in subsidiaries achieved in stages until losing control

General treatmentDuring the Reporting Period, when the Company disposes of a subsidiary orbusiness, the income, expenses and profits of that subsidiary or business from thebeginning of the period to the date of disposal are included in the consolidatedincome statement of the Company; The cash flows from the beginning of the periodto the disposal date of the subsidiary or operation are included in the consolidatedstatement of cash flows of the Company.When control over the investee is lost due to the disposal of part of the equityinvestment or other reasons, the Company remeasures the remaining equityinvestment after disposal at its fair value at the date when control is lost. Thedifference between the sum of the consideration obtained on disposal of the equityinterest and the fair value of the remaining equity interest, less the sum of the shareof the net assets of the original subsidiary calculated by the Company based on theoriginal shareholding ratio and goodwill calculated on a continuing basis from the dateof purchase or consolidation, is included in investment income in the period in whichcontrol is lost and goodwill is written off. The Company converts other comprehensiveincome relating to the equity investment in the original subsidiary, etc to investmentincome in the current period when control is lost. Disposal of subsidiaries step by stepWhere the Company disposed of equity investment in a subsidiary step by stepthrough multiple transactions until control is lost, for example, the terms, conditionsand economic impact of each transaction that disposes of the equity investment in asubsidiary meet one or more of the following conditions, the Company accounts formultiple transactions as a single transaction:

i. The transactions were entered into simultaneously or with mutual influence inmind;ii. The transactions as a whole are capable of achieving a complete commercial

outcome;iii. The occurrence of one transaction depends on the occurrence of at least one

other transaction;iv. The transaction is uneconomical by itself but economic when considered in

conjunction with other transactions.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Where each transaction that disposes of an equity investment in a subsidiary untilcontrol is lost is a blanket transaction, the Company accounts for each transaction asa transaction that disposes of the subsidiary and loses control; However, theCompany recognises the difference between each disposal price before the loss ofcontrol and the share of net assets of the subsidiary corresponding to the disposal ofthe investment as other comprehensive income in the consolidated financialstatements and is transferred to profit or loss in the period in which control is lostwhen control is lost.Where each transaction that disposes of an equity investment in a subsidiary until theloss of control is not a blanket transaction, the relevant policy for partial disposal ofan equity investment in a subsidiary without loss of control is accounted for beforethe loss of control by the Company; When control is lost, accounting is performed inthe same manner as would be done for a disposal subsidiary.

(6) Purchase of minority interests in subsidiaries

The difference between the Company’s costs of newly acquired long-term equityinvestment resulting from the purchase of minority interests and the share of net assetsattributable to the subsidiary calculated on an ongoing basis from the date of purchase (orthe date of combination) based on the newly increased shareholding ratio, the equitypremium in the capital reserve in the consolidated balance sheet is adjusted, and if theequity premium in the capital reserve is insufficient to offset, the retained earnings isadjusted.

(7) Partial disposal of equity investments in subsidiaries without loss of control

The Company adjusts the equity premium in the capital reserve in the consolidated balancesheet for the difference between the disposal price obtained from the partial disposal of thelong-term equity investment in the subsidiary without loss of control and the share of thenet assets of the subsidiary that would continue to be calculated from the purchase date orthe combination date corresponding to the disposal of the long-term equity investment, oradjust the retained earnings if the equity premium in the capital reserve is insufficient tooffset.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

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. Inaccordance with the Company’s rights and obligations under a joint arrangement, the Companyclassifies joint arrangements into joint operations and joint ventures.

(1) Joint operations

Joint operations refer to a joint arrangement in which the Company is a party and isentitled to relevant assets and obligations of this arrangement.The Company recognizes the following items in relation to its interest in a joint operation,and accounts the same in accordance with relevant accounting standards for businessenterprises: ① recognize the assets held solely by the Company, and recognize assetsheld jointly by the Company in appropriation to the share of the Company; ② recognize theobligations assumed solely by the Company, and recognize obligations assumed jointly bythe Company 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; ⑤recognize 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 inAccounting 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 the its purchase of assets from joint operations.

(2) Joint ventures

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 equitymethod according to the accounting policies referred to under ‘22. Long-term equityinvestment’ of Note V.

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Section X Financial Report

8. Recognition standard for cash and cash equivalents

Cash 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.

9. Foreign currency businesses and translation of foreign currency statements

√ Applicable □ Not Applicable

(1) Foreign currency transactions

If foreign currency transactions occur, they are translated into the amount of functionalcurrency by applying the exchange rate at the transaction date.Monetary items denominated in foreign currencies are translated by the Company intofunctional currencies at the rates of exchange ruling at the balance sheet date. All foreignexchange difference are credited in the profit or loss of the current period, except thosearising from the funds denominated in foreign currency specially borrowed for theestablishment of the qualifying assets are treated based on the principal of capitalization ofborrowing costs.Non-monetary items in foreign currency measured at historical cost are translated by theCompany using the spot exchange rate prevailing on the date when transaction occurredand its functional currency shall remain unchanged. Non-monetary items denominated inforeign currencies that are measured at fair value are translated using the foreign exchangerate at the date the fair value is determined; the exchange differences between thetranslated and original amounts of functional currencies are recognized in the statement ofprofit or loss or other comprehensive income as changes in fair value (including changes inexchange rate).

(2) Translation of foreign currency financial statements

If 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 foreign currency balance sheet of the Company aretranslated using the spot exchange rate at the balance sheet date; all items except for‘undistributed profits’ of the owner’s equity are translated at the spot exchange rate on thetransaction date. The revenue and expenses in the foreign currency income statement ofthe Company are translated using the approximate rate of the spot exchange rate on thetransaction date. Exchange differences on translation of financial statements denominated inforeign currencies are presented as the ‘other comprehensive income’ in the owner’s equityof the balance sheet.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Foreign currency cash flow and cash flows of a foreign subsidiary of the Company istranslated using the approximate rate of the spot exchange rate on the date of the cashflows. The impact of exchange rate changes on cash amount is regarded as areconciliation item and reflected separately in the cash flow.When disposing overseas operations, the translation difference in the foreign currencyfinancial statements as shown in the owner’s equity of the balance sheet and related to theoverseas operation shall be transferred from owner’s equity to profit or loss in the currentperiod of disposal. If part of the overseas operations is disposed of, the translationdifference in the foreign currency financial statements of the disposal part shall becalculated based on the proportion of the disposal and transferred to profit or loss in thecurrent period of disposal.

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 andequity instrument is recognized when the Company becomes a party to the contract of afinancial instrument.

(1) Classification, recognition and measurement of financial assets

On initial recognition of a financial asset, according to the business model for managingfinancial assets and the contractual cash flow characteristics of financial assets, theCompany classifies financial assets into: Financial assets measured at amortized cost;financial assets measured at fair value through other comprehensive income; financialassets measured at fair value through profit or loss of the current period.Financial assets are measured at fair value upon initial recognition. For financial assetsmeasured at fair value through profit and loss of the current period, related transactioncosts are directly included in profit and loss of the current period; for other types offinancial assets, related transaction costs are included in their initial recognized amounts.For the accounts receivable or bills receivable arising from the sale of products or theprovision of labor services that do not contain or consider the significant financingcomponents, etc, the Company shall take the consideration amount entitled to be receivedas the initial recognized amount.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

1) The debt instruments held by the Company:

① Financial assets measured at amortized cost

The Company’s business model for managing such financial assets is: With theaim of obtaining contractual cash flow, the contractual cash flow characteristicsof such financial assets shall be consistent with the basic lending arrangements,that is, the cash flow generated on a specific date is only the payment for theprincipal and the interest based on the outstanding principal amount. For suchfinancial assets, the Company recognizes the interest income in accordancewith the effective interest method. Such financial assets are subsequentlymeasured at amortised cost. The gains or losses arising from amortisation orimpairment are recognised in profit or loss of the current period. Such financialassets of the Company mainly include cash and cash equivalents, billsreceivable, accounts receivable, other receivables, creditor’s right investmentand long-term receivables. The Company lists the creditor’s rights investmentsand long-term receivables matured within one year (including one year) from thebalance sheet date as non-current assets matured within one year; thecreditor’s rights investments matured within one year (including one year) whenbeing obtained are listed as other current assets.

② Financial assets measured at fair value through other comprehensive income

The Company’s business mode for managing such financial assets is: With theaim of obtaining contractual cash flow and selling the financial assets, thecontractual cash flow characteristics of such financial assets shall be consistentwith the basic lending arrangements. Such financial assets are measured at fairvalue through other comprehensive income, but impairment gains and losses,exchange gains and losses, and interest income calculated by the effectiveinterest method are included in profit and loss of the current period. Suchfinancial assets of the Company mainly include financing receivables and othercreditor’s rights investments. The Company lists other creditor’s rightsinvestments matured within one year (including one year) from the balancesheet date as non-current assets matured within one year; other creditor’srights investments matured within one year (including one year) when beingobtained are listed as other current assets.

③ Financial assets measured at fair value through profit or loss of the current period

The Company classifies financial assets other than those above measured atamortized cost and those measured at fair value through other comprehensiveincome as financial assets measured at fair value through profit or loss of thecurrent period. In addition, at the time of initial recognition, in order to eliminateor significantly reduce accounting mismatch, the Company designated somefinancial assets as financial assets measured at fair value through profit or lossof the current period. Such financial assets are subsequently measured at fairvalue and changes in fair value are included in profit or loss of the currentperiod. Such financial assets that are matured more than one year and areexpected to be held for more than one year from the balance sheet date arelisted as other non-current financial assets.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2) Equity instrument investments of the Company:

The Company classifies equity instrument investments that have no control, jointcontrol and significant influence on itself as financial assets measured at fair valuethrough profit or loss of the current period; investments that are expected to be heldfor more than one year from the balance sheet date are listed as other non-currentfinancial assets.In addition, the Company designated some non-trading equity instrument investmentsas financial assets measured at fair value through other comprehensive income, whichare listed as other equity instrument investments. Such designation cannot berevoked once made. The Company includes the relevant dividends and interestincome of such financial assets in profit and loss of the current period, and changesin fair value are included in other comprehensive income. When the financial asset isderecognised, the Company transfers the cumulative gain or loss previously includedin other comprehensive income directly to retained earnings and is not included inprofit or loss of the current period.

(2) Classification, recognition and measurement of financial liabilities

On initial recognition, financial instruments or their components issued by the Company areclassified into financial liabilities or equity instruments based on the contractual terms of thefinancial instruments and the economic nature, rather than solely on its legal form, togetherwith the definition of financial liability and equity instruments.The Company classifies financial liabilities as financial liabilities at fair value through profitand loss of the current period and other financial liabilities at initial recognition.Financial liabilities at fair value through profit and loss of the current period aresubsequently measured at fair value. Any gains or losses arising from changes in the fairvalue and any interest expenses related to the financial liabilities are recognized in profit orloss of the current period. The financial liabilities at fair value through profit and loss of thecurrent period of the Company mainly consist of financial liabilities held for trading.Other financial liabilities are subsequently measured at amortized costs using effectiveinterest method. Other financial liabilities of the Company are financial liabilities measured atamortized cost, including bills payable, accounts payable, other payables, borrowings,bonds payable, etc. Such financial liabilities are recognized initially at fair value lesstransaction costs and subsequently measured using the effective interest method. Financialliabilities with a maturity of less than one year (including one year) are listed as currentliabilities: those with maturity of more than one year but are mature within one year fromthe balance sheet date (including one year) are listed as non-current liabilities due withinone year; the rest are presented as non-current liabilities.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(3) Classification and treatment of financial liabilities and equity instruments

The Company classifies financial liabilities and equity instruments on the followingprinciples: (1) Where the Company is unable to unconditionally avoid delivering cash oranother financial asset to fulfil a contractual obligation, the contractual obligation meets thedefinition of a financial liability. Although some financial instruments do not explicitly includethe terms and conditions imposing the contractual obligation to deliver cash or anotherfinancial asset, they may indirectly give rise to the contractual obligation through otherterms and conditions. (2) Where a financial instrument shall or may be settled in theCompany’s own equity instrument, consideration shall be given to whether the Company’sown equity instrument as used to settle the instrument is a substitute of cash or anotherfinancial asset or the residual interest in the assets of the Company after deducting all of itsliabilities. In the former case, the instrument shall be the Company’s financial liability; in thelatter case, the instrument shall be the equity instrument of the Company. Under certaincircumstances whereby a financial instrument contract stipulates that the Company shall ormay use its own equity instrument to settle the financial instrument, and the amount of thecontractual right or obligation equal to the number of its own equity instruments to bereceived or delivered multiplied by their fair value at the time of settlement, the contractshall be classified as a financial liability, regardless of whether the amount of thecontractual right or obligation is fixed, or fluctuates in full or in partly in response tochanges in a variable other than the market price of the Company’s own equity instruments(for example an interest rate, a commodity price or a financial instrument price).When classifying a financial instrument (or a component thereof) in consolidated financialstatements, the Company shall consider all terms and conditions agreed between membersof the Group and the holders of the financial instrument. If the Group as a whole has anobligation in respect of the instrument to settle it by delivering cash or another financialasset or in such a way that it would be a financial liability, such instrument shall beclassified as a financial liability.If the financial instrument or its component is attributable to the financial liability, therelevant interests, dividends, gains or losses, and gains or losses arising from redemptionor refinancing, shall be recorded in the profit or loss of the current period.If the financial instrument or its component is attributable to equity instrument, theCompany treats it as change in equity when it is issued (including refinanced), repurchased,sold or cancelled. Changes in fair value of equity instrument is not recognized by theCompany. Transaction costs related to equity transactions are deducted from equity. TheCompany recognizes the distribution to holders of the equity instruments as distribution ofprofits, and dividends paid do not affect total amount of shareholders’ equity.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(4) Recognition and measurement on transfer of financial assets

A financial asset shall be de-recognized when one of the following conditions is met: ① thecontractual right for receiving cash flows from the financial asset is terminated; ②thefinancial asset is transferred, and the risk and rewards of ownership of the financial assethave been substantially transferred to the transferee; and ③ the financial asset istransferred; the Company neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset, but ceases the control over the financial asset. If theCompany neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset, and the control over the financial asset is not ceased, the financial assetand the related financial liabilities should be recognized based on the degree of continuinginvolvement. The degree of continuing involvement means the level of risks borne by theCompany resulting from the change in value of the financial asset.On de-recognition of other equity instruments investment, the difference between thecarrying amount and the sum of the consideration received and the cumulative changes infair value that had been recognized directly in other comprehensive income is recognized inthe retained earnings. On de-recognition of other financial assets, the difference betweenthe carrying amount and the sum of the consideration received and the cumulative changesin fair value that had been recognized directly in other comprehensive income is recognizedin current profit or loss.For financial assets that are sold with recourse or endorsement, the Company needs todetermine whether the risk and rewards of ownership of the financial asset have beensubstantially transferred. If the risk and rewards of ownership of the financial asset havebeen substantially transferred, the financial asset shall be derecognized. If the risk andrewards of ownership of the financial asset have been substantially retained, the financialasset shall not be de-recognized. If the Company neither transfers nor retains substantiallyall the risks and rewards of ownership of the financial asset, the Company shall assesswhether the control over the financial asset is retained, and the financial assets shall beaccounted for according to the above paragraphs.

(5) Derecognition of financial liabilities

If the current obligation of a financial liability (or part of it) has been discharged, theCompany derecognizes the financial liability (or part of the financial liability). The Company(borrower) enters into an agreement with the lender to replace the original financial liabilityin the form of a new financial liability, and if the new financial liability is substantiallydifferent from the original financial liability, the original financial liability is derecognized andthe new financial liability is recognized. If the Company makes substantial changes to thecontractual terms of the original financial liability (or a part thereof), the original financialliability is derecognized and the new financial liability is recognized in accordance with therevised terms.If the financial liability (or a part thereof) is derecognized, the difference between thecarrying amount and the consideration paid (including the transferred non-cash assets orliabilities assumed) is recognized in current profit or loss.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(6) Offsetting financial assets and financial liabilities

When the Company has the legal right to offset recognized financial assets and financialliabilities, and the legal right can be executed at present, and the Company has a plan tosettle the financial assets and financial liabilities at the same time or at net amount, thefinancial assets and financial liabilities can be presented in the balance sheet at net amountafter offsetting. Except for the above circumstances, financial assets and financial liabilitiescannot be offset and shall be presented separately in the balance sheet.

(7) Determination of fair value of financial assets and financial liabilities

Fair value is the amount at which an asset could be sold or a liability could be transferredbetween willing parties in an orderly transaction on a measurement date. The fair value of afinancial instrument that is traded in an active market is determined at the quoted price inthe active market. Quoted price in the active market represents quoted price which can beeasily obtained periodically from exchange market, brokers, industry associations or pricingservices agency, etc., which is the transactions amount in arm’s length transactions. Thefair value of a financial instrument that is not traded in an active market is determined byusing a valuation technique. Valuation techniques include using prices of recent markettransactions between knowledgeable and willing parties, reference to the current fair valueof another financial asset that is substantially the same with this instrument, discountedcash flow analysis and option pricing models, etc. During the valuation, the Companyadopts an applicable valuation technique under current conditions and there are enoughavailable data and other information to support. Those inputs should be consistent with theinputs a market participant would use when pricing the asset or liability, and the Companyshould maximize the use of relevant observable inputs. When related observable inputscan’t be acquired or are not feasible to be acquired, then use unobservable inputs.In summary, the Company categorizes inputs for fair value measurement into three levelsand uses the inputs by the order of Level 1, Level 2 and Level 3. Level 1: quoted prices(unadjusted) in active markets for identical assets or liabilities at the measurement date.Level 2: inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset orliability.

(8) Impairment of financial assets

For financial assets measured at amortized cost and debt instrument investments measuredat fair value through other comprehensive income, contract assets and financial guaranteecontracts, the Company recognizes the loss provision based on the expected credit losses.The Company considers reasonable and reliable information about past events, currentconditions and forecasts of future economic conditions, and takes the risk of default as aweight, and calculates the probability-weighted amount of the present value of thedifference between the cash flow receivable and the cash flow expected to be received ofthe contract to confirm the expected credit losses.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

On each balance sheet date, the Company measures the expected credit losses offinancial instruments in different phases. If the credit risk has not increased significantlysince the initial recognition, the financial instruments are in the first phase. The Companymeasures the loss provision according to the expected credit losses in the next 12 months;if credit risk has increased significantly but credit impairment has not yet occurred since theinitial recognition, the financial instruments are in the second phase. The Companymeasures the loss provision according to the expected credit losses of the instrumentsduring the entire duration; if credit impairment has occurred since the initial recognition, thefinancial instruments are in the third phase. The Company measures the loss provisionaccording to the expected credit losses of the instruments during the entire duration.For financial instruments with lower credit risk on the balance sheet date, the Companymeasures the loss provision according to the expected credit losses in the next 12 months,assuming that its credit risk has not increased significantly since the initial recognition.For financial instruments in the first phase and second phase and financial instruments withrelatively lower credit risk, the Company calculates interest income based on their bookbalance before the deduction of provisions and effective interest rate. For financialinstruments in the third phase, the Company calculates interest income based on theiramortized cost after the impairment provision has been deducted from the book balanceand effective interest rate.For bills receivable, accounts receivable and contractual assets, whether there existsignificant financing components, the Company measures loss provision based on expectedcredit loss over the entire duration.The Company classifies accounts receivable into groups on the basis of shared credit riskcharacteristics, and calculates the expected credit losses on groups, the bases of groupdetermination are as follows:

For each group of bills receivable, the Company applies exposure at default and expectedcredit losses rate over the entire duration to calculate the expected credit losses by takinginto account the historical credit losses experience, the existing conditions and forecast offuture economic conditions.For each group of accounts receivable, the Company makes the comparison of expectedcredit losses rates of accounts receivable in overdue days and over the entire duration tocalculate the expected credit losses by taking into account the historical credit lossesexperience, the existing conditions and forecast of future economic conditions.For each group of other accounts receivable, the Company applies exposure at default andexpected credit losses rate within the next 12 months or over the entire duration tocalculate the expected credit losses by taking into account the historical credit lossesexperience, the existing conditions and forecast of future economic conditions.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

The Company recognizes the loss impairment provision or reversed in profit or loss of thecurrent period. For held debt instruments at fair value through other comprehensiveincome, the Company recognizes loss/gain on impairment in profit or loss of the currentperiod, and adjusts other comprehensive income at the same time.

11. Inventory

√ Applicable □ Not Applicable

(1) Classification of inventory

Inventory refers to finished products and commodities held by the Company in dailyactivities for sale, products in progress, materials and supplies consumed in the process ofproduction or provision of labour services, including mainly raw materials, turnovermaterials, materials for commissioned processing work, packaging materials, products inprogress, semi-finished products through in-house manufacturing, finished products(products in stock) and project construction, among others.

(2) Pricing of dispatch of inventory

The actual cost of inventories upon delivery is calculated using the weighted averagemethod.

(3) Impairment provision for inventory

At the balance sheet date, inventory is measured at the lower of cost and net realisablevalue.The net realisable value of inventories that can be directly put to sale, including finishedproducts, commodities and materials for sale is determined as the estimated selling price ofsuch inventory less estimated selling expenses and related tax expenses; the net realisablevalue of or inventories held for production, is determined as the estimated selling price offinished products manufactured less estimated cost incurred upon completion, estimatedselling expenses and related tax expenses; the net realisable value of inventory held for theexecution of sales contract or labour contract is computed on the basis of the contractprice. If the quantity of inventories held by the Company is more than the quantity orderedunder a sales contract, the net realisable value of the inventories in excess is computed onthe basis of the general selling price.Inventory impairment provision is made on the basis of individual inventory items, providedthat if certain inventories are related to a series of products manufactured and sold in thesame region with identical or similar end uses or purposes and are difficult to measureseparately with other items, their cost and net realisable value may be measured on anaggregate basis. Inventories The cost and net realizable value of inventories in largequantity with low unit prices are measured according to inventory types.At the balance sheet date, if the cost of inventory of the Company is higher than its netrealisable value, impairment provision is made and charged to current profit or loss. If thefactor causing the write-down of inventory value has been removed, the amount ofwrite-down should be reversed and transferred out of the previous inventory impairmentprovision amount. The reversed amount is included in current profit or loss.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(4) Inventory system

The Company adopts the perpetual inventory system as its inventory system.

(5) Amortisation of low-value consumables and packaging materials

The Company adopts one-off amortisation of its low-value consumables and packagingmaterials.

12. Long-term equity investments

√ Applicable □ Not Applicable

Long-term equity investments hereunder refer long-term equity investments in which theCompany exercises control, joint control or significant influence over the investee.

(1) Determination of initial investment cost

① The initial cost of long-term equity investments acquired through business combination

involving parties under common control should be recognised as the share of thecarrying value of the owner’s equity of the acquired party; the initial cost of long-termequity investments acquired through business combination involving parties not undercommon control should be recognised as the combination costs determined at thedate of acquisition;

② The Company invested in other equity investment other than long-term equity

investments acquired through combination, the initial investment cost of long-termequity investments acquired with cash payment is the acquisition price actually paid;the initial investment cost of long-term equity investments acquired with the issuanceof equity- based securities is represented by the fair value of equity-based securities;the initial investment cost of long-term equity investments acquired through debtrestructuring is determined in accordance with relevant provisions under “AccountingStandards for Business Enterprises No.12—Debt Restructuring”; the initialinvestment cost acquired in exchange for non-monetary assets shall be determined inaccordance with relevant provisions of the standard.

(2) Subsequent measurement and recognition of profit or loss

Cost methodLong-term equity investments in which the Company is able to exercise control overthe investee is accounted for using the cost method. Under the cost method, thecarrying value of long-term equity investments, other than additional investment orrecouped investment, shall remain constant. The Company declared the distribution ofprofit or cash dividend to the investee and calculated the portion of entitlement,which is recognised as investment income.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Equity methodThe equity method is used by the Company to account for long-term equityinvestments in associates and joint ventures. Under the equity method, the initialinvestment cost is not adjusted for any excess of the initial investment cost over theshare of the net fair value of the investee’s identifiable assets. When the initialinvestment cost is less than the share of the fair value of the investment’s identifiablenet assets, the difference is recognised in current profit or loss and the cost oflong-term equity investment is adjusted accordingly.Under the equity method, share of net profit or losses and other comprehensiveincome of the investee are recognised by the Company as investment income andother comprehensive income, respectively, and the carrying amount of the long-termequity investment is adjusted accordingly. Share of profit or cash dividend declaredby the investee is charged against the carrying value of the long-term equityinvestment; changes in owners’ equity of the investee other than net profit or loss,other comprehensive income and profit distribution are adjusted against the carryingvalue of long-term equity investment and included in capital reserve. Share of netprofit or loss of the investee is recognised by the Company on the basis of the fairvalue of the identifiable assets of the investee when the investment is acquired andadjusted against the net profit of the investee. If the accounting policy andaccounting period of the investee are inconsistent with those of the Company, thefinancial statements of the investee is adjusted to align with the accounting policy andaccounting period of the Company, and investment income and other comprehensiveincome is recognised accordingly.Net losses of the investee is recognised by the Company by deducting the carryingvalue of the long-term equity investment together with long-term equity that insubstance forms part of the net investment in the investee until it reaches zero.Moreover, if the Company has incurred obligations to assume additional losses of theinvestee, estimated liabilities are recognised according to the obligation expected tobe assumed and charged to current investment loss. If the investee records net profitin future periods, the Company shall recognise its share of gains after applying suchshare of gains to make up for the unrecognised share of loss.

(3) Change of accounting method for long-term equity investment

① Change from fair value measurement to the equity method: If an equity investment in

the investee not previously affording control, joint control or significant influence andaccounted for in accordance with the standard for recognition and measurement offinancial instruments becomes capable of affording joint control or significant influenceover the investee as a result of increased shareholding following additionalinvestment, the accounting method should be changed to the equity method, and thefair value of the original equity investment determined according to the standard forrecognition and measurement of financial instruments plus the fair value ofconsideration paid for the acquisition of the new investment shall be changed theinitial investment cost under the equity method.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

② Change from fair value measurement or equity method to cost method: if an equity

investment previously held in the investee not previously affording control, joint controlor significant influence and accounted for in accordance with the standard forrecognition and measurement of financial instruments, or a long- term equityinvestment previously held in associates or joint ventures becomes capable ofaffording control over the investee, it is accounted for long-term equity investmentformed through business combination.

③ Change from equity method to fair value measurement: if a long-term equity investment

previously held in the investee affording joint control or significant influence ceases toafford joint control or significant influence as a result of decrease in shareholdingpercentage following partial disposal, the remaining equity investment is recognised inaccordance with the standard for recognition and measurement of financialinstruments, and the difference between the fair value at the date of loss of jointcontrol or significant influence and the carrying value is included in current profit orloss.

④ Change from cost method to equity method or fair value measurement: when preparing

separate financial statements, if the Company losses control over an investee due todisposal of some equity-based investment and other reasons, the Company accountsfor the remaining equity affording joint control or significant influence over an investeeas a result of disposal based on the equity method, and the remaining equity will beadjusted as if it is accounted for using the equity method from the date ofacquisition; for the remaining equity not affording joint control or significant influenceover an investee as a result of disposal, it is accounted for in accordance withrelevant requirements of Accounting Standards for Business Enterprises No. 22—

Recognition and measurement of financial assets, and the differences between the fairvalue and book value on the date when control is lost are included in profit or loss.When preparing consolidated financial statements, it shall be accounted for inaccordance with relevant requirements of Accounting Standards for BusinessEnterprises No.33— Consolidated financial statements.

(4) Bases for determining joint control or significant influence over an investee

Joint control is the contractually agreed sharing of control over an arrangement, whichrelevant activities of such arrangement must be decided by unanimously agreement fromparties who share control. If all the parties or a group of parties must act in concert todecide on the relevant activities of certain arrangement, it can be considered that all partiesor a group of parties have collective control over the arrangement. When determining ifthere is any joint control, it should first be determined if the arrangement is controlledcollectively by all parties or a combination of parties, and then determined whetherdecisions about activities related to the arrangement must be made by the unanimousagreement of those parties who have collective control over the arrangement. If there aretwo or more party groups that can collectively control certain arrangement, it does notconstitute joint control. When determining if there is any joint control, the relevantprotection rights will not be taken into account.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Significant influence is the power of the investor to participate in the decision-making of aninvestee’s financial and operational policies, but neither control nor jointly control theformulation of such policies with other parties. When determining if there is any significantinfluence on the investee, the influence of the voting shares of the investee held directly orindirectly and the potential voting rights held by the Company and other parties which areexercisable in the current period and converted to the equity of the investee, including thewarrants, stock options and convertible bonds that are issued by the investee and can beconverted in the current period, shall be taken into account by the Company.When the Company holds directly or indirectly through the subsidiary 20% (inclusive) to50% of the voting shares of the investee, it is generally considered to have significantinfluence on the investee, unless there is concrete evidence to prove that it cannotparticipate in the production and operational decisions of the investee and cannot posesignificant influence in this situation.The Company usually determines whether there is significant influence on the investeethrough the following one or several circumstances:

① Representation at the board or similar authority of the investee.

② Participation in the decision-making process of the investee’s financial and operational

policies.

③ Having important transactions with the investee.

④ Posting of management personnel at the investee.

⑤ Providing key technical data to the investee.

Having one or several of the above circumstances does not mean that the Company musthave significant influence on the investee. The Company needs to comprehensivelyconsider all the facts and circumstances to make an appropriate judgment.

(5) Methods for impairment test and impairment provision

At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of a long-term equity investment. If there are indications of impairment, animpairment test should be performed to ascertain its recoverable amount, and animpairment provision equivalent to the margin by which the recoverable amount is lowerthan the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods. The recoverable amount is determined as thehigher of net fair value of the long-term equity investment on disposal and present value ofestimated future cash flow.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(6) Disposal of long-term equity investments

Upon the Company’s disposal of long-term equity investments, the difference between thecarrying value and consideration actually acquired is included in current profit or loss. Upondisposal of long-term equity investment, the portion previously included in othercomprehensive income is accounted for according to the relevant percentage on the samebasis adopted in the direct disposal of the relevant assets or liabilities by the investee.

13. Investment properties

(1) Types and measurement models of investment properties

The Company’s investment properties include the following types: leased land-use rights,leased buildings and land-use rights held for transfer upon appreciation.The Company’s investment properties is initially measured at cost and subsequently on acost basis.

(2) Adoption of cost model as accounting policy

Among the Company’s investment properties, leased buildings are subject to depreciationon a straight-line basis in accordance with accounting policies identical with accountingpolicies for fixed assets. Leased land-use rights and land-use rights held for disposal afterappreciation land- use rights in investment properties are amortised using the straight-linemethod in accordance with accounting policies identical with fixed asset accountingpolicies for intangible assets.At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of an investment property. If there are indications of impairment, an impairmenttest should be performed to ascertain its recoverable amount, and an impairment provisionequivalent to the margin by which the recoverable amount is lower than the carrying valueshould be made. Once recognised, impairment loss will not be reversed in subsequentaccounting periods.Where the investment properties are sold, transferred, retired or damaged, the differencesfrom disposal after deducting the carrying amount and related taxes are recognised in profitor loss for the current period by the Company. When the Company has evidence indicatingthe self-occupied houses and buildings are converted to leasing or leasing out itsproperties held for sale under operating leases, the carrying amount of such fixed assets,intangible assets or inventories before the conversion are transferred to investmentproperties. When the Company has evidence indicating the property held to earn rentals orfor capital appreciation are converted to self-occupation or the property intended foroperating lease purpose are open for sale, the carrying amount of such properties beforethe conversion are transferred to fixed assets, intangible asset or inventories.

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Section X Financial Report

14. Fixed assets

√ Applicable □ Not Applicable

(1) Recognition criteria

Fixed assets of the Company refer to tangible assets held for the production ofcommodities, provision of labour services, lease or operational management with a usefullife of more than one accounting year. Fixed assets are recognised if all of the followingconditions are met:

① Economic benefits relating to such fixed assets are likely to flow into the Company;

② The cost of the fixed assets can be reliably measured.

Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shallbe included in the cost of the fixed asset, and the carrying amount of the component ofthe fixed asset that is replaced shall be derecognised. Otherwise, such expenditure shall berecognised in profit or loss for the period in which it is incurred.Fixed assets of the Company are initially measured at cost. The purchase cost of a fixedasset comprises its purchase price, related taxes and any directly attributable expenditurefor bringing the asset to its working condition for its intended use, such as transportationcosts and installation expenses. If the payment for a purchased fixed asset is deferredbeyond the normal credit terms, the cost of the fixed asset shall be determined based onthe present value of the instalment payments. The difference between the actual paymentand the present value of the purchase price is recognised in profit or loss over the creditperiod, except for such difference that is capitalised according to Accounting Standard forBusiness Enterprises No. 17— Borrowing Costs (ASBE No. 17).

(2) Depreciation method

√ Applicable □ Not Applicable

The Company’s fixed assets are mainly classified into: buildings, machinery equipment,transportation equipment and office and other equipment; depreciation is conducted on astraight-line basis. The useful life and estimated net residual value of fixed assets aredetermined based on the nature and use of the fixed assets. At the end of the year, theuseful life and estimated residual value of and depreciation method for fixed assets arereviewed, and adjustment is made for any difference with the original estimated amount.Other than fully depreciated fixed assets which remain in use and the land which isseparately priced and recorded, the Company measures depreciation for all fixed assets.

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Section X Financial Report

The type, depreciation method, estimated useful lives, estimated residual values and yearlydepreciation of the Company’s fixed assets are as follows:

Type

Depreciationmethod

Depreciation

life(years)

Residual

ratioBuildingsLife average method8–

–5%Machinery equipmentLife average method4–

–5%Transportation equipmentLife average method5–

–5%Office and other equipmentLife average method3–

–5%

(3) Methods for impairment test and impairment provision for fixed assets

At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of fixed assets. If there are indications of impairment, an impairment test shouldbe performed to ascertain its recoverable amount, and an impairment provision equivalentto the margin by which the recoverable amount is lower than the carrying value should bemade. Once recognised, impairment loss will not be reversed in subsequent accountingperiods.

(4) Disposal of fixed assets

Fixed assets are derecognised upon disposal, or when no economic benefits are expectedfrom use or disposal. The difference between gains on disposal, transfer, retirement ordamage of fixed assets, net of their book value and related taxes, are included in profit andloss.

15. Construction in progress

√ Applicable □ Not Applicable

(1) Measurement of construction in progress

The cost of the Company’s construction in progress is recognised at actual constructionexpenses, including all necessary construction expenses incurred during the construction,and borrowing costs capitalized before the work reaches the expected conditions for useand other related costs.

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Section X Financial Report

(2) Criteria for and timing of the transfer of construction in progress to fixed assets

The Company’s construction in progress is transferred to fixed assets when the work iscompleted and reaches the expected conditions for use. The criteria for judgement ofexpected conditions for use should meet one of the following:

① The physical construction (including installation) of fixed assets has been completed in

full or substantially completed in full;

② Trial production or operation has commenced and the result indicates that the asset

can operate normally or can manufacture compliant products in a consistent manner,or the trial operation indicates that it can operate or conduct business normally;

③ The amount of fixed asset expenditure of the construction is minimal or almost certain

not be further incurred;

④ Fixed assets acquired have reached design or contractual requirements, or are

essentially consistent with design and contractual requirements.

(3) Methods for impairment test and impairment provision for construction in progress

At the balance sheet date, the Company inspects whether there are indications of possibleimpairment of construction in progress. If there are indications of impairment, animpairment test should be performed to ascertain its recoverable amount, and animpairment provision equivalent to the margin by which the recoverable amount is lowerthan the carrying value should be made. Once recognised, impairment loss will not bereversed in subsequent accounting periods.The recoverable amount is determined as the higher of net fair value of the asset lessdisposal cost and the present value of estimated future cash flow.

16. Borrowing costs

√ Applicable □ Not Applicable

(1) Principle for recognition of capitalisation of borrowing cost

Borrowing costs incurred by the Company that can be directly attributed to the acquisitionor production of assets qualified for capitalisation are capitalised and included in relevantasset costs; other borrowing costs are recognised as cost at the amount incurred at thetime of incurrence and charged to current profit or loss. Assets qualified for capitalisationrefer to fixed assets, investment properties and inventory that require a considerably longperiod of acquisition or production activities to reach the expected conditions for use orsale.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(2) Computation of capitalised amounts

Capitalisation period: from the point of time at which the capitalisation of borrowing costsbegins to the point of time at which capitalisation ceases. The period of suspension ofcapitalisation of borrowing costs is not included.Period of suspension of capitalisation: In case of abnormal disruption during the acquisitionor production process for a consecutive period of more than 3 months, the capitalisationperiod for borrowing costs should be suspended.Computation of capitalised amount: ① For specific borrowings, the amount is determinedas interest expense incurred for the period in respect of the specific borrowing less interestincome received through the deposit of unutilised borrowed funds or investment gainsreceived through provisional investments; ② For general borrowings utilised, the amount isdetermined as the weighted average amount of the portion of cumulative asset expenses inexcess of the asset expense of specific borrowings multiplied by the capitalisation rate forthe general borrowings utilised, where the capitalisation rate is the weighted averageinterest rate of general borrowings; ③ where there is a discount or premium in theborrowings, the amortisation of such discount or premium for each accounting period isdetermined according to the effective interest rate and the interest amount for each periodis adjusted accordingly.

17. Right-of-use assets

√ Applicable □ Not Applicable

Right-of-use assets are the rights of the Company as lessee to use leased assets during thelease period. At the inception date of the lease, the Company as lessee recognises right- of-useassets and lease liabilities in respect of the lease, other than short-term leases and leases oflow-value assets which are subject to simplified treatment.The Company’s right-of-use assets are initially measured at cost, which includes:

(1) The amount of lease liability under initial measurement;

(2) The lease payment made on or before the inception date of the lease term, less the relevant

amount of lease incentive received if such incentive is available;

(3) The initial direct cost of the Company as lessee;

(4) Estimated cost to be incurred for the demolishing and removal of leased assets, restoration

of venues where the leased assets are located or restoration of the leased assets to theconditions agreed under the lease terms.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

The Company charges depreciation in respect of right-of-use assets using the average service lifemethod. Where the acquisition of ownership of the leased asset at the end of the lease periodcan be reasonably ascertained by the Company, depreciation is charged over the remaininguseful life of the leased assets. If the acquisition of ownership of the leased asset at the end ofthe lease period cannot be reasonably ascertained, depreciation is charged during the lease termor the remaining useful life of the leased assets, whichever is shorter.The Company shall determine whether impairment of right-of-use assets has occurred andaccount for impairment loss which has been identified in accordance with the provisions of“Accounting Standards for Business Enterprises No. 8— Asset Impairment”.When the Company remeasures lease liabilities in accordance with the accounting standard, thecarrying value of the right-of-use assets is adjusted accordingly. If the carrying value of the right-of-use assets is reduced to zero but the lease liabilities still require further adjustment, theremaining amount is charged to current profit or loss.Where lease modification results in a reduced scope of lease or shortened lease term, thecarrying value of the right-of-use assets is reduced accordingly, and the relevant gain or lossresulting from the partial or full termination of the lease is included in current profit or loss. Forother lease modifications resulting in the remeasurement of lease liabilities, the carrying value ofthe right-of-use assets is adjusted accordingly.

18. Intangible assets

Intangible assets are the identifiable non-monetary assets which have no physical form and arepossessed or controlled by the Company, and are recognized when the following conditions aremet:

① it is probable that economic benefits attributable to the intangible assets will flow into the

Company;

② the costs of the intangible assets can be measured reliably.

(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. Intangible assets acquired ina business combination not under common control that are owned by the acquiree but notrecognised in its financial statements are recognised as intangible assets at fair value oninitial recognition of the acquiree’s assets.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

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 life

The 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 beascertained.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 Company reviews the useful lives of the intangible assets withindefinite useful lives. The assessment is primarily reviewed by relevant departments thatuse the intangible assets, using the down-to-top approach, to determine if there arechanges to the determination basis of indefinite useful lives.

(3) Methods of test and provision for impairment of intangible assets

At 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 in subsequent accounting periods once provision ismade for it. The recoverable amount of intangible assets should be based on the higher ofthe net fair value of the assets less the disposal expense and the present value ofestimated future cash flow of the assets.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(4) Basis for research and development phases for internal research and development

project and basis for capitalization of expenditure incurred in development stageAs 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 capitalized only if all of the following conditions are met: ①the technicalfeasibility of completing the intangible assets so that they will be available for use or forsale; 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: the Company refers to the research stage as the stageof planned investigation and search for obtaining new technology and knowledge, whichfeatures planning and exploration; before commercial production or other uses, theCompany regards the stage of applying the research achievements and other knowledge ina plan or design to produce new or substantially improved materials, equipment andproducts as development stage, which features pertinence and is very likely to formresults.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. Annual Report 2022

Section X Financial Report

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 arising from a business combination and an intangible asset with an indefinite useful lifeis tested for impairment at least at each year end, irrespective of whether there is any indicationthat the asset may be impaired. Intangible assets that have not been ready for intended use aretested for impairment each year.When the Company carries out impairment test of the goodwill, the carrying amount of thegoodwill, arising from business combination, shall be allocated to the related asset groups onreasonable basis since the acquisition date, or to the related asset group portfolios if it is difficultto be allocated to the related asset groups. When the carrying amount of the goodwill isallocated to the related asset groups or asset group portfolios, it shall be allocated in theproportion of the fair value of each asset group or asset group portfolio against the total fairvalue of related asset groups or asset group portfolios. If it is difficult to measure the fair valuereliably, it shall be allocated in the proportion of the carrying amount of each asset group orasset group portfolio against the total carrying amount of related asset groups or asset groupportfolios.When impairment test is made by the Company to the related asset groups or asset groupportfolios including goodwill, if there is a sign that the related asset groups or asset groupportfolios are prone to impair, the Company shall first conduct impairment test on the assetgroups or asset group portfolios excluding goodwill, calculate the recoverable amount andrecognize the corresponding impairment loss by comparing with its carrying amount. TheCompany shall then conduct impairment test on the asset groups or asset group portfoliosincluding goodwill and compare the carrying amount (including the carrying amount of allocatedgoodwill) of related asset groups or asset group portfolios with the recoverable amount thereof.Impairment loss shall be recognized in accordance with the differences when the recoverableamount of the related asset groups or asset group portfolios is lower than the carrying amountthereof. The amount of the impairment loss is first reduced by the carrying amount of thegoodwill allocated to the asset group or set of asset groups, and then the carrying amount ofother assets (other than the goodwill) within the asset group or set of asset groups, pro ratabased on the carrying amount of each asset.Once the above impairment loss on assets is recognized, it shall not be reversed by theCompany in any subsequent accounting period.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

20. Long-term prepaid expense

√ Applicable □ Not Applicable

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

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, employeewelfare, housing provident fund, labor union fee and education fee, medical insurance premiums,work-related injury insurance premiums, maternity insurance premiums, short-term compensatedleave, short-term profit-sharing plans, etc. During the accounting period when employees renderservices, short-term remunerations that actually incurred shall be recognized as liabilities andcredited into the current profit or loss or the cost of relevant assets on an accrual basis by thebenefit objects.Post-employment benefits mainly include the basic pension insurance, enterprise annuity, etc., Inaccordance with the risks and obligations undertaken by the Company, the post- employmentbenefits are classified as defined contribution plans and defined benefit plans. Definedcontribution plans: the Company shall recognize the sinking funds paid on the balance sheet dateto individual entities in exchange for services from employees in the accounting period asliabilities, and shall credit such funds into the profit or loss or the cost of relevant assets inaccordance with the benefit objects. Defined benefit plans: the cost for providing benefits isdetermined using the expected cumulative welfare unit method, with actuarial valuations beingcarried out by independent actuary at the interim and annual balance sheet date. The costs forstaff’s remunerations incurred by the defined benefit plans of the Group are categorized asfollows: (1) service cost, including current period service cost, past service cost and settlementprofit or loss. Specifically, current period service cost means the increase of the present value ofdefined benefit obligations resulted from the current period services offered by employees. Pastservice cost means the increase or decrease of the present value of defined benefit obligationsresulted from the revision of the defined benefit plans related to the prior period services offeredby employees; (2) interest expenses of defined benefit plans; (3) changes caused by theremeasurement of liabilities for defined benefit plans. Unless other accounting standards requireor permit the credit of the costs for employee welfare into the cost of assets, the Company willcredit (1) and (2) above into the profit or loss; and recognize (3) above as other comprehensiveincome and will not transfer it back to the profit or loss in subsequent accounting periods.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Termination benefits: The indemnity proposal provided by the Company for employees for thepurpose of terminating labor relations with employees before expiry of the labor contracts orencouraging employees to accept downsizing voluntarily. When the following conditions are met,the Company will recognize and credit into the profit or loss the accrued liabilities arising fromthe indemnity as a result of terminating labor relations with the employees: the Company hasmade a formal plan for termination of labor relations or has made an offer for voluntaryredundancy which will be implemented immediately; and the Company could not unilaterallywithdraw the plan for termination of labor relations or the redundancy offer. Early retirement plansfor employees will be handled in the principle the same as the termination benefits above. TheCompany will credit the salaries and social insurance premiums to be paid to the early retireesduring the period from the date of early retirement to the normal retirement date to the profit orloss when recognition conditions for estimated liabilities are met.

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 discountrate.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 thelessor. The lessee’s incremental borrowing rate refers to the interest rate that the lessee isrequired to pay for borrowing funds under similar mortgage conditions in a similar economicenvironment in order to obtain assets close to the value of the right-of-use assets during asimilar period.The Company shall calculate the interest expenses of lease liabilities over the lease term at thefixed periodic interest rate, and include it into current profit or loss or assets cost.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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

23. Estimated liability

√ Applicable □ Not Applicable

(1) Criterion for determining of estimated liability

If 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 liability

The 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. Ifthere is objective evidence that the carrying value could not reflect in the current bestestimate, the carrying 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.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 thecash-settled share-based payment that may be exercised immediately after the grant, the fairvalue of the liability assumed by the Company shall, on the date of the grant, be recognized inrelevant costs or expenses and the liabilities shall be increased accordingly. For cash-settledshare-based payment that may be exercised if services are fulfilled during the vesting period orthe specified performance condition is achieved, on each balance sheet date within the vestingperiod, the services acquired in the current period shall, based on the best estimate of exercise,be recognized in relevant costs or expenses at the fair value of the liability assumed by theCompany, and the liabilities shall be adjusted correspondingly.At each balanced sheet date and the settlement date prior to the settlement of liabilities, the fairvalue of the liability is re-measured with its change consolidated in profit/loss.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

When there is 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.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 singleperformance obligation in accordance with the relevant proportion of separate selling price ofgoods or services promised by various single performance obligation, and measure revenue inaccordance with transaction 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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

When one of the following conditions is met, the Company and its subsidiaries performperformance obligations during a certain time horizon, otherwise, it belongs to fulfillingperformance obligations at a certain time point:

① The client simultaneously obtains and consumes economic benefits as the Company and its

subsidiaries 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 and

services;

② The Company and its subsidiaries have transferred the material objects of such goods to

the client;

③ The Company and its subsidiaries have transferred statutory ownership right of the goods

or 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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Specific accounting policies relating to major activities that the Company and its subsidiariesobtain revenue are described as follows:

(1) Sale of goods

Generally, contracts for sale of goods between the Company and its clients only includeperformance obligation of transferring the whole machine of home appliance. Generally, onthe basis of taking into account the following factors comprehensively, the Companyrecognizes the revenue at the time point of transfer of control right of goods: the right ofinstant collection for obtaining goods, transfer of major risks and rewards on ownership ofgoods, transfer of statutory ownership of goods, transfer of assets of material objects ofgoods, the client’s acceptance of such goods.

(2) Construction contract income

Construction 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.

(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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

26. Government grants

√ Applicable □ Not Applicable

(1) Types of government grants

Government 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 grants

Asset-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-related

government 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.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 the

proportion 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 in

general statement and no specific project is specified in the relevant governmentdocument.

(4) Amortization method and determination of amortization period of deferred revenue

related 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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(5) Recognition of government grants

Government 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 tax assets/deferred 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 asset

or 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 income

for 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.

(3) Deferred income tax liability is recognized for taxable temporary difference arising from

investments 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 initial

recognition 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.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

28. Other significant accounting policies and accounting estimates

√ Applicable □ Not Applicable

(1) Asset securitisation

The Company has securitised certain receivables to entrust the assets to specific-purposeentities which would issue such securities to investors. As asset service provider, theCompany is responsible for the provision of maintenance and daily management of theassets, formulation of annual asset disposal plans, formulation and implementation of assetdisposal plan, signing of relevant asset disposal agreements and preparation asset servicereports on a regular basis.In applying the accounting policy for the securitisation of financial assets, the Company hasconsidered the extent to which the risk and reward of the assets have been transferred toother entities, and the extent to which the Company exercises control over the entity:

① When the Company has transferred substantially all risk and reward relating to the

ownership of a financial asset, such financial asset is derecognised;

② When the Company retains substantially all risk and reward relating to the ownership

of a financial asset, the Company continues to recognise such financial asset;

③ If the Company neither transfers nor retains substantially all risk and reward relating to

the ownership of a financial asset, the Company considers whether it has control overthe financial asset. If the Company does not retain control, the financial asset isderecognised, and the rights and obligations arising from or retained the transfer arerecognised as assets and liabilities, respectively. If the Company retains control, thefinancial asset is recognised according to the extent of continued involvement in thefinancial assets.

(2) Hedge accounting

Hedge refers, in respect of the risk exposure arising from the company’s management ofspecific risks such as foreign exchange risks, interest rate risks, price risks and credit risks,to risk management activity of designating financial instruments as hedging instrumentssuch that the change in the fair value or cash flow of the hedging instruments can beexpected to set off the change in the fair value or cash flow of the hedged item.The hedged item refers to an item designated for hedge against the risk of change in fairvalue or cash flow that can be reliably measured.Hedging instruments are financial instruments designated for hedge, the change in fair valueor cash flow of which is expected to set off the change in the fair value or cash flow of thehedged item.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

The Company assesses whether the hedge relationship fulfills the requirement for hedgeeffectiveness at the inception date of the hedge and continuously in subsequent periods.The effectiveness of hedge refers to the extent to which the change in the fair value orcash flow of the hedging instruments can offset the change in the fair value or cash flow ofthe hedged item caused by the risk against which the hedge is made. The change in thefair value or cash flow of a hedging instrument in excess or shortfall of the change in thefair value or cash flow of the hedging instruments can offset the change in the fair value orcash flow of the hedged item represents the ineffective portion of the hedge.

(3) Significant accounting estimates

In the course of applying accounting policies, the Company is required to makejudgements, estimations and assumptions on the carrying values of statement items thatcannot be accurately measured owing to uncertainties to which operating activities aresubject. Such judgements, estimations and assumptions are made based on the pastexperience of the management and taking into consideration of other relevant factors. Suchjudgements, estimations and assumptions affect the reported amounts of income,expenses, assets and liabilities and the disclosure of contingent liabilities as at the balancesheet date. However, the actual outcome resulting from the uncertainty of such estimatescould be different from the current estimates of the management, thereby resulting insignificant adjustments to the carrying value of the future assets or liabilities affected. TheCompany regularly reviews such judgements, estimations and assumptions on a goingconcern basis. If the change in accounting estimates affects only the current period inwhich the change occurs, the affected amount is recognized for the period in which thechange occurs; if both the current period and future periods are affected, the affectedamount is recognised for the current period and the future periods.At the balance sheet date, important aspects in which the Company is required to makejudgements, estimations and assumptions on the amount of items on the financialstatements are as follows:

Estimated liabilities

The Company estimates and makes provision for product warranty and estimatedcontract loss according to contract terms, existing knowledge and historicalexperience. When such contingencies have given rise to a present obligation, and theperformance of such present obligation is likely to result in the outflow of economicbenefit from the Company, the Company recognises estimated liabilities for thecontingencies based on the best estimates of expenses required for the performanceof relevant present obligations. The recognition and measurement of estimatedliabilities is dependent to a large extent on management judgement. In the course ofjudgement, the Company is required to assess factors such as risks, uncertaintiesand the time value of currency relating to such contingencies. In particular, theCompany recognises estimated liabilities in respect of after-sales undertaking tocustomers for return and replacement, maintenance and installation of goods sold.The recognition of estimated liabilities has taken into account the maintenanceexperience and data of the Company for recent years, although past experience inmaintenance may not reflect maintenance in the future. Any increase or decrease inthis provision might affect the profit or loss of future years.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Provision for ECLThe Company measures ECL through default risk exposure and the ECL rate, whichis determined based on the default probability rate and default loss rate. Indetermining the ECL rate, the Company uses data such as internal historic credit lossexperience and adjusts the historic data taking into consideration current conditionsand prospective information. When considering prospective information, indicatorsadopted by the Company include the risk of economic downside, expected growth inunemployment rate, and changes in external market conditions, technical conditionsand customer conditions. The Company monitors and reviews the assumptionsrelating to ECL computation on a regular basis. There was no significant change toaforesaid estimation technique and key assumptions during the year. Impairment provisions for inventoryThe Company makes impairment provisions for inventory of which cost is higher thannet realisable value and obsolete and slow-moving inventory based on the lower ofcost and net realisable value according to its inventory accounting policy. Theimpairment of inventory to its net realisable value is based on assessment of thesellability of inventory and its net realisable value. The authentication of inventoryimpairment requires the management to obtain conclusive evidence and makejudgment and estimates taking into consideration factors such as the purpose ofinventory and post-balance sheet date events. Any difference between the actualoutcome and the previous estimate will affect the carrying value of inventory and thecharge or reversal of impairment provisions for inventory during the period in whichthe estimates are modified. Fair value of financial instruments

For financial instruments without an active trading market, the Company determinesits fair value using valuation techniques. Such valuation techniques include discountedcash flow model analysis and others. During the assessment, the Company isrequired to make estimates on future cashflow, credit risk, market volatility rate andrelevance and select an appropriate discount rate. Such relevant assumptions aresubject to uncertainty, and any change will affect the fair value of financialinstruments.

Impairment of other equity instrument investments

The Company’s determination of impairment for other equity instrument investments islargely dependent on the management’s judgment and assumptions to determinewhether impairment should be recognised. In the course of making judgments andassumptions, the Company is required to assess the extent and duration of the fairvalue of the investment being lower than cost, as well as the financial conditions andshort-term business prospects of the investee, including industry conditions,technological revolution, credit rating, default rate and counterparty risks.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Impairment provision for long-term assetsAt the balance sheet date, the Company assesses whether there are indications ofpossible impairment of non-current assets other than financial assets. In addition tothe annual impairment test, intangible assets with indefinite useful life are also testedfor impairment when there are indications of the same. Impairment tests on non-current assets other than financial assets are conducted when there are indicationsthat its carrying value may not be recoverable. An impairment has occurred when thecarrying value of an asset or asset group is higher than the recoverable amount (thehigher of net fair value less disposal cost and the present value of estimated futurecash flow). The net fair value less disposal cost is determined with reference to theagreed selling price of similar assets in a fair transaction or observable market pricesless incremental costs attributable directly to the disposal of such asset. In estimatingthe present value of future cashflow, significant judgement is required to be made inrespect of the production volume and selling price of the asset or (asset group),relevant operating cost and discount rate for the computation of present value. TheCompany takes into consideration all available relevant information when makingestimates on the recoverable amount, including forecasts on production volume,selling price and relevant operating costs based on reasonable and justifiableassumptions. The Company conducts goodwill impairment tests at least annually. Thisrequires estimates on the present value of future cashflow of asset group or portfolioof asset groups to which goodwill has been allocated. When making estimates on thepresent value of future cashflow, the Company is required to make estimates oncashflow generated from future asset group or portfolio of asset groups, and at thesame time select an appropriate discount rate to determine the present value offuture cashflow. Depreciation and amortisationDepreciation and amortisation of investment properties, fixed assets and intangibleassets is charged on a straight-line basis over their useful life after taking theirresidual values into account. The Company reviews the useful life on a regular basisto determine the amount of depreciation and amortisation charge to be allocated toeach reporting period. The useful life is determined based on past experience relatingto similar assets taking into consideration expected technological upgrades. If thereare significant changes in previous estimates, the depreciation and amortisationcharge for future periods will be adjusted. Deferred income tax assetsThe Company recognises deferred income tax assets in respect of all unutilised taxlosses, to the extent that it is probable that sufficient taxable profit will be available tooffset the loss. This requires the exercise of significant judgement by the Company’smanagement to estimate the timing and amount of future taxable profit, taking intoaccount its tax planning strategy, to determine the amount of deferred income taxassets to be recognised.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Income tax

In the Company’s usual operating activities, the final tax treatment and computationof certain transactions are subject to uncertainty. Whether certain items can bepresented on a pretax basis is subject to approval of the competent taxationauthority. If the final confirmed outcome of such taxation matters is different from theamount of the initial estimates, such difference will affect the current income tax anddeferred income tax for the period of final confirmation. Provision for sales rebateThe Company and its subsidiaries adopt a sales rebate policy for sales agentcustomers. Based on relevant provisions of the sales agreements, vetting of specifictransactions, market conditions, channel inventory level and past experience withreference to the status of completion of agreed appraisal indicators by sales agentcustomers, the Company and its subsidiaries makes estimates on and provision forsales rebate on a regular basis. The provision of sales rebate involves judgment andestimation by the management. In the event of any material change in previousestimates, the aforesaid difference will affect the sales rebate for the period for whichthe estimates are changed.

29. Changes in 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 typesBasis of taxationTax rateValue-added taxTaxable revenue from sales of

goods and rendering services

6%, 9%, 13%City maintenance and construction taxCirculation tax payable7%(Local) education surchargeCirculation tax payable1%, 2%, 3%EITTaxable incomeStatutory tax rate

or preferentialrates as followsDisclosure of tax entities with different enterprise income tax rates

□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2. Preferential tax

√ Applicable □ Not Applicable

Companies subjected to preferential tax and preferential tax rate:

CompanyTax ratePreferential taxQingdao Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Special Refrigerator Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Dishwasher Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Special Freezer Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Intelligent HomeAppliance Technology Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseWuhan Haier Electronics Holding Co.,

Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseWuhan Haier Freezer Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHefei Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHefei Haier Air-conditioning Co., Limited15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseZhengzhou Haier Air-conditioning Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseShenyang Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Air-ConditionerElectronics Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Meier Plastic Powder Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Hai Gao Design and

Manufacture Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Hairi High Technology Co., Ltd15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier (Jiaozhou) Air-

conditioning Co., Limited

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Intelligent Technology

Development Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseFoshan Haier Freezer Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Central Air Conditioning

Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterprise

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

CompanyTax ratePreferential taxHaier U+smart Intelligent Technology

(Beijing) Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseBeijing Zero Micro Technology Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Electronic Plastic Co.,

Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Wei Xi Intelligent Technology

Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Special Refrigerating

Appliance Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Smart Kitchen ApplianceCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHefei Haier Air Conditioning ElectronicsCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseBeijing Lingli Technology Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Hairuijiejing Electronics Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseShanghai Haier Medical TechnologyCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Yunshang Yuyi IOT Technology

Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHaier (Shanghai) Home Appliance

Research and Development CenterCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHaier (Shenzhen) R&D Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseLaiyang Haier Smart Kitchen Appliance

Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseGuangdong Heilong Intelligent

Technology Co. Ltd

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseDalian Haier Refrigerator Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHefei Haier Washing Machine Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Washing Machine Co.,

Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Jiaonan Haier Washing

Machine Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseFoshan Shunde Haier Electric Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseTianjin Haier Cleaning Electrical

Appliances Co., Ltd.(天津海爾洗滌電器有限公司)

15.00%entitled to the preferential taxation

policies as a hi-tech enterprise

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

CompanyTax ratePreferential taxQingdao Economic and Technological

Development Zone Haier WaterHeater Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseWuhan Haier Water Heater Co., Ltd.15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseFoshan Drum Washing Machine Co.,

Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Strauss Water Equipment Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Strauss Technology Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier New Energy ElectricAppliance Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Washing Appliance Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Lexin Cloud TechnologyCo., Ltd. (青島海爾樂信雲科技有限公司)

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHefei Haier Drum Washing Machine Co.,Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Smart ElectricsEquipment Co. Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Smart Living ApplianceCo. Ltd. (青島海爾智慧生活電器有限公司)

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Ririshun Lejia IOT TechnologyCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseJiangxi Haier Medical Technology Co.,

Ltd.

15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRCChongqing Haier Electrical Appliance

Sales Co., Ltd. and some Westerncompanies

15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRCChongqing Haier Air-conditioning Co.,

Ltd.

15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRCChongqing Haier Refrigeration

Appliance Co., Ltd.

15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRCGuizhou Haier Electronics Co., Ltd.15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRC

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

CompanyTax ratePreferential taxChongqing Xin Ririshun Electric Sales

Co., Ltd and some Westerncompanies

15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCChongqing Haier Washing Machine Co.,

Ltd

15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCChongqing Haier Water Heater Co., Ltd15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCChongqing Haier Drum WashingMachine Co., Ltd

15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCQingdao Haier Technology Co., Ltd.10.00%entitled to half deduction the

preferential taxation policies as akey software enterpriseVII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIALSTATEMENTSUnless otherwise specified, the following closing balances represent the amount as at 31 December2022 and opening balances represent the amount as at 31 December 2021; amount for the periodrepresents the amount from 1 January to 31 December 2022 and amount for the previous periodrepresents the amount from 1 January to 31 December 2021.

1. Monetary funds

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceCash on hand5,312,391.113,085,964.28Cash in bank52,955,417,379.1645,010,311,638.51Other cash balances1,178,085,912.241,083,936,300.66Total54,138,815,682.5146,097,333,903.45Include:

—total amount of overseas deposits11,963,648,575.808,966,246,518.74Other monetary funds mainly included investment fund, deposit on third party payment platforms,guarantees and other restricted fund, etc.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2. Financial assets held for trading

ItemsClosing balanceOpening balanceShort-term wealth management products14,638,968.262,168,622,090.00Investments in other equity instruments336,743,065.02330,557,610.82Investment funds168,430,847.63150,516,274.37Forward foreign exchange contracts136,379,553.90Total519,812,880.912,786,075,529.09

3. Derivative financial assets

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts178,992,877.3272,822,190.59Forward commodity contracts4,192,283.196,997,783.42Total183,185,160.5179,819,974.01

4. Bills receivable

(1) Bills receivable presented by types

ItemsClosing balanceOpening balanceBank acceptance notes9,346,227,149.9213,053,809,505.49Commercially acceptance notes237,902,374.08368,076,810.80Balance of bills receivable9,584,129,524.0013,421,886,316.29Allowance for bad debts3,937,685.8567,095,248.00Bills receivable, net9,580,191,838.1513,354,791,068.29Provision for bad debts on a collective basis

□ Applicable √ Not Applicable

(2) Changes in allowance for bad debts of bills receivable in the current period:

Items

Openingbalance

Increase for

the current period

Decrease for

the current period

ClosingbalanceProvision for

the current

period

OthermovementReversal

Write-off/other

movementAllowance for bad debts67,095,248.001,901,562.1561,256,000.003,937,685.85Total67,095,248.001,901,562.1561,256,000.003,937,685.85

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

The Company’s bills receivables were mainly generated from daily operation activities suchas sales of commodity, provision of labor, etc., and the allowance for bad debts wasmeasured based on expected credit loss over the entire duration whether there existsignificant financing components.The bills receivable pledged by the Company at the end of the period wasRMB8,716,194,311.64 (amount at the beginning of the period RMB12,526,757,275.50).

5. Accounts receivable

Accounts receivable are disclosed by aging as follow:

AgingClosing balanceOpening balanceWithin one year15,983,198,223.1614,776,616,491.33

–2 years744,571,231.78376,187,052.43

–3 years249,911,820.6478,861,353.76Over 3 years129,303,240.96135,768,657.33Balance of accounts receivable17,106,984,516.5415,367,433,554.85Allowance for bad debts1,193,292,979.43742,172,698.81Accounts receivable, net15,913,691,537.1114,625,260,856.04 By method of provision of allowance for bad debts

CategoriesClosing balance

Book balance

Allowance forbad debts

Percentage of

provision (%)Carrying valueAccount receivables

subject to provision forbad debts on aseparate basis669,106,556.78658,051,988.7098.3511,054,568.08Account receivables

subject to provision forbad debts on acollective basis16,437,877,959.76535,240,990.733.2615,902,636,969.03Total17,106,984,516.541,193,292,979.436.9815,913,691,537.11

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(continued)CategoriesOpening balance

Book balance

Allowance for

bad debts

Percentage ofprovision (%)Carrying valueAccount receivablessubject to provision forbad debts on aseparate basis381,406,983.17320,303,932.1383.9861,103,051.04Account receivablessubject to provision forbad debts on acollective basis14,986,026,571.68421,868,766.682.8214,564,157,805.00Total15,367,433,554.85742,172,698.814.8314,625,260,856.04 Account receivables subject to provision for bad debts on a collective basisAgingClosing balance

Book balance

Allowancefor bad debts

Percentage ofprovision (%)Within 1 year15,670,232,732.83340,620,524.482.17

–2 years444,886,453.8033,709,717.147.58

–3 years204,386,489.3078,004,660.4638.17Over 3 years118,372,283.8382,906,088.6570.04Total16,437,877,959.76535,240,990.733.26(continued)

Opening balanceAgingBook balance

Allowancefor bad debts

Percentage ofprovision (%)Within 1 year14,549,378,136.84312,565,470.272.15

–2 years229,160,440.399,396,866.154.10

–3 years76,516,782.7423,388,497.4330.57Over 3 years130,971,211.7176,517,932.8358.42Total14,986,026,571.68421,868,766.682.82

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Changes in allowance for bad debts of accounts receivable in the current period:

ItemsOpening balanceIncrease for the current periodDecrease for the current periodClosing balance

Provision for the

current periodOther movementReversal

Write-off/othermovementAllowance for bad debts742,172,698.81511,476,608.9961,256,000.0090,784,265.8930,828,062.481,193,292,979.43The aggregate amount of the top 5 account receivables as at the end of the period wasRMB3,981,240,561.25, accounting for 23.27% of the book balance of account receivables(amount at the beginning of the period: RMB3,856,035,612.12, accounting for 25.09% ofthe book balance of account receivables). Actual write-off of accounts receivable in the current periodThe amount of accounts receivable actually written off in the current period isRMB35,724,496.02 (amount for the corresponding period: RMB10,143,124.34) and there isno important bad debt write-off of accounts receivable.The company’s accounts receivable that were terminated due to the transfer of

financial assets in the current periodThe amount of accounts receivable that the company terminated at the end of the perioddue to the transfer of financial assets was RMB7,752,646,133.49 (amount at the beginningof the period: RMB4,127,671,197.04) and the transfer method was outright sale factoring/asset securitization. Restricted accounts receivable in the current period

The amount of accounts receivable restricted at the end of the period isRMB1,944,980,392.98 (amount at the beginning of the period: RMB1,913,582,226.30).

6. Prepayments

(1) Prepayments are presented by aging:

AgingClosing balanceOpening balanceWithin one year1,097,684,518.38823,420,072.64

–2 years9,392,472.9922,367,994.84

–3 years7,826,299.099,728,842.63Over 3 years5,852,909.408,231,174.95Total1,120,756,199.86863,748,085.06

(2) The total amount of the top 5 in the prepayments at the end of the period is

RMB285,279,364.51, which accounts for 25.45% of the prepayment balance (amount at thebeginning of the period: RMB174,076,576.41, accounting for 20.15%).

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

7. Other receivables

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceInterest receivable513,320,376.79295,017,551.76Other receivables1,867,609,246.401,662,868,705.43Total2,380,929,623.191,957,886,257.19

(1) Interest receivable

√ Applicable □ Not Applicable

Unit and Currency: RMBAgingClosing balanceOpening balanceWithin one year365,716,532.95231,649,800.22

–2 years117,786,419.1847,983,727.86

–3 years19,790,000.0015,384,023.68Over 3 years10,027,424.66Total513,320,376.79295,017,551.76

(2) Other receivables

AgingClosing balanceOpening balanceWithin one year1,395,900,684.431,275,398,749.49

–2 years216,523,682.62109,677,138.52

–3 years23,617,332.57355,219,038.13Over 3 years387,087,496.32113,213,998.61Balance of other receivables2,023,129,195.941,853,508,924.75Allowance for bad debts155,519,949.54190,640,219.32Other receivables, net1,867,609,246.401,662,868,705.43

①The total amount of the top 5 other receivables at the end of the period isRMB913,820,290.12, accounting for 45.17% of the book balance of other receivables(amount at the beginning of the period: RMB588,207,363.50, accounting for 31.73%of the book balance of other receivables).

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Provision of allowance for bad debtsAllowance for bad debtsStage 1Stage 2Stage 3Total

Expected creditlosses for the

coming 12

months

Lifetimeexpected creditlosses (notcredit-impaired)

Lifetimeexpected creditlosses (credit-impaired)Opening balance112,022,673.3778,617,545.95190,640,219.32Provision for the current period17,263,203.57 17,263,203.57Reversal for the current period4,676,503.70 4,676,503.70Write-off and othersfor the current period–9,007,063.30 56,714,032.9547,706,969.65Closing balance133,616,436.5421,903,513.00155,519,949.54Changes in allowance for bad debt provision of other receivables in the current

periodItems

Openingbalance

Increase for

the current period

Decrease for

the current period

ClosingbalanceProvision forthe currentperiod

OthermovementReversal

Write-off/other

movementAllowance for bad debts190,640,219.3217,263,203.57 4,676,503.7047,706,969.65155,519,949.54 Other receivables written off during the periodThe amount of other receivables actually written off in the current period isRMB56,385,567.52 (amount for the corresponding period: RMB4,293,611.04) and nosignificant other receivables are written off for bad debts.Other receivables mainly include deposits, quality guarantees, employee loans, taxrefunds, and advance payments, etc.

8. Inventories

(1) Category of inventories

ItemsClosing BalanceOpening Balance

Book value

balance

Impairment

Provision

Book value

balance

Impairment

ProvisionRaw materials6,220,344,034.47171,673,251.235,173,523,964.42117,428,681.85Work in progress74,028,876.21 115,676,026.77Finished goods36,858,876,539.391,438,863,087.0235,990,645,130.231,248,466,540.71Total43,153,249,450.071,610,536,338.2541,279,845,121.421,365,895,222.56

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(2) Impairment provision of inventories

Items

Openingbalance

Increase forthe current period

Decrease forthe current period

ClosingbalanceProvision for

the currentperiod

OthermovementReversal

Write-off/othermovementRaw materials117,428,681.8596,267,946.5342,023,377.15171,673,251.23Work in progressFinished goods1,248,466,540.711,124,401,331.2675,747,450.78858,257,334.171,438,863,087.02Total1,365,895,222.561,220,669,277.7975,747,450.78900,280,711.321,610,536,338.25

9. Contractual assets

(1) Details

ItemsClosing BalanceOpening Balance

Book valuebalance

ImpairmentProvision

Book valuebalance

ImpairmentProvisionRelating to constructionservice contract379,905,624.9669,975,265.71304,434,294.70Total379,905,624.9669,975,265.71304,434,294.70

(2) Impairment provision

Items

Openingbalance

Increase forthe current period

Decrease forthe current period

ClosingbalanceProvision for

the current

period

OthermovementReversal

Write-off/othermovementRelating to constructionservice contract69,975,265.7169,975,265.71Total69,975,265.7169,975,265.71

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

10. Other current assets

(1) Details

ItemsClosing BalanceOpening Balance

Book value

balance

ImpairmentProvision

Book valuebalance

ImpairmentProvisionBank deposit for wealthmanagement products1,642,421,944.45316,590,333.42Deductible taxes2,710,135,299.653,275,762,776.66Returns cost receivables563,233,565.88280,818,239.06585,140,752.69328,552,987.70Others57,543,006.3179,847,733.16Total4,973,333,816.29280,818,239.064,257,341,595.93328,552,987.70

(2) Impairment Provision

Items

Openingbalance

Increase forthe current period

Decrease forthe current period

ClosingbalanceProvision for

the current

period

OthermovementReversal

Write-off/other

movementReturns costreceivables328,552,987.70280,818,239.06328,552,987.70280,818,239.06Total328,552,987.70280,818,239.06328,552,987.70280,818,239.06

11. Debt investments

ItemsClosing balanceOpening balance

principalInterestPrincipalInterestTime deposit— 3 years1,000,000,000.0034,222,222.22Total1,000,000,000.0034,222,222.22

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

12. Long-term equity investments

√ Applicable □ Not Applicable

InvesteesOpening balanceIncrease/decrease for the current period

Investment

increase

Investment profitrecognized underequity method

Adjustment inothercomprehensiveincome

Other changes

in equity

Declaration ofcash dividends

or profitsAssociate：

Haier Group Finance Co., Ltd.7,108,709,375.38665,707,466.584,170,482.08–218,400,000.00Bank of Qingdao Co., Ltd.2,654,248,436.12352,102,643.20210,748,314.67–54,294,726.05–152,429,907.54–76,288,906.40Wolong Electric (Jinan) Motor

Co., Ltd.151,837,378.9922,860,428.75Qingdao Hegang New MaterialTechnology Co., Ltd.312,493,256.219,482,737.24–7,173,662.00Qingdao Haier SAIF SmartHome Industry InvestmentCenter (Limited Partnership)393,598,372.59–57,153,662.41–17,199,060.82Mitsubishi Heavy Industries

Haier (Qingdao)

Air-conditioners Co., Ltd.682,901,976.73113,559,283.53–81,000,000.00Qingdao Haier Carrier

Refrigeration Equipment

Co., Ltd.409,053,808.0522,213,959.56–17,900,226.81Qingdao Haier Multimedia Co.,

Ltd277,102,563.88–123,552,329.38Qingdao Haier Moulds Co., Ltd.269,158,534.543,419,373.38Hefei Feier Smart Technology

Co., Ltd.265,106.27–265,106.27Anhui Kunhe Smart Technology

Co., Ltd.1,877,574.14120,208.47Zhejiang Futeng Fluid

Technology Co., Ltd.82,098,847.75–4,291,438.91Beijing Mr. Hi Network

Technology Company

Limited7,507,759.75Beijing Xiaobei Technology Co.,

Ltd.2,687,341.82Beijing ASU Tech Co., Ltd.15,529,700.01–17,876,874.2215,176,607.99Shenzhen Genyuan

Environmental Protection

Technology Co., Ltd.6,914,487.73Qingdao Haimu Investment

Management Co., Ltd.2,465,299.7056,466.72Qingdao Haimu Smart Home

Investment Partnership

(Limited Partnership)59,424,662.44–518,749.56Hainengwanjia (Shanghai)

Technology Development

Co., Ltd. (海能萬嘉（上海）

科技發展有限公司)772,938.88Qingdao Guochuang Intelligent

Household Appliance

Research Institute Co., Ltd.52,835,228.01–7,863,687.6344,793.82Guangzhou Heying Investment

Partnership (Limited

Partnership)285,793,577.87

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Section X Financial Report

InvesteesOpening balanceIncrease/decrease for the current period

Investment

increase

Investment profitrecognized underequity method

Adjustment in

othercomprehensive

income

Other changes

in equity

Declaration ofcash dividends

or profitsQingdao Home Wow Cloud

Network Technology Co.,Ltd.2,600,050.50–52,833.50Bingji (Shanghai) CorporateManagement Co., Ltd.972,200,487.8842,224,805.16Youjin (Shanghai) Corporate

Management Co., Ltd.1,766,819,068.8676,772,373.02RRS (Shanghai) Investment Co.,Ltd.3,211,580,125.21139,586,132.77Haier Best Water Technology

Co., Ltd.79,785,557.3967,661,160.00922,921.01Huizhixiangshun Equity

Investment Fund (Qingdao)

Partnership (Limited

Partnership)119,008,967.03119,797,980.61Qingdao Ririshun Huizhi

Investment Co., Ltd.2,083,482.782,000,000.00Qingdao Xinshenghui

Technology Co., Ltd.9,964,773.52–1,366,770.63Meiling Candy Washing Machine

Co., Ltd.22,752,232.071,389,264.77–124,866.83EuropaltersItaliaS.r.l.9,361,965.486,398,539.80OryginLLC13,918,442.26Konan Electronic Co., Ltd.69,273,712.612,472,773.58–3,739,243.20–237,150.00HNR Company (Private) Limited114,055,318.97–31,378,609.43–8,309,799.99HPZ LIMITED71,269,048.9717,668,356.54–186,357.53HaierRayaElectricS.A.E10,568,507.40–689,346.51CONTROLADORAMABES.

A.deC.V.4,131,983,673.10501,663,292.98161,545,695.15–10,972,791.00–98,292,483.70MiddleEast Air conditioning

Company,Limited10,318,898.13–2,359,212.96860,416.38Total23,327,293,929.87615,486,932.761,583,499,537.3299,921,600.01–148,181,296.73–516,491,489.73

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(Continued)Investees

Increase/decreasefor the current periodClosing balance

Impairment

ProvisionClosing BalanceOthermovement

The disposal ofthe investmentAssociate：

Haier Group Finance Co.,

Ltd.7,560,187,324.04Bank of Qingdao Co., Ltd.2,934,085,854.00Wolong Electric (Jinan)Motor Co., Ltd.174,697,807.74Qingdao Hegang NewMaterial Technology Co.,Ltd.314,802,331.45Qingdao Haier SAIF SmartHome IndustryInvestment Center(Limited Partnership)319,245,649.36Mitsubishi Heavy Industries

Haier (Qingdao) Air-

conditioners Co., Ltd.715,461,260.26Qingdao Haier Carrier

Refrigeration Equipment

Co., Ltd.413,367,540.80–21,000,000.00Qingdao Haier Multimedia

Co., Ltd153,550,234.50–88,300,000.00Qingdao Haier Moulds Co.,

Ltd.–272,577,907.92Hefei Feier Smart

Technology Co., Ltd.Anhui Kunhe Smart

Technology Co., Ltd.1,997,782.61Zhejiang Futeng Fluid

Technology Co., Ltd.77,807,408.84Beijing Mr. Hi Network

Technology Company

Limited7,507,759.75–7,507,759.75Beijing Xiaobei Technology

Co., Ltd.–2,687,341.82Beijing ASU Tech Co., Ltd.12,829,433.78Shenzhen Genyuan

Environmental Protection

Technology Co., Ltd.6,914,487.73–6,914,487.73Qingdao Haimu Investment

Management Co., Ltd.2,521,766.42Qingdao Haimu Smart

Home Investment

Partnership (Limited

Partnership)58,905,912.88

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Investees

Increase/decreasefor the current periodClosing balance

Impairment

ProvisionClosing BalanceOthermovement

The disposal ofthe investmentHainengwanjia (Shanghai)

Technology DevelopmentCo., Ltd. (海能萬嘉（上海）科技發展有限

公司)772,938.88Qingdao GuochuangIntelligent HouseholdAppliance ResearchInstitute Co., Ltd.45,016,334.20Guangzhou Heying

Investment Partnership

(Limited Partnership)285,793,577.87Qingdao Home Wow Cloud

Network Technology Co.,

Ltd.2,547,217.00Bingji (Shanghai) Corporate

Management Co., Ltd.1,014,425,293.04Youjin (Shanghai) Corporate

Management Co., Ltd.1,843,591,441.88RRS (Shanghai) Investment

Co., Ltd.3,351,166,257.98Haier Best Water

Technology Co., Ltd.148,369,638.40Huizhixiangshun Equity

Investment Fund

(Qingdao) Partnership

(Limited Partnership)238,806,947.64Qingdao Ririshun Huizhi

Investment Co., Ltd.4,083,482.78Qingdao Xinshenghui

Technology Co., Ltd.8,598,002.89Meiling Candy Washing

Machine Co., Ltd.–24,016,630.01EuropaltersItaliaS.r.l.15,760,505.28OryginLLC13,918,442.26Konan Electronic Co., Ltd.67,770,092.99HNR Company (Private)

Limited74,366,909.55HPZ LIMITED88,751,047.98HaierRayaElectricS.A.E–9,879,160.89CONTROLADORAMABES.

A.deC.V.4,685,927,386.53MiddleEast Air conditioning

Company,Limited8,820,101.55–845,634.54Total—–309,161,040.6424,652,368,172.86–124,567,882.02

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

13. Investments in other equity instruments

(1) Details of investments in other equity instruments

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceSINOPEC Fuel Oil Sales Corporation Limited1,234,500,000.001,290,487,901.40COSMO IOT Ecosystem TechnologyCo., Ltd.2,817,408,000.002,812,000,000.00Other1,799,974,930.20749,397,043.23Total5,851,882,930.204,851,884,944.63

(2) Dividends from investment in other equity instruments during the current period:

ItemsAmount for the current periodSINOPEC Fuel Oil Sales Corporation Limited21,597,813.60Other10,009,543.62Total31,607,357.22

14. Investment properties

(1) The changes in investment properties measured at cost this year are as follows:

Items

Houses andbuildingsLand use rightsTotalI. Original book value

1. Opening balance34,022,711.502,128,550.5136,151,262.01

2. Increase for the period

(1) External acquisition

(2) Inventories/fixed

assets/construction inprogress transferred in

(3) Increase in business

combinations

3. Decrease for the period

(1) Disposal

(2) Disposal of

subsidiaries

(3) Other transferring out

4. Change in foreign

exchange rate and others2,629,072.852,629,072.85

5. Closing balance36,651,784.352,128,550.5138,780,334.86

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Section X Financial Report

Items

Houses andbuildingsLand use rightsTotalII. Accumulated depreciationand accumulatedamortization

1. Opening balance10,555,753.15630,620.3811,186,373.53

2. Increase for the period

(1) Provision or

amortization1,331,401.9740,236.221,371,638.19

3. Decrease for the period

(1) Disposal

(2) Disposal of

subsidiaries

(3) Other transferring out

4. Change in foreign

exchange rate and others543,830.57543,830.57

5. Closing balance12,430,985.69670,856.6013,101,842.29III. Provision for impairment

1. Opening balance

2. Increase for the period

(1) Provision

3. Decrease for the period

(1) Disposal

(2) Disposal of

subsidiaries

(3) Other transferring out

4. Change in foreign

exchange rate andothers

5. Closing balance

IV. Book value

1. Closing book value24,220,798.661,457,693.9125,678,492.57

2. Opening book value23,466,958.351,497,930.1324,964,888.48

(2) The depreciation and amortization amount charge for the period is RMB1,371,638.19 (amount

for the corresponding period: RMB1,337,191.36).

(3) The recoverable amount of the investment real estate of the Company at the end of the

period is not less than its book value, so no provision for impairment is made.

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Section X Financial Report

15. Fixed assets

Presented by item

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceFixed assets27,158,348,424.2822,303,470,855.46Disposals of fixed assets4,543,369.52Total27,158,348,424.2822,308,014,224.98Fixed assets

(1) Fixed assets:

Items

Houses and

buildings

Productionequipment

TransportationequipmentI. Original book value:

1. Opening balance11,353,869,023.3326,574,628,944.96179,083,687.93

2. Increase for the period

(1) Acquisition101,657,525.971,188,385,651.072,167,409.42

(2) Construction in progress

transferred in2,891,101,753.552,743,020,391.6621,453,507.31

(3) Increase in business combinations590,522.62710,633.26

3. Decrease for the period

(1) Disposal or write-off46,129,650.12628,913,476.229,351,808.74

(2) Disposal of subsidiaries754,649.79

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others336,041,830.451,446,702,112.84545,067.44

5. Closing balance14,637,131,005.8031,324,534,257.57193,143,213.57II. Accumulated depreciation

1. Opening balance3,922,452,407.1313,228,502,231.17107,950,259.30

2. Increase for the period

(1) Provision543,265,392.342,588,160,230.2519,634,196.19

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or write-off23,016,988.16487,050,458.868,638,193.13

(2) Disposal of subsidiaries645,746.91

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others95,722,496.92705,541,332.74770,125.42

5. Closing balance4,538,423,308.2316,035,153,335.30119,070,640.87

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Section X Financial Report

Items

Houses andbuildings

Productionequipment

Transportation

equipmentIII. Provision for impairment

1. Opening balance29,499,438.2121,647,562.09173,485.13

2. Increase for the period

(1) Provision109,381.582,384,431.73

(2) Increase in business combinations

3. Decrease for the period

(1) Disposal or write-off5,463,734.0158,084.82

(2) Disposal of subsidiaries

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others–1,022,795.89–2,365,489.53–5,371.31

5. Closing balance28,586,023.9016,202,770.28110,029.00IV. Book value

1. Closing book value10,070,121,673.6715,273,178,151.9973,962,543.70

2. Opening book value7,401,917,177.9913,324,479,151.7070,959,943.50Fixed assets (continued)ItemsOffice furnitureOtherTotalI. Original book value:

1. Opening balance1,031,464,831.772,464,395,005.9041,603,441,493.89

2. Increase for the period

(1) Acquisition94,436,679.8151,377,212.281,438,024,478.55

(2) Construction in progress

transferred in229,928,105.43358,718,424.146,244,222,182.09

(3) Increase in business combinations1,148,899.852,450,055.73

3. Decrease for the period

(1) Disposal or write-off51,864,855.66117,788,696.08854,048,486.82

(2) Disposal of subsidiary434,468.6837,980.001,227,098.47

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others21,106,516.36158,930,592.751,963,326,119.84

5. Closing balance1,324,636,809.032,916,743,458.8450,396,188,744.81II. Accumulated depreciation

1. Opening Balance565,874,594.661,418,493,692.2019,243,273,184.46

2. Increase for the period

(1) Provision243,101,288.42268,425,659.273,662,586,766.47

(2) Increase in business combinations

3. Decrease for the period

(1) Disposal or write-off32,221,331.4751,780,228.89602,707,200.51

(2) Disposal of subsidiary414,487.1936,090.251,096,324.35

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsOffice furnitureOtherTotal

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others12,524,084.7573,571,430.33888,129,470.16

5. Closing Balance788,864,149.171,708,674,462.6623,190,185,896.23III. Provision for impairment

1. Opening balance258,528.085,118,440.4656,697,453.97

2. Increase for the period

(1) Provision697,457.733,191,271.04

(2) Increase in business combinations

3. Decrease for the period

(1) Disposal or write-off6,270.952,936,006.738,464,096.51

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others–8,869.75–367,677.72–3,770,204.20

5. Closing balance243,387.382,512,213.7447,654,424.30IV. Book value

1. Closing book value535,529,272.481,205,556,782.4427,158,348,424.28

2. Opening book value465,331,709.031,040,782,873.2422,303,470,855.46

(2)In the current period, the balance of the construction in progress transferred to the original

value of the fixed assets in a total of RMB6,244,222,182.09 (amount for the correspondingperiod: RMB4,269,007,467.86).(3)As at 31 December 2022, the net book value of the buildings for which the Company hasnot yet obtained certificates of title was RMB2.037 billion (opening amount of RMB274million), of which RMB1.884 billion was put into use at the end of 2022 and the relevantcertificates of title were being processed. The Company can legally and effectively occupyand operate the above-mentioned buildings for which no certificates of title have beenobtained.(4)There was no mortgage secured by the fixed assets mortgage at the end of the period andat the beginning of the period.

(5) Disposals of fixed assets

Items

ClosingBalance

OpeningBalance

Reason fortransferring todisposalRelocation of Qingdao

Industrial Park4,543,369.52DemolitionTotal4,543,369.52

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

16. Construction in progress

Presented by item

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

ClosingBalance

OpeningBalanceConstruction in progress4,094,684,500.494,183,263,398.79Construction materialsTotal4,094,684,500.494,183,263,398.79Construction in progress

(1) Balance of construction in progress

√ Applicable □ Not Applicable

Unit and Currency: RMB

ProjectsClosing BalanceOpening Balance

Book balance

ImpairmentProvisionBook ValueBook balance

ImpairmentprovisionBook ValueEurope Candy Project467,370,049.46467,370,049.46153,117,404.68153,117,404.68Eastern European Project392,579,594.60392,579,594.60183,534,295.62183,534,295.62America GEA Project338,096,215.95338,096,215.95722,008,600.99722,008,600.99Shanghai WashingAppliances Project315,004,188.48315,004,188.484,756,839.224,756,839.22Qingdao Air Conditioning

Electronics Project313,855,913.14313,855,913.1457,933,662.4857,933,662.48Zhengzhou New Energy

Project197,524,472.64197,524,472.64125,734,579.67125,734,579.67New Zealand FPA Project176,619,361.43176,619,361.43111,516,266.46111,516,266.46Hefei Drum Washing

Machine Project98,411,863.3098,411,863.3054,949,612.9354,949,612.93Foshan Freezer Project97,616,741.6997,616,741.69199,726,996.70199,726,996.70Qingdao Jiaozhou

Washing Appliances

Project93,825,106.0793,825,106.07167,168.14167,168.14Qingdao Water Ecology

Technology Project92,905,882.1392,905,882.13Hailvyuan Recycling

Technology Project75,470,633.2475,470,633.2458,589,285.4658,589,285.46Qingdao Smart

Appliances Project67,092,916.9967,092,916.9939,116,050.6139,116,050.61Special Refrigerator

Project66,136,656.5966,136,656.59220,203,225.72220,203,225.72Haier Dishwasher Project64,842,812.9164,842,812.9191,964,708.5791,964,708.57Wuhan Haier freezer

Project64,045,346.3464,045,346.34103,052,450.36103,052,450.36Chongqing Water Heater

Project61,350,349.6361,350,349.6317,708,337.3817,708,337.38Chongqing Washing

Appliances Project59,889,999.8659,889,999.86Tianjin Washing Appliance

Project59,146,925.2059,146,925.2059,409,379.4559,409,379.45

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ProjectsClosing BalanceOpening Balance

Book balance

Impairment

ProvisionBook ValueBook balance

ImpairmentprovisionBook ValueQingdao Development

Zone Water HeaterProject59,124,223.2259,124,223.2228,850,846.9428,850,846.94Hefei Refrigerator Project57,694,281.9857,694,281.98208,080,465.14208,080,465.14Others877,291,584.561,210,618.92876,080,965.641,744,048,203.991,204,981.721,742,843,222.27Total4,095,895,119.411,210,618.924,094,684,500.494,184,468,380.511,204,981.724,183,263,398.79

(2) Details of significant changes of construction in progress for the period

Project name

OpeningbalanceIncrease for thecurrent period

Transfer tofixed assetsOther decrease

Change

in foreignexchange rateand othersClosing balanceSource of fundEurope Candy Project153,117,404.68558,282,924.59308,622,314.3364,592,034.52467,370,049.46Self-fundingEastern European Project183,534,295.62579,942,619.46374,945,381.004,048,060.52392,579,594.60Self-fundingAmerica GEA Project722,008,600.99561,061,906.71996,350,326.0251,376,034.27338,096,215.95Self-fundingShanghai Washing

Appliances Project4,756,839.22744,624,823.61434,377,474.35315,004,188.48Self-fundingQingdao Air ConditioningElectronics Project57,933,662.48344,820,217.3588,897,966.69313,855,913.14Self-fundingZhengzhou New EnergyProject125,734,579.67189,899,480.45118,109,587.48197,524,472.64Self-fundingNew Zealand FPA Project111,516,266.46213,046,224.99153,925,175.855,982,045.83176,619,361.43Self-fundingHefei Drum Washing

Machine Project54,949,612.9383,357,570.7939,895,320.4298,411,863.30Self-fundingFoshan Freezer Project199,726,996.7039,362,551.12141,472,806.1397,616,741.69Self-fundingQingdao Jiaozhou

Washing Appliances

Project167,168.14169,026,880.9375,368,943.0093,825,106.07Self-fundingQingdao Water Ecology

Technology Project92,905,882.1392,905,882.13Self-fundingHailvyuan Recycling

Technology Project58,589,285.46174,296,964.23157,415,616.4575,470,633.24Self-fundingQingdao Smart

Appliances Project39,116,050.6147,146,371.5819,169,505.2067,092,916.99Self-fundingSpecial Refrigerator

Project220,203,225.7220,007,471.04174,074,040.1766,136,656.59Self-fundingHaier Dishwasher Project91,964,708.5780,495,751.96107,617,647.6264,842,812.91Self-fundingWuhan Haier freezer

Project103,052,450.3630,197,051.7769,204,155.7964,045,346.34Self-fundingChongqing Water Heater

Project17,708,337.3863,724,952.1020,082,939.8561,350,349.63Self-fundingChongqing Washing

Appliances Project80,594,688.4220,704,688.5659,889,999.86Self-fundingTianjin Washing Appliance

Project59,409,379.4531,743,637.5832,006,091.8359,146,925.20Self-fundingQingdao Development

Zone Water Heater

Project28,850,846.9474,138,742.7843,865,366.5059,124,223.22Self-fundingHefei Refrigerator Project208,080,465.1445,961,497.56196,347,680.7257,694,281.98Self-fundingOthers1,744,048,203.991,801,838,916.532,671,879,554.133,284,018.17877,291,584.56

Self-funding/fund

raisingTotal4,184,468,380.516,026,477,127.686,244,332,582.09129,282,193.314,095,895,119.41

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(3) Impairment provision of construction in progress

Project name

Openingbalance

Increase forthe currentperiod

Transfer tofixed assets

Otherdecrease

Change inforeignexchangerate andothers

ClosingbalanceLejia IOT Project837,735.85837,735.85Others367,245.87107,523.90110,400.008,513.30372,883.07Total1,204,981.72107,523.90110,400.008,513.301,210,618.92

17. Right-of-use assets

Items

Houses and

buildings

Productionequipment

TransportationequipmentI. Original book value:

1. Opening balance3,565,296,279.0543,142,180.40205,005,241.06

2. Increase for the current period

(1) Increase1,643,558,415.837,023,796.1644,625,189.74

3. Decrease for the current period

(1) Disposal721,830,499.564,821,027.1339,758,835.98

(2) Disposal of subsidiary686,878.07

4. Change in foreign exchange rate

and others187,362,591.58–7,970,760.993,339,682.93

5. Closing balance4,673,699,908.8337,374,188.44213,211,277.75II. Accumulated depreciation

1. Opening balance1,186,766,506.5718,538,537.80104,827,622.22

2. Increase for the current period

(1) Provision723,469,841.567,352,846.5463,260,043.73

3. Decrease for the current period

(1) Disposal678,927,696.644,821,027.1337,747,434.96

(2) Disposal of subsidiary410,841.82

4. Change in foreign exchange rate

and others53,185,390.50–2,098,028.65–4,840,901.53

5. Closing balance1,284,083,200.1718,972,328.56125,499,329.46III. 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. Change in foreign exchange

rate and others

5. Closing balance

IV. Book Value

1. Closing book balance3,389,616,708.6618,401,859.8887,711,948.29

2. Opening book balance2,378,529,772.4824,603,642.60100,177,618.84

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Right-of-use assets (continued)ItemsOffice furnitureOtherTotalI. Original book value:

1. Opening balance56,885,631.59392,228,761.084,262,558,093.18

2. Increase for the current period

(1) Increase9,351,245.42148,918,518.621,853,477,165.77

3. Decrease for the current period

(1) Disposal2,174,726.79210,488,135.97979,073,225.43

(2) Disposal of subsidiary686,878.07

4. Change in foreign exchange rate

and others–10,926,649.1633,871,179.06205,676,043.42

5. Closing balance53,135,501.06364,530,322.795,341,951,198.87II. Accumulated depreciation

1. Opening balance17,981,428.91199,765,091.151,527,879,186.65

2. Increase for the current period

(1) Provision10,217,962.9691,808,692.08896,109,386.87

3. Decrease for the current period

(1) Disposal2,174,726.79210,488,135.97934,159,021.49

(2) Disposal of subsidiary410,841.82

4. Change in foreign exchange rate

and others–3,173,259.1814,233,933.6357,307,134.77

5. Closing balance22,851,405.9095,319,580.891,546,725,844.98III. 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. Change in foreign exchange rate

and others

5. Closing balance

IV. Book Value

1. Closing book balance30,284,095.16269,210,741.903,795,225,353.89

2. Opening book balance38,904,202.68192,463,669.932,734,678,906.53

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

18. Intangible assets

Items

Proprietarytechnology

Licenses andfranchisesLand use rightsI. Original book value

1. Opening balance1,852,677,632.574,242,396,745.161,266,446,332.10

2. Increase for the current period

(1) Purchase1,037,735.8336,954,158.55350,861,991.46

(2) Internal research and

development124,845,373.37

(3) Increase in business

combination

3. Decrease for the current period

(1) Disposal21,150,987.8520,244,270.89

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others88,335,587.32382,545,587.95469,714.81

5. Closing balance2,045,745,341.244,641,652,220.771,617,778,038.37II. Accumulated amortization

1. Opening balance946,309,396.14822,985,645.24215,300,271.80

2. Increase for the current period

(1) Provision200,049,471.79146,606,413.9731,360,014.54

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal21,150,987.8017,118,801.38

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others52,518,817.4260,519,964.34–66,681.10

5. Closing balance1,177,726,697.551,012,993,222.17246,593,605.24III. 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. Change in foreign exchange rate

and others

5. Closing balanceIV. Book Value

1. Closing book balance868,018,643.693,628,658,998.601,371,184,433.13

2. Opening book balance906,368,236.433,419,411,099.921,051,146,060.30

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Intangible assets (continued)

ItemsTrademark rights

Applicationmanagementsoftware andothersTotalI. Original book value

1. Opening balance2,475,717,142.634,195,088,908.8014,032,326,761.26

2. Increase for the current period

(1) Purchase261,891,814.26650,745,700.10

(2) Internal research and

development703,363,975.05828,209,348.42

(3) Increase in business

combination10,091,872.5010,091,872.50

3. Decrease for the current period

(1) Disposal39,931.4962,882,800.64104,317,990.87

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others107,299,533.43236,804,464.65815,454,888.16

5. Closing balance2,582,976,744.575,344,358,234.6216,232,510,579.57II. Accumulated amortization

1. Opening balance2,441,416,170.954,426,011,484.13

2. Increase for the current period

(1) Provision696,925,839.981,074,941,740.28

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal26,462,001.3164,731,790.49

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others153,850,762.12266,822,862.78

5. Closing balance3,265,730,771.745,703,044,296.70III. Impairment provision

1. Opening balance55,930,533.2355,930,533.23

2. Increase for the current period

(1) Provision

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal32,345,627.5732,345,627.57

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others

5. Closing balance23,584,905.6623,584,905.66IV. Book Value

1. Closing book balance2,582,976,744.572,055,042,557.2210,505,881,377.21

2. Opening book balance2,475,717,142.631,697,742,204.629,550,384,743.90

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

At the end of the period, the intangible assets developed through the Company accounted forthe 20.47% of the original value at the end of the period (accounting for 17.06% at thebeginning of the period).

19. Development cost

Items

Openingbalance

Increase forthe currentperiodDecrease for the current period

Change in

foreignexchange rateand others

ClosingbalanceRecognized asintangibleasset

Included incurrent profitand loss

Disposal ofsubsidiary91ABD. ERP ITProgram41,946,252.4791,741,744.72128,722,339.212,573,460.447,539,118.42IOT Project110,027,251.8475,735,477.82185,762,729.66Others75,918,724.82739,267,880.70513,724,279.55165,680,958.9911,160,030.27146,941,397.25Total227,892,229.13906,745,103.24828,209,348.42165,680,958.9913,733,490.71154,480,515.67

20. Goodwill

ItemsOpening balance

Increase for the

current period

Decrease for the

current period

Change in foreignexchange rate and

othersClosing balanceGEA18,938,463,729.431,743,253,534.7920,681,717,264.22Candy1,877,121,985.5652,831,999.591,929,953,985.15Others1,011,517,345.7713,817,128.586,589,920.151,031,924,394.50Total21,827,103,060.7613,817,128.581,802,675,454.5323,643,595,643.87

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 2.29%–

6.68%)

and the EBITDA profit margin (mainly 4.29%–

12.43%) based on historical experience and market

development forecasts, and adopts the pre-tax interest rate that can reflect the specific risks ofthe relevant asset group as the discount rate (mainly 10.2%–

16.25%). 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. Annual Report 2022

Section X Financial Report

21. Long-term amortized expenses

ItemsOpening balance

Increase for the

current period

Amortization for

the current

periodOther decrease

Change inforeignexchange rateand othersClosing balanceRenovation341,401,034.69451,003,919.97334,678,428.8679,964.56457,806,490.36Improvement on leasedproperty154,175,600.7817,739,906.5028,204,841.032,747,442.97146,458,109.22Others93,566,442.42111,560,990.5748,454,979.49–1,053,878.88155,618,574.62Total589,143,077.89580,304,817.04411,338,249.381,773,528.65759,883,174.20

22. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets before elimination

ItemsClosing balanceOpening balanceProvision for assets impairment484,686,533.08354,806,051.43Liabilities1,524,046,160.331,405,119,092.59Internal unrealized earnings eliminated

due to combination848,773,608.23619,291,715.60Uncovered losses217,344,490.61817,306,157.01R&D expenses615,110,766.7256,914,918.90Others347,135,709.18393,477,903.16Total4,037,097,268.153,646,915,838.69

(2) Deferred income tax liabilities before elimination

ItemsClosing balanceOpening balanceAsset amortisation3,006,598,088.302,318,829,386.48Remeasurement of fair value of the reaming

equity on the day when the control right

was lost878,623,804.46878,623,804.46Changes in fair value of investments in other

equity instruments293,662,487.81292,476,080.49Others494,850,409.06421,341,222.80Total4,673,734,789.633,911,270,494.23

(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end

of the period was RMB2,314,874,230.44 (amount at the beginning of the periodRMB1,789,467,320.40).Other explanation:

□ Applicable √ Not Applicable

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

23. Other non-current assets

ItemsClosing balanceOpening balancePrepayments for equipment and land1,671,590,606.021,859,693,694.07Others209,146,285.61304,690,319.07Total1,880,736,891.632,164,384,013.14

24. Short-term borrowings

√ Applicable □ Not Applicable

Unit and Currency: RMBItemClosing balanceOpening balanceBorrowings— secured by pledge70,878,338.07255,103,925.36Borrowings— secured by guarantee84,506,733.93304,896,830.40Borrowings— secured by credit9,479,489,787.3310,661,927,352.96Interest payable for short-term borrowings8,499,873.134,284,025.67Total9,643,374,732.4611,226,212,134.39

25. Financial liabilities held for trading

ItemsClosing balanceOpening balanceForward foreign exchange contracts6,294,014.40Total6,294,014.40

26. Derivative financial liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceForward foreign exchange contracts92,580,419.4860,527,532.76Forward commodity contracts12,013,621.18Interest rate swap agreement19,684,900.48Total104,594,040.6680,212,433.24

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

27. Bills payable

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceCommercial acceptance notes2,212,721,304.363,022,602,833.31Bank acceptance notes22,878,224,116.9222,000,635,573.41Total25,090,945,421.2825,023,238,406.72

28. Accounts payables

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceAccounts payables41,883,694,299.2442,363,218,840.33Total41,883,694,299.2442,363,218,840.33The book balance at the end of the period was mainly the unpaid expenditures on material andlabour.

29. Contractual liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceContractual liabilities9,329,554,748.3410,027,091,593.60Total9,329,554,748.3410,027,091,593.60The book balance at the end of the period is mainly due to the advance payment that has beencollected and has not yet performed the contractual obligations.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

30. Payables for staff remuneration

√ Applicable □ Not Applicable

(1) Payables for staff remuneration

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceI. Short-term remuneration3,988,907,110.6825,946,782,966.6826,119,959,546.223,815,730,531.14II. Post-employment

benefits definedcontribution plan19,100,855.171,370,126,936.351,323,781,624.1765,446,167.35III. Termination benefits9,818,188.4167,018,092.9541,669,406.9635,166,874.40IV. Other benefits due

within one year101,599,133.3458,929,753.8026,407,705.66134,121,181.48Total4,119,425,287.6027,442,857,749.7827,511,818,283.014,050,464,754.37

(2) Short-term remuneration

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for the

current periodClosing balanceI. Salaries, bonus,

allowances and benefit2,848,692,628.8319,241,002,573.9019,430,129,697.822,659,565,504.91II. Employee welfare321,996,794.22972,603,845.99961,551,256.01333,049,384.20III. Social benefit171,645,833.661,746,401,940.661,693,687,072.96224,360,701.36IV. Housing fund11,137,621.51507,873,900.28513,974,914.655,036,607.14V. Labor union fee and

education fund3,790,540.75121,507,187.96116,272,286.459,025,442.26VI. Short-term

compensated leave268,213,164.85491,622,903.29499,213,550.01260,622,518.13VII. Others363,430,526.862,865,770,614.602,905,130,768.32324,070,373.14Total3,988,907,110.6825,946,782,966.6826,119,959,546.223,815,730,531.14

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Section X Financial Report

(3) Defined contribution plan

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balance

1. Basic pension insurance18,396,477.111,280,918,422.911,235,152,520.9464,162,379.08

2. Unemployment insurance132,417.3535,062,369.9434,847,957.35346,829.94

3. Enterprise annuity

payment571,960.7154,146,143.5053,781,145.88936,958.33Total19,100,855.171,370,126,936.351,323,781,624.1765,446,167.35

(4) Termination benefits

ItemsClosing balance

OpeningbalanceTermination compensation35,166,874.409,818,188.41Total35,166,874.409,818,188.41

31. Taxes payable

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balance

OpeningbalanceValue-added tax860,587,585.73961,934,808.61Corporate income tax1,702,692,154.061,308,563,619.70Individual income tax100,168,757.8794,885,149.39City maintenance and construction tax28,202,062.6540,423,487.04Education surcharge14,512,234.0616,193,890.94The electrical and electronic products waste

treatment fund97,068,373.0095,522,090.50Other taxes69,615,659.8090,299,610.19Total2,872,846,827.172,607,822,656.37

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Section X Financial Report

32. Other payables

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceDividends payable1,246,573.3510,639,313.22Other payables17,510,525,089.3517,559,700,612.54Total17,511,771,662.7017,570,339,925.76

(1) Dividends payable

Name of unitClosing balanceOpening balanceOther public shareholders1,246,573.3510,639,313.22Total1,246,573.3510,639,313.22

(2) Other payables

ItemsClosing balanceOpening balanceOther payables17,510,525,089.3517,559,700,612.54Total17,510,525,089.3517,559,700,612.54The closing balance mainly included the incurred but unpaid costs.

33. Non-current liabilities due within one year

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceLong-term borrowings due within one year2,854,446,929.326,745,950,334.20Lease liabilities due within one year903,249,632.59687,991,183.42Anticipated liabilities due within one year2,537,054,105.172,190,397,652.84Total6,294,750,667.089,624,339,170.46

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Section X Financial Report

34. Other current liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balancePayable refund624,887,787.38655,801,519.33Tax amount to be transferred to output tax1,198,555,405.781,568,670,492.94Others26,982,922.6314,295,539.13Total1,850,426,115.792,238,767,551.40

35. Long-term borrowings

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— unsecured by credit13,567,316,873.433,038,573,824.53Borrowings— secured by guarantee23,550,000.00Total13,590,866,873.433,038,573,824.53The interest rates of the Company’s long-term borrowings: 1.19%–

5.31%.

36. Bonds payable

In 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 considered and approved thescheme to convert the exchangeable bonds into convertible bonds. The underlying shares of theoriginal exchangeable bonds were changed from the shares of Haier Electronic to newly issuedH-shares of Haier Smart Home (referred to as EB to CB Scheme). On 23 December 2020,H-shares of Haier Smart Home were listed and traded, and the EB-to-CB Scheme took effect.The outstanding principle amount of the original exchangeable bonds was HK$7.993 billion. Thematurity date, coupon rate and yield rate of the bond remain unchanged. The liability componentand equity component of convertible bonds at the initial recognition:

Items

Convertible corporate bonds on

23 December 2020Initial recognition:9,105,660,619.93Including：

Equities of the convertible bond2,364,195,333.79Liabilities of the convertible bond6,741,465,286.14

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Section X Financial Report

Changes in the liability portion of corporate bonds in the current period:

ItemsOpening balance

Increase for the

current period

Accrued bondInterest for thecurrent period

Less: bondinterest paid forthe currentperiodRedemption inthe current

period

Sharesconverted in the

current period

Exchange rateimpactClosing balanceConvertible corporate bonds (CB)334,730,048.825,847,637.754,848,724.30361,395,824.1725,666,861.90Total334,730,048.825,847,637.754,848,724.30361,395,824.1725,666,861.90

37. Lease liabilities

ItemsClosing balanceOpening balanceLease liabilities3,727,727,303.212,648,886,164.89Less: lease liabilities due within one year903,249,632.60687,991,183.42Total2,824,477,670.611,960,894,981.47

38. Long-term payables

ItemsClosing balanceOpening balanceInvestment from CDB development fund36,500,000.0036,500,000.00Others7,740,087.9463,102,707.76Less: long-term payables due within one yearTotal44,240,087.9499,602,707.76Under 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 of the end of

the period, the subsidiaries of the Company made buyback in amount of RMB36.5 million.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

39. Long-term employee benefits payable

√ Applicable □ Not Applicable

(1) Long-term employee benefits payable

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceI. Post-employment benefits: net liability ofdefined benefit plan417,072,669.76517,077,143.43II. Termination benefits386,522,704.17453,425,129.57III. Provision for work-related injurycompensation206,951,828.41202,649,488.64Total1,010,547,202.341,173,151,761.64

(2) Defined benefits plan

Some 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 beneficiaryand other 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. The defined benefit plan of Haier Asia Co., Ltd., a subsidiary of the CompanyActuarial assumptions used to defined benefit plans

ItemsRateDiscount rate0.50%Expected rate of return2.00%

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Section X Financial Report

Present value of defined benefit obligationsItemsAmountI. Opening balance279,152,422.12II. Defined benefit cost recognized in current profit or loss8,755,696.92

1. Current service cost7,455,244.10

2. Past service cost

3. Settlement gains (loss indicated in ‘

—’)

4. Interest cost1,300,452.82III. Defined benefit cost recognized in other comprehensiveincome–2,115,953.62

1. Actuarial loss (gain indicated in ‘

—’)–2,115,953.62IV. Other changes–32,490,184.11

1. The consideration paid at the time of settlement

2. Benefit paid

–16,945,470.21

3. Exchange differences

–15,544,713.90V. Closing balance253,301,981.31Fair value of plan assets

ItemsAmountI. Opening balance337,081,685.24II. Defined benefit cost recognized in current profit and loss6,137,579.93

1. Interest income6,137,579.93III. Defined benefit cost recognized in other comprehensive

income–23,745,622.09

1. Return on plan assets (except those included in net

interests)–23,745,622.09

2. Changes in impact of asset cap (except those included

in net interests)IV. Other changes–25,728,500.35

1. Employer contributions2,351,112.64

2. Benefit paid

–9,140,773.62

3. Exchange differences

–18,938,839.37V. Closing balance293,745,142.73Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Net liability (net asset) of defined benefit planItemsAmountI. Opening balance–57,929,263.12II. Defined benefit cost recognized in current profit or loss2,618,116.99III. Defined benefit cost recognized in other comprehensiveincome21,629,668.47IV. Other changes–6,761,683.76V. Closing balance–40,443,161.42The average term for the defined benefit obligation is 11.73 years at the balancesheet date. The defined benefit plan of Roper Corporation, a subsidiary of the Company

Roper Corporation, a subsidiary of the Company, has provided post-employmentdefined benefit plan of health care benefits to eligible employees.Actuarial assumptions used in defined benefit plansItemsRateDiscount rate5.59%Present value of defined benefit obligations

ItemsAmountI. Opening balance128,979,684.17II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss11,160,460.51

1. Current service cost7,310,935.93

2. Past service cost

3. Settlement gains (loss indicated in ‘

—’)

4. Interest cost3,849,524.58IV. Defined benefit cost recognized in other comprehensive

incomes–29,716,130.82

1. Actuarial loss (gain indicated in ‘

—’)–29,716,130.82V. Other changes13,353,406.38

1. The consideration paid at the time of settlement

2. Benefit paid

–7,637,603.12

3. Plan amendments9,659,287.75

4. Exchange differences11,331,721.75VI. Closing balance123,777,420.24

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Section X Financial Report

Net liability (net asset) of defined benefit planItemsAmountI. Opening balance128,979,684.17II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss11,160,460.51IV. Defined benefit cost recognized in other comprehensiveincomes–29,716,130.82V. Other changes13,353,406.38VI. Closing balance123,777,420.24The average term for the defined benefit obligation is 11.22 years at the balancesheet date.The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the CompanyHaier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has providedpost-retirement defined benefit plan of health care benefits for the eligible employees.Actuarial assumptions used in defined benefit plansItemsRateDiscount rate5.51%

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Present value of defined benefit obligationsItemsAmountI. Opening balance221,602,455.52II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss5,965,648.96

1. Current service cost

2. Past service cost

3. Settlement gains (loss indicated in ‘

—’)

4. Interest cost5,965,648.96IV. Defined benefit cost recognized in other comprehensiveincomes–24,365,460.38

1. Actuarial loss (gain indicated in ‘

—’)–24,365,460.38V. Other changes–8,098,449.97

1. The consideration paid at the time of settlement

2. Benefit paid

–26,970,932.93

3. Exchange differences18,872,482.96VI. Closing balance195,104,194.13Net liability (net asset) of defined benefit planItemsAmountI. Opening balance221,602,455.52II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss5,965,648.96IV. Defined benefit cost recognized in other comprehensiveincomes–24,365,460.38V. Other changes–8,098,449.97VI. Closing balance195,104,194.13

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiaryof the CompanyHaier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has provideddefined benefit plan of pension for the eligible employees.Actuarial assumptions used in defined benefit plansItemsRateDiscount rate5.51%Present value of defined benefit obligations

ItemsAmountI. Opening balance166,510,439.87II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss4,081,765.48

1. Current service cost

2. Past service cost

3. Settlement gains (loss indicated in ‘

—’)

4. Interest cost4,081,765.48IV. Defined benefit cost recognized in other comprehensiveincomes–23,095,869.18

1. Actuarial loss (gain indicated in ‘

—’)–23,095,869.18V. Other changes–20,629,461.15

1. The consideration paid at the time of settlement

2. Benefit paid

–34,139,499.45

3. Exchange differences13,510,038.30VI. Closing balance126,866,875.02

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Fair value of plan assetsItemsAmountI. Opening balance126,020,077.85II. Defined benefit cost recognized in current profit or loss

1. Interest income

III. Defined benefit cost recognized in other comprehensiveincomes–10,974,063.63

1. Return on plan assets (except those included in net

interests)–10,974,063.63

2. Changes in impact of asset cap (except those included

in net interests)IV. Other changes–23,006,241.35

1. Employer contributions2,502,057.77

2. Benefits paid out

–35,597,949.95

3. Exchange differences10,089,650.83V. Closing balance92,039,772.87Net liability (net asset) of defined benefit plan

ItemsAmountI. Opening balance40,490,362.02II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss4,081,765.48IV. Defined benefit cost recognized in other comprehensive

income–12,121,805.55V. Other changes2,376,780.20VI. Closing balance34,827,102.15

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Section X Financial Report

(3) Provision for work-related injury compensation

Haier 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 from1 January 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%.

ItemsAmountI. Opening balance202,649,488.64II. Business combination not under common controlIII. Compensation recognized in current profit and loss96,295,893.87IV. Actual compensation paid–64,397,610.92V. Other changes–27,595,943.18VI. Closing balance206,951,828.41Classification of the balance of defined benefit plan

ItemsClosing balanceOpening balanceShort-term Benefit36,444,790.6932,502,729.33Long-term Benefit417,072,669.76517,077,143.43Total453,517,460.45549,579,872.76

40. Estimated liabilities

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balanceClosing balanceActive litigation29,259,869.4818,469,174.18Others252,996,489.56262,077,808.56Projection of warranty expenses and

installation fees1,666,309,118.071,330,482,237.43Total1,948,565,477.111,611,029,220.17Significant assumption and estimation relating to estimation of warranty expenses and installationfees: the Company reasonably estimated the warranty expenses and installation fees rate basedon its actual expenses on the warranty expenses and installation fees as well as sales data in thepast. The Company estimated the warranty expenses and installation fees that are likely to beincurred in the future according to its policies on the warranty expenses and installation fees, aswell as the actual sales data.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

41. Deferred income

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for the

current period

Decrease for thecurrent periodClosing balanceGovernment grants852,794,567.20262,630,986.65166,490,419.80948,935,134.05Total852,794,567.20262,630,986.65166,490,419.80948,935,134.05

42. Share capital

Share category

Openingbalance

Increase forthe current

period

Decrease forthe currentperiod

ClosingbalanceI. 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 entitiesII. Non-restricted shares9,398,704,53062,864,16314,970,2009,446,598,493

1. Ordinary shares in

RMB6,308,552,6546,308,552,654

2. Domestic listed

foreign Shares

3. Offshore listed foreign

Shares3,090,151,87662,864,16314,970,2003,138,045,839

4. Others

III. Total shares9,398,704,53062,864,16314,970,2009,446,598,493

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

43. Other equity instruments

ItemsOpening balance

Increase for thecurrent period

Decrease for the

current periodClosing balanceEquity portion ofconvertible bond118,017,507.59118,017,507.59Total118,017,507.59118,017,507.59

44. Capital reserve

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceShare premium (share capitalpremium)21,590,525,556.911,445,824,970.89786,112,567.9122,250,237,959.89Others capital reserve1,074,849,182.55912,283,606.31385,333,423.991,601,799,364.87Total22,665,374,739.462,358,108,577.201,171,445,991.9023,852,037,324.76The main reasons for the change in capital premium: The non-public issue of H shares for thecurrent period resulted in the increase in capital premium of RMB898,627,404.94; the conversionof CB for the current period resulted in the increase in capital premium of RMB457,962,768.76;the cancellation of treasury stock for the current period resulted in the decrease in capitalpremium of RMB315,351,869.05; a business combination under the same control occurred forthe current period resulted in the decrease in capital premium of RMB304,818,769.28.The main reasons for the change in other capital reserves: the amortized share-based paymentfor the current period included in other capital reserves of RMB912,283,606.31; the exercise ofstock ownership plan for the current period resulted in the decrease in other capital reserves ofRMB218,448,143.60.

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Section X Financial Report

45. Other comprehensive income

ItemsAmounts for the current period

Opening balance

Amount beforecurrent income tax

Deduction

of Impact on

income tax

Attributable to

the parentcompany after tax

Attributable

to minorityshareholders

after taxOthersClosing balancea–341,470,688.4599,921,599.99—99,921,599.99–

0.00

–241,549,088.46b1,618,386.47816,720.909,010,066.042,308,423.987,518,362.96 3,926,810.45c–1,916,614,455.793,158,845,054.75 3,168,394,472.68–9,549,417.93 1,251,780,016.89d1,005,776,349.60–150,689,650.8213,862,982.16–136,488,922.01–337,746.65336,152.58869,623,580.17e73,838,708.2538,812,373.94–5,738,054.6533,063,471.1510,848.14 106,902,179.40Total–1,176,851,699.923,147,706,098.7617,134,993.553,167,199,045.79–2,357,953.48336,152.581,990,683,498.45Notes:

(1) Item a, b, and c are other comprehensive income that will be reclassified to profit or loss, the details are as follows:

Item a represents other comprehensive income classified to profit and loss under the equity method.Item b represents cash flow hedge reserves (the effective part of the cash flow hedge profit and loss).Item c represents exchange differences on translation of financial statements denominated in foreign currencies.

(2) Item 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.

46. Surplus reserve

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for the

current periodClosing balanceStatutory surplus reserve3,390,959,108.25575,574,713.403,966,533,821.65Discretionary surplus reserve26,042,290.4826,042,290.48Reserve fund11,322,880.6411,322,880.64Enterprise expansion fund10,291,630.4710,291,630.47Total3,438,615,909.84575,574,713.404,014,190,623.24Pursuant to the Company Law of the People’s Republic of China and the Articles of Association,the Company is required to appropriate the statutory surplus reserve at 10% of its net profit.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

47. Undistributed profits

√ Applicable □ Not Applicable

ItemsAmountsUndistributed profits at the end of previous year47,907,134,328.80Change in accounting policyCombination under common control58,136,031.99Undistributed profits at the beginning of the year47,965,270,360.79Add: net profit attributable to owners of the parent company14,710,923,491.99Other transfer in172,960,573.19Adjustment due to implementation of enterprise accounting standardProfit available for appropriation for the year62,849,154,425.97Less: appropriation of statutory surplus reserve575,574,713.40Appropriation of staff incentive and welfare fundDividend payable for ordinary shares4,296,634,791.21Undistributed profits at the end of period57,976,944,921.36

48. Operating income and operating cost

(1) Operating income

Items

Amount for the

current period

Amount for theprevious periodPrimary business242,431,313,231.23226,120,377,524.14Other Business1,082,250,439.50985,440,117.55Total243,513,563,670.73227,105,817,641.69

(2) Primary business income and primary business cost by product category

Amount for the current periodAmount for the previous periodCategories

Primary business

income

Primary business

cost

Primary business

income

Primary business

costAir conditioner40,059,458,698.7528,599,397,831.6737,531,431,456.4027,048,946,901.15Refrigerator77,637,761,907.8552,883,745,098.8071,569,789,213.8148,835,867,469.21Kitchen appliance38,740,706,547.1226,213,735,106.8235,244,040,315.0923,735,209,066.45Water appliance13,786,852,209.997,443,373,512.2812,470,593,776.216,760,377,744.75Washing machine57,721,991,613.3338,583,555,563.9754,758,839,273.5736,334,162,716.43Equipment product and

integrated channelservices14,484,542,254.1913,065,622,141.6814,545,683,489.0612,989,119,690.80Total242,431,313,231.23166,789,429,255.22226,120,377,524.14155,703,683,588.79

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

49. Taxes and surcharge

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodCity maintenance and construction tax290,126,011.45302,871,487.15Education surcharge190,906,821.86217,297,845.37Property tax61,713,388.9258,844,071.60Land use tax21,637,047.8316,126,888.33Stamp duty206,692,727.74176,355,444.58Others42,213,230.0337,116,582.03Total813,289,227.83808,612,319.06

50. Selling expenses

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodSelling expenses38,597,810,391.1036,584,438,840.05Total38,597,810,391.1036,584,438,840.05The Company’s selling expenses are mainly salary expenses, logistic and storage fees,advertising and promotion fees, and after-sales expenses.

51. Administrative expenses

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodAdministrative expenses10,837,316,878.5010,471,531,966.20Total10,837,316,878.5010,471,531,966.20The Company’s administrative expenses are mainly salary expenses, office fees, depreciation andamortization of assets fees, etc.

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

52. R&D expenses

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodR&D expenses9,499,191,097.858,363,868,872.76Total9,499,191,097.858,363,868,872.76The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, designand R&D expenses.

53. Financial expenses

√ Applicable □ Not Applicable

Items

Amount for thecurrent period

Amount for theprevious periodInterest expense984,142,709.25712,462,772.83Less: interest income855,178,860.53566,432,900.38Less: cash discount142,905,868.01163,118,260.27Exchange gains and losses(gains are represented by ‘-’)–371,894,224.02577,463,512.90Others140,206,872.26124,346,494.67Total–245,629,371.05684,721,619.75Interest expenditure in lease liabilities in the current period is RMB96,997,943.85 (amount for thecorresponding period: RMB113,104,014.07).

54. Other income

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodGovernment grants related to revenue966,389,191.58875,988,212.18Government grants related to assets103,374,416.9882,525,988.76Total1,069,763,608.56958,514,200.94

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

55. Investment income (losses are represented by ‘-’)

Items

Amount for the

current period

Amount for theprevious periodLong-term equity investments income calculated

by the equity method1,582,178,829.861,887,911,034.17Investment income from disposal of long-termequity investments27,123,485.745,189,653.78Investment income from other equity instrumentinvestments during holding period31,607,357.2258,638,795.05Income from wealth management products92,625,406.5560,011,933.94Investment income from disposal of financialassets measured at fair value with changesincluded in current profit and loss99,121,873.23393,124,704.67Total1,832,656,952.602,404,876,121.61

56. Gains on changes in fair value (losses are represented by ‘-’)

Items

Amount for thecurrent period

Amount for theprevious periodChange in fair value of forward foreign

exchange contracts–134,151,416.1053,963,469.20Change in fair value of equity investments59,522,888.3646,729,587.36Change in fair value of fund investments–37,211,579.8218,097,485.77Others–10,602,826.09487,081.52Total–122,442,933.65119,277,623.85

57. Credit impairment loss (losses are represented by ‘-’)

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodBad debts losses on bills receivable1,901,562.15–55,738,551.40Bad debts losses on accounts receivable–420,692,343.10–362,209,683.09Bad debts losses on other receivable–12,586,699.87–102,351,680.93Total–431,377,480.82–520,299,915.42

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

58. Impairment loss on assets (losses are represented by ‘-’)

Items

Amount for thecurrent period

Amount for theprevious periodImpairment losses on inventory–1,144,921,827.01–1,057,658,740.03Impairment losses on other current assets–280,818,239.06–325,647,466.98Impairment losses on fixed assets–3,191,271.04–4,624,930.91Impairment losses on construction in progress–107,523.90–372,747.55Impairment losses on intangible assets–29,631,196.82Impairment losses on long-term equity investment–845,634.54–818,536.53Impairment losses on contract assets–69,975,265.71Total–1,499,859,761.26–1,418,753,618.82

59. Gains on disposal of assets (losses are represented by ‘-’)

Items

Amount for the

current period

Amount for theprevious periodGains on disposal of non-current assets257,217,030.01127,741,157.10Losses on disposal of non-current assets–50,474,214.22–16,757,437.06Total206,742,815.79110,983,720.04

60. Non-operating income

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodTotal gains on disposal of non-current assets2,647,656.161,546,396.81Quality claims and fines46,841,255.4237,390,034.91Others87,038,358.38160,131,926.76Total136,527,269.96199,068,358.48

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

61. Non-operating expenses

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodTotal losses on disposal of non-current assets27,077,182.7422,285,702.85Others163,629,787.05136,964,575.40Total190,706,969.79159,250,278.25

62. Income tax expenses

(1) Statement of income tax expenses

Items

Amount for the

current period

Amount for theprevious periodCurrent income tax expense2,751,728,843.582,507,855,951.35Deferred income tax expense305,811,089.58197,397,904.54Total3,057,539,933.162,705,253,855.89

(2) Reconciliation between accounting profit and income tax expenses for the current

periodItemsAmountsTotal accounting profit17,789,721,551.69Income tax expense calculated pursuant to statutory tax rate4,447,430,387.92Impact from different tax rates applicable to subsidiaries–832,397,707.79Impact from adjustment to income tax in prior periods–215,282,210.40Impact from non-taxable income–493,234,020.50Impact from non-deductible cost, expense and loss199,136,849.33Impact from deductible provisional differences or deductible losses

of unrecognized deferred tax226,227,840.39Others–274,341,205.79Total income tax expense3,057,539,933.16

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

63. Other comprehensive income

√ Applicable □ Not Applicable

Please refer to notes VII.45 for details.

64. Other cash received from operating activities

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodDeposits and securities146,194,549.40Government grants856,331,974.78Non-operating income excluding government grants49,872,811.00Interest income554,921,958.03Others62,395,840.69Total1,669,717,133.90

65. Other cash paid to operating activities

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodCash paid on selling expenses17,494,555,343.05Cash paid on administrative and R&D expenses6,533,466,704.27Cash paid on financial expenses133,646,664.77Non-operating expenses21,293,448.35Others71,195,948.75Total24,254,158,109.19

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

66. Other cash paid to investing activities

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodDisposal of subsidiary218,440,847.94Total218,440,847.94

67. Other cash received from financing activities

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodOthers1,000,000.00Total1,000,000.00

68. Other cash paid to financing activities

√ Applicable □ Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodRepurchase of shares2,012,393,016.13Cash paid to lease956,996,323.37Cash paid for acquisition of subsidiaries through business combinationunder common control312,957,760.00Purchase of minority interests in subsidiaries56,960,660.00Others8,494,694.74Total3,347,802,454.24

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Section X Financial Report

69. Net profit adjusted to cash flow of operating activities

Net profit adjusted to cash flow of operatingactivities

Amount for the

current period

Amount for theprevious period

1. Net profit14,732,181,618.5313,232,259,371.01Add: impairment provision for assets1,931,237,242.081,939,053,534.24Depreciation of fixed assets4,560,067,791.533,899,373,994.04Amortization of intangible assets1,074,941,740.28905,996,786.57Amortization of long-term prepaid expenses411,338,249.38257,802,793.09Losses on disposal of fixed assets, intangibleassets and other long-term assets (‘-’represents ‘gains’)–182,313,289.21–90,244,414.00Loss and gains on change of fair value (‘-’represents ‘gains’)122,442,933.65–119,277,623.85Financial expenses (‘-’ represents ‘gains’)612,248,485.231,289,922,731.05Loss on investments (‘-’ represents ‘gains’)–1,832,656,952.60–2,404,876,121.61Decrease in deferred income tax assets (‘-’represents ‘increase’)–452,670,928.44115,139,652.25Increase of deferred income tax liabilities (‘-’

represents ‘decrease’)758,482,018.0382,258,252.29Decrease in inventories (‘-’ represents ‘increase’)–2,773,685,039.99–11,480,423,018.54Decrease of operational account receivables (‘-’

represents ‘increase’)1,781,282,453.765,372,841,776.18Increase of operational account payables (‘-’

represents ‘decrease’)–1,597,814,712.039,875,284,130.88Others1,008,424,173.16360,268,847.35Net cash flow generated from operational activities20,153,505,783.3523,235,380,690.95

2. Significant investment and financing

activities not involving cash inflows and

outflows:

Capital transferred from debts361,395,824.176,368,251,389.85Convertible corporate bonds due within one yearFixed assets under finance lease

3. Net changes of cash and cash equivalents:

Cash balance at the end of the period53,368,813,384.6145,197,664,411.15Less: cash balance at the beginning of the period45,197,664,411.1545,790,589,785.11Add: cash equivalents balance at the end of the

periodLess: cash equivalents balance at the beginning of

the periodNet increase of cash and cash equivalents8,171,148,973.46–592,925,373.96

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

70. Cash and cash equivalents

ItemsClosing balanceOpening balanceI. Cash53,368,813,384.6145,197,664,411.15Including: Cash on hand5,312,391.113,085,964.28Bank deposits always available for payment52,955,417,379.1645,010,311,638.51Other monetary funds always available forpayment408,083,614.34184,266,808.36II. Cash equivalentsIncluding: bond investments due within threemonthsIII. Closing balance of cash and cash equivalents53,368,813,384.6145,197,664,411.15

71. Monetary items in foreign currency

ItemsClosing balanceOpening balance

Balance in

foreign currencyExchange rateBalance in RMB

Balance in

foreign currencyExchange rateBalance in RMBMonetary fundsUSD1,290,843,958.566.96468,990,211,833.81850,630,647.696.37575,423,365,820.48EUR47,915,506.827.4229355,672,015.56149,225,110.607.21971,077,360,530.99JPY2,642,036,348.790.052358138,331,739.1510,520,503,841.740.055415582,993,720.39HKD647,479,463.240.8933578,393,404.51483,444,582.350.8176395,264,290.53Others 2,630,279,781.27 2,955,290,563.22Subtotal 12,692,888,774.30 10,434,274,925.61Accounts receivablesUSD770,735,456.706.96495,368,095,382.34721,343,093.776.37574,599,067,162.94EUR480,679,854.027.42293,568,038,488.40413,528,990.857.21972,985,555,255.25JPY4,448,523,930.250.052358232,915,815.944,064,574,659.930.055415225,238,404.78Others 3,648,407,445.01 3,668,237,038.46Subtotal 12,817,457,131.69 11,478,097,861.43Short-term borrowingsUSD337,460,553.026.96462,350,277,767.57347,844,969.696.37572,217,755,173.25EUR551,092,544.777.42294,090,704,850.58883,863,602.217.21976,381,230,048.85JPY0.052358623,360,869.800.05541534,543,542.60HKD2,600,000,000.000.89332,322,580,000.002,600,000,000.000.81762,125,760,000.00Others 518,039,984.83 328,850,057.11Subtotal 9,281,602,602.98 11,088,138,821.81Accounts payablesUSD1,941,535,383.626.964613,522,017,332.772,033,952,669.546.375712,967,872,035.21EUR626,564,863.637.42294,650,928,326.21640,851,532.987.21974,626,755,812.65

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

ItemsClosing balanceOpening balance

Balance in

foreign currencyExchange rateBalance in RMB

Balance in

foreign currencyExchange rateBalance in RMBJPY7,649,104,013.600.052358400,491,787.948,161,874,338.900.055415452,290,266.49NZD150,709,317.714.4162665,562,488.87151,371,298.464.3553659,267,416.20Others 3,276,292,812.40 3,268,885,987.84Subtotal 22,515,292,748.19 21,975,071,518.39Non-current liabilities due in one yearUSD501,395,115.526.96463,492,016,421.53757,148,488.126.37574,827,351,615.72EUR82,207,419.427.4229610,217,453.64214,053,730.557.21971,545,403,718.47JPY2,057,044,588.880.052358107,702,740.583,705,244,389.610.055415205,326,117.85RUB471,424,350.040.094244,408,173.77651,073,870.060.085555,666,815.89Others 86,526,344.63 1,589,397,292.33Subtotal 4,340,871,134.16 8,223,145,560.26Long-term borrowingsUSD742,230,000.006.96465,169,335,058.00403,838,717.506.37572,574,754,511.17EUR698,254,017.687.42295,183,069,747.8637,498,911.177.2197270,730,888.98RUB250,000,000.000.094223,550,000.00186,061,000.000.085515,908,215.50JPY0.0523583,197,333,012.360.055415177,180,208.88Others1,014,924,067.59Subtotal 11,390,878,873.45 3,038,573,824.53

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Section X Financial Report

VIII. CHANGES OF CONSOLIDATION SCOPE

1. Business combination not under common control

√ Applicable □ Not Applicable

(1) Business combination not under common control occurring in the current period

√ Applicable □ Not Applicable

Unit and Currency: RMB

Name of the acquiree

Point of time ofacquisition ofequity

Cost foracquisition of

equity

Theproportionof equityacquiredMethod ofacquisition ofequity

Combinationdate

Basis fordetermining thecombination

Revenue ofthe acquiree

fromcombinationdate to theend of the

period

Net profit ofthe acquiree

fromcombinationdate to theend of the

periodMidwest Sales & Service Inc.July 20225,949,248.00100Acquisition of assetJuly 2022Asset delivery26,121,516.00–191,464.04

(2) Combination cost and goodwill

Items

Midwest Sales& Service Inc.— Cash5,949,248.00— Contingent considerationTotal combination cost5,949,248.00Less: acquired identifiableShare of fair value of net assets3,965,339.58Amount of goodwill1,983,908.42

(3) Identifiable assets and liabilities of the acquiree on the combination date

ItemsMidwest Sales & Service Inc.

Fair valueBook valueAccounts receivables2,706,845.212,706,845.21Prepayments166,538.44166,538.44Inventories1,112,129.271,266,800.74Fixed assets364,162.70336,708.75Intangible assets1,500,000.00Accounts payables–1,715,934.54–1,715,934.54Other payables–168,401.50–168,401.50Net assets3,965,339.582,592,557.10Less: minority interestsNet assets acquired3,965,339.582,592,557.10

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Section X Financial Report

2. Business combination under common control

√ Applicable □ Not Applicable

(1) Business combination under common control occurring in the current period

Name of the acquiree

The proportion ofequity acquired in

the businesscombination

The basis for thetransaction ofconstituting businesscombination undercommon controlCombination date

Recognition basis ofcombination dateQingdao Ririshun Service Co., Ltd.100.00%Controlled by Haier Group

Corporation before andafter combination

2022.6Subject equity-related right and

obligation transferred to theCompanyHaier Robot Technology (Qingdao)Co., Ltd. (海爾機器人科技（青島）有限公司)

100.00%Controlled by Haier Group

Corporation before andafter combination

2022.6Subject equity-related right and

obligation transferred to theCompanyQingdao Haier Special Plastic R&D

Co., Ltd.

100.00%Controlled by Haier Group

Corporation before andafter combination

2022.9Subject equity-related right and

obligation transferred to theCompany

(Continued)

Name of theacquiree

The income

of theacquiree fromthe beginningof the current

period tocombination

date

Net profit ofthe acquiree

from thebeginning

of thecurrent

period tocombination

date

The income

of theacquireeduring thecomparison

period

Net profit ofthe acquiree

during thecomparison

periodQingdao RirishunService Co., Ltd.37,211.901,421,013.2194,116,731.27–4,254,036.49Haier RobotTechnology(Qingdao) Co., Ltd.(海爾機器人科技（青島）有限公司)205,120,142.193,052,468.49243,526,079.577,385,686.65Qingdao HaierSpecial PlasticR&D Co., Ltd.476,266,547.258,461,133.81753,473,339.4110,367,061.02

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(2) Combination cost

Combination costCashEquityQingdao Ririshun Service Co.,Ltd.50,957,80032,169,100Haier Robot Technology

(Qingdao) Co., Ltd. (海爾機器人科技（青島）有限公司)125,000,000N/AQingdao Haier Special Plastic

R&D Co., Ltd.152,000,000N/A

(3) Book value of acquiree’s assets and liabilities as at the combination date

ItemsQingdao Ririshun Service Co., Ltd.

Combination date

End of theprevious periodMonetary funds46,604,249.7159,493,989.32Accounts receivables1,041,138.301,144,058.93Inventory1,837,248.481,879,270.49Other current assets4,840.17778,605.93Less: Accounts payables12,023,461.4526,719,700.69Payables for staff’s remuneration65,143.90988,310.00Taxes payable383,755.86337.90Other current liabilities118,797.58112,271.42Net assets36,896,317.8735,475,304.66Items

Haier Robot Technology (Qingdao) Co.,

Ltd. ()Combination date

End of theprevious periodMonetary funds70,965,249.2654,371,498.79Accounts receivables35,633,561.5832,228,299.73Inventory64,895,694.3436,212,378.79Other current assets990,753.45Long-term asset742,124.921,559,671.95Deferred income tax assets2,638,785.392,638,785.39Less: Accounts payables108,357,839.9364,054,579.25

Payables for staff’s remuneration997,688.001,069,738.28Taxes payable2,702,903.891,824,903.82Non-current liabilities due within

one year647,508.671,324,322.70Other current liabilities3,514,317.624,125,155.16Net assets58,655,157.3855,602,688.89

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Section X Financial Report

Items

Qingdao Haier Special Plastic R&D

Co., Ltd.Combination date

End of theprevious periodMonetary funds115,521,114.49126,298,139.94Accounts receivables92,983,452.02102,437,201.57Inventory28,093,776.3112,687,209.27Other current assets1,692,415.37Long-term asset17,888,167.239,245,933.66Deferred income tax assetsLess: Accounts payables104,855,934.97108,198,443.08Payables for staff’s remuneration3,109,652.363,485,652.36Taxes payable859,443.392,313,952.81Other current liabilities11,552,679.62Net assets135,801,215.08136,670,436.19

3. Disposal of subsidiary

Whether single disposal of investment in subsidiary will result in losing control power:

Items

Yantai Ririshun

ElectronicsCo., Ltd.

Hainengwanjia(Shanghai)TechnologyDevelopmentCo., Ltd. (

)

Shanghai

YouyueInformationTechnology Co.,Ltd. (

)Equity disposal price26,139,242.23 1,045,500.00Proportion of equity disposal81.00%51%62.50%Method of equity disposalDisposalDisposalDisposalTime of loss-of-control2022.12022.92022.12Basis for determination the time ofloss-of- controlCancellationTransferTransferDifference between considerationand its share of net assets of thesubsidiary as respect to thedisposal in the consolidated level–4,432,192.088,171,950.75

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Section X Financial Report

(Continued)

Items

HangzhouGandaoIntelligentTechnology Co.,Ltd. (

)

Tianjin Internetof clothesEcologicalTechnology

Co., Ltd.(

)

Qingdao HaierStrauss Smart

ChipTechnology Co.,

Ltd. (

)Equity disposal price1,000,000.0033,000.00Proportion of equity disposal51.00%100%67.90%Method of equity disposalDisposalDisposalCancellationTime of loss-of-control2022.112022.112022.2Basis for determination the time of

loss-of- controlTransferTransferCancellationDifference between considerationand its share of net assets of thesubsidiary as respect to thedisposal in the consolidated level293,204.50135,796.592,226.81

4. Changes of consolidation scope due to other reasons

√ Applicable □ Not Applicable

(1) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established

a subsidiary, Chengdu Yunshang Meier Yilian Technology Co., Ltd. (成都云裳美尔衣聯科技有限公司) for the period.

(2) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established

a subsidiary, Beijing Yunshang Yilian Technology Co., Ltd. (北京云裳衣聯科技有限公司) forthe period.

(3) Chongqing Yunshang Yilian Technology Co., Ltd., a subsidiary of the Company, established

a wholly-owned subsidiary, Chengdu Yunshang Yilian Technology Co., Ltd. (成都云裳衣聯科技有限公司) 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. (青島海爾水生態科技有限公司) for the period.

(5) Qingdao Haier Air-Conditioner Electronics Co., Ltd., a subsidiary of the Company, established

a wholly-owned subsidiary Qingdao Haixiangzhi Technology Co., Ltd. (青島海享智科技有限公司) for the period.

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(6) Hefei Haier Refrigerator Co., Ltd., a subsidiary of the Company, established a wholly-owned

subsidiary, Qingdao Haier Refrigeration Appliance Co., Ltd. (青島海爾製冷電器有限公司)for the period.

(7) Qingdao Haier Dishwasher Co., Ltd., a subsidiary of the Company, established a

wholly-owned subsidiary, Chongqing Haier Washing Appliance Co., Ltd. (重庆海尔洗涤电器有限公司) for the period.

IX. INTERESTS IN OTHER ENTITIES

1. Interests in subsidiaries

(1) Composition of the Group

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvotingrightMethodDirectIndirectFlourishing Reach

Limited

Mainland of ChinaBermudaGroup company, which

mainly engage ininvestment holding, theproduction and sale ofwashing machines andwater heaters,distribution service

100.00%100.00%Establishment

Haier ElectronicsGroup Co., Ltd.

Mainland of China

and Hong Kong

BermudaGroup company, which

mainly engage ininvestment holding, theproduction and sale ofwater equipment,distribution service

100.00%100.00%Establishment

Haier U.S. Appliance

Solutions, Inc.

the United Statesthe United

States

Group company, which

mainly engage in homeappliances productionand distributionbusiness

100.00%100.00%Establishment

Haier Singapore

Investment HoldingCo., Ltd.

Singapore and

other overseasareas

SingaporeGroup company, which

mainly engage in homeappliances productionand distributionbusiness

100.00%100.00%Business

combinationunder commoncontrolHaier New Zealand

Investment HoldingCompany Limited

New ZealandNew ZealandGroup company, which

mainly engage in homeappliances productionand distributionbusiness

100.00%100.00%Business

combinationunder commoncontrolCandy S.p.AEuropeItalyGroup company, which

mainly engage in homeappliances productionand distributionbusiness

100.00%100.00%Business

combination notunder commoncontrolQingdao Haier Air

Conditioner GenCorp., Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Manufacture and sale of

household air-conditioners

100.00%100.00%Business

combinationunder commoncontrol

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.278?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectGuizhou Haier

Electronics Co., Ltd.

Huichuan District,Zunyi City,Guizhou Province

HuichuanDistrict, ZunyiCity, GuizhouProvince

Manufacture and sale ofrefrigerator

59.00%59.00%Business

combinationunder commoncontrolHefei Haier Air-conditioning Co.,Limited

Hefei Haier

Industrial Park

Hefei Haier

Industrial Park

Manufacture and sale ofair-conditioners

100.00%100.00%Business

combinationunder commoncontrolWuhan HaierElectronics HoldingCo., Ltd.

Wuhan HaierIndustrial Park

Wuhan HaierIndustrial Park

Manufacture and sale ofair-conditioners

60.00% 60.00%Business

combinationunder commoncontrolQingdao HaierAir- ConditionerElectronics Co., Ltd.

Qingdao

DevelopmentZone

Qingdao

DevelopmentZone

Manufacture and sale of

air-conditioners

100.00% 100.00%Business

combinationunder commoncontrolQingdao Haier

Information PlasticDevelopment Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Manufacturing of plastic

products

100.00% 100.00%Business

combinationunder commoncontrolDalian Haier Precision

Products Co., Ltd.

Dalian Export

Expressing Zone

Dalian Export

ExpressingZone

Manufacture and sale of

precise plastics

90.00% 90.00%Business

combinationunder commoncontrolHefei Haier Plastic

Co., Ltd.

Hefei Economic &

TechnologicalDevelopmentArea

Hefei Economic

&TechnologicalDevelopmentArea

Manufacture and sale of

plastic parts

95.17%4.83%100.00%Business

combinationunder commoncontrolQingdao Meier Plastic

Powder Co., Ltd.

Qingdao

DevelopmentZone

Qingdao

DevelopmentZone

Manufacture of plastic

powder, plastic sheetand high-performancecoatings

40.00%60.00%100.00%Business

combinationunder commoncontrolChongqing Haier

Precision PlasticCo., Ltd.

Jiangbei District,

Chongqing City

Jiangbei District,

ChongqingCity

Plastic products, sheet

metal work, electronicsand hardware

90.00%10.00%100.00%Business

combinationunder commoncontrolQingdao Haier

Refrigerator Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Manufacture and

production offluorine-freerefrigerators

100.00% 100.00%Establishment

Qingdao Haier

Refrigerator(International) Co.,Ltd.

Pingdu

DevelopmentZone, Qingdao

Pingdu

DevelopmentZone, Qingdao

Manufacture of

refrigerators

100.00% 100.00%Establishment

Qingdao Household

ApplianceTechnology andEquipment ResearchInstitute

Qingdao High-tech

Zone

Qingdao

High-techZone

Research and

development of homeappliances mold andtechnological equipment

100.00% 100.00%Establishment

Qingdao Haier Whole

Set Home ApplianceService Co., Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Research, development

and sales ofhealth- related smallhome appliance

98.33% 98.33%Establishment

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.279?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectQingdao Haier Special

Refrigerator Co.,Ltd.

Qingdao

DevelopmentZone

Qingdao

DevelopmentZone

Manufacture and sales of

fluorine-freerefrigerators

100.00% 100.00%Establishment

Qingdao Haier

Dishwasher Co.,Ltd.

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Manufacture of dishwashing machine andgas stove

100.00% 100.00%Establishment

Qingdao Haier SpecialFreezer Co., Ltd.

Qingdao

DevelopmentZone

QingdaoDevelopmentZone

Research, manufacture

and sales of freezer andother refrigerationproducts

100.00% 100.00%Establishment

Dalian Haier

Air- conditioningCo., Ltd.

Dalian ExportExpressing Zone

Dalian ExportExpressingZone

Air conditioner processingand manufacturing

90.00% 90.00%Establishment

Dalian Haier

Refrigerator Co.,Ltd.

Dalian Export

Expressing Zone

Dalian Export

ExpressingZone

Refrigerator processing

and manufacturing

100.00% 100.00%Establishment

Qingdao Haier

Electronic PlasticCo., Ltd.

Qingdao

DevelopmentZone

Qingdao

DevelopmentZone

Development, assembling

and sales of plastics,electronics andproducts

100.00% 100.00%Establishment

Wuhan Haier Freezer

Co., Ltd

Wuhan Economic &

TechnologicalDevelopmentZone High-techIndustrial Park

Wuhan Economic

&TechnologicalDevelopmentZone High-techIndustrial Park

Research, manufacture

and sales of freezer andother refrigerationproducts

95.00%5.00%100.00%Establishment

Qingdao HaidaruiProcurement ServiceCo., Ltd.

Qingdao High-techZone

Qingdao

High-techZone

Develop, purchase and

sell electrical productsand components

98.00%2.00%100.00%Establishment

Qingdao Haier

Intelligent HomeApplianceTechnology Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Development and

application of homeappliances,communication,electronics and networkengineering technology

91.46%1.01%92.47%Establishment

Chongqing Haier

Air-conditioning Co.,Ltd.

Jiangbei District,

Chongqing City

Jiangbei District,

ChongqingCity

Manufacture and sales of

air conditioners

76.92%23.08%100.00%Establishment

Qingdao Haier

Precision ProductsCo., Ltd.

Qianwang ang

Road, JiaonanCity

Qianwang ang

Road, JiaonanCity

Development and

manufacture of preciseplastic, metal plate,mold and electronicproducts for homeappliances

70.00%70.00%Establishment

Qingdao Haier AirConditioningEquipment Co., Ltd.

Jiaonan City,Qingdao

Jiaonan City,

Qingdao

Manufacture of home

appliances andelectronics

100.00%100.00%EstablishmentDalian Free Trade

Zone HaierAir-conditioningTrading Co., Ltd.

Dalian Export

Expressing Zone

Dalian Export

ExpressingZone

Domestic trade 100.00%100.00%EstablishmentDalian Free Trade

Zone HaierRefrigerator TradingCo., Ltd.

Dalian Export

Expressing Zone

Dalian Export

ExpressingZone

Domestic trade 100.00%100.00%Establishment

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.indd

Haier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.280?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectChongqing Haier

Electronics SalesCo., Ltd.

Jiangbei District,Chongqing City

Jiangbei District,ChongqingCity

Sales of home appliances95.00% 5.00% 100.00%EstablishmentChongqing HaierRefrigerationAppliance Co., Ltd.

Jiangbei District,Chongqing City

Jiangbei District,ChongqingCity

Processing andmanufacturing ofrefrigerator

84.95%15.05%100.00%Establishment

Haier Refrigerator Co.,Ltd.

Hefei HaierIndustrial Park

Hefei HaierIndustrial Park

Processing andmanufacturing ofrefrigerator

100.00% 100.00%Establishment

Qingdao Haier

Intelligent BuildingTechnology Co.,Ltd. (青島海爾智慧樓宇科技有限公司)

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Air-conditioning engineer 100.00%100.00%EstablishmentChongqing

Goodaymart ElectricAppliance Sale Co.,Ltd.

Jiangbei District,

Chongqing City

Jiangbei District,

ChongqingCity

Sales of home appliances

and electronics

51.00%51.00%EstablishmentQingdao Haier

(Jiaozhou)Air-conditioning Co.,Limited

Jiaozhou City,

Qingdao

Jiaozhou City,

Qingdao

Manufacture and sale of

air-conditioners

100.00%100.00%EstablishmentQingdao Haier

Component Co.,Ltd.

Jiaozhou City,

Qingdao

Jiaozhou City,

Qingdao

Manufacture and sales of

plastic and precisesheet metal products

100.00%100.00%EstablishmentHaier Shareholdings

(Hong Kong) Limited

Hong KongHong KongInvestment100.00% 100.00%EstablishmentHarvest International

Company

Cayman IslandsCayman IslandsInvestment100.00%100.00%EstablishmentShenyang Haier

Refrigerator Co.,Ltd.

Shenbei New Area,

Shenyang City

Shenbei New

Area,Shenyang CityS

Manufacture and sales of

refrigerator

100.00% 100.00%Establishment

Foshan Haier Freezer

Co., Ltd.

Sanshui District,

Foshan City

Sanshui District,

Foshan City

Manufacture and sales of

refrigerator

100.00% 100.00%Establishment

Zhengzhou Haier

Air-conditioning Co.,Ltd.

Zhengzhou

Economic andTechnologicalDevelopmentZone

Zhengzhou

Economic andTechnologicalDevelopmentZone

Manufacture and sales of

freezer

100.00% 100.00%Establishment

Qingdao Haidayuan

Procurement ServiceCo., Ltd.

QingdaoDevelopmentZone

Qingdao

DevelopmentZone

Develop, purchase and

sell electrical productsand components

100.00% 100.00%Establishment

Qingdao Haier

IntelligentTechnologyDevelopment Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Development and

research of homeappliance products

100.00% 100.00%Establishment

Qingdao Hairi High

Technology Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Design, manufacture and

sales of product modeland mould

100.00%100.00%Business

combinationunder commoncontrolQingdao Hai Gao

Design andManufacture Co.,Ltd.

Qingdao High-tech

Zone

Qingdao

High-techZone

Industrial design and

prototype production

75.00%75.00%Business

combinationunder commoncontrol

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.indd

Haier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.281?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectBeijing Haier Guangke

Digital TechnologyCo., Ltd.

BeijingBeijingDevelopment, promotion

and transfer oftechnology

55.00%55.00%Business

combinationunder commoncontrolShanghai HaierMedical TechnologyCo., Ltd.

ShanghaiShanghaiWholesale and retail of

medical facility

66.87%66.87%EstablishmentQingdao Haier

Technology Co.,Ltd.

QingdaoQingdaoDevelopment and sales of

software and informationproduct

100.00%100.00%Business

combinationunder commoncontrolQingdao HaierTechnologyInvestment Co., Ltd.

QingdaoQingdaoEntrepreneurship

investment andconsulting

100.00%100.00%Establishment

Qingdao CasarteSmart LivingAppliances Co., Ltd.

QingdaoQingdaoDevelopment, production

and sales of appliances

100.00%100.00%EstablishmentQingdao

HaichuangyuanAppliances SalesCo., Ltd.

QingdaoQingdaoSales of home appliances

and digital products

100.00%100.00%EstablishmentHaier Overseas

Electric ApplianceCo., Ltd.

QingdaoQingdaoSales of home appliances,

international freightforwarding

100.00%100.00%Establishment

Haier Group (Dalian)

Electrical AppliancesIndustry Co., Ltd.

DalianDalianSales of home appliances,

international freightforwarding

100.00%100.00%Business

combinationunder commoncontrolQingdao Haier Central

Air Conditioning Co.,Ltd.

QingdaoQingdaoProduction and sales of

air and refrigerationequipment

100.00%100.00%EstablishmentChongqing Haier

Home ApplianceSale Hefei Co., Ltd.

HefeiHefeiSales of home appliances100.00%100.00%EstablishmentQingdao Weixi SmartTechnology Co.,Ltd.

QingdaoQingdaoIntelligent sanitary ware71.43%71.43%EstablishmentHaier U+smartIntelligentTechnology (Beijing)Co., Ltd.

BeijingBeijingSoftware development100.00%100.00%EstablishmentHaier (Shanghai)Electronics Co., Ltd.

ShanghaiShanghaiSales, research and

development of homeappliances

100.00%100.00%Establishment

Shanghai Haier

Zhongzhi FangChuang KeManagement Co.,Ltd.

ShanghaiShanghaiBusiness management

consulting, chuangkemanagement

100.00% 100.00%Establishment

Qingdao Haier Smart

Kitchen ApplianceCo., Ltd.

QingdaoQingdaoProduction and sales of

kitchen smart homeappliances

100.00%100.00%EstablishmentGE Appliance

(Shanghai) Co., Ltd.

ShanghaiShanghaiSales of home appliances 100.00%100.00%Establishment

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.282?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvotingrightMethodDirectIndirectQingdao Haier SpecialRefrigeratingAppliance Co., Ltd.

QingdaoQingdaoProduction and sales of

home appliances

100.00%100.00%EstablishmentBeijing Zero Micro

Technology Co.,Ltd.

BeijingBeijingPromotion of

technologicaldevelopment

55.00%55.00%EstablishmentLaiyang Haier SmartKitchen ApplianceCo., Ltd.

LaiyangLaiyangProduction and sales of

home appliances

100.00%100.00%EstablishmentHefei Haier AirConditioningElectronics Co., Ltd.

HefeiHefeiProduction and sales of

home appliances

100.00%100.00%EstablishmentHaier (Shanghai)

Home ApplianceResearch andDevelopment CenterCo., Ltd.

ShanghaiShanghaiResearch and

development of homeappliances

100.00%100.00%Establishment

Haier (Shenzhen) R&D

Co., Ltd.

ShenzhenShenzhenDevelopment, research

and technical services ofhousehold andcommercial electrical

100.00%100.00%Establishment

Guangzhou Haier Air

Conditioner Co.,Ltd.

GuangdongGuangdongManufacturing of

refrigeration and airconditioning equipment

100.00%100.00%Establishment

Qingdao Yunshang

Yuyi IOT TechnologyCo., Ltd.

QingdaoQingdaoIoT technology research

and development

60.00%60.00%Establishment

Qingdao Haizhi

Robotics Co., Ltd.(青島海知機器人

科技有限公司)

QingdaoQingdaoAsset management,

equity investment

100.00%100.00%Establishment

Qingdao Jijia Cloud

IntelligentTechnology Co.,Ltd.

QingdaoQingdaoR&D and sales of lighting

appliances

80.00%80.00%Establishment

Qingdao Haimeihui

ManagementConsulting Co., Ltd.(青島海美匯管理諮詢有限公司)

QingdaoQingdaoLeasing and business

services

100.00%100.00%EstablishmentWuxi Yunshang

Internet of ClothingTechnology Co.,Ltd.(無錫雲裳衣聯網科技有限公司)

WuxiWuxiInternet of Things

technology R & D

100.00%100.00%Establishment

Qingdao Haidacheng

Procurement ServiceCo., Ltd.

QingdaoQingdaoDevelop, purchase and

sell electrical productsand components

100.00%100.00%Establishment

Guangdong Heilong

IntelligentTechnology Co. Ltd(廣東黑龍智能科技有限公司)

GuangzhouGuangzhouScientific research and

technology servicesector

76.72%76.72%Business

combination notunder commoncontrol

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.283?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectBeijing Haixianghui

Technology Co.,Ltd. (北京海享匯科技有限公司)

BeijingBeijingScientific research and

technology servicesector

100.00%100.00%Establishment

Qingdao HairuijiejingElectronics Co., Ltd.(青島海瑞潔凈電子有限公司)

QingdaoQingdaoElectronic equipment

technology research,development, transfer,consulting and services

51.00%51.00%Business

combination notunder commoncontrolHaier Smart HomeExperience CloudEcologicalTechnology Co.,Ltd. (海爾智家體驗雲生態科技有限公司)

QingdaoQingdaoTechnology development

of smart homeproducts, wholefurniture customization,etc.

100.00%100.00%Establishment

Haier Smart Home(Qingdao) NetworkCo., Ltd. (海爾智家（青島）網絡有限公司)

QingdaoQingdaoTechnical services,

development,consulting, transfer, etc.

100.00%100.00%Establishment

Haier Smart Home

(Qingdao) NetworkOperation Co., Ltd.(海爾智家（青島）網絡運營有限公司)

QingdaoQingdaoResidential interior

decoration, professionalconstruction operation,special equipmentinstallation, upgradingand repair, etc.

100.00%100.00%Establishment

Qingdao Internet of

Wine TechnologyCo., Ltd. (青島酒聯網物聯科技有限公司)

QingdaoQingdaoUrban distribution and

transportation services,import and export ofgoods, technologyimport and export andfood business, etc.

100.00%100.00%Establishment

Qingdao Linghai Air

ConditioningEquipment Co., Ltd.(青島菱海空調設備有限公司)

QingdaoQingdaoManufacture and

production of airconditioner andrefrigeration equipment

100.00%100.00%Establishment

Shenzhen Yunshang

Internet of ClothesTechnology Co.,Ltd. (深圳雲裳衣

聯網科技有限公司)

ShenzhenShenzhenImport and export

business, Internet,Internet of things, bigdata, AI, AR andtechnical servicesoperation

100.00%100.00%Establishment

Qingdao Haixiangxue

Human ResourcesCo., Ltd. (青島海享學人力資源有限公司)

QingdaoQingdaoProfessional intermediary

activities

100.00%100.00%Establishment

Jiangxi Haier Medical

Technology Co.,Ltd.

JiangxiJiangxiWholesale and retail of

medical equipment

100.00%100.00%EstablishmentQingdao Haizhi

Yunlan TechnologyCo., Ltd. (青島海智雲嵐科技有限公司)

QingdaoQingdaoTechnical service

development

100.00%100.00%Establishment

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.284?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvotingrightMethodDirectIndirectQingdao Haishengze

Technology Co.,Ltd.

QingdaoQingdaoAir conditioning

equipment technicalservices

100.00%100.00%Establishment

Qingdao Hailvyuan

RecyclingTechnology Co.,Ltd.

QingdaoQingdaoElectrical and electronic

products wastetreatment

100.00%100.00%EstablishmentQingdao Haier HVAC

Equipment Co., Ltd.(青島海爾暖通空調設備有限公司)

QingdaoQingdaoManufacture and sale of

air-conditioners

75.00% 25.00%100.00%Establishment

Qingdao Haier Home

AI IndustryInnovation CenterCo., Ltd. (青島海爾家庭人工智能產業創新中心有限公司)

QingdaoQingdaoIntegrated service of AI

industry applicationsystem

100.00%100.00%Establishment

Zhejiang Weixi IoT

Technology Co.,Ltd. (浙江衛璽物聯科技有限公司)

ZhejiangZhejiangIoT application service 100.00%100.00%EstablishmentQingdao Haier QualityInspection Co., Ltd.(青島海爾質量檢測有限公司)

QingdaoQingdaoInspection and testing of

home appliance

100.00% 100.00%Business

combinationunder commoncontrolQingdao

HaiyongchengCertification ServiceCo., Ltd. (青島海永成認證服務有限公司)

QingdaoQingdaoProduct certification

service

100.00%100.00%Business

combinationunder commoncontrolQingdao Zhonghai

Borui TestingTechnology ServiceCo., Ltd. (青島中海博睿檢測技術服務有限公司)

QingdaoQingdaoHome appliance testing

and technologyconsulting

100.00%100.00%Business

combinationunder commoncontrolsQingdao Haier SpecialPlastic DevelopmentCo., Ltd.

QingdaoQingdaoManufacture and sale of

refrigerator doors

100.00%100.00%Business

combinationunder commoncontrolsHaier Robot

Technology(Qingdao) Co., Ltd.(海爾機器人科技（青島）有限公司)

QingdaoQingdaoManufacture and sale of

service robots

100.00%100.00%Business

combinationunder commoncontrolsQingdao Ririshun

Service Co., Ltd.

QingdaoQingdaoAfter-sale service of home

appliances

100.00%100.00%Business

combinationunder commoncontrolsQingdao Haizhiling

Air ConditioningEngineering Co.,Ltd. (青島海智菱

空調工程有限公司)

QingdaoQingdaoSoftware development

and sale of dailynecessities

100.00%100.00%Establishment

810????S:\COMPOSITION\Job?Folder\Annual\18703_AR(3)?(Haier?Smart?Home)\18703[3]?E12b?Section?10.inddHaier?18703[3]?E12b?Section?10?1st?Proof?Time:?04-04-2023_17:39:35?P.285?(P1)?(C>E)?810

Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvoting

rightMethodDirectIndirectHaier Smart Home

(Xiongan, Hebei)Technology Co.,Ltd. (海爾智家科技（河北雄安）有限公司)

QingdaoQingdaoPromotion of energy-

saving technology

100.00%100.00%Establishment

Qingdao Ruibo

EcologicalEnvironmentalTechnology Co.,Ltd. (青島瑞博生態環保科技有限公司)

QingdaoQingdaoEnvironmental and AI

technology consulting

100.00% 100.00%Establishment

Qingdao SanyiniaoTechnology Co.,Ltd. (青島三翼鳥科技有限公司)

QingdaoQingdaoTechnology service and

advertisement design

100.00%100.00%EstablishmentQingdao Jingzhi

RecycleEnvironmentalTechnology Co.,Ltd. (青島鯨智再生環保科技有限公司)

QingdaoQingdaoOperation of dangerous

waste

100.00%100.00%Establishment

Qingdao YunshangJieshen YilianTechnology Co.,Ltd. (青島雲裳潔神衣聯科技有限公司)

QingdaoQingdaoProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentShanghai Yunshang

Yuyi IoT TechnologyCo., Ltd. (上海雲裳羽衣物聯科技有限公司)

ShanghaiShanghaiProfessional cleaning and

sale of daily necessities

100.00%100.00%EstablishmentShijiazhuang

Yunshang YilianTechnology Co.,Ltd. (石家莊雲裳衣聯科技有限公司)

ShijiazhuangShijiazhuangProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentNanjing Yunshang

Yilian TechnologyCo., Ltd. (南京雲裳衣聯科技有限公司)

NanjingNanjingProfessional cleaning and

sale of daily necessities

80.00%80.00%EstablishmentShanxi Yunshang

Yilian TechnologyCo., Ltd. (山西雲裳衣聯科技有限公司)

ShanxiShanxiProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentTianjin YunshangYilian TechnologyCo., Ltd. (天津雲裳衣聯網科技有限公司)

TianjinTianjinProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentChongqing Yunshang

Haihong YilianTechnology Co.,Ltd. (重慶雲裳海宏衣聯科技有限公司)

ChongqingChongqingProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

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Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% ofvotingrightMethodDirectIndirectChengdu Yunshang

Meier YilianTechnology Co.,Ltd. (成都雲裳美爾衣聯科技有限公司)

ChengduChengduProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentBeijing Yunshang

Yilian TechnologyCo., Ltd. (北京雲裳衣聯科技有限公司)

BeijingBeijingProfessional cleaning and

sale of daily necessities

51.00%51.00%EstablishmentChengdu Yunshang

Yilian TechnologyCo., Ltd. (成都雲裳衣聯科技有限公司)

ChengduChengduProfessional cleaning and

sale of daily necessities

100.00%100.00%EstablishmentQingdao Haier WaterEcology TechnologyCo., Ltd. (青島海爾水生態科技有限公司)

QingdaoQingdaoTechnology service,

development andconsultation

100.00%100.00%EstablishmentQingdao HaixiangmianTechnology Co.,Ltd. (青島海享眠科技有限公司)

QingdaoQingdaoSale of food and daily

necessities

100.00%100.00%EstablishmentQingdao Haier Kitchen

IoT Technology Co.,Ltd. (青島海爾廚聯網物聯科技有限公司)

QingdaoQingdaoTechnology service and

sale of daily necessities

100.00%100.00%EstablishmentTibet Haifeng

Intelligent InnovationTechnology Co.,Ltd. (西藏海峰智能創新科技有限公司)

TibetTibetDevelopment of software

and medical equipment

100.00%100.00%EstablishmentQingdao Haixiangzhi

Technology Co.,Ltd. (青島海享智科技有限公司)

QingdaoQingdaoManufacturing of home

appliances

100.00%100.00%Establishment

Qingdao Haier

RefrigerationAppliance Co., Ltd.(青島海爾製冷電器有限公司)

QingdaoQingdaoManufacturing of home

appliances

100.00%100.00%Establishment

Chongqing Haier

Washing ApplianceCo., Ltd. (重慶海爾洗滌電器有限公司)

ChongqingChongqingManufacturing of home

appliances

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 appliancesEstablishment

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Reasons for including subsidiaries which the Company has 50% or less of the equity intothe scope of consolidated financial statements:

At the end of the reporting period, the Company had substantial control over the financeand operation of companies like Qingdao Hai Heng Feng Electrical Appliances Sale &Service Co., Ltd, which were included into the scope of consolidated financial statements.

(2) Material non-wholly owned subsidiaries

Name ofsubsidiaries

Shareholdingof minorityshareholders

Profit or loss

attributableto minorityshareholdersfor thecurrentperiod

Distributedividends tominorityshareholdersin the current

period

Balance ofminorityshareholders’equity at theend of theperiodGuizhou Haier

Electronics Co.,Ltd.41.00%18,163,882.93–13,120,000.00113,721,893.53Wuhan HaierElectronicsHolding Co., Ltd.40.00%9,406,875.12 258,330,069.24

(3) Summarized financial information in respect of material non-wholly owned

subsidiariesName ofsubsidiaryClosing balance

Current assets

Non-current

assetsTotal assets

Currentliabilities

Non-current

liabilitiesTotal liabilitiesGuizhou Haier

ElectronicsCo., Ltd.470,967,911.5174,062,299.71545,030,211.22261,666,739.205,993,000.00267,659,739.20Wuhan Haier

ElectronicsHolding Co.,Ltd.924,844,806.17133,143,608.301,057,988,414.47412,163,241.37 412,163,241.37

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(continued)

Name ofsubsidiaryOpening balance

Current assets

Non-currentassetsTotal assets

Currentliabilities

Non-current

liabilitiesTotal liabilitiesGuizhou HaierElectronicsCo., Ltd.548,369,499.7590,003,558.19638,373,057.94368,134,127.345,170,612.06373,304,739.40Wuhan HaierElectronicsHolding Co.,Ltd.795,204,982.68144,368,337.05939,573,319.73317,265,334.43 317,265,334.43Name of subsidiaryAmount for the current period

Operating incomeNet profit

Totalcomprehensiveincome

Cash flow ofoperatingactivitiesGuizhou Haier Electronics Co., Ltd.1,600,827,796.6344,302,153.4844,302,153.48–15,368,670.01Wuhan Haier Electronics Holding

Co., Ltd.1,742,719,032.5323,517,187.8023,517,187.80–71,319,433.90

(continued)

Name of subsidiaryAmount for the previous period

Operating incomeNet profit

Totalcomprehensive

income

Cash flow of

operatingactivitiesGuizhou Haier Electronics Co., Ltd.1,434,916,082.2234,970,709.0434,970,709.04428,271,861.58Wuhan Haier Electronics Holding

Co., Ltd.1,658,928,537.9115,000,470.7115,000,470.71124,310,705.76

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2. Transactions leading to the change of shareholding in subsidiaries but not losing

the control

√ Applicable □ Not Applicable

(1) Description of changes in the share of owners’ equity in subsidiaries

√ Applicable □ Not Applicable

Capital contribution by minority shareholders of the subsidiary of the Company leads tochanges in the Company’s shareholding ratio.

(2) Impact of the transactions on minority interest and the equity attributable to shareholders of

the Company:

ItemsOthersTotal Consideration for acquisition/disposal54,639,935.57Less: share of net assets of subsidiaries in respect tothe shareholding proportion acquired/disposed5,258,549.54Difference–49,381,386.03Including: adjustment to increase capital reserve–49,381,386.03

3. Interests in joint ventures and associates

√ Applicable □ Not Applicable

(1) Joint ventures and associates

Name of joint venture and associates

Principal place ofbusiness

Place ofregistrationNature of business

Nature ofbusiness

Accounting treatmentof investmentHaier Group Finance Co.,LtdQingdaoQingdaoFinancial services42.00%Equity methodBank of Qingdao Co.,LtdQingdaoQingdaoCommercial Bank8.19%Equity methodWolong Electric (Jinan) Motor Co., Ltd.JinanJinanMotor Manufacturing30.00%Equity methodQingdao Hegang New Material TechnologyCo., Ltd. (青島河鋼新材料科技股份有限公司)

QingdaoQingdaoSteel plate manufacturing23.94%Equity methodQingdao Haier SAIF Smart Home Industry

Investment Center (Limited Partnership)

QingdaoQingdaoVenture Capital63.13%Equity methodMitsubishi Heavy Industries Haier (Qingdao)

Air-conditioners Co., Ltd.

QingdaoQingdaoManufacturing of home

appliances

45.00%Equity method

Qingdao Haier Carrier Refrigeration

Equipment Co., Ltd.

QingdaoQingdaoManufacturing of home

appliances

49.00%Equity method

Qingdao Haier Multimedia Co., LtdQingdaoQingdaoR&D and sales of

television

20.20%Equity method

Hefei Feier Smart Technology Co., Ltd.HefeiHefeiTechnology development40.00%Equity methodAnhui Kunhe Intelligent Technology Co., Ltd.HefeiHefeiElectrical equipment R&D30.00%Equity method

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Section X Financial Report

Name of joint venture and associates

Principal place ofbusiness

Place ofregistrationNature of business

Nature ofbusiness

Accounting treatmentof investmentZhejiang Futeng Fluid Technology Co., Ltd.HuzhouHuzhouGas compression

machinerydevelopment andmanufacturing

48.00%Equity method

Beijing Mr. Hi Network TechnologyCompany Limited

BeijingBeijingTechnology development36.29%Equity methodBeijing ASU Tech Co., Ltd.BeijingBeijingTechnical service import

and export business

36.45%Equity method

Shenzhen Genyuan Environmental Protection

Technology Co., Ltd.

ShenzhenShenzhenTechnical advisory

services

14.70%Equity method

Qingdao Haimu Investment Management

Co., Ltd.

QingdaoQingdaoInvestment management49.00%Equity methodQingdao Haimu Smart Home Investment

Partnership (Limited Partnership)

QingdaoQingdaoInvestment management24.00%Equity methodQingdao Guochuang Intelligent Household

Appliance Research Institute Co., Ltd.(青島國創智能家電研究院有限公司)

QingdaoQingdaoDevelopment of home

appliances

35.51%Equity method

Hainengwanjia (Shanghai) Technology

Development Co., Ltd. (海能萬嘉（上海）科技發展有限公司)

ShanghaiShanghaiConstruction work20.00%Equity methodGuangzhou Heying Investment Partnership

(Limited Partnership)

GuangzhouGuangzhouInvestment49.00%Equity methodQingdao Home Wow Cloud Network

Technology Co., Ltd

QingdaoQingdaoHome online service24.93%Equity methodBingji (Shanghai) Corporate Management

Co., Ltd.

ShanghaiShanghaiInvestment management45.00%Equity methodYoujin (Shanghai) Corporate Management

Co., Ltd

ShanghaiShanghaiInvestment management45.00%Equity methodRRS (Shanghai) Investment Co., Ltd.

(日日順（上海）投資有限公司)

ShanghaiShanghaiInvestment management45.00%Equity methodHaier Best Water Technology Co., Ltd.

(倍世海爾飲水科技有限公司)

QingdaoQingdaoWater equipment

technologydevelopment service

49.00%Equity method

HuizhiXiangshun Equity Investment Fund(Qingdao) Partnership (LimitedPartnership)

QingdaoQingdaoInvestment management30.00%Equity methodQingdao RRS Huizhi Investment Co., Ltd.QingdaoQingdaoInvestment management50.00%Equity methodQingdao Xinshenghui Technology Co., Ltd.(青島鑫晟匯科技有限公司)

QingdaoQingdaoTechnology service

development

20.00%Equity method

Europalters Italia S.r.l.EuropeEuropeSales of home appliances40.00%Equity methodKonan Electronic Co., LtdJapanJapanMotor Manufacturing50.00%Equity methodHPZ LIMITEDNigeriaNigeriaManufacturing of home

appliance

25.01%Equity method

HNR Company (Private) LimitedPakistanPakistanManufacturing of home

appliance

31.72%Equity method

ControladoraMabeS.A.deC.V.MexicoMexicoManufacturing of home

appliance

48.41%Equity method

Middle East Air conditioning

Company,Limited

Saudi ArabiaSaudi ArabiaSales of home appliances49.00%Equity method

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(2) Major financial information of important associates

√ Applicable □ Not Applicable

The basic profile of important associates:

Haier Group Finance Co., Ltd. (hereinafter referred to as ‘Finance company’) wasestablished by Haier Group Corporation and its three affiliates. Registration place andprincipal place of business: No.178–2 Haier Road, Laoshan District, Qingdao City. TheCompany’s subsidiaries hold an aggregate of 42.00% equity interest in FinanceCompany.

Financial information of important associates:

Unit and Currency: RMBItemsFinance company

Closing balance/

Amount for thecurrent period

Opening balance/Amount for theprevious periodCurrent assets62,367,859,305.4461,294,606,916.47Non-current assets12,622,422,390.739,404,030,263.35Total assets74,990,281,696.1770,698,637,179.82Current liabilities56,509,751,262.7453,403,515,414.15Non-current liabilities480,084,424.03369,623,253.07Total liabilities56,989,835,686.7753,773,138,667.22Minority equity interestsEquity attributable to shareholders of

the parent company18,000,446,009.4016,925,498,512.60Including: share of net assets calculated

per shareholding percentage7,560,187,323.957,108,709,375.29Operating income2,037,253,129.202,039,657,544.66Net profit1,585,017,777.561,503,077,521.32Other comprehensive income9,929,719.24–38,457,038.17Total comprehensive income1,594,947,496.801,464,620,483.15Dividend received from associates for the year218,400,000.00218,400,000.00

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(3) Summarized financial information of insignificant joint ventures and associates

Investment in associates

Closing balance/

Amount for thecurrent period

Opening balance/Amount for theprevious periodBank of Qingdao Co., Ltd.2,934,085,854.002,654,248,436.12Wolong Electric (Jinan) Motor Co., Ltd.174,697,807.74151,837,378.99Qingdao Hegang New Material Technology Co., Ltd.(青島河鋼新材料科技股份有限公司)314,802,331.45312,493,256.21Qingdao Haier SAIF Smart Home Industry Investment

Center (Limited Partnership)319,245,649.36393,598,372.59Mitsubishi Heavy Industries Haier (Qingdao)Airconditioners Co., Ltd.715,461,260.26682,901,976.73Qingdao Haier Carrier Refrigeration Equipment Co.,

Ltd.413,367,540.80409,053,808.05Qingdao Haier Multimedia Co., Ltd153,550,234.50277,102,563.88Qingdao Haier Moulds Co., Ltd. 269,158,534.54Hefei Feier Smart Technology Co., Ltd. 265,106.27Anhui Kunhe Intelligent Technology Co., Ltd.1,997,782.611,877,574.14Zhejiang Futeng Fluid Technology Co., Ltd.77,807,408.8482,098,847.75Beijing Mr. Hi Network Technology Company Limited7,507,759.757,507,759.75Beijing Xiaobei Technology Co., Ltd. 2,687,341.82Beijing ASU Tech Co., Ltd.12,829,433.7815,529,700.01Shenzhen Genyuan Environmental Protection

Technology Co., Ltd.6,914,487.736,914,487.73Qingdao Haimu Investment Management Co., Ltd.2,521,766.422,465,299.70Qingdao Haimu Smart Home Investment Partnership

(Limited Partnership)58,905,912.8859,424,662.44Hainengwanjia (Shanghai) Technology Development

Co., Ltd. (海能萬嘉（上海）科技發展有限公司)772,938.88Qingdao Guochuang Intelligent Household Appliance

Research Institute Co., Ltd.

(青島國創智能家電研究院有限公司)45,016,334.20Guangzhou Heying Investment Partnership (Limited

Partnership)285,793,577.87285,793,577.87Qingdao Home Wow Cloud Network Technology Co.,

Ltd2,547,217.002,600,050.50Bingji (Shanghai) Corporate Management Co., Ltd.1,014,425,293.04972,200,487.88Youjin (Shanghai) Corporate Management Co., Ltd1,843,591,441.881,766,819,068.86RRS (Shanghai) Investment Co., Ltd.

(日日順（上海）Investment有限公司)3,351,166,257.983,211,580,125.21Haier Best Water Technology Co., Ltd.(倍世海爾飲水科技有限公司)148,369,638.4079,785,557.39

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Investment in associates

Closing balance/Amount for the

current period

Opening balance/Amount for theprevious periodHuizhiXiangshun Equity Investment Fund (Qingdao)Partnership (Limited Partnership)238,806,947.64119,008,967.03Qingdao RRS Huizhi Investment Co., Ltd.4,083,482.782,083,482.78Qingdao Xinshenghui Technology Co., Ltd.(青島鑫晟匯科技有限公司)8,598,002.899,964,773.52Meiling Candy Washing Machine Co., Ltd.

(美菱卡迪洗衣機有限公司) 22,752,232.07EuropaltersItaliaS.r.l.15,760,505.289,361,965.48Orygin LLC13,918,442.26Konan Electronic Co., Ltd67,770,092.9969,273,712.61HNR Company (Private) Limited74,366,909.55114,055,318.97HPZ LIMITED88,751,047.9871,269,048.97Haier Raya Electric S.A.E 10,568,507.40ControladoraMabeS.A.deC.V.4,685,927,386.534,131,983,673.10Middle East Air conditioning Company,Limited8,820,101.5510,318,898.13Total book value of investment17,092,180,848.8216,218,584,554.49Total amount of the following financial data of

associates calculated based on shareholdingpercentageNet profit917,792,070.741,276,185,381.16Other comprehensive income95,751,117.93–34,119,700.06Total comprehensive income1,013,543,188.671,242,065,681.10

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

X. SEGMENT REPORT

√ Applicable □ Not Applicable

The Company is principally engaged in manufacture and sales of home appliances and relevantservices business, manufacture of upstream home appliances parts, distribution of products of thirdparty, logistics and after-sale business. The Company has three business segments: (1) China smarthome business segment; (2) Overseas home appliance and smart home business segment; (3) Otherbusiness 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.

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 business

segments such as GEA, FPA, Candy and so on.

(3) Other business segments: mainly include channel, equipment components, small home appliance

business 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, debt investment, long-term accounts receivable, long-term equity investment, other equityinstruments investment, other non-current financial assets, goodwill and deferred income tax assets;the total liabilities of segments exclude long-term and short-term borrowings, financial liabilities held fortrading, derivative financial liabilities, taxes payable, interests payable, dividends payable, held-for-saleliabilities, bonds payable, deferred income tax liabilities and other non-current liabilities; profits ofsegments exclude financial expenses, profit or loss in fair value changes, income from investment, andincome on disposal of assets, Non-value-added tax refundable upon imposition component of otherincome, non-operating incomes and expenses and income tax.

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(1) Information of reportable segments

Segment information for the periodSegment informationChina smart home business

Internet of Food solutions

Air energy

solutions

Internet of

clothingsolutions W

Whole housewater solutionsRefrigerator/freezers

KitchenappliancesAir conditionersWashing machine

Water home

appliancesSegment revenue43,199,470,772.093,763,429,363.3733,946,969,623.7131,613,988,663.1713,854,726,199.27Including: external revenue39,027,034,631.313,113,540,694.7628,386,620,301.4627,076,387,016.9513,542,203,958.47Inter-segment revenue4,172,436,140.78649,888,668.615,560,349,322.254,537,601,646.22312,522,240.80Total segment operating cost39,396,647,949.903,695,684,203.2633,076,503,084.4928,544,566,501.1712,141,922,308.40Segment operating profit3,802,822,822.1967,745,160.11870,466,539.223,069,422,162.001,712,803,890.87Total segment assets14,577,249,272.862,326,675,305.9615,101,978,985.7314,156,800,879.356,504,143,011.57Total segment liabilities34,825,770,806.251,674,425,538.4911,709,730,530.338,711,401,637.345,287,383,764.72(continued)

Segment information

Overseas homeappliance and smarthome businessOther business

Inter-segmenteliminationsTotalSegment revenue125,423,825,543.8584,251,398,520.89–92,540,245,015.62243,513,563,670.73Including: external revenue124,703,758,491.877,664,018,575.91 243,513,563,670.73Inter-segment revenue720,067,051.9876,587,379,944.98–92,540,245,015.62Total segment operating cost119,174,719,653.5985,153,874,973.61–92,585,243,582.25228,598,675,092.17Segment operating profit6,249,105,890.26–902,476,452.7244,998,566.6314,914,888,578.56Total segment assets64,106,295,908.6746,119,831,030.71–43,669,842,995.53119,223,131,399.32Total segment liabilities34,773,662,612.5056,005,860,058.46–43,436,908,965.22109,551,325,982.87

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

Segment information for the corresponding period of last year

Segment informationChina smart home business

Internet of Food solutions

Air energysolutions

Internet ofclothing solutions

Internet ofclothing solutionsRefrigerator/freezers

KitchenappliancesAir conditionersAir conditioners

Water homeappliancesSegment revenue41,743,157,017.743,495,589,873.4332,192,834,146.7330,658,121,874.8712,701,189,534.01Including: external revenue36,854,876,837.943,013,351,768.2527,412,948,533.3025,916,495,249.8312,478,797,708.26Inter-segment revenue4,888,280,179.80482,238,105.184,779,885,613.434,741,626,625.04222,391,825.75Total segment operating cost38,754,084,806.603,442,698,782.4231,944,204,039.4027,951,528,749.3111,242,746,656.47Segment operating profit2,989,072,211.1452,891,091.01248,630,107.332,706,593,125.561,458,442,877.54Total segment assets17,849,098,835.462,547,615,110.7917,958,004,697.7920,919,506,189.828,406,963,618.39Total segment liabilities42,593,142,081.382,371,416,306.2815,600,383,361.7611,249,225,999.717,865,505,122.98

(continued)

Segment information

Overseas homeappliance and smart

home businessOther business

Inter-segment

eliminationsTotalSegment revenue113,725,197,263.8891,716,273,350.33–99,126,545,419.30227,105,817,641.69Including: external revenue113,090,283,595.328,339,063,948.79 227,105,817,641.69Inter-segment revenue634,913,668.5683,377,209,401.54–99,126,545,419.30Total segment operating cost107,799,170,859.3491,912,861,706.02–99,170,658,940.10213,876,636,659.46Segment operating profit5,926,026,404.54–196,588,355.6944,113,520.8013,229,180,982.23Total segment assets57,368,272,498.7351,126,662,397.31–63,373,327,405.31112,802,795,942.98Total segment liabilities33,874,070,274.7859,750,131,702.98–63,106,428,270.31110,197,446,579.56

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Section X Financial Report

(2) Geographical information

‘Other countries/regions’ in this report refers to all other countries/regions (including Hong Kongand Macau Special Administration Region and Taiwan) other than the mainland China for thepurpose of information disclosureExternal transaction revenueItems

Amount for the

current period

Amount for theprevious periodMainland China116,754,660,544.84111,866,568,165.67Other countries/regions126,758,903,125.89115,239,249,476.02Among which:

America76,629,831,084.8270,277,292,639.70Australia6,962,360,306.707,011,702,914.33South Asia8,283,959,988.297,138,132,421.70Europe23,031,521,394.1219,736,797,708.72Southeast Asia5,179,557,555.834,740,118,325.43Middle East and Africa1,970,513,900.111,478,785,406.72Japan3,568,558,534.133,491,226,268.28Others1,132,600,361.891,365,193,791.14Total243,513,563,670.73227,105,817,641.69Total non-current assets

ItemsClosing balanceOpening balanceMainland China19,355,615,775.7016,573,428,753.11Other countries/regions29,019,302,954.2425,209,296,729.73Total48,374,918,729.9441,782,725,482.84Total non-current assets exclude: debt investments, long-term receivable, long-term equityinvestments, other equity instrument investments, other non-current financial assets, goodwill anddeferred income tax assets.

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Section X Financial Report

XI. DISCLOSURE OF FAIR VALUE

1. Fair value of assets and liabilities measured at fair value

The level to which the fair value measurement result belongs is determined by the lowest level towhich the input value is 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.At the end of the periodItemsInput used for fair value measurement

Quotes in anactive market(Level 1)

Importantobservableinput(Level 2)

Importantunobservable

input(Level 3)TotalContinuously measured

at fair valueFinancial assets held for trading395,687,084.8314,638,968.26109,486,827.82519,812,880.91Including: Bank wealth management

products14,638,968.2614,638,968.26Investment fund168,430,847.63168,430,847.63Investment in equity instruments227,256,237.20109,486,827.82336,743,065.02Derivative financial assets 183,185,160.51183,185,160.51Including: Forward foreign exchange

contract 178,992,877.32178,992,877.32Forward commodity contract 4,192,283.194,192,283.19Other equity instruments16,353,773.341,027,550,923.674,807,978,233.195,851,882,930.20Including: Equity instruments measured

at fair value and changes of which

included in other comprehensive

income16,353,773.341,027,550,923.674,807,978,233.195,851,882,930.20Derivative financial liabilities 104,594,040.66 104,594,040.66Including: Forward foreign exchange

contract 92,580,419.48 92,580,419.48Forward commodity contracts 12,013,621.18 12,013,621.18Other non-current liabilities 16,916,789.1016,916,789.10Including: put option liability 16,916,789.1016,916,789.10

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Section X Financial Report

At the beginning of the period

ItemsInput used for fair value measurement

Quotes in anactive market

(Level 1))

Importantobservable input

(Level 2)

Importantunobservable

input(Level 3)TotalContinuously measured at fair valueFinancial assets held for trading374,782,417.762,305,001,643.90106,291,467.432,786,075,529.09Including: Bank wealth managementproducts2,168,622,090.002,168,622,090.00Forward foreign exchange contract136,379,553.90136,379,553.90Investment fund150,516,274.37150,516,274.37Investment in equity instruments224,266,143.39106,291,467.43330,557,610.82Derivative financial assets79,819,974.0179,819,974.01Including: Forward foreign exchange

contract72,822,190.5972,822,190.59Interest rate swap agreement6,997,783.426,997,783.42Other equity instruments21,055,159.542,812,000,000.002,018,829,785.094,851,884,944.63Including: Equity instruments measured

at fair value and changes of which

included in other comprehensive

income21,055,159.542,812,000,000.002,018,829,785.094,851,884,944.63Other non-current assets46,832,494.6146,832,494.61Including: Other non-current financial

assets46,832,494.6146,832,494.61Financial liabilities held for trading6,294,014.406,294,014.40Including: Forward foreign exchange

contract6,294,014.406,294,014.40Derivative financial liabilities80,212,433.2480,212,433.24Including: Forward foreign exchange

contract60,527,532.7660,527,532.76Interest rate swap agreement19,684,900.4819,684,900.48

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.

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Section X Financial Report

2. The basis for determining the fair value of the continual Level 2 fair value

measurement itemsItems

Fair value at theend of the periodValuation techniquesFinancial assets held for tradingIncluding: Bank wealth management

products

14,638,968.26Discounted cash flowDerivative financial assetsIncluding: Forward foreign exchangecontract

178,992,877.32Discounted cash flowForward commodity contract4,192,283.19Discounted cash flowOther equity instruments investment—Including: equity instruments measured atfair value through other comprehensiveincome

1,027,550,923.67Recent transaction

methodsDerivative financial liabilitiesIncluding: Forward foreign exchangecontract

92,580,419.48Discounted cash flowForward commodity contracts12,013,621.18Discounted cash flow

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Section X Financial Report

3. Continual Level 3 fair value measurement major items, the valuation techniques

adopted and information of important parametersItems

Fair value at theend of the period

Valuationtechnique

Significantunobservable inputRange

Sensitivity of fair valueto the inputOther equity instrumentsIncluding:

1. COSMO IoT

TechnologyCo., LTD. (卡奥斯物聯科技股份有限公司)

2,817,408,000.00Market approach1. Average EV/

Sales multipleof peers

2. Discount for

lack ofmarketability

1. 1.46 to 1.48

2. 19% to 21%

1. 1% increase

(decrease) in averageEV/Sales multiple ofthe ComparableCompanies wouldresult in increase(decrease) in fairvalue by RMB116million.

2. 1% increase

(decrease) in thelack of marketabilitywould result indecrease (increase)in fair value byRMB146 million.

2. SINOPEC Fuel

Oil SalesCorporationLimited (中國石化銷售股份有限公司)

1,234,500,000.00Market approach1. Average P/E

multiple ofpeers

2. Discount for

lack ofmarketability

1. 32.38 to

33.04

2. 28.2% to

30.2%

1. 1% increase

(decrease) in averageP/E multiple of theComparableCompanies wouldresult in increase(decrease) in fairvalue by RMB12.3million.

2. 1% increase

(decrease) in thelack of marketabilitywould result indecrease (increase)in fair value byRMB17.4 million.

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Section X Financial Report

4. Financial instruments not measured at fair value

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. The difference between the book value and the fair value of financial assets and financialliabilities not measured at fair value at the end of the period is small.XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS(I) Explanation for basis of identifying related partyAccording to Accounting Standards for Business Enterprises No. 36—Related PartyDisclosures, parties are considered to be related if one party has the ability to control or jointlycontrol the other party or exercise significant influence over the other party. Parties (two or morethan two) are also considered to be related if they are subject to common control, joint controlor significant 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.

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Section X Financial Report

(II) Relationships between related parties

1. Information about the parent company and other companies holding shares of the

CompanyName

Type ofenterpriseRegistered place

Registered

capitalLegalrepresentative

Relationships withthe Company

Interest

in theCompany

Voting rights

to theCompanyHaier GroupCorporation

Collectiveownershipcompany

Qingdao High-techZone Haier Park

311,180,000Zhou YunjieParent Company11.35%11.35%Haier COSMO Co.,

Ltd. (海尔卡奥斯股份有限公司)

Joint-stockcompany

Qingdao High-tech

Zone Haier Park

631,930,000Zhou YunjieSubsidiary of

ParentCompany

13.32%13.32%

HCH (HK) Investment

Management Co.,Limited

Private

company

Hong KongHKD 10,000/Parties acting in

concert ofParentCompany

5.70%5.70%

Qingdao Haier Venture

& InvestmentInformation Co.,Ltd.

Company with

limitedliability

Qingdao Free Trade

Zone

923,000,000Zhou YunjieParties acting in

concert ofParentCompany

1.82%1.82%

Qingdao Haichuangzhi

ManagementConsultingEnterprise (LimitedPartnership)

Limited

partnershipcompany

Qingdao High-tech

Zone Haier Park

118,924,416/Parties acting in

concert ofParentCompany

1.28%1.28%

Haier International

Co., Limited

Private

company

Hong KongHKD 2/Parties acting in

concert ofParentCompany

0.62%0.62%

2. Subsidiaries

The details of the subsidiaries of the Company are detailed in Note IX.1.

3. Joint ventures and associates

The details of associates and joint ventures of the Company are detailed in Note VII.11 andIX.3.

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Section X Financial Report

4. Connected companies with no relationship of control

NameRelationship with the CompanyQingdao Haier Parts Procurement Co., Ltd.Subsidiary of Haier GroupGooday Supply Chain Technologies Co., Ltd.Subsidiary of Haier GroupChongqing Haier Electrical Appliances Sales

Co., Ltd.

Subsidiary of Haier GroupShanghai Cotai Supply Chain ManagementCo., Ltd.

Subsidiary of Haier GroupDalian Haier International Trade Co., Ltd.Subsidiary of Haier GroupQingdao Goodaymart Supply Chains Co.,Ltd.

Subsidiary of Haier GroupQingdao Haier Moulds Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Trading Co., Ltd.Subsidiary of Haier GroupCosmoplat Chuangzhi IOT Technology Co.,Ltd.

Subsidiary of Haier GroupQingdao Dingxin Electronic Technology Co.,Ltd.

Subsidiary of Haier GroupQingdao Haier International Travel AgencyCo., Ltd.

Subsidiary of Haier GroupShanghai Zhiyu Technology Co., Ltd.Subsidiary of Haier GroupCosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd.

Subsidiary of Haier GroupQingdao Haina Cloud Intelligent System Co.,Ltd.

Subsidiary of Haier GroupChongqing Zhonglian Energy TechnologyCo., Ltd.

Subsidiary of Haier GroupQingdao Blue Whale Technology Co., Ltd.Subsidiary of Haier GroupQingdao Xiaoshuai Intelligent Technology

Co., Ltd.

Subsidiary of Haier GroupHaier International Co., Ltd.Subsidiary of Haier GroupHongkong Gooday Supply ChainManagement Limited

Subsidiary of Haier GroupGooday (Qingdao) International Supply ChainService Co., Ltd.

Subsidiary of Haier GroupQingdao Manniq Intelligent Technology Co.,

Ltd.

Subsidiary of Haier GroupThunderobot International (HK) LimitedSubsidiary of Haier GroupChongqing Zhonglian Energy Technology

Co., Ltd

Subsidiary of Haier GroupQingdao Haier New Materials R & D Co.,

Ltd.

Subsidiary and associate of Haier

GroupHNR Company (Private) LimitedAssociateWolong Electric (Jinan) Motor Co., Ltd.AssociateHPZ LimitedAssociateMitsubishi Heavy Industry Haier (Qingdao) Air

Conditioner Co., Ltd.

AssociateControladora Mabe S.A.deC.V.AssociateQingdao Haier Multi-media Co., Ltd.Associate

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Section X Financial Report

NameRelationship with the CompanyQingdao HBIS Composite New Material Co.,

Ltd.

Subsidiary of associateHefei Hegang New Material Technology Co.,Ltd.

Subsidiary of associate

(III) Related transactions

1. Details of the Company’s procurement of goods and services from related parties are as

follows:

√ Applicable □ Not Applicable

Unit and Currency: RMBRelated parties

Amount for the

current period

Amount for theprevious periodControladora Mabe S.A.deC.V.13,123,708,450.3812,314,855,657.89Qingdao Haier Parts Procurement Co., Ltd.7,059,896,523.58538,564,747.23Gooday Supply Chain Technologies Co., Ltd.4,444,169,934.173,848,406,918.04HNR Company (Private) Limited3,073,674,460.322,733,833,669.59Chongqing Haier Electrical Appliances SalesCo., Ltd.3,054,825,152.175,274,865,476.66Shanghai Cotai Supply Chain Management

Co., Ltd.1,471,945,927.421,624,701,243.17Dalian Haier International Trade Co., Ltd.529,797,174.58507,660,692.05Qingdao Goodaymart Supply Chains Co.,

Ltd.421,203,765.86690,524,339.94Qingdao Haier Moulds Co., Ltd.413,503,657.29654,961,221.67Qingdao Haier International Trading Co., Ltd.397,359,401.03570,588,757.78Cosmoplat Chuangzhi IOT Technology Co.,

Ltd.322,583,108.752,121,388,092.90Wolong Electric (Jinan) Motor Co., Ltd.233,769,115.211,013,817,589.80Qingdao HBIS Composite New Material Co.,

Ltd.156,388,498.04923,986,491.86Qingdao Ding Xin Electronics Technology

Co., Ltd.101,558,830.18885,837,757.21Cosmoplat Chuangzhi IOT Technology

(Chongqing) Co., Ltd. (卡奧斯創智物聯

科技（重慶）有限公司)119,852,149.421,031,357,405.38Hefei Hegang New Material Technology Co.,

Ltd.117,415,909.491,190,287,247.15Other related parties2,848,081,174.134,051,040,692.74Total37,889,733,232.0239,976,678,001.06

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Section X Financial Report

2. Details of the Company’s sales of goods to related parties are as follows:

Related parties

Amount for thecurrent period

Amount for theprevious periodControladora Mabe S.A.deC.V.1,023,743,811.97730,275,993.98Qingdao Haier International Trading Co., Ltd.672,339,983.04613,142,450.61HNR Company (Private) Limited602,998,664.66681,960,950.97Qingdao Haier Multi-media Co., Ltd.136,786,578.4788,327,957.96Qingdao Haier International Travel AgencyCo., Ltd.119,166,052.08215,683,256.42HPZ Limited118,748,741.5090,831,902.38Other related parties829,514,949.57917,809,275.26Total3,503,298,781.293,338,031,787.58

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Section X Financial Report

3. Amount of unsettled items of related parties

Items and name of customers

ClosingBalance

OpeningBalanceBills receivable:

Qingdao Ding Xin Electronics Technology Co.,Ltd.45,947,984.43622,590.67Cosmoplat Chuangzhi IOT Technology(Chongqing) Co., Ltd.28,764,679.422,528,394.74Cosmoplat Chuangzhi IOT Technology Co., Ltd.23,908,824.4913,520,000.00Qingdao Haina Cloud Intelligent System Co., Ltd.9,196,905.3021,511,057.07Other related parties13,863,643.7320,304,074.20Accounts receivable:

HNR Company (Private) Limited887,316,060.44588,605,242.72Controladora Mabe S.A.deC.V.155,980,651.90123,524,843.42Qingdao Haier Parts Procurement Co., Ltd.155,500,553.65Qingdao Haier International Trading Co., Ltd.147,208,453.4134,284,071.61HPZ Limited117,899,486.73Shanghai Zhiyu Technology Co., Ltd.116,549,809.1443,349,588.61Chongqing Zhonglian Energy Technology Co.,

Ltd.48,870,443.2145,403,951.21Qingdao Haina Cloud Intelligent System Co., Ltd.24,917,701.1031,824,063.09Other related parties126,236,118.64352,919,464.97Prepayments:

HNR Company (Private) Limited110,370,091.9982,148,476.31Shanghai Zhiyu Technology Co., Ltd.40,934,511.12Qingdao Haier New Materials R & D Co., Ltd.8,445,024.12Qingdao Haier International Travel Agency Co.,

Ltd.6,253,573.5623,936,807.36Other related parties27,781,442.2095,176,038.89Other receivables:

Qingdao Blue Whale Technology Co., Ltd.12,392,334.2112,392,334.21Controladora Mabe S.A.deC.V.12,158,833.5016,260,655.41Dalian Haier International Trade Co., Ltd.9,440,616.074,372,124.84Qingdao Haier International Travel Agency Co.,

Ltd.5,553,777.665,908,061.04Haier International Co., Ltd.4,272,144.028,497,154.27Other related parties26,691,391.5199,783,350.46Bills payable:

Qingdao Haier New Materials R & D Co., Ltd.386,075,771.0490,348,253.59Qingdao Haier Parts Procurement Co., Ltd.180,719,158.83Wolong Electric (Jinan) Motor Co., Ltd.37,773,640.004,127,872.00Other related parties37,227,346.9750,019,985.82Accounts payable:

Qingdao Haier Parts Procurement Co., Ltd.1,860,747,884.391,986,376,315.99Controladora Mabe S.A.deC.V.1,299,452,149.83941,545,815.41Qingdao Haier International Trading Co., Ltd.257,531,848.99106,344,044.12Hongkong Gooday Supply Chain Management

Limited250,478,107.49

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Section X Financial Report

Items and name of customers

ClosingBalance

OpeningBalanceThunderobot International (HK) Limited155,527,162.34Dalian Haier International Trade Co., Ltd.150,178,673.56175,739,251.85Qingdao Haier New Materials R & D Co., Ltd.101,958,410.6021,654,400.63Gooday Supply Chain Technologies Co., Ltd.79,442,717.421,461,094.92Cosmoplat Chuangzhi IOT Technology Co., Ltd.53,275,591.30268,605,818.56Other related parties212,314,885.051,978,773,614.10Contract liabilities:

Wolong Electric (Jinan) Motor Co., Ltd.51,422,207.6921,373,101.27Chongqing Zhonglian Energy Technology Co.,Ltd.17,215,206.9217,210,554.92Mitsubishi Heavy Industry Haier (Qingdao) Air

Conditioner Co., Ltd.4,208,374.0049,594.69HPZ Limited3,353,144.424,696,178.43Other related parties6,008,371.78111,264,927.65Other payables:

Gooday Supply Chain Technologies Co., Ltd.485,473,357.04687,378,382.22Gooday (Qingdao) International Supply Chain

Service Co., Ltd.140,136,176.89Shanghai Cotai Supply Chain Management Co.,

Ltd.113,720,815.14154,351,301.35Qingdao Haier Moulds Co., Ltd.69,423,409.1621,298,170.87Qingdao Manniq Intelligent Technology Co., Ltd.67,521,909.3728,372,133.16Qingdao Goodaymart Supply Chains Co., Ltd.30,669,122.9672,545,343.35Dalian Haier International Trade Co., Ltd.21,899,297.2621,800,000.00Qingdao Haier International Travel Agency Co.,

Ltd.17,736,906.1016,372,400.80Qingdao Blue Whale Technology Co., Ltd.15,865,657.9427,367,393.54Other related parties123,426,526.98168,093,852.85

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Section X Financial Report

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:

ItemsClosing BalanceOpening BalanceMonetary funds deposited

at the Finance Company31,424,418,720.1328,870,880,571.84Interest receivable from the Finance Company468,636,097.70260,900,663.40Loans of the Finance Company60,000,000.00336,507,659.12Interest payable to the Finance Company46,158.001,813,534.66Acceptance note issued21,621,825,652.9621,697,666,574.19Foreign exchange derivatives

of the Finance Company–2,293,511.731,577,848.15Various balances of the Company and the Finance Company are as follows:

Items

Amount for the

current period

Amount for theprevious periodInterest income of the Finance Company570,162,386.04339,728,297.25Interest expense of the Finance Company4,933,548.818,137,583.63Service fee of the Finance Company29,446,933.0923,493,333.12Spot foreign exchange business (foreign

exchange settlement and sale)6,337,945,933.799,856,440,483.71

(2) The lease expense of the Company and its subsidiaries for production and operation

leased from related parties for the current period was RMB97 million (amount for thecorresponding period: RMB113 million).

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(3) Related information on the guarantor of the Company’s guaranteed borrowings as a

related party at the end of period:

LenderClosing BalanceOpening BalanceGuarantorHaier Russian Electric Co.,Ltd.

304,896,830.40Haier Group

CorporationHaier Russian IndustriesLtd.

60,000,000.00Haier Group

CorporationTotal60,000,000.00304,896,830.40

(4) Haier Group Corporation provided joint liability guarantee for certain bills payable of

the subsidiaries of the Company with the guaranteed amount of RMB2,311 million atthe end of the period (amount for the corresponding period: RMB1,805 million).(IV) Pricing Policy

1. Related-party Sales

Some 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.

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Section X Financial Report

2. Related-party Procurement

In 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.

3. Financial aspect

Some 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 renewedthe Financial Services Framework Agreement, which agreed on the financial connectedtransactions. The pricing principle included the deposit interest rate not lower than themaximum interest rate of major banks listed and the loan interest rate not less favourablethan the market price to ensure the fairness and reasonableness of connected transactions.The valid term of the agreement lasts until 31 December 2023, which can be renewed foranother three years upon expire.

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Section X Financial Report

4. Others

The 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 listing date. Whensuch specific intellectual property rights expire and are not renewed by Haier Group, ourright to use certain intellectual property rights under the Intellectual Property LicensingFramework Agreement will terminate.

XIII. SHARE-BASED PAYMENTS

√ Applicable □ Not Applicable

(1) Employee Stock Ownership Plan

The resolutions on the 2022 A Share Core Employee Stock Ownership Plan of Haier SmartHome Co., Ltd. (Draft) And Its Summary (the “2022 A Share ESOP”) and the 2022 H Share CoreEmployee Stock Ownership Plan of Haier Smart Home Co., Ltd. (Draft) And Its Summary (the“2022 H Share ESOP”) were considered and passed at the 28th meeting of the 10th session ofthe Board of Directors and the 25th meeting of the 10th session of the Board of Supervisorsheld by the Company on 28 April 2022, and it was agreed to implement the 2022 A ShareESOP and the 2022 H Share ESOP.(a) 2022 A Share ESOP

The shares of the 2022 A Share ESOP were sourced from the repurchased shares of26,814,055 Shares transferred from the “securities account for repurchase of Haier SmartHome Co., Ltd.” to the specific account of the 2022 A Share ESOP at a transfer price ofRMB25.33 per share.(b) 2022 H Share ESOPThe management of the 2022 H Share ESOP has been entrusted to Industrial SecuritiesAsset Management Co., Ltd. with the establishment of Industrial Securities AssetManagement Xinzhong Haier Smart Home No. 8 Employee Stock Ownership Single AssetManagement Plan (the “Asset Management Plan”). The Asset Management Plan purchased2,653,200 H Shares in aggregate in the secondary market through the Hong Kong StockConnect, with an average transaction price of HK$25.6630 per share and a transactionamount of approximately HK$68,089,020.00.

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Section X Financial Report

(2) 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 Grant of 2022 A Share Option to IncentiveRecipients 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 recipients at the exercise price of RMB23.86 per Share.Number of Share Options

Number for the

current period

Number for theprevious periodAt the beginning of the period50,525,214.00Granted during the period104,756,896.0050,525,214.00Vested during the periodLapsed during the periodAt the end of the period155,282,110.0050,525,214.00

(3) Restricted Shares

Number of restricted shares

Number for thecurrent period

Number for theprevious periodAt the beginning of the period4,438,027.00Granted during the period5,636,959.004,438,027.00Vested during the period309,451.00Lapsed during the period999,660.00At the end of the period8,765,875.004,438,027.00

(4) Method of determining the fair value of equity instrument on the date of grant:

(a) 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), exerciseprice of the option (K), risk-free rate (r), valid term of the option (t), expected volatility of theshare 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 asfollows:

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.

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Section X Financial Report

③ risk-free rate (r): according to the maturity yield rate of the China Government Bonds

from Bloomberg’s system, the risk-free rate for one year was 1.997%; 2.358% fortwo years; 2.452% for three years; 2.561% for four years; and 2.67% for five years,where the risk-free rate for the fourth year was calculated as the arithmetic average ofthe risk-free rate of the third and fifth year.

④ lifetime of the option (t): 1 year, 2 years, 3 years, 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

(4 years). The interval adopted for the calculation of historical volatility was thecontinuous closing price of the Company in the preceding four years. At the sametime, the historical volatility for the preceding 1, 2, 3, 4, and 5 years was calculated,respectively, based on the differences 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 onthe date of grant. According to the calculation under the above pricing model, thetheoretical aggregate value of the 104,756,896 share options granted under thisincentive plan of the Company amounted to RMB777,000,000.(b) The fair value on the date of grant was arrived at on the basis of the share price of the

Company on the date of grant, taking into account the current value of cash dividend.

(5) Based on the latest available subsequent information, such as change in number of vesting

employee, 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:

RMB567,000,000 for the stock ownership plan; RMB315,000,000 for the share options; andRMB47,000,000 for the restricted shares.As at the end of the period, balance associated with the above share-based payment incentiveplans provided in the capital reserve amounted to RMB955,000,000.XIV. CONTINGENCIES

√ Applicable □ Not Applicable

As of 30 March 2023, the Company has no significant contingencies that need to be disclosed.

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Section X Financial Report

XV. EVENTS AFTER THE BALANCE SHEET DATE

According to the resolution of the 4th meeting of the 11th session of the Board of Directors of theCompany held on 30 March 2023, the profit for the year is proposed to be distributed on the basis ofthe total number of shares on the record date after deducting the repurchased shares from therepurchased account when the plan is implemented in the future, the Company will declare cashdividend of RMB5.66 (including taxes) for every 10 shares to all shareholders.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 assetsItemsClosing Balance

Financial assetsmeasured at fairvalue andchanges of whichincluded incurrent profit and

loss

Measured atamortized cost

Financial assetsmeasured at fair

value andchanges of whichincluded in othercomprehensive

incomeTotalMonetary funds 54,138,815,682.51 54,138,815,682.51Financial assets held for trading519,812,880.91 519,812,880.91Derivative financial assets 183,185,160.51183,185,160.51Receivable 9,580,191,838.15 9,580,191,838.15Accounts receivable 15,913,691,537.11 15,913,691,537.11Other receivables 2,380,929,623.19 2,380,929,623.19Other current assets 1,642,421,944.45 1,642,421,944.45Debt investments 1,034,222,222.22 1,034,222,222.22Long-term receivables 305,070,001.45 305,070,001.45Other equity instruments 5,851,882,930.205,851,882,930.20

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Financial assets (continued)ItemsOpening Balance

Financial assetsmeasured at fair

value andchanges of which

included incurrent profit and

loss

Measured atamortized cost

Financial assetsmeasured at fairvalue andchanges of whichincluded in othercomprehensive

incomeTotalMonetary funds 46,097,333,903.45 46,097,333,903.45Financial assets held for trading2,786,075,529.09 2,786,075,529.09Derivative financial assets 79,819,974.0179,819,974.01Receivable 13,354,791,068.29 13,354,791,068.29Accounts receivable 14,625,260,856.04 14,625,260,856.04Other receivables 1,957,886,257.19 1,957,886,257.19Other current assets 316,590,333.42 316,590,333.42Long-term receivables 308,998,755.30 308,998,755.30Other equity instruments 4,851,884,944.634,851,884,944.63Other non-current assets46,832,494.61 46,832,494.61

Financial liabilitiesItemsClosing Balance

Financialliabilitiesmeasured at

fair value

Financialliabilitiesmeasured atamortised costTotalShort-term borrowings 9,643,374,732.469,643,374,732.46Derivative financial liabilities104,594,040.66 104,594,040.66Bills payable 25,090,945,421.2825,090,945,421.28Accounts payable 41,883,694,299.2441,883,694,299.24Other payables 17,511,771,662.7017,511,771,662.70Non-current liabilities due in one year 2,854,446,929.322,854,446,929.32Long-term borrowings 13,590,866,873.4313,590,866,873.43Long-term payables 44,240,087.9444,240,087.94Other non-current liabilities16,916,789.1016,916,789.10

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Financial liabilities (continued)ItemsOpening Balance

Financialliabilitiesmeasured at

fair value

Financialliabilitiesmeasured atamortised costTotalShort-term borrowings 11,226,212,134.3911,226,212,134.39Financial liabilities held for trading6,294,014.40 6,294,014.40Derivative financial liabilities80,212,433.24 80,212,433.24Bills payable 25,023,238,406.7225,023,238,406.72Accounts payable 42,363,218,840.3342,363,218,840.33Other payables 17,570,339,925.7617,570,339,925.76Non-current liabilities due in one year 6,745,950,334.206,745,950,334.20Long-term borrowings 3,038,573,824.533,038,573,824.53Bonds payable 334,730,048.82334,730,048.82Long-term payables 99,602,707.7699,602,707.76Please refer to related items in Note VII for details on each of the financial instruments of theCompany. Risks related to these financial instruments and the risk management policies taken by theCompany to mitigate these risks are summarized below. The management of the Company managesand monitors these risk exposures to ensure the above risks are well under control.

1. Credit risk

The credit risk of the Company mainly arises from bank deposits, bills receivable, accountsreceivable, interest receivable, other receivables and wealth management products.

(1) The Company’s bank deposits and wealth management products are mainly deposited in

Haier Finance Co., Ltd., state-owned banks and other large and medium-sized listed banks.The interest receivables are mainly the accrued interests from fixed deposits which aredeposited in the above banks. The Group does not believe there is any significant creditrisk due to defaults of its counterparties which would cause any significant loss. (2)Accounts receivable and bills receivable: The Company only trades with approved andreputable third parties. All customers who are traded by credit are subject to creditassessment according to the policies of the Company, and the payment terms shall bedetermined on a reasonable basis. The Company monitors the balances of accountsreceivable on an ongoing basis and purchases credit insurance for receivables oflarge-amount credit customers in order to ensure the Company is free from material baddebts 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 businessbased on historical data, so as to ensure that the Company’s significant risk of bad debtsis controllable and will be further reduced.

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2. Liquidity risk

Liquidity 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 risk

The Company’s businesses are based in mainland China, USA, Japan, Southeast Asia, SouthAsia, central and east Africa, Europe, and Australia, etc. and are settled in RMB, USD, and othercurrencies.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 risk

The Company’s interest rate risk arises primarily from its long- and short- term bank loans andbonds payables which are interest-bearing debts. Financial liabilities with floating interest ratesexpose the Company to cash flow interest rate risk, while financial liabilities with fixed interestrates expose the Company to fair value interest rate risk. The Group determines the relativeproportion of fixed-interest rate and floating interest rate contracts in light of the prevailing marketconditions.XVII. OTHER SIGNIFICANT EVENTSThe Company has no other significant events that need to be disclosed.

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XVIII.NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENTCOMPANY

1. Accounts receivable

Aging

ClosingBalance

OpeningBalanceWithin one year379,679,227.77546,532,442.90

–2 years533,963,843.29

–3 yearsOver 3 yearsAccounts receivable balance913,643,071.06546,532,442.90Allowance for bad debtsNet receivables913,643,071.06546,532,442.90Changes in bad debt provision for accounts receivable in the current period:

Items

OpeningBalance

Increase for the current

period

Decrease for the current

period

ClosingBalanceProvision for

the current

period

OtherincreaseReversal

Write-off and

othermovementAllowance forbad debts

2. Other receivables

√ Applicable □ Not Applicable

Unit and Currency: RMBItemsClosing BalanceOpening BalanceInterest receivable29,783,516.9551,632,471.99Dividend receivable1,015,840,000.003,615,840,000.00Other receivables13,341,408,140.6212,577,807,696.42Total14,387,031,657.5716,245,280,168.41

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Interest receivable

√ Applicable □ Not Applicable

Unit and Currency: RMBAgingClosing BalanceOpening BalanceWithin 1 year29,783,516.9551,632,471.99More than 1 yearTotal29,783,516.9551,632,471.99Dividend receivable

√ Applicable □ Not Applicable

Unit and Currency: RMBAgingClosing BalanceOpening BalanceWithin 1 year1,000,000,000.003,615,840,000.00More than 1 year15,840,000.00Total1,015,840,000.003,615,840,000.00Other receivable

① The disclosure of other receivables by aging is as follows:

AgingClosing BalanceOpening BalanceWithin one year6,278,019,144.6712,040,141,153.64More than one year7,066,828,954.97537,791,379.00Other receivables balance13,344,848,099.6412,577,932,532.64Allowance for bad debts3,439,959.02124,836.22Net other receivables13,341,408,140.6212,577,807,696.42

② Changes in bad debt provision for other receivables in the current period:

Increase forthe current period

Decrease forthe current periodItems

OpeningBalance

Provision for

the current

period

OtherincreaseReversal

Write-off and

othermovement

ClosingBalanceAllowance for baddebts124,836.223,315,122.8 3,439,959.02

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3. Long-term equity investment

√ Applicable □ Not Applicable

(1) Details of long-term equity investments:

Unit and Currency: RMBClosing BalanceOpening BalanceItemsBook balance

Provision forimpairmentBook balance

Provision forimpairmentLong-term equity investmentIncluding: Long-term equity investments in

subsidiaries49,632,299,728.317,100,000.0049,377,425,428.317,100,000.00Long-term equity investments in

associates3,228,239,799.56109,300,000.003,252,734,849.46109,300,000.00Total52,860,539,527.87116,400,000.0052,630,160,277.77116,400,000.00

(2) Long-term equity investments to subsidiaries

InvesteeOpening Balance

Increase/Decrease for

the periodClosing Balance

Impairmentprovisions atthe end of theperiodI. Subsidiaries:

Chongqing Haier Electronics Sales Co., Ltd.9,500,000.00 9,500,000.00Haier Group (Dalian) Electrical Appliances

Industry Co., Ltd34,735,489.79 34,735,489.79Qingdao Haier Refrigerator Co., Ltd.402,667,504.64 402,667,504.64Qingdao Haier Special Refrigerator Co., Ltd.329,832,047.2896,904,371.71426,736,418.99Qingdao Haier Information Plastic DevelopmentCo., Ltd.102,888,407.30 102,888,407.30Dalian Haier Precision Products Co., Ltd.41,836,159.33 41,836,159.33Hefei Haier Plastic Co., Ltd.42,660,583.2129,689,700.0072,350,283.21Qingdao Haier Technology Co., Ltd.16,817,162.03 16,817,162.03Qingdao Household Appliance Technology and

Equipment Research Institute66,778,810.80 66,778,810.80Qingdao Meier Plastic Powder Co., Ltd.24,327,257.77 24,327,257.77Chongqing Haier Precision Plastic Co., Ltd.47,811,283.24 47,811,283.24Qingdao Haier Electronic Plastic Co., Ltd.69,200,000.00 69,200,000.00Dalian Haier Refrigerator Co., Ltd.138,600,000.00 138,600,000.00Dalian Haier Air-conditioning Co., Ltd.99,000,000.00 99,000,000.00Guizhou Haier Electronics Co., Ltd.96,904,371.71–96,904,371.71—

Hefei Haier Air-conditioning Co., Limited67,110,323.8512,292,800.0079,403,123.85Qingdao Haier Refrigerator (International) Co.,

Ltd.238,758,240.85 238,758,240.85Qingdao Haier Air-Conditioner Electronics Co.,

Ltd.1,131,107,944.51 1,131,107,944.51Qingdao Haier Air Conditioner Gen Corp., Ltd.220,636,306.02 220,636,306.02Qingdao Haier Special Freezer Co., Ltd.471,530,562.76 471,530,562.76Qingdao Haier Dishwasher Co., Ltd.206,594,292.82 206,594,292.82

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InvesteeOpening Balance

Increase/Decrease forthe periodClosing Balance

Impairmentprovisions atthe end of the

periodWuhan Haier Freezer Co., Ltd.47,310,000.00 47,310,000.00Wuhan Haier Electronics Holding Co., Ltd.100,715,445.04 100,715,445.04Chongqing Haier Air-conditioning Co., Ltd100,000,000.00 100,000,000.00Hefei Haier Refrigerator Co., Ltd.49,000,000.00 49,000,000.00Qingdao Haier Whole Set Home Appliance

Service Co., Ltd.118,000,000.00 118,000,000.00Chongqing Haier Refrigeration Appliance Co.,

Ltd.91,750,000.00 91,750,000.00Haier Shanghai Zhongzhi Fang Chuang Ke

Management Co., Ltd.2,000,000.00 2,000,000.00Qingdao Haier Special Refrigerating Appliance

Co., Ltd.100,000,000.00 100,000,000.00Haier Shareholdings (Hong Kong) Limited26,022,782,526.24157,891,800.0026,180,674,326.24Shenyang Haier Refrigerator Co., Ltd.100,000,000.00 100,000,000.00Foshan Haier Freezer Co., Ltd.100,000,000.00 100,000,000.00Zhengzhou Haier Air-conditioning Co., Ltd.100,000,000.00 100,000,000.00Qingdao Haidayuan Procurement Service Co.,

Ltd.20,000,000.00 20,000,000.00Qingdao Haier Intelligent Technology

Development Co., Ltd.130,000,000.00 130,000,000.00Qingdao Haier Technology Investment Co., Ltd.367,505,635.00 367,505,635.00Qingdao Casarte Smart Living Appliances Co.,

Ltd.10,000,000.00 10,000,000.00Haier Overseas Electric Appliance Co., Ltd.500,000,000.00 500,000,000.00Haier (Shanghai) Electronics Co., Ltd.12,500,000.00 12,500,000.00Haier U+smart Intelligent Technology (Beijing)

Co., Ltd.143,000,000.00 143,000,000.00Haier Electronics Group Co., Ltd.3,979,407,602.61 3,979,407,602.617,100,000.00Flourishing Reach Limited (SPVX)12,751,300,336.02 12,751,300,336.02Qingdao Haidarui Procurement Service Co., Ltd.107,800,000.00 107,800,000.00Qingdao Haier Intelligent Household Appliances

Co., Ltd.326,400,000.00 326,400,000.00Qingdao Haidacheng Procurement Service Co.,

Ltd.100,000,000.00 100,000,000.00Qingdao Haier Quality Inspection Co., Ltd.18,657,135.49 18,657,135.49Qingdao Haier Home AI Industry Innovation

Center Co., Ltd.20,000,000.00 20,000,000.00Haier Zhijia Experience Cloud Ecological

Technology Co., Ltd.100,000,000.00 100,000,000.00Qingdao Ruibo Ecological Environmental

Technology Co., Ltd. 55,000,000.0055,000,000.00Total49,377,425,428.31254,874,300.0049,632,299,728.317,100,000.00

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

(3) Long-term equity investments to associates

Increase/Decrease for the current periodName of investeeOpening Balance

Increased/

decreasedamount for thecurrent period

Investmentincomerecognized underequity methodOthersClosing Balance

Impairmentprovisions at theend of the periodWolong Electric (Jinan)

Motor Co., Ltd.145,209,273.31 23,370,283.04 168,579,556.35Qingdao Haier SAIF Smart

Home Industry

Investment Center

(Limited Partnership)393,598,372.59–57,153,662.41–17,199,060.82319,245,649.36Bank of Qingdao Co., Ltd.1,051,480,863.27139,485,507.2083,487,972.18–112,115,851.231,162,338,491.42Mitsubishi Heavy Industries

Haier (Qingdao)

Air-conditioners Co.,

Ltd.682,901,976.73 113,559,283.53–81,000,000.00715,461,260.26Qingdao Haier Carrier

Refrigeration Equipment

Co., Ltd.409,053,808.05 22,213,959.56–17,900,226.81413,367,540.8021,000,000.00Qingdao Haier Multimedia

Co., Ltd277,102,563.87–123,552,329.38 153,550,234.4988,300,000.00Hefei Hegang New Material

Technology Co., Ltd.293,387,991.64 9,482,737.24–7,173,662.00295,697,066.88Total3,252,734,849.46139,485,507.2071,408,243.76–235,388,800.863,228,239,799.56109,300,000.00

4. Operating revenue and operating cost

√ Applicable □ Not Applicable

Unit and Currency: RMB

Amount forthe current period

Amount forthe previous periodItemsRevenueCostRevenueCostPrimary Business335,344,865.65292,889,261.14208,799,283.50197,653,713.44Other Business89,317,060.6777,735,951.48144,998,965.02117,703,392.70Total424,661,926.32370,625,212.62353,798,248.52315,357,106.14

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

5. Investment income

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodLong-term equity investments income calculated

by the equity method71,408,243.76275,575,730.42Investment income generated from disposal of long-term equity investmentInvestment income from long-term equity investmentaccounted for using cost method6,328,139,259.263,633,540,000.00Income from wealth management products31,888,263.129,015,443.80Investment income from investment in other equity

instrument during the holding period302,249.84269,896.34Total6,431,738,015.983,918,401,070.56

XIX. APPROVAL OF FINANCIAL REPORT

This financial report was approved for publication by the Directors of the Company on 30 March2023.XX. SUPPLEMENTARY INFORMATION

1. Basic earnings per share and diluted earnings per share

Amount for the current periodAmount for the previous period

Earnings per share(RMB)

Earnings per share(RMB)Items

Weightedaveragereturn onnet assets

Basicearningsper share

Dilutedearningsper share

Weighted

averagereturn onnet assets

Basicearningsper share

Dilutedearningsper shareNet profit attributable to ordinary

shareholders of the Company16.81%1.581.5717.26%1.411.40Net profit attributable to ordinaryshareholders of the Companyafter deduction of non-recurringprofit or loss15.95%1.501.4915.65%1.271.27

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Haier Smart Home Co., Ltd. Annual Report 2022

Section X Financial Report

2. Non-recurring profit or loss

Items

Amount for thecurrent period

Amount for theprevious periodNet profit attributable to ordinary shareholders of the ParentCompany14,710,923,491.9913,078,840,517.10Less: non-recurring profit or loss747,991,638.211,247,567,958.81Net profit attributable to ordinary shareholders of the ParentCompany after deduction of non-recurring profit or loss13,962,931,853.7811,831,272,558.29Breakdown of non-recurring profit and loss for the current periodNon-recurring profit and loss itemsAmounts for the current periodProfit and loss from disposal of non-current assets209,436,774.95Government subsidies included in current profit or loss,except for government subsidies that are closely relatedto the Company’s normal business operations, to beenjoyed in a fixed amount or fixed quantity based onthe national unified standards766,426,467.17Profit from the excess of the fair value of the identifiable

net assets of investee companies on acquisition of theinvestment over the cost of investment in theCompany’s subsidiaries, associates and joint venturesProfit and loss from fair value changes of financial assets

held for trading, financial liabilities held for trading, aswell as investment gains arising from disposal offinancial assets held for trading, financial liabilities heldfor trading and financial assets held for sale, except theeffective hedging related to the normal operations of theCompany–23,321,060.42Other non-operating income and expenses except theaforementioned items–29,750,173.25Effect of minority equity interest–20,321,980.53Effect of income tax–167,413,005.22Effect of profit from business combination under common

control12,934,615.51Total747,991,638.21

3. Differences in accounting data under domestic and overseas accounting

standards

□ Applicable √ Not Applicable

Chairman of the Board: LI HuagangDate of approval for publication by the Board: 30 March 2023Information of amendment

□ Applicable √ Not Applicable