2017 Interim Report
Qingdao Haier Co., Ltd
Stock Code: 600690 Short Name: Qingdao Haier
Qingdao Haier Co., Ltd
2017 Interim Report
Stock Code：600690
INTELLIGENCE
CREATES SMART
LIFE
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Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of Qingdao Haier Co., Ltd. (“the Company”) hereby assure that the content set
out in the interim report is true, accurate and complete, and free from any false record,
misleading representation or material omission, and are individually and collectively
responsible for the content set out therein.
II. All directors of the Company have attended the Board meeting.
III. The interim report is unaudited.
IV. Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of the
Company) and Ying Ke (the person in charge of accounting department) hereby certify that
the financial report set out in the interim report is true, accurate and complete.
V. Proposal of profit distribution or proposal of capitalizing capital reserves for the reporting
period examined and reviewed by the Board
Not Applicable
VI. Disclaimer in respect of forward-looking statements
√Applicable □Not Applicable
Forward-looking statements such as future plans, development strategies as set out in this report do
not constitute our substantial commitment to investors. Investors are advised to pay attention to
investment risks.
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VII. Are there any funds held by controlling shareholders and their related parties for
non-operational purposes?
No
VIII. Is there any provision of external guarantee in violation of prescribed decision-making
procedures?
No
IX. Important Risk Warnings
For the possible risks which the Company may encounter, please refer to the relevant information
set out in the section of ―DISCUSSION AND ANALYSIS ON OPERATIONS‖ in this report.
X. Others
□Applicable √Not Applicable
Chairman: Liang Haishan
Qingdao Haier Co., Ltd.
25 August 2017
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Contents
SECTION I DEFINITIONS ............................................................................................................................... 5
SECTION II GENERAL INFORMATION OF THE COMPANY AND FINANCIAL INDICATORS ......... 7
SECTION III SUMMARY OF THE COMPANY’S BUSINESS ....................................................................... 11
SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS ................................................................ 18
SECTION V SIGNIFICANT EVENTS ............................................................................................................ 40
SECTION VI CHANGES IN ORDINARY SHARES AND INFORMATION ABOUT SHAREHOLDERS 56
SECTION VII RELEVANT INFORMATION OF PREFERRED SHARES .................................................... 61
SECTION VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT .................................................. 62
SECTION IX RELEVANT INFORMATION ON CORPORATE BONDS .................................................... 63
SECTION X FINANCIAL REPORT ................................................................................................................ 64
SECTION XI DOCUMENTS AVAILABLE FOR INSPECTION.................................................................. 207
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SECTION I DEFINITIONS
Unless otherwise stated in context, the following terms should have the following meanings in this
report:
refers
CSRC China Securities Regulatory Commission
to
refers
SSE Shanghai Stock Exchange
to
refers China Securities Depository and Clearing Corporation Limited Shanghai
CSDCCL
to Branch
The Company, refers
Qingdao Haier Co., Ltd.
Qingdao Haier to
Four Major
refers China Securities Journal, Shanghai Securities News, Securities Times,
Securities
to Securities Daily
Newspapers
KKR & Co. L.P. and its subsidiary. KKR & Co. L.P., is a limited partnership
KKR refers incorporated and existed in accordance with the laws of the state of Delaware,
(GROUP) to USA. KKR & Co. L.P. is listed on the New York Stock Exchange (both stock
name and stock ticker: KKR).
KKR Home Investment S.à.r.l., a wholly owned subsidiary of KKR China
KKR, KKR refers Growth Fund L.P., is a project company incorporated in Luxembourg in
(Luxembourg) to accordance with international practices for the sole purpose of a strategic
investment in the Company.
Haier
refers Haier Electronics Group Co., Ltd. (a company listed in Hong Kong, stock
Electrionics,
to code: 01169.HK)
1169
GE Appliances, a company of Qingdao Haier, helps its users to enjoy every
beautiful moment of life by producing high-performance household
appliances and providing unparalleled services. GE Appliances owns brands
refers
GEA including Hotpoint, GE, GE Café GE Profile and Monogram; thus enables its
to
users to have many options. Its products include refrigerator, freezer, cooking
products, dishwasher, washing machine, drier, air-conditioner and water
filtration system.
Fisher & Paykel Appliances Holdings Limited (Chinese Name:斐雪派克)
was established in 1934 and is known as the national appliance brand of New
Zealand, the global top-level kitchen appliance brand and a famous luxury
brand of the world. It has products including ventilator, gas stove, oven,
refers
FPA dishwasher, microwave oven, freezer, washing machine, clothes dryer, etc. Its
to
business covers over 50 countries across the world. In 2012, it became a
wholly owned subsidiary of Haier Group. In order to perform the undertaking
of Haier Group in respect of eliminating horizontal competition, the Company
entered into the Trust Agreement on Fisher & Paykel Appliances Holdings
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Limited between Haier Group Corporation and Qingdao Haier Co., Ltd. on
25th of May 2015, whereby Haier Group entrusted its assets held in Fisher &
Paykel Appliances Holdings Limited to the Company for operation and
management.
China Market Monitor Co., Ltd., established in 1994, has been focusing on
refers research on retail sales in China‘s consumption market for a long term and is
CMM
to the nationally recognized market research institute in terms of the appliance
industry.
Euromonitor International, established in 1972, is the worlds‘ leading
strategic market information supplier and owns over 40-year experience in
refers
Euromonitor respect of publishing market reports, commercial reference data and on-line
to
database. Euromonitor offer data and analysis on thousands of products and
services around the world.
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SECTION II GENERAL INFORMATION OF THE COMPANY AND
FINANCIAL INDICATORS
I. Information of the Company
Chinese name 青岛海尔股份有限公司
Chinese short name 青岛海尔
English name QINGDAO HAIER CO., LTD.
English short name HAIER
Legal representative Liang Haishan
II. Contact Person and Contact Information
Secretary to the Board Representative of securities affairs
Name Ming Guozhen Liu Tao
Department of Securities of Qingdao Department of Securities of Qingdao
Haier Co., Ltd. Haier Co., Ltd.
Address
Haier Information Industrial Park, Haier Information Industrial Park, No.1
No.1 Haier Road, Qingdao City Haier Road, Qingdao City
Tel 0532-88931670 0532-88931670
Fax 0532-88931689 0532-88931689
Email finance@haier.com finance@haier.com
III. Summary of Changes in General Information
There was no change in the general information of the Company during the reporting period.
Details of the latest conditions are set out in the 2016 annual report of the Company.
IV. Information Disclosure and Location
Designated newspaper for China Securities Journal, Shanghai Securities News, Securities
information disclosure Times, Securities Daily
Website for publishing interim
www.sse.com.cn
report as designated by the CSRC
Department of Securities of Qingdao Haier Co., Ltd.
Company interim report location
Haier Information Industrial Park, No.1 Haier Road, Qingdao City
Enquiry index of changes during
Nil
the reporting period
V. Information on Shares of the Company
Type of Shares Stock Exchange of Stock Short Name Stock Code Stock Short Name
Shares Listed Before Variation
A shares Shanghai Stock Qingdao Haier 600690 ／
Exchange
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VI. Other Related Information
□Applicable √Not Applicable
VII. Key Accounting Data and Financial Indicators of the Company
(I) Key accounting data
Unit and Currency: RMB
1H 2017 1H 2016 Increase/decrease
Key accounting data
(January - June) (January - June) YoY(%)
Operating revenue 77,575,749,980.10 48,786,606,924.87 59.01
Net profit attributable to shareholders
4,427,068,404.51 3,315,173,171.70 33.54
of the Company
Net profit after deduction of
non-recurring profit or loss
3,777,339,454.95 2,765,423,757.22 36.59
attributable to shareholders of the
Company
Net cash flows from operating 8,393,200,906.18 4,754,556,382.69 76.53
activities
Increase/decrease
As of June 30,2017 As of June 30,2016
YoY(%)
Net assets attributable to
29,343,093,829.35 26,364,725,409.83 11.30
shareholders of the Company
Total assets 139,773,857,467.20 131,255,290,325.24 6.49
(II) Key financial indicators
1H 2017 1H 2016 Increase/decrease
Key financial indicators
(January - June) (January - June) YoY(%)
Basic earnings per share (RMB per
0.726 0.543 33.70
share)
Diluted earnings per share (RMB per
0.726 0.543 33.70
share)
Basic earnings per share after deducting
non-recurring profit or loss (RMB per 0.619 0.453 36.64
share)
Weighted average return on net assets Increased by
15.47 13.78
(%) 1.69 pct pt
Weighted average return on net assets
Increased by
after deducting non-recurring profit or 13.20 11.49
1.71 pct pt
loss (%)
Explanation of the key accounting data and financial indicators of the Company
√Applicable □Not Applicable
1. In the first half of 2017, contribution to the revenue of the Company by GEA amounted to
RMB22.5 billion, contribution to net profit attributable to the parent company amounted to RMB1.16
billion, and contribution to net profit attributable to the parent company after deduction of non-recurring
profit or loss amounted to RMB630 million.
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2. In the first half of 2017, the original business of the Company (excluding GEA) recorded an
increase in revenue of 22.8% over the same period of last year, among which, revenue from white
appliances increased by 27.2% by products as follows: revenue from refrigerator and freezer up by
16.5%, revenue from washing machine up by 20.7%, revenue from air conditioner up by 50.5%, and
revenue from kitchen&sanitary products up by 22.7%.
3. Since 1 January 2016, the Company has changed the accounting method for Bank of Qingdao
Co., Ltd. from available-for-sale financial assets to long-term equity investment and recognized the
profit or loss using equity method, while the net profit attributable to the parent company for the first
half of 2016 was adjusted upward accordingly.
4. In the first half of 2017, net profit attributable to the parent company after deduction of
non-recurring profit or loss increased by 37% as compared with the same period of last year, of which
the net profit attributable to the parent company after deduction of non-recurring profit or loss of the
original business of the Company (excluding GEA) increased by 21.5% over the same period of last
year.
VIII. Differences in Accounting Data under Domestic and Overseas Accounting Standards
□Applicable √Not Applicable
IX. Non-recurring Profit or Loss Items and Amount
√Applicable □Not Applicable
Unit and Currency: RMB
Non-recurring profit or loss items Amount
Profit or loss from disposal of non-current assets -418,828.94
Gain from disposal of long-term equity investment 21,438,092.72
Government grants included in current profit or loss, but closely related to the
normal operating business, and in compliance with requirements of national
118,072,782.97
policies, continues to be granted with an amount and quantity determined under
certain standards
In addition to the effective hedging business related to normal operations of the
Company, profit or loss of changes in fair value arising from holding of trading
financial assets and trading financial liabilities, as well as investment gain 425,914,149.99
realized from disposal of trading financial assets, trading financial liabilities
and financial assets available for sale
Other non-operating net income and expenses except the aforementioned items 162,843,152.93
Minority interests -70,417,181.68
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Effect of income tax -7,703,218.43
Total 649,728,949.56
X. Others
□Applicable √Not Applicable
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SECTION III SUMMARY OF THE COMPANY’S BUSINESS
I. Introduction of Major Business, Operating Mode and Industry Background
(I) Major Business of the Company
The Company mainly engages in research, development, production and sales of home appliances
with product portfolios covering refrigerators/freezers, washing machines, air-conditioners, water
heaters, kitchen appliances products, small home appliances, U-home smart home business, etc., offering
integrated smart home solutions to our consumers, and channel integration service business including
logistics, home appliances and other product distribution business.
Since its establishment, the Company has been upholding the concept of ―taking the user as right
and ourselves as wrong‖, while adhering to the spirit of entrepreneurship and innovation and the strategy
of keeping up with the new era. Through its persistent efforts and the acquisition of the white goods
business of Sanyo of Japan and the household appliances business of GE, and entrusted management of
the Fisher & Paykel business in New Zealand, the Company has established its competitive edge with
integrated capabilities in R&D, manufacturing and marketing at home and abroad.
According to retail sales statistics on large home appliances for the year 2016 published by
Euromonitor, the world‘s leading independent provider of strategic market research, in 2016, sales of
Haier‘s large home appliances represented a global market share of 10.3%, ranked No. 1 in the world for
the 8th consecutive year. Meanwhile, global sales of Haier‘s refrigerators, washing machines, wine
cellars and freezers continued to rank No. 1 in the world.
The Company‘s U+ SmartLife platform (U+ home OS) + industrial internet platform (COSMOPlat):
In face of the opportunities and challenges arising in the Internet of Things (―IOT‖) era, the Company
has initiated a transformation to the IOT platform and established its leading role in the development of
consumer-oriented smart homes, and the development of smart manufacturing for those industrial
enterprises through the construction of the U+ SmartLife platform and the industrial internet platform.
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U+ SmartLife platform: Through the U+ home OS operating system, the Company provides the
support to the transformation of household appliances into smart appliances, as well as the transition of
household appliances into internet appliances, and realizes the interconnection between things, the
interconnection between humans and things, as well as the interconnection among various services
through the interconnection of big data, cloud computing and service resources of third-parties, thus
creating a complete ecosystem and providing consumers with a full scene experience of smart life.
Industrial Internet Platform (COSMOPlat): As the original ground-breaking project in China,
Haier‘s global-leading industrial internet platform with independent intellectual property rights was built
on its models developed from interconnected factories, as well as best practices in digitalization and
product formation. This platform, combined with existing capabilities such as smart equipment, smart
control, mold and Smart Research Institute, will be able to offer comprehensive solutions and
value-added services enabled by the combination of software and hardware as well as the mix of virtual
and real factors for the transformation and upgrading from mass manufacturing to mass customization
for enterprises.
(II) Industry Review
In the first half of 2017, the domestic macro economy operated stable, and the stable trend of the
exchange rate of Renminbi strengthened the market confidence. In respect of the cost, the price of mass
raw materials remained high and put pressure on profits. In respect of demand, the domestic market of
white appliances witnessed an increasing trend while the performance of each sub-industry faced a
different situation: ① affected by factors such as high temperature weather, growth of real estate sector,
improvement of rural penetration rate, the demand for air conditioners increased rapidly. According to
data released by CMM, retail sales and retail volumes increased by 26.3% and 31.9%, respectively, in
the first half of the year; ② demand for refrigerators was inadequate: retail sales and retail volumes
increased by 1.7% and 4.8%, respectively; ③ demand for washing machines grew steadily: retail sales
and retail volumes increased by 8.2% and 10.3%, respectively. Domestic demand for kitchenware and
sanitary ware grew steadily: retail volumes of water heaters and kitchen & electricity products increased
by 8.0% and 14.9%, respectively. Benefiting from the recovery of the global economy, export of
household appliances from China grew strongly: according to data released by China Industry Online,
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export sales of refrigerators, air-conditioners and washing machines increased by 17.2%, 13.2%, 14.4%,
respectively, in the first half of the year.
As the domestic white appliance market entered a development stage led by the demand of
replacement and upgrading, brand, quality, design and technique become the main factors that affect the
consumption decisions and consumers are likely to pay the premium of ―good products‖. Consumption
upgrading is steadfast: high-capacity, healthy, intellectual and artistic products become more popular,
and the average price of products increases steadily; the penetrate rate of smart products improves:
according to CMM, the penetration rate of smart white appliances will reach over 20% in 2017.
The market favores leading enterprises who put a long term focus on innovation and keep leading
the trend and build on comprehensive advantages accumulated in long term competition. Such
enterprises will continue to benefit from the upgrading of domestic consumption and market
concentration.
II. Explanation of Significant Changes of Major Assets of the Company during the Reporting
Period
√Applicable □ Not Applicable
During the reporting period, the proportion of overseas assets of the Company remained stable as
compared with the 2016 annual report:
Overseas assets amounted to RMB62,732.7948 million, representing 44.9% of the total assets.
III. Analysis on Core Competitiveness during the Reporting Period
√Applicable □ Not Applicable
Since the foundation of the Company in 1984, Haier always adhered to the principle of driving
sustainable and healthy development with innovation focusing on the needs of users, and the Company
has successfully transformed itself from a debt-burdened collective small factory which was on the verge
of shutdown into one of the largest home appliances manufacturers in the world. The Company is
committed to realizing sustainable development across different cycles through continued evolution on
development strategy and operating mode, brand, research and development, intelligent manufacturing,
development of foreign and domestic markets to achieve competitiveness and adapt to ever-changing
conditions.
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(I) Brand competitiveness
According to data published by Euromonitor, Haier has been ranked No. 1 among global large
home appliances brands for the 8th consecutive years. In the segments of refrigerators, washing machines,
wine cellars, freezers, the Company continues to be ranked No. 1 in the world. To meet the personalized
and diversified needs of users, we have broken down the global technical barriers in the household
appliances industry and promoted the healthy development of the industry through global strategic
synergies among six brands of household appliances, namely Haier, GE Appliances in the U.S., Fisher &
Paykel in New Zealand, AQUA in Japan, Casarte and Leader. Haier has built the largest household
appliances industry cluster in the world which covers global market and communities.
(II) R&D and technological competitiveness
1. Layout of R&D resources around the world: With its 10 large open R&D centers around the
world, Haier has established a global network of resources and users, and attracted world-class resources
to participate in R&D with its ―cooperation, win-win and sharing‖ mechanism, thus playing a leading
role in the development of products and technologies in the industry and providing excellent experience
for its users.
2. Leadership in industrial standards. With its sustained innovation capacity, Haier has become a
leader in the household appliances industry in the PRC and worldwide. At present, Haier held a total of
66 expert seats in IEC and ISO, two international standardization organizations. Haier also held 28
expert seats in the UL standardization organization. Of the 90 proposal for the development of and
amendments to international standards put forward by Haier, 43 proposals have been published and
implemented. Haier ranks No. 1 among household appliances companies in the PRC in terms of the
number of proposals raised. Haier took a leading role in the formulation of first international standards
for fresh-keeping capabilities of refrigerators issued by IEC. Its proposal for electricity insulation wall
technologies have been incorporated into IEC international standards. Haier has led or participated in the
development of national/industrial standards and its amendments with a total of 430, marking the highest
level of household appliance companies in China.
3. The number of invention patents accounts for more than 70% of total invention patents. And the
network of global patents covers 25 countries and regions, making Haier the leader in household
appliances companies in the PRC in terms of the amount of overseas invention patents. Haier has
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obtained more than one hundred international design awards, and was granted the unique gold award in
the China industrial design awards for two consecutive years, demonstrating its industry-leading
industrial design. Apart from the 14 National Science and Technology Progress awards, it also obtained
the first prize in 2016, which was unprecedented in the household appliances industry.
4. Innovating the R&D mechanism through the HOPE platform. Through ―HOPE‖, its online open
innovation platform, Haier has been facilitating the matching of resources from the source of innovation
to the process of materialization of innovation, producing cross-border and disruptive innovation
continuously. As the leading open innovation platform, currently the platform can reach 3.8 million
world-leading resources, more than 400,000 registered users, and offers over 6,000 creative ideas on
average per year, thus supporting the maintenance of our leading position in products/technologies.
(III) Competitiveness of smart manufacturing
The core competitiveness of Haier‘s smart manufacturing lies in its commitment to realizing
long-term value for users through its user-oriented approach and the transition from large-scale
manufacturing to large-scale customization. In practical operation, Haier has established eight
global-leading sample interconnected factories, as well as the interconnected capabilities and ecological
system covering the whole process. Such businesses cover refrigerators, washing machines,
air-conditioners, water heaters, electric motors, molds and other fields, meeting our user's need for
perfect experience in high-end personalized products and services. Such initiatives have produced
notable effects: orders from mass customization in which users are involved in the whole process
accounted for up to 16% of the total, and orders from mass customization in which customers are
involved accounted for up to 52% of the total, achieved the breakthrough which eliminated or shortened
the period of products in the warehouses. In addition, operational efficiency throughout the process has
been enhanced.
COSMOPlat - China‘s first and global-leading industrial internet platform with independent
intellectual property rights was developed from interconnected factories, as well as best practices in
digitalization and product formation. This platform, combined with existing capabilities such as smart
equipment, smart control, mold and Smart Research Institute, has been in collaboration with relevant
companies in seven major industries, and will be able to offer comprehensive solutions and value-added
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services featured by the union of software and hardware as well as the mix of virtual and real factors for
the transformation and upgrading from mass manufacturing to mass customization for enterprises.
(IV) Competitiveness in domestic market
1. Through our diversified channel system, we have achieved full coverage of the domestic market
and provide convenient shopping experience anywhere, anytime. We have also maintained strong
strategic cooperation relationship with professional chains for household appliances, such as Gome and
Suning, as well as e-commerce platforms, such as Tmall and JD. In respect of our own channels, Haier
has established more than 8,000 county-level stores, and more than 30,000 stores within town and
country-level networks. With regard to our comprehensive store channel, we have established a number
of clubs, such as V58 and V140 Clubs, and maintained close cooperation with major enterprises
engaging in regional distribution of household appliances.
2. The network of the warehouses of Gooday Logistics covers more than 100 cities and regions in
the PRC, with a total storage area of 3.57 million square meters, of which self-owed warehouses was
1.05 million square meters, representing 30% of the total areas, besides, it strengthened its terminal
service capacity and continues to make investment in the terminal core network contribution. Through
the whole-process visualization system and users‘ timely comment system, Gooday Logistics constantly
improves the customers‘ experience, leading presence in the last mile.
(V) Competitiveness in overseas market
We have been adhering to the strategy of building our own brand independently. The Company has
completed the localization layout of a triple network comprising R&D, manufacturing and marketing in
the overseas market through self-construction and mergers and acquisition, with overseas capacity up to
20 million units, which helped us gain insight into and meet the needs of local consumers in a short time.
The Company has completed its acquisition of GEA a year ago and there is strong complementarity
between the two parties in R&D of technologies, market channels, product categories as well as
procurement and other aspects. The integration of GEA will promote the realization of synergies for
each of the parties involved.
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Europe
1 R&D
2 Factories
8 Marketing China Region America
centers 2 R&D 3 R&D
54 Factories 27 Factories
42 Marketing 1 marketing
centers East Asia & center
South Asia South-east Asia
1 R&D 2 R&D
8 Factories 14 Factories
2 Marketing 9 Marketing
centers centers
Middle and Eastern
Africa
2 Factories
2 Marketing centers
Australia
1 R&D
1 Factory
2 Marketing
centers
(VI) Cultural competitiveness
Credibility culture based on quality and service is the core driver of Haier‘s growth, and is also the
essential reason of constant success of Haier. Leveraging on credibility culture of ―user-oriented‖ and
―persistent honesty‖, Haier has turned itself from a small collective factory which was on the verge of
shutdown into one of the largest white goods manufacturers in the world, while keeping a leading
position in world-wide innovation in the internet era. Haier upholds the concept of ―always take the
users as right and ourselves as wrong‖. This concept stimulates the spirit of innovation, revolution and
entrepreneurship of Haier and motivates it to follow the times and continuously improve and challenge
itself, so as to always seize development opportunities. The win-win model of combining individual and
goal is the assurance of sustainable operation of Haier. In exploring the ―Individual-goal combination,
Co-create and Win-win ecosystem‖, Haier endeavors to build a win-win ecosystem based on user value
interaction in the next stage of the e-commerce era to make every employee his/her own CEO and
realize their own value while creating value for users, so as to achieve a win-win situation, which is
critical to parties in the system.
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SECTION IV DISCUSSION AND ANALYSIS ON OPERATIONS
I. Discussion and Analysis on Operations
The Company adheres to the transformation and upgrading of the globalization development
direction, focusing on ―electric appliance leading‖, ―internet appliances leading‖, ―ecological leading‖,
maintaining the leading position in respect of business scale, globalized operation, high-end structure,
market share, ecological layout and other aspects, to achieve the breakthrough from ―No. 1 in China to
the leader of white appliances throughout the world‖, the transformation from ―single brand operation to
multi-brands synergy operation‖ and the transition from ―traditional household appliance manufactory to
the leader of smart life platform in the internet of things era‖.
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In the first half of 2017, the Company recorded revenue of RMB77.576 billion, representing an
increase of 59.01%, of which overseas revenue amounted to RMB35.083 billion, accounting for 45%.
Revenue of self-owned brands of global household appliance business accounts for approximately 100%;
recorded net profit attributable to the parent company amounted to RMB4.427 billion, representing an
increase of 33.54%. Casarte, the high-end brand, recorded an increase in revenue of 46%.
Market share of the whole product lineup improved. ① Refrigerators, washing machines, water
heaters expanded their leadership, with market share of domestic retail sales from January to June
increasing by 3.12, 2.04 and 1.63 percentage points, respectively, ranking No. 1 in each industry in
terms of market share; ② household air-conditioners, range hoods, cookers and other key growth
businesses grew steadily, with market share of retail sales increasing by 0.42, 0.7 and 0.76 percentage
points, respectively. Intelligent air conditioner of the Company accounted for 33.5% of total, ranking
No.1 in the industry.
(I) Continued Introduction of Original Products, Leading the Industry Trend
Each industry of the Company provides consumers with solutions for quality life by building on the
global top 10 R&D centers where the Company has first class resources and focuses on the R&D of
original technology, leading the industry trend through continuing to promote product innovation.
Refrigerator/freezer business: The listing of F+ wholly-new MSA oxygen sensor freshness
refrigerator, embedded infrared thermostat refrigerator, whole space freshness refrigerator and other
products meet the market demand of super-large volume, premium classification storage, whole space
freshness and household integration. F+ wholly-new MSA oxygen sensor freshness refrigerator
combines the advantages of super-large volumes of French refrigerators and premium classification
storage of T-type refrigerators. The MSA oxygen sensor and freshness technology achieves prolonged
freshness for double the time while the nutrition loss is lower than 1/10 of ordinary refrigerators; Haier
whole-space freshness refrigerators enlarge the fresh-maintaining space to the freezing compartment,
achieving separated storage of dry and wet products, freezing the original taste and flavor. VDE
(Verband Deutscher Elektrotechniker) awarded the first worldwide VDE fresh-maintaining certificate to
Haier refrigerator, which is currently the first brand that passed the 537 strict inspections and obtained a
VDE-QTM quality certificate, which is one of the strictest quality certificates throughout the world.
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The market share of retail sales of refrigerators in the domestic market for the first half of the year
was 30.64%, which is 2.39 times of the No. 2 ranked company; the market share of retail sales in the
high-end market of RMB10,000 to RMB15,000 was 35.6% and increased by 11.1 percentage points as
compared with the same period last year.
Washing machine business: In order to meet the demand for ―healthier, more economical, separate
rinsing, large-diameter drum‖ requirements, the Company constantly upgrades the rinsing and care
solution through the application of advanced technology to clean water rinsing, smart rinsing, cloth
identification and other advanced technologies; and making good products becomes visible through the
marketing activities of ―coin challenge‖ and ―egg care washing‖. The ―FabriCare‖ washing machine of
Casarte achieved accurate identification of fabric materials, colors of clothes through cloud connection,
and achieved smart and healthy washing through the automatic and accurate matching of washing
procedures and automatically added suitable detergent. The products are priced at RMB35,999, raising
the high-end segment and leading the industry.
As the No.1 brand in respect of global rinsing and care solution, the upgrading effect of the
washing machine on the business structure of the Company‘s is obvious: leading the industry by
differentiation through direct-drive converter drum, revenue of front-loading washing machines
increased by 50%; and the share of retail sales in the first half of the year was 29%, increased by 2.04
percentage points as compared with the same period last year, and which is 1.67 times of the No. 2;
market share of products priced above RMB10,000 rose from 53% to 65%, increased by 12 percentage
points as compared with the same period last year.
Household air-conditioner business: benefitting from Haier air-conditioner‘s continuous leading
position in terms of technologies such as intelligent self-cleaning, temperature sensing, temperature and
humidity self-controlling, as well as the market network, marketing innovation, revenue of the first half
of the year increased by over 50%, of which domestic revenue increased by 60%. Sales of household
air-conditioners of the Company during January to July this year has exceeded the whole of last year.
Global sales in the cold year of 2017 (August 2016 to July 2017) exceeded 10 million sets. In respect of
product innovation: ① from cleaning air-conditioner to providing clean air, and from cleaning heat
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exchanger to automatic inspection and purifying of indoor air. The Company introduced an air-cleaning
integrated air-conditioner, which has a purifying capacity of 450 cubic meters/h, reaching professional
purifier levels. In the first half of 2017, the share of Haier‘s self-cleaning air-conditioners was 79.9%.
② from refrigeration and heating to human perception: the air-conditioner of Casarte was the first to
creat temperature and humidity self-controlling technology to achieve the most comfortable experience
through the intelligent adjustment of temperature and humidity. From the healthy and steady air of the
Tian Zun air-conditioner to the zoned air of the Casarte series in 2017, the Company realized
personalized air supply for different individuals in the same space. Share of sales of products above
RMB16,000 during January to July amounted to 39.8%, ranking No. 1 in the industry and achieving a
breakthrough in the high-end market. ③ from intelligent control to artificial intelligence: the market
share of Haier intelligent air-conditioners was 33.5% in the first half of 2017, ranking No.1 in the
industry.
Through the establishment of a win-win sharing mechanism with customers, the number of
self-owned networks in 2017 realized a rapid increase, which promises a rapid development for future
business. In respect of marketing, the Company promoted clean air experience brought by Haier
intelligent self-cleaning air-conditioners by digital marketing to strengthen customers‘ attachment to the
products.
Central air-conditioner business: focusing on “smart energy-saving”, industry segmentation
and customization, launching ecological services
According to statistics, the energy consumption of central air-conditioners typically account for
40%-60% of the total energy consumption of a building. Aiming at energy-saving of central
air-conditioners, the Company provided smart energy-saving solutions for users through cloud services,
magnetic suspension, wireless communication and other advanced technology. By realizing magnetic
suspension, the Company‘s central air-conditioners continue leading the era and launched the largest
refrigerating capacity air-conditioner of the world with 4200 ton of refrigeration and magnetic levitation,
which could cover more than 95% of central air-conditioner users, achieving double growth in magnetic
suspension through the advantage of saving 50% power‘.
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Aiming at users‘ energy-saving and upgrading opportunities, the Company launched the exchange
of connected machines, to realize the ―exchange of central air-conditioners without impairment‖ by the
―five don‘ts‖ differentiated solution. For heating supply of clean energy, the Company introduced new
central air-conditioner products and solutions such as combining air-conditioner with floor heating,
two-stage compressive screw machines, heat resource machines, which gained popularity among users;
for home users, the Company launched a central air-conditioner with butterfly-wing home-type features,
which overturned traditional air supply mode, and the ultrathin design addressed the installation space
problem. Product customization was achieved for heat recovery, corrosion resistance and other
customized solutions for hotel, railway, industry, etc..
The Company launched central air-conditioner with a ―three-free‖ energy-saving mode with
ecological layout and achieved a breakthrough of energy conservation through big data analysis to
realize intelligent energy-saving.
Market share improves steadily and high-end customization takes the lead: ① market share in the
first half of 2017 rose 1.3 percentage points; ② for high-end intelligent energy-saving products, the
share of magnetic suspension was 76%; ③ the market share of railway, hotel and other subdivided
industries ranked No.1.
Kitchenware and sanitary ware business:
Water heater business: ① electric water heater: targeting at users‘ demand of ―clean water
rinsing‖, ―safe rinsing‖, ―quick heating‖, the Company progressed electric water heater product
innovation with the support of core technologies such as ―SMART instantaneous heat cleaning
technique‖, ―double-effect scale control and triple-step purification‖, which achieved the effect of saving
90% time and increasing 10 times capacity, effectively addressing the drawback of ―slow heating speed‖;
the technique of ―double-effect scale control and triple-step purification‖ controls scale effectively while
at the same time purifying the water in three steps, which effectively removes harmful substances such
as sediments, rust, residual chlorine, bacteria, etc., sufficiently safeguarding water for users. ② gas
water heater: targeting at the requirement of safe and constant temperature, by leveraging aerospace
nano-platinum catalytic technology (航天纳米铂金催化技术), the Company‘s gas water heater adopted
Nuoco technology (诺客技术) to automatically eliminate carbon monoxide so as to safeguard the safety
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of bathing; through cross-border cooperation and resource sharing, the Company applied space
exploration power line carrier technique (天探测电力载波技术) in the area of gas water heaters to
break the industry barrier of space control.
Haier‘s water heater products in the first half of the year increased retail price by 23%. The
high-end market share improved sharply: electric water heaters from RMB2,800 to RMB4,000,
accounted for 27.2%, up by 9 percentage points; gas water heaters above RMB4,000 accounted for
16.6%, up by 9 percentage points compared with the same period last year.
Kitchen appliances business: targeting at the portfolio requirement of different kitchen appliances
for differentiated home decoration style, the Company integrated the features of global advanced
techniques from FPA, GEA, and was enhanced by differentiation, kitting, high-end and intelligence to
provide users with a set of smart free-combination solutions to realize the goal of becoming a leader.
The Company integrated the GEA technique to launch the five-burner gas stoves, which divided
into a heat preservation area, soup-cooking area, stew area, auxiliary heating area, stir frying area and
other main kitchen areas, to provide users with more abundant choices for kitchen life. The Company
newly established 70 smart kitchen experience centers in the first half of 2017 to propel the
transformation towards high-end kitting kitchen appliances.
Domestic revenue from kitchen appliances for the first half of 2017 increased by 55%, of which
Casarte increased by 79%, which is double the industry‘s average.
(II) Domestic market: Focusing on retail, making investments in network, optimizing
efficiency and improving structure
For more than one year after the commencement of the retail transformation, the Company
provided consumers with the best quality and services by focusing on the value of products, upgrading
user experience and customer services by focusing on the competitive force in the market, proactively
following the development under the consumption upgrading era, through which the Company realized a
sharp improvement both in results and quality: revenue from the household appliances business in the
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PRC during January to June 2017 increased by 28%, the increase of average prices exceeded 10%, and
the channel turnaround efficiency improved 15% compared with the same period of last year.
During the reporting period, the Company strengthened and expanded the competitive strength of
the market system by the following measures.
1. Deepening network layout, promoting a full set of real scene sales mode. ①
Comprehensively changing the comprehensive store system and innovating and upgrading the specialty
store system to realize meticulous planning and management of the network. A. Copying the mode of
comprehensive stores like V58, V140, etc. to ordinary comprehensive stores to realize the breakthrough
from one to more stores and to propel the operation of Haier Appliance Park in that channel; B.
innovating and upgrading the specialty operation system, planning the network layout based on users‘
life scenes; releasing the new brand position of ―Haier specialty store, a warm neighbor‘ near the user‖,
to provide the most professional household appliance solutions and services and to penetrate into the life
of the community; conducting standardized network development and operating management to
specialty stores of single products such as kitchenware, sanitary ware and air-conditioners. C. putting
into operation a full set of real scene sales mode in stores, to accomplish ―from sales of products to full
set of products, full set of design, full set of purchase and full set of services based on the household
appliance solution customization‖, ―from sales of products to experiential marketing‖, so as to gain trust
by experience and attract users with services.
② The e-commerce channel improved its market reputation by increasing medium and high-end
products layout, strengthening the formation of the brand internet image, increasing traffic entrances by
opening an ecological channel and realizing multi-mode operation, so as to maintain rapid development.
Revenue for the first half year increased by 70%. During the event held on 18 June, medium and
high-end products of the Company online accounted for 55% and the average price rose by 14%. Retail
sales of Haier on Tmall on 18th of June amounted to RMB375 million, accounting for 17.27% of the
share.
③ The community economic ecological platform of ―Shunguang micro-store, online store, offline
store‖ develops rapidly, which accelerated the proceeding of online-offline (O+O) transformation based
on trust. As of the end of June, Shunguang had 450,000 micro-store owners, more than 16,000
associations, and realized the initial connection between online stores (Haier mall), offline stores (13,000
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Haier stores) and micro-store (450,000 Shunguang micro-store owners). Sales of the Shunguang
platform during January to June 2017 exceeded RMB2.1 billion, more than the whole year of 2016.
2. Apply smart cloud stores, Yilihuo, Jushanghui and other internet tools to accomplish the
digital transformation for staff, products and fields, improving the operating efficiency.
① Smart cloud stores broke the traditional store-opening mode, lowering the establishing cost and
operating cost; this allows to display the full advantage of the Company‘s products through in-scene and
precise marketing under the new retail method; the combination of information digitalization and
training videos makes the latest information of products reach the terminal store in a timely and accurate
way. ② Yilihuo eliminated the information breakpoint between enterprises and customers in towns and
enables the information of products to reach customers and users in towns at the quickest speed and the
lowest cost, thus accurately capturing the requirement of users. ③ Jushanghui platform provides order
forecasting from preparing statements to automatic generation by the system, with the accuracy of order
forecasting improved by 28%.
3. Casarte pushed forward the construction of brand, marketing and channel, and entered
into the rapid development period; revenue for the first half of the year increased by 46%,
becoming the leader in the high-end market.
① By launching the brand promotion strategy of ―Casarte Life‖ and strengthening the recognition
of target groups to the Casarte brand, the recommendation conversion rate of Casarte brand
reached 73%; ② Casarte focused on accurate marketing and conducted ―Chuangyi in China
(创艺中国行)‖, ―Chuangyi Life Show (创艺生活展)‖ and ―Yishu Home (艺墅之家)‖ Casarte
experience activities; established ―520 Love Wife Day (520 爱妻日)‖ for Casarte; ③ focusing
on the full network and exploring new channels: new users of the network in the first half of
the year exceeded 800 families; entering into home building materials channel and capturing
front-end market for home decoration; sparing no efforts in the construction of network in
tier-three and tier-four markets, the growth of market revenue in this market exceeded 70%.
Maintaining advantage in the share of high-end market: the share of Casarte refrigerators over
RMB10,000 in the first half of the year was 30.0%, up by 9.5 percentage points, representing an increase
of 46.3%; Casarte washing machines of RMB8,000-10,000 accounted for 40.4%, up by 16.2 percentage
points; the market share of Casarte air-conditioners over RMB20,000 reached 87.3%.
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(III) Overseas market: collaboration of globalization, comprehensive development of business.
Revenue from overseas markets reached RMB35.083 billion in the first half of 2017, an increase by
150.43% on a year-on-year basis, of which self-owned brands accounted for nearly 100%. Original
overseas business (excluding GEA) achieved revenue of RMB12.58 billion, significantly up by 19.7%:
of which revenue from South Asia region increased by 47%, revenue from Europe increased by 29%.
During the reporting period, the Company approved the following measures to facilitate the business
development of overseas markets:
1. Propel the creation of a global procurement, supply chain and R&D platform and
accelerate collaboration. ① continue the identification of collaboration opportunities for procurement
and project landing: new collaboration projects of procurement in 2017 were valued at US$85.20 million,
of which over 92% could be realized. The creation of a big data base for global materials entered the
execution stage, and global sharing for procurement data will be addressed, which will also facilitate
new collaboration opportunities. ② sharing the superior resources in global manufacturing, transferring
15 best practices in manufacturing, among which 7 were provided by GEA; based on the medium and
long term development, each business implemented the best strategic layout for the global supply chain,
completed the layout mode and evaluated standards. ③ establishing a sharing mechanism for global
intellectual property rights and the global COE (Center of Excellence) solution, allowing an equal
sharing system for global R&D information, to accomplish uniform import procedures and engineering
language of new products, and to implement collaboration across regions and improving R&D
efficiency.
2. GEA performs well, the consolidation effect exceeded expectations. In the first half of 2017,
GEA achieved revenue of RMB22.5 billion and net profit of RMB1.16 billion. During the year after the
transaction closing in June 2016, GEA successfully completed the first stage in the consolidation plan
with the improvement of operating efficiency, collaboration with Haier globally in respect of R&D,
global products platform, procurement and supply chain; during the reporting period, GEA focused on
the goal of being a leader in the market, propelled the innovation of leading products and the
implementation of high profit strategy through the adjustment of organization and mechanism, to lay a
solid foundation for the development of the next stage.
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3. Integrate global advantageous product resources and optimize the structure. ① Europe
market: through third-generation products of Italian refrigerators, including a 521 hinged door
refrigerator, T-door refrigerator and other high-end differentiated products, revenue from refrigerator
recorded an increase of 43%; the share of Haier refrigerators in the mid and high-end market with three
doors or above in Russia reached 25%, ranking No.1; wholly-new air-conditioner products of GEA
listed in Italy, targeted at the mid to high-end market. Sales of home air-conditioners in Italy for the first
half of the year increased by 24% on a year-on-year basis, and commercial air-conditioners increased by
44% on a year-on-year basis. ②Japan market: sales of mid and high-end washing machines for the first
half of the year increased by 98% on a year-on-year basis; ③ Southeast Asia market: the import of
glass hinged door refrigerators in the headquarter, and T-type four-door refrigerator, twin drum washing
machine, composite machine, self-cleaning air-conditioner and other mid and high-end products, quickly
improve the image of terminal brands and products structure.
4. Propelling the layout of local supply chain and efficiency improvement. ① The
manufacturing cost of Russian refrigerators was lowered by 20% compared with 2016 by the
improvement of efficiency and reduction of material consumption, and the gross profit margin improved
by increasing the proportion of local procurement, enhancement of skill and lowering of cost; in May
this year, 100,000 refrigerators made in Russia went offline. ② the project of Haier industrial park in
India proceeds smoothly and is expected to be put into operation by the end of the year. Categories of
products after reaching target output will include products from refrigerators to washing machines,
air-conditioners, and water heaters, and the overall output is expected to double. While meeting the
market demand from India, such products will be at the same time introduced into the markets of Middle
East, Africa, Russia, etc..
(IV) Logistic business continues its sound growth
Benefitting from the continuous improvement of online home appliances sales and the high quality
service capacity of Gooday Logistics, the e-commerce logistic segment maintained high-speed growth,
and revenue increased by 56%. Meanwhile, the e-commerce segment also proactively expanded into
large-size industries, such as health devices and entertainment equipment, while health devices
maintained a more than three-digit figure growth.
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Regarding logistics, the e-commerce segment proactively explored and promoted a supply chain
integration solution, improved value-added services such as delivering accompanied with installation,
reverse logistic, in house maintenance, etc., so as to better serve customer needs, improve customers‘
attachment and strengthen operating efficiency.
By leveraging its advantage in the large-size home appliances area and supported by brand order
from Yihua Group, Gooday Logistics at the same time proactively expanded terminal network coverage,
with revenue from online household segment for the first half of the year increasing over 60%. Gooday
Logistics also constantly strengthened the transportation network and arranged intelligent and automatic
warehouses so as to erect a standard for the large-size product logistics industry. At present, the total
area of warehouses of the Group amounted to 3.57 million square meters, of which the area of
self-owned warehouses in aggregate was 1.05 million square meters and self-established warehouses
amounted to 30%.
(V) U+ focuses on intelligent overall scenario, win-win new ecology and provides the best
ecological experience
Focusing on U+ SmartLife 3.0 strategy around the themes of ―intelligence, scenario and new
ecology‖, the Company established a cloud of thing and cloud brain for the U+ SmartLife platform with
natural human-computer interaction and distributed scenario internet appliances to provide users with
the best experience. Users in the U+ platform reached 50 million and sales of internet appliances
amounted to 4.95 million, increased by 112%.
1. Intelligence: releasing a smart family IoT cloud of things solution, U+cloud chip, offering
standard and services output, assisting the transformation and upgrading of traditional enterprises; the
UHomeOS operating system-liteOS was released and first applied to air-conditioner; focusing on energy
saving and water saving of users, the Company established a data mode that can ―self-perceive habits
(习惯自感知)‖, ―self-generate energy-saving strategy (节能策略自生成)‖ and ―self-release control
strategy (控制策略自下发)‖ by remote technology as well as self-learning intelligent control technique.
As of the end of June, energy savings reached 260,000 KWh.
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2. Overall scene: increasing model coverage of internet appliances for the complete set of smart
household appliances and increasing the number of smart scenes, the Company is improving the
management process of the full life-cycle of smart household appliance products; strengthening the
control capacity in the U+APP scene, establishing an open U+engine for accessing a massive amount of
internet appliances. Making 180+ intelligent scenes to form multi-screen and scene interconnection.
3. New ecology: With a focus on the strategy for ecological platform, the Company is creating an
ecology of smart scenes, achieving sustainable and synergic appreciation of the ecological system,
promoting added value to the ecology of scenes. For example, kitchen food ecology will focus on trusted
food materials and healthy cooking, breaking the platform construction, and preliminarily establishing
the mode of ―one scene, one community, one system and one standard‖, with the weekly repurchase rate
of scenes exceeding 20% and monthly ecological revenue increasing 9 times. Smart washing ecology
focuses on laundry solutions, such as the establishment of internet of clothes ecological union platform
as well as community laundry.
(VI) Move forward the construction of COSMOPlat platform, accelerate the transformation
of intelligent manufacturing, and meeting the rapid growth of personalized customization
requirements.
During the reporting period, the Company proactively moved forward the transformation of its
internal supply chain: with 8 interconnected factories, the Company promoted the mode of
interconnected factory to 108 factories throughout the world, and enriched the interconnected
capabilities and ecological system covering the whole process.
The Company provides customization for home appliances by virtue of a community economy,
moving forward into the mother & baby market, and establishing cross-domain community scene
ecology. Creative Convergence, together with each industrial line and the Chinese mother & baby
community customization platform, built a ―Magic Mommy College (魔法妈咪学院)‖, and opened a
full set of customized home appliances products covering all categories including air, food, washing,
which drove the MTD (Mind To Deliver) of the Creative Convergence mode to make continuous
contributions. As the sub-platform for home appliance customization on Haier‘s COSMOPlat, ―Creative
Convergence‖ has developed into the largest home appliances customization platform in the industry.
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Propelling the development of a new industry of smart manufacturing: the Company acquired
Fisher & Paykel Production Machinery Limited (斐雪派克生产设备有限公司) (the ―PML‖), and
consolidated the resources of both parties and established a business platform for intelligent equipment;
applied COSMOline, developed by PML, into COSMOPlat to drive its development and promotion.
Smart manufacturing solutions of the Company have been adopted by 7 top industries, such as machine
and electronics, etc..
II. Development Plan for the Second Half of the Year
(I) Industry Outlook
In the long run, with the diversification of the consumption structure in the industry, the
differentiation of consumption requirements as well as the change of concept brought by the boom of
young consumer groups and middle class, the upgrading trend of consumption will be further
accelerated. In the short run, the de-stocking in the real estate in the tier three and tier four cities
generated profit for the industry. Meanwhile, the continuous high temperature facilitated the digestion of
stock in the air-conditioner channel. The significant increase of raw material price in the short term
increased enterprises‘ costs, while at the same time accelerated the elimination of the weak.
(II) Key Works for the Second Half of the Year
The Company will closely capture the upgrading trend and lead the consumption upgrading by the
innovation of products; continue strengthen the development of air-conditioner products and kitchen and
appliances products while at the same time maintain the leading advantages in washing and water
heating industry.
Domestic market: the Company will continue to promote the upgrading of channel management
mode by virtue of the internet, copied and promoted the scene specific and accurate marketing mode
under new retail modes; realize the unity of synergy and market throughout the whole process by
focusing on products size and the whole process; and realize the upgrading of scene interaction by the
continuous propelling of the 3UP scene channel and further improvement of brand image and terminal
experience. The Company will accelerate the expansion of the Casarte network in the second half of the
year to achieve the coverage over core stores and further facilitating the transformation of Casarte in
high-end retail.
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Overseas market: by leverage the global multi-brand and triple layout, the Company will open and
consolidate global resources, and by focusing on differentiated products, improve the terminal
competitiveness; move forward the collaboration of global research and development, products and
supply chain, and improve performance.
Logistic business: Gooday Logistics will also continously strengthen the terminal services capacity,
continue making investments into the terminal core network construction. It is expected that 5,000 image
stores will be established in stages to conduct delivery, receipt, on-site impairment and other services, so
as to improve the terminal image and user attachment. Meanwhile, Gooday Logistics will constantly
improve customer experience through visual systems during the whole process and timely evaluation to
lead the last mile.
U+business: under the guidelines of the U+ smart homes 3.0 strategy, the Company further
upgraded U+ cloud brain, optimized natural interaction experience and improved the family scene and
knowledge storage of smart home. Constantly attracting third parties‘ hardware resources and ecological
resources through open platform and publicizing customized scenes, improving the overall smart home
whole scene interaction experience, to further improve U+ecology.
COSMOPlat platform: the Company conducted the digitization and product focus of the Haier
interconnected factory mode, and also consolidated Haier‘s existing intelligent equipment, intelligent
control, sophisticated mode, institution of industrial intelligence and other capacity to offer
comprehensive solutions and value-added services through the combination of software and hardware as
well as the mix of virtual and real factors for the transformation and upgrading of smart manufacturing.
Mass customization business focuses on user requirement, offering home appliances customization by
the community and achieving scene customization. The Company is also engaged in mother & baby and
other markets to further accomplish the co-development of community and contextualization.
(I) Analysis of principal business
1 Table of changes of selected items in financial statement
Unit and Currency: RMB
Items Corresponding
Current period Change (%)
period of last year
Operating revenue 77,575,749,980.10 48,786,606,924.87 59.01
Operating cost 54,154,905,833.39 34,675,732,074.42 56.18
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Taxes and surcharge 345,386,333.3 171,696,918.3 101.16
Sales expense 12,937,515,954.38 6,693,076,335.80 93.30
Administration expenses 4,623,708,396.51 3,543,082,531.68 30.50
Financial expenses 611,677,281.93 125,069,008.47 389.07
Net cash flows generating from 8,393,200,906.18 4,754,556,382.69 76.53
operating activities
Net cash flows generating from -2,379,700,543.68 -36,998,768,852.90 93.57
investing activities
Net cash flows generating from -383,733,536.99 29,440,960,074.11 -101.30
financing activities
Reason for the change in operating revenue: operating revenue increased by 59.01% as compared
with the same period of last year, which was mainly due to the growth of the original business of the
Company and the revenue of GEA contributed to the Company since the acquisition of GEA.
Reason for the change in operating expenses: operating expenses increased by 56.18% as compared
with the same period of last year, which was mainly due to increase of cost resulting from the growth of
sales and helped by the increase of scale after the acquisition of GEA.
Taxes and surcharge increased by 101.16% as compared with the same period of last year, which
was mainly due to the consolidation of all relevant taxes during the course of operating activities into the
accounting item of taxes and surcharge since 1 May 2016 according to the CAIKUAI No. [2016]22
Value Added Tax Accounting Treatment Regulations issued by the MOF.
Reason for the change in selling expenses: selling expenses increased by 93.3% as compared with
the corresponding period of last year, which was mainly attributable to the increase of revenue of the
Company and the inclusion of selling expenses of GEA (the corresponding period only included the
selling expenses of GEA during the period from 6 June to 30 June 2016).
Reason for the change in management expenses: management expenses increased by 30.5% as
compared with the corresponding period of last year, which was mainly due to the inclusion of the
management expenses of GEA (the corresponding period only included the management expenses of
GEA during the period from 6 June to 30 June 2016).
Reason for the change in financial expenses: financial expenses increased by 389.07% as compared
with the corresponding period of last year, which was mainly attributable to the increase of the average
balance of borrowings for the period as compared with the corresponding period of last year.
Reason for the change in net cash flows from operating activities: net cash flows from operating
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activities increased by 76.53% as compared with the corresponding period of last year, which was
mainly due to the increase of revenue for the period and helped by the strengthening of management of
accounts receivables.
Reason for the change in net cash flows from investing activities: net cash flows from investing
activities decreased by 93.57% as compared with the corresponding period of last year, which was
mainly attributable to that the payment for the acquisition of GEA, which was settled in the
corresponding period of last year (for the current period: nil).
Reason for the change in net cash flows from financing activities: net cash flows from financing
activities decreased by 101.3% as compared with the corresponding period of last year, which was
mainly attributable to the debt financing for the acquisition of GEA in the corresponding period of last
year (for the current period: nil).
2 Others
(1) Detailed explanation on material changes in the composition of profit or resources of profit of
the Company
√Applicable □ Not Applicable
1. Loss from change in fair value decreased by 326.09% compared with the corresponding period
of last year, which was mainly attributable to the change in fair value of derivative financial instruments
such as future exchange.
2. Other income increased by 100% as compared with the corresponding period of last year, which
was mainly attributable to the implementation of the Accounting Standards for Business Enterprises No.
16 - Government grants (2017 Revision) at the time, as request by the MOF during the period.
3. Non-operating income decreased by 32.87% as compared with the corresponding period of last
year, which was mainly attributable to the changes of accounting methods in equity investment of Bank
of Qingdao in the corresponding period of last year, and the inclusion of the difference between the fair
value of the equity investment and the attributable fair value of net identifiable assets of the Bank of
Qingdao as determined according to the proportion of shareholding (for the current period: nil).
4. Non-operating expenses increased by 49.74% as compared with the corresponding period of last
year, which was mainly attributable to the increase of disposal of non-current assets for the period.
3. Principle operating activities by products
Unit and Currency: RMB0‘000
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Gross
Operating Operating
Gross profit
revenue cost
Operating Operating profit margin
By product increased/ increased/
revenue cost margin increased/
decreased decreased
(%) decreased
yoy (%) yoy (%)
yoy (%)
Air-conditioners 1,632,737 1,112,524 31.86 68.94 67.20 0.71
Refrigerators 2,274,300 1,541,866 32.20 48.49 51.06 -1.15
Kitchenware and
1,316,172 826,701 37.19 163.44 182.77 -4.29
sanitary ware
Washing machines 1,384,511 906,228 34.55 59.02 55.63 1.43
Equipment components 148,550 125,477 15.53 18.86 18.51 0.25
Channel integrated
services business and 967,993 896,303 7.41 14.37 13.22 0.94
others
(II) Explanation of non-operating business leading to significant changes in profit
□Applicable √Not Applicable
(III) Analysis of assets and liabilities
√Applicable □ Not Applicable
1. Assets and liabilities
Unit: RMB
Percentage
of change in
Percentage
Percentage amount
of amount at
of amount at from the
the end of
Amount as at the the end of the Amount as at the end of
Items the previous
end of the period period over end of last period previous
period over
total assets period to
total assets
(%) current
(%)
period
(%)
Financial assets at fair
value and its change
36,973,157.4 0.03 80,432,384.17 0.06 -54.03
consolidated in profit
or loss for the period
Short-term borrowing 11,985,795,621.88 8.58 18,165,531,879.15 13.84 -34.02
Financial liabilities at
70,573,461.47 0.05 2,340,213.20 0.00 2,915.69
fair value and its
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change included in
profit or loss for the
period
Interests payable 76,637,799.03 0.05 30,570,328.66 0.02 150.69
Dividend payable 1,893,922,420.51 0.27 148,690,489.01 0.11 1,173.73
Non-current
liabilities due within 1,700,963,280.46 1.22 2,966,808,509.55 2.26 -42.67
one year
Other non-current
50,769,391.88 0.04 582,785,069.86 0.44 -91.29
liabilities
Capital reserve 315,454,458.52 0.23 83,383,194.51 0.06 278.32
Other explanations
1. Financial assets measured at fair value and its change included in profit or loss for the period
decreased by 54.03% as compared with the beginning of the year, which was mainly due to the change
in fair value of derivative financial instruments such as forward exchange contracts for the period.
2. Short-term borrowings decreased by 34.02% as compared with the beginning of the year, which
was mainly due to the adjustment of the borrowing structure and certain short-term borrowings that were
turned into long-term borrowing by the Company.
3. Financial liabilities measured at fair value and its change included in profit or loss increased by
2915.69% as compared with the corresponding period of last year, which was mainly due to the change
in fair value of derivative financial instruments such as forward exchange contracts for the period.
4. Interests payable increased by 150.69% as compared with the beginning of the period, which was
mainly due to the increase of interest which has been provided but not paid.
5. Dividends payable increased by 1173.73% as compared with the beginning of the period, which
was mainly attributable to the increase of dividends which have been provided but not allocated to the
Company and subsidiaries.
6. Non-current liabilities due within one year decreased by 42.67% as compared with the beginning
of the period, which was mainly due to the conversion of convertible bonds issued in prior years by the
subsidiary of the Company during the period.
7. Other non-current liabilities decreased by 91.29% as compared with the beginning of the period,
which was mainly attributable to the change in fair value of forward exchange contracts held by the
Company for the period.
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8. Capital reserve increased by 278.32% as compared with the beginning of the period, which was
mainly attributable to the capital increases from minority shareholders of the subsidiary of the Company
for the period and the conversion of convertible bonds for the period.
2. Restrictions on major assets at the end of reporting period
□Applicable √Not Applicable
3. Other explanations
□Applicable √Not Applicable
(IV) Analysis on investment
1. Overall analysis on external equity investment
√Applicable □ Not Applicable
During the reporting period, the external equity investment of the Company amounted to RMB856
million.
Percentage
of the Amount of Investment
Major
Name of equity investment Amount
operating Remark
investees interest of (RMB 100 (RMB 100
activities
investees million) million)
(%)
Manufacturing
of automatic
For details, please refer to the
and customized
Announcement on the Transfer of
Fisher & intelligent
the 100% Equity of Fisher &
Paykel equipment and
Paykel Production Machinery
Production offering
100 Limited by Qingdao Haier Co., Ltd. 3.31
Machinery businesses such
and Connected Transaction
Limited as solutions for
disclosed on 21 June 2017 as well
(―PML‖) the
as relevant announcement of the
management
Board.
system of
factories
Qingdao Communication For details, please refer to the
Haier equipment, Announcement on the Transfer of
Multi-media home Certain Equity of Qingdao Haier
20.20 5.25
Co., Ltd. (青 appliances, Multi-media Co., Ltd. (青岛海尔多
岛海尔多媒 R&D, sales, 媒体有限公司) by Qingdao Haier
体有限公司) etc. Co., Ltd. and Capital Increase and
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Qingdao Haier Co., Ltd
Connected Transaction as well as
relevant announcement of the
Board.
(1) Significant equity investment
√Applicable □ Not Applicable
Please refer to the content in ―1.Overall analysis on external equity investment‖ as set out above.
(2) Significant non-equity investment
□Applicable √Not Applicable
(3) Financial assets measured at fair value
√Applicable □ Not Applicable
Unit: RMB
Current
Investment Changes in
purchase /
Initial cost income fair value
Abbreviation of Sources of sale during
of during the during
security funds the
investment reporting the reporting
reporting
period period
period
Bank of
Communications 1,803,769.50 Own funds 531,278.28
(601328)
BAILIAN (600827) 154,770.00 Own funds 74,443.32
Eastsoft (300183) 18,713,562.84 Own funds -3,314,348.64
Others 2,358,797.02 Own funds -38,042.01
Forward foreign
13,850,304.84 412,063,845.15
exchange contract (Note)
Total 23,030,899.36 13,850,304.84 409,317,176.10
Note: As of 30 June 2017, the aggregate balance of foreign exchange derivative transactions
amounted to approximately US$2.8 billion.
(V) Material Assets and Equity Disposal
□Applicable √Not Applicable
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Qingdao Haier Co., Ltd
(VI) Analysis on Major Controlling Companies
√Applicable □ Not Applicable
Unit: RMB0‘000
Scope of Total Net
Name of company Net Profit
business assets assets
Production and
Haier Electronics Group Co., Ltd. sale of home 3,619,712 2,095,786 145,034
appliances
Qingdao Haier Air-Conditioner
Air conditioner
Electronics Co., Ltd. (青岛海尔空 519,606 335,402 27,777
products
调电子有限公司)
Haier US APPLIANCE Holding
4,648,790 1,362,467 91,504
SOLUTIONS, INC. company
Note: The financial data of Haier Electronics Group Co., Ltd. (a Hong Kong listed company, stock
abbreviation: Haier Electronics, stock code: 1169.HK) is determined in accordance with the accounting
standards in the PRC and the accounting policies of the Company.
(VII) Information on the Main Structure Controlled by the Company
□Applicable √Not Applicable
II. Other disclosures
(I) Warning and explanation for any prediction of accumulated net loss from the beginning of the
year to the end of the next reporting period or substantial change in accumulated net profit as
compared to the same period last year
□Applicable √Not Applicable
(II) Potential risks
√Applicable □ Not Applicable
1. Risk of soft demand due to a slowdown in macro-economic growth. As white home appliance
products fall into the category of durable consumer electronic products, the income level and expectation
on future income growth will have an effect on the purchase of white goods. In the event of a slowdown
in the macro economic growth, which will decrease the purchasing power of consumers, growth of the
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Qingdao Haier Co., Ltd
industry will be adversely affected. In addition, uncertainties from the real estate market will have some
negative effect on market demand, which will in turn have some indirect effect on demand for home
appliance products.
2. Price war risk caused by intensified industry competition. In a long run, the market concentration
of white home appliance industry continues to rise, but in short-term, due to the imbalance between
supply and demand caused by high capacity generated from industry expansion and decreasing of
industry demand in recent years, industry inventories rise. A price war can become a strategy of
competitors to increase market share in the short term.
3. Risk of rise in cost. Bulk raw materials such as copper, aluminum, steel plate, oil-related plastic
particles and foam materials account for a large proportion of the cost of white goods production. Given
the noticeable upward trend of prices of bulk raw material in 2017 up to now, the Company may be
exposed to more cost pressure if the price of raw materials continues to rise in the future. The freight
cost constitutes a larger proportion of the selling expenses and freight cost has risen due to restrictions
on ―three excess‖ by the government in the logistics industry.
4. Operating risk in overseas market. The Company has set up a dozen production bases, research
and development centers and marketing centers in a number of countries around the world, leading to
the continuous rise of the overseas business. As the overseas market is subject to the impact of local
political and economic situations, including legal and sovereign system, significant changes of such
factors would pose risks to the Company‘s local operation overseas.
5. Risk of fluctuation in foreign currency exchange rate. Significant fluctuations in exchange rates
may have an adverse impact on the Company's exports and may also result in an exchange loss and an
increase in financial costs.
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SECTION V SIGNIFICANT EVENTS
I. Introduction to the General Meeting of shareholders
Index for details of websites designated for Date of
Meeting Date
publishing resolutions disclosure
For details, please refer to the Announcement
on Resolutions Passed at the 2016 Annual
2016 Annual
General Meeting of Qingdao Haier Co., Ltd.
General Meeting of 28 June 201
(L2017-023) published by the Company on 29 June 2017
Qingdao Haier Co.,
the website of Shanghai Stock Exchange
Ltd
(www.sse.com.cn) and the four major
securities newspapers
Explanation of Shareholders‘ general meeting
√Applicable □Not Applicable
The 2016 Annual General Meeting of the Company (the ―2016 AGM‖) was held by way of on-site
voting and network voting by poll at Room A108, Haier University, Haier Information Park, No.1 Haier
Road, Qingdao, the PRC in the afternoon on 28 June 2017. The Company‘s share capital in aggregate
amounted to 6,097,630,727 shares. 171 shareholders and proxies attended the meeting, holding a total of
3,696,722,055 shares, representing 60.63% of the total number of shares of the Company with voting
rights. The Directors, supervisors and senior management of the Company as well as the lawyers
engaged by the Company also attended the meeting. The 2016 AGM was convened by the Board of the
Company. Vice Chairman Ms. Tan Lixia, presided over the 2016 AGM. The Company had 9 Directors,
of whom 4 Director attended the 2016 AGM (Directors Liang Haishan, Zhou Hongbo, Peng Jianfeng,
Wu Cheng, Liu Haifeng David, were unable to attend the 2016 AGM due to personal engagements); the
Company had 3 supervisors, all of whom attended the 2016 AGM. The secretary to the Board of the
Company attended the 2016 AGM and other members of senior management of the Company were
invited to attend the 2016 AGM.
Ⅱ. Proposal of Profit Distribution or Capitalisation of Capital Reserve
(I) Proposal for Interim Profit Distribution and proposal for Capitalisation of Capital Reserve
Whether distributed or converted No
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III. Performance on Undertakings
(I) The undertakings made by the ultimate controller, shareholders, related parties, purchasers and the Company and others during or up to the
reporting period
√Applicable □Not applicable
Whether
it is
Whether there
performed
Time and is a
Background Type Content in a
term deadline for
timely
performance
and strict
way
During the period from September 2006 to May 2007, the Company issued shares to
Haier Group Corporation (―Haier Group‖) to purchase the controlling equity in its four
subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔
空调电子有限公司), Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有
限公司） Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司), Guizhou
Eliminate
Haier Electronics Co., Ltd. (贵州海尔电器有限公司). With regard to the land and
Undertaking the right
property required in the operation of Qingdao Haier Air-Conditioner Electronics Co.,
related to defects in Haier Group September
Ltd. (青岛海尔空调电子有限公司) , Hefei Haier Air-conditioning Co., Limited (合肥 YES YES
significant land Corporation 2006, long
海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限
reorganization property term
公 司 ) (the ―Covenantees‖), Haier Group made an undertaking (the ―2006
and etc.
Undertaking‖). According to the content of 2006 Undertaking and current condition of
each Covenantee, Haier Group will constantly assure that Covenantees will lease the
land and property owned by Haier Group for free. Haier Group will make
compensation in the event that the Covenantees suffer loss due to the unavailability of
such land and property.
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Qingdao Haier Co., Ltd
Haier Group Corporation undertakes that it will assure Qingdao Haier and
its subsidiaries of the constant, stable and unobstructed use of the leased
property. In the event that Qingdao Haier or any of its subsidiaries suffer
any economic loss due to the fact that leased property has no relevant
ownership certificate, Haier Group Corporation will make compensation
to impaired party in a timely and sufficient way and take all reasonable
and practicable measures to support the impaired party to recover to
normal operation before the occurrence of loss. Upon the expiration of
relevant leasing period, Haier Group Corporation will grant or take
practicable measures to assure Qingdao Haier and its subsidiaries of
priority to continue to lease the property at a price not higher than the rent
Eliminate
in comparable market at that time. Haier Group Corporation will assure
the right
Undertaking Qingdao Haier and its subsidiaries of the constant, stable, free and
defects in Haier Group December
related to unobstructed use of self-built property and land of the Group. In the event YES YES
land Corporation 2013, long
refinancing that Qingdao Haier or any of its subsidiaries fails to continue to use
property term
self-built property according to its own will or in original way due to the
and ect
fact that self-built property has no relevant ownership certificate, Haier
Group Corporation will take all reasonable and practicable measures to
eliminate obstruction and impact, or will support Qingdao Haier or its
affected subsidiary to obtain alternative property as soon as possible, if
Haier Group Corporation anticipates it is unable to cope with or eliminate
the external obstruction and impact with its reasonable effort. For details,
please refer to the Announcement of Qingdao Haier Co., Ltd. on the
Formation, Current Situation of the Defective Property, the Influence on
Operation of Issuer Caused by Uncertainty of Ownership, Solution for the
Defect and Guarantee Measures (L 2014-005) published by the Company
on the four major securities newspapers and the website of Shanghai
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Stock Exchange on 29 March 2014.
The Company undertakes that it will eliminate the property defects of the
Company and main subsidiaries within five years with reasonable
Eliminate business effort since 24 December 2013, so as to achieve the legality and
the right compliance of the Company and main subsidiaries in terms of land and 24
Qingdao
defects in property. For details, please refer to the Announcement of Qingdao Haier December
Haier Co., YES YES
land Co., Ltd. on the Formation, Current Situation of the Defective Property, 2013, five
Ltd.
property the Influence on Operation of Issuer Caused by Uncertainty of Ownership, years
and etc. Solution for the Defect and Guarantee Measures (L 2014-005) published
by the Company on the four major securities newspapers and the website
of Shanghai Stock Exchange on 29 March 2014.
Undertaking With regard to its Share Option Incentive Scheme, the Company has
related to the Qingdao undertaken not to provide loan or any other kind of financial support to 11 April
Share Option Other Haier Co., incentive object in exercising option under the Share Option Incentive 2014, long YES YES
Incentive Ltd. Scheme or purchase of restricted shares, including providing guarantee for term
Scheme its loan.
Inject the assets of Fisher & Paykel to the Company or dispose such assets
through other ways according to the requirements of the domestic
supervision before June 2020. For more details, please refer to the May
Asset Haier Group
Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding 2015-June YES YES
injection Corporation
Commitment (L 2015-015) published on the four major securities
Other
newspapers and the website of Shanghai Stock Exchange on 26 May
undertakings
2015.
Inject the assets of Haier Photoelectric to the Company or dispose such
December
Asset Haier Group assets through other ways according to the requirements of the domestic
2015-June YES YES
injection Corporation supervision before June 2020. For more details, please refer to the
Announcement of Qingdao Haier Co., Ltd. on the Changes of Funding
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Commitment of Haier Group Corporation (L 2015-063) published on the
four major securities newspapers and the website of Shanghai Stock
Exchange on 23 December 2015.
In December 2015 and January 2016, the meeting of the Board of
Directors and general meeting of the shareholders considered and
approved the matters in relation to the acquisition of minority equity
interest of Mitsubishi Heavy Industries Haier and Carrier Refrigeration
Profit Equipment held by Haier Group. The Company signed the Profit
forecast Compensation Agreement with Haier Group to forecast the profits December
and Haier Group achieved by the aforementioned two companies in 2015 - 2018. If the 2015-
YES YES
compensa Corporation profits are not reached during the commitment period, the difference part December
tion will be made up to the Company by Haier Group in cash. For more
details, please refer to the Announcement of Qingdao Haier Co., Ltd. on
the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier
Group Corporation and Related-party Transaction (L 2015-062) published
on the four major securities newspapers and the website of Shanghai
Stock Exchange on 23 December 2015
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IV. Appointment and Dismissal of Accounting Firm
Information on Appointment and Dismissal of Accounting Firm
√Applicable □Not Applicable
During the reporting period, the Company considered and approved the resolution on the
re-appointment of accounting firm of the 2016 annual general meeting: in order to ensure the smooth
implementation of the financial and internal auditing and the continuity of the auditing work in 2017, the
Company re-appointed Shandong Hexin Certified Public Accountants (LLP) as the audit institution of
the financial report and internal control of 2017, and the audit fees amounted to RMB9.60 million (of
which, financial report of RMB7.15 million, internal report of RMB2.45 million).
Explanation of change of accounting firm during the auditing period
□ Applicable √Not Applicable
Description of the Company on the ―non-standard audit report‖ issued by the accounting firm
□ Applicable √Not Applicable
Description of the Company on the ―non-standard audit report‖ issued by the accounting firm in respect
of the financial report in the annual report last year
□ Applicable √Not Applicable
V. Matters relating to bankruptcy and restructuring
□ Applicable √Not Applicable
VI. Material litigation and arbitration matters
□Material litigation and arbitration matters during the reporting period
√ No material litigation and arbitration matters in the reporting period
VII. Penalties to the Listed Company and its Directors, Supervisors, Senior Management,
Controlling Shareholders, Ultimate Controller, Acquirer and the Status of Rectification
□ Applicable √Not Applicable
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VIII. Explanation of the integrity status of the Company and its controlling shareholders and
actual controllers during the reporting period
□ Applicable √Not Applicable
XI. The Company’s equity incentive plan, employee shareholding plan or other employee
incentive measures and its influence
(I) Matters disclosed in temporary announcement and without any subsequent progress or
change
√Applicable □ Not Applicable
Summary Index for details
Cancelation of Exercise/Unlocking of Equity under
Phase IV Share Option Incentive Scheme: On 28 For details, please refer to the Announcement
April 2017, the 5th meeting of the 9th session of on Arrangement on Cancelation of
Board of Directors of the Company reviewed and Exercise/Unlocking of Equity under Phase IV
approved the Resolution on Cancelation of Share Option Incentive Scheme of Qingdao
Exercise/Unlocking of Retained Equity under Phase Haier Co., Ltd. (L 2017-014) and relevant
IV Share Option Incentive Scheme of Qingdao Haier announcement on the resolutions of the board
Co., Ltd.. According to which the exercise/unlocking disclosed on 29 April 2017, Announcement on
of the equity incentive based on the assessment for Cancellation of Repurchased Restricted Shares
the year 2016 was cancelled as the results for the year under the Share Option Incentive Scheme (L
2016 had not reached the condition for 2017-025) disclosed on 19 July 2017.
exercise/unlocking.
(Ⅱ) Share incentives not disclosed in temporary announcements or with subsequent progress
Share Option Incentive
□ Applicable √Not Applicable
Other explanations
□ Applicable √Not Applicable
Employee shareholding plan
√Applicable □ Not Applicable
On 27 February 2017, the Company considered and approved relevant resolutions such as the Phase
II Stock Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd.
(Draft) and its Summary at the 4th meeting of the 9th session of the Board of Directors. The 576 staff
who participated in the Stock Ownership Scheme are the directors (excluding independent directors),
supervisors, senior management of the Company and regular employees who serve at the Company and
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its subsidiaries and sign employment contracts with the Company or its subsidiaries and receive
remuneration from them, together holding RMB266.10 million in the fund. On 29 March 2017, the
Company disclosed the Announcement on the Completion of Share Purchase by the Phase II Stock
Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd. (《青島海
爾股份有限公司核心員工持股计划之第二期持股计划完成股票购买的公告》), and the Employees
Stock Ownership Scheme has been entrusted to Industrial Assets Management Co., Ltd.( 兴证证券资产
管理有限公司), who will establish a directional asset management plan for the Phase II Stock
Ownership Scheme of Core Employees Stock Ownership Scheme of Qingdao Haier Co., Ltd. (―Assets
Management Plan‖) for the management. As of 28 March 2017, the Assets Management Plan has
purchased an aggregate of 22,820,787.00 shares of the Company, representing 0.37% of the total share
capital of the Company, from the secondary market at an average trading price of approximately
RMB11.43 per share with a trading volume of RMB260,768,338.35. The Phase II Stock Ownership
Scheme of Core Employees Stock Ownership Scheme has completed the purchase of shares of the
Company. Those shares purchased aforesaid will be locked in accordance with requirement, and the
locking period will be 12 months from the date of the disclosure of this announcement, being 29 March
2017 to 28 March 2018.
Other incentives
□ Applicable √Not Applicable
X. Significant Related-Party Transactions
(I) Related-Party Transaction from Routine Operation
1. Matter disclosed in temporary announcement and with no subsequent progress or change
□ Applicable √Not Applicable
2. Matter disclosed in temporary announcement and with subsequent progress or change
√Applicable □ Not Applicable
The Company made a forecast on the related-party transaction matters of the Company for the year
of 2017 at the 5th meeting of the 9th session of Board Meeting held on 28 April 2017. For details, please
refer to the Announcement of Qingdao Haier Co., Ltd. regarding the Anticipation on the Daily
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Related-party Transactions for 2017 and relevant announcement on the resolutions of the Board
disclosed on 29 April 2017.
For the actual implementation of the Related-party transaction of January to June 2017, please refer
to ―Note12 – Related Parties and Related-party Transactions‖ under section X - Financial and
Accounting Report set out in this regular report.
3. Matter not disclosed in temporary announcement
□ Applicable √Not Applicable
(Ⅱ) Related-party Transactions Regarding Acquisition or Disposal of Assets or Equity
1. Matters disclosed in temporary announcement without any subsequent progress or change
√Applicable □ Not Applicable
Summary Index for details
Acquisition of equity of PML: in order to further consolidate
and expand the Company‘s strengths in the intelligent
manufacturing area, facilitate the construction and
implementation of the digital platform of the
For details, please refer to the
COSMOPlat-intelligent manufacturing, the Company purchased
Announcement on the Transfer of the
the 100% equity of Fisher & Paykel Production Machinery
100% Equity of Fisher & Paykel
Limited (斐雪派克生产设备有限公司, ―PML‖) held by Fisher
Production Machinery Limited to
& Paykel Appliances Limited ( 斐 雪 派 克 电 器 有 限 公 司 ,
Qingdao Haier Co., Ltd. and
―Fisher & Paykel‖), an overseas subsidiary of Haier Group
Connected Transaction disclosed on
Corporation, by way of paying cash through overseas
21 June 2017 (L 2017-022).
subsidiary. The overseas subsidiary of the Company shall pay
US$48.615481 million (equivalent to RMB330.6825 million) to
Fisher & Paykel, and the cash consideration will be transferred
to PML.
Acquisition of equity of multi-media company: in order to
For details, please refer to the
further facilitate the implementation of Haier U+SmartLife
Announcement on the Transfer of
strategy, arrange the construction of Haier smart home ecology
Certain Equity of Qingdao Haier
and further control the entry of the living room with TV as the
Multi-media Co., Ltd. (青岛海尔多
carrier, the Company transferred certain equity of Qingdao
媒 体 有 限公 司 ) to Qingdao Haier
Haier Multi-media Co., Ltd. (青岛海尔多媒体有限公司) and
Co., Ltd. and Capital Increase and
contributed part of its new registered capital, which amounted
Connected Transaction (L 2017-003).
to RMB525 million in total.
2. Matters disclosed in temporary announcement and with subsequent progress or change
□ Applicable √Not Applicable
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3. Matter not disclosed in temporary announcement
□ 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 disclosed in temporary announcement and without any subsequent progress or
change
□ Applicable √Not Applicable
2. Matters disclosed in temporary announcement and with subsequent progress or change
□ Applicable √Not Applicable
3. Matter not disclosed in temporary announcement
□ Applicable √Not Applicable
(IV) Amounts due to or from related parties
1. Matters disclosed in temporary announcement and without any subsequent progress or
change
□ Applicable √Not Applicable
2. Matters disclosed in temporary announcement and with subsequent progress or change
□ Applicable √Not Applicable
3. Matter not disclosed in temporary announcement
□ Applicable √Not Applicable
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(V) Other significant related-party transactions
□ Applicable √Not Applicable
(VI) Others
□ Applicable √Not Applicable
XI. Significant Contracts and their Execution
1 Trusteeship, contracting and leasing
√Applicable □ Not Applicable
(1) Trusteeship
□ Applicable √Not Applicable
There was no material custody of the Company during the reporting period. As at the date hereof,
the following matters related to entrusted assets as passed at relevant meetings (such as the general
meetings of the Company) are within the term thereof:
(1) According to the 2011 Haier Group's commitment to further support the development of
Qingdao Haier and resolve intra-industry competition to reduce related-party transactions, Haier Group
should strive to resolve the problems of intra-industry competition with the Company within five years.
However, based on the current market and financial factors of FPA, Haier Group was unable to transfer
the assets under custody to the Company before the completion of the aforementioned commitment. In
order to resolve the problems of intra-industry competition between Haier Group and the Company,
Haier Group intends to entrust the Company with the management and operation of assets under custody
and will pay RMB1 million trust fee to the Company each year during the period of custody.
(2) According to the Haier Group's commitment in 2011 to further support the development of
Qingdao Haier and resolve intra-industry competition to reduce related-party transactions, and given the
fact that the Company‘s purchase of the color TV business from Haier Group, Qingdao Haier
Photoelectric Co., Ltd. and its subsidiaries are still in the transformation and consolidation period and its
financial performance fails to reach the expectation of the Company. Therefore, Haier Group is unable
to complete the transfer before the above commitment period. Haier Group intends to entrust the
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Company with the operation and management of assets under custody and will pay RMB1 million
custodian fee to the Company each year during the period of custody.
(2) Contracting
□ Applicable √Not Applicable
(3) Leasing
□ Applicable √Not Applicable
2 Guarantee
√Applicable □ Not Applicable
Unit and Currency: RMB
External guarantees provided by the Company (excluding guarantees for subsidiaries)
Date
Relati
of
onship
occurr Wheth Wheth
betwee Wheth Overdu Wheth
ence Startin Expirat er the er
n the Amou Type er the e er there Rel
of the g date ion guarant related
Guara guaran Secure nt of of guarant amount is a atio
guaran of date of ee has party
ntor tor and d party guaran guara ee is of the counter nshi
tee guarant guarant been guarant
the tee ntee overdu guarant -guaran p
(date ee ee fulfille ee or
listed e ee tee
of d not
compa
agree
ny
ment)
Total amount of guarantee occurred during the
reporting period (excluding guarantees for
subsidiaries)
Total balance of guarantee at the end of the
reporting period (A) (excluding guarantees for
subsidiaries)
Guarantees provided by the Company for subsidiaries
Total amount of guarantees for subsidiaries 3,553,542.41
occurred during the reporting period
Total balance of guarantees for subsidiaries at 2,295,459.60
the end of the reporting period (B)
Total amount of guarantees provided by the Company (including guarantees for subsidiaries)
Total guarantee (A + B) 2,295,459.60
Ratio of total amount of guarantees to net 78.23
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assets of the Company (%)
Among which:
Amount of guarantees for shareholders, actual
controllers and their related parties (C)
Amount of debt guarantees provided directly
or indirectly for the secured party with 2,063,587.55
asset-liability ratio exceeding 70% (D)
The amount of total amount of guarantee in
828,304.90
excess of 50% of net assets (E)
Total amount of the above three guarantees 2,891,892.45
(C + D + E)
Explanation of possibly bearing related None
discharge duty for premature guarantees
1. In the year of 2016, the Company acquired the assets of
GEA at a total consideration of US$5.61 billion, which was
sourced from self-owned funds and loan for merger, of
which, the loan for merger in the amount of US$3.3 billion
was applied for by Haier US Appliance Solutions, Inc., a
wholly-owned subsidiary of the Company, to China
Development Bank Co., Ltd. The loan was fully secured by
the Company and Haier Group Corporation, and the amount
of which was equivalent to approximately RMB22.356
billion (note). The balance guaranteed amounted to
approximately RMB15.242 billion as at the end of the
reporting period. The provision of security had been
Explanation of guarantee status
reviewed and approved by the Board and the general meeting
of shareholders of the Company;
2. In June 2017, the resolution on the security provided to
subsidiaries in the year 2017 was passed on the 2016 Annual
General Meeting of the Company, according to which, the
Company had provided security in respect of the application
for comprehensive facility made by certain subsidiaries to
financial institutions. During the reporting period, the
accumulated amount of guarantee offered by the Company to
subsidiaries was approximately RMB18.81 billion. As at the
end of the reporting period, the balance guaranteed was
RMB7.713 billion.
Note: The foreign currency quoted in the above statement is calculated at the exchange rate quoted
on 30 June 2017. In US dollars, for example, on 30 June 2017, $ 1 = RMB6.77.
3 Other Major Contracts
□ Applicable √Not Applicable
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XII. Information on initiatives taken to help people out of poverty
√Applicable □ Not Applicable
1. Targeted measures in poverty alleviation plan
In accordance with the national plan for targeted measures in poverty alleviation and the
requirements set out in relevant documents, the Company places great emphasis on poverty alleviation,
and carries out initiatives of targeted measures in poverty alleviation within the scope as authorized by
the general meetings on related matters (such as donation). Over the years, the Company has been
devoted to education undertakings and making significant contributions, with a view to targeting the
weakest area of education and to blocking the transmission of poverty between generations through
focused efforts in raising the basic cultural quality in poverty and the skill levels of labor force from
poor families. As at the end of the reporting period, the Company and the Haier Group Corporation (its
actual controller) and its subsidiaries (referred to as the ―Haier Group‖) has built more than 200 hope
schools, covering 26 provinces, municipalities directly under the central government and autonomous
regions in China. These initiatives have effectively enhanced the basic educational capabilities in
poverty-stricken areas and improved the quality of education.
2. Summary of targeted measures in poverty alleviation during the reporting period
In the first half of 2017, the Company‘s expenditures on targeted measures in poverty alleviation
was approximately RMB11.18 million, which was mainly utilized in the education improvement,
physical and mental health development of adolescents and children. At the same time, as part of its
initiatives in response to the government and the performance of its social responsibilities, Haier Group
has also made investments in many aspects, such as poverty alleviation through agricultural
development, poverty alleviation through improvement of the health of farmers.
3. Table of statistics of initiatives of targeted measures in poverty alleviation of the Company
during the reporting period
Unit and Currency: RMB0‘000
Indicators Amount and the status
I. General information
Among which：1. Funds 1,118
II. Breakdown of the use of funds
1. Overcoming poverty through education 1,118
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1.1 Amount of investment for the purpose of 1,118
improving the resources of education in poverty-stricken
areas
4. Subsequent targeted measures in poverty alleviation plans
In the second half of 2017, the Company will make concerted efforts with Haier Group and
continue to implement the proposition of the documents issued by the central government in respect of
poverty alleviation, dedicate to improve the education in poverty-stricken areas and other initiatives, and
will perform our social responsibilities in a proactive manner.
XIII. Convertible corporation bonds
□ Applicable √Not Applicable
XIV. Statement on the matters related to the environment protection list of major pollution
emission organizations as announced by environment protection authorities and the subsidiaries of
such companies
□ Applicable √Not Applicable
XX. Other explanations on significant events
(I). Information, reason and effect of change in accounting policies, accounting estimates and
accounting methods as compared with the last accounting period
√Applicable □Not Applicable
The Chinese Ministry of Finance issued Accounting Standards for Business Enterprises No. 42 –
Non-Current Assets Held for Sale, Disposal Groups and Discontinued Operations in 2017 and it has
been performed since 28 May 2017, the non-current assets held for sale, disposal groups and
discontinuing operation which existed since implementation date are required to be dealt with
prospective application; and revised the Accounting Standards for Business Enterprises No. 16 –
Government Grants and it has been performed since 12 June 2017, the government grants which existed
since 1 January 2017 are required to be dealt with future method; the government grants which existed
during the period from 1 January 2017 to implementation date are required to be dealt with this revised
accounting standards.
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On 25 August 2017, the Company considered and approved the Resolution on the Change of
Accounting Policies by Qingdao Haier Co., Ltd. on the 7th meeting of the 9th session of the Board of
Directors, and considered aforesaid matters such as change of accounting policies.
(II) Information of material accounting error correction that need the retroactive restatement
during the reporting period, the correct amount, reason and its effect
□ Applicable √Not Applicable
(III) Others
□ Applicable √Not Applicable
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SECTION VI CHANGES IN ORDINARY SHARES AND
INFORMATION ABOUT SHAREHOLDERS
I. CHANGES IN SHARES
(I) Table of Changes in Shares
1. Table of Changes in Shares
During the Reporting period, there is no change in the aggregate amount of shares and the share
capital structure.
2. Statement on the changes in shares
□ Applicable √Not Applicable
3. Effects of changes in shares occurred during the period after the Reporting period to the
semi-annual report period on financial indicators such as earnings per share and net assets per
share (if any)
√Applicable □ Not Applicable
On 28 April 2017, the 5th meeting of 9th session of Board of Directors of the Company reviewed
and approved the Resolution on Cancellation of Exercise/Unlocking of Equity under Phase IV Share
Option Incentive Scheme of Qingdao Haier Co., Ltd. The Company intended to cancel the exercise of
the second period stock option in the portion of retained equity and to repurchase and cancel the
restricted shares of the second unlocking period due to the lack of exercise / unlocking conditions.
According to the resolution, the Company has repurchased a total of 228,000 restricted shares, which
were cancelled on 19 July 2017. After the cancellation, the share capital of the Company has been
changed from 6,097,630,727 to 6,097,402,727. For details, please refer to the Announcement of
Qingdao Haier Co., Ltd. on Cancellation of Repurchased Restricted Shares under the Share Option
Incentive Scheme (L 2017-025) disclosed by the Company on 19 July 2017.
During the Reporting period, the Company achieved net profit attributable to owners of the
Company of RMB 4,427,068,404.51, and equity attributable to owners of the Company of RMB
29,343,093,829.35. Calculated based on the share capital of 6,097,630,727 during the Reporting period,
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earnings per share was RMB0.726 and net assets per share is RMB4.812 in the Company‘s interim
report; Calculated based on the latest share capital of 6,097,402,727, earnings per share was RMB0.726
and net assets per share is RMB4.812 in the Company‘s interim report.
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 Applicable
II. Information on shareholders
(I) Total number of shareholders:
Total number of ordinary shareholders up to the end of 164,612
the reporting period
Total numbers of preferential shareholders with
restoration of voting rights as at the end of the reporting
period
(II) Table of top ten shareholders, top ten common shareholders (or the shareholders without
selling restrictions) by the end of the reporting period
Unit: share
Shareholdings of top ten shareholders
Increa Status of
sing/ shares
decre pledged
asing Number of Number of or frozen
Perce Nature
durin shares held shares held Num
Name of shareholder (full name) ntage of
g the at the end of with selling ber
(%) shareholder
report the period restrictions Statu
ing s
perio
d
Domestic
Haier Electric Appliances non-state-o
1,258,684,824 20.64 Nil
International Co., Ltd. wned legal
entity
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Domestic
non-state-o
Haier Group Corporation 1,072,610,764 17.59 Nil
wned legal
entity
Foreign
KKR HOME INVESTMENT Unkn
605,985,988 9.94 605,985,988 legal
S.A R.L. own
entity
Hong Kong Securities Unkn
403,226,905 6.61 Unknown
Clearing Co., Ltd. own
China Securities Finance Unkn
225,816,727 3.70 Unknown
Corporation Limited own
Qingdao Haier Venture & Domestic
Investment Information Co., non-state-o
172,252,560 2.82 Nil
Ltd.(青岛海尔创业投资咨询有 wned legal
限公司) entity
National social security fund, Unkn
100,588,871 1.65 Unknown
Portfolio 104 own
Unkn
GIC PRIVATE LIMITED 77,301,335 1.27 Unknown
own
Central Huijin Asset Unkn
69,539,900 1.14 Unknown
Management Ltd. own
Industrial and Commercial Bank
of China Limited－China
Southern Consumption Unkn
36,986,401 0.61 Unknown
Vitality Flexible Allocation own
Hybrid Initiated
Securities Investment Fund
Shareholdings of top ten shareholders without selling restrictions
Number of Class and number of shares
tradable shares
Name of shareholder
held without Class Number
selling restrictions
Haier Electric Appliances International Co., Ltd. 1,258,684,824 RMB ordinary 1,258,684,824
Haier Group Corporation 1,072,610,764 RMB ordinary 1,072,610,764
Hong Kong Securities Clearing Co., Ltd. 403,226,905 RMB ordinary 403,226,905
China Securities Finance Corporation Limited 225,816,727 RMB ordinary 225,816,727
Qingdao Haier Venture & Investment
Information Co., Ltd. (青岛海尔创业投资 172,252,560 RMB ordinary 172,252,560
咨询有限公司)
National social security fund, Portfolio 104 100,588,871 RMB ordinary 100,588,871
GIC PRIVATE LIMITED 77,301,335 RMB ordinary 77,301,335
Central Huijin Asset Management Ltd. 69,539,900 RMB ordinary 69,539,900
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Industrial and Commercial Bank of China
Limited－China Southern Consumption
36,986,401 RMB ordinary 36,986,401
Vitality Flexible Allocation Hybrid Initiated
Securities Investment Fund
National social security fund, Portfolio 103 36,027,875 RMB ordinary 36,027,875
(1) Haier Electric Appliances International Co., Ltd. is a
holding subsidiary of Haier Group Corporation. Haier Group
Corporation holds 51.20% of its equity. Qingdao Haier Venture
Related-parties or parties acting in concert among & Investment Information Co., Ltd.(青岛海尔创业投资咨询有
the aforesaid shareholders 限 公 司 ) is a party acting in concert with Haier Group
Corporation;
(2) The Company is not aware of the existence of any
connections of other shareholders.
Explanation of preferential shareholders with
restoration of voting rights and their N/A
shareholdings
Number of shares held by top ten shareholders with selling restrictions and the selling restrictions
√Applicable □ Not Applicable
Unit: share
Listing status of shares
with selling restrictions
Number of
Number of
shares held
Name of shareholder with additional Selling
No. with Eligible
selling restrictions shares restrictions
selling listing
eligible to
restrictions time
be
listed
KKR HOME INVESTMENT S.A Strategic
1 605,985,988 17 July 2017
R.L. investments
Restricted
Natural person shareholders Shares under
(Objects of reserved portion granted the Share
2 228,000 26 February 2017
under the Phase IV Share Option Option
Incentive Scheme) Incentive
Scheme
Related-parties or parties acting in concert Nil
among the aforesaid shareholders
Note:
As at the disclosable date of this report, the latest changes on the aforesaid shares being restricted
sold are as follows:
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(1) The aforesaid shares with selling restrictions held by KKR HOME INVESTMENT S.A R.L.
was deregulated and listed on 17 July 2017. For details, please refer to the Announcement of Qingdao
Haier Co., Ltd. on the Non - public Issuance of Shares with Selling Restrictions Listed disclosed by the
Company on 11 July 2017 (L 2017-024).
(2) The aforesaid shares with selling restrictions held by natural person shareholders was
repurchased and cancelled on 19 July 2017. For details, please refer to the Announcement of Qingdao
Haier Co., Ltd. on Cancellation of Repurchased Restricted Shares under the Share Option Incentive
Scheme disclosed by the Company on 19 July 2017 (L 2017-025).
(III) Strategic investors or general legal persons who became the top ten shareholders due to
placing of new shares
√Applicable □ Not Applicable
Name of strategic investor or general Starting date of Expiration date of
legal person agreed shareholding agreed shareholding
KKR HOME INVESTMENT S.A R.L. 17 July 2014 17 July 2017
According to the Share Purchase Agreement entered into
between the Company and KKR in 2013, the shares of the
Statement of the terms of the agreed Company subscribed by it shall not be transferred within 36
shareholding of the strategic investors or months after the date of issuance. The summary of the
ordinary legal persons involved in agreement sets out in the announcement regarding the
placing new shares Proposal of Qingdao Haier Co., Ltd. on Non-public Issuance
of A-share 《青岛海尔股份有限公司非公开发行 A 股股票
预案》) (L 2013-023) of the Company dated 8 October 2013.
III. Changes in controlling shareholder and the ultimate controller
□Applicable √Not Applicable
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SECTION VII RELEVANT INFORMATION OF PREFERRED
SHARES
□Applicable √ Not Applicable
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SECTION VIII DIRECTORS, SUPERVISORS, SENIOR
MANAGEMENT
I. Changes of Shareholding
(I) Changes of shareholding of current and retired directors, supervisors and senior
management during the reporting period
□Applicable √ Not Applicable
Note: The shareholding particulars of directors, supervisors and senior management of the
Company set out in the 2016 Annual Report. During the reporting period, there is no change on their
shareholdings.
(II) Incentive share option granted to directors, supervisors and senior management during the
reporting period
□Applicable √ Not Applicable
II. Changes in Directors, Supervisors and Senior Management of the Company
□Applicable √ Not Applicable
Explanation on the Changes in directors, supervisors and senior management of the Company
□Applicable √ Not Applicable
III. Other explanations
□Applicable √ Not Applicable
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SECTION IX RELEVANT INFORMATION ON CORPORATE BONDS
□Applicable √ Not Applicable
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SECTION X FINANCIAL REPORT
I. Auditors’ Report
□Applicable √ Not Applicable
II. Financial Statements
Consolidated Balance Sheet
30 June 2017
Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
Items Notes Closing balance Opening balance
Current Assets:
Monetary Capital VII.1 29,096,992,741.80 23,504,634,124.25
Clearing settlement funds
Placements with banks
Financial assets measured at fair VII.2
value and changes of which included in 36,973,157.40 80,432,384.17
current profit and loss
Derivative financial assets
Bills receivables VII.3 12,351,384,023.77 13,796,561,238.05
Accounts receivables VII.4 14,761,940,537.00 12,247,244,097.66
Prepayments VII.5 742,474,582.50 578,543,441.40
Premiums receivables
Reinsurance accounts receivables
Reinsurance contract reserves
receivables
Interests receivables VII.6 146,268,609.17 135,319,774.41
Dividends receivables 131,393,317.77 101,648,913.10
Other receivables VII.7 1,088,319,985.89 1,180,418,052.75
Financial assets purchased under
resale agreements
Inventories VII.8 17,226,363,075.10 15,237,942,420.85
Assets classified as held for sale
Non-current assets due within one
year
Other current assets VII.9 2,676,334,034.47 2,653,444,588.12
Total current assets 78,258,444,064.87 69,516,189,034.76
Non-current assets:
Loans and advances granted
Available-for-sale financial assets VII.10 1,522,072,563.73 1,555,878,717.05
Held-to-maturity investments
Long-term receivables
Long-term equity investments VII.11 11,409,603,852.96 11,057,819,628.14
Investment properties VII.12 33,001,507.84 34,600,393.37
Fixed assets VII.13 15,415,207,385.68 15,539,046,885.38
Construction in progress VII.14 1,985,822,855.83 1,769,875,050.35
Construction materials
Disposals of fixed assets VII.15 56,056,072.15 55,808,808.81
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Biological assets for production
Fuel assets
Intangible assets VII.16 7,111,319,956.95 7,242,420,479.44
Development expenses VII.17 947,314,222.94 913,283,796.32
Goodwill VII.18 20,527,542,588.58 21,004,123,145.39
Long-term deferred expenditures VII.19 85,829,524.72 115,773,592.78
Deferred income tax assets VII.20 1,639,919,231.91 1,592,009,404.59
Other non-current assets VII.21 781,723,639.04 858,461,388.86
Total non-current assets 61,515,413,402.33 61,739,101,290.48
Total assets 139,773,857,467.20 131,255,290,325.24
Current liabilities:
Short-term borrowings VII.22 11,985,795,621.88 18,165,531,879.15
Borrowings from central bank
Absorbing deposit and deposit in
inter-bank market
Placements from banks
Financial liabilities measured at fair
value and changes of which included in VII.23 70,573,461.47 2,340,213.20
current profit and loss
Derivative financial liabilities
Bills payable VII.24 15,508,579,823.30 12,404,889,760.05
Accounts payables VII.25 24,835,266,362.14 20,594,203,310.08
Advances from customers VII.26 4,149,761,184.38 5,734,732,855.06
Disposal of repurchased financial
assets
Handling charges and commissions
payable
Payables for staff‘s remuneration VII.27 2,140,301,086.17 2,404,380,458.59
Taxes payable VII.28 1,306,449,322.48 1,620,463,062.11
Interests payable VII.29 76,637,799.03 30,570,328.66
Dividends payable VII.30 1,893,922,420.51 148,690,489.01
Other payables VII.31 9,839,677,091.29 9,363,015,551.12
Reinsurance accounts payable
Deposits for insurance contracts
Consumer deposits for trading in
securities
Amounts due to issuer for securities
underwriting
Liabilities classified as held for sale
Non-current liabilities due within one VII.32 1,700,963,280.46 2,966,808,509.55
year
Other current liabilities 20,946,270.55 17,228,645.29
Total current liabilities 73,528,873,723.66 73,452,855,061.87
Non-current liabilities:
Long-term borrowings VII.33 19,690,132,020.64 15,530,801,311.80
Debentures payable
Including: preference shares
Perpetual bonds
Long-term payable VII.34 116,912,770.25 115,783,382.28
Long-term payables for staff‘s VII.35 892,376,822.29 1,206,510,917.33
remuneration
Special payable
Estimated liabilities VII.36 2,404,885,832.93 2,310,119,430.60
Deferred income VII.37 390,479,357.16 342,825,593.35
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Deferred income tax liabilities VII.20 163,130,628.52 133,243,146.68
Other non-current liabilities VII.38 50,769,391.88 582,785,069.86
Total non-current liabilities 23,708,686,823.67 20,222,068,851.90
Total liabilities 97,237,560,547.33 93,674,923,913.77
Owners’ equity
Share capital VII.39 6,097,630,727.00 6,097,630,727.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserve VII.40 315,454,458.52 83,383,194.51
Less: Treasury stock VII.41 1,041,960.00 1,041,960.00
Other comprehensive income VII.42 397,623,539.26 566,238,911.96
Special reserve
Surplus reserve VII.43 2,074,118,571.01 2,074,118,571.01
General risk provisions
Undistributed profits VII.44 20,459,308,493.56 17,544,395,965.35
Total equity attributable to owners of 29,343,093,829.35 26,364,725,409.83
the Company
Minority interests 13,193,203,090.52 11,215,641,001.64
Total owners‘ equity 42,536,296,919.87 37,580,366,411.47
Total liabilities and owners‘ 139,773,857,467.20 131,255,290,325.24
equities
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of
accounting department: Ying Ke (应珂)
Balance Sheet of the Company
30 June 2017
Prepared by: Qingdao Haier Co., Ltd.
Unit and Currency: RMB
Items Notes Closing balance Opening balance
Current Assets:
Monetary Capital 3,258,256,614.06 3,888,623,400.28
Financial assets measured at fair
value and changes of which included in
current profit and loss
Derivative financial assets
Notes receivables
Accounts receivables XVIII.1 287,277,541.16 265,438,220.39
Prepayments 10,000,000.00 10,000,000.00
Interests receivables 152,554,270.23 85,452,583.16
Dividends receivables 136,281,061.80 329,713,897.32
Other receivables XVIII.2 1,236,684,324.51 322,953,279.90
Inventories 62,181,463.12 69,799,065.47
Assets classified as held for sale
Non-current assets due within one
year
Other current assets 245,424,828.47 94,935,174.83
Total current assets 5,388,660,103.35 5,066,915,621.35
Non-current assets:
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Available-for-sale financial assets 5,884,728.28 5,478,235.84
Held-to-maturity investments
Long-term receivables 8,600,000,000.00 8,600,000,000.00
Long-term equity investments XVIII.3 22,451,771,746.91 22,342,078,877.07
Investment properties
Fixed assets 125,895,991.38 116,840,195.32
Construction in progress 8,959,429.64 22,611,979.50
Construction materials
Disposals of fixed assets
Biological assets for production
Fuel assets
Intangible assets 8,161,973.53 8,578,922.84
Development expenses
Goodwill
Long-term deferred expenditures
Deferred income tax assets 69,544,303.72 62,346,256.82
Other non-current assets
Total non-current assets 31,270,218,173.46 31,157,934,467.39
Total assets 36,658,878,276.81 36,224,850,088.74
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair
value and changes of which included in
current profit and loss
Derivative financial liabilities
Bills payable
Accounts payables 718,058,821.46 1,142,008,704.07
Payments received in advance 1,066,172,209.89 1,844,082,827.50
Payables for staff‘s remuneration 23,938,508.78 39,919,748.55
Taxes payable 5,134,436.46 57,218,867.86
Interests payable 233,737,254.44 117,705,327.18
1,512,155,876.30
Dividends payable
-
Other payables 22,615,213,152.52 21,170,550,089.69
Liabilities classified as held for sale
Non-current liabilities due within one
year
Other current liabilities 8,635,147.36 4,841,867.91
Total current liabilities 26,183,045,407.21 24,376,327,432.76
Non-current liabilities:
Long-term borrowings
Debentures payable
Including: preference shares
Perpetual bonds
Long-term payable 20,000,000.00 20,000,000.00
Long-term payables for staff‘s
remuneration
Special payables
Estimated liabilities
Deferred income 17,700,000.00 17,700,000.00
Deferred income tax liabilities 15,630,274.98 15,569,301.11
Other non-current liabilities
Total non-current liabilities 53,330,274.98 53,269,301.11
Total liabilities 26,236,375,682.19 24,429,596,733.87
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Owners’ equity:
Share capital 6,097,630,727.00 6,097,630,727.00
Other equity instruments
Including: preference shares
Perpetual bonds
Capital reserve 2,061,626,920.17 2,061,597,739.78
Less: Treasury stock 1,041,960.00 1,041,960.00
Other comprehensive income -24,485,101.06 -10,881,603.15
Special reserve
Surplus reserve 1,389,846,284.51 1,389,846,284.51
Undistributed profits 898,925,724.00 2,258,102,166.73
Total owners‘ equity 10,422,502,594.62 11,795,253,354.87
Total liabilities and owners‘ 36,658,878,276.81 36,224,850,088.74
equities
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting
department: Ying Ke (应珂)
Consolidated Income Statement
January-June 2017
Unit and Currency: RMB
Items Notes 2017
Ⅰ.Total operating revenue 77,575,749,980.10 48,786,606,924.87
Including: operating revenue VII.45 77,575,749,980.10 48,786,606,924.87
Interest income
Insurance premiums earned
Fee and commission income
Ⅱ. Total cost of operations 72,895,770,760.33 45,404,843,534.70
Including: operating cost VII.45 54,154,905,833.39 34,675,732,074.42
Interest expenses
Fee and commission expenses
Insurance withdrawal payment
Net payment from indemnity
Net provisions for insurance
contract
Insurance policy dividend paid
Reinsurance cost
Taxes and surcharge VII.46 345,386,333.30 171,696,918.27
Selling expenses VII.47 12,937,515,954.38 6,693,076,335.80
Administrative expenses VII.48 4,623,708,396.51 3,543,082,531.68
Financial expenses VII.49 611,677,281.93 125,069,008.47
Loss in assets impairment VII.50 222,576,960.82 196,186,666.06
Add: income from change in fair VII.51
412,063,845.15 -182,258,158.84
value (losses are represented by ―-‖)
Investment income (losses are VII.52
653,842,714.35 1,029,193,799.84
represented by ―-‖)
Including: investment income of
associates and joint ventures
Exchange gain (losses are
represented by ―-‖)
Other income VII.53 72,741,846.04
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Ⅲ. Operating profit (losses are
5,818,627,625.31 4,228,699,031.17
represented by ―-‖)
Add: non-operating income VII.54 309,004,068.62 460,324,873.14
Including: gain from disposal of
non-current assets
Less: non-operating expenses VII.55 84,579,023.15 56,483,320.12
Including: Loss from disposal of
non-current assets
Ⅳ. Total profit (total losses are
6,043,052,670.78 4,632,540,584.19
represented by ―-‖)
Less: income tax expense VII.56 758,022,158.23 660,698,381.98
Ⅴ. Net profit (net losses are represented
5,285,030,512.55 3,971,842,202.21
by ―-‖)
Net profit attributable to owners of
4,427,068,404.51 3,315,173,171.70
the Company
Profit or loss attributable to minority
857,962,108.04 656,669,030.51
shareholders
VI. Other comprehensive income, net of VII.57
-201,133,413.24 -376,650,095.76
tax
Other comprehensive income
attributable to owners of the Company, -168,615,372.70 -386,671,414.67
net of tax
(I) Other comprehensive income
that will not be reclassified subsequently
to profit or loss
1. Changes in net liabilities or
net assets arising from re-measurement
of defined benefit plans
2. Share of other comprehensive
income of investees that cannot be
reclassified to profit or loss under equity
method
(II) Other comprehensive income
to be reclassified subsequently to profit -168,615,372.70 -386,671,414.67
or loss
1. Share of other comprehensive
income of investees that will be
-122,040,176.25 -45,016,833.22
reclassified subsequently to profit or
loss under equity method
2. Gain or loss from change in
fair value of available-for-sale financial -2,347,023.98 -448,305,792.02
assets
3. Gain or loss arising from
reclassification from held-to-maturity
investments to available-for-sale
financial assets
4. Effective portion of gain or -5,767,610.62
loss arising from cash flow hedging
instruments
5. Exchange differences on -38,460,561.85 106,651,210.57
translation of financial statements
denominated in foreign currencies
6. Other
Other comprehensive income
-32,518,040.54 10,021,318.91
attributable to minority shareholders, net
69 / 20763202017 Interim Report
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of tax
Ⅶ. Total comprehensive income 5,083,897,099.31 3,595,192,106.45
Total comprehensive income
attributable to the shareholders of parent 4,258,453,031.81 2,928,501,757.03
company
Total comprehensive income
825,444,067.50 666,690,349.42
attributable to the minority shareholders
Ⅷ . Earnings per share:
(I) Basic earnings per share XX .1 0.726 0.543
(RMB/share)
(II) Diluted earnings per share XX .1 0.726 0.543
(RMB/share)
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting
department: Ying Ke (应珂)
Income Statement of the Parent Company
January-June 2017
Unit and Currency: RMB
Items Notes 2017
Ⅰ. Operating revenue XVIII.4 1,543,112,325.65 1,515,871,485.21
Less: Operation cost XVIII.4 1,125,099,741.07 1,063,974,867.43
Taxes and surcharge 9,124,152.47 6,445,399.44
Selling expenses 84,535,020.01 141,678,913.88
Administrative expenses 291,801,719.89 222,014,043.98
Financial expenses 45,432,212.79 -79,578.03
Loss in assets impairment 49,240,545.55 -1,894,656.67
Add: income from change in fair
value (losses are represented by ―-‖)
Investment income (losses are XVIII.5
151,893,767.73 143,464,637.96
represented by ―-‖)
Including: investment income of
associates and joint ventures
Other income
Ⅱ. Operating profit (losses are
89,772,701.60 227,197,133.14
represented by ―-‖)
Add: non-operating income 52,825,954.68 75,940,630.64
Including: gain from disposal of
non-current assets
Less: non-operating expenses 9,413.67 20,330.70
Including: loss from disposal of
non-current assets
Ⅲ. Total Profit (total losses are
142,589,242.61 303,117,433.08
represented by ―-‖)
Less: income tax expense -10,390,190.96 7,794,918.54
Ⅳ. Net Profit (net losses are represented
152,979,433.57 295,322,514.54
by ―-‖)
V. Other comprehensive income, net of
-13,603,497.91 -20,707,515.14
tax
(I) Other comprehensive income will
not be reclassified subsequently to profit
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or loss
1. Changes in net liabilities or net
assets arising from re-measurement of
defined benefit plans
2. Share of other comprehensive
income of investees that cannot be
reclassified to profit or loss under equity
method
(II) Other comprehensive income to
be reclassified subsequently to profit or -13,603,497.91 -20,707,515.14
loss
1. Share of other comprehensive
income of investees that will be
-13,949,016.48 -5,254,534.33
reclassified subsequently to profit or
loss under equity method
2. Gain or loss from change in fair
value of available-for-sale financial 345,518.57 -15,452,980.81
assets
3. Gain or loss arising from
reclassification from held-to-maturity
investments to available-for-sale
financial assets
4. Effective portion of gain or loss
arising from cash flow hedging
instruments
5. Exchange differences on
translation of financial statements
denominated in foreign
6. Other
VI. Total comprehensive income 139,375,935.66 274,614,999.40
VII. Earnings per share:
(I) Basic earnings per share (RMB/
share)
(II) Diluted earnings per share
(RMB/share)
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting
department: Ying Ke (应珂)
Consolidated Cash Flow Statement
January-June 2017
Unit and Currency: RMB
Items Notes 2017
Ⅰ. Cash flows from operating
activities:
Cash received from the sale of goods
74,797,892,675.82 49,016,704,968.11
and rendering of services
Net increase in consumer and
interbank deposits
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Net increase in borrowing from
PBOC
Net cash increase in borrowing from
other financial institutes
Cash received from premiums under
original insurance contract
Net cash received from reinsurance
business
Net increase in deposits of policy
holders and investment
Net increase from the disposal of
financial assets measured at fair value
and changes of which included in
current profit and loss
Cash paid for interest, bank charges
and commissions
Net increase in cash borrowed
Net increase in cash received from
repurchase operation
Refunds of taxes 483,646,574.65 324,681,172.08
Cash received from other related VII.58
548,371,812.58 441,762,351.22
operating activities
Sub-total of cash inflows from
75,829,911,063.05 49,783,148,491.41
operating activities
Cash paid on purchase of goods and
51,715,675,906.49 31,017,533,105.36
services
Net increase in loans and advances
Net increase in deposits in PBOC and
interbank
Cash paid for compensation payments
under original insurance contract
Cash paid for interest, bank charges
and commissions
Cash paid for insurance policy
dividend
Cash paid to and on behalf of
7,124,394,856.33 4,555,848,831.85
employees
Cash paid for all types of taxes 3,532,854,592.59 3,993,432,606.60
Cash paid to other operation related VII.59
5,063,784,801.46 5,461,777,564.91
activities
Sub-total of cash outflows from
67,436,710,156.87 45,028,592,108.72
operating activities
Net cash flows from operating VII.63
8,393,200,906.18 4,754,556,382.69
activities
Ⅱ. Cash flows from investing
activities:
Cash received from disposal of
13,500,000.00 537,931,064.15
investments
Cash received from return on
111,755,467.37 45,278,736.34
investments
Net cash received from the disposal
of fixed assets, intangible assets and 38,490,006.64 24,238,142.21
other long term assets
Net cash received from disposal of
5,916,992.24
subsidiaries and other operating
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entities
Cash received from other VII.60
75,828.87 3,693,847.50
investment related activities
Sub-total of cash inflows from
169,738,295.12 611,141,790.20
investing activities
Cash paid on purchase of fixed
assets, intangible assets and other long 1,682,795,106.07 1,020,054,184.72
term assets
Cash paid for investments 811,857,006.21 424,187,569.41
Net increase in secured loans
Net cash paid on acquisition of
54,786,726.52 36,161,700,507.07
subsidiaries and other operating entities
Cash paid on other investment VII.61
3,968,381.90
related activities
Sub-total of cash outflows from
2,549,438,838.80 37,609,910,643.10
investing activities
Net cash flows from investing
-2,379,700,543.68 -36,998,768,852.90
activities
Ⅲ. Cash flows from financing
activities:
Cash received from investment 403,277,599.87 16,900,063.70
Including: cash received by
subsidiaries from minority shareholders‘
investment
Cash received from borrowings 12,542,711,276.95 31,315,006,673.29
Cash received from issuing bonds
Cash received from other financing
related activities
Sub-total of cash inflows from
12,945,988,876.82 31,331,906,736.99
financing activities
Cash paid on repayment of
13,163,829,731.76 1,636,907,891.06
borrowings
Cash paid on distribution of
130,616,690.52 123,970,737.14
dividends, profits, or interest expenses
Including: dividend, profit paid to
minority shareholders by subsidiaries
Cash paid on other financing VII.62
35,275,991.53 130,068,034.68
activities
Sub-total of cash outflows from
13,329,722,413.81 1,890,946,662.88
financing activities
Net cash flows from financing
-383,733,536.99 29,440,960,074.11
activities
Ⅳ. Effect of fluctuations in exchange
-74,883,290.00 -25,818,334.76
rates on cash and cash equivalents
Ⅴ. Net increase in cash and cash
5,554,883,535.51 -2,829,070,730.86
equivalents
Add: balance of cash and cash VII.64
equivalents at the beginning of the 23,217,634,558.10 24,724,585,700.76
period
Ⅵ. Balance of cash and cash VII.64
28,772,518,093.61 21,895,514,969.90
equivalents at the end of the period
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting
department: Ying Ke (应珂)
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Cash Flow Statement of the Parent Company
January-June 2017
Unit and Currency: RMB
Items Notes 2017
Ⅰ. Cash flows from operating
activities:
Cash received from the sale of
139,120,441.24 47,535,983.95
goods and rendering of services
Refunds of taxes 11,312,294.31
Cash received from other related
50,673,786.01 5,668,199.83
operating activities
Sub-total of cash inflows from
189,794,227.25 64,516,478.09
operating activities
Cash paid on purchase of goods
817,622,677.26 175,369,512.35
and services
Cash paid to and on behalf of
460,813,118.91 163,991,849.56
employees
Cash paid for all types of taxes 95,721,014.98 90,115,531.59
Cash paid to other operation related
201,399,325.56 263,737,039.90
activities
Sub-total of cash outflows from
1,575,556,136.71 693,213,933.40
operating activities
Net cash flows from operating
-1,385,761,909.46 -628,697,455.31
activities
Ⅱ. Cash flows from investing
activities:
Cash received from disposal of
investments
Cash received from return on
279,713,897.32
investments
Net cash received from the disposal
of fixed assets, intangible assets and
other long term assets
Net cash received from disposal of
subsidiaries and other operating entities
Cash received from other
investment related activities
Sub-total of cash inflows from
279,713,897.32
investing activities
Cash paid on purchase of fixed
assets, intangible assets and other long 1,791,373.41 5,209,655.94
term assets
Cash paid for investments 220,659,237.50 15,066,468,700.00
Net cash paid on acquisition of
subsidiaries and other operating entities
Cash paid on other investment
related activities
Sub-total of cash outflows from
222,450,610.91 15,071,678,355.94
investing activities
Net cash flows from investing
57,263,286.41 -15,071,678,355.94
activities
Ⅲ. Cash flows from financing
activities:
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Cash received from investment
Cash received from borrowings
Cash received from issuing bonds
Cash received from other
698,132,975.25 16,570,240,137.80
financing related activities
Sub-total of cash inflows
698,132,975.25 16,570,240,137.80
from financing activities
Cash paid on repayment of
borrowings
Cash paid on distribution of
dividends, profits, or interest
expenses
Cash paid on other financing
112,647,024.84
activities
Sub-total of cash outflows
112,647,024.84
from financing activities
Net cash flows from
698,132,975.25 16,457,593,112.96
financing activities
Ⅳ. Effect of fluctuations in
exchange rates on cash and cash -1,138.42
equivalents
Ⅴ. Net increase in cash and cash
-630,366,786.22 757,217,301.71
equivalents
Add: balance of cash and cash
equivalents at the beginning of the 3,888,623,400.28 562,827,007.96
period
Ⅵ. Balance of cash and cash
equivalents at the end of the 3,258,256,614.06 1,320,044,309.67
period
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting
department: Ying Ke (应珂)
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Consolidated Statement of Changes in Equity
January-June 2017
Unit and Currency: RMB
Current period
Equity attributable to owners of the parent company
Other equity
Items Other General Minority Total owners‘
instruments Less: interests equity
Capital comprehensiv Special Surplus risk Undistributed
Share capital Preferen Perpet Treasury
reserve e reserve reserve provisio profits
ce ual Others stock
income ns
share bonds
Ⅰ. Closing 6,097,630,727.00 83,383,194.51
balance for the 1,041,960.00 566,238,911.96 2,074,118,571.01 17,544,395,965.35 11,215,641,001.64 37,580,366,411.47
previous year
Add: changes in
accounting
policies
Correction
of previous
errors
The
consolidation
of
enterprises
under
common
control
Others
Ⅱ. Opening 6,097,630,727.00 83,383,194.51
balance for the 1,041,960.00 566,238,911.96 2,074,118,571.01 17,544,395,965.35 11,215,641,001.64 37,580,366,411.47
current year
Ⅲ. 232,071,264.01
Increase/decrease
and change of -168,615,372.70 2,914,912,528.21 1,977,562,088.88 4,955,930,508.40
amount for the
current period
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(decrease is
represented by
―-‖)
(I) Total
comprehensive -168,615,372.70 4,427,068,404.51 825,444,067.50 5,083,897,099.31
income
(II) Capital injection 232,071,264
and reduction by .01 1,401,209,001.28 1,633,280,265.29
owners
1. Ordinary shares 231,991,591.90
invested by 1,401,208,371.06 1,633,199,962.96
shareholders
2. Capital injected
by holders of other
equity instruments
3. Amount of shares
payment credited to
owner‘s equity
4.Others 79,672.11 630.22 80,302.33
(III) Profit
-1,512,155,876.30 -249,090,979.90 -1,761,246,856.20
distribution
1. Appropriation to
surplus reserves
2.Provisions for
general risks
3.Distribution to
owners (or -1,512,155,876.30 -249,090,979.90 -1,761,246,856.20
shareholders)
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
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4.Others
(V) Special reserve
1. Appropriated for
the period
2. Utilized for the
period
(VI) Others
Ⅳ. Closing 6,097,630,727.00 315,454,458.52 397,623,539.26
balance for the 1,041,960.00 2,074,118,571.01 20,459,308,493.56 13,193,203,090.52 42,536,296,919.87
period
Previous period
Equity attributable to owners of the Company
Items Other equity Minority Total owners‘
Less: Other interests equity
instruments Special Surplus General risk Undistributed
Share capital Prefere Capital reserve Treasury comprehensive
Perpetual reserve reserve provisions profits
nce Others stock income
bonds
share
Ⅰ. Closing balance for 6,123,154,268.00 83,383,194. 77,604,54 633,183,460.0 2,026,085,301 13,905,774,481.
the previous year 9,708,285,895.93 32,402,262,056.88
51 4.70 3 .23
Add: changes in
accounting policies
Correction of
previous errors
The consolidation 500,000.00 38,858,499.40
of enterprises under 39,358,499.40
common control
Others
Ⅱ.Opening balance for 6,123,154,268.00 83,383,194. 77,604,54 633,183,460.0 2,026,585,301 13,944,632,981.
9,708,285,895.93 32,441,620,556.28
the current the period 51 4.70 3 .23
Ⅲ.Increase/decrease -18,050,341.00 -47,396,7 -386,671,414. -17,475,258.4 3,157,895,845.3
and change of amount 06.70 67 8
for the period 502,424,912.00 3,285,520,449.91
(decrease is represented
by ―-‖)
(I) Total comprehensive -386,671,414. 3,315,173,171.7
income 666,690,349.42 3,595,192,106.45
67
(II) Capital injection -18,050,341.00 -47,396,7 -17,475,258.4 -157,277,326.34
and reduction by owners 1,460,835.65 -143,945,383.47
06.70
1. Ordinary shares -18,050,341.00 -160,043, -14,203,978.0 -127,835,802.54 1,460,835.65 1,414,445.59
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invested by shareholders 731.54
2. Capital injected by
holders of other equity
instruments
3. Amount of shares
payment credited to
owner‘s equity
4．Others 112,647,0 -3,271,280.42 -29,441,523.80
-145,359,829.06
24.84
(III) Profit distribution -165,726,273.07 -165,726,273.07
1. Appropriation to
surplus reserves
2. Provisions for general
risks
3. Distribution to
owners (or -165,726,273.07 -165,726,273.07
shareholders)
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.Others
(V) Special reserve
1. Appropriated for the
period
2. Utilized for 2017
(VI) Others
Ⅳ. Closing balance for 6,105,103,927.00 83,383,194. 30,207,83 246,512,045.3 2,009,110,042 17,102,528,826.
10,210,710,807.93 35,727,141,006.19
the period 51 8.00 6 .75
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂)
Statement of Changes in Equity of the Parent Company
January-June 2017
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Unit and Currency: RMB
Current period
Other equity
instruments
Pre Speci
Per Less: Other
Items fer al Undistributed Total owners‘
Share capital pet Capital reserve Treasury comprehensive Surplus reserve
enc Other reser profits equity
ual stock income
e s ve
bo
sha
nds
re
Ⅰ. Closing balance for the 2,258,102,166.7
previous period 6,097,630,727.00 2,061,597,739.78 1,041,960.00 -10,881,603.15 1,389,846,284.51 11,795,253,354.87
Add: changes in accounting
policies
Correction of previous errors
Others 2,258,102,166.7
6,097,630,727.00 2,061,597,739.78 1,041,960.00 -10,881,603.15 1,389,846,284.51 11,795,253,354.87
Ⅱ.Opening balance for the -1,359,176,442.
current period 29,180.39 -13,603,497.91 -1,372,750,760.25
Ⅲ.Increase/decrease and change
of amount for the period -13,603,497.91 152,979,433.57 139,375,935.66
(decrease is represented by ―-‖)
(I) Total comprehensive income 29,180.39 29,180.39
(II) Capital injection and
reduction by owners
1. Ordinary shares invested by
shareholders
2. Capital injected by holders of
other equity instruments
3. Amount of shares payment
credited to owner‘s equity 29,180.39 29,180.39
4. Others -1,512,155,876.
-1,512,155,876.30
(III) Profit distribution
1. Appropriation to surplus -1,512,155,876. -1,512,155,876.30
reserves
2. Distribution to owners (or
shareholders)
3. Others
(IV) Internal transfer of owner‘s
equity
1. Transfer of capital reserves
into capital (or share capital)
2. Transfer of surplus reserves
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into capital (or share capital)
3. Surplus reserves used for
remedying loss
4.Others
(V) Special reserve
1. Appropriated for the period
2. Utilized for the period
(VI) Others
IV. Closing balance for the period 6,097,630,727.00 2,061,626,920.17 1,041,960.00 -24,485,101.06 1,389,846,284.51 898,925,724.00 10,422,502,594.62
Previous period
Other equity instruments
Less: Other
Items Special Undistributed Total owners‘
Share capital Prefer Capital reserve Treasury comprehensive Surplus reserve
Perpetual reserve profits equity
ence Others stock income
bonds
share
Ⅰ . Closing balance for
the previous period
6,123,154,268.00 2,229,511,649.19 77,604,544.70 18,842,022.25 1,332,647,187.44 3,036,008,007.25 12,662,558,589.43
Add: changes in
accounting policies
Correction of
previous errors
Others
-
Ⅱ . Opening balance for
the current period
6,123,154,268.00 2,229,511,649.19 77,604,544.70 18,842,022.25 1,332,647,187.44 3,036,008,007.25 12,662,558,589.43
Ⅲ. Increase/decrease and
change of amount for the
-18,050,341.00 -146,260,600.75 -47,396,706.70 -20,707,515.14 295,322,514.54 157,700,764.35
period (decrease is
represented by ―-‖)
(I) Total
comprehensive income
-20,707,515.14 295,322,514.54 274,614,999.40
(II) Capital injection and
reduction by owners
-18,050,341.00 -146,260,600.75 -47,396,706.70 -116,914,235.05
1. Ordinary shares
invested by shareholders
-18,050,341.00 -141,993,390.54 -47,396,706.70 -112,647,024.84
2. Capital injected by
holders of other equity
instruments
3. Amount of shares
payment credited to
owner‘s equity
4.Others -4,267,210.21 -4,267,210.21
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(III) Profit distribution
1. Appropriation to surplus
reserves
2.Distribution to owners
(or shareholders)
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.Others
(V) Special reserve
1. Appropriated for the
period
2. Utilized for the period
(VI) Others
Ⅳ . Closing balance for
6,105,103,927.00 2,083,251,048.44 30,207,838.00 -1,865,492.89 1,332,647,187.44 3,331,330,521.79 12,820,259,353.78
the period
Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂)
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III. General Information of the Company
1. Overview of the Company
√Applicable □Not Applicable
The predecessor of Qingdao Haier Co., Ltd. (herein after referred to as the ―Company‖) was Qingdao
Refrigerator Factory, which was established in 1984. As permitted to offering by People's Bank of China,
Qingdao Branch on 16 December 1989, approved by Qing Ti Gai [1989] No.3 on 24 March 1989, based
on the reconstruction of the original Qingdao Refrigerator Factory, a limited company was set up by
directional fund raising of RMB150 million. In March and September 1993, as approved by the
document of Qing Gu Ling Zi [1993] No. 2 and No. 9 issued by the pilot leading team of Qingdao joint
stock company, the Company was converted from a directional offering company to a public
subscription company, and issued additional 50 million shares to the public and listed with trading on
SSE in November 1993.
The Company‘s registered office is located at the Haier Industrial Park of Laoshan District, Qingdao,
Shandong Province, and the headquarters is located at the Haier Industrial Park of Laoshan District,
Qingdao, Shandong Province.
The Company is mainly engaged in manufacturing and trading as well as R&D of refrigerator,
air-conditioner, freezer, washing machine, water heater, dishwashers, gas stove and relevant products
and commercial circulation business.
The Company‘s ultimate holding company is Haier Group Corporation.
These financial statements have been approved for publication by the Board of the Company on 25
August 2017.
2. Scope of consolidated financial statements
√Applicable □Not Applicable
For details of changes in the scope of consolidated financial statements for the period, please refer
to ―VIII. Changes in Consolidation Scope‖ and ―Ⅸ. Interests in Other Entities‖ of this note.
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
to the transactions and matters actually occurred, in accordance with the Accounting Standards for
Enterprises – Basic Standards published by the Ministry of Finance, specific accounting standards,
and guidance on application of accounting standards for enterprises, interpretations to accounting
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standards for enterprises and other relevant requirements (hereinafter collectively referred to as the
―Accounting Standards for Enterprises‖) which issued subsequently, and in combination with the
disclosure provisions of the Rules for the Information Disclosure and Compilation of Companies
Publicly Issuing Securities No.15: General Provisions for Financial Report (Revised in 2014) of
CSRC as well as the following significant accounting policies and accounting estimation.
2. Continuing Operation
√Applicable □Not Applicable
The Company has ability to continue its operation for at least 12 months since the end of the
reporting period and there are no significant events affecting its ability to continue as a going concern.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Tips of specific accounting policies and accounting estimation:
√Applicable □Not Applicable
According to the characteristics of its production and operation, the Company formulated a series
of specific accounting policies and accounting estimates, including the provisions for impairment for
accounts receivable (Note V.11); the measurement of inventories (Note V.12); the depreciation and
amortization of the investment properties (Note V.14); the depreciation of fixed assets (Note V.15); the
amortization of intangible assets (Note V.18); the criterion for determining of long-term assets
impairment (Note V.19); and the date of revenue recognition (Note V.24), etc..
1. Statement of compliance with enterprise accounting standards
The financial statements prepared by the Company meet the requirements of the enterprise
accounting standards, which accurately and completely reflected information relating to the financial
condition as of 30 June 2017, operation result and cash flow of the Company in January to June 2017.
2. Accounting period
The accounting year of the Company is from 1 January each year to 31 December of the same year
in solar calendar.
3. Operating cycle
√Applicable □Not Applicable
The Company takes 12 months as an operating 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.
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5. Accounting methods of enterprise combinations involving entities under common control and
entities not under common control
√Applicable □Not Applicable
An enterprise combination is a transaction or event that brings together two or more separate entities
into one reporting entity. Enterprise combinations are classified into enterprise combinations under
common control and enterprise combinations not under common control.
(1) Enterprise combinations under common control
An enterprise combination under common control is an enterprise combination in which all of the
combining entities are ultimately controlled by the same party or parties both before and after the
combination, and that control is not transitory. For enterprise combination under common control, the
party that obtains the control over the other parties on the combination date is the acquirer, and other
parties involving in the enterprise combination are the acquiree. The combination date is the date on
which the acquiring party effectively obtains the control over the party being acquired.
In case the consideration for long-term equity investments formed in enterprise combination under
common control is paid by ways of cash, transfer of non-cash assets or assumption of debts, the
Company will regard the share of carrying amounts of the net assets of the acquiree in the ultimate
controller‘s consolidated financial statements obtained as the initial investment cost of long-term equity
investments as at the date of combination. For carrying value of net assets of the acquiree is negative as
at the date of combination, investment cost of long-term equity investment is calculated as zero. In case
the acquiree is controlled by the ultimate controller by the enterprise combination under non-common
control before combination, the initial investment cost of the long-term equity investment of the acquirer
includes relevant goodwill. The Company should adjust the capital reserve (capital premium or share
premium) in accordance with the differences between initial investment cost of the long-term equity
investment and the cash paid, the non-cash assets transferred and the carrying value of liability assumed;
in case the balance of the capital reserve (capital premium or share premium) is insufficient for the
elimination, the surplus reserves and undistributed profits shall be used to dilute such expenses in order.
In case the consideration for the combination is paid by issuance of equity instruments, the aggregate
nominal value of shares issued will be deemed as the share capital. The difference between the initial
investment cost of long-term equity investments and aggregate nominal value of shares issued shall be
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adjusted to capital reserve (capital premium or share premium), in case the capital reserve (capital
premium or share premium) is insufficient for the elimination, the surplus reserves and undistributed
profits shall be used to dilute such expenses in order.
Intermediary fees (such as audit, legal services and valuation consultancy) and other relevant
management fees incurred in the enterprises combination by the acquirer are credited in profit or loss in
the period when they occurred. Trading expenses in direct relation to the issuance of equity instrument
as the consideration for the combination is written down to the capital reserve (share premium), where
the capital reserve (share premium) is insufficient, and to surplus reserves and undistributed profits in
order. Trading expenses in direct relation to the issuance of debt instrument as the consideration for the
combination is included in the initial recognition amount of the debt instrument.
For enterprise combination under common control realized through several transactions step by step,
in case of a package transaction, all the transactions are accounted as one transaction that has acquired
the control; in case of not a package transaction, in the financial statement of parent company the capital
reserve ( share premium) is adjusted by the difference between the initial investment cost and the sum of
the carrying value of the original long-term equity investment and the book value of the new payment
consideration for further acquisition of shares with the share of acquirer's owner's equity on the date of
combination in case calculated on the proportion of shareholding on the date of combination as its initial
investment cost; where the capital reserve is insufficient, the retained earnings will be used to offset such
expenses.
In the consolidated financial statements, the long-term equity investment held by the combining
party before the date of acquiring control of the combined parties, and the profit and loss, the other
comprehensive income and changes in the other owners‘ equity recognized during the period between
the later of the date of acquisition and the date when the combining and the combined parties are under
the common control of the same party and the date of combination, are written down to the retained
earnings or current profit or loss at the beginning of the comparative reporting period, respectively.
(2) Enterprise combinations involving entities not under common control
An enterprise combination not under common control is an enterprise combination in which all of
the combining entities are not ultimately controlled by the same party or parties both before and after the
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combination. For enterprise combination not under common control, the party that obtains the control of
the other parties at the combination date is the acquirer; other parties involving in the enterprise
combination are the acquirees. The combination date is the date on which the acquirer effectively
obtains control of the acquirees.
In enterprise combination involving entities not under common control, the cost of combination
shall be the sum of the assets paid, obligations incurred or assumed and the fair value of the equity
securities issued by the acquirer for obtaining control of the acquiree at the date of acquisition.
Intermediary fees (such as audit, legal services and valuation consultancy) and other relevant
management fees incurred by the acquirer for the purpose of enterprise combination are credited in
profit or loss in the period when they occurred. Transaction fees for the equity instruments or debt
instruments issued by the acquirer as combination consideration is included in the initial recognition
amount of such equity instruments or debt instruments. Contingent consideration involved shall be
recorded as the combination cost based on its fair value on the acquisition date. Should any new or
further evidence arises within 12 months after the acquisition date and makes it necessary to adjust the
contingent consideration on the acquisition date, the goodwill arising from the enterprise combination
shall be amended accordingly.
The cost of combination and identifiable net assets obtained by the acquirer in an enterprise
combination are measured at fair value on the acquisition date. Where the cost of the combination
exceeds the acquirer‘s interest in the fair value of the acquiree‘s identifiable net assets, the difference is
recognized as goodwill; where the cost of combination is lower than the acquirer‘s interest in the fair
value of the acquiree‘s identifiable net assets, the difference is initially recognized in profit or loss for
the current year after a review of computation for the identifiable assets, liabilities or fair value of
contingent liabilities and combination cost, and where the combination cost is still lower than the fair
value of the identifiable net assets of the acquiree obtained during the course of combination, then the
difference is recorded in the current profit and loss.
In enterprise combination involving entities not under common control that is realized in phases
through multiple exchange transactions, in the individual financial statements of parent company, the
sum of the book value of the equity investment of the acquiree held before the date of acquisition and
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the cost of new investment on the date of acquisition are recognized as the initial investment cost of such
investment.
In the consolidated financial statement, the equity of the acquiree held before the date of acquisition
is re-measured at the fair value on the date of acquisition, and the difference between the fair value and
book value is included in current investment income; where the equity of the acquiree held before the
date of acquisition involves the other comprehensive income, such equity and relevant other
comprehensive income are transferred to current investment income on the date of acquisition, other
than the other comprehensive income that cannot be reclassified into the current profit or loss.
The fair value on the acquisition date of equity interest in the acquiree prior to the acquisition date
and the fair value of the considerations paid for the acquisition of the new equity on the acquisition date
are regarded as the combination costs of the Company, comparing with aquirer's share of the fair value
on the acquisition date of the acquiree's net identifiable assets on the proportion of the shareholding on
the acquisition date to confirm the goodwill that required to be recognized on the acquisition date or the
amount that shall be included in the current consolidated profit or loss.
6. Preparation method of consolidated financial statements
√Applicable □Not Applicable
(1) Scope of consolidated financial statements
The Company incorporated all of its subsidiaries (including the separate entities controlled by the
Company) into the scope of consolidation financial statements, including the enterprises under the
Company‘s control, divisible part in the investees and structured entities.
(2) To unify the accounting policies, balance sheets date and accounting periods of the Company
and subsidiaries
When preparing consolidated financial statements, adjustments are made if subsidiaries‘ accounting
policies or accounting periods are different from that of the Company, in accordance with the
Company‘s accounting policies and accounting periods.
(3) Offset matters in the consolidated financial statements
The consolidated financial statements shall be prepared on the basis of the balance sheets of the
Company and subsidiaries, which offset the internal transactions incurred between the Company and
subsidiaries and among subsidiaries. The owner‘s equity of the subsidiaries not attributable to the
Company shall be presented as ―minority equity‖ under the owners‘ equity item in the consolidated
balance sheet.
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The long-term equity investment of the Company held by the subsidiaries, deemed as treasury stock
of the corporate group as well as the reduction of owners‘ equity, shall be presented as ―Less: Treasury
stock‖ under the owners‘ equity item in the consolidated balance sheet.
(4) Accounting treatment of subsidiaries acquired from combination
For subsidiaries acquired from enterprise combination under common control, the assets, liabilities,
operating results and cash flows of the subsidiaries are included in the consolidated financial statements
from the beginning of the period in which the combination took place, as if the combination has taken
since the ultimate controller began its control. When preparing the consolidated financial statements, for
the subsidiaries acquired from enterprise combination under non-common control, separate financial
statement will be adjusted on the basis of their fair values of the identifiable net assets on the date of
acquisition.
7. Classification of joint arrangement and accounting methods of joint operations
√Applicable □Not Applicable
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance with the
Company‘s rights and obligations under a joint arrangement, the Company classifies joint arrangements into:
joint operations and joint ventures.
Joint operations refer to a joint arrangement in which the Company is a party and is entitled 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 business
enterprises:
(1) recognize the assets held solely by the Company, and recognize assets held jointly by the Company in
appropriation to the share of the Company; (2) recognize the obligations assumed solely by the Company, and
recognize obligations assumed jointly by the Company in appropriation to the share of the Company; (3)
recognize revenue from disposal of joint operations in appropriation to the share of the Company; (4)
recognize revenue from disposal of joint operations in appropriation to the share of the Company; (5)
recognize fees solely occurred by the Company and recognize fees from joint operations in appropriation to
the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the assets do not constitute
a business, the same below) from joint operations, the Company shall only recognize the part of profit or lost
from this transaction attributable to other parties of joint operations before these assets are sold to a third party.
In case of an impairment loss incurred on these assets which meets the requirements as set out in ―Accounting
Standards for Business Enterprises No. 8 – Asset Impairment‖, the Company shall full recognize the amount
of this loss in relation to its investment in or sale of assets to joint operations, or recognize the loss according
to the Company‘s share of commitment in relation to the its purchase of assets from joint operations.
Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this
arrangement. Investment in joint venture is accounted for using the equity method according to the accounting
policies referred to under ―13 Long-term equity investment‖ of this Note III.
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8. Recognition standard for cash and cash equivalents
Cash recognized in the cash flow statements represents the cash on hand and deposits available for
payment of the Company at any time.
Cash equivalents recognized in the cash flow statements refer to short-term, highly liquid
investments held by the Company that are readily convertible to known amounts of cash and which 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 functional currency by
applying the spot exchange rate at the transaction date.
Monetary items denominated in foreign currencies are translated into functional currencies at the
rates of exchange ruling at the balance sheet date. All foreign exchange difference are credited into the
current profit or loss, except ① those arising from the funds denominated in foreign currency specially
borrowed for the establishment of the qualifying assets are treated based on the principal of
capitalization of borrowing costs; ② those arising from the other changes in the balance other than
amortized cost of available-for-sale monetary items denominated in foreign currency are recognized in
the other comprehensive income.
Non-monetary items in foreign currency measured at historical cost are translated using the spot
exchange rate prevailing on the date when transaction occurred and its functional currency shall remain
unchanged. Non-monetary items denominated in foreign currencies that are measured at fair value are
translated using the foreign exchange rate at the date the fair value is determined; the exchange
differences between the translated and original amounts of functional currencies are recognized in the
statement of profit or loss or other comprehensive income as changes in fair value (including changes in
exchange rate).
(2) Translation of foreign currency financial statements
If the functional currencies used as the bookkeeping base currency by the subsidiaries, joint
ventures and associates under the control of the Company are different from that of the Company, their
financial statements denominated in foreign currencies shall be translated to perform accounting and
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prepare the consolidated financial statements.
The assets and liabilities of the balance sheet are translated 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 the transaction date. The revenue and expenses in the income statement are
translated using the approximate rate of the spot exchange rate on the transaction date. Differences
arising from the translation of foreign currency financial statements are presented as the ―other
comprehensive income‖ in the owner‘s equity of the balance sheet.
Foreign currency cash flows are translated using the approximate rate of the spot exchange rate on
the transaction date. The impact of exchange rate changes on cash amount is reflected separately in the
cash flow.
When disposing overseas operations, the translation difference related to the overseas operation
shall be transferred together or as the percentage of disposing the overseas operation to profit or loss for
the period of disposal.
10. Financial instruments
√Applicable □Not Applicable
(1) Classification, recognition and measurement of financial instruments
A financial asset or a financial liability is recognized when the Company becomes a contractual
party of a financial instrument. Financial assets and financial liabilities are measured at fair value upon
initial recognition. Related transaction costs are recorded directly in current profit or loss for financial
assets and financial liabilities at fair value with its change consolidated in profit/loss, or included in the
amount recognized initially for other types of financial assets and financial liabilities.
Determination of the fair value of financial assets and financial liabilities: Fair value refers to the
price receivable from the exchange of an asset or payable for the settlement of a liability in a fair
transaction between knowledgeable and willing counterparties. The fair value of financial instruments
where there is an active market is determined based on the quoted price in such market, which refers to
the price regularly available from exchanges, brokers, trade associations and pricing service agencies
that represents the price adopted in an arm‘s length transaction which actually occurred in the market.
For financial instruments where there is no active market, the fair value is determined using valuation
techniques. Such techniques include reference to prices used in recent market transactions between
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knowledgeable and willing counterparties, reference to the current fair value of another instrument
which is substantially the same, discounted cash flow analysis and option pricing models or other
valuation models.
Financial assets are classified into financial assets at fair value with its change consolidated in
profit/loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets
upon initial recognition. Classification of financial asset other than receivables is based on the purpose
and capability of financial asset held by the Company and its subsidiaries. The financial liabilities are,
on initial recognition, classified into financial liabilities at fair value with its change consolidated in
profit/loss and other financial liabilities.
Financial assets at fair value with its change consolidated in profit/loss include financial assets held
for trading and financial assets designated as at fair value with its change consolidated in profit/loss. All
financial assets at fair value with its change consolidated in profit/loss of the Company are financial
assets held for trading. Financial assets may be classified as financial assets held for trading if one of the
following conditions is met: ① the financial asset is acquired principally for the purpose of sale or
repurchase in the near term; ② the financial asset is part of a portfolio of identified financial
instruments that are managed together and for which there is an objective evidence of recent pattern of
short-term profit-taking; or ③ the financial asset is a derivative, excluding the derivatives designated as
effective hedging instruments, the derivatives classified as financial guarantee contract, and the
derivatives linked to an equity instrument investment, which has no quoted price in an active market nor
a reliably measured fair value, and required to be settled through delivery of that equity instrument. A
financial asset may be designated as at fair value with its change consolidated in profit/loss upon initial
recognition only when one of the following conditions is satisfied: ① such designation eliminates or
significantly reduces a measurement or recognition inconsistency that would otherwise result from
measuring assets or recognizing the gains or losses on them on different bases; ② the financial asset
forms part of a group of financial assets or a group of financial assets and financial liabilities, which is
managed and its performance is evaluated on a fair value basis, in accordance with the Company‘s
documented risk management or investment strategy, and information about the grouping is reported to
key management personnel on that basis; or ③ pursuant to Accounting Standards for Enterprises No.
22 – Recognition and Measurement of Financial Instruments, the financial asset is designated as
combination instrument of financial assets measured at fair value through current profit or loss and
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related to embedded derivatives. A financial asset at fair value with its change consolidated in profit/loss,
except for those falling under cash flow hedging, is subsequently measured at fair value. Any gains or
losses arising from changes in the fair value are recognized in profit or loss of changes in the fair value.
Interests or cash dividends received during the period in which such assets are held, are recognized as
investment income; on disposal, the differences between the consideration received and initial
recognized amount are recognized as investment income and the gain or loss from changes in fair value
shall be adjusted accordingly.
Held-to-maturity investments are non-derivative financial assets that have fixed or determinable
payments and fixed maturity and for which the Company has the positive intention and ability to hold to
maturity. Held-to-maturity investments are measured subsequently at amortized cost by using the
effective interest rate method. Gains or losses arising from de-recognition, impairment or amortization
are recognized in the profit or loss in 2016.
The effective interest method is a method of calculating the amortized cost of a financial asset and
of allocating interest income or expense over each period based on the effective interest of a financial
asset or a financial liability (including a group of financial assets or financial liabilities). The effective
interest rate is the rate that discounts future cash flows from the financial asset or financial liability over
its expected life or (where appropriate) a shorter period to the carrying amount of the financial asset or
financial liability. In calculating the effective interest rate, the Company will estimate the future cash
flows (excluding future credit losses) by taking into account all contract terms relating to the financial
assets or financial liabilities whilst considering various fees, transaction costs and discounts or premiums
which are part of the effective interest rate paid or received between the parties to the financial assets or
financial liabilities contracts.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Financial assets, including bills receivable, accounts receivable, other
receivables and long-term receivables are classified as loans and receivables by the Company. Loans and
receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss
on derecognition, impairment or amortization is recognized with its change consolidated in profit/loss
for the period.
Available-for-sale financial assets include non-derivative financial assets designated as
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available-for-sale at initial recognition, and the financial assets other than financial assets at fair value
with its change consolidated in profit/loss, loans and receivables, and held-to-maturity investments.
Available-for-sale financial assets are subsequently measured at fair value, the gains or losses arising
from changes in fair value, except for impairment losses and exchange difference related to monetary
financial assets and amortized cost which are recognized in profit or loss, are recognized in other
comprehensive income and reclassified to profit or loss when the financial assets are derecognized.
Interests calculated in the effective interest method during the holdings of available-for-sale financial
assets and cash dividends declared by investees are recognized in investment incomes. On disposal, the
differences between the consideration received and the carrying amount of assets after deducting the
accumulated fair value adjustments previously recorded in capital reserves are recorded as investment
income. However, an equity instrument investment which has no quoted price in an active market nor a
reliably measured fair value, and a derivative financial asset (or derivative financial liability) linked to
such equity instrument and required to be settled through delivery of that equity instrument are measured
at cost.
Derivative financial instruments include forward foreign exchange contracts and interest rate swap
contracts, etc. Derivative financial instruments are initially recognized at fair value at the execution date
of relevant contracts, and subsequently measured at fair value. Expect for the derivative financial
instruments designated as hedging instruments with a highly effective hedging, of which the profit or
loss arising from the changes in fair value will be included in the corresponding profit or loss depending
on the nature of hedging relations and the accounting requirements of hedging tools, the changes in the
fair value of all other derivative financial instruments will be included in the current profit or loss.
For hybrid instruments containing embedded derivatives, an embedded derivative is separated from
the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial
liability at fair value with its change consolidated in profit/loss, and treated as a stand-alone derivative if
the economic characteristics and risks of the embedded derivative are not closely related to those of the
host contract, and a separate instrument with the same terms as the embedded derivative would be in
compliance with the definition of a derivative. If the Group is unable to measure the embedded
derivative separately either at acquisition or at a subsequent balance sheet date, it will designate the
entire hybrid instrument as a financial asset or financial liability at fair value with its change
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consolidated in profit/loss.
Equity instruments refer to the contracts proving the ownership of the remaining equities in the
assets of the Company upon the deduction of all the liabilities. The consideration received from the issue
of the equity instruments increases the shareholders‘ equity upon the deduction of the transaction costs.
The allocations made by the Company to the holders of equity instruments (excluding stock dividends)
decrease shareholders‘ equity. The Company does not recognize the change in the fair value of equity
instruments.
(2) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognized: ① the contract
right to recover the cash flows of the financial asset has terminated; ② the financial asset, along with
substantially all the risk and return arising from the ownership of the financial asset, has been transferred
to the transferee; or③ the financial asset has been transferred, and the Company has given up the
control on such financial asset, though it does not assign or maintain substantially all the risk and return
arising from the ownership of the financial asset.
When the Company does not either assign or maintain substantially all the risk and rewards of
ownership of the financial asset and does not give up the control on such financial asset, to the extent of
its continuous involvement in the financial asset, the Company recognizes it as a related financial asset
and recognizes the relevant liability accordingly. The extent of the continuous involvement is the extent
to which the Company exposes to changes in the value of such financial assets.
On derecognition of a financial asset, the difference between the following amounts is recognized
in profit or loss in the period: the carrying amount and the sum of the consideration received and any
accumulated changes in fair value that had been recognized originally and directly in capital reserve. If a
part of the financial assets qualifies for derecognition, the carrying amount of the financial asset is
allocated between the part that continues to be recognized and the part that qualifies for derecognition,
based on the fair values of the respective parts. The difference between the following amounts is
recognized in profit or loss in the period when the carrying amount of the part that qualifies for
derecognition and the sum of the consideration received and any accumulated changes in fair value that
had been recognized originally and directly in capital reserve.
Financial assets and financial liabilities are offset and the net amount is reported in the balance
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sheet if there is currently an enforceable legal right to offset the recognized financial assets and financial
liabilities and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities
simultaneously. Otherwise, financial assets and financial liabilities are presented separately in the
balance sheet without being offset.
(3) Classification, recognition and measurement of financial liabilities
The Company classifies financial liabilities and equity instruments according to the substance of
the contractual arrangements of the financial instrument and the definitions of a financial liability and an
equity instrument. Financial liabilities are classified as financial liabilities at fair value with its change
consolidated in profit or loss and other financial liabilities at initial recognition.
Financial liabilities at fair value with its change consolidated in profit or loss include financial
liabilities held for trading and financial liabilities designated as at fair value with its change included in
profit or loss.
Financial liabilities may be classified as financial liabilities held for trading if one of the following
conditions is met: ① The financial liability is acquired principally for the purpose of sale or repurchase
in the near term; ② The financial liability is part of a portfolio of identified financial instruments that
are managed together and for which there is an objective evidence of recent pattern of short-term
profit-taking; or ③ The financial liability is a derivative, excluding the derivatives designated as
effective hedging instruments, the derivatives classified as financial guarantee contract, and the
derivatives linked to an equity instrument investment, which has no quoted price in an active market nor
a reliably measured fair value, and required to be settled through delivery of that equity instrument.
A financial liability may be designated as at fair value with its change consolidated in profit/loss
upon initial recognition only when one of the following conditions is satisfied: ① such designation
eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
result from measuring liabilities or recognizing the gains or losses on them on different bases; ② the
financial liability forms part of a group of financial liabilities or a group of financial liabilities and
financial liabilities, which is managed and its performance is evaluated on a fair value basis, in
accordance with the Company‘s documented risk management or investment strategy, and information
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about the grouping is reported to key management personnel on that basis; or ③ pursuant to
Accounting Standards for Enterprises No. 22 – Recognition and Measurement of Financial Instruments,
the financial liability is designated as combination instrument of financial liabilities measured at fair
value through current profit or loss and related to embedded derivatives.
Financial liabilities at fair value with its change consolidated in profit or loss are subsequently
measured at fair value. The gain or loss arising from changes in fair value and dividend and interest
incomes arising from such financial liabilities are recognized in profit or loss in the period.
Other financial liabilities: The derivative financial liabilities linked to and to be settled through
delivery of the equity instruments that are not quoted in an active market and the fair value of which
cannot be reliably measured, such equity instruments are subsequently measured at cost. Other financial
liabilities apart from the financial guarantee contracts are subsequently measured at amortized cost using
the effective interest rate method and the gains or losses arising from de-recognition or amortization are
recognized in profit or loss in the period.
Financial guarantee contracts: Contracts in which the guarantor and the creditor agrees that the
guarantor will settle debts or assume liabilities in accordance with terms therein if the debtor fails to
make payment. Financial guarantee contracts other than those designated as financial liabilities at fair
value with its change consolidated in profit/loss or loan commitments that are not designated at fair
value with its change consolidated in profit/loss and granted at a rate below market rates are initially
recognized at fair value less directly attributable transaction fees, and shall be subsequently measured at
the higher of the following: the amount determined in accordance with Accounting Standard for
Business Enterprises No. 13 ―Contingencies‖ and the amount initially recognized less cumulative
amortization recognized in accordance with the principles set out in Accounting Standard for Business
Enterprises No. 14 ―Revenue‖.
Derecognition of financial liabilities: A financial liability shall be derecognized or partly
derecognized when the current obligation is discharged or partly discharged. When the Company (debtor)
and the creditor have signed a contract, which uses a new financial liability to replace the existing
financial liability, and the contract terms of the new financial liability are substantially different with the
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existing financial liability, the existing financial liability shall be derecognized, and the new financial
liability shall be recognized at the same time. If a financial liability is fully or partially derecognized, the
difference between the book value of derecognized portion and the consideration paid (including
non-cash assets transferred out or new financial liability assumed) is recognized in current profit or loss.
(4) Impairment of financial assets
The carrying values of all financial assets except financial assets at fair value with its change
included in profit or loss should be tested for impairment. If impairment is demonstrated by objective
evidences, the provision of impairment should be prepared according to the impairment test.
Objective evidences for recognition of impairment of financial asset include the following
observable matters:
① The issuer or debtor is experiencing significant financial difficulties;
② The debtor breaches the contractual terms, including default or delinquency in interest or
principal payments;
③ The Company, based on economic or legal or other factors, waive the debts;
④ It is highly probable that the debtor will enter bankruptcy or other financial reorganization;
⑤ The issuer is experiencing significant financial difficulties that the corresponding financial
instruments could not be traded in an active market;
⑥ When it is unable to determine whether cash flows of a specific instrument in a group of
financial assets decrease, but the cash flows since initial recognition of that group of financial assets
would decrease and be measurable, or the ability to repay by the debtors in that group of financial asset
deteriorate, or the unemployment rate of the country or region in which the debtors situate increases, or
the price of the underlying collateral decreases significantly in its region, or the industry of the debtors is
diminishing;
⑦ There are significant adverse changes in the technology, market, economy or legal
environments in issuance place of the equity instrument so that the investor could not recover its
investment costs;
⑧ There is significant or other than temporary decrease in fair value of equity instrument;
⑨ Other objective evidences show that the financial asset is impaired.
The Company shall carry out independent impairment test for financial assets of significant single
amounts. With regard to the financial assets with insignificant single amounts, an independent
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impairment test shall be included in a combination of financial assets with similar credit risk
characteristics so as to carry out an impairment test. In the event, upon independent test, the financial
asset (including those financial assets with significant single amounts and those with insignificant
amounts) has not been impaired, it shall be included in a combination of financial assets with similar
characteristics so as to conduct another impairment test. Financial assets that have conducted
independent test as impairment loss shall not be included in a combination of financial assets with
similar risk characteristics so as to conduct another impairment test.
When held-to-maturity investments, loans and accounts receivables have been impaired, the book
value of the financial assets shall be written down to the current value of estimated future cash flow
discounted at the original effective interest rate, and the write-down amount is recorded as impairment
loss and written into profit or loss of the period. When a financial asset based on amortized cost is
impaired, if there are objective evidences showing the value of this financial asset is recovered and it is
objectively related to the matters happened after the impairment loss recognition, the impairment loss
recognized shall be reversed. However, the reversal shall not result in a carrying amount of the financial
asset that exceeds the amortized cost if the impairment had not been recognized at the date when the
impairment is reversed.
If an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair
value that had been recognized directly in other comprehensive income is reclassified to current profit or
loss. The cumulative loss reclassified is the difference between its acquisition cost (net of any principal
repayment and amortization) and its current fair value, less any impairment loss previously recognized
in profit or loss. If there are objective evidences that the value of that financial asset is recovered and it
can be objectively related to an event occurred after the impairment loss recognition, the impairment loss
recognized shall be reversed, impairment losses recognized for equity instruments classified as
available-for-sale are reversed through other comprehensive income, while impairment losses
recognized for debt instruments classified as available-for-sale are reversed through current profit or
loss.
If there‘s an objective evidence that an investment in equity instrument which has no quoted price
in an active market nor a reliably measured fair value or a derivative financial asset which is linked to
that equity instrument and required to be settled through delivery of that equity instrument is impaired,
the carrying amount shall be written down to the present value discounted at the market rate of return on
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future cash flows of the similar financial assets, and the write-down amount shall be recognized as
impairment loss in profit or loss. Such impairment loss once recognized shall no longer be reversed.
For investments in equity instruments, the specific quantitative criterion for the Company to
determine ―serious‖ or ―not temporary‖ decrease in their fair value are set out below:
Specific quantitative criterion on ―serious‖ decrease Decrease in closing fair value relative to the
in their fair value cost has reached or exceeded 50%.
Specific quantitative criterion on ―not temporary‖
Fall for 12 consecutive months.
decrease in their fair value
11. Receivables
Receivables of the Company include trade receivables and other receivables. Recognition and
provision of bad debts of receivables:
(1) Individually significant receivables for which separate bad-debt provision is made
Individually significant receivables represent the receivables accounting for above 5% of the closing
balance. The Company conducted a separate impairment test for receivables that are individually
significant on the balance sheet date and made provision for its bad debts based on the difference
between the present value of its estimated future cash flows and its carrying amount.
(2) Individually insignificant receivables for which separate bad-debt provision is made
Individual impairment test is made where there is a concrete evidence indicates that there is an
obvious difference in recoverability, and bad debts provision is made based on the difference between
the present value of its estimated future cash flows and its carrying amount.
(3) Trade receivables for which collective bad debt provision is made
Receivables that are individually tested not impairment, is classified by similar credit risks into
several portfolio and then recognize the impairment loss and make bad debts provision on prorate basis
of the balance of the receivables on the balance sheet date.
12. Inventories
√Applicable □Not Applicable
(1) Classification of inventories:
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Inventories refer to the finished goods or commodities held for sale in daily activities, goods in
progress in the production process, consumed materials and supplies in the production process or
providing services of the Company, which mainly include raw materials, revolving materials, entrusted
processed materials, wrap page, low-cost consumables, goods in progress, self-made semi-finished
goods, finished goods (merchandise inventory) and engineering construction, etc.
(2) Measurement of inventories transferred out
At delivery, inventories are accounted using the weighted average method for the Company and
most of its subsidiaries, and using the first in first out method for the remaining subsidiaries.
(3) Provision for inventory impairment
At balance sheet date, inventories are stated at the lower of cost or net realizable value.
The net realizable value of inventories (including finished products, merchandize and materials for
sale) that can be sold directly is determined using the estimated saleable price of such inventory
deducted by the cost of sales and relevant taxation. The net realizable value of materials in inventory that
are held for production is determined using the estimated saleable price of the finished product deducted
by the cost to completion, estimated cost of sales and relevant taxation. The net realizable value of
inventory held for performance of sales contract or labor service contract is determined based on the
contractual price; in case the amount of inventory held by the enterprise exceeds the contractual amount,
the net realizable value of the excess portion of inventory is calculated using the normal saleable price.
Provision for impairment of inventories is made for individual inventory.
For items of inventories that is produced and marketed in the same geographical area and with the
same or similar end uses or purposes, which cannot be practicable evaluated separately from other items,
cost and net realizable value of inventories may be determined on an aggregate basis. For large quantity
and low value items of inventories, cost and net realizable value of inventories may be determined on
types of inventories.
Provision for impairment of inventories is made and recognized as current profit or loss when the
cost is higher than the net realizable value on the balance sheet date. If the factors that give rise to the
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provision in prior years are not in effect in current year, provision would be reversed within the impaired
cost, and recognized in the current profit or loss.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization of low-value consumables and packaging
Low-value consumables and packages of the Company are amortized by one-time write-off.
13. Long-term equity investments
√Applicable □Not Applicable
Long-term equity investments in this section refer to equity investments held by the Company that
give it control, joint control or significant influence over the investee. Long-term equity investments
where the Company does not exercise control, joint control or significant influence over the investee are
accounted for as available-for-sale financial assets.
(1) Recognition of initial cost of investment
① For long-term equity investment obtained from business consolidation under common control,
the initial cost is measured at the combining party‘s share of the carrying amount of the equity of the
combined party; for a long-term equity investment obtained from business consolidation under
non-common control, the initial cost is the consolidation cost at the date of acquisition;
② For the long-term equity investment acquired in a manner other than enterprise combination: the
initial investment cost of the long-term equity investment acquired by payment in cash shall be the total
purchase price; the initial investment cost of the long-term equity investment acquired by issuing equity
securities shall be the fair value of the equity securities issued；For long-term equity investment acquired
by debt restructuring, the initial investment cost shall be recognized in accordance with the requirements
under Accounting Standards for Enterprises No. 12 - Debt Restructuring. For long-term equity
investment acquired by the exchange of non-monetary assets, the initial investment cost shall be
recognized in accordance with relevant requirements under the Rules.
(2) Subsequent measurement and profit or loss recognition
① Cost method
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Where the investor has a control over the investee, long-term equity investments are measured using
cost method. For long-term equity investments using cost method, unless increasing or reducing the
investment, the carrying value is unchanged. The Company‘s share of the profit distributions or cash
dividends declared by the investee are recognized as investment income.
② Equity method
Investor's long-term equity investments in associates and joint ventures are measured using equity
method. Where part of the equity investments of an investor in its associates are held indirectly through
venture investment institutions, common fund, trust companies or other similar entities including
investment linked insurance funds, such part of equity investments indirectly held by the investor shall
be measured at fair value with its change consolidated in profit/loss according to relevant requirements
of Accounting Standards for Business Enterprises No.22—Recognization and measurement of Financial
Instruments regardless whether the above entities have significant influence on such part of equity
investments, while the remaining part shall be measured using equity method.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds
the Company‘s share of the fair value of the investee‘s identifiable net assets at the time of acquisition,
no adjustment is made to the initial investment cost. Where the initial investment cost is less than the
Company‘s share of the fair value of the investee‘s identifiable net assets at the time of acquisition, the
difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is
adjusted accordingly.
For long-term equity investments accounted for using the equity method, the Company recognizes
the investment income and other comprehensive incomes according to its share of net profit or loss and
other comprehensive incomes of the investee, and the carrying amount of the long-term equity
investments shall be adjusted accordingly; the carrying amount of the investment is reduced by the
Company‘s share of the profit distribution or cash dividends declared by an investee; for changes in
owner‘s equity of the investee other than those arising from its net profit or loss, other comprehensive
income and profit distribution, the carrying amount of the long-term equity investment shall be adjusted
and recognized to capital reserve. When recognizing attributable share of the net profit and losses of the
investee, the net profit of the investee shall be recognized after adjustment on the ground of the fair
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value of all identifiable assets of the investee when it obtains the investment. If the accounting policies
and accounting periods adopted by the investee are different from those adopted by the Company, an
adjustment shall be made to the financial statements of the investee in accordance with the accounting
policies and accounting periods of the Company and recognize the investment incomes and other
comprehensive incomes.
The Company‘s share of net losses of the investee shall be recognized to the extent that 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 the investee 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
or loss as investment loss for the period. Where the investee is making net profits in subsequent periods,
the Company shall resume recognizing its share of profits after setting off against the share of
unrecognized losses.
(3) Change of the accounting methods for long-term equity investments
① Change of measurement at fair value to accounting under equity method: where the equity
investment held have no control, joint control or significant impact on the investee and that are
accounted according to the financial instrument recognition and measurement criteria can carry out
common control or place significant impact due to addition of investment which resulted in the increase
of shareholding, the investee shall plus the fair value of the equity investment originally held determined
in accordance with the Standards for Recognition and Measurement of Financial Instruments and the fair
value of the consideration payable for new investment as the initial investment cost accounted under
equity method when changing the equity method.
② Change of measurement at fair value or accounting under equity method to cost method: the
equity investment of the investee held by the investor with no control, joint control or significant impact
and accounted according to the financial instrument recognition and measurement criteria, or the
long-term equity investment in associates or joint venture originally held that can control the investee
due to addition of investment, shall be accounted in accordance with the long-term equity investment
formed by combination of enterprises.
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③ Change of accounting under equity method to measurement at fair value: the long-term equity
investment originally held with common control or significant impact on the investee that cannot
conduct common control or significant impact on the investee due to the decrease of shareholding as a
result of factors such as partial disposal, shall be accounted in accordance with Standards for
Recognition and Measurement of Financial Instruments, and the difference between the fair value on the
date when the common control or significant impact is lost and the book value is included in current
profit or loss.
④ Change of cost method to equity method: where control on the investee change to significant
impact or common control with other investors due to factors such as disposal of investment, the
long-term equity investment cost that ceased to be recognized shall first be carried forward on the
proportion of the investment disposed. Then comparing the cost of the remaining long-term equity
investment with the attributable fair value of the identifiable net assets of the investee at the original
investment calculated on proportion of the remaining shareholding, where the former larger than the
later, it belongs to the goodwill as showed in deciding the investment price and will not adjust the
carrying amount of the long-term equity investment; where the former less than the later, the retained
earnings will be adjusted along with the adjustment of the long-term equity investment.
(4) Basis of conclusion for common control and significant influence over the investee
① Joint control over an investee refers to activities which have a significant influence on return of
an arrangement could be decided only by mutual consent of the investing parties sharing the control,
which includes the sales and purchase of goods or services, management of financial assets, acquisition
and disposal of assets, research and development activities and financing activities, etc.
② Significant influence on the investee refers to significant influence over the investee exists when
holding more than 20% but less than 50% of the shares with voting rights or even if the holding is below
20%, there is still significant influence if any of the following conditions satisfied:
1) there is representative in the board of directors or similar governing body of the investee;
2) participating in investee‘s policy setting process;
3) assign management to investee;
4) the investee relies on the technology or technical information of the investor;
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5) major transactions with the investee.
(5) Impairment test and provision of impairment
At the balance sheet date, the Company reviews whether there is impairment indicator for the
long-term equity investments. When there is impairment indicator, the recoverable amount is determined
through impairment test and impairment is provided based on the difference between the recoverable
amount and the carrying value. Impairment loss is not reversed once provided.
The recoverable amount is the higher of net fair value of long-term equity investments on disposal
and the present value of estimated future cash flows.
(6) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the considerations received and
the carrying amount of the disposed investment is recognized in profit or loss. For long-term equity
investment accounted for using the equity method, the part recognized in other comprehensive income is
accounted on pro rata basis upon disposal in the same way as the relevant assets or liabilities are
disposed of directly by the investee.
14. Investment properties
Investment properties of the Company include leased land use rights and leased buildings.
An investment property is initially measured at cost, and cost method is adopted for subsequent
measurement.
The buildings leased out of investment properties of the Company are depreciated over their useful
lives using the straight-line method. The specific measurement policy is the same as fixed assets. For
land use rights leased out or held for resale after appreciation in value, they are amortized over their
useful lives using the straight-line method. The specific measurement policy is the same as that of
intangible assets.
At the balance sheet date, the Company reviews whether there is impairment indicator for
investment properties. When there is impairment indicator, the recoverable amount is recognized
through an impairment test and impairment is provided based on the difference between the carrying
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value and the recoverable amount. Impairment is not reversed in subsequent periods.
15. Fixed assets
(1) Recognition criteria
√Applicable □Not Applicable
Fixed assets are tangible assets that are held for production of goods, provision of labor services,
leasing or administrative purposes, and have useful life more than one fiscal year, which are recognized
when the following conditions are met:
① economic benefits in relation to the fixed assets are very likely to flow into the enterprise;
② the cost of the fixed assets can be measured reliably.
(2) Classification and Depreciation method of fixed assets
The fixed assets of the Company can be divided into: buildings and constructions, production
equipment, transportation equipment and office equipment, etc. The straight-line method over useful
lives is used to measure depreciation. The useful lives and the expected net residual value of fixed assets
are determined according to the nature and usage of various fixed assets. At the end of each year, the
useful lives, expected net residual value and depreciation method of fixed assets are reviewed, and
adjusted if there is variance with original policies; The Company have made provisions for all of the
fixed assets except for the fixed assets with full provision and used continuously.
Type of fixed assets Useful lives Expected net residual
value
Land ownership - -
Houses and buildings 8-40 years 0%-5%
Machinery equipment 4-20 years 0%-5%
Vehicles 5-10 years 0%-5%
Office equipment and others 3-10 years 0%-5%
(3) Test method and provision for impairment of fixed assets
At the balance sheet date, the Company reviews whether there is impairment indicator for the fixed
assets. When there is an impairment indicator, the recoverable amount is estimated and impairment is
provided based on the difference between the carrying value and the recoverable amount once the
impairment of an asset is recognized, it will not be reversed in the subsequent accounting period.
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(4) Basis for Recognition, measurement and depreciation of fixed assets held under finance lease
√Applicable □Not Applicable
Basis for recognition of fixed assets held under finance lease: leases that transfer all the risks and
rewards related to the ownership of the relevant assets. The asset is recognized if one or more of the
following criteria is met: ① upon expiry of the lease term, the ownership of the leased asset is
transferred to the lessee; ② the lessee has the option to purchase the leased asset at a price expected to
be sufficiently lower than the fair value of the leased asset when the option is exercised and at the
inception of the lease, it is reasonably certain that the lessee will exercise the option; ③ the lease term
approximates the useful life of the leased asset even if the ownership is not transferred; ④ at the
inception of the lease, the present value of the minimum lease payments is substantially equivalent to the
fair value of the leased asset; ⑤ the leased assets are of such a specialized nature that only the lessee
can use them without major modification.
Measurement of fixed assets held under finance lease: fixed assets held under finance lease are
initially recognized at the lower of fair value of the leased assets at the inception of lease and the present
value of minimum lease payments. Subsequent measurement of fixed assets held under finance lease is
accounted for using the depreciation and impairment policies of owned fixed assets.
16. Construction in progress
√Applicable □Not Applicable
(1) Types of construction in progress
Construction in progress for the Company is self-constructed.
(2) Standard and date of transfer from construction in progress to fixed assets
The construction in progress of the Company is transferred to fixed assets when the project is
completed and ready for its intended use, which shall satisfy one of the following conditions:
① The construction of the fixed assets (including installation) has been completed or substantially
completed;
② The fixed asset has been used for trial operation and it is evidenced that the asset can operate
ordinarily or produce steadily qualified products; or the result of trial operation proves that it can operate
normally;
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③ Further expenditure incurred for construction is very minimal or remote;
④ The constructed fixed asset reaches or almost reaches the design or the requirements of contract,
or complies with the design or the requirements of contract.
(3) Impairment test and provision of impairment of construction in progress
At the balance sheet date, the Company reviews the construction in progress to check whether there
is any sign of impairment and an impairment test is needed to recognize the recoverable amount when
there are signs that construction in progress may impair. The impairment loss should be the lower of the
carrying value and recoverable amount and impairment loss cannot be reversed in the following
accounting period if it has been provided.
The recoverable amount of construction in progress should base on the higher value between fair
value of asset less disposal expense and present value of estimated cash flow in the future.
17. Borrowing costs
√Applicable □Not Applicable
(1) Recognition principles for borrowing cost capitalization
The Company‘s borrowing costs that are directly attributable to the acquisition or production of a
qualifying asset are capitalized into the cost of relevant assets. Other borrowing costs are recognized as
expenses in profit and loss for the period when incurred. Qualifying assets include fixed assets,
investment properties and inventories that necessarily take a substantial period of time for acquisition,
construction or production to get ready for their intended use or sale.
(2) Computation of capitalized amount of borrowing costs
Capitalization period refers to the period from the commencement to the cessation of capitalization
of borrowing costs, excluding the periods in which capitalization of borrowing costs is suspended.
Capitalization interruption period: Capitalization of borrowing costs is suspended during periods in
which the acquisition or construction of a qualifying asset is interrupted abnormally and the interruption
lasts for more than 3 months.
Computation of capitalized amount of borrowing costs: ① Specific borrowings will be recorded
based on the actual interest expense incurred in the period of special borrowings less the interest income
from unutilized borrowings placed at banks or investment gain from temporary investment; ② Normal
borrowings utilized are calculated based on the weighted average of expenses of the aggregate asset
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exceeding the asset expenses of the portion of special borrowings multiplied by the capitalization ratio
of the normal borrowings utilized. Capitalization ratio is calculated based on weighted average interest
rate of normal borrowings; ③ For borrowings with discount or premium, the discount or premium was
amortized over the accounting periods borrowings to adjust the interest in every period using the
effective interest rates.
18. intangible assets
Intangible assets are the identifiable non-monetary assets which have no physical shape and are
possessed or controlled by the Company.
(1) Measurement of intangible assets
Intangible assets are initially recognized at costs. The actual costs of purchased intangible assets
include the consideration and relevant expenses paid. For intangible asset contributed by investors, the
value agreed in the investment contract or agreement is the actual cost of the intangible asset. But if the
value agreed in the investment contract or agreement is not a fair value, the fair value of the intangible
asset is regarded as the actual cost. The cost of a self-developed intangible asset is the total expenditure
incurred in bringing the asset to its intended use.
Subsequent measurement of intangible assets of the Company: ① Intangible assets with finite
useful lives are amortized on a straight-line basis; at the end of each year, the useful lives and
amortization policy are reviewed, and adjusted if there is any variance with original policies; ②
Intangible assets with indefinite useful lives are not amortized and the useful lives are reviewed at each
year end date. If there is objective evidence that the useful life of an intangible asset is finite, the
intangible asset is amortized using the straight-line method according to the estimated useful life.
(2) Criterion of determining indefinite useful life
The useful life of an intangible asset is indefinite if the period in which the future economic
benefits generated by the intangible asset could not be determined, or the useful life could not be
ascertained.
Criterion of determining intangible assets with indefinite useful lives: ① For intangible assets
derived from contractual rights or other legal rights and there are no explicit years of use stipulated in
the contract or laws and regulations; ② the period in which generating benefits for the Company still
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could not be estimated after considering the industrial practice or relevant expert opinion.
At the end of each year, the useful lives of the intangible assets with indefinite useful lives are
reviewed. The assessment is performed by the departments that use the intangible assets, using the
down-to-top approach, to determine if there are changes to the determining basis of indefinite useful
lives.
(3) Methods for impairment test and provision for impairment of intangible assets
As at the balance sheet date, the Company reviews the intangible assets to check whether there is an
indication of impairment and an impairment test is needed to recognize the recoverable amount when
there are signs that intangible assets may impair. The impairment provision should be the lower of the
recoverable amount and carrying value and provision for impairment loss cannot be reversed in the
following accounting periods once it has been provided.
The recoverable amount of intangible assets should be based on the higher value between the net of
fair value of asset less disposal expense and present value of estimated cash flow of assets in the future.
(4) Basis for research and development stage for internal research and development project and
basis for capitalization of expenditure incurred in development stage
As for an internal research and development project, expenditure incurred in the research stage is
recognized in profit or loss in the period as incurred. Expenses incurred in the development stage are
recognized as intangible assets if all of the following conditions are met: ① the technical feasibility of
completing the intangible asset so that it will be available for use or for sale; ② the intention to complete the
intangible asset for use or for sale; ③ how the intangible asset will generate economic benefits, including
there is evidence that the products produced by the intangible asset has a market or the intangible asset itself
has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the
intangible asset; ④ the availability of adequate technical, financial and other resources to complete the
development and the ability to use or sell the intangible asset; ⑤ the expenditures attributable to the
development of the intangible asset could be reliably measured.
Basis for distinguishing research stage and development stage of an internal research and
development project: research stage is the activities carried out for the planned investigation and search
for obtaining new technology and knowledge, which has the characteristics of planning and exploration;
before commercial production or other uses, the application of achievements and other knowledge
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obtained from the research stage in a plan or design to produce new or substantially improved materials,
equipment and products is regarded as development stage, which has the characteristics of pinpointing
and is very likely to form results.
All the expenditures on research and development which cannot be distinguished between research
stage and development stage are recognized in the current profit or loss when incurred.
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 impairment if there is
any indication that an asset may be impaired at the balance date. If the result of the impairment test
indicates that the recoverable amount of the asset is less than its carrying amount, a provision for
impairment will be made for the difference will be recorded in impairment loss. The recoverable amount
is the higher of the net of the asset‘s fair value less disposal costs and the present value of the future cash
flows expected to be derived from the asset. Provision for asset impairment is determined and
recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an
individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A
group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill is tested for impairment at least at each year end.
In terms of impairment test of the goodwill, the carrying amount of the goodwill, arising from
enterprise combination, shall be allocated to the related asset groups on reasonable basis since the
acquisition date, or to the related asset group portfolios if it is difficult to be allocated to the related asset
groups. When the carrying amount of the goodwill is allocated to the related asset groups or asset group
portfolios, it shall be allocated in the proportion of the fair value of each asset group or asset group
portfolio against the total fair value of related asset groups or asset group portfolios. If it is difficult to
measure the fair value reliably, it shall be allocated in the proportion of the carrying amount of each asset
group or asset group portfolio against the total carrying amount of related asset groups or asset group
portfolios.
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When impairment test is made to the related asset groups or asset group portfolios including
goodwill, if there is an indication that the related asset groups or asset group portfolios are prone to
impair, the Company shall firstly test for impairment for the asset groups or asset group portfolios
excluding goodwill and calculate the recoverable amount and recognize the impairment loss accordingly
by comparing with its carrying amount. The Company shall then test for impairment for the asset groups
or asset group portfolios including goodwill and compare the carrying amount (including the carrying
amount of allocated goodwill) with its recoverable amount of related asset groups or asset group
portfolios. Provision for impairment loss shall be recognized when the recoverable amount of the related
asset groups or asset group portfolios is lower than its carrying amount.
Once the above impairment loss of assets is recognized, it shall not be reversed in any subsequent
accounting period.
20. Long-term prepayments
√Applicable □Not Applicable
Long-term prepayments are expenditures which have incurred but the benefit period is more than
one year (excluding one year). They are amortized evenly over the benefit period of each item of
expenses. If the long-term prepayments are no longer beneficial to the subsequent accounting periods,
the unamortized balance is then fully transferred to profit or loss for the period.
21. Remuneration of employees
Remuneration of employees are all forms of compensation and other relevant expenditure
given by the Company in exchange for services rendered by employees, including short-term
remuneration, post-employment benefits, termination benefits and other long-term benefits.
Short-term remuneration include short-term salaries, bonus, allowance, subsidies, staff‘s
welfare, housing provident fund, union funds and employee education funds, medical insurance fees,
injury insurance fees, maternity insurance fees, short-term paid absence, short-term profit sharing
plans, etc.. During the accounting period when employees render services, short-term benefits
payable that actually incurred shall be recognized as liabilities and credited into the current profit
and loss or relevant assets cost on an accrual basis for the benefit objects.
Post-employment benefits mainly include the basic pension insurance, supplementary pension, etc.,
In accordance with the risks and obligations undertaken by the Company, the post-employment benefits
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is classified as defined contribution plans and defined benefit pension plans. Defined contribution plans:
the Company shall recognize the sinking fund paid to individual entity on balance sheet date as a
liability in exchange of services from the employee in accounting period, and credited into current
profits or losses or related assets costs in accordance with the benefit objects. Defined benefit plans: the
cost of providing benefits is determined using the projected unit credit method, with actuarial valuations
being carried out by independent actuary at the interim and the annual balance sheet date. Staffs' benefit
costs incurred by the defined benefit plan of the Group are categorized as follows: (1) service cost,
include current period service cost, past-service cost and settlement gain or loss. Current period service
cost means the increase of the present value of defined benefit obligation resulted from service offered
by employee for the period. Past-service cost means the increase or decrease of the present value of
defined benefit obligation resulted from the revision of the defined benefit plans related to the prior
period service offered by employee; (2) interest costs of defined benefit plans; (3) changes related to the
remeasurement of defined benefit plans liabilities. Unless other accounting standards require or permit to
charge the employee benefits into assets cost, the Company charges (1) and (2) above into current profit
or loss, and recognized (3) above as other comprehensive income without transferring to profit or loss in
subsequent accounting periods.
Termination benefits: the indemnity proposal provided by the Company for employees for the
purpose of terminating labor relation with the employees before the expiry of the labor contract or
encouraging employees to accept downsizing voluntarily, when the following conditions are met,
recognize and at the same time credited into the current profit or loss the accrued liabilities arising from
the indemnity as a result of terminating labor relation with the employees: the Company has made a
formal plan for termination of employment relationship or has made an offer for voluntary redundancy
which will be implemented immediately; and the Company could not unilaterally withdraw from the
termination plan or the redundancy offer. Early retirement benefits will adopt same principles as the
termination benefit. The Company will credit the salaries and social benefits intend to pay for these early
retirees during the periods from the date of early retirement to the normal retirement date to profit or loss
of the period when recognition conditions for accrued liabilities are met.
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22. Estimated liabilities
√Applicable □Not Applicable
(1) Criterion for determining of estimated liability
If an obligation in relation to contingencies such as external guarantees, discounting of commercial
acceptance bills, pending litigation or arbitration and product quality assurance is the present obligation
of the Company and the performance of such obligation is likely to lead to the outflow of economic
benefits and its amount can be reliably measured, such obligation shall be recognized as estimated
liability.
(2) Measurement of estimated liability
The best estimate of the expenditure from the performance of the current obligation is initially
recorded as accrued liability. When the necessary expenditures fall within a range and the probability of
each result in the range are identical, the best estimate is the median of the range; if there are severable
items involved, every possible result and relevant probability are taken into account for the best
estimation.
At the balance sheet date, the carrying value of estimated liabilities is reviewed. If there is objective
evidence that the carrying value could not reflect the current best estimate, the carrying value is adjusted
to the best estimated value.
23. Share-based payments
√Applicable □Not Applicable
For equity-settled share-based payment transaction in return for services from employees, it
shall be measured at the fair value of equity instruments granted to the employees. For the payment
of such fair value that may only be exercised if services are fulfilled during the vesting period or the
specified performance is achieved, the fair value shall, based on the best estimate of the number of
exercisable instruments during the vesting period, be recognized in relevant costs or expenses in
straight-line method with the increase in the capital reserve accordingly.
The cash-settled share-based payment shall be measured at the fair value of liability assumed
by the Company, which is calculated and determined based on the shares or other equity
instruments. For the cash-settled share-based payment that may be exercised immediately after the
grant, the fair value of the liability assumed by the Company shall, on the date of the grant, be
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recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For
cash-settled share-based payment that may be exercised if services are fulfilled during the vesting
period or the specified performance is achieved, on each balance sheet date within the vesting
period, the services acquired in the 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 the Company,
and the liabilities shall be adjusted correspondingly.
At each balance sheet date and the settlement date prior to the settlement of liabilities, the fair
value of the liability is re-measured with its change included in profit or loss.
When there is changes to the Company's share-based payment plans, if the modification
increases the fair value of the equity instruments granted, corresponding recognition of service
increase in accordance with the increase in the fair value of the equity instruments; if the
modification increases the number of equity instruments granted, the increase in fair value of the
equity instruments is recognized as a corresponding increase in service achieved. Increase in the fair
value of equity instruments refer to the difference between the fair values of the equity instrument
on the modified date before or after the modification. If the Company modifies the exercisable
conditions in such manner conductive to the employees, including the shortening of the vesting
period, change or cancellation of the performance conditions (rather than market conditions), the
Company shall consider the modified exercisable conditions upon the disposal of exercisable
conditions. If the modification reduces the total fair value of shares paid or the Company uses 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 the accounting treatment, as if the
change had not occurred, unless the Company cancelled some or all of the equity instruments
granted.
During the vesting period, if the Company cancel equity instruments granted will be treated as
accelerating the exercise of rights and the remaining vesting period should be recognized
immediately in the current profit or loss, while at the same time recognize the capital reserve.
Employees or other parties can choose to meet non-vesting conditions, but for those that are not met
in the vesting period, the Company will treat it as cancellation of equity instruments granted.
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24. Revenue
√Applicable □Not Applicable
(1) Sale of goods
Revenue from the sale of goods shall be recognized at the amount received or receivable from
buyers based on contractual or agreed prices, when all of the following conditions are satisfied: ① the
significant risks and rewards of ownership of the goods have been passed to the buyer; ② the Company
retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold; ③ the amount of revenue can be measured reliably; ④ it is
probable that the associated economic benefits will flow to the enterprise; ⑤ the associated costs
incurred or to be incurred can be measured reliably.
Recognition process of the Company‘s sales revenue: business personnel submit sales application in
the business system according to the consumers‘ orders; financial personnel review the remaining credit
of the consumers or whether the payment for goods is made in advance according to the sales
application, and notify the warehouse to handle the delivery formalities if the delivery conditions are met.
The financial department confirms that the major risks of property in the goods and rewards have been
transferred to the buyers upon the receipt of waybill with the consumers‘ signature, and then issue sales
invoices to confirm the sales revenue.
(2) Provision of labor services
At the balance sheet date, when the outcome of a transaction involving the rendering of services can
be estimated reliably, revenue from provision of services shall be recognized using the percentage of
completion method. The Company confirms the completion progress in accordance with the ratio of
actual cost accounting for the total estimated cost. At the balance sheet date, when the outcome of the
transaction involving the rendering of services cannot be estimated reliably, it shall be dealt with in the
following ways: ① if the cost of services incurred is expected to be compensated, the revenue from the
rendering of services is recognized to the extent of actual cost incurred to date, and the relevant cost is
transferred to cost of service; ② if the cost of services incurred is not expected to be compensated, the
cost incurred should be included in current profit or loss, and no revenue from the rendering of services
may be recognized.
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(3) Assignment of asset use rights
Revenue from usage fee arising from assignment of intangible assets (such as trademark rights,
patent rights, franchise rights, software and copyright, etc.) and the use right of other assets will be
recognized in accordance with the time and method for charge as required under relevant contract or
agreement and at the same time satisfy the conditions that the economic benefit in connection with
transaction could flow into the Company and the amount of revenue could be reliably measured.
(4) Construction contracts revenue
Where the outcome of a construction contract can be estimated reliably at the balance sheet date,
revenues and expenses associated are recognized using the percentage of completion method. The term
―percentage of completion method‖ means a method by which the contractor recognizes its revenues and
costs in the light of the schedule of the contracted project. The Company ascertained the completion
schedule of a contract project according to the proportion of the completed total contract cost against the
expected total contract cost.
25. Government grants
(1)Types of government grants
Government grants refer to the monetary assets or non-monetary assets obtained by the Company
from the government for free, not including the investment made by the government as an owner. The
government grants are mainly divided into asset-related government grants and revenue-related
government grants.
(2) Accounting treatment of government grants
Asset-related government grants shall be recognized as deferred income in profit or loss for the
period on an even basis over the useful life of the asset；government grants measured at nominal amount
shall be recorded directly in profit and loss for the period. Revenue-related government grants shall be
treated as follows: ① those used to compensate relevant expenses or losses to be incurred by the
enterprise in subsequent periods are recognized as deferred income and recorded in profit or loss for the
period when such expenses are recognized; ② those used to compensate relevant expenses or losses
that have been incurred by the enterprise are recorded directly in profit or loss for the period.
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(3) Basis for determination of asset-related government grant and revenue-related government grant
If the government grant received by the Company is used for construction or other project that forms
a long term asset, it is regarded as asset-related government grant.
If the government grant received by the Company is not asset-related, it is regarded as
revenue-related government grant.
Government grant received without clear objective shall be classified as asset-related government
grant or revenue-related government grant by:
① Government grant subject to a certain project shall be separated according to the proportion of
expenditure budget and capitalization budget, and the proportion shall be reviewed and modified if
necessary on the balance sheet date;
② Government grant shall be categorized as related to income if its usage is just subject to general
statement and no specific project in relevant document.
(4) Amortization method and determination of amortization period of deferred revenue related to
government grants
Asset-related government grant received by the Company is recognized as deferred revenue and is
evenly amortized to the current profit or loss over the estimated useful life of the relevant asset starting
from the date the asset is available for use.
(5) Recognition of government grants
Government grant measured at the amounts receivable is recognized at the end of period when there
is clear evidence that the conditions set out in the financial subsidy policies and regulation are fulfilled
and the receipt of such financial subsidy is assured.
Other government grants other than those measured at the amounts receivables are recognized upon
actual receipt of such subsidies.
26. 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 ascertained by the current tax
laws and regulation, the tax base is the difference), deferred income tax asset or deferred income tax
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liability is calculated using the applicable tax rate prevailing at the expected time of recovering the
relevant asset or discharging the relevant liability.
(2) Deferred income tax asset is recognized to the extent that there is enough taxable income for
the utilization of the deductible temporary difference. At the balance sheet date, if there is sufficient
evidence that there would be enough taxable benefit for the utilization of the deductible temporary
difference, the deferred income tax asset not previously recognized is recognized in current period. If
there is no sufficient evidence that there would be enough future taxable income for the deduction of the
deferred income 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 control the reversal of
the temporary differences and the temporary differences would not be probably reversed in the
foreseeable future. For deductible temporary differences arising from investments in subsidiaries and
associated companies, deferred income tax asset is recognized if the temporary difference will be very
probably reversed in foreseeable future and there will be sufficient future taxable profit to deduct the
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 is
recognized for the temporary differences resulting from the initial recognition of assets or liabilities due
to a transaction other than a business combination, which affects neither accounting profit nor taxable
profit (or deductible loss). At the balance sheet date, deferred income tax assets and deferred income
tax liabilities are measured at the tax rates that are estimated to apply to the period when the asset is
realized or the liability is settled.
27. Lease
(1). Accounting treatment of operating lease
√Applicable □Not Applicable
① Rental payments for asset rented are amortized on a straight-line basis over the lease term
(including rent-free periods), and credited into the current expenses. Initial direct costs that are
attributable to leasing transactions paid by the Company are credited to current expense.
When the lesser of the assets bears the lease related expenses which should be undertaken by the
Company, the Company shall deduct that part of expense from the rent and amortize the net amount over
the lease term and credited to current expense.
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② Rental income received from assets rented out is amortized on a straight-line basis over the
lease term (including rent-free periods), and recognized as lease income. Initial direct costs involving
leasing transactions paid by the Company are credited into current expenses, in case the amount is
significant, it will be capitalized, and are credited into current revenue on the same basis as rental
income recognized over the lease term.
When the Company bears the lease related expenses which should be undertaken by the lessee, the
Company shall deduct that part of expense from the total rent income, and allocate the rental payment
over the lease term.
(2). Accounting treatment of Finance lease
√Applicable □Not Applicable
①When the Company is a lessee, the leased asset is recorded at the amounts equal to the lower of
the fair value of the leased asset and the present value of the minimum lease payments on the lease
beginning date and the long-term payables is recorded at the amounts of the minimum lease payments.
The difference between the recorded amount of the leased asset and the minimum lease payments is
accounted for as unrecognized finance charge.
The unrecognized finance charge is amortized using the effective interest method over the period of
the lease and accounted in finance charge. Initial direct costs incurred by the Company are credited in
value of leased assets.
②When the Company is a lessor, the difference between sum of the lease receivables and
unguaranteed residual value and its present value is accounted for as unrealized finance income and is
recognized as rental income over the period of receiving rental. Initial direct costs attributable to lease
transaction incurred by the Company shall be accounted in the initial measurement of finance lease
receivables and reduced the amount of recognized during period of the lease.
28. CHANGES ON SIGNIFICANT ACCOUNTING POLICES AND ACCOUNTING
ESTIMATES
(1). Changes on Significant Accounting Policies
√Applicable □Not Applicable
（1）Changes on accounting policies
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On 28 April 2017, the CAIKUAI No. [2017]13 the Accounting Standards for Enterprises No.
42—Non-current assets held for sale, disposal group and termination operations was issued by MOF,
which was implemented since 28 May 2017. On 10 May 2017, the CAIKUAI No. [2017]15 The
Accounting Standards for Enterprises No. 16—Government‘s Subsidies (revised in 2017) was issued by
MOF, which was implemented since 12 June 2017. The Company carried out the aforesaid two
standards according to the time required by MOF.
Before carrying out the Accounting Standards for Enterprises No. 16—Government‘s Subsidies
(revised in 2017), the government‘s subsidies gained by the Company were included in the
non-operating income. After carrying out the Accounting Standards for Enterprises No.
16—Government‘s Subsidies (revised in 2017), the Company adopted the future applicable method to
deal with the government‘s subsidies exiting on 1 January 2017 and adjusted the additional
government‘s subsidies during the period from 1 January 2017 to the implementation date of this
standard; for the government‘s subsidies occurred after 1 January 2017 and not related to the daily
activities, they were included in net operating costs and management expenses, or included in other
revenue; the government‘s subsidies not related to the daily activities was included in non-operating
income.
The changes on the accounting policies and adjustment on the accounting item calculation have
only effect on the financial statements and will not have effect on the profit or loss, total assets and net
assets of the Company without involving retroactive adjustments on the prior years.
（2）. Changes on Significant Accounting Estimates
√Applicable □Not Applicable
There is no change on the accounting estimates of the Company in the period.
29. Other significant accounting policies and accounting estimations
(1) Share repurchases
When the Company purchases its own shares to decrease its registered capital or reward its staff, it
shall be included in treasury stock against the amount actually paid.
When the Company awards the purchased shares to its staff under the equity-settled share-based
payment agreement, it shall be included in capital reserve (equity premium) against the difference
between the book balance of awarded treasury stock and the staff-paid cash and capital reserve
recognized upon the granting of equity instruments.
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When cancelling the treasury stock, the share capital shall be cancelled against the total face value
of the cancelled treasury stock; the treasury stock shall be eliminated against the book balance of the
cancelled treasury stock; the capital reserve (equity premium) shall be eliminated against the difference;
if the equity premium is insufficient for elimination, the retained earnings shall be adjusted accordingly.
(2) Asset securitization business
Some of the Company‘s receivables are securitized. The Company‘s underlying assets are
trusted to a special purpose entity which issues senior asset-backed securities to investors. The
Company holds subordinated asset-backed securities which are not transferrable before both the
principals and interests of the senior asset-backed securities are repaid. The Company serves as the
asset service supplier, providing services including asset maintenance and its daily management,
formulation of the annual asset disposal plan, formulation and implementation of the asset disposal
plan, signing relevant asset disposal agreements and periodic preparation of asset service report.
Meanwhile, the Company, as the liquidity support organization, provides liquidity support before
the principals of the senior asset-backed securities are fully repaid to make up the differences of the
interests or principals. Trust assets are prioritized to repay the principals and interests of the senior
asset-backed securities after the trust taxes and relevant fees are paid, and the remaining trust assets
upon the full repayment of the principals and interests will be owned by the Company as returns of
the subordinated asset-backed securities. The trust assets are not derecognized because the
Company retains substantially all the risks and rewards. At the same time, the Company has de
facto controls over the special purpose entity which are consolidated into our financial statements.
The Company evaluates the extent to which it transfers the risks and rewards of ownership of
the assets to the other entities and determines whether it retains control while applying the
accounting policy in respect of asset securitization.
①The financial asset is derecognized when the Company transfers substantially all the risks and
rewards of ownership of the financial asset;
② The financial asset is continued to recognize when the Company retains substantially all the
risks and rewards of ownership of the financial asset;
③ When the Company neither transfers nor retains substantially all the risks and 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.
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(3) Hedge accounting
① Hedges are classified as:
1) A fair value hedge is a hedge of the exposure to changes in fair value of a recognized asset
or liability or an unrecognized firm commitment (except foreign exchange risk).
2) Cash flow hedges is a hedge of the exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognized asset or liability or a highly probable
forecast transaction, or a foreign currency risk in an unrecognized firm commitment.
3) Hedge of a net investment in a foreign operation is a hedge of the exposure to foreign
exchange risk associated with a net investment in a foreign operation. Net investment in a foreign
operation is the share of interest in the net asset of the foreign operation.
② Designation of the hedge relationship and recognition of the effectiveness of hedging:
At the inception of a hedge relationship, the Company formally designates the hedge
relationship and prepares documents relating to the hedge relationship, the risk management
objective and its strategy for undertaking the hedge. The documentation includes identification of
the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how
the Company will assess the hedging instrument‘s effectiveness.
Hedging instrument‘s effectiveness means the degree of the change of fair value and cash flow
of the hedging instrument in offsetting the exposure to changes in the hedged item‘s fair value or
cash flows attributable to the hedged risk. The hedge is assessed by the Company for effectiveness
on an ongoing basis and judged whether it has been highly effective throughout the accounting
periods for which the hedging relationship was designated. A hedge is regarded as highly effective
if both of the following conditions are satisfied:
1) at the inception and in subsequent periods, the hedge is expected to be highly effective in
offsetting changes in fair value or cash flows attributable to the hedged risk during the period for
which the hedge is designated;
2) the actual results of offsetting are within a range of 80% to 125%.
③ Method of Hedge accounting:
1) Fair value hedges
The change in the fair value of a hedging derivative is recognized in the current profit or loss.
The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part
of the carrying amount of the hedged item and is also recognized in the current profit or loss.
For fair value hedges relating to financial instruments carried at amortized cost, the adjustment
to carrying value of the hedged items is amortized through the current profit or loss over the
remaining term from adjustment to maturity. Amortization based on the effective interest method
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may begin as soon as an adjustment is made to the carrying amount and shall not be later than when
the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being
hedged.
If the hedged item is derecognized, the unamortized fair value is recognized immediately in the
current profit or loss.
When an unrecognized firm commitment is designated as a hedged item, the subsequent
cumulative change in the fair value of the firm commitment attributable to the hedged risk is
recognized as an asset or liability with a corresponding gain or loss recognized in the current profit
or loss. The changes in the fair value of the hedging instrument are also recognized in the current
profit or loss.
2) Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognized directly as
capital reserve (other capital reserve), while the ineffective portion is recognized immediately in the
current profit or loss.
Amounts taken to capital reserve (other capital reserve) are transferred to the current profit or
loss when the hedged transaction affects the current profit or loss, such as when hedged financial
income or financial expense is recognized or when a forecast sale occurs. Where the hedged item is
the cost of a non-financial asset or non-financial liability, the amounts taken to capital reserve
(other capital reserve) are transferred to the initial carrying amount of the non-financial asset or
non-financial liability (or the amounts originally recognized in capital reserve (other capital reserve)
will be transferred to the current profit or loss for in the same period when the profit or loss are
affected by the non-financial asset or non-financial liability).
If the forecast transaction or firm commitment is no longer expected to occur, the accumulated
profit or loss hedging instruments previously recognized in shareholders‘ equity are transferred to
the current profit or loss. If the hedging instrument expires or is sold, terminated or exercised
without replacement or rollover, or if its designation as a hedge is revoked, the amounts previously
recognized in other comprehensive income remain in there until the forecast transaction or firm
commitment affects the current profit or loss.
3) Hedge of net investment in foreign operation
A hedge of a net investment in a foreign operation includes the hedge of the currency item as a
portion of net investment, its treatment is similar to cash flow hedge. The portion of the gain or loss
on a hedging instrument that is determined to be an effective hedge is included in other
comprehensive income. The ineffective portion is recognized in the current profit or loss. When
deal with foreign operation, any accumulated profit or loss attributable to shareholders‘ equity will
be transferred to the current profit or loss.
(4) Explanations on significant accounting estimates
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Judgments, estimates and assumptions shall be made to book value of the financial statements
items, which could not be measured accurately, due to the inherent uncertainties of operating activities,
while applying accounting policy. Such judgments, estimates and assumptions were based on the
management‘s historical experience and made after considered other various factors. These judgments,
estimates and assumptions will influence the amount of revenues, expenses, assets and liabilities
presented in financial reports and the disclosure of contingent liabilities on the balance sheet date.
However, the actual results caused by the uncertainties of these estimations may be different from the
current estimates of the management, and thus cause a material adjustment to the carrying amounts of
assets and liabilities affected in the future. The judgments, estimates and assumptions mentioned
above shall be reviewed on a going concern basis. If the revisions to accounting estimates only
affected the period, relevant adjustment due to the effect shall be recognized in the period; if the
revision affects both the current and future period, the effect shall be recognized in the current and
future period.
On the balance sheet date, the significant fields involving judgments, estimates and assumptions
about financial report items are listed as follows:
① Estimated liability
Provision for product quality guarantee, estimated onerous contracts, and other estimates shall be
recognized in accordance with the terms of contract, current knowledge and historical experience. If
the contingent event has formed a practical obligation which probably results in outflow of economic
benefits from the Company, an estimated liability shall be recognized on the basis of the best estimate
of the expenditures to settle relevant practical obligation. Recognition and measurement of the
estimated liability significantly rely on the management‘s judgments. In the process of judgment, the
Company takes into consideration the assessment of relevant risks, uncertainties, time value of money
and other factors related to the contingent events. Among them, the Company will undertake
estimated liabilities with respect to the after-sales services provided for the return, maintenance and
installation of goods. When estimating liabilities, the Company has considered the maintenance
information in recent years, but the previous maintenance experiences may fail to reflect the future
circumstances. Any increase or decrease in this provision is likely to affect the profits and losses of
the next year.
② Provision for bad debts
The allowance method is adopted for bad debts according to accounting policies of accounts
receivables. Impairment losses for receivables are assessed on the basis of recoverability, as a result of
judgments and estimates of the management. The difference between actual outcome and the
previously estimated outcome will influence the carrying value of receivables and accrual or reversal
of provision for bad debts during the period accounting estimates are changed.
③ Provision of impairment of inventories
Inventories are measured by lower of historical cost or net realizable value method according to
the accounting policies of inventories; for obsolete and unsalable inventories or whose costs are
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higher than the net realizable, provision for impairment of inventories shall be incurred. The carrying
value of inventory shall be written down to the net realizable value on the basis of the salability of
inventories and the net realizable value. Inventory impairment requires the management‘s obtaining of
solid evidence, and their judgment and estimations made after considering the purpose of holding
inventories and the effect of events after the balanced sheet date and etc. The difference between the
actual outcome and the previously estimated outcome will influence the carrying value of inventories
and the provision or reversal of impairment of inventories during the period accounting estimates are
changed.
④ Fair value of financial instruments
For financial instruments where there is no active market, the Company will determine the fair
value through a variety of valuation methods. Such valuation methods include discounted cash flow
analysis. In the valuation, the Company shall estimate the future cash flow, credit risk, market
volatility and correlation, and select the appropriate discount rate. Such related assumptions are
uncertain, and their changes may affect the fair value of financial instruments.
⑤ Impairment of available-for-sale financial assets
The determination of whether impairment loss shall be recognized in income statement for
available-for-sale financial asset is significantly depends on the judgments and assumptions of the
management. While making judgments and assumptions, it shall be take into consideration that how
much the fair value of the investment is lower than the cost and its continuity, the financial position
and short-term business projection of the investee, including industry conditions, technological
innovation, the credit ratings, probability of violation and counterparts‘ risks.
⑥ Provision for long-term assets impairment
On the balance sheet date, the Company shall judge whether there is any possible indication of
impairment against non-current assets other than financial assets. The intangible assets with indefinite
useful life must be tested for impairment on an annual basis as well as when there is any indication of
impairment. Other non-current assets other than financial assets shall be tested for impairment when
there is an indication showing that the carrying value is not recoverable. Impairment occurs while the
carrying value of an asset or asset group is higher than the recoverable value, which is the higher of
the net of fair value deducted disposal expenses and the present value of expected future cash flow.
The net of fair value deducted by disposal expenditure is determined with reference to the price in the
sale agreement regarding analogous asset, and observable market price less the increase of cost that
directly attributable to the disposal of assets. Significant judgments regarding the production amount,
sales price, relevant operating costs of the assets (or assets group) and the discount rate used to
calculate the present value shall be made when determining the present value of future cash flows.
Recoverable amount shall be estimated by using all accessible relevant information, including
production amount, sales price, and relevant operating costs predictions made based on reasonable
and supportive assumptions. The Company shall test for goodwill impairment at least every year. This
requires the Company to estimate the present value of future cash flows for such assets groups or asset
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group portfolios allocated with goodwill. When estimating the present value of future cash flows, the
Company shall not only estimate the future cash flows generated by such asset groups or asset group
portfolios, and select the appropriate discount rate to determine the present value of such future cash
flows.
⑦ Depreciation and amortization
Investment properties, fixed assets and intangible assets are depreciated and amortized by a
straight-line approach over their estimated useful life by taking into consideration the residual value.
Useful life shall be periodically reviewed to determine the depreciation and amortization expenses for
each reporting period and be determined on the basis of historical experience regarding analogous
assets and the expected technological innovation. Significant changes to previous accounting
estimates will result in adjustments against depreciation and amortization expenses in the future
periods.
⑧ Deferred income tax assets
Deferred income tax asset is recognized for all the uncompensated tax losses to the extent that
there is sufficient taxable income for the deduction of loss. In order to determine the amount of
deferred tax assets, the management of the Company needs to predict the timing and the amount of
taxable profits in the future by taking into account a large amount of judgment, as well as the strategy
of tax planning.
⑨ Income tax
There are certain transactions the tax treatment and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. Whether some items could be
presented before taxation shall be approved by relevant tax authorities. Where the final tax outcome of
these matters is different from the initial estimated amount, such differences will impact the current
and deferred tax in the period of confirmation.
⑩ Returned profits from sales
The Company and its subsidiaries adopt the policy of returned profits from sales for all
consumers. According to the relevant conventions in the sales agreement, the review of specific
transactions, the market situation, the pipeline inventory levels and the historical experiences, the
Company and its subsidiaries estimate and make returned profits from sales on a regular basis with
reference to the completion of agreed assessment indexes. Provisions of returned profits from sales
involve the judgment and estimates of the management. In case of any significant changes in the
previous estimates, the difference above will have an impact on the returned profits from sales during
the period when significant changes occur.
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VI. Taxation
1. Main tax types and tax rates
√Applicable □Not Applicable
Tax type Basis of taxation Tax rate
Value-added tax Taxable revenue of goods sales and 5%, 6%, 11%, 17%
taxable labor services revenue
Urban maintenance and 7%
Turnover tax amount payable
construction tax
EIT Statuary tax rate or
Income tax amount payable
preferential rates as follows
(Local) education 1%, 2%, 3%
Turnover tax amount payable
surcharges
2. Preferential tax
√Applicable □Not Applicable
Companies enjoying preferential tax and preferential tax rate:
Name of company Tax rate Preferential tax
entitled to the preferential taxation policies
Qingdao Haier Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Refrigerator Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Intelligent Electronics Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Special Refrigerator Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Dishwasher Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Special Freezer Co., Ltd. 15%
as a hi-tech enterprise
Qingdao Haier Intelligent Home Appliance Technology entitled to the preferential taxation policies
15%
Co., Ltd as a hi-tech enterprise
entitled to the preferential taxation policies
Wuhan Haier Electronics Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Wuhan Haier Freezer Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Hefei Haier Refrigerator Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Hefei Haier Air-conditioning Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Zhengzhou Haier Air-conditioning Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Shenyang Haier Refrigerator Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Chongqing Haier Air-conditioning Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Chongqing Haier Refrigeration Appliance Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Guizhou Haier Electronics Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Qingdao Haier Air-Conditioner Electronics Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Moulds Co., Ltd. 15%
as a hi-tech enterprise
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entitled to the preferential taxation policies
Qingdao Meier Plastic Powder Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Chongqing Haier Precision Plastic Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Chongqing Haier Intelligent Electronics Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Qingdao Haigao Design & Manufacture Co., Ltd. 15%
as a hi-tech enterprise
Qingdao Haier Technology Co., Ltd. 10% significant software enterprise tax
preferential
entitled to the preferential taxation policies
Qingdao Hairi High Technology Molding Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier (Jiaozhou) Air-Comditioner Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Beijing Haier Guangke Digital Technology Co., Ltd. 15%
as a hi-tech enterprise
Qingdao Haier Intelligent Technology Development entitled to the preferential taxation policies
15%
Co., Ltd. as a hi-tech enterprise
entitled to the preferential taxation policies
Foshan Haier Freezer Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential policies as a
Wuhan Haier Energy and Power Co., Ltd. 10%
small and micro enterprise
entitled to the preferential taxation policies
Hefei Haier Washing Machine Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Washing Machine Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Jiaonan Haier Washing Machine Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Drum Washing Machine Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Foshan Shunde Haier Electric Appliance 15%
as a hi-tech enterprise
Qingdao Economy and Technology Development Zone entitled to the preferential taxation policies
15%
Haier Water Heater Co., Ltd. as a hi-tech enterprise
entitled to the preferential taxation policies
Wuhan Haier Water Heater Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Foshan Drum Washing Machine Co., Ltd. 15%
as a hi-tech enterprise
entitled to the preferential taxation policies
Qingdao Haier Goodaymart Logistic Co., Ltd. 15%
as a hi-tech enterprise
Shengfeng Supply Chain Co., Ltd. (盛丰供应链有限 entitled to the preferential taxation for
15% enterprises in Pingtan Comprehensive
公司)
ExperimentaltheArea
entitled to preferential taxation policies
Chongqing Goodaymart Electronics Sales Co., Ltd. 15% under the Western Development initiative
Chongqing Haier Home Appliance Sale Co., Ltd. and the PRCto the preferential taxation policies
entitled
15% under the Western Development initiative
some branches in western region
Chongqing Goodaymart Electronics Sales Co., Ltd. and the PRCto the preferential taxation policies
entitled
15% under the Western Development initiative
some branches in western region
the PRCto the preferential taxation policies
entitled
Chongqing Haier Washing Machine Co., Ltd. 15% under the Western Development initiative
the PRCto the preferential taxation policies
entitled
Chongqing Haier Water Heater Co., Ltd. 15% under the Western Development initiative
Chongqing Haier Drum Washing Machine Co., the PRCto the preferential taxation policies
entitled
15%
Ltd. under the Western Development initiative
the PRC
VII. Explanatory Notes for Items in Consolidated Financial Statements
Unless otherwise specified, the following closing balance means the amount as at 30 June 2017;
opening balance means the amount as at 31 December 2016; current period means the amount incurred
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from 1 January to 30 June 2017, while the previous period means the amount incurred from 1 January to
30 June 2016.
1. Monetary funds
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Treasury cash 593,053.62 565,073.32
Bank deposit 28,737,845,846.53 23,191,076,580.34
Other
monetary 358,553,841.65 312,992,470.59
funds
Total 29,096,992,741.80 23,504,634,124.25
Among which: total of overseas amounts 2,549,100,263.21 2,075,691,395.39
Other explanatory
An amount of RMB12,786,629,814.46 of the monetary fund was deposited in Haier Group Finance
Co., Ltd. on 30 June 2017, the balance of which including a fixed term bank deposit of
RMB984,312,683.26. The investment fund in the closing balance of other monetary fund was
RMB15,017,278.47, the payment of the third party platform was RMB19,061,914.99 and the amount
securing bill payable was RMB324,474,648.19.
2. Financial asset designated to be measured at fair value and the change of which is recorded in
current profit and loss
√Applicable □Not Applicable
Items Closing balance Opening balance
Forward foreign exchange sale and
36,973,157.40 80,432,384.17
purchase agreement
Total 36,973,157.40 80,432,384.17
3. Bills receivable
(1) Categories of bills receivable
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Bank acceptance notes 1,904,187,025.49 3,410,072,113.31
Commercial acceptance bill 10,447,196,998.28 10,386,489,124.74
Total 12,351,384,023.77 13,796,561,238.05
(2) The pledged bills receivable of the Company at the end of the period was RMB 9,520,989,005.71.
4. Accounts receivables
(1) Accounts receivables disclosed by categories:
Closing balance Opening balance
Items
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Provision for Provision for
Book balance Book balance
bad debts bad debts
Accounts receivables that are
individually significant and
are subject to provision for
bad debts on individual basis
Accounts receivables that are
subject to provision for bad 15,236,801,608.65 474,861,071.65 12,585,181,476.76 337,937,379.10
debts on portfolio basis
Accounts receivables that are
individually insignificant but
41,445,442.87 41,445,442.87 71,243,900.12 71,243,900.12
are subject to provision for
bad debts on individual basis
Total 15,278,247,051.52 516,306,514.52 12,656,425,376.88 409,181,279.22
(2) Accounts receivables of which provision for bad debts is made within the group:
Closing balance Opening balance
Aging
Book balance Provision for bad Book balance Provision for bad
debts debts
Within 1
14,953,048,631.15 460,673,422.77 12,281,406,481.14 322,748,629.33
year
1-2
177,724,889.08 8,886,244.45 200,752,072.44 10,037,603.63
years
2-3
58,520,469.57 2,926,023.49 79,398,804.14 3,969,940.20
years
Over 3
47,507,618.85 2,375,380.94 23,624,119.04 1,181,205.94
years
Total 15,236,801,608.65 474,861,071.65 12,585,181,476.76 337,937,379.10
(3) The total amount of the top 5 in the accounts receivables at the end of the period was
RMB4,962,485,545.70, accounting for 32.48% of the book balance of the accounts receivables, and the
amount of provision for bad debts was RMB82,125,551.23.
(4) Provisions for bad debts made, collected or reversed in the period:
Provisions for bad debts in the amount of RMB116,172,298.97 were reverted in the period.
(5) Accounts receivable written off in the period:
The bad debts written off in 2017 was RMB1,953,553.65, and there was no significant accounts
receivable written off in the period.
5. Prepayments
(1) Aging of prepayments
√Applicable □Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 717,127,435.94 96.59 547,842,144.20 94.69
1-2 years 16,207,046.99 2.18 20,243,191.67 3.50
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2-3 years 8,672,215.67 1.17 9,492,337.02 1.64
Over 3 years 467,883.90 0.06 965,768.51 0.17
Total 742,474,582.50 100.00 578,543,441.40 100.00
(2) The total amount of the top 5 in the prepayments at the end of the period was
RMB289,762,024.09, accounting for 39.03% of the book balance of the prepayments.
6. Interest receivables
Closing balance Opening balance
Aging
Book balance Proportion Book balance Proportion
Within 1 year 146,249,181.03 99.99% 133,777,402.17 98.86%
1-2 years 19,428.14 0.01% 1,542,372.24 1.14%
Total 146,268,609.17 100.00% 135,319,774.41 100.00%
7. Other receivables
(1) Other receivables disclosed by categories:
Closing balance Opening balance
Items Provision for Provision for
Book balance Book balance
bad debts bad debts
Individual significant other
receivables of which provision
for bad debts is made on an
individual basis
Other receivables of which
provision for bad debts is 1,149,816,482.93 61,496,497.04 1,217,243,603.74 36,825,550.99
made on a group basis
Individual insignificant other
receivables of which provision
35,984,245.50 35,984,245.50 61,449,863.58 61,449,863.58
for bad debts is made on an
individual basis
Total 1,185,800,728.43 97,480,742.54 1,278,693,467.32 98,275,414.57
(2) Other receivables of which provision for bad debts is made on portfolio basis:
Closing balance Opening balance
Aging Provision for Provision for
Book balance Book balance
bad debts bad debts
Within one
year
892,156,530.72 48,613,499.42 872,780,892.61 19,602,415.43
1-2 years 187,197,706.55 9,359,885.33 288,221,508.15 14,411,075.41
2-3 years 50,108,989.39 2,505,449.47 37,909,711.73 1,895,485.59
Over 3 years 20,353,256.27 1,017,662.82 18,331,491.25 916,574.56
Total 1,149,816,482.93 61,496,497.04 1,217,243,603.74 36,825,550.99
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(3) At the end of the period, total amount of top five other receivables was RMB229,205,981.58,
representing19.33% of the book balance of other receivables, and the amount of provision for bad debts
was RMB11,460,299.08.
(4) Bad-debt provisions made, collected or reversed in the period:
Provisions for bad debts in the amount of RMB8,697,165.94 were made in the period.
(5) The other receivables actually written off in the period was RMB1,460,605.99.
(6) Other receivables mainly include the deposit, the quality retention money, staff borrowing, tax
refunds, and advance money for another, etc.
8. Inventories
(1) Details of inventories
Closing balance Opening balance
Items Impairment Impairment
Book balance Book balance
Provision Provision
Raw materials 2,776,960,468.75 60,670,393.92 2,086,007,432.32 56,844,901.08
Work in
295,441,627.87 216,384,326.73
progress
Unsettled
payments of
179,021,325.97 159,358,411.30
completed
projects
Finished goods 14,486,084,231.54 450,474,185.11 13,317,467,752.08 484,430,600.50
Total 17,737,507,654.13 511,144,579.03 15,779,217,922.43 541,275,501.58
(2) Impairment provision of inventories
Opening Increase for Decrease for the period Closing
Items
balance the period Reversal Write-off Total balance
Raw
material 56,844,901.08 8,630,598.81 4,805,105.97 4,805,105.97 60,670,393.92
s
Finished
484,430,600.50 105,868,842.00 16,791,944.90 123,033,312.49 139,825,257.39 450,474,185.11
goods
Total 541,275,501.58 114,499,440.81 16,791,944.90 127,838,418.46 144,630,363.36 511,144,579.03
(3) Unsettled payments of completed projects from the construction contracts at the end of the
period
Unsettled payments
Accumulatively
Accumulated cost of completed projects
recognized gross Settled Amounts
incurred from the construction
profit
contracts
885,522,591.36 186,318,837.63 892,820,103.02 179,021,325.97
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9. Other current assets
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Bank Treasury deposit 1,052,649,331.20 490,807,882.39
Deductable VAT 1,089,684,914.18 1,794,827,965.32
Others 533,999,789.09 367,808,740.41
Total 2,676,334,034.47 2,653,444,588.12
10. Available-for-sale financial assets
(1). Information of available-for-sale financial assets
√Applicable □Not Applicable
Unit and Currency: RMB
Closing balance Opening balance
Provision Provision
Items Carrying for Carrying for
Book value Book value
Balance impairmen balance impairmen
t t
Available-for-sal
e debt
instrument:
At fair value 27,584,986.24 27,584,986.24 30,354,194.80 30,354,194.80
At cost 1,497,712,577.4 3,225,000.0 1,494,487,577.4 1,528,749,522.2 3,225,000.0 1,525,524,522.2
9 0 9 5 0
Total 1,525,297,563.7 3,225,000.0 1,522,072,563.7 1,559,103,717.0 3,225,000.0 1,555,878,717.0
3 0 3 5 0
(2). Available-for-sale financial assets at fair value at the end of the period
√Applicable □Not Applicable
Unit and Currency: RMB
Categories of available-for-sale financial assets Available-for-sale equity instrument
Cost of equity instrument / Amortization cost of debt
23,030,899.36
instruments
Fair value 27,584,986.24
Accumulated fair value changes credited into other
3,765,777.42
comprehensive income
Allowance for impairment amounts
(3) Available-for-sale financial assets at cost at the end of the period
Increase for Decrease for
Opening balance Closing balance
Book value the period the period
(1) Book value
China Petrochemical Marketing Co., Ltd. 1,379,537,271.77 41,756,944.76 1,337,780,327.01
Others 149,212,250.48 10,720,000.00 159,932,250.48
Total 1,528,749,522.25 10,720,000.00 41,756,944.76 1,497,712,577.49
(2) Provision for impairment
China Petrochemical Marketing Co., Ltd.
Others 3,225,000.00 3,225,000.00
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Total 3,225,000.00 3,225,000.00
(3) Book value
China Petrochemical Marketing Co., Ltd. 1,379,537,271.77 1,337,780,327.01
Others 145,987,250.48 156,707,250.48
Total 1,525,524,522.25 1,494,487,577.49
(4) Movement in impairment of available-for-sale financial assets during the reporting period:
Provision for impairment of
Items
available-for-sale equity instrument
Provision balance at the beginning of the period 3,225,000.00
Provision made in the year
Decrease in the year
Allowance for impairment amounts at the end of the period 3,225,000.00
11. Long-term equity investments
√Applicable □Not Applicable
Increase/decrease in the period
Investment
Investees Opening balance Adjustment in
income Other Declaration of
Investments other
recognized changes cash dividends
increased comprehensive
under equity in equity or profits
income
method
Associates:
Haier Group Finance
4,108,505,917.07 291,954,914.37 -13,419,311.99
Co., Ltd.
CONTROLADORA
3,011,983,426.16 99,292,057.77 -67,495,468.99 -34,405,195.14
MABE S.A.deC.V.
Bank of Qingdao co.,
1,670,058,752.11 120,813,257.79 -38,386,695.61 80,302.33 -76,868,844.93
Ltd.
Others 2,267,271,532.80 73,900,402.83 -3,044,759.55 -635,022.00
Total 11,057,819,628.14 585,960,632.76 -122,346,236.14 80,302.33 -111,909,062.07
continued table
Increase/decrease in the
Closing
period balance of
Investees The disposal Closing balance
provision for
Others of the impairment
investment
Associates:
Haier Group Finance Co., Ltd. 4,387,041,519.45
CONTROLADORA MABE S.A.deC.V. 3,009,374,819.80
Bank of Qingdao Co., Ltd. 1,675,696,771.69
Others -1,412.06 2,337,490,742.02
Total -1,412.06 11,409,603,852.96
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12. Investment Property
Measurement method of investment property
（1）Increase and decrease of investment property under cost model for the year are set out as
follows:
Increase for the Decrease for
Items Opening balance Closing balance
period the period
(1) Total original costs for the
investment property
48,177,608.70 48,177,608.70
House, buildings and land 48,177,608.70 48,177,608.70
(2) Total accumulated amortization
for the investment property
13,577,215.33 1,598,885.53 15,176,100.86
House, buildings and land 13,577,215.33 1,598,885.53 15,176,100.86
(3) Total accumulated provision for
Impairment for the investment
property
House, buildings and land
(4) Total book value for the
investment property
34,600,393.37 33,001,507.84
House, buildings and land 34,600,393.37 33,001,507.84
(2) Depreciated and amortized amount for the period was RMB1,598,885.53 .
(3) No provision for impairment was made as the recoverable amount of investment property was
not less than the book value of the Company at the end of the period.
13. Fixed assets
Translation
Category of Increase for the Decrease for the difference of
Opening balance Closing balance
fixed assets period period foreign
statement
(1) Book value
Buildings and
7,652,338,608.01 433,347,676.33 51,878,482.18 -16,785,873.42 8,017,021,928.74
structures
Production
14,438,121,707.48 766,847,799.16 529,943,303.01 -137,737,266.55 14,537,288,937.08
equipment
Transportation
271,648,884.84 37,348,694.81 22,795,160.60 -238,885.49 285,963,533.56
equipment
Office
342,983,520.59 32,516,766.33 15,623,601.59 2,735,077.77 362,611,763.10
equipment
Others 650,939,331.36 59,071,020.49 14,114,192.77 149,396.50 696,045,555.58
Total 23,356,032,052.28 1,329,131,957.12 634,354,740.15 -151,877,551.19 23,898,931,718.06
(2) Accumulated depreciation
Buildings and
2,108,838,241.54 195,540,739.34 6,235,233.83 3,513,041.09 2,301,656,788.14
structures
Production
5,057,054,706.21 855,206,553.36 427,035,029.94 -16,597,867.64 5,468,628,361.99
equipment
Transportation
138,946,612.53 25,090,929.34 20,511,544.12 4,867.60 143,530,865.35
equipment
Office
167,977,041.68 25,767,740.80 11,266,890.39 3,126,599.76 185,604,491.85
equipment
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Others 304,113,366.47 52,943,714.51 12,276,594.22 66,740.94 344,847,227.70
Total 7,776,929,968.43 1,154,549,677.35 477,325,292.50 -9,886,618.25 8,444,267,735.03
(3) Net book value
Buildings and
5,543,500,366.47 5,715,365,140.60
structures
Production
9,381,067,001.27 9,068,660,575.09
equipment
Transportation
132,702,272.31 142,432,668.21
equipment
Office
175,006,478.91 177,007,271.25
equipment
Others 346,825,964.89 351,198,327.88
Total 15,579,102,083.85 15,454,663,983.03
(4) Provision for impairment
Buildings and
31,269,149.66 551,222.80 31,820,372.46
structures
Production
8,658,226.28 1,212,979.39 59,397.92 7,504,644.81
equipment
Transportation
1,959.66 57.61 2,017.27
equipment
Office
equipment
Others 125,862.87 3,699.94 129,562.81
Total 40,055,198.47 1,212,979.39 614,378.27 39,456,597.35
(5) Book value
Buildings and
5,512,231,216.81 5,683,544,768.14
structures
Production
9,372,408,774.99 9,061,155,930.28
equipment
Transportation
132,700,312.65 142,430,650.94
equipment
Office
175,006,478.91 177,007,271.25
equipment
Others 346,700,102.02 351,068,765.07
Total 15,539,046,885.38 15,415,207,385.68
(1) Total fixed asset transferred from construction-in-progress balance for the period amounted to
RMB952,220,110.22.
(2) Haier Group Corporation, the parent company of the Company, issued an undertaking letter to
the Company, committing that it will ensure the Company and its subsidiaries use the self-established
buildings and the Group‘s lands in a continuous, steady, free and undisturbed condition. If Haier Group
Corporation suspended or terminated to fulfill its commitment and obligation as leading to any loss of
the Company and its subsidiaries, Haier Group Corporation shall take responsibility for the loss. As for
the legal defects of the Company‘s and its substantial subsidiaries‘ land and property, the Company
committed since the application date of non-public issue, the Company will use all reasonable
commercial endeavors to solve the real estate defects of the Company and its substantial subsidiaries
within five years to realize the legal compliance of the Company‘s and its substantial subsidiaries in
respect of the land and property.
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(3) The pledged fixed assets were RMB81,743,670.84 at the end of the period.
(4) The rental financial fixed assets at the end of the period:
Items Category of fixed assets Closing balance
Transportation
(1) Book amount 22,814,833.51
equipment
(2) Accumulated Transportation
15,957,810.14
depreciation equipment
Transportation
(3) Net book value 6,857,023.37
equipment
(4) Provision for Transportation
impairment equipment
Transportation
(5) Book value 6,857,023.37
equipment
14. Construction in progress
（1）Balance of Construction in progress
Transl
ation Percentag
Increase for Other differe e
Opening Transfer to Closing Source
Projects decrea nce of of
balance the period fixed assets
se foreign
balance
completio
of fund
statem n
ent
Chongqing Self-financin
Household Air 6,842,989.46 7,588,173.68 5,922,702.16 8,508,460.98 37% g
Conditioner
Hefei Self-financin
55,163,303.93 18,362,697.97 23,524,063.01 50,001,938.89 90% g
Refrigerator
Qingdao Special 170,360,757.1 152,926,522.7 Self-financin
8,289,732.63 25,723,967.04 90% g
Freezer 4
Jiaozhou 101,053,559.4 109,619,773.7 Self-financin
56,412,093.13 47,845,878.84 80% g
Air-Conditioner 7
Zhengzhou Self-financin
19,107,519.72 10,020,612.83 9,386,533.84 19,741,598.71 92% g
Air-Conditioner
Shenyang Self-financin
97,330,292.25 21,301,657.51 76,028,634.74 97% g
Refrigerator
Qingdao Special Self-financin
28,632,842.95 1,603,930.17 16,080,184.75 14,156,588.37 89% g
Refrigerator
Qingdao Central 228,836,416.9 Self-financin
238,645,406.28 33,122,218.05 42,931,207.39 50% g
Air-Conditioner
Electrical Self-financin
20,115,831.80 30,870,745.58 10,739,702.52 40,246,874.86 83% g
Air-Conditioner
Qingdao Electric Self-financin
29,200,218.71 13,223,612.84 32,623,242.60 9,800,588.95 96% g
Water Heater
Qingdao Haier Self-financin
New Energy g
18,685,374.13 13,786,228.70 4,899,145.43 70%
Electric
Appliance
Qingdao Self-financin
DrumWashing 7,459,337.17 47,704,178.54 7,115,180.39 48,048,335.32 90% g
Machine
Guiyang Self-financin
74,759,310.41 14,645,496.03 89,404,806.44 100% g
Logistics
Ningbo Self-financin
10,043,180.95 2,745,612.56 12,788,793.51 95% g
Logistics
Nanchang Self-financin
58,160,947.88 4,945,694.90 63,106,642.78 100% g
Logistics
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Changchun Self-financin
32,420,922.88 6,385,066.90 38,805,989.78 10% g
Logistics
ChongqingWater Self-financin
29,059,692.94 1,289,540.29 28,763,763.16 1,585,470.07 95% g
Heater
222,00 Self-financin
Japan Projects 16,543,086.12 4,615,815.03 2,485,492.91 18,895,418.02 99% g
9.78
American -4,998, 211,905,739.8 Self-financin
209,044,715.11 7,859,742.24 43% g
Projects 717.52
201,959,089.9 2,735,1 305,518,408.1 Self-financin
100,824,148.31 51% g
India Projects 9 69.83
496,086,859.8 384,276,300.4 -4,292, 762,807,412.6 Self-financin
655,289,847.51 g
Others 7 9 994.29
1,772,030,794. 1,174,443,404 952,220,110.2 -6,334, 1,987,919,555
Total
27 .08 2 532.20 .93
(2) Provision for impairment of construction in progress
Transfer Translation
Opening Increase for Other difference of Closing
Name of Projects to fixed
balance the period decrease foreign balance
assets statement
Others 2,155,743.92 -59,043.82 2,096,700.10
15. Disposals of fixed assets
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
International Refrigerator 55,808,808.81 55,808,808.81
Project
Others 247,263.34
Total 56,056,072.15 55,808,808.81
16. Intangible assets
Translation
Increase for the Decrease for difference of
Categories Opening balance Closing balance
period the period foreign
statement
(1) Original value
Technical
expertise 773,207,000.00 -18,048,600.00 755,158,400.00
Concession 3,933,279,000.00 54,885,200.00 -91,504,200.00 3,786,889,600.00
Land use rights 1,565,093,116.98 96,812,489.11 -279,293.23 1,661,626,312.86
Management
software 494,936,735.56 85,396,589.20 7,657,775.57 -14,448,081.95 558,227,467.24
Trademark rights 659,015,000.00 -15,447,000.00 643,568,000.00
Others 311,513,042.00 54,716,231.30 6,046,551.77 -1,402.31 360,181,319.22
Total 7,737,043,894.54 236,925,309.61 68,589,527.34 -139,728,577.49 7,765,651,099.32
(2) Accumulated
amortization
Technical
expertise 48,117,075.00 38,076,607.50 -1,531,522.50 84,662,160.00
Concession 57,360,318.75 47,138,382.69 -1,937,108.12 102,561,593.32
Land use rights 138,512,078.55 24,703,473.87 -78,212.99 163,137,339.43
Management 171,110,669.67 60,207,198.69 2,359,017.38 -7,257,212.50 221,701,638.48
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software
Trademark rights
Others 79,523,273.13 3,645,059.12 814,091.29 -85,829.82 82,268,411.14
Total 494,623,415.10 173,770,721.87 3,173,108.67 -10,889,885.93 654,331,142.37
(3) Net book value
Technical
expertise 725,089,925.00 670,496,240.00
Concession 3,875,918,681.25 3,684,328,006.68
Land use rights 1,426,581,038.43 1,498,488,973.43
Management
software 323,826,065.89 336,525,828.76
Trademark rights 659,015,000.00 643,568,000.00
Others 231,989,768.87 277,912,908.08
Total 7,242,420,479.44 7,111,319,956.95
(4) Provision for
impairment
Technical
expertise
Concession
Land use rights
Management
software
Trademark rights
Others
Total
(5) Book value
Technical
expertise 725,089,925.00 670,496,240.00
Concession 3,875,918,681.25 3,684,328,006.68
Land use rights 1,426,581,038.43 1,498,488,973.43
Management
software 323,826,065.89 336,525,828.76
Trademark rights 659,015,000.00 643,568,000.00
Others 231,989,768.87 277,912,908.08
Total 7,242,420,479.44 7,111,319,956.95
At the end of the period, the intangible assets arise from internal research and development accounting
for 3.10% of the original value at the end of the period.
17. Development expenses
Decrease for the period
Translation
Charged to
Opening Increase for difference of Closing
Items profit or Recognized as an
balance the period foreign balance
loss for the intangible asset
statement
period
U+ platform
5,088,000.00 2,080,000.00 7,168,000.00
construction
91ABD.ERPP
857,168,622.06 100,469,404.51 50,340,000.23 -20,721,838.67 886,576,187.67
ROGRAM
Others 51,027,174.26 17,362,112.49 13,575,595.58 -1,243,655.90 53,570,035.27
Total 913,283,796.32 119,911,517.00 63,915,595.81 -21,965,494.57 947,314,222.94
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18. Goodwill
Impact of
Decrease
Increase for fluctuation in
Items Opening balance for the Closing balance
the period exchange rate
period
for the period
GEA 20,611,638,212.84 -479,879,314.56 20,131,758,898.28
Furniture
after-sales service 6,123,000.00 6,123,000.00
business
Shanghai Boyol
New Brothers
Supply Chain 68,407,241.86 68,407,241.86
Management
Company Limited
Greenone TEC
3,298,757.75 3,298,757.75
Solarindustrie GmbH
Shengfeng
Logistics Group 317,954,690.69 317,954,690.69
Co., Ltd
Total 21,004,123,145.39 3,298,757.75 -479,879,314.56 20,527,542,588.58
(1) The Company additionally acquired RMB3,298,757.75 of goodwill of Greenone TEC
Solarindustrie GmbH. The subsidiaries of the Company paid considerations of RMB60,307,603.61 to
acquire 51% equity interest of Greenone TEC Solarindustrie GmbH. On 17 May 2017, the fair value of
the equity interest was RMB57,008,845.86, the difference between the cost of business combination and
the share of fair value of identifiable assets acquired is recognized as goodwill.
(2) The Company calculates the recoverable amount of the asset groups by estimating the present
value of future cash flows. According to the cash flows in the next five to ten years based on the
financial budget approved by the management, the perpetual growth rate of cash flow in the next years is
estimated to be 2% to 4%, not more than the long-term average growth rate of the asset group business.
The discount rate is within the range of 9.00% to 15.00%. The management prepares the financial
budget above based on the past performance and market development forecasts. Pursuant to the result of
impairment test, no goodwill has been impaired by the end of the period.
19. Long-term deferred expenditures
Translation
Increase Amortization
difference for
amount for the amount for the Other
Items Opening balance foreign Closing balance
period period deductions
currency
statement
Renovation
fee
23,495,429.77 128,243.23 448,313.99 9,438,849.35 13,736,509.66
Expenditure
for
45,710,143.55 1,473,799.09 4,940,728.54 42,243,214.10
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reconstruction
of leased
plant
Others 46,568,019.46 3,886,471.19 4,445,646.49 16,048,924.84 -110,118.36 29,849,800.96
Total 115,773,592.78 5,488,513.51 9,834,689.02 25,487,774.19 -110,118.36 85,829,524.72
20. Deferred income tax assets/liabilities
(1) The deferred income tax assets without consideration of the offsetting of balances
Items Closing balance Opening balance
Provision for assets impairment 157,822,525.86 206,179,413.32
Liabilities 1,329,411,456.74 1,588,572,631.81
Internal unrealized profit due to
335,437,189.29 306,515,615.29
consolidation
Others 16,343,978.99 10,774,534.11
Total 1,839,015,150.88 2,112,042,194.53
(2) Deferred income tax liabilities without consideration of the offsetting of balances
Items Closing balance Opening balance
Changes of the fair value 20,023,745.00 30,458,666.66
Disposal of subsidiaries and
117,683,479.17 111,105,965.55
available-for-sale financial assets
Reserved foreign enterprise income
70,702,527.50 38,629,859.78
tax
Depreciation and amortization of
assets and the difference of the tax 149,007,109.32 461,236,134.20
laws
Interest rate swap agreement 3,532,757.81 6,663,731.01
Others 1,276,928.69 5,181,579.42
Total 362,226,547.49 653,275,936.62
(3) The deferred income tax assets and the deferred income tax liabilities offset at the end of the
period was RMB199,095,918.97.
21. Other non-current assets
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Prepayments for equipment and 687,050,969.23 776,647,520.39
land
Others 94,672,669.81 81,813,868.47
Total 781,723,639.04 858,461,388.86
22. Short-term borrowings
(1). Classification of short - term borrowings
√Applicable □Not Applicable
Unit and Currency: RMB
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Items Closing balance Opening balance
Pledged borrowings 3,048,480,000.00 3,994,850,204.62
Mortgage loan 53,000,000.00 23,000,000.00
Guaranteed borrowings 60,000,000.00 6,950,000,000.00
Unsecured borrowings 8,824,315,621.88 7,197,681,674.53
Total 11,985,795,621.88 18,165,531,879.15
23. Financial liabilities designated to be measured by fair value and change of which is recorded
in current profit or loss
Items Closing balance Opening balance
Forward foreign exchange sale
70,573,461.47 2,340,213.20
and purchase agreement
Total 70,573,461.47 2,340,213.20
24. Bills payable
√Applicable □Not Applicable
Unit and Currency: RMB
Categories Closing balance Opening balance
Commercially acceptance 2,436,569,579.83 1,725,416,481.48
bill
Bank acceptance bill 13,072,010,243.47 10,679,473,278.57
Total 15,508,579,823.30 12,404,889,760.05
25. Accounts payables
Items Closing balance Opening balance
Accounts payables 24,835,266,362.14 20,594,203,310.08
Total 24,835,266,362.14 20,594,203,310.08
The book balance at the end of the period was mainly the unpaid expenditures on material,
equipment and labor.
26. Prepayment
Items Closing balance Opening balance
Prepayment 4,149,761,184.38 5,734,732,855.06
Total 4,149,761,184.38 5,734,732,855.06
The book balance at the end of the period was mainly the prepayment.
27. Payables for staff’s remuneration
(1) Presentation of payables for staff’s remuneration
√Applicable □Not Applicable
Unit and Currency: RMB
Opening Increase for Decrease for Closing
Items
balance the period the period balance
Ⅰ. Short-term 2,197,223,036.69 6,259,845,612.47 6,593,250,259.75 1,863,818,389.41
remuneration
Ⅱ. Post-employment 190,360,845.76 518,368,391.98 436,636,832.14 272,092,405.60
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benefits-defined
contribution plan
Ⅲ. Termination benefits 16,796,576.14 282,321.44 12,688,606.42 4,390,291.16
Ⅳ . Other welfare due
within one
year
Total 2,404,380,458.59 6,778,496,325.89 7,042,575,698.31 2,140,301,086.17
(2) Presentation of short-term remuneration
Opening Increase for the Decrease for the Closing
Items
balance period period balance
Ⅰ. Salaries, bonus, allowance
1,082,738,315.83 4,239,906,530.00 4,525,560,614.86 797,084,230.97
and benefit
Ⅱ. Employee welfare 531,758,045.89 61,032,793.73 61,395,062.76 531,395,776.86
Ⅲ. Social benefit 91,041,425.17 594,156,530.56 542,258,303.92 142,939,651.81
Ⅳ. Housing fund 8,587,321.53 113,338,258.85 115,998,515.79 5,927,064.59
Ⅴ . Labor union fee and 2,291,456.49 33,378,658.41 33,565,669.30 2,104,445.60
education fee
Ⅵ . Short-term compensated 228,698,109.89 102,222,758.81 150,455,334.78 180,465,533.92
leave
Ⅶ. Others 252,108,361.89 1,115,810,082.11 1,164,016,758.34 203,901,685.66
Total 2,197,223,036.69 6,259,845,612.47 6,593,250,259.75 1,863,818,389.41
(3) Presentation of defined contribution plan
√Applicable □Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the
Items Closing balance
balance period period
1. Basic pension insurance 189,197,049.65 505,858,856.95 424,198,406.04 270,857,500.56
2. Unemployment 700,838.23 10,818,911.06 10,942,308.27 577,441.02
insurance
3. Enterprise annuity 462,957.88 1,690,623.97 1,496,117.83 657,464.02
payment
Total 190,360,845.76 518,368,391.98 436,636,832.14 272,092,405.60
(4) Presentation of termination benefits
Items Closing balance Opening balance
Termination compensation 4,390,291.16 16,796,576.14
Total 4,390,291.16 16,796,576.14
28. Taxes payable
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
VAT 299,239,757.63 501,344,246.89
Business tax 2,313,918.06 11,554,246.76
Enterprise income tax 835,396,732.26 930,301,189.86
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Individual income tax 20,429,927.44 19,205,381.15
Municipal maintenance tax 16,008,888.61 33,805,437.30
Education surcharge 6,003,582.15 12,144,570.87
The electrical and electronic 72,341,575.67 73,838,985.81
products waste treatment fund
Additional taxes 54,714,940.66 38,269,003.47
Total 1,306,449,322.48 1,620,463,062.11
29. Interests payable
Items Closing balance Opening balance
Interest of long-term borrowings 51,470,134.03 15,891,113.99
Interest of short-term borrowings 25,167,665.00 14,679,214.67
Total 76,637,799.03 30,570,328.66
30. Dividends payable
Company Closing balance Opening balance
BRAVE LION (HK) LIMITED 122,756,874.10 122,756,874.10
Haier Electric Appliances International
312,153,836.35
Co., Ltd.
Haier Group Corporation 266,007,469.47
Qingdao Haier Venture & Investment
42,718,634.88
Information Co., Ltd.
HCH (HK) Investment Management Co.,
50,015,733.17
Limited
Social shareholders (The Company has
made provision for the issuance of public 1,074,338,151.44
shares)
Other minority shareholders 25,931,721.10 25,933,614.91
Total 1,893,922,420.51 148,690,489.01
31. Other payables
(1). Other payables by nature
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Other payables 9,839,677,091.29 9,363,015,551.12
Total 9,839,677,091.29 9,363,015,551.12
The book balance at the end of the period mainly included the incurred but unpaid costs.
32. Non-current liabilities due within 1 year
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Long-term borrowings due 1,693,600,000.00 1,734,250,000.00
within one year
Bonds payable due within one 1,223,220,143.70
year
Long-term payables due within 7,363,280.46 9,338,365.85
one year
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Total 1,700,963,280.46 2,966,808,509.55
33. Long-term borrowings
(1). Classification of Long-term borrowings
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Pledged borrowings
Mortgage loan 31,559,245.46
Guaranteed borrowings 19,251,346,823.40 14,716,253,452.30
Credit borrowings 407,225,951.78 814,547,859.50
Total 19,690,132,020.64 15,530,801,311.80
Long-term borrowings – pledge that the interest rate is the interest rate as provided in the borrowing
agreement plus London inter-bank offered rate.
Long-term borrowings – guarantee that the interest rate is the interest rate as provided in the
borrowing agreement plus London inter-bank offered rate.
Long-term borrowings – the interest rate of domestic borrowing in the credit borrowings is the
benchmark loan rate published by the People‘s Bank of China.
Long-term borrowings – the interest rate of international borrowings in the credit borrowings is the
interest rate as provided in the borrowing agreement plus London inter-bank offered rate.
34. Long-term payables
(1). Long-term payables by nature of payment:
√Applicable □Not Applicable
Unit and Currency: RMB
Items Opening balance Closing balance
CDB development fund investment 93,000,000.00 93,000,000.00
fund
Lease 22,783,382.28 23,912,770.25
Total 115,783,382.28 116,912,770.25
Under the Investment Contract of China Development Fund executed by the Company and its
subsidiaries including Qingdao Haier Refrigerator Co., Ltd., 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 RMB20 million in Qingdao
Haier Refrigerator Co., Ltd., and RMB73 million in Qingdao Haier (Jiaozhou) Air-conditioning Co.,
Limited. China Development Fund Co. Ltd. obtains 1.2% of the earnings every year in dividend or
through call premium. From 2020 to 2027, the Company and its subsidiaries will repurchase the
investments made by China Development Fund Co. Ltd. to the subsidiary of the Company.
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35. Long-term payables for staff’s remuneration
√Applicable □Not Applicable
(1) Table of long-term payables for staff‘s remuneration
Items Closing balance Opening balance
I. Post-employment benefits: net liability of
542,499,881.60 837,967,757.25
defined benefit plan
II. Termination benefits 49,360,971.88 51,440,750.33
III. Provision for work-related injury
300,515,968.81 317,102,409.75
compensation
IV. Other long-term benefits
Total 892,376,822.29 1,206,510,917.33
(2) Defined benefit plan
Some subsidiaries of the Company have set several defined benefit plans for the qualified staff. In
these plans, the employees are entitled to enjoy the retirement benefits agreed in such defined benefit
plans.
These plans are exposed to interest rate risks, changes in life expectancy of the beneficiary and
other risks.
The recent actuarial evaluation of the assets and the present value of defined benefit obligations
under such plans are determined by using the expected cumulative welfare unit method.
①.The defined benefit plan of Haier Asia Co., Ltd. (海尔亚洲株式会社), a subsidiary of the
Company
Actuarial assumption used in the defined benefit plan
Items Percentage
I. Discount rate 1.10%
II. Expected rate of return 2.00%
Present value of defined benefit obligations
Items Amount
I. Opening balance 314,909,686.37
II. Defined benefit cost in current profit or loss
1. Current period service cost
2. Past service cost
3. Settlement profit (loss indicated in―-‖)
4. Interest expenses
III. Defined benefit cost in other comprehensive incomes
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1. Actuarial loss (gain indicated in ―-‖)
IV. Other changes -10,446,044.84
1. Consideration paid upon settlement
2. Prepaid benefits -15,402,402.60
3.Exchange difference 4,956,357.76
V. Closing balance 304,463,641.53
Fair value of plan assets
Items Amount
I. Opening balance 300,272,483.59
II. Defined benefit cost in current profit or loss
1. Interest income
III. Defined benefit cost in other comprehensive incomes
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 -10,667,076.44
1. Payments made by the employer
2. Prepaid benefits -15,402,402.60
3.Exchange difference 4,735,326.16
V. Closing balance 289,605,407.15
Neither the Company's common stocks or bonds, nor the properties occupied by the Company are
included in the plan assets.
Net liability (net asset) of defined benefit plan
Items Amount
I. Opening balance 14,637,202.78
II. Defined benefit cost in current profit or loss
III. Defined benefit cost in other comprehensive incomes
IV. Other changes 221,031.60
V. Closing balance 14,858,234.38
The average term for the defined benefit obligation is 14.70 years at the balance sheet date.
②. The defined benefit plan of Roper Corporation, a subsidiary of the Company
Roper Corporation, a subsidiary of the Company, has set post-employment defined benefit plan of
health care benefits for the qualified staff.
Actuarial assumption used in the defined benefit plan
Items Percentage
I. Discount rate 3.98%
Present value of defined benefit obligations
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Items Amount
Ⅰ. Opening balance 147,664,284.01
Ⅱ. Consolidation of enterprises under non-common control
Ⅲ. Defined benefit cost in current profit or loss 11,899,870.44
1. Current period service cost 6,263,983.76
2. Past service cost -18,571.91
3. Settlement profit (loss indicated in ―-‖)
4. Interest expenses 5,654,458.59
Ⅳ. Defined benefit cost in other comprehensive incomes
1. Actuarial loss (gain indicated in ―-‖)
V. Other changes -3,610,868.18
1. Consideration paid upon settlement
2. Paid benefits -
3. Exchange difference -3,610,868.18
Ⅵ. Closing balance 155,953,286.27
Net liability (net asset) of defined benefit plan
Items Amount
Ⅰ. Opening balance 147,664,284.01
Ⅱ. Consolidation of enterprises under non-common control -
Ⅲ. Defined benefit cost in current profit or loss 11,899,870.44
Ⅳ. Defined benefit cost in other comprehensive incomes
V. Other changes -3,610,868.18
Ⅵ. Closing balance 155,953,286.27
The average term for the defined benefit obligation is 12.14 years at the balance sheet date.
③. The defined benefit plan of Haier US APPLIANCE SOLUTIONS, INC., a subsidiary of the
Company.
Haier US APPLIANCE SOLUTIONS, INC., a subsidiary of the Company, has set post-retirement
defined benefit plan of health care benefits for the qualified staff.
Actuarial assumption used in the defined benefit plan
Items Percentage
I. Discount rate 3.68%
Present value of defined benefit obligations
Items Amount
Ⅰ. Opening balance 385,674,932.23
Ⅱ. Consolidation of enterprises under non-common control
Ⅲ. Defined benefit cost in current profit or loss 17,425,944.74
1. Current period service cost 5,494,041.70
2. Past service cost -1,861,644.08
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3. Settlement profit (loss indicated in ―－‖)
4. Interest expenses 13,793,547.12
Ⅳ. Defined benefit cost in other comprehensive incomes
1. Actuarial loss (gain indicated in ―－‖)
V. Other changes -9,259,237.12
1. Consideration paid upon settlement
2. Paid benefits
3. Exchange difference -9,259,237.12
Ⅵ. Closing balance 393,841,639.85
Net liability (net asset) of defined benefit plan
Items Amount
Ⅰ. Opening balance 385,674,932.23
Ⅱ.Consolidation of enterprises under non-common control
Ⅲ. Defined benefit cost in current profit or loss 17,425,944.74
Ⅳ. Defined benefit cost in other comprehensive incomes
V. Other changes -9,259,237.12
Ⅵ. Closing balance 393,841,639.85
④. The defined benefit plan of Haier US APPLIANCE SOLUTIONS, INC., a subsidiary of the
Company.
Haier US APPLIANCE SOLUTIONS, INC., a subsidiary of the Company, has set a defined
benefit plan of retirement pension for the qualified staff.
Actuarial assumption used in the defined benefit plan
Items Percentage
I. Discount rate 3.21%
Present value of defined benefit obligations
Items Amount
Ⅰ. Opening balance 344,065,731.00
Ⅱ.Consolidation of enterprises under non-common control
Ⅲ. Defined benefit cost in current profit or loss -51,562,174.01
1. Current period service cost 15,744,689.04
2. Past service cost -77,706,929.57
3. Settlement profit (loss indicated in ―－‖)
4. Interest expenses 10,400,066.52
Ⅳ. Defined benefit cost in other comprehensive incomes -
1. Actuarial loss (gain indicated in ―－‖) -
V. Other changes -7,416,143.07
1. Consideration paid upon settlement -
2. Paid benefits -
3. Exchange difference -7,416,143.07
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Ⅵ. Closing balance 285,087,413.92
Fair value of plan assets
Items Amount
Ⅰ. Opening balance 8,170,835.63
II. Defined benefit cost in current profit or loss
1. Interest income
III. Defined benefit cost in other comprehensive incomes -
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 262,912,300.00
1. Payments made by the employer 260,020,530.00
2. Paid benefits -
3. Exchange difference 2,891,770.00
V. Closing balance 271,083,135.63
Net liability (net asset) of defined benefit plan
Items Amount
Ⅰ. Opening balance 335,894,895.37
Ⅱ.Consolidation of enterprises under non-common control
Ⅲ. Defined benefit cost in current profit or loss -51,562,174.01
Ⅳ. Defined benefit cost in other comprehensive incomes
V. Other changes -270,328,443.07
Ⅵ. Closing balance 14,004,278.29
(3) Provision for work-related injury compensation
Our subsidiary Haier US APPLIANCE SOLUTIONS, INC. made a provision for the
occupational injury claims filed by the injured due to production accidents starting from 1 January
1991. The provision will be used to pay the claims to the employees injured during the accidents.
The provision accrued was prepared by Beecher Carlson Insurance Services, LLC. adopting the
actuarial method. The discount rate used in the actuarial method is 3.72%.
Items Amount
Ⅰ. Opening balance 317,102,409.75
Ⅱ. Consolidation of enterprises under non-common control
Ⅲ. Compensation expenses in current profit or loss 57,146,434.67
Ⅳ. Compensation amount actually paid for the period 66,416,755.42
V. Other changes -7,316,120.19
Ⅵ.Closing balance 300,515,968.81
Classification of the balance of defined benefit plan
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Items Closing balance Opening balance
Short-term remuneration 36,157,557.20 45,903,557.14
Long-term remuneration 542,499,881.60 837,967,757.25
Total 578,657,438.80 883,871,314.39
36. Estimated liabilities
Items Closing balance Opening balance
Estimated charges of ―three
2,326,468,508.80 2,275,917,930.84
guarantees‖ and installations
Acquisition of equity interests of
55,862,218.57 15,700,000.00
minority equity interests
Pending litigation 22,555,105.56 18,501,499.76
Total 2,404,885,832.93 2,310,119,430.60
Significant assumptions and estimates related to the estimated charges of ―three guarantees‖ and
installations: the Company rationally estimates the rate of ―three guarantees‖ and installations according
to the previous actual expenditures and sales data on ―three guarantees‖ and installations, and estimates
the potential charges of ―three guarantees‖ and installations based on the policy of ―three guarantees‖
and installations and the realized sales data.
37. Deferred income
Explanations of deferred income
√Applicable □Not Applicable
Unit and Currency: RMB
Opening Increase for the Decrease for the
Items Closing balance Reason
balance period period
Government
Governmental
337,441,740.36 75,182,143.40 25,912,706.16 386,711,177.60 subsidies related
subsidy
assets
Leaseback The differences
on sales price and
5,383,852.99 1,615,673.43 3,768,179.56
the book value of
assets
Total 342,825,593.35 75,182,143.40 27,528,379.59 390,479,357.16 /
38. Other non-current liabilities
√Applicable □Not Applicable
Unit and Currency: RMB
Items Closing balance Opening balance
Changes of fair value in hedging 50,769,391.88 582,785,069.86
instruments
Total 50,769,391.88 582,785,069.86
39. Share capital
Class of shares Opening balance Increase for Decrease for Closing balance
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the period the period
I. Restricted shares 606,213,988 606,213,988
1. State-owned shares
2.Shares held by domestic
non-state-owned
legal entities
3.Shares held by domestic
228,000 228,000
natural persons
4. Shares held by foreign
non-state-owned legal 605,985,988 605,985,988
entities
Ⅱ. Non-restricted shares 5,491,416,739 5,491,416,739
1.Ordinary shares in
5,491,416,739 5,491,416,739
RMB
2. Domestic listed foreign
shares
3. Overseas listed foreign
shares
4. Others
Ⅲ. Total shares 6,097,630,727 6,097,630,727
40. Capital reserve
√Applicable □Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance Closing balance
period period
Capital premium
(share capital 231,991,591.90 231,991,591.90
premium)
Other capital
83,383,194.51 79,672.11 83,462,866.62
reserve
Total 83,383,194.51 232,071,264.01 315,454,458.52
Other explanations, including the explanations on increases or decreases for the period and the reasons
thereof:
Movements in capital reserve due to: ①an increase of RMB231,991,591.90 in capital premium
due to the capital contribution to subsidiaries not on the original proportion of equity interest for the
period led to the changes in the shareholdings of the Company; ②an increase of RMB79,672.11 in
other capital reserves due to the changes of capital reserves calculated in equity method for the period.
41. Treasury stock
√Applicable □Not Applicable
Unit and Currency: RMB
Increase for the Decrease for the
Items Opening balance Closing balance
period period
Restricted share 1,041,960.00 1,041,960.00
certificates
Share repurchase
Total 1,041,960.00 1,041,960.00
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42. Other comprehensive income
Amounts incurred for the period
Opening The pre-tax Attributable Attributable Closing
Items Less:
balance to the parent to minority balance
amount for income tax Others
company, net shareholders,
the period expense
of tax net of tax
a 34,176,554.03 -122,346,236.14 -122,040,176.25 -306,059.89 -87,863,622.22
b 6,134,086.21 -2,746,669.05 -406,294.04 -2,347,023.98 6,648.97 3,787,062.23
c 9,966,493.62 -9,300,368.43 -3,532,757.81 -5,767,610.62 4,198,883.00
d 522,147,275.38 -70,679,191.47 -38,460,561.85 -32,218,629.62 483,686,713.53
e -6,185,497.28 -6,185,497.28
Total 566,238,911.96 -205,072,465.09 -3,939,051.85 -168,615,372.70 -32,518,040.54 397,623,539.26
Notes: (1) Item a, b, c, and d are other comprehensive income that will be reclassified to profit or loss in the future,
including:
Item a represents other comprehensive income of investees accounted for using the equity method, which will be
reclassified subsequently to profit or loss.
Item b represents profit and loss in change in fair value of financial assets available-for-sale.
Item c represents effective portion of gain or loss arising from cash flow hedging instruments
Item d represents exchange differences from translation of foreign currency financial statements.
(2) Item e represents changes arising from remeasurement of net liabilities or assets of defined benefit plans, which
may not be subsequently reclassified to profit or loss.
43. Surplus reserve
√Applicable □Not Applicable
Unit and Currency: RMB
Items Opening balance Increase for the Decrease for the Closing balance
period period
Statutory surplus 2,026,461,769.42 2,026,461,769.42
reserve
Discretionary 26,042,290.48 26,042,290.48
surplus reserve
Reserve fund 11,322,880.64 11,322,880.64
Enterprise 10,291,630.47 10,291,630.47
expansion fund
Total 2,074,118,571.01 2,074,118,571.01
44. Undistributed profits
√Applicable □Not Applicable
Items Amount
Undistributed profits at the end of last year 17,544,395,965.35
Add: correction of accounting errors
Adjustment on implementation of ASBE
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Adjustment on business combination under common control
Undistributed profits at the beginning of the year 17,544,395,965.35
Add: net profit attributable to owners of the Company 4,427,068,404.51
Profit available for appropriation for the year 21,971,464,369.86
Less: appropriation of statutory surplus reserve
Appropriation of staff incentive and welfare fund
Dividend payable for ordinary shares 1,512,155,876.30
Retained earnings after deduction of combined offsetting
under common control
Undistributed profits at the end of the period 20,459,308,493.56
45. Operating income and Operating cost
(1) Operating income
Categories Amount for the current period Amount for the previous period
Principal Business 77,242,627,605.56 48,396,652,699.11
Other Business 333,122,374.54 389,954,225.76
Total 77,575,749,980.10 48,786,606,924.87
(2) Income and cost of principle operations presented by product categories
Amount for the current period Amount for the previous period
Categories Income of principal Cost of principal Income of principal Cost of principal
business business business business
Air
16,327,368,124.73 11,125,241,053.36 9,664,635,513.49 6,653,835,753.76
conditioner
Refrigerator 22,743,000,584.94 15,418,659,922.43 15,316,053,347.53 10,206,844,876.29
Kitchen
13,161,723,397.20 8,267,012,813.14 4,996,083,899.67 2,923,535,853.93
appliance
Washing
13,845,106,171.68 9,062,281,717.42 8,706,411,819.07 5,823,035,874.06
machine
Equipment
1,485,496,698.74 1,254,773,044.03 1,249,804,964.69 1,058,835,187.55
product
Integrated
channel
9,679,932,628.27 8,963,031,315.36 8,463,663,154.66 7,916,431,058.06
services and
others
Total 77,242,627,605.56 54,090,999,865.74 48,396,652,699.11 34,582,518,603.65
46. Taxes and surcharge
Amount for the current Amount for the previous
Items
period period
Business tax 6,278,229.86 5,858,432.78
City maintenance and construction tax 120,193,292.32 112,850,473.17
Education surcharge 52,303,868.63 48,800,232.38
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Property tax 61,265,810.45
Land use tax 18,718,053.00
Stamp tax 43,625,123.62
Others 43,001,955.42 4,187,779.94
Total 345,386,333.30 171,696,918.27
47. Expenses of sales
√Applicable □Not Applicable
Unit and Currency: RMB
Amount for the current Amount for the previous
Items
period period
Expenses of sales 12,937,515,954.38 6,693,076,335.80
Total 12,937,515,954.38 6,693,076,335.80
Selling expenses of the Company mainly include compensation, transportation and warehousing costs,
advertising and sales promotion expenses, after-sale expenses and so on.
48. Management expenses
√Applicable □Not Applicable
Unit and Currency: RMB
Items Amount for the current Amount for the previous
period period
Management expenses 4,623,708,396.51 3,543,082,531.68
Total 4,623,708,396.51 3,543,082,531.68
Administrative expenses of the Company mainly include compensation, research and development
costs, administrative expenses, taxes, rental payments and so on.
49. Financial expenses
Amount for the current Amount for the previous
Items
period period
Interest expenses 612,416,699.07 197,158,970.54
Less: interest income 132,911,499.93 112,282,670.60
Exchange gain or loss 172,272,254.88 15,543,225.29
Others -40,100,172.09 24,649,483.24
Total 611,677,281.93 125,069,008.47
50. Loss in assets impairment
Amount for the current Amount for the previous
Items
period period
Bad debt loss 124,869,464.91 57,962,188.88
Loss from price drop in inventory 97,707,495.91 138,224,477.18
Impairment loss on fixed assets
Impairment loss on construction in
progress
Impairment loss on financial assets
available for sale
Total 222,576,960.82 196,186,666.06
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51. Profit or loss of changes in fair value
Amount for the current Amount for the previous
Items
period period
Financial instruments measured in fair
value through current profit or loss - 412,063,845.15 -182,258,158.84
derivative financial instruments
Total 412,063,845.15 -182,258,158.84
52. Investment Income
√Applicable □Not Applicable
Amount for the Amount for the
Items
current period previous period
Long-term equity investments income calculated by the
585,960,632.76 413,267,458.21
equity method
Investment income from disposal of long-term equity
21,438,092.72 37,414,012.10
investments
Investment income from financial assets available for
21,465,578.23 9,343,791.85
sale during the holding period
Investment income from disposal of financial assets
531,765,734.66
available for sale
Investment income from disposal of financial assets at
fair value and its changes recognized in the current profit 13,850,304.84 32,350,801.48
and loss
Wealth management products return 11,128,105.80 5,052,001.54
Total 653,842,714.35 1,029,193,799.84
53. Other income
Amount for the current Amount for the previous
Items
period period
Refundable value-added tax for software
72,741,846.04
products
Total 72,741,846.04
According to the requirements of CAIKUAI No.[2017] 15 the Accounting Standards for Enterprises
No.16—Government‘s Subsidies issued by the MOF in May 2017, since 1 January 2017, the Company‘s
government subsidies related to corporate daily activities are included in other gains or reduced costs
related costs in accordance with the essence of economic business. Once the refundable value-added tax
is received which is closely related to the normal operating business of the Company will be included in
other revenue items.
54. Non-operating income
Amount for the current Amount for the previous
Items
period period
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Gain on disposal of non-current assets 49,427,601.31 5,558,955.90
Government grants 62,000,721.48 125,842,469.31
Change in accounting methods of
166,840,685.70
financial assets available for sale
Others 197,575,745.83 162,082,762.23
Total 309,004,068.62 460,324,873.14
Details of government grants are presented as follows:
Amount for the current Amount for the
Items
period previous period
Current amortization of government
5,738,834.79 16,734,996.28
grants related to assets
Government grants related to profit 56,261,886.69 109,107,473.03
Total 62,000,721.48 125,842,469.31
55. Non-operating expenses
Amount for the current Amount for the
Items
period previous period
Loss on disposal of non-current asset 49,846,430.25 20,179,924.08
Charitable donation expenses 11,183,710.06 6,288,255.95
Others 23,548,882.84 30,015,140.09
Total 84,579,023.15 56,483,320.12
56. Income tax expense
(1) Table of income tax expense
√Applicable □Not Applicable
Unit and Currency: RMB
Amount for the previous
Items Amount for the current period
period
Current income expense 778,856,781.57 615,259,241.98
Deferred tax income -20,834,623.34 45,439,140.00
Total 758,022,158.23 660,698,381.98
(2) Adjustment process of accounting profit and income tax expenses:
√Applicable □Not Applicable
Unit and Currency: RMB
Items Amount for the current period
Total profit 6,043,052,670.78
Income tax expenses calculated at statutory /applicable tax rate 1,510,763,167.70
Impact from different tax rates applicable to subsidiaries -631,694,049.31
Impact from adjustment to income tax in prior periods -75,991,738.05
Effect from non-taxable income -141,463,594.83
Impact from non-deductible costs, fees and losses 19,157,316.84
Impact from deductible losses of unrecognized deferred tax before
77,670,591.77
use
Effect of write-off of deferred income taxes -419,535.89
Others
Total income tax expenses 758,022,158.23
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57. Other comprehensive income
√Applicable □Not Applicable
For details, please refer to item 42 of note VII.
58. Cash received from other operation related activities
Items Amount
Deposits and securities 68,796,766.32
Government grants 253,966,557.91
Non-operating income excluding government
101,459,811.04
grants
Interest income 121,962,665.17
Others 2,186,012.14
Total 548,371,812.58
59. Cash paid to other operation related activities
Items Amount
Cash paid on operating expenses 3,151,649,224.94
Cash paid on management expenses 1,791,755,150.46
Cash paid on financial expenses 55,214,874.23
Non-operating expenses 33,663,772.25
Others 31,501,779.58
Total 5,063,784,801.46
60. Cash received from other investment related activities
Items Amount
Government grants related to assets 75,828.87
Total 75,828.87
61. Cash paid to other financing related activities
Items Amount
Cash paid on repurchasing shares 12,038,506.40
Cash paid due to the withdrawal of minority 603,380.00
Cash paid on financial lease 6,220,000.00
Loan margin 16,414,105.13
Others
Total 35,275,991.53
62. Information of net profit adjusted to cash flows of operating activities:
Net profit adjusted to cash flows of operating Amount for the current Amount for the
activities period previous period
1. Net profit 5,285,030,512.55 3,971,842,202.21
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Plus: provisions for assets impairment 222,576,960.82 196,186,666.06
Depreciation of fixed assets 1,156,148,562.88 671,372,916.51
Amortization of intangible assets 173,770,721.87 51,395,463.20
Amortization of long term expenses payable 9,834,689.02 16,414,091.19
Loss on disposal of fixed assets, intangible assets
418,828.94 -167,680,746.72
and other long term assets (―-‖ represents ―gains‖)
Gain and loss on change of fair value
-412,063,845.15 182,258,158.84
(―-‖ represents ―gains‖)
Financial expenses (―-‖ represents ―gains‖) 612,416,699.07 197,158,970.54
Loss on investments (―-‖ represents ―gains‖) -653,842,714.35 -1,029,193,799.84
Decrease of deferred income tax assets
274,672,665.40 -29,728,891.88
(―-‖ represents ―increase‖)
Increase of deferred income tax liabilities
-295,507,288.73 75,168,031.88
(―-‖ represents ―decrease‖)
Decrease of inventories (―-‖ represents ―increase‖) -2,086,128,150.16 586,856,577.31
Decrease of operational account receivables
-660,451,774.62 24,497,917.00
(―-‖ represents ―increase‖)
Increase of operational account payables
4,614,484,067.71 -14,090,986.86
(―-‖ represents ―decrease‖)
Others 151,840,970.93 22,099,813.25
Net cash flows generated from operational
8,393,200,906.18 4,754,556,382.69
activities
2. Significant investment and financing activities
not involving cash inflows and outflows:
Capital transferred from debts 1,223,220,143.70
Convertible corporate bonds due within 1 year
Financial leased fixed assets
3. Changes of cash and cash equivalents:
Cash balance at the end of the period 28,772,518,093.61 21,895,514,969.90
Less: cash balance at the beginning of the period 23,217,634,558.10 24,724,585,700.76
Add: cash equivalents balance at the end of the
period
Less: cash equivalents balance at the beginning of
the period
Net increase of cash and cash equivalents 5,554,883,535.51 -2,829,070,730.86
63. Cash and cash equivalents
Items Closing balance Opening balance
I. Cash 28,772,518,093.61 23,217,634,558.10
Including: treasury cash 593,053.62 565,073.32
Bank deposit available for payment at
28,737,845,846.53 23,191,076,580.34
any time
Other monetary capital available for
34,079,193.46 25,992,904.44
payment at any time
II. Cash equivalents
Including: bond investment due within
three months
Ⅲ. Closing balance of cash and cash
28,772,518,093.61 23,217,634,558.10
equivalents
Including: restricted cash and cash
equivalents used by the parent company
or subsidiaries of the Group
64. Foreign Currency Items
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Closing balance Opening balance
Items Foreign currency Exchange Foreign currency Exchange
RMB balance RMB balance
balance rate balance rate
Monetary capital
Dollar 616,510,502.50 6.7744 4,176,488,748.14 387,284,566.46 6.9370 2,686,593,037.50
Euro 13,434,640.84 7.7496 104,113,092.63 21,250,231.16 7.3068 155,271,189.01
Yen 5,152,812,685.67 0.060485 311,667,875.29 5,184,441,120.47 0.059591 308,946,030.81
Others 1,252,116,637.05 961,507,199.02
Sub-total 5,844,386,353.11 4,112,317,456.34
Receivables
Dollar 1,118,305,787.67 6.7744 7,575,850,727.98 976,653,474.79 6.9370 6,775,045,154.60
Euro 77,850,240.42 7.7496 603,308,223.16 49,108,138.60 7.3068 358,823,347.09
Yen 3,598,512,480.30 0.060485 217,656,027.37 4,314,375,738.62 0.059591 257,097,964.64
Others 2,105,944,296.47 1,882,170,143.32
Others
Sub-total 10,502,759,274.98 9,273,136,609.65
Short-term borrowings
Dollar 544,039,812.49 6.7744 3,685,543,305.73 1,329,063,973.44 6.937 9,219,716,783.74
Euro 20,181,516.95 7.7496 156,398,683.76 10,815,675.73 7.3068 79,027,979.42
Yen 44,978,035,950.41 0.0605 2,721,171,175.00 5,251,439,976.00 0.059591 312,938,559.62
HK
725,000,000.00 0.8679 629,227,500.00 725,000,000.00 0.8945 648,512,500.00
Dollars
Others 5,744,061.22 21,015,000.00
Sub-total 7,198,084,725.71 10,281,210,822.78
Payables
Dollar 803,006,496.42 6.7744 5,439,887,209.35 894,240,568.95 6.937 6,203,346,826.78
Euro 19,470,141.02 7.7496 150,885,804.85 28,647,679.79 7.3068 209,322,866.70
Yen 1,596,990,579.56 0.0605 96,617,930.06 3,804,098,671.44 0.059591 226,690,043.93
Others 851,831,193.63 1,012,439,147.10
Sub-total 6,539,222,137.89 7,651,798,884.51
Non-current liabilities due within one year
Dollar 250,000,000.00 6.7744 1,693,600,000.00 250,000,000.00 6.937 1,734,250,000.00
Sub-total 1,693,600,000.00 1,734,250,000.00
Long-term borrowings
Dollar 2,841,778,876.86 6.7744 19,251,346,823.40 2,121,414,653.64 6.937 14,716,253,452.30
Euro 5,005,824.91 7.7496 38,793,140.72
Yen 5,278,445,730.06 0.059591 314,547,859.50
Others
Sub-total 19,290,139,964.12 15,030,801,311.80
65. Government Subsidies
√Applicable □Not Applicable
Unit and Currency: RMB
Amounts included in
Types Amount Presented items the profit or loss for the
period
Research and development 31,638,029.63 Management expenses -31,638,029.63
projects
Research and development 6,242,739.87 Deferred revenue
projects
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Technology upgrading and 24,434,031.86 Operating costs -24,434,031.86
innovation
Technology upgrading and 52,798,214.00 Deferred revenue
innovation
Technology upgrading and 34,750,026.00 Non-operating income 34,750,026.00
innovation
Tax refunds 72,741,846.04 Other revenue 72,741,846.04
Other tax refunds 12,114,492.86 Non-operating income 12,114,492.86
Others 15,136,202.62 Non-operating income 15,136,202.62
Total 249,855,582.88
VIII. Changes in consolidation scope
1. The consolidation of enterprises under non-common control
√Applicable □Not Applicable
(1). The consolidation of enterprises under non-common control occurred for the period
√Applicable □Not Applicable
Unit and Currency: RMB
Net profit
Income of of
Proporti Recogniti acquiree acquiree
Name Date of Method
Cost of on of Date of on basis from the from the
of equity of equity
equity equity purchas as at the date of date of
acquir acquisiti acquisiti
acquisition acquire e date of acquisition acquisitio
ee on on
d (%) purchase to the end n to the
of the period end of the
period
Green 2017.5.1 Acquisiti 2017.5. Equity
60,307,603 47,282,807 2,925,986
one 7 51% on 17 Transf
.61 .16 .87
er
(2). Combination costs and goodwill
□ Applicable √ Not Applicable
Unit and Currency: RMB
Combination costs Green one
------ Cash 52,366,495.84
------ Fair value of contingent considerations 7,941,107.77
Total combination costs 60,307,603.61
Less: share of fair value of identifiable assets 57,008,845.86
Amount of goodwill 3,298,757.75
(3). Identifiable assets and liabilities of the acquire as at the acquisition date
√Applicable □Not Applicable
Unit and Currency: RMB
Green one
Items Fair value as at the date of Book value as at the date
acquisition of acquisition
Monetary Capital 22,542.76 22,542.76
Receivables 48,279,085.49 48,279,085.49
Inventories 29,245,478.71 29,245,478.71
Fixed assets /Construction in
175,517,957.81 142,590,494.36
progress / Intangible assets
Deferred income tax assets 1,645,621.75 1,645,621.75
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Other long-term 270,513.16 270,513.16
assets
Accounts payables -10,655,212.95 -10,655,212.95
Short-term borrowings -86,767,097.30 -86,767,097.30
Other payables -27,381,943.58 -27,381,943.58
Estimated liabilities
