海尔智家：2023年半年度报告(英文版)

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

Haier Smart Home Co., Ltd.

2023 Interim Report

Important Notice

I.The Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of Haier Smart Home Co., Ltd. (the “Company”) are individually and collectivelyresponsible for the content set out therein and hereby assure that the content set out in theinterim report is true, accurate and complete, and free from any false record, misleadingrepresentation or material omission.II.All directors attend the Board of Directors.III.The interim report is unaudited.IV.Li Huagang (legal representative of the Company), Gong Wei (chief financial officer of theCompany) and Ying Ke (the person in charge of accounting department) hereby certify thatthe financial report set out in the interim report is true, accurate and complete.V.Proposal of profit distribution or proposal of converting capital reserves into share capital forthis reporting period resolved and passed by the BoardNoVI.Disclaimer in respect of forward-looking statements

√Applicable Not

ApplicableForward-looking statements such as future plans, development strategies as set out in this report donot constitute our substantial commitment to investors. Investors are advised to pay attention toinvestment risks.VII.Is there any fund occupation by controlling shareholders and other related parties fornon-operational purposesNoVIII.Is there any provision of external guarantee in violation of prescribed decision-making

procedures?NoIX.Are there more than half of the Directors could not warrant the truthfulness, accuracy andcompleteness of the interim report disclosed by the CompanyNoX.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.

Important Notice

XI. Others

Applicable √ Not Applicable

Chairman of the Board: LI Huagang

Haier Smart Home Co., Ltd

30 August 2023

Contents

SECTION I— DEFINITIONSSECTION II— GENERALINFORMATION OF THE COMPANY AND KEY FINANCIAL INDICATORSSECTION III— MANAGEMENT DISCUSSION AND ANALYSISSECTION IV— CORPORATE GOVERNANCESECTION V— ENVIRONMENTAL AND SOCIAL RESPONSIBILITIESSECTION VI— SIGNIFICANT ISSUESSECTION VII— CHANGESIN SHARES AND INFORMATION ABOUT SHAREHOLDERSSECTION VIII— RELEVANT INFORMATION OF PREFERRED SHARESSECTION IX— RELEVANT INFORMATION OF CORPORATE BONDSSECTION X— FINANCIAL REPORT

Documents Availablefor Inspection

I.2023 Interim Report of Haier Smart Home Co., Ltd. with signature of thelegal representative.II.Financial statements with signatures or seals of the person in charge of theentity, chief accountant and person in charge of accounting department.III.All documents publicly disclosed on China Securities Journal, ShanghaiSecurities News, Securities Daily, Securities Times and the website ofShanghai Stock Exchange (www.sse.com.cn) during the reporting period.

Section I Definitions

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

DEFINITION OF FREQUENTLY USED TERMSCSRCChina Securities Regulatory CommissionSSEShanghai Stock ExchangeThe Company, Haier SmartHome

Haier Smart Home Co., Ltd, its original name is “Qingdao Haier Co., Ltd.”,and the original short name is “Qingdao Haier”Four Major SecuritiesNewspapers

China Securities Journal, Shanghai Securities News, Securities Times,Securities DailyHaier Electronics, 1169Haier Electronics Group Co., Ltd. (a company originally listed in Hong Kong,

stock code: 01169.HK), a subsidiary as accounted for in the consolidatedstatement of the Company. Haier Electronics has been privatized by way of Hshares issuance on 23 December 2020 and became a wholly ownedsubsidiary 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: ) was

established in 1934 and is known as the national appliance brand of New

Zealand, the global top-level kitchen appliance brand and the famous luxury

brand of the world. It has products including ventilator, gas stove, oven,

dishwasher, microwave oven, built-in freezer, washing machine, clothes dryer

and etc. Its business covers over 50 countries/regions across the world. FPA

is wholly-owned subsidiary of the Company.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 home appliances area, was established in 1994 and has been

focusing on research of retail sales in China consumption market ever since.

Section I Definitions

EuromonitorEuromonitor, established in 1972, is the leading strategic market information

supplier and has over 40-years of experience in respect of publishing marketreport, commercial reference data and on-line database. They create data andanalysis on thousands of products and services 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 information services, regulardata information services and special data services.IECThe International Electrotechnical Commission. Founded in 1906, it is the

world’s first organization for the preparation and publication of internationalelectrotechnical standardization and is responsible for internationalstandardization for electrical engineering and electronic engineering. The goalsof the commission include: to effectively meet the needs of the global market;to ensure that the standards and conformity assessment programs areapplied globally in a prioritized manner and to the greatest extent; to assessand improve the quality of products and services involved in its standards; tocreate conditions for the common use of complicated systems; to improve theeffectiveness of the industrialization process; to improve human health andsafety, and to protect the environment.IEEEThe Institute of Electrical and Electronics Engineers, an international

association of electronic technology and information science engineers, iscurrently the largest non-profit professional technology society in the world. Itis committed to the development and research of electrical, electronic,computer engineering and science-related fields, and has developed into aninternational academic organization with great influence in terms of the fieldsof space, computer, telecommunications, biomedicine, power and consumerelectronics.Model ofRendanheyi

(人單合一)

The concept of “Achieving win-win via Rendanheyi (人單合一) “is theguarantee of Haier’s sustainable operation and the driving force of theCompany featuring a self-motivated and empowering corporate culture. “Ren”is an employee who has the spirit of entrepreneurship and innovation; “Dan”is to create value for users. The “Rendanheyi (人單合一) “management modelencourages employees to create value for users with an entrepreneurialmindset, and to achieve self-value in line with the those of the Company andits shareholders.COPThe ratio of cooling capacity (heating capacity) to input power that the HVAC

system can achieve. The larger the ratio, the more efficient and energy-savingthe system is.

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

Secretary tothe Board

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, 35/F,The Center, 99Queen’s RoadCentral, Central,Hong Kong

/

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

Section II General Information of the Company and Key Financial Indicators

III. SUMMARY OF THE CHANGES IN GENERAL INFORMATION

Registered addressHaier Park, Laoshan District, Qingdao CityHistorical change of the

registered address

Prior to the Company’s listing in 1993, the registered address of theCompany 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] index for anychanges during thereporting period

Not applicableIV. MOVEMENT OF PLACE FOR INFORMATION DISCLOSURE ANDDEPOSITDesignated newspaper forinformation disclosure

Shanghai Securities News, Securities Times, China Securities Journal,Securities DailyWebsite for publishinginterim report

www.sse.com.cnOther websites for interim

report disclosure

https://smart-home.haier.com/cn/, www.xetra.com, www.dgap.de,https://www.hkexnews.hkDeposit place of interim

report

Department of Securities of Haier Smart Home Co., Ltd.

Haier Science and Technology Innovation Ecological Park,No. 1 Haier Road, Qingdao CityQuery index for anychanges during thereporting period

Not applicableV. SUMMARIZED INFORMATION OF SHARES OF THE COMPANY

Type of Shares

Stock Exchange ofShares Listed

Stock ShortNameStock Code

Stock ShortName BeforeVariationA shareShanghai Stock

Exchange

Haier SmartHome

600690Qingdao HaierD shareFrankfurt Stock

Exchange

Haier SmartHome

690DQingdao HaierH ShareHong Kong Stock

Exchange

Haier SmartHome

6690/

Section II General Information of the Company and Key Financial Indicators

VI. OTHER RELATED INFORMATION

Applicable √ Not ApplicableVII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THECOMPANY (I) Key accounting data

Unit and Currency: RMB

Key accounting data

For the reporting

period(January-June)

The corresponding period of last year

Increase/decreasefor the reportingperiod compared

with thecorrespondingperiod of last year

(%)Afteradjustment

BeforeadjustmentOperating revenue131,626,581,506.56121,640,067,379.35121,857,522,462.228.21Net profit attributable to shareholdersof the listed Company8,963,875,999.847,959,684,042.657,949,084,472.7012.62Net profit after deduction ofnon-recurring profit or lossattributable to shareholders of thelisted Company8,603,977,764.587,490,693,705.387,490,693,705.3814.86Net cash flows from operatingactivities6,790,530,462.545,965,070,983.865,964,247,657.2213.84

As at the end ofthe reportingperiod

As at the end ofreporting period of last year

Increase/decrease asat the end ofthe reportingperiodcomparedwith that oflast year (%)Afteradjustment

BeforeadjustmentNet assets attributable to

shareholders of the listedCompany96,681,175,780.7193,454,454,213.6793,422,647,664.433.45Total assets246,302,105,777.51235,938,042,474.57235,842,254,826.774.39

Section II General Information of the Company and Key Financial Indicators

(II) Key financial indicators

Key financial indicators

For the reporting

period(January-June)The corresponding period of last year

Increase/decreasefor the reportingperiod compared

with thecorrespondingperiod of last year

(%)Afteradjustment

BeforeadjustmentBasic earnings per share (RMB/share)0.970.850.8514.12Diluted earnings per share (RMB/share)0.960.850.8512.94Basic earnings per share afterdeducting non-recurring profit orloss (RMB/share)0.930.800.8016.25Weighted average return on net

assets (%)9.169.239.24–

0.07

Weighted average return on netassets after deducting non-recurring profit or loss (%)8.808.718.710.09Explanation of the key accounting data and financial indicators of the Company

Applicable √ Not ApplicableVIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND

OVERSEAS ACCOUNTING STANDARDS

√ Applicable Not Applicable

(I) Difference in net profit and net assets attributable to shareholders of the listed

company in financial statements as disclosed in accordance with InternationalAccounting Standards and Chinese Accounting Standards

Applicable √ Not ApplicableThere is no difference between the net profit and net assets attributable to shareholders of thelisted company presented in the consolidated financial statements as disclosed in accordancewith International Accounting Standards and Chinese Accounting Standards by the Company.

Section II General Information of the Company and Key Financial Indicators

(II) Difference in net profit and net assets attributable to shareholders of the listed

company in financial statements as disclosed in accordance with overseasaccounting standards and Chinese Accounting Standards Applicable √ Not ApplicableApart from the financial statements prepared in accordance with International AccountingStandards, the Company has not prepared financial statements in accordance with otheroverseas accounting standards. (III) Explanation on difference in domestic and overseas accounting standards

Applicable √ Not ApplicableIX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNT

√ Applicable Not Applicable

Unit and Currency: RMBNon-recurring profit and loss itemsAmountProfit and loss on disposal of non-current assets–21,886,978.96Government subsidies through the profit and loss, except for governmentsubsidies that are closely related to the Company’s normal businessoperations, comply with national policies and regulations, and continue to beenjoyed in a fixed amount or fixed quantity according to certain standards409,863,390.47Profit and loss from fair value changes of financial assets held for trading,

derivative financial assets, financial liabilities held for trading and derivativefinancial liabilities, as well as investment gains arising from disposal offinancial assets held for trading, derivative financial assets, financial liabilitiesheld for trading and derivative financial liabilities and other debt investments,except the effective hedging related to the normal operations of the Company31,271,562.35Other non-operating income and expenses except the aforementioned items30,661,194.26Reduction: Effect of income tax–77,663,165.02Effect of minority equity interest (After Tax)–12,347,767.84Total359,898,235.26

Section II General Information of the Company and Key Financial Indicators

For 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 in the“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 ApplicableX. OTHERS

Applicable √ Not Applicable

Section III Management Discussion andAnalysis

I. INTRODUCTION OF THE INDUSTRY WHERE THE COMPANY OPERATES

AND ITS MAJOR 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 14 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.? 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. SAN YI NIAO focuses on customising smart home experience, by building up fivecore competencies in Smart Home Brain, scenario-based solutions, experiential stores, the SANYI NIAO interior design tool and the digital platform, we provide end-to-end and full life cycleservices 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 Business.

Smart 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 SAN YI NIAO 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.

Section III Management Discussion and Analysis

? Household Laundry Solutions (Internet of Clothing): Haier’s washing machine focuses on applyingoriginal 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 () 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 provides productssuch as home air-conditioners and fresh air systems, as well as a comprehensive range of full-cyclesolutions including coordination of multiple air-conditioners and purifiers, adaptive air flow, air qualitymonitoring and air disinfection, thereby delivering a healthy and comfortable experience at home andduring commute that caters to the user needs in terms of air temperature, humidity and quality.Smart building: The Company is committed to becoming a leader in efficient, sustainable and smartbuilding solutions based on the state’s “carbon peaking and carbon neutrality” strategy. Focusing onthe business areas of smart control, environment, energy and system integration of buildings, theCompany provides green and smart building solutions integrating “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 Business

In addition to China market, the Company also manufactures and sells a comprehensive portfolio ofhome appliance products and provides value-added services in more than 200 countries and regions,including North America, Europe, South Asia and Southeast Asia, Australia and New Zealand, Japan,Middle East and Africa.

Section III Management Discussion and Analysis

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%.Other BusinessesBuilding 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.In August 2023, the Company was once again listed among the Top 500 World’s Companies. InFebruary 2023, the Company was named again as the 2023 World’s Most Admired Companies by theFortune Magazine. We are the only company being selected in Europe and Asia in the homeappliances industry, and are the only selected company incorporated outside the US. Meanwhile, theCompany is also the world’s only Internet-of-Things (IoT) ecosystem brand being named again asBrandZtm Top 100 Most Valuable Global Brands in 2022.During the period, the Company was named again among Fortune’s first China ESG Impact list andranked top in the industry; and was named Forbes’ The World’s Best Employers 2022 list. TheCompany’s ESG effort has also been recognized by external rating agencies, receiving an MSCI ESGrating of BBB and a Wind ESG rating of AAA, both of which are at leading levels in China. Thanks tothe above performance, Haier Smart Home was selected into the three major ESG indices of the HangSeng Index, including the HSI ESG Enhanced Index, the HSI ESG Enhanced Select Index and theHSCEI ESG Enhanced Index.

Section III Management Discussion and Analysis

I. Industry overview for the first half of 2023

(1) The domestic market:

In the first half of 2023, the Chinese home appliance industry recorded a marginal growth.AVC data showed that the retail sales of home appliances in China reached RMB398.2billion in the first half of 2023, an increase of 4.4% year-on-year. Growth of various sectorsare as follows:

Home air conditioning industry: Benefiting from continuous hot weather and low industryinventory levels, growth of the air conditioning category spearheaded the market, with retailvolume amounting to 37.265 million units, up 18.8% year-on-year, and retail sales reachingRMB130.16 billion, a year-on-year increase of 19.5%.Refrigerator industry: Product mix upgrades have resulted in an increase in average pricesacross the industry. Retail volume of the refrigerator industry reached 14.686 million units,down 2.6% year-on-year, while retail sales amounted to RMB47.95 billion, up 5.2% year-on-year.Washing machine industry: Due to a lag in replacement demand and dependence oninstallation, the industry experienced a slow recovery as retail volume dropped 6% to

14.362 million units, and retail sales amounted to RMB29.91 billion, down 3.2% year-on-

year. The tumble dryer industry maintained rapid growth with retail sales reaching RMB4.97billion, a year-on-year increase of 14.7%.Kitchen appliance industry: Due to the fulfilment of pent-up demand and product mixupgrades, the retail sales of range hoods, stoves, and disinfection cabinets reachedRMB24.24 billion, a year-on-year increase of 1.90%. Retail sales of integrated stovesamounted to RMB12.45 billion, a slight decrease of 0.40% year-on-year. Categories suchas integrated cooking centres and integrated dishwashers continued to experience rapidgrowth. Specifically, integrated cooking centres, which combined stove, steaming, andbaking units, recorded a significant 286.4% year-on-year increase in revenue online, and asurge of 87.8% in revenue offline.Water heater industry: Due to the rapid growth of demand of gas water heater products,retail sales of the water heater segment reached RMB22.36 billion, up 6.0% year-on-year.Water purifier industry: Benefiting from traffic recovery offline and product mix upgrades,retail sales of the industry continued to grow, with retail revenue reaching RMB9.0 billion,an increase of 8.0% year-on-year.Commodity prices in the domestic market have substantially declined compared to thesame period last year; at the same time, market competition has become more rationalwith stable prices, all of which have collectively contributed to the industry’s profitabilityimprovement.

Section III Management Discussion and Analysis

The home appliance market was divided based on purchasing power and consumerattitudes. The high-end market was largely driven by quality consumption and indulgentspending. Taking air conditioners for example, in the first half of 2023, high-end wall-mounted units (priced above RMB3,500) accounted for 12.4% of retail sales, an increase of

3.2 percentage points year-on-year. At the same time, the size of the low-end market was

also growing, with online sales of wall-mounted units priced below RMB2,000 up by 1.6percentage points to 15.2%.In terms of distribution network, e-commerce channels continued to gain shares in volumeas consumers have become accustomed to shopping online where services have becomemore integrated. According to AVC, the online shares of air conditioner, refrigerator andwashing machine in terms of retail volume reached 57.1%, 71.8% and 71.9% respectively.Meanwhile, online and offline channels were becoming more integrated, facilitated by livestreaming in stores. This approach represents the future direction of retailing by combiningthe convenience of shopping online with immersive offline experience. Short video platformslike TikTok also accelerated channel fragmentation because of their increasing significancein user acquisition.With improvement in living standards and technologies, home appliances are increasinglyintegrated with the living space. For example, built-in and integrated appliances are gainingpopularity for better utilisation of the space in the kitchen. The use of tumble dryerseffectively frees up the balcony for other functions. In addition to hosting guests,entertainment, and family activities, living room appliances are designed with a greaterfocus on user interaction and experience.

Export markets:

The global economy experienced a slowdown in 2023, putting pressure on China’s homeappliance exports due to sluggish overseas demand and low orders volumes. Exports toEurope and the U.S. suffered from reduced demand and inventory destocking; but exportsto Southeast Asia, Middle East and Africa continued to grow. According to data from theGeneral Administration of Customs, the cumulative export of the home appliance industryfrom January to June 2023 amounted to USD 43.1 billion, representing a 2.0% decreaseyear-on-year. Exports in RMB term however totalled RMB296.7 billion, up 5.2% year-on-year, with 3.3% decrease in refrigerators, 29% growth in washing machines and 0.4%increase in air conditioners.

Section III Management Discussion and Analysis

(II) Overseas marketIn the first half of 2023, competition intensified and volume declined in major overseasmarkets due to global economic slowdown, persistent high inflation, and over-draft inappliances demand.

(1) North America: In the first half of 2023, lingering inflation and demand exceeding

capacity contributed to 3.3% drop in core appliances shipment according to AHAM(Association of Home Appliance Manufacturers). Profitability remains under pressure asimprovement in gross profit margins resulting from more favourable raw material andshipping costs was offset by intensifying competitions and promotions.

(2) Europe: Inflationary pressures and Russia-Ukraine conflict caused industry demand to

decline. According to GFK, retail volume of the home appliance industry decreased

8.1% year-on-year in the first half of the year. However, there are still growth

opportunities as consumers have become increasingly attracted to products with classA energy-efficiency during times of shortages.

(3) South Asia: Driven by gradual economic recovery, home appliances retail volume

experienced a slight year-on-year increase in India. High-end, large-capacity productswith health benefits were popular with expansions of national and regional chainstores as well as e-commerce platforms. In Pakistan, high inflation severelyweakened purchasing power, resulting in over 30% volume decline in the industry.

(4) Southeast Asia: Thailand experienced a 15% increase in sales volume, benefitting from

strong air conditioner performance during hot weather and demand recoveryfacilitated by return of tourists. Markets including Vietnam faced varying degrees ofdecline due to economic slowdown and high inflation.

(5) Australia & New Zealand: During the first half of the year, the home appliance industry

was challenged by sluggish demand, intensified competition, and a significantdecrease in new properties sales. According to GFK, the industry’s sales volumedropped by 7.1%, with retail volume down by over 10%.

(6) Japan: The industry was impacted by currency depreciation and reduced disposable

income caused by higher prices. In the first half of the year, sales volume ofrefrigerators, freezers and washing machines dropped 9.5% year-on-year. Driven byincrease in average unit price, sales revenue decreased slightly by 1.3% year-on-year.Consumer demand for large-capacity, health-boosting, and energy-saving productscontinued to rise.

Section III Management Discussion and Analysis

II. Industry Outlook for the second half of 2023

(1) The domestic market:

Economic recovery and policies supporting consumption and real estate will unleashdemand for home appliances and drive industry growth. AVC expects a definitive recoveryfor most of home appliance categories in 2023, with industry retail revenue growth of

6.4%.

Export markets:

Export business is expected to remain stable amid ending destocking, favourable shippingcosts and concluding of interest rate hike.

(2) Overseas markets

In the short term, more developed markets will still be challenged by weak demand andintensified competition, the industry is more likely to turnaround in 2024. Demand in theSouth Asian and Southeast Asian markets will gradually recover alongside economicresurgence.Home appliance industry remains resilient in the medium to long term. Future MarketInsights believes, global sales revenue will maintain a CAGR of 4.3% from 2022 to 2029.Furthermore, implementation of the “Belt and Road” initiative could facilitate emergingmarkets including South Asia, Southeast Asia, and the Middle East and Africa in becomingcrucial growth hubs. New opportunities still exists in high-end, smart, eco-friendly, andenergy-efficient home appliances.

Section III Management Discussion and Analysis

II. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTINGPERIOD

√ Applicable Not Applicable

The Company has established a solid strategic presence and competitive advantage in China andoverseas markets. In China’s major home appliance market, the Company has long maintained aleading position across all product categories. According to CMM’s report, the Company hasestablished a continued leading market position in key major home appliance categories in the first halfof 2023. In overseas markets, the Company has adhered to its high-end brand creation strategy,building capacity to create leading sustainable growth, which has continuously improved its marketshare. Building on this foundation, the Company will further consolidate its leadership position in theindustry by leveraging integrated synergies of its global unified platforms, through efficiencytransformation driven by digitalization, and by leveraging its technological strength and innovativecapabilities. As cornerstone for sustainable development, our ‘Rendanheyi (單)’ Model alsoprovided management guidance to the Company, and enabled us to replicate successful experiences.It is believed that the following advantages will help the Company to continue to strengthen its leadingposition:

(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-qualityexperiences. 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’s high-end major home appliance market in first half of 2023, ranking first in the retail sales ofrefrigerator, washing machine and air conditioner categories in the high-end segment.Specifically, in terms of offline retail sales, shares of the Casarte brand of washing machines andrefrigerators reached 82.9% and 39.4% respectively in the market with product price aboveRMB10,000 in China, while its share of air conditioners priced above RMB15,000 in the China’smarket reached 29.2%.In the North American market, the Company owns high-end brands such as Monogram, Café,and GE Profile. We achieved our market leader position through launching such key homeappliance innovative products including high-end combo heat pump washing-drying machines andpizza ovens. Through the creation of luxurious, customizable and smart technology-enabled userexperience, our high-end brands Monogram, Café and GE Profile have grown rapidly.

Section III Management Discussion and Analysis

(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 was able to provideusers with the “1+3+5+N” differentiation-enabled smart scenario solutions riding on the corestrength of the Smart Home Brain, building around the five major intelligence spaces at homeincluding living room, kitchen, bathroom, bedroom and balcony, as well as the whole-housesolution of “whole-house’s water usage, air, smart control” with infinite number of smart homescenarios.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, SAN YI NIAO had converged itscapability of intelligent scenario differentiation with spatial integrated design strength and wholeproduct package customisation, whilst matching up mainstream household type with home styleand family structure, as well as adapting modern light luxury-style, new Chinese-style, French-style and other sets of digital sample room into the interior design tool, so as to provide its userswith customised designs for whole-scenario smart-and-cozy household solutions that embodiedconcepts of whole space aesthetics, health-technology-nature and genuine smart lifestyle.In addition, SAN YI NIAO’s interior design tool focused on “building a home”, providing userswith smart home appliances + smart home solutions. It featured a comprehensive collection ofsmall household design types, smart swift output, preliminary programme functional design and3D rendering design, empowering designers with speed 3-minute drawings creation and hencerealising the transformation from selection by users to customisation for users.Finally, SAN YI NIAO’s digital platform continued to strengthen its capabilities in scenario design,store, user and delivery digitalisation to offer full life cycle service for users, thereby enhancingthe value added to active users and increasing conversion of scenario-based transactions.(iii) Extensive and solid global presence with localised operational capabilityIn 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 synergisedoperation.The Company’s extensive global presence depends on its localised 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 user

Section III Management Discussion and Analysis

demands. The Company also proactively integrates into local markets and cultures, and hasestablished a corporate image that is recognised by local communities in the overseas regionswhere the Company operates.The Company established 10+N innovative ecosystems, 122 manufacturing centres, and 108marketing centres around the world, and achieved a coverage of nearly 230,000 point of sales inoverseas 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: thefour brands of Fisher & Paykel, Casarte, Haier and Leader achieved the coverage of premium,high-end, mainstream and niche market groups respectively; in North American market, the sixmajor brands such as Monogram, Café, GE Profile, GE, Haier, Hotpoint comprehensively coveredall segments of high-end, mid-range and low-end markets, thereby meeting the preferences andneeds of different types of users.

(v) Cross-border acquisition and synergy realisation capabilities

The Company has an excellent track record of acquisition and integration. The Company hasacquired Haier Group Corporation’s overseas white goods business, including Sanyo Electric Co.,Ltd.’s white goods businesses in Japan and Southeast Asia in 2015, the home appliancebusiness of General Electric in the US in 2016, the New Zealand company Fisher&Paykel (whichhas been entrusted by the Haier Group since 2015) in 2018, and the Italian company Candy in2019. The Company’s capability to perform acquisition and integration is reflected in thefollowing: First of all, the Company implements the ‘Rendanheyi (單)’ 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.

Section III Management Discussion and Analysis

(vi) Comprehensive and in-depth global collaborations and empowermentThe Company has made full use of its global collaborative platform, as well as its integratedfunctions of R&D, product development, procurement, supply chain, sales and brand marketing.It was able to share and expand its successful market development experience to variousmarkets around the world. By strengthening the synergies among its global businesses, theCompany has created a strong driving force for its future development.? Global collaborative R&D: The Company has a global collaborative R&D system and hasestablished global technology R&D mechanisms to share common modules, utilise 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 globalproduct 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.? 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 digital

management 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 a multi-level brand portfolio on a global scale, which can realise 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.

Section III Management Discussion and Analysis

(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 the first half of 2023, the Company hasinnovated a range of solutions that exceeded users’ expectations and made technologymore integral to everyday life.For example, the newly launched Neutron F2 Washing and Drying Machine showcasesindustry’s first ever 1.5m optimal height that allows easy and effortless handling. Defyingconventional wisdom, the model’s groundbreaking 3D perspective drying technologyintroduces contactless capacitance dryness assessment which enables accurate sensing ofdryness beneath clothing’s surface and thorough drying with single application, therebyachieving time saving and efficiency.Researched and developed solely and entirely by the Company and wholly independentand controllable, the world first ever hydrostatic air suspension central air-conditionerapplies the Bernoulli principle of fluid mechanics where the shaft is lifted and supported byhigh-pressure gas, thus enables operation without friction. As a result, the model achieves6x spindle and 1x efficiency enhancements, and 50% energy saving and 50% carbonreduction.? Certification from state authorities: For the first half of 2023, the Company received atotal of 16 State Science and Technology Progress Award. Haier Smart Home was amongthe first batch of “Leading Digital Enterprises” selected by the Ministry of Industry andInformation Technology. The HOPE Platform was selected by Innovation China as one ofthe “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: For the first half of 2023, Haier Smart Home hasaccumulated more than 97,000 patents applications globally, including more than 62,000invention 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 12 state patent gold awards,ranking first in the domestic market. In the ‘Global Smart Home Invention Patent Ranking’in the first half of 2023, Haier Smart Home once again topped the list with 3,087 publishedpatent applications, ranking first in the world for the ninth consecutive times.

Section III Management Discussion and Analysis

? Leadership in terms of international standards: For the first half of 2023, Haier Smart

Home has cumulatively led and participated in the formulation of 95 international standardsand 67,037 state/industrial standards. We are the only company in the industry to obtaincomprehensive coverage of smart home standards from international organisations 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 standardisation efforts and have avoice in the formulation of standards.? Leadership in terms of experience design: Haier Smart Home topped the industry byearning 6 international design gold awards, 3 being the iF Design Awards and 3 Red DotDesign Awards. The Company has cumulatively received 3 “China Excellent IndustrialDesign Gold Awards” from the Ministry of Industry and Information Technology, making itthe only enterprise that have earned 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’ (單) model, Haier encourages every employee to maximise their own values while creating valuesfor users. In Haier’s ‘Rendanheyi’ (單) model, ‘Ren’ refers to creators; ‘Dan’ refers to uservalue; ‘Heyi’ refers to the integration of values realised by employees and the values created forusers. ‘Value of people comes first’ is the highest purpose of the ‘Rendanheyi’ (單) model.Haier Smart Home adheres to the values of recognising users’ demand as priority and denyingour own perceptions, and is committed to the ‘two creative spirits’ of entrepreneurship andinnovation. We turned employees into creators, implementers into entrepreneurs, and transformedenterprises into open ecosystem platforms, which have supported the Company to become aglobal leader of smart home in the Internet of Things era.

Section III Management Discussion and Analysis

III. DISCUSSION AND ANALYSIS ON OPERATIONS

Discussion and analysis of the Company’s operation in the first half of the yearIn the first half of 2023, the Company’s sales revenue grew 8.2% to RMB131.627 billion driven by: (1)the Company’s extensive multi-brand portfolio which capitalised growth opportunities across diversemarket segments; strengthened competitiveness of the design, sales and services of SAN YI NIAO’ssolutions, which boosted sales of scenario-based product sets with increased user value; (2) networkexpansion, retailed-oriented digitalisation, and premiumisation fuelled the development of market-leading products, thereby improving price indices and growing market shares overseas; (3) thedevelopment of new product categories including tumble dryers, dishwashers, home cleaning robots,HVAC systems and heat pumps, capturing opportunities unlocked by desire to improve livingstandards and implement low carbon strategies.In the first half of 2023, net profit attributable to the shareholders of the parent Company wasRMB8.964 billion, representing an increase of 12.6% compared to the same period in 2022. Net profitattributable to the shareholders of the parent company after deduction of non-recurring profit or losswas RMB8.604 billion, up 14.9% year-on-year.

(1) The Company’s gross profit margin in the first half of 2023 reached 30.4%, up 0.2 percentage

points year-on-year. In the domestic market, gross profit margin improved because of lowercommodities prices, digitalisation in procurement and R&D, as well as increased proportion of in-house manufacturing. In the overseas market, benefits from improved product mix andproduction utilisation were offset by intensified competition and accelerated destocking, resultingin lower gross margin compared with the same period last year; such decline has howevernarrowed since last quarter of this year.

(2) In the first half of 2023, the Company’s selling expense ratio was 14.3%, down 0.2 percentage

points as compared with the same period in 2022, largely contributed by digitally enhancedefficiency in domestic marketing, logistics and warehouse operations; on the other hand,overseas selling expense ratio increased as intensified competition drove up, spending in channelexpansion, new product promotion and store renovations.

(3) In the first half of 2023, the Company’s administrative expense ratio was 4.2%, down 0.1

percentage points year-on-year, leveraging digitally enhanced operations and improvedefficiencies.

(4) In the first half of 2023, the Company’s financial expense ratio was

–

0.01% (“+” represents

expenses and “—” represents revenue), worsened by 0.2 percentage points year-on-year. Theworsening of the financial expense ratio was mainly due to the increased interest expensesincurred overseas as a result of interest rate hikes, despite higher interest income achievedthrough improved capital management.

Section III Management Discussion and Analysis

The Company’s net cash from operating activities in the first half of 2023 was RMB6.791 billion, anincrease of RMB0.825 billion year-on-year, which was derived from increased operating profit andenhanced operational efficiency during the period.(I) Smart Home Business in ChinaIn the first half of 2023, China’s smart home business generated sales revenue of RMB70.353billion, up 8.6% compared to the same period in 2022. The growth was driven by: retail-oriented digitalization focusing on optimised store operations and improved consumerinteractions, transactions, and delivery experiences, ultimately boosted acquisition and conversionof traffic; market shares expansion of refrigerators, washing machines, home air conditioners,and water heaters, as well as the rapid growth of central air conditioners and heat pumps;implementation of SAN YI NIAO’s interior design platform for designers to create tailored homeappliance solutions for local consumers, resulting in increased sales of high-end product setswith higher average ticket price.

1. Household Food Storage and Cooking Solutions (Internet of Food)

(1) Refrigerator and Freezer Business

The refrigerator and freezer business enhanced high-end competitiveness andpromoted retail-oriented digitalisation to capitalise on growth opportunities. During thereporting period, the business achieved sales revenue of RMB22.245 billion,representing a year-on-year growth of 2.3%, with revenue in the domestic marketincreased by 7.0% year-on-year.According to CMM, in the first half of 2023, the Company’s offline retail share rose

1.9 percentage points to 45.1%, with 57% market share in products priced above

RMB15,000, up 1.1 percentage points. Online retail share reached 39.3%, up 0.1percentage points year-on-year.During the reporting period, Casarte’s refrigerator maintained robust growth throughenhancing its French door series and expanding its portfolio of seamless built-inproducts. The sales of built-in refrigerators more than doubled, with the salescontribution of built-in refrigerators under Casarte brand growing by more than 30percentage points. Building upon proprietary seamless built-in design, cell-levelfreshness, and health-conscious housekeeping systems, the Company’s new F+550Lseries featured multiple dedicated compartments and built-in smart control screens tocater to users’ needs for healthy and compartmentalised storage. The seamless built-in 603 series were equipped with bottom-mounted circulating air curtains, dual-axishinge doors, MRA low-oxygen cellaring freshness preservation and smart dynamicdisinfection and purification technologies. The product offered users dedicatedstorage, ultimate freshness, and seamless integration with home furnishings. In thefirst half of the year, Casarte brand’s market share in products priced aboveRMB15,000 reached 50.5%.

Section III Management Discussion and Analysis

Haier brand unveiled T-style refrigerator—the latest addition to Boguan (觀)series, featuring compartmentalised storage and full-space freshness preservationtechnology. It became the top model in the RMB20,000 price range within 3 weeksof its launch, thus contributed to a 34% year-on-year revenue increase of the full-space freshness preservation series (average price RMB6,000). In addition,seamless built-in series and large freezer series both achieved revenue growth ofover 50%.Leader brand has launched a new line of practical products with light-colouredexteriors and minimalist interiors targeting at young customers. It also offeredcustomisation of the appearance with iCase products, catering to the individual users’desire for visual appeal and value for money.The freezer business launched the Xinlan (藍) large freezer targeting small andmedium-sized fresh food merchants. This popular product offered unparalleledfreezing power, optimal energy efficiency, and time-saving defrosting capabilities. Itfulfilled users’ need for low-temperature food preservation, thus contributed to a

2.3-percentage-point year-on-year increase in the market share of large freezers.

Export businessDuring the reporting period, the Company leveraged innovative preservationtechnology to upgrade high-end products, including T-door refrigerators, S+refrigerators, and French door refrigerators, thereby grasping opportunities in thehigh-end customised market. According to China IoL, the Company’s cumulativeexport volume from January to June 2023 has increased by 22.9% year-on-year.

(2) Kitchen appliance business

During the reporting period, kitchen appliance revenue reached RMB2.138 billion, ayear-on-year increase of 7.5%. According to CMM, the Company’s offline retail shareincreased 0.9 percentage points year-on-year to 8.9%, ranking among the top three,while online retail share rose 0.6 percentage points to 4.6%.During the period, the Company implemented technology oriented long-termroadmap, increased R&D investment and accelerated the building of cooking andgourmet laboratories. In response to growing demand for improved extraction andprecise heat control, the Company increased product competitiveness by integratingcutting-edge technologies from GEA and FPA with focuses on cooking environmentand cooking performance.

Section III Management Discussion and Analysis

Casarte range hood’s smart air technology has undergone continuous upgrades,enabling more precise and smarter control of air flow based on the environment anduser habits. During the period, the retail revenue of Casarte’s constant air range hoodsurged 45%. Casarte also launched new stove that could expand heating surfacearea by 40%, contributing to 118% revenue increase of stoves with five rings.The Company persistently enhanced high-end products to meet growing demand forintegrated and built-in products. The latest built-in ovens, steamers, and steam ovensaim at improving effectiveness and fresh steaming, tender roasting, and easycleaning, in order to improve cooking effects and convenience. CMM ranks the Groupnumber four in integrated units with 8.23% retail market share; while steamer oven’srevenue grew by 249%.Export businessExport revenue grew by over 50%, benefiting from high-end brand building initiativesincluding launching built-in set products to improve market recognition and growmarket share.

2. Household Clothing Solutions

During the reporting period, revenue amounted to RMB15.345 billion, representing a 3.8%increase compared to the same period in 2022.According to CMM, the Group’s retail market share reached 47.1% offline and 40.3%online, up 1.2 percentage points and 0.1 percentage points respectively.Replacement and upgrade demand continue to drive growth in the laundry sector. Toaddress consumers’ increasingly sophisticated demand to wash and care for delicatefabrics and materials, the Company unveiled “Casarte F2 washer & dryer combo” at thisyear’s AWE in April. Equipped with industry’s first 3D vision technology and flat built-indesign, this new bestseller monitors and adjusts the drying of each load using 3Dtechnology, thus significantly reduces drying time for heavy items and improves energyefficiency performance; and it is made even more user friendly with ultra flat built-in designand compact height of 150cm. This new product strengthened Casarte’s premiumleadership with market share in units priced above RMB15,000 exceeding 70%.In the first half this year, the Company consolidated leadership in tumble dryers with 40%market share offline and 41% online, up 3 and 8 percentage points, respectively. TheCompany also started construction of new factory in Shanghai, which is expected to addtwo million units in capacity when production ramps up.

Section III Management Discussion and Analysis

The Company also made considerable progress in developing retail-orientedcompetitiveness. Numerous advertising campaigns and promotions are created catering fornew homeowners, urban house renovators and rural users, whose characteristic demandsare profiled, analysed and better captured. In addition, digitally enhanced packages havebeen used to improve interaction in order to strengthen presence and capture increasingfoot traffic in shopping malls.Export marketDuring the reporting period, export revenue maintained steady growth driven by globalproduct upgrade, including the successful launch of wash and dry Combo in the US andH700 series in Europe, leading to the price index reach 144, ranking first in the industry.

3. Air Solutions

During the reporting period, sales revenue reached RMB23.147 billion, a year-on-yearincrease of 18.9%.

(1) Home air conditioner business

During the reporting period, the Company recorded domestic revenue growth of 25%,by accelerating transformation in product innovation, network expansion, retaildevelopment and supply chain cost optimization.According to CMM, the Group’s retail share of air conditioners (standing & wall-mounted units) across all channels in the first half of 2023 was 16.4%, up 0.6percentage points year-on-year. The share in lower-tier channels grew a significant

7.1 percentage points to 22%.

The Company enhanced product competitiveness by leveraging module-drivencapabilities and implementing product iteration systems. During the period, theCompany introduced Casarte Nebula (雲) the industry’s first integrated high-energyair conditioner. This product uses advanced technologies, including twin-tower light airtechnology, hydro-oxygen air wash technology, and equilibrium temperaturedehumidification, to achieve large-volume air circulation and long-distance airflow. Itcan effectively remove seven types of pollutants and increase two types of healthyparticles in the air, thereby creating a comfortable and healthy environment. Theproduct drove market share of standing units priced above RMB10,000 to surpass39%, ranking top in the industry. Casarte’s air conditioners grew rapidly in the firsthalf of 2023.Targeting young users of Gen Z, Leader’s new Vitality (氣) air conditioner pioneereddual-wing omnidirectional wind technology, which blows cold air upwards at a 15?angle while sending warm air downwards at 90? angle, minimize the discomfort fromdirect cold air blow. This product helped Leader brand achieve over 50% revenuegrowth in its air conditioners.

Section III Management Discussion and Analysis

Considering residential central air conditioners’ dependence on installation, theCompany strengthened design, installation, and service capabilities. We were the firstCompany in the industry to introduce a 7-star service standard, and our “ResidentialCentral Air-conditioning Installation Service Standard” was recognised as a benchmarkby air conditioning service industry. The Group also accelerated the establishment ofresidential central air conditioner training hubs that incorporate user experience,employee training, product retailing, and brand image, aiming at redefining userinteractions. In the first half of the year, the Group developed over 1,360 airconditioner franchise stores, achieved 30% in store conversion rate, and raisedhigh-end residential central air conditioners’ revenue contribution to 26%.During the reporting period, the Company focused on enhancing supply chainnetwork and improving in-house component manufacturing capacities to increase costcompetitiveness. In March 2023, the computer board factory commenced massproduction in Zhengzhou with an annual output of 2 million sets and potential costsaving of over RMB10 million. In early April 2023, compressor joint venture withShanghai Highly officially laid the foundation in Zhengzhou, aiming to establishintegrated compressor supply capabilities.Export businessThe Company made efforts to enhance network presence overseas, includingproactively developing professional HVAC channels and chain retailers in SoutheastAsia, as well as accelerating the construction of distribution networks in fourth andfifth-tier markets in South Asia to boost retail market share. During the reportingperiod, the Company began to introduce solution-based products, including RV airconditioners and solar-powered air conditioners, to tap into growth opportunities inniche markets and for energy efficient products. Export revenue remained stable witha notable improvement in profitability.

(2) Smart building business

During the reporting period, the Company built upon existing HVAC business andexpanded into heat pumps and smart building management, by providing solutions for“smart and low-carbon architecture”, thereby capitalised on the opportunitiespresented by the upgrading of buildings’ energy efficiency standards and the growingadoption of clean energy.In the first half of 2023, the Company’s smart building business experienced rapidrevenue growth. According to China IoL, our market share grew steadily to 9.6%, up

0.3 percentage points year-on-year, while export market share went up by 0.6

percentage points to 16%.

Section III Management Discussion and Analysis

The Company remained committed to developing technological innovations includingmagnetic levitation, air suspension, and high-efficiency heat exchange. We maintainedleadership in high-speed variable-frequency and smart IoT technologies, and createdenergy-efficient solutions. (1) The air-suspending centrifugal chiller utilised air bearing,oil-free lubrication technologies, resulting in 50% energy savings compared to ordinarychiller units, with no need for oil system replacement. This design increased reliabilityand reduced failure rate by 80%. (2) The introduction of MX-super IoT-based multi-split units was the industry’s first smart solution for 1,000-square-meter spaces. Themaximum capacity of a single module could reach 24 HP, up to 4 units could run inparallel to achieve maximum output of 96 HP, while occupying 50% less floor space.It could be conveniently installed at various locations such as the rooftop, mechanicalfloor, refuge floor, podium floor, and the ground floor to enhance the energyefficiency of building equipment and systems. (3) HVAC plant room scenario-basedsolutions utilizes AI smart control while reducing 50% energy usage. To address thereplacement needs of chiller plant rooms, the Group introduced a wireless smartcontrol solution that facilitated the installation of new equipment under 3 days withoutany down times.To stay at the forefront of the heat pump industry, the Company capitalised ongrowing clean energy requirements and expanded product applications. The newlylaunched variable frequency high-temperature heat pump could provide 90?C hotwater under full working conditions. It could be remotely controlled using Haier SmartCloud Platform, and it has been widely used by clients from electroplating,slaughterhouses, petroleum, food processing, textile printing and dyeing industries, aswell as on urban gentrification projects. During the reporting period, the Company’sheat pump revenue grew over 20%; China IoL estimated the Group’s domesticmarket share to be 17.7%, up 3.9 percentage points year-on-year.During the reporting period, the Company won the bid for Shenzhen Metro Line 14with integrated solution of maglev air- and water-cooled chillers, which could achievea plant room COP of 5.0 or above. The Company also collaborated with ChinaResources Group to provide smart and efficient IoT-based multi-split solutions forChina Resources Land’s office buildings, shopping centres, and hotels.Export businessThe Company continued to expand product portfolio and optimise product mix. Forexample, the Company received significant orders from clients in the Middle East forT3 variable frequency series that could operate under high-temperature. The Group’smagnetic centrifugal chiller has also been selected by Qinhuai Data Centre projectdue for its outstanding energy efficiency and easily detachable structure. In overseasmarkets, the Group focused on building sales centres that encompassed userexperience, product display, employee training, and product sales to demonstrateprofessionalism. During the reporting period, export revenue grew by over 40%.

Section III Management Discussion and Analysis

4. Household Water Solutions

The water heater and water purifier business is committed to providing users with safe,smart, and comfortable whole-house water solutions. During the reporting period, salesrevenue amounted to RMB7.478 billion, a year-on-year increase of 10.2%.The Company’s robust performance is driven by long term focus on user-centrictechnologies.Several new units were added to the established Crystal Tank and Dual Tank series,featuring water purification and home mineral spa experience, capturing consumers’ specificdemand for water quality, temperature, water volume and attractive design, this producthelps the Group consolidate leadership in electric tanks. Gas tank revenue grew by 19%.Casarte pioneered dual motor constant temperature technology that controls watertemperature and volume separately, effectively reducing water temperature fluctuation whenshower is interrupted halfway.During the reporting period, the Company also launched the industry’s first whole housewater solution online design platform, so designers and sales teams in 265 SAN YI NIAOoutlets and 624 home improvement outlets could help millions of users visualisecomprehensive water heater and purification solutions.During the reporting period, the Company strengthened its water purification business withseveral new products that addressing users’ concerns with water quality and mineral levels.Casarte’s Mineral Spring water purifier helped with expanding market share in productspriced RMB5,000 and above.

5. China operation: accelerating reforms and taking the initiative to achieve sustainable

growthDuring the reporting period, the Company accelerated retail-oriented digitalisation throughmechanism reforms, policy restructuring and the development of digital platforms, whichimproved acquisition and conversion of user traffic, enhanced management of user assets,and achieved sustainable growth. In the first half of 2023, the Company’s home appliancebusiness in China realised a year-on-year revenue growth of over 10%.In response to fragmentation user traffic, the Group followed users demand and enhancedpresence across online and offline platforms. By implementing full-life-cycle digitalmanagement platforms, the Group was able to devise omnichannel strategies based onregional user traffic analysis. The management capabilities of sale outlets were significantlyimproved leveraging digitally enhanced distributor screening and store planning. During thereporting period, the Group developed 1,957 stores, realizing additional revenue of overRMB1 billion.

Section III Management Discussion and Analysis

Offline channels:

In first and second-tier markets, the Group focused on expansion within shopping mallsand home improvement channels by adding 82 new stores in shopping malls and 143 newstores in home improvement channels. In third and fourth-tier markets, emphasis was onbuilding retail capabilities of high-end product suites, facilitated by retail-orienteddigitalisation from selling individual products to offering scenario-based solutions, so as toimprove conversion rates and increase the proportion of sales derived from product suites.Online channels:

On traditional e-commerce platforms, the Group optimised outlet coverage, improvedproduct planning, and upgraded store display to enhance resource allocation. The Groupalso expanded Casarte’s product offerings on mainstream platforms and launched light-coloured product lines tailored for young users. On content generating platforms, the Groupfocused on content creation and store operation while developing live streamingcapabilities, thereby facilitated user interactions and improved conversions. During June18th shopping festival, the Company’s retail sales went up by 40% year-on-year, with over60% growth in retail sales of high-end Casarte products. The Group’s market shares ofrefrigerators, washing machines, water heaters, and freezers also topped the industryonline.The Company expanded multi-brand portfolio catering for user groups including luxury,high-end, mass market, and Gen Z, capturing opportunities for growth in various marketsegments.Casarte brand grew steadily leveraging product leadership, comprehensive set offerings anddistribution network renovation. During the reporting period, Casarte’s market share wentup 1.4 percentage points reaching 14.2%.During the reporting period, Casarte also unveiled upgrade plan, redefining high-endlifestyles for elite users featuring original technologies, spatial experience, and smartlifestyle. The Company strengthened competitiveness of product sets by launching theindustry’s first white colour range Casarte Light Year White () series, tailoredspecifically for wealthy young individuals seeking quality life. The revenue contribution fromset products increased by 6 percentage points in the first half of 2023. The Group alsoenhanced presence in shopping malls and developed lifestyle scenarios to accelerate high-end traffic acquisition and conversion.During the reporting period, the Company accelerated Fisher & Paykel’s development inluxury home appliance market in China. Leveraging strong user base, extensive distributionnetwork, and well-established service coverage, the Group was able to set up experiencestores in luxury building materials market and prestigious shopping malls while collaboratingwith renowned architects and designers to provide affluent individuals with social kitchenand luxury laundry solutions.

Section III Management Discussion and Analysis

6. Inspired by “Smart Living, Better Homes”, SAN YI NIAO offers smart scenario-based

solutions leveraging core competencies in Smart Home Brain, scenario-basedsolutions, design tools, in-store operations and digital platform.During the reporting period, the Company focused on transforming SAN YI NIAO storesusing asset-light approach in collaborating with ecosystem partners and utilizing digital toolsto improve traffic conversion. Nesting Interior Design Platform was developed featuringintelligent matching, 3D design, VR water and electricity design, to provide designers withprofessional support. The platform added 4,000 home appliance models to assist designersand at store front. Leveraging Casarte’s Light Year series and Haier’s health-conscioussets, SAN YI NIAO introduced additional 105 new solutions during the reporting period,with focus on smart kitchen and whole-house smart lighting solutions, all of which helpedwith achieving sales of 4,000 sets of Light Year White series.(II) Overseas home appliances and smart home businessDuring the reporting period, the Company’s overseas sales revenue was RMB66.917 billion, anincrease of 8.8% compared to the same period in 2022. Revenue growth was mainly driven bycommitment to high-end strategy and launch of leading products with increased price indices, forinstance, Monogram, high-end brand in North America achieved double-digit growth against theheadwind. The Company also capitalised on the demand for energy-efficient products. In theEuropean market, over 50% of washing machines obtained class A energy-efficiency, while HVACrevenue grew significantly. The Group also expanded distribution network, improved retailcapabilities, reduced costs and improved efficiency leveraging efficient global collaborativesystems, at the same time, efforts have been made to grow presence along the Belt and RoadInitiative to grasp development opportunities.

1. North America:

Despite macro weaknesses in North America, the Company outgrew the industry with salesrevenue of RMB39.133 billion, up 4.5% year-on-year and expanded market share.

Section III Management Discussion and Analysis

The Company remained committed to building premium market leadership with successfullaunch of innovative products such as GE Profile UltraFast Combo that is designed torevolutionize the laundry experience by washing and drying a large load in two hours, whileusing smart technology combining fast air flow at lower temperatures to maximize care offabrics. Since debuting at the Kitchen & Bath Industry Show earlier this year, the UltraFastCombo has been recognized by several associations and media companies for being aninnovative smart home product. This all-in-one solution was awarded “the Best HomeTechnology Product for the 10

thannual Best of IBS awards” by the National Association ofHome Builders (NAHB), which recognizes outstanding building products and services basedon the products’ innovation, functionality, design as well as builder and consumerfriendliness. It was also awarded “2023 Sustainable Products of the Year” by Green Builderfor its energy saving capabilities and the “Design Meets Tech Award” by ConnectedDesign.The Company continued to develop pro-centric products and differentiated dealer supportprogrammes under its Air and Water Solutions business. Three new product lines wereshowcased at this year’s AHR Expo, including GE Appliances Residential Ducted HAC, GEZoneline UltimateV12 and RealMAX atmospheric gas water heaters. In addition, theCompany also launched Pro Solutions Partner Programme to offer dealers financing,marketing support and extended labour warranties.In March this year, IoT Breakthrough, a leading market intelligence organization thatrecognizes the top companies, technologies and products in the global IoT marketannounced GE Appliances as winner of the “Smart Appliance Company of The Year award”for the fifth time. In August, GE Appliances was named one of the Best Workplaces forInnovators by Fast Company magazines for encouraging innovations and creating life-enhancing digital technologies to consumers.

2. Europe:

During the reporting period, the Company achieved sales revenue of RMB13.278 billion inEurope, up 29.6% year-on-year. Volume market share increased by 1.1 percentage pointsto 7.9% and revenue retail share grew 1.7 percentage points reaching 7.1%, ranking 4thand 5th respectively.Leveraging product competitiveness, the Company was able to improve brand positioning.The 525cm ultrathin and standard washing machine from Haier’s H700 series does not onlysave space, it is also equipped with Anti-bacterial technology, double spay andcomprehensive range of fabric care solutions. 7,800 units have been sold during thereporting period, and a total of 31,000 units have been ordered.Various efforts have also been made to improve marketing and distribution network. In Italy,the Company formed partnership with premium kitchen distributor Lube and celebrated theopening of its first 001 Store in Rome; in Spain, the new boutique and 26 store-within-store specializing in scenario-solutions helped market share grow from 11% to 14% inMediaMart. The Company also became Official Partner of some of the world’s top tennistournaments including Grand Slam tournament Roland Garros, the Nitto ATP Finals, andATP Masters tournaments.

Section III Management Discussion and Analysis

Meanwhile, the company remained committed to leveraging IoT technologies andintegrating resources from ecosystem partners. During the reporting period, WashPass, thefirst washing ecosystem was launched with Nuncas

?. Available on hOn APP, this washingmachine comes with a subscription including installation, maintenance, and refill of theactive ingredients to create a professional washing experience at home.

3. Australia & New Zealand:

Home appliances industry was challenged by weak momentum and intensified pricecompetition in Australia and New Zealand during the reporting period. The Companyrealised sales revenue of RMB2.95 billion, down 15.5% year-on-year. Leveraging long termcommitment to technological and product innovations, the Company launched FPA60 built-in refrigerator and H20 dish washer to add to its modern kitchen solution packages. Haierbrand also introduced the industry’s first and only one-side T door refrigerator with largefridge and smaller freezer space. This new unit attracted wide interest from leadingdistributors immediately after launch. In addition, digital tools were also used in Australia tofacilitate end-to-end order tracking, thus increasing operational efficiency and improvingtraffic conversion.

4. South Asia:

During the reporting period, revenue amounted to RMB5.955 billion, an increase of 23.5%year-on-year.In India, the Group focused on meeting local demands with launching variable temperatureFrench door refrigerators that catering for vegetarian diets. This product was recognised asone of the ‘Annual Most Innovative Products’ by the Indian government, capturing a marketshare of 20%. The Group enhanced competitiveness in the supply chain by boosting in-house components production and establishing a manufacturing base that is both cost-effective and highly efficient. During the reporting period, the Company’s volume marketshare rose 0.7 percentage points to 10.7%, ranking top three in the industry for the firsttime.In Pakistan, the Company continued to hold the top spots in market shares forrefrigerators, freezers, air conditioners and washing machines, with retail volume sharereaching 41%, up 4 percentage points year-on-year. The Group implemented high-endbrand transformation by rolling out the multi-brand strategy of Casarte, Haier and Candy,catering to the diverse consumer needs, and established 70 high-end experience stores.The Group strengthened supply chain development to enable local production of kitchenappliances, and continued to build franchise network in third and fourth-tier markets.

Section III Management Discussion and Analysis

5. Southeast Asia:

During the reporting period, sales revenue amounted to RMB3.107 billion, up 6.3% year-on-year.In Thailand, the Group strengthened product innovation and launched self-cleaning airconditioners and washing machines, winning local “Product Innovation” awards. TheGroup’s market shares of home air conditioners and refrigerators have risen to the firstplace. The Group also developed presence in chain retailers and deployed digital tools toenhance operational efficiency. In Vietnam, the Group launched attractive and easy-to-operate AI-powered washing machines to meet the needs of female local users, resulting inwashing machine market share leaping to the top of the industry. The Group also swiftlyresponded to opportunities in the air conditioning industry and achieved a record highmarket share. In the Philippines, the Group focused on the dual-brand strategy of Haierand Candy, increased the revenue contribution of high-end products, and captured thelargest market share for high-end T-door refrigerators. In Indonesia, the Group promotedthe transformation and upgrades in high-end channels and achieved double-digit growth.

6. Japan:

During the reporting period, revenue amounted to RMB1.947 billion, up 6.0% year-on-year.During this period, the Company remained committed to the dual-brand strategy of AQUAand Haier, and enhanced high-end product lineup with differentiated offerings such as theTZ/TX/icase refrigerators series, front-load/dryer series, and the Slim& deep freezers. Thisstrategy accelerated the transition to high-end market, as revenue contributed of high-endproducts rose to 36%. AQUA heat pump front-load washer and Haier variable-frequencywasher have received the “Best Recommendation Award” from the renowned Japanesemagazine “Smart”. AQUA’s smart community laundry business maintained marketleadership through creating cross-industry scenarios, developing new operation models, andreplicating successful strategies overseas.During the period, the Company’s combined volume share for freezers, refrigerators andwashing machines continued to top the industry at 18.6%, of which refrigerators rankedfirst with 16.8% market share, freezers ranked first with 50.4%, and washing machinesranked third with market share of 17.7%.(III) accelerating digitalisations to enhance efficiency and optimise operationImproving the competitive edge of individual product models by developing digitalplatforms for product planning and R&D.The Company established an integrated R&D digital platform to connect product planning withthe procurement system, thereby enabling smart design and asynchronous development ofmodules, promoting the use of common parts, increasing the procurement scale per module, andreducing purchasing costs. During the reporting period, total number of components wasreduced by 16.6% year-on-year. The Company also developed a digital simulation platform,which reduced the resources required for physical prototypes and experiments through virtualdiagnosis, design, and verification, thus improving the success rate of initial designs andshortening development cycles.

Section III Management Discussion and Analysis

Promoting the construction of digital platforms for procurement and supply chain toenhance cost competitiveness.The Company created a digital platform to handle the entire supplier journey from introduction tocollaboration and termination of contract, which streamlined business processes, and shortenedthe supplier onboarding time by 50%. The Group also implemented online tools such asshortlisted supplier pools, component costing models, and AI-driven big data analysis for similarmaterials to reduce procurement costs.Leveraging annual production capacity planning, quarterly and monthly production and salescoordination, and weekly smart order reviews, the Group could instantly respond to orders andensure timely delivery, resulting in improved manufacturing efficiency. The Group reformed orderprocessing system, where production was made based on forecasted orders and shipments weredriven by actual orders, thereby speeding up order response. In the first half of 2023, inventoryturnover days went down by 18%.The manufacturing platform optimised resource allocation by integrating key elements such aslabour, materials and equipment, thus visualising production processes, to increase the standardcycle completion rate by 18% year-on-year.The logistics platform focused on delivering finished products, and achieved end-to-endvisualisation in terms of “production, sales, warehousing, delivery and installation” throughvehicle-cargo matching and digital warehousing, resulting in a 16% increase in warehouseutilisation.Promoting the development of user experience cloud platform to enhance userexperience and improve efficiency.Centring around the journey of “purchase, delivery, installation, usage, and service,” the Groupreconstructed over 240 scenarios and visualised 1,269 indicators to achieve end-to-endtraceability. The Group also integrated 10 business functions, connecting user needs andcomplaints to every responsible unit, so as to close gaps and minimise discrepancies, andincreased consumer satisfaction by 14% in the first half of the year. In terms of servicedigitalisation, the entire process from user-submitted service requests to servicemen arriving atthe door has been streamlined in order to facilitated smart diagnosis and enhance serviceefficiency.The Group established media centre, content centre, event centre, and business opportunitymanagement centre to facilitate online activities, user interaction and traffic conversion. In the firsthalf of the year, revenue contribution from digitally aided retail increased 28%.The Group accelerated digitalisation and established data-driven management systems, whichenabled the use of digital desktops, automated system scheduling, and improved operationalefficiency of its workforce.

Section III Management Discussion and Analysis

Development plan for the second half of the yearThe Company will continue to strengthen the three-level brand strategy transformation from high-end brand scenario-based brand ecosystem brand. We will press ahead with digitalisationfor all processes to improve operational efficiency, provide better user experience, and enhanceuser value. We will implement profit-oriented mechanism transformations to improve operationalquality.In the domestic market, we will further the advancement of end-to-end digital transformation,leveraging digital tools and implementing organisational changes to integrate the entire processfrom product definition to R&D, manufacturing, supply chain, sales, and after-sales services,thereby to facilitate efficient synergies, and increase the percentage of market-leading products.We will also emphasize the adoption of lean manufacturing principles, and leverage digital toolsto address issues such as low component commonality and to enhance production efficiency.We will focus on upgrading the Casarte brand to improve its long-term competitiveness andsolidify its foundation for growth. In the home air conditioner business, we will continue tostrengthen our business foundation and improve organisational efficiency to increase marketshare and profitability. For SAN YI NIAO, we will continue to invest in its five core capabilities,including “the Smart Home Brain, scenario-based solutions, design tools, store operations, anddigital platform capabilities”. We will enrich our range of scenario-based solutions, drive theapplication of interior design tools at retail end, and foster the upgrade of sales models, toimprove user experience and store output, and enhance the user value we deliver.In overseas markets, our brand portfolio provides comprehensive coverage of all users andcaters to the needs of different user segments. We will continue to improve the competitivenessof our high-end brands and enhance the price index and profitability of our products. We willfocus on improving the competitive edge of individual product models and upgrading the productmix in advantageous industries, as well as seizing opportunities in growing sectors such as homeair conditioning, commercial air conditioning, and kitchen appliances to generate business growth.We will create meaningful touchpoints, enhance interactions with end users, and improve oursales capabilities for smart home appliance product sets. We will prioritise profit-oriented end-to-end management to improve overseas profit margins.Significant changes in the Company’s operating conditions during the reportingperiod, and matters occurring during the reporting period that have andexpected to have a significant impact on the Company’s operating conditions

Applicable √ Not Applicable

Section III Management Discussion and Analysis

IV. MAJOR OPERATIONS DURING THE REPORTING PERIOD

(I) Analysis of principal business

1. Table of movement analysis on the related items in financial statements

Unit and Currency: RMB

ItemsCurrent period

Corresponding

period oflast yearChange (%)Operating revenue131,626,581,506.56121,640,067,379.358.21Operating cost91,555,264,412.9984,818,768,956.567.94Selling expenses18,768,944,057.4417,606,475,316.076.60Administrative expenses5,461,681,481.505,140,311,538.476.25Financial expenses–9,349,613.72–200,558,018.91N/AR&D expenses5,025,786,116.644,598,032,317.919.30Net cash flow generated from

operating activities6,790,530,462.545,965,070,983.8613.84Net cash flow generated from

investing activities–4,333,325,021.19–4,164,668,747.75N/ANet cash flow generated from

financing activities–1,267,997,912.182,125,608,361.90–

159.65

Taxes and surcharge532,576,459.68357,254,442.5949.07Gains on changes in fair value31,271,562.35–118,790,175.68N/ACredit impairment loss–165,968,929.36–258,076,846.14N/AGains on disposal of assets–20,647,304.6431,589,207.10–

165.36

Section III Management Discussion and Analysis

Reasons for the significant changes:

Reasons for the changes in financial expenses: it was primarily attributable to the increasein our interest expenses in the current period over the corresponding period.Reasons for the changes in net cash flow from financing activities: the increase of

159.65% in our net cash flows from financing activities over the corresponding period was

primarily attributable to the new borrowings raised and proceeds from additional issuanceduring the corresponding period.Reasons for the changes in taxes and surcharge: the increase of 49.07% in our taxes andsurcharge over the corresponding period was primarily attributable to the increase in value-added tax payable and the corresponding increase in taxes and surcharge recognizedduring the current period.Reasons for the gains on changes in fair value: it was primarily attributable to the increasein fair value change of forward contracts, etc. over the same period.Reasons for changes in credit impairment loss: it was primarily attributable to the decreasein the provision for bad debts of receivables in the current periodReasons for the change in gains on disposal of assets: the decrease of 165.36% in ourgains on disposal of assets over the corresponding period was primarily attributable to therecognition of losses on disposal of assets in the current period and the recognition ofgains on disposal of assets in the corresponding period.

2. Detailed explanation on significant changes in the operation types and the components of

profit or sources of profit of the Company during the period Applicable √ Not Applicable (II) Explanations on the major changes in profits caused by non-principal businesses

Applicable √ Not Applicable

Section III Management Discussion and Analysis

(III) Analysis of assets and liabilities

√ Applicable Not Applicable

1. Assets and liabilities

Unit: RMB

Items

Amount as at the

end ofthe period

Percentage ofamount at the endof the period overtotal assets (%)

Amount as at theend of thecorrespondingperiod oflast year

Percentage ofamount at the end

of the

correspondingperiod of last yearover total assets

(%)

Percentage ofchange in amountfrom the end of thecorrespondingperiod of last yearto current period

(%)Monetary funds55,641,485,513.5622.5954,161,702,227.3922.962.73Receivables21,742,220,596.238.8315,886,628,623.996.7336.86Inventories39,026,874,630.7815.8541,587,786,307.5317.63–

6.16

Contract assets392,384,817.350.16309,930,359.250.1326.60Investment properties25,514,429.830.0125,678,492.570.01–

0.64

Long-term equity investments25,183,862,504.9110.2224,527,800,290.8410.402.67Fixed assets27,270,691,461.2711.0727,158,348,424.2811.510.41Construction in progress4,675,841,932.961.904,094,684,500.491.7414.19Right-of-use assets4,385,820,465.381.783,795,225,353.891.6115.56Short-term borrowings9,365,184,799.413.809,672,223,522.364.10–

3.17

Contract liabilities6,251,026,204.672.549,352,719,895.493.96–

33.16

Long-term borrowings18,366,761,352.037.4613,590,866,873.435.7635.14Lease liabilities3,338,912,496.121.362,824,477,670.611.2018.21Financial assets held for

trading

734,584,929.880.30519,912,880.910.2241.29Derivative financial assets100,132,280.780.04183,185,160.510.08–

45.34

Debt investments2,254,869,444.450.921,034,222,222.220.44118.03Development expenses237,607,781.860.10154,480,515.670.0753.81Derivative financial liabilities352,914,936.890.14104,594,040.660.04237.41Other payable22,901,109,264.179.3017,517,838,565.997.4230.73Non-current Liabilities duewithin one year

3,519,285,132.721.436,294,750,667.082.67–

44.09

Other non-current liabilities72,361,573.140.03107,332,101.070.05–

32.58

Section III Management Discussion and Analysis

Explanation of reasons for significant changes:

1) Financial assets held for trading increased by 41.29% as compared to the beginning

of the period, mainly due to the increase in short-term financial management;

2) Derivative financial assets decreased by 45.34% as compared to the beginning of the

period, mainly due to the fluctuation in fair value of forward foreign exchangecontracts;

3) Accounts receivable increased by 36.86% as compared to the beginning of the period,

mainly due to the decrease in factoring business of overseas accounts receivable forthe current period;

4) Debt investments increased by 118.03% as compared to the beginning of the period,

mainly due to the increase in long-term time deposits in order to optimize the depositstructure and improve the return on funds;

5) Development expenses increased by 53.81% as compared to the beginning of the

period, mainly due to the increase in investment in low-carbon and energy-savingprojects;

6) Derivative financial liabilities increased by 237.41% as compared to the beginning of

the period, mainly due to the fluctuation in fair value of forward foreign exchangecontracts;

7) Contract liabilities decreased by 33.16% as compared to the beginning of the period,

mainly due to the increase in advance payment from customers in the fourth quarterof 2022, which resulted in revenue for the current period;

8) Other payables increased by 30.73% as compared to the beginning of the period,

mainly due to the distribution of dividends from Smart Home;

9) Non-current liabilities due within one year decreased by 44.09% as compared to the

beginning of the period, mainly due to the repayment of long-term borrowings duewithin one year;10) Long-term borrowings increased by 35.14% as compared to the beginning of the

period, mainly due to the replacement of long-term borrowings due within one yearand new policy borrowings;

11) Other non-current liabilities decreased by 32.58% as compared to the beginning of the

period, mainly due to the purchase of non-current assets to be paid in installments,which was paid during the current period.

Section III Management Discussion and Analysis

2. Overseas Assets

√ Applicable Not Applicable

(1) Scope of assets

Among the assets, overseas assets amounted to 12,130,795 (unit and currency:

RMB0,000), representing 49.30% of the total assets.

(2) Relevant information on high percentage of overseas assets

√ Applicable Not Applicable

Unit and Currency: RMB0,000

Name of overseas assetReason for FormationOperation mode

Operating revenueduring the reporting

periodNet profit during thereporting periodOverseas Home Appliance andSmart Home Business

Overseas mergers &acquisitions and theCompany’s owndevelopment

Localized Operations with the

integration of R&D,manufacturing and marketing

6,691,737350,111Note: Net profit stated in the above table represents operating profit.

3. Restrictions on major assets as of the end of reporting period

Applicable √ Not Applicable

4. Other explanations

Applicable √ Not Applicable

(IV) Analysis of investment

1. Overall analysis on external equity investment

Applicable √ Not Applicable

Section III Management Discussion and Analysis

(1) Significant equity investment

Applicable √ Not Applicable

(2) Significant non-equity investment

Applicable √ Not Applicable

(3) Items measured at fair value

Asset TypeOpening Balance

Profits or Losses

of Changes inFair Value duringthe Period

CumulativeChanges in FairValue Includedin Equity

Provision forImpairmentof duringthe PeriodPurchases duringthe Period

Sold/RedeemedAmount duringthe PeriodOther ChangesClosing BalanceWealth management products14,638,968.262,626,845.25428,000,000.00264,881,193.19180,384,620.32Investments in other equity instruments5,851,882,930.2029,397,079.244,372,766.9120,000,000.0046,701,460.445,912,354,236.79Investments in equity instrument held for trading336,843,065.026,761,392.801,387,649.45342,216,808.37Investment funds168,430,847.6323,806,724.2112,103,931.787,641,997.57211,983,501.19Derivative financial instruments61,674,330.75–118,844,830.95–199,207,840.573,595,684.66–252,782,656.11Total6,433,470,141.86–85,649,868.69–169,810,761.33—444,476,698.69286,268,842.6457,939,142.676,394,156,510.56Note: As of 30 June 2023, the aggregate balance of foreign exchange derivative transaction amounted to

approximately US$1.602 billion.Investment in securities

√ Applicable Not Applicable

Unit and Currency: RMB

Type ofSecurities

SecuritiesCodeSecurities Abbreviation

Initial

investmentcostSources offunding

Carryingamount at the

beginning ofthe PeriodProfit and lossarising fromchanges in fairvalue duringthe PeriodAccumulatedfair valuechangesincluded in

equityPurchasesduring thePeriodDisposalsduring thePeriodInvestmentprofit or loss

during theperiodCarryingamount at the

end of thePeriodAccounting itemsStock601328Bank of Communications1,803,769.50Self-funding6,457,074.48272,357.906,729,432.38Investments in other equity instrumentsStock600827Bailian Group154,770.00Self-funding477,382.56477,382.56Investments in other equity instrumentsStock300183Neusoft Carrier18,713,562.84Self-funding9,419,316.309,419,316.30Investments in other equity instrumentsStock000959Beijing Shougang99,999,996.80Self-funding70,074,347.20–5,018,587.2065,055,760.00Financial assets held for tradingStock688455KENGIC29,450,000.00Self-funding157,181,890.0011,779,980.00168,961,870.00Financial assets held for tradingTotal//150,122,099.14/243,610,010.546,761,392.80272,357.90250,643,761.24/

Explanation of investment in securities

Applicable √ Not Applicable

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 privateequity funds as follows: the Company invested 63.13% share in Qingdao Haier SAIFSmart Home Industry Investment Center (Limited Partnership); Qingdao RRS HuitongInvestment Management Co., Ltd. (青島日日順匯通投資管理有限公司), a subsidiaryof the Company, invested 49% share in Guangzhou Heying Investment Partnership(Limited Partnership); Qingdao Haishang Chuangzhi Investment Co., Ltd. (青島海尚創智投資有限公司), a subsidiary of the Company, invested 30% share inHuizhixiangshun Equity Investment Fund (Qingdao) Partnership (Limited Partnership), aprivate equity fund, and 50% 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 subsidiary of the Company, invested in private equity funds:

1.073% share in Beijing-Tianjin-Hebei Industrial 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% sharein 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 Haimu Smart Home InvestmentPartnership (Limited Partnership), and invested in fund management 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 name of derivativesinvestmentType of derivatives investment

Initialinvestmentamount ofderivativesinvestmentStarting dateEnding date

Openinginvestmentamount

Amountpurchasedduring thereportingperiodAmount sold

during thereportingperiodProvision forimpairment(if any)

Closinginvestmentamount

Proportion of

closinginvestmentamount overnet assets at

end ofreporting

periodActual profitor loss forthe reportingperiodBankForward foreign exchange contract1,360,0762023/1/12024/6/301,360,0761,157,97810,680BankInterest rate/exchange rate swap02023/1/12023/6/30000Funding sources of derivatives investmentsOwn funds of the CompanyFor changes in the market price or fair value of the invested derivatives products during thereporting period, the specific methodology used and the settings of relevant assumptions andparameters should be disclosed in the fair value analysis of the derivatives.

Changes in market prices or fair value of products,

1. The profit or loss arising from the foreign exchange forward contracts amounted to RMB106.80 million during the reporting period;

2. The profit or loss arising from the interest rate/exchange rate swap was nil during the reporting period.

The specific methodology used and the related assumptions and parameter settings are based on the forward quotations of foreign exchange and interest rateswaps of the financial institutions.

Section III Management Discussion and Analysis

(V) Sale of material assets and equity

Applicable √ Not Applicable(VI) Analysis on major subsidiaries and Investees

Applicable √ Not Applicable(VII) Structured entities controlled by the Company

Applicable √ Not ApplicableV. OTHER DISCLOSURES (I) Potential risks

√ 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, decrease in market demand and fiercercompetition in individual sub-sectors may lead to risks such as price wars. Furthermore,rapid technological advancements, scarce talents in the industry, shortened product lifecycles and ease of imitation are making it increasingly difficult to profit. Although newproducts, services and technologies are often associated with higher selling prices, it hasbecome necessary for the Company to invest more in R&D. The Company will activelyinvest in R&D to attract more users through continuous innovation in products andservices, to build a lasting brand awareness.

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.

Section III Management Discussion and Analysis

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.

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

predict trends and events and maintain appropriate inventory levels; thus, the Companymay be forced to offer discounts or promotions to manage the slow-moving inventory. Onthe other hand, a shortage of inventory may lead to loss of sales opportunities for theCompany. However, the Company will manage its inventory and adjust according to marketsituation and will conduct regular impairment assessment of its inventory. (II) Other disclosures

Applicable √ Not Applicable

Section IV Corporate Governance

I. INTRODUCTION TO THE GENERAL MEETINGS OF SHAREHOLDERS

MeetingDate

Index for details of websites designatedfor publishing resolutions

Date ofdisclosureResolutions approved2022 Annual General

Meeting2023 First A Shares Class

Meeting2023 First D Shares

Class Meeting2023 First H Shares Class

Meeting

26 June 2023For details, please refer to the

Announcement on Resolutions passed atthe 2022 Annual General Meeting, 2023First A Shares Class Meeting, 2023 FirstD Shares Class Meeting and 2023 FirstH Shares Class Meeting of Haier SmartHome Co., Ltd. (L2023-027) publishedby the Company on the website ofShanghai Stock Exchange(www.sse.com.cn) and the four majorsecurities newspapers

27 June 2023Considered and approved the

resolutions related to annualreport, internal control auditreport, profit distributionproposal, re-appointment ofauditor, external guarantees,routine connectedtransactions, generalmandate to issue additionalshares / repurchase sharesand employee stockownership plan, etc.Considered and approved theresolutions for generalmandate to repurchaseshares, etc.

Preferred shareholders whose voting rights have been restored requested an

extraordinary general meeting Applicable √ Not Applicable

Explanation of Shareholders’ general meeting

√ Applicable Not Applicable

The 2022 Annual General Meeting and the 2023 First A/D/H Shares Class Meetings of theCompany was held in successive order by way of on-site voting, off-site voting and network voting bypoll at Room B101, Haier Rendanheyi Research Center, Haier Science and Technology InnovationEcological Park, No.1 Haier Road, Qingdao, the PRC, in the afternoon on 26 June 2023, consideringthe annual report and other relevant resolutions. The total number of the shares of the Companycarrying voting right amounted to 9,328,695,050 shares (of which 6,199,132,811 shares were Ashares, 271,013,973 shares were D shares and 2,858,548,266 shares were H shares). 1,031shareholders and proxies, representing 6,422,740,689 shares or 68.85% of the total number of theshares of the Company carrying voting right, were present at the 2022 Annual General Meeting. 955shareholders and proxies, representing 4,126,409,131 shares or 66.56% of the total number of Ashares of the Company carrying voting rights, were present at the 2023 First A Shares Class Meeting;66 shareholders and proxies, representing 175,964,322 shares or 64.93% of the total number of Dshares of the Company carrying voting rights, were present at the 2023 First D Shares Class Meeting;9 shareholders and proxies, representing 2,122,075,173 shares or 74.24% of the total number of Hshares of the Company carrying voting rights, were present at the 2023 First H Shares Class Meeting.The Directors, supervisors, and senior management of the Company as well as the lawyers engagedby the Company also attended the abovementioned four meetings. The abovementioned meetings wereconvened by the Board of the Company and Chairman Mr. Li Huagang presided over the meetings.The Company had 9 Directors, of whom 9 Directors attended the meetings; the Company had 3

Section IV Corporate Governance

supervisors, of whom 3 supervisors attended the meeting. The secretary to the Board of the Companyattended the abovementioned meetings and other members of senior management of the Companywere invited to attend the abovementioned meetings.II. CHANGES IN OF DIRECTORS, SUPERVISORS AND SENIORMANAGEMENT OF THE COMPANY Applicable √ Not ApplicableExplanation of changes in Directors, supervisors and senior management of theCompany Applicable √ Not ApplicableIII. PROPOSAL OF PROFIT DISTRIBUTION OR CAPITALIZATION OFCAPITAL RESERVEProposal for interim profit distribution and proposal for reverse conversion into sharecapital

Whether distributed or convertedNo

Section IV Corporate Governance

IV. EQUITY INCENTIVE PLAN, EMPLOYEE STOCK OWNERSHIP PLAN OROTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF

(I) Relevant incentive events disclosed in provisional announcements but without

subsequent development or changes during implementation

√ Applicable Not Applicable

Summary of MattersQuery IndexCancellation of certain 2021 and 2022 equityincentive options: In view of the fact that thesecond exercise period of the first/reserved grantportion of the 2021 A Share Option Incentive Schemeand the first exercise period of the 2022 A ShareOption Incentive Scheme of the Company did notmeet the exercise conditions, and due to theresignation of some of the incentive recipients, theCompany cancelled the corresponding 11,391,979share options and 27,934,987 share options that hadbeen granted but had not yet been exercised.

For details, please refer to the

Announcement of Haier SmartHome Co., Ltd on theCancellation of Certain ShareOptions in the 2021 A ShareOption Incentive Scheme, the2022 A Share Option IncentiveScheme disclosed by theCompany on 28 April 2023, theAnnouncement of Haier SmartHome Co., Ltd on theCompletion of Cancellation ofCertain Share Options in the2021 A Share Option IncentiveScheme, the 2022 A ShareOption Incentive Scheme andrelevant contents disclosed bythe Company on 31 May 2023.Introduction of New Phase of A Share and H Share

Employee Stock Ownership Plan: In order tofurther improve the governance mechanism of theCompany, create shareholder value and promote thecomprehensive implementation of the Company’s IoTsmart home ecological brand strategy, the Companyconsidered and introduced the 2023 H Share CoreEmployee Stock Ownership Plan of Haier SmartHome Co., Ltd (Draft) and the 2023 A Share CoreEmployee Stock Ownership Plan of Haier SmartHome Co., Ltd (Draft) at the 5th meeting of the 11thsession of the Board of Directors held by theCompany on 27 April 2023 and the 2022 AnnualGeneral Meeting held by the Company on 26 June2023. During the reporting period, the Companypromoted the opening of accounts and other relatedworks for the 2022 A Share and H Share EmployeeStock Ownership Plan.

For details, please refer to the

2023 A Share Core EmployeeStock Ownership Plan of HaierSmart Home Co., Ltd (Draft),the 2023 H Share CoreEmployee Stock Ownership Planof Haier Smart Home Co., Ltd(Draft) disclosed by theCompany on 28 April 2023 andthe Announcement ofResolutions at the GeneralMeeting and relevant contentsdisclosed by the Company on27 June 2023.

Section IV Corporate Governance

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

developmentEquity incentive

Applicable √ Not ApplicableOther explanations

Applicable √ Not ApplicableEmployee stock ownership plan

Applicable √ Not ApplicableOther Incentives

Applicable √ Not applicable

Section V Environmental and Social

Responsibilities

1. ENVIRONMENTAL INFORMATION

(I) Explanation of the environmental protection status of companies and their

important 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 direct/indirect non-wholly owned subsidiaries Hefei Haier Refrigerator Co.,Ltd. (“Hefei Refrigerator”), Qingdao Haier Special Refrigerator Co., Ltd. (“Qingdao SpecialRefrigerator”), Wuhan Haier Water Heater Co., Ltd. (“Wuhan Water Heater”), Wuhan HaierFreezer Co., Ltd. (“Wuhan Freezer”), Wuhan Haier. Electronics Co., Ltd. (“Wuhan Air-Conditioning”) and Qingdao Haier (Jiaozhou) Air-conditioning Co., Ltd. (“Jiaozhou Air-Conditioning”) are among the key emission units announced by the local environmentalprotection department. The main information on pollutant discharge is as follows:

(1) Hefei Refrigerator

Main pollutants:

Wastewater. According to theTechnical 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, PH, Chemicaloxygen demand (COD), ammonia nitrogen (NH3-N), and five-day biochemicaloxygen demand (BOD5)Exhaust gas. According to theVolatile Organic Unorganized Emission ControlStandard(GB 37822-1-2019), Development Zone Energy should apply for apollutant discharge permit and detect pollutants. Main types of atmosphericpollutants: particulate matter, non-methane total hydrocarbons Way of discharge: continuous dischargeNumber and distribution of discharge outlets: 1 sewage, at the north entrance

of the refrigerator Park; 23 exhaust gas, at the refrigerator block A(10), blockB(10), and Phase III Factory(3)

Section V Environmental and Social Responsibilities

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 (2022 data) are asfollows:

No.

Name ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD99.95 mg/L37.55 tons300 tonsNo2Ammonia

nitrogen

12.59 mg/L4.93 tons28 tonsNo

3total nitrogen30.28 mg/L11.69 tons20 tonsNo4total phosphorus2.19 mg/L0.87 tons5 tonsNoPollutant discharge standards implemented: Wastewater Quality Standards forDischarge to Municipal Sewers (GBT 31962-2015)

(2) Qingdao Special Refrigerator

Main0 Pollutants:

Exhaust gas. According to the Administrative Measures for Pollutant DischargeLicensing (for Trial Implementation) (HJ 978-2018), Qingdao Special Refrigeratorshould apply for a pollutant discharge permit and detect the primary type ofpollutant in the atmosphere, namely non-methane hydrocarbon (VOC), with themaximum concentration of discharge not exceeding 60mg/m?. A qualified third-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a quarterly basis.Wastewater: There is no wastewater generated by the business department, andthe domestic wastewater is discharged into the municipal sewage networkthrough the sewage pipes in Haier Industrial Park. Way of discharge: Continuous emissionNumber and distribution of discharge outlets: two in total, one for absorptionexhaust port at the west side of the Special Refrigerator plant roof, and one forfoam exhaust port at the west side of the Special Refrigerator plant roof.

Section V Environmental and Social Responsibilities

Concentration and total amount of discharge and approved total amount ofdischarge:

According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.Name ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1Non-methane

hydrocarbon

4.725 mg/m?

0.1423 tons

No totalamount ofdischargecontrol

No

Pollutant discharge standards implemented: Volatile Organic Compounds

Discharge Standards Part 7: Other Industries in Shandong Province(DB37/2801.7-2019) (3) Wuhan water heater

Main pollutants:

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. Way of discharge: indirect dischargeNumber and distribution of discharge outlets: one, on the southwest of thewastewater treatment plant, pipeline discharge

Section V Environmental and Social Responsibilities

Concentration and total amount of discharge and approved total amount ofdischarge:

According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.Name ofpollutant

Concentrationof discharge

Totalamount ofdischarge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD40 mg/L3.012 tons9.075 tonNo2Ammonia

nitrogen

0.336 mg/L0.376 tons0.9075 tonNo

Pollutant discharge standards implemented:

Wastewater Quality Standards forDischarge to Municipal Sewers(GBT 31962-2015)

(4) Wuhan freezer

Main pollutants:

Wastewater. According to theTechnical 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. Way of discharge: indirect dischargeNumber and distribution of discharge outlets: one, on the south of the wastewatertreatment plant, pipeline discharge

Section V Environmental and Social Responsibilities

Concentration and total amount of discharge and approved total amount of

discharge:

According to the discharge permit, the concentration and total amount ofpollutant discharge subject to approval for the total amount are as follows:

No.Name of pollutant

Concentrationof discharge

Total amountof discharge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1COD17 mg/L0.61 tonsNo registration

managementregarding therequirementof the totalamount

No

2Ammonia nitrogen0.552 mg/L0.02 tonsNo registration

managementregarding therequirementof the totalamount

No

Pollutant discharge standards implemented:

Wastewater Quality Standards forDischarge to Municipal Sewers(GBT 31962-2015)

(5) Wuhan Air-Conditioning

Main Pollutants

Organic exhaust gas. Exhaust gas pollutant discharge refers to the Integratedemission standard of air pollutants, and the primary type of pollutant in theatmosphere detected are namely non-methane hydrocarbon (VOC), with themaximum concentration of discharge not exceeding 120mg/m?. A qualifiedthird-party testing unit is commissioned to conduct organic exhaust gasconcentration testing and issue a report on a half-yearly basis. Way of discharge: Continuous dischargeNumber and distribution of discharge outlets: Five in total, one degreasing exhaust

port at the south side of the plant roof, and three stamping exhaust ports at thesouth side of the plant roof and one spraying exhaust port at the north side ofthe spraying workshop

Section V Environmental and Social Responsibilities

Concentration and total amount of discharge and approved total amount ofdischarge: No control regarding the total amount of discharge of organicexhaust gas

No.Name of pollutant

Concentrationof discharge

Total amountof discharge

Approvedtotal amountof discharge

Whether it isexcessivedischarge1VOC8mg/m?1.53 tonsNo control

regarding thetotal amountof dischargeof VOC

no

Implementation of Grade 2 standards according to Table 2 indicated in thenational Integrated emission standard of air pollutants (GB16297-1996)

(6) Jiaozhou Air-Conditioning

Main Pollutants:

Hazardous waste. According to the national directory, 11 types of hazardouswaste detected are namely: waste oil, sludge, slag powder, computer boards,activated carbon, cotton filters, lightning tubes, soldering flux buckets, paintbuckets,packaging bags and forklift battery.Way of discharge: Hazardous waste is transferred to a qualified hazardous waste

disposal unit for disposal Total amount of discharge and approved total amount of discharge:

No.Name of hazardous waste

Total amount

of transfer(tons)

Total amountof managedplan (tons)

Whether it isexcessivedischarge1Waste cotton filters0.150.5No2Waste oil12.5435No3Soldering flux buckets0.481.5No4Waste forklift battery18.3622No5Sludge29.4645No6Waste paint buckets0.965No7Waste activated carbon3.628NoPollutant discharge standards implemented: Directory of National Hazardous

Wastes (Version 2021), Law of the People’s Republic of China on the

Prevention and Control of Environmental Pollution by Solid Waste

Section V Environmental and Social Responsibilities

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

√ Applicable Not Applicable

Jiaozhou Air-Conditioning, Wuhan Freezer, Wuhan Water Heater have one, one and twowastewater treatment plants with a designed treatment capacity of 300 tons/day, 360tons/day, 300 tons/day and 260 tons/day, respectively. The construction, maintenance anddaily operation of all wastewater treatment facilities are conducted in accordance with therequirements of national and local environmental laws and regulations. Information on allwastewater discharge is subject to 24-hour online monitoring and such monitoredinformation is transmitted to environmental authorities in a real-time manner. All equipmentis operating normally. Wastewater discharge is in compliance with the prescribedstandards. In addition, the Company fully promotes all plants to install exhaust treatmentfacilities and VOCs online monitoring facilities. All equipment is operating normally andexhaust produced is treated by the prevention and treatment facilities before compliantrelease 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” principle requirements of environmental protection forconstruction projects 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

All pollutants of the Company are regularly tested and the Company complies with nationaland local environmental standard requirements in respect of all pollutant discharge.Wastewater collected is subject to standard treatment and is released in a compliantmanner. It is under real-time monitoring through the automatic online wastewatermonitoring system, which shares its information with Haier Smart Energy System. In March2017, the Company passed the upgraded certification in relation to ISO14001 environment

Section V Environmental and Social Responsibilities

management system. In May 2021, a professional certification firm was appointed toconduct a review and audit on the operation of ISO14001 system in 2020, wheresatisfactory results were obtained to demonstrate its good operating condition; In May2022, a second review and audit was conducted on the operation of the system in 2021;In May 2023, a third review and audit was conducted on the operation of the system in2022.

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

pollutant-emission 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 division of the Company execute construction project implementation and production inaccordance with the requirements of laws and regulations and strictly comply with the“three simultaneous” requirements of environmental protection for construction projects inthe process of environmental impact assessment, and have passed environmentalassessment acceptance and are not involved in any environmental illegal conducts such asconstruction before approval.

Section V Environmental and Social Responsibilities

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) Explanation of the subsequent progress or changes in the disclosure of

environmental information content during the Reporting Period

√ Applicable Not Applicable

The Company will continue to maintain and improve existing results and strictly comply withexisting environmental protection and emission standards to achieve compliant emission.(IV) Relevant information favorable to ecological protection, pollution prevention and

control and environmental responsibility fulfillment

√ Applicable Not Applicable

During the reporting period, Hefei Refrigerator actively participated in the declaration of “Zero-waste Factories” organised by environmental protection department of the local government. Withan aim to achieve “effective energy conservation, lower energy consumption, less pollution andhigher efficiency”, it firmly stays on the path of green development with priority given toecological conservation. The Company and each of its subsidiaries faithfully implement thenational “dual carbon” strategy by integrating low-carbon, recycling, energy conservation andemission reduction into daily operations, actively exploring the carbon reduction modelthroughout the whole product life cycle and continuously promoting green industrial upgrade. Asa leader in green development, we work together with our peers to march towards a greener,win-win and sustainable future with concerted effort to safeguard our homeland.

Section V Environmental and Social Responsibilities

(V) Measures taken during the Reporting Period to reduce its carbon emission and

their effectiveness

√ Applicable Not Applicable

During the reporting period, all relevant entities of the Company actively carried out its work incarbon reduction, and some examples of our carbon reduction measures are as follows:

(1) Conducting greenhouse gas inventory: some of our factories have conducted greenhouse

gas inventory, established a greenhouse gas inventory system (ISO14064) and obtainedcertificates from accreditation agencies;

(2) Application of solar energy as a form of clean energy: new photovoltaic on-grid power

generation was to replace thermal power to reduce carbon emissions;

(3) Efficient transformation of energy use: reasonable production scheduling was achieved in the

factories in the park to improve the productivity of personnel and production lines andreduce idle energy consumption losses in production lines, leading to more efficient energyuse;

(4) Intelligent energy management with upgrades in digital technologies: with the master energy

control system, the Company has implemented remote collection of energy data and real-time monitoring of park production and domestic energy use, which enabled timely warningof energy wastage at terminals through big data analysis to effectively enhance theefficiency of energy use, thereby reducing carbon emissions;

(5) Promoting energy saving and emission reduction in the daily operations of offices: As an

important part of the production and operation of the park, the activities of the staff have anon-negligible impact on carbon emissions. Carbon emission occurs every moment inclothing, food, housing, transportation, and use of items in daily life, so more promotionalcampaigns are organized to enhance the awareness of energy saving and emissionreduction among all staff, such as timely replacement of clothing to reduce the use of air-conditioning at moderate temperature, replacement of energy-saving lamps in rooms,double-sided printing of paper, and repeated recycling of tap water.

Section V Environmental and Social Responsibilities

2. Particulars on the efforts to consolidate and expand its achievements in poverty

alleviation and rural area invigoration

√ Applicable Not Applicable

The Company emphasizes poverty alleviation and rural revitalization. In accordance with theseries of national planning and documentation requirements, the Company providestargeted assistance within the authority granted on the general meeting in respect of,among others, donations to revitalize the rural areas.For years, the Company has made genuine contributions to education to improve the basiccultural quality of people in poverty, with an emphasis on shoring up the weak link of theeducation sector and stopping inter-generational poverty. As of now, the Company, HaierGroup Companies (the effective controller of the Company) and its subordinate enterprises(“Haier Group”) have constructed over 300 hope primary schools and hope secondaryschools, covering 26 provinces, municipalities and autonomous regions in the PRC. It alsooffers continuous resource assistance to such schools every year to effectively boost thebase education capacity in poverty regions and improve education quality. During thereporting period, in order to implement the “Ten thousand enterprises help ten thousandvillages* (萬企幫萬村)” targeted poverty alleviation programme and assist in povertyalleviation, the Company’s “Ten thousand enterprises help ten thousand villages* (萬企幫萬村)” targeted poverty alleviation donation activity and the distribution ceremony of “BenefitCard” home appliances subsidies were held in the Guanwa Community of JingshanTownship, which provided the poverty-stricken people with support as much as possible. Inaddition, the Company provided financial support to Wuchuan Autonomous County.In the first half of 2023, the Company spent approximately RMB3.65 million on targetedpoverty alleviation, which was mainly used for education and poverty alleviation, in povertyregions. The Company actively responded to the government’s call and practiced socialresponsibility.

Section VI Significant Issues

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

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

√ Applicable Not Applicable

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayUndertaking relatedto significantreorganization

Eliminate the property rightdefects in land etc.

Haier GroupCorporation

During the period from September 2006 to May 2007,the Company issued shares to Haier GroupCorporation (“Haier Group”) to purchase thecontrolling equity in its four subsidiaries, namelyQingdao Haier Air-Conditioner Electronics Co., Ltd.(青島海爾空調電子有限公司), Hefei HaierAir-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier Electronics 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 theland and property required in the operation ofQingdao Haier Air-Conditioner Electronics Co., Ltd.(青島海爾空調電子有限公司), Hefei HaierAir-conditioning Co., Limited (合肥海爾空調器有限公司), Wuhan Haier Electronics 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 Undertaking andthen condition of each Covenantee, Haier Group willconstantly assure that Covenantees will lease theland and property owned by Haier Group for free.Haier Group will make compensation in the eventthat the Covenantees suffer loss due to theunavailability of such land and property.

27 September

2006,long-term

YesYes

Address competition issuesHaier Smart Home

Co., Ltd.

Prior to the Transaction (hereinafter “the Transaction”

refers to the transaction in relation to theprivatisation of Haier Electronics by Haier SmartHome), Haier Electric was a controlling subsidiary ofthe Company and did not compete with theCompany; after the completion of the Transaction,Haier Electric became a wholly-owned or controllingsubsidiary of the Company and no new competitionwith the Company existed or will arise. There is nonew peer competition or potential competitionbetween the Company and other related partiescontrolled by the controlling shareholders or the defacto controllers of the Company.

31 July 2020

long-term

YesYes

Section VI Significant Issues

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayAddress connected

transactions

Haier Group

Corporation

1. The Transaction constitutes a connected transaction

and the connected transaction procedures performedunder the Transaction are in compliance with therelevant regulations. The pricing of the connectedtransaction is fair and there are no circumstances underwhich the interests of the listed company and thenon-connected shareholders are prejudiced. 2. Uponcompletion of the Transaction, the Company and itsaffiliates will take lawful and effective measures tominimize and regulate the connected transactions withthe listed company, take the initiative to safeguard theinterests of the listed company and all shareholders,and refrain from taking advantages of connectedtransactions for improper benefits. 3. Provided that thereis no conflict with laws and regulations, if connectedtransactions between the Company and its affiliates andthe listed company occur or exist which cannot beavoided or for which there are reasonable reasons, theCompany and its affiliates will legally enter into atransaction agreement with the listed company toensure strict compliance with the procedures ofconnected transactions required by the laws,regulations, regulatory documents and the articles ofassociation of the Company, conduct transactions inaccordance with the principles of marketability and fairprices to ensure the fairness and compliance ofconnected transactions, and refrain from takingadvantages of such connected transactions to engage inany acts that are detrimental to the interests of thelisted company or its minority shareholders, and at thesame time, comply with the information disclosureobligations in accordance with relevant regulations.

29 July 2020, long-

term

YesYes

Section VI Significant Issues

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayAddress competition issuesHaier Group

Corporation

1. The Company and its controlling subsidiary, Haier

COSMO Co., Ltd., were principally engaged ininvestment business during the reporting period, and theCompany and its controlling subsidiary, Haier COSMOCo., Ltd. (including its subsidiaries and entities withmore than 30% shareholding), have no real or potentialcompetition with Haier Smart Home; 2. the domesticand overseas white goods businesses and assets heldby the Company (including the Company’s subsidiariesand entities with more than 30% shareholding) havebeen injected into Haier Smart Home through assetconsolidation and equity transfer in accordance with thecommitments made by the Company in January 2011and the requirements for adjusting such commitmentsas considered and approved by Haier Smart Home atits 2014 annual general meeting; 3, Since theacquisition of 100% of Haier New Zealand InvestmentHolding Company Limited (which holds 100% of theshares in Fisher & Paykel Appliances Holdings Limited)by Haier Smart Home’s offshore subsidiary, HaierSingapore Investment Holding Co., Ltd., following thecompletion in July 2018, the Company (including theCompany’s subsidiaries and entities with more than30% shareholding) and Haier Smart Home do not haveany competing relationship in any business areas bothwithin and outside the PRC. During the reporting period,the Company (including the Company’s subsidiaries andentities with more than 30% shareholding) did not haveany new peer competition with Haier Smart Home; 4.Upon completion of the Transaction, the Company(including the Company’s subsidiaries and entities withmore than 30% shareholding) and its affiliates do nothave any new or potential peer competition with HaierSmart Home; 5. During the period when the Companyis the controlling shareholder of Haier Smart Home andthe shares of Haier Smart Home are listed on the HongKong Stock Exchange, the Company and its othersubsidiaries and entities with more than 30%shareholding will not operate any business thatcompetes with the business engaged by Haier SmartHome and will not engage in real or potentialcompetition with Haier Smart Home.

29 July 2020, long-

term

YesYes

Section VI Significant Issues

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayOthersHaier Group

Corporation

Upon completion of the Transaction, the Company will

strictly comply with the Company Law, theSecurities Law, the relevant regulations of the ChinaSecurities Regulatory Commission, the ShanghaiStock Exchange and the articles of association ofHaier Smart Home, etc., fairly exercise shareholders’rights and fulfill shareholders’ obligations, refrainfrom taking advantage of its shareholding positionfor improper 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 on SeveralIssues concerning Regulating Fund Transactionsbetween Listed Companies and Their Affiliates andthe External Guarantee of Listed Companies and theCircular of China Securities Regulatory Commissionand China Banking Regulatory Commission onRegulating the External Guaranties Provided byListed Companies to regulate the externalguarantees by listed companies and theirsubsidiaries, and will not misappropriate the funds ofthe listed company and their subsidiaries. TheCompany undertakes to strictly fulfill the abovecommitments. In the event that the interests of thelisted company are damaged as a result of anybreach of the above commitments by the Companyand other enterprises on which the Companyexercises control and exerts significant influence, theCompany will legally bear the corresponding liabilityfor damage.

29 July 2020, long-

term

YesYes

Section VI Significant Issues

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayAddress connectedtransactions

HCH (HK)INVESTMENTMANAGEMENTCO., LIMITED

1. The Transaction constitutes a connected transaction

and the connected transaction procedures performedunder the Transaction are in compliance with therelevant regulations. The pricing of the connectedtransaction is fair and there are no circumstances underwhich the interests of the listed company and thenon-connected shareholders are prejudiced. 2. Uponcompletion of the Transaction, the Company and otherenterprises on which the Company exercises control willtake lawful and effective measures to minimize andregulate the connected transactions with the listedcompany, take the initiative to safeguard the interests ofthe listed company and all shareholders, and refrainfrom taking advantages of connected transactions forimproper benefits. 3. Provided that there is no conflictwith laws and regulations, if connected transactionsbetween the Company and other enterprises on whichthe Company exercise control and the listed companyoccur or exist which cannot be avoided or for whichthere are reasonable reasons, the Company and otherenterprises on which the Company exercises control willlegally enter into a transaction agreement with the listedcompany to ensure strict compliance with theprocedures of connected transactions required by thelaws, regulations, regulatory documents and the articlesof association of the Company, conduct transactions inaccordance with the principles of marketability and fairprices, and refrain from taking advantages of suchconnected transactions to engage in any acts that aredetrimental to the interests of the listed company or itsminority shareholders, and at the same time, complywith the information disclosure obligations inaccordance with relevant regulations. 4. Any covenantsand arrangements between the Company and otherenterprises on which the Company exercise control andthe listed company in relation to connected transactionsshall not prevent the other party from conductingbusiness or dealing with any third party for its ownbenefit and on equal competitive terms in the market.

29 July 2020, long-

term

YesYes

Section VI Significant Issues

Background ofundertakingsType of undertakingsCovenanterContents of undertakings

Date andterm ofundertakings

Anydeadline forperformance

Whetherperformed ina timely andstrict wayUndertaking relatedto refinancing

Eliminate the property rightdefects in land etc.

Haier GroupCorporation

Haier Group Corporation undertakes that it will assure

Haier Smart Home and its subsidiaries of theconstant, stable and unobstructed use of the leasedproperty. In the event that Haier Smart Home or anyof its subsidiaries suffers any economic loss due tothe fact that leased property has no relevantownership certificate, Haier Group Corporation willmake compensation to impaired party in a timelyand sufficient way and take all reasonable andpracticable measures to support the impaired partyto recover to normal operation before theoccurrence of loss. Upon the expiration of relevantleasing period, Haier Group Corporation will grant ortake practicable measures to assure Haier SmartHome and its subsidiaries of priority to continue tolease the property at a price not higher than the rentin comparable market at that time. Haier GroupCorporation will assure Haier Smart Home and itssubsidiaries of the constant, stable, free andunobstructed use of self-built property and land ofthe Group. In the event that Haier Smart Home orany of its subsidiaries fails to continue to useself-built property according to its own will or inoriginal way due to the fact that self-built propertyhas no relevant ownership certificate, Haier GroupCorporation will take all reasonable and practicablemeasures to eliminate obstruction and impact, or willsupport Haier Smart Home or its affected subsidiaryto obtain alternative property as soon as possible, ifHaier Group Corporation anticipates it is unable tocope with or eliminate the external obstruction andimpact with its reasonable effort. For details, pleaserefer to theAnnouncement of Qingdao Haier Co.,Ltd. on the Formation, Current Situation of theDefective Property, the Influence on Operation ofIssuer Caused by Uncertainty of Ownership, Solutionfor the Defect and Guarantee Measures(L2014-005)published by the Company on the four majorsecurities newspapers and the website of ShanghaiStock Exchange on 29 March 2014.

24 December2013,long-term

YesYes

Undertakings relatedto equityincentive

OthersHaier Smart Home

Co., Ltd

The Company will not provide loans or any other forms

of financial assistance, including guaranteeing theirloans, to any incentive recipient for acquiringrelevant stock options under this incentive plan.

15 September2021/28 June2022, thecompletion ofequity incentiveimplementation

YesYes

Other undertakingsAsset injectionHaier Group

Corporation

Inject the assets of Haier Photoelectric to the Company

or dispose such assets through other waysaccording to the requirements of the domesticsupervision before June 2025. For more details,please refer to theAnnouncement of Haier SmartHome Co., Ltd. on the Changes of SomeCommitments on Asset Injection(L2020-024)published on the four major securities newspapersand the website of Shanghai Stock Exchange on 30April 2020.

December 2015 to

June 2025

YesYes

Section VI Significant Issues

II. NON-OPERATING UTILIZATION OF FUNDS BY CONTROLLINGSHAREHOLDERS AND OTHER RELATED PARTIES DURING THEREPORTING PERIOD. Applicable √ Not Applicable

III. INFORMATION ON NON-COMPLIANCE GUARANTEES

Applicable √ Not Applicable

IV. INFORMATION ON INTERIM AUDIT

Applicable √ Not ApplicableV. CHANGES IN MATTERS COVERED BY THE NON-STANDARD AUDITOPINION ON THE PREVIOUS YEAR’S ANNUAL REPORT AND ITSHANDLING Applicable √ Not ApplicableVI. MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING

Applicable √ Not ApplicableVII. MATERIAL LITIGATION AND ARBITRATION MATTERS

Material litigation and arbitration matter during the reporting period

√ No material litigation and arbitration matters during the reporting period

VIII. PUNISHMENT AND CORRECTION ON THE LISTED COMPANY AND ITSDIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLINGSHAREHOLDERS AND ULTIMATE CONTROLLERS DUE TO SUSPECTOF LAW VIOLATIONS AND THE ISSUE OF RECTIFICATION

Applicable √ Not applicableIX. EXPLANATION OF THE INTEGRITY STATUS OF THE COMPANY ANDITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERDURING THE REPORTING PERIOD

Applicable √ Not applicable

Section VI Significant Issues

X. SIGNIFICANT RELATED-PARTY TRANSACTIONS (I) Related-party transactions relating to daily operation

1. Matters that have been disclosed in temporary announcements and with 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 “Product and Materials Purchase Framework Agreement between HaierSmart Home Co., Ltd. and Haier Group Corporation” (海爾智家股份有限公司與海爾集團公司之產品及物料採購框架協議) and “Service Purchase Framework Agreement betweenHaier Smart Home Co., Ltd. and Haier Group Corporation” (海爾智家股份有限公司與海爾集團公司之服務採購框架協議) considered and approved at the 28th meeting of the10th session of the Board of Directors and the 2021 Annual General Meeting, and the“Resolution of Haier Smart Home Co., Ltd. on Renewing the Framework Agreement onFinancial Services with Haier Group Corporation and Estimated Amount of ConnectedTransactions” (海爾智家股份有限公司關於與海爾集團公司續簽〈金融服務框架協定〉暨預計關聯交易額度的議案) considered and approved at the 18th meeting of the 10th sessionof the Board of Directors and the 2020 Annual General Meeting, the Company has madeestimation on the connected transactions for the next three years, as detailed in theaforesaid announcements regarding the resolutions of the meetings.For the actual performance of the Company’s connected transactions in the first half of2023, 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

Section VI Significant Issues

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

1. Matters 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

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

Section VI Significant Issues

3. Matters not disclosed in temporary announcements

Applicable √ Not applicable(V) Financial business between the Company and the finance company with which

it has a related relationship, the company’s controlling finance company andrelated parties

√ Applicable Not applicable

1. Deposit business

√ Applicable Not applicable

Unit and Currency: RMB

Changes of the period

Related partyRelationship

Maximum dailydeposit limit

Range of depositinterestBalance 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

34 billion0.00012% to 5.32%31,432,615,224.52258,505,160,653.43256,685,459,490.0533,252,316,387.90Total///31,432,615,224.52258,505,160,653.43256,685,459,490.0533,252,316,387.90

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 amountdepositedduring theperiodTotal amount

withdrawnduring theperiodBalance as atthe end of the

periodHaier FinanceCo., Ltd.

Subsidiary ofHaier Group

10 billion0–

4.5%60,000,000.0060,000,000.000.00Total///60,000,000.0060,000,000.000.00

Section VI Significant Issues

3. Trustee business or other finance businesses

√ Applicable Not applicable

Unit and Currency: RMBRelated partyRelationshipType of businessTotal amount

Actual numberof occurrenceHaier FinanceCo., Ltd.

Subsidiary of HaierGroup

Foreign exchangederivativesproducts

5.5 billion3,054,405,905.60

Haier FinanceCo., Ltd.

Subsidiary of HaierGroup

Service charge80 million7,917,428.19

4. Others

Applicable √ Not applicable

(VI) Other material related transactions

Applicable √ Not applicable (VII) Others

Applicable √ Not applicable

Section VI Significant Issues

XI. SIGNIFICANT CONTRACTS AND THEIR EXECUTION 1 Trusteeship, contracting and leasing

Applicable √ Not applicableDuring the reporting period, the Company had no material escrow matters. Up to now, thefollowing entrusted assets that have been approved by the Company’s shareholders’ meeting arestill 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 on thefact that Qingdao Haier Optoelectronics Co., Ltd. (青島海爾光電有限公司) and its subsidiaries,the main body of Haier Group engaging in the color television business, are still in a period oftransformation and integration, and their financial performance has not yet met the Company’sexpectations, Haier Group is unable to complete the transfer before the aforesaid commitmentperiod. Haier Group intends to entrust the Company with the operation and management of theescrow assets and pay the Company an annual escrow fee of RMB1 million during the escrowperiod. 2 Significant guarantees performed and outstanding during the reporting period

√ Applicable Not Applicable

Unit and Currency: RMB0’000

External guarantees provided by the Company (excluding guarantees for subsidiaries)Guarantor

Relationshipbetween theguarantorand the listedcompany

SecuredpartyAmount ofguarantee

Date ofoccurrenceof theguarantee(date ofagreement)

Commencementdate ofguaranteeExpiry dateofguarantee

Type ofguaranteeStatus ofprincipleliabilitiesCollateral(if any)Whether theguaranteehas beenfulfilledWhether theguaranteeis overdue

Overdueamount oftheguarantee

Whetherthere is acounter-guarantee

WhetherRelated-partyguaranteeor 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 period1,387,881Total balance of guarantees for subsidiaries at the end of the reporting period (B)1,356,958

Total amount of guarantees provided by the Company (including guarantees for subsidiaries)Total amount of guarantee (A + B)1,356,958Ratio of total amount of guarantees to net assets of the Company (%)14.5Including:

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)728,269The amount of total amount of guarantee in excess of 50% of net assets (E)0Total amount of the above three guarantees (C + D + E)728,269Explanation of possibly bearing related discharge duty for premature guaranteesNot applicableExplanation of guarantee statusNil3 Other major contracts

Applicable √ Not Applicable

Section VI Significant Issues

XII. STATEMENT ON OTHER SIGNIFICANT EVENTS

√ Applicable Not Applicable

(1) Entrusted wealth management: By the end of the reporting period, the balance of the Company’s

entrusted wealth management amounted to RMB5.255 billion. Under the premise of ensuringsufficient capital required by the principal operating activities and daily operations, the Companyand some of its subsidiaries purchased some low-risk wealth management products andstructured deposits from major commercial banks to improve the yield of temporarily-idle fundsand the return for shareholders within the authority of the president’s office meeting and underthe condition of ensuring fund safety.

(2) Progress of the A-share repurchase: On 27 April 2023, the Company convened the 5th meeting

of the 11th session of the Board of Directors, which considered and approved the Resolution inRelation to the Repurchase Plan of a Portion of Public A Shares of Haier Smart Home Co., Ltd.It approved the Company to use its own funds to repurchase a portion of A shares of theCompany by way of centralised bidding. The repurchase price is no more than RMB32 per shareand the proposed total repurchase amount is no more than RMB3.0 billion and no less thanRMB1.5 billion. The period of this repurchase is within 12 months from the date the Boardconsidered and approved the resolution of repurchase of shares. As at the end of the reportingperiod, the Company had repurchased a total of 25,847,600 shares, representing 0.27% of thetotal share capital of the Company. The highest price purchased was RMB23.90 per share andthe lowest price was RMB21.20 per share, and the amount paid was RMB579,132,930.98. Fordetails, please refer to the announcements on the related progress disclosed by the Company ona monthly basis.

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 changesIncrease/decrease in sharesAfter changesAmountPercentage(%)

Issueof new sharesBonus shares

Reservesconverted tosharesOthersSub-totalAmount

Percentage(%)I. Restricted shares

1. State-owned

shares

2. Shares held by

state-owned legalentities

3. Other domestic

entities held sharesIncluding:

Shares held by

domestic non-state-ownedlegal entitiesShares held bydomesticindividuals

4. Shares held by

foreign entitiesIncluding:

Shares held byoffshore legalentitiesShares held byoffshoreindividualsII. Non-restricted shares9,446,598,493100.00–8,483,6009,438,114,893

1. Ordinary shares in

RMB6,308,552,65466.786,308,552,654

2. Domestically listed

foreign-ownedShares

3. Offshore listed

foreign-ownedShares3,138,045,83933.22-8,483,600-8,483,6003,129,562,239

4. Others

III. Total shares9,446,598,493100.00-8,483,600-8,483,6009,438,114,893

Section VII Changes in Shares and Information About Shareholders

2. Statement on the changes in shares

√ Applicable Not Applicable

Cancellation of H share repurchase: On 28 June 2022, the 2021 Annual GeneralMeeting, the First Class Meeting of 2022 for A shares, the First Class Meeting of 2022 forD shares and the First Class Meeting of 2022 for H shares of the Company considered andapproved the Resolution on Proposing the General Meeting to Grant the General Mandateto the Board of Directors to Repurchase not more than 10% of the Total Number of Hshares of the Company in Issue of Haier Smart Home Co., Ltd., in which the Companyintends to repurchase H shares and cancel them within the agreed period. During thereporting period, the Company repurchased a total of 8,483,600 H shares and all suchshares have been cancelled.Based on the above, during the reporting period, the share capital of the Company waschanged from 9,446,598,493 shares at the beginning of the reporting period to9,438,114,893 shares.

Section VII Changes in Shares and Information About Shareholders

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

and net assets per share (if any) after the reporting period to the disclosure dateof interim report Applicable √ Not Applicable

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

regulatory authorities Applicable √ Not Applicable (II) Changes in shares with selling restrictions

Applicable √ Not ApplicableII. INFORMATION ON SHAREHOLDERS

(I) Total number of shareholders:

Total number of ordinary shareholders by the end of the reporting period162,489Total numbers of preferential shareholders with restoration of voting rights

by the end of the reporting period

Section VII Changes in Shares and Information About Shareholders

(II) Table of shareholdings of top ten shareholders, top ten shareholders of tradable

shares (or shares without selling restrictions) by the end of the reportingperiod

Unit: shareShareholdings of top ten shareholders

Name of shareholder(full name)

Increase/decreaseduring thereportingperiod

Number ofshares heldat the end ofthe period

Percentage(%)Number ofshares heldwith sellingrestrictions

Status of shares pledged,marked or frozen

Nature ofshareholderStatusNumberHKSCC NOMINEES LIMITED(Note)

2,231,357,31923.64UnknownUnknownHaier COSMO Co., Ltd.(海爾卡奧斯股份有限公司)

1,258,684,82413.34NoneDomestic non-state-

owned legal entityHaier Group Corporation1,072,610,76411.36NoneDomestic non-state-

owned legal entityHong Kong Securities ClearingCo., Ltd.

677,016,5907.17NoneUnknownHCH (HK) INVESTMENTMANAGEMENT CO., LIMITED

538,560,0005.71NoneForeign legal entityChina Securities FinanceCorporation 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)

172,252,5601.83NoneDomestic non-state-

owned legal entityQingdao HaichuangzhiManagement ConsultingEnterprise (LimitedPartnership) (青島海創智管理諮詢企業（有限合夥）)

133,791,0581.42NoneDomestic non-state-

owned legal entityALIBABA INVESTMENT LIMITED83,823,9930.89UnknownForeign legal entityAgricultural Bank of ChinaLimited—YifangdaConsumer Industry EquitySecurities Investment Fund

60,843,1840.64NoneUnknown

Section VII Changes in Shares and Information About Shareholders

Shareholdings of top ten shareholders without selling restrictions

Name of shareholder

Number oftradable sharesheld withoutsellingrestrictionsClass and number of shares

ClassNumberHKSCC NOMINEESLIMITED

2,231,357,319Overseas listed foreign

shares

2,231,357,319Haier 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 SecuritiesClearing Co., Ltd.

677,016,590RMB ordinary677,016,590HCH (HK) INVESTMENTMANAGEMENT CO.,LIMITED

538,560,000Overseas listed foreign

shares

538,560,000China Securities FinanceCorporation 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 HaichuangzhiManagementConsulting Enterprise(Limited Partnership)(青島海創智管理諮詢企業（有限合夥）)

133,791,058RMB ordinary133,791,058

ALIBABA INVESTMENTLIMITED

83,823,993Overseas listed foreign

shares

83,823,993Agricultural Bank ofChina Limited—

Yifangda ConsumerIndustry EquitySecurities InvestmentFund

60,843,184RMB ordinary60,843,184

Explanation onrepurchase account oftop ten shareholders

As of the end of the reporting period, the repurchase accounts

of the Company held a total of 112,853,243 shares.

Section VII Changes in Shares and Information About Shareholders

Name of shareholder

Number oftradable sharesheld withoutsellingrestrictionsClass and number of shares

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

Nil

Related parties orparties acting inconcert among theaforesaidshareholders

(1) Haier COSMO Co., Ltd. (海爾卡奥斯股份有限公司) is a

subsidiary of Haier Group Corporation. Haier GroupCorporation holds 51.20% of its equity. Qingdao HaierVenture & Investment Information Co., Ltd. (青島海爾創業投資諮詢有限公司), HCH (HK) INVESTMENT MANAGEMENTCO., LIMITED and Qingdao Haichuangzhi ManagementConsulting Enterprise (Limited Partnership) (青島海創智管理諮詢企業（有限合伙）) are parties acting in concert with HaierGroup 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

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.

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

restrictions Applicable √ Not Applicable(III) Strategic investors or general legal persons who became the top ten

shareholders due to placing of new shares Applicable √ Not Applicable

Section VII Changes in Shares and Information About Shareholders

III. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT(I) Changes of shareholding of current and retired directors, supervisors and senior

management during the reporting period Applicable √ Not ApplicableOther explanations

Applicable √ Not Applicable

(II) Incentive share option granted to directors, supervisors and senior management

during the reporting period

√ Applicable Not Applicable

Unit: 0’000 shares

NamePosition

Number ofstock optionsheld at thebeginning ofthe period

Number ofstock optionsnewly grantedduring thereportingperiod

Exercisablesharesoptionsduring the

reportingperiod

Shares fromstock optionexercisedduring thereportingperiod

Number ofstock optionsheld at theend of theperiodLi HuagangDirector91.39018.28073.12Gong WeiDirector45.7009.14036.56Xie JuzhiExecutive91.39018.28073.12Li PanExecutive45.7009.14036.56Song YujunExecutive31.2106.24024.97Zhao YanfengExecutive46.8209.36037.46Huang XiaowuExecutive45.7009.14036.56Wu YongExecutive22.8504.57018.28Li YangExecutive45.7009.14036.56Guan JiangyongExecutive22.8504.57018.28Liu XiaomeiExecutive11.650008.74Total/500.96097.860400.21

Section VII Changes in Shares and Information About Shareholders

(III) Other explanations

Applicable √ Not ApplicableIV. CHANGES IN CONTROLLING SHAREHOLDER AND THE ULTIMATECONTROLLER Applicable √ Not Applicable

Section VIII Relevant Information of

Preferred Shares

Applicable √ Not Applicable

Section IX Relevant Information ofCorporate Bonds

I. ENTERPRISE BOND, CORPORATE BOND, AND NON-FINANCIALCORPORATE DEBT FINANCING INSTRUMENTS Applicable √ Not ApplicableII. CONVERTIBLE CORPORATE BOND

Applicable √ Not Applicable

Section X Financial Report

I. AUDIT REPORT

Applicable √ Not ApplicableII. FINANCIAL STATEMENTS Consolidated Balance Sheet

30 June 2023Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMB

ItemsNotes30 June 202331 December 2022

Current assets:

Monetary fundsVII.155,641,485,513.5654,161,702,227.39Provision of settlement fundFunds lentFinancial assets held for tradingVII.2734,584,929.88519,912,880.91Derivative financial assetsVII.3100,132,280.78183,185,160.51Bills receivableVII.410,495,699,695.289,624,191,838.15Accounts receivableVII.521,742,220,596.2315,886,628,623.99Financing receivablesPrepaymentsVII.61,320,534,071.511,109,114,343.41Premiums receivableReinsurance accounts receivableReinsurance contract reserves receivableOther receivablesVII.72,746,235,275.212,401,113,902.55Including: Interest receivable706,805,733.78513,320,376.79

Dividend receivableFinancial assets purchased under resaleagreementsInventoriesVII.839,026,874,630.7841,587,786,307.53Contract assetsVII.9392,384,817.35309,930,359.25Assets held for saleNon-current assets due in one yearOther current assetsVII.104,089,032,500.274,692,946,083.94Total current assets136,289,184,310.85130,476,511,727.63

Non-current assets:

Loans and advances grantedDebt investmentsVII.112,254,869,444.451,034,222,222.22Other debt investmentsLong-term receivables302,494,994.66305,070,001.45Long-term equity investmentsVII.1225,183,862,504.9124,527,800,290.84Investments in other equity instrumentsVII.135,912,354,236.795,851,882,930.20

Section X Financial Report

ItemsNotes30 June 202331 December 2022Other non-current financial assetsInvestment propertiesVII.1425,514,429.8325,678,492.57Fixed assetsVII.1527,270,691,461.2727,158,348,424.28Construction in progressVII.164,675,841,932.964,094,684,500.49Biological assets for productionOil and gas assetsRight-of-use assetsVII.174,385,820,465.383,795,225,353.89Intangible assetsVII.1810,772,404,503.2610,505,881,377.21Development costVII.19237,607,781.86154,480,515.67GoodwillVII.2024,639,555,391.7723,643,595,643.87Long-term prepaid expensesVII.21810,071,466.35759,883,174.20Deferred income tax assetsVII.221,209,374,679.111,724,040,928.42Other non-current assetsVII.232,332,458,174.061,880,736,891.63Total non-current assets110,012,921,466.66105,461,530,746.94Total assets246,302,105,777.51235,938,042,474.57Current liabilities:

Short-term borrowingsVII.249,365,184,799.419,672,223,522.36Borrowings from central bankDue to banks and other financialinstitutionsFinancial liabilities held for tradingDerivative financial liabilitiesVII.25352,914,936.89104,594,040.66Bills payableVII.2623,187,832,976.2225,098,557,730.06Accounts payableVII.2747,160,319,625.8241,878,607,182.94Receipts in advanceContract liabilitiesVII.286,251,026,204.679,352,719,895.49Disposal of repurchased financial assetsAbsorbing deposit and deposit in inter-

bank marketCustomer deposits for trading in securitiesAmounts due to issuer for securities

underwritingPayables for staff’s remunerationVII.293,419,419,922.124,050,464,754.37Taxes payableVII.303,005,344,046.942,876,221,892.91Other payablesVII.3122,901,109,264.1717,517,838,565.99Including: Interest payable

Dividend payable5,299,410,272.791,246,573.35Fees and commissions payableReinsurance Accounts payablesLiabilities held for saleNon-current liabilities due within one yearVII.323,519,285,132.726,294,750,667.08Other current liabilitiesVII.331,431,239,433.131,850,426,115.79Total current liabilities120,593,676,342.09118,696,404,367.65

Section X Financial Report

ItemsNotes30 June 202331 December 2022Non-current liabilities:

Deposits for insurance contractsLong-term borrowingsVII.3418,366,761,352.0313,590,866,873.43Bonds payableIncluding: Preference shares

Perpetual bondsLease liabilitiesVII.353,338,912,496.122,824,477,670.61Long-term payablesVII.3643,686,763.7344,240,087.94Long-term payables for staff’sremunerationVII.371,074,202,443.831,010,547,202.34Estimated liabilitiesVII.381,761,498,273.351,611,029,220.17Deferred incomeVII.39961,687,013.36948,935,134.05Deferred income tax liabilitiesVII.222,094,815,467.452,358,860,559.19Other non-current liabilities72,361,573.14107,332,101.07Total non-current liabilities27,713,925,383.0122,496,288,848.80Total liabilities148,307,601,725.10141,192,693,216.45Owners’ equity (or shareholders’equity):

Paid-in capital (or share capital)VII.409,438,114,893.009,446,598,493.00Other equity instrumentsIncluding: Preference shares

Perpetual bondsCapital reserveVII.4123,993,726,933.3323,877,037,324.76Less: treasury stock4,572,635,271.763,857,807,196.38Other comprehensive incomeVII.422,145,734,558.091,990,683,498.45Special reserveSurplus reserveVII.434,014,190,623.244,014,190,623.24General risk provisionsUndistributed profitsVII.4461,662,044,044.8157,983,751,470.60Total equity attributable to owners (orshareholders) of the Parent Company96,681,175,780.7193,454,454,213.67Minority shareholders’ interests1,313,328,271.701,290,895,044.45Total owners’ equity (or shareholders’equity)97,994,504,052.4194,745,349,258.12Total liabilities and owners’ equity(or shareholders’ equity)246,302,105,777.51235,938,042,474.57Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Balance Sheet of the Parent Company30 June 2023Prepared by: Haier Smart Home Co., Ltd.

Unit and Currency: RMBItemsNotes30 June 202331 December 2022Current Assets:

Monetary funds7,208,829,680.385,747,356,591.19Financial assets held for tradingDerivative financial assetsBills receivableAccounts receivableXVIII.11,233,075,337.42913,643,071.06Financing receivablesPrepayments3,115,793.213,116,793.21Other receivablesXVIII.219,552,192,080.9214,387,031,657.57Including: Interest receivable61,817,349.9029,783,516.95

Dividend receivable1,244,013,185.591,015,840,000.00Inventories4,257,323.349,245,507.97Contract assetsAssets held for saleNon-current assets due within one yearOther current assets1,453,125,718.191,642,423,149.85Total current assets29,454,595,933.4622,702,816,770.85Non-current assets:

Debt investments1,354,869,444.451,034,222,222.22Other debt investmentsLong-term receivablesLong-term equity investmentsXVIII.354,756,983,288.0652,744,139,527.87Investments in other equity instruments1,618,513,056.481,618,513,056.48Other non-current financial assetsInvestment propertiesFixed assets154,921,098.23167,043,774.16Construction in progress10,353,351.082,667,680.62Biological assets for productionOil and gas assetsRight-of-use assets357,996.03Intangible assets44,773,526.9548,239,513.12Development costGoodwillLong-term prepaid expenses2,912,930.813,910,065.39Deferred income tax assetsOther non-current assets1,294,805,641.191,302,773,743.02

Section X Financial Report

ItemsNotes30 June 202331 December 2022Total non-current assets59,238,132,337.2556,921,867,578.91

Total assets88,692,728,270.7179,624,684,349.76Current liabilities:

Short-term borrowingsFinancial liabilities held for tradingDerivative financial liabilitiesBills payableAccounts payables794,483,497.68521,733,555.60Receipts in advanceContract liabilities12,605,139.9313,084,442.85Payables for staff’s remuneration4,621,311.009,696,654.18Taxes payable1,718,888.267,479,878.13Other payables45,932,717,477.3132,659,845,830.05Including: Interest payable

Dividends payable5,297,529,553.10Liabilities held for saleNon-current liabilities due within one yearOther current liabilities9,490,609.565,876,886.89Total current liabilities46,755,636,923.7433,217,717,247.70Non-current liabilities:

Long-term borrowings3,298,000,000.002,195,000,000.00Bonds payableIncluding: Preference shares

Perpetual bondsLease liabilitiesLong-term payableLong-term payables for staff’s

remunerationEstimated liabilitiesDeferred income13,798,300.0012,355,000.00Deferred income tax liabilities420,805,600.57420,805,600.57Other non-current liabilitiesTotal non-current liabilities3,732,603,900.572,628,160,600.57Total liabilities50,488,240,824.3135,845,877,848.27Owners’ equity (or Shareholders’

equity):

Paid-in capital (or share capital)9,438,114,893.009,446,598,493.00Other equity instrumentsIncluding: Preference shares

Perpetual bondsCapital reserve27,487,762,552.3527,300,899,019.76Less: treasury stock2,906,103,457.342,308,138,558.42Other comprehensive income602,091,349.74602,091,349.74Special reserveSurplus reserve3,409,044,397.793,409,044,397.79

Section X Financial Report

ItemsNotes30 June 202331 December 2022Undistributed profits173,577,710.865,328,311,799.62Total owners’ equity (or shareholders’equity)38,204,487,446.4043,778,806,501.49Total liabilities and owners’ equity

(or shareholders’ equity)88,692,728,270.7179,624,684,349.76Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Consolidated Profit StatementJanuary-June 2023

Unit and Currency: RMBItemsNotes2023 Interim2022 InterimI. Total operating revenue131,626,581,506.56121,640,067,379.35Including: Operating revenueVII.45131,626,581,506.56121,640,067,379.35Interest incomeInsurance premiums earnedFee and commission incomeII. Total cost of operations121,334,902,914.53112,320,284,552.69

Including: Operating costVII.4591,555,264,412.9984,818,768,956.56Interest expensesFee and commission expensesInsurance withdrawal paymentNet payment from indemnityNet provisions withdrew for insuranceliabilityInsurance policy dividend paidReinsurance costTaxes and surchargesVII.46532,576,459.68357,254,442.59Selling expensesVII.4718,768,944,057.4417,606,475,316.07Administrative expensesVII.485,461,681,481.505,140,311,538.47R&D expensesVII.495,025,786,116.644,598,032,317.91Financial expensesVII.50–9,349,613.72–200,558,018.91Including: Interest expenses875,078,615.27348,353,122.72Interest income614,901,983.30362,928,829.17Add: other incomeVII.51601,365,025.76546,249,657.56investment income (losses are

represented by “–”)VII.521,129,768,360.361,170,336,743.41Including: Investment income of

associates and joint ventures1,078,905,972.36936,511,207.40Income generated from the derecognition

of financial assets measured at

amortized cost (losses are represented

by “–”)Exchange gain (losses are represented by

“–”)Gains on net exposure hedges (losses are

represented by “–”)Income from change in fair value (losses

are represented by “–”)VII.5331,271,562.35–118,790,175.68Loss on credit impairment (losses are

represented by “–”)VII.54–165,968,929.36–258,076,846.14

Section X Financial Report

ItemsNotes2023 Interim2022 InterimLoss on assets impairment (losses arerepresented by “–”)VII.55–779,748,575.44–707,061,947.81Gain from disposal of assets (losses are

represented by “–”)VII.56–20,647,304.6431,589,207.10III. Operating profit (losses are representedby “–”)11,087,718,731.069,984,029,465.10Add: non-operating incomeVII.5758,784,451.6168,907,687.69Less: non-operating expensesVII.5832,299,513.2143,535,551.68IV. Total profit (total losses are representedby “–”)11,114,203,669.4610,009,401,601.11Less: income tax expenseVII.592,069,496,385.862,000,315,202.76V. Net profit (net losses are represented by“–”)9,044,707,283.608,009,086,398.35(I) Classification by continuous operation

1. Net profit from continuous operation

(net losses are represented by “–”)9,044,707,283.608,009,086,398.35

2. Net profit from discontinued

operation (net losses arerepresented by “–”)(II) Classification by ownership of the

equity

1. Net profit attributable to shareholders

of the Parent Company (net lossesare represented by “–”)8,963,875,999.847,959,684,042.65

2. Profit or loss attributable to minority

shareholders (net losses arerepresented by “–”)80,831,283.7649,402,355.70VI. Other comprehensive income, net of taxVII.60136,824,101.132,864,992,299.95

(I) Other comprehensive incomeattributable to owners of the ParentCompany, net of tax155,051,059.642,866,524,948.88

1. Other comprehensive income that

cannot be reclassified into theprofit or loss36,663,726.03–45,646,560.54

(1) Changes arising from

re-measurement of definedbenefit plans32,438,331.874,562,166.91

(2) Other comprehensive income

that cannot be transferred intoprofit or loss under equitymethod

(3) Changes in fair value of

investments in other equityinstruments4,225,394.16–50,208,727.45

Section X Financial Report

ItemsNotes2023 Interim2022 Interim

(4) Changes in fair value of credit

risks of the enterprise

2. Other comprehensive income to be

reclassified into the profit or loss118,387,333.612,912,171,509.42

(1) Other comprehensive income

that can be transferred intoprofit or loss under equitymethod–15,508,344.88108,350,151.43

(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 hedging

–193,755,242.8425,995,214.10

(6) Exchange differences on

translation of financialstatements denominated inforeign currencies327,650,921.332,777,826,143.89

(7) Others

(II) Other comprehensive incomeattributable to minority shareholders,net of tax–18,226,958.51–1,532,648.93VII. Total comprehensive income9,181,531,384.7310,874,078,698.30

(I) Total comprehensive income

attributable to the owners of ParentCompany9,118,927,059.4810,826,208,991.53(II) Total comprehensive income

attributable to the minorityshareholders62,604,325.2547,869,706.77VIII. Earnings per share:

(I) Basic earnings per share (RMB/share)XX.10.970.85(II) Diluted earnings per share (RMB/share)XX.10.960.85For business combination under common control occurring in the current period, the net profit of theacquiree before the combination was RMB0, and the net profit of the acquiree for the previous periodwas RMB6,271,553.65.Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Profit Statement of the Parent CompanyJanuary-June 2023

Unit and Currency: RMBItemsNotes2023 Interim2022 InterimI. Operating incomeXVIII.4327,406,706.8493,323,883.33

Less: operating costXVIII.4286,220,868.4380,891,389.46

Taxes and surcharges3,754,801.821,171,987.68Selling expenses4,603,666.694,615,963.20Administration expenses377,868,026.53328,116,657.42R&D expenses6,617,045.165,806,423.66Financial expenses–92,308,439.54–42,487,430.75Including: Interest expenses32,509,056.334,530,273.29

Interest income115,693,759.6553,365,585.67Add: other income1,361,535.0017,240,565.58investment income (losses arerepresented by “–”)XVIII.5400,717,692.54548,236,536.95Including: Investment income of

associates and joint

ventures144,556,606.76137,123,178.78

Derecognition income on

financial assetsmeasured at amortizedcost (losses arerepresented by “–”)Gains on net exposure hedges

(losses are represented by “–”)Income from change in fair value

(losses are represented by “–”)Loss on credit impairment (losses

are represented by “–”)47,441.31116,871.97Loss on assets impairment (losses

are represented by “–”)Gain from disposal of assets (losses

are represented by “–”)35,074,022.45II. Operating profit (losses are represented

by “–”)142,777,406.60315,876,889.61Add: non-operating income97,965.97204,216.74Less: non-operating expenses78,702.8328,698.02III. Total profit (total losses are represented

by “–”)142,796,669.74316,052,408.33Less: income tax expenses1,205.40IV. Net profit (net losses are represented

by “–”)142,795,464.34316,052,408.33

Section X Financial Report

ItemsNotes2023 Interim2022 Interim(I) Net profit from continuous operations

(net losses are represented by “–”)142,795,464.34316,052,408.33(II) Net profit from discontinued operations(net losses are represented by “–”)V. Other comprehensive income, net of tax–2,564,158.17(I) Other comprehensive income thatcannot be reclassified into the profit orloss

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 instruments

4. Changes in fair value of credit risks

of the enterprise(II) Other comprehensive income to be

reclassified into the profit or loss–2,564,158.17

1. Other comprehensive income that

can be transferred into profit or loss

under equity method–2,564,158.17

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 income142,795,464.34313,488,250.16VII. 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

Section X Financial Report

Consolidated Cash Flow StatementJanuary-June 2023

Unit and Currency: RMBItemsNotes2023 Interim2022 InterimI. Cash flow from operating activities:

Cash received from the sale of goods

and rendering services131,285,030,662.96125,851,561,877.12Net increase in customer and inter-bankdepositsNet 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 placement from banks

and other financial institutionsNet increase in cash received from

repurchase operationNet cash received from customer

deposits for trading in securitiesRefunds of taxes1,055,963,172.821,359,618,593.20Cash received from other related

operating activitiesVII.611,004,688,596.01841,653,468.08Sub-total of cash inflows from operating

activities133,345,682,431.79128,052,833,938.40Cash paid on purchase of goods and

services90,336,797,328.2889,623,874,730.21Net increase in loans and advances of

customersNet increase in deposits in the PBOC and

inter-bankCash paid for compensation payments

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

commissions

Section X Financial Report

ItemsNotes2023 Interim2022 InterimCash paid for insurance policy dividendCash paid to and on behalf ofemployees14,745,533,991.1613,714,753,125.85Cash paid for all types of taxes7,627,692,738.305,096,870,980.52Cash paid to other operation related

activitiesVII.6213,845,127,911.5113,652,264,117.96Sub-total of cash outflows from operatingactivities126,555,151,969.25122,087,762,954.54Net cash flow from operating activitiesVII.666,790,530,462.545,965,070,983.86II. Cash flow from investing activities:

Cash received from recovery of

investments5,129,042,704.704,997,285,703.11Cash received from return on

investments484,178,075.61423,887,380.66Net cash received from the disposal of

fixed assets, intangible assets and

other long-term assets74,087,510.8174,590,057.10Net cash received from disposal of

subsidiaries and other operating

entities2,000,000.00Other cash received from investment

activitiesVII.6315,362,098.03Sub-total of cash inflows from investing

activities5,704,670,389.155,495,763,140.87Cash paid on purchase of fixed assets,

intangible assets and other long-term

assets3,727,907,256.473,342,824,864.02Cash paid for investments6,303,165,775.566,274,280,514.60Net increase in secured loansNet cash paid on acquisition of

subsidiaries and other operating

entities37,326,510.00Other cash paid on investment activitiesVII.646,922,378.316,000,000.00Sub-total of cash outflows from investing

activities10,037,995,410.349,660,431,888.62Net cash flow from investing activities–4,333,325,021.19–4,164,668,747.75

Section X Financial Report

ItemsNotes2023 Interim2022 InterimIII. Cash flow from financing activities:

Cash received from capital contributions986,491,004.94Including: Cash received from capital

contributions by minority shareholders of subsidiariesCash received from borrowings11,553,402,031.978,047,351,638.86Other cash received from financingactivities1,000,235.35Sub-total of cash inflows from financing

activities11,553,402,031.979,034,842,879.15Cash paid on repayment of loans10,428,924,467.654,695,505,438.44Cash paid on distribution of dividends,profits or repayment of interestexpenses817,299,422.27337,151,305.96Including: Dividend and profit paid to

minority shareholders by subsidiariesOther cash paid to financing activitiesVII.651,575,176,054.231,876,577,772.85Sub-total of cash outflows from financing

activities12,821,399,944.156,909,234,517.25Net cash flow from financing activities–1,267,997,912.182,125,608,361.90IV. Effect of fluctuations in exchange

rates on cash and cash equivalents482,296,933.74230,069,372.19V. Net increase in cash and cash equivalents1,671,504,462.914,156,079,970.20Add: balance of cash and cash

equivalents at the beginning of the periodVII.6753,391,699,929.4945,204,217,909.49VI. Balance of cash and cash equivalents

at the end of the periodVII.6755,063,204,392.4049,360,297,879.69Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Cash Flow Statement of the Parent Company

January-June 2023

Unit and Currency: RMBItemsNotes2023 Interim2022 InterimI. Cash flow from operating activities:

Cash received from the sale of goods

and rendering of services33,292,958.6525,976,480.20Refunds of taxes7,799,497.52Other cash received from operating

activities65,817,539.47311,936,036.56Sub-total of cash inflows from operating

activities99,110,498.12345,712,014.28Cash paid on purchase of goods and

services80,721,248.11141,857.64Cash paid to and on behalf of

employees27,717,542.5224,825,638.14Cash paid for all types of taxes16,713,598.661,578,405.68Other cash paid to operation activities27,993,348.4181,136,892.33

Sub-total of cash outflows fromoperating activities153,145,737.70107,682,793.79Net cash flow from operating

activities–54,035,239.58238,029,220.49II. Cash flow from investing activities:

Cash received from recovery of

investments4,623,000,000.00803,860,000.00Cash received from return on

investments81,202,353.2472,346,255.88Net cash received from the disposal of

fixed assets, intangible assets and

other long-term assets35,206,354.85Net cash received from disposal of

subsidiaries and other operating

entitiesOther cash received from investment

activitiesSub-total of cash inflows from investing

activities4,704,202,353.24911,412,610.73Cash paid on purchase of fixed assets,

intangible assets and other long-term

assets4,137,180.7715,544,095.62Cash paid for investments6,647,572,258.002,173,745,507.20

Section X Financial Report

ItemsNotes2023 Interim2022 Interim

Net cash paid on acquisition ofsubsidiaries and other operatingentitiesOther cash paid on investment activities1,057,569,045.001,521,600,000.00

Sub-total of cash outflows frominvesting activities7,709,278,483.773,710,889,602.82Net cash flow from investingactivities–3,005,076,130.53–2,799,476,992.09III. Cash flow from financing activities:

Cash received from capital contributions940,041,004.94Cash received from borrowings1,110,000,000.002,100,000,000.00Other cash received from financing

activities4,223,807,260.091,408,448,043.37Sub-total of cash inflows from financing

activities5,333,807,260.094,448,489,048.31Cash paid on repayment of borrowings7,000,000.00Cash paid on distribution of dividends,

profits or repayment of interest

expenses32,820,559.743,091,905.56Other cash paid on financing activities780,445,507.581,409,796,873.02

Sub-total of cash outflows from

financing activities820,266,067.321,412,888,778.58Net cash flow from financing

activities4,513,541,192.773,035,600,269.73IV. Effect of fluctuations in exchange

rates on cash and cash equivalents7,043,266.53–3,465,214.53V. Net increase in cash and cash

equivalents1,461,473,089.19470,687,283.60Add: balance of cash and cash

equivalents at the beginning of

the period5,747,356,591.194,043,535,735.48VI. Balance of cash and cash equivalents

at the end of the period7,208,829,680.384,514,223,019.08Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Consolidated Statement of Changes in Owner’s EquityJanuary-June 2023

Unit and Currency: RMB

2023 Interim

Equity attributable to owners of the Parent Company

Other equity instruments

Items

Paid-in capital(or share capital)Preference

sharesPerpetual

bondsOthersCapital reserve

Less: treasury

stockOthercomprehensive

incomeSpecial reserveSurplus reserve

General risk

provisionUndistributed

profitsOthersSub-totalMinority equity

Total owners’

equity

I. Closing balance for the previous year9,446,598,493.0023,852,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,976,944,921.3693,422,647,664.431,290,895,044.4594,713,542,708.88Add: changes in accounting policiesError correction for prior periodBusiness combination under common

control25,000,000.006,806,549.2431,806,549.2431,806,549.24

OthersII. Opening balance for the current year9,446,598,493.0023,877,037,324.763,857,807,196.381,990,683,498.454,014,190,623.2457,983,751,470.6093,454,454,213.671,290,895,044.4594,745,349,258.12III. Increase/decrease for the current period

(decrease is represented by “–”)–8,483,600.00116,689,608.57714,828,075.38155,051,059.643,678,292,574.213,226,721,567.0422,433,227.253,249,154,794.29

(I) Total comprehensive income155,051,059.648,963,875,999.849,118,927,059.4862,604,325.259,181,531,384.73(II) Capital injection and reduction by

owners

–8,483,600.00116,689,608.57714,828,075.38

–606,622,066.81–31,896,976.12–638,519,042.93

1. Ordinary shares invested by owners

–31,896,976.12–31,896,976.12

2. Capital contribution by holders of

other equity instruments

3. Share-based payment included in

owners’ equity390,681,368.30390,681,368.30390,681,368.30

4. Others

–8,483,600.00

–273,991,759.73714,828,075.38

–997,303,435.11

–997,303,435.11

(III) Profit distribution

–5,297,529,553.10

–5,297,529,553.10–8,274,121.88–5,305,803,674.98

1. Withdrawal of surplus reserves

2. Withdrawal of provisions for general

risks

3. Distribution to owners

(or shareholders)

–5,297,529,553.10

–5,297,529,553.10–8,274,121.88–5,305,803,674.98

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) Others11,946,127.4711,946,127.4711,946,127.47

IV. Closing balance for the period9,438,114,893.0023,993,726,933.334,572,635,271.762,145,734,558.094,014,190,623.2461,662,044,044.8196,681,175,780.711,313,328,271.7097,994,504,052.41

Section X Financial Report

2022 Interim

Equity attributable to owners of the Parent Company

Other equity instruments

Items

Paid-in capital(or share capital)PreferencesharesPerpetualbondsOthersCapital reserve

Less: treasurystockOthercomprehensiveincomeSpecial reserveSurplus reserve

General riskprovisionUndistributedprofitsOthersSub-totalMinority equity

Total owners’equity

I. Closing balance for the previous year9,398,704,530.00118,017,507.5922,665,374,739.46 2,424,038,819.70

–1,176,851,699.92

3,438,615,909.8447,965,270,360.7979,985,092,528.061,289,500,808.7281,274,593,336.78

Add: changes in accounting policiesError correction for prior periodBusiness combination under commoncontrol25,000,000.0021,254,911.0146,254,911.0146,254,911.01OthersII. Opening balance for the current year9,398,704,530.00118,017,507.5922,690,374,739.462,424,038,819.70

–1,176,851,699.92

3,438,615,909.8447,986,525,271.8080,031,347,439.071,289,500,808.7281,320,848,247.79

III. Increase/decrease for the current period(decrease is represented by “–”)48,087,440.00

–36,677,120.161,241,554,898.941,538,651,010.372,866,524,948.883,819,711,634.536,400,550,791.8236,040,777.656,436,591,569.47

(I) Total comprehensive income2,866,524,948.887,959,684,042.6510,826,208,991.5347,869,706.7710,874,078,698.30(II) Capital injection and reduction by

owners 48,087,440.00

–36,677,120.161,238,717,313.171,538,651,010.37

–288,523,377.36–11,072,350.20–299,595,727.56

1. Ordinary shares invested by owners41,413,600.00898,627,404.94940,041,004.94

–11,072,350.20928,968,654.74

2. Capital contribution by holders of

other equity instruments6,673,840.00

–36,677,120.16134,131,566.36104,128,286.20104,128,286.20

3. Share-based payment included in

owners’ equity332,853,517.66332,853,517.66332,853,517.66

4. Others

–126,895,175.791,538,651,010.37

–1,665,546,186.16

–1,665,546,186.16

(III) Profit distribution

–4,320,445,666.86

–4,320,445,666.86–756,578.92–4,321,202,245.78

1. Withdrawal of surplus reserves

2. Withdrawal of provisions for general

risks

3. Distribution to owners

(or shareholders)

–4,320,445,666.86

–4,320,445,666.86–756,578.92–4,321,202,245.78

4. Others

(IV) Internal transfer of owner’s equity

1. Transfer of capital reserves 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) Others2,837,585.77180,473,258.74183,310,844.51183,310,844.51

IV. Closing balance for the period9,446,791,970.0081,340,387.4323,931,929,638.403,962,689,830.071,689,673,248.963,438,615,909.8451,806,236,906.3386,431,898,230.891,325,541,586.3787,757,439,817.26

Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

Section X Financial Report

Statement of Changes in Owners’ Equity of the Parent CompanyJanuary-June 2023

Unit and Currency: RMB

2023 InterimOther equity instrumentsItems

Paid-in capital

(or share

capital)

Preference

sharesPerpetualbondsOthersCapital reserve

Less: treasurystock

Othercomprehensiveincome

Specialreserve

SurplusreserveUndistributedprofitsTotal owners’

equityI. Closing balance for the

previous year9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49Add: changes in accountingpoliciesError correction for prior

periodOthersII. Opening balance for thecurrent year9,446,598,493.0027,300,899,019.762,308,138,558.42602,091,349.743,409,044,397.795,328,311,799.6243,778,806,501.49III. Increase/decrease for thecurrent period (decrease isrepresented by “–”)–8,483,600.00186,863,532.59597,964,898.92–5,154,734,088.76–5,574,319,055.09(I) Total comprehensive income142,795,464.34142,795,464.34(II) Capital injection and

reduction by owners–8,483,600.00186,863,532.59597,964,898.92–419,584,966.33

1. Ordinary shares invested

by owners

2. Capital contribution by

holders of other equityinstruments

3. Share-based payment

included in owners’equity360,860,541.25360,860,541.25

4. Others

–8,483,600.00–173,997,008.66597,964,898.92–780,445,507.58(III) Profit distribution–5,297,529,553.10–5,297,529,553.10

1. Withdrawal of surplus

reserves

2. Distribution to owners

(or shareholders)–5,297,529,553.10–5,297,529,553.10

3. Others

(IV) Internal transfer of owner’s

equity

1. Transfer of capital

reserves into capital(or share capital)

2. Transfer of surplus

reserves into capital(or share capital)

3. Surplus reserves used

for remedying loss

4. Changes in defined

benefit plans 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 period9,438,114,893.0027,487,762,552.352,906,103,457.34602,091,349.743,409,044,397.79173,577,710.8638,204,487,446.40

Section X Financial Report

2022 InterimOther equity instrumentsItems

Paid-in capital(or share

capital)Preference

sharesPerpetualbondsOthersCapital reserve

Less: treasurystock

Othercomprehensiveincome

Specialreserve

SurplusreserveUndistributedprofitsTotal 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 the

current 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 is

represented by “–”)48,087,440.001,319,643,690.831,406,832,569.06–2,564,158.17–4,004,393,258.53–4,046,058,854.93

(I) Total comprehensive

income–2,564,158.17316,052,408.33313,488,250.16

(II) Capital injection andreduction by owners 48,087,440.001,319,643,690.831,406,832,569.06–39,101,438.23

1. Ordinary shares invested

by owners41,413,600.00898,627,404.94940,041,004.94

2. Capital contribution by

holders of other equityinstruments6,673,840.0097,454,446.20104,128,286.20

3. Share-based payment

included in owners’equity323,222,114.26323,222,114.26

4. Others339,725.431,406,832,569.06–1,406,492,843.63

(III) Profit distribution–4,320,445,666.86–4,320,445,666.86

1. Withdrawal of surplus

reserves

2. Distribution to owners

(or shareholders)–4,320,445,666.86–4,320,445,666.86

3. Others

(IV) Internal transfer of owner’s

equity

1. Transfer of capital

reserves into capital(or share capital)

2. Transfer of surplus

reserves into capital(or share capital)

3. Surplus reserves used

for remedying loss

4. Changes in defined

benefit plans 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 period9,446,791,970.0027,121,923,173.962,902,003,244.14618,738,786.662,833,469,684.39464,182,367.9937,583,102,738.86

Person in charge of the Company: Li HuagangPerson in charge of accounting function: Gong WeiPerson in charge of accounting department: Ying Ke

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. (herein after referred to as the Company) wasQingdao Refrigerator Factory, which was established in 1984. As permitted to offering byPeople’s Bank of China, Qingdao Branch on 16 December 1989, and approved by Qing Ti Gai[1989] No.3 on 24 March 1989, based on the reconstruction of the original Qingdao RefrigeratorFactory, a limited company was set up by directional fund raising of RMB150 million. In Marchand September 1993, as approved by the document of Qing Gu Ling Zi [1993] No. 2 and No. 9issued by the pilot leading team of Qingdao joint stock company, the Company was convertedfrom a directional offering company to a public subscription company and issued additional 50million shares to the public and listed with trading on Shanghai Stock Exchange in November1993. In October 2018, D-shares in issue of the Company were listed on the China EuropeInternational Exchange AG. In December 2020, H-shares in issue of the Company were listed onthe 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 headquarter is locatedat 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, laundryappliances and water appliances, and other smart home business, as well as providing smarthome packaged solutions.The ultimate holding company of the Company is Haier Group Corporation.These financial statements have been approved for publication by the Board of the Company on30 August 2023.

2. Scope of consolidated financial 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.

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 theAccounting Standards forBusiness Enterprises—Basic Standardspublished by the Ministry of Finance, specificaccounting standards, and guidance on application of accounting standards for businessenterprises, interpretations to accounting standards for business enterprises and other relevantrequirements (herein after collectively referred to as the “Accounting Standards for BusinessEnterprises”) which issued subsequently, and in combination with the disclosure provisions of theRules for the Information Disclosure and Compilation of Companies Publicly Issuing SecuritiesNo.15: General Provisions for Financial Report (Revised in 2014)of CSRC as well as thefollowing significant accounting policies and accounting estimation.

2. Going Concern

√ Applicable Not Applicable

The Company has ability to continue its operation for at least 12 months since the end of thereporting period and there are no significant events affecting its ability to continue as a goingconcern.

V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

√ Applicable Not Applicable

According to the characteristics of its production and operation, the Company formulated a series ofspecific accounting policies and accounting estimates, including the provisions for impairment foraccounts receivable (Note V.10); the measurement of inventories (Note V.11); the depreciation andamortization of the investment properties (Note V.13); the depreciation of fixed assets (Note V.14); theamortization of intangible assets (Note V.18); the criterion for determining of long-term assetsimpairment (Note V.19); and the date of revenue recognition (Note V.25), etc.

1. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements prepared by the Company meet the requirements of the AccountingStandards for Business Enterprises, which accurately and completely reflected informationrelating to the financial condition as at 30 June 2023, the operating results of January to June2023 and cash flow of the Company.

2. Accounting period

The accounting year of the Company is from 1 January each year to 31 December of the sameyear in solar calendar.

Section X Financial Report

3. Operating cycle

√ Applicable Not Applicable

A normal operating cycle refers to the period from the Company’s acquisition of assets forprocessing to their realisation in cash or cash equivalents. The Company takes 12 months as anoperating cycle, which is also the classification basis for the liquidity of its assets and 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 thecombining entities are ultimately controlled by the same party or parties both before andafter the combination, and that control is not transitory. For business combination undercommon control, the party that obtains the control over the other parties on thecombination date is the acquirer, and other parties involving in the business combinationare the transferors. The combination date is the date on which the acquiring partyeffectively obtains the control over the party being acquired.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.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.

Section X Financial Report

(2) Business combinations 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 involving in the business combination atthe combination date is the acquirer; other parties involving in the business combination arethe transferors. The combination date is the date on which the acquirer effectively obtainscontrol of the transferors.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.

Section X Financial Report

6. Preparation method of consolidated financial 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.

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.

(5) Dispose of equity interests in subsidiaries achieved in stages until losing control

General treatment

During 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.

Section X Financial Report

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 commercialoutcome;iii. The occurrence of one transaction depends on the occurrence of at least oneother transaction;iv. The transaction is uneconomical by itself but economic when considered in

conjunction with other transactions.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.

Section X Financial Report

(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.

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: recognize the assets held solely by the Company, and recognize assetsheld jointly by the Company in appropriation to the share of the Company; recognize theobligations assumed solely by the Company, and recognize obligations assumed jointly bythe Company in appropriation to the share of the Company; recognize revenue fromdisposal of joint operations in appropriation to the share of the Company; recognizerevenue from disposal of joint operations in appropriation to the share of the Company;recognize fees solely occurred by the Company and recognize fees from joint operations inappropriation to the share of the Company.

Section X Financial Report

When the Company, as a joint venture, invests or sells assets to or purchase assets (theassets do not constitute a business, the same below) from joint operations, the Companyshall only recognize the part of profit or lost from this transaction attributable to otherparties of joint operations before these assets are sold to a third party. In case of animpairment loss incurred on these assets which meets the requirements as set out in“Accounting Standards for Business Enterprises No. 8— Asset Impairment”, the Companyshall full recognize the amount of this loss in relation to its investment in or sale of assetsto joint operations or recognize the loss according to the Company’s share of commitmentin relation to its purchase of assets from joint operations.

(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 “12 Long-term equityinvestment” of Note V.

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, except those arising from the fundsdenominated in foreign currency specially borrowed for the establishment of the qualifyingassets are treated based on the principal of capitalization of borrowing 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).

Section X Financial Report

(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.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.

Section X Financial Report

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.

1) The debt instruments held by the Company:

Financial assets measured at amortized costThe 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. Financial assets measured at fair value through other comprehensive incomeThe 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.

Section X Financial Report

Financial assets measured at fair value through profit or loss of the current periodThe 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.

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.

Section X Financial Report

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.

(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.

Section X Financial Report

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.

(4) Recognition and measurement on transfer of financial assets

A financial asset shall be de-recognized when one of the following conditions is met: thecontractual right for receiving cash flows from the financial asset is terminated; thefinancial asset is transferred, and the risk and rewards of ownership of the financial assethave been substantially transferred to the transferee; and 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.

Section X Financial Report

(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.

(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.

Section X Financial Report

(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.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 impairment provisions and effective interest rate. Forfinancial instruments in the third phase, the Company calculates interest income based ontheir amortized cost after the impairment provision has been deducted from the bookbalance and 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 on thehistorical credit losses experience, the existing conditions and forecast of future economicconditions.

Section X Financial Report

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.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. Inventories

√ Applicable Not Applicable

(1) Classification of inventories

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.

Section X Financial Report

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 of write-down should be reversed and transferred out of the previous inventory impairment provisionamount. The reversed amount is included in current profit or loss.

(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.

Section X Financial Report

12. Long-term equity investments

√ Applicable Not Applicable

Long-term equity investments in this section refer to equity investments held by the Companythat give it control, joint control or significant influence over the investee. (1) Recognition of initial cost of investment

For long-term equity investment obtained from business consolidation under commoncontrol, the initial cost is measured at the combining party’s share of the carryingamount of the equity of the combined party; for a long-term equity investmentobtained from business consolidation not under common control, the initial cost is theconsolidation cost at the date of acquisition;The Company invested in other equity investment other than long-term equityinvestments 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. Equity methodThe equity method is used by the Company to account for long-term equityinvestments in associates and joint ventures. Under the equity method, where theinitial investment cost of a long-term equity investment exceeds the Company’s shareof the fair value of the investee’s identifiable net assets at the time of acquisition, noadjustment is made to the initial investment cost. Where the initial investment cost isless than the Company’s share of the fair value of the investee’s identifiable netassets at the time of acquisition, the difference is recognized in profit or loss for theperiod, and the cost of the long-term equity investment is adjusted accordingly.

Section X Financial Report

Under the equity method, the Company recognizes the investment income and othercomprehensive income according to its share of net profit or loss and othercomprehensive income of the investee, and the carrying amount of the long-termequity investments shall be adjusted accordingly; the carrying amount of theinvestment is reduced by the Company’s share of the profit distribution or cashdividends declared by an investee; for changes in owner’s equity of the investee otherthan those arising from its net profit or loss, other comprehensive income and profitdistribution, the carrying amount of the long-term equity investment shall be adjustedand recognized to capital reserve. When recognizing attributable share of the netprofit and losses of the investee, the net profit of the investee shall be recognizedafter adjustment on the ground of the fair value of all identifiable assets of theinvestee when it obtains the investment. If the accounting policies and accountingperiods adopted by the investee are different from those adopted by the Company,an adjustment shall be made to the financial statements of the investee inaccordance with the accounting policies and accounting periods of the Company andrecognize the investment incomes and other comprehensive income.The Company’s share of net losses of the investee shall be recognized to the extentthat the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of the investor’s net investment in theinvestee are reduced to zero. If the Company has to assume additional obligations,the estimated obligation assumed shall be provided for and charged to the profit orloss as investment loss for the period. Where the investee is making net profits insubsequent periods, the Company shall resume recognizing its share of profits aftersetting off against the share of unrecognized losses. (3) Change of the accounting methods for long-term equity investments

Change of measurement at fair value to accounting under equity method: where the

equity investment originally held have no control, joint control or significant impact onthe investee, and that are accounted according to the Standards for Recognition andMeasurement of Financial Instruments and can impose common control or placesignificant impact on the investee due to addition of investment which resulted in theincrease of shareholding, the investee shall take the fair value of the equityinvestment originally held determined in accordance with the Standards forRecognition and Measurement of Financial Instruments plus the fair value of theconsideration payable for new investment as the initial investment cost accountedafter the equity method is adopted.Change of measurement at fair value or accounting under equity method to cost

method: the equity investment originally held by the investor with no control, jointcontrol or significant impact on the investee and accounted according to theStandards for Recognition and Measurement of Financial Instruments, or the long-term equity investment originally held in associates or joint ventures that can imposecontrol over the investee due to addition of investment, shall be accounted as long-term equity investment formed by combination of relevant enterprises.

Section X Financial Report

Change of accounting under equity method to measurement at fair value: for the long-

term equity investment originally held with common control or significant impact onthe investee that can no longer impose common control or significant impact on theinvestee due to a decrease of shareholding as a result of factors such as partialdisposal, the remaining equity investment shall be accounted in accordance withStandards for Recognition and Measurement of Financial Instruments, and thedifference between the fair value on the date when the common control or significantimpact no longer exists and the book value is included in profit or loss.Change of cost method to equity method or measured at fair value: For loss of controlin the invested company due to reasons such as partial disposal of equity investment,in the preparation of separate financial statements, the residual equity which canapply common control or impose significant influence to the invested company afterdisposal shall be accounted for under equity method. Such residual equity shall betreated as accounting for under equity method since the equity is obtained andadjusted. For residual equity which cannot apply common control or imposesignificant influence after disposal, it shall be accounted for in accordance withrelevant requirements of “Accounting Standards for Business Enterprises No. 22—

Recognition and Measurement of Financial Instrument”, and the difference betweenthe fair value and the carrying value of residual equity on the date loss of control shallbe included in the profit or loss for such period. In the preparation of combinedfinancial statements, it shall be accounted for in accordance with relevantrequirements of “Accounting Standards for Business Enterprises No. 33—CombinedFinancial Statements”. (4) Basis of conclusion for common control and significant impact over the investee

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.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.

Section X Financial Report

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:

Representation at the board or similar authority of the investee.Participation in the decision-making process of the investee’s financial and operational

policies. Having important transactions with the investee. Posting of management personnel at the investee. 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 of impairment test and provision for impairment

At the balance sheet date, the Company reviews whether there are signs for theimpairment of long-term equity investments. If yes, the recoverable amount is determinedthrough impairment test and provision for impairment is made based on the differencebetween the recoverable amount and the carrying value. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it. The recoverableamount is the higher of net fair value of long-term equity investments on disposal and thepresent value of estimated future cash flow. (6) Disposal of long-term equity investments

Upon the Company’s disposal of long-term equity investment, the difference between theconsiderations actually received and the carrying value of the disposed investment isrecognized in current profit or loss. For long-term equity investment accounted for using theequity method, the part previously recognized in other comprehensive income is accountedon pro rata basis upon disposal in the same way as the relevant assets or liabilities aredisposed of directly by the investee.

Section X Financial Report

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.An investment property is initially measured at cost, and cost method is adopted forsubsequent measurement.

(2) Adoption of cost model as accounting policy

The buildings leased out of investment properties of the Company are depreciated overtheir useful lives using the straight-line method. The specific measurement policy is thesame as that of fixed assets. For land use rights leased out of investment properties orheld for resale after appreciation in value, they are amortized using the straight-linemethod. The specific measurement policy is the same as that of intangible assets.At the balance sheet date, the Company reviews whether there are signs for impairment ofinvestment properties. If yes, the recoverable amount is recognized through an impairmenttest and provision for impairment is made based on the difference between the carryingvalue and the recoverable amount. Impairment loss will not be reversed in subsequentaccounting periods once provision is made for it.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.

Section X Financial Report

14. Fixed assets (1). Recognition criteria and measurement of fixed assets

The Company’s fixed assets are tangible assets that are held for production of goods,provision of labor services, leasing or operation and management purposes, and have auseful life of more than one fiscal year, which are recognized when the following conditionsare met:

economic benefits in relation to the fixed assets are very likely to flow into the Company; the cost of the fixed assets can be measured reliably.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). Classification of fixed assets and depreciation method

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.

Section X Financial Report

The type, depreciation method, estimated useful lives, estimated residual ratio and yearlydepreciation of the Company’s fixed assets are as follows:

Type of assetDepreciation method

Estimateduseful lives(years)

Estimatednet residual

ratioBuildingsLife average method8–

–5%Machinery equipmentLife average method4–

–5%Transportation equipmentLife average method5–

–5%Office and other equipmentLife average method3–

–5% (3). Method of test and provision for impairment of fixed assets

At the balance sheet date, the Company reviews whether there are signs for impairment ofthe fixed assets. If yes, the recoverable amount is recognized through an impairment testand provision for impairment is made based on the difference between the carrying valueand the recoverable amount. Impairment loss will not be reversed in subsequentaccounting periods once provision is made for it. (4). Disposal of fixed assets

When fixed assets are disposed of or are expected to fail to generate economic benefitsafter the use or disposal, the fixed assets shall be derecognized. The difference of theincome from sales, transfer, retirement or damage of fixed assets deducting the book valueand related taxes should be included in the current profit and loss.

15. Construction in progress

√ Applicable Not Applicable

(1) Measurement of construction in progress

Costs of construction in progress are recognised based on actual construction expense,including various necessary construction expenses incurred during construction, borrowingcosts to be capitalised before reaching estimated usable status and other relevant fees. (2) Standard and timing of transfer from construction in progress to fixed assets

The construction in progress of the Company is transferred to fixed assets when theproject is completed and ready for its intended use, which shall satisfy one of the followingconditions:

The construction of the fixed assets (including installation) has been completed or

substantially completed;The fixed asset has been used for trial production or operation and it is evidenced that

the asset can operate ordinarily or steadily produce qualified products; or the result of

trial operation proves that it can operate normally or be opened for business;

Section X Financial Report

Further expenditure incurred for construction of the fixed asset is very minimal orremote;The constructed fixed asset reaches or almost reaches the design or contractualrequirements, or complies with the design or contractual requirements.

(3) Method of test and provision for impairment of impairment of construction in

progressAt the balance sheet date, the Company reviews the construction in progress to checkwhether there is any sign of impairment. If yes, the recoverable amount is recognizedthrough an impairment test and provision for impairment is made based on the differencebetween the carrying value and the recoverable amount. Impairment loss will not bereversed in subsequent accounting periods once provision is made for it.The recoverable amount of construction in progress should base on the higher of net fairvalue of asset less disposal expense and the present value of estimated future cash flow ofthe asset. 16. Borrowing costs

√ Applicable Not Applicable

(1) Recognition principles for capitalization of borrowing costs

The Company’s borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalized into the cost of relevantassets. Other borrowing costs are recognized as expenses in current profit or loss basedon the amount incurred. Qualifying assets for capitalization include fixed assets, investmentproperties and inventories that necessarily take a substantial period of time for acquisition,construction or production to get ready for their intended use or for sale. (2) Computation of capitalized amount

Period of capitalization refers to the period from the commencement to the cessation ofcapitalization timing of borrowing costs, excluding the periods in which capitalization ofborrowing costs is suspended.Period of suspended capitalization: Capitalization of borrowing costs is suspended duringperiods in which the acquisition, construction or production of a qualifying asset issuspended abnormally and the suspension lasts for more than 3 months.

Section X Financial Report

Computation of capitalized amount: Specific borrowings will be determined based on theactual interest expense incurred in the current period of the special borrowings less theinterest income from unutilized borrowings deposited in banks or investment income fromtemporary investment; Normal borrowings utilized are calculated based on the weightedaverage of the asset expenses accumulated exceeding the asset expenses of the portion ofspecial borrowings multiplied by the capitalization ratio of the normal borrowings utilized.Capitalization ratio is calculated based on weighted average interest rate of normalborrowings; For borrowings with discount or premium, the discount or premium whichshould be amortized in each accounting period is determined based on the effectiveinterest rate method and an adjustment should be made to the amount of interests in eachperiod. 17. Right-of-use assets

√ Applicable Not Applicable

Right-of-use assets are the right of the Company as a lessee to use leased assets during thelease term. On the commencement date of the lease term, the Company as lessee recognizesthe right-of-use assets and lease liabilities for the lease, except for short-term leases and lowvalue assets leases which are treated with practical expedient.The Company’s right-of-use assets shall be initially measured at the costs. The costs include:

(1) initial measurement amount of the lease liability;

(2) a lease payment paid on or before the date of commencement of the lease period, where

there was lease incentive, such incentives shall be deducted;

(3) initial direct costs incurred by the Company as lessee;

(4) costs expected to be incurred by the Company for demolition and removal of leased assets,

restoration of the premises where the leased assets are located, or restoration of theleased assets to the conditions of the lease terms.The Company accrues depreciation for right-of-use assets using the life average method. If theCompany can reasonably determine that the ownership of the leased asset can be acquired atthe expiration of the lease term, the leased asset shall be depreciated within its remaining usefullife. If the Company cannot reasonably determine that the ownership of the leased asset can beacquired at the expiration of the lease term, the leased asset shall be depreciated within thelease term or its remaining useful life (whichever is shorter).The Company determines whether the right-of-use assets are impaired in accordance with theprovisions ofAccounting Standards for Business Enterprises No. 8—Asset Impairmentandperforms accounting treatment on the identified impairment losses.

Section X Financial Report

When the lease liabilities are remeasured in accordance with the Standards, the Companyadjusts the book value of the right-of-use assets accordingly. If the book value of the right-of-use assets is reduced to zero, but needs a further reduction in the measurement of the leaseliabilities, the Company recognizes any remaining amount of the remeasurement in current profitor loss.If the lease change results in a narrower lease or a shorter lease term, the Company reduces thebook value of the right-of-use assets accordingly and recognizes the related gains or losses ofthe partially terminated or completely terminated leases into current profit and loss. For otherlease changes which result in the remeasurement of lease liabilities, the Company adjusts thebook value of the right-of-use assets accordingly. 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:

it is probable that economic benefits attributable to the intangible assets will flow into theCompany; 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.Subsequent measurement of intangible assets of the Company: Intangible 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; Intangible 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.

Section X Financial Report

(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: 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; 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 insubsequent accounting periods once provision is made for it.The recoverable amount of intangible assets should be based on the higher of the net fairvalue of the assets less the disposal expense and the present value of estimated futurecash flow of the assets.

(4) Basis for research and development phases for internal research and development

project and basis for capitalization of expenditure incurred in development stageAs for an internal research and development project, expenditure incurred by the Companyin the research stage is recognized in the profit or loss as incurred. Expenses incurred bythe Company in the development stage are capitalized only if all of the following conditionsare met: the technical feasibility of completing the intangible assets so that they will beavailable for use or for sale; the intention to complete the intangible assets for use or forsale; how the intangible assets will generate economic benefits, including there isevidence that the products produced by the intangible assets has a market or theintangible assets themselves have a market; if the intangible assets are for internal use,there is evidence that there exists usage for the intangible assets; the availability ofadequate technical, financial and other resources to complete the development and gainthe ability to use or sell the intangible assets; the capability to reliably measure theexpenditures attributable to the development stage of the intangible assets.

Section X Financial Report

Specific standards of the Company for distinguishing research stage and developmentstage of an internal research and development project: research stage of the Companyrefers to the stage of planned investigation and search for obtaining new technology andknowledge, which features planning and exploration; before commercial production or otheruses, the stage of applying the research achievements and other knowledge in a plan ordesign to produce new or substantially improved materials, equipment and products isregarded as development stage of the Company, which features pertinence and is verylikely to form results.All the expenditures incurred by the Company on research and development which cannotbe distinguished between research stage and development stage are recognized in theprofit or loss. 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 impairmentby the Company if there is any sign of impairment at the balance sheet date. If the result of theimpairment test indicates that the recoverable amount of the assets is less than the carryingamount, a provision for impairment will be made based on the difference and will be recorded inimpairment loss. The recoverable amount is the higher of the net fair value of the assets less thedisposal expense and the present value of estimated future cash flow of the assets. Provision forasset impairment is calculated and recognized on the individual asset basis. If it is not possibleto estimate the recoverable amount of an individual asset, the recoverable amount of the assetgroup to which the asset belongs is determined. An asset group is the smallest asset portfoliothat can generate cash 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 assetgroup portfolios 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 asset

Section X Financial Report

groups 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. 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.

Section X Financial Report

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 require orpermit 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.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 from theindemnity as a result of terminating labor relations with the employees: the Company has made aformal plan for termination of labor relations or has made an offer for voluntary redundancy whichwill be implemented immediately; and the Company could not unilaterally withdraw the plan fortermination of labor relations or the redundancy offer. Early retirement plans for employees will behandled in the principle the same as the termination benefits above. The Company will credit thesalaries and social insurance premiums to be paid to the early retirees during the period from thedate of early retirement to the normal retirement date to the profit or loss when recognitionconditions 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.

Section X Financial Report

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. 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.

Section X Financial Report

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.When there are changes to the Company’s share-based payment plans, if the modificationincreases the fair value of the equity instruments granted, corresponding recognition of serviceincrease in accordance with the increase in the fair value of the equity instruments; if themodification increases the number of equity instruments granted, the increase in fair value of theequity instruments is recognized as a corresponding increase in service achieved. Increase in thefair value of equity instruments refer to the difference between the fair values of the equityinstrument on the modified date before or after the modification. If the Company modifies thevesting conditions in such manner conductive to the employees, including the shortening of thevesting period, change or cancellation of the performance conditions (rather than marketconditions), the Company shall consider the modified vesting conditions upon the disposal ofvesting conditions. If the modification reduces the total fair value of shares paid or the Companyuses other methods not conductive to employees to modify the terms and conditions of share-based payment plans, it will continue to be accounted for the services obtained in theaccounting treatment, as if the change had not occurred, unless the Company cancelled some orall of the equity instruments granted.During the vesting period, if the Company cancel equity instruments granted which will be treatedas accelerating the exercise of rights and any amount to be charged over the remaining vestingperiod should be recognized immediately in the profit or loss, while at the same time recognizethe capital reserve. Employees or other parties can choose to meet non-vesting conditions, butfor those that are not met in the vesting period, the Company will treat it as cancellation ofequity instruments granted.

Section X Financial Report

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.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:

The client simultaneously obtains and consumes economic benefits as the Company and itssubsidiaries perform the contract;The client is able to control goods under construction during the process of performance of

the Company and its subsidiaries;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 the

amount for the cumulative completed and performed portion to date during the entire

contractual 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.

Section X Financial Report

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:

The Company and its subsidiaries enjoy the right of instant collection over such goods andservices;The Company and its subsidiaries have transferred the material objects of such goods tothe client;The Company and its subsidiaries have transferred statutory ownership right of the goodsor major risks and rewards of the ownership to the client; The client has accepted such goods or service.The right that the Company and its subsidiaries are entitled to collect the consideration forhaving transferred goods or services to the client (and such right depends on other factors otherthan time lapse) is presented as contractual asset, and contractual asset is provisionedimpairment on the basis of expected credit losses. The right owned by and unconditionallycollected from the client by the Company and its subsidiaries (only depend on time lapse) shallbe presented as accounts receivable. Obligations that the Company and its subsidiaries havecollected or shall collect consideration from the client and shall transfer goods or services to theclient are presented as contractual obligations.Specific accounting policies relating to major activities that the Company and its subsidiariesobtain revenue are described as follows:

(1) Sale of 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.

Section X Financial Report

(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.

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.

Section X Financial Report

(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: those 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; those 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:

Government grant subject to a certain project shall be separated according to theproportion of expenditure budget and capitalization budget, and the proportion shallbe reviewed and modified if necessary on each balance sheet date;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. (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.

Section X Financial Report

27. Deferred income tax assets/deferred income tax liabilities

√ Applicable Not Applicable

Deferred income tax assets and deferred income tax liabilities of the Company are recognized:

(1) Based on the difference between the carrying amount and the tax base amount of an 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.

Section X Financial Report

28. Other significant accounting policies and accounting estimations

√ Applicable Not Applicable

(1) Asset securitization business

Some of the Company’s receivables are securitized. The Company’s underlying assets aretrusted to a special purpose entity which issues securities to investors. The Companyserves as the asset service supplier, providing services including asset maintenance and itsdaily management, formulation of the annual asset disposal plan, formulation andimplementation of the asset disposal plan, signing relevant asset disposal agreements andperiodic preparation of asset service report.The Company has evaluated the extent to which it transfers the risks and rewards ofassets to other entities and the extent it exercises control over such entities while applyingthe accounting policy in respect of securitization of financial assets:

The financial asset is derecognized when the Company transfers substantially all the

risks and rewards of ownership of the financial asset;Recognition of the financial asset is continued when the Company retains substantially

all the risks and rewards of ownership of the financial asset;When the Company neither transfers nor retains substantially all the risks and rewards

of ownership of the financial asset, the Company evaluates whether it retains control

over the financial asset. If the Company does not retain control, it derecognizes the

financial asset and recognizes separately as assets or liabilities any rights and

obligations created or retained in the transfer. If the Company retains control, it

continues to recognize the financial asset to the extent of its continuing involvement

in the financial asset. (2) Hedge accounting

Hedge refers to risk management activities that enterprises designate financial instrumentsas hedge instruments in order to manage risk exposure caused by specific risks such asforeign exchange risk, interest rate risk, price risk and credit risk, allowing to expectchanges in fair value or cash flow of hedge instruments to offset all or partial changes infair value or cash flow of hedged items.Hedged items refer to items which make enterprises face risks of changes in fair value orcash flow and are designated as hedged objects and can be reliably measured.A hedging instrument is a financial instrument designated by an enterprise for the purposeof hedging, whose fair value or cash flow changes are expected to offset the change in thefair value or cash flow of the hedged items.

Section X Financial Report

The Company continuously conducts assessment over whether hedge relationship complieswith requirements of hedge effectiveness on the starting date of hedge and during follow-on period. Hedge effectiveness refers to the extent that changes in fair value or cash flowof hedge instruments can offset that of hedged items caused by the risks of being hedged.The portion that the changes in fair value or cash flow of hedge instruments is greater orless than that of hedged items is the ineffective portion of hedge. (3) Explanations on significant accounting estimates

Judgments, estimates and assumptions shall be made to book value of the financialstatements items, which could not be measured accurately, due to the inherentuncertainties of operating activities, while applying accounting policy. Such judgments,estimates and assumptions were based on the management’s historical experience andmade after other various factors are considered. These judgments, estimates andassumptions will influence the amount of revenues, expenses, assets and liabilitiespresented in financial reports and the disclosure of contingent liabilities on the balancesheet date. However, the actual results caused by the uncertainties of these estimationsmay be different from the current estimates of the management, and thus cause a materialadjustment to the carrying amounts of assets and liabilities affected in the future. Thejudgments, estimates and assumptions mentioned above shall be reviewed on a goingconcern basis. If the revisions to accounting estimates only affect the current period, theamount affected shall be recognized in the current period; if the revisions affect both thecurrent and future periods, the amount affected shall be recognized in both the current andfuture periods.On the balance sheet date, the Company needs to have judgments, estimates andassumptions about the following items on the financial statements:

Estimated liabilitiesProvision for product quality guarantee, expected contract losses, and other estimatesshall be made in accordance with the terms of contracts, current knowledge andhistorical experience. If the contingent event has formed a present obligation theperformance of which is very probable to result in outflow of economic benefits fromthe Company, an estimated liability shall be recognized by the Company on the basisof the best estimate of the expenditures to settle relevant present obligation.Recognition and measurement of the estimated liability significantly rely to a greatextent on the management’s judgments. In the process of judgment, the Companytakes into consideration the assessment of relevant risks, uncertainties, time value ofmoney and other factors related to the contingent events. Among them, the Companywill undertake estimated liabilities with respect to the after-sales services provided forthe return, maintenance and installation of goods. When estimating liabilities, theCompany has considered the empirical data on maintenance in recent years, but theprevious maintenance experiences may fail to reflect the future circumstances. Anyincrease or decrease in this provision is likely to affect the profits and losses of thenext year.

Section X Financial Report

Provision of expected credit lossesThe Company calculates the expected credit losses in accordance with breach riskexposure and expected credit loss rate, and confirms expected credit loss rate on thebasis of breach possibilities and breach loss rate. When confirming expected creditloss rate, the Company uses data such as internal historical credit loss experiences,and conducts adjustments over historical data in combination with current status andforward-looking information. When considering forward-looking information, indexesused by the Company include risks such as economic downturn, growth of expectedunemployment rate, changes in external market environment, technologicalenvironment and client conditions. The Company regularly monitors and reviewsrelevant assumptions relating to calculation of expected credit losses. The aforesaidestimation techniques and key assumptions have not changed substantially in thisyear. Impairment provision of inventoriesInventories are measured by lower of cost and net realizable value according to theaccounting policies of inventories; for inventories whose costs are higher than the netrealizable value or those obsolete and unsalable, the impairment provision ofinventories shall be made. The carrying value of inventory shall be written down to thenet realizable value on the basis of the evaluation of the salability of inventories andthe net realizable value thereof. Authenticating inventory impairment requires themanagement’s obtaining of solid evidence, and their judgments and estimations madeafter considering the purpose of holding inventories and the effect of events after thebalanced sheet date and etc. The difference between the actual outcome and thepreviously estimated outcome will influence the carrying value of inventories and theprovision or reversal of impairment provision of inventories during the period when theestimates are changed. Fair value of financial instrumentsFor financial instruments where there is no active market, the Company will determinetheir fair value through a variety of valuation methods. Such valuation methodsinclude discounted cash flow analysis. In the valuation, the Company shall estimatethe future cash flow, credit risk, market volatility and correlation, and select theappropriate discount rate. Such related assumptions are uncertain, and their changesmay affect the fair value of financial instruments.

Section X Financial Report

Impairment of investment in other equity instrumentsThe Company largely relies on judgments and assumptions of the management whendetermining whether investments of other equity instruments are impaired todetermine whether it is needed to recognize their impairment. During the process ofconducting judgments or making assumptions, the Company shall assess the extentand duration period that the fair value of such investments is below the cost, as wellas financial conditions and short-term business prospects of the invested objects,including industry conditions, technological reform, credit rating, breach rate and risksof counterparties. Provision of long-term assets impairment

As at the balance sheet date, the Company shall judge whether there is any possibleindication of impairment against non-current assets other than financial assets. Theintangible assets with indefinite useful life must be tested for impairment on an annualbasis as well as when there is any indication of impairment. Other non-current assetsother than financial assets shall be tested for impairment when there is an indicationshowing that the carrying value is not recoverable. Impairment occurs while thecarrying value of an asset or asset group is higher than the recoverable value, whichis the higher of the net of fair value less disposal expenses and the present value ofexpected future cash flow. The net of fair value less disposal expenses is determinedwith reference to the price in the sale agreement regarding analogous asset in fairtransactions or the observable market price less the increase of cost that is directlyattributable to the disposal of assets. Significant judgments regarding the output,sales price, relevant operating costs of the assets (or assets group) and the discountrate used to calculate the present value shall be made when estimating the presentvalue of future cash flow. Recoverable amount shall be estimated by the Companyusing all accessible relevant information, including predictions made on the output,sales price, and relevant operating costs based on reasonable and supportiveassumptions. The Company shall test for goodwill impairment at least every year. Thisrequires the Company to estimate the present value of future cash flow for suchassets groups or asset group portfolios allocated with goodwill. When estimating thepresent value of future cash flow, the Company shall not only estimate the futurecash flow generated by such asset groups or asset group portfolios, but also selectthe appropriate discount rate to determine the present value of such future cash flow.

Section X Financial Report

Depreciation and amortizationInvestment properties, fixed assets and intangible assets are depreciated andamortized by the Company with a straight-line approach over their useful life bytaking into consideration the residual value. Useful life shall be periodically reviewedby the Company to determine the amount of depreciation and amortization expensesfor each reporting period and be determined on the basis of historical experienceregarding analogous assets and the expected technological updates. Significantchanges to previous accounting estimates will result in adjustments againstdepreciation and amortization expenses in the future periods. Deferred income tax assetsDeferred income tax asset is recognized by the Company for all the uncompensatedtax losses to the extent that there is sufficient taxable profit for the deduction of loss.In order to determine the amount of deferred income tax assets, the management ofthe Company needs to predict the timing and the amount of taxable profits in thefuture by making abundant judgments, as well as through the strategy of taxplanning. Income taxIn the ordinary course of business of the Company, the ultimate tax treatment andcalculations of some transactions are uncertain. Whether some items could bepresented before taxation shall be approved by relevant tax authorities. Where thereare differences between the final tax outcome of these items and the initial estimatedamount, such differences will impact the current and deferred tax in the period of finalconfirmation. Provisions for sales rebates

The Company and its subsidiaries adopt the policy of sales rebates for consumers.According to the relevant conventions in the sales agreement, the review of specifictransactions, the market situation, the pipeline inventory levels and the historicalexperiences, the Company and its subsidiaries estimate and accrue sales rebate on aregular basis with reference to the completion of agreed assessment indexes bycustomers. Accrual of sales rebate involves the judgment and estimates of themanagement. In case of any significant changes in the previous estimates, thedifference above will have an impact on the sales rebate during the period whenrelevant changes in estimates occur.

Section X Financial Report

29. Changes in the significant accounting policies and accounting estimates

√ Applicable Not Applicable

Particulars of and reasons for

changes in accounting policiesDate of issueDate of adoptionAccounting Standards for BusinessEnterprises Interpretation No. 16(“Interpretation No. 16”)

November 20221 January 2023The Company and its subsidiaries have adopted the standard of the Interpretation No. 16 on1 January 2023. For deferred tax assets and liabilities recognised in respect of the lease liabilitiesand right-of-use assets related to a single transaction at the beginning of the earliest periodwhen the Interpretation No. 16 was adopted for the presentation of the financial statements, thenet amount of the deferred tax assets and liabilities after offsetting was equal to the amountsoriginally recognised on a net basis, with no impact on the consolidated balance sheet itemspresented at the net amount after offsetting. The impact of the changes in accounting policies ondeferred tax assets and deferred tax liabilities before offsetting as at 1 January 2023 was asfollows:

Item

Before policychanges

Impact ofchanges

After policychangesDeferred tax assetsbefore offsetting4,038,915,158.86868,657,062.494,907,572,221.35Deferred tax liabilitiesbefore offsetting4,673,734,789.63868,657,062.495,542,391,852.12Offset amount–2,314,874,230.44–868,657,062.49–3,183,531,292.93Deferred tax assetsafter offsetting1,724,040,928.421,724,040,928.42Deferred tax liabilitiesafter offsetting2,358,860,559.192,358,860,559.19VI. TAXATION 1. Main tax categories and rates

Tax categoriesBasis of taxationTax rateValue-added taxTaxable revenue from sales of

goods or rendering services

6%, 9%, 13%City maintenance and construction taxCirculation Taxes payable7%(Local) education surchargeCirculation Taxes payable1%, 2%, 3%Enterprise income taxTaxable incomeStatutory tax rate

or preferentialrates as follows

Section X Financial Report

2. Preferential tax

√ Applicable Not Applicable

Companies subjected to preferential tax:

Name of 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 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-Conditioner

Electronics 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 Hi-Tech Co., Ltd.15.00%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 ConditioningCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterprise

Section X Financial Report

Name of 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 TechnologyCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Special RefrigeratingAppliance 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 enterpriseShanghai Haier Medical Technology

Co., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseShanghai Haier Smart Technology Co.,Ltd. ()

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Yunshang Yuyi IOT TechnologyCo., Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseHaier (Shanghai) Home ApplianceResearch 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

Section X Financial Report

Name of 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 Electrics

Equipment Co. Ltd.

15.00%entitled to the preferential taxation

policies as a hi-tech enterpriseQingdao Haier Smart Living Appliance

Co. 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 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 PRCChongqing Hairishun Home Appliance

Sales Co., Ltd. (重慶海日順家電銷售有限公司) and some Westerncompanies

15.00%entitled to the preferential taxation

policies under the Western

Development initiative of the PRC

Section X Financial Report

Name of companyTax ratePreferential taxChongqing Haier Washing Machine

Co., Ltd.

15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCChongqing Haier Water Heater Co.,

Ltd.

15.00%entitled to the preferential taxation

policies under the WesternDevelopment initiative of the PRCChongqing Haier Drum Washing

Machine 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 the preferential taxation

policies as a key softwareenterprise

Section X Financial Report

VII. EXPLANATORY NOTES FOR ITEMS IN CONSOLIDATED FINANCIALSTATEMENTS 1. Monetary funds

√ Applicable Not Applicable

Unit and Currency: RMBItems

ClosingbalanceOpening balanceCash on hand9,276,508.905,312,391.11Deposit in bank54,386,531,893.7852,978,303,924.04Other monetary funds1,245,677,110.881,178,085,912.24Total55,641,485,513.5654,161,702,227.39Including: Total amount deposit overseas13,222,758,823.1011,963,648,575.80 2. Financial assets held for trading

Items

ClosingbalanceOpening balanceShort-term wealth management products180,384,620.3214,638,968.26Investment in equity instruments342,216,808.37336,843,065.02Investment fund211,983,501.19168,430,847.63Total734,584,929.88519,912,880.91

Section X Financial Report

3. Derivative financial assets

√ Applicable Not Applicable

Unit and Currency: RMBItems

ClosingbalanceOpening balanceForward foreign exchange contracts98,319,153.53178,992,877.32Forward commodity contracts1,813,127.254,192,283.19Total100,132,280.78183,185,160.51 4. Bills receivable

(1) Details of bills receivable

Items

ClosingbalanceOpening balanceBank acceptance notes10,239,074,495.529,390,227,149.92Commercially acceptance notes260,562,885.61237,902,374.08Balance of bills receivable10,499,637,381.139,628,129,524.00Allowance for bad debts3,937,685.853,937,685.85Bills receivable, net10,495,699,695.289,624,191,838.15

(2) Changes in allowance for bad debts of bills receivable in the current period

Items

Openingbalance

Increase for thecurrent period

Decrease for thecurrent period

ClosingbalanceProvision

OtherincreasesReversal

Write-off/othermovementAllowance for bad debts3,937,685.853,937,685.85Total3,937,685.853,937,685.85The Company’s bills receivable was mainly generated from daily operation activities such assales of commodity, provision of labor, etc., and the allowance for bad debts 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 wasRMB8,131,377,594.61 (amount at the beginning of the period: RMB8,716,194,311.64).

Section X Financial Report

5. Accounts receivable

Accounts receivable are disclosed by aging as follows:

Aging

ClosingbalanceOpening balanceWithin one year21,731,301,617.7615,940,556,486.40

–2 years896,282,247.63744,911,486.13

–3 years298,064,719.69277,269,661.37Over 3 years181,809,877.16129,303,240.96Accounts receivable, balance23,107,458,462.2417,092,040,874.86Allowance for bad debts1,365,237,866.011,205,412,250.87Accounts receivable, net21,742,220,596.2315,886,628,623.99 By method of provision of allowance for bad debts

√ Applicable Not Applicable

CategoriesClosing balance

Book balance

Allowance forbad debts

Percentage ofprovision (%)Carrying valueAccount receivablessubject to provision forbad debts on aseparate basis668,670,134.13659,660,046.4898.659,010,087.65Account receivablessubject to provision forbad debts on acollective basis22,438,788,328.11705,577,819.533.1421,733,210,508.58Total23,107,458,462.241,365,237,866.015.9121,742,220,596.23

Section X Financial Report

(continued)CategoriesOpening balance

Book balance

Allowance for bad

debts

Percentage ofprovision (%)Carrying valueAccount receivables subjectto provision for baddebts on a separatebasis669,106,556.78658,051,988.7098.3511,054,568.08Account receivables subjectto provision for baddebts on a collectivebasis16,422,934,318.08547,360,262.173.3315,875,574,055.91Total17,092,040,874.861,205,412,250.877.0515,886,628,623.99 Account receivables subject to provision for bad debts on a collective basis

√ Applicable Not Applicable

AgingBalance as at the end of the period

Book Balance

Allowance for

bad debts

Percentage of

provision (%)Within 1 year21,536,299,514.37460,150,811.392.14

–2 years521,218,109.1646,563,866.968.93

–3 years229,765,584.36100,367,802.6843.68Over 3 years151,505,120.2298,495,338.5065.01Total22,438,788,328.11705,577,819.533.14(continued)AgingBalance as at the beginning of the period

Book Balance

Allowance forbad debts

Percentage of

provision (%)Within 1 year15,627,590,996.07340,620,524.492.18

–2 years445,226,708.1533,709,717.147.57

–3 years231,744,330.0390,123,931.8938.89Over 3 years118,372,283.8382,906,088.6570.04Total16,422,934,318.08547,360,262.173.33

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 thecurrent periodOther increaseReversal

Write-off/other

movementAllowance for bad debts1,205,412,250.87266,868,732.80 91,621,780.1415,421,337.521,365,237,866.01The aggregate amount of the top 5 account receivables as at the end of the period was

RMB7,814,725,596.81, accounting for 33.82% of the book balance of account receivables(amount at the beginning of the period: RMB3,981,240,561.25, accounting for 23.29%). Actual write-off of accounts receivable in the current periodThe amount of accounts receivable actually written off in the current period isRMB22,054,320.92 (amount for the corresponding period: RMB13,058,370.53) and there isno important bad debt write-off of accounts receivable.The company’s accounts receivable that were terminated due to the transfer of financialassets in the current period.At the end of the period, the amount of accounts receivable that were terminated due tothe transfer of financial assets was RMB4,607,639,593.81 (amount at the beginning of theperiod: RMB7,752,646,133.49) and the transfer method was outright sale factoring/assetsecuritization. Restricted accounts receivable in the current periodThe amount of accounts receivable restricted at the end of the period is RMB2,138,633,123.64(amount at the beginning of the period: RMB1,944,980,392.98).

Section X Financial Report

6. Prepayments

(1) Prepayments are disclosed by aging as follows:

AgingClosing balanceOpening balanceWithin one year1,224,019,867.001,085,953,965.16

–2 years82,909,151.029,481,169.76

–3 years9,426,694.147,826,299.09Over 3 years4,178,359.355,852,909.40Total1,320,534,071.511,109,114,343.41

(2) The amount of the top 5 in the prepayments at the end of the period totals

RMB180,818,230.92, which accounts for 13.69% of the book balance of prepayment(amount at the beginning of the period: RMB285,279,364.51, accounting for 25.72%). 7. Other receivables

ItemsClosing balanceOpening balanceInterest receivable706,805,733.78513,320,376.79Other receivables2,039,429,541.431,887,793,525.76Total2,746,235,275.212,401,113,902.55

Section X Financial Report

Interest receivable

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceWithin one year453,749,959.10365,716,532.95

–2 years193,664,120.98117,786,419.18

–3 years38,804,913.9719,790,000.00Over 3 years20,586,739.7310,027,424.66Total706,805,733.78513,320,376.79 (1) Other receivables

Other receivables are disclosed by aging as follows:

AgingClosing balanceOpening balanceWithin one year1,390,633,305.801,415,479,963.79

–2 years296,629,907.75217,023,682.62

–3 years98,020,174.7923,617,332.57Over 3 years385,330,257.74387,192,496.32Other receivables balance2,170,613,646.082,043,313,475.30Allowance for bad debts131,184,104.65155,519,949.54Other receivables, net2,039,429,541.431,887,793,525.76The total amount of the top 5 other receivables at the end of the period isRMB676,333,122.65, which accounts for 31.16% of the book balance of other receivables(amount at the beginning of the period: RMB913,820,290.12, accounting for 44.72%).

Section X Financial Report

Provision of allowance for bad debts

Allowance for baddebtsStage 1Stage 2Stage 3Total

Expectedcredit lossesfor the coming12 months

Lifetimeexpectedcredit losses(not credit-impaired)

Lifetimeexpectedcredit losses(credit-impaired)Balance as at the

beginning of theperiod133,616,436.54 21,903,513.00155,519,949.54Provision for thecurrent period4,490,945.92 4,490,945.92Reversal for the current

period12,384,884.27 1,384,084.9513,768,969.22Write-off and others for

the current period–3,808,093.46 18,865,915.0515,057,821.59Balance as at the end

of the period129,530,591.65 1,653,513.00131,184,104.65 Changes in allowance for bad debt provision of other receivables in the current periodItems

Openingbalance

Increase for thecurrent period

Decrease for thecurrent period

ClosingbalanceProvisionfor thecurrentperiod

OtherincreaseReversal

Write-off/othermovementAllowance for baddebts155,519,949.544,490,945.92 13,768,969.2215,057,821.59131,184,104.65 Other receivables written off during the period

The amount of other receivables actually written off in the current period isRMB18,910,375.10 (amount for the corresponding period: RMB306,025.66), and nosignificant other receivables are written off for bad debts.Other receivables mainly include deposits, quality guarantees, employee loans, tax refunds,and advance payments, etc.

Section X Financial Report

8. Inventories

(1) Details of Inventories

ItemsClosing balanceOpening balance

Book valuebalance

Impairment

provision

Book valuebalance

Impairment

provisionRaw material5,696,796,547.03188,164,385.656,220,344,034.47171,673,251.23Work in progress116,094,591.24 74,028,876.21Finished goods34,764,879,936.791,362,732,058.6336,903,949,735.101,438,863,087.02Total40,577,771,075.061,550,896,444.2843,198,322,645.781,610,536,338.25

(2) Impairment provision of inventories

Items

Openingbalance

Increase forthe period

Decrease forthe period

ClosingbalanceProvisionOther IncreaseReversal

Write-off/other

movementRaw material171,673,251.2323,446,084.85 3,849,498.323,105,452.11188,164,385.65Work in progressFinished goods1,438,863,087.02588,926,551.80 109,022,234.74556,035,345.451,362,732,058.63Total1,610,536,338.25612,372,636.65 112,871,733.06559,140,797.561,550,896,444.28

9. Contract assets

(1) Details

ItemsClosing balanceOpening balance

Book valuebalance

ImpairmentProvision

Book value

balance

ImpairmentProvisionRelating to constructionservice contract466,471,066.0074,086,248.65379,905,624.9669,975,265.71Total466,471,066.0074,086,248.65379,905,624.9669,975,265.71

(2) Impairment provision

Items

Openingbalance

Increase forthe current period

Decrease forthe current period

ClosingbalanceProvision forthe currentperiodOther increaseReversal

Write-off/othermovementRelating to constructionservice contract69,975,265.714,110,982.9474,086,248.65Total69,975,265.714,110,982.9474,086,248.65

Section X Financial Report

10. Other current assets

(1) Details

ItemsClosing balanceOpening balance

Book valuebalance

Impairmentprovision

Book valuebalance

ImpairmentprovisionBank deposit for financialproducts1,447,066,286.66 1,642,421,944.45Taxes to be deducted2,286,276,696.84 2,710,565,806.36Return cost receivable559,241,779.17269,894,630.51563,233,565.88280,818,239.06Others66,342,368.11 57,543,006.31Total4,358,927,130.78269,894,630.514,973,764,323.00280,818,239.06

(2) Impairment provision

Items

Openingbalance

Increase forthe period

Decrease forthe period

ClosingbalanceProvisionOther IncreaseReversal

Write-off/other

movementReturn cost receivables280,818,239.06269,894,630.51280,818,239.06269,894,630.51Total280,818,239.06269,894,630.51280,818,239.06269,894,630.51

11. Debt investments

ItemsClosing balanceOpening balance

PrincipalInterestPrincipalInterestTime deposit— long-term2,200,000,000.0054,869,444.451,000,000,000.0034,222,222.22Total2,200,000,000.0054,869,444.451,000,000,000.0034,222,222.22

Section X Financial Report

12. Long-term equity investments

√ Applicable Not Applicable

InvesteesOpening balanceIncrease/decrease for the period

Investmentincrease

Investment profitrecognized underequity method

Adjustment inothercomprehensiveincomeOther changes in

equity

Declaration ofcash dividends or

profitsAssociate:

Haier Group Finance Co., Ltd.7,560,187,324.04316,482,151.52–9,220,365.69–235,200,000.00Bank of Qingdao Co., Ltd.2,934,085,854.00190,867,189.68–76,288,906.40Wolong Electric (Jinan) Motor

Co., Ltd.174,697,807.7412,444,173.12Qingdao Hegang New MaterialTechnology Co., Ltd.314,802,331.456,618,828.26Qingdao Haier SAIF Smart

Home Industry Investment

Center (Limited Partnership)319,245,649.36890,827.17–9,552,551.66Mitsubishi Heavy Industries

Haier (Qingdao)

Air-conditioners Co., Ltd.715,461,260.2659,119,761.19Qingdao Haier Carrier

Refrigeration Equipment

Co., Ltd.413,367,540.806,280,892.60–17,510,692.75Qingdao Haier multimedia Co.,

Ltd.153,550,234.50–16,852,864.55Anhui Kunhe Intelligent

Technology Co., Ltd.*1,997,782.61Zhejiang Futeng Fluid

Technology Co., Ltd.*77,807,408.84Beijing Mr. Hi Network

Technology Company

Limited7,507,759.75Hongtong Environmental

Technology (Guangzhou)

Co., Ltd.*4,500,000.00Beijing ASU Tech Co., Ltd.12,829,433.78–11,232,376.16Shenzhen Genyuan Environment

al Protection Technology

Co., Ltd.6,914,487.73Qingdao Haimu Investment

Management Co., Ltd.2,521,766.42–22,008.54Qingdao Haimu Smart Home

Investment Partnership

(Limited Partnership)58,905,912.88–238,863.11Haineng Wanjia (Shanghai)

Technology Development

Co., Ltd.*772,938.88Qingdao Guochuang Intelligent

Home Appliance Research

Institute Co., Ltd.45,016,334.202,477,779.47Guangzhou Heying Investment

Partnership (Limited

Partnership)285,793,577.87–21,503,315.00Qingdao Home Wow Cloud

Network Technology Co.,

Ltd.2,547,217.00–336,971.16*For identification purposes only

Section X Financial Report

InvesteesOpening balanceIncrease/decrease for the period

Investmentincrease

Investment profitrecognized under

equity method

Adjustment in

othercomprehensive

income

Other changes in

equity

Declaration ofcash dividends or

profitsBingji (Shanghai) Corporate

Management Co., Ltd.1,014,425,293.0420,868,519.47Youjin (Shanghai) CorporateManagement Co., Ltd1,843,591,441.8837,942,762.66RRS (Shanghai) Investment Co.,Ltd.3,351,166,257.9868,986,841.20Haier Best Water TechnologyCo., Ltd.148,369,638.405,286,278.08Huizhixiangshun EquityInvestment Fund (Qingdao)Partnership (LimitedPartnership)238,806,947.6420,415,567.30Qingdao Ririshun HuizhiInvestment Co., Ltd.4,083,482.78Qingdao XinshenghuiTechnology Co., Ltd.8,598,002.89–218,930.32EuropaltersItaliaS.r.l.15,760,505.28–15,760,505.28OryginLLC13,918,442.269,512,519.87Konan Electronic Co., Ltd.67,770,092.99382,702.68–2,978,193.94–230,850.00HNR Company (Private) Limited74,366,909.5523,481,658.71–6,813,630.42HPZ LIMITED88,751,047.98–20,901,562.28–19,632,307.56CONTROLADORAMABES.A.deC.V.4,685,927,386.53390,599,106.0023,869,702.77–12,600,608.82–67,531,073.10Middle East Airconditioning

Company, Limited8,820,101.55–692,668.60354,197.66Total24,652,368,172.86–1,747,985.411,092,233,227.09–15,508,344.88–12,600,608.82–406,314,073.91

Section X Financial Report

(Continued)

InvesteesIncrease/decrease for the periodClosing balance

ImpairmentprovisionClosing balanceOthermovement

Disposal of the

investmentAssociate:

Haier Finance Co., Ltd.7,632,249,109.87Bank of Qingdao Co., Ltd.3,048,664,137.28Wolong Electric (Jinan)Motor Co., Ltd.187,141,980.86Qingdao Hegang NewMaterial Technology Co.,Ltd.321,421,159.71Qingdao Haier SAIF SmartHome IndustryInvestment Center(Limited Partnership)310,583,924.87Mitsubishi Heavy IndustriesHaier (Qingdao) Air-conditioners Co., Ltd.774,581,021.45Qingdao Haier CarrierRefrigeration EquipmentCo., Ltd.402,137,740.65–21,000,000.00Qingdao Haier Multimedia

Co., Ltd136,697,369.95–88,300,000.00Anhui Kunhe Intelligent

Technology Co., Ltd.*1,997,782.61Zhejiang Futeng FluidTechnology Co., Ltd.*77,807,408.84Beijing Mr. Hi Network

Technology Company

Limited7,507,759.75–7,507,759.75Hongtong Environmental

Technology (Guangzhou)

Co., Ltd.*4,500,000.00Beijing ASU Tech Co., Ltd.1,597,057.62Shenzhen Genyuan

Environmental Protection

Technology Co., Ltd.–6,914,487.73Qingdao Haimu Investment

Management Co., Ltd.2,499,757.88Qingdao Haimu Zhijia

Investment Partnership

(Limited Partnership)58,667,049.77Haineng Wanjia (Shanghai)

Technology Development

Co., Ltd.*772,938.88

*For identification purposes only

Section X Financial Report

InvesteesIncrease/decrease for the periodClosing balance

Impairment

provisionClosing balanceOthermovement

Disposal of theinvestmentQingdao GuochuangIntelligent HomeAppliance ResearchInstitute Co., Ltd.47,494,113.67Guangzhou HeyingInvestment Partnership(Limited Partnership)264,290,262.87Qingdao Home Wow CloudNetwork Technology Co.,Ltd.2,210,245.84Bingji (Shanghai) CorporateManagement Co., Ltd.1,035,293,812.51Youjin (Shanghai) Corporate

Management Co., Ltd1,881,534,204.54RRS (Shanghai) InvestmentCo., Ltd.3,420,153,099.18Haier Best WaterTechnology Co., Ltd.153,655,916.48Huizhixiangshun EquityInvestment Fund(Qingdao) Partnership(Limited Partnership)259,222,514.94Qingdao Ririshun HuizhiInvestment Co., Ltd.4,083,482.78Qingdao XinshenghuiTechnology Co., Ltd.8,379,072.57EuropaltersItaliaS.r.l.OryginLLC23,430,962.13Konan Electronic Co., Ltd.64,943,751.73HNR Company (Private)Limited91,034,937.84HPZ LIMITED48,217,178.14CONTROLADORAMABES.A.deC.V.5,020,264,513.38Middle East Airconditioning

Company, Limited8,481,630.61–845,634.54Total–6,914,487.7325,301,515,899.20–117,653,394.29

Section X Financial Report

13. Investment in other equity instruments

√ Applicable Not Applicable

(1) Details of investment in other equity instruments at the end of the period:

Unit and Currency: RMBItems

ClosingbalanceOpening balanceSINOPEC Fuel Oil Sales Corporation Limited1,519,232,955.161,234,500,000.00COSMO IOT Technology Co., Ltd.2,817,408,000.002,817,408,000.00Others1,575,713,281.631,799,974,930.20Total5,912,354,236.795,851,882,930.20

(2) Dividends from investment in other equity during the current period:

ItemsAmount for the current periodSINOPEC Fuel Oil Sales Corporation Limited16,008,958.50Others1,910,251.35Total17,919,209.85 14. Investment properties

(1) The changes in investment properties measured at cost for this year are as follows:

Items

Houses andbuildingsLand use rightsTotalI. Original book value

1. Opening balance36,651,784.352,128,550.5138,780,334.86

2. Increase for the period

(1) Outsourced

(2) Inventories\fixed

assets\construction inprogress transferred in

(3) Increase in business

combinations

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

4. Change in foreign

exchange rate and others779,147.60779,147.60

5. Closing balance37,430,931.952,128,550.5139,559,482.46

Section X Financial Report

Items

Houses andbuildingsLand use rightsTotalII. Accumulated depreciationand accumulatedamortization

1. Opening balance12,430,985.69670,856.6013,101,842.29

2. Increase for the period

(1) Provision or

amortization681,981.8020,118.11702,099.91

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

4. Change in foreign

exchange rate and others241,110.43241,110.43

5. Closing balance13,354,077.92690,974.7114,045,052.63III. Impairment provision

1. Opening balance

2. Increase for the period

(1) Provision

3. Decrease for the period

(1) Disposal

(2) Disposal of subsidiary

(3) Other transferring out

4. Change in foreign

exchange rate and others

5. Closing balance

IV. Book value

1. Closing book value24,076,854.031,437,575.8025,514,429.83

2. Opening book value24,220,798.661,457,693.9125,678,492.57

(2) The depreciation and amortization amount charge for the period is RMB702,099.91 (amount

for the corresponding period: RMB669,390.08).

(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.

Section X Financial Report

15. Fixed assetsOverall presented as

√ Applicable Not Applicable

Unit and Currency: RMBItems

ClosingbalanceOpening balanceFixed assets27,270,243,076.1127,158,348,424.28Disposals of fixed assets448,385.16Total27,270,691,461.2727,158,348,424.28

(1) Fixed assets:

Items

Houses andbuildings

Productionequipment

TransportationequipmentI. Original book value

1. Opening balance14,637,131,005.8031,324,534,257.57193,143,213.57

2. Increase for the period

(1) Acquisition151,416.09407,110,085.541,248,468.37

(2) Construction in progress

transferred in306,068,742.04869,590,717.8310,844,589.49

(3) Increase in business combinations

3. Decrease for the period

(1) Disposal or Write-off37,097,971.20235,453,121.814,855,444.54

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others102,235,305.91549,422,765.51–2,398,985.90

5. Closing balance15,008,488,498.6432,915,204,704.64197,981,840.99II. Accumulated depreciation

1. Opening balance4,538,423,308.2316,035,153,335.30119,070,640.87

2. Increase for the period

(1) Provision322,561,141.521,374,247,641.3911,479,245.38

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or write-off19,172,410.25195,778,380.254,426,024.15

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others61,177,815.76297,557,504.05841,482.33

5. Closing balance4,902,989,855.2617,511,180,100.49126,965,344.43

Section X Financial Report

Items

Houses and

buildings

Productionequipment

TransportationequipmentIII. Impairment provision

1. Opening balance28,586,023.9016,202,770.28110,029.00

2. Increase for the period

(1) Provision1,106,322.835,068,356.22

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or Write-off1,305,299.85

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others–873,442.87–22,342.32–2,105.56

5. Closing balance28,818,903.8619,943,484.33107,923.44IV. Book value

1. Closing book value10,076,679,739.5215,384,081,119.8270,908,573.12

2. Opening book value10,070,121,673.6715,273,178,151.9973,962,543.70(Continued)ItemsOffice furnitureOthersTotalI. Original book value

1. Opening balance1,324,636,809.032,916,743,458.8450,396,188,744.81

2. Increase for the period

(1) Acquisition13,619,927.1638,873,697.67461,003,594.83

(2) Construction in progress

transferred in68,368,453.97132,648,182.441,387,520,685.77

(3) Increase in business combinations

3. Decrease for the period

(1) Disposal or Write-off8,958,773.71109,615,778.70395,981,089.96

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others11,409,715.1338,806,040.77699,474,841.42

5. Closing balance1,409,076,131.583,017,455,601.0252,548,206,776.87II. Accumulated depreciation

1. Opening balance788,864,149.171,708,674,462.6623,190,185,896.23

2. Increase for the period

(1) Provision95,726,548.18132,785,364.841,936,799,941.31

(2) Increase in business

combinations

Section X Financial Report

ItemsOffice furnitureOthersTotal

3. Decrease for the period

(1) Disposal or Write-off7,622,726.6277,985,761.72304,985,302.99

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others9,146,682.1935,731,433.43404,454,917.76

5. Closing balance886,114,652.921,799,205,499.2125,226,455,452.31III. Impairment provision

1. Opening balance243,387.382,512,213.7447,654,424.30

2. Increase for the period

(1) Provision39,067.786,213,746.83

(2) Increase in business

combinations

3. Decrease for the period

(1) Disposal or Write-off4,080.321,309,380.17

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate and

others–7,821.69–144,830.07–1,050,542.51

5. Closing balance270,553.152,367,383.6751,508,248.45IV. Book Value

1. Closing book value522,690,925.511,215,882,718.1427,270,243,076.11

2. Opening book value535,529,272.481,205,556,782.4427,158,348,424.28

(2) In the current period, the balance of the construction in progress transferred to the original

value of the fixed assets is in total RMB1,387,520,685.77 (amount for the correspondingperiod: RMB2,044,129,761.22).

Section X Financial Report

(3) As at 30 June 2023, the net book value of the buildings for which the Company has not yet

obtained certificates of title was RMB1.857 billion (opening amount of RMB2.037 billion), ofwhich RMB1.826 billion was put into use at the end of 2022 and the relevant certificates oftitle were being processed. The Company can legally and effectively occupy and operatethe above-mentioned buildings for which no certificates of title have been obtained.

(4) There was no mortgage secured by the fixed assets mortgage at the end of the period, and

there was no mortgage secured by the fixed assets mortgage at the beginning of theperiod.

(5) Disposals of fixed assets

Items

Closingbalance

Openingbalance

Reason fortransferring todisposalOthers448,385.16RetirementTotal448,385.16 16. Construction in progress

√ Applicable Not Applicable

Unit and Currency: RMBItems

Closingbalance

OpeningbalanceConstruction in progress4,675,841,932.964,094,684,500.49Construction materialsTotal4,675,841,932.964,094,684,500.49

Section X Financial Report

(1) Balance of construction in progress

√ Applicable Not Applicable

Unit and Currency: RMB

ProjectsClosing balanceOpening balance

Book balance

ImpairmentprovisionBook valueBook balance

ImpairmentprovisionBook valueEurope Candy Project664,994,525.97664,994,525.97467,370,049.46467,370,049.46Qingdao Air ConditioningElectronics Project360,505,021.09360,505,021.09313,855,913.14313,855,913.14America GEA Project347,979,805.43347,979,805.43338,096,215.95338,096,215.95Shanghai WashingAppliances Project338,248,596.70338,248,596.70315,004,188.48315,004,188.48Qingdao HVAC Project278,456,642.72278,456,642.72365,555.56365,555.56Eastern European Project254,146,857.47254,146,857.47392,579,594.60392,579,594.60Zhengzhou New Energy

Project225,758,431.82225,758,431.82197,524,472.64197,524,472.64Qingdao Water Ecology

Technology Project213,649,684.86213,649,684.8692,905,882.1392,905,882.13New Zealand FPA Project169,081,527.98169,081,527.98176,619,361.43176,619,361.43Qingdao Jiaozhou

Washing Appliances

Project130,940,468.79130,940,468.7993,825,106.0793,825,106.07Chongqing Water Heater

Project103,009,444.62103,009,444.6261,350,349.6361,350,349.63Hefei Drum Washing

Machine Project84,647,805.1584,647,805.1598,411,863.3098,411,863.30Foshan Freezer Project74,637,240.1274,637,240.1297,616,741.6997,616,741.69Special Refrigerator

Project71,737,926.0371,737,926.0366,136,656.5966,136,656.59Hailvyuan Recycling

Technology Project69,708,484.4769,708,484.4775,470,633.2475,470,633.24Chongqing Washing

Appliances Project69,020,092.9869,020,092.9859,889,999.8659,889,999.86Qingdao Central Air

Conditioner Project61,594,348.9661,594,348.9629,216,265.8829,216,265.88Qingdao Dishwasher

Project60,639,123.3960,639,123.3964,842,812.9164,842,812.91Qingdao Smart

Appliances Project53,964,974.7053,964,974.7067,092,916.9967,092,916.99Tianjin Washing

Appliances Project49,250,077.4549,250,077.4559,146,925.2059,146,925.20Zhengzhou Air

Conditioner Project46,113,903.6046,113,903.60546,460.15546,460.15Others948,855,669.261,098,720.60947,756,948.661,028,027,154.511,210,618.921,026,816,535.59Total4,676,940,653.561,098,720.604,675,841,932.964,095,895,119.411,210,618.924,094,684,500.49

Section X Financial Report

(2) Details of significant changes of construction in progress for the period

Project Name

Openingbalance

Increase forthe currentperiod

Transfer tofixed taxOther decrease

Change inforeignexchange rateand others

ClosingbalanceSource of fundEurope Candy Project467,370,049.46540,757,295.31211,569,369.22–131,563,449.58664,994,525.97Self-fundingQingdao Air ConditioningElectronics Project313,855,913.1451,742,568.975,093,461.02360,505,021.09Self-fundingAmerica GEA Project338,096,215.95156,988,345.60159,685,180.5512,580,424.43347,979,805.43Self-fundingShanghai WashingAppliances Project315,004,188.4823,244,408.22338,248,596.70Self-fundingQingdao HVAC Project365,555.56278,091,087.16278,456,642.72Self-fundingEastern European Project392,579,594.60116,858,497.57217,851,214.05–37,440,020.65254,146,857.47Self-fundingZhengzhou New Energy

Project197,524,472.6441,579,582.2613,345,623.08225,758,431.82Self-fundingQingdao Water Ecology

Technology Project92,905,882.13120,743,802.73213,649,684.86Self-fundingNew Zealand FPA Project176,619,361.4383,156,754.0491,564,951.03870,363.54169,081,527.98Self-fundingQingdao Jiaozhou

Washing Appliances

Project93,825,106.0737,115,362.72130,940,468.79Self-fundingChongqing Water HeaterProject61,350,349.6353,200,000.9611,540,905.97103,009,444.62Self-fundingHefei Drum Washing

Machine Project98,411,863.305,396,985.9719,161,044.1284,647,805.15Self-fundingFoshan Freezer Project97,616,741.696,449,691.1529,429,192.7274,637,240.12Self-fundingSpecial Refrigerator

Project66,136,656.5925,679,345.4320,078,075.9971,737,926.03Self-fundingHailvyuan Recycling

Technology Project75,470,633.2414,506,226.4720,268,375.2469,708,484.47Self-fundingChongqing Washing

Appliances Project59,889,999.8613,012,405.403,882,312.2869,020,092.98Self-fundingQingdao Central Air

Conditioner Project29,216,265.8840,485,605.188,107,522.1061,594,348.96Self-fundingQingdao Dishwasher

Project64,842,812.913,770,475.267,974,164.7860,639,123.39Self-fundingQingdao Smart

Appliances Project67,092,916.999,619,713.0322,747,655.3253,964,974.70Self-fundingTianjin Washing

Appliances Project59,146,925.203,238,445.1413,135,292.8949,250,077.45Self-fundingZhengzhou Air

Conditioner Project546,460.1546,174,601.59607,158.1446,113,903.60

Self-funding/fundraisingOthers1,028,027,154.51451,511,089.59531,586,711.17904,136.33948,855,669.26

Self-funding/fund

raisingTotal4,095,895,119.412,123,322,289.751,387,628,209.67–154,648,545.934,676,940,653.56

Section X Financial Report

(3) Impairment provision of construction in progress

Project name

Openingbalance

Increase forthe period

Transfer tofixed assets

Otherdecrease

Change inforeignexchangerate andothers

ClosingbalanceLejia IOT Project837,735.85837,735.85Other372,883.07107,523.90–4,374.42260,984.75Total1,210,618.92107,523.90–4,374.421,098,720.60 17. Right-of-use assets

Items

Houses andbuildings

Productionequipment

Transportation

equipmentI. Original book value:

1. Opening balance4,673,699,908.8337,374,188.44213,211,277.75

2. Increase for the current period

(1) Increase766,981,092.95573,908.0038,057,315.40

3. Decrease for the current period

(1) Disposal270,408,600.921,104,153.9623,249,569.32

(2) Disposal of subsidiary

4. Change in foreign exchange rate

and others109,994,689.30257,443.862,366,209.94

5. Closing balance5,280,267,090.1637,101,386.34230,385,233.77II. Accumulated amortization

1. Opening balance1,284,083,200.1718,972,328.56125,499,329.46

2. Increase for the current period

(1) Provision460,362,630.222,560,133.5533,983,793.47

3. Decrease for the current period

(1) Disposal170,330,845.221,104,153.9622,455,647.53

(2) Disposal of subsidiary

4. Change in foreign exchange

rate and others30,721,312.4086,274.62–3,967,299.01

5. Closing balance1,604,836,297.5720,514,582.77133,060,176.39III. 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 value3,675,430,792.5916,586,803.5797,325,057.38

2. Opening book value3,389,616,708.6618,401,859.8887,711,948.29

Section X Financial Report

(Continued)

ItemsOffice furnitureOtherTotalI. Original book value:

1. Opening balance53,135,501.06364,530,322.795,341,951,198.87

2. Increase for the current period

(1) Increase232,812,790.34105,558,304.021,143,983,410.71

3. Decrease for the current period

(1) Disposal679,880.54295,442,204.74

(2) Disposal of subsidiary

4. Change in foreign exchange rate

and others7,759,892.5817,484,855.37137,863,091.05

5. Closing balance293,028,303.44487,573,482.186,328,355,495.89II. Accumulated amortization

1. Opening balance22,851,405.9095,319,580.891,546,725,844.98

2. Increase for the current period

(1) Provision10,340,096.4450,335,427.89557,582,081.57

3. Decrease for the current period

(1) Disposal679,880.54194,570,527.25

(2) Disposal of subsidiary

4. Change in foreign exchange rate

and others561,792.365,395,550.8432,797,631.21

5. Closing balance33,073,414.16151,050,559.621,942,535,030.51III. 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 value259,954,889.28336,522,922.564,385,820,465.38

2. Opening book value30,284,095.16269,210,741.903,795,225,353.89

Section X Financial Report

18. Intangible assets

√ Applicable Not Applicable

Items

Proprietarytechnology

Licenses andfranchisesLand use rightsI. Original book value

1. Opening balance2,045,745,341.244,641,652,220.771,617,778,038.37

2. Increase for the current period

(1) Purchase127,234.88217,056,009.69

(2) Internal research and

development67,033,935.23

(3) 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 others28,872,015.88227,865,976.695,278,068.76

5. Closing balance2,141,651,292.354,869,645,432.341,840,112,116.82II. Accumulated amortization

1. Opening balance1,177,726,697.551,012,993,222.17246,593,605.24

2. Increase for the current period

(1) Provision104,395,920.9690,044,784.4438,937,948.60

(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 others21,804,973.3046,609,316.21756,325.61

5. Closing balance1,303,927,591.811,149,647,322.82286,287,879.45III. 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

Section X Financial Report

Items

Proprietarytechnology

Licenses andfranchisesLand use rights

5. Closing balance

IV. Book Value

1. Closing book value837,723,700.543,719,998,109.521,553,824,237.37

2. Opening book value868,018,643.693,628,658,998.601,371,184,433.13(Continued)

ItemsTrademark rights

Applicationmanagementsoftware andothersTotalI. Original book value

1. Opening balance2,582,976,744.575,344,358,234.6216,232,510,579.57

2. Increase in the current period

(1) Purchase156,084,629.39373,267,873.96

(2) Internal research and

development173,599,388.36240,633,323.59

(3) Increase in business

combination

3. Decrease for the current period

(1) Disposal63,204,022.7963,204,022.79

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others111,038,637.8599,408,981.47472,463,680.65

5. Closing balance2,694,015,382.425,710,247,211.0517,255,671,434.98II. Accumulated amortization

1. Opening balance3,265,730,771.745,703,044,296.70

2. Increase in the current period

(1) Provision391,213,427.35624,592,081.35

(2) Increase in business

combination

3. Decrease for the current period

(1) Disposal33,039,874.2833,039,874.28

(2) Disposal of subsidiary

(3) Transfer to hold for sale

4. Change in foreign exchange rate

and others95,885,383.38165,055,998.50

5. Closing balance3,719,789,708.196,459,652,502.27

Section X Financial Report

ItemsTrademark rights

Applicationmanagementsoftware and

othersTotalIII. Impairment provision

1. Opening balance23,584,905.6623,584,905.66

2. Increase in the current period

(1) Provision28,311.5728,311.57

(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 others1,212.221,212.22

5. Closing balance23,614,429.4523,614,429.45IV. Book value

1. Closing book value2,694,015,382.421,966,843,073.4110,772,404,503.26

2. Opening book value2,582,976,744.572,055,042,557.2210,505,881,377.21At the end of the period, the intangible assets developed through the Company accounted for

20.74% of the original value (at the beginning of the period20.47%).

Section X Financial Report

19. Development cost

Items

Openingbalance

Increase forthe periodDecrease for the period

Change inforeignexchange rateand others

ClosingbalanceConfirmed asan intangibleasset

Included inCurrent profitand loss

Disposal ofsubsidiaries91ABD.ERP IT

Program7,539,118.4215,735,011.577,471,378.12587,691.8316,390,443.70low-carbon andenergy-savingProject77,643,503.5377,643,503.53Others146,941,397.25346,050,812.15233,161,945.47100,345,093.76–15,911,335.54143,573,834.63Total154,480,515.67439,429,327.25240,633,323.59100,345,093.76–15,323,643.71237,607,781.86 20. Goodwill

ItemsOpening balance

Increase for

the period

Decrease forthe period

Change in foreignexchange rateand othersClosing balanceGEA20,681,717,264.22776,368,136.0421,458,085,400.26Candy1,929,953,985.15118,091,999.092,048,045,984.24Others1,031,924,394.50102,436,911.98–937,299.211,133,424,007.27Total23,643,595,643.87102,436,911.98893,522,835.9224,639,555,391.77In 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%–

6.50%)

and the EBITDA profit margin (mainly 5.11%–

13.15%) 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 10.4%–

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.

Section X Financial Report

21. Long-term prepaid expenses

ItemsOpening balance

Increase forthe currentperiod

Amortization for

the currentperiodOther decrease

Change inforeignexchange rateand othersClosing balanceRenovation457,806,490.36229,016,427.22214,133,432.573,970.33472,693,455.34Improvement on leased

property146,458,109.2231,832,639.5415,544,173.801,259,574.93164,006,149.89Others155,618,574.6248,769,049.9228,293,692.22–2,722,071.20173,371,861.12Total759,883,174.20309,618,116.68257,971,298.59–1,458,525.94810,071,466.35 22. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets before elimination

Items

ClosingbalanceOpening balanceProvision for assets impairment459,216,865.16486,504,423.79Liabilities2,643,585,609.132,392,703,222.82Internal unrealized earnings eliminated dueto combination426,881,409.73848,773,608.23Uncovered losses232,784,216.45217,344,490.61R&D expenses866,307,772.03615,110,766.72Others302,013,820.85347,135,709.18Total4,930,789,693.354,907,572,221.35

(2) Deferred income tax liabilities before elimination

Item

ClosingbalanceOpening balanceAsset amortisation4,099,895,099.193,875,255,150.79Remeasurement of fair value of the

remaining equity interest on the date ofloss of control878,623,804.46878,623,804.46Changes in fair value of investments in otherequity instruments 293,193,619.84293,662,487.81Others544,517,958.20494,850,409.06Total5,816,230,481.695,542,391,852.12

(3) The deferred income tax assets and the deferred income tax liabilities eliminated at the end

of this period was RMB3,721,415,014.24 (amount at the beginning of the period:

RMB3,183,531,292.93).

Section X Financial Report

23. Other non-current assets

Item

Closingbalance

OpeningbalancePrepayments for equipment and land2,118,960,332.561,671,590,606.02Others213,497,841.50209,146,285.61Total2,332,458,174.061,880,736,891.63

24. Short-term borrowings

√ Applicable Not Applicable

Unit and Currency: RMBItem

ClosingbalanceOpening balanceBorrowings— secured by pledge180,484,052.0182,727,127.97Borrowingssecured by guarantee7,000,000.00101,506,733.93Borrowings— unsecured9,114,905,384.709,479,489,787.33Interest payable for short-term borrowings62,795,362.708,499,873.13Total9,365,184,799.419,672,223,522.36

25. Derivative financial liabilities

√ Applicable Not Applicable

Unit and Currency: RMBItem

ClosingbalanceOpening balanceForward foreign exchange contracts346,817,213.8392,580,419.48Forward commodity contracts6,097,723.0612,013,621.18Total352,914,936.89104,594,040.66

Section X Financial Report

26. Bills payable

√ Applicable Not Applicable

Unit and Currency: RMBItem

ClosingbalanceOpening balanceCommercially acceptance notes51,885,099.142,212,721,304.36Bank acceptance notes23,135,947,877.0822,885,836,425.70Total23,187,832,976.2225,098,557,730.06 27. Accounts payable

√ Applicable Not Applicable

Unit and Currency: RMBItem

ClosingbalanceOpening balanceAccounts payable47,160,319,625.8241,878,607,182.94Total47,160,319,625.8241,878,607,182.94The ending book balance is mainly the unpaid expenditures on material and labour. 28. Contract liabilities

√ Applicable Not Applicable

Unit and Currency: RMBItem

ClosingbalanceOpening balanceContract liabilities6,251,026,204.679,352,719,895.49Total6,251,026,204.679,352,719,895.49The book balance at the end of the period was mainly due to the advance payment that hasbeen collected and has not yet performed the contractual obligations.

Section X Financial Report

29. Payables for staff’s remuneration

(1) Payables for staff’s remuneration

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceI. Short-term remuneration3,815,730,531.1413,491,231,398.2214,115,423,960.443,191,537,968.92II. Post-employmentbenefits-definedcontribution plan65,446,167.35728,655,472.93699,112,731.9294,988,908.36III. Termination benefits35,166,874.40277,307,461.54304,204,085.498,270,250.45IV. Other benefits duewithin one year134,121,181.4818,167,078.7927,665,465.88124,622,794.39Total4,050,464,754.3714,515,361,411.4815,146,406,243.733,419,419,922.12

(2) Short-term remuneration

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceI. Salaries, bonus,allowance andbenefit2,659,565,504.9110,002,795,704.3010,616,686,791.022,045,674,418.19II. Employee welfare333,049,384.20473,562,865.35495,677,161.57310,935,087.98III. Social benefit224,360,701.36927,072,638.54942,422,351.56209,010,988.34IV. Housing fund5,036,607.14295,062,937.57261,872,382.7238,227,161.99V. Labor union fee and

education fee9,025,442.2654,429,387.9759,735,051.643,719,778.59VI. Short-term

compensated

absences260,622,518.13268,276,739.50269,886,159.15259,013,098.48VII. Others324,070,373.141,470,031,124.991,469,144,062.78324,957,435.35Total3,815,730,531.1413,491,231,398.2214,115,423,960.443,191,537,968.92

Section X Financial Report

(3) Defined contribution plan

√ Applicable Not Applicable

Unit and Currency: RMB

ItemsOpening balance

Increase for thecurrent period

Decrease for

current theperiodClosing balanceI. Basic pension insurance64,162,379.08678,566,464.02662,438,086.8980,290,756.21II. Unemploymentinsurance346,829.9417,866,223.4917,748,148.00464,905.43III. Enterprise annuitypayment936,958.3332,222,785.4218,926,497.0314,233,246.72Total65,446,167.35728,655,472.93699,112,731.9294,988,908.36

(4) Termination benefits

ItemsClosing balance

OpeningbalanceTermination compensation8,270,250.4535,166,874.40Total8,270,250.4535,166,874.40 30. Taxes payable

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balance

OpeningbalanceValue-added tax1,113,053,099.21860,587,585.73Enterprise income tax1,569,022,348.601,704,621,792.80Individual income tax95,323,159.10100,208,772.52City maintenance and construction tax40,061,438.6728,891,872.00Education surcharge18,238,161.6514,945,658.71The electrical and electronic products waste

treatment fund91,159,372.0097,068,373.00Other taxes78,486,467.7169,897,838.15Total3,005,344,046.942,876,221,892.91

Section X Financial Report

31. Other payables

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceDividends payable5,299,410,272.791,246,573.35Other payables17,601,698,991.3817,516,591,992.64Total22,901,109,264.1717,517,838,565.99

(1) Dividends payables

Name of companyClosing balanceOpening balanceHaier Cosmo Co., Limited712,415,610.38Haier Group Corporation607,097,692.42Other Shareholders of Social Shares3,979,896,969.991,246,573.35Total5,299,410,272.791,246,573.35 (2) Other payables

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceOther payables17,601,698,991.3817,516,591,992.64Total17,601,698,991.3817,516,591,992.64The closing balance at the end of the period mainly included the incurred but unpaid costs.

Section X Financial Report

32. Non-current liabilities due within one year

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceLong-term borrowings due within one year19,143,918.092,854,446,929.32Lease liabilities due within one year979,431,504.82903,249,632.59Estimated liabilities due within one year2,520,709,709.812,537,054,105.17Total3,519,285,132.726,294,750,667.08 33. Other current liabilities

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balancePayable refund580,015,990.29624,887,787.38Tax amount to be written off825,061,115.541,198,555,405.78Others26,162,327.3026,982,922.63Total1,431,239,433.131,850,426,115.79

34. Long-term borrowings

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balanceOpening balanceBorrowings— secured by guarantee23,550,000.00Borrowings— unsecured18,366,761,352.0313,567,316,873.43Total18,366,761,352.0313,590,866,873.43Interest rates of long-term loans of the Company ranged from 2.20% to 6.30%.

Section X Financial Report

35. Lease liabilities

ItemsClosing balanceOpening balanceLease liabilities4,318,344,000.943,727,727,303.20Less: lease liabilities due within one year979,431,504.82903,249,632.59Total3,338,912,496.122,824,477,670.61 36. Long-term payables

ItemsClosing balanceOpening balanceInvestment from CDB development fund36,500,000.0036,500,000.00Others7,186,763.737,740,087.94Less: long-term payables due within one yearTotal43,686,763.7344,240,087.94Under the Investment Contract of China Development Fund executed by the Company and itssubsidiaries including Qingdao Haier Air Conditioner Gen Corp., Ltd., Qingdao Haier (Jiaozhou)Air-conditioning Co., Limited together with China Development Fund Co. Ltd. in 2015 and 2016,China Development Fund Co. Ltd. invested RMB73 million in Qingdao Haier (Jiaozhou) Air-conditioning Co., Limited. China Development Fund Co. Ltd. obtained an annual return of 1.2%by means of dividends or buyback premium for the above investments. As at the end of theperiod, subsidiaries of the Company repurchased RMB36.50 million. 37. Long-term payables for staff’s remuneration

√ Applicable Not Applicable

(1) Long-term payables for staff’s remuneration

√ Applicable Not Applicable

Unit and Currency: RMBItemsClosing balance

OpeningbalanceI. Post-employment benefits-net liability of definedbenefit plan391,834,022.84417,072,669.76II. Termination benefits467,975,538.86386,522,704.17III. Provision for work-related injury compensation214,392,882.13206,951,828.41Total1,074,202,443.831,010,547,202.34

Section X Financial Report

(2) Defined benefit 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 Company.

Actuarial assumption used in the defined benefit planItemsRateDiscount rate0.50%Expected rate of return2.00%

Present value of defined benefit obligations

ItemsAmountI. Opening balance253,301,981.31II. Defined benefit cost recognized in current profit or loss–928,052.75

1. Current service cost

–928,052.75

2. Past service cost

3. Settlement gains (loss indicated in “

–”)

4. Interest expenses

III. Defined benefit cost recognized in other comprehensiveincome

1. Actuarial loss (gain indicated in “

–”)IV. Other changes–10,930,430.49

1. The consideration paid at the time of settlement

2. Benefits paid

3. Exchange differences

–10,930,430.49V. Closing balance241,443,498.07

Section X Financial Report

Fair value of plan assetsItemsAmountI. Opening balance293,745,142.73II. Defined benefit cost recognized in current profit or loss

1. Interest income

III. Defined benefit cost recognized in other comprehensiveincome

1. Return on plan assets (except those included in net

interests)

2. Changes in impact of asset cap (except those included in

net interests)IV. Other changes–18,169,503.70

1. Employer contributions

–600,443.06

2. Benefits paid

–5,003,405.32

3. Exchange differences

–12,565,655.32V. Closing balance275,575,639.03Neither the Company’s ordinary shares or bonds, nor the properties occupied by theCompany are included in the plan assets.

Net liability (net asset) of defined benefit plan

ItemsAmountI. Opening balance–40,443,161.42II. Defined benefit cost recognized in current profit or loss–928,052.75III. Defined benefit cost recognized in other comprehensive

incomeIV. Other changes7,239,073.21V. Closing balance–34,132,140.96The average term for the defined benefit obligation is 11.73 years at the balancesheet date.

Section X Financial Report

The defined benefit plan of Roper Corporation, a subsidiary of the Company

Roper Corporation, a subsidiary of the Company, has provided qualified staff withdefined benefit plan for post-retirement health care benefits.

Actuarial assumptions used in defined benefit plansItemRateDiscount rate5.59%

Present value of defined benefit obligationsItemAmountI. Opening balance123,777,420.24II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,687,091.34

1. Current period service cost5,277,772.41

2. Past service cost

3. Settlement gains ((loss indicated in “

–”)

4. Interest expenses4,409,318.93IV. Defined benefit cost recognized in other comprehensiveincome–45,267,739.89

1. Actuarial loss (gain indicated in “

–”)–45,267,739.89V. Other changes–5,382,153.84

1. The consideration paid at the time of settlement

2. Benefits paid

–8,401,002.70

3. Exchange differences3,018,848.86VI. Closing balance82,814,617.85

Net liability (net asset) of defined benefit plan

ItemsAmountI. Opening balance123,777,420.24II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,687,091.34IV. Defined benefit cost recognized in other comprehensive

income–45,267,739.89V. Other changes–5,382,153.84VI. Closing balance82,814,617.85The average term for the defined benefit obligation is 11.22 years at the balancesheet date.

Section X Financial Report

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary

of the Company.Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has providedqualified staff with defined benefit plan for post-retirement health care benefits.

Actuarial assumptions used in defined benefit plans

ItemRateDiscount rate5.51%

Present value of defined benefit obligations

ItemsAmountI. Opening balance195,104,194.13II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,994,742.42

1. Current period service cost

2. Past service cost

3. Settlement gains (loss indicated in “

–”)

4. Interest expenses9,994,742.42IV. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “

–”)V. Other changes–21,370,853.88

1. The consideration paid at the time of settlement

2. Benefits paid

–28,022,650.00

3. Exchange differences6,651,796.12VI. Closing balance183,728,082.67

Net liability (net asset) of defined benefit plan

ItemsAmountI. Opening balance195,104,194.13II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss9,994,742.42IV. Defined benefit cost recognized in other comprehensive

incomeV. Other changes–21,370,853.88VI. Closing balance183,728,082.67

Section X Financial Report

The defined benefit plan of Haier U.S. Appliance Solutions, Inc., a subsidiary

of the Company.

Haier U.S. Appliance Solutions, Inc., a subsidiary of the Company, has providedqualified staff with defined benefit plan for post-retirement pension.

Actuarial assumptions used in defined benefit plansItemRateDiscount rate5.51%

Present value of defined benefit obligations

ItemsAmountI. Opening balance126,866,875.02II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss6,303,537.72

1. Current service cost136,528.81

2. Past service cost

3. Settlement gains (loss indicated in “

–”)

4. Interest expenses6,167,008.91IV. Defined benefit cost recognized in other comprehensive

income

1. Actuarial loss (gain indicated in “

–”)V. Other changes–36,510,318.91

1. The consideration paid at the time of settlement

2. Benefits paid

–40,023,767.34

3. Exchange differences3,513,448.43VI. Closing balance96,660,093.83

Section X Financial Report

Fair value of plan assetsItemsAmountI. Opening balance92,039,772.87II. Defined benefit cost recognized in current profit or loss

1. Interest income

III. Defined benefit cost recognized in other comprehensiveincome

1. Return on plan assets (except those included in net

interests)

2. Changes in impact of asset cap (except those included in

net interests)IV. Other changes–25,257,079.47

1. Employer contributions4,263,284.95

2. Benefits paid

–31,950,334.14

3. Exchange differences2,429,969.72V. Closing balance66,782,693.40

Net liability (net asset) of defined benefit plan

ItemsAmountI. Opening balance34,827,102.15II. Business combination not under common controlIII. Defined benefit cost recognized in current profit or loss6,303,537.72IV. Defined benefit cost recognized in other comprehensive

incomeV. Other changes–11,253,239.44VI. Closing balance29,877,400.43

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 from 1January 1991, which was used to pay for the claim made by the injured staff. Theprovision was calculated by Beechercarlson Insurance Services, LLC., based on actuarialmethod and a discount rate of 3.72%.ItemsAmountI. Opening balance206,951,828.41II. Business combination not under common controlIII. Compensation recognized in current profit and loss46,154,353.19IV. Actual compensation paid in the current period–46,463,403.63V. Other changes7,750,104.16VI. Closing balance214,392,882.13Classification of the balance of defined benefit plan

ItemsClosing balanceOpening balanceShort-term salary23,283,167.7136,444,790.69Long-term salary391,834,022.84417,072,669.76Total415,117,190.55453,517,460.45 38. Estimated liabilities

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balanceClosing balancePending litigation18,469,174.1832,333,083.62Others262,077,808.56299,431,322.56Projection of three guarantees and installation fees1,330,482,237.431,429,733,867.17Total1,611,029,220.171,761,498,273.35Significant assumption and estimation relating to projection of three guarantees and installationfees: the Company reasonably estimated the three guarantees and installation fee rate based onits actual expenses on the three guarantees and installation fees as well as sales data in thepast. The Company estimated the three guarantees and installation fees that are likely to beincurred in the future according to its policies on the three guarantees and installation fees, aswell as the actual sales data.

Section X Financial Report

39. Deferred income

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceGovernment grants948,935,134.0572,999,793.5060,247,914.19961,687,013.36Total948,935,134.0572,999,793.5060,247,914.19961,687,013.36 40. Share capital

Categories of shares

Openingbalance

Increase for

the currentperiod

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 shares9,446,598,4938,483,6009,438,114,893

1. Ordinary shares in

RMB6,308,552,6546,308,552,654

2. Domestic listed

foreign Shares

3. Offshore listed foreign

Shares3,138,045,8398,483,6003,129,562,239

4. Others

III. Total shares9,446,598,4938,483,6009,438,114,893

Section X Financial Report

41. Capital reserve

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceCapital premium (share capitalpremium)22,275,237,959.89 273,991,759.7322,001,246,200.16Other capital reserve1,601,799,364.87390,681,368.301,992,480,733.17Total23,877,037,324.76390,681,368.30273,991,759.7323,993,726,933.33The main reasons for the change in share premium:

The cancellation of treasury stock during the period resulted in the decrease in share premium ofRMB173,997,008.66; the common control combination occurred during the period resulted in thedecrease in share premium by RMB70,000,000.00.The main reasons for the change in other capital reserve: The amortized share-based paymentfor the period included in other capital reserve was RMB390,681,368.30.

42. Other comprehensive income

ItemsAmount for the current period

Opening balance

Amount beforeincome tax in the

current period

Deduction of

impact onincome tax

Amountattributable to theparent companyafter tax

Amountattributable tominorityshareholders after

taxOthersClosing balancea–241,549,088.46–15,508,344.88–15,508,344.88–257,057,433.34b3,926,810.45–205,933,491.479,483,229.06–193,755,242.84–2,695,019.57–189,828,432.39c1,251,780,016.89312,200,171.06 327,650,921.33–15,450,750.27 1,579,430,938.22d869,623,580.1729,397,079.24–25,252,906.684,225,394.16–81,221.60 873,848,974.33e106,902,179.4041,736,048.01–9,297,683.2132,438,331.8732.93 139,340,511.27Total1,990,683,498.45161,891,461.96–25,067,360.83155,051,059.64–18,226,958.51 2,145,734,558.09Notes:

(1) Items a, b, and c are other comprehensive income that will be reclassified into profit or loss, the details are as follows:

Item a represents other comprehensive income classified into profit and loss under the equity method.Item b represents cash flow hedge reserves (effective portion of profit or loss generated from cash flow hedge).Item c represents the balance arising from translation of foreign currency financial statements.

(2) Items d and e are other comprehensive income that cannot be reclassified into profit or loss. Details are as follows:

Item d represents the change in fair value of investments in other equity instruments.Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans.

Section X Financial Report

43. Surplus reserve

√ Applicable Not Applicable

Unit and Currency: RMBItemsOpening balance

Increase for thecurrent period

Decrease for thecurrent periodClosing balanceStatutory surplus reserve3,966,533,821.653,966,533,821.65Discretionary surplus reserve26,042,290.4826,042,290.48Reserve fund11,322,880.6411,322,880.64Enterprise development fund10,291,630.4710,291,630.47Total4,014,190,623.244,014,190,623.24Pursuant 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 ofcurrent year. 44. Undistributed profits

√ Applicable Not Applicable

ItemsAmountsUndistributed profits at the end of previous year57,976,944,921.36Changes in accounting policiesBusiness combination under common control6,806,549.24Undistributed profits at the beginning of the year57,983,751,470.60Add: net profit attributable to owners of the parent company8,963,875,999.84Other transfer in11,946,127.47Adjustment due to implementation of enterprise accounting standardProfit available for appropriation for the year66,959,573,597.91Less: appropriation of statutory surplus reserveAppropriation of staff incentive and welfare fundDividend payable for ordinary shares5,297,529,553.10Undistributed profits at the end of period61,662,044,044.81

Section X Financial Report

45. Operating income and operating cost

(1) Operating income

Items

Amount for the

current period

Amount for theprevious periodPrimary business130,794,605,634.37121,030,459,783.59Other business831,975,872.19609,607,595.76Total131,626,581,506.56121,640,067,379.35

(2) Primary business income and primary business cost by product category

Amount for thecurrent period

Amount for theprevious periodCategories

Primary business

income

Primary business

costPrimary business

income

Primary business

costAir conditioner27,990,491,459.0419,980,348,155.1923,670,538,686.3417,107,788,658.52Refrigerator40,302,800,944.8927,987,308,901.7837,913,367,317.5026,475,741,807.66Kitchen appliance19,700,572,437.0413,561,433,684.5218,750,037,462.8812,816,780,100.13Water appliance7,458,185,872.454,356,557,669.166,713,300,912.433,934,510,287.34Washing machine28,125,479,757.3518,950,800,863.9126,516,919,361.8217,907,657,332.94Equipment product and

integrated channelservices7,217,075,163.606,540,223,461.397,466,296,042.626,440,093,281.13Total130,794,605,634.3791,376,672,735.95121,030,459,783.5984,682,571,467.72

46. Taxes and surcharge

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodCity construction tax211,267,062.08122,226,136.72Education surcharge129,147,500.9088,480,235.93Property tax37,815,087.4028,716,064.84Land use tax10,889,390.917,536,240.97Stamp duty118,585,679.9991,460,460.03Others24,871,738.4018,835,304.10Total532,576,459.68357,254,442.59

Section X Financial Report

47. Selling expenses

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for the

current period

Amount for theprevious periodSelling expenses18,768,944,057.4417,606,475,316.07Total18,768,944,057.4417,606,475,316.07The Company’s selling expenses are mainly salary expenses, logistic and storage expenses,advertising and promotion expenses, and after-sales expenses etc. 48. Administrative expenses

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodAdministrative expenses5,461,681,481.505,140,311,538.47Total5,461,681,481.505,140,311,538.47The Company’s management expenses are mainly salary expenses, administrative officeexpenses, depreciation and amortization of assets fees, etc. 49. R&D expenses

√ Applicable Not Applicable

Unit and Currency: RMBItem

Amount for thecurrent period

Amount for theprevious periodR&D expenses5,025,786,116.644,598,032,317.91Total5,025,786,116.644,598,032,317.91The Company’s R&D expenses are mainly salary expenses, R&D equipment expenses, designand R&D fees.

Section X Financial Report

50. Financial expenses

Items

Amount for the

current period

Amount for theprevious periodInterest expenses875,078,615.27348,353,122.72Less: Interest income614,901,983.30362,928,829.17Less: Cash discount59,172,643.2879,106,314.27Exchange gains and losses(gains are represented by ‘-’)–288,204,003.86–169,143,266.33Others77,850,401.4562,267,268.14Total–9,349,613.72–200,558,018.91Interest expenditure in lease liabilities in the current period is RMB54,418,808.15 (amount for thecorresponding period: RMB37,961,657.33). 51. Other income

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodGovernment grants related to revenue557,482,171.75493,179,590.59Government grants related to assets43,882,854.0153,070,066.97Total601,365,025.76546,249,657.56

52. Investment income (losses are represented by ‘-’)

Items

Amount for thecurrent period

Amount for theprevious periodIncome from long-term equity investmentcalculated by equity method1,078,905,972.36936,511,207.40Investment income from disposal of long-termequity investment2,936,581.5411,181,922.82Investment income from other equity instrument

investments during holding period17,919,209.852,596,583.32Income from wealth management products30,006,596.6142,007,117.65Investment income from disposal of financial

assets at fair value through profit or loss178,039,912.22Total1,129,768,360.361,170,336,743.41

Section X Financial Report

53. Gains on changes in fair value (losses are represented by “-”)

Items

Amount for thecurrent period

Amount for theprevious periodChanges in fair value of forward foreign exchange

contracts–53,088,495.38Changes in fair value of equity investments6,761,392.80–24,266,144.66Changes in fair value of fund investmentsproducts23,806,724.21–43,056,624.92Others703,445.341,621,089.28Total31,271,562.35–118,790,175.68 54. Credit impairment loss (losses are represented by “-”)

Items

Amount for the

current period

Amount for theprevious periodBad debts losses on accounts receivable–175,246,952.66–222,677,055.12Bad debts losses on other receivables9,278,023.30–3,907,480.73Bad debts losses on bills receivable–31,492,310.29Total–165,968,929.36–258,076,846.14

55. Impairment loss on assets (losses are represented by “-”)

Items

Amount for the

current period

Amount for theprevious periodImpairment losses on inventory–499,500,903.59–371,859,276.93Impairment losses on other current assets–269,894,630.51–335,202,670.88Impairment losses on fixed assets–6,213,746.83

Impairment losses on construction in progressImpairment losses on intangible assets–28,311.57

Impairment losses on long-term equity investmentImpairment losses on contract assets–4,110,982.94

Total–779,748,575.44–707,061,947.81

Section X Financial Report

56. Gains on disposal of assets (losses are represented by “-”)

Items

Amount for thecurrent period

Amount for theprevious periodGains on disposal of non-current assets9,697,510.2238,409,742.18Losses on disposal of non-current assets–30,344,814.86–6,820,535.08Total–20,647,304.6431,589,207.10 57. Non-operating income

√ Applicable Not Applicable

Items

Amount for thecurrent period

Amount for theprevious periodGains on disposal of non-current assets810,466.8496,551.42Quality claims and fines18,063,839.1326,011,423.15Others39,910,145.6442,799,713.12Total58,784,451.6168,907,687.69

58. Non-operating expenses

Items

Amount for thecurrent period

Amount for theprevious periodLosses on disposal of non-current assets4,986,722.709,060,187.94Others27,312,790.5134,475,363.74Total32,299,513.2143,535,551.68

Section X Financial Report

59. Income tax expenses

(1) Statement of income tax expenses

Items

Amount for the

current period

Amount for theprevious periodCurrent income tax expenses1,878,888,468.161,240,405,103.19Deferred income tax expenses190,607,917.70759,910,099.57Total2,069,496,385.862,000,315,202.76

(2) Current reconciliation between accounting profit and income tax expenses

ItemsAmountsTotal accounting profit11,114,203,669.46Income tax expenses calculated pursuant to statutory tax rate(s)2,778,550,917.37Impact from different tax rates applicable to subsidiaries–849,083,080.82Impact from adjustment to income tax in prior periods–172,683,764.29Impact from non-taxable income–302,592,522.82Impact from non-deductible cost, expense and loss109,517,247.44Impact from deductible provisional differences or deductible losses of

unrecognized deferred tax581,291,307.14Others–75,503,718.16Total income tax expense2,069,496,385.86 60. Other comprehensive income

√ Applicable Not Applicable

Please refer to Note VII. 42 for details.

Section X Financial Report

61. Other cash received from operating activities

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodDeposits and securities97,555,295.08Government grants387,142,763.36Non-operating income excluding government grants26,511,078.87Interest income411,472,201.42Others82,007,257.28Total1,004,688,596.01 62. Other cash paid to operating activities

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for the

current periodCash paid on selling expenses10,249,268,213.42Cash paid on administrative and R&D expenses3,474,855,473.01Cash paid on financial expenses57,225,034.72Non-operating expenses3,765,039.59Others60,014,150.77Total13,845,127,911.51

63. Other cash received from investment activities

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent periodAcquisition of subsidiaries15,265,835.02Others96,263.01Total15,362,098.03

Section X Financial Report

64. Other cash paid to investment activities

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent periodDisposal of subsidiaries6,922,378.31Total6,922,378.31 65. Other cash paid to financing activities

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent periodRepurchase of shares897,308,684.04Cash paid to lease549,040,170.19Cash paid for acquisition of subsidiaries through business combinationunder common control70,000,000.00Purchase of minority interests in subsidiaries26,677,200.00Capital reduction of minority shareholders32,150,000.00Total1,575,176,054.23

Section X Financial Report

66. Net profit adjusted to cash flow of operating activities

Net profit adjusted to cash flow of operatingactivities

Amount for thecurrent period

Amount for theprevious period

1. Net profit9,044,707,283.608,009,086,398.35Add: impairment provision for assets945,717,504.80965,138,793.95Depreciation of fixed assets2,495,084,122.792,206,879,661.56Amortization of intangible assets624,592,081.35446,162,246.74Amortization of long-term prepaid expenses257,971,298.59183,520,989.34Losses on disposal of fixed assets, intangibleassets and other long-term assets(‘-’ represents ‘gains’)24,823,560.50–22,625,570.58Loss and gains on change of fair value(‘-’ represents ‘gains’)–31,271,562.35118,790,175.68Financial expenses (‘-’ represents ‘gains’)586,874,611.41179,187,219.23Loss on investments (‘-’ represents ‘gains’)–1,129,768,360.36–1,170,336,743.41Decrease in deferred income tax assets(‘-’ represents ‘increase’)167,338,912.59404,639,263.48Increase of deferred income tax liabilities

(‘-’ represents ‘decrease’)23,269,005.11355,270,836.09Decrease in inventories (‘-’ represents ‘increase’)2,061,410,773.14–1,486,709,880.77Decrease of operational account receivables

(‘-’ represents ‘increase’)–7,214,512,184.59–3,327,019,952.50Increase of operational account payables

(‘-’ represents ‘decrease’)–1,469,139,831.65–1,283,514,973.88Others403,433,247.61386,602,520.58Net cash flow generated from operational activities6,790,530,462.545,965,070,983.86

2. Significant investment and financing

activities not involving cash inflows and

outflows:

Capital transferred from debts104,128,286.20Convertible 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 period55,063,204,392.4049,360,297,879.69Less: cash balance at the beginning of the period53,391,699,929.4945,204,217,909.49Add: cash equivalents balance at the end of the

periodLess: cash equivalents balance at the beginning of

the periodNet increase of cash and cash equivalents1,671,504,462.914,156,079,970.20

Section X Financial Report

67. Cash and cash equivalents

ItemsClosing balanceOpening balanceI. Cash55,063,204,392.4053,391,699,929.49Including: cash on hand9,276,508.905,312,391.11Bank deposits always available for payment54,386,531,893.7852,978,303,924.04Other monetary funds always available forpayment667,395,989.72408,083,614.34II. Cash equivalentsIncluding: Bond investments due within three

monthsIII. Closing balance of cash and cash equivalents55,063,204,392.4053,391,699,929.49

Section X Financial Report

68. Monetary items in foreign currency

ItemsClosing balanceOpening balance

Balance inforeigncurrency

Exchangerate

Balancein RMB

Balance inforeigncurrency

Exchangerate

Balancein RMBMonetary fundsUSD1,357,885,660.377.22589,811,810,204.701,290,843,958.566.96468,990,211,833.81EUR62,657,160.607.8771493,556,719.7647,915,506.827.4229355,672,015.56JPY4,788,688,694.250.050094239,884,571.452,642,036,348.790.052358138,331,739.15HKD386,478,386.160.9220356,333,072.04647,479,463.240.8933578,393,404.51Others2,964,318,986.932,630,279,781.27Subtotal13,865,903,554.8812,692,888,774.30Accounts receivablesUSD1,212,869,716.787.22588,763,953,999.52770,735,456.706.96495,368,095,382.34EUR493,845,255.847.87713,890,068,464.78480,679,854.027.42293,568,038,488.40JPY3,198,713,044.480.050094160,236,331.254,448,523,930.250.052358232,915,815.94Others5,577,933,729.783,648,407,445.01Subtotal18,392,192,525.3312,817,457,131.69Short-term borrowingsUSD337,613,289.307.22582,439,526,105.79337,460,553.026.96462,350,277,767.57EUR451,793,222.387.87713,558,820,391.98551,092,544.777.42294,090,704,850.58JPY2,062,700,922.270.050094103,328,940.000.052358HKD2,600,762,515.570.92202,397,903,039.362,600,000,000.000.89332,322,580,000.00Others436,936,714.60518,039,984.83Subtotal8,936,515,191.739,281,602,602.98Accounts payablesUSD1,981,247,523.007.225814,316,098,351.691,941,535,383.626.964613,522,017,332.77EUR278,613,968.277.87712,194,670,089.44626,564,863.637.42294,650,928,326.21JPY7,207,385,924.260.050094361,046,790.497,649,104,013.600.052358400,491,787.94NZD157,171,385.014.4003691,601,245.45150,709,317.714.4162665,562,488.87Others3,558,778,339.293,276,292,812.40Subtotal21,122,194,816.3622,515,292,748.19Non-current liabilities due in one yearUSD144,292,967.067.22581,042,632,121.38501,395,115.526.96463,492,016,421.53EUR92,658,787.967.8771729,882,538.6182,207,419.427.4229610,217,453.64JPY142,631,071.190.0500947,144,960.882,057,044,588.880.052358107,702,740.58RUB603,084,790.090.083450,297,271.49471,424,350.040.094244,408,173.77Others353,602,255.2186,526,344.63Subtotal2,183,559,147.574,340,871,134.15

Section X Financial Report

ItemsClosing balanceOpening balance

Balance inforeigncurrency

Exchangerate

Balancein RMB

Balance inforeigncurrency

Exchangerate

Balancein RMBLong-term borrowingsUSD1,266,360,000.007.22589,150,464,088.00742,230,000.006.96465,169,335,058.00EUR596,367,832.177.87714,697,649,050.76698,254,017.687.42295,183,069,747.86RUB250,000,000.000.094223,550,000.00Others 1,011,421,765.201,014,924,067.59Subtotal14,859,534,903.9611,390,878,873.45

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: EUR

Name ofthe acquiree

Point of time ofacquisition ofequity

Cost foracquisitionof equity

Theproportionof equityacquired(%)Method ofacquisitionof equity

Acquisitiondate

Basis fordeterminingtheacquisitiondate

Revenue of theacquiree fromacquisition dateto the end of

the period

Net profit of the

acquiree fromacquisition dateto the end of

the periodEuropaltners Italia SrlApril 20232,292,460100AcquisitionApril 2023Equity delivery4,308,308–205,872

(2) Combination cost and goodwill

√ Applicable Not Applicable

Unit and Currency: EURItemsEuropaltners Italia Srl— CashEUR 2,292,460.00— Contingent considerationTotal combination costEUR 2,292,460.00Less: acquired share of fair value of net identifiable assetsEUR–10,711,934.00Amount of goodwillEUR 13,004,394.00

Section X Financial Report

(3) Identifiable assets and liabilities of the acquiree on the combination date

√ Applicable Not Applicable

Unit and Currency: EUREuropaltners Italia SrlItemsFair value (EUR)Book value (EUR)Monetary funds97,231.0097,231.00Accounts receivables4,470,509.004,470,509.00Inventories516,481.00516,481.00Other current assets934,716.00934,716.00Long-term asset339,897.00339,897.00Short-term borrowings–3,026,876.00–3,026,876.00Accounts payables–173,081.00–173,081.00Taxes payable–33,253.00–33,253.00Payables for staff’s remuneration–418,771.00–418,771.00Other payables–10,189,660.00–10,189,660.00Estimated liabilities–2,784,819.00–2,784,819.00Lease liabilities–120,569.00–120,569.00Long-term payables for staff’s remuneration–323,739.00–323,739.00Net assets–10,711,934.00–10,711,934.00Less: minority interestsNet assets acquired–10,711,934.00–10,711,934.00

2. Business consolidation under common control

√ Applicable Not Applicable

(1). Business combination under common control occurring in the current period

Name of theacquiree

The proportionof equityacquired in thebusinesscombination

The basis forthe transactionof constitutingbusinesscombinationunder commoncontrol

Combinationdate

Recognitionbasis ofcombinationdateShanghai Haier SmartTechnology Co.,Limited

100.00%Controlled by

Haier GroupCorporationbefore and aftercombination

2023.1Subject equity-

related right andobligationtransferred to theCompany

Section X Financial Report

(Continued)

Name of theacquiree

The income ofthe acquireefrom thebeginning ofthe currentperiod tocombination

date

Net profit ofthe acquireefrom thebeginning ofthe currentperiod tocombination

date

The income ofthe acquireeduring thecomparisonperiod

Net profit ofthe acquireeduring thecomparisonperiodShanghai Haier SmartTechnology Co.,Limited

N/AN/A60,386,152.686,271,553.65

(2). Combination cost

√ Applicable Not Applicable

Unit and Currency: RMBCombination costCashEquityShanghai Haier SmartTechnology Co., Limited70,000,000.00N/A

(3). Assets and liabilities of the acquiree

√ Applicable Not Applicable

Unit and Currency: RMBItems

Shanghai Haier SmartTechnology Co., LimitedCombination

date

End of theprevious periodMonetary funds22,886,544.8822,886,544.88Accounts receivables183,024,484.05183,024,484.05Inventories45,073,195.7145,073,195.71Other current assets530,506.71530,506.71Deferred income tax assets1,817,890.711,817,890.71Less: Accounts payables189,302,217.18189,302,217.18Short-term borrowings28,848,789.9028,848,789.90Taxes payable3,375,065.743,375,065.74Net assets31,806,549.2431,806,549.24

Section X Financial Report

3. Disposal of subsidiary

Whether single disposal of investment in subsidiary will result in losing control power:

Items

QingdaoHaishuzhiEnterpriseConsulting

Service

Co., Ltd.Equity disposal priceProportion of equity disposal100%Method of equity disposalCancellationTime of loss-of-control2023.1Basis for determination the time of loss-of-controlCancellationDifference between consideration and its share of net assets of the

subsidiary as respect to the disposal in the consolidated level–

733.51

4. Changes of consolidation scope due to other reasons

√ Applicable Not Applicable

(1) During the period, Chongqing Haier Water Heater Co., Ltd., a subsidiary of the Company,

established a wholly-owned subsidiary, Qingdao Jingxiang Precision Manufacturing Co. (青島淨享精密製造有限公司).

(2) During the period, Qingdao Haier Home AI Industry Innovation Center Co., Ltd. established

a wholly-owned subsidiary, Qingdao Haier Yikang Technology Co., Ltd. (青島海爾益康科技有限公司).

Section X Financial Report

IX. INTERESTS IN OTHER ENTITIES 1. Interests in subsidiaries

(1). Composition of the Group

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of thevotingrightsAcquiring methodDirectIndirectFlourishing ReachLimited

Mainland of ChinaBritish Virgin

Islands

Group company, whichmainly engage ininvestment holding, theproduction and sale ofwashing machines andwater heaters,distribution service

100.00%100.00%Establishment

Haier ElectronicsGroup Co., Ltd.

Mainland of Chinaand 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, whichmainly engage in homeappliances productionand distributionbusiness

100.00%100.00%Establishment

Haier SingaporeInvestment HoldingCo., Ltd.

Singapore andother 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 AirConditioner GenCorp., Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Manufacture and sale ofhousehold air-conditioners

100.00%100.00%Business

combinationunder commoncontrolGuizhou Haier

Electronics Co.,Ltd.*

Huichuan District,Zunyi City,Guizhou Province

HuichuanDistrict, ZunyiCity, GuizhouProvince

Manufacture and sale of

refrigerator

59.00%59.00%Business

combinationunder commoncontrolHefei Haier Air-

conditioning Co.,Limited*

Hefei HaierIndustrial Park

Hefei HaierIndustrial Park

Manufacture and sale of

air- conditioners

100.00%100.00%Business

combinationunder commoncontrol*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of the

votingrightsAcquiring methodDirectIndirectWuhan Haier

Electronics HoldingCo., Ltd.*

Wuhan HaierIndustrial Park

Wuhan HaierIndustrial Park

Manufacture and sale ofair- conditioners

60.00%60.00%Business

combinationunder commoncontrolQingdao HaierAir- ConditionerElectronics Co.,Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Manufacture and sale of

air- conditioners

100.00%100.00%Business

combinationunder commoncontrolQingdao Haier

Information PlasticDevelopment Co.,Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Manufacturing of plastic

products

100.00%100.00%Business

combinationunder commoncontrolDalian Haier Precision

Products Co., Ltd.*

Dalian ExportExpressing Zone

Dalian ExportExpressingZone

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 PlasticPowder Co., Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Manufacture of plasticpowder, 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 HaierRefrigerator Co.,Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Manufacture andproduction offluorine-freerefrigerators

100.00%100.00%Establishment

Qingdao Haier

Refrigerator(International) Co.,Ltd.*

PingduDevelopmentZone, Qingdao

PingduDevelopmentZone, Qingdao

Manufacture ofrefrigerators

100.00%100.00%Establishment

Qingdao Household

ApplianceTechnology andEquipment ResearchInstitute*

Qingdao High-techZone

QingdaoHigh-techZone

Research anddevelopment of homeappliances mold andtechnological equipment

100.00%100.00%Establishment

Qingdao Haier WholeSet Home ApplianceService Co., Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Research, developmentand sales ofhealth- related smallhome appliance

98.33%98.33%Establishment

Qingdao Haier SpecialRefrigerator Co.,Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Manufacture and sales offluorine-freerefrigerators

100.00%100.00%Establishment

Qingdao HaierDishwasher Co.,Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Manufacture of dishwashing machine andgas stove

100.00%100.00%Establishment

*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of thevotingrightsAcquiring methodDirectIndirectQingdao Haier Special

Freezer Co., Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Research, manufactureand 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 HaierRefrigerator Co.,Ltd.*

Dalian Export

Expressing Zone

Dalian ExportExpressingZone

Refrigerator processingand manufacturing

100.00%100.00%Establishment

Qingdao HaierElectronic PlasticCo., Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Development, assemblingand sales of plastics,electronics andproducts

100.00%100.00%Establishment

Wuhan Haier FreezerCo., Ltd*

Wuhan Economic &TechnologicalDevelopmentZone High-techIndustrial Park

Wuhan Economic&TechnologicalDevelopmentZone High-techIndustrial Park

Research, manufactureand sales of freezer andother refrigerationproducts

95.00%5.00%100.00%Establishment

Qingdao HaidaruiProcurement ServiceCo., Ltd.*

Qingdao High-techZone

Qingdao

High-techZone

Development, purchaseand sale of electricalproducts andcomponents

98.00%2.00%100.00%Establishment

Qingdao Haier

Intelligent HomeApplianceTechnology Co.,Ltd.*

Qingdao High-tech

Zone

QingdaoHigh-techZone

Development andapplication of homeappliances,communication,electronics and networkengineering technology

91.46%1.01%92.74%Establishment

Chongqing HaierAir- conditioningCo., Ltd.*

Jiangbei District,Chongqing City

Jiangbei District,ChongqingCity

Manufacture and sales of

air conditioners

76.92%23.08%100.00%Establishment

Qingdao HaierPrecision ProductsCo., Ltd.*

Qianwang angRoad, JiaonanCity

Qianwang angRoad, JiaonanCity

Development andmanufacture 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 homeappliances andelectronics

100.00%100.00%Establishment

Dalian Free Trade

Zone HaierAir-conditioningTrading Co., Ltd.*

Dalian ExportExpressing Zone

Dalian ExportExpressingZone

Domestic trade100.00%100.00%EstablishmentDalian Free Trade

Zone HaierRefrigerator TradingCo., Ltd.*

Dalian ExportExpressing Zone

Dalian ExportExpressingZone

Domestic trade100.00%100.00%EstablishmentChongqing Haier

Electronics SalesCo., Ltd.*

Jiangbei District,Chongqing City

Jiangbei District,ChongqingCity

Sales of home appliances95.00%5.00%100.00%Establishment*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of the

votingrightsAcquiring methodDirectIndirectChongqing HaierRefrigerationAppliance Co., Ltd.*

Jiangbei District,Chongqing City

Jiangbei District,

ChongqingCity

Processing andmanufacturing ofrefrigerator

84.95%15.05%100.00%Establishment

Hefei HaierRefrigerator Co.,Ltd.*

Hefei HaierIndustrial Park

Hefei HaierIndustrial Park

Processing andmanufacturing ofrefrigerator

100.00%100.00%Establishment

Qingdao Haier

Intelligent BuildingTechnology Co.,Ltd.*

QingdaoDevelopmentZone

QingdaoDevelopmentZone

Air-conditioning engineer100.00%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%Establishment

Qingdao Haier(Jiaozhou)Air-conditioning Co.,Limited*

Jiaozhou City,

Qingdao

Jiaozhou City,

Qingdao

Manufacture and sale of

air- conditioners

100.00%100.00%Establishment

Qingdao HaierComponent Co.,Ltd.*

Jiaozhou City,

Qingdao

Jiaozhou City,

Qingdao

Manufacture and sales of

plastic and precisesheet metal products

100.00%100.00%Establishment

Haier Shareholdings(Hong Kong)Limited*

Hong KongHong KongInvestment100.00%100.00%EstablishmentHarvest InternationalCompany*

Cayman IslandsCayman IslandsInvestment100.00%100.00%EstablishmentShenyang Haier

Refrigerator Co.,Ltd.*

Shenbei New Area,

Shenyang City

Shenbei NewArea,Shenyang City

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

freezer

100.00%100.00%Establishment

Zhengzhou Haier

Air- conditioningCo., Ltd.*

Zhengzhou

Economic andTechnologicalDevelopmentZone

Zhengzhou

Economic andTechnologicalDevelopmentZone

Manufacture and sales of

air conditioner

100.00%100.00%Establishment

Qingdao Haidayuan

Procurement ServiceCo., Ltd.*

QingdaoDevelopmentZone

Qingdao

DevelopmentZone

Development, purchaseand sale of electricalproducts andcomponents

100.00%100.00%Establishment

Qingdao Haier

IntelligentTechnologyDevelopment Co.,Ltd.*

Qingdao High-tech

Zone

QingdaoHigh-techZone

Development andresearch of homeappliance products

100.00%100.00%Establishment

Qingdao Hairi HighTechnology Co.,Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Design, manufacture andsales of product modeland mould

100.00%100.00%Business

combinationunder commoncontrolQingdao Hai GaoDesign andManufacture Co.,Ltd.*

Qingdao High-techZone

QingdaoHigh-techZone

Industrial design andprototype production

75.00%75.00%Business

combinationunder commoncontrol*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of the

votingrightsAcquiring methodDirectIndirectBeijing Haier Guangke

Digital TechnologyCo., Ltd.*

BeijingBeijingDevelopment, promotion

and transfer oftechnology

55.00%55.00%Business

combinationunder commoncontrolShanghai Haier MedicalTechnology Co., Ltd.*

ShanghaiShanghaiWholesale and retail of

medical facility

66.87%66.87%Establishment

Qingdao HaierTechnology Co., Ltd.*

QingdaoQingdaoDevelopment and sales of

software and informationproduct

100.00%100.00%Business

combinationunder commoncontrolQingdao Haier

TechnologyInvestment Co., Ltd.*

QingdaoQingdaoEntrepreneurship

investment andconsulting

100.00%100.00%Establishment

Qingdao Casarte Smart

Living Appliances Co.,Ltd.*

QingdaoQingdaoDevelopment, production

and sales of appliances

100.00%100.00%Establishment

Qingdao Haichuangyuan

Appliances Sales Co.,Ltd.*

QingdaoQingdaoSales of home appliances

and digital products

100.00%100.00%Establishment

Haier Overseas Electric

Appliance Co., 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 conditioners andrefrigeration equipment

100.00%100.00%Establishment

Chongqing Haier HomeAppliance Sale HefeiCo., Ltd.*

HefeiHefeiSales of home appliances100.00%100.00%EstablishmentQingdao Weixi SmartTechnology Co., Ltd.*

QingdaoQingdaoIntelligent sanitary ware71.43%71.43%EstablishmentHaier U+smartIntelligent Technology(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 HaierZhongzhi 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%Establishment

GE Appliance(Shanghai) Co., Ltd.*

ShanghaiShanghaiSales of home appliances100.00%100.00%EstablishmentQingdao Haier SpecialRefrigeratingAppliance Co., Ltd.*

QingdaoQingdaoProduction and sales of

home appliances

100.00%100.00%Establishment

*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of thevotingrightsAcquiring methodDirectIndirectBeijing Zero MicroTechnology Co.,Ltd.*

BeijingBeijingPromotion of

technologicaldevelopment

55.00%55.00%Establishment

Laiyang Haier SmartKitchen ApplianceCo., Ltd.*

LaiyangLaiyangProduction and sales of

home appliances

100.00%100.00%Establishment

Hefei Haier AirConditioningElectronics Co.,Ltd.*

HefeiHefeiProduction and sales of

home appliances

100.00%100.00%Establishment

Haier (Shanghai)

Home ApplianceResearch andDevelopment CenterCo., Ltd.*

ShanghaiShanghaiResearch and

development of homeappliances

100.00%100.00%Establishment

Haier (Shenzhen) R&DCo., Ltd.*

ShenzhenShenzhenDevelopment, research

and technical services ofhousehold andcommercial electricalappliances

100.00%100.00%Establishment

Guangzhou Haier AirConditioner Co.,Ltd.*

GuangdongGuangdongManufacturing of

refrigeration and airconditioning equipment

100.00%100.00%Establishment

Qingdao YunshangYuyi IOT TechnologyCo., Ltd.*

QingdaoQingdaoIoT technology research

and development

60.00%60.00%Establishment

Qingdao Haizhi

Robotics Co., Ltd.*

QingdaoQingdaoAsset management,

equity investment

100.00%100.00%Establishment

Qingdao Jijia CloudIntelligentTechnology Co.,Ltd.*

QingdaoQingdaoR&D and sales of lighting

appliances

80.00%80.00%Establishment

Qingdao Haimeihui

ManagementConsulting Co., Ltd.

QingdaoQingdaoLeasing and business

services

100.00%100.00%Establishment

Wuxi YunshangInternet of ClothingTechnology Co.,Ltd.*

WuxiWuxiInternet of Things

technology R & D

100.00%100.00%Establishment

Qingdao HaidachengProcurement ServiceCo., Ltd.*

QingdaoQingdaoDevelopment, purchase

and sale of electricalproducts andcomponents

100.00%100.00%Establishment

Guangdong HeilongIntelligentTechnology Co. Ltd*

GuangzhouGuangzhouScientific research and

technology servicesector

76.72%76.72%Business

combination notunder commoncontrolBeijing Haixianghui

Technology Co.,Ltd.*

BeijingBeijingScientific research and

technology servicesector

100.00%100.00%Establishment

Qingdao Hairuijiejing

Electronics Co.,Ltd.*

QingdaoQingdaoElectronic equipment

technology research,development, transfer,consulting and services

51.00%51.00%Business

combination notunder commoncontrol*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of thevotingrightsAcquiring methodDirectIndirectHaier Smart Home

Experience CloudEcologicalTechnology Co.,Ltd.*

QingdaoQingdaoTechnology development

of smart homeproducts, wholefurniture customization,etc.

100.00%100.00%Establishment

Haier Smart Home(Qingdao) NetworkCo., Ltd.*

QingdaoQingdaoTechnical services,

development,consulting, transfer, etc.

100.00%100.00%Establishment

Haier Smart Home(Qingdao) NetworkOperation Co., Ltd.*

QingdaoQingdaoResidential interior

decoration, professionalconstruction operation,special equipmentinstallation, upgradingand repair, etc.

100.00%100.00%Establishment

Qingdao Internet of

Wine TechnologyCo., Ltd.*

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.*

QingdaoQingdaoManufacture and

production of airconditioner andrefrigeration equipment

100.00%100.00%Establishment

Shenzhen YunshangInternet of ClothesTechnology Co.,Ltd.*

ShenzhenShenzhenImport and export

business, Internet,Internet of things, bigdata, AI, AR andtechnical servicesoperation

100.00%100.00%Establishment

Qingdao Haixiangxue

Human ResourcesCo., Ltd.*

QingdaoQingdaoProfessional intermediary

activities

100.00%100.00%Establishment

Jiangxi Haier Medical

Technology Co.,Ltd.*

JiangxiJiangxiWholesale and retail of

medical equipment

100.00%100.00%Establishment

Qingdao HaizhiYunlan TechnologyCo., Ltd.*

QingdaoQingdaoTechnical service

development

100.00%100.00%Establishment

Qingdao 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%Establishment

Qingdao Haier HVAC

Equipment Co.,Ltd.*

QingdaoQingdaoManufacture and sale of

air- conditioners

75.00%25.00%100.00%Establishment

Qingdao Haier HomeAI IndustryInnovation CenterCo., Ltd.*

QingdaoQingdaoIntegrated service of AI

industry applicationsystem

100.00%100.00%Establishment

*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of thevotingrightsAcquiring methodDirectIndirectZhejiang Weixi IoT

Technology Co.,Ltd.*

ZhejiangZhejiangIoT application service100.00%100.00%EstablishmentQingdao Haier QualityInspection Co., Ltd.*

QingdaoQingdaoInspection and testing of

home appliance

100.00%100.00%Business

combinationunder commoncontrolQingdaoHaiyongchengCertification ServiceCo., Ltd*

QingdaoQingdaoProduct certification

service

100.00%100.00%Business

combinationunder commoncontrolQingdao ZhonghaiBorui TestingTechnology ServiceCo., Ltd*

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.*

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.*

QingdaoQingdaoSoftware development

and sale of dailynecessities

100.00%100.00%Establishment

Haier Smart Home(Xiongan, Hebei)Technology Co.,Ltd.*

QingdaoQingdaoPromotion of energy-

saving technology

100.00%100.00%Establishment

Qingdao RuiboEcologicalEnvironmentalTechnology Co.,Ltd.*

QingdaoQingdaoEnvironmental and AI

technology consulting

100.00%100.00%Establishment

Qingdao SanyiniaoTechnology Co.,Ltd.*

QingdaoQingdaoTechnology service and

advertisement design

100.00%100.00%Establishment

Qingdao JingzhiRecycleEnvironmentalTechnology Co.,Ltd.*

QingdaoQingdaoOperation of dangerous

waste

100.00%100.00%Establishment

Qingdao Yunshang

Jieshen YilianTechnology Co.,Ltd.*

QingdaoQingdaoProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Shanghai YunshangYuyi IoT TechnologyCo., Ltd.*

ShanghaiShanghaiProfessional cleaning and

sale of daily necessities

100.00%100.00%Establishment

*For identification purposes only

Section X Financial Report

Name of subsidiary

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

% of the

votingrightsAcquiring methodDirectIndirectShijiazhuang

Yunshang YilianTechnology Co.,Ltd.*

ShijiazhuangShijiazhuangProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Nanjing YunshangYilian TechnologyCo., Ltd.*

NanjingNanjingProfessional cleaning and

sale of daily necessities

80.00%80.00%Establishment

Shanxi YunshangYilian TechnologyCo., Ltd.*

ShanxiShanxiProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Tianjin YunshangYilian TechnologyCo., Ltd.*

TianjinTianjinProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Chongqing YunshangHaihong YilianTechnology Co.,Ltd.*

ChongqingChongqingProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Chengdu YunshangMeier YilianTechnology Co.,Ltd.

ChengduChengduProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Beijing YunshangYilian TechnologyCo., Ltd.

BeijingBeijingProfessional cleaning and

sale of daily necessities

51.00%51.00%Establishment

Chengdu YunshangYilian TechnologyCo., Ltd.

ChengduChengduProfessional cleaning and

sale of daily necessities

100.00%100.00%Establishment

Qingdao Haier WaterEcology TechnologyCo., Ltd.

QingdaoQingdaoTechnical services,

development, consulting

100.00%100.00%Establishment

Qingdao Haixiangmian

Technology Co.,Ltd.*

QingdaoQingdaoSale of food and daily

necessities

100.00%100.00%Establishment

Qingdao Haier Kitchen

IoT Technology Co.,Ltd.*

QingdaoQingdaoTechnology service and

sale of daily necessities

100.00%100.00%Establishment

Tibet Haifeng

Intelligent InnovationTechnology Co.,Ltd.*

TibetTibetDevelopment of software

and medical equipment

100.00%100.00%Establishment

Qingdao HaixiangzhiTechnology Co.,Ltd.*

QingdaoQingdaoManufacturing of home

appliances

100.00%100.00%Establishment

Qingdao Haier

RefrigerationAppliance Co., Ltd.*

QingdaoQingdaoManufacturing of home

appliances

100.00%100.00%Establishment

Chongqing Haier

Washing ApplianceCo., Ltd.*

ChongqingChongqingManufacturing of home

appliances

100.00%100.00%Establishment

Microenterprises suchas Qingdao HaiHeng Feng ElectricalAppliances Sale &Service Co., Ltd.*

All over thecountry

All over thecountry

Sales of home appliancesEstablishment

*For identification purposes only

Section X Financial Report

Reasons for including subsidiaries in 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 decisions of enterprises such as Qingdao Hai Heng Feng ElectricalAppliances Sale & Service Co., Ltd*, which were included into the scope of consolidatedfinancial statements.

(2). Material non-wholly owned subsidiaries

Name ofsubsidiary

Shareholding

of minorityshareholders

Profit or lossattributableto minorityshareholdersin the current

period

Dividendsannounced tobe distributedto minorityshareholdersin the current

period

Balance ofminorityinterests atthe end of the

periodGuizhou HaierElectronics Co.,Ltd.*41.00%7,804,274.43121,526,167.98Wuhan HaierElectronics Co.,Ltd.*40.00%5,916,977.69–8,000,000.00253,353,839.37

*For identification purposes only

Section X Financial Report

(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 HaierElectronicsCo., Ltd.*504,363,908.4079,788,445.71584,152,354.11281,754,066.425,993,000.00287,747,066.42Wuhan HaierElectronicsCo., Ltd.*1,047,819,707.79128,389,588.181,176,209,295.97542,824,697.54542,824,697.54(continued)

Name ofSubsidiaryOpening balance

Currentassets

Non-current

AssetsTotal assets

Currentliabilities

Non-current

liabilitiesTotal liabilitiesGuizhou HaierElectronicsCo., Ltd.*470,967,911.5174,062,299.71545,030,211.22261,666,739.205,993,000.00267,659,739.20Wuhan Haier

ElectronicsCo., Ltd.*924,844,806.17133,143,608.301,057,988,414.47412,163,241.37412,163,241.37Name of subsidiaryAmount for the current period

OperatingrevenueNet profit

Totalcomprehensiveincome

Cash flow from

operatingactivitiesGuizhou Haier ElectronicsCo., Ltd.*714,552,506.7419,034,815.6719,034,815.67–27,399,823.80Wuhan Haier Electronics

Co., Ltd.*1,297,917,803.2314,792,444.2314,792,444.23–121,090,029.67

(continued)Name of subsidiaryAmount for the previous period

OperatingrevenueNet profit

Totalcomprehensiveincome

Cash flow fromoperatingactivitiesGuizhou Haier ElectronicsCo., Ltd.*687,283,541.1213,097,320.0913,097,320.09–258,232,502.08Wuhan Haier ElectronicsCo., Ltd.*820,118,983.242,313,384.362,313,384.36–40,171,033.70*For identification purposes only

Section X Financial Report

2. Control over subsidiaries’ transactions despite change in owners’ equity in

subsidiaries

√ Applicable Not Applicable

(1). Descriptions of change in owners’ equity in subsidiaries: capital increase by minority

shareholders of the Company’s subsidiaries resulted in the change in the Company’sshareholding ratio.

(2). Impact of the transactions on minority interests and the equity attributable to shareholders

of the Parent Company:

ItemsOthersTotal consideration for acquisition/disposal58,827,200.00Less: share of net assets of subsidiaries in respect to theshareholding proportion acquired/disposed88,821,951.07Difference–29,994,751.07Including: capital reserve adjustment–29,994,751.07

Section X Financial Report

3. Interests in joint ventures or associates

√ Applicable Not Applicable

(1) Joint ventures or associates

Name of joint ventures or associates

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

Accounting treatmentof investmentHaier Finance Co., Ltd.*QingdaoQingdaoFinancial services42.00%Equity methodBank of Qingdao Co., Ltd.*QingdaoQingdaoCommercial Bank8.19%Equity methodWolong Electric (Jinan) Motor Co., Ltd.*JinanJinanMotor Manufacturing30.00%Equity methodQingdao Hegang New Material Technology

Co., Ltd.*

QingdaoQingdaoSteel plate Manufacturing23.94%Equity methodQingdao Haier SAIF Smart Home IndustryInvestment Center (Limited Partnership)*

QingdaoQingdaoVenture Capital63.13%Equity methodMitsubishi Heavy Industries Haier (Qingdao)

Air-conditioners Co., Ltd.*

QingdaoQingdaoManufacturing of

household appliances

45.00%Equity method

Qingdao Haier Carrier Refrigeration

Equipment Co., Ltd.*

QingdaoQingdaoManufacturing of

household appliances

49.00%Equity method

Qingdao Haier Multimedia Co., Ltd.*QingdaoQingdaoR&D and sales of

televisions

20.20%Equity method

Anhui Kunhe Intelligent Technology Co.,Ltd.*

HefeiHefeiElectrical equipment R&D30.00%Equity methodZhejiang Futeng Fluid Technology Co., Ltd.*HuzhouHuzhouGas compression

machinerydevelopment andmanufacturing

48.00%Equity method

Hongtong Environmental Technology(Guangzhou) Co., Ltd*

GuangzhouGuangzhouMachinery and equipment

development andmanufacturing

15.00%Equity method

Beijing ASU Tech Co. Ltd*BeijingBeijingTechnical service import

and export business

34.15%Equity method

Qingdao Haimu Investment Management

Co., Ltd.*

QingdaoQingdaoInvestment Management49.00%Equity methodQingdao Haimu Smart Home InvestmentPartnership (Limited Partnership)*

QingdaoQingdaoInvestment Management24.00%Equity methodHaineng Wanjia (Shanghai) Technology

Development Co., Ltd.*

ShanghaiShanghaiConstruction20.00%Equity methodQingdao Guochuang Intelligent HouseholdAppliance Research Institute Co., Ltd.*

QingdaoQingdaoDevelopment of home

appliances

35.51%Equity method

Guangzhou Heying Investment Partnership

(Limited Partnership)*

GuangzhouGuangzhouInvestment49.00%Equity methodQingdao Java Cloud Network Technology

Co., Ltd.*

QingdaoQingdaoHome online service22.10%Equity methodBingji (Shanghai) Corporate ManagementCo., Ltd.*

ShanghaiShanghaiInvestment management45.00%Equity methodYoujin (Shanghai) Corporate ManagementCo., Ltd.*

ShanghaiShanghaiInvestment management45.00%Equity methodRRS (Shanghai) Investment Co., Ltd.*ShanghaiShanghaiInvestment management45.00%Equity methodHaier Best Water Technology Co., Ltd.*QingdaoQingdaoWater equipment

technologydevelopment service

49.00%Equity method

*For identification purposes only

Section X Financial Report

Name of joint ventures or associates

Principal place ofbusiness

Place ofregistrationNature of businessShareholding

Accounting treatmentof investmentHuizhi Xiangshun 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.*QingdaoQingdaoTechnology service

development

20.00%Equity method

Konan Electronic Co., Ltd.JapanJapanMotor Manufacturing50.00%Equity methodHPZ LIMITEDNigeriaNigeriaManufacturing of

household appliances

25.01%Equity method

HNR Company (Private) LimitedPakistanPakistanManufacturing of

household appliances

31.72%Equity method

Controladora Mabe S.A.deC.V.MexicoMexicoManufacturing of

household appliances

48.41%Equity method

Middle East Air conditioning Company,Limited

Saudi ArabiaSaudi ArabiaSales of household

appliances

49.00%Equity method

(2). Major financial information of significant associates

√ Applicable Not Applicable

Unit and Currency: RMB Basic information of significant associates:

Haier Finance Co., Ltd. (hereinafter referred to as “Finance Company”) wasestablished by Haier Group Corporation and its three affiliates via capital contribution.The place of registration and principal place of business of the Finance Company isYulong International Center, No.178-2 Haier Road, Laoshan District, Qingdao City. TheCompany’s subsidiaries hold an aggregate of 42.00% equity in the Finance Company.

*For identification purposes only

Section X Financial Report

Financial Information of significant associates:

ItemsFinance company

Closing balance/Amount for the

current period

Opening balance/

Amount for theprevious periodCurrent assets60,760,261,748.0862,367,859,305.44Non-current assets14,106,525,430.1212,622,422,390.73Total assets74,866,787,178.2074,990,281,696.17Current liabilities56,217,272,559.9856,509,751,262.74Non-current liabilities477,492,928.25480,084,424.03Total liabilities56,694,765,488.2356,989,835,686.77Minority equity interestsEquity interest attributable to shareholdersof the Parent Company18,172,021,689.9718,000,446,009.40Including: share of net assets calculated basedon shareholding percentage7,632,249,109.797,560,187,323.95Operating income903,641,445.711,033,551,173.17Net profit753,528,932.20758,762,130.10Other comprehensive income–21,953,251.6318,240,788.11Total comprehensive income731,575,680.57777,002,918.21Dividend received from associates for the year235,200,000.00218,400,000.00

(3). Summarized financial information of insignificant joint ventures or associates

Investment in Associates

Closing balance/Amount for the

current period

Opening balance/Amount for theprevious periodBank of Qingdao Co., Ltd.*3,048,664,137.282,934,085,854.00Wolong Electric (Jinan) Motor Co., Ltd.*187,141,980.86174,697,807.74Qingdao Hegang New Material Technology Co., Ltd.*321,421,159.71314,802,331.45Qingdao Haier SAIF Smart Home Industry Investment

Center (Limited Partnership)*310,583,924.87319,245,649.36Mitsubishi Heavy Industries Haier (Qingdao)

Air Conditioner Co., Ltd.*774,581,021.45715,461,260.26Qingdao Haier Carrier Refrigeration Equipment

Co., Ltd.*402,137,740.65413,367,540.80Qingdao Haier Multimedia Co., Ltd.*136,697,369.95153,550,234.50

*For identification purposes only

Section X Financial Report

Investment in Associates

Closing balance/Amount for thecurrent period

Opening balance/Amount for theprevious periodAnhui Kunhe Intelligent Technology Co., Ltd.*1,997,782.611,997,782.61Zhejiang Futeng Fluid Technology Co., Ltd.*77,807,408.8477,807,408.84Beijing Mr. Hi Network Technology Company Limited*7,507,759.757,507,759.75Hongtong Environmental Technology (Guangzhou)Co., Ltd*4,500,000.00Beijing ASU Tech Co., Ltd.*1,597,057.6212,829,433.78Shenzhen Genyuan Environmental ProtectionTechnology Co., Ltd.*6,914,487.73Qingdao Haimu Investment Management Co., Ltd.*2,499,757.882,521,766.42Qingdao Haimu Smart Home Investment Partnership

(Limited Partnership)*58,667,049.7758,905,912.88Haineng Wanjia (Shanghai) Technology Development

Co., Ltd.*772,938.88772,938.88Qingdao Guochuang Intelligent Home Appliance

Research Institute Co., Ltd.47,494,113.6745,016,334.20Guangzhou Heying Investment Partnership

(Limited Partnership)*264,290,262.87285,793,577.87Qingdao Java Cloud Network Technology Co., Ltd.*2,210,245.842,547,217.00Bingji (Shanghai) Corporate Management Co., Ltd.*1,035,293,812.511,014,425,293.04Youjin (Shanghai) Corporate Management Co., Ltd.*1,881,534,204.541,843,591,441.88RRS (Shanghai) Investment Co., Ltd.*3,420,153,099.183,351,166,257.98Haier Best Water Technology Co., Ltd.*153,655,916.48148,369,638.40Huizhi Xiangshun Equity Investment Fund (Qingdao)

Partnership (Limited Partnership)*259,222,514.94238,806,947.64Qingdao RRS Huizhi Investment Co., Ltd.*4,083,482.784,083,482.78Qingdao Xinshenghui Technology Co., Ltd.*8,379,072.578,598,002.89Europalters Italia S.r.l.15,760,505.28Orygin LLC23,430,962.1313,918,442.26Konan Electronic Co., Ltd.64,943,751.7367,770,092.99HNR Company (Private) Limited91,034,937.8474,366,909.55HPZ LIMITED48,217,178.1488,751,047.98Controladora Mabe S.A.deC.V.5,020,264,513.384,685,927,386.53Middle East Airconditioning Company, Limited8,481,630.618,820,101.55Total book value of investment17,669,266,789.3317,092,180,848.82Total amount of the following financial data of

associates calculated based on shareholding

percentage

Net profit775,751,075.57635,985,295.85

Other comprehensive income–6,287,979.19100,213,218.25

Total comprehensive income769,463,096.38736,198,514.10*For identification purposes only

Section X Financial Report

X. SEGMENT REPORT

√ Applicable Not Applicable

The Company principally engaged in manufacture and sales of household appliances and relevantservices business, manufacture of upstream household appliances parts business and distribution ofproducts of third-party and after-sale business. The Company has three business segments: (1) Chinasmart home business segment; (2) Overseas home appliance and smart home business segment; (3)Other business segments. The management of the Company assesses operating performance of eachsegment and allocates resources according to the division. Sales between segments were mainlybased on market price.

(1) China smart home business segment consists of:

Internet of Food solutions: mainly engages in production and sales of refrigerator/freezersand kitchen appliances.Internet of Clothing solutions: mainly engages in production and sales of washing machineproducts. Air energy solutions: mainly engages in production and sales of air conditioners products.Whole house water solutions: mainly engages in production and sales of water homeappliances 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, etc.

(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.

Section X Financial Report

(1) Information of reportable segmentsSegment information for the current period

Segment informationChina smart home business

Internet of Food solutions

Air energysolutions

Internet ofclothing solutions

Whole housewater solutionsRefrigerator/freezers

KitchenappliancesAir conditionersWashing machine

Water homeappliancesSegment revenue22,245,174,494.042,137,875,956.4223,146,792,438.6915,344,804,539.967,478,162,983.32Including: external revenue20,513,039,963.721,738,705,376.3219,538,642,151.2612,481,254,443.517,304,415,738.43Inter-segment revenue1,732,134,530.32399,170,580.103,608,150,287.432,863,550,096.45173,747,244.89Total segment operating cost19,468,041,944.432,063,803,199.8622,051,219,308.6213,846,392,069.506,459,188,854.83Segment operating profit2,777,132,549.6174,072,756.561,095,573,130.071,498,412,470.461,018,974,128.49Total segment assets23,239,854,352.773,000,416,287.4314,759,714,231.4112,535,668,264.436,684,219,823.16Total segment liabilities44,871,598,818.762,314,305,595.3413,561,034,973.636,801,347,597.386,343,307,329.15(Continued)

Segment information

Overseas homeappliance and smarthome businessOther businesses

Inter-segmentoffsettingTotalSegment revenue66,917,369,665.2740,977,428,705.79–46,621,027,276.93131,626,581,506.56Including: external revenue66,733,299,471.803,317,224,361.52131,626,581,506.56Inter-segment revenue184,070,193.4737,660,204,344.27–46,621,027,276.93Total segment operating cost63,416,259,276.8241,489,657,369.91–46,696,093,626.21122,098,468,397.76Segment operating profit3,501,110,388.45–512,228,664.1275,066,349.289,528,113,108.80Total segment assets72,929,283,142.2260,477,592,830.12–67,392,389,630.21126,234,359,301.33Total segment liabilities41,765,578,113.5961,273,983,045.51–67,248,139,515.21109,683,015,958.15

Section X Financial Report

Segment information for the corresponding period of last year

Segment informationChina smart home business

Internet of Food solutions

Air energy

solutions

Internet ofClothing solutions

Whole housewater solutionsRefrigerator/freezers

KitchenappliancesAir conditionersWashing machine

Water home

appliancesSegment revenue21,744,034,195.341,988,398,642.9919,460,445,551.5414,783,761,779.196,786,264,746.43Including: external revenue19,263,438,400.091,655,732,227.0015,920,771,259.1812,473,357,903.206,677,037,998.51Inter-segment revenue2,480,595,795.25332,666,415.993,539,674,292.362,310,403,875.99109,226,747.92Total segment operating cost19,442,607,634.741,943,862,296.1119,004,620,002.7713,489,839,349.115,938,407,699.27Segment operating profit2,301,426,560.6044,536,346.88455,825,548.771,293,922,430.08847,857,047.16Total 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 smart

home businessOther business

Inter-segmentoffsettingTotalSegment revenue61,480,633,415.5843,401,983,597.38–48,005,454,549.10121,640,067,379.35Including: external revenue61,195,622,271.604,454,107,319.77121,640,067,379.35Inter-segment revenue285,011,143.9838,947,876,277.61–48,005,454,549.10Total segment operating cost57,846,314,400.8843,853,376,910.48–48,144,459,161.32113,374,569,132.04Segment operating profit3,634,319,014.70–451,393,313.10139,004,612.228,265,498,247.31Total segment assets64,106,295,908.6746,347,928,710.47–43,827,387,969.79119,293,684,104.82Total segment liabilities34,773,662,612.5056,195,162,275.64–43,594,453,939.48109,583,083,225.79 (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 disclosure.

Section X Financial Report

External transaction revenue

Items

Amount for thecurrent period

Amount for theprevious periodMainland China63,324,130,550.5559,139,897,434.39Other countries/regions68,302,450,956.0162,500,169,944.96Including:

America39,133,384,718.3137,433,676,787.86Australia2,949,512,878.443,489,830,122.80South Asia5,954,521,760.734,822,648,942.01Europe13,278,015,975.7910,245,305,312.81Southeast Asia3,107,279,065.872,922,334,445.85Central East and Africa1,162,600,377.181,163,078,229.45Japan1,947,027,593.721,836,927,420.37Others770,108,585.97586,368,683.81Total131,626,581,506.56121,640,067,379.35Total non-current assets

ItemsClosing balanceOpening balanceMainland China63,324,130,550.5559,139,897,434.39Other countries/regions68,302,450,956.0162,500,169,944.96Total131,626,581,506.56121,640,067,379.35The total non-current assets exclude debt investment, long-term accounts receivable, long-termequity investment, other equity instrument investments, other non-current financial assets,goodwill and deferred income tax assets.XI. DISCLOSURE OF FAIR VALUE

1. Assets and liabilities measured at fair value

The level to which the fair value measurement result belongs is determined by the lowest level ofinputs which are significant to the fair value measurement as a whole:

Level 1: Unadjusted quotes for the same asset or liability in an active marketLevel 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.

Section X Financial Report

At the end of the period

ItemsInputs 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 trading446,001,131.19180,384,620.32108,199,178.37734,584,929.88Including: Bank wealth management

products180,384,620.32180,384,620.32Investment fund211,983,501.19211,983,501.19Investment in equityinstruments234,017,630.00108,199,178.37342,216,808.37Derivative financial assets100,132,280.78100,132,280.78Including: Forward foreign exchange

contract98,319,153.5398,319,153.53Forward commodity contract1,813,127.251,813,127.25Other equity instruments16,626,131.245,895,728,105.555,912,354,236.79Including: Equity instruments measured

at fair value and changesof which included in other comprehensive income16,626,131.245,895,728,105.555,912,354,236.79Derivative financial liabilities352,914,936.89352,914,936.89Including: Forward foreign exchange

contract346,817,213.83346,817,213.83Forward commodity

contracts6,097,723.066,097,723.06

Section X Financial Report

At the beginning of the period

ItemsInput 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 trading395,687,084.8314,638,968.26109,586,827.82519,912,880.91Including: Bank wealth management

products14,638,968.2614,638,968.26Investment fund168,430,847.63168,430,847.63Investment in equityinstruments227,256,237.20109,586,827.82336,843,065.02Derivative financial assets183,185,160.51183,185,160.51Including: Forward foreign exchange

contract178,992,877.32178,992,877.32Forward commodity contract4,192,283.194,192,283.19Other 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 ofwhich included in other comprehensive income16,353,773.341,027,550,923.674,807,978,233.195,851,882,930.20Derivative financial liabilities104,594,040.66104,594,040.66Including: Forward foreign exchange

contract92,580,419.4892,580,419.48Forward commodity contracts12,013,621.1812,013,621.18Other non-current liabilities16,916,789.1016,916,789.10Including: put option liability16,916,789.1016,916,789.10

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.

Section X Financial Report

2. The basis for determining the fair value of the continual Level 2 fair value

measurement items

Items

Closingfair valueValuation techniquesFinancial assets held for tradingIncluding: Bank wealth management

products

180,384,620.32Discounted cash flowDerivative financial assetsIncluding: Forward exchange contract98,319,153.53Discounted cash flowForward commodity contract1,813,127.25Discounted cash flowDerivative financial liabilitiesIncluding: Forward exchange contract346,817,213.83Discounted cash flowForward commodity contract6,097,723.06Discounted cash flow

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 equityinstrumentsIncluding: 1.

COSMO IoTTechnologyCo., 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.

Section X Financial Report

Items

Fair value at theend of the period

Valuationtechnique

Significantunobservable inputRange

Sensitivity of fair valueto the input

2. SINOPEC Fuel

Oil SalesCorporationLimited (中國石化銷售股份有限公司)

1,519,232,955.16Market approach1. Average P/E

multiple ofpeers

2. Discount for

lack ofmarketability

1. 33.07 to

33.73

2. 25.23% to

27.23%

1. 1% increase

(decrease) in averageP/E multiple of theComparableCompanies wouldresult in increase(decrease) in fairvalue by RMB15.19million.

2. 1% increase

(decrease) in thelack of marketabilitywould result indecrease (increase)in fair value byRMB20.59 million.

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.

Section X Financial Report

XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS (I) Explanation for basis of identifying related party

According to Accounting Standards for Business Enterprises No. 36—Related Party Disclosures,parties are considered to be related if one party has the ability to control or jointly control theother party or exercise significant influence over the other party. Parties (two or more than two)are also considered to be related if they are subject to common control, joint control orsignificant influence from another party.According to Management Practices for Information Disclosure of Listed Company (ChinaSecurities Regulatory Commission Order No. 182), related legal entity or individual will beidentified as related parties in certain occasions. (II) Relationships between related parties

1. Information about the parent company and other companies holding shares of the

CompanyName of enterprise

Type ofenterpriseRegistered place

RegisteredcapitalLegalrepresentative

Relations hips withthe Company

Interestin theCompany

Voting rightsto theCompanyHaier GroupCorporation

Collectiveownershipcompany

Qingdao High-techZone Haier Park

311,180,000Zhou YunjieParent Company11.36%11.36%Haier COSMO Co.,Ltd.

Joint-stockcompany

Qingdao High-techZone Haier Park

631,930,000Zhou YunjieSubsidiary of

ParentCompany

13.34%13.34%

HCH (HK) Investment

ManagementCo.,Limited

Private

company

Hong KongHKD 10,000/Parties acting in

concert ofParentCompany

5.71%5.71%

Qingdao Haier Venture

& InvestmentInformation Co.,Ltd.

Company withlimitedliability

Qingdao Free Trade

Zone

923,000,000Zhou YunjieParties acting in

concert ofParentCompany

1.83%1.83%

Qingdao Haichuangzhi

ManagementConsultingEnterprise (LimitedPartnership)

Limitedpartnership

Qingdao High-tech

Zone Haier Park

118,924,416/Parties acting in

concert ofParentCompany

1.42%1.42%

Haier InternationalCo., Limited

Privatecompany

Hong KongHKD 2/Parties acting in

concert ofParentCompany

0.62%0.62%

2. Subsidiaries of the Company

The details of the subsidiaries of the Company are detailed in Note IX. 1 the disclosure ofinterests in subsidiaries

Section X Financial Report

3. Joint ventures and associates of the Company

The information of material joint ventures or associates of the Company are detailed in NoteVII. 12 and Note IX. 3.

4. Related company with no controlling relationship

Name of companyRelationship with the CompanyChongqing Zhonglian Energy TechnologyCo., Ltd.

Subsidiary of Haier GroupChongqing Haier Electrical Appliances SalesCo., Ltd.

Subsidiary of Haier GroupHongkong Gooday Supply ChainManagement Limited

Subsidiary of Haier GroupShanghai Cotai Supply Chain ManagementCo., Ltd.

Subsidiary of Haier GroupShandong COSMO Smart CarbonTechnology Co., Ltd.(山東卡奧斯智碳科技有限公司)

Subsidiary of Haier GroupGooday Supply Chain Technologies Co., Ltd.Subsidiary of Haier GroupGooday (Qingdao) International Supply ChainService Co., Ltd.

Subsidiary of Haier GroupQingdao Goodaymart Supply Chains

Co., Ltd.

Subsidiary of Haier GroupQingdao Manniq Intelligent TechnologyCo., Ltd.

Subsidiary of Haier GroupQingdao Maidirui Ecological EnvironmentTechnology Co., Ltd.(青島邁帝瑞生態環境科技有限公司)

Subsidiary of Haier GroupQingdao Oasis Technology Co., Ltd.Subsidiary of Haier GroupQingdao Haina Cloud Intelligent System

Co., Ltd.

Subsidiary of Haier GroupQingdao Haier Parts Procurement Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Trading Co., Ltd.Subsidiary of Haier GroupQingdao Haier International Travel Agency

Co., Ltd.

Subsidiary of Haier GroupCOSMO Energy Technology Co., Ltd.

(卡奧斯能源科技有限公司)

Subsidiary of Haier GroupCOSMO Moulds (Qingdao) Co., Ltd.(卡奧斯模具（青島）有限公司)

Subsidiary of Haier Group

Section X Financial Report

Name of companyRelationship with the CompanyHenan Ririshun Electronics Co., Ltd.

(河南日日順電器有限公司)

Subsidiary of Haier GroupHaier Digital Technology (Qingdao) Co., Ltd.

(海爾數字科技（青島）有限公司)

Subsidiary of Haier GroupFeiketeng Intelligent Technology (Qingdao)

Co., Ltd. (斐科騰智能科技（青島）有限公司)

Subsidiary of Haier GroupDalian Haier International Trade Co., Ltd.Subsidiary of Haier GroupChongqing Zhonglian Energy TechnologyCo., Ltd.

Subsidiary of Haier GroupQingdao Haier International Trade Co., Ltd.Subsidiary of Haier GroupQingdao Dingteng Industrial Technology Co.,Ltd. (青島頂騰工業科技有限公司)

Subsidiary of Haier GroupHaier International Co., Ltd.Subsidiary of Haier GroupQingdao Haironghui Commercial FactoringCo., Ltd. (青島海融匯商業保理有限公司)

Subsidiary of Haier GroupQingdao Haier New Materials R&D Co., Ltd.Subsidiary and associate of Haier

GroupQingdao Haier Multi-media Co., Ltd.AssociateControladora Mabe S.A.de C.V.AssociateHNR Company (Private) LimitedAssociateHPZ LimitedAssociateMitsubishi Heavy Industry Haier (Qingdao)Air Conditioner Co., Ltd.

AssociateWolong Electric (Jinan) Motor Co., Ltd.AssociateQingdao HBIS Composite New MaterialCo., Ltd.

Subsidiary of associateHefei Hegang New Material TechnologyCo., Ltd.

Subsidiary of associate

Section X Financial Report

(III) Related party transactions

1. Details of the goods and services purchased by the Company from the related parties

are as follows:

Related parties

Amount for the

current period

Amount for theprevious periodControladora Mabe S.A.de C.V.5,353,771,339.605,992,396,585.28Qingdao Haier Parts Procurement Co., Ltd.3,608,931,862.863,457,957,900.64HNR Company (Private) Limited1,642,887,548.692,225,964,262.84Gooday Supply Chain Technologies Co., Ltd.1,635,118,057.322,566,920,774.21Shanghai Cotai Supply Chain ManagementCo., Ltd.710,764,662.41760,063,618.26Chongqing Haier Electrical Appliances SalesCo., Ltd.623,669,202.511,428,396,771.15Dalian Haier International Trade Co., Ltd.239,260,166.14208,746,767.78Hongkong Gooday Supply ChainManagement Limited230,897,560.82Qingdao Haier International Travel AgencyCo., Ltd.89,089,979.1161,297,205.85COSMO Energy Technology Co., Ltd.

()76,761,901.6069,569,511.99Shandong COSMO Smart Carbon

Technology Co., Ltd. (山東卡奥斯智碳

科技有限公司)64,696,625.1680,950,701.68Other related parties2,136,924,689.063,081,357,658.81Total16,412,773,595.2819,933,621,758.48 2. Details of the Company’s sales of goods to the related parties are as follows:

Related parties

Amount for thecurrent period

Amount for theprevious periodHNR Company (Private) Limited910,139,552.47371,766,028.14Controladora Mabe S.A.de C.V.641,206,803.16540,669,324.96Qingdao Haier International Trade Co., Ltd.372,641,570.39231,644,878.27Qingdao Haier Parts Procurement Co., Ltd.278,395,066.75244,922,357.53Qingdao Oasis Technology Co., Ltd.67,494,605.4035,266,249.63HPZ Limited64,486,834.5046,402,303.46Qingdao Haier Multi-media Co., Ltd.59,259,332.4862,200,352.87Qingdao Maidirui Ecological Environment

Technology Co., Ltd. (青島邁帝瑞生態環境

科技有限公司)23,449,912.7313,919,083.64Other related parties157,593,684.21477,834,122.77Total2,574,667,362.092,024,624,701.27

Section X Financial Report

3. Payables and receivables from related parties

Items and name of customers

ClosingBalance

OpeningBalanceBills receivable:

Qingdao Haier International Trade Co., Ltd.16,080,000.00Qingdao Haina Cloud Intelligent System Co., Ltd.14,611,877.839,196,905.30Haier Digital Technology (Qingdao) Co., Ltd.(海爾數字科技（青島）有限公司)3,781,061.752,338,177.61Other related parties8,774,282.17110,146,954.46Accounts receivable:

HNR Company (Private) Limited1,616,118,570.73887,316,060.44Controladora Mabe S.A.de C.V.211,439,142.79155,980,651.90HPZ Limited107,438,423.43117,899,486.73Qingdao Haier Parts Procurement Co., Ltd.73,740,269.15155,500,553.65Mitsubishi Heavy Industry Haier (Qingdao) Air

Conditioner Co., Ltd.31,140,335.335,022,843.27Qingdao Haier International Trade Co., Ltd.29,370,484.20147,208,453.41Qingdao Haina Cloud Intelligent System Co., Ltd.28,427,659.2124,917,701.10Qingdao Maidirui Ecological EnvironmentTechnology Co., Ltd. (青島邁帝瑞生態環境科技有限公司)22,384,360.6212,210,497.95Chongqing Zhonglian Energy Technology Co.,Ltd.20,861,198.7748,870,443.21Other related parties105,082,043.85155,667,307.33Prepayments:

Qingdao Haier New Materials R&D Co., Ltd.6,306,045.318,445,024.12HNR Company (Private) Limited110,370,091.99Other related parties31,742,435.4337,160,925.21Other receivables:

Qingdao Haier International Trade Co., Ltd.50,907,797.743,055,976.92Controladora Mabe S.A.de C.V.12,511,805.0912,158,833.50Other related parties57,447,464.3664,740,632.55Bills payable:

Qingdao Haier New Materials R&D Co., Ltd.290,861,916.47386,075,771.04Hefei Hegang New Material Technology Co., Ltd.14,910,195.0724,471,564.49Qingdao HBIS Composite New Material Co., Ltd.21,961,066.6612,149,382.48Wolong Electric (Jinan) Motor Co., Ltd.35,185,356.0037,773,640.00Other related parties181,325,558.83

Section X Financial Report

Items and name of customers

ClosingBalance

OpeningBalanceAccounts payable:

Controladora Mabe S.A.de C.V.1,434,091,790.961,299,452,149.83HNR Company (Private) Limited617,699,398.96Qingdao Haironghui Commercial Factoring Co.,Ltd. (青島海融匯商業保理有限公司)233,892,380.58Dalian Haier International Trade Co., Ltd.183,356,349.75150,178,673.56Qingdao Haier International Trade Co., Ltd.174,144,261.90257,531,848.99Hongkong Gooday Supply Chain ManagementLimited156,672,005.81250,478,107.49Qingdao Haier Parts Procurement Co., Ltd.112,362,213.861,860,747,884.39Qingdao Haier New Materials R&D Co., Ltd.101,368,554.33101,958,410.60Other related parties470,317,218.34500,560,356.11Contract liabilities:

Wolong Electric (Jinan) Motor Co., Ltd.46,079,010.8651,422,207.69Chongqing Zhonglian Energy Technology Co.,Ltd.17,217,306.9217,215,206.92Other related parties11,849,997.2613,569,890.19Other payables:

Gooday Supply Chain Technologies Co., Ltd.683,802,257.28485,473,357.04Shanghai Cotai Supply Chain Management Co.,

Ltd.159,364,583.86113,720,815.14Gooday (Qingdao) International Supply ChainService Co., Ltd.88,152,940.91140,136,176.89Qingdao Goodaymart Supply Chains Co., Ltd.60,775,443.0230,669,122.96Feiketeng Intelligent Technology (Qingdao) Co.,

Ltd. (斐科騰智能科技（青島）有限公司)54,577,602.50759,000.00Other related parties256,634,889.13315,114,706.81 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.

Section X Financial Report

Various current balances of the Company and the Finance Company are as follows:

Items

ClosingBalance

OpeningBalanceMonetary funds deposited at the Finance

Company33,252,316,387.9031,432,615,224.52Interest receivable from the Finance Company661,964,473.38468,636,097.70Loans of the Finance Company60,000,000.00Interest payable to the Finance Company46,158.00Bank acceptance note issued14,699,167,787.9121,620,704,761.58Foreign exchange derivatives of the FinanceCompany–11,020,984.32–2,293,511.73Various balances of the Company and the Finance Company are as follows:

Items

Amount for thecurrent period

Amount for theprevious periodInterest income of the Finance Company353,842,566.54260,517,401.68Interest expense of the Finance Company413,964.864,004,749.21Service fee of the Finance Company7,917,428.1913,688,276.03Spot foreign exchange business

(foreign exchange settlement and sale)3,287,657,392.002,373,997,630.96

(2) The lease expense of the Company and its subsidiaries for production and operation

leased from related parties for the current period was RMB49 million (amount for thecorresponding period: RMB60 million).

(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 Industries

Ltd.

60,000,000.00Haier Group

CorporationShanghai Haier Smart

Technology Co., Ltd.()

7,000,000.00Senior

management

of a

subsidiaryTotal7,000,000.0060,000,000.00

Section X Financial Report

(4) Haier Group Corporation provided joint liability guarantee for certain bills payable of

the subsidiaries of the Company with the guaranteed amount of RMB1,775 million atthe end of the period (amount at the beginning of the period: RMB2,311 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 April 2022, according to the implementation ofconnected 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 1 January 2023 31 December 2025, which can be renewed for another three yearsupon expire. 2. Related parties 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 April 2022, 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 1 January 2023 to 31 December 2025, which can berenewed for another three years upon expire.

Section X Financial Report

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 signed theFinancial Services Framework Agreement on the basis of the original execution contract,which agreed on the financial connected transactions. The pricing principle included thedeposit interest rate not lower than the maximum interest rate of major banks listed andthe loan interest rate not less favourable than the market price to ensure the fairness andreasonableness of connected transactions. The valid term of the agreement expires at 31December 2023, which can be renewed for another three years upon expire. 4. 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 H Share listingdate. When such specific intellectual property rights expire and are not renewed by HaierGroup, our right to use certain intellectual property rights under the Intellectual PropertyLicensing Framework Agreement will terminate.

Section X Financial Report

XIII. SHARE-BASED PAYMENTS (1) Share Options

Number of Share Options

Number for the

current periodAt the beginning of the period155,282,110.00Granted during the periodVested during the periodLapsed during the period–39,326,966.00At the end of the period115,955,144.00 (2) Restricted Shares

Number of restricted shares

Number for thecurrent period

Number for theprevious periodAt the beginning of the period8,765,875.004,438,027.00Granted during the period6,139,263.00Vested during the periodLapsed during the periodAt the end of the period14,905,138.004,438,027.00

(3) 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:

RMB340,000,000 for the stock ownership plan; RMB21,000,000 for the share options; andHKD31,000,000 for the restricted shares.As of the end of the period, balance associated with the above share-based payment incentiveplans provided in the capital reserve amounted to RMB1,346,000,000.XIV. CONTINGENCIES

Applicable √ Not ApplicableAs of 30 August 2023, the Company has no significant contingencies that need to be disclosed.XV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATEAs of 30 August 2023, the Company has no significant events subsequent to the balance sheet datethat need to be disclosed.

Section X Financial Report

XVI. RISKS RELATED TO FINANCIAL INSTRUMENTS

√ Applicable Not Applicable

The book value of various financial instruments on the balance sheet date is as follows:

Financial assets

ItemsClosing balance

Financial assetsmeasured at fairvalue and changesof which includedin current profitand loss

Measured atamortized cost

Financial assetsmeasured at fairvalue and changesof which included

in othercomprehensiveincomeTotalMonetary funds55,641,485,513.5655,641,485,513.56Financial assets held for trading734,584,929.88734,584,929.88Derivative financial assets100,132,280.78100,132,280.78Bills receivable10,495,699,695.2810,495,699,695.28Accounts receivable21,742,220,596.2321,742,220,596.23Other receivables2,746,235,275.212,746,235,275.21Other current assets1,447,066,286.661,447,066,286.66Debt investments2,254,869,444.452,254,869,444.45Long-term receivables302,494,994.66302,494,994.66Other equity instruments5,912,354,236.795,912,354,236.79

Financial assets (Continued)

ItemsOpening balance

Financial assetsmeasured at fairvalue and changesof which includedin current profitand loss

Measured atamortized cost

Financial assetsmeasured at fairvalue and changesof which included

in othercomprehensiveincomeTotalMonetary funds54,161,702,227.3954,161,702,227.39Financial assets held for trading519,912,880.91519,912,880.91Derivative financial assets183,185,160.51183,185,160.51Bills receivable9,624,191,838.159,624,191,838.15Accounts receivable15,886,628,623.9915,886,628,623.99Other receivables2,401,113,902.552,401,113,902.55Other current assets1,642,421,944.451,642,421,944.45Debt investments1,034,222,222.221,034,222,222.22Long-term receivables305,070,001.45305,070,001.45Other equity instruments5,851,882,930.205,851,882,930.20

Section X Financial Report

Financial liabilities

ItemsClosing balance

Financial liabilities

measured atfair value

Financial liabilitiesmeasured atamortized costTotalShort-term borrowings9,365,184,799.419,365,184,799.41Derivative financial liabilities352,914,936.89352,914,936.89Bills payable23,187,832,976.2223,187,832,976.22Accounts payable47,160,319,625.8247,160,319,625.82Other payables22,901,109,264.1722,901,109,264.17Non-current liabilities due within one year19,143,918.0919,143,918.09Long-term borrowings18,366,761,352.0318,366,761,352.03Long-term payables43,686,763.7343,686,763.73Financial liabilities (Continued)

ItemsOpening balance

Financial liabilitiesmeasured atfair value

Financial liabilitiesmeasured atamortized costTotalShort-term borrowings9,672,223,522.369,672,223,522.36Derivative financial liabilities104,594,040.66104,594,040.66Bills payable25,098,557,730.0625,098,557,730.06Accounts payable41,878,607,182.9441,878,607,182.94Other payables17,517,838,565.9917,517,838,565.99Non-current liabilities due within one year2,854,446,929.322,854,446,929.32Long-term borrowings13,590,866,873.4313,590,866,873.43Long-term payables44,240,087.9444,240,087.94Other non-current liabilities16,916,789.1016,916,789.10Please 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.

Section X Financial Report

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. Theinterest receivables are mainly the accrued interests from fixed deposits which are deposited inthe above banks. The Group does not believe there is any significant credit risk due to defaultsof its counterparties which would cause any significant loss. (2) Accounts receivable and billsreceivable: The Company only trades with approved and reputable third parties. All customerswho are traded by credit are subject to credit assessment according to the policies of theCompany, and the payment terms shall be determined on a reasonable basis. The Companymonitors the balances of accounts receivable on an ongoing basis and purchases creditinsurance for receivables of large-amount credit customers in order to ensure the Company isfree from material bad debts risks. (3) Other receivables of the Company mainly include exporttax refund, borrowings and contingency provision. The Company strengthened its managementand continuous monitoring in respect of these receivables and relevant economic business basedon historical data, so as to ensure that the Company’s significant risk of bad debts iscontrollable and will be further reduced. 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.

Section X Financial Report

XVII. OTHER SIGNIFICANT EVENTSThe Company has no other significant events that need to be disclosed.

XVIII.NOTES TO MAIN ITEMS OF FINANCIAL STATEMENTS OF THE PARENTCOMPANY 1. Accounts receivable

AgingClosing balance

OpeningbalanceWithin 1 year639,733,948.19379,679,227.771-2 years185,637,967.37533,963,843.292-3 years407,731,056.68Over 3 yearsAccounts receivable, balance1,233,102,972.24913,643,071.06Allowance for bad debts27,634.82Accounts receivable, net1,233,075,337.42913,643,071.06Changes in allowance for bad debts of accounts receivable during the current period:

Items

OpeningBalance

Increase for the current

period

Decrease for the current

period

ClosingBalanceProvision forthe currentperiod

OtherincreaseReversal

Write-offand othermovementAllowance for baddebts27,634.8227,634.82Items

OpeningBalance

Increase for the current

period

Decrease for the current

period

ClosingBalanceProvision for

the currentperiod

OtherincreaseReversal

Write-offand othermovementAllowance for baddebts27,634.8227,634.82

Section X Financial Report

2. Other receivables

ItemsClosing balanceOpening balanceInterest receivable61,817,349.9029,783,516.95Dividend receivable1,244,013,185.591,015,840,000.00Other receivables18,246,361,545.4313,341,408,140.62Total19,552,192,080.9214,387,031,657.57

(1) Interest receivable:

ItemsClosing balanceOpening balanceWithin 1 year61,817,349.9029,783,516.95Over 1 yearTotal61,817,349.9029,783,516.95

(2) Dividend receivable:

AgingClosing BalanceOpening BalanceWithin 1 year1,228,173,185.591,000,000,000.00More than 1 year15,840,000.0015,840,000.00Total1,244,013,185.591,015,840,000.00

Section X Financial Report

(3) Other receivables:

The disclosure of other receivables by aging is as follows:

AgingClosing balanceOpening balanceWithin 1 year9,535,068,221.866,278,019,144.67Over 1 year8,714,658,206.467,066,828,954.97Other receivables, balance18,249,726,428.3213,344,848,099.64Allowance for bad debts3,364,882.893,439,959.02Other receivables, net18,246,361,545.4313,341,408,140.62 Changes in allowance for bad debt of other receivables in the current period:

Increase for thecurrent period

Decrease for thecurrent periodItems

Openingbalance

Provision forthe currentperiod

OtherincreaseReversal

Write-off and

othermovement

ClosingbalanceAllowance forbad debts3,439,959.0275,076.133,364,882.89 3. Long-term equity investment

√ Applicable Not Applicable

(1) Details of long-term equity investments:

Closing balanceOpening balanceItemsBook balance

Provision forimpairment

Bookbalance

Provision for

impairmentLong-term equity investmentsIncluding: long-term equity investments insubsidiaries51,557,871,986.317,100,000.0049,632,299,728.317,100,000.00Long-term equity investments in

associates3,315,511,301.75109,300,000.003,228,239,799.56109,300,000.00Total54,873,383,288.06116,400,000.0052,860,539,527.87116,400,000.00

Section X Financial Report

(2) Long-term equity investments in subsidiaries

Name of investeeOpening balance

Increase/Decrease for

the currentperiodClosing balance

Impairmentprovisions atthe end of the

periodprovisionsI. Subsidiaries:

Chongqing Haier Electronics Sales Co., Ltd.9,500,000.009,500,000.00Haier Group (Dalian) Electrical AppliancesIndustry Co., Ltd34,735,489.7934,735,489.79Qingdao Haier Refrigerator Co., Ltd.402,667,504.64402,667,504.64Qingdao Haier Special Refrigerator Co., Ltd.426,736,418.99426,736,418.99Qingdao Haier Information Plastic DevelopmentCo., Ltd102,888,407.30102,888,407.30Dalian Haier Precision Products Co., Ltd.41,836,159.3341,836,159.33Hefei Haier Plastic Co., Ltd.72,350,283.2172,350,283.21Qingdao Haier Technology Co., Ltd.16,817,162.0316,817,162.03Qingdao Household Appliance Technology and

Equipment Research Institute66,778,810.8066,778,810.80Qingdao Meier Plastic Powder Co., Ltd.24,327,257.7724,327,257.77Chongqing Haier Precision Plastic Co., Ltd.47,811,283.2447,811,283.24Qingdao Haier Electronic Plastic Co., Ltd.69,200,000.0069,200,000.00Dalian Haier Refrigerator Co., Ltd.138,600,000.00138,600,000.00Dalian Haier Air Conditioner Co., Ltd.99,000,000.0099,000,000.00Hefei Haier Air-conditioning Co., Limited79,403,123.8579,403,123.85Qingdao Haier Refrigerator (International) Co.,

Ltd.238,758,240.85238,758,240.85Qingdao Haier Air-Condition Electronic Co., Ltd.1,131,107,944.511,131,107,944.51Qingdao Haier Air Conditioner General Corp.,

Ltd.220,636,306.02220,636,306.02Qingdao Haier Special Freezer Co., Ltd.471,530,562.76471,530,562.76Qingdao Haier Dishwasher Co., Ltd.206,594,292.82206,594,292.82Wuhan Haier Freezer Co., Ltd.47,310,000.0047,310,000.00Wuhan Haier Electronics Co., Ltd.100,715,445.04100,715,445.04Chongqing Haier Air Conditioner Co., Ltd.100,000,000.00100,000,000.00Hefei Haier Refrigerator Co., Ltd.49,000,000.0049,000,000.00Qingdao Haier Whole Set Home Appliances

Services Co., Ltd.118,000,000.00118,000,000.00Chongqing Haier Refrigeration Appliance Co.,

Ltd.91,750,000.0091,750,000.00Shanghai Haier Zhongzhi Fang Chuang Ke Space

Management Co., Ltd.2,000,000.002,000,000.00Qingdao Haier Special Refrigerating Appliance

Co., Ltd.100,000,000.00100,000,000.00Haier Shareholdings (Hong Kong) Limited26,180,674,326.241,802,702,258.0027,983,376,584.24

Section X Financial Report

Name of investeeOpening balance

Increase/Decrease for

the currentperiodClosing balance

Impairmentprovisions atthe end of the

periodprovisionsShenyang Haier Refrigerator Co., Ltd.100,000,000.00100,000,000.00Foshan Haier Freezer Co., Ltd.100,000,000.00100,000,000.00Zhengzhou Haier Air Conditioner Co., Ltd.100,000,000.00100,000,000.00Qingdao Haidayuan Procurement Service Co.,Ltd.20,000,000.0020,000,000.00Qingdao Haier Intelligent Technology

Development Co., Ltd.130,000,000.00130,000,000.00Qingdao Haier Technology Investment Co., Ltd.367,505,635.0042,870,000.00410,375,635.00Qingdao Casarte Smart Living Appliances Co.,Ltd.10,000,000.0010,000,000.00Haier Overseas Electric Appliance Co., Ltd.500,000,000.00500,000,000.00Haier (Shanghai) Electronics Co., Ltd.12,500,000.0012,500,000.00Haier U+smart Intelligent Technology (Beijing)

Co., Ltd.143,000,000.00143,000,000.00Haier Electronics Group Co., Ltd.3,979,407,602.613,979,407,602.617,100,000.00Flourishing Reach Limited (SPVX)12,751,300,336.0212,751,300,336.02Qingdao Haidarui Procurement Service Co., Ltd.107,800,000.00107,800,000.00Qingdao Haier Intelligent Household Appliances

Co., Ltd.326,400,000.00326,400,000.00Qingdao Haidacheng Procurement Service Co.,

Ltd.100,000,000.00100,000,000.00Qingdao Haier Quality Inspection Co. Ltd.18,657,135.4918,657,135.49Qingdao Haier Home AI Industry Innovation

Center Co. Ltd.20,000,000.0080,000,000.00100,000,000.00Haier Smart Home Experience Cloud Ecological

Technology Co., Ltd.100,000,000.00100,000,000.00Qingdao Ruibo Ecological Environmental

Technology Co., Ltd.55,000,000.0055,000,000.00Total49,632,299,728.311,925,572,258.0051,557,871,986.317,100,000.00

Section X Financial Report

(3) Long-term equity investments in associates

Increase/decrease for the current periodName of investeeOpening balance

Increase/decrease for the

current period

Recognizedinvestmentincome underequity methodOthersClosing balance

Impairmentprovisions at theend of the periodWolong Electric (Jinan)Motor Co., Ltd.168,579,556.3512,699,100.26181,278,656.61Qingdao Haier SAIF SmartHome IndustryInvestment Center(Limited Partnership)319,245,649.36890,827.17–9,552,551.66310,583,924.87Bank of Qingdao Co., Ltd.1,162,338,491.4275,800,061.82–30,221,860.161,207,916,693.08Mitsubishi Heavy Industries

Haier (Qingdao)Air-conditioners Co.,Ltd.715,461,260.2659,119,761.19774,581,021.45Qingdao Haier CarrierRefrigeration EquipmentCo., Ltd.413,367,540.806,280,892.60–17,510,692.75402,137,740.6521,000,000.00Qingdao Haier MultimediaCo., Ltd.153,550,234.49–16,852,864.54136,697,369.9588,300,000.00Qingdao HBIS New Material

Technology Co., Ltd.295,697,066.886,618,828.26302,315,895.14Total3,228,239,799.56144,556,606.76–57,285,104.573,315,511,301.75109,300,000.00 4. Operating revenue and operating cost

√ Applicable Not Applicable

Unit and Currency: RMBAmount for thecurrent period

Amount for theprevious periodItemsRevenueCostRevenueCostPrimary business284,845,756.66247,445,754.1453,149,966.6046,742,634.57Other business42,560,950.1838,775,114.2940,173,916.7334,148,754.89Total327,406,706.84286,220,868.4393,323,883.3380,891,389.46

Section X Financial Report

5. Investment income

√ Applicable Not Applicable

Unit and Currency: RMBItems

Amount for thecurrent period

Amount for theprevious periodInvestment income from long-term equity investments

accounted for using cost method228,173,185.59400,000,000.00Investment income from long-term equity investmentaccounted for using equity method144,556,606.76137,123,178.78Income from wealth management products27,987,900.1911,113,358.17Investment income from investment in other equityinstrument during the holding periodTotal400,717,692.54548,236,536.95

XIX. APPROVAL OF FINANCIAL REPORTThis financial report was approved for publication by the Directors of the Company on 30 August2023.

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 rate

on netassets

Basicearningsper share

Dilutedearningsper share

Weightedaveragereturn rate

on netassets

Basicearningsper share

Dilutedearningsper shareNet profit attributable to ordinary

shareholders of the ParentCompany9.16%0.970.969.23%0.850.85Net profit attributable to ordinary

shareholders of the ParentCompany after deduction of non-recurring profit or loss8.80%0.930.928.71%0.800.80

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 Parent

Company8,963,875,999.847,959,684,042.65Less: non-recurring profit or loss359,898,235.26468,990,337.27Net profit attributable to ordinary shareholders of the ParentCompany after deduction of non-recurring profit or loss8,603,977,764.587,490,693,705.38Statement of non-recurring profit or loss for the current period

Non-recurring profit and loss itemsAmount for the current periodProfit and loss on disposal of non-current assets–21,886,978.96Government subsidies through the profit and loss, except

for government subsidies that are closely related to the

Company’s normal business operations, comply with

national policies and regulations, and continue to be

enjoyed in a fixed amount or fixed quantity according

to certain standards409,863,390.47Gains on investments in subsidiaries, associates and joint

ventures in which the investment cost was less than the

fair value of identifiable net assets of the investees at

the time of acquisitionProfit and loss from fair value changes of financial assets

held for trading and financial liabilities held for trading,

as well as investment gains arising from disposal of

financial assets held for trading, financial liabilities held

for trading and financial assets held for sale, except the

effective hedging related to the normal operations of the

Company31,271,562.35Other non-operating income and expenses except the

aforementioned items30,661,194.26Effect of minority equity interest (After Tax)–12,347,767.84Effect of income tax–77,663,165.02Effect of profit from business combination under common

controlTotal359,898,235.26

Chairman of the Board: LI HuagangDate of approval for publication by the Board: 30 August 2023Information of amendment

Applicable √ Not Applicable